UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-09561
Century Capital Management Trust
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(Exact name of registrant as specified in charter)
c/o Century Capital Management, LLC
100 Federal Street, Boston, Massachusetts 02110
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(Address of principal executive offices) (Zip code)
Steven Alfano
Century Capital Management, LLC
100 Federal Street, Boston, Massachusetts 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 482-3060
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Date of fiscal year end: October 31
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Date of reporting period: October 31, 2005
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ITEM 1. Report to Shareholders.
CENTURY CAPITAL MANAGEMENT
Seventy-Seven
Years of Investing
1928 - 2005
Logo: Century
CENTURY
FUNDS
ANNUAL REPORTS
OCTOBER 31, 2005
CENTURY
SHARES
TRUST
AND
CENTURY
SMALL CAP
SELECT FUND
Companies can be evaluated from many perspectives. One measurement that we look
for when investing is excellent management. We expect management to build
shareholder value. We seek businesses capable of delivering 15% return on equity
and growing book value 15% per year compounded over rolling five-year periods.
Logo: Century Funds
AVERAGE ANNUAL TOTAL RETURNS AS OF OCTOBER 31, 2005
CENTURY SHARES TRUST OVERALL 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------
Institutional Shares 11.18% 12.36% 5.26% 11.73%
Morningstar Overall
Rating graphic: graphic: graphic: graphic:
4 stars 3 stars 5 stars 5 stars
For the period ended 10/31/05, Century Shares Trust was rated against 1237, 938,
and 327 Large Blend funds for the 3-, 5- and 10-year periods, respectively.
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CENTURY SMALL CAP
SELECT FUND SINCE
OVERALL 1 YEAR 3 YEARS 5 YEARS INCEPTION
- --------------------------------------------------------------------------------
Investor Shares (02/24/00) 9.87% 19.84% 13.46% 18.94%
Institutional Shares (12/09/99) 10.19% 20.27% 13.80% 18.95%
Morningstar Overall
Rating graphic: graphic: graphic:
5 stars 4 stars 5 stars
The Overall Morningstar Rating for a fund is derived from a weighted average of
the performance figure associated with its 3, 5 and 10-year (if applicable)
Morningstar Rating metrics. For the period ended 04/30/05, Century Small Cap
Select was rated against 573 and 421 Small Cap Growth funds for the 3 and 5-year
periods, respectively.
TRUSTEES AND OFFICERS
Alexander L. Thorndike, Chairman
and Chief Investment Officer
John E. Beard, Trustee
Davis R. Fulkerson, Trustee
Stephen W. Kidder, Trustee
Jerrold Mitchell, Trustee
Michael J. Poulos, Trustee
Jerry S. Rosenbloom, Trustee
David D. Tripple, Trustee
Steven Alfano, Secretary and
Chief Compliance Officer
INVESTMENT ADVISOR
Century Capital Management, LLC
100 Federal Street
Boston, Massachusetts 02110
SHAREHOLDER HOTLINE
800-303-1928
WEBSITE
www.centuryfunds.com
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. Current performance may be lower or higher than the performance
data quoted. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than original cost.
For the most recent month end performance, please call 1-800-321-1928 or visit
the Funds' website at www.centuryfunds.com. Shares held less than 180 days may
be subject to a 1.0% redemption fee.
CENTURY SMALL CAP SELECT FUND INVESTS IN SMALLER COMPANIES WHICH POSE GREATER
RISKS THAN THOSE ASSOCIATED WITH LARGER, MORE ESTABLISHED COMPANIES.
CONCENTRATION OR FOCUS, AS THE CASE MAY BE, IN THE FINANCIAL SERVICES FIELD WILL
SUBJECT THE FUNDS TO THE RISKS ASSOCIATED WITH THAT FIELD (E.G., GOVERNMENT
REGULATION, INTEREST RATES, CLAIMS ACTIVITY, AND EXPOSURE TO NATURAL AND
MAN-MADE DISASTERS) AND MAY RESULT IN GREATER FLUCTUATION IN SHARE VALUE THAN IS
EXPERIENCED IN LESS CONCENTRATED PORTFOLIOS.
For the period ended 10/31/05, Century Small Cap Select Fund's Overall
Morningstar Rating was five stars and Century Shares Trust's Overall Morningstar
Rating was four stars. For each fund with at least a three-year history,
Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted
Return measure that accounts for variation in a fund's monthly performance
(including the effects of sales charges, loads, and redemption fees),placing
more emphasis on downward variations and rewarding consistent performance. The
top 10% of funds in each category receive 5 stars, the next 22.5% receive 4
stars, the next 35% receive 3stars,the next 22.5% receive 2 stars and the bottom
10% receive 1 star.(Each share class is counted as a fraction of one fund within
this scale and rated separately, which may cause slight variations in the
distribution percentages.) The Overall Morningstar Rating for a fund is derived
from a weighted-aver-age of the performance figures associated with its
three-,five- and ten-year Morningstar Rating metrics. The Century Small Cap
Select Fund was rated against 573 and 421 U.S.-domiciled small cap growth funds
over the last three and five years respectively. With respect to these small cap
growth funds, the Century Small Cap Select Fund (both share classes) received a
Morningstar Rating of four stars for the three-year and five stars for the
five-year periods. Century Shares Trust was rated against 1237,938,and 327 U.S.-
domiciled large blend funds over the last 3-,5- and 10-years,respectively.With
respect to these large blend funds, Century Shares Trust received a Morningstar
rating of 3 stars for the 3 year period and five stars for the 5- and 10- year
periods. (C)2005 Morningstar, Inc. All Rights Reserved. The information
contained herein:(1) is proprietary to Morningstar;(2) may not be copied or
distributed; and (3)is not warranted to be accurate, complete or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses
arising from any use of this information. Past performance is no guarantee of
future results.
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus, which includes information
regarding the Funds' risks, objectives, fees and expenses, experience of its
management, and other information. Foreside Fund Services, LLC, Distributor.
DEAR FELLOW SHAREHOLDERS,
This report begins with some overall market commentary, followed by a review of
the Funds' performance and two case study examples of our investment process.
During the year ended October 31, 2005, performance in the U.S. bond and equity
markets mirrored the continued strength in corporate earnings. U.S. Gross
Domestic Product (GDP) has grown above a healthy 3% annual rate for 10
consecutive quarters, contributing meaningfully to the equity markets 10%-15%
forecasted earnings growth for 2005. The resilient consumer continues to be the
financial markets' primary catalyst - perennially underestimated and spending
beyond his/her means. Elsewhere in the economy, businesses ramped up their
capital investment in new R&D and production. The year was remarkable for having
generated strong results despite many negative events including: the London
bombings, Iraq, continued Middle East conflict, catastrophic hurricanes in the
Gulf states, energy prices hitting all-time highs, rising interest rates and
inflationary pressures.
We believe the current economy is in a stable state, with clean balance sheets
and peak profit margins offsetting inflationary concerns and slowing demand. It
will be interesting to see whether investors focus on the pluses of low
unemployment and continued growth in 2006 or the minuses of rising inflation and
slowing economic trends.
HOW DID THE FUNDS DO THIS YEAR?
For the fiscal year ending October 31, 2005, both Funds had positive results.
Century Shares Trust (our larger cap fund) Institutional Shares increased
+11.18%, exceeding the S&P 500 Index return of +8.72%. Century Small Cap Select
Fund's Institutional and Investor shares were up +10.19% and +9.87%,
respectively, lagging the Russell 2000 Index return of +12.08%. Century Shares
Trust finished the year stronger than it started, while the Century Small Cap
Select Fund had a terrific first six months, but its relative outperformance
faded as the equity markets and lower quality stocks rallied through the summer
and fall. We provide additional detail on each Fund's performance on the
following pages.
HOW DOES OUR INVESTMENT PHILOSOPHY CHANGE OVER TIME?
It does not change much. There are four points we emphasize about our
philosophy:
1. We seek consistently profitable businesses with predictable growth
prospects at attractive valuation discounts to their fair market value
- easier said than done.
2. We utilize a research-intensive process, which means we spend a lot of
time learning about our portfolio holdings.
3. We are long-term investors willing to be owners in a business for 3-5
years - a blessing and a curse. A blessing in that our research and
patience may generate attractive returns in the long term. A curse in
that our investments may decline in value or our thesis may change in
the short term.
4. Our buy and sell decisions are decoupled and separate from each other.
We prefer to remain on the sidelines when we cannot find companies
that meet our quality standards.
OUR LONG-TERM FUNDAMENTAL APPROACH LEADS US TO CONTINUALLY REASSESS OUR
INVESTMENTS.
We ask ourselves: Is our thesis still relevant? Are we objective? Are our own
assumptions realistic versus "tilting at windmills?" This may mean that we zig
when the market zags. We plan to stick with our investment process and not allow
the stock market's changing winds to influence how we invest. In general, we
expect the Century Funds to outperform in normal and nervous market conditions
but underperform during periods of strong bullish sentiment.
CENTURY FUNDS
1
WHAT ARE THE NEW DEVELOPMENTS AT CENTURY?
Our organization continues to grow in quality and quantity. Century Small Cap
Select Fund's growth led to our decision to close the Fund to new investors, in
order to protect our ability to maximize returns for you-our existing
shareholders. We believe that our ability to deploy your hard-earned assets
efficiently would be impaired if the Fund continued to grow at its previous
pace. Meanwhile, the Small Cap Fund's success encouraged us to add an Investor
share class to Century Shares Trust. We hope the new share class will help us
lower expenses as Trust assets grow. We are happy to report that the expense
ratios for both funds declined for the third consecutive year.
At the board level, Ernest E. Monrad retired as a Trustee after 29 years of
exemplary stewardship; we will miss his thoughtful insight. He provided wise
counsel to many of us over the years, and his various contributions to the board
and our shareholders were extremely valuable. We are pleased to welcome Stephen
W. Kidder as a Century Funds Trustee. He brings over 25 years of legal and
business expertise in government, corporate and philanthropic oversight to the
board.
On the investment team, we are excited to report the addition of Edward Moore,
CFA, an experienced equity analyst in technology, and Christine Cauley, a
portfolio accountant and assistant trader, to the Century team. We continue to
seek out candidates with relevant expertise, experience, curiosity, humility and
a sense of humor.
WHY ARE OUR INVESTMENT PRINCIPLES IMPORTANT? (SEE PAGE 3)
The simple answer is our belief that Century's culture, values and investment
philosophy are key components in seeking exceptional risk-adjusted performance
over time. Safeguarding and growing your assets requires a consistent investment
philosophy, disciplined research and patience. Patience is underrated. It is
needed when an analyst's counter-consensus thesis needs time to prove itself and
become the market consensus over the course of several months or years.
Our principles act as a compass to help guide us through the investment process
and find a company's "true North" valuation. We believe that these core values
should guide our work ethic and the companies in which we invest. Our Funds are
long-term oriented, and we view ourselves as long-term investors. We judge our
performance over 5-year periods and hope that you share our investment horizon.
