As filed with the Securities and Exchange Commission on June ___, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Centurion Counsel Funds, Inc.
(File No. 2-73955): Post-Effective Amendment
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
Centurion Counsel Funds, Inc.
(File No. 811-3257): Post-Effective Amendment
CENTURION COUNSEL FUNDS, 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)
(858) 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
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on ______________ pursuant to Paragraph (b).
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ X / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N-1A
Item No.
of Form N-1A Caption in Prospectus
1 Front Cover Page, Back Cover Page
2 "Risk/Return Summary-Summary of Principal Risks," "Description of the
Funds-Investment Objectives and Policies," Description of Fund Practices
and Related Risks." "Description of the Funds," and "Financial Highlights"
3 "Risk/Return Summary;" "Fee Table"
4 "Description of Funds--Investment Objectives and Policies," "Principal
Investment Strategies," and "Summary of Risks"
5 "Financial Highlights"
6 "Management," "Information About Your Account - Share Classes, Sales
Charges and Distribution Agreement."
7 "Information About Your Account"
8 "Information About Your Account - Share Classes, Sales Charges and
Distribution Agreement."
9 "Financial Highlights"
Caption in Statement of Additional Information
10 Cover Page and "Table of Contents"
11 "Fund History"
12 "Description of the Fund and its Investments and Risks"
13 "Management of the Fund"
14 "Control Persons and Principal Holders of Securities"
15 "Investment Advisory and Other Services"
16 "Brokerage Allocations and Other Practices"
17 "Capital Stock and Other Securities"
18 "Purchase, Redemption and Pricing of Shares"
19 "Taxation of the Fund"
20 "Distributors"
21 "Calculation of Performance Data"
22 "Financial Statements"
PROSPECTUS
CENTURION COUNSEL FUNDS, INC.
The Centurion Counsel Stock Funds provide a spectrum of investment alternatives
to investors seeking capital growth or high total return.
Prospectus and Application for:
* Centurion Counsel Market Neutral Fund
* Centurion Counsel Growth Fund
* Centurion Counsel Real Estate Fund
The SEC has not approved or disapproved these shares or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
September ___, 1999
Table of Contents
Page
RISK/RETURN SUMMARY -3-
Centurion Counsel Market Neutral Fund -3-
Centurion Counsel Growth Fund -5-
Centurion Counsel Real Estate Fund -7-
Summary of Principal Risks -8-
FEES AND EXPENSES -9-
DESCRIPTION OF THE FUNDS -11-
Investment Objectives and Policies -11-
Description of Fund Practices and Related Risks -17-
MANAGEMENT -26-
DISTRIBUTIONS AND TAXES -26-
INFORMATION ABOUT YOUR ACCOUNT -27-
Share Classes, Sales Charges and Distribution Arrangements -27-
Buying Shares -29-
Investor Services -30-
Selling Shares -31-
Account Policies -33-
FINANCIAL HIGHLIGHTS -34-
Centurion Counsel Market Neutral Fund -34-
STATEMENT OF ADDITIONAL INFORMATION (SAI) -37-
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.
The Fund is an open-end, diversified management investment company that only
issues shares of common stock. The Funds' investment adviser, or Adviser,
is Centurion Counsel, Inc., a registered investment adviser providing
diversified services to institutions and individuals.
RISK/RETURN SUMMARY
This Risk/Return Summary describes each Fund's objectives, principal investment
strategies, principal risks and fees. Please be sure to read this additional
information BEFORE you invest. You will find additional information about the
Funds, including a detailed description of the risks of an investment in the
Funds, after this Summary.
Centurion Counsel Market Neutral Fund
Principal Investment Objective. The Fund's principal investment objective
is to obtain long-term growth while minimizing the impact of overall
movements in the securities markets. There is no assurance that the Fund
will achieve its goal.
Principal Investment Strategies and Risks. The Fund's principal investment
strategies involve risks and you could lose your money. The Adviser seeks to
increase overall net income and minimize its exposure to general market
risks by allocating the Fund's assets among the three asset classes and
taking long positions in securities within each class the Adviser identifies
as undervalued, and short positions in securities the Adviser identifies as
over-valued.
In seeking the Fund's principal objectives, the Adviser allocates investments
among three asset classes - common stocks, bonds and money market instruments
based on changes or anticipated market conditions. The Fund will invest in
common stocks, corporate bonds, government agency and money market
instruments, and may also invest in futures contracts, stock index contracts
and options thereon. The Adviser employs special investment techniques,
including selling securities short, which is effected by selling a security
that the Fund does not own, or, if the Fund does own such security, it is
not to be delivered upon consummation of the sale. A short sale is "against
the box" to the extent that the Fund contemporaneously owns or has the right
to obtain securities identical to those sold short without payment. The Fund
makes short sales of securities the Adviser identifies as over-valued. If
the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will
incur a loss; conversely, if the price declines, the Fund will realize a
capital gain.
Among the principal risks of investing in the Market Neutral Fund are certain
investment techniques used by the Fund's Adviser, including short-sale
strategies, and the dependence on the ability of the Adviser to correctly
choose Fund investment so as to neutralize market fluctuations. Other
principal risks are high portfolio turnover rates, the Fund's relatively
small size, the level of Fund expenses and securities market risks.
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods.
Performance Data. The following performance data includes a table for the
Fund showing its average annual returns and a bar chart showing its annual
returns. The table and bar chart provide an indication of the historical
risk of an investment in the Fund by showing:
* how the Fund's average annual returns for four years compare to those of
a broad based securities market index; and
* changes in the Fund's performance from year to year over four years.
The Fund's past performance, of course, does not necessarily indicate how it
will perform in the future. You should also consider that:
* You may lose all or most of your money by investing in the Fund.
* An investment in the Fund is not a deposit in a bank and is not guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Bar Chart. This bar chart and table show the volatility of the Fund's
returns, which is one indicator of the risks of investing in the Fund. The
bar chart shows changes in the Fund's returns from year to year over the
past four calendar years which covers the period during which the current
Adviser has provided advisory services to the Fund under its current
fundamental investment objectives and policies. The table shows how the
Fund's average annual total returns compare to those of a broad-based
securities market index. Of course, past performance cannot predict or
guarantee future results.
[GRAPHIC OMITTED]
[The following table is depicted as a bar chart in the printed Prospectus]
95 96 97 98
Class C Shares 2.6% 5.1% -5.1% -10.2%
Index 5.5% 5.1% 5.2% 4.9%
The Fund's Best Quarter was up 5.5%, 3rd quarter, 1997; and Worst Quarter was
down -5.7%, 4th quarter, 1998.
Performance Table. The following table provides an indication of the
historical risk of an investment in the Fund.
Average Annual Total Returns(1)
Since Most Recent of
Share January 1, 1995 or
Class(2) 1 Year Inception of Class(3)
Class A -13.19% -9.02%(4)
Class B -13.51% -9.48%(4)
Class C -10.2% -3.04%
Class D -8.09% -2.77%
Index 4.9% 5.6%
(1) The average annual total returns in the performance table for the periods
ended December 31, 1998. Performance data for the Class A Shares and Class B
Shares reflect imposition of the maximum front-end or contingent deferred
sales charges, respectively. The Class C and Class D Shares do not have
front end or contingent deferred sales charges. All Fund performance
assumes reinvestment of dividends and capital gains.
(2) The Class C Shares are shown as they have been outstanding the longest
period and are the largest outstanding class of shares.
(3) The Fund has operated under its current Adviser and fundamental
investment objectives and policies since January 1, 1995. Prior to that
time, the Fund had different fundamental investment policies.
(4) Since first sale of this class on January 7, 1997.
(5) Since first sale of this class on December 6, 1996.
(6) The Adviser has chosen the 90-day T-bill as an appropriate benchmark
because it has the least exposure to systematic market influences and the
Adviser's stock selection techniques are not based on systematic market
or economy-wide factors.
Centurion Counsel Growth Fund
Principal Investment Objective. The Fund's investment objective is growth of
capital with a view towards current income.
Principal Investment Strategies and Risks. The Fund invests primarily in
securities of companies that are financially sound and have or stated they will
pay dividends. Within this framework, the Fund may invest in any company and
industry and in any type of security with potential for capital appreciation.
It invests in the stock of established companies or in new or unseasoned
companies, including rights or options to purchase such stock and securities
convertible into such stock. It may also invest in debt securities and up
to 10% of its total assets in foreign securities. The Fund will not
purchase securities on margin.
Among the principal risks of investing in the Growth Fund are market risk and
sector risk. In addition, investments in small-cap, micro-cap and mid-cap
companies may be more volatile than investments in large-cap companies. To
the extent the Fund invests in lower-rated fixed-income securities and
convertible bonds, your investment may have interest rate or credit risk.
The Fund's investments in foreign securities have foreign risk and currency
risk.
Performance Data. The Growth Fund is newly formed and has no operating
history. The bar chart and table below summarize the performance history
of a 401k Plan investment portfolio (the "Plan"), which has been exclusively
managed since its inception by Mr. Jack K. Heilbron, Chairman of Centurion
Counsel and portfolio manager to the Fund. The investment objectives,
policies and strategies of the Plan are, and at all times have been,
identical to those of the Fund. The Plan is the only other account that has
been managed by Centurion Counsel or Mr. Heilbron with such identical
investment objectives, policies and strategies. The following Summary includes
a table showing the Plan's average annual returns and a bar chart showing
the Plan's annual returns. The table and bar chart provide an indication of
the historical risk you can expect from an investment in the Growth Fund
by showing:
* how the Plan's average annual returns for one, five, and eight years
compare to those of a broad based securities market index; and
* changes in the Plan's performance from year to year over eight years.
The Plan's past performance, of course, does not necessarily indicate how
the Fund will perform in the future. You should also consider that:
* You may lose all or most of your money by investing in the Fund.
* An investment in the Fund is not a deposit in a bank and is not guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Bar Chart. This bar chart and table show the volatility of the Plan's returns,
which can be used as one indicator of the risks of investing in the Fund.
The bar chart shows changes in the Plan's returns from year to year over the
past eight calendar years which covers the Plan's performance since its
inception. The table shows how the Plan's average annual total returns
compare to those of the S&P 500, a broad-based securities market index. Of
course, past performance cannot predict or guarantee future results for the
Fund.
[The following table is depicted as a bar chart in the printed Prospectus]
91 92 93 94 95 96 97 98
Class C Shares 9.86% -5.68% 12.72% -6.67% 38.05% 8.04% 16.18% 5.20%
Index 30.48% 7.62% 10.08% 1.32% 34.11% 19.33% 31.01% 28.76%
The Plan's Best Quarter was up 10.87%, 2nd quarter, 1991; and Worst Quarter
was down -10.27%, 1st quarter, 1991.
Performance Table. The following table provides an indication of the historical
risk you can expect from an investment in the Fund. The information on
which the table is compiled has been audited by Boros & Farrington,
Certified Public Accountants. For presentation in the table, the Plan's
actual net income during the periods presented has been adjusted during each
period to reflect maximum expenses which would have been incurred had the
Plan paid the advisory fees and other expenses under the arrangements
of the Fund for such services and expenses. THE RESULTS PRESENTED IN THE
TABLE SHOULD NOT BE CONSIDERED INDICATIVE OF THE FUTURE OPERATING RESULTS OF
THE FUND.
Average Annual Total Returns(1)
Share Class 1 Year 5 Years 9 Years
Class C(2) 5.20% 13.59% 7.78%(3)
S&P 500 Index(4) 4.96% 23.63% 18.63%
(1) The average annual total returns in the performance table for the periods
ended December 31, 1998. The Plan performance assumes reinvestment of
dividends and capital gains.
(2) The Plan performance is adjusted for the Class C Shares because they are
expected to be the most commonly purchased class of Fund shares. The Class C
Shares do not have front-end or conditional deferred sales charges.
(3) The Plan was established in 1991 and Mr. Heilbron has served as its
portfolio manager since the Plan's inception.
(4) Adviser believes that the Standard & Poors 500 Index is appropriate
measure of Growth Fund performance because it is comprised of common stock
of companies with a broad sampling of industry segments and reflects overall
market risks and influences.
Centurion Counsel Real Estate Fund
Principal Investment Objective. The Funds' investment objective is total
return from long-term growth of capital and income principally through
investing in equity securities of companies that are primarily engaged in
or related to the real estate industry.
Principal Investment Strategies and Risks. The Fund invests primarily in
equity securities of real estate investment trusts or "REITs" and other real
estate industry companies. The Fund invests in real estate companies that
Centurion Counsel believes have strong property fundamentals and management
teams. The Fund seeks to invest in real estate companies whose underlying
portfolios are diversified geographically and by property type. The Fund may
invest up to 20% of its total assets in mortgage-backed securities, which
are securities that directly or indirectly represent participations in, or
are collateralized by and payable from, mortgage loans secured by real
property.
Among the principal risks of investing in the Real Estate Fund are market risk,
the risks of the real estate industry, risks of debt and fixed-income
investments, interest rate risk, and credit risk.
Because the Fund invests a substantial portion of its assets in the real estate
market, it has many of the same risks as direct ownership of real estate,
including the risk that the value of real estate could decline due to a
variety of factors affecting the real estate market. In addition, REITs are
dependent on the capability of their managers, may have limited
diversification, and could be significantly affected by changes in tax laws.
The Fund's interest rates decline and the Fund will have to reinvest in
securities with lower interest rates. This risk causes mortgage-backed
securities to have significantly greater price and yield volatility
than traditional fixed-income securities.
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods.
Performance Data. The Fund is newly organized and did not exist prior to
July 1, 1999.
Summary of Principal Risks
The value of your investment in a Fund will change with changes in the values
of that Fund's investments. Many factors can affect those values. Set forth
below are the principal risks that may affect a Fund's portfolio as a whole.
The Fund could be subject to additional principal risks because the types of
investments it makes can change over time. This Prospectus has additional
descriptions of the types of investments that appear in bold type in the
discussions under "Description of Fund Practices" or "Additional Risk
Considerations." These sections also include more information about the
Fund, its investments, and related risks.
The value of your investment in a Fund will change with changes in the
values of that Fund's investments. Many factors can affect those values.
Set forth below are the principal risks that may affect a Fund's portfolio
as a whole. This Prospectus has additional descriptions of the principal
types of investments that the Fund makes under "Description of the Fund -
Fund Practices" and "Additional Risk Considerations." These sections also
include more information about the Fund, its investments, and related risks.
* Investment Techniques. The investment policies of the Market Neutral Fund,
which include unleveraged, short-term investments in put and call options,
index futures and index options are highly technical and increases in the
price of the underlying security before the Fund terminates its position
would generally result in losses to the Fund.
* Dependence on Adviser. In each Fund, you must rely on the Adviser's
ability to correctly choose Fund investments and, in the case of the Market
Neutral Fund, to neutralize market fluctuations.
* Short Sales. In the Market Neutral Fund, if the Adviser deems a security
to be over-valued, it may sell the security short by borrowing the same
security from a broker or other institution and selling the security. The
Fund would incur a loss from a short sale if the price of the borrowed
security increases between the date of the short sale and the date on which the
Fund replaces the borrowed security.
* High Portfolio Turnover. Because of its principal investment objectives
and the strategies employed by the Adviser, you can expect to experience an
annual portfolio turnover rate of up to 800% in the Market Neutral Fund,
200% in the Growth Fund, and 100% in the Real Estate Fund.
* Fund Size. Because each Fund is small in size and has limited investment
portfolio size, market fluctuations may have a greater impact on the Fund
than on larger more diversified funds.
* Fund Expenses. Because each Fund is small in size, gross levels of the
Fund's expenses (i.e., expenses before waiver of expense reimbursements and
fees) will be greater in proportion to its assets.
* Investment Techniques. The Fund's investment policies, which include
unleveraged, short-term investments in put and call options, index futures
and index options are highly technical and changes in the price of the
underlying security before the Fund terminates its position would generally
result in losses to the Fund.
* Market Risk. The value of a Fund's investments will fluctuate as the
overall stock or bond markets fluctuate and that prices overall will decline
over short or longer-term periods.
* Sector Risk. Market and/or economic factors affecting a particular industry
sector could have a major effect on the value of a Fund's investments.
* Real Estate Industry Risks. While not a direct investor in real estate,
the Real Estate Fund will be exposed to real estate investment risk,
including dilution in real estate values, changing conditions in local and
regional economic and financial markets, availability of mortgage financing,
overbuilding, extended tenant vacancies and competition.
* Capitalization Risk. Investments in mid-cap companies may be more volatile
than investments in large-cap companies. Investments in micro-to-small-cap
companies tend to be more volatile than investments in large-cap or mid-cap
companies. A Fund's investments in smaller capitalization stocks may have
additional risks because these companies often have limited product lines,
markets or financial resources.
* Interest Rate Risk. Changes in interest rates will specifically affect the
value of the Real Estate portfolio as well as the long positions in income-
producing, fixed-income (i.e., debt) securities held by the Market Neutral
Fund and Growth Fund. Increases in interest rates generally will cause the
value of a Fund's investments to decline and this decrease in value may not
be offset by the higher interest rate income.
* Credit Risk. This is the risk that the issuer of a security or the other
party to an over-the-counter transaction will be unable or unwilling to make
timely payments of interest or principal, or to otherwise honor its
obligations. The degree of risk for a particular security may be reflected
in its credit rating. Credit risk is applicable to Funds that invest in
fixed-income securities and is greater where a Fund invests a substantial
portion of its assets in lower-rated securities.
An investment in the Funds is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Class A Class B Class C Class D
Shares Shares Shares Shares
Shareholders Fee (fees paid directly
from you investment)
Maximum Sales Charge (Load) imposed on
purchases as a percentage of offering
price 4.75% None None None
Maximum Deferred Sales Charge None 4% during 1st None None
and 2nd year,
3% during 3rd
year, decreasing
0.5% annually to
0% after the 5th
year
Please see "Information About Your Account, Share Classes, Sales Charges and
Distribution Arrangements" below for an explanation of how and when these sales
charges apply.
Annual Fund Operating Expenses (expenses deducted from fund assets)
Class A Class B Class C Class D
Management Fees 1.0% 1.0% 1.0% 1.0%
Rule 12b-1 Fees 0.25% 1.0% 1.0% None
Other Expenses (gross)(1) 1.42% 1.42% 1.42% 1.42%
(1) Pursuant to the Advisory Agreement, the Adviser has agreed to, at least
through December 31, 1999, waive reimbursement of its expenses by the Fund to
the extent such reimbursements would cause the Fund's expenses, including
advisory fees, but excluding 12b-1 fees, interest expense, taxes, brokerage
fees and commissions, to exceed 2.625% the Fund's average daily net assets
on an annual basis. During the year ended December 31, 1998, the Adviser
did not waive reimbursement of its expenses since the Fund's expenses did
not exceed 2.625%. During 1998, the Fund did not pay dividends on short
sales which would have been included in the Other Expenses (gross) if any
had been paid.
Example. This example can help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The example assumes you invest $10,000 for the periods shown and then
sell all of your shares at the end of those periods. The example also
assumes your investment has a 5% return each year and the Fund's operating
expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Class A Class B Class C Class D
After 1 Year $742 $759 $359 $254
After 3 Years $1,294 $1,393 $1,093 $781
After 5 Years $1,870 $1,997 $1,847 $1,335
After 10 Years $3,425 $3,827 $3,827 $2,841
DESCRIPTION OF THE FUNDS
This section of the Prospectus provides a more complete description of each
Fund's investment objectives, principal strategies and risks. Of course,
there can be no assurance that a Fund will achieve its investment objective.
Please note that:
* Additional discussion of each Fund's investments, including the risks of
the investments, can be found in the discussion under "Description of Fund
Practices" following this section.
* The description of the principal risks for the Funds may include risks
described in the "Summary of Principal Risks" above. Additional information
about the risks of investing in the Fund can be found in the discussion under
"Additional Risk Considerations" below.
* Additional descriptions of each Fund's strategies, investments and risks
can be found in the Fund's Statement of Additional Information or SAI.
Investment Objectives and Policies
Centurion Counsel Market Neutral Fund
The term "market neutral" refers to the Fund's strategy of investing or
engaging in transactions and securities while seeking to minimize the impact
of movements in the securities markets. The Fund's goal provides investors
with a professionally managed, diversified portfolio, which the Adviser
believes offers 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.
The Fund's fundamental investment objectives are to neutralize the effect of
overall market direction by dividing its investments of securities of companies
the Adviser deems undervalued and short sales of securities of companies the
Adviser deems to be overvalued. In seeking these objectives, the Adviser may
also allocate the Fund's investments based on changes in market conditions
among three asset classes -- common stocks, bonds and money market
instruments.
The Fund thereby seeks long-term capital appreciation while maintaining minimal
exposure to general equity market risk by taking long positions in securities
the Adviser has deemed undervalued and short positions in stocks that the
Adviser has deemed overvalued. The Fund's policies included the use of certain
investment techniques, including engaging in transactions in futures contracts,
options on futures contracts, and short sales. However, the Fund will not use
these techniques for the purpose of creating leverage.
Except as noted, the Fund's investment objectives are "fundamental" and cannot
be changed without a shareholder vote. The Fund's investment policies are not
fundamental and can be changed in the Board's discretion without a shareholder
vote.
By taking long and short positions in different stocks, the Fund attempts to
cancel out the effect of general stock market movements on the Fund's
performance. In general, the Adviser expects the Fund to achieve a positive
return if the Fund's long portfolio outperforms the Fund's short portfolio.
By this strategy, the Adviser may make money in any type of market as long
as the Fund's long positions perform better than the stocks the Fund has
sold short. The Fund will therefore be subject to the risk of poor
securities selection by the Adviser if it is unsuccessful in executing its
strategy in identifying underperforming and overperforming investments in
the equity and debt markets.
Under normal circumstances, the Adviser's investment selections are likely to
result in the Fund being overweighted in both its long and short positions in
different asset classes. Also, the Fund may take long positions in a sector
of the market that are not offset by short positions in that sector and visa
versa, consequently the Fund may have net exposures to different asset classes
and/or different industries or sectors of the market. This overexposure
increases the risk to the Fund and the opportunity for loss should its
investments in a particular asset class, or industry sector not perform as the
Adviser predicts. The Adviser determines the size of each long and short
position by analyzing the tradeoff between the attractiveness of each
position and its impact on the risk characteristics of the Fund's overall
portfolio. Generally, the Fund will invest in securities which are
principally traded in the United States markets. The Fund's long and short
positions, however, may involve equity securities of foreign issuers that
are principally traded in the markets of the United States.
The Fund may from time to time hold a significant portion of its assets in the
credit obligations of the United States Government, including U.S. Treasury
bills, and in short-term notes, commercial paper or other money market
instruments.
The Adviser allocates the Fund's investments based on changes in market
conditions among three asset classes - common stock, bonds, and money market
instruments. The Adviser employs this tactical asset allocation strategy to
move Fund investments to the asset class it deems to offer more attractive
investments. The Adviser believes that timely shifts of Fund assets among
these classes, common stocks, bonds and money market instruments, can produce
above average 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.
The Adviser has developed computer program models and related systems
pertaining to the tactical allocation of assets among the three investment
asset classes. The computer model analyzes extensive financial data from
numerous public and private sources, and, based on such data, the Adviser
recommends percentage allocations among the three asset classes. The
Adviser 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.
The Adviser compares the Fund's investments to the computer model's
recommended asset allocation. Subject to certain trading policies
employed by the Adviser, it will generally allocate Fund investments
among the asset classes on the model's recommendations. The Adviser may,
however, under certain circumstances, vary the allocation from that
recommended by the model, depending on such factors as cost, tax
consequences or liquidating requirements.
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.
Centurion Counsel Growth Fund
Centurion Counsel Growth Fund's investment objective is long-term
capital appreciation. The objective is a fundamental policy of the
Fund and may not be changed without shareholder approval.
Preservation of capital, while not an objective, is also an
important consideration. Incidental to seeking its investment
objective of long-term capital appreciation, the Fund seeks
current income. Of course, there is no assurance that the Fund's
objective will be achieved.
The Fund seeks to achieve its investment objective by investing at
least 65% of its total assets in financially sound companies that
have paid dividends (as described below) based on the Adviser's
investment philosophy that the securities of such companies,
because of their dividend record, have a strong potential to
increase in value. Normally, the Fund's investments are in
common stock, securities convertible into common stock, or rights
or warrants to subscribe for or purchase common stock.
As a fundamental policy, under normal market conditions at least
65% of the Fund's portfolio is invested in the securities of
companies (i) that have consistently paid dividends in the past
and/or (ii) whose management have publically announced a current
policy of consistently paying dividends.
The Adviser believes that a focus on companies which consistently
pay dividends will help the Fund attain its objective of long-
term capital appreciation and income. In addition, because
capital preservation is an important consideration, the Adviser
also reviews a company's stability and the strength of its
balance sheet in selecting among eligible growth companies
generally. The Adviser also considers other factors, such as
return on shareholder's equity, rate of earnings growth and
anticipated price/earnings ratios, in selecting investments
for the Fund.
Following these policies, the Fund will invest predominantly
in equity securities issued by U.S. companies. These may
include Large-cap, Mid-cap, Small-cap and/or Micro-cap
companies. Large-cap companies are those which have a
market capitalization of $5 billion or more; Mid-cap
companies generally have a market capitalization of
$1 billion up to $5 billion; Small-cap companies generally
have a market capitalization of up to $1 billion; and
Micro-cap companies generally have a market capitalization
of less than $200 million. Investments in smaller
capitalization companies will subject the Fund to greater risks.
The Fund may invest in foreign securities, generally by
purchasing sponsored or unsponsored American Depositary
Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and
European Depositary Receipts ("EDRs"). ADRs evidence
ownership of, and represent the right to receive, securities
of a foreign issuer deposited in a U.S. bank or a correspondent
bank, while GDRs and EDRs are typically issued by foreign banks
or trust companies and evidence ownership of underlying
securities issued by either a foreign or a U.S. corporation.
The Fund may also purchase the securities of foreign issuers
directly in foreign markets. The Fund currently intends to
limit its foreign investments to no more than 10% of its net
assets. Foreign securities have risks that U.S. securities do
not have. For more information about foreign securities and
their risks, please see "ADDITIONAL RISK CONSIDERATIONS."
In any period of stock market weakness or of uncertain market
or economic conditions as determined by Centurion Counsel,
the Fund may establish a defensive position to preserve
capital by temporarily having all or a part of its assets
invested in short-term, fixed-income securities or retained
in cash or cash equivalents. These investments would include
U.S. government securities, bank certificates of deposit,
bankers' acceptances and high-quality commercial paper issued
by domestic corporations.
The Fund also may:
* invest up to 20% of its assets in options contracts;
* invest in foreign securities, although not generally in
excess of 10% of its total assets;
* write covered call and put options;
* purchase and sell put and call options; and
* make loans of portfolio securities of up to 30% of its total
assets.
If a percentage restriction noted above is adhered to at the time
of investment, a later increase or decrease in the percentage
resulting from a change in the value of portfolio securities or
the amount of net assets will not be considered a violation of any
of the foregoing policies.
The Fund has a number of additional investment restrictions that
limit its activities to some extent. Some of these restrictions
may only be changed with shareholder approval. For a list of
these restrictions and more information about the Fund's
investment policies, please see "Investment Restrictions" in the
SAI.
The Fund purchases securities primarily for investment rather
than 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. 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.
Centurion Counsel Real Estate Fund
Centurion Counsel Real Estate Fund seeks a total return from
long-term growth of capital and from income principally through
investing in a portfolio of equity securities of issuers that
are primarily engaged in or related to the real estate industry.
The Fund normally invests at least 65% of its total assets in
equity securities of real estate investment trusts, or REITs,
and other real estate industry companies. A "real estate industry
company" is a company that derives at least 50% of its gross
revenues or net profits from the ownership, development,
construction, financing, management, or sale of commercial,
industrial, or residential real estate or interests in these
properties. The Fund invests in equity securities that include
common stock, shares of beneficial interest of REITs, and
securities with common stock characteristics, such as preferred
stock or convertible securities ("Real Estate Equity
Securities").
The Fund may invest up to 25% of its total assets in
(a) securities that directly or indirectly represent
participations in, or are collateralized by and payable
from, mortgage loans secured by real property ("Mortgage-
Backed Securities"), such as mortgage pass-through
certificates, real estate mortgage investment conduit
certificates ("REMICs") and collateralized mortgage
obligations ("CMOs") and (b) short-term investments.
These securities are described below.
In selecting Real Estate Equity Securities, Centurion
Counsel's analysis will focus on determining the degree
to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability.
Centurion Counsel believes that the primary determinant
of this capability is the economic viability of property
markets in which the company operates and that the secondary
determinant of this capability is the ability of management
to add value through strategic focus and operating expertise.
