CENTURION COUNSEL MARKET NEUTRAL FUND, INC.
Portfolio Review
as of December 31, 1999
Fund Highlights Top Ten Holdings
12/31/98 12/31/98 Cisco, Jan 02, 60, C 14.4%
Net Assets: $4,935,360 $1,618,616 Home Depot,Jan 02,33 3/8 C 10.4%
NASDAQ 100, Jan 02, 120 C 5.3%
NAV Per Share: United Dominion REIT 4.6%
Dow Jones IndexDec 01,104,P 4.6%
Class A: $3.04 $2.92 United Investors REIT 4.5%
Class B: $3.00 $2.86 America Online, Jan 02,40 C 3.4%
Class C: $2.99 $2.86 Intel, Jan 01, 30, C 3.4%
Class D: $3.05 $2.95 Prison Realty 2.8%
Entertainment Properties 2.8%
Share Outstanding: 1,643,245 562,505
Portfolio Allocation by Sector
as of December 31, 1999 Top Ten Holdings-Short Positions
Trac Data 6.2%
Juno Online 6.0%
On Technology 5.1%
Netobjects 4.4%
Home Depoot, Jan 01, 70,C 3.5%
J W Genesis 3.3%
Viropharma 3.0%
Cisco, Jan 01, 70,C 2.8%
Quepasa.com 2.7%
Tegal 2.4%
Graph Top Ten Sectors
Real Estate Investment Trust 14.8%
Cash and Commerial Paper 1.2%
Industrial Services 1.7%
Consumer Products 16.0%
Natural Resources 1.7%
Indexes 9.9%
Industrial Products 6.9%
Corporate Bonds 2.2%
Technology 32.9%
Technology (Short Positions) 31.7%
TOTAL RETURN
Through December 31, 1999
(Since new management and investment objectives--January 1995)
Last Since Date of
Quarter Twelve Changeor First
Months FirstSales Sale
Class A:(1) -8.18% -3.95% -5.45% 1/07/97
Class B: -8.33% -4.67% -6.57% 1/07/97
Class C: -8.04% -4.35% 2.95% 12/31/94
Class D: -7.52% -3.28% -4.64% 12/06/96
(1) Does not include commission load of 4.75% when purchased
TOTAL RETURN
Through December 31, 1999
(Since inception--January 1982)
Last
Quarter Twelve Five Ten Since
Months Year Year Inception
Class A:(1) -8.18% - 3.95% * * -5.45%
Class B: -8.33% - 4.67% * * -6.57%
Class C: -8.04% - 4.35% -3.56% -6.93% 2.95%
Class D: -7.52% - 3.28% * * -4.64%
*Shares of this Class not available for the total period
(1) Does not include commission load of 4.75% when purchased
It seems that the riskiest conerns of the market are the ones
getting the current volume and attention. An example is the volume
in the Bulletin Board or Pink Sheet stocks. As recently as 1998, the
average daily volume was just 123.3 million shares. Currently, it
is over a billion shares a day. While some of these companies are
legitimate, the requirements to be listed on the Bulletin Board
are much less stringent that the NASDAQ or Exchange listed stocks.
Oftentimes, these companies have never filed financial statements
or reported to the SEC but they have sent out press releases
touting their prospects.
When you have gaint pools of capital competing for a handful
of stocks with a very small float, you can get monstrous moves
regardless of what the Dow Jones Industrial Average or the S&P 500
does. The people behind these giant pools of capital (including
day traders) cannot keep an eye on the big picture. Instead, their
mantra is to get in and get out" and that is how we have come to
have this ridiculous two-tiered market. In the past 12 months
(through March 7 of this year) the DOW is only up 1.10%, the S&P
500 is up 5.95%, the NYSE is actually down 2.30%, while the NASDAQ
is up an unbelievable 100% in the same period.
