Registration Nos. 33-75926
811-8384
As filed with the Securities and Exchange Commission on January 15,
1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 6 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 8 X
(Check appropriate box or boxes)
CENTURA FUNDS, INC.
(Exact name of Registrant as specified in charter)
3435 Stelzer Road
Columbus, Ohio 43219-3035
-------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 808-
3901
----------------------------------------
George O. Martinez, Esq.
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
--------------------------------------
(Name and Address of Agent for Service)
with a copy to:
Jeffrey L. Steele, Esq. George O. Martinez, Esq.
Dechert Price & Rhoads BISYS Fund Services
1500 K Street, N.W. 3435 Stelzer Road
Washington, D.C. 20005 Columbus, Ohio 43219-3035
It is proposed that this filing will become effective:
(check appropriate box)
immediately upon filing pursuant to paragraph (b) on (date) pursuant to
paragraph (b) 60 days after filing pursuant to paragraph (a)(1) on (date)
pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2) on (date) pursuant to
paragraph (a)(2) of rule 485
<PAGE>
Registrant has registered an indefinite number of shares of its Common
Stock under the Securities Act of 1933 pursuant to the provisions of Rule 24f-2
under the Investment Company Act of 1940. Registrant filed a Rule 24f-2 Notice
for its fiscal year ended April 30, 1996 with the Securities and Exchange
Commission on June 14, 1996.
<PAGE>
CENTURA FUNDS, INC.
CROSS REFERENCE SHEET
Pursuant to Rule 495
under the Securities Act of 1933
N-lA Item No. Location
- ------------- -----------
Part A Prospectus Caption
Item 1. Cover Page
Item 2. Highlights
Item 3. N/A
Item 4. The Funds; Description of
Securities and Investment
Practices; Investment Restrictions
Item 5. Management of the Funds; Portfolio
Transactions
Item 5A N/A
Item 6. Other Information; Dividends,
Distributions and Federal Income
Taxation
Item 7. Fund Share Valuation; Purchase of
Fund Shares; Management of the
Funds
Item 8. Redemption of Fund Shares
Item 9. N/A
Heading in Statement of
Part B Additional Information
- ------ -----------------------
Item 10. Cover Page
Item 11. Table of Contents
Item 12. N/A
Item 13. Investment Policies
Item 14. Management
Item 15. Other Information
Item 16. Management
Item 17. Portfolio Transactions
Item 18. Other Information
Item 19. Purchase of Fund Shares;
Redemption of Fund Shares
Item 20. Taxation
Item 21. Management
Item 22. Other Information
Item 23. Financial Statements
<PAGE>
CENTURA FUNDS, INC.
Class A Shares and Class B Shares
3435 Stelzer Road
Columbus, Ohio 43219
General and Account Information:
(800) 442-3688
CENTURA BANK -- Adviser
BISYS FUND SERVICES, INC. -- Administrator and Sponsor
CENTURA FUNDS DISTRIBUTOR, INC. -- Distributor
This Prospectus describes the five 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
Centura Southeast Equity 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 ____________,
1997, 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.
<PAGE>
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 ____________, 1997
2
<PAGE>
TABLE OF CONTENTS
Page
HIGHLIGHTS.................................................... 4
FUND EXPENSES................................................. 7
FINANCIAL HIGHLIGHTS.......................................... 10
THE FUNDS..................................................... 15
DESCRIPTION OF SECURITIES AND INVESTMENT PRACTICES............ 18
INVESTMENT RESTRICTIONS....................................... 25
RISKS OF INVESTING IN THE FUNDS............................... 26
MANAGEMENT OF THE FUNDS....................................... 30
PRICING OF FUND SHARES........................................ 35
MINIMUM PURCHASE REQUIREMENTS................................. 38
PURCHASE OF FUND SHARES....................................... 38
RETIREMENT PLAN ACCOUNTS...................................... 40
EXCHANGE OF FUND SHARES....................................... 40
REDEMPTION OF FUND SHARES..................................... 41
PORTFOLIO TRANSACTIONS........................................ 45
FUND SHARE VALUATION.......................................... 45
DIVIDENDS, DISTRIBUTIONS, AND FEDERAL INCOME TAXATION......... 46
OTHER INFORMATION............................................. 49
APPENDIX
3
<PAGE>
HIGHLIGHTS
The Funds
This prospectus describes the five 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:
o 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").
o 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.
o 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.
o 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.
o Centura Southeast Equity Fund -- This Fund's investment
objective is long-term capital appreciation. The Fund invests
primarily in a diversified portfolio of common and preferred
stocks and securities convertible into common stock of
companies that are headquartered or have substantial
operations in the Southeastern region of the United States.
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
4
<PAGE>
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 and Centura Southeast Equity Fund in securities of a single state or
region, respectively, makes each of those Funds particularly vulnerable to
events affecting that state or region, respectively. 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, 0.35% for Centura North Carolina Tax-Free Bond
Fund, and 0.70% for Centura Southeast Equity Fund. Fees to the Adviser may be
reduced pursuant to expense limitations. See "Management of the Funds."
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.
BISYS Fund Services, Inc. ("BISYS") acts as Sponsor and Administrator to the
Funds. For its services as Administrator, each Fund pays BISYS a fee at the
annual rate of 0.15% of its average daily net assets. BISYS also acts as
transfer agent and fund accounting agent for the Funds, for which it receives
additional fees.
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, Centura Equity Income Fund and Centura Southeast Equity 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, Centura Equity Income Fund and Centura Southeast Equity 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, Centura Equity
Income Fund and Centura Southeast Equity Fund, and 3.00% for each of the other
Funds to a minimum in the fifth year after
5
<PAGE>
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.
6
<PAGE>
Guide to Investing in Centura Funds, Inc.
Purchase orders for the Funds received by your broker or Service
Organization in proper order prior and transmitted to the Funds prior to 4:00
p.m. Eastern time will become effective that day.
o Minimum Initial Investment ...................... $1,000
o Minimum Initial Investment for IRAs
and other qualified retirement plans ............ $ 250
o Minimum Subsequent Investment ................... $ 250
(except for IRA and other qualified retirement plans)
o Minimum Investment per pay period for
Payroll Deduction Plan .......................... $ 50
(No investment is required to initiate this plan.)
o 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.
o 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.
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.
7
<PAGE>
<TABLE>
<CAPTION>
FEE TABLES*
Centura Federal Centura North
Centura Equity Centura Equity Securities Carolina Tax-Free Centura Southeast
Growth Fund Income Fund Income Fund Fund Equity Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class B Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases (as a percentage of
offering price) 4.50 --- 4.50 --- 2.75 --- 2.75 --- 4.50 ---
Maximum Sales Charge Imposed on
Reinvested Dividends (as a
percentage of offering price) --- --- --- --- --- --- --- --- --- ---
Deferred Sales Charge (as a
percentage of redemption --- 5.00 --- 5.00 --- 3.00 --- 3.00 --- 5.00
proceeds)**
Exchange Fees --- --- --- --- --- --- --- --- --- ---
Annual Fund Operating Expenses
(as a percentage of average net
assets annualized)
Management Fees (After 0.70 0.70 0.36 0.36 0.30 0.30 0.10 0.10 0.42 0.42
Waiver)***
12b-1 Fees**** 0.25 1.00 0.25 1.00 0.25 0.75 0.25 0.75 0.25 1.00
Other Expenses (After Waiver)*** 0.31 0.31 0.39 0.39 0.30 0.30 0.33 0.33 0.83 0.83
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total Portfolio Operating
Expenses***** 1.26 2.01 1.00 1.75 0.85 1.35 0.68 1.18 1.50 2.25
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</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%. "Management Fees" and "Other Expenses" for Centura
Southeast Equity Fund reflect anticipated waivers. Without these
reductions, this Fund's "Management Fees" and "Other Expenses" would be
0.70% and 0.89%, respectively.
**** 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, 1.29% for the North Carolina Tax-Free Bond
Fund, and 2.09% for Centura Southeast Equity Fund, and "Total Portfolio
Operating Expenses" for Class B shares of the Equity Growth Fund, the
Equity Income Fund, the Federal Securities Income Fund, the North
Carolina Tax-Free Bond Fund, and Centura Southeast Equity Fund,
respectively, would be 2.01%, 2.16%, 1.60%, 1.79% and 2.59%.
8
<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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Class B Class A Class B Class A Class B Class A Class B
------- ------- ------- ------- ------- ------- ------- -------
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: --- 20 --- 18 --- 14 --- 12
1 year --- 63 --- 55 --- 43 --- 37
3 years --- 108 --- 95 --- 74 --- 65
5 years --- 234 --- 206 --- 162 --- 143
10 years
</TABLE>
9
<PAGE>
Centura Southeast
Equity Fund
Class A Class B
Assuming complete redemption
at the end of each time period:
1 year 60 73
3 years 90 100
Class B Shares assuming no
redemption:
1 year --- 23
3 years --- 70
- -------------------------
* 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.
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 Southeast Equity Fund, which was formed on ____________, 1997.) The
information set forth in this table (except for the six months ended October 31,
1996 which is unaudited) has been audited by McGladrey & Pullen LLP, the Funds'
independent accountant whose report on the financial statements for the periods
ended April 30, 1996 and April 30, 1995 is included in the Funds' Annual Report.
The Annual Report also includes Management's Discussion of Fund Performance.
Both the Annual Report and the Funds' Semi-Annual Report for the six months
ended October 31, 1996 may be obtained without charge. The financial statements
from each Report are also contained in the Statement of Additional Information,
which is available without charge upon request. This information should be read
in conjunction with the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
Centura Equity Growth Fund
---------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
--------------------------------- ------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) ...................... 0.02 0.00 0.04 0.03 (0.06) 0.07 0.06 0.03 0.07
Net Realized and Unrealized
Gain/(Loss) on Securities .... (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)
Distributions 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%
====== ====== ===== ====== ====== ====== ===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)........................ $7,070 $7,954 $148,588 $5,740 $6,194 $133,714 $968 $1,362 $84,004
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net
Assets**....................... 1.24% 1.99% 0.98% 1.26% 2.02% 1.04% 1.29% 2.03% 1.04%
Ratios of Expenses before Waivers/
Reimbursements to Average Net
Assets**...................... 1.24% 1.99% 0.98% 1.26% 2.02% 1.04% 1.32% 2.06% 1.07%
Ratio of Net Investment Income to
Average Net Assets**.............. 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%
- -------------------------------
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six months ended October 31, 1996 are annualized.
11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Centura Federal Securities Income Fund
-----------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
--------------------------------- ------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) ..................... 0.28 0.25 0.30 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized and Unrealized
Gain/(Loss) on Securities ..... 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)
Distributions 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%
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)...................... $543 $208 $121,558 $526 $176 $109,775 $247 $118 $93,807
Ratio of Expenses Net of
Waivers/Reimbursements to
Average Net Assets**.......... 0.73% 1.39% 0.48% 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets**.......... 0.73% 1.39% 0.48% 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net Investment Income
to Average Net Assets**.......... 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%
- --------------------------
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six months ended October 31, 1996 are annualized.
12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Centura North Carolina Tax-Free Bond Fund
---------------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
------------------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) ..................... 0.23 0.20 0.24 0.42 0.34 0.44 0.39 0.32 0.41
Net Realized and Unrealized
Gain/(Loss) on Securities .... 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)
Distributions 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%
===== ===== ===== ===== ===== ===== ===== ====== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)........................ $3,851 $429 $35,696 $3,927 $393 $37,009 $429 $275 $34,885
Ratio of Expenses Net of
Waivers/ Reimbursements to
Average Net Assets............ 0.69% 1.35% 0.44% 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets............ 0.69% 1.35% 0.44% 1.04% 1.80% 0.80% 0.92% 1.49% 0.91%
Ratio of Net Investment Income
to Average Net Assets......... 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%
- --------------------------
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six months ended October 31, 1996 are annualized.
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</TABLE>
<PAGE>
Centura Equity Income Fund
----------------------------------------
For the Period
October 1, 1996*
through
October 31, 1996 (unaudited)
----------------------------------------
Class Class Class
A B C
--- --- ---
Net Asset Value, Beginning of
Period........................... $10.00 $10.00 $10.00
Income from Investment
Operations:
Net Investment Income
/(Loss) ...................... 0.02 0.02 0.02
Net Realized and Unrealized
Gain/(Loss) on Securities .... 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)
Distributions 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%
===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)........................ $95 $20 $51,094
Ratio of Expenses Net of
Waivers/ Reimbursements to
Average Net Assets**.......... 0.71% 0.45% 0.72%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets**.......... 0.71% 0.45% 0.72%
Ratio of Net Investment Income
to Average Net Assets**....... 1.46% 0.58% 2.15%
Portfolio Turnover Rate.......... 7% 7% 7%
- --------------------------
* Commencement of Operations
** Annualized
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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 and Centura
Southeast Equity Fund were established as new portfolios of the Company on
August 28, 1996 and __________, 1997, respectively. 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.
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
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<PAGE>
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.
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
16
<PAGE>
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 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.
Centura Southeast Equity Fund. Investors seeking long-term growth of
capital through investment in companies of the southeastern United States should
consider investing in Centura Southeast Equity Fund.
17
<PAGE>
The investment objective of Centura Southeast Equity Fund is long-term
capital appreciation. The Fund invests primarily in a diversified portfolio of
common and preferred stocks and securities convertible with common stock of
companies headquartered or with substantial operations in the southeastern
region of the United States. The southeastern region includes Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina, Tennessee, Texas and Virginia.
The Adviser uses fundamental analysis to select stocks of issuers that
are undervalued relative to their industry or their historical valuation ranges.
However, the Adviser may also invest in companies which it believes have
improving prospects, whose equity securities are selling below their estimated
intrinsic value. In addition, out-of-favor cyclicals may be purchased if the
Adviser anticipates a sustainable earnings recovery for these companies. Under
normal market conditions, at least 65% of the Fund's assets will be invested in
securities of southeastern issuers, and at least 65% of its assets will be
invested in equity securities or securities convertible into equity securities.
Under normal market conditions, the Adviser anticipates investing a majority of
the Fund's assets in securities of small to medium sized companies. Subject to
the foregoing, the Fund also has authority to invest in equity and debt
securities of non-southeastern issuers and non-U.S. issuers. Its investments in
non-U.S. issuers will generally be in the form of American Depository Receipts
("ADRs"). For temporary defensive purposes during abnormal market or economic
conditions, the Fund may invest without limit in debt instruments of the same
type, and subject to the same conditions, as Centura Equity Growth Fund under
such circumstances.
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
18
<PAGE>
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.
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
19
<PAGE>
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.
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.
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
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<PAGE>
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 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
21
<PAGE>
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.
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, Centura Equity Income
Fund and Centura Southeast Equity 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,
Centura Equity Income Fund and Centura Southeast Equity 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
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had not been used. See the SAI for further information concerning forward
foreign currency transactions.
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."
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
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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.
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.
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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.
(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.
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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.
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, Centura Equity Income
Fund and Centura Southeast Equity 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
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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 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.
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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, 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.
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Risks of Foreign Currency Options (Centura Equity Growth Fund, Centura
Equity Income Fund and Centura Southeast Equity 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.
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
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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.
Risks of Forward Foreign Currency Contracts (Centura Equity Growth
Fund, Centura Equity Income Fund and Centura Southeast Equity 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.
Risks Of Concentrating Investments In Southeastern Issuers (Centura
Southeast Equity Fund). Because Centura Southeast Equity Fund will normally
invest primarily in equity securities of southeastern issuers, its portfolio
will be more vulnerable to negative economic developments and natural disasters
affecting the region than a fund with a more geographically diversified
portfolio. There can, of course, be no assurance that southeastern issuers will
outperform, or perform as well as, issuers of other regions, and there can be no
assurance that southeastern issuers whose securities are held by the Fund will
outperform, or perform as well as, those of the region generally, other issuers
of the region, or issuers of any other U.S. or foreign region.
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
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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, 0.35% for Centura North Carolina Tax-Free Bond
Fund and 0.70% for Centura Southeast Equity 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.
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 conversion 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.
Daniel Cole serves as portfolio manager for Centura Southeast Equity Fund.
Mr. Cole joined Centura Bank in November, 1996 where he has previously managed
the Centura Southeast Common Trust Funds and has personal and pension fund
investment responsibilities. Mr. Cole has four years experience in investments
and portfolio management. He began his investment career with Southern National
Bank in Winston-Salem, North Carolina as an investment analyst and portfolio
manager in Trust Investments. In 1995, Mr. Cole joined Central Carolina Bank in
Durham, North Carolina as
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<PAGE>
a portfolio manager and trust investment officer where he was primarily
responsible for personal trust and endowment fund investment management. He
graduated from Guilford College in Greensboro, North Carolina with a Bachelor of
Science degree and from Virginia Polytechnic Institute and State University in
Blacksburg, Virginia with an M.B.A. in Finance. Mr. Cole is a level III
Chartered Financial Analyst candidate and a member of the Association for
Investment Management and Research and the North Carolina Society of Financial
Analysts.
The Distributor
Centura Funds Distributor, Inc., 3435 Stelzer Road, Columbus, Ohio
43219, acts as the Funds' Distributor. The Distributor is an affiliate of the
Funds' Administrator, BISYS, and was formed specifically to distribute the
Funds.
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 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, Centura Equity Income Fund and Centura Southeast
Equity 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.
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<PAGE>
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.
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
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio 43219 acts as Sponsor and Administrator of the
Company. BISYS, headquartered
33
<PAGE>
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. From the Company's inception
to January 1, 1997, Furman Selz LLC ("Furman Selz") acted as the Company's
Sponsor and Administrator. Furman Selz transferred its mutual fund business to
BISYS pursuant to a definitive agreement announced June 28, 1996.
Pursuant to an Administration Agreement with the Company, BISYS
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, the Administrator receives from each
Fund a fee, payable monthly, at the annual rate of 0.15% of each Fund's average
daily net assets. Prior to January 1, 1996, Furman Selz LLC served as the Funds'
Administrator under a contract substantially similar to the Administration
Agreement with BISYS. For the fiscal year ended April 30, 1996, Furman Selz
received $172,047 and $156,049 in administrative services fees from the Equity
Growth Fund and the Federal Securities Income Fund, respectively. Furman Selz
was entitled to $59,260 but waived $42,761 in fees from the North Carolina
Tax-Free Bond Fund. Since the Company's commencement, Furman Selz also acted as
the Funds' transfer and fund accounting agent and effective January 1, 1997,
BISYS now acts in that capacity (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, the Transfer Agent for that
fiscal period, 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
34
<PAGE>
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.
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 to
Sales Charge as a Percentage of Dealers as a
Percentage
of Public
Offering Price*
----------------------------------------------
Public Net Amount
Offering Price Invested
<S> <C> <C> <C>
Class A Shares -- Centura Equity
Growth Fund , Centura Equity Income
Fund and Centura Southeast Equity 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)
* 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.
</TABLE>
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<PAGE>
** 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).
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, Centura Equity Income Fund and
Centura Southeast Equity 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)
BISYS or any of its affiliates; (d) Directors or officers of the Funds; (e)
directors or officers of BISYS 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."
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<PAGE>
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.
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
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<PAGE>
the purchase that results in passing that level and on subsequent purchases will
be subject to further 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. BISYS 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 4:00 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.
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,
Inc., P.O. Box 182485, Columbus, Ohio 43218-2485. No third party or foreign
checks will be accepted.
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<PAGE>
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 Funds' 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. A completed Account
Application must be overnighted to the Funds at Centura Funds, Inc., 3435
Stelzer Road, Columbus, Ohio 43219-8021. Notification must be given to the Funds
at 1-800-442-3688 prior to 4:00 p.m., Eastern Time, of the wire date. Federal
funds purchases will be accepted only on a day on which the Funds, the
Distributor and the custodian bank are all open for business. To purchase shares
by a federal funds wire, investors should first contact the Funds at
1-800-442-3688 for complete instructions.
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 ("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.
39
<PAGE>
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. Completion of a special
application is required in order to create such an account. 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 a 1-800-44CENTURA (442-3688).
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.
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.
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
40
<PAGE>
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 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. Telephone Redemption and
Telephone Exchange will be suspended for a period of 10 days following a
telephonic address change.
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.
41
<PAGE>
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
<S> <C> <C>
Centura Equity
Growth Fund, Centura
Equity Income Fund and Centura Federal Securities
Centura Southeast Income Fund and Centura North
Years Since Purchase Equity Fund Carolina Tax-Free Bond Fund
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."
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
42
<PAGE>
only after giving written notice to shareholders. Redemption by mail will always
be available to shareholders. Requests in "proper order" must include the
following documentation: (a) a letter of instruction, if required, signed by all
registered owners of the shares in the exact names in which they are registered;
(b) any required signature guarantees (see "Signature Guarantees" below); and
(c) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit sharing
plans and other organizations.
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.
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. Telephone
Redemption and Telephone Exchange will be suspended for a period of 10 days
following a telephonic address change.
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
43
<PAGE>
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.
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.
44
<PAGE>
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 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%.
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 4:00 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
45
<PAGE>
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.
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, Centura Equity Income Fund and Centura Southeast
Equity 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
46
<PAGE>
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.
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.
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.
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, Centura Equity Income Fund or Centura Southeast
Equity 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.
If you elect to receive distributions in cash, and checks (1) are
returned and marked as "undeliverable" or (2) remain uncashed for six months,
your cash election will be changed automatically and your future dividend and
capital gains distributions will be reinvested in the Fund at the per share net
asset value determined as of date of payment of the distribution. In addition,
any undeliverable check or checks that remain uncashed for six months will be
cancelled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.
47
<PAGE>
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 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.
48
<PAGE>
OTHER INFORMATION
Capitalization
Centura Funds, Inc. was organized as a Maryland corporation on March 1,
1994 and currently consists of five separately managed portfolios. The Board of
Directors may establish additional portfolios in the future. The capitalization
of the Company consists solely of seven hundred fifty million (750,000,000)
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.
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).
49
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Performance Information
[to be updated]
<TABLE>
<CAPTION>
Centura Bank (Class C shares)
Performance Comparisons (unaudited)
For Calendar Year Periods For The Periods Ended 6/30/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 3 Year 5 Year Current
--
1991 1992 1993 1994 1995 Y-T-D Months Average Average Year
---- ---- ---- ---- ---- ----- ------ ------- ------ ----
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%
Centura Southeast Equity Fund*
Standard & Poor's 500 30.5% 7.7% 10.0% 1.3% 37.5% 10.1% 25.9% 17.2% 15.7% --
Russell 2000 46.0% 18.6% 18.9% -1.8% 28.4% 13.7% 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% --
* Numbers to be provided.
(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. [update]
(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
</TABLE>
50
<PAGE>
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.
The Russell 2000 Index is comprised of the smallest 2000 companies in
the Russell 3000 Index, representing approximately 11% of the Russell
3000 total market capitalization. The Index was developed with a base
value of 135.00 as of December 31, 1986.
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.
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
51
<PAGE>
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 1997 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%.
52
<PAGE>
<TABLE>
<CAPTION>
1997 Taxable Year
Taxable Equivalent Yield Table (1) -- Federal and North Carolina Personal Income Taxes
To Equal Hypothetical Tax-free Yield of
Taxable Income (2) 4%, 5%, 6%, 7% OR 8%, a Taxable Investment
Combined Would Have to Yield Approximately
Marginal
Rate
- --------------------------------------------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Single Return Joint Return 4% 5% 6% 7% 8%
------------- ------------ -- -- -- -- --
up to $ 12,750 up to $ 21,250 20.10% 5.01% 6.26% 7.51% 8.76% 10.01%
$ 12,751-$ 24,650 $ 21,251-$ 41,200 20.95% 5.06% 6.33% 7.59% 8.86% 10.12%
$ 24,651-$ 59,750 $ 40,201-$ 99,600 33.04% 5.97% 7.47% 8.96% 10.45% 11.95%
$ 59,151-$ 60,000 $ 99,601-$100,000 35.83% 6.23% 7.79% 9.35% 10.91% 12.47%
$ 60,001-$124,650 $100,001-$151,750 36.35% 6.28% 7.86% 9.43% 11.00% 12.57%
$124,651-$271,050 $151,751-$271,050 40.96% 6.78% 8.47% 10.16% 11.86% 13.55%
$271,051 and over $271,051 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 1997 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
1997 exceeds $121,200 ($60,600 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 1997,
$121,200 in the case of single individuals and $181,800 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.
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
53
<PAGE>
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.
BISYS 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, P.O. Box
182485, Columbus, Ohio 43218-2485.
General and Account Information: (800) 44CENTURA (442-3688).
54
<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.
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
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
Address for:
General Shareholder Inquiries
Centura Funds, Inc.
P.O. Box 182485
Columbus, Ohio 43218-2485
Investment Adviser and Custodian
Centura Bank
131 North Church Street
Rocky Mount, North Carolina 27802
Administrator and Sponsor
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Distributor
Centura Funds Distributor, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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
BISYS FUND SERVICES, INC.
Administrator and Sponsor
CENTURA FUNDS DISTRIBUTOR, INC.
Distributor
<PAGE>
CENTURA FUNDS, INC.
CLASS C SHARES
3435 Stelzer Road
Columbus, Ohio 43219
GENERAL AND ACCOUNT INFORMATION:
(800) 442-3688
CENTURA BANK -- ADVISER
BISYS FUND SERVICES, INC. -- ADMINISTRATOR AND SPONSOR
CENTURA FUNDS DISTRIBUTOR, INC -- DISTRIBUTOR
This Prospectus describes the five 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
Centura Southeast Equity 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.")
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 _____________, 1997,
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.
<PAGE>
The Date of this Prospectus is _____________, 1997.
