<PAGE>
Investing for
Long Term
Growth and
Income
Since 1928
[logo]
CENTURY
[graphic omitted]
Century
Shares
Trust
SEMI-ANNUAL REPORT
JUNE 30, 2000
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[logo]
CENTURY
Shares Trust
TRUSTEES
Allan W. Fulkerson, Chairman and Trustee
William O. Bailey, Trustee
John E. Beard, Trustee
William W. Dyer, Jr., Trustee
Ernest E. Monrad, Trustee
Michael J. Poulus, Trustee
Jerry S. Rosenbloom, Trustee
Alexander L. Thorndike, Trustee
AUDITORS
Deloitte & Touche LLP
CUSTODIAN
State Street Bank & Trust Co.
TRANSFER AGENT
Boston Financial Data Services, Inc.
LEGAL COUNSEL
Palmer & Dodge
INVESTMENT ADVISER
Century Capital Management, Inc.
TELEPHONE
617-482-3060
800-321-1928
Shareholder Hotline
800-303-1928
AVERAGE ANNUAL TOTAL RETURNS
The average annual total return for the Trust for the indicated investment
periods ended June 30, 2000, were as follows: (i) one year = -15.37%, (ii) five
years = 14.04%, (iii) ten years = 12.66%. This data represents past performance.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
This report is submitted for the general information of the shareholders of the
Trust. It is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective prospectus.
<PAGE>
DEAR FELLOW SHAREHOLDERS
The year 2000 greeted the equity markets with strong economic growth and
volatility in the financial markets. Overall, the equity markets were mixed with
the S&P 500 down -0.4% through June. Technology stock valuations soared before
correcting in March, while financial services stocks rebounded after facing a
steady headwind of rising interest rates. January and February saw banking and
insurance stocks drop significantly as 1) the Federal Reserve continued its
efforts to slow inflation and economic growth to more sustainable levels and 2)
investors gravitated toward rising valuations in the technology sector. However,
this trend reversed itself in early March as Internet and Nasdaq stocks faltered
and financial services equities rallied through the spring.
We are seeing a shift in market sentiment away from the "momentum" (revenue
growth-at-any-cost) and eCommerce "concept" stocks that have performed so well
until recently. This change has resulted in an increased focus on the quality
and predictability of earnings. Renewed emphasis on the sustainable quality of
cash flows, earnings and intrinsic value should continue to benefit the Trust's
portfolio companies over the next several quarters. We believe your Trust's
portfolio is well-positioned to take advantage of these changes.
YOUR TRUST'S PORTFOLIO
The Trust reported a -1.7% return through June 30th. This compares to a -0.4%
return for the S&P 500 and -1.1% return for the Nasdaq Composite. Since the end
of June, the Trust's stocks have continued to improve, reflecting better
operating results.
While no one anticipated these recent valuation swings in the equity market, we
are very encouraged by the trends cited above as well as several recent
catalysts, including:
1) dramatic increases in pricing and profitability we are beginning to see at
many of our core holdings
2) the competitive strengths and strategies of our portfolio companies
3) attractive valuation and growth prospects that the Trust's portfolio
companies currently exhibit.
Second quarter results that have been released reinforce the positive trend and
strength of these factors, especially the accelerating growth in revenue and
earnings for our portfolio companies. Commercial and specialty insurers are
currently seeing significant double-digit improvement in premium pricing. We
believe a continuation could translate into dramatic earnings growth through
2001.
Looking at specific contributors to portfolio performance, the Trust's best
performers included Everest Re and HCC Insurance Holdings, (specialty insurers);
UnitedHealth Group, (health insurer); Arthur J. Gallagher, (broker); and Bank of
New York, (bank/securities processor). The Trust's underperformers included
companies that continue to work through merger-related indigestion and changing
competitive positions: Safeco, (property-casualty insurer) Aon, (broker) and
Wachovia Corp, (regional bank).