Our Fund continues to outperform its peer group as it has done
consistently over the past 24 months. While we recognize the return
has laaged the S&P 500, the market rotation that we are getting now
makes us feel more comfortable that at any time in the past several
years that we will outperform the S&P 500 as we have done year to date
(The Fund is up 8.74% through March 6, while the S&P 500 is down
4.18%). Value stocks, our traditional focus, continue to be beaten
down but we have been able to make satisfactory progress on the long
side by investing in some bigger names. While not traditional
value stocks in the "new economy" market, these acquistions, such
as Cisco and PE Biosystems, have been stellar performers. The
short selling activity has offered us many opportunities
to take advantage of the one-day wonders discussed in the first
paragraph.
We are cautiously optimistic that this year will continue
to be a strong year for the Fund and can prove the validity
over the long-term of investing in a market neutral mutual fund.
As Manager of the Fund, I appreciate your staying with us and
the patience that you have shown. We intend to amply reward
that commitment over the coming months.
CENTURION COUNSEL MARKET NEUTRAL FUND
Jack K. Heilbron
Chief Investment Officer
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS:
Statement of Assets and Liabilities
Statement of Investment Securities
Statement of Covered Call Options Written
Statement of Securities Sold Short
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENT OF ASSESTS AND LIABILITIES
December 31, 1999
Assets
Investments in Securities, at value, $1,491,555
(indentified cost $1,595,733)
Cash and Deposits 20,062
Receivables:
Dividends 1,743
Interest 31
Investment securities sold 72,425
Miscellaneous 1,611
Margin Deposit for Securities Sold Short 943,568
___________
TOTAL ASSETS 2,530,995
LIABILITIES
Covered Call Options Written, at market value,
(premiums received $115,639) 229,450
Securities Sold Short, at market value,
(sales proceeds received $503,857) 644,638
Payables:
Accounts Payable 15,214
Investment securities purchased 23,077
Fund shares redeemed 0
___________
TOTAL LIABILITIES 912,378
___________
NET ASSETS $1,618,617
===========
Class A:
Net asset value and offering price per share
($7,468 divided by 2,554 shares outstanding) $ 2.92
Class B:
Net asset value and offering price per share
($412 divided by 144 shares outstanding) $ 2.86
Class C:
Net asset value and offering price per share
($1,258,506 divided by 440,355 shares outstanding) $ 2.86
Class D:
Net asset value and offering price per share
($352,231 divided by 119,452 shares outstanding) $ 2.95
The accompanying notes are an integral part of the financial statements.
