As filed with the Securities and Exchange Commission on
November 5, 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. 25
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. 25
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"; "Expense Synopsis"
3 "Financial Highlights"; "Performance Data"
4 "Summary of Contents"; "Investment Objective 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 "Multiple Pricing System"; "Valuing Shares"; "Buying Shares";
"Sales Charge"; "Plans of Distribution"; "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 "Multiple Class Share Plan", "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
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 (dated as of the
date of this Prospectus) 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 SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION AND THE SHARES
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER FEDERAL OR STATE AGENCY.
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 __________, 1996
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.
Objective Prospectus, page 1
The investment objective of the Fund is set forth in the cover
page of this Prospectus.
Valuing Shares Prospectus, page 20
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.
Dividends; Investment Income; Reinvestments Prospectus, page 27 and 28
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.
Buying Shares Prospectus, page 21
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.
Risk Considerations Prospectus, page 5,
pages 14-19
Appendix A
Your investment in the Fund involves 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 32
Centurion Institutional Services, Inc.Statement of Additional
Information, page B-9
Your investment is professionally managed. Centurion Counsel
is the Fund's investment advisor (the Advisor"). 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 underwriter (the "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.
Multiple Pricing System Prospectus, page 11
Statement of Additional Information, page B-6
The Fund offers four classes of shares. Class A shares,
Class B shares and Class C shares are offered to the general public
and each has its own sales charge structure. Each of these classes
of shares has distinct advantages and disadvantages for different
investors, and investors may choose the class of shares that best
suits their circumstances and objectives. Each class of shares
represents an interest in the same portfolio of investments of the
Fund. The per share dividends on Class B and Class C shares will be
lower than the per share dividends on Class A shares. In addition,
the Fund offers Class D shares to investors who qualify as an Advisor
Professionals, Eligible Employees, or Eligible Account. There are no
sales charges with respect to Class D shares.
Class A Shares. These shares are offered at their net asset
value per share plus a maximum initial sales charge ("front-end charge")
of 4.75% of the offering price. Class A Shares are charged an annual Rule
12b-1 fee of 0.25% of its average daily net assets attributable to Class A
shares.
Class B Shares. These shares are offered at their net asset
value per share and are subject to a maximum contingent deferred sales
charge of up to 4% of redemption proceeds during the first year,
declining each year thereafter to 0% after the fifth year. Class B shares
are charged an annual Rule 12b-1 fees of 1.0% of its average daily net
assets attributable to Class B shares. The Class B shares convert
automatically to Class A shares eight years after the end of the calendar
month in which the shareholder's purchase of the Class B Share was accepted.
Class C Shares. These Shares are offered at their net asset
value per share. No front-end charge or deferred sales charge will be
charged by the Fund with respect to the Class C shares. Class C shares
will be charged an annual Rule 12b-1 fees of 1.0% of its average daily net
assets attributable to Class C shares.
Class D Shares. These shares are offered at their net asset
value per share only to Advisor Professionals, Eligible Employees, and
Eligible Accounts, as defined under "Purchase of Shares - Class D
Shares" herein. No front-end charge or deferred sales charge will be charged
by the Fund with respect to Class D shares. The Fund will not pay 12b-1 fees
with respect to Class D shares.
Sales Charge Prospectus, pages 6 and pages 22 and 24
There is no front-end sales charge on the Class C or Class D
shares. The Fund charges a front-end sales charge of 4.75% of the
Offering Price on the Class A shares and charges a maximum contingent
deferred sales charge of 4.0% on Class B shares during the first year,
which amount declines each year thereafter to 0% after the fifth year.
Sales Expenses Prospectus, page 6 and pages 25-26
The Fund charges Class A shares an annual 12b-1 fees equal to 0.25%
of the Fund's average daily net assets of Class A shares, 1.0% of the Fund's
average daily net assets attributable to the Class B shares charges Class B
share and 1.0% of the Fund's average daily net assets attributable to the
Class C shares, respectively. No. Rule 12b-1 expenses are charged with
respect to the Class D shares.
Fund Brokerage Statement of Additional Information, page B-15
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.
Taxes Prospectus, page 28
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-16
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 29
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 30-32
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.
The following Tables are intended to assist investors in
understanding the expenses applicable to each Class of the Fund's
Shares.
<TABLE>
EXPENSE SYNOPSIS
<CAPTION>
Class A Shares Class B Shares Class C Shares Class D Shares
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Charge
Imposed on Purchases
(as a Percentage of
Offering Price) 4.75% None None None
Sales charge imposed on
dividend reinvestments None None None None
Deferred Sales Charge (as a
percentage of original purchase
price on redemption proceeds,
whichever is lower) None 4% during the None None
first and second
year, 3% during
the third year,
2.5% during the
fourth year,
1.5% during the
fifth year, and
0% after the
fifth year(a)<F1>
Exchange Fee(b)<F2> $7.50 $7.50 $7.50 $7.50
Annual Fund Operating
Expenses (as a percentage of
Average net Assets)
Management (Advisory) Fees 1.0% 1.0% 1.0% 1.0%
12b-1 Fees(c) 0.25% 1.0% 1.0% None
Other Expenses (After
Waivers of Fees and Expense
Reimbursements)(d)<F4> 1.53% 1.53% 1.53% 1.53%
Total Fund Operating
Expenses (After Fee Waiver
and Expense
Reimbursements)(e)<F5> 2.78% 3.53% 3.53% 2.53%
<FN>
<F1> (a) See "Purchase of Shares - Class B Shares".
<F2> (b) There is a $7.50 transfer agent's fee per exchange.
<F3> (c) Up to 0.25% for Class A Shares and 1.0% for Class B
and Class C Shares.
<F4> (d) Before the Waivers of Fees and Expense Reimbursements,
Other Expenses would be 2.82%.
<F5> (e) Before Waivers of Fees and Expense Reimbursements, Total
Operating Expenses would be, based on the average net
assets of the Fund during the year ended December 31, 1995,
4.07% in the case of Class A Shares, 4.82% in the case of
Class B Shares, 4.82% in the case of Class C Shares, and
3.82% in the case of Class D Shares.
</FN>
</TABLE>
<TABLE>
Cumulative Expenses Paid for Period of:
<CAPTION
Example: 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000 investment including, for Class
A shares, the maximum $47.50 front-end
sales charge and for Class B, a contingent
deferred sales charge, assuming (1) an
operating expense ratio of 2.78% for
Class A shares 3.53% for Class B shares,
3.53% for Class C shares, and 2.53% for
Class D shares; (2) a 5% annual return
throughout the period and (3) redemption
at the end of the period:
Class A . . . . . . . . . . . . . . . . . . $75 $133 $192 $353
Class B . . . . . . . . . . . . . . . . . . $77 $143 $205 $376*<F1>
Class C . . . . . . . . . . . . . . . . . . $37 $113 $190 $393
Class D . . . . . . . . . . . . . . . . . . $27 $ 82 $139 $295
An investor would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of the period:
Class A . . . . . . . . . . . . . . . . . . $75 $133 $192 $353
Class B . . . . . . . . . . . . . . . . . . $37 $113 $190 $376*<F1>
Class C . . . . . . . . . . . . . . . . . . $37 $113 $190 $393
Class D . . . . . . . . . . . . . . . . . . $27 $ 82 $139 $295
<FN>
<F1> * Based on conversion to Class A shares after eight years.
(a) See "Purchase of Shares - Class B Shares".
(b) There is a $7.50 transfer agent's fee per exchange.
(c) Up to 0.25% for Class A and 1.0% for Class B and Class C Shares.
(d) Before the Waivers of Fees and Expense Reimbursements, Other
Expenses would be 2,82% for each class.
(e) Before Waivers of Fees and Expense Reimbursements, Total
Operating Expenses would be, based on the average net assets of
the Fund during the year ended December 31, 1995, 4.07% in the
case of Class A Shares, 4,82% in the case of Class B Shares,
4.82% in the case of Class C Shares, and 3.82% in the case of
Class D Shares.
</FN>
</TABLE>
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 on
Class B, C and D shares. 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 Class B Shares and Class C
shares placed, long-term shareholders may pay more with respect to
Class B shares and Class C shares than the economic equivalent of the
current maximum front-end sales charges or the maximum front-end sales
charges permitted by the Conduct Rules of the National Association of
Security Dealers (the "NASD").
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Sixth Months Ended June 30 (Unaudited) Year Ended December 31 (Audited)
1996<F1>1995<F1> 1994<F1> 1993<F1> 1992<F1> 1991<F1> 1990<F1> 1989<F1> 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $3.34 $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 (0.01) (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) 0.30 (0.04) (0.94) (0.20) (0.18) 0.73 (1.77) 1.07 0.32 0.48 1.37
Total From Investment Operations 0.29 (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 0.00 (0.07) (0.17) (0.19) (0.22)(0.23)(0.30)
Distributions from Capital Gains 0.00 0.00 0.00 0.00 0.00 (0.64) (0.43) (0.47) 0.00 (3.68)(0.88)
Returns of Capital Total Distributions 0.00 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 $3.63 $3.34 $3.43 $4.55 $4.96 $5.17 $5.11 $7.37 $6.77 $6.59 $9.91
TOTAL RETURN***<F2> 8.68% -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 Omitted) $5,010 $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 3.42% 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 3.42% 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 -0.43% 0.17% -4.78% -4.50% -0.78% 1.20% 1.72% 2.60% 1.67% 0.86% 1.45%
Portfolio Turnover Rate 76.31% 57.20% 148.21% 143.11% 151.12% 161.48% 60.77% 75.53% 39.34% 104.01%126.66%
Average Commission Rate Paid .045
Number of Shares outstanding at
End of Period (000) 1,379 1,309 132 166 256 308 375 465 719 1,087 1,231
<FN>
<F1> ** 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.
<F2> *** 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.
</FN>
</TABLE>
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, and a negative .35% return on the Dow Jones 20 Bond Index.
During the first five months of 1995 the Fund's net assets continued to
decline due to the redemptions of the Fund shares. The Fund's net assets
decreased during 1/1/95 to 5/24/95 from $452,000 to $325,000. Net redemptions
caused unplanned sales of portfolio investments in order to meet the
redemptions, which resulted in losses when the Fund liquidated unprofitable
positions. Commencing in June 1995 as the Advisor and Principal underwriter
were able to implement marketing of the shares, the Fund's net assets
increased and the Fund's new investment objective could be implemented.
From 5/24/95 to 12/31/95 the Fund's net assets increased from $326,000 to
$4,370,000. During the period the Fund's total returned increased 1.2%.
During the six months ended December 31, 1995, the Fund's assets were
invested approximately 60% in equities, 35% in commerical paper and fixed
income. Also during this period the Advisor's asset allocation model
indicated an overbought signal for equities therefore the Fund hedged the
equity position with OEX options. As the overall market increased the losses
on these options mitigated the profits on the equity positions.
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%), (6.61%), and (1.98%),
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.
Data used in the Centurion T.A.A. Fund, Inc. Performance Graph
Assumptions:
Date of investment 1/1/86
Amount of investment $10,000
Sales Charge 4.50%
Average Annual Total Return Ended on 12/31/95
1-year -2.62%
5-year -6.91
10-year 1.83
Total Return $10,000 Investment
-------------------- --------------------
Centurion S&P 500 Centurion S&P 500
T.A.A. Index T.A.A. Index
Year Ended Fund Fund
1/86 30.780% 31.740% $9,550 $10,000
12/86 11.320 18.680 10,631 11,868
12/87 -0.330 5.26 10,596 12,492
12/88 -0.300 16.610 10,564 14,567
12/89 -3.570 31.680 10,187 19,182
12/90 -27.090 -3.120 7,427 18,584
12/91 9.940 30.480 8,166 24,248
12/92 -8.380 7.620 7,481 26,096
12/93 -12.390 10.060 6,554 28,721
12/94 -28.010 1.320 4,719 29,100
12/95 -2.860 34.110 4,584 39,026
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.
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.
MULTIPLE PRICING SYSTEM
The Fund's Multiple Pricing System permits an investor to choose
the method of purchasing shares. This is most beneficial for that
investor's circumstances, including the amount to be purchased and the
length of time the investor expects to hold the shares.
Class A Shares. Class A shares are sold at net asset value
plus a maximum front-end sales charge of 4.75% of the offering price.
Class A shares are subject to an ongoing service fee (shareholder
services fee) at an annual rate of up to 0.25 of the Fund's aggregate
average daily net assets attributable to the Class A shares. See
"Purchase of Shares--Class A Shares".
Class B Shares. Class B shares are sold at net asset value and
are subject to a deferred sales charge if they are redeemed within five
years of purchase. Class B shares are subject to an ongoing service fee
at an annual rate of up to 0.25% of the Fund's aggregate average daily
net assets attributable to the Class B shares and an ongoing distribution
fee at an annual rate of up to 0.75% of the Fund's aggregate average
daily net assets attributable to the Class B shares.
Class B shares enjoy the benefit of permitting all of the investor's
dollars to work from the time the investment is made. The ongoing
distribution fee paid by Class B shares will cause such shares to have a
higher expense ratio and to pay lower dividends than those related to
Class A shares. See "Purchase of Shares--Class B Shares." Class B
shares will automatically convert to Class A shares eight years after the
end of the calendar month in which the shareholder's order to purchase
was accepted. See "Conversion Feature" below for discussion on
applicability of the conversion feature to Class B shares.
Class C Shares. Class C shares are sold at net asset value and
are not subject to a front-end or a deferred sales charge. Class C
shares are subject to an ongoing service fee at an annual rate of up to
0.25% of the Fund's aggregate average daily net assets attributable to
the Class C shares and an ongoing distribution fee at an annual rate of
up to 0.75% of the Fund's aggregate average daily net assets attributable
to the Class C shares. Class C shares enjoy the benefit of permitting
all of the investor's dollars to work from the time the investment is
made.
The ongoing distribution fee paid by Class C shares will cause such
shares to have a higher expense ratio and to pay lower dividends than
those related to Class A shares. See "Purchase of Shares--Class C
Shares."
Class D Shares. Class D shares are sold at net asset value
only to persons who qualify as an Advisor Professional, Eligible
Employee, or Eligible Account, each of which is defined in "Purchase of
Shares - Class D Shares". No front-end charge, deferred sales charge,
service fees or distribution fees will be paid by the Fund with respect
to the Class D shares. Class D shares are offered at net asset value to
such persons because of anticipated economies in sales efforts and
sales-related expenses.
Conversion Feature. Class B shares will automatically convert
to Class A shares eight years after the end of the calendar month in
which they were purchased and, a Class A share, will no longer be subject
to the distribution fee. Such conversion will be on the basis of the
relative net asset value per share, without the imposition of any sales
load, fee or other charge. The purpose of the conversion feature is to
relieve the holders of Class B shares that have been outstanding for a
period of time sufficient for the Distributor to have been substantially
compensated for distribution expenses related to the Class B shares from
most of the burden of the ongoing distribution fee.
For the purpose of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions paid
on Class B shares in a shareholder's Fund account will be considered to
be held in a separate sub-account. Each time any Class B shares in the
shareholder's Fund account (other than those in the sub-account) convert
to Class A, an equal pro rata portion of the Class B shares in the
sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject
to the continuing availability of an opinion of counsel to the effect
that (i) the assessment of the distribution fee and any higher transfer
agency costs with respect to Class B shares does not result in the Fund's
dividends or distributions constituting "preferential dividends" under
the Internal Revenue Code, as amended (the "Code"), and (ii) the
conversion of shares does not constitute a taxable event under federal
income tax law. The conversions of Class B shares may be suspended if
such an opinion is no longer available. In that event, no further
conversions of Class B shares would occur, and such Class B shares might
continue to be subject to the distribution fee for an indefinite period
which may extend beyond the period ending eight years after the end of
the calendar month in which the shareholder's order to purchase was
accepted.
Factors for Consideration. In deciding which class of shares
to purchase investors should take into consideration their investment
goals, amounts of present and anticipated investments and their
individual investment time horizon and temperaments. Investors should
consider whether, during the anticipated life of their investment in the
Fund the accumulated distribution fees and contingent deferred sales
charges on Class B shares prior to conversion would be less than the
initial sales charge on Class A shares purchased at the same time and to
what extent such differential would be offset by the higher dividends per
share on Class A shares. To assist investors in making this
determination, the table under the caption "Expense Synopsis" sets forth
examples of the charges applicable to each class of shares.
Class A shares are not subject to an ongoing distribution fee
and, accordingly, receive correspondingly higher dividends per share.
However, because initial sales charges are deducted at the time of
purchase, investors in Class A shares do not have all their funds
invested initially and, therefore, initially own fewer shares. Other
investors might determine that it is more advantageous to purchase
either Class B shares or Class C shares and have all their funds invested
initially, although remaining subject to ongoing distribution fees and,
for a five year period, being subject to a contingent deferred sales
charge. Ongoing distribution fees on Class B shares and Class C shares
will be offset to the extent of the additional funds originally invested
(resulting from the non-payment of an initial sales charge) and any return
realized on those funds. However, there can be no assurance as to the
return, if any, which will be realized on such additional funds. For
investments held for ten years or more, the relative value upon
liquidation of the three classes tends to favor Class A or Class B
shares, rather than Class C shares.
Class A shares may be appropriate for investors who prefer to
pay the sales charge up front, wish to maximize their current income from
the start, prefer not to pay redemption charges and/or have a longer-term
investment horizon. Class C shares may be appropriate for investors who
wish to avoid a front-end sales charge, put 100% of their investment
dollars to work immediately, and have a shorter-term investment horizon.
Under most circumstances, investments originally made in Class C
shares will tend to have a slightly higher value upon liquidation than
investments originally made in either Class A or Class B shares, if
liquidated within the first six (6) years after the date of the original
investment due to the front-end sales charge on Class A shares and the
contingent deferred sales charges on Class B shares. Under most
circumstances investments origninally made in Class A shares will tend to
have a slightly higher value upon liquidation than investments originally
made in Class C shares, if held for and liquidated, after approximately
seven (7) years after the date of original investment because of higher
Rule 12b-1 expenses charged to Class C shares. This would also tend to be
true for investments originally made in Class B shares which are liquidated
after eight years when they convert to Class A shares. However, this will
not be true in all cases and in the event the Fund experiences inconsistently
negative widely fluctuating total returns, may differ.
The distribution expenses incurred by the Distributor in
connection with the sale of the shares will be reimbursed, in the case of
Class A shares, from the proceeds of the initial sales charge and, in the
case of Class B shares from the proceeds of the ongoing distribution fee
and any contingent deferred sales charge incurred upon redemption within
five years of purchase. In the case of Class C shares, such distribution
expenses will be reimbursed from the proceeds of the ongoing distribution
fee. Sales personnel of broker-dealers distributing the Fund's shares
and other persons entitled to receive compensation for selling such
shares may receive differing compensation for selling Class A, Class B or
Class C shares. Investors should understand that the purpose and
function of the contingent deferred sales charge and ongoing distribution
fee with respect to Class B shares and the ongoing distribution fee with
respect to Class C shares are the same as those of the initial sales
charge with respect to Class A shares. See "Distribution Plans". Class
D shares will be more beneficial to the investor who qualifies for the
purchase thereof.
General. Dividends paid by the Fund with respect to Class A,
Class B, Class C and Class D shares will be calculated in the same manner
at the same time on the same day, except that theon going service fees,
distribution fees and/or any incremental transfer agency costs relating
to Class A, Class B or Class C shares will be borne by the respective
class. Shares of the Fund may be exchanged, subject to certain
limitations, for shares of the same class or other mutual funds advised
by the Adviser. See "Shareholder Services/Transfers - Exchange
Privilege."
The Directors of the Fund have determined that currently no
conflict of interest exists between the classes of shares. On an
ongoing basis, the Directors of the Fund, pursuant to their fiduciary
duties under the Investment Company Act of 1940 (the "1940 Act") and
state laws, will seek to ensure that no such conflict arises.
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. See Appendix A for a description
of mortgage-backed 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.
Investments in Debt Securities. From time to time the
Fund has substantial amounts of its assets invested in debt securities
issued by governments and/or private entitles such as corporations and
trusts. The Fund may from time to time invest a substantial portion of
its assets in debt securities of less than investment grade; provided the
Fund must invest less than 35% of its net assets in junk bonds. Junk bonds
are bonds not rated in one of the four highest rating categories by a NRSRO.
Thus Junk bonds would include bonds rated lower than BBB by Standard
& Poors Corporation (the "S&P"), or rated Baa or lower by Moody's
Investors Service, Inc. ("Moody's"). Investments in Junk bonds would
generally expose the Fund to greater risks of loss by reason of default
on these bonds. Although having greater risk, junk bonds or lower rated
debt securities generally sell at substantially greater yields than
investment quality debt securities and generally offer greater potential
returns. See Appendix A for a description of the kinds of debt
securities in which the Fund may invest.
Securities of Foreign Issuers. The Fund may invest in
securities of foreign issuers, including securities issued or guaranteed
by foreign corporations and governments. Investing in securities of
foreign issuers involves considerations and risks not typically
associated with investing in securities issued by domestic issuers.
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 issuers 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. The Fund may from time to time invest up to 50% of its
assets in investments in options contracts. The Fund will continue to
purchase and sell call and put options in its efforts to enhance
performance and/or to hedge the Fund's risk exposure. The Fund will
invest in options at such time and from time to time, as Centurion
Counsel determines to be appropriate and consistent with the investment
objective of the Fund. In addition to purchasing such options written
by others, the Fund may also write (sell) covered call and secured put
options with respect to certain of its portfolio securities. A covered
call option means that the Fund owns the underlying securities on which
the option is written. By writing a call option the Fund may become
obligated during the term of the option to deliver the securities
underling the option at the exercise price if the option is exercised.
A secured put option means that the Fund has and maintains on deposit
with its custodian bank cash or U.S. Government securities having a value
equal to the exercise value of the option. By writing a put option, the
Fund may become obligated during the term of the option to purchase the
securities underlying the option at the exercise price. Options written
by the Fund will be conducted on recognized securities exchanges. See
Appendix A to this Prospectus.
Options contracts are considered derivative securities
("Derivatives"). In general, a Derivative is a security whose value is
linked to or derived from an underlying security or index. The Fund may
make such investments either for hedging purposes or 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.
Futures Contracts on Indexes and Options Thereupon and
other Special Investment Techniques. In pursuing its investment
objective, the Fund utilizes investment techniques index futures
contracts, options thereupon, 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 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. See Appendix
A for a description of Futures Contracts on indexes and options
thereupon.
How The Fund's General Tactical Asset Allocation Strategy Is
Implemented.
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 & Poors 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, 1995, under the
Fund's previous investment objectives and policies, the Fund's turnover
rate was 57.2%. Under its current TAA strategy, the Fund expects the
Fund's turnover rate to increase to not more than 300%. 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 theStatement 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 5% 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 35% or more of its net assets in debt
obligations which are not rated in one of the four highest debt rating
categories by a nationally recognized statistical rating organization.
The Fund may not invest more than 5% of its net assets in
illiquid investments. For the purposes of this restriction, "Illiquid
investments" are Restricted Securities or 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 such
securities.
The Fund may not invest more than 50% of its net assets in
index futures contracts and/or options thereupon.
The Fund may not invest more than 50% of its net assets in
options, including put options and/or call options to purchase or sell on
equity securities.
The Fund will not (i) invest in exploration or development
programs such as oil or gas programs, or (ii) buy or sell foreign
exchange.
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
Shares are offered at the next determined net asset value per
share, plus a front-end or contingent deferred sales charge depending on
the class of shares chosen by the investor, as shown in the
tables herein. The net asset value per share for each class of shares is
determined by dividing the value of the Fund's securities, cash and other
assets (including accrued interest) attributable to such class, less all
liabilities (including accrued expenses) attributable to such class, by
the total number of shares of the class outstanding. Net asset value per
share is determined 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
General
The Fund offers Class A, Class B and Class C shares to the
general public and Class D shares only to Advisor Professionals,
Eligible Employees and Eligible Accounts, as defined. Class A shares
are sold with a front-end sales charge; Class B shares are sold without a
front-end sales charge and are subject to a contingent deferred sales
charge upon certain redemptions. Class C and Class D shares are sold
without either a front-end sales charge or a deferred sales charge.
