RUSHALL & McGEEVER
A Professional Law Corporation
2111 Palomar Airport Road, Suite 200
Carlsbad, California 92009
Telephone (619) 438-6855
Facsimile (619) 438-3026
April 9, 1996 via ELECTRONIC TRANSMISSION
Filing Desk
U.S. SECURITIES AND EXCHANGE COMMISSION
450 5th Street, N.W.
Washington, DC 20549
Re: Centurion T.A.A. Fund, Inc.
Post-Effective Amendment No. 22 to Form N-1A
1933 Act File No. 2-73955
1940 Act File No. 811-3257
Ladies and Gentlemen:
We hereby submit for filing on behalf of the above Registrant, pursuant
to Rule 485(b), Post-Effective Amendment No. 22. The Post-Effective
Amendment is being filed under both the Securities Act of 1993 (the
"1993 Act") and the Investment Company Act of 1940 (the "1940 Act").
The purpose of Post-Effective Amendment No. 22 is (1) to amend (by
Supplement No. 1) the performance and financial highlights sections of
the Prospectus and amend the Statement of Additional Information (SAI)
to reflect the Fund's financial statements for its year ended
December 31, 1995 and to file those financial statements as part of
the SAI.
Applicant has also included as part of Supplement No. 1 disclosure
regarding certain proposed changes to the Fund's fundamental investment
policies which are be considered for approval by the Fund's shareholders
at the Annual Meeting of Shareholders. The Fund has filed its
preliminary proxy material for this meeting and it is presently being
reviewed by the Staff. Applicant desires to include this information
in the Post-Effective Amendment rather than file it separately as a
Rule 497 "sticker".
We understand that the Post-Effective Amendment will be effective
upon its filing with the Commission. Please contact us at your
earliest convenience with any additional questions or comments you
may have.
Very truly yours,
BRUCE J. RUSHALL
BJR/ask
Enclosures
c/w/enc: Kevin Rupert (Mail Stop 10-S)
Jack K. Heilbron
Kenneth W. Elsberry
As filed with the Securities and Exchange Commission
on April ___, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Centurion T.A.A. Fund, Inc., formerly Excel Value Fund, Inc.
(File No. 2-73955): Post-Effective Amendment No. 22
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Centurion T.A.A. Fund, Inc., formerly Excel Value Fund, Inc.
(File No. 811-3257): Post-Effective Amendment No. 22
CENTURION T.A.A. FUND, INC.
(Exact Name of Registrant as Specified in Charter)
11545 W. Bernardo Court, Suite 100, San Diego, California 92127
(Address of Principal Executive Offices) (Zip Code)
(619) 673-8536
(Registrant's Telephone Number, including Area Code)
Jack K. Heilbron
11545 W. Bernardo Court, Suite 100, San Diego, California 92127
(Name and Address of Agent for Service)
Copy to:
Bruce J. Rushall, Esq.
Rushall & McGeever
2111 Palomar Airport Road, Suite 200
Carlsbad, California 92009
It is proposed that this filing will become effective immediately
upon filing pursuant to Paragraph (b) of Rule 485.
The Registrant has registered an indefinite number or
amount of securities under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act
of 1940. A Rule 24f-2 Notice for the Registrant's most
recent fiscal year was filed with the Securities and
Exchange Commission on March 29, 1995.
CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N 1A
Item No.
of Form N-1A Caption in Prospectus
1 Cover Page
2 "Summary of Contents"; "Fees and Expenses"
3 "Financial Highlights"; "Performance Data"
4 "Summary of Contents"; "Investment Objectives and
Policies of the Fund"; "Investments the Fund Will
Not Make; Restrictions on Investments";"Other
Information"; "Appendix A"
5 "Summary of Contents"; "Management"; "Other Information"
6 "Investment Income"; "Taxes"; "Other Information"
7 "Valuing Shares"; "Buying Shares"; "Sales Charge";
"Reinvestments"; "Shareholder Services/Transfers"
8 "Redeeming Shares"; "Shareholder Services/Transfers"
9 Not Applicable
Caption in Statement of Additional Information
10 Cover Page
11 "Table of Contents"
12 "Additional Information"
13 Investment Restrictions; See also "Investment
Objectives and Policies of the Fund";
"Investments the Fund Will Not Make;
Restrictions on Investments" in Prospectus
14 "Fund Management"
15 "Ownership of Shares"
16 "Centurion Counsel, Inc., Centurion Group, Inc. and
Centurion Institutional Services, Inc.";
"Custodian; General Counsel; Auditors"
17 "Brokerage"
18 See "Investment Income" and "Other Information" in
Prospectus
19 "Additional Purchase and Redemption Information"; See
"Buying Shares"; "Sales Charge"; "Redeeming Shares"
and "Shareholder Services/Transfers" in the Prospectus
20 "Taxes"
21 "Centurion Counsel, Inc., Centurion Group, Inc. and
Centurion Institutional Services, Inc."
22 "Calculation of Performance Data"
23 "Financial Statements"
CENTURION T.A.A. FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART A PROSPECTUS
PROSPECTUS SUPPLEMENT
CENTURION T.A.A. FUND, INC.
DATED APRIL ___, 1996
The following text replaces the text under the same headings on
pages 5 through 9 of the Prospectus regarding the matters discussed
thereunder.
FEES AND EXPENSES
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a Percentage of Offering Price). . . . . 0%
Exchange Fee. . . . . . . . . . . . . . . . . $7.50*
Annual Fund Operating Expenses (as a percentage of Average Net Assets)
Management Fees. . . . . . . . . . . . . . . . 1.0%
l2b-1 Fees . . . . . . . . . . . . . . . . . . 1.0%**
Other Expenses (After Waivers of Fees and
Expense Reimbursements). . . . . . . . . . . . 1.53%***
Total Fund Operating Expenses
(After Fee Waiver and Expense Reimbursements). 3.53%***
Example: 1 Year 3 Years 5 Years 10 Years
You would pay the following expenses
on a $1,000 investment assuming a 5%
annual return. You would pay the
same expenses whether or not you
redeemed your shares at the end of
each time period . . . . . . . . . .$37.07 $135.52 $234.25 $432.58
* There is a $7.50 transfer agent's fee per exchange.
** Includes the 0.75% Distribution Fee and the
0.25% Shareholder Services Fee.
*** Without the waivers of fees and expense
reimbursements Other Expenses would be 2.82% and the Fund's Total
Operating Expenses would be 4.82% based on the average net assets
of the Fund during the year ended December 31, 1995 and its Total
Operating Expenses before waivers of fees and reimbursements
in 1995.
The purpose of the above table is to assist the investor in
understanding the various costs and expenses that investors in the Fund
will bear directly or indirectly. The above example should not be
considered a representation of past or future expenses of the Fund;
actual expenses may be greater or less than those shown. At least
through December 31, 1996, the Fund's investment advisor has agreed to
waive reimbursement of its expenses by the Fund to the extent such
reimbursements would result in the Fund's expenses, including the
management fee (investment advisory fee), but excluding 12b-1 fees,
interest expense, taxes, brokerage fees and commissions, to exceed
2.625% of the first $200-million of its average daily net assets on an
annual basis. The amounts in the above example may increase if waivers
of expense reimbursements and fees are reduced or eliminated. The Fund
does not charge shareholders a front-end sales charge. However,
because the Fund will pay continuing 12b-1 fees at an annualized rate
of up to 1.0% of the Fund's average daily net assets attributable to
the shares placed, long-term shareholders may pay more than the
economic equivalent of the current maximum front-end sales charges or
the maximum front-end sales charges permitted by the National
Association of Security Dealers (the "NASD") Rules of Fair Practice.
FINANCIAL HIGHLIGHTS
Year Ended December 31 (Audited)
1995**1994**1993**1992**1991**1990**1989**1988 1987 1986
Net Asset
Value,
Beginning
of Period $3.43 $4.55 $4.96 $5.17 $5.11 $7.37 $6.77 $6.59 $9.91 $9.59
INCOME FROM INVESTMENT OPERATIONS
Net
Investment
Income (0.05)(0.18)(0.21)(0.03) 0.04 0.11 0.19 0.08 0.11 0.13
Net Gains
or (Losses)
on Securities
(Both Realized
and
Unrealized)(0.04)(0.94)(0.20)(0.18) 0.73 (1.77) 1.07 0.32 0.48 1.37
Total From
Investment
Operations (0.09)(1.12)(0.41)(0.21) 0.77 (1.66) 1.26 0.40 0.59 1.50
LESS DISTRIBUTIONS
Dividends
from Net
Investment
Income 0.00 0.00 0.00 0.00 (0.07)(0.17)(0.19)(0.22)(0.23)(0.30)
Distributions
from Capital
Gains 0.00 0.00 0.00 0.00 (0.64)(0.43)(0.47) 0.00 (3.68)(0.88)
Returns of
Capital Total
Distrib. 0.00 0.00 0.00 0.00 (0.71)(0.60)(0.66)(0.22)(3.91)(1.18)
Net Asset
Value, End
of Period $3.34 $3.43 $4.55 $4.96 $5.17 $5.11 $7.37 $6.77 $6.59 $9.91
TOTAL
RETURN*** -2.62%-28.01%-12.39%-8.38% 9.94%-27.09%-3.57%-0.30%-0.33%11.32%
RATIOS/SUPPLEMENTAL DATA
Net Assets,
End of
Period ($000
Omit.)$4,370 $452 $757 $1,273 $1,593 $1,917 $3,423 $4,869 $7,161 $12,198
Ratio of Expenses,
before waiver of Fees
and reimbursement, to
average Net
Assets 4.82% 9.04% 6.19% 4.51% 4.20% 3.89% 4.12% 3.31% 2.24% 1.95%
Ratio of Expenses,
after waiver of Fees
and reimbursement, to
average Net
Asset 3.53% 6.00% 5.19% 3.51% 3.18% 2.90% 3.12% 2.46% 1.96% 1.76%
Ratio of Net Investment
Income to average Net
Assets 0.17%-4.78%-4.50%-0.78% 1.20% 1.72% 2.60% 1.67% 0.86% 1.45%
Portfolio Turnover
Rate 57.20%148.21%143.11%151.12%161.48%60.77%75.53%39.34%104.01%126.66%
Number of Shares
outstanding at End of
Period
(000) 1,309 132 166 256 308 375 465 719 1,087 1,231
* Restated to give retroactive effect to the two-for-one stock split
effected in the form of a 100% stock dividend in July, 1985.
** Centurion Counsel has acted as the Fund's investment advisor and CGI
has acted as the Fund's accounting services agent, transfer agent,
dividend disbursing agent and administrative services agent since
January 1, 1995. Prior thereto, Excel Advisors, Inc. had acted in
each of the foregoing capacities of the Fund since May 10, 1989.
Prior thereto, IRI Asset Management, Inc. served the Fund in such
capacities.
*** Total return is based on the change in net asset value during the
period, assumes reinvestment of all distributions and the maximum
front-end sales charge of 4.5% in effect through 1994. Commencing
in 1995, the Fund charges no front-end load but will pay 12b-1
fees of up to 1.0% of its net asset value per annum.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Fund Performance
For the year ended December 31, 1995, the Fund
experienced a total return of a negative 2.62%. This
compared to a positive 34.11% experienced by the S&P 500
Index, which broadly reflects the performance of common
stock. Management notes that for the first six months of
1995, the Fund experienced a total return of a negative
4.62%. This was partially countered by an increase in
total return of approximately 2% during the last six
months of the year. Management attributes the Fund's
improved performance to its new share marketing strategy
(no front-end sales charge and increased 12b-1 fees) and
new investment objective and policies both of which were
implemented in May, 1995. Also, under the Fund's new
investment advisor, Centurion Counsel, and new investment
objective and policies, the Fund's investment performance
also improved. Under the Fund's new marketing strategy,
the Fund's net assets grew from a low of approximately
$325,000 to more than $4,370,000 by December 31, 1995.
As a result of the Fund's asset base growth and
certain cost saving measures instituted by management,
the Fund's expense ratio decreased from 6% in 1994 to
3.6% in 1995. For 1996, Centurion Counsel has again
agreed to waive its expense reimbursements and, if
necessary, to reimburse the Fund, to the extent the
Fund's expenses, other than 12b-1 fees, interest expense,
taxes and brokerage fees and commissions exceed 2.625% of
the first $200-million of the Fund's average daily net
assets. There is no dollar limit to the amount of
expense reimbursements which will be waived. Thus, so
long as these waivers are in effect, Centurion Counsel
will bear the Fund's total operating expenses to the
extent they exceed 3.625% of the Fund's daily average net
assets. Centurion Counsel has agreed to maintain this
waiver at least through the current fiscal year. The
waiver of reimbursements will be calculated and made at
the same time as the advisory fee is payable under the
Advisory Agreement.
PERFORMANCE GRAPH
Description Of Performance Graph
Graph compares the average total return over a
10-year period from January 1, 1986 through
December 31, 1995 for the fund and the S&P 500
index. The graph includes a table which states
that the average annual total returns for the Fund
over the 1-year, 5-year, and 10-year periods ending
December 31, 1995 were (2.62%), (6.91%), and 1.83%,
respectively. These returns include all dividends
and capital gains distributions and the maximum
front end sales load of 4.5% in effect prior to
1995.
Past performance is not predictive of future
performance.
The above illustration compares a $10,000 investment
made in the Fund on January 1, 1986 to a $10,000
investment made in the Standard & Poor's 500 Stock Index
on that date. For comparative purposes, the value of the
Index on December 31, 1985 is used as the beginning value
on January 1, 1986. All dividends and capital gain
distributions are reinvested.
The graph and related data concerning the Fund reflect
costs after the advisor's waiver of fees and
reimbursements. Unlike the Fund, the Standard & Poor's
500 Stock Index is an unmanaged total return performance
benchmark consisting of a broad-based basket of 500
securities. The index does not take into account
charges, fees and other expenses. Further information
relating to Fund performance, including expense
reimbursements, if applicable, is contained in the
Financial Highlights section of this Prospectus and
elsewhere herein.
PROPOSED CHANGES IN FUNDAMENTAL INVESTMENT POLICIES,
PROPOSED CLASSIFICATION OF SHARES
PROPOSED SHARE DISTRIBUTION PLANS
Shareholder Proposals
The Fund plans to schedule its Annual Meeting of
Shareholders for late May, 1996 and to set April 10, 1996
as the record date for voting at the annual meeting. At
the annual meeting, the Fund's shareholders will be asked
to reelect each current member of the Board of Directors
of the Fund (the "Board") and to approve the following
measures, each of which has been approved by the Board.
1. The reclassification of the Fund's current
shares of common stock as Class C Common Stock (the
"Class C Shares") and the authorization to issue Class A
Common Stock (the "Class A Shares"), Class B Common Stock
(the "Class B Shares") and Class D Common Stock (the
"Class D Shares");
2. The adoption of plans of distribution for the
new Class A Shares and the Class B Shares;
3. A change in the Fund's fundamental investment
policy to allow the Fund to invest in debt securities
(including bonds) issued by corporations or other issuers
without limitation as to the investment rating or
maturity of such debt securities;
4. The removal of the Fund's fundamental
investment policy limiting the Fund's investment in
securities of foreign issuers;
5. A change in the Fund's fundamental investment
policies to allow the Company to invest up to 50% of its
total assets in option securities;
6. A change to the Fund's fundamental investment
policies to allow the Fund to invest up to 50% of its
total assets in futures contracts on stock indexes and/or
options thereupon; and
7. A change in the Fund's fundamental investment
policies to allow the Fund to invest up to 5% of its
total assets in illiquid securities.
Reclassification of Shares; Authorization of New Share
Classes. If the shareholders approve the proposal to
reclassify the Fund's shares, the Fund's current shares
would become Class C Shares. The Class C Shares would
continue to be distributed without the imposition of a
front-end charge pursuant to the Fund's current plan of
distribution, which would be redesignated the "Class C
Plan." As Class C Shares, these shares would continue to
be offered at net asset value per share. The Fund would
continue to pay an annual Distribution Fee and a
Shareholder Services Fee of 0.75% and 0.25%,
respectively, of the Fund's average daily net assets
attributable to these shares.
The Fund's current shareholders (Class C shareholders
if the reclassification is approved) will continue to
bear expenses of the Fund in the same manner as they do
currently.
The Board has determined that it would improve the
Fund's ability to attract investors if it could offer
multiple classes of shares each of which provided for a
different sales charge structure. The Board proposes to
reclassify the existing Fund shares as Class C common
stock (the Class "C" shares) and to authorize the
issuance of new Class A, Class B and Class D Shares,
subject to shareholder approval.
Class A Shares. These shares would be offered at net
asset value per share plus a maximum initial sales charge
("front-end charge") of 4.75% of the offering price.
Under the Class A Plan of Distribution, the Fund would
pay an annual Shareholder Services Fee of up to 0.25% of
its average daily net assets attributable to each class
of shares. See Proposal 8 below.
Class B Shares. These shares would be offered at net
asset value per share and are subject to a maximum
contingent deferred sales charge of 4% of redemption
proceeds during the first year, declining each year
thereafter to 0% after the fifth year. Under the Class
B Plan of Distribution, the Fund would pay an annual
Distribution Fee and a Shareholder Services Fee of 0.75%
and 0.25%, respectively, of the Fund's average daily net
assets attributable to each class of shares. See
Proposal 9 below. Class B shares will convert
automatically to Class A shares eight years after the end
of the calendar month in which the shareholder's order to
purchase was accepted.
Class D Shares. These shares are offered only to
persons who are Advisor Professionals or Eligible
Employees. These shares are offered at net asset value
per share. No front-end charge or deferred sales charge
or distribution services fees will be paid by the Fund
with respect to these shares. The Advisor Professionals
will include investment advisors, trust companies and
bank trust departments exercising discretionary
investment authority with respect to the money to be
invested in the Fund. Eligible Employees include (a)
current or retired directors of the Funds, current or
retired employees of Centurion Counsel and any of its
affiliated companies, spouses, minor children and
grandchildren of the above persons, and parents of
employees and parents of spouses of employees of
Centurion Counsel and any of its affiliated companies;
(b) employees and registered representatives of Service
Organizations with selling group agreements with the
Distributor, employees of financial institutions that
have arrangements with Service Organizations having
selling group agreements with the Distributor, and
spouses and minor children of such persons and (c) any
trust, pension, profit sharing or other benefit plan for
such persons. Such shares are offered at net asset value
to such persons because of anticipated economics in sales
efforts and sales-related expenses. Shares are also
offered at net asset value to Eligible Accounts.
Eligible Accounts are accounts opened for shareholders by
dealers where the amounts invested represent the
redemption proceeds from investment companies distributed
by an entity other than the Distributor if such
redemption has occurred no more than 15 days prior to
the purchase of shares of the Fund and the shareholder
paid an initial sales charge and was not subject to a
deferred sales charge on the redeemed account.
Plans of Distribution for Class A and Class B Shares.
At the annual meeting, the shareholders of the Fund will
be asked to approve the Fund's Class A Share Plan of
Distribution (the "Class A Plan") and the Class B Share
Plan of Distribution (the "Class B Plan"). Under the
Class A Plan, among other things, the maximum amount of
12b-1 fees and charges paid by the Fund under either the
Class A Plan or the Class B Plan will not be greater than
those paid under the Fund's current plan of distribution
which would become the Class C Plan.
If the adoption of the Class A Share Plan is approved
by the shareholders, the Fund's Class A Shares would be
distributed with an initial sales charge (front-end fee)
charged to the purchaser of up to 4.75% of the offering
price and the Fund would pay a Shareholder Services Fee
of up to 0.25% of its average daily net assets
attributable to the Class A Shares.
If the adoption of the Class B Share Plan is approved
by the shareholders, the Fund's Class B Shares would be
distributed with a maximum contingent deferred sales
charge equal to 5.0% of the redemption proceeds from such
shares and the payment by the Fund of an annual
Distribution Fee and Shareholder Services Fee equal to
0.75% and 0.25%, respectively, of the Fund's average
daily net assets attributable to the Class B Shares.
Both the Class A and Class B Plan authorize the Fund
to enter into shareholder servicing agreements with one
or more firms, including the Distributor, whereby, as
further described below, such persons (the "Servicing
Agents") will provide shareholder liaison services
("Shareholder Services") with respect to the Class A
Shares and pay certain expenses in connection therewith
("Shareholder Servicing Costs") for a fee (the "Servicing
Agent Fee") in an amount, calculated and paid quarterly,
equal to an annual rate of up to 0.25% of the average
daily net assets of the Fund represented by the Class A
and Class B shareholders, respectively, with whom the
Servicing Agent maintains a servicing relationship, or an
amount which equals the maximum amount which may be paid
to a Servicing Agent under applicable law. The Class A
and Class B Plans limit the total Distribution Fees and
Servicing Agent Fees paid by the Fund to an amount,
calculated and payable quarterly, equal to an annualized
rate of 1.00% of the Fund's daily net assets.
Under both the Class A and Class B Plans, the
Distributor is obligated to pay distribution-related
expenses but not Shareholder Servicing Costs. Also,
under both plans, the Fund's advertising and/or
promotional expenses must be paid by the Distributor in
the same manner as the Fund's current Plan of
Distribution.
The material effect of the Class A Plan will be to (i)
provide for the payment of Shareholder Services Fees to
Servicing Agents (including the Distributor) equal to
0.25% of the average daily net assets of the Fund payable
to broker-dealers for their services in the distribution
of the Fund's Class A. For such Servicing Agents who
also receive it, this fee would be in addition to the
commission of up to 4.75% of the sales price of the
Shares they place. Thus, long-term shareholders may pay
more than the economic equivalent of the current maximum
front-end sales charges or the maximum front-end sales
charges permitted by the National Association of Security
Dealers (the "NASD") Rules of Fair Practice. There is,
however, a distinction with regard to shares sold under
the Class A Share Plan and shares sold under the current
Class C Share Plan and the proposed Class B Share Plan
with respect to the payment of distribution expenses.
Shareholders who purchase shares under the Class A Plan
will bear their portion of expenses under only the Class
A Plan.
The material effect of the Class B Plan will be to (i)
provide for the payment of a Distribution Fee payable to
the Distributor equal to 0.75% of the average daily net
assets of the Fund attributable to the Class B Shares.