The Fund will purchase Real Estate Equity Securities when, in
the judgment of Centurion Counsel, their market price does
not adequately reflect this potential. In making this
determination, Centurion Counsel will take into account
fundamental trends in underlying property markets as determined
by proprietary models, site visits conducted by individuals
knowledgeable in local real estate markets, price-earnings
ratios (as defined for real estate companies), cash flow growth
and stability, the relationship between asset value and
market price of the securities, dividend payment history,
and such other factors that Centurion Counsel may determine
from time to time to be relevant.
The Fund may invest without limitation in shares of REITs. REITs
are pooled investment vehicles that invest primarily in income
producing real estate or real estate related loans or interests.
REITs are generally classified as equity REITs, mortgage REITs,
or a combination of equity and mortgage REITs. Equity REITs
invest the majority of their assets directly in real property
and derive income primarily from the collection of rents.
Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs
invest the majority of their assets in real estate mortgages
and derive income from the collection of interest payments.
Similar to investment companies such as the Fund, REITs are
not taxed on income distributed to shareholders provided
they comply with several requirements of the Code. The Fund
will indirectly bear its proportionate share of expenses
incurred by REITs in which the Fund invests in addition to
the expenses incurred directly by the Fund.
The Fund's investment strategy with respect to Real Estate
Equity Securities is based on the premise that property
market fundamentals are the primary determinant of growth
underlying the performance of Real Estate Equity Securities.
Value and management further distinguishes the
most attractive Real Estate Equity Securities. The Fund's
research and investment process is designed to identify
those companies with strong property fundamentals and
strong management teams. This process is comprised of
real estate market research, specific property inspection,
and securities analysis. Centurion Counsel believes that
this process will result in a portfolio that will consist
of Real Estate Equity Securities of companies that own
assets in the most desirable markets across the country,
diversified geographically and by property type.
To implement the Fund's research and investment process,
Centurion Counsel will use publicly available and
proprietary databases and algorithms to analyze local
market rent, expenses, occupancy trends, market specific
transaction pricing, demographic and economic trends, and
leading indicators of real estate supply such as building
permits. Centurion Counsel further screens the universe
of real estate industry companies by using rigorous
financial models and by engaging in regular contact
with management of targeted companies.
Each management's strategic plan and ability to execute
the plan are determined and analyzed. Centurion Counsel makes
extensive use of industry analysis in order to assess trends in
tenant industries. This information is then used to further
evaluate management's strategic plans. Financial ratio analysis
is used to isolate those companies with the ability to make
value-added acquisitions. This information is combined with
property market trends and used to project future earnings
potential.
The Fund may invest in short-term investments including:
corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with
similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations
(including certificates of deposit, time deposits, demand
deposits and bankers' acceptances) of banks with securities
outstanding that are rated Prime-1, Aa or better by Moody's
or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities with remaining maturities not exceeding
18 months.
The Fund may invest in debt securities rated BBB or higher
by S&P or Baa or higher by Moody's or, if not rated, of
equivalent credit quality as determined by Centurion Counsel.
The Fund expects that it will not retain a debt security
that is downgraded below BBB or Baa or, if unrated, determined
by Centurion Counsel to have undergone similar credit quality
deterioration, subsequent to purchase by the Fund.
The Fund also may:
* invest up to 15% of its net assets in convertible securities;
* enter into forward commitments;
* enter into standby commitment agreements;
* make short sales of securities or maintain a short position
but only if at all times when a short position is open not more
than 25% of the Fund's net assets is held as collateral for such
sales.
* invest up to 10% of its net assets in rights or warrants;
* make loans of portfolio securities of up to 25% of its total
assets; and
* enter into repurchase agreements of up to seven days' duration.
Because the Fund invests a substantial portion of its assets in
the real estate market, it is subject to many of the same risks
involved in direct ownership of real estate. For example, the
value of real estate could decline due to a variety of factors
affecting the real estate market generally, such as overbuilding,
increases in interest rates, or declines in rental rates. In
addition, REITs are dependent on the capability of their
managers, may have limited diversification, and could be
significantly affected by changes in tax laws.
The Fund's investments in mortgage-backed securities have
prepayment risk, which is the risk that mortgage loans will
be prepaid when interest rates decline and the Fund will have
to reinvest in securities with lower interest rates. This risk
causes mortgage-backed securities to have significantly greater
price and yield volatility than traditional fixed-income
securities. The Fund's investments in REMICs, CMOs and other
types of mortgage-backed securities may be subject to special
risks that are described under "Description of Investment
Practices."
Description of Fund Practices and Related Risks
This section describes each Fund's investment practices and
related risks. Unless otherwise stated, a Fund's use of
these practices was described in the previous section.
Dependence on Adviser. The Funds depend on the Adviser's
ability to among other things, accurately and timely identify
undervalued and overvalued securities. In the Market Neutral
Fund in particular, the Adviser may fail to purchase and sell
short different stocks such that the long positions outperform
the short positions. Also, the Adviser may fail to construct
a portfolio that has limited exposure to general equity market
risk or that has limited exposure to specific industries,
specific capitalization ranges and certain other risk factors.
Investment Techniques. The value of Fund shares may increase
or decrease depending on external conditions affecting the
Fund's portfolio. These conditions depend upon market, economic,
political, regulatory and other factors. Investment in shares
of the Fund is more volatile and risky than some other forms
of investment. In the Market neutral Fund in particular, the
Fund's long positions may decline in value at the same time
that the market value of securities sold short increases,
thereby increasing the magnitude of the loss that you may
suffer on your investment as compared to other stock mutual
funds. Although the Market Neutral Fund's investment strategy
seeks to minimize the risk associated with investing in the
equity market, an investment in the Market Neutral Fund will
be subject to various risks, including the risk of poor stock
selection by the Adviser.
An investment in the Market Neutral Fund and the other Funds
is different from an investment in 3-month U.S. Treasury
Bills because, among other differences, Treasury Bills are
backed by the full faith and credit of the U.S. Government,
Treasury Bills have a fixed rate of return, investors in
Treasury Bills do not risk losing their investment, and an
investment in the Fund is more volatile than an investment
in Treasury Bills.
Investments in Common Stock. Each 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. None of the Funds' goal is 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.
Risks of Short Sales. When the Adviser believes that a
security is overvalued, it may sell the security short by
borrowing it from a third party and selling it at the then
current market price. A Fund will incur a loss if the
price of the borrowed security increases between when the
Fund sells it and when the Fund replaces it the Fund may
gain if the price of the borrowed security decreases during
that period of time. The Fund cannot guarantee that it will
be able to replace a security at any particular time or at
an acceptable price. This risk is particularly applicable
to the Market Neutral Fund.
During the time a Fund is short a security, it is always
subject to the risk that the security's lender will terminate
the loan at a time when the Fund is unable to borrow the same
security from another lender. If this happens, the Fund must
buy the replacement share immediately at its then market value
or "buy in" by paying the lender an amount equal to the price
required to purchase the' security to close out the short
position. A Fund's gain on a short sale is limited by the price
at which it sold the borrowed security. By contrast, its loss
on a short sale is limited only by the maximum attainable
price of the security less the price at which it was sold.
Short sales also involve other costs. A Fund must repay
to the lender any dividends or interest that accrue while
it is holding a security sold short To borrow the security,
the Fund also may be required to pay a premium. A Fund also
will incur transaction costs in effecting short sales. The
amount of any ultimate gain for a Fund resulting from a
short sale will be decreased, and the amount of any ultimate
loss for the Fund will be increased, by the amount of premiums,
dividends, interest or expenses the Fund may be required to
pay in connection with a short sale.
Until a Fund replaces a borrowed security, it will maintain
daily a segregated account with its Custodian containing cash,
U.S. Government securities, or other liquid securities. The
amount deposited in the segregated account plus any amount
deposited as collateral with a broker or other custodian will
at least equal the current market value of the security sold
short. Depending on the arrangements made with such broker or
custodian, the Fund might not receive any payments (including
interest) on collateral deposited with the broker or custodian.
A Fund will not make a short sale if after giving effect to
the sale the market value of all securities sold short would
exceed 100% of the value of the Fund's net assets.
Options on Securities. An option gives the purchaser of the
option, upon payment of a premium, the right to deliver to
(in the case of a put) or receive from (in the case of a call)
the writer a specified amount of a security on or before a
fixed date at a predetermined price. A call option written by a
Fund is "covered" if the Fund owns the underlying security,
has an absolute and immediate right to acquire that security upon
conversion or exchange of another security it holds, or holds a
call option on the underlying security with an exercise price
equal to or less than that of the call option it has written.
A put option written by the Fund is covered if a Fund is short
the underlying security or holds a put option on the underlying
securities with an exercise price equal to or greater than that
of the put option it has written.
A call option is used for cross-hedging purposes if a Fund does
not own the underlying security, and is designed to provide a
hedge against a decline in value in another security which the
Fund owns or has the right to acquire. A Fund would write a call
option for cross-hedging purposes, instead of writing a covered
call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing
a covered call option, while at the same time achieving the desired
hedge.
In purchasing an option, a Fund would be in a position to realize
a gain if, during the option period, the price of the underlying
security increased (in the case of a call) or decreased (in the
case of a put) by an amount in excess of the premium paid; otherwise
the Fund would experience a loss equal to the premium paid for the
option.
If an option written by the Fund were exercised by the holder of
the option, the Fund would be obligated to purchase (in the case
of a put) or sell (in the case of a call) the underlying security
at the exercise price. The risk involved in writing an option is
that, if the option were exercised, the underlying security could
then be purchased or sold by the Fund at a disadvantageous price.
Entering into a closing transaction (i.e., by disposing of the
option prior to its exercise) could reduce these risks. A Fund
retains the premium received from writing a put or call option
whether or not the option is exercised. The writing of covered
call options could result in increases in a Fund's portfolio
turnover rate, especially during periods when market prices
of the underlying securities appreciate.
Options on Securities Indices. An option on a securities index
is similar to an option on a security except that, rather than
the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right
to receive, upon exercise of the option, an amount of cash if the
closing level of the chosen index is greater than (in the case of
a call) or less than (in the case of a put) the exercise price of
the option.
Rights and Warrants. A Fund will invest in rights or warrants only
if the Adviser deems the underlying equity securities themselves
appropriate for inclusion in the Fund's portfolio. Rights and
warrants entitle the holder to buy equity securities at a specific
price for a specific period of time. Rights are similar to warrants
except that they have a substantially shorter duration. Rights and
warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities, nor do they
represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with the
value of the underlying security, although the value of a right or
warrant may decline because of a decrease in the value of the
underlying security, the passage of time or a change in perception
as to the potential of the underlying security, or any combination
of these factors. If the market price of the underlying security is
below the exercise price of the warrant on the expiration date, the
warrant will expire worthless. Moreover, a right or warrant ceases
to have value if it is not exercised prior to the expiration date.
Short Sales. The Centurion Market Neutral Fund routinely makes short
sales of securities. A short sale is effected by selling a security
that a Fund does not own, or, if the Fund does own such security, it
is not to be delivered upon consummation of the sale. A short sale is
"against the box" to the extent that the Fund contemporaneously owns
or has the right to obtain securities identical to those sold short
without payment. A Fund will make short sales of securities the Adviser
identifies as over-valued. If the price of the security sold short
increases between the time of the short sale and the time a Fund
replaces the borrowed security, the Fund will incur a loss; conversely,
if the price declines, the Fund will realize a capital gain.
Convertible Securities. Each of the Funds, to some extent, invests
in convertible securities. Prior to conversion, convertible securities
have the same general characteristics as non-convertible debt
securities, which generally provide a stable stream of income with
yields that are generally higher than those of equity securities of
the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying equity
security, although the higher yield tends to make the convertible
security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to
decrease as interest rates rise and increase as interest rates
decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of
similar quality, they offer investors the potential to benefit from
increases in the market price of the underlying common stock.
Convertible debt securities that are rated Baa or lower by Moody's
or BBB or lower by S&P, Duff & Phelps or Fitch and comparable unrated
securities may share some or all of the risks of non-convertible debt
securities with those ratings.
Money Market Instrument Investments. From time to time a Fund may
have substantial amounts of its assets invested in money market
instruments. In general, these investments are in one or a
combination of two of 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 and Fixed-Income Securities. From time to
time each Fund may have substantial amounts of its assets invested
in debt securities issued by governments and/or private entities
such as corporations and trusts. Each Fund may from time to time
invest a substantial portion of its assets in debt securities of
less than investment grade; provided each 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.
Changes in interest rates will specifically affect the value of the
Fund's long positions in income-producing, fixed-income (i.e.,
debt) securities. Increases in interest rates generally will cause
the value of a Fund's investments to decline and this decrease in
value may not be offset by the higher interest rate income.
The value of the Fund's shares will fluctuate with the value of
its investments. The value of the Fund's investments in fixed-
income securities will change as the general level of interest
rates fluctuates. During periods of falling interest rates, the
values of fixed-income securities generally rise. Conversely,
during periods of rising interest rates, the values of fixed-
income securities generally decline.
Under normal market conditions, the average dollar-weighted
maturity of the Fund's portfolio of debt or other fixed-income
securities is expected to vary between one and 30 years. In
periods of increasing interest rates, the Fund may, to the
extent it holds mortgage-backed securities, be subject to
the risk that the average dollar-weighted maturity of the
Fund's portfolio of debt or other fixed-income securities may
be extended as a result of lower than anticipated prepayment
rates.
Illiquid Securities. While not a principal investment policy,
each of the Funds will limit its investments in illiquid
securities to no more than 5% of their net assets. Illiquid
securities generally include (i) direct placements or other
securities that are subject to legal or contractual restrictions
on resale or for which there is no readily available market
(e.g., when trading in the security is suspended or, in the case
of unlisted securities, when market makers do not exist or will
not entertain bids or offers), including many individually
negotiated currency swaps and any assets used to cover currency
swaps and most privately negotiated investments in state
enterprises that have not yet conducted an initial equity
offering, (ii) over-the-counter options and assets used to
cover over-the-counter options, and (iii) repurchase agreements
not terminable within seven days.
Because of the absence of a trading market for illiquid
securities, a Fund may not be able to realize its full value
upon sale. The Adviser will monitor the liquidity of each Fund's
investments in illiquid securities. Rule 144A securities will not
be treated as "illiquid" for purposes of this limit on investments.
The Fund may not be able to readily sell securities for which there
is no ready market. Such securities are unlike securities that are
traded in the open market and can be expected to be sold immediately
if the market is adequate. The sale price of illiquid securities may
be lower or higher than the Adviser's most recent estimate of their
fair value. Generally, less public information is available about
the issuers of such securities than about companies whose securities
are traded on an exchange. To the extent that these securities are
foreign securities, there is no law in many of the countries in which
the Fund may invest similar to the Securities Act requiring an issuer
to register the sale of securities with a governmental agency or
imposing legal restrictions on resales of securities, either as to
length of time the securities may be held or manner of resale.
However, there may be contractual restrictions on resales of
non-publicly traded foreign securities.
Futures Contracts and Options on Futures Contracts. While not a
principal investment policy, the Market Neutral Fund may purchase
options on futures contracts written or purchased by the Fund that
are traded on U.S. or foreign exchanges or over-the-counter. A
"purchase" of a futures contract means the incurring of an
obligation to acquire the securities, foreign currencies or other
commodity called for by the contract at a specified price on a
specified date. The purchaser of a futures contract on an index
agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of the
index on the expiration date of the contract ("current contract
value") and the price at which the contract was originally struck.
No physical delivery of the securities underlying the index is
made. These investment techniques will be used only to hedge
against anticipated future changes in market conditions and
interest or exchange rates which otherwise might either
adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of securities
which the Fund intends to purchase at a later date. The
Fund will not enter into any futures contracts or options
on futures contracts if immediately thereafter the market
values of the outstanding futures contracts of the Fund
and the currencies and futures contracts subject to
outstanding options written by the Fund would exceed 50%
of its total assets.
Portfolio Turnover Rate. The portfolio turnover rate for
the Funds are included in the Financial Highlights section
of the Statement of Additional Information (SAI). A higher
rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Fund and its
shareholders. High portfolio turnover also may result in
the realization of substantial net short-term capital
gains, which, when distributed, are taxable to shareholders.
During its year ended, December 31, 1998, the turnover
rate for the Centurion Counsel Market Neutral Fund was
522%. Under its current strategies, the Market Neutral
Fund, the Growth Fund and the Real Estate Fund expect
their turnover rate to not be more than 800%, 200% and
100%, respectively. 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.
Mortgage-Backed Securities and Associated Risks.
Investing in Mortgage-Backed Securities involves certain
unique risks in addition to those risks associated with
investment in the real estate industry in general.
Interest and principal payments (including prepayments)
on the mortgages underlying mortgage-backed securities
are passed through to the holders of the securities. As
a result of the pass-through of prepayments of principal
on the underlying securities, mortgage-backed securities
are often subject to more rapid prepayment of principal
than their stated maturity would indicate. Prepayments
occur when the mortgagor on a mortgage prepays the
remaining principal before the mortgage's scheduled
maturity date. Because the prepayment characteristics of
the underlying mortgages vary, it is impossible to predict
accurately the realized yield or average life of a particular
issue of pass-through certificates. Prepayments are important
because of their effect on the yield and price of the mortgage-
backed securities. During periods of declining interest rates,
prepayments can be expected to accelerate and a Fund that
invests in these securities would be required to reinvest
the proceeds at the lower interest rates then available.
Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturity
of the securities, subjecting them to a greater risk of decline
in market value in response to rising interest rates. In
addition, prepayments of mortgages underlying securities
purchased at a premium could result in capital losses.
Mortgage-Backed Securities include mortgage pass-through
certificates and multiple-class pass-through securities,
such as REMIC pass-through certificates, CMOs and stripped
mortgage-backed securities ("SMBS"), and other types of
Mortgage-Backed Securities that may be available in the
future.
Guaranteed Mortgage Pass-Through Securities. Centurion
Counsel Real Estate Fund may invest in guaranteed mortgage
pass-through securities which represent participation
interests in pools of residential mortgage loans and are
issued by U.S. governmental or private lenders and
guaranteed by the U.S. Government or one of its agencies
or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"),
the Federal National Mortgage Association ("Fannie Mae")
and the Federal Home Loan Mortgage Corporation ("Freddie
Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for
timely payment of principal and interest on the certificates.
Fannie Mae certificates are guaranteed by Fannie Mae, a
federally chartered and privately-owned corporation, for
full and timely payment of principal and interest on the
certificates. Freddie Mac certificates are guaranteed by
Freddie Mac, a corporate instrumentality of the United
States Government, for timely payment of interest and the
ultimate collection of all principal of the related mortgage
loans.
Multiple-Class Pass-Through Securities and Collateralized
Mortgage Obligations. Mortgage- Backed Securities also include
CMOs and REMIC pass-through or participation certificates that
may be issued by, among others, U.S. Government agencies and
instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal
of and interest on the mortgage assets may be allocated among
the several classes of CMOs or REMIC certificates in various
ways. Each class of CMOs or REMIC certificates, often referred
to as a "tranche," is issued at a specific adjustable or fixed
interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues
on all classes of CMOs or REMIC certificates on a monthly basis.
Centurion Counsel Real Estate Fund will not invest in the lowest
tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac
certificates but also may be collateralized by other mortgage
assets such as whole loans or private mortgage pass-through
securities. Debt service on CMOs is provided from payments
of principal and interest on collateral of mortgaged assets
and any reinvestment income.
A REMIC is a CMO that qualifies for special tax treatment
under the Code and invests in certain mortgages primarily
secured by interests in real property and other permitted
investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts,
although Centurion Counsel Real Estate Fund does not intend
to invest in residual interests.
The Real Estate Industry. Although Centurion Counsel Real
Estate Fund does not invest directly in real estate, it
invests primarily in Real Estate Equity Securities and has a
policy of concentration of its investments in the real estate
industry. Therefore, an investment in the Fund is subject to
certain risks associated with the direct ownership of real
estate and with the real estate industry in general. These
risks include, among others: possible declines in the value of
real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in
competition, property taxes and operating expenses; changes
in zoning laws; costs resulting from the clean-up of, and
liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses;
uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes
in interest rates. To the extent that assets underlying the
Fund's investments are concentrated geographically, by property
type or in certain other respects, the Fund may be subject to
certain of the foregoing risks to a greater extent.
In addition, if Centurion Counsel Real Estate Fund receives
rental income or income from the disposition of real property
acquired as a result of a default on securities the Fund owns,
the receipt of such income may adversely affect the Fund's
ability to retain its tax status as a regulated investment
company. Investments by the Fund in securities of companies
providing mortgage servicing will be subject to the risks
associated with refinancings and their impact on servicing
rights.
REITs. Investing in REITs involves certain unique risks
in addition to those risks associated with investing in
the real estate industry in general. Equity REITs may be
affected by changes in the value of the underlying property
owned by the REITs, while mortgage REITs may be affected
by the quality of any credit extended. REITs are dependent
upon management skills, are not diversified, and are subject
to heavy cash flow dependency, default by borrowers and self-
liquidation. REITs are also subject to the possibilities of
failing to qualify for tax-free pass-through of income
under the Code and failing to maintain their exemptions from
registration under the 1940 Act.
REITs (especially mortgage REITs) also are subject to interest
rate risks. When interest rates decline, the value of a
REIT's investment in fixed rate obligations can be expected
to rise. Conversely, when interest rates rise, the value of a
REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate
mortgage loans are reset periodically, yields on a REIT's
investments in such loans will gradually align themselves to
reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to
interest rate fluctuations than would investments in fixed rate
obligations.
Investing in REITs involves risks similar to those associated
with investing in small capitalization companies. REITs may have
limited financial resources, may trade less frequently and in
a limited volume and may be subject to more abrupt or erratic
price movements than larger company securities. Historically,
small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks
included in the S&P 500 Index.
U.S. and Foreign Taxes. A Fund's investment in foreign
securities may be subject to taxes withheld at the source
on dividend or interest payments. Foreign taxes paid by a
Fund may be creditable or deductible by U.S. shareholders
for U.S. income tax purposes.
No assurance can be given that applicable tax laws and
interpretations will not change in the future. Moreover,
non-U.S. investors may not be able to credit or deduct such
foreign taxes.
Investments in Micro and Small-cap Companies. Each Fund will
invest in micro-to-small-cap companies which tend to be more
volatile than investments in large-cap or mid-cap companies
because smaller capitalization stocks typically have additional
risks because these often have limited product lines, markets
or financial resources.
Future Developments. Each Fund may, following written notice
to its shareholders, take advantage of other investment
practices that are not currently contemplated for use by the
Fund, or are not available but may yet be developed, to the
extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund.
Such investment practices, if they arise, may involve risks that
exceed those involved in the activities described above.
Year 2000. Many computer systems and applications in use today
process transactions using two-digit date fields for the year of
the transaction, rather than the full four digits. If these
systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900," which could result
in processing inaccuracies and computer system failures. This
is commonly known as the Year 2000 problem. Should any of the
computer systems employed by a Fund's major service providers
fail to process Year 2000 related information properly, that
could have a significant negative impact on the Funds' operations
and the services that are provided to the Fund's shareholders.
In addition, to the extent that the operations of issuers of
securities held by a Fund are impaired by the Year 2000 problem,
or prices of securities held by the Fund decline as a result
of real or perceived problems relating to the Year 2000, the
value of the Fund's shares may be materially affected.
With respect to the Year 2000, the Fund has been advised that
the Adviser, CSI, the Distributor, Centurion Group, Inc., the
Fund's registrar and transfer agent, and Firstar Bank, the
Fund's custodian, began to address the Year 2000 issue several
years ago in connection with the replacement or upgrading of
certain computer systems and applications. During 1997, the
Adviser began a formal Year 2000 initiative, which established
a structured and coordinated process to deal with the Year 2000
issue.
General. The successful use of the investment practices
described above draws upon the Adviser's special skills and
experience and usually depends on the Adviser's ability to
forecast price movements, interest rates, or currency exchange
rate movements correctly. Should interest rates, prices or
exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize
losses and thus be in a worse position than if such
strategies had not been used. Unlike many exchange-traded
futures contracts and options on futures contracts, there
are no daily price fluctuation limits for certain options
and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of
time. In addition, the correlation between movements in
the prices of futures contracts, options and forward contracts
and movements in the prices of the securities and currencies
hedged or used for cover will not be perfect and could produce
unanticipated losses.
A Fund's ability to dispose of its position in futures
contracts, options, and forward contracts depends on the
availability of liquid markets in such instruments. Markets
in options and futures with respect to a number of types of
securities and currencies are relatively new and still
developing, and there is no public market for forward
contracts. It is impossible to predict the amount of trading
interest that may exist in various types of futures contracts,
options, and forward contracts. If a secondary market does not
exist for an option purchased or written by a Fund, it might not
be possible to effect a closing transaction in the option (i.e.,
dispose of the option), with the result that (i) an option
purchased by the Fund would have to be exercised in order for
the Fund to realize any profit and (ii) the Fund may not be able
to sell currencies or portfolio securities covering an option
written by the Fund until the option expires or it delivers the
underlying security, futures contract or currency upon exercise.
Therefore, no assurance can be given that the Fund will be able to
utilize these instruments effectively. In addition, a Fund's
ability to engage in options and futures transactions may be
limited by tax considerations and the use of certain hedging
techniques may adversely impact the characterization of income to
the Fund for U.S. federal income tax purposes.
Temporary Defensive Position. For temporary defensive purposes,
each Fund may reduce its position in equity securities and invest
in, without limit, certain types of short-term, liquid, high grade
or high quality (depending on the Fund) debt securities. These
securities may include U.S. Government securities, qualifying bank
deposits, money market instruments, prime commercial paper and other
types of short-term debt securities including notes and bonds. While
the Funds are investing for temporary defensive purposes, they may
not meet their investment objectives. The Adviser will determine
when market conditions warrant temporary defensive measures.
MANAGEMENT
The Adviser, Centurion Counsel, has served as the Company's adviser
since January 1, 1995. The Adviser's address is 11545 West Bernardo
Court, Suite 100, San Diego, CA 92127. The Adviser has operated as
an investment adviser since its organization in 1986. Its business
consists primarily of managing the investment portfolios for
individuals, corporations and retirement plans. The Fund pays the
Adviser a fee for managing the Fund's assets and making its investment
decisions. Under the Fund's agreement with the Adviser, this fee
equals 1% per annum of the Fund's first $200 million of average daily
net assets and declines thereafter at a percentage of average daily
net assets if the size of the Fund should be greater. For the year
ended December 31, 1998, the Market Neutral Fund paid an annualized
rate of 1.0% of its average daily assets to the Adviser.
Mr. Jack K. Heilbron has served as portfolio manager for the Fund
since 1992. Mr. Heilbron is Chairman, Chief Executive Officer and
Chief Investment Officer of the Adviser. Mr. Heilbron also serves
as Chairman and/or Chief Executive Officer for the Adviser's
Affiliates, including the Fund's underwriter, Centurion Institutional
Services, Inc. ("CISI"). The Adviser compensates Mr. Heilbron for
his services to the Fund.
DISTRIBUTIONS AND TAXES
Income and Capital Gains Distributions. The Funds intend to pay
dividends at least annually representing its net investment income.
Capital gains, if any, may be distributed annually. The amount of
these distributions will vary and there is no guarantee a Fund will
pay dividends.
To receive a distribution, you must be a shareholder on the record
date. The record dates for the Fund's distributions will vary.
Remember that if you invest in the Fund shortly before the record
date of a distribution, any distribution will lower the value of the
Fund's shares by the amount of the distribution and you will receive
some of your investment back in the form of a taxable distribution.
If you would like information on upcoming record dates for the Fund's
distributions, please call Centurion Counsel at 1-800-878-8536.
Tax Considerations. In general, Fund distributions are taxable to
you as either ordinary income or capital gains. This is true whether
you reinvest your distributions in additional shares of the Fund or
receive them in cash. Any capital gains the Fund distributes are
taxable to you as long-term capital gains no matter how long you have
owned your shares.
Every January, you will receive a statement that shows the tax status
of distributions you received for the previous year. Distributions
declared in December but paid in January are taxable as if they were
paid in December.
When you sell your shares of the Fund, you may have a capital gain
or loss. For tax purposes, an exchange of your Fund shares for
shares of a different Centurion Counsel Fund is the same as a
sale. The individual tax rate on any gain from the sale or
exchange of your shares depends on how long you have held your
shares.
The Fund must, by law, withhold 31% of your taxable distributions
and proceeds if you do not provide your correct taxpayer
identification number (TIN) or certify that your TIN is correct,
or if the IRS instructs the Fund to do so.
Fund distributions and gains from the sale or exchange of your
shares will generally be subject to state and local income tax.
