CENTURA FUNDS INC, 497J, 1996-09-05

CENTURA FUNDS INC
497J, 1996-09-05

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<PAGE>
CENTURA FUNDS, INC.
CLASS A SHARES AND CLASS B SHARES

237 PARK AVENUE
NEW YORK, NEW YORK 10017
GENERAL AND ACCOUNT INFORMATION:
(800) 442-3688

CENTURA BANK -- ADVISER
FURMAN SELZ LLC -- ADMINISTRATOR AND SPONSOR
CENTURA FUNDS DISTRIBUTOR, INC. -- DISTRIBUTOR

This Prospectus describes the four Funds (the "Funds") comprising Centura
Funds, Inc. (the "Company"), a registered open-end management investment company
advised by Centura Bank (the "Adviser"). Each Fund is a separate portfolio of
the Company. The Funds described in this Prospectus are:

Centura Equity Growth Fund
Centura Equity Income Fund
Centura Federal Securities Income Fund
Centura North Carolina Tax-Free Bond Fund

This Prospectus relates to Class A shares and Class B shares which are
sold to the public as an investment vehicle for individuals, institutions,
corporations and fiduciaries. Class C shares, available only to certain
institutional investors, are not offered hereby. (See "Other
Information -- Capitalization"). Class A shares and Class B shares each bear
certain expenses related to their distribution, calculated at an annual rate and
based on a percentage of the average daily net assets of the class.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND FUND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN MUTUAL FUNDS, SUCH AS THE FUNDS, INVOLVE RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION A PROSPECTIVE
INVESTOR SHOULD KNOW BEFORE INVESTING IN ANY OF THE FUNDS AND SHOULD BE READ AND
RETAINED FOR INFORMATION ABOUT EACH FUND.

A Statement of Additional Information (the "SAI"), dated August 28, 1996,
containing additional and more detailed information about the Funds, has been
filed with the Securities and Exchange Commission ("SEC") and is hereby
incorporated by reference into the Prospectus. It is available without charge
and can be obtained by writing or calling the Funds at the address and
information numbers printed above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date of this Prospectus is August 28, 1996

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE

<S> <C>
HIGHLIGHTS.................................................................................................... 3

FUND EXPENSES................................................................................................. 6

FINANCIAL HIGHLIGHTS.......................................................................................... 9

THE FUNDS..................................................................................................... 12

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES............................................................ 15

INVESTMENT RESTRICTIONS....................................................................................... 22

RISKS OF INVESTING IN THE FUNDS............................................................................... 24

MANAGEMENT OF THE FUNDS....................................................................................... 28

PRICING OF FUND SHARES........................................................................................ 33

MINIMUM PURCHASE REQUIREMENTS................................................................................. 36

PURCHASE OF FUND SHARES....................................................................................... 36

RETIREMENT PLAN ACCOUNTS...................................................................................... 38

EXCHANGE OF FUND SHARES....................................................................................... 39

REDEMPTION OF FUND SHARES..................................................................................... 40

PORTFOLIO TRANSACTIONS........................................................................................ 43

FUND SHARE VALUATION.......................................................................................... 44

DIVIDENDS, DISTRIBUTIONS, AND FEDERAL INCOME TAXATION......................................................... 45

OTHER INFORMATION............................................................................................. 47

APPENDIX...................................................................................................... i
</TABLE>

<PAGE>
HIGHLIGHTS

THE FUNDS

This prospectus describes the four Funds comprising Centura Funds, Inc.
(the "Company"). Each Fund has a distinct investment objective and policies, as
described below. The investment objective of each Fund is a fundamental policy
of that Fund and may not be changed without approval of the Fund's shareholders.
See "The Funds." The Funds and their investment objectives and policies are as
follows:

(Bullet) CENTURA EQUITY GROWTH FUND -- This Fund's objective is
long-term capital appreciation. It invests in a
diversified portfolio comprised mainly of publicly traded
common and preferred stocks and securities convertible
into or exchangeable for common stock. Although its
investments will be principally in securities of
U.S.-based companies, it may also invest in securities of
foreign issuers, generally in the form of American
Depositary Receipts ("ADRs").

(Bullet) CENTURA EQUITY INCOME FUND -- This Fund's objective is to
provide long-term capital appreciation and income. The
Fund invests primarily in dividend-paying common stocks,
convertible preferred stocks, and convertible bonds, notes
and debentures. It may also invest in securities believed
to offer special capital appreciation opportunities. The
Fund will invest primarily in securities of U.S.-based
companies, but it may also invest in securities of
non-U.S. issuers, generally through ADRs.

(Bullet) CENTURA FEDERAL SECURITIES FUND -- This Fund seeks to
provide relatively high current income consistent with
relative stability of principal and safety. The Fund
invests primarily in securities issued by the U.S.
Government, its agencies and instrumentalities. The
maximum maturity of any such security will be 10 years.
Generally, at least 70% of the Fund's portfolio will
consist of direct obligations of the U.S. Treasury, with
no more than 30% in securities of U.S. Government agencies
and instrumentalities.

(Bullet) CENTURA NORTH CAROLINA TAX-FREE BOND FUND -- This Fund
seeks to provide relatively high current income that is
free of both Federal and North Carolina personal income
tax, together with relative safety of principal. It
invests primarily in a portfolio of high quality municipal
securities with a maximum maturity of 15 years and an
average portfolio maturity of 5 to 10 years.

<PAGE>
RISKS OF INVESTING IN THE FUNDS

Investment in each of the Funds involves certain risks. There can, of
course, be no assurance that a Fund will achieve its investment objective or be
successful in preventing or minimizing the risk of loss that is inherent in
certain types of investments. Fund investments in securities of foreign issuers
involve special risks not usually associated with investing in U.S. companies.
Concentration of Centura North Carolina Tax-Free Bond Fund in securities of a
single state makes the Fund particularly vulnerable to events affecting that
state. The Funds have authority, which they presently do not intend to use, to
invest in various types of derivative instruments, which would entail special
risks. Investors should be aware that the value of each Fund's shares will
fluctuate, which may cause a loss in the principal value of the investment. See
"Risks of Investing in the Funds."

THE ADVISER

Management of the Funds is provided by Centura Bank (the "Adviser"),
headquartered in Rocky Mount, North Carolina. For its advisory services, the
Adviser, receives from each Fund a fee at an annual rate based on the Fund's
average daily net assets. This fee is at an annual rate of 0.70% for Centura
Equity Growth Fund, 0.70% for Centura Equity Income Fund, 0.30% for Centura
Federal Securities Income Fund, and 0.35% for Centura North Carolina Tax-Free
Bond Fund.

THE DISTRIBUTOR, ADMINISTRATOR AND SPONSOR

Centura Funds Distributor, Inc. (the "Distributor") distributes the
Funds' shares and may be reimbursed for certain of its distribution-related
expenses. Furman Selz LLC ("Furman Selz") acts as Sponsor and Administrator to
the Funds. For its services as Administrator, each Fund pays Furman Selz a fee
at the annual rate of 0.15% of its average daily net assets. Furman Selz also
acts as transfer agent and fund accounting agent for the Funds, for which it
receives additional fees. For information concerning changes in the
Administrator and other Services, see "Management of the Funds -- The
Administrator and Sponsor."

<PAGE>
CLASSES OF SHARES

Class A shares and Class B shares differ principally with respect to
sales charges and the rate of expenses to which they are subject. Investors may
select the class that best suits their investment needs. Class A shares are
offered with a maximum front-end sales charge of 4.50% for Centura Equity Growth
Fund and Centura Equity Income Fund, and 2.75% for Centura Federal Securities
Income Fund and Centura North Carolina Tax-Free Bond Fund. The initial sales
charge for each Fund may be reduced or waived in certain cases. See "Purchase of
Fund Shares." Class B shares are offered at net asset value, with no front-end
sales charge. Shares of each class are also subject to service and distribution
fees calculated as a percentage of the net asset value of each class which may
not exceed the following annual rates: 0.25% for Class A shares of each of the
Funds (pursuant to a voluntary limit set by the Distributor for the current
fiscal year; the maximum fee for Class A shares would, without this limit, be
0.50%); 1.00% for Class B shares of Centura Equity Growth Fund and Centura
Equity Income Fund, and 0.75% for Class B shares of Centura Federal Securities
Income Fund and Centura North Carolina Tax-Free Bond Fund (pursuant to a
voluntary limit set by the Adviser for the current fiscal year; the maximum fee
for Class B shares of the last two funds would, without this limit, be 1.00%).
Shareholders who redeem Class B shares within five years from the date of
purchase will be assessed a contingent deferred sales charge ("CDSC") declining
from a maximum in the first year after purchase of 5.00% for Centura Equity
Growth Fund and Centura Equity Income Fund, and 3.00% for each of the other
Funds to a minimum in the fifth year after purchase of 1.00% for each of the
Funds. The CDSC may be waived in certain cases. On the seventh anniversary of
their purchase date, Class B shares convert automatically to Class A shares,
which bear a lower Service and Distribution Fee. See "Management of The
Funds -- The Distributor." Class C shares of the Funds, not offered by this
Prospectus, are available only to certain institutional investors. See "Other
Information -- Capitalization."

A prospective investor in Class A or Class B shares, in selecting between
these classes, should consider the respective impact of the sales charge or CDSC
together with the cumulative effect of the Service and Distribution Fees for
each class over the anticipated period of investment, as well as the effect of
any sales charge or CDSC waivers to which the investor may be entitled. For
purchasers (other than those eligible to invest in Class C shares) contemplating
an investment of at least $250,000, the Funds believe it is preferable to
purchase Class A shares. Investors should be aware that other expenses
attributable to each class may differ slightly due to the allocation to each
class of certain "class specific" expenses, including distribution and mailing
expenses and federal and state securities registration fees. Finally, investors
should be aware that persons selling shares of the Funds may receive different
levels of compensation for sales of Class A and Class B shares.

<PAGE>
GUIDE TO INVESTING IN CENTURA FUNDS, INC.

Purchase orders for the Funds received by your broker or Service
Organization in proper order prior to 4:15 p.m., Eastern time, and transmitted
to the Funds prior to 5:00 p.m. Eastern time will become effective that day.

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<S> <C>
(Bullet) Minimum Initial Investment................................................. $1,000

(Bullet) Minimum Initial Investment for IRAs
and other qualified retirement plans.............................................. $250

(Bullet) Minimum Subsequent Investment.............................................. $250
(except for IRA and other qualified retirement plans)

(Bullet) Minimum Investment per pay period for
Payroll Deduction Plan............................................................ $ 50
(NO INVESTMENT IS REQUIRED TO INITIATE THIS PLAN.)

(NO INVESTMENT IS REQUIRED TO INITIATE THIS PLAN.)

(BULLET) Minimum Amount Per Investment Under Automatic
Investment Plan................................................................... $ 50

(NO INVESTMENT IS REQUIRED TO INITIATE THIS PLAN.)

SHAREHOLDERS MAY EXCHANGE SHARES OF A PARTICULAR CLASS IN ONE FUND FOR SHARES OF
THE SAME CLASS IN ANOTHER FUND BY TELEPHONE OR MAIL.

(BULLET) Minimum exchange........................................................... NONE
(HOWEVER, AN INVESTOR MUST SATISFY THE $1,000 MINIMUM INVESTMENT FOR EACH FUND
INTO WHICH HE OR SHE EXCHANGES.)

SHAREHOLDERS MAY REDEEM SHARES BY TELEPHONE, MAIL OR WIRE.
</TABLE>

The Funds reserve the right to redeem upon not less than 30 days' notice
all shares in a Fund's account which have an aggregate value of less than
$1,000.

ALL DIVIDENDS AND DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED AT NET
ASSET VALUE IN ADDITIONAL SHARES OF THE SAME CLASS OF THE APPLICABLE FUND UNLESS
CASH PAYMENT IS REQUESTED. EACH OF THE FUNDS PAYS DIVIDENDS FROM INCOME, IF ANY,
MONTHLY.

SEE "PURCHASE OF FUND SHARES," "REDEMPTION OF FUND SHARES" AND
"DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXATION" FOR MORE INFORMATION.

FUND EXPENSES

The following expense tables indicate costs and expenses that an investor
in Class A shares or Class B shares should anticipate incurring either directly
or indirectly as a shareholder in the Funds.

<PAGE>
FEE TABLES*

<TABLE>
<CAPTION>
CENTURA FEDERAL CENTURA NORTH
CENTURA EQUITY CENTURA EQUITY SECURITIES CAROLINA TAX-FREE
GROWTH FUND INCOME FUND INCOME FUND BOND FUND
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering
price) 4.50 -- 4.50 -- 2.75 -- 2.75 --
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) -- -- -- -- -- -- -- --
Deferred Sales Charge (as a
percentage of redemption proceeds)** -- 5.00 -- 5.00 -- 3.00 -- 3.00
Exchange Fees -- -- -- -- -- -- -- --

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets
annualized)
Management Fees (After Waiver)** 0.70 0.70 0.36 0.36 0.30 0.30 0.10 0.10
12b-1 Fees (pursuant to voluntary
cap)**** 0.25 1.00 0.25 1.00 0.25 0.75 0.25 0.75
Other Expenses (After Waiver)*** 0.31 0.31 0.39 0.39 0.30 0.30 0.33 0.33

TOTAL PORTFOLIO OPERATING EXPENSES***** 1.26 2.01 1.00 1.75 0.85 1.35 0.68 1.18
</TABLE>

* The information in the Fee Table relates only to Class A shares and
Class B shares. Class C shares pay no Sales Charge. Deferred Sales
Charge or 12b-1 fees. (See "Other Information -- Capitalization.")
** Shareholders who redeem shares by wire may be charged a fee by the
banks receiving the wire payments on their behalf. (See "Redemption
of Fund Shares.")
*** Amounts shown for "Management Fees" and "Other Expenses" for the
Equity Income Fund and the North Carolina Tax-Free Bond Fund reflect
reductions of fees payable to the Adviser and fees payable for
administrative and transfer agent services pursuant to agreements to
limit fund expenses. Without these reductions, "Management Fees" for
the Equity Income Fund and the North Carolina Tax-Free Bond Fund,
respectively, would be 0.70% and 0.35% and "Other Expenses" would be
0.46% and 0.44%. "Other Expenses" for Centura Equity Income Fund are
based on amounts estimated for the current fiscal year.
**** Under rules of the National Association of Securities Dealers, Inc.
(the "NASD"), a 12b-1 fee may be treated as a sales charge for
certain purposes under those rules. Because the 12b-1 fee is an
annual fee charge against the assets of a Fund, long-term
shareholders may pay more initial sales charges than the economic
equivalent of the maximum front-end sales charge permitted by rules
of the NASD. The 12b-1 fees in the above Fee Table represent fees
anticipated to be paid by the Funds. Class A shares of each Fund are
permitted to pay 12b-1 fees up to 0.50%, and Class B shares are
permitted to pay 12b-1 fees up to 1.00%. However, the Distributor has
undertaken to limit 12b-1 fees to 0.25% for Class A shares and 0.75%
for Class B shares of Centura Federal Securities Income Fund and
Centura North Carolina Tax-Free Bond Fund for the current fiscal
year. See "Management of the Funds -- The Distributor."
***** Absent the reductions of management, administrative, and transfer
agent fees, and the limitation applicable to 12b-1 fees, "Total
Portfolio Operating Expenses" for Class A shares would be 1.51% for
the Equity Growth Fund, 1.66% for the Equity Income Fund, 1.10% for
the Federal Securities Income Fund and 1.29% for the North Carolina
Tax-Free Bond Fund, and "Total Portfolio Operating Expenses" for
Class B shares of the Equity Growth Fund, the Equity Income Fund, the
Federal Securities Income Fund and the North Carolina Tax-Free Bond
Fund, respectively, would be 2.01%, 2.16%, 1.60%, and 1.79%.

<PAGE>
EXAMPLE*

An investor would pay the following expenses on a $1,000 investment,
assuming 5% annual return:

<TABLE>
<CAPTION>
CENTURA FEDERAL CENTURA
CENTURA EQUITY CENTURA EQUITY SECURITIES NORTH CAROLINA
GROWTH FUND INCOME FUND INCOME FUND TAX-FREE FUND
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assuming complete redemption at the end
of each time period:
1 year 57 70 55 68 36 44 34 42
3 years 83 93 75 85 54 73 49 67
5 years 111 118 98 105 73 84 64 75
10 years 190 234 162 206 130 162 110 143

Class B Shares assuming no redemption:
1 year -- 20 -- 18 -- 14 -- 12
3 years -- 63 -- 55 -- 43 -- 37
5 years -- 108 -- 95 -- 74 -- 65
10 years -- 234 -- 206 -- 162 -- 143
</TABLE>

* This example should not be considered a representation of future expenses
which may be more or less than those shown. The assumed 5% annual return
is hypothetical and should not be considered a representation of past or
future annual return. Actual return may be greater or less than the
assumed amount.

<PAGE>
FINANCIAL HIGHLIGHTS

The table below sets forth certain information for each Fund's fiscal
periods ended April 30, 1996 and April 30, 1995. (No information is shown for
Centura Equity Income Fund, which was formed on August 28, 1996.) The
information set forth in this table has been audited by McGladrey & Pullen LLP,
the Funds' independent accountant whose report on the financial statements is
included in the Funds' Annual Report, which may be obtained without charge, and
is also contained in the Statement of Additional Information, which is available
without charge upon request. The Annual Report also includes Management's
Discussion of Fund Performance. This information should be read in conjunction
with the financial statements.
<TABLE>
<CAPTION>
CENTURA EQUITY GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
1996 1995*

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $10.70 $10.69 $10.70 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.03 (0.06) 0.07 0.06 0.03 0.07
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 3.67 3.65 3.65 0.70 0.69 0.70
Total from Investment Operations.................. 3.70 3.59 3.72 0.76 0.72 0.77
Less Distributions:
Dividends from Net Investment Income.............. (0.05) (0.00) (0.07) (0.06) (0.03) (0.07)
Distributions from Capital Gains.................. (0.04) (0.04) (0.04) -- -- --
Total Distributions............................... (0.09) (0.04) (0.11) (0.06) (0.03) (0.07)
Net Asset Value, End of Period...................... $14.31 $14.24 $14.31 $10.70 $10.69 $10.70
Total Return (not reflecting sales load)............ 34.72% 33.73% 34.97% 7.64% 7.23% 7.71%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $5,740 $6,194 $133,714 $968 $1,362 $84,004
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets**......... 1.26% 2.02% 1.04% 1.29% 2.03% 1.04%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 1.26% 2.02% 1.04% 1.32% 2.06% 1.07%
Ratio of Net Investment Income to Average
Net Assets**................................... 0.27% (0.48)% 0.55% 0.63% 0.00% 0.79%
Portfolio Turnover Rate............................. 46% 46% 46% 44% 44% 44%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

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<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1996 1995*

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $9.97 $9.97 $9.97 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 0.04 0.04 0.04 (0.03) (0.03) (0.03)
Total from Investment Operations.................. 0.61 0.54 0.64 0.49 0.42 0.51
Less Distributions:
Dividends from Net Investment Income.............. (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Distributions from Capital Gains.................. -- -- -- -- -- --
Total Distributions............................... (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Net Asset Value, End of Period...................... $10.01 $10.01 $10.01 $9.97 $9.97 $9.97
Total Return (not reflecting sales load)............ 6.20% 5.40% 6.47% 5.02% 4.32% 5.28%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $526 $176 $109,775 $247 $118 $93,807
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets**......... 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net Investment Income to Average
Net Assets**................................... 5.61% 4.84% 5.88% 5.58% 4.86% 5.97%
Portfolio Turnover Rate............................. 34% 34% 34% 42% 42% 42%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

<PAGE>
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
<S> <C> <C> <C> <C> <C> <C>
1996 1995*

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $9.98 $9.98 $9.98 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.42 0.34 0.44 0.39 0.32 0.41
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 0.13 0.13 0.13 (0.02) (0.02) (0.02)
Total from Investment Operations.................. 0.55 0.47 0.57 0.37 0.30 0.39
Less Distributions:
Dividends from Net Investment Income.............. (0.42) (0.34) (0.44) (0.39) (0.32) (0.41)
Distributions from Capital Gains.................. (0.07) (0.07) (0.07) -- -- --
Total Distributions............................... (0.49) (0.41) (0.51) (0.39) (0.32) (0.41)
Net Asset Value, End of Period...................... $10.04 $10.04 $10.04 $9.98 $9.98 $9.98
Total Return (not reflecting sales load)............ 5.50% 4.72% 5.78% 3.77% 3.09% 4.08%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $3,927 $393 $37,009 $429 $275 $34,885
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets**......... 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 1.04% 1.80% 0.80% 0.92% 1.49% 0.91%
Ratio of Net Investment Income to Average
Net Assets**................................... 3.98% 3.30% 4.32% 4.46% 3.89% 4.64%
Portfolio Turnover Rate............................. 80% 80% 80% 121% 121% 121%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

<PAGE>
THE FUNDS

Each Fund is a separate diversified investment fund or portfolio,
commonly known as a mutual fund. The Funds are portfolios of the Company, which
was organized under the laws of the State of Maryland on March 1, 1994 as an
open-end, management investment company. Centura Equity Income Fund was
established as a new portfolio of the Company on August 28, 1996. The Company's
Board of Directors oversees the overall management of the Funds and elects the
Funds' officers.

CENTURA EQUITY GROWTH FUND. Investors seeking long-term growth of capital
and for whom current income is not an objective should consider investing in
Centura Equity Growth Fund.

The investment objective of Centura Equity Growth Fund is long-term
capital appreciation. The Fund invests primarily in a diversified portfolio of
publicly traded common and preferred stocks and securities convertible into or
exchangeable for common stock. The Adviser uses fundamental analysis to select
stocks for the Fund's portfolio and the Fund will invest primarily in stocks of
established growth companies that are undervalued relative to their industry or
to their historical valuation ranges. However, the Adviser may also invest in
companies which it believes have improving prospects whose equity securities are
currently selling below their estimated intrinsic value. In addition,
out-of-favor growth cyclicals may be used if the adviser anticipates a
sustainable earnings recovery for these companies. The Fund expects to invest
primarily in securities of U.S.-based companies, but it may also invest in
securities of non-U.S. companies, generally through American Depository Receipts
("ADRs"). Under normal circumstances, at least 65% of the Fund's total assets
will be invested in equity securities and convertible securities. However, the
Fund may invest without limit in debt instruments for temporary defensive
purposes when the Adviser has determined that abnormal market or economic
conditions so warrant. These debt obligations may include U.S. Government
securities; certificates of deposit, bankers' acceptances and other short-term
debt obligations of banks with total assets of at least $1,000,000,000; debt
obligations of corporations (corporate bonds, debentures, notes and other
similar corporate debt instruments); commercial paper; and repurchase agreements
with respect to securities in which the Fund is authorized to invest. Although
the Fund's investments in such debt securities and in convertible and preferred
stock will generally be rated A, A-1, or better by Standard & Poor's Corporation
("S&P") or A, Prime-1 or better by Moody's Investors Service, Inc. ("Moody's"),
or deemed of comparable quality by the Adviser, the Fund is authorized to invest
up to 15% of its assets in securities rated as low as BBB by S&P or Baa by
Moody's, or deemed of comparable quality by the Adviser. Securities rated BBB or
Baa, or deemed equivalent to such securities, may have speculative
characteristics. See "Risks of Investing in the Funds." If any security held by
the Fund is downgraded below BBB/Baa (or so deemed by the Adviser), the
securities will generally be sold unless it is determined that such sale is not
in the best interest of the Fund. The Fund will invest in no securities rated
below BBB or Baa.

<PAGE>
CENTURA EQUITY INCOME FUND. Investors seeking long-term growth and income
should consider an investment in Centura Equity Income Fund.

The investment objective of Centura Equity Income Fund is to provide
long-term capital appreciation and income. This Fund invests primarily in
dividend-paying common stocks, convertible preferred stocks, and convertible
bonds, notes and debentures. In managing this Fund, the Adviser uses fundamental
analysis to select stocks for the Fund's portfolio. The Fund will invest
primarily in the stocks of established companies with above average dividend
yields and/or prospects for increasing dividends. However, the Adviser may also
select stocks (or convertible securities) of companies that it believes offer
special appreciation opportunities because they are undervalued in the
marketplace based on such factors as price/earnings ratios or the ratio of stock
price to the company's inherent asset value, book value, cash flow or underlying
franchise value. The Fund expects to invest primarily in securities of
U.S.-based companies, but it may also invest in securities of non-U.S.
companies, generally through ADRs. Under normal circumstances, at least 65% of
the Fund's total assets will be invested in equity securities and convertible
securities and at least 65% of such assets will be invested in income producing
securities. However, for temporary defensive purposes when the Adviser has
determined that abnormal market or economic conditions so warrant, the Fund may
invest without limit in debt instruments of the same types, and subject to the
same conditions, as Centura Equity Growth Fund under such circumstances.

CENTURA FEDERAL SECURITIES INCOME FUND. Investors seeking relatively high
current income from a portfolio of U.S. Government securities should consider
investing in Centura Federal Securities Income Fund.

The investment objective of Centura Federal Securities Income Fund is to
provide high current income consistent with relative stability of principal and
safety. It pursues this objective by investing primarily in securities issued by
the U.S. Government, its agencies and instrumentalities with maximum maturities
of 10 years. These securities typically display greater price stability and
safety than debt securities of longer duration and lower quality, although the
latter generally offer higher income. In addition to limiting the maturity of
its portfolio securities, the Fund attempts to moderate principal fluctuations
by generally investing at least 70% of its portfolio in direct obligations of
the U.S. Treasury, with no more than 30% in securities of U.S. Government
agencies and instrumentalities, and by using a modified "laddering" approach to
structuring the Fund's portfolio -- i.e., by investing in securities with
different maturities and adjusting their relative proportions, as well as the
maximum and average maturity of its portfolio securities, to adapt to various
market conditions. Using this approach, the Fund hopes both to capture a high
proportion of the currently available return on fixed income securities and to
limit volatility.

To permit desirable flexibility, the Fund has authority to invest in
corporate debt securities rated A or better by S&P or Moody's (or deemed of
comparable quality by the Adviser) and high quality money market instruments
including commercial paper rated A-1 or better by S&P or Prime-1 or better by
Moody's (or deemed by the Adviser to be of comparable quality); certificates of
deposit, bankers' acceptances and other short-term debt obligations of banks
with total assets of at least $1,000,000,000; and repurchase agreements with
respect to securities in which the Fund is authorized to invest.

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CENTURA NORTH CAROLINA TAX-FREE BOND FUND. Investors seeking dividend
income that is generally free of regular federal and North Carolina personal
income taxes should consider investing in the Centura North Carolina Tax-Free
Bond Fund.

The investment objective of Centura North Carolina Tax-Free Bond Fund is
relatively high current income that is free of both regular federal and North
Carolina personal income tax, together with relative safety of principal. This
Fund invests primarily in a portfolio of obligations issued by the state of
North Carolina, its political subdivisions, and their agencies and
instrumentalities, the income from which, in the opinion of the issuer's bond
counsel, is exempt from regular federal and North Carolina personal income taxes
("North Carolina Municipal Obligations"). By limiting the Fund's average
portfolio maturity to between 5 and 10 years, with a maximum maturity for any
portfolio security of 15 years, the Fund seeks to capture a high proportion of
the currently available return on North Carolina Municipal Obligations while
providing greater safety of principal than would be available from longer term
municipal securities. It also seeks to moderate price fluctuations by
diversifying its investments among different municipal issuers and by limiting
its investments to securities of high quality.

The Fund seeks to provide income that is fully free from regular federal
and North Carolina personal income taxes, as well as from the federal
alternative minimum tax. To provide the flexibility to deal with a variety of
market circumstances, however, the Fund has limited authority (a) to invest in
municipal obligations of other states ("Municipal Obligations"), the income from
which would not be free from North Carolina personal income tax, (b) to invest
up to 10% of its assets in Municipal Obligations subject to the federal
alternative minimum tax ("AMT Obligations"), and (c) to invest up to 20% of its
assets in AMT Obligations plus cash reserves and other obligations producing
taxable income, including obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit, bankers' acceptances and other
short-term debt obligations of U.S banks with total assets of at least
$1,000,000,000; commercial paper rated A-1 or better by S&P or Prime- 1 or
better by Moody's (or deemed by the Adviser to be of comparable quality); and
repurchase agreements relating to underlying securities in which the Fund is
authorized to invest. For temporary defensive purposes when the Adviser has
determined that abnormal market and economic conditions so warrant the Fund may
invest up to 50% of its assets in investments producing taxable income and AMT
Obligations. Any distributions by the Fund of capital gains and other income
that are not distributions designated by the Fund as "exempt-interest dividends"
will normally be subject to federal, state and, in some cases, local tax. As a
fundamental policy, during periods of normal market conditions, at least 80% of
the Fund's net assets will be invested in securities the interest income from
which is exempt from the regular federal income tax. Additionally, under normal
circumstances, (a) at least 65% of the value of the Fund's total assets will be
invested in "bonds" -- i.e., debt obligations with a duration of at least one
year from the date of issue, and (b) at least 65% of the value of the Fund's
total assets will be invested in bonds that are North Carolina Municipal
Obligations. Tax advisers should be consulted regarding tax effects for
particular investors.

The Fund's quality criteria require that the Fund purchase Municipal
Obligations rated A, SP-1 or better by S&P or A, MIG-1 or better by Moody's;
commercial paper rated A-1 or better by S&P or Prime-1 or better by Moody's;
corporate debt securities rated A or better by S&P or Moody's (or debt
securities given equivalent ratings by at least two other nationally recognized
statistical rating organizations ("NRSROs")) or, if any of such securities are
not rated, that they be of comparable quality in the Adviser's opinion. For more
information on Municipal

<PAGE>
Obligations and North Carolina Municipal Obligations, see "Description of
Securities and Investment Practices" and "Risks of Investing in the Funds."

In determining to invest in a particular Municipal Obligation, the
Adviser will rely on the opinion of bond counsel for the issuer as to the
validity of the security and the exemption of interest on such security from
federal and relevant state income taxes, and the Adviser will not make an
independent investigation of the basis for any such opinion.

OTHER INVESTMENT POLICIES OF THE FUNDS

Each of the Funds may also invest up to 5% of its total assets in another
investment company, not to exceed 10% of the value of its total assets in the
securities of other investment companies. Taxable distributions earned from
other investment companies will, likewise, represent taxable income to a Fund. A
Fund will incur additional expenses due to the duplication of expenses as a
result of investing in mutual funds other than the Funds. Each of the Funds has
authority, which it does not presently intend to exercise, to invest in futures
and options contracts and to lend its portfolio securities. For information
concerning these practices, see "Investment Policies" in the SAI.

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES

U.S. GOVERNMENT SECURITIES (All Funds). U.S. Government securities are
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. U.S. Treasury bills, which have a maturity of up to one year,
are direct obligations of the United States and are the most frequently issued
marketable U.S. Government security. The U.S. Treasury also issues securities
with longer maturities in the form of notes and bonds.

U.S. Government agency and instrumentality obligations are debt
securities issued by U.S. Government-sponsored enterprises and federal agencies.
Some obligations of agencies are supported by the full faith and credit of the
United States or by U.S. Treasury guarantees, such as mortgage-backed
certificates issued by the Government National Mortgage Association; others,
such as obligations of the Federal Home Loan Banks, Federal Farm Credit Bank,
Bank for Cooperatives, Federal Intermediate Credit Banks and the Federal Land
Bank, are guaranteed by the right of the issuer to borrow from the U.S.
Treasury; others, such as obligations of the Federal National Mortgage
Association, are supported by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others, such
as obligations of the Student Loan Marketing Association and the Tennessee
Valley Authority, are backed only by the credit of the agency or instrumentality
issuing the obligation. In the case of obligations not backed by the full faith
and credit of the United States, the investor must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment.

BANK OBLIGATIONS (All Funds). These obligations include negotiable
certificates of deposit and bankers' acceptances. The Funds limit their bank
investments to dollar-denominated obligations of U.S. or foreign banks which
have more than $1 billion in total assets at the time of investment and, in the
case of U.S. banks, 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.

<PAGE>
COMMERCIAL PAPER (All Funds). Commercial paper includes short-term
unsecured promissory notes, variable rate demand notes and variable rate master
demand notes issued by domestic and foreign bank holding companies, corporations
and financial institutions, as well as similar instruments issued by government
agencies and instrumentalities.

CORPORATE DEBT SECURITIES (All Funds). A Fund's investments in corporate
debt securities are limited to corporate debt securities (corporate bonds,
debentures, notes and other similar corporate debt instruments) which meet the
previously disclosed minimum ratings and maturity criteria established for the
Fund under the direction of the Board of Directors and the Fund's Adviser or, if
unrated, are in the Adviser's opinion comparable in quality to corporate debt
securities in which the Fund may invest. See "The Funds."

REPURCHASE AGREEMENTS (All Funds). Securities held by the Funds may be
subject to repurchase agreements. A repurchase agreement is a transaction in
which the seller of a security commits itself at the time of the sale to
repurchase that security from the buyer at a mutually agreed-upon time and
price. These agreements permit the Funds to earn income for periods as short as
overnight. Repurchase agreements may be considered to be loans by the purchaser
collateralized by the underlying securities. These agreements will be fully
collateralized and the collateral will be marked-to-market daily. The Funds will
enter into repurchase agreements only with dealers, domestic banks or recognized
financial institutions which, in the opinion of the Adviser, present minimal
credit risks in accordance with guidelines adopted by the Board of Directors. In
the event of default by the seller under the repurchase agreement, a Fund may
have problems in exercising its rights to the underlying securities and may
experience time delays in connection with the disposition of such securities.

LOANS OF PORTFOLIO SECURITIES (All Funds). To increase current income
each Fund may lend its portfolio securities worth up to 5% of that Fund's total
assets to brokers, dealers and financial institutions, provided certain
conditions are met, including the condition that each loan is secured
continuously by collateral maintained on a daily mark-to-market basis in an
amount at least equal to the current market value of the securities loaned. For
further information, see the SAI.

VARIABLE AND FLOATING RATE DEMAND AND MASTER DEMAND NOTES (All Funds).
The Funds may, from time to time, buy variable or floating rate demand notes
issued by corporations, bank holding companies and financial institutions and
similar instruments issued by government agencies and instrumentalities. These
securities will typically have a maturity over one year but carry with them the
right of the holder to put the securities to a remarketing agent or other entity
at designated time intervals and on specified notice. The obligation of the
issuer of the put to repurchase the securities may be backed by a letter of
credit or other obligation issued by a financial institution. The repurchase
price is ordinarily par plus accrued and unpaid interest. Generally, the
remarketing agent will adjust the interest rate every seven days (or at other
specified intervals) in order to maintain the interest rate at the prevailing
rate for securities with a seven-day or other designated maturity. A Fund's
investment in demand instruments which provide that the Fund will not receive
the principal note amount within seven days' notice, in combination with the
Fund's other investments in illiquid instruments, will be limited to an
aggregate total of 15% of that Fund's net assets.

<PAGE>
The Funds may also buy variable rate master demand notes. The terms of
these obligations permit a Fund to invest fluctuating amounts at varying rates
of interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. These instruments permit weekly and, in some instances, daily changes
in the amounts borrowed. The Funds have the right to increase the amount under
the note at any time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may repay up to the full amount of the
note without penalty. The notes may or may not be backed by bank letters of
credit. Because the notes are direct lending arrangements between the Fund and
borrower, it is not generally contemplated that they will be traded, and there
is no secondary market for them, although they are redeemable (and, thus,
immediately repayable by the borrower) at principal amount, plus accrued
interest, at any time. In connection with any such purchase and on an ongoing
basis, the Adviser will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal and interest on
demand, including a situation in which all holders of such notes make demand
simultaneously. While master demand notes, as such, are not typically rated by
credit rating agencies, a Fund may, under its minimum rating standards, invest
in them only if, at the time of an investment, the issuer meets the criteria set
forth in this Prospectus for commercial paper obligations.

FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES (Centura Equity Income
Fund, Centura Federal Securities Income Fund and Centura North Carolina Tax-Free
Bond Fund). A Fund may purchase when-issued securities and make contracts to
purchase securities for a fixed price at a future date beyond customary
settlement time if the Fund holds, and maintains until the settlement date in a
segregated account cash, U.S. Government securities or high-grade debt
obligations in an amount sufficient to meet the purchase price, or if the Fund
enters into offsetting contracts for the forward sale of other securities it
owns. Purchasing securities on a when-issued basis and forward commitments
involves a risk of loss if the value of the security to be purchased declines
prior to the settlement date, which risk is in addition to the risk of decline
in value of a Fund's other assets. No income accrues on securities purchased on
a when-issued basis prior to the time delivery of the securities is made,
although a Fund may earn interest on securities it has deposited in the
segregated account because it does not pay for the when-issued securities until
they are delivered. Investing in when-issued securities has the effect of (but
is not the same as) leveraging the Fund's assets. Although a Fund would
generally purchase securities on a when-issued basis or enter into forward
commitments with the intention of actually acquiring securities, that Fund may
dispose of a when-issued security or forward commitment prior to settlement if
the Adviser deems it appropriate to do so. A Fund may realize short-term profits
or losses upon such sales.

<PAGE>
fixed-income securities, when interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
decline, the value of mortgage-related securities with prepayment features may
not increase as much as other fixed-income securities. In recognition of this
prepayment risk to investors, the Public Securities Association (the "PSA") has
standardized the method of measuring the rate of mortgage loan principal
prepayments. The PSA formula, the Constant Prepayment Rate (the "CPR"), or other
similar models that are standard in the industry will be used by a Fund in
calculating maturity for purposes of its investment in mortgage-related
securities. Upward trends in interest rates tend to lengthen the average life of
mortgage-related securities and also cause the value of outstanding securities
to drop. Thus, during periods of rising interest rates, the value of these
securities held by a Fund would tend to drop and the portfolio-weighted average
life of such securities held by a Fund may tend to lengthen due to this effect.
Longer-term securities tend to experience more price volatility. Under these
circumstances, a Manager may, but is not required to, sell securities in part in
order to maintain an appropriate portfolio-weighted average life.

Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government (such as
securities guaranteed by the Government National Mortgage Association ("GNMA"));
or guaranteed by agencies or instrumentalities of the U.S. Government (such as
securities guaranteed by the Federal National Mortgage Association ("FNMA") or
the Federal Home Loan Mortgage Corporation ("FHLMC"), which are supported only
by the discretionary authority of the U.S. Government to purchase the agency's
obligations. Mortgage pass-through securities created by nongovernmental issuers
(such as commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers) may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance, and letters of credit, which may be
issued by governmental entities, private insurers or the mortgage poolers.

A Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs") which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, semiannually.
CMOs may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
GNMA, FHLMC or FNMA. CMOs are structured into multiple classes, with each class
bearing a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class; investors holding longer maturity classes receive principal only after
the first class has been retired. CMOs may be issued by government and
nongovernmental entities. Some CMOs are debt obligations of FHLMC issued in
multiple classes with different maturity dates secured by the pledge of a pool
of conventional mortgages purchased by FHLMC. Other types of CMOs are issued by
corporate issuers in several series, with the proceeds used to purchase
mortgages or mortgage pass-through certificates. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios. To the extent a
particular CMO is issued by an investment company, a Fund's ability to invest in
such CMOs will be limited. See "Investment Restrictions" in the SAI.

<PAGE>
Assumptions generally accepted by the industry concerning the probability
of early payment may be used in the calculation of maturities for debt
securities that contain put or call provisions, sometimes resulting in a
calculated maturity different from the stated maturity of the security.

It is anticipated that governmental, government-related or private
entities may create mortgage loan pools and other mortgage-related securities
offering mortgage pass-through and mortgage-collateralized investments in
addition to those described above. As new types of mortgage-related securities
are developed and offered to investors, the Adviser will, consistent with a
Fund's investment objectives, policies and quality standards, consider making
investments in such new types of mortgage-related securities, but no investments
will be made in such securities until the Fund's prospectus and/or SAI have been
revised to reflect such securities.

OTHER ASSET-BACKED SECURITIES (Centura Equity Income Fund, Centura
Federal Securities Income Fund and Centura North Carolina Tax-Free Bond Fund).
Other asset-backed securities (unrelated to mortgage loans) are developed from
time to time and may be purchased by a Fund to the extent consistent with its
investment objective and policies, but only after disclosure reflecting such
securities has been added to the Fund's prospectus and/or SAI.

FOREIGN SECURITIES (Centura Equity Growth Fund and Centura Equity Income
Fund). These Funds may invest in securities represented by American Depositary
Receipts ("ADRs"). ADRs are dollar-denominated receipts generally issued by
domestic banks, which represent the deposit with the bank of a security of a
foreign issuer, and which are publicly traded on exchanges or over-the-counter
in the United States. There are certain risks associated with investments in
unsponsored ADR programs. Because the non-U.S. company does not actively
participate in the creation of the ADR program, the underlying agreement for
service and payment will be between the depositary and the shareholders. The
company issuing the stock underlying the ADRs pays nothing to establish the
unsponsored facility, as fees for ADR issuance and cancellation are paid by
brokers. Investors directly bear the expenses associated with certificate
transfer, custody and dividend payment. In addition, in an unsponsored ADR
program, there may be several depositories with no defined legal obligations to
the non-U.S. company. The duplicate depositories may lead to marketplace
confusion because there would be no central source of information to buyers,
sellers and intermediaries. The efficiency of centralization gained in a
sponsored program can greatly reduce the delays in delivery of dividends and
annual reports. For more information, see "Risks of Investing in the Funds."

FORWARD FOREIGN CURRENCY TRANSACTIONS (Centura Equity Growth Fund and
Centura Equity Income Fund). These Funds may enter into forward foreign currency
exchange contracts in order to protect against uncertainty in the level of
future foreign exchange rates. These contracts, which involve costs, permit a
Fund to purchase or sell a specific amount of a particular currency at a
specified price on a specified future date. A Fund will realize a benefit from
this type of contract only to the extent that the relevant currencies move as
anticipated. If the currencies do not move as anticipated, the contracts may
cause greater loss to a Fund than if they had not been used. See the SAI for
further information concerning forward foreign currency transactions.

<PAGE>
FUTURES CONTRACTS AND OPTIONS (All Funds). The Funds may purchase and
sell futures contracts on securities, currencies, and indices of securities, and
write and sell put and call options on securities, currencies and indices of
securities as a hedge against changes in interest rates, stock prices, currency
fluctuations and other market developments, provided that not more than 5% of a
Fund's net assets are committed to margin deposits on futures contracts and
premiums for options. See the SAI for further information about futures and
options. See "Risks of Investing in the Funds" for a discussion of risks related
to investing in futures and options.

MUNICIPAL OBLIGATIONS (Centura North Carolina Tax-Free Bond Fund). The
Fund may invest in securities issued by states, their political subdivisions and
agencies and instrumentalities of the foregoing, the income from which, in the
opinion of bond counsel for the issuer, is exempt from regular income taxes by
the federal government and state of the issuing entity ("Municipal
Obligations"). Such Municipal Obligations include municipal bonds, floating rate
and variable rate Municipal Obligations, participation interests in municipal
bonds, tax-exempt asset-backed certificates, tax-exempt commercial paper,
short-term municipal notes, and stand-by commitments. It may be anticipated that
governmental, government-related or private entities will create other
tax-exempt investments in addition to those described above. As new types of
tax-exempt vehicles are developed, the Adviser will, consistent with the Fund's
investment objectives, policies and quality standards, consider making
investments in such types of Municipal Obligations, but will not make such
investments until they are reflected in the Fund's prospectus and/or SAI. The
Fund will purchase only Municipal Obligations rated A, SP-1 or better by S&P or
A, MIG-1 or better by Moody's (or given equivalent ratings by another NRSRO) or,
if the securities are not rated, are of comparable quality in the Adviser's
opinion. Municipal Obligations in which the Fund may invest include "general
obligation" and "revenue" securities. General obligation securities are backed
by the issuer's full faith, credit and taxing power for the payment of principal
and interest. The taxes that can be levied for the payment of debt service may
be limited or unlimited in terms of rate or amount or special assessments.
Revenue securities are secured primarily by net revenues generated by a
particular facility or group of facilities, or by the proceeds of a special
excise or other specific revenue source. Additional security may be provided by
a debt service reserve fund. Municipal bonds include industrial development
bonds ("IDBs"), moral obligation bonds, put bonds and private activity bonds
("PABs"). PABs generally relate to the financing of a facility used by a private
entity or entities. The credit quality of such bonds is usually directly related
to that of the users of the facilities. The interest on most PABs is an item of
tax preference for purposes of the federal alternative minimum tax and Fund
distributions attributable to such interest likewise, constitute an item of tax
preference. For information on the risks related to the Fund's concentration in
North Carolina Municipal Obligations, see "Risks of Investing in the Funds."

<PAGE>
any such unrated municipal lease obligations in which the Fund invests, the
Company's Board of Directors will be responsible for determining their credit
quality, on an ongoing basis, including assessing the likelihood that the lease
will not be canceled. Prior to purchasing a municipal lease obligation and on a
regular basis thereafter, the Adviser will evaluate the credit quality and,
pursuant to guidelines adopted by the Directors, the liquidity of the security.
In making its evaluation, the Adviser will consider various credit factors, such
as the necessity of the project the municipality's credit quality, future
borrowing plans, and sources of revenue pledged for lease repayment, general
economic conditions in the region where the security is issued, and liquidity
factors, such as dealer activity. For further discussion regarding municipal
lease obligations, see "Risks of Investing in the Funds" in this Prospectus and
"Investment Policies" in the SAI.

STAND-BY COMMITMENTS (Centura North Carolina Tax-Free Bond Fund). The
Fund may acquire "stand-by commitments," which will enable it to improve its
portfolio liquidity by making available same-day settlements on sales of its
securities. A stand-by commitment gives the Fund, when it purchases a Municipal
Obligation from a broker, dealer or other financial institution ("seller"), the
right to sell up to the same principal amount of such securities back to the
seller, at the Fund's option, at a specified price. Stand-by commitments are
also known as "puts." The Fund may acquire stand-by commitments solely to
facilitate portfolio liquidity and not to protect against changes in the market
price of the Fund's portfolio securities. The exercise by the Fund of a stand-by
commitment is subject to the ability of the other party to fulfill its
contractual commitment.

The Fund expects that stand-by commitments generally will be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund will pay for stand-by commitments, either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitments.

It is difficult to evaluate the likelihood of use or the potential
benefit of a stand-by commitment. Therefore, it is expected that the Directors
will determine that stand-by commitments ordinarily have a "fair value" of zero,
regardless of whether any direct or indirect consideration was paid. However, if
the market price of the security subject to the stand-by commitment is less than
the exercise price of the stand-by commitment, such security will ordinarily be
valued at such exercise price. Where the Fund has paid for a stand-by
commitment, its cost will be reflected as unrealized depreciation for the period
during which the commitment is held.

There is no assurance that stand-by commitments will be available to the
Fund nor does the Fund assume that such commitments would continue to be
available under all market conditions.

<PAGE>
fixed rate on the bond is retained by the financial institution. The financial
institution granting the option does not provide credit enhancement. In the
event that there is a default in the payment of principal or interest, or
downgrading of a bond to below investment grade, or a loss of the bond's
tax-exempt status, the put option will terminate automatically. The risk to the
Fund in this case will be that of holding a long-term bond which would tend to
lengthen the weighted average maturity of the Fund's portfolio.

These bonds coupled with puts may present tax issues also associated with
stand-by commitments. As with any stand-by commitments acquired by the Fund, the
Fund intends to take the position that it is the owner of any Municipal
Obligation acquired subject to a third-party put, and that tax-exempt interest
earned with respect to such Municipal Obligations will be tax-exempt in its
hands. There is no assurance that the Internal Revenue Service will agree with
such position in any particular case. Additionally, the federal income tax
treatment of certain other aspects of these investments, including the treatment
of tender fees and swap payments, in relation to various regulated investment
company tax provisions is unclear. However, the Adviser intends to manage the
Fund's portfolio in a manner designed to minimize any adverse impact from these
investments.

PARTICIPATION INTERESTS (Centura North Carolina Tax-Free Bond Fund). The
Fund may purchase from banks participation interests in all or part of specific
holdings of Municipal Obligations. Each participation is backed by an
irrevocable letter of credit or guarantee of the selling bank that the Fund's
Adviser has determined meets the prescribed quality standards of the Fund. Thus
either the credit of the issuer of the Municipal Obligation or the selling bank,
or both, will meet the quality standards of the Fund. The Fund has the right to
sell the participation back to the bank after seven days' notice for the full
principal amount of the Fund's interest in the Municipal Obligation plus accrued
interest, but only (a) as required to provide liquidity to the Fund, (b) to
maintain a high quality investment portfolio or (c) upon a default under the
terms of the Municipal Obligation. The selling bank will receive a fee from the
Fund in connection with the arrangement. The Fund will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service satisfactory to the Adviser that interest earned by
the Fund on Municipal Obligations on which it holds participation interests is
exempt from federal income tax.

INVESTMENT RESTRICTIONS

The following restrictions are applicable to each of the Funds, except as
otherwise indicated.

(1) No Fund may, with respect to 75% of its total assets, purchase more
than 10% of the voting securities of any one issuer or invest more than 5% of
the value of such assets in the securities or instruments of any one issuer,
except securities or instruments issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.

(2) No Fund may purchase securities or instruments which would cause 25%
or more of the market value of its total assets at the time of such purchase to
be invested in securities or instruments of one or more issuers having their
principal business activities in the same industry, provided that there is no
limit with respect to investments in the U.S. Government, its agencies and
instrumentalities.

<PAGE>
(3) No Fund may borrow money, except that a Fund may borrow from banks up
to 10% of the current value of its total net assets for temporary or emergency
purposes. A Fund will make no purchases if its outstanding borrowings exceed 5%
of its total assets.

(4) No Fund may make loans, except that a Fund may (a) lend its portfolio
securities, (b) enter into repurchase agreements with respect to its portfolio
securities, and (c) purchase the types of debt instruments described in this
Prospectus or the SAI.

For purposes of investment restriction number (1), Centura North Carolina
Tax-Free Bond Fund considers a Municipal Obligation to be issued by the
government entity (or entities) whose assets and revenues back the Municipal
Obligation. For a Municipal Obligation backed only by the assets and revenues of
a nongovernmental user, such user is deemed to be the issuer; such issuers to
the extent their principal business activities are in the same industry, are
also subject to investment restriction (2). For purposes of investment
restriction (2), public utilities are not deemed to be a single industry but are
separated by industrial categories, such as telephone or gas utilities.

The foregoing investment restrictions and those described in the SAI as
fundamental are policies of each Fund which may be changed with respect to that
Fund only when permitted by law and approved by the holders of a majority of the
applicable Fund's outstanding voting securities as described under "Other
Information -- Voting."

Additionally, as a non-fundamental policy, no Fund may invest more than
15% of the aggregate value of its net assets in investments which are illiquid,
or not readily marketable (including repurchase agreements having maturities of
more than seven calendar days and variable and floating rate demand and master
demand notes not requiring receipt of the principal note amount within seven
days' notice).

If a percentage restriction on investment policies or the investment or
use of assets set forth in this Prospectus are adhered to at the time a
transaction is effected, later changes in percentage resulting from changing
values will not be considered a violation.

<PAGE>
RISKS OF INVESTING IN THE FUNDS

The price per share of each of the Funds will fluctuate with changes in
the value of the investments held by the Fund. Shareholders of a Fund should
expect the value of their shares to fluctuate with changes in the value of the
securities owned by that Fund. There is, of course, no assurance that a Fund
will achieve its investment objective or be successful in preventing or
minimizing the risk of loss that is inherent in investing in particular types of
investment products. In order to attempt to minimize that risk, the Adviser
monitors developments in the economy, the securities markets, and with each
particular issuer. Also, as noted earlier, each Fund is managed within certain
limitations that restrict the amount of a Fund's investment in any single
issuer.

FOREIGN SECURITIES (Centura Equity Growth Fund and Centura Equity Income
Fund). Investing in the securities of issuers in any foreign country, including
ADRs, involves special risks and considerations not typically associated with
investing in securities of U.S. issuers. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political instability which
could affect U.S. investments in foreign countries. Additionally, foreign
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including taxes withheld from payments on those securities.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodial fees than apply to domestic custodial arrangements and transaction
costs of foreign currency conversions. Changes in foreign exchange rates also
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar. A Fund's objective may be affected either unfavorably or
favorably by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations and by
indigenous economic and political developments. A decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of a Fund's holdings of securities denominated in such currency
and, therefore, will cause an overall decline in the Fund's net asset value and
any net investment income and capital gains to be distributed in U.S. dollars to
shareholders of the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by several factors including the supply and demand for
particular currencies, central bank efforts to support particular currencies,
the movement of interest rates, the pace of business activity in certain other
countries and the United States, and other economic and financial conditions
affecting the world economy. Although a Fund may engage in forward foreign
currency transactions and foreign currency options to protect its portfolio
against fluctuations in currency exchange rates in relation to the U.S. dollar,
there is no assurance that these techniques will be successful. See "Description
of Securities and Investment Practices" and below for additional information
about these kinds of transactions.

Although the Funds value their assets daily in terms of U.S. dollars, the
Funds do not intend to convert their holdings of foreign currencies into U.S.
dollars on a daily basis. The Funds will do so from time to time, and investors
should be aware of the costs of currency conversion. Although foreign exchange
dealers do not charge a fee for conversion, they do realize a profit based on
the difference ("spread") between the prices at which they are

<PAGE>
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to sell that currency to the dealer.

Through the Funds' flexible policies, the Adviser endeavors to avoid
unfavorable consequences and to take advantage of favorable developments in
particular nations where, from time to time, it may place the Funds'
investments. See the SAI for information about foreign securities.

ZERO COUPON AND PAY-IN-KIND SECURITIES (Centura Equity Income Fund,
Centura Federal Securities Income Fund and Centura North Carolina Tax-Free Bond
Fund). Zero coupon bonds (which do not pay interest until maturity) and
pay-in-kind securities (which pay interest in the form of additional securities)
may be more speculative and may fluctuate more in value than securities which
pay income periodically and in cash. In addition, although a Fund receives no
periodic cash payments from such investments, applicable tax rules require the
Fund to accrue and pay out its income from such securities annually as income
dividends and require stockholders to pay tax on such dividends (except if such
dividends qualify as exempt-interest dividends).

NORTH CAROLINA MUNICIPAL OBLIGATIONS (Centura North Carolina Tax-Free
Bond Fund). Because this Fund will concentrate its investments in North Carolina
Municipal Obligations, it may be affected by political, economic or regulatory
factors that may impair the ability of North Carolina issuers to pay interest on
or to repay the principal of their debt obligations. Thus, the net asset value
of the shares may be particularly impacted by the general economic situation
within North Carolina. The concentration of the Fund's investments in a single
state may involve greater risk than if the Fund invested in Municipal
Obligations throughout the country, due to the possibility of an economic or
political development which could uniquely affect the ability of issuers to meet
the debt obligations of the securities.

The economy of North Carolina is supported by industry, agricultural
products, and tourism, with the largest segment of its work force employed in
manufacturing. From 1980 to 1993, the state's per capita income grew 133.8%,
from $7,999 to $18,702. The state has the nation's tenth highest population, and
its unemployment rate in March, 1995 was 3.9% of the labor force (versus a
national rate of 5.5%). The state's labor force grew 26.4% between 1980 and
1994, while its complexion shifted from agriculture to the production of goods
and services. In 1993, North Carolina nevertheless ranked tenth in the nation in
gross agricultural income. Although 20% of its agricultural income comes from
tobacco, 34% comes from a diversified poultry industry and the remainder from a
relatively large variety of other agricultural plant and animal products. North
Carolina is the third most diversified state in the country in terms of its
agriculture.

Obligations of issuers of North Carolina Municipal Obligations are
subject to the provisions of bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the Federal Bank Reform Act of 1978.
In addition, the obligations of such issuers may become subject to the laws
enacted in the future by Congress or the North Carolina legislature or by
referenda extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of such obligations or upon
municipalities to levy taxes. There is also the possibility that, as a result of
legislation or other conditions, the power or ability of any issuer to pay, when
due,

<PAGE>
the principal of and interest on its North Carolina Municipal Obligations may be
materially affected. Additional considerations relating to the risks of
investing in North Carolina Municipal Obligations are presented in the SAI.

MUNICIPAL LEASE OBLIGATIONS (Centura North Carolina Tax-Free Bond Fund).
Municipal lease obligations have special risks not normally associated with
municipal bonds. These obligations frequently contain "non-appropriation"
clauses that provide that the governmental issuer of the obligation has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purposes by the legislative body on a yearly or other
periodic basis. For more information on risks of municipal lease investments,
see the SAI.

RISKS OF OPTIONS TRANSACTIONS (All Funds). The purchase and writing of
options involves certain risks. During the option period, the covered call
writer has, in return for the premium on the option, given up the opportunity to
profit from a price increase in the underlying securities above the exercise
price, but, as long as its obligation as a writer continues, has retained the
risk of loss should the price of the underlying security decline. The writer of
an option has no control over the time when it may be required to fulfill its
obligation as a writer of the option. Once an option writer has received an
exercise notice, it cannot effect a closing purchase transaction in order to
terminate its obligation under the option and must deliver the underlying
securities at the exercise price. If a put or call option purchased by a Fund is
not sold when it has remaining value, and if the market price of the underlying
security, in the case of a put, remains equal to or greater than the exercise
price, or in the case of a call, remains less than or equal to the exercise
price, the Fund will lose its entire investment in the option. Also, where a put
or call option on a particular security is purchased to hedge against price
movements in a related security, the price of the put or call option may move
more or less than the price of the related security. There can be no assurance
that a liquid market will exist when a Fund seeks to close out an option
position. Furthermore, if trading restrictions or suspensions are imposed on the
options market, a Fund may be unable to close out a position. If a Fund cannot
effect a closing transaction, it will not be able to sell the underlying
security while the previously written option remains outstanding, even if it
might otherwise be advantageous to do so.

FOREIGN CURRENCY OPTIONS (Centura Equity Growth Fund and Centura Equity
Income Fund). Currency options traded on U.S. or other exchanges may be subject
to position limits which may limit the ability of a Fund to reduce foreign
currency risk using such options. Over-the-counter options differ from
exchange-traded options in that they are two-party contracts with price and
other terms negotiated between buyer and seller and generally do not have as
much market liquidity as exchange-traded options. Employing hedging strategies
with options on currencies does not eliminate fluctuations in the prices of
portfolio securities or prevent losses if the prices of such securities decline.
Furthermore, such hedging transactions reduce or preclude the opportunity for
gain if the value of the hedged currency should change relative to the U.S.
dollar. The Funds will not speculate in options on foreign currencies.

There is no assurance that a liquid secondary market will exist for any
particular foreign currency option, or at any particular time. In the event no
liquid secondary market exists. it might not be possible to effect closing
transactions in particular options. If a Fund cannot close out an option which
it holds, it would have to exercise its option in order to realize any profit
and would incur transactional costs on the sale of the underlying assets.

<PAGE>
RISKS OF FUTURES AND RELATED OPTIONS TRANSACTIONS (All Funds). There are
several risks associated with the use of futures contracts and options on
futures contracts. While a Fund's use of futures contracts and related options
for hedging may protect a Fund against adverse movements in the general level of
interest rates or securities prices, such transactions could also preclude the
opportunity to benefit from favorable movements in the level of interest rates
or securities prices. There can be no guarantee that the Adviser's forecasts
about market value, interest rates and other applicable factors will be correct
or that there will be a correlation between price movements in the hedging
vehicle and in the securities being hedged. The skills required to invest
successfully in futures and options may differ from the skills required to
manage other assets in a Fund's portfolio. An incorrect forecast or imperfect
correlation could result in a loss on both the hedged securities in a Fund and
the hedging vehicle so that the Fund's return might have been better had hedging
not been attempted.

There can be no assurance that a liquid market will exist at a time when
a Fund seeks to close out a futures contract or futures option position. Most
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single day; once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain of these instruments are relatively new
and without a significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist. Lack of a
liquid market for any reason may prevent the Fund from liquidating an
unfavorable position and the Fund would remain obligated to meet margin
requirements until the position is closed. The potential risk of loss to a Fund
from a futures transaction is unlimited. Therefore, although the Funds have
authority to engage in futures transactions, they have no present intention to
do so and will engage in such transactions only when disclosure to that effect
has been added to the Prospectus.

A Fund will only enter into futures contracts or futures options which
are standardized and traded on a U.S. or foreign exchange or board of trade, or
similar entity, or are quoted on an automated quotation system. A Fund will not
enter into a futures contract if immediately thereafter the initial margin
deposits for futures contracts held by the Fund plus premiums paid by it for
open futures options positions, less the amount by which any such positions are
"in-the-money," would exceed 5% of the Fund's total assets.

The Funds may trade futures contracts and options on futures contracts on
U.S. domestic markets and, for Centura Equity Growth Fund and Centura Equity
Income Fund, also on exchanges located outside of the United States. Foreign
markets may offer advantages such as trading in indices that are not currently
traded in the United States. Foreign markets, however, may have greater risk
potential than domestic markets. Unlike trading on domestic commodity exchanges,
trading on foreign commodity exchanges is not regulated by the Commodity Futures
Trading Commission and may be subject to greater risk than trading on domestic
exchanges. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and a trader may look only to the broker for
performance of the contract. In addition, any profits that the Fund might
realize in trading could be eliminated by adverse changes in the exchange rate
of the currency in which the transaction is denominated, or the Fund could incur
losses as a result of changes in the exchange rate. Transactions on foreign
exchanges may include both commodities that are traded on domestic exchanges or
boards of trade and those that are not.

<PAGE>
RISKS OF FORWARD FOREIGN CURRENCY CONTRACTS (Centura Equity Growth Fund
and Centura Equity Income Fund). The precise matching of forward contracts and
the value of the securities involved will not generally be possible since the
future value of the securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered into and the date it matures. Projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain. There can be no
assurance that new forward contracts or offsets will always be available to the
Funds.

MANAGEMENT OF THE FUNDS

The business and affairs of each Fund are managed under the direction of
the Board of Directors. The Directors are Leslie H. Garner, Jr., James H. Speed,
Jr., Frederick E. Turnage, Lucy Hancock Bode and J. Franklin Martin. Additional
information about the Directors, as well as the Company's executive officers,
may be found in the SAI under the heading "Management -- Directors and
Officers."

THE ADVISER: CENTURA BANK

Centura Bank, 131 North Church Street, Rocky Mount, North Carolina 27802,
is a member bank of the Federal Reserve System. Centura Bank and its parent,
Centura Banks, Inc., were formed in 1990 through a merger of two other Rocky
Mount, North Carolina bank holding companies and their subsidiary banks.

For the advisory services it provides the Funds, the Adviser receives
from each Fund fees, payable monthly based on average daily net assets, at an
annual rate based on the Fund's average net assets. Fees are 0.70% for Centura
Equity Growth Fund, 0.70% for Centura Equity Income Fund, 0.30% for Centura
Federal Securities Income Fund and 0.35% for Centura North Carolina Tax-Free
Bond Fund. The Adviser also serves as Custodian for the Funds' assets, for which
it receives additional fees. For the fiscal year ended April 30, 1996, the
Adviser received $802,888 in Advisory fees from the Equity Growth Fund and
$312,098 from the Federal Securities Income Fund. The advisory fees for the
North Carolina Tax-Free Bond Fund amounted to $138,274, however, the Adviser
waived $99,774.

Frank Jolley has primary responsibility for management of the Centura
Equity Income Fund and the Centura Equity Growth Fund. Mr. Jolley has over 17
years experience in investments and financial analysis. He graduated from the
University of North Carolina with a Bachelor of Science in business
administration. Mr. Jolley began his investment career with Dean Witter Reynolds
in retail sales and later served as a branch manager for a regional securities
firm. Primary duties at Centura have included the management of common and
collective funds along with personal trust and pension fund investment
responsibilities. In August 1996, Mr. Jolley was named Chief Investment Officer
of Centura's asset management area. As Chief Investment Officer, his duties
include oversight of all Centura's mutual funds. Mr. Jolley is a Chartered
Financial Analyst and a member of the North Carolina Society of Financial
Analysts where he currently serves as the Secretary and member of the Board.

<PAGE>
Robert D. Marsh serves as portfolio manager for Centura North Carolina
Tax-Free Bond Fund. He previously managed the North Carolina Tax-Free common
trust fund before the conversion to the Centura North Carolina Tax-Free Bond
Fund in June 1994. Mr. Marsh has over 34 years' experience in Trust investments,
portfolio management, and Trust administration. He graduated from Ball State
University with a Bachelor of Science degree in accounting. Mr. Marsh began his
Trust career at American National Bank and Trust Company in Indiana in Trust
administration and portfolio management. Mr. Marsh's other duties at Centura
Bank include the management of personal trust and pension account investment
responsibilities.

Lawrence R. Allen serves as portfolio manager for Centura Federal
Securities Income Fund. He previously managed the Federal Securities common
trust fund before the coversion to the Centura Federal Securities Income Fund in
June 1994. Mr. Allen has 3 years experience in investments and portfolio
management. He graduated from Campbell University with a Bachelor in Business
Administration and a Trust Management certificate. Mr. Allen began his
investment career with United Carolina Bank in Trust Investments. Mr. Allen's
other duties at Centura include the management of personal trust and pension
account investment responsibilities.

THE DISTRIBUTOR

Centura Funds Distributor, Inc., 230 Park Avenue, New York, New York
10169, acts as the Funds' Distributor. The Distributor is an affiliate of the
Funds' Administrator, Furman Selz LLC ("Furman Selz"), and was formed
specifically to distribute the Funds. For information concerning changes
regarding Furman Selz, see "The Administrator and Sponsor."

Each of the Funds has adopted a service and distribution plan ("Plan")
with respect to its Class A and Class B shares. The Plans provide that each
class of shares will pay the Distributor a fee calculated as a percentage of the
value of average daily net assets of that class as reimbursement for its costs
incurred in financing certain distribution and shareholder service activities
related to that class.

CLASS A PLANS. The Class A Plans provide for payments by each Fund to the
Distributor at an annual rate not to exceed 0.50% of the Fund's average net
assets attributable to its Class A shares. Such fee may include a Service Fee
totalling up to 0.25% of the average annual net assets attributable to a Fund's
Class A shares. Service Fees are paid to securities dealers and other financial
institutions for maintaining shareholder accounts and providing related services
to shareholders. The Distributor may also retain portions of the sales charges
paid on Class A shares. The Funds' limited 12b-1 fees for Class A shares to
0.25% during its past fiscal year and will continue to do so for its current
fiscal year. For the period year ended April 30, 1996, the Distributor received
$7,215, $888 and $5,259 for the Equity Growth Fund, the Federal Securities
Income Fund and the North Carolina Tax-Free Bond Fund, respectively, pursuant to
Class A Plans.

CLASS B PLANS. The Class B Plans provide for payments by each Fund to the
Distributor at an annual rate not to exceed 1.00% of the Fund's average net
assets attributable to its Class B shares. For the current fiscal year, the
Distributor has agreed to limit fees for Class B shares of Centura Federal
Securities Income Fund and Centura North Carolina Tax-Free Bond Fund to 0.75%.
Such fees may include a Service Fee totalling up to 0.25% of the

<PAGE>
average annual net assets attributable to a Fund's Class B shares. The
Distributor also receives the proceeds of any CDSC imposed on redemptions of
Class B shares.

Although Class B shares are sold without an initial sales charge, the
Distributor pays a sales commission equal to 4.00% of the amounts invested in
Centura Equity Growth Fund and Centura Equity Income Fund and 2.50% of the
amounts invested in each of the other Funds to securities dealers and other
financial institutions who sell Class B shares. The Distributor may, at times,
pay sales commissions higher than the above on sales of Class B shares. These
commissions are not paid on exchanges from other Funds and sales to investors
for whom the CDSC is waived. For the fiscal year ended April 30, 1996, the
Distributor received $33,942, $1,696 and $3,168 for the Equity Growth Fund, the
Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively, pursuant to Class B Plans.

Under each Plan, each Fund pays the Distributor and other securities
dealers and other financial institutions and organizations for certain
shareholder service or distribution activities. Subject to overall limits
applicable to each class, selling dealers may be paid amounts totalling up to
0.50% of the value of average daily net assets of Fund shares annually. Amounts
received by the Distributor may, additionally, subject to the Plan maximums, be
used to cover certain other costs and expenses related to the distribution of
Fund shares and provision of service to Fund shareholders, including: (a)
advertising by radio, television, newspapers, magazines, brochures, sales
literature, direct mail or any other form of advertising; (b) expenses of sales
employees or agents of the Distributor, including salary, commissions, travel
and related expenses; (c) costs of printing prospectuses and other materials to
be given or sent to prospective investors; and (d) such other similar services
as the Directors determine to be reasonably calculated to result in the sale of
shares of the Funds. Each Fund will pay all costs and expenses in connection
with the preparation, printing and distribution of the Prospectus to current
shareholders and the operation of its Plan(s), including related legal and
accounting fees. A Fund will not be liable for distribution expenditures made by
the Distributor in any given year in excess of the maximum amount payable under
a Plan for that Fund in that year.

SERVICE ORGANIZATIONS

Payments may be made by the Funds or by the Adviser to various banks,
trust companies, broker-dealers or other financial organizations (collectively,
"Service Organizations") for providing administrative services for the Funds and
their shareholders, such as maintaining shareholder records, answering
shareholder inquiries and forwarding materials and information to shareholders.
The Funds may pay fees to Service Organizations (which vary depending upon the
services provided) in amounts up to an annual rate of 0.25% of the daily net
asset value of the shares of either class owned by shareholders with whom the
Service Organization has a servicing relationship.

Some Service Organizations may impose additional or different conditions
on their clients, such as requiring clients to invest more than a Fund's minimum
initial or subsequent investments or charging a direct fee for servicing. If
imposed, these fees would be in addition to any amounts which might be paid to
the Service Organization by the Funds. Each Service Organization has agreed to
transmit to its clients a schedule of any such fees. Shareholders using Service
Organizations are urged to consult with them regarding any such fees or
conditions.

<PAGE>
The Glass-Steagall Act and other applicable laws provide that among other
things, banks may not engage in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either federal or state regulations relating
to the possible activities of banks and their subsidiaries or affiliates, could
prevent a bank Service Organization from continuing to perform all or a part of
its servicing activities. If a bank were prohibited from so acting, its
shareholder clients would be permitted to remain shareholders of the Funds and
alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

THE ADMINISTRATOR AND SPONSOR

Furman Selz LLC, 230 Park Avenue, New York, New York 10169, acts as
Sponsor and Administrator of the Funds. Furman Selz is primarily an
institutional brokerage firm with membership on the New York, American, Boston,
Midwest, Pacific and Philadelphia Stock Exchanges. Furman Selz also serves as
sponsor, administrator and distributor of other mutual funds. On June 28, 1996
Furman Selz and BISYS Group, Inc. ("BISYS") announced a definitive agreement
which provides for Furman Selz to transfer its mutual fund business to BISYS.
This transaction is expected to close on or about October 1, 1996. BISYS,
headquartered in Little Falls, New Jersey, supports more than 5,000 financial
institutions and corporate clients through two strategic business units. BISYS
Information Services Group provides image and data processing outsourcing, and
pricing analysis to more than 600 banks nationwide. BISYS Investment Services
Group designs, administers and distributes over 30 families of proprietary
mutual funds consisting of more than 365 portfolios, and provides 401(k)
marketing support, administration, and recordkeeping services in partnership
with banking institutions and investment management companies. At a meeting held
on July 24, 1996, the Directors reviewed and approved a new Administration
Agreement and Distribution Agreement with BISYS Fund Services Limited
Partnership d/b/a BISYS Fund Services, a new Transfer Agency Agreement and a
Fund Accouting Agreement with BISYS Fund Services, Inc. Both BISYS companies
have their principal place of business at 3435 Stelzer Road, Columbus, Ohio
43219. These new agreements are expected to take effect in the fall of 1996 at
which time the BISYS Companies will commence providing the services previously
provided by Furman Selz.

<PAGE>
was entitled to $59,260 but waived $42,761 in fees from the North Carolina
Tax-Free Bond Fund. Under separate agreements with the Company, Furman Selz also
acts as the Funds' transfer and dividend disbursing agent (for which it receives
a fee of $15 per account per year, plus out-of-pocket expenses) and provides
assistance in calculating the Funds' net asset values and provides other
accounting services for the Funds (for an annual fee of $30,000 per Fund plus
out-of-pocket expenses). For the fiscal year ended April 30, 1996, Furman Selz
earned $38,623, $7,326 and $6,452 in transfer agent fees for the Equity Growth
Fund, the Federal Securities Income Fund and the North Carolina Tax-Free Bond
Fund, respectively. Furman Selz also earned $32,848, $33,981 and $41,369 in fund
accounting fees for the Equity Growth Fund, the Federal Securities Income Fund
and the North Carolina Tax-Free Bond Fund, respectively, for the same period.

OTHER EXPENSES

Each Fund bears all costs of its operations other than expenses
specifically the responsibility of the Administrator, the Adviser or other
service providers. In addition to service providers described above, the costs
borne by the Funds, some of which may vary among the classes, as noted above,
include: legal and accounting expenses; Directors' fees and expenses; insurance
premiums; custodian and transfer agent fees and expenses; expenses incurred in
acquiring or disposing of the Funds' portfolio securities; expenses of
registering and qualifying the Funds' shares for sale with the SEC and with
various state securities commissions; expenses of maintaining the Funds' legal
existence and of shareholders' meetings; and expenses of preparing and
distributing reports, proxy statements and prospectuses to existing
shareholders. Each Fund bears its own expenses associated with its establishment
as a portfolio of the Company; these expenses are amortized over a five-year
period from the commencement of a Fund's operations. Company expenses directly
attributable to a Fund or class are charged to that Fund or class; other
expenses are allocated proportionately among all of the Funds and classes in the
Company in relation to the net assets of each Fund and class.

<PAGE>
PRICING OF FUND SHARES

CLASS A SHARES

Orders for the purchase of Class A shares will be executed at the net
asset value per share of that class next determined after an order has been
received, plus any applicable sales charge (the "public offering price"). The
sales charge on purchases of Class A shares of the Funds is as follows:

<TABLE>
<CAPTION>
AMOUNT
OF SALES CHARGE
REALLOWED
SALES CHARGE AS A PERCENTAGE TO DEALERS
OF AS A PERCENTAGE
PUBLIC NET AMOUNT OF PUBLIC
OFFERING PRICE INVESTED OFFERING PRICE*
<S> <C> <C> <C>
CLASS A SHARES -- Centura Equity
Growth Fund and Centura Equity
Income Fund
AMOUNT OF INVESTMENT
Less than $50,000 4.50% 4.71% 4.50%
$50,000 but less than $100,000 4.00% 4.17% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.50%
$250,000 but less than $500,000 2.50% 2.56% 2.50%
$500,000 but less than $1,000,000 1.50% 1.52% 1.50%
$1,000,000 and over 0.00%** 0.00%** (See below)
CLASS A SHARES -- Centura Federal
Securities Income Fund and Centura
North Carolina Municipal Bond Fund
AMOUNT OF INVESTMENT
Less than $50,000 2.75% 2.83% 2.75%
$50,000 but less than $100,000 2.50% 2.56% 2.50%
$100,000 but less than $250,000 2.25% 2.30% 2.50%
$250,000 but less than $500,000 1.75% 1.78% 1.75%
$500,000 but less than $1,000,000 1.00% 1.01% 1.00%
$1,000,000 and over 0.00%*** 0.00%*** (See below)
</TABLE>

* The staff of the Securities and Exchange Commission has indicated that
dealers who receive more than 90% of the sales charge may be considered
underwriters.
** A 1.00% CDSC will be assessed on shares redeemed within 18 months of
purchase (excluding shares purchased with reinvested dividends and/or
distributions).
*** A 0.75% CDSC will be assessed on shares redeemed within 18 months of
purchase (excluding shares purchased with reinvested dividends and/or
distributions).