As a result, the maximum compensation payable to the
Distributor (and sales agents) for their services in the
distribution of the Fund's Class B Shares will be a
maximum-deferred sales charge of 4.0% of the redemption
proceeds of the Class B Shares and a continuing fee
calculated and payable quarterly in an amount not to
exceed an annualized rate of up to 0.75% of the Fund's
average daily net assets attributable to the Class B
Shares. Thus, long-term shareholders may, however, pay
more than the economic equivalent of the current maximum
front-end sales charges or the maximum front-end sales
charges permitted by the National Association of Security
Dealers (the "NASD") Rules of Fair Practice. There is,
however, a distinction with regard to shares sold under
the Class B Share Plan and after they have converted to
Class C Shares, the Class C Shares sold under the current
Plan with respect to the payment of distribution
expenses. Accordingly, shareholders who purchase shares
under the Class B Plan will bear their portion of
expenses under the Class B Plan with respect to their
shares.
Proposed Change to Restrictions on Investments in Debt
Securities. Currently, bonds and other debt securities
purchased by the Fund must be either U.S. Treasury bonds
with maturities generally, ranging from 20 to 30 years or
U.S. Corporate bonds rated AA or higher by the Standard
and Poors Index (the "S&P"), or have a comparable rating
by another recognized rating agency. If the proposed
change is approved, the Fund will be able to invest in
bonds and other indebtedness issued by corporations and
other issuers irregardless of the term or investment
rating of such security. Generally, debt securities
rated less than investment grade (BBB or better on the
S&P) are considered to have substantially greater risk of
default than lower grade, debt securities or so-called
"junk" bonds. However, such lower grade debt securities
generally sell at substantially greater yields than
investment quality debt securities and generally offer
greater potential returns. If the proposal is approved,
the Fund may from time to time invest all or a
substantial portion of its assets in debt securities with
an investment rating of less than investment grade. Such
investments would generally expose the Fund to greater
risks of loss by reason of default on these bonds. This
proposal is not contingent upon shareholder approval of
any of the other proposals set forth in this Proxy
Statement.
Proposed Change to Restrictions on Investments in
Securities of Foreign Issuers. Currently, the Fund is
restricted from investing more than 10% of its total
assets in securities of foreign issuers. If the proposed
change is removed, there would be no limitation on the
amount of the Fund's assets which could be invested in
stock, bonds or other securities of non-United States
issuers (foreign investments). Foreign investments are
subject to numerous risks. For example, the values of
foreign investments are affected by changes in currency
rates and exchange control regulations, the application
of foreign tax laws, including withholding taxes, changes
in governmental administration or economic or monetary
policy (both in the United States and abroad) and changed
circumstances in relationships between nations. Foreign
securities markets may be less liquid, more volatile and
less subject to governmental supervision than those in
the United States. Costs incurred in connection with
conversions between the currencies of different nations
can be significant. Investments in securities of foreign
corporations could be affected by other factors not
present in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and
auditing standards and potential difficulties in
enforcing contractual obligations. Also the foreign
brokerage commissions are generally higher than in the
United States and trades could be subject to extended
settlement periods. This proposal is not contingent upon
shareholder approval of any of the other proposals set
forth in this Proxy Statement.
Proposed Change to Restriction on Investments in
Options. Currently, the Fund may not invest more than
___% of its total assets in option investments other than
for hedging purposes. Under the proposed amended
restriction on option investments, the Fund would be able
to invest up to 50% of its assets in investments in put
or call options written by others for non-hedging
purposes.
Options to purchase or sell securities are considered
derivative securities ("Derivatives") as would certain
other investments the Fund can make, including futures on
stock indexes (and options thereupon) and Collateralized
Mortgage Obligations (CMO's). In general, a Derivative
is a security whose value is linked to or derived from an
underlying security or index. The Fund may invest in
Derivatives such as put and call Options, futures
contracts on stock indexes and options either for hedging
purposes and non-hedging purposes. A hedge, for example,
would be where the Fund sells a stock index future for
protection against a future decline in the stock market
so if the market drops, the value of the futures position
would rise, thereby offsetting the decline in value of
the Fund's stock holdings. A non-hedge investment would
be where the Fund purchased a stock index future in order
to profit by reason of an increase in the market. In
such event, if the market declined, the Fund would
realize a loss from the stock index future and incur a
decline in value of its stock holdings. Investments in
Derivatives for non-hedging purposes can subject the Fund
to substantial risks, including, but not limited to,
imperfect correlation between the change in market value
of the underlying stocks or bonds held by the Fund and
the prices of futures, contracts and options, and
possible lack of a liquid secondary market for the
Derivative security resulting in the Fund's inability to
close a position in a Derivative security prior to its
maturity or expiration date. The Fund will attempt to
diminish the risk of imperfect market correlation by
investing in contracts whose price fluctuations are
expected to resemble those of the Fund's underlying
securities. Risks of illiquidity of Derivative
investments will be minimized by entering into
transactions on national exchanges with an active and
liquid secondary market. Also, risks in the Fund's
acquisition of Derivative investments will not include
the risk of leverage inasmuch as the Fund may not and
will not purchase Derivative investments on credit or
with borrowed funds. This proposal is not contingent
upon shareholder approval of any of the other proposals
set forth in this Proxy Statement.
Proposed Change to Restriction on Investments in
Futures Contracts on Stock Indexes and/or Options
Thereupon. Currently, the Fund may in general not
invest, for non-hedging purposes, more than 5% of the
liquidation value of its portfolio in futures contracts
on stock indexes and/or options thereupon. If this
proposal is approved, the Fund will be able to invest up
to 50% of its assets in futures contracts on stock
indexes and/or options thereupon. The loss from
investing in futures transactions is potentially
unlimited. Index options are subject to substantial
risks, including the risk of imperfect correlation
between the option price and the value of the underlying
securities comprising the index and the risk that there
might not be a liquid secondary market for the option.
The Fund will not enter into an option position that
exposes the Fund to an obligation to another party,
unless the Fund either (i) owns an offsetting position in
other options and/or (ii) maintains with its custodian
bank (and marked-to-market on a daily basis) a segregated
account consisting of cash, U.S. Government securities,
or other liquid high-grade debt securities that, when
added to the premiums deposited with respect to the
option, are equal to the market value of the underlying
stock index not otherwise covered. This proposal is not
contingent upon shareholder approval of any of the other
proposals set forth in this Proxy Statement.
Futures contracts on stock indexes and options
thereupon are Derivatives and involve substantial risks.
Please see the discussion of Derivatives above.
Proposed Change to Restriction on Investments in
Restructured Securities. Currently, the Fund may not
invest in restricted securities or other illiquid
investments. If the proposed change is approved by the
shareholders, the Fund will be able to invest up to 5% of
its assets in illiquid securities. For the purposes of
this restriction, illiquid securities means securities
which cannot be disposed of within seven (7) days in the
normal course of the Fund's business at approximately the
amount at which the Fund has valued the securities.
Illiquid securities include those which are illiquid by
virtue of the absence of a readily available market or
lease or contractual restrictions on resale, repurchase
agreements which are not terminable within seven (7) days
and possibly certain options purchased in the over-the-
counter market. The Fund will invest in illiquid
securities where such investment is consistent with the
Fund's investment objective. The Advisor, subject to
supervision by the Fund's Board of Directors, will
monitor the liquidity of such restricted securities with
respect to the Fund's portfolio investments. This
proposal is not contingent upon shareholder approval of
any of the other proposals set forth in this Proxy
Statement.
Required Shareholder Approval. Under the Investment
Company Act of 1940 (the "Act"), approval of the Fund's
shareholders is required before the proposed changes to
the Fund's fundamental investment policies may be
effected. Approval of the shareholders of the Fund
requires the Affirmative vote by the holders of a
majority of the outstanding voting securities of the Fund
for each proposed change. For this purpose, the term
"majority of the outstanding voting securities" means the
vote of i) 67% or more of the voting securities of the
Fund present at the annual meeting, if the holders of
more than 50% of the Fund's outstanding voting securities
are present or represented by proxy; or ii) more than 50%
of the outstanding voting securities of the Fund,
whichever is less. Only shareholders of record on the
Record Date may vote at the annual meeting.
If the proposed changes to the Fund's investment
policies are approved by the shareholders, the Fund's
investment objective will not be changed. It will
continue to emphasize long-term total return on
investment based on a tactical asset allocation ("TAA")
strategy implemented by the Fund's Advisor, Centurion
Counsel. Each member of the Board voted to approve each
of these measures. The Board believes each proposed
change in fundamental investment policies will help the
Fund to achieve its investment objective. The Board
believes that the proposed reclassification of the Fund's
shares and the adoption of the Class A Plan and the Class
B Plan will allow the Fund to more effectively attract
new investors for its shares. Each of the nominees for
the board of directors is a current director of the Fund.
The date of this Supplement is April ___, 1996.
Prospctus.sup
REVISED
April 8, 1996 @ 7:58a
ASK
CENTURION T.A.A. FUND, INC.
Centurion T.A.A. Fund, Inc. ("the Fund") is a mutual
fund that continuously offers its shares for sale. The
investment objectives of the Fund are long-term, high-
level, total return consistent with reasonable risk by
pursuing a tactical asset allocation strategy whereby the
Fund's investments are allocated, based on changes in
market conditions, among three asset classes -- common
stocks, bonds and money market instruments. In pursuing
its objectives, the Fund will invest in common stocks and
corporate bonds, including options thereon and will
employ certain special investment techniques such as
short sales and investments in futures contracts, stock
index contracts and options thereon. The Fund will not
borrow funds to finance its investments (that is the Fund
will not leverage its investments or invest on margin).
There can be no assurance that the Fund will achieve
its investment objectives.
This Prospectus sets forth concisely the information
about the Fund that you should know before investing.
You should read it to decide if an investment in the Fund
is right for you. Please keep it with your investment
records for future reference. The Fund has filed a
Statement of Additional Information (also dated May 19,
1995) with the Securities and Exchange Commission. The
Statement of Additional Information is available free of
charge from the Fund at the mailing address and telephone
number below, and is incorporated by reference into this
Prospectus in accordance with the Commission's rules.
To invest, you may fill out the application that
accompanies this Prospectus, or simply contact Centurion
Institutional Services, Inc. or one of the broker-dealers
that have sales agreements with Centurion Institutional
Services, Inc. For more information or assistance in
opening an account, please contact:
CENTURION INSTITUTIONAL SERVICES, INC.
11545 W. Bernardo Court, Suite 100
San Diego, California 92127
(619) 673-8536
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSIONS NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSIONS
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS DATED MAY 19, 1995
No dealer, sales representative or other person has
been authorized to give any information or to make any
representations other than those contained in this
Prospectus (and/or in the Statement of Additional
Information referred to on the cover page of this
Prospectus), and, if given or made, such information or
representations must not be relied upon as having been
authorized by the Fund or Centurion Institutional
Services, Inc. This Prospectus does not constitute an
offer or solicitation by anyone in the state in which
such offer or solicitation is not authorized, or in which
the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation.
SUMMARY OF CONTENTS
This summary describes some important facts concerning
an investment in the Fund. It also tells you where a
more detailed discussion may be found in the text of this
Prospectus or the Fund's Statement of Additional
Information.
The Fund is an open-end, diversified management
investment company that only issues shares of common
stock. By purchasing shares in the Fund, you and the
other investors in the Fund are pooling your money to
acquire a diversified portfolio of securities and other
assets.
Objectives Prospectus, page 1
The investment objective of the Fund is set forth in
the cover page of this Prospectus.
Valuing Shares Prospectus, page 14
Generally the value of a share of the Fund is
determined each day. Such values may fluctuate from day
to day as the values of the Fund's investments fluctuate.
Buying Shares Prospectus, page 15
You can start your investment in the Fund with $500.
Just fill out the application that accompanies this
Prospectus or call a sales representative of Centurion
Institutional Services, Inc. ("CIS") at (619) 673-8536.
You can also buy shares through other broker-dealers that
have sales agreements with CIS.
Once you have made your initial investment, you can
make additional investments of $25 or more at any time.
Sales Charge Prospectus, pages 5 and 16
There is no front-end sales charge. Shares of the
Fund may be purchased at its public offering price, which
is the next determined net asset value of one share of
the Fund. The Fund will pay annual 12b-1 fees of up to
1.0% of the Fund's average daily net assets.
Risk Considerations Prospectus, page 5, pages 7-14
Your investment in the Fund involve several risk considerations,
including:
- The Fund's small size and limited investment portfolio size.
- The level of the Fund's expenses before waivers of expense
reimbursements and fees.
- The inexperience of the Fund's investment advisor,
Centurion Counsel, Inc. ("Centurion Counsel"),
in managing registered investment companies.
- The Fund's investment policies which include unleveraged,
short-term investments in put and call options, index
futures and index options.
Centurion Counsel,Inc. and Prospectus, page 21
Centurion Institutional Services, Inc.
Statement of Additional Information, page B-5
Your investment is professionally managed. Centurion Counsel is the
Fund's investment adviser. The Fund pays Centurion Counsel a fee based
on a percentage of its net asset value. The total fees (expressed as
a percentage of average daily net assets) payable by the Fund for these
services equal 1%(annualized) of the first $200-million of the Fund's
average daily net assets and thereafter decline as a percentage of
average daily net assets as the size of the Fund increases. The fees
paid by the Fund for advisory services are higher than the advisory
fees of most other mutual funds.
CIS is the principal distributor of the Fund's shares.
The address and phone number of Centurion Counsel and CIS is the
same as the Fund's, which are on the cover page of this Prospectus.
Brokerage Statement of Additional Information, page B-10
The Fund's investment adviser may consider sales of shares of the
Fund and of any other funds the adviser may advise as a factor in the
selection of the broker-dealers to execute the Fund's portfolio
transactions. The Fund expects to use affiliates of Centurion Counsel
(including CIS and PIM Financial Services, Inc.) as a broker of its
portfolio securities but only if the provisions of Section 17(e) of
the Investment Company Act of 1940 (and the rules thereunder) are
complied with and only when, in the judgment of Centurion Counsel,
such firm will be able to obtain a price and execution at least as
favorable as other qualified brokers, and the transactions effected
by such firm, including the frequency thereof, the receipt of
commissions payable in connection therewith and the selection of such
firm, are not unfair or unreasonable to the shareholders of the Fund.
Investment Income; Reinvestments Prospectus, pages 16 and 17
The Fund intends to pay out substantially all of its net investment
income on at least an annual basis and net realized capital gains, if
any, prior to the end of each fiscal year (December 31). Income
dividends and capital gains distributions may be reinvested without a
front-end sales charge.
Taxes Prospectus, page 17
The Fund intends to meet the requirements for regulated investment
companies under Subchapter M of the Internal Revenue Code, and if so
qualified, the Fund will not be taxed on the income or capital gains
it distributes. Each shareholder must report his or her own income
dividends and any capital gains distributions, whether received in
cash or additional shares.
Retirement Accounts Statement of Additional Information, page B-12
Given the Fund's objectives, an investment in the Fund may be
appropriate for Individual Retirement Accounts ("IRAs"), Keogh Plans,
Tax-Deferred Investment Plans and other similar plans. For
information about the available IRAs or about any other of such plans,
contact the Fund.
Redeeming Shares Prospectus, page 18
Shareholders of the Fund can redeem their shares at any time by
mailing a request to the Fund in the care of Centurion Counsel, or by
having a broker-dealer that has a sales agreement with CIS telephone
or telegraph the redemption request to the Fund.
Shareholder Services/Exchanges Prospectus, pages 19-21
Shareholders may make systematic investments automatically on a
monthly, quarterly or semiannual basis. This type of arrangement helps
the shareholder put money aside regularly. The Fund also offers a plan
for redeeming your investment in regular installments. Shareholders
selecting the periodic pay-out plan must reinvest any dividends and
capital gains distributions. Shareholders may exchange all or a
portion of their investment from the Fund for an investment in the Cash
Equivalent Fund - Money Market Portfolio, a money market fund offered
through CIS without incurring a sales charge.
FEES AND EXPENSES
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases
(as a Percentage of Offering Price) . . . . . 0%
Exchange Fee . . . . . . . . . . . . . . . . . . $7.50*
Annual Fund Operating Expenses (as a
percentage of Average Net Assets)
Management Fees . . . . . . . . . . . . . . . 1.0%
l2b-1 Fees. . . . . . . . . . . . . . . . . . 1.0%**
Other Expenses (After Waivers of Fees and
on Expense Reimbursements). . . . . . . . . . 1.625%***
Total Fund Operating Expenses
(After Fee Waiver and Expense Reimbursements) 3.625%***
Example: 1 Year 3 Years 5 Years 10 Years
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return.
You would pay the same expenses
whether or not you redeemed
your shares at the end of each
time period . . . . . . . . . . . $38.06 $136.42 $235.06 $433.18
* There is a $7.50 transfer agent's fee per exchange.
** Includes the 0.75% Distribution Fee and the 0.25% Shareholder
Services Fee.
*** Without the waivers of fees and expense reimbursements Other
Expenses would be 8.69% and the Fund's Total Operating Expenses
would be 10.69% based on the amount of the Fund's net assets at
December 31, 1994 and it Total Operating Expenses before waivers
of fees and reimbursements in 1994.
The purpose of the above table is to assist the investor in understanding
the various costs and expenses that investors in the Fund will bear directly
or indirectly. The above example should not be considered a representation of
past or future expenses of the Fund; actual expenses may be greater or less
than those shown. To the extent that the Fund's expenses, including the
management fee (investment advisory fee), but excluding 12b-1 fees, interest
expense, taxes, brokerage fees and commissions, exceed 2.625% of the first
$200-million of its average daily net assets on an annual basis, then the
Fund's investment advisor will waive reimbursement of expenses by the Fund.
The investment advisor has agreed to waive such reimbursements by the Fund at
least through December 31, 1995. The amounts in the above example may
increase if waivers of expense reimbursements and fees are reduced or
eliminated. The Fund does not charge shareholders a front-end sales charge.
However, because the Fund will pay continuing 12b-1 fees at an annualized
rate of up to 1.0% of the Fund's average daily net assets attributable to
the shares placed, long-term shareholders may pay more than the economic
equivalent of the current maximum front-end sales charges or the maximum
front-end sales charges permitted by the National Association of Security
Dealers (the "NASD") Rules of Fair Practice.
FINANCIAL HIGHLIGHTS
Selected data for a share of the Fund outstanding throughout the period
for the years ended December 31, 1986 through 1994 follows. This information
has been audited by certified public accountants. The report of Squire & Co.
appears in the Statement of Additional Information.
FINANCIAL HIGHLIGHTS
Year Ended December 31 (Audited)
1994**1993**1992**1991**1990**1989**1988 1987 1986 1985*
Net Asset Value,
Beginning of
Period $4.55 $4.96 $5.17 $5.11 $7.37 $6.77 $6.59 $9.91 $9.59 $7.18
INCOME FROM INVESTMENT OPERATIONS
Net Investment
Income (0.18)(0.21)(0.03) 0.04 0.11 0.19 0.08 0.11 0.13 0.26
Net Gains or (Losses)
on Securities (Both
Realized and
Unrealized)(0.94)(0.20)(0.18) 0.73 (1.77) 1.07 0.32 0.48 1.37 2.35
Total From
Investment
Operations (1.12)(0.41)(0.21) 0.77 (1.66) 1.26 0.40 0.59 1.50 2.61
LESS DISTRIBUTIONS
Dividends from Net
Investment
Income 0.00 0.00 0.00 (0.07)(0.17)(0.19)(0.22)(0.23)(0.30)(0.20)
Distributions from
Capital
Gains 0.00 0.00 0.00 (0.64)(0.43)(0.47) 0.00 (3.68)(0.88) 0.00
Returns of Capital
Total
Distrib. 0.00 0.00 0.00 (0.71)(0.60)(0.66)(0.22)(3.91)(1.18)(0.20)
Net Asset Value, End
of Period $3.43 $4.55 $4.96 $5.17 $5.11 $7.37 $6.77 $6.59 $9.91 $9.59
TOTAL
RETURN*** -28.01%-12.39%-8.38% 9.94%-27.09%-3.57%-0.30%-0.33%11.32%30.78%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of
Period ($000
Omit.) $452 $757 $1,273 $1,593 $1,917 $3,423 $4,869 $7,161 $12,198 $8,863
Ratio of Expenses,
before waiver of Fees
and reimbursement, to
average Net
Assets 9.04% 6.19% 4.51% 4.20% 3.89% 4.12% 3.31% 2.24% 1.95% 1.50%
Ratio of Expenses,
after waiver of Fees
and reimbursement, to
average Net
Asset 6.00% 5.19% 3.51% 3.18% 2.90% 3.12% 2.46% 1.96% 1.76% 1.50%
Ratio of Net Investment
Income to average Net
Assets -4.78%-4.50%-0.78% 1.20% 1.72% 2.60% 1.67% 0.86% 1.45% 3.05%
Portfolio Turnover
Rate 148.21%143.11%151.12%161.48%60.77%75.53%39.34%104.01%126.66%37.00%
Number of Shares
outstanding at End of
Period
(000) 132 166 256 308 375 465 719 1,087 1,231 1,029
* Restated to give retroactive effect to the two-for-one stock split
effected in the form of a 100% stock dividend in July, 1985.
** Centurion Counsel has acted as the Fund's investment advisor and CGI
has acted as the Fund's accounting services agent, transfer agent,
dividend disbursing agent and administrative services agent since
January 1, 1995. Prior thereto, Excel Advisors, Inc. had acted in
each of the foregoing capacities of the Fund since May 10, 1989.
Prior thereto, IRI Asset Management, Inc. served the Fund in such
capacities.
*** Total return is based on the change in net asset value during the
period, assumes reinvestment of all distributions and the maximum
front-end sales charge of 4.5% in effect through 1994. Commencing
in 1995, the Fund charges no front-end load but will pay 12b-1
fees of up to 1.0% of its net asset value per annum.
* Restated to give retroactive effect to the two-for-one stock split
effected in the form of a 100% stock dividend in July, 1985.
** Centurion Counsel has acted as the Fund's investment advisor and
CGI has acted as the Fund's accounting services agent, transfer
agent, dividend disbursing agent and administrative services agent
since January 1, 1995. Prior thereto, Excel Advisors, Inc. had
acted in each of the foregoing capacities of the Fund since
May 10, 1989. Prior thereto, IRI Asset Management, Inc. served
the Fund in such capacities.