Non-U.S. investors may be subject to U.S. withholding and estate
tax. You should consult your tax adviser about federal, state,
local or foreign tax consequences of your investment in the Fund.
INFORMATION ABOUT YOUR ACCOUNT
Share Classes, Sales Charges and Distribution Arrangements
Share Classes: Each Fund offers four classes of Shares. Each
class has its own sales charges and distribution arrangement.
Class A Shares--Initial Sales Charge Alternative
You can purchase Class A shares at NAV (net asset value per share)
with an initial sales charge as follows:
Initial Sales Charge
As % of Net As % of Commission to Dealer/Agent
Amount Invested Offering Price as % of Offering Price
4.99% 4.75% 4.00%
Class B Shares--Deferred Sales Charge Alternative
You can purchase Class B Shares at NAV without an initial sales
charge. A Fund will thus receive the full amount of your purchase.
Your investment, however, will be subject to a conditional deferred
sales charge or CDSC if you redeem shares within 5 years of purchase.
The CDSC varies depending on the number of years you hold the shares.
The CDSC amounts are:
Years Since Purchase CDSC
First 4.0%
Second 4.0%
Third 3.0%
Fourth 2.5%
Fifth 1.5%
Sixth None
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.
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.
Class C Shares--Asset-based Sales Charge Alternative
You can purchase shares at NAV without an initial sales charge
or CDSC. Class C shares will be subject to Rule 12b-1 fees.
A Fund will thus receive the full amount of your purchase.
Class D Shares--No Sales Charges
Class D shares are sold at net asset value only to persons
who qualify as an Adviser Professional, Eligible Employee, or
Eligible Account, as defined below. 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.
"Adviser Professionals" are investment advisers, trust companies
and bank trust departments exercising discretionary investment
authority with respect to the money to be invested in the Fund.
Eligible Employees are (a) current or retired directors of the
Funds, current or retired employees of the Adviser or its
affiliated companies, including spouses, minor children and
grandchildren of these persons or their parents; or (b) employees
or registered representatives of the Fund's dealers' selling
group agreements with the Distributor, employees of financial
institutions that have arrangements having selling group
agreements with the Distributor, and spouses and minor children
of such persons; or (c) any trust, pension, profit sharing or
other benefit plan for such persons. "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.
Asset-based Sales Charge or Rule 12b-1 Fees. Each Fund has
adopted a plan under Rule 12b-1 that allows the Fund to pay
asset-based sales charges or distribution and service fees for
the distribution and sale of its shares. The amount of these
fees for each class of the Fund's shares is:
Rule 12b-1 Fee (As a Percentage of
Aggregate Average Daily Net Assets)
Class A 0.25%
Class B 1.00%
Class C 1.00%
Class D None
The fee under the Rule 12b-1 Plan for the Class A shares is 1.0%
of the aggregate average daily net assets. Because these fees
are paid out of the Fund's assets on an on-going basis, over time
these fees will increase the cost of your investment and may cost
you more than paying other types of sales fees. Class B and Class
C shares are subject to higher distribution fees than Class A
shares (Class B shares are subject to these higher fees for a
period of eight years, after which they convert to Class A
shares). The higher fees mean a higher expense ratio, so Class B
and Class C shares pay correspondingly lower dividends and may
have a lower net asset value than Class A shares.
Choosing a Class of Shares. The decision as to which class of
shares is more beneficial to you depends primarily on the intended
length of your investment. If you plan to keep your shares for
5 years or longer, you might consider purchasing Class A shares
because of their one-time front end charge and lower 12b-1 fees
of 0.25% per year. If your investment will be for a shorter
term, you might consider purchasing Class B shares because 100%
of your purchase is invested immediately. Also, while your
12b-1 fee expenses will be 1.0% per year they should, when added
to the CDSD charged on your Class B Shares, be less than the total
of the front end sales charge and 12b-1 fees on Class A Shares
eld for the same period. If you are unsure of the length of
your investment, you might consider Class C shares because there
is no initial sales charge and no CDSC as long as the shares
are held for one year or more. Dealers and agents may receive
differing compensation for selling Class A, Class B, or Class
C shares. There is no size limit on purchases of any class of
shares.
You should consult your financial agent to assist in choosing a
class of Fund shares.
Other Charges. A transaction, service, administrative or other
similar fee may be charged by your broker-dealer, agent,
financial intermediary, or other financial representative with
respect to the purchase, sale, or exchange of Class A, Class B,
or Class C shares made through your financial representative.
The financial intermediaries also may impose requirements on
the purchase, sale, or exchange of shares that are different
from, or in addition to, those imposed by a Fund, including
requirements as to the minimum initial and subsequent investment
amounts.
In addition to the discount or commission paid to dealers or
agents, the Distributor from time to time may pay additional
cash or other incentives to dealers or agents for the sale of
shares of the Fund. These additional amounts may be utilized,
in whole or in part, in some cases together with other revenues
of such dealers or agents, to provide additional compensation to
registered representatives who sell shares of the Fund. On some
occasions, the cash or other incentives will be conditioned upon
the sale of a specified minimum dollar amount of the shares of
the Fund and/or other Centurion Counsel Funds during a specific
period of time. The incentives may take the form of payment for
attendance at seminars, meals, sporting events or theater
performances, or payment for travel, lodging and entertainment
incurred in connection with travel by persons associated with
a dealer or agent to urban or resort locations within or outside
the U.S. The dealer or agent may elect to receive cash incentives
of equivalent amount in lieu of such payments.
Buying Shares
You can start your investment in the Fund with as little as a
$500 purchase. You can make additional purchases of $25 or more.
Your new Fund shares will be priced based on the Share's NAV next
determined after your order is received. The Fund may waive these
minimum purchase amounts to groups of investors with a single
agent. All Shares are offered to the public except the Class D
Shares, which are offered only to Adviser Professionals, Eligible
Employees or Eligible Accounts.
How to Buy Shares
Adding to an account
Through your investment
representative Contact your investment representative
By Mail Complete New Account Application and
state the Fund in which you want to
invest. Make your check payable to
Centurion Counsel Funds, inc.
Mail your New Account Application and
check to Centurion Institutional
Services, Inc.
By Exchange Call Centurion Institutional Services, Inc.
at the number below or send signed written
instructions.
(Please see page ___ for information on exchanges.)
Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Telephone 1-800-878-8536
(Monday through Friday 8:00 a.m. to 5:00 p.m., Pacific time)
Investor Services
Periodic Payment Plan. This plan offers a convenient way for you to
invest in the Fund by automatically transferring money from your
checking or savings account each month to buy shares. To sign up,
complete the appropriate section of your account application.
Distribution Options. You may reinvest distributions you receive from
the Fund in an existing account in the same share class of the Fund or
another Centurion Counsel Fund. Initial or contingent sales charges will
not apply if you reinvest your distributions under this option.
Please indicate on your application the distribution option you have
chosen, otherwise we will reinvest your distributions in the Fund.
Telephone Privileges. You will automatically receive telephone
privileges when you open your account, allowing you and your investment
representative to sell or exchange your shares and make certain other
changes to your account by phone.
For accounts with more than one registered owner, telephone privileges
also allow the Fund to accept written instructions signed by only one
owner for transactions and account changes that could otherwise be made
by phone. For all other transactions and changes, all registered owners
must sign the instructions.
As long as we take certain measures to verify telephone requests, we
will not be responsible for any losses that may occur from unauthorized
requests. Of course, you can decline telephone exchange or redemption
privileges on your account application.
Exchange Privilege. Subject to the following limitations, you may
exchange some or all of your shares of the Fund for shares of Cash
Equivalent Fund - Money Market Portfolio (a money market fund) ("CEF").
CEF is managed by Kemper Financial Services, Inc. and is offered
through Centurion Institutional Services, Inc. If a shareholder
wishes to exchange shares of the Fund for shares of CEF, the
shareholder should first contact CIS and obtain and read the prospectus
of CEF.
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 purchase. You need not pay any front-end
sales charges 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.
Generally, exchanges may only be made between identically registered
accounts, unless you send written instructions with a signature guarantee.
Any CDSC will continue to be calculated from the date of your initial
investment and will not be charged at the time of the exchange. The
purchase price for determining a CDSC on exchanges shares will be the
price you paid for the original shares. If you exchange shares subject
to a CDSC into the Centurion Counsel Money Market Fund, the time your
shares are held in the money market fund will not count towards the CDSC
holding period.
An exchange is really two transactions: a sale of one fund and the
purchase of another. In general, the same policies that apply to
purchases and sales apply to exchanges, including minimum investment
amounts. Exchanges also have the same tax consequences as ordinary
sales and purchases.
Frequent exchanges can interfere with fund management or operations
and drive up costs for all shareholders. To protect shareholders,
there may be limits on the number and amount of exchanges you may
make.
Payout Plan. This plan allows you to automatically sell your shares
and receive regular payments from your account of $150 or more. If
applicable, a CEC will apply to withdrawals. Certain terms and minimums
apply. To sign up, complete the appropriate section of your application.
Selling Shares
You can sell your shares at any time at their NAV next determined after
your request is received, less any CDSC in the case of the Class B shares.
Please keep in mind that even if you sell all the shares in your account,
your account will not be closed. You will still be able to buy additional
Fund shares.
Selling Shares in Writing. Requests to sell shares can generally be made
over the phone or with a simple letter. Sometimes, however, to protect you
and the Fund we will need written instructions signed by all registered
owners, with a signature guarantee for each owner if you want to send your
proceeds somewhere other than the address of record, or preauthorized bank
or brokerage firm account.
We may also require a signature guarantee on instructions we receive from
an agent, not the registered owners, or when we believe it would protect
the Fund against potential claims based on the instructions received.
A signature guarantee helps protect your account against fraud. You can
obtain a signature guarantee at most banks and securities dealers. A
notary public CANNOT provide a signature guarantee.
Selling Recently Purchased Shares. If you sell shares recently purchased
with a check or draft, we may delay sending you the proceeds until your
check or draft has cleared, which may take seven business days or more. A
certified or cashier's check may clear in less time.
Redemption Proceeds. Your redemption check will be sent within seven
(7) days after we receive your request in proper form. We are not able
to receive or pay out cash in the form of currency. Redemption proceeds
may be delayed if we have not yet received your signed account application.
Selling Shares
To sell some or all of your shares
Through your investment
representative
Contact your investment
representative
By Mail Send written instructions and endorsed share
certificates (if you hold share certificates)
to Centurion Institutional Services, Inc.
Corporate,partnership or trust accounts may
need to send additional documents.
Specify the fund, the account number and the
dollar value or number of shares you wish to
sell. Be sure to include all necessary
signatures and any additional documents, as
well as signature guarantees, if required.
A check will be mailed to the name(s) and
address on the account, or otherwise according
to your written instructions.
By Phone As long as you do not hold share certificates
and you have not changed your address by phone
within the last 15 days, you can sell your
Telephone (619) 673-8536 shares by phone.
A check will be mailed to the name(s) and
address on the account. Written instructions,
with a signature guarantee, are required to
send the check to another address or to make it
payable to another person.
By Exchange Obtain a current prospectus for the fund you are
considering.
Call Shareholder Services at the number below
or send signed written instructions. See the
policies above for selling shares by mail or
phone.
Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
Telephone 1-800-878-8536
Account Policies
Calculating Share Price. The Fund calculates the net asset value per
share ("NAV") each business day at the close of trading on the New York
Stock Exchange (normally 1:00 p.m. Pacific time). The Fund's NAV is
calculated by dividing its net assets attributable to the share class
by the number of shares of that class outstanding.
When you buy shares, you pay the offering price. The offering price is
the NAV plus any applicable sales charge.
When you sell shares, you receive the NAV minus any applicable contingent
deferred sales charge (CDSC).
The Fund's assets are generally valued at their market value. If market
prices are unavailable, or if an event occurs after the close of the
trading market that materially affects the values, assets may be valued
at their fair value. If the Fund holds securities listed primarily on
a foreign exchange that trades on days when the Fund is not open for
business, the value of your shares may change on days that you cannot
buy or sell shares.
Requests to buy and sell shares are processed at the NAV next calculated
after we receive your request in proper form.
Statements and Reports. You will receive confirmations and account
statements that show our account transactions. You will also receive the
Fund's financial reports every six months. To reduce Fund expenses, we
try to identify related shareholders on a household and send only one copy
of the financial reports. If you need additional copies, please call
1-800-878-8536.
If there is a dealer or other investment representative of record on your
account, he or she will also receive confirmations, account statements and
other information about your account directly from the Fund.
Street or Nominee Accounts. You may transfer your shares from the street
or nominee name account of one dealer to another, as long as both dealers
have an agreement with CISI. We will process the transfer after we receive
authorization in proper form from your delivering securities dealer.
Joint Accounts. Unless you specify a different registration, accounts with
two or more owners are registered as "joint tenants with rights of
survivorship." To make any ownership changes to a joint account, all owners
must agree in writing, regardless of the law in your state.
Market Timers. The Fund allows investments by market timers.
Additional Policies. Please note that the Fund maintains additional
policies and reserves certain rights, including:
* The Fund may refuse any order to buy shares, including any purchase
under the exchange privilege.
* At any time, the Fund may change its investment minimums or waive or
lower its minimums for certain purchases.
* The Fund may modify or discontinue the exchange privilege on 60 days'
notice.
* You may only buy shares of a fund eligible for sale in your state or
jurisdiction.
* In unusual circumstances, we may temporarily suspend redemptions, or
postpone the payment of proceeds, as allowed by federal securities
laws.
* For redemptions over a certain amount, the Fund reserves the right
to make payments in securities or other assets of the Fund, in the
case of an emergency or if the payment by check or wire would be
harmful to existing shareholders.
* To permit investors to obtain the current price, dealers are
responsible for transmitting all orders to the Fund promptly.
Dealer Compensation. Qualifying dealers who sell the Class A, Class B or
Class C Shares may receive sales commissions and other payments. These
are paid by the Fund's Distributor, CISI, from sales charges, distribution
and service (12b-1) fees and its other resources.
Share Class Maximum Reallowance
Class A 4.0%
Class B up to 4.0% CDSC
Class C None
Class D None
FINANCIAL HIGHLIGHTS
Centurion Counsel Market Neutral Fund
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information
reflects financial results for a single share of the Fund. The total
returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by
Squire & Co., the independent accountants for the Fund, whose reports,
along with the Fund's financial statements, are included in the Statement
of Additional Information ("SAI"), which is available upon request.
The auditor's report, along with the Fund's financial statements, are
included in the SAI, which is available upon request.
Selected data for each share of capital stock outstanding throughout
the period is as follows:
Class A Class B
Shares Shares
Per Share Operating Performance: 1998 1997 (c) 1998 1997 (c)
"Net asset value, beginning of period" $3.35 $3.65 $ 3.33 $3.65
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) 0.02 - -0.01 -
Net gains (losses) on investments
(both realized and unrealized) (d) -0.33 -0.30 -0.32 -0.32
Total From Investment Operation -0.31 -0.30 -0.33 -0.32
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - - -
Distributions from capital gains - - - -
al Distributions - - - -
Net asset value, end of period $3.04 $3.35 $3.00 $3.33
TOTAL RETURN (e) -8.28% -8.47% -9.91% -4.39%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $ 8 $ 8 $ 1 $ 1
Ratios to net assets
Expenses, before waiver of fees 2.67% 2.38% 3.42% 2.84%
Expenses, after waiver of fees 2.67% 2.15% 3.42% 2.60%
Net investment income -2.85% 0.64% -3.60% 0.19%
Portfolio Turnover Rate 522.88% 234.67% 522.88% 234.67%
Number of Shares Outstanding
at End of Period (000 Omitted) 3 3 0 0
Class C Shares (a)
For the years ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
"Net asset value, beginning of period" $3.33 $3.51 $3.34 $3.43 $4.55
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) -0.01 -0.01 -0.03 -0.05 -0.18
Net gains (losses) on investments
(both realized and unrealized) (d) -0.33 -0.17 0.20 -0.04 -0.94
Total From Investment Operation -0.34 -0.18 0.17 -0.09 -1.12
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - - - -
Distributions from capital gains - - - - -
Total Distributions - - - - -
"Net asset value, end of period $2.99 $3.33 $3.51 $3.34 $3.43
TOTAL RETURN (e) -10.25% -5.13% 5.16% -2.62% -28.01%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $4,166 $7,288 $7,855 $4,370 $ 452
Ratios to net assets
Expenses, before waiver of fees 3.42% 3.14% 3.54% 4.82% 9.04%
Expenses, after waiver of fees 3.42% 2.91% 3.54% 3.53% 6.00%
Net investment income -3.60% -0.11% -0.43% 0.17% -4.78%
Portfolio Turnover Rate 522.88% 234.67% 129.20% 57.20% 148.21%
Number of Shares Outstanding
At End of Period (000 Omitted) 1,392 2,191 2,241 1,309 132
Class D
Shares
Per Share Operating Performance: 1998 1997 1996 (b)
Net asset value, beginning of period $3.36 $3.51 $3.46
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) 0.02 0.01 -
Net gains (losses) on investments
(both realized and unrealized) (d) (0.33) (0.16) 0.05
Total From Investment Operation (0.31) (0.15) 0.05
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - -
Distributions from capital gains - - -
Total Distributions - - -
Net asset value, end of period $3.05 $ 3.36 $3.51
TOTAL RETURN (e) -8.09% -4.27% -5.16%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period ($000 Omitted) $760 $972 $1,839
Ratios to net assets
Expenses, before waiver of fees 2.42% 2.20% 2.13%
Expenses, after waiver of fees 2.42% 1.97% 2.13%
Net investment income -2.60% 0.82% 0.00%
Portfolio Turnover Rate 522.38% 234.67% 129.20%
Number of Shares Outstanding
at End of Period (000 Omitted) 249 290 524
Notes:
(a) All capital shares issued and outstanding as of
November 6, 1996 were reclassified as Class C Shares
(b) For the period December 9, 1996 (effective date) to December 31, 1996.
(c) For the period January 7, 1997 (first sale date) to December 31, 1997.
(d) Allocated between Net Investment Income and Net Gains or (Losses)
on Securities based on monthly weighted average shares outstanding.
(e) Total return measures the change in value of an investment over the
periods indicated. It is not annualized. It does not include the
maximum front end sales charge or contingent deferred sales charge.
Centurion Counsel Growth Fund
This Fund is newly organized and did not exist prior to July 1, 1999.
Centurion Counsel Real Estate Fund
This Fund is newly organized and did not exist prior to July 1, 1999.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Each Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Funds' SAIs are
incorporated by reference into (and are legally part of) this prospectus.
You may request a free copy of the current annual/semi-annual report or the
SAI, by contacting your broker or other financial intermediary, or by contacting
Centurion Institutional Services, Inc.:
By Mail: c/o Centurion Institutional Services, Inc.
11545 West Bernardo Court, Suite 100
San Diego, California 92127
By Phone: For Information: 1-800-878-8536
Or you may view or obtain these documents from the Commission:
In Person: At the Commission's Public Reference Room in Washington, D.C.
By Phone: 1-800-SEC-0330
By Mail: Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
On the Internet: www.sec.gov
Each Fund's Statement of Additional Information
("SAI") dated __________, 1999 contains additional
information about the Fund. It is incorporated by
reference into this Prospectus, which means that it is part
of this Prospectus for legal purposes. Additional
information about the Fund's investments is available in
a Fund's annual and semi-annual reports to Shareholders.
You may obtain free copies of the SAI and the annual
and semi-annual reports for a Fund, or request other
information about a Fund, or make shareholder inquiries
by writing to CISI Fund at the address below or by
telephoning __________________.
CENTURION COUNSEL FUNDS, INC.
11545 West Bernardo Court, Suite 100
San Diego, CA 92127
(858) 673-8536
The SAI for each Fund has been filed with the
Commission. You may review and copy information
about a Fund, including the SAI, at the Commission's
Public Reference Room in Washington, D.C. You may
call the Commission at 1-800-SEC-0330 for information
about the operation of the Public Reference Room. The
Commission maintains a World Wide Website at
http://www.sec.gov, which contains reports and other
information about a Fund. You may also obtain copies of
these materials, upon payment of a duplicating fee. By
writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009.
Prospectus and Application
September ___, 1999
CENTURION COUNSEL FUNDS, INC.
File Number: 811-3257
_________________________________
Centurion Counsel Funds, Inc.
CENTURION COUNSEL FUNDS, INC.
GROWTH FUND
Statement of Additional Information
This Statement of Additional Information ("SAI") is not a
prospectus, but should be read in conjunction with the Prospectus of
Centurion Counsel Funds, Inc.-Growth Fund (the "Fund") dated
September ___, 1999 (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: (858) 673-8536).
TABLE OF CONTENTS
Page
FUND HISTORY 2
FUND INVESTMENTS AND RISKS 2
FUND MANAGEMENT 3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 6
INVESTMENT ADVISORY AND OTHER SERVICES 6
UNDERWRITING ARRANGEMENTS 9
BROKERAGE ALLOCATIONS AND OTHER PRACTICES 13
CAPITAL STOCK AND OTHER SECURITIES 14
RETIREMENT ACCOUNTS 20
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 20
TAXATION OF THE FUND 21
CALCULATION OF PERFORMANCE DATA 22
LIMITATION OF DIRECTOR LIABILITY 23
ADDITIONAL INFORMATION 24
FINANCIAL STATEMENTS 24
Dated September ____, 1999
FUND HISTORY
The Fund is a multi-class series of common stock of Centurion
Counsel Funds, Inc. (the "Company"). The assets and liabilities,
income and expenses of the Company attributable to the Fund are
maintained in a separate investment portfolio and determined separately
for the Fund. The Company was incorporated on August 27, 1981 under
the laws of Minnesota. IRI Asset Management, Inc., a Minneapolis based
investment adviser, served as the adviser to the Company from its
inception until March 1988. At that time, the Company's Board of
Directors ("Board") approved Excel Advisors, Inc. as its adviser and
the offices of the Company were moved to San Diego, California. In
December 1994, the Company?s shareholders approved Centurion Counsel,
Inc. as the Company?s Adviser and on January 15, 1999, the shareholders
and Board of the Company approved establishment of the Fund and the
Board approved the Fund's fundamental investment objective and policies.
FUND INVESTMENTS AND RISKS
Classification. The Fund is a series of shares in an open-end,
diversified management investment company that only issues shares of
common stock. By purchasing shares in the Fund, investors are pooling
their money to acquire a diversified portfolio of securities and other
assets.
Investment Strategies and Risks. The Fund's non-principal
investment strategies are set forth in the Prospectus.
Fund Policies. The Fund has the investment restrictions set forth
below which 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.
To lower investment risks, the Fund will observe the following
fundamental policies.
(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 issuer.
The Fund will also limit its investment in a single issuer to not more
than 10% of that issuer'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 in another investment company
except as a part of a plan of merger, acquisition or consolidation.
(3) The Fund will not buy or sell real estate, commodities or
commodity contracts, except the Fund may invest up to 20% of its net assets
in index futures contracts and options thereupon.
(4) The Fund will not buy securities on margin.
(5) 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.
(6) 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.
(7) 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.
(8) 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.
(9) The Fund will not act as an underwriter.
(10) The Fund will not buy any securities of a company if it
knows that the officers or directors of the Fund, who own ? of 1% or more
of the company's securities, together own more than 5% of the company's
securities.
(11) The Fund will not invest in exploration or development
programs, such as oil or gas programs.
(12) The Fund will not buy or sell foreign currency exchange
securities.
If a percentage limitation described above is adhered to at the time of
the investment by the Fund, a later increase or decrease in the percentage
resulting from any change in the value of the Fund's net assets will not
constitute a violation of the restriction.
FUND MANAGEMENT
Officers and Directors. The names, addresses and principal
occupations of directors and executive officers of the Company 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 (61)<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. She has served as a
registered representative of World Invest
Corporation, a licensed broker-dealer
since 1994.
Richard E. Hall (73) 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 (48)<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 (55)<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 (47) 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 Company 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 Company, or a registered broker/dealer, as defined under the Investment
Company Act of 1940, as amended.
</FN>
</TABLE>
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, 1998.
COMPENSATION TABLE
<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, $1800* -0- -0- $1800*
Director
Richard E. Hall, $1800* -0- -0- $1800*
Director
Russell W. Ketron, $1800* -0- -0- $1800*
Director
Douglas Werner, $1400* -0- -0- $1400*
Director
* Directors are paid $400 per meeting. There were four scheduled
quarterly meetings for 1998.
** 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,
the Centurion Counsel Market Neutral Fund and the Centurion Counsel Real
Estate Fund.
The Company's Board does not have a standing audit or nominating
committee or committees performing similar functions. The Company pays
no compensation to any of its officers and directors, except for a $200 per
year retainer and a fee of $400 for each meeting attended (other than
telephonically) by each director not affiliated with Centurion Counsel and
reimburses such nonaffiliated directors for their travel expenses to attend
directors' meetings. The Board held a total of four (4) regular meetings
during its last fiscal year.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date of this SAI, the Fund had outstanding 10 shares of
each Class, all of which were owned by the Adviser.
As of March 9, 1999, to the knowledge of management, no one
person or persons could control the Company through the exercise of voting
rights. As of March 9, 1999, to the knowledge of management, no person
owned beneficially more than 5% of the Company?s outstanding shares. The
following directors or nominees for the position of director or officers,
as of March 9, 1999, beneficially owned shares of the Company.
Number % of Total
of Shares Outstanding Shares*
Richard E. Hall 22,980 1.72%
Jack K. Heilbron 3,005 .22%
Russell W. Ketron 6,626 .49%
Doug Werner 521 .04%
* All classes on a combined basis.
INVESTMENT ADVISORY AND OTHER SERVICES
General
Centurion Counsel, Inc. ("Centurion Counsel") is the Fund's Adviser.
Centurion Counsel was incorporated in the State of California in 1984 and
has since that time been an SEC-registered investment adviser. Centurion
Counsel has acted as the Company's investment adviser for its Market Neutral
Fund since January 1, 1995 and investment adviser to the Fund since its
inception. In addition to its services to the Company, Centurion Counsel's
primary business activities include investment consulting to individuals,
corporations and institutions and the providing of investment banking services
and other activities related to the investment and securities industries.
Centurion Group, Inc. ("CGI") was incorporated in the State of
California in 1984. CGI has acted as the Company's accounting services
agent, transfer agent, dividend disbursing agent and administrative services
agent for its Market Neutral Fund since January 1, 1995.
Centurion Institutional Services, Inc. ("CISI") was incorporated in the
State of California in 1991. CISI has served as the Company's principal
underwriter for its Market Neutral Fund shares (Distributor) 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. 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 Company has contracted with its Adviser, Centurion Counsel, to
provide investment advice and management services to the Fund pursuant to
the Investment Advisory Agreement (the "Adviser Agreement"). The Adviser
Agreement continues from year to year only if approved by the Board
(including a majority of disinterested directors as described above). The
Adviser Agreement may be terminated by either the Company or Centurion
Counsel on 60 days' written notice to the other, and terminates automatically
in certain situations. The Adviser Agreement was approved by the
Company?s shareholders on December 20, 1994 and was last approved by the
Board (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 Company) on February 5, 1999. On ___________, 1999 Centurion
Counsel, as the only shareholder of each class of the Fund?s shares, approved
an amendment to the Adviser Agreement expressly pursuant to which the
Fund adopted and became a party to the Adviser Agreement.
Under the Adviser 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 Board. Under the Adviser 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 Company?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.
The Fund bears costs and expenses of its operation, other than those
specifically required to be paid by Centurion Counsel under the Adviser
Agreement. 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 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 also
pays the fees and bears the expense of registering and maintaining the
registration of the Fund and its shares with the Securities and Exchange
Commission, the expense of 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.
Under the Adviser Agreement, Centurion Counsel must reimburse
the Fund, in an amount not in excess of the adviser fee otherwise payable by
the Fund to the Adviser 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 2.50% 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 Adviser Agreement is last effective, subject
to its right to end this obligation at the end of any Fund fiscal year.
The Fund did not pay advisory fees to Centurion Counsel before
1999.
Accounting Services Agreement
CGI acts as the Fund's accounting services agent pursuant to the
Accounting Services Agreement (the "Accounting Agreement"). The
Accounting Agreement was approved by the Board (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 Company), and the shareholders
of the Company approved such Agreement on December 20, 1994. On
___________, 1999 Centurion Counsel, as the only shareholder of each class
of the Fund?s shares, approved an amendment to the Accounting Agreement
expressly pursuant to which the Fund adopted and became a party to the
Accounting Agreement. The Accounting Agreement continues from year to
year only if the Board approves it in the same manner they approve the
Adviser Agreement. The Accounting Services Agreement may be terminated
by either the Company or CGI on 60 days' written notice to the other, and the
Agreement terminates automatically in certain situations.
