As filed with the Securities and Exchange Commission on July 31, 1996
1933 Act File No. 33-64872; 1940 Act File No. 811-7820
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 5 X
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 X
(Check appropriate box or boxes.)
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
(Exact Name of Registrant as Specified in Charter)
Twentieth Century Tower, 4500 Main Street, Kansas City, MO 64111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (816) 531-5575
James E. Stowers, Jr.
Twentieth Century Tower, 4500 Main Street, Kansas City, MO 64111
(Name and address of Agent for Service)
Approximate Date of Proposed Public Offering August 1, 1996
It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on August 1, 1996 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 notice for the
fiscal year ended March 31, 1996, was filed on May 30, 1996.
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<PAGE>
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Cross Reference Sheet
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Item No. Page No.
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Part A. - Prospectus
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1. Cover Page Cover Page
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2. Synopsis N/A
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3. Condensed Financial Information N/A
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4. General Description of Registrant Cover Page,
2, 4-14, 26-28
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5. Management of the Fund 28-30
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6. Capital Stock and Other Securities 29-30
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7. Purchase of Securities Being Offered Cover Page,
15-18
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8. Redemption or Repurchase 18-22
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9. Pending Legal Proceedings N/A
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Part B. - Statement of Additional Information
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10. Cover Page Cover Page
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11. Table of Contents Cover Page
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12. General Information and History N/A
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13. Investment Objectives and Policies 3-7, 9-10
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14. Management of the Fund 10-13
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15. Control Persons and Principal Holders of Securities
N/A
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16. Investment Advisory and Other Services 12-13
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17. Brokerage Allocation 15-16
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18. Capital Stock and Other Securities 14
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19. Purchase, Redemption and Pricing of Securities Being
Offered 16-17
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20. Tax Status 14-15
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21. Underwriters N/A
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22. Calculation of Performance Data N/A
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23. Financial Statements 17
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<PAGE>
TWENTIETH CENTURY
CAPITAL PORTFOLIOS
PROSPECTUS
AUGUST 1,
1996
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TWENTIETH CENTURY
Twentieth Century Capital Portfolios, Inc., a member of the Twentieth
Century family of funds, is an open-end diversified management investment
company whose shares are offered without a sales charge. Two series of shares
offered by Twentieth Century, Twentieth Century Value and Twentieth Century
Equity Income (the "funds"), are described in this prospectus. The investment
objectives of the funds are listed on the inside cover of this prospectus.
NO-LOAD MUTUAL FUNDS
Twentieth Century offers investors a full line of no-load mutual funds that
have no sales charges or commissions. There are no minimum initial investment
requirements. However, if the value of the shares held in any one fund account
is less than $2,500 ($1,000 for UGMA/UTMA accounts), you must establish a $50 or
greater automatic monthly investment to purchase additional shares in each such
account. (See "Automatic Monthly Investments," page 16, and "Automatic
Redemption of Shares," page 22.)
This prospectus gives you information about the funds that you should know
before investing. You should read this prospectus carefully and retain it for
future reference. Additional information is included in the Statement of
Additional Information dated August 1, 1996, and filed with the Securities and
Exchange Commission. It is incorporated in this prospectus by reference. To
obtain a copy without charge, call or write:
Twentieth Century Mutual Funds
4500 Main Street o P.O. Box 419200
Kansas City, MO 64141-6200 o 1-800-345-2021
Local and international calls: 816-531-5575
Telecommunications device for the deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet address: http://www.twentieth-century.com
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TWENTIETH CENTURY VALUE
The investment objective of Twentieth Century Value is long-term capital
growth. Income is a secondary objective. The fund seeks to achieve its
investment objectives by investing in securities that management believes to be
undervalued at the time of purchase.
TWENTIETH CENTURY
EQUITY INCOME
The investment objective of Twentieth Century Equity Income is the
production of current income. Capital appreciation is a secondary objective. The
fund attempts to achieve its objectives by investing primarily in
income-producing equity securities. In the pursuit of its objectives, the fund
seeks a yield that exceeds the yield of securities comprising the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500").
There is no assurance that the funds will achieve their respective investment
objectives.
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NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2
TABLE OF CONTENTS
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TRANSACTION AND
OPERATING EXPENSE TABLE.................................4
FINANCIAL HIGHLIGHTS....................................5
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds........................7
Twentieth Century Value...............................7
Twentieth Century Equity Income.......................7
Policies Applicable to Both Funds.....................7
OTHER INVESTMENT PRACTICES, THEIR
CHARACTERISTICS AND RISKS.............................9
Foreign Securities....................................9
Equity Securities.....................................9
Forward Currency Exchange Contracts...................9
Portfolio Turnover...................................10
Repurchase Agreements................................11
Index Futures Contracts..............................11
Derivative Securities................................11
Portfolio Lending....................................12
When-Issued Securities...............................12
Short Sales..........................................13
Rule 144A Securities.................................13
PERFORMANCE ADVERTISING................................13
HOW TO INVEST WITH TWENTIETH CENTURY
TWENTIETH CENTURY FAMILY OF FUNDS......................15
INVESTING IN TWENTIETH CENTURY.........................15
By Mail..............................................15
By Telephone.........................................15
By Wire..............................................15
Automatic Monthly Investments........................16
Additional Information About Investments.............16
Tax Identification Number............................16
Certificates.........................................17
SPECIAL SHAREHOLDER SERVICES...........................17
HOW TO CONVERT YOUR INVESTMENT FROM ONE
TWENTIETH CENTURY FUND TO ANOTHER....................17
By Telephone.........................................17
By Mail..............................................18
Additional Information About Conversions.............18
HOW TO REDEEM SHARES...................................18
By Telephone.........................................19
By Mail..............................................19
By Check-A-Month.....................................19
Signature Guarantee..................................20
REDEMPTION PROCEEDS....................................20
By Mail..............................................20
By Wire and Electronic Funds Transfer................21
Special Requirements for Large Redemptions...........21
Automatic Redemption of Shares.......................22
Additional Information About Redemptions.............22
TELEPHONE SERVICES.....................................22
Investors Line.......................................22
Automated Information Line...........................23
HOW TO CHANGE YOUR ADDRESS OF RECORD...................23
TAX-QUALIFIED RETIREMENT PLANS.........................23
HOW TO TRANSFER AN INVESTMENT TO A
TWENTIETH CENTURY RETIREMENT PLAN....................23
HOW TO TRANSFER YOUR
SHARES TO ANOTHER PERSON.............................23
REPORTS TO SHAREHOLDERS................................24
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE............................................25
When Share Price Is Determined.......................25
How Share Price Is Determined........................25
Where to Find Information
About Share Price..................................26
DISTRIBUTIONS..........................................26
General Information About Distributions..............26
TAXES..................................................27
Tax-Deferred Accounts................................27
Taxable Accounts.....................................27
MANAGEMENT.............................................28
Investment Management................................28
Code of Ethics.......................................29
Transfer and Administrative Services.................29
FURTHER INFORMATION
ABOUT TWENTIETH CENTURY..............................29
3
TRANSACTION AND OPERATING EXPENSE TABLE
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TWENTIETH CENTURY VALUE
AND TWENTIETH CENTURY
EQUITY INCOME
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases................none
Maximum Sales Load Imposed on Reinvested Dividends.....none
Deferred Sales Load....................................none
Redemption Fee*........................................none
Exchange Fee...........................................none
ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):
Management Fees........................................1.00%
12b-1 Fees.............................................none
Other Expenses**.......................................0.00%
Total Fund Operating Expenses..........................1.00%
Example: You would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption
at the end of each time period:
1 year $10
3 years 32
5 years 55
10 years 122
* Redemption proceeds sent by wire transfer are subject to a $10 processing
fee.
** Other expenses, the fees and expenses of those directors who are not
"interested persons" as defined in the Investment Company Act, were .00111 of
1% of average net assets for the most recent fiscal year.
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in shares of the Twentieth Century funds offered
by this prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
4
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FINANCIAL HIGHLIGHTS--VALUE
(For a share outstanding throughout the period.)
The Financial Highlights for the periods presented have been examined by
Ernst & Young LLP, independent auditors, whose report appears in the
corporation's annual report, which is incorporated by reference into the
Statement of Additional Information. The annual report contains additional
performance information and will be made available upon request and without
charge.
Year Ended March 31, September 1, 1993
-------------------------- (inception) through
1996 1995 March 31, 1994
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NET ASSET VALUE,
BEGINNING OF PERIOD............ $5.46 $4.98 $5.01
------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income(1).................... 0.13 0.12 0.08
Net Realized and Unrealized
Gains (Loss) on Securities... 1.34 0.75 (0.04)
------ ------ ------
Total from
Investment Operations........ 1.47 0.87 0.04
------ ------ ------
DISTRIBUTIONS
From Net
Investment Income............ (0.12) (0.12) (0.07)
In Excess of Net Investment
Income....................... (0.01) -- --
From Net Realized
Gains on Investment
Transactions................. (0.48) (0.27) --
------ ------ ------
Total Distributions.......... (0.61) (0.39) (0.07)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD.................. $ 6.32 $ 5.46 $ 4.98
====== ====== ======
TOTAL RETURN(2)................ 28.06% 18.56% 0.83%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets........ 0.97% 1.00% 1.00%(3)
Ratio of Net Investment
Income to Average
Net Assets................... 2.17% 2.65% 3.37%(3)
Portfolio Turnover Rate...... 145% 94% 79%
Average Commission Paid per
Investment Security Traded... $0.0409 -- --
Net Assets, End
of Period....................$881,885 $348,281 $87,798
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(1) Computed using average shares outstanding throughout the period.
(2) Total returns for periods less than one year are not annualized. Total
return assumes reinvestment of dividends and capital gains distribution, if
any.
(3) Annualized
5
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FINANCIAL HIGHLIGHTS (CONTINUED)--EQUITY INCOME
(For a share outstanding throughout the period.)
August 1, 1994
Year Ended (inception) through
1996 March 31, 1995
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NET ASSET VALUE,
BEGINNING OF PERIOD................ $5.42 $5.00
------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income(1)........................ 0.20 0.09
Net Realized and Unrealized
Gains on Securities.............. 1.13 0.44
------ ------
Total from
Investment Operations............ 1.33 0.53
------ ------
DISTRIBUTIONS
From Net
Investment Income................ (0.19) (0.09)
In Excess of Net Investment
Income........................... (0.01) --
From Net Realized
Gains on Investment
Transactions..................... (0.45) (0.02)
------ ------
Total Distributions.............. (0.65) (0.11)
------ ------
NET ASSET VALUE,
END OF PERIOD...................... $ 6.10 $ 5.42
====== ======
TOTAL RETURN(2).................. 25.67% 10.69%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets............ 0.98% 1.00%(3)
Ratio of Net Investment
Income to Average
Net Assets....................... 3.51% 4.04%(3)
Portfolio Turnover Rate.......... 170% 45%
Average Commission Paid per
Investment Security Traded....... $0.0378 --
Net Assets, End
of Period........................ $116,692 $52,213
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(1) Computed using average shares outstanding throughout the period.
(2) Total returns for periods less than one year are not annualized. Total
return assumes reinvestment of dividends and capital gains distribution, if
any.
(3) Annualized
6
INFORMATION REGARDING THE FUNDS
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INVESTMENT POLICIES
OF THE FUNDS
The funds have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objective of the funds, as identified on the inside front cover page,
and any other investment policies designated as "fundamental" in this prospectus
or in the Statement of Additional Information, cannot be changed without the
approval of the shareholders entitled to cast a majority of the outstanding
votes of the corporation, as defined by the Investment Company Act. The funds
have implemented additional investment policies and practices to guide their
activities in the pursuit of their respective investment objectives. These
policies and practices, which are described throughout this prospectus, are not
designated as fundamental policies and may be changed without shareholder
approval.