We are optimistic about the outlook for your Funds over the next year (please
see the portfolio growth and valuation table on pages 5 & 7). We also hope you
find the Annual Report informative and helpful in understanding your investment
and how we hope to build on it over time. We appreciate your support and hope to
earn your trust again during the next year.
Sincerely,
/s/ Alexander L. Thorndike
Alexander L. Thorndike
Chairman of the Trustees
CENTURY FUNDS
2
CENTURY FUNDS INVESTMENT PRINCIPLES
Goals:
> We strive to deliver exceptional risk-adjusted performance over
time
> We seek to develop long-term relationships with our shareholders
and clients
> We aim to be an ethical leader in the investment industry
Objectives:
o Performance is our primary goal
- We pursue a research-intensive process, resulting in a
disciplined investment strategy
o Hire the best people
- We seek curious individuals who challenge consensus, thrive
on adversity and possess a competitive spirit
- We value a sense of humor and humility
o Continuous improvement is a high priority
o Maintain a culture of teamwork and mutual respect
Core Values: Create a culture of excellence and integrity
o Think long term ... always do the "right" thing
o Remember why people entrust us with their money
o Value our independence, entrepreneurial spirit and flexibility
o Learn from our weaknesses
o Encourage innovation and creativity
o Leverage our talent, resources and contacts
o Reward excellence
Investment Philosophy: Growth Investors in Value Industries
We believe:
o Capital markets are semi-efficient
o In-depth original research is a competitive advantage
o Reassessing each investment's risks and rewards will benefit
performance
We seek:
o Credible, capable management with a history of success
o Franchises with high recurring revenues, barriers to entry and
improving fundamentals
o Firms with expanding profit margins and ROE's
o Companies growing consistently faster than the overall market and
peers
o Attractively valued stocks relative to the overall market and
peers
o Firms operating in favorable competitive environments
o Companies with shareholder orientation and transparent accounting
CENTURY FUNDS
3
THE YEAR IN REVIEW
Over the past fiscal year ending October 31, 2005, the S&P 500 and Russell 2000
indices generated total returns of +8.72% and +12.08%, respectively. Equities
are enjoying three consecutive years of positive returns as the economy
continues to grow, corporate profits stay strong and job creation remains
robust. Energy was the year's overriding investment theme, and energy-related
stocks outperformed all other industry groups.
During the past year, the stock market started off fast, but lost strength owing
to economic and energy concerns, only to rebound strongly through the fall.
Hurricanes in the Gulf of Mexico damaged much of the regional economy, and oil
traded up to $70 per barrel before easing recently. Higher commodity and energy
costs acted as a drag on the economy, but inflation should remain below 4% for
this year. Corporate earnings growth is one of the main drivers of stock market
performance, and 2005 earnings projections are 14% for the large cap S&P 500
Index and 11% for the small cap Russell 2000 Index. These estimates are above
the 6.5% long-term average earnings-per-share growth rate, but slower growth
than the last three years.
MARKET OUTLOOK
The economy is composed of three segments: consumers, businesses and government
spending. Consumer spending remains the most important segment of the economy
and now accounts for over 70% of the U.S. GDP. This percentage is up from 67% a
decade ago and 50%-60% of GDP in other developed nations. The resilience of the
American consumer continues to defy market skeptics who fear that rising energy
costs, inflation and a drop in housing prices will lead consumers to stop
spending. Now that energy prices are slowly receding, the outlook for the
consumer is cautiously optimistic but fragile as we head into 2006.
We estimate business spending and capital expenditures at 10-12% of U.S. GDP.
Corporate America is probably in its strongest position in the last forty years,
with little debt on their balance sheets, high profit margins and attractive
returns on equity (ROEs). Government spending accounts for 18-20% of U.S. GDP
and is likely to continue growing in the wake of recent hurricanes and the
rebuilding of the Gulf States, at the expense of the rising federal budget
deficit.
THE ECONOMY ENTERS MIDDLE AGE
We define the current investment climate as entering middle age - stable,
vibrant but slowing. The domestic economy continues to grow and productivity
remains strong. However, corporate earnings are expected to deliver an estimated
8% growth in 2006 - slower growth than the last three years but still healthy.
Risks to a moderately improving economy include: geopolitical unrest and
military involvement in the Middle East, rising interest rates, housing bubble,
inflation, the federal budget deficit and the declining dollar.
We believe the outlook for equities remains favorable over both near-term and
long-term horizons. The quality of earnings, balance sheets and cash flows
continue to improve:
Profitability: corporate profit margins and balance sheets are at stronger
levels than previous cycles.
Growth: Earnings growth rates for large cap stocks (represented by the
S&P 500 Index) and small cap stocks (represented by the Russell
2000 Index) are projected to be about 8% in 2006.
Valuation: Valuations seem fair and reasonable given the level of interest
rates and projected earnings growth. Today, we believe that
lower quality companies appear expensive.
Looking forward, we caution you that we spend more time researching the
long-term outlook of our portfolio companies than on anticipating the short-term
swings in the economy. World affairs and global cycles certainly impact markets,
but in-depth research on individual stocks is where we believe we add the most
value.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
This is the 78th annual report of Century Shares Trust and the 6th annual report
for Century Small Cap Select Fund. Both Funds have continued their positive
performance during the last year and over longer periods of time. We begin this
report with 1) a review of Century Shares Trust, 2) a review of Century Small
Cap Select Fund, followed by 3) our reflections on two examples of our recent
investment purchases.
CENTURY SHARES TRUST
PERFORMANCE
The Trust delivered an 11.18% return for the fiscal year ended October 31, 2005.
This compares with an 8.72% return for the S&P 500 Index. The chart below shows
that the Trust has outperformed its benchmark over the 5 and 10 year time
periods as well. We are pleased to report the Trust's expense ratio dropped for
the third consecutive year.
Bar Chart:
Performance Comparison
Average Annual Total Returns 10/31/05
Century Shares Trust
Institutional Shares S&P 500(R) Index
1 Year 11.18% 8.72%
3 Years 12.36% 12.85%
5 Years 5.26% -1.74%
10 Years 11.73% 9.34%
Performance data quoted represents past performance and is no guarantee of
future results. Current performance may be lower or higher than the performance
data quoted. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than original cost.
For the most recent month-end performance, please call 1-800-321-1928 or visit
the Fund's website. Shares held less than 180 days may be subject to a 1.0%
redemption fee.
CENTURY FUNDS
4
Over the last year, the Trust's best performers were in the health care and
financial services sectors, with UnitedHealth Group, Inc., Chubb Corp, Caremark
Rx, Inc. and Wellpoint, Inc. leading the way. Company-specific issues related to
new products or facing regulatory scrutiny hurt the Trust's worst performers,
including RenaissanceRe Holdings Ltd., Wal-Mart Inc., Pfizer, Inc. and CDW Corp.
While the leaders and laggards have significant competitive advantages, their
performance divergence is due to the different stages of each company's current
growth cycle. Each of the four winners faced significant growth challenges in
the recent past. Today, the underperformers face similar concerns as they
reinvest in their future growth. We sold Wal-Mart, Inc. and Pfizer, Inc. because
their turnarounds may take longer than we initially expected.
We sold several stocks that appreciated to our price targets during the year,
such as Assurant, Inc. (life/health insurer), ADP, Inc. (payroll processing),
Citrix Systems, Inc. (software), General Dynamics Corp. (manufacturing) and
Varian Medical Systems, Inc. (medical equipment). We also sold a few positions
where the company's fundamentals changed, such as Citigroup, Inc. (diversified
financials), Family Dollar Stores, Inc. (discount retailer), Marsh & McLennan
Cos., Inc. (insurance and asset management) and McKesson Corp. (health
distribution and IT services).
Pie Chart:
Century Shares Trust
Fund Composition 10/31/05*
HEALTH CARE 19%
CONSUMER DISCRETIONARY 11%
TECHNOLOGY 8%
CASH EQUIVALENTS 6%
CONSUMER STAPLES 4%
PRODUCER DURABLES 4%
FINANCIAL SERVICES 48%
*Based on the Trust's net assets at 10/31/05
The Trust's segment composition did not change materially over the last year,
with consumer, financials, health care and technology making up the majority of
our core holdings. These industries also exhibit the attributes we look for in
our companies, such as 15% compounded growth in book value and return on equity
(ROE) greater than 15%. Examples of new portfolio holdings include Cisco
Systems, Inc. (networking technology), Costco Wholesale Corp. (warehouse
retailer), Millipore Corp. (life sciences and filtration) and PepsiCo, Inc.
(food and beverage).
Attractive Valuation Potential
CENTURY
SHARES S&P
TRUST 500
Calendar year 2006 P/E ratio 14.4x 17.7x
Long term estimated growth rate 13.0% 12.0%
----- -----
PEG ratio (P/E to long term growth rate) 1.11 1.48
P/E PREMIUM TO GROWTH RATE 11% 48%
Source: Baseline
As we look at the Trust portfolio, we see attractive growth and valuation
metrics. In terms of the Trust portfolio, the estimated long-term earnings
growth rate for portfolio holdings is 13% compared to 12% for the S&P 500 index.
The 2006 price-to-earnings ratios for the Trust and the S&P 500 are 14.4 times
and 17.7 times, respectively. These last two ratios can be combined to create
the P/E-to-growth ratio (PEG ratio), which stands at 1.11 times for the Trust
and 1.48 times for the S&P 500.
In effect, we can translate this PEG ratio to mean that the Trust is trading at
a modest premium of 11% to its underlying growth rate while the S&P 500 is
trading at a 48% premium to its expected growth rate. In other words, the
Trust's portfolio is trading at a lower valuation than its benchmark, while
growing earnings faster than the comparable universe of equities. It is
important to note that portfolio holdings and earnings forecasts may change over
time.
In summary, we view Century Shares Trust's portfolio as well positioned to
deliver consistent earnings during a slowing economy.
CENTURY FUNDS
5
CENTURY SMALL CAP SELECT FUND
PERFORMANCE
The Fund delivered positive returns for the fiscal year ended October 31, 2005.
The Institutional Shares and the Investor Shares gained +10.19% and +9.87%,
respectively, versus a +12.08% return for the Russell 2000 Index. Although the
Fund finished in positive territory for the sixth consecutive fiscal year, we
were disappointed to lag the broad Russell 2000 Index for the year. It was
especially disappointing since we were significantly ahead of the Index at our
midyear semi-annual report. We are pleased to report that the Fund's expense
ratio dropped for the third consecutive year.
The chart below shows that the Fund has outperformed its benchmark over the last
five years and since inception. Recent performance lagged mostly due to sector
exposure rather than individual stock issues. We were underrepresented in three
key sectors - energy, technology and utilities where we did not find enough
firms meeting our investment criteria. We were also overweighted in cash in the
second half of the year due to unusually large cash inflows. We were able to
reduce cash to normal levels by the end of the year.
Performance Comparison
Average Annual Total Returns 10/31/05
Bar Chart:
Performance Comparison
Average Annual Total Returns 10/31/05
CSCS INST. SHARES RUSSELL 2000(R) INDEX
1 Year 10.19% 12.08%
3 Years 20.27% 21.54%
5 Years 13.80% 6.75%
10 Years 18.95% 7.11%
Institutional Inception Date (12/9/99) used for Russell 2000 Index.
