<PAGE>
CENTURY SHARES TRUST
April 30, 1999
The investment objective of Century Shares Trust (the "Trust") is long-term
growth of principal and income. The Trust seeks to achieve this objective by
investing in a diversified portfolio of stocks of insurance companies, banks,
insurance brokers, and other companies providing services to, or closely related
to, insurance companies and banks.
The United States Securities and Exchange Commission has not approved or
disapproved the Trust's shares or passed on the adequacy of this Prospectus, nor
has any state securities commission done so. Any contrary representation is a
criminal offense.
<PAGE>
INFORMATION IN THIS PROSPECTUS
Important Information About the Trust ....................................... 2
Investment Objective ................................................... 2
Principal Investment Strategies ........................................ 2
Principal Investment Risks ............................................. 2
Trust Performance ........................................................... 2
Trust Fees and Expenses ..................................................... 3
Investment Strategies and Related Risks ..................................... 4
Strategies to Meet the Trust's Goals ................................... 4
Risks of Investing in Insurance and Financial Services Companies ....... 4
Management of the Trust ..................................................... 5
Shareholder Information ..................................................... 5
Pricing of Trust Shares ................................................ 5
Purchasing Shares ...................................................... 5
Redeeming Shares ....................................................... 6
Shareholder Account .................................................... 7
Dividends and Distributions ............................................ 8
Tax Consequences ....................................................... 8
Financial Highlights ........................................................ 9
<PAGE>
IMPORTANT INFORMATION ABOUT THE TRUST
INVESTMENT OBJECTIVE
The Trust's goal is long-term growth of principal and income.
PRINCIPAL INVESTMENT STRATEGIES
The Trust concentrates its investments in equity securities issued by insurance
companies and brokers, banks, and other companies providing services to, or
closely related to, such companies. While not required, the Trust's investments
in recent years have been predominantly in insurance companies.
The Trust's investment adviser, Century Capital Management, Inc. (the
"Adviser"), purchases securities primarily for investment, rather than with a
view to trading profits, which results in a low turnover ratio. The Adviser
seeks to keep the Trust invested in companies with good long-term results and
attractive valuations compared to the markets generally.
PRINCIPAL INVESTMENT RISKS
You take on investment risk when you purchase shares of the Trust. The market
prices of shares in which the Trust invests fluctuate with changes in the
financial condition of the companies and with changing investor perceptions.
General economic and political factors also affect market prices. The share
price of the Trust may change daily, and when shares are sold they may be worth
more or less than their original cost. As a result, you risk losing money by
investing in the Trust.
Because the Trust concentrates its investments in stocks issued by insurance,
banking and other financial services companies, you are subject to risks
particularly affecting those industries. These risks include the effect of
changes in interest rates and government regulations or of claims activity due,
for example, to natural disasters or changing demographic factors. These and
other factors are described in more detail in "Investment Strategies and Related
Risks" below.
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TRUST PERFORMANCE
The Trust's annual returns for each of the last ten calendar years were as
follows:
1989 41.64%
1990 (7.84)%
1991 31.51%
1992 26.99%
1993 (0.36)%
1994 (3.90)%
1995 35.23%
1996 17.16%
1997 50.13%
1998 7.00%
During these 10 years, the Trust's highest return for any quarter was 19.89% (Q2
1997) and the lowest return was -18.83% (Q3 1990).
The Trust's average annual returns for the 1, 5, and 10 year periods ending
December 31, 1998, compared with the Standard & Poor's 500 Stock Index over the
same periods, were as follows:
Past 1 Past 5 Past 10
Year Years Years
---- ----- -----
Century Shares Trust 7.00% 19.59% 18.18%
S&P 500 Index 28.58% 24.06% 19.21%
The returns shown in the chart and table above include reinvestment of all
dividends and capital gains distributions and reflect fund expenses. This
information provides some indication of the risks of investing in the Trust by
showing changes in the Trust's performance from year to year and by showing how
the Trust's average annual returns have compared with those of a broad measure
of market performance. (Of course, the S&P 500 does not incur expenses as the
Trust does.)
A discussion of Trust performance is included in the Trust's annual report. The
Trust provides a copy of the annual report to shareholders and, upon request and
without charge, to each person to whom this Prospectus is delivered. As with any
mutual fund, past performance of the Trust is not necessarily an indication of
future performance.
TRUST FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you buy
and hold shares of the Trust.
SHAREHOLDER FEES (fees paid directly from your investment):
o Maximum Sales Charge (Load) Imposed on Purchases NONE
o Maximum Deferred Sales Charge (Load) NONE
o Maximum Sales Charge (Load) Imposed on Reinvested
Dividends or other Distributions NONE
o Redemption Fee (as a percentage of amount redeemed) NONE*
o Exchange Fee NONE
* The Trust may reduce the price you receive upon redeeming shares by up to
one percent but has never done so. If the Trust imposed this redemption
fee, you would receive prior notice.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Trust
assets):
o Management Fees 0.66%
o Distribution and Service (12b-1) Fees 0 %
o Other Expenses 0.12%
o Total Annual Fund Operating Expenses 0.78%
o Example. This EXAMPLE is intended to help you compare the cost of investing in
the Trust with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Trust for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Trust's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$80 $249 $433 $966
INVESTMENT STRATEGIES AND RELATED RISKS
STRATEGIES TO MEET THE TRUST'S GOALS
The Trust's investment objective is long-term growth of principal and income.