TWENTIETH CENTURY VALUE
The investment objective of Twentieth Century Value is long-term capital
growth. Income is a secondary objective. The fund seeks to achieve its
objectives by investing primarily in equity securities of well-established
companies with intermediate-to-large market capitalizations that are believed by
management to be undervalued at the time of purchase.
Securities may be undervalued because they are temporarily out of favor in
the market due to market decline, poor economic conditions, or actual or
anticipated unfavorable developments affecting the issuer of the security or its
industry, or because the market has overlooked them. Under normal market
conditions, the fund expects to invest at least 80% of the value of its total
assets in equity securities. The fund's investments will typically be
characterized by lower price-to-earnings, price-to-cash flow and/or
price-to-book value ratios relative to the equity market in general. Its
investments also may have above-average current dividend yields.
It is management's intention that the fund will primarily consist of
domestic equity securities. However, the fund also may invest in other types of
domestic or foreign securities consistent with the accomplishment of the fund's
objective. The other securities the fund may invest in are convertible
securities (see "Other Investment Practices, Their Characteristics and
Risks--Equity Securities," page 9), preferred stocks, bonds, notes and debt
securities of companies and debt obligations of governments and their agencies.
Investments in these securities will be made when the manager believes that the
total return potential on these securities equals or exceeds the potential
return on common stocks.
TWENTIETH CENTURY EQUITY INCOME
The investment objective of Twentieth Century Equity Income is the
production of current income. Capital appreciation is a secondary objective of
the fund. The fund seeks to achieve its objectives by screening companies
primarily for favorable dividend paying history (yield) and prospects for
continuing and/or increasing dividend paying ability and secondarily for capital
appreciation potential. The fund seeks a yield that exceeds the yield of
securities comprising the S&P 500. Total return for the fund will consist
primarily of dividend income and secondarily of capital appreciation (or
depreciation).
Under normal circumstances, the fund will invest at least 65% of the fund's
total assets in equity securities and at least 85% of the fund's total assets
will be invested in income-paying securities. The fund's portfolio will consist
primarily of domestic securities.
POLICIES APPLICABLE TO BOTH FUNDS
Each fund's holdings will be spread among industry groups that meet its
investment criteria to help reduce certain of the risks inherent in
7
common stock investments. These investments will primarily be securities listed
on major exchanges or traded in the over-the-counter markets.
Income is a primary or secondary objective of each fund. As a result, a
portion of the portfolio of each fund may consist of fixed income securities.
The value of fixed income securities fluctuates based on changes in
interest rates and in the credit quality of the issuer. Debt securities that
comprise part of a fund's fixed income portfolio will primarily be limited to
"investment grade" obligations. However, each fund may invest up to 5% of its
assets in "High yield" securities. "Investment grade" means that at the time of
purchase, such obligations are rated within the four highest categories by a
nationally recognized statistical rating organization [for example, at least Baa
by Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's
Corporation ("S&P")], or, if not rated, are of equivalent investment quality as
determined by the investment manager. According to Moody's, bonds rated Baa are
medium-grade and possess some speculative characteristics. A BBB rating by S&P
indicates S&P's belief that a security exhibits a satisfactory degree of safety
and capacity for repayment, but is more vulnerable to adverse economic
conditions and changing circumstances.
"High yield" securities, sometimes referred to as "junk bonds," are higher
risk, non-convertible debt obligations that are rated below investment grade
securities, or are unrated, but with similar credit quality.
There are no credit or maturity restrictions on the fixed income securities
in which the high yield portion of fund's portfolio may be invested. Debt
securities rated lower than Baa by Moody's or BBB by S&P or their equivalent are
considered by many to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead a weakened capacity to
make principal and interest payments on such securities that is the case with
higher quality debt securities. Regardless of rating levels, all debt securities
considered for purchase by the fund are analyzed by the investment manager to
determine, to the extent reasonably possible, that the planned investment is
sound, given the investment objective of the fund. (See "An Explanation of Fixed
Income Securities Ratings" in the Statement of Additional Information.)
The funds will not necessarily dispose of high yield securities if the
aggregate value of such securities exceeds 5% of a fund's assets if such level
is exceeded as a result of market appreciation of the value of such securities
or market depreciation of the value of the other assets of the fund. Rather, the
manager will cease purchasing any additional high yield securities until the
value of such securities is less than 5% of the fund's assets and will monitor
such investments to determine whether continuing to hold such investments is
likely to assist the fund in meeting its investment objectives.
In addition, the value of a fund's investments in fixed income securities
will change as prevailing interest rates change. In general, the prices of such
securities vary inversely with interest rates. As prevailing interest rates
fall, the prices of bonds and other securities that trade on a yield basis rise.
When prevailing interest rates rise, bond prices fall. These changes in value
may, depending upon the particular amount and type of fixed income securities
holdings of a fund, impact the net asset value of that fund's shares.
Notwithstanding the fact the funds will primarily invest in equity
securities, under exceptional market or economic conditions, the funds may
temporarily invest all or a substantial portion of their assets in cash or
investment grade short-term securities (denominated in U.S. dollars or foreign
currencies).
To the extent that a fund assumes a defensive position, it will not be
investing for capital growth.
8
OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS
For additional information, see "Investment Restrictions" in the Statement
of Additional Information.
FOREIGN SECURITIES
Each fund may invest up to 25% of its assets in the securities of foreign
issuers, including debt securities of foreign governments and their agencies,
when these securities meet its standards of selection. The principal business
activities of such issuers will be located in developed countries.
The funds may make such investments either directly in foreign securities
or indirectly by purchasing depositary receipts or depositary shares of similar
instruments ("DRs") for foreign securities. DRs are securities that are listed
on exchanges or quoted in the domestic over-the-counter markets in one country
but represent shares of issuers domiciled in another country. Direct investments
in foreign securities may be made either on foreign securities exchanges or in
the over-the-counter markets.
Subject to its investment objective and policies, each fund may invest in
common stocks, convertible securities, preferred stocks, bonds, notes and other
debt securities of foreign issuers and debt securities of foreign governments
and their agencies. The credit quality standards applicable to domestic
securities purchased by each fund are also applicable to its foreign securities
investments.
Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
EQUITY SECURITIES
In addition to investing in common stocks, the funds may invest in other
equity securities and equity equivalents. Other equity securities and equity
equivalents include securities that permit the fund to receive an equity
interest in an issuer, the opportunity to acquire an equity interest in an
issuer, or the opportunity to receive a return on its investment that permits
the fund to benefit from the growth over time in the equity of an issuer.
Examples of equity securities and equity equivalents include preferred stock,
convertible preferred stock and convertible debt securities. Each fund will
limit its purchase of convertible debt securities to those that, at the time of
purchase, are rated at least B- by S&P or B3 by Moody's, or if not rated by S&P
or Moody's are of equivalent investment quality as determined by management.
Debt securities rated below the four highest categories are not considered
"investment grade" obligations. These securities have speculative
characteristics and present more credit risk than investment grade obligations.
(For a description of the S&P and Moody's ratings categories, see "An
Explanation of Fixed Income Securities Ratings," page 7 of the Statement of
Additional Information.) Equity equivalents may also include securities whose
value or return is derived from the value or return of a different security. An
example of the type of derivative security in which the fund might invest
includes depositary receipts.
FORWARD CURRENCY
EXCHANGE CONTRACTS
Some of the securities held by the funds may be denominated in foreign
currencies. Other securities, such as DRs, may be denominated in U.S. dollars
but have a value that is dependent on the performance of a foreign security, as
valued in the currency of its home country. As a result, the value of a fund's
portfolio may be affected by changes in the exchange rate between foreign
currencies and the U.S. dollar, as well as by
9
changes in the market value of the securities themselves. The performance of
foreign currencies relative to the dollar may be a factor in a fund's overall
performance.
To protect against adverse movements in exchange rates between currencies,
the funds may, for hedging purposes only, enter into forward currency exchange
contracts. A forward currency exchange contract obligates the fund to purchase
or sell a specific currency at a future date at a specific price.
Each fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.
By entering into a forward currency exchange contract with respect to the
specific purchase or sale of a security denominated in a foreign currency, the
funds can "lock in" an exchange rate between the trade and settlement dates for
that purchase or sale. This practice is sometimes referred to as "transaction
hedging." Each fund may enter into transaction hedging contracts with respect to
all or a substantial portion of its foreign securities trades.
When the manager believes that a particular currency may decline in value
compared to the dollar, the funds may enter into forward currency exchange
contracts to sell an amount of foreign currency equal to the value of some or
all of a fund's portfolio securities either denominated in, or whose value is
tied to, that currency. This practice is sometimes referred to as "portfolio
hedging." A fund may not enter into a portfolio hedging transaction where the
fund would be obligated to deliver an amount of foreign currency in excess of
the aggregate value of the fund's portfolio securities or other assets
denominated in, or whose value is tied to, that currency.
The funds will make use of portfolio hedging to the extent deemed
appropriate by the manager. However, it is anticipated that the funds will enter
into portfolio hedges much less frequently than transaction hedges.
If a fund enters into a forward currency exchange contract, the fund, when
required, will instruct its custodian bank to segregate cash or liquid
high-grade securities in a separate account in an amount sufficient to cover its
obligation under the contract. Those assets will be valued at market daily, and
if the value of the segregated securities declines, additional cash or
securities will be added so that the value of the account is not less than the
amount of the fund's commitment. At any given time, no more than 10% of a fund's
assets will be committed to a segregated account in connection with portfolio
hedging transactions.
Predicting the relative future values of currencies is very difficult, and
there is no assurance that any attempt to protect the funds against adverse
currency movements through the use of forward currency exchange contracts will
be successful. In addition, the use of forward currency exchange contracts tends
to limit the potential gains that might result from a positive change in the
relationship between the foreign currency and the U.S.
dollar.
PORTFOLIO TURNOVER
The portfolio turnover rates of the funds are shown in the Financial
Highlights table on pages 5 and 6 of this prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a fund's objectives. The
rate of portfolio turnover is irrelevant when the manager believes a change is
in order to achieve those objectives and, accordingly, the annual portfolio
turnover rate cannot be accurately predicted.
The portfolio turnover of the funds may be higher than other investment
companies with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the funds
pay directly. Portfolio turnover may also affect the character of capital gains,
if any,
10
realized and distributed by a fund since short-term capital gains are taxable as
ordinary income.
REPURCHASE AGREEMENTS
Each fund may invest up to 20% of its assets in repurchase agreements when
such transactions present an attractive short-term return on cash that is not
otherwise committed to the purchase of securities pursuant to the fund's
investment policies.
A repurchase agreement occurs when a fund purchases an interest-bearing
obligation from a bank or broker-dealer registered under the Securities Exchange
Act of 1934 and simultaneously agrees to sell it back on a specified date in the
future (usually less than one week later) at a higher price. The repurchase
price reflects an agreed-upon interest rate during the time the fund's money is
invested in the security and is considered by the staff of the Securities and
Exchange Commission to be a loan by the fund.
A fund's risk in connection with repurchase agreements is the ability of
the seller to pay the repurchase price on the repurchase date. If the seller
defaults, the fund may incur costs, delays or losses. Management monitors the
creditworthiness of sellers.
The funds will not invest more than 15% of their respective assets in
repurchase agreements maturing in more than seven days.
The funds will enter into repurchase agreements only with those commercial
banks and broker-dealers whose creditworthiness has been reviewed and found
satisfactory by the funds' management pursuant to criteria adopted by the funds'
board of directors.