Performance data quoted represents past performance and is no guarantee of
future results. Current performance may be lower or higher than the performance
data quoted. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than original cost.
For the most recent month end performance, please call 1-800-321-1928 or visit
the Fund's website. Shares held less than 180 days may be subject to a 1.0%
redemption fee.
Over the last year, the Fund's best performers included Providence Services
Corp. (social services), Foundation Coal Holdings, Inc. (energy), Advent
Software, Inc. (financial systems) and Ixia (IT software services). The Fund's
worst performers included Able Laboratories, Inc. (generic pharmaceutical),
Arbinet-thexchange, Inc. (telecom services) and American Italian Pasta Co.
(consumer foods). Managers do not like to talk about their losers, but we learn
more from our mistakes than our successes. Able Laboratories deserves additional
commentary. We spent considerable time visiting Able's facilities and management
last spring, only to learn in May that the CEO resigned suddenly when news that
the FDA was investigating the company for quality control issues became public.
Although we hope that our intensive research will uncover potential issues
before we invest, it is not always possible to do so.
During the year, we reduced our weightings in health care and redeployed these
assets into technology companies, which are positioned to perform well in 2006
as capital expenditures increase. We sold several stocks that appreciated beyond
our price targets, such as Beacon Roofing Supply, Inc. (homebuilding supplies),
Diodes Inc. (electronic manufacturing), Gildan Activewear Inc. (leisure
clothing), Magnum Hunter Resources (natural gas) and Sunrise Senior Living Inc.
(senior care). We also sold a few positions where the company's fundamentals
changed, such as Apria Healthcare Group, Inc. (home care), Greenfield Online
Inc. (online market research) and Rogers Corp. (electronic components).
PIE CHART:
TECHNOLOGY 16%
HEALTH CARE 15%
CASH EQUIVALENTS 6%
OTHER ENERGY 5%
MATERIALS & PROCESSING 4%
PRODUCER DURABLES 4%
CONSUMER STAPLES 2%
OTHER 1%
FINANCIAL SERVICES 25%
CONSUMER DISCRETIONARY 22%
*Based on the Fund's net assets at 10/31/05
The majority of the Fund's holdings remains focused on consumer, financial,
health care and technology firms. These industries also exhibit the attributes
we look for in our companies, such as 15% compounded growth in book value and
return on equity (ROE) greater than 15%. Examples of new portfolio holdings
include CapitalSource, Inc. (specialty lending), Computer Programs and Systems,
Inc. (health care IT), Guitar Center, Inc. (music instrument retailer),
Haemonetics Corp. (blood products) and Labor Ready, Inc. (temporary employment).
In summary, we believe the Century Small Cap Select Fund's growth prospects are
attractive and the current valuation compelling (see the accompanying table.)
CENTURY FUNDS
6
Attractive Valuation Potential
CENTURY RUSSELL
SMALL 2000
CAP SELECT INDEX
Calendar year 2006 P/E ratio 15.5x 22.5x
Long term estimated growth rate 17.0% 16.0%
----- -----
PEG ratio (P/E to long term
growth rate) 0.91 1.41
P/E PREMIUM (DISCOUNT) TO GROWTH RATES (9%) +41%
Source: Baseline
In terms of the Century Small Cap Select Fund, the estimated long-term earnings
growth rate is 17% compared to 16% for the Russell 2000 index. The 2006
price-to-earnings ratios for the Small Cap Fund and the Russell 2000 are 15.5
times and 22.5 times, respectively. The P/E-to-growth ratio (PEG ratio) stands
at 0.91 for the Small Cap Fund and 1.41 for the Russell 2000. In effect, the
Small Cap Fund is trading at a modest discount of 9% to its underlying growth
rate while the Russell 2000 is trading at a 41% premium to its expected growth
rate. In other words, the Small Cap Fund's portfolio is trading at a lower
valuation than its benchmark, while growing earnings faster than the comparable
universe of equities.
KNOWLEDGE, OPINION & CONVICTION
We base our investment decision on three factors: knowledge, opinion and
conviction. Knowledge relates to the understanding of a company's operations,
its industry and sector. Opinions are formulated from the knowledge we learn.
And finally, our conviction level is based on a combination of knowledge and
opinion. It is derived from our understanding of a business along with the
industry in which it operates.
When we begin to build our knowledge base on a company, we focus on four key
characteristics: Profitability, Growth, Valuation and Intangibles. We place a
premium on the quality and consistency of a company's profitability before
assessing its growth prospects. Does the firm have a defensible franchise? Does
its capital structure seek to maximize shareholder returns over the long term?
We believe few executives are adept at managing capital efficiently; however,
the best management teams think about capital management every day.
In terms of growth, we prefer industries growing faster than GDP and companies
that grow organically, rather than through acquisitions. Once we are comfortable
with a company's profitability and growth prospects, we assess the intangible
factors such as the quality and depth of the management team as well as the
flexibility of the business model. Valuation of entry and exit are usually
determined by absolute, historic and relative comparisons to peers and the
overall market. We typically sell stocks for three reasons: (1) they reach our
price targets, (2) fundamentals deteriorate or (3) an unforeseen event occurs
(i.e. the CEO resigns unexpectedly).
Century Investment Criteria
PROFITABILITY GROWTH
- ROE-oriented - Attractive industry growth
- Leading market share - New products & markets
- Proprietary advantage - Gaining market share
- Low-cost structure - Organic vs. acquisition
- Operating leverage - Book value growth
- Low capital intensity - Perceived value to buyers
VALUATION INTANGIBLES
- Low relative to: - Management quality & focus
o Peers - Balance sheet strength
o Market - Flexible business model
o History - Predictability of business
- Free Cash Flow Yield - Capital management
There is a delicate balance between the science of fundamentally researching a
company (financial statements, shifting market trends and our industry contacts)
and the intuitive art of reading the body language or hesitation in how
management answers a question about a mature product or new strategy. We invest
significant time and resources visiting companies, competitors, suppliers and
buyers to gain a better understanding of each company we investigate. Gauging
management's conviction level for a product or strategy is challenging. However,
the more questions we ask and the more listening we do, the more help we have in
determining the right balance between investment science and art.
CENTURY FUNDS
7
TWO CASE STUDIES
We want to share a couple of case studies of companies that were owned in the
Funds at different stages of their evolution. These examples highlight our
investment criteria and how we leverage our research across two funds with
separate risk/reward and investment mandates.
Tiffany, Inc. is a retailer of luxury goods and possesses many of the attributes
Century looks for in its portfolios, such as a strong management team, return on
equity greater than 15% and a very attractive valuation. In addition, this
iconic company has established its Tiffany blue brand identity as a dominant
worldwide franchise, and its signature color symbolizes quality and exclusivity
- - a valuable and unique competitive strength. After several years of growth,
Tiffany struggled in Japan in late 2003 and 2004, and the stock dropped down to
a level where we were interested in conducting more research. After spending
last fall visiting stores and meeting with management and competitors, we
believe that growth in the core business was intact and management was making
progress in turning around the Japanese division. We initiated a position in
Century Shares Trust in 2004, and we own the stock today as Tiffany continues to
execute on its long-term ability to create shareholder value.
Blackbaud is another example of a strong company that has carved out an
attractive niche in a growing industry. Blackbaud is a small cap software
company, whose products and services enable non-profit organizations to increase
donations, reduce fundraising costs and improve communications with
constituents. In essence, if you sponsor an individual in a fundraising
walk-a-thon and bike-a-thon, you can register and contribute a donation via the
Internet using software from Blackbaud or a competitor. This software greatly
improves a client's productivity. During our due diligence, we met with senior
and junior management several times, visited their headquarters, visited a
competitor's headquarters and spoke with customers of both companies. The
company: (1) is the market leader in a fragmented industry, (2) has a high
percentage of recurring revenue and (3) is generating a return on equity over
26%. Blackbaud is four times larger than its next largest competitor and renews
94% of its customers each year, producing relatively stable, consistent
operating results. The company business model enables it to generate significant
positive free cash flow, which it efficiently deploys toward stock repurchases,
dividends or opportunistic acquisitions. We initiated a position in Century
Small Cap Select Fund and continue to own the stock today. As a result of price
appreciation, we have trimmed our holdings in Blackbaud.
SUMMARY
Given the ups and downs of the past five years, it is important to maintain a
long-term time horizon and remember that timing the market is extremely
difficult. We are committed to helping you preserve and grow the assets you have
entrusted to us.
We thank you for your continued support and wish you and your family a Happy New
Year from all of us at Century Funds. Please visit our website
(www.centuryfunds.com) for updates on the Funds, and we always welcome your
questions, comments and feedback by phone or mail.
Respectfully submitted,
/s/ Alexander L. Thorndike /s/ Kevin W. Callahan, CFA
Alexander L. Thorndike Kevin W. Callahan, CFA
Chairman and Director of Research
Chief Investment Officer
The views expressed in this report reflect those of the portfolio managers as of
the end of the period covered by this report. These views are subject to change
at any time based on market and other conditions and should not be construed as
a recommendation with respect to any security.
CENTURY FUNDS
8
LOGO: CENTURY
SHAREHOLDER EXPENSE EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs
including redemption fees, and (2) ongoing costs, including management fees,
distribution and service fees (in the case of Investor Shares of both Funds) and
other Fund expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare those costs
with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2005 to October 31, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000.00 (for example, an $8,600
account value divided by $1,000.00=8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. An annual
maintenance fee of $10.00 that is charged once a year may apply for certain IRA
accounts. This fee is not included in the table below. If it was, the estimate
of expenses you paid during the period would be higher, and your ending account
value lower, by this amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs such as redemption
fees. Therefore, the second line of the table is useful in comparing ongoing
cost only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transactional costs were included, your
costs would have been higher.
CENTURY SHARES TRUST EXPENSES PAID
DURING PERIOD*
BEGINNING ENDING SIX MONTHS
ACCOUNT VALUE ACCOUNT VALUE ENDING
MAY 1, 2005 (A) OCTOBER 31, 2005 OCTOBER 31, 2005
Based on Actual Fund Return
Institutional Shares $1,000.00 $1,070.30 $5.84
Investor Shares $1,000.00 $1,017.40 $6.10
Based on Hypothetical 5% Yearly Return before expenses
Institutional Shares $1,000.00 $1,019.56 $5.70
Investor Shares $1,000.00 $1,019.16 $6.11
* These calculations are based on expenses incurred in the most recent fiscal
half-year for the Institutional Shares and since inception for the Investor
Shares. The Fund's annual expense ratios are 1.12% for Institutional Shares
and 1.20% for Investor Shares. The dollar amounts shown as "Expenses Paid"
are equal to the annualized expense ratio multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year, then divided by 365.
(a) The Investor Shares commenced operations on July 18, 2005.