- 2 -
<PAGE>
TABLE OF CONTENTS
PAGE
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
- 3 -
<PAGE>
HIGHLIGHTS
The Funds
This prospectus describes the five 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:
o 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").
o 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.
o 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.
o 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.
o Centura Southeast Equity Fund -- This Fund's investment objective is
long-term capital appreciation. The Fund invests primarily in a
diversified portfolio of common and preferred stocks and securities
convertible into common stock of companies that are headquartered or have
substantial operations in the Southeastern region of the United States.
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
- 4 -
<PAGE>
issuers involves special risks not usually associated with investing in U.S.
companies. Concentration of Centura North Carolina Tax-Free Bond Fund and
Centura Southeast Equity Fund in securities of a single state or region,
respectively, makes each of these Funds particularly vulnerable to events
affecting that state or region, respectively. The Funds have 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
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, and 0.70% for Centura Southeast Equity Fund. Fees to the Adviser may
be reduced pursuant to expense limitations. See "Management of the Funds."
The Distributor, Administrator and Sponsor
Centura Funds Distributor, Inc. (the "Distributor") distributes the Funds'
shares. BISYS Fund Services, Inc. ("BISYS") acts as Sponsor and Administrator to
the Funds. For its services as Administrator, each Fund pays BISYS a fee at the
annual rate of 0.15% of its average daily net assets. BISYS also acts as
transfer agent and fund accounting agent for the Funds, for which it receives
additional fees.
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.
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 "Pricing and Purchase of Fund Shares," "Redemption of Fund Shares" and
"Dividends, Distributions and Federal Income Taxation" for more information.
- 5 -
<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>
<S> <C> <C> <C> <C> <C>
CENTURA CENTURA
CENTURA CENTURA FEDERAL NORTH CAROLINA CENTURA
EQUITY EQUITY- SECURITIES TAX-FREE SOUTHEAST
GROWTH FUND INCOME FUND INCOME FUND BOND FUND EQUITY FUND
CLASS C CLASS C CLASS C CLASS C CLASS C
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) None None None None None
Maximum Sales Charge Imposed on Reinvested Dividends (as
a percentage of offering price) None None None None None
Deferred Sales Charge (as a percentage of redemption
proceeds)**
Exchange Fees
None None None None None
None 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 0.42
12b-1 Fees ____ ____ ____ ____ ____
Other Expenses (After Waiver)*** 0.31 0.39 0.30 0.33 0.83
TOTAL PORTFOLIO OPERATING EXPENSES*** 1.01 0.75 0.60 0.43 1.25
</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%. "Management Fees,"
"Other Expenses" and Total Portfolio Operating Expenses for Centura Southeast
Equity Fund reflect anticipated waivers. Without these reductions, "Management
Fees," "Other
- 6 -
<PAGE>
Expenses" and "Total Portfolio Operating Expenses" for this Fund would be
0.70%, 0.89%, and 1.59%, respectively.
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>
<S> <C> <C> <C> <C> <C>
CENTURA CENTURA CENTURA
EQUITY EQUITY CENTURA FEDERAL NORTH CAROLINA CENTURA SOUTHEAST
GROWTH FUND INCOME FUND SECURITIES FUND TAX-FREE FUND EQUITY FUND
CLASS C CLASS C CLASS C CLASS C CLASS C
1 Year 10 8 6 4 13
3 Years 32 24 19 14 40
5 years 56 N/A 33 24 N/A
10 Years 124 N/A 75 54 N/A
</TABLE>
* This example should not be considered a representation of future expenseswhich
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.
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 Southeast Equity Fund, which was formed on April 1, 1997.) The
information set forth in this table (except for the six months ended October 31,
1996, which is unaudited) has been audited by McGladrey & Pullen LLP, the Funds'
independent accountant whose report on the financial statements is included in
the Funds' Annual Report. The Annual Report also includes Management's
Discussion of Fund Performance. Both the Annual Report and the Funds'
Semi-Annual Report for the six months ended October 31, 1996 may be obtained
without charge. The financial statements from each Report are also contained in
the Statement of Additional Information, which is available without charge upon
request. This information should be read in conjunction with the financial
statements.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Centura Equity Growth Fund
----------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
---------------------------- ----------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) ........... 0.02 0.00 0.04 0.03 (0.06) 0.07 0.06 0.03 0.07
Net Realized and Unrealized
Gain/(Loss) on Securiti(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)
Distributions from Capital 0.00s 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%
====== ====== ===== ====== ======= ====== ===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)............. $7,070 $7,954 $148,588 $5,740 $6,194 $133,714 $968 $1,362 $84,004
Ratio of Expenses Net of Waivers/
Reimbursements to Average Net
Assets**............ 1.24% 1.99% 0.98% 1.26% 2.02% 1.04% 1.29% 2.03% 1.04%
Ratios of Expenses before Waivers/
Reimbursements to Average Net
Assets**........... 1.24% 1.99% 0.98% 1.26% 2.02% 1.04% 1.32% 2.06% 1.07%
Ratio of Net Investment Income to
Average Net Assets**... 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%
</TABLE>
- -------------------------------
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six months ended October 31, 1996 are
annualized.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
Centura Federal Securities Income Fund
---------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
---------------------------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) .......... 0.28 0.25 0.30 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized and Unrealized
Gain/(Loss) on Securities 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)
Distributions 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%
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)........... $543 $208 $121,558 $526 $176 $109,775 $247 $118 $93,807
Ratio of Expenses Net of
Waivers/Reimbursements to
Average Net Assets** 0.73% 1.39% 0.48% 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets** 0.73% 1.39% 0.48% 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net Investment Income
to Average Net Assets** 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>
- --------------------------
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six months ended October 31, 1996 are
annualized.
- 9 -
<PAGE>
<TABLE>
<CAPTION>
Centura North Carolina Tax-Free Bond Fund
------------------------------------------------------------------------------------------------
Six Months Ended 1996 1995*
October 31, 1996 (unaudited)
--------------------------- ------------------------------ -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B 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
/(Loss) .......... 0.23 0.20 0.24 0.42 0.34 0.44 0.39 0.32 0.41
Net Realized and Unrealized
Gain/(Loss) on Securities 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)
Distributions 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%
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)............. $3,851 $429 $35,696 $3,927 $393 $37,009 $429 $275 $34,885
Ratio of Expenses Net of
Waivers/ Reimbursements to
Average Net Assets. 0.69% 1.35% 0.44% 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets. 0.69% 1.35% 0.44% 1.04% 1.80% 0.80% 0.92% 1.49% 0.91%
Ratio of Net Investment Income
to Average Net Assets 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>
* Commencement of Operations June 1, 1994.
** Figures for 1995 and for the six month s ended October 31, 1996 ar
annualized.
- 10 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Centura Equity Income Fund
---------------------------
For the Period
October 1, 1996*
through
October 31, 1996 (unaudited)
---------------------------
Class Class Class
A B C
----- ----- -----
Net Asset Value, Beginning of
Period................ $10.00 $10.00 $10.00
Income from Investment
Operations:
Net Investment Income
/(Loss) ........... 0.02 0.02 0.02
Net Realized and Unrealized
Gain/(Loss) on Securities 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)
Distributions 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%
===== ===== =====
Ratios/Supplemental Data:
Net Assets, End of Period
(000's)............. $95 $20 $51,094
Ratio of Expenses Net of
Waivers/ Reimbursements to
Average Net Assets** 0.71% 0.45% 0.72%
Ratios of Expenses before
Waivers/Reimbursements to
Average Net Assets** 0.71% 0.45% 0.72%
Ratio of Net Investment Income
to Average Net Assets** 1.46% 0.58% 2.15%
Portfolio Turnover Rate 7% 7% 7%
</TABLE>
- --------------------------
* Commencement of Operations
** Annualized
- 11 -
<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 and Centura
Southeast Equity Fund were established as new portfolios of the Company on
August 28, 1996 and ________________, 1997, respectively. 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.
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
- 12 -
<PAGE>
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 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.
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.
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.
- 13 -
<PAGE>
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.
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 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 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."
- 14 -
<PAGE>
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.
Centura Southeast Equity Fund. Investors seeking long-term growth of
capital through investment in companies of the southeastern United States should
consider investing in Centura Southeast Equity Fund.
The investment objective of Centura Southeast Equity Fund is long-term
capital appreciation. The Fund invests primarily in a diversified portfolio of
common and preferred stocks and securities convertible into common stock of
companies headquartered or with substantial operations in the southeastern
region of the United States. The southeastern region includes Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina, Tennessee, Texas and Virginia.
The Adviser uses fundamental analysis to select stocks of issuers that are
undervalued relative to their industry or their historical valuation ranges.
However, the Adviser may also invest in companies in which it believes have
improving prospects, whose equity securities are selling below their estimated
intrinsic value. In addition, out-of-favor cyclicals may be purchased if the
Adviser anticipates a sustainable earnings recovery. Under normal market
conditions, at least 65% of the Fund's assets will be invested in securities of
southeastern issuers, and at least 65% of its assets will be invested in equity
securities or securities convertible into equity securities. Under normal market
conditions, the Adviser anticipates investing a majority of the Fund's assets in
securities of small to medium sized companies. Subject to the foregoing, the
Fund also has authority to invest in equity and debt securities of
non-southeastern issuers and non-U.S. issuers. Its investments in non-U.S.
issuers will generally be in the form of American Depository Receipts ("ADRs").
For temporary defensive purposes during abnormal market or economic conditions,
the Fund may invest without limit in debt instruments of the same type, and
subject to the same conditions, as Centura Equity Growth Fund under such
circumstances.
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.
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
- 15 -
<PAGE>
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.
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
- 16 -
<PAGE>
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.
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.
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
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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.
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
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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.
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, Centura Equity Income Fund
and Centura Southeast Equity 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 investments in unsponsored ADR programs. Because
the non-U.S. company does not actively
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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, Centura
Equity Income Fund and Centura Southeast Equity 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.
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.
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
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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."
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.
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
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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 win 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.
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 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.
(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.
(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.
(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
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.
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.
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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, Centura Equity Income Fund
and Centura Southeast Equity 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.
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 buying and
selling various currencies. Thus,
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<PAGE>
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 further 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, the principal
of and interest on its North Carolina Municipal Obligations may be materially
affected.
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<PAGE>
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.
Risks of Foreign Currency Options (Centura Equity Growth Fund, Centura
Equity Income Fund and Centura Southeast Equity 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.
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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.
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, 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.
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Risks of Forward Foreign Currency Contracts (Centura Equity Growth Fund,
Centura Equity Income Fund and Centura Southeast Equity 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 a Fund.
Risks of Concentrating Investments in Southeastern Issuers (Centura
Southeast Equity Fund). Because Centura Southeast Equity Fund will normally
invest primarily in equity securities of southeastern issuers, its portfolio
will be more vulnerable to negative economic developments and natural disasters
affecting the region than a fund with a more geographically diversified
portfolio. There can, of course, be no assurance that southeastern issuers will
outperform, or perform as well as, issuers of other regions, and there can be no
assurance that southeastern issuers whose securities are held by the Fund will
outperform, or perform as well as, those of the region generally, other issuers
of the region, or issuers of any other U.S. or foreign region.
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 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, 0.35% for Centura North Carolina Tax-Free Bond
Fund and 0.70% for Centura Southeast Equity 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.
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
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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.
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 conversion 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.
Daniel Cole serves as portfolio manager for Centura Southeast Equity Fund.
Mr. Cole joined Centura Bank in November, 1996 where he has managed the Centura
Southeast Common Trust Funds and has personal and pension fund investment
responsibilities. Mr. Cole has four years experience in investments and
portfolio management. He began his investment career with Southern National Bank
in Winston-Salem, North Carolina as an investment analyst and portfolio manager
in Trust Investments. In 1995, Mr. Cole joined Central Carolina Bank in Durham,
North Carolina as a portfolio manager and trust investment officer where he was
primarily responsible for personal trust and endowment fund investment
management. He graduated from Guilford College in Greensboro, North Carolina
with a Bachelor of Science degree and from Virginia Polytechnic Institute and
State University in Blacksburg, Virginia with an M.B.A. in Finance. Mr. Cole is
a Level III Chartered Financial Analyst candidate and a member of the
Association for Investment Management and Research and the North Carolina
Society of Financial Analysts.
The Distributor
Centura Funds Distributor, Inc., 3435 Stelzer Road, Columbus, Ohio 43219,
acts as the Funds' Distributor. The Distributor is an affiliate of the Funds'
Administrator, BISYS, was formed specifically to distribute the Funds.
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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 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, 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
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services, 3435
Stelzer Road, Columbus, Ohio 43219, acts as Sponsor and Administrator of the
Funds. 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.
Pursuant to an Administration Agreement with the Company, BISYS 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
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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, BISYS receives from each Fund a fee,
payable monthly, at the annual rate of 0.15% of each Fund's average daily net
assets. Prior to January 1, 1996, Furman Selz LLC served as the Funds'
Administrator under a contract substantially similar to the Administration
Agreement with BISYS. For the fiscal year ended April 30, 1996, Furman Selz
received $172,047 and $156,049 in administrative services fees from the Equity
Growth Fund and the Federal Securities Income Fund, respectively. Furman Selz
was entitled to $59,260 but waived $42,761 in fees from the North Carolina
Tax-Free Bond Fund. Since the Company's commencement, Furman Selz also acted as
the Funds' transfer and fund accounting agent and effective January 1, 1997,
BISYS now acts in that capacity (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, the Transfer Agent for that
fiscal period, 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 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.
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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. BISYS 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.
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.
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.
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 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 a
caller's identity, and sending written confirmation of telephone transactions,
designed to give reasonable assurance that instructions communicated by
telephone are genuine, and
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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. Telephone Redemption and Telephone Exchange will be
suspended for a period of 10 days following a telephonic address change.
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.
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.
Requests in "proper order" must include the following documentation: (a) a
letter of instruction, if required, signed by all registered owners of the
shares in the exact names in which they are registered; (b) any required
signature guarantees (see "Signature Guarantees" below); and (c)
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other supporting legal documents, if required, in the case of estate, trusts,
guardianships, custodianships, corporations, pension and profit sharing plans
and other organizations.
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.
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. Telephone
Redemption and Telephone Exchange will be suspended for a period of 10 days
following a telephonic address change.
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 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
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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.
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. 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
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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
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 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%.
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 4:00 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.
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.
- 36 -
<PAGE>
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.
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, Centura Equity Income Fund and Centura Southeast
Equity 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.
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.
- 37 -
<PAGE>
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.
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, Centura Equity Income Fund or Centura Southeast Equity 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 the 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.
If you elect to receive distributions in cash, and checks (1) are returned
and marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains contributions will be reinvested in the fund at the per share net asset
value determined as of date of payment of the distribution. In addition, any
undeliverable check or check that remain uncashed for six months will be
canceled and will be reinvested in the fund at the per share net asset value
determined as of the date of cancellation.
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
- 38 -
<PAGE>
shareholder as a dividend rather than as redemption proceeds, might have
qualified as an exempt- interest dividend.
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 five separately managed portfolios. The Board of
Directors may establish additional portfolios in the future. The capitalization
of the Company consists solely of seven hundred fifty million (750,000,000)
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 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
- 39 -
<PAGE>
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.
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).
- 40 -
<PAGE>
Performance Information
[to be updated]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Centura Bank (Class C shares)
Performance Comparisons (unaudited)
For Calendar Year Periods For The Periods Ended 6/30/96
12 3 Year 5 Year Current
--
1991 1992 1993 1994 1995 Y-T-D Months Average Average Year
---- ---- ---- ---- ---- ----- ------ ------- ------- ----
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%
Centura Southeast Equity Fund*
Standard & Poor's 500 30.5% 7.7% 10.0% 1.3% 37.5% 10.1% 25.9% 17.2% 15.7% --
Russell 2000 46.0% 18.6% 18.9% -1.8% 28.4% 13.7% 15.7%
Fixed Income Funds:
Centura Federal Securities 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>
* Numbers to be provided.
(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. [update]
- 41 -
<PAGE>
(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.
The Russell 2000 Index is comprised of the smallest 2000 companies in the
Russell 3000 Index, representing approximately 11% of the Russell 3000
total market capitalization. The Index was developed with a base value of
135.00 as of December 31, 1986.
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.
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
- 42 -
<PAGE>
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.
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 particular 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 (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.
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 1997 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%.
- 43 -
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1997 Taxable Year
Taxable Equivalent Yield Table (1) -- Federal and North Carolina Personal Income Taxes
To Equal Hypothetical Tax-free Yield of
Taxable Income (2) 4%, 5%, 6%, 7% OR 8%, a Taxable Investment
Combined Would Have to Yield Approximately
Marginal
Rate
- ------------------------------------ --------------------------------------------------
Single Return Joint Return 4% 5% 6% 7% 8%
------------- ------------ -- -- -- -- --
up to $ 12,750 up to $ 21,250 20.10% 5.01% 6.26% 7.51% 8.76% 10.01%
$ 12,751-$ 24,650 $ 21,251-$ 41,200 20.95% 5.06% 6.33% 7.59% 8.86% 10.12%
$ 24,651-$ 59,750 $ 41,201-$ 99,600 33.04% 5.97% 7.47% 8.96% 10.45% 11.95%
$ 59,751-$ 60,000 $ 99,601-$100,000 35.83% 6.23% 7.79% 9.35% 10.91% 12.47%
$ 60,001-$124,650 $100,001-$151,750 36.35% 6.28% 7.86% 9.43% 11.00% 12.57%
$124,650-$271,050 $151,751-$271,050 40.96% 6.78% 8.47% 10.16% 11.86% 13.55%
$271,051 and over $271,051 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 1997 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 1997 exceeds $121,200 ($60,600 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 adjusted gross incomes exceed specified thresholds (for
1997, $121,200 in the case of single individuals and $181,800 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.
- 44 -
<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.
BISYS 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, P.O. Box
182485, Columbus,
Ohio 43218-2485.
General and Account Information: (800) 44CENTURA (442-3688).
- 45 -
<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 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:
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.
<PAGE>
Address for:
General Shareholder Inquiries
Centura Funds, Inc.
P.O. Box 182485
Columbus, Ohio 43219-2485
Investment Adviser and Custodian
Centura Bank
131 North Church Street
Rocky Mount, North Carolina 27802
Administrator and Sponsor
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Distributor
Centura Funds Distributor, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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 C SHARES
CENTURA BANK
ADVISER
BISYS FUND SERVICES, INC.
ADMINISTRATOR AND SPONSOR
CENTURA FUNDS DISTRIBUTOR, INC.
DISTRIBUTOR
<PAGE>
CENTURA FUNDS, INC.
(the "Company")
3435 Stelzer Road
Columbus, Ohio 43218
General and Account Information: (800) 442-3688
- ---------------------------------------------------------------
Centura Bank
Investment Adviser
BISYS Fund Services, Inc.
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 five 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
- Centura Southeast Equity 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 _______________,
1997 (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.
_______________, 1997
<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.................................... 21
Administrative Services........................................ 23
Service Organizations.......................................... 25
DETERMINATION OF NET ASSET VALUE..................................... 26
PORTFOLIO TRANSACTIONS............................................... 26
Portfolio Turnover............................................. 28
TAXATION............................................................. 28
Centura North Carolina Tax-Free Bond Fund...................... 35
OTHER INFORMATION.................................................... 37
Capitalization................................................. 37
Voting Rights.................................................. 38
Custodian, Transfer Agent and Dividend Disbursing
Agent.......................................................... 38
Independent Accountants........................................ 41
Counsel........................................................ 41
Registration Statement......................................... 41
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<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 Centura Equity Income
Fund and Centura Southeast Equity 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
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<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, Centura Equity Income Fund
and Centura Southeast Equity Fund). As described in the Prospectus, changes in
foreign exchange rates
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<PAGE>
will affect the value of securities denominated or quoted in currencies
other than the U.S. dollar.
Since Centura Equity Growth Fund, Centura Equity Income Fund and Centura
Southeast Equity 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,
Centura Equity Income Fund and Centura Southeast Equity Fund). Centura Equity
Growth Fund, Centura Equity Income Fund and Centura Southeast Equity 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.
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
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<PAGE>
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.
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, Centura Equity
Income Fund and Centura Southeast Equity 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
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<PAGE>
a gain in that amount. In the event the index level falls below the level at
which the stock 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, Centura Equity Income Fund and Centura
Southeast Equity 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
- 6 -
<PAGE>
an amount, known as a premium, to the option writer in exchange for the right
under the option contract.
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.
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
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<PAGE>
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 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
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<PAGE>
Fund would be reduced, however, by the premium received on the sale of the put,
less any transactions costs.
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.
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<PAGE>
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.
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.
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
- 10 -
<PAGE>
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
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).
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
- 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. 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 &0
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: 44
*J. Franklin Martin Director President of
LandCraft Properties LandCraft Properties
227 W. Trade Street (1978 - President)
Suite 2730
Charlotte, NC 28202
Age: 51
- 15 -
<PAGE>
John J. Pileggi President, Furman Selz LLC -
230 Park Avenue Treasurer, Director (1984-
New York, NY 10169 and Chief present)
Age: 37 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 Divison
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.
- 16 -
<PAGE>
<TABLE>
<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>
As of January 3, 1997, the Officers and Directors of the Company, as a
group, own less than 1% of the outstanding shares of the Funds.
As of January 3, 1997, the following individuals owned 5% or more of the
Class A and Class B shares of the Funds:
CENTURA EQUITY GROWTH FUND
<TABLE>
<S> <C> <C>
Class A SHARES OWNED PERCENTAGE OWNED
Stephens Inc for the Exclusive 375,937 71.7%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402
</TABLE>
CENTURA FEDERAL SECURITIES INCOME FUND
<TABLE>
<S> <C> <C>
CLASS A SHARES OWNED PERCENTAGE OWNED
Stephens Inc for the Exclusive 41,579 77.7%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402
Centura Bank 5,021 9.4%
Trust Department
131 N. Church Street
Rocky Mount, NC 27801
- 17 -
<PAGE>
CLASS B SHARES OWNED PERCENTAGE OWNED
Furman Selz Inc 1,062 5.2
Attn: Sergio Lupetin
230 Park Ave 12th Fl
New York, NY 10169-0005
Stephens Inc FBO 1,501 7.3%
ACCT 83216300
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 2,883 14.0%
ACCT 83278411
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 1,505 7.3%
A/C 83279514
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 2,463 11.9%
A/C 83310595
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 2,229 10.8%
A/C 83329707
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 1,217 5.9%
A/C 83339985
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 2,100 10.2%
A/C 83378482
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 1,145 5.6%
A/C 83327930
P.O. Box 34127
Little Rock, AR 72203-4127
</TABLE>
- 18 -
<PAGE>
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
<TABLE>
<S> <C> <C>
CLASS A SHARES OWNED PERCENTAGE OWNED
Stephens Inc for Exclusive 372,100 96.5%
Benefit of our Customers
111 Center Street
Little Rock, AR 72201-4402
CLASS B SHARES OWNED PERCENTAGE OWNED
Stephens Inc FBO 5,026 11.7%
ACCT 83283728
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 9,427 22.0%
A/C 83318544
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc. FBO 2,498 5.8%
A/C 83385411
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 3,357 7.8%
A/C 83338132
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 5,555 12.9%
A/C 83351331
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 5,511 12.8%
A/C 83351449
P.O. Box 34127
Little Rock, AR 72203-4127
Stephens Inc FBO 3,747 8.7%
A/C 83366040
P.O. Box 34127
Little Rock, AR 72203-4127
</TABLE>
- 19 -
<PAGE>
CENTURA EQUITY INCOME FUND
<TABLE>
<S> <C> <C>
CLASS A SHARES OWNED PERCENTAGE OWNED
Stephens Inc 9,951 97.8%
for Exclusive Benefit of
Our Customers
P.O. Box 34127
Little Rock, AR 72203-4127
CLASS B SHARES OWNED PERCENTAGE OWNED
Stephens Inc FBO 750 9.7%
A/C 83245388
P.O. Box 34127
Little Rock, AR 72203
Stephens Inc FBO 1,404 18.2%
A/C 83261241
P.O. Box 34127
Little Rock, AR 72203
Stephens Inc 1,964 25.5%
A/C 83279514
P.O. Box 34127
Little Rock, AR 72203
Stephens Inc FBO 3,046 39.4%
A/C 83350949
P.O. Box 34127
Little Rock, AR 72203
</TABLE>
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, 0.35% for Centura North Carolina
Tax-Free Bond Fund, and 0.70% for Centura Southeast Equity 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
- 20 -
<PAGE>
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 and
Centura Southeast Equity 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 and Centura Southeast Equity
Fund, respectively, 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 meetings called for such purpose held
on April 24, 1996 and January 29, 1997, and by the sole shareholder of each such
Fund on April 24, 1996 and January 29, 1997. 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 but 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
- 21 -
<PAGE>
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 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 and Centura Southeast Equity 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
Plans for these Funds were recently re-approved at the April 23, 1996 Board of
Directors Meeting. The Plan with respect to Centura Equity Income Fund and
Centura Southeast Equity Fund, respectively, was approved by the Board of
Directors and by the Plan Directors by vote cast in person at meetings held July
24, 1996 and January 29, 1997 called for the purpose of voting on that Plan, and
by the sole shareholder of each class of shares of the respective Funds on July
24, 1996 and January 29, 1997. The continuance of the Plans is subject to
similar annual approval by the Directors and the Plan Directors. 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:
- 22 -
<PAGE>
$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 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
Since the Company's inception, Furman Selz LLC ("Furman Selz") acted as
Sponsor and Administrator of the Funds. On June 28, 1996 Furman Selz LLC and
BISYS Group, Inc. ("BISYS") announced a definitive agreement providing for
Furman Selz to transfer its mutual fund business to BISYS. On January 1, 1997,
BISYS became the Sponsor and Administrator of the Funds and 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, BISYS 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
BISYS. For these services, BISYS receives from each Fund a fee, payable monthly,
at the annual rate of 0.15% of each Fund's average daily net assets.
