<PAGE>
CENTURION FUNDS, INC.
Centurion U.S. Contra Fund
Centurion U.S. Equity Fund
Centurion International Equity Fund
ANNUAL REPORT
September 30, 1999
This report is authorized for distribution to shareholders and to others only
when accompanied or preceded by a current prospectus of the Fund.
<PAGE>
Dear Shareholder:
We are pleased to provide the first annual report for the Centurion Funds
("Funds") for the period ended September 30, 1999. We hope that you find this
report useful and informative. In this report we summarized the period's
prevailing economic and market conditions and outlined our portfolio strategies.
The performance and current holdings of each Fund are discussed in detail in the
sections that follow.
The Performance of the Centurion Funds*
Total returns since inception (December 7, 1998) through September 30, 1999
Centurion U.S. Contra Fund (24.50)%
Centurion U.S. Equity Fund 4.00
Centurion International Equity Fund 7.30
Market Update and Outlook
U.S. Equity Markets
An interest rate hike by the Federal Reserve Board ("Fed') and investors fears
of more hikes put a damper in the stock market in the third quarter of 1999.
Although many market indexes set record highs in July and August, most indexes
posted losses for the third quarter.
However, investors did not need to search too far to find good news about stock
market performance. Prior to the third quarter, the stock market had recorded
three good quarters and this performance is reflected in longer-term returns.
For the period ended September 30, 1999 the total return for the S&P 500 was
27.79%. (The S&P 500 is a capitalization-weighted index of 500 stocks.) For the
same period the total return for the Russell 3000 Index was 26.32%. (The Russell
3000 Index is composed of 3000 largest U.S. publicly traded stocks, as
determined by market capitalization.)
In our view, a primary driver of equity markets in recent years has been
declining interest rates. That key positive influence has been absent in the
past few quarters. As a result, relative stock outperformance was narrow and
generally confined to the stocks of companies in non-interest-rate-sensitive
industries, likely to generate sustainable sales growth or with a solid track
record of meeting earnings expectations. In contrast, the market was unfavorable
to companies announcing earnings shortfalls. In most cases, the shares of such
stumbling companies saw quick, striking declines in share values, reflecting a
considerably low tolerance for risk among many investors. Notably, the tone of
the broader markets reflects significantly greater damage than indicated by
percentage declines of the popular market indices. The average stock has fallen
from its high this year and most industry sectors posted negative returns
through the end of the third quarter.
The tone of recent economic data has provided little evidence that the economy
will slow anytime soon and dampened optimism that the next hike by the Fed will
be its last. In our view, the timing and duration of future rate activity may
hinge on signs of slowing U.S. economic growth. We expect that the
interpretation of data linked to popular gauges of inflation and economic
strength should remain a dominant influence of future market activity.
- -------------
* The performance figures shown above represent past performance which is not
indicative of future results. The investment return and principle value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
1
<PAGE>
International Equity Markets
International stock markets outperformed the U.S. equity markets for the period
ended September 30, 1999. The most widely followed foreign market index - Morgan
Stanley Capital International Europe Australia Far East Index (MSCI EAFE) -
generated a total return of 30.95% for the period ended September 30, 1999.
(MSCI EAFE Index is a broadly diversified international index composed of
international securities of approximately 1,000 companies located outside the
United States.) In comparison, the Russell 3000 and the S&P 500 generated total
returns of 26.32% and 27.79%, respectively.
In our view the strong relative performance of international markets reflects
growing recognition of important structural changes and cyclical recovery in
many of the world's economies. Asia appears to be awakening from its lengthy
inactivity and the Japanese stock market has been one of the star performers so
far this year. A combination of strong government policy combined with
cost-cutting and streamline initiatives of multinational corporations has also
spurred greater optimism among many investors for Japanese stock opportunities.
European companies are also benefiting from structural reform and consolidation
across a host of industries such as banking, energy, and telecommunications. The
general emergence of hostile takeovers in Europe has caused a greater focus on
enhancing shareholder value. The stabilization of the new euro currency, which
fell sharply earlier in the year, is giving renewed impetus to more broad
diversification in many portfolios.
Central banks are expected to remain cautious and to respond to the pick up in
the global growth as the key lead indicator. Further modest interest rate
increases are expected in the U.S. and the U.K., followed by Euroland where
monetary policy remains very accommodative and interest rates remain at
extremely low levels. In Japan, printing more money remains an option if the
strength of the yen threatens to undermine its economic recovery.
While interest rate concerns may continue to moderate stock market returns,
positive earnings news and continued merger and acquisition activity support our
view that stocks should continue to provide better returns versus cash or bonds
overtime.
Centurion U.S. Contra Fund
The Centurion U.S. Contra Fund ("Fund") seeks to provide protection against
declines in the value of the U.S. equity allocation of certain assets custodied
with Centurion Trust Company ("Centurion"). We are committed to our strategy
regardless of market conditions and therefore will not invest the Fund's
portfolio, in the aggregate, in anticipation of rising U.S. equity prices.
The Centurion U.S. Contra Fund seeks to provide a degree of protection against
declines in the value of the U.S. equity allocation of certain assets custodied
with Centurion. With this objective in mind, we have selected Credit Suisse
Asset Management ("CSAM") as the sub-advisor. CSAM seeks to provide returns that
move counter to the direction of the broad-based U.S. Equity marketplace as
measured by the S&P 500 Stock Index. Centurion makes use of the U.S. Contra Fund
in combination with other asset class exposures with the objective of limiting
downside return participation. CSAM invests primarily in S&P 500 Index put
options, S&P 500 futures contracts, and cash equivalents such as U.S. Treasury
bills. CSAM actively manages their use of S&P put options and futures contracts
in an attempt to minimize the cost of delivering the desired degree of
protection against marketplace declines.
Since the Fund's inception (December 7, 1998) through September 30, 1999, the
Fund posted a total return of negative 24.50%.
For the period ended September 30, 1999 we continued to adjust the equity
exposure of the portfolio through positions in the index futures market. An
equity sharing strategy was employed in order to achieve the desired protection
at a minimum overall cost.
2
<PAGE>
Centurion U.S. Equity Fund
The Centurion U.S. Equity Fund ("Fund") seeks to provide long-term after-tax
growth consistent with reasonable efforts to preserve capital by investing in
common stocks and other equity securities of U.S. issuers with total market
capitalizations greater than $1 billion at the time of purchase. In order to
achieve the Fund's investment objective, Centurion has selected two
sub-advisors, Parametric Portfolio Associates ("Parametric") and CSAM, to
conduct the Fund's investment program. Parametric seeks to provide investment
returns that, over the long-term, correspond to the performance of the Russsell
3000. While CSAM uses certain hedging techniques designed to protect against or
other otherwise cushion declines in the value of the Fund's portfolio.
Since the Fund's inception (December 7, 1998) through September 30, 1999, the
Fund returned 4.00%. The portion of the Fund that is advised by Parametric
returned 12.70%, while the portion advised by CSAM returned negative 61.20%.
Throughout the period, we have maintained our original strategy of
diversification, risk control and tax efficiency. In line with our
tax-management strategies, we produced losses of $554,406 in order to cover
redemptions and the rebalancing of the portfolio to meet our risk exposure
requirements. These realized losses have economic value to the Fund because they
help avoid or reduce future distribution of capital gains, deferring the payment
of capital gains taxes for our shareholders.
Centurion International Equity Fund
The Centurion International Equity Fund ("Fund") seeks to provide long-term
after-tax growth consistent with reasonable effort to preserve capital. In order
to achieve the Fund's investment goal, we have selected two sub-advisors,
Friends, Ivory and Sime ("FISI") and CSAM, to conduct the Fund's investment
objective. FISI seeks to provide investment returns that, over the long-term,
correspond to the performance of the MSCI EAFE Index. FISI invests primarily in
common stocks and other securities of non-U.S. issues with total market
capitalizations greater than $1 billion at the time of purchase. While CSAM uses
certain hedging techniques designed to protect against or otherwise cushion
price declines in the value of the Fund's portfolio.