<PAGE>
Although no sales charge is applied to purchases of $1,000,000 or more,
Centura Funds Distributor, Inc. may pay the following dealer concessions for
such purchases: for Centura Equity Growth Fund and Centura Equity Income Fund,
up to 1.00% on purchases of $1,000,000 to $1,999,999, plus an additional 0.75%
on amounts from $2,000,000 to $2,999,999, plus an additional 0.50% on amounts
from $3,000,000 to $9,999,999, plus an additional 0.25% for amounts of
$10,000,000 or more; for Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund, up to 0.75% on purchases of $1,000,000 to
$1,999,999, plus an additional 0.50% on amounts from $2,000,000 to $4,999,999,
plus an additional 0.25% on amounts of $5,000,000 or more.

The sales charge will not apply to purchases of Class A shares by: (a)
trust, investment management and other fiduciary accounts managed by the Adviser
pursuant to a written agreement; (b) any person purchasing shares with the
proceeds of a distribution from a trust, investment management or other
fiduciary account managed by the Adviser pursuant to a written agreement; (c)
Furman Selz or any of its affiliates; (d) Directors or officers of the Funds;
(e) directors or officers of Furman Selz or the Adviser, or affiliates or bona
fide full-time employees of any of the foregoing who have acted as such for not
less than 90 days (including members of their immediate families and their
retirement plans or accounts); or (f) retirement accounts or plans (or monies
from retirement accounts or plans) for which there is a written service
agreement between the Company and the plan sponsor, so long as such shares are
purchased through the Funds; or (g) any person purchasing shares within an
approved asset allocation program sponsored by a financial services
organization. The sales charge also does not apply to shares sold to
representatives of selling brokers and members of their immediate families. In
addition, the sales charge does not apply to sales to bank trust departments,
acting on behalf of one or more clients, of shares having an aggregate value
equal to or exceeding $200,000.

For purchases of $250,000 or more, the Funds believe that it is
preferable for an investor (other than an institutional investor eligible to
purchase Class C shares) to purchase Class A rather than Class B shares. This
belief is based on an assessment of the relative costs of the two classes,
including applicable sales charge or CDSC and Service and Distribution Fees.
Accordingly, the Funds have adopted guidelines directing authorized brokers,
investment advisers and Service Organizations that purchases of $250,000 or more
by their non-institutional clients should be of Class A shares. The Funds
reserve the right to vary these guidelines at any time.

CLASS B SHARES

The Funds offer their Class B shares at their net asset value next
determined after a purchase order has been received. No sales charge is imposed
at the time of purchase. A CDSC is, however, imposed on certain redemptions of
Class B shares. See "Redemption of Fund Shares" for more information on the
CDSC. On the seventh anniversary of their purchase date, Class B shares
automatically convert to Class A shares. See "Management of the Funds -- the
Distributor."

See "Dividends, Distributions and Federal Income Taxation," for an
explanation of circumstances in which a sales charge paid to acquire shares of a
mutual fund may not be taken into account in determining gain or loss on the
disposition of those shares.

<PAGE>
QUANTITY DISCOUNTS IN THE SALES CHARGES

RIGHT OF ACCUMULATION

The Funds permit sales charges on Class A shares to be reduced through
rights of accumulation. For Class A shares, the schedule of reduced sales
charges will be applicable once the accumulated value of the account has reached
$50,000. For this purpose, the dollar amount of the qualifying concurrent or
subsequent purchase is added to the net asset value of any other Class A shares
of those Funds in the Company owned at the time by the investor. The sales
charge imposed on the Class A shares being purchased will then be at the rate
applicable to the aggregate of Class A shares purchased. For example, if the
investor held Class A shares of these Funds valued at $100,000 and purchased an
additional $20,000 of shares of these Funds (totalling an investment of
$120,000), the sales charge for the $20,000 purchase would be at the next lower
sales charge on the schedule (i.e., the sales charge for purchases over $100,000
but less than $250,000). There can be no assurance that investors will receive
the cumulative discounts to which they may be entitled unless, at the time of
placing their purchase order, the investors, their dealers, or Service
Organizations make a written request for the discount. The cumulative discount
program may be amended or terminated at any time. This particular privilege does
not entitle the investor to any adjustment in the sales charge paid previously
on purchases of shares of the Funds. If the investor knows that he will be
making additional purchases of shares in the future, he may wish to consider
executing a Letter of Intent.

LETTER OF INTENT

The schedule of reduced sales charges is also available to Class A
investors who enter into a written Letter of Intent providing for the purchase,
within a 13-month period, of Class A shares of a particular Fund. Shares of such
Fund previously purchased during a 90-day period prior to the date of receipt by
the Fund of the Letter of Intent which are still owned by the shareholder may
also be included in determining the applicable reduction, provided the
shareholder, dealer, or Service Organization notifies the Fund of such prior
purchases.

A Letter of Intent permits an investor in Class A shares to establish a
total investment goal to be achieved by any number of investments over a
13-month period. Each investment made during the period will receive the reduced
sales commission applicable to the amount represented by the goal as if it were
a single investment. A number of shares totalling 5% of the dollar amount of the
Letter of Intent will be held in escrow by the Fund in the name of the
shareholder. The initial purchase under a Letter of Intent must be equal to at
least 5% of the stated investment goal.

The Letter of Intent does not obligate the investor to purchase, or a
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the 13-month period, the investor is required to pay the
difference between the sales charge otherwise applicable to the purchases made
during this period and sales charges actually paid. The Fund is authorized by
the shareholder to liquidate a sufficient number of escrowed shares to obtain
such difference. If the goal is exceeded and purchases pass the next sales
charge level, the sales charge on the entire amount of the purchase that results
in passing that level and on subsequent purchases will be subject to further

<PAGE>
reduced sales charges in the same manner as set forth under "Right of
Accumulation," but there will be no retroactive reduction of sales charges on
previous purchases. At any time while a Letter of Intent is in effect, a
shareholder may, by written notice to the Fund, increase the amount of the
stated goal. In that event, shares purchased during the previous 90-day period
and still owned by the shareholder will be included in determining the
applicable sales charge reduction. The 5% escrow and minimum purchase
requirements will be applicable to the new stated goal. Investors electing to
purchase Fund shares pursuant to a Letter of Intent should carefully read the
application for Letter of Intent which is available from the Fund.

MINIMUM PURCHASE REQUIREMENTS

The minimum initial investment in each of the Funds is $1,000, except
that the minimum investment required for an IRA or other qualified retirement
plan is $250. Any subsequent investments must be at least $250, except for an
IRA or qualified retirement plan investment. All initial investments should be
accompanied by a completed Purchase Application unless otherwise agreed upon
when purchases are made through an authorized securities dealer or financial
institution. A Purchase Application accompanies this Prospectus. However, a
separate application is required for IRA and other qualified retirement plan
investments. Centura North Carolina Tax-Free Bond Fund is not a recommended
investment for an IRA or other qualified retirement plan. The Funds reserve the
right to reject purchase orders.

PURCHASE OF FUND SHARES

All consideration received by the Funds for the purchase of shares is
invested in full and fractional shares of the indicated class of the appropriate
Fund. Certificates for shares are not issued. Furman Selz maintains records of
each shareholder's holdings of Fund shares, and each shareholder receives a
monthly statement of transactions, holdings and dividends.

An investment may be made using any of the following methods:

Through an Authorized Broker, Investment Adviser or Service Organization.
Shares are available to new and existing shareholders through authorized
brokers, investment advisers and Service Organizations. To make an investment
using this method, a Purchase Application must have been completed and the
customer must notify the broker, investment adviser or Service Organization of
the amount to be invested. The broker will then contact the Funds to place the
order.

Orders received by the broker or Service Organization in proper order
prior to the determination of net asset value and transmitted to the Funds prior
to the close of its business day (which is currently 5:00 p.m., Eastern time),
will become effective that day. Brokers who receive orders are obligated to
transmit them promptly. Written confirmation of an order should be received a
few days after the broker has placed the order.

<PAGE>
THROUGH THE FUNDS. Orders may be placed directly with the Funds. For an
initial investment, the investor should submit a completed Purchase Application
together with a check or other negotiable bank draft for at least $1,000 (or any
lower applicable minimum required for an initial investment) to:

Centura Funds
Grand Central Station
P.O. Box 4490
New York, New York 10163-4490

Subsequent investments may be made by sending a check or other negotiable
bank draft for at least $250 (or any lower applicable minimum for a subsequent
investment) to the same address. The investor's letter of instruction should
include: (a) the name of the Fund and class of shares to be purchased; and (b)
the account number.

If orders placed through the Fund's Distributor are paid for by check,
the order becomes effective on the day on which funds are made available with
respect to the check, which will be the same day of receipt of the check if the
check is received by 2:00 p.m., Eastern time. A customer who purchases Fund
shares through the Distributor by personal check will be permitted to redeem
those shares only after the purchase check has been collected, which may take up
to 15 days or more. Customers who anticipate the need for more immediate access
to their investment should purchase shares with federal funds. A customer
purchasing Fund shares through a Shareholder Servicing Agent should contact his
or her Shareholder Servicing Agent with respect to the ability to purchase
shares by check and the related procedures.

BY WIRE. Investments may be made directly through the use of wire
transfers of Federal funds. An investor's bank may wire Federal funds to the
applicable Fund. In most cases, the bank will either be a member of the Federal
Reserve Banking System or have a relationship with a bank that is. The bank will
normally charge a fee for handling the transaction. To purchase shares by a
Federal funds wire, investors should first contact the Funds' Client Services
Wire Desk which will establish a record of information for the wire to insure
the correct processing of funds. The Wire Desk may be called at 1-800-44CENTURA
(442-3688).

The investor's bank should wire funds using the following instructions:

Investors Fiduciary Trust Company
Kansas City, MO 64105
ABA#1010-0362-1
Account #751-300-3
Attn: Centura
Further Credit to: your account name and
account number

Investors who have read the Prospectus may establish a new regular
account through the Wire Desk; IRAs and other qualified retirement plan accounts
may not be opened in this way. When new accounts are established by wire, the
distribution options will be set to reinvest all dividends and the social
security or tax identification number

<PAGE>
("TIN") will not be certified until a signed application is received. Completed
applications should be forwarded immediately to the Funds. By using the Purchase
Application, an investor may specify other distribution options and may add any
special features offered by a Fund. Should any dividend distributions or
redemptions be paid before the TIN is certified, they will be subject to 31%
federal tax withholding.

INSTITUTIONAL ACCOUNTS. Bank trust departments and other institutional
accounts, not subject to sales charges, may place orders directly with the Funds
by telephone at 1-800-44CENTURA (442-3688).

AUTOMATIC INVESTMENT PROGRAM. An eligible shareholder may also
participate in the Centura Automatic Investment Program, an investment plan that
automatically debits money from the shareholder's bank account and invests it in
one or more of the Funds through the use of electronic funds transfers or
automatic bank drafts. No investment is required to initiate this Program.
Shareholders may elect to make investments by transfers of a minimum of $50 on
either the fifth or twentieth day of each month or calendar quarter into their
established Fund account. Contact the Funds for more information about the
Centura Automatic Investment Program.

BY PAYROLL DIRECT DEPOSITS. Investors may set up a payroll direct deposit
arrangement for amounts to be automatically invested in any of the Funds.
Participants in the Payroll Direct Deposit Program may make periodic investments
of at least $50 per pay period. Contact the Funds for more information about
Payroll Direct Deposits.

RETIREMENT PLAN ACCOUNTS

Each of the Funds may be used as a funding medium for IRAs and other
qualified retirement plans ("Retirement Plans"), except that Centura North
Carolina Tax-Free Bond Fund is not recommended for IRA or Retirement Plan
investments. The minimum initial investment for an IRA or a Retirement Plan is
$250, with no minimum for subsequent investments. An IRA may be established
through a custodial account with Investors Fiduciary Trust Company. Completion
of a special application is required in order to create such an account. A $5.00
establishment fee and an annual $12.00 maintenance and custody fee is payable
with respect to each IRA; in addition there will be charged a $10.00 termination
fee when the account is closed. Fund shares may also be purchased for IRAs and
Retirement Plans established with other authorized custodians. Contributions to
IRAs are subject to prevailing amount limits set by the Internal Revenue
Service. For more information about IRAs and other Retirement Plan accounts,
call the Funds at 1-800-44CENTURA (442-3688).

<PAGE>
EXCHANGE OF FUND SHARES

The Funds offer two convenient ways to exchange shares in one Fund for
shares of another Fund in the Company. Shares of a particular class of a Fund
may be exchanged only for shares of that same class in another Fund. Before
engaging in an exchange transaction, a shareholder should read carefully the
information in the Prospectus describing the Fund into which the exchange will
occur. A shareholder may not exchange shares of a class of one Fund for shares
of the same class of another Fund that is not qualified for sale in the state of
the shareholder's residence. There is no minimum for exchanges, provided the
investor has satisfied the $1,000 minimum investment requirement for the Fund
into which he or she is exchanging, and no service fee is imposed for an
exchange. The Company may terminate or amend the terms of the exchange privilege
at any time upon 60 days notice to shareholders.

A new account opened by exchange must be established with the same
name(s), address and social security number as the existing account. All
exchanges will be made based on the respective net asset values next determined
following receipt of the request by a Fund in good order.

In the case of transactions subject to a sales charge, the sales charge
will be assessed on an exchange of shares, equal to the excess of the sales load
applicable to the shares to be acquired, over the amount of any sales load
previously paid on the shares to be exchanged. No sales charge is assessed on an
exchange of Class A shares that have been held for more than two years. No
service fee is imposed on any exchange. See "Dividends, Distributions and
Federal Income Taxation" for an explanation of circumstances in which a sales
charge paid to acquire shares of the Funds may not be taken into account in
determining gain or loss on the disposition of those shares.

EXCHANGE BY MAIL. To exchange Fund shares by mail, shareholders should
simply send a letter of instruction to the Funds. The letter of instruction must
include: (a) the investor's account number; (b) the class of shares to be
exchanged; (c) the Fund from and the Fund into which the exchange is to be made;
(d) the dollar or share amount to be exchanged; and (e) the signatures of all
registered owners or authorized parties.

EXCHANGE BY TELEPHONE. To exchange Fund shares by telephone or to ask any
questions, shareholders may call the Fund at 1-800-44CENTURA (442-3688). Please
be prepared to give the telephone representative the following information: (a)
the account number, social security number and account registration; (b) the
class of shares to be exchanged; (c) the name of the Fund from which and the
Fund into which the exchange is to be made; and (d) the dollar or share amount
to be exchanged. Telephone exchanges are provided automatically to each
shareholder unless otherwise specifically indicated on the Purchase Application.
The Funds employ procedures, including recording telephone calls, testing
caller's identity, and sending written confirmation of telephone transactions,
designed to give reasonable assurance that instructions communicated by
telephone are genuine, and to discourage fraud. To the extent that a Fund does
not follow such procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. A Fund will not be liable for acting upon
instructions communicated by telephone that it

<PAGE>
reasonably believes to be genuine. The Funds reserve the right to suspend or
terminate the privilege of exchanging by mail or by telephone at any time.

REDEMPTION OF FUND SHARES

Shareholders may redeem their shares, in whole or in part on any business
day. If a shareholder holds shares in more than one class of a Fund, any request
for redemption must specify the class from which shares are to be redeemed. In
the event a shareholder fails to make such a specification or if there are
insufficient shares of the specified class to satisfy the redemption order, the
redemption order will be delayed until the Fund's transfer agent receives
further instructions from the shareholder.

Class A and Class B shares will be redeemed at the net asset value next
determined after a redemption request in good order has been received by the
applicable Fund, provided that for Class B shares, redemption proceeds will be
reduced by any applicable CDSC. A CDSC payable to the Distributor is imposed on
any redemption of Class B shares that causes the current value of a Class B
shareholder's account to fall below the dollar amount of all payments by the
shareholder for the purchase of Class B shares ("purchase payments") during the
preceding five years. No charge is imposed to the extent the net asset value of
the Class B shares to be redeemed does not exceed (a) the current net asset
value of the Class B shares purchased through the reinvestment of dividends or
capital gains distributions, plus (b) increases in the net asset value of the
shareholder's Class B shares above the purchase payments made during the
preceding five years.

In circumstances in which the CDSC is imposed, the amount of the charge
will depend on the number of years since the shareholder made the purchase
payment from which the amount is being redeemed. With respect to Class B share
redemptions only, the purchase payment from which a redemption is made is
assumed to be the earliest purchase payment from which a full redemption has not
already been effected. Solely for purposes of determining the number of years
since a purchase payment, all purchase payments during a month will be
aggregated and deemed to have been made on the last day of the preceding month.
The following table sets forth the rates of the charge for redemptions of Class
B shares of each Fund.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
CENTURA FEDERAL SECURITIES
CENTURA EQUITY INCOME FUND AND CENTURA NORTH
YEARS SINCE PURCHASE GROWTH FUND CAROLINA TAX-FREE BOND FUND
<S> <C> <C>
1 5.0% 3.0%
2 4.0% 3.0%
3 3.0% 3.0%
4 2.0% 2.0%
5 1.0% 1.0%
6 0% 0%
</TABLE>

Following the seventh anniversary of their purchase date, Class B shares
will convert automatically to Class A shares and thereafter will be subject to
the lower service and distribution plan fees applicable to Class A shares. See
"Management of the Funds -- The Distributor."

<PAGE>
WAIVERS OF CDSC. The Class B CDSC will be waived on (a) involuntary
redemptions; and (b) redemptions of shares in connection with a combination of
any investment company with the Company or a Fund by merger, acquisition of
assets or otherwise. The CDSC will also be waived for the classes of investors
for which the initial sales charge is waived on purchases of Class A shares.
(See "Pricing of Fund Shares -- Class A Shares.")

Where the shares of any class to be redeemed have been purchased by
check, the redemption request will be held until the purchasing check has
cleared, which may take up to 15 days. Shareholders may avoid this delay by
investing through wire transfers of Federal funds. During the period prior to
the time the shares are redeemed, dividends on the shares will continue to
accrue and be payable and the shareholder will be entitled to exercise all other
beneficial rights of ownership.

Once the shares are redeemed, a Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment, although this will not
be the customary practice. Also, if the New York Stock Exchange is closed (or
when trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Funds may suspend redemptions or postpone payment dates. A
redemption may be a taxable transaction on which gain or loss may be recognized.

REDEMPTION METHODS. To ensure acceptance of a redemption request, it is
important that shareholders follow the procedures described below. Although the
Funds have no present intention to do so, the Funds reserve the right to refuse
or to limit the frequency of any telephone or wire redemptions. Of course, it
may be difficult to place orders by telephone during periods of severe market or
economic change, and a shareholder should consider alternative methods of
communications, such as couriers. The Funds' services and their provisions may
be modified or terminated at any time by the Funds. If the Funds terminate any
particular service, they will do so only after giving written notice to
shareholders. Redemption by mail will always be available to shareholders.

A shareholder may redeem shares using any of the following methods:

THROUGH AN AUTHORIZED BROKER, INVESTMENT ADVISER OR SERVICE ORGANIZATION.
The shareholder should contact his or her broker, investment adviser or Service
Organization and provide instructions to redeem shares. Such organizations are
responsible for prompt transmission of orders. The broker will contact the Funds
and place a redemption trade. The broker may charge a fee for this service.

BY MAIL. Shareholders may redeem shares by sending a letter directly to
the Funds. To be accepted, a letter requesting redemption must include: (a) the
Fund name, class of shares and account registration from which shares are being
redeemed; (b) the account number; (c) the amount to be redeemed; (d) the
signatures of all registered owners; and (e) a signature guarantee by any
eligible guarantor institution including members of national securities
exchanges, commercial banks or trust companies, broker-dealers, credit unions
and savings associations. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.

<PAGE>
BY TELEPHONE. Shareholders may redeem shares by calling the Funds toll
free at 1-800-44CENTURA (442-3688). Be prepared to give the telephone
representative the following information: (a) the account number, social
security number and account registration; (b) the name of the class and the Fund
from which shares are being redeemed; and (c) the amount to be redeemed.
Telephone redemptions are available unless otherwise indicated on the Purchase
Application or on the Optional Services Form. The Funds employ procedures,
including recording telephone calls, testing a caller's identity, and sending
written confirmation of telephone transactions, designed to give reasonable
assurance that instructions communicated by telephone are genuine, and to
discourage fraud. To the extent that a Fund does not follow such procedures, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions. A Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.

BY WIRE. Shareholders may redeem shares by contacting the Funds by mail
or telephone and instructing the Funds to send a wire transmission to the
shareholder's bank.

The shareholder's instructions should include: (a) the account number,
social security number and account registration; (b) the name of the class and
the Fund from which shares are being redeemed; and (c) the amount to be
redeemed. Wire redemptions can be made unless otherwise indicated on the
shareholder's Purchase Application, and a copy is attached of a void check on an
account where proceeds are to be wired. The bank may charge a fee for receiving
a wire payment on behalf of its customer.

SYSTEMATIC WITHDRAWAL PLAN. An owner of $12,000 or more of shares of a
Fund may elect to have periodic redemptions made from his account to be paid on
a monthly, quarterly, semiannual or annual basis. No CDSC will be imposed on
redemptions of Class B shares pursuant to a systematic withdrawal plan. The
maximum withdrawal per year is 12% of the account value at the time of the
election. A sufficient number of shares to make the scheduled redemption will
normally be redeemed on the date selected by the shareholder. Depending on the
size of the payment requested and fluctuation in the net asset value, if any, of
the shares redeemed, redemptions for the purpose of making such payments may
reduce or even exhaust the account. A shareholder may request that these
payments be sent to a predesignated bank or other designated party. Capital
gains and dividend distributions paid to the account will automatically be
reinvested at net asset value on the distribution payment date.

REINSTATEMENT PRIVILEGE. A shareholder who has redeemed Class A shares on
which a sales charge was paid may reinvest, without a sales charge, up to the
full amount of such redemption at the net asset value determined at the time of
the reinvestment within 30 days of the original redemption. This privilege is
not applicable with respect to any CDSC imposed on redemptions of Class B
shares. The shareholder must reinvest in the same Fund, same class, and the same
account from which the shares were redeemed. A redemption is a taxable
transaction and gain may be recognized for federal income tax purposes even if
the reinstatement privilege is exercised. Any loss realized upon the redemption
will not be recognized as to the number of shares acquired by reinstatement,
except through an adjustment in the tax basis of the shares so acquired. See
"Dividends, Distributions and Federal Income Taxation" for an explanation of
circumstances in which a sales charge paid to acquire shares of a Fund may not
be taken into account in determining gain or loss on the disposition of those
shares.

<PAGE>
REDEMPTION OF SMALL ACCOUNTS. Due to the disproportionately higher cost
of servicing small accounts, the Funds reserve the right to redeem on not less
than 30 days' notice, an account in a Fund that has been reduced by a
shareholder (not by market action) to $1,000 or less. No CDSC will be imposed on
Class B shares so redeemed. Moreover, if during the 30-day notice period the
shareholder purchases sufficient shares to bring the value of the account above
$1,000, the account will not be redeemed.

REDEMPTION IN KIND. All redemptions of shares of the Funds shall be made
in cash, except that the commitment to redeem shares in cash extends only to
redemption requests made by each shareholder of a Fund during any 90-day period
of up to the lesser of $250,000 or 1% of the net asset value of the Fund at the
beginning of such period. This commitment is irrevocable without the prior
approval of the SEC. In the case of redemption requests by shareholders in
excess of such amounts, the Board of Directors reserves the right to have a Fund
make payment, in whole or in part, in securities or other assets, in case of an
emergency or any time a cash distribution would impair the liquidity of the Fund
to the detriment of the existing shareholders. In this event, the securities
would be valued generally in the same manner as the securities of that Fund are
valued generally. The value of securities payable in kind for a redemption of
Class B shares would reflect the deduction of any applicable CDSC. If the
recipient were to sell such securities. he or she would incur brokerage charges.

SIGNATURE GUARANTEES. To protect shareholder accounts, the Funds and the
Administrator from fraud, signature guarantees are required to enable the Funds
to verify the identity of the person who has authorized a redemption by mail
from an account. Signature guarantees are required for (1) redemptions where the
proceeds are to be sent to someone other than the registered shareholder(s) and
the registered address, (2) a redemption of $25,000 or more, and (3) share
transfer requests. Signature guarantees may be obtained from certain eligible
financial institutions, including but not limited to, the following: banks,
trust companies, credit unions, securities brokers and dealers, savings and loan
associations and participants in the Securities and Transfer Association
Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or
the New York Stock Exchange Medallion Signature Program ("MSP"). Shareholders
may contact the Funds at 1-800-442-3688 for further details.

PORTFOLIO TRANSACTIONS

Pursuant to the Investment Advisory Agreement the Adviser places orders
for the purchase and sale of portfolio investments for the Funds' accounts with
brokers or dealers it selects in its discretion.

In effecting purchases and sales of portfolio securities for the account
of a Fund, the Adviser will seek the best execution of the Fund's orders.
Purchases and sales of portfolio debt securities for the Funds are generally
placed by the Adviser with primary market makers for these securities on a net
basis, without any brokerage commission being paid by the Funds. Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices. The Funds may
purchase securities during an underwriting, which will include an underwriting
fee paid to the underwriter. Purchases and sales of common stocks are generally
placed by the Adviser with broker-dealers which, in the judgment of the Adviser,
provide prompt and reliable execution at favorable security prices and
reasonable commission rates. Broker-dealers are selected on the basis of a
variety of factors such as reputation, capital strength, size and difficulty of
order, sale

<PAGE>
of Fund shares and research provided to the Adviser. The Adviser may cause a
Fund to pay commissions higher than another broker-dealer would have charged if
the Adviser believes the commission paid is reasonable in relation to the value
of the brokerage and research services received by the Adviser.

Each of the Funds may buy and sell securities to take advantage of
investment opportunities when such transactions are consistent with a Fund's
investment objectives and policies and when the Adviser believes such
transactions may improve a Fund's overall investment return. These transactions
involve costs in the form of spreads or brokerage commissions. The Funds are not
normally expected to have portfolio turnover rates in excess of 50%.

FUND SHARE VALUATION

The net asset value per share for each class of shares of each Fund is
calculated at 4:15 pm. (Eastern time), Monday through Friday, on each day the
New York Stock Exchange is open for trading, which excludes the following
business holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The net asset value per share of each class of shares of the
Funds is computed by dividing the value of net assets of each class (i.e., the
value of the assets less the liabilities) by the total number of such class's
outstanding shares. All expenses, including fees paid to the Adviser and
Administrator, are accrued daily and taken into account for the purpose of
determining the net asset value.

Securities listed on an exchange are valued on the basis of the last sale
prior to the time the valuation is made. If there has been no sale since the
immediately previous valuation, then the current bid price is used. Quotations
are taken for the exchange where the security is primarily traded. Portfolio
securities which are primarily traded on foreign exchanges may be valued with
the assistance of a pricing service and are generally valued at the preceding
closing values of such securities on their respective exchanges, except that
when an occurrence subsequent to the time a foreign security is valued is likely
to have changed such value, then the fair value of those securities will be
determined by consideration of other factors by or under the direction of the
Board of Directors. Over-the-counter securities are valued on the basis of the
bid price at the close of business on each business day. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or at the direction of the Board of Directors.
Notwithstanding the above, bonds and other fixed-income securities are valued by
using market quotations and may be valued on the basis of prices provided by a
pricing service approved by the Board of Directors. All assets and liabilities
initially expressed in foreign currencies will be converted into U.S. dollars at
the mean between the bid and asked prices of such currencies against U.S.
dollars as last quoted by any major bank.

<PAGE>
DIVIDENDS, DISTRIBUTIONS, AND FEDERAL INCOME TAXATION

Each Fund intends to qualify annually to elect to be treated as a
regulated investment company pursuant to the provisions of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To qualify, each Fund
must meet certain income, distribution and diversification requirements. In any
year in which a Fund qualifies as a regulated investment company and timely
distributes all of its taxable income and substantially all of its net tax-
exempt interest income, the Fund generally will not pay any U.S. federal income
or excise tax.

Each Fund intends to distribute to its shareholders substantially all of
its investment company taxable income (which includes, among other items,
dividends and interest and the excess, if any, of net short-term capital gains
over net long-term capital losses). Investment company taxable income (other
than the capital gain component thereof) will be declared and paid monthly by
Centura Equity Growth Fund and Centura Equity Income Fund. Centura Federal
Securities Income Fund and Centura North Carolina Tax-Free Bond Fund will
declare dividends daily and pay them out monthly. Each Fund intends to
distribute, at least annually, substantially all net realized long- and
short-term capital gain. In determining amounts of capital gains to be
distributed, any capital loss carryovers from prior years will be applied
against capital gains.

In the case of Centura Federal Securities Income Fund and Centura North
Carolina Tax-Free Bond Fund, the amount declared each day as a dividend may be
based on projections of estimated monthly net investment income and may differ
from the actual investment income determined in accordance with generally
accepted accounting principles. An adjustment will be made to the dividend each
month to account for any difference between the projected and actual monthly
investment income.

Distributions will be paid in additional Fund shares of the relevant
class based on the net asset value of shares of that class at the close of
business of the payment date of the distribution, unless the shareholder elects
in writing, not less than five full business days prior to the record date, to
receive such distributions in cash. Dividends declared in, and attributable to,
the preceding month will be paid within five business days after the end of each
month. In the case of the Funds that declare daily dividends, shares purchased
will begin earning dividends on the day after the purchase order is executed,
and shares redeemed will earn dividends through the day the redemption is
executed. Investors who redeem all or a portion of their Fund shares prior to a
dividend payment date will be entitled on the next payment date to all dividends
declared but unpaid on those shares at the time of their redemption.

Any dividend or other distribution paid by a Fund has the effect of
reducing the net asset value per share on the record date by the amount thereof.
Therefore, in the case of Centura Equity Growth Fund, which does not declare
dividends daily, a dividend or other distribution paid shortly after a purchase
of shares would represent, in substance, a return of capital to the shareholder
(to the extent it is paid on the shares so purchased), even though subject to
income taxes, as discussed below.

<PAGE>
not designated by the Fund as exempt-interest dividends will, however, generally
be subject to federal, state and local tax. The Fund's investment policies
permit it to earn income which cannot be designated as exempt-interest
dividends.

Distributions of investment company taxable income (regardless of whether
derived from dividends, interest or short-term capital gains) will be taxable to
shareholders as ordinary income. If a portion of the income of Centura Equity
Growth Fund or Centura Equity Income Fund consists of dividends paid by U.S.
corporations, a portion of the dividends paid by that Fund may qualify for the
deduction for dividends received by corporations. No portion of the dividends
paid by Centura Federal Securities Income Fund or Centura North Carolina
Tax-Free Bond Fund is expected to so qualify. Distributions of net long-term
capital gains designated by a Fund as capital gain dividends will be taxable as
long-term capital gains, regardless of how long a shareholder has held his Fund
shares. Distributions are taxable in the same manner whether received in
additional shares or in cash.

A distribution, including an "exempt-interest dividend," will be treated
as paid on December 31 of the calendar year if it is declared by a Fund during
October, November, or December of that year to shareholders of record in such a
month and paid by the Fund during January of the following calendar year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.

Any gain or loss realized by a shareholder upon the sale or other
disposition of shares of a Fund, or upon receipt of a distribution in complete
liquidation of a Fund, generally will be a capital gain or loss which will be
long-term or short-term generally depending upon the shareholder's holding
period for the shares.

The timing of a shareholder's investment could have undesirable tax
consequences. If a shareholder opens a new account or buys more shares for his
or her current account just before the day a capital gain distribution is
reflected in the Fund's share price, the shareholder would receive a portion of
his or her investment back as a taxable capital gain distribution.

Shareholders should also be aware that redeeming shares of Centura North
Carolina Tax-Free Bond Fund after tax-exempt interest income has been accrued by
the Fund but before that income has been distributed as a dividend may be
disadvantageous. This is because the gain, if any, on the redemption will be
taxable, even though such gain may be attributable in part to the accrued
tax-exempt interest, which, if distributed to the shareholder as a dividend
rather than as redemption proceeds, might have qualified as an exempt-interest
dividend.

Under certain circumstances, the sales charge incurred in acquiring Class
A shares of a Fund may not be taken into account in determining the gain or loss
on the disposition of those shares. This rule applies when Class A shares of a
Fund are exchanged within 90 days after the date they were purchased and new
Class A shares of a Fund are acquired without a sales charge or at a reduced
sales charge. In that case, the gain or loss recognized on the exchange will be
determined by excluding from the tax basis of the Class A shares exchanged all
or a portion of the sales charge incurred in acquiring those shares. This
exclusion applies to the extent that the otherwise applicable sales charge with
respect to the newly acquired Class A shares is reduced as a result of having
incurred a sales

<PAGE>
charge initially. The portion of the sales charge affected by this rule will be
treated as a sales charge paid for the new Class A shares.

The Funds may be required to withhold federal income tax of 31% ("backup
withholding") of the distributions and the proceeds of redemptions payable to
shareholders who fail to provide a correct taxpayer identification number or to
make required certifications, or where a Fund or shareholder has been notified
by the Internal Revenue Service that the shareholder is subject to backup
withholding. Corporate shareholders and certain other shareholders specified in
the Code are exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against the shareholder's
U.S. federal income tax liability.

Further information relating to tax consequences is contained in the SAI.

Shareholders will be notified annually by the Company as to the federal
tax status of distributions made by the Fund(s) in which they invest. Depending
on the residence of the shareholder for tax purposes, distributions also may be
subject to state and local taxes, including withholding taxes. Foreign
shareholders may also be subject to special withholding requirements. Special
tax treatment including a penalty on certain pre-retirement distributions, is
accorded to accounts maintained as IRAs. With respect to Centura North Carolina
Tax-Free Bond Fund, North Carolina law exempts from income taxation dividends
received from a regulated investment company in proportion to the income of the
regulated investment company that is attributable to interest on bonds or
securities of the U.S. government or any agency or instrumentality thereof or on
bonds of the State of North Carolina or any county, municipality or political
subdivision thereof. Shareholders should consult their own tax advisers as to
the federal, state and local tax consequences of ownership of shares of the
Funds in their particular circumstances.

OTHER INFORMATION

CAPITALIZATION

Centura Funds, Inc. was organized as a Maryland corporation on March 1,
1994 and currently consists of four separately managed portfolios. The Board of
Directors may establish additional portfolios in the future. The capitalization
of the Company consists solely of six hundred million (600,000,000) shares of
common stock with a par value of $0.001 per share. When issued, shares of the
Funds are fully paid, non-assessable and freely transferable.

This Prospectus relates to Class A shares and Class B shares of the
Funds. Each Fund also offers Class C shares which are offered at net asset value
with no sales charge or CDSC only to accounts managed by the Adviser's Trust
Department. Because Class C shares are not subject to service and distribution
fees, their performance will typically differ from that of Class A or Class B
shares. Information about Class C shares may be obtained from your sales
representative or the Funds by calling (800) 442-3688.

<PAGE>
VOTING

Shareholders have the right to vote in the election of Directors and on
any and all matters on which, by law or under the provisions of the Company's
Articles of Incorporation, they may be entitled to vote. The Company is not
required to hold regular annual meetings of the Funds' shareholders and does not
intend to do so. Each Fund's shareholders vote separately on items affecting
only that Fund, and shareholders of each class within a Fund vote separately on
matters affecting only that class, such as the service and distribution plan for
that class.

The Articles of Incorporation provide that the holders of not less than
two-thirds of the outstanding shares of the Company may remove a person serving
as a Director either by a declaration in writing or at a meeting called for such
purpose. The Directors are required to call a meeting for the purpose of
considering the removal of a person serving as Director if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Company. See "Other Information-Voting Rights" in the SAI.

Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of a
majority of the outstanding shares" of a Fund, a class or the Company, as
applicable, means the vote of the lesser of: (1) 67% of the shares of the Fund
(a class or the Company) present at a meeting if the holders of more than 50% of
the outstanding shares are present in person or by proxy; or (2) more than 50%
of the outstanding shares of the Fund (a class or the Company).

PERFORMANCE INFORMATION

CENTURA BANK (CLASS C SHARES)
PERFORMANCE COMPARISONS (UNAUDITED)

<TABLE>
<CAPTION>
FOR THE PERIODS ENDED 6/30/96
FOR CALENDAR YEAR PERIODS 3 YEAR 5 YEAR CURRENT
1991 1992 1993 1994 1995 Y-T-D 12 MONTHS AVERAGE AVERAGE YIELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS:
Centura Equity Growth Fund 30.9% 16.5% 18.8% -8.3% 35.0% 9.7% 21.7% 14.5% 15.4% 0.5%
Centura Equity Income Fund 19.5% 11.3% 13.8% -2.6% 32.6% 8.7% 23.8% 14.5% 14.9% 2.7%
Standard & Poor's 500 30.5% 7.7% 10.0% 1.3% 37.5% 10.1% 25.9% 17.2% 15.7% --

FIXED INCOME FUNDS:
Centura Federal Securities Fund 12.0% 6.1% 6.9% -1.8% 13.5% -0.8% 4.2% 4.1% 6.3% 6.0%
Centura NC Tax-Free Bond Fund 5.3% 5.6% 8.0% -3.9% 12.5% -1.1% 4.4% 3.7% 5.2% 4.3%
U.S. Treasury Bills (3-Months) 6.2% 3.9% 2.7% 4.2% 4.9% 2.3% 4.8% 4.1% 3.8% --
Merrill Lynch Gov't. U.S. Treasury
Short-Term Index 11.7% 6.3% 5.4% 0.6% 12.9% 1.4% 5.5% 4.9% 6.3% --
Lehman Brothers 5 Year
Municipal Index 11.4% 7.6% 8.7% -1.3% 11.6% 0.6% 5.1% 4.7% 6.8% --
</TABLE>

<PAGE>
(1) The performance figures in this table relate to the Class C shares of the
Funds. The performance of Class A and Class B shares would be lower due to
certain distribution-related expenses borne by those classes.