CENTURY SMALL CAP SELECT FUND EXPENSES PAID
DURING PERIOD*
BEGINNING ENDING SIX MONTHS
ACCOUNT VALUE ACCOUNT VALUE ENDING
MAY 1, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005
Based on Actual Fund Return
Institutional Shares $1,000.00 $1,043.20 $5.46
Investor Shares $1,000.00 $1,041.50 $6.95
Based on Hypothetical 5% Yearly Return before expenses
Institutional Shares $1,000.00 $1,019.86 $5.40
Investor Shares $1,000.00 $1,018.40 $6.87
* These calculations are based on expenses incurred in the most recent fiscal
half-year. The Fund's annual expense ratios are 1.06% for Institutional
Shares and 1.35% for Investor Shares. The dollar amounts shown as "Expenses
Paid" are equal to the annualized expense ratio multiplied by the average
account value over the period, multiplied by the number of days in the most
recent fiscal half-year, then divided by 365.
CENTURY FUNDS
10
PERFORMANCE OF A $10,000 INVESTMENT
LINE CHART:
CENTURY SHARES TRUST INSTITUTIONAL SHARES AND S&P 500(R) INDEX
CST S&P 500
10/31/95 10000 10000
10/31/96 11868 12410
10/31/97 17062 16394
10/31/98 19183 20000
10/31/99 18732 25134
10/31/00 23467 26665
10/31/01 22677 20024
10/31/02 21380 16999
10/31/03 25012 20535
10/31/04 27277 22470
10/31/05 30326 24429
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The performance graph and
returns table do not reflect the deduction of taxes that a shareholder would pay
on Trust distributions or the redemption of Trust shares.
This chart compares the performance over the past ten years, through October 31,
2005, of a hypothetical $10,000 investment in Century Shares Trust Institutional
Shares, including reinvested dividends and distributions, with that of a
broad-based securities market index. The S&P 500(R) Index is a well known gauge
of how large capitalization U.S. equities are doing. On the other hand, its
results are not adjusted for the costs to manage and trade a portfolio of
securities, so they are not directly comparable to an actual investor's results,
and it is not available for investment. This differs from the Trust's focus on
investments in the financial services and related business services sectors.
TEN LARGEST HOLDINGS
Chubb Corp 5.44%
Specialty commercial and personal insurance.
United Health Group, Inc. 4.70%
Health benefits provider.
American International Group, Inc. 4.67%
Global insurance and financial services.
Berkshire Hathaway, Inc. 4.36%
Financial investment and insurance.
Protective Life Corp. 3.91%
Insurance and investment products.
The Progressive Corp. 3.89%
Personal automobile insurance.
MBIA, Inc. 3.67%
Financial guaranty and credit enhancement.
Torchmark Corp. 3.55%
Life insurance and distribution.
Johnson & Johnson, Inc. 3.12%
Health care and consumer products.
Aflac, Inc. 3.06%
Supplemental health and life insurance.
CENTURY SHARES TRUST
INSTITUTIONAL SHARES
AVERAGE ANNUAL TOTAL RETURNS
AS OF OCTOBER 31, 2005
1 YEAR 11.18%
5 YEARS 5.26%
10 YEARS 11.73%
20 YEARS 12.26%
CENTURY FUNDS
11
PERFORMANCE OF A $10,000 INVESTMENT
The following charts compare the performance through October 31, 2005 of a
hypothetical $10,000 investment in Century Small Cap Select Fund's Institutional
Shares (12/9/99 inception date) and the Fund's Investor Shares (2/24/00
inception date) and the Russell 2000 Index. The Russell 2000(R) Index is widely
regarded in the industry as the premier measure of small cap stocks. On the
other hand, its results are not adjusted for the costs to manage and trade a
portfolio of securities, so that they are not directly comparable to an actual
investors' results. The index is not available for investment.
Line Chart:
CSCS Institutional Russell 2000
Dec-99 10000 10000
Jan-00 10100 10696
Apr-00 11150 10939.7
Jul-00 12390 10839.9
Oct-00 14570 10818.6
Jan-01 15304 11090.6
Apr-01 14862 10627
Jul-01 16024 10654.5
Oct-01 15099 9444.75
Jan-02 16337 10691.5
Apr-02 17592 11336.6
Jul-02 15767 8740.95
Oct-02 15985 8352.01
Jan-03 16309 10691
Apr-03 17376 11337
Jul-03 20482 10761
Oct-03 22980 11973.7
Jan-04 25588 13200
Apr-04 24419 12757
Jul-04 24026 12596
Oct-04 25239 13378
Jan-05 26557 14344
Apr-05 26661 13358
Jul-05 29240 15718
Oct-05 27812 14994
Line Chart:
CSCS Investor Russell 2000
Feb-00 10000 10000
Apr-00 10920 9154
Jul-00 12130 9071.23
Oct-00 14260 9052.66
Jan-01 14977.6 9280
Apr-01 14592.8 8892
Jul-01 15727 8915
Oct-01 14785.2 7903
Jan-02 15990 8946
Apr-02 17208 9486
Jul-02 15412 7314
Oct-02 15574 6989
Jan-03 15871 6990
Apr-03 16902 7517.28
Jul-03 19883 9004
Oct-03 22290 10019
Jan-04 24792 11045
Apr-04 23652 10675
Jul-04 23246 10540
Oct-04 24397 11195
Jan-05 25648 12003
Apr-05 25739 11178
Jul-05 28211 13152
Oct-05 26806 12547
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The performance graph and
returns table do not reflect the deductions for taxes that a shareholder would
pay on Fund distributions or redemption of Fund shares.
TEN LARGEST HOLDINGS
Foundation Coal Holdings, Inc. 3.03%
Producer and processor of coal.
RPM International, Inc. 2.58%
Manufactures and markets specialty coatings.
ScanSource, Inc. 2.11%
Wholesale distributor of specialty technology products.
Choicepoint, Inc. 2.05%
Decision-making intelligence provider.
Scientific Games Corp. 2.05%
Lottery services, systems and products.
Blackbaud, Inc. 1.82%
Non-profit software and related services.
Websense, Inc. 1.75%
Internet management software products.
Jarden Corp. 1.68%
Branded consumer products.
Redwood Trust, Inc. 1.65%
Residential and commercial real estate loans.
Tuesday Morning Corp. 1.61%
Closeout retailer of upscale home items.
CENTURY SMALL CAP
SELECT FUND
AVERAGE ANNUAL TOTAL RETURNS
AS OF OCTOBER 31, 2005
INVESTOR SHARES
1 YEAR 9.87%
5 YEARS 13.46%
SINCE INCEPT. (02/24/00) 18.94%
INSTITUTIONAL SHARES
1 YEAR 10.19%
5 YEARS 13.80%
SINCE INCEPT. (12/09/99) 18.95%
CENTURY FUNDS
12
CENTURY SHARES TRUST
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2005
COMMON STOCK - 93.7%
SHARES VALUE
- ------ -----
CONSUMER DISCRETIONARY - 10.7%
110,320 CDW Corp. $ 6,216,532
73,150 Costco Wholesale Corp. 3,537,534
45,320 Home Depot, Inc. 1,859,933
94,450 Nordstrom, Inc. 3,272,693
302,565 Staples, Inc. 6,877,302
59,200 Target Corp. 3,296,848
180,660 Tiffany & Co. 7,118,004
113,820 TJX Companies, Inc. 2,450,545
------------
34,629,391
------------
CONSUMER STAPLES - 3.7%
54,150 PepsiCo, Inc. 3,199,182
55,350 Proctor & Gamble Co. 3,099,047
67,930 Sysco Corp. 2,167,646
75,370 Walgreen Co. 3,424,059
------------
11,889,934
------------
FINANCIAL SERVICES - 47.6%
207,800 AFLAC, Inc. 9,928,684
181,394 Allstate Corp. 9,575,789
234,016 American International Gr., Inc. 15,164,237
115,000 Aon Corp. 3,892,750
165 Berkshire Hathaway, Inc. CL A * 14,173,500
190,000 The Chubb Corp. 17,664,300
191,257 Cincinnati Financial Corp. 8,137,985
108,430 Gallagher (Arthur J.) & Co. 3,190,011
260,000 J.P. Morgan Chase & Co. 9,521,200
204,750 MBIA, Inc. 11,924,640
8,000 Ohio Casualty Corp. 218,240
109,000 The Progressive Corp. 12,623,290
290,000 Protective Life Corp. 12,713,600
231,100 RenaissanceRe Holdings Ltd. 8,747,135
71,500 SAFECO Corp. 3,982,550
218,300 Torchmark Corp. 11,532,789
87,666 Waddell & Reed Fin'l, Inc. CL A 1,681,434
------------
154,672,134
------------
HEALTH CARE - 19.2%
98,920 Abbott Laboratories 4,258,506
35,270 Beckman Coulter, Inc. 1,737,400
78,350 Biomet, Inc. 2,728,930
23,900 C.R. Bard, Inc. 1,490,882
129,770 Caremark Rx, Inc. * 6,799,948
227,830 Health Management Associates, Inc. 4,877,840
37,610 Henry Schein, Inc. * 1,490,860
161,600 Johnson & Johnson, Inc. 10,119,392
29,050 Medtronic, Inc. 1,645,973
41,860 Millipore Corp. * 2,562,669
263,560 UnitedHealth Group, Inc. 15,257,488
127,440 Wellpoint, Inc. * 9,517,219
------------
62,487,107
------------
SHARES/FACE AMOUNT VALUE
- ------------------ -----
OTHER ENERGY - 0.5%
20,850 Peabody Energy Corp. $ 1,629,636
------------
PRODUCER DURABLES - 4.1%
133,700 Donaldson Co., Inc. 4,178,125
175,860 United Technologies Corp. 9,018,101
------------
13,196,226
------------
TECHNOLOGY - 7.9%
82,308 Check Point Software Tech. Ltd. * 1,840,407
172,800 Cisco Systems, Inc. * 3,015,360
35,450 Intuit, Inc. * 1,628,219
380,540 Microsoft Corp. 9,779,878
56,400 Nokia Corp. 948,648
172,730 Texas Instruments, Inc. 4,931,442
85,400 Zebra Technologies Corp. * 3,681,594
------------
25,825,548
------------
TOTAL INVESTMENT IN COMMON STOCKS - 93.7%
(Identified cost, $130,090,146) 304,329,976
------------
CASH EQUIVALENTS - 5.7%
$18,388,000 State Street Bank and Trust Eurodollar
Time Deposit, at cost approximating
value, maturity 11/01/05, 3.00% 18,388,000
------------
TOTAL INVESTMENTS - 99.4%
(Identified cost, $148,478,146) 322,717,976
------------
OTHER ASSETS AND LIABILITIES - 0.6%
Other Assets in excess of liabilities 2,063,726
------------
NET ASSETS - 100% $324,781,702
============
* Non-income producing security
See notes to financial statements.
