CENTURION FUNDS INC, 485BPOS, 2000-01-28

CENTURION FUNDS INC
485BPOS, 2000-01-28

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As filed with the U.S. Securities and Exchange Commission
on January 28, 2000

Securities Act File No. 333-61973
Investment Company Act File No. 811-8977
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No.
Post-Effective Amendment No. 1
[X]
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
[x]

Amendment No. 2
[x]
(Check appropriate box or boxes)
Centurion Funds, Inc.
.......................................
(Exact Name of Registrant as Specified in Charter)
2425 East Camelback Road, Suite 530
Phoenix, Arizona 85016-4228
........................................
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (602) 957-9789
Gerard P. Dipoto, Jr.
Centurion Funds, Inc.
2425 East Camelback Road, Suite 530
Phoenix, Arizona 85016-4228
......................................
(Name and Address of Agent for Service)
Copy to:

Burton M. Leibert, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099

Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this Registration
Statement.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended (the "1933 Act"), or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

PART A

P R O S P E C T U S
................................................................................

[LOGO OF CENTURION FUNDS APPEARS HERE]
CENTURION FUNDS, INC.

CENTURION U.S. EQUITY FUND
CENTURION INTERNATIONAL EQUITY FUND
CENTURION U.S. CONTRA FUND
CENTURION INTERNATIONAL CONTRA FUND

JANUARY 28, 2000

As with all mutual funds, the Securities and Exchange Commission ("SEC") does
not guarantee that the information in this Prospectus is accurate or complete,
nor has it judged the above funds for investment merit. It is a criminal
offense to state otherwise.

<PAGE>

Contents

<TABLE>
<S> <C>
Overview 1
- -----------------------------------------------
Risk/Return Summary 2
- -----------------------------------------------
Investor Expenses 10
- -----------------------------------------------
Centurion U.S. Equity Fund 11
- -----------------------------------------------
Centurion International Equity Fund 13
- -----------------------------------------------
Centurion U.S. Contra Fund 15
- -----------------------------------------------
Centurion International Contra Fund 16
- -----------------------------------------------
More About Risk 18
- -----------------------------------------------
Management 20
- -----------------------------------------------
Account Policies 24
- -----------------------------------------------
Shareholder Services 26
- -----------------------------------------------
Distribution Policies and Taxes 27
- -----------------------------------------------
Fund Details 28
- -----------------------------------------------
Financial Highlights 30
- -----------------------------------------------
For Additional Information Back Cover
- -----------------------------------------------
</TABLE>
<PAGE>

Overview

Centurion Funds, Inc. (the "Company") is a no-load mutual fund complex with
four separate diversified investment portfolios (each a "Fund"). The Funds are
designed for professional money managers and knowledgeable investors who
intend to invest in the Funds as part of a strategic or tactical asset alloca-
tion investment strategy. The Funds are not designed to be stand-alone invest-
ment vehicles, but rather, are to be used with certain other investments to
provide a balance to the risks inherent in those investments.

Only investors who have entered into an investment management agreement with
certain registered investment advisers ("Investment Professionals") and have a
custodial relationship with Centurion Trust Company ("Centurion") are cur-
rently eligible to buy shares of the Funds. Investment Professionals provide
investors asset allocation recommendations with respect to the Funds and other
mutual funds based on an evaluation of an investor's investment goals, risk
preferences and investment time horizons. The Funds were developed to afford
Investment Professionals ready access to certain strategies designed to facil-
itate their management of the risks inherent in allocating their clients'
assets among other available investment options. Fees paid to Investment Pro-
fessionals for their services are in addition to the operating expenses of the
Funds discussed in this Prospectus. Investors should consult their Investment
Professional if in doubt about their fees.

Centurion currently serves as custodial agent for investors who are eligible
to invest in the Funds. Centurion also serves as investment manager to each of
the four Funds that make up the Company. Centurion has engaged the following
sub-adviser(s) to manage all or a portion of a Fund's portfolio according to
its investment goal and strategies:

Centurion U.S. Equity Fund
. Parametric Portfolio Associates ("Parametric")

. Credit Suisse Asset Management, LLC ("CSAM")

Centurion International Equity Fund
. Friends Ivory & Sime, Inc. ("FISI")

. CSAM

Centurion U.S. Contra Fund

. CSAM

Centurion International Contra Fund

. CSAM

Investment in the Funds involves special risks, some not traditionally asso-
ciated with mutual funds. Investors should carefully review and evaluate these
risks when considering an investment in the Funds. None of the Funds alone
constitutes a balanced investment plan.

1
<PAGE>

Risk/Return Summary

Investment Goals and Principal Strategies

Each Fund has adopted its own investment goal and employs certain strategies
that result in its own risk/reward profile. Because you can lose money by
investing in these Funds, be sure to read all risk disclosure carefully before
investing.

Fund / Risk Factors Investment Goal / Principal Strategies
- --------------------------------------------------------------------------------

Centurion U.S. Equity Fund Seeks to provide long-term after-tax
growth consistent with reasonable efforts
. Market Risk to preserve capital.

. Tracking Error Risk . Parametric seeks to provide investment
returns that, over the long term, corre-
spond to the performance of the Russell
In order to achieve the Fund's 3000(R) Index (the "Russell Index").
investment goal, Centurion has
selected two sub-advisers, Para- . Parametric invests primarily in common
metric and CSAM, to conduct the stocks and other equity securities of
Fund's investment program. U.S. issuers with total market capital-
izations greater than $1 billion at the
time of purchase.

. Parametric utilizes certain strategies
designed to minimize the impact of taxes
on investors' returns.

. CSAM uses certain hedging techniques
designed to protect against or otherwise
cushion price declines in the value of
the Fund's portfolio.
- --------------------------------------------------------------------------------
Centurion Int'l Equity Fund
Seeks to provide long-term growth consis-
. Foreign Securities Risk tent with reasonable efforts to preserve
capital.

. Market Risk . FISI seeks to provide investment returns
that, over the long term, correspond to
. Tracking Error Risk the performance of the Morgan Stanley
Capital International Europe, Australa-
sia, Far East (EAFE(R)) Index (the "EAFE
In order to achieve the Fund's Index").
investment goal, Centurion has
selected two sub-advisers, FISI . FISI invests primarily in common stocks
and CSAM, to conduct the Fund's and other equity securities of non-U.S.
investment program. issuers with total market capitaliza-
tions greater than $1 billion at the
time of purchase.

2
<PAGE>

Risk/Return Summary (continued)

Fund / Risk Factors Investment Goal / Principal Strategies
- --------------------------------------------------------------------------------

. CSAM uses certain hedging techniques
designed to project against or otherwise
cushion price declines in the value of
the Fund's portfolio.
- --------------------------------------------------------------------------------
Centurion U.S. Contra Fund Seeks to provide protection against
declines in the value of the U.S. equity
. Available Information Risk allocation of certain assets custodied
with Centurion (the "U.S. Equity Bench-
. Derivatives Risk mark").

. Exposure Risk
. Centurion advises CSAM of the level and
. Market Risk nature of the downside protection
desired for the U.S. Equity Benchmark
. Portfolio Turnover Rate Risk and CSAM, using statistical and quanti-
tative analysis, selects the specific
. Regulatory Risk investments designed to provide this
protection.

. Trading Halt Risk

. Centurion and CSAM intend to pursue the
In order to achieve the Fund's Fund's investment goal regardless of
investment goal, Centurion has market conditions and will not invest
selected CSAM to assist it in the Fund's portfolio, in the aggregate,
conducting the Fund's investment in anticipation of rising U.S. equity
program. prices.

. CSAM trades primarily in (i) options on
securities and stock indexes, (ii) stock
index futures contracts, (iii) options
on stock index futures contracts and
(iv) Dow Jones Industrial Average Model
New Depositary Shares ("DIAMONDS") and
Standard & Poor's Depositary Receipts
("SPDRs").
- --------------------------------------------------------------------------------

3
<PAGE>

Risk/Return Summary (continued)

Fund / Risk Factors Investment Goal / Principal Strategies
- -------------------------------------------------------------------------------

Centurion Int'l Contra Fund Seeks to provide protection against
declines in the value of the non-U.S.
. Available Information Risk equity allocation of certain assets
custodied with Centurion (the "Interna-
. Derivatives Risk tional Equity Benchmark").

. Exposure Risk
. Centurion advises CSAM of the level and
. Foreign Securities Risk nature of the downside protection
desired for the International Equity
. Market Risk Benchmark and CSAM, using statistical
and quantitative analysis, selects the
. Portfolio Turnover Rate Risk specific investments designed to provide
this protection.

. Regulatory Risk
. Centurion and CSAM intend to pursue the
. Trading Halt Risk Fund's investment goal regardless of
market conditions and will not invest
the Fund's portfolio, in the aggregate,
In order to achieve the Fund's in anticipation of rising international
investment goal, Centurion has equity prices.
selected CSAM to assist it in
conducting the Fund's investment
program. . CSAM engages in forward currency con-
tracts and trades primarily in (i)
options on securities, currencies and
stock indexes, (ii) stock index futures
contracts, (iii) options on stock index
futures contracts and (iv) World Equity
Benchmark Shares ("WEBS").
- -------------------------------------------------------------------------------

The Russell Index is an unmanaged index composed of the 3000 largest U.S.
publicly traded stocks, as determined by market capitalization. The EAFE Index
is a broadly diversified international index composed of the equity securities
of approximately 1,000 companies located outside the United States. Please
read "Fund Details--Benchmark Information" for more information about these
securities indexes.

None of the Funds will invest 25% or more of its total assets in the securi-
ties of one or more issuers conducting their principal business activities in
the same industry, except that, to the extent the benchmarks of the Centurion
U.S. Equity Fund or the Centurion International Equity Fund are concentrated
in a particular industry, these Funds will be concentrated in that industry.
This limitation does not apply to investments or obligations of the U.S. Gov-
ernment or any of its agencies or instrumentalities.

4
<PAGE>

Risk/Return Summary (continued)

A Word About Risk

The principal risks of investing in the Funds are discussed below. Before
you invest, please make sure you understand the risks that apply to your Fund.
As with any mutual fund, there is no guarantee that you will make money over
any period of time and you could lose money by investing in a Fund. All
investments involve some level of risk. Simply defined, risk is the possibil-
ity that you may lose money and not make money.

Investments in the Funds are not bank deposits. They are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other govern-
ment agency.

Available Information Risk. Because the mutual funds held by Centurion's
clients are not required to report their securities holdings to Centurion,
Centurion may be unable to determine current market exposure of the U.S.
Equity Benchmark and the International Equity Benchmark, and thus may have
imperfect knowledge of the exact risks to be hedged.

Derivatives Risk. A Fund's use of options, futures and options on futures
("derivatives") involves additional risks and transaction costs, such as, (i)
adverse changes in the value of these instruments, (ii) imperfect correlation
between the price of derivatives and movements in the price of the underlying
securities, index or futures contracts, (iii) the fact that use of derivatives
requires different skills than those needed to select portfolio securities,
and (iv) the possible absence of a liquid secondary market for a particular
derivative at any moment in time.

Exposure Risk. Certain investments (such as options and futures) and certain
practices may have the effect of magnifying declines as well as increases in a
Fund's net asset value. Losses from buying and selling futures can be unlimit-
ed.

Foreign Securities Risk. Foreign securities markets generally have less
trading volume and less liquidity than U.S. markets. Investments in foreign
countries also involve a risk of local political, economic or social instabil-
ity. Additionally, fluctuations in the exchange rates between the U.S. dollar
and foreign currencies may negatively affect an investment. Adverse changes in
exchange rates may erode or reverse any gains produced by foreign currency-
denominated investments and may widen any losses.

Market Risk. The market value of a security may move up and down, sometimes
rapidly and unpredictably. Stock markets tend to move in cycles, with periods
of rising stock prices and periods of falling stock prices. These fluctuations
may cause a security to be worth less than the price originally paid for it,
or less than it was worth at an earlier time. Market risk may affect a single
issuer, industry, sector of the economy or the market as a whole. Market risk
is common to

5
<PAGE>

Risk/Return Summary (continued)

most investments, including stocks and bonds, and the mutual funds that invest
in them.

Portfolio Turnover Rate Risk. The Company anticipates that investors that
are part of a tactical or strategic asset allocation strategy may frequently
redeem or exchange shares of the Centurion U.S. Contra Fund and/or the Centu-
rion International Contra Fund, which will cause these Funds to experience
higher portfolio turnover. A higher portfolio turnover rate may result in the
Funds paying more brokerage commissions and generating greater tax liabilities
for shareholders. Additionally, high portfolio turnover may adversely affect
the ability of the Funds to meet their investment goals.

Regulatory Risk. Positions in futures and related options will be entered
into only to the extent they constitute permissible positions for a Fund
according to applicable rules of the Commodity Futures Trading Commission. At
times, a Fund may be constrained in its ability to use futures, options on
futures or other derivatives by an unanticipated inability to close positions
when it would be most advantageous to do so. Additionally, to the extent that
a Fund engages in futures and related options for other than "bona fide" hedg-
ing purposes, aggregate initial margin and premiums required to establish
these positions may not exceed 5% of the Fund's net asset value.

Tracking Error Risk. Factors such as Fund expenses, imperfect correlation
between a Fund's investments and those of its benchmark, rounding of share
prices, changes to the benchmark, and regulatory policies may affect the Cen-
turion U.S. Equity Fund and the Centurion International Equity Fund's ability
to provide investment returns that correspond to the performance of their
respective benchmarks. Additionally, because these Funds may at times sell
securities at a loss in order to reduce the Funds' capital gains distribu-
tions, these Funds should not be expected to achieve perfect correlation. The
magnitude of any tracking error may be affected by a higher portfolio turnover
rate.

Trading Halt Risk. Certain major exchanges on which options and futures con-
tracts are traded, such as the Chicago Mercantile Exchange, have established
limits on how much an option or futures contract may decline over various time
periods within a day. If an option or futures contract's price declines more
than the established limits, trading on the exchange is halted on that instru-
ment. If a trading halt occurs before the close of a trading day, a Fund may
not be able to purchase or sell options or futures contracts. In such an
event, the Fund also may be required to use a "fair-value" method to price its
outstanding contracts.

6
<PAGE>

Risk/Return Summary (continued)

Performance

Centurion U.S. Equity Fund

Risk return bar chart

This bar chart shows the performance of the fund's common shares since
inception through December 31, 1999, and, in the future, will show changes in
the fund's performance from year to year. Past performance does not necessarily
indicate how the fund will perform in the future.

Total Return for Common Shares

[Bar Chart Appears Here]

1999 11.80%

Calendar year ended December 31

Quarterly returns:

Highest: 11.15% in 4th quarter 1999; Lowest: (4.59)% in 3rd quarter 1999

Risk return table

This table compares the average annual total return of the Fund for the
periods shown with that of the Russell 3000(R) Index, a broad-based unmanaged
market capitalization-weighted measure of the 3000 largest U.S. publicly traded
stocks. This table assumes the redemption of shares at the end of the period
and the reinvestment of distributions and dividends.

Average Annual Total Returns

Calendar Year Ended December 31, 1999

<TABLE>
<S> <C> <C> <C>
Inception Date 1 year Since Inception
U.S. Equity Fund 12/07/98 11.80% 14.57%
Russell 3000(R) Index * 20.90% 20.90%
</TABLE>

* Index Comparison begins on December 31, 1998

7
<PAGE>

Risk/Return Summary (continued)

Centurion International Equity Fund

Risk return bar chart

This bar chart shows the performance of the fund's common shares since incep-
tion through December 31, 1999, and, the future, will show changes in the
fund's performance from year to year. Past performance does not necessarily
indicate how the fund will perform in the future.

Total Return for Common Shares

[Bar Chart Appears Here]

1999 30.30%

Calendar year ended December 31

Quarterly returns:

Highest: 24.84% in 4th quarter 1999; Lowest: 0.10% in 1st quarter 1999

Risk return table

This table compares the average annual total return of the Fund for the peri-
ods shown with that of the EAFE(R) Index, a broad-based unmanaged market capi-
talization-weighted measure of the 1,000 companies located outside the United
States. This table assumes the redemption of shares at the end of the period
and the reinvestment of distributions and dividends.

Average Annual Total Returns

Calendar Year Ended December 31, 1999

<TABLE>
<S> <C> <C> <C>
Inception Date 1 year Since Inception
International Equity Fund 12/07/98 30.30% 31.56%
EAFE(R) Index * 26.96% 26.96%
</TABLE>

* Index Comparison begins on December 31, 1998

8
<PAGE>

Risk/Return Summary (continued)

Centurion U.S. Contra Fund

Risk return bar chart

This bar chart shows the performance of the fund's common shares since incep-
tion through December 31, 1999, and, in the future, will show changes in the
fund's performance from year to year. Past performance does not necessarily
indicate how the fund will perform in the future.

Total Return for Common Shares

[Bar Chart Appears Here]

1999 (48.38%)

Calendar year ended December 31

Quarterly returns:

Highest: 11.36% in 3rd quarter 1999; Lowest: (36.42)% in 4th quarter 1999

Risk return table

This table compares the average annual total return of the Fund for the peri-
ods shown with that of the S&P 500 Index, a broad-based unmanaged market capi-
talization-weighted measure of the 500 widely held common stocks. This table
assumes the no sales load redemption of shares at the end of the period and the
reinvestment of distributions and dividends.

Average Annual Total Returns

Calendar Year Ended December 31, 1999

<TABLE>
<S> <C> <C> <C>
Inception Date 1 year Since Inception
U.S. Contra Fund 12/07/98 (48.38)% (49.77)%
S&P 500 Index * 19.53 19.53
</TABLE>

* Index Comparison begins on December 31, 1998

9
<PAGE>

Risk/Return Summary (continued)

Centurion International Contra Fund

Performance Information and Financial Highlights are not available for this
fund as there are no shares outstanding.

Investor Expenses

Fee Table

As an investor, you pay certain fees and expenses in connection with each
Fund, which are described in the table below. "Shareholder Fees" are paid from
your account. "Annual Fund Operating Expenses" are paid out of Fund assets, so
their effect is included in the share price. "Annual Fund Operating Expense"
figures are for the fiscal period ended September 30, 1999.

<TABLE>
<CAPTION>
Centurion Centurion
Centurion U.S. International Centurion U.S. International
Equity Fund Equity Fund Contra Fund Contra Fund
- -------------------------------------------------------------------------------------------------
Shareholder Fees
(paid directly from your investment)
<S> <C> <C> <C> <C>
Sales charge (load) on
purchases None None None None
Deferred sales charge
(load) None None None None
Redemption fees None None None None
- -------------------------------------------------------------------------------------------------
<CAPTION>
Annual Fund Operating Expenses
(deducted from Fund assets)
<S> <C> <C> <C> <C>
Management fee 0.75% 0.75% 1.20% 1.20%
Distribution and service
(12b-1) fees None None None None
Other expenses* 0.70% 0.71% 0.82% 0.82%
- -------------------------------------------------------------------------------------------------
Total Annual Fund
Operating Expenses** 1.45% 1.46% 2.02% 2.02%***
- -------------------------------------------------------------------------------------------------
</TABLE>

* "Other expenses" are based on actual amounts for each Fund's first full
fiscal period.

** "Total annual fund operating expenses" do not reflect fee waivers and
expense reimbursements. Centurion has voluntarily agreed to reduce or
otherwise limit its "Management fee" for the Centurion U.S. Contra Fund as
described below until further notice. Centurion is under no obligation to
continue these waivers. Actual fees and expenses for the fiscal period
ended September 30, 1999 are show below:

<TABLE>
<CAPTION>
Total Annual
Management Fees Fund Operating Expenses
--------------- -----------------------
<S> <C> <C>
Centurion U.S. Contra Fund .68% 1.50%
</TABLE>

*** Total annual fund operating expenses have been estimated based on expenses
incurred by the Centurion U.S. Contra Fund because no shares were
outstanding for the fiscal period ended September 30, 1999.

10
<PAGE>

Investor Expenses (continued)

Expense Examples

This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example, however,
is only hypothetical and your actual costs may be higher or lower.

The example assumes that you invest $10,000 in a Fund for the time periods
indicated and 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 Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year: 3 Years: 5 Years: 10 Years:
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Centurion U.S. Equity Fund $148 $459 $ 792 $1,735
Centurion International Equity Fund $149 $462 $ 797 $1,746
Centurion U.S. Contra Fund $205 $634 $1,088 $2,348
Centurion International Contra Fund $205 $634 $1,088 $2,348
- ---------------------------------------------------------------------------
</TABLE>

Centurion U.S. Equity Fund

Goal and Strategies

The Fund seeks to provide long-term after-tax growth consistent with reason-
able efforts to preserve capital. The Fund is sub-advised by Parametric, which
manages approximately 90% of the Fund's assets, and CSAM, which manages the
remaining 10% of the Fund's assets. This allocation of the Fund's assets
between Parametric and CSAM may vary from time to time. The Fund's investment
goal may be changed by the Board of Directors without shareholder approval.

Parametric seeks to provide investment returns that, over the long term,
correspond to the performance of the Russell Index. Parametric invests in
domestic companies that it believes are undervalued and demonstrate long-term
revenue and earnings growth potential. In evaluating companies for purchase,
Parametric uses a proprietary quantitative model that ranks companies based on
long-term price appreciation potential through analysis of such factors as
growth of sustainable earnings and dividend behavior.

Parametric utilizes certain strategies designed to minimize the impact of
taxes on investors' returns. The Fund seeks to minimize portfolio turnover in
order to defer the realization, and minimize the distribution, of capital
gains. Parametric considers the negative tax impact of realizing capital gains
and the positive tax impact of realizing capital losses when deciding whether
to sell portfolio securities. Parametric may, when appropriate, sell securi-
ties in order to realize capital losses. Realized capital losses can be used
to offset realized capital gains and thus reduce the Fund's

11
<PAGE>

Centurion U.S. Equity Fund (continued)

capital gains distributions. Additionally, Parametric will attempt to sell
shares on which it has the highest cost basis in order to minimize capital
gains distributions.

CSAM uses certain hedging techniques designed to protect against or otherwise
cushion price declines in the value of the Fund's portfolio. Because of the
nature of the investments made by CSAM on behalf of the Fund, CSAM's trading
could have an impact on Fund performance that is proportionately greater than
the portion of Fund assets it manages.

Portfolio Investments

To achieve its investment goal, the Fund intends to invest at least 80% of
its assets in common stocks and other equity securities of U.S. issuers with
total market capitalizations greater than $1 billion at the time of purchase.
Normally, the Fund invests substantially all of its assets in equity securi-
ties, including:

. common stocks;
. securities convertible into common stocks; and
. securities such as rights and warrants, whose values are based on common
stocks.

Additionally, in an attempt to provide downside protection for the Fund's
portfolio, CSAM will trade in:

. options on securities and stock indexes;
. stock index futures contracts; and
. options on stock index futures contracts.