(2) From 1/1/91 to 5/31/94 Centura Equity Growth Fund and Centura Federal
Securities Income Fund were bank collective trust funds maintained and
managed by Centura Bank and Centura North Carolina Tax-Free Bond Fund was a
common trust fund managed by Centura Bank. The information above regarding
Centura Equity Income Fund was for when that Fund was a bank common trust
fund maintained and managed by Centura Bank. The investment objectives and
policies of each fund prior to its conversion to a registered mutual fund
were substantially comparable to those of its successor registered mutual
fund.

(3) Investment performance for the Funds during their maintenance as common or
collective trust funds has been calculated on a monthly basis utilizing the
Bank Administration Institute's recommended time-weighted rate of return
method to compute the investment performance reflected in the above
Schedule.

The performance figures assume reinvestment of dividends and interest and
include the cost of brokerage commissions. The investment performance
excludes taxes an investor might have incurred as a result of taxable
ordinary income and capital gains realized by the accounts. Bank common and
collective trust funds are not subject to certain expenses normally incurred
by a mutual fund. Thus, the performance figures for periods prior to
conversion to registered funds have been adjusted, on a quarterly basis, to
reflect the impact of the estimated expense ratios for the registered funds
at the time of the conversion.

(4) The bank-maintained common and collective trust funds were managed with
substantially the same investment objectives and policies as the registered
mutual funds, but were not subject to all the same tax and regulatory
requirements applicable to mutual funds. These regulatory and tax
requirements could affect performance either positively or negatively.

(5) Each of the following indexes used in the above table is a widely recognized
index of market performance. The indexes are unmanaged and thus reflect no
management fees. They also do not reflect the transaction costs that would
be incurred by an investor to acquire the included securities. Because the
indexes used as Fixed Income Funds comparisons reflect shorter maturities
than the portfolios of the Centura fixed income funds in the illustration,
the indexes are less volatile than the trust funds.

Standard & Poor's 500 Composite Stock Price Index is an index of market
activity based on the aggregate performance of a selected portfolio of
publicly traded common stocks, including monthly adjustments to reflect the
reinvestment of dividends. The Index thus reflects the total return of its
portfolio. Including changes in market prices as well as accrued investment
income.

Merrill Lynch Government, U.S. Treasury Short-Term Index shows total return
for all outstanding U.S. Treasury securities maturing in from one to 2.99
years. Price, coupon and total return are reported using market weighted
value including accrued interest.

Lehman Brothers Municipal Bond Index is a total return performance index of
approximately 21,000 municipal bonds that meet certain criteria. Price,
coupon, and total return are reported using market weighted value including
accrued interest.

<PAGE>
When performance records are developed by the Funds, they may, from time
to time, include the yield and total return for shares (including each class, as
applicable) in advertisements or reports to shareholders or prospective
investors. The methods used to calculate the yield and total return of the Funds
are mandated by the SEC. In general, the performance of the classes of each Fund
will differ due to (a) differences in the level of class specific expenses,
including service and distribution fees and (b) the fact that total return
figures for Class A shares will reflect the deduction of the maximum front-end
sales charge applicable for each Fund while the total return figures for Class B
shares will reflect the maximum CDSC for each Fund. Performance figures for
Class C shares will reflect the absence of any service and distribution fee,
front-end sales charge or CDSC. Due to these differences in fees and/or expenses
borne by Class A, Class B and Class C shares, yield and total return on Class A
and Class B shares can be expected to be lower than the yield and total return
on Class C shares for the same period.

Quotations of "yield" will be based on the investment income per share
during a particular 30-day (or one month) period (including dividends and
interest), less expenses accrued during the period ("net investment income"),
and will be computed by dividing net investment income by the maximum public
offering price per share (for each class, as applicable) on the last day of the
period.

Quotations of yield reflect a Fund's (and its classes') performance only
during the particular period on which the calculations are based. Yields will
vary based on changes in market conditions, the level of interest rates and the
level of the Fund's expenses, including class-specific expenses, and no reported
performance figure should be considered an indication of performance which may
be expected in the future. Quotations of average annual total return will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in shares of a Fund (or class) over periods of 1, 5 and
10 years (up to the life of the Fund), reflect the deduction of a proportional
share of Fund and class-specific expenses, as applicable, on an annual basis,
and assume that all dividends and distributions are reinvested when paid.

Centura North Carolina Tax-Free Bond Fund may also advertise its "taxable
equivalent yield." Taxable equivalent yield is the yield that an investment,
subject to regular federal and North Carolina personal income taxes, would need
to earn in order to equal, on an after-tax basis, the yield on an investment
exempt from such taxes. A taxable equivalent yield quotation for the Fund will
be higher than the yield quotations for the Fund.

The following table shows how to translate the yield of an investment
that is exempt from regular federal and North Carolina personal income taxes
into a taxable equivalent yield for the 1996 taxable year. The last five columns
of the table show approximately how much a taxable investment would have to
yield in order to generate an after-tax (regular federal and North Carolina
personal income taxes) yield of 4%, 5%, 6%, 7% or 8%. For example, the table
shows that a married taxpayer filing a joint return with taxable income of
$80,000 would have to earn a yield of approximately 10.45% before regular
federal and North Carolina personal income taxes in order to earn a yield after
such taxes of 7%.

<PAGE>
1996 TAXABLE YEAR
TAXABLE EQUIVALENT YIELD TABLE (1) -- FEDERAL AND NORTH CAROLINA PERSONAL INCOME
TAXES

<TABLE>
<CAPTION>
TO EQUAL HYPOTHETICAL TAX-FREE YIELD OF
COMBINED 4%, 5%, 6%, 7% OR 8%, A TAXABLE INVESTMENT
TAXABLE INCOME (2) MARGINAL WOULD HAVE TO YIELD APPROXIMATELY
SINGLE RETURN JOINT RETURN RATE 4% 5% 6% 7% 8%
<S> <C> <C> <C> <C> <C> <C> <C>
up to $ 12,750 up to $ 21,250 20.10% 5.01% 6.26% 7.51% 8.76% 10.01%
$ 12,751-$ 24,000 $ 21,251-$ 40,100 20.95% 5.06% 6.33% 7.59% 8.86% 10.12%
$ 24,001-$ 58,150 $ 40,101-$ 96,900 33.04% 5.97% 7.47% 8.96% 10.45% 11.95%
$ 58,151-$ 60,000 $ 96,901-$100,000 35.83% 6.23% 7.79% 9.35% 10.91% 12.47%
$ 60,001-$121,300 $100,001-$147,700 36.35% 6.28% 7.86% 9.43% 11.00% 12.57%
$121,301-$263,750 $147,701-$263,750 40.96% 6.78% 8.47% 10.16% 11.86% 13.55%
$263,751 and over $263,751 and over 44.28% 7.18% 8.98% 10.77% 12.57% 14.36%
</TABLE>

(1) The chart is presented for information purposes only. Tax equivalent
yields are a useful tool in determining the desirability of a tax
exempt investment; tax equivalent yields should not be regarded as
determinative of the desirability of such an investment. In addition,
this chart is based on a number of assumptions which may not apply in
your case. You should, therefore, consult a competent tax adviser
regarding tax equivalent yields in your situation.
(2) Assuming the federal alternative minimum tax is not applicable.
(3) The combined marginal rates were calculated using federal and North
Carolina tax rate tables for the 1996 taxable year. The federal tax
rate tables are indexed each year to reflect changes in the Consumer
Price Index. The combined federal and North Carolina personal income
tax marginal rates assume the North Carolina personal income taxes are
fully deductible for federal income tax purposes as an itemized
deduction. However, the ability to deduct itemized deductions
(including state income taxes) for federal income tax purposes is
limited for those taxpayers whose federal adjusted gross income for
1996 exceeds $117,950 ($58,975 in the case of a married individual
filing a separate return). In addition, for federal income tax purposes
that tax benefit of personal exemptions is phased out for taxpayers
whose adjusted gross incomes exceed specified thresholds (for 1996,
$117,950 in the case of single individuals and $176,950 in the case of
married individuals filing a joint return).

Performance information for the Funds may be compared to various
unmanaged indices, such as the Standard & Poor's 500 Stock Index, the Dow Jones
Industrial Average, indices prepared by Lipper Analytical Services, and other
entities or organizations which track the performance of investment companies.
Any performance information should be considered in light of each Fund's
investment objectives and policies, characteristics and quality of the Fund and
the market conditions during the time period indicated, and should not be
considered to be representative of what may be achieved in the future. For a
description of the methods used to determine yield and total return for the
Funds, see the SAI.

<PAGE>
ACCOUNT SERVICES

All transactions in shares of the Funds will be reflected in a statement
for each shareholder. In those cases where a Service Organization or its nominee
is shareholder of record of shares purchased for its customer, the Funds have
been advised that the statement may be transmitted to the customer at the
discretion of the Service Organization.

Furman Selz provides fund accounting functions for the Funds, and
provides personnel and facilities to perform shareholder servicing and transfer
agency-related services for the Company.

SHAREHOLDER INQUIRIES

All shareholder inquiries should be directed to Centura Funds, Grand
Central Station, P.O. Box 4490, New York, New York 10163-4490.

General and Account Information: (800) 44CENTURA (442-3688).

<PAGE>
APPENDIX
DESCRIPTION OF BOND RATINGS

DESCRIPTION OF MOODY'S BOND RATINGS:

Excerpts from Moody's description of its bond ratings are listed as
follows: AAA -- judged to be the best quality and they carry the smallest degree
of investment risk; AA -- judged to be of high quality by all standards --
together with the Aaa group, they comprise what are generally known as high
grade bonds; A -- possess many favorable investment attributes and are to be
considered as "upper medium grade obligations;" BAA -- considered to be medium
grade obligations, i.e., they are neither highly protected nor poorly
secured -- interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; BA -- judged to
have speculative elements, their future cannot be considered as well assured;
B -- generally lack characteristics of the desirable investment; CAA -- are of
poor standing -- such issues may be in default or there may be present elements
of danger with respect to principal or interest; CA -- speculative in a high
degree, often in default; C -- lowest rated class of bonds, regarded as having
extremely poor prospects.

Moody's also supplies numerical indicators 1, 2 and 3 to rating
categories. The modifier 1 indicates that the security is in the higher end of
its rating category; the modifier 2 indicates a mid-range ranking; and modifier
3 indicates a ranking toward the lower end of the category.

DESCRIPTION OF S&P'S BOND RATINGS:

Excerpts from S&P's description of its bond ratings are listed as
follows: AAA -- highest grade obligations, in which capacity to pay interest and
repay principal is extremely strong: AA -- has a very strong capacity to pay
interest and repay principal, and differs from AAA issues only in a small
degree; A -- has a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories;
BBB -- regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories. This group is the lowest which qualifies for
commercial bank investment. BB, B, CCC, CC, C -- predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with terms
of the obligations; BB indicates the highest grade and C the lowest within the
speculative rating categories. D -- interest or principal payments are in
default.

S&P applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.

<PAGE>
DESCRIPTION OF MOODY'S RATINGS OF SHORT-TERM MUNICIPAL OBLIGATIONS:

Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity. Ratings categories for securities in these groups
are as follows: MIG 1/VMIG 1 -- denotes best quality, there is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing; MIG 2/VMIG 2 -- denotes high
quality, margins of protection are ample although not as large as in the
preceding group; MIG 3/VMIG 3 -- denotes high quality, all security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades; MIG 4/VMIG 4 -- denotes adequate quality, protection commonly regarded
as required of an investment security is present, but there is specific risk;
SQ -- denotes speculative quality, instruments in this category lack margins of
protection.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:

Excerpts from Moody's commercial paper ratings are listed as follows:
PRIME-1 -- issuers (or supporting institutions) have a superior ability for
repayment of senior short-term promissory obligations; PRIME-2 -- issuers (or
supporting institutions) have a strong ability for repayment of senior
short-term promissory obligations; PRIME-3 -- issuers (or supporting
institutions) have an acceptable ability for repayment of senior short-term
promissory obligations; Not Prime -- issuers do not fall within any of the Prime
categories.

DESCRIPTION OF S&P'S RATINGS FOR CORPORATE AND MUNICIPAL BONDS:

INVESTMENT GRADE RATINGS: AAA -- the highest rating assigned by S&P,
capacity to pay interest and repay principal is extremely strong; AA -- has a
very strong capacity to pay interest and repay principal and differs from the
highest rated issues only in a small degree; A -- has strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories; BBB -- regarded as having an adequate capacity to pay
interest and repay principal -- whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

SPECULATIVE GRADE RATINGS: BB, B, CCC, CC, C -- debt rated in these
categories is regarded as having predominantly speculative characteristics with
respect to capacity to pay interest and repay principal -- while such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions;
CI -- reserved for income bonds on which no interest is being paid; D -- in
default, and payment of interest and/or repayment of principal is in arrears.
PLUS (+) OR MINUS (-) -- the ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

<PAGE>
DESCRIPTION OF S&P'S RATING FOR MUNICIPAL NOTES AND SHORT-TERM MUNICIPAL DEMAND
OBLIGATIONS:

Rating categories are as follows: SP-1 -- has a very strong or strong
capacity to pay principal and interest -- those issues determined to possess
overwhelming safety characteristics will be given a plus (+) designation;
SP-2 -- has a satisfactory capacity to pay principal and interest;
SP-3 -- issues carrying this designation have a speculative capacity to pay
principal and interest.

DESCRIPTION OF S&P'S RATINGS FOR SHORT-TERM CORPORATE DEMAND OBLIGATIONS AND
COMMERCIAL PAPER:

An S&P commercial paper rating is a current assessment of the likelihood
of timely repayment of debt having an original maturity of no more than 365
days. Excerpts from S&P's description of its commercial paper ratings are listed
as follows: A-1 -- the degree of safety regarding timely payment is
strong -- those issues determined to possess extremely strong safety
characteristics will be denoted with a plus (+) designation; A-2 -- capacity for
timely payment is satisfactory -- however, the relative degree of safety is not
as high as for issues designated "A-1;" A-3 -- has adequate capacity for timely
payment -- however, is more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations; B -- regarded
as having only speculative capacity for timely payment; C -- a doubtful capacity
for payment; D -- in payment default -- the "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.

iii

<PAGE>
Address for:

GENERAL SHAREHOLDER INQUIRIES
Centura Funds, Inc.
P.O. Box 4490
Grand Central Station
New York, New York 10163-4490

INVESTMENT ADVISER AND CUSTODIAN
Centura Bank
131 North Church Street
Rocky Mount, North Carolina 27802

ADMINISTRATOR AND SPONSOR
Furman Selz LLC
230 Park Avenue
New York, New York 10169

DISTRIBUTOR
Centura Funds Distributor, Inc.
230 Park Avenue
New York, New York 10169

COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005

INDEPENDENT ACCOUNTANTS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017

CENTURA FUNDS, INC.
PROSPECTUS
CLASS A SHARES AND CLASS B SHARES

CENTURA BANK
ADVISER
FURMAN SELZ LLC
ADMINISTRATOR AND SPONSOR
CENTURA FUNDS DISTRIBUTOR, INC.
DISTRIBUTOR

CNPROSP

<PAGE>
CENTURA FUNDS, INC.
CLASS C SHARES

237 PARK AVENUE
NEW YORK, NEW YORK 10017
GENERAL AND ACCOUNT INFORMATION:
(800) 442-3688

CENTURA BANK -- ADVISER
FURMAN SELZ LLC -- ADMINISTRATOR AND SPONSOR
CENTURA FUNDS DISTRIBUTOR, INC -- DISTRIBUTOR

Centura Equity Growth Fund
Centura Equity Income Fund
Centura Federal Securities Income Fund
Centura North Carolina Tax-Free Bond Fund

This Prospectus relates to Class C shares which only certain investors
are eligible to purchase. Each Fund also has Class A shares and Class B shares.
(See "Other Information -- Capitalization.")

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION A PROSPECTIVE
INVESTOR SHOULD KNOW BEFORE INVESTING IN ANY OF THE FUNDS AND SHOULD BE READ AND
RETAINED FOR INFORMATION ABOUT EACH FUND.

The Date of this Prospectus is August 28, 1996.

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE

<S> <C>
HIGHLIGHTS.................................................................................................... 3

FUND EXPENSES................................................................................................. 5

FINANCIAL HIGHLIGHTS.......................................................................................... 7

THE FUNDS..................................................................................................... 9

DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES............................................................ 13

INVESTMENT RESTRICTIONS....................................................................................... 20

RISKS OF INVESTING IN THE FUNDS............................................................................... 21

MANAGEMENT OF THE FUNDS....................................................................................... 25

MINIMUM PURCHASE REQUIREMENTS................................................................................. 28

PRICING AND PURCHASE OF FUND SHARES........................................................................... 28

EXCHANGE OF FUND SHARES....................................................................................... 29

REDEMPTION OF FUND SHARES..................................................................................... 30

PORTFOLIO TRANSACTIONS........................................................................................ 32

FUND SHARE VALUATION.......................................................................................... 33

DIVIDENDS, DISTRIBUTIONS, AND FEDERAL INCOME TAXATION......................................................... 33

OTHER INFORMATION............................................................................................. 36

APPENDIX...................................................................................................... i
</TABLE>

<PAGE>
HIGHLIGHTS

THE FUNDS

This prospectus describes the four funds comprising Centura Funds, Inc.
(the "Company"). Each Fund has a distinct investment objective and policies, as
described below. The investment objective of each Fund is a fundamental policy
of the Fund and may not be changed without approval of the Fund's shareholders.
See "The Funds." The Funds and their investment objectives and policies are as
follows:

(Bullet) CENTURA EQUITY GROWTH FUND -- This Fund's objective is
long-term capital appreciation. It invests in a
diversified portfolio comprised mainly of publicly traded
common and preferred stocks and securities convertible
into or exchangeable for common stock. Although its
investments will be principally in securities of
U.S.-based companies; it may also invest in securities of
foreign issuers, generally in the form of American
Depositary Receipts ("ADRs").

(Bullet) CENTURA FEDERAL SECURITIES INCOME FUND -- This Fund seeks
to provide relatively high current income consistent with
relative stability of principal. The Fund invests
primarily in securities issued by the U.S. Government, its
agencies and instrumentalities. The maximum maturity of
any such security will be 10 years. Generally, at least
70% of the Fund's portfolio will consist of direct
obligations of the U.S. Treasury, with no more than 30% in
securities of U.S. Government agencies and
instrumentalities.

RISKS OF INVESTING IN THE FUNDS

<PAGE>
authority, which they do not presently intend to use, to invest in various types
of derivative instruments, which would entail special risks. Investors should be
aware that the value of each Fund's shares will fluctuate, which may cause a
loss in the principal value of the investment. See "Risks of Investing in the
Funds."

THE ADVISER

THE DISTRIBUTOR, ADMINISTRATOR AND SPONSOR

Centura Funds Distributor, Inc. (the "Distributor") distributes the
Funds' shares. Furman Selz LLC ("Furman Selz") acts as Sponsor and Administrator
to the Funds. For its services as Administrator, each Fund pays Furman Selz a
fee at the annual rate of 0.15% of its average daily net assets. Furman Selz
also acts as transfer agent and fund accounting agent for the Funds, for which
it receives additional fees. For information concerning changes regarding Furman
Selz, see "Management of the Funds -- The Administrator and Sponsor."

CLASSES OF SHARES

Class C shares are offered at net asset value with no sales charge, and
no contingent deferred sales charge ("CDSC") is imposed on redemptions. Class C
shares are available only to accounts managed by the Adviser's Trust Department.
See "Pricing and Purchase of Fund Shares" and "Redemption of Fund Shares." Each
of the Funds also offers Class A shares (subject to a front-end sales charge,
unless waived) and Class B shares (subject to a CDSC, unless waived). See "Other
Information -- Capitalization."

The Funds reserve the right to redeem upon not less than 30 days' notice
all shares in a Fund's account which have an aggregate value of $1,000 or less.

SEE "PRICING AND PURCHASE OF FUND SHARES," "REDEMPTION OF FUND SHARES"
AND "DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXATION" FOR MORE INFORMATION.

<PAGE>
FUND EXPENSES

The following expense table indicates costs and expenses that an investor
in Class C shares should anticipate incurring either directly or indirectly as a
shareholder in the Funds.

FEE TABLES*

<TABLE>
<CAPTION>
CENTURA CENTURA
CENTURA CENTURA FEDERAL NORTH CAROLINA
EQUITY EQUITY- SECURITIES TAX-FREE
GROWTH FUND INCOME FUND INCOME FUND BOND FUND
CLASS C CLASS C CLASS C CLASS C
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) None None None None
Maximum Sales Charge Imposed on Reinvested Dividends (as
a percentage of offering price) None None None None
Deferred Sales Charge (as a percentage of redemption
proceeds)** None None None None
Exchange Fees None None None None

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets annualized)
Management Fees (After Waiver)*** 0.70 0.36 0.30 0.10
12b-1 Fees (pursuant to voluntary cap)****
Other Expenses (After Waiver)*** 0.31 0.39 0.30 0.33
TOTAL PORTFOLIO OPERATING EXPENSES***** 1.01 0.75 0.60 0.43
</TABLE>

* Class A shares of each Fund are subject to a maximum 12b-1 fee of 0.50%
and a maximum front-end load of 4.50% for Centura Equity Growth Fund
and Centura Equity Income Fund, and 2.75% for each of the other Funds
(unless waived). Class B shares of each Fund are subject to a 12b-1 fee
of 1.00%, and a maximum contingent deferred sales charge ("CDSC") of
5.00% for Centura Equity Growth Fund and Centura Equity Income Fund,
and 3.00% for each of the other Funds (unless waived) for redemptions
within five years of purchase.
** Shareholders who redeem shares by wire may be charged a fee by the
banks receiving the wire payments on their behalf. (See "Redemption of
Fund Shares.")
*** Amounts shown for "Management Fees," "Other Expenses" and "Total
Portfolio Operating Expenses" for the Equity Income Fund and the North
Carolina Tax-Free Bond Fund reflect reductions of fees payable by those
Funds to the Adviser and for administrative and transfer agent services
pursuant to agreements to limit fund expenses. Without these
reductions, "Management Fees" for the Equity Income Fund and North
Carolina Tax-Free Bond Fund, respectively, would be 0.70% and 0.35%,
"Other Expenses" would be 0.46% and 0.44%, and "Total Portfolio
Operating Expenses" would be 1.16% and 0.79%.

<PAGE>
Example:*

An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
CENTURA CENTURA CENTURA
EQUITY EQUITY CENTURA FEDERAL NORTH CAROLINA
GROWTH FUND INCOME FUND SECURITIES FUND TAX-FREE FUND
CLASS C CLASS C CLASS C CLASS C
<S> <C> <C> <C> <C>
1 Year 10 8 6 4
3 Years 32 24 19 14
5 years 56 42 33 24
10 Years 124 93 75 54
</TABLE>

<PAGE>
FINANCIAL HIGHLIGHTS

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $10.70 $10.69 $10.70 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.03 (0.06) 0.07 0.06 0.03 0.07
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 3.67 3.65 3.65 0.70 0.69 0.70
Total from Investment Operations.................. 3.70 3.59 3.72 0.76 0.72 0.77
Less Distributions:
Dividends from Net Investment Income.............. (0.05) (0.00) (0.07) (0.06) (0.03) (0.07)
Distributions from Capital Gains.................. (0.04) (0.04) (0.04) -- -- --
Total Distributions............................... (0.09) (0.04) (0.11) (0.06) (0.03) (0.07)
Net Asset Value, End of Period...................... $14.31 $14.24 $14.31 $10.70 $10.69 $10.70
Total Return (not reflecting sales load)............ 34.72% 33.73% 34.97% 7.64% 7.23% 7.71%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $5,740 $6,194 $133,714 $968 $1,362 $84,004
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets**......... 1.26% 2.02% 1.04% 1.29% 2.03% 1.04%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 1.26% 2.02% 1.04% 1.32% 2.06% 1.07%
Ratio of Net Investment Income
to Average Net Assets**........................ 0.27% (0.48)% 0.55% 0.63% 0.00% 0.79%
Portfolio Turnover Rate............................. 46% 46% 46% 44% 44% 44%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

<PAGE>
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1996 1995*

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $9.97 $9.97 $9.97 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 0.04 0.04 0.04 (0.03) (0.03) (0.03)
Total from Investment Operations.................. 0.61 0.54 0.64 0.49 0.42 0.51
Less Distributions:
Dividends from Net Investment Income.............. (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Distributions from Capital Gains.................. -- -- -- -- -- --
Total Distributions............................... (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Net Asset Value, End of Period...................... $10.01 $10.01 $10.01 $9.97 $9.97 $9.97
Total Return (not reflecting sales load)............ 6.20% 5.40% 6.47% 5.02% 4.32% 5.28%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $526 $176 $109,775 $247 $118 $93,807
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets........... 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net Investment Income
to Average Net Assets**........................ 5.61% 4.84% 5.88% 5.58% 4.86% 5.97%
Portfolio Turnover Rate............................. 34% 34% 34% 42% 42% 42%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

<PAGE>
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
<S> <C> <C> <C> <C> <C> <C>
1996 1995*

<CAPTION>
CLASS CLASS
CLASS A CLASS B C CLASS A CLASS B C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $9.98 $9.98 $9.98 $10.00 $10.00 $10.00
Income from Investment Operations:
Net Investment Income/(Loss)...................... 0.42 0.34 0.44 0.39 0.32 0.41
Net Realized and Unrealized Gain/(Loss) on
Securities..................................... 0.13 0.13 0.13 (0.02) (0.02) (0.02)
Total from Investment Operations.................. 0.55 0.47 0.57 0.37 0.30 0.39
Less Distributions:
Dividends from Net Investment Income.............. (0.42) (0.34) (0.44) (0.39) (0.32) (0.41)
Distributions from Capital Gains.................. (0.07) (0.07) (0.07) -- -- --
Total Distributions............................... (0.49) (0.41) (0.51) (0.39) (0.32) (0.41)
Net Asset Value, End of Period...................... $10.04 $10.04 $10.04 $9.98 $9.98 $9.98
Total Return (not reflecting sales load)............ 5.50% 4.72% 5.78% 3.77% 3.09% 4.08%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $3,927 $393 $37,009 $429 $275 $34,885
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net Assets**......... 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratios of Expenses before Waivers/
Reimbursements to Average Net Assets**......... 1.04% 1.80% 0.80% 0.92% 1.49% 0.91%
Ratio of Net Investment Income
to Average Net Assets**........................ 3.98% 3.30% 4.32% 4.46% 3.89% 4.64%
Portfolio Turnover Rate............................. 80% 80% 80% 121% 121% 121%
</TABLE>

* Commencement of Operations June 1, 1994.
** Annualized

THE FUNDS

CENTURA EQUITY GROWTH FUND. Investors seeking long-term growth of capital
and for whom current income is not an objective should consider investing in
Centura Equity Growth Fund.

<PAGE>
portfolio and the Fund will invest primarily in stocks of established growth
companies that are undervalued relative to their industry or to their historical
valuation ranges. However, the Adviser may also invest in companies which it
believes have improving prospects whose equity securities are currently selling
below their estimated intrinsic value. In addition, out-of-favor growth
cyclicals may be used if the adviser anticipates a sustainable earnings recovery
for these companies. The Fund expects to invest primarily in securities of
U.S.-based companies, but it may also invest in securities of non-U.S.
companies, generally through American Depository Receipts ("ADRs"). Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
equity securities and convertible securities. However, the Fund may invest
without limit in debt instruments for temporary defensive purposes when the
Adviser has determined that abnormal market or economic conditions so warrant.
These debt obligations may include U.S. Government securities; certificates of
deposit, bankers' acceptances and other short-term debt obligations of banks
with total assets of at least $1,000,000,000; debt obligations of corporations
(corporate bonds, debentures, notes and other similar corporate debt
instruments); commercial paper; and repurchase agreements with respect to
securities in which the Fund is authorized to invest. Although the Fund's
investments in such debt securities and in convertible and preferred stock will
generally be rated A, A-1, or better by Standard & Poor's Corporation ("S&P") or
A, Prime-1 or better by Moody's Investors Service, Inc. ("Moody's"), or deemed
of comparable quality by the Adviser, the Fund is authorized to invest up to 15%
of its assets in securities rated as low as BBB by S&P or Baa by Moody's, or
deemed of comparable quality by the Adviser. Securities rated BBB or Baa, or
deemed equivalent to such securities, may have speculative characteristics. See
"Risks of Investing in the Funds." If any security held by the Fund is
downgraded below BBB/Baa (or so deemed by the Adviser), the securities will
generally be sold unless it is determined that such sale is not in the best
interest of the Fund. The Fund will invest in no securities rated below BBB or
Baa.

CENTURA EQUITY INCOME FUND. Investors seeking long-term growth and income
should consider an investment in Centura Equity Income Fund.

<PAGE>
CENTURA FEDERAL SECURITIES INCOME FUND. Investors seeking relatively high
current income from a portfolio of U.S. Government securities should consider
investing in Centura Federal Securities Income Fund.

The investment objective of Centura Federal Securities Income Fund is to
provide high current income consistent with relative stability of principal and
safety. It pursues this objective by investing primarily in securities issued by
the U.S. Government, its agencies and instrumentalities with maximum maturities
of ten years. These securities typically display greater price stability and
safety than debt securities of longer duration and lower quality, although the
latter generally offer higher income. In addition to limiting the maturity of
its portfolio securities, the Fund attempts to moderate principal fluctuations
by investing at least 70% of its portfolio in direct obligations of the U.S.
Treasury, with no more than 30% in securities of U.S. Government agencies and
instrumentalities, and by using a modified "laddering" approach to structuring
the Fund's portfolio -- i.e., by investing in securities with different
maturities and adjusting their relative proportions, as well as the maximum and
average maturity of its portfolio securities, to adapt to various market
conditions. Using this approach, the Fund hopes both to capture a high
proportion of the currently available yield on fixed income securities and to
limit volatility.

CENTURA NORTH CAROLINA TAX-FREE BOND FUND. Investors seeking dividend
income that is generally free of regular federal and North Carolina personal
income taxes should consider investing in the Centura North Carolina Tax-Free
Bond Fund.

The investment objective of Centura North Carolina Tax-Free Bond Fund is
relatively high current income that is free of both regular federal and North
Carolina income tax, together with relative safety of principal. This Fund
invests primarily in a portfolio of obligations issued by the state of North
Carolina, its political subdivisions, and their agencies and instrumentalities,
the income from which, in the opinion of the issuer's bond counsel, is exempt
from regular federal and North Carolina personal income taxes ("North Carolina
Municipal Obligations"). By limiting the Fund's average portfolio maturity to
between 5 and 10 years, with a maximum maturity for any portfolio security of 15
years, the Fund seeks to capture a high proportion of the currently available
return on North Carolina Municipal Obligations while providing greater safety of
principal than would be available from longer term municipal securities. It also
seeks to moderate price fluctuations by diversifying its investments among
different municipal issuers and by limiting its investments to securities of
high quality.

<PAGE>
up to 10% of its assets in municipal obligations subject to the federal
alternative minimum tax ("AMT Obligations"), and (c) to invest up to 20% of its
assets in AMT Obligations plus cash reserves and obligations producing taxable
income, including obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit, bankers' acceptances and other
short-term debt obligations of U.S banks with total assets of at least
$1,000,000,000; commercial paper rated A-1 or better by S&P or Prime-1 or better
by Moody's (or deemed by the Adviser to be of comparable quality); and
repurchase agreements relating to underlying securities in which the Fund is
authorized to invest. For temporary defensive purposes when the Adviser has
determined that abnormal market and economic conditions so warrant, the Fund may
invest up to 50% of its assets in investments producing taxable income and AMT
Obligations. Any distributions by the Fund of capital gains and other income
that are not designated by the Fund as "exempt-interest" dividend's will
normally be subject to federal, state and, in some cases, local tax. As a
fundamental policy, during periods of normal market conditions, at least 80% of
the Fund's net assets will be invested in securities the interest income from
which is exempt from the regular federal income tax. Additionally, under normal
circumstances, (a) at least 65% of the Funds total assists will be invested in
"bonds" -- i.e. debt obligations with a duration of at least one year from the
date of issue, and (b) at least 65% of the value of the Fund's total assets will
be invested in bonds that are North Carolina Municipal Obligations. Tax advisers
should be consulted regarding tax effects for particular investors.

The Fund's quality criteria require that ft Fund purchase Municipal
Obligations rated A, SP-1 or better by S&P or A, MIG-1 or better by Moody's;
commercial paper rated A-1 or better by S&P or Prime-1 or better by Moody's;
corporate debt securities rated A or better by S&P or Moody's (or debt
securities given equivalent ratings by at least two other nationally recognized
statistical rating organizations ("NRSROs")) or, if any of such securities are
not rated, that they be of comparable quality in the Adviser's opinion. For more
information on Municipal Obligations and North Carolina Municipal Obligations,
see "Description of Securities and Investment Practices" and "Risks of Investing
in the Funds."

OTHER INVESTMENT POLICIES OF THE FUNDS

Each of the Funds may also invest up to 5% of its total assets in another
investment company, not to exceed 10% of the value of its total assets in the
securities of other investment companies. Taxable distributions earned from
other investment companies will, likewise, represent taxable income to a Fund. A
Fund will incur additional expenses due to the duplication of expenses as a
result of investing in new funds other than the Funds. Each of the Funds has
authority, which it does not presently intend to exercise, to invest in futures
and options contracts and to lend its portfolio securities. For information
concerning these practices, see "Investment Policies" in the SAI.

<PAGE>
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES

U.S. Government agency and instrumentality obligations are debt
securities issued by U.S. Government-sponsored enterprises and Federal agencies.
Some obligations of agencies are supported by the full faith and credit of the
United States or by U.S. Treasury guarantees, such as mortgage-backed
certificates issued by the Government National Mortgage Association; others,
such as obligations of the Federal Home Loan Banks, Federal Farm Credit Bank,
Bank for Cooperatives, Federal Intermediate Credit Banks and the Federal Land
Bank, are guaranteed by the right of the issuer to borrow from the U.S.
Treasury; others, such as obligations of the Federal National Mortgage
Association, are supported by discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality; and others, such
as obligations of the Student Loan Marketing Association and the Tennessee
Valley Authority, are backed only by the credit of the agency or instrumentality
issuing the obligation. In the case of obligations not backed by the full faith
and credit of the United States, the investor must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment.

COMMERCIAL PAPER (All Funds). Commercial paper includes short-term
unsecured promissory notes, variable rate demand notes and variable rate master
demand notes issued by domestic and foreign bank holding companies, corporations
and financial institutions, as well as similar instruments issued by government
agencies and instrumentalities.

<PAGE>
or recognized financial institutions which in the opinion of the Adviser,
present minimal credit risks in accordance with guidelines adopted by the Board
of Directors. In the event of default by the seller under the repurchase
agreement a Fund may have problems in exercising its rights to the underlying
securities and may experience time delays in connection with the disposition of
such securities.

The Funds may also buy variable rate master demand notes. The terms of
few obligations permit a Fund to invest fluctuating amounts at varying rates of
interest pursuant to direct arrangements between the Fund, as lender, and the
borrower. These instruments permit weekly and, in some instances, daily changes
in the amounts borrowed. The Funds have the right to increase the amount under
the note at any time up to the full amount provided by the note agreement, or to
decrease the amount, and the borrower may repay up to the full amount of the
note without penalty. The notes may or may not be backed by bank letters of
credit. Because the notes are direct lending arrangements between the Fund and
borrower, it is not generally contemplated that they will be traded, and there
is no secondary market for them, although they are redeemable (and, thus,
immediately repayable by the borrower) at principal amount, plus accrued
interest, at any time. In connection with any such purchase and on an ongoing
basis, the Adviser will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal and interest on
demand, including a situation in which all holders of such notes make demand
simultaneously. While master demand notes, as such, are not typically rated by
credit rating agencies, a Fund may, under its minimum rating standards, invest
in them only if, at the time of an investment, the issuer meets the criteria set
forth in this Prospectus for commercial paper obligations.

<PAGE>
Fund holds, and maintains until the settlement date in a segregated account
cash, U.S. Government securities or high-grade debt obligations in an amount
sufficient to meet the purchase price, or if the Fund enters into offsetting
contracts for the forward sale of other securities it owns. Purchasing
securities on a when-issued basis and forward commitments involves a risk of
loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in addition to the risk of decline in value of a
Fund's other assets. No income accrues on securities purchased on a when-issued
basis prior to the time delivery of the securities is made, although a Fund may
earn interest on securities it has deposited in the segregated account because
it does not pay for the when-issued securities until they are delivered.
Investing in when-issued securities has the effect of (but is not the same as)
leveraging the Fund's assets. Although a Fund would generally purchase
securities on a when-issued basis or enter into forward commitments with the
intention of actually acquiring securities, that Fund May dispose of a
when-issued security or forward commitment prior to settlement if the Adviser
deems it appropriate to do so. A Fund may realize short-term profits or losses
upon such sales.