INDEX FUTURES CONTRACTS
Each fund may enter into domestic stock index futures contracts. An index
futures contract is an agreement to take or make delivery of an amount of cash
based on the difference between the value of the index at the beginning and at
the end of the contract period. Rather than actually purchasing the securities
of an index, the manager may purchase a futures contract, which reflects the
value of such underlying securities. For example, S&P 500 futures reflect the
value of the underlying companies that comprise the S&P 500 Composite Stock
Price Index. If the aggregate market value of the underlying index securities
increases or decreases during the contract period, the value of the S&P 500
futures can be expected to reflect such increase or decrease. As a result, the
manager is able to expose to the equity markets cash that is maintained by the
funds to meet anticipated redemptions or held for future investment
opportunities. Because futures generally settle within a day from the date they
are closed out (compared with three days for the types of equity securities
primarily invested in by the funds) the manager believes that this use of
futures allows the funds to effectively be fully invested in equity securities
while maintaining the liquidity needed by the funds.
When a fund enters into a futures contract, it must make deposit of cash or
high-quality debt securities, known as "initial margin," as partial security for
its performance under the contract. As the value of the index fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. Assets set aside by a fund as initial or variable margin may not be
disposed of so long as the fund maintains the contract.
The funds may not purchase leveraged futures. A fund will deposit in a
segregated account with its custodian bank cash or high-quality debt securities
in an amount equal to the fluctuating market value of the index contracts it has
purchased, less any margin deposited on its position. The funds will only invest
in exchange-traded futures. In addition, the value of index futures contracts
purchased by a fund may not exceed 5% of the fund's total assets.
DERIVATIVE SECURITIES
To the extent permitted by its investment objectives and policies, each of
the funds may
11
invest in securities that are commonly referred to as "derivative" securities.
Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as DRs or S&P 500 futures), currencies, interest rates, indices or other
financial indicators ("reference indices"). No fund may invest in an
index/structured security unless the reference index or the instrument to which
it relates is an eligible investment for the fund. For example, a security whose
underlying value is linked to the S&P 500 Index would be a permissible
investment since each of the funds may invest in the securities of companies
comprising the S&P 500 Index (assuming they otherwise meet the other
requirements for the fund), while a security whose underlying value is linked to
the price of oil would not be a permissible investment since neither fund may
invest in oil and gas leases or futures.
The return of an index/structured security may increase or decrease,
depending upon changes in the reference index.
No purchases will be made of index/ structured securities having "leverage"
characteristics. This means that no investments will be made in securities whose
change in underlying value is a multiple of the change in the reference index.
In no event will an index/structured security be purchased if its value (or
referenced value) exceeds the available cash of a fund.
Because their performance is tied to a reference index, a fund investing in
index/ structured securities, in addition to being exposed to the credit risk of
the issuer of the security, will also bear the market risk of changes in the
reference index.
The board of directors has approved management's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. Management will report on fund activity in derivative
securities to the board of directors as necessary. In addition, the board will
review management's policy for investments in derivative securities annually.
PORTFOLIO LENDING
In order to realize additional income, each fund may lend its portfolio
securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash, collateral or by
irrevocable letters of credit maintained on a current basis in an amount at
least equal to the market value of the securities loaned. During the existence
of the loan, the funds must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The funds must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable Twentieth Century to vote the securities. Such
loans may not exceed one-third of either fund's net assets valued at market. The
portfolio lending policy described in this paragraph is fundamental policy that
may be changed only by a vote of Twentieth Century's shareholders.
WHEN-ISSUED SECURITIES
Each fund may purchase new issues of securities on a when-issued basis
without limit when, in the opinion of management, such purchases will further
the investment objectives of such fund. The price of when-issued securities is
established at the time the commitment to purchase is made. Delivery of and
payment for these securities typically occur 15 to 45 days after the commitment
to purchase. Market rates of interest on debt securities at the time of delivery
may be higher or lower than those contracted for on the when-issued security.
Accordingly, the value of such security may decline prior to delivery, which
could result in a loss to the fund. A separate account consisting of cash or
high-quality liquid debt securities in an amount at least equal
12
to the when-issued commitments will be established and maintained with the
custodian. No income will accrue to the fund prior to delivery.
SHORT SALES
Each fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost. These transactions allow a fund to hedge against
price fluctuations by locking in a sale price for securities it does not wish to
sell immediately.
A fund may make a short sale when it wants to sell the security it owns at
a current attractive price, but also wishes to defer recognition of gain or loss
for federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code.
RULE 144A SECURITIES
The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds'
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the board of directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the board
of directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the board of directors of the funds have delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.
Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the fund's manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. Neither fund may
invest more than 15% of its assets in illiquid securities (securities that may
not be sold within seven days at approximately the price used in determining the
net asset value of fund shares).
PERFORMANCE ADVERTISING
From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
Each fund also may include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known
13
indices of market performance, such as the Standard & Poor's 500 index, the Dow
Jones Industrial Average, the S&P/Barra Value Index (with regard to Twentieth
Century Value) and the Lipper Equity Income Fund Index (with regard to Twentieth
Century Equity Income). Fund performance may also be compared to other funds in
our family of funds. It may also be combined or blended with other funds in our
fund family, and that combined or blended performance may be compared to the
same indices to which individual funds may be compared.
All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
The funds may also be compared, on a relative basis, to the other funds in
our fund family. This relative comparison, which may be based upon historical or
expected fund performance, volatility or other fund characteristics, may be
presented numerically, graphically or in text.
14
HOW TO INVEST WITH TWENTIETH CENTURY
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TWENTIETH CENTURY
FAMILY OF FUNDS
In addition to the funds offered by this prospectus, the Twentieth Century
family of funds also includes the 31 funds offered by Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc., Twentieth Century
Premium Reserves, Inc. and Twentieth Century Strategic Asset Allocations, Inc.
Please call the Investors Line for a prospectus and additional information about
the other funds in the Twentieth Century family of funds.
The Twentieth Century family of mutual funds also now includes the 35 funds
offered by The Benham Group as a result of the acquisition of Benham Management
Corporation, the investment manager of The Benham Group, by Twentieth Century
Companies, Inc. The Benham Group offers several funds with investment objectives
similar to funds within the Twentieth Century family, but with different fee
structures. You also may wish to consider the funds of The Benham Group for your
investment needs. For a prospectus and more information about those funds,
please call 1-800-331-8331.
INVESTING IN
TWENTIETH CENTURY
You may make an initial investment in a fund in any amount you choose.
SUBSEQUENT INVESTMENTS TO PURCHASE ADDITIONAL SHARES IN ANY ONE FUND ACCOUNT
MUST BE IN AN AMOUNT OF NOT LESS THAN $50.*
While there is no minimum investment requirement, if you have one or more
accounts with a share value of less than $2,500 ($1,000 for Uniform
Gifts/Transfers to Minors Acts ["UGMA/UTMA"] accounts), you must establish an
automatic monthly investment to purchase additional shares in each such fund
account in an amount of $50 or more.** (See "Automatic Monthly Investments,"
page 16, and "Automatic Redemption of Shares," page 22.)
*THIS REQUIREMENT DOES NOT APPLY TO 403(B) ACCOUNTS AND OTHER TYPES OF
TAX-DEFERRED RETIREMENT PLAN ACCOUNTS.
**THIS REQUIREMENT DOES NOT APPLY TO INDIVIDUAL RETIREMENT ACCOUNTS, 403(B)
ACCOUNTS AND OTHER TYPES OF TAX-DEFERRED RETIREMENT PLAN ACCOUNTS.
You may invest in the following ways:
BY MAIL
Send your application and check or money order to Twentieth Century. Checks
must be payable in U.S. dollars.
WHEN MAKING SUBSEQUENT INVESTMENTS, ENCLOSE YOUR CHECK WITH THE RETURN
REMITTANCE PORTION OF THE CONFIRMATION OF YOUR PREVIOUS INVESTMENT. IF THE
REMITTANCE SLIP IS NOT AVAILABLE, INDICATE YOUR NAME, ADDRESS AND ACCOUNT NUMBER
ON YOUR CHECK OR A SEPARATE PIECE OF PAPER.
Orders to purchase shares are effective on the day Twentieth Century
receives your check or money order. (See "When Share Price is Determined," page
25.)
BY TELEPHONE
Once your account is open, you may make investments by telephone if you
have elected the service authorizing Twentieth Century to draw on your bank
account by electronic draft when you call with instructions. Investments made by
phone are effective at the time of your call. (See "When Share Price Is
Determined," page 25.)
BY WIRE
You may make your initial or subsequent investments in Twentieth Century by
wiring funds. To do so:
(1) Instruct your bank to wire funds to the Boatmen's First National Bank
of Kansas City, Missouri (ABA routing number 101000035).
15
(2) BE SURE TO SPECIFY ON THE WIRE:
(A) TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
(B) THE FUND YOU ARE BUYING AND ACCOUNT NUMBER.
(C) YOUR NAME.
(D) YOUR CITY AND STATE.
(E) YOUR TAXPAYER IDENTIFICATION NUMBER.
Wired funds are considered received on the day they are deposited in
Twentieth Century's account if they are deposited before the close of business
on the New York Stock Exchange, usually 3 p.m. Central time. (See "When Share
Price Is Determined," page 25.)
AUTOMATIC MONTHLY INVESTMENTS
Once your account is open, you may make investments automatically by
electing the service authorizing Twentieth Century to draw on your bank account
regularly by a preauthorized electronic draft. SUCH INVESTMENTS MUST BE IN
AMOUNTS OF NOT LESS THAN $50. You should inquire at your bank whether it will
honor a pre-authorized check or electronic debit. Contact Twentieth Century if
your bank requires additional documentation.
You may change the date or amount of your monthly investment at any time by
calling or writing to Twentieth Century at least five business days before the
change is to become effective.
ADDITIONAL INFORMATION
ABOUT INVESTMENTS
TWENTIETH CENTURY CANNOT ACCEPT INVESTMENTS SPECIFYING A CERTAIN PRICE,
DATE OR NUMBER OF SHARES AND WILL RETURN THESE INVESTMENTS.
Once you have mailed or otherwise transmitted your investment instructions
to Twentieth Century, it may not be modified or canceled.
The funds reserve the right to suspend the offering of shares for a period
of time, and they reserve the right to reject any specific purchase order,
including purchases by exchange or conversion. Additionally, purchases may be
refused if, in the opinion of the manager, they are of a size that would disrupt
the management of the fund.
Twentieth Century intends, upon 60 days' prior notice, to involuntarily
redeem shares in any account that does not meet any required minimum share value
or automatic monthly investment applicable to such account. Twentieth Century
reserves the right to change such requirements from time to time or waive it in
whole or in part for certain classes of investors. (See "Automatic Monthly
Investments," on this page, and "Automatic Redemption of Shares," page 22.)
Transactions in shares of the fund may be executed by brokers or investment
advisers who charge a fee for their services. You should be aware of the fact
that these transactions may be made directly with Twentieth Century without
incurring such fees.
TAX IDENTIFICATION NUMBER
You must furnish Twentieth Century with your tax identification number and
state whether or not you are subject to withholding for prior under-reporting,
certified under penalties of perjury as prescribed by the Internal Revenue Code
and Regulations. Unless previously furnished, an investment received without
such certification will be returned. Instructions to convert or transfer shares
held in an established account will be refused unless the certification has been
provided, and redemption of such shares will be subject to federal tax
withholding at the rate of 31%. In addition, redemption proceeds will be reduced
by $50 to reimburse Twentieth Century for the penalty that the IRS will impose
on the company for failure to report your tax identification number on
information reports. Please avoid these penalties by correctly furnishing your
tax identification number.
