CENTURA EQUITY INCOME FUND
a series of
Centura Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
Dear Shareholder:
At the recommendation of Centura Bank ("Adviser"), the investment adviser
to Centura Funds, Inc. ("Company"), the Company's Board of Directors has
approved a change to the investment objective of Centura Equity Income Fund
("Fund") and a change in the Fund's name. The changes are subject to approval by
the Fund's shareholders of the new investment objective.
The Fund's current investment objective is to provide long-term capital
appreciation and income. It pursues this objective by investing primarily in
dividend-paying stocks and convertible securities, and particularly seeks out
stocks of established companies with above-average dividend yields and/or
prospects for increasing dividends. The proposed new investment objective would
be to provide long-term capital appreciation. With this new objective, the Fund
would invest primarily in equity securities of large companies those with market
capitalization in excess of $1 billion. The Adviser would seek out investments
it believes are undervalued by the securities markets. The Fund would no longer
specifically seek to produce income as part of its investment objective and thus
would not specifically select portfolio securities based on their
dividend-paying record. An issuer's dividend-paying record would, however,
remain a factor that may be considered by the Adviser.
If shareholders approve this change, the Fund's name would be changed to
Centura Large Cap Equity Fund.
The proposed change is part of a general repositioning of the Centura
funds to offer investors a selection of investment options that will permit them
to allocate their investments among a range of asset classes that the Adviser
believes can offer enhanced diversification. When this process is fully
implemented, the Centura funds will represent a broader, more clearly defined
range of asset classes. Centura Money Market Fund was recently organized as part
of this process. If the proposed changes to the Fund are adopted, the Fund will
represent the "large-cap" asset class. Proposed changes to Centura Equity Growth
Fund (which do not require shareholder approval) would refocus that fund to
reflect the "mid cap" asset class, with investments primarily in medium-sized
companies.
What do these changes mean to current shareholders?
If the new investment objective and policies are implemented, the Fund's
income dividends are likely to be lower, although the Fund will still pay income
dividends monthly to the extent they are generated. The Adviser believes that
opportunities for capital appreciation will, however, be enhanced by the new
objective. Further, gains from capital appreciation may provide greater tax
efficiency over the long term than income generated from dividends.
If the proposed new investment objective is approved by shareholders, the
Adviser anticipates that it will make certain changes to the Fund's portfolio.
The Adviser will seek securities that it believes are more representative of the
large cap asset class, in terms of prevailing market conditions, than the Fund's
current holdings. This process is likely to increase temporarily the Fund's
portfolio turnover rate. It is anticipated that this portfolio repositioning
will take place over a period of 12 to 18 months in order to better manage tax
consequences to shareholders.
YOUR VOTE IS IMPORTANT
We urge you to read the enclosed Proxy Statement and to vote now by completing,
signing and returning the enclosed proxy ballot form in the postage prepaid
envelope that has been provided. If you have any questions, please call
{_______}.
Sincerely,
George R. Landreth
<PAGE>
CENTURA EQUITY INCOME FUND
a series of
Centura Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS to be held at 10:00
a.m., Eastern Time, July 23, 1998
Notice is hereby given that a special meeting ("Meeting") of shareholders
of Centura Equity Income Fund ("Fund"), a series of Centura Funds, Inc.
("Company") will be held at 10:00 a.m., Eastern Time, July 23, 1998 at the
offices of the Company's administrator, BISYS Fund Services, Inc., 3435 Stelzer
Road, Columbus, Ohio 43219, for the following purposes:
1. To approve a change in the investment objective of the Fund. The Fund's
current investment objective is to provide long-term capital appreciation and
income. The proposed new investment objective is to provide long-term capital
appreciation.
2. To transact such other business as may properly come before the Meeting,
including any adjournment thereof.
The Board of Directors of the Company has fixed the close of business of
June 1, 1998 as the record date for determining shareholders entitled to notice
of, and to vote at, the Meeting, including any adjournment thereof.
A complete list of shareholders entitled to vote at the Meeting will be
available for inspection by any Fund shareholder for any purpose relevant to the
Meeting during ordinary business hours after __________, 1998 at BISYS Fund
Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219.
Shareholders may attend the Meeting and vote in person. Shareholders,
regardless of whether they plan to attend in person, are urged to complete, date
and sign the enclosed proxy and return it promptly in the enclosed envelope that
requires no postage if mailed within the United States. The enclosed proxy is
solicited on behalf of the Board of Directors of the Company.