The Adviser seeks to achieve this objective through investment in a diversified
portfolio of equity securities of insurance companies and brokers, banks, and
other companies providing services to, or in a business closely related to, the
insurance and banking industriess.
The Trust invests in major insurance and banking companies in order to
participate in the basic growth of those industries. It also invests in many
other, smaller companies, including insurance brokers and service providers to
the insurance and banking industries, that the Adviser believes will offer
superior prospects, seeking with this portfolio mix to produce above-average
results over the longer term.
The Adviser focuses on factors such as the following:
o The long-term results of a company are important. A key measure is the
ability to grow book value plus dividends per share at a meaningful rate
over an extended period. In recent years the Adviser has used a target
measure of 15% per year compounded over rolling five-year periods.
o A company's ability and willingness to raise dividends regularly is
valued.
o The Adviser seeks out companies with superior management.
o As a general rule, the Adviser attempts to buy shares of companies when
their prices are temporarily out of favor or their valuation is lower than
that of securities generally.
The Adviser purchases securities for the Trust primarily for investment, rather
than with a view to trading profits. Accordingly, the Trust expects to have a
low rate of portfolio turnover and associated trading costs, which should result
in a lower current tax burden for shareholders compared to investing in a fund
with higher turnover. The average portfolio turnover ratio was 4.4% over the
past five years.
RISKS OF INVESTING IN INSURANCE AND FINANCIAL SERVICES COMPANIES
In addition to the general market, economic, and political risks of investing in
stocks, some of which are described in "Summary of Important Information" above,
the Trust's principal investment strategies expose investors to the particular
risks of investing in the insurance and financial services industries. Various
factors directly affect the value of insurance and banking stocks. These
include:
o marketing competition
o pricing of products
o general economic conditions
o claims activity
o changes in interest rates
o governmental regulation.
Particular types of insurance companies will be affected by different risk
factors. For example:
o exposure to natural disasters and other catastrophes may reduce the
earnings of property-casualty insurance companies
o changing mortality and morbidity rates affect life and health insurer
profits.
Individual companies may be adversely affected by inadequate reserves or the
inability to collect from reinsurance carriers. Risks also exist in the nature
and degree of governmental regulation of the companies in which the Trust may
invest. For example:
o Rate regulation or tax law changes may adversely affect insurance
companies.
o The lowering of historical regulatory barriers between insurance and
banking companies presents challenges to management of these companies
that may adversely affect their performance.
In addition, although the Adviser takes steps to assess the status of so-called
"Year 2000" problem compliance as reported by the Trust's portfolio companies,
this review is necessarily limited by the varied quality of their Year 2000
reporting. In addition, insurance companies may be adversely affected by the
Year 2000 problems of their insureds. Despite the Adviser's efforts, you should
understand that the Year 2000 issue may have a material adverse effect on the
companies held in the portfolio and, in any event, may materially affect the
securities markets and the economy generally.
MANAGEMENT OF THE TRUST
Century Capital Management, Inc. is the Trust's investment adviser. The
Adviser's address is One Liberty Square, Boston, Massachusetts 02109. The
Adviser, which is owned by its officers and certain related persons, was
organized in April 1992, and became the Trust's investment adviser on July 1,
1994. Before that date and since the Trust's inception in 1928, the Trust was
internally managed under the direction of its Trustees. The Trust is the
Adviser's first and only mutual fund client. The Adviser also is the investment
adviser to several limited partnerships, the investors in which are principally
institutions.
The Adviser has discretionary authority to invest the Trust's assets. The
Trust's investments are managed by an investment committee of individuals who
are officers of the Adviser. The Adviser also performs (or arranges for the
performance of) certain management and administrative services necessary for the
Trust's operation. Such services include providing office space, equipment and
facilities, supervising relations with service providers (such as the Trust's
custodian, transfer agent, accountants and attorneys), preparing shareholder
communications, conducting shareholder relations, maintaining the Trust's
existence and records, and maintaining the Trust's registration and
qualification for sale of its shares.
The Trust pays the Adviser a fee, monthly in arrears, based on a percentage of
the Trust's net asset value. For the year ended December 31, 1998, the aggregate
fee paid to the Adviser was 0.66% of average net assets.
Based on a review of its equipment and software and the information provided by
the Trust's custodian and shareholder servicing firm, the Adviser currently
believes that the services it provides the Trust will not be materially affected
by Year 2000 problems with its computer systems or those of its vendors.
However, failure by the Adviser or any other party to address all Year 2000
issues affecting their systems could disrupt the Trust's functions, such as
calculations of net asset value, purchases and redemptions, or shareholder
reporting, which could have a material adverse effect on the Trust and its
shareholders.
SHAREHOLDER INFORMATION
PRICING OF TRUST SHARES
The price of Trust shares is based on the Trust's daily net asset value. Net
asset value is the market value of the Trust's investments plus cash,
receivables and any other Trust assets, less liabilities. (Market value is the
closing (last sale) price on the principal exchange for securities listed on
national exchanges and the bid price for unlisted securities.) The Trust's net
asset value divided by the number of shares outstanding is the net asset value
per share.
The net asset value per share is computed by the Trust's custodian bank, State
Street Bank and Trust Company, as of the close of trading on the New York Stock
Exchange (normally 4:00 p.m., New York City time) each day that the Exchange is
open for trading. Net asset value would be computed on other days if there were
a sufficient degree of trading in the Trust's portfolio securities that current
net asset value might be materially affected. The price at which you purchase or
redeem Trust shares is the net asset value per share as next determined after
you place your order.