MORTGAGE-RELATED SECURITIES (Centura Equity Income Fund, Centura Federal
Securities Income Fund and Centura North Carolina Tax-Free Bond Fund). Mortgage
pass-through securities are securities representing interests in "pools" of
mortgages in which payments of both interest and principal on the securities are
made monthly, in effect "passing through" monthly payments made by the
individual borrowers on the residential mortgage loans which underlie the
securities (net of fees paid to the issuer or guarantor of the securities).
Centura North Carolina Tax-Free Bond Fund may invest only in those mortgage
pass-through securities whose payments are tax-exempt. Early repayment of
principal on mortgage pass-through securities (arising from prepayments of
principal due to sale of the underlying property, refinancing, or foreclosure,
net of fees and costs which may be incurred) may expose a Fund to a lower rate
of return upon reinvestment of principal. Also, if a security subject to
prepayment has been purchased at a premium, in the event of prepayment the value
of the premium would be lost. Like other fixed-income securities, when interest
rates rise, the value of a mortgage-related security generally will decline;
however, when interest rates decline, the value of mortgage-related securities
with prepayment features may not increase as much as other fixed-income
securities. In recognition of this prepayment risk to investors, the Public
Securities Association (the "PSA") has standardized the method of measuring the
rate of mortgage loan principal prepayments. The PSA formula, the Constant
Prepayment Rate (the "CPR"), or other similar models that are standard in the
industry will be used by a Fund in calculating maturity for purposes of its
investment in mortgage-related securities. Upward trends in interest rates tend
to lengthen the average life of mortgage-related activities and also cause the
value of outstanding securities to drop. Thus, during periods of rising interest
rates, the value of these securities held by a Fund would tend to drop and the
portfolio-weighted average life of the securities held by a Fund may tend to
lengthen due to this effect. Longer-term securities tend to experience more
price volatility. Under these circumstances, a Manager may, but is not required
to, sell securities in part in order to maintain an appropriate portfolio-
weighted average life.

<PAGE>
("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"), which are
supported only by the discretionary authority of the U.S. Government to purchase
the agency's obligations). Mortgage pass-through securities created by
nongovernmental issuers (such as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
secondary market issuers) may be supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance, and
letters of credit, which may be issued by governmental entities, private
insurers or the mortgage poolers.

A Fund may also invest in investment grade Collateralized Mortgage
Obligations ("CMOs") which are hybrid instruments with characteristics of both
mortgage-backed bonds and mortgage pass-through securities. Similar to a bond,
interest and prepaid principal on a CMO are paid, in most cases, semi-annually.
CMOs may be collateralized by whole mortgage loans but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
GNMA, FHLMC or FNMA. CMOs are structured into multiple classes, with each class
bearing a different stated maturity. Monthly payments of principal, including
prepayments, are first returned to investors holding the shortest maturity
class; investors holding longer maturity classes receive principal only after
the first class has been retired. CMOs may be issued by government and
non-governmental entities. Some CMOs are debt obligations of FHLMC issued in
multiple classes with different maturity dates secured by the pledge of a pool
of conventional mortgages purchased by FHLMC. Other types of CMOs are issued by
corporate issuers in several series, with the proceeds used to purchase
mortgages or mortgage pass-through certificates. With some CMOs, the issuer
serves as a conduit to allow loan originators (primarily builders or savings and
loan associations) to borrow against their loan portfolios. To the extent a
particular CMO is issued by an investment company, a Fund's ability to invest in
such CMOs will be limited. See "The Funds -- Other Investment Policies of the
Funds."

Assumptions generally accepted by the industry concerning the probability
of early payment may be used in the calculation of maturities for debt
securities that contain put or call provisions, sometimes resulting in a
calculated maturity different from the stated maturity of the security.

FOREIGN SECURITIES (Centura Equity Growth Fund and Centura Equity Income
Fund). The Funds may invest in securities represented by American Depositary
Receipts ("ADRs"). ADRs are dollar-denominated receipts generally issued by
domestic banks, which represent the deposit with the bank of a security of a
foreign issuer, and which are publicly traded on exchanges or over-the-counter
in the United States. There are certain risks associated with

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investments in unsponsored ADR programs. Because the non-U.S. company does not
actively participate in the creation of the ADR program, the underlying
agreement for service and payment will be between the depositary and the
shareholders. The company issuing the stock underlying the ADRs pays nothing to
establish the unsponsored facility, as fees for ADR issuance and cancellation
are paid by brokers. Investors directly bear the expenses associated with
certificate transfer, custody and dividend payment. In addition, in an
unsponsored ADR program, there may be several depositories with no defined legal
obligations to the non-U.S. company. The duplicate depositories may lead to
marketplace confusion because there would be no central source of information to
buyers, sellers and intermediaries. The efficiency of centralization gained in a
sponsored program can greatly reduce the delays in delivery of dividends and
annual reports. For more information, see "Risks of Investing in the Funds."

FUTURES CONTRACTS AND OPTIONS (All Funds). The Funds may purchase and
sell futures contracts on securities, currencies, and indices of securities, and
write and sell put and call options on securities, currencies and indices of
securities as a hedge against changes in interest rates, stock prices, currency
fluctuations and other market developments, provided that not more than 5% of a
Fund's net assets are committed to margin deposits on futures contracts and
premiums for options. See the SAI for information about futures and options. See
"Risks of Investing in the Funds" for a discussion of risks related to investing
in futures and options.

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revenues generated by a particular facility or group of facilities, or by the
proceeds of a special excise or other specific revenue source. Additional
security may be provided by a debt service reserve fund. Municipal bonds include
industrial development bonds ("IDBs"), moral obligation bonds, put bonds and
private activity bonds ("PABs"). PABs generally relate to the financing of a
facility used by a private entity or entities. The credit quality of such bonds
is usually directly related to that of the users of the facilities. The interest
on most PABs is an item of tax preference for purposes of the Federal
alternative minimum tax and Fund distributions attributable to such interest
likewise, constitute an item of tax preference. For information on the risks
related to the Fund's concentration in North Carolina Municipal Obligations, see
"Risks of Investing in the Funds."

MUNICIPAL LEASE OBLIGATIONS (Centura North Carolina Tax-Free Bond Fund).
The Fund may invest in municipal lease obligations including certificates of
participation ("COPs"), which finance a variety of public projects. Because of
the way these instruments are structured, they may carry a greater risk than
other types of Municipal Obligations. The Fund may invest in lease obligations
only when they are rated by a rating agency or, if unrated, are deemed by the
Adviser, to be of a quality comparable to the Fund's quality standards. With
respect to any such unrated municipal lease obligations in which the Fund
invests, the Company's Board of Directors will be responsible for determining
their credit quality, on an ongoing basis, including assessing the likelihood
that the lease will not be cancelled. Prior to purchasing a municipal lease
obligation and on a regular basis thereafter, the Adviser will evaluate the
credit quality and, pursuant to guidelines adopted by the Directors, the
liquidity of the security. In making its evaluation, the Adviser will consider
various credit factors, such as the necessity of the project, the municipality's
credit quality, future borrowing plans, and sources of revenue pledged for lease
repayment, general economic conditions in the region where the security is
issued, and liquidity factors, such as dealer activity. For discussion regarding
municipal lease obligations, see "Risks of Investing in the Funds" in this
Prospectus and "Investment Policies" in the SAI.

The Fund expects that stand-by commitments generally will be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund will pay for stand-by commitments either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitments.

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ordinarily be valued at such exercise price. Where the Fund has paid for a
stand-by commitment, its cost will be reflected as unrealized depreciation for
the period during which the commitment is held.

There is no assurance that stand-by commitments will be available to the
Fund nor does the Fund assume that such commitments would continue to be
available under all market conditions.

THIRD PARTY PUTS (Centura North Carolina Tax-Free Bond Fund). The Fund
may also purchase long-term fixed rate bonds that have been coupled with an
option granted by a third party financial institution allowing the Fund at
specified intervals to tender (or "put") the bonds to the institution and
receive the face value thereof (plus accrued interest). These third party puts
are available in several different forms, may be represented by custodial
receipts or trust certificates and may be combined with other features such as
interest rate swaps. The Fund receives a short-term rate of interest (which is
periodically reset), and the interest rate differential between that rate and
the fixed rate on the bond is retained by the financial institution. The
financial institution granting the option does not provide credit enhancement.
In the event that there is a default in the payment of principal or interest, or
downgrading of a bond to below investment grade, or a loss of the bond's
tax-exempt status, the put option will terminate automatically. The risk to the
Fund in this case will be that of holding a long-term bond which would tend to
lengthen the weighted average maturity of the Fund's portfolio.

PARTICIPATION INTERESTS (Centura North Carolina Tax-Free Bond Fund). The
Fund may purchase from banks participation interests in all or part of specific
holdings of Municipal Obligations. Each participation is backed by an
irrevocable letter of credit or guarantee of the selling bank that the Fund's
Adviser has determined meets the prescribed quality standards of theft Fund.
Thus either the credit of the issuer of the Municipal Obligation or the selling
bank, or both, will meet the quality standards of the Fund. The Fund has the
right to sell the participation back to the bank after seven days' notice for
the full principal amount of the Fund's interest in the Municipal Obligation
plus accrued interest, but only (a) as required to provide liquidity to the
Fund, (b) to maintain a high quality investment portfolio or (c) upon a default
under the terms of the Municipal Obligation. The selling bank will receive a fee
from the Fund in connection with the arrangement. The Fund will not purchase
participation interests unless it receives an opinion of counsel or a ruling of
the Internal Revenue Service satisfactory to the Adviser that interest earned by
the Fund on Municipal Obligations on which it holds participation interests is
exempt from federal income tax.

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INVESTMENT RESTRICTIONS

The following restrictions are applicable to each of the Funds, except as
otherwise indicated.

(3) No Fund may borrow money, except that a Fund may borrow from banks up
to 10% of the current value of its total net assets for temporary or emergency
purposes. A Fund will make no purchase if its outstanding borrowings exceed 5%
of its total assets.

For purposes of investment restriction number (1), Centura North Carolina
Tax-Free Bond Fund considers a Municipal Obligation to be issued by the
governmental entity (or entities) whose assets and revenues back the Municipal
Obligation. For a Municipal Obligation backed only by the assets and revenues of
a nongovernmental user, such user is deemed to be the issuer; such issuers, to
the extent their principal business activities are in the same industry, are
also subject to investment restriction (2). For purposes of investment
restriction (2), public utilities are not deemed to be a single industry but are
separated by industrial categories, such as telephone or gas utilities.

<PAGE>
RISKS OF INVESTING IN THE FUNDS

FOREIGN SECURITIES (Centura Equity Growth Fund and Centura Equity Income
Fund). Investing in the securities of issuers in any foreign country, including
ADRS, involves special risks and considerations not typically associated with
investing in securities of U.S. issuers. These include differences in
accounting, auditing and financial reporting standards; generally higher
commission rates on foreign portfolio transactions; the possibility of
nationalization, expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country); and political instability which
could affect U.S. investments in foreign countries. Additionally, foreign
securities and dividends and interest payable on those securities may be subject
to foreign taxes, including taxes withheld from payments on those securities.
Foreign securities often trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodial fees than apply to domestic custodial arrangements and transaction
costs of foreign currency conversions. Changes in foreign exchange rates also
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar. A Fund's objective may be affected either unfavorably or
favorably by fluctuations in the relative rates of exchange between the
currencies of different nations, by exchange control regulations and by
indigenous economic and political developments. A decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of a Fund's holdings of securities denominated in such currency
and, therefore, will cause an overall decline in a Fund's net asset value and
any net investment income and capital gains to be distributed in U.S. dollars to
shareholders of the Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by several factors including the supply and demand for
particular currencies, central bank efforts to support particular currencies,
the movement of interest rates, the pace of business activity in certain other
countries and the United States, and other economic and financial conditions
affecting the world economy. Although the Fund may engage in forward foreign
currency transactions and foreign currency options to protect its portfolio
against fluctuations in currency exchange rates in relation to the U.S. dollar,
there is no assurance that these techniques will be successful. See "Description
of Securities and Investment Practices" and below for additional information
about these kinds of transactions.

The economy of North Carolina is supported by industry, agricultural
products, and tourism, with the largest segment of its work force employed in
manufacturing. From 1980 to 1993, the state's per capita income grew 133.8%,
from $7,999 to $18,702. The state has the nation's tenth highest population, and
its unemployment rate in March 1995 was 3.9% of the labor force (versus a
national rate of 5.5%). The state's labor force grew 26.4% between 1980 and
1994, while its complexion shifted from agriculture to the production of goods
and services. In 1993, North Carolina nevertheless ranked tenth in the nation in
gross agricultural income. Although 20% of its agricultural income comes from
tobacco, 34% comes from a diversified poultry industry and the remainder from a
relatively large variety of other agricultural plant and animal products. North
Carolina is the third most diversified state in the country in terms of its
agriculture.

FOREIGN CURRENCY OPTIONS (Centura Equity Growth Fund and Centura Equity
Income Fund). Currency options traded on U.S. or other exchanges may be subject
to position limits which may limit the ability of a Fund to reduce foreign
currency risk using such options. Over-the-counter options differ from
exchange-traded options in that they are two-party contracts with price and
other terms negotiated between buyer and seller and generally do not have as
much market liquidity as exchange-traded options. Employing hedging strategies
with options on currencies does not eliminate fluctuations in the prices of
portfolio securities or prevent losses if the prices of such securities decline.
Furthermore, such hedging transactions reduce or preclude the opportunity for
gain if the value of the hedged currency should change relative to the U.S
dollar. A Fund will not speculate in options on foreign currencies.

There is no assurance that a liquid secondary market will exist for any
particular foreign currency option, or at any particular time. In the event no
liquid secondary market exists, it might not be possible to effect closing
transactions in particular options. If a Fund cannot close out an option which
it holds, it would have to exercise its option in order to realize any profit
and would incur transactional costs on the sale of the underlying assets.

<PAGE>
RISKS OF FUTURES AND RELATED OPTIONS TRANSACTIONS (All Funds). There are
several risks associated with the use of futures contracts and options on
futures contracts. While a Fund's use of futures contracts and related options
for hedging may protect a Fund against adverse movements in the general level of
interest rates or securities prices, such transactions could also preclude the
opportunity to benefit from favorable movements in the level of interest rates
or securities prices. There can be no guarantee that the Adviser's forecasts
about market value interest rates and other applicable factors will be correct
or that there will be a correlation between price movements in the hedging
vehicle and in the securities being hedged. The skills required to invest
successfully in futures and options may differ from the skills required to
manage other assets in a Fund's portfolio. An incorrect forecast or imperfect
correlation could result in a loss on both the hedged securities in a Fund and
the hedging vehicle so that the Fund's return might have been better had hedging
not been attempted.

There can be no assurance that a liquid market will exist at a time when
a Fund seeks to close out a futures contract or futures option position. Most
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single day; once the daily limit has been
reached on a particular contract, no trades may be made that day at a price
beyond that limit. In addition, certain of these instruments are relatively new
and without a significant trading history. As a result, there is no assurance
that an active secondary market will develop or continue to exist. Lack of a
liquid market for any reason may prevent the Fund from liquidating an
unfavorable position and the Fund would remain obligated to meet margin
requirements until the position is closed. The potential risk to a Fund from a
futures transaction is unlimited. Therefore, although the Funds have authority
to engage in futures transactions, they have no present intention to do so and
will engage in such transactions only when disclosure to that affect has been
added to the Prospectus.

The Funds may trade futures contracts and options on futures contracts on
U.S. domestic markets and, except for Centura North Carolina Tax-Free Bond Fund,
also on exchanges located outside of the United States. Foreign markets,
however, may have greater risk potential than domestic markets. Unlike trading
on domestic commodity exchanges, trading on foreign commodity exchanges is not
regulated by the Commodity Futures Trading Commission and may be subject to
greater risk than trading on domestic exchanges. For example, some foreign
exchanges are principal markets so that no common clearing facility exists and a
trader may look only to the broker for performance of the contract. In addition,
any profits that a Fund might realize in trading could be eliminated by adverse
changes in the exchange rate of the currency in which the transaction is
denominated, or the Fund could incur losses as a result of changes in the
exchange rate. Transactions on foreign exchanges may include both commodities
that are traded on domestic exchanges or boards of trade and those that are not.

RISKS OF FORWARD FOREIGN CURRENCY CONTRACTS (Centura Equity Growth Fund
and Centura Equity Income Fund). The precise matching of forward contracts and
the value of the securities involved will not generally be

<PAGE>
possible since the future value of the securities in foreign currencies will
change as a consequence of market movements in the value of those securities
between the date the forward contract is entered into and the date it matures.
Projection of short-term currency market movements is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.
There can be no assurance that new forward contracts or offsets will always be
available to a Fund.

MANAGEMENT OF THE FUNDS

THE ADVISER: CENTURA BANK

For the advisory services it provides the Funds, the Adviser receives
from each Fund fees, payable monthly based on the average daily net assets, at
an annual rate based on the Fund's average net assets. Fees are 0.70% for
Centura Equity Growth Fund, 0.70% for Centura Equity Income Fund, 0.30% for
Centura Federal Securities Income Fund and 0.35% for Centura North Carolina
Tax-Free Bond Fund. The Adviser also serves as Custodian for the Funds' assets,
for which it receives additional fees. For the fiscal period ended April 30,
1996, the Adviser received $802,888 in Advisory fees from the Equity Growth Fund
and $312,098 from the Federal Securities Income Fund. The advisory fees for the
North Carolina Tax-Free Bond Fund amounted to $138,274, however, the Adviser
waived $99,774.

Robert D. Marsh serves as portfolio manager for Centura North Carolina
Tax-Free Bond Fund. He previously managed the North Carolina Tax-Free common
trust fund before the conversion to the Centura North Carolina

<PAGE>
Tax-Free Bond Fund in June 1994. Mr. Marsh has over 34 years' experience in
Trust investments, portfolio management, and Trust administration. He graduated
from Ball State University with a Bachelor of Science degree in accounting. Mr.
Marsh began his Trust career at American National Bank and Trust Company in
Indiana in Trust administration and portfolio management. Mr. Marsh's other
duties at Centura Bank include the management of personal trust and pension
account investment responsibilities.

THE DISTRIBUTOR

Centura Funds Distributor, Inc., 230 Park Avenue, New York, New York
10169, acts as the Funds' Distributor. The Distributor is an affiliate of the
Funds' Administrator, Furman Selz, was formed specifically to distribute the
Funds. For information concerning changes regarding Furman Selz, see "The
Administrator and Sponsor" below.

SERVICE ORGANIZATIONS

Some Service Organizations may impose additional or different conditions
on their clients, such as requiring their clients to invest more than a Fund's
minimum initial or subsequent investments or charging a direct fee for
servicing. If imposed, these fees would be in addition to any amounts which
might be paid to the Service Organization by the Funds. Each Service
Organization has agreed to transmit to its clients a schedule of any such fees.
Shareholders using Service Organizations are urged to consult with them
regarding any such fees or conditions.

The Glass-Steagall Act and other applicable laws provide that, among
other things, banks may not engage in the business of underwriting, selling or
distributing securities. There is currently no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either federal or state regulations relating
to the permissible activities of banks and their subsidiaries or affiliates,
could prevent a bank Service Organization from continuing to perform all or a
part of its servicing activities. If a bank were prohibited from so acting,

<PAGE>
its shareholder clients would be permitted to remain shareholders of the Funds
and alternative means for continuing the servicing of such shareholders would be
sought. It is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

THE ADMINISTRATOR AND SPONSOR

Pursuant to an Administrative Services Contract with the Company, Furman
Selz provides certain management and administrative services necessary for the
Funds' operations including: (a) general supervision of the operation of the
Funds including coordination of the services performed by the Funds' Adviser,
custodian, independent accountants and legal counsel; (b) regulatory compliance,
including the compilation of information for documents such as reports to, and
filings with, the SEC and state securities commissions, and preparation of proxy
statements and shareholder reports for the Funds; (c) general supervision
relative to the compilation of data required for the preparation of periodic
reports distributed to the Funds' officers and Board of Directors; and (d)
furnishing office space and certain facilities required for conducting the
business of the Funds. For these services, Furman Selz receives from each Fund a
fee, payable monthly, at the annual rate of 0.15% of each Fund's average daily
net assets. For the fiscal year ended April 30, 1996, the Administrator received
$172,047 and $156,049 in administrative services fees from the Equity Growth
Fund and the Federal Securities Income Fund, respectively. The Administrator was
entitled to $59,260 but waived $42,761 in fees from the North Carolina Tax-Free
Bond Fund. Under separate agreements with the Company, Furman Selz also acts as
the Funds' transfer and dividend disbursing agent (for which it receives a fee
of $15 per account per year, plus out-of-pocket expenses) and provides
assistance in calculating the Funds' net asset values and provides other
accounting services for the Funds (for an annual fee of $30,000 per Fund plus
out-of-pocket expenses). For the fiscal year ended April 30, 1996, Furman Selz
earned $38,623, $7,326 and $6,452 in transfer agent fees for the Equity Growth
Fund, the Federal Securities Income Fund and the

<PAGE>
North Carolina Tax-Free Bond Fund, respectively. Furman Selz also earned
$32,848, $33,981 and $41,369 in fund accounting fees for the Equity Growth Fund,
the Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively, for the same period.

OTHER EXPENSES

Each Fund bears all costs of its operations other than expenses
specifically the responsibility of the Administrator, the Adviser or other
service providers. In addition to fees paid to service providers described
above, the costs borne by the Funds, some of which may vary among the classes,
as noted above, include: legal and accounting expenses; Directors' fees and
expenses; insurance premiums; custodian and transfer agent fees and expenses;
expenses incurred in acquiring or disposing of the Funds' portfolio securities;
expenses of registering and qualifying the Funds' shares for sale with the SEC
and with various state securities commissions; expenses of maintaining the
Funds' legal existence and of shareholders' meetings; and expenses of preparing
and distributing reports, proxy statements and prospectuses to existing
shareholders. Each Fund bears its own expenses associated with its establishment
as a portfolio of the Company; these expenses are amortized over a five-year
period from the commencement of a Fund's operations. Company expenses directly
attributable to a Fund or class are charged to that Fund or class; other
expenses are allocated proportionately among all of the Funds and classes in the
Company in relation to the net assets of each Fund and class.

MINIMUM PURCHASE REQUIREMENTS

The minimum initial investment in each of the Funds is $1,000, except
that the minimum investment requirement for an IRA or other qualified retirement
plan is $250. Any subsequent investments must be at least $250, except for an
IRA or qualified retirement plan investment. All initial investments should be
accompanied by a completed Purchase Application. A Purchase Application may be
obtained by calling Fund Services at 1-800-44CENTURA (442-3688). However, a
separate application is required for IRA and other qualified retirement plan
investments. Centura North Carolina Tax-Free Bond Fund is not a recommended
investment for an IRA or other qualified retirement plan. The Funds reserve the
right to reject purchase orders.

PRICING AND PURCHASE OF FUND SHARES

Each Fund offers its Class C shares at their net asset value next
determined after a purchase order has been received. All consideration received
by the Funds for the purchase of Class C shares is invested in full and
fractional Class C shares of the appropriate Fund. Certificates for shares are
not issued. Furman Selz maintains records of each shareholder's holdings of Fund
shares, and each shareholder receives a monthly statement of transactions,
holdings and dividends. The Funds reserve the right to reject any purchase.

<PAGE>
EXCHANGE OF FUND SHARES

The Funds offer two convenient ways to exchange Class C shares in one
Fund for Class C shares of another Fund in the Company. Before engaging in an
exchange transaction, a shareholder should read carefully the information in the
Prospectus describing the Fund into which the exchange will occur. A Class C
shareholder may not exchange shares of one Fund for Class C shares of another
Fund unless the latter Fund's Class C shares are qualified for sale in the state
of the shareholder's residence. There is no minimum amount required for
exchanges, provided the investor has satisfied the $1,000 minimum investment
requirement for the Fund into which he or she is exchanging, and no service fee
is imposed for an exchange. The Company may terminate or amend the terms of the
exchange privilege at any time upon 60 days notice to shareholders.

An exchange is taxable as a sale of a security on which a gain or loss
may be recognized. Shareholders should receive written confirmation of the
exchange within a few days of the completion of the transaction. See "Dividends,
Distributions and Federal Income Taxation" for an explanation of circumstances
in which a sales charge paid to acquire shares of the Funds may not be taken
into account in determining gain or loss on the disposition of those shares.

EXCHANGE BY TELEPHONE. To exchange Fund shares by telephone or to ask any
questions, shareholders may call the Fund at 1-800-44CENTURA (442-3688). Please
be prepared to give the telephone representative the following information: (a)
the account number, social security number and account registration; (b) the
class of shares to be exchanged; (c) the name of the Fund from which and the
Fund into which the exchange is to be made; and (d) the dollar or share amount
to be exchanged. Telephone exchanges are provided automatically to each
shareholder unless otherwise specifically indicated on the Purchase Application.
The Funds employ procedures, including recording telephone calls, testing a
caller's identity, and sending written confirmation of telephone transactions,
designed to give reasonable assurance that instructions communicated by
telephone are genuine, and to discourage fraud. To the extent that a Fund does
not follow such procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. A Fund will not be liable for acting upon
instructions communicated by telephone that it reasonably believes to be
genuine. The Funds reserve the right to suspend or terminate the privilege of
exchanging by mail or by telephone at any time.

<PAGE>
REDEMPTION OF FUND SHARES

Shareholders may redeem their shares, in whole or in part, on any
business day. If a shareholder holds shares in more than one class of a Fund,
any request for redemption must specify the class from which shares are to be
redeemed. In the event a shareholder fails to make such a specification or if
there are insufficient shares of the specified class to satisfy the redemption
order, the redemption order will be delayed until the Fund's transfer agent
receives further instructions from the shareholder.

Class C shares will be redeemed at the net asset value next determined
after a redemption request in good order has been received by the applicable
Fund. See "Pricing and Purchase of Fund Shares."

Where the shares have been purchased by check, the redemption request
will be held until the purchasing check has cleared, which may take up to 15
days. Shareholders may avoid this delay by investing through wire transfers of
Federal funds. During the period prior to the time the shares are redeemed,
dividends on the shares will continue to accrue and be payable and the
shareholder will be entitled to exercise all other beneficial rights of
ownership.

Once the shares are redeemed, a Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund my, however, take up to seven days to make payment although this will not
be the customary practice. Also, if the New York Stock Exchange is closed (or
when trading is restricted) for any reason other than the customary weekend or
holiday closing or if an emergency condition as determined by the SEC merits
such action, the Funds may suspend redemptions or postpone payment dates. A
redemption may be a taxable transaction on which gain or loss may be recognized.

A shareholder may redeem shares using any of the following methods:

<PAGE>
are being redeemed; (b) the account number; (c) the amount to be redeemed; (d)
the signatures of all registered owners; and (e) a signature guarantee by any
eligible guarantor institution including members of national securities
exchanges, commercial banks or trust companies, broker-dealers, credit unions
and savings associations. Corporations, partnerships, trusts or other legal
entities will be required to submit additional documentation.

BY TELEPHONE. Shareholders may redeem shares by calling the Funds toll
free at 1-800-44CENTURA (442-3688). Be prepared to give the telephone
representative the following information: (a) the account number, social
security number and account registration; (b) the name of the class (if
applicable) and the Fund from which shares are being redeemed; and (c) the
amount to be redeemed. Telephone redemptions are available unless otherwise
indicated on the Purchase Application or on the Optional Services Form. The
Funds employ procedures, including recording telephone calls, testing a caller's
identity, and sending written confirmation of telephone transactions, designed
to give reasonable assurance that instructions communicated by telephone are
genuine, and to discourage fraud. To the extent that a Fund does not follow such
procedures, it may be liable for losses due to unauthorized or fraudulent
telephone instructions. A Fund will not be liable for acting upon instructions
communicated by telephone that it reasonably believes to be genuine.

BY WIRE. Shareholders may redeem shares by contacting the Funds by mail
or telephone and instructing the Funds to send a wire transmission to the
shareholder's bank.

SYSTEMATIC WITHDRAWAL PLAN. An owner of $12,000 or more of shares of a
Fund may elect to have periodic redemptions made from this account to be paid on
a monthly, quarterly, semiannual or annual basis. The maximum withdrawal per
year is 12% of the account value at the time of the election. A sufficient
number of shares to make the scheduled redemption will normally be redeemed on
the date selected by the shareholder. Depending on the size of the payment
requested and fluctuation in the net asset value, if any, of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account. A shareholder may request that these payments be sent to a
predesignated bank or other designated party. Capital gains and dividend
distributions paid to the account will automatically be reinvested at net asset
value on the distribution payment date.

REDEMPTION OF SMALL ACCOUNTS. Due to the disproportionately higher cost
of servicing small accounts, the Funds reserve the right to redeem, on not less
than 30 days' notice, an account in a Fund that has been reduced by a
shareholder (not by market action) below $1,000. If during the 30-day notice
period the shareholder purchases sufficient shares to bring the value of the
account to $1,000, the account will not be redeemed.

<PAGE>
90-day period of up to the lesser of $250,000 or 1% of the net asset value of
the Fund at the beginning of such period. This commitment is irrevocable without
the prior approval of the SEC. In the case of redemption requests by
shareholders in excess of such amounts, the Board of Directors reserves the
right to have a Fund make payment, in whole or in part, in securities or other
assets, in case of an emergency or any time a cash distribution would impair the
liquidity of the Fund to the detriment of the existing shareholders. In this
event, the securities would be valued generally in the same manner as the
securities of that Fund are valued generally. If the recipient were to sell such
securities, he or she would incur brokerage charges.

PORTFOLIO TRANSACTIONS

Pursuant to the Investment Advisory Agreement, the Adviser places orders
for the purchase and sale of portfolio investments for the Funds' accounts with
brokers or dealers it selects in its discretion.

Each of the Funds may buy and sell securities to take advantage of
investment opportunities when such transactions are consistent with a Fund's
investment objective and when the Adviser believes such transactions may improve
a Fund's overall investment return. These transactions involve costs in the form
of spreads or brokerage commissions. The Funds are not normally expected to have
portfolio turnover rates in excess of 50%.

<PAGE>
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of the Funds as a factor in the selection
of broker-dealers to execute portfolio transactions for the Funds.

FUND SHARE VALUATION

The net asset value per share for each class of shares of each Fund is
calculated at 4:15 p.m. (Eastern time), Monday through Friday, on each day the
New York Stock Exchange is open for trading, which excludes the following
business holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The net asset value per share of each class of shares of the
Funds is computed by dividing the value of net assets of each class (i.e., the
value of the assets less the liabilities) by the total number of such class'
outstanding shares. All expenses, including fees paid to the Adviser and
Administrator, are accrued daily and taken into account for the purpose of
determining the net asset value.

DIVIDENDS, DISTRIBUTIONS, AND FEDERAL INCOME TAXATION

<PAGE>
thereof) will be declared and paid monthly by Centura Equity Growth Fund and
Centura Equity Income Fund. Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund will declare dividends daily and pay them out
monthly. Each Fund intends to distribute, at least annually, substantially all
net realized long- and short-term capital gain. In determining amounts of
capital gains to be distributed, any capital loss carryovers from prior years
will be applied against capital gains.

Dividends distributed by Centura North Carolina Tax-Free Bond Fund that
are derived from interest income exempt from federal income tax and are
designated by the Fund as "exempt-interest dividends" will be exempt from the
regular federal income tax. Capital gains distributions and any other
distributions of Fund earnings not designated by the Fund as exempt-interest
dividends will, however, generally be subject to federal, state and local tax.
The Fund's investment policies permit it to earn income which cannot be
designated as exempt-interest dividends.

<PAGE>
dividends will be taxable as long-term capital gains, regardless of how long a
shareholder has held the Fund shares. Distributions are taxable in the same
manner whether received in additional shares or in cash.

The timing of a shareholder's investment could have undesirable tax
consequences. If a shareholder opened a new account or bought more shares for
his or her current account just before the day a capital gain distribution was
reflected in the Fund's share price, the shareholder would receive a portion of
his or her investment back as a taxable capital gain distribution.

Shareholders should also be aware that redeeming shares of a Fund after
tax-exempt interest income has been accrued by the Fund but before that income
has been distributed as a dividend may not be advantageous. This is because the
gain, if any, on the redemption will be taxable, even though such gain may be
attributable in part to the accrued tax-exempt interest, which, if distributed
to the shareholder as a dividend rather than as redemption proceeds, might have
qualified as an exempt-interest dividend.

Further information relating to tax consequences is contained in the SAI.

Shareholders will be notified annually by the Company as to the federal
tax status of distributions made by the Fund(s) in which they invest. Depending
on the residence of the shareholder for tax purposes, distributions also may be
subject to state and local taxes, including withholding taxes. Foreign
shareholders may also be subject to special withholding requirements. Special
tax treatment, including a penalty on certain pre-retirement distributions, is
accorded to accounts maintained as IRAs. With respect to Centura North Carolina
Tax-Free Bond Fund, North Carolina law exempts from income taxation dividends
received from a regulated investment company in proportion to the income of the
regulated investment company that is attributable to interest on bonds or
securities of the U.S. government or any agency or instrumentality thereof or on
bonds of the State of North Carolina or any county,

<PAGE>
municipality or political subdivision thereof. Shareholders should consult their
own tax advisers as to the federal, state and local tax consequences of
ownership of shares of the Funds in their particular circumstances.

OTHER INFORMATION

CAPITALIZATION

This Prospectus relates to Class C shares of the Funds. Each Fund also
offers Class A and Class B shares. Class A shares are offered with a front-end
sales charge (unless waived), and a contingent deferred sales charge is imposed
(unless waived) on redemptions of Class B shares within five years of purchase.
Because of differences in expenses, the performance of each class will typically
be different. Information about Class A and Class B shares may be obtained from
your sales representative or by calling the Funds at (800) 442-3688.

VOTING

Shareholders have the right to vote in the election of Directors and on
any and all matters on which, by law or under the provisions of the Articles of
Incorporation, they may be entitled to vote. The Company is not required to hold
regular annual meetings of the Funds' shareholders and does not intend to do so.
Each Fund's shareholders vote separately on items affecting only that Fund, and
shareholders of each class within a Fund vote separately on matters affecting
only that class.

The Articles of Incorporation provide that the holders of not less than
two-thirds of the outstanding shares of the Company may remove a person serving
as Director either by declaration in writing or at a meeting called for such
purpose. The Directors are required to call a meeting for the purpose of
considering the removal of a person serving as Director if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Company. See "Other Information -- Voting Rights" in the SAI.

<PAGE>
PERFORMANCE INFORMATION

CENTURA BANK (CLASS C SHARES)
PERFORMANCE COMPARISONS (UNAUDITED)

(1) The performance figures in this table relate to the Class C shares of the
Funds. The performance of Class A and Class B shares would be lower due to
certain distribution-related expenses borne by those classes.

<PAGE>
(4) The bank-maintained common and collective trust funds were managed with
substantially the same investment objectives and policies as the registered
mutual funds, but were not subject to all the same tax and regulatory
requirements applicable to mutual funds. These regulatory and tax
requirements could affect performance either positively or negatively.

When performance records are developed by the Funds, they may, from time
to time, include the yield and total return for shares (including each class, as
applicable) in advertisements or reports to shareholders or prospective
investors. The methods used to calculate the yield and total return of the Funds
are mandated by the SEC. In general, the performance of the classes of each Fund
will differ due to (a) differences in the level of class specific expenses,
including service and distribution fees and (b) the fact that total return
figures for Class A shares will reflect the deduction of the maximum front-end
sales charge applicable for each Fund while the total return figures for Class B
shares will reflect the maximum CDSC for the particular Fund. Performance
figures for Class C shares will reflect the absence of any service and
distribution fee, front-end sales charge or CDSC. Due to these differences in
fees and/or expenses borne by Class A, Class B and Class C shares, yield and
total return on Class A and Class B shares can be expected to be lower than the
yield and total return on Class C shares for the same period.

<PAGE>
figure should be considered an indication of performance which may be expected
in the future. Quotations of average annual total return will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in shares of a Fund (or class) over periods of 1, 5 and 10 years (up
to the life of the Fund), reflect the deduction of a proportional share of Fund
and class-specific expenses, as applicable, on an annual basis, and assume that
all dividends and distributions are reinvested when paid.

Centura North Carolina Tax-Free Bond Fund may also advertise its "taxable
equivalent yield." Taxable equivalent yield is the yield that an investment,
subject to regular federal and North Carolina personal income taxes, would need
to earn in order to equal. on an after-tax basis, the yield on an investment
exempt from such taxes (normally calculated assuming the maximum combined
federal and North Carolina marginal tax rate). A taxable equivalent yield
quotation for the Fund will be higher than the yield quotations for the Fund.

1996 TAXABLE YEAR
TAXABLE EQUIVALENT YIELD TABLE (1) -- FEDERAL AND NORTH CAROLINA PERSONAL INCOME
TAXES

<TABLE>
<CAPTION>
COMBINED TO EQUAL HYPOTHETICAL TAX-FREE YIELD OF 4%, 5%,
MARGINAL 6%, 7% OR 8%, A TAXABLE INVESTMENT WOULD HAVE TO
TAXABLE INCOME (2) TAX RATE YIELD APPROXIMATELY
SINGLE RETURN JOINT RETURN (3) 4% 5% 6% 7% 8%
<S> <C> <C> <C> <C> <C> <C> <C>
Up to $12,750 up to $21,250 20.10% 5.01% 6.26% 7.51% 8.76% 10.01%
$12,751-$24,000 $21,251-$40,100 20.95% 5.06% 6.33% 7.59% 8.86% 10.12%
$24,001-$58,150 $40,101-$96,901 33.04% 5.97% 7.47% 8.96% 10.45% 11.95%
$58,151-$60,000 $96,901-$100,000 35.83% 6.23% 7.79% 9.35% 10.91% 12.47%
$60,001-$121,300 $100,001-$147,700 36.35% 6.28% 7.86% 9.43% 11.00% 12.57%
$121,301-$263,750 $147,701-$263,750 40.96% 6.78% 8.47% 10.16% 11.86% 13.55%
$263,751 and over $263,751 and over 44.28% 7.18% 8.98% 10.77% 12.57% 14.36%
</TABLE>

(1) This chart is presented for general information purposes only. Tax
equivalent yields are a useful tool in determining the desirability of
a tax-exempt investment; tax equivalent yields should not be regarded
as determinative of the of such an investment. In addition, this chart
is based on a number of assumptions which may not apply in your case.
You should, therefore, consult a competent tax advisor regarding
tax-equivalent yields in your situation.
(2) Assuming the federal alternative minimum tax is not applicable.
(3) The combined marginal rates were calculated using federal and North
Carolina tax rate tables for the 1996 taxable year. The federal tax
rate tables are indexed each year to reflect changes in the Consumer
Price Index. The combined federal and North Carolina income tax
marginal rates assume that North Carolina personal income taxes are
fully deductible for federal income tax purposes as an itemized
deduction. However, the ability to deduct itemized deductions
(including state income taxes) for federal income tax purposes is
limited for those taxpayers whose federal adjusted gross income for
1996 exceeds $117,950 ($58,975 in the case of a married individual
filing a separate return). In addition, for federal income tax purposes
the tax benefit of personal exemptions is phased out for taxpayers
whose

<PAGE>
adjusted gross incomes exceed specified thresholds (for 1996, $117,950
in the case of single individuals and $176,950 in the case of married
individuals filing a joint return).