*** Total return is based on the change in net asset value during the
period, assumes reinvestment of all distributions and the maximum
front-end sales charge of 4.5% in effect through 1994. Commencing
in 1995, the Fund charges no front-end load but will pay 12b-1
fees of up to 1.0% of its net asset value per annum.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
Fund Performance
For the year ended December 31, 1994, the Fund experienced a total
return of a negative 24%, not including front-end sales charges. This
compared to a positive 1.32% experienced by the S&P 500 Index, which
broadly reflects the performance of common stock. The Fund's
disappointing performance resulted primarily from unrealized losses
in connection with the Fund's investment in the securities of a
mexican issuer and the general poor performance of the Fund's
investments in the retail, health care and medical supply sectors
of the U.S. economy. Also, under the Fund's prior investment
objectives in effect during 1994, the Fund's investment advisor
selected the Fund's portfolio holdings with an emphasis on long-term
capital growth. Moreover, because of its small portfolio size, the
Fund was not able to invest in a broad selection of securities of
issuers from different economic sectors. Thus at various times the
Company's investments were invested in a limited number of economic
sectors. This made the Fund's portfolio sensitive to even normal
fluctuations in market performance and thereby exposed the Fund's
portfolio to under-performance. Also, the Fund was frequently
required to liquidate positions during a market down-turns in order
to meet the cash demands of share redemptions, which also contributed
to the Fund's poor performance.
On December 20, 1994, the shareholders of the Fund approved certain
changes in the Fund's fundamental investment objective and policies
whereby the Fund's principal objective was changed from a primary
objective of long-term capital growth to one of long-term, high-level
total return consistent with the assumption of reasonable risk pursuant
to a tactical asset allocation strategy. On December 20, 1994, the
Fund's shareholders also approved a new advisory agreement with a new
investment advisor, Centurion Counsel, Inc., and an amendment to the
Fund's Plan of Distribution under which the Fund's front-end sales
charge (previously up to 4.5%) was discontinued. The Fund's 12b-1
fees include a distribution fee equal to 0.75% of average daily net
assets and a shareholder services fee equal to 0.25% of average
daily net assets.
These changes were proposed by the Fund's current Management with
the hope that the deletion of a front-end sales charge and the change
in investment objective coupled with the Fund's revised expense
reimbursements waiver structure, including the advisor's reimbursement
obligations, will attract additional investors to the Fund and reverse
the trend of net share redemptions experienced by the Fund over the
past several years. Also, Management is hopeful that the Fund's
performance will be enhanced by anticipated overall reduced Fund
expenses (primarily by reason of the investment advisor's
reimbursement obligations). There is, however, no assurance that the
Fund will experience any of the anticipated or hoped for benefits
from these changes.
Commencing in 1995, the Fund's investment advisor has agreed to
waive its expense reimbursements and, if necessary, to reimburse the
Fund, to the extent the Fund's expenses, other than 12b-1 fees,
interest expense, taxes and brokerage fees and commissions exceed
2.625% of the first $200-million of the Fund's average daily net
assets. There is no dollar limit to the amount of expense
reimbursements which will be waived. Thus, so long as these waivers
are in effect, the investment advisor will bear the Fund's total
operating expenses to the extent they exceed 3.625% of the Fund's
daily average net assets. The investment advisor has agreed to
maintain this waiver at least through the current fiscal year. The
waiver of reimbursements will be calculated and made at the same
time as the advisory fee is payable under the Advisory Agreement.
PERFORMANCE GRAPH
Description Of Performance Graph
Graph compares the average total return over a 10-year period
from January 1, 1985 through December 31, 1994 for the fund and
the S&P 500 index. The graph includes a table which states that
the average annual total returns for the Fund over the 1-year,
5-year, and 10-year periods ending December 31, 1995 were (28.2%),
(11.04%), and 1.57%, respectively. These returns include all
dividends and capital gains distributions and the maximum front
end sales load of 4.5% in effect prior to 1995.
Past performance is not predictive of future performance.
The above illustration compares a $10,000 investment made in the Fund
on January 1, 1985 to a $10,000 investment made in the Standard &
Poor's 500 Stock Index on that date. For comparative purposes, the
value of the Index on December 31, 1984 is used as the beginning value
on January 1, 1985. All dividends and capital gain distributions are
reinvested.
The graph and related data concerning the Fund reflect costs after
the advisor's waiver of fees and reimbursements. Unlike the Fund,
the Standard & Poor's 500 Stock Index is an unmanaged total return
performance benchmark consisting of a broad-based basket of 500
securities. The index does not take into account charges, fees and
other expenses. Further information relating to Fund performance,
including expense reimbursements, if applicable, is contained in the
Financial Highlights section of this Prospectus and elsewhere herein.
PERFORMANCE DATA
Advertisements and other sales literature for the Fund may refer to
the Fund's "average annual total return" and "cumulative total
return." All such quotations are based upon historical earnings and
are not intended to indicate future performance. The investment
return on and principal value of an investment in the Fund will
fluctuate, so that the investor's shares when redeemed may be worth
more or less than their original cost. In addition to advertising
average annual total return and cumulative total return, comparative
performance information may be used from time-to-time in advertising
the Fund's shares, including data from Lipper Analytical Services,
Inc., the Dow Jones Industrial Average, the Standard & Poor's 500
Stock Index and other industry publications.
"Average annual total return" is the average annual compounded rate
of return on a hypothetical $1,000 investment made at the beginning of
the advertised period. In calculating average annual total return,
the maximum sales charge is deducted from the hypothetical investment
and all dividends and distributions are assumed to be reinvested.
"Cumulative total return" is calculated by subtracting a
hypothetical $1,000 payment to the Fund from the ending redeemable
value of such payment (at the end of the relevant advertised period),
dividing such difference by $1,000 and multiplying the quotient by
100. In calculating ending redeemable value, all income and capital
gain distributions are assumed to be reinvested in additional Fund
shares and the maximum sales load is deducted.
For more information regarding how the Fund's average annual total
return and cumulative total return is calculated, see "Calculation
of Performance Data" in the Statement of Additional Information.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUND
The Fund provides investors with a professionally managed,
diversified portfolio, which its investment adviser believes offer the
potential to earn over the long-term a high level of total investment
return (that is, both capital appreciation and current income)
consistent with the assumption of reasonable risk, by pursuing a
tactical asset strategy whereby the Fund's investments are allocated,
based on changes in market conditions, among three asset classes
- --common stocks, bonds and money market instruments.
The Fund also employs certain non-traditional investment techniques,
including engaging in transactions in futures contracts, options on
Futures contracts, and short sales. Each of these investment
techniques is described under "Special Investment Techniques" below.
For the purposes of the Fund's TAA strategy, transactions in options
and futures contracts will be considered of the same asset class as
the security underlying such rights. Thus, put or call options for
common stocks would be considered in the common stock asset class,
interest rate futures would be considered in the bond asset class,
and futures contracts on stock market indexes would be considered in
the common stock class.
Only the holders of a "majority" of the outstanding shares of the
Fund (as defined in the Investment Company Act of 1940) can change
its investment objectives. Policies not designated as "fundamental"
may be changed by the board of directors of the Fund if, in the
board's discretion, it believes it is in the best interests of the
Fund to do so.
Investments The Fund Will Make
Common Stock Investments. Under its TAA strategy, the Fund, from
time to time has substantial amounts of its assets invested in common
stocks. The Fund invests in common stocks which are individually
selected after considering a number of factors, including price earning
ratios, historical stock price movements and perceived under valuation
or over valuation. The goal is not necessarily to achieve a portfolio
of publicly traded common stocks which is representative of any index
or industry wide sampling. Thus, the Fund does not seek to make
representative or pro rata investments in the stocks of any single
index such as the S&P index on a capitalized weighted basis or
otherwise. However, the Fund may make such representative investments
in individual industry components. For instance, where specific
industries are judged to be undervalued in general in relation to other
industries or segments.
Mortgage-Related Securities. The Fund may from time to time have
substantial amounts of its assets invested in mortgage-related
securities including, but not limited to, obligations issued or
guaranteed by Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation ("FHLMC"). GNMA is a wholly-owned corporate
instrumentality of the United States whose securities and guarantees
are backed by the full faith and credit of the United States. The
securities and the guarantees of FNMA and the FHLMC are not backed,
directly or indirectly, by the full faith and credit of the United
States. Although the Secretary of the Treasury of the United States
has discretionary authority to lend funds to FNMA, neither the United
States nor any agency thereof is obligated to finance the operations
of either FNMA or FHLMC or to assist either in any other manner.
Mortgage-related securities are characterized by monthly payments
to the holder, reflecting the monthly payments made by the borrowers
who received the underlying mortgage loans. The payments to investors
in these securities, like payments on the underlying loans, represent
both principal and interest. Although the underlying loans may have
substantial remaining terms, the borrowers can, and typically do, pay
these loans off sooner. Thus, holders of these securities frequently
receive prepayment of principal. A borrower is more likely to prepay
a mortgage which bears a relatively higher interest rate in relation
to those interest rates then currently available. Thus at time of
declining interest rates, some of the Fund's higher yielding
securities might be converted to cash which the Fund would be able to
reinvest only at lower yields. The increased likelihood of prepayment
when interest rates decline also limits market price appreciation of
mortgage-related securities. If the Fund should buy mortgage-related
securities at a premium, mortgage foreclosures or mortgage prepayments
could result in a loss to the Fund of up to the amount of the premium
it paid.
The Fund may also invest in mortgage-backed securities such as
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduits ("REMICs") CMOs are debt securities issued by
U.S. government agencies or by financial institutions and other
mortgage lenders and are collateralized by a pool of mortgages held
under an indenture. CMOs are typically issued in a number of classes
or series with different maturities. The classes or series are retired
in sequence as the underlying mortgages are prepaid. Prepayment may
shorten the stated maturity of the obligation and can result in a loss
of premium, if any has been paid. Certain of these securities may
have variable or floating interest rates and others may be stripped
(securities which provide only the principal or interest feature of
the underlying security). REMICs, which were authorized under the
Tax Reform Act of 1986, are private entities formed for the purpose
of holding a fixed pool of mortgages. REMICs are similar to CMOs in
that they issue multiple classes of securities. Mortgage-related
securities issued by private entities, such as certain CMOs and
REMICs are not U.S. government securities and are not directly
guaranteed by any government agency. They are secured by the
underlying collateral of the private issuer.
Stripped mortgage-related securities are derivative multi-class
mortgage securities. Stripped mortgage securities may be issued by
agents which are instrumentalities of the U.S. government, or by
private originators of, or investors in, mortgage loans, including
savings and loan associations, mortgage banks, commercial banks,
investment banks and special-purpose subsidiaries of the foregoing.
Stripped securities and mortgage securities are typically structured
with two classes that receive different proportions of interest and
principal distributions on the pool of mortgage assets. In the most
extreme case, one class will receive all of the interest (the
interest-only or "IO" class) while the other class will receive all
of the principal (the principal-only or "PO" class). The Fund will
not invest in IO or PO class securities.
Money Market Instrument Investments. From time to time the Fund has
substantial amounts of its assets invested in money market instruments.
In general, these investments are in one or a combination of two or
the following that have remaining maturities not exceeding one year:
(i) obligations issued and guaranteed by the U.S. Government, its
agencies or instrumentalities; (ii) negotiable certificates of deposit,
bankers' acceptances and fixed time deposits and other obligations of
domestic banks (including foreign branches) that have more than
$1-billion in total assets at the time of investment and are members
of the Federal Reserve System or are examined by the Comptroller of
the Currency or whose deposits are insured by the Federal Deposit
Insurance Corporation; (iii) commercial paper rated at the date of
purchase "P-1" by Moody's Investors Services, Inc. ("Moody's") or an
"A-1" or "A-1+" by S&P; (iv) certain repurchase agreements; and
(v) high-quality municipal obligations, the income from which may or
may not be exempt from federal income taxes. The Fund may also invest
in short-term U.S. dollar-dominated obligations of foreign banks
(including U.S. branches) that at the time of investment: (i) have
more than $10-billion, or the equivalent in other currencies, in total
assets; (ii) are among the 75 largest foreign banks in the world as
determined on the basis of assets; and (iii) have branches or agencies
in the United States. The value of the money market instruments in
which the Fund may invest will vary adversely with changes in market
interest rates.
Bond Investments. From time to time the Fund has substantial amounts
of its assets invested in bonds. Bonds purchased by the Fund will be
U.S. Treasury obligations with maturities ranging from 0 to 30 years
and U.S. corporate obligations rated AA or better by S&P (or a
comparable rating by other recognized rating agencies). The value of
the bonds in which the Fund invests is expected to vary inversely
with changes in market interest rates. In general the variations in
the market value associated with bonds of remaining average maturity
to 30 years can be expected to be greater than variations in values
of shorter term U.S. Treasury obligations and corporate obligations.
Securities of Foreign Corporations. The Fund may invest up to 10%
of its total assets in securities of foreign corporations, including
securities issued or guaranteed by foreign corporations. Investing
in securities of foreign corporations involves considerations and
risks not typically associated with investing in securities issued by
domestic corporations. The values of such foreign investments are
affected by changes in currency rates and exchange control
regulations, the application of foreign tax laws, including
withholding taxes, changes in governmental administration or economic
or monetary policy (both in the United States and abroad) and changed
circumstances in relationships between nations. Foreign securities
markets may be less liquid, more volatile and less subject to
governmental supervision than those in the United States. Costs
incurred in connection with conversions between the currencies of
different nations can be significant. Investments in securities of
foreign corporations could be affected by other factors not present
in the United States, including expropriation, confiscatory taxation,
lack of uniform accounting and auditing standards and potential
difficulties in enforcing contractual obligations. Also the foreign
brokerage commissions are generally higher than in the United States
and trades could be subject to extended settlement periods.
Options Futures Contracts and Special Investment Techniques. In
pursuing its investment objective, the Fund utilizes investment
techniques and certain special investment techniques involving
options and futures contracts and short sales each of which is
described in Appendix A to this Prospectus.
These reinvestment techniques are highly technical, highly
specialized, and involve risks not traditionally associated with
investment companies. In using these techniques, the Fund would
generally incur a loss if the price of the underlying security or
index increases between the date the Fund takes a position
(e.g., the date of the writing or the purchase of the put or call
option, the sale of the futures contract or the short sale) and the
date on which the Fund terminates the position (e.g., closes the
futures contract or option contract position or replaces the borrowed
security in the case of a short sale). The Fund would generally
realize a gain if the underlying security or index declines in price
between those dates. This result is the opposite of what one would
expect from a cash purchase of a long position in a security. The
amount of any gain or loss on an investment technique may be
affected by any premium or amounts in lieu of dividends or interest
the Fund pays or receives as the result of the transaction.
Participation in the options or futures markets involves investment
risks and transaction costs to which the Fund would not be subject
absent the use of options, futures contracts, and options on futures
contracts including: (1) adverse changes in the value of such
instruments; (2) imperfect correlation between the price of options
and futures contracts and options thereon and movements in the price
of the securities being hedged; (3) the fact that skills needed to
use these strategies are different from those needed to select
portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument at any time; and (5) the
possible need to defer closing out certain positions to avoid
adverse tax consequences.
Consistent with the Fund's Investment Objective, the Fund may
lend some of its securities to brokers and other financial
institutions and earn interest on them, provided they are 100%
secured.
How Its Tactical Asset Allocation Strategy Is Used By The Fund.
Under its tactical asset allocation strategy (the "TAA strategy"),
the Fund allocates its investments based on changes in market
conditions among three asset classes - common stock, bonds, and
money market instruments. The premise underlying its TAA strategy is
that, from time to time, certain asset classes offer more attractive
long-term investments than others and thus, timely shifts among these
classes, common stocks, bonds and money market instruments, can
produce superior long-term investment returns. The determination
as to when to shift between classes will be based on perceived
relative over-evaluation or under-evaluation of each asset class in
comparison with the other classes. TAA strategies are often
contrarian in nature. Typically, the expected return on common
stock investments is based on the relationship between the current
level of the stock market index and justified price or intrinsic
value based on projections of dividends or earnings for its component
stocks. Variations in valuations based on projected dividends and
earnings are usually smaller than corresponding variations in stock
prices. Accordingly, expected returns tend to fall when prices rise
and values change little, if at all, leading to a tactical asset
allocation decrease in common stock holdings. Expected returns rise
when prices fall and values fall less, leading the Fund to increase
in its common stock holdings. With its TAA strategy, the Fund intends
to take into account changes in expected returns, risks and
correlations so that its investment portfolio can be concentrated in
the appropriate asset class.
Centurion Counsel, consistent with the investment parameters and
restrictions, selects Fund investments in each of the asset classes.
Centurion Counsel has developed computer program models and related
systems pertaining to the tactical allocation of assets among the
three investment asset classes. Centurion Counsel, however, has not
previously served as an investment advisor to a registered investment
company. The computer model analyzes extensive financial data from
numerous public and private sources, and, based on such data,
recommends percentage allocations among the three asset classes.
Centurion Counsel developed its computer model over more than a
decade based on its experience in managing individual, small
business and institutional investment portfolios.
The principal financial data used in connection with the computer
model currently are: (i) Consensus estimates of the earnings,
dividends, free cash flow and payout ratios on a broad cross-section
of common stocks as reported by independent financial reporting
services that survey over 1,000 Wall Street analysts; (ii) the
estimated current yield to maturity on long-term corporate bonds
rated "AA" by Standard & Poor Corporation ("S&P"); (iii) the present
yield on money market instruments; (iv) historical standards
deviation and investment return for each class of assets;
(v) historical standard statistical correlation of investment
return among the various asset classes; and (vi) technical factors
in the market including overbought and oversold conditions, market
momentum and market volume.
Centurion Counsel compares the Fund's investments to the computer
model's recommended asset allocation. Subject to certain trading
policies employed by Centurion Counsel, the Fund will generally base
its allocations among the asset classes on the model's
recommendations, but may not always do so. Centurion Counsel,
however, independently evaluates each recommended allocation and may,
under certain circumstances, vary the allocation from that
recommended by the model. For example, Centurion Counsel may
determine not to follow the model if to do so would result in the
Fund's ceasing to be qualified as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"), if
it believes that the Fund would incur unreasonable transaction costs
in reallocating among the asset classes in a highly erratic market
environment, or if necessary, to satisfy liquidity requirements.
Any recommended allocation will be implemented in accordance with
trading policies designed to take advantage of market opportunities
and to reduce transaction costs. Recommended reallocations may be
implemented promptly upon receipt of recommendations or may not be
acted upon for as long as two to three months thereafter, depending
on the factors such as the percentage change from previous
recommendations and the consistency of recommended reallocations
over a period of time.
The Fund generally invests the net proceeds from the sale of Fund
shares and liquidates existing Fund investments to meet net
redemption requirements in a manner that best allows the Fund to
follow the asset allocation then-implemented by the Fund's investment
advisor. The foregoing notwithstanding, the Fund will endeavor to
maintain at least that portion of its assets and money market
instruments reasonably considered necessary to meet redemption
requirements. There is no requirement that the Fund maintain
positions in any particular asset class or classes.
Short-Term Trading
The Fund purchases securities both for investment and for
short-term profits. If the Fund feels it is wise to sell a position
in a security, it will not hesitate even if it has had the security
just a short time. Turnover of the Fund's assets will affect
brokerage costs and may affect the taxes you pay. The Fund
calculates its portfolio turnover as the ratio of the lesser of
annual purchases or sales of portfolio securities to average monthly
portfolio value (not including short-term securities, if any). If
the Fund had a 100% turnover rate, it would mean that the Fund
replaced all of its portfolio securities within a year. During its
year ended, December 31, 1994, under the Fund's previous investment
objectives and policies, the Fund's turnover rate was 148.21%.
Under its current TAA strategy, the Fund expects the Fund's turnover
rate to increase to not more than 500%. However, there is no
assurance that a higher turnover rate might not be experienced. As
a result of the portfolio turnover rate the Fund will generally
incur greater brokerage commissions which could also affect federal
and state income taxes. Shorter term investment strategies will
also increase the likelihood that the Fund will incur short-term
capital gains and losses.
Guarantees
The Fund makes no guarantees because any investment involves risks.
In addition, although it will attempt to spread the overall risk of
its investments by investing in companies in a number of different
industries, such strategy will not eliminate the risk. The Fund
cannot predict stock price changes from day to day, and it cannot
guarantee against losses or that it will meet its investment
objectives.
INVESTMENTS THE FUND WILL NOT MAKE; RESTRICTIONS ON INVESTMENTS
The Fund has adopted certain investment restrictions set forth in
their entirety in the Statement of Additional Information, which
restrictions, together with the fundamental investment objectives
and policies of the Fund, cannot be changed without approval by
holders of a majority of the Fund's outstanding voting shares, as
explained in the Statement of Additional Information. These
restrictions include, but are not limited to, the following items:
Not more than 10% of the Fund's net assets will, at any time, be
subject to repurchase agreements which mature in more than seven days
or invested in other illiquid securities.
The Fund will not invest any of its assets in restricted securities.
Restricted securities are those the sale of which is limited by
contract or law. They are usually traded in private, direct
negotiations.
The Fund will not (i) invest in exploration or development programs
such as oil or gas programs, (ii) buy or sell foreign exchange, or
(iii) invest more than 10% of its total assets at the time of
purchase in securities of foreign corporations or in foreign
corporations in which the obligor is not a corporation.
If a percentage limitation described above is adhered to at the
time of the investment by the Fund, a later increase or decrease in
the percentage resulting from any change in the value of the Fund's
net assets will not constitute a violation of the restriction.
VALUING SHARES
The value of an individual share of the Fund is figured by dividing
all outstanding shares of the Fund into the Fund's net assets. The
Fund will figure net assets by valuing all the securities the Fund
owns, then adding it to the Fund's other assets and subtracting all
outstanding liabilities. The Fund will calculate the value of its
shares once daily, Monday through Friday, as of 1:00 p.m., Pacific
Standard Time (the close of primary trading on the New York Stock
Exchange), except on (i) days on which changes in the value of the
Fund's portfolio securities will not materially affect the current
net asset value of the Fund's shares, (ii) days during which no
shares of the Fund are tendered for redemption and no order to
purchase or sell shares of the Fund is received by the Fund or
(iii) customary national business holidays on which the New York
Stock Exchange is closed for trading (as of the date of this
Prospectus, New Year's Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day). The Fund will value its portfolio securities and
other assets as follows:
The Fund will value stocks, convertible debentures and bonds,
warrants and options traded on major exchanges each day at their
last quoted sales price on their primary exchange as of the close of
the New York Stock Exchange. If a particular security has not been
traded on a certain day, the Fund takes the average price between
the last offer to buy and the last offer to sell.