Since the Fund's inception (December 7, 1998) through September 30, 1999, the
Fund generated a total return of 7.30%. The portion of the Fund advised by FISI
returned 18.70%, while the portion advised by CSAM returned negative 56.80%.
During the reporting period, we gave back some of our gains from the previous
quarters, which was mainly due to the Fund's underweight exposure to the
Japanese stock markets at a time when the stock markets were rising and the yen
was appreciating.
In the past few months we have become more confident about a sustainable
recovery in Japan which led us to slightly increase our exposure. During the
last quarter for the period ended September 30, 1999 we purchased the Bank of
Tokyo-Mitsubishi, Nippon Telegraph & Telephone, Rohm, Shin-Etsu Chemical, Sony
and Takeda Chemical Industries so that our asset allocation would better reflect
our renewed confidence in Japan's markets.
In closing, we thank you for your investment in Centurion Funds.
Sincerely,
/s/ Gerard P. Dipoto Jr.
Gerard P. Dipoto Jr.
Chairman October 15, 1999
3
<PAGE>
<TABLE>
================================================================================
Centurion U.S. Contra Fund
================================================================================
Historical Performance
================================================================================
<CAPTION>
Net Asset Value
--------------------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception* - 9/30/99 $10.00 $7.55 $0.00 $0.00 (24.50)%
- ---------------------------------------------------------------------------------------------------------------
================================================================================
Centurion U.S. Equity Fund
================================================================================
Historical Performance
================================================================================
Net Asset Value
--------------------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)(2)
- ---------------------------------------------------------------------------------------------------------------
Inception* - 9/30/99 $10.00 $10.40 $0.00 $0.00 4.00%
- ---------------------------------------------------------------------------------------------------------------
================================================================================
Centurion International Equity Fund
================================================================================
Historical Performance
================================================================================
Net Asset Value
--------------------------------
Beginning End Income Capital Gain Total
Period Ended of Period of Period Dividends Distributions Return(1)(2)
- ---------------------------------------------------------------------------------------------------------------
Inception* - 9/30/99 $10.00 $10.73 $0.00 $0.00 7.30%
- ---------------------------------------------------------------------------------------------------------------
It is the Fund's policy to distribute dividends and capital gains, if any,
annually.
================================================================================
Average Annual Total Returns(1)(2)
================================================================================
<CAPTION>
Centurion Centurion Centurion
U.S. Contra U.S. Equity International
Fund Fund Equity Fund
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception* to 9/30/99 (24.50)% 4.00% 7.30%
- ---------------------------------------------------------------------------------------------------------------
================================================================================
Cumulative Total Returns(1)
================================================================================
Centurion Centurion Centurion
U.S. Contra U.S. Equity International
Fund Fund Equity Fund
- ---------------------------------------------------------------------------------------------------------------
Inception* to 9/30/99 (24.50)% 4.00% 7.30%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions.
(2) Total return is not annualized, as it may not be respresentative of the
total return for the year.
* The inception date for the Centurion U.S. Contra Fund, Centurion U.S.
Equity Fund and Centurion International Equity Fund is December 7, 1998.
4
<PAGE>
================================================================================
Schedules of Investments September 30, 1999
================================================================================
CENTURION U.S. CONTRA FUND
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILL - 14.3%
<S> <C> <C>
$1,500,000 U.S. Treasury Bill, 5.003% due 3/16/00 (a) (Cost - $1,466,043) $1,466,043
- ---------------------------------------------------------------------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS - 85.7%
43,000 S&P 500 Index, Put @ 1425, Expire 1/00 (a) 5,896,375
40,000 S&P 500 Index, Put @ 1350, Expire 11/99 2,905,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS (Cost - $6,504,740) 8,801,375
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost - $7,970,783*) $10,267,418
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Security is segregated for futures contracts commitments.
* Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
5
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK - 96.3%
- ------------------------------------------------------------------------------------------------------------------
Advertising - 0.7%
1,746 The Interpublic Group of Cos., Inc. $ 71,805
1,855 Omnicom Group Inc. 146,894
- ------------------------------------------------------------------------------------------------------------------
218,699
- ------------------------------------------------------------------------------------------------------------------
Aerospace & Defense - 1.4%
3,116 AlliedSignal Inc. 186,767
900 Cordant Technologies Inc. 27,394
900 GenCorp Inc. 16,481
1,125 General Dynamics Corp. 70,241
297 Litton Industries, Inc.* 16,260
2,404 United Technologies Corp. 142,589
- ------------------------------------------------------------------------------------------------------------------
459,732
- ------------------------------------------------------------------------------------------------------------------
Airlines - 0.3%
1,300 Midwest Express Holdings, Inc.* 34,044
4,710 Southwest Airlines Co. 71,533
- ------------------------------------------------------------------------------------------------------------------
105,577
- ------------------------------------------------------------------------------------------------------------------
Auto Parts - 0.3%
2,046 Dana Corp. 75,957
800 Stewart & Stevenson Services, Inc. 10,500
- ------------------------------------------------------------------------------------------------------------------
86,457
- ------------------------------------------------------------------------------------------------------------------
Automotive - 1.0%
949 Delphi Automotive Systems Corp. 15,244
4,858 General Motors Corp. 305,753
- ------------------------------------------------------------------------------------------------------------------
320,997
- ------------------------------------------------------------------------------------------------------------------
Banking - 5.2%
5,200 Bank One Corp. 181,025
1,900 BankAmerica Corp. 105,806
3,262 BankBoston Corp. 141,489
1,100 Bay View Capital Corp. 14,575
3,104 Chase Manhattan Corp. 233,966
800 Compass Bancshares, Inc. 20,000
2,000 Cullen/Frost Bankers, Inc. 50,000
2,000 First Tennesse National Corp. 56,250
2,836 Firstar Corp. 72,673
1,600 GreenPoint Financial Corp. 42,500
2,970 Huntington Bancshares, Inc. 78,891
900 J.P. Morgan & Co. Inc. 102,827
97 Marshall & Ilsley Corp. 5,535
6,787 MBNA Corp. 154,828
3,568 Mellon Bank Corp. 120,422
3,000 North Fork Bancorporation, Inc. 58,500
1,000 Old Kent Financial Corp. 37,125
2,067 PNC Bank Corp. 108,907
485 TCF Financial Corp. 13,853
1,200 Wells Fargo Co. 47,550
- ------------------------------------------------------------------------------------------------------------------
1,646,722
- ------------------------------------------------------------------------------------------------------------------
Beverages - Soft Drinks - 0.4%
800 Brown-Forman Corp., Class B Shares 49,900
2,500 Coca-Cola Enterprises Inc. 56,406
1,800 Whitman Corp. 25,650
- ------------------------------------------------------------------------------------------------------------------
131,956
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Beverages - Wines - 0.6%
500 Beringer Wine Estates Holdings, Inc.* $ 20,531
400 Canandaigua Brands, Inc., Class A Shares* 23,900
2,300 Patterson Dental Co.* 113,995
500 The Robert Mondavi Corp., Class A Shares* 18,781
- ------------------------------------------------------------------------------------------------------------------