ACCOUNT SERVICES

Furman Selz provides fund accounting functions for the Funds, and
provides personnel and facilities to perform shareholder servicing and transfer
agency-related services for the Company.

SHAREHOLDER INQUIRIES

All shareholder inquiries should be directed to Centura Funds, Grand
Central Station, P.O. Box 4490, New York, New York 10163-4490.

General and Account Information: (800) 44CENTURA (442-3688).

<PAGE>
APPENDIX
DESCRIPTION OF BOND RATINGS

DESCRIPTION OF MOODY'S BOND RATINGS:

Excerpts from Moody's description of its bond ratings are listed as
follows: AAA -- judged to be the best quality and they carry the smallest degree
of investment risk; AA -- judged to be of high quality by all standards --
together with the Aaa group, they comprise what are generally known as high
grade bonds; A -- possess many favorable investment attributes and are to be
considered as "upper medium grade obligations"; BAA -- considered to be medium
grade obligations, i.e., they are neither highly protected nor poorly
secured -- interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; BA -- judged to
have speculative elements, their future cannot be considered as well assured;
B -- generally lack characteristics of the desirable investment; CAA -- are of
poor standing -- such issues may be in default or there may be present elements
of danger with respect to principal or interest; CA -- speculative in a high
degree, often in default; C lowest rated class of bonds, regarded as having
extremely poor prospects.

DESCRIPTION OF S&P'S BOND RATINGS:

Excerpts from S&P's description of its bond ratings are listed as
follows: AAA -- highest grade obligations, in which capacity to pay interest and
repay principal is extremely strong; AA -- has a very strong capacity to pay
interest and repay principal, and differs from AAA issues only in a small
degree; A -- has a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories;
BBB -- regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories. This group is the lowest which qualifies for
commercial bank investment. BB, B, CCC, CC, C -- predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with terms
of the obligations; BB indicates the highest grade and C the lowest within the
speculative rating categories. D -- interest or principal payments are in
default.

S&P applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.

<PAGE>
DESCRIPTION OF MOODY'S RATINGS OF SHORT-TERM MUNICIPAL OBLIGATIONS:

Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or NHG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings on
issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity. Ratings categories for securities in these groups
are as follows: MIG 1/VMIG 1 -- denotes best quality, there is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing; MIG 2/VMIG 2 -- denotes high
quality, margins of protection are ample although not as large as in the
preceding group; MIG 3/VMIG 3 -- denotes high quality, all security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades; MIG 4/VMIG 4 -- denotes adequate quality, protection commonly regarded
as required of an investment security is present, but there is specific risk;
SQ -- denotes speculative quality, instruments in this category lack margins of
protection.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:

Excerpts from Moody's commercial paper ratings are listed as follows:
PRIME-1 -- issuers (or supporting institutions) have a superior ability for
repayment of senior short-term promissory obligations; PRIME-2 -- issuers (or
supporting institutions) have a strong ability for repayment of senior
short-term promissory obligations; PRIME-3 -- issuers (or supporting
institutions) have an acceptable ability for repayment of senior short-term
promissory obligations; NOT PRIME -- issuers do not fall within any of the Prime
categories.

DESCRIPTION OF S&P'S RATINGS FOR CORPORATE AND MUNICIPAL BONDS:

Investment grade ratings: AAA -- the highest rating assigned by S&P,
capacity to pay interest and repay principal is extremely strong; AA -- has a
very strong capacity to pay interest and repay principal and differs from the
highest rated issues only in a small degree; A -- has strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories; BBB -- regarded as having an adequate capacity to pay
interest and repay principal -- whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

Speculative grade ratings: BB, B, CCC, CC, C -- debt rated in these
categories is regarded as having predominantly speculative characteristics with
respect to capacity to pay interest and repay principal -- while such debt will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions;
CI -- reserved for income bonds on which no interest is being paid; D -- in
default, and payment of interest and/or repayment of principal is in arrears.
Plus (+) or Minus (-) -- the ratings from "AA" to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing

<PAGE>
within the major rating categories. Description of S&P's rating for municipal
notes and short-term municipal demand obligations:

DESCRIPTION OF S&P'S RATINGS FOR SHORT-TERM CORPORATE DEMAND OBLIGATIONS AND
COMMERCIAL PAPER:

iii

<PAGE>
ADDRESS FOR:

GENERAL SHAREHOLDER INQUIRIES
Centura Funds, Inc.
P.O. Box 4490
Grand Central Station
New York, New York 10163-4490

INVESTMENT ADVISER AND CUSTODIAN
Centura Bank
131 North Church Street
Rocky Mount, North Carolina 27802

ADMINISTRATOR AND SPONSOR
Furman Selz LLC
230 Park Avenue
New York, New York 10169

DISTRIBUTOR
Centura Funds Distributor, Inc.
230 Park Avenue
New York, New York 10169

COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005

INDEPENDENT ACCOUNTANTS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017

CNPROSPC

CENTURA FUNDS, INC.
PROSPECTUS
CLASS C SHARES

CENTURA BANK
ADVISER

FURMAN SELZ LLC
ADMINISTRATOR AND SPONSOR

CENTURA FUNDS DISTRIBUTOR, INC.
DISTRIBUTOR

<PAGE>

CENTURA FUNDS, INC.
(the "Company")
237 Park Avenue
New York, New York 10017
General and Account Information: (800) 442-3688
---------------------------------------------------------------

Centura Bank
Investment Adviser

Furman Selz LLC -
Administrator and Sponsor

Centura Funds Distributor, Inc. -
Distributor

STATEMENT OF ADDITIONAL INFORMATION
Class A Shares and Class B Shares

This Statement of Additional Information ("SAI") describes the four
funds (the "Funds") advised by Centura Bank (the "Adviser"). The Funds are:

- Centura Equity Growth Fund
- Centura Equity Income Fund
- Centura Federal Securities Income Fund
- Centura North Carolina Tax-Free Bond Fund

Each Fund has distinct investment objectives and policies. Shares of
the Funds are sold to the public by the Distributor as an investment vehicle for
individuals, institutions, corporations and fiduciaries, including customers of
the Adviser or its affiliates.

The Company is offering an indefinite number of shares of each class of
each Fund. In addition to Class A shares and Class B shares, each Fund also
offers Class C shares, available only to accounts managed by the Adviser's Trust
Department, and non-profit institutions with a minimum investment in the Funds
of at least $100,000. Class C shares have no front-end sales charge or
contingent deferred sales charge. See "Other Information Capitalization" in the
prospectus.

This SAI is not a prospectus and is authorized for distribution only
when preceded or accompanied by the prospectus for the Funds dated August 28,
1996 (the "Prospectus"). This SAI contains additional and more detailed
information than that set forth in the Prospectus and should be read in
conjunction with the Prospectus. The Prospectus may be obtained without charge
by writing or calling the Funds at the address and information numbers printed
above.

August 28, 1996

<PAGE>

TABLE OF CONTENTS
Page

INVESTMENT POLICIES....................................................... 1
Bank Obligations (All Funds)..................................... 1
Commercial Paper (All Funds)..................................... 1
Convertible Securities .......................................... 1
Corporate Debt Securities........................................ 1
Repurchase Agreements............................................ 2
Variable and Floating Rate Demand and Master Demand
Notes............................................................ 2
Loans of Portfolio Securities.................................... 3
Foreign Securities............................................... 3
Forward Foreign Currency Exchange Contracts...................... 4
Interest Rate Futures Contracts.................................. 4
Stock Index Futures Contracts.................................... 5
Option Writing and Purchasing.................................... 6
Options on Futures Contracts..................................... 8
Risks of Futures and Options Investments (All Funds)............. 9
Limitations on Futures Contracts and Options on Futures
Contracts (All Funds)............................................ 9
North Carolina Municipal Obligations............................. 9
Municipal Lease Obligations...................................... 10
Securities of Other Investment Companies......................... 10

INVESTMENT RESTRICTIONS................................................... 11

MANAGEMENT................................................................ 15
Directors and Officers........................................... 15
Distribution of Fund Shares...................................... 20
Administrative Services.......................................... 22
Service Organizations............................................ 23

DETERMINATION OF NET ASSET VALUE.......................................... 24

PORTFOLIO TRANSACTIONS.................................................... 25
Portfolio Turnover............................................... 26

TAXATION.................................................................. 27
Centura North Carolina Tax-Free Bond Fund........................ 34

OTHER INFORMATION......................................................... 36
Capitalization................................................... 36
Voting Rights.................................................... 36
Custodian, Transfer Agent and Dividend Disbursing
Agent............................................................ 37
Independent Accountants.......................................... 40
Counsel.......................................................... 40
Registration Statement........................................... 40

- i -

<PAGE>

INVESTMENT POLICIES

The Prospectus discusses the investment objectives of the Funds and the
policies to be employed to achieve those objectives. This section contains
supplemental information concerning certain types of securities and other
instruments in which the Funds may invest, the investment policies and portfolio
strategies that the Funds may utilize, and certain risks attendant to such
investments, policies and strategies.

Bank Obligations (All Funds). These obligations include negotiable
certificates of deposit and bankers' acceptances. A description of the banks the
obligations of which the Funds may purchase are set forth in the Prospectus. A
certificate of deposit is a short-term, interest-bearing negotiable certificate
issued by a commercial bank against funds deposited in the bank. A bankers'
acceptance is a short-term draft drawn on a commercial bank by a borrower,
usually in connection with an international commercial transaction. The borrower
is liable for payment as is the bank, which unconditionally guarantees to pay
the draft at its face amount on the maturity date.

Commercial Paper (All Funds). Commercial paper includes short-term
unsecured promissory notes, variable rate demand notes and variable rate master
demand notes issued by domestic and foreign bank holding companies, corporations
and financial institutions and similar taxable instruments issued by government
agencies and instrumentalities. All commercial paper purchased by a Fund must
meet the minimum rating criteria for that Fund.

Convertible Securities (Centura Equity Growth Fund and Centura Equity
Income Fund). Convertible securities give the holder the right to exchange the
security for a specific number of shares of common stock. Convertible securities
include convertible preferred stocks, convertible bonds, notes and debentures,
and other securities. Convertible securities typically involve less credit risk
than common stock of the same issuer because convertible securities are "senior"
to common stock -- i.e., they have a prior claim against the issuer's assets.
Convertible securities generally pay lower dividends or interest than
non-convertible securities of similar quality. They may also reflect changes in
the value of the underlying common stock.

Corporate Debt Securities (All Funds). Fund investments in these
securities are limited to corporate debt securities (corporate bonds,
debentures, notes and similar corporate debt instruments) which meet the rating
criteria established for each Fund.

After purchase by a Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require a sale of such security by the Fund. However, the
Adviser will consider such

<PAGE>

event in its determination of whether the Fund should continue to hold the
security. To the extent the ratings given by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P") or another rating agency may
change as a result of changes in such organizations or their rating systems, the
Funds will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in the Prospectus and in this
SAI.

Repurchase Agreements (All Funds). The Funds may invest in securities
subject to repurchase agreements with U.S. banks or broker-dealers. Such
agreements may be considered to be loans by the Funds for purposes of the
Investment Company Act of 1940, as amended (the "1940 Act"). A repurchase
agreement is a transaction in which the seller of a security commits itself at
the time of the sale to repurchase that security from the buyer at a mutually
agreed-upon time and price. The repurchase price exceeds the sale price,
reflecting an agreed-upon interest rate effective for the period the buyer owns
the security subject to repurchase. The agreed-upon rate is unrelated to the
interest rate on that security. The Adviser will monitor the value of the
underlying security at the time the transaction is entered into and at all times
during the term of the repurchase agreement to insure that the value of the
security always equals or exceeds the repurchase price. In the event of default
by the seller under the repurchase agreement, the Funds may have problems in
exercising their rights to the underlying securities and may incur costs and
experience time delays in connection with the disposition of such securities.

Variable and Floating Rate Demand and Master Demand Notes (All Funds).
The Funds may, from time to time, buy variable rate demand notes issued by
corporations, bank holding companies and financial institutions and similar
taxable and tax-exempt instruments issued by government agencies and
instrumentalities. These securities will typically have a maturity in the 5 to
20 year range but carry with them the right of the holder to put the securities
to a remarketing agent or other entity on short notice, typically seven days or
less. The obligation of the issuer of the put to repurchase the securities is
backed up by a letter of credit or other obligation issued by a financial
institution. The purchase price is ordinarily par plus accrued and unpaid
interest. Ordinarily, the remarketing agent will adjust the interest rate every
seven days (or at other intervals corresponding to the notice period for the
put), in order to maintain the interest rate at the prevailing rate for
securities with a seven-day maturity.

The Funds may also buy variable rate master demand notes. The terms of
these obligations permit the investment of

- 2 -

<PAGE>

fluctuating amounts by the Funds at varying rates of interest pursuant to direct
arrangements between a Fund, as lender, and the borrower. They permit weekly,
and in some instances, daily, changes in the amounts borrowed. The Funds have
the right to increase the amount under the note at any time up to the full
amount provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty. The notes
may or may not be backed by bank letters of credit. Because the notes are direct
lending arrangements between the lender and the borrower, it is not generally
contemplated that they will be traded, and there is no secondary market for
them, although they are redeemable (and thus, immediately repayable by the
borrower) at principal amount, plus accrued interest, at any time. The Funds
have no limitations on the type of issuer from whom the notes will be purchased.
However, in connection with such purchase and on an ongoing basis, the Adviser
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes make demand simultaneously. While
master demand notes, as such, are not typically rated by credit rating agencies,
if not so rated, the Funds may, under their minimum rating standards, invest in
them only if at the time of an investment the issuer meets the criteria set
forth in the Prospectus for other comparable debt obligations.

Loans of Portfolio Securities (All Funds). The Funds may lend their
portfolio securities to brokers, dealers and financial institutions, provided:
(1) the loan is secured continuously by collateral consisting of U.S. Government
securities or cash or letters of credit maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (2) the Funds may at any time call the loan and obtain the return of the
securities loaned within five business days; (3) the Funds will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed 5% of the total
assets of a particular Fund.

The Funds will earn income for lending their securities because cash
collateral pursuant to these loans will be invested in short-term money market
instruments. In connection with lending securities, the Funds may pay reasonable
finders, administrative and custodial fees. Loans of securities involve a risk
that the borrower may fail to return the securities or may fail to provide
additional collateral.

Foreign Securities (Centura Equity Growth Fund and Centura Equity
Income Fund). As described in the Prospectus, changes in

- 3 -

<PAGE>

foreign exchange rates will affect the value of securities denominated or quoted
in currencies other than the U.S. dollar.

Since Centura Equity Growth Fund and Centura Equity Income Fund may
invest in securities denominated in currencies other than the U.S. dollar, and
since those Funds may temporarily hold funds in bank deposits or other money
market investments denominated in foreign currencies, the Funds may be affected
favorably or unfavorably by exchange control regulations or changes in the
exchange rate between such currencies and the dollar. Changes in foreign
currency exchange rates will influence values of securities in the Funds'
portfolios, from the perspective of U.S. investors. Changes in foreign currency
exchange rates may also affect the value of dividends and interest earned, gains
and losses realized on the sale of securities, and net investment income and
gains, if any, to be distributed to shareholders by the Funds. The rate of
exchange between the U.S. dollar and other currencies is determined by the
forces of supply and demand in the foreign exchange markets. These forces are
affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors.

Forward Foreign Currency Exchange Contracts (Centura Equity Growth Fund
and Centura Equity Income Fund). Centura Equity Growth Fund and Centura Equity
Income Fund may enter into forward foreign currency exchange contracts in order
to protect against uncertainty in the level of future foreign exchange rates. A
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are entered into in the interbank market
conducted between currency traders (usually large commercial banks) and their
customers. Forward foreign currency exchange contracts may be bought or sold to
protect the Funds against a possible loss resulting from an adverse change in
the relationship between foreign currencies and the U.S. dollar, or between
foreign currencies. Although such contracts are intended to minimize the risk of
loss due to a decline in the value of the hedged currency, at the same time,
they tend to limit any potential gain which might result should the value of
such currency increase.

- 4 -

<PAGE>

a future date. Futures contracts are traded on designated "contracts markets"
which, through their clearing corporations, guarantee performance of the
contracts. Currently, there are futures contracts based on securities such as
long-term U.S. Treasury bonds, U.S. Treasury notes, GNMA Certificates and
three-month U.S. Treasury bills. For municipal securities, there is the Bond
Buyer Municipal Bond Index.

Generally, if market interest rates increase, the value of outstanding
debt securities declines (and vice versa). Entering into a futures contract for
the sale of securities has an effect similar to the actual sale of securities,
although sale of the futures contract might be accomplished more easily and
quickly. For example, if a Fund holds long-term U.S. Government securities and
the Adviser anticipates a rise in long-term interest rates, the Fund could, in
lieu of disposing of its portfolio securities, enter into futures contracts for
the sale of similar long-term securities. If rates increased and the value of
the Fund's portfolio securities declined, the value of the Fund's futures
contracts would increase, thereby protecting the Fund by preventing net asset
value from declining as much as it otherwise would have. Similarly, entering
into futures contracts for the purchase of securities has an effect similar to
actual purchase of the underlying securities, but permits the continued holding
of securities other than the underlying securities. For example, if the Adviser
expects long-term interest rates to decline, the Fund might enter into futures
contracts for the purchase of long-term securities, so that it could gain rapid
market exposure that may offset anticipated increases in the cost of securities
it intends to purchase, while continuing to hold higher-yielding short-term
securities or waiting for the long-term market to stabilize.

Stock Index Futures Contracts (Centura Equity Growth Fund and Centura
Equity Income Fund). These Funds may enter into stock index futures contracts in
order to protect the value of their common stock investments. A stock index
futures contract is an agreement in which one party agrees to deliver to the
other an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the agreement is made. As the aggregate
market value of the stocks in the index changes, the value of the index also
will change. In the event that the index level rises above the level at which
the stock index futures contract was sold, the seller of the stock index futures
contract will realize a loss determined by the difference between the purchase
level and the index level at the time of expiration of the stock index futures
contract, and the purchaser will realize a gain in that amount. In the event the
index level falls below the level at which the stock

- 5 -

<PAGE>

index futures contract was sold, the seller will recognize a gain determined by
the difference between the two index levels at the expiration of the stock index
futures contract, and the purchaser will realize a loss. Stock index futures
contracts expire on a fixed date, currently one to seven months from the date of
the contract, and are settled upon expiration of the contract.

Centura Equity Growth Fund and Centura Equity Income Fund will utilize
stock index futures contracts only for the purpose of attempting to protect the
value of their common stock portfolios in the event of a decline in stock prices
and, therefore, usually will be sellers of stock index futures contracts. This
risk management strategy is an alternative to selling securities in the
portfolio and investing in money market instruments. Also, stock index futures
contracts may be purchased to protect a Fund against an increase in prices of
stocks which that Fund intends to purchase. If the Fund is unable to invest its
cash (or cash equivalents) in stock in an orderly fashion, the Fund could
purchase a stock index futures contract which may be used to offset any increase
in the price of the stock. However, it is possible that the market may decline
instead, resulting in a loss on the stock index futures contract. If the Fund
then concludes not to invest in stock at that time, or if the price of the
securities to be purchased remains constant or increases, the Fund will realize
a loss on the stock index futures contract that is not offset by a reduction in
the price of securities purchased. These Funds also may buy or sell stock index
futures contracts to close out existing futures positions.

Option Writing and Purchasing (All Funds). A Fund may write (or sell)
put and call options on the securities that the Fund is authorized to buy or
already holds in its portfolio. These option contracts may be listed for trading
on a national securities exchange or traded over-the-counter. A Fund may also
purchase put and call options. A Fund will not write covered calls on more than
25% of its portfolio, and a Fund will not write covered calls with strike prices
lower than the underlying securities' cost basis on more than 25% of its total
portfolio. A Fund may not invest more than 5% of its total assets in option
purchases.

A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying security at the agreed upon exercise (or
"strike") price during the option period. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying security at
the strike price during the option period. Purchasers of options pay an amount,
known as a premium, to the option writer in exchange for the right under the
option contract.

- 6 -

<PAGE>

A Fund may sell "covered" put and call options as a means of hedging
the price risk of securities in the Fund's portfolio. The sale of a call option
against an amount of cash equal to the put's potential liability constitutes a
"covered put." When a Fund sells an option, if the underlying securities do not
increase (in the case of a call option) or decrease (in the case of a put
option) to a price level that would make the exercise of the option profitable
to the holder of the option, the option will generally expire without being
exercised and the Fund will realize as profit the premium paid for such option.
When a call option of which a Fund is the writer is exercised, the option holder
purchases the underlying security at the strike price and the Fund does not
participate in any increase in the price of such securities above the strike
price. When a put option of which a Fund is the writer is exercised, the Fund
will be required to purchase the underlying securities at the strike price,
which may be in excess of the market value of such securities. At the time a
Fund writes a put option or a call option on a security it does not hold in its
portfolio in the amount required under the option, it will establish and
maintain a segregated account with its custodian consisting solely of cash, U.S.
Government securities and other liquid high grade debt obligations equal to its
liability under the option.

Over-the-counter options ("OTC options") differ from exchange-traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than exchange-traded
options. Because OTC options are not traded on an exchange, pricing is normally
done by reference to information from a market marker. This information is
carefully monitored by the Adviser and verified in appropriate cases. OTC
options transactions will be made by a Fund only with recognized U.S. Government
securities dealers. OTC options are subject to the Funds' 15% limit on
investments in securities which are illiquid or not readily marketable (see
"Investment Restrictions"), provided that OTC option transactions by a Fund with
a primary U.S. Government securities dealer which has given the Fund an absolute
right to repurchase according to a "repurchase formula" will not be subject to
such 15% limit.

- 7 -

<PAGE>

same terms as the option sold by the Fund and has the effect of cancelling the
Fund's position as a seller. The premium which a Fund will pay in executing a
closing purchase transaction may be higher than the premium received when the
option was sold, depending in large part upon the relative price of the
underlying security at the time of each transaction. To the extent options sold
by a Fund are exercised and the Fund either delivers portfolio securities to the
holder of a call option or liquidates securities in its portfolio as a source of
funds to purchase securities put to the Fund, the Fund's portfolio turnover rate
may increase, resulting in a possible increase in short-term capital gains and a
possible decrease in long-term capital gains.

Options on Futures Contracts (All Funds). A Fund may purchase and write
put and call options on futures contracts that are traded on a U.S. exchange or
board of trade and enter into related closing transactions to attempt to gain
additional protection against the effects of interest rate, currency or equity
market fluctuations. There can be no assurance that such closing transactions
will be available at all times. In return for the premium paid, such an option
gives the purchaser the right to assume a position in a futures contract at any
time during the option period for a specified exercise price.

A Fund may purchase put options on futures contracts in lieu of, and
for the same purpose as, the sale of a futures contract. It also may purchase
such put options in order to hedge a long position in the underlying futures
contract.

The purchase of call options on futures contracts is intended to serve
the same purpose as the actual purchase of the futures contracts. A Fund may
purchase call options on futures contracts in anticipation of a market advance
when it is not fully invested.

A Fund may write a call option on a futures contract in order to hedge
against a decline in the prices of the index or debt securities underlying the
futures contracts. If the price of the futures contract at expiration is below
the exercise price, the Fund would retain the option premium, which would
offset, in part, any decline in the value of its portfolio securities.

The writing of a put option on a futures contract is similar to the
purchase of the futures contracts, except that, if market price declines, a Fund
would pay more than the market price for the underlying securities or index
units. The net cost to that Fund would be reduced, however, by the premium
received on the sale of the put, less any transactions costs.

- 8 -

<PAGE>

Risks of Futures and Options Investments (All Funds). A Fund will incur
brokerage fees in connection with its futures and options transactions, and it
will be required to segregate funds for the benefit of brokers as margin to
guarantee performance of its futures and options contracts. In addition, while
such contracts will be entered into to reduce certain risks, trading in these
contracts entails certain other risks. Thus, while a Fund may benefit from the
use of futures contracts and related options, unanticipated changes in interest
rates may result in a poorer overall performance for that Fund than if it had
not entered into any such contracts. Additionally, the skills required to invest
successfully in futures and options may differ from skills required for managing
other assets in the Fund's portfolio.

Limitations on Futures Contracts and Options on Futures Contracts (All
Funds). Each Fund will use financial futures contracts and related options only
for "bona fide hedging" purposes, as such term is defined in applicable
regulations of the CFTC, or, with respect to positions in financial futures and
related options that do not qualify as "bona fide hedging" positions, will enter
such non-hedging positions only to the extent that aggregate initial margin
deposits plus premiums paid by it for open futures option positions, less the
amount by which any such positions are "in-the-money," would not exceed 5% of
the Fund's total assets. Futures contracts and related put options written by a
Fund will be offset by assets held in a segregated custodial account sufficient
to satisfy the Fund's obligations under such contracts and options.

North Carolina Municipal Obligations (Centura North Carolina Tax-Free
Bond Fund). The ability of this Fund to achieve its investment objective depends
on the ability of issuers of North Carolina Municipal Obligations to meet their
continuing obligations for the payment of principal and interest.

North Carolina Municipal Obligations are debt securities issued by the
state of North Carolina, its political subdivisions, and the districts,
authorities, agencies and instrumentalities of the state and its political
subdivisions, the interest on which is exempt from regular federal and North
Carolina income taxes.

North Carolina municipal bonds are issued for various public purposes,
including the construction of housing, pollution abatement facilities, health
care and prison facilities, and educational facilities.

Unlike other types of investments, municipal securities have
traditionally not been subject to registration with, or other

- 9 -

<PAGE>

regulation by, the Securities and Exchange Commission ("SEC"). However, there
have been proposals which could lead to future regulations of these securities
by the SEC.

Municipal Lease Obligations (Centura North Carolina Tax-Free Bond
Fund). Municipal lease obligations are municipal securities that may be
supported by a lease or an installment purchase contract issued by state and
local government authorities to acquire funds to obtain the use of a wide
variety of equipment and facilities such as fire and sanitation vehicles,
computer equipment and other capital assets. These obligations, which may be
secured or unsecured, are not general obligations and have evolved to make it
possible for state and local government authorities to obtain the use of
property and equipment without meeting constitutional and statutory requirements
for the issuance of debt. Thus, municipal lease obligations have special risks
not normally associated with municipal bonds. These obligations frequently
contain "non-appropriation" clauses that provide that the governmental issuer of
the obligation has no obligation to make future payments under the lease or
contract unless money is appropriated for such purposes by the legislative body
on a yearly or other periodic basis. In addition to the "non-appropriation"
risk, many municipal lease obligations have not yet developed the depth of
marketability associated with municipal bonds; moreover, although the
obligations may be secured by the leased equipment, the disposition of the
equipment in the event of foreclosure might prove difficult. In order to limit
certain of these risks, the Fund will limit its investments in municipal lease
obligations that are illiquid, together with all other illiquid securities in
its portfolio, to not more than 15% of its assets. The liquidity of municipal
lease obligations purchased by the Fund will be determined pursuant to
guidelines approved by the Board of Directors. Factors considered in making such
determinations may include; the frequency of trades and quotes for the
obligation; the number of dealers willing to purchase or sell the security and
the number of other potential buyers; the willingness of dealers to undertake to
make a market; the obligation's rating; and, if the security is unrated, the
factors generally considered by a rating agency.

- 10 -

<PAGE>

of the Funds; and (d) not more than 10% of the outstanding voting stock of any
one investment company will be owned in the aggregate by the Funds. As a
shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of that company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
Investment companies in which a Fund may invest may also impose a sales or
distribution charge in connection with the purchase or redemption of their
shares and other types of commissions or charges. Such charges will be payable
by the Funds and, therefore, will be borne indirectly by Shareholders.

INVESTMENT RESTRICTIONS

The following restrictions are fundamental policies of each Fund, and
except as otherwise indicated, may not be changed with respect to a Fund without
the approval of a majority of the outstanding voting securities of that Fund
which, as defined in the Investment Company Act of 1940 ("1940 Act"), means the
lesser of (1) 67% of the shares of such Fund present at a meeting if the holders
of more than 50% of the outstanding shares of such Fund are present in person or
by proxy, or (2) more than 50% of the outstanding voting shares of such Fund.

Each Fund, except as indicated, may not:

(1) with respect to 75% of its total assets, purchase more
than 10% of the voting securities of any one issuer or invest more than
5% of the value of such assets in the securities or instruments of any
one issuer, except securities or instruments issued or guaranteed by
the U.S. Government, its agencies or instrumentalities;

(2) Borrow money except that a Fund may borrow from banks up
to 10% of the current value of its total net assets for temporary or
emergency purposes; a Fund will make no purchases if its outstanding
borrowings exceed 5% of its total assets;

(3) Invest in real estate, provided that a Fund may invest in
readily marketable securities (except limited partnership interests) of
issuers that deal in real estate and securities secured by real estate
or interests therein and a Fund may hold and sell real estate (a) used
principally for its own office space or (b) acquired as a result of a
Fund's ownership of securities;

- 11 -

<PAGE>

(4) Engage in the business of underwriting securities of other
issuers, except to the extent that the purchase of securities directly
from the issuer (either alone or as one of a group of bidders) or the
disposal of an investment position may technically cause it to be
considered an underwriter as that term is defined under the Securities
Act of 1933;

(5) Make loans, except that a Fund may (a) lend its portfolio
securities, (b) enter into repurchase agreements and (c) purchase the
types of debt instruments described in the Prospectus or the SAI;

(6) Purchase securities or instruments which would cause 25%
or more of the market value of the Fund's total assets at the time of
such purchase to be invested in securities or instruments of one or
more issuers having their principal business activities in the same
industry, provided that there is no limit with respect to investments
in the U.S. Government, its agencies and instrumentalities;

(7) Issue any senior securities, except as appropriate to
evidence indebtedness which it is permitted to incur, and provided that
collateral arrangements with respect to forward contracts, futures
contracts or options, including deposits of initial and variation
margin, are not considered to be the issuance of a senior security for
purposes of this restriction; or

(8) Purchase or sell commodity contracts, except that the Fund
may invest in futures contracts and in options related to such
contracts (for purposes of this restriction, forward foreign currency
exchange contracts are not deemed to be commodities).

- 12 -

<PAGE>

separated by industrial categories, such as telephone or gas utilities. For
purposes of restriction number 7, with respect to its futures transactions and
writing of options (other than fully covered call options), a Fund will maintain
a segregated account for the period of its obligation under such contract or
option consisting of cash, U.S. Government securities and other liquid high
grade debt obligations in an amount equal to its obligations under such
contracts or options.

The following policies of the Funds are non-fundamental and may be
changed by the Board of Directors without shareholder approval. These policies
provide that a Fund, except as otherwise specified, may not:

(a) Invest in companies for the purpose of exercising control
or management;

(b) Knowingly purchase securities of other investment
companies, except (i) in connection with a merger, consolidation,
acquisition, or reorganization; and (ii) the equity and fixed income
funds may invest up to 10% of their net assets in shares of other
investment companies;

(c) Purchase securities on margin, except that a Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities;

(d) Mortgage, pledge, or hypothecate any of its assets,
except that a Fund may pledge not more than 15% of the current value of the
Fund's total net assets;

(e) Purchase or retain the securities of any issuer, if those
individual officers and Directors of the Company, the Adviser, the
Administrator, or the Distributor, each owning beneficially more than
1/2 of 1% of the securities of such issuer, together own more than 5%
of the securities of such issuer;

(f) Invest more than 5% of its net assets in warrants which
are unattached to securities; included within that amount, no more than
2% of the value of the Fund's net assets, may be warrants which are not
listed on the New York or American Stock Exchanges;

(g) Write, purchase or sell puts, calls or combinations
thereof, except as described in the Prospectus or SAI;

(h) Invest more than 5% of the current value of its total
assets in the securities of companies which, including

- 13 -

<PAGE>

predecessors, have a record of less than three years' continuous
operation;

(i) Invest more than 15% of the value of its net assets in
investments which are illiquid or not readily marketable (including
repurchase agreements having maturities of more than seven calendar
days and variable and floating rate demand and master demand notes not
requiring receipt of the principal note amount within seven days'
notice); or

(j) Invest in oil, gas or other mineral exploration or
development programs, although it may invest in issuers that own or
invest in such programs.

- 14 -

<PAGE>

MANAGEMENT

Directors and Officers

The principal occupations of the Directors and executive officers of
the Company for the past five years are listed below. The address of each,
unless otherwise indicated, is 237 Park Avenue, New York, New York 10017.
Directors deemed to be "interested persons" of the Company for purposes of the
1940 Act are indicated by an asterisk.

Position
with Principal
Name, Address and Age Company Occupation

Leslie H. Garner, Jr. Director President,
Cornell College Cornell College
600 First Street West
Mount Vernon, IA 52314-1098
Age: 45

James H. Speed, Jr. Director Hardee's Food Systems,
1233 Hardee's Blvd. Inc. - Vice President
Rocky Mount, NC 27802 Controller (1991-
Age: 43 present); Deloitte &
Touche - Senior Audit
Manager (1979-1991)

Frederick E. Turnage Director Attorney
149 North Franklin St.
Rocky Mount, NC 27804
Age: 60

*Lucy Hancock Bode Director Lobbyist
P.O. Box 6338
Raleigh, NC 27628
Age: 45

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<PAGE>

*J. Franklin Martin Director President of
LandCraft Properties LandCraft Properties
227 W. Trade Street (1978 - present)
Suite 2730
Charlotte, NC 28202
Age: 51

John J. Pileggi President, Furman Selz LLC -
Age: 37 Treasurer, Director (1984-present)
and Chief
Executive
Officer

Joan V. Fiore Secretary Furman Selz LLC -
Age: 40 Managing Director and
Counsel (1991-present);
Securities and Exchange
Commission - Staff
Attorney (1986-1991)

Sheryl Hirschfeld Assistant Furman Selz LLC -
Age: 35 Secretary Director, Corporate
Secretary Services
(since 1994); The Dreyfus
Corporation - Assistant
to the Corporate
Secretary and General
Counsel (1982-1994)

Gordon M. Forrester Assistant Furman Selz LLC -
Age: 35 Treasurer Managing Director, Mutual
Funds Division (1987-
present)

- 16 -

<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Total
Aggregate Retirement Compensation
Name of Compensa- Benefits Accrued Estimated Annual From Registrant
Person, tion As Part of Fund Benefits Upon and Fund Complex
Position Registrant Expenses Retirement Paid to Directors

Leslie H. Garner, Jr. $5,000 -0- -0- $5,000

James H. Speed, Jr. $5,000 -0- -0- $5,000

Frederick E. Turnage $5,000 -0- -0- $5,000

Lucy Hancock Bode $4,000 -0- -0- $4,000

J. Franklin Martin* $1,000 -0- -0- $1,000
</TABLE>

- ---------------------------------
* Elected to the Board January 24, 1996.

As of August 9, 1996, the Officers and Directors of the Company, as a
group, own less than 1% of the outstanding shares of the Funds.

As of August 9, 1996, the following individuals owned 5% or more of the
Class A and Class B shares of the Funds:

CENTURA EQUITY GROWTH FUND

Class A SHARES OWNED PERCENTAGE OWNED

Stephens Inc for the Exclusive 343,043 72.2%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402

CENTURA FEDERAL SECURITIES INCOME FUND

CLASS A SHARES OWNED PERCENTAGE OWNED

Stephens Inc for the Exclusive 44,549 79.8%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402

CLASS B SHARES OWNED PERCENTAGE OWNED

Furman Selz Inc 1,236 6.6%
Attn: Sergio Lupetin
230 Park Ave 12th Fl
New York, NY 10169-0005

- 17 -

<PAGE>

Stephens Inc FBO 983 5.2%
ACCT 83360137
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 1,472 7.8%
ACCT 83216300
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 2,826 15.1%
ACCT 83278411
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 972 5.2%
A/C 83254735
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 2,414 12.9%
A/C 83310595
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 2,185 11.6%
A/C 83329707
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 1,193 6.4%
A/C 83339985
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 2,101 11.2%
A/C 83378482
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 1,123 6.0%
A/C 83327930
P.O. Box 34127
Little Rock, AR 72203-4127

CENTURA NORTH CAROLINA TAX-FREE BOND FUND

CLASS A SHARES OWNED PERCENTAGE OWNED

Stephens Inc for Exclusive 365,934 96.5%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402

- 18 -

<PAGE>

CLASS B SHARES OWNED PERCENTAGE OWNED

Stephens Inc FBO 4,910 11.7%
ACCT 83283728
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 9,209 22.0%
A/C 83318544
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 2,498 6.0%
A/C 83385411
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 3,280 7.8%
A/C 83338132
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 5,426 12.9%
A/C 83351331
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 5,512 13.1%
A/C 83351449
P.O. Box 34127
Little Rock, AR 72203-4127

Stephens Inc FBO 3,661 8.7%
A/C 83366040
P.O. Box 34127
Little Rock, AR 72203-4127

Investment Adviser

Centura Bank (the "Adviser") 131 North Church Street, Rocky Mountain,
North Carolina 27802, serves as investment adviser to the Funds. For these
services, the Adviser receives from each Fund a fee at an annual rate based on
each Fund's average daily net assets. The rates for each Fund are 0.70% for
Centura Equity Growth Fund, 0.70% for Centura Equity Income Fund, 0.30% for
Centura Federal Securities Income Fund and 0.35% for Centura North Carolina
Tax-Free Bond Fund.