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PORTFOLIO COMPOSITION
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6/30/99
PROPERTY & CASUALTY INSURANCE 34%
LIFE INSURERS 21%
MULTI-LINE FINANCIAL SERVICES 12%
INSURANCE BROKERS 11%
SPECIALTY INSURERS 11%
BANKS 8%
HEALTH INSURERS 1%
OTHER 1%
CASH 1%
6/30/00
PROPERTY & CASUALTY INSURANCE 23%
MULTI-LINE/FINANCIAL SERVICES 22%
LIFE INSURERS 14%
SPECIALTY INSURERS 14%
INSURANCE BROKERS 11%
BANKS 8%
OTHER 4%
HEALTH INSURERS 2%
CASH 2%
SHIFTING MARKET CONDITIONS
Over the last year, we have written about the fundamental forces driving growth
and change within the "risk management" industries - deregulation,
globalization, shifting demographics and technological innovation. With the 1999
passage of financial services reform legislation and the recent acquisitions of
several U.S. financial firms by European competitors, these forces continue to
lead to the convergence between banks, brokers, insurers and other financial
providers and intermediaries. Looking forward, we are positioning the portfolio
to take advantage of the dramatic changes in the market. For example, many of
our newer positions exhibit at least one of the following trends:
o Established technology companies positioned to capitalize on the continuing
evolution of financial services.
o Insurance companies with strong commercial franchises and above-average
earnings visibility.
o Fee-based banks with diversified revenues and less dependence on the interest
rate cycle.
RELATIVE PRICE-TO-EARNINGS RATIO
CST VS S&P 500 AS OF 6/30/00
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79 71.6%
80 61.1
81 81.4
82 77.3
83 80.8
84 125.4
85 120.3
86 68.8
87 63.7
88 72.7
89 82.8
90 63.2
91 50.0
92 68.0
93 62.3
94 75.6
95 78.0
96 78.4
97 81.1
98 66.2
99 55.0
2000 53.0
COMPANIES IN THE TRUST'S PORTFOLIO ARE AT ATTRACTIVE
VALUATION RELATIVE TO THE S&P 500
As we look at the Trust's portfolio, we see attractive growth and valuation
metrics on both an historic and prospective basis. In terms of creating
shareholder value, the portfolio companies reached a weighted five-year
compounded annual growth rate of book value plus dividends of 17.4% versus an
estimated 11.3% for the S&P 500; in terms of earnings growth and valuation, the
Trust's weighted average growth rate in 2001 estimated earnings equals 17.1%
compared to 9.2% for the S&P 500, and the 2001 estimated price-to-earnings
ratios for the Trust and the S&P 500 are 12.7 times and 23.1 times,
respectively. As shown in the table below these last two ratios can be combined
to create the P/E-to-growth rate (PEG ratio) which stands at 0.74 for the
Trust's portfolio and 2.51 for the S&P 500. In effect, we can translate this PEG
ratio to mean that the Trust's portfolio is trading at a significant discount
(26%) to its underlying growth rate while the S&P 500 is trading at a large
premium (251%) to its expected growth rate.
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CST S&P 500
CREATING SHAREHOLDER VALUE
5 year CAGR in Book Value plus
Dividends (95-00) 17.4% 11.3%
(CAGR = Compounded Annual Growth Rate)
EARNINGS GROWTH AND VALUATION:
2001 Est. Price to earnings (P/E) ratio: 12.7% 23.1%
2001 Est. earnings growth: 17.1% 9.2%
----- -----
2001 P/E Ratio to Growth Rate (PEG Ratio): 0.74% 2.51%
SOURCE: StockVal, S & P and CCM research
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Our investment philosophy continues to focus on industry leaders with superior
management teams and sustainable competitive advantages in their products,
services and/or distribution networks. Our investing process includes in-depth
fundamental research on each company, its rivals and the industry in which it
competes. Our research analysts focus on analyzing the shifting trends in
strategy, innovation, pricing, margins and capital allocation in order to assess
risk-versus-reward tradeoffs in making our buy and sell decisions.
We believe this industry knowledge enables us to anticipate attractive
investment entry points in each company's growth cycle, and we expect to see
tremendous market share changes among the leaders in our "risk management"
industries over the next 1-2 years.
Please visit our website (www.centuryfunds.com) to read more about our
investment strategy and to receive updates on the Trust. We also welcome your
questions by phone or letter.