Under the Accounting Agreement, 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 did not pay CGI for accounting service fees before 1999. 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.
Administration Agreement
CGI acts as transfer agent, dividend disbursing agent and
administrative services agent for the Company pursuant to the 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.
For its services under this agreement, 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 Adviser Agreement. The Fund did not pay
CGI for administrative services before 1999.
The Administration Agreement was approved by the Board
(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) and
by the shareholders of the Company on December 20, 1994. On
___________, 1999 Centurion Counsel, as the only shareholder of each class
of the Fund?s shares, approved an amendment to the Adviser Agreement
expressly pursuant to which the Fund adopted and became a party to the
Adviser Agreement. The agreement continues from year to year only if the
Company's directors approve them in the same manner as they approve the
Investment Advisory Agreement. The Administration Agreement may be
terminated by either the Company or by CGI on 60 days' written notice to the
other, and the Agreement terminates automatically in certain situations.
UNDERWRITING ARRANGEMENTS
CISI, as the Fund's Distributor or principal underwriter, sells the
Fund's shares under the Distribution Agreement with the Company, as
amended, dated January 1, 1995 and effective November 6, 1996. Under the
Distribution Agreement, CISI bears the costs of all advertising and promotion
expenses in connection with the distribution of the Fund's shares (except
those expenses assumed by the Fund's investment adviser). The Distribution
Agreement was last approved by the Board (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 Company) on February 5, 1999. The
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 sales commissions were received by the Fund's principal
underwriter for sales of the Fund's shares before January 1999.
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 with CISI.
As compensation for its services, CISI receives a front-end
commission in the case of Class A shares, a contingent deferred sales charge
("CDSC") in the case of Class B shares and 12b-1 fees in the case of Class A
shares, Class B shares and Class C shares as described below.
Class A Shares
The Distributor receives a sales charge equal to 4.75% of the gross
price of Class A shares it places which it may reallow to dealers through
whom purchases are made in an amount equal to 4.0% 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 advisers, 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 such reallowance to dealers. Such financial institutions, other
industry professionals and dealers are referred to as "Service Organizations."
In addition, 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.
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 which are redeemed within five years of purchase are
subject to a CDSC at the rates set forth in the following table.
Contingent Deferred Sales Charge Table
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
The CDSC is assessed on an amount equal to the lesser of the then
current market value or the cost of the shares being redeemed. No CDSC 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 CDSC,
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.
In determining whether a CDSC 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
CDSC, 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. As 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 through reinvestment of
dividends. 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 CDSC 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 Distributor 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 Adviser Professionals or Eligible Employees, as defined under "CAPITAL
STOCK AND OTHER SECURITIES" below. No front-end, deferred or other
sales charge or Rule 12b-1 fees will be charged by the Fund with respect to
the Class D shares.
12b-1 Fees
The Fund has adopted a Plan of Distribution pursuant to Rule l2b-1
under the Investment Company Act of 1940. The Plan of Distribution was
adopted by the Fund on _________, 1999 upon the approval of Centurion
Counsel, the only shareholder of each Class of the Fund?s shares. The Plan
of Distribution authorizes the Fund to pay Rule 12b-1 fees. As compensation
for share distribution-related services it performs under its Distribution
Agreement with the Fund, CISI receives 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, CISI 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.
CISI may, at its own expense, may provide additional compensation to
dealers in connection with sales of Fund shares and servicing of Fund
shareholders. CISI may reallow all or a portion of its 12b-1 fees to
its representatives or to other broker-dealers who contract to provide
shareholder services to their customers holding shares of the respective
class.
The Plan of Distribution The Plan of Distribution was adopted by the
Fund on _________, 1999 upon the approval of Centurion Counsel, the only
shareholder of each Class of the Fund?s shares.
These 12b-1 fees are to compensate CISI and the participating
dealers for their sales of the Fund's shares, 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.
The Fund's Plans of Distribution provide for the indirect payment of
distribution expenses by the Fund only as described above. 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.
Indirect or reimbursable expenses under the Plan do not include
interest paid on amounts borrowed by Centurion Counsel to make the
payments for which reimbursement is made. Also, there is no provision in the
Plan of Distribution limiting payments to the amounts of actual distribution
expenses or actual shareholder servicing expenses expended by CISI. If the
Plan of Distribution were terminated or not continued, the Fund would not be
contractually obligated to pay CISI for any expenses not previously
reimbursed by the Fund. However, in the sole discretion of the Board, the
Fund could 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. 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 Board, and the Board 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 directors
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 shares of the Company.
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 Company?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.
CISI did not receive any distribution services fees in connection with
its sale of the Fund?s shares before 1999.
Custodian; General Counsel; Auditors
Firstar 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.
Squire & Company acts as the Fund's independent public
accountants.
Rushall & McGeever acts as the general counsel for the Fund.
BROKERAGE ALLOCATIONS AND OTHER PRACTICES
In effecting securities and commodities transactions, the Fund's
investment adviser 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 adviser, 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.
As the Fund was established in 1999, CISI or its affiliated brokers
did not receive compensation in connection with Fund activities prior to 1999.
CAPITAL STOCK AND OTHER SECURITIES
General
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"), which was last amended by the Board and
approved by a majority vote of the Company's shareholders on January 15,
1999.
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. 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 per share plus a maximum
initial sales charge ("front-end sales charge") set from time to time by 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. 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.
Class B Shares
Class B shares are sold at net asset value per share and are subject to
a maximum contingent deferred sales charge if they are redeemed within five
years of purchase. Initially, the maximum deferred sales charge shall be 4%
of the redemption proceeds during the first year and second year, declining
each year thereafter to 0% after the fifth year. 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. 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.
Class C Shares
Class C shares are sold at net asset value per share 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.
Class D Shares
Class D shares are sold at net asset value only to persons who qualify
as an Adviser Professional, Eligible Employee, or Eligible Account. 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. The Adviser Professionals
shall mean investment advisers, 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 adviser,
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 adviser and any of its affiliated
companies; (b) employees and registered representatives of Adviser
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. 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.
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 of 1986, 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.
Dividends
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 the ongoing 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."
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.
Income and Expenses
The income and expenses of the Fund must be allocated among each
class of shares as follow:
Separate Distribution Expenses. Each class at all times maintains
a separate arrangement for shareholder services or the distribution services or
both, and pays all of the expenses of that arrangement ("distribution
expenses").
Allocation of Income, Realized and Unrealized Capital Gains and
Losses, and Expenses. Each class is 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
Board may require one or more classes 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 pays the same advisory fee.
Waiver of Expenses. Expenses may be waived or reimbursed by the
Adviser, Distributor, 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 assets
of the Fund.
Voting Rights
All of the Company's shares have one vote. All shares vote as a
single class for directors and other matters, except on any matter which
affects only a specific Fund or as otherwise may be required by the 1940 Act.
Each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class. Each class 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. Except as
described above, each class has in all other aspects the same rights and
obligations as each other class.
Under the Company's Articles of Incorporation, the Board may
authorize one or more additional classes 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.
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, investment
originally 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. Class D
shares will be more beneficial to the investor who qualifies for the purchase
thereof.
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 1940 Act
and state laws, will seek to ensure that no such conflict arises.
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
adviser prior to the establishment of such a plan.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
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.
TAXATION OF THE FUND
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 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, an exchange of the shares for the shares of
another Centurion Counsel Fund 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
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.
CALCULATION OF PERFORMANCE DATA
Total Return Calculations
The Fund computes its average annual total return by determining the
average annual compounded rates of return during specified periods that
would equate the initial amount invested in a particular share class to the
ending redeemable value of such investment in the class, according to the
following formula:
Where: P(I + T) TO THE POWER OF n = ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of a period at the end of such period.
P = A hypothetical initial payment of $1,000.
n = Number of years.
The calculation of average annual total return assumes that any
dividends and distributions are reinvested immediately, rather than paid to the
investor in cash. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end of the
period covered by the computations. Unlike 'bank deposits or other
investments that pay a fixed yield or return for a stated period of time, the
return for the Fund will fluctuate from time to time and does not provide a
basis for determining future returns. Average annual total return is affected
by many factors, including the performance of the Fund?s individual securities
investments, changing market conditions, the composition of the Fund's
portfolio and the Fund's operating expenses.
Performance Comparisons
Investors may compare the performance of the Fund by comparing it
to the performance of other mutual funds with comparable investment
objectives and policies through various mutual fund or market indices such
as those prepared by Dow Jones & Co., Inc'. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a
widely-recognized independent service which monitors the performance of
mutual funds. Comparisons may also be made to indices or data published in
certain periodicals, including BARRON'S, BUSINESS WEEK,
CDA/WIESENBERGER, FORBES, IBBOTSON ASSOCIATES,
INSTITUTIONAL INVESTOR, MONEY MAGAZINE, MORNINGSTAR,
INC., THE NEW YORK TIMES, THE WALL STREET JOURNAL and
U.S.A. TODAY. In addition to performance information, general
information about the Fund that appears in such publications may be included
in advertisements, sales literature and reports to shareholders. The Fund may
also include in advertisements and reports to shareholders information
discussing the performance of the Adviser in comparison to other investment
advisers and to other institutions.
From time to time, the Company may include the following types of
information in advertisements, supplemental sales literature and reports to
shareholders: (1) discussions of general economic or financial principles (such
as the effects of inflation, the power of compounding and the benefits of
dollar cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for the Fund; (5)
descriptions of investment strategies for the Fund; (6) descriptions or
comparisons of various investment products, which may or may not include
the Fund; (7) comparisons of investment products (including the Fund) with
relevant market or industry indices or other appropriate benchmarks; (8)
discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons that have invested
in the Fund. The Company may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in
such communications. Such performance examples will be based on an
express set of assumptions and are not indicative of the performance of the
Fund.
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 recessionary 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 Company was originally 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." On January 15, 1999, the shareholders of the Fund approved an
amendment to the Article providing that the name "Centurion T.A.A. Fund,
Inc." be changed to "Centurion Counsel Funds, Inc.," all outstanding shares
of the Fund be reclassified as the "Centurion Counsel Market Neutral Fund"
series and the "Centurion Counsel Growth Fund" series and the "Centurion
Counsel Real Estate Fund" series of shares were authorized.
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 is newly formed and has no historical Financial Statements
for periods ending prior to January 1, 1999.
CENTURION COUNSEL FUNDS, INC.
MARKET NEUTRAL FUND
Statement of Additional Information
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Prospectus of Centurion Counsel
Funds, Inc.--Market Neutral Fund (the "Fund") dated September ___, 1999
(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: (858) 673-8536).
TABLE OF CONTENTS
Page
FUND HISTORY 2
FUND INVESTMENTS AND RISKS 2
FUND MANAGEMENT 3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 6
INVESTMENT ADVISORY AND OTHER SERVICES 6
UNDERWRITING ARRANGEMENTS 9
BROKERAGE ALLOCATIONS AND OTHER PRACTICES 14
CAPITAL STOCK AND OTHER SECURITIES 15
RETIREMENT ACCOUNTS 21
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 21
TAXATION OF THE FUND 22
CALCULATION OF PERFORMANCE DATA 23
LIMITATION OF DIRECTOR LIABILITY 24
ADDITIONAL INFORMATION 25
FINANCIAL STATEMENTS 26
Dated September ____, 1999
FUND HISTORY
The Fund is a multi-class series of common stock of Centurion
Counsel Funds, Inc. (the "Company"). The assets and liabilities,
income and expenses of the Company attributable to the Fund are
maintained in a separate investment portfolio and determined
separately for the Fund. The Company was incorporated on
August 27, 1981 under the laws of Minnesota. IRI Asset
Management, Inc., a Minneapolis based investment adviser, served
as the adviser to the Company from its inception until March 1988.
At that time, the Company's Board of Directors ("Board") approved
Excel Advisors, Inc. as its adviser and the offices of the Company
were moved to San Diego, California. In December 1994, the Company's
shareholders approved Centurion Counsel, Inc. as the Company's Adviser
and the shareholders and the Board approved the Fund's current fundamental
investment objectives and policies. On January 15, 1999, the shareholders
approved the redesignation of the Fund series as the Centurion Counsel
Market Neutral Fund.
FUND INVESTMENTS AND RISKS
Classification. The Fund is an open-end, diversified management
investment company that only issues shares of common stock. By
purchasing shares in the Fund, investors are pooling their money
to acquire a diversified portfolio of securities and other assets.
Investment Strategies and Risks. The Fund's non-principal
investment strategies are set forth in the Prospectus.
Fund Policies. The Fund has the investment restrictions set forth
below which 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.
FUND MANAGEMENT
Officers and Directors. The names, addresses and principal
occupations of directors and executive officers of the Fund for the past five
years are given below:
</TABLE>
<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 (61)<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. She has served as a
registered representative of World Invest
Corporation, a licensed broker-dealer
since 1994.
Richard E. Hall (73) 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 (48)<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 (55)<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 (47) 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 Company 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 Company, or a registered broker/dealer, as defined under the Investment
Company Act of 1940, as amended.
</FN>
</TABLE>
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, 1998.
<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, $1800* -0- -0- $1800*
Director
Richard E. Hall, $1800* -0- -0- $1800*
Director
Russell W. Ketron, $1800* -0- -0- $1800*
Director
Douglas Werner, $1400* -0- -0- $1400*
Director
* Directors are paid $400 per meeting. There were four scheduled
quarterly meetings for 1998.
** 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,
the Centurion Counsel Market Neutral Fund and the Centurion Counsel Real
Estate Fund.
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 $200 per year retainer and a fee of $400 for each meeting attended (other
than telephonically) by each director not affiliated with Centurion Counsel
and reimburses such nonaffiliated directors for their travel expenses to attend
directors' meetings. The board of directors held a total of four (4) regular
meetings during its last fiscal year.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 9, 1999, to the knowledge of management, no one
person or persons could control the Fund through the exercise of voting
rights. As of March 9, 1999, to the knowledge of management, no person
owned beneficially more than 5% of the outstanding shares of the Fund.
The following directors or nominees for the position of director or officers,
as of March 9, 1999, beneficially owned shares of the Fund.
Number % of Total
of Shares Outstanding Shares*
Richard E. Hall 22,980 1.72%
Jack K. Heilbron 3,005 .22%
Russell W. Ketron 6,626 .49%
Doug Werner 521 .04%
* All classes on a combined basis.
INVESTMENT ADVISORY AND OTHER SERVICES
General
Centurion Counsel, Inc. ("Centurion Counsel") is the Fund's
Adviser. Centurion Counsel was incorporated in the State of California in
1984 and has since that time been an SEC-registered investment adviser.
Centurion Counsel has acted as the Fund's investment adviser 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 and the providing of investment banking
services and other activities related to the investment and securities
industries.
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.
Centurion Institutional Services, Inc. was incorporated in the State
of California in 1991. CISI has served as the Fund's principal underwriter
(Distributor) 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. 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 has contracted with its Adviser, Centurion Counsel, for
investment advice and management services pursuant to the Investment
Advisory Agreement (the "Adviser Agreement"). The Fund's Adviser
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 Adviser 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. The Adviser Agreement was approved
by the shareholders of the Fund on December 20, 1994 and was last
approved by the Fund's board of directors (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 5, 1999.
Under the Adviser 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 Adviser
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.
The Fund bears costs and expenses of its operation, other than those
specifically required to be paid by Centurion Counsel under the Adviser
Agreement. 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 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 also pays the fees and bears the expense of registering and
maintaining the registration of the Fund and its shares with the Securities and
Exchange Commission, the expense of 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.
Under the Adviser Agreement, Centurion Counsel must reimburse
the Fund, in an amount not in excess of the adviser fee otherwise payable by
the Fund to the Adviser 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 Adviser Agreement is last effective, subject
to its right to end this obligation at the end of any Fund fiscal year.
For the year ended December 31, 1996, 1997, and 1998, Centurion
Counsel earned $60,766, $92,281, and $72,126 respectively, in advisory
fees from the Fund. For the year ended December 31, 1997, Centurion
Counsel voluntarily waived $16,716 of the advisory fee even though
expenses were not in excess of the expense limitation.
Accounting Services Agreement
CGI acts as the Fund's accounting services agent pursuant to the
Accounting Services Agreement (the "Accounting Agreement"). The
Accounting Agreement was approved by the Fund's board of directors
(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 the shareholders of the Fund approved such Agreement on
December 20, 1994. The Accounting Agreement continues from year to
year only if the Fund's directors approve it in the same way they approve the
Adviser 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.
Under the Accounting Agreement, 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
years ended December 31, 1996, 1997 and 1998. This fee is in addition to
the fee payable by the Fund to Centurion Counsel pursuant to the Fund's
Investment Advisory 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.
Administration Agreement
CGI acts as transfer agent, dividend disbursing agent and
administrative services agent for the Fund pursuant to the 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.
For its services under this agreement, 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 Adviser Agreement. For the years
ended December 31, 1996, 1997 and 1998, the Fund paid CGI, its
administrative services agent, a fee of $3,417, $3,232, and $2,830
respectively.
The Administration Agreement was approved by the Fund's Board
of Directors (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. 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.
UNDERWRITING ARRANGEMENTS
CISI, as the Fund's Distributor or principal underwriter, sells the
Fund's shares under the Distribution Agreement, as amended, dated January
1, 1995 and effective November 6, 1996. Under the Distribution
Agreement, CISI bears the costs of all advertising and promotion expenses
in connection with the distribution of the Fund's shares (except those
expenses assumed by the Fund's investment adviser). 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 February 5, 1999. 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 years ended December 31, 1996 and 1998. For the year ended
December 31, 1997, the Fund paid CISI, as its principal underwriter, front-
end sales charges of $412. No sales commissions were received by the
Fund's principal underwriter for sales of the Fund's shares in 1996 or 1998.
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 with CISI.
As compensation for its services, CISI receives a front-end
commission in the case of Class A shares, a contingent deferred sales charge
("CDSC") in the case of Class B shares and 12b-1 fees in the case of Class
A shares, Class B shares and Class C shares as described below.
Class A Shares
The Distributor receives a sales charge equal to 4.75% of the gross
price of Class A shares it places which it may reallow to dealers through
whom purchases are made in an amount equal to 4.0% 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 advisers, 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 such reallowance to dealers. Such financial institutions,
other industry professionals and dealers are referred to as "Service
Organizations." In addition, 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.
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 which are redeemed within five years of purchase
are subject to a CDSC at the rates set forth in the following table.
Contingent Deferred Sales Charge Table
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
The CDSC is assessed on an amount equal to the lesser of the then
current market value or the cost of the shares being redeemed. No CDSC
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 CDSC, 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.
In determining whether a CDSC 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 CDSC,
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. As 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 CDSC 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 Distributor 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 Adviser Professionals or Eligible Employees, as defined under
"CAPITAL STOCK AND OTHER SECURITIES" below. No front-end,
deferred or other sales charge or Rule 12b-1 fees will be charged by the
Fund with respect to the Class D shares.
12b-1 Fees
For each class of its shares, the Fund has adopted a Plan of
Distribution pursuant to Rule l2b-1 under the Investment Company Act of
1940. The Plan of Distribution authorizes the Fund to pay Rule 12b-1 fees.
As compensation for share distribution-related services it performs under
its Distribution Agreement with the Fund, CISI receives 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, CISI 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. CISI may, at its own expense, may provide additional
compensation to dealers in connection with sales of Fund shares and
servicing of Fund shareholders.
The Plan of Distribution for the Class C Shares was entered into on
January 1, 1995 and for each of the Class A shares and Class B shares was
entered into on November 6, 1996, the first date on which the Fund offered
Class A and Class B shares. CISI may reallow all or a portion of its 12b-1
fees to its representatives or to other broker-dealers who contract to provide
shareholder services to their customers holding shares of the respective
class.
These 12b-1 fees are to compensate CISI and the participating
dealers for their sales of the Fund's shares, 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.
The Fund's Plans of Distribution provide for the indirect payment
of distribution expenses by the Fund only as described above. 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.
Indirect or reimbursable expenses under the Plan do not include
interest paid on amounts borrowed by Centurion Counsel to make the
payments for which reimbursement is made. Also, there is no provision in
the Plan of Distribution limiting payments to the amounts of actual
distribution expenses or actual shareholder servicing expenses expended by
CISI. If the Plan of Distribution were terminated or not continued, the Fund
would not be 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. 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 years ended December 31, 1996, 1997, and 1998, CISI, the
Fund's principal underwriter, received $49,449, $72,691, and $62,985 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 year ended
December 31, 1997, the Fund's principal underwriter received $10.90 and
$3.08 from the Fund pursuant to the Fund's Class A and B share Plan of
Distribution, respectively.
Custodian; General Counsel; Auditors
Firstar 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.
Squire & Company acts as the Fund's independent public
accountants.
Rushall & McGeever acts as the general counsel for the Fund.
BROKERAGE ALLOCATIONS AND OTHER PRACTICES
In effecting securities and commodities transactions, the Fund's
investment adviser 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 adviser, 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, 1996, 1997, and 1998,
$1,810,232, $2,670,128, and $1,258,091 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, all of which
were effected through brokers or banks unaffiliated with the Fund. During
the years ended December 31, 1996, 1997 and 1998, the Fund paid a total
of $34,994, $83,956, and $115,426 respectively, in brokerage commissions
in connection with agency transactions; during 1996, 1997 and 1998,
$9,051, $27,075, and $15,426 respectively, were paid to broker dealers
who furnished investment research to the Fund's investment adviser. During
1996, 1997, and 1998, CISI and its affiliate, PIM, together, effected 75%,
82%, and 92% respectively, of the total dollar volume of transactions in
which commissions were paid and received 74%, 66%, and 87%
respectively, of such commissions.
CAPITAL STOCK AND OTHER SECURITIES
General
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. 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 per share plus a maximum
initial sales charge ("front-end sales 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. 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 per share and are subject
to a maximum contingent deferred sales charge if they are redeemed within
five years of purchase. Initially, the maximum deferred sales charge shall
be 4% of the redemption proceeds during the first and second year,
declining each year thereafter to 0% after the fifth year. 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 per share 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 Adviser Professional, Eligible Employee, or Eligible Account.
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. The Adviser
Professionals shall mean investment advisers, 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 adviser, 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 adviser and any of its
affiliated companies; (b) employees and registered representatives of Adviser
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. 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.
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.
Dividends
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 the ongoing 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."
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.
Income and Expenses
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, underwriter, 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 assets of the Fund.
Voting Rights
All of the Company's shares have one vote. All shares vote as a
single class for directors and other matters, except on any matter which
affects only a specific Fund or as otherwise may be required by the 1940
Act. Each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class. Each class 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. Except as described above,
each class has in all other aspects the same rights and obligations as each
other class.
Under the Fund's Articles of Incorporation, the Fund's Board of
Directors may authorize one or more additional classes 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.
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, investment originally 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.
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.
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
adviser prior to the establishment of such a plan.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
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.
TAXATION OF THE FUND
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
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.
CALCULATION OF PERFORMANCE DATA
Total Return Calculations
The following table sets forth the average annual total return for the
Fund for the periods ended December 31, 1998, as set forth below:
PERIODS ENDED DECEMBER 31, 1998
One Year Five Years Ten Years Since Inception
Class C (10.21%) (8.89%) (4.91%) Jan. 18, 1982
3.07%
Class A (8.28%) --- --- Jan. 7, 1997
(9.02%)
Class B (9.91%) --- --- Jan. 7, 1997
(7.54%)
Class D (8.09%) --- --- Dec. 6, 1996
(2.77%)
Total Return Calculations
The Fund computes its average annual total return by determining
the average annual compounded rates of return during specified periods that
would equate the initial amount invested in a particular share class to the
ending redeemable value of such investment in the class, according to the
following formula:
Where: P(I + T) TO THE POWER OF n = ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of a period at the end of such period.
P = A hypothetical initial payment of $1,000.
n = Number of years.
The calculation of average annual total return assumes that any
dividends and distributions are reinvested immediately, rather than paid to
the investor in cash. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end of the
period covered by the computations. Unlike bank deposits or other
investments that pay a fixed yield or return for a stated period of time, the
return for the Fund will fluctuate from time to time and does not provide a
basis for determining future returns. Average annual total return is affected
by many factors, including the performance of the Fund's individual
securities investments, changing market conditions, the composition of the
Fund's portfolio and the Fund's operating expenses.
Performance Comparisons
Investors may compare the performance of the Fund by comparing
it to the performance of other mutual funds with comparable investment
objectives and policies through various mutual fund or market indices such
as those prepared by Dow Jones & Co., Inc'. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a
widely-recognized independent service which monitors the performance of
mutual funds. Comparisons may also be made to indices or data published
in certain periodicals, including BARRON'S, BUSINESS WEEK,
CDA/WIESENBERGER, FORBES, IBBOTSON ASSOCIATES,
INSTITUTIONAL INVESTOR, MONEY MAGAZINE,
MORNINGSTAR, INC., THE NEW YORK TIMES, THE WALL
STREET JOURNAL and U.S.A. TODAY. In addition to performance
information, general information about the Fund that appears in such
publications may be included in advertisements, sales literature and reports
to shareholders. The Fund may also include in advertisements and reports
to shareholders information discussing the performance of the Adviser in
comparison to other investment advisers and to other institutions.
From time to time, the Company may include the following types
of information in advertisements, supplemental sales literature and reports
to shareholders: (1) discussions of general economic or financial principles
(such as the effects of inflation, the power of compounding and the benefits
of dollar cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for the Fund; (5)
descriptions of investment strategies for the Fund; (6) descriptions or
comparisons of various investment products, which may or may not include
the Fund; (7) comparisons of investment products (including the Fund) with
relevant market or industry indices or other appropriate benchmarks; (8)
discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons that have invested
in the Fund. The Company may also include calculations, such as
hypothetical compounding examples, which describe hypothetical investment
results in such communications. Such performance examples will be based
on an express set of assumptions and are not indicative of the performance
of the Fund.
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 recessionary 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 originally 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." On January 15, 1999, the shareholders of the Fund
approved an amendment to the Article providing that the name "Centurion
T.A.A. Fund, Inc." be changed to "Centurion Counsel Funds, Inc." and that
all outstanding shares of the Fund be reclassified as the "Centurion Counsel
Market Neutral Fund" series.
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 Financial Statements for the year ended December 31,
1998 are set forth below.
CENTURION T.A.A. FUND, INC.
Portfolio Review
as of December 31, 1998
Fund Highlights Top Ten Holdings
12/31/97 12/31/98 Hershey Creamery 4.1%
Net Assets: $8,268,736 $4,935,360 Cisco Systems 2.3%
Novacare Conv. 5.5% 2.0%
NAV Per Share: United Investors REIT 2.0%
Dow Jones Index Dec 00,90,P 1.9%
Class A: $3.35 $3.04 Transmaritime, 8.5%, 2000 1.8%
Class B: $3.33 $3.00 Rock Bottom Restuarant 1.8%
Class C: $3.33 $2.99 Intel 1.8%
Class D: $3.36 $3.05 Southern Energy Homes 1.6%
United Dominion REIT 1.6%
Share Outstanding: 2,484,106 1,643,245
Portfolio Allocation by Sector
as of December 31, 1998
Graph Top Ten Sectors
Real Estate Investment Trust 13.1%
Cash and Commerial Paper 11.8%
Health 5.6%
Industrial Services 4.7%
Technology 4.7%
Consumer Products 4.5%
Natural Resources 3.7%
Indexes 3.4%
Industrial Products 3.3%
Financial Services 1.4%
TOTAL RETURN
Through December 31, 1998
(Since new management and investment objectives--January 1995)
Last Since Date of
Quarter Twelve Changeor First
Months FirstSales Sale
Class A:(1) -5.04% -8.89% -9.02% 1/07/97
Class B: -5.36% -9.91% -7.54% 1/07/97
Class C: -5.68% -10.21% -3.04% 12/31/94
Class D: -5.28% -8.09% -2.77% 12/06/96
(1) Does not include commission load of 4.75% when purchased
TOTAL RETURN
Through December 31, 1998
(Since inception--January 1982)
Last
Quarter Twelve Five Ten Since
Months Year Year Inception
Class A:(1) -5.04% - 8.89% * * -9.02%
Class B: -5.36% - 9.91% * * -7.54%
Class C: -5.68% -10.21% -8.89% -5.13% 2.07%
Class D: -5.28% - 8.09% * * -2.77%
*Shares of this Class not available for the total period
(1) Does not include commission load of 4.75% when purchased
CENTURION T.A.A. FUND, INC.
