<PAGE> 1
CENTURA FUNDS, INC.
CENTURA EQUITY GROWTH FUND
CENTURA EQUITY INCOME FUND
CENTURA FEDERAL SECURITIES INCOME FUND
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
December 12, 1996
Dear Shareholder,
This mid-year report covers the period from May 1, 1996 through October 31,
1996. Following is a discussion of the domestic equity and fixed income markets
and comments on each of the Centura Funds.
ECONOMICS/CAPITAL MARKET COMMENTARY
The six months ended 10/31/96 reflected strong equity markets as the
domestic economy continued to show moderate growth with relatively low
inflation. Corporate America has been reporting record profits and the economy
has been operating near full employment. Additionally, the United States has
clearly emerged as the technological leader of the world. All this good news
hasn't gone unnoticed in the fixed income markets as market participants have
been worried all year that the Federal Reserve Board would be forced to slow the
economy down to keep inflationary pressures at bay. Recent economic data has
shown a more moderate pace of economic growth with subdued inflation, easing the
fears of any Federal Reserve tightening. This has led to a recovery in the fixed
income markets as this mid-year update is being written.
In this bull market the major demand for stocks has come from mutual funds.
The inflows in the first six months of 1996 has equaled the record set for the
full year in 1995. Perhaps even more astonishing is the fact that 84% of all the
money ever invested in mutual funds was invested since 1990. The 401-K pension
plan is providing a stable source of cash for mutual fund managers; short-term
market volatility has not dampened the enthusiasm for stocks in these long term
retirement vehicles. Corporate demand for stock has also been strong as stock
buybacks and mergers have provided major support for the market. In the third
quarter of 1996 mergers and acquisitions activity involving U.S. corporations
totaled $153.7 billion. This represented the third strongest quarter on record
and the sixth consecutive quarter of $100 billion or more. In addition, many
corporations have used excess cash flow to buy in shares rather than increase
dividends which are subject to double taxation.
While the "supply versus demand equation" for stocks appear to still be
favorable, it could be suggested that stocks are not cheap by historical
valuation measures. The S&P 500 dividend yield of approximately 2% is at the
lowest level of the century. The current market value of stocks to GDP is the
highest ever. The S&P price to book value and price to sales ratios are at peak
levels. How do we explain this phenomenon? Many explain the low dividend yield
as unimportant because corporate America is using excess cash flow to buy in
shares rather than increase dividends. The market value of all U.S. stocks
relative to GDP is at its highest valuation ever, but remains below the current
levels for Germany and Japan. So in a global context, perhaps valuation levels
found in the U.S. are not excessive.
<PAGE> 2
As this is being written Federal Reserve Chairman Alan Greenspan sent
global markets tumbling as he questioned publicly whether asset values have been
inflated by "irrational exuberance". Greenspan posed the question of how the Fed
would be able to tell if the asset balloon is so over-inflated that values have
become "subject to unexpected and prolonged contractions as ....in Japan over
the past decade". In addition, Greenspan posed the question as to how the Fed
would "factor that assessment into monetary policy". After a temporary one day
market correction, the markets shrugged off Greenspan's comments as the
consensus decided that recent economic data would keep the Federal Reserve on
its current course of action.
While we are not market timers, we have structured our portfolios in a
fashion that we feel make sense in light of the above mentioned factors. It is
our goal to provide our shareholders with above average risk adjusted returns
over an entire market cycle. This can only be achieved with a consistent
discipline that does not become mesmerized by near term market forces. It is our
promise to invest using a fundamental long term approach where we see value, not
driven by some "irrational exuberance".
CENTURA EQUITY GROWTH FUND
After a mid-year setback, stocks have resumed their upward course with the
large capitalization indexes leading the way. Stock selection has become much
more important as the year progressed and many of the momentum stocks that led
the markets in the first half of the year tumbled as they were unable to meet
investors expectations. We have been moving the Fund into a more defensive
posture as we feel that economy will grow at a slower pace in 1997 making
corporate earnings comparisons more difficult. Consumer staples have been
increased while reducing the fund's exposure to the more economically sensitive
basic industries area. We continue to favor growth companies that are trading at
a discount to the market or to their specific industry group. Many times these
companies need to be added to the portfolio when the company has disappointed
Wall Street; which, as we all know is extremely short term oriented.
Additionally, companies that have strong balance sheets and positive free cash
flow are being emphasized. As always, we assess the downside risk in a company
before looking at the upside potential.
The average weighted market capitalization of the portfolio is now
approaching $16 billion. The average equity holding is strong financially with
long term debt of approximately 34% of total capital. The average holding has a
return on common equity approaching 20% which compares favorably with the S&P
500. The average trailing price/earnings ratio is currently slightly less than
the market, although the portfolio has stronger growth characteristics than that
of the market as represented by the S&P 500.
CENTURA EQUITY INCOME FUND
This fund was started on October 1, 1996 as legislation allowed us to make
a tax-free conversion of our commingled fund and collective trust into an
equity-income mutual fund. We are excited about the addition of the Equity
Income Fund to the Centura family. We feel that this fund is appropriate for
people who desire the benefits of equity ownership but also need an above
average dividend yield. Additionally, this fund's portfolio has typically
experienced below average market volatility over the last market cycle (as
measured by standard deviation).
2
<PAGE> 3
As of this writing, the Centura Equity Income Fund is presently invested in
common stocks (83%), convertible issues (10%) and cash (7%). The average
weighted market capitalization of the fund is approximately $24 billion. The
fund continues to overweight basic materials, capital goods, consumer staples
and energy. Technology continues to be underweighted in the Equity Income Fund
due to the lack of yield available in this sector. It is our goal for this fund
to have a current yield exceeding that of the S&P 500 index.
CENTURA FEDERAL SECURITIES INCOME FUND
The bond market has recently recovered as investors have become more
confident that the U.S. economy is beginning to grow at a more moderate pace
with little inflation. The Federal Securities Income Fund has not fully
participated in this recovery due to the portfolio exposure to higher yielding
callable agency bonds. Presently the portfolio is comprised of 72.8% treasury
obligations, 20.3% agency obligations and 6.9% cash equivalents. The average
maturity of the fund is 3.13 years and the average duration is 2.57 years.
As of October 31, 1996 the 3 year U.S. Treasury was yielding 5.86% and the
30 year U.S. Treasury was yielding 6.64%. Presently, the conservative fixed
income investor is able to receive 88% of the yield available in long treasuries
by going out only 3 years in maturity. When combining this with the volatility
on the long end of the yield curve, we feel the Centura Federal Securities
Income Fund is providing a representative yield with relatively low principal
risk.
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
The North Carolina municipal market has recovered along with the U.S.
Treasury market over the last couple of months as recent economic data has
convinced fixed income participants that the U.S. economy is beginning to
advance at a more moderate pace. The supply of new bonds being issued in North
Carolina has been low, as many refunding bonds were removed from the calendar
when rates backed up earlier in the year. With the recent bond rally, it is
likely that the supply of North Carolina municipal bonds will return to a more
normal level. The average maturity of the fund is 7.5 years and the average
duration is 5.9 years.
The fund continues to stress quality with an average Moody's Investment
Service rating of Aa1. Currently the fund is comprised of 70.9% general
obligation bonds, 28% revenue bonds and 1.1% cash equivalents. We believe the
Centura North Carolina Tax-Free Fund offers the high tax bracket investor with
an excellent taxable equivalent yield when compared to other fixed income
alternatives.
CAPITAL MARKET OUTLOOK
The future for the U.S. economy still looks bright as the GDP is expected
to grow at 2.0% with subdued inflationary pressures. As discussed above, we do
have some concerns in regard to valuation levels in the equity markets and the
fact that there has been no meaningful correction over the last few years. While
we are not market timers, we have been structuring portfolios in a more
defensive fashion. It would come as no surprise to us to see the bond market
produce higher total returns than common stocks over the next six months to a
year.
3
<PAGE> 4
One should keep in mind that we should never underestimate corporate
America and the reasons to be invested in quality common stocks over the long
term. We remain committed to that fact and will do our best to provide excellent
risk adjusted returns over the coming year. Your support and confidence are
greatly appreciated.
Sincerely,
/s/ FRANK G. JOLLEY
Frank G. Jolley, CFA
Chief Investment Officer
Centura Bank/Trust Investments
4
<PAGE> 5
CENTURA FUNDS, INC.