16
CERTIFICATES
At your written request, Twentieth Century will issue negotiable stock
certificates. Unless your shares are purchased with wired funds, a certificate
will not be issued until 15 days have elapsed from the time of purchase, or
Twentieth Century has satisfactory proof of payment, such as a copy of your
canceled check.
SPECIAL SHAREHOLDER SERVICES
You may establish one or more special services, which are designed to
provide an easy way to do business with Twentieth Century. By electing these
services on your application or by completing the appropriate forms, you may
authorize:
o Investments by phone.
o Automatic Monthly Investments.
o Conversions and redemptions by phone.
o Conversions and redemptions in writing signed by only one registered
owner.
o Redemptions without a signature guarantee.
o Transmission of redemption proceeds by wire or electronic funds
transfer.
An election to establish any of the above services, except Automatic
Monthly Investments, also will apply to all existing or future accounts in the
Twentieth Century family of funds, listed under the same Social Security number
or employer identification number.
With regard to the service that enables you to convert and redeem by phone
or in writing signed by only one registered owner and with respect to
redemptions without a signature guarantee, Twentieth Century, its transfer agent
and investment adviser will not be responsible for any loss for instructions
that they reasonably believe are genuine. Twentieth Century intends to employ
reasonable procedures to confirm that instructions received by Twentieth Century
for your account in fact are genuine. Such procedures will include requiring
personal information to verify the identity of callers, providing written
confirmations of transactions, and recording telephone calls. If Twentieth
Century does not employ reasonable procedures to confirm the genuineness of
instructions, then Twentieth Century may be liable for losses due to
unauthorized or fraudulent instructions.
HOW TO CONVERT YOUR
INVESTMENT FROM ONE
TWENTIETH CENTURY
FUND TO ANOTHER
Subject to any applicable minimum initial investment requirements, you may
exchange ("convert") your fund shares to shares of any of the other funds
(except Giftrust Investors) in the Twentieth Century family of funds. Please
call the Investors Line for a prospectus and additional information about the
other funds in the Twentieth Century family of funds.
Except as noted below, conversions from any one fund account are limited to
four times in any one calendar year. In addition, the shares being converted and
the shares of each fund being acquired must have a current value of at least
$500 and otherwise meet the minimum investment requirement, if any, of the fund
being acquired. If you would like to convert your shares, please call the
Investors Line for a prospectus and additional information about the other funds
in the Twentieth Century family of funds. (See "Additional Information About
Conversions," page 18.)
Shares of the funds may be received in exchange for shares of any series
issued by the other members of the Twentieth Century family of mutual funds.
THE CONVERSION PRIVILEGE IS NOT DESIGNED TO AFFORD SHAREHOLDERS A WAY TO
PLAY SHORT-TERM SWINGS IN THE MARKET. TWENTIETH CENTURY IS NOT SUITABLE FOR THAT
PURPOSE.
BY TELEPHONE
You may convert your shares by phone if you have authorized Twentieth
Century to accept telephone instructions. (Before calling, read
17
"Additional Information About Conversions," below.)
BY MAIL
You may direct Twentieth Century in writing to convert your shares.
If you have authorized Twentieth Century to accept written instructions
from any one registered owner, and if the shares are owned by two or more
persons, only one signature is required on your written conversion request.
Otherwise, the request should be signed by each person in whose name the shares
are registered. All signatures should be exactly as the name appears in the
registration; for example, if an owner's name is registered as John Robert
Jones, he should sign that way and not as John R. Jones.
(Before writing, read "Additional Information About Conversions," below.)
ADDITIONAL INFORMATION
ABOUT CONVERSIONS
(1) IN A CONVERSION OF SHARES FROM ONE FUND ACCOUNT TO SHARES OF ANOTHER
FUND ACCOUNT, THE SHARES BEING SOLD AND THE NEW SHARES BEING PURCHASED
MUST HAVE A CURRENT VALUE OF AT LEAST $500, AND YOU MUST MEET ANY
INVESTMENT MINIMUM IMPOSED BY THE FUND BEING ACQUIRED.
(2) CONVERSIONS FROM ANY ONE FUND ACCOUNT ARE LIMITED TO FOUR TIMES IN ANY
ONE CALENDAR YEAR except for the conversion of shares pursuant to an
automatic monthly conversion. [This limitation does not apply to shares
held in 403(b) accounts, certain pooled accounts owned by institutional
investors, and time-phased redemptions of shares with a value in excess
of $250,000.]
(3) The shares being acquired must be qualified for sale in your state of
residence.
(4) If the shares are represented by a negotiable stock certificate, the
certificate must be returned before the conversion can be effected.
(5) ONCE YOU HAVE TELEPHONED OR MAILED YOUR CONVERSION REQUEST, IT IS
IRREVOCABLE AND MAY NOT BE MODIFIED OR CANCELED.
(6) If, in any 90-day period, the total of your conversions and your
redemptions from any one account exceeds the lesser of $250,000 or 1%
of the fund's assets, further conversions will be subject to special
requirements to comply with Twentieth Century's policy on large
redemptions. (See "Special Requirements for Large Redemptions," page
21.)
(7) For purposes of processing conversions, the value of the shares
surrendered and the value of the shares acquired are the net asset
values of such shares next computed after receipt of your conversion
order.
(8) Shares MAY NOT be converted unless you have furnished Twentieth Century
with your tax identification number, certified as prescribed by the
Internal Revenue Code and Regulations. (See"Tax Identification Number,"
page 16.)
(9) Conversion of shares is, for federal income tax purposes, a sale of the
shares on which you may realize a taxable gain or loss.
(10)If the request is made by a corporation, partnership, trust, fiduciary,
agent or unincorporated association, Twentieth Century will require
evidence satisfactory to it of the authority of the individual signing
the request.
HOW TO REDEEM SHARES
Twentieth Century will redeem or "buy back" your shares at any time at the
net asset value next determined after receipt of a redemption request in good
order. (Before redeeming, please read "Special Requirements for Large
Redemptions," page 21, "Additional Information About Redemptions," page 22 and
"When Share Price Is Determined," page 25.)
Your redemption proceeds may be delayed if you have owned your shares less
than 15 days. (See "Redemption Proceeds," page 20.)
18
ALL REQUESTS TO REDEEM SHARES MADE WITHIN 30 DAYS OF OUR RECEIPT OF AN
ADDRESS CHANGE (INCLUDING REQUESTS TO REDEEM THAT ACCOMPANY AN ADDRESS CHANGE),
WHICH ARE TO BE PAID BY CHECK, MUST BE IN WRITING. ADDITIONALLY, THE REQUEST
MUST BE SIGNED BY EACH PERSON IN WHOSE NAME THE SHARES ARE OWNED, AND ALL
SIGNATURES MUST BE GUARANTEED. (See "Signature Guarantee," page 20 and "How to
Change Your Address of Record," page 23.)
BY TELEPHONE
If you have authorized Twentieth Century to accept telephone instructions,
you may redeem your shares by telephone. ONCE MADE, YOUR TELEPHONE REQUEST MAY
NOT BE MODIFIED OR CANCELED.
If you call before the close of the New York Stock Exchange ("NYSE" or the
"Exchange"), usually 3 p.m. Central time, you will receive that day's closing
price.
(Before calling, read "Additional Information About Redemptions," page 22.)
BY MAIL
Your written instructions to redeem shares may be in any one of the
following forms:
o A redemption form, available from Twentieth Century.
o A letter to Twentieth Century.
o An assignment form or stock power.
o An endorsement on the back of your negotiable stock certificate, if you
have one.
ONCE MAILED TO TWENTIETH CENTURY, THE REDEMPTION REQUEST IS IRREVOCABLE AND
MAY NOT BE MODIFIED OR CANCELED.
If you have authorized Twentieth Century to accept written instructions
from any one registered owner without a signature guarantee, only one signature
is required on your written redemption request and it need not be guaranteed.
If you have not elected this special service, all signatures must be
guaranteed. (See "Signature Guarantee," page 20.) The request must be signed by
each person in whose name the shares are registered; for example, in the case of
joint ownership, each owner must sign.
All signatures should be exactly as the name appears in the registration.
If the owner's name appears in the registration as Mary Elizabeth Jones, she
should sign that way and not as Mary E. Jones.
(Before writing, see "Additional Information About Redemptions," page 22.)
BY CHECK-A-MONTH
Twentieth Century's Check-A-Month plan automatically redeems enough shares
each month to provide you with a check for a minimum of $25. To set up a
Check-A-Month plan, call Twentieth Century for instructions.
Shares will be redeemed on the 20th day of each month or the next business
day, and your check will be mailed the next day. If your monthly checks exceed
the dividends, interest and capital appreciation on your shares, the payments
will deplete your investment.
Amounts paid to you by Check-A-Month are not a return on your investment.
They are derived from the redemption of shares in your account, and you must
report on your income tax return gains or losses that you realize.
You may specify a Check-A-Month when you make your first investment. If you
order a Check-A-Month thereafter, then, as in any redemption, the request for a
Check-A-Month or any increase in amount must be signed by all owners with their
signatures guaranteed unless Twentieth Century has been authorized to accept
instructions from any one owner, by telephone or in writing, without a signature
guarantee.
You may request that the Check-A-Month be sent to an address other than the
address of record at the time of your first investment. Thereafter, a request to
send a Check-A-Month to an address other than the address of record must be
signed by all owners, with their signatures guaranteed.
19
Twentieth Century may terminate the Check-A-Month at any time, upon notice
to you, and you likewise may terminate it or change the amount of the
Check-A-Month by notice to Twentieth Century in writing or by telephone.
Termination or change will become effective within five business days following
receipt of your instruction.
Your Check-A-Month plan may begin anytime after you have owned your shares
for 15 days.
SIGNATURE GUARANTEE
When a signature guarantee is required, each signature MUST be guaranteed
by a domestic bank or trust company, credit union, broker, dealer, national
securities exchange registered securities association, clearing agency or
savings association as defined by federal law. The institution providing the
guarantee must use a signature guarantee ink stamp or medallion that states
"Signature(s) Guaranteed" and be signed in the name of the guarantor by an
authorized person with that person's title and the date. Twentieth Century may
reject a signature guarantee if the guarantor is not a member of or participant
in a signature guarantee program.
Shareholders living abroad may acknowledge their signatures before a U.S.
consular officer. Military personnel in foreign countries may acknowledge their
signatures before officers authorized to take acknowledgments; e.g., legal
officers and adjutants.
Twentieth Century may waive the signature guarantee on a redemption of
$5,000 or less if it is able to verify the signatures of all registered owners
from its account records. Twentieth Century reserves the right to amend or
discontinue this waiver policy at any time and, with regard to a particular
redemption transaction, to require a signature guarantee at its discretion.
REDEMPTION PROCEEDS
Redemption proceeds may be sent to you:
BY MAIL
If your redemption check is mailed, it is usually mailed on the second
business day after receipt of your redemption request, but not later than seven
days afterwards. If a redemption is requested shortly after a recent purchase
made by check or electronic draft, Twentieth Century will process the
redemption, but may hold the redemption proceeds beyond seven days until your
purchase funds have cleared, which may take up to 15 days or more.
No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption check is mailed. IF YOU ANTICIPATE
REDEMPTIONS SOON AFTER YOU PURCHASE YOUR SHARES, YOU ARE ADVISED TO WIRE FUNDS
TO AVOID DELAY.
Except for a direct transfer of proceeds from an IRA or 403(b) to a
custodian of another IRA or 403(b), and as noted below, all checks will be made
payable to the registered owner of the shares and will be mailed only to the
ADDRESS OF RECORD.