1999 Annual Report
Influences on Markets
NASDAQ value is soaring. As of February 2, 1999, the NASDAQ
stock market has traded more than a billion shares for 9 of the
last 21 sessions. Previoulsy, there had never been more than two
straight days with a billion plus shares. Moreover, there were
only nine trading days with over a billion shares traded on the
NASDAQ in all of 1998. What concerns us is that the size of the
average trade is only 1200 shares, down significantly in size
from a year ago. This means that more and more amateurs are
trading and, obviously, they are trading more often. A lot of
this can be chalked up to "net mania" (tulip.com).
The shrinking memories of investors seems almost fantasy-like.
It was only last fall that President Clinton gave warning of the
worst financial crisis World War II when talking about the Asian
meltdown, Russian default and Brazil's problems (of course, it was
an election year). The Asian economic crisis feels like it happened
last century. It seems as though the vastly accelerated pace of
internet time is operating through our collective memories, quickly
pushing bad memories to the distant corners of our mind. Generally,
collective amnesia proves fatal to those who have engaged in it.
What really has changed in a mere four months time? Russis is still
a mess; Brazil blew $41 billion of the IMF's money, and is still a
mess; the fourth largest oil company is Russia defaulted this past
month and less than two years ago, Brisith Petroleum paid over $500
million for 10% ownership of the company; Japan is still reeling with
bad news on a daily basis; one of China's largest corporations defaulted
on its debt. We are concerned with the blind faith of investors who
think the stock market is without risk. As a money manager, I feel
we are watching a disaster in the making. One can just feel that
massive sums of money will be lost.
Two-Tier Market
While there can be no denying that the market index averages
showed that 1998 was an up year, only approximately 40% of the
stocks on the New York Stock Exchange were up, which means 60%
were either unchanged or down. The S&P was up 28% in 1998. It
should be noted though that the average performance of the top
50 stocks in the S&P 500 was up in excess of 55%. At year end
the S&P top 50 was selling at 38 times estimated 1999 earnings
while the small cap index is selling at only 17 times earnings.
While your Fund has performed in line with other "market neutral
funds," it trailed the S&P 500 again in 1998.
Market Volatility
In addition to the two tier market described above, market
volatility returned to the markets in a big way last year. The
decrease in equities in August 1998 was the largest decrease since
October 1987. We anticipate that 1999 will be more of the same
market volatility; however, we believe that "value stocks" will
bring the greatest rewards.
Adapting Investment Strategy to Current Markets
Since the sell off in the third quarter, we have positioned
the Fund around core holding of value oriented equities selling
at reasonable price earning ratios and paying substantial
dividends. A large part of this holding is in real estate
investment trusts. We are also take advantage of the "tulip.com
mania" by shorting those selected stocks that are really nothing
more than an announcement by promoters of some "get rich quick"
scheme. This strategy has led us to outperform the S&P 500 for
the two months ended February 28, 1999. While two months do not
make a year, we feel that tremendous advantage can be gained by
keeping a cool head and looking at the market realistically.
Over the long run, value wins out.
Sincerely,
CENTURION T.A.A. FUND, INC.
Jack K. Heilbron
Chief Investment Officer
TABLE OF CONTENTS
INDEPENDENTS AUDITOR'S REPORT
FINANCAIL STATEMENTS:
Statement of Assets and Liabilities
Statement of Investment Securities
Statement of Covered Call Options Written
Statement of Securities Sold Short
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
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 statements of investment
securities, covered call options written, and securities sold short as
of December 31, 1998, and the related statement of operations for the
year ended, the statements of changes in 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. 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 statements. Our precedures
included confirmation of securities owned as of December 31, 1998, by
correspondence with 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, 1998,
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.
Squire & Co.
/s/
February 5, 1999
Poway, California
CENTURION T.A.A. FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS
Investments in Securities, at value,
(identified cost $4,703,475)" $ 4,218,170
Cash and Deposits 308,854
Receivables:
Dividends 7,350
Interest 14,574
Investment securities sold 235,801
Margin Deposit for Securities Sold Short 1,872,161
TOTAL ASSETS 6,656,910
LIABILITIES
Covered Call Options Written, at market value,
(premiums received $107,602) 191,200
Securities Sold Short, at market value,
(sales proceeds received $1,130,461) 1,162,849
Payables:
Accounts payable 46,695
Investment securities purchased 51,739
Fund shares redeemed 270,067
TOTAL LIABILITIES 1,722,550
NET ASSETS $4,934,360
Class A:
Net asset value and offering price per share
($7,757 divided by 2,549 shares outstanding) $ 3.04
Class B:
Net asset value and offering price per share
($431 divided by 144 shares outstanding) $ 3.00
Class C:
Net asset value and offering price per share
($4,166,397 divided by 1,391,770 shares outstanding) $ 2.99
Class D:
Net asset value and offering price per share
($759,775 divided by 248,782 shares outstanding) $ 3.05
The accompanying notes are an integral part of the financial statements.
CENTURION T.A.A. FUND, INC.
STATEMENT OF INVESTMENT SECURITIES
December 31, 1998
Shares or % of Value
Principal Net (Note 1)
Amount Description Notes Assets Security Sector
COMMON STOCKS 46.3%
CONSUMER PRODUCTS 6.0%
1,000 BEATRICE (TLC) (b) $52,000
80 HERSHEY CREAMERY 200,000
2,000 SUNGLASS HUT (a) (b) 14,000
1,200 VLASIC FOODS INTL (b) 28,500
$294,500
CONSUMER SERVICES 1.8%
16,500ROCK BOTTOM (b) 89,718
89,718
FINANCIAL SERVICES 3.4%
2,600 CAL FED LITIGATION WARRANTS (b) 32,175
12,000GOLDEN STATE LITIGATION WARRANTS (b) 54,750
2,500 COAST FEDERAL LITIGATION WARRANTS (b) 16,562
1,000 HANCOCK HOLDING 45,500
900 PIONEER GROUP (b) 17,775
166,762
HEALTH 4.5%
2,000 CARDIAC PATHWAYS (b) 8,500
4,500 CYPROS (b) 13,219
2,000 GELTEX (a),(b) 45,250
4,000 GENZYME TISSUE (b) 9,000
1,500 LIGAND PHARMACTICAL (b) 17,437
5,000 LIPOSOME CO. (a),(b) 77,187
2,500 PERRIGO (b) 22,031
3,000 SCIOS, INC (b) 31,125
223,749
INDUSTRIAL PRODUCTS 3.4%
3,300 BETHLEHEM STEEL (b) 27,637
75 BOSTON SAND & GRAVEL (b) 24,375
1,200 GLATFELTER (PH) (b) 14,775
1,000 JEWETT CAMERON TRADING (b) 5,062
27,600NORTHWEST STEEL & WIRE (b) 17,250
13,200SOUTHERN ENERGY HOMES (b) 80,850
169,949
INDUSTRIAL SERVICES 5.6%
1,000 BAKER HUGHES 17,687
300 BOUYGUES OFFSHORE 3,187
1,100 CHEMED 36,850
2,000 CORRECTIONS CORP (b) 35,000
2,000 EAGLE GEOPHYSICAL (b) 7,750
140 FARMER BROTHERS (b) 29,960
40 GREY ADVERTISING 14,560
2,140 OCTEL (b)29,692
1,500 R&B FALCON (b) 11,437
21,150TRANSCOASTAL MARINE (b) 62,789
2,500UNIFAB INTL (b) 20,000
1,000WORKFLOW MANAGEMENT (b) 6,625
275,537
INTERNATIONAL 1.8%
5,000 EMERGING MEXICO (b) $29,062
11,000LATIN AMERICA SMALLER CO 61,875
$90,937
NATURAL RESOURCES 2.6%
1,000 EURO NEVADA(CN) 16,190
1,220 FRANCO NEVADA(CN) 23,278
300 FREEPORT COPPER & GOLD 3,131
2,000 GULF CANADA RESOURCES (b) 5,875
1,110 HOMESTAKE MINING 10,129
816 NEWMONT MINING 14,739
5,000 PAN AMERICAN SILVER (b) 25,000
58,000SUNSHINE MINING (b) 29,000
127,342
REAL ESTATE 13.5%
1,000 ALICO 18,000
3,000 BODDIE NOELL PROPERTIES 31,313
5,250 CCA PRISON REALTY 71,750
2,800 ENTERTAINMENT PROP TRUST 47,600
2,600 ESSEX PROPERTY TRUST 77,350
185 HORIZON GROUP PROPERTIES 717
1,100 MERIDIAN INDUSTRIAL TRUST 25,575
1,800 MIDAMERICA APARTMENTS 40,838
3,700 PRIME RETAIL 36,306
3,100 STORAGE TRUST REALTY 72,462
7,600 UNITED DOMINION 78,375
14,400UNITED INVESTORS REIT 97,200
1,800 WASHINGTON REIT 33,413
1,200 WEEKS CORP 33,825
664,723
TECHNOLOGY 3.7%
1,500 ADVANCED MICRO DEVICES (b) 43,406
1,000 BRIGHTPOINT (b) 13,750
1,000 EXCITE (a), (b) 42,063
3,300 INTERGRAPH (a), (b) 18,975
2,100 ROGUE WAVE SOFTWARE (b) 18,375
1,600 SYSTEMS & COMPUTERS (b) 22,000
5,000 WESTELL (b) 24,375
182,944
TOTAL COMMON STOCKS (COST $2,688,330) 2,286,160
PREFERRED STOCKS 1.3%
2,900 PATINA OIL & GAS, 7.125% 51,838
400 AMAX GOLD, 3.75% 14,400
TOTAL PREFERRED STOCKS (COST $99,966) 66,238
OPTIONS AND WARRANTS 24.9%
CONSUMER PRODUCTS 3.1%
4,000 CHS ELECT, JAN, 17 1/2, PUTS 5,250
2,800 HON INDUSTRIES, FEB, 30, PUTS 18,900
15,000PIER ONE, MAR, 5, CALLS (a) 67,500
4,000 ROSS STORES, FEB, 35, PUTS 3,750
4,000 TELSAVE, JAN, 15, PUTS 4,500
1,600 UNILEVER, JAN, 50, CALLS (a) 53,200
2,000 ZALE CORP, FEB, 25, PUTS 500
153,600
CONSUMER SERVICES 0.2%
4,000 CBS, JAN, 25, PUTS 250
1,000 FAMILY GOLF, FEB, 20, PUTS 2,625
4,000 KLM, MAR, 30, PUTS 7,000
9,875
FINANCIAL SERVICES 0.9%
4,000 CITIGROUP, JAN (01), 40, PUTS(a) 23,750
4,000 ING, JAN, 55, PUTS 2,250
10,000LEHMAN BROS, APR, 25, PUTS 3,750
2,000 TCF FINANCIAL, JAN, 25, CALLS(a) 1,000
4,000 TORCHMARK, FEB, 45, PUTS 13,750
44,500
HEALTH 3.8%
3,000 BECT DICSON, MAR, 35, CALLS 25,125
2,000 BIOTIME, MAR, 10, PUTS 2,000
3,000 BMC SOFTWARE, FEB, 40, CALLS 21,562
2,500 CENTOCOR, JAN(00), 25, CALLS (a) 57,812
3,000 SCHRING PLH, JAN 00, 30, CALLS(a) 78,750
185,249
INDUSTRIAL PRODUCTS 1.2%
1,100 CORNING GLASS, JAN, 30, CALLS 16,637
2,000 AVNET, FEB, 55, PUTS 3,250
3,000 BOEING, JAN (01), 25, CALLS 37,875
57,762
INDUSTRIAL SERVICES 1.3%
4,000 BURLNGTN NORTH, JAN, 35, PUTS 5,750
4,500 SCHLMBERGER, JAN(00), 40, CALLS(a) 56,250
4,000 WASTE MANAGEMENT, JAN, 45, PUTS 3,750
65,750
INTERNATIONAL 1.0%
2,800 TEL ARGEN, JAN, 37 1/2, PUTS 26,950
2,800 TELCON ARGEN, JAN, 35, PUTS 21,350
48,300
INDEXES 2.7%
5,000 DOW JONES, DEC (00), 80, PUTS 35,625
10,000DOW JONES INDEX, DEC 00, 90, PUTS 95,625
131,250
NATURAL RESOURCES 1.2%
5,000 BARRICK GOLD, JAN(00), 15, CALLS (a) 32,811
10,000HOMESTAKE MINING, JAN(00), 10, CALLS(a) 27,500
26,900SUNSHINE MINING WARRANTS 420
60,731
TECHNOLOGY 9.6%
900 ALLIANT TECH, FEB, 60, CALLS 20,362
2,000 CISCO, JAN (01), 45, CALLS (a) 112,500
2,700 CYPRESS SEMICONDUCTOR, MAR, 10, CALLS 1,181
2,000 HEWLETT PACKARD, JAN(01), 45, CALLS(a) 59,500
2,000 INTEL, JAN (01), 60, CALLS (a) 133,500
1,800 LUCENT, JAN (00), 60, CALLS (a) 98,325
700 RAMBUS, FEB, 55, CALLS (a) 29,531
600 SPRINT, JAN, 65, CALLS 18,225
473,124
TOTAL OPTIONS AND WARRANTS (COST $1,190,428) 1,230,141
FIXED INCOME 7.3%
CORPORATE BONDS 6.0%
100 AGNICO, CONVERTIBLE, 3.5%, DUE 1-27-04 60,000
40 GOLDEN BOOK, 7.65%, DUE 9-15-02 11,800
50 NORTHWEST STEEL & WIRE, 9.5%, DUE 6-15-01 31,500
125 NOVA, CONVERTIBLE, 5.5%, DUE 1-15-00 101,093
1.006 MOUNTAIN STATES GTY MTG, 1-G, 9.4%,DUE 8-1-18 1,000
100 TRANSMARITIME, 8.5%, DUE 10-27-00 91,000
296,393
U.S. GOVERNMENT AGENCY BONDS 1.3%
23.75 FNMA G93-40 ZC, 6.5%, 12-25-23 23,631
25.954FNR 91-56M, 6.75%, 6-25-21 26,270
14.497FNMA 61G, 7.0%, 9-25-20 14,474
64,375
TOTAL FIXED INCOME (COST $449,888) 360,768
COMMERCIAL PAPERS 5.6%
275 GMAC COMMERCIAL PAPER, DUE 1-4-99 274,863
TOTAL COMMERCIAL PAPER (COST $274,863) 274,863
TOTAL INVESTEMENT IN SECURITIES 85.5% 4,218,170
COVERED CALL OPTION SECURITES -3.9% -191,200
SECURITIES SOLD SHORT -23.6% -1,162,849
NET INVESTMENT IN SECURITIES 58.0% 2,864,121
CASH 6.3% 308,854
MARGIN DEPOSIT ON SECURITIES SOLD SHORT 37.9% 1,872,161
OTHER ASSETS LESS LIABILITIES -2.2% -110,776
NET ASSETS 100.0% $4,934,360
(a) Call options have been written against this position.
(b) Non-income producing securities.
(c) Total unrealized depreciation on investments consists of gross
unrealized gains of $582,450 and gross unrealized losses of
$1,186,866.
"CENTURION T.A.A. FUND, INC."
STATEMENT OF COVERED CALL OPTIONS WRITTEN
December 31, 1998
Shares or % of Value
Principal Net (Note 1)
Amount Description Assets Security Sector
CONSUMER PRODUCTS -0.65%
- -10,000PIER ONE, JAN, 10, CALLS $ -4,375
- -5,000 PIER ONE, MAR, 7 1/2, CALLS -13,125
- -2,000 SUNGLASS HUT, JAN, 7 1/2, CALLS -1,125
- -1,600 UNILEVER, JAN, 75, CALLS -13,400
$-32,025
FINANCIAL SERVICES -0.02%
- -4,000 CITIGROUP, JAN, 40, PUTS -750
-750
HEALTH -1.26%
- -2,500 CENTOCOR, JAN, 40, CALLS -13,125
- -2,000 GELTEX, JAN, 17 1/2, CALLS -10,375
- -5,000 LIPOSOME, JAN 7 1/5, CALLS -38,750
-62,250
INDUSTRIAL SERVICES -0.07%
- -1,500 SCHLUMBERGER, MAY, 55, CALLS -3,375
-3,375
NATURAL RESOURCES -0.08%
- -3,000 BARRICK GOLD, JAN, 25, CALLS -188
- -4,000 HOMESTAKE, APR, 12 1/2, CALLS -2,500
- -4,000 HOMESTAKE, JAN(99), 10, CALLS -1,000
- -2,000 HOMESTAKE, JAN(99), 15, CALLS -125
-3,813
TECHNOLOGY -1.80%
- -500 CISCO, JAN (00), 100, CALLS -8,562
- -500 CISCO, JAN (00), 95, CALLS -9,500
- -1,000EXCITE, JAN, 55, CALLS -625
- -500 HEWLETT PACKARD, JAN, 70, CALLS -719
- -1,200INTEL, JAN, 80, CALLS -47,100
- -3,300INTERGRAPH, JAN, 7 1/2, CALLS -412
- -1,000LUCENT, JAN, 90, CALLS -20,625
- -700 RAMBUS, JAN, 105, CALLS -1,444
-88,987
TOTAL -3.87% $-191,200
"CENTURION T.A.A. FUND, INC."
STATEMENT OF SECURITIES SOLD SHORT
December 31, 1998
Shares or % of Value
Principal Net (Note 1)
Amount Description Assets Security Sector
CONSUMER PRODUCTS -4.29%
- -2,000 EXIDE, JAN, 15, PUTS $-1,125
- -5,000 EXIDE -81,250
- -2,100 JOSTENS -54,862
- -4,300 SEATTLE FILM WORKS -19,887
- -4,300 SEATTLE FILM, JAN, 5, PUTS -2,687
- -4,000 BOOKS A MILLION -52,000
$-211,811
CONSUMER SERVICES -3.66%
- -2,000 DATA TRANS NETWORK, FEB 25, PUTS -2,625
- -2,000 DATA TRANS NETWORK, JAN, 25, PUTS -875
- -4,000 DATA TRANSMISSION NETWORK -115,500
- -2,000 SYLVAN -61,000
- -2,000 SYLVAN, JAN, 25, PUTS -500
-180,500
FINANCIAL SERVICES -2.83%
- -2,000 ASTORIA FINANCIAL -91,500
- -2,000 TCF FINANCIAL -48,375
-139,875
HEALTH -1.03%
- -1,500 CURATIVE -50,250
- -3,000 SCHERING PLOUG JAN 60 C -750
-51,000
INDUSTRIAL PRODUCTS -1.49%
- -1,800YORK INTERNATIONAL -73,463
-73,463
INDEXES -1.08%
- -10,000DOW JONES INDEX, JAN, 85, PUTS -1,875
- -5,000 WEBS - MEXICO -51,250
- -5,000 DOW JONES INDEX, JAN, 80, PUTS -313
-53,438
INDUSTRIAL SERVICES -1.97%
- -2,400 INTERNATIONAL SPEEDWAY -97,200
-97,200
TECHNOLOGY -7.21%
- -3,000 APPLE COMPUTER, JAN, 32 1/2, PUTS -750
- -3,000 APPLE COMPUTER -122,813
- -4,800 CYBERIAN OUTPOST -132,000
- -2,000 CYBERCASH, JAN 15, PUTS -3,250
- -4,100 CYBERCASH -61,500
- -2,000 MULTIPLE ZONE -35,250
-355,563
TOTAL -23.57% $-1,162,849
CENTURION T.A.A. FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
Dividends $ 75,042
Interest 149,089
Total investment income 224,131
EXPENSES
Investment advisory fees $ 72,126
Distribution expenses 62,985
Registration and filing fees 9,806
Fund accounting fees 23,982
Custodian fees and expenses 40,441
Audit fees and expenses 5,400
Directors' fees and expenses 12,014
Transfer agent fees 2,830
Insurance 1,953
Other expenses 5,693
Total expenses 237,230
Fees and Expenses Absorbed by Investment Advisor -
Net expenses 237,230
Net investment income (loss) -13,099
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net realized loss on investments -538,729
Change in unrealized depreciation of investments for the year-101,802
Net loss on investments -640,531
Net Decrease in Net Assets Resulting from Operations $ -653,630
The accompanying notes are an integral part of the financial statements.
CENTURION T.A.A. FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) $-13,099 $3,312
Net realized gain (loss) on investments -538,729 -60,487
Net change in unrealized depreciation of investments -101,802 -406,598
Net increase (decrease) in net assets resulting
from operations -653,630 -463,773
Class C:
Distribution to shareholders:
Net investment income -12,145 -
CAPITAL SHARE TRANSACTIONS: (NOTE 5)
Increase from capital shares sold 365,679 1,783,727
Increase from capital shares reinvested 12,145 -
Decrease from capital shares repurchased -3,047,343 -2,744,423
Net increase (decrease) from capital share
transactions -2,669,519 -960,696
Total increase (decrease) in net assets -3,335,294 -1,424,469
NET ASSETS
Beginning of period 8,269,654 9,694,123
End of period (includes no undistributed investment
income) $4,934,360 $8,269,654
The accompanying notes are an integral part of the 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 amended, as a diversified, open-end management
investment company. The objective of the Fund is to achieve long-term
investment return, including both capital appreciation and current
income, consistent with reasonable risk.
At the shareholder meeting on August 6, 1996, the shareholders
approved the Fund to offer Class A, Class B, Class C and Class D shares,
each of which has equal rights as to assets and voting privileges.
Class A and Class B each has exclusive voting rights with respect to
its distribution plan. Investment income, realized and unrealized
capital gains and losses, and the common expenses of the Fund are
allocated on a pro rata basis to each class based on the relative net
assets of each class to the total net assets of the Fund. Each class
of shares differ in its respective service and distribution expenses,
and may differ in its transfer agent, registration, and certain other
class-specific fees and expenses.
At the shareholder meeting on January 15, 1999, the shareholders
voted to change the name of the fund to Centurion Counsel Funds, Inc.
from Centurion T.A.A. Fund, Inc. Also, shareholders approved to
reclassify each of the Fund's outstanding Class A shares, Class B shares,
Class C shares, and Class D shares as the series entitled Centurion
Market Neutral Fund Class A shares, Class B shares, Class C shares, and
Class D shares, respectively.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Portfolio Valuation:
The Fund calculates its net asset value and completes orders to purchase,
exchange or repurchase its shares on each business day, with the exception
of those days on which the New York Stock Exchange is closed.
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 (date the order
to buy or sell is executed). The cost of securities sold is determined
on a first-in, first-out basis, unless otherwise specified. Dividends are
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.
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:
It is the policy of the Fund to meet the requirements for qualification as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the
Code. Therefore, no provision has been made for Federal taxes on income,
capital gains, or unrealized appreciation of securities held, and excise tax
on income and capital gains. The Fund currently has a capital loss
carryforwards totaling $313,324 which begin to expire in 2002.
Distributions to Shareholders:
Distributions to shareholders are recorded by the Fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with Federal income tax regulations, which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities
held by the Fund and timing differences.
Restricted Securities:
The Fund is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or
to the public if the securities are registered. Disposal of these securities
may involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
Cash Deposits:
At December 31, 1998 the Fund had cash on deposit at one financial institution
of $308,854. 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, 1998, net assets consisted of:
Net proceeds from capital stock $ 6,622,910
Unrealized depreciation of securities (520,818)
Unrealized depreciation of covered call options written (83,598)
Excess distributions over accumulated net income (349,520)
Undistributed net realized loss from security transactions (734,614)
$ 4,934,360
NOTE 3. COVERED CALL OPTIONS WRITTEN
As of December 31, 1998, portfolio securities valued at $1,162,849 were
held by the custodian in connection with covered call options written
by the Fund.
NOTE 4. PAYMENTS TO RELATED PARTIES
Centurion Counsel, Inc. ("Centurion") is the Fund's investment manager.
The Fund pays investment management fees to Centurion at the annualized
rate of 1.00% on the first $200 million of average daily net assets of
the Fund, 0.85% on the next $200 million, 0.80% on the next $200 million,
0.75% on the next $200 million, 0.60% on the next $200 million and 0.50%
on amounts over $1 billion. These fees are computed daily and paid
quarterly and are subject to reduction in any year to the extent that
the Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed 3.625%
based on the average total net asset value of the Fund. During the year
ended December 31, 1998 Centurion received investment management fees
of $72,126.
Centurion Institutional Services, Inc. ("CISI"), an affiliate of Centurion,
serves as the Fund's distributor. The Fund offers Class A, Class B,
Class C and Class D shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. CISI collects the sales charges imposed on the sale of Class A
shares, and re-allows a portion of such charges to dealers who sold the
shares. During the year ended December 31, 1998, no shares of Class A shares
were sold. CISI also makes ongoing shareholder servicing and trail
commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares
are sold, CISI from its own resources pays commissions to dealers who sell
these shares. Certain redemptions of Class B shares made within six years of
purchase are subject to contingent deferred sales charges ("CDSC") upon
redemption, in accordance with the Fund's current prospectus. During the
year ended December 31, 1998, no shares were sold and there were no
redemptions of Class B shares, accordingly, CISI did not collect any
CDSC charges. In addition, CISI makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class B shares.
Class D shares are not subject to initial sales charges, CDSC, service fees
or distribution fees. These shares are only available to Advisor professionals
and eligible employees of the Fund, Centurion and its affiliates or service
organizations.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors
has adopted separate plans of distribution with respect to the Fund's
Class A shares ("Class A Plan"), Class B shares ("Class B Plan"), and
Class C shares ("Class C Plan"), pursuant to which the Fund reimburses CISI
for a portion of its shareholder servicing and distribution expenses. Under
the Class A Plan, the Fund may pay CISI a service fee at the annualized rate
of up to 0.25% of the average daily net assets of the Fund's Class A shares
for CISI's expenditures incurred in servicing and maintaining shareholder
accounts.
Pursuant to the Fund's Class B Plan, the Fund may pay CISI a service fee
at the annualized rate of up to 0.25% of the average daily net assets of
the Fund's Class B shares for CISI's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay CISI a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the
Fund's Class B shares for CISI's expenditures incurred in providing
services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in
subsequent years as long as that Plan continues in effect.
Pursuant to the Fund's Class C Plan, the Fund may pay CISI a service fee
at the annualized rate of up to 0.25% of the average daily net assets of
the Fund's Class C shares for CISI's expenditures incurred in servicing
and maintaining shareholder accounts, and may pay CISI a distribution fee
at the annualized rate of up to 0.75% of the average daily net assets of the
Fund's Class C shares for CISI's expenditures incurred in providing services
as distributor. Expenses incurred under the Class C Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as
long as that Plan continues in effect. During the year ended
December 31, 1998, CISI received servicing and distribution fees from the
Fund of $62,985.
CISI also executes some of the Fund's portfolio transactions. During the
year ended December 31, 1998, CISI received commissions of $100,811 from
the Fund for this service.
Centurion Group, Inc. ("CGI"), an affiliate of Centurion and CISI, is the
administrator and transfer agent of the Fund. CGI is paid an account
maintenance fee of $0.75 per account per month, a customer statement fee
of $50 per 1,000 statements and other miscellaneous charges and expenses.
During the year ended December 31, 1998, CGI received transfer fees of
$2,830 from the Fund.
CGI is also the accounting agent for the Fund. The monthly fee for these
services paid to CGI is 0.15% of the Fund's average daily net assets with
a minimum fee of $18,000 per year. During the year ended December 31, 1998,
CGI received accounting fees of $18,000 from the Fund.
The Fund pays each of its Directors who is not an employee, officer or
director of Centurion or any affiliate a $200 annual retainer and $400 for
each meeting of the Board or any committee thereof attended by the Director.
In addition the Fund pays each Director's expenses to attend the meetings.
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term securities)
were $23,041,000 and $25,885,000, respectively. Net loss on investments for
the year ended December 31, 1998 was $640,531. That amount represents the net
decrease in value of investments held during the year. The components are
as follows:
Realized Unrealized Net
Long Position $ (84,887) $ 37,806 $ (47,081)
Covered Calls Written (448,500) (107,220) (552,720)
Short Position (5,342) (32,388) (37,730)
$ (538,729) $ (101,802) $ (640,531)
As of December 31, 1998, the unrealized depreciation on investments
consists of gross unrealized gains of $582,450 and gross unrealized losses
of $1,186,866.
As of December 31, 1998, securities sold short (at market value) totaled
$1,162,849. The Fund has established a segregated margin deposit to account
for cash greater or equal in value to the securities sold short. The margin
deposit is held be the Fund's custodian and totals $1,872,161 at
December 31, 1998.