The Fund will value short-term securities maturing more than 60
days from the valuation date at the readily available market price
or, if unavailable, an approximate market value based on current
interest rates. The board of directors of the Fund has determined
that the determination of value using this method will result in a
fair value of the security is an appropriate means of valuing such
securities. The Fund will value short-term securities maturing in
60 days or less but which originally had maturities of more than
60 days at the acquisition date on an amortized cost basis using
the market value on the 61st day before maturity, and the Fund
will value short-term securities maturing in 60 days or less at
the acquisition date at amortized cost unless the board of
directors of the Fund determines that, under the circumstances,
the amortized cost method does not represent fair value.
(Amortized cost is an approximation of market value determined by
systematically increasing the carrying value of a security if
acquired at a discount, or systematically reducing the carrying
value if acquired at a premium, so that the carrying value is
equal to maturity value on the maturity date.)
The Fund will value any foreign securities in its portfolio which
are traded on major exchanges at their last quoted sales price (or,
if it has not been traded on a certain day, the average between the
last offer to buy and the last offer to sell) on their primary
exchange as of the close of the New York Stock Exchange. The Fund
will value any foreign securities which are not listed on a major
exchange but have readily available market quotations at the
average between the last bid and asked price at the time of the
close of the New York Stock Exchange. Any foreign securities held
by the Fund will be valued in United States dollars.
The Fund will value securities for which market quotations or
pricing service valuations are not readily available at fair value
as determined in good faith by the Fund's Board of Directors. In
valuing such securities, the Fund's directors are responsible for
selecting methods that they believe represent the fair value.
The Fund will take into consideration yield, quality, coupon,
maturity, type of issue, trading characteristics and other market
data in determining valuations for such securities.
BUYING SHARES
You can start your investment in the Fund with a $500 investment.
You can make additional investments at any time of $25 or more.
The Fund may waive the foregoing minimums for sales to a group of
investors with a single agent, such as a corporation acting on
behalf of participating employees, for sales involving spousal IRAs
and for shares being purchased through the Fund's periodic payment
plan. For your initial investment you can complete the Application
delivered with this Prospectus yourself and mail it to CIS, at the
address on the cover page of this Prospectus, along with a check in
the amount of your investment, or, if you desire, you can contact
CIS who will see that the investment is made for you. You can make
additional investments by sending a check in the amount of your
investment along with a letter identifying your account number (or
one of the payment stubs provided to shareholders) to CIS, or you
can make additional investments by telephoning CIS.
In addition to buying shares through CIS, you can also invest in
the Fund through certain other broker-dealers which are members of
the National Association of Securities Dealers, Inc. and which have
sales agreements with CIS.
Once you have decided to invest in the Fund, and your purchase
order is accepted, the Fund will then compute the number of shares
you will receive by dividing the offering price of one share into
your investment. The Fund will use the offering price at the close
of business on the day the Fund accepts your order. The Fund's close
of business is the closing time of the New York Stock Exchange on
that day. The Fund reserves the right to reject any purchase order.
The Fund will accept or reject your purchase order on the day your
purchase order, containing all required information, is received by
the Fund.
The offering price of one share of the Fund is the net asset value
of such share rounded to the nearest whole cent. The net asset value
is the total value of all the Fund's assets minus any outstanding
liabilities. The net assets are divided by the number of shares of
the Fund outstanding before any shareholder transactions, such as
purchases or redemptions, for that day, to determine the net asset
value per share of the Fund.
SALES CHARGE
The person buying shares pays no front-end sales charge.
INVESTMENT INCOME
Dividends and Interest
Once a year the Fund distributes substantially all its investment
income, if any, minus its operating expenses. Such distributions will
be payable to shareholders who owned the shares on the date of record.
Investment income includes dividends on stocks and interest on bonds
or other securities the Fund holds. Although dividends and interest
on some of the Fund's investments may be fairly regular, the Fund
cannot guarantee any investment income.
Capital Gains
A capital gain is made by selling a security or other capital asset
for more than its cost. Because capital gains are realized only when
an asset is sold, these gains are quite unpredictable. Before the
end of December 31 of each year, the Fund intends to distribute at
least 98% of its net capital gains, if any, for the twelve-month
period ending October 31 of the calendar year.
REINVESTMENTS
Your income dividends and capital gains distributions will be
reinvested in additional shares unless you instruct the Fund to do
otherwise. This allows you to accumulate additional shares of the
Fund without paying a front-end sales charge. The price you pay is
the net asset value of such Fund's shares, and the dividends and
capital gains distributions are reinvested on the first business
day following the dividend record date.
If you prefer to take your income distributions and capital gains in
cash, you have two other options: You can accept any income dividends
in cash and any capital gains in additional shares at the net asset
value of the Fund's shares, or you can accept any income dividends
and capital gains in cash. Cash distributions will be paid seven
to fourteen days following the dividend record date. Dividend
checks which are returned to the Fund marked "unable to forward" by
the postal service will be placed in the Cash Equivalent Fund until
further instructions from the shareholders.
Indicate your option on the Application delivered with this
Prospectus. You can cancel or change your authorization any time if
you notify the Fund in writing. Any change in your option is
effective when it reaches the Fund in care of Centurion Group, Inc.
Only dividends and distributions declared after your changed
authorization has arrived can be reinvested. A confirmation of the
reinvestment will be mailed to you.
TAXES
Since its inception the Fund has met, and the Fund intends to
continue to meet, the requirements for regulated investment
companies under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), and, if it meets these requirements, the
Fund will not be liable for federal income taxes to the extent it
distributes its taxable income to its shareholders.
Distributions by the Fund are generally taxable to the shareholders,
whether received in cash or additional shares of the Fund. Dividends
paid from the Fund's net investment income, including net short-term
capital gains, will be taxable to its shareholders as ordinary
income. Dividends paid from the net capital gains of the Fund and
designated as capital gain dividends will be taxable to shareholders
as long-term capital dividends, regardless of the length of time for
which they have held their shares in the Fund. For individuals in
1995, long-term capital gains are subject to a maximum tax rate of
28% while ordinary income is subject to a maximum effective rate in
excess of 39.6% (resulting from a combination of a nominal 39.6%
rate, a phase-out of personal exemptions for individuals filing
single returns with adjusted gross income in excess of $111,800 and
for married couples filing joint returns with adjusted gross income
in excess of $167,700, and a partial disallowance of itemized
deductions for individuals with adjusted gross income in excess of
$111,800).
If shares of the Fund are sold or otherwise disposed of more than
twelve months from the date of acquisition, the shareholder will
realize a long-term capital gain or loss equal to the difference
between the purchase price and the sale price of the shares
disposed of, if, as is usually the case, the shares are a capital
asset in the hands of the shareholder. In addition, pursuant to a
special provision in the Code, if the Fund's shares with respect to
which a long-term capital gain distribution has been made are held
for six months or less, any loss on the sale or other disposition
of such shares will be a long-term capital loss to the extent of
such long-term capital gain distribution.
Shareholders will be notified annually as to the Federal income tax
status of dividends and distributions. Distributions and redemption
payments will also be reported to the Internal Revenue Service.
Payors of interest and dividends must generally withhold 31% of
taxable interest, dividends and certain other payments, including
redemption payments, if the shareholder fails to furnish and certify
his correct taxpayer identification number (for most individuals,
their Social Security number) or as a result of certain other events
specified in Section 3406 of the Code. Payees that are exempt from
this "back up withholding" are generally not individuals, but are
corporate, trust or governmental entities. In order to avoid
withholding, a shareholder of the Fund must provide and certify to
the Fund that his taxpayer identification number is correct and that
he is not subject to back up withholding. The new account
application included with this Prospectus provides for shareholder
compliance with these certification requirements.
The foregoing discussion of Federal income tax consequences is based
on tax laws and regulations in effect on the date of this Prospectus,
and is subject to change by legislative or administrative action.
Further, in those states that have income tax laws, the tax treatment
of the Fund and of shareholders in respect to distributions by the
Fund may differ from Federal tax treatment. For a more detailed
discussion of the federal income tax consequences of investing in
shares of the Fund, see "Taxes" in the Statement of Additional
Information. Prospective investors are advised to consult with
their tax advisers concerning the application of state and local
taxes to distributions by and investments in the Fund which may
differ from the Federal income tax consequences described above.
REDEEMING SHARES
As a shareholder in the Fund, you have a right to redeem your
shares any time. The Fund will redeem your shares at their net
asset value, as of the time net asset value is next determined after
receipt of your redemption request by the Fund in care of Centurion
Group, Inc. See "Valuing Shares." The value of the redeemed shares
may be more or less than what you invested. IF SHARES OF THE FUND
ARE REDEEMED IMMEDIATELY AFTER THEY HAVE BEEN PURCHASED BY
NON-GUARANTEED FUNDS (SUCH AS A PERSONAL CHECK), THE FUND WILL DELAY
MAILING THE REDEMPTION CHECK UNTIL THE FUND HAS VERIFIED YOUR CHECK
HAS CLEARED, WHICH MAY TAKE UP TO 15 DAYS FROM THE DATE OF PURCHASE.
If the value of shares of the Fund in your account falls below $500
because of a redemption and not because of a decrease in market
value, the Fund reserves the right to redeem its shares in your
account on 60 days' written notice to you and pay the proceeds to
you, unless you make additional investments to bring the account
value above $500 within 30 days of the written notice. Therefore,
shareholders who invest only $500 (the minimum investment), and who
redeem any amount in excess of any market appreciation, may have the
remaining shares redeemed by the Fund.
You may redeem your shares in writing. A written redemption request
must include a specific request to redeem part or all of your shares.
Any written request must be signed by each registered owner. All
signatures on the redemption request must be guaranteed by one of the
following: a bank or trust company; a broker-dealer; or credit union,
a national securities exchange, registered securities association
or clearing agency, a savings and loan association or a federal
savings bank. Occasionally the Fund, or Centurion Group, Inc. as its
agent, may ask for additional proof of identification and authority
to redeem. Such a request is more likely to happen if the
shareholder is a corporate, partnership or fiduciary account or if
redemption is requested by someone who is not the registered owner.
If you have a certificate for shares you want to redeem, it must
accompany your redemption request.
The Fund will accept redemption requests in writing or facsimile
from broker-dealers which have sales agreements with CIS for the
Fund's shares. The Fund will employ reasonable procedures to
confirm that instructions communicated to the Fund by telephone
with respect to redemptions are genuine; if the Fund fails to do so,
it may be liable for any losses due to unauthorized or fraudulent
transactions. Your broker-dealer may require certain documentation
from you before executing a redemption request on your behalf, and
may charge a fee for handling the redemption request for you.
Payment for your redeemed shares will be sent to you within seven
days after receipt of your request in proper form, except that the
Fund may delay the mailing of the redemption check, or a portion
thereof, until the check used to purchase Fund shares has cleared,
which may take up to 15 days from the date of purchase. Although
the use of a certified or cashier's check will generally reduce
this delay, shares purchased with these checks will also be held
pending clearance. Shares purchased by federal funds wire are
available for immediate redemption. In addition, the right of
redemption may be suspended or the date of payment postponed if the
Exchange is closed (other than customary closing) or upon the
determination of the SEC that trading on the Exchange is restricted
or an emergency exists, or if the SEC permits it by order for the
protection of shareholders. Of course, the amount you receive may
be more or less than your investment, depending on fluctuations in
the market value of securities owned by the Fund. Certain large
redemptions may be paid in kind. See "Redemptions" in the Statement
of Additional Information.
Should the Fund stop selling shares, the directors of the Fund may,
after notification to shareholders, make a deduction from the value
of the assets it holds to cover the cost of future liquidations of
its assets so as to distribute fairly these costs among all
shareholders.
A redemption is considered a taxable transaction by the Internal
Revenue Service. If there is a gain, it may be taxable. If there is
a loss, and shares are reacquired 30 days or less after redemption,
some or all of the loss may be disallowed as a deduction depending on
the number of shares reacquired.
SHAREHOLDER SERVICES/TRANSFERS
For each shareholder, Centurion Group, Inc. establishes an account
to which is credited purchases and dividends and from which is
deducted all redemptions. This procedure makes additional purchases
and redemptions more convenient and makes the issuance of share
certificates unnecessary.
Periodic Payment Plan
After you make your first cash investment, you may arrange to make
additional payments of $25 or more on a regular basis. You decide
how often you want to make them: monthly, quarterly or semi-
annually. You are not obligated to make these payments, so if you
cannot make a payment, you can skip it or you can drop the plan
altogether. The Fund can also change its plan or end it anytime on
five days' notice.
You may arrange to have the regular payments described above
automatically invested in the Fund. If you authorize Centurion
Counsel to do so, Centurion Counsel will prepare a check at the
time each periodic payment is to be made, drawn on your account,
and payable to its order. This payment will be used to purchase
the Fund's shares in the same way as if you had written a check and
mailed it to Centurion Counsel, only you do not have to write the
check out and mail it. After each automatic investment, you will
receive a confirmation, and the canceled check will be returned to
you in your regular checking account statement. For information on
establishing an automatic investment plan, you should communicate
with your sales representative or contact the Fund.
The periodic payment plan works as follows: When your payment is
received, all the shares of the Fund which your money can buy will be
purchased at the public offering price. This includes fractions of
a share. Your regular investment amount will purchase more shares
when the net asset value per share decreases, and fewer shares when
the net asset value per share increases.
A plan is not an option or an absolute right to buy shares. Each
purchase is a separate transaction. After each purchase the Fund will
add your new shares to your account. You will receive a confirmation
of shares purchased and total number of shares held.
Shares of the Fund bought through the periodic payment plan are
exactly the same as any other shares of the Fund. They may be
redeemed anytime after the check clears.
If you are interested in this plan, remember the plan itself
cannot assure there will be a profit. Neither can it protect
against a loss in a declining market. If you decide to discontinue
the plan and redeem your shares when their net asset value is less
than what you paid for them, you will suffer a loss. For this
reason, you should think about your ability to continue the plan
even during "down" periods in markets.
Pay-Out Plan
As a shareholder in the Fund, you may use a pay-out plan to redeem
your investment in regular installments at no extra cost to you and
regardless of the size of your investment. All you have to do is
make a written request to Centurion Counsel at least five days before
the date you want your payments to begin and state the amount of the
payment (minimum of $150) and the frequency thereof (monthly,
quarterly, semi-annually or annually). Once your request is
received, the Fund will pay out a fixed amount that you decide
on as frequently as you have requested by redeeming whatever number
of shares are necessary to make the payment at the times requested.
The Fund will make regular installments until the account is closed
or you terminate the plan. You can change or cancel your request by
giving the Fund five days' notice in care of Centurion Counsel. To
the extent payments made under this plan exceed the amount of
dividend income and capital gains income that you have reinvested
in shares, such payments will constitute a return of the capital
that you invested.
Exchange Privilege
Subject to the following limitations, you may exchange some or all
of your shares of the Fund for shares of Cash Equivalent Fund -
Money Market Portfolio (a money market fund) ("CEF"). CEF is
managed by Kemper Financial Services, Inc. and is offered through
Centurion Institutional Services, Inc. If a shareholder wishes to
exchange shares of the Fund for shares of CEF, the shareholder should
first contact CIS and obtain and read the prospectus of CEF.
The Fund may elect a three business day settlement period for all
exchanges before shares may be re-exchanged. Such exchange is
considered a taxable transaction, and gain or loss will be
recognized. The Fund's transfer agent charges a nominal fee of
$7.50 per exchange for this service. The exchange must satisfy the
minimum dollar amount necessary for new purchases. You need not
pay any front-end sales charge for the exchange.
This exchange privilege is available only in states where shares
of the Fund being acquired may legally be offered and sold and may
be modified or terminated at any time by the Fund. Broker-dealers
which have sales agreements with CIS may charge a fee for processing
exchange orders on behalf of their customers.
Telephone Exchanges
By becoming a shareholder of the Fund you will have the privilege
of instructing Centurion Group by telephone to exchange your shares
between any funds managed by Centurion Counsel (but not to purchase
additional shares or redeem shares). Under this Telephone Exchange
privilege, Centurion Group will accept telephone instructions from
you and those persons representing you for the exchange of your
share subject to the conditions described under "Exchange Privilege"
above. Centurion Group and the Fund will employ procedures they
consider reasonable to confirm that instructions communicated by or
for you by telephone are genuine. These procedures may include
requiring certain personal identification information prior to
acting upon telephonic instructions, tape recording telephone
communications and providing written confirmation of telephonic
instructions. If reasonable procedures are employed, neither
Centurion Group nor the Fund will be liable for following
telephonic instructions which they reasonably believe to be genuine.
Centurion Counsel and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are
not followed. You may decline or terminate the Telephone Exchange
privilege by written election to the Centurion Group.
MANAGEMENT
Centurion Counsel, Centurion Group, Inc. and Centurion
Institutional Services, Inc. are each wholly owned subsidiaries of
C I Holding Group, Inc. ("C I Holding"), a California corporation that
is engaged through its subsidiaries in various aspects of the
financial services industry. C I Holding's primary business
activities include investment advisory, securities brokerage services,
investment banking services and due diligence research and analysis
services provided to other financial services firms on a contract
basis. Approximately 40% of C I Holding's common shares, on a
fully diluted basis, are owned by officers and directors of
C I Holding.
Centurion Counsel has been the investment adviser to the Fund since
January 1, 1995. The Fund pays Centurion Counsel a fee for investment
advice based on a percentage of the Fund's net assets. Jack Heilbron
is the portfolio manager for the Fund and has been for four years.
Mr. Heilbron served as a director of the Fund from 1989 to 1990.
Since 1989, he has served as Chairman and Chief Executive Officer
of CI Holding Group, Inc. and certain of its affiliates, including
Centurion Institutional Services, Inc. He serves as Chairman and
Chief Investment Officer of Centurion Counsel. Under the Fund's
Investment Advisory Agreement, the fee for these services equals
1.00% (annualized) of the first $200-million of the Fund's average
daily net assets and thereafter declines as a percentage of average
daily net assets as the size of the Fund increases. The fees paid by
the fund for these services are higher than the fees most other mutual
funds pay to investment advisers.
In addition to the investment advisory fees paid to the Fund's
investment adviser, the Fund pays all of its expenses not assumed by
its investment adviser or its distributor, including certain expenses
incurred in the operation of the Fund and the public offering of its
shares.
The Fund has adopted a Plan of Distribution pursuant to Rule l2b-1
under the Investment Company Act of 1940 which authorizes the plan to
pay up to a total of 12b-1 fees equal to 1.0% of the Fund's average
daily assets. Pursuant to the Fund's Plan of Distribution, the Fund
currently pays two types of 12b-1 fees. CIS will receive, as
compensation for share distribution-related services it performs
under its Distribution Agreement with the Fund, a fee from the Fund
equal to 0.75 of 1% per year of the Fund's average daily net assets.
In addition, CIS will receive as compensation for shareholder
services it performs under its Shareholder Services Agent Agreement
with the Fund a fee from the Fund equal to 0.25 of 1% of the Fund's
average daily net assets which services include receiving and
responding to shareholder inquires and requests for information
regarding the Fund. CIS may, at its own expense, may provide
additional compensation to dealers in connection with sales of Fund
shares and servicing of Fund shareholders.
The Bank of California, N.A., 475 Sansome Street, 11th Floor,
San Francisco, California 94111, acts as custodian of the Fund's
assets.
Centurion Group, Inc. acts as the Fund's accounting services agent
pursuant to an Accounting Services Agreement with the Fund. As
compensation for these services, the Fund pays CGI a monthly fee
equal to an annual rate of .15% of the Fund's average net assets,
provided, however, the Fund has agreed to pay an annual minimum
accounting services fee of $18,000, which, based on the monthly
average net asset value of the Fund in 1994, would equal an annual
rate of 3.45%.
CGI also acts as the Fund's administration agent pursuant to an
Administration Agreement with the Fund. As such CGI acts as the
Fund's transfer agent, disburses Fund distributions and maintains
the Fund's shareholder records. As compensation for these services,
the Fund pays CGI a separate fee per service provided as follows:
$0.75 per account maintenance per month; $7.50 per dealer
confirmation; $10.00 per wire transfer; and $50.00 per 1,000
customer statements. Additionally, the Fund reimburses CGI for all
out-of-pocket expenses incurred by CGI in connection with the
rendering of services under the Administration Agreement.
Both the accounting services fee and the administrative services
fee paid by the Fund to CGI is in addition to the Fund's investment
advisory fee.
In February, 1994, PIM Financial Services ("PIM"), formerly
Planners' Independent Management, Inc., was named as co-defendant in
a legal action in the State of Oklahoma. Also named as co-defendants
were Mr. Heilbron, Ms. Limoges, a former agent of PIM and two of
PIM's clearing broker-dealer firms. In these actions, the claimants
allege damages of $6,372,000 plus costs against the defendants by
reason of alleged excessive mark-ups in connection with purchases
and sales of U.S. government securities made by the defendants to
the Oklahoma State Treasurer's office during 1991 and 1992. PIM,
Mr. Heilbron and Ms.Limoges deny any wrongdoing and are vigorously
defending this litigation. The liability of these defendants, if
any, is not yet determinable. Management believes that the
resolution of these claims will not result in any material adverse
effect on CIC, CGI or CIS or interfere in a material way with the
capacity of these companies to perform under their respective
contracts with the Fund.
OTHER INFORMATION
Shares
All shares issued by the Fund are the same class--common stock.
They have a par value of $0.01 a share. They are fully paid,
nonassessable and can be transferred. All shares of the Fund have
equal voting rights. They can be issued as full shares or fractions.
A fraction of a share has the same kind of rights and privileges a
full share has. The shares do not have cumulative voting or
preemptive rights.
The bylaws of the Fund provide that annual shareholder meetings are
not required and that meetings need be held only with such frequency
as required by Minnesota Law or the Investment Company Act of 1940.
The Fund's Articles of Incorporation limit the liability of its
directors to the fullest extent permitted by law.
Financial Reports
As required by the Investment Company Act of 1940, the Fund will
mail annual and semi-annual reports to each of its shareholders.