PURCHASING SHARES
You may purchase shares of the Trust by check or wire transfer. If you are
already a shareholder, you may purchase additional shares by telephone. The
Trust is a "no-load" fund, so you pay no sales commissions on a purchase
directly from the Trust. The minimum initial investment is $1,000; the minimum
investment for subsequent purchases is $50.
o Delivery Instructions. To make an initial investment, you must complete and
sign the Application to purchase shares and deliver it with your payment as
follows:
By Regular Mail By Overnight Express or Hand Delivery
--------------- -------------------------------------
Century Shares Trust Boston Financial Data Services
P.O. Box 8329 Attention: Century Shares Trust
Boston, MA 02266-8329 2 Heritage Drive
North Quincy, MA 02171
Your purchase request will be completed and your shares will be purchased at the
net asset value per share next computed after the Trust receives your
Application and investment in proper form.
o Purchases by Check. You should make your check payable to Century Shares Trust
for the requested purchase amount. The Trust will not accept cash, third party
checks, or checks drawn on banks located outside of the United States. If your
purchase order for shares is cancelled because your check does not clear, you
will be responsible for any loss incurred by the Trust; existing shareholders
may have shares redeemed from their account to reimburse any loss.
o Wire and Electronic Transfers. You may purchase shares by having your bank
send a wire transfer to the Trust's custodian bank. Your bank may charge you a
fee for a wire transfer. If you wish to send a wire transfer, notify us before
the funds are wired by telephone: 800-321-1928 or 617-482-3060. Use the
following wire transfer instructions:
State Street Bank and Trust Company
ABA # 011000028; DDA # 99046583
Credit Century Shares Trust
[insert your Shareholder Registration Name and Account Number]
You may purchase additional shares of the Trust by having your bank account
automatically drafted on a periodic basis. For more information and to receive
the documentation required for this program, call the Trust.
o Telephone Purchases. If you currently have an active account, you may make
subsequent investments by telephone in accordance with policies established by
the Trust. You can call us at 800-303-1928 or 617-482-3060 to inquire about a
telephone purchase or to place your order. The purchase price will be the net
asset value per share next computed after receiving your order. Payment for
shares purchased by telephone must be received within seven days or the order is
subject to cancellation. At its discretion, the Trust may accept telephone
orders from non-shareholders or securities dealers.
o Transactions Through Intermediaries. You may purchase or redeem shares of the
Trust through intermediaries such as certain broker-dealers, "fund
supermarkets," banks, investment professionals, retirement accounts or other
vehicles. An intermediary may charge you a fee for its service, and it may have
procedures for purchasing and redeeming shares and account features differing
from those that would apply if you deal directly with the Trust.
An intermediary may be a designated agent of the Trust. If so, orders it accepts
at any time until the daily computation of the Trust's net asset value per share
would receive that price. The agent will segregate orders received on a business
day after the daily computation time and transmit those orders to the Trust
separately for execution at the net asset value next computed after that
business day.
o General Policies. The Trust reserves the right to reject any order to purchase
shares. In particular, the Trust may reject orders from investors whose trading
practices are not considered to be consistent with the long-term investment
objectives of the Trust. If your order to purchase shares is accepted and
processed, you may not cancel or revoke the purchase, but you may redeem the
shares purchased.
REDEEMING SHARES
You may redeem shares of the Trust by sending a written request for redemption
to the Trust. The request should be delivered as follows:
By Regular Mail By Overnight Express or Hand Delivery
--------------- -------------------------------------
Century Shares Trust Boston Financial Data Services
P.O. Box 8329 Attention: Century Shares Trust
Boston, MA 02266-8329 2 Heritage Drive
North Quincy, MA 02171
In your written request, you must (1) indicate the number of shares or dollar
amount to be redeemed, (2) provide your shareholder account number, and (3) have
each record owner sign the request exactly as the shares are registered (e.g., a
trustee or custodian must sign as such). The Trust does not permit redemption by
telephone, fax, or email. You also may redeem shares through intermediaries as
described above in "Purchasing Trust Shares."
Redemption orders are processed at the net asset value per share next computed
after the Trust receives your order in good form. The price you receive in a
redemption may be more or less than the price you paid when you purchased your
shares and may result in a taxable capital gain or loss.
o Required Documentation. Certain redemption requests must include a signature
guarantee, which is an established commercial practice designed to protect you
and the Trust from fraud. You must include a signature guarantee if: (1) you
wish to sell more than $10,000 worth of shares, (2) you wish to have the
redemption proceeds sent to an address different than that registered in your
account, (3) you have changed your registered address within the last 60 days,
or (4) you wish to have the redemption proceeds made payable to a person who is
not the registered account owner. The signature guarantee must apply to the
signature of each record owner on your account. You may obtain a signature
guarantee from a participant in the Medallion signature guarantee program, such
as a bank, credit union, or securities broker-dealer. A notary public cannot
provide a signature guarantee.
Shares owned by corporations, trusts, partnerships, estates or other entities
are subject to special rules regarding documentation required for redemption.
These shareholders should call the Trust at 800-303-1928 or 617-482-3060 to
obtain specific instructions for their situation.
o Payment for Redeemed Shares. Your redemption will normally be paid by check
sent to you not later than seven days from the effective redemption date.