NOTE 6. CAPITAL SHARE TRANSACTIONS
As of December 31, 1998, there were 100,000,000 shares of the Company's
common stock authorized, at $0.01 par value. Transactions in capital
stock of the Fund for the years ended December 31, 1998 and 1997 were
as follows:
December 31, 1998 December 31, 1997
Shares Amount Shares Amount
Class A shares:
Shares sold 0 $ 0 2,563 $8,664
Shares issued in
reinvestment
of dividends 0 0 0 0
0 0 2,563 8,864
Shares redeemed 0 0 (14) (88)
Net increase 0 $ 0 2,549 $ 8,576
Class B shares:
Shares sold 0 $ 0 144 $ 500
Shares issued in
reinvestment
of dividends 0 0 0 0
0 0 144 500
Shares redeemed 0 0 0 0
Net increase 0 $ 0 144 $ 500
Class C shares:
Shares sold 55,157 $188,539 385,499 $ 1,341,181
Shares issued in
reinvestment
of dividends 0 0 0 0
55,157 188,539 385,499 1,341,181
Shares redeemed (854,747) (2,722,413) (434,885) (1,494,774)
Net decrease (799,590)$(2,533,874) (49,386) $(153,593)
Class D shares:
Shares sold 54,073 $177,140 123,388 $433,381
Shares issued in
reinvestment
of dividends 3,520 12,145 0 0
57,593 189,285 123,388 433,381
Shares redeemed (98,505) (324,929) (359,188) (1,249,561)
Net decrease (40,912) $(135,644) (235,800) ($816,180)
NOTE 7. PER SHARE INFORMATION
Selected data for each share of capital stock outstanding throughout
the period is as follows:
Class A Class B
Shares Shares
Per Share Operating Performance: 1998 1997 (c) 1998 1997 (c)
"Net asset value, beginning of period" $3.35 $3.65 $ 3.33 $3.65
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) 0.02 - -0.01 -
Net gains (losses) on investments
(both realized and unrealized) (d) -0.33 -0.30 -0.32 -0.32
Total From Investment Operation -0.31 -0.30 -0.33 -0.32
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - - -
Distributions from capital gains - - - -
al Distributions - - - -
Net asset value, end of period $3.04 $3.35 $3.00 $3.33
TOTAL RETURN (e) -8.28% -8.47% -9.91% -4.39%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $ 8 $ 8 $ 1 $ 1
Ratios to net assets
Expenses, before waiver of fees 2.67% 2.38% 3.42% 2.84%
Expenses, after waiver of fees 2.67% 2.15% 3.42% 2.60%
Net investment income -2.85% 0.64% -3.60% 0.19%
Portfolio Turnover Rate 522.88% 234.67% 522.88% 234.67%
Number of Shares Outstanding
at End of Period (000 Omitted) 3 3 0 0
Class C Shares (a)
For the years ended December 31,
Per Share Operating Performance: 1998 1997 1996 1995 1994
"Net asset value, beginning of period" $3.33 $3.51 $3.34 $3.43 $4.55
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) -0.01 -0.01 -0.03 -0.05 -0.18
Net gains (losses) on investments
(both realized and unrealized) (d) -0.33 -0.17 0.20 -0.04 -0.94
Total From Investment Operation -0.34 -0.18 0.17 -0.09 -1.12
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - - - -
Distributions from capital gains - - - - -
Total Distributions - - - - -
"Net asset value, end of period $2.99 $3.33 $3.51 $3.34 $3.43
TOTAL RETURN (e) -10.25% -5.13% 5.16% -2.62% -28.01%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $4,166 $7,288 $7,855 $4,370 $ 452
Ratios to net assets
Expenses, before waiver of fees 3.42% 3.14% 3.54% 4.82% 9.04%
Expenses, after waiver of fees 3.42% 2.91% 3.54% 3.53% 6.00%
Net investment income -3.60% -0.11% -0.43% 0.17% -4.78%
Portfolio Turnover Rate 522.88% 234.67% 129.20% 57.20% 148.21%
Number of Shares Outstanding
At End of Period (000 Omitted) 1,392 2,191 2,241 1,309 132
Class D
Shares
Per Share Operating Performance: 1998 1997 1996 (b)
Net asset value, beginning of period $3.36 $3.51 $3.46
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) 0.02 0.01 -
Net gains (losses) on investments
(both realized and unrealized) (d) (0.33) (0.16) 0.05
Total From Investment Operation (0.31) (0.15) 0.05
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - -
Distributions from capital gains - - -
Total Distributions - - -
Net asset value, end of period $3.05 $ 3.36 $3.51
TOTAL RETURN (e) -8.09% -4.27% -5.16%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period ($000 Omitted) $760 $972 $1,839
Ratios to net assets
Expenses, before waiver of fees 2.42% 2.20% 2.13%
Expenses, after waiver of fees 2.42% 1.97% 2.13%
Net investment income -2.60% 0.82% 0.00%
Portfolio Turnover Rate 522.38% 234.67% 129.20%
Number of Shares Outstanding
at End of Period (000 Omitted) 249 290 524
(a) All capital shares issued and outstanding as of
November 6, 1996 were reclassified as Class C Shares
(b) For the period December 9, 1996 (effective date) to December 31, 1996.
(c) For the period January 7, 1997 (first sale date) to December 31, 1997.
(d) Allocated between Net Investment Income and Net Gains or (Losses)
on Securities based on monthly weighted average shares outstanding.
(e) Total return measures the change in value of an investment over the
periods indicated. It is not annualized. It does not include the
maximum front end sales charge or contingent deferred sales charge.
CENTURION COUNSEL FUNDS, INC.
REAL ESTATE FUND
Statement of Additional Information
This Statement of Additional Information ("SAI") is not a
prospectus, but should be read in conjunction with the Prospectus of
Centurion Counsel Funds, Inc.-Real Estate Fund (the "Fund") dated
September ___, 1999 (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: (858) 673-8536).
TABLE OF CONTENTS
Page
FUND HISTORY 2
FUND INVESTMENTS AND RISKS 2
FUND MANAGEMENT 3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 5
INVESTMENT ADVISORY AND OTHER SERVICES 6
UNDERWRITING ARRANGEMENTS 9
BROKERAGE ALLOCATIONS AND OTHER PRACTICES 13
CAPITAL STOCK AND OTHER SECURITIES 14
RETIREMENT ACCOUNTS 20
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 20
TAXATION OF THE FUND 21
CALCULATION OF PERFORMANCE DATA 22
LIMITATION OF DIRECTOR LIABILITY 23
ADDITIONAL INFORMATION 24
FINANCIAL STATEMENTS 25
Dated September ____, 1999
FUND HISTORY
The Fund is a multi-class series of common stock of Centurion
Counsel Funds, Inc. (the "Company"). The assets and liabilities, income
and expenses of the Company attributable to the Fund are maintained in a
separate investment portfolio and determined separately for the Fund. The
Company was incorporated on August 27, 1981 under the laws of
Minnesota. IRI Asset Management, Inc., a Minneapolis based investment
adviser, served as the adviser to the Company from its inception until
March 1988. At that time, the Company's Board of Directors ("Board")
approved Excel Advisors, Inc. as its adviser and the offices of the Company
were moved to San Diego, California. In December 1994, the Company's
shareholders approved Centurion Counsel, Inc. as the Company's Adviser
and on January 15, 1999, the shareholders and Board of the Company
approved establishment of the Fund and the Board approved the Fund's
fundamental investment objective and policies.
FUND INVESTMENTS AND RISKS
Classification. The Fund is a series of shares in an open-end,
diversified management investment company that only issues shares of
common stock. By purchasing shares in the Fund, investors are pooling
their money to acquire a diversified portfolio of securities and other assets.
Investment Strategies and Risks. The Fund's non-principal
investment strategies are set forth in the Prospectus.
Fund Policies. The Fund has the investment restrictions set forth
below which 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.
To lower investment risks, the Fund, as a fundamental policy, will:
(1) have at least 75% of its total assets represented by
other than: (a) cash and cash items, (b) U.S. Government
securities, or (c) securities of any one issuer (other than the
U.S. Government and its agencies or instrumentalities)
having a value greater than 5% of the Fund's total assets
representing more than 10% of the outstanding voting
securities of such issuer;
(2) not purchase the securities of any one issuer, other
than the U.S. Government and its agencies or
instrumentalities, if as a result (a) the value of the holdings
of the Fund in the securities of such issuer exceeds 25% of
its total assets, or (b) the Fund owns more than 25% of the
outstanding securities of any one class of securities of such
issuer;
(3) not invest 25% or more of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, other than the real estate
industry in which the Fund will invest at least 65% or more
of its total assets, except that this restriction does not apply
to U.S. Government securities;
(4) not purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in real
estate or interests therein, including Real Estate Equity
Securities;
(5) not borrow money except for temporary or
emergency purposes or to meet redemption requests, in an
amount not exceeding 5% of the value of its total assets at
the time the borrowing is made;
(6) not pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure permitted borrowings;
(7) not make loans except through (a) the purchase of
debt obligations in accordance with its investment objectives
and policies; (b) the lending of portfolio securities; or
(c) the use of repurchase agreements;
(8) participate on a joint or joint and several basis in
any securities trading account;
(9) invest in companies for the purpose of exercising
control;
If a percentage limitation described above is adhered to at the time
of the investment by the Fund, a later increase or decrease in the percentage
resulting from any change in the value of the Fund's net assets will not
constitute a violation of the restriction.
FUND MANAGEMENT
Officers and Directors. The names, addresses and principal
occupations of directors and executive officers of the Company for the past
five years are given below:
</TABLE>
<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 (61)<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. She has served as a
registered representative of World Invest
Corporation, a licensed broker-dealer
since 1994.
Richard E. Hall (73) 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 (48)<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 (55)<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 (47) 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 Company 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 Company, or a registered broker/dealer, as defined under the Investment
Company Act of 1940, as amended.
</FN>
</TABLE>
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, 1998.
COMPENSATION TABLE
<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, $1800* -0- -0- $1800*
Director
Richard E. Hall, $1800* -0- -0- $1800*
Director
Russell W. Ketron, $1800* -0- -0- $1800*
Director
Douglas Werner, $1400* -0- -0- $1400*
Director
* Directors are paid $400 per meeting. There were four scheduled
quarterly meetings for 1998.
** 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,
the Centurion Counsel Market Neutral Fund and the Centurion Counsel Real
Estate Fund.
The Company's Board does not have a standing audit or nominating
committee or committees performing similar functions. The Company pays
no compensation to any of its officers and directors, except for a $200 per
year retainer and a fee of $400 for each meeting attended (other than
telephonically) by each director not affiliated with Centurion Counsel and
reimburses such nonaffiliated directors for their travel expenses to attend
directors' meetings. The Board held a total of four (4) regular meetings
during its last fiscal year.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date of this SAI, the Fund had outstanding 10 shares of
each Class of shares, all of which were owned by the Adviser.
As of March 9, 1999, to the knowledge of management, no one
person or persons could control the Company through the exercise of voting
rights. As of March 9, 1999, to the knowledge of management, no person
owned beneficially more than 5% of the Company's outstanding shares. The
following directors or nominees for the position of director or officers, as
of March 9, 1999, beneficially owned shares of the Company.
Number % of Total
of Shares Outstanding Shares*
Richard E. Hall 22,980 1.72%
Jack K. Heilbron 3,005 .22%
Russell W. Ketron 6,626 .49%
Doug Werner 521 .04%
* All classes on a combined basis.
INVESTMENT ADVISORY AND OTHER SERVICES
General
Centurion Counsel, Inc. ("Centurion Counsel") is the Fund's
Adviser. Centurion Counsel was incorporated in the State of California in
1984 and has since that time been an SEC-registered investment adviser.
Centurion Counsel has acted as the Company's investment adviser since
January 1, 1995 and investment adviser to the Fund since its inception. In
addition to its services to the Company, Centurion Counsel's primary
business activities include investment consulting to individuals, corporations
and institutions and the providing of investment banking services and other
activities related to the investment and securities industries.
Centurion Group, Inc. ("CGI") was incorporated in the State of
California in 1984. CGI has acted as the Company's accounting services
agent, transfer agent, dividend disbursing agent and administrative services
agent for its Market Neutral Fund since January 1, 1995.
Centurion Institutional Services, Inc. ("CISI") was incorporated in
the State of California in 1991. CISI has served as the Company's principal
underwriter for its Market Neutral Fund shares (Distributor) 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. 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 Company has contracted with its Adviser, Centurion Counsel,
to provide investment advice and management services to the Fund pursuant
to the Investment Advisory Agreement (the "Adviser Agreement"). The
Adviser Agreement continues from year to year only if approved by the
Board (including a majority of disinterested directors as described above).
The Adviser Agreement may be terminated by either the Company or
Centurion Counsel on 60 days' written notice to the other, and terminates
automatically in certain situations. The Adviser Agreement was approved
by the Company's shareholders on December 20, 1994 and was last
approved by the Board (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 Company) on February 5, 1999. On ___________, 1999
Centurion Counsel, as the only shareholder of each class of the Fund's
shares, approved the Adviser Agreement.
Under the Adviser 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 Board. Under the Adviser 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 Company'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.
The Fund bears costs and expenses of its operation, other than those
specifically required to be paid by Centurion Counsel under the Adviser
Agreement. 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 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 also pays the fees and bears the expense of registering and
maintaining the registration of the Fund and its shares with the Securities and
Exchange Commission, the expense of 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.
Under the Adviser Agreement, Centurion Counsel must reimburse
the Fund, in an amount not in excess of the adviser fee otherwise payable by
the Fund to the Adviser 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 Adviser Agreement is last effective, subject
to its right to end this obligation at the end of any Fund fiscal year.
The Fund did not pay advisory fees to Centurion Counsel before
1999.
Accounting Services Agreement
CGI acts as the Fund's accounting services agent pursuant to the
Accounting Services Agreement (the "Accounting Agreement"). The
Accounting Agreement was approved by the Board (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 Company), and the
shareholders of the Company approved such Agreement on December 20,
1994. On ___________, 1999 Centurion Counsel, as the only shareholder
of each class of the Fund's shares, approved the Accounting Agreement.
The Accounting Agreement continues from year to year only if the Board
approves it in the same manner they approve the Adviser Agreement. The
Accounting Services Agreement may be terminated by either the Company
or CGI on 60 days' written notice to the other, and the Agreement
terminates automatically in certain situations.
Under the Accounting Agreement, 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 did not pay CGI for accounting service fees before
1999. 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.
Administration Agreement
CGI acts as transfer agent, dividend disbursing agent and
administrative services agent for the Company pursuant to the
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.
For its services under this agreement, 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 Adviser Agreement. The Fund did not
pay CGI for administrative services before 1999.
The Administration Agreement was approved by the Board
(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)
and by the shareholders of the Company on December 20, 1994. On
____________, 1999 Centurion Counsel, as the only shareholder of each
class of the Fund's shares, approved the Adviser Agreement. The
agreement continues from year to year only if the Company's directors
approve them in the same manner as they approve the Investment Advisory
Agreement. The Administration Agreement may be terminated by either the
Company or by CGI on 60 days' written notice to the other, and the
Agreement terminates automatically in certain situations.
UNDERWRITING ARRANGEMENTS
CISI, as the Fund's Distributor or principal underwriter, sells the
Fund's shares under the Distribution Agreement with the Company, as
amended, dated January 1, 1995 and effective November 6, 1996. Under
the Distribution Agreement, CISI bears the costs of all advertising and
promotion expenses in connection with the distribution of the Fund's shares
(except those expenses assumed by the Fund's investment adviser). The
Distribution Agreement was last approved by the Board (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 Company) on
February 5, 1999. The 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 sales commissions were received by
the Fund's principal underwriter for sales of the Fund's shares before
January 1999.
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 with CISI.
As compensation for its services, CISI receives a front-end
commission in the case of Class A shares, a contingent deferred sales charge
("CDSC") in the case of Class B shares and 12b-1 fees in the case of Class
A shares, Class B shares and Class C shares as described below.
Class A Shares
The Distributor receives a sales charge equal to 4.75% of the gross
price of Class A shares it places which it may reallow to dealers through
whom purchases are made in an amount equal to 4.0% 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 advisers, 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 such reallowance to dealers. Such financial institutions,
other industry professionals and dealers are referred to as "Service
Organizations." In addition, 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.
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 which are redeemed within five years of purchase
are subject to a CDSC at the rates set forth in the following table.
Contingent Deferred Sales Charge Table
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
The CDSC is assessed on an amount equal to the lesser of the then
current market value or the cost of the shares being redeemed. No CDSC
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 CDSC, 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.
In determining whether a CDSC 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 CDSC,
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. As 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 through reinvestment of dividends.
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 CDSC 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 Distributor 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 Adviser Professionals or Eligible Employees, as defined under
"CAPITAL STOCK AND OTHER SECURITIES" below. No front-end,
deferred or other sales charge or Rule 12b-1 fees will be charged by the
Fund with respect to the Class D shares.
12b-1 Fees
For each class of its shares, the Fund has adopted a Plan of
Distribution pursuant to Rule l2b-1 under the Investment Company Act of
1940. The Plan of Distribution was adopted by the Fund on ___________,
1999 upon the approval of Centurion Counsel, the only shareholder of each
Class of the Fund's shares. The Plan of Distribution authorizes the Fund to
pay Rule 12b-1 fees. As compensation for share distribution-related services
it performs under its Distribution Agreement with the Fund, CISI receives
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,
CISI 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. CISI may, at its own expense, may provide
additional compensation to dealers in connection with sales of Fund shares
and servicing of Fund shareholders.
The Plan of Distribution for the Class C Shares was entered into on
January 1, 1995 and for each of the Class A shares and Class B shares was
entered into on November 6, 1996, the first date on which the Fund offered
Class A and Class B shares. CISI may reallow all or a portion of its 12b-1
fees to its representatives or to other broker-dealers who contract to provide
shareholder services to their customers holding shares of the respective
class.
These 12b-1 fees are to compensate CISI and the participating
dealers for their sales of the Fund's shares, 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.
The Fund's Plans of Distribution provide for the indirect payment
of distribution expenses by the Fund only as described above. 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.
Indirect or reimbursable expenses under the Plan do not include
interest paid on amounts borrowed by Centurion Counsel to make the
payments for which reimbursement is made. Also, there is no provision in
the Plan of Distribution limiting payments to the amounts of actual
distribution expenses or actual shareholder servicing expenses expended by
CISI. If the Plan of Distribution were terminated or not continued, the Fund
would not be contractually obligated to pay CISI for any expenses not
previously reimbursed by the Fund. However, in the sole discretion of the
Board, the Fund could 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. 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 Board, and the Board 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
directors 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 shares of the
Company. 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 Company'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.
CISI did not receive any distribution services fees in connection
with its sale of the Fund's shares before 1999.
Custodian; General Counsel; Auditors
Firstar 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.
Squire & Company acts as the Fund's independent public
accountants.
Rushall & McGeever acts as the general counsel for the Fund.
BROKERAGE ALLOCATIONS AND OTHER PRACTICES
In effecting securities and commodities transactions, the Fund's
investment adviser 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 adviser, 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.
As the Fund was established in 1999, CISI or its affiliated brokers
did not receive compensation in connection with Fund activities prior to
1999.
CAPITAL STOCK AND OTHER SECURITIES
General
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"), which was last amended by the
Board and approved by a majority vote of the Company's shareholders on
January 15, 1999.
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. 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 per share plus a maximum
initial sales charge ("front-end sales charge") set from time to time by 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. 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.
Class B Shares
Class B shares are sold at net asset value per share and are subject
to a maximum contingent deferred sales charge if they are redeemed within
five years of purchase. Initially, the maximum deferred sales charge shall
be 4% of the redemption proceeds during the first year and second year,
declining each year thereafter to 0% after the fifth year. 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. 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.
Class C Shares
Class C shares are sold at net asset value per share 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.
Class D Shares
Class D shares are sold at net asset value only to persons who
qualify as an Adviser Professional, Eligible Employee, or Eligible Account.
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. The Adviser
Professionals shall mean investment advisers, 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 adviser, 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 adviser and any of its
affiliated companies; (b) employees and registered representatives of Adviser
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. 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.
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 of 1986, 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.
Dividends
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 the ongoing 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."
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.
Income and Expenses
The income and expenses of the Fund must be allocated among each
class of shares as follow:
Separate Distribution Expenses. Each class at all times maintains
a separate arrangement for shareholder services or the distribution services
or both, and pays all of the expenses of that arrangement ("distribution
expenses").
Allocation of Income, Realized and Unrealized Capital Gains and
Losses, and Expenses. Each class is 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 Board may require one or more classes 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 pays the same advisory fee.
Waiver of Expenses. Expenses may be waived or reimbursed by
the Adviser, Distributor, 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:
(1) 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;
(2) 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 assets of the Fund.
Voting Rights
All of the Company's shares have one vote. All shares vote as a
single class for directors and other matters, except on any matter which
affects only a specific Fund or as otherwise may be required by the 1940
Act. Each class has exclusive voting rights on any matter submitted to
shareholders that relates solely to that class. Each class 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. Except as described above,
each class has in all other aspects the same rights and obligations as each
other class.
Under the Company's Articles of Incorporation, the Board may
authorize one or more additional classes 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.
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, investment originally 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. Class D shares will be more beneficial to the investor who qualifies
for the purchase thereof.
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
1940 Act and state laws, will seek to ensure that no such conflict arises.
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
adviser prior to the establishment of such a plan.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
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.
TAXATION OF THE FUND
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 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, an exchange of the shares for the shares
of another Centurion Counsel Fund 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
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.
CALCULATION OF PERFORMANCE DATA
Total Return Calculations
The Fund computes its average annual total return by determining
the average annual compounded rates of return during specified periods that
would equate the initial amount invested in a particular share class to the
ending redeemable value of such investment in the class, according to the
following formula:
Where: P(I + T) TO THE POWER OF n = ERV
Where:
T = Average annual total return
ERV = Ending redeemable value of a hypothetical $1,000 payment
made at the beginning of a period at the end of such period.
P = A hypothetical initial payment of $1,000.
n = Number of years.
The calculation of average annual total return assumes that any
dividends and distributions are reinvested immediately, rather than paid to
the investor in cash. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end of the
period covered by the computations. Unlike 'bank deposits or other
investments that pay a fixed yield or return for a stated period of time, the
return for the Fund will fluctuate from time to time and does not provide a
basis for determining future returns. Average annual total return is affected
by many factors, including the performance of the Fund's individual
securities investments, changing market conditions, the composition of the
Fund's portfolio and the Fund's operating expenses.
Performance Comparisons
Investors may compare the performance of the Fund by comparing
it to the performance of other mutual funds with comparable investment
objectives and policies through various mutual fund or market indices such
as those prepared by Dow Jones & Co., Inc'. and Standard & Poor's
Corporation and to data prepared by Lipper Analytical Services, Inc., a
widely-recognized independent service which monitors the performance of
mutual funds. Comparisons may also be made to indices or data published
in certain periodicals, including BARRON'S, BUSINESS WEEK,
CDA/WIESENBERGER, FORBES, IBBOTSON ASSOCIATES,
INSTITUTIONAL INVESTOR, MONEY MAGAZINE,
MORNINGSTAR, INC., THE NEW YORK TIMES, THE WALL
STREET JOURNAL and U.S.A. TODAY. In addition to performance
information, general information about the Fund that appears in such
publications may be included in advertisements, sales literature and reports
to shareholders. The Fund may also include in advertisements and reports
to shareholders information discussing the performance of the Adviser in
comparison to other investment advisers and to other institutions.
From time to time, the Company may include the following types
of information in advertisements, supplemental sales literature and reports
to shareholders: (1) discussions of general economic or financial principles
(such as the effects of inflation, the power of compounding and the benefits
of dollar cost averaging); (2) discussions of general economic trends; (3)
presentations of statistical data to supplement such discussions; (4)
descriptions of past or anticipated portfolio holdings for the Fund; (5)
descriptions of investment strategies for the Fund; (6) descriptions or
comparisons of various investment products, which may or may not include
the Fund; (7) comparisons of investment products (including the Fund) with
relevant market or industry indices or other appropriate benchmarks; (8)
discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons that have invested
in the Fund. The Company may also include calculations, such as
hypothetical compounding examples, which describe hypothetical investment
results in such communications. Such performance examples will be based
on an express set of assumptions and are not indicative of the performance
of the Fund.
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 recessionary 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 Company was originally 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." On January 15, 1999, the shareholders of the Fund
approved an amendment to the Article providing that the name "Centurion
T.A.A. Fund, Inc." be changed to "Centurion Counsel Funds, Inc.," all
outstanding shares of the Fund be reclassified as the "Centurion Counsel
Market Neutral Fund" series and the "Centurion Counsel Growth Fund"
series and the "Centurion Counsel Real Estate Fund" series of shares were
authorized.
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 is newly formed and has no Financial Statements.
PART C -- OTHER INFORMATION
Item 23. Exhibits
(a)(1) Articles of Incorporation of Registrant.(3)
(a)(2) Articles of Amendment of Registrant.(3)
(a)(3) Articles of Amendment of Registrant to change name to "Excel
Value Fund, Inc."(3)
(a)(4) Articles of Amendment of Registrant to change name to
"Centurion T.A.A. Fund, Inc."(3)
(a)(5) Articles of Amendment of Registrant authorizing multiple classes
of shares.(2)
(a)(6) Articles of Amendment of Registrant to change name to
"Centurion Counsel Funds, Inc." and to redesignate outstanding
shares as the "Centurion Counsel Market Neutral Fund" series.
(b) Restated Bylaws of Registrant.(3)
(c)(1) Multiple Class Share Plan.(2)
(c)(2) Specimen copy of share certificate of Registrant.(2)
(4) Form of Investment Advisory Agreement of
Centurion T.A.A. Fund, Inc.(Market
Neutral Fund Series).(1)
(d)(1) Advisory Agreement Terms and Conditions
Dated January 1, 1999.
(d)(2) Investment Advisory Agreement of
Centurion Growth Fund.
(d)(3) Investment Advisory Agreement of
Centurion Real Estate Fund.
(e) Form of Distribution Agreement of
Centurion T.A.A. Fund, Inc. (Market
Neutral Fund Series).(2)
(e)(1) Distribution Agreement Terms and
Conditions Dated January 1, 1999.
(e)(2) Distribution Agreement of Centurion
Growth Fund.
(e)(3) Distribution Agreement of Centurion Real
Estate Fund.
(e)(4) Shareholder Services Agent Agreement of
Centurion Growth Fund.
(e)(5) Shareholder Services Agent Agreement of
Real Estate Fund.
(f) Not applicable.
(g) Custodian Agreement.(2)
(h)(1) Form of Administration Agreement of
Centurion T.A.A. Fund, Inc. (Market
Neutral Fund Series).(2)
(h)(2) Form of Accounting Services Agreement of
Centurion T.A.A. Fund, Inc. (Market
Neutral Fund Series).(2)
(h)(3) Form of Shareholder Services Agent
Agreement of Centurion T.A.A. Fund, Inc.
(Market Neutral Fund Series).(2)
(h)(4) Administration Agreement Terms and
Conditions Dated January 1, 1999.
(h)(5) Administration Agreement of Centurion
Growth Fund.
(h)(6) Administration Agreement of Centurion
Real Estate Fund.
(h)(7) Accounting Services Agreement Terms And
Conditions Dated January 1, 1999.
(h)(8) Accounting Services Agreement of
Centurion Growth Fund.
(h)(9) Accounting Services Agreement of
Centurion Real Estate Fund.
(i) Opinion and Consent with respect to
Centurion T.A.A. Fund, Inc. (Market Neutral
Fund Series).
(i)(1) Opinion and Consent with respect to
Centurion Growth Fund.
(i)(2) Opinion and Consent with respect to
Centurion Real Estate Fund.
(j)(1) Consent of Squire & Company.
(j)(2) Consent of Boros & Farrington.
(k) Not applicable.
(l) Letter of Investment Intent with respect
to Centurion T.A.A. Fund, Inc. (Market
Neutral Fund Series).(1)
(m)(1) Market Neutral Fund Series Rule 12b-1
Plan of Distribution (Class C Share
Plan).(2)
(m)(2) Market Neutral Fund Series Rule 12b-1
Plan of Distribution for Class A
Shares.(2)
(m)(3) Market Neutral Fund Series Rule 12b-1
Plan of Distribution for Class B
Shares.(2)
(m)(4) Class A Share Plan of Distribution Dated
January 1, 1996.
(m)(5) Class B Share Plan of Distribution Dated
January 1, 1996.
(m)(6) Class C Share Plan of Distribution Dated
August 1, 1994.
(m)(7) Class A Plan Adoption Agreement of
Centurion Growth Fund.
(m)(8) Class B Plan Adoption Agreement of
Centurion Growth Fund.
(m)(9) Class C Plan Adoption Agreement of
Centurion Growth Fund.
(m)(10) Class A Plan Adoption Agreement of Centurion Real
Estate Fund.
(m)(11) Class B Plan Adoption Agreement of Centurion Real
Estate Fund.
(m)(12) Class C Plan Adoption Agreement of Centurion Real
Estate Fund.
(14) Not applicable.
(15) Not applicable.