As a cash reserve, for liquidity purposes or as "cover" for positions it has
taken, the Fund may temporarily invest all or part of the Fund's assets in cash
or cash equivalents. The Fund may also invest in preferred stocks and non-con-
vertible debt securities such as bonds, debentures and notes, and engage, to a
limited extent, in other investment practices in order to achieve its invest-
ment goal.

Risk Factors

The Fund is subject to the following principal risk factors (discussed in the
Fund's "Risk/Return Summary"):

. Market Risk . Tracking Error Risk

Because the Fund seeks to provide attractive after-tax returns it may not
provide as high a return before taxes as other funds with similar investment
strategies that do not consider these tax implications. As such, investors who
are not subject to

12
<PAGE>

Centurion U.S. Equity Fund (continued)

current income tax should consider whether the Fund's investment strategies, in
view of its tax-sensitive policies, are appropriate for their needs.

The value of your investment in the Fund will tend to increase during times
when the value of the securities in the Russell Index is increasing. When the
value of the securities in the Russell Index decreases, however, the value of
your investment in the Fund should decrease as well. In both instances, the
investment techniques employed by CSAM on behalf of the Fund are designed to
reduce the amount of these increases and decreases. To the extent that the Fund
invests in certain securities, the Fund may be affected by additional risks as
discussed in "More About Risk." Please read "More About Risk" carefully before
you invest in the Fund.

Centurion International Equity Fund

Goal and Strategies

The Fund seeks to provide long-term growth consistent with reasonable efforts
to preserve capital. The Fund is sub-advised by FISI, which manages approxi-
mately 90% of the Fund's assets, and CSAM, which manages the remaining 10% of
the Fund's assets. This allocation of the Fund's assets between FISI and CSAM
may vary from time to time. The Fund's investment goal may be changed by the
Board of Directors without shareholder approval.

FISI seeks to provide investment returns that, over the long term, correspond
to the performance of the EAFE Index. FISI invests in companies located outside
the United States that it believes demonstrate long-term revenue and earnings
growth potential. In evaluating companies for purchase, FISI conducts extensive
financial screening and follows up with in-depth company analysis. FISI will
allocate the Fund's assets in countries that are broadly in line with the coun-
try allocation of the EAFE Index, but may at times adjust the Fund's country
allocation towards those countries that it believes will produce superior eco-
nomic growth.

13
<PAGE>

Centurion International Equity Fund (continued)

Portfolio Investments

To achieve its investment goal, the Fund intends to invest at least 80% of
its assets in common stocks and other equity securities of non-U.S. issuers
with total market capitalizations greater than $1 billion at the time of pur-
chase. Normally, the Fund invests substantially all of its assets in equity
securities, including:

. common stocks;
. securities convertible into common stocks; and
. securities such as rights and warrants, whose values are based on common
stocks.

Additionally, in an attempt to provide downside protection for the Fund's
portfolio, CSAM will trade in:

. options on securities, currencies and stock indexes;
. stock index futures contracts; and
. options on stock index futures contracts; and engage in
. forward currency contracts.

Risk Factors

The Fund is subject to the following principal risk factors (discussed in the
Fund's "Risk/Return Summary"):

. Foreign Securities Risk . Market Risk
. Tracking Error Risk

The value of your investment in the Fund will tend to increase during times
when the value of the securities in the EAFE Index is increasing. When the
value of the securities in the EAFE Index decreases, however, the value of your
investment in the Fund should decrease as well. In both instances, the invest-
ment techniques employed by CSAM on behalf of the Fund are designed to reduce
the amount of these increases and decreases. To the extent that the Fund
invests in certain securities, the Fund may be affected by additional risks as
discussed in "More About Risk." Please read "More About Risk" carefully before
you invest in the Fund.

14
<PAGE>

Centurion U.S. Contra Fund

Goal and Strategies

The Fund seeks to provide protection against declines in the value of the
U.S. equity allocation of certain assets custodied with Centurion (the "U.S.
Equity Benchmark"). This investment goal may be changed by the Board of Direc-
tors without shareholder approval.

Centurion analyzes the various mutual funds held by certain of its clients
(the "Custodied Funds"), as well as the portfolio securities of these funds.
Centurion performs its analysis based on information provided by the Custodied
Funds and/or, because these funds are not required to report their securities
holdings to Centurion, by reviewing the historic securities holdings of the
Custodied Funds as described in public documents (which are required to be made
available at least semi-annually within 60 days after the close of the applica-
ble reporting period). Based on the information available, Centurion attempts
to determine the composition of the U.S. Equity Benchmark, including the rela-
tive proportion of the underlying assets maintained in various asset classes,
geographic locations and industries, in order to advise CSAM, the Fund's sub-
adviser, of the level and nature of the downside protection specifically
desired for the U.S. Equity Benchmark at any moment in time. CSAM then uses
statistical and quantitative analysis to select investments designed to provide
protection against declines in the performance of the U.S. Equity Benchmark.

Centurion and CSAM intend to pursue the Fund's investment goal regardless of
market conditions and will not invest the Fund's portfolio, in the aggregate,
in anticipation of rising U.S. equity prices.

Portfolio Investments

To achieve its investment goal, the Fund intends to use the following
instruments:
. options on securities and stock indexes;
. stock index futures contracts;
. options on stock index futures contracts; and
. DIAMONDS and SPDRs (securities issued by investment companies holding a
portfolio of securities that is intended to track the performance and
dividend yield of the Dow Jones Industrial Average and the S&P 500 Index,
respectively).

To the extent that the Fund invests in DIAMONDS or SPDRs, the Fund will indi-
rectly bear its proportionate share of the expenses of the underlying invest-
ment vehicle issuing these instruments. The Fund's investments in securities of
other investment companies, such as DIAMONDS or SPDRs, are subject to limita-
tions under the Investment Company Act of 1940.

15
<PAGE>

Centurion U.S. Contra Fund (continued)

As a cash reserve, for liquidity purposes or as "cover" for positions it has
taken, the Fund may temporarily invest all or part of the Fund's assets in cash
or cash equivalents. The Fund may also engage, to a limited extent, in other
investment practices in order to achieve its investment goal.

Risk Factors

The Fund is subject to the following principal risk factors (discussed in the
Fund's "Risk/Return Summary"):

. Available Information Risk . Exposure Risk
. Trading Halt Risk
. Portfolio Turnover Rate Risk
. Market Risk
. Derivatives Risk

. Regulatory Risk

The value of your investment in the Fund is designed to increase during times
when the value of the U.S. Equity Benchmark is decreasing. Conversely, when the
value of the U.S. Equity Benchmark increases, the value of your investment in
the Fund should decrease. To the extent that the Fund invests in certain secu-
rities, the Fund may be affected by additional risks as discussed in "More
About Risk." Please read "More About Risk" carefully before you invest in the
Fund.

Centurion International Contra Fund

Goal and Strategies

The Fund seeks to provide protection against declines in the value of the
non-U.S. equity allocation of certain assets custodied with Centurion (the "In-
ternational Equity Benchmark"). This investment goal may be changed by the
Board of Directors without shareholder approval.

Centurion analyzes the various mutual funds held by certain of its clients
(the "Custodied Funds"), as well as the portfolio securities of these funds.
Centurion performs its analysis based on information provided by the Custodied
Funds and/or, because these funds are not required to report their securities
holdings to Centurion, by reviewing the historic securities holdings of the
Custodied Funds as described in public documents (which are required to be made
available at least semi-annually within 60 days after the close of the applica-
ble reporting period). Based on the information available, Centurion attempts
to determine the composition of the International Equity Benchmark, including
the relative proportion of the underlying assets maintained in various asset
classes, geographic locations and industries, in order to advise CSAM, the
Fund's sub-adviser, of the level and nature of the

16
<PAGE>

Centurion International Contra Fund (continued)

downside protection specifically desired for the International Equity Benchmark
at any moment in time. CSAM then uses statistical and quantitative analysis to
select investments designed to provide protection against declines in the per-
formance of the International Equity Benchmark.

Portfolio Investments

To achieve its investment goal, the Fund intends to use the following
instruments:

. options on securities, currencies and stock indexes;
. stock index futures contracts;
. options on stock index futures contracts;
. WEBS (securities of an investment company designed to replicate the per-
formance of a particular foreign equity market index); and
. forward currency contracts.

To the extent that the Fund invests in WEBS, the Fund will indirectly bear
its proportionate share of the expenses of the underlying investment vehicle
issuing these instruments. The Fund's investments in securities of other
investment companies, such as WEBS, are subject to limitations under the
Investment Company Act of 1940.

As a cash reserve, for liquidity purposes or as "cover" for positions it has
taken, the Fund may temporarily invest all or part of the Fund's assets in cash
or cash equivalents. The Fund may also engage, to a limited extent, in other
investment practices in order to achieve its investment goal.

Risk Factors

The Fund is subject to the following principal risk factors (discussed in the
Fund's "Risk/Return Summary"):

. Available Information Risk . Market Risk
. Derivatives Risk . Portfolio Turnover Rate Risk
. Exposure Risk . Regulatory Risk
. Foreign Securities Risk . Trading Halt Risk

17
<PAGE>

Centurion International Contra Fund (continued)

The value of your investment in the Fund is designed to increase during
times when the value of the International Equity Benchmark is decreasing. Con-
versely, when the value of the International Equity Benchmark increases, the
value of your investment in the Fund should decrease. To the extent that the
Fund invests in certain securities, the Fund may be affected by additional
risks as discussed in "More About Risk." Please read "More About Risk" care-
fully before you invest in the Fund.

More About Risk

Generally

A Fund's risk profile is largely defined by the Fund's investment goal and
principal strategies. You will find a concise description of each Fund's risk
profile in "Risk/Return Summary." The Fund-by-Fund discussions contain more
detailed information about each Fund.

The Funds may use certain investment practices that have higher risks and
opportunities associated with them. However, each Fund has limitations and
policies designed to reduce these risks. To the extent a Fund utilizes these
securities or practices, its overall performance may be affected, either posi-
tively or negatively.

Types of Investment Risk

Correlation Risk. The risk that changes in the value of a hedging instrument
will not match those of the investment being hedged. Hedging is the use of one
investment to offset the effects of another. Incomplete correlation can result
in unanticipated risks.

Credit Risk. The risk that the issuer of a security, or the counterparty to
a contract, will default or otherwise become unable to honor a financial obli-
gation.

Early Closing Risk. The risk that unanticipated early closings of securities
exchanges will result in a Fund being unable to sell or buy securities on that
day. If an exchange closes early on a day when a Fund needs to execute a high
volume of securities trades late in a trading day, the Fund might incur sub-
stantial trading losses.

Information Risk. The risk that key information about an issuer, security or
market is inaccurate or unavailable.

Interest Rate Risk. The risk of a decline in an investment's market value
attributable to changes in interest rates. With bonds and other fixed income
securities, a rise in interest rates typically causes a fall in values, while
a fall in interest rates typically causes a rise in values.

18
<PAGE>

More About Risk (continued)

Liquidity Risk. The risk that certain securities may be difficult or impossi-
ble to sell at the time and the price that the seller would like. The seller
may have to lower the price, sell other securities instead or forego an invest-
ment opportunity. Any of these could have a negative effect on Fund management
or performance.

Management Risk. The risk that a strategy used by a Fund may fail to produce
the intended result. This risk is common to all mutual funds.

Natural Event Risk. The risk of losses attributable to natural disasters and
similar events.

Opportunity Risk. The risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in other
investments.

Political Risk. The risk of losses attributable to government or political
instability, such as changes in tax or trade statutes, nationalization, expro-
priation, currency blockage or governmental collapse and war.

Valuation Risk. The risk that a Fund has valued certain of its securities at
a higher price that it can sell them for.

Year 2000 Risk. The inability of a computer system to distinguish the year
2000 from the year 1900 (the "Year 2000 Issue") could cause difficulties for
system users after December 31, 1999. Although this date has passed, the impact
of the failure by companies or foreign markets in which the Funds invest to
address the Year 2000 Issue effectively could continue to be felt into 2000 and
may negatively impact a Fund's performance.

19
<PAGE>

Management

About the Board of Directors

The Board of Directors of the Company supervises each Fund's business
affairs. The Board approves all significant agreements between a Fund and the
Fund's service providers.

About the Investment Advisers

The Investment Manager. The Board has selected Centurion, located at 2425
East Camelback Road, Suite 530, Phoenix, AZ 85016-4200, to serve as investment
manager to the Funds. As investment manager to the Funds, Centurion is respon-
sible for:

. managing the day-to-day operations and business activities of the Funds;

. determining the level and nature of the downside protection desired for
the U.S. Contra Fund and the International Contra Fund;

. evaluating and selecting qualified investment sub-advisers to manage each
Fund's assets according to its investment goal and strategies;

. monitoring the activities of the Funds' sub-advisers; and

. providing office space and equipment.

Centurion, an independent trust company organized under the laws of the State
of Arizona in 1994, is exempt from registration under the Investment Advisers
Act of 1940. With more than $1 billion of assets under management and adminis-
tration as of September 30, 1999, Centurion and its affiliates provide a full
range of custodial, investment and trust products and services to their custom-
ers.

The Sub-Advisers. Centurion has engaged the following sub-adviser(s) to man-
age all or a portion of a Fund's portfolio according to its investment goal and
strategies:

- --------------------------------------------------------------------------------
Centurion U.S.
Equity Fund . Parametric Portfolio Associates, located at 7310
Columbia Center, 701 Fifth Avenue, Seattle, WA 98104-
7090, is an investment management firm organized as a
general partnership. PIMCO Advisors, L.P., a publicly
traded investment management organization, is
Parametric's supervisory partner and Parametric Man-
agement Inc. is the partnership's managing partner.
Parametric Portfolio Associates, Inc., the predeces-
sor company, commenced operations in 1987. Accounts
managed by Parametric had combined assets of
approximately $4.0 billion
as of September 30, 1999.

. Credit Suisse Asset Management, LLC. ("CSAM")
located at One Citicorp Center, 153 East 53rd Street,
New York, NY 10022, is a limited liability company
that is

20
<PAGE>

Management (continued)

wholly-owned by Credit Suisse Group, the second largest
Swiss bank. CSAM is a diversified investment adviser
managing global equity, fixed income and derivative
securities accounts for corporate pension and profit-
sharing plans, state pension funds, union funds, endow-
ments and other charitable institutions. Together with
its predecessor firms, CSAM has been engaged in the
investment advisory business for over 60 years. As of
September 30, 1999, CSAM managed approximately $59 bil-
lion in assets.

- -------------------------------------------------------------------------------
Centurion Int'l
Equity Fund . Friends Ivory & Sime, Inc., located at One World
Trade Center, Suite 2101, New York, NY 10048-0080, is
an investment management firm organized in 1978. FISI
has entered into a sub-advisory arrangement with
Friends Ivory & Sime plc ("Friends"), its parent com-
pany, whereby Friends will perform certain investment
advisory and portfolio transaction services for the
Fund. Friends, located at 15 Old Bailey, London,
England EC4M7AP, is one of the leading independent
investment managers in the United Kingdom. As of Sep-
tember 30, 1999, FISI and its affiliates managed
approximately $57 billion, including approximately
$35 billion of global equity and equity-related
investments.

. CSAM. See above.

- -------------------------------------------------------------------------------
Centurion U.S.
Contra Fund . CSAM, See above.

- -------------------------------------------------------------------------------
Centurion Int'l
Contra Fund . CSAM. See above.

- -------------------------------------------------------------------------------

Management Fees. For services provided to the Funds, each Fund pays Centu-
rion the annual investment management fee described below (based on a percent-
age of the Fund's average daily net assets):

Centurion U.S.
Equity Fund:
0.75% of the first $25 million of the average daily
net assets of the Fund and 0.70% of the amount in
excess of $25 million

Centurion Int'l
Equity Fund:
0.75% of the first $50 million of the average daily
net assets of the Fund, 0.725% of the next $50 million
and 0.70% of the amount in excess of $100 million

21
<PAGE>

Management (continued)

Centurion U.S.
Contra Fund:
1.20%

Centurion Int'l
Contra Fund:
1.20%

From this amount, Centurion pays each sub-adviser an annual sub-advisory fee
for its services to the Fund. None of the Funds are responsible for payment of
the annual sub-advisory fee.

SSB Citi Fund Management LLC ("SSB Citi") acts as the Funds' administrator
for which each Fund pays a fee at an annual rate of 0.20% of the respective
Funds'average daily net assets. SSB Citi also receives a fee for consulting
services at an annual rate of 0.05% of each Fund's average daily net assets.

Meet the Managers

Each portfolio manager or advisory committee indicated below is primarily
responsible for the day-to-day management of the Fund.

- -------------------------------------------------------------------------------
Centurion U.S. . (Parametric) David Stein, Managing Director and Chief
Equity Fund Investment Officer, and Thomas Seto, Vice President,
have served as co-portfolio managers since the Fund's
inception. Prior to joining Parametric in 1996, Mr.
Stein was the Director of Investment Research at GTE
Investment Management from 1995 to 1996. Before then,
Mr. Stein served as the Director of Active Equity
Strategies at the Vanguard Group and the Director of
Quantitative Portfolio Management and Research at IBM
Retirement Funds.

. (CSAM) CSAM utilizes a team of portfolio managers,
assistant portfolio managers and analysts acting
together to manage the Fund (the "CSAM Committee").
The CSAM Committee--which consists of Jeffrey A.
Geller, Executive Director, Nelson Louie, Vice Presi-
dent, Waiman Leung, Vice President, and Anthony
Antonucci, Assistant Vice President--has served as
portfolio manager since the Fund's inception.

Jeffrey A. Geller, Managing Director, is head of risk
tailored strategies. He joined in 1978 as a member of
the research group and currently manages the Risk Tai-
lored Strategy group. In addition he is an options and
futures portfolio manager, as well as a member of the
Management Committee.

22
<PAGE>

Management (continued)

Anthony J. Antonucci, Vice President, is responsible
for the implementation, monitoring and execution of
equity derivative strategies. He joined CSAM in 1994.

Christian T. Lee is an Assistant Vice President of CSAM
and researches trading opportunities by designing and
programming analytical tools for currency and equity
markets. He oversees operational and accounting issues.
He joined CSAM in 1996.

Waiman Leung is a Vice President of CSAM and is respon-
sible for implementing, monitoring and executing equity
derivative strategies. He joined CSAM in 1994.

Nelson Louie is an Assistant Vice President of CSAM and
is responsible for all exchange-traded futures analysis
and execution. He joined CSAM in 1993.

- -------------------------------------------------------------------------------
Centurion Int'l
Equity Fund . (FISI) Julie Dent, Director of Global Equities at
Friends, has served as portfolio manager since the
Fund's inception. Ms. Dent, who joined Friends in 1986,
has extensive experience in research and investing in
Asian markets, and has been involved in country asset
allocation for the past seven years.

. (CSAM) The CSAM Committee (discussed above under "U.S.
Equity Fund") has served as portfolio manager since the
Fund's inception.

- -------------------------------------------------------------------------------
Centurion U.S.
Contra Fund . (CSAM) The CSAM Committee (discussed above under "U.S.
Equity Fund") has served as portfolio manager since the
Fund's inception.

- -------------------------------------------------------------------------------
Centurion Int'l
Contra Fund . (CSAM) The CSAM Committee (discussed above under "U.S.
Equity Fund") has served as portfolio manager since the
Fund's inception.

- -------------------------------------------------------------------------------

Account Policies

Pricing of Shares

You pay no sales charges on initial or subsequent investments in the Funds.
Your price for Fund shares is the Fund's net asset value ("NAV") per share,
which is generally calculated at the later of the close of regular trading on
the New York Stock Exchange (typically 4 p.m. Eastern time) or the time for
settlement of

23
<PAGE>

Account Policies (continued)

the Funds' options and futures contracts, if any (typically 4:15 p.m. Eastern
time), each day the Exchange is open for business. Your purchase order will be
priced at the next NAV calculated after your order is accepted by the Fund.
Your redemption request will be priced at the next NAV calculated after the
Fund receives the request in proper form.

Options and futures contracts purchased and held by a Fund are valued at the
close of the securities or commodities exchanges on which they are traded (typ-
ically 4:15 p.m. Eastern time). Stock index options will be valued at the last
price, but if that price does not fall within the bid and ask price for the
stock index option when the market closes at 4:15 p.m. Eastern Time, then the
stock index option will be valued at the mean between the bid and asked quota-
tions. These times are referred to as "Valuation Times." Each Fund values its
securities based on market value or, where market quotations are not readily
available or are believed not to reflect market value at Valuation Times, based
on fair value as determined in good faith using consistently applied procedures
established by the Fund's Board. Debt obligations that will mature in 60 days
or less are valued on the basis of amortized cost, unless the Board determines
that using this method would not reflect the investments' value.

Some Fund securities may be listed on foreign exchanges that are open on days
(such as Saturdays) when the Funds do not compute their prices. This could
cause the value of a Fund's portfolio investments to be affected by trading on
days when you cannot buy or sell shares.

Buying Shares

Currently, only investors who have entered into an investment management
agreement with an Investment Professional and have a custodial relationship
with Centurion are eligible to buy shares of the Funds. Investment Profession-
als may charge fees for their services in addition to the expenses charged by
the Funds and may set different minimum investments or limitations on buying or
selling shares than those described below. Investors should consult their
Investment Professional if in doubt.

Minimum Initial Investment: $2,500

Minimum Subsequent Investment: $250

All investments must be in U.S. dollars. Third-party checks cannot be accept-
ed. You may be charged a fee for any check that does not clear. In its discre-
tion, subject to review by the Board, Centurion may waive the above minimum
investment requirements.

24
<PAGE>

Account Policies (continued)

Selling Shares

When selling shares, your order will be processed promptly and you will gen-
erally receive the proceeds within a week. Before selling recently purchased
shares, please note that if the Fund has not yet collected payment for the
shares you are selling, it may delay sending the proceeds for up to eight
business days.

Some circumstances require written sell orders, along with signature guaran-
tees. These include:

. amounts of $100,000 or more;

. amounts of $1,000 or more on accounts whose address has been changed
within the last 30 days; or

. requests to send the proceeds to a different payee or address.

A signature guarantee helps protect against fraud. You can obtain one from
most banks or securities dealers, but not from a notary public. Please call us
to ensure that your signature guarantee will be processed correctly.

General Policies

If your account falls below $2,000, the Fund may ask you to increase your
balance. If it still remains below $2,000 after 60 days, the Fund may close
your account and send you the proceeds.

Unless you decline telephone privileges on your application, you may be
responsible for any fraudulent telephone order as long as the Fund takes rea-
sonable measures to verify the order.

Each Fund reserves the right to:

. refuse any purchase or exchange request that could adversely affect the
Fund or its operations, including those from any individual or group who,
in the Fund's view, is likely to engage in excessive trading;

. refuse any purchase or exchange request in excess of 1% of the Fund's
total assets;

. change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions;

. change its minimum investment amounts;

. delay sending out redemption proceeds for up to seven days if doing so
sooner would adversely affect the Fund (generally applies only in cases
of very large redemptions, excessive trading or during unusual market
conditions); and

. make a "redemption in kind" (payment in portfolio securities rather than
cash) if the amount you are redeeming is large enough to affect Fund
operations.