CENTURY FUNDS
13
CENTURY SMALL CAP SELECT FUND
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2005
COMMON STOCK - 94.2%
SHARES VALUE
- ------ -----
CONSUMER DISCRETIONARY - 22.1%
464,859 America's Car-Mart, Inc. * $ 7,512,121
1,438,900 Casual Male Retail Group, Inc. * 8,302,453
514,950 The Cato Corp. 10,288,701
482,150 ChoicePoint, Inc. * 20,375,659
184,700 Christopher & Banks Corp. 2,469,439
305,580 DTS, Inc. * 4,950,396
393,680 Fred's, Inc. 5,865,832
695,350 Goody's Family Clothing, Inc. 6,605,825
284,500 Guitar Center, Inc. * 14,825,295
494,625 Jarden Corp. * 16,713,379
871,850 Kforce, Inc. * 9,415,980
430,550 Labor Ready, Inc. * 10,053,342
107,200 P.F. Chang's China Bistro, Inc. * 4,903,328
381,690 Princeton Review, Inc. * 2,152,732
401,045 Providence Service Corp. * 12,380,259
329,490 Ruby Tuesday, Inc. 7,219,126
678,500 Scientific Games Corp. * 20,327,860
163,350 Thomas Nelson, Inc. 3,497,323
125,850 Tiffany & Co. 4,958,490
326,170 Tractor Supply Co. * 15,819,245
667,418 Tuesday Morning Corp. 16,011,358
338,404 USANA Health Sciences, Inc. * 14,896,544
------------
219,544,687
------------
CONSUMER STAPLES - 2.0%
275,050 Anixter International, Inc. * 10,198,854
138,150 Church & Dwight, Inc. 4,842,157
160,100 McCormick & Co., Inc. 4,849,429
------------
19,890,440
------------
FINANCIAL SERVICES - 24.7%
375,650 Advent Software, Inc. * 11,539,968
339,000 Arbor Realty Trust, Inc. 8,936,040
105,180 Bancorp Rhode Island, Inc. 3,786,480
1,255,144 Blackbaud, Inc. 18,074,074
571,850 Bristol West Holdings, Inc. 11,025,268
314,330 Capital Trust, Inc. 9,624,785
706,250 CapitalSource, Inc. * 15,537,500
677,100 Collegiate Funding Services, Inc. * 9,926,286
237,000 Community Bancorp * 7,735,680
543,472 Encore Capital Group, Inc. * 9,342,284
152,110 First Community Bancorp, Inc. 7,654,175
1,009,340 First Niagara Financial Group, Inc. 14,867,578
185,350 Infinity Property and Casualty Corp. 6,898,727
SHARES VALUE
- ------ -----
FINANCIAL SERVICES (CONTINUED)
435,700 Interactive Data Corp. * $ 10,108,240
300,450 IPC Holdings, Ltd. 7,910,848
16,950 James River Group, Inc. * 320,355
305,780 Jones Lang LaSalle, Inc. 15,374,618
436,300 Marlin Business Services Corp. * 10,253,050
307,750 Max Re Capital Ltd. 7,358,303
368,850 McGrath RentCorp. 10,530,667
418,390 Platinum Underwriters Holding, Ltd. 11,919,931
160,150 Protective Life Corp. 7,020,976
128,400 PXRE Group Ltd. 1,386,720
352,330 Redwood Trust, Inc. 16,400,962
130,900 RenaissanceRe Holdings Ltd. 4,954,565
247,350 World Acceptance Corp. * 6,960,429
------------
245,448,509
------------
HEALTH CARE - 15.3%
358,500 Amedisys, Inc. * 13,698,285
364,240 American Healthways, Inc. * 14,773,574
347,200 Centene Corp. * 6,996,080
111,450 Charles River Laboratories Int'l, Inc. * 4,897,748
285,550 Computer Programs & Systems, Inc. 10,536,795
201,000 Covance, Inc. * 9,778,650
218,700 Haemonetics Corp. * 10,596,015
694,450 Healthcare Services Group, Inc. 12,944,548
164,950 Kindred Healthcare, Inc. * 4,618,600
151,650 Medicis Pharmaceutical Corp. 4,473,675
297,923 Merit Medical Systems, Inc. * 3,551,242
119,390 Millipore Corp. * 7,309,056
704,300 PSS World Medical, Inc. * 9,810,899
725,423 Perrigo Co. 9,698,906
156,620 Stericycle, Inc. * 9,015,047
128,350 Surmodics, Inc. * 5,072,392
394,305 United Surgical Partners Int'l, Inc. * 14,135,834
------------
151,907,346
------------
MATERIALS & PROCESSING - 4.3%
324,850 Maverick Tube Corp. * 10,057,356
388,350 Olin Corp. 6,943,698
1,376,530 RPM International, Inc. 25,630,989
------------
42,632,043
------------
OTHER - 1.0%
73,400 iShares Russell 2000 Growth Index 4,822,380
75,650 iShares Russell 2000 Index Fund 4,824,957
------------
9,647,337
------------
See notes to financial statements.
CENTURY FUNDS
14
SHARES VALUE
- ------ -----
OTHER ENERGY - 4.9%
115,500 Berry Petroleum Co. $ 6,913,830
802,350 Foundation Coal Holdings, Inc. 30,088,125
228,050 Houston Exploration Co. * 11,755,978
------------
48,757,933
------------
PRODUCER DURABLES - 4.0%
285,550 Dionex Corp. * 13,829,186
103,600 Donaldson Co., Inc. 3,237,500
811,900 Orbital Sciences Corp. * 9,442,397
324,316 Plantronics, Inc. 9,680,833
163,150 Spectrum Brands, Inc. * 3,377,205
------------
39,567,121
------------
TECHNOLOGY - 15.9%
219,400 Avid Technology, Inc. * 10,801,062
1,061,650 Bell Microproducts, Inc. * 7,314,769
395,270 Benchmark Electronics, Inc. * 11,103,134
302,800 Cognos, Inc. * 11,364,084
198,950 Internet Security Systems, Inc. * 4,900,138
361,400 Inter-Tel, Inc. 6,689,514
837,300 Ixia * 10,566,726
289,350 J2 Global Communications, Inc. * 12,792,164
277,350 Jupitermedia Corp. * 4,714,950
209,000 Mercury Interactive Corp. * 7,271,110
619,374 Online Resources Corp. * 7,432,488
288,180 Open Solutions, Inc. * 6,169,934
369,938 ScanSource, Inc. * 20,953,288
17,920 Ultimate Software Group, Inc. * 304,461
332,350 Webex Communications, Inc. * 7,614,138
293,950 Websense, Inc. * 17,366,566
239,950 Zebra Technologies Corp. * 10,344,245
------------
157,702,771
------------
FACE AMOUNT VALUE
- ----------- -----
TOTAL INVESTMENT IN COMMON STOCKS - 94.2%
(Identified cost, $896,401,028) $ 935,098,187
-------------
CASH EQUIVALENTS - 10.9%
$108,660,000 State Street Bank and Trust Eurodollar
Time Deposit, at cost approximating
value, maturity 11/01/05, 3.00% 108,660,000
-------------
TOTAL INVESTMENTS - 105.1%
(Identified cost, $1,005,061,028) 1,043,758,187
-------------
CASH AND RECEIVABLES LESS LIABILITIES - (5.1%)
Liabilities in excess of other assets (50,987,133)
-------------
NET ASSETS - 100% $ 992,771,054
=============
*Non-income producing security
See notes to financial statements.
CENTURY FUNDS
15
STATEMENT OF ASSETS AND LIABILITIES - OCTOBER 31, 2005
Century Shares Century Small Cap
Trust Select Fund
ASSETS:
Investments, at value (Note 1A) (Identified cost of, $148,478,146 and
$1,005,061,028, respectively) .............................................. $322,717,976 $1,043,758,187
Cash ........................................................................... 983 528
Dividends and interest receivable .............................................. 111,873 377,245
Receivable for investments sold ................................................ 3,985,716 88,310,127
Receivable for Trust/Fund shares sold .......................................... 381,576 2,676,693
Receivable from investment adviser ............................................. 120 --
------------ --------------
Total Assets ............................................................... 327,198,244 1,135,122,780
------------ --------------
LIABILITIES:
Payable for investments purchased .............................................. 1,864,981 140,295,029
Payable for Trust/Fund shares repurchased ...................................... 169,209 1,187,425
Payable to Affiliates:
Investment Advisory fee (Note 4) ............................................... 225,032 784,888
Administration fee (Note 5) ................................................ 40,544 178
Distribution fees (Note 7) ................................................. 244 --
Accrued expenses and other liabilities ......................................... 116,532 84,206
------------ --------------
Total Liabilities .......................................................... 2,416,542 142,351,726
------------ --------------
NET ASSETS ..................................................................... $324,781,702 $992,771,054
============ ============
At October 31, 2005, net assets consisted of:
Capital paid-in ................................................................ $123,762,549 $944,782,170
Accumulated distributions in excess ............................................ (247,377) --
Accumulated undistributed net realized gains on investments .................... 27,026,700 9,291,725
Unrealized appreciation in value of investments ................................ 174,239,830 38,697,159
------------ --------------
Net assets applicable to outstanding capital stock ............................. $324,781,702 $992,771,054
============ ============
Net Assets consist of:
Institutional Shares ....................................................... $323,642,550 $585,723,192
Investor Shares ............................................................ $1,139,152 $407,047,862
Shares Outstanding consist of (Note 2):
Institutional Shares ....................................................... 9,141,326 24,257,759
Investor Shares ............................................................ 32,222 17,056,353
NET ASSET VALUE PER SHARE (Represents both the offering and redemption price*)
Institutional Shares ........................................................... $35.40 $24.15
Investor Shares ............................................................ $35.35 $23.86
* In general, shares of the Trust and Fund may be redeemed at net asset
value. However, upon the redemption of shares held less than 180 days, a
redemption fee of 1% of the current net asset value of the shares may be
assessed and retained by each for the benefit of their respective remaining
shareholders. The redemption fee is accounted for as an addition to
paid-in-capital.
See notes to financial statements.
CENTURY FUNDS
16
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 2005
Century Shares Century Small Cap
Trust Select Fund
Investment Income/(Loss):
Dividends (net of withholding tax of $0 and $8,857, respectively) .......... $4,981,153 $4,599,330
Interest ................................................................... 441,756 2,591,701
----------- -----------
Total income ............................................................ 5,422,909 7,191,031
----------- -----------
Expenses:
Investment adviser fee (Note 4) ............................................ 2,598,656 5,695,233
Administration (Note 5) .................................................... 487,248 77,876
Distribution fee (Note 7) .................................................. 245 414,510
Non-interested trustees' remuneration ...................................... 80,300 79,450
Transfer agent
Institutional Shares .................................................... 182,145 19,775
Investor Shares ......................................................... -- 371,990
Custodian .................................................................. 63,295 138,050
Insurance .................................................................. 40,613 35,350
Professional fees .......................................................... 58,845 91,195
Registration ............................................................... 21,460 56,360
Printing and other ......................................................... 114,400 274,000
----------- -----------
Total expenses .......................................................... 3,647,207 7,253,789
Advisor reimbursement (Note 6) ............................................. (147) --
----------- -----------
Net expenses ............................................................... 3,647,060 7,253,789
----------- -----------
Net investment income/(loss) ............................................... 1,775,849 (62,758)
----------- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain from investment transactions ............................. 27,162,660 11,309,976
Increase in unrealized appreciation on investments ......................... 7,610,424 16,240,663
----------- -----------
Net realized and unrealized gain on investments ............................ 34,773,084 27,550,639
----------- -----------
Net increase in net assets resulting from operations ........................... $36,548,933 $27,487,881
=========== ===========
See notes to financial statements.