_______________________________________
(1) Incorporated by reference to Amendment to the Registration
Statement on Form N-1A of Centurion T.A.A. Fund, Inc. filed
with the Securities and Exchange Commission on April 9, 1996 (Accession
No. 0000355419-96-000005).
(2) Incorporated by reference to Amendment to the Registration
Statement on Form N-1A of Centurion T.A.A. Fund, Inc. filed
with the Securities and Exchange Commission on November 6, 1996
(Accession No. 0000355419-96-000024).
(3) Incorporated by reference to Amendment to the Registration
Statement on Form N-1A of Centurion Counsel Funds, Inc.
filed with the Securities and Exchange Commission on April 29, 1999
(Accession No. 0000355419-99-000013).
Item 24. Persons Controlled by or Under Common Control with
Registrant
Not applicable.
Item 25. 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
or 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 26. 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 relating to "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>
<TABLE>
<CAPTION>
Name and Principle Position(s) with Other Occupations
Business Address Centurion Counsel, Inc. During Past Two Years
<C> <C> <C>
Jack K. Heilbron Chairman of the Board and Chairman of the Board and Chief
11545 W. Bernardo Court Chief Investment Officer Executive Officer of the Registrant.
Suite 100 Chairman of the Board of Directors of
San Diego, CA 92127 CI Holding Group, Inc. ("CI Holding"),
the parent corporation of Centurion
Counsel, Inc. Mr. Heilbron also serves
as the Chairman and a Director of other
operating subsidiaries of CI Holding.
Kenneth W. Elsberry President, Chief Financial President, Chief Financial Officer and
11545 W. Bernardo Court, Officer 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 of
San Diego, CA 92127 of other of its operating subsidiaries.
</TABLE>
Item 27. 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 Counsel Funds, Inc.
Position(s) and Office(s)
Name and Principle with Centurion Institutional Positions and Offices
Business Address Services, Inc. with the Registrant
Mary R. Limoges President, Chief Executive Secretary
11545 W. Bernard Court Officer and Director
Suite 100
San Diego, CA 92127
Kenneth W. Elsberry Chief Financial Officer and President, Chief
11545 W. Bernardo Court Director Executive Officer,
Suite 100 Treasurer, Chief
San Diego, CA 92127 Financial Officer
Item 28. Location of Accounts and Records
Firstar 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 29. Management Services
Not applicable.
Item 30. 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 June 1999.
CENTURION
COUNSEL FUNDS, INC.
By: /s/
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/ Chairman of the Board of June 21, 1999
Jack K. Heilbron the Registrant.
/s/ President, Chief Executive June 21, 1999
Kenneth W. Elsberry Officer, Chief Financial
Officer.
/s/ Director of the Registrant June 21, 1999
Carol Ann Freeland
/s/ Director of the Registrant June 21, 1999
Richard E. Hall
/s/ Director of the Registrant June 21, 1999
Russell W. Ketron
/s/ Director of the Registrant June 21, 1999
Douglas Werner
Exhibit (d)(1)
INVESTMENT ADVISORY AGREEMENT
TERMS AND CONDITIONS
DATED JANUARY 1, 1999
The terms and conditions set forth below shall apply to each
Investment Advisory Agreement ("Agreement") by and between
CENTURION COUNSEL FUNDS, INC., a Minnesota corporation (the
"Company"), and CENTURION COUNSEL, a California corporation
("Centurion Counsel"), into which they have been expressly
incorporated. Terms used herein not otherwise defined herein
shall have the meanings set forth in the respective Agreement.
Section 1. Investment Advisory Services.
Subject to the objectives and investment restrictions of
the Fund and subject to the supervision of the Board of
Directors of the Company (the"Board"), 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 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 Company office facilities, personnel and
equipment for administering the Fund and for servicing
its investments portfolio. Centurion Counsel shall
arrange for the Company's officers or employees to serve
without compensation from the Fund if duly elected to
such positions by the shareholders or the Board.
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 Board 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 Company, 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 Company.
Section 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 Company's 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-million as
follows:
.85% of net assets between $200-million and $400-
million;
.80% of net assets between $400-million 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.
Section 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, bookkeeping and
auditing (including computerized accounting system
maintenance fees) 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
the printing and mailing of the Fund's 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.
Section 4. Limit on Expense. All compensation
and expense reimbursements required under this Section 4
and under Section 2 and Section 3, respectively, shall be
payable by the Company only from the assets of the Fund.
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 the Expense
Limitation. The amount of any such reimbursements to the
Fund by Centurion Counsel shall be determined and made
quarterly at the same time as the fee payable to
Centurion Counsel is determined and payable pursuant to
Section 2 hereof. The reimbursement amount shall be
based on estimated annualized expenses at the end of each
of the first three quarters of each year and shall be
determined and adjusted for the fourth quarter of each
year based on actual Fund expenses for the year.
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 the
Agreement is effective, irrespective of whether the
Agreement is terminated prior to the end thereof.
Centurion Counsel has the right to terminate its
obligation under this Section 4 as of the end of the then
current fiscal year of the Fund.
Section 5. Freedom to Deal With Third Parties.
Centurion Counsel shall be free to render services to
others similar to those rendered under the 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.
Section 6. 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.
Section 7. Notices. Any notice under the
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.
Exhibit (d)(2)
INVESTMENT ADVISORY AGREEMENT
FOR
CENTURION COUNSEL GROWTH FUND SERIES
THIS INVESTMENT ADVISORY AGREEMENT is dated and made as
of __________ 1999 (the "Effective Date"), by and between
CENTURION COUNSEL FUNDS, INC., a Minnesota corporation (the
"Company"), and CENTURION COUNSEL, a California corporation
("Centurion Counsel").Section 1. Engagement. The Company
hereby engages Centurion Counsel and Centurion Counsel hereby
agrees to act as investment adviser for and to manage the
investment assets allocated to and the affairs of the
series of shares of the Fund designated the Centurion
Counsel Growth Fund (the "Fund"). The Fund is a multi-
class series of the Company's common stock, the assets
and liabilities of which are maintained in a separate
investment portfolio and the income and expenses of which
are determined separately from the other series of the
Company's common stock. The investment of the assets of
the Fund shall at all times be subject to the applicable
provisions of the Company's Articles of Incorporation,
the Bylaws, and the Registration Statement, 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 such Registration Statement and
Prospectus and Statement of Additional Information and as
interpreted from time to time by the Company's Board of
Directors (the "Board").
Section 2. Terms and Conditions. This
Investment Advisory Agreement ("Agreement") shall be
subject to the Investment Advisory Agreement Terms and
Conditions dated January 1, 1999, a copy of which is
attached hereto and incorporated herein by reference.
Section 3. Expense Limitation. For the
purposes of limiting the Fund's expenses, the limitation
shall be 2.50% (the "Expense Limitation").
Section 4. Effective Date, Duration and
Termination of Agreement. This Agreement shall be
effective as of the Effective Date. 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, 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 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.
Section 5. Amendments to Agreement. No
material amendment to this Agreement (including the
Investment Advisory Agreement Terms and Conditions) shall
be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the
Fund.
Section 6. Counterparts. 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.
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 COUNSEL
FUNDS, INC.
By: By:
Its Its
Exhibit (d)(3)
INVESTMENT ADVISORY AGREEMENT
FOR
CENTURION COUNSEL REAL ESTATE FUND SERIES
THIS INVESTMENT ADVISORY AGREEMENT is dated and made as
of __________ 1999 (the "Effective Date"), by and
between CENTURION COUNSEL FUNDS, INC., a Minnesota corporation
(the "Company"), and CENTURION COUNSEL, a California corporation
("Centurion Counsel").
Section 1. Engagement. The Company hereby
engages Centurion Counsel and Centurion Counsel hereby
agrees to act as investment adviser for and to manage the
investment assets allocated to and the affairs of the
series of shares of the Fund designated the Centurion
Counsel Real Estate Fund (the "Fund"). The Fund is a
multi-class series of the Company's common stock, the
assets and liabilities of which are maintained in a
separate investment portfolio and the income and expenses
of which are determined separately from the other series
of the Company's common stock. The investment of the
assets of the Fund shall at all times be subject to the
applicable provisions of the Company's Articles of
Incorporation, the Bylaws, and the Registration
Statement, 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
such Registration Statement and Prospectus and Statement
of Additional Information and as interpreted from time to
time by the Company's Board of Directors (the "Board").
Section 2. Terms and Conditions. This
Investment Advisory Agreement ("Agreement") shall be
subject to the Investment Advisory Agreement Terms and
Conditions dated January 1, 1999, a copy of which is
attached hereto and incorporated herein by reference.
Section 3. Expense Limitation. For the
purposes of limiting the Fund's expenses, the limitation
shall be 2.50% (the "Expense Limitation").
Section 4. Effective Date, Duration and
Termination of Agreement. This Agreement shall be
effective as of the Effective Date. 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, 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 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.
Section 5. Amendments to Agreement. No
material amendment to this Agreement (including the
Investment Advisory Agreement Terms and Conditions) shall
be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the
Fund.
Section 6. Counterparts. 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.
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 COUNSEL
FUNDS, INC.
By: By:
Its Its
Exhibit (e)(1)
DISTRIBUTION AGREEMENT
TERMS AND CONDITIONS
DATED JANUARY 1, 1999
The terms and conditions set forth below shall apply to each
Distribution Agreement by and between Centurion Counsel Funds,
Inc., a Minnesota corporation (the "Company"), and Centurion
Institutional Services, Inc., a California corporation ("CISI"),
into which they have been expressly incorporated. Terms used
herein not otherwise defined herein shall have the meanings set
forth in the respective Agreement.
Section 1. Underwriting Services. CISI shall distribute the
Shares through dealers or otherwise, and shall distribute the Class
D shares of the Fund to Advisor Professionals, Eligible Employees,
and Eligible Accounts as defined in the Fund's current Prospectus.
CISI agrees to offer such 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 Registration Statement on Form N-1A relating to the Fund 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").
Section 2. Sale of Fund Shares. The 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 Company. Any offer or sale shall be conclusively
presumed to have been accepted by the Company if it fails to notify the
Distributor of the rejection of such offer or sale prior to the computation
of the net asset value of the Shares next following receipt by the Company
of notice of such offer or sale.
(2) No Share 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.
Section 3. Registration of Shares. The Company
agrees to make prompt and reasonable efforts to effect and
keep in effect, at its expense, the registration or
qualification of Fund shares for sale in such jurisdictions
as the Company may designate.
Section 4. Information to be Furnished to CISI. The
Company agrees that it will furnish CISI with such
information with respect to the affairs and accounts of the
Company as CISI may from time to time reasonably require, and
further agrees that CISI at all reasonable times, shall be
permitted to inspect the Company's books and records for the
Fund.
Section 5. Allocation of Expenses. During the
period of this contract, the Company shall pay or cause to be
paid from the Fund's allocated cash, investment portfolio,
cash and other allocated assets, if any, 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 Centurion, CISI shall pay all advertising and
promotional expenses in connection with the distribution of
the Shares, including paying for printing and distribution of
the Fund's Prospectus and Statement of Additional Information
for new shareholders.
Section 6. 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 Company.
Section 7. Subscription for Shares - Refund for
Canceled Orders. CISI shall subscribe for Shares 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 is placed
with CISI by a customer or dealer and subsequently canceled,
CISI shall forthwith cancel the subscription for such Shares
entered on the books of the Company, and, if CISI has paid
the Company for such Shares, shall be entitled to receive
from the Company 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.
Anything in this Agreement to the contrary
notwithstanding, CISI shall look for payment of any
compensation or reimbursements hereunder only to the
allocated assets of the Fund.
Section 8. Indemnification of the Fund. CISI
agrees to indemnify the Company 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 proceedings in any way
arising out of or in connection with the sale or distribution
of the Shares 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 Company 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 Company 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 Company to CISI, or to CISI by a
director, officer, or employee of the Company 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 Company or any such person
referred to above.
Section 9. 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.
Section 10. Reports to the Board. Appropriate
officers of CISI shall provide the Company's Board of
Directors (the "Board") with such information as is required
by the Plans of Distribution for Class A, Class B, and/or
Class C Shares of the Fund or any other plan of distribution
adopted by the Company pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended.
Section 2. 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.
Exhibit (e)(2)
DISTRIBUTION AGREEMENT
FOR
CENTURION COUNSEL GROWTH FUND SERIES
THIS DISTRIBUTION AGREEMENT is dated and made effective on
_______________, 1999 (the "Effective Date") by and between
Centurion Counsel Funds, Inc., a Minnesota corporation (the
"Company"), and Centurion Institutional Services, Inc., a
California corporation ("CISI"). In consideration of the
mutual covenants herein contained, the parties hereto,
intending to be legally bound, do hereby agree as follows:
W I T N E S S E T H:
Section 1. Engagement. The Company hereby engages the CISI,
and CISI hereby agrees to act, as principal underwriter for
the Company in the sale and distribution of Class A shares,
Class B shares, Class C shares and Class D shares (the "Shares")
of its series of Shares designated as the Centurion Counsel
Growth Fund series (the "Fund").
Section 2. Terms and Conditions. This Distribution Agreement
("Agreement") shall be subject to the Distribution Agreement
Terms And Conditions dated January 1, 1999 (the "Terms And
Conditions"), a copy of which is attached hereto and incorporated
herein by reference. Section 3. Compensation to CISI. It is
understood and agreed by the parties hereto that CISI will received,
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 Shares based upon a percentage of
the net assets allocated to the Fund for which such broker-dealers or
registered representatives are responsible by reason of their sale of
Shares, and to pay other advertising and promotional expenses in
connection with the distribution of Shares.
Section 4. Effective Date, Duration and Termination of Agreement.
This Agreement is effective on the Effective Date. 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 Company (the "Board"), including the specific approval of a
majority of the directors who are not interested persons as defined
in 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.
Section 5. Amendments to Agreement. No material amendment to this
Agreement shall be effective until approved by CISI and by the Board
in the manner discussed in Section 4 hereof.
Section 2. Counterparts. 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.IN WITNESS WHEREOF, the Company and CISI
have caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
CENTURION COUNSEL FUNDS,
INC.
By:
Its
CENTURION INSTITUTIONAL
SERVICES, INC.
By:
Its
SCHEDULE A
Sales Charge Schedule
1. Class A Shares
A front-end sales charge of 4.75% as follows:
As % of Net Amount Reallowed to Dealers
Investment As % of Offering Price (as % 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
Dollar Amount Subject to
Year Since Purchase 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
Exhibit (e)(3)
DISTRIBUTION AGREEMENT
FOR
CENTURION COUNSEL REAL ESTATE FUND SERIES
THIS DISTRIBUTION AGREEMENT is dated and made effective on
_______________, 1999 (the "Effective Date") by and between
Centurion Counsel Funds, Inc., a Minnesota corporation (the
"Company"), and Centurion Institutional Services, Inc., a
California corporation ("CISI"). In consideration of the mutual
covenants herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:
W I T N E S S E T H:
Section 1. Engagement. The Company hereby engages the CISI, and
CISI hereby agrees to act, as principal underwriter for the Company
in the sale and distribution of Class A shares, Class B shares,
Class C shares and Class D shares (the "Shares") of its series of
Shares designated as the Centurion Counsel Real Estate Fund series
(the "Fund").
Section 2. Terms and Conditions. This Distribution Agreement
("Agreement") shall be subject to the Distribution Agreement Terms And
Conditions dated January 1, 1999 (the "Terms And Conditions"), a copy
of which is attached hereto and incorporated herein by reference.
Section 3. Compensation to CISI. It is understood and agreed by the
parties hereto that CISI will received, as compensation for services
it performs hereunder:
(a) a sales charge in accordance with Schedule A hereto; and
(2) 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 Shares based upon a
percentage of the net assets allocated to the Fund for which such
broker-dealers or registered representatives are responsible by reason
of their sale of Shares, and to pay other advertising and promotional
expenses in connection with the distribution of Shares.
Section 4. Effective Date, Duration and Termination of Agreement.
This Agreement is effective on the Effective Date. 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 Company (the "Board"), including the specific approval of a
majority of the directors who are not interested persons as defined
in 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.
Section 5. Amendments to Agreement. No material amendment
to this Agreement shall be effective until approved by CISI and by
the Board in the manner discussed in Section 4 hereof. Section 2.
Counterparts. 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.IN WITNESS WHEREOF, the Company and
CISI have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.
CENTURION COUNSEL FUNDS, INC.
By:
Its
CENTURION INSTITUTIONAL SERVICES,
INC.
By:
Its
SCHEDULE A
Sales Charge Schedule
1. Class A Shares
A front-end sales charge of 4.75% as follows:
As % of Net Amount Reallowed to Dealers
Investment As % of Offering Price (as % 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
Dollar Amount Subject to
Year Since Purchase 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
Exhibit (e)(4)
SHAREHOLDERS SERVICES AGENT AGREEMENT
FOR
CENTURION COUNSEL GROWTH FUND SERIES
THIS AGREEMENT, made on and as of this ____ day of __________ 1999,
by and between Centurion Counsel Funds, Inc., a Minnesota corporation
(the "Company"), and Centurion Institutional Services, Inc., a California
corporation (the "Servicing Agent").
W I T N E S S E T H:
Section 1. Engagement of Servicing Agent. The Company hereby
engages the Servicing Agent, and the Servicing Agent hereby agrees
to act, as agent to provide certain services to certain holders of
the Company's series of common stock designated the Centurion Counsel
Growth Fund Series (the"Fund"). The Servicing Agent shall provide
such services to those shareholders of the Fund's shares who are
brokerage or advisory customers or clients of the Servicing Agent,
either through their agents, employees, or otherwise. The Servicing
Agent agrees to provide such services at all times to such persons
("Shareholders") who own shares of the Fund during the term of this
Agreement. The Servicing Agent represents and warrants that it is,
and that it shall remain during the term of this Agreement, duly
licensed and authorized to perform the services it is required to
perform under this Agreement.
Section 2. Shareholder Services. The services to be provided by
the Servicing Agent under this Agreement (the "Shareholder Services")
shall consist of liaison services including receiving and responding
to customer inquiries and providing such persons information
regarding their investments in the shares of the Fund (the"Shares").
In addition, the Servicing Agent shall provide such other related
services as the Company or the Shareholders may reasonably request.
Section 3. Registration of Shares. The Company agrees to make
prompt and reasonable efforts to effect and keep in effect, at its
expense, the registration or qualification of the Shares for sale
in such jurisdictions as the Company may designate.
Section 4. Information to be Furnished to the Servicing Agent.
The Company agrees that it will furnish the Servicing Agent with
such information with respect to the affairs and accounts of the
Fund as the Servicing Agent may from time to time reasonably require,
and further agrees that the Servicing Agent, at all reasonable times,
shall be permitted to inspect the Company's books and records relating
to the Fund.
Section 5. Allocation of Expenses. During the period of this contract,
the Company shall pay or cause to be paid all expenses, costs and fees
incurred by or for the Fund which are not assumed by the Servicing Agent.
The Servicing Agent shall be required hereunder to pay costs which it
incurs in connection with providing administrative or accounting services
to the Shareholders (such costs are referred to as "Shareholder Servicing
Costs").Shareholder Servicing Costs shall be all expenses of the Servicing
Agent incurred in connection with providing administrative or accounting
services to the shareholders, including, but not limited to, an allocation
of the Servicing Agent's overhead and payments made to persons, including
employees of the Servicing Agent, who respond to inquiries of shareholders
regarding their ownership of Shares, or who provide other administrative
or accounting services not otherwise required to be provided by the
investment advisor or transfer agent for the Fund.
Section 6. Compensation to the Servicing Agent
(a) Pursuant to the Plan of Distribution for the Shares (the "Plan")
adopted in accordance with Rule 12b-1 under the Investment Company Act
of 1940 (the "1940 Act"), the Company shall pay the Servicing Agent as
its sole compensation hereunder, a distribution fee (the "Servicing Fee"),
calculated and payable quarterly at an annual rate equal to 0.25% per
annum of the average daily net assets of the Fund to cover Shareholder
Servicing Costs. Such fee shall be paid to the Servicing Agent no later
than the fifth business day following the end of such quarter. Average
daily net assets shall be computed in accordance with the Prospectus of
the Fund and the Company's Articles of Incorporation. Amounts payable
to the Servicing Agent under the Plan may exceed or be less than the
Servicing Agent's actual Shareholder Servicing Costs. In the event
such Shareholder Servicing Costs exceed amounts payable to the
Servicing Agent under the Plan, the Servicing Agent shall not be
entitled to reimbursement by the Company.
(b) In each year during which this Agreement remains in effect, the
Servicing Agent will prepare and furnish to the Board of Directors of
the Company (the "Board"), and the Board will review, on a quarterly
basis, written reports complying with the requirements of Rule 12b-1
under the 1940 Act that set forth the amounts expended under this
Agreement and the Plan and the purposes for which those expenditures
were made.
Section 7. Limitation of the Servicing Agent's Authority. The Servicing
Agent 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 Company.
Section 8. Indemnification of the Fund. The Servicing Agent agrees
to indemnify the Company 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
proceedings in any way arising out of or in connection with the sale
or distribution of the Shares by the Servicing Agent. In the event
of the threat or institution of any such litigation or legal proceedings
against the Company, the Servicing Agent shall defend such action on
behalf of the Company at the Servicing Agent's 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, the Servicing Agent shall not be
required to pay or reimburse the Company 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 Company to
the Servicing Agent, or to the Servicing Agent by a director, officer,
or employee of the Company who is not an "interested person," as defined
in the provisions of the 1940 Act, of the Servicing Agent, unless the
information so supplied or omitted was available to the Servicing Agent
or the investment advisor to the Fund without recourseto the Company or
any such person referred to above.
Section 9. Limitation on Expenses. Anything in this Agreement to the
contrary notwithstanding, any compensation, expenses, reimbursements or
payments for indemnification otherwise payable to Servicing Agent
hereunder shall be payable only from the Fund's allocated assets.
Section 10. Freedom to Deal with Third Parties. The Servicing Agent
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.
Section 11. Effective Date, Duration and Termination of Agreement
(a) The effective date of this Agreement is set forth in the first
paragraph of this Agreement. Unless sooner terminated as hereinafter
provided, this Agreement shall continue in effect for a period of one
year after the date of its execution, and from year to year thereafter,
but only so long as such continuance is specifically approved at least
annually by the Board, and of the directors who are not "interested
persons" (as defined in the provisions of the 1940 Act) of the Company,
as defined by the provisions of the 1940 Act, and have no direct or
indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (including, without limitation, this
Agreement), cast in person at a meeting called for the purpose of
voting on this Agreement.
(b) This Agreement may be terminated at any time without the payment
of any penalty, by the vote of a majority of the members of the Board
who are not "interested persons" (as defined in the provisions of the
1940 Act) of the Company and have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (including, without limitation, this Agreement), or by the
vote of a majority of the outstanding voting securities of the Fund,
or by the Servicing Agent, upon 60 days' written notice to the other
party.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined by the provisions of the 1940 Act).
(d) 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 lesser of (i) the vote of 67% or more of the voting
securities of the Fund present at a regular or special meeting of
shareholders duly called, if more than 50% of the Fund's outstanding
voting securities are present or represented by proxy, or (ii) the
vote of more than 50% of the outstanding voting securities of the
Fund.
Section 12. Amendments to Agreement. No material amendment to this
Agreement shall be effective until approved by the Servicing Agent and
by vote of a majority of the Board who are not interested persons of
the Servicing Agent.
Section 13. 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.
Section 14. Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single Agreement. IN
WITNESS WHEREOF, the Fund and the Servicing Agent have caused this
Agreement to be executed by their duly authorized officers as of the
day and year first above written.
THE "FUND"
CENTURION COUNSEL FUNDS, INC.
By:
Its
THE "SERVICING AGENT"
CENTURION INSTITUTIONAL
SERVICES, INC.
By:
Its
Exhibit (e)(5)
SHAREHOLDERS SERVICES AGENT AGREEMENT
FOR
CENTURION COUNSEL REAL ESTATE FUND SERIES
THIS AGREEMENT, made on and as of this ____ day of __________ 1999,
by and between Centurion Counsel Funds, Inc., a Minnesota corporation
(the "Company"), and Centurion Institutional Services, Inc., a
California corporation (the "Servicing Agent").
W I T N E S S E T H:
Section 1. Engagement of Servicing Agent. The Company hereby engages
the Servicing Agent, and the Servicing Agent hereby agrees to act, as
agent to provide certain services to certain holders of the Company's
series of common stock designated the Centurion Counsel Growth Fund
Series (the"Fund"). The Servicing Agent shall provide such services
to those shareholders of the Fund's shares who are brokerage or advisory
customers or clients of the Servicing Agent, either through their
agents, employees, or otherwise. The Servicing Agent agrees to provide
such services at all times to such persons ("Shareholders") who own
shares of the Fund during the term of this Agreement. The Servicing
Agent represents and warrants that it is, and that it shall remain
during the term of this Agreement, duly licensed and authorized to
perform the services it is required to perform under this Agreement.
Section 2. Shareholder Services. The services to be provided by
the Servicing Agent under this Agreement (the "Shareholder Services")
shall consist of liaison services including receiving and responding
to customer inquiries and providing such persons information regarding
their investments in the shares of the Fund (the"Shares"). In addition,
the Servicing Agent shall provide such other related services as the
Company or the Shareholders may reasonably request.
Section 3. Registration of Shares. The Company agrees to make prompt
and reasonable efforts to effect and keep in effect, at its expense,
the registration or qualification of the Shares for sale in such
jurisdictions as the Company may designate.
Section 4. Information to be Furnished to the Servicing Agent. The
Company agrees that it will furnish the Servicing Agent with such
information with respect to the affairs and accounts of the Fund as
the Servicing Agent may from time to time reasonably require, and
further agrees that the Servicing Agent, at all reasonable times,
shall be permitted to inspect the Company's books and records
relating to the Fund.
Section 5. Allocation of Expenses. During the period of this
contract, the Company shall pay or cause to be paid all expenses,
costs and fees incurred by or for the Fund which are not assumed
by the Servicing Agent. The Servicing Agent shall be required
hereunder to pay costs which it incurs in connection with
providing administrative or accounting services to the
Shareholders (such costs are referred to as "Shareholder
Servicing Costs"). Shareholder Servicing Costs shall be
all expenses of the Servicing Agent incurred in connection
with providing administrative or accounting services to the
shareholders, including, but not limited to, an allocation
of the Servicing Agent's overhead and payments made to persons,
including employees of the Servicing Agent, who respond to
inquiries of shareholders regarding their ownership of Shares,
or who provide other administrative or accounting services not
otherwise required to be provided by the investment advisor or
transfer agent for the Fund.
Section 6. Compensation to the Servicing Agent
(a) Pursuant to the Plan of Distribution for the Shares
(the "Plan") adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act"), the Company
shall pay the Servicing Agent as its sole compensation
hereunder, a distribution fee (the "Servicing Fee"),
calculated and payable quarterly at an annual rate equal
to 0.25% per annum of the average daily net assets of the
Fund to cover Shareholder Servicing Costs. Such fee shall
be paid to the Servicing Agent no later than the fifth
business day following the end of such quarter. Average
daily net assets shall be computed in accordance with the
Prospectus of the Fund and the Company's Articles of
Incorporation. Amounts payable to the Servicing Agent
under the Plan may exceed or be less than the Servicing
Agent's actual Shareholder Servicing Costs. In the event
such Shareholder Servicing Costs exceed amounts payable
to the Servicing Agent under the Plan, the Servicing Agent
shall not be entitled to reimbursement by the Company.
(b) In each year during which this Agreement remains in
effect, the Servicing Agent will prepare and furnish to
the Board of Directors of the Company (the "Board"), and
the Board will review, on a quarterly basis, written
reports complying with the requirements of Rule 12b-1
under the 1940 Act that set forth the amounts expended
under this Agreement and the Plan and the purposes for
which those expenditures were made.
Section 7. Limitation of the Servicing Agent's Authority.
The Servicing Agent 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 Company.
Section 8. Indemnification of the Fund. The Servicing
Agent agrees to indemnify the Company 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
proceedings in any way arising out of or in connection
with the sale or distribution of the Shares by the
Servicing Agent. In the event of the threat or institution
of any such litigation or legal proceedings against the
Company, the Servicing Agent shall defend such action on
behalf of the Company at the Servicing Agent's 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, the Servicing Agent shall not be required
to pay or reimburse the Company 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 Company to the Servicing Agent, or to the Servicing Agent
by a director, officer, or employee of the Company who is not
an "interestedperson," as defined in the provisions of the
1940 Act, of the Servicing Agent, unless the information so
supplied or omitted was available to the Servicing Agent or
the investment advisor to the Fund without recourse to the
Company or any such person referred to above.