By Order of the Board of Directors
Ellen Stoutamire
Secretary
[Date]
<PAGE>
CENTURA EQUITY INCOME FUND
a series of
Centura Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
PROXY STATEMENT
---------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Centura Funds, Inc. ("Company") from
shareholders all classes of shares of Centura Equity Income Fund ("Fund"), a
series of the Company, for use at a special meeting of shareholders of the Fund
("Meeting") to be held July 23, 1998 at 10:00 a.m. Eastern Time, at 3435 Stelzer
Road, Columbus, Ohio 43219, and at any and all adjournments thereof (each a
special meeting ("Meeting")). The Meeting is being held for the purposes set
forth in the foregoing Notice. The Company' s Annual Report, including audited
financial statements, for its fiscal year ended April 30, 1998 is available upon
request without charge from Centura Funds, Inc., 3435 Stelzer Road, Columbus,
Ohio 43219, or call 1-800-261-FUND (3863). The approximate date of mailing of
this Proxy Statement and the enclosed proxy is June ___, 1998.
Voting
Approval of the proposed change in the Fund's investment objective (the
"Proposal") requires the affirmative vote of (A) 67% or more of the voting
securities of the Fund present at the Meeting, if the holders of more than 50%
of the outstanding voting securities of the Fund are present or represented by
proxy; or (B) more than 50% of the outstanding voting securities of the Fund,
whichever is less.
Shareholders of record of the Fund on June 1, 1998 ("Record Date") are
entitled to vote at the Meeting, and at any adjournment of the Meeting, on the
matters submitted to the Meeting. Shareholders of each class of shares of the
Fund have one vote for each share held in the Fund and a fractional vote for
each fraction of a share held in the Fund, on each matter submitted to the
Meeting. Shareholders of Class A, Class B and Class C will vote in the aggregate
on the Proposal because shareholders of each class are similarly affected by the
Proposal. On the Record Date, the number of shares of each class of the Fund
outstanding were as follows:
Class A Class B Class C Total Shares Outstanding
- ------- ------- ------- ------------------------
123,373.139 183,814.196 5,150,414.411 5,457,601.746
All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is completed,
dated, signed and returned in time to be voted at the Meeting and is not
subsequently revoked. If the proxy is returned properly signed and dated, but no
instructions are given, the shares represented will be voted in favor of the
Proposal. Any proxy may be revoked by the timely submission of a properly
executed subsequent proxy, by a timely written revocation, or by an oral
revocation or vote at the Meeting prior to the finalization of the vote on the
Proposal. Execution and submission of a proxy does not affect a shareholder's
right to attend the Meeting in person. One third of the outstanding shares of
the Fund, represented by proxy or in person and regardless of class, will
constitute a quorum as to matters presented at the Meeting. Due to applicable
legal principles that the Proposal be approved by specified percentages of the
Fund's outstanding shares in order to be adopted, an abstention by a shareholder
from voting, either by proxy or in person at the Meeting, has the same effect as
a negative vote on the Proposal. Shares that are held by a broker-dealer or
other fiduciary as record owner for the account of a beneficial owner will be
counted for purposes of determining the presence of a quorum and as votes on
matters presented if the beneficial owner has executed and timely delivered the
necessary instructions for the record owner to vote the shares, or if the record
owner has, and exercises discretionary voting power. If the record owner does
not have discretionary voting power as to a matter presented, but grants a proxy
for, or votes, such shares, the shares will be counted toward the quorum but
will have the effect of a negative vote as to that matter.
In addition to the solicitation of proxies by use of the mail, proxies may
be solicited by officers of the Company, by officers and employees of the
Adviser or the Company's administrator, BISYS Fund Services ("Administrator")
personally or by telephone or telegraph, without special compensation.
Shareholder Communications Corporation ("SCC") may be retained to assist in
solicitation of proxies.
If SCC is retained, shareholders whose votes have not yet been received
may receive telephone calls from representatives of SCC requesting that they
authorize SCC, by telephonic or electronically transmitted instructions, to
execute proxy cards on their behalf. Telephone authorizations will be recorded
in accordance with the procedures set forth below. The Adviser believes that
these procedures are reasonably designed to ensure that the identity of the
shareholder casting the vote and the voting instructions of the shareholders are
accurately determined. SCC has received an opinion of Maryland counsel that
addresses the validity, under the laws of the State of Maryland, of
authorization given orally to execute a proxy. The opinion given by Maryland
counsel concludes that a Maryland court would find that there is not Maryland
law or public policy against the acceptance of proxies signed by an
orally-authorized agent, provided the agent adheres to the procedures set forth
below.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, social
security or employer identification number, title (if the person giving the
proxy is authorized to act on behalf of an entity, such as a corporation), and
the number of shares owned, and to confirm that the shareholder has received the
Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Company, the SCC representative has the
responsibility to explain the process, read the Proposal and ask for the
shareholders voting instructions on the Proposal. Although he or she is
permitted to answer questions about the process, the SCC representative is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendations set forth in the Proxy Statement. SCC will record the
shareholder's instructions on the card. Within 72 hours, SCC will send the
shareholder a letter or mailgram confirming the shareholder's vote and asking
the shareholder to call SCC immediately if the shareholder's instructions are
not correctly reflected in the confirmation.