177,207
- ------------------------------------------------------------------------------------------------------------------
Brewers - 0.9%
700 Adolph Coors Co., Class B Shares 37,888
3,773 Anheuser-Busch Cos., Inc. 264,347
- ------------------------------------------------------------------------------------------------------------------
302,235
- ------------------------------------------------------------------------------------------------------------------
Broadcasting - 2.5%
900 ACT Networks, Inc.* 7,931
2,700 AT&T Corp. - Liberty Media A* 100,239
1,500 CBS Corp. 69,375
1,000 Sinclair Broadcast Group Inc., Class A Shares 9,062
2,802 TV Guide, Inc.* 109,631
1,005 United Television Inc. 113,316
1,035 Univision Communications, Inc.* 84,224
1,200 Viacom Inc., Class B Shares* 50,700
4,220 Westwood One Inc. 190,406
1,200 Young Broadcasting Corp.* 62,850
- ------------------------------------------------------------------------------------------------------------------
797,734
- ------------------------------------------------------------------------------------------------------------------
Building Materials - 0.2%
1,182 Dycom Industries Inc.* 49,865
900 Johns Manville Corp. 11,925
- ------------------------------------------------------------------------------------------------------------------
61,790
- ------------------------------------------------------------------------------------------------------------------
Chemicals - Specialty - 0.1%
582 Rohm and Hass Co. 21,024
- ------------------------------------------------------------------------------------------------------------------
Computer Services - 0.4%
776 Affiliated Computer Services, Inc., Class A Shares* 31,525
2,025 Electronic Data Systems Corp. 107,201
- ------------------------------------------------------------------------------------------------------------------
138,726
- ------------------------------------------------------------------------------------------------------------------
Computer Software - 9.5%
2,780 America Online, Inc.* 289,122
388 Automatic Data Processing, Inc. 17,314
388 Black Box Corp.* 20,370
1,067 BMC Software Inc.* 76,357
3,500 Cadence Design Systems, Inc.* 46,375
11,498 Cisco Systems Inc.* (a) 788,333
1,194 Computer Associates International Inc. 73,132
13,484 Microsoft Corp.* (a) 1,221,152
1,600 Midway Games Inc.* 25,200
7,275 Oracle Corp.* 331,012
8,400 Saga Systems, Inc.* 121,277
200 Veritas Software Corp.* 15,187
- ------------------------------------------------------------------------------------------------------------------
3,024,831
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Computers - 4.7%
876 Computer Sciences Corp.* $ 61,593
145 Comverse Technology, Inc.* 13,675
9,482 Dell Computer Corp.* (a) 396,468
5,796 International Business Machines Corp. (a) 703,491
194 Lexmark International Group, Inc., Class A Shares* 15,617
3,022 Sun Microsystems, Inc. 281,048
679 Zebra Technologies Corp.* 30,873
- ------------------------------------------------------------------------------------------------------------------
1,502,765
- ------------------------------------------------------------------------------------------------------------------
Conglomerates - 3.7%
9,958 General Electric Co. (a) 1,180,647
- ------------------------------------------------------------------------------------------------------------------
Consumer Products - 2.5%
2,386 Avery Dennison Corp. 125,863
3,138 Colgate-Palmolive Co. 143,565
1,700 Eastman Kodak Co. 128,243
600 Fossil, Inc, 16,237
1,128 Minnesota Mining & Manufacturing Co. 108,360
800 Nature's Sunshine Products, Inc. 7,575
2,626 Procter & Gamble Corp. 246,189
1,400 Unifi, Inc. 15,400
- ------------------------------------------------------------------------------------------------------------------
791,432
- ------------------------------------------------------------------------------------------------------------------
Consumer Services - 0.6%
6,038 Cendant Corp.* 107,176
200 Lancaster Colony Corp. 6,400
3,200 Metromedia International* 13,200
2,000 Quintiles Transnational Corp. 38,062
1,100 Safety-Kleen Corp. 13,268
- ------------------------------------------------------------------------------------------------------------------
178,106
- ------------------------------------------------------------------------------------------------------------------
Cosmetics - 1.0%
900 Alberto Culver Co., Class B Shares 20,812
3,025 Avon Products, Inc. 75,058
1,900 International Flavors & Fragrances Inc. 65,550
2,819 Kimberly-Clark Corp. 147,999
- ------------------------------------------------------------------------------------------------------------------
309,419
- ------------------------------------------------------------------------------------------------------------------
Data Processing - 0.0%
582 Reynolds & Reynolds Co., Class A Shares 11,858
- ------------------------------------------------------------------------------------------------------------------
Diversified/Manfacturer - 0.9%
6,000 Ogden Corp. 60,000
1,400 Pharmacia & Upjohn Inc. 69,475
1,334 PPG Industries Inc. 80,040
4,200 Tenneco Inc. 71,400
- ------------------------------------------------------------------------------------------------------------------
280,915
- ------------------------------------------------------------------------------------------------------------------
Electric - Integrated - 1.5%
3,420 Calpine Corp.* 290,915
1,500 DQE, Inc. 58,687
2,300 FPL Group, Inc. 115,862
- ------------------------------------------------------------------------------------------------------------------
465,464
- ------------------------------------------------------------------------------------------------------------------
Electronics - 5.3%
1,994 Altera Corp.* 86,489
1,644 EMC Corp. 117,443
3,180 Hewlett-Packard Co. 292,562
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Electronics - 5.3% (continued)
12,319 Intel Corp. (a) $ 915,457
870 Sanmina Corp.* 67,316
1,000 Sawtek Inc.* 35,000
1,616 Solectron Corp.* 116,049
755 Vitesse Semiconductor Corp.* 64,458
- ------------------------------------------------------------------------------------------------------------------
1,694,774
- ------------------------------------------------------------------------------------------------------------------
Electronics - Semiconducter - 0.4%
1,789 Maxim Integrated Products, Inc.* 112,876
- ------------------------------------------------------------------------------------------------------------------
Energy Technology - Equipmet - 0.1%
1,200 Thermo Electron Corp.* 16,125
- ------------------------------------------------------------------------------------------------------------------
Engines - 0.1%
400 Cummins Engine Co., Inc. 19,925
- ------------------------------------------------------------------------------------------------------------------
Entertainment & Leisure - 0.8%
1,000 Carmike Cinemas Inc., Class A Shares* 13,125
1,600 Harrah's Entertainment Inc.* 44,400
1,100 International Game Technology 19,800
2,000 Lowes Cineplex Entertainment* 15,750
2,889 Marriott International Co. 94,434
2,400 Meristar Hospitality Corp. 36,600
1,400 Metro-Goldwyn-Mayor Inc.* 24,500
300 Trendwest Resorts, Inc.* 7,800
- ------------------------------------------------------------------------------------------------------------------
256,409
- ------------------------------------------------------------------------------------------------------------------
Environmental Control - 0.0%
1,600 Newpark Resources, Inc.* 12,400
- ------------------------------------------------------------------------------------------------------------------
Financial Services - 5.5%
888 American Express Co. 119,547
388 Americredit Corp.* 5,795
1,300 Associated First Captial Corp. 46,800
600 Bank United Corp., Class A Shares 19,425
573 Capital One Financial Corp. 22,347
1,864 Charles Schwab Corp. 62,794
11,844 Citigroup Inc. (a) 521,136
728 Concord Efs, Inc. 15,004
2,000 Federal National Mortgage Association 125,375
4,964 Fulton Financial Corp. 93,075
679 Golden West Financial Corp. 66,711
1,261 Household International Inc. 50,597
1,937 Lehman Brothers Holding Inc. 112,951
1,000 Merrill Lynch & Co. 67,187
3,777 Morgan Stanley, Dean Witter, Discover & Co. 336,861
700 Providian Financial Corp. 55,431
194 SEI Investments Co. 17,320
194 SLM Holding Corp. 8,342
400 UnionBanCal Corp. 14,500
- ------------------------------------------------------------------------------------------------------------------
1,761,198
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Food - 3.0%
5,400 AmeriSource Health Corp., Class A Shares* $ 127,912
5,800 Archer-Daniels-Midland Co. 70,687
3,700 Chiquita Brands International 21,968
1,500 Fleming Cos. Inc. 14,718
2,000 General Mills Inc. 162,250
500 The Great Atlantic & Pacific Tea Co., Inc. 15,156
500 Hormel Foods Corp. 20,656
900 IBP Inc. 22,218