Generally, the net asset values per share of Class A, Class B, Class C
and Class D shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of
Class A, Class B, Class C and Class D shares may differ from one another,
reflecting the daily expense accruals of the service fees payable with
respect to Class A, Class B and Class C shares and the distribution fees
applicable with respect to the Class B and Class C shares and the
differential in the dividends paid on the classes of shares. The price
paid for shares purchased is based on the next calculation of net asset
value plus applicable Class A front-end sales charges after an order is
received by a dealer provided such order is transmitted to the
Distributor prior to 4:00 P.M. Eastern Standard Time on such day.
Orders received by dealers after the close of the Exchange are priced
based on the next close provided they are received by the Distributor
prior to the Distributor's close of business on such day. It is the
responsibility of dealers to transmit orders received by them to the
Distributor so they will be received prior to such time.
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. When
purchasing shares, you must specify whether your purchase is for Class A,
Class B, Class C or Class D shares. Orders to purchase Class D shares
must be accompanied by verification of eligibility for purchase
satisfactory to 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.
Each class of shares represents an interest in the same
portfolio of investments of the Fund, has the same rights and is
identical in all respects, except that (i) Class B shares bear the
expenses of the deferred sales arrangement and any expenses (including
the distribution fee and any incremental transfer agency costs)
resulting from such sales arrangement, (ii) each class has exclusive
voting rights with respect to approvals of the Rule 12b-1 distribution
plan pursuant to which its distribution fee and/or service free is paid
which relate to a specific class, and (iii) Class B shares are subject to
a conversion feature. Each class has different exchange privileges and
certain different shareholder service options available. See
"Distribution Plans" and "Shareholder Services/Transfers - Exchange
Privilege." The net income attributable to Class B and Class C shares
and the dividends payable on Class B and Class C shares will be reduced
by the amount of the distribution fee and incremental expenses associated
with such distribution fee. Sales personnel of broker-dealers
distributing the Fund's shares and other persons entitled to receive
compensation for selling such shares may receive differing compensation
for selling Class A, Class B or Class C shares.
Class A Shares
The public offering price of Class A shares is the next
determined net asset value plus a sales charge, as set forth below.
<TABLE>
Front End Sales Charge Table
<CAPTION>
As % of Net As % of Reallowed to dealers
Amount Invested Offering Price (as a % of Offering Price)
<C> <C> <C>
4.99% 4.75% 4.00%
</TABLE>
In addition to the reallowances from the applicable public
offering price described above, the Distributor may, from time to time,
pay or allow additional reallowances or promotional incentives, in the
form of cash or other compensation, to dealers that sell shares of the
Fund. The distributor may pay dealers through whom purchases are made
an amount equal to 0.40% of the amount invested. Dealers which are
reallowed ninety percent (90%) or more of the sales charges may be deemed to
be underwriters for purposes of the Securities Act of 1933.
The Distributor may also pay broker-dealers, registered
investment advisors, financial institutions (which may include banks) and
other financial industry professionals that provide services to
facilitate transactions in shares of the Fund for their clients a
transaction fee up to the level of the reallowance allowable to dealers
described herein. Such financial institutions, other industry
professionals and dealers are hereinafter referred to as "Service
Organizations." Banks are currently prohibited under the Glass-Steagall
Act from providing certain underwriting or distribution services. If
banking firms were further prohibited from acting in any capacity or
providing any of the described services, the Distributor would consider
what action, if any, would be appropriate. The Distributor 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
banks and other financial institutions may be required to register as
dealers pursuant to certain state laws.
Class B Shares
Class B shares are offered at the next determined net asset
value. Class B shares which are redeemed within five years of purchase
are subject to a contingent deferred sales charge at the rates set forth
in the following table charged as a percentage of the dollar amount
subject thereto. The charge is assessed on an amount equal to the lesser
of the then current market value or the cost of the shares being
redeemed. No sales charge is imposed on increases in net
asset value above the initial purchase price or on Class B shares derived
from reinvestment of dividends on capital gains distributions, other than
Rule 12b-1 fees.
The amount of the contingent deferred sales charge, if any,
varies depending on the number of years from the time of payment for the
purchase of Class B shares until the time of redemption of such shares.
Solely for purposes of determining the number of years from the time of
any payment for the purchase of shares, all payments during a month are
aggregated and deemed to have been made on the last day of the month.
<TABLE>
Contingent Deferred Sales Charge Table
<CAPTION>
Contingent Deferred Sales Charge
as a Percentage of
Year Since Purchase Dollar Amount Subject to Charge
<S> <C>
First. . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Second . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Third. . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%
Fifth. . . . . . . . . . . . . . . . . . . . . . . . . . 1.5%
Sixth. . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
In determining whether a contingent deferred sales charge is
applicable to a redemption, the calculation is determined in the manner
that results in the lowest possible rate being charged. Therefore, it is
assumed that the redemption is first of any shares in the shareholder's
Fund account that are not subject to a contingent deferred sales charge,
second, of shares held for over five years or shares acquired pursuant to
reinvestment of dividends or distributions and third, of shares held
longest during the five-year period.
To provide an example, assume an investor purchased 100 shares
at $10 per share (at a cost of $1,000) and in the second year after
purchase, the net asset value per share is $12 and, during such time,
the investor has acquired 10 additional shares upon divided reinvestment.
If at such time the investor makes his or her first redemption of 50
shares (proceeds of $600), 10 shares will not be subject to charge
because of dividend reinvestment. With respect to the remaining 40
shares, the charge is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds is subject to a deferred
sales charge at a rate of 4% (the applicable rate in the second year
after purchase).
The contingent deferred sales charge is waived on redemptions
of Class B shares (i) following the death or disability (as defined in
the Code) of a shareholder, (ii) in connection with certain distributions
from an IRA or other retirement plan, (iii) pursuant to the Fund's
systematic withdrawal plan but limited to 12% annually of the initial
value of the account, and (iv) effected pursuant to the right of the Fund
to liquidate a shareholder's account as described herein under
"Redemption of Shares".
A commission or transaction fee of 4% of the purchase amount
will be paid by the Distributer to broker-dealers and other Service
Organizations at the time of purchase. Additionally, the Distributor may,
from time to time, pay additional promotional incentives in the form of cash
or other compensation, to Service Organizations that sell Class B shares of
the Fund.
Class C Shares
Class C shares are offered at the next determined net asset
value. Other than Rule 12b-1 fees, no front-end, deferred, or other sales
charge is charged with respect to Class C shares.
Class D Shares
The Class D shares are sold at net asset value only to persons
who are Advisor Professionals or Eligible Employees. No front-end,
deferred, other sales charge or Rule 12b-1 fees will be charged by
the Fund with respect to the Class D 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. Class D 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.
DISTRIBUTION PLANS
Rule 12b-1 adopted by the SEC under the 1940 Act permits an
investment company to directly or indirectly pay expenses associated with
the distribution of its shares ("distribution expenses") and servicing
its shareholders in accordance with a plan adopted by the investment
company's board of directors and approved by its shareholders. Pursuant
to such Rule, the Directors of the Fund, and the shareholders of each
class have adopted the Distribution Plan for their class of shares,
hereinafter referred to, respectively, as the "Class A Plan", the
"Class B Plan" and the "Class C Plan". No Rule 12b-1 Distribution Plan
has been adopted with respect to the Class D shares. The Class C Plan
was adopted by the Class C shareholders on December 20, 1994. Each of
the Class A Plan and the Class B Plan was adopted by the Advisor, as the
initial holder of the Class A shares and Class B shares, respectively, on
the date of this Prospectus pursuant to a shareholder meeting duly held
on such date.
Each Distribution Plan is in compliance with NASD Conduct Rules
(formerly the rules of fair practice). The NASD Rules limit the annual
distribution costs and service fees that a mutual fund may impose on a
class of shares. The NASD Rules limit the annual distribution costs and
service fees that a mutual fund may impose on a class of shares. The
NASD Rules also limit the aggregate amount which the Fund may pay for
such distribution costs. Under the Class A Plan, the Fund pays a
shareholder service fee (service fee) to the Distributor at an annual
rate of up to 0.25% of the Fund's aggregate average daily net assets
attributable to the Class A shares. Such payments to the Distributor
under the Class A Plan are based on an annual percentage of the value of
Class A shares held in shareholder accounts for which the Distributor and
other Service Organizations are responsible at the rate of 0.25% annually
with respect to such Class A shares. Under the Class B Plan and the
Class C Plan, the Fund pays a service fee to the Distributor at an annual
rate of up to 0.25% and a distribution fee at an annual rate of up to
0.75% of the Fund's aggregate average daily net assets attributable to
the Class B or Class C shares. These fees compensate the Distributor for
service fees paid by it to Service Organizations and for its distribution
costs and service costs.
The Distributor uses the Class A, Class B and Class C service
fees to compensate Service Organizations for personal service and/or the
maintenance of shareholder accounts of the respective share classes. Under
the Class B Plan, the Distributor receives additional payments from the
Fund in the form of a distribution fee at the annual rate of up to 0.75% of
the Fund's aggregate average daily net assets attributable to the Class B
shares as reimbursement for (i) up-front commissions and transaction fees of
up to 4% of the purchase price for Class B shares purchased by the clients of
broker-dealers and other Service Organizations and (ii) other distribution
expenses such as advertising and promotional costs. Under the Class C Plan,
the Distributor receives additional payments from the Fund in the form of a
distribution fee at the annual rate of up to 0.75% of the net assets of the
Class C shares as reimbursement for other distribution expenses as described
above.
In adopting each of the Class A Plan, Class B Plan and Class C
Plan, the Directors of the Fund determined that there was a reasonable
likelihood that such Plans would benefit the Fund and its shareholders.
Information with respect to distribution and service revenues and
expenses is presented to the Directors each year for their consideration
in connection with their deliberations as to the continuance of each of
these Distribution Plans. In their review of the Distribution Plans, the
Directors are asked to take into consideration expenses incurred in
connection with the distribution and servicing of each class of shares
separately. The sales charge and distribution fee, if any, of a
particular class will not be used to subsidize the sale of shares of the
other classes.
Service expenses accrued by the Distributor in one fiscal year
may not be paid from the Class A service fees received from the Fund in
subsequent fiscal years. Thus, if the Class A Plan were terminated or
not continued, no amounts (other than current amounts accrued but not
yet paid) would be owed by the Fund to the Distributor.
The respective higher Rule 12b-1 fees attributable to Class B and
Class C shares are designed to permit an investor to purchase such shares
without the assessment of a front-end sales load and at the same time
permit the Distributor to compensate the Distributor and other Service
Organizations with respect to such shares. In this regard, the purpose
and function of the combined contingent deferred sales charge and
distribution fee in the case of Class B shares and the distribution fee
in the case of Class C shares are the same as those of the initial sales
charge with respect to the Class A shares in that in each case such
charges provide for the financing of the distribution of the Fund's
shares.
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 or deferred 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.
As described herein under "Purchase of Shares", redemptions of
Class B shares are subject to a contingent deferred sales charge. The
contingent deferred sales charge incurred upon redemption is paid to the
Distributor in reimbursement for its distribution-related expenses. See
"Purchase of Shares". A custodian of a retirement plan account may
charge fees based on the custodian's independent fee schedule.
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 (amoney 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 Plans of Distribution pursuant to Rule
l2b-1 under the Investment Company Act of 1940 as described above, which
authorize the plan to pay up to a total of 12b-1 fees. See "Distribution
Plans" above. 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 attributable to the Class B and Class C shares.
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 attributable to the Class A, Class B and Class C shares. These
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.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201-1118
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 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, except that only shareholders of a class
may vote on matters affecting only that class. 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
Mortgage-Backed Securities
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.
Debt Securities
Debt securities in which the Fund may thereafter invest include
both convertible and non-convertible debt securities including:
- Straight fixed-income debt securities which include bonds
and other debt obligations which bear a fixed or variable
rate of interest payable at regular intervals and have a
fixed or resettable maturity date. The particular terms of
such securities vary and may include features such as call
provisions and sinking funds.
- Zero-coupon debt securities which bear no interest
obligation but are issued at a discount from their value at
maturity. When held to maturity, their entire return
equals the difference between their issue price and their
maturity value.
- Convertible debt securities which may bear interest
payable in cash and/or securities (or may be zero-coupon)
and/or may convert on a specified date to cash equity
securities, debt securities or a combination thereof.
The Fund may invest in lower rated debt securities including
high yielding fixed-income debt securities such as junk bond. Junk bonds
are bonds not rated in one of the four highest rating categories by a
NRSRO. Thus junk bonds would include bonds rated lower than BBB by Standard
& Poors Corporation (the "S&P"), or rated Baa or lower by Moody's Investors
Services, Inc. ("Moody's"). These securities are subject to high risk as
described below. Fixed-income securities rated below B by S&P and Moody's
include debt obligations or other securities of companies that are
financially troubled, in default or are in bankruptcy or reorganization.
Such debt securities are usually available at a deep discount from the
face value of the instrument.
Lower rated debt securities are regarded as speculative with
respect to their issuer's continuing ability to meet required principal and
interest payments. Also, debt securities rated in the lower categories by
recognized rating services are generally subordinated to the prior claims
of banks and other senior lenders. The ratings of S&P, Moody's, and other
rating services represent opinions of the quality of the debt securities
they rated by these services, but not the market value risk of such
securities. Ratings are general and are not absolute standards of quality
and, consequently, debt securities with the same maturity, coupon and
rating may have different yields while debt securities of the same maturity
and coupon with different ratings may have the same yield. The Fund may
also invest in debt securities which do not produce immediate cash income,
such as zero-coupon securities.
A debt security purchased at a deep discount may currently pay
a very high effective yield. In addition, if the financial condition of
the issuer improves, the underlying value of the security may increase,
resulting in a capital gain. However, if the company defaults on its
obligations or remains in default, or if the plan of reorganization is
insufficient for debtholders, the Deep Discount Securities may stop
generating income and lose value or become worthless. The Adviser will
balance the benefits of Deep Discount Securities with their risks. While
a diversified portfolio may reduce the overall impact of a Deep Discount
Security that is in default or loses its value, the risk cannot be
eliminated.
At times during which the Fund has substantial investments in
lower rated debt securities, an investment in the Fund may be considered
more speculative than investment in a fund which invests primarily in
higher rated debt securities. An economic downturn or increase in
interest rates is likely to have a greater negative effect on this
market, the value of lower rated debt securities in the Fund's portfolio,
the Fund's net asset value, and the ability of the bonds' issuers to
repay principal and interest, meet projected business goals and obtain
additional financing than on higher rated securities. These
circumstances also may result in a higher incidence of defaults than with
respect to higher rated securities. Also, prices on non-cash-paying
instruments or zero coupon securities may be more sensitive to changes
in the issuer's financial condition, fluctuations in interest rates
and market demand/supply imbalances than cash-paying securities with
similar credit ratings, and thus may be more speculative. Prices of
lower rated debt securities tend to be more sensitive to adverse economic
changes or corporate developments than higher rated investments. Market
prices of lower rated debt securities structured as zero coupon or
pay-in-kind securities are affected to a greater extent by interest rate
changes and may be more volatile than securities which pay interest
periodically and in cash.
The Fund's ability to liquidate investments in lower rated debt
securities may be limited. Because the market for lower rated debt
securities may be thinner and less active than for higher rated debt
securities, there may be market price volatility for these securities and
limited liquidity in the resale market. Nonrated securities are usually
not as attractive to as many buyers as rated securities are, a factor
which may make nonrated securities less marketable. These factors may
have the effect of limiting the availability of the securities for
purchase by the Fund and may also limit the ability of the Fund to sell
such securities at their fair value either to meet redemption requests or
in response to changes in the economy or the financial markets. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of lower rated debt
securities, especially in a thinly traded market.
Special tax considerations are associated with investing in
lower rated debt securities structured as zero coupon or pay-in-kind
securities. The Fund accrues income on these securities prior to the
receipt of cash payments. Moreover, the non-cash interest income earned
on such instruments is included in investment company taxable income,
thereby increasing the minimum required distributions to shareholders
(without providing the corresponding cash flow with which to pay such
distributions). The Fund must distribute substantially all of its income
to its shareholders to qualify for pass-through treatment under the tax
laws and may, therefore, have to dispose of its portfolio securities to
satisfy distribution requirements.
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 Indexes and Options Thereupon
In furtherance of its investment objectives, the Fund may sell
stock index futures contracts on indexes (index futures contracts), write
call options, and/or purchase put options on stock index futures
contracts. An 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 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 securities
instruments in the index is made. In general, the fund intends to
invest in stock index futures contracts but may invest in futures
contracts or interest rate indexes for hedging purposes. The Fund will
endeavor to purchase and sell futures contracts on the Indexes for which
the Fund can obtain the best value with consideration also given to
liquidity.
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 purchase put and call
options on index futures contracts, which options give the Fund the
right to sell or purchase the underlying futures contract for a specified
price upon exercise at any time during the option period. The Fund also
may write (sell) put and call options on index futures contracts. The
Fund receives a premium in return for granting to the purchaser of the
option the right to sell to or buy from the Fund the underlying futures
contract for a specified price upon exercise at any time during the
option period. The Fund may engage in related closing transactions with
respect to options on 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 depends generally upon movements in the level of
stock prices in the stock market and the advisor's ability to predict
correctly the direction of stock prices, interest rates, and other
economic factors. In contrast to a long position, where the Fund's loss
from the position cannot exceed the cost of that position, the extent of
the Fund's loss from investing in futures transactions is potentially
unlimited.
The Fund also may purchase and write put and call options on
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 or for the purpose of hedging
the Fund's portfolio. A stock index fluctuates with changes in the
market values of the stocks included in the index. Options on 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 index upon which the option is based being greater than
(in the case of a call) or less than (in the case of a put) the exercise
price of the option. The amount of cash received 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
delivery of this amount. Unlike the options on securities discussed
above, all settlements are in cash. The Fund will, in general, invest or
write index options which one traded in a national exchange.
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 5% limitation on investment in illiquid investments.
Each of the Exchanges has established limitations governing the
maximum number of call or 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 more brokers). 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 position limits may restrict the number of listed options which the
Fund may buy or sell; however, the Centurion Counsel intends to comply
with all limitations.
Index options are subject to substantial risks, including the
risk of imperfect correlations 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
securities or other options and/or (ii) maintains with its custodian bank
(and mark-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.
Centurion Counsel intends to utilize index options as a
technique to leverage the Fund's portfolio. If Centurion Counsel is
correct in its assessment of the future direction of stock prices, the
Fund share price will be enhanced. If the Fund takes a position in
options and stock prices move in a direction contrary to Centurion
Counsel's forecast, however, the Fund would incur greater loss than the
Fund would have incurred without the options position.
The fund will engage in transactions on stock index futures
contracts (and/or options thereupon) 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.
Futures contracts on stock indexes and options thereupon and
Derivative Securities involve substantial risks. See the discussion of
Derivatives under Options above.
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
Prospectus and Application
____________, 1996
Centurion T.A.A. Fund, Inc.
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
[back of back cover]
APPLICATION AND INSTRUCTIONS
Opening Your Account
You may purchase shares of Centurion T.A.A. Fund, Inc. (the
"Fund") with an initial investment of $500 or more. Once you are a
shareholder in the Fund you can make additional investments of $25 or
more by mail.
To Invest By Mail
Complete this application and mail it with your check payable
to the Fund at the address set forth on the cover page of the prospectus.
If you are currently a shareholder, you may mail additional investments
at any time. Please enclose one of the payment stubs that is provided to
shareholders or enclose a brief note indicating your account number.
To Invest By Phone
If you are already a shareholder, you may purchase additional
shares by telephone and receive that day's closing public offering price.
Simply call Centurion Institutional Services, Inc. prior to the close of
the New York Stock Exchange (normally 4:00 p.m. Eastern Standard Time)
at (619) 673-8536 or call the broker through whom you made your
original investment. Payments must be received within five days of your
order.
Withdrawals
You have a right to redeem your shares at any time in writing
through your broker. All written requests for withdrawals must be
signed by each shareholder, and all signatures on requests for
withdrawals must be guaranteed by a national bank or state chartered
commercial bank or trust company (except a savings bank) or a member of
the New York or American Stock Exchange, the National Association of
Securities Dealers, Inc. or any regional stock exchange.
The Fund will require certain legal documents from corporations
or other organizations, executors, and trustees, or if anyone other than
the shareholder of record requests redemption. If you have any questions
concerning a redemption, telephone the Fund's transfer agent, Centurion
Counsel, Inc. at (619) 673-8536.
The Fund also offers a systematic withdrawal plan whereby you
can authorize periodic automatic redemptions. Contact the broker through
whom you made your original investment or the Fund for further
information.
Exchange With Other Fund
You may exchange some or all of your shares of the Fund for
shares of Cash Equivalent Fund Money Market Portfolio. You need not pay
any front-end sales charge for the exchange. There is a service charge
of $7.50 each time you use the exchange privilege. To be able to use
the exchange feature over the telephone you will need to complete the
Telephone Exchange Authorization Form included with the application.
APPLICATION Mail to: CENTURION INSTITUTIONAL SERVICES, INC.,
11545 W. Bernardo, Suite 100,
San Diego, CA 92127
1.I (We) apply to invest $ ____________(payment attached) in common
shares of CENTURION T.A.A. FUND, INC. ($500 Minimum)
CLASS OF SHARES (Must select one only)
[]CLASS A Shares (front-end sales charge)
[]CLASS B Shares (contingent deferred sales charge)
[]CLASS C Shares (no sales charge)
[]CLASS D Shares (eligible purchasers only)
[]CASH EQUIVALENT FUND MONEY MARKET PORTFOLIO ($500 Minimum)
(Prior to investing in Cash Equivalent Fund, you must acquire the
Fund's prospectus from Centurion Institutional Services, Inc. and read
such prospectus.)
(Please make checks payable to the appropriate Fund.)
This is my (our) initial investment: ___ Yes ___ No
Additional Investments can be made at any time. Please see
instructions on the reverse side of this application.
2.NAME(Important: Please Print)
[]Individual
First Name ________________________________________________
Middle Initial
Last Name
Social Security No.
Birthdate
[]Joint Owner
First Name ________________________________________________
Middle Initial
Last Name
Social Security
No.Birthdate
Joint owners will be "Joint Tenants with Right of Survivorship"
unless otherwise specified.
[]Gifts to Minors _____________ as custodian ______________________
Name of Custodian (One Only) Name of Minor (One Only)
under the _____________
State
Uniform Gifts to Minors__________________________ ________________
Minor's Social Security No. Minor's Birthdate
[]Other ___________________________________________________________
Indicate name of corporation, other organization, a person acting as a
fiduciary. Include date of trust instrument, tax ID number, etc.
3.ADDRESS
______________ ______________ ________________
Street Home Telephone Office Telephone
______________ Citizen of: ___ U.S. ___ Other
City State ZIP (please specify)
4.DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS(check one)
[]FULL REINVESTMENT OPTION Income dividends and capital gains
distributions will automatically purchase additional shares for you
at no sales charge.
[]CAPITAL GAINS REINVESTMENT OPTION Income dividends will be paid out
in cash, and Reinvestment Option capital gains distributions will
automatically purchase additional shares for you at no sales charge.
[]CASH All income dividends and capital gains distributions will be
paid out to you in cash. If no election is indicated above, the Full
Reinvestment Option will apply.
5.AUTOMATIC INVESTMENT PLAN Please call us for information.
6.BROKER or DEALER Please indicate name of your broker and his firm.
_______________ ______________________ _____________________
Name of Company Name of Representative Representative Number
Application is subject to acceptance by the Fund. A confirmation is
mailed to the investor following each transaction showing the transaction
and the total number of shares owned.
7. SIGNATURE: I (We) am (are) of legal age and have received and read
the Prospectus and agree to its terms.
Under the penalties of perjury, I (we) certify that the Taxpayer
Identification Number (Social Security or Employer Identification
Number) contained herein is true, correct and complete and I (we) am
(are) not subject to backup withholding under the provisions of Section
3406(a)(1)(C) of the Internal Revenue Code.