CENTURY FUNDS
17
STATEMENT OF CHANGES IN NET ASSETS
Century Small Cap
Century Shares Trust Select Fund
INCREASE (DECREASE) Year Ended Year Ended Year Ended Year Ended
IN NET ASSETS: October 31, 2005 October 31, 2004 October 31, 2005 October 31, 2004
Operations:
Net investment income/(loss) $ 1,775,849 $ 260,433 $ (62,758) $ (1,167,269)
Net realized gain on investment transactions 27,162,660 36,864,445 11,309,976 6,580,251
Change in net unrealized appreciation/(depreciation) 7,610,424 (5,934,258) 16,240,663 8,897,460
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets
resulting from operations 36,548,933 31,190,620 27,487,881 14,310,442
Distributions to shareholders from:
Net Investment Income
Institutional Shares (3,027,966) (3,399,416) -- (2,292,188)
Investor Shares -- -- (4,127,025)
Realized gain from investment transactions
Institutional Shares (35,121,376) (27,153,654) (3,513,749) (463,307)
Investor Shares -- -- (3,922,249) (861,677)
Trust/Fund share transactions - net (36,019,193) 19,063,442 682,027,208 161,980,295
Redemption fees 9,629 12,155 65,647 184,676
------------ ------------ ------------ ------------
Total (decrease)/increase (37,609,973) 19,713,147 702,144,738 168,731,216
Net Assets:
At beginning of period 362,391,675 342,678,528 290,626,316 121,895,100
------------ ------------ ------------ ------------
At end of period $324,781,702 $362,391,675 $992,771,054 $290,626,316
============ ============ ============ ============
Distributions in excess of net investment
income at end of period $ 247,377 $ 247,377 $ -- $ --
============ ============ ============ ============
See notes to financial statements.
CENTURY FUNDS
18
FINANCIAL HIGHLIGHTS
PERIOD ENDED YEAR ENDED
CENTURY SHARES TRUST YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31,
Institutional Shares 2005 2004 2003 2002 (a) 2001 2000
Net Asset Value, beginning of period $ 35.62 $ 35.66 $ 33.95 $ 38.12 $ 42.97 $ 34.32
--------- --------- --------- --------- --------- ---------
Income/(loss) from Investment Operations:
Net investment income (b) 0.19 0.03 0.07 0.08 0.17 0.39
Net realized and unrealized gain/
(loss) on investments 3.54 3.02 5.03 (4.20) (1.26) 12.39
--------- --------- --------- --------- --------- ---------
Total income/(loss) from investment operations 3.73 3.05 5.10 (4.12) (1.09) 12.78
--------- --------- --------- --------- --------- ---------
Less Distributions From:
Net investment income (0.32) (0.34) (0.10) (0.05) (0.17) (0.38)
In excess of net investment income -- -- -- -- -- --
Net realized gain on investment transactions (3.63) (2.75) (3.29) -- (3.60) (3.75)
--------- --------- --------- --------- --------- ---------
Total distributions (3.95) (3.09) (3.39) (0.05) (3.77) (4.13)
--------- --------- --------- --------- --------- ---------
Redemption fees --+ --+ --+ --+ 0.01 --
--------- --------- --------- --------- --------- ---------
Net Asset Value, end of period $ 35.40 $ 35.62 $ 35.66 $ 33.95 $ 38.12 $ 42.97
========= ========= ========= ========= ========= =========
Total Return 11.18% 9.06% 16.99% -10.82%** -2.52% 37.44%
Ratios and supplemental data
Net assets, end of period (000 omitted) $323,643 $362,392 $342,679 $291,311 $345,849 $417,598
Ratio of expenses to average net assets 1.12% 1.15% 1.17% 1.19%* 1.05% 0.83%
Ratio of net investment income to average net assets 0.55% 0.07% 0.21% 0.26%* 0.41% 1.05%
Portfolio Turnover Rate 19% 43% 37% 22% 17% 17%
PERIOD ENDED
CENTURY SHARES TRUST OCTOBER 31,
INVESTOR SHARES 2005 (c)
Net Asset Value, beginning of period $ 35.00
---------
Income from Investment Operations:
Net investment (loss)/income (b) (0.03)
Net realized and unrealized gain on investments 0.29
---------
Total income from investment operations 0.26
---------
Less Distributions From:
Net investment income --
Net realized gain on investment transactions --
---------
Total distributions --
---------
Redemption fees 0.09
---------
Net Asset Value, end of period $ 35.35
=========
Total Return 1.00%**
Ratios and supplemental data
Net assets, end of period (000 omitted) $ 1,139
Ratio of expenses to average net assets 1.20%*
Ratio of expenses to average net assets without
giving effect to voluntary expense agreement 1.35%*
Ratio of net investment (loss)/income to average net assets -0.36%*
Portfolio Turnover Rate 19%
(a) For the period from January 1, 2002 to October 31, 2002. Effective
September 5, 2002, CST changed its fiscal year end from December 31 to
October 31.
(b) Calculated based on average shares outstanding during the period.
(c) From the commencement date of operations, July 18, 2005 to October 31,
2005.
+ Amount represents less than $0.01 per share.
* Annualized
** Not annualized
See notes to financial statements.
CENTURY FUNDS
19
FINANCIAL HIGHLIGHTS (CONTINUED)
CENTURY SMALL CAP SELECT FUND YEAR ENDED OCTOBER 31,
Institutional Shares 2005 2004 2003 2002 2001
Net Asset Value, beginning of period $ 22.46 $ 21.53 $ 15.42 $ 14.68 $ 14.57
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment (loss)/income (a) 0.03 (0.08) (0.09) (0.10) --
Net realized and unrealized gain on investments 2.22 2.14 6.64 0.93 0.52(b)
--------- --------- --------- --------- ---------
Total income from investment operations 2.25 2.06 6.55 0.83 0.52
--------- --------- --------- --------- ---------
Less Distributions From:
Net investment income -- (0.94) (0.11) -- (0.02)
Net realized gain on investment transactions (0.56) (0.19) (0.35) (0.13) (0.41)
--------- --------- --------- --------- ---------
Total distributions (0.56) (1.13) (0.46) (0.13) (0.43)
--------- --------- --------- --------- ---------
Redemption fees --+ --+ 0.02 0.04 0.02
--------- --------- --------- --------- ---------
Net Asset Value, end of period $ 24.15 $ 22.46 $ 21.53 $ 15.42 $ 14.68
========= ========= ========= ========= =========
Total Return 10.19% 9.83% 43.76% 5.87% 3.63%
Ratios and supplemental data
Net assets, end of period (000 omitted) $585,723 $ 140,208 $ 42,936 $ 12,938 $ 6,093
Ratio of expenses to average net assets 1.06% 1.13% 1.26% 1.45% 1.45%
Ratio of expenses to average net assets without
giving effect to voluntary expense agreement 1.06% 1.13% 1.40% 1.87% 4.04%
Ratio of net investment (loss)/income to average net assets 0.13% -0.36% -0.50% -0.70% -0.02%
Portfolio Turnover Rate 96% 103% 88% 123% 48%
CENTURY SMALL CAP SELECT FUND YEAR ENDED OCTOBER 31,
Investor Shares 2005 2004 2003 2002 2001
Net Asset Value, beginning of period $ 22.26 $ 21.39 $ 15.35 $ 14.60 $ 14.26
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment (loss)/income (a) (0.04) (0.15) (0.15) (0.18) (0.03)
Net realized and unrealized gain on investments 2.20 2.12 6.60 0.94 0.53(b)
--------- --------- --------- --------- ---------
Total income from investment operations 2.16 1.97 6.45 0.76 0.50
--------- --------- --------- --------- ---------
Less Distributions From:
Net investment income -- (0.91) (0.07) -- --
Net realized gain on investment transactions (0.56) (0.19) (0.35) (0.03) (0.19)
--------- --------- --------- --------- ---------
Total distributions (0.56) (1.10) (0.42) (0.03) (0.19)
--------- --------- --------- --------- ---------
Redemption fees --+ --+ 0.01 0.02 0.03
--------- --------- --------- --------- ---------
Net Asset Value, end of period $ 23.86 $ 22.26 $ 21.39 $ 15.35 $ 14.60
========= ========= ========= ========= =========
Total Return 9.87% 9.45% 43.12% 5.34% 3.68%
Ratios and supplemental data
Net assets, end of period (000 omitted) $ 407,048 $ 150,418 $ 78,959 $ 10,119 $ 9,302
Ratio of expenses to average net assets 1.35% 1.50% 1.61% 1.80% 1.80%
Ratio of expenses to average net assets without
giving effect to voluntary expense agreement 1.35% 1.50% 1.76% 2.53% 4.38%
Ratio of net investment (loss) to average net assets -0.17% -0.69% -0.86% -1.05% -0.48%
Portfolio Turnover Rate 96% 103% 88% 123% 48%
(a) Calculated based on average shares outstanding during the period.
(b) The per share amount is not in accord with the net realized and unrealized
gain/loss for the period because of the timing of sales of Fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
+ Amount represents less than $0.01 per share.
See notes to financial statements.
CENTURY FUNDS
20
NOTES TO FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES -- Century Capital Management Trust (the
"Master Trust") is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. Century Shares Trust (the
"Trust") and Century Small Cap Select Fund (the "Fund" and together with the
Trust, the "Funds") are diversified series of the Master Trust. The following is
a summary of significant accounting policies consistently followed by both the
Trust and the Fund in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
A. Investment Security Valuations -- Securities listed on national securities
exchanges are valued at closing prices. Unlisted securities or listed securities
for which closing prices are not available generally are valued at the latest
bid prices. Short-term obligations, maturing in 60 days or less, are valued at
amortized cost, which approximates value. In the absence of readily available
market quotes, the Funds' portfolio securities and other assets will be valued
at fair value, as determined in good faith by the Board of Trustees, its
Valuation Committee, or the Adviser or a Delegate pursuant to instructions from
the Board of Trustees or its Valuation Committee.
B. Securities Transactions -- Investment security transactions are recorded on a
trade date basis. Gain or loss on sales is determined on the basis of identified
cost. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Shares issuable to shareholders electing to receive income
dividends and capital gain distributions in shares are recorded on the
ex-dividend date. Interest income is recorded daily on an accrual basis.
C. Use of Estimates -- The preparation of these financial statements in
accordance with accounting principles generally accepted in the United States of
America incorporates estimates made by management in determining the reported
amounts of assets, liabilities, revenues and expenses of the Trust and Fund.
Actual results could differ from those estimates.
D. Risks and Uncertainty -- The Trust focuses its investments in securities
issued by companies in the financial services sector, which will subject the
Trust to risks associated with that sector (e.g., government regulation,
interest rate changes, claims activity, and exposure to property casualty
risks). The Fund concentrates its investments in the financial services and
health care group of industries, which will subject the Fund to the risks
associated with those industries and may result in greater fluctuation in share
value than is experienced in less concentrated portfolios. In addition, the Fund
invests in smaller companies, which generally involves greater risk than
investing in larger, more established companies.