Section 9. Limitation on Expenses. Anything in this Agreement
to the contrary notwithstanding, any compensation, expenses,
reimbursements or payments for indemnification otherwise
payable to Servicing Agent hereunder shall be payable only
from the Fund's allocated assets.
Section 10. Freedom to Deal with Third Parties. The Servicing
Agent 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.
Section 11. Effective Date, Duration and Termination of Agreement
(a) The effective date of this Agreement is set forth in the first
paragraph of this Agreement. Unless sooner terminated as hereinafter
provided, this Agreement shall continue in effect for a period of one
year after the date of its execution, and from year to year thereafter,
but only so long as such continuance is specifically approved at least
annually by the Board, and of the directors who are not "interested
persons" (as defined in the provisions of the 1940 Act) of the Company,
as defined by the provisions of the 1940 Act, and have no direct or
indirect financial interest in the operation of the Plan or in any
agreement related to the Plan (including, without limitation, this
Agreement), cast in person at a meeting called for the purpose of voting
on this Agreement.
(b) This Agreement may be terminated at any time without the payment
of any penalty, by the vote of a majority of the members of the Board
who are not "interested persons" (as defined in the provisions of the
1940 Act) of the Company and have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to
the Plan (including, without limitation, this Agreement), or by the
vote of a majority of the outstanding voting securities of the Fund,
or by the Servicing Agent, upon 60 days' written notice to the other
party.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined by the provisions of the 1940 Act).
(d) 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 lesser of (i) the vote of 67% or more of the voting
securities of the Fund present at a regular or special meeting of
shareholders duly called, if more than 50% of the Fund's outstanding
voting securities are present or represented by proxy, or (ii) the vote
of more than 50% of the outstanding voting securities of the Fund.
Section 12. Amendments to Agreement. No material amendment to this
Agreement shall be effective until approved by the Servicing Agent
and by vote of a majority of the Board who are not interested persons
of the Servicing Agent.
Section 13. 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.
Section 14. Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single Agreement.
IN WITNESS WHEREOF, the Fund and the Servicing Agent have caused this
Agreement to be executed by their duly authorized officers as of the
day and year first above written.
THE "FUND"
CENTURION COUNSEL FUNDS, INC.
By:
Its
THE "SERVICING AGENT"
CENTURION INSTITUTIONAL
SERVICES, INC.
By:
Its
Exhibit (h)(4)
ADMINISTRATION AGREEMENT
TERMS AND CONDITIONS
DATED JANUARY 1, 1999
The terms and conditions set forth below shall apply to each
Administration Agreement ("Agreement") by and between Centurion
Counsel Funds, Inc. (the "Company"), and Centurion Group, Inc.
("Centurion"), into which they have been expressly incorporated.
Terms used herein not otherwise defined herein shall have the
meanings set forth in the respective Agreement.
Section 1. Definitions. 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" means each investment plan, dividend or
capital gains reinvestment plan, systematic withdrawal
plan and each other type of plan set forth in the Fund's
prospectus, in form acceptable to Centurion, which the
Company may from time to time adopt and make available to
the Shareholders, including plans or accounts by self-
employed individuals or partnerships.
"Planholder" means a Shareholder who, at the
time of reference, is participating in a Plan, and shall
include any underwriter, representative or broker-dealer.
"Shares" means each Class of shares of the
Fund.
"Shareholder" means the record owners of the
Shares.
Section 2. Transfer Agency.
(a) The Company 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 Company authorized by law
or the bylaws of the Company to sign Share Certificates
and, if required, shall bear the corporate seal or a
facsimile thereof.
(1) Centurion as Transfer Agent, shall
make original issues of shares of the Fund ("Shares") in
accordance with Sections 11 and 12 below and with the
Fund's Prospectus upon the written request of the Company
and upon being furnished with (i) a certified copy of a
resolution or resolutions of the Board of Directors of
the Company (the "Board") 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.
(2) 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.
(3) 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.
(4) 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 Company 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.
(5) 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.
(6) In case any officer of the Company
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.
(7) 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 Company is responsible to provide Centurion reports
of 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.
(8) 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 Company 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 Company
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.
(9) 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 Company, or upon
the advice of counsel for the Company. 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 Company or to
Centurion. The Company 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.
(10) In case of any request or demand for
the inspection of the share records for the Fund,
Centurion as Transfer Agent, shall endeavor to notify the
Company 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.
Section 3. Issuance of Shares. (1) 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. All calculations of the Fund's net asset value
shall be made in accordance with the Company's Articles
of Incorporation. 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 Company in
writing. (2) Centurion having made the calculations
provided for herein, 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
Company 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.
Section 4. Redemptions.
(1) 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 Company of the total number of Shares
available for redemption and the number of Shares and
fractional Shares requested to be redeemed. The Company
shall then quote to Centurion the applicable net asset
value of the Fund, whereupon Centurion shall furnish the
Company 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.
(2) 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 Company may authorize
Centurion to waive the signature guarantee in certain
cases by Written Instructions.
(c) For the purposes of redemption of Shares
which have been purchased within 15 days of a redemption
request, the Company shall provide Centurion, from time
to time, with Written Instructions concerning the time
within which such requests may be honored.
Section 5. Dividends.
(a) Upon the declaration of each dividend and
each capital gains distribution by the Board, the Company
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.
(b) On or before each payment date the
Company 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.
Section 6. Records. 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 7. Additional Services by Centurion.
In addition to the services as Transfer Agent, Dividend
Disbursing Agent and Administrator as above set forth,
Centurion will perform other services with respect to the
Fund as agreed to by the Company 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 8. Holidays. 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 Company as set forth in the Fund's Prospectus as
amended from time to time.
Section 9. No Liability for Taxes, Assessments.
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 10. Indemnification. The Company
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) Reliance. Centurion may rely upon the
advice of the Company, or of counsel who may be counsel
for the Company, 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.
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, Company
or other proper party or parties.
(b) Limitation on Liability. 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, 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.
Section 11. Authorization. Centurion is
authorized, upon receipt of Written Instructions from the
Company, to make payment upon redemption of Shares
without a signature guarantee. The Company 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
Company shall assume the entire defense of any action,
suit or claim subject to the foregoing indemnity.
Centurion shall notify the Company of any such action,
suit or claim within 30 days after receipt by Centurion
of notice thereof.
Section 12. Delivery of Records. The
Company 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 Company to
provide any portion of such or to provide any information
needed by Centurion to knowledgeably perform its
functions.
Section 13. Notices. 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 14. Representations By The Company.
The Company 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.
Section 15. Representations by Centurion.
Centurion represents and warrants to the Company that:
(a) 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; and
(b) 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.
(1) Shareholder Approval. 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 shall automatically terminate in the
event of its assignment (as defined by the provisions of
the Act).
Section 16. Successors and Assigns. 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 Company, authorized or approved by a resolution of
the Board.
Section 17. Governing Laws. This Agreement
shall be governed by the laws of the State of California.
Exhibit (h(5)
ADMINISTRATION AGREEMENT
FOR
CENTURION COUNSEL GROWTH FUND SERIES
THIS ADMINISTRATION AGREEMENT, is dated and made as of
_____________ 1999 (the "Effective Date"), by and between
Centurion Counsel Funds, Inc. (the "Company"), 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. 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. Appointment. The Company hereby appoints Centurion as its
Transfer Agent, Redemption Agent and Dividend Disbursing Agent and as
Administrator of Plans for the Company's series of common stock
designated the Centurion Counsel Growth Fund Series (the"Fund"),
and Centurion accepts such appointments and agrees to act in such
capacities upon the terms set forth in this Agreement.
Section 2. Compensation. The Company agrees to pay Centurion
compensation for its services and to reimburse it for expenses,
as set forth in Schedule A attached hereto. It is expressly
agreed that, anything herein to the contrary not withstanding,
Centurion shall look only to the assets of the Fund for the
payment of any compensation, reimbursement, indemnity or other
payment under this Agreement.
Section 3. Effective Date, Duration, Termination. This
Agreement is effective on the Effective Date. Either the
Company 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.
(a) 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 Company's Board of Directors (the "Board"),
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.
(1) This Agreement may be terminated at any time without the
payment of any penalty by the vote of the Board 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 Company of all amounts due to
Centurion as of said date, Centurion shall make available to the
Company or its designated record keeping successor all of the
records of the Fund maintained under this Agreement then in
Centurion's possession.
Section 4. Amendments. No material amendment to this Agreement
(including the Terms and Conditions) shall be effective until
approved by vote of the holders of a majority of the outstanding
voting securities of the Fund.
Section 5. Counterparts. 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.
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 COUNSEL FUNDS, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
SCHEDULE A
Attached to and part of Administration Agreement
Dated January 1, 1995, between
Centurion Counsel Funds, 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.
Exhibit (h)(6)
ADMINISTRATION AGREEMENT
FOR
CENTURION COUNSEL REAL ESTATE FUND SERIES
THIS ADMINISTRATION AGREEMENT, is dated and made as of
_____________ 1999 (the "Effective Date"), by and between
Centurion Counsel Funds, Inc. (the "Company"), 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.
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. Appointment. The Company hereby appoints Centurion as
its Transfer Agent, Redemption Agent and Dividend Disbursing Agent
and as Administrator of Plans for the Company's series of common
stock designated the Centurion Counsel Real Estate Fund Series
(the"Fund"), and Centurion accepts such appointments and agrees
to act in such capacities upon the terms set forth in this
Agreement.
Section 2. Compensation. The Company agrees to pay Centurion
compensation for its services and to reimburse it for expenses, as
set forth in Schedule A attached hereto. It is expressly agreed
that, anything herein to the contrary not withstanding, Centurion
shall look only to the assets of the Fund for the payment of any
compensation, reimbursement, indemnity or other payment under this
Agreement.
Section 3. Effective Date, Duration, Termination. This Agreement
is effective on the Effective Date. Either the Company 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.
(a) 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 Company's
Board of Directors (the "Board"), 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.
(1) This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board 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 Company of all
amounts due to Centurion as of said date, Centurion shall make available to
the Company or its designated record keeping successor all of the records of
the Fund maintained under this Agreement then in Centurion's possession.
Section 4. Amendments. No material amendment to this Agreement
(including the Terms and Conditions) shall be effective until approved by
vote of the holders of a majority of the outstanding voting securities of the
Fund.
Section 5. Counterparts. 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.
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 COUNSEL FUNDS, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
SCHEDULE A
Attached to and part of Administration Agreement
Dated January 1, 1995, between
Centurion Counsel Funds, 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.
Exhibit (h)(7)
ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
DATED JANUARY 1, 1999
The terms and conditions set forth below shall apply to each
Accounting Services Agreement ("Agreement") by and between
Centurion Counsel Funds, Inc. (the "Company"), and Centurion
Group, Inc. ("Centurion"), into which they have been expressly
incorporated. Terms used herein not otherwise defined herein shall
have the meanings set forth in the respective Agreement.
Section 1. Delivery of Fund Accounts, Records and Information.
The Company shall promptly turn over to Centurion such of the
Accounts and Records of the Fund as are necessary for Centurion to
perform its services under this Agreement. The Company 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
Company to provide any portion of such or to provide any information
needed by Centurion to knowledgeably perform its functions.
Section 2. Accounts and Records to be Maintained. Upon the receipt
of necessary information from the Company or the Company's Agents by
Written or Oral Instructions, Centurion shall maintain and keep current
the following Accounts and Records relating to the business of the Company
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
Company 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 Company 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 Company,
or any designated agent of the Company.
It shall be the responsibility of the Company 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. Fund Net Asset Value Calculations. 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. All net asset value calculations
of the Fund shall be made in accordance with the Company's Articles of
Incorporation. Portfolio items for which market quotations are available by
Centurion's use of a securities pricing service satisfactory to the Company
shall be based on such pricing service's prices, except where the Company 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 Company-approved pricing service;
for the accuracy of the information supplied by the Company; 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 Company in any computation unless and until
it is timely supplied to Centurion in usable form.
Section 4. Instructions. 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 Company 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 Company shall
cause the broker or dealer executing such transaction for the Fund 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 Company. 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 Company.
The Company 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
Company shall give Centurion specific Written Instruction as to the action
required.
Section 5. Monthly Statements. At the end of each month, the Company 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 Company.
Section 6. Periodic Reports. Centurion shall supply daily and periodic reports
to the Company as required by law, rule or regulation for the Fund to maintain
and as requested by the Company and agreed upon by Centurion.
Section 7. Information Update Requirement. The Company shall require each of
the Fund's 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 Company 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 Company is responsible to provide Centurion
with reports of Share purchases, redemptions, and total Shares of the Fund
outstanding on the next business day after each net asset valuation.
Section 8. Assistant to Auditors. The Accounts and Records, in the agreed
upon format, maintained by Centurion shall be the property of the Company,
and shall be made available to the Company, within a reasonable period
of time, upon proper demand. Centurion shall assist the Fund's independent
auditors, or upon approval of the Company, 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 Company 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 Company and
Centurion shall agree upon from time to time.
Section 9. Company Procedures. Centurion and the Company may from time
to time adopt such procedures as they agree upon, and Centurion may
conclusively assume that any procedure approved by the Company or
directed by the Company, does not conflict with or violate any
requirements of the Company's Prospectus for the Fund, Articles of
Incorporation, Bylaws, or any rule or regulation of any regulatory
body or governmental agency. The Company 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. Limitation on Centurion's Liability. 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 Company 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 Company, or of counsel,
who may be counsel for the Company 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 Company's Board of Directors (the "Board") 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, 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, Company, or other proper party or parties.
Section 11. United States Currency. 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. Holidays. 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 13. Certain Definitions. 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 to give Oral Instructions on behalf
of the Company.
Shares: The term Shares shall mean the shares of each class 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 to give Written Instructions
on behalf of the Company.
Section 14. Certification of Instructions. The Company shall, from time to
time, file with Centurion a certified copy of each resolution of the Board
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 Company. The Company shall, from time to time, file with Centurion a
certified copy of each resolution of the Board 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 Company. Upon transmitting any Oral
Instruction, the Company 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 15. Notices. 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.
Exhibit (h)(8)
ACCOUNTING SERVICES AGREEMENT
FOR
CENTURION COUNSEL GROWTH FUND SERIES
THIS ACCOUNTING SERVICES AGREEMENT is dated and made as of
___________, 1999 (the "Effective Date"), by and between
Centurion Counsel Funds, Inc. (the "Company"), 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. In
consideration of the mutual covenants herein contained, the parties
hereto, intending to be legally bound, do hereby agree as follows:
Section 1. Engagement. The Company hereby appoints Centurion
its Accounting Services Agent to maintain and keep current
books, accounts, records, journals or other records of original
entry relating to the business and investment portfolio
separately established and maintained for its series of Shares
designated as the Centurion Counsel Growth Fund Series (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.
Section 2. Terms and Conditions. This Accounting Services
Agreement ("Agreement") shall be subject to the Accounting
Services Agreement Terms And Conditions dated January 1, 1999
(the "Terms And Conditions"), a copy of which is attached hereto
and incorporated herein by reference.
Section 3. Compensation and Reimbursements. The Company 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 Company
and Centurion. It is expressly agreed that, anything herein to
the contrary not withstanding, Centurion shall look only to
the assets of the Fund for the payment of any compensation,
reimbursement, indemnity or other payment under this
Agreement.
Section 4. Effective Date, Duration and Termination. This Agreement is
effective on the Effective Date. Either the Company 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.
(a) 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 Company's
Board of Directors (the "Board"), 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.
(1) This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board 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 Company of all
amounts due to Centurion as of said date, Centurion shall make available
to the Company or its designated record keeping successor all of the
records of the Fund maintained under this Agreement then in
Centurion's possession.
Section 5. Amendments. No material amendment to this Agreement (including
the Terms and Conditions) shall be effective until approved by Centurion
and by vote of a majority of the Board who are not interested persons of
Centurion.
Section 6. Counterparts. 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.
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 COUNSEL FUNDS, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
SCHEDULE A
Attached to and part of Accounting Services Agreement
Dated ____________, 1999, between
Centurion Counsel Funds, Inc.
and Centurion Group, Inc.
1. A monthly fee is equal on an annual basis to .15%
of the average net assets of the Fund, subject to an annual
minimum fee if $18,000.
2. Reimbursement of the pro rata portion of the
third-party computer accounting system maintenance fee.
Exhibit (h)(9)
ACCOUNTING SERVICES AGREEMENT
FOR
CENTURION COUNSEL REAL ESTATE FUND SERIES
THIS ACCOUNTING SERVICES AGREEMENT is dated and made as of
___________, 1999 (the "Effective Date"), by and between
Centurion Counsel Funds, Inc. (the "Company"), 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.
In consideration of the mutual covenants herein contained, the
parties hereto, intending to be legally bound, do hereby agree as
follows:
Section 1. Engagement. The Company hereby
appoints Centurion its Accounting Services Agent to maintain
and keep current books, accounts, records, journals or other
records of original entry relating to the business and
investment portfolio separately established and maintained
for its series of Shares designated as the Centurion Counsel
Real Estate Fund Series (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.
Section 2. Terms and Conditions. This
Accounting Services Agreement ("Agreement") shall be subject
to the Accounting Services Agreement Terms And Conditions
dated January 1, 1999 (the "Terms And Conditions"), a copy
of which is attached hereto and incorporated herein by
reference.
Section 3. Compensation and Reimbursements.
The Company 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 Company and
Centurion. It is expressly agreed that, anything herein to
the contrary not withstanding, Centurion shall look only to
the assets of the Fund for the payment of any compensation,
reimbursement, indemnity or other payment under this
Agreement.
Section 4. Effective Date, Duration and
Termination. This Agreement is effective on the Effective
Date. Either the Company 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.
(a) 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 Company's Board of
Directors (the "Board"), 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.
(1) This Agreement may be terminated at any
time without the payment of any penalty by the vote of the
Board 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 Company of all amounts due to Centurion as
of said date, Centurion shall make available to the Company
or its designated record keeping successor all of the
records of the Fund maintained under this Agreement then in
Centurion's possession.
Section 5. Amendments. No material amendment to
this Agreement (including the Terms and Conditions) shall be
effective until approved by Centurion and by vote of a
majority of the Board who are not interested persons of
Centurion.
Section 6. Counterparts. 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.
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 COUNSEL FUNDS, INC.
By:
Its President
CENTURION GROUP, INC.
By:
Its President
By:
Its Secretary
SCHEDULE A
Attached to and part of Accounting Services Agreement
Dated ____________, 1999, between
Centurion Counsel Funds, Inc.
and Centurion Group, Inc.
1. A monthly fee is equal on an annual basis to .15%
of the average net assets of the Fund, subject to an annual
minimum fee if $18,000.
2. Reimbursement of the pro rata portion of the
third-party computer accounting system maintenance fee.
Exhibit (j)(2)
INDEPENDENT AUTIDTOR'S CONSENT
We consent to the inclusion in Form N-1A of our report dated
June 29, 1999 on our audit of the performance history of the
CI Holding Group, inc. 401k Plan investment portfolio for
each year in the eight year period ended December 31, 1998.
/s/
Boros & Farrington, PC
San Diego, California
June 29, 1999
Exhibit (m)(4)
CENTURION COUNSEL FUNDS, INC.
CLASS A SHARE
PLAN OF DISTRIBUTION
DATED JANUARY 1, 1996
This Class A Share Plan of Distribution (the "Class A Plan"), relates to
the Class A shares of each designated series of common stock (a "Fund")
of Centurion Counsel Funds, Inc. a Minnesota corporation (the "Company")
which has duly adopted this Class A Plan pursuant to Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940, as amended (the "1940 Act").
1. Engagement and Compensation of Service Agents
The Company may enter into servicing agreements with one or more
shareholder servicing agents (the "Service Agents"), including the
principal underwriter for the Fund's shares (the "Distributor") or its
affiliates, to provide certain liaison services to the holders of the
Class A Shares who are their customers (the "Shareholders"). Such
services (the "Shareholder Services") shall include receiving and
responding to Shareholder inquiries and providing Shareholders information
regarding their investments in the shares. In addition, the Service
Agents shall provide such other services as the Company or the
Shareholders may reasonably request. For their services, the Company may
pay the Service Agents 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, as determined in accordance with the Company's
Articles of Incorporation, 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
Company and the Service Agent. Such payments and any other payments
provided under or as a result of this Agreement shall be payable only
from the Fund's assets.
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. Compensation may be paid by the Service Agent to persons,
including employees of the Service Agent, and institutions who responded
to inquiries of Shareholders 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 Company's investment
advisor for the Fund, transfer agent or other agent of the Company.
(b) Payments under this Class A Plan are not tied to or limited by the
actual expenses of a Service Agent for its shareholder servicing-related
expenses. Thus, such payments may exceed expenses actually incurred by
the Service Agent. The Company's Board of Directors (the "Board") 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 Agents and amounts they
receive under this Class A Plan.
(c) Should the Company terminate or not continue this Class A Plan, the
Company shall not be obligated in any way to pay any Service Agent for any
expenses not previously reimbursed by the Company. However, nothing herein
shall prevent the Company, in the sole discretion of the Board, from
reimbursing all or any portion of such unreimbursed amounts.
(1) Nothing in this Class A Plan shall require any Service Agent to
pay any expenses of the Company other than as provided above. The Company
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.
(2) Anything herein to the contrary notwithstanding, the Distributor
and any assignee or third party seeking payment of the Service Agent Fee or
any other amounts by reason of reimbursement or indemnity in connection with
the Plan shall have right to payment thereof only from the assets of the Fund.
3. Additional Payments by Advisor and the Distributor The Company's
investment advisor for the Fund 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.
3. 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 Board, and (b) those directors of
the Company 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.
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. 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 Board in the
manner described in Section 4 above.
6. 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 4
hereof or by a vote of a majority of the outstanding voting securities of
the Fund in the manner described in Section 5 hereof.
7. 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 5 hereof, and all
material amendments to this Class A Plan must also be approved by the Board
in the manner described in Section 5 hereof.
8. Selection of Certain Directors
While this Class A Plan is in effect, the selection and nomination of the
Company'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 Company.
9. 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 Company pursuant to this Class A Plan or any related
agreement will prepare and furnish to the Board, 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.
10. Preservation of Materials
The Company 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.
11. 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 Company for
the Fund under the 1940 Act by the Securities and Exchange Commission.
Exhibit (m)(5)
CENTURION COUNSEL FUNDS, INC.
CLASS B SHARE
PLAN OF DISTRIBUTION
DATED JANUARY 1, 1996
This Class B Share Plan of Distribution (the "Class B Plan"), relates to the
Class B shares of each designated series of common stock (a "Fund") of
Centurion Counsel Funds, Inc. a Minnesota corporation (the "Company") which
has duly adopted this Class B Plan pursuant to Rule 12b-1 (the "Rule") under
the Investment Company Act of 1940, as amended (the "1940 Act").
1. Compensation of Distributor
The Company 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 as determined in
accordance with the Company's Articles of Incorporation. 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 Company 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 Company or the Fund's shareholders may reasonably request.
For their services, the Company 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 , as determined in accordance with the Company's Articles of
Incorporation, 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 Company 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 Company's Board of Directors (the "Board")
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 Company 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 Company.
However, nothing herein shall prevent the Fund, in the sole discretion of the
Company's Board, 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 Company 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 the directors of the
Company 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.
(f) Anything herein to the contrary notwithstanding, the Distributor and
any assignee or third-party seeking payment of the Distribution Fee, the
Service Agent Fee or any other amounts by reason of reimbursement or
indemnity in connection with the Plan shall have the right to payment
thereof only from the assets of the Fund.
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 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 and
(b) those directors of the Company 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.
6. 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.
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 Board in the
manner described in Section 5 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 5 hereof or by a vote of a majority of the outstanding voting
securities of the Fund in the manner described in Section 6 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 and Section 2, 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 6 hereof,
and all material amendments to this Class B Plan must also be approved by
the Board in the manner described in Section 5 hereof.
10. Selection of Certain Directors
While this Class B Plan is in effect, the selection and nomination of the
Company'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 Board, 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 Company 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 Company under the 1940 Act by the Securities and Exchange
Commission.
Exhibit (m)(6)
CENTURION COUNSEL FUNDS, INC.
CLASS C SHARE
PLAN OF DISTRIBUTION
DATED AUGUST 1, 1994
This Class C Share Plan of Distribution (the "Class C Plan"), relates
to the Class C shares of each designated series of common stock (a "Fund")
of Centurion Counsel Funds, Inc. a Minnesota corporation (the "Company")
which has duly adopted this Class C Plan pursuant to Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940, as amended (the "1940 Act").
1. Compensation of Distributor
The Company 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 as determined in
accordance with the Company's Articles of Incorporation. 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 Company 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 Company or the Fund's shareholders may reasonably request.
For their services, the Company 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 as determined in accordance with the Company's Articles of
Incorporation, 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 Company 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 Company's Board of Directors (the "Board")
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 Company terminate or not continue this Class C Plan of
Distribution, the Company shall not be obligated in any way to pay any
Distributor or Service Agent for any expenses not previously reimbursed
by the Company. However, nothing herein shall prevent the Fund, in the
sole discretion of the Board, 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 Company other than as provided
above. The Company shall be responsible for paying its other expenses,
including, but not limited to, expenses relating to the compensation of
the directors of the Company 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.
(f) Anything herein to the contrary notwithstanding, the Distributor and
any assignee or third-party seeking payment of the Distribution Fee, the
Service Agent Fee, or any other amounts by reason of reimbursement or
indemnity in connection with the Plan shall have the right to payment
thereof only from the assets of the Fund.
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 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 and (b) those directors
of the Company 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.
6. Approval by Shareholders
This Class C Plan shall 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.
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 Board in the
manner described in Section 5 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 5
hereof or by a vote of a majority of the outstanding voting securities of the
Fund in the manner described in Section 6 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 and Section 2, 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 6 hereof,
and all material amendments to this Class C Plan must also be approved by
the Board Directors in the manner described in Section 5 hereof.
10. Selection of Certain Directors
While this Class C Plan is in effect, the selection and nomination of the
Company'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 Company 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 Company under
the 1940 Act by the Securities and Exchange Commission.
Exhibit (m)(7)
CENTURION COUNSEL GROWTH FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS A SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class A Share Plan of Distribution dated January 1, 1996
(the "Class A Plan") 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") with respect to its series of common stock designated the
Centurion Counsel Growth Fund Series (the "Fund").
The Company's adoption of the Class A Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class A Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class A Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class A
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
Exhibit (m)(8)
CENTURION COUNSEL GROWTH FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS B SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class B Share Plan of Distribution dated January 1, 1996
(the "Class B Plan") 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") with respect to its series of common stock designated the
Centurion Counsel Growth Fund Series (the "Fund").
The Company's adoption of the Class B Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class B Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class B Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class B
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
Exhibit (m)(9)
CENTURION COUNSEL GROWTH FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS C SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class C Share Plan of Distribution dated August 1, 1994 (the
"Class C Plan") 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") with respect to its series of common stock designated the Centurion
Counsel Growth Fund Series (the "Fund").
The Company's adoption of the Class C Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class C Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class C Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class C
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
Exhibit (m)(10)
CENTURION COUNSEL REAL ESTATE FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS A SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class A Share Plan of Distribution dated January 1, 1996
(the "Class A Plan") 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") with respect to its series of common stock designated the
Centurion Counsel Real Estate Fund Series (the "Fund").
The Company's adoption of the Class A Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class A Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class A Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class A
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
Exhibit (m)(11)
CENTURION COUNSEL REAL ESTATE FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS B SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class B Share Plan of Distribution dated January 1, 1996
(the "Class B Plan") 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") with respect to its series of common stock designated the
Centurion Counsel Real Estate Fund Series (the "Fund").
The Company's adoption of the Class B Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class B Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class B Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class B
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
Exhibit (m)(12)
CENTURION COUNSEL REAL ESTATE FUND SERIES
ADOPTION OF PLAN OF DISTRIBUTION
FOR
CLASS C SHARES
Centurion Counsel Funds, Inc., a Minnesota corporation (the "Company")
hereby adopts the Class C Share Plan of Distribution dated August 1, 1994 (the
"Class C Plan") 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") with respect to its series of common stock designated the Centurion
Counsel Real Estate Fund Series (the "Fund").
The Company's adoption of the Class C Plan shall be effective for the Fund
on ____________, 1999 (the "Effective Date").
The Class C Plan has been duly adopted and approved by the Board and by
the Shareholders of the Fund as required by Section 5 and Section 6,
respectively, of the Class C Plan.
IN WITNESS WHEREOF, the undersigned, the Secretary of the Company
hereby certifies that the foregoing is a true and correct copy of the Class C
Plan, as amended, as last approved by the Shareholders of the Fund in the
manner described in Section 4 of said Plan and the Board in the manner
described in Section 5 of said Plan.
Mary R. Limoges