2,800 Imperial Sugar Co. 17,150
1,300 Ingles Markets Inc., Class A Shares 17,143
800 International Multifoods Corp. 18,400
2,300 Keebler Foods Co.* 68,712
2,400 Lance, Inc. 31,350
5,200 Nabisco Group Holding 78,000
2,864 The Quaker Oats Co. 177,210
500 Smithfield Foods, Inc. 13,375
400 Suiza Foods Corp.* 15,000
1,864 SYSCO Corp. 65,356
- ------------------------------------------------------------------------------------------------------------------
957,261
- ------------------------------------------------------------------------------------------------------------------
Hospital Supplies & Service - 0.1%
700 United Healthcare Corp. 34,081
- ------------------------------------------------------------------------------------------------------------------
Household Furnishings - 0.2%
1,891 Ethan Allen Interiors, Inc. 60,157
- ------------------------------------------------------------------------------------------------------------------
Human Resources - 0.1%
1,800 Olsten Corp. 18,787
- ------------------------------------------------------------------------------------------------------------------
Industrials - 0.1%
500 Illinois Tool Works Inc. 37,281
- ------------------------------------------------------------------------------------------------------------------
Insurance - 3.5%
1,452 AFLAC Inc. 60,802
4,227 American International Group, Inc. 367,484
400 American National Insurance Co. 26,800
1,340 Arthur J. Gallagher & Co. 71,355
1,300 E. W. Blanch Holdings Inc. 84,662
1,200 Frontier Insurance Group Inc. 10,500
2,768 Lincoln National Corp. 103,973
2,695 Marsh & McLennan Cos., Inc. 184,607
1,491 Radian Group, Inc. 64,019
7,800 Reliance Group Holdings 34,612
1,500 SAFECO Corp. 42,000
1,300 St. Paul Cos. 35,750
900 Unumprovident Corp. 26,493
- ------------------------------------------------------------------------------------------------------------------
1,113,057
- ------------------------------------------------------------------------------------------------------------------
Machinery - 1.6%
1,600 Agco Corp. 20,800
1,334 Applied Materials, Inc.* 103,885
800 Case Corp. 39,850
3,374 Caterpillar Inc. 184,937
1,800 Chart Industries Inc. 8,887
1,561 Deere & Co. 60,391
1,485 Ingersoll-Rand Co. 81,582
800 Speedfam Ipec, Inc.* 9,600
- ------------------------------------------------------------------------------------------------------------------
509,932
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manufacturing - 0.7%
700 Dexter Corp. $ 26,119
1,286 Emerson Electric Co. 81,258
2,213 Pentair, Inc. 88,796
900 Springs Industries Inc. 30,543
200 Standex International Corp. 5,400
- ------------------------------------------------------------------------------------------------------------------
232,116
- ------------------------------------------------------------------------------------------------------------------
Media Group - 0.3%
1,300 Gannett Co. 89,943
- ------------------------------------------------------------------------------------------------------------------
Medical - Drugs - 0.7%
388 Biogen, Inc.* 30,580
943 Dow Chemical Corp. 107,149
2,900 Medco Research Inc.* 72,318
1,000 Mylan Laboratories Inc. 18,375
- ------------------------------------------------------------------------------------------------------------------
228,422
- ------------------------------------------------------------------------------------------------------------------
Medical - Hospital - 0.1%
2,700 Tenet Healthcare Corp. 47,418
- ------------------------------------------------------------------------------------------------------------------
Medical - Nursing Home - 0.0%
2,100 Beverly Enterprises, Inc* 8,925
- ------------------------------------------------------------------------------------------------------------------
Medical - Products & Supplies - 7.5%
4,570 Amgen Inc.* 372,455
1,000 Andrx Corp. 58,531
1,000 Barr Laboratories Inc. 31,750
7,748 Bristol-Myers Squibb Co. 522,990
2,080 Guidant Corp. 111,540
4,620 Johnson & Johnson (a) 424,462
1,000 Laser Vision Centers Inc. 14,032
4,250 Medtronic, Inc. 150,875
5,080 Merck & Co., Inc. 329,247
7,548 Pfizer Inc. 271,256
770 Stryker Corp. 39,366
700 Sybron International Corp.* 18,812
788 VISX, Inc.* 62,325
- ------------------------------------------------------------------------------------------------------------------
2,407,641
- ------------------------------------------------------------------------------------------------------------------
Medical - Services - 0.1%
1,400 Columbia/HCA Healthcare Corp. 29,662
1,400 Phycor Inc.* 6,125
- ------------------------------------------------------------------------------------------------------------------
35,787
- ------------------------------------------------------------------------------------------------------------------
Metals - 0.6%
2,028 Alcoa, Inc. 125,863
500 Phelps Dodge Corp. 27,531
1,164 Reliance Steel & Aluminum Co. 24,444
1,200 A.M. Castle & Co. 15,150
285 Mueller Industries* 8,460
- ------------------------------------------------------------------------------------------------------------------
201,448
- ------------------------------------------------------------------------------------------------------------------
Metals - Mining & Steel - 0.1%
3,100 Homestake Mining Co. 28,481
2,800 Battle Mountain Gold Co. 9,100
- ------------------------------------------------------------------------------------------------------------------
37,581
- ------------------------------------------------------------------------------------------------------------------
Miscellaneous - 0.0%
1,400 Usec Inc. 14,350
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Office Automation & Equipment - 0.4%
2,219 Pitney Bowes, Inc. $ 135,220
- ------------------------------------------------------------------------------------------------------------------
Oil - 2.9%
2,513 Chevron Corp. 223,028
4,584 Conoco Inc.* 125,487
2,178 E.I. du Pont de Nemours & Co. 132,582
3,070 Mobil Corp. 309,302
1,200 Pride International Inc.* 17,025
3,800 Tosco Corp. 95,950
500 Weatherford International, Inc.* 16,000
- ------------------------------------------------------------------------------------------------------------------
919,374
- ------------------------------------------------------------------------------------------------------------------
Oil - Drilling & Services - 0.4%
2,400 Chesapeake Energy Corp. 9,300
1,164 Diamond Offshore Drilling, Inc. 38,848
1,071 Halliburton Co. 43,911
1,400 Input/Output Inc.* 9,275
2,400 Key Energy Services, Inc.* 11,850
- ------------------------------------------------------------------------------------------------------------------
113,184
- ------------------------------------------------------------------------------------------------------------------
Oil - Domestic Production - 1.9%
7,764 Exxon Corp. (a) 589,578
388 USX-Marathon Group, Inc. 11,349
- ------------------------------------------------------------------------------------------------------------------
600,927
- ------------------------------------------------------------------------------------------------------------------
Oil - Field Services - 0.1%
1,300 Baker Hughes Inc. 37,700
- ------------------------------------------------------------------------------------------------------------------
Packaging & Bottling - 0.0%
200 Bemis, Inc. 6,775
- ------------------------------------------------------------------------------------------------------------------
Pharmaceutical - 0.3%
1,100 Dura Pharmaceuticals, Inc.* 15,331
1,000 ICN Pharmaceutical, Inc. 17,187
300 IDEC Pharmaceuticals Corp.* 28,209
1,900 NBTY Inc.* 14,487
500 Roberts Pharmaceutical Corp.* 15,125
- ------------------------------------------------------------------------------------------------------------------
90,339
- ------------------------------------------------------------------------------------------------------------------
Publishing - Newspaper - 0.3%
400 Central Newspapers, Inc., Class A Shares 17,800
659 Harte-Hanks, Inc. 16,598
894 Times Mirror Co., Class A Shares 58,836
- ------------------------------------------------------------------------------------------------------------------
93,234
- ------------------------------------------------------------------------------------------------------------------
Real Estate - 1.0%
2,500 AMRESCO Inc. 7,500
2,100 Franchise Financial Corp. 49,087
12,207 Indymac Mortgage Holdings 183,105
5,600 Meditrust Cos. 47,600
1,900 US Restaurant Properties 36,100
- ------------------------------------------------------------------------------------------------------------------
323,392
- ------------------------------------------------------------------------------------------------------------------
Retail - 5.4%
1,100 Costco Wholesale Corp. 79,200
388 Dayton Hudson Corp. 23,304
485 Fastenal Co. 22,855
5,288 Gap, Inc. 169,216
7,172 Home Depot Inc. 492,178
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Retail - 5.4% (continued)