The Fund's financial statements at the close of its fiscal year
(December 31) will be audited by Squire & Company, independent
public accountants.
Stock Certificates
The Fund will maintain a permanent record of all accounts so that
the issuance of stock certificates is generally not necessary.
However, the Fund will issue you a certificate if so requested
in writing.
Incorporation and Headquarters
The Fund was incorporated on August 27, 1981 in Minnesota. The
business and affairs of the Fund are managed under the direction of
the Fund's Board of Directors. The Fund's headquarters are located
at the address set forth on the cover page of this Prospectus.
Shareholder inquiries may be made to the Fund at this address.
APPENDIX A
Options
A call option is a contract which gives a buyer of the option the
right to buy a security at a set price for the length of the contract.
The writer of a call option agrees to sell the security when the buyer
wants to exercise his or her option to buy the security at the set
price no matter what the market price of the security is at that time.
In a covered call option, the writer or seller owns the underlying
security required to be sold by the option contract.
A put option is a contract which gives the buyer of the option the
right to sell a security at a set price for the length of the
contract. The writer of a put option agrees to purchase the security
when the buyer wants to exercise his or her option to sell the
security at the set price no matter what the market price of the
security is at that time.
When an option contract is made it is agreed that the underlying
security will be sold, in the case of a call option, or purchased,
in the case of a put option, at the set price no matter what the
market price of the security is at the time the option is exercised.
For undertaking the obligation to sell or purchase the security, a
writer receives a cash payment (premium) at the time the option is
written. The premium is retained by the writer whether or not the
option is exercised. However, a writer of a call option gives up
the opportunity for profit when an increase in the market price of
the security exceeds the option premium, and the writer of a put
option incurs the risk of loss when a decrease in the market price
of the security exceeds the option premium.
Writing Covered Call Options
As an example of writing a covered call option, assume the Fund
owned 200 shares of Alpha Corp. When the stock was selling at $25
per share, the Fund wrote a call option agreeing to sell those shares
at a price of $25 at any time for the next six months. The buyer
paid $200 for the call option (plus commission, if any). Should
Alpha Corp. stock decline to $20 per share during the time covered by
the call option, the option would not be exercised. The Fund would
have realized a short-term capital gain of about $200. On the other
hand, should Alpha Corp. stock rise to $35 per share, the call option
is likely to be exercised. The Fund would sell the stock at $25 and
not at $35. It would not realize the $2,000 gain but only retain the
premium it received at the time it wrote the call option. To some
extent, the risk of not realizing a gain if the price of the security
should go up can be reduced. To do this, the Fund would enter into a
"closing purchase transaction" prior to the end of the call option,
by purchasing a call option with the same terms as the one it wrote,
if one is available. The cost to close the option and terminate the
Fund's obligation to sell the stock may be more or less than the
premium received when it originally wrote the call option. This
would result in a short-term capital gain or loss. If the Fund
would not enter into a closing purchase transaction, it may be
required to hold a security that it may otherwise have sold to
protect against depreciation. The Fund's portfolio turnover may
increase through the exercise of the option if the market price of
the underlying securities goes up and the Fund has not entered into
a closing purchase transaction. The brokerage commissions associated
with the buying and selling of call options are normally
proportionately higher than those associated with general securities
transactions.
Writing a covered call option can serve various purposes. For
example, it can be an alternate method of selling securities
because the Fund, in effect, sets the price in advance at which it
intends to sell securities in its portfolio. It may provide some
additional funds which in turn may provide some additional
investment opportunities. The Fund will write covered call options
when it is appropriate and will follow these guidelines.
-Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the Fund's
objective.
-All equity options written by the Fund will be "covered." In
other words, the Fund will own the securities required to be sold
by the call option. If a decision is made to sell the security,
the Fund will attempt to terminate the option contract through a
closing purchase transaction.
-The Fund intends to deal only in standard option contracts traded
on national securities exchanges. The Fund will only write options
as permitted under federal or state laws or regulations. For example,
some state regulations limit the amount of total assets subject to
options. While no limit has been set by the Fund, it will conform to
the requirements of those states. When a covered call option is
written, the custodian segregates the underlying securities and
issues a receipt. There are certain rules regarding banks issuing
such receipts which may restrict the amount of covered call options
written. Besides these limitations, net premiums on call options
which are closed or premiums on lapsed call options are treated as
short-term capital gain. Since the Fund will be taxed as a
regulated investment company under the Internal Revenue Code, any
gains on options and other securities held less than three months
must be limited to less than 30% of annual gross gains.
Purchase of Options Written by Others
The purchase of put and call options written by others may be used
as a trading technique to facilitate buying and selling securities,
or for investment purposes if, as a result, no more than 5% of the
Fund's net assets would be invested in options. When the option is
bought, the Fund pays a premium and a commission. It then pays a
second commission on the purchase or sale of the underlying stock
when the option is exercised. For record keeping and tax purposes,
the price obtained on the purchase or sale of the underlying security
will be the combination of the exercise price, the premium and both
of the commissions.
The purchase of put and call options as a trading technique would
involve the sale of a call option or the purchase of a put option with
the expectation that the option would be exercised immediately and
would be used to take advantage of any disparity which might exist
between the price of the underlying stock on the stock market and its
price on the options market. It is anticipated that the proposed
trading technique will be utilized to effect a stock transaction when
the price of the security plus the option price will be as good or
better than the price at which the stock could be bought or sold
directly. Options purchased as a trading technique will not be
included as a separate security for the purpose of portfolio
valuation.
When the Fund purchases a call option for investment purposes, it
will realize a profit (loss) if and to the extent the market price
of the underlying security at the time of exercise of the option is
greater than (less than) the fixed exercise price plus the option
premium and commissions paid. When the Fund purchases a put option
for investment purposes, it will realize a profit (loss) if and to
the extent the market price of the underlying security at the time
of exercise of the option is less than (greater than) the fixed
exercise price minus the option premium and commissions paid.
When the Fund fails to exercise an option it has purchased, the Fund
will realize a loss in the amount of the premium and commission it
has paid. The purchase of put and call options written by others
may involve risks not encountered with investments in other
securities. Such risks include the possibility that a liquid
secondary market might not exist at a particular time, in which
event it might not be possible to close an option position when it
is desirable to do so. Dealing in options could result in increases
in the Fund's portfolio turnover rate, especially during periods
when market prices of the underlying securities are fluctuating.
Purchasing options also limits the use of monies which might
otherwise be available for long-term investments. Options purchased
for investment purposes will be valued in the Fund's portfolio like
any other security. See "Valuing Shares."
Futures Contracts on Stock Indexes and Options Thereupon
In furtherance of its investment objectives, the Fund may sell
stock index futures contracts, write call options, and/or purchase
put options on stock index futures contracts. A stock index futures
contract obligates the seller to deliver (and the purchaser to take)
an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close
of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of the underlying stocks
in the index is made. Writing call options obligates the Fund to
deliver the underlying futures contract for a specified price upon
exercise at any time during the option period. The Fund receives a
premium in return for granting to the purchaser of the option this
right. If the Fund purchases a put contract it will pay a premium
for the right to sell the underlying futures contract for a
specified price upon exercise any time during the put option period.
The Fund may engage in related closing transactions with respect
to options on stock index futures. The Fund will purchase or write
options only on futures contracts that are traded on a United
States exchange or board of trade. Whether the Fund realizes a gain
or loss from futures activities will generally depend upon movements
in the level of stock prices in the stock market, interest rates,
and other economic factors.
The loss from investing in futures transactions is potentially
unlimited. The Fund will engage in transactions on stock index
futures contracts and options thereon only to the extent its
activities would exclude it from the definition of "commodity pool
operator" under the requirements of Section 4.5 of the regulations
under the Commodity Exchange Act promulgated by the Commodity
Futures Trading Commission (the "CFTC" Regulations"). Under
Section 4.5 of the CFTC Regulations, the Fund may engage in futures
transactions, either for "bona fide hedging" purposes, as this term
is defined in the CFTC Regulations, or for non-hedging purposes to
the extent that the aggregate initial margins and premiums required
to establish such non-hedging positions do not exceed 5% of the
liquidation value of the Fund's portfolio. In the case of an option
on futures contracts that is "in-the-money" at the time of purchase
(i.e., the amount by which the exercise price of the put option
exceeds the current market value of the underlying security), the
in-the-money amount may be excluded in calculating this 5%
limitation.
However, when buying or selling a stock index futures contract, or
selling an option on a stock index futures contract, the Fund will
cover its position. To cover its position, the Fund may maintain
with its custodian bank (and mark-to market on a daily basis) a
segregated account consisting of cash or U.S. Government securities
or repurchase agreements secured by U.S. Government securities that,
when added to any amounts deposited with a futures commission
merchant as margin, are equal to the market value of the futures
contract or otherwise "cover" its position. The Fund may cover its
short position in a futures contract by owning the instruments
underlying the futures contract (or instruments the prices of which
are expected to move relatively consistently with the instruments
underlying the futures contract). The Fund may cover its sale of a
call option on a futures contract by taking a long position on the
underlying futures contract at a price no higher than the strike
price of the call option or, if lower, the Fund maintains in a
segregated account cash or liquid high-grade debt securities equal
in value to the difference between the two strike prices.
There are a number of risks associated with the use of futures
contracts and options. Although the Fund intends to sell futures
contracts, no assurance can be given that a liquid market will exist
for any particular contract any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no
trades may be made that day at a price beyond that limit or trading
may be suspended for specified periods during the day. Futures
contract prices could move to the limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of futures positions an potentially subjecting the Fund
to substantial losses. The risk that the Fund will be unable to
close out a futures position will be minimized by entering into such
transactions on a national exchange with an active and liquid
secondary market. Also, the effect of certain of these risks will
be reduced as the Fund will not engage in these transactions on
margin and thus will not be required to make daily cash payments of
variation margin.
Index Options Transactions. The Fund may buy or sell put options
or buy or sell call options on stock indexes listed on national
securities exchanges or traded in the over-the-counter market as an
investment vehicle for the purpose of realizing the Fund's
investment objective. A stock index fluctuates with changes in the
market values of the stocks included in the index. Options on
stock indexes give the holder the right to receive an amount of cash
upon exercise of the option. Receipt of this cash amount will
depend upon the closing level of the stock index upon which the
option is based being less than the exercise price of the option.
The amount of cash, if any, that will be received by the option
holder will be the difference between the closing price of the index
and the exercise price of the option, multiplied by a specified
dollar multiple. The writer (seller) of the option is obligated,
in return for the premiums received, to make payment to the option
holder of this amount. Unlike the options on securities discussed
below, all settlements are in cash.
Some stock index options are based on a broad market index such as
the Standard and Poor's 500 Composite Stock Price Index, the New York
Stock Exchange Composite Index, or the Philadelphia Stock Exchange
Over-the-Counter Index or on a narrower index such as the American
Stock Exchange ("AMEX") Major Market Index. A stock index fluctuates
with changes in the market values of the stocks included in the index.
Options currently are traded on the Chicago Board Options Exchange,
the AMEX, and other exchanges ("Exchanges"). Over-the-counter index
options, purchased over-the-counter options, and the cover for written
over-the-counter options will be subject to the Fund's limitation on
investment in illiquid securities.
Each of the Exchanges has established limitations governing the
maximum number of put options on the same index which may be bought
or written (sold) by a single investor, whether acting alone or in
concert with others (regardless of whether such options are written
on the same or different Exchanges or are held or written on one or
more accounts or through one or morebrokers). Under these
limitations, the option positions of all investment companies advised
by the same investment advisor are combined for purposes of these
limits. An Exchange may order the liquidation of positions and may
impose other sanctions or restrictions. These limitations may
restrict the number of listed options which the Fund may buy or sell.
The Advisor intends to comply with all limitations.
Index options are subject to substantial risks, including the risk
of imperfect correlation between the option price and the value of
the underlying securities comprising the index and the risk that
there might not be a liquid secondary market for the option. The
Fund will not enter into an option position that exposes the Fund
to an obligation to another party, unless the Fund either (i) owns
an offsetting position in other options and/or (ii) maintains with
its custodian bank (and marks-to-market on a daily basis) a
segregated account consisting of cash, U.S. Government securities,
or other liquid high-grade debt securities that, when added to the
premiums deposited with respect to the option, are equal to the
market value of the underlying stock index not otherwise covered.
Short Sales
In seeking its investment objective, the Fund may make short sales.
A short sale of a security is a transaction in which the Fund sells
a security it does not own. To complete such a transaction, the
Fund must own the security so as to make delivery to the buyer. The
Fund will not borrow the security which it sells short.
Until the Fund closes its short position, the Fund will:
(a) maintain a segregated account containing the securities sold
short, or cash or liquid high-grade debt securities at such a level
that (i) the amount deposited in the account equal the current value
of the security sold short and (ii) the amount deposited in the
segregated account will not be less than the market value of the
security at the time it was sold short; or (b) otherwise cover its
short position. For example, through the purchase of a put option
for the security sold short.
Investment Advisor
Centurion Counsel, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Distributor
Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Shareholder Servicing Agent
Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Auditors
Squire & Company
1205 Prospect Street, Suite 400
La Jolla, CA 92037
Legal Counsel
Rushall & McGeever
2111 Palomar Airport Road, Suite 200
Carlsbad, CA 92009
Officers
Jack K. Heilbron
Chairman of the Board
Kenneth W. Elsberry
Chief Executive Officer, President and
Chief Financial Officer
Mary R. Limoges
Secretary
Directors
Carol Ann Freeland
Richard E. Hall
Jack K. Heilbron
Russell W. Ketron
Douglas Werner
CENTURION T.A.A. FUND, INC.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Prospectus and Application
May 19, 1995
Centurion T.A.A. Fund, Inc.
[back of back cover]
CENTURION T.A.A. FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART B - STATEMENT OF ADDITIONAL INFORMATION
CENTURION T.A.A. FUND, INC.
Statement of Additional Information
Dated March ___, 1996
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Prospectus of Centurion T.A.A.
Fund, Inc. (the "Fund") dated May 19, 1995, as supplemented
March ___, 1996 (the "Prospectus"). A copy of the Prospectus may be
obtained by contacting the Fund's principal underwriter, Centurion
Institutional Services, Inc. ("CISI"), at 11545 W. Bernardo Court,
Suite 100, San Diego, California 92127 (Telephone: (619) 673-8536).
TABLE OF CONTENTS
Page
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . B-2
FUND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . B-3
OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . . . . . . B-5
CENTURION COUNSEL, INC., CENTURION GROUP, INC. AND
CENTURION INSTITUTIONAL SERVICES, INC . . . . . . . . . . . . B-6
CUSTODIAN; GENERAL COUNSEL; AUDITORS . . . . . . . . . . . . B-11
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . B-13
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . B-14
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-14
CALCULATION OF PERFORMANCE DATA . . . . . . . . . . . . . . . B-15
LIMITATION OF DIRECTOR LIABILITY . . . . . . . . . . . . . . B-17
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . B-17
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . B-19
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions set forth
below which, together with the fundamental investment objective
and policies of the Fund, cannot be changed without approval by
holders of a majority of the outstanding voting shares of the Fund.
As defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), this means the lesser of the vote of (a) 67% of
the shares of the Fund at a meeting where more than 50% of the
outstanding shares of the Fund are present in person or by proxy or
(b) more than 50% of the outstanding shares of the Fund. These
investment restrictions are set forth below:
(1) The Fund will not invest more than 5% of its net assets
(taken at the lower of cost or value) in securities of any one
company. The Fund will also limit its investment in a single
company to not more than 10% of that company's outstanding voting
securities. Further, the Fund will not invest more than 25% of its
total assets in securities issued by companies in any single
industry.
(2) The Fund will not invest more than 5% of its total assets
in securities of companies, including any predecessors, less than
three years old.
(3) The Fund will not invest in another investment company
except as a part of a plan of merger, acquisition or consolidation.
(4) The Fund will not buy or sell real estate, commodities or
commodity contracts, except for futures contracts on stock indexes
and options thereupon.
(5) The Fund will not buy on margin.
(6) The Fund will not pledge or mortgage its assets, except
to the extent that writing covered call options or future contracts
or options may be deemed to be pledging or mortgaging assets.
(7) The Fund will not borrow money or property (for example,
securities), except that as a temporary measure for extraordinary
purposes or emergencies, the Fund may borrow from banks up to 5%
of the value of its total assets.
(8) The Fund will not make cash loans. However, the Fund may
purchase bonds or other debt securities sold publicly, including
short-term securities which may be acquired under agreements by the
sellers to repurchase; provided that not more than 10% of the Fund's
net assets will, at any time, be subject to repurchase agreements
which mature in more than seven days. The Fund does not consider
these debt securities and other short-term investments to be loans.
(9) The Fund will not invest any of its assets in restricted
securities. Restricted securities are those the sale of which is
limited by contract or law. They are usually traded in private,
direct negotiations.
(10) The Fund will not act as an underwriter.
(11) The Fund will not buy any securities of a company if it
knows that the officers or directors of the Fund, who own 1/2 of 1%
or more of the company's securities, together own more than 5% of
the company's securities.
(12) The Fund will not invest in exploration or development
programs, such as oil or gas programs.
(13) The Fund will not invest in securities of foreign
corporations or in foreign corporations in which the obligor is not
a corporation in excess of 10% of its total assets at the time of
purchase.
(14) The Fund will not buy or sell foreign currency exchange
securities.
If a percentage limitation described above is adhered to at the time
of the investment by the Fund, a later increase or decrease in the
percentage resulting from any change in the value of the Fund's net
assets will not constitute a violation of the restriction.
FUND MANAGEMENT
The names, addresses and principal occupations of directors and
executive officers of the Fund for the past five years are given
below:
Name and (Age)
Positions with the Fund and Principal
Occupations During Past 5 Years
Business Address
Carol Ann Freeland (57)(1) Has served as a director of the Fund since
December 20, 1994. Since 1992,
Executive Vice President, Collateral
Equity Management, of Dallas, Texas.
From 1987 to 1992, Executive Vice
President, Financial Services Exchange,
Irving, Texas; from 1985 to 1986, Vice
President, Marketing, Property Co. of
America, Dallas, Texas.
4015 Beltline Road, #200
Dallas, TX 75244
Richard E. Hall (70) Has served as a director of the Fund since
December 20, 1994. Since 1989, a retired
financial planner and securities salesman.
Served as registered representative and
director of PIM Financial Services, Inc.
("PIM"), an affiliate of Centurion
Counsel, Inc., from 1983 to 1989. Until
July, 1994, Mr. Hall owned approximately
3% of the shares of CI Holding Group,
Inc., Centurion Counsel, Inc.'s parent
corporation. At that time he sold his
shares for fair value to an Affiliate of
Centurion Counsel, Inc. There is no
agreement or understanding between Mr.
Hall and Centurion Counsel, Inc. or its
Affiliates regarding his service as a
director of the Fund.
10 Carson Drive
Grant's Pass, OR 97526
Jack K. Heilbron (44)(2) Has served as a director of the Fund since
December 20, 1994. Also served as a
Director of the Fund from 1989 to 1990.
He has served as portfolio manager for the
Fund since 1990. Since 1984 he has
served as Chairman and Chief Executive
Officer of C I Holding Group, Inc. and
PIM. Since 1989, he served Chairman
and Chief Investment Officer of Centurion
Counsel, Inc. For the period 1988 until
1989, he served as an officer and director
of Excel Interfinancial Corporation, the
parent of Excel Advisors, Inc.
11545 W. Bernardo Court, #100
San Diego, CA 92127
Russell W. Ketron (51)(2) Has served as a director of the Fund since
December 20, 1994. A Certified Financial
Planner since 1977. Since 1979 has been a
registered principal with Protected
Investors of America, a national
broker-dealer firm. Has been an instructor
at Sierra Nevada College since
1985 and at the College of Marin since
1991.
1701 Novato Blvd., # 204
Novato, CA 94947
Douglas Werner (44) Has served as a director of the Fund since
December 20, 1994. Since 1993 has been
President of Tracks Publishing, a printing
firm located in Chula Vista, California.
Since 1980, has served as President and
owner of Werner Graphics, a graphic
design firm located in San Diego,
California.
140 Brightwood Ave.
Chula Vista, CA 92010
(1) Although this Director may be an "affiliated person" of a
broker/dealer registered under the Securities and Exchange Act
of 1934, as defined under the Investment Company Act of 1940,
the Fund has determined that this person is not an
"interested person" of the Fund, Centurion Counsel, Inc. or its
Affiliates, as defined under the Investment Company Act of 1940
by reason of Rule 2a19-1 promulgated thereunder.
(2) This Director is an "interested person" of Centurion Counsel,
Inc., the Fund, or a registered broker/dealer, as defined under
the Investment Company Act of 1940, as amended.
The Fund pays no compensation to any of its officers and directors,
except that the Fund pays fees of $250 for each meeting attended by
each director not affiliated with Centurion Counsel, Inc. or
Centurion Institutional Services, Inc., and reimburses such
nonaffiliated directors for their travel expenses to attend
directors' meetings.
Fund Executive and Director Compensation
The following Table sets forth information for each of the
directors of the Fund, all members of any advisory board of the Fund,
and for each of the three highest paid executive officers or any
affiliated person of the Fund whose aggregate compensation from the
Fund for the Fund's year ended December 31, 1995.
COMPENSATION TABLE
(1) (2) (3) (4) (5)
Total
Pension or Compensation
Retirement Estimated From
Aggregate Benefits Annual Registrant
Name of Compensation Accrued As Benefits and Fund
Person, From Part of Fund Upon Complex Paid
Position Registrant Expenses Retirement to Directors
Jack K. Heilbron, -0- -0- -0- -0-
Chairman of the
Board
Carol Ann Freeland, $750* -0- -0- $750*
Director
Richard E. Hall, $750* -0- -0- $750*
Director
Russell W. Ketron, $750* -0- -0- $750*
Director
Douglas Werner, $750* -0- -0- $750*
Director
* Directors are paid $250 per meeting. There are four scheduled
quarterly meetings for 1996.
** Mr. Heilbron receives no compensation, including no director
fees, for his service to the Fund either directly or indirectly
from the Fund or any other investment company in a Fund Complex
which includes the Fund.
OWNERSHIP OF SHARES
As of February 29, 1996, to the knowledge of management, no person
owned beneficially more than 5% of the outstanding shares of the Fund.