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
- 23 -
<PAGE>
banking institutions and investment management companies. At a meeting held on
July 24, 1996, the Directors reviewed and approved an Administration Agreement
with BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services, a
Transfer Agency Agreement and a Fund Accounting Agreement with BISYS Fund
Services, Inc. Both BISYS companies have their principal place of business at
3435 Stelzer Road, Columbus, Ohio 43219.
For the fiscal year ended April 30, 1996, Furman Selz, the Administrator
for that fiscal period, 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, Furman Selz, the Administrator for
that fiscal period, 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 and Centura
Southeast Equity 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 and
Centura Southeast Equity Fund, respectively, 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 meetings held July 24, 1996
and January 29, 1997 and by the sole shareholder of the respective Funds on July
24, 1996 and January 29, 1997. 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.
- 24 -
<PAGE>
Service Organizations
The Company may also contract with banks, trust companies, broker-dealers
(other than BISYS) 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 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 BISYS 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
- 25 -
<PAGE>
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 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.
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
- 26 -
<PAGE>
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 BISYS 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.
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 fiscal year ended April 30, 1996, $192,075 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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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
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
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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 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
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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.
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.
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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 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
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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 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.
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
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<PAGE>
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
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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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.
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
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<PAGE>
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 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.
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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 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
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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 five separately
managed portfolios, each of which offers three classes of shares. The
capitalization of the Company consists solely of seven hundred fifty million
(750,000,000) 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.
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, 1995 and April 30, 1996, respectively, these expenses
totalled $36,856 and $7,386 for the Equity Growth Fund, $48,751 and $9,772 for
the Federal Securities Income Fund and $16,251 and $3,257 for the North Carolina
Tax Free Bond Fund. Expenses of organizing Centura Equity Income Fund and
Centura Southeast Equity Fund will be treated in a similar manner.
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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 periods ended April 30, 1995
and April 30, 1996, respectively, the custodian earned fees of $17,188 and
$28,109, $19,585 and $24,580 and $10,192 and $12,503 for the Equity Growth Fund,
the Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively.
BISYS serves as the Company's transfer agent pursuant to a Service
Agreement. For the fiscal year ended April 30, 1996, the Company's prior
transfer agent, 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 BISYS $2,500 per month for providing fund accounting services for
the Funds. For the fiscal year ended April 30, 1996, the Fund's prior accounting
agent, 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,
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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 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
- 39 -
<PAGE>
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 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.
- 40 -
<PAGE>
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, 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
- 41 -
<PAGE>
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.
- 42 -
<PAGE>
CENTURA FUNDS, INC.
CENTURA EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 95.4%
AEROSPACE -- 7.5%
80,000 Boeing Co. .............................................. $ 4,077,433 $ 6,570,000
100,000 Precision Castparts Corp. ............................... 2,139,836 4,337,500
------------ ------------
6,217,269 10,907,500
------------ ------------
CHEMICALS -- 7.2%
220,000 Cabot Corp. ............................................. 3,301,090 5,885,000
125,000 Engelhard Corp. ......................................... 2,974,973 3,140,625
70,000 Mississippi Chemical Corp. .............................. 1,430,625 1,408,750
------------ ------------
7,706,688 10,434,375
------------ ------------
CAPITAL GOODS -- 4.0%
130,000 Briggs & Stratton Corp. ................................. 4,564,798 5,898,750
------------ ------------
CAPITAL GOODS/TECHNOLOGY -- 7.6%
51,500 United Technologies Corp. ............................... 4,522,201 5,690,750
250,000 Lexmark International Group Inc. Class A*................ 4,270,964 5,406,250
------------ ------------
8,793,165 11,097,000
------------ ------------
CONSUMER CYCLICALS -- 2.8%
105,000 Gentex Corp.............................................. 2,469,875 4,147,500
------------ ------------
CONSUMER & INDUSTRIAL PRODUCTS -- 3.5%
66,000 General Electric Co. .................................... 3,141,520 5,115,000
------------ ------------
CONSUMER STAPLE PRODUCTS -- 4.3%
150,000 Millipore Corp. ......................................... 4,566,572 6,281,250
------------ ------------
ELECTRICAL EQUIPMENT -- 3.1%
100,000 Amp Inc. ................................................ 3,847,316 4,475,000
------------ ------------
ENERGY -- 4.2%
113,100 Tosco Corp. ............................................. 4,075,359 6,050,850
------------ ------------
ENVIRONMENTAL CONTROL -- 4.8%
80,000 Molten Metal Technology Corp.*........................... 1,783,250 2,580,000
141,250 Newpark Resources Inc.*.................................. 2,358,663 4,431,719
------------ ------------
4,141,913 7,011,719
------------ ------------
FINANCIAL SERVICES -- 6.4%
107,000 American Express Company................................. 2,958,922 5,189,500
60,000 Household International Inc. ............................ 2,751,265 4,147,500
------------ ------------
5,710,187 9,337,000
------------ ------------
HEALTHCARE MANAGEMENT -- 3.2%
100,000 Medaphis Corp.*.......................................... 3,348,977 4,612,500
------------ ------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
APRIL 30, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 6.7%
90,000 Jefferson Pilot Corp..................................... $ 3,092,260 $ 4,747,500
150,000 Provident Companies Inc.................................. 3,503,250 5,081,250
------------ ------------
6,595,510 9,828,750
------------ ------------
MINING -- 4.8%
100,000 Potash Corp.............................................. 3,246,552 7,050,000
------------ ------------
PHARMACEUTICALS -- 6.1%
50,000 Guilford Pharmaceuticals Inc.*........................... 1,066,570 1,275,000
65,000 Rhone-Poulenc Rorer Inc.................................. 3,100,173 4,030,000
75,000 Watson Pharmaceuticals Inc.*............................. 2,917,500 3,562,500
------------ ------------
7,084,243 8,867,500
------------ ------------
RAW MATERIALS -- 3.9%
100,000 Nucor Inc................................................ 5,994,600 5,625,000
------------ ------------
RETAIL-SPECIALTY LINE -- 2.5%
99,000 Autozone Inc.*........................................... 2,333,525 3,613,500
------------ ------------
TECHNOLOGY -- 8.1%
100,000 Applied Materials Inc.*.................................. 5,061,900 4,000,000
75,000 Computer Sciences Corp.*................................. 4,469,010 5,550,000
75,000 Madge Networks N.V.*..................................... 2,115,925 2,212,500
------------ ------------
11,646,835 11,762,500
------------ ------------
TEXTILES -- 3.7%
200,000 Unifi Inc................................................ 4,709,400 5,375,000
------------ ------------
TRUCKING & LEASING -- 1.0%
111,000 Celadon Group Inc.*...................................... 1,515,552 1,470,750
------------ ------------
TOTAL COMMON STOCKS...................................... 101,709,856 138,961,444
------------ ------------
U.S. TREASURY BILL -- 2.7%
4,000,000 U.S. Treasury Bill due 5/30/96........................... 3,984,445 3,984,445
------------ ------------
MONEY MARKET FUNDS -- 4.8%
3,264,880 Financial Square Prime Obligations Portfolio............. 3,264,880 3,264,880
3,635,190 Temp Investment Fund..................................... 3,635,190 3,635,190
------------ ------------
TOTAL MONEY MARKET FUNDS................................. 6,900,070 6,900,070
------------ ------------
TOTAL INVESTMENTS -- 102.9%.............................. $112,594,371+ $149,845,959
=============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (2.9)%....................................... (4,197,558)
------------
NET ASSETS -- 100.0%..................................... $145,648,401
=============
</TABLE>
- ---------------
* Non-income producing securities.
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA FEDERAL SECURITIES INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
---------- ------------ ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 21.6%
FEDERAL HOME LOAN BANK -- 4.6%
7.89%, 12/23/97........................................ $2,000,000 $ 2,000,000 $ 2,066,640
7.02%, 07/06/99........................................ 3,000,000 2,990,156 3,056,670
------------ ------------
4,990,156 5,123,310
------------ ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.8%
7.35%, 06/01/05........................................ 2,000,000 2,000,000 1,936,960
------------ ------------
FEDERAL FARM CREDIT BANK -- 7.9%
5.94%, 01/23/01........................................ 3,000,000 2,998,125 2,900,279
5.79%, 03/01/99........................................ 1,141,304 1,109,903 1,121,377
6.04%, 01/19/06........................................ 5,000,000 5,036,075 4,664,999
------------ ------------
9,144,103 8,686,655
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 7.3%
7.29%, 09/22/99........................................ 2,000,000 1,982,692 2,026,060
7.40%, 07/01/04........................................ 3,000,000 3,168,584 3,086,370
7.47%, 05/03/06........................................ 3,000,000 3,000,000 2,962,680
------------ ------------
8,151,276 8,075,110
------------ ------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS................. 24,285,535 23,822,035
------------ ------------
U.S. TREASURY NOTES -- 72.6%
6.125%, 12/31/96....................................... 5,000,000 5,008,486 5,021,000
6.875%, 04/30/97....................................... 5,000,000 5,044,437 5,057,599
5.500%, 09/30/97....................................... 5,000,000 4,945,388 4,975,600
5.250%, 07/31/98....................................... 5,000,000 4,876,626 4,912,400
7.125%, 10/15/98....................................... 5,000,000 5,039,042 5,112,749
5.125%, 12/31/98....................................... 5,000,000 4,794,120 4,872,849
6.375%, 01/15/99....................................... 5,000,000 4,959,223 5,023,350
7.000%, 04/15/99....................................... 5,000,000 5,011,541 5,103,600
6.000%, 10/15/99....................................... 5,000,000 4,881,330 4,963,000
8.500%, 02/15/00....................................... 5,000,000 5,152,629 5,357,899
7.125%, 02/29/00....................................... 5,000,000 4,977,031 5,127,499
5.250%, 01/31/01....................................... 2,000,000 1,977,365 1,908,420
5.750%, 08/15/03....................................... 5,000,000 4,868,700 4,753,850
7.875%, 11/15/04....................................... 5,000,000 5,345,211 5,377,100
6.500%, 05/15/05....................................... 5,000,000 5,118,049 4,932,799
6.500%, 08/15/05....................................... 5,000,000 4,976,562 4,931,000
5.625%, 02/15/06....................................... 3,000,000 2,832,606 2,780,970
------------ ------------
TOTAL U.S. TREASURY NOTES................................ 79,808,346 80,211,684
------------ ------------
MONEY MARKET FUND -- 4.8%
Goldman Sachs Institutional Treasury Instrument
Portfolio............................................ 5,327,978 5,327,978 5,327,978
------------ ------------
TOTAL INVESTMENTS -- 99.0%............................... $109,421,859+ $109,361,697
=============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.0%... 1,115,980
------------
NET ASSETS -- 100%....................................... $110,477,677
=============
</TABLE>
- ---------------
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- 96.2%
Aa/AA- Alamance County UTGO, 5.70%, 05/01/96......... $ 350,000 $ 350,000 $ 350,014
Aa/AA- Buncombe County UTGO, Refunding, 5.00%,
03/01/01.................................... 1,000,000 1,013,163 1,020,000
Aa/AA- Catawba County UTGO, 4.60%, 06/01/03.......... 1,000,000 1,004,127 993,750
Aa/AA- Catawba County UTGO, 4.60%, 06/01/05.......... 1,000,000 983,187 982,500
Aaa/AAA Charlotte UTGO, Refunding, 5.10%, 06/01/09.... 1,500,000 1,492,740 1,464,375
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, Refunding,
5.20%, 01/01/97............................. 200,000 200,261 201,630
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, Refunding,
6.00%, 01/01/04............................. 1,000,000 996,867 1,058,750
Aaa/AAA Cleveland County UTGO, (FGIC), Refunding,
5.10%, 06/01/07............................. 1,000,000 1,000,000 976,250
Aaa/AAA Concord Utility System, Revenue, (MBIA),
4.80%, 12/01/03............................. 500,000 500,000 493,125
Aaa/AAA Concord Utility System, Revenue, (MBIA),
4.90%, 12/01/04............................. 500,000 500,000 492,500
Aaa/AAA Cumberland County Civic Center Project, Series
A, COPS, (AMBAC), 6.20%, 12/01/07........... 1,535,000 1,550,374 1,630,937
Aaa/AAA Durham County UTGO, 5.40%, 02/01/99........... 1,200,000 1,220,898 1,234,500
Aa1/AAA Durham City UTGO, 5.00%, 02/01/11............. 1,540,000 1,540,000 1,451,450
Aaa/AAA Fayetteville Public Works, Series A, Revenue,
(AMBAC), 5.25%, 03/01/08.................... 1,280,000 1,274,326 1,252,800
Aa1/AAA Forsyth County Public Improvement UTGO, 4.75%,
02/01/10.................................... 1,000,000 994,920 930,000
Aa1/AAA Forsyth County Public Improvement UTGO, 4.75%,
02/01/11.................................... 1,000,000 968,770 917,500
Aaa/AAA Gaston County UTGO, (MBIA),
5.70%, 03/01/04............................. 850,000 863,318 892,500
Aaa/AAA Gaston County UTGO, (MBIA),
5.70%, 03/01/05............................. 1,000,000 1,031,465 1,046,250
Aaa/AAA Gastonia UTGO, (FGIC), 5.20%, 04/01/01........ 700,000 699,260 717,500
Aa1/AAA Greensboro Public Improvement, Series B, UTGO,
5.40%, 04/01/04............................. 1,000,000 996,460 1,027,500
Aa1/AA+ Guilford County UTGO, Refunding, 4.90%,
04/01/01.................................... 1,000,000 1,021,793 1,013,750
Aaa/AAA Mecklenberg County GO, 4.70%, 03/01/00........ 1,000,000 1,010,462 1,010,000
Aaa/AAA Mecklenberg County GO, 4.70%, 03/01/02........ 1,000,000 1,004,998 1,005,000
Aa/A+ New Hanover County Solid Waste UTGO,
Refunding, 4.80%, 09/01/07.................. 1,000,000 949,953 952,500
Aaa/AAA North Carolina Municipal Power Agency #1,
Catawba Electric Revenue, (MBIA) (IBC),
Refunding, 5.25%, 01/01/09.................. 1,500,000 1,415,610 1,481,250
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/02....................... 1,000,000 988,610 1,001,250
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/04....................... 950,000 947,005 938,125
A1/A+ Onslow County UTGO, 5.60%, 03/01/05........... 1,000,000 1,020,802 1,032,500
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- (CONTINUED)
Aa1/AA+ Orange County UTGO, Refunding, 5.10%,
06/01/03.................................... $1,050,000 $ 1,052,995 $ 1,074,937
Aa/AA- Pitt County UTGO, Refunding,
5.10%, 02/01/06............................. 1,000,000 1,011,468 1,000,000
Aaa/AAA Raleigh UTGO, Refunding, 6.40%, 03/01/02...... 1,250,000 1,351,077 1,354,688
Aa/AA University of North Carolina, Utility System
Revenue, Refunding, 5.00%, 08/01/09......... 1,460,000 1,432,263 1,388,825
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.35%, 02/15/02........... 1,000,000 1,000,000 981,250
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.45%, 02/15/03........... 1,000,000 1,000,000 978,750
Aaa/AAA Wake County UTGO, Refunding, 4.50%, 02/01/06.. 2,000,000 2,000,000 1,922,500
Aaa/AAA Wake County Hospital Revenue, (MBIA),
4.50%, 10/01/03............................. 1,200,000 1,124,517 1,165,500
A/A Wilkes County UTGO, Refunding, 5.20%,
06/01/05.................................... 1,275,000 1,275,000 1,271,813
Aa/AA+ Winston-Salem Water & Sewer System, Revenue,
6.30%, 06/01/06............................. 1,000,000 1,084,894 1,078,750
----------- -----------
TOTAL MUNICIPAL OBLIGATIONS................... 39,871,583 39,785,219
----------- -----------
MONEY MARKET FUNDS -- 4.8%
Institutional Liquid Assets Tax Exempt Fund... 968,472 968,472 968,472
North Carolina Municipal Money Market Fund.... 1,003,140 1,003,140 1,003,140
----------- -----------
TOTAL MONEY MARKET FUNDS...................... 1,971,612 1,971,612
----------- -----------
TOTAL INVESTMENTS -- 101.0%................... $41,843,195+ $41,756,831
============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (1.0)%............................ (427,611)
-----------
NET ASSETS -- 100.0%.......................... $41,329,220
============
</TABLE>
- ---------------
* See page 8 for Credit Ratings.
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
FOOTNOTES TO PORTFOLIOS
APRIL 30, 1996
* Credit Ratings (unaudited) given by Moody's Investors Service Inc. and
Standard & Poor's Corporation.
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S
------- -----------------
<C> <C> <S>
Aaa AAA Instrument judged to be of the highest quality and carrying
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.
NR NR Not Rated. In the opinion of the Investment Adviser,
instrument judged to be of comparable investment quality to
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.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
CENTURA CENTURA
CENTURA FEDERAL NORTH
EQUITY SECURITIES CAROLINA
GROWTH INCOME TAX-FREE
FUND FUND BOND FUND
------------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost -- $112,594,371,
$109,421,859, and $41,843,195,
respectively) (Note 2a)................... $149,845,959 $109,361,697 $ 41,756,831
Cash........................................ -- -- 86,176
Dividends and interest receivable........... 81,325 1,709,793 545,787
Receivable for Fund shares sold............. 102,487 443 --
Unamortized organization cost (Note 2e)..... 22,730 30,061 10,021
Other assets................................ 12,500 -- --
------------- ------------------ ------------------
Total Assets............................ 150,065,001 111,101,994 42,398,815
------------- ------------------ ------------------
LIABILITIES:
Payable for investments purchased........... 4,134,300 -- 1,013,094
Payable for Fund shares purchased........... 69 -- 100
Payable to custodian for Fund
disbursements............................. 106,428 510,847 --
Investment advisory fee payable............. 81,371 27,184 17,500
Administration fee payable.................. 17,437 13,592 16,500
Transfer agency fee payable................. 8,535 1,719 1,695
12B-1 Distribution fee payable.............. 5,886 274 995
Accrued expenses and other expenses......... 62,574 70,701 19,711
------------- ------------------ ------------------
Total Liabilities....................... 4,416,600 624,317 1,069,595
------------- ------------------ ------------------
NET ASSETS.................................. $145,648,401 $110,477,677 $ 41,329,220
============== ================= ===================
NET ASSETS:
Shares of beneficial interest outstanding
(par value $.001 per share)
450,000,000 shares authorized (Note
9)...................................... $ 10,180 $ 11,040 $ 4,118
Additional paid-in capital................ 105,460,769 110,487,788 41,049,883
Accumulated net realized capital
gain/(loss) on investments.............. 2,925,864 39,011 361,583
Net unrealized appreciation (depreciation)
on investments (Note 7)................. 37,251,588 (60,162) (86,364)
------------- ------------------ ------------------
$145,648,401 $110,477,677 $ 41,329,220
============== ================= ===================
CLASS A:
Net Assets................................ $ 5,740,390 $ 526,374 $ 3,927,049
Shares Outstanding........................ 401,069 52,606 391,286
Net Asset Value Per Share................. $14.31 $10.01 $10.04
======= ========= =========
Maximum Offering Price Per Share
($14.31/.955, $10.01/.9725 and
$10.04/.9725, respectively)............. $14.98 $10.29 $10.32
======= ========= =========
CLASS B:
Net Assets................................ $ 6,193,920 $ 176,326 $ 392,677
Shares Outstanding........................ 434,840 17,625 39,131
Net Asset Value Per Share................. $14.24 $10.01 $10.04
======= ========= =========
CLASS C:
Net Assets................................ $133,714,091 $109,774,977 $ 37,009,494
Shares Outstanding........................ 9,344,335 10,969,624 3,687,751
Net Asset Value Per Share................. $14.31 $10.01 $10.04
======= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
CENTURA
CENTURA CENTURA NORTH
EQUITY FEDERAL CAROLINA
GROWTH SECURITIES TAX-FREE
FUND INCOME FUND BOND FUND
----------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................ $ 447,689 $6,743,376 $1,877,603
Dividends....................................... 1,362,901 -- --
----------- ----------- ----------
Total income................................. 1,810,590 6,743,376 1,877,603
----------- ----------- ----------
EXPENSES:
Advisory (Note 3)............................... 802,888 312,098 138,274
Administrative services (Note 4)................ 172,047 156,049 59,260
Fund accounting (Note 5)........................ 32,848 33,981 41,369
Registration.................................... 13,842 9,917 5,297
Custodian (Note 5).............................. 28,109 24,580 12,503
Reports to shareholders......................... 22,666 8,799 7,872
Audit........................................... 12,872 15,500 6,205
Shareholder services (Note 5)................... 38,623 7,326 6,452
Directors fees & expenses....................... 7,920 7,920 7,920
Legal........................................... 13,754 12,851 4,910
Insurance....................................... 8,569 9,611 3,623
Amortization of organization expenses........... 7,386 9,772 3,257
12B-1 Distribution fee-class A (Note 5)......... 7,215 888 5,259
12B-1 Distribution fee-class B (Note 5)......... 33,942 1,696 3,168
Miscellaneous................................... 24,609 29,253 19,510
----------- ----------- ----------
Total expenses before waivers................ 1,227,290 640,241 324,879
Less: Expenses waived by
Adviser/Administrator (Notes 3 and 4)...... -- -- (142,535)
----------- ----------- ----------
Net expenses.................................... 1,227,290 640,241 182,344
----------- ----------- ----------
Net investment income (Note 2d)................... 583,300 6,103,135 1,695,259
----------- ----------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain on investments................ 5,486,387 304,345 792,820
Net change in unrealized
appreciation/(depreciation) on
investments (Note 7)......................... 28,573,774 (266,951) (318,669)
----------- ----------- ----------
Net realized and unrealized gains on
investments.................................. 34,060,161 37,394 474,151
----------- ----------- ----------
Net increase in net assets resulting
from operations................................. $34,643,461 $6,140,529 $2,169,410
========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES
CENTURA EQUITY GROWTH FUND INCOME FUND
------------------------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE YEAR JUNE 1, 1994* FOR THE YEAR JUNE 1, 1994*
ENDED THROUGH ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
Net investment income.................. $ 583,300 $ 515,377 $ 6,103,135 $ 4,728,278
Net realized gain/(loss) on
investments.......................... 5,486,387 (2,101,969) 304,345 (265,334)
Net change in unrealized appreciation/
(depreciation) on investments........ 28,573,774 8,677,814 (266,951) 206,789
------------ ----------- ------------ ------------
Net increase in net assets resulting from
operations............................. 34,643,461 7,091,222 6,140,529 4,669,733
------------ ----------- ------------ ------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class A.............................. (9,804) (4,155) (19,788) (9,413)
Class B.............................. (1,144) (2,648) (8,208) (2,099)
Class C.............................. (572,220) (508,706) (6,075,139) (4,716,766)
------------ ----------- ------------ ------------
Total distributions from net
investment income (Note 2d).......... (583,168) (515,509) (6,103,135) (4,728,278)
------------ ----------- ------------ ------------
DISTRIBUTIONS FROM CAPITAL GAINS:
Class A.............................. (12,445) -- -- --
Class B.............................. (14,106) -- -- --
Class C.............................. (432,003) -- -- --
------------ ----------- ------------ ------------
Total distributions from capital
gains................................ (458,554) -- -- --
------------ ----------- ------------ ------------
Total Distributions...................... (1,041,722) (515,509) (6,103,135) (4,728,278)
------------ ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A.............................. 3,996,812 1,039,671 296,512 247,553
Class B.............................. 3,972,644 1,363,221 112,249 104,640
Class C.............................. 34,342,658 87,017,254 28,545,692 102,532,024
------------ ----------- ------------ ------------
Total proceeds from sales of shares.... 42,312,114 89,420,146 28,954,453 102,884,217
------------ ----------- ------------ ------------
Proceeds of shares issued in
reinvestment of dividends:
Class A.............................. 22,225 4,155 19,767 9,387
Class B.............................. 15,094 2,648 8,047 2,097
Class C.............................. 712,210 398,366 3,621,321 2,763,205
------------ ----------- ------------ ------------
Total proceeds of shares issued in
reinvestment of dividends............ 749,529 405,169 3,649,135 2,774,689
------------ ----------- ------------ ------------
Cost of shares redeemed:
Class A.............................. (127,873) (171,707) (31,434) (21,587)
Class B.............................. (168,362) (127,493) (61,464) --
Class C.............................. (17,052,874) (9,801,033) (16,242,864) (11,439,650)
------------ ----------- ------------ ------------
Total cost of shares redeemed.......... (17,349,109) (10,100,233) (16,335,762) (11,461,237)
------------ ----------- ------------ ------------
Net increase in net assets from
capital share transactions (Note 8).... 25,712,534 79,725,082 16,267,826 94,197,669
------------ ----------- ------------ ------------
Total increase in net assets........... 59,314,273 86,300,795 16,305,220 94,139,124
NET ASSETS:
Beginning of period.................... 86,334,128 33,333 94,172,457 33,333
------------ ----------- ------------ ------------
End of period+......................... $145,648,401 $ 86,334,128 $110,477,677 $ 94,172,457
============ =========== ============ ============
</TABLE>
* Fund commenced investment operations on June 1, 1994.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
CENTURA
NORTH CAROLINA
TAX-FREE BOND FUND
--------------------------------
FOR THE PERIOD
FOR THE YEAR JUNE 1, 1994*
ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income.......................................... $ 1,695,259 $ 1,299,735
Net realized gain/(loss) on investments........................ 792,820 (137,684)
Net change in unrealized appreciation/(depreciation) on
investments.................................................. (318,669) 232,305
----------- -----------
Net increase in net assets resulting
from operations................................................ 2,169,410 1,394,356
----------- -----------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class A...................................................... (82,525) (18,457)
Class B...................................................... (10,750) (8,666)
Class C...................................................... (1,601,984) (1,272,612)
----------- -----------
Total distributions from net
investment income (Note 2d).................................. (1,695,259) (1,299,735)
----------- -----------
DISTRIBUTIONS FROM CAPITAL GAINS:
Class A...................................................... (17,195) --
Class B...................................................... (2,298) --
Class C...................................................... (274,060) --
----------- -----------
Total distributions from capital gains......................... (293,553) --
----------- -----------
Total Distributions.............................................. (1,988,812) (1,299,735)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A...................................................... 3,531,762 759,168
Class B...................................................... 231,490 280,551
Class C...................................................... 12,172,633 43,283,109
----------- -----------
Total proceeds from sales of shares............................ 15,935,885 44,322,828
----------- -----------
Proceeds of shares issued in
reinvestment of dividends:
Class A...................................................... 100,014 16,577
Class B...................................................... 9,265 2,959
Class C...................................................... 45,725 53,208
----------- -----------
Total proceeds of shares issued in
reinvestment of dividends.................................... 155,004 72,744
----------- -----------
Cost of shares redeemed:
Class A...................................................... (94,372) (351,699)
Class B...................................................... (122,233) (20,586)
Class C...................................................... (10,314,437) (8,562,467)
----------- -----------
Total cost of shares redeemed.................................. (10,531,042) (8,934,752)
----------- -----------
Net increase in net assets from
capital share transactions (Note 8)............................ 5,559,847 35,460,820
----------- -----------
Total increase in net assets................................... 5,740,445 35,555,441
NET ASSETS:
Beginning of period............................................ 35,588,775 33,334
----------- -----------
End of period.................................................. $ 41,329,220 $ 35,588,775
=========== ===========
</TABLE>
* Fund commenced investment operations on June 1, 1994.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 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 three separate investment portfolios:
Centura Equity Growth 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, and prior to that date had no operations
other than organization matters.