210 Intimate Brands Inc. $ 8,176
400 Jones Apparel Group, Inc.* 11,500
300 Kenneth Cole Productions* 11,212
3,891 May Department Stores Co. 141,778
200 Movado Group, Inc. 4,600
200 Nautica Enterprises, Inc.* 3,225
2,000 Office Depot Inc.* 20,375
300 Pacific Sunwear of California, Inc.* 8,409
6,400 Rexall Sundown, Inc.* 78,800
1,600 Smart & Final Inc. 16,000
5,343 TJX Co., Inc. 149,937
10,072 Wal-Mart Stores, Inc. (a) 479,049
- ------------------------------------------------------------------------------------------------------------------
1,719,814
- ------------------------------------------------------------------------------------------------------------------
Retail - Restaurant - 0.5%
97 Applebee's International, Inc. 3,267
3,200 McDonald's Corp. 137,600
582 Outback Steakhouse, Inc.* 14,822
- ------------------------------------------------------------------------------------------------------------------
155,689
- ------------------------------------------------------------------------------------------------------------------
Savings & Loan Associates - 0.1%
2,200 Capitol Federal Financial* 21,931
1,300 Roslyn Bancorp Inc. 23,237
- ------------------------------------------------------------------------------------------------------------------
45,168
- ------------------------------------------------------------------------------------------------------------------
Telecommunications - 11.4%
861 ADC Telecommunications, Inc.* 36,108
3,277 ALLTEL Corp. 230,618
10,494 American Telephone & Telegraph Corp.* (a) 456,489
5,614 Ameritech Corp.* 377,190
3,000 Bell Atlantic Corp. 201,937
5,300 C&D Technologies, Inc. 192,456
2,759 Commonwealth Telephone Corp. 121,396
4,838 GTE Corp. 371,921
5,920 King World Productions, Inc.* 222,000
9,158 Lucent Technologies Inc. (a) 594,125
3,300 MCI WorldCom, Inc.* 237,187
800 MediaOne Group, Inc.* 54,650
1,800 Premiere Technologies, Inc.* 10,687
5,727 SBC Communications, Inc. 292,434
3,300 Sprint Corp. 246,056
- ------------------------------------------------------------------------------------------------------------------
3,645,254
- ------------------------------------------------------------------------------------------------------------------
Telecommunications - Equipment - 0.8%
1,456 Linear Technology Corp. 85,585
1,746 Micrel, Inc.* 75,732
1,458 Tellabs, Inc.* 83,014
- ------------------------------------------------------------------------------------------------------------------
244,331
- ------------------------------------------------------------------------------------------------------------------
Textiles - 0.1%
2,500 Guilford Mills Inc. 21,562
600 Timberland, Class A Shares* 23,437
- ------------------------------------------------------------------------------------------------------------------
44,999
- ------------------------------------------------------------------------------------------------------------------
Tobacco - 0.3%
4,400 Dimon Inc. 17,050
1,900 Philip Morris Cos. Inc. 64,956
- ------------------------------------------------------------------------------------------------------------------
82,006
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION U.S. EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Toys - 0.2%
1,018 Hasbro Inc. $ 21,823
2,300 Mattel, Inc. 43,700
- ------------------------------------------------------------------------------------------------------------------
65,523
- ------------------------------------------------------------------------------------------------------------------
Transportation - 0.2%
1,261 CNF Transportation, Inc. 46,972
550 Rollins Truck Leasing Corp. 5,568
500 TRW Inc. 24,875
- ------------------------------------------------------------------------------------------------------------------
77,415
- ------------------------------------------------------------------------------------------------------------------
Utilities - 0.6%
1,500 Coastal Corp. 61,406
400 Columbia Energy Group 22,150
400 MDU Resources Group, Inc. 9,000
4,978 Public Service Co. of New Mexico 90,848
400 Southern Co. 10,300
- ------------------------------------------------------------------------------------------------------------------
193,704
- ------------------------------------------------------------------------------------------------------------------
Waste Disposal - 0.1%
1,800 Waste Management, Inc. 34,650
- ------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost - $25,641,586) 30,750,885
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK RIGHTS - 0.0%
818 Talk.Com Non Transferable Rights* (Cost - $0) 0
- ------------------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS - 2.2% .
5,100 S&P 500 Index, Put @ 1425, Expire 1/00 (Cost - $479,553) 699,337
- ------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
- ------------------------------------------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS - 1.5%
- ------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bill - 1.5%
$ 500,000 U.S. Treasury Bill, 5.003% due 3/16/00 (a)
(Cost - $488,681) 488,681
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost - $26,609,820**) $ 31,938,903
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) Security is segregated for futures contracts commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
14
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STOCKS - 95.6%
- -----------------------------------------------------------------------------------------------------------------
Finland - 4.4%
9,333 Nokia Oyj (a) $ 838,217
18,691 Sonera Oyj (a) 541,439
- -----------------------------------------------------------------------------------------------------------------
1,379,656
- -----------------------------------------------------------------------------------------------------------------
France - 14.1%
8,300 Aerospatiale-Matra* 176,259
4,850 Equant NV* 394,623
7,100 France Telecom SA (a) 623,065
12,900 Rhone-Poulenc SA 666,316
3,500 Societe Generale, Class A Shares 721,269
3,375 Suez Lyonnaise des Eaux 546,345
5,800 Total Fina SA, Class B Shares 728,883
8,215 Vivendi (a) 576,993
- -----------------------------------------------------------------------------------------------------------------
4,433,753
- -----------------------------------------------------------------------------------------------------------------
Germany - 4.2%
10,760 Deutsche Bank AG - REG 721,024
3,730 Mannesmann AG 584,742
- -----------------------------------------------------------------------------------------------------------------
1,305,766
- -----------------------------------------------------------------------------------------------------------------
Ireland - 1.4%
12,814 Elan Corp. PLC ADR* 430,069
- -----------------------------------------------------------------------------------------------------------------
Italy - 1.9%
8,343 Assicurazioni Generali 277,486
50,317 ENI S.p.A 315,363
- -----------------------------------------------------------------------------------------------------------------
592,849
- -----------------------------------------------------------------------------------------------------------------
Japan - 22.2%
47,000 Bank of Tokyo-Mitsubishi, Ltd. 721,752
50,000 Daiwa House Industry Co., Ltd. 494,505
40,000 Kao Corp. 1,130,834
44 Nippon Telegraph & Telephone Corp. 541,375
43 NTT Data Corp. 484,643
3,900 Rohm Co. Ltd. 815,020
17,000 Shin-Etsu Chemical Co., Ltd. 708,932
6,600 Sony Corp. 986,249
20,000 Takeda Chemical Industries, Ltd. 1,080,116
- -----------------------------------------------------------------------------------------------------------------
6,963,426
- -----------------------------------------------------------------------------------------------------------------
Netherlands - 7.3%
11,308 ING Groep NV 614,192
13,694 Koninklijke Ahold NV 450,649
7,239 Koninklijke Philips Electronics NV 728,548
13,979 VNU NV 485,335
- -----------------------------------------------------------------------------------------------------------------
2,278,724
- -----------------------------------------------------------------------------------------------------------------
Spain - 5.1%
51,120 Banco Santander Central Hispano, SA 528,637
39,032 Grupo Dragados, SA 448,944
38,841 Telefonica, SA 621,725
- -----------------------------------------------------------------------------------------------------------------
1,599,306
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
South Korea - 3.6%
35,200 Korea Electric Power Corp. ADR $ 565,400
17,600 Pohang Iron & Steel Co. Ltd. ADR 551,100
- -----------------------------------------------------------------------------------------------------------------
1,116,500
- -----------------------------------------------------------------------------------------------------------------
Sweden - 5.2%
33,124 Europolitan Holdings AB 355,565
21,831 Securitas AB, Class B Shares 327,544