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 93.3%
AEROSPACE -- 7.5%
75,000 Boeing Co. ............................................. $ 4,024,058 $ 7,153,125
110,000 Precision Castparts Corp. .............................. 2,619,836 5,142,500
------------ ------------
6,643,894 12,295,625
------------ ------------
BEVERAGES -- 1.9%
104,000 Pepisco Inc. ........................................... 3,166,618 3,081,000
------------ ------------
CHEMICALS -- 5.1%
235,000 Cabot Corp.............................................. 3,722,965 5,669,375
105,000 Mississippi Chemical Corp. ............................. 2,160,000 2,638,125
------------ ------------
5,882,965 8,307,500
------------ ------------
CAPITAL GOODS -- 3.4%
138,000 Briggs & Stratton Corp. ................................ 4,926,798 5,520,000
------------ ------------
CAPITAL GOODS/TECHNOLOGY -- 4.4%
55,500 United Technologies Corp. .............................. 4,993,201 7,145,625
------------ ------------
CONSUMER CYCLICALS -- 4.6%
51,000 Gentex Corp*............................................ 615,875 1,211,250
265,000 Lexmark International Group*............................ 4,516,589 6,260,625
------------ ------------
5,132,464 7,471,875
------------ ------------
CONSUMER & INDUSTRIAL PRODUCTS -- 3.9%
66,000 General Electric Co. ................................... 3,141,520 6,385,500
------------ ------------
CONSUMER SERVICES -- 1.5%
75,000 Dow Jones & Co. Inc. ................................... 2,537,365 2,475,000
------------ ------------
CONSUMER STAPLE PRODUCTS -- 2.9%
135,200 Millipore Corp. ........................................ 4,314,510 4,732,000
------------ ------------
COSMETICS & TOILETRIES -- 3.7%
35,800 Colgate-Palmolive Co. .................................. 2,949,100 3,293,600
200,000 Dial Corp. ............................................. 2,589,300 2,750,000
------------ ------------
5,538,400 6,043,600
------------ ------------
ENERGY -- 4.9%
40,000 Amoco Corp. ............................................ 3,044,000 3,030,000
90,000 Tosco Corp. ............................................ 3,693,100 5,051,250
------------ ------------
6,737,100 8,081,250
------------ ------------
ENVIRONMENTAL CONTROL -- 3.4%
150,000 Newpark Resources Inc.*................................. 2,969,382 5,625,000
------------ ------------
FINANCIAL SERVICES -- 6.1%
117,000 American Express Company................................ 3,405,172 5,499,000
50,000 Household International Inc. ........................... 2,322,965 4,425,000
------------ ------------
5,728,137 9,924,000
------------ ------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
CENTURA FUNDS, INC.
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
FOOD -- 4.1%
171,150 Archer-Daniels Midland Co. ............................. $ 2,989,355 $ 3,722,512
68,500 Kroger Co.*............................................. 2,894,951 3,056,813
------------ ------------
5,884,306 6,779,325
------------ ------------
HEALTH CARE -- 2.0%
175,000 Allegiance Corp.*....................................... 3,316,000 3,281,250
------------ ------------
INSURANCE -- 6.9%
96,000 Jefferson Pilot Corp. .................................. 3,406,510 5,460,000
157,500 Provident Companies Inc. ............................... 3,823,528 5,847,188
------------ ------------
7,230,038 11,307,188
------------ ------------
IRON/STEEL -- 1.2%
80,000 Olympic Steel Inc.*..................................... 2,129,063 2,000,000
------------ ------------
MINING -- 4.1%
95,000 Potash Corp. ........................................... 4,188,137 6,733,125
------------ ------------
PHARMACEUTICALS -- 3.0%
65,000 Rhone-Poulenc Rorer Inc. ............................... 3,100,173 4,363,125
15,700 Watson Pharmaceuticals Inc.*............................ 510,795 523,988
------------ ------------
3,610,968 4,887,113
------------ ------------
PUBLISHING & PRINTING -- 1.1%
50,000 Readers Digest Assoc. .................................. 1,741,500 1,781,250
------------ ------------
RAW MATERIALS -- 3.9%
133,000 Nucor Inc. ............................................. 7,668,913 6,300,875
------------ ------------
RETAIL -- 1.7%
79,000 Dayton Hudson Corp. .................................... 2,616,860 2,735,375
------------ ------------
TECHNOLOGY -- 6.5%
63,000 Computer Sciences Corp.*................................ 3,987,910 4,677,750
24,000 International Business Machines......................... 3,040,080 3,096,000
64,000 Varian Assoc. Inc. ..................................... 3,782,380 2,888,000
------------ ------------
10,810,370 10,661,750
------------ ------------
TELECOMMUNICATIONS -- 1.5%
55,000 Motorola Inc. .......................................... 2,713,150 2,530,000
------------ ------------
TEXTILES -- 4.0%
212,500 Unifi Inc. ............................................. 5,054,712 6,614,062
------------ ------------
TOTAL COMMON STOCKS..................................... 118,676,371 152,699,288
------------ ------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
CENTURA FUNDS, INC.
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES/ MARKET
PRINCIPAL COST VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
U.S. TREASURY BILL -- 5.5%
$5,000,000 U.S. Treasury Bill due 11/21/96......................... $ 4,988,020 $ 4,988,020
4,000,000 U.S. Treasury Bill due 1/16/97.......................... 3,958,766 3,957,200
------------ ------------
8,946,786 8,945,220
------------ ------------
MONEY MARKET FUNDS -- 3.8%
3,533,956 Financial Square Prime Obligations Portfolio............ 3,533,956 3,533,956
2,694,614 Temp Investment Fund.................................... 2,694,614 2,694,614
------------ ------------
6,228,570 6,228,570
------------ ------------
TOTAL INVESTMENTS -- 102.6%............................. $133,851,727+ 167,873,078
=============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (2.6%)...................................... (4,261,275)
------------
NET ASSETS -- 100.0%.................................... $163,611,803
=============
</TABLE>
- ---------------
* Non-income producing securities.
+ The cost for Federal income tax purposes is substantially the same.
7
<PAGE> 8
CENTURA FUNDS, INC.
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 88.8%
AEROSPACE -- 2.8%
15,000 Boeing Co............................................... $ 589,987 $ 1,430,625
------------ ------------
BANKS -- 1.5%
13,500 CCB Financial Corp. .................................... 444,253 769,500
------------ ------------
BEVERAGES -- 3.6%
46,000 Coca-Cola Bottling Co. ................................. 1,269,934 1,840,000
------------ ------------
BUSINESS EQUIPMENT & SERVICES -- 2.6%
69,000 Rollins Inc. ........................................... 1,511,354 1,319,625
------------ ------------
CHEMICALS -- 5.1%
30,000 Goodrich (B.F.) Co. .................................... 1,000,224 1,271,250
45,000 Lubrizol Corp. ......................................... 1,286,197 1,338,750
------------ ------------
2,286,421 2,610,000
------------ ------------
CONSUMER INDUSTRIAL PRODUCTS -- 2.8%
15,000 General Electric Co. ................................... 718,938 1,451,250
------------ ------------
CONSUMER SERVICES -- 2.6%
40,000 Dow Jones & Co. Inc. ................................... 1,490,341 1,320,000
------------ ------------
ENERGY -- 5.3%
16,000 Amoco Corp. ............................................ 975,090 1,212,000
9,200 Royal Dutch Petroleum N.Y. ............................. 701,066 1,521,450
------------ ------------
1,676,156 2,733,450
------------ ------------
ENTERTAINMENT -- 2.2%
30,500 Time Warner Inc. ....................................... 1,211,155 1,136,125
------------ ------------
FINANCIAL SERVICES -- 2.9%
38,000 Time Warner Fin Pfd Series Conv......................... 1,280,410 1,472,500
------------ ------------
FOOD -- 8.4%
27,000 Chiquita Brands Pfd Series A Conv....................... 1,291,410 1,161,000
78,000 Flowers Industries Inc.................................. 1,052,303 1,823,250
75,000 Lance Inc. ............................................. 1,474,750 1,312,500
------------ ------------
3,818,463 4,296,750
------------ ------------
HEALTH CARE -- 5.6%
31,000 Abbott Laboratories..................................... 1,234,935 1,569,375
21,000 American Home Products.................................. 757,470 1,286,250
------------ ------------
1,992,405 2,855,625
------------ ------------
HOLDING COMPANIES -- 2.5%
35,000 Onbancorp Inc. ......................................... 1,116,255 1,273,125
------------ ------------
HOUSEHOLD PRODUCTS -- 2.0%
45,000 Bassett Furniture Industries............................ 1,023,750 1,006,875
------------ ------------
INDUSTRIALS -- 2.9%
32,000 Crane Co. .............................................. 1,070,166 1,488,000
------------ ------------
INSURANCE -- 2.3%
21,000 Jefferson Pilot Corp. .................................. 467,054 1,194,375
------------ ------------
MINING -- 2.1%
15,000 Potash Corp. ........................................... 330,900 1,063,125
------------ ------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
CENTURA FUNDS, INC.