Respectfully submitted,
/s/ Allan W. Fulkerson /s/ Lanny Thorndike
Allan W. Fulkerson Lanny Thorndike
Chairman and Trustee Trustee
<PAGE>
Portfolio of Investments - June 30, 2000
COMMON STOCKS: INSURANCE COMPANIES - 88.3%
SHARES VALUE
------ -----
200,000 AFLAC Inc. .................................... $ 9,187,500
416,394 The Allstate Corp. ............................ 9,264,767
190,000 American General Corp. ........................ 11,590,000
210,000 American International Group, Inc. ............ 24,675,000
455,000 AON Corp. ..................................... 14,133,437
325 Berkshire Hathaway Inc. CL A .................. 17,485,000
235,000 The Chubb Corp. ............................... 14,452,500
608,000 Cincinnati Financial Corp. .................... 19,114,000
98,400 Everest Re Group, Ltd. ........................ 3,234,900
115,600 Gallagher (Arthur J.) & Co..................... 4,855,200
220,000 HCC Insurance Holdings, Inc. .................. 4,152,500
78,500 HSB Group, Inc. ............................... 2,443,313
10,000 John Hancock Financial Services, Inc. ......... 236,875
120,000 Marsh & McLennan Companies, Inc. .............. 12,532,500
360,000 MBIA, Inc. .................................... 17,347,500
233,900 Mercury General Corp........................... 5,525,887
15,000 MetLife, Inc. ................................. 315,937
205,000 Mutual Risk Management Ltd. ................... 3,549,063
90,500 Ohio Casualty Corp. ........................... 961,563
215,000 The Progressive Corp. ......................... 15,910,000
300,000 Protective Life Corp. ......................... 7,987,500
217,000 RenaissanceRe Holdings Ltd. ................... 9,453,063
136,500 SAFECO Corp. .................................. 2,712,937
230,000 St. Paul Companies, Inc. ...................... 7,848,750
473,300 Torchmark Corp................................. 11,684,594
80,000 UnitedHealthgroup Corp. ....................... 6,860,000
72,600 UnumProvident Corp. ........................... 1,456,537
44,808 Waddell & Reed Financial, Inc. CL A ........... 1,470,262
72,858 Waddell & Reed Financial, Inc. CL B ........... 2,117,436
180,000 XL Capital Ltd. CL A .......................... 9,742,500
------------
252,301,021
------------
COMMON STOCKS: BANKING AND OTHER FINANCIAL INSTITUTIONS - 10.3%
90,000 The Bank of New York Company, Inc. ............ 4,185,000
55,000 Chase Manhattan Corp. ......................... 2,533,437
90,000 Fiserv, Inc. .................................. 3,892,500
100,000 J.P. Morgan & Co., Inc. ....................... 11,012,500
40,000 U.S. Bancorp ................................. 770,000
130,000 Wachovia Corp. ................................ 7,052,500
------------
29,445,937
------------
TOTAL INVESTMENTS IN COMMON STOCKS - 98.6%
(Identified Cost, $94,686,852) ............................... 281,746,958
------------
CASH EQUIVALENTS - 1.4%
3,976,000 State Street Bank and Trust Eurodollar Time
Deposit, at cost approximating value,
maturity 07/03/00 ............................ 3,976,000
------------
TOTAL INVESTMENTS - 100% (IDENTIFIED COST, $98,662,852) ...... $285,722,958
============
See notes to financial statements.