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENT OF INVESTMENT SECURITIES
December 31, 1999
Shares or % of Value
Principal Net (Note 1)
Amount Descriptions Notes Assets Security Sector
COMMON STOCK 39.3%
CONSUMER PRODUCTS 5.6%
1000 BEATRICE (TLC) (b) $ 8,000
140 FARMER BROTHERS 22,260
1000 READERS DIEGEST 29,250
200 GENERAL ELECTRIC 30,950
90,460
HEALTH 1.9%
500 BAXTER $ 31,406
31,406
INDUSTRIAL PRODUCTS 5.1%
200 NORTEL NETWORKS $ 20,200
350 PE BIOSYSTEMS 42,109
8400 SO. ENERGY HOMES (b) 19,688
81,997
INDUSTRIAL SERVICES 1.7%
2140 OCTEL (b) $ 22,203
1800 TRANSCOASTAL MARINE (b) 5,175
27,378
NATURAL RESOURCES 1.6%
5000 PAN AMERICAN SILVER (a),(b) $ 26,563
26,563
REAL ESTATE INVESTMENT TRUST 14.8%
9000 PRISON REALTY (b) $ 45,563
3400 ENTERTAINMENT PROP TRUST 44,838
7600 UNITED DOMINION 75,050
11900 UNITED INVESTORS REIT 73,631
239,081
TECHNOLOGY 8.6%
200 CUTRIX SYSTEMS (b) $ 24,600
100 DOUBLECLICK (b) 25,306
4500 FAROUDJA (b) 22,641
1400 INTEGRATED DEVICE TECH (b) 40,600
100 LIBERATE TECH (b) 25,700
138,847
_________
TOTAL COMMON STOCKS (COST $859,432) 635,732
PREFERRED STOCK 0.7%
400 AMAX GOLD 3.75 PREFERRED (b) $ 10,550
TOTAL PREFERRED STOCK (COST $18,355) 10,550
OPTIONS AND WARRANTS 50.1%
CONSUMER PRODUCTS 10.4%
4500 HOME DEPOT JAN (01) Cs (a) $ 168,750
168,750
FINANCIAL SERVICES 0.4%
2000 ALLIED CAP MAY 20 Ps $ 5,375
2000 LEHMAN JAN (01) 25 Ps 1,000
6,375
HEALTH 3.0%
1000 ENZO BIO JUL 35 Cs (a) $ 15,750
1000 JNJ JAN (02) 85 Cs 23,313
1000 PFIZER JAN (02) 30 Cs 10,125
49,188
INDEXES 9.9%
10000 DJ INDEX DEC (01) 104 Ps (a) $ 75,000
1000 NASDAQ 100 JAN (02) 120 Cs (a) 85,500
160,500
INDUSTRIAL PRODUCTS 1.8%
400 GM HUGHES MAR 80 Cs $ 7,500
1000 UNITED TECH JAN (02) 50 Cs 22,063
29,563
NATURAL RESOURCES 0.1%
1000 WILLIAMS CO JAN 30 Cs $ 1,938
1,938
TECHNOLOGY 24.3%
1200 AMER ONLINE JAN (02) 40 Cs (a) $ 54,450
4000 CISCO JAN (01) 60 Cs (a) 232,750
600 IBM JAN (02) 80 Cs (a) 25,575
1000 INTEL JAN (01) 30 Cs (a) 54,313
3000 WAVE SYSTEMS JAN 17 1/2 Ps (a) 26,813
393,900
_________
TOTAL OPTIONS AND WARRANTS (COST $682,765) 810,213
FIXED INCOME 2.2%
U.S. GOVERNMENT AGENCY BONDS 2.2%
17.787 FNMA G93-40 ZC $ 15,930
19.394 FNR 91-56M 19,127
35,058
__________
TOTAL FIXED INCOME (COST $35,181) 35,058
TOTAL INVESTMENT OF SECURITES 92.2% 1,491,555
COVERED CALL OPTION SECURITIES -14.2% (229,450)
SECURITIES SOLD SHORT -39.8% (644,638)
______ ____________
NET INVESTMENT IN SECURITIES 38.1% 617,468
CASH 1.2% 20,062
MARGIN DEPOSIT ON SECURITES SOLD
SHORT 58.3% 943,568
OTHER ASSETS LESS LIABILITIES 2.3% 37,519
NET ASSETS 100.0$ $ 1,618,617
(a) Options have been written against this
positions.
(b) Non-income producing securities.
(c) Total unrealized depreciation on investments
consists of gross unrealized gains of
$306,668 and gross unrealized losses of
$665,441.