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
SHARES/ MARKET
PRINCIPAL COST VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
NATURAL GAS -- 0.8%
16,000 Piedmont Natural Gas Co. ............................... $ 320,295 $ 392,000
------------ ------------
OIL/GAS -- 5.7%
15,500 Schlumberger Ltd. ...................................... 895,541 1,536,438
27,000 Tejas Gas Corp. Pfd Conv................................ 1,083,195 1,417,500
------------ ------------
1,978,736 2,953,938
------------ ------------
POLLUTION CONTROL -- 2.7%
40,000 WMX Technologies Inc. .................................. 1,241,940 1,375,000
------------ ------------
PUBLISHING/PRINTING -- 3.1%
44,700 Readers Digest Assoc. .................................. 1,786,075 1,592,437
------------ ------------
RAW MATERIALS -- 5.1%
21,500 Aluminum Company of America............................. 1,194,600 1,260,438
14,500 Du Pont (E.I.) De Nemours............................... 508,905 1,344,875
------------ ------------
1,703,505 2,605,313
------------ ------------
REAL ESTATE INVESTMENT TRUST -- 2.5%
44,700 Highwoods Properties Inc. .............................. 1,118,900 1,285,125
------------ ------------
RETAIL -- 2.3%
22,500 Penney (J.C.) Co. ...................................... 1,173,847 1,181,250
------------ ------------
TECHNOLOGY -- 2.3%
9,000 International Business Machines......................... 1,161,405 1,161,000
------------ ------------
TELECOMMUNICATIONS -- 2.5%
31,000 Bellsouth Corp. ........................................ 1,286,110 1,263,250
------------ ------------
TOBACCO -- 2.5%
48,000 Universal Corp. -- VA................................... 1,262,880 1,308,000
------------ ------------
UTILITIES -- 2.1%
26,000 GTE Corp. .............................................. 915,330 1,095,250
------------ ------------
TOTAL COMMON STOCKS..................................... 36,246,965 45,473,513
------------ ------------
U.S. TREASURY BILL -- 3.9%
$2,000,000 U.S. Treasury Bill due 12/5/96.......................... 1,990,905 1,990,905
------------ ------------
MONEY MARKET FUNDS -- 7.7%
1,988,420 Financial Square Prime Obligations Portfolio............ 1,988,421 1,988,420
1,945,635 Temp Investment Fund.................................... 1,945,635 1,945,635
------------ ------------
3,934,056 3,934,056
------------ ------------
TOTAL INVESTMENTS -- 100.4%............................. $ 42,171,926+ 51,398,474
============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (0.4%)...................................... (189,973)
------------
NET ASSETS -- 100.0%.................................... $ 51,208,501
============
</TABLE>
- ---------------
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
9
<PAGE> 10
CENTURA FUNDS, INC.
FEDERAL SECURITIES INCOME FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
---------- ------------ ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 20.0%
FEDERAL HOME LOAN BANK -- 6.7%
7.89%, 12/23/97........................................ $2,000,000 $ 2,000,000 $ 2,049,200
7.02%, 7/6/99.......................................... 3,000,000 2,990,156 3,075,120
6.83%, 6/7/01.......................................... 3,000,000 2,978,438 3,031,440
------------ ------------
7,968,594 8,155,760
------------ ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.7%
7.35%, 6/01/05......................................... 2,000,000 2,000,000 2,025,140
------------ ------------
FEDERAL FARM CREDIT BANK -- 4.9%
5.94%, 1/23/01......................................... 3,000,000 2,998,125 2,948,130
7.125%, 8/8/01......................................... 3,000,000 3,004,523 3,030,210
------------ ------------
6,002,648 5,978,340
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.7%
7.29%, 9/22/99......................................... 2,000,000 1,984,967 2,019,299
7.40%, 7/01/04......................................... 3,000,000 3,160,549 3,155,070
7.47%, 5/03/06......................................... 3,000,000 3,000,000 3,042,690
------------ ------------
8,145,516 8,217,058
------------ ------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS................. 24,116,758 24,376,298
------------ ------------
U.S. TREASURY NOTES -- 71.6%
6.125%, 12/31/96....................................... 7,000,000 7,004,203 7,012,249
6.875%, 4/30/97........................................ 5,000,000 5,022,098 5,038,849
5.50%, 9/30/97......................................... 5,000,000 4,966,926 5,001,900
5.25%, 7/31/98......................................... 5,000,000 4,906,906 4,964,200
7.125%, 10/15/98....................................... 7,000,000 7,068,558 7,180,529
5.125%, 12/31/98....................................... 5,000,000 4,832,690 4,936,750
6.375%, 1/15/99........................................ 5,000,000 4,966,784 5,064,350
7.00%, 4/15/99......................................... 5,000,000 5,009,603 5,134,150
8.00%, 8/15/99......................................... 5,000,000 5,224,409 5,267,000
6.00%, 10/15/99........................................ 5,000,000 4,897,668 5,019,899
8.50%, 2/15/00......................................... 5,000,000 5,134,580 5,376,600
7.125%, 2/29/00........................................ 5,000,000 4,977,031 5,174,400
5.25%, 1/31/01......................................... 2,000,000 1,979,488 1,947,159
5.75%, 8/15/03......................................... 5,000,000 4,875,976 4,873,598
7.875%, 11/15/04....................................... 5,000,000 5,329,882 5,490,550
6.50%, 5/15/05......................................... 5,000,000 5,113,030 5,055,200
6.50%, 8/15/05......................................... 5,000,000 4,976,563 5,056,000
------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS.......................... 86,286,395 87,593,383
------------ ------------
MONEY MARKET FUND -- 6.7%
Goldman Sachs Institutional............................ 3,449,905 3,449,905 3,449,905
Treasury Instrument Portfolio.......................... 4,812,077 4,812,077 4,812,078
------------ ------------
8,261,982 8,261,983
------------ ------------
TOTAL INVESTMENTS -- 98.3%............................... $118,665,135+ 120,231,664
============
ASSETS IN EXCESS OF LIABILITIES -- 1.7%.................. 2,077,625
------------
NET ASSETS -- 100.0%..................................... $122,309,289
============
</TABLE>
- ---------------
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
10
<PAGE> 11
CENTURA FUNDS, INC.
NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- 98.6%
Aa/AA- Buncombe County UTGO, Refunding, 5.00%,
03/01/01.................................... $1,000,000 $ 1,011,920 $ 1,025,000
A1/A+ Cabarrus County, 6.9%, 3/1/97................. 500,000 504,915 505,415
Aaa/AAA Carteret County, 5.4%, 5/1/09................. 1,000,000 1,004,468 1,004,470
Aa/AA- Catawba County UTGO, 4.60%, 06/01/03.......... 1,000,000 1,003,870 995,000
Aa/AA- Catawba County UTGO, 4.60%, 06/01/05.......... 1,000,000 983,934 973,750
Aaa/AAA Charlotte UTGO, 5.10%, 06/01/09............... 1,500,000 1,492,740 1,477,500
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, 5.20%,
01/01/97.................................... 200,000 200,002 200,572
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, 6.00%,
01/01/04.................................... 1,000,000 997,023 1,067,500
Aaa/AAA Cleveland County UTGO, (FGIC), 5.10%,
06/01/07.................................... 1,400,000 1,394,996 1,387,750
Aaa/AAA Craven County Rev, 5.40%, 06/01/02............ 1,000,000 1,036,283 1,043,750
Aaa/AAA Cumberland County Civic Center Project, Series
A, COPS, (AMBAC), 6.20%, 12/01/07........... 1,535,000 1,549,894 1,650,125
Aaa/AAA Durham County UTGO, 5.40%, 02/01/99........... 1,200,000 1,217,190 1,231,500
Aaa/AAA Fayetteville Public Works, Series A, Revenue,
(AMBAC), 5.25%, 03/01/08.................... 1,280,000 1,274,498 1,275,200
Aaa/AAA Gaston County UTGO, (MBIA), 5.70%, 03/01/04... 850,000 862,618 898,875
Aaa/AAA Gaston County UTGO, (MBIA), 5.70%, 03/01/05... 1,000,000 1,030,069 1,055,000
Aaa/AAA Gastonia UTGO, (FGIC), 5.20%, 04/01/01........ 700,000 699,260 721,000
Aa1/AAA Greensboro Public Improvement, Series B, UTGO,
5.40%, 04/01/04............................. 1,000,000 996,460 1,037,500
Aa1/AA+ Guilford County UTGO, 4.90%, 04/01/01......... 1,000,000 1,019,782 1,020,000
Aaa/AAA Lincoln County UTGO, 4.7%, 6/1/99............. 1,000,000 1,009,568 1,012,500
Aa1/AA+ Mecklenburg County NC, 4.70%, 03/01/20........ 1,000,000 1,010,337 1,011,250
Aa1/AA+ Mecklenburg County NC, 4.70%, 03/01/02........ 1,000,000 1,004,610 1,008,750
Aa/A+ New Hanover County Solid Waste UTGO,
Refunding, 4.80%, 09/01/07.................. 1,000,000 964,640 960,000
Aaa/AAA North Carolina Municipal Power Agency # 1,
Catawba Electric Revenue, (MBIA), 5.25%,
01/01/09.................................... 1,500,000 1,415,610 1,498,125
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/02....................... 1,000,000 988,610 1,008,750
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/04....................... 1,000,000 997,308 998,750
A1/A+ Onslow County UTGO, 5.60%, 03/01/05........... 1,000,000 1,019,858 1,043,750
Aa1/AA+ Orange County UTGO, Refunding, 5.10%,
06/01/03.................................... 1,050,000 1,052,808 1,080,188
Aa/AA- Pitt County UTGO, Refunding, 5.10%,
02/01/06.................................... 1,000,000 1,010,997 1,006,250
Aaa/AAA Raleigh UTGO, 6.40%, 03/01/02................. 1,250,000 1,342,137 1,357,813
A1/A+ University of North Carolina, Utility System
Revenue, Refunding, 5.00%, 08/01/09......... 1,460,000 1,432,263 1,405,250
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.35%, 02/15/02........... 1,000,000 1,000,000 997,500
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.45%, 02/15/03........... 1,000,000 1,000,000 996,250
Aaa/AAA Wake County UTGO, Refunding, 4.50%, 02/01/06.. 2,000,000 2,000,000 1,930,000
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
CENTURA FUNDS, INC.
NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- (CONTINUED)
Aaa/AAA Wake County Hospital Revenue, (MBIA), 4.50%,
10/01/03.................................... $1,200,000 $ 1,124,941 $ 1,173,000
*A/A Wilkes County UTGO, Refunding, 5.20%,
06/01/05.................................... 1,275,000 1,275,000 1,286,155
Aa/AA+ Winston-Salem Water & Sewer System, Revenue,
6.30%, 06/01/06............................. 1,000,000 1,080,231 1,090,000
----------- -----------
Total Municipal Obligations................... 39,008,840 39,434,188
----------- -----------
MONEY MARKET FUNDS -- 1.0%
Institutional Liquid Assets Tax Exempt Fund... 272,698 272,698 272,698
PNC Investments N.C. Money Market Fund........ 108,591 108,592 108,591
----------- -----------
381,290 381,290
----------- -----------
TOTAL INVESTMENTS -- 99.6%.................... $39,390,130+ 39,815,478
===========
ASSETS IN EXCESS OF OTHER
LIABILITIES -- 0.4%......................... 160,635
-----------
NET ASSETS -- 100.0%.......................... $39,976,113
===========
</TABLE>
- ---------------
* See page 13 for Credit Ratings.
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
12
<PAGE> 13
CENTURA FUNDS, INC.
FOOTNOTES TO PORTFOLIOS
OCTOBER 31, 1996
* Credit Ratings (unaudited given by Moody's Investors Service Inc. and
Standard & Poor's Corporation.
<TABLE>
<CAPTION>
STANDARD &
MOODY'S POOR'S
- ------------ ---------------
<C> <C> <S>
Instrument judged to be of the highest quality and carrying
Aaa AAA the smallest amount of investment risk.
Aa AA Instrument judged to be of high quality by all standards.
A A- Instrument judged to be adequate by all standards.
Not Rated. In the opinion of the Investment Adviser,
instrument judged to be of comparable investment quality to
NR NR rated securities which may be purchased by the Fund.
</TABLE>
Items which possess the strongest investment attributes of their category are
given that letter rating followed by a number. Moody's applies numerical
modifiers to designate relative standing within the generic ratings categories.
The Standard & Poor's ratings may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
ABBREVIATIONS USED IN THE PORTFOLIOS:
<TABLE>
<S> <C>
AMBAC.............. American Municipal Bond Assurance Corporation
COPS............... Certificates of Participation
FGIC............... Financial Guaranty Insurance Corporation
GO................. General Obligation
MBIA............... Municipal Bond Insurance Association
UTGO............... Unlimited Tax General Obligation
</TABLE>
Investment percentages shown are calculated as a percentage of net assets.
Institutions shown in parenthesis have entered into credit support agreement
with the issuer.
See accompanying notes to financial statements.
13
<PAGE> 14
CENTURA FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CENTURA CENTURA
CENTURA CENTURA FEDERAL NORTH
EQUITY EQUITY SECURITIES CAROLINA
GROWTH INCOME INCOME TAX-FREE
FUND FUND FUND BOND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (identified cost --
$133,851,727; $42,171,926; $118,665,135; $39,390,130,
respectively)........................................ $167,873,078 $51,398,474 $120,231,664 $39,815,478
Dividends and interest receivable.................... 126,650 115,518 1,791,740 529,232
Receivable for investments sold...................... 221,922 0 0 770,364
Receivable for fund shares sold...................... 154,516 138,452 673,579 22,777
Unamortized organizational expenses (Note 2e)........ 19,017 0 0 11,640
Other assets......................................... 5,314 0 8,281 11,363
------------ ----------- ------------ -----------
Total Assets....................................... 168,400,497 51,652,444 122,705,264 41,160,854
------------ ----------- ------------ -----------
LIABILITIES
Payable for securities purchased..................... 4,140,315 0 0 1,007,170
Income distribution payable.......................... 0 0 0 0
Payable to Custodian for overdraft................... 6,126 50,613 212,321 127,238
Payable for fund shares repurchased.................. 463,623 362,273 114,610 5,503
Advisory fee payable (Note 3)........................ 97,471 12,494 30,601 4,019
Administrative services fee payable (Note 3)......... 20,887 6,246 15,300 1,723
Transfer agent fee payable (Note 3).................. 9,488 310 1,258 1,016
12b-1 Distribution fee payable....................... 10,919 40 419 2,682
Other accrued expenses............................... 39,865 11,967 21,466 35,390
------------ ----------- ------------ -----------
Total Liabilities.................................. 4,788,694 443,943 395,975 1,184,741
------------ ----------- ------------ -----------
NET ASSETS............................................. $163,611,803 $51,208,501 $122,309,289 $39,976,113
============ =========== ============ ===========
NET ASSETS CONSIST OF:
Shares of beneficial interest outstanding (par value
$.001 per share) 450,000,000 shares authorized..... $ 11,459 $ 5,019 $ 12,105 $ 3,954
Additional paid -- in capital........................ 123,197,701 50,283,822 120,904,207 39,397,791
Accumulated undistributed net investment income/
(loss) on investments.............................. (15,158) 0 0 0
Accumulated undistributed realized gain/(loss) on
investments........................................ 6,396,450 102,806 (173,552) 149,020
Net unrealized appreciation/(depreciation) on
investments........................................ 34,021,351 816,854 1,566,529 425,348
------------ ----------- ------------ -----------
NET ASSETS............................................. $163,611,803 $51,208,501 $122,309,289 $39,976,113
============ =========== ============ ===========
CLASS A:
Net Assets........................................... $ 7,069,584 $ 94,939 $ 542,930 $ 3,850,679
Shares Outstanding................................... 494,975 9,297 53,745 380,820
Net Asset Value Per Share............................ $ 14.28 $ 10.21 $ 10.10 $ 10.11
============ =========== ============ ===========
Maximum Offering Price Per Share ($14.28/.955,
$10.21/.955, $10.10/.9725, $10.11/.9725,
respectively)...................................... $ 14.95 $ 10.69 $ 10.39 $ 10.40
============ =========== ============ ===========
CLASS B:
Net Assets........................................... $ 7,954,009 $ 19,941 $ 207,892 $ 429,484
Shares Outstanding................................... 560,687 1,954 20,581 42,480
Net Asset Value Per Share............................ $ 14.19 $ 10.21 $ 10.10 $ 10.11
============ =========== ============ ===========
CLASS C:
Net Assets........................................... $148,588,210 $51,093,621 $121,558,467 $35,695,950
Shares Outstanding................................... 10,403,792 5,007,303 12,030,482 3,530,437
Net Asset Value Per Share............................ $ 14.28 $ 10.20 $ 10.10 $ 10.11
============ =========== ============ ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 15
CENTURA FUNDS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CENTURA
CENTURA NORTH
CENTURA CENTURA FEDERAL CAROLINA
EQUITY EQUITY SECURITIES TAX FREE
GROWTH FUND INCOME FUND INCOME FUND BOND FUND
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............................ $ 350,594 $ 96,940 $3,751,042 $1,012,376
Dividends........................... 835,666 26,871 0 0
----------- ---------- ---------- ----------
1,186,260 123,811 3,751,042 1,012,376
----------- ---------- ---------- ----------
EXPENSES:
Advisory (Note 3)................... 524,852 29,152 174,608 72,293
Administrative services (Note 3).... 112,468 6,246 87,304 30,983
Fund Accounting (Note 3)............ 16,861 2,620 16,691 21,727
Legal............................... 18,803 750 13,386 5,491
Reports to shareholders............. 5,800 100 600 600
Audit............................... 6,600 1,000 6,600 6,600
Registration........................ 2,783 2,550 933 2,533
Custodian........................... 15,980 2,000 9,600 6,045
Trustee............................. 4,008 333 4,008 4,008
Transfer agent fees and expenses
(Note 3)......................... 25,805 310 2,446 2,807
12b-1 Distribution fee -- Class A... 8,048 10 691 4,804
12b-1 Distribution fee -- Class B... 35,212 30 897 1,879
Amortization of organizational
expenses......................... 3,354 0 4,184 800
Miscellaneous....................... 232 2,752 968 5,828
----------- ---------- ---------- ----------
Total expenses before waivers.... 780,806 47,853 322,916 166,398
Less: expenses
waived/reimbursed.............. 0 (16,658) 0 (68,850)
----------- ---------- ---------- ----------
Net expenses........................ 780,806 31,195 332,916 97,548
----------- ---------- ---------- ----------
Net investment income/(loss).......... 405,454 92,616 3,428,126 914,828
----------- ---------- ---------- ----------
Realized gain/(loss) on investments... 3,470,586 102,806 (450,271) (212,563)
Net change in unrealized