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 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, 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 4.50% for
Centura Equity Growth Fund and 2.75% for each of the other Funds to a minimum in
the fifth year after purchase of 0.90% for Centura Equity Growth 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
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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
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 declares and pays
dividends of substantially all of its 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.
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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
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 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 year ended April 30, 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........................................ $802,888 --
Centura Federal Securities Income Fund............................ 312,098 --
Centura North Carolina Tax-Free Bond Fund......................... 138,274 $99,774
</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.
For the year ended April 30, 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........................................ $172,047 --
Centura Federal Securities Income Fund............................ 156,049 --
Centura North Carolina Tax-Free Bond Fund......................... 59,260 $42,761
</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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
account fee and reimbursement for out of pocket expenses in connection with
shareholder servicing. For the year ended April 30, 1996, Furman Selz earned
transfer agent fees and out-of-pocket expenses of $38,623, $7,326 and $6,452 for
the Equity Growth 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 year ended April 30, 1996, Furman Selz earned $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.
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 year ended April 30, 1996,
Centura Funds Distributor, Inc. earned distribution fees for Class A of $7,215,
$888 and $5,259 for the Equity Growth 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.
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 year ended April 30, 1996, Centura Funds Distributor,
Inc. earned distribution fees for Class B of $33,942, $1,696 and $3,168 for the
Equity Growth 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 year
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
ended April 30, 1996, Centura Bank earned custodian fees and out-of-pocket
expenses of $28,109, $24,580 and $12,503 for the Equity Growth 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 year ended April
30, 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........ $72,011,207 $48,687,615 -- --
Centura Federal Securities Income
Fund............................ -- -- $ 45,355,781 $34,414,547
Centura North Carolina Tax-Free
Bond Fund....................... 35,280,510 30,592,407 -- --
</TABLE>
Unrealized appreciation and depreciation at April 30, 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.................... $ 38,749,765 $ (1,498,177) $ 37,251,588
Centura Federal Securities Income Fund........ 1,057,575 (1,117,737) (60,162)
Centura North Carolina Tax-Free Bond Fund..... 416,579 (502,943) (86,364)
</TABLE>
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 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 year ended April 30, 1996, and the period ended
April 30, 1995, respectively were as follows:
<TABLE>
<CAPTION>
CENTURA EQUITY GROWTH FUND CENTURA EQUITY GROWTH FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 90,488 127,357 7,847,477 1,111 1,111 1,111
------- ------- ---------- ------- ------- ----------
Shares sold........................... 318,467 319,526 2,792,574 106,840 138,458 8,813,192
Shares issued in reinvestment of
dividends from net investment
income.............................. 1,775 1,215 57,537 413 318 39,707
Shares redeemed....................... (9,661) (13,258) (1,353,253) (17,876) (12,530) (1,006,533)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 310,581 307,483 1,496,858 89,377 126,246 7,846,366
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 401,069 434,840 9,344,335 90,488 127,357 7,847,477
======== ======== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES CENTURA FEDERAL SECURITIES
INCOME FUND INCOME FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 24,778 11,869 9,409,781 1,111 1,111 1,111
------- ------- ---------- ------- ------- ----------
Shares sold........................... 28,969 10,998 2,798,588 24,889 10,545 10,288,015
Shares issued in reinvestment of
dividends from net investment
income.............................. 1,936 788 354,575 951 213 279,771
Shares redeemed....................... (3,077) (6,030) (1,593,320) (2,173) 0 (1,159,116)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 27,828 5,756 1,559,843 23,667 10,758 9,408,670
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 52,606 17,625 10,969,624 24,778 11,869 9,409,781
======== ======== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA CENTURA NORTH CAROLINA
TAX-FREE BOND FUND TAX-FREE BOND FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 42,947 27,561 3,495,234 1,111 1,111 1,112
------- ------- ---------- ------- ------- ----------
Shares sold........................... 347,776 22,572 1,197,604 76,112 28,313 4,357,097
Shares issued in reinvestment of
dividends from net investment
income.............................. 9,761 904 4,473 1,686 302 5,402
Shares redeemed....................... (9,198) (11,906) (1,009,560) (35,962) (2,165) (868,377)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 348,339 11,570 192,517 41,836 26,450 3,494,122
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 391,286 39,131 3,687,751 42,947 27,561 3,495,234
======== ======== ========== ======== ======== ==========
</TABLE>
* Fund commenced investment operations on June 1, 1994.
<PAGE>
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA CENTURA
EQUITY GROWTH FEDERAL SECURITIES
FUND INCOME FUND
------------------------------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 1996 APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1995
-------------------------- ------------------------- -------------------------- -------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B CLASS C A B C A B CLASS C
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period....... $10.70 $10.69 $ 10.70 $10.00 $10.00 $ 10.00 $ 9.97 $ 9.97 $ 9.97 $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 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized
and
Unrealized
Gain/(Loss)
on
Securities... 3.67 3.65 3.65 0.70 0.69 0.70 0.04 0.04 0.04 (0.03) (0.03) (0.03)
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Total from
Investment
Operations... 3.70 3.59 3.72 0.76 0.72 0.77 0.61 0.54 0.64 0.49 0.42 0.51
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Less
Distributions:
Dividends
from Net
Investment
Income..... (0.05) (0.00) (0.07) (0.06) (0.03) (0.07) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Distributions
from
Capital
Gains...... (0.04) (0.04) (0.04) -- -- -- -- -- -- -- -- --
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Total
Distributions. (0.09) (0.04) (0.11) (0.06) (0.03) (0.07) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Net Asset
Value, End of
Period....... $14.31 $14.24 $ 14.31 $10.70 $10.69 $ 10.70 $10.01 $10.01 $ 10.01 $ 9.97 $ 9.97 $ 9.97
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Total Return
(not
reflecting
sales
load)........ 34.72% 33.73% 34.97% 7.64% 7.23% 7.71% 6.20% 5.40% 6.47% 5.02% 4.32% 5.28%
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Ratios/Supplemental
Data:
Net Assets,
End of
Period
(000's).... $5,740 $6,194 $133,714 $ 968 $1,362 $84,004 $ 526 $ 176 $109,775 $ 247 $ 118 $93,807
Ratio of
Expenses to
Average Net
Assets*.... 1.26% 2.02% 1.04% 1.29% 2.03% 1.04% 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of
Expenses
before
Waivers/Reimbursements
to Average
Net
Assets*.... 1.26% 2.02% 1.04% 1.32% 2.06% 1.07% 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net
Investment
Income to
Average Net
Assets*.... 0.27% (0.48)% 0.55% 0.63% 0.00% 0.79% 5.61% 4.84% 5.88% 5.58% 4.86% 5.97%
Portfolio
Turnover
Rate......... 46% 46% 46% 44% 44% 44% 34% 34% 34% 42% 42% 42%
</TABLE>
* Annualized
<PAGE>
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA
NORTH CAROLINA
TAX-FREE BOND FUND
---------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
APRIL 30, 1996 APRIL 30, 1995
--------------------------------- ---------------------------------
CLASS CLASS CLASS CLASS
A B CLASS C A B CLASS 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 to
Average Net Assets*.......................... 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratio 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>
* Annualized
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Centura Funds, Inc.
We have audited the accompanying statements of assets and liabilities of
Centura Equity Growth Fund, Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund, separate portfolios of Centura Funds, Inc.,
including the portfolios of investments, as of April 30, 1996, and the related
statements of operations for the year then ended, and the statements of changes
in net assets, and the financial highlights for the year then ended and for the
period June 1, 1994 (commencement of operations) through April 30, 1995. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Centura Equity Growth Fund, Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund as of April 30, 1996, the results of their
operations, the changes in their net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
MCGLADREY & PULLEN LLP
New York, New York
June 6, 1996
<PAGE>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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>
<PAGE>
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>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
<PAGE>
CENTURA FUNDS, INC.
(the "Company")
3435 Stelzer Road
Columbus, Ohio 43219
General and Account Information: (800) 442-3688
- --------------------------------------------------------------
Centura Bank
Investment Adviser
BISYS Fund Services, Inc.
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 five 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
- Centura Southeast Equity 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 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.
This SAI is not a prospectus and is authorized for distribution only when
preceded or accompanied by the prospectus for the Funds dated _______________,
1997 (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.
_______________, 1997
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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.................................................. 32
Custodian, Transfer Agent and Dividend Disbursing
Agent.......................................................... 32
Yield and Performance Information.............................. 33
Independent Accountants........................................ 35
Counsel........................................................ 35
Registration Statement......................................... 35
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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, Centura Equity Income
Fund and Centura Southeast Equity 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
<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.
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 fluctuating amounts by the Funds at
varying rates of interest pursuant to direct arrangements between a Fund, as
lender, and
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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, Centura Equity Income Fund
and Centura Southeast Equity 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, Centura Equity Income Fund and Centura
Southeast Equity Fund may invest in securities
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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,
Centura Equity Income Fund and Centura Southeast Equity Fund). Centura Equity
Growth Fund, Centura Equity Income Fund and Centura Southeast Equity 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.
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.
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<PAGE>
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, Centura Equity
Income Fund and Centura Southeast Equity 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 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, Centura Equity Income Fund and Centura
Southeast Equity Fund will utilize stock index futures contracts only for the
purpose of attempting to protect the value
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<PAGE>
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.
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
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<PAGE>
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.
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
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<PAGE>
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.
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"
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<PAGE>
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 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
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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.
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
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
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<PAGE>
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 purchase 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;
(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
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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).
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.
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;
- 12 -
<PAGE>
(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 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.
MANAGEMENT
Directors and Officers
The principal occupations of the Directors and executive officers of the
Company for the past five years are listed below. Directors deemed to be
"interested persons" of the Company for purposes of the 1940 Act are indicated
by an asterisk.
- 13 -
<PAGE>
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: 44
*J. Franklin Martin Director President of
LandCraft Properties LandCraft Properties
227 W. Trade Street (1978 - President)
Suite 2730
Charlotte, NC 28202
Age: 51
John J. Pileggi President, Furman Selz LLC -
230 Park Avenue Treasurer, Director (1984-
New York, NY 10169 and Chief present)
Age: 37 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)
- 14 -
<PAGE>
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 -
Age: 35 Treasurer Managing 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>
<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>
As of January 3, 1997, the Officers and Directors of the Company, as a
group, own less than 1% of the outstanding shares of the Funds.
As of January 3, 1997, the following individuals owned 5% or more of the
Class C shares of the Funds:
- 15 -
<PAGE>
CENTURA EQUITY GROWTH FUND
<TABLE>
<S> <C> <C>
SHARES OWNED PERCENTAGE OWNED
Centura Bank 3,183,765 30.0%
Cash Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, N.C. 27802-1220
Centura Bank 7,223,520 68.1%
Reinvest Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220
</TABLE>
CENTURA FEDERAL SECURITIES INCOME FUND
<TABLE>
<S> <C> <C>
SHARES OWNED PERCENTAGE OWNED
Centura Bank 4,507,518 36.8%
Cash Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220
Centura Bank 7,664,553 62.5%
Reinvest Account
Attn Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220
</TABLE>
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, 0.35% for Centura North Carolina
Tax-Free Bond Fund, and 0.70% for Centura Southeast Equity 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 execution, only as long as such
continuance is approved at least annually (i) by vote of the holders of a
majority of the
- 16 -
<PAGE>
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 and Centura
Southeast Equity 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 and Centura Southeast Equity Fund,
respectively, 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 meetings called for such purpose held on April
24, 1996 and January 29, 1997, and by the sole shareholder of each such Fund on
April 24, 1996 and January 29, 1997. 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 but 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 for
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 for Class A shares and Class B shares providing for different rates of
fee payment with respect
- 17 -
<PAGE>
to each of those classes of shares, as described in the Prospectus. No Plan
has been adopted for Class C shares.
Administrative Services
Since the Company's inception, Furman Selz LLC ("Furman Selz") acted as
Sponsor and Administrator of the Funds. On June 28, 1996 Furman Selz LLC and
BISYS Group, Inc. ("BISYS") announced a definitive agreement providing for
Furman Selz to transfer its mutual fund business to BISYS. On January 1, 1997,
BISYS became the Sponsor and Administrator of the Funds and 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, BISYS 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
BISYS. For these services, BISYS receives from each Fund a fee, payable monthly,
at the annual rate of 0.15% of each Fund's average daily net assets.
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 an
Administration Agreement with BISYS Fund Services Limited Partnership d/b/a
BISYS Fund Services, a Transfer Agency Agreement and a Fund Accounting Agreement
with BISYS Fund Services, Inc. Both BISYS companies have their principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219.
For the period ended April 30, 1996, Furman Selz, the Administrator for
that fiscal period, 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 Tax Free
Bond Fund 89,260 $42,761
For the period ended April 30, 1995, Furman Selz, the Administrator for
that fiscal period, 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 and Centura
Southeast Equity 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 and
Centura Southeast Equity Fund, respectively, 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 meetings held July 24, 1996
and January 29, 1997 and by the sole shareholder of the respective Funds on July
24, 1996 and January 29, 1997. 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
The Company may also contract with banks, trust companies, broker-dealers
(other than BISYS) 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
- 19 -
<PAGE>
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 BISYS 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 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.
- 20 -
<PAGE>
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.
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 BISYS are prohibited from dealing with the Funds as a
principal in the purchase and sale of
- 21 -
<PAGE>
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.
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
- 22 -
<PAGE>
when purchased of one year or less. The portfolio turnover rate for the fiscal
period 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
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 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
- 23 -
<PAGE>
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.
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
- 24 -
<PAGE>
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.
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 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>
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 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
- 26 -
<PAGE>
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 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 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
- 27 -
<PAGE>
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 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
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
- 28 -
<PAGE>
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.
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.
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
- 29 -
<PAGE>
"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
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
- 30 -
<PAGE>
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 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 five separately
managed portfolios, each of which offers three classes of shares. The
capitalization of the Company consists solely of seven hundred fifty million
- 31 -
<PAGE>
(750,000,000) 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.
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, 1995 and April 30, 1996, respectively, these expenses
totalled $36,856 and $7,386 for the Equity Growth Fund, $48,751 and $9,772 for
the Federal Securities Income Fund and $16,251 and $3,257 for the North Carolina
Tax Free Bond Fund. Expenses of organizing Centura Equity Income Fund and
Centura Southeast Equity 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 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.
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.
- 32 -
<PAGE>
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 periods ended April 30, 1995
and April 30, 1996, respectively, the custodian earned fees of $17,188 and
$28,109, $19,585 and $24,580 and $10,192 and $12,503 for the Equity Growth Fund,
the Federal Securities Income Fund and the North Carolina Tax-Free Bond Fund,
respectively.
BISYS serves as the Company's transfer agent pursuant to a Service
Agreement. For the fiscal year ended April 30, 1996, the Company's prior
transfer agent, 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 BISYS $2,500 per month for providing fund accounting services for
the Funds. For the fiscal year ended April 30, 1996, the Fund's prior fund
accounting agent, 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
- 33 -
<PAGE>
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 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:
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.
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.
- 34 -
<PAGE>
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.
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, 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.
- 35 -
<PAGE>
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.
- 36 -
<PAGE>
CENTURA FUNDS, INC.
CENTURA EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- 95.4%
AEROSPACE -- 7.5%
80,000 Boeing Co. .............................................. $ 4,077,433 $ 6,570,000
100,000 Precision Castparts Corp. ............................... 2,139,836 4,337,500
------------ ------------
6,217,269 10,907,500
------------ ------------
CHEMICALS -- 7.2%
220,000 Cabot Corp. ............................................. 3,301,090 5,885,000
125,000 Engelhard Corp. ......................................... 2,974,973 3,140,625
70,000 Mississippi Chemical Corp. .............................. 1,430,625 1,408,750
------------ ------------
7,706,688 10,434,375
------------ ------------
CAPITAL GOODS -- 4.0%
130,000 Briggs & Stratton Corp. ................................. 4,564,798 5,898,750
------------ ------------
CAPITAL GOODS/TECHNOLOGY -- 7.6%
51,500 United Technologies Corp. ............................... 4,522,201 5,690,750
250,000 Lexmark International Group Inc. Class A*................ 4,270,964 5,406,250
------------ ------------
8,793,165 11,097,000
------------ ------------
CONSUMER CYCLICALS -- 2.8%
105,000 Gentex Corp.............................................. 2,469,875 4,147,500
------------ ------------
CONSUMER & INDUSTRIAL PRODUCTS -- 3.5%
66,000 General Electric Co. .................................... 3,141,520 5,115,000
------------ ------------
CONSUMER STAPLE PRODUCTS -- 4.3%
150,000 Millipore Corp. ......................................... 4,566,572 6,281,250
------------ ------------
ELECTRICAL EQUIPMENT -- 3.1%
100,000 Amp Inc. ................................................ 3,847,316 4,475,000
------------ ------------
ENERGY -- 4.2%
113,100 Tosco Corp. ............................................. 4,075,359 6,050,850
------------ ------------
ENVIRONMENTAL CONTROL -- 4.8%
80,000 Molten Metal Technology Corp.*........................... 1,783,250 2,580,000
141,250 Newpark Resources Inc.*.................................. 2,358,663 4,431,719
------------ ------------
4,141,913 7,011,719
------------ ------------
FINANCIAL SERVICES -- 6.4%
107,000 American Express Company................................. 2,958,922 5,189,500
60,000 Household International Inc. ............................ 2,751,265 4,147,500
------------ ------------
5,710,187 9,337,000
------------ ------------
HEALTHCARE MANAGEMENT -- 3.2%
100,000 Medaphis Corp.*.......................................... 3,348,977 4,612,500
------------ ------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
APRIL 30, 1996
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- --------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS -- (CONTINUED)
INSURANCE -- 6.7%
90,000 Jefferson Pilot Corp..................................... $ 3,092,260 $ 4,747,500
150,000 Provident Companies Inc.................................. 3,503,250 5,081,250
------------ ------------
6,595,510 9,828,750
------------ ------------
MINING -- 4.8%
100,000 Potash Corp.............................................. 3,246,552 7,050,000
------------ ------------
PHARMACEUTICALS -- 6.1%
50,000 Guilford Pharmaceuticals Inc.*........................... 1,066,570 1,275,000
65,000 Rhone-Poulenc Rorer Inc.................................. 3,100,173 4,030,000
75,000 Watson Pharmaceuticals Inc.*............................. 2,917,500 3,562,500
------------ ------------
7,084,243 8,867,500
------------ ------------
RAW MATERIALS -- 3.9%
100,000 Nucor Inc................................................ 5,994,600 5,625,000
------------ ------------
RETAIL-SPECIALTY LINE -- 2.5%
99,000 Autozone Inc.*........................................... 2,333,525 3,613,500
------------ ------------
TECHNOLOGY -- 8.1%
100,000 Applied Materials Inc.*.................................. 5,061,900 4,000,000
75,000 Computer Sciences Corp.*................................. 4,469,010 5,550,000
75,000 Madge Networks N.V.*..................................... 2,115,925 2,212,500
------------ ------------
11,646,835 11,762,500
------------ ------------
TEXTILES -- 3.7%
200,000 Unifi Inc................................................ 4,709,400 5,375,000
------------ ------------
TRUCKING & LEASING -- 1.0%
111,000 Celadon Group Inc.*...................................... 1,515,552 1,470,750
------------ ------------
TOTAL COMMON STOCKS...................................... 101,709,856 138,961,444
------------ ------------
U.S. TREASURY BILL -- 2.7%
4,000,000 U.S. Treasury Bill due 5/30/96........................... 3,984,445 3,984,445
------------ ------------
MONEY MARKET FUNDS -- 4.8%
3,264,880 Financial Square Prime Obligations Portfolio............. 3,264,880 3,264,880
3,635,190 Temp Investment Fund..................................... 3,635,190 3,635,190
------------ ------------
TOTAL MONEY MARKET FUNDS................................. 6,900,070 6,900,070
------------ ------------
TOTAL INVESTMENTS -- 102.9%.............................. $112,594,371+ $149,845,959
=============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (2.9)%....................................... (4,197,558)
------------
NET ASSETS -- 100.0%..................................... $145,648,401
=============
</TABLE>
- ---------------
* Non-income producing securities.