25
<PAGE>

Shareholder Services

Exchange Privilege

You can exchange $2,500 or more from one Fund into another (no minimum for
retirement accounts). You can request your exchange in writing or by phone. Be
sure to read the Fund description in this Prospectus for any Fund into which
you are exchanging. Any new account established through an exchange will have
the same privileges as your original account (as long as they are available).
No fee is currently charged on exchanges.

Telephone Privilege

To move money between your bank account and your Fund account with a phone
call, use the telephone privilege. You can set up this privilege on your
account by providing bank account information and following the instructions on
your application.

Account Statements

You will automatically receive regular account statements. You will also be
sent a yearly statement detailing the tax characteristics of any dividends and
distributions you have received.

Distribution Policies and Taxes

Distributions

As a Fund investor, you will receive distributions.

Each Fund earns dividends from stocks and interest from bond, money market
and other investments. These are passed along as dividend distributions. A Fund
realizes capital gains whenever it sells securities for a higher price than it
paid for them. These are passed along as capital gains distributions, a portion
of which may be taxable to you as ordinary income.

Each Fund declares and pays its net income and capital gains annually. A
Fund's capital gains are usually distributed in November or December.

When you open an account, specify on your account application how you want to
receive your distributions. Most investors have their distributions reinvested
in additional shares of the same Fund. Distributions will be automatically
reinvested unless you choose on your account application to have your distribu-
tions mailed to you by check or sent by electronic transfer.

For retirement accounts, all distributions are automatically reinvested. When
you are over 59 1/2 years old, you can receive distributions in cash.

26
<PAGE>

Distribution Policies and Taxes (continued)

Taxes

As with any investment, you should consider how your investment in a Fund
will be taxed. Unless your account is an IRA or other tax-advantaged account,
you should be aware of the potential tax implications. Please consult your tax
professional concerning your own tax situation.

Taxes on Distributions. As long as a Fund continues to meet the requirements
for being a tax-qualified regulated investment company, it pays no federal
income tax on the earnings it distributes to shareholders.

Consequently, distributions you receive from a Fund, whether reinvested or
taken in cash, are generally considered taxable. Distributions from a Fund's
long-term capital gains are taxed as long-term capital gains regardless of how
long you have held Fund shares; distributions from other sources are generally
taxed as ordinary income.

Some dividends paid in January may be taxable as if they had been paid the
previous December. If you buy shares shortly before or on the "record date"
(the date that establishes you as the person to receive the upcoming distribu-
tion) you will receive a portion of the money you just invested in the form of
a taxable distribution.

If you fail to provide your correct taxpayer identification number on your
application, or you have been notified by the IRS that you are subject to
backup withholding, the Funds may withhold 31% of all distributions to you for
federal taxes. In the case of an individual, your taxpayer identification num-
ber is your social security number.

The form 1099 that is mailed to you every January details your distributions
and their federal tax category, including the portion taxable as long-term cap-
ital gains.

Taxes on Transactions. Any time you sell or exchange shares, it is considered
a taxable event for you. Depending on the purchase price and the sale price of
the shares you sell or exchange, you may have a gain or loss on the transac-
tion. You are responsible for any tax liabilities generated by your transac-
tions.

Fund Details

About the Distributor

CFBDS, Inc. serves as the distributor for the Company and is responsible for
making shares of the Funds available to you. The distributor provides share-
holder and distribution services to Fund shareholders at no charge.

27
<PAGE>

Fund Details (continued)

About the Administrator and Consultant

SSB Citi serves as the administrator for the
Company and is responsible for overseeing all aspects of the Company's adminis-
tration and operations. SSB Citi provides investment management and administra-
tion services to investment companies that had aggregate assets under manage-
ment, as of October 31, 1999, over $114 billion.

Salomon Smith Barney Inc. ("SSB"), an affiliate of SSB Citi, provides con-
sulting services to the Funds through its Consulting Group. As a consultant,
SSB furnishes statistical and other factual information to the Funds, as well
as advice regarding general economic factors and market trends.

Benchmark Information

None of the Funds is sponsored, endorsed, sold or promoted by Frank Russell
Company ("Frank Russell"), Standard & Poor's ("S&P") or Morgan Stanley, Dean
Witter & Co. ("Morgan Stanley"), which own service mark rights to the Russell
Index, S&P and EAFE Index, respectively. Neither Frank Russell nor Morgan Stan-
ley make any representation or warranty, implied or express, to investors in
the Funds, or any member of the public, regarding the advisability of investing
in the Funds or the ability of the Russell Index or the EAFE Index, respective-
ly, to track general stock market performance.

28
<PAGE>

Financial Highlights

The financial highlights tables are intended to help you understand the per-
formance of each Fund since inception. Certain information reflects financial
results for a single share. Total return represents the rate that a share-
holder would have earned (or lost) on a fund share assuming reinvestment of
all dividends and distributions. The information in the following tables was
audited by KPMG LLP, independent accountants, whose report, along with each
Fund's financial statements, are included in the annual report (available upon
request). No information is present for the Centurion International Contra Fund
because no shares were present during the period shown.

<TABLE>
<CAPTION>
U.S. Equity Fund(1)(2)
- ------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
- ------------------------------------------------
Income (Loss) From Operations:
Net investment loss (0.01)
Net realized and unrealized gain 0.41
- ------------------------------------------------
Total Income From Operations 0.40
- ------------------------------------------------
Less Distributions From:
Net investment income --
- ------------------------------------------------
Total Distributions --
- ------------------------------------------------
Net Asset Value, End of Period $10.40
- ------------------------------------------------
Total Return(3) 4.00%
- ------------------------------------------------
Net Assets, End of Period (000s) $32,328
- ------------------------------------------------
Ratios to Average Net Assets(4):
Expenses 1.45%
Net investment loss (0.14)
- ------------------------------------------------
Portfolio Turnover Rate 89%
- ------------------------------------------------
</TABLE>

(1) For the period from December 7, 1998 (inception date) to September 30,
1999.

(2) Per share amounts have been calculated using the monthly average shares
method.

(3)Total return is not annualized, as it may not be representative of the
total return for the year.

(4)Annualized.

29
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
International Equity Fund(1)(2)
- ------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
- ------------------------------------------------
Income From Operations:
Net investment income 0.04
Net realized and unrealized gain 0.69
- ------------------------------------------------
Total Income From Operations 0.73
- ------------------------------------------------
Less Distributions From:
Net investment income --
- ------------------------------------------------
Total Distributions --
- ------------------------------------------------
Net Asset Value, End of Period $10.73
- ------------------------------------------------
Total Return (3) 7.30%
- ------------------------------------------------
Net Assets, End of Period (000s) $31,418
- ------------------------------------------------
Ratios to Average Net Assets (4):
Expenses 1.46%
Net investment income 0.51
- ------------------------------------------------
Portfolio Turnover Rate 102%
- ------------------------------------------------
</TABLE>

(1) For the period from December 7, 1998 (inception date) to September 30,
1999.

(2) Per share amounts have been calculated using the monthly average shares
method.

(3) Total return is not annualized, as it may not be representative of the
total return for the year.

(4) Annualized.

30
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
U.S. Contra Fund(1)(2)
- -------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.00
- -------------------------------------------------
Income (Loss) From Operations:
Net investment income(3) 0.17
Net realized and unrealized loss (2.62)
- -------------------------------------------------
Total Loss From Operations (2.45)
- -------------------------------------------------
Less Distributions From:
Net investment income --
- -------------------------------------------------
Total Distributions --
- -------------------------------------------------
Net Asset Value, End of Period $7.55
- -------------------------------------------------
Total Return(4) (24.50)%
- -------------------------------------------------
Net Assets, End of Period (000s) $28,593
- -------------------------------------------------
Ratios to Average Net Assets(5):
Expenses(3)(6) 1.50%
Net investment income (loss) 2.57
- -------------------------------------------------
Portfolio Turnover Rate 0%
- -------------------------------------------------
</TABLE>

(1) For the period from December 7, 1998 (inception date) to September 30,
1999.

(2) Per share amounts have been calculated using the monthly average shares
method.

(3) The manager has waived a portion of its fees for the period ended September
30, 1999. If such fees were not waived, the per share effect on net
investment income and the expense ratio would have been as follows:
<TABLE>
<CAPTION>
Per Share Decrease Expense Ratio
in Net Investment Income Without Fee Waiver
------------------------ ------------------
<S> <C> <C>
U.S. Contra Fund $0.03 2.02%(5)(6)
</TABLE>

(4) Total return is not annualized, as it may not be representative of the
total return for the year.

(5) Annualized.

(6) As a result of a voluntary expense limitation, the expense ratio for the
U.S. Contra Fund will not exceed 1.50%.

31
<PAGE>

(This page is intentionally left blank.)
<PAGE>

For Additional Information

More information about the Funds is available free upon request, including
the following:

Annual/Semiannual Report to Shareholders

These reports include financial statements, portfolio investments and
detailed performance information. The annual report also provides a discussion
of the market conditions and investment strategies that significantly affected
Fund performance during the last fiscal year and includes the independent
accountants' report.

Statement of Additional Information ("SAI")

The SAI provides more details about the Funds and their investments. A cur-
rent SAI has been filed with the SEC and is incorporated by reference (is
legally considered part of this Prospectus).

Please contact the Company to obtain more information about the Funds,
inquire about your account or request a free copy of the current annual/semi-
annual report or SAI:

. By telephone: 800-451-2010

. By mail: Centurion Funds, Inc.
2425 East Camelback Road, Suite 530
Phoenix, AZ 85016-4200

You can also obtain copies of the SAI and other information about the Funds
from your Investment Professional.

You may visit the SEC's Internet Website (www.sec.gov) to view the SAI, mate-
rial incorporated by reference and other information. You can also obtain cop-
ies of this information by sending your request and a duplicating fee to the
SEC's Public Reference Section, Washington, D.C. 20549-6009 or by sending your
request electronically at [email protected]. You may review and copy informa-
tion about the Funds, including the SAI, at the SEC's Public Reference Room in
Washington, D.C. To find out more about the public reference room, call the SEC
at 1-800-SEC-0330.

- --------------------------------------------------------------------------------

Sub-advisers:
Investment Manager:
Centurion Trust Company Credit Suisse Asset Management
LLC
2425 E. Camelback Rd., Suite 530 One Citicorp Center, 153 E.
Phoenix, AZ 85016-4200 53rd St.
New York, NY 10022
Administrator:
Friends Ivory & Sime, Inc.
SSB Citi Fund Management LLC One World Trade Center, Suite
388 Greenwich St. 2101
New York, NY 10013
New York, NY 10048-0080
Transfer Agent:
Parametric Portfolio Associates
PFPC Global Fund Services 7310 Columbia Center
Exchange Place
Boston, MA 02109 701 Fifth Avenue
Seattle, WA 98104-7090
Custodians:
Independent Accountant:
PNC Bank, National Association
17th and Chestnut Streets
KPMG LLP
Philadelphia, PA 19103 Distributor: 345 Park Ave.
New York, NY 10154
CFBDS, Inc.
The Chase Manhattan Bank 21 Milk St., 5th
4 Chase MetroTech Center Flr. Counsel:
Brooklyn, NY 11245 Boston, MA 02109 Willkie Farr & Gallagher