_________ ____
Signature Date
TELEPHONE EXCHANGE PRIVILEGE AUTHORIZATION FORM
Mail to:For investors in:
Centurion Counsel, Inc.Cash Equivalent Fund
11545 W. Bernardo Court, Suite 100(Money Market Portfolios)
San Diego, California 92127
The undersigned, either directly or through his Authorized Agent, if
any, named below, hereby authorizes Centurion Group, Inc. (hereinafter
referred to as the "Transfer Agent"), acting as the undersigned's
attorney in fact, to surrender for redemption any and all shares held
for the undersigned's account in Centurion T.A.A. Fund, Inc. and Cash
Equivalent Fund - Money Market Portfolio (hereinafter collectively
referred to as the "Fund Family") pursuant to any telephone request
without a signature guarantee whether from the undersigned or from any
other person directing redemption; provided, however, that the proceeds
of such redemption are to be used to purchase shares for the
undersigned's account of the other Fund in the Fund Family. It is
understood that the proceeds of any redemption of shares that are not to
be used to purchase shares in the other Fund in the Fund Family may be
effected only by procedures described in the current prospectus of the
Fund being redeemed.
Authorized Agent: The undersigned hereby authorizes the investment
counsel firm or other advisor named below as his agent and attorney in
fact (hereinafter referred to as "Agent") to utilize the Telephone
Exchange Privilege described above on the undersigned's behalf in the
same manner and with the same force and effect as if done by the
undersigned and such Agent hereby agrees that the Transfer Agent will
honor any telephone transfer believed by the Transfer Agent to be genuine
and further agrees to be bound by the Transfer Agent's records of such
instructions and the undersigned Agent and his assigns and successors
release and indemnify the Transfer Agent and the Funds in the Fund Family
and their respective officers and employees from any and all liability or
losses for so acting.
________________________ _____________________________
Name of Authorized Agent Authorized Signature of Agent
Address:
____ _____ ___
City State Zip
It is understood that this Authorization Form will continue in effect
until the Transfer Agent receives written notice of its cancellation
from the undersigned. This service may be discontinued or modified
without notice. The undersigned hereby authorizes the Transfer Agent to
honor any telephone transfer believed by the Transfer Agent to be genuine
and agrees to be bound by the Transfer Agent's records of such
instructions and the undersigned and his assigns and successors release
and indemnify the Transfer Agent and the Funds in the Fund Family and
their respective officers and employees from any and all liability or
losses for so acting. A current prospectus of the Fund being purchased
should be read in advance of purchase hereunder.
_____________________ _____________________
Print Investor's Name Signature of Investor
_____________________ _____________________
Print Investor's Name Signature of Investor
Account Number and Fund name of existing account, if any:
__________ ______________
Fund Owned Account Number
NOTE:This Form should accompany the original Application Form if it is
being completed in connection with the establishment of a new account.
CENTURION T.A.A. FUND, INC.
Statement of Additional Information
Dated ____________, 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") ____________, 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-6
MULTIPLE CLASS SHARE PLAN. . . . . . . . . . . . . . . . . . .B-6
CENTURION COUNSEL, INC., CENTURION GROUP, INC. AND
CENTURION INSTITUTIONAL SERVICES, INC. . . . . . . . . . . .B-9
CUSTODIAN; GENERAL COUNSEL; AUDITORS . . . . . . . . . . . . B-15
BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . . . . B-15
RETIREMENT ACCOUNTS. . . . . . . . . . . . . . . . . . . . . B-16
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . B-17
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-17
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . B-19
LIMITATION OF DIRECTOR LIABILITY . . . . . . . . . . . . . . B-20
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . B-21
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . B-22
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 the Fund may invest up to 50% of its net
assets in index futures contracts 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 may not invest more than 5% of its net assets in
illiquid investments. For the purposes of this restriction, "Illiquid
investments" are Restricted Securities or 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 such
securities.
(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 35% or more of its net assets in debt
obligations of corporations and other issuers which are not rated in one
of the four highest rating categories by a nationally recognized
statistical rating organization.
(14) The Fund will not buy or sell foreign currency exchange
securities.
(15)The Fund will not invest more than 50% of its net assets in
options contracts, including put options and/or call options to
purchase or sell equity 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.
The names, addresses and principal occupations of directors and
executive officers of the Fund for the past five years are given below:
<TABLE>
FUND MANAGEMENT
<CAPTION>
Positions with the Fund and Principal
Name and (Age) Occupations During Past 5 Years Business Address
<S> <C> <C>
Carol Ann Freeland (57)<F1> Has served as a director of the Fund since 4015 Beltline Road, #200
December 20, 1994. Since 1992, Dallas, TX 75244
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. Since January 1994 has served
as a registered representative of World Invest
Corporation, a licensed broker-dealer.
Richard E. Hall (70) Has served as a director of the Fund since 10 Carson Drive
December 20, 1994. Since 1989, a retired Grant's Pass, OR 97526
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.
Jack K. Heilbron (45)<F2> Has served as a director of the Fund since 11545 W. Bernardo Court, #100
December 20, 1994. Also served as a San Diego, CA 92127
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.
Russell W. Ketron (52)<F2> Has served as a director of the Fund since 1701 Novato Blvd., # 204
December 20, 1994. A Certified Financial Novato, CA 94947
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.
Douglas Werner (45) Has served as a director of the Fund since 140 Brightwood Ave.
December 20, 1994. Since 1993 has been Chula Vista, CA 92010
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.
<FN>
<F1> 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.
<F2> 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.
</FN>
</TABLE>
The Fund does not have a standing audit or nominating committee of
its board of directors, or committees performing similar functions.
The Fund pays no compensation to any of its officers and directors,
except for a fee of $250 for each meeting attended by each director not
affiliated with Centurion Counsel 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.
<TABLE>
COMPENSATION TABLE
<CAPTION>
(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
<S> <C> <C> <C> <C>
Jack K. Heilbron, -0-** -0- -0- -0-
Chairman of the
Board
Carol Ann Freeland, $1000* -0- -0- $1000*
Director
Richard E. Hall, $1000* -0- -0- $1000*
Director
Russell W. Ketron, $1000* -0- -0- $1000*
Director
Douglas Werner, $1000* -0- -0- $1000*
Director
<F1>* Directors are paid $250 per meeting. There are four scheduled
quarterly meetings for 1996.
<F2>** 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 June 30, 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).
MULTIPLE CLASS SHARE PLAN
The Articles of Incorporation of the Fund authorize the Fund to issue
Class A, Class B, Class C and Class D shares pursuant to the Fund's
Multiple Class Share Plan (this "Plan"). The Plan was adopted by the
Fund's Board of Directors and approved by a majority vote of the Fund's
shareholders on August 6, 1996.
Under the Plan, the Fund is authorized to issue the Class A shares,
the Class B. shares, the Class C Shares, and the Class D Shares in
accordance with the following.
Class A Shares. The Class Shares shall be sold at their net asset
value per share plus a maximum initial sales charge ("front-end charge")
set from time to time by the Board of Directors of the Fund (the
"Board"). Initially, the front-end charge on the Class A Shares shall
be 4.75% of the offering price of the Class A Shares. The Board shall
approve and, subject to the required approval of the Fund's shareholders,
put into effect a Rule 12b-1 plan of distribution for the Class A Shares
pursuant to which the Fund may pay an annual shareholder services fees
of up to 0.25% of its average daily net assets attributable to the
Class A Shares.
Class B Shares. The Class B Shares shall be sold at their net asset
value per share and shall be subject to a maximum contingent deferred
sales charge as determined from time to time by the Board. Initially,
maximum deferred sales charge shall be 4% of the redemption proceeds
during the first year, declining each year thereafter to 0% after the
fifth year. The Board shall approve and, subject to the required
approval of the Fund's shareholders, put into effect a Rule 12b-1 plan of
distribution for the Class B Shares pursuant to which the Fund would pay
annual distribution fees, services fees, and shareholder services fees of
up to 0.75% and 0.25%, respectively, of the Fund's average daily net
assets attributable to the Class B Shares. The Class B shares shall
convert automatically to Class A shares on the date eight years following
the last day of the calendar month in which a shareholder's order to
purchase Class B Shares is accepted by the Fund.
Class C Shares. The Class C Shares shall be sold at their net asset
value per share. Upon the effective date of this Plan, each share of the
Fund then outstanding shall be designated and reclassified a Class C
share. The Fund shall pay annual distribution fees and shareholder
services fees of up to 0.75% and 0.25%, respectively, of the Fund's
average daily net assets attributable to these shares pursuant to the
Funds Rule 12b-1 plan of distribution in effect on the date hereof,
which shall upon the effective date of this plan be designated the
"Class C Plan".
Class D Shares. The Class D Shares shall be sold at their net asset
value per share. No front-end charge or deferred sales charge shall be
charged with respect to the Class D Shares. The Fund shall not pay
distribution services fees or shareholder services fees with respect
to the Class D Shares. The Class D Shares shall be sold only to persons
who are Advisor Professionals or Eligible Employees. The Advisor
Professionals shall mean 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
shall mean (a) current or retired directors of the Funds, current or
retired employees of the Fund's advisor, 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
he Fund's advisor and any of its affiliated companies; (b) employees and
registered representatives of Advisor professionals, banks and other
financial institutions with selling group agreements with the Fund's
principal underwriter, employees of such persons, and spouses and minor
children of any such persons and (c) any trust, pension, profit sharing
or other benefit plan for such persons. 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 Fund's principal underwriter if such redemption has
occurred no more than 15 days prior to the purchase of the Class D Shares
and the shareholder paid an initial sales charge and was not subject to a
deferred sales charge on the redeemed account.
The income and expenses of the Fund must be allocated among each
Class of Shares as follow:
Separate Distribution Expenses. Each Class of Shares must, at all
times, maintain a separate arrangement for shareholder services or the
distribution services or both, and shall pay all of the expenses of that
arrangement ("distribution expenses"). Allocation of Income, Realized
and Unrealized Capital gains and Losses, and Expenses. Each Class of
Shares must be allocated its pro-rata share of the Fund's income,
realized and unrealized capital gains and losses, and expenses not
allocated to a particular Class on the basis of the net asset value of
that class in relation to the net asset value of the Company. In the
future, the Fund's Board of Directors may require one or more Classes of
Shares to pay a different share of expenses (other than advisory or
custodial fees or other expenses related to the management of the Fund's
assets) if such expenses are actually incurred in a different amount by a
Class, or if a Class receives services of a different kind or to a
different degree than other Classes, provided any payments made pursuant
to the foregoing shall be made pursuant to a written plan setting forth
the separate arrangement and expense allocation of each Class, and any
related conversion features or exchange privileges.
Advisory Fees. Each Class of Shares shall pay the same advisory fee.
Waiver of Expenses. Expenses may be waived or reimbursed by the
Fund's adviser, underwritten, or any other provider of services to the
Fund.
Income, Capital Gains and Losses. Income, realized and unrealized
capital gains and losses, and expenses of the Fund not allocated to a
particular Class pursuant to the foregoing:
(i) Except as permitted in paragraph (ii) below, shall be allocated
to each Class on the basis of the net asset value of that Class
in relation to the net asset value of the Fund;
(ii) If the Fund operates pursuant to Rule 270.2a-7 under the 1940
Act (including the provision allowing the calculation of net
assets on an amortized cost basis), or declares distributions
of net investment income daily and maintains the same net asset
value per share in each class, may be allocated:
(aa) To each Share without regard to Class, provided that the
Fund has received undertakings from its adviser, principal
underwriter or any other provider of services to the Fund,
agreeing to waive or reimburse the Fund for payments to such
service provider by one or more classes, as allocated under
paragraph (i) above, to the extent necessary to assure that
all classes of the Fund maintain the same net asset value
per share; or
(bb) On the basis of relative net assets (settled shares). For
purposes of this subsection (e), "relative net assets
(settled shares)" are net assets valued in accordance with
generally accepted accounting principles but excluding the
value of subscriptions receivable, in relation to the net of
the Fund.
The Shares shall have the following voting rights: (i) Each Class
of Shares has exclusive voting rights on any matter submitted to
shareholders that relates solely to its arrangement; (ii) Each Class of
Shares has separate voting rights on any matter submitted to shareholders
in which the interests of one class differ from the interests of any
other class; (iii) Each Class of Shares, except as provided herein, has
in all other aspects the same rights and obligations as each other class.
Nothing in the Plan prohibits the Fund's Board of Directors from
issuing Shares of any Class with any of the following rights or
provisions.
(a) An exchange privilege providing that Shares of a Class may be
exchanged for certain securities of another company.
(b) Authorize and effect a conversion whereby the Shares of one
Class (the "purchase class") will be exchanged automatically for
Shares of another Class (the "target class") after a specified
period of time, provided that:
(i) The conversion is effected on the basis of the relative net
asset values of the two classes without the imposition of any
sales load, fee, or other charge;
(ii) The expenses, including payments authorized under a plan
adopted pursuant to 270.12b-1 ("rule 12b-1 plan"), for the
target class are not higher than the expenses, including
payments authorized under a rule 12b-1 plan, for the purchase
class; and
(iii) If the amount of expenses, including payments authorized
under a rule 12b-1 plan, for the target class is increased
materially without approval of the shareholders of the
purchase class, the Fund will establish a new target class
for the purchase class on the same terms as applied to the
target class before that increase.
Currently, only the Class B shares have such a conversion right.
(c) A conversion feature providing that shares of a Class in which
an investor is no longer eligible to participate may be
converted to shares of a class in which that investor is
eligible to participate, provided that:
(i) The shareholder is given prior notice of the proposed
conversion; and
(ii) The conversion is effected on the basis of the relative net
asset values of the two classes without the imposition of any
sales load, fee, or other charge.
The Plan is intended to meet the requirements of Rule 270.18f-3
promulgated under the 1940 Act.
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. ("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 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, Centurion Counsel is entitled to a
fee, payable within five days after the end of each fiscal quarter based
on the Fund's average daily net assets as follows:
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.
Centurion Counsel shall reimburse the Fund, in an amount not in excess of
the advisor fee otherwise payable by the Fund to the advisor for such period,
if and to the extent that the aggregate operating expenses of the Fund,
including such fee but excluding interest expense, Rule 12b-1 Plan of
Distribution fees, taxes, and brokerage fees and commissions, are in excess
of 2.625% of the first $10 million of average net assets of the Fund, plus
1-1/2% of the next $20 million of average net assets, plus 1-1/4% of average
net assets above $30 million. 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, as amended _____________, 1996, 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
___________________, 1996. 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. No front-end
sales charges were paid in connection with the sales of the Fund's shares
during the year ended December 31, 1995. 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 the Class A, Class B
and Class C Plans of Distribution, respectively, the Fund has entered
into a shareholder servicing agreement with CISI dated January 1, 1995
for the Class C shares and August ___, 1996 for the Class A and Class B
shares, 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 holders of the respective Class may
reasonably request. Under each of the Shareholder Services Agent
Agreements, CISI and its representatives are required to pay all expenses
of the Servicing Agent incurred in connection with providing such
services to holders of the respective Class. 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 holding shares of the respective
Class. Under each agreement, 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 of the respective Class 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 Plans of
Distribution for the Class A, Class B and Class C shares, respectively,
the Fund has included in its Distribution Agreement with CISI provisions
for the payment to CISI of distribution fees with respect to each of the
Class A, Class B and Class C shares. With respect to each of the Class B
and Class C shares, CISI receives, a distribution fee which will be equal
to an annual rate of 0.75 of 1% of the Fund's average daily net assets
attributable to each of the Class B shares and Class C shares. This fee
is to compensate broker-dealers, including CISI, and CISI's registered
representatives, for their sales of the Fund's shares of the respective
Class to which the agreement relates, based on a percentage of the net
assets of the Fund relating to the respective Class for which such
broker-dealers or registered representatives are responsible by reason of
their sale of shares of the respective Class, and to pay other
advertising and promotional expenses in connection with the distribution
of the shares of the respective Class. CISI, at its expense, may also
provide additional compensation to dealers in connection with sales of
such 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.
Each of the Fund's Plans of Distribution provide for the indirect
payment of distribution expenses by the Fund only 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 any of the Plans 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.
Each of the Fund's Plans of Distribution 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 Class C
Plan of Distribution, the only Plan of Distribution in effect prior to
1996. 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 Class C share
Plan of Distribution.
CUSTODIAN; GENERAL COUNSEL; AUDITORS
Star Bank, NA, 425 Walnut Street, Cincinnati, Ohio, 45202-1118 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 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
ten year period beginning on January 1, 1986 and ending on
December 31, 1995 was 86.63%.
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.
FINANCIAL STATEMENTS
The Fund's unaudited Statement of Assets and Liabilities dated
June 30, 1996 the Fund's unaudited Statement of Operations and the
Fund's unaudited Statement of Changes in Net Assets for the six months
ended June 30, 1996 are included in the Fund's Semi-Annual Report to
Shareholders dated June 30, 1996, which are hereby incorporated by
reference there to.
The Fund's Financial Statements for the year ended December 31, 1995
are set forth below.
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
1933 Act Registration No. 3-73955
1940 Act Registration No. 811-3257
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
to
FORM N-1A
POST-EFFECTIVE AMENDMENT No. 23
REGISTRATION STATEMENT
UNDER
The Securities Act of 1993
and
The Investment Company Act of 1940
CENTURION T.A.A. FUND, INC.
(formerly Excel Value Fund, Inc.)
(Exact name of registrants as specified in governing instruments)
INDEX TO EXHIBITS
Exhibit
Number Exhibit
1.1 Articles of Amendment of Centurion T.A.A. Fund authorizing
multiple classes of shares.
2.1 Multiple Class Share Plan.
6 Form of Distribution Agreement of Centurion T.A.A. Fund, Inc.
8 Custodian Agreement.
9(c) Form of Shareholder Services Agent Agreement of Centurion
T.A.A. Fund, Inc.
15.1 Form of Rule 12b-1 Plan of Distribution for Class C Shares
15.2 Form of Rule 12b-1 Plan of Distribution for Class A Shares
15.3 Form of Rule 12b-1 Plan of Distribution for Class B Shares
ARTICLES OF AMENDMENT OF CENTURION T.A.A. FUND
AUTHORIZING MULTIPLE CLASSES OF SHARES
EXHIBIT 1.1
ARTICLES OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
EXCEL VALUE FUND, INC.
Pursuant to the provisions of the Minnesota Statutes, the
undersigned, Kenneth W. Elsberry, President of EXCEL VALUE FUND, INC.,
a Minnesota corporation, hereby certifies that the following amendment
to the Articles of Incorporation of such corporation was adopted by
the shareholders of such corporation at a meeting held on
December 20, 1994, and that such amendment has not been subsequently
modified or rescinded:
RESOLVED, that Article 1 of the Articles of Incorporation
of the corporation is hereby amended to read in its entirety as
follows:
"1. The name of this corporation is CENTURION T.A.A. FUND,
INC."
RESOLVED FURTHER, that the President of this corporation is
authorized and directed to execute Articles of Amendment to the
Articles of Incorporation of this corporation, as heretofore amended,
and to file such instrument with the Minnesota Secretary of State in
the manner provided by the Minnesota Statutes."
The effective date of incorporation was the 27th day of
August, 1981.
IN WITNESS WHEREOF, the undersigned has executed this
document as of the 28th day of December, 1994.
__________________________________
KENNETH W. ELSBERRY,
President
EXHIBIT 1.1
(i) Each class of shares shall, at all times,
maintain a different arrangement for shareholder
services or the distribution services or both, and
shall pay all of the expenses of that arrangement
("distribution expenses") as defined under the
Investment Company Act of 1940, as amended (the
1940 "Act").
(ii) Each class of shares shall be allocated its
pro-rata share of the corporation's income,
realized and unrealized capital gains and losses,
and expenses not allocated to a particular class
pursuant to (a) above on the basis of the net
asset value of that class in relation to the
net asset value of the corporation, as defined
under the 1940 Act. One or more classes of shares
may be required to pay a different share of
expenses (other than advisory or custodial fees or
other expenses related to the management of the
corporation's assets) if such expenses are
actually incurred in a different amount by the
class, or if the class receives services of a
different kind or to a different degree than other
classes, provided any payments made pursuant to
the foregoing shall be made pursuant to a written
plan setting forth the separate arrangement and
expense allocation of each class, and any related
conversion features or exchange privileges.
(iii)Each class of shares shall pay the same
advisory fee, as defined under the 1940 Act.
(iv) Expenses of the corporation payable to
any advisor, underwriter, or any other provider of
services to the corporation may be waived by such
person.
(v) Income, realized and unrealized capital gains and
losses, and expenses of the corporation not
allocated to a particular class pursuant to the
foregoing:
(aa) Except as permitted in paragraph (c) below,
shall be allocated to each class on the
basis of the net asset value of that class in
relation to the net asset value of the
corporation;
(bb) If the corporation operates pursuant to
Rule 270.2a-7 under the 1940 Act (including
the provision allowing the calculation of net
assets on an amortized cost basis), or
declares distributions of net investment
income daily and maintains the same net asset
value per share in each class, may be
allocated: (i) To each Share without regard
to class, provided that the corporation has
received undertakings from its adviser,
underwriter or any other provider of
services to the corporation, agreeing to
waive or reimburse the corporation for
payments to such service provider by one or
more classes, as allocated under paragraph
(i) above, to the extent necessary to assure
that all classes of the corporation maintain
the same net asset value per share; or
(ii) On the basis of relative net assets
(settled shares). For purposes of this
subsection (v), "relative net assets (settled
shares)" are net assets of the corporation
valued in accordance with generally accepted
accounting principles but excluding the value
of subscriptions receivable, in relation to
the net assets of the corporation.
(b) The shares shall have the following voting rights
set forth below.
(i) Each class of shares shall have exclusive
voting rights on any matter submitted to
shareholders that relates solely to its
arrangement;
(ii) Each class of shares shall have separate
voting rights on any matter submitted to
shareholders in which the interests of one
class differ from the interests of any other
class; and
(iii)Each class of shares shall, except as provided
herein, have in all other aspects the same rights
and obligations as each other class.
(c) Nothing in this Article 5 shall prohibit the board of
directors of the corporation from issuing the shares of
any class with any of the following rights or
provisions.
(i) An exchange privilege providing that shares of a
class may be exchanged for certain securities
of another company.
(ii) The Board may from time to time, in its discretion,
authorize and effect a conversion whereby the
shares of one class (the "purchase class") will be
exchanged automatically for shares of another class
(the "target class") after a specified period of
time, provided that:
(aa) The conversion is effected on the
basis of the relative net asset values of the
two classes without the imposition of any
sales load, fee, or other charge;
(bb) The expenses, including payments authorized
under a plan adopted pursuant to Rule
270.12b-1, as amended, promulgated under the
1940 Act, ("rule 12b-1 plan"), for the target
class are not higher than the expenses,
including payments authorized under a rule
12b-1 plan, for the purchase class; and
(cc) If the amount of expenses, including payments
authorized under a rule 12b-1 plan, for the
target class is increased materially without
approval of the shareholders of the purchase
class, the corporation will establish a new
target class for the purchase class on the
same terms as applied to the target class
before that increase.
(iii)A conversion feature providing that shares
of a class in which an investor is no longer
eligible to participate may be converted to shares
of a class in which that investor is eligible to
participate, provided that:
(aa) The shareholder is given prior notice of the
proposed conversion; and
(bb) The conversion is effected on the basis of
the relative net asset values of the two
classes without the imposition of any sales
load, fee, or other charge.
RESOLVED FURTHER, that the President of this
corporation is authorized and directed to execute Articles of
Amendment to the Articles of Incorporation of this corporation,
as heretofore amended, and to file such instrument with the
Minnesota Secretary of State in the manner provided by the
Minnesota Statutes."
The effective date of incorporation of the corporation was the
27th day of August, 1981.
IN WITNESS WHEREOF, the undersigned has executed this document
as of the 6th day of August, 1996.
______________________________
KENNETH W. ELSBERRY, President
MULTIPLE CLASS SHARE PLAN
MULTIPLE CLASS SHARE PLAN
EXHIBIT 2.1
CENTURION T.A.A., INC.
MULTIPLE CLASS SHARE PLAN
This Multiple Class Share Plan (this "Plan") is adopted by
the Board of Directors of Centurion T.A.A., Inc. (the "Fund"), an
investment company registered under the Investment Company Act
of 1940 (the "Act"), on the date last shown below subject to the
approval by a majority vote of its shareholders.