Under the terms of the Investment Advisory Agreement for the Funds
between the Company and the Adviser ("Agreement"), the investment advisory
services of the Adviser to the Funds are not exclusive. The Adviser is free to,
and does, render investment advisory services to others.

The Agreement will continue in effect with respect to each Fund for a
period more than two years from the date of its

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<PAGE>

execution, only as long as such continuance is approved at least annually (i) by
vote of the holders of a majority of the outstanding voting securities of each
Fund or by the Board of Directors and (ii) by a majority of the Directors who
are not parties to the Agreement or "interested persons" (as defined in the 1940
Act) of any such party. With respect to all the Funds other than Centura Equity
Income Fund, the Agreement was approved by the Board of Directors, including a
majority of the Directors who are not parties to the Agreement or interested
persons of any such parties, at a meeting called for the purpose of voting on
the Agreement, held on April 26, 1994, and by the sole shareholder of the Funds
on April 26, 1994. The Agreement was recently re-approved with respect to those
Funds at the April 23, 1996 Board of Directors Meeting. With respect to Centura
Equity Income Fund, which was organized on August 28, 1996, the Agreement was
approved by the Board of Directors, including a majority of the Directors who
are not parties to the Agreement or interested persons of any such parties, at
its meeting called for such purpose held on April 24, 1996, and by the sole
shareholder of that Fund on April 24, 1996. The Agreement may be terminated at
any time without penalty by vote of the Directors (with respect to the Company
or a Fund) or, with respect to any Fund, by vote of the Directors or the
shareholders of that Fund, or by the Adviser, on 60 days written notice by
either party to the Agreement and will terminate automatically if assigned.

For the fiscal year ended April 30, 1996, the Adviser received the
following in advisory fees: $802,888 from the Equity Growth Fund, $312,098 from
the Federal Securities Income Fund and was entitled to $138,274 from the North
Carolina Tax-Free Bond Fund, however, waived $99,774. For the period June 1,
1994 (commencement of operations) through April 30, 1995, the Adviser received
the following in advisory fees: $458,424 from the Equity Growth Fund, $236,139
from the Federal Securities Income Fund and the Adviser was entitled to $98,015
from the North Carolina Tax-Free Bond Fund but waived $83,311.

Distribution of Fund Shares

Centura Funds Distributor, Inc. (the "Distributor") serves as principal
underwriter for the shares of the Funds pursuant to a Distribution Contract. The
Distribution Contract provides that the Distributor will use its best efforts to
maintain a broad distribution of the Funds' shares among bona fide investors and
may enter into selling group agreements with responsible dealers and dealer
managers as well as sell the Funds' shares to individual investors. The
Distributor is not obligated to sell any specific amount of shares.

Service and distribution plans (the "Plans") have been adopted by each
of the Funds. The Plan for each Fund provides for different rates of fee payment
with respect to Class A shares

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<PAGE>

and Class B shares, as described in the Prospectus. No Plan has been adopted for
Class C shares. Pursuant to the Plans, the Funds may pay directly or reimburse
the Distributor monthly in amounts described in the Prospectus for costs and
expenses of marketing the shares, or classes of shares, of the Funds. The Board
of Directors has concluded that there is a reasonable likelihood that the Plans
will benefit the Funds and their shareholders.

Each Plan provides that it may not be amended to increase materially
the costs which the Funds or a class of shares may bear pursuant to the Plan
without shareholder approval and that other material amendments of the Plans
must be approved by the Board of Directors, and by the Directors who are neither
"interested persons" (as defined in the 1940 Act) of the Company nor have any
direct or indirect financial interest in the operation of the particular Plan or
any related agreement, by vote cast in person at a meeting called for the
purpose of considering such amendments. The selection and nomination of the
Directors of the Company have been committed to the discretion of the Directors
who are not "interested persons" of the Company. The Plans with respect to each
of the Funds except Centura Equity Income Fund were approved by the Board of
Directors and by the Directors who are neither "interested persons" nor have any
direct or indirect financial interest in the operation of any Plan ("Plan
Director"), by vote cast in person at a April 26, 1994 meeting called for the
purpose of voting on the Plans, and by the sole shareholder of each class of
shares of each of the Funds on April 26, 1994. The Plan with respect to Centura
Equity Income Fund was approved by the Board of Directors and by the Plan
Directors by vote cast in person at a meeting held July 24, 1996 called for the
purpose of voting on that Plan, and by the sole shareholder of each class of
shares of that Fund on July 24, 1996. The continuance of the Plans is subject to
similar annual approval by the Directors and the Plan Directors. The Plans were
recently re-approved at the April 23, 1996 Board of Directors Meeting. Each Plan
is terminable with respect to a class of shares of a Fund at any time by a vote
of a majority of the Plan Directors or by vote of the holders of a majority of
the shares of the class.

For the fiscal year ended April 30, 1996 the following fees with
respect to Class A shares were received by the Distributor: $7,215 for the
Equity Growth Fund, $888 for the Federal Securities Income Fund and $5,259 for
the North Carolina Tax-Free Bond Fund. For the same fiscal year, with respect to
Class B shares, the Distributor received $33,942 for the Equity Growth Fund,
$1,696 for the Federal Securities Income Fund and $3,168 for the North Carolina
Tax-Free Bond Fund. All expenditures were

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<PAGE>

for compensation to the Distributor for its services as Underwriter of the
Funds.

For the period ended April 30, 1995, the Distributor received the
following fees with respect to Class A shares: $1,106 for the Equity Growth
Fund, $422 for the Federal Securities Income Fund and $1,018 for the North
Carolina Tax-Free Bond Fund. For the period ended April 30, 1995, the
Distributor received the following fees with respect to Class B shares: $4,705
for the Equity Growth Fund, $412 for the Federal Securities Income Fund and
$2,322 for the North Carolina Tax-Free Bond Fund. All expenditures were for
compensation to the Distributor for its services as Underwriter of the Funds.

Administrative Services

Furman Selz LLC (the "Administrator") provides administrative services
necessary for the operation of the Funds, including among other things, (i)
preparation of shareholder reports and communications, (ii) regulatory
compliance, such as reports to and filings with the Securities and Exchange
Commission ("SEC") and state securities commissions and (iii) general
supervision of the operation of the Funds, including coordination of the
services performed by the Funds' Adviser, Distributor, custodians, independent
accountants, legal counsel and others. In addition, Furman Selz furnishes office
space and facilities required for conducting the business of the Funds and pays
the compensation of the Funds' officers, employees and Directors affiliated with
Furman Selz. For these services, Furman Selz receives from each Fund a fee,
payable monthly, at the annual rate of 0.15% of each Fund's average daily net
assets.

On June 28, 1996 Furman Selz and BISYS Group, Inc. ("BISYS") announced
a definitive agreement which provides for Furman Selz to transfer its mutual
fund business to BISYS. This transaction is expected to close within 90 days.
BISYS, headquartered in Little Falls, New Jersey, supports more than 5,000
financial institutions and corporate clients through two strategic business
units. BISYS Information Services Group provides image and data processing
outsourcing, and pricing analysis to more than 600 banks nationwide. BISYS
Investment Services Group designs, administers and distributes over 30 families
of proprietary mutual funds consisting of more than 365 portfolios, and provides
401(k) marketing support, administration, and recordkeeping services in
partnership with banking institutions and investment management companies. At a
meeting held on July 24, 1996, the Directors reviewed and approved a new
Administration Agreement with BISYS Fund Services Limited Partnership d/b/a
BISYS Fund Services, a new Transfer Agency Agreement and a Fund Accouting
Agreement with BISYS Fund Services, Inc. Both BISYS companies

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<PAGE>

have their principal place of business at 3435 Stelzer Road, Columbus, Ohio
43219. These new agreements are expected to take effect in the fall of 1996.

For the fiscal year ended April 30, 1996, the Administrator was
entitled to the following administrative services fees:

Furman Selz Furman Selz
Entitled Waived

Centura Equity Growth Fund $172,047 -
Centura Federal Securities Income Fund 156,049 -
Centura North Carolina 59,260 $42,761
Tax-Free Bond Fund

For the period ended April 30, 1995, the Administrator was entitled to
the following administrative services fees:

Furman Selz Furman Selz
Entitled Waived

Centura Equity Growth Fund $105,945 $19,669
Centura Federal Securities Income Fund 117,881 23,780
Centura North Carolina Tax-Free Bond Fund 45,419 40,371

For each of the Funds except Centura Equity Income Fund, the
Administrative Services Contract was approved by the Board of Directors,
including a majority of the Directors who are not parties to the Contract or
interested persons of such parties, at its meeting held on April 26, 1994 and by
the sole shareholder of each of the Funds on April 26, 1994 and was recently
re-approved at the April 23, 1996 Board of Directors Meeting. The Administrative
Services Contract with respect to Centura Equity Income Fund was approved by the
Board of Directors, including a majority of the Directors who are not parties to
the Contract or interested persons of such parties, at a meeting held July 24,
1996 and by the sole shareholder of that Fund on July 24, 1996. The
Administrative Services Contract is terminable with respect to a Fund or the
Company without penalty, at any time, by vote of a majority of the Directors or,
with respect to a Fund, by vote of the holders of a majority of the shares of
the Fund, each upon not more than 60 days written notice to the Administrator,
and upon 60 days notice, by the Administrator.

Service Organizations

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<PAGE>

Service Organizations may include among other things: providing necessary
personnel and facilities to establish and maintain certain shareholder accounts
and records; assisting in processing purchase and redemption transactions;
arranging for the wiring of funds; transmitting and receiving funds in
connection with client orders to purchase or redeem shares; verifying and
guaranteeing client signatures in connection with redemption orders, transfers
among and changes in client-designating accounts; providing periodic statements
showing a client's account balance and, to the extent practicable, integrating
such information with other client transactions; furnishing periodic and annual
statements and confirmations of all purchases and redemptions of shares in a
client's account; transmitting proxy statements, annual reports, and updating
prospectuses and other communications from the Funds to clients; and providing
such other services as the Funds or a client reasonably may request, to the
extent permitted by applicable statute, rule or regulation. Neither Furman Selz
nor the Adviser will be a Service Organization or receive fees for servicing.

Some Service Organizations may impose additional or different
conditions on their clients, such as requiring their clients to invest more than
the minimum initial or subsequent investments specified by the Funds or charging
a direct fee for servicing. If imposed, these fees would be in addition to any
amounts that might be paid to the Service Organization by the Funds. Each
Service Organization has agreed to transmit to its clients a schedule of any
such fees. Shareholders using Service Organizations are urged to consult them
regarding any such fees or conditions.

The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting, selling or
distributing securities. There currently is no precedent prohibiting banks from
performing administrative and shareholder servicing functions as Service
Organizations. However, judicial or administrative decisions or interpretations
of such laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, could prevent a bank from continuing to perform all
or a part of its servicing activities. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and banks and financial institutions may be required to register as dealers
pursuant to state law. If a bank were prohibited from so acting, its shareholder
clients would be permitted to remain shareholders of the Funds and alternative
means for continuing the servicing of such shareholders would be sought. In that
event, changes in the operation of the Funds might occur and a shareholder
serviced by

- 25 -

<PAGE>

such a bank might no longer be able to avail itself of any services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.

DETERMINATION OF NET ASSET VALUE

The Funds value their portfolio securities in accordance with the
procedures described in the Prospectus.

PORTFOLIO TRANSACTIONS

Investment decisions for the Funds and for the other investment
advisory clients of the Adviser are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved.
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more clients are selling the security. In some instances, one client may sell
a particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as possible, averaged as
to price and allocated between such clients in a manner which in the Adviser's
opinion is equitable to each and in accordance with the amount being purchased
or sold by each. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.

The Funds have no obligation to deal with any dealer or group of
dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Company's Board of Directors, the Adviser is
primarily responsible for portfolio decisions and the placing of portfolio
transactions. In placing orders, it is the policy of the Funds to obtain the
best results taking into account the broker-dealer's general execution and
operational facilities, the type of transaction involved and other factors such
as the dealer's risk in positioning the securities. While the Adviser generally
seeks reasonably competitive spreads or commissions, the Funds will not
necessarily be paying the lowest spread or commission available.

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<PAGE>

behalf of a Fund. Debt securities normally will be purchased or sold from or to
issuers directly or to dealers serving as market makers for the securities at a
net price. Generally, money market securities are traded on a net basis and do
not involve brokerage commissions. Under the 1940 Act, persons affiliated with
the Funds, the Adviser or Furman Selz are prohibited from dealing with the Funds
as a principal in the purchase and sale of securities unless a permissive order
allowing such transactions is obtained from the SEC.

The Adviser may, in circumstances in which two or more broker-dealers
are in a position to offer comparable results, give preference to a dealer that
has provided statistical or other research services to the Adviser. By
allocating transactions in this manner, the Adviser is able to supplement its
research and analysis with the views and information of securities firms. These
items, which in some cases may also be purchased for cash, include such matters
as general economic and securities market reviews, industry and company reviews,
evaluations of securities and recommendations as to the purchase and sale of
securities. Some of these services are of value to the Adviser in advising
various of its clients (including the Funds), although not all of these services
are necessarily useful and of value in managing the Funds. The advisory fees
paid by the Funds are not reduced because the Adviser and its affiliates receive
such services.

As permitted by Section 28(e) of the Securities Exchange Act of 1934
(the "Act"), the Adviser may cause a Fund to pay a broker-dealer that provides
"brokerage and research services" (as defined in the Act) to the Adviser an
amount of disclosed commission for effecting a securities transaction for the
Fund in excess of the commission which another broker-dealer would have charged
for effecting that transaction.

For the fiscal year ended April 30, 1996, $192,705 was paid in
brokerage commissions by the Equity Growth Fund. Of this amount, none was paid
to any affiliated brokers. For the period ended April 30, 1995, only the Equity
Growth Fund paid brokerage commissions, in the amount of $115,342. Of this
amount, none was paid to any affiliated brokers.

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<PAGE>

Portfolio Turnover

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<PAGE>

for the Equity Growth Fund, the Federal Securities Income Fund and the North
Carolina Tax-Free Bond Fund, respectively. The portfolio turnover rate for the
fiscal period ended April 30, 1995 was 44%, 42%, and 121% for the Equity Growth
Fund, the Federal Securities Income Fund and the North Carolina Tax-Free
Bond Fund, respectively.

TAXATION

The Funds intend to qualify and elect annually to be treated as
regulated investment companies under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). To qualify as a regulated investment company,
a Fund must for each taxable year (a) distribute to shareholders at least 90% of
its investment company taxable income (which includes, among other items,
dividends, taxable interest and the excess of net short-term capital gains over
net long-term capital losses); (b) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (c) derive less than 30% of its gross income from the
sale or other disposition of certain assets (namely, in the case of a Fund, (i)
stock or securities; (ii) options, futures, and forward contracts (other than
those on foreign currencies), and (iii) foreign currencies (including options,
futures, and forward contracts on such currencies) not directly related to the
Fund's principal business of investing in stock or securities (or options and
futures with respect to stocks or securities)) held less than 3 months; and (d)
diversify its holdings so that, at the end of each quarter of the taxable year,
(i) at least 50% of the market value of the Fund's assets is represented by cash
and cash items (including receivables), U.S. Government securities, the
securities of other regulated investment companies and other securities, with
such other securities of any one issuer limited for the purposes of this
calculation to an amount not greater than 5% of the value of the Fund's total
assets and not greater than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities or
the securities of other regulated investment companies, or of any two or more
issuers which the Fund controls and which are engaged in the same or similar or
related trades or businesses). In addition, a Fund earning tax-exempt interest
must, in each year, distribute at least 90% of its net tax-exempt income. By
meeting these requirements, a Fund generally will not be subject to Federal
income tax on its investment company taxable income and net capital gains which
are distributed to shareholders. If the Funds do not meet all of these Code
requirements, they will be

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taxed as ordinary corporations and their distributions will be taxed to
shareholders as ordinary income.

Amounts, other than tax-exempt interest, not distributed on a timely
basis in accordance with a calendar year distribution requirement are subject to
a nondeductible 4% excise tax. To prevent imposition of the excise tax, each
Fund must distribute for each calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (excluding any capital gains or losses) for the
calendar year, (2) at least 98% of the excess of its capital gains over capital
losses (adjusted for certain ordinary losses) for the one-year period ending
October 31 of such year, and (3) all ordinary income and capital gain net income
(adjusted for certain ordinary losses) for previous years that were not
distributed during such years. A distribution, including an "exempt-interest
dividend," will be treated as paid on December 31 of a calendar year if it is
declared by a Fund during October, November or December of that year to
shareholders of record on a date in such a month and paid by the Fund during
January of the following year. Such distributions will be reportable by
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.

Distributions of investment company taxable income generally are
taxable to shareholders as ordinary income. Distributions from certain of the
Funds may be eligible for the dividends-received deduction available to
corporations. Distributions of net capital gains, if any, designated by the
Funds as capital gain dividends are taxable to shareholders as long-term capital
gain, regardless of the length of time the Funds' shares have been held by a
shareholder. All distributions are taxable to the shareholder in the same manner
whether reinvested in additional shares or received in cash. Shareholders will
be notified annually as to the Federal tax status of distributions.

Distributions by a Fund reduce the net asset value of the Fund's
shares. Should a distribution reduce the net asset value below a stockholder's
cost basis, such distribution, nevertheless, would be taxable to the shareholder
as ordinary income or capital gain as described above, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares just prior to a distribution by the Funds. The price of shares
purchased at that time includes the amount of the forthcoming distribution.
Those purchasing just prior to a distribution will receive a distribution which
will nevertheless generally be taxable to them.

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<PAGE>

Upon the taxable disposition (including a sale or redemption) of shares
of a Fund, a shareholder may realize a gain or loss depending upon his basis in
his shares. Such gain or loss generally will be treated as capital gain or loss
if the shares are capital assets in the shareholder's hands. Such gain or loss
will be long-term or short-term, generally depending upon the shareholder's
holding period for the shares. However, a loss realized by a shareholder on the
disposition of Fund shares with respect to which capital gain dividends have
been paid will, to the extent of such capital gain dividends, be treated as
long-term capital loss if such shares have been held by the shareholder for six
months or less. A loss realized on the redemption, sale or exchange of Fund
shares will be disallowed to the extent an exempt-interest dividend was received
with respect to those shares if the shares have been held by the shareholder for
six months or less. Further, a loss realized on a disposition will be disallowed
to the extent the shares disposed of are replaced (whether by reinvestment of
distributions or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss.
Shareholders receiving distributions in the form of additional shares will have
a cost basis for Federal income tax purposes in each share received equal to the
net asset value of a share of the Funds on the reinvestment date.

Under certain circumstances, the sales charge incurred in acquiring
shares of a Fund may not be taken into account in determining the gain or loss
on the disposition of those shares. This rule applies where shares of a Fund are
exchanged within 90 days after the date they were purchased and new shares of a
Fund are acquired without a sales charge or at a reduced sales charge. In that
case, the gain or loss recognized on the exchange will be determined by
excluding from the tax basis of the shares exchanged all or a portion of the
sales charge incurred in acquiring those shares. This exclusion applies to the
extent that the otherwise applicable sales charge with respect to the newly
acquired shares is reduced as a result of having incurred the sales charge
initially. Instead, the portion of the sales charge affected by this rule will
be treated as a sales charge paid for the new shares.

The taxation of equity options is governed by the Code section 1234.
Pursuant to Code section 1234, the premium received by a Fund for selling a put
or call option is not included in income at the time of receipt. If the option
expires, the premium is short-term capital gain to the Fund. If the Fund enters
into a closing transaction, the difference between the amount paid to close out
its position and the premium

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<PAGE>

received is short-term capital gain or loss. If a call option written by a Fund
is exercised, thereby requiring the Fund to sell the underlying security, the
premium will increase the amount realized upon the sale of such security and any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term depending upon the holding period of the security. With respect to a
put or call option that is purchased by a Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term or
short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised, the
cost of the option, in the case of a call option, is added to the basis of the
purchased security and, in the case of a put option, reduces the amount realized
on the underlying security in determining gain or loss.

Certain of the options, futures contracts, and forward foreign currency
exchange contracts that several of the Funds may invest in are so-called
"section 1256 contracts." With certain exceptions, gains or losses on section
1256 contracts generally are considered 60% long-term and 40% short-term capital
gains or losses ("60/40"). Also, section 1256 contracts held by a Fund at the
end of each taxable year (and, generally, for purposes of the 4% excise tax, on
October 31 of each year) are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized and the resulting gain
or loss is treated as 60/40 gain or loss.

Generally, the hedging transactions undertaken by a Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by a Fund. In addition, losses realized
by a Fund on a position that is part of a straddle may be deferred under the
straddle rules, rather than being taken into account in calculating the taxable
income for the taxable year in which such losses are realized. Because only a
few regulations implementing the straddle rules have been promulgated, the tax
consequences to a Fund of hedging transactions are not entirely clear. Hedging
transactions may increase the amount of short-term capital gain realized by a
Fund which is taxed as ordinary income when distributed to stockholders.

A Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the

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<PAGE>

elections may operate to accelerate the recognition of gains or losses from the
affected straddle positions.

Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging transactions.

Certain requirements that must be met under the Code in order for a
Fund to qualify as a regulated investment company may limit the extent to which
a Fund will be able to engage in transactions in options, futures, forward
contracts and similar instruments.

Certain of the debt securities acquired by a Fund may be treated as
debt securities that were originally issued at a discount. Original issue
discount can generally be defined as the difference between the price at which a
security was issued and its stated redemption price at maturity. Although no
cash income is actually received by the Fund, original issue discount on a
taxable debt security earned in a given year generally is treated for Federal
income tax purposes as interest and, therefore, such income would be subject to
the distribution requirements of the Code. Original issue discount on an
obligation, the interest from which is exempt from Federal income tax, generally
will constitute tax-exempt interest income.

Some of the debt securities may be purchased by a Fund at a discount
which exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for Federal income tax purposes.
The gain realized on the disposition of any debt security, including a
tax-exempt debt security, having market discount will be treated as ordinary
income to the extent it does not exceed the accrued market discount on such debt
security. Generally, market discount accrues on a daily basis for each day the
debt security is held by the Fund at a constant rate over the time remaining to
the debt security's maturity or, at the election of the Fund, at a constant
yield to maturity which takes into account the semi-annual compounding of
interest.

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<PAGE>

generally are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain options and forward and futures contracts, gains or
losses attributable to fluctuations in the value of foreign currency between the
date of acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. These gains or losses, referred to under
the Code as "section 988" gains or losses, may increase, decrease, or eliminate
the amount of a Fund's investment company taxable income to be distributed to
its shareholders as ordinary income.

Some Funds may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign company is classified as a PFIC under the Code if at least
one-half of its assets constitute investment-type assets or 75% or more of its
gross income is investment-type income. Under the PFIC rules, an "excess
distribution" received with respect to PFIC stock is treated as having been
realized ratably over the period during which the Fund held the PFIC stock. A
Fund itself will be subject to tax on the portion, if any, of the excess
distribution that is allocated to the Fund's holding period in prior taxable
years (and an interest factor will be added to the tax, as if the tax had
actually been payable in such prior taxable years) even though the Fund
distributes the corresponding income to stockholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain distributions
from a PFIC. All excess distributions are taxable as ordinary income.

A Fund may be able to elect alternative tax treatment with respect to
PFIC stock. Under an election that currently may be available, a Fund generally
would be required to include in its gross income its share of the earnings of a
PFIC on a current basis, regardless of whether any distributions are received
from the PFIC. If this election is made, the special rules, discussed above,
relating to the taxation of excess distributions, would not apply. In addition,
another election may be available that would involve marking to market the
Fund's PFIC shares at the end of each taxable year (and on certain other dates
prescribed in the Code), with the result that unrealized gains are treated as
though they were realized. If this election were made, tax at the Fund level
under the PFIC rules would generally be eliminated, but the Fund could, in
limited circumstances, incur nondeductible interest charges. Each Fund's
intention to qualify annually as a regulated investment company may limit its
elections with respect to PFIC stock.

Income received by a Fund from sources within foreign countries may be
subject to withholding and other similar income

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<PAGE>

taxes imposed by the foreign country. If more than 50% of the value of a Fund's
total assets at the close of its taxable year consists of securities of foreign
governments and corporations, the Fund will be eligible and intends to elect to
"pass-through" to its shareholders the amount of such foreign taxes paid by the
Fund. Pursuant to this election, a shareholder would be required to include in
gross income (in addition to taxable dividends actually received) his pro rata
share of the foreign taxes paid by a Fund, and would be entitled either to
deduct (as an itemized deduction) his pro rata share of foreign taxes in
computing his taxable income or to use it as a foreign tax credit against his
U.S. Federal income tax liability, subject to limitations. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize deductions,
but such a shareholder may be eligible to claim the foreign tax credit (see
below). Each shareholder will be notified within 60 days after the close of a
Fund's taxable year whether the foreign taxes paid by a Fund will "pass-through"
for that year and, if so, such notification will designate (a) the shareholder's
portion of the foreign taxes paid to each such country and (b) the portion of
the dividend which represents income derived from foreign sources.

Generally, a credit for foreign taxes is subject to the limitation that
it may not exceed the shareholder's U.S. tax attributable to his total foreign
source taxable income. For this purpose, if a Fund makes the election described
in the preceding paragraph, the source of the Fund's income flows through to its
shareholders. With respect to a Fund, gains from the sale of securities will be
treated as derived from U.S. sources and certain currency fluctuations gains,
including fluctuation gains from foreign currency-denominated debt securities,
receivables and payables, will be treated as ordinary income derived from U.S.
sources. The limitation on the foreign tax credit is applied separately to
foreign source passive income (as defined for purposes of the foreign tax
credit) including foreign source passive income of a Fund. The foreign tax
credit may offset only 90% of the alternative minimum tax imposed on
corporations and individuals, and foreign taxes generally may not be deducted in
computing alternative minimum taxable income.

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<PAGE>

notices to that effect, or (3) when required to do so, the shareholder fails to
certify that he is not subject to backup withholding. If the withholding
provisions are applicable, any such distributions, whether reinvested in
additional shares or taken in cash, will be reduced by the amounts required to
be withheld. Backup withholding is not an additional tax. Any amount withheld
may be credited against the shareholder's U.S. Federal income tax liability.
Investors may wish to consult their tax advisors about the applicability of the
backup withholding provisions.

The foregoing discussion relates only to Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
corporations, partnerships, trusts and estates). Distributions by the Funds also
may be subject to state and local taxes and their treatment under state and
local income tax laws may differ from the Federal income tax treatment.
Distributions of a Fund which are derived from interest on obligations of the
U.S. Government and certain of its agencies and instrumentalities may be exempt
from state and local taxes in certain states. Shareholders should consult their
tax advisors with respect to particular questions of Federal, state and local
taxation. Shareholders who are not U.S. persons should consult their tax
advisors regarding U.S. and foreign tax consequences of ownership of shares of
the Funds including the likelihood that distributions to them would be subject
to withholding of U.S. tax at a rate of 30% (or at a lower rate under a tax
treaty).

Centura North Carolina Tax-Free Bond Fund. The Fund intends to manage
its portfolio so that it will be eligible to pay "exempt-interest dividends" to
shareholders. The Fund will so qualify if, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets consists of state,
municipal, and certain other securities, the interest on which is exempt from
the regular Federal income tax. To the extent that the Fund's dividends
distributed to shareholders are derived from such interest income and are
designated as exempt-interest dividends by the Fund, they will be excludable
from a shareholder's gross income for Federal income tax purposes.
Exempt-interest dividends, however, must be taken into account by shareholders
in determining whether their total incomes are large enough to result in
taxation of up to one-half (85% for taxable years beginning after 1993) of their
social security benefits and certain railroad retirement benefits. The Fund will
inform shareholders annually as to the portion of the distributions from the
Fund which constitute exempt-interest dividends. In addition, for corporate
shareholders of the Fund, exempt-interest dividends may comprise part or all of
an adjustment to alternative minimum taxable income for purposes of the
alternative minimum tax and the environmental tax under sections

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<PAGE>

55 and 59A. Exempt-interest dividends that are attributable to certain private
activity bonds, while not subject to the regular Federal income tax, may
constitute an item of tax preference for purposes of the alternative minimum
tax.

To the extent that the Fund's dividends are derived from its investment
company taxable income (which includes interest on its temporary taxable
investments and the excess of net short-term capital gain over net long-term
capital loss), they are considered ordinary (taxable) income for Federal income
tax purposes. Such dividends will not qualify for the dividends-received
deduction for corporations. Distributions, if any, of net capital gains (the
excess of net long-term capital gain over net short-term capital loss)
designated by a Fund as capital gain dividends are taxable to shareholders as
long-term capital gain regardless of the length of time the shareholder has
owned shares of the Fund.

Upon redemption, sale or exchange of shares of the Fund, a shareholder
will realize a taxable gain or loss, depending on whether the gross proceeds are
more or less than the shareholder's tax basis for the shares. The discussion
above provides additional detail about the income tax consequences of disposing
of Fund shares.

Deductions for interest expense incurred to acquire or carry shares of
the Fund may be subject to limitations that reduce, defer, or eliminate such
deductions. This includes limitations on deducting interest on indebtedness
properly allocable to investment property (which may include shares of the
Fund). In addition, a shareholder may not deduct a portion of interest on
indebtedness incurred or continued to purchase or carry shares of an investment
company (such as this Fund) paying exempt-interest dividends. Such disallowance
would be in an amount which bears the same ratio to the total of such interest
as the exempt-interest dividends bear to the total dividends, excluding net
capital gain dividends received by the shareholder. Under rules issued by the
IRS for determining when borrowed funds are considered used for the purposes of
purchasing or carrying particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though the borrowed funds
are not directly traceable to the purchase of shares.

North Carolina law exempts from income taxation dividends received from
a regulated investment company in proportion to the income of the regulated
investment company that is attributable to interest on bonds or securities of
the U.S. government or any agency or instrumentality thereof or on bonds of the
State of North Carolina or any county, municipality or political

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<PAGE>

subdivision thereof, including any agency, board, authority or commission of any
of the above.

Opinions relating to the validity of municipal securities and the
exemption of interest thereon from Federal income tax are rendered by bond
counsel to the issuers. The Fund, the Adviser and their affiliates, and the
Fund's counsel make no review of proceedings relating to the issuance of state
or municipal securities or the bases of such opinions.

Persons who may be "substantial users" (or "related persons" of
substantial users) of facilities financed by private activity bonds should
consult their tax advisers before purchasing shares of Centura North Carolina
Tax-Free Bond Fund since the acquisition of shares of the Fund may result in
adverse tax consequences to them. In addition, all shareholders of the Fund
should consult their tax advisers about the tax consequences to them of their
investments in the Fund.

Changes in the tax law, including provisions relating to tax-exempt
income, frequently come under consideration. If such changes are enacted, the
tax consequences arising from an investment in Centura North Carolina Tax-Free
Bond Fund may be affected. Since the Funds do not undertake to furnish tax
advice, it is important for shareholders to consult their tax advisers regularly
about the tax consequences to them of investing in one or more of the Funds.

OTHER INFORMATION

Capitalization

The Company is a Maryland corporation established under Articles of
Incorporation dated March 1, 1994 and currently consists of four separately
managed portfolios, each of which offers three classes of shares. The
capitalization of the Company consists solely of six hundred million
(600,000,000) shares of common stock with a par value of $0.001 per share. The
Board of Directors may establish additional Funds (with different investment
objectives and fundamental policies), or additional classes of shares, at any
time in the future. Establishment and offering of additional Funds or classes
will not alter the rights of the Company's shareholders. When issued, shares are
fully paid, non-assessable, redeemable and freely transferable. Shares do not
have preemptive rights or subscription rights. In any liquidation of a Fund or
class, each shareholder is entitled to receive his pro rata share of the net
assets of that Fund or class.

- 38 -

<PAGE>

Expenses incurred in connection with each Fund's organization and the
public offering of its shares have been deferred and are being amortized on a
straight-line basis over a period of not less than five years. For the fiscal
period ended April 30, 1996, these expenses totalled $7,386 for the Equity
Growth Fund, $9,772 for the Federal Securities Income Fund and $3,257 for the
North Carolina Tax Free Bond Fund. Expenses of organizing Centura Equity Income
Fund will be treated in a similar manner.

Voting Rights

Under the Articles of Incorporation, the Company is not required to
hold annual meetings of each Fund's shareholders to elect Directors or for other
purposes. It is not anticipated that the Company will hold shareholders'
meetings unless required by law or the Articles of Incorporation. In this
regard, the Company will be required to hold a meeting to elect Directors to
fill any existing vacancies on the Board if, at any time, fewer than a majority
of the Directors have been elected by the shareholders of the Company. In
addition, the Articles of Incorporation provide that the holders of not less
than a majority of the outstanding shares of the Company may remove persons
serving as Director.

Each Fund may vote separately on matters affecting only that Fund, and
each class of shares of each Fund may vote separately on matters affecting only
that class or affecting that class differently from other classes.

The Company's shares do not have cumulative voting rights, so that the
holders of more than 50% of the outstanding shares may elect the entire Board of
Directors, in which case the holders of the remaining shares would not be able
to elect any Directors.

Custodian, Transfer Agent and Dividend Disbursing Agent

Centura Bank, 131 North Church Street, Rocky Mount, North Carolina
27802, acts as custodian of the Company's assets. For the fiscal year ended
April 30, 1996, the custodian earned fees and out-of-pocket expenses in the
amounts of $28,109, $24,580 and $12,503 for the Equity Growth Fund, the Federal
Securities Income Fund and the North Carolina Tax-Free Bond Fund, respectively.
For the period ended April 30, 1995, the custodian earned fees of $17,188,
$19,585 and $10,192 for the Equity Growth Fund, the Federal Securities Income
Fund and the North Carolina Tax-Free Bond Fund, respectively.

- 39 -

<PAGE>

Furman Selz serves as the Company's transfer agent pursuant to a
Service Agreement. For the fiscal year ended April 30, 1996, Furman Selz earned
transfer agent fees of $38,623 for the Equity Growth Fund, $7,326 for the
Federal Securities Income Fund and $6,452 for the North Carolina Tax-Free Bond
Fund. For the period ended April 30, 1995, Furman Selz earned transfer agent
fees of $9,897 for the Equity Growth Fund, $5,034 for the Federal Securities
Income Fund and $4,275 for the North Carolina Tax-Free Bond Fund. Pursuant to a
Fund Accounting Agreement, each Fund compensates Furman Selz $2,500 per month
for providing fund accounting services for the Funds. For the fiscal year ended
April 30, 1996, Furman Selz earned the following fees for their fund accounting
services: $32,848 for the Equity Growth Fund, $33,981 for the Federal Securities
Income Fund and $41,369 for the North Carolina Tax-Free Bond Fund. For the
period ended April 30, 1995, Furman Selz earned the following fees for their
fund accounting services: $29,727 for the Equity Growth Fund, $32,231 for the
Federal Securities Income Fund and $34,948 for the North Carolina Tax-Free Bond
Fund.

Yield and Performance Information

The Funds may, from time to time, include their yield, effective yield,
tax equivalent yield and average annual total return in advertisements or
reports to shareholders or prospective investors.

Quotations of yield for each class of shares of the Funds will be based
on the investment income per share earned during a particular 30-day period,
less expenses accrued with respect to that class during a period ("net
investment income"), and will be computed by dividing net investment income for
the class by the maximum offering price per share of that class on the last day
of the period, according to the following formula:

YIELD = 2[(a-b + 1)superscript 6-1]
---
cd

where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of any reimbursements), c = the average daily number of
shares of the class outstanding during the period that were entitled to receive
dividends, and d = the maximum offering price per share of the class on the last
day of the period.

The 30-day yield for the period ended April 30, 1996 was as follows:
5.37% and 4.10% for the Class A shares of the Federal Securities Income Fund and
the North Carolina Tax-Free Bond Fund, respectively, and 4.75% and 3.45% for the
Class B shares of the

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<PAGE>

Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively.

Quotations of tax-equivalent yield for each class of shares of Centura
North Carolina Tax-Free Bond Fund will be calculated according to the following
formula:

TAX EQUIVALENT YIELD = ( E )
-----
l-p

E = tax-exempt yield
p = stated income tax rate

Quotations of average annual total return will be expressed in terms of
the average annual compounded rate of return of a hypothetical investment in
each class of shares of a Fund over periods of 1, 5 and 10 years (up to the life
of the Fund), calculated pursuant to the following formula:

P (1 + T)superscript n = ERV

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return for the class, n = the number of years, and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period). All total return figures will reflect the deduction of the maximum
sales charge and a proportional share of Fund and class-specific expenses (net
of certain reimbursed expenses) on an annual basis, and will assume that all
dividends and distributions are reinvested when paid.

Quotations of yield and total return will reflect only the performance
of a hypothetical investment in a class of shares of the Funds during the
particular time period shown. Yield and total return for the Funds will vary
based on changes in the market conditions and the level of the Fund's (and
classes') expenses, and no reported performance figure should be considered an
indication of performance which may be expected in the future.

For the fiscal year ended April 30, 1996, the average annual total
returns for Class A shares were as follows: 28.65% for the Equity Growth Fund,
3.28% for the Federal Securities Income Fund and 2.60% for the North Carolina
Tax-Free Bond Fund. The average annual total returns for the same period for the
Class B shares were as follows: 27.71% for the Equity Growth Fund, 2.50% for the
Federal Securities Income Fund and 1.84% for the North Carolina Tax-Free Bond
Fund.