The Trust may reduce the redemption price by an amount up to 1%, but has never
done so. If such a redemption fee were imposed in the future, the Trust would
give prior notice to all shareholders. The Trust may announce redemption
policies and procedures that might, for example, apply any redemption fee
selectively based on the length of time of share ownership, or the size of
shareholder account or redemption amount.
The Trust is permitted to deliver assets in kind (in whole or in part) instead
of cash for large redemptions pursuant to Rule 18f-1 under the Investment
Company Act of 1940. This election might apply if, over any 90-day period, any
one shareholder redeemed shares for an amount in excess of $250,000 or 1% of the
total net asset value of the Trust, whichever is less. A shareholder receiving
a redemption in kind may incur brokerage costs in converting securities received
into cash.
o Possible Redemption Delays. If you have recently purchased shares and you wish
to redeem those shares within 15 days of the purchase date, the Trust may delay
payment of the redemption proceeds to you. The delay allows the Trust to verify
that payment for the recently purchased shares has been received and collected.
The Trust may suspend redemptions and defer payment when the New York Stock
Exchange is closed (other than weekends or holiday) or trading on that Exchange
is restricted, as permitted by the Securities and Exchange Commission, or during
any emergency making it impractical for the Trust to dispose of its securities
or value its assets.
SHAREHOLDER ACCOUNT
The Trust bears the cost to maintain your shareholder account. However, the
Trust may charge you a fee to cover its additional costs if you request a
duplicate confirmation statement of a transaction or a historical transcript of
your account. The Trust reserves the right on 60 days' prior written notice to
impose charges to cover other administrative costs.
You will not receive share certificates from the Trust unless you specifically
request them in writing. If you do hold issued certificates, they must be
returned to the Trust with the redemption request for the shares they represent.
If you lose issued certificates, you must pay for a surety bond obtained by the
Trust on your behalf for the Trust's protection.
Because small accounts result in relatively higher administration costs, the
Trust reserves the right to redeem shares in any account the value of which
falls below $500 following any redemption by you. The Trust will notify you
before doing so in order to allow you to increase your account balance above the
minimum level. The Trust also may at any time redeem your shares if you have
failed to provide required taxpayer identification number certification.
DIVIDENDS AND DISTRIBUTIONS
The Trust distributes to shareholders its net investment income in the form of
income dividends. Net investment income represents the dividends, interest and
other income earned from its investments, less its expenses. The Trust normally
makes income dividend payments in June and December.
The Trust also distributes to shareholders its net realized capital gains in the
form of capital gain distributions. These distributions represent capital gains
realized by the Trust on its investments, less any capital losses. The capital
gain distribution is normally made in December.
The Trust will reinvest your income dividends and capital gain distributions in
additional shares of the Trust unless you choose one of the following options:
o Income Option - you will receive income dividends in cash and have capital
gain distributions reinvested; or
o Cash Option - you will receive both income dividends and capital gain
distributions in cash.
You should indicate your choice in the Application you complete with your
initial share purchase. You may change your choice at any time by writing the
Trust.
TAX CONSEQUENCES
Your investment in the Trust may result in tax consequences to you. (If you are
investing through a tax-advantaged retirement account, you should consult your
tax advisor as to your tax situation.)
Income dividends and capital gains distributions are generally subject to
federal income tax, and may also be subject to state or local taxes. Capital
gain distributions may be taxable at different rates, depending on the length of
time the Trust holds its assets. At the present time, for federal tax purposes
both income dividends and short-term capital gains distributions are taxable to
you as ordinary income. Long-term capital gain distributions are generally
taxable to you as long-term capital gains regardless of the length of time you
have owned Trust shares. Any taxable distributions you receive will generally be
taxable whether you receive them in cash or reinvest them in shares of the
Trust.
o If you purchase shares of the Trust shortly before a distribution, you will be
"buying a dividend" and you will effectively receive back a portion of your
investment in the form of a taxable income dividend or capital gains
distribution.
When you redeem shares you may realize a taxable capital gain or loss for
federal income tax purposes. You will realize a taxable capital gain if the
price you receive on redemption is greater than the cost of the shares that you
redeem.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Trust's
financial performance for the past 5 years. Certain information reflects
financial results for a single Trust share. The total returns in the table
represent the rate than an investor would have earned (or lost) on an investment
in the Trust (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, whose report, along with
the Trust's financial statements, are included in the Trust's annual report,
which is available upon request.
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of year $44.66 $31.30 $28.07 $21.77 $24.04
Income (Loss) from Investment Operations:
Net investment income $0.41 $0.39 $0.46 $0.41 $0.44
Net realized and unrealized gain (loss) 2.71 15.25 4.34 7.22 (1.38)
------ ------ ------ ------ ------
Total from investment operations $3.12 $15.64 $4.80 $7.63 ($0.94)
Less Distributions:
From net investment income ($0.40) ($0.38) ($0.46) ($0.41) ($0.45)
From net realized gain (2.72) (1.90) (1.11) (0.92) (0.88)
Returns of capital -- -- -- -- --
------ ------ ------ ------ ------
Total distributions ($3.12) ($2.28) ($1.57) ($1.33) ($1.33)
Net Asset Value, end of year $44.66 $44.66 $31.30 $28.07 $21.77
====== ====== ====== ====== ======
Total Return 7.00% 50.10% 17.20% 35.20% -3.90%
Ratios/Supplemental Data:
Net assets, end of year (in millions) $415 $415 $271 $267 $206
Ratio of expenses to average net assets 0.78% 0.82% 0.87% 0.94% 1.01%
Ratio of net income to average net assets 0.88% 1.04% 1.58% 1.60% 1.93%
Portfolio Turnover Rate 6% 6% 3% 5% 2%
</TABLE>
<PAGE>
A Statement of Additional Information ("SAI") for the Trust dated April 30,
1999, includes additional information about the Trust. The SAI is incorporated
by reference into this Prospectus. Information about the Trust's investments is
also available in its annual and semi-annual reports to shareholders. The
Trust's most recent annual report provides a discussion of the market conditions
and investment strategies that significantly affected the Trust's performance
during its last fiscal year.