1. Authorized Classes of Shares.
Under this Plan, the Fund is authorized to issue the Class A
shares, the Class B. shares, the Class C Shares, and the Class D
Shares in accordance with the following.
Class A Shares. The Class Shares shall be sold at
their net asset value per share plus a maximum initial sales charge
("front-end charge") set from time to time by the Board of Directors
of the Fund (the "Board"). Initially, the front-end charge on the
Class A Shares shall be 4.75% of the offering price of the Class A
Shares. The Board shall approve and, subject to the required
approval of the Fund's shareholders, put into effect a Rule 12b-1
plan of distribution for the Class A Shares pursuant to which the
Fund may pay an annual shareholder services fees of up to 0.25%
of its average daily net assets attributable to the Class A Shares.
Class B Shares. The Class B Shares shall be sold at
their net asset value per share and shall be subject to a maximum
contingent deferred sales charge as determined from time to time by
the Board. Initially, maximum deferred sales charge shall be 4%
of the redemption proceeds during the first year, declining each
year thereafter to 0% after the fifth year. The Board shall approve
and, subject to the required approval of the Fund's shareholders,
put into effect a Rule 12b-1 plan of distribution for the Class B
Shares pursuant to which the Fund would pay annual distribution
fees, services fees, and shareholder services fees of up to 0.75%
and 0.25%, respectively, of the Fund's average daily net assets
attributable to the Class B Shares. The Class B shares shall convert
automatically to Class A shares on the date eight years following the
last day of the calendar month in which a shareholder's order to
purchase Class B Shares is accepted by the Fund.
Class C Shares. The Class C Shares shall be sold at
their net asset value per share. Upon the effective date of this Plan,
each share of the Fund then outstanding shall be designated and
reclassified a Class C share. The Fund shall pay annual distribution
fees and shareholder services fees of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to
these shares pursuant to the Funds Rule 12b-1 plan of distribution
in effect on the date hereof, which shall upon the effective date of
this plan be designated the "Class C Plan".
EXHIBIT 2.1
Class D Shares. The Class D Shares shall be sold at
their net asset value per share. No front-end charge or deferred
sales charge shall be charged with respect to the Class D Shares.
The Fund shall not pay distribution services fees or shareholder
services fees with respect to the Class D Shares. The Class D
Shares shall be sold only to persons who are Advisor Professionals
or Eligible Employees. The Advisor Professionals shall mean
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 shall mean
(a) current or retired directors of the Funds, current or retired
employees of the Fund's advisor, 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 the Fund's advisor and any of its affiliated companies;
(b) employees and registered representatives of Advisor
professionals, banks and other financial institutions with selling
group agreements with the Fund's principal underwriter, employees
of such persons, and spouses and minor children of any such
persons and (c) any trust, pension, profit sharing or other benefit
plan for such persons. 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 Fund's principal underwriter if such
redemption has occurred no more than 15 days prior to the
purchase of the Class D Shares and the shareholder paid an initial
sales charge and was not subject to a deferred sales charge on the
redeemed account.
2. Allocation of Fund Income and Expenses Among Classes.
The income and expenses of the Fund shall be allocated
among each class of Shares as follows:
(a) Separate Distribution Expenses. In accordance with
Section 1 above, each Class of Shares shall, at all times, maintain
a separate arrangement for shareholder services or the distribution
services or both, and shall pay all of the expenses of that
arrangement ("distribution expenses").
(b) Allocation of Expenses. Each Class of Shares shall
pay its pro-rata share of the Fund's expenses, including advisory or
custodial fees and other expenses related to the management of the
Fund's assets, the weighted average number of Shares of such Class
(i.e., the same amount of such expenses per Share calculated on the
number of Shares of such Class outstanding during the period for
which such expenses are to be allocated.) In the future, the Board
may require one or more classes of Shares to pay a different share
of expenses (other than advisory or custodial fees or other expenses
related to the management of the Fund's assets) if such expenses are
actually incurred in a different amount by a Class, or if the Class
receives services of a different kind or to a different degree than
other classes, provided any payments made pursuant to the
foregoing shall be made pursuant to a written plan setting forth the
separate arrangement and expense allocation of each class, and any
related conversion features or exchange privileges.
(c) Advisory Fees. Each Class of Shares shall pay the
same advisory fee.
(d) Waiver of Expenses. Expenses may be waived or
reimbursed by the Fund's adviser, underwritten, or any other
provider of services to the Fund.
(e) Income, Capital Gains and Losses. Income, realized
and unrealized capital gains and losses, and expenses of the Fund
not allocated to a particular Class pursuant to the foregoing:
(i) Except as permitted in paragraph (ii) below,
shall be allocated to each Class on the basis of the net
asset value of that Class in relation to the net asset
value of the Fund;
(ii) If the Fund operates pursuant to Rule 270.2a-7 under the
Act(including the provision allowing the calculation of
net assets on an amortized cost basis), or declares
distributions of net investment income daily and
maintains the same net asset value per share in each
class, may be allocated:
(aa) To each Share without regard to Class, provided
that the Fund has received undertakings from its
adviser, principal underwriter any other provider
of services to the Fund, agreeing to waive or
reimburse the Fund for payments to such service
provider by one or more classes, as allocated under
paragraph (i) above, to the extent necessary to
assure that all classes of the Fund maintain the
same net asset value per share; or
(bb) On the basis of relative net assets (settled
shares). For purposes of this subsection (e),
"relative net assets (settled shares)" are net
assets valued in accordance with generally accepted
accounting principles but excluding the value of
subscriptions receivable, in relation to the net
assets of the Fund.
3. Class Voting Rights.
The Shares shall have the following voting rights set forth below.
(a) Each Class of Shares shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its
arrangement;
(b) Each Class of Shares shall have separate voting rights on any
matter submitted to shareholders in which the interests of
one class differ from the interests of any other class;
(c) Each Class of Shares shall, except as provided herein, have in
all other aspects the same rights and obligations as each other
class.
4. Permitted Acts.
Nothing in this Plan shall prohibit the Board from issuing
the Shares of any class with any of the following rights or
provisions.
(a) An exchange privilege providing that Shares of a
Class may be exchanged for certain securities of another
company.
(b) The Board may from time to time, in its discretion,
authorize and effect a conversion whereby the Shares of one
Class (the "purchase class") will be exchanged automatically
for Shares of another Class (the "target class") after a
specified period of time, provided that:
(i) The conversion is effected on the basis of the
relative net asset values of the two classes without
the imposition of any sales load, fee, or other
charge;
(ii) The expenses, including payments authorized
under a plan adopted pursuant to 270.12b-1 ("rule
12b-1 plan"), for the target class are not higher than
the expenses, including payments authorized under
a rule 12b-1 plan, for the purchase class; and
(iii)If the amount of expenses, including
payments authorized under a rule 12b-1 plan, for the
target class is increased materially without approval
of the shareholders of the purchase class, the Fund
will establish a new target class for the purchase
class on the same terms as applied to the target class
before that increase.
(c) A conversion feature providing that shares of a Class in which
an investor is no longer eligible to participate may be
converted to shares of a class in which that investor is
eligible to participate, provided that:
(i) The shareholder is given prior notice of the
proposed conversion; and
(ii) The conversion is effected on the basis of the
relative net asset values of the two classes without
the imposition of any sales load, fee, or other charge.
5. Compliance With Rule 270.18f-3.
This Plan is intended to meet the requirements of Rule
270.18f-3 promulgated under the Act.
6. Effective Date of Plan.
This Plan shall be effective, subject to the approval by a
majority vote of the Funds shareholders, on the date the Articles of
Incorporation of the Fund are amended as required to authorize the
issuance of the Funds shares pursuant hereto.
IN WITNESS WHEREOF:
This Plan was unanimously approved and adopted by the
Board on February 2, 1996, which in doing so, specifically made
the following determinations:
1. The Board has requested and evaluated such agreements relating
to the Class arrangements under this Plan and such other
information as they deemed reasonably necessary to evaluate the
Plan; and
2. This Plan as proposed to be adopted, including the expense
allocations hereunder, is in the best interests of each Class
of Shares hereunder individually and the Fund as a whole.
July 5, 1996 ____________________
San Diego, California Secretary
FORM of INVESTMENT ADVISORY AGREEMENT OF
CENTURION T.A.A. FUND, INC.
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
THIS INVESTMENT ADVISORY AGREEMENT, made this 1st day of January
1995, by and between CENTURION T.A.A. FUND, INC., a Minnesota
corporation (the "Fund") and CENTURION COUNSEL, a California corporation
"Centurion Counsel").
W I T N E S S E T H:
1. Investment Advisory Services
The Fund hereby engages Centurion Counsel, and Centurion
Counsel hereby agrees to act as investment advisor for, and to manage
the investment of the assets and the affairs and business of, the
Fund.
The investment of the assets of the Fund shall at all times be
subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, and the current Prospectus
and Statement of Additional Information of the Fund and shall conform
to the policies and purposes of the Fund as set forth in the
Registration Statement and Prospectus and Statement of Additional
Information and as interpreted from time to time by the Board of
Directors of the Fund. Subject to the objectives and investment
restrictions of the Fund and subject to the supervision of the
Fund's Board of Directors, Centurion Counsel shall have 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.
Centurion Counsel shall report to the Board of Directors regularly at
such times and in such detail as the Board may from time to time
determine to be appropriate, in order to permit the Board to determine
the adherence of Centurion Counsel to the investment policies of the
Fund.
Centurion Counsel shall, at its own expense, furnish the Fund
office facilities and equipment for the Fund and personnel for
servicing the investments of the Fund. Centurion Counsel shall
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. Centurion Counsel shall be
responsible for continuously supervising and monitoring the
performance of the various organizations providing services to the
Fund, and for periodically reporting to the Fund's Board of Directors
on the performance of such organizations.
Centurion Counsel hereby acknowledges that all records necessary
in the operation of the Fund, including records pertaining to its
shareholders and investments, are the property of the Fund, and in
the event that a transfer of investment advisory services to someone
other than Centurion Counsel should ever occur, Centurion Counsel
will promptly, and at its own cost, take all steps necessary to
segregate such records and deliver them to the Fund.
2. Compensation for Services
In payment for the investment advisory services to be
rendered by Centurion Counsel hereunder, the Fund shall pay to
Centurion Counsel a quarterly fee, which fee shall be paid to
Centurion Counsel not later than the fifth business day
following the end of each fiscal quarter in which said services were
rendered. Said quarterly fee shall be based on the average of the
net asset values of all of the issued and outstanding shares of the
Fund as determined as of the close of each business day of the
quarter pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus and Statement of Additional Information
of the Fund and shall be equal to an annual rate of 1.00% of the
Fund's first $200-million of average daily net assets plus a
lesser percentage of assets in excess of $200-millon as follows:
.85% of net assets between $200-million and $400-millon;
.80% of net assets between $400-millon and $600-million;
.75% of net assets between $600-million and $800-million;
.60% of net assets between $800-million and $1-billion; and
.50% of all net assets over $1-billion.
3. Allocation of Expenses
(a) In addition to the fee described in Section 2 hereof,
the Fund shall pay all its expenses which are not expressly to be
borne by Centurion Counsel. These Fund expenses include, by way of
example but not by way of limitation, all expenses incurred in the
operation of the Fund and any public offering of its shares,
including, among others, interest, taxes, brokerage fees and
commissions, fees of the directors who are not full-time employees
of Centurion Counsel, or any of their affiliates, expenses of
directors' and shareholders' meeting, 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
Centurion Institutional Services, Inc., the Fund's principal
underwriter, under its Distribution 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, Statements of
Additional Information and reports to existing Fund shareholders.
Centurion Counsel will endeavor to advance these costs on behalf of
the Fund and to the extent it does so it shall be reimbursed by the
Fund, subject to Section 4 below.
(b) Except as provided in subsection (c) of this Section 3,
Centurion Institutional Services, Inc., under its Distribution
Agreement with the Fund, shall bear all promotional expenses in
connection with the distribution of the Fund's shares, including
paying for Prospectuses and Statement of Additional Information for
new shareholders.
(c) Centurion Counsel may not use any portion of the fee
paid by the Fund pursuant to Section 2 hereof to pay for expenses in
connection with the distribution of the Fund's shares, including
without limitation any sales commissions to broker-dealers
participating in the distribution of the Fund's shares.
4. Limit on Expense
Centurion Counsel shall reimburse the Fund if and to the
extent that the aggregate operating expenses of the Fund, including
the fee payable by the Fund to Centurion Counsel pursuant to Section
2 hereof and the reimbursements by the Fund to Centurion Counsel
pursuant to Section 3(a) hereof, but excluding interest expense, Rule
12b-1 Plan of Distribution fees, taxes and brokerage fees and
commissions, are in excess of 2.625% of the first $200-million of
average net assets of the Fund. The amount of any such
reimbursements to the Fund by Centurion Counsel shall be determined
and made at the same time as the fee payable to Centurion Counsel is
determined and payable pursuant to Section 2 hereof. Centurion
Counsel shall make the foregoing reimbursements with respect to such
operating expenses incurred by the Fund during any fiscal year
during any part of which this Agreement is effective, irrespective
of whether this Agreement is terminated prior to the end thereof.
Centurion Counsel has the right to terminate its obligation under
the Section 4 as of the end of any fiscal year of the Fund after
its 1995 fiscal year.
5. Freedom to Deal With Third Parties
Centurion Counsel shall be free to render services to
others similar to those rendered under this Agreement or of a
different nature except as such services may conflict with the
services to be rendered or the duties to be assumed hereunder.
6. Effective Date, Duration and Termination of Agreement
The effective date of this Agreement shall be January 1, 1995.
Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of the
Fund shall mean the vote of 67% or more of such securities if the
holders of more than 50% of such securities are present in person or
by proxy or the vote of more than 50% of such securities, whichever
is the lesser.
Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect from year to year from the date of its
execution, but only so long as such continuance is specifically
approved at least annually by a majority of the Board of Directors
of the Fund, including a majority of the directors who are not
interested persons of Centurion Counsel. This Agreement may be
terminated at any time without the payment of any penalty by the
vote of the Board of Directors of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the
Fund, or by Centurion Counsel, upon 60 days' written notice to the
other party.
This Agreement shall automatically terminate in the event of
its assignment as such term is defined by the Investment Company Act
of 1940 (the "1940 Act"), as amended.
7. Reports to Directors of the Fund
Appropriate officers of Centurion Counsel shall provide the
directors of the Fund with such information as is required by any
plan of distribution adopted by the Fund pursuant to Rule 12b-1
under the 1940 Act, as amended.
8. Amendments to Agreement
No material amendment to this Agreement shall be effective
until approved by vote of the holders of a majority of the
outstanding voting securities of the Fund.
9. Notices
Any notice under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party
at such address as such other party may designate in writing for
receipt of such notice.
IN WITNESS WHEREOF, the Fund and Centurion Counsel have caused
this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
CENTURION COUNSEL, INC. CENTURION T.A.A. FUND,
INC.
By: By:
Its Its
FORM OF DISTRIBUTION AGREEMENT OF
CENTURION T.A.A. FUND, INC.
EXHIBIT 6
DISTRIBUTION AGREEMENT
THIS AGREEMENT made on January 1, 1995 by and between
Centurion T.A.A. Fund, Inc., a Minnesota corporation (the "Fund"), and
Centurion Institutional Services, Inc., a California corporation ("CISI")
is hereby amended and restated in its entirety effective on this ____ day
of ____________, 1996 (the "Effective Date").
W I T N E S S E T H:
1. Underwriting Services. The Fund hereby engages CISI, and CISI
hereby agrees to act, as principal underwriter for the Fund in the sale
and distribution of the Class A shares, Class B shares, and Class C
shares of the Fund to the public, and the Class D shares of the Fund to
Advisor Professionals, Eligible Employees, and Eligible Accounts,
directly, through dealers or otherwise. CISI agrees to offer such shares
(the "Shares") for sale at all times when such shares are available for
sale and may lawfully be offered for sale and sold in the manner
described in the Fund's Prospectus included in the Fund's Registration
Statement on Form N-1A filed with the U.S. Securities and Exchange
Commission, as amended, effective on the date hereof and as it may be
amended in the future (the "Registration Statement").
2. Sale of Fund Shares. Such shares are to be sold only on
the following terms:
(a) All subscriptions, offers, or sales shall be subject
to acceptance or rejection by the Fund. Any offer or sale
shall be conclusively presumed to have been accepted by
the Fund if the Fund shall fail to notify CISI of the
rejection of such offer or sale prior to the computation
of the net asset value of the Fund's shares next following
receipt by the Fund of notice of such offer or sale.
(b) No share of the fund shall be sold by CISI (i) for any
consideration other than cash or, pursuant to any exchange
privilege provided for by the Fund's currently effective
Prospectus or Statement of Additional Information filed as
part of the Registration Statement, shares of any other
investment company for which CISI acts as an underwriter,
or (ii), except in instances otherwise provided for by the
Fund's currently effective Prospectus or Statement of
Additional Information, for any amount less than the
public offering price of each respective Class of shares,
which shall be determined in accordance with the Fund's
currently effective Prospectus and Statement of Additional
Information.
EXHIBIT 6
3. Registration of Shares. The Fund agrees to make prompt and
reasonable efforts to effect and keep in effect, at its expense,
the registration or qualification of its shares for sale in such
jurisdictions as the Fund may designate.
4. Information to be Furnished to CISI. The Fund agrees that it
will furnish CISI with such information with respect to the affairs
and accounts of the Fund as CISI may from time to time reasonably
require, and further agrees that CISI, at all reasonable times, shall be
permitted to inspect the books and records of the Fund.
5. Allocation of Expenses. During the period of this
contract, the Fund shall pay or cause to be paid all expenses, costs and
fees incurred by the Fund which are not assumed by CISI or Centurion
Counsel, Inc. ("Centurion"). Except as provided in Section 6 hereof and
except for such expenses as are assumed by Excel, CISI shall pay all
advertising and promotional expenses in connection with the distribution
of the Fund's shares, including paying for Prospectuses and Statements
of Additional Information for new shareholders.
6. Compensation to CISI. It is understood and agreed by
the parties hereto that CISI will receive, as compensation for services
it performs hereunder:
(a) a sales charge in accordance with Schedule A hereto; and
(b) a distribution fee which shall be paid quarterly to CISI
with respect to each of the Class B shares and the Class
C shares not later than the fifth business day following
the end of each calendar quarter in which said services
were rendered. Said distribution fees shall be equal to an
annual rate of 0.75 of 1% of the Fund's average daily net
assets attributable to Class B shares and Class C shares,
respectively, determined as of the close of each business
day of the calendar quarter pursuant to the Articles of
Incorporation, Bylaws and currently effective Prospectus
and Statement of Additional Information of the Fund. Said
distribution fees shall be used by CISI to compensate
broker-dealers, including CISI, and CISI's registered
representatives, for their sale of Fund shares based upon 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 Fund shares, and to
pay other advertising and promotional expenses in
connection with the distribution of Fund shares.
7. Limitation of CISI's Authority. CISI shall be deemed
to be an independent contractor and, except as specifically provided or
authorized herein, shall have no authority to act for or represent the
Fund.
8. Subscription for Shares - Refund for Cancelled Orders.
CISI shall subscribe for shares of the Fund only for the purpose of
covering purchase orders already received by it or for the purpose of
investment for its own account. In the event that an order for the
purchase of shares of the Fund is placed with CISI by a customer or
dealer and subsequently cancelled, CISI shall forthwith cancel the
subscription for such shares entered on the books of the Fund, and, if
CISI has paid the Fund for such shares, shall be entitled to receive from
the Fund in refund of such payment the lesser of:
(a) The consideration received by the Fund for said
shares; or
(b) The net asset value of such shares at the time of
cancellation by CISI.
9. Indemnification of the Fund. CISI agrees to indemnify
the Fund against any and all litigation and other legal proceedings of
any kind or nature and against any liability, judgment, cost, or penalty
imposed as a result of such litigation or proceeding in any way arising
out of or in connection with the sale or distribution of the shares of
the Fund by CISI. In the event of the threat or institution of any such
litigation or legal proceedings against the Fund, CISI shall defend such
action on behalf of the Fund at its own expense and shall pay any such
liability, judgment, cost, or penalty resulting therefrom, whether
imposed by legal authority or agreed upon by way of compromise and
settlement; provided, however, CISI shall not be required to pay or
reimburse the Fund for any liability, judgment, cost, or penalty incurred
as a result of information supplied by, or as the result of the omission
to supply information by, the Fund to CISI, or to CISI by a director,
officer, or employee of the Fund who is not an interested person of CISI,
unless the information so supplied or omitted was available to CISI or
the Fund's investment advisor without recourse to the Fund or any such
person referred to above.
10. Freedom to Deal with Third Parties. CISI shall be free to
render to others services of a nature either similar to or different from
those rendered under this contract, except such as may impair its
performance of the services and duties to be rendered by it hereunder.
11. Duration and Termination of Agreement. Unless sooner
terminated as hereinafter provided, this Agreement shall continue in
effect from year to year but only so long as such continuance is
specifically approved at least annually by the Board of Directors of the
Fund, including the specific approval of a majority of the directors who
are not interested persons of CISI as defined by the provisions of the
Investment Company Act of 1940, as amended, cast in person at a meeting
called for the purpose of voting on such approval, or by the vote of the
holders of a majority of the outstanding voting securities of the Fund.
Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of the Fund
shall mean the vote of 67% or more of such securities if the holders of
more than 50% of such securities are present in person or by proxy or the
vote of more than 50% of such securities, whichever is the lesser.
This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board of Directors of the Fund in the
manner described above or by the vote of the holders of a majority
of the outstanding voting securities of the Fund, or by CISI, upon 60
days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment (as defined by the provisions of the Investment Company Act
of 1940, as amended).
12. Reports to Directors of the Fund. Appropriate officers
of CISI shall provide the directors of the Fund with such information as
is required by the Class A, Class B, and/or Class C plans of distribution
or any other plan of distribution adopted by the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended.
13. Amendments to Agreement. No material amendment to
this Agreement shall be effective until approved by CISI and by vote of
a majority of the Board of Directors of the Fund in the manner discussed
in Section 11 hereof.
14. Notices. Any notice under this Agreement shall be in
writing, addressed, delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate in writing for
receipt of such notice.
IN WITNESS WHEREOF, the Fund and CISI have caused this Agreement to
be executed by their duly authorized officers as of the day and year
first above written.
CENTURION T.A.A. FUND, INC. CENTURION INSTITUTIONAL
SERVICES, INC.
By: By:
Its: Its:
SCHEDULE A
Sales Charge Schedule
1. Class A Shares.
A front-end sales charge of 4.75% as follows:
As % of Net As % of Reallowed to dealers
Amount Invested Offering Price (as a % of Offering Price)
4.99% 4.75% 4.00%
2. Class B Shares.
A contingent deferred Sales Charge as follows:
Contingent Deferred Sales Charge
as a Percentage of
Year Since Purchase Dollar Amount Subject to Charge
First. . . . . . . . . . . . . . . . . . . 4%
Second . . . . . . . . . . . . . . . . . . 4%
Third. . . . . . . . . . . . . . . . . . . 3%
Fourth . . . . . . . . . . . . . . . . . 2.5%
Fifth. . . . . . . . . . . . . . . . . . 1.5%
Sixth. . . . . . . . . . . . . . . . . . None
3. Class C Shares.
None.
4. Class D Shares.
None.
CUSTODIAN AGREEMENT
EXHIBIT 8
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of
the 1st day of June, 1996, by and between Centurion T.A.A.
Fund, (the "Fund"), an open-end diversified investment business
corporation organized under the laws of Minnesota and having
its office at 11545 West Bernardo Court, Suite 100, San Diego,
California 92127 and Star Bank, National Association, (the
"Custodian"), a national banking association having its
principal office at 425 Walnut Street, Cincinnati, Ohio 45202.
WHEREAS, the Fund and the Custodian desire to enter into
this Agreement to provide for the custody and safekeeping of
the assets of the Fund as required by the Investment Company
Act of 1940, as amended (the "Act").
WHEREAS, the Fund hereby appoints the Custodian as
custodian of all the Fund's Securities and moneys at any time
owned by the Fund during the term of this Agreement (the "Fund
Assets").
WHEREAS, the Custodian hereby accepts such appointment as
Custodian and agrees to perform the duties thereof as
hereinafter set forth.