E. Multiple Classes of Shares -- The Funds offers multiple classes of shares,
which differ in their respective distribution and transfer agent fees. Transfer
agent fees for each Fund's class are based on a per shareholder account charge.
All shareholders bear the common expenses of the Funds based upon daily net
assets of each class, without distinction between share classes.
F. Redemption Fees -- In general, shares of the Trust and Fund may be redeemed
at net asset value. However, upon the redemption of shares held less than 180
days, a fee of 1% of the current net asset value of the shares may be assessed
and retained by each for the benefit of their respective remaining shareholders.
The redemption fee is accounted for as an addition to paid-in-capital.
G. Income Tax Information and Distributions to Shareholders -- Each year, each
Fund intends to qualify as a regulated investment company by distributing all of
its taxable income and realized gains under Subchapter M of the Internal Revenue
Code. As a result, no provision for income taxes is required in the accompanying
financial statements. Foreign taxes are provided for based on each fund's
understanding of the tax rules and rates that exist in the foreign markets in
which it invests. Income dividends and capital gain distributions are declared
separately for each class. Distributions are recorded on the ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent and
temporary book and tax differences.
In order to present undistributed (distribution in excess of) net investment
income ("UNII") and accumulated net realized gain ("Accumulated Gain") more
closely to its tax character, the following accounts for each Fund were
increased (decreased):
PAID-IN
CAPITAL UNII ACCUMULATED GAIN
Century Shares Trust $ -- $1,252,117 $(1,252,117)
Century Small Cap Select Fund $ 878,747 $ 62,758 $ (941,505)
These adjustments have no impact on net assets or the results of operations.
Temporary differences will reverse in a subsequent period. These differences are
primarily due to equalization, partnership income, net operating losses and
losses deferred due to wash sales and excise tax regulations.
The tax-basis components of distributable earnings and the federal tax cost as
of period end were as follows:
FOR THE TRUST OCTOBER 31, 2005
- -------------
Ordinay Income ............................................. $ 5,316,481
Long-term capital gains .................................... $ 21,710,219
Unrealized appreciation .................................... $ 175,733,399
Unrealized depreciation .................................... $ 1,493,569
---------------
Unrealized net appreciation ................................ $ 174,239,830
Cost for federal income tax purposes ....................... $ 148,478,146
CENTURY FUNDS
21
The tax character of distributions paid was as follows:
INSTITUTIONAL SHARES OCTOBER 31, 2005
- --------------------
Ordinary Income .............................................. $ 2,888,236
Long-term capital gain ....................................... $ 35,263,112
FOR THE FUND
- ------------
Long-term capital gains ...................................... $ 7,435,998
Unrealized appreciation ...................................... $ 74,600,119
Unrealized depreciation ...................................... $ 37,168,928
---------------
Unrealized net appreciation .................................. $ 37,431,191
Cost for federal income tax purposes ......................... $ 1,006,326,996
The tax character of distributions paid was as follows:
OCTOBER 31, 2005
Ordinary Income
Investor shares .......................................... $ --
Institutional shares ..................................... $ --
Long-term capital gain
Investor shares .......................................... $ 3,922,249
Institutional shares ..................................... $ 3,513,749
(2) TRANSACTIONS IN SHARES
A. TRUST SHARES -- The number of authorized shares is unlimited. Transactions in
Trust shares were as follows:
CENTURY SHARES TRUST
YEAR ENDED OCTOBER 31, 2005
INSTITUTIONAL SHARES INVESTOR SHARES
SHARES AMOUNT SHARES AMOUNT
Sold .................................................. 436,413 $15,013,209 38,232 $1,320,066
Issued to shareholders in reinvestment of
distributions from:
Net investment income ............................ 847,946 28,406,204 -- --
Realized gain on investment transactions ......... 66,835 2,303,047 -- --
---------- ------------ ---------- ------------
1,351,194 45,722,460 38,232 1,320,066
Repurchased ........................................... (2,383,848) (82,852,859) (6,010) (208,860)
---------- ------------ ---------- ------------
Net increase (decrease) ............................... (1,032,654) $(37,130,399) 32,222 $1,111,206
========== ============ ========== ============
YEAR ENDED
OCTOBER 31, 2004
INSTITUTIONAL SHARES
SHARES AMOUNT
Sold .................................................. 1,204,333 $43,119,845
Issued to shareholders in reinvestment of
distributions from:
Net investment income ............................ 75,256 2,566,092
Realized gain on investment transactions ......... 657,481 22,130,823
---------- ------------
1,937,070 67,816,760
Repurchased ........................................... (1,372,661) (48,753,319)
---------- ------------
Net increase .......................................... 564,409 $19,063,441
========== ============
CENTURY FUNDS
22
B. Fund Shares - The number of authorized shares is unlimited. Shares of the
Fund are currently divided into Investor shares and Institutional shares.
Transactions in Fund shares were as follows:
CENTURY SMALL CAP SELECT FUND
YEAR ENDED OCTOBER 31, 2005
INSTITUTIONAL SHARES INVESTOR SHARES
SHARES AMOUNT SHARES AMOUNT
Sold 20,297,470 $493,078,854 12,763,403 $301,872,176
Issued to shareholders in reinvestment of
distributions from:
Net investment income -- -- -- --
Realized gain on investment transactions 148,747 3,354,253 148,925 3,326,988
---------- ------------ ---------- ------------
20,446,217 496,433,107 12,912,328 305,199,164
Repurchased (2,431,059) (57,909,605) (2,612,975) (61,695,458)
---------- ------------ ---------- ------------
Net increase 18,015,158 $438,523,502 10,299,353 $243,503,706
========== ============ ========== ============
YEAR ENDED OCTOBER 31, 2004
INSTITUTIONAL SHARES INVESTOR SHARES
SHARES AMOUNT SHARES AMOUNT
Sold 5,191,629 $113,979,347 5,625,370 $123,936,410
Issued to shareholders in reinvestment of
distributions from:
Net investment income 96,665 2,066,697 174,258 3,702,975
Realized gain on investment transactions 20,693 442,409 36,415 773,818
---------- ------------ ---------- ------------
5,308,987 116,488,453 5,836,043 128,413,203
Repurchased (1,060,514) (23,004,896) (2,771,158) (59,916,466)
---------- ------------ ---------- ------------
Net increase 4,248,473 $ 93,483,557 3,064,885 $ 68,496,737
========== ============ ========== ============
(3) INVESTMENT SECURITY TRANSACTIONS
FOR THE TRUST, other than U.S. Government obligations and certificates of
deposit, purchases and sales of investment securities aggregated $59,687,391 and
$136,066,773, respectively, during the period ended October 31, 2005.
FOR THE FUND, other than U.S.Government obligations and certificates of deposit,
purchases and sales of investment securities aggregated $1,147,651,792 and
$506,058,854, respectively, during the year ended October 31, 2005.
(4) INVESTMENT ADVISER FEE
FOR THE TRUST, the investment adviser fee is earned by Century Capital
Management, LLC ("CCM"), as compensation for providing investment advisory
services to the Trust. CCM receives a monthly fee equal on an annualized basis
to 0.8% of the first $500 million and 0.7% of the amounts exceeding $500 million
of the Trust's net asset value. For the year ended October 31, 2005, the fee
amounted to $2,598,656. Officers and Trustees of the Master Trust who are
employed by CCM receive remuneration for their services out of such investment
adviser fee.
The Trust has guaranteed retirement benefits to be paid to two former Trustees.
Under the terms of the Trust's Investment Advisory and Management Agreement with
CCM, CCM has assumed the obligation to make all such payments on behalf of the
Trust during the term of the agreement. The amount of potential future payments
owed by the Trust cannot be estimated with certainty due to the variability of
amounts used to determine the payment and therefore are not reflected in the
Trust's financial statements. Retirement benefits are payable over various
periods.
FOR THE FUND, the investment adviser fee is earned by CCM as compensation for
providing investment advisory, management and administrative services to the
Fund. CCM receives a monthly fee equal on an annualized basis to 0.95% of the
Fund's net asset value. For the year ended October 31, 2005, the fee amounted to
$5,695,233. Officers and Trustees of the Master Trust who are employed by CCM
receive remuneration for their services out of such investment adviser fee.
(5) ADMINISTRATION FEES -- The Trust has an Administration Agreement with CCM.
Under the agreement CCM shall provide or procure, at its expense, non-investment
advisory services to the Trust. CCMwill receive a monthly fee equal on an
annualized basis to 0.15% of the Trust's net asset value. The fee was $487,248
for the year ended October 31, 2005. Per the Investment Advisory and Management
Services Agreement between CSCS and CCM, the Fund will reimburse CCM for
expenses associated with having the adviser's personnel perform shareholder
service functions and certain financial, accounting, administrative and clerical
services. During the year ended October 31, 2005 CCM was reimbursed $77,876.
CENTURY FUNDS
23
(6) ADVISER REIMBURSEMENT -- CCM has voluntarily waived a portion of its
management fee for both classes of the Fund and reimbursed certain other
expenses to the extent necessary so that net fund annual operating expenses
(exclusive of brokerage commissions, taxes, interest and litigation,
indemnification and other extraordinary expenses) will not exceed certain
expense limitations through at least February 28, 2006. The expense limitations
for the Investor and Institutional Class are 1.80% and 1.45%, respectively.
During the year ended October 31, 2005, CCM did not make a voluntary
reimbursement. CCM has contractually agreed to reimburse the Trust for 0.15% of
the distribution and services fees paid by the Trust's Investor Shares through
February 28, 2007. During the year ended October 31, 2005, CCM made a
reimbursement of $147.
(7) DISTRIBUTION AND SERVICE PLAN -- The Trust and the Fund have adopted a
distribution and service plan for the Investor Shares under Rule 12b-1 of the
1940 Act. Distribution plans permit a fund to pay for all or a portion of the
costs incurred in connection with the distribution and/or servicing of shares.
The Investor Shares currently pays a distribution and service fee up to 0.25% of
the average daily net assets of the class. During the year ended October 31,
2005, $245 and $414,510 for the Trust and Fund, respectively, was paid under the
distribution and service plan. The plan may be terminated at any time by the
vote of a majority of the independent Trustees or by the vote of the holders of
a majority of the outstanding shares of the Investor Shares.
CENTURY FUNDS
24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of
Century Capital Management Trust:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Century Shares Trust and Century Small Cap
Select Fund (the "Funds") (each a separate series of Century Capital Management
Trust) as of October 31, 2005, and the related statements of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Funds' 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 the standards of the Public Company
Accounting Oversight Board (United States). 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. The Funds
are not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds' internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2005, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. 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
Century Shares Trust and Century Small Cap Select Fund as of October 31, 2005,
the results of their operations for the year then ended, the changes in their
net assets for each of the two years in the period then ended, and their
financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Boston, Massachusetts
December 16, 2005
CENTURY FUNDS
25
MANAGEMENT OF THE FUNDS
The following table provides certain information regarding the Trustees and
officers of Century Shares Trust and Century Small Cap Select Fund (the "Funds")
as of October 31, 2005. Unless otherwise noted, (i) each Trustee and officer has
engaged in the principal occupation(s) noted in the table for at least the most
recent five years, although not necessarily in the same capacity, and (ii) the
address of each Trustee and officer is c/o Century Capital Management, 100
Federal Street, 29th Floor, Boston, Massachusetts 02110. Each Trustee's term of
office continues until the Trustee retires, resigns or is removed in accordance
with the Declaration of Trust or until the next shareholders' meeting called for
the purpose of electing Trustees and until the election and qualification of a
successor.