<PAGE>
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES - June 30, 2000
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ASSETS:
Investments, at value (Note 1A)
(Identified cost, $98,662,852) ............................. $ 285,722,958
Dividends and interest receivable ............................ 537,842
Other assets ................................................. 7,596
Receivable for Trust shares sold ............................. 8,760
Receivable for investments sold .............................. 776,118
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Total Assets ..................................... 287,053,274
LIABILITIES:
Payable for Trust shares repurchased ............. $ 145,046
Accrued investment adviser fee (Note 5)........... 169,733
Accrued expenses and other liabilities .......... 115,658
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Total liabilities ............................... 430,437
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NET ASSETS (Note 3) .......................................... $ 286,622,837
=============
Per share net asset value, offering price and
redemption price ($286,622,837 / 8,541,329
shares of $1.00 par value capital stock
outstanding) (Note 2) ........................................... $ 33.56
=======
STATEMENT OF OPERATIONS - Six Months Ended June 30, 2000
-------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends ....................................... $ 2,805,465
Interest ....................................... 185,738
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Total Income ................................... 2,991,203
Expenses:
Investment adviser fee (Note 5) ...... $ 988,056
Non-interested trustees' remuneration 62,528
Transfer agent ....................... 85,039
Custodian ............................ 26,223
Insurance ............................ 8,626
Professional fees .................... 49,991
Registration costs.................... 14,578
Printing and other.................... 45,530
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Total expenses ................................. 1,280,571
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Net investment income ....................... 1,710,632
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investment transactions ............... 10,272,651
Decrease in net unrealized appreciation on investments ..... (20,110,841)
-------------
Net realized and unrealized loss on investments ... (9,838,190)
-------------
Net decrease in net assets resulting from operations ........ $ (8,127,558)
=============
See notes to financial statements.
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<TABLE>
Statements of Changes in Net Assets
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<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .............................................. $ 1,710,632 $ 3,637,707
Net realized gain on investment transactions ....................... 10,272,651 44,149,086
Decrease in net unrealized appreciation of investments ............. (20,110,841) (95,998,695)
-------------- ---------------
Net decrease in net assets resulting from operations ............... (8,127,558) (48,211,902)
Net equalization (Note 1C) ............................................ (11,260) (68,842)
Distributions to shareholders from:
Net investment income .............................................. (1,643,067) (3,326,274)
In excess of net investment income ................................. -- (122,364)
Realized gain from investment transactions ......................... -- (35,324,476)
Trust share transactions - net (Note 2) ............................... (13,239,542) (18,430,813)
-------------- ---------------
Total decrease ..................................................... (23,021,427) (105,484,671)
NET ASSETS:
At beginning of period ............................................. 309,644,264 415,128,935
-------------- ---------------
At end of period (including accumulated distributions
in excess of net investment income of $323,971 and
$380,276, respectively) ........................................... $ 286,622,837 $ 309,644,264
============== ===============
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- ------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning
of period ......................... $ 34.32 $ 44.66 $ 44.66 $ 44.66 $ 31.30 $ 28.07 $ 21.77
-------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............. $ 0.20 $ 0.19 $ 0.42 $ 0.41 $ 0.39 $ 0.46 $ 0.41
Net realized and unrealized gain
(loss) on investments ............. (0.77) 0.61 (6.05) 2.71 15.25 4.34 7.22
-------- -------- -------- -------- -------- -------- --------
Total income (loss) from investment
operations ....................... $ (0.57) $ 0.80 $ (5.63) $ 3.12 $ 15.64 $ 4.80 $ 7.63
-------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income .............. $ (0.19) $ (0.20) $ (0.40) $ (0.40) $ (0.38) $ (0.46) $ (0.41)
In excess of net investment income -- -- (0.01) -- -- -- --
Net realized gain on investment
transactions ..................... -- -- (4.30) (2.72) (1.90) (1.11) (0.92)
-------- -------- -------- -------- -------- -------- --------
Total distributions ................ $ (0.19) $ (0.20) $ (4.71) $ (3.12) $ (2.28) $ (1.57) $ (1.33)
-------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, end of period ...... $ 33.56 $ 45.26 $ 34.32 $ 44.66 $ 44.66 $ 31.30 $ 28.07
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN ........................ (1.7%) 1.8% (12.4%) 7.0% 50.1% 17.2% 35.2%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) ..................... $286,623 $389,783 $309,644 $415,129 $414,576 $270,781 $267,181
Ratio of expenses to average
net assets ....................... 0.88%* 0.81%* 0.82% 0.78% 0.82% 0.87% 0.94%
Ratio of net investment income to
average net assets ............... 1.18%* 0.86%* 1.00% 0.88% 1.04% 1.58% 1.60%
PORTFOLIO TURNOVER RATE ............. 4% 4% 11% 6% 6% 3% 5%
* Annulized
</TABLE>
See notes to financial statements.