None of the directors or nominees for the position of director or
officers, as of February 29, 1996, beneficially owned shares of the
Fund, except Mr. Heilbron, Mr. Werner and Mr. Ketron who owned
beneficially 2,990, 520, and 36,575 shares, respectively, of the Fund
on such date (representing approximately 0.22%, 0.04% and 2.73%,
respectively, of the outstanding shares of the Fund).
CENTURION COUNSEL, INC., CENTURION GROUP, INC. AND
CENTURION INSTITUTIONAL SERVICES, INC.
General
Centurion Counsel, Inc. ("Centurion Counsel") was incorporated in
the State of California in 1984. Centurion Counsel has acted as the
Fund's investment advisor since January 1, 1995. Centurion Group,
Inc. ("CGI") was incorporated in the State of California in 1984.
CGI has acted as the Fund's accounting services agent, transfer agent,
dividend disbursing agent and administrative services agent since
January 1, 1995. In addition to its services to the Fund, Centurion
Counsel's primary business activities include investment consulting
to individuals, corporations, and institutions, sponsoring of
investment limited partnerships (primarily in the real estate
industry) and the providing of investment banking services and other
activities related to the investment and securities industries.
Centurion Counsel is an SEC-registered investment advisor.
Centurion Institutional Services, Inc. was incorporated in the
State of California in 1991. CISI has acted as the distributor of
the Fund's shares since January 1, 1995. CISI has been an
SEC-registered broker-dealer since July 1991. Since then, CISI has
been engaged primarily in the business of clearing securities
trades for its corporate and institutional clients.
Centurion Counsel, CGI and CISI are wholly owned subsidiaries of
C I Holding Group, Inc. ("CI Holding"), a California corporation that
is engaged through its subsidiaries in various aspects of the
financial services industry. C I Holding's primary business
activities have included investment advisory series, securities
brokerage services, and due diligence research and analysis
services provided to other financial services firms on a contract
basis. Approximately 40% of C I Holding's common shares, on a fully
diluted basis, are owned by officers and directors of C I Holding.
Investment Advisory Agreement
The Fund does not maintain its own research department. The Fund
has contracted with Centurion Counsel for investment advice and
management services. Pursuant to the Fund's Investment Advisory
Agreement, Centurion Counsel has the sole and exclusive
responsibility for the management of the Fund's portfolio and the
making and execution of all investment decisions for the Fund
subject to the objectives and investment restrictions of the Fund
and subject to the supervision of the Fund's board of directors.
Under the Fund's Investment Advisory Agreement, Centurion Counsel
also furnishes, at its own expense, office facilities, equipment
and personnel for servicing the investments of the Fund. Centurion
Counsel has agreed to arrange for the Fund's officers or employees
to serve without compensation from the Fund if duly elected to such
positions by the shareholders or directors of the Fund.
As compensation for its services to the Fund, Centurion Counsel is
entitled to a fee, payable within five days after the end of each
fiscal quarter, based upon the Fund's average daily net assets.
Under the Fund's Investment Advisory Agreement, Centurion Counsel
receives a fee at the annual rate of:
1.00% of the first $200-million of the Fund's average daily net assets
0.85% of average daily net assets between $200-million and $400-million
0.80% of average daily net assets between $400-million and $600-million
0.75% of average daily net assets between $600-million and $800-million
0.60% of average daily net assets between $800-million and $1-billion
0.50% of average daily net assets over $1-billion.
The percentage fee is calculated on the daily value of the Fund's net
assets at the close of each business day. The foregoing fees are
higher than fees paid by most other investment companies.
All costs and expenses (other than those specifically referred to as
being borne by Centurion Counsel) incurred in the operation of the
Fund are borne by the Fund. These expenses include, among others,
interest, taxes, brokerage fees and commissions, fees of the directors
who are not full-time employees of Centurion Counsel, CGI, CISI or any
of their affiliates, expenses of directors' and shareholders' meetings,
including the cost of printing and mailing proxies, expenses of
insurance premiums for fidelity and other coverage, expenses of
repurchase and redemption of shares, expenses of issue and sale of
shares (to the extent not borne by CISI under its Distribution
Agreement or its Shareholder Services Agent Agreement with the Fund),
expenses of printing and mailing stock certificates representing
shares of the Fund, association membership dues, charges of custodians,
transfer agents, dividend disbursing agents and accounting services
agents, and bookkeeping, auditing and legal expenses. The Fund will
also pay the fees and bear the expense of registering and maintaining
the registration of the Fund and its shares with the Securities and
Exchange Commission and registering or qualifying its shares under
state or other securities laws and the expense of preparing and
mailing prospectuses and reports to existing Fund shareholders.
The Investment Advisory agreement provides that Centurion Counsel
will endeavor to pay directly the Fund's expenses and that to the
extent the Fund's Annual Total Operating Expenses including Advisory
fees but excluding 12b-1 fees, taxes, brokerage fees and commissions,
exceed 2.625% of the first $200-million of the Fund's average daily
net assets on an annual basis, Centurion Counsel will waive
reimbursements of these expenses (including its advisory fee).
Centurion Counsel has agreed to waive such reimbursements for any
fiscal year of the Fund in which this Advisory Agreement is last
effective, subject to the investment advisor's right to end this
obligation at the end of any Fund fiscal year.
The Investment Advisory Agreement dated January 1, 1995 between
Centurion Counsel and the Fund was approved by the shareholders of the
Fund on December 20, 1994 and was last approved by the board of
directors of the Fund (including a majority of the directors who are
not parties to the agreement, or interested persons of any such
party, other than as directors of the Fund) on February 2, 1996.
The Fund's Investment Advisory Agreement continues from year to year
only if a majority of the Fund's directors (including a majority of
disinterested directors as described above) approve. The Fund's
Investment Advisory Agreement may be terminated by either the Fund
or Centurion Counsel on 60 days' written notice to the other, and
terminates automatically in certain situations.
For the years ended December 31, 1993 and 1994, the Fund's former
investment advisor Excel Advisors, Inc. ("Excel") earned $9,340 and
$5,840, respectively, in fees from the Fund before reimbursement of
certain expenses. For the year ended December 31, 1995, Centurion
Counsel, the Funds current investment advisor, earned $20,820 in
advisory fees from the Fund. For the years ended December 31, 1993
and 1994, Excel reimbursed the Fund $9,340 and $5,840, respectively,
for expenses in excess of the expense limitations under its
investment advisory agreement with the Fund. For the year ended
December 31, 1995, Centurion Counsel reimbursed the Fund $20,821 for
expenses in excess of the expense limitations under its advisory
agreement with the Fund.
Accounting Services Agreement
Centurion Group, Inc. acts as the Fund's accounting services agent
pursuant to the Accounting Services Agreement with the Fund dated
January 1, 1995. Pursuant to this agreement, CGI maintains the books,
accounts, records, journals and other records of original entry
relating to the business of the Fund and performs certain daily
functions in connection therewith.
The Fund pays CGI a monthly fee equal on a annual basis to 0.15% of
average net assets, provided that the Fund has agreed to pay an annual
minimum accounting services fee of $18,000. The Fund paid CGI
accounting service fees of $18,000 for the year ended December 31, 1995.
This fee is in addition to the fee payable by the Fund to Centurion
Counsel pursuant to the Fund's investment advisory agreement. For the
years ended December 31, 1993 and 1994, the Fund paid its former
accounting services agent, Excel, $18,000 and $6,000, respectively, in
accounting services fees. Excel had waived $12,000 of its fee for the
year ended December 31, 1994. for the year ended December 31, 1995,
CGI waived $6,000 of its fee.
The Accounting Services Agreement between CGI and the Fund was
approved by the board of directors of the Fund (including a majority
of the directors of the Fund who are not parties to the Agreement, or
interested persons of any such party, other than as directors of the
Fund) and by the shareholders of the Fund approved such Agreement on
December 20, 1994. A majority of the disinterested directors of the
Fund specifically found, in the course of their review of the
Agreement, that the Agreement is in the best interests of the Fund
and its shareholders, the services to be performed pursuant to the
Agreement are services required for the operation of the Fund, CGI
can provide services the nature and quality of which are at least
equal to those provided by others offering the same or similar
services, and the fees for such services are fair and reasonable in
light of the usual and customary charges made by others for services
of the same nature and quality. The Agreement continues from year to
year only if the Fund's directors approve it in the same way they
approve the Fund's Investment Advisory Agreement. The Accounting
Services Agreement may be terminated by either the Fund or CGI on 60
days' written notice to the other, and the Agreement terminates
automatically in certain situations.
Administrative Agreement
CGI acts as transfer agent, dividend disbursing agent and
administrative services agent for the Fund pursuant to Administration
Agreement effective January 1, 1995. Pursuant to this agreement, CGI
will maintain the Fund's stock registers, process requested account
registration changes, issue stock certificates, record redemptions and
administer the payments of dividends by the Fund.
As compensation for these services, the Fund will pay CGI a separate
fee per service provided as follows: $0.75 per account maintenance per
month; $7.50 per dealer confirmation; $10.00 per wire transfer; and
$50.00 per 1,000 customer statements per month. In addition, all out
of pocket expenses incurred by CGI in connection with the rendering of
services pursuant to the Administration Agreement will be reimbursed to
CGI by the Fund. Such expenses will include, without limitation,
postage, stationery, telephone service, and any other expense involved
in the handling of correspondence. These fees are in addition to the
fees paid by the Fund to Centurion Counsel pursuant to the Fund's
Investment Advisory Agreement. For the year ended December 31, 1995,
the Fund paid CGI, its administrative services agent, a fee of $2,124.
For the years ended December 31, 1993 and 1994, the Fund paid Excel,
its former administrative services agent, administrative fees of
$1,962 and $1,406, respectively.
The Administration Agreement between CGI and the Fund was approved
by the Board of Directors of the Fund (including a majority of the
directors of the Fund who are not parties to the agreement, or
interested persons of any such party, other than as directors of the
Fund) and by the shareholders of the Fund on December 20, 1994. A
majority of the disinterested directors of the Fund specifically
found, in the course of their review of the agreement, that the
agreement is in the best interests of the Fund and its shareholders,
the services to be performed pursuant to the agreement are services
required for the operation of the Fund, CGI can provide services the
nature and quality of which are at least equal to those provided by
others offering the same or similar services, and the fees for such
services are fair and reasonable in light of the usual and customary
charges made by others for services of the same nature and quality.
The agreement continues from year to year only if the Fund's
directors approve them in the same way they approve the Fund's
Investment Advisory Agreement. The Administration Agreement may be
terminated by either the Fund or by CGI on 60 days' written notice
to the other, and the Agreement terminates automatically in certain
situations.
Distribution Agreement
Representatives of CISI, as the Fund's principal underwriter, sell
the Fund's shares under the Distribution Agreement with the Fund
dated January 1, 1995. CISI receives, as compensation for services
it performs under the Distribution Agreement, a distribution fee.
See "Payment of Certain Distribution Expenses" below. CISI bears all
advertising and promotion expenses in connection with the
distribution of the Fund's shares (except those expenses assumed by
the Fund's investment advisor). The Distribution Agreement was last
approved by the board of directors of the Fund (including a majority
of the directors who are not parties to the agreement, or interested
persons of any such party, other than as directors of the Fund) on
December 20, 1994. The Fund's Distribution Agreement may be
terminated by either CISI or the Fund on 60 days' written notice to
the other, and terminates automatically in certain situations.
Since January 1, 1995, no front-end sales charges are paid in
connection with the sales of the Fund's shares. For the years ended
December 31, 1993 and 1994, the Fund's prior principal underwriter,
Warner Beck Incorporated, received gross amounts equal to $364 and
$57, respectively, from the Fund in sales commission through the
sale of the Fund's shares. No sales commissions were received by
the Fund's principal underwriter for sales of the Fund's shares in
1995.
Under the Distribution Agreement, CISI agrees to indemnify the
Fund against all costs of litigation and other legal proceedings and
against any liability incurred by or imposed on the Fund in any
way arising out of or in connection with the sale or distribution of
the Fund's shares, except to the extent that such liability is the
result of information which was obtainable by CISI only from persons
affiliated with the Fund but not CISI.
Shareholder Services Agent Agreement
Pursuant to payment of 12b-1 fees authorized by its Plan of
Distribution, the Fund has entered into a Shareholder Services Agent
Agreement with CISI dated January 1, 1995 whereby CISI and its
representatives provide shareholder liaison services for the Fund
including responding to customer inquiries and providing information
on their investments, and such other related services as the Fund or
the Fund's shareholders may reasonably request. Under the Shareholder
Services Agent Agreement, CISI and its representatives are required to
pay all expenses of the Servicing Agent incurred in connection with
providing such services to shareholders of the Fund. For such services
and/or as a reimbursement of its shareholder servicing costs, the Fund
pays CISI a servicing agent fee, all or a portion of which CISI may
reallow to its representatives or to other broker-dealers who contract
to provide shareholder services to their customers. This fee is
calculated and payable quarterly, at an annualized rate of 0.25% of the
average daily net assets of the Fund represented by the shares owned by
shareholders with whom CISI and its representatives maintain a
servicing relationship, or an amount which equals the maximum amount
payable to the Servicing Agent under applicable laws, regulations or
rules, whichever is less.
Payment of Certain Distribution Expenses
Pursuant to the payment of 12b-1 fees authorized by its Plan of
Distribution, the Fund has entered into the Distribution Agreement with
CISI. Under this agreement, CISI will receive, as compensation for
services it performs under such agreements, a distribution fee which
will be equal to an annual rate of 0.75 of 1% of the Fund's average
daily net assets and will be used by CISI to compensate broker-dealers,
including CISI, and CISI's registered representatives, for their sales
of the Fund's shares based on a percentage of the net assets of the
Fund for which such broker-dealers or registered representatives are
responsible by reason of their sale of the Fund's shares, and to pay
other advertising and promotional expenses in connection with the
distribution of the Fund's shares. CISI, at its expense, may also
provide additional compensation to dealers in connection with sales of
shares of the Fund. Such compensation may include financial assistance
to dealers in connection with conferences, sales or training programs
for their employees, seminars for the public, advertising campaigns
regarding the Fund and/or dealer-sponsored special events. In some
instances, these incentives may be made available only to certain
dealers whose representatives have sold or are expected to sell
significant amounts of such shares. Such compensation may include
payment for travel expenses, including lodging, incurred in connection
with trips taken by invited registered representatives and members of
their families to locations within or outside of the United States for
meetings or seminars of a business nature. Dealers may not use sales
of the Fund's shares to qualify for the incentives to the extent such
may be prohibited by the laws of any state or any self-regulatory
agency, such as the National Association of Securities Dealers, Inc.
None of the aforementioned compensation is paid for by the Fund or
its shareholders.
The Fund's Plan of Distribution provides for the indirect payment
of distribution expenses by the Fund as described in the preceding
paragraph. The advertising and/or promotional expenses that may
be paid for pursuant to the Fund's Plan of Distribution include, by
way of example but not limitation, the costs of printing the
prospectus, statement of additional information and shareholder
reports provided to prospective investors; the preparation and
distribution of sales literature; advertising of any type;
allocated overhead and other expenses of the principal underwriter
related to the distribution of the Fund's shares; and payments to
and expenses of, officers, employees or representatives of the
principal underwriter, of other broker-dealers, banks or other
financial institutions, and of any other persons who provide
support services in connection with the distribution of the Fund's
shares, including travel, entertainment, and telephone expenses.
Banks are currently prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. If
banking firms were prohibited from acting in any capacity or
providing any of the described services, the Underwriter would
consider what action, if any, would be appropriate. The
Underwriter does not believe that termination of a relationship
with a bank would result in any material adverse consequences to
the Fund. State securities laws regarding registration of banks
and other financial institutions may differ from the interpretations
of federal law expressed herein, and bank and other financial
institutions may be required to register as dealers pursuant
to certain state laws.
Indirect or reimbursable expenses under the Plan do not include
interest paid on amounts borrowed by Centurion Counsel to make the
payments for which reimbursement is made. Also, there is no
provision in the Plan limiting payments to the amounts of actual
distribution expenses or actual shareholder servicing expenses
expended by CISI. If the Plan were terminated or not continued,
the Fund is not contractually obligated to pay CISI for any expenses
not previously reimbursed by the Fund. However, the Fund could, in
the sole discretion of its Board of Directors, determine to reimburse
all or a portion of any such amounts.
In addition, the Plan contains, among other things, provisions
complying with the requirements of Rule l2b-1 discussed below. Rule
l2b-1(b) provides that any payments made by the Fund in connection
with the distribution of its shares may only be made pursuant to a
written plan describing all material aspects of the proposed financing
of distribution and also requires that all agreements with any person
relating to implementation of the plan must be in writing. In
addition, Rule l2b-1(b)(1) requires that such plan be approved by a
vote of at least a majority of the Fund's outstanding shares, and
Rule l2b-1(b)(2) requires that such plan, together with any related
agreements, be approved by a vote of the board of directors of the
Fund and of the directors of the Fund who are not interested persons
of the Fund and have no direct or indirect financial interest in the
operation of the plan or in any agreements related to the plan, cast
in person at a meeting called for the purpose of voting on such plan
or agreements. Rule l2b-1(b)(3) requires that the plan or agreement
provide, in substance: (1) that it shall continue in effect for a
period of more than one year from the date of its execution or
adoption only so long as such continuance is specifically approved at
least annually in the manner described in paragraph (b)(2) of Rule
l2b-1; (2) that any person authorized to direct the disposition of
monies paid or payable by the Fund pursuant to the plan or any
related agreement shall provide to the Fund's board of directors, and
the directors shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures
were made; and (3) in the case of a plan, that it may be terminated
at any time by vote of a majority of the members of the board of
directors of the Fund who are not interested persons of the Fund and
have no direct or indirect financial interest in the operation of the
plan or in any agreements related to the plan or by vote of a majority
of the outstanding voting securities of the Fund. Rule l2b-1(b)(4)
requires that such plans may not be amended to increase materially the
amount to be spent for distribution without shareholder approval and
that all material amendments of the plan must be approved in the
manner described in paragraph (b)(2) of Rule l2b-1. Rule l2b-1(c)
provides that the Fund may rely upon Rule l2b-1(b) only if selection
and nomination of the Fund's disinterested directors are committed to
the discretion of such disinterested directors. Rule l2b-1(e)
provides that the Fund may implement or continue a plan pursuant to
Rule l2b-1(b) only if the directors who vote to approve such
implementation or continuation conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties
under state law, and under Sections 36(a) and (b) of the 1940 Act,
that there is a reasonable likelihood that the plan will benefit the
Fund and its shareholders. For the year ended December 31, 1995,
CISI, the Fund's principal underwriter, received $10,088 in
distribution service fees, pursuant to the Fund's Plan of Distribution.
During the years ended December 31, 1993 and 1994, the Fund's former
principal underwriter, Warner Beck Incorporated, received $0 and $0,
respectively, from the Fund pursuant to the Fund's Plan of Distribution.
CUSTODIAN; GENERAL COUNSEL; AUDITORS
The Bank of California, N.A., 475 Sansome Street, 11th Floor,
San Francisco, California 94111, acts as custodian of the Fund's
assets. The custodian may, in conformity with applicable rules of
the Securities and Exchange Commission, enter into sub-custodial
arrangements with eligible foreign sub-custodians for the custody
of any foreign securities held by the Fund.
Rushall & McGeever acts as the general counsel for the Fund.
Squire & Company acts as the Fund's independent public accountants.
BROKERAGE
In effecting securities and commodities transactions, the Fund's
investment advisor seeks to obtain the best price and execution of
orders. Commission rates, being a component of price, are
considered together with other relevant factors.
The Fund expects to use affiliates of Centurion Counsel, including
CISI, as brokers of the Fund's portfolio securities but only if the
provisions of Section 17(e) of the 1940 Act (and the rules thereunder)
are complied with and only when, in the judgment of Centurion Counsel,
the firm will be able to obtain a price and execution at least as
favorable as other qualified brokers, and the transactions effected
by the firm, including the frequency thereof, the receipt of
commissions payable in connection therewith and the selection of the
firm, are not unfair or unreasonable to the shareholders of the Fund.
In determining the commissions to be paid to an affiliated broker-
dealer, it is the policy of the Fund that such commissions will, in
the judgment of the Fund's investment advisor, be both at least as
favorable as those which would be charged by other qualified brokers
having comparable execution capability and at least as favorable as
commissions contemporaneously charged by such broker-dealer on
comparable transactions for its most favored unaffiliated customers,
except for any customers of such broker-dealer considered by a
majority of the disinterested directors (as described above) not to
be comparable to the Fund. While the Fund does not deem it
practicable and in its best interest to solicit competitive bids for
commission rates on the transaction, consideration will regularly be
given to posted commission rates as well as to other information
concerning the level of commissions charged on comparable
transactions by other qualified brokers.
When selecting brokers, business may be placed with broker-dealers
who furnish investment research services to Centurion Counsel or its
affiliates. Such research services include advice, both directly and
in writing, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability
of securities or purchasers or sellers of securities, as well as
analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance
of accounts. This allows these persons to supplement their own
investment research activities and enables them to obtain the views
and information of individuals and research staffs of many different
securities research firms prior to making investment decisions for
the Fund. To the extent such commissions are directed to these other
broker-dealers who furnish research services, Centurion Counsel
receives a benefit, not capable of evaluation in dollar amounts,
without providing any direct monetary benefit to the Fund from these
commissions. Centurion Counsel has not entered into any formal or
informal agreements with any broker-dealers (except as noted above),
and it does not maintain any "formula" which must be followed in
connection with the placement of the Fund's portfolio transactions
in exchange for research services, except as noted below. However,
Centurion Counsel may maintain an informal list of broker-dealers
which it may use as a general guide in the placement of the Fund's
business, in order to encourage certain broker-dealers to provide
it with research services which it anticipates will be useful to it.
Because the list, if any, is merely a general guide which is to be
used only after the primary criteria for the selection of broker-
dealers (discussed above) have been met, substantial deviations from
the list are permissible and may be expected to occur. Centurion
Counsel will authorize the Fund to pay an amount of commission for
effecting a securities transaction in excess of the amount of
commission another broker-dealer would have charged only if it
determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services
provided by the broker-dealer viewed in terms of either that
particular transaction or its overall responsibilities with respect
to the accounts as to which it exercises investment discretion.