appreciation/(depreciation) of
investments......................... (3,230,237) 899,241 1,626,691 513,511
----------- ---------- ---------- ----------
Net realized and unrealized
gain/(loss) on investments.......... 240,349 1,002,047 1,176,420 300,948
----------- ---------- ---------- ----------
Net increase in net assets resulting
from operations..................... $ 645,803 $1,094,663 $4,604,546 $1,215,776
=========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 16
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CENTURA EQUITY
INCOME FUND
-----------------
CENTURA EQUITY GROWTH FUND FOR THE PERIOD
--------------------------------- OCTOBER 1, 1996*
SIX MONTHS ENDED THROUGH
OCTOBER 31, 1996 YEAR ENDED OCTOBER 31, 1996
(UNAUDITED) APRIL 30, 1996 (UNAUDITED)
---------------- -------------- -----------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ 405,454 $ 583,300 $ 92,616
Net realized gain/(loss) on investments......... 3,470,586 5,486,387 102,806
Net change in unrealized appreciation/
(depreciation) of investments................. (3,230,237) 28,573,774 899,241
------------ ------------ ------------
Net increase in net assets resulting from
operations.................................... 645,803 34,643,461 1,094,663
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Class A....................................... (11,175) (9,804) (155)
Class B....................................... 0 (1,144) (32)
Class C....................................... (409,437) (572,220) (92,429)
------------ ------------ ------------
(420,612) (583,168) (92,616)
------------ ------------ ------------
From capital gains:
Class A....................................... 0 (12,445) 0
Class B....................................... 0 (14,106) 0
Class C....................................... 0 (432,003) 0
------------ ------------ ------------
0 (458,554) 0
------------ ------------ ------------
Decrease in net assets resulting from
distributions to shareholders................. (420,612) (1,041,722) (92,616)
------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A....................................... 1,553,680 3,996,812 94,526
Class B....................................... 1,910,616 3,972,644 20,000
Class C....................................... 24,825,881 34,342,658 50,739,199
------------ ------------ ------------
28,290,177 42,312,114 50,853,725
------------ ------------ ------------
Net asset value of shares issued to shareholders
in reinvestment of dividends and
distributions:
Class A....................................... 11,175 22,225 155
Class B....................................... 0 15,094 32
Class C....................................... 274,535 712,210 41,800
------------ ------------ ------------
285,710 749,529 41,987
------------ ------------ ------------
Net asset value of shares redeemed:
Class A....................................... (255,246) (127,873) 0
Class B....................................... (171,982) (168,362) 0
Class C....................................... (10,410,448) (17,052,874) (689,288)
------------ ------------ ------------
(10,837,676) (17,349,109) (689,288)
------------ ------------ ------------
Net increase in net assets from capital share
transactions.................................. 17,738,211 25,712,534 50,206,424
------------ ------------ ------------
Total increase in net assets.................... 17,963,402 59,314,273 51,208,471
NET ASSETS:
Beginning of period............................. 145,648,401 86,334,128 30
------------ ------------ ------------
End of period................................... $163,611,803 $145,648,401 $ 51,208,501
============ ============ ============
</TABLE>
* Commencement of Operations.
See accompanying notes to financial statements.
16
<PAGE> 17
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES INCOME CENTURA NORTH CAROLINA TAX FREE
FUND BOND FUND
--------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996 OCTOBER 31, 1996 APRIL 30, 1996
---------------- -------------- ---------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............. $ 3,428,126 $ 6,103,135 $ 914,828 $ 1,695,259
Net realized gain/(loss) on
investments..................... (450,271) 304,345 (212,563) 792,820
Net change in unrealized
appreciation/(depreciation) of
investments..................... 1,626,691 (266,951) 513,511 (318,669)
------------ ------------ ----------- ------------
Net increase in net assets
resulting from operations....... 4,604,546 6,140,529 1,215,776 2,169,410
------------ ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Class A......................... (15,487) (19,788) (81,209) (82,525)
Class B......................... (4,711) (8,208) (7,309) (10,750)
Class C......................... (3,407,928) (6,075,139) (826,310) (1,601,984)
------------ ------------ ----------- ------------
(3,428,126) (6,103,135) (914,828) (1,695,259)
------------ ------------ ----------- ------------
From capital gains:
Class A......................... 0 0 0 (17,195)
Class B......................... 0 0 0 (2,298)
Class C......................... 0 0 0 (274,060)
------------ ------------ ----------- ------------
0 0 0 (293,553)
------------ ------------ ----------- ------------
Decrease in net assets resulting
from distributions to
shareholders.................... (3,428,126) (6,103,135) (914,828) (1,988,812)
------------ ------------ ----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A......................... 57,741 296,512 49,382 3,531,762
Class B......................... 31,278 112,249 27,431 231,490
Class C......................... 16,387,992 28,545,692 2,205,115 12,172,633
------------ ------------ ----------- ------------
16,477,011 28,954,453 2,281,928 15,935,885
------------ ------------ ----------- ------------
Net asset value of shares issued
to shareholders in reinvestment
of dividends and distributions:
Class A......................... 15,487 19,767 81,196 100,014
Class B......................... 4,088 8,047 6,116 9,265
Class C......................... 2,143,038 3,621,321 29,375 45,725
------------ ------------ ----------- ------------
2,162,613 3,649,135 116,687 155,004
------------ ------------ ----------- ------------
Net asset value of shares redeemed:
Class A......................... (62,047) (31,434) (234,200) (94,372)
Class B......................... (5,776) (61,464) 0 (122,233)
Class C......................... (7,916,609) (16,242,864) (3,818,470) (10,314,437)
------------ ------------ ----------- ------------
(7,984,432) (16,335,762) (4,052,670) (10,531,042)
------------ ------------ ----------- ------------
Net increase in net assets from
capital share transactions...... 10,655,192 16,267,826 (1,654,055) 5,559,847
------------ ------------ ----------- ------------
Total increase in net assets...... 11,831,612 16,305,220 (1,353,107) 5,740,445
NET ASSETS:
Beginning of period............... 110,477,677 94,172,457 41,329,220 35,588,775
------------ ------------ ----------- ------------
End of period..................... $122,309,289 $110,477,677 $ 39,976,113 $ 41,329,220
============ ============ =========== ============
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 18
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
OCTOBER 31, 1996
1. DESCRIPTION -- Centura Funds, Inc. (the "Company") is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company, organized under the laws of the State of Maryland on March
1, 1994. The company currently consists of four separate investment portfolios:
Centura Equity Growth Fund, Centura Equity Income Fund, Centura Federal
Securities Income Fund, and Centura North Carolina Tax-Free Bond Fund
(collectively, the "Funds"). The Funds commenced operations on June 1, 1994,
except for the Equity Income Fund which commenced operations on October 1, 1996,
and prior to those dates had no operations other than organization matters. On
October 1, 1996, 5,049,923 shares of Centura Equity Income Fund were exchanged
for portfolio securities with an aggregate value of $50,499,233. This exchange
represented a transfer of assets from Centura Bank's trust funds: the Centura
Income Equity Fund and the Centura Bank Income Equity Benefit Group Trust. The
trust funds were managed with substantially the same objectives and policies as
the registered mutual funds, but were not subject to all the same tax and
regulatory requirements applicable to mutual funds.
The Centura Equity Growth Fund seeks to achieve its investment objective of
long-term capital appreciation by investing in a diversified portfolio comprised
mainly of publicly traded common and preferred stocks and securities convertible
into or exchangeable for common stock.
The Centura Equity Income Fund seeks to achieve its investment objective of
long-term capital appreciation and income by investing primarily in dividend
paying common stocks, convertible preferred stocks, and convertible bonds, notes
and debentures.