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA FEDERAL SECURITIES INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
---------- ------------ ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 21.6%
FEDERAL HOME LOAN BANK -- 4.6%
7.89%, 12/23/97........................................ $2,000,000 $ 2,000,000 $ 2,066,640
7.02%, 07/06/99........................................ 3,000,000 2,990,156 3,056,670
------------ ------------
4,990,156 5,123,310
------------ ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.8%
7.35%, 06/01/05........................................ 2,000,000 2,000,000 1,936,960
------------ ------------
FEDERAL FARM CREDIT BANK -- 7.9%
5.94%, 01/23/01........................................ 3,000,000 2,998,125 2,900,279
5.79%, 03/01/99........................................ 1,141,304 1,109,903 1,121,377
6.04%, 01/19/06........................................ 5,000,000 5,036,075 4,664,999
------------ ------------
9,144,103 8,686,655
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 7.3%
7.29%, 09/22/99........................................ 2,000,000 1,982,692 2,026,060
7.40%, 07/01/04........................................ 3,000,000 3,168,584 3,086,370
7.47%, 05/03/06........................................ 3,000,000 3,000,000 2,962,680
------------ ------------
8,151,276 8,075,110
------------ ------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS................. 24,285,535 23,822,035
------------ ------------
U.S. TREASURY NOTES -- 72.6%
6.125%, 12/31/96....................................... 5,000,000 5,008,486 5,021,000
6.875%, 04/30/97....................................... 5,000,000 5,044,437 5,057,599
5.500%, 09/30/97....................................... 5,000,000 4,945,388 4,975,600
5.250%, 07/31/98....................................... 5,000,000 4,876,626 4,912,400
7.125%, 10/15/98....................................... 5,000,000 5,039,042 5,112,749
5.125%, 12/31/98....................................... 5,000,000 4,794,120 4,872,849
6.375%, 01/15/99....................................... 5,000,000 4,959,223 5,023,350
7.000%, 04/15/99....................................... 5,000,000 5,011,541 5,103,600
6.000%, 10/15/99....................................... 5,000,000 4,881,330 4,963,000
8.500%, 02/15/00....................................... 5,000,000 5,152,629 5,357,899
7.125%, 02/29/00....................................... 5,000,000 4,977,031 5,127,499
5.250%, 01/31/01....................................... 2,000,000 1,977,365 1,908,420
5.750%, 08/15/03....................................... 5,000,000 4,868,700 4,753,850
7.875%, 11/15/04....................................... 5,000,000 5,345,211 5,377,100
6.500%, 05/15/05....................................... 5,000,000 5,118,049 4,932,799
6.500%, 08/15/05....................................... 5,000,000 4,976,562 4,931,000
5.625%, 02/15/06....................................... 3,000,000 2,832,606 2,780,970
------------ ------------
TOTAL U.S. TREASURY NOTES................................ 79,808,346 80,211,684
------------ ------------
MONEY MARKET FUND -- 4.8%
Goldman Sachs Institutional Treasury Instrument
Portfolio............................................ 5,327,978 5,327,978 5,327,978
------------ ------------
TOTAL INVESTMENTS -- 99.0%............................... $109,421,859+ $109,361,697
=============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.0%... 1,115,980
------------
NET ASSETS -- 100%....................................... $110,477,677
=============
</TABLE>
- ---------------
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- 96.2%
Aa/AA- Alamance County UTGO, 5.70%, 05/01/96......... $ 350,000 $ 350,000 $ 350,014
Aa/AA- Buncombe County UTGO, Refunding, 5.00%,
03/01/01.................................... 1,000,000 1,013,163 1,020,000
Aa/AA- Catawba County UTGO, 4.60%, 06/01/03.......... 1,000,000 1,004,127 993,750
Aa/AA- Catawba County UTGO, 4.60%, 06/01/05.......... 1,000,000 983,187 982,500
Aaa/AAA Charlotte UTGO, Refunding, 5.10%, 06/01/09.... 1,500,000 1,492,740 1,464,375
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, Refunding,
5.20%, 01/01/97............................. 200,000 200,261 201,630
Aa/AA Charlotte Mecklenberg Hospital Authority
Health Care System, Revenue, Refunding,
6.00%, 01/01/04............................. 1,000,000 996,867 1,058,750
Aaa/AAA Cleveland County UTGO, (FGIC), Refunding,
5.10%, 06/01/07............................. 1,000,000 1,000,000 976,250
Aaa/AAA Concord Utility System, Revenue, (MBIA),
4.80%, 12/01/03............................. 500,000 500,000 493,125
Aaa/AAA Concord Utility System, Revenue, (MBIA),
4.90%, 12/01/04............................. 500,000 500,000 492,500
Aaa/AAA Cumberland County Civic Center Project, Series
A, COPS, (AMBAC), 6.20%, 12/01/07........... 1,535,000 1,550,374 1,630,937
Aaa/AAA Durham County UTGO, 5.40%, 02/01/99........... 1,200,000 1,220,898 1,234,500
Aa1/AAA Durham City UTGO, 5.00%, 02/01/11............. 1,540,000 1,540,000 1,451,450
Aaa/AAA Fayetteville Public Works, Series A, Revenue,
(AMBAC), 5.25%, 03/01/08.................... 1,280,000 1,274,326 1,252,800
Aa1/AAA Forsyth County Public Improvement UTGO, 4.75%,
02/01/10.................................... 1,000,000 994,920 930,000
Aa1/AAA Forsyth County Public Improvement UTGO, 4.75%,
02/01/11.................................... 1,000,000 968,770 917,500
Aaa/AAA Gaston County UTGO, (MBIA),
5.70%, 03/01/04............................. 850,000 863,318 892,500
Aaa/AAA Gaston County UTGO, (MBIA),
5.70%, 03/01/05............................. 1,000,000 1,031,465 1,046,250
Aaa/AAA Gastonia UTGO, (FGIC), 5.20%, 04/01/01........ 700,000 699,260 717,500
Aa1/AAA Greensboro Public Improvement, Series B, UTGO,
5.40%, 04/01/04............................. 1,000,000 996,460 1,027,500
Aa1/AA+ Guilford County UTGO, Refunding, 4.90%,
04/01/01.................................... 1,000,000 1,021,793 1,013,750
Aaa/AAA Mecklenberg County GO, 4.70%, 03/01/00........ 1,000,000 1,010,462 1,010,000
Aaa/AAA Mecklenberg County GO, 4.70%, 03/01/02........ 1,000,000 1,004,998 1,005,000
Aa/A+ New Hanover County Solid Waste UTGO,
Refunding, 4.80%, 09/01/07.................. 1,000,000 949,953 952,500
Aaa/AAA North Carolina Municipal Power Agency #1,
Catawba Electric Revenue, (MBIA) (IBC),
Refunding, 5.25%, 01/01/09.................. 1,500,000 1,415,610 1,481,250
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/02....................... 1,000,000 988,610 1,001,250
Aaa/AAA North Carolina Capital Improvement, Series A,
UTGO, 4.70%, 02/01/04....................... 950,000 947,005 938,125
A1/A+ Onslow County UTGO, 5.60%, 03/01/05........... 1,000,000 1,020,802 1,032,500
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
CENTURA NORTH CAROLINA TAX-FREE BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
<TABLE>
<CAPTION>
CREDIT PRINCIPAL MARKET
RATINGS* AMOUNT COST VALUE
- -------- ---------- ----------- -----------
<S> <C> <C> <C>
NORTH CAROLINA MUNICIPAL OBLIGATIONS -- (CONTINUED)
Aa1/AA+ Orange County UTGO, Refunding, 5.10%,
06/01/03.................................... $1,050,000 $ 1,052,995 $ 1,074,937
Aa/AA- Pitt County UTGO, Refunding,
5.10%, 02/01/06............................. 1,000,000 1,011,468 1,000,000
Aaa/AAA Raleigh UTGO, Refunding, 6.40%, 03/01/02...... 1,250,000 1,351,077 1,354,688
Aa/AA University of North Carolina, Utility System
Revenue, Refunding, 5.00%, 08/01/09......... 1,460,000 1,432,263 1,388,825
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.35%, 02/15/02........... 1,000,000 1,000,000 981,250
Aa/AA University of North Carolina at Chapel Hill,
Hospital Revenue, 4.45%, 02/15/03........... 1,000,000 1,000,000 978,750
Aaa/AAA Wake County UTGO, Refunding, 4.50%, 02/01/06.. 2,000,000 2,000,000 1,922,500
Aaa/AAA Wake County Hospital Revenue, (MBIA),
4.50%, 10/01/03............................. 1,200,000 1,124,517 1,165,500
A/A Wilkes County UTGO, Refunding, 5.20%,
06/01/05.................................... 1,275,000 1,275,000 1,271,813
Aa/AA+ Winston-Salem Water & Sewer System, Revenue,
6.30%, 06/01/06............................. 1,000,000 1,084,894 1,078,750
----------- -----------
TOTAL MUNICIPAL OBLIGATIONS................... 39,871,583 39,785,219
----------- -----------
MONEY MARKET FUNDS -- 4.8%
Institutional Liquid Assets Tax Exempt Fund... 968,472 968,472 968,472
North Carolina Municipal Money Market Fund.... 1,003,140 1,003,140 1,003,140
----------- -----------
TOTAL MONEY MARKET FUNDS...................... 1,971,612 1,971,612
----------- -----------
TOTAL INVESTMENTS -- 101.0%................... $41,843,195+ $41,756,831
============
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS -- (1.0)%............................ (427,611)
-----------
NET ASSETS -- 100.0%.......................... $41,329,220
============
</TABLE>
- ---------------
* See page 8 for Credit Ratings.
+ The cost for Federal income tax purposes is substantially the same.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
FOOTNOTES TO PORTFOLIOS
APRIL 30, 1996
* Credit Ratings (unaudited) given by Moody's Investors Service Inc. and
Standard & Poor's Corporation.
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S
------- -----------------
<C> <C> <S>
Aaa AAA Instrument judged to be of the highest quality and carrying
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.
NR NR Not Rated. In the opinion of the Investment Adviser,
instrument judged to be of comparable investment quality to
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.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1996
<TABLE>
<CAPTION>
CENTURA CENTURA
CENTURA FEDERAL NORTH
EQUITY SECURITIES CAROLINA
GROWTH INCOME TAX-FREE
FUND FUND BOND FUND
------------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost -- $112,594,371,
$109,421,859, and $41,843,195,
respectively) (Note 2a)................... $149,845,959 $109,361,697 $ 41,756,831
Cash........................................ -- -- 86,176
Dividends and interest receivable........... 81,325 1,709,793 545,787
Receivable for Fund shares sold............. 102,487 443 --
Unamortized organization cost (Note 2e)..... 22,730 30,061 10,021
Other assets................................ 12,500 -- --
------------- ------------------ ------------------
Total Assets............................ 150,065,001 111,101,994 42,398,815
------------- ------------------ ------------------
LIABILITIES:
Payable for investments purchased........... 4,134,300 -- 1,013,094
Payable for Fund shares purchased........... 69 -- 100
Payable to custodian for Fund
disbursements............................. 106,428 510,847 --
Investment advisory fee payable............. 81,371 27,184 17,500
Administration fee payable.................. 17,437 13,592 16,500
Transfer agency fee payable................. 8,535 1,719 1,695
12B-1 Distribution fee payable.............. 5,886 274 995
Accrued expenses and other expenses......... 62,574 70,701 19,711
------------- ------------------ ------------------
Total Liabilities....................... 4,416,600 624,317 1,069,595
------------- ------------------ ------------------
NET ASSETS.................................. $145,648,401 $110,477,677 $ 41,329,220
============== ================= ===================
NET ASSETS:
Shares of beneficial interest outstanding
(par value $.001 per share)
450,000,000 shares authorized (Note
9)...................................... $ 10,180 $ 11,040 $ 4,118
Additional paid-in capital................ 105,460,769 110,487,788 41,049,883
Accumulated net realized capital
gain/(loss) on investments.............. 2,925,864 39,011 361,583
Net unrealized appreciation (depreciation)
on investments (Note 7)................. 37,251,588 (60,162) (86,364)
------------- ------------------ ------------------
$145,648,401 $110,477,677 $ 41,329,220
============== ================= ===================
CLASS A:
Net Assets................................ $ 5,740,390 $ 526,374 $ 3,927,049
Shares Outstanding........................ 401,069 52,606 391,286
Net Asset Value Per Share................. $14.31 $10.01 $10.04
======= ========= =========
Maximum Offering Price Per Share
($14.31/.955, $10.01/.9725 and
$10.04/.9725, respectively)............. $14.98 $10.29 $10.32
======= ========= =========
CLASS B:
Net Assets................................ $ 6,193,920 $ 176,326 $ 392,677
Shares Outstanding........................ 434,840 17,625 39,131
Net Asset Value Per Share................. $14.24 $10.01 $10.04
======= ========= =========
CLASS C:
Net Assets................................ $133,714,091 $109,774,977 $ 37,009,494
Shares Outstanding........................ 9,344,335 10,969,624 3,687,751
Net Asset Value Per Share................. $14.31 $10.01 $10.04
======= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1996
<TABLE>
<CAPTION>
CENTURA
CENTURA CENTURA NORTH
EQUITY FEDERAL CAROLINA
GROWTH SECURITIES TAX-FREE
FUND INCOME FUND BOND FUND
----------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest........................................ $ 447,689 $6,743,376 $1,877,603
Dividends....................................... 1,362,901 -- --
----------- ----------- ----------
Total income................................. 1,810,590 6,743,376 1,877,603
----------- ----------- ----------
EXPENSES:
Advisory (Note 3)............................... 802,888 312,098 138,274
Administrative services (Note 4)................ 172,047 156,049 59,260
Fund accounting (Note 5)........................ 32,848 33,981 41,369
Registration.................................... 13,842 9,917 5,297
Custodian (Note 5).............................. 28,109 24,580 12,503
Reports to shareholders......................... 22,666 8,799 7,872
Audit........................................... 12,872 15,500 6,205
Shareholder services (Note 5)................... 38,623 7,326 6,452
Directors fees & expenses....................... 7,920 7,920 7,920
Legal........................................... 13,754 12,851 4,910
Insurance....................................... 8,569 9,611 3,623
Amortization of organization expenses........... 7,386 9,772 3,257
12B-1 Distribution fee-class A (Note 5)......... 7,215 888 5,259
12B-1 Distribution fee-class B (Note 5)......... 33,942 1,696 3,168
Miscellaneous................................... 24,609 29,253 19,510
----------- ----------- ----------
Total expenses before waivers................ 1,227,290 640,241 324,879
Less: Expenses waived by
Adviser/Administrator (Notes 3 and 4)...... -- -- (142,535)
----------- ----------- ----------
Net expenses.................................... 1,227,290 640,241 182,344
----------- ----------- ----------
Net investment income (Note 2d)................... 583,300 6,103,135 1,695,259
----------- ----------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain on investments................ 5,486,387 304,345 792,820
Net change in unrealized
appreciation/(depreciation) on
investments (Note 7)......................... 28,573,774 (266,951) (318,669)
----------- ----------- ----------
Net realized and unrealized gains on
investments.................................. 34,060,161 37,394 474,151
----------- ----------- ----------
Net increase in net assets resulting
from operations................................. $34,643,461 $6,140,529 $2,169,410
========== ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES
CENTURA EQUITY GROWTH FUND INCOME FUND
------------------------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE YEAR JUNE 1, 1994* FOR THE YEAR JUNE 1, 1994*
ENDED THROUGH ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
Net investment income.................. $ 583,300 $ 515,377 $ 6,103,135 $ 4,728,278
Net realized gain/(loss) on
investments.......................... 5,486,387 (2,101,969) 304,345 (265,334)
Net change in unrealized appreciation/
(depreciation) on investments........ 28,573,774 8,677,814 (266,951) 206,789
------------ ----------- ------------ ------------
Net increase in net assets resulting from
operations............................. 34,643,461 7,091,222 6,140,529 4,669,733
------------ ----------- ------------ ------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class A.............................. (9,804) (4,155) (19,788) (9,413)
Class B.............................. (1,144) (2,648) (8,208) (2,099)
Class C.............................. (572,220) (508,706) (6,075,139) (4,716,766)
------------ ----------- ------------ ------------
Total distributions from net
investment income (Note 2d).......... (583,168) (515,509) (6,103,135) (4,728,278)
------------ ----------- ------------ ------------
DISTRIBUTIONS FROM CAPITAL GAINS:
Class A.............................. (12,445) -- -- --
Class B.............................. (14,106) -- -- --
Class C.............................. (432,003) -- -- --
------------ ----------- ------------ ------------
Total distributions from capital
gains................................ (458,554) -- -- --
------------ ----------- ------------ ------------
Total Distributions...................... (1,041,722) (515,509) (6,103,135) (4,728,278)
------------ ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A.............................. 3,996,812 1,039,671 296,512 247,553
Class B.............................. 3,972,644 1,363,221 112,249 104,640
Class C.............................. 34,342,658 87,017,254 28,545,692 102,532,024
------------ ----------- ------------ ------------
Total proceeds from sales of shares.... 42,312,114 89,420,146 28,954,453 102,884,217
------------ ----------- ------------ ------------
Proceeds of shares issued in
reinvestment of dividends:
Class A.............................. 22,225 4,155 19,767 9,387
Class B.............................. 15,094 2,648 8,047 2,097
Class C.............................. 712,210 398,366 3,621,321 2,763,205
------------ ----------- ------------ ------------
Total proceeds of shares issued in
reinvestment of dividends............ 749,529 405,169 3,649,135 2,774,689
------------ ----------- ------------ ------------
Cost of shares redeemed:
Class A.............................. (127,873) (171,707) (31,434) (21,587)
Class B.............................. (168,362) (127,493) (61,464) --
Class C.............................. (17,052,874) (9,801,033) (16,242,864) (11,439,650)
------------ ----------- ------------ ------------
Total cost of shares redeemed.......... (17,349,109) (10,100,233) (16,335,762) (11,461,237)
------------ ----------- ------------ ------------
Net increase in net assets from
capital share transactions (Note 8).... 25,712,534 79,725,082 16,267,826 94,197,669
------------ ----------- ------------ ------------
Total increase in net assets........... 59,314,273 86,300,795 16,305,220 94,139,124
NET ASSETS:
Beginning of period.................... 86,334,128 33,333 94,172,457 33,333
------------ ----------- ------------ ------------
End of period+......................... $145,648,401 $ 86,334,128 $110,477,677 $ 94,172,457
============ =========== ============ ============
</TABLE>
* Fund commenced investment operations on June 1, 1994.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
<TABLE>
<CAPTION>
CENTURA
NORTH CAROLINA
TAX-FREE BOND FUND
--------------------------------
FOR THE PERIOD
FOR THE YEAR JUNE 1, 1994*
ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income.......................................... $ 1,695,259 $ 1,299,735
Net realized gain/(loss) on investments........................ 792,820 (137,684)
Net change in unrealized appreciation/(depreciation) on
investments.................................................. (318,669) 232,305
----------- -----------
Net increase in net assets resulting
from operations................................................ 2,169,410 1,394,356
----------- -----------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class A...................................................... (82,525) (18,457)
Class B...................................................... (10,750) (8,666)
Class C...................................................... (1,601,984) (1,272,612)
----------- -----------
Total distributions from net
investment income (Note 2d).................................. (1,695,259) (1,299,735)
----------- -----------
DISTRIBUTIONS FROM CAPITAL GAINS:
Class A...................................................... (17,195) --
Class B...................................................... (2,298) --
Class C...................................................... (274,060) --
----------- -----------
Total distributions from capital gains......................... (293,553) --
----------- -----------
Total Distributions.............................................. (1,988,812) (1,299,735)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares:
Class A...................................................... 3,531,762 759,168
Class B...................................................... 231,490 280,551
Class C...................................................... 12,172,633 43,283,109
----------- -----------
Total proceeds from sales of shares............................ 15,935,885 44,322,828
----------- -----------
Proceeds of shares issued in
reinvestment of dividends:
Class A...................................................... 100,014 16,577
Class B...................................................... 9,265 2,959
Class C...................................................... 45,725 53,208
----------- -----------
Total proceeds of shares issued in
reinvestment of dividends.................................... 155,004 72,744
----------- -----------
Cost of shares redeemed:
Class A...................................................... (94,372) (351,699)
Class B...................................................... (122,233) (20,586)
Class C...................................................... (10,314,437) (8,562,467)
----------- -----------
Total cost of shares redeemed.................................. (10,531,042) (8,934,752)
----------- -----------
Net increase in net assets from
capital share transactions (Note 8)............................ 5,559,847 35,460,820
----------- -----------
Total increase in net assets................................... 5,740,445 35,555,441
NET ASSETS:
Beginning of period............................................ 35,588,775 33,334
----------- -----------
End of period.................................................. $ 41,329,220 $ 35,588,775
=========== ===========
</TABLE>
* Fund commenced investment operations on June 1, 1994.
See accompanying notes to financial statements.
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 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 three separate investment portfolios:
Centura Equity Growth 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, and prior to that date had no operations
other than organization matters.
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 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, 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 4.50% for
Centura Equity Growth Fund and 2.75% for each of the other Funds to a minimum in
the fifth year after purchase of 0.90% for Centura Equity Growth 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
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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
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 declares and pays
dividends of substantially all of its 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.
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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
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 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 year ended April 30, 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........................................ $802,888 --
Centura Federal Securities Income Fund............................ 312,098 --
Centura North Carolina Tax-Free Bond Fund......................... 138,274 $99,774
</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.
For the year ended April 30, 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........................................ $172,047 --
Centura Federal Securities Income Fund............................ 156,049 --
Centura North Carolina Tax-Free Bond Fund......................... 59,260 $42,761
</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
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
account fee and reimbursement for out of pocket expenses in connection with
shareholder servicing. For the year ended April 30, 1996, Furman Selz earned
transfer agent fees and out-of-pocket expenses of $38,623, $7,326 and $6,452 for
the Equity Growth 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 year ended April 30, 1996, Furman Selz earned $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.
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 year ended April 30, 1996,
Centura Funds Distributor, Inc. earned distribution fees for Class A of $7,215,
$888 and $5,259 for the Equity Growth 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.
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 year ended April 30, 1996, Centura Funds Distributor,
Inc. earned distribution fees for Class B of $33,942, $1,696 and $3,168 for the
Equity Growth 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 year
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 1996
ended April 30, 1996, Centura Bank earned custodian fees and out-of-pocket
expenses of $28,109, $24,580 and $12,503 for the Equity Growth 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 year ended April
30, 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........ $72,011,207 $48,687,615 -- --
Centura Federal Securities Income
Fund............................ -- -- $ 45,355,781 $34,414,547
Centura North Carolina Tax-Free
Bond Fund....................... 35,280,510 30,592,407 -- --
</TABLE>
Unrealized appreciation and depreciation at April 30, 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.................... $ 38,749,765 $ (1,498,177) $ 37,251,588
Centura Federal Securities Income Fund........ 1,057,575 (1,117,737) (60,162)
Centura North Carolina Tax-Free Bond Fund..... 416,579 (502,943) (86,364)
</TABLE>
<PAGE>
CENTURA FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
APRIL 30, 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 year ended April 30, 1996, and the period ended
April 30, 1995, respectively were as follows:
<TABLE>
<CAPTION>
CENTURA EQUITY GROWTH FUND CENTURA EQUITY GROWTH FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 90,488 127,357 7,847,477 1,111 1,111 1,111
------- ------- ---------- ------- ------- ----------
Shares sold........................... 318,467 319,526 2,792,574 106,840 138,458 8,813,192
Shares issued in reinvestment of
dividends from net investment
income.............................. 1,775 1,215 57,537 413 318 39,707
Shares redeemed....................... (9,661) (13,258) (1,353,253) (17,876) (12,530) (1,006,533)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 310,581 307,483 1,496,858 89,377 126,246 7,846,366
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 401,069 434,840 9,344,335 90,488 127,357 7,847,477
======== ======== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA FEDERAL SECURITIES CENTURA FEDERAL SECURITIES
INCOME FUND INCOME FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 24,778 11,869 9,409,781 1,111 1,111 1,111
------- ------- ---------- ------- ------- ----------
Shares sold........................... 28,969 10,998 2,798,588 24,889 10,545 10,288,015
Shares issued in reinvestment of
dividends from net investment
income.............................. 1,936 788 354,575 951 213 279,771
Shares redeemed....................... (3,077) (6,030) (1,593,320) (2,173) 0 (1,159,116)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 27,828 5,756 1,559,843 23,667 10,758 9,408,670
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 52,606 17,625 10,969,624 24,778 11,869 9,409,781
======== ======== ========== ======== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
CENTURA NORTH CAROLINA CENTURA NORTH CAROLINA
TAX-FREE BOND FUND TAX-FREE BOND FUND
------------------------------ ------------------------------
FOR THE PERIOD
JUNE 1, 1994*
FOR YEAR ENDED THROUGH
APRIL 30, 1996 APRIL 30, 1995
------------------------------ ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance..................... 42,947 27,561 3,495,234 1,111 1,111 1,112
------- ------- ---------- ------- ------- ----------
Shares sold........................... 347,776 22,572 1,197,604 76,112 28,313 4,357,097
Shares issued in reinvestment of
dividends from net investment
income.............................. 9,761 904 4,473 1,686 302 5,402
Shares redeemed....................... (9,198) (11,906) (1,009,560) (35,962) (2,165) (868,377)
------- ------- ---------- ------- ------- ----------
Net increase in shares................ 348,339 11,570 192,517 41,836 26,450 3,494,122
------- ------- ---------- ------- ------- ----------
Closing Balance.............. 391,286 39,131 3,687,751 42,947 27,561 3,495,234
======== ======== ========== ======== ======== ==========
</TABLE>
* Fund commenced investment operations on June 1, 1994.
<PAGE>
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA CENTURA
EQUITY GROWTH FEDERAL SECURITIES
FUND INCOME FUND
------------------------------------------------------- -------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
APRIL 30, 1996 APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1995
-------------------------- ------------------------- -------------------------- -------------------------
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
A B C A B CLASS C A B C A B CLASS C
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset
Value,
Beginning of
Period....... $10.70 $10.69 $ 10.70 $10.00 $10.00 $ 10.00 $ 9.97 $ 9.97 $ 9.97 $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 0.57 0.50 0.60 0.52 0.45 0.54
Net Realized
and
Unrealized
Gain/(Loss)
on
Securities... 3.67 3.65 3.65 0.70 0.69 0.70 0.04 0.04 0.04 (0.03) (0.03) (0.03)
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Total from
Investment
Operations... 3.70 3.59 3.72 0.76 0.72 0.77 0.61 0.54 0.64 0.49 0.42 0.51
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Less
Distributions:
Dividends
from Net
Investment
Income..... (0.05) (0.00) (0.07) (0.06) (0.03) (0.07) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
Distributions
from
Capital
Gains...... (0.04) (0.04) (0.04) -- -- -- -- -- -- -- -- --
------ ------ -------- ------ ------ ------- ------ ------ -------- ------ ------ -------
Total
Distributions. (0.09) (0.04) (0.11) (0.06) (0.03) (0.07) (0.57) (0.50) (0.60) (0.52) (0.45) (0.54)
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Net Asset
Value, End of
Period....... $14.31 $14.24 $ 14.31 $10.70 $10.69 $ 10.70 $10.01 $10.01 $ 10.01 $ 9.97 $ 9.97 $ 9.97
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Total Return
(not
reflecting
sales
load)........ 34.72% 33.73% 34.97% 7.64% 7.23% 7.71% 6.20% 5.40% 6.47% 5.02% 4.32% 5.28%
======= ======= ========= ======= ======= ======== ======= ======= ========= ======= ======= ========
Ratios/Supplemental
Data:
Net Assets,
End of
Period
(000's).... $5,740 $6,194 $133,714 $ 968 $1,362 $84,004 $ 526 $ 176 $109,775 $ 247 $ 118 $93,807
Ratio of
Expenses to
Average Net
Assets*.... 1.26% 2.02% 1.04% 1.29% 2.03% 1.04% 0.85% 1.61% 0.61% 0.86% 1.61% 0.63%
Ratios of
Expenses
before
Waivers/Reimbursements
to Average
Net
Assets*.... 1.26% 2.02% 1.04% 1.32% 2.06% 1.07% 0.85% 1.61% 0.61% 0.89% 1.64% 0.66%
Ratio of Net
Investment
Income to
Average Net
Assets*.... 0.27% (0.48)% 0.55% 0.63% 0.00% 0.79% 5.61% 4.84% 5.88% 5.58% 4.86% 5.97%
Portfolio
Turnover
Rate......... 46% 46% 46% 44% 44% 44% 34% 34% 34% 42% 42% 42%
</TABLE>
* Annualized
<PAGE>
CENTURA FUNDS, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CENTURA
NORTH CAROLINA
TAX-FREE BOND FUND
---------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
APRIL 30, 1996 APRIL 30, 1995
--------------------------------- ---------------------------------
CLASS CLASS CLASS CLASS
A B CLASS C A B CLASS 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 to
Average Net Assets*.......................... 0.68% 1.44% 0.44% 0.42% 0.99% 0.41%
Ratio 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>
* Annualized
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Centura Funds, Inc.
We have audited the accompanying statements of assets and liabilities of
Centura Equity Growth Fund, Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund, separate portfolios of Centura Funds, Inc.,
including the portfolios of investments, as of April 30, 1996, and the related
statements of operations for the year then ended, and the statements of changes
in net assets, and the financial highlights for the year then ended and for the
period June 1, 1994 (commencement of operations) through April 30, 1995. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Centura Equity Growth Fund, Centura Federal Securities Income Fund and Centura
North Carolina Tax-Free Bond Fund as of April 30, 1996, the results of their
operations, the changes in their net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
MCGLADREY & PULLEN LLP
New York, New York
June 6, 1996
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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>
<PAGE>
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>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in the Prospectus:
Financial Highlights for the periods ended April 30, 1996,
April 30, 1995, and for six months ended October 31, 1996.