<PAGE>
Notes to Financial Statements
(1) SIGNIFICANT ACCOUNTING POLICIES -- The Trust is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of
financial statements. The policies are in conformity with generally accepted
accounting principles.
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 are valued at the latest bid prices.
Short-term obligations, maturing in 60 days or less, are valued at amortized
cost, which approximates value.
B. Federal Taxes -- It is the Trust's policy to comply with the provisions of
the Internal Revenue Code applicable to investment companies and to distribute
to shareholders each year all of its taxable income, including any net realized
gain on investments. Accordingly, no provision for Federal income or excise tax
is necessary.
C. Equalization -- The Trust follows the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
repurchases of Trust shares equivalent, on a per share basis, to the amount of
undistributed net investment income on the date of the transaction, is credited
or charged to undistributed net investment income. As a result, undistributed
net investment income per share is unaffected by sales or repurchases of Trust
shares.
D. Other -- Investment security transactions are accounted for on the date the
securities are purchased or sold. 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.
E. 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. Actual
results could differ from those estimates.
(2) TRUST SHARES -- At June 30, 2000, 8,541,329 shares were outstanding. The
number of authorized shares of $1.00 par value is unlimited. Transactions in
Trust shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
SHARES AMOUNT SHARES AMOUNT
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sold .......................................... 1,939,570 $ 67,248,774 1,190,034 $ 48,808,793
----------- ------------ ----------- ------------
Issued to shareholders in reinvestment of
distributions from:
Net investment income ........................ 33,255 1,143,891 61,653 2,368,084
Realized gain on investment transactions ..... -- -- 816,478 27,254,035
----------- ------------ ----------- ------------
1,972,825 68,392,665 2,068,165 78,430,912
Repurchased ................................... (2,454,892) (81,632,207) (2,340,143) (96,861,725)
----------- ------------ ----------- ------------
Net decrease ................................. (482,067) $(13,239,542) (271,978) $(18,430,813)
=========== ============ =========== ============
</TABLE>
<TABLE>
<S> <C>
(3) SOURCES OF NET ASSETS -- At June 30, 2000, net assets consisted of:
Capital paid-in .......................................................... $ 90,213,947
Accumulated distributions in excess of net investment income .............. (323,971)
Accumulated undistributed net realized gain on investment transactions .... 9,672,755
Unrealized appreciation in value of investments ........................... 187,060,106
-------------
Net assets applicable to outstanding capital stock ........................ $286,622,837
============
</TABLE>
(4) INVESTMENT SECURITY TRANSACTIONS -- Other than U.S. Government obligations
and certificates of deposit, purchases and sales of investment securities
aggregated $11,697,010 and $28,554,807, respectively, during the six months
ended June 30, 2000. At June 30, 2000, the cost of investments for federal tax
purposes was $98,662,852. Net unrealized appreciation for all securities at that
date was $187,060,106. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost of
$188,430,704 and aggregate gross unrealized depreciation for all securities in
which there was an excess tax cost over market value of $1,370,598.
5) INVESTMENT ADVISER FEE -- The investment adviser fee is earned by Century
Capital Management, Inc. ("CCM"), as compensation for providing investment
advisory, management and administrative services to the Trust. CCM receives a
monthly fee equal on an annualized basis to 0.7% of the first $250 million and
0.6% of the amounts exceeding $250 million of the Trust's net asset value. For
the six months ended June 30, 2000, the fee amounted to $988,056. Officers and
Trustees of the Trust who are employed by CCM receive remuneration for their
services out of such investment adviser fee.
Independent Auditor's Report
To the Trustees and Shareholders of Century Shares Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Century Shares Trust as of June 30, 2000, the
related statement of operations for the six months then ended, the statements of
changes in net assets for the six months then ended and for the year ended
December 31, 1999, and the financial highlights for the six months ended June
30, 2000 and 1999 and for each of the years in the five year period ending
December 31, 1999. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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. Our
procedures included confirmation of securities owned as of June 30, 2000 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Century Shares Trust
at June 30, 2000, the results of its operations, the changes in its net assets,
and its financial highlights for the respective stated periods in conformity
with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
July 28, 2000
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One Liberty Square Boston, Massachusetts 02109
CST SAR 20
AUG 2000