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENT OF COVERED OPTIONS WRITTEN
December 31, 1999
Shares or % of Value
Principal Net (Note 1)
Amount Descriptions Assets Security Sector
CONSUMER PRODUCTS -3.5%
(3,000) HOME DEPOT JAN 50 Cs $ (57,000)
(57,000)
HEALTH -0.7%
(1,000) ENZO BIO APR 40 Cs $ (10,375)
(1,000) VIROPHARMA JAN 30 Ps (125)
(400) VIROPHARMA JAN 25 Ps (75)
(10,575)
INDEXES -1.4%
(5,000) DOW JONES JAN 104 Ps $ (1,875)
(5,000) DOW JONES FEB 104 Ps (5,000)
(1,000) NASDAW 100 JAN 172 Cs (16,375)
(23,250)
NATURAL RESOURCES -0.1%
(5,000) PAN AMER SILVER MAR 10 Cs $ (938)
(938)
TECHNOLOGY -8.5%
(1,200) AMER ONLINE APR 100 Cs $ (6,300)
(1,000) CISCO APR 100 Cs (15,250)
(1,000) CISCO APR 90 Cs (22,000)
(1,000) CISCO JAN (00) 72 1/2 Cs (34,875)
(1,000) CISCO JAN (01) 70 Cs (44,750)
(600) IBM JAN 120 Cs (825)
(1,000) INTEL JAN (00) 75 Cs (8,625)
(3,000) WAVE SYSTEMS JAN 12 1/2 Ps (5,063)
(137,688)
TOTAL -14.2% $(229,450)
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENT OF COVERED OPTIONS WRITTEN
December 31, 1999
Shares or % of Value
Principal Net (Note 1)
Amount Descriptions Notes Assets Security Sector
CONSUMER PRODUCTS -1.9%
(1,600) HOLLYWOOD.COM $ (30,400)
(30,400)
FINANCIAL SERVICES -3.3%
(1,800) JWGENESIS $ (52,875)
(52,875)
HEALTH -3.0%
(1,300) VIROPHARM (a) $ (48,100)
(48,100)
TECHNOLOGY -31.7%
(1,600) ALPHA MICRO $ (7,600)
(500) CYBERGOLD (8,844)
(300) GOTO.COM (17,625)
(2,700) JUNO ONLINE (97,031)
(4,300) NETOBJECTS (70,950)
(5,900) ON TECHNOLOGY (81,863)
(100) PEGASUS SYSTEMS (6,031)
(3,400) QUE PASA (43,138)
(4,400) TEGAL (38,913)
(9,900) TRACK DATA (100,856)
(2,500) V-ONE (14,688)
(700) WIND RIVER SY (25,725)
(513,263)
TOTAL -39.8% $(644,638)
(a) Options have been written against this position.
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME
Dividends $ 43,002
Interest 31,707
Total investment income 74,708
EXPENSES
Investment advisory fee $ 26,333
Distribution expenses 21,213
Registration and filing fees 15,719
Fund accounting fees 24,368
Custodian fees and expenses 8,468
Audit fees and expenses 5,600
Directors' fees and expenses 11,059
Transfer agent fees 2,134
Insurance 2,018
Other expenses 4,162
Total expenses 121,074
Fees and Expenses Absorbed by Investment Advisor (31,052)
Net expenses 90,022
Net investment income (loss) (15,314)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net realized loss on investments (293,443)
Change in unrealized depreciation of investment
for the year 245,658
Net loss on investments (47,785)
Net Decrease in Net Assets Resulting from Operations $ (63,099)
===========
The accompanying notes are an integral part of the financial statements.
CENTURION COUNSEL MARKET NEUTRAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999
1999 1998
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income (loss) $ (15,314) $ (13,099)
Net realized gain (loss) on investments (293,443) (538,729)
Net change in unrealized depreciation
of investments 245,658 (101,802)
___________ ____________
Net increase (decrease) in net assets
resulting from operations (63,099) (653,630)
Class C:
Distribution to shareholders:
Net investment income - (12,145)
CAPITAL SHARE TRANSACTIONS: (NOTE 6)
Increase from capital shares sold 27,911 365,679
Increase from capital shares reinvested - 12,145
Decrease from capital shares repurchases (3,280,556) (3,047,343)
____________ ____________
Net increase (decrease) from capital
share transactions (3,252,645) (2,669,519)
_____________ _____________
Total increase (decrease) in net assets (3,315,744) (3,335,294)
NET ASSETS
Beginning of period 4,934,360 8,269,654
_____________ _____________
End of period (includes no undistributed
investment income) $ 1,618,616 $ 4,934,360
============= =============
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 Counsel 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 $983,466 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, 1999 the Fund had cash on deposit at one financial
institution of $18,062 and cash on deposit with a broker of $945,568. Cash
amounts over the maximum deposit insurance 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, 1999, net assets consisted of:
Net proceeds from capital stock $ 3,370,275
Unrealized depreciation of securities (244,959)
Unrealized depreciation of covered call options written (113,811)
Excess distributions over accumulated net income (364,832)
Undistributed net realized loss from security
transactions (1,028,056)
_______________
$1,618,617
NOTE 3. COVERED CALL OPTIONS WRITTEN
As of December 31, 1999, portfolio securities valued at $717,364 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 Funds 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 Funds 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 twelve months ended
December 31, 1999 Centurion received investment management fees of $7,126,
and it waived $19,207 of the advisory fee.