Included in the Statement of Additional Information:
1) Portfolio of Investments dated April 30, 1996.
2) Statements of Assets and Liabilities dated April 30, 1996
and October 31, 1996.
3) Statement of Operations for the year ended April 30, 1996
and October 31, 1996.
4) Statement of Changes in Net Assets for the periods ended April
30, 1996, April 30, 1995 and October 31, 1996.
5) Notes to Financial Statements dated April 30, 1996 and
October 31, 1996.
6) Report of Independent Accountants (not applicable to
period ended October 31, 1996).
(b) Exhibits:
Exhibit Description
Number
1(a) -- Articles of Incorporation of Registrant1
1(b) -- Articles Supplementary1
1(c) -- Articles of Amendment filed herewith
1(d) -- Form of Articles Supplementary filed herewith
2 -- ByLaws of Registrant2
3 -- Not applicable
4 -- Specimen certificates of shares of common stock of
Registrant3
5(a) -- Form of Master Investment Advisory Contract4
5(b) -- Form of Investment Advisory Contract Supplement4
5(c) -- Form of Investment Advisory Contract Supplement filed
herewith
6(a) -- Form of Distribution Contract filed herewith
6(b) -- Form of Dealer and Selling Group Agreement4
7 -- Not applicable
8 -- Form of Custody Agreement4
9(a) -- Form of Administration Agreement - filed herewith
9(c) -- Form of Transfer Agency Agreement - filed herewith
9(d) -- Form of Sub-Transfer Agency Agreement4
9(e) -- Form of Fund Accounting Agreement - filed herewith
9(f) -- Form of Services Agreement4
10 -- Opinion of Counsel4
11(a) -- Consent of Independent Auditors - filed herewith
11(b) -- Powers of Attorney5
12 -- Not Applicable
13 -- Purchase Agreement3
14 -- Not Applicable
15(a) -- Form of Master Distribution Plan4
15(b) -- Form of Distribution Plan Supplement4
15(c) -- Form of Distribution Plan Supplement - filed herewith
16 -- Schedule of Computation6
17 -- Financial Data Schedule - filed herewith
18 -- Plan Pursuant to Rule 18f-37
____________
1 Filed as part of Post-Effective No. 4 to Registrant's Registration
Statement on June 14, 1996.
2 Filed as part of Registrant's initial Registration Statement on March 1,
1994
3 Filed as part of Post-Effective No. 2 to Registrant's Registration
Statement on June 30, 1995.
4 Filed as part of Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on April 15, 1994.
5 Filed as part of Post-Effective No. 1 to Registrant's Registration
Statement on November 30, 1994.
6 Filed as part of Post-Effective No. 5 to Registrant's Registration
Statement on August 28, 1996.
7 Filed as part of Post-Effective No. 3 to Registrant's Registration
Statement on August 29, 1995.
8 The above Directors and Officers of Centura Bank can be reached at 131
North Church Street, Rocky Mount, North Carolina 27802.
9 The address of all director and officers is 230 Park Avenue, New York,
New York 10169.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities
Number of Record
Holders at
Title of Class Title of Class January 3, 1977
Shares of Centura Equity
Growth Fund par value
$.001 per share
Class A: 871
Class B: 1020
Class C: 41
Shares of Centura Federal
Securities Fund, par value
$.001 per share
Class A: 39
Class B: 28
Class C: 34
Shares of Centura North
Carolina
Tax Free Bond Fund,
par value $.001 per share
Class A: 20
Class B: 24
Class C: 21
Shares of Centura Equity
Income Fund,
par value $.001 per share
Class A: 5
Class B: 6
Class C: 3
Item 27. Indemnification
Reference is made to Article VII of Registrant's Articles of Incorporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the Articles of Incorporation or otherwise, the
Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Investment Company Act of 1940 and, therefore, is unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such directors, officers or
controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Investment Company Act of 1940 and will be governed by the
final adjudication of such issues.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Centura Bank, the investment adviser to Centura Funds, Inc., is a
registered investment adviser and a member of the Federal Reserve System. The
names of Centura Bank's directors and officers and their business and other
connections for at least the past two years are as follows:8
Name Title Business and Other
Connections
Richard H. Barnhardt Director Director, Centura Bank;
President, Properties,
Inc.
C. Wood Beasley Director Director, Centura Bank;
President, Wood Beasley
Farms, Inc.
Thomas A. Betts, Jr. Director Director, Centura Bank;
Partner, Betts and
Company.
H. Tate Bowers Director Director, Centura Bank;
Chief Executive Officer,
Bowers Fibers, Inc.
Ernest L. Evans Director Director, Centura Bank;
President, ELE, Inc.
J. Richard Futrell, Jr. Chairman, Executive Director, Centura Bank;
Committee and Director Chairman, Executive
Committee and Director,
Centura Banks, Inc.
John H. High Director Director, Centura Bank;
President, John H. High
& Co., Inc.
Dr. Michael K. Hooker Director Director, Centura Bank;
Chancellor, University
of North Carolina at
Chapel Hill.
William D. Hoover Executive Vice President Executive Vice President
and Director, Centura
Bank.
Robert L. Hubbard Director Director, Centura Bank;
Vice Chairman, Americal
Corp.
William H. Kincheloe Director Director, Centura Bank;
President, Bullock
Furniture Co., Inc.
Charles T. Lane Director Director, Centura Bank;
Partner, Poyner &
Spruill, L.L.P.
Robert R. Mauldin Chairman, Chief Executive Director, Centura Bank;
Officer and Director Chairman and Chief
Executive Officer, and
Director, Centura Banks,
Inc.
Jack A. Moody Director Director, Centura Bank.
Joseph H. Nelson Director Director, Centura Bank;
President, Davenport
Motor Company.
Dean E. Painter, Jr. Director Director, Centura Bank;
Chairman, CLG, Inc.
D. Earl Purdue Director Director, Centura Bank;
President, Brightwood
Farm, Inc.
O. Tracy Parks III Director Director, Centura Bank;
Partner, Brown &
Robbins, L.L.P.
Frank L. Pattillo Group Executive Officer, Director, Centura Bank;
Chief Financial Officer Group Executive Officer
and Director and Chief Financial
Officer, Centura Bank.
William H. Redding, Jr. Director Director, Centura Bank;
President, Acme-McCrary
Corporation.
Charles M. Reeves III Director Director, Centura Bank;
President, Reeves
Properties, Inc.
Cecil W. Sewill, Jr. President, Chief President, Chief
Operating Officer, and Operating Officer, and
Director Director, Centura Bank.
George T. Stronach III Director Director, Centura Bank;
Real Estate Developer
Alexander P. Thorpe III Director Director, Centura Bank;
President, Thorpe & Co.,
Inc.
Joseph L. Wallace, Jr. Director Director, Centura Bank.
William H. Wilkerson Group Executive Officer Group Executive Officer
and Director and Director, Centura
Banks.
Charles P. Wilkins Director Director, Centura Bank;
Attorney, Broughton,
Wilkins & Webb, P.A.
Item 29. Principal Underwriters
(a) Not applicable.
Name and Principal Positions and Offices Positions and Offices
Business Address9 with Underwriter with Registrant
Robert Hering President None
Michael C. Petrycki Vice President and None
Director
Gordon Forrester Vice President None
Steven D. Blecher Vice President, Secretary None
and Treasurer
Lawrence Wagner Vice President, Chief None
Financial Officer
Elizabeth Q. Solazzo Assistant Secretary None
Thalia M. Cody Assistant Secretary None
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940, and
the Rules thereunder will be maintained at the offices of BISYS Fund Services,
Inc., 3435 Stelzer Road, Columbus, Ohio.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Registrant undertakes to file an amendment to its registration
statement, using financial statements for Centura Southeast Equity Fund which
need not be certified, within four to six months of the later of (i) the
effective date of this Post-Effective Amendment No. 6 to its registration
statement or (ii) the date on which shares of Centura Southeast Equity Fund are
first sold (other than shares sold for seed capital).
(c) Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of Registrant's latest annual report to shareholders upon
request and without charge.
(d) If requested to do so by holders of at least 10% of Registrant's
outstanding shares, a meeting of shareholders will be called for the purpose of
voting upon the question of removal of a director or directors and to assist in
communications with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Amendment to the Registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of New York and State of New
York on the 15th day of January, 1997.
CENTURA FUNDS, INC.
By /s/ John J. Pileggi
John J. Pileggi
President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons in
the capacities and on the 15th day of January, 1997.
SIGNATURE TITLE
/s/ John J. Pileggi
John J. Pileggi President and Treasurer
Leslie H. Garner, Jr. Director and Chairman of Board of Directors
James H. Speed, Jr. Director
Frederick E. Turnage Director
Lucy Hancock Bode Director
By: /s/ Joan V. Fiore
Joan V. Fiore
Attorney-in-fact
<PAGE>
CENTURA FUNDS, INC.
INDEX TO EXHIBITS
Exhibit Number Description of Exhibit Sequentially
Numbered Page
1(c) Articles of Amendment
1(d) Form of Articles
Supplementary
5(c) Form of Investment Advisory
Contract Supplement
6(a) Form of Distribution
Agreement
9(a) Form of Administration
Agreement
9(c) Form of Transfer Agency
Agreement
9(e) Form of Fund Accounting
Agreement
11 Consent of Independent
Accountants
15(c) Form of Distribution Plan
Supplement
17 Financial Data Schedule
<PAGE>
CENTURA FUNDS, INC.
ARTICLES OF AMENDMENT
Centura Funds, Inc., a Maryland corporation having its
principal office in Maryland, in Baltimore City, Maryland (hereinafter called
the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Article THIRD of the Articles Supplementary to the charter of
the Corporation, effective June 14, 1996, is hereby amended to change the name
of the series designated therein as Centura Income-Equity Fund to Centura Equity
Income Fund.
SECOND: The foregoing amendment to such Articles Supplementary to the
charter of the Corporation was approved by a majority of the entire Board of
Directors of the Corporation; the charter amendment is limited to changes
expressly permitted by Section 2-605 of Title 2 of Subtitle 6 of the Maryland
General Corporation Law to be made without action by the stockholders, and the
Corporation is registered as an open-end company under the Investment Company
Act of 1940.
THIRD. The information required by subsection (b)(2)(i) of Section
2-607 of Title 2 of Subtitle 6 of the Maryland General Corporation Law is not
changed by this amendment.
The undersigned President of the Corporation acknowledges these Articles of
Amendment to be the corporate act of the Corporation and states to the best of
his knowledge, information and belief that the matters and facts set forth in
these Articles with respect to authorization and approval are true in all
material respects and that this statement is made under the penalties of
perjury.
IN WITNESS WHEREOF, Centura Funds, Inc. has caused this instrument to be
signed in its name and on its behalf by its President, John J. Pileggi, and by
its Secretary, Joan V. Fiore, on the 21st day of October, 1996.
ATTEST: CENTURA FUNDS, INC.
/s/ Joan V. Fiore By: /s/ John J. Pileggi (SEAL)
Joan V. Fiore John J. Pillegi
Secretary President
65570.79
<PAGE>
CENTURA FUNDS, INC.
ARTICLES SUPPLEMENTARY
CENTURA FUNDS, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940 and having its
principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter called the "Corporation"), hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting duly
convened and held on January 29, 1997, adopted a resolution to increase the
Corporation's authorized capital of Common Shares and to classify such
additional Common Shares as a new series of Common Shares having three classes,
as described in Article THIRD, below.
SECOND: As of immediately prior to such increase in authorized capital of
the Corporation, the total number of shares of all classes that the Corporation
was authorized to issue was six hundred million (600,000,000) shares of common
stock, par value $0.001 per share and having an aggregate par value of six
hundred thousand dollars ($600,000), classified as follows:
Name of Series Number of Shares Allocated
Class A Class B Class C
Centura Equity Growth Fund 50,000,000 50,000,000 50,000,000
Centura Equity Income Fund 50,000,000 50,000,000 50,000,000
Centura Federal Securities
Income Fund 50,000,000 50,000,000 50,000,000
Centura North Carolina
Tax-Free Bond Fund 50,000,000 50,000,000 50,000,000
THIRD: As of immediately subsequent to such increase in authorized capital
of the Corporation, the total number of shares of all classes that the
Corporation was authorized to issue was six hundred million (750,000,000) shares
of common stock, par value $0.001 per share and having an aggregate par value of
six hundred thousand dollars ($750,000), classified as follows:
Name of Series Number of Shares Allocated
Class A Class B Class C
Centura Equity Growth Fund 50,000,000 50,000,000 50,000,000
Centura Equity Income Fund 50,000,000 50,000,000 50,000,000
Centura Federal Securities
Income Fund 50,000,000 50,000,000 50,000,000
Centura North Carolina
Tax-Free Bond Fund 50,000,000 50,000,000 50,000,000
Centura Southeast Equity
Fund 50,000,000 50,000,000 50,000,000
FOURTH: The shares of the Corporation authorized and classified pursuant
to these Articles Supplementary have been so authorized and classified by the
Board of Directors under the authority contained in the charter of the
Corporation. The number of Shares of capital stock of the various classes that
the Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law. The Corporation is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act").
FIFTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of the series and classes of Common Shares described in
Article THIRD hereof shall be as set forth in the Corporation's charter and
shall be subject to all provisions of the charter relating to shares of the
Corporation generally, including those set forth in Article 5.5 of such charter.
IN WITNESS WHEREOF, Centura Funds, Inc. has caused these Articles
Supplementary to be signed in its name on its behalf by its authorized officers
who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury.
Date: January 29, 1997 CENTURA FUNDS, INC.
By: /s/ John J. Pileggi
John J. Pileggi
President
ATTEST: /s/ Joan V. Fiore
Joan V. Fiore
Secretary
65570-78.doc
INVESTMENT ADVISORY CONTRACT SUPPLEMENT
CENTURA FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio 43219-3035
Centura Bank
131 North Church Street
Rocky Mount, North Carolina 27802
Re: Centura Southeast Equity Fund
Dear Sirs:
This will confirm the agreement between the undersigned (the "Company")
and Centura Bank (the "Advisor") as follows:
1. The Company is an open-end investment company organized as a
Maryland corporation, and consists of one or more separate investment portfolios
as have been or may be established by the Directors of the Company from time to
time. A separate class of shares of common stock of the Company is offered to
investors with respect to each investment portfolio. Centura Southeast Equity
Fund (the "Fund") is a separate investment portfolio of the Company.
2. The Company and the Advisor have entered into a Master Investment
Advisory Contract ("Master Advisory Contract") pursuant to which the Company has
employed the Advisor to provide investment advisory and other services specified
in that Contract and the Advisor has accepted such employment.
3. As provided in paragraph 1 of the Master Advisory Contract, the
Company hereby adopts the Master Advisory Contract with respect to the Fund and
the Advisor hereby acknowledges that the Master Advisory Contract shall pertain
to the Fund, the terms and conditions of such Master Advisory Contract being
hereby incorporated herein by reference.
4. The term "Funds" as used in the Master advisory Contract shall for
purposes of this Supplement pertain to the Fund.
5. As provided in paragraph 6 of the Master Advisory Contract and
subject to further conditions as set forth therein, the Company shall with
respect to the Fund pay the Advisor a monthly fee on the first business day of
each month at the annual rate of 0.70% of the Fund's average daily net assets
(as determined on each business day at the time set forth in the Prospectus for
determining net asset value per share).
6. As provided and defined in paragraph 7 of the Master Advisory
Contract, the "Advisor's reimbursement" shall for purposes of this Supplement
with respect to the Fund equal 0.70%.
7. This Supplement and the Master Advisory Contract (together, the
"Contract") became effective with respect to the Fund on ___________, 1997 and
shall continue thereafter in effect with respect to the Fund for a period of
more than two years from such date only so long as the continuance is
specifically approved at least annually (a) by the vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act) of by a
majority of the Company's Board of Directors and (b) by the vote, cast in person
at a meeting called for that purpose, of a majority of the Company's Directors
who are not parties to this contract or "interested persons" (as defined in the
Investment Company Act of 1940 ("1940 Act")) of any such party. This contract
may be terminated with respect to the fund at any time, without the payment of
any penalty by vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act) or by a vote of a majority of the Company's
entire Board of Directors on 60 days written notice to the Advisor and by
Advisor on 60 days written notice to the Company. This contract shall terminate
automatically in the event of its assignment (as defined in the 1940 Act).
If the foregoing correctly sets forth the agreement between the Company
and the Advisor, please do indicate by signing and returning to the Company the
enclosed copy hereof.
Very truly yours,
CENTURA FUNDS, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
ACCEPTED:
CENTURA BANK
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
65570-74.DOC
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of October, 1996, between CENTURA FUNDS, INC.
(the "Company"), a Maryland corporation, and CENTURA FUNDS DISTRIBUTOR, INC.
("Distributor").
WHEREAS, the Company is an open-end management investment company,
organized as a Maryland corporation and registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, it is intended that Distributor act as the distributor of the
units of beneficial interest ("Shares") of each of the investment portfolios of
the Company (such portfolios being referred to individually as a "Fund" and
collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Distributor; Conversion to the Services.
1.1 Distributor (i) will act as agent for the distribution of the
Shares covered by the registration statement and prospectus of the Company then
in effect under the Securities Act of 1933, as amended (the "Securities Act")
and (ii) will perform such additional services as are provided in this Section 1
(collectively, the "Services"). In connection therewith, the Company agrees to
convert to the Distributor's data processing systems and software (the "BISYS
System"). The Company shall cooperate with the Distributor to provide the
Distributor with all necessary information and assistance required to
successfully convert to the BISYS System. The Distributor shall provide the
Company with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The Distributor hereby accepts such engagement and agrees to
perform the Services commencing, with respect to each individual Service, on the
date that the conversion of such Service to the BISYS System has been completed.
The Distributor shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted. As used
in this Agreement, the term "registration statement" shall mean Parts A (the
prospectus), B (the Statement of Additional Information) and C of each
registration statement that is filed on Form N-1A, or any successor thereto,
with the Commission, together with any amendments thereto. The term "prospectus"
shall mean each form of prospectus and Statement of Additional Information used
by the Funds for delivery to shareholders and prospective shareholders after the
effective dates of the above-referenced registration statements, together with
any amendments and supplements thereto.
1.2 Distributor agrees to use appropriate efforts to solicit orders
for the sale of the Shares and will undertake such advertising and promotion as
it believes reasonable in connection
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with such solicitation. The Company understands that Distributor is now and may
in the future be the distributor of the shares of several investment companies
or series (together, "Investment Companies") including Companies having
investment objectives similar to those of the Company. The Company further
understands that investors and potential investors in the Company may invest in
shares of such other Investment Companies. The Company agrees that Distributor's
duties to such Investment Companies shall not be deemed in conflict with its
duties to the Company under this paragraph 1.2.
Distributor shall, at its own expense, finance appropriate
activities which it deems reasonable, which are primarily intended to result in
the sale of the Shares, including, but not limited to, advertising, compensation
of underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current Shareholders, and the printing and mailing of
sales literature.
1.3 In its capacity as distributor of the Shares, all activities of
Distributor and its partners, agents, and employees shall comply with all
applicable laws, rules and regulations, including, without limitation, the 1940
Act, all rules and regulations promulgated by the Commission thereunder and all
rules and regulations adopted by any securities association registered under the
Securities Exchange Act of 1934.
1.4 Distributor will transmit any orders received by it for purchase
or redemption of the Shares to the transfer agent and custodian for the Funds.
1.5 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind, the Company's officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it advisable to
accept such orders and to make such sales.
1.6 Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others.
1.7 The Company agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the qualification of
the Shares for sale in such states as Distributor may designate.
1.8 The Company shall furnish from time to time, for use in
connection with the sale of the Shares, such information with respect to the
Funds and the Shares as Distributor may reasonably request; and the Company
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Company shall also
furnish Distributor upon request with: (a) unaudited semi-annual statements of
the Funds' books and accounts prepared by the Company, (b) a monthly itemized
list of the securities in the Funds, (c) monthly balance sheets as soon as
practicable after the end of each month, and (d) from time to
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time such additional information regarding the financial condition of the Funds
as Distributor may reasonably request.
1.9 The Company represents to Distributor that, with respect to the
Shares, all registration statements and prospectuses filed by the Company with
the Commission under the Securities Act have been carefully prepared in
conformity with requirements of said Act and rules and regulations of the
Commission thereunder. The registration statement and prospectus contain all
statements required to be stated therein in conformity with said Act and the
rules and regulations of said Commission and all statements of fact contained in
any such registration statement and prospectus are true and correct.
Furthermore, neither any registration statement nor any prospectus includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
to a purchaser of the Shares. The Company may, but shall not be obligated to,
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Company's counsel, be
necessary or advisable. If the Company shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after receipt by
the Company of a written request from Distributor to do so, Distributor may, at
its option, terminate this Agreement. The Company shall not file any amendment
to any registration statement or supplement to any prospectus without giving
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Company's right
to file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Company may deem
advisable, such right being in all respects absolute and unconditional.
1.10 The Company authorizes Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of the Shares. The Company agrees to indemnify, defend and hold Distributor, its
several partners and employees, and any person who controls Distributor within
the meaning of Section 15 of the Securities Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which Distributor, its partners
and employees, or any such controlling person, may incur under the Securities
Act or under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the
Company's agreement to indemnify Distributor, its partners or employees, and any
such controlling person shall not be deemed to cover any claims, demands,
liabilities or expenses arising out of any statements or representations as are
contained in any prospectus and in such financial and other statements as are
furnished in writing to the Company by Distributor or its affiliates and used in
the answers to the registration statement or in the corresponding statements
made in the prospectus, or arising out of or based upon any omission or alleged
omission to state a material fact in connection with the giving of such
information required to be stated in such answers or necessary to make the
answers not
G:\LEGALSRV\AGREEMEN\CENTURA\DISTRBCO.AGR
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misleading; and further provided that the Company's agreement to indemnify
Distributor and the Company's representations and warranties hereinbefore set
forth in paragraph 1.9 shall not be deemed to cover any liability to the Company
or its Shareholders to which Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Distributor's reckless disregard of its obligations and
duties under this Agreement. The Company's agreement to indemnify Distributor,
its partners and employees and any such controlling person, as aforesaid, is
expressly conditioned upon the Company being notified of any action brought
against Distributor, its partners or employees, or any such controlling person,
such notification to be given by letter or by telegram addressed to the Company
at its principal office in Columbus, Ohio and sent to the Company by the person
against whom such action is brought, within 10 days after the summons or other
first legal process shall have been served. The failure to so notify the Company
of any such action shall not relieve the Company from any liability which the
Company may have to the person against whom such action is brought by reason of
any such untrue, or allegedly untrue, statement or omission, or alleged
omission, otherwise than on account of the Company's indemnity agreement
contained in this paragraph 1.10. The Company will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or liability, but,
in such case, such defense shall be conducted by counsel of good standing chosen
by the Company and approved by Distributor, which approval shall not be
unreasonably withheld. In the event the Company elects to assume the defense of
any such suit and retain counsel of good standing approved by Distributor, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Company does not
elect to assume the defense of any such suit, or in case Distributor reasonably
does not approve of counsel chosen by the Company, the Company will reimburse
Distributor, its partners and employees, or the controlling person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by Distributor or them. The Company's indemnification agreement
contained in this paragraph 1.10 and the Company's representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of Distributor, its
partners and employees, or any controlling person, and shall survive the
delivery of any Shares.
This Agreement of indemnity will inure exclusively to
Distributor's benefit, to the benefit of its several partners and employees, and
their respective estates, and to the benefit of the controlling persons and
their successors. The Company agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against the Company or any of its
officers or Directors in connection with the issue and sale of any Shares.
1.11 Distributor agrees to indemnify, defend and hold the Company,
its several officers and Directors and any person who controls the Company
within the meaning of Section 15 of the Securities Act free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, or liabilities and any
counsel fees incurred in connection therewith) which the Company, its officers
or Directors or any such controlling person, may incur under the Securities Act
or under common law or otherwise, but only to the extent that such liability or
expense incurred by the Company, its officers or Directors
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or such controlling person resulting from such claims or demands, shall arise
out of or be based upon any untrue, or alleged untrue, statement of a material
fact contained in information furnished in writing by Distributor to the Company
and used in the answers to any of the items of the registration statement or in
the corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished in writing by Distributor or its
affiliates to the Company required to be stated in such answers or necessary to
make such information not misleading. Distributor's agreement to indemnify the
Company, its officers and Directors, and any such controlling person, as
aforesaid, is expressly conditioned upon Distributor being notified of any
action brought against the Company, its officers or Directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office in Columbus, Ohio, and sent to
Distributor by the person against whom such action is brought, within 10 days
after the summons or other first legal process shall have been served.
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Company, if such action is
based solely upon such alleged misstatement or omission on Distributor's part,
and in any other event the Company, its officers or Directors or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure to so notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the Company, its officers or Directors, or to such
controlling person by reason of any such untrue or alleged untrue statement, or
omission or alleged omission, otherwise than on account of Distributor's
indemnity agreement contained in this paragraph 1.11.
1.12 No Shares shall be offered by either Distributor or the Company
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Company if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act or if and so long as a current prospectus as required by Section
10(b)(2) of said Act is not on file with the Commission; provided, however, that
nothing contained in this paragraph 1.12 shall in any way restrict or have an
application to or bearing upon the Company's obligation to repurchase Shares
from any Shareholder in accordance with the provisions of the Company's
prospectus, Articles of Incorporation, or Bylaws.