If you would like a redemption check made payable to someone other than the
registered owner of the shares and/or mailed to an address other than the
address of record, your request to redeem must (1) be made in writing; (2)
include an instruction to make the check payable to someone other than the
registered owner of the shares and/or mail it to an address other than the
address of record; and (3) be signed by all registered owners with their
signatures guaranteed. (See "Signature Guarantee," on this page.) Redemptions
from UGMA/UTMA accounts and from certain types of retirement accounts, such as
IRA, 403(b) and qualified retirement plan accounts, will not be eligible for
this special service. If you would like to use this special service but are not
certain that a
20
redemption from your account is eligible, please call Twentieth Century prior to
submitting your request. (See "Telephone Services," page 22.)
BY WIRE AND ELECTRONIC
FUNDS TRANSFER
You may authorize Twentieth Century to transmit redemption proceeds by wire
or electronic funds transfer. These services will be effective 30 days after
Twentieth Century receives the authorization.
Proceeds from the redemption of shares will normally be transmitted on the
first business day, but not later than the seventh day, following the
redemption.
Your bank usually will receive wired funds the day they are transmitted or
the next day. Electronically transferred funds will ordinarily be received
within one to seven days after transmission. Once the funds are transmitted, the
time of receipt and the availability of the funds are not within Twentieth
Century's control. Wired funds are subject to a charge of $10 to cover bank wire
charges, which is deducted from redemption proceeds.
If your bank account changes, you must send a new "voided" check,
preprinted with your bank registration, with written instructions, including tax
identification number. The change will be effective 30 days after receipt by
Twentieth Century.
Redemption proceeds will be transmitted by wire or electronic funds
transfer only after Twentieth Century is satisfied that checks or electronic
drafts that paid for the shares have cleared, i.e., after 15 days have elapsed
from the time of purchase, or you have furnished Twentieth Century with
satisfactory proof that the purchase funds have cleared. If a purchase were made
by check, for example, a copy of the canceled check would be satisfactory proof.
No interest is paid on the redemption proceeds after the redemption is processed
but before your redemption proceeds are transmitted. IF YOU ANTICIPATE
REDEMPTIONS WITHIN 15 DAYS AFTER YOU PURCHASE SHARES, YOU ARE ADVISED TO WIRE
FUNDS TO PAY FOR YOUR PURCHASES TO AVOID DELAY.
SPECIAL REQUIREMENTS
FOR LARGE REDEMPTIONS
Twentieth Century has elected to be governed by Rule 18f-1 under the
Investment Company Act, which obligates each fund to redeem shares in cash, with
respect to any one shareholder during any 90-day period, up to the lesser of
$250,000 or 1% of the assets of the fund. Although redemptions in excess of this
limitation will also normally be paid in cash, Twentieth Century reserves the
right to honor these redemptions by making payment in whole or in part in
readily marketable securities (a "redemption-in-kind"). If payment is made in
securities, the securities will be selected by the fund, will be valued in the
same manner as they are in computing the fund's net asset value and will be
provided to you in lieu of cash without prior notice.
If you expect to make a large redemption and would like to avoid any
possibility of being paid in securities, you may do so by providing Twentieth
Century with an unconditional instruction to redeem at least 15 days prior to
the date on which the redemption transaction is to occur. The instruction must
specify the dollar amount or number of shares to be redeemed and the date of the
transaction. Receipt of your instruction 15 days prior to the transaction
provides a fund with sufficient time to raise the cash in an orderly manner to
pay the redemption and thereby minimizes the effect of the redemption on the
fund and its remaining shareholders.
Despite its right to redeem fund shares through a redemption-in-kind,
Twentieth Century does not expect to exercise this option unless a fund has an
unusually low level of cash to meet redemptions and/or is experiencing unusually
strong demands for its cash. Such a demand might be caused, for example, by
21
extreme market conditions that result in an abnormally high level of redemption
requests concentrated in a short period of time. Absent these or similar
circumstances, Twentieth Century expects redemptions in excess of $250,000 to be
paid in cash in any fund with assets of more than $50 million if total
redemptions from any one account in any 90-day period do not exceed one-half of
1% of the total assets of the fund.
AUTOMATIC REDEMPTION OF SHARES
Whenever the shares held in an account have a value of less than $2,500
($1,000 for UGMA/UTMA accounts), a notification will be sent advising you of the
need to either make an investment to bring the value of the shares held in the
account up to $2,500 ($1,000) or to establish a $50 or more automatic monthly
investment to purchase additional shares. If the investment is not made or the
automatic monthly investment is not established within 60 days from the date of
notification, the shares held in the account will be redeemed and the proceeds
from the redemption will be sent by check to your address of record.
The automatic redemption of shares will not apply to Individual Retirement
Accounts, 403(b) accounts and other types of tax-deferred retirement plan
accounts. In addition, Twentieth Century reserves the right to modify its policy
regarding the automatic redemption of shares, or to waive such policy in whole
or in part for certain classes of investors.
ADDITIONAL INFORMATION
ABOUT REDEMPTIONS
If you experience difficulty in making a telephone redemption during
periods of drastic economic or market changes, your redemption request may be
made by regular or express mail. It will be implemented at the net asset value
next determined after your request has been received by Twentieth Century in
good order. Twentieth Century reserves the right to revise or terminate the
telephone redemption privilege at any time.
REDEMPTIONS SPECIFYING A CERTAIN DATE OR PRICE CANNOT BE ACCEPTED AND WILL
BE RETURNED.
If the shares are represented by a negotiable stock certificate, the
certificate must be returned before the redemption can be effected.
ALL REDEMPTIONS ARE MADE AND THE PRICE IS DETERMINED ON THE DAY WHEN ALL
DOCUMENTATION, PROPERLY COMPLETED, IS RECEIVED BY TWENTIETH CENTURY. (See
"When Share Price Is Determined," page 25.)
If the request to redeem is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, Twentieth Century will require
evidence satisfactory to it of the authority of the individual signing the
request. Please call or write Twentieth Century for further information.
A request to redeem shares in an IRA or 403(b) plan must be accompanied by
an IRS Form W4-P and a reason for withdrawal as specified by the IRS.
TELEPHONE SERVICES
INVESTORS LINE
You may reach a Twentieth Century Customer Service Representative by
calling our Investors Line at 1-800-345-2021. On our Investors Line, you may
request information about our funds and a current prospectus, speak with a
Customer Service Representative about your account, or get answers to any
questions that you may have about the funds and the services we offer. In
addition, if you have authorized telephone transactions in your account, you may
have a Customer Service Representative help you with investment, conversion and
redemption transactions.
UNUSUAL STOCK MARKET CONDITIONS HAVE IN THE PAST RESULTED IN AN INCREASE IN
THE NUMBER OF SHAREHOLDER TELEPHONE CALLS. IF YOU EXPERIENCE DIFFICULTY IN
REACHING TWENTIETH CENTURY ON THE INVESTORS LINE DURING SUCH PERIODS, YOU SHOULD
CONSIDER SENDING YOUR TRANSACTION INSTRUCTIONS BY
22
MAIL, EXPRESS MAIL OR COURIER SERVICE OR USING OUR AUTOMATED INFORMATION LINE,
IF YOU HAVE REQUESTED AND RECEIVED AN ACCESS CODE AND ARE NOT ATTEMPTING TO
REDEEM SHARES.
AUTOMATED INFORMATION LINE
In addition to reaching us on our Investors Line, you may also reach us by
telephone on our Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also obtain an access code
that will allow you to use the Automated Information Line to make investment and
conversion transactions in your accounts and obtain your share balance, value
and most recent transaction. Redemption transactions cannot be made on the
Automated Information Line. Please call our Investors Line at 1-800-345-2021 for
more information on how to obtain an access code for our Automated Information
Line.
HOW TO CHANGE YOUR
ADDRESS OF RECORD
You may notify Twentieth Century of changes in your address of record
either by writing us or calling our Investors Line. Because your address of
record impacts every piece of information we send to you, you are urged to
notify us promptly of any change of address. TO PROTECT YOU AND TWENTIETH
CENTURY, ALL REQUESTS TO REDEEM SHARES MADE WITHIN 30 DAYS OF OUR RECEIPT OF AN
ADDRESS CHANGE (INCLUDING REQUESTS TO REDEEM THAT ACCOMPANY AN ADDRESS CHANGE),
WHICH ARE TO BE PAID BY CHECK, MUST BE MADE IN WRITING, SIGNED BY EACH PERSON IN
WHOSE NAME THE SHARES ARE OWNED, AND ALL SIGNATURES MUST BE GUARANTEED. (See
"Signature Guarantee," page 20.)
TAX-QUALIFIED
RETIREMENT PLANS
Each fund is available for your tax-deferred retirement plan. Call or write
Twentieth Century and request the appropriate forms for:
o Individual Retirement Accounts (IRAs).
o 403(b) plans for employees of public school systems and non-profit
organizations.
o Profit sharing plans and pension plans for corporations and other
employers.
HOW TO TRANSFER AN INVESTMENT
TO A TWENTIETH CENTURY
RETIREMENT PLAN
It's easy to transfer your tax-deferred plan to Twentieth Century from
another company or custodian. Call or write Twentieth Century for a request to
transfer form.
If you direct Twentieth Century to transfer funds from an existing
non-retirement Twentieth Century account into a retirement account, the shares
in your non-retirement account will be redeemed. The redemption proceeds will be
invested in your Twentieth Century IRA or other tax-qualified retirement plan.
The redemption is a taxable event resulting in a taxable gain or loss.
HOW TO TRANSFER YOUR
SHARES TO ANOTHER PERSON
You may transfer ownership of your shares to another person or organization
by sending written instructions to Twentieth Century, SIGNED BY ALL OWNERS AND
WITH SIGNATURES GUARANTEED AS DESCRIBED UNDER "SIGNATURE GUARANTEE," PAGE 20. IF
THE SHARES ARE REPRESENTED BY A NEGOTIABLE STOCK CERTIFICATE, THE CERTIFICATE
MUST BE RETURNED WITH YOUR TRANSFER INSTRUCTIONS.
23
REPORTS TO SHAREHOLDERS
In January of each year, Twentieth Century will send shareholders a
cumulative statement of their accounts showing all transactions since the
beginning of the previous year. Shareholders of Twentieth Century Equity Income
will receive such statements, including dividend information, at the end of each
calendar quarter. You may request a statement of your account activity at any
time.
Each time you invest, redeem, transfer or convert shares, Twentieth Century
will send you a confirmation of the transaction. Carefully review all the
information relating to the transaction to ensure that your instruction was
acted on properly. Please notify Twentieth Century immediately in writing if
there is an error. If you fail to provide notification of an error within 30
days of the transaction, you will be deemed to have ratified the transaction.
No later than January 31 of each year, Twentieth Century will send you the
following reports, which you may use in completing your U.S. income tax return:
Form 1099-DIV Reports taxable distributions during the preceding year. (If
you did not receive taxable distributions in the previous year,
you will not receive a 1099-DIV.)
Form 1099-B Reports proceeds paid on redemptions during the preceding year.
Form 1099-R Reports distributions from IRAs and 403(b) plans during the
preceding year.
At such time as prescribed by law, Twentieth Century will send you a Form
5498, which reports contributions to your IRA for the previous calendar year.
In May of each year, Twentieth Century will send you an annual report that
includes audited financial statements for the fiscal year ending the preceding
March 31 and a list of securities in its portfolio on that date. In November of
each year, Twentieth Century will send you a semiannual report that includes
unaudited financial statements for the six months ending the preceding September
30, as well as a list of securities in its portfolio on that date. Twentieth
Century does not publish interim lists of portfolio securities.
Twentieth Century usually will prepare a new prospectus on August 1 of each
year. If not sent before, you will receive a current prospectus with the
confirmation of your first investment after that date.
IT IS IMPORTANT THAT YOU NOTIFY TWENTIETH CENTURY PROMPTLY OF ANY CHANGE OF
ADDRESS. (See "How to Change Your Address of Record," page 23.)