The SAI and the Trust's annual and semi-annual reports and other information are
available, without charge, upon request to the Trust. Investors may contact the
Trust by calling 1-800-321-1928, by sending e-mail to "[email protected]" or
by writing to:
Century Shares Trust
One Liberty Square
Boston, Massachusetts 02109
Information about the Trust (including the SAI) can be reviewed and copied at
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained
by calling the Commission at 1-800-SEC-0330. Reports and other information about
the Trust are available on the Commission's Internet site at http://www.sec.gov;
copies of this information may be obtained, upon payment of a duplicating fee,
by writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.
Investment Company Act File Number 811-00019
<PAGE>
CENTURY SHARES TRUST
One Liberty Square
Boston, Massachusetts 02109
800-321-1928 or 617-482-3060
[email protected]
PART B
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1999
This Statement of Additional Information supplements the Trust's Prospectus
dated April 30, 1999. You may obtain a copy of the Prospectus free of charge by
writing, calling or sending an email to the Trust. This Statement of Additional
Information is not a Prospectus.
-----------------------------
TABLE OF CONTENTS
The Trust.................................................................... 2
Management of the Trust...................................................... 3
Control Persons and Principal Holders of Securities.......................... 4
Investment Advisory and Other Services....................................... 4
Brokerage Allocation and Other Practices..................................... 5
Capital Stock and Other Securities........................................... 6
Purchase, Redemption and Pricing of Shares................................... 6
Taxation of the Trust........................................................ 7
Calculation of Performance Data.............................................. 7
Financial Statements......................................................... 8
-----------------------------
THE TRUST
Century Shares Trust is a "Massachusetts trust" organized under the laws of
Massachusetts in March 1928. Wiesenberger Investment Companies Service, 1985
Ed., a recognized independent compilation of mutual fund industry statistics,
lists the organization dates of "virtually all mutual funds registered for sale
in the United States," and indicates that nine mutual funds in addition to the
Trust were organized in or prior to 1928. Several of the largest shareholders of
the Trust are insurance companies, owning shares directly or through nominees.
The Trust operates as a diversified, open-end management investment company.
In pursuing its investment objectives described in the Prospectus, the Trust may
invest in stock of the types of entities described in the Prospectus and holding
companies or subsidiaries of such entities, as well as in securities convertible
into or exercisable for such stock. The Trust also may invest in debt
instruments of domestic governmental and non-governmental issuers of investment
grade at the time of purchase.
The Trust may not:
o issue senior securities;
o borrow money, except temporary borrowing that does not cause the outstanding
indebtedness of the Trust to exceed 10% of its gross assets (valued at
market) or of its liquidating value, whichever is lower (Any temporary
borrowings also would be subject to the 300% asset coverage requirement of
the Investment Company Act of 1940. If the Trust were to borrow temporarily,
this could require it to liquidate portfolio securities at a disadvantageous
time.);
o act as underwriter of securities;
o invest more than 5% of its gross assets (valued at market) in the securities
of any one issuer
o hold more than 10% of any class of the securities of any one issuer;
o purchase or sell real estate, commodities, or commodity contracts, except in
satisfaction of a debt or in connection with a merger, consolidation,
reorganization, or other activities of the Trust;
o make loans;
o invest in debt securities other as described above;
o invest in the securities of other investment companies, except by purchase in
the open market that does not require any commission or result in any profit
to an underwriter or dealer, other than customary brokers' commissions;
o invest in the securities of companies that have a record (including the
record of any predecessors) of fewer than three years' continuous operation;
o invest for the purpose of exercising control or management;
o purchase securities on margin or sell short; or
o purchase or retain in its portfolio any securities of an issuer if the
officers or Trustees of the Trust that own beneficially more than 0.5% of the
securities of such issuer together own more than 5% of the securities of such
issuer.
The principal investment objectives of the Trust and the limitations listed
above may not be changed without the vote or written approval of a majority of
the outstanding shares of the Trust
Additionally, the Trustees currently have a policy that will not allow
investments in convertible securities to exceed 5% of total investments.
MANAGEMENT OF THE TRUST
The Trustees named below are responsible for setting policy and overseeing the
Trust's activities. The Trustees hire and supervise the performance of the
companies that provide services to the Trust, such as the investment adviser,
the independent accountants, and the custodian. The Trustees elect their
successors.
The following table provides information regarding each Trustee and officer of
the Trust:
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION(S) HELD WITH TRUST PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
--------------------- --------------------------- -------------------------------------------
<S> <C> <C>
William O. Bailey Trustee o Terra Nova (Bermuda) Holdings Ltd.,
7 Victoria Street Chairman, President & CEO (Insurance Holding
Hamilton Bermuda Co.)