The Centura Federal Securities Fund seeks to achieve its investment
objective of providing relatively high current income consistent with relative
stability of principal and safety by investing primarily in securities issued by
the U.S. Government, its agencies and instrumentalities.
The Centura North Carolina Tax-Free Bond Fund seeks to achieve its
investment objective of providing relatively high current income that is free of
both Federal and North Carolina personal income tax together with relative
safety of principal by investing primarily in a portfolio of high quality
municipal securities.
The Funds each have three classes of shares known as Class A, Class B and
Class C. Class A shares are offered with a maximum front-end sales charge of
4.50% for the Centura Equity Growth Fund, 4.50% for the Centura Equity Income
Fund, 2.75% for the Centura Federal Securities Income Fund and 2.75% for the
Centura North Carolina Tax-Free Bond Fund. Class B shares are offered with 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 the Centura
Equity Income Fund and 3.00% for each of the other Funds to a minimum in the
fifth year after purchase of 0.90% for Centura Equity Growth Fund and Centura
Equity Income Fund and 0.55% for each of the other Funds. This charge is imposed
if shareholders redeem their shares within five years from the date of purchase.
The CDSC is 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. The front-end sales charge is not
applied to certain
18
<PAGE> 19
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
categories of investors in Class A shares. Class C shares are offered to
accounts managed by the Adviser's Trust Department and to non-profit
Institutions who invest at least $100,000, and there is no sales charge or
contingent deferred sales charge imposed on this Class.
2. SIGNIFICANT ACCOUNTING POLICIES -- The following is a summary of the
significant accounting policies followed by the Funds:
a. Security Valuation 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 from the exchange where the security is
primarily traded. 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. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost.
b. Investment Transactions Transactions are recorded on the trade date.
Identified cost of investments sold is used for both financial statement and
Federal income tax purposes. Interest income, including the amortization of
discount or premium, is recorded as accrued. Dividends are recorded on the
ex-dividend date.
c. Federal Income Taxes Each Fund's policy is to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Funds will not be subject to Federal income taxes
to the extent that they distribute taxable and tax-exempt income for their
fiscal year. The Funds also intend to meet the distribution requirements to
avoid the payment of an excise tax.
d. Dividends To Shareholders Centura Equity Growth Fund and Centura Equity
Income Fund declare and pay dividends of substantially all of their net
investment income monthly. Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund declare dividends of substantially all of
their net investment income daily and pay those dividends monthly. Each Fund
will distribute, at least annually, substantially all net capital gains, if any,
earned by such Fund. Distributions to shareholders are recorded on the ex-
dividend date. The amount of dividends and distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains.
19
<PAGE> 20
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
e. Organization Expenses Costs incurred in connection with the
organization and initial registration of the Company, which have been allocated
among the Funds, have been deferred and are being amortized over a sixty-month
period, beginning with each Fund's commencement of operations.
f. Determination of Net Asset Value and Allocation of Expenses Expenses
directly attributable to a Fund are charged to that Fund; other expenses are
allocated proportionately among each Fund within the Company in relation to the
net assets of each Fund or on another reasonable basis. In calculating net asset
value per share of each class, investment income, realized and unrealized gains
and losses and expenses other than class specific expenses, are allocated daily
to each class of shares based upon the proportion of net assets of each class at
the beginning of each day. Class specific expenses, as determined under
applicable law and regulatory policy, are borne by the class incurring the
expense.
g. Use of Estimates Estimates and assumptions are required to be made
regarding assets, liabilities, and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ from these amounts.
3. ADVISER -- Centura Bank is the Fund's Adviser.
Pursuant to the Advisory Contracts, the Adviser manages the investments of
the Funds and continuously reviews, supervises and administers the Funds'
investments. The Adviser is responsible for placing orders for the purchase and
sale of investment securities directly with brokers and dealers selected at its
discretion. The terms of the Advisory Contracts provide for annual fees at the
following percentages of average daily net assets:
Centura Equity Growth Fund, 0.70% of average daily net assets
Centura Equity Income Fund, 0.70% of average daily net assets
Centura Federal Securities Income Fund, 0.30% of average daily net assets
Centura North Carolina Tax-Free Bond Fund, 0.35% of average daily net assets
For the six month period ended October 31, 1996, Centura Bank was entitled
to and voluntarily waived advisory fees as listed below:
<TABLE>
<CAPTION>
ENTITLED WAIVED
-------- -------
<S> <C> <C>
Centura Equity Growth Fund........................................ $524,852 --
Centura Equity Income Fund........................................ 29,152 $16,658
Centura Federal Securities Income Fund............................ 174,608 --
Centura North Carolina Tax-Free Bond Fund......................... 72,293 48,195
</TABLE>
4. ADMINISTRATOR -- The Funds have entered into Administrative Services
Contracts with Furman Selz LLC ("Furman Selz"). Furman Selz provides management
and administrative services necessary for the operations of the Funds, furnishes
office space and facilities required to conduct the business of the Funds and
pays the compensation of the Company's officers affiliated with Furman Selz. The
terms of the Administrative Services Contracts provide for annual fees of 0.15%
of average daily net assets of each Fund.
20
<PAGE> 21
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
For the six months ended October 31, 1996, Furman Selz was entitled to
administrative services fees as listed below:
<TABLE>
<CAPTION>
FURMAN FURMAN
SELZ SELZ
ENTITLED WAIVED
-------- -------
<S> <C> <C>
Centura Equity Growth Fund........................................ $112,468 --
Centura Equity Income Fund........................................ 6,246 --
Centura Federal Securities Income Fund............................ 87,304 --
Centura North Carolina Tax-Free Bond Fund......................... 30,983 $20,655
</TABLE>
5. OTHER TRANSACTIONS WITH AFFILIATES -- Furman Selz is transfer agent for
the Funds. Under a Transfer Agency Agreement, Furman Selz provides personnel and
facilities to perform shareholder servicing and transfer agency related
services. Furman Selz receives a per account fee and reimbursement for out of
pocket expenses in connection with shareholder servicing. For the six months
ended October 31, 1996, Furman Selz earned transfer agent fees and out-of-pocket
expenses of $25,805, $310, $2,446, and $2,807 for the Equity Growth Fund, Equity
Income Fund, Federal Securities Income Fund and North Carolina Tax-Free Bond
Fund, respectively.
Furman Selz also provides fund accounting services to the Funds. The Funds
each pay $2,500 per month to Furman Selz for performing fund accounting. Furman
Selz is also reimbursed for out of pocket expenses relating to fund accounting.
For the six months ended October 31, 1996, Furman Selz earned $16,861 for the
Equity Growth Fund, $2,620 for the Equity Income Fund, $16,691 for the Federal
Securities Income Fund and $21,727 for the North Carolina Tax-Free Bond Fund.
Centura Funds Distributor, Inc. acts as the Funds' Distributor. The
Distributor is an affiliate of the Funds' Administrator, Furman Selz, and was
formed specifically to distribute the Funds. (See "The Administrator".)
Each of the Funds has adopted a service and distribution plan (the "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 PLAN. The Class A Plan provides 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 fees 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. During the current fiscal year the Adviser has undertaken to
limit 12b-1 fees for Class A shares to 0.25%. For the six months ended October
31, 1996, Centura Funds Distributor, Inc. earned distribution fees for Class A
of $8,048, $10, $691 and $4,804 for the Equity Growth Fund, Equity Income Fund,
Federal Securities Income Fund and North Carolina Tax-Free Bond Fund,
respectively. In addition, the Distributor also retains a portion of the
front-end sales charge.
21
<PAGE> 22
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
CLASS B PLAN. The Class B Plan provides for payments by the 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. Such fees may include a Service Fee
totalling up to 0.25% of the average annual net assets attributable to a Fund's
Class B shares. For the six months ended October 31, 1996, Centura Funds
Distributor, Inc. earned distribution fees for Class B of $35,212, $30, $897 and
$1,879 for the Equity Growth Fund, Equity Income Fund, Federal Securities Income
Fund and North Carolina Tax-Free Bond Fund, respectively. The Distributor also
receives the proceeds of any CDSC imposed on redemptions of Class B shares.
Centura Bank acts as custodian for the Funds. For furnishing custodial
services, Centura Bank is paid a monthly fee with respect to the Funds at an
annual rate based on a percentage of average daily net assets plus certain
transaction and out-of-pocket expenses. For the six months ended October 31,
1996, Centura Bank earned custodian fees and out-of-pocket expenses of $15,980,
$2,000, $9,600 and $6,045 for the Equity Growth Fund, Equity Income Fund,
Federal Securities Income Fund and North Carolina Tax-Free Bond Fund,
respectively.
6. CONCENTRATION OF CREDIT RISK -- The Centura North Carolina Tax-Free Bond
Fund invests substantially all of its assets in a varied portfolio of debt
obligations issued by the State of North Carolina and its authorities and
agencies. The issuers' abilities to meet their obligations may be affected by
economic or political developments in the State of North Carolina.