THEREFORE, in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:
ARTICLE I
Definitions
The following words and phrases, when used in this
Agreement, unless the context otherwise requires, shall have
the following meanings:
Authorized Person - the Chairman, President, Secretary,
Treasurer, Controller, or Senior Vice President of the Fund, or
any other person, whether or not any such person is an officer
or employee of the Fund, duly authorized by the Board of
Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund, and listed in the
Certificate annexed hereto as Appendix A, or such other
Certificate as may be received by the Custodian from time to
time.
Book-Entry System - The Federal Reserve Bank book-entry
system for United States Treasury securities and federal agency
securities.
Depository - The Depository Trust Company ("DTC"), a
limited purpose trust company, its successor(s) and its
nominee(s) or any other person or clearing agent.
Dividend and Transfer Agent - the dividend and transfer
agent appointed, from time to time, pursuant to a written
agreement between the Dividend and Transfer Agent and the Fund.
Foreign Securities - a) securities issued and sold
primarily outside of the United States by a foreign government,
a national of any foreign country, or a corporation or other
organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the
government of the United States, by any state, by any political
subdivision or agency thereof, or by any entity organized under
the laws of the United States or of any state thereof, which
have been issued and sold primarily outside of the United
States.
Money Market Security - debt obligations issued or
guaranteed as to principal and/or interest by the government of
the United States or agencies or instrumentalities thereof,
commercial paper, obligations (including certificates of
deposit, bankers' acceptances, repurchase agreements and
reverse repurchase agreements with respect to the same), and
time deposits of domestic banks and thrift institutions whose
deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the
purchase and sale of such securities normally require
settlement in federal funds or their equivalent on the same day
as such purchase and sale, all of which mature in not more than
thirteen (13) months.
Officers - the Chairman, President, Secretary, Treasurer,
Controller, and Senior Vice President of the Fund listed in the
Certificate annexed hereto as Appendix A, or such other
Certificate as may be received by the Custodian from time to
time.
Oral Instructions - verbal instructions received by the
Custodian from an Authorized Person (or from a person that the
Custodian reasonably believes in good faith to be an Authorized
Person) and confirmed by Written Instructions in such a manner
that such Written Instructions are received by the Custodian on
the business day immediately following receipt of such Oral
Instructions.
Prospectus - the Fund's then currently effective
prospectus and Statement of Additional Information, as filed
with and declared effective from time to time by the Securities
and Exchange Commission.
Security or Securities - Money Market Securities, common
stock, preferred stock, options, financial futures, bonds,
notes, debentures, corporate debt securities, mortgages, and
any certificates, receipts, warrants, or other instruments
representing rights to receive, purchase, or subscribe for the
same or evidencing or representing any other rights or interest
therein, or any property or assets.
Written Instructions - communication received in writing
by the Custodian from an Authorized Person.
ARTICLE II
Documents and Notices to be Furnished by the Fund
A. The following documents, including any amendments
thereto, will be provided contemporaneously with the execution
of the Agreement, to the Custodian by the Fund:
1. A copy of the Articles of Incorporation of the Fund
certified by the Secretary.
2. A copy of the By-Laws of the Fund certified by the
Secretary.
3. A copy of the resolution of the Board of Trustees
of the Fund appointing the Custodian, certified by
the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the
Fund setting forth the names and signatures of the
Officers of the Fund.
B. The Fund agrees to notify the Custodian in writing
of the appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Fund Assets
A. During the term of this Agreement, the Fund will
deliver or cause to be delivered to the Custodian all moneys
constituting Fund Assets. The Custodian shall be entitled to
reverse any deposits made on the Fund's behalf where such
deposits have been entered and the moneys are not finally
collected within 30 days of the making of such entry.
B. During the term of this Agreement, the Fund will
deliver or cause to be delivered to the Custodian all
Securities constituting Fund Assets. The Custodian will not
have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit
to the account(s) of the Fund any and all payments for shares
of the Fund issued or sold from time to time as they are
received from the Fund's distributor or Dividend and Transfer
Agent or from the Fund itself.
ARTICLE IV
Disbursement of Fund Assets
A. The Fund shall furnish to the Custodian a copy of
the resolution of the Board of Trustees of the Fund, certified
by the Fund's Secretary, either (i) setting forth the date of
the declaration of any dividend or distribution in respect of
shares of the Fund, the date of payment thereof, the record
date as of which Fund shareholders entitled to payment shall be
determined, the amount payable per share to Fund shareholders
of record as of that date, and the total amount to be paid by
the Dividend and Transfer Agent on the payment date, or (ii)
authorizing the declaration of dividends in respect of shares
of the Fund on a daily basis and authorizing the Custodian to
rely on a Certificate setting forth the date of the declaration
of any such dividend or distribution, the date of payment
thereof, the record date as of which Fund shareholders entitled
to payment shall be determined, the amount payable per share to
Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the
payment date.
On the payment date specified in such resolution or
Certificate described above, the Custodian shall segregate such
amounts from moneys held for the account of the Fund so that
they are available for such payment.
B. Upon receipt of Written Instructions so directing
it, the Custodian shall segregate amounts necessary for the
payment of redemption proceeds to be made by the Dividend and
Transfer Agent from moneys held for the account of the Fund so
that they are available for such payment.
C. Upon receipt of a Certificate directing payment and
setting forth the name and address of the person to whom such
payment is to be made, the amount of such payment, and the
purpose for which payment is to be made, the Custodian shall
disburse amounts as and when directed from the Fund Assets.
The Custodian is authorized to rely on such directions and
shall be under no obligation to inquire as to the propriety of
such directions.
D. Upon receipt of a Certificate directing payment,
the Custodian shall disburse moneys from the Fund Assets in
payment of the Custodian's fees and expenses as provided in
Article VIII hereof.
ARTICLE V
Custody of Fund Assets
A. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of
the Fund, subject only to draft or order by the Custodian
acting pursuant to the terms of this Agreement, and shall hold
all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account
established and used by the Fund in accordance with Rule 17f-3
under the Act. Moneys held by the Custodian on behalf of the
Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such
moneys shall be deposited by the Custodian in its capacity as
such, and shall be withdrawable by the Custodian only in such
capacity.
B. The Custodian shall hold all Securities delivered
to it in safekeeping in a separate account or accounts
maintained at Star Bank, N.A. for the benefit of the Fund.
C. All Securities held which are issued or issuable
only in bearer form, shall be held by the Custodian in that
form; all other Securities held for the fund shall be
registered in the name of the Custodian or its nominee. The
Fund agrees to furnish to the Custodian appropriate instruments
to enable the custodian to hold, or deliver in proper form for
transfer, any Securities that it may hold for the account of
the fund and which may, from time to time, be registered in the
name of the Fund.
D. With respect to all Securities held for the Fund,
the Custodian shall on a timely basis (concerning items 1 and
2 below, as defined in the Custodian's Standards of Service
Guide, as amended from time to time, annexed hereto as Appendix
C):
1.) Collect all income due and payable with
respect to such Securities;
2.) Present for payment and collect amounts
payable upon all Securities which may mature
or be called, redeemed, or retired, or
otherwise become payable;
3.) Surrender Securities in temporary form for
definitive Securities; and
4.) Execute, as agent, any necessary
declarations or certificates of ownership
under the Federal income tax laws or the
laws or regulations of any other taxing
authority, including any foreign taxing
authority, now or hereafter in effect.
E. Upon receipt of a Certificate and not otherwise,
the Custodian shall"
1.) Execute and deliver to such persons as may
be designated in such Certificate proxies,
consents, authorizations, and any other
instruments whereby the authority of the
Fund as beneficial owner of any Securities
may be exercised;
2.) Deliver any Securities in exchange for other
Securities or cash issued or paid in
connection with the liquidation,
reorganization, refinancing, merger,
consolidation, or recapitalization of any
corporation, or the exercise of any
conversion privilege;
3.) Deliver any Securities to any protective
committee, reorganization committee, or
other person in connection with the
reorganization, refinancing, merger,
consolidation, recapitalization, or sale of
assets of any corporation, and receive and
hold under the terms of this Agreement such
certificates of deposit, interim receipts or
other instruments or documents as may be
issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the
assets of the Fund and take such other steps
as shall be stated in said Certificate to be
for the purpose of effectuating any duly
authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Fund; and
5.) Deliver any Securities held for the Fund to
the depository agent for tender or other
similar offers.
F. The Custodian shall promptly deliver to the Fund
all notices, proxy material and executed but unvoted proxies
pertaining to shareholder meetings of Securities held by the
Fund. The Custodian shall not vote or authorize the voting of
any Securities or give any consent, waiver or approval with
respect thereto unless so directed by a Certificate or Written
Instruction.
G. The Custodian shall promptly deliver to the Fund
all information received by the Custodian and pertaining to
Securities held by the Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of
rights.
ARTICLE VI
Purchase and Sale of Securities
A. Promptly after each purchase of Securities by the
Fund, the Fund shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market
Securities, Written Instructions, and (ii) with respect to each
purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such
purchase the;
1.) name of the issuer and the title of the
Securities,
2.) principal amount purchased and accrued
interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker
through which, the purchase was made.
The Custodian shall, against receipt of Securities purchased by
and for the Fund, pay out of the Fund Assets, the total amount
payable to the person from whom or the broker through which the
purchase was made, provided that the same conforms to the total
amount payable as set forth in such Written Instructions or
Oral Instructions, as the case may be.
B. Promptly after each sale of Securities by the Fund,
the Fund shall deliver to the Custodian (i) with respect to
each sale of Securities which are not Money Market Securities,
Written Instructions, and (ii) with respect to each sale of
Money Market Securities, Written Instructions or Oral
Instructions, specifying with respect to each such sale the;
1.) name of the issuer and the title of the
Securities,
2.) principal amount sold and accrued interest,
if any,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable, and
6.) name of the person to whom, or the broker
through which, the sale was made.
The Custodian shall deliver the Securities against receipt of
the total amount receivable, provided that the same conforms to
the total amount receivable as set forth in such Written
Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of the
Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made.
Likewise, on contractual settlement date, proceeds from the
sale of Securities settling that day will be credited to the
account of the fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the
Custodian will be made on a delivery versus payment basis. The
Custodian may, in its sole discretion, upon receipt of a
Certificate, elect to settle a purchase or sale transaction in
some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written
Instruction so directing it, establish and maintain a
segregated account or accounts for and on behalf of the Fund.
Cash and/or Securities may be transferred into such account or
accounts for specific purposes, to-wit:
1.) in accordance with the provision of any
agreement among the Fund, the Custodian, and
a broker-dealer registered under the
Securities and Exchange Act of 1934, as
amended, and also a member of the National
Association of Securities Dealers (NASD) (or
any futures commission merchant registered
under the Commodity Exchange Act), relating
to compliance with the rules of the Options
Clearing Corporation and of any registered
national securities exchange, the Commodity
Futures Trading Commission, any registered
contract market, or any similar organization
or organizations requiring escrow or other
similar arrangements in connection with
transactions by the Fund;
2.) for purposes of segregating cash or
government securities in connection with
options purchased, sold, or written by the
Fund or commodity futures contracts or
options thereon purchased or sold by the
Fund;
3.) for the purpose of compliance by the Fund
with the procedures required for reverse
repurchase agreements, firm commitment
agreements, standby commitment agreements,
and short sales by Act Release No. 10666, or
any subsequent release or releases or rule
of the Securities and Exchange Commission
relating to the maintenance of segregated
accounts by registered investment companies;
and
4.) for other corporate purposes, only in the
case of this clause 4 upon receipt of a copy
of a resolution of the Board of Trustees of
the Fund, certified by the Secretary of the
Fund, setting forth the purposes of such
segregated account.
F. Except as otherwise may be agreed upon by the
parties hereto, the Custodian shall not be required to comply
with any Written Instructions to settle the purchase of any
Securities on behalf of the Fund unless there is sufficient
cash in the account(s) at the time or to settle the sale of any
Securities from an account(s) unless such Securities are in
deliverable form. Notwithstanding the foregoing, if the
purchase price of such Securities exceeds the amount of cash in
the account(s) at the time of such purchase, the Custodian may,
in its sole discretion, advance the amount of the difference in
order to settle the purchase of such Securities. The amount of
any such advance shall be deemed a loan from the Custodian to
the Fund payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date
such loan is repaid, at a rate per annum customarily charged by
the Custodian on similar loans.
ARTICLE VII
Fund Indebtedness
In connection with any borrowings by the Fund, the Fund
will cause to be delivered to the Custodian by a bank or broker
requiring Securities as collateral for such borrowings
(including the Custodian if the borrowing is from the
Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing:
(a) the name of the bank or broker, (b) the amount and terms of
the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the
Fund, or a loan agreement, (c) the date, and time if known, on
which the loan is to be entered into, (d) the date on which the
loan becomes due and payable, (e) the total amount payable to
the Fund on the borrowing date, and (f) the description of the
Securities securing the loan, including the name of the issuer,
the title and the number of shares or the principal amount.
The Custodian shall deliver on the borrowing date specified in
the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that
the same conforms to that which is described in the
Certificate. The Custodian shall deliver, in the manner
directed by the Fund, such Securities as additional collateral,
as may be specified in a Certificate, to secure further any
transaction described in this Article VII. The Fund shall
cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall
receive from time to time such return of collateral as may be
tendered to it.
The Custodian may, at the option of the lender, keep such
collateral in its possession, subject to all rights therein
given to the lender because of the loan. The Custodian may
require such reasonable conditions regarding such collateral
and its dealings with third-party lenders as it may deem
appropriate.
ARTICLE VIII
Concerning the Custodian
A. Except as otherwise provided herein, the Custodian
shall not be liable for any loss or damage resulting from its
action or omission to act or otherwise, except for any such
loss or damage arising out of its own gross negligence or
willful misconduct. The Fund shall defend, indemnify and hold
harmless the Custodian and its directors, officers, employees
and agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to
arise from or relating to the Fund's duties hereunder or any
other action or inaction of the Fund or its Trustees, officers,
employees or agents, except such as may arise from the
negligent action, omission, willful misconduct or breach of
this Agreement by the Custodian. The Custodian may, with
respect to questions of law, apply for and obtain the advice
and opinion of counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted by
it in good faith in conformity with the advice or opinion of
counsel. The provisions under this paragraph shall survive the
termination of this Agreement.
B. Without limiting the generality of the foregoing,
the Custodian, acting in the capacity of Custodian hereunder,
shall be under no obligation to inquire into, and shall not be
liable for:
1.) The validity of the issue of any Securities
purchased by or for the account of the fund,
the legality of the purchase thereof, or the
propriety of the account paid therefor;
2.) The legality of the sale of any Securities
by or for the account of the Fund, or the
propriety of the amount for which the same
are sold;
3.) The legality of the issue or sale of any
shares of the Fund, or the sufficiency of
the amount to be received therefor;
4.) The legality of the redemption of any shares
of the Fund, or the propriety of the amount
to be paid therefor;
5.) The legality of the declaration or payment
of any dividend by the Fund in respect of
shares of the Fund;
6.) The legality of any borrowing by the Fund on
behalf of the Fund, using Securities as
collateral;
C. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount
due to the Fund from any Dividend and Transfer Agent of the
Fund nor to take any action to effect payment or distribution
by any Dividend and Transfer Agent of the Fund of any amount
paid by the Custodian to any Dividend and Transfer Agent of the
Fund in accordance with this Agreement.
D. Notwithstanding Section D of Article V, the
Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities
upon which such amount is payable are in default, or if payment
is refused after due demand or presentation, unless and until
(i) it shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction (including
prepayment thereof) of reimbursement of its costs and expenses
in connection with any such action.
E. The Fund acknowledges and hereby authorizes the
Custodian to hold Securities through its various agents
described in Appendix B annexed hereto. The Fund hereby
represents that such authorization has been duly approved by
the Board of Trustees of the Fund as required by the Act. The
Custodian acknowledges that although certain Fund Assets are
held by its agents, the Custodian remains primarily liable for
the safekeeping of the Fund Assets.
In addition, the Fund acknowledges that the Custodian may
appoint one or more financial institutions, as agent or agents
or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries,
for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any
obligation or liability under this Agreement in connection with
the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as
such for assets of investment companies registered under the
Act. Upon request, the Custodian shall promptly forward to the
Fund any documents it receives from any agent or sub-custodian
appointed hereunder which may assist trustees of registered
investment companies fulfill their responsibilities under Rule
17f-5 of the Act.
F. The Custodian shall not be under any duty or
obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Fund are such
as properly may be held by the Fund under the provisions of the
Articles of Incorporation and the fund's By-Laws.
G. The Custodian shall treat all records and other
information relating to the Fund and the Fund Assets as
confidential and shall not disclose any such records or
information to any other person unless (i) the Fund shall have
consented thereto in writing or (ii) such disclosure is
required by law.
H. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian such compensation as shall
be determined pursuant to Appendix D attached hereto, or as
shall be determined pursuant to amendments to such Appendix D.
The Custodian shall be entitled to charge against any money
held by it for the account of the Fund, the amount of any of
its fees, any loss, damage, liability or expense, including
counsel fees. The expenses which the Custodian may charge
against the account of the fund include, but are not limited
to, the expenses of agents or sub-custodians incurred in
settling transactions involving the purchase and sale of
Securities of the Fund.
I. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions. The Fund
agrees to forward to the Custodian Written Instructions
confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by
hand delivery, facsimile or otherwise, on the same business day
on which such Oral Instructions were given. The Fund agrees
that the failure of the Custodian to receive such confirming
instructions shall in no way affect the validity of the
transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund for acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions.
J. The Custodian will (i) set up and maintain proper
books of account and complete records of all transactions in
the accounts maintained by the Custodian hereunder in such
manner as will meet the obligations of the Fund under the Act,
with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the
Fund, and (ii) preserve for the periods prescribed by
applicable Federal statute or regulation all records required
to be so preserved. All such books and records shall be the
property of the Fund, and shall be open to inspection and audit
at reasonable times and with prior notice by Officers and
auditors employed by the Fund.
K. The Custodian shall send to the Fund any report
received on the systems of internal accounting control of the
Custodian, or its agents or sub-custodians, as the Fund may
reasonably request from time to time.
L. The Custodian performs only the services of a
custodian and shall have no responsibility for the management,
investment or reinvestment of the Securities from time to time
owned by the Fund. The Custodian is not a selling agent for
shares of the Fund and performance of its duties as custodian
shall not be deemed to be a recommendation to the Fund's
depositors or others of shares of the Fund as an investment.
M. The Custodian shall take all reasonable action,
that the Fund may from time to time request, to assist the Fund
in obtaining favorable opinions from the Fund's independent
accountants, with respect to the Custodian's activities
hereunder, in connection with the preparation of the Fund's
Form N-1A, Form N-SAR, or other annual reports to the
Securities and Exchange Commission.
N. The Fund hereby pledges to and grants the Custodian
a security interest in any Fund Assets to secure the payment of
any liabilities of the Fund to the Custodian, whether acting in
its capacity as Custodian or otherwise, or on account of money
borrowed from the Custodian. This pledge is in addition to any
other pledge of collateral by the Fund to the Custodian.
ARTICLE X
Termination
A. Either of the parties hereto may terminate this
Agreement for any reason by giving to the other party a notice
in writing specifying the date of such termination, which shall
be not less than ninety (90) days after the date of giving of
such notice. If such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees
of the Fund, certified by the Secretary of the Fund, electing
to terminate this Agreement and designating a successor
custodian or custodians. In the event such notice is given by
the Custodian, the Fund shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of the
Board of Trustees of the Fund, certified by the Secretary,
designating a successor custodian or custodians to act on
behalf of the Fund. In the absence of such designation by the
Fund, the Custodian may designate a successor custodian which
shall be a bank or trust company having not less than
$100,000,000 aggregate capital, surplus, and undivided profits.
Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver,
on that date, directly to the successor custodian all
securities and moneys then owned by the Fund and held by it as
Custodian. Upon termination of this Agreement, the Fund shall
pay to the Custodian on behalf of the Fund such compensation as
may be due as of the date of such termination. The Fund agrees
on behalf of the Fund that the Custodian shall be reimbursed
for its reasonable costs in connection with the termination of
this Agreement.
B. If a successor custodian is not designated by the
Fund, or by the Custodian in accordance with the preceding
paragraph, or the designated successor cannot or will not
serve, the Fund shall, upon the delivery by the Custodian to
the Fund of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund, be deemed to be the custodian
for the Fund, and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book-Entry System, which cannot be delivered to the Fund, which
shall be held by the Custodian in accordance with this
Agreement.
ARTICLE XI
Miscellaneous
A. Appendix A sets forth the names and the signatures
of all Authorized Persons, as certified by the Secretary of the
Fund. The Fund agrees to furnish to the Custodian a new
Appendix A in form similar to the attached Appendix A, if any
present Authorized Person ceases to be an Authorized Person or
if any other or additional Authorized Persons are elected or
appointed. Until such new Appendix A shall be received, the
Custodian shall be fully protected in acting under the
provisions of this Agreement under Oral Instructions or
signatures of the then current Authorized Persons as set forth
in the last delivered Appendix A.
B. No recourse under any obligation of this Agreement
or for any claim based thereon shall be had against any
organizer, shareholder, Officer, Director, past, present or
future as such, of the Fund or of any predecessor or successor,
either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or
rule of law or equity, or be the enforcement of any assessment
or penalty or otherwise; it being expressly agreed and
understood that this Agreement and the obligations thereunder
are enforceable solely against the Fund, and that no such
personal liability whatever shall attach to, or is or shall be
incurred by, the organizers, shareholders, Officers, Trustees
of the Fund or of any predecessor or successor, or any of them
as such. To the extent that any such liability exists, it is
hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this
Agreement.
C. The obligations set forth in this Agreement as
having been made by the Fund have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the
Fund, pursuant to the authority vested in them under the laws
of the State of Minnesota, the Articles of Incorporation and
the By-Laws of the Fund. This Agreement has been executed by
Officers of the Fund as officers, and not individually, and the
obligations contained herein are not binding upon any of the
Trustees, Officers, agents or holders of shares, personally,
but bind only the Fund.
D. Provisions of the Prospectus and any other
documents (including advertising material) specifically
mentioning the Custodian (other than merely by name and
address) shall be reviewed with the Custodian by the Fund prior
to publication and/or dissemination or distribution, and shall
be subject to the consent of the Custodian.
E. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M.L. 6118, Cincinnati, Ohio
45202, Attention Mutual Fund Custody Department, or at such
other place as the Custodian may from time to time designate in
writing.
F. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Fund shall be sufficiently given when delivered to the Fund or
on the second business day following the time such notice is
deposited in the U.S. mail postage prepaid and addressed to the
Fund at its office at 11545 W. Bernardo Court, Suite 100, San
Diego, California 92127, or at such other place as the Fund may
from time to time designate in writing.
G. This Agreement, with the exception of the
appendices, may not be amended or modified in any manner except
by a written agreement executed by both parties with the same
formality as this Agreement, and authorized and approved by a
resolution of the Board of Trustees of the Fund.
H. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund or by the Custodian, and no attempted
assignment by the Fund or the Custodian shall be effective
without the written consent of the other party hereto.
I. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
J. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers,
thereunto duly authorized as of the day and year first above
written.
ATTEST: Centurion T.A.A. Fund
______________________________ By: ________________
Title: ________________
ATTEST: Star Bank, N.A.
______________________________ By: ________________
Title: ________________
APPENDIX A
Authorized Persons
Specimen Signatures
Chairman: Jack K. Heilbron
____________________
President: Kenneth W. Elsberry
____________________
Secretary: Mary R. Limoges
____________________
Treasurer: Kenneth W. Elsberry
____________________
Controller: Dawn McDaniel
____________________
Adviser Employees: Hilary Johnson
____________________
Chris Van Stelle
____________________
_____________________
Transfer Agent/Fund Accountant
Employees:
Cleshelle Quijencio
____________________
Mike Mayhew
____________________
_____________________
_____________________
APPENDIX B
The following agents are employed currently by Star Bank, N.A.
for securities processing and control ...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC
eligible Securities)
APPENDIX C
Standards of Service Guide
Standards of Service Guide
STAR BANK, N.A.