787 Seventh Avenue
New York, NY 10019-6099

SEC File No. 811-8977

PART B

STATEMENT OF ADDITIONAL INFORMATION

January 28, 2000

CENTURION FUNDS, INC.
__________________________
Centurion U.S. Equity Fund
Centurion International Equity Fund
Centurion U.S. Contra Fund
Centurion International Contra Fund
__________________________
Contents
Page
Organization of the Company 2
Investment Goals and Policies 2
Management of the Funds 26
Additional Purchase and Redemption Information 31
Exchange Privilege 31
Additional Information Concerning Taxes 31
Determination of Performance 37
Principal Stockholders 39
Other Information 39
Financial Statements 40
Appendix ? Description of Ratings A
This Statement of Additional Information is meant to be read
in conjunction with the Prospectus for Centurion Funds, Inc. (the
"Company") dated January 28, 2000, as amended or supplemented from
time to time (the "Prospectus"), and is incorporated by reference
in its entirety into the Prospectus. The Company currently
consists of four separately managed portfolios: Centurion U.S.
Equity Fund (the "U.S. Equity Fund"), Centurion International
Equity Fund (the "International Equity Fund"), Centurion U.S.
Contra Fund (the "U.S. Contra Fund") and Centurion International
Contra Fund (the "International Contra Fund") (together, the
"Funds," and each, a "Fund"). Because this Statement of
Additional Information is not itself a prospectus, no investment
in shares of a Fund should be made solely upon the information
contained herein. Copies of the Prospectus and information
regarding the Funds' current performance and the status of
shareholder accounts may be obtained by calling the Company at
(800) 451-2010 or by writing to the Company at 2425 East Camelback
Road, Phoenix, Arizona 85016-4200.
ORGANIZATION OF THE COMPANY
The Company is a diversified open-end management investment
company that was organized as a corporation on August 20, 1998
under the laws of the State of Maryland. The Company's Charter
authorizes the Board of Directors (the "Board") to issue
500,000,000 full and fractional shares of capital stock, $.001 par
value, of which 100,000,000 shares are designated a series called
the "Centurion U.S. Equity Fund," 100,000,000 shares are
designated a series called the "Centurion International Equity
Fund," 150,000,000 shares are designated a series called the
"Centurion U.S. Contra Fund," and 150,000,000 shares are
designated a series called the "Centurion International Contra
Fund."
INVESTMENT GOALS AND POLICIES
As stated in the Prospectus, the investment goal of the U.S.
Equity Fund is to provide long-term after-tax growth consistent
with reasonable efforts to preserve capital. The investment goal
of the International Equity Fund (together with the U.S. Equity
Fund, the "Equity Funds") is to provide long-term growth
consistent with reasonable efforts to preserve capital. The
investment goal of the U.S. Contra Fund is to provide protection
against declines in the value of the U.S. equity allocation of
certain assets custodied with Centurion Trust Company
("Centurion"). The investment goal of the International Contra
Fund is to provide protection against declines in the value of the
non-U.S. equity allocation of certain assets custodied with
Centurion. The following information supplements the discussion
of each Fund's investment goal and policies in the Prospectus.
There are no assurances that a Fund will achieve its investment
goal.
Centurion serves as investment manager to each Fund.
Centurion has engaged Parametric Portfolio Associates
("Parametric") and Credit Suisse Asset Management LLC ("CSAM") as
sub-advisers to the U.S. Equity Fund, Friends Ivory & Sime, Inc.
("FISI") and CSAM as sub-advisers to the International Equity
Fund, and CSAM as sub-adviser to both the U.S. Contra Fund and the
International Contra Fund (together, the "Contra Funds"). The term
"Adviser," as used in this Statement of Additional Information,
shall refer to Centurion, Parametric, FISI and/or CSAM, as
applicable.
Options, Futures and Currency Exchange Transactions
Securities Options. Each Fund may write covered call
options on stock and debt securities and may purchase U.S.
exchanged-traded and over-the counter ("OTC") put and call
options.
A Fund realizes fees (referred to as "premiums") for
granting the rights evidenced by the options it has written. A
put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an
underlying security at a specified price for a specified time
period or at a specified time. In contrast, a call option
embodies the right of its purchaser to compel the writer of the
option to sell to the option holder an underlying security at a
specified price for a specified time period or at a specified
time.
The principal reason for writing covered options on a
security is to attempt to realize, through the receipt of
premiums, a greater return than would be realized on the securi-
ties alone. In return for a premium, a Fund as the writer of a
covered call option forfeits the right to any appreciation in the
value of the underlying security above the strike price for the
life of the option (or until a closing purchase transaction can be
effected). Nevertheless, a Fund as a call writer retains the risk
of a decline in the price of the underlying security. The size of
the premiums that a Fund may receive may be adversely affected as
new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.
In the case of options written by a Fund that are deemed
covered by virtue of the Fund's holding convertible or
exchangeable preferred stock or debt securities, the time required
to convert or exchange and obtain physical delivery of the
underlying common stock with respect to which the Fund has written
options may exceed the time within which the Fund must make
delivery in accordance with an exercise notice. In these
instances, a Fund may purchase or temporarily borrow the
underlying securities for purposes of physical delivery. By so
doing, a Fund will not bear any market risk, since the Fund will
have the absolute right to receive from the issuer of the
underlying security an equal number of shares to replace the
borrowed securities, but the Fund may incur additional transaction
costs or interest expenses in connection with any such purchase or
borrowing.
Additional risks exist with respect to certain of the
securities for which a Fund may write covered call options. For
example, if a Fund writes covered call options on mortgage-backed
securities, the mortgage-backed securities that it holds as cover
may, because of scheduled amortization or unscheduled prepayments,
cease to be sufficient cover. If this occurs, a Fund will
compensate for the decline in the value of the cover by purchasing
an appropriate additional amount of mortgage-backed securities.
Options written by a Fund will normally have expiration
dates between one and twelve months from the date written. The
exercise price of the options may be below, equal to or above the
market values of the underlying securities at the times the
options are written. In the case of call options, these exercise
prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively. A Fund may write (i)
in-the-money call options when the Adviser expects that the price
of the underlying security will remain flat or decline moderately
during the option period, (ii) at-the-money call options when the
Adviser expects that the price of the underlying security will
remain flat or advance moderately during the option period and
(iii) out-of-the-money call options when the Adviser expects that
the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the
exercise price will be greater than the appreciation in the price
of the underlying security alone. In any of the preceding
situations, if the market price of the underlying security
declines and the security is sold at this lower price, the amount
of any realized loss will be offset wholly or in part by the
premium received. To secure its obligation to deliver the
underlying security when it writes a call option, a Fund will be
required to deposit in escrow the underlying security or other
assets in accordance with the rules of the Options Clearing
Corporation (the "Clearing Corporation") and of the securities
exchange on which the option is written.
Prior to their expirations, put and call options may be sold
in closing sale or purchase transactions (sales or purchases by a
Fund prior to the exercise of options that it has purchased or
written, respectively, of options of the same series) in which a
Fund may realize a profit or loss from the sale. An option
position may be closed out only where there exists a secondary
market for an option of the same series on a recognized securities
exchange or in the over-the-counter market. When a Fund has
purchased an option and engages in a closing sale transaction,
whether the Fund realizes a profit or loss will depend upon
whether the amount received in the closing sale transaction is
more or less than the premium the Fund initially paid for the
original option plus the related transaction costs. Similarly, in
cases where a Fund has written an option, it will realize a profit
if the cost of the closing purchase transaction is less than the
premium received upon writing the original option and will incur a
loss if the cost of the closing purchase transaction exceeds the
premium received upon writing the original option. A Fund may
engage in a closing purchase transaction to realize a profit, to
prevent an underlying security with respect to which it has
written an option from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby
permitting its sale or the writing of a new option on the security
prior to the outstanding option's expiration). The obligation of
a Fund under an option it has written would be terminated by a
closing purchase transaction, but the Fund would not be deemed to
own an option as a result of the transaction. So long as the
obligation of a Fund as the writer of an option continues, the
Fund may be assigned an exercise notice by the broker-dealer
through which the option was sold, requiring the Fund to deliver
the underlying security against payment of the exercise price.
This obligation terminates when the option expires or a Fund
effects a closing purchase transaction. A Fund can no longer
effect a closing purchase transaction with respect to an option
once it has been assigned an exercise notice.
There is no assurance that sufficient trading interest will
exist to create a liquid secondary market on a securities exchange
for any particular option or at any particular time, and for some
options no such secondary market may exist. A liquid secondary
market in an option may cease to exist for a variety of reasons.
In the past, for example, higher than anticipated trading activity
or order flow or other unforeseen events have at times rendered
certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on
certain types of orders or trading halts or suspensions in one or
more options. There can be no assurance that similar events, or
events that may otherwise interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be
possible to effect closing transactions in particular options.
Moreover, a Fund's ability to terminate options positions
established in the over-the-counter market may be more limited
than for exchange-traded options and may also involve the risk
that securities dealers participating in over-the-counter
transactions would fail to meet their obligations to the Fund.
Each Fund, however, intends to purchase over-the-counter options
only from dealers whose debt securities, as determined by the
Adviser, are considered to be investment grade. If, as a covered
call option writer, a Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the
underlying security upon exercise. In either case, a Fund would
continue to be at market risk on the security and could face
higher transaction costs, including brokerage commissions.
Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class which
may be held or written, or exercised within certain time periods
by an investor or group of investors acting in concert (regardless
of whether the options are written on the same or different
securities exchanges or are held, written or exercised in one or
more accounts or through one or more brokers). It is possible
that a Fund and other clients of the Adviser and certain of its
affiliates may be considered to be such a group. A securities
exchange may order the liquidation of positions found to be in
violation of these limits and it may impose certain other
sanctions. These limits may restrict the number of options a Fund
will be able to purchase on a particular security.
Stock Index Options. Each Fund may purchase and write
exchange-listed and OTC put and call options on stock indexes. A
stock index measures the movement of a certain group of stocks by
assigning relative values to the common stocks included in the
index, fluctuating with changes in the market values of the stocks
included in the index. Some stock index options are based on a
broad market index, such as the NYSE Composite Index, or a
narrower market index such as the Standard & Poor's 100. Indexes
may also be based on a particular industry or market segment.
Options on stock indexes are similar to options on stock
except that (i) the expiration cycles of stock index options are
monthly, while those of stock options are currently quarterly, and
(ii) the delivery requirements are different. Instead of giving
the right to take or make delivery of stock at a specified price,
an option on a stock index gives the holder the right to receive a
cash "exercise settlement amount" equal to (a) the amount, if any,
by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing
value of the underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this cash amount
will depend upon the closing level of the stock index upon which
the option is based being greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the index
and the exercise price of the option times a specified multiple.
The writer of the option is obligated, in return for the premium
received, to make delivery of this amount. Stock index options
may be offset by entering into closing transactions as described
above for securities options.
OTC Options. Each Fund may purchase OTC or dealer options
or sell OTC options. Unlike exchange-listed options where an
intermediary or clearing corporation, such as the Clearing
Corporation, assures that all transactions in such options are
properly executed, the responsibility for performing all
transactions with respect to OTC options rests solely with the
writer and the holder of those options. A listed call option
writer, for example, is obligated to deliver the underlying stock
to the clearing organization if the option is exercised, and the
clearing organization is then obligated to pay the writer the
exercise price of the option. If a Fund were to purchase a dealer
option, however, it would rely on the dealer from whom it
purchased the option to perform if the option were exercised. If
the dealer fails to honor the exercise of the option by a Fund,
the Fund would lose the premium it paid for the option and the
expected benefit of the transaction.
Listed options generally have a continuous liquid market
while dealer options have none. Consequently, a Fund will
generally be able to realize the value of a dealer option it has
purchased only by exercising it or reselling it to the dealer who
issued it. Similarly, when a Fund writes a dealer option, it
generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction
with the dealer to which the Fund originally wrote the option.
Although a Fund will seek to enter into dealer options only with
dealers who will agree to and that are expected to be capable of
entering into closing transactions with the Fund, there can be no
assurance that the Fund will be able to liquidate a dealer option
at a favorable price at any time prior to expiration. The
inability to enter into a closing transaction may result in
material losses to a Fund. Until a Fund, as a covered OTC call
option writer, is able to effect a closing purchase transaction,
it will not be able to liquidate securities (or other assets) used
to cover the written option until the option expires or is
exercised. This requirement may impair a Fund's ability to sell
portfolio securities or, with respect to currency options,
currencies at a time when such sale might be advantageous. In the
event of insolvency of the other party, a Fund may be unable to
liquidate a dealer option.
Futures Activities. Each Fund may enter into foreign
currency, interest rate and stock index futures contracts and
purchase and write (sell) related options traded on exchanges
designated by the Commodity Futures Trading Commission (the
"CFTC") or consistent with CFTC regulations on foreign exchanges.
These transactions may be entered into for "bona fide hedging"
purposes as defined in CFTC regulations and other permissible
purposes including hedging against changes in the value of
portfolio securities due to anticipated changes in currency
values, interest rates and/or market conditions and increasing
return.
A Fund will not enter into futures contracts and related
options for which the aggregate initial margin and premiums
(discussed below) required to establish positions other than those
considered to be "bona fide hedging" by the CFTC exceed 5% of the
Fund's net asset value after taking into account unrealized
profits and unrealized losses on any such contracts it has entered
into. Each Fund reserves the right to engage in transactions
involving futures contracts and options on futures contracts to
the extent allowed by CFTC regulations in effect from time to time
and in accordance with the Fund's policies. There is no overall
limit on the percentage of Fund assets that may be at risk with
respect to futures activities.
The over the counter market in forward foreign currency
exchange contracts offers less protection against defaults by the
other party to such instruments than is available for currency
instruments traded on an exchange. Such contracts are subject to
the risk that the counterparty to the contract will default on its
obligations. Since these contracts are not guaranteed by an
exchange or clearinghouse, a default on the contract would deprive
a Fund of unrealized profits, transaction costs or the benefits of
a currency hedge or force the Fund to cover its purchase or sale
commitments, if any, at the current market price. Currency
exchange rates may fluctuate significantly over short periods of
time. They generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of
investments in different countries, actual or perceived changes in
interest rates and other complex factors as seen from an
international perspective. Currency exchange rates also can be
affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad.
Futures Contracts. A foreign currency futures contract
provides for the future sale by one party and the purchase by the
other party of a certain amount of a specified non-U.S. currency
at a specified price, date, time and place. An interest rate
futures contract provides for the future sale by one party and the
purchase by the other party of a certain amount of a specific
interest rate sensitive financial instrument (debt security) at a
specified price, date, time and place. Stock indexes are
capitalization weighted indexes which reflect the market value of
the stock listed on the indexes. A stock index futures contract
is an agreement to be settled by delivery of an amount of cash
equal to a specified multiplier times the difference between the
value of the index at the close of the last trading day on the
contract and the price at which the agreement is made.
No consideration is paid or received by a Fund upon entering
into a futures contract. Instead, a Fund is required to deposit
in a segregated account with its custodian an amount of cash or
liquid securities acceptable to the broker, equal to approximately
1% to 10% of the contract amount (this amount is subject to change
by the exchange on which the contract is traded, and brokers may
charge a higher amount). This amount is known as "initial margin"
and is in the nature of a performance bond or good faith deposit
on the contract which is returned to a Fund upon termination of
the futures contract, assuming all contractual obligations have
been satisfied. The broker will have access to amounts in the
margin account if a Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the currency, financial
instrument or stock index underlying the futures contract
fluctuates, making the long and short positions in the futures
contract more or less valuable, a process known as
"marking-to-market." A Fund will also incur brokerage costs in
connection with entering into futures transactions.
At any time prior to the expiration of a futures contract, a
Fund may elect to close the position by taking an opposite
position, which will operate to terminate the Fund's existing
position in the contract. Positions in futures contracts and
options on futures contracts (described below) may be closed out
only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists.
Although each Fund intends to enter into futures contracts only if
there is an active market for such contracts, there is no
assurance that an active market will exist at any particular time.
Most futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the
daily limit has been reached in a particular contract, no trades
may be made that day at a price beyond that limit or trading may
be suspended for specified periods during the day. It is possible
that futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions at an
advantageous price and subjecting a Fund to substantial losses.
In such event, and in the event of adverse price movements, a Fund
would be required to make daily cash payments of variation margin.
In such situations, if a Fund had insufficient cash, it might have
to sell securities to meet daily variation margin requirements at
a time when it would be disadvantageous to do so. In addition, if
the transaction is entered into for hedging purposes, in such
circumstances a Fund may realize a loss on a futures contract or
option that is not offset by an increase in the value of the
hedged position. Losses incurred in futures transactions and the
costs of these transactions will affect a Fund's performance.
Options on Futures Contracts. Each Fund may purchase and
write put and call options on foreign currency, interest rate and
stock index futures contracts and may enter into closing
transactions with respect to such options to terminate existing
positions. There is no guarantee that such closing transactions
can be effected; the ability to establish and close out positions
on such options will be subject to the existence of a liquid
market.
An option on a currency, interest rate or stock index
futures contract, as contrasted with the direct investment in such
a contract, gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date
of the option. The writer of the option is required upon exercise
to assume an offsetting futures position (a short position if the
option is a call and a long position if the option is a put).
Upon exercise of an option, the delivery of the futures position
by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's
futures margin account, which represents the amount by which the
market price of the futures contract exceeds, in the case of a
call, or is less than, in the case of a put, the exercise price of
the option on the futures contract. The potential loss related to
the purchase of an option on futures contracts is limited to the
premium paid for the option (plus transaction costs). Because the
value of the option is fixed at the point of sale, there are no
daily cash payments by the purchaser to reflect changes in the
value of the underlying contract; however, the value of the option
does change daily and that change would be reflected in the net
asset value of the Fund.
Currency Exchange Transactions. The value in U.S. dollars
of the assets of a Fund that are invested in foreign securities
may be affected favorably or unfavorably by changes in exchange
control regulations, and the Fund may incur costs in connection
with conversion between various currencies. Currency exchange
transactions may be from any non-U.S. currency into U.S. dollars
or into other appropriate currencies. A Fund will conduct its
currency exchange transactions (i) on a spot (i.e., cash) basis at
the rate prevailing in the currency exchange market, (ii) through
entering into futures contracts or options on such contracts (as
described above), (iii) through entering into forward contracts to
purchase or sell currency or (iv) by purchasing exchange-traded
currency options.
Forward Currency Contracts. A forward currency contract
involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date
of the contract as agreed upon by the parties, at a price set at
the time of the contract. These contracts are entered into in the
interbank market conducted directly between currency traders
(usually large commercial banks and brokers) and their customers.
Forward currency contracts are similar to currency futures
contracts, except that futures contracts are traded on commodities
exchanges and are standardized as to contract size and delivery
date.
At or before the maturity of a forward contract, a Fund may
either sell a portfolio security and make delivery of the
currency, or retain the security and fully or partially offset its
contractual obligation to deliver the currency by negotiating with
its trading partner to purchase a second, offsetting contract. If
a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or a loss to the extent that
movement has occurred in forward contract prices.
Currency Options. Each Fund may purchase exchange-traded
put and call options on foreign currencies. Put options convey
the right to sell the underlying currency at a price which is
anticipated to be higher than the spot price of the currency at
the time the option is exercised. Call options convey the right
to buy the underlying currency at a price which is expected to be
lower than the spot price of the currency at the time the option
is exercised.
Currency Hedging. A Fund's currency hedging will be limited
to hedging involving either specific transactions or portfolio
positions in the aggregate. Transaction hedging is the purchase
or sale of forward currency with respect to specific receivables
or payables of a Fund generally accruing in connection with the
purchase or sale of its portfolio securities. Position hedging is
the sale of forward currency with respect to portfolio security
positions. A Fund may not position hedge to an extent greater
than the aggregate market value (at the time of entering into the
hedge) of the hedged securities.
A decline in the U.S. dollar value of a foreign currency in
which a Fund's securities are denominated will reduce the U.S.
dollar value of the securities, even if their value in the foreign
currency remains constant. The use of currency hedges does not
eliminate fluctuations in the underlying prices of the securities,
but it does establish a rate of exchange that can be achieved in
the future. For example, in order to protect against diminutions
in the U.S. dollar value of securities it holds, a Fund may
purchase currency put options. If the value of the currency does
decline, a Fund will have the right to sell the currency for a
fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on the U.S. dollar value of its
securities that otherwise would have resulted. Conversely, if a
rise in the U.S. dollar value of a currency in which securities to
be acquired are denominated is projected, thereby potentially
increasing the cost of the securities, a Fund may purchase call
options on the particular currency. The purchase of these options
could offset, at least partially, the effects of the adverse
movements in exchange rates. The benefit to a Fund derived from
purchases of currency options, like the benefit derived from other
types of options, will be reduced by premiums and other
transaction costs. Because transactions in currency exchange are
generally conducted on a principal basis, no fees or commissions
are generally involved. Currency hedging involves some of the
same risks and considerations as other transactions with similar
instruments. Although currency hedges limit the risk of loss due
to a decline in the value of a hedged currency, at the same time,
they also limit any potential gain that might result should the
value of the currency increase. If a devaluation is generally
anticipated, a Fund may not be able to contract to sell a currency
at a price above the devaluation level it anticipates.
While the values of currency futures and options on futures,
forward currency contracts and currency options may be expected to
correlate with exchange rates, they will not reflect other factors
that may affect the value of a Fund's investments and a currency
hedge may not be entirely successful in mitigating changes in the
value of the Fund's investments denominated in that currency. A
currency hedge, for example, should protect a Yen-denominated bond
against a decline in the Yen, but will not protect a Fund against
a price decline if the issuer's creditworthiness deteriorates.
Swaps. Each Fund may enter into swaps relating to indexes,
currencies and equity interests of foreign issuers. A swap
transaction is an agreement between a Fund and a counterparty to
act in accordance with the terms of the swap contract. Index
swaps involve the exchange by a Fund with another party of the
respective amounts payable with respect to a notional principal
amount related to one or more indexes. Currency swaps involve the
exchange of cash flows on a notional amount of two or more
currencies based on their relative future values. An equity swap
is an agreement to exchange streams of payments computed by
reference to a notional amount based on the performance of a
basket of stocks or a single stock. A Fund may enter into these
transactions to preserve a return or spread on a particular
investment or portion of its assets, to protect against currency
fluctuations, as a duration management technique or to protect
against any increase in the price of securities the Fund
anticipates purchasing at a later date. A Fund may also use these
transactions for speculative purposes, such as to obtain the price
performance of a security without actually purchasing the security
in circumstances, for example, the subject security is illiquid,
is unavailable for direct investment or available only on less
attractive terms. Swaps have risks associated with them including
possible default by the counterparty to the transaction,
illiquidity and, where swaps are used as hedges, the risk that the
use of a swap could result in losses greater than if the swap had
not been employed
A Fund will usually enter into swaps on a net basis (i.e.,
the two payment streams are netted out in a cash settlement on the
payment date or dates specified in the agreement, with the Fund
receiving or paying, as the case may be, only the net amount of
the two payments). Swaps do not involve the delivery of
securities, other underlying assets or principal. Accordingly,
the risk of loss with respect to swaps is limited to the net
amount of payments that a Fund is contractually obligated to make.
If the counterparty to a swap defaults, a Fund's risk of loss
consists of the net amount of payments that the Fund is
contractually entitled to receive. Where swaps are entered into
for good faith hedging purposes, the Adviser believes such
obligations do not constitute senior securities under the
Investment Company Act of 1940, as amended (the "1940 Act"), and,
accordingly, will not treat them as being subject to a Fund's
borrowing restrictions. Where swaps are entered into for other
than hedging purposes, a Fund will segregate an amount of cash or
liquid securities having a value equal to the accrued excess of
its obligations over entitlements with respect to each swap on a
daily basis.
Hedging. In addition to entering into options, futures and
currency exchange transactions for other purposes, including
generating current income to offset expenses or increase return, a
Fund may enter into these transactions as hedges to reduce
investment risk, generally by making an investment expected to
move in the opposite direction of a portfolio position. A hedge
is designed to offset a loss in a portfolio position with a gain
in the hedged position; at the same time, however, a properly
correlated hedge will result in a gain in the portfolio position
being offset by a loss in the hedged position. As a result, the
use of options, futures, contracts and currency exchange
transactions for hedging purposes could limit any potential gain
from an increase in the value of the position hedged. In
addition, the movement in the portfolio position hedged may not be
of the same magnitude as movement in the hedge. With respect to
futures contracts, since the value of portfolio securities will
far exceed the value of the futures contracts sold by a Fund, an
increase in the value of the futures contracts could only
mitigate, but not totally offset, the decline in the value of the
Fund's assets.
In hedging transactions based on an index, whether a Fund
will realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain
indexes, in an industry or market segment, rather than movements
in the price of a particular stock. The risk of imperfect
correlation increases as the composition of a Fund's portfolio
varies from the composition of the index. In an effort to
compensate for imperfect correlation of relative movements in the
hedged position and the hedge, a Fund's hedge positions may be in
a greater or lesser dollar amount than the dollar amount of the
hedged position. Such "over hedging" or "under hedging" may
adversely affect a Fund's net investment results if market
movements are not as anticipated when the hedge is established.
Stock index futures transactions may be subject to additional
correlation risks. First, all participants in the futures market
are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting
transactions which would distort the normal relationship between
the stock index and futures markets. Secondly, from the point of
view of speculators, the deposit requirements in the futures
market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the
futures market also may cause temporary price distortions.
Because of the possibility of price distortions in the futures
market and the imperfect correlation between movements in the
stock index and movements in the price of stock index futures, a
correct forecast of general market trends by the Adviser still may
not result in a successful hedging transaction.
A Fund will engage in hedging transactions only when deemed
advisable by the Adviser, and successful use by a Fund of hedging
transactions will be subject to the Adviser's ability to predict
trends in currency, interest rate or securities markets, as the
case may be, and to correctly predict movements in the directions
of the hedge and the hedged position and the correlation between
them, which predictions could prove to be inaccurate. This
requires different skills and techniques than predicting changes
in the price of individual securities, and there can be no
assurance that the use of these strategies will be successful.
Even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or trends. Losses incurred
in hedging transactions and the costs of these transactions will
affect a Fund's performance.
Asset Coverage for Forward Contracts, Options, Futures and
Options on Futures. Each Fund will comply with guidelines
established by the U.S. Securities and Exchange Commission (the
"SEC") with respect to coverage of forward currency contracts;
options written by a Fund on securities and indexes; and currency,
interest rate and index futures contracts and options on these
futures contracts. These guidelines may, in certain instances,
require segregation by a Fund of cash or liquid securities.
For example, a call option written by a Fund on securities
may require the Fund to hold the securities subject to the call
(or securities convertible into the securities without additional
consideration) or to segregate assets (as described above)
sufficient to purchase and deliver the securities if the call is
exercised. A call option written by a Fund on an index may
require the Fund to own portfolio securities that correlate with
the index or to segregate assets (as described above) equal to the
excess of the index value over the exercise price on a current
basis. A Fund could purchase a put option if the strike price of
that option is the same or higher than the strike price of a put
option sold by the Fund. If a Fund holds a futures or forward
contract, the Fund could purchase a put option on the same futures
or forward contract with a strike price as high or higher than the
price of the contract held. A Fund may enter into fully or
partially offsetting transactions so that its net position,
coupled with any segregated assets (equal to any remaining
obligation), equals its net obligation. Asset coverage may be
achieved by other means when consistent with applicable regulatory
policies.
Additional Information on Other Investment Practices
Foreign Investments. Investors should recognize that
investing in foreign companies involves certain risks, including
those discussed below, which are not typically associated with
investing in U.S. issuers.
Foreign Currency Exchange. Since a Fund may invest in
securities denominated in currencies other than the U.S. dollar,
and since a Fund may temporarily hold funds in bank deposits or
other money market investments denominated in foreign currencies,
a Fund may be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rate between such
currencies and the dollar. A change in the value of a foreign
currency relative to the U.S. dollar will result in a
corresponding change in the dollar value of Fund assets
denominated in that foreign currency. Changes in foreign currency
exchange rates may also affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and
net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S.
dollar and other currencies is determined by the forces of supply
and demand in the foreign exchange markets. Changes in the
exchange rate may result over time from the interaction of many
factors directly or indirectly affecting economic and political
conditions in the United States and a particular foreign country,
including economic and political developments in other countries.
Of particular importance are rates of inflation, interest rate
levels, the balance of payments and the extent of government
surpluses or deficits in the United States and the particular
foreign country, all of which are in turn sensitive to the
monetary, fiscal and trade policies pursued by the governments of
the United States and foreign countries important to international
trade and finance. Governmental intervention may also play a
significant role. National governments rarely voluntarily allow
their currencies to float freely in response to economic forces.
Sovereign governments use a variety of techniques, such as
intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of
their currencies. A Fund may use hedging techniques with the
objective of protecting against loss through the fluctuation of
the value of the yen against the U.S. dollar, particularly the
forward market in foreign exchange, currency options and currency
futures. See "Currency Exchange Transactions" and "Futures
Activities" above.
Information. There may be less publicly available
information about foreign securities and about the foreign company
or government issuing them than is available about a domestic
company or government entity. Foreign companies are generally not
subject to uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. companies.
Political Instability. With respect to some foreign
countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of funds or
other assets of a Fund, political or social instability, or
domestic developments which could affect U.S. investments in those
and neighboring countries.
Delays. Securities of some foreign companies are less
liquid and their prices are more volatile than securities of
comparable U.S. companies. Certain foreign countries are known to
experience long delays between the trade and settlement dates of
securities purchased or sold.
Foreign Debt Securities. The returns on foreign debt
securities reflect interest rates and other market conditions
prevailing in those countries and the effect of gains and losses
in the denominated currencies against the U.S. dollar, which have
had a substantial impact on investment in foreign fixed-income
securities. The relative performance of various countries' fixed-
income markets historically has reflected wide variations relating
to the unique characteristics of each country's economy. Year-to-
year fluctuations in certain markets have been significant, and
negative returns have been experienced in various markets from
time to time.
The foreign government securities in which a Fund may invest
generally consist of obligations issued or backed by national,
state or provincial governments or similar political subdivisions
or central banks in foreign countries. Foreign government
securities also include debt obligations of supranational
entities, which include international organizations designated or
backed by governmental entities to promote economic reconstruction
or development, international banking institutions and related
government agencies. Examples include the International Bank for
Reconstruction and Development (the "World Bank"), the European
Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
Foreign government securities also include debt securities
of "quasi-governmental agencies" and debt securities denominated
in multinational currency units of an issuer (including
supranational issuers). Debt securities of quasi-governmental
agencies are issued by entities owned by either a national, state
or equivalent government or are obligations of a political unit
that is not backed by the national government's full faith and
credit and general taxing powers.
General. Individual foreign economies may differ favorably