All costs of the Meeting, including the expenses of preparing, printing
and distributing this Proxy Statement and the proxy cards, legal expenses, and
solicitation expenses, will be borne by the Fund. Such expenses are expected to
range from $_________ to $_________.
The Board of Directors may seek one or more adjournments of the Meeting to
solicit votes from additional shareholders, if necessary to obtain a quorum for
the Meeting or to obtain the vote required to approve the Proposal. An
adjournment requires approval by either (a) a majority of the shares present at
the Meeting in person or by proxy, whether or not they constitute a quorum, or
(b) any officer present entitled to preside or act as Secretary of the Meeting.
THE PROPOSAL
The Board of Directors has approved, and determined to recommend that
shareholders of the Fund approve, a change in the investment objective and
policies of the Fund. The Fund currently seeks to provide long-term capital
appreciation and income. In pursuing this objective, the Fund invests primarily
in dividend-paying common stocks, convertible preferred stocks, and convertible
bonds, notes and debentures. In accordance with its investment objective, an
important factor in the Adviser's selection of stocks for the Fund is whether
they have above-average dividend yields and/or prospects for increasing
dividends.
It is proposed that the Fund's investment objective be changed so that the
Fund would seek to provide long-term capital appreciation. The additional
objective of income would be discontinued. In pursuing this investment
objective, the Fund would invest in equity securities of large U.S. companies -
i.e., companies that have market capitalization in excess of $1 billion at the
time of purchase by the Fund. The Fund would have an investment policy that at
least 65% of the Fund's assets would be invested in securities of such issuers.
An issuer that satisfied the test at the time its stock was purchased by the
Fund would continue to be included for purposes of the 65% test even if its
capitalization subsequently fell below $1 billion. To reflect these changes, the
name of the Fund would also be changed to Centura Large Cap Equity Fund.
If the proposed changes are adopted, the Adviser will continue to use
fundamental analysis in selecting stocks for the Fund's portfolio and will seek
out stocks it believes are undervalued in the marketplace based on such factors
as price/earnings rations, ratio of stock price to the issuer's inherent asset
value, book value, cash flow or underlying franchise value. The Fund will also
continue to invest primarily in U.S. companies, although, as now, it will have
authority to invest in securities of non-U.S. companies, as well.
The proposed changes are part of a repositioning of the Centura funds to
represent a spectrum of asset classes, of which the Fund will represent the
"large-cap" asset class. One of the other Centura funds, Centura Equity Growth
Fund, will be redefined as a "mid-cap" fund. A new fund, Centura Money Market
Fund, has also recently been organized as part of this process. The Adviser
believes it is desirable to offer investors a range of asset classes among which
they can diversify their investments. It is generally recognized that risk can
be lowered by investing in securities of a number of different issuers. An
investment in each of the Centura funds offers this type of diversification,
because each fund invests in securities of a number of different issuers. The
Adviser believes, however, that additional protection against risk is present
when an investor diversifies his or her investments among a number of different
assets classes, as well. Asset classes for investment can be broadly categorized
as cash, bonds and stocks. The stock and bond asset classes can also be divided
into sub-classes, including, for example, short-term, medium-term and long-term
bonds, and small cap, mid cap and large cap stocks. Additional categories might
distinguish between government and corporate bonds; taxable and tax-exempt
bonds; growth and value stocks; or by various economic sectors, such as
technology, real estate, retail, etc. Securities of non-United States issuers is
another large category which can be broken down by region, by whether the
country is a developed or emerging market, as well as by categories similar to
those used for U.S. issuers (large cap, small cap, growth, value, government,
corporate, etc.). The rationale for offering a range of asset classes as
investment options is that these different classes are likely to be differently
affected by market, economic, political and other developments. Investors
offered a choice of asset classes can then elect to invest in several, in order
to better diversify their risk, or to focus on a particular class they believe
will offer special advantages over a particular time period. The changes planned
for the Centura funds will provide more specific asset class choices for this
type of investment selection.
Although the changes to the Fund are proposed in the context of this
general redefinition of the Centura funds, the Adviser believes current
shareholders of the Fund can be benefited by a more clearly focused objective.
Thus, although the Adviser has the flexibility to invest in stocks that pay
dividends, it will focus primarily on stocks that it believes offer superior
potential for appreciation in value. Although there can be no assurance, the
Adviser anticipates that this objective provides more opportunity for gain over
the long term.