MAIL LOCATION #6118
425 WALNUT STREET
CINCINNATI, OH 45202
March, 1996
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior
quality service to all customers and their agents at all times.
We have compiled this guide as a tool for our clients to
determine our standards for the processing of security
settlements, payment collection, and capital change
transactions. Deadlines recited in this guide represent the
times required for Star Bank to guarantee processing. Failure
to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort
to compete all processing on a timely basis.
Star Bank is a direct participant of the Depository Trust
Company, a direct member of the Federal Reserve Bank of
Cleveland, and utilizes the Bankers Trust Company as its agent
for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's
Reorg Source, Financial Information, Inc., XCITEK, DTC
Important Notices, and the Wall Street Journal.
For bond calls and mandatory puts, Star Bank utilizes
SEI's Bond Source, Kenny Information Systems, Standard & Poor's
Corporation, and DTC Important Notices. Star Bank will not
notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents
must be received three (3) business days prior to any payment
or settlement in order for the Star Bank standards of service
to apply.
Should you have any questions regarding the information
contained in this guide, please feel free to contact your
account representative.
The information contained in this Standards of Service Guide is
subject to change. Should any changes be made, Star Bank will
provide you with an updated copy of its Standards of Service
Guide.
</TABLE>
<TABLE>
Star Bank Security Settlement Standards
<CAPTION>
Transaction Type Instruction Deadlines*<F1> Delivery Instructions
<S> <C> <C>
DTC 1:30 P.M. on Settlement Date DTC
Participant #2219
Agent Bank
ID 27895
Institutional
#______________
For Account
#_________________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve
Bank of Cinti/Trust
for Star Bank, N.A.
ABA #042000013
For Account
#_________________
Federal Reserve 1:00 P.M. on Settlement Date Federal Reserve Bank of
Book Entry (Repurchase Cinti/Trust
Agreement Collateral Only) for Star Bank, N.A.
ABA #042000013
For Account
# ________________
PTC Securities 12:00 P.M. on Settlement Date PTC for Account BTRST/CUST
(GNMA Book Entry) Sub Account:
Star Bank, N.A. #090334
Physical Securities 9:30 A.M. EST on Settlement Date Bankers Trust Company
(for Deliveries, by 4:00 P.M. on 16 Wall Street 4th Floor
Settlement Date minus 1) Window 43 for
Star Bank Account
#090334
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Euroclear Via
minus 2 Cedel Bridge
in favor of
Bankers Trust Comp
Cedel 53355
For Star Bank
Account #501526354
Cash Wire Transfer 3:00 P.M. Star Bank,
N.A. Cinti/Trust
ABA #042000013
Credit Account #9901877
Further Credit
to ______________
Account # ____________
<FN>
<F1> * All times listed are Eastern Standard Time.
</FN>
</TABLE>
<TABLE>
Star Bank Payment Standards
<CAPTION>
Security Type Income Principal
<S> <C> <C>
Equities Payable Date
Municipal Bonds * Payable Date Payable Date
Corporate Bonds * Payable Date Payable Date
Federal Reserve Bank Book Entry * Payable Date Payable Date
PTC GNMAs (P&I) Payable Date + 1 Payable Date + 1
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates * Payable Date Payable Date
Certificates of Deposit * Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
<FN>
<F1>*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend
or bank holiday, payment will be made
on the immediately following business
day.
</FN>
</TABLE>
<TABLE>
Star Bank Corporate Reorganization Standards
<CAPTION>
Deadline for
Type of<F1> Notification Client Instructions Transaction
Action to Client to Star Bank Posting
<S> <C> <C>
Rights, Warrants and Later of 10 business days 5 business days prior Upon receipt
Optional Mergers prior to expiration or to expiration
receipt of notice
Mandatory Puts with Later of 10 business days 5 business days prior Upon receipt
Option to Retain prior to expiration or to expiration
receipt of notice
Class Actions 10 business days prior to 5 business days prior Upon receipt
expiration date to expiration
Voluntary Tenders, Later of 10 business days 5 business days prior Upon receipt
Exchanges and prior to expiration or to expiration
Conversions receipt of notice
Mandatory Puts, At posting of funds or None Upon receipt
Defaults, Liquidations, securities received
Bankruptcies, Stock
Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days None Upon receipt
prior to expiration or
receipt of notice
<FN>
<F1> NOTE: Fractional shares/par amounts resulting from any of the above will be sold.
</FN>
</TABLE>
APPENDIX D
Schedule of Compensation
Star Bank, N.A.
Third Party Access Compensation Schedule
for the Centurion T.A.A. Fund, Inc.
Third Party access is available within two (2) weeks and
requires dial-up software which will allow your organization to
access its Star Bank account from any location.
Requirements and Expenses
There will be a one time expense for the purchase
of software from SEI which includes internal
password control and ability to dial a local IBM
Information Systems number. (Generally anywhere in
the continental U.S.A.) $250.00
Ongoing Expenses
Telephone Connect time $.37/minute
Star Bank, N.A.
Proposed Custody Fee Schedule for the Centurion T.A.A. Fund, Inc.
Star Bank, N.A., as Custodian, will receive monthly compensation
for services according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction through DTC or
Federal Reserve $9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $8.00
(f) For each option/future contract written, exercised
or expired $45.00
(4/29/96 - Agreed one time charge only for each
transaction)
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free
delivery (excludes initial conversion), maturity, tender or exchange:
II. Market Value Fee
Based upon an annual rate of: Million
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee-Per Fund $400.00
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will
be shipping fees or transfer fees.
V. IRA Documents
Per Shareholder/year to hold each IRA Document $ 8.00
VI.Earnings Credits
Star Bank, on a monthly basis, will provide Earnings Credits
from uninvested balances which will be applied against Cash
Management Services Fees. If there are earnings credits in
excess of what is used to offset cash management fees, then the
bank will agree to reduce up to 35% of the monthly Custody Fees
assuming sufficient Earnings Credits are available. Earnings
Credits are based upon the average yield on the 91 Day U.S.
Treasury Bill for the preceding thirteen weeks less the 10%
reserve.
Revised April 29, 1996
<TABLE>
Star Bank, N.A.
Proposed Custody Fee Schedule for the Centurion T.A.A. Fund, Inc.
Revised 10/31/95
<CAPTION>
Services Unit Cost Monthly Cost
($) ($)
<S> <C> <C>
D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .095
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture * .10
Drafts Cleared .179
Lockbox Maintenance ** 55.00
Lockbox Items Processed
with copy of check .32
without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
Wires Incoming
Domestic 10.00
International 10.00
Wires Outgoing
Domestic
Repetitive 12.00
Non-Repetitive 13.00
International
Repetitive 35.00
Non-Repetitive 40.00
PC - Initiated Wires:
Domestic
Repetitive 9.00
Non-Repetitive 9.00
International
Repetitive 25.00
Non-Repetitive 25.00
<FN>
<F1>* Price can vary depending upon what information needs to be
captured
<F2>** With the use of lockbox, the collected balance in the demand
deposit account will be significantly increased and therefore
earnings to offset cash payment service fees will be maximized.
<F3>*** Fees for uncollected balances are figures on the monthly
average of all combined accounts.
*** Uncollected Charge
Star Bank Prime Rate as of first of month plus 4%
<F4>**** Other available cash management services are priced separately.
</FN>
</TABLE>
FORM OF ADMINSITRATION AGREEMENT OF
CENTURION T.A.A. FUND, INC.
EXHIBIT 9(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT, dated as of the 1st day of January 1995, is made by and
between Centurion T.A.A. Fund, Inc. (the "Fund"), a corporation operating as
an open-end investment company, duly organized and existing under the laws
of the State of Minnesota, and Centurion Group, Inc. ("Centurion"), a
corporation duly organized and existing under the laws of the State of
California:
W I T N E S S E T H T H A T:
WHEREAS, Centurion has agreed to act as Transfer Agent of the Fund, as its
Dividend Disbursing Agent, and as Administrator of the Plans of the Fund, and
Centurion also has agreed to act for the Fund in other respects as
hereinafter stated. NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties hereto, intending to be
legally bound, do hereby agree as follows:
Section 1. The Fund hereby appoints Centurion as its Transfer,
Redemption and Dividend Disbursing Agent and as Administrator of its Plans,
and Centurion accepts such appointments and agrees to act in such capacities
upon the terms set forth in this Agreement.
TRANSFER AGENCY
Section 2. The Fund shall furnish to Centurion as Transfer Agent a
sufficient supply of blank Share Certificates and from time to time will
renew such supply upon the request of Centurion. Such blank Share
Certificates shall be signed manually or by facsimile signatures of officers
of the Fund authorized by law or the bylaws of the Fund to sign Share
Certificates and, if required, shall bear the corporate seal or a facsimile
thereof.
Section 3. Centurion as Transfer Agent, shall make original issues of
Shares in accordance with Sections 13 and 14 below and with the Fund's
Prospectus upon the written request of the Fund and upon being furnished with
(i) a certified copy of a resolution or resolutions of the Board of Directors
of the Fund authorizing such issue; (ii) an opinion of counsel as to the
validity of such additional Shares; and (iii) necessary funds for the payment
of any original issue tax applicable to such additional Shares.
Section 4. Transfers of Shares shall be registered and new Share
Certificates shall be issued by Centurion upon surrender of outstanding Share
Certificates (i) in form deemed by Centurion to be properly endorsed for
transfer, (ii) with all necessary endorsers' signatures guaranteed by a
member firm of a national securities exchange or a commercial bank,
accompanied by (iii) such assurances as Centurion shall deem necessary or
appropriate to evidence the genuineness and effectiveness of each necessary
endorsement, and (iv) satisfactory evidence of compliance with all applicable
laws relating to the payment or collection of taxes.
Section 5. When mail is used for delivery of Share Certificates, Centurion
shall forward Share Certificates in "non-negotiable" form by first-class
mail, and Share Certificates in "negotiable" form by registered mail, all
mail deliveries to be covered while in transit to the addressee by insurance
arranged for by Centurion.
Section 6. In registering transfers, Centurion as Transfer Agent may
rely upon the Uniform Commercial Code or any other statutes which in the
opinion of counsel protect Centurion and the Fund in not requiring complete
documentation, in registering transfers without inquiry into adverse claims,
in delaying registration for purposes of such inquiry, or in refusing
registration where in its judgment an adverse claim requires such refusal.
Section 7. Centurion as Transfer Agent may issue new Share Certificates in
place of Share Certificates represented to have been lost, destroyed or
stolen, upon receiving indemnity satisfactory to Centurion, and may issue new
Share Certificates in exchange for, and upon surrender of mutilated Share
Certificates.
Section 8. In case any officer of the Fund who shall have signed
manually or whose facsimile signature shall have been affixed to blank Share
Certificates shall die, resign or be removed prior to the issuance of such
Share Certificates, Centurion as Transfer Agent may issue or register such
Share Certificates as the Share Certificates of the Fund notwithstanding such
death, resignation or removal; and the Fund shall file promptly with
Centurion such approval, adoption or ratification as may be required by
law.
Section 9. Centurion will maintain stock registry records in the usual
form in which it will note the issuance, transfer and redemption of Shares
and the issuance and transfer of Share Certificates, and is also authorized
to maintain an account entitled "Unissued Certificate Account" in which it
will record the Shares and fractions issued and outstanding from time to
time for which issuance of Share Certificates is deferred. The Fund is
responsible to provide Centurion reports of Fund Share purchases, redemptions
and total Shares outstanding on the next business day after each net asset
valuation. Centurion is authorized to keep records, which will be part of
the stock transfer records, as well as its records of the Plans, in which it
will note the names and registered addresses of Shareholders and Planholders,
and the number of Shares and fractions from time to time owned by them for
which no Share Certificates are outstanding. Each Shareholder or Planholder
will be assigned a single account number even though Shares held under each
Plan and Shares for which Certificates have been issued will be accounted
for separately. Whenever a Shareholder deposits Shares represented by Share
Certificates in a Plan permitting the deposit of Shares thereunder,
Centurion, as Transfer Agent, upon receipt of the Share Certificates
registered in the name of the Shareholder (or if not so registered, in proper
form for transfer), shall cancel such Share Certificates, debit the
Shareholder's individual stock account and credit the Shares to the Unissued
Share Certificate Account. Centurion, as Plan Administrator, shall credit
the Shares so deposited to the proper Plan Account.
Section 10. Centurion will issue Share Certificates for Shares of the
Fund, only upon receipt of a written request from a Shareholder. In all
other cases, the Fund authorizes Centurion to dispense with the issuance and
countersignature of Share Certificates whenever Shares are purchased. In
such case Centurion, as Transfer Agent, shall merely note on its stock
registry records the issuance of the Shares and fractions (if any), shall
credit the Unissued Certificate Account with the Shares and fractions issued
and shall credit the proper number of Shares and fractions to the respective
Shareholders.
Likewise, whenever Centurion has occasion to surrender for redemption Shares
and fractions owned by Shareholders, it shall be unnecessary to issue Share
Certificates for redemption purposes. The Fund authorizes Centurion in such
cases to process the transactions by appropriate entries in its stock
transfer records, and debiting of the Unissued Certificate Account and the
record of issued Shares outstanding.
Section 11. Centurion in its capacity as Transfer Agent will, in
addition to the duties and functions above-mentioned, perform the usual
duties and functions of a stock transfer agent for a corporation. It will
countersign for issuance or reissuance Share Certificates representing
original issue or reissued treasury Shares as directed by the Written
Instructions of the Fund, and will transfer Share Certificates registered in
the name of Shareholders from one Shareholder to another in the usual manner.
Centurion may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, Share Certificate or
other instrument or paper believed by it in good faith to be genuine and
unaltered, and to have been signed, countersigned, or executed by duly
authorized person or persons, or upon the instructions of any officer of the
Fund, or upon the advice of counsel for the Fund. Centurion may record any
transfer of Share Certificates which is believed by it in good faith to have
been duly authorized or may refuse to record any transfer of Share
Certificates if in good faith Centurion in its capacity as Transfer Agent
deems such refusal necessary in order to avoid any liability either to the
Fund or to Centurion. The Fund agrees to indemnify and hold harmless
Centurion from and against any and all losses, costs, claims, and liability
which it may suffer or incur by reason of so relying or acting or refusing to
act.
Section 12. In case of any request or demand for the inspection of the
share records of the Fund, Centurion as Transfer Agent, shall endeavor to
notify the Fund and to secure instructions as to permitting or refusing such
inspection. However, Centurion may exhibit such records to any person in any
case where it is advised by its counsel that it may be held liable for
failure to do so.
ISSUANCE OF SHARES
Section 13. Prior to the daily determination of net asset value in
accordance with the Fund's Prospectus, Centurion shall process all purchase
orders received since the last determination of the Fund's net asset value.
Centurion shall calculate daily the amount available for investment in
Shares at the net asset value determined by the Fund as of the close of
trading on the New York Stock Exchange, the number of Shares and fractional
Shares to be purchased and the net asset value to be deposited with the
Custodian. Centurion as agent for the Shareholders and Planholders, shall
place a purchase order daily with the Fund for the proper number of Shares
and fractional Shares to be purchased and confirm such number to the Fund in
writing.
Section 14. Centurion having made the calculations provided for in Section
13, shall thereupon pay over the net asset value of Shares purchased to the
Custodian. The net asset value shall then be deposited in the account
maintained under the Custodian Agreement. The proper number of Shares and
fractional Shares shall then be issued daily and credited by Centurion to
the Unissued Certificate Account. The Shares and fractional Shares purchased
for each Shareholder and Planholder will be credited by Centurion to his
separate account. Centurion shall mail to each Shareholder and Planholder a
confirmation of each purchase, with copies to the Fund if requested. Such
confirmations will show the prior Share balance, the new Share balance, the
Shares held under a Plan (if any), the Shares for which Stock Certificates
are outstanding (if any), the amount invested and the price paid for the
newly purchased Shares.
REDEMPTIONS
Section 15. Centurion shall, prior to the daily determination of net
asset value in accordance with the Fund's Prospectus, process all requests
from Shareholders to redeem Shares and determine the number of Shares
required to be redeemed to make monthly payments, automatic payments or the
like. Thereupon, Centurion shall advise the Fund of the total number of
Shares available for redemption and the number of Shares and fractional
Shares requested to be redeemed. The Fund shall then quote to Centurion the
applicable net asset value, whereupon Centurion shall furnish the Fund
with an appropriate confirmation of the redemption and process the redemption
by filing with the Custodian an appropriate statement and making the proper
distribution and application of the redemption proceeds in accordance with
the Fund's Prospectus. The stock registry books recording outstanding
Shares, the Unissued Certificate Account and the individual account of the
Shareholder or Planholder shall be properly debited.
Section 16. The proceeds of redemption shall be remitted by Centurion
in accordance with the Fund's Prospectus by check mailed to the Shareholder
or Planholder at his registered address. If Share Certificates have been
issued for Shares being redeemed, then such Share Certificates and a stock
power with a signature guarantee of a commercial bank, or a member firm of a
national securities exchange shall accompany the redemption request. If
Share Certificates have not been issued to the redeeming Shareholder, the
signature of the Shareholder on the redemption request must be similarly
guaranteed. The Fund may authorize Centurion to waive the signature
guarantee in certain cases by Written Instructions.
For the purposes of redemption of Shares which have been purchased
within 15 days of a redemption request, the Fund shall provide Centurion, from
time to time, with Written Instructions concerning the time within which such
requests may be honored.
DIVIDENDS
Section 17. Upon the declaration of each dividend and each capital gains
distribution by the Board of Directors of the Fund, the Fund shall notify
Centurion of the date of such declaration, the amount payable per share, the
record date for determining the Shareholders entitled to payment, the payment
and the reinvestment date price.
Section 18. On or before each payment date the Fund will transfer, or
cause the Custodian to transfer, to Centurion in its capacity as Dividend
Disbursing Agent, the total amount of the dividend or distribution currently
payable. Centurion will, on the designated payment date, automatically
reinvest all dividends in additional Shares except in cases where
Shareholders have elected to receive Shares in cash, in which case
Centurion will mail distribution checks to the Shareholders for the proper
amounts payable to them.
GENERAL PROVISIONS
Section 19. Centurion shall maintain records (which may be part of the
stock transfer records) in connection with the issuance and redemption of
Shares, the disbursement of dividends and the administration of the Plans
and dividend reinvestments, in which will be noted the transactions effected
for each Shareholder and Planholder and the number of Shares and fractional
Shares owned by each for which no Share Certificates are outstanding.
Centurion agrees to make available upon request and to preserve for the
periods prescribed in Rule 31a-2 of the Investment Company Act of
1940, as amended, (the "Act") any records relating to services provided
under this Agreement which are required to be maintained by Rule 31a-1 of the
Act.
Section 20. In addition to the services as Transfer Agent, Dividend
Disbursing Agent and Administrator as above set forth, Centurion will
perform other services for the Fund as agreed from time to time, including
but not limited to, preparation of and mailing Federal Tax Information Forms,
mailing semi-annual reports of the Fund, preparation of one annual list of
Shareholders, and mailing notices of Shareholders' meetings, proxies and
proxy statements.
Section 21. Nothing contained in this Agreement is intended to or
shall require Centurion in any capacity hereunder, to perform any functions
or duties on any holiday, day of special observance or any other day on which
Centurion or the New York Stock Exchange is closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and
as of, the next business day on which both the New York Stock Exchange and
Centurion are open. Centurion shall not be required to perform its duties
hereunder on any local or regional holiday observed by the Fund as set forth
in the Fund's Prospectus as amended from time to time.
Section 22. The Fund agrees to pay Centurion compensation for its
services and to reimburse it for expenses, as set forth in Schedule A attached
hereto.
Section 23. Centurion in acting for Planholders, or in any other
capacity set forth in this Agreement, shall not be personally liable for any
taxes, assessments, or governmental charges which may be levied or assessed
on any basis whatsoever in connection with the administration of the Plans,
excepting only for taxes assessed against it in its corporate capacity
arising out of its compensation hereunder.
Section 24. The fund shall indemnify Centurion and save it harmless
from and against any and all actions, suits and claims, whether groundless
or otherwise, arising directly or indirectly out of or in connection with
its performance under this Agreement as Transfer Agent, Dividend Disbursing
Agent and Administrator of Plans and from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liabilities
incurred by Centurion in connection with any such action, suit, or claim,
except as shall arise due to the negligence or willful misconduct of
Centurion.
Without limitation of the foregoing:
(a) Centurion may rely upon the advice of the Fund, or of counsel
who may be counsel for the Fund, and upon statements of accountants, brokers
and other persons believed by it in good faith to be expert in the matters upon
which they are consulted and for any actions taken in good faith upon such
statements, Centurion shall not be liable to anyone.
(b) Centurion shall not be liable for any action taken in good faith
reliance upon any Written Instruction or certified copy of any resolution of
the Board of Directors of the Fund, and Centurion may rely upon the
genuineness of any such document or copy thereof believed in good faith by
the Custodian to have been validly executed.
(c) Centurion may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper or document believed by it to be genuine and to have been signed or
presented by the purchaser, Fund or other proper party or parties.
Section 25. Centurion is authorized, upon receipt of Written
Instructions from the Fund, to make payment upon redemption of Shares
without a signature guarantee. The Fund hereby agrees to indemnify and hold
Centurion, its successors and assigns, harmless of and from any and all
expenses, damages, claims, suits, liabilities, actions, demands, or losses
whatsoever arising out of or in connection with a payment by Centurion upon
redemption of Shares without a signature guarantee and upon the request
of Centurion the Fund shall assume the entire defense of any action, suit or
claim subject to the foregoing indemnity. Centurion shall notify the Fund
of any such action, suit or claim within 30 days after receipt by Centurion
of notice thereof.
Section 26. The Fund shall promptly cause to be turned over to
Centurion (i) an accurate list of Shareholders of the Fund showing the proper
registered address and number of Shares owned and whether such Shares are
represented by outstanding Share Certificates or by non-certificated share
accounts, (ii) all records relating to Plans, including original applications
signed by the Planholders and original plan accounts recording payments,
deductions, reinvestments, withdrawals and liquidations, and (iii) all
shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Centurion under this Agreement
(hereinafter called "Materials"); and hereby agrees to indemnify and hold
Centurion, its successors and assigns, harmless of and from any and all
expenses, damages, claims, suits, liabilities, actions, demands and losses
whatsoever arising out of or in connection with any error, omission, inaccuracy
or other deficiency of such Materials, or out of the failure of the Fund to
provide any portion of such or to provide any information needed by Centurion
to knowledgeably perform its functions.
Section 27. The following additional terms, for purposes of this
Agreement or any amendment or supplement thereto, shall have the meanings
herein specified unless the context otherwise requires:
Plan: The term Plan shall include such investment plan, dividends
or capital gains reinvestment plans, systematic withdrawal plans or other
types of plans set forth in the prospectus of the Fund, in form acceptable to
Centurion, which the Fund may from time to time adopt and make available to
its Shareholders, including plans or accounts by self-employed individuals
or partnerships.
Planholder: The term Planholder shall mean a Shareholder who, at
the time of reference, is participating in a Plan, and shall include any
underwriter, representative or broker-dealer.
Section 28. This Agreement may be amended from time to time by a
supplemental agreement executed by the Fund and Centurion.
Section 29. Either the Fund or Centurion may give 60 days' notice to
the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice.
Section 30. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall
be delivered in person or sent by first class mail, postage prepaid, to such
person and address specified in writing from time to time by the other party
hereto.
Section 31. The Fund represents and warrants to Centurion that the
execution and delivery of this Administration Agreement by the undersigned
officers of the Fund has been duly and validly authorized by resolution of
the Board of Directors of the Fund.
Section 32. Centurion represents and warrants to the Fund that the
execution and delivery of this Administration Agreement by the undersigned
officers of Centurion has been duly and validly authorized by resolution of
the Board of Directors of Centurion.
Section 33. Centurion represents and warrants to the Fund that Centurion
is in good standing under the laws of the State of California and is duly
registered as a transfer agent with the Securities and Exchange Commission.