7. SECURITY TRANSACTIONS -- The cost of securities purchased and proceeds
from securities sold (excluding short-term securities) for the six months ended
October 31, 1996, were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
COMMON STOCKS AND BONDS OBLIGATIONS
---------------------------- ------------------------------
COST OF PROCEEDS FROM COST OF PROCEEDS FROM
SECURITIES SECURITIES SECURITIES SECURITIES
PURCHASED SOLD PURCHASED SOLD
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Centura Equity Growth Fund........ $52,920,015 $39,424,086 -- --
Centura Equity Income Fund........ 1,785,842 146,927 -- --
Centura Federal Securities Income
Fund............................ -- -- $ 15,261,875 $ 8,533,523
Centura North Carolina Tax-Free
Bond Fund....................... 4,773,674 5,402,229 -- --
</TABLE>
Unrealized appreciation and depreciation at October 31, 1996, based on cost
of securities for Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ --------------
<S> <C> <C> <C>
Centura Equity Growth Fund.................... $ 36,792,716 $ (2,771,365) $ 34,021,351
Centura Equity Income Fund.................... 1,780,391 (963,537) 816,854
Centura Federal Securities Income Fund........ 1,654,331 (87,802) 1,566,529
Centura North Carolina Tax-Free Bond Fund..... 579,538 (154,190) 425,348
</TABLE>
22
<PAGE> 23
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
8. CAPITAL SHARE TRANSACTIONS -- The Company is authorized to issue 450
million shares of capital stock with a par value of $.001. Transactions in
shares of the Funds for the six months ended October 31, 1996, and the year
ended April 30, 1996, respectively were as follows:
<TABLE>
<CAPTION>
CENTURA EQUITY GROWTH FUND CENTURA EQUITY GROWTH FUND
------------------------------ ------------------------------
FOR SIX MONTHS ENDED FOR YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 401,069 434,840 8,344,335 90,488 127,357 7,847,477
------- ------- ---------- ------- ------- ----------
Shares sold........................... 111,299 138,119 2,792,115 318,467 319,526 2,792,574
Shares issued in reinvestment of
dividends from net investment
income.............................. 784 0 19,264 1,775 1,215 57,537
Shares redeemed....................... (18,177) (12,272) (751,922) (9,661) (13,258) (1,353,253)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 93,904 125,847 2,059,457 310,581 307,483 1,496,858
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 494,975 560,687 10,403,792 401,069 434,840 9,344,335
======= ======= ========== ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA EQUITY INCOME FUND
------------------------------
FOR SIX MONTHS ENDED
OCTOBER 31, 1996
------------------------------
CLASS A CLASS B CLASS C
------- ------- ----------
<S> <C> <C> <C>
Beginning Balance..................... 1 1 1
------ ------- ----------
Shares sold........................... 9,281 1,950 5,003,204
Shares issued in reinvestment of
dividends from net investment
income.............................. 15 3 4,098
Shares redeemed....................... 0 0 0
------ ------- ----------
Net increase in shares................ 9,296 1,953 5,007,302
------ ------- ----------
Closing Balance.............. 9,297 1,954 5,007,303
====== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES CENTURA FEDERAL SECURITIES
INCOME FUND INCOME FUND
------------------------------ ------------------------------
FOR SIX MONTHS ENDED FOR YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 52,606 17,625 10,863,624 24,778 11,869 9,409,781
------ ------- ---------- ------- ------- ----------
Shares sold........................... 5,788 3,128 1,639,390 28,969 10,998 2,798,588
Shares issued in reinvestment of
dividends from net investment
income.............................. 1,550 409 214,489 1,936 788 354,575
Shares redeemed....................... (6,194) (581) (793,021) (3,077) (6,030) (1,593,320)
------ ------- ---------- ------- ------- ----------
Net increase in shares................ 1,140 2,855 1,060,859 27,828 5,756 1,559,843
------ ------- ---------- ------- ------- ----------
Closing Balance.............. 53,745 20,581 12,030,482 52,606 17,625 10,969,624
====== ======= ========== ======= ======= ==========
</TABLE>
23
<PAGE> 24
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA CENTURA NORTH CAROLINA
TAX-FREE BOND FUND TAX-FREE BOND FUND
------------------------------ ------------------------------
FOR SIX MONTHS ENDED FOR YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 391,286 39,131 3,687,751 42,947 27,561 3,495,234
------- ------- ---------- ------- ------- ----------
Shares sold........................... 4,311 2,739 221,089 347,776 22,572 1,197,604
Shares issued in reinvestment of
dividends from net investment
income.............................. 8,100 610 2,932 9,761 904 4,473
Shares redeemed....................... (23,477) 0 (381,335) (9,198) (11,906) (1,009,560)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ (10,466) 3,348 (157,314) 348,339 11,570 192,517
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 380,820 42,480 3,530,437 391,286 39,131 3,687,751
======= ======= ========== ======= ======= ==========
</TABLE>
In connection with the transfer of assets to the Equity Income Fund described in
Note 1, $8,409,694 was credited to unrealized appreciation, representing
unrealized appreciation on the portfolio securities received from the trusts on
the transfer date.
9. SUBSEQUENT EVENT -- Furman Selz has consummated an agreement with BISYS
Group, Inc. ("BISYS") whereby services currently provided to the Company by
Furman Selz will be provided to the Company by BISYS and certain of its
affiliates under new Administrative Services, Transfer Agency and Fund
Accounting Agreements between the Company and BISYS.
24
<PAGE> 25
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA EQUITY GROWTH FUND
----------------------------------------------------------------------------------------
FOR THE
YEAR ENDED
SIX MONTHS ENDED JUNE 1, 1994+
OCTOBER 31, 1996 YEAR ENDED THROUGH
(UNAUDITED) MARCH 31, 1996 APRIL 30, 1995
---------------------------- -------------------------- --------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
------ -------- -------- ------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning
of
Period.... $14.31 $ 14.24 $ 14.31 $10.70 $10.69 $ 10.70 $10.00 $10.00 $ 10.00
Income from
Investment
Operations:
Net
investment
income... 0.02 0.00 0.04 0.03 (0.06) 0.07 0.06 0.03 0.07
Net
realized
and
unrealized
gains on
investments... (0.03) (0.05) (0.03) 3.67 3.65 3.65 0.70 0.69 0.70
------- -------- -------- ------ ------ -------- ------ ------ ------
Total from
investment
operations... (0.01) (0.05) 0.01 3.70 3.59 3.72 0.76 0.72 0.77
------- -------- -------- ------ ------ -------- ------ ------ ------
Less
Distributions:
Dividends
from net
investment
income.. (0.02) 0.00 (0.04) (0.05) 0.00 (0.07) (0.06) (0.03) (0.07)
Dividends
from
capital
gains
:....... 0.00 0.00 0.00 (0.04) (0.04) (0.04) 0.00 0.00 0.00
------- -------- -------- ------ ------ -------- ------ ------ ------
Total
distributions
:......... (0.02) 0.00 (0.04) (0.09) (0.04) (0.11) (0.06) (0.03) (0.07)
------- -------- -------- ------ ------ -------- ------ ------ ------
Net Asset
Value, End
of
Period.... $14.28 $ 14.19 $ 14.28 $14.31 $14.24 $ 14.31 $10.70 $10.69 $10.70
======= ======== ======== ====== ====== ======== ====== ====== ======
Total
Return
(not
reflecting
sales
load)..... -0.03% -0.35% 0.08% 34.72% 33.73% 34.97% 7.64% 7.23% 7.71%
======= ======== ======== ====== ====== ======== ====== ====== ======
Net Assets
End of
Period (in
thousands).. $7,070 $ 7,954 $148,588 $5,740 $6,194 $133,714 $ 968 $1,362 $ 84,004
Ratios to
Average
Net Assets
of:
Expenses
net of
waivers/reimbursements... 1.24%* 1.99%* 0.98%* 1.26% 2.02% 1.04% 1.29%* 2.03%* 1.04%*
Expenses
before
waivers/reimbursements... 1.24%* 1.99%* 0.98%* 1.26% 2.02% 1.04% 1.32%* 2.06%* 1.07%*
Net
investment
income... 0.34%* -0.41%* 0.64%* 0.27% 0.48% 0.55% 0.63%* 0.00%* 0.79%*
Portfolio
Turnover
Rate...... 78% 78% 78% 46% 46% 46% 44% 44% 44%
<CAPTION>
CENTURA EQUITY FUND
-------------------------
FOR THE
PERIOD
OCTOBER 1, 1996+
THROUGH
OCTOBER 31, 1996
(UNAUDITED)
-------------------------
CLASS CLASS
A B CLASS C
------ ------ -------
<S> <C> <C> <C>
Net Asset
Value,
Beginning
of
Period.... $10.00 $10.00 $ 10.00
Income from
Investment
Operations:
Net
investment
income... 0.02 0.02 .0.02
Net
realized
and
unrealized
gains on
investments... 0.21 0.21 0.20
------ ------ -------
Total from
investment
operations... 0.23 0.22 0.22
------ ------ -------
Less
Distributions:
Dividends
from net
investment
income.. (0.02) (0.02) (0.02)
Dividends
from
capital
gains
:....... 0.00 0.00 0.00
------ ------ -------
Total
distributions
:......... (0.02) (0.02) (0.02)
------ ------ -------
Net Asset
Value, End
of
Period.... $10.21 $10.21 $ 10.20
======= ======= ========
Total
Return
(not
reflecting
sales
load)..... 2.19% 2.19% 2.19%
======= ======= ========
Net Assets
End of
Period (in
thousands).. $ 95 $ 20 $51,094
Ratios to
Average
Net Assets
of:
Expenses
net of
waivers/reimbursements... 0.71%* 0.45%* 0.72%*
Expenses
before
waivers/reimbursements... 0.71%* 0.45%* 0.72%*
Net
investment
income... 1.46%* 0.58%* 2.15%*
Portfolio
Turnover
Rate...... 7% 7% 7%
</TABLE>
* Annualized.