Generally, the Fund pays higher than the lowest commission rates
available.
Subject to the policies set forth in the preceding paragraph and
such other policies as the Fund's directors may determine, Centurion
Counsel may consider sales of shares of the Fund and of other funds
it may advise as a factor in the selection of broker-dealers to
execute the Fund's portfolio transactions.
During the years ended December 31, 1993, 1994 and 1995, $1,216,169,
$617,652 and $1,275,276, respectively, of the Fund's portfolio
securities were purchased and sold through brokers or banks acting on
a principal basis for which no commissions were charged. During 1993
and 1994, all of these transactions were effected through brokers or
banks unaffiliated with the Fund. During 1995, $66,200 of such
transactions were effected through CISI and its affiliate, PIM.
During the years ended December 31, 1993, 1994 and 1995, the Fund
paid a total of $16,372, $9,141 and $9,997, respectively, in brokerage
commissions in connection with agency transactions. During the year
ended December 31, 1995, $6,726 of total commissions were paid to CISI,
the Fund's principal underwriter, and to its affiliate, PIM and $3,271
of commissions were paid to broker-dealer who provided investment
research to Centurion Counsel, the Fund's investment advisor. During
1993, $7,968 and $8,404, respectively, and during 1994 $0 and $9,141,
respectively, commissions were paid to Warner Beck, the Fund's former
principal underwriter, and to broker-dealers who furnished investment
research to the Fund's investment advisor. During the year ended
December 31, 1993, Warner Beck effected 65% of the total dollar
volume of transactions in which commissions were paid and received 49%
of such commissions. During 1994 and 1995, PIM and CIS, together,
effected 90% and 87%, respectively, of the total dollar volume of
transactions in which commissions were paid and received 89% and 67%,
respectively, of such
commissions.
RETIREMENT ACCOUNTS
The objectives of the Fund may make the shares of the Fund an
appropriate investment for Tax-Sheltered Retirement Plans, including
Individual Retirement Accounts ("IRAs"), Keogh (HR-10) Plans (for
self-employed individuals), qualified corporate pension or profit
sharing plans (for employees) and Tax-Deferred Investment Plans (for
employees of public school systems and certain types of charitable
organizations).
IRAs are available from the Fund. Persons desiring information about
the available IRAs or about any other of the plans referred to above
should communicate with a CISI representative. All tax-sheltered
retirement plans referred to above involve a long-term commitment of
assets and are subject to various legal requirements and restrictions.
The legal and tax implications may vary according to the circumstances
of the individual investor. Therefore, the investor is urged to
consult with an attorney or tax advisor prior to the establishment of
such a plan.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
On December 31, 1995, the net asset value per share for the of the
Fund was calculated as follows:
Net Assets ($4,370,287) = Net Asset Value Per Share ($3.34)
Shares Outstanding ($1,308,886)
As disclosed in the Prospectus, during certain emergencies, the
board of directors of the Fund can suspend the computation of net
asset value of the Fund, stop accepting payments for purchase of the
Fund's shares or suspend the duty of the Fund to redeem its shares.
There are only a few such emergency situations:
-The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings, or trading on the Exchange
is restricted as defined by the Securities and Exchange
Commission.
-The Securities and Exchange Commission decides that for a
certain period of time, disposal of the Fund's securities
is not practical, or that it is not practical for the Fund
to fairly value its net assets.
-Other emergency periods declared by the Securities and
Exchange Commission under the provisions of the
Investment Company Act of 1940.
The Fund will pay in cash all redemption requests by any shareholder
of record, limited in amount during any 90-day period to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of
such period. When redemption requests exceed such amount, however,
the Fund reserves the right to make part or all of the payment in the
form of securities or other assets of the Fund. An example of when
this might be done is in case of emergency, such as in those
situations enumerated above, or at any time a cash distribution would
impair the liquidity of the Fund to the detriment of existing
shareholders. Any securities being so distributed would be valued in
the same manner as the portfolio of the Fund is valued. If the
recipient sold such securities, he or she probably would incur
brokerage charges. The Fund has filed with the Securities and
Exchange Commission a notification of election pursuant to Rule 18f-1
under the Investment Company Act of 1940 in order to make such
redemptions in kind.
TAXES
Since its inception the Fund has met, and the Fund intends to
continue to meet, the requirements for regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), and, if it meets these requirements, the Fund will not
be liable for federal income taxes to the extent the Fund distributes
its taxable income to its shareholders. To qualify as a regulated
investment company, the Fund must meet certain tests of
diversification of assets, source of income and other requirements of
the Code. However, the Fund's management reserves the right to
depart from this policy whenever, in its sole judgment, it is deemed
in the best interest of the Fund and its shareholders to do so. If
the Fund fails to meet any of the Code requirements, the Fund will be
subject to tax on its income as a regular corporation whether or not
its income is distributed to its shareholders, and any such
distributions will be taxable to the Fund's shareholders as ordinary
dividends to the extent of its current and accumulated earnings and
profits, regardless of whether such distributions were derived from
the Fund's net long-term capital gains.
Under the Code, the Fund will be subject to a non-deductible excise
tax equal to 4% of the excess, if any, of the amount required to be
distributed pursuant to the Act for the calendar year over the amount
actually distributed. Any undistributed amounts subject to
corporate-level income tax, however, will not be subject to the excise
tax. In order to avoid the imposition of the excise tax, the Fund must
generally declare dividends by the end of the calendar year
representing 98% of the Fund's ordinary income for the calendar year
and 98% of its capital gain net income (both long-term and short-term
capital gains) for the twelve-month period ending October 31 of the
calendar year.
Currently, individual shareholders are not able to exclude
distributions by the Fund which are attributable to dividends earned
by the Fund, and corporate shareholders are allowed to deduct 70% of
such dividend distributions. Such a deduction by a corporate
shareholder is limited to the portion of the Fund's gross income
which is derived from dividends received from domestic corporations.
Since it is anticipated that a portion of the Fund's net investment
income may be derived from sources other than dividends from domestic
corporations, a portion of its dividends may not qualify for this
exclusion. Distributions designated as long-term capital gain
distributions will be taxable as long-term capital gains, regardless
of how long shares have been held, and will not be eligible for the
dividends received deduction for corporate shareholders referred to
above.
For federal tax purposes, if a shareholder transfers shares of the
Fund for shares of Cash Equivalent Fund-Money Market Portfolio, such
transfer will be considered a taxable sale of the first-purchased
shares. Furthermore, if a shareholder uses the exchange privilege
within ninety days of the purchase of the first-purchased shares, any
sales charge incurred on the purchase of those shares cannot be taken
into account for determining the shareholder's gain or loss on the
sale of those shares to the extent any sales charge on the purchase
of the later-acquired shares is reduced because of the exchange
privilege. However, the amount of any sales charge that may not be
taken into account in determining the shareholder's gain or loss on
the sale of the first-purchased shares may be taken into account in
determining his gain or loss on the eventual sale or exchange of the
later-acquired shares.
The foregoing discussion of Federal income tax consequences is based
on tax laws and regulations in effect on the date of this Prospectus,
and is subject to change by legislative or administrative action.
Further, in those states that have income tax laws, the tax treatment
of the Fund and of shareholders in respect to distributions by the Fund
may differ from Federal tax treatment. Prospective investors are
advised to consult with their tax advisors concerning the application
of state and local taxes to distributions by and investments in the
Fund which may differ from the Federal income tax consequences
described above.
CALCULATION OF PERFORMANCE DATA
Advertisements and other sales literature for the Fund may refer to
the Fund's "average annual total return" and "cumulative total return."
All such quotations are based upon historical earnings and are not
intended to indicate future performance. The investment return on and
principal value of an investment in the Fund will fluctuate, so that
the investor's shares when redeemed may be worth more or less than
their original cost.
Average Annual Total Return
Average annual total return is computed by finding the average
annual compounded rates of return over the periods indicated in the
advertisement that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment
made at the beginning of such period.
This calculation deducts the maximum sales charge from the initial
hypothetical $1,000 investment, assumes all dividends and capital
gains distributions are reinvested at net asset value on the
appropriate reinvestment dates as described in the Prospectus, and
includes all recurring fees, such as investment advisory and
management fees, charged to all shareholder accounts.
The following table sets forth the average annual total return for the Fund
for the periods ended December 31, 1995, as set forth below:
PERIODS ENDED DECEMBER 31, 1995
Since inception
One Year Five Years Ten Years (Jan. 18, 1982)
(2.26)% (6.91)% 1.98% 6.10%
Cumulative Total Return
Cumulative total return is calculated by finding the cumulative
compounded rate of return over the period indicated in the
advertisement that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
ERV-P
CTR = (---------)100
P
CTR = Cumulative total return
ERV = ending redeemable value at the end of the period
of a hypothetical $1,000 payment made at the
beginning of such period
P = initial payment of $1,000
This calculation deducts the maximum sales charge from the initial
hypothetical $1,000 investment, assumes all dividends and capital
gains distributions are reinvested at net asset value on the
appropriate reinvestment dates as described in the Prospectus, and
includes all recurring fees, such as investment advisory and
management fees, charged to all shareholder accounts.
The cumulative return for the Fund for the period beginning at
the inception of the Fund (January 1, 1986 and ending
December 31, 1995 129.16%.
LIMITATION OF DIRECTOR LIABILITY
Under Minnesota law, the director of the Fund owes certain fiduciary
duties to the Fund and to its shareholders. Minnesota law provides
that a director "shall discharge the duties of the position of director
in good faith, in a manner the director reasonably believes to be in
the best interest of the corporation, and with the care an ordinarily
prudent person in a like position would exercise under similar
circumstances." Fiduciary duties of a director of a Minnesota
corporation include, therefore, both a duty of "loyalty" (to act in
good faith and act in a manner reasonably believed to be in the best
interests of the corporation) and a duty of "care" (to act with the
care an ordinarily prudent person in a like position would exercise
under similar circumstances). In February, 1987, Minnesota enacted
legislation which authorizes corporations to eliminate or limit the
personal liability of a director to the corporation or its
shareholders for monetary damages for breach of the fiduciary duty of
"care." Minnesota law does not, however, permit a corporation to
eliminate or limit the liability of a director (i) for any breach of
the directors' duty of "loyalty" to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law,
(iii) for authorizing a dividend, stock repurchase or redemption or
other distribution in violation of Minnesota law or for violation of
certain provisions of Minnesota securities laws, or (iv) for any
transaction from which the director derived an improper personal
benefit. The Articles of Incorporation of the Fund were amended on
April 28, 1988, to limit the liability of directors to the fullest
extent permitted by Minnesota statutes, except to the extent that
such liability cannot be limited as provided in the 1940 Act (which
Act prohibits any provisions which purport to limit the liability of
directors arising from such directors' willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of their role as directors).
Minnesota law does not eliminate the duty of "care" imposed upon a
director. It only authorizes a corporation to eliminate monetary
liability for violations of that duty. Minnesota law, further, does
not permit elimination or limitation of liability of "officers" to the
corporation for breach of their duties as officers (including the
liability of directors who serve as officers for breach of their
duties as officers). Minnesota law does not permit elimination or
limitation of the availability of equitable relief, such as
injunctive or rescissionary relief. Further, Minnesota law does not
permit elimination or limitation of a director's liability under the
Securities Act of 1933 or the Securities Exchange Act of 1934, and it
is uncertain whether and to what extent the elimination of monetary
liability would extend to violations of duties imposed on directors
by the 1940 Act and the rules and regulations adopted under such Act.
ADDITIONAL INFORMATION
The Fund was incorporated under the name "IRI Stock Fund, Inc."
The shareholders of the Fund, at a meeting held on May 10, 1989,
approved an amendment to the Articles of Incorporation (the
"Articles") of the Fund providing that the name "IRI Stock Fund, Inc."
be changed to "Excel Value Fund, Inc." The shareholders of the Fund,
at a meeting held on December 20, 1994, approved an amendment to the
Articles providing that the name "Excel Value Fund, Inc." be changed
to "Centurion T.A.A. Fund, Inc."
The Fund is not required under Minnesota law to hold annual or
periodically scheduled regular meetings of shareholders. Regular and
special shareholder meetings are held only at such times and with
such frequency as required by law. Minnesota corporation law provides
for the Board of Directors to convene shareholder meetings when it
deems appropriate. In addition, if a regular meeting of shareholders
has not been held during the immediately preceding 15 months, a
shareholder or shareholders holding 3% or more of the voting shares of
the Fund may demand a regular meeting of shareholders of the Fund by
written notice of demand given to the chief executive officer or the
chief financial officer of the Fund. Within 90 days after receipt of
the demand, a regular meeting of shareholders must be held at the
expense of the Fund. Additionally, the 1940 Act requires shareholder
votes for all amendments to fundamental investment policies and
restrictions and for all investment advisory contracts and amendments
thereto.
The Fund has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement under the Securities
Act of 1933 and the 1940 Act, with respect to the common stock offered
hereby. This Statement of Additional Information does not contain all
of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with rules and regulations of
the Commission. The Registration Statement may be inspected at the
principal office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the
Commission at prescribed rates.
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
FINANCIAL STATEMENTS
For the Year Ended December 31, 1995
CONTENTS
INDEPENDENT AUDITOR'S REPORT
Financial Statements:
Statement of Assets and Liabilities
Statement of Investments
Statement of Covered Call Options Written
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
FINANCIAL STATEMENTS
For the Year Ended December 31, 1995
Squire & Company
A Professional Corporation
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
Centurion T.A.A. Fund, Inc.
(Formerly Excel Value Fund, Inc.)
We have audited the accompanying Statement of assets and liabilities
of Centurion T.A.A. Fund, Inc., including the statement of investments
and covered call options written, as of December 31, 1995, and the
related statement of operations for the year then ended, the
statements of changes in ent assets for each of the two years in the
period then ended, and the selected per share data and ratios for the
five years then ended. These financial statements and per share data
and ratios are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial statements
and per share data and ratios based on our audit.
We conducted our audit 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 per share data and ratios are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statemens. Our procedures
included confirmation of securities owned as of December 31, 1995, by
correspondence with the custodian. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and selected per share data
and ratios referred to above present fairly, in all material respects,
the financial position of Centurion T.A.A. Fund, Inc. As of
December 31, 1995, and the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the
period then ended, and the selected per share data and ratios for the
five years then ended in conformity with generally accepted
accounting principles.
February 7, 1996
Powary, California
Member Division for CPA Firms
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
ASSETS
Investments in Securities, at value,
(identified cost $4,330,940) $4,343,929
Cash 135,280
Receivables:
Dividends 3,056
Interest 2,512
Investment Securities Sold 5,918
-----------
TOTAL ASSETS $4,490,696
==========
LIABILITIES
Covered Call Options Written, at market value,
(premiums received $54,719) $52,156
Securities sold short,
(proceeds received $15,384) 23,250
Payables:
Accounts Payable 29,827
Investment Securities Purchased 15,175
-----------
TOTAL LIABILITIES 120,408
-----------
NET ASSETS
Net Assets (equivalent to $3.34 per share on
1,308,886 shares of $0.01 par value capital stock
outstanding: authorized 100,000,000 shares $4,370,287
==========
The accompanying notes are an integral part of the financial statement
CENTURION T.A.A. FUND, INC.
STATEMENT OF INVESTMENT SECURITIES
DECEMBER 31, 1995
Shares or % of
Principal Net Market
Amount Description Assets Cost(a) Value (b)
COMMON STOCKS 66.63%
AUTO AND AUTO PARTS 13.22%
200 Chrysler Corp $10,150 $11,075
300 Ford Motor 9,213 8,700
6,100 Navistar International 82,720 64,050(e)
1,000 Echlin Inc. 34,775 36,500
2,000 Spartan Motors 21,275 22,000
2,400 Dana Corp 61,825 70,200
2,500 Arvin Industries 43,775 41,250
2,500 Federal-Mogul 47,838 49,063
2,500 APS Holding Corp. 47,188 56,250(e)
3,000 Modine Manufacturing 83,625 72,000
3,200 Simpson Industries 29,225 28,800
5,000 MasoTech, Inc. 56,275 54,375
4,000 SPX Corp 59,525 63,500
Total Auto and Auto Parts $587,408 $577,763
FINANCE/BANKING 4.72%
100 First National Bank of Anchorage 154,250 156,500
240 Morgan (J.P.) 13,490 19,260
800 CoreStates Financial 29,225 30,300
Total Finance/Banking 196,965 206,060
CHEMICALS 1.82%
2,700 Rexene Corp 32,080 29,025
500 Grace (WR) 29,150 29,563
300 duPont(EI) deNemours 18,288 20,963
Total Chemicals 79,518 79,550
COMPUTER RELATED 9.49%
2,000 Performance Systems International 41,025 45,750(e)
3,000 Cal Micro Development 26,250 25,875(e)
3,500 Datawatch 18,375 17,500(e)
6,000 Fastcomm 41,525 34,500(e)
10,000 Conner Peripherals 179,150 210,000(e)
2,000 Eagle Point Software 34,800 43,000(e)
3,000 Cypress Semiconductor 50,763 38,250(e)
Total Computer Related 391,888 414,875
CONSUMER/DEFENSIVE 5.50%
3,300 Borg-Warner Security 28,248 41,250(e)
100 Hershey Creamery 180,000 175,000
1,000 Beatrice (TLC) 61,000 24,000
Total Consumer/Defense 269,248 240,250
INDUSTRIALS 2.31%
1,300 Cincinnati Milacron 32,038 34,125
2,100 Bethlehem Steel 30,580 29,400(e)
5,000 Quadrax Corp 8,463 4,219(e)
500 Minnesota Mining & Manufacturing 27,157 33,125
Total Industrials 98,237 100,869
INSURANCE 1.68%
3,000 Transnational Re'A'Insurance 74,275 73,500
Total Insurance 74,275 73,500
MANUFACTURING/TOYS 0.81%
3,000 Galoob (Lewis) Toys 22,720 35,250(e)
Total Manufacturing 22,720 35,250
MEDICAL RELATED 2.29%
3,000 Circon Corp. 62,625 60,750(e)
1,300 Sunrise Medical 33,375 24,050(e)
2,000 Cor Therapeutics 20,750 16,750(e)
900 Merck & Co 51,213 59,175
Total Medical Related 167,963 160,725
MINING 2.58%
2,500 Barrick Gold $62,650 $65,938
3,000 Homestack Mining 49,530 46,875
Total Mining 112,180 112,813
OIL AND GAS 6.11%
200 Mobil Corp 20,200 22,400
300 Halliburton Co 12,963 15,188
300 Texaco Inc. 20,050 23,550
300 Chevron Corp 13,085 15,750
500 Questar Corp 15,338 16,750
500 Tidewater, Inc. 13,275 15,750
700 Unocal Corp 19,625 20,388
1,000 Offshore Logis 13,025 12,625(e)
1,120 Core Laboraories N.V. 13,300 13,440(e)
1,500 Santa Fe Energy Resources 12,963 14,438
1,600 Gulf Canada Resources 6,496 6,600
2,500 Noble Drilling Corp 16,900 22,500(e)
3,000 Comstock Resources 12,750 16,875(e)
3,000 Marine Drilling 12,563 15,375(e)
5,000 Zapata Corp 25,400 15,625
700 Pogo Producing 14,200 19,775
Total Oil and Gas 242,131 267,028
PUBLISHING 0.30%
1,000 Thomas Nelson 14,025 13,000
Total Publishing 14,025 13,000
REAL ESTATE 6.34%
300 ROC Communities 6,850 7,200
350 Crescent Real Estate Euity 10,963 11,944
400 Merry Land & Investment 8,775 9,450
500 Gables Residential Trust 11,275 11,438
500 Bay Apartment Communities 10,713 12,125
500 Liberty Property Trust 10,588 10,375
800 Pennsylvania REIT 15,880 16,600
900 Oasis Residential 19,513 20,475
1,000 Mid-America Apartment Communities25,030 24,750
1,100 Avalon Properties 22,063 23,650
1,200 Bradley Real Estate Trust 18,425 16,200
1,900 Camden Propety Trust 41,225 45,125
2,000 Washington REIT SBI 30,765 31,750
2,400 United Dominion Realty Trust 33,310 36,000
Total Real Estate 265,373 277,081
RESTAURANTS 4.73%
1,200 Koo Koo Roo 9,175 7,800(e)
3,600 Rock Bottom Restaurants 55,863 46,800(e)
4,000 Morrison Restaurants 70,251 56,000
10,000 Foodmaker Inc. 51,750 58,750(e)
12,000 TPI Enterprises 34,540 37,500(e)
Total Restaurants 221,579 206,850
RETAIL 2.24%
13,000 Gantos 36,785 26,000(e)
1,500 Claire's Stores 23,153 26,438
1,500 Limited, Inc. 28,530 25,875
2,600 Fay's Inc. 20,503 19,500
Total Retail 108,97 197,813
TRANSPORTATION 0.67%
1,000 Kirby Corp 17,567 16,250
200 Union Pacific 12,950 13,200
Total Transportation 30,517 29,450
UTILITIES 0.44%
300 Western Resources 9,213 10,013
300 Wisconsin Energy Corp 7,938 9,188
Total Utilities 17,150 19,200
PREFERRED STOCK 0.47%
2,000 Sunshine Mining & Refining
-Preferred $17,390 $20,750(e)
Total Preferred Stock 17,390 20,750
OPTIONS AND WARRANTS 3.00%
2,500 Put-Apple Computer, Inc.