Section 34. The effective date of this Agreement shall be
January 1, 1995. Wherever referred to in this Agreement, the vote or approval
of the holders of a majority of the outstanding voting securities of the Fund
shall mean the vote of 67% or more of such securities if the holders of more
than 50% of such securities are present in person or by proxy or the vote of
more than 50% of such securities, whichever is the lesser.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect from year to year but only so long as such continuance is
specifically approved at least annually by the Board of Directors of the
Fund, including the specific approval of a majority of the directors who are
not interested persons of Centurion as defined by the provisions of the Act
cast in person at a meeting called for the purpose of voting on such
approval, or by the vote of the holders of a majority of the outstanding
voting securities of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Fund or by the vote of
the holders of a majority of the outstanding voting securities of the Fund, or
by Centurion, upon sixty (60) days' written notice to the other party. Upon
the effective termination date, subject to payment to Centurion by the Fund
of all amounts due to Centurion as of said date, Centurion shall make
available to the Fund or its designated record keeping successor all of the
records of the Fund maintained under this Agreement then in Centurion's
possession.
This Agreement shall automatically terminate in the event of its
assignment (as defined by the provisions of the Act).
Section 35. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 36. This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
written consent of Centurion or by Centurion without the written consent of
the Fund, authorized or approved by a resolution of its Board of Directors.
Section 37. This Agreement shall be governed by the laws of the State
of Minnesota.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and attested, as of the day and
year first above written.
CENTURION T.A.A. FUND, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
<PAGE>
SCHEDULE A
Attached to and part of Administration Agreement
Dated January 1, 1995, between
Centurion T.A.A. Fund, Inc.
and Centurion Group, Inc.
SERVICE FEE
Account Maintenance $ .75 per account per month
Dealer Confirmations $ 7.50 per confirmation
Wire Transfers $ 10.00 per transfer
Customer Statements $ 50.00 per 1,000 statements
In addition, all out of pocket expenses shall be separately charged, i.e.,
postage, stationery, telephone service, and any other expense involved in
the handling of correspondence.
FORM OF ACCOUNTING SERVICES AGREEMENT OF
CENTURION T.A.A FUND, INC.
EXHIBIT 9(b)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT, dated as of the 1st day of January 1995, made by and
between Centurion T.A.A. Fund, Inc. (the "Fund"), a corporation operating as
an open-end investment company, duly organized and existing under the laws of
the State of Minnesota, and Centurion Group, Inc. ("Centurion"), a corporation
duly organized and existing under the laws of the State of California:
W I T N E S S E T H T H A T:
WHEREAS, the Fund desires to appoint Centurion as its Accounting Services
Agent to maintain and keep current books, accounts, records, journals or
other records of original entry relating to the business of the Fund as set
forth in Section 2 of this Agreement (the "Accounts and Records") and to
perform certain daily functions in connection with such Accounts and Records;
and WHEREAS, Centurion is willing to perform such functions upon the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, do
hereby agree as follows:
Section 1. The Fund shall promptly turn over to Centurion such of
the Accounts and Records previously maintained by or for it as are
necessary for Centurion to perform its functions under this Agreement. The
Fund authorizes Centurion to rely on such Accounts and Records turned over
to it and hereby indemnifies and holds Centurion, its successors and assigns,
harmless of and from any and all expenses, damages, claims, suits,
liabilities, actions, demands and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of such
Accounts and Records or in the failure of the Fund to provide any portion of
such or to provide any information needed by Centurion to knowledgeably
perform its functions.
Section 2. Upon the receipt of necessary information from the Fund or the
Fund's Agents by Written or Oral Instructions, Centurion shall maintain and
keep current the following Accounts and Records relating to the business of
the Fund and necessary or advisable for compliance with applicable
regulations, including Rules 31(a)-1 and 31(a)-2 of the Investment Company
Act of 1940, as amended, (the "Act") in such form as may be mutually agreed
to between the Fund and Centurion:
(a) Cash Receipts;
(b) Cash Disbursements;
(c) Dividend Record;
(d) Purchases and Sales - Portfolio Securities;
(e) Subscription and Redemption Journals;
(f) Security Ledgers;
(g) Broker Ledger;
(h) General Ledger;
(i) Daily Expense Accruals;
(j) Daily Interest Accruals;
(k) Securities and Monies borrowed or loaned and collateral therefor;
and
(l) Daily Trial Balances.
Unless necessary information to perform the above functions is furnished by
Written or Oral Instructions to Centurion prior to the next close of the New
York Stock Exchange and calculation of the Fund's net asset value, as provided
below, Centurion shall incur no liability, and the Fund shall indemnify and
hold harmless Centurion from and against any liability arising from any
failure to provide complete information or from any discrepancy between the
information received by Centurion and used in such calculations and any
subsequent information received from the Fund, or any designated agent of
the Fund.
It shall be the responsibility of the Fund to furnish or cause to be
furnished to Centurion, the declaration, record, payment dates and amounts of
any dividends or income and any other special actions required on or
concerning each of its portfolio securities.
Section 3. Centurion shall perform the ministerial calculations
necessary to calculate the Fund's net asset value daily, in accordance with
the Fund's current prospectus and utilizing the information described in
this Section. Portfolio items for which market quotations are available by
Centurion's use of a securities pricing service satisfactory to the Fund
shall be based on such pricing service's prices, except where the
Fund has given or caused to be given specific Written or Oral Instructions
to utilize a different value. All other portfolio items shall be given
such values as the Fund provides, including all foreign securities,
restricted securities and other securities requiring valuations not readily
ascertainable solely by mechanical procedures. Centurion shall have no
responsibility or liability for the accuracy of prices quoted by any Fund-
approved pricing service; for the accuracy of the information supplied by the
Fund; or for any loss, liability, damage or cost arising out of any
inaccuracy of such data. In addition, Centurion shall have no responsibility
or duty to include information or valuations to be provided by the Fund in
any computation unless and until it is timely supplied to Centurion in usable
form.
Section 4. For all purposes under this Agreement, Centurion is
authorized to act upon receipt of the first of any Written or Oral
Instruction it receives. In cases where the first Instruction is an Oral
Instruction that is not in the form of a document or written record, the
Fund shall be responsible for delivering, or having delivered, a confirmatory
Written Instruction or Oral Instruction in the form of a document or written
record, and in cases where Centurion receives an Instruction, whether
Written or Oral, to enter a portfolio transaction on the records, the Fund
shall cause the broker or dealer executing such transaction to send written
confirmation to Centurion. Centurion shall be entitled to rely on the first
Instruction received, and for any act or omission undertaken in compliance
therewith shall be free of liability and fully indemnified and held harmless
by the Fund. The sole obligation of Centurion with respect to any follow-up
or confirmatory Written Instruction or Oral Instruction in documentary or
written form shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to promptly
report such discrepancy to the Fund. The Fund shall be responsible, at the
Fund's expense, for taking any action, including any reprocessing, necessary
to correct any discrepancy or error, and to the extent such action requires
Centurion to act the Fund shall give Centurion specific Written Instruction as
to the action required.
Section 5. At the end of each month, the Fund shall cause the Fund's
custodian to forward to Centurion a monthly statement of cash and portfolio
transactions, which will be reconciled with Centurion's Accounts and Records
maintained for the Fund. Centurion will report any discrepancies to the
Fund's custodian, and report any unreconciled items to the Fund.
Section 6. Centurion shall supply daily and periodic reports to the
Fund as required by law, rule or regulation for the Fund to maintain and as
requested by the Fund and agreed upon by Centurion.
Section 7. The Fund shall require each of its agents (including
without limitation its transfer agent and its custodian) to provide
Centurion as of the close of each business day, or on such other schedule
as the Fund determines is necessary, with Written or Oral Instructions (to
be delivered to Centurion by 10:00 a.m., Pacific Standard Time, on the
next following business day) containing all data and information necessary
for Centurion to maintain the Fund's Accounts and Records and Centurion may
conclusively assume that the information it receives by Written Instructions
or Oral Instructions is complete and accurate. The Fund is responsible to
provide Centurion with reports of Share purchases, redemptions, and total
Shares outstanding on the next business day after each net asset valuation.
Section 8. The Accounts and Records, in the agreed upon format,
maintained by Centurion shall be the property of the Fund, and shall be made
available to the Fund, within a reasonable period of time, upon proper
demand. Centurion shall assist the Fund's independent auditors, or upon
approval of the Fund, or upon demand, any regulatory body, in any requested
review of the Fund's Accounts and Records but shall be reimbursed for all
expenses and employee time invested in any such review outside of routine
and normal periodic reviews. Upon receipt from the Fund of the necessary
information, Centurion shall supply the necessary data for the Fund or
accountant's completion of any necessary tax returns, questionnaires,
periodic reports to shareholders and such other reports and information
requests as the Fund and Centurion shall agree upon from time to time.
Section 9. Centurion and the Fund may from time to time adopt such
procedures as they agree upon, and Centurion may conclusively assume that
any procedure approved by the Fund or directed by the Fund, does not
conflict with or violate any requirements of its Prospectus, Articles of
Incorporation, Bylaws, or any rule or regulation of any regulatory body or
governmental agency. The Fund shall be responsible for notifying
Centurion of any changes in regulations or rules which might necessitate
changes in Centurion's procedures, and for working out with Centurion such
changes.
Section 10. Centurion, in performing under the terms and conditions of
this Agreement, shall incur no liability for its status hereunder or for
any actions taken or omitted in good faith and without negligence and the
Fund does hereby agree to indemnify and hold Centurion harmless from any
and all loss, liability and expense, including any legal expenses, arising
out of Centurion's performance, or status, or any act or omission of
Centurion, under this Agreement other than that incurred by Centurion's
negligence or lack of good faith. Without limitation of the foregoing:
(a) Centurion may rely upon the advice of the Fund, or of counsel,
who may be counsel for the Fund or counsel for Centurion and upon statements
of accountants, brokers and other persons believed by it in good faith to
be expert in the matters upon which they are consulted and for any actions
taken in good faith upon such statements, Centurion shall not be liable to
anyone.
(b) Centurion may act upon any Oral Instruction which it receives and
which it believes in good faith was transmitted by the person or persons
authorized by the Board of Directors of the Fund to give such Oral
Instruction. Centurion shall have no duty or obligation to make any inquiry
or effort of certification of such Oral Instruction, subject to Section 4
hereof.
(c) Centurion shall not be liable for any action taken in good faith
reliance upon any Written Instruction or certified copy of any resolution of
the Board of Directors of the Fund, and Centurion may rely upon the genuineness
of any such document or copy thereof believed in good faith by Centurion to
have been validly executed.
(d) Centurion may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate, opinion of
counsel, statement, instrument, report, notice, consent, order, or other paper
or documents believed by it to be genuine and to have been signed or presented
by the purchaser, Fund, or other proper party or parties.
Section 11. All financial data provided to, processed by, or reported
by Centurion under this Agreement shall be stated in United States dollars
or currency. Centurion shall have no obligation to convert to, equate, or
deal in foreign currencies or values, and expressly assumes no liability for
any currency conversion or equation computations relating to the affairs of
the Fund.
Section 12. The Fund agrees to pay Centurion compensation for its
services and to reimburse it for expenses, as set forth in Schedule A
attached hereto, or as shall be set forth in amendments to such schedule
approved by the Fund and Centurion.
Section 13. Nothing contained in this Agreement is intended to or shall
require Centurion, in any capacity hereunder, to perform any functions or
duties on any holiday, day of special observance or any other day on which
Centurion or the New York Stock Exchange is closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and
as of, the next succeeding business day on which both the new York Stock
Exchange and Centurion are open.
Section 14. This Agreement may be executed in two or more counterparts,
each of which, when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instruments.
Section 15. The following terms used in this Agreement, or in any
amendment or supplement hereto, shall have the meanings herein specified
unless the context otherwise requires.
Oral Instruction: The term Oral Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to Centurion in person or by telephone, telegram, telecopy, or
other mechanical or documentary means lacking original signature, by a person
or persons believed in good faith by Centurion to be a person or persons
authorized by a resolution of the Board of Directors of the Fund to give Oral
Instructions on behalf of the Fund.
Shares: The term Shares shall mean the shares of capital stock of the
Fund.
Written Instruction: The term Written Instruction shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to Centurion in original writing containing original signatures
believed in good faith by Centurion to be the signature of a person
authorized by a resolution of the Board of Directors of the Fund to give
Written Instructions on behalf of the Fund.
Section 16. The Fund shall from time to time file with Centurion a
certified copy of each resolution of its Board of Directors authorizing
execution of Written Instructions and specifying the number of signatories
required, together with certified signatures of authorized signatories. If
the certifying officer is authorized to sign Written Instructions,
the certification also shall be signed by a second officer of the Fund.
The Fund shall from time to time file with Centurion a certified copy
of each resolution of its Board of Directors authorizing the transmittal of
Oral Instructions and specifying the person or persons authorized to give
Oral Instructions in accordance with this Agreement. If the certifying
officer is authorized to give Oral Instructions, the certification also
shall be signed by a second officer of the Fund. Upon transmitting any
Oral Instruction, the Fund shall promptly forward to Centurion a Written
Instruction confirming the authorization, instruction or approval transmitted
by such Oral Instruction.
Any resolution so filed with Centurion shall be considered in full force
and effect and Centurion shall be fully protected in acting in reliance
thereon until it actually receives a new certified copy of a resolution
adding or deleting a person or persons with authority to give Oral or
Written Instructions.
Section 17. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall
be delivered in person or sent by first class mail, postage prepaid, to such
person and at such address specified in writing from time to time by the
other party hereto.
Section 18. This Agreement shall be governed by the laws of the State of
Minnesota.
Section 19. The effective date of this Agreement shall be
January 1, 1995.
Wherever referred to in this Agreement, the vote or approval of the holders
of a majority of the outstanding voting securities of the Fund shall mean
the vote of 67% or more of such securities if the holders of more than 50%
of such securities are present in person or by proxy or the vote of more
than 50% of such securities, whichever is the lesser.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect from year to year but only so long as such continuance is
specifically approved at least annually by the Board of Directors of the
Fund, including the specific approval of a majority of the directors who are
not interested persons of Centurion as defined by the provisions of the Act
cast in person at a meeting called for the purpose of voting on such
approval, or by the vote of the holders of a majority of the outstanding
voting securities of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Fund or by the vote of
the holders of a majority of the outstanding voting securities of the Fund,
or by Centurion, upon sixty (60) days' written notice to the other party.
Upon the effective termination date, subject to payment to Centurion by the
Fund of all amounts due to Centurion as of said date, Centurion shall make
available to the Fund or its designated record keeping successor all of the
records of the Fund maintained under this Agreement then in Centurion's
possession.
This Agreement shall automatically terminate in the event of its
assignment (as defined by the provisions of the Act).
Section 20. No material amendment to this Agreement shall be effective
until approved by Centurion and by vote of a majority of the Board of
Directors of the Fund who are not interested persons of Centurion.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the date and year first above
written.
CENTURION T.A.A. FUND, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
SCHEDULE A
Attached to and part of Accounting Services Agreement
Dated January 1, 1995, between
Centurion T.A.A. Fund, Inc.
and Centurion Group, Inc.
Monthly fee is equal on an annual basis to .15% of the average net
assets of the Fund. The annual minimum fee if $18,000.
FORM OF SHAREHOLDER SERVICES
AGENT AGREEMENT OF
CENTURION T.A.A. FUND, INC.
EXHIBIT 9(c)
CENTURION INSTITUTIONAL SERVICES, INC.
11545 West Bernardo Court, Suite 100
San Diego, California 92127
Servicing Agreement Relating to Shares of the Centurion Counsel
Mutual Funds
Dear Sir:
This Servicing Agreement (the "Agreement") between us,
Centurion Institutional Services, Inc. and you, the undersigned
authorized dealer, defines the services to be provided by you for which
YOU ARE to receive payment pursuant to Distribution Plans (hereinafter
severally referred to as the "Plan") adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Act") by certain mutual
funds for which we serve as distributor. Such funds are those listed on
Schedule A hereto which may be amended or supplemented from time to time
by US by mailing a revised Schedule A to you. Each such fund has acted
severally and not jointly in adopting the Plan and the Agreement and
hereinafter is referred to severally as the "Fund." The Plan and the
Agreement have been approved by a majority of the Directors or Trustees
of the Fund including a majority of the Directors or Trustees who are not
interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or any related agreements
(the "non-interested Directors"), cast in person at a meeting called for
the purpose of voting on the Plan. Such approval included a
determination that in the exercise of their reasonable business judgment
and in light of their fiduciary duties, there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders. The Plan has
also been approved by a vote of a majority of the Fund's outstanding
voting securities, as defined in the Act.
1. To the extent you provide distribution assistance and
administrative support services to YOUR Customers who may from time
to time, directly or beneficially, own shares, including but not limited
to, distributing prospectuses and sales literature, answering routine
Customer inquiries regarding the Fund, assisting YOUR Customers in
changing dividend options, account designations and addresses, and in
enrolling into the pre-authorized check plan, systematic withdrawal
plan or any of several tax-sheltered retirement plans offered in
connection with the purchase of shares in the case of those Funds
offering such Plans, assisting in the establishment transactions,
investing dividends and capital gains distributions automatically in
shares and providing such other services as the Fund or the Customer may
reasonably request, we shall pay you quarterly a fee of 0.0625% (0.25% on
an annual basis) of the net asset value attributable to the respective
Class of the Fund shares owned by shareholders whose shares are owned of
record by your firm as nominee for your Customers or which are owned by
those
EXHIBIT 9(c)
Customers of your firm whose records, as maintained by the Fund or its
agent, designate your firm as the Customer's dealer of record. We shall
make the determination of the net asset value of such Fund shares on or
about the 45th day of each fiscal quarter of each Fund. No such
quarterly fee will be paid to you with respect to shares purchased by
you and redeemed or repurchased by the Fund or by us as Agent within
seven (7) business days after the date of our confirmation of such
purchase. No such quarterly fee will be paid to you with respect to any
of your Customers if the amount of such fee based upon the value of such
Customer's shares of any Fund will be less than $5.00. Payment of such
quarterly fee shall be made within 45 days after the close of each fiscal
quarter for which such fee is payable.
2. This Agreement does not require any authorized dealer to hold
Fund shares in street name or to provide shareholder accounting
and record-keeping services for any Customers who are
beneficial owners of Fund shares.
3. You shall furnish us and the Fund with such information as
shall reasonably be requested by either the Directors or
Trustees of the Fund or by us with respect to the fees paid to
you pursuant to this Agreement.
4. We shall furnish to the Directors or Trustees of the Fund, for
their review on a quarterly basis, a written report of the
amounts expended under the Plan by us and the purpose for which
such expenditures were made.
5. Neither you nor any of your employees or agents are authorized
to make any representation concerning shares of the Fund except
those contained in the then-current Prospectus for the Fund,
and you shall have no authority to act as Agent for the Fund or
for us.
6. We may enter into other similar Servicing Agreements with any
other person without your consent.
7. This Agreement may be terminated with respect to any Fund at
any time without payment of any penalty by the vote of a
majority of the non-interested Directors or Trustees or by a
vote of a majority of the Fund's outstanding shares on sixty
(60) days written notice. It will be terminated by any act
which terminates either the Fund's Distribution Agreement with
us or the Dealer Agreement between your firm and us and shall
terminate automatically in the event of its assignment as that
term is defined in the Act.
8. The provisions of the Distribution Agreement between the Fund
and us, insofar as they relate to the Plan, are incorporated
herein by reference. This Agreement shall become effective
upon execution and delivery hereof and shall continue in full
force and effect so long as the continuance of the Plan and
this related Agreement are approved at least annually by a vote
of the Fund's Directors or Trustees, including a majority of
the non-interested Directors or Trustees, cast in person at a
meeting called for the purpose of voting thereon. All
communications to us should be sent to our address stated
above. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
9. As described in the Prospectus of each Fund which is organized
as a corporation, the Fund's Articles of Incorporation and
Bylaws provide that, no director, shareholder or officer of
said Fund shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of
any obligation or claim or otherwise in connection with the
affairs of the Fund, but only the assets and property of the
Fund in question shall be liable. In the case of each Fund
comprised of series, all obligations of such Fund under this
Agreement shall apply only on a series-by-series basis and the
assets of one series shall not be liable for the obligations of
any other series.
10. This Agreement shall be construed in accordance with the laws
of the State of California.
Dated: , 199 By:
Please sign both copies and return one to: Accepted:
Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127 By:
Title:
CENTURION INSTITUTIONAL SERVICES, INC.
11545 West Bernardo Court, Suite 100
San Diego, California 92127
SCHEDULE A
Dated May 11, 1995
Servicing Agreement Relating to Shares of
the Centurion Counsel Mutual Funds
Centurion T.A.A. Fund
Class A Shares, Class B Shares and Class C Shares Only
The Cash Equivalent Fund - Money Market Portfolio is not a party to the
Servicing Agreement.
FORM OF RULE 12b
PLAN OF DISTRIBUTION FOR
CLASS C SHARES
EXHIBIT 15.1
CENTURION T.A.A. FUND, INC.
CLASS C SHARE
PLAN OF DISTRIBUTION
This Plan of Distribution (this "Class C Plan"), as amended on
December 20, 1994 and redesignated as the Class C Plan of Distribution
on August ___, 1996, has been adopted and is continued pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act") by Centurion T.A.A. Fund, Inc., a Minnesota
corporation (the "Fund").
1. Compensation
The Fund is obligated to pay the principal underwriter of the
Fund's shares (the "Distributor") a total fee (the "Distribution Fee") in
connection with distribution related services provided in respect to the
Fund, calculated and payable quarterly, at an annual rate of up to 0.75%
average daily net assets of the Fund attributable to the Class C shares.
The actual amount of the Distribution Fee payable to the Distributor
shall be determined, within the foregoing limits, from time to time by
mutual agreement between the Fund and the Distributor. The Distributor
may enter into selling agreements with one or more other broker-dealers
(the "Selling Agents") under which such agents may receive compensation
for sales distribution support services from the Distributor, including
but not limited to, commissions or other payments to such agents based on
the average daily net assets of the Fund shares attributable to them.
Services provided by Selling Agents in exchange for commissions and other
payments to selling agents are the principal sales support services
provided to the Fund. The Distributor may retain any portion of the
Distribution Fee to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related
expenses.
2. Engagement and Compensation of Service Agents
The Fund may enter into servicing agreements with one or more
shareholder servicing agents (the "Service Agents"), including the
Distributor or its affiliates. Under such agreements, the Service Agents
shall provide shareholder liaison services including receiving and
responding to customer inquiries and providing such persons information
regarding their investments in the shares. In addition, such Service
Agents shall provide such other services as the Fund or the Fund's
shareholders may reasonably request. For their services, the Fund may
pay a Service Agent a fee (the "Service Agent Fee"), calculated and
payable quarterly, at an annual rate of up to 0.25% of the average daily
net assets of the Fund attributable to Class C shares owned by investors
with whom the Service Agent maintains a servicing relationship, or an
amount which equals the maximum amount payable to the Service Agent under
applicable laws, regulations or rules, whichever is less. The actual
amount of the Service Agent Fee paid shall be determined, within the
foregoing limits, from time to time by mutual agreement between the Fund
and the Service Agent.
3. Expenses Covered by the Plan
(a) The Distribution Fee may be used by the Distributor to
provide initial and ongoing sales compensation to its
registered representatives and agents and to other
broker-dealers in respect of sales of the Fund's shares
and to pay for advertising and/or promotional expenses in
connection with the distribution of the Fund's shares
("Distribution Expenses"). Distribution Expenses include,
by way of example but not by way of 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 Distributor related to
the distribution of the Fund's shares; and payments to and
expenses of, officers, employees or representatives of the
Distributor, 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.
(b) The Service Agent Fee may be used by a Service Agent to
provide compensation for ongoing servicing and/or
maintenance of shareholder accounts with the Fund.
Compensation may be paid by the Service Agent to persons,
including employees of the Service Agent, and institutions
who responded inquiries of shareholders of the Fund
regarding their ownership of shares or their accounts with
the Fund or provide other administrative accounting
services not otherwise required to be provided by the
Fund's investment advisor, transfer agent or other
agent of the Fund.
(c) Payments under this Class C Plan are not tied to or
limited by the actual expenses of the Distributor for
distribution-related activities or the actual expenses of
a Service Agent for its shareholder servicing-related
expenses. Thus, such payments may exceed expenses
actually incurred by the Distributor or Service Agent.