+ Commencement of Operations.
25
<PAGE> 26
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES INCOME FUND
-------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31,
1996 YEAR ENDED FOR THE PERIOD JUNE 1, 1994+
(UNAUDITED) MARCH 31, 1996 THROUGH APRIL 30, 1995
------------------------------ ------------------------------ -------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
------ ------ -------- ------ ------ -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period............... $10.01 $10.01 $ 10.01 $ 9.97 $ 9.97 $ 9.97 $ 10.00 $ 10.00 $ 10.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment
income............. 0.28 0.25 0.30 0.57 0.50 0.60 0.52 0.45 0.54
Net realized and
unrealized gains on
investments........ 0.09 0.09 0.09 0.04 0.04 0.04 (0.03) (0.03) (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations......... 0.37 0.34 0.39 0.61 0.54 0.64 0.49 0.42 0.51
------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net
investment
income............. (0.28) (0.25) (0.30) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Dividends from
capital gains:..... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Total
distributions:..... (0.28) (0.25) (0.30) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period............ $10.10 $10.10 $ 10.10 $10.01 $10.01 $ 10.01 $ 9.97 $ 9.97 $ 9.97
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (not
reflecting sales
load)................ 3.79% 3.45% 3.92% 6.20% 5.40% 6.47% 5.02% 4.32% 5.28%
====== ====== ====== ====== ====== ====== ====== ====== ======
Net Assets End of
Period (in
thousands)........... $ 543 $ 208 $121,558 $ 526 $ 176 $109,775 $ 247 $ 118 $93,807
Ratios to Average Net
Assets of:
Expenses net of
waivers/
reimbursements..... 0.73%* 1.39%* 0.48%* 0.85% 1.61% 0.61% 0.86%* 1.61%* 0.63%*
Expenses before
waivers/
reimbursements..... 0.73%* 1.39%* 0.48%* 0.85% 1.61% 0.61% 0.89%* 1.64%* 0.66%*
Net investment
income............. 5.63%* 4.95%* 5.89%* 5.61% 4.84% 5.88% 5.58%* 4.86%* 5.97%*
Portfolio Turnover
Rate................. 41% 41% 41% 34% 34% 34% 42% 42% 42%
</TABLE>
* Annualized
+ Commencement of Operations.
26
<PAGE> 27
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA TAX FREE BOND FUND
-----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED OCTOBER 31,
1996 YEAR ENDED FOR THE PERIOD JUNE 1, 1994+
(UNAUDITED) MARCH 31, 1996 THROUGH APRIL 30, 1995
----------------------------- ----------------------------- -------------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B C A B C
------ ------ ------- ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $10.04 $10.04 $ 10.04 $ 9.98 $ 9.98 $ 9.98 $ 10.00 $ 10.00 $ 10.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment
income............... 0.23 0.20 0.24 0.42 0.34 0.44 0.39 0.32 0.41
Net realized and
unrealized gains on
investments.......... 0.07 0.07 0.07 0.13 0.13 0.13 (0.02) (0.02) (0.02)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations........... 0.30 0.27 0.31 0.55 0.47 0.57 0.37 0.30 0.39
------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net
investment income.... (0.23) (0.20) (0.24) (0.42) (0.34) (0.44) (0.39) (0.32) (0.41)
Dividends from capital
gains:............... 0.00 0.00 0.00 (0.07) (0.07) (0.07) 0.00 0.00 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions:... (0.23) (0.20) (0.24) (0.49) (0.41) (0.51) (0.39) (0.32) (0.41)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Period................. $10.11 $10.11 $ 10.11 $10.04 $10.04 $ 10.04 $ 9.98 $ 9.98 $ 9.98
====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return (not
reflecting sales
load).................. 2.85% 2.51% 2.98% 5.50% 4.72% 5.78% 3.77% 3.09% 4.08%
====== ====== ====== ====== ====== ====== ====== ====== ======
Net Assets End of Period
(in thousands)......... $3,851 $ 429 $35,696 $3,927 $ 393 $37,009 $ 429 $ 275 $34,885
Ratios to Average Net
Assets of:
Expenses net of
waivers/reimbursements... 0.69%* 1.35%* 0.44%* 0.68% 1.44% 0.44% 0.42%* 0.99%* 0.41%*
Expenses before
waivers/reimbursements... 0.69%* 1.35%* 0.44%* 1.04% 1.80% 0.80% 0.92%* 1.49%* 0.91%*
Net investment
income............... 4.21%* 3.55%* 4.46%* 3.98% 3.30% 4.32% 4.46%* 3.89%* 4.64%*
Portfolio Turnover
Rate................... 27% 27% 27% 80% 80% 80% 121% 121% 121%
</TABLE>
* Annualized.
+ Commencement of Operations.
27
<PAGE> 28
CENTURA FUNDS, INC.
CENTURA FUNDS, INC.
BOARD OF DIRECTORS AND OFFICERS
Leslie H. Garner, Jr.*
Chairman of the Board
James H. Speed, Jr.*
Director
Frederick E. Turnage*
Director
Lucy Hancock Bode+
Director
J. Franklin Martin+
Director
John J. Pileggi
Vice President and Treasurer
Joan V. Fiore
Secretary
Gordon M. Forrester
Assistant Treasurer
Sheryl Hirschfeld
Assistant Secretary
* Audit Committee Members
+ "Interested person" as that term is defined in the Investment Company Act of
1940.
<PAGE> 29
{LOGO} CENTURA
(C) 1994 CENTURA BANKS, INC. {LOGO} {LOGO} {LOGO}
FOR ADDITIONAL INFORMATION ON THE
CENTURA FUNDS, CALL
1-800-44-CENTURA
(800-442-3688).
C CENTURA EQUITY
INVESTMENT CENTURA BANK E GROWTH FUND
ADVISER AND 131 NORTH CHURCH STREET N
CUSTODIAN ROCKY MOUNT, NC 27802 T CENTURA EQUITY
U INCOME FUND
ADMINISTRATOR FURMAN SELZ LLC R
AND SPONSOR 230 PARK AVENUE A CENTURA FEDERAL
NEW YORK, NEW YORK 10169 SECURITIES INCOME
F FUND
DISTRIBUTOR CENTURA FUNDS DISTRIBUTOR, INC. U
230 PARK AVENUE N CENTURA NORTH
NEW YORK, NEW YORK 10169 D CAROLINA TAX-FREE
S BOND FUND
COUNSEL DECHERT PRICE & RHOADS
INDEPENDENT 1500 K STREET, N.W. SEMI-ANNUAL REPORT
WASHINGTON, D.C. 20005 OCTOBER 31, 1966
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN TAKEN
FROM THE RECORDS OF THE COMPANY WITHOUT EXAMINATION BY
THE INDEPENDENT ACCOUNTANTS AND ACCORDINGLY THEY DO NOT
EXPRESS AN OPINION THEREON.
THIS REPORT IS FOR THE INFORMATION OF THE SHAREHOLDERS OF
CENTURA FUNDS. ITS USE IN CONNECTION WITH ANY OFFERING OF
THE FUNDS' SHARES IS AUTHORIZED ONLY IN CASE OF A CONCURRENT
OR PRIOR DELIVERY OF THE FUNDS' CURRENT PROSPECTUS.
INVESTMENTS IN MUTUAL FUNDS INVOLVE RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. CENTURA FUNDS ARE NOT DEPOSITS, GUARAN-
TEED BY OR OBLIGATONS OF CENTURA BANK OR ITS AFFILIATES AND
ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR
ANY OTHER GOVERNMENT AGENCY.