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 twelve months ended December 31, 1999, 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 Funds current
prospectus. During the twelve months ended December 31, 1999, 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 Companys 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 twelve months ended
December 31, 1999, CISI received servicing and distribution fees from the
Fund of $21,075.
CISI also executes some of the Fund's portfolio transactions. During
the twelve months ended December 31, 1999, CISI received commissions of
$65,055 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 twelve months ended December 31, 1999, CGI received transfer
fees of $900 from the Fund, and it waived $1,233 of the transfer agent
fee.
CGI is also the accounting agent for the Fund. The monthly fee for
these services paid to CGI is 0.15% of the Funds average daily net assets
with a minimum fee of $18,000 per year. During the twelve months ended
December 31, 1999, CGI received accounting fees of $9,000 from the Fund,
and it waived $9,000 of the accounting fee.
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 Directors expenses to attend
the meetings.
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities) were $5,938,819 and $8,467,891, respectively. Net loss on
investments for the twelve months ended December 31, 1999 was $47,785.
That amount represents the net decrease in value of investments held during
the year. The components are as follows:
Realized Unrealized Net
Long Position $ (542,393) $ 393,269 $ (149,124)
Covered Calls Written 19,061 (66,422) (47,361)
Short Position 229,889 (81,189) 148,700
___________ ____________ __________
$ (293,443) $ 245,658 $ (47,785)
As of December 31, 1999, the unrealized depreciation on investments
consists of gross unrealized gains of $306,668 and gross unrealized losses
of $665,441.
NOTE 6. CAPITAL SHARE TRANSACTIONS
As of December 31, 1999, there were 100,000,000 shares of the
Companys common stock authorized, at $0.01 par value. Transactions in
capital stock of the Fund for the twelve months ended December 31, 1999 and
year ended December 31, 1998 were as follows:
December 31, 1999 December 31, 1998
Shares Amount Shares Amount
Class A shares:
Shares sold - $ - - $ -
Shares issued in
reinvestment of
dividends - - - -
- - - -
Shares redeemed - - - -
Net increase - $ - - $ -
Class B shares:
Shares sold - $ - - $ -
Shares issued in
reinvestment
of dividends - - - -
- - - -
Shares redeemed - - - -
Net increase - $ - - $ -
Class C shares:
Shares sold 467 1,400 55,157 $ 188,539
Shares issued in
reinvestment
of dividends - - - -
467 1,400 55,157 188,539
Shares redeemed (951,883) (2,852,272) (854,747) (2,722,413)
Net decrease $ (951,416) $ (2,850,872) $ (799,590) $ (2,533,874)
Class D shares:
Shares sold 8,575 $ 26,511 $ 54,073 $ 177,140
Shares issued in
reinvestment
of dividends - - 3,520 12,145
8,575 26,511 57,593 189,285
Shares redeemed (137,905) (428,284) (98,505) (324,929)
Net decrease $ (129,330) $ (401,773) $ (40,912) $ (135,644)
NOTE 7. PER SHARE INFORMATION
Selected data for each share of capital stock outstanding throughout the period
is as follows:
Class A
Shares
Per Share Operating Performance: 1999 1998 1997 (c)
"Net asset value, beginning of period" $3.04 $3.35 $3.65
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) - 0.02 -
Net gains (losses) on investments
(both realized and unrealized)(d) -0.12 -0.33 -0.30