For the period June 1, 1994 (commencement of operations) through April
30, 1996, the average annual total returns for

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<PAGE>

Class A shares were as follows: 18.51% for the Equity Growth Fund, 4.35% for the
Federal Securities Income Fund and 3.35% for the North Carolina Tax-Free Bond
Fund. For the period June 1, 1994 (commencement of operations) through April 30,
1996, the average annual total returns for Class B shares were as follows:
17.84% for the Equity Growth Fund, 3.56% for the Federal Securities Income Fund
and 2.58% for the North Carolina Tax-Free Bond Fund.

In connection with communicating its yields or total return to current
or prospective unit holders, the Funds also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.

Performance information for the Funds may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, or other unmanaged indices so that investors may compare the
Funds' results with those of a group of unmanaged securities widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment in a Fund.

Investors who purchase and redeem shares of the Funds through a
customer account maintained at a Service Organization may be charged one or more
of the following types of fees as agreed upon by the Service Organization and
the investor, with respect to the customer services provided by the Service
Organization: account fees (a fixed amount per month or per year); transaction
fees (a fixed amount per transaction processed); compensating balance
requirements (a minimum dollar amount a customer must maintain in order to
obtain the services offered); or account maintenance fees (a periodic charge
based upon a percentage of the assets in the account or of the dividends paid on
those assets). Such fees will have the effect of reducing the yield and average
annual total return of the Funds for those investors.

Independent Accountants

McGladrey & Pullen LLP serves as the independent accountants for the
Company. McGladrey & Pullen LLP provides audit services,

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<PAGE>

tax return preparation and assistance and consultation in connection with review
of SEC filings.

Counsel

Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C., 20005,
passes upon certain legal matters in connection with the shares offered by the
Company and also acts as Counsel to the Company.

Registration Statement

This SAI and the Prospectus do not contain all the information included
in the Company's Registration Statement filed with the SEC under the Securities
Act of 1933 with respect to the securities offered hereby, certain portions of
which have been omitted pursuant to the rules and regulations of the SEC. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.

Statements contained herein and in the Prospectus as to the contents of
any contract or other documents referred to are not necessarily complete, and,
in each instance, reference is made to the copy of such contract or other
documents filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

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<PAGE>

CENTURA FUNDS, INC.
(the "Company")
237 Park Avenue
New York, New York 10017
General and Account Information: (800) 442-3688

--------------------------------------------------------------

Centura Bank
Investment Adviser

Furman Selz LLC -
Administrator and Sponsor

Centura Funds Distributor, Inc. -
Distributor

STATEMENT OF ADDITIONAL INFORMATION
Class C Shares

This Statement of Additional Information ("SAI") describes Class C
shares of the four funds (the "Funds") advised by Centura Bank (the "Adviser").
The Funds are:

- Centura Equity Growth Fund
- Centura Equity Income Fund
- Centura Federal Securities Income Fund
- Centura North Carolina Tax-Free Bond Fund

The Company is offering an indefinite number of shares of each class of
each Fund. In addition to Class C shares, each Fund also offers Class A and
Class B shares, subject to a front-end sales charge (unless waived) and Class B
shares subject to a contingent deferred sales charge (unless waived) on
redemptions within five years of purchase. See "Other Information
Capitalization" in the prospectus.

August 28, 1996

<PAGE>

TABLE OF CONTENTS

Page

INVESTMENT POLICIES......................................................... 1
Bank Obligations................................................... 1
Commercial Paper................................................... 1
Convertible Securities............................................. 1
Corporate Debt Securities.......................................... 1
Repurchase Agreements.............................................. 2
Variable and Floating Rate Demand and Master Demand
Notes.............................................................. 2
Loans of Portfolio Securities...................................... 3
Foreign Securities................................................. 3
Forward Foreign Currency Exchange Contracts........................ 4
Interest Rate Futures Contracts.................................... 4
Stock Index Futures Contracts...................................... 5
Option Writing and Purchasing...................................... 6
Options on Futures Contracts....................................... 7
Risks of Futures and Options Investments........................... 8
Limitations on Futures Contracts and Options on Futures
Contracts.......................................................... 8
North Carolina Municipal Obligations............................... 9
Municipal Lease Obligations........................................ 9
Securities of Other Investment Companies........................... 10

INVESTMENT RESTRICTIONS..................................................... 10

MANAGEMENT.................................................................. 13
Directors and Officers............................................. 13
Investment Adviser................................................. 16
Distribution of Fund Shares........................................ 17
Administrative Services............................................ 18
Service Organizations.............................................. 19

DETERMINATION OF NET ASSET VALUE............................................ 20

PORTFOLIO TRANSACTIONS...................................................... 20
Portfolio Turnover................................................. 22

TAXATION.................................................................... 22
Centura North Carolina Tax-Free Bond Fund.......................... 29

OTHER INFORMATION........................................................... 31
Capitalization..................................................... 31
Voting Rights...................................................... 31
Custodian, Transfer Agent and Dividend Disbursing
Agent.............................................................. 32
Yield and Performance Information.................................. 32
Independent Accountants............................................ 35
Counsel............................................................ 35
Registration Statement............................................. 35

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<PAGE>

INVESTMENT POLICIES

After purchase by a Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require a sale of such

- 1 -

<PAGE>

security by the Fund. However, the Adviser will consider such event in its
determination of whether the Fund should continue to hold the security. To the
extent the ratings given by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P") or another rating agency may change as a
result of changes in such organizations or their rating systems, the Funds will
attempt to use comparable ratings as standards for investments in accordance
with the investment policies contained in the Prospectus and in this SAI.

The Funds may also buy variable rate master demand notes. The terms of
these obligations permit the investment of fluctuating amounts by the Funds at
varying rates of interest pursuant to direct arrangements between a Fund, as
lender, and

- 2 -

<PAGE>

the borrower. They permit weekly, and in some instances, daily, changes in the
amounts borrowed. The Funds have the right to increase the amount under the note
at any time up to the full amount provided by the note agreement, or to decrease
the amount, and the borrower may prepay up to the full amount of the note
without penalty. The notes may or may not be backed by bank letters of credit.
Because the notes are direct lending arrangements between the lender and the
borrower, it is not generally contemplated that they will be traded, and there
is no secondary market for them, although they are redeemable (and thus,
immediately repayable by the borrower) at principal amount, plus accrued
interest, at any time. The Funds have no limitations on the type of issuer from
whom the notes will be purchased. However, in connection with such purchase and
on an ongoing basis, the Adviser will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
make demand simultaneously. While master demand notes, as such, are not
typically rated by credit rating agencies, if not so rated, the Funds may, under
their minimum rating standards, invest in them only if at the time of an
investment the issuer meets the criteria set forth in the Prospectus for other
comparable debt obligations.

Foreign Securities (Centura Equity Growth Fund and Centura Equity
Income Fund). As described in the Prospectus, changes in foreign exchange rates
will affect the value of securities denominated or quoted in currencies other
than the U.S. dollar.

Since Centura Equity Growth Fund and Centura Equity Income Fund may
invest in securities denominated in currencies other than the U.S. dollar, and
since those Funds may temporarily hold

- 3 -

<PAGE>

funds in bank deposits or other money market investments denominated in foreign
currencies, the Funds may be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rate between such currencies and
the dollar. Changes in foreign currency exchange rates will influence values of
securities in the Funds' portfolios, from the perspective of U.S. investors.
Changes in foreign currency exchange rates may also affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by the Funds. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors.

Interest Rate Futures Contracts (Centura Equity Income Fund, Centura
Federal Securities Income Fund and Centura North Carolina Tax-Free Bond Fund).
These Funds may purchase and sell interest rate futures contracts ("futures
contracts") as a hedge against changes in interest rates. A futures contract is
an agreement between two parties to buy and sell a security for a set price on a
future date. Futures contracts are traded on designated "contracts markets"
which, through their clearing corporations, guarantee performance of the
contracts. Currently, there are futures contracts based on securities such as
long-term U.S. Treasury bonds, U.S. Treasury notes, GNMA Certificates and
three-month U.S. Treasury bills. For municipal securities, there is the Bond
Buyer Municipal Bond Index.

- 4 -

<PAGE>

- 5 -

<PAGE>

therefore, usually will be sellers of stock index futures contracts. This risk
management strategy is an alternative to selling securities in the portfolio and
investing in money market instruments. Also, stock index futures contracts may
be purchased to protect a Fund against an increase in prices of stocks which
that Fund intends to purchase. If the Fund is unable to invest its cash (or cash
equivalents) in stock in an orderly fashion, the Fund could purchase a stock
index futures contract which may be used to offset any increase in the price of
the stock. However, it is possible that the market may decline instead,
resulting in a loss on the stock index futures contract. If the Fund then
concludes not to invest in stock at that time, or if the price of the securities
to be purchased remains constant or increases, the Fund will realize a loss on
the stock index futures contract that is not offset by a reduction in the price
of securities purchased. These Funds also may buy or sell stock index futures
contracts to close out existing futures positions.

- 6 -

<PAGE>

such securities above the strike price. When a put option of which a Fund is the
writer is exercised, the Fund will be required to purchase the underlying
securities at the strike price, which may be in excess of the market value of
such securities. At the time a Fund writes a put option or a call option on a
security it does not hold in its portfolio in the amount required under the
option, it will establish and maintain a segregated account with its custodian
consisting solely of cash, U.S. Government securities and other liquid high
grade debt obligations equal to its liability under the option.

It may be a Fund's policy, in order to avoid the exercise of an option
sold by it, to cancel its obligation under the option by entering into a closing
purchase transaction, if available, unless it is determined to be in the Fund's
interest to sell (in the case of a call option) or to purchase (in the case of a
put option) the underlying securities. A closing purchase transaction consists
of a Fund purchasing an option having the same terms as the option sold by the
Fund and has the effect of cancelling the Fund's position as a seller. The
premium which a Fund will pay in executing a closing purchase transaction may be
higher than the premium received when the option was sold, depending in large
part upon the relative price of the underlying security at the time of each
transaction. To the extent options sold by a Fund are exercised and the Fund
either delivers portfolio securities to the holder of a call option or
liquidates securities in its portfolio as a source of funds to purchase
securities put to the Fund, the Fund's portfolio turnover rate may increase,
resulting in a possible increase in short-term capital gains and a possible
decrease in long-term capital gains.

Options on Futures Contracts (All Funds). A Fund may purchase and
write put and call options on futures contracts that are traded on a U.S.
exchange or board of trade and enter into

- 7 -

<PAGE>

related closing transactions to attempt to gain additional protection against
the effects of interest rate, currency or equity market fluctuations. There can
be no assurance that such closing transactions will be available at all times.
In return for the premium paid, such an option gives the purchaser the right to
assume a position in a futures contract at any time during the option period for
a specified exercise price.

- 8 -

<PAGE>

the CFTC, or, with respect to positions in financial futures and related options
that do not qualify as "bona fide hedging" positions, will enter such
non-hedging positions only to the extent that aggregate initial margin deposits
plus premiums paid by it for open futures option positions, less the amount by
which any such positions are "in-the-money," would not exceed 5% of the Fund's
total assets. Futures contracts and related put options written by a Fund will
be offset by assets held in a segregated custodial account sufficient to satisfy
the Fund's obligations under such contracts and options.

Unlike other types of investments, municipal securities have
traditionally not been subject to registration with, or other regulation by, the
Securities and Exchange Commission ("SEC"). However, there have been proposals
which could lead to future regulations of these securities by the SEC.

- 9 -

<PAGE>

"non-appropriation" risk, many municipal lease obligations have not yet
developed the depth of marketability associated with municipal bonds; moreover,
although the obligations may be secured by the leased equipment, the disposition
of the equipment in the event of foreclosure might prove difficult. In order to
limit certain of these risks, the Fund will limit its investments in municipal
lease obligations that are illiquid, together with all other illiquid securities
in its portfolio, to not more than 15% of its assets. The liquidity of municipal
lease obligations purchased by the Fund will be determined pursuant to
guidelines approved by the Board of Directors. Factors considered in making such
determinations may include; the frequency of trades and quotes for the
obligation; the number of dealers willing to purchase or sell the security and
the number of other potential buyers; the willingness of dealers to undertake to
make a market; the obligation's rating; and, if the security is unrated, the
factors generally considered by a rating agency.

Securities of Other Investment Companies (All Funds). Each Fund may
invest in securities issued by the other investment companies. Each of these
Funds currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (a) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
(c) not more than 3% of the outstanding voting stock of any one investment
company will be owned by any of the Funds; and (d) not more than 10% of the
outstanding voting stock of any one investment company will be owned in the
aggregate by the Funds. As a shareholder of another investment company, a Fund
would bear, along with other shareholders, its pro rata portion of that
company's expenses, including advisory fees. These expenses would be in addition
to the advisory and other expenses that the Fund bears directly in connection
with its own operations. Investment companies in which a Fund may invest may
also impose a sales or distribution charge in connection with the purchase or
redemption of their shares and other types of commissions or charges. Such
charges will be payable by the Funds and, therefore, will be borne indirectly by
Shareholders.

INVESTMENT RESTRICTIONS

- 10 -

<PAGE>

Each Fund, except as indicated, may not:

(2) Borrow money except that a Fund may borrow from banks up
to 10% of the current value of its total net assets for temporary or
emergency purposes; a Fund will make no purchase if its outstanding
borrowings exceed 5% of its total assets;

(5) Make loans, except that a Fund may (a) lend its portfolio
securities, (b) enter into repurchase agreements and (c) purchase the
types of debt instruments described in the Prospectus or the SAI;

- 11 -

<PAGE>

For restriction number 1, above, with respect to Centura North Carolina
Tax-Free Bond Fund, the state of North Carolina and each of its political
subdivisions, as well as each district, authority, agency or instrumentality of
North Carolina or of its political subdivisions will be deemed to be a separate
issuer, and all indebtedness of any issuer will be deemed to be a single class
of securities. Securities backed only by the assets of a non-governmental user
will be deemed to be issued by that user. Restriction number 6, above, will
prevent Centura North Carolina Tax-Free Bond Fund from investing 25% or more of
its total assets in industrial building revenue bonds issued to finance
facilities for non-governmental issuers in any one industry, but this
restriction does not apply to any other tax-free Municipal Obligations. For
purposes of investment restriction number 6, public utilities are not deemed to
be a single industry but are separated by industrial categories, such as
telephone or gas utilities. For purposes of restriction number 7, with respect
to its futures transactions and writing of options (other than fully covered
call options), a Fund will maintain a segregated account for the period of its
obligation under such contract or option consisting of cash, U.S. Government
securities and other liquid high grade debt obligations in an amount equal to
its obligations under such contracts or options.

(a) Invest in companies for the purpose of exercising
control or management;

(c) Purchase securities on margin, except that a Fund may
obtain such short-term credits as may be necessary for the clearance
of purchases and sales of securities;

(d) Mortgage, pledge, or hypothecate any of its assets,
except that a Fund may pledge not more than 15% of the current value of
the Fund's total net assets;

- 12 -

<PAGE>
(e) Purchase or retain the securities of any issuer, if those
individual officers and Directors of the Company, the Adviser, the
Administrator, or the Distributor, each owning beneficially more than
1/2 of 1% of the securities of such issuer, together own more than 5%
of the securities of such issuer;

(g) Write, purchase or sell puts, calls or combinations
thereof, except as described in the Prospectus or SAI;

(h) Invest more than 5% of the current value of its total
assets in the securities of companies which, including predecessors,
have a record of less than three years' continuous operation;

(j) Invest in oil, gas or other mineral exploration or
development programs, although it may invest in issuers that
own or invest in such programs.

MANAGEMENT

Directors and Officers

POSITION
WITH PRINCIPAL
NAME, ADDRESS AND AGE COMPANY OCCUPATION

Leslie H. Garner, Jr. Director President,
Cornell College Cornell College
600 First Street West
Mount Vernon, IA 52314-1098
Age: 45

James H. Speed, Jr. Director Hardee's Food Systems,
1233 Hardee's Blvd. Inc. - Vice President
Rocky Mount, NC 27802 Controller (1991-present);
Age: 43 Deloitte & Touche - Senior
Audit Manager (1979-1991)

Frederick E. Turnage Director Attorney
149 North Franklin St.
Rocky Mount, NC 27804
Age: 60

*Lucy Hancock Bode Director Lobbyist
P.O. Box 6338
Raleigh, NC 27628
Age: 45

*J. Franklin Martin Director President of
LandCraft Properties LandCraft Properties
227 W. Trade Street (1978 - present)
Suite 2730
Charlotte, NC 28202
Age: 51

John J. Pileggi President, Furman Selz LLC - Director
Age: 37 Treasurer, (1984-present)
and Chief
Executive
Officer

- 13 -

<PAGE>

Joan V. Fiore Secretary Furman Selz LLC - Managing
Age: 40 Director and Counsel
(1991-present); Securities
and Exchange Commission -
Staff Attorney (1986-1991)

Sheryl Hirschfeld Assistant Furman Selz LLC -
Age: 35 Secretary Director, Corporate
Secretary Services (1994);
The Dreyfus Corporation -
Assistant to the Corporate
Secretary and General
Counsel (1982-1994)

Gordon M. Forrester Assistant Furman Selz LLC - Managing
Age: 35 Treasurer Director, Mutual Funds
Division (1987-present)

Directors of the Company who are not directors, officers or employees
of the Adviser or the Administrator receive from the Company an annual retainer
of $2000 and a fee of $500 for each Board of Directors and Board committee
meeting of the Company attended and are reimbursed for all out-of-pocket
expenses relating to attendance at such meetings. Directors who are directors,
officers or employees of the Adviser or the Administrator do not receive
compensation from the Company. The table below sets forth the compensation
received by each Director from the Company for the fiscal year ended April 30,
1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Pension or Estimated Total
Aggregate Retirement Annual Compensation
Name of Compensa- Benefits Accrued Benefits From Registrant
Person, tion From As Part of Fund Upon and Fund Retirement
Complex Position Registrant Expenses Paid to Directors

Leslie H. Garner, Jr. $5,000 -0- -0- $5,000

James H. Speed, Jr. $5,000 -0- -0- $5,000

Frederick E. Turnage $5,000 -0- -0- $5,000

Lucy Hancock Bode $4,000 -0- -0- $4,000

J. Franklin Martin $1,000 -0- -0- $1,000
</TABLE>

- -----------------------------
* Elected to the Board January 24, 1996

- 14 -

<PAGE>

As of August 9, 1996, the Officers and Directors of the Company, as a
group, own less than 1% of the outstanding shares of the Funds.

As of August 9, 1996, the following individuals owned 5% or more of the
Class C shares of the Funds:

- 15 -

<PAGE>

CENTURA EQUITY GROWTH FUND

SHARES OWNED PERCENTAGE OWNED

Centura Bank 2,584,069 26.8%
Cash Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, N.C. 27802-1220

Centura Bank 6,859,329 71.2%
Reinvest Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220

CENTURA FEDERAL SECURITIES INCOME FUND

SHARES OWNED PERCENTAGE OWNED

Centura Bank 4,252,858 36.8%
Cash Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220

Centura Bank 7,238,917 62.6%
Reinvest Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220

CENTURA NORTH CAROLINA TAX-FREE BOND FUND

SHARES OWNED PERCENTAGE OWNED

Centura Bank 3,541,300 95.8%
Cash Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220

Investment Adviser

Under the terms of the Investment Advisory Agreement for the Funds
between the Company and the Adviser ("Agreement"), the

- 16 -

<PAGE>

investment advisory services of the Adviser to the Funds are not exclusive. The
Adviser is free to, and does, render investment advisory services to others.

The Agreement will continue in effect with respect to each Fund for a
period more than two years from the date of its execution, only as long as such
continuance is approved at least annually (i) by vote of the holders of a
majority of the outstanding voting securities of each Fund or by the Board of
Directors and (ii) by a majority of the Directors who are not parties to the
Agreement or "interested persons" (as defined in the 1940 Act) of any such
party. With respect to all the Funds other than Centura Equity Income Fund, the
Agreement was approved by the Board of Directors, including a majority of the
Directors who are not parties to the Agreement or interested persons of any such
parties, at a meeting called for the purpose of voting on the Agreement, held on
April 26, 1994, and by the sole shareholder of the Funds on April 26, 1994. The
Agreement was recently re-approved with respect to those Funds at the April 23,
1996 Board of Directors Meeting. With respect to Centura Equity Income Fund,
which was organized on August 28, 1996, the Agreement was approved by the Board
of Directors, including a majority of the Directors who are not parties to the
Agreement or interested persons of any such parties, at its meeting called for
such purpose held on July 24, 1996, and by the sole shareholder of that Fund on
July 24, 1996. The Agreement may be terminated at any time without penalty by
vote of the Directors (with respect to the Company or a Fund) or, with respect
to any Fund, by vote of the Directors or the shareholders of that Fund, or by
the Adviser, on 60 days written notice by either party to the Agreement and will
terminate automatically if assigned.

Distribution of Fund Shares

- 17 -

<PAGE>

individual investors. The Distributor is not obligated to sell any specific
amount of shares.

Service and distribution plans (the "Plans") have been adopted by each
of the Funds for Class A shares and Class B shares providing for different rates
of fee payment with respect to each of those classes of shares, as described in
the Prospectus. No Plan has been adopted for Class C shares.

Administrative Services

Furman Selz (the "Administrator") provides administrative services
necessary for the operation of the Funds, including among other things, (i)
preparation of shareholder reports and communications, (ii) regulatory
compliance, such as reports to and filings with the Securities and Exchange
Commission ("SEC") and state securities commissions and (iii) general
supervision of the operation of the Funds, including coordination of the
services performed by the Funds' Adviser, Distributor, custodians, independent
accountants, legal counsel and others. In addition, Furman Selz furnishes office
space and facilities required for conducting the business of the Funds and pays
the compensation of the Funds' officers, employees and Directors affiliated with
Furman Selz. For these services, Furman Selz receives from each Fund a fee,
payable monthly, at the annual rate of 0.15% of each Fund's average daily net
assets.

On June 28, 1996 Furman Selz and BISYS Group, Inc. ("BISYS") announced
a definitive agreement which provides for Furman Selz to transfer its mutual
fund business to BISYS. This transaction is expected to close within 90 days.
BISYS, headquartered in Little Falls, New Jersey, supports more than 5,000
financial institutions and corporate clients through two strategic business
units. BISYS Information Services Group provides image and data processing
outsourcing, and pricing analysis to more than 600 banks nationwide. BISYS
Investment Services Group designs, administers and distributes over 30 families
of proprietary mutual funds consisting of more than 365 portfolios, and provides
401(k) marketing support, administration, and recordkeeping services in
partnership with banking institutions and investment management companies. At a
meeting held on July 24, 1996, the Directors reviewed and approved a new
Administration Agreement and Distribution Agreement with BISYS Fund Services
Limited Partnership d/b/a BISYS Fund Services, a new Transfer Agency Agreement
and a Fund Accouting Agreement with BISYS Fund Services, Inc. Both BISYS
companies have their principal place of business at 3435 Stelzer Road, Columbus,
Ohio 43219. These new agreements are expected to take effect in the fall of
1996.

For the fiscal year ended April 30, 1996, the Administrator was
entitled to the following administrative services fees:

- 18 -

<PAGE>

Furman Selz Furman Selz
Entitled Waived

Centura Equity Growth Fund $172,047 -
Centura Federal Securities Income Fund 156,049 -
Centura North Carolina 59,260 $42,761
Tax-Free Bond Fund

For the period ended April 30, 1995, the Administrator was entitled to
the following administrative services fees:

Furman Selz Furman Selz
Entitled Waived

Centura Equity Growth Fund $105,945 $19,669
Centura Federal Securities Income Fund 117,881 23,780
Centura North Carolina Tax-Free Bond Fund 45,419 40,371

Service Organizations

The Company may also contract with banks, trust companies,
broker-dealers (other than Furman Selz) or other financial organizations
("Service Organizations") to provide certain administrative services for the
Funds. Services provided by Service Organizations may include among other
things: providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records; assisting in processing purchase and
redemption transactions; arranging for the wiring of funds; transmitting and
receiving funds in connection with client orders to purchase or redeem shares;
verifying and guaranteeing client signatures in connection with redemption
orders, transfers among and changes in client-designating accounts; providing
periodic statements showing a client's account balance and, to the extent
practicable, integrating such information with other client transactions;
furnishing periodic and annual statements and confirmations of all purchases and
redemptions

- 19 -

<PAGE>

of shares in a client's account; transmitting proxy statements, annual reports,
and updating prospectuses and other communications from the Funds to clients;
and providing such other services as the Funds or a client reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Neither Furman Selz nor the Adviser will be a Service Organization or receive
fees for servicing.

DETERMINATION OF NET ASSET VALUE

The Funds value their portfolio securities in accordance with the
procedures described in the Prospectus.

PORTFOLIO TRANSACTIONS

- 20 -

<PAGE>

security may be bought for one or more clients when one or more clients are
selling the security. In some instances, one client may sell a particular
security to another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged as to price and
allocated between such clients in a manner which in the Adviser's opinion is
equitable to each and in accordance with the amount being purchased or sold by
each. There may be circumstances when purchases or sales of portfolio securities
for one or more clients will have an adverse effect on other clients.

Purchases and sales of securities will often be principal transactions
in the case of debt securities and equity securities traded otherwise than on an
exchange. The purchase or sale of equity securities will frequently involve the
payment of a commission to a broker-dealer who effects the transaction on behalf
of a Fund. Debt securities normally will be purchased or sold from or to issuers
directly or to dealers serving as market makers for the securities at a net
price. Generally, money market securities are traded on a net basis and do not
involve brokerage commissions. Under the 1940 Act, persons affiliated with the
Funds, the Adviser or Furman Selz are prohibited from dealing with the Funds as
a principal in the purchase and sale of securities unless a permissive order
allowing such transactions is obtained from the SEC.

- 21 -

<PAGE>

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Adviser may consider sales of shares of the Funds as a factor in the selection
of broker-dealers to execute portfolio transactions for the Funds. For the
period ended April 30, 1996, the Equity Growth Fund paid brokerage commissions
in the amount of $192,705. Of this amount, none was paid to any affiliated
brokers. For the period ended April 30, 1995, only the Equity Growth Fund paid
brokerage commissions, in the amount of $115,342. Of this amount, none was paid
to any affiliated brokers.

Portfolio Turnover

Changes may be made in the portfolio consistent with the investment
objectives and policies of the Funds whenever such changes are believed to be in
the best interests of the Funds and their shareholders. It is anticipated that
the annual portfolio turnover rate for a Fund normally will not exceed the
amount stated in the Funds' Prospectus. The portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of portfolio securities
by the average monthly value of the Fund's portfolio securities. For purposes of
this calculation, portfolio securities exclude all securities having a maturity
when purchased of one year or less. The portfolio turnover rate for the fiscal
year ended April 30, 1996 was 46%, 34%, and 80% for the Equity Growth Fund, the
Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively. The portfolio turnover rate for the fiscal period ended April 30,
1995 was 44%, 42%, and 121% for the Equity Growth Fund, the Federal Securities
Income Fund and the North Carolina Tax-Free Bond Fund, respectively.

TAXATION

- 22 -

<PAGE>

business of investing in such stock, securities or currencies; (c) derive less
than 30% of its gross income from the sale or other disposition of certain
assets (namely, in the case of a Fund, (i) stock or securities; (ii) options,
futures, and forward contracts (other than those on foreign currencies), and
(iii) foreign currencies (including options, futures, and forward contracts on
such currencies) not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to stocks
or securities)) held less than 3 months; and (d) diversify its holdings so that,
at the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not greater
than 5% of the value of the Fund's total assets and not greater than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
engaged in the same or similar or related trades or businesses. In addition, a
Fund earning tax-exempt interest must, in each year, distribute at least 90% of
its net tax-exempt income. By meeting these requirements, a Fund generally will
not be subject to Federal income tax on its investment company taxable income
and net capital gains which are distributed to shareholders. If the Funds do not
meet all of these Code requirements, they will be taxed as ordinary corporations
and their distributions will be taxed to shareholders as ordinary income.

Distributions of investment company taxable income generally are
taxable to shareholders as ordinary income. Distributions from certain of the
Funds may be eligible for the dividends-received

- 23 -

<PAGE>

deduction available to corporations. Distributions of net capital gains, if any,
designated by the Funds as capital gain dividends are taxable to shareholders as
long-term capital gain, regardless of the length of time the Funds' shares have
been held by a shareholder. All distributions are taxable to the shareholder in
the same manner whether reinvested in additional shares or received in cash.
Shareholders will be notified annually as to the Federal tax status of
distributions.

Upon the taxable disposition (including a sale or redemption) of shares
of a Fund, a shareholder may realize a gain or loss depending upon his basis in
his shares. Such gain or loss generally will be treated as capital gain or loss
if the shares are capital assets in the shareholder's hands. Such gain or loss
will be long-term or short-term, generally depending upon the shareholder's
holding period for the shares. However, a loss realized by a shareholder on the
disposition of Fund shares with respect to which capital gain dividends have
been paid will, to the extent of such capital gain dividends, be treated as
long-term capital loss if such shares have been held by the shareholder for six
months or less. A loss realized on the redemption, sale or exchange of Fund
shares will be disallowed to the extent an exempt-interest dividend was received
with respect to those shares if the shares have been held by the shareholder for
six months or less. Further, a loss realized on a disposition will be disallowed
to the extent the shares disposed of are replaced (whether by reinvestment of
distributions or otherwise) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss. In some
circumstances, basis adjustments are required in computing gains or loss on
dispositions of Fund shares within 90 days after their acquisition where new
shares of a regulated investment company are then acquired with a reduced sales
load. Shareholders receiving distributions in the form of additional shares will
have a cost basis for Federal income tax purposes in each share received equal
to the net asset value of a share of the Funds on the reinvestment date.

- 24 -

<PAGE>

of receipt. If the option expires, the premium is short-term capital gain to the
Fund. If the Fund enters into a closing transaction, the difference between the
amount paid to close out its position and the premium received is short-term
capital gain or loss. If a call option written by a Fund is exercised, thereby
requiring the Fund to sell the underlying security, the premium will increase
the amount realized upon the sale of such security and any resulting gain or
loss will be a capital gain or loss, and will be long-term or short-term
depending upon the holding period of the security. With respect to a put or call
option that is purchased by a Fund, if the option is sold, any resulting gain or
loss will be a capital gain or loss, and will be long-term or short-term,
depending upon the holding period of the option. If the option expires, the
resulting loss is a capital loss and is long-term or short-term, depending upon
the holding period of the option. If the option is exercised, the cost of the
option, in the case of a call option, is added to the basis of the purchased
security and, in the case of a put option, reduces the amount realized on the
underlying security in determining gain or loss.

- 25 -

<PAGE>

Some of the debt securities may be purchased by a Fund at a discount
which exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for Federal income tax purposes.
The gain realized on the disposition of any debt security, including a
tax-exempt debt security, having market discount will be treated as taxable
income to the extent it does not exceed the accrued market discount on such debt
security. Generally, market discount accrues on a daily basis for each day the
debt security is held by the Fund at a constant rate over the time remaining to
the debt security's maturity or, at the election of the Fund, at a constant
yield to maturity which takes into account the semi-annual compounding of
interest.

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency, and the time the Fund actually collects such receivables or pays such
liabilities, generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain options and forward and futures contracts, gains
or losses attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "section 988" gains or losses, may increase, decrease, or
eliminate the amount of a Fund's investment

- 26 -

<PAGE>

company taxable income to be distributed to its shareholders as ordinary income.

A Fund may be able to elect alternative tax treatment with respect to
PFIC stock. Under an election that currently may be available, a Fund generally
would be required to include in its gross income its share of the earnings of a
PFIC on a current basis, regardless of whether any distributions are received
from the PFIC. If this election is made, the special rules, discussed above,
relating to the taxation of excess distributions, would not apply. In addition,
another election may be available that would involve marking to market the
Funds' PFIC shares at the end of each taxable year (and on certain other dates
prescribed in the Code), with the result that unrealized gains are treated as
though they were realized. If this election were made, tax at the Fund level
under the PFIC rules would generally be eliminated, but the Fund could, in
limited circumstances, incur nondeductible interest charges. Each Fund's
intention to qualify annually as a regulated investment company may limit its
elections with respect to PFIC stock.

Income received by a Fund from sources within foreign countries may be
subject to withholding and other similar income taxes imposed by the foreign
country. If more than 50% of the value of a Fund's total assets at the close of
its taxable year consists of securities of foreign governments and corporations,
the Fund will be eligible and intends to elect to "pass-through" to its
shareholders the amount of such foreign taxes paid by the Fund. Pursuant to this
election, a shareholder would be required to include in gross income (in
addition to taxable dividends actually received) his pro rata share of the
foreign taxes paid by a Fund, and would be entitled either to deduct (as an
itemized deduction) his pro rata share of foreign taxes in computing his taxable
income or to use it as a foreign tax credit against his U.S. Federal income tax
liability, subject to limitations. No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions, but such a shareholder may be
eligible to claim the foreign tax credit (see below). Each shareholder will be

- 27 -

<PAGE>

notified within 60 days after the close of a Fund's taxable year whether the
foreign taxes paid by a Fund will "pass-through" for that year and, if so, such
notification will designate (a) the shareholder's portion of the foreign taxes
paid to each such country and (b) the portion of the dividend which represents
income derived from foreign sources.

The Funds are required to report to the Internal Revenue Service
("IRS") all distributions except in the case of certain exempt shareholders. All
such distributions generally are subject to withholding of Federal income tax at
a rate of 31% ("backup withholding") in the case of non-exempt shareholders if
(1) the shareholder fails to furnish the Funds with and to certify the
shareholder's correct taxpayer identification number or social security number,
(2) the IRS notifies the Funds or a shareholder that the shareholder has failed
to report properly certain interest and dividend income to the IRS and to
respond to notices to that effect, or (3) when required to do so, the
shareholder fails to certify that he is not subject to backup withholding. If
the withholding provisions are applicable, any such distributions, whether
reinvested in additional shares or taken in cash, will be reduced by the amounts
required to be withheld. Backup withholding is not an additional tax. Any amount
withheld may be credited against the shareholder's U.S. Federal income tax
liability. Investors may wish to consult their tax advisors about the
applicability of the backup withholding provisions.

- 28 -

<PAGE>

and local taxation. Shareholders who are not U.S. persons should consult their
tax advisors regarding U.S. and foreign tax consequences of ownership of shares
of the Funds including the likelihood that distributions to them would be
subject to withholding of U.S. tax at a rate of 30% (or at a lower rate under a
tax treaty).

- 29 -

<PAGE>

(which may include shares of the Fund). In addition, a shareholder may not
deduct a portion of interest on indebtedness incurred or continued to purchase
or carry shares of an investment company (such as this Fund) paying
exempt-interest dividends. Such disallowance would be in an amount which bears
the same ratio to the total of such interest as the exempt-interest dividends
bear to the total dividends, excluding net capital gain dividends received by
the shareholder. Under rules issued by the IRS for determining when borrowed
funds are considered used for the purposes of purchasing or carrying particular
assets, the purchase of shares may be considered to have been made with borrowed
funds even though the borrowed funds are not directly traceable to the purchase
of shares.

OTHER INFORMATION

Capitalization

- 30 -

<PAGE>

hundred million (600,000,000) shares of common stock with a par value of $0.001
per share. The Board of Directors may establish additional Funds (with different
investment objectives and fundamental policies), or additional classes of
shares, at any time in the future. Establishment and offering of additional
Funds or classes will not alter the rights of the Company's shareholders. When
issued, shares are fully paid, non-assessable, redeemable and freely
transferable. Shares do not have preemptive rights or subscription rights. In
any liquidation of a Fund or class, each shareholder is entitled to receive his
pro rata share of the net assets of that Fund or class.

Voting Rights

Each Fund may vote separately on items affecting only that Fund, and
each class of shares of each Fund may vote separately on matters affecting only
that class or affecting that class differently from other classes.

Custodian, Transfer Agent and Dividend Disbursing Agent

- 31 -

<PAGE>

$10,192 for the Equity Growth Fund, the Federal Securities Income Fund and the
North Carolina Tax-Free Bond Fund, respectively.

Yield and Performance Information

The Funds may, from time to time, include their yield, effective yield,
tax equivalent yield and average annual total return in advertisements or
reports to shareholders or prospective investors.

YIELD = 2[(a-b + 1)superscript 6-1]
---
cd

The 30-day yield for Class C shares for the period ended April 30, 1996
was as follows: 5.77% for the Federal Securities Income Fund and 4.45% for the
North Carolina Tax Free Bond Fund.

Quotations of tax-equivalent yield for each class of shares of Centura
North Carolina Tax-Free Bond Fund will be calculated according to the following
formula:

- 32 -

<PAGE>

TAX EQUIVALENT YIELD = ( E )
-----
l-p

E = tax-exempt yield
p = stated income tax rate

P (1 + T)superscript n = ERV

The average annual total return for Class C shares for the fiscal year
ended April 30, 1996 was 34.97% for the Equity Growth Fund, 6.47% for the
Federal Securities Income Fund and 5.78% for the North Carolina Tax-Free Bond
Fund. The average annual total return for Class C shares for the period June 1,
1994 (commencement of operations) through April 30, 1996 was 21.54% for the
Equity Growth Fund, 6.13% for the Federal Securities Income Fund and 5.14% for
the North Carolina Tax-Free Bond Fund.

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<PAGE>

the securities markets in general; (ii) other groups of mutual funds tracked by
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets, or
tracked by other services, companies, publications, or persons who rank mutual
funds on overall performance or other criteria; and (iii) the Consumer Price
Index (measure for inflation) to assess the real rate of return from an
investment in a Fund.

Independent Accountants

McGladrey & Pullen LLP serves as the independent accountants for the
Company. McGladrey & Pullen LLP provides audit services, tax return preparation
and assistance and consultation in connection with review of SEC filings.

Counsel

Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C., 20005,
passes upon certain legal matters in connection with the shares offered by the
Company and also acts as Counsel to the Company.

Registration Statement

[insert 43-a]

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