The Fund's Board of Directors will evaluate the
appropriateness of this Class C Plan and its payments of
terms on a continuing basis and in doing so will consider
all relevant factors, including expenses born by the
Distributor and Service Agent(s) and amounts they receive
under this Class C Plan.
(d) Should the Fund terminate or not continue this Class C
Plan of Distribution, the Fund shall not be obligated in
any way to pay any Distributor or Service Agent for any
expenses not previously reimbursed by the Fund. However,
nothing herein shall prevent the Fund, in the sole
discretion of the Fund's Board of Directors, from
reimbursing all or any portion of such unreimbursed
amounts.
(e) Nothing in this Class C Plan shall require the Distributor
or any Service Agent to pay any expenses of the Fund other
than as provided above. The Fund shall be responsible for
paying its other expenses, including, but not limited to,
expenses relating to the compensation of its Directors who
are not affiliated with its investment advisor or any of
its Affiliates; advisory and administration fees; payments
pursuant to this Class C Plan, including payments to
Service Agents; interest charges; taxes; fees and expenses
of its independent accountants, legal counsel, transfer
agent and dividend disbursing agents; expenses of
redeeming shares; expenses of preparing and printing
prospectuses (except the expense of printing and mailing
prospectuses used for promotional purposes, unless
otherwise payable pursuant to this Class C Plan);
shareholders reports, notices, proxy statements and
reports to regulatory agencies; insurance premiums and
certain expenses relating to insurance coverage; trade
association membership dues; brokerage and other expenses
in connection with the execution of portfolio transactions;
expenses of shareholders meetings; expenses relating to
the issuance, registration and qualification of shares of
the Fund; pricing services; organizational expenses; and
any extraordinary expenses.
4. Additional Payments by Advisor and the Distributor
The Fund's investment advisor and the Distributor may, at their
option and in their sole discretion, make payments from their own
resources to cover additional costs of additional distribution and/or
shareholder servicing activities.
5. Approval by Shareholders
This Class C Plan shall not take effect with respect to the Fund,
and no fee will be payable in accordance with Section 1 hereof, until
this Class C Plan has been approved by a vote of at least a majority of
the outstanding voting securities of the Fund. For the purposes of this
Class C Plan, the vote or approval of the holders of a majority of the
outstanding voting securities of the Fund shall mean the vote of 67% or
more of such securities if the holders of more than 50% of such
securities are present in person or by proxy or the vote of more than
50% of such securities, whichever is the lesser.
6. Approval by Directors
Neither this Class C Plan nor any related agreements will take
effect until approved by a majority vote of both (a) the full Board of
Directors of the Fund and (b) those Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest
in the operation of this Class C Plan or in any agreements related to it
(the "Independent Directors"), cast in person at a meeting called for the
purpose of voting on this Class C Plan and the related agreements.
7. Continuance of the Plan
This Class C Plan will continue in effect from year to year so
long as its continuance is specifically approved annually by vote of the
Fund's Board of Directors in the manner described in Section 6 above.
8. Termination
This Class C Plan may be terminated at any time, without
penalty, by vote of a majority of the Independent Directors in the manner
described in Section 6 hereof or by a vote of a majority of the
outstanding voting securities of the Fund in the manner described in
Section 5 hereof.
9. Amendments
This Class C Plan may not be amended to increase materially the
amount of the fees payable hereunder, as described in Section 1, unless
the amendment is approved by a vote of at least a majority of the
outstanding voting securities of the Fund in the manner described in
Section 5 hereof, and all material amendments to this Class C Plan must
also be approved by the Fund's Board of Directors in the manner
described in Section 6 hereof.
10. Selection of Certain Directors
While this Class C Plan is in effect, the selection and nomination
of the Fund's Directors who are not interested persons of the Fund will
be committed to the discretion of the Directors then in office who are
not interested persons of the Fund.
11. Written Reports
In each year during which this Class C Plan remains in effect, the
Distributor and any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Class C Plan or any related
agreement will prepare and furnish to the Fund's Board of Directors, and
the Board will review, at least quarterly, written reports, complying
with the requirements of the Rule, which set out the amounts expended
under this Class C Plan and the purposes for which those expenditures
were made.
12. Preservation of Materials
The Fund will preserve copies of this Class C Plan, any agreement
relating to this Class C Plan and any report made pursuant to Section 11
hereof, for a period of not less than six years (the first two years in
an easily accessible place) from the date of said Plan, agreement or
report.
13. Meaning of Certain Terms
As used in this Class C Plan, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have
the same meaning that those terms have under the 1940 Act and the rules
and regulations under the 1940 Act, subject to any exemption that may be
granted to the Fund under the 1940 Act by the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the undersigned, the Secretary of
Centurion T.A.A. Fund, Inc. (the "Fund") hereby certifies that the
foregoing is a true and correct copy of one Class C Plan an amended, as
last approved by the shareholders of the Fund in the manner described in
Section 5 of said Plan and Directors of the Fund in the manner described
in Section 6 of said Plan.
Mary R. Limoges
FORM OF RULE 12b
PLAN OF DISTRIBUTION FOR
CLASS A SHARES
EXHIBIT 15.2
CENTURION T.A.A. FUND, INC.
CLASS A SHARE
PLAN OF DISTRIBUTION
This Plan of Distribution (this "Class A Plan"), has been adopted
effective _________________, 1996 in accordance with the terms hereof
and pursuant to Rule 12b-1 (the "Rule") under the Investment Company
Act of 1940, as amended (the "1940 Act") by Centurion T.A.A. Fund,
Inc., a Minnesota corporation (the "Fund").
1. Engagement and Compensation of Service Agents
The Fund may enter into servicing agreements with one or more
shareholder servicing agents (the "Service Agents"), including the
Distributor or its affiliates. Under such agreements, the Service Agents
shall provide shareholder liaison services including receiving and
responding to customer inquiries and providing such persons information
regarding their investments in the shares. In addition, such Service
Agents shall provide such other services as the Fund or the Fund's
shareholders may reasonably request. For their services, the Fund may
pay a Service Agent a fee (the "Service Agent Fee"), calculated and
payable quarterly, at an annual rate of up to 0.25% of the average daily
net assets of the Fund attributable to Class A shares owned by investors
with whom the Service Agent maintains a servicing relationship, or an
amount which equals the maximum amount payable to the Service Agent
under applicable laws, regulations or rules, whichever is less. The
actual amount of the Service Agent Fee paid shall be determined, within
the foregoing limits, from time to time by mutual agreement between the
Fund and the Service Agent.
2. Expenses Covered by the Plan
(a) The Service Agent Fee may be used by a Service
Agent to provide compensation for ongoing servicing and/or
maintenance of shareholder accounts with the Fund.
Compensation may be paid by the Service Agent to persons,
including employees of the Service Agent, and institutions who
responded inquiries of shareholders of the Fund regarding their
ownership of shares or their accounts with the Fund or provide
other administrative accounting services not otherwise required
to be provided by the Fund's investment advisor, transfer agent
or other agent of the Fund.
(b) Payments under this Class A Plan are not tied to or limited by
the actual of a Service Agent for its shareholder servicing-
related expenses. Thus, such payments may exceed expenses
actually incurred by the Service Agent. The Fund's Board of
Directors will evaluate the appropriateness of this Class A
Plan and its payments of terms on a continuing basis and in
doing so will consider all relevant factors, including expenses
born by the Service Agent(s) and amounts they receive under
this Class A Plan.
EXHIBIT 15.2
(c) Should the Fund terminate or not continue this Class A Plan of
Distribution, the Fund shall not be obligated in any way to pay
any Service Agent for any expenses not previously reimbursed by
the Fund. However, nothing herein shall prevent the Fund, in
the sole discretion of the Fund's Board of Directors, from
reimbursing all or any portion of such unreimbursed amounts.
(d) Nothing in this Class A Plan shall require any Service Agent to
pay any expenses of the Fund other than as provided above. The
Fund shall be responsible for paying its other expenses,
including, but not limited to, expenses relating to the
compensation of its Directors who are not affiliated with its
investment advisor or any of its Affiliates; advisory and
administration fees; payments pursuant to this Class A Plan, to
Service Agents; interest charges; taxes; fees and expenses of
its independent accountants, legal counsel, transfer agent and
dividend disbursing agents; expenses of redeeming shares;
expenses of preparing and printing prospectuses (except the
expense of printing and mailing prospectuses used for
promotional purposes, unless otherwise payable pursuant to this
Class A Plan); shareholders reports, notices, proxy statements
and reports to regulatory agencies; insurance premiums and
certain expenses relating to insurance coverage; trade
association membership dues; brokerage and other expenses in
connection with the execution of portfolio transactions;
expenses of shareholders meetings; expenses relating to the
issuance, registration and qualification of shares of the Fund;
pricing services; organizational expenses; and any
extraordinary expenses.
3. Additional Payments by Advisor and the Distributor
The Fund's investment advisor and the Distributor may, at their
option and in their sole discretion, make payments from their own
resources to cover additional costs of additional activities relating to
Shareholder Services.
4. Approval by Shareholders
This Class A Plan shall not take effect with respect to the Fund,
and no fee will be payable in accordance with Section 1 hereof, until
this Class A Plan has been approved by a vote of at least a majority of
the outstanding voting securities of the Fund. For the purposes of this
Class A Plan, the vote or approval of the holders of a majority of the
outstanding voting securities of the Fund shall mean the vote of 67% or
more of such securities if the holders of more than 50% of such
securities are present in person or by proxy or the vote of more than
50% of such securities, whichever is the lesser.
5. Approval by Directors
Neither this Class A Plan nor any related agreements will take
effect until approved by a majority vote of both (a) the full Board of
Directors of the Fund and (b) those Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest
in the operation of this Class A Plan or in any agreements related to it
(the "Independent Directors"), cast in person at a meeting called for the
purpose of voting on this Class A Plan and the related agreements.
6. Continuance of the Plan
This Class A Plan will continue in effect from year to year so
long as its continuance is specifically approved annually by vote of the
Fund's Board of Directors in the manner described in Section 5 above.
7. Termination
This Class A Plan may be terminated at any time, without
penalty, by vote of a majority of the Independent Directors in the manner
described in Section 5 hereof or by a vote of a majority of the outstanding
voting securities of the Fund in the manner described in Section 4 hereof.
8. Amendments
This Class A Plan may not be amended to increase materially the
amount of the fees payable hereunder, as described in Section 1, unless
the amendment is approved by a vote of at least a majority of the
outstanding voting securities of the Fund in the manner described in
Section 4 hereof, and all material amendments to this Class A Plan must
also be approved by the Fund's Board of Directors in the manner
described in Section 5 hereof.
9. Selection of Certain Directors
While this Class A Plan is in effect, the selection and nomination
of the Fund's Directors who are not interested persons of the Fund will
be committed to the discretion of the Directors then in office who are
not interested persons of the Fund.
10. Written Reports
In each year during which this Class A Plan remains in effect, the
Distributor and any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Class A Plan or any related
agreement will prepare and furnish to the Fund's Board of Directors, and
the Board will review, at least quarterly, written reports, complying
with the requirements of the Rule, which set out the amounts expended
under this Class A Plan and the purposes for which those expenditures
were made.
11. Preservation of Materials
The Fund will preserve copies of this Class A Plan, any
agreement relating to this Class A Plan and any report made pursuant to
Section 10 hereof, for a period of not less than six years (the first two
years in an easily accessible place) from the date of said Plan,
agreement or report.
12. Meaning of Certain Terms
As used in this Class A Plan, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have
the same meaning that those terms have under the 1940 Act and the rules
and regulations under the 1940 Act, subject to any exemption that may be
granted to the Fund under the 1940 Act by the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the undersigned, the Secretary of
Centurion T.A.A. Fund, Inc. (the "Fund") hereby certifies that the
foregoing is a true and correct copy of one Class A Plan an amended, as
last approved by the shareholders of the Fund in the manner described in
Section 4 of said Plan and Directors of the Fund in the manner described
in Section 5 of said Plan.
_______________
Mary R. Limoges
FORM OF RULE 12b
PLAN OF DISTRIBUTION FOR
CLASS B SHARES
EXHIBIT 15.3
CENTURION T.A.A. FUND, INC.
CLASS B SHARE
PLAN OF DISTRIBUTION
This Plan of Distribution (this "Class B Plan"), has been adopted
effective ______________, 1996 in accordance with the terms hereof and
pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act
of 1940, as amended (the "1940 Act") by Centurion T.A.A. Fund, Inc.,
a Minnesota corporation (the "Fund").
1. Compensation
The Fund is obligated to pay the principal underwriter of the
Fund's shares (the "Distributor") a total fee (the "Distribution Fee") in
connection with distribution related services provided in respect to the
Fund, calculated and payable quarterly, at an annual rate of up to 0.75%
average daily net assets of the Fund attributable to the Class B shares.
The actual amount of the Distribution Fee payable to the Distributor
shall be determined, within the foregoing limits, from time to time by
mutual agreement between the Fund and the Distributor. The Distributor
may enter into selling agreements with one or more other broker-dealers
(the "Selling Agents") under which such agents may receive compensation
for sales distribution support services from the Distributor, including
but not limited to, commissions or other payments to such agents based
on the average daily net assets of the Fund shares attributable to them.
Services provided by Selling Agents in exchange for commissions and other
payments to selling agents are the principal sales support services
provided to the Fund. The Distributor may retain any portion of the
Distribution Fee to compensate it for distribution-related services
provided by it or to reimburse it for other distribution-related
expenses.
2. Engagement and Compensation of Service Agents
The Fund may enter into servicing agreements with one or more
shareholder servicing agents (the "Service Agents"), including the
Distributor or its affiliates. Under such agreements, the Service Agents
shall provide shareholder liaison services including receiving and
responding to customer inquiries and providing such persons information
regarding their investments in the shares. In addition, such Service
Agents shall provide such other services as the Fund or the Fund's
shareholders may reasonably request. For their services, the Fund may
pay a Service Agent a fee (the "Service Agent Fee"), calculated and
payable quarterly, at an annual rate of up to 0.25% of the average daily
net assets of the Fund attributable to Class B shares owned by investors
with whom the Service Agent maintains a servicing relationship, or an
amount which equals the maximum amount payable to the Service Agent under
applicable laws, regulations or rules, whichever is less. The actual
amount of the Service Agent Fee paid shall be determined, within the
foregoing limits, from time to time by mutual agreement between the Fund
and the Service Agent.
3. Expenses Covered by the Plan
(a) The Distribution Fee may be used by the Distributor to provide
initial and ongoing sales compensation to its registered
representatives and agents and to other broker-dealers in
respect of sales of the Fund's shares and to pay for
advertising and/or promotional expenses in connection with the
distribution of the Fund's shares ("Distribution Expenses").
Distribution Expenses include, by way of example but not by way
of 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 Distributor related to the
distribution of the Fund's shares; and payments to and expenses
of, officers, employees or representatives of the Distributor,
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.
(b) The Service Agent Fee may be used by a Service Agent to provide
compensation for ongoing servicing and/or maintenance of
shareholder accounts with the Fund. Compensation may be paid
by the Service Agent to persons, including employees of the
Service Agent, and institutions who responded inquiries of
shareholders of the Fund regarding their ownership of shares or
their accounts with the Fund or provide other administrative
accounting services not otherwise required to be provided by
the Fund's investment advisor, transfer agent or other agent of
the Fund.
(c) Payments under this Class B Plan are not tied to or limited by
the actual expenses of the Distributor for distribution-related
activities or the actual expenses of a Service Agent for its
shareholder servicing-related expenses. Thus, such payments
may exceed expenses actually incurred by the Distributor or
Service Agent. The Fund's Board of Directors will evaluate the
appropriateness of this Class B Plan and its payments of terms
on a continuing basis and in doing so will consider all
relevant factors, including expenses born by the Distributor
and Service Agent(s) and amounts they receive under this Class
B Plan.
(d) Should the Fund terminate or not continue this Class B Plan of
Distribution, the Fund shall not be obligated in any way to pay
any Distributor or Service Agent for any expenses not
previously reimbursed by the Fund. However, nothing herein
shall prevent the Fund, in the sole discretion of the Fund's
Board of Directors, from reimbursing all or any portion of such
unreimbursed amounts.
(e) Nothing in this Class B Plan shall require the Distributor or
any Service Agent to pay any expenses of the Fund other than as
provided above. The Fund shall be responsible for paying its
other expenses, including, but not limited to, expenses
relating to the compensation of its Directors who are not
affiliated with its investment advisor or any of its
Affiliates; advisory and administration fees; payments pursuant
to this Class B Plan, including payments to Service Agents;
interest charges; taxes; fees and expenses of its independent
accountants, legal counsel, transfer agent and dividend
disbursing agents; expenses of redeeming shares; expenses of
preparing and printing prospectuses (except the expense of
printing and mailing prospectuses used for promotional
purposes, unless otherwise payable pursuant to this Class B
Plan); shareholders reports, notices, proxy statements and
reports to regulatory agencies; insurance premiums and certain
expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses in connection
with the execution of portfolio transactions; expenses of
shareholders meetings; expenses relating to the issuance,
registration and qualification of shares of the Fund; pricing
services; organizational expenses; and any extraordinary
expenses.
4. Additional Payments by Advisor and the Distributor
The Fund's investment advisor and the Distributor may, at their
option and in their sole discretion, make payments from their own
resources to cover additional costs of additional distribution and/or
shareholder servicing activities.
5. Approval by Shareholders
This Class B Plan shall not take effect with respect to the Fund,
and no fee will be payable in accordance with Section 1 hereof, until
this Class B Plan has been approved by a vote of at least a majority of
the outstanding voting securities of the Fund. For the purposes of this
Class B Plan, the vote or approval of the holders of a majority of the
outstanding voting securities of the Fund shall mean the vote of 67% or
more of such securities if the holders of more than 50% of such
securities are present in person or by proxy or the vote of more than
50% of such securities, whichever is the lesser.
6. Approval by Directors
Neither this Class B Plan nor any related agreements will take
effect until approved by a majority vote of both (a) the full Board of
Directors of the Fund and (b) those Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest
in the operation of this Class B Plan or in any agreements related to it
(the "Independent Directors"), cast in person at a meeting called for the
purpose of voting on this Class B Plan and the related agreements.
7. Continuance of the Plan
This Class B Plan will continue in effect from year to year so
long as its continuance is specifically approved annually by vote of the
Fund's Board of Directors in the manner described in Section 6 above.
8. Termination
This Class B Plan may be terminated at any time, without penalty,
by vote of a majority of the Independent Directors in the manner
described in Section 6 hereof or by a vote of a majority of the
outstanding voting securities of the Fund in the manner described in
Section 5 hereof.
9. Amendments
This Class B Plan may not be amended to increase materially the
amount of the fees payable hereunder, as described in Section 1, unless
the amendment is approved by a vote of at least a majority of the
outstanding voting securities of the Fund in the manner described in
Section 5 hereof, and all material amendments to this Class B Plan must
also be approved by the Fund's Board of Directors in the manner
described in Section 6 hereof.
10. Selection of Certain Directors
While this Class B Plan is in effect, the selection and nomination
of the Fund's Directors who are not interested persons of the Fund will
be committed to the discretion of the Directors then in office who are
not interested persons of the Fund.
11. Written Reports
In each year during which this Class B Plan remains in effect, the
Distributor and any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Class B Plan or any related
agreement will prepare and furnish to the Fund's Board of Directors, and
the Board will review, at least quarterly, written reports, complying
with the requirements of the Rule, which set out the amounts expended
under this Class B Plan and the purposes for which those expenditures
were made.
12. Preservation of Materials
The Fund will preserve copies of this Class B Plan, any
agreement relating to this Class B Plan and any report made pursuant to
Section 11 hereof, for a period of not less than six years (the first two
years in an easily accessible place) from the date of said Plan,
agreement or report.
13. Meaning of Certain Terms
As used in this Class B Plan, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have
the same meaning that those terms have under the 1940 Act and the rules
and regulations under the 1940 Act, subject to any exemption that may be
granted to the Fund under the 1940 Act by the Securities and Exchange
Commission.
IN WITNESS WHEREOF, the undersigned, the Secretary of Centurion
T.A.A. Fund, Inc. (the "Fund") hereby certifies that the foregoing is a
true and correct copy of one Class B Plan an amended, as last approved by
the shareholders of the Fund in the manner described in Section 5 of said
Plan and Directors of the Fund in the manner described in Section 6 of
said Plan.
_______________
Mary R. Limoges
CONSENT
OF
SQUIRE & COMPANY
EXHIBIT 11
Consent of Independent Accountants
We consent to the inclusion in Form N-1A (Post-Effective Amendment
No. 24) of Centurion T.A.A. Fund, Inc., (formerly, Excel Value Fund,
Inc.) of our report dated February 7, 1996, on our audit of the
financial statements and selected per share data and ratios of Centurion
T.A.A. Fund, Inc., as of December 31, 1995.
Squire & Co.
/s/
14458 Crestwood Ave.
Poway, California
October 30, 1996
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
<TABLE>
Selected data for each share of capital stock outstanding throughout
the period is as follows:
<CAPTION>
Year Ended December 31
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
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 <F1> -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%
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
<FN>
<F1> Note 1 - Allocated between Net Investment Income and Net Gains or
(Losses) on Securities based on monthly weighted average
shares outstanding.
</FN>
</TABLE>
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:
The following Exhibits are hereby filed electronically. Each document
is in the same form as the document that was previously filed by hand,
except Exhibit 11, which is a new consent.
1. Articles of Amendment of Excel Value Fund, Inc. to change name to
"Centurion T.A.A. Fund, Inc."
4 Specimen copy of share certificate of Centurion T.A.A. Fund, Inc.
5 Form of Investment Advisory Agreement of Centurion T.A.A. Fund,
Inc.
9(a) Form of Administration Agreement of Centurion T.A.A. Fund, Inc.
9(b) Form of Accounting Services Agreement of Centurion T.A.A. Fund,
Inc.
11 Consent of Squire & Company.
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 July 31, 1996.
Title of Class Number of Record Holders
Common stock, par value 346
$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.
<TABLE>
<CAPTION>
Name and Principal Position(s) with Other Occupations
Business Address Centurion Counsel, Inc. During Past Two Years
<S> <C> <C>
Jack K. Heilbron Chairman of the Board and Chief Chairman of the Board and Chief
11545 W. Bernardo Court, Investment Officer Executive Officer of the Registrant.
Suite 100 Chairman of the Board of Directors of
San Diego, CA 92127 C I 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 President, Chief Financial Officer President, Chief Financial Officer and
11545 W. Bernardo Court, and Director Treasurer of the Registrant. Chief
Suite 100 Financial Officer and Director of C I
San Diego, CA 92127 Holding and other of its operating
subsidiaries.
Mary R. Limoges Executive Vice President, Secretary of Registrant. Executive Vice
11545 W. Bernardo Court, Secretary and Director President, Secretary and Director of C I
Suite 100 Holding and serves as Executive Officer
San Diego, CA 92127 of other of its operating subsidiaries.
</TABLE>
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.
<TABLE>
<CAPTION>
Name and Principal Position(s) and Office(s) with Positions and Offices
Business Address Centurion Institutional Services, Inc. With the Registrant
<S> <C> <C>
Mary R. Limoges President, Chief Executive Officer Secretary
11545 W. Bernardo Court, and Director
Suite 100
San Diego, CA 92127
Kenneth W. Elsberry Chief Financial Officer and Director President, Chief Executive
11545 W. Bernardo Court, Officer, Treasurer, Chief
Suite 100 Financial Officer
San Diego, CA 92127
</TABLE>
Item 30. Location of Accounts and Records
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio, 45202-1118,
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 Registrant's transfer agent, dividend
disbursing agent, administrative services agent and accounting services
agent. Star Bank, 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(a) 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 _____ day of November 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 November __, 1996
Jack K. Heilbron of the Registrant
/s/ Kenneth W. Elsberry President, Chief Executive November __, 1996
Kenneth W. Elsberry Officer, Chief Financial
Officer and Director of
the Registrant
/s/ Carol Ann Freeland Director of the Registrant November __, 1996
Carol Ann Freeland
/s/ Richard E. Hall Director of the Registrant November __, 1996
Richard E. Hall
/s/ Russell W. Ketron Director of the Registrant November __, 1996
Russell W. Ketron
/s/ Douglas Werner Director of the Registrant November __, 1996
Douglas Werner