or unfavorably from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments positions. A
Fund may invest in securities of foreign governments (or agencies
or instrumentalities thereof), and many, if not all, of the
foregoing considerations apply to such investments as well.
Depositary Receipts. The assets of a Fund may be invested
in the securities of foreign issuers in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and International Depositary Receipts ("IDRs"). These
securities may not necessarily be denominated in the same currency
as the securities into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign
corporation. EDRs, which are sometimes referred to as Continental
Depositary Receipts, are receipts issued in Europe, and IDRs,
which are sometimes referred to as Global Depositary Receipts, are
issued outside the United States. EDRs and IDRs are typically
issued by non-U.S. banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally,
ADRs in registered form are designed for use in U.S. securities
markets and EDRs and IDRs in bearer form are designed for use in
European and non-U.S. securities markets, respectively.
U.S. Government Securities. Each Fund may invest in debt
obligations of varying maturities issued or guaranteed by the
United States government, its agencies or instrumentalities ("U.S.
Government Securities"). Direct obligations of the U.S. Treasury
include a variety of securities that differ in their interest
rates, maturities and dates of issuance. U.S. Government
Securities also include securities issued or guaranteed by the
Federal Housing Administration, Farmers Home Loan Administration,
Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association ("GNMA"),
General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation ("FHLMC"), Federal Intermediate Credit
Banks, Federal Land Banks, Federal National Mortgage Association
("FNMA"), Maritime Administration, Tennessee Valley Authority,
District of Columbia Armory Board and Student Loan Marketing
Association. A Fund may also invest in instruments that are
supported by the right of the issuer to borrow from the U.S.
Treasury and instruments that are supported by the credit of the
instrumentality. Because the U.S. government is not obligated by
law to provide support to an instrumentality it sponsors, a Fund
will invest in obligations issued by such an instrumentality only
if the Adviser determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable for
investment by the Fund.
Below Investment Grade Securities. The market values of
below investment grade securities and unrated securities of
comparable quality tend to react less to fluctuations in interest
rate levels than do those of investment grade securities and the
market values of certain of these securities also tend to be more
sensitive to individual corporate developments and changes in
economic conditions than below investment grade securities. In
addition, these securities generally present a higher degree of
credit risk. Issuers of these securities are often highly
leveraged and may not have more traditional methods of financing
available to them so that their ability to service their
obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. The risk of
loss due to default by such issuers is significantly greater
because below investment grade securities generally are unsecured
and frequently are subordinated to prior payment of senior
indebtedness.
A Fund may have difficulty disposing of certain of these
securities because there may be a thin trading market. Because
there is no established retail secondary market for many of these
securities, the Funds anticipate that these securities could be
sold only to a limited number of dealers or institutional
investors. To the extent a secondary trading market for these
securities does exist, it generally is not as liquid as the
secondary market for investment grade securities. The lack of a
liquid secondary market, as well as adverse publicity and investor
perception with respect to these securities, may have an adverse
impact on market price and a Fund's ability to dispose of
particular issues when necessary to meet liquidity needs or in
response to a specific economic event such as a deterioration in
the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more
difficult for a Fund to obtain accurate market quotations for
purposes of valuing the Fund and calculating net asset value.
The market value of securities rated below investment grade
is more volatile than that of investment grade securities.
Factors adversely impacting the market value of these securities
will adversely impact a Fund's net asset value. A Fund will rely
on the judgment, analysis and experience of the Adviser in
evaluating the creditworthiness of an issuer. In this evaluation,
the Adviser will take into consideration, among other things, the
issuer's financial resources, its sensitivity to economic
conditions and trends, its operating history, the quality of the
issuer's management and regulatory matters. Normally, below
investment grade securities and comparable unrated securities are
not intended for short-term investment. A Fund may incur
additional expenses to the extent it is required to seek recovery
upon a default in the payment of principal or interest on its
portfolio holdings of such securities.
Securities of Other Investment Companies. Each Fund may
invest in securities of other investment companies to the extent
permitted under the 1940 Act. Presently, under the 1940 Act, a
Fund may hold securities of another investment company in amounts
which (i) do not exceed 3% of the total outstanding voting stock
of such company, (ii) do not exceed 5% of the value of the Fund's
total assets and (iii) when added to all other investment company
securities held by the Fund, do not exceed 10% of the value of the
Fund's total assets.
DIAMONDS, SPDRs and WEBS ("Equity Equivalents"). DIAMONDS
("Dow Jones Industrial Average Model New Depositary Shares") and
SPDRs ("Standard & Poor's Depositary Receipts") are exchange-
traded securities that represent ownership in long-term unit
investment trusts established to accumulate and hold a portfolio
of common stocks that is intended to track the price performance
and dividend yield of the Dow Jones Industrial Average and the
Standard & Poor's Composite Stock Price Index, respectively. WEBS
("World Equity Benchmark Shares") are exchange-traded shares of
series of an investment company that are designed to replicate the
performance of a particular foreign equity market index.
Equity Equivalents may be used for several purposes,
including, to simulate full investment in the underlying index
while retaining a cash balance for fund management purposes, to
facilitate trading, to reduce transaction costs or to seek higher
investment returns where an Equity Equivalent is priced more
attractively than securities in the underlying index. Because the
expense associated with an investment in Equity Equivalents may be
substantially lower than the expense of small investments directly
in the securities comprising the indices they seek to track,
investments in Equity Equivalents may provide a cost-effective
means of diversifying a Fund's assets across a broad range of
equity securities.
To the extent a Fund invests in securities of other
investment companies, Fund shareholders would indirectly pay a
portion of the operating costs of such companies in addition to
the expenses of its own operation. These costs include
management, brokerage, shareholder servicing and other operational
expenses. Indirectly, then, shareholders of a Fund that invests
in Equity Equivalents may pay higher operational costs than if
they owned the underlying investment companies directly.
Additionally, a Fund's investments in such investment companies
are subject to limitations under the 1940 Act and market
availability.
The prices of Equity Equivalents are derived and based upon
the securities held by the particular investment company.
Accordingly, the level of risk involved in the purchase or sale of
an Equity Equivalent is similar to the risk involved in the
purchase or sale of traditional common stock, with the exception
that the pricing mechanism for such instruments is based on a
basket of stocks. The market prices of Equity Equivalents are
expected to fluctuate in accordance with both changes in the net
asset values of their underlying indices and the supply and demand
for the instruments on the exchanges on which they are traded.
Substantial market or other disruptions affecting an Equity
Equivalent could adversely affect the liquidity and value of the
shares of a Fund investing in such instruments.
Lending of Portfolio Securities. Each Fund may lend
portfolio securities to brokers, dealers and other financial
organizations that meet capital and other credit requirements or
other criteria established by the Board. These loans, if and when
made, may not exceed 33-1/3% of a Fund's total assets taken at
value. A Fund will not lend portfolio securities to affiliates of
the Adviser unless they have applied for and received specific
authority to do so from the SEC. Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S.
Government Securities, which are maintained at all times in an
amount equal to at least 102% of the current market value of the
loaned securities. Any gain or loss in the market price of the
securities loaned that might occur during the term of the loan
would be for the account of the Fund. From time to time, a Fund
may return a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a
third party that is unaffiliated with the Fund and that is acting
as a "finder."
By lending its securities, a Fund can increase its income by
continuing to receive interest and any dividends on the loaned
securities as well as by either investing the collateral received
for securities loaned in short-term instruments or obtaining yield
in the form of interest paid by the borrower when U.S. Government
Securities are used as collateral. Although the generation of
income is not the primary investment goal of the Funds, income
received could be used to pay a Fund's expenses and would increase
an investor's total return. Each Fund will adhere to the
following conditions whenever its portfolio securities are loaned:
(i) the Fund must receive at least 102% cash collateral or
equivalent securities of the type discussed in the preceding
paragraph from the borrower; (ii) the borrower must increase such
collateral whenever the market value of the securities rises above
the level of such collateral; (iii) the Fund must be able to
terminate the loan at any time; (iv) the Fund must receive
reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities and any
increase in market value; (v) the Fund may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights
on the loaned securities may pass to the borrower, provided,
however, that if a material event adversely affecting the
investment occurs, the Board must terminate the loan and regain
the right to vote the securities. Loan agreements involve certain
risks in the event of default or insolvency of the other party
including possible delays or restrictions upon a Fund's ability to
recover the loaned securities or dispose of the collateral for the
loan.
When-Issued Securities, Delayed-Delivery Transactions and
Forward Commitments. Each Fund may purchase securities on a
"when-issued" basis, for delayed delivery (i.e., payment or
delivery occur beyond the normal settlement date at a stated price
and yield) or on a forward commitment basis. Each Fund does not
intend to engage in these transactions for speculative purposes,
but only in furtherance of its investment goal. These
transactions occur when securities are purchased or sold by a Fund
with payment and delivery taking place in the future to secure
what is considered an advantageous yield and price to a Fund at
the time of entering into the transaction. The payment obligation
and the interest rate that will be received on when-issued
securities are fixed at the time the buyer enters into the
commitment. Due to fluctuations in the value of securities
purchased or sold on a when-issued, delayed-delivery basis or
forward commitment basis, the prices obtained on such securities
may be higher or lower than the prices available in the market on
the dates when the investments are actually delivered to the
buyers.
When a Fund agrees to purchase when-issued, delayed-delivery
securities or securities on a forward commitment basis, its
custodian will set aside cash or liquid securities equal to the
amount of the commitment in a segregated account. Normally, the
custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case a Fund may be required
subsequently to place additional assets in the segregated account
in order to ensure that the value of the account remains equal to
the amount of the Fund's commitment. The assets contained in the
segregated account will be marked-to-market daily. It may be
expected that a Fund's net assets will fluctuate to a greater
degree when it sets aside portfolio securities to cover such
purchase commitments than when it sets aside cash. When a Fund
engages in when-issued, delayed-delivery or forward commitment
transactions, it relies on the other party to consummate the
trade. Failure of the seller to do so may result in a Fund's
incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
Repurchase Agreements. Each Fund may agree to purchase
securities from a bank or recognized securities dealer and
simultaneously commit to resell the securities to the bank or
dealer at an agreed-upon date and price reflecting a market rate
of interest unrelated to the coupon rate or maturity of the
purchased securities ("repurchase agreements"). A Fund would
maintain custody of the underlying securities prior to their
repurchase; thus, the obligation of the bank or dealer to pay the
repurchase price on the date agreed to would be, in effect,
secured by such securities. If the value of such securities were
less than the repurchase price, plus interest, the other party to
the agreement would be required to provide additional collateral
so that at all times the collateral is at least 102% of the
repurchase price plus accrued interest. Default by or bankruptcy
of a seller would expose a Fund to possible loss because of
adverse market action, expenses and/or delays in connection with
the disposition of the underlying obligations. The financial
institutions with which a Fund may enter into repurchase
agreements will be banks and non-bank dealers of U.S. Government
securities that are listed on the Federal Reserve Bank of New
York's list of reporting dealers, if such banks and non-bank
dealers are deemed creditworthy by the Fund's Adviser. The
Adviser will continue to monitor creditworthiness of the seller
under a repurchase agreement, and will require the seller to
maintain during the term of the agreement the value of the
securities subject to the agreement to equal at least 102% of the
repurchase price (including accrued interest). In addition, the
Adviser will require that the value of this collateral, after
transaction costs (including loss of interest) reasonably expected
to be incurred on a default, be equal to 102% or greater than the
repurchase price (including accrued premium) provided in the
repurchase agreement or the daily amortization of the difference
between the purchase price and the repurchase price specified in
the repurchase agreement. The Adviser will mark-to-market daily
the value of the securities. Repurchase agreements are considered
to be loans by a Fund under the 1940 Act.
Reverse Repurchase Agreements and Dollar Rolls. Each Fund
may enter into reverse repurchase agreements with the same parties
with whom it may enter into repurchase agreements. Reverse
repurchase agreements involve the sale of securities held by a
Fund pursuant to its agreement to repurchase them at a mutually
agreed upon date, price and rate of interest. At the time a Fund
enters into a reverse repurchase agreement, it will establish and
maintain a segregated account with an approved custodian
containing cash or liquid securities having a value not less than
the repurchase price (including accrued interest). The assets
contained in the segregated account will be marked-to-market daily
and additional assets will be placed in such account on any day in
which the assets fall below the repurchase price (plus accrued
interest). A Fund's liquidity and ability to manage its assets
might be affected when it sets aside cash or portfolio securities
to cover such commitments. Reverse repurchase agreements involve
the risk that the market value of the securities retained in lieu
of sale may decline below the price of the securities a Fund has
sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or
receiver may receive an extension of time to determine whether to
enforce a Fund's obligation to repurchase the securities, and the
Fund's use of the proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision.
Each Fund also may enter into "dollar rolls," in which a
Fund sells fixed-income securities for delivery in the current
month and simultaneously contracts to repurchase similar but not
identical (same type, coupon and maturity) securities on a
specified future date. During the roll period, the Fund would
forego principal and interest paid on such securities. The Fund
would be compensated by the difference between the current sales
price and the forward price for the future purchase, as well as by
the interest earned on the cash proceeds of the initial sale. At
the time a Fund enters into a dollar roll transaction, it will
place in a segregated account maintained with an approved
custodian cash or liquid securities having a value not less than
the repurchase price (including accrued interest) and will
subsequently monitor the account to ensure that its value is
maintained. Reverse repurchase agreements and dollar rolls that
are accounted for as financings are considered to be borrowings
under the 1940 Act.
Convertible Securities. Convertible securities in which a
Fund may invest, including both convertible debt and convertible
preferred stock, may be converted at either a stated price or
stated rate into underlying shares of common stock. Because of
this feature, convertible securities enable an investor to benefit
from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying
equity securities, but generally offer lower yields than
non-convertible securities of similar quality. Like bonds, the
value of convertible securities fluctuates in relation to changes
in interest rates and, in addition, also fluctuates in relation to
the underlying common stock.
Structured Notes. Each Fund may invest in structured notes.
The distinguishing feature of a structured note is that the amount
of interest and/or principal payable on the notes is based on the
performance of a benchmark asset or market other than fixed-income
securities or interest rates. Examples of a benchmark include
stock prices, currency exchange rates and physical commodity
prices. Investing in a structured note allows a Fund to gain
exposure to the benchmark asset or market, such as investments in
certain emerging markets that restrict investment by foreigners.
The structured note fixes the maximum loss that a Fund may
experience in the event that the market does not perform as
expected. The performance tie can be a straight relationship or
leveraged, although the Adviser generally will not use leverage in
its structured note strategies. Depending on the terms of the
note, a Fund may forego all or part of the interest and principal
that would be payable on a comparable conventional note; a Fund's
loss cannot exceed this foregone interest and/or principal. An
investment in a structured note involves risks similar to those
associated with a direct investment in the benchmark asset.
Structured notes will be treated as illiquid securities for
investment limitation purposes.
Non-Publicly Traded and Illiquid Securities. Each Fund may
not invest more than 15% of its net assets in non-publicly traded
and illiquid securities, including securities that are illiquid by
virtue of the absence of a readily available market, repurchase
agreements which have a maturity of longer than seven days,
certain Rule 144A Securities (as described below) and time
deposits maturing in more than seven days. Securities that have
legal or contractual restrictions on resale but have a readily
available market are not considered illiquid for purposes of this
limitation. Repurchase agreements subject to demand are deemed to
have a maturity equal to the notice period.
Under current guidelines of the staff of the SEC, illiquid
securities are considered to include, among other securities,
purchased OTC options, certain cover for OTC options, securities
subject to contractual or legal restrictions on resale because
they have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), securities which are otherwise not
readily marketable and repurchase agreements having a maturity of
longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a
mutual fund might be unable to dispose of restricted or other
illiquid securities promptly or at reasonable prices and might
thereby experience difficulty satisfying redemptions within seven
days without borrowing. A mutual fund might also have to register
such restricted securities in order to dispose of them resulting
in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.
In recent years, however, a large institutional market has
developed for certain securities that are not registered under the
Securities Act including repurchase agreements, commercial paper,
foreign securities, municipal securities and corporate bonds and
notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be
readily resold or on an issuer's ability to honor a demand for
repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
Rule 144A Securities. Rule 144A under the Securities Act
adopted by the SEC allows for a broader institutional trading
market for securities otherwise subject to restriction on resale
to the general public. Rule 144A establishes a "safe harbor" from
the registration requirements of the Securities Act for resales of
certain securities to qualified institutional buyers. The Adviser
anticipates that the market for certain restricted securities such
as institutional commercial paper will expand further as a result
of this regulation and use of automated systems for the trading,
clearance and settlement of unregistered securities of domestic
and foreign issuers, such as the PORTAL System sponsored by the
National Association of Securities Dealers, Inc.
An investment in Rule 144A Securities will be considered
illiquid and therefore subject to the Fund's limit on the purchase
of illiquid securities unless the Board or its delegates
determines that the Rule 144A Securities are liquid. In reaching
liquidity decisions, the Board and its delegates may consider,
inter alia, the following factors: (i) the unregistered nature of
the security; (ii) the frequency of trades and quotes for the
security; (iii) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (iv)
dealer undertakings to make a market in the security and (v) the
nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).
Emerging Growth and Smaller Capitalization Companies;
Unseasoned Issuers. Investments in securities of small- and
medium-sized, emerging growth companies and companies with
continuous operations of less than three years ("unseasoned
issuers") involve considerations that are not applicable to
investing in securities of established, larger-capitalization
issuers, including reduced and less reliable information about
issuers and markets, less stringent financial disclosure
requirements, illiquidity of securities and markets, higher
brokerage commissions and fees and greater market risk in general.
Securities of these companies may also involve greater risks since
these securities may have limited marketability and, thus, may be
more volatile. Because such companies normally have fewer shares
outstanding than larger, more established companies, it may be
more difficult for a Fund to buy or sell significant amounts of
such shares without an unfavorable impact on prevailing prices.
These companies may have limited product lines, markets or
financial resources and may lack management depth. In addition,
these companies are typically subject to a greater degree of
changes in earnings and business prospects than are larger, more
established companies. Although investing in securities of these
companies offers potential for above-average returns if the
companies are successful, the risk exists that the companies will
not succeed and the prices of the companies' shares could
significantly decline in value.
Rights Offerings and Purchase Warrants. Each Fund may
invest in rights and warrants to purchase newly created equity
securities consisting of common and preferred stock. The equity
security underlying a right or warrant is outstanding at the time
the right or warrant is issued or is issued together with the
right or warrant.
Investing in rights and warrants can provide a greater
potential for profit or loss than an equivalent investment in the
underlying security, and, thus, can be a speculative investment.
The value of a right or warrant may decline because of a decline
in the value of the underlying security, the passage of time,
changes in interest rates or in the dividend or other policies of
the company whose equity underlies the warrant or a change in the
perception as to the future price of the underlying security, or
any combination thereof. Rights and warrants generally pay no
dividends and confer no voting or other rights other than to
purchase the underlying security.
Borrowing. Each Fund may borrow up to 33-1/3% of its total
assets for temporary or emergency purposes, including to meet
portfolio redemption requests so as to permit the orderly
disposition of portfolio securities or to facilitate settlement
transactions on portfolio securities. Investments (including
roll-overs) will not be made when borrowings exceed 5% of a Fund's
net assets. Although the principal of such borrowings will be
fixed, a Fund's assets may change in value during the time the
borrowing is outstanding. Each Fund expects that some of its
borrowings may be made on a secured basis. In such situations,
either the custodian will segregate the pledged assets for the
benefit of the lender or arrangements will be made with a suitable
subcustodian, which may include the lender.
Other Investment Limitations
The investment limitations numbered 1 through 8 may not be
changed without the affirmative vote of the holders of a majority
of the Fund's outstanding shares. Such majority is defined as the
lesser of (i) 67% or more of the shares present at the meeting, if
the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (ii) more than 50% of the
outstanding shares. Investment limitations 9 through 14 may be
changed by a vote of the Board at any time.
Each Fund may not:
1. Borrow money except that a Fund may (a) borrow from
banks for temporary or emergency purposes and (b) enter into
reverse repurchase agreements; provided that reverse repurchase
agreements, dollar roll transactions that are accounted for as
financings and any other transactions constituting borrowing by
the Fund may not exceed 33-1/3% of the value of the Fund's total
assets at the time of such borrowing. For purposes of this
restriction, the entry into currency transactions, options,
futures contracts, options on futures contracts, forward
commitment transactions and dollar roll transactions that are not
accounted for as financings (and the segregation of assets in
connection with any of the foregoing) shall not constitute
borrowing.
2. Purchase any securities which would cause 25% or more
of the value of the Fund's total assets at the time of purchase to
be invested in the securities of issuers conducting their
principal business activities in the same industry; provided that
to the extent the benchmark of the Equity Funds is concentrated in
a particular industry, these Funds will be concentrated in that
industry. This limitation shall not apply to the purchase of U.S.
Government Securities.
3. Purchase the securities of any issuer if as a result
more than 5% of the value of the Fund's total assets would be
invested in the securities of such issuer, except that this 5%
limitation does not apply to U.S. Government Securities and except
that up to 25% of the value of the Fund's total assets may be
invested without regard to this 5% limitation.
4. Make loans, except that a Fund may purchase or hold
fixed-income securities, including structured securities, lend
portfolio securities and enter into repurchase agreements.
5. Underwrite any securities issued by others except to
the extent that investment in restricted securities and the sale
of securities in accordance with the Fund's investment goal,
policies and limitations may be deemed to be underwriting.
6. Purchase or sell real estate or invest in oil, gas or
mineral exploration or development programs, except that a Fund
may invest in (a) securities secured by real estate, mortgages or
interests therein and (b) securities of companies that invest in
or sponsor oil, gas or mineral exploration or development
programs.
7. Invest in commodities, except that a Fund may purchase
and sell futures contracts, including those relating to
securities, currencies and indices, and options on futures
contracts, securities, currencies or indices, and purchase and
sell currencies on a forward commitment or delayed-delivery basis.
8. Issue any senior security except as permitted in the
Fund's investment limitations.
9. Purchase securities on margin, except that a Fund may
obtain any short-term credits necessary for the clearance of
purchases and sales of securities. For purposes of this
restriction, the deposit or payment of initial or variation margin
in connection with transactions in currencies, options, futures
contracts or related options will not be deemed to be a purchase
of securities on margin.
10. Purchase securities of other investment companies
except in connection with a merger, consolidation, acquisition,
reorganization or offer of exchange, or as otherwise permitted
under the 1940 Act.
11. Pledge, mortgage or hypothecate its assets, except to
the extent necessary to secure permitted borrowings and to the
extent related to the deposit of assets in escrow and in
connection with the writing of covered put and call options and
purchase of securities on a forward commitment or delayed-delivery
basis and collateral and initial or variation margin arrangements
with respect to currency transactions, options, futures contracts,
and options on futures contracts.
12. Invest more than 15% of the Fund's net assets in
securities which may be illiquid because of legal or contractual
restrictions on resale or securities for which there are no
readily available market quotations. For purposes of this
limitation, repurchase agreements with maturities greater than
seven days shall be considered illiquid securities.
13. Invest in rights and warrants (other than rights and
warrants acquired by the Fund as part of a unit or attached to
securities at the time of purchase) if, as a result, the
investments (valued at the lower of cost or market) would exceed
10% of the value of the Fund's net assets.
14. Make additional investments (including roll-overs) if
the Fund's borrowings exceed 5% of its net assets.
If a percentage restriction (other than the percentage
limitation set forth in No. 1 and No. 12) is adhered to at the
time of an investment, a later increase or decrease in the
percentage of assets resulting from a change in the values of
portfolio securities or in the amount of a Fund's assets will not
constitute a violation of such restriction.
Portfolio Valuation
The Prospectus discusses the time at which the net asset
value of each Fund is determined for purposes of sales and
redemptions. The following is a description of the procedures
used by each Fund in valuing its assets.
Securities listed on a U.S. securities exchange (including
securities traded through the NASDAQ National Market System) or
foreign securities exchange or traded in an over-the-counter
market will be valued at the most recent sale as of the time the
valuation is made or, in the absence of sales, at the mean between
the bid and asked quotations. If there are no such quotations,
the value of the securities will be taken to be the highest bid
quotation on the exchange or market. Options or futures contracts
will be valued similarly. Stock index options will be valued at
the last price, but if that price does not fall within the bid and
ask price for the stock index option when the market closes at
4:15 p.m. Eastern Time, then the stock index option will be valued
at the mean between the bid and asked quotations. A security which
is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for
such security. Short-term obligations with maturities of 60 days
or less are valued at amortized cost, which constitutes fair value
as determined by the Board. Amortized cost involves valuing a
portfolio instrument at its initial cost and thereafter assuming a
constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the
market value of the instrument. The amortized cost method of
valuation may also be used with respect to other debt obligations
with 60 days or less remaining to maturity. Notwithstanding the
foregoing, in determining the market value of portfolio
investments, a Fund may employ outside organizations (a "Price
Service") which may use a matrix, formula or other objective
method that takes into consideration market indexes, matrices,
yield curves and other specific adjustments. The procedures of
Pricing Services are reviewed periodically by the officers of a
Fund under the general supervision and responsibility of the
Board, which may replace a Pricing Service at any time.
Securities, options and futures contracts for which market
quotations are not available and certain other assets of a Fund
will be valued at their fair value as determined in good faith
pursuant to consistently applied procedures established by the
Board. In addition, the Board or its delegates may value a
security at fair value if it determines that such security's value
determined by the methodology set forth above does not reflect its
fair value.
Trading in securities in certain foreign countries is
completed at various times prior to the close of business on each
business day in New York (i.e., a day on which the New York Stock
Exchange (the "NYSE") is open for trading). In addition,
securities trading in a particular country or countries may not
take place on all business days in New York. Furthermore, trading
takes place in various foreign markets on days which are not
business days in New York and days on which a Fund's net asset
value is not calculated. As a result, calculation of a Fund's net
asset value may not take place contemporaneously with the
determination of the prices of certain foreign portfolio
securities used in such calculation. Events affecting the values
of portfolio securities that occur between the time their prices
are determined and the close of regular trading on the NYSE will
not be reflected in a Fund's calculation of net asset value unless
the Board or its delegates deems that the particular event would
materially affect net asset value, in which case an adjustment may
be made. All assets and liabilities initially expressed in
foreign currency values will be converted into U.S. dollar values
at the prevailing rate as quoted by a Pricing Service. If such
quotations are not available, the rate of exchange will be
determined in good faith pursuant to consistently applied
procedures established by the Board.
Portfolio Transactions
Each Fund's Adviser is responsible for establishing,
reviewing and, where necessary, modifying the Fund's investment
program to achieve its investment goal. Purchases and sales of
newly issued portfolio securities are usually principal
transactions without brokerage commissions effected directly with
the issuer or with an underwriter acting as principal. Other
purchases and sales may be effected on a securities exchange or
over-the-counter, depending on where it appears that the best
price or execution will be obtained. The purchase price paid by a
Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of
securities from dealers, acting as either principals or agents in
the after market, are normally executed at a price between the bid
and asked price, which includes a dealer's mark-up or mark-down.
Transactions on U.S. stock exchanges and some foreign stock
exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. On most foreign
exchanges, commissions are generally fixed. There is generally no
stated commission in the case of securities traded in domestic or
foreign over-the-counter markets, but the price of securities
traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. Government Securities are generally
purchased from underwriters or dealers, although certain newly
issued U.S. Government Securities may be purchased directly from
the U.S. Treasury or from the issuing agency or instrumentality.
The Adviser will select specific portfolio investments and
effect transactions for a Fund and in doing so seeks to obtain the
overall best execution of portfolio transactions. In evaluating
prices and executions, the Adviser will consider the factors it
deems relevant, which may include the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of a broker or dealer and the reasonableness
of the commission, if any, for the specific transaction and on a
continuing basis. The Adviser may, in its discretion, effect
transactions in portfolio securities with dealers who provide
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to a Fund
and/or other accounts over which the Adviser exercises investment
discretion. The Adviser may place portfolio transactions with a
broker or dealer with whom it has negotiated a commission that is
in excess of the commission another broker or dealer would have
charged for effecting the transaction if the Adviser determines in
good faith that the amount of commission was reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of either that
particular transaction or of the overall responsibilities of the
Adviser. Research and other services received may be useful to
the Adviser in serving both a Fund and the Adviser's other clients
and, conversely, research or other services obtained by the
placement of business of other clients may be useful to the
Adviser in carrying out its obligations to a Fund. Research may
include furnishing advice, either directly or through publications
or writings, as to the value of securities, the advisability of
purchasing or selling specific securities and the availability of
securities or purchasers or sellers of securities; furnishing
seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative
developments, changes in accounting practices, economic factors
and trends and portfolio strategy; access to research analysts,
corporate management personnel, industry experts, economists and
government officials; comparative performance evaluation and
technical measurement services and quotation services; and
products and other services (such as third party publications,
reports and analyses, and computer and electronic access,
equipment, software, information and accessories that deliver,
process or otherwise utilize information, including the research
described above) that assist the Adviser in carrying out its
responsibilities. Research received from brokers or dealers is
supplemental to the Adviser's own research program. The fees
payable to Centurion under its advisory agreement with each Fund,
and the fees payable to the sub-advisers under their respective
sub-advisory agreements with Centurion, are not reduced by reason
of the Adviser receiving any brokerage and research services. For
the fiscal period ended September 30, 1999, Centurion US Equity
Fund paid $20,011 to brokers because of research services
provided. For the fiscal period ended September 30, 1999, the
Centurion US Equity Fund directed brokerage transactions totaling
approximately $_________ to brokers because of research services
provided.
Investment decisions for a Fund concerning specific port-
folio securities are made independently from those for other
clients advised by the Adviser. Such other investment clients may
invest in the same securities as the applicable Fund. When
purchases or sales of the same security are made at substantially
the same time on behalf of such other clients, transactions are
averaged as to price and available investments allocated as to
amount, in a manner which the Adviser believes to be equitable to
each client, including the applicable Fund. In some instances,
this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained or sold
for the Fund. To the extent permitted by law, the Adviser may
aggregate the securities to be sold or purchased for a Fund with
those to be sold or purchased for such other investment clients in
order to obtain best execution. In no instance will portfolio
securities be purchased from or sold to the Adviser or its
affiliates.
Transactions for a Fund may be effected on foreign
securities exchanges. In transactions for securities not actively
traded on a foreign securities exchange, each Fund will deal
directly with the dealers who make a market in the securities
involved, except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are
acting as principal for their own account. On occasion,
securities may be purchased directly from the issuer. Such
portfolio securities are generally traded on a net basis and do
not normally involve brokerage commissions. Securities firms may
receive brokerage commissions on certain portfolio transactions,
including options, futures and options on futures transactions and
the purchase and sale of underlying securities upon exercise of
options.
Each Fund may participate, if and when practicable, in
bidding for the purchase of securities for its portfolio directly
from an issuer in order to take advantage of the lower purchase
price available to members of such a group. A Fund will engage in
this practice, however, only when the Adviser, in its sole
discretion, believes such practice to be otherwise in the Fund's
interest.
Each fund has paid the following in brokerage commissions for
portfolio transactions:

Fund

Fiscal
Period
Ended
9/30/99

U.S. Equity Fund

$164,681
International
Equity Fund

175,318
U.S. Contra Fund

45,868
International
Contra Fund*

N/A

*The International Contra Fund had no outstanding shares as of
September 30, 1999

Portfolio Turnover
As discussed in the Prospectus, the Company anticipates that
investors in the Contra Funds, as part of a tactical or strategic
asset allocation strategy, may frequently redeem or exchange
shares of these Funds. The Contra Funds may have to dispose of
certain portfolio investments to maintain sufficient liquid assets
to meet such redemption and exchange requests, thereby resulting
in higher portfolio turnover. Because each Contra Fund's
portfolio turnover rate to a great extent will depend on the
purchase, redemption and exchange activity of the Fund's
investors, it is difficult to estimate what the Fund's actual
turnover rate will be in the future. Additionally, because of the
investment techniques employed by the U.S. Equity Fund and the
International Equity Fund to reduce the realization of capital
gains, it is anticipated that the annual portfolio turnover rate
for the these Funds will not exceed 50% and 100%, respectively,
under normal market conditions.
A Fund's portfolio turnover rate is calculated by the value
of the securities purchased or sold, excluding all securities
whose maturities at the time of acquisition were one year or less,
divided by the average monthly value of such securities owned
during the year. Based on this calculation, instruments,
including options and futures contracts, with remaining maturities
of less than one year are excluded from the portfolio turnover
rate. In any given period, all of a Contra Fund's investments may
have a remaining maturity of less than one year; in which case,
the portfolio turnover rate for that period would be equal to
zero.

The portfolio turnover rates are as follows:

Fund

Fiscal
Period
Ended
9/30/99

U.S. Equity Fund

89%

International
Equity Fund

102%

U.S. Contra Fund

0%
International
Contra Fund*

N/A
*The International Contra Fund had no outstanding shares as of
September 30, 1999

MANAGEMENT OF THE FUNDS
Officers and Board of Directors
The business and affairs of each Fund is managed by the
Company's Board in accordance with the laws of the State of
Maryland. The Board elects officers who are responsible for the
day-to-day operations of the Funds and who execute policies
formulated by the Board. Under the Company's Charter, the Board
may classify or reclassify any unissued shares of the Company into
one or more additional classes by setting or changing in any one
or more respects their relative rights, voting powers,
restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption. The Board may similarly
classify or reclassify any class of the Company's shares into one
or more series and, without shareholder approval, may increase the
number of authorized shares of the Company.
The names (and ages) of the Company's directors and
officers, their addresses, present positions and principal
occupations during the past five years and other affiliations are
set forth below. An asterisk appears after the name of each
director who is an "interested person" of the Company, as defined
in the 1940 Act.
Name (Age) and Address
Position and Principal Occupation(s)
Charles P. Dickinson (61)
5219 N. Casa Blanca Dr. #54
Paradise Valley, AZ 85253
Director. President of The Dickinson Co., a
farming company, since 1972.
Gerard P. Dipoto, Jr.* (53)
2425 E. Camelback Rd, Suite 530
Phoenix, AZ 85016-4200
Chairman of the Board, President and Chief
Executive Officer. President of Centurion
since 1997; Executive Vice President of
Sales, Marketing and Relationship Management
at Investors Fiduciary Trust Company from
1987 to 1997.
Timothy E. Kloenne (55)
5730 E. Leith Lane.
Scottsdale, AZ 85254
Director. President of Klontech Industrial
Sales, Inc., a quality control and
inspection equipment sales company, since
1971.
Joseph F. Smith (51)
9736 Legler St.
Lenexa, KS 66219
Director. Executive Vice President and
Chief Technology Officer of Gold Banc
Corporation, Inc., since 1999; Owner of
Compunet Engineering, a computer networking
company, from 1995-1999; Executive Vice
President and Director at Investors
Fiduciary Trust Company from 1993 to 1995.
Thomas M. Smith (56)
2525 E. Camelback Rd., Suite
150
Phoenix, AZ 85016
Director. Realtor at Coldwell Banker Success
Realty since 1990.
Ron A. Link (35)
2425 E. Camelback Rd, Suite 530
Phoenix, AZ 85016-4200
Treasurer. Information Systems Manager at
Centurion since March 1998; Senior Staff CPA
at Ferraro & McMurthy, P.C. from 1995 to
1998; Staff CPA at Zolondek, Blumenthal,
Green, Freed & Strossels, P.C. from 1993 to
1995.
Irving P. David (39)
388 Greenwich Street
New York, NY 10013
Controller. A Director of Salomon Smith
Barney Inc. and SSB Citi Fund Management LLC
("SSB Citi") (successor to SSBC Fund
Management Inc.) since 1994; Controller of
several investment companies associated with
Salomon Smith Barney Inc.
Paul A. Monroe (39)
2425 E. Camelback Rd, Suite 530
Phoenix, AZ 85016-4200
Vice President. Operations Manager at
Centurion since 1997; Project Manager at
Bank One, NA from 1996 to 1997; Assistant
Vice President and Manager at First
Interstate Bank of Arizona, NA/Wells Fargo
from February 1996 to September 1996;
Assistant Vice President and Manager at Bank
One, NA from 1977 to 1996.
Jennifer L. Stecker (31)
2425 E. Camelback Rd, Suite 530
Phoenix, AZ 85016-4200
Secretary. Finance Manager at Centurion
since March 1998; Financial Analyst at
MicroAge, Inc. from 1997 to 1998; Securities
Specialist at Centurion from 1994 to 1997;
Sales Assistant at Principal Financial Group
from 1993 to 1994.
No employee of Centurion or any of its affiliates receives
compensation from the Company for acting as an officer or director
of the Company. The Company pays each director who is not an
"affiliated person" (as defined in the 1940 Act) of the Adviser,
administrator or distributor an annual fee of $5,000 and $1,250
for each meeting of the Board attended by him for his services as
director, and reimburses such director for expenses incurred with
his attendance at Board meetings.
Directors' Total Compensation:
Name of Director Total Compensation from
the Company
Charles P. Dickinson
$7,500
Gerard P. Dipoto, Jr.
None*
Timothy E. Kloenne
$7,500
Joseph F. Smith
$7,500
Thomas M. Smith
$7,500
* Mr. Dipoto receives compensation as an affiliate of
Centurion and, accordingly, receives no compensation from
the Company.

As of January 4, 2000, the directors and officers as a group owned
less than 1% of the outstanding common stock of the trust. To the
best knowledge of the trustees, as of January 4, 2000, the
following shareholders or "groups" (as such term is defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended)
owned beneficially or of record more than 5% of the shares of the
following classes:

Shareholder

Percent Ownership

A. U.S. Equity Fund*

Centurion Trust Company
2425 East Camelback Road
Suite 530
Phoenix, AZ 85016-4270
Owned 2,777,409.552 shares

100%

B. International Equity Fund*

Centurion Trust Company
2425 East Camelback Road
Suite 530
Phoenix, AZ 85016-4270
Owned 2,765,213.339 shares

100%

C. U.S. Contra Fund*

Centurion Trust Company
2425 East Camelback Road
Suite 530
Phoenix, AZ 85016-4270
Owned 4,7774,806.261 shares

100%
The International Contra Fund had no outstanding shares as of
September 30, 1999

*Centurion may be deemed to control each Fund because it has
complete investment discretion and voting authority with respect
to the shares of the Fund held by its clients.

Investment Advisers
Centurion, located at 2425 East Camelback Road, Suite 530,
Phoenix, AZ 85016-4200, serves as investment manager to the Funds.
Centurion is a wholly-owned subsidiary of CCM Group Inc., a
holding company organized under the laws of the State of Arizona.
For a description of the fees paid to Centurion for its services
as investment manager to each of the Funds, see the Prospectus.
Parametric, located at 7310 Columbia Center, 710 Fifth
Avenue, Seattle, Washington 98104-7090, serves as co-sub-adviser
to the U.S. Equity Fund. PIMCO Advisors, L.P., a publicly traded
investment management organization, is Parametric's supervisory
partner and Parametric Management Inc. is the partnership's
managing partner. For its services as co-sub-adviser to the U.S.
Equity Fund, Centurion pays Parametric 0.30% of the first $25
million of the average daily net assets of the Fund allocated to
Parametric and 0.25% of the amount in excess of $25 million.
FISI, located at One World Trade Center, Suite 2101, New
York, NY 10048-0080, effectively serves as co-sub-adviser to the
International Equity Fund. FISI is a wholly-owned subsidiary of
Friends Ivory & Sime plc ("Friends"), a global investment
management company, which in turn is majority-owned by Friends
Provident Life Office, a mutual life assurance company registered
in England. As discussed in the Prospectus, FISI has entered into
a sub-advisory arrangement with Friends whereby Friends will
perform certain investment advisory and portfolio transaction
services for the International Equity Fund, as may be agreed upon
from time to time by FISI and Friends. Currently, Friends is
responsible for the day-to-day management of the International
Equity Fund's assets allocated to FISI, and FISI reviews
investment performance, policies and guidelines, maintains certain
books and records, and facilitates communication between Friends
and Centurion. For its services as co-sub-adviser to the
International Equity Fund, Centurion pays FISI 0.30% of the first
$50 million of the average daily net assets of the Fund allocated
to FISI, 0.275% of the next $50 million and 0.25% of the amount in
excess of $100 million.
Credit Suisse Asset Management LLC ("CSAM"), located at One
Citicorp Center, 153 East 53rd Street, New York, NY 10022, serves
as sub-adviser to the Contra Funds and co-sub-adviser to each of
the Equity Funds. CSAM is a limited liability company that is
wholly-owned by Credit Suisse Group, the second largest Swiss
bank. For its services as sub-adviser to the Contra Funds,
Centurion pays CSAM 0.85% of the average daily net assets of each
Contra Fund. For its services as co-sub-adviser to the Equity
Funds, Centurion pays CSAM 0.10% of the average daily net assets
of each Equity Fund.
Centurion serves as investment manager to the Funds pursuant
to separate investment management agreements ("Management
Agreements"). Centurion, in turn, has entered into separate sub-
advisory agreements ("Sub-Advisory Agreements") with each sub-
adviser selected to manage all or a portion of a particular Fund's
portfolio according to its investment goal and strategies. Each
Adviser bears all expenses in connection with the performance of
its services under the applicable Management Agreement or Sub-
Advisory Agreement. Each Fund pays Centurion a fee for services
provided under the Management Agreement that is computed daily and
paid monthly based on the value of the Fund's average net assets.
From this amount, Centurion pays the Fund's sub-adviser(s) a fee
for services provided under the Sub-Advisory Agreement that is
likewise computed daily and paid monthly based on the value of the
Fund's average net assets. Centurion and/or each Fund's sub-
adviser may voluntarily waive a portion of its fees from time to
time and temporarily limit the expenses to be borne by a Fund.
The adviser fees paid by each fund to Centurion in fiscal
period ended September 30, 1999 was:

Fund

Fiscal
Period
Ended
9/30/99

Fee Waiver and
Expense
Reimbursement

U.S. Equity Fund

$280,701
N/A

International Equity
Fund

$309,463
N/A

U.S. Contra Fund

$345,060
$134,166
International Contra
Fund*

N/A
N/A
*The International Contra Fund had no
outstanding shares as of September 30, 1999.

Administrator
SSB Citi, located at 388 Greenwich Street, New York, NY
10013, serves as administrator for the Company pursuant to an
administration agreement ("Administration Agreement"). As
administrator, SSB Citi generally oversees all aspects of the
Company's administration and operations. SSB Citi furnishes the
Company with statistical and research data, clerical help,
accounting, data processing, bookkeeping, internal auditing and
legal services and certain other services required by the Company;
prepares tax returns and reports to the Company's shareholders;
and prepares reports to and filings with the SEC and state blue
sky authorities. Each Fund pays SSB Citi a fee for services
provided under the Administration Agreement that is computed daily
and paid monthly at an annual rate of 0.20% of the Fund's average
daily net assets or $50,000, whichever amount is greater. SSB
Citi may voluntarily waive a portion of its fees from time to time
and temporarily limit the expenses to be borne by a Fund.
The administrator fees paid to SSB Citi in fiscal period
ended September 30, 1999 were:

Fund

Fiscal
Period
Ended
9/30/99

U.S. Equity Fund

$79,196

International Equity
Fund

$86,450

U.S. Contra Fund

$57,510

International Contra
Fund*

N/A

*The International Contra Fund had no
outstanding shares as of September 30, 1999.

The consultant fees paid to SSB Citi in fiscal period ended
September 30, 1999 for each Fund were:.

Fund

Fiscal
Period
Ended
9/30/99

Fee Waiver and
Expense
Reimbursement

U.S. Equity Fund

$19,830
N/A

International Equity
Fund

$21,636
N/A

U.S. Contra Fund

$0
$14,377
International Contra
Fund*

N/A

*The International Contra Fund had no
outstanding shares as of September 30, 1999.