Age: 72 o MBIA, Inc., Director and Former CEO
(Insurance Co.)
o Business Men's Assurance Co. of America,
Director
John E. Beard Trustee o Ropes & Gray, Partner (Attorneys)
One International Place
Boston, Massachusetts
Age: 66
William W. Dyer, Jr.* Trustee o Century Capital Management, Inc., Managing
One Liberty Square (Prior to July 1994, also Director and Director#
Boston, Massachusetts Vice President) o CCP Capital, Inc., Vice President and
Age: 64 Director (Management Services)#
o CCP Capital II, LLC, Managing Member
(Management Services)#
o Prior to October 1994, Massachusetts
Fiduciary Advisors, Inc., Director and Senior
Vice President (Investment Adviser)#
Allan W. Fulkerson* Chairman of the Trustees o Century Capital Management, Inc., President
One Liberty Square (Prior to July 1994, also and Director#
Boston, Massachusetts President and Managing o CCP Capital, Inc., President and Director
Age: 65 Trustee) (Management Services)#
o CCP Capital II, LLC, Managing Member
(Management Services)#
o Massachusetts Fiduciary Advisors, Inc.,
President and Director (Investment Adviser)#
Ernest E. Monrad Trustee o Northeast Investors Trust, Chairman of the
50 Congress Street Trustees (Investment Company)
Boston, Massachusetts
Age: 66
Michael J. Poulos Trustee o Western National Corporation (Holding
3 Riverway Plaza Company) and Western National Life Insurance
Houston, Texas Company, Chairman, President and Chief
Age: 68 Executive Officer
Jerry S. Rosenbloom Trustee o The Wharton School, University of
304 Colonial Penn Center Pennsylvania, Professor of Insurance and Risk
3641 Locust Walk Management
Philadelphia, Pennsylvania
Age: 60
Richard F. Cook, Jr. Secretary o Century Capital Management, Inc., Managing
One Liberty Square Director, Treasurer, Clerk and Director#
Boston, Massachusetts o CCP Capital, Inc., Vice President,
Age: 48 Treasurer, Clerk and Director (Management
Services)#
o CCP Capital II, LLC, Managing Member
(Management Services)#
o Massachusetts Fiduciary Advisors, Inc.,
Senior VP, Treasurer and Clerk (Investment
Adviser)#
- -------------
* Indicates Trustees who are interested persons of the Trust.
# Indicates a position with an entity that may be deemed an "affiliated person" of the Trust.
</TABLE>
During the fiscal year ended December 31, 1998 the following persons received
the indicated amounts from the Trust:
PENSION OR
RETIREMENT TOTAL
AGGREGATE BENEFITS ACCRUED COMPENSATION
NAME OF PERSON, COMPENSATION AS PART OF TRUST FROM TRUST
POSITION FROM THE TRUST EXPENSES (1) PAID TO TRUSTEES
-------- -------------- ------------ ----------------
William O. Bailey, $20,000 -- $20,000
Trustee
John Beard, $20,000 -- $20,000
Trustee
William W. Dyer, Jr., -- -- --
Trustee (2)
Allan W. Fulkerson, -- -- --
Trustee (2)
Ernest E. Monrad, $20,000 -- $20,000
Trustee
Michael J. Poulos, $10,000 -- $10,000
Trustee
Jerry S. Rosenbloom, $15,000 -- $15,000
Trustee
(1) The Trust neither sponsors nor pays pension or retirement benefits to
Trustees or officers of the Trust.
(2) Any Trustee or officer of the Trust who also is an officer of the Adviser
receives no remuneration from the Trust.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 8, 1999, the Trustees and officers as a group owned less than 1%
of the outstanding shares of the Trust. As of February 8, 1999, Charles Schwab &
Co. Inc., 101 Montgomery Street, San Francisco, CA, 94104 was the record owner
of two accounts with a combined share balance equal to approximately 7.9% of the
Trust's outstanding shares. The Trust believes these accounts hold shares
beneficially owned by clients of Charles Schwab & Co., Inc. As of February 8,
1999, CUDD & Co., c/o Chase Manhattan Bank, N.A., 1211 Sixth Avenue, New York,
NY, 10036-8701 was the record owner of an account with a share balance equal to
approximately 5.9% of the Trust's outstanding shares.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser. Century Capital Management, Inc., the Trust's investment
adviser, is solely owned by its officers and certain related persons. Allan W.
Fulkerson, who exercises voting control over the Adviser, is both Chairman of
the Trustees of the Trust and President and a Director of the Adviser. William
W. Dyer, Jr., is a Trustee of the Trust, and he and Richard F. Cook, Jr.,
Secretary of the Trust, each serve as Managing Director and Director of the
Adviser.
The Trust pays the Adviser a fee, monthly in arrears, equal to one-twelfth
(1/12th) of the sum of seven-tenths of one percent (0.7%) of the first $250
million and six-tenths of one percent (0.6%) of the amount exceeding $250
million, of the net asset value of the Trust at the end of each month. The
Trust's advisory agreement with the Adviser provides that the Adviser's fee will
be reduced by an amount necessary to prevent the Trust's aggregate expenses from
exceeding the most restrictive of the expense limitation imposed by any state
securities commission in states in which the Trust's shares are registered or
qualified for sale. For the years 1998, 1997 and 1996, the Trust paid the
Adviser total fees of $2,776,322, $2,281,156, and $1,756,532, respectively.