Total From Investment Operation -0.12 -0.31 -0.30
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - -
Distributions from capital gains - - -
al Distributions - - -
Net asset value, end of period $2.94 $3.04 $3.35
TOTAL RETURN (e) -3.95% -8.28% -8.47%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $ 7 $ 8 $ 8
Ratios to net assets
Expenses, before waiver of fees 4.05% 3.47% 2.38%
Expenses, after waiver of fees 2.87% 3.47% 2.15%
Net investment income -3.45% 0.67% 0.64%
Portfolio Turnover Rate 447.63% 522.88% 234.67%
Number of Shares Outstanding
at End of Period (000 Omitted) 3 3 3
Class B
Shares
Per Share Operating Performance: 1999 1998 1997 (c)
"Net asset value, beginning of period" $3.00 $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) -0.12 -0.32 -0.32
Total From Investment Operation -0.14 -0.33 -0.32
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - -
Distributions from capital gains - - -
al Distributions - - -
Net asset value, end of period $2.86 $3.00 $3.33
TOTAL RETURN (e) -4.67% -9.91% -4.39%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $ - $ 1 $ 1
Ratios to net assets
Expenses, before waiver of fees 4.72% 4.14% 2.84%
Expenses, after waiver of fees 3.54% 4.14% 2.60%
Net investment income -4.12% 0.04% 0.19%
Portfolio Turnover Rate 447.63% 522.88% 234.67%
Number of Shares Outstanding
at End of Period (000 Omitted) - - -
Class C Shares (a)
For the years ended December 31,
Per Share Operating Performance: 1999 1998 1997 1996 1995
"Net asset value, beginning of period" $2.99 $3.33 $3.51 $3.34 $3.43
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) -0.02 -0.01 -0.01 -0.03 -0.05
Net gains (losses) on investments
(both realized and unrealized) (d) -0.11 -0.33 -0.17 0.20 -0.04
Total From Investment Operation -0.13 -0.34 -0.18 0.17 -0.09
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income - - - - -
Distributions from capital gains - - - - -
Total Distributions - - - - -
"Net asset value, end of period $2.86 $2.99 $3.33 $3.51 $3.34
TOTAL RETURN (e) -4.35% -10.25% -5.13% 5.16% -2.62%
RATIOS AND SUPPLEMENTAL DATA
"Net Assets, End of Period
($000 Omitted) $1,259 $4,166 $7,288 $7,855 $4,370
Ratios to net assets
Expenses, before waiver of fees 4.80% 3.34% 3.14% 3.54% 4.82%
Expenses, after waiver of fees 3.62% 3.34% 2.91% 3.54% 3.53%
Net investment income 4.20% 33.00% -0.11% -0.43% 17.00%
Portfolio Turnover Rate 447.63% 522.88% 234.67% 129.20% 57.20%
Number of Shares Outstanding
At End of Period (000 Omitted) 440 1,392 2,191 2,241 1,309
Class D
Shares
Per Share Operating Performance: 1999 1998 1997 1996 (b)
Net asset value, beginning of period $3.05 $3.36 $3.51 $3.46
INCOME FROM INVESTMENT OPERATIONS
Net investment income (d) 0.01 0.02 0.01 -
Net gains (losses) on investments
(both realized and unrealized) (d) -0.11 -0.33 - 0.16 0.05
Total From Investment Operation -0.10 -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 $2.95 $3.05 $ 3.36 $3.51
TOTAL RETURN (e) -3.28 -8.09% -4.27% -5.16%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period ($000 Omitted)$352 $760 $972 $1,839
Ratios to net assets
Expenses, before waiver of fees 3.80% 2.96% 2.20% 2.13%
Expenses, after waiver of fees 2.62% 2.96% 1.97% 2.13%
Net investment income -3.20% 0.85% 0.82% 0.00%
Portfolio Turnover Rate 447.63% 522.38% 234.67% 129.20%
Number of Shares Outstanding
at End of Period (000 Omitted) 119 249 290 524
(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.