Distributor
CFBDS, Inc., located at 21 Milk Street, 5th Floor, Boston,
MA 02109, serves as the distributor for the Company and is
responsible for making shares of the Funds available to investors.
The distributor provides shareholder and distribution services to
the Funds at no charge.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The offering price of each Fund's shares is equal to the
Fund's per share net asset value. Information on how to purchase
and redeem Fund shares and how such shares are priced is included
in the Prospectus.
Under the 1940 Act, each Fund may suspend the right of
redemption or postpone the date of payment upon redemption for any
period during which the NYSE is closed, other than customary
weekend and holiday closings, or during which trading on the NYSE
is restricted, or during which (as determined by the SEC) an
emergency exists as a result of which disposal or fair valuation
of portfolio securities is not reasonably practicable, or for such
other periods as the SEC may permit. (Each Fund may also suspend
or postpone the recordation of an exchange of its shares upon the
occurrence of any of the foregoing conditions.)
If the Board determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or
undesirable, a Fund may make payment wholly or partly in
securities or other investment instruments which may not
constitute securities as such term is defined in the applicable
securities laws. If a redemption is paid wholly or partly in
securities or other property, a shareholder would incur
transaction costs in disposing of the redemption proceeds. Each
Fund intends to comply with Rule 18f-1 promulgated under the 1940
Act with respect to redemptions in kind.
EXCHANGE PRIVILEGE
An exchange privilege among the Funds is available to
investors in each Fund. The exchange privilege enables
shareholders to acquire shares in a Fund with a different
investment goal when they believe that a shift between Funds is an
appropriate investment decision. This privilege is available to
shareholders residing in any state in which the shares being
acquired may legally be sold. Prior to any exchange, shareholders
should review a copy of the current prospectus of each Fund into
which an exchange is being considered.
Upon receipt of proper instructions and all necessary
supporting documents, shares submitted for exchange are redeemed
at the then-current net asset value of the Fund and the proceeds
are invested on the same day, at a price as described above, in
shares of the Fund being acquired. The exchange privilege may be
modified or terminated at any time upon 30 days' notice to
shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
The following is a summary of the material United States
federal income tax considerations regarding the purchase,
ownership and disposition of shares of a Fund. Each prospective
shareholder is urged to consult his own tax adviser with respect
to the specific federal, state, local and foreign tax consequences
of investing in a Fund. The summary is based on the laws in
effect on the date of this Statement of Additional Information,
which are subject to change.
The Funds and Their Investments
Each Fund intends to qualify to be treated as a regulated
investment company each taxable year under the Internal Revenue
Code of 1986, as amended (the "Code"). To so qualify, a Fund
must, among other things: (a) derive at least 90% of its gross
income in each taxable year from dividends, interest, payments
with respect to securities, loans and gains from the sale or other
disposition of stock or securities or foreign currencies, or other
income (including, but not limited to, gains from options, futures
or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; and (b)
diversify its holdings so that, at the end of each quarter of a
Fund's taxable year, (i) at least 50% of the market value of a
Fund's assets is represented by cash, securities of other
regulated investment companies, United States government
securities and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater
than 5% of a Fund's assets and not greater than 10% of the
outstanding voting securities of such issuer and (ii) not more
than 25% of the value of its assets is invested in the securities
(other than United States government securities or securities of
other regulated investment companies) of any one issuer or any two
or more issuers that a Fund controls and are determined to be
engaged in the same or similar trades or businesses or related
trades or businesses.
As a regulated investment company, each Fund will not be
subject to United States federal income tax on its net investment
income (i.e., income other than its net realized long- and short-
term capital gains) and its net realized long- and short-term
capital gains, if any, that it distributes to its shareholders,
provided that an amount equal to at least 90% of the sum of its
investment company taxable income (i.e., 90% of its taxable income
minus the excess, if any, of its net realized long-term capital
gains over its net realized short-term capital losses (including
any capital loss carryovers), plus or minus certain other
adjustments as specified in the Code) and its net tax-exempt
income for the taxable year is distributed, but will be subject to
tax at regular corporate rates on any taxable income or gains that
it does not distribute. Furthermore, each Fund will be subject to
a United States corporate income tax with respect to such
distributed amounts in any year that it fails to qualify as a
regulated investment company or fails to meet this distribution
requirement.
The Code imposes a 4% nondeductible excise tax on each Fund
to the extent a Fund does not distribute by the end of any
calendar year at least 98% of its net investment income for that
year and 98% of the net amount of its capital gains (both long-and
short-term) for the one-year period ending, as a general rule, on
October 31 of that year. For this purpose, however, any income or
gain retained by a Fund that is subject to corporate income tax
will be considered to have been distributed by year-end. In
addition, the minimum amounts that must be distributed in any year
to avoid the excise tax will be increased or decreased to reflect
any underdistribution or overdistribution, as the case may be,
from the previous year. Each Fund anticipates that it will pay
such dividends and will make such distributions as are necessary
in order to avoid the application of this tax.
With regard to a Fund's investments in foreign securities,
exchange control regulations may restrict repatriations of
investment income and capital or the proceeds of securities sales
by foreign investors such as a Fund and may limit a Fund's ability
to pay sufficient dividends and to make sufficient distributions
to satisfy the 90% and excise tax distribution requirements.
If, in any taxable year, a Fund fails to qualify as a
regulated investment company under the Code or fails to meet the
distribution requirement, it would be taxed in the same manner as
an ordinary corporation and distributions to its shareholders
would not be deductible by a Fund in computing its taxable income.
In addition, in the event of a failure to qualify, a Fund's
distributions, to the extent derived from a Fund's current or
accumulated earnings and profits would constitute dividends
(eligible for the corporate dividends-received deduction) which
are taxable to shareholders as ordinary income, even though those
distributions might otherwise (at least in part) have been treated
in the shareholders' hands as long-term capital gains. If a Fund
fails to qualify as a regulated investment company in any year, it
must pay out its earnings and profits accumulated in that year in
order to qualify again as a regulated investment company. In
addition, if a Fund failed to qualify as a regulated investment
company for a period greater than one taxable year, a Fund may be
required to recognize any net built-in gains (the excess of the
aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order
to qualify as a regulated investment company in a subsequent year.
A Fund's transactions in foreign currencies, forward
contracts, options and futures contracts (including options and
futures contracts on foreign currencies) will be subject to
special provisions of the Code (including provisions relating to
"hedging transactions" and "straddles") that, among other things,
may affect the character of gains and losses realized by a Fund
(i.e., may affect whether gains or losses are ordinary or
capital), accelerate recognition of income to a Fund and defer
Fund losses. These rules could therefore affect the character,
amount and timing of distributions to shareholders. These
provisions also (a) will require a Fund to mark-to-market certain
types of the positions in its portfolio (i.e., treat them as if
they were closed out) and (b) may cause a Fund to recognize income
without receiving cash with which to pay dividends or make
distributions in amounts necessary to satisfy the distribution
requirements for avoiding income and excise taxes. Each Fund will
monitor its transactions, will make the appropriate tax elections
and will make the appropriate entries in its books and records
when it acquires any foreign currency, forward contract, option,
futures contract or hedged investment in order to mitigate the
effect of these rules and prevent disqualification of a Fund as a
regulated investment company.
A Fund's investment in Section 1256 contracts, such as
regulated futures contracts, most forward currency forward
contracts traded in the interbank market and options on most stock
indices, are subject to special tax rules. All section 1256
contracts held by a Fund at the end of its taxable year are
required to be marked to their market value, and any unrealized
gain or loss on those positions will be included in the Fund's
income as if each position had been sold for its fair market value
at the end of the taxable year. The resulting gain or loss will
be combined with any gain or loss realized by the Fund from
positions in section 1256 contracts closed during the taxable
year. Provided such positions were held as capital assets and
were not part of a "hedging transaction" nor part of a "straddle,"
60% of the resulting net gain or loss will be treated as long-term
capital gain or loss, and 40% of such net gain or loss will be
treated as short-term capital gain or loss, regardless of the
period of time the positions were actually held by the Fund.
As a result of entering into index swaps, a Fund may make or
receive periodic net payments. A Fund may also may or receive a
payment when a swap is terminated prior to maturity through an
assignment of the swap or other closing transaction. Periodic net
payments will contititute ordianary income or deductions, while
termination of a swap will result in capital gain or loss (which
will be a long-term capital gain or loss if a Fund has been a
party to the swap for more than one year.
Passive Foreign Investment Companies. If a Fund purchases
shares in certain foreign investment entities, called "passive
foreign investment companies" (a "PFIC"), it may be subject to
United States federal income tax on a portion of any "excess
distribution" or gain from the disposition of such shares even if
such income is distributed as a taxable dividend by a Fund to its
shareholders. Additional charges in the nature of interest may be
imposed on a Fund in respect of deferred taxes arising from such
distributions or gains. If a Fund were to invest in a PFIC and
elected to treat the PFIC as a "qualified electing fund" under the
Code, in lieu of the foregoing requirements, a Fund might be
required to include in income each year a portion of the ordinary
earnings and net capital gains of the qualified electing fund,
even if not distributed to a Fund, and such amounts would be
subject to the 90% and excise tax distribution requirements
described above. In order to make this election, a Fund would be
required to obtain certain annual information from the passive
foreign investment companies in which it invests, which may be
difficult or not possible to obtain.
Alternatively, a Fund may make a mark-to-market election
that would result in a Fund being treated as if it had sold and
repurchased all of the PFIC stock at the end of each year. In
this case, a Fund would report gains as ordinary income and would
deduct losses as ordinary losses to the extent of previously
recognized gains. The election, once made, would be effective for
all subsequent taxable years of a Fund, unless revoked with the
consent of the IRS. By making the election, a Fund could
potentially ameliorate the adverse tax consequences with respect
to its ownership of shares in a PFIC, but in any particular year
may be required to recognize income in excess of the distributions
it receives from PFICs and its proceeds from dispositions of PFIC
company stock. A Fund may have to distribute this "phantom"
income and gain to satisfy its distribution requirement and to
avoid imposition of the 4% excise tax.
Each Fund will make the appropriate tax elections, if
possible, and take any additional steps that are necessary to
mitigate the effect of these rules.
Taxation of United States Shareholders
Dividends and Distributions. Any dividend declared by a
Fund in October, November or December of any calendar year and
payable to shareholders of record on a specified date in such a
month shall be deemed to have been received by each shareholder on
December 31 of such calendar year and to have been paid by a Fund
not later than such December 31, provided that such dividend is
actually paid by a Fund during January of the following calendar
year. Each Fund intends to distribute annually to its
shareholders substantially all of its investment company taxable
income, and any net realized long-term capital gains in excess of
net realized short-term capital losses (including any capital loss
carryovers). Each Fund currently expects to distribute any excess
annually to its shareholders. However, if a Fund retains for
investment an amount equal to all or a portion of its net long-
term capital gains in excess of its net short-term capital losses
and capital loss carryovers, it will be subject to a corporate tax
(currently at a rate of 35%) on the amount retained. In that
event, a Fund will designate such retained amounts as
undistributed capital gains in a notice to its shareholders who
(a) will be required to include in income for United Stares
federal income tax purposes, as long-term capital gains, their
proportionate shares of the undistributed amount, (b) will be
entitled to credit their proportionate shares of the 35% tax paid
by the Fund on the undistributed amount against their United
States federal income tax liabilities, if any, and to claim
refunds to the extent their credits exceed their liabilities, if
any, and (c) will be entitled to increase their tax basis, for
United States federal income tax purposes, in their shares by an
amount equal to 65% of the amount of undistributed capital gains
included in the shareholder's income. Organizations or persons
not subject to federal income tax on such capital gains will be
entitled to a refund of their pro rata share of such taxes paid by
a Fund upon filing appropriate returns or claims for refund with
the Internal Revenue Service (the "IRS").
Dividends of net investment income and distributions of net
realized short-term capital gains are taxable to a United States
shareholder as ordinary income, whether paid in cash or in shares.
Distributions of net-long-term capital gains, if any, that a Fund
designates as capital gains dividends are taxable as long-term
capital gains, whether paid in cash or in shares and regardless of
how long a shareholder has held shares of a Fund. Dividends and
distributions paid by a Fund (except for the portion thereof, if
any, attributable to dividends on stock of U.S. corporations
received by a Fund) will not qualify for the deduction for
dividends received by corporations. Distributions in excess of a
Fund's current and accumulated earnings and profits will, as to
each shareholder, be treated as a tax-free return of capital, to
the extent of a shareholder's basis in his shares of a Fund, and
as a capital gain thereafter (if the shareholder holds his shares
of a Fund as capital assets).
Shareholders receiving dividends or distributions in the
form of additional shares should be treated for United States
federal income tax purposes as receiving a distribution in the
amount equal to the amount of money that the shareholders
receiving cash dividends or distributions will receive, and should
have a cost basis in the shares received equal to such amount.
Investors considering buying shares just prior to a dividend
or capital gain distribution should be aware that, although the
price of shares just purchased at that time may reflect the amount
of the forthcoming distribution, such dividend or distribution may
nevertheless be taxable to them.
If a Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such
dividends are included in a Fund's gross income not as of the date
received but as of the later of (a) the date such stock became ex-
dividend with respect to such dividends (i.e., the date on which a
buyer of the stock would not be entitled to receive the declared,
but unpaid, dividends) or (b) the date a Fund acquired such stock.
Accordingly, in order to satisfy its income distribution
requirements, a Fund may be required to pay dividends based on
anticipated earnings, and shareholders may receive dividends in an
earlier year than would otherwise be the case.
Sales of Shares. Upon the sale or exchange of his shares, a
shareholder will realize a taxable gain or loss equal to the
difference between the amount realized and his basis in his
shares. Such gain or loss will be treated as capital gain or
loss, if the shares are capital assets in the shareholder's hands,
and will be long-term capital gain or loss if the shares are held
for more than one year and short-term capital gain or loss if the
shares are held for one year or less. Any loss realized on a sale
or exchange will be disallowed to the extent the shares disposed
of are replaced, including replacement through the reinvesting of
dividends and capital gains distributions in a Fund, within a 61-
day period beginning 30 days before and ending 30 days after the
disposition of the shares. In such a case, the basis of the
shares acquired will be increased to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of a Fund share
held by the shareholder for six months or less will be treated for
United States federal income tax purposes as a long-term capital
loss to the extent of any distributions or deemed distributions of
long-term capital gains received by the shareholder with respect
to such share.
Foreign Taxes. A Fund may elect for U.S. income tax
purposes to treat foreign income taxes paid by it as paid by its
shareholders if: (i) the Fund qualifies as a regulated investment
company, (ii) certain asset and distribution requirements are
satisfied, and (iii) more than 50% of the Fund's total assets at
the close of its fiscal year consists of stock or securities of
foreign corporations. A Fund may qualify for and make this
election in some, but not necessarily all, of its taxable years.
If a Fund were to make an election, shareholders of the Fund would
be required to take into account an amount equal to their pro rata
portions of such foreign taxes in computing their taxable income
and then treat an amount equal to those foreign taxes as a U.S.
federal income tax deduction or as a foreign tax credit against
their U.S. federal income taxes. Shortly after any year for which
it makes such an election, a Fund will report to its shareholders
the amount per share of such foreign income tax that must be
included in each shareholder's gross income and the amount which
will be available for the deduction or credit. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize
deductions. Certain limitations will be imposed on the extent to
which the credit (but not the deduction) for foreign taxes may be
claimed.
Backup Withholding. Each Fund may be required to withhold,
for United States federal income tax purposes, 31% of the
dividends and distributions payable to shareholders who fail to
provide a Fund with their correct taxpayer identification number
or to make required certifications, or who have been notified by
the IRS that they are subject to backup withholding. Certain
shareholders are exempt from backup withholding. Backup
withholding is not an additional tax and any amount withheld may
be credited against a shareholder's United States federal income
tax liabilities.
Notices. Shareholders will be notified annually by a Fund
as to the United States federal income tax status of the
dividends, distributions and deemed distributions attributable to
undistributed capital gains (discussed above in "Dividends and
Distributions") made by a Fund to its shareholders. Furthermore,
shareholders will also receive, if appropriate, various written
notices after the close of a Fund's taxable year regarding the
United States federal income tax status of certain dividends,
distributions and deemed distributions that were paid (or that are
treated as having been paid) by a Fund to its shareholders during
the preceding taxable year.
Other Taxation
Distributions also may be subject to additional state, local
and foreign taxes depending on each shareholder's particular
situation.
The foregoing is only a summary of certain material tax
consequences affecting the fund and its shareholders.
Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an
investment in the funds.

PERFORMANCE DATA
From time to time, the fund may quote its total return in
advertisements or in reports and other communications to
shareholders. The fund may include comparative performance
information in advertising or marketing the fund's shares. Such
performance information may include the following industry and
financial publications: Barron's, Business Week, CDA Investment
Technologies, Inc., Changing Times, Forbes, Fortune, Institutional
Investor, Investors Daily, Money, Morningstar Mutual Fund Values,
The New York Times, USA Today and The Wall Street Journal.

Average Annual Total Return

A fund's "average annual total return," as described below, is
computed according to a formula prescribed by the SEC. The
formula can be expressed as follows:

P(1 + T)n = ERV

Where: P = a hypothetical initial payment
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 a 1-,
5- or 10-year period at the
end of a 1-, 5- or 10-year
period (or fractional portion
thereof), assuming
reinvestment of all dividends
and distributions.

The ERV assumes complete redemption of the hypothetical investment
at the end of the measuring period. A fund's net investment
income changes in response to fluctuations in interest rates and
the expenses of the fund.

Aggregate Annual Total Return

Fund
1-Year
5-Year
10-
Year
Inceptio
n1
U.S. Equity Fund
N/A
N/A
N/A
4.00
%
International Equity Fund
N/A
N/A
N/A
7.30
%
U.S. Contra Fund
N/A
N/A
N/A
(24.50)
%
International Contra Fund
N/A
N/A
N/A
N/A
1 With the exception of the International Contra Fund which is
not currently offered, each of the above Funds commenced
operations on December 7, 1998.

Aggregate Total Return

Each Fund's "aggregate total return," as described below,
represents the cumulative change in the value of an investment in
the Fund for the specified period and is computed by the following
formula:

ERV - P
P

Where: P = a hypothetical initial payment of
$10,000.

ERV = Ending Redeemable Value of a
hypothetical $10,000 investment made
at the beginning of the 1-, 5- or
10-year period at the end of the 1-,
5- or 10-year period (or fractional
portion thereof), assuming
reinvestment of all dividends and
distributions.

The ERV assumes complete redemption of the hypothetical investment
at the end of the measuring period.

Average Annual Total Return

Fund
1-Year
5-Year
10-
Year
Inceptio
n1
U.S. Equity Fund
N/A
N/A
N/A
4.00 %
International Equity Fund
N/A
N/A
N/A
7.30 %
U.S. Contra Fund
N/A
N/A
N/A
(24.50)%
International Contra Fund
N/A
N/A
N/A
N/A
1 With the exception of the International Contra Fund which is
not currently offered, each of the above Funds commenced
operations on December 7, 1998.

Performance will vary from time to time depending upon market
conditions, the composition of each Fund's portfolio and its
operating expenses. Consequently, any given performance quotation
should not be considered representative of a Fund's performance
for any specified period in the future. Because performance will
vary, it may not provide a basis for comparing an investment in a
Fund with certain bank deposits or other investments that pay a
fixed yield for a stated period of time. Investors comparing a
Fund's performance with that of other mutual funds should give
consideration to the quality and maturity of the respective
investment companies' portfolio securities.

OTHER INFORMATION
Capital Stock
Investors in a Fund are entitled to one vote for each full
share held and fractional votes for fractional shares held.
Shareholders of a Fund will vote in the aggregate except where
otherwise required by law. There will normally be no meetings of
investors for the purpose of electing members of the Board unless
and until such time as less than a majority of the members holding
office have been elected by investors. Any director of the
Company may be removed from office upon the vote of shareholders
holding at least a majority of the Company's outstanding shares,
at a meeting called for that purpose. A meeting will be called
for the purpose of voting on the removal of a Board member at the
written request of holders of 10% of the outstanding shares of the
Company.
All shareholders of a Fund, upon liquidation, will
participate ratably in the Fund's net assets. Shares do not have
cumulative voting rights, which means that holders of more than
50% of the shares voting for the election of directors can elect
all directors. Shares are transferable but have no preemptive,
conversion or subscription rights.
Independent Accountant
KPMG LLP ("KPMG"), with principal offices located at 345
Park Avenue, New York, NY 10154, serves as the independent
accountant for the Company. The Statements of Assets and
Liabilities, as of September 30, 1999, and the Statements of
Operations, Statement of Changes in Net Assets and the financial
highlights for the period ended September 30, 1999, of each Fund
that are incorporated by reference in this Statement of Additional
Information have been audited by KPMG, and have been included
herein by reference in reliance upon the report of such firm of
independent accountants given upon their authority as experts in
accounting and auditing.
Counsel
Willkie Farr & Gallagher serves as counsel for the Company,
as well as counsel to Centurion.
Custodians and Transfer Agent
PNC Bank, National Association ("PNC"), located at 17th and
Chestnut Streets, Philadelphia, PA 19103, and The Chase Manhattan
Bank ("Chase"), located at 4 Chase MetroTech Center, Brooklyn, NY
11245, serve as co-custodians of each Fund's assets. Under their
respective custody agreements with the Company, PNC and Chase are
authorized to establish separate accounts for foreign securities
owned by the Funds to be held with foreign branches of U.S. banks
as well as certain foreign banks and securities depositories as
sub-custodians of assets owned by the Funds.
PFPC Global Fund Services, located at Exchange Place,
Boston, MA 02109, serves as the Company's transfer agent.
FINANCIAL STATEMENTS
The fund's annual report for the fiscal year ended September 30,
1999 is incorporated herein by reference in its entirety. The
annual report was filed on January 19, 2000, Accession Number
91155-00-000039

APPENDIX
DESCRIPTION OF RATINGS
Commercial Paper Ratings
Commercial paper rated A-1 by Standard and Poor's Ratings
Services ("S&P") indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus
sign designation. Capacity for timely payment on commercial paper
rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated Prime-1 (or related supporting
institutions) are considered to have a superior capacity for
repayment of short-term promissory obligations. Issuers rated
Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics of issuers rated Prime-1 but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
Corporate Bond Ratings
The following summarizes the ratings used by S&P for
corporate bonds:
AAA - This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay
interest and repay principal.
AA - Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from AAA issues only in
small degree.
A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
BBB - This is the lowest investment grade. Debt rated BBB
is regarded as having an adequate capacity to pay interest and
repay principal. Although it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to
pay interest and repay principal for bonds in this category than
for bonds in higher rated categories.
BB, B and CCC - Debt rated BB and B are regarded, on
balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of
the obligation. BB represents a lower degree of speculation than
B, and CCC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to
default than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business, financial,
or economic conditions, which could lead to inadequate capacity to
meet timely interest and principal payments. The BB rating
category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B - Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions
will likely impair capacity or willingness to pay interest and
repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC - Debt rated CCC has a currently identifiable
vulnerability to default and is dependent upon favorable business,
financial and economic conditions to meet timely payment of
interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC
rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied B or B- rating.
CC - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied CCC rating.
C - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied CCC- debt
rating. The C rating may be used to cover a situation where a
bankruptcy petition has been filed, but debt service payments are
continued.
Additionally, the rating CI is reserved for income bonds on
which no interest is being paid. Such debt is rated between debt
rated C and debt rated D.
To provide more detailed indications of credit quality, the
ratings may be modified by the addition of a plus or minus sign to
show relative standing within this major rating category.
D - Debt rated D is in payment default. The D rating
category is used when interest payments or principal payments are
not made on the date due even if the applicable grace period has
not expired, unless S&P believes that such payments will be made
during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are
jeopardized.
The following summarizes the ratings used by Moody's for
corporate bonds:
Aaa - Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large or exceptionally stable margin and principal
is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A - Bonds which are rated A possess many favorable invest-
ment attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which suggest
a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as
medium-grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal security
appear adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics
of desirable investments. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Moody's applies numerical modifiers (1, 2 and 3) with
respect to the bonds rated "Aa" through "B." The modifier 1
indicates that the bond being rated ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
Caa - Bonds that are rated Caa are of poor standing. These
issues may be in default or present elements of danger may exist
with respect to principal or interest.
Ca - Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
C - Bonds which are rated C comprise the lowest rated class
of bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.

PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit No. Description of Exhibit
(a) (1) Articles of Incorporation.*
(2) Articles of Amendment of Articles of
Incorporation #
(b) By-laws.*
(c) Form of Stock Certificate #
(d) (1) Form of Investment Advisory Agreement with
Centurion Trust Company ("Centurion") for
the Centurion U.S. Equity Fund (the "U.S.
Equity Fund") #

(2) Form of Investment Advisory Agreement with
Centurion for the Centurion International
Equity Fund (the "International Equity
Fund") #

(3) Form of Investment Advisory Agreement with
Centurion for the Centurion U.S. Contra Fund
(the "U.S. Contra Fund") #

(4) Form of Investment Advisory Agreement with
Centurion for the Centurion International
Contra Fund (the "International Contra
Fund") #

(5) Form of Sub-Advisory Agreement with
Parametric Portfolio Associates
("Parametric") for the U.S. Equity Fund #

(6) Form of Sub-Advisory Agreement with BEA
Associates ("BEA") (presently known as
Credit Suisse Asset Management ("CSAM") )
for the U.S. Equity Fund #

(7) Form of Sub-Advisory Agreement with Friends
Ivory & Sime, Inc. ("FISI") for the
International Equity Fund #

(8) Form of Sub-Advisory Agreement with BEA for
the International Equity Fund #

(9) Form of Sub-Advisory Agreement with BEA for
the U.S. Contra Fund #

(10) Form of Sub-Advisory Agreement with BEA for
the International Contra Fund.
(e) Form of Distribution Agreement with CFBDS,
Inc. ("CFBDS") #
(f) Not applicable
(g) (1) Form of Custodian Agreement with PNC Bank,
National Association #
(2) Form of Custodian Agreement with The Chase
Manhattan Bank #
(h) (1) Form of Transfer Agency and Service
Agreement with First Data Investor Services
Group Inc. #

(2)(a) Form of Administration Agreement with Mutual
Management Corp. #
(2)(b) Form of Administration Agreement with SSB
Citi Fund Management LLC dated September 21,
1999 is filed herein.
(3) Form of Consulting Agreement with Salomon
Smith Barney Inc. #
(i) (1) Opinion and Consent of Willkie Farr &
Gallagher, counsel to Registrant #

(2) Opinion and Consent of Venable, Baetjer and
Howard, LLP, Maryland counsel to Registrant
#
(j) Consent of KPMG Peat Marwick LLP,
Independent Accountants is filed herein.
(k) Not applicable.
(l) Purchase Agreement #
(m) Not applicable.
(n) Financial Data Schedules are filed herein.
(o) Not applicable.
_____________

* Incorporated by reference to Registrant's Registration
Statement on Form N-1A filed on August 21, 1998.
# Incorporated by reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on
Form N-1A filed on November 30, 1998.

Item 24. Persons Controlled by or Under Common Control
with Registrant

All of the outstanding shares of common stock of
Registrant on the date Registrant's Registration Statement becomes
effective will be owned by Centurion, which will have contributed
Registrant's initial seed capital.

Item 25. Indemnification

Under Article VIII of the Articles of Incorporation
(the "Articles"), the Directors and officers of Registrant shall
not have any liability to Registrant or its stockholders for money
damages, to the fullest extent permitted by Maryland law. This
limitation on liability applies to events occurring at the time a
person serves as a Director or officer of Registrant whether or
not such person is a Director or officer at the time of any
proceeding in which liability is asserted. No provision of
Article VIII shall protect or purport to protect any Director or
officer of Registrant against any liability to Registrant or its
stockholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Registrant shall indemnify and advance expenses to its currently
acting and its former Director to the fullest extent that
indemnification of Directors and advancement of expenses to
Directors is permitted by the Maryland General Corporation Law.

Registrant shall indemnify and advance expenses to its
officers to the same extent as its Directors and to such further
extent as is consistent with such law. The Board of Directors
may, through a by-law, resolution or agreement, make further
provisions for indemnification of directors, officers, employees
and agents to the fullest extent permitted by the Maryland General
Corporation Law.