29,828 Skandia Forsakrings AB 622,174
10,300 Telefonaktiebolaget LM Ericsson, Class B Shares 319,127
- -----------------------------------------------------------------------------------------------------------------
1,624,410
- -----------------------------------------------------------------------------------------------------------------
Switzerland - 1.7%
291 Nestle SA (a) 546,861
- -----------------------------------------------------------------------------------------------------------------
United Kingdom - 20.1%
54,374 BG PLC 314,317
40,932 British Telecommunications PLC (a) 614,790
33,068 General Electric Co. PLC 315,866
27,925 Glaxo Wellcome PLC (a) 734,458
39,112 Kingfisher PLC 422,875
51,206 Lloyds TSB Group PLC (a) 638,811
16,953 National Westminster Bank PLC 395,067
25,949 Next PLC 260,901
38,442 Prudential PLC 590,684
33,116 Reuters Group PLC 373,318
89,511 Shell Transport & Trading Co. (a) 669,271
41,582 Vodafone AirTouch PLC (a) 984,080
- -----------------------------------------------------------------------------------------------------------------
6,314,438
- -----------------------------------------------------------------------------------------------------------------
United States - 4.4%
121,400 WEBS-Hong Kong Index Series 1,380,925
- -----------------------------------------------------------------------------------------------------------------
TOTAL STOCK (Cost - $27,001,723) 29,966,683
- -----------------------------------------------------------------------------------------------------------------
PURCHASED OPTIONS - 1.3%
- -----------------------------------------------------------------------------------------------------------------
Call Options - 0.5%
680 AEX Stock Index, Call @ 560, Expire 1/00 20,640
159 CAC 40 Stock Index, Call @ 4550, Expire 12/99 43,925
154 DAX Stock Index, Call @ 5350, Expire 12/99 25,290
155 FTSE Stock Index, Call @ 6425, Expire 12/99 34,079
3,561 Nikkei Index, Call @ 17500, Expire 10/99 10,368
40 SMI Stock Index, Call @ 6950, Expire 12/99 7,594
- -----------------------------------------------------------------------------------------------------------------
141,896
- -----------------------------------------------------------------------------------------------------------------
Put Options - 0.8%
680 AEX Stock Index, Put @ 560, Expire 1/00 26,071
159 CAC 40 Stock Index, Put @ 4550, Expire 12/99 34,578
154 DAX Stock Index, Put @ 5350, Expire 12/99 56,977
3 EOE Dutch Index, Put @ 580, Expire 10/99 10,543
155 FTSE Stock Index, Put @ 6425, Expire 12/99 116,276
3,561 Nikkei Index, Put @ 17500, Expire 10/99 7,525
40 SMI Stock Index, Put @ 6950, Expire 12/99 8,022
- -----------------------------------------------------------------------------------------------------------------
259,992
- -----------------------------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS (Cost - $539,900) 401,888
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
================================================================================
Schedules of Investments (continued) September 30, 1999
================================================================================
CENTURION INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INSTRUMENTS - 3.1%
- -----------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILL - 3.1%
$ 1,000,000 U.S. Treasury Bill, 5.003% due 3/16/00 (a)
(Cost - $977,362) $ 977,362
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost - $28,518,985**) $ 31,345,933
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Security is segregated for futures contracts commitments.
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
17
<PAGE>
================================================================================
Statements of Assets and Liabilities September 30, 1999
================================================================================
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C> <C>
Investments, at value (Cost --- $7,970,783,
$26,609,820 and $28,518,985, respectively) $ 10,267,418 $ 31,938,903 $ 31,345,933
Cash segregated for futures contracts 18,607,954 - -
Dividends and interest receivable 61,603 36,889 83,592
Receivable from manager 30,046 - -
Receivable for Fund shares sold 6,280 - -
Receivable for securities sold - 4,074,950 347,780
Receivable from broker - variation margin - - 622,590
Receivable for open forward
foreign currency contracts (Note 8) - - 17,094
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 28,973,301 36,050,742 32,416,989
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to broker - variation margin 297,375 109,800 -
Payable for Fund shares reacquired 53,476 55,549 61,300
Administration fees payable 5,212 5,601 5,346
Management fees payable - 20,387 19,596
Consulting fees payable - 10,884 8,571
Options written (Note 6) - - 415
Payable for securities purchased - 3,384,752 -
Payable to bank - 102,460 772,556
Payable for open forward
foreign currency contracts (Note 8) - - 94,782
Accrued expenses 24,657 32,834 36,386
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 380,720 3,722,267 998,952
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 28,592,581 $ 32,328,475 $ 31,418,037
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital stock $ 3,786 $ 3,109 $ 2,927
Capital paid in excess of par value 40,756,876 29,310,436 27,657,941
Accumulated net investment income (loss) 777,642 - (166,744)
Accumulated net realized gain (loss) from security
transactions, futures contracts and options (16,245,038) (2,644,153) 1,130,204
Net unrealized appreciation (depreciation) of investments,
futures contracts, options and foreign currencies 3,299,315 5,659,083 2,793,709
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 28,592,581 $ 32,328,475 $ 31,418,037
- ---------------------------------------------------------------------------------------------------------------------------
Shares Outstanding 3,786,165 3,108,819 2,927,467
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, per share $7.55 $10.40 $10.73
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
================================================================================
Statements of Operations For the Period Ended September 30, 1999(a)
================================================================================
<TABLE>
<CAPTION>
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest $ 1,167,268 $ 59,812 $ 292,252
Dividends - 457,301 638,721
Less: Foreign withholding tax - - (80,407)
- ---------------------------------------------------------------------------------------------------------------------------
Total Investment Income 1,167,268 517,113 850,566
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 2) 345,060 280,701 309,463
Administration fees (Note 2) 57,510 79,196 86,450
Registration fees 41,353 43,685 47,471
Organization costs 41,083 51,567 56,515
Audit and legal 35,143 35,188 37,458
Consulting fees (Note 2) 14,377 19,830 21,636
Directors' fees 11,000 12,000 12,000
Shareholder communications 5,541 7,575 7,733
Shareholder and system servicing fees 5,129 5,447 5,156
Custody 1,226 20,756 26,762
Pricing fees - - 3,826
Other 21,830 18,354 17,729
- ---------------------------------------------------------------------------------------------------------------------------
Total Expenses 579,252 574,299 632,199
Less: Management and consulting fee waiver (Note 2) (148,543) - -
- ---------------------------------------------------------------------------------------------------------------------------
Net Expenses 430,709 574,299 632,199
- ---------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 736,559 (57,186) 218,367
- ---------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS, OPTIONS
AND FOREIGN CURRENCIES (NOTES 3, 5, 6 AND 8):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 1,013 (63,396) 3,369,701
Futures contracts (2,494,049) (1,666,909) (1,107,917)
Options (13,752,002) (914,860) (918,154)
Foreign currency transactions - - (655,052)
- ---------------------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss) (16,245,038) (2,645,165) 688,578
- ---------------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments,
Futures Contracts, Options and Foreign Currencies:
Beginning of period - - -
End of period 3,299,315 5,659,083 2,793,709
- ---------------------------------------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation 3,299,315 5,659,083 2,793,709
- ---------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) on Investments, Futures Contracts,
Options and Foreign Currencies (12,945,723) 3,013,918 3,482,287
- ---------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations $ (12,209,164) $2,956,732 $ 3,700,654
- ---------------------------------------------------------------------------------------------------------------------------
(a) For the period from December 7, 1998 (commencement of operations) to
September 30, 1999.