-Expires 4/96 @37.50 11,629 18,125
10,000 Put-Conner Pheripherals 8,900 1,875
1,000 Put-S&P 100 Index
-Expires 3/96 @ 590 10,040 13,250
2,000 Put-OEX Index
-Expires 2/96 @ 560 20,807 36,500
2,000 Put-S&P100 Index
-Expires 1/96 @ 540 18,05 71,125
2,500 Put-S&P100 Index
-Expires 3/96 @570 27,778 16,875
1,000 Put-Semiconductor Index
-Expires 3/96 @ 265 19,042 65,125
16,900 Sunshine Mining & Refining
-Warrants 15,872 18,450
Total Options and Warrants 132,122 131,325
FIXED INCOME
SECURITIES 6.45%
CORPORATE BONDS 1.31%
50 Revlon Worldwide Sr. Sec Disc
(Zero Coupon) 1998 36,563 36,750
25 Nova Care Convertible,
5.5%,due 2000 25,000 20,406
Total Corporate Bonds 61,563 57,156
U. S. GOVERNMENT
AGENCY BONDS 5.14%
2.04 FHLMC Pool 534912 2,080 2,242
8.28 FHLMC Series 1294 A 7,871 8,247
11.24 FNMA Gtd. Remic Pass thru
Certificates 92 150 EB 11,101 11,171
90.13 FNMA Series 103E 90,129 90,129
112.88 FNMA Series 61G 112,477 112,882
Total U.S. Government
Agency Bonds 223,659 224,672
SHORT-TERM
INVESTMENTS 22.83%
COMMERCIAL PAPER 22.83%
150 Texaco Inc Discount Bond
due 1/12/96 149,639 149,663
250 Ford Motor Credit Co.
Discount 1/18/96 248,909 249,198
300 General Electric Capital
Discount Bond due 1/11/96 298,663 299,379
300 IBM Corp
Discount Bond due 1/4/96 298,854 299,712
Total Commercial Paper 996,065 997,951
TOTAL INVESTMENTS $4,330,942 4,343,929
EXCESS OF CASH AND OTHER
ASSETS OVER LIABILITIES
0.60% 26,358
NET ASSETS 100.00% $4,370,287
NOTES:
(a) Also represents cost for federal income tax purposes.
(b) See Note 1 of notes to financial statements.
(c) Total unrealized appreciation on investments consists
of gross unrealized gains of $254,086 and gross unrealized
losses of $241,100.
(d) For the year ended December 31, 1995, the aggregate cost
of purchases and proceeds from sales of investment
securities (excluding short-term commercial paper and US
Treasury bills) were $3,836,912 and $732,655, respectively.
(e) Nonincome producing securities
The accompanying notes are an intergral part of the financial statements.
CENTURION T.A.A. FUND, INC.
STATEMENT OF COVERED CALL OPTIONS WRITTEN
DECEMBER 31, 1995
Shares Common Stock /
Subject Expiration Date / Market Premium
to Call Exercise Price Value Received
2,500 American Barrick Resources
-Leaps, Expires January 1997 @ 30 $6,094 $5,249
1,300 Cincinnati Milacro
-Expires May 1996 @30 1,625 1,092
1,500 Claire's Stores, Inc.
-Expires May 1996 @ 22.50 938 3,328
10,000 Conner Peripherals
-Expires January 1996 @20 15,000 11,050
2,000 Cor Therapeutics, Inc.
-Expires April 1996 @ 12.50 875 2,568
1,000 Cypress Semiconductor
-Expires March 1996 @15 875 898
1,000 Cypress Semiconductor
-Leaps, Expires January 1997 @ 35 2,125 4,968
1,000 Cypress Semiconductor
-Leaps, Expires January 1997 @45 1,250 4,718
1,500 Galoob Toys, Inc.
-Expires May 1996 @ 10 3,844 2,766
1,500 Galoob Toys, Inc.
-Expires May 1996 @ 12.50 1,969 1,266
2,000 Homestake Mining
-Expire January 1997 @20 2,250 3,818
1,000 Limited, Inc.
-Expires May 1996 @ 20 63 960
500 Limited, Inc.
-Expires May 1996 @ 20375343
2,000 Performance Systems Intl
-Expires April 1996 @17.50 14,875 11,693
------------------
Total $52,156 $54,719
==================
CENTURION T.A.A. FUND, INC.
STATEMENT OF SECURITIES SOLD SHORT
DECEMBER 31, 1995
Shares Common Stock /
Subject Expiration Date / Market Premium
to Call Exercise Price Value Received
500 Phlx Semiconductor Index
-Expires January 1996 @ 210 $6,563 $5,918
500 Phlx Semiconductor Index
-Expires March 1996 @ 230 16,688 9,466
------------------
Total $23,250 $15,384
==================
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
INVESTMENT REVENUE
Dividends $17,597
Interest 59,598
----------
Total Investment Revenue 77,195
EXPENSES
Investment Advisory Fees (Note 4) $20,820
Accounting (Note 4) 18,000
Custodian Fees and Expenses 5,106
Transfer Agent Fees 2,124
Audit Fees and Expenses 3,900
Shareholder Services 20,892
Insurance 371
Registration 19,912
Directors Fees 7,512
Other Expenses 1,741
----------
Total Expenses 100,378
Fees and Expenses Absorbed
by Investment Advisor (26,821)
----------
Net Expenses 73,557
----------
Net Investment Income 3,638
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Loss from Securities
Transactions (62,931)
Unrealized Appreciation of Investments 110,721
Unrealized Depreciation of Call Options Written (3,616)
----------
Net Gain on Investments 44,174
----------
Net Increase in Net Assets from Operations $47,812
==========
The accompanying notes are an integral part of the financial statements.
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
OPERATIONS
Net Investment Income (Loss) $ 3,638 ($27,969)
Net Realized Loss from Securities Transactions (62,931) (36,423)
Unrealized Depreciation of Investments 110,721 (108,570)
Unrealized Appreciation (Depreciation)
of Covered Call Options Written (3,616) 3,975
---------- ---------
Net Increase (Decrease) in Net Assets
from Operations 47,812 (168,987)
---------- ---------
FUND SHARE TRANSACTIONS
Proceeds from Sale of 1,301,491 and 285
Shares, Respectively 4,283,465 1,212
Amount Paid for Repurchase
of 124,552 and 34,516
Shares, Respectively (413,054) (137,095)
----------- ---------
Net Increase (Decrease) in Net Assets
from Fund Share Transactions 3,870,411 (135,883)
---------- ---------
NET ASSETS
Beginning of Period 452,064 756,934
---------- ---------
End of Period (includes no undistributed
investment income) $4,370,287 $452,064
========== =========
The accompanying notes are an integral part of the financial statements.
CENTURION T.A.A. FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund commenced operations in January 1982. At the shareholder
meeting on December 20, 1994, the shareholders voted to change the
name of the fund to Centurion T.A.A. Fund, Inc. ("Fund") from Excel
Value Fund, Inc. The Fund is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment
company. The objective of the Fund to achieve long-term investment
return, including both capital appreciation and current income,
consistent with reasonable risk.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its
financial statements.
Security Valuation:
Investments in securities traded on major exchanges are valued at
the last quoted sales price on that exchange where such securities
are primarily traded. Securities traded in the over-the-counter
market are valued at the last sales price. Over-the-counter and
listed securities that have not been traded on a certain day are
valued at the average between the last bid and asked price. If
market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good
faith by the Fund's board of directors. Debt securities are valued
in accordance with the procedures above. Short-term securities are
stated at amortized cost (which approximates market value) if
maturity is 60 days or less, or at market value if maturity is
greater than 60 days.
Security Transactions and Related Investment Income:
Security transactions are accounted for on the trade date and
dividend income is recorded on the ex-dividend date. Interest income,
which may be comprised of stated coupon rate, market discount and
original issue discount, is recorded on the accrual basis. Discounts
on debt securities purchased are amortized over the life of the
respective security as adjustments to interest income. Realized
security gains and losses are determined using the specific
identification cost method.
Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Income Taxes:
The Fund has complied and continues to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies
and, accordingly, has made or intends to make sufficient distributions
of net investment income and net realized capital gains, if any, to
relieve it from all federal and state income taxes and federal excise
taxes.
CENTURION T.A.A. FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
Cash Deposits:
At December 31, 1995 the Fund had cash on deposit at one financial
institution of $135,280. Thus, all cash amounts over the maximum
Federal Deposit Insurance Corporation coverage are not insured. From
time to time, the Fund evaluates the credit worthiness of the
financial institution and considers alternatives.
NOTE 2 - NET ASSETS
At December 31, 1995, net assets consisted of:
Net proceeds from capital stock $5,037,715
Unrealized appreciation of investments 12,989
Unrealized depreciation of covered call
options written (5,303)
Excess distributions over accumulated
net income (320,045)
Undistributed net realized loss from
security transactions (355,069)
--------------
$ 4,370,287
==============
NOTE 3 - COVERED CALL OPTIONS WRITTEN
As of December 31, 1995, portfolio securities valued at $516,875
were held by the custodian in connection with covered call options
written by the Fund.
NOTE 4 - PAYMENTS TO RELATED PARTIES
The following were paid to the Fund advisor or its affiliates for
the year ended December 31, 1995:
Investment advisory fee $ 20,820
Accounting fees 18,000
12B-1 fees 10,088
Transfer agency fees 2,124
Commissions:
Portfolio transactions 6,726
CENTURION T.A.A. FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
The investment advisory and management agreements provide that the
advisor be paid a fee of 1% per annum of the average daily net assets
of the Fund. However, if the Fund's expenses, exclusive of taxes,
interest, brokerage fees and commissions, exceed 3.625% of the average
daily net assets, then the Fund advisor will reimburse the Fund the
excess amount. For the year ended December 31, 1995, the advisor
reimbursed the Fund the total advisory fee allowed of $20,820 and
accounting fees of $6,000.
NOTE 5 - PER SHARE INFORMATION
Selected data for each share of capital stock outstanding throughout
the period is as follows:
CENTURION T.A.A. FUND, INC.
(Formerly Excel Value Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - PER SHARE INFORMATION
Selected data for each share of capital stock outstanding throughout
the period is as follows:
Year Ended December 31
1995 1994 1993 1992 1991 1990
Net Asset Value,
Beginning of Period $3.43 $4.55 $4.96 $5.17 $5.11 $7.37
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income -0.05 -0.18 -0.21 -0.03 0.04 0.11
Net Gains or (Losses)
on Securities
(Both Realized
and Unrealized) -0.04 -0.94 -0.20 -0.18 0.73 -1.77
Total From Investment
Operations - Note 1 -0.09 -1.12 -0.41 -0.21 0.77 -1.66
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.00 0.00 -0.07 -0.17
Distributions from
Capital Gains 0.00 0.00 0.00 0.00 -0.64 -0.43
Returns of Capital
Total Distributions 0.00 0.00 0.00 0.00 -0.71 -0.60
Net Asset Value, End of Period
TOTAL RETURN -2.62% -28.01% -12.39% -8.38% 9.94% -27.09%
Note 1 - Allocated between Net Investment Income and Net Gains or
(Losses) on Securities based on monthly weighted average
shares outstanding.
RATIOS AND SUPPLEMENTAL DATA
Net Assets,
End of Period
($000 Omitted) $4,370 $452 $757 $1,273 $1,593 $1,917
Ratio of Expenses,
Before Waiver of Fees
and Reimbursement,
to Average Net Assets 4.82% 9.04% 6.19% 4.51% 4.20% 3.89%
Ratio of Expenses,
After Waiver of Fees
and Reimbursement,
to Average Net Assets 3.53% 6.00% 5.19% 3.51% 3.18% 2.90%
Ratio of Net Investment
Income to Average
Net Assets 0.17% -4.78% -4.50% -0.78% 1.20% 1.72%
Portfolio Turnover Rate 57.20% 148.21% 143.11% 151.12% 161.48% 60.77%
Number of Shares
Outstanding
at End of Period
(000 Omitted) 1,309 132 166 256 308 375
PART C -- OTHER INFORMATION
Item 24. Financial Statement and Exhibits
(a) Financial Statements: Financial statements of the Registrant
are included in the Registrant's combined Statement of
Additional Information filed as part of this Registration
Statement.
(b) Exhibits:
1 Articles of Incorporation of IRI Stock Fund, Inc.(1)
Articles of Amendment of IRI Stock Fund, Inc.(3)
Articles of Amendment of IRI Stock Fund, Inc. to change name to
"Excel Value Fund, Inc."(5)
Articles of Amendment of Excel Value Fund, Inc. to change name
to "Centurion T.A.A. Fund, Inc."(7)
2 Restated Bylaws of Centurion T.A.A. Fund, Inc.(5)
3 Not applicable.
4 Specimen copy of share certificate of
Centurion T.A.A. Fund, Inc.(7)
5 Form of Investment Advisory Agreement of
Centurion T.A.A. Fund, Inc.(8)
6 Form of Distribution Agreement of
Centurion T.A.A. Fund, Inc.(7)
7 Not applicable.
8 Custodian Agreement(6)
9(a) Form of Administration Agreement of
Centurion T.A.A. Fund, Inc.(7)
9(b) Form of Accounting Services Agreement of
Centurion T.A.A. Fund, Inc.(7)
9(c) Form of Shareholder Services Agent Agreement of
Centurion T.A.A. Fund, Inc.(7)
10 Opinion and Consent with respect to
Centurion T.A.A. Fund, Inc.(2)
11 Consent of Squire & Company
12 Not applicable.
13 Letter of Investment Intent with respect to
Centurion T.A.A. Fund, Inc.(1)
14 Forms of Tax-Sheltered Retirement Plans(2)
15 Form of Plan of Distribution of
Centurion T.A.A. Fund, Inc.(7)
16 Calculations of Total Returns of
Centurion T.A.A. Fund, Inc.(3)
________________________________________
(1) Incorporated herein by reference to Registration Statement
on Form N-1A of IRI Stock Fund, Inc. filed with the
Securities and Exchange Commission on September 4, 1981.
(2) Incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registration Statement
on Form N-1A of IRI Stock Fund, Inc. filed with the
Securities and Exchange Commission on January 6, 1982.
(3) Incorporated by reference to Post-Effective
Amendment No. 10 to the Registration Statement on
Form N-1A of IRI Stock Fund, Inc. and Post-Effective
Amendment No. 8 to the Registration Statement on
Form N-1A of Midas Gold Shares & Bullion, Inc.
filed with the Securities and Exchange Commission on
May 2, 1988.
(4) Incorporated by reference to Post-Effective
Amendment No. 11 to the Registration Statement on
Form N-1A of IRI Stock Fund, Inc. and Post-Effective
Amendment No. 9 to the Registration Statement on
Form N-1A of Midas Gold Shares & Bullion, Inc. filed
with the Securities and Exchange Commission on
March 30, 1989.
(5) Incorporated by reference to Post-Effective
Amendment No. 12 to the Registration Statement on
Form N-1A of Excel Value Fund, Inc. and Post-Effective
Amendment No. 10 to the Registration Statement on
Form N-1A of Excel Midas Gold Shares, Inc. filed with
the Securities and Exchange Commission on May 1, 1990.
(6) Incorporated by reference to Post-Effective
Amendment No. 14 to the Registration Statement on
Form N-1A of Excel Value Fund, Inc. filed with the
Securities and Exchange Commission on May 1, 1992.
(7) Incorporated by reference to Post-Effective
Amendment No. 17 to the Registration Statement on
Form N-1A of Centurion T.A.A. Fund, Inc. filed with
the Securities and Exchange Commission on
February 2, 1995.
(8) Incorporated by reference to Post-Effective
Amendment No. 20 to the Registration Statement on
Form N-1A of Centurion T.A.A. Fund, Inc. filed with
the Securities and Exchange Commission on
April 27, 1995.
Item 25. Persons Controlled by or Under Common
Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
The following table sets forth the number of holders of shares
of Centurion T.A.A. Fund, Inc. as of ______________________, 1996.
(1) (2)
Title of Class Number of Record Holders
Common stock, par value 320
$0.01 per
Item 27. Indemnification
Indemnification. Article 7(d) of the Registrant's Articles of
Incorporation and Article VIII of its Bylaws provide that the
Registrant shall indemnify such persons, for such expenses and
liabilities, in such manner, under such circumstances, and to
such extent as permitted by Section 302A.521 of the Minnesota
Statutes, as now enacted or hereafter amended; provided,
however, that no such indemnification may be made if it would
be in violation of Section 17(h) of the Investment Company Act
of 1940, as now enacted or hereinafter amended, and any rules,
regulations or releases promulgated thereunder.
The Registrant may indemnify its officers and directors and
other "persons" acting in an "official capacity" (as such terms
are defined in Section 302A.521) pursuant to a determination by
the board of directors or shareholders of the Registrant as set
forth in Section 302A.521, by special legal counsel selected by
the board or a committee thereof for the purpose of making such
a determination, or by a Minnesota court upon application of the
person seeking indemnification. If a director is seeking
indemnification for conduct in the capacity of director or
officer of the Registrant, then such director generally may not
be counted for the purpose of determining either the presence of
a quorum of such director's eligibility to be indemnified.
In any case, indemnification is proper only if the eligibility
determining body decides that the person seeking indemnification:
(a) has not received indemnification for the same conduct from
any other party or organization;
(b) acted in good faith;
(c) received no improper personal benefit;
(d) in the case of criminal proceedings, had no reasonable cause
to believe the conduct was unlawful;
(e) reasonably believed that the conduct was in the best interest
of the Registrant, or in certain contexts, was not opposed to
the best interest of the Registrant; and
(f) had not otherwise engaged in conduct which precludes
indemnification under either Minnesota or Federal law
(including, without limitation, conduct constituting
willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties as set forth in Section
17(h) and (i) of the Investment Company Act of 1940).
Advances. If a person is made or threatened to be made a party to
a proceeding, the person is entitled, upon written request to the
Registrant, to payment or reimbursement by the Registrant of
reasonable expenses, including attorneys' fees and disbursements,
incurred by the person in advance of the final disposition of the
proceeding, (a) upon receipt by the Registrant of a written
affirmation by the person of a good faith belief that the criteria
for indemnification set forth in Section 302A.521 have been satisfied
and a written undertaking by the person to repay all amounts so paid
or reimbursed by the Registrant, if it is ultimately determined that
the criteria for indemnification have not been satisfied, and
(b) after a preclude indemnification under Section 302A.521.
The written undertaking required by clause
(a) is an unlimited general obligation of the person making it,
but need not be secured and shall be
accepted without reference to financial ability to make the
repayment.
Undertaking. The Registrant undertakes that insofar as
indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless, in the opinion of its
counsel, the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
Other. Reference is made to Section 9 of the Distribution
Agreement filed as Exhibit (6) to this Registration Statement.
Item 28. Business and Other Connections of Investment Advisor
Information on the business of the Registrant's investment advisor
is described in the section of the Statement of Additional Information
entitled "Centurion Counsel, Inc., Centurion Group, Inc. and
Centurion Institutional Services, Inc." filed as part of this
Registration Statement.
The following table includes a listing of the name and principal
business address of each director and executive officer of Centurion
Counsel, Inc., the Registrant's investment advisor, the position(s)
held with Centurion Counsel, Inc. and any other business, profession,
vocation or employment of a substantial nature in which such persons
currently engage or have engaged (in the capacity of director, officer,
employee, partner or trustee) during the past two years.
Name and Principal Business Address
Position(s) with Centurion Counsel, Inc.
Other Occupations During Past Two Years
Jack K. Heilbron
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
Chairman of the Board and Chief
Executive Officer of the Registrant.
Chairman of the Board of Directors of
CI Holding Group, Inc. ("C I Holding"),
the parent corporation of Centurion
Counsel, Inc. Mr. Heilbron also serves
as the Chairman and a Director of other
operating subsidiaries of C I Holding.
Kenneth W. Elsberry
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
President and Chief Financial Officer
President, Chief Financial Officer and
Treasurer of the Registrant. Chief
Financial Officer and Director of C I
Holding and other of its operating
subsidiaries.
Mary R. Limoges
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
Executive Vice President, Secretary and Director
Secretary of Registrant. Executive Vice
President, Secretary and Director of C I
Holding and serves as Executive Officer
of other of its operating subsidiaries.
Susan B. Fulton
4326 Montgomery Avenue
Bethesda, MD 20814
Director
Director of C I Holding and other of its
operating subsidiaries. Officer, Director
and owner of Fulton, Breakefield and
Broenniman, a financial services firm
located in Bethesda, MD.
Margaret C. Broenniman
4326 Montgomery Avenue
Bethesda, MD 20814
Director
Director of C I Holding and other of its
operating subsidiaries. Officer, Director
and owner of Fulton, Breakefield and
Broenniman, a financial services firm
located in Bethesda, MD.
Item 29. Principal Underwriters
The following table sets forth the name and principal business
address of each director and officer of Centurion Institutional
Services, Inc., the Registrant's principal underwriter, and the
positions, if any, such persons hold with Centurion T.A.A. Fund,
Inc.
Name and Principal Business Address
Position(s) and Office(s) with Centurion Institutional Services, Inc.
Positions and offices with the Registrant
Mary R. Limoges
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
President, Chief Executive Officer and Director
Secretary
Kenneth W. Elsberry
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
Chief Financial Officer and Director
President, Treasurer, Chief
Financial Officer
Susan B. Fulton
4326 Montgomery Avenue
Bethesda, MD 20814
Vice President and Director
None
Margaret C. Broenniman
4326 Montgomery Avenue
Bethesda, MD 20814
Vice President and Director
None
Holly N. Wood
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
Vice President
None
Maureen Ward
11545 W. Bernardo Court,
Suite 100
San Diego, CA 92127
Vice President
None
Item 30. Location of Accounts and Records
The Bank of California, N.A., 475 Sansome Street, 11th Floor,
San Francisco, California 94111, acts as the custodian of the
Registrant's portfolio securities and cash. Centurion Group, Inc.,
11545 W. Bernardo Court, Suite 100, San Diego, California 92127,
acts as Centurion T.A.A. Fund, Inc.'s transfer agent, dividend
disbursing agent, administrative services agent and accounting
services agent. The Bank of California, N.A. and Centurion Group,
Inc. will maintain certain books and records in connection with
their respective duties. All other records, including the
Registrant's minute books, will be kept by the Registrant.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective
Amendment to the Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of San Diego,
State of California, on the 29th day of March 1996.
CENTURION T.A.A. FUND, INC.
By: /s/ Kenneth W. Elsberry
Kenneth W. Elsberry
Chief Executive Officer and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
/s/ Jack K. Heilbron Chairman of the Board March 29, 1996
Jack K. Heilbron of the Registrant
/s/ Kenneth W. Elsberry President, Chief Executive March 29, 1996
Kenneth W. Elsberry Officer, Chief Financial
Officer and Director of
the Registrant
/s/ Carol Ann Freeland Director of the Registrant March 21, 1996
Carol Ann Freeland
/s/ Richard E. Hall Director of the Registrant March 29, 1996
Richard E. Hall
/s/ Russell W. Ketron Director of the Registrant March 20, 1996
Russell W. Ketron
/s/ Douglas Werner Director of the Registrant March 20, 1996
Douglas Werner
EXHIBIT 11
CONSENT
OF
SQUIRE & COMPANY