Article V of the By-laws further limits the liability
of the Directors by providing that any person who was or is a
party or is threatened to be made a party in any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of
Registrant, or is or was serving while a director or officer of
Registrant at the request of Registrant as a director, officer,
partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, enterprise or
employee benefit plan, shall be indemnified by Registrant against
judgments, penalties, fines, excise taxes, settlements and
reasonable expenses (including attorneys' fees)actually incurred
by such person in connection with such action, suit or proceeding
to the full extent permissible under the Maryland General
Corporation Law, the 1993 Act and the 1940 Act, as such statutes
are now or hereafter in force, except that such indemnity shall
not protect any such person against any liability to Registrant or
any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of this office.

Additionally, with respect to indemnification against
liability incurred by Registrant's distributor, reference is made
to Paragraph 4.1 of the form of Distribution Agreement filed
herewith. With respect to indemnification against liability
incurred by Registrant's investment manager and sub-advisers,
reference is made to Section 5 of each form of Investment Advisory
Agreement and to Section 9 of each form of Sub-Advisory Agreement,
respectively, which are incorporated by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-
1A filed on November 30, 1998.

Item 26. Business and Other Connections of Investment Adviser
Centurion, an independent trust company organized
under the laws of the State of Arizona, serves as investment
manager to each of Registrant's Funds. Centurion also serves as a
custodian to financial service companies and their clients.
Gerard P. Dipoto, Jr. serves as President of Centurion, and Robert
W. Doede, Werner E. Keller, Frank C. Meyer and Marcy C. Leonard
serve on Centurion's board of directors. Mr. Dipoto has been
President of Centurion since February 1997, before which he served
as Executive Vice President of Investors Fiduciary Trust Company.
In addition to serving as a Director of Centurion, Mr. Doede has
been (i) Chairman of Centurion Capital Corporation, an affiliate
of Centurion, since 1985; (ii) a Director of FundMinder Inc., an
affiliate of Centurion, since 1991; (iii) Chairman of CCM Group
Inc., an affiliate of Centurion, since 1997; and (iv) a
representative of Managing Member of Schabacker/FundMinder
Investment Advisors, LLC, an affiliate of Centurion, from 1995 to
1996. In addition to serving as a Director of Centurion, Mr.
Keller has been (i) a Director of CCM Group Inc. since 1997; (ii)
Chairman of FundMinder Inc. since June 1998; (iii) President of
FundMinder Inc. from 1984 to June 1998; and (iv) a representative
of Managing Member of Schabacker/FundMinder Investment Advisors,
LLC from 1995 to 1996. In addition to serving as a Director of
Centurion, Mr. Meyer is also President of Glenwood Investment
Corp. Lastly, in addition to serving as a Director of Centurion,
Ms. Leonard is also President of Compliance Dynamics.

Parametric serves as co-sub-adviser to the U.S. Equity
Fund. The list required by this Item 26 of officers and directors
of Parametric, together with information as to their other
businesses, professions, vocations or employment of a substantial
nature during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by Parametric (SEC File No.
801-48184) pursuant to the Investment Advisers Act of 1940, as
amended (the "Advisers Act").

FISI serves as co-sub-adviser to the International
Equity Fund. The list required by this Item 26 of officers and
directors of FISI, together with information as to their other
businesses, professions, vocations or employment of a substantial
nature during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by FISI (SEC File No. 801-
13750) pursuant to the Advisers Act.

CSAM serves as co-sub-adviser to each of the U.S.
Equity Fund and the International Equity Fund, as well as sub-
adviser to each of the U.S. Contra Fund and the International
Contra Fund. The list required by this Item 26 of officers and
directors of BEA, together with information as to their other
businesses, professions, vocations or employment of a substantial
nature during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by BEA (SEC File No. 801-
37170) pursuant to the Advisers Act.

Item 27. Principal Underwriter

(a) CFBDS, Inc. the Registrant's Distributor, is also
the distributor for CitiFundsSM International Growth & Income
Portfolio,
CitiFundsSM International Equity Portfolio, CitiFundsSM Large Cap
Growth Portfolio, CitiFundsSM Intermediate Income Portfolio,
CitiFundsSM Short-Term U.S. Government Income Portfolio,
CitiFundsSM Emerging Asian Markets Equity Portfolio,
CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash Reserves,
CitiFundsSM Premium U.S. Treasury Reserves,
CitiFundsSM Premium Liquid Reserves, CitiFundsSM Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid Reserves,
SM Institutional Cash Reserves, CitiFundsSM Tax Free Reserves,
CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves,
CitiFundsSM New York Tax Free Reserves, CitiFundsSM Balanced
Portfolio,
CitiFundsSM Small Cap Value Portfolio, CitiFundsSM Growth & Income
Portfolio,
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM National
Tax Free Income Portfolio, CitiFundsSM New York Tax Free Income
Portfolio,
CitiSelect VIP Folio 200, Citiselect VIP Folio 300,
CitiSelect (VIP Folio 400, CitiSelect (VIP Folio 500,
CitiFundsSM Small Cap Growth VIP Portfolio, CitiSelect (Folio 200,
CitiSelect (Folio 300, CitiSelect (Folio 400, and CitiSelect (Folio
500.

CFBDS is also the placement agent for Large Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio,
Growth & Income Portfolio, Large Cap Growth Portfolio,
Small Cap Growth Portfolio, International Equity Portfolio,
Balanced Portfolio, Government Income Portfolio, Emerging
Asian Markets Equity Portfolio, Tax Free Reserves Portfolio,
Cash Reserves Portfolio and U.S. Treasury Reserves Portfolio.

CFBDS, Inc. is also the distributor for the following
Smith Barney Mutual Fund registrants:
Consulting Group Capital Markets Funds
Greenwich Street Series Fund
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Concert Allocation Series Inc.
Smith Barney Equity Funds
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
Smith Barney Institutional Cash Management Fund, Inc.
Smith Barney Investment Trust
Smith Barney Investment Funds Inc.
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc.
Smith Barney Muni Funds
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund Inc.
Smith Barney Principal Return Fund
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust
Smith Barney Variable Account Funds
Smith Barney World Funds, Inc.
Travelers Series Fund Inc.
And various series of unit investment trusts.

CFBDS, Inc. is also the distributor for the following
Salomon Brothers funds;
Salomon Brothers Opportunity Fund Inc
Salomon Brothers Investors Fund Inc
Salomon Brothers Capital Fund Inc
Salomon Brothers Series Funds Inc
Salomon Brothers Institutional Series Funds Inc
Salomon Brothers Variable Series Funds Inc
Concert Investment Series

The information required by this Item 27 with respect
to each director, officer and partner of CFBDS, Inc.
is incorporated by reference to Schedule A of Form BD
filed by CFBDS, Inc. pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-32417).

(1) Centurion Trust Company
2425 East Camelback Road -- Suite 530
Phoenix, Arizona 85016-4228
(records relating to its functions as
investment adviser)

(2) Parametric Portfolio Associates
7310 Columbia Center
701 Fifth Avenue
Seattle, Washington 98104-7090
(records relating to its functions as
sub-adviser)

(3) Friends Ivory & Sime, Inc.
One World Trade Center -- Suite 2101
New York, New York 10048-0080
(records relating to its functions as
sub-adviser)

(4) Credit Suisse Asset Management (formerly known
as BEA Associates)
One Citicorp Center
153 East 53rd Street
New York, New York 10022
(records relating to its functions as
sub-adviser)

(5) SSB Citi Fund Management LLC (formerly known as
Mutual Management Corp.)
388 Greenwich Street
New York, New York 10013
(records relating to its functions as
administrator; Fund's Articles of Incorporation,
By-laws and minute books)

(6) CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, Massachusetts 02109
(records relating to its functions as
distributor)

(7) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, Pennsylvania 19103
(records relating to its functions as co-
custodian)

(8) The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, New York 11245
(records relating to its functions as co-
custodian)

(9) PFPC Global Fund Services
Exchange Place
Boston, Massachusetts 02109

(records relating to its functions as transfer
agent)
Item 29. Management Services
Not applicable.

Item 30. Undertakings.
Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933, as amended (the"1933 Act")and the Investment Company Act of
1940, as amended, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the 1933 Act and the Registrant has
duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, this Post-
Effective Amendment, and where applicable, the true and lawful
attorney-in-fact, thereto duly authorized, in the City of Phoenix
and the State of Arizona, on this 28th day of January 2000.

CENTURION FUNDS, INC.
By:/s/ Gerard P. Dipoto, Jr.
Gerard P. Dipoto, Jr.
President & Chief Executive
Officer

Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities and on the date
indicated:

Signature
Title
Date

/s/ Gerard P. Dipoto, Jr.
Gerard P. Dipoto, Jr.
Chairman of the Board,
President & Chief Executive
Officer
1/28/00

/s/ Ron A. Link
Ron A. Link
Treasurer
1/28/00

/s/ Irving P. David
Irving P. David
Controller
1/28/00

/s/ Paul A. Monroe
Paul A. Monroe
Vice President
1/28/00

/s/ Charles P. Dickinson
Charles P. Dickinson
Director
1/28/00

/s/ Timothy E. Kloenne
Timothy E. Kloenne
Director
1/28/00

/s/ Joseph F. Smith
Joseph F. Smith
Director
1/28/00

/s/ Thomas M. Smith
Thomas M. Smith
Director
1/28/00

INDEX TO EXHIBITS

Exhibit No.
Description of Exhibit
(h)(2)(b)
Form of Administration Agreement with SSB Citi Fund
Management LLC
(j)
Consent of KPMG Peat Marwick LLP, Independent
Accountants

(n) Financial Data Schedules

FORM OF
ADMINISTRATION AGREEMENT

September 21, 1999

SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013

Dear Sirs:

Centurion Funds, Inc (the "Fund"), a corporation organized
under the laws of the State of Maryland, confirms its agreement
with SSB Citi Fund Management LLC ("SSB Citi ") with respect to
Series of the Fund that may be offered from time to time (each a
"Portfolio" and collectively the "Portfolios"), as follows:

1. Investment Description; Appointment

The Fund desires to employ the Portfolios' capital by
investing and reinvesting in investments of the kind and in
accordance with the limitations specified in its Charter dated
August 20, 1998 as amended from time to time (the "Charter"), in
its Prospectus and Statement of Additional Information as from
time to time in effect and in such manner and to such extent as
may from time to time be approved by the Board of Directors of the
Fund (the "Board"). Copies of the Fund's Prospectus, Statement of
Additional Information and Charter have been or will be submitted
to SSB Citi. Centurion Trust Company ("The Adviser") serves as
the Fund's investment adviser; BEA Associates and Parametric
Portfolio Associates serve as the sub-investment advisers of the
Centurion U.S. Equity Fund; BEA Associates and Friends Ivory &
Sime, Inc. serve as the sub-investment advisers to the Centurion
International Equity Fund; BEA Associates serves as the sub-
investment adviser to the Centurion U.S. Contra Fund; and BEA
Associates serves as the sub-investment adviser to the Centurion
International Contra Fund, respectively; and the Fund desires to
employ and hereby appoints SSB Citi to act as its administrator.
SSB Citi accepts this appointment and agrees to furnish the
services to the Fund for the compensation set forth below. SSB
Citi is hereby authorized to retain third parties and is hereby
authorized to delegate some or all of its duties and obligations
hereunder to such persons provided that such persons shall remain
under the general supervision of SSB Citi .

2. Services as Administrator

Subject to the supervision and direction of the Board,
SSB Citi will: (a) assist in supervising all aspects of the
Portfolio's operations except those performed by other parties
pursuant to written agreements with the Fund; (b) supply the Fund
with office facilities (which may be in SSB Citi 's own offices),
statistical and research data, data processing services, clerical,
accounting and bookkeeping services, including, but not limited
to, the calculation of (i) the net asset value of shares of the
Portfolios, (ii) distribution fees, internal auditing and legal
services, internal executive and administrative services, and
stationary and office supplies; and (c) prepare reports to
shareholders of the Portfolios, tax returns and reports to and
filings with the Securities and Exchange Commission (the "SEC")
and state blue sky authorities.

3. Compensation

In consideration of services rendered pursuant to this
Agreement, the Fund will pay SSB Citi on the first business day
of each month a fee for the previous month at an annual rate of
0.20% of each Portfolio's average daily net assets or a minimum of
$50,000 for each Portfolio depending upon which amount is greater.
The fee for the period from the date the Fund's initial
registration statement is declared effective by the SEC to the end
of the month during which the initial registration statement is
declared effective shall be prorated according to the proportion
that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of any month, the fee
for such part of a month shall be prorated according to the
proportion which such period bears to the full monthly period and
shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to SSB Citi , the
value of the each Portfolio's net assets shall be computed at the
times and in the manner specified in the Fund's Prospectus and
Statement of Additional Information as from time to time in
effect.

4. Expenses

SSB Citi will bear all expenses in connection with
the performance of its services under this Agreement. The Fund
will bear certain other expenses incurred by it in connection with
operation of the Portfolios, including: taxes, interest,
brokerage fees and commissions, if any; fees of the members of the
Board of the Fund who are not officers, directors or employees of
Centurion or its affiliates or any person who is an affiliate of
any person to whom duties may be delegated hereunder; SEC fees and
state blue sky qualification fees; charges of custodians and
transfer and dividend disbursing agents; the Fund's and Board
members' proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing and legal
expenses; costs of maintaining the Fund's existence; costs
attributable to investor services, including, without limitation,
telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders;
costs of shareholders' reports and meetings of the officers or
Board and any extraordinary expenses

5 Standard of Care

SSB Citi shall exercise its best judgment in
rendering the services listed in paragraph 2 above, and SSB Citi
shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund or the Portfolios in connection
with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect
SSB Citi against liability to the Fund or the Portfolios or to
the Fund's shareholders to which SSB Citi would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by
reason of SSB Citi's reckless disregard of its obligations and
duties under this Agreement.

6 Term of Agreement

This Agreement shall continue automatically (unless
terminated as provided herein) for successive annual periods,
provided that such continuance is specifically approved at least
annually by the Board. This Agreeement is terminable, without
penalty, on 90 days' written notice, by the Board or by vote of
holders of a majority of the Fund's shares, or upon 60 days'
written notice, by SSB Citi .

7 Service to Other Companies or Accounts

The Fund understands that SSB Citi now acts, will
continue to act and may act in the future as administrator to one
or more other investment companies, and the Fund has no objection
to SSB Citi so acting. In addition, the Fund understands that
the persons employed by SSB Citi or its affiliates to assist in
the performance of its duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed
to limit or restrict the right of SSB Citi or its affiliates to
engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.

8 Indemnification

The Fund agrees to indemnify SSB Citi and its
officers, directors, employees, affiliates, controlling persons,
agents (including persons to whom responsibilities are delegated
hereunder) ("indemnitees") against any loss, claim, expense or
cost of any kind (including reasonable attorney's fees) resulting
or arising in connection with this Agreement or from the
performance or failure to perform any act hereunder, provided that
no such indemnification shall be available if the indemnitee
violated the standard of care in paragraph 5 above. This
indemnification shall be limited by the Investment Company Act of
1940 and relevant state law. Each indemnitee shall be entitled to
advancement of its expenses in accordance with the requirements of
the 1940 Act and the rules, regulations and interpretations
thereof as in effect from time to time.

If the foregoing is in accordance with your understanding,
kindly indicate your acceptance hereof by singing and returning to
us the enclosed copy hereof.

Very truly yours,

Centurion Funds, Inc.

By:

Title:
Accepted:

SSB Citi Fund Management LLC.

By: _________________________________
Title:

APPENDIX A

ADMINISTRATIVE SERVICES

Fund Accounting. Fund accounting services involve comprehensive
accrual-based recordkeeping and management information. They
include maintaining the Fund's books and records in accordance
with the Investment Company Act of 1940, as amended (the "1940
Act"), net asset value calculation, daily dividend calculation,
tax accounting and portfolio accounting.

The designated fund accountants interact with the Fund's
custodians, transfer agent and investment adviser daily. As
required, the responsibilities of each fund accountant may
include:

? Cash Reconciliation - Reconcile prior day's ending
cash balance per custodians' records and the
accounting system to the prior day's ending cash
balance per fund accounting's cash availability
report;

? Cash Availability - Combine all activity affecting the
Fund's cash account and produce a net cash amount
available for investment;

? Formal Reconciliations - Reconcile system generated
reports to prior day's calculations of interest,
dividends, amortization, accretion, distributions,
capital stock and net assets;

? Trade Processing - Upon receipt of instructions from
the investment adviser review, record and transmit
buys and sells to the custodian;

? Journal Entries - Input entries to the accounting
system reflecting shareholder activity and Fund
expense accruals;

? Reconcile and Calculate N.O.A. (net other assets) -
Compile all activity affecting asset and liability
accounts other than investment account;

? Calculate Net Income, Mil Rate and Yield for Daily
Distribution Funds - Calculate income on purchase and
sales, calculate change in income due to variable rate
change, combine all daily income less expenses to
arrive at net income, calculate mil rate and yields (1
day, 7 day and 30 day);

? Mini-Cycle (except for Money Market Funds) - Review
intra day trial balance and reports, review trial
balance N.O.A.;

? Holdings Reconciliation - Reconcile the portfolio
holdings per the system to custodian records;

? Pricing - Determine N.A.V. for Portfolios using market
value of all securities and currencies (plus N.O.A.),
divided by the shares outstanding, and investigate
securities with significant price changes (over 5%);

? System Check-Back - Verify the change in market value
of securities which saw trading activity per the
system;

? Net Asset Value Reconciliation - Identify the impact
of current day's Portfolio activity on a per share
basis;

? Reporting of Price to NASDAQ - 5:30 P.M. is the final
deadline for Fund prices being reported to the
newspaper;

? Reporting of Price to Transfer Agent- N.A.V.s are
reported to transfer agent upon total completion of
above activities.

In addition, fund accounting personnel: communicate
corporate actions of portfolio holdings to portfolio managers;
initiate notification to custodian procedures on outstanding
income receivables; provide information to the Fund's treasurer
for reports to shareholders, SEC, Board members, tax authorities,
statistical and performance reporting companies and the Fund's
auditors; interface with the Fund's auditors; prepare monthly
reconciliation packages, including expense pro forma; prepare
amortization schedules for premium and discount bonds based on the
effective yield method; prepare vault reconciliation reports to
indicate securities currently "out-for-transfer;" and calculate
daily expenses based on expense ratios supplied by Fund's
treasurer.

Financial Administration. The financial administration services
made available to the Fund fall within three main categories:
Financial Reporting; Statistical Reporting; and Publications. The
following is a summary of the services made available to the Fund
by the Financial Administration Division:

Financial Reporting

? Coordinate the preparation and review of the
annual, semi-annual and quarterly portfolio of
investments and financial statements included in
the Fund's shareholder reports.

Statistical Reporting

? Total return reporting;

? SEC 30-day yield reporting;

? Prepare dividend summary;

? Prepare quarter-end reports;

? Communicate statistical data to the financial
media (Donoghue, Lipper, Morningstar, et al.)

Publications

? Coordinate the printing and mailing process with
outside printers for annual and semi-annual
reports, prospectuses, statements of additional
information, proxy statements and special
letters or supplements;

? Provide graphics and design assistance relating
to the creation of marketing materials and
shareholder reports.

Treasury. The following is a summary of the treasury services
available to the Fund:

? Provide a Controller for the Fund;

? Determine expenses properly chargeable to the
Fund;

? Authorize payment of bills for expenses of the
Fund;

? Establish and monitor the rate of expense
accruals;

? Prepare financial materials for review by the
Fund's Board (e.g., 10f-3, 17a-7 and 17e-1
reports, repurchase agreement dealer lists,
securities transactions);

? Recommend dividends to be voted by the Fund's
Board;

? Monitor mark-to-market comparisons for money
market funds;

? Recommend valuation to be used for securities
which are not readily saleable;

? Function as a liaison with the Fund's outside
auditors and arrange for audits;

? Provide accounting, financial and tax support
relating to portfolio management and any
contemplated changes in the Fund's structure or
operations;

? Prepare and file forms with the Internal Revenue
Service

* Form 8613
* Form 1120-RIC
* Board Members' and Shareholders' 1099s
* Mailings in connection with Section 852
and related regulations.

Legal and Regulatory Services. The legal and regulatory services
made available to the Fund fall within four main areas: SEC and
Public Disclosure Assistance; Corporate and Secretarial Services;
Compliance Services; and Blue Sky Registration. The following is
a summary of the legal and regulatory services available to the
Fund:

SEC and Public Disclosure Assistance

? File annual amendments to the Fund's
registration statements, including updating the
prospectus and statement of additional
information where applicable;

? File annual and semi-annual shareholder reports
with the appropriate regulatory agencies;

? Prepare and file proxy statements;

? Review marketing material for SEC and NASD
clearance;

? Provide legal assistance for shareholder
communications.

Corporate and Secretarial Services

? Provide an Assistant Secretary for the Fund;

? Maintain general corporate calendar;

? Prepare agenda and background materials for Fund
board meetings, make presentations where
appropriate, prepare minutes and follow-up
matters raised at Board meetings;

? Organize, attend and keep minutes of shareholder
meetings;

? Maintain Articles of Incorporation and By-Laws
of the Fund.

Legal Consultation and Business Planning

? Provide general legal advice on matters relating
to portfolio management, Fund operations and any
potential changes in the Fund's investment
policies, operations or structure;

? Maintain continuing awareness of significant
emerging regulatory and legislative developments
which may affect the Fund, update the Fund's
Board and the investment adviser on those
developments and provide related planning
assistance where requested or appropriate;

? Develop or assist in developing guidelines and
procedures to improve overall compliance by the
Fund and its various agents;

? Manage Fund litigation matters and assume full
responsibility for the handling of routine Fund
examinations and investigations by regulatory
agencies.

Compliance Services

The Compliance Department is responsible for preparing
compliance manuals, conducting seminars for fund accounting and
performing on-going testing of the Fund's portfolio to assist the
Fund's investment adviser in complying with prospectus guidelines
and limitations, 1940 Act requirements and Internal Revenue Code
requirements. The Department may also act as liaison to the SEC
during its routine examinations of the Fund.

Independent Auditors' Consent

To the Shareholders and Board of Directors of
Centurion Funds, Inc.:
We consent to the incorporation by reference, in this Prospectus
and Statement of Additional Information, of our report dated
November 16, 1999, on the statement of assets and liabilities for
the Centurion U.S. Contra Fund, Centurion U.S. Equity Fund and
Centurion International Equity Fund of Centurion Funds, Inc. (the
"Funds") as of September 30, 1999 and the related statement of
operations , the statement of changes in net assets, and the
financial highlights for the period from December 7, 1998
(commencement of operations) to September 30, 1999. These
financial statements and financial highlights and our report
thereon are included in the Annual Report of the Funds as filed on
Form N-30D.
We also consent to the references to our firm under the headings
"Financial Highlights"in the Prospectus and "Independent
Accountant" in the Statement of Additional Information.

KPMG LLP
New York, New York
January 19, 2000
Page

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<REALIZED-GAINS-CURRENT> (2,645,165)
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<NET-CHANGE-FROM-OPS> 2,956,732
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<DISTRIBUTIONS-OF-GAINS> 0
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