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
Statements of Changes in Net Assets For the Period Ended September 30, 1999 (a)
==========================================================================================================
Centurion
Centurion Centurion International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
- ---------------------------------------------------------------------------------------------------------------
OPERATIONS:
<S> <C> <C> <C>
Net investment income (loss) $ 736,559 $ (57,186) $ 218,367
Net realized gain (loss) (16,245,038) (2,645,165) 688,578
Increase in net unrealized appreciation 3,299,315 5,659,083 2,793,709
- ---------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations (12,209,164) 2,956,732 3,700,654
- ---------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - -
- ---------------------------------------------------------------------------------------------------------------
Increase in Net Assets
From Distributions to Shareholders - - -
- ---------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
Net proceeds from sale of shares 87,816,165 68,184,942 87,912,971
Cost of shares reacquired (47,014,420) (38,813,199) (60,195,588)
- ---------------------------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 40,801,745 29,371,743 27,717,383
- ---------------------------------------------------------------------------------------------------------------
Increase in Net Assets 28,592,581 32,328,475 31,418,037
NET ASSETS:
Beginning of period - - -
- ---------------------------------------------------------------------------------------------------------------
End of period* $28,592,581 $32,328,475 $ 31,418,037
- ---------------------------------------------------------------------------------------------------------------
* Includes accumulated net investment
income (loss) of: $777,642 - ($166,744)
- ---------------------------------------------------------------------------------------------------------------
(a) For the period from December 7, 1998 (commencement of operations) to
September 30, 1999.
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
================================================================================
Notes to Financial Statements
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Centurion Funds, Inc. ("Fund"), a Maryland Corporation, is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund consists of three separate investment
portfolios ("Portfolios"): Centurion U.S. Contra Fund ("U.S. Contra Fund"),
Centurion U.S. Equity Fund ("U.S. Equity Fund") and Centurion International
Equity Fund ("International Equity Fund").
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities traded
on national securities markets are valued at the closing prices on such markets;
securities for which no sales price was reported and U.S. government and agency
obligations are valued at the mean between bid and ask prices; (c) securities
for which market quotations are not available will be valued in good faith at
fair value by or under the direction of the Board of Directors; (d) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (e) dividend income is recorded on
the ex-dividend date; foreign dividend income is recorded on the ex-dividend
date or as soon as practical after the Fund determines the existence of a
dividend declaration after exercising reasonable due diligence; (f) interest
income, adjusted for amortization of premium and accretion of discount, is
recorded on the accrual basis; (g) gains or losses on the sale of securities are
calculated by using the specific identification method; (h) dividends and
distributions to shareholders are recorded on the ex-dividend date; (i) the
accounting records are maintained in U.S. Dollars. All assets and liabilities
denominated in foreign currencies are translated into U.S. dollars based on the
rate of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, and income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian bank;
(j) the character of income and gains distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At September 30, 1999, reclassifications were made to the capital
accounts of U.S. Contra Fund, U.S. Equity Fund and International Equity Fund to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Accordingly, a portion of
accumulated net investment income (loss) amounting to $41,083, $(58,198) and and
$56,515 was reclassified to paid-in capital for U.S. Contra Fund, U.S. Equity
Fund and International Equity Fund, respectively. Net investment income, net
realized income and net assets were not affected by this change; and (k)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
In addition, the International Equity Portfolio may enter into forward
exchange contracts in order to hedge against foreign currency risk. These
contracts are marked to market daily, by recognizing the difference between the
contract exchange rate and the current market rate as an unrealized gain or
loss. Realized gains or losses are recognized when the contracts are settled.
2. MANAGEMENT AGREEMENT
Centurion Trust Company ("Centurion") acts as investment manager of the
Portfolios. U.S. Equity Fund and International Equity Fund pay Centurion a
management fee calculated at an annual rate based on the average daily net
assets as follows:
<TABLE>
<CAPTION>
U.S. Equity Fund International Equity Fund
----------------------------------------------- ---------------------------------------------------------
Annual Annual
Average Daily Net Assets Rate Average Daily Net Assets Rate
----------------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C>
First $25 Million 0.750% First $50 Million 0.750%
Over $25 Million 0.700 Next $50 Million 0.725
Over $100 Million 0.700
</TABLE>
21
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
U.S. Contra Fund pays Centurion a management fee calculated at an annual
rate of 1.20% of the average daily net assets. These fees are calculated daily
and paid monthly. For the period ended September 30, 1999, Centurion waived a
portion of its management fee for U.S. Contra Fund in the amount of $134,166.
SSB Citi Fund Management LLC ("SSBC") acts as the Portfolios' administrator
for which each Portfolio pays a fee calculated at an annual rate of 0.20% of the
respective Portfolio's average daily net assets. This fee is calculated daily
and paid monthly.
SSBC also receives a fee for consulting services at an annual rate of 0.05%
of the respective Portfolio's average daily net assets. This fee is calculated
daily and paid monthly. SSBC waived all of its consulting fees for U.S. Contra
Fund for the period ended September 30, 1999.
Centurion has entered into sub-advisory agreements with Credit Suisse Asset
Management (formerly known as BEA Associates), Parametric Portfolio Associates
and Friends Ivory & Sime, Inc. Pursuant to the sub-advisory agreement, each
sub-advisor is responsible for the day-to-day portfolio operations and and
investment decisions of the portfolio. The sub-advisors for each Portfolio are
as follows:
<TABLE>
<CAPTION>
Sub-Advisor
Portfolio Sub-Advisors Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Contra Fund Credit Suisse Asset Management 0.850%
U.S. Equity Fund Parametric Portfolio Associates:
on the first $25 million 0.300
on the amount over $25 million 0.250
Credit Suisse Asset Management 0.100
International Equity Fund Friends Ivory & Sime, Inc.:
on the first $50 million 0.300
on the next $50 million 0.275
on the amount over $100 million 0.250
Credit Suisse Asset Management 0.100
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. Investments
During the period ended September 30, 1999, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows: International U.S. Contra U.S. Equity
<TABLE>
<CAPTION>
International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchases --- $64,724,200 $70,522,711
- --------------------------------------------------------------------------------------------------------------------------
Sales --- 39,019,328 46,853,780
- --------------------------------------------------------------------------------------------------------------------------
At September 30, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
International
U.S. Contra U.S. Equity Equity
Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,296,635 $5,684,390 $3,931,380
Gross unrealized depreciation - (355,307) (1,104,432)
- --------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 2,296,635 $5,329,083 $2,826,948
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
4. Repurchase Agreements
The Portfolios purchase (and its custodian takes possession of) U.S.
government securities from banks and securities dealers subject to agreements to
resell the securities to the seller at a future date (generally, the next
business day) at an agreed-upon higher repurchase price. The Portfolios require
maintenance of the market value of the collateral in amounts at least equal to
the repurchase price.
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are
recognized as assets. Securities or cash equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contract. During
the period the futures contract is open, changes in the value of the contract
are recognized as unrealized gains or losses by "marking to market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments are made or received and recognized as assets
due from or liabilities due to broker, depending upon whether unrealized gains
or losses are incurred. When the contract is closed the Portfolios record a
realized gain or loss equal to the difference between the proceeds from (or cost
of) the closing transactions and the Portfolio's basis in the contract.
The Portfolios enter into such contracts to hedge a portion of its portfolio.
The Portfolios bear the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts) and the credit
risk should a counterparty fail to perform under such contracts.