INDEPENDENT TRUSTEES
NAME, AGE, POSITION(S) RINCIPAL OCCUPATION(S) NUMBER OF OTHER
HELD WITH MASTER TRUST DURING PAST 5 YEARS PORTFOLIOS DIRECTORSHIPS
AND LENGTH OF TIME SERVED IN FUND HELD
COMPLEX
OVERSEEN
John E. Beard (73) Ropes & Gray LLP (law firm), Partner 2 BTU International, Inc.
Trustee, 1999 to present 1 (until 12/31/00), of Counsel (thereafter).
Stephen W. Kidder (52) Partner, Hemenway & Barnes (law firm). 2 Trustee, Wellesley College;
Trustee, July 31, 2005 to present Trustee, Isabella Stewart
Gardner Museum; Chair,
Board of Overseers, Children's
Hospital, Boston; Director,
The Concord Bookshop, Inc.
Jerrold Mitchell (66) Independent Investment Adviser (since 1995); 2 None.
Trustee, 2004 to present Massachusetts Pension Reserves Investment
Management Board, Chief Investment Officer
(April 2001 to October 2004).
Michael J. Poulos (74) Retired. 2 Technical Olympic, USA, Inc.
Trustee, 1999 to present 1
Jerry S. Rosenbloom (66) The Wharton School, University of Pennsylvania, 2 Harleysville Group, Inc.;
Trustee, 1999 to present 1 Professor of Insurance and Risk Management and MBIA Municipal Bond
Fund. Academic Director. Certified Employee Benefit
Specialist Program
David D. Tripple (61) Pioneer Investment Management, a subsidiary 2 None.
Trustee, 2004 to present of UniCredito Italiano (investment adviser),
Chief Executive Officer and Trustee of all
U.S. Pioneer mutual funds (10/00 to 09/01);
prior thereto, The Pioneer Group, Inc.
(asset management), Executive Vice President
and Director (09/98 to 10/00).
- ------------------
1 On July 31, 2001, Century Shares Trust was reorganized from a separate
stand-alone trust into a series of Century Capital Management Trust. Prior
to the reorganization, the following Trustees had served as Trustees of
Century Shares Trust since the year indicated: Mr. Beard - since 1983; Mr.
Poulos - since 1998; and Mr. Rosenbloom - since 1998.
CENTURY FUNDS
26
INTERESTED TRUSTEES AND OFFICERS 2
NAME, AGE, POSITION(S) PRINCIPAL OCCUPATIONS NUMBER OF OTHER
HELD WITH TRUST AND DURING PAST 5 YEARS PORTFOLIOS DIRECTORSHIPS
LENGTH OF TIME SERVED IN FUND HELD
COMPLEX
OVERSEEN
Alexander L. Thorndike (39) Century Capital Management, LLC, 2 None.
Chairman, Chief Executive Managing Partner and Executive
Officer and Chief Investment Committee Member; CCP Capital II,
Officer, 2004 to present; Trustee LLC, Managing Member (since 1999)
and Chief Investment Officer, (investment management services); Sachem
1999 to present Partners, LLC, manager (since 2003)
(investment management services)
Davis R. Fulkerson (40) Century Capital Management, LLC, 2 None.
Trustee, 2000 to present Managing Partner and Executive
Committee Member; CCP Capital II, LLC,
Managing Member (since 1999) (investment
management services); CCP Capital III, Inc.,
Director (since 2001) (investment management
services); Sachem Partners, LLC, manager
(since 2003) (investment management
services); Massachusetts Fiduciary Advisors,
Inc., Vice President (03/99 to 12/00)
(investment adviser)
Steven Alfano (46) Century Capital Management, LLC, Managing N/A N/A
Secretary, 2001 to present, Chief Director; CCP Capital II, LLC, Managing
Financial Officer, 2002 to Member (since 1999) (investment management
present, and Chief Compliance services); CCP Capital III, Inc., Secretary and
Officer, 2004 to present Treasurer (since 2001) (investment management
services); Massachusetts Fiduciary Advisors, Inc.,
Vice President (03/99 to 12/00) (investment adviser)
The Funds' Statement of Additional Information ("SAI") includes additional
information about the Trustees. The SAI is available, without charge, upon
request. If you would like to request a copy of the SAI, you may do so by
calling the following toll-free number: 1-800-321-1928
Availability of Quarterly Portfolio Schedules. Each fund files a complete
schedule of its portfolio holdings with the SEC for the first and third quarters
of the fund's fiscal year on Form N-Q. The Forms N-Q are available on the SEC's
website at http://www.sec.gov, and they may be reviewed and copied at the SEC's
Public Reference Room in Washington, DC. Information on the operation of the
SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
Availability of Proxy Voting Policies and Procedures and Proxy Voting Record. A
description of the policies and procedures that each fund uses to determine how
to vote proxies relating to portfolio securities and each fund's proxy voting
record for the 12-month period ended June 30 are available, without charge, upon
request, by calling 1-800-321-1928. You may also obtain a copy of the funds'
proxy voting policies and procedures and proxy voting record on the SEC's
website at http://www.sec.gov.
- ------------------
2 Each person listed is considered an "interested person" of the Funds within
the meaning of the 1940 Act by virtue of being an officer or employee of
the Adviser.
CENTURY FUNDS
27
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Logo: Century Funds
100 Federal Street Boston, Massachusetts 02110
GROWTH INVESTORS IN VALUE INDUSTRIES
Item 2. Code of Ethics.
(a) The registrant has, as of the end of the period covered by this report,
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless
of whether these individuals are employed by the registrant or a third
party.
(b) During the period covered by this report, there were not any amendments to
a provision of the code of ethics referenced in 2(a) above. However, on
December 16, 2004, the Board of Trustees adopted a new, more comprehensive
code of ethics that applies to the registrant's principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The new code of ethics
superceded the previous code of ethics, effective December 16, 2004. It is
filed as an exhibit hereto.
(c) During the period covered by this report, there were not any waivers or
implicit waivers to a provision of the code of ethics adopted in 2(a)
above.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that Jerry Rosenbloom,
who is a member of the registrant's Board of Trustees and Audit Committee,
qualifies as an audit committee financial expert. Mr. Rosenbloom is an
independent trustee, as defined in paragraph (a)(2) of this item's
instructions. The SEC has stated that the designation or identification of
a person as an audit committee financial expert pursuant to this Item 3 of
Form N-CSR does not impose on such person any duties, obligations or
liability that are greater than the duties, obligations and liability
imposed on such person as a member of the Audit Committee and the Board of
Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed to the Trust for each of the last two
fiscal years for professional services rendered by the principal accountant
for the audit of the financial statements of Century Capital Management
Trust (the "Trust") or services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements for these fiscal years were as follows:
FYE Audit Fees
--- ----------
10/31/05 $59,000
10/31/04 $55,200
(b) Audit-Related Fees. For each of the last two fiscal years, there were no
fees billed to the Trust for assurance and related services by the
principal accountant that are reasonably related to the performance of the
audit of the Trust's financial statements and are not reported under Audit
Fees. For each of the last two fiscal years of the Trust, there were no
audit-related fees billed by the Fund's principal accountant to the Trust's
investment adviser and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the Fund
(together, "Accounting Affiliates") for services that were related directly
to the operations and financial reporting of the Trust.
(c) Tax Fees. The aggregate fees billed to the Trust for each of the last two
fiscal years for professional services provided by the Trust's principal
accountant for tax compliance, tax advice and tax planning were as follows:
FYE Tax Fees
--- ----------
10/31/05 None
10/31/04 None
For the last two fiscal years of the Trust, there were no tax fees billed
by the Fund's principal accountant to the Trust's Accounting Affiliates for
services that were related directly to the operations and financial
reporting of the Trust.
(d) All Other Fees. All Other Fees are fees related to services other than
those reported above under "Audit Fees," "Audit-Related Fees," and "Tax
Fees." For each of the Trust's last two fiscal years, no such fees were
billed by the Trust's principal accountant to the Trust or to the
Accounting Affiliates for services related directly to the operations and
financial reporting of the Trust.
(e) (1) The Audit Committee's pre-approval policies and procedures are as
follows:
The Charter of the Audit Committee of the Board requires that the Committee
approve (a) all audit and permissible non-audit services to be provided to
the Funds and (b) all permissible non-audit services to be provided by the
Funds' independent auditors to the Funds' investment adviser or any entity
controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Funds, if the engagement
relates directly to the operations and financial reporting of the Funds.
(2) No services described in each of paragraphs (b) through (d) of this
Item were approved by the Audit Committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable
(g) The aggregate non-audit fees billed by the Trust's accountant, for the
Trust's last two fiscal years, for services rendered to the Trust and the
Trust's Accounting Affiliates are shown in the table below:
Non-Audit Fees
Non-Audit Fees for Accounting Aggregate
for Trust Affiliates Non-Audit Fees
FYE
October 31, 2005 None None None
October 31, 2004 None None None
(h) The Audit Committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors
to the Registrant is compatible with maintaining the auditors' independence
in performing audit services.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6. Schedule of Investments.
Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchases.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders. No changes.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, after evaluating the effectiveness of the registrant's "disclosure
controls and procedures" (as defined in the Investment Company Act of 1940 Rule
30-a-2(c) under the Act (17 CFR 270.30a-2(c))) as of a date (the "Evaluation
Date") within 90 days of the filing date of this report, have concluded that, as
of the Evaluation Date, the registrant's disclosure controls and procedures were
adequately designed to ensure that the information required to be disclosed by
the registrant in this Form N-CSR is recorded, processed, summarized and
reported within the time periods specified in the Commission's rules and forms.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d))) that occurred during the registrant's second fiscal quarter of
the period covered by this report that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
Items 12. Exhibits.
(a) Fund's Code of Ethics. The registrant's code of ethics required to be
disclosed under Item 2 of Form N-CSR attacheded hereto as Exhibit 99.CODE ETH.
(b) Attached hereto.
Exhibit 99.CERT A separate certification for each principal
executive officer and principal financial
officer of the registrant as required by
Rule 30a-2 of the Investment Company
Act of 1940.
Exhibit 99.906CERT Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Century Capital Management Trust
By: /s/ Alexander L. Thorndike
---------------------------------------------------------
Alexander L. Thorndike, Chairman
Date: December 30, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicate.
By: /s/ Alexander L. Thorndike
------------------------------------------------------------------
Alexander L. Thorndike, Chairman (Principal Executive Officer)
Date: December 30, 2005
By: /s/ Steven Alfano
------------------------------------------------------------------
Steven Alfano, Secretary (Principal Financial Officer)
Date: December 30, 2005