As investment adviser to the Trust, the Adviser acts with discretionary
authority to invest the Trust's assets. The Adviser also performs (or arranges
for performance of) certain management and administrative services necessary for
the operation of the Trust. These services include providing office space,
equipment and facilities, supervising relations with the Trust's custodian,
transfer agent, accountants, attorneys and other third-party service providers,
preparing shareholder communications, conducting shareholder relations,
maintaining the Trust's existence and records and maintaining the Trust's
registration and qualification for sale of its shares. The Adviser may be
reimbursed by the Trust for the allocated cost of the Adviser's employees'
providing shareholder, transfer agent and accounting services to the Trust. The
Trust pays its other expenses. Expenses of the Trust for compensation, office
rental and other office expenses, and investment advisory, statistical and
research services are subject to an annual overall limitation in the Declaration
of Trust of 1.5% of average quarterly net assets up to $30,000,000 and 1% of
average net quarterly assets over that amount.
Transfer Agent and Dividend Paying Agent. State Street Bank and Trust Company,
through its subsidiary Boston Financial Data Services, Inc., 2 Heritage Drive,
North Quincy, Massachusetts, acts as the Trust's transfer agent and dividend
paying agent. Charles Schwab Trust Company, 101 Montgomery Street, San
Francisco, CA 94104 may act as transfer agent with respect to certain retirement
plans of which it is trustee.
Custodian. State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts, acts as the custodian of the Trust's cash and investment
securities. The custodian also is responsible for receipt and delivery of the
Trust's investment securities, as well as other matters specified in the
custodial agreement.
Accountants. Deloitte & Touch LLP, 125 Summer Street, Boston, Massachusetts,
acts as the independent accountants for the Trust. The independent accountants
are responsible for auditing the Trust's financial statements.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Trust's portfolio transactions are executed by broker-dealers and banks
selected by the Adviser. During the years 1998, 1997 and 1996, brokerage
commissions were $33,953, $28,059 and $12,804, respectively. The lower
commissions in 1996 compared with the two years since then resulted from fewer
transactions requiring brokerage payments during that year.
The Adviser selects broker-dealers to execute Trust investment transactions
based on many factors, including the size and type of the transaction, the
reputation, experience, and quality of services rendered by the broker-dealer in
other transactions, and the reasonableness of the commission, if any. Execution
at the most favorable prices and in the most effective manner possible are the
primary considerations. To minimize brokerage charges, the Adviser seeks to
execute portfolio transactions with a primary market maker in over-the-counter
transactions, except in those circumstances where better prices and execution
are available elsewhere. Purchases from market makers or other dealers will
include the spread between the bid and the asked price.
When more than one broker-dealer firm meets the foregoing criteria for a
particular transaction, the Adviser may give consideration to those firms that
supply research services that may contribute to the overall performance of the
Trust and of the Adviser's other client accounts, and not all of these services
may be used in connection with the Trust. The research services may include
analysis, quotations and statistical or other information, and the Adviser may
at times pay a higher commission rate than might have been available elsewhere
in recognition of the value of such services; however, the transaction will
always meet the Adviser's overall criteria for obtaining best execution.
Investment decisions for the Trust are made independently from those for other
clients of the Adviser and suitability is always a paramount consideration.
Nevertheless, it is possible that at times the same securities will be
acceptable for the Trust and for one or more other client accounts. The Adviser
or its personnel may have interests in one or more of those client accounts. The
Adviser has adopted allocation procedures designed to allocate securities and
prices fairly between the Trust and the Adviser's various other accounts.
CAPITAL STOCK AND OTHER SECURITIES
Ownership of the Trust is represented by shares of $1.00 par value. The number
of shares is not limited. Each share has the same rights as every other share.
Shares have no preemptive rights and are fully paid and non-assessable. Shares
may be redeemed at any time at net asset value. The Trust may redeem shares in
any account valued at less than $500 after any redemption by the shareholder to
minimize the disproportionately high administrative costs associated with small
account balances.
SHAREHOLDERS HAVE NO RIGHT TO VOTE IN THE SELECTION OF TRUSTEES OR OTHER MATTERS
RELATING TO THE MANAGEMENT OF THE TRUST (EXCEPT THAT A TRUSTEE MAY BE REMOVED
FROM OFFICE AS PROVIDED IN THE INVESTMENT COMPANY ACT); PROVIDED THAT THE
DECLARATION OF TRUST MAY BE AMENDED OR TERMINATED WITH THE WRITTEN CONSENT OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES.
The Trust may create and issue additional series of shares, subject to the
Investment Company Act of 1940, when, as and if the Trustees may determine,
without further action by the shareholders. The Declaration of Trust gives the
Trustees authority to fix and determine the relative rights and preferences as
between different series as to dividends and other distributions and on
liquidation or termination of the Trust, and also to determine provisions
concerning investment, reinvestment, sinking or purchase Trusts, conversion
rights, the manner of determining Trustee remuneration with respect to such
series, and conditions under which the several series shall have separate voting
rights or no voting rights.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Purchase and Redemption of Shares. The Trust offers its shares directly to the
public without any sales charge, as described in the Prospectus. The shares also
may be purchased through broker-dealers, banks, and "fund supermarkets," which
may charge a fee for this service. The Trust may from time to time issue its
shares in exchange for securities held in the portfolio of another investment
company, trust, or securities owner. Such a transaction would generally involve
the issuance of trust shares at net asset value, based upon the value of the
securities acquired.