1.13 The Company agrees to advise Distributor as soon as reasonably
practical by a notice in writing delivered to Distributor or its counsel:
(a) of any request by the Commission for amendments to the registration
statement or prospectus then in effect or for additional information;
(b) in the event of the issuance by the Commission of any
stop order suspending the effectiveness of the
registration statement or prospectus then in effect or
the initiation by service of process on the Company of
any proceeding for that purpose;
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(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration
statement or prospectus then in effect or which requires
the making of a change in such registration statement or
prospectus in order to make the statements therein not
misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement or prospectus
which may from time to time be filed with the
Commission.
For purposes of this section, informal requests by or acts of
the Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.14 Distributor agrees on behalf of itself and its partners and
employees to treat confidentially and as proprietary information of the Company
all records and other information relative to the Company and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Company.
1.15 This Agreement shall be governed by the laws of the State of Delaware.
2. Fee.
Distributor shall receive from the Funds identified in the
Distribution and Shareholder Service Plan attached as Schedule A hereto (the
"Distribution Plan Funds") a distribution fee at the rate and upon the terms and
conditions set forth in such Plan. The distribution fee shall be accrued daily
and shall be paid on the first business day of each month, or at such time(s) as
the Distributor shall reasonably request.
3. Sale and Payment.
Shares of a Fund may be subject to a sales load and may be subject
to the imposition of a distribution fee pursuant to the Distribution and
Shareholder Service Plan referred to above. To the extent that Shares of a Fund
are sold at an offering price which includes a sales load or at net asset value
subject to a contingent deferred sales load with respect to certain redemptions
(either within a single class of Shares or pursuant to two or more classes of
Shares), such Shares shall hereinafter be referred to collectively as "Load
Shares" (in the case of Shares that are sold with a front-end sales load or
Shares that are sold subject to a contingent deferred sales load), "Front-End
Load Shares" or "CDSL Shares" and individually as a "Load Share," a "Front-End
Load Share" or a "CDSL Share." A Fund that contains Front-End Load Shares shall
hereinafter be referred to
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collectively as "Load Funds" or "Front-End Load Funds" and individually as a
"Load Fund" or a "Front-end Load Fund." A Fund that contains CDSL Shares shall
hereinafter be referred to collectively as "Load Funds" or "CDSL Funds" and
individually as a "Load Fund" or a "CDSL Fund." Under this Agreement, the
following provisions shall apply with respect to the sale of, and payment for,
Load Shares.
3.1 Distributor shall have the right to purchase Load Shares at
their net asset value and to sell such Load Shares to the public against orders
therefor at the applicable public offering price, as defined in Section 4
hereof. Distributor shall also have the right to sell Load Shares to dealers
against orders therefor at the public offering price less a concession
determined by Distributor, which concession shall not exceed the amount of the
sales charge or underwriting discount, if any, referred to in Section 4 below.
3.2 Prior to the time of delivery of any Load Shares by a Load Fund
to, or on the order of, Distributor, Distributor shall pay or cause to be paid
to the Load Fund or to its order an amount in Boston or New York clearing house
funds equal to the applicable net asset value of such Shares. Distributor may
retain so much of any sales charge or underwriting discount as is not allowed by
Distributor as a concession to dealers.
4. Public Offering Price.
The public offering price of a Load Share shall be the net asset
value of such Load Share, plus any applicable sales charge, all as set forth in
the current prospectus of the Load Fund. The net asset value of Shares shall be
determined in accordance with the provisions of the Articles of Incorporation
and Bylaws of the Company and the then-current prospectus of the Load Fund.
5. Issuance of Shares.
The Company reserves the right to issue, transfer or sell Load
Shares at net asset value (a) in connection with the merger or consolidation of
the Company or the Load Fund(s) with any other investment company or the
acquisition by the Company or the Load Fund(s) of all or substantially all of
the assets or of the outstanding Shares of any other investment company; (b) in
connection with a pro rata distribution directly to the holders of Shares in the
nature of a stock dividend or split; (c) upon the exercise of subscription
rights granted to the holders of Shares on a pro rata basis; (d) in connection
with the issuance of Load Shares pursuant to any exchange and reinvestment
privileges described in any then-current prospectus of the Load Fund; and (e)
otherwise in accordance with any then-current prospectus of the Load Fund.
6. Term, Duration and Termination.
This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date first written above (or, if a
particular Fund is not in existence on such date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) and,
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unless sooner terminated as provided herein, shall continue until one year from
the Conversion Date. Thereafter, if not terminated, this Agreement shall
continue with respect to a particular Fund automatically for successive one-year
terms, provided that such continuance is specifically approved at least annually
by (a) by the vote of a majority of those members of the Company's Board of
Directors who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting for the purpose of voting on such
approval and (b) by the vote of the Company's Board of Directors or the vote of
a majority of the outstanding voting securities of such Fund. This Agreement is
terminable without penalty, on not less than sixty days' prior written notice,
by the Company's Board of Directors, by vote of a majority of the outstanding
voting securities of the Company or by the Distributor. This Agreement will also
terminate automatically in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meanings as ascribed
to such terms in the 1940 Act.)
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first written
above.
CENTURA FUNDS, INC. CENTURA FUNDS DISTRIBUTOR, INC.
By: By:
Title: Title:
Date: Date:
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Dated: October 1, 1996
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
BETWEEN
CENTURA FUNDS, INC.
AND
CENTURA FUNDS DISTRIBUTOR, INC.
DISTRIBUTION AND SHAREHOLDER SERVICE PLAN
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<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of October, 1996, by and between
CENTURA FUNDS, INC., a Maryland corporation (the "Company"), and BISYS FUND
SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the "Administrator"),
an Ohio limited partnership.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of common stock ("Shares"); and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Company as the Company and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator; Conversion to the Services. The
Company hereby engages the Administrator to act as the administrator of the
Portfolios and to furnish the Portfolios with the management and administrative
services as set forth in Article 2 below (collectively, the "Services"), and, in
connection therewith, the Company agrees to convert to the Administrator's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Company shall cooperate with the Administrator to
provide the Administrator with all necessary information and assistance required
to successfully convert to the BISYS System. The Administrator shall provide the
Company with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." The Administrator hereby accepts such engagement and agrees
to perform the Services commencing, with respect to each individual Service, on
the date that the conversion of such Service to the BISYS System has been
completed. The Administrator shall determine in accordance with its normal
acceptance procedures when the applicable Service has been successfully
converted.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Company,
will investigate, assist in the selection of and conduct
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relations with custodians, depositories, accountants, legal counsel,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
persons in any other capacity deemed to be necessary or desirable for the
Portfolios' operations. The Administrator shall provide the Directors of the
Company with such reports regarding investment performance as they may
reasonably request but shall have no responsibility for supervising the
performance by any investment adviser or sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and
directors of the Company) for handling the affairs of the Portfolios and such
other services as the Administrator shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. In addition, at the
request of the Board of Directors, the Administrator shall make reports to the
Company's Directors concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Company expenses and control all disbursements
for the Company, and as appropriate compute the Company's yields,
total return, expense ratios, portfolio turnover rate and, if
required, portfolio average dollar-weighted maturity;
(b) assist Company counsel with the preparation of prospectuses, statements
of additional information, registration statements and proxy materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in order to
comply with Federal and state corporate and securities law) as may be necessary
or desirable to register the Company's Shares with state and securities
authorities, monitor the sale of Company Shares for compliance with state
corporate and securities laws, and file with the appropriate state securities
authorities the registration statements and reports for the Company and the
Company's Shares and all amendments thereto, as may be necessary or convenient
to register and keep effective the Company and the Company's Shares with state
securities authorities to enable the Company to make a continuous offering of
its Shares;
(d) develop and prepare, with the assistance of the Company's investment
adviser, communications to Shareholders, including the annual report
to Shareholders, coordinate the mailing of prospectuses, notices,
proxy statements, proxies and other reports to Shareholders, and
supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder votes;
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(e) administer contracts on behalf of the Company with, among others,
the Company's investment adviser, distributor, custodian, transfer
agent and fund accountant;
(f) supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(g) calculate performance data of the Portfolios for dissemination to
information services covering the investment company industry;
(h) coordinate and supervise the preparation and filing of the Company's
tax returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Company or any Portfolio of
the Company, including, without limitation, the Company's investment
adviser, distributor, custodian, fund accountant, transfer agent,
outside legal counsel and independent public accountants, and at the
request of the Board of Directors, report to the Board on the
performance of organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of
the Company's semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation of the Portfolios,
including new classes, investment objectives, policies and structure;
(l) provide individuals reasonably acceptable to the Company's Board of
Directors to serve as officers of the Company, who will be
responsible for the management of certain of the Company's affairs
as determined by the Company's Board of Directors;
(m) advise the Company and its Board of Directors on matters concerning the
Company and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under
the 1940 Act as such bonds and policies are approved by the
Company's Board of Directors;
(o) monitor and advise the Company and its Portfolios on their
registered investment company status under the Internal Revenue Code
of 1986, as amended;
(p) perform all administrative services and functions of the Company and
each Portfolio to the extent administrative services and functions
are not provided to the Company or such Portfolio pursuant to the
Company's or such Portfolio's investment advisory
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agreement, distribution agreement, custodian agreement, transfer agent
agreement and fund accounting agreement;
(q) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Company and the
Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the Company
on Form N-SAR and all required notices pursuant to Rule 24f-2.
The Administrator shall perform such other services for the Company that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Directors of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Directors of the
Company to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Directors, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses, and all fees and charges of investment advisers to the Company.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly.
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If the Conversion Date occurs subsequent to the first day of a month
or termination of this Agreement occurs before the last day of a month, the
Administrator's compensation for that part of the month in which this Agreement
is in effect shall be prorated in a manner consistent with the calculation of
the fees as set forth above. Payment of the Administrator's compensation for the
preceding month shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Company assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of the Administrator's actions taken or
nonactions with respect to the performance of services hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Company shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and
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<PAGE>
retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Company does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders are or may be or become interested in the Administrator, as
officers, employees or otherwise and that partners, officers and employees of
the Administrator and its counsel are or may be or become similarly interested
in the Company, and that the Administrator may be or become interested in the
Company as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved (i) by the vote of a majority of
the Directors of the Company, and (ii) by the vote of a majority of the
Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Directors meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume
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<PAGE>
that any special procedure which has been approved by the Company does not
conflict with or violate any requirements of its Articles of Incorporation or
then current prospectuses, or any rule, regulation or requirement of any
regulatory body.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice provided hereunder shall be sufficiently
given when sent by registered or certified mail to the party required to be
served with such notice, at the following address: 3435 Stelzer Road, Columbus,
Ohio 43219, or at such other address as such party may from time to time specify
in writing to the other party pursuant to this Section.
ARTICLE 13. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CENTURA FUNDS, INC.
By:
Attest:
BISYS FUND SERVICES LIMITED
PARTNERSHIP
By: BISYS Fund Services,
General Partner
By:
Attest:
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN CENTURA FUNDS, INC.
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of the Company,
either now or hereafter created (collectively, the "Portfolios"). The current
Portfolios of the Company are set forth below:
Centura Equity Income Fund;
Centura Equity Growth Fund;
Centura Federal Securities Income Fund; and
Centura North Carolina Tax Free Bond Fund.
Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Company will pay
the Administrator on the first business day of each month, or at
such time(s) as the Administrator shall request and the parties
hereto shall agree, a fee computed daily at the annual rate of:
.015% of each Portfolio's average daily net assets
The fee for the period from the day of the month upon which the
Conversion Date occurs until the end of that month shall be prorated
according to the proportion which such period bears to the full
monthly period. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be prorated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of
this Agreement.
For purposes of determining the fees payable to the Administrator,
the value of the net assets of a particular Portfolio shall be
computed in the manner described in the Company's Articles of
Incorporation or in the Prospectus or Statement of Additional
Information respecting that Portfolio as from time to time is in
effect for the computation of the value of such net assets in
connection with the determination of the liquidating value of the
shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder shall be
applied to each Portfolio as a whole, and not to separate classes of
shares within the Portfolios.
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Term: The initial term of this Agreement (the "Initial Term") shall be for
a period commencing on the date this Agreement is executed by both parties and
ending on the date that is twelve (12) months after the Conversion Date. This
Agreement shall be renewed automatically for successive periods of one year
after the Initial Term, unless written notice of nonrenewal is provided by
either party not less than 90 days prior to the end of the then-current term. In
the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
Notwithstanding the foregoing, after such termination for so long as
the Administrator, with the written consent of the Company, in fact
continues to perform any one or more of the services contemplated by
this Agreement or any schedule or exhibit hereto, the provisions of
this Agreement, including without limitation the provisions dealing
with indemnification, shall continue in full force and effect.
Compensation due the Administrator and unpaid by the Company upon
such termination shall be immediately due and payable upon and
notwithstanding such termination. The Administrator shall be
entitled to collect from the Company, in addition to the
compensation described in this Schedule A, the amount of all of the
Administrator's cash disbursements for services in connection with
the Administrator's activities in effecting such termination,
including without limitation, the delivery to the Company and/or its
designees of the Company's property, records, instruments and
documents, or any copies thereof. Subsequent to such termination,
for a reasonable fee, the Administrator will provide the Company
with reasonable access to any Company documents or records remaining
in its possession.
If, for any reason, other than a material breach of this Agreement,
the Administrator is replaced as fund manager and administrator, or
if a third party is added to perform all or a part of the services
provided by the Administrator under this Agreement (excluding any
sub-administrator appointed by the Administrator as provided in
Article 7 hereof), then the Company shall make a one-time cash
payment, as liquidated damages, to the Administrator equal to the
balance due the Administrator for the remainder of the term of this
Agreement, assuming for purposes of calculation of the payment that
the asset level of the Company on the date the Administrator is
replaced, or a third party is added, will remain constant for the
balance of the contract term.
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TRANSFER AGENCY AGREEMENT
AGREEMENT made this 1st day of October, 1996, between CENTURA FUNDS, INC.
(the "Company"), a Maryland corporation, and BISYS FUND SERVICES, INC.
("BISYS"), a Delaware corporation.
WHEREAS, the Company desires that BISYS perform certain services for each
series of the Company (individually referred to herein as a "Fund" and
collectively as the "Funds"); and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Retention of BISYS; Conversion to the Services.
The Company hereby engages BISYS to act as the transfer agent for the
Funds to perform (i) the transfer agent services set forth in Schedule A hereto
(the "Initial Services"), (ii) such special services (the "Special Services")
incidental to the performance of such services as may be agreed to by the
parties from time to time (for such fees as the parties may agree as aforesaid)
and (iii) such additional services (collectively with the Initial Services and
the Special Services, the "Services"), as may be agreed to by the parties from
time to time and set forth in an amendment to said Schedule A (for such fees as
the parties may agree as aforesaid), and, in connection therewith, the Company
agrees to convert to BISYS' data processing systems and software (the "BISYS
System") as necessary in order to receive the Services. The Company shall
cooperate with BISYS to provide BISYS with all necessary information and
assistance required to successfully convert to the BISYS System. BISYS shall
provide the Company with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon which all
Initial Services shall have been converted to the BISYS System shall be referred
to herein as the "Conversion Date." BISYS hereby accepts such engagement and
agrees to perform the Services commencing, with respect to each individual
Service, on the date that the conversion of such Service to the BISYS System has
been completed. BISYS shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Company (individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Company or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.
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2. Fees.
The Company shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in,
Schedule B hereto. Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule A hereto shall be subject to mutual
agreement at the time such amendment to Schedule A is proposed.
3. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 2 hereof,
the Company agrees to reimburse BISYS for BISYS' out-of-pocket expenses in
providing services hereunder, including without limitation, the following:
(a) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Company and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment adviser
or custodian, dealers, shareholders or others as required for
BISYS to perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies,
notices or other form of printed material which shall be required
by BISYS for the performance of the services to be provided
hereunder;
(d) The cost of microfilm or microfiche of records or other materials; and
(e) Any expenses BISYS shall incur at the written direction of an
officer of the Company thereunto duly authorized.
4. Effective Date.
This Agreement shall become effective as of the date first written
above (the "Effective Date").
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5. Term.
The initial term of this Agreement (the "Initial Term") shall be for
a period commencing on the date this Agreement is executed by both parties and
ending on the date that is twelve (12) months after the Conversion Date.
Thereafter, it shall be renewed automatically for successive one-year terms
unless written notice not to renew is given by the non-renewing party to the
other party at least 60 days prior to the expiration of the then-current term;
provided, however, that after such termination, for so long as BISYS, with the
written consent of the Company, in fact continues to perform any one or more of
the services contemplated by this Agreement or any Schedule or exhibit hereto,
the provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Company upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Company, in addition to
the fees and disbursements provided by Sections 2 and 3 hereof, the amount of
all of BISYS' costs in connection with BISYS' activities in effecting such
termination, including without limitation, the delivery to the Company and/or
its distributor or investment adviser and/or other parties, of the Company's
property, records, instruments and documents, or any copies thereof. To the
extent that BISYS may retain in its possession copies of any Company documents
or records subsequent to such termination which copies had not been requested by
or on behalf of the Company in connection with the termination process described
above, BISYS will provide the Company with reasonable access to such copies;
provided, however, that, in exchange therefor, the Company will reimburse BISYS
for all costs reasonably incurred in connection therewith.
In the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in writing of such
breach and, upon receipt of such notice, the breaching party shall have 45 days
to remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason, other than a material breach of this Agreement,
BISYS is replaced as transfer agent, or if a third party is added to perform all
or a part of the services provided by BISYS under this Agreement (excluding any
sub-transfer agent appointed by BISYS as provided in Section 1 hereof), then the
Company shall make a one-time cash payment, as liquidated damages to, BISYS
equal to the balance due BISYS for the remainder of the term of this Agreement,
assuming for purposes of calculation of the payment that the asset level of the
Company on the date BISYS is replaced, or a third party is added, will remain
constant for the balance of the contract term.
6. Uncontrollable Events.
BISYS assumes no responsibility hereunder, and shall not be liable
for any damage, loss of data, delay or any other loss whatsoever caused by
events beyond its reasonable control.
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7. Legal Advice.
BISYS shall notify the Company at any time BISYS believes that it is
in need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Company, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Company or
Funds unless relating to a matter involving BISYS' willful misfeasance, bad
faith, gross negligence or reckless disregard with respect to BISYS'
responsibilities and duties hereunder and BISYS shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.
8. Instructions.
Whenever BISYS is requested or authorized to take action hereunder
pursuant to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Company or
by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Company or
any other person authorized by the Company's Board of Directors or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the Prospectuses and Statement of Additional
Information of the Company relating to the Funds to the extent that such
services are described therein unless BISYS receives written instructions to the
contrary in a timely manner from the Company.
9. Standard of Care; Reliance on Records and Instructions; Indemnification.
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Company agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Company, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
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willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Company written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.
10. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Company and its shareholders, except when requested to divulge such information
by duly-constituted authorities or court process, or requested by a shareholder
or shareholder's agent with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Company, the shareholder, or shareholder's agent, or the dealer
of record as to such account.
11. Reports.
BISYS will furnish to the Company and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C. The Company agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein not later
than three business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within three days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and be binding upon the Company and
any other recipient, and BISYS shall have no liability for errors or
discrepancies therein and shall have no further responsibility with respect to
such report except to perform reasonable corrections of such errors and
discrepancies within a reasonable time after requested to do so by the Company.
12. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Company and all
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<PAGE>
such other records and data will be furnished to the Company in appropriate form
as soon as practicable after termination of this Agreement for any reason.
13. Return of Records.
BISYS may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain BISYS' files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS in the performance of its services or for
its legal protection. If not so turned over to the Company, such documents and
records will be retained by BISYS for six years from the year of creation. At
the end of such six-year period, such records and documents will be turned over
to the Company unless the Company authorizes in writing the destruction of such
records and documents.
14. Bank Accounts.
The Company and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Company, as are
necessary in order that BISYS may perform the services required to be performed
hereunder. To the extent that the performance of such services shall require
BISYS directly to disburse amounts for payment of dividends, redemption proceeds
or other purposes, the Company and Funds shall provide such bank or banks with
all instructions and authorizations necessary for BISYS to effect such
disbursements.
15. Representations of the Company.
The Company certifies to BISYS that this Agreement has been duly
authorized by the Company and, when executed and delivered by the Company, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
16. Representations of BISYS.
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the secure
performance of its obligations hereunder.
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17. Insurance.
BISYS shall notify the Company should its insurance coverage with
respect to professional liability or errors and omissions coverage be canceled
or reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Company of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Company from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.
18. Information to be Furnished by the Company and Funds.
The Company has furnished to BISYS the following:
(a) Copies of the Articles of Incorporation of the Company and of any
amendments thereto, certified by the proper official of the state
in which such Declaration has been filed.
(b) Copies of the following documents:
1. The Company's By-Laws and any amendments thereto.
covering the following matters:
A. Approval of this Agreement and authorization of a specified officer of
the Company to execute and deliver this Agreement and authorization for
specified officers of the Company to instruct BISYS hereunder; and
B. Authorization of BISYS to act as Transfer Agent for the Company on
behalf of the Funds.
(c) A list of all officers of the Company, together with specimen
signatures of those officers, who are authorized to instruct
BISYS in all matters.
(d) Two copies of the following (if such documents are employed by the
Company):
1. Prospectuses and Statement of Additional Information;
2. Distribution Agreement; and
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<PAGE>
3. All other forms commonly used by the Company or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.
(e) A certificate as to shares of beneficial interest of the Company
authorized, issued, and outstanding as of the Effective Date of
BISYS' appointment as Transfer Agent (or as of the date on which
BISYS' services are commenced, whichever is the later date) and
as to receipt of full consideration by the Company for all shares
outstanding, such statement to be certified by the Treasurer of
the Company.
19. Information Furnished by BISYS.
BISYS has furnished to the Company the following:
(a) BISYS' Articles of Incorporation.
(b) BISYS' By-Laws and any amendments thereto.
(c) Certified copies of actions of BISYS covering the following matters:
1. Approval of this Agreement, and authorization of a specified officer of
BISYS to execute and deliver this Agreement;
2. Authorization of BISYS to act as Transfer Agent for the Company.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with the
Commission pursuant to Rule 17Ad-13 under the Exchange Act.
20. Amendments to Documents.
The Company shall furnish BISYS written copies of any amendments to,
or changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Company which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.
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21. Reliance on Amendments.
BISYS may rely on any amendments to or changes in any of the
documents and other items to be provided by the Company pursuant to Sections 18
and 20 of this Agreement and the Company hereby indemnifies and holds harmless
BISYS from and against any and all claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, counsel fees and other expenses of
every nature and character which may result from actions or omissions on the
part of BISYS in reasonable reliance upon such amendments and/or changes.
Although BISYS is authorized to rely on the above-mentioned amendments to and
changes in the documents and other items to be provided pursuant to Sections 18
and 20 hereof, BISYS shall be under no duty to comply with or take any action as
a result of any of such amendments or changes unless the Company first obtains
BISYS' written consent to and approval of such amendments or changes.
22. Compliance with Law.
Except for the obligations of BISYS set forth in Section 10 hereof,
the Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Company's shares. The Company
represents and warrants that no shares of the Company will be offered to the
public until the Company's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.
23. Notices.
Any notice provided hereunder shall be sufficiently given when sent
by registered or certified mail to the party required to be served with such
notice, at the following address: 3435 Stelzer Road, Columbus, Ohio 43219, or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
24. Headings.
Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
25. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Section 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
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<PAGE>
26. Governing Law.
This Agreement shall be governed by and provisions shall be construed
in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CENTURA FUNDS, INC.
By:________________________________
Attest:______________________________
BISYS FUND SERVICES, INC.
By:________________________________
Attest:______________________________
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<PAGE>
Dated: October 1, 1996
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
CENTURA FUNDS, INC.
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend option, taxpayer
identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the Securities
Exchange Act of 1934, as amended.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares, through
dividend reimbursement.
2. Shareholder Information Services
a. Provide toll-free lines for direct shareholder use and customer liaison
staff with on-line inquiry capacity.
b. Make information available to shareholder servicing unit and other
remote access units regarding trade date, share price, current
holdings, yields, and dividend information.
c. Produce detailed history of transactions through duplicate or special
order statements upon request.
d. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current shareholders.
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<PAGE>
3. Compliance Reporting
a. Provide reports to the Securities and Exchange Commission, the National
Association of Securities Dealers and the States in which the Fund is
registered.
b. Prepare and distribute appropriate Internal Revenue Service forms for
corresponding Fund and shareholder income and capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
a. Provide reports for tracking rights of accumulation and purchases made
under a Letter of Intent.
b. Account for separation of shareholder investments from transaction sale
charges for purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and marketing
expenses.
d. Track sales and commission statistics by dealer and provide for payment
of commissions on direct shareholder purchases in a load Fund.
5. Shareholder Account Maintenance
a. Maintain all shareholder records for each account in the Company.
b. Issue customer statements on scheduled cycle, providing duplicate second
and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
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<PAGE>
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
CENTURA FUNDS, INC.
AND
BISYS FUND SERVICES, INC.
TRANSFER AGENT FEES
Effective as of the Conversion Date, the Transfer Agent shall receive an
account maintenance fee of $15.00 per year for each account which is in
existence at any time during the month for which payment is made, such fee to be
paid in equal monthly installments, plus out-of-pocket expenses, provided that
the minimum annual fee to be paid by each Fund is $10,000.00. The Transfer Agent
shall be entitled to this account maintenance fee on all accounts maintained in
its records during the year, including those accounts which have a zero balance
during any portion of the year.
Additional Services:
Additional services such as IRA processing, development of interface
capabilities, servicing of 403(b) and 408(c) accounts, management of cash sweeps
between DDAs and mutual fund accounts and coordination of the printing and
distribution of prospectuses, annual reports and semi-annual reports are subject
to additional fees which will be quoted upon request. Programming costs or
database management fees for special reports or specialized processing will be
quoted upon request.