24
ADDITIONAL INFORMATION YOU SHOULD KNOW
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SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value is determined at the close of regular trading on
each day that the New York Stock Exchange is open.
Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our authorized agents before the close of
business on the New York Stock Exchange, usually 3 p.m. Central time, are
effective on, and will receive the price determined, that day as of the close of
the Exchange. Investment, redemption and exchange requests received thereafter
are effective on, and receive the price determined, as of the close of the
Exchange on the next day the Exchange is open.
Investments are considered received only when your check or wired funds are
received by us. Wired funds are considered received on the day they are
deposited in our bank account if they are deposited before the close of business
on the Exchange, usually 3 p.m. Central time, and the money is deposited that
day.
Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange, will receive that day's
price. Investments and instructions received after that time will receive the
price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the funds' transfer agent prior to the applicable cut-off
time and to make payment for any purchase transactions in accordance with the
funds' procedures or any contractual arrangement with the funds or the funds'
distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
Portfolio securities of each fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
price is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices or at
the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the board of directors.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the board of directors.
Pursuant to a determination by the funds' board of directors that such
value represents fair value, debt securities with maturities of 60 days or less
are valued at amortized cost. When a security is valued at amortized cost, it is
valued at its cost when purchased and thereafter by assuming a constant
amortization to maturity of
25
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument.
The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the NYSE, usually 3 p.m. Central
time, if that is earlier. That value is then converted to dollars at the
prevailing foreign exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established, but before the net
asset value per share was determined, which was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the board of directors.
Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the New York Stock
Exchange is not open and on which a fund's net asset value is not calculated.
Therefore, such calculation does not take place contemporaneously with the
determination of the prices of many of the portfolio securities used in such
calculation and the value of a fund's portfolio may be affected on days when
shares of the fund may not be purchased or redeemed.
WHERE TO FIND INFORMATION
ABOUT SHARE PRICE
The net asset values of Twentieth Century's funds are published in leading
newspapers daily. The net asset value of each fund may also be obtained by
calling Twentieth Century. (See "Telephone Services," page 22.)
DISTRIBUTIONS
Distributions from net investment income are declared and paid quarterly.
Distributions from net realized securities gains, if any, generally are declared
and paid once a year, but the funds may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events in
a manner consistent with the provisions of the Investment Company Act.
GENERAL INFORMATION
ABOUT DISTRIBUTIONS
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders in taxable accounts, distributions
will be reinvested unless you elect to receive them in cash. Distributions of
less than $10 and distributions on shares purchased within the last 15 days,
however, will not be paid in cash and will be reinvested. You may elect to have
distributions on shares of Individual Retirement Accounts and 403(b) plans paid
in cash only if you are 59 1/2 years old or permanently and totally disabled.
Distribution checks normally are mailed within seven days after the record date.
The board of directors may elect not to distribute capital gains in whole
or in part to take advantage of loss carryovers.
A distribution on shares of a fund does not increase the value of your
shares or your total return. At any given time, the value of your shares
includes the undistributed net gains, if any, realized by the fund on the sale
of portfolio securities and undistributed dividends and interest received, less
fund expenses.
Because undistributed gains and dividends are included in the value of your
shares prior to distribution, when they are distributed, the value of your
shares will be reduced by the amount of the distribution. If you buy your shares
through a taxable account just before the distribution, you will pay the full
price for your shares and then
26
receive a portion of the purchase price back as a taxable distribution. (See
"Taxes," on this page.)
TAXES
The funds have elected to be taxed as a regulated investment company under
Sub-chapter M of the Internal Revenue Code, which means that to the extent its
income is distributed to shareholders, it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If shares are purchased through tax-deferred accounts, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account on a tax-deferred basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If the shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. Distributions from net long-term capital gains are taxable as
long-term capital gains regardless of the length of time you have held the
shares on which such distributions are paid. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.
Dividends and interest received by the funds on foreign securities, and, in
limited circumstances capital gains realized by the funds upon the sale of such
securities, may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Foreign countries generally do not impose taxes
on capital gains in respect of investments by non-resident investors. The
foreign taxes paid by a fund will reduce its dividends.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your invest- ment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the investment
portfolio of the fund. If these portfolio securities are subsequently sold and
the gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains. (See "General Information About
Distributions," page 26.)
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions made to taxable accounts also may be subject to state and
local taxes, even if all or a substantial part of such distributions are derived
from interest on U.S. government obligations, which, if you received them
directly, would be exempt from state income tax. However, most but not all
states allow this tax exemption to pass through to fund shareholders when a fund
pays distributions to its shareholders. You should consult your tax adviser
about the tax status of such distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and
27
Regulations, Twentieth Century is required by federal law to withhold
and remit to the IRS 31% of reportable payments (which may include dividends,
capital gains distributions and redemptions). Those regulations require you to
certify that the Social Security number or tax identification number you provide
is correct and that you are not subject to 31% withholding for previous
under-reporting to the IRS. You will be asked to make the appropriate
certification on your application. PAYMENTS REPORTED BY TWENTIETH CENTURY THAT
OMIT YOUR SOCIAL SECURITY NUMBER OR TAX IDENTIFICATION NUMBER WILL SUBJECT
TWENTIETH CENTURY TO A PENALTY OF $50, WHICH WILL BE CHARGED AGAINST YOUR
ACCOUNT IF YOU FAIL TO PROVIDE THE CERTIFICATION BY THE TIME THE REPORT IS
FILED. THIS CHARGE IS NOT REFUNDABLE. (See "Tax Identification Number," page
16.)
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
Under the laws of the State of Maryland, the board of directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, Investors
Research Corporation ("Investors Research") serves as the investment manager of
the funds. Its principal place of business is Twentieth Century Tower, 4500 Main
Street, Kansas City, Missouri, 64111. Investors Research has been providing
investment advisory services to investment companies and institutional clients
since 1958.
Investors Research supervises and manages the investment portfolio of the
funds and directs the purchase and sale of their investment securities.
Investors Research utilizes a team of portfolio managers, assistant portfolio
managers and analysts acting together to manage the assets of the funds. The
team meets regularly to review portfolio holdings and to discuss purchase and
sale activity. The team adjusts holdings in the funds' portfolios as it deems
appropriate in pursuit of the funds' investment objectives. Individual Portfolio
manager members of the team may also adjust portfolio holdings of the funds as
necessary between team meetings.
The portfolio manager members of the team managing the funds described in
this prospectus and their work experience for the last five years are as
follows:
ROBERT C. PUFF JR., Executive Vice President and Chief Investment Officer,
has been a Portfolio Manager for more than five years, having joined Twentieth
Century in 1983. In his position as Chief Investment Officer, Mr. Puff oversees
the investment activities of all of the teams that manage Twentieth Century
funds.
PETER A. ZUGER, Vice President and Portfolio Manager, joined Twentieth
Century in June 1993 as a Portfolio Manager. Prior to joining Twentieth Century,
Mr. Zuger served as an investment manager in the Trust Department of NBD Bancorp
in Detroit, Michigan.
PHILLIP N. DAVIDSON, Vice President and Portfolio Manager, joined Twentieth
Century in September 1993 as a Portfolio Manager. Prior to joining Twentieth
Century, Mr. Davidson served
28
as an investment manager for Boatmen's Trust Company in St. Louis, Missouri.
The activities of Investors Research are subject only to directions of the
funds' board of directors. Investors Research pays all the expenses of the funds
except brokerage, taxes, interest, fees and expenses of the non-interested
person directors (including counsel fees) and extraordinary expenses.
For the services provided to the funds, Investors Research receives an
annual fee of 1% of the average net assets of each fund offered by this
prospectus. On the first business day of each month, each fund pays the
management fee to the manager for the previous month at the specified rate. The
fee for the previous month is calculated by multiplying 1% of the aggregate
average daily closing value of each fund's net assets during the previous month
by a fraction, the numerator of which is the number of days in the previous
month and the denominator of which is 365 (366 in leap years).
The management fees paid by the funds to Investors Research may be higher
than those paid by many investment companies. However, most if not all of such
companies also pay, in addition, certain of their own expenses, while virtually
all of the funds' expenses, except as specified above, are paid by Investors
Research.
CODE OF ETHICS
The funds and Investors Research have adopted a Code of Ethics, which
restricts personal investing practices by employees of Investors Research and
its affiliates. Among other provisions, the Code of Ethics requires that
employees with access to information about the purchase or sale of securities in
the funds' portfolios obtain preclearance before executing personal trades. With
respect to portfolio managers and other investment personnel, the Code of Ethics
prohibits acquisition of securities in an initial public offering, as well as
profits derived from the purchase and sale of the same security within 60
calendar days. These provisions are designed to ensure that the interests of
fund shareholders come before the interests of the people who manage those
funds.
TRANSFER AND
ADMINISTRATIVE SERVICES
Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, acts as transfer, administrative services and dividend paying agent for
Twentieth Century. It provides facilities, equipment and personnel to Twentieth
Century and is paid for such services by Investors Research. Certain
recordkeeping services that would otherwise be performed by Twentieth Century
Services, Inc., may be performed by an insurance company or other entity
providing similar services for various retirement plans using shares of
Twentieth Century as a funding medium or by broker-dealers for their customers
investing in shares of Twentieth Century. Investors Research may elect to enter
into a contract to pay them for such services.
From time to time, special services may be offered to shareholders who
maintain higher share balances in the Twentieth Century family of funds. These
services may include the waiver of minimum investment requirements, expedited
confirmation of shareholder transactions, newsletters and a team of personal
representatives. Any expenses associated with these special services will be
paid by Investors Research.
Investors Research and Twentieth Century Services, Inc., are both wholly
owned by Twentieth Century Companies, Inc. James E. Stowers Jr., chairman of the
board of directors of the funds, controls Twentieth Century Companies by virtue
of his ownership of a majority of its common stock.
FURTHER INFORMATION
ABOUT TWENTIETH CENTURY
Twentieth Century Capital Portfolios, Inc. was organized as a Maryland
corporation on June 14, 1993.
29
Twentieth Century Capital Portfolios is a diversified, open-end management
investment company whose shares were first offered for sale September 1, 1993.
Its business and affairs are managed by its officers under the direction of its
board of directors.
The principal office of Twentieth Century Capital Portfolios is Twentieth
Century Tower, 4500 Main Street, P.O. Box 419200, Kansas City, Missouri,
64141-6200. All inquiries may be made by mail to that address, or by phone to
1-800-345-2021. (For local Kansas City area or international callers:
816-531-5575.)
Twentieth Century Capital Portfolios issues two series of $0.01 par value
shares, Twentieth Century Value and Twentieth Century Equity Income. Each series
is commonly referred to as a fund. Each share, when issued, is fully paid and
non-assessable. The assets belonging to each series of shares are held
separately by the custodian.
Each share, irrespective of series, is entitled to one vote for each dollar
of net asset value applicable to such share on all questions, except for those
matters that must be voted on separately by the series of shares affected.
Matters affecting only one series are voted upon only by that series.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors if they choose to do so, and in such event the holders of the
remaining shares will not be able to elect any person or persons to the board of
directors.
Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the funds' bylaws, the holders of at least 10% of the votes
entitled to be cast may request the funds to hold a special meeting of
shareholders. We will assist in the communication with other shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
30
TWENTIETH CENTURY
Capital Portfolios
Prospectus
August 1, 1996
[company logo]
Investments That Work(TM)
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P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
- --------------------------------------------------
PERSON-TO-PERSON ASSISTANCE:
1-800-345-2021 OR 816-531-5575
- --------------------------------------------------
AUTOMATED INFORMATION LINE:
1-800-345-8765
- --------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-753-1865
- --------------------------------------------------
FAX: 816-340-7962
- --------------------------------------------------
INTERNET ADDRESS: HTTP://WWW.TWENTIETH-CENTURY.COM
- --------------------------------------------------
[company logo]
================================================================================
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SH-BKT-5393 [Recycled logo]
9608 Recycled
<PAGE>
TWENTIETH CENTURY
CAPITAL PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
August 1,
1996
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This statement is not a prospectus but should be read in conjunction with the
current prospectus of Twentieth Century Capital Portfolios, Inc., dated
August 1, 1996. Please retain this document for future reference.
To obtain the prospectus, call Twentieth Century toll-free at 1-800-345-2021
(816-531-5575 for local and international calls), or write P.O. Box
419200, Kansas City, Missouri 64141-6200.
TABLE OF CONTENTS
Page Prospectus
Herein Page
Investment Objective of the Funds 3 2
Investment Restrictions 3 --
Forward Currency Exchange Contracts 4 9
Index Futures Contracts 5 10
An Explanation of Fixed Income Securities Ratings 7 --
Short Sales 9 12
Portfolio Turnover 9 12
Officers and Directors 10 --
Management 12 27
Custodians 13 --
Independent Auditors 14 --
Capital Stock 14 --
Taxes 14 25
Brokerage 15 --
Performance Advertising 16 13
Redemptions in Kind 16 --
Holidays 17 --
Financial Statements 17 --
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INVESTMENT OBJECTIVE OF THE FUNDS
The investment objective of each series of shares of Twentieth Century
Capital Portfolios, Inc. is described on the inside front cover page of the
prospectus. In achieving its objective, a fund must conform to certain policies,
some of which are designated in the prospectus or in this Statement of
Additional Information as "fundamental" and cannot be changed except with the
approval of the shareholders entitled to cast a majority of the outstanding
votes of the fund as defined in the Investment Company Act of 1940 (the
"Investment Company Act").
The following paragraph is also a statement of fundamental policy with
respect to selection of investments:
In general, within the restrictions outlined herein, each series has broad
powers with respect to investing funds or holding them uninvested. Investments
are varied according to what is judged advantageous under changing economic
conditions. It is the policy of Twentieth Century to retain maximum flexibility
in management without restrictive provisions as to the proportion of one or
another class of securities that may be held, subject to the investment
restrictions described below. It is management's intention that each fund will
generally consist of equity securities. However, the investment manager may
invest the assets of a fund in varying amounts in other instruments and in
senior securities, such as bonds, debentures, preferred stocks and convertible
issues, when such a course is deemed appropriate in order to attempt to attain
its financial objective.
Neither the Securities and Exchange Commission nor any other federal or
state agency participates in or supervises the management of the funds or their
investment practices or policies.
INVESTMENT RESTRICTIONS
Fundamental policies that may be changed only with shareholder approval
provide that neither series of shares:
(1) Shall invest more than 15% of its assets in illiquid investments.
(2) Shall invest in the securities of companies that, including predecessors,
have a record of less than three years of continuous operation.
(3) Shall lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act. No such rules and regulations have been issued, but it is Twentieth
Century's policy that such loans must be secured continuously by cash
collateral maintained on a current basis in an amount at least equal to the
market value of the securities loaned or by irrevocable letters of credit.
During the existence of the loan, a fund must continue to receive the
equivalent of the interest and dividends paid by the issuer on the
securities loaned and interest on the investment of the collateral; the
fund must have the right to call the loan and obtain the securities loaned
at any time on five days' notice, including the right to call the loan to
enable the fund to vote the securities. To comply with the regulations of
certain state securities administrators, such loans may not exceed
one-third of the fund's net assets valued at market.
(4) Shall, with regard to 75% of its portfolio, purchase the security of any
one issuer if such purchase would cause more than 5% of the fund's assets
at market to be invested in the securities of such issuer, except U.S.
government securities, or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in a fund's
portfolio.
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(5) Shall invest for control or for management or concentrate its investment in
a particular company or a particular industry. No more than 25% of the
assets of a fund, exclusive of cash and U.S. government securities, will be
invested in securities of any one industry.
(6) Shall buy securities on margin or sell short (unless it owns or by virtue
of its ownership of other securities has the right to obtain securities
equivalent in kind and amount to the securities sold without additional
cost); however, a fund may make margin deposits in connection with the use
of any financial instrument or any transaction in securities permitted by
its fundamental policies.
(7) Shall invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers' commission
and no sales charges.
(8) Shall issue any senior security.
(9) Shall underwrite any securities.
(10) Shall borrow any money, except in an amount not in excess of 5% of the
total assets of the series and then only for emergency and extraordinary
purposes. Note: This investment restriction does not prohibit escrow and
collateral arrangements in connection with investment in futures contracts
and related options by a fund.
(11) Shall purchase or sell real estate, except that a fund may purchase
securities of issuers that deal in real estate and may purchase securities
that are secured by interests in real estate.
The Investment Company Act imposes certain additional restrictions upon
acquisition by the fund of securities issued by insurance companies, brokers,
dealers, underwriters or investment advisers, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership.
To comply with the requirements of state security administrators, Twentieth
Century may, from time to time, agree to additional investment restrictions. For
example, the fund has agreed not to invest in oil, gas or other mineral leases,
or in warrants, except that a fund may purchase securities with warrants
attached. In addition, the fund will not invest in puts, calls, straddles,
spreads or any combination thereof (other than hedging positions or positions
covered by cash or securities). These types of restrictions are not fundamental
policies and may be adopted, revised or withdrawn as required or permitted by
the various state securities administrators.
Neither the Securities and Exchange Commission nor any other agency of the
federal or state government participates in or supervises the fund's management
or its investment practices or policies.
FORWARD CURRENCY
EXCHANGE CONTRACTS
Each fund conducts its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into forward currency exchange contracts
("forward contracts") to purchase or sell foreign currencies.
Each fund expects to use forward contracts under two circumstances:
(1) When the manager wishes to "lock in" the U.S. dollar price of a security
when a fund is purchasing or selling a security denominated in a foreign
currency, the fund would be able to enter into a forward contract to do so;
(2) When the manager believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar, a fund would be
able to enter into a forward contract to sell foreign currency for a fixed
U.S. dollar amount approximating the value of some or all of its portfolio
securities either denominated in, or whose value is tied to, such foreign
currency.
As to the first circumstance, when a fund enters into a trade for the
purchase or sale of a security denominated in a foreign currency, it may be
desirable to establish (lock in) the U.S.
4
dollar cost or proceeds. By entering into forward contracts in U.S. dollars for
the purchase or sale of a foreign currency involved in an underlying security
transaction, the fund will be able to protect itself against a possible loss
between trade and settlement dates resulting from the adverse change in the
relationship between the U.S. dollar and the subject foreign currency.
Under the second circumstance, when the manager believes that the currency
of a particular country may suffer a substantial decline relative to the U.S.
dollar, a fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all
of its portfolio securities either denominated in, or whose value is tied to,
such foreign currency. The fund will place cash or high-grade liquid securities
in a separate account with its custodian in an amount equal to the value of the
forward contracts entered into under the second circumstance. If the value of
the securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account equals the amount of the fund's commitments with respect to such
contracts.
The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible since the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. The manager does not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the manager
believes that it is important to have flexibility to enter into such forward
contracts when it determines that a fund's best interests may be served.
Generally, a fund will not enter into a forward contract with a term of
greater than one year. At the maturity of the forward contract, the fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate the obligation to deliver the foreign
currency by purchasing an "offsetting" forward contract with the same currency
trader obligating the fund to purchase, on the same maturity date, the same
amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for a fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.
INDEX FUTURES CONTRACT
As described in the prospectus, each fund may enter into domestic stock
index futures contracts. Unlike when a fund purchases securities, no purchase
price for the underlying securities is paid by the fund at the time it purchases
a futures contract. When a futures contract is entered into, both the buyer and
seller of the contract are required to deposit with a futures commission
merchant ("FCM") cash or high-grade debt securities in an amount equal to a
percentage of the contract's value, as set by the exchange on which the contract
is traded. This amount is known as "initial margin" and is held by the Fund's
custodian for the benefit of the FCM in the event of any default by the fund in
the payment of any future obligations.
The value of the index futures is adjusted daily to reflect the fluctuation
of the value of the underlying securities that comprise the index.
5
This is a process known as marking the contract to market. If the value of a
party's position declines, that party is required to make additional "variation
margin" payments to the FCM to settle the change in value. The party that has a
gain may be entitled to receive all or a portion of this amount. The FCM may
have access to the funds' margin account only under specified conditions of
default.
The funds maintain from time to time a percentage of their assets in cash
or high-grade liquid securities to provide for redemptions or to hold for future
investment in securities consistent with the funds' investment objectives. The
funds may enter into index futures contracts as an efficient means to expose the
funds' cash position to the domestic equity market. The manager believes that
the purchase of futures contracts is an efficient means to effectively be fully
invested in equity securities.
The funds intend to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the
Commodity Futures Trading Commission ("CFTC") and the National Futures
Association, which regulate trading in the futures markets. To do so, the
aggregate initial margin required to establish such positions may not exceed 5%
of the fair market value of a fund's net assets, after taking into account
unrealized profits and unrealized losses on any contracts it has entered into.
The principal risks generally associated with the use of futures include:
o the possible absence of a liquid secondary market for any particular
instrument may make it difficult or impossible to close out a position when
desired (liquidity risk);
o the risk that the counter party to the contract may fail to perform its
obligations or the risk of bankruptcy of the FCM holding margin deposits
(counter party risk);
o the risk that the index of securities to which the futures contract relates
may go down in value (market risk); and
o adverse price movements in the underlying index can result in losses
substantially greater than the value of a fund's investment in that
instrument because only a fraction of a contract's value is required to be
deposited as initial margin (leverage risk); PROVIDED, HOWEVER, that the
funds may not purchase leveraged futures, so there is no leverage risk
involved in the funds' use of futures.
A liquid secondary market is necessary to close out a contract. The funds
seek to manage liquidity risk by investing only in exchange-traded futures.
Exchange-traded index futures pose less risk that there will not be a liquid
secondary market than privately negotiated instruments. Through their clearing
corporations, the futures exchanges guarantee the performance of the contracts.
Futures contracts are generally settled within a day from the date they are
closed out, as compared to three days for most types of equity securities. As a
result, futures contracts can provide more liquidity than an investment in the
actual underlying securities. Nevertheless, there is no assurance that a liquid
secondary market will exist for any particular futures contract at any
particular time. Liquidity may also be influenced by an exchange-imposed daily
price fluctuation limit, which halts trading if a contract's price moves up or
down more than the established limit on any given day. On volatile trading days
when the price fluctuation limit is reached, it may be impossible for a fund to
enter into new positions or close out existing positions. If the secondary
market for a futures contract is not liquid because of price fluctuation limits
or otherwise, a fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until liquidity in the market is re-established. As a result, such
fund's access to other assets held to cover its futures positions also could be
impaired until liquidity in the market is re-established.
The funds manage counter-party risk by investing in exchange-traded index
futures. In the event of the bankruptcy of the FCM that holds margin on behalf
of a fund, that fund may
6
be entitled to the return of margin owed to such fund only in proportion to the
amount received by the FCM's other customers. The manager will attempt to
minimize the risk by monitoring the creditworthiness of the FCMs with which the
funds do business.
The prices of futures contracts depend primarily on the value of their
underlying instruments. As a result, the movement in market price of index
futures contracts will reflect the movement in the aggregate market price of the
entire portfolio of securities comprising the index. Since the funds are not
index funds, a fund's investment in futures contracts will not correlate
precisely with the performance of such fund's other equity investments. However,
the manager believes that an investment in index futures will more closely
reflect the investment performance of the funds than an investment in U.S.
government or other highly liquid, short-term debt securities, which is where
the cash position of the funds would otherwise be invested.