If shareholders approval the Proposal, the Adviser anticipates making a
number of changes to the Fund's portfolio. Although a substantial portion of the
Fund's assets currently consists of securities of issuers with market
capitalization in excess of $1 billion, the criteria for selecting these
securities, which included consideration of dividend payment, was not the same
as those the Adviser will use under the new investment objective. Thus, the
Adviser intends to select securities it believes better represent large
capitalization stocks in light of market conditions prevailing at the time of
investment. As this repositioning is conducted, the Fund's portfolio turnover
rate will temporarily increase, although the rate cannot be accurately estimated
at this time. It is anticipated that this portfolio repositioning will take
place over a period of 12 to 18 months in order to better manage tax
consequences to shareholders. Taxable gains may or may not be realized in
connection with this process, depending on market conditions and other factors.
The proposed change in the Fund's investment objective, as well as the
related changes in the Fund's investment policies and name, were considered by
the Board at a special meeting held May 11, 1998. A majority of the Board
determined to approve the proposed changes and to recommend to shareholders that
they vote FOR the Proposal.
OTHER INFORMATION
Adviser, Distributor and Administrator
The Fund's investment adviser is Centura Bank, located at 131 North Church
Street, Rocky Mount, North Carolina 27802. The Fund's administrator and
distributor is BISYS Fund Services, located at 3435 Stelzer Road, Columbus, Ohio
43219.
Beneficial Ownership of Fund Shares
Following is information regarding beneficial ownership of 5% or more of
each class of shares of the Fund as of May 21, 1998:
NAME AND ADDRESS TOTAL SHARES PERCENT OWNED
---------------- ------------------ -----------------
CLASS A SHARES
- ------------------------
Donaldson Lufkin Jenrette 7,113.676 5.846%
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
CLASS B SHARES
- ------------------------
Donaldson Lufkin Jenrette 16,678.933 9.190%
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
CLASS C SHARES
- ------------------------
Centura Bank 2,696,839.701 52.611%
Cash Account
Attn: Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220
Centura Bank 2,398,044.733 46.782%
Reinvest Account
Attn: Trust Operations
P.O. Box 1220
Rocky Mount, NC 27802-1220
As of May 21, 1998, directors and officers of the Company, as a group,
owned less than 1% of the outstanding shares of the Fund and of any class of the
Fund.
Shareholder Proposals
Shareholders who wish to submit proposals to be included in a Proxy
Statement for any subsequent meeting of shareholders should send the proposals
in writing to: Centura Funds, Inc., 3435 Stelzer Road, Columbus, Ohio 43219
within a reasonable period of time prior to the time proxies are solicited for
that meeting. Timely submission of a proposal does not assure that it will be
included.
Other Business
The Directors are not aware of any matters to be presented at the Meeting
other than the Proposal described in this Proxy Statement. In the event any such
other matters should be brought before the Meeting, each executed proxy will be
deemed to authorize the persons named as proxy in the accompanying form of proxy
to vote on such matters in accordance with their best judgment in the interest
of the Fund and the Company.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF THE PROXY IS MAILED WITHIN THE UNITED STATES.
By Order of the Board of Directors,
Ellen Stoutamire
Secretary
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF CENTURA EQUITY INCOME FUND
a Series of Centura Funds, Inc.
SPECIAL MEETING OF SHAREHOLDERS
JULY, 23 1998 -10:00 A.M. EASTERN TIME
The undersigned hereby revokes all previous proxies for his or her shares and
appoints George R. Landreth and Jeanette Peplowski, and each of them, with the
power of substitution, as Proxies, and hereby authorizes them to vote as
designated below, as effectively as the undersigned could do if personally
present, all the shares of Centura Equity Income Fund ("Fund") held of record by
the undersigned on June 1. 1998, at the Special Meeting of Shareholders, or any
adjournment(s) thereof, to be held at 10:00 a.m. Eastern Time on July 23, 1998
at 3435 Stelzer Road, Columbus, Ohio 43219.
1. Approval of new investment objective for Centura Equity Income Fund
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2 Transaction of such other business as may properly come before the Meeting or
any adjournment(s) thereof.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
(Continued and to be signed on reverse)
<PAGE>
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY IMMEDIATELY
IN THE POSTAGE-PAID ENVELOPE PROVIDED.
This Proxy is solicited on behalf of the Board of Directors, and when properly
executed, will be voted as specified. If no specification is made, the
undersigned's vote, as a shareholder of Centura Equity Income Fund, will be cast
FOR Proposal 1. If any other matters properly come before the meeting of which
the Directors were not aware a reasonable time before the solicitation, the
undersigned hereby authorizes proxy holders to vote in their discretion on such
matters. The undersigned acknowledges receipt of the Notice of Meeting and Proxy
Statement dated __________, 1998.
Please sign exactly as your name or names appear below. When shares are held by
joint tenants, both should sign. If signing as attorney, executor, trustee or in
any other representative capacity, or as a corporate officer, please give full
title. Please date the proxy.
=======================================
Signature
Dated: _______________________, 1998