Out-of-pocket Expenses:
BISYS shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses including, but not limited to, the expenses set forth in Section 3 of
the Transfer Agency Agreement to which this Schedule B is attached.
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SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
CENTURA FUNDS, INC.
AND
BISYS FUND SERVICES, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. Annual report by independent public accountants concerning BISYS'
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13 of
the Securities Exchange Act of 1934, as amended.
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<PAGE>
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of October, 1996, between CENTURA FUNDS, INC.
(the "Company"), a Maryland corporation, and BISYS FUND SERVICES, INC. ("Fund
Accountant"), a corporation organized under the laws of the State of Delaware.
WHEREAS, the Company desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Company, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant; Conversion to Services.
The Company hereby engages Fund Accountant to perform fund accounting
services as set forth in this Section 1 (collectively, the "Services"), and, in
connection therewith, the Company agrees to convert to Fund Accountant's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Company shall cooperate with Fund Accountant to
provide Fund Accountant with all necessary information and assistance required
to successfully convert to the BISYS System. Fund Accountant shall provide the
Company with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." Fund Accountant hereby accepts such engagement and agrees to
perform the Services commencing, with respect to each individual Service, on the
date that the conversion of such Service to the BISYS System has been completed.
Fund Accountant shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.
(a) Maintenance of Books and Records. Fund Accountant will keep
and maintain the following books and records of each Fund
pursuant to Rule 31a-1 under the Investment Company Act of
1940 (the "Rule"):
(i) Journals containing an itemized daily record in detail
of all purchases and sales of securities, all receipts
and disbursements of cash and all other debits and
credits, as required by subsection (b)(1) of the Rule;
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<PAGE>
(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense
accounts, including interest accrued and interest
received, as required by subsection (b)(2)(I) of the
Rule;
(iii) Separate ledger accounts required by subsection (b)(2 (ii) and (iii)
of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8)
of the Rule.
(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, Fund
Accountant shall perform the following accounting services
daily for each Fund:
(i) Calculate the net asset value per share utilizing prices obtained from
the sources described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain
such prices from each Fund's investment adviser or its
designee, as approved by the Company's Board of
Directors;
(iii) Verify and reconcile with the Fund's custodian all daily trade
activity;
(iv) Compute, as appropriate, each Fund's net income and
capital gains, dividend payables, dividend factors,
7-day yields, 7-day effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Fund prior to release
to shareholders, check and confirm the net asset values
and dividend factors for reasonableness and deviations,
and distribute net asset values and yields to NASDAQ;
(vi) Report to the Company the daily market pricing of
securities in any money market Funds, with the
comparison to the amortized cost basis;
(vii) Determine unrealized appreciation and depreciation on securities held
in variable net asset value Funds;
(viii)Amortize premiums and accrete discounts on securities purchased at a
price other than face value, if requested by the Company;
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<PAGE>
(ix) Update fund accounting system to reflect rate changes,
as received from a Fund's investment adviser, on
variable interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to instruction received from
the Company's Administrator;
(xii) Determine the outstanding receivables and payables for
all (1) security trades, (2) Fund share transactions and
(3) income and expense accounts;
(xiii)Provide accounting reports in connection with the
Company's regular annual audit and other audits and
examinations by regulatory agencies; and
(xiv) Provide such periodic reports as the parties shall agree
upon, as set forth in a separate schedule.
(c) Special Reports and Services.
(i) Fund Accountant may provide additional special reports
upon the request of the Company or a Fund's investment
adviser, which may result in an additional charge, the
amount of which shall be agreed upon between the
parties.
(ii) Fund Accountant may provide such other similar services
with respect to a Fund as may be reasonably requested by
the Company, which may result in an additional charge,
the amount of which shall be agreed upon between the
parties.
(d) Additional Accounting Services. Fund Accountant shall also perform the
following additional accounting services for each Fund:
(i) Provide monthly a download (and hard copy thereof) of
the financial statements described below, upon request
of the Company. The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
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<PAGE>
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal excise tax returns;
(B) the Company's semi-annual reports with the Securities and Exchange
Commission ("SEC") on Form N-SAR;
(C) the Company's annual, semi-annual and quarterly (if any) shareholder
reports;
(D) registration statements on Form N-1A and other filings relating to the
registration of Shares;
(E) the Administrator's monitoring of the Company's
status as a regulated investment company under
Subchapter M of the Internal Revenue Code, as
amended;
(F) annual audit by the Company's auditors; and
(G) examinations performed by the SEC.
2. Subcontracting.
Fund Accountant may, at its expense, subcontract with any entity or
person concerning the provision of the services contemplated hereunder;
provided, however, that Fund Accountant shall not be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that Fund Accountant shall be responsible, to the extent
provided in Section 6 hereof, for all acts of such subcontractor as if such acts
were its own.
3. Compensation.
The Company shall pay Fund Accountant for the services to be
provided by Fund Accountant under this Agreement in accordance with, and in the
manner set forth in, Schedule A hereto, as such Schedule may be amended from
time to time.
4. Reimbursement of Expenses.
In addition to paying Fund Accountant the fees described in Section
3 hereof, the Company agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
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<PAGE>
(a) All freight and other delivery and bonding charges incurred by Fund
Accountant in delivering materials to and from the Company;
(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by Fund Accountant in
communication with the Company, the Company's investment advisor or
custodian, dealers or others as required for Fund Accountant to
perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes pursuant to Section l
(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other materials;
an officer of the Company thereunto duly authorized; and
(f) Any additional expenses reasonably incurred by Fund Accountant in
the performance of its duties and obligations under this Agreement.
5. Effective Date.
This Agreement shall become effective with respect to a Fund as of
the date first written above.
6. Term.
The initial term of this Agreement (the "Initial Term") shall be for
a period commencing on the date this Agreement is executed by both parties and
ending on the date that is twelve (12) months after the Conversion Date. This
Agreement shall be renewed automatically for successive one-year terms unless
written notice not to renew is given by the non-renewing party to the other
party at least 60 days prior to the expiration of the then-current term;
provided, however, that after such termination for so long as Fund Accountant,
with the written consent of the Company, in fact continues to perform any one or
more of the services contemplated by this Agreement or any schedule or exhibit
hereto, the provisions of this Agreement, including without limitation the
provisions dealing with indemnification, shall continue in full force and
effect. Compensation due Fund Accountant and unpaid by the Company upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. Fund Accountant shall be entitled to collect from the Company, in
addition to the compensation described under Section 3 hereof, the amount of all
of Fund Accountant's cash disbursements for services in connection with Fund
Accountant's activities in effecting such termination, including without
limitation, the delivery to the Company and/or its designees of the Company's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination, for a reasonable fee, Fund Accountant will provide the
Company with reasonable access to any Company documents or records remaining in
its possession.
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<PAGE>
In the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in writing of such
breach and, upon receipt of such notice, the breaching party shall have 45 days
to remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.
If, for any reason, other than a material breach of this Agreement,
Fund Accountant is replaced as Fund Accountant, or if a third party is added to
perform all or a part of the services provided by Fund Accountant under this
Agreement (excluding any sub-accountant appointed by Fund Accountant as provided
in Section 2 hereof), then the Company shall make a one-time cash payment, as
liquidated damages, to Fund Accountant equal to the balance due Fund Accountant
for the remainder of the term of this Agreement, assuming for purposes of
calculation of the payment that the asset level of the Company on the date Fund
Accountant is replaced, or a third party is added, will remain constant for the
balance of the contract term.
7. Standard of Care; Reliance on Records and Instructions; Indemnification.
Fund Accountant shall use its best efforts to insure the accuracy of
all services performed under this Agreement, but shall not be liable to the
Company for any action taken or omitted by Fund Accountant in the absence of bad
faith, willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. A Fund agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to such Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to such
Fund given or made to Fund Accountant by a duly authorized representative of the
Company other than a representative who is also an affiliated person of Fund
Accountant or its affiliates; provided that this indemnification shall not apply
to actions or omissions of Fund Accountant in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties, and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, Fund Accountant
shall give the Company written notice of and reasonable opportunity to defend
against said claim in its own name or in the name of Fund Accountant.
8. Record Retention and Confidentiality.
Fund Accountant shall keep and maintain on behalf of the Company all
books and records which the Company and Fund Accountant is, or may be, required
to keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. Fund
Accountant further agrees that all such books and records shall be the property
of the Company and
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
6
<PAGE>
to make such books and records available for inspection by the Company or by the
Securities and Exchange Commission at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Company
and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
9. Uncontrollable Events.
Fund Accountant assumes no responsibility hereunder, and shall not
be liable, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
10. Reports.
Fund Accountant will furnish to the Company and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Company
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by Fund
Accountant, or as subsequently agreed upon by the parties pursuant to an
amendment hereto. The Company agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein no later than three business days from the receipt thereof. In the event
that errors or discrepancies, except such errors and discrepancies as may not
reasonably be expected to be discovered by the recipient within ten days after
conducting a diligent examination, are not so reported within the aforesaid
period of time, a report will for all purposes be accepted by and binding upon
the Company and any other recipient, and, except as provided in Section 6
hereof, Fund Accountant shall have no liability for errors or discrepancies
therein and shall have no further responsibility with respect to such report
except to perform reasonable corrections of such errors and discrepancies within
a reasonable time after requested to do so by the Company.
11. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by Fund Accountant under this Agreement are the property
of Fund Accountant. All records and other data except such computer programs and
procedures are the exclusive property of the Company and all such other records
and data will be furnished to the Company in appropriate form as soon as
practicable after termination of this Agreement for any reason.
12. Return of Records.
Fund Accountant may at its option at any time, and shall promptly
upon the Company's demand, turn over to the Company and cease to retain Fund
Accountant's files, records and documents created and maintained by Fund
Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Company, such documents and records will be retained
by Fund
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
7
<PAGE>
Accountant for six years from the year of creation. At the end of such six-year
period, such records and documents will be turned over to the Company unless the
Company authorizes in writing the destruction of such records and documents.
13. Representations of the Company.
The Company certifies to Fund Accountant that this Agreement has
been duly authorized by the Company and, when executed and delivered by the
Company, will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
14. Representations of Fund Accountant.
Fund Accountant represents and warrants that: (1) the various
procedures and systems which Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Company and Fund Accountant's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by Fund Accountant
and, when executed and delivered by Fund Accountant, will constitute a legal,
valid and binding obligation of Fund Accountant, enforceable against Fund
Accountant in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
15. Insurance.
Fund Accountant shall notify the Company should any of its insurance
coverage be canceled or reduced. Such notification shall include the date of
change and the reasons therefor. Fund Accountant shall notify the Company of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Company from time to time as may be appropriate of the total outstanding claims
made by Fund Accountant under its insurance coverage.
16. Information to be Furnished by the Company and Funds.
The Company has furnished to Fund Accountant the following:
(a) Copies of the Articles of Incorporation of the Company and of
any amendments thereto, certified by the proper official of
the state in which such document has been filed.
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
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<PAGE>
(b) Copies of the following documents:
(i) The Company's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Board of
Directors covering the approval of this Agreement,
authorization of a specified officer of the Company to
execute and deliver this Agreement and authorization for
specified officers of the Company to instruct Fund
Accountant thereunder.
(c) A list of all the officers of the Company, together with
specimen signatures of those officers who are authorized to
instruct Fund Accountant in all matters.
(d) Two copies of the Prospectuses and Statements of Additional Information
for each Fund.
17. Information Furnished by Fund Accountant.
(a) Fund Accountant has furnished to the Company the following:
(i) Fund Accountant's Articles of Incorporation; and
(ii) Fund Accountant's Bylaws and any amendments thereto.
(b) Fund Accountant shall, upon request, furnish certified copies
of corporate actions covering the following matters:
(i) Approval of this Agreement, and authorization of a specified officer of
Fund Accountant to execute and deliver this Agreement; and
(ii) Authorization of Fund Accountant to act as fund
accountant for the Company and to provide accounting
services for the Company.
18. Amendments to Documents.
The Company shall furnish Fund Accountant written copies of any
amendments to, or changes in, any of the items referred to in Section 16 hereof
forthwith upon such amendments or changes becoming effective. In addition, the
Company agrees that no amendments will be made to the Prospectuses or Statements
of Additional Information of the Company which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Company first obtains Fund Accountant's approval of such
amendments or changes.
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
9
<PAGE>
19. Compliance with Law.
Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Company assumes full responsibility for the preparation, contents
and distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Company's
Shares. The Company represents and warrants that no Shares of the Company will
be offered to the public until the Company's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
20. Notices.
Any notice provided hereunder shall be sufficiently given when sent
by registered or certified mail to the party required to be served with such
notice, at the following address: 3435 Stelzer Road, Columbus, Ohio 43219, or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
21. Headings.
Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
22. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to a Fund by either of the parties hereto except by the
specific written consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. Governing Law.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio.
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CENTURA FUNDS, INC.
By:
Attest:
BISYS FUND SERVICES, INC.
By:
Attest:
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
11
<PAGE>
Dated: October 1, 1996
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
CENTURA FUNDS, INC.
AND
BISYS FUND SERVICES, INC..
FEES
Effective as of the Conversion Date, Fund Accountant shall be entitled to
receive a fee from each Fund in accordance with the following schedule:
$30,000 annually plus out-of-pocket expenses, as described in
Section 4
CENTURA FUNDS, INC. BISYS FUND SERVICES, INC.
By: By:
G:\LEGALSRV\AGREEMEN\CENTURA\FACORP.AGR
A-1
<PAGE>
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated June 9, 1995 on the
financial statements of Centura Equity Growth Fund, Centura Federal Securities
Income Fund and Centura North Carolina Tax-Free Bond Fund, series of Centura
Funds, Inc., referred to therein in Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A File No. 33-75926 as filed with the
Securities and Exchange Commission.
We also consent to the reference to our firm in each Statement of
Additional Information under the caption "Independent Accountants" and in each
Prospectus under the caption "Financial Highlights."
/s/ McGladrey & Pullen LLP
New York, New York
January 13, 1997
<PAGE>
CENTURA FUNDS, INC.
Distribution Plan Supplement
Centura Southeast Equity Fund
Class B Shares
___________________, 1997
WHEREAS, Centura Funds, Inc. (the "Company") is an open-end investment
company organized as a Maryland corporation and consists of one or more separate
investment portfolios, as may be established and designated by the Directors
from time to time;
WHEREAS, a separate series of shares of common stock of the Company is
offered to investors with respect to each investment portfolio; and
WHEREAS, each investment portfolio offers one or more classes of shares;
WHEREAS, the Company has adopted a Master Distribution Plan ("Plan")
which provides that it shall pertain to such investment portfolios and classes
of shares as shall be designated from time to time by the Directors of the
Company in any Supplement to the Plan; and
WHEREAS, Centura Southeast Equity Fund (the "Fund") is a separate
investment portfolio of the Company and offers three classes of shares
("Classes"), including the Class B shares covered by this Supplement:
NOW, THEREFORE, the Directors of the Company hereby take the following
actions, subject to the conditions set forth:
1. As provided in paragraph 1 of the Plan, the Company hereby adopts the
Plan on behalf of the Fund and its Class B shares, the terms and conditions of
such Plan being hereby incorporated herein by reference;
2. The terms "Fund" or "Funds" and "Class" or "Classes" as used in the Plan
shall refer to the Fund and its Classes, respectively; and
3. As provided in paragraph 2 of the Plan, reimbursements by the
Fund with respect to Class B shares shall be subject to the
following annual limits: 1.00% of the average daily net assets
attributable to Class B shares, provided that up to 0.25% of
such average daily net assets may be designated out of such
reimbursements as a "service fee," as defined in rules and
policy statements of the National Association of Securities
Dealers.
65570-75.doc
<PAGE>
CENTURA FUNDS, INC.
Distribution Plan Supplement
Centura Southeast Equity Fund
Class A Shares
_______________, 1997
WHEREAS, Centura Funds, Inc. (the "Company") is an open-end investment
company organized as a Maryland corporation and consists of one or more separate
investment portfolios, as may be established and designated by the Director
from time to time;
WHEREAS, a separate series of shares of common stock of the Company is
offered to investors with respect to each investment portfolio; and
WHEREAS, each investment portfolio offers one or more classes of shares;
WHEREAS, the Company has adopted a Master Distribution Plan ("Plan")
which provides that it shall pertain to such investment portfolios and classes
of shares as shall be designated from time to time by the Directors of the
Company in any Supplement to the Plan; and
WHEREAS, Centura Southeast Equity Fund (the "Fund") is a separate
investment portfolio of the Company and offers three classes of shares
("Classes"), including the Class A shares covered by this Supplement:
NOW, THEREFORE, the Directors of the Company hereby take the following
actions, subject to the conditions set forth:
1. As provided in paragraph 1 of the Plan, the Company hereby adopts the
Plan on behalf of the Fund and its Class A shares, the terms and conditions of
such Plan being hereby incorporated herein by reference;
2. The terms "Fund" or "Funds" and "Class" or "Classes" as used in the Plan
shall refer to the Fund and its Classes, respectively; and
3. As provided in paragraph 2 of the Plan, reimbursements by the
Fund shall be subject to the following annual limits: 0.50% of
the average daily net assets attributable to Class A shares,
provided that up to 0.25% of such average daily net assets may
be designated out of such reimbursements as a "service fee,"
as defined in rules and policy statements of the National
Association of Securities Dealers.
65570-75.doc
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<AVERAGE-NET-ASSETS> 7045
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<NAME> CENTURA EQUITY GROWTH FUND CLASS C
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<SHARES-COMMON-STOCK> 10404
<SHARES-COMMON-PRIOR> 9344
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<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 836
<INTEREST-INCOME> 351
<OTHER-INCOME> 0
<EXPENSES-NET> 781
<NET-INVESTMENT-INCOME> 405
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<APPREC-INCREASE-CURRENT> (3230)
<NET-CHANGE-FROM-OPS> 646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 409
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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</TABLE>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 118665
<INVESTMENTS-AT-VALUE> 120232
<RECEIVABLES> 2465
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<PAID-IN-CAPITAL-COMMON> 120916
<SHARES-COMMON-STOCK> 54
<SHARES-COMMON-PRIOR> 53
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (174)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1567
<NET-ASSETS> 122309
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3751
<OTHER-INCOME> 0
<EXPENSES-NET> 323
<NET-INVESTMENT-INCOME> 3428
<REALIZED-GAINS-CURRENT> (450)
<APPREC-INCREASE-CURRENT> 1627
<NET-CHANGE-FROM-OPS> 4605
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6
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<SHARES-REINVESTED> 2
<NET-CHANGE-IN-ASSETS> 122309
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323
<AVERAGE-NET-ASSETS> 549
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.09
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<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 0.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<ARTICLE> 6
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<NUMBER> 022
<NAME> CENTURA FEDERAL SECURITIES INCOME FUND CLASS B
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
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<INVESTMENTS-AT-VALUE> 120232
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<TOTAL-LIABILITIES> 396
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<PAID-IN-CAPITAL-COMMON> 120916
<SHARES-COMMON-STOCK> 20
<SHARES-COMMON-PRIOR> 18
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (174)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1567
<NET-ASSETS> 122309
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3751
<OTHER-INCOME> 0
<EXPENSES-NET> 323
<NET-INVESTMENT-INCOME> 3428
<REALIZED-GAINS-CURRENT> (450)
<APPREC-INCREASE-CURRENT> 1627
<NET-CHANGE-FROM-OPS> 4605
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3
<NUMBER-OF-SHARES-REDEEMED> 1
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 122309
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323
<AVERAGE-NET-ASSETS> 190
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 1.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> CENTURA FEDERAL SECURITIES INCOME FUND CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 118665
<INVESTMENTS-AT-VALUE> 120232
<RECEIVABLES> 2465
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 122705
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 396
<TOTAL-LIABILITIES> 396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120916
<SHARES-COMMON-STOCK> 12030
<SHARES-COMMON-PRIOR> 10970
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (174)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1567
<NET-ASSETS> 122309
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3751
<OTHER-INCOME> 0
<EXPENSES-NET> 323
<NET-INVESTMENT-INCOME> 3428
<REALIZED-GAINS-CURRENT> (450)
<APPREC-INCREASE-CURRENT> 1627
<NET-CHANGE-FROM-OPS> 4605
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3408
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1639
<NUMBER-OF-SHARES-REDEEMED> 793
<SHARES-REINVESTED> 214
<NET-CHANGE-IN-ASSETS> 122309
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 39
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323
<AVERAGE-NET-ASSETS> 114818
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 0.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> CENTURA NORTH CAROLINA TAX FREE BOND FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 39390
<INVESTMENTS-AT-VALUE> 39815
<RECEIVABLES> 1322
<ASSETS-OTHER> 23
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41161
<PAYABLE-FOR-SECURITIES> 1007
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 1185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39402
<SHARES-COMMON-STOCK> 381
<SHARES-COMMON-PRIOR> 391
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 149
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 425
<NET-ASSETS> 39976
<DIVIDEND-INCOME> 1012
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 98
<NET-INVESTMENT-INCOME> 915
<REALIZED-GAINS-CURRENT> (213)
<APPREC-INCREASE-CURRENT> 514
<NET-CHANGE-FROM-OPS> 1216
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 81
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4
<NUMBER-OF-SHARES-REDEEMED> 23
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> (1353)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 166
<AVERAGE-NET-ASSETS> 3824
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 0.07
<PER-SHARE-DIVIDEND> 0.23
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.11
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> CENTURA NORTH CAROLINA TAX FREE BOND FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 39390
<INVESTMENTS-AT-VALUE> 39815
<RECEIVABLES> 1322
<ASSETS-OTHER> 23
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41161
<PAYABLE-FOR-SECURITIES> 1007
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 1185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39402
<SHARES-COMMON-STOCK> 42
<SHARES-COMMON-PRIOR> 39
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 149
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 425
<NET-ASSETS> 39976
<DIVIDEND-INCOME> 1012
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 98
<NET-INVESTMENT-INCOME> 915
<REALIZED-GAINS-CURRENT> (213)
<APPREC-INCREASE-CURRENT> 514
<NET-CHANGE-FROM-OPS> 1216
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (1353)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 166
<AVERAGE-NET-ASSETS> 409
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> 0.20
<PER-SHARE-GAIN-APPREC> 0.07
<PER-SHARE-DIVIDEND> 0.20
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.11
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> CENTURA NORTH CAROLINA TAX FREE BOND FUND CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 39390
<INVESTMENTS-AT-VALUE> 39815
<RECEIVABLES> 1322
<ASSETS-OTHER> 23
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 41161
<PAYABLE-FOR-SECURITIES> 1007
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 178
<TOTAL-LIABILITIES> 1185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39402
<SHARES-COMMON-STOCK> 3530
<SHARES-COMMON-PRIOR> 3688
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 149
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 425
<NET-ASSETS> 39976
<DIVIDEND-INCOME> 1012
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 98
<NET-INVESTMENT-INCOME> 915
<REALIZED-GAINS-CURRENT> (213)
<APPREC-INCREASE-CURRENT> 514
<NET-CHANGE-FROM-OPS> 1216
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 826
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 221
<NUMBER-OF-SHARES-REDEEMED> 381
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> (1353)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 362
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 166
<AVERAGE-NET-ASSETS> 36745
<PER-SHARE-NAV-BEGIN> 10.04
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 0.07
<PER-SHARE-DIVIDEND> 0.24
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.11
<EXPENSE-RATIO> 0.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> CENTURA EQUITY INCOME FUND CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 42172
<INVESTMENTS-AT-VALUE> 51398
<RECEIVABLES> 254
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51652
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 444
<TOTAL-LIABILITIES> 444
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50289
<SHARES-COMMON-STOCK> 9
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 817
<NET-ASSETS> 51209
<DIVIDEND-INCOME> 27
<INTEREST-INCOME> 97
<OTHER-INCOME> 0
<EXPENSES-NET> 31
<NET-INVESTMENT-INCOME> 93
<REALIZED-GAINS-CURRENT> 102
<APPREC-INCREASE-CURRENT> 899
<NET-CHANGE-FROM-OPS> 1002
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 51208
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48
<AVERAGE-NET-ASSETS> 59
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.21
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> CENTURA EQUITY INCOME FUND CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 42172
<INVESTMENTS-AT-VALUE> 51398
<RECEIVABLES> 254
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51652
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 444
<TOTAL-LIABILITIES> 444
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50289
<SHARES-COMMON-STOCK> 2
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 817
<NET-ASSETS> 51209
<DIVIDEND-INCOME> 27
<INTEREST-INCOME> 97
<OTHER-INCOME> 0
<EXPENSES-NET> 31
<NET-INVESTMENT-INCOME> 93
<REALIZED-GAINS-CURRENT> 102
<APPREC-INCREASE-CURRENT> 899
<NET-CHANGE-FROM-OPS> 1002
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 51208
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48
<AVERAGE-NET-ASSETS> 20
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.21
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 043
<NAME> CENTURA EQUITY INCOME FUND CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 42172
<INVESTMENTS-AT-VALUE> 51398
<RECEIVABLES> 254
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51652
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 444
<TOTAL-LIABILITIES> 444
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50289
<SHARES-COMMON-STOCK> 5007
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 103
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 817
<NET-ASSETS> 51209
<DIVIDEND-INCOME> 27
<INTEREST-INCOME> 97
<OTHER-INCOME> 0
<EXPENSES-NET> 31
<NET-INVESTMENT-INCOME> 93
<REALIZED-GAINS-CURRENT> 102
<APPREC-INCREASE-CURRENT> 899
<NET-CHANGE-FROM-OPS> 1002
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 92
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5003
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 4098
<NET-CHANGE-IN-ASSETS> 51208
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48
<AVERAGE-NET-ASSETS> 50631
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.21
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