A broker-dealer or other intermediary may be a designated agent of the Trust. If
so, orders that it accepts for the purchase of shares at any time until the
daily computation of the Trust's net asset value would receive that value as the
purchase price per share. (The agent would then segregate any orders received
after the daily computation and transmit those separately to the Trust for
execution at the net asset value as determined at the end of the next trading
day.) A purchase made through an intermediary that is not a designated agent of
the Trust is made at the net asset value next determined after the order is
actually received by the Trust.
Share redemptions may be made directly from the Trust or through an
intermediary, which may charge a fee for the service. The Trust is authorized to
reduce the redemption price by up to one percent, but has never done so. The
Trust has the right to suspend redemption when the New York Stock Exchange is
closed (other than on weekends or holidays) or trading on the New York Stock
Exchange is restricted during any period permitted by order of the Securities
and Exchange Commission for the protection of investors.
The Trust is permitted to deliver assets in kind (in whole or in part) in lieu
of cash for large redemptions pursuant to Rule 18f-1 under the Investment
Company Act of 1940. The Trustees are obligated to redeem shares solely in cash
up to the lesser of $250,000 or 1% of the liquidating value of the Trust, during
any 90-day period for any one shareholder, but may make redemptions in kind
above that limitation. Shareholders receiving redemptions in kind may incur
brokerage costs in converting securities received in cash.
Offering Price. The offering price of the Trust's shares is the net asset value
per share. Net asset value of the Trust is determined by the Trust's custodian
as described in the Prospectus. Equity securities traded on a national
securities exchange or Nasdaq are valued at the last sale price on the national
securities exchange on which such securities are primarily traded or Nasdaq, as
the case may be. Securities for which there were no transactions on a given day
or securities not listed on an exchange or Nasdaq are valued at the most recent
bid prices. Other exchange-traded securities (generally foreign securities) will
generally be valued based on market quotations.
Short-term obligations, maturing in 60 days or less, are valued at amortized
cost, which approximates value. Other debt securities are valued by a pricing
service that utilized electronic date processing techniques to determine values
for normal institutional-sized trading units of debt securities without regard
to sale or bid prices when such techniques are believed to more accurately
reflect the fair market value for such securities. Otherwise, sale or bid prices
are used. Any securities or other assets for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Trustees of the Trust.
Securities quoted in foreign currency, if any, are valued in U.S. dollars at the
foreign currency exchange rate prevailing at the time the net asset value per
share is determined.
TAXATION OF THE TRUST
For 1998, the Trust qualified as a "regulated investment company" under the
Internal Revenue Code and it intends to be so qualified throughout 1999. This
special tax status means that the Trust will not be liable for federal tax on
income and capital gains distributed to shareholders. In order to preserve its
tax status, the Trust must comply with certain requirements. If the Trust fails
to meet these requirements in any taxable year, it will be subject to tax on its
taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, will be taxable to shareholders as ordinary income. In addition,
the Trust could be required to recognize unrealized gains, pay substantial taxes
and interest, and make substantial distributions before regaining its tax status
as a regulated investment company.
CALCULATION OF PERFORMANCE DATA
The Trust may from time to time present its investment performance in
advertisements, shareholder reports or other communications. In those
communications, the Trust may compare its performance to (a) indexes of groups
of unmanaged stocks, such as the Standard and Poor's Stock Indexes and the Dow
Jones Averages, (b) indexes of mutual funds prepared by independent
organizations such as Lipper Analytical Services, Inc. and Morningstar, and (c)
the Consumer Price Index demonstrating changes in the average cost of living.
The investment performance of the Trust or such indexes may be calculated,
ranked, rated or otherwise described by independent publications or analysts
such as Barron's, Business Week, Forbes, Fortune, Investor's Business Daily,
Lipper Analytical Services, Inc., Money Magazine, Morningstar, Mutual Trust
Forecaster, No Load Trust X, The Value Line Mutual Trust Survey, The Wall Street
Journal, and Wiesenberger Investment Companies Service, and such information may
also be presented.
An investment in shares of the Trust with all dividends reinvested would have
provided the average annual compounded rate of return ("Average Annual Total
Return") listed below for each of the indicated periods:
Average Annual
Investment Period Total Return
----------------- ------------
One Year Ending December 31, 1998 7.00%
Five Years Ending December 31, 1998 19.59%
Ten Years Ending December 31, 1998 18.18%
Average Annual Total Return is computed as follows. A hypothetical investment of
$1,000 ("Invested Amount") is assumed to have been made at the beginning of the
investment period, resulting in the purchase of a certain number of shares at
the effective net asset value. All income dividend and capital gain
distributions made by the Trust over such period are assumed to have been
reinvested in additional shares at the then effective net asset value, thereby
increasing share holdings. At the end of the investment period, the number of
shares then assumed held is multiplied by the ending net asset value, resulting
in the amount which the assumed investment would have been worth on redemption
at that time ("Redeemed Amount"). The Redeemed Amount is then compared to the
Invested Amount, and the average annual compounded rate of return is derived for
the period by application of a standard compound interest rate calculation.
The Average Annual Total Return figures provided above are computed by finding
the average annual compounded rates of return over the 1, 5 and 10 year periods
that would equate the initial amount invested to the ending redeemable value,
according to the formula P(1 + T)n = ERV, where:
P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years, and
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
periods (or fractional portion thereof).
<PAGE>
FINANCIAL STATEMENTS
The Trust's financial statements appearing in the Trust's annual report for 1998
and the report thereon of Deloitte & Touche LLP, independent accountants, also
appearing therein, are incorporated by reference into this Statement of
Additional Information. You may obtain a copy of the annual report without
charge upon request to the Trust.