At September 30, 1999, the Portfolios had the following open futures
contracts:
U.S. Contra Fund
<TABLE>
<CAPTION>
# of Basis Market Unrealized
Contracts Expiration Value Value Gain
- --------------------------------------------------------------------------------------------------------------------------
Sold Contracts:
<S> <C> <C> <C> <C> <C>
S&P 500 Index 65 12/99 $ 22,098,430 $ 21,095,750 $1,002,680
- --------------------------------------------------------------------------------------------------------------------------
U.S. Equity Fund
# of Basis Market Unrealized
Contracts Expiration Value Value Gain
- --------------------------------------------------------------------------------------------------------------------------
Sold Contracts:
S&P 500 Index 24 12/99 $ 8,119,200 $ 7,789,200 $ 330,000
- --------------------------------------------------------------------------------------------------------------------------
International Equity Fund
# of Basis Market Unrealized
Contracts Expiration Value Value Gain (Loss)
- --------------------------------------------------------------------------------------------------------------------------
Sold Contracts:
Marche A Terme International
de France Cac 40 Euro Index 19 10/99 $ 920,993 $ 927,570 ($6,577)
London Financial Times
Stock Exchange 100 Index 15 12/99 1,506,917 1,502,964 3,953
Simex Nikkei 225 Index 8 12/99 662,722 659,716 3,006
Eurex Deutschland DAX Index 9 12/99 1,271,659 1,235,503 36,156
- --------------------------------------------------------------------------------------------------------------------------
$4,362,291 $4,325,753 $36,538
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
6. Option Contracts
Premiums paid when put or call options are purchased by the Portfolios
represent investments which are marked-to-market daily. When a purchased option
expires, the Portfolios will realize a loss in the amount of the premium paid.
When the Portfolios enter into a closing sales transaction, the Portfolios will
realize a gain or loss depending on whether the proceeds from the closing sales
transaction are greater or less than the premium paid for the option. When the
Portfolios exercise a put option, it will realize a gain or loss from the sale
of the underlying security and the proceeds from such sales will be decreased by
the premium originally paid. When the Portfolios exercise a call option, the
cost of the security which the Portfolios purchase upon exercise will be
increased by the premium originally paid.
At September 30, 1999, the International Equity Fund held 6 purchased call
options and 7 purchased put options with a total cost of $539,900, the U.S.
Contra Fund held 2 purchased put options with a total cost of $6,504,740 and the
U.S. Equity Fund held 1 purchased put option with a cost of $479,553.
When a Portfolio writes a call or put option, an amount equal to the premium
received by the Portfolio is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Portfolio realizes a
gain equal to the amount of the premium received. When the Portfolio enters into
a closing purchase transaction, the Portfolio realizes a gain or loss depending
upon whether the cost of the closing transaction is greater or less than the
premium originally received without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a call option is exercised the proceeds of the security sold will be
increased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Portfolio purchased upon exercise. When written index options
are exercised, settlement is made in cash.
The risk associated with purchasing options is limited to the premium
originally paid. The Portfolio enters into options for hedging purposes. The
risk in writing a call option is that the Portfolio gives up the opportunity to
participate in any increase in the price of the underlying security beyond the
exercise price. The risk in writing a put option is that the Portfolio is
exposed to the risk of loss if the market price of the underlying security
declines.
The following covered call option transactions occurred in the International
Equity Fund during the period ended September 30, 1999:
<TABLE>
<CAPTION>
Number of
Contracts Premium
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options written during the period ended September 30, 1999 690 $458,117
Options cancelled in closing purchase transactions (687) (453,963)
- --------------------------------------------------------------------------------------------------------------------------
Options written, outstanding at September 30, 1999 3 $4,154
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following represents the covered call option written contracts held by
the International Equity Fund that were open as of September 30, 1999:
<TABLE>
<CAPTION>
Number of Strike
Contracts Expiration Price Value
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3 EOE Dutch Index
(Premium received --- $4,154) 10/99 $580 $415
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
7. Foreign Securities
Investing in securities of foreign companies and foreign governments
involve special risks and considerations not typically associated with investing
in U.S. companies and the U.S. government. These risks include revaluation of
currencies and future adverse political and economic developments. Moreover,
securities of many foreign companies and foreign governments and their markets
may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
8. Forward Foreign Currency Contracts
At September 30, 1999, International Equity Fund had open forward foreign
currency contracts as described below. The Portfolios bear the market risk that
arise from changes in foreign currency exchange rates. The unrealized gain
(loss) on the contracts reflected in the accompanying financial statements were
as follows:
<TABLE>
<CAPTION>
Local Market Settlement Unrealized
Foreign Currency Currency Value Date Gain (Loss)
- --------------------------------------------------------------------------------------------------------------------------
To Sell:
<S> <C> <C> <C> <C>
British Pound 1,050,000 1,729,959 12/17/99 $(33,500)
Euro 2,310,000 2,476,025 12/17/99 (53,239)
Japanese Yen 95,000,000 903,471 12/17/99 17,094
Swiss Franc 500,000 336,310 12/17/99 (8,043)
- --------------------------------------------------------------------------------------------------------------------------
Total Net Unrealized Loss on Forward
Foreign Currency Contracts 5,445,765 $(77,688)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
9. Shares of Capital Stock
At September 30, 1999, the Fund had 350,000,000 shares of capital stock
authorized with a par value of $0.001 per share. Each share represents an equal
proportionate interest and has an equal entitlement to any dividends and
distributions made by the Fund.
Transactions in shares of each Portfolio were as follows:
<TABLE>
<CAPTION>
Period Ended
September 30, 1999(a)
- --------------------------------------------------------------------------------------------------------------------------
U.S. Contra Fund
<S> <C>
Shares sold 9,964,500
Shares reacquired (6,178,335)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase 3,786,165
- --------------------------------------------------------------------------------------------------------------------------
U.S. Equity Fund
Shares sold 6,762,541
Shares reacquired (3,653,722)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase 3,108,819
- --------------------------------------------------------------------------------------------------------------------------
International Equity Fund
Shares sold 8,672,435
Shares reacquired (5,744,968)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase 2,927,467
- --------------------------------------------------------------------------------------------------------------------------
(a) For the period December 7, 1998 (commencement of operations) to September
30, 1999.
</TABLE>
25
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
International
U.S. Contra U.S. Equity Equity
Fund(1)(2) Fund(1)(2) Fund(1)(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income (loss)(3) 0.17 (0.01) 0.04
Net realized and unrealized gain (loss) (2.62) 0.41 0.69
- ------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (2.45) 0.40 0.73
- ------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income - - -
- -----------------------------------------------------------------------------------------------------------------
Total Distributions - - -
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.55 $10.40 $10.73
- ------------------------------------------------------------------------------------------------------------------
Total Return(4) (24.50)% 4.00% 7.30%
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $28,593 $32,328 $31,418
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets(5):
Expenses(3)(6) 1.50% 1.45% 1.46%
Net investment income (loss) 2.57 (0.14) 0.51
- ------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 0% 89% 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) 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:
Per Share Decrease Expense Ratio
in Net Investment Income Without Fee Waiver
--------------------------- ---------------------
U.S. Contra Fund $0.03 2.02% (5)(6)
(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%
26
<PAGE>
KPMG
757 Third Avenue Telephone 212 758 9700
New York, NY 10017 Fax 212 872 3001
The Shareholders and Board of Directors of
Centurion Funds, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Centurion U.S. Contra Fund,
Centurion U.S. Equity Fund and Centurion International Equity Fund of
Centurion Funds, Inc. as of September 30, 1999, the related statements of
operations, the statements 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 are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of September 30, 1999, by correspondence with the custodian and
brokers. As to securities purchased and sold but not yet received or
delivered, we performed other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material aspects, the financial position of the
Centurion U.S. Contra Fund, Centurion U.S. Equity Fund and Centurion
International Equity Fund of Centurion Funds, Inc. as of September 30, 1999,
the results of their operations, the changes in their net assets and their
financial highlights for the period from December 7, 1998 (commencement of
operations) to September 30, 1999, in conformity with generally accepted
accounting principles.
/s/ KPMG
New York, New York
November 16, 1999
KPMG LLP. KPMG LLP, a U.S limited liability partnership, is a member of KPMG
International, a Swiss association.
<PAGE>
================================================================================
Tax Information (unaudited)
================================================================================
The total foreign sourced income received by the International Equity Fund was
$0.2182 per share (or a total amount of $638,721). The total amount of foreign
taxes paid was $0.0275 per share (or a total amount of $80,407).