The policy of the manager is to remain fully invested in equity securities.
There may be times when the manager deems it advantageous to the funds not to
invest excess cash in index futures, but such decision will generally not be the
result of an active effort to use futures to time or anticipate market movements
in general.
AN EXPLANATION OF FIXED
INCOME SECURITIES RATINGS
As described in the prospectus, the funds may invest in fixed income
securities. With the exception of convertible securities, the funds may invest
only in investment grade obligations.
Fixed income securities ratings provide the investment manager with current
assessment of the credit rating of an issuer with respect to a specific fixed
income security. The following is a description of the rating categories
utilized by the rating services referenced in the prospectus disclosure:
The following summarizes the ratings used by Standard & Poor's Corporation
("S&P") for bonds:
AAA--This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.
AA--Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only to a small
degree.
A--Debt rated A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher-rated
categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions, which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B--Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
7
CCC--Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial and economic conditions
to meet timely payment of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied B or B- rating.
CC--The rating CC typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C--The rating C typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
CI--The rating CI Is reserved for income bonds on which no interest is
being paid.
D--Debt rated D is in payment default.
The D rating category is used when interest payments or principal payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
To provide more detailed indications of credit quality, the ratings from AA
to CCC may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
The following summarizes the ratings used by Moody's Investors Service,
Inc. ("Moody's") for bonds:
Aaa--Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present that make the long-term risk appear somewhat
larger than the Aaa securities.
A--Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment some time in the
future.
Baa--Bonds that are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.
Ba--Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
8
B--Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa--Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca--Bonds that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds that are rated C are the lowest-rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
category from Aa through B. The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of
that generic rating category.
SHORT SALES
A fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost.
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If a fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. There will be certain additional transaction
costs associated with short sales, but the fund will endeavor to offset these
costs with income from the investment of the cash proceeds of short sales.
A fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price but also wishes to defer
recognition of gain or loss for federal income tax purposes and for purposes of
satisfying certain tests applicable to regulated investment companies under the
Internal Revenue Code. In such a case, all or some part of any future losses in
the fund's long position in substantially identical securities may not become
deductible for tax purposes until all or some part of the short position has
been closed.
PORTFOLIO TURNOVER
The portfolio turnover rates of the funds are shown in the Financial
Highlights table in the prospectus.
With respect to each series of shares, management will purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, the rate of portfolio turnover may be greater than other investment
companies with similar investment objectives.
The corporation intends to purchase a given security whenever management
believes it will contribute to the stated objective of a fund, even if the same
security has only recently been sold. In selling a given security, management
keeps in mind that (1) profits from sales of securities held less than three
months must be limited in order to meet the requirements of Subchapter M of the
Internal Revenue Code, and (2) profits from sales of securities are taxed to
shareholders. Subject to those considerations, the corporation will sell a given
security, no matter for how long or how short a period it has been held in the
portfolio and no matter whether the sale is at a gain or at a loss, if
management believes that the security is
9
not fulfilling its purpose, either because, among other things, it did not live
up to management's expectations, or because it may be replaced with another
security holding greater promise, or because it has reached its optimum
potential, or because of a change in the circumstances of a particular company
or industry or in general economic conditions, or because of some combination of
such reasons.
When a general decline in security prices is anticipated, a fund may
decrease or eliminate entirely its equity position and increase its cash
position, and when a rise in price levels is anticipated, a fund may increase
its equity position and decrease its cash position. It should be expected,
however, that the funds will, under most circumstances, be essentially fully
invested in equity securities and equity equivalents.
Since investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives, management believes that the rate
of portfolio turnover is irrelevant when management believes a change is in
order to achieve those objectives.
OFFICERS AND DIRECTORS
The principal officers and directors of the corporation, their positions
held with Twentieth Century, their principal business experience during the past
five years, and their affiliation with Investors Research Corporation and its
affiliated companies are listed below. Unless otherwise noted, the business
address of each director and officer is 4500 Main Street, Kansas City, Missouri
64111. Those directors who are "interested persons" as defined in the Investment
Company Act are indicated by an asterisk (*).
JAMES E. STOWERS, JR.,* chairman, principal executive officer and director;
chairman, director and controlling shareholder of Twentieth Century Companies,
Inc., parent corporation of Investors Research Corporation and Twentieth Century
Services, Inc.; chairman and director of Investors Research Corporation,
Twentieth Century Services, Inc., Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Premium Reserves, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.
JAMES E. STOWERS III,* president and director; president and director,
Investors Research Corporation, Twentieth Century Services, Inc., Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc., Twentieth
Century Premium Reserves, Inc., TCI Portfolios, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century Companies, Inc.
THOMAS A. BROWN, director; 2029 Wyandotte, Kansas City, Missouri; chief
executive officer, Associated Bearing Company, a corporation engaged in the sale
of bearings and power transmission products; director, Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc., Twentieth Century
Premium Reserves, Inc., TCI Portfolios, Inc. and Twentieth Century Strategic
Asset Allocations, Inc.
ROBERT W. DOERING, M.D., director; 6406 Prospect, Kansas City, Missouri;
general surgeon; director, Twentieth Century Investors, Inc., Twentieth Century
World Investors, Inc., Twentieth Century Premium Reserves, Inc., TCI Portfolios,
Inc. and Twentieth Century Strategic Asset Allocations, Inc.
LINSLEY L. LUNDGAARD, director; 18630 East Via Hermosa, Rio Verde, Arizona;
retired; formerly vice president and national sales manager, Flour Milling
Division, Cargill, Inc.; director, Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Premium Reserves, Inc., TCI
Portfolios, Inc. and Twentieth Century Strategic Asset Allocations, Inc.
DONALD H. PRATT, director; P.O. Box 419917, Kansas City, Missouri;
president, Butler Manufacturing Company; director, Twentieth Century Investors,
Inc., Twentieth Century World Investors, Inc., Twentieth Century Premium
Reserves, Inc., TCI Portfolios, Inc. and Twentieth Century Strategic Asset
Allocations, Inc.
10
LLOYD T. SILVER JR., director; 2300 West 70th Terrace, Mission Hills,
Kansas; president, LSC, Inc., manufacturer representative; director, Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc., Twentieth
Century Premium Reserves, Inc., TCI Portfolios, Inc. and Twentieth Century
Strategic Asset Allocations, Inc.
M. JEANNINE STRANDJORD, director; 2330 Shawnee Mission Parkway, Westwood,
Kansas; senior vice president and treasurer, Sprint Corporation; director,
Twentieth Century Investors, Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Premium Reserves, Inc., TCI Portfolios, Inc. and Twentieth
Century Strategic Asset Allocations, Inc.
JOHN M. URIE, director; 5511 N.W. Flint Ridge Road, Kansas City, Missouri;
consultant; formerly director of finance, City of Kansas City, Missouri;
director, Twentieth Century Investors, Inc., Twentieth Century World Investors,
Inc., Twentieth Century Premium Reserves, Inc., TCI Portfolios, Inc.
and Twentieth Century Strategic Asset Allocations, Inc.
WILLIAM M. LYONS, executive vice president and general counsel; executive
vice president, secretary and general counsel, Twentieth Century Investors, Inc.
and Twentieth Century World Investors, Inc.; executive vice president and
general counsel, Twentieth Century Premium Reserves, Inc., TCI Portfolios, Inc.,
Twentieth Century Strategic Asset Allocations, Inc., Twentieth Century
Companies, Inc., Investors Research Corporation and Twentieth Century Services,
Inc.
ROBERT T. JACKSON, executive vice president- finance and principal
financial officer; treasurer, Twentieth Century Companies, Inc. and Investors
Research Corporation; executive vice president and treasurer, Twentieth Century
Services, Inc.; executive vice president-finance, Twentieth Century Investors,
Inc., TCI Portfolios, Inc., Twentieth Century World Investors, Inc., Twentieth
Century Premium Reserves, Inc. and Twentieth Century Strategic Asset
Allocations, Inc.; formerly executive vice president, Kemper Corporation.
PATRICK A. LOOBY, vice president and secretary; vice president and
secretary, Twentieth Century Premium Reserves, Inc., TCI Portfolios and
Twentieth Century Strategic Asset Allocations, Inc.; vice president, Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc. and Twentieth
Century Services, Inc.; formerly associated with the law firm of Stinson, Mag &
Fizzell, Kansas City, Missouri.
MARYANNE ROEPKE, CPA, vice president, treasurer and principal accounting
officer; vice president and treasurer, Twentieth Century Investors, Inc.,
Twentieth Century World Investors, Inc., Twentieth Century Premium Reserves,
Inc. and TCI Portfolios, Inc.; vice president, Twentieth Century Services, Inc.
MERELE A. MAY, controller; controller, Twentieth Century Investors, Inc.,
TCI Portfolios, Inc. and Twentieth Century Strategic Asset Allocations, Inc.
The board of directors has established four standing committees: the
executive committee, the audit committee, the compliance committee and the
nominating committee.
Messrs. Stowers Jr., Stowers III and Urie constitute the executive
committee of the board of directors. The committee performs the functions of the
board of directors between meetings of the board, subject to the limitations on
its power set out in the Maryland General Corporation Law and except for matters
required by the Investment Company Act to be acted upon by the whole board.
Messrs. Lundgaard (chairman), Brown and Doering and Ms. Strandjord
constitute the audit committee. The functions of the audit committee include
recommending the engagement of the corporation's independent auditors, reviewing
the arrangements for and scope of the annual audit, reviewing comments made by
the independent auditors with respect to internal controls and the
considerations given or the corrective action taken by management and reviewing
nonaudit services provided by the independent auditors.
11
Messrs. Brown (chairman), Pratt and Silver constitute the compliance
committee. The functions of the compliance committee include reviewing the
results of the funds' compliance testing program, reviewing quarterly reports
from the manager of the funds regarding various compliance matters and
monitoring the implementation of the funds' Code of Ethics, including any
violations thereof.
The nominating committee has, as its principal role, the consideration and
recommendation of individuals for nomination as directors. The names of
potential director candidates are drawn from a number of sources, including
recommendations from members of the board, management and shareholders. This
committee also reviews and makes recommendations to the board with respect to
the composition of board committees and other board-related matters, including
its organization, size, composition, responsibilities, functions and
compensation. The members of the nominating committee are Messrs. Urie
(chairman), Lundgaard and Stowers III.
The directors of the corporation also serve as directors of Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc., Twentieth
Century Premium Reserves, Inc., Twentieth Century Strategic Asset Allocations,
Inc. and TCI Portfolios, Inc., registered investment companies. Each director
who is not an "interested person" as defined in the Investment Company Act
receives for service as a member of the board of all six companies an annual
director's fee of $36,000, a fee of $1,000 per regular board meeting attended
and $500 per special board meeting and committee meeting attended. In addition,
those directors who are not "interested persons" who serve as chairman of a
committee of the board of directors receive an additional $2,000 for such
services. These fees and expenses are divided among the six investment companies
based upon their relative net assets. Under the terms of the management
agreement with Investors Research Corporation, the funds are responsible for
paying such fees and expenses. For the most recent fiscal year, Twentieth
Century Value's share of such fees and expenses was $6,570 and Twentieth Century
Equity Income's share was $950.
Set forth below is the aggregate compensation paid for the periods
indicated by the corporation and by the Twentieth Century family of mutual funds
as a whole to each director of the corporation who is not an "interested person"
as defined in the Investment Company Act.
Aggregate Total Compensation from
Compensation the Twentieth Century
Director from the corporation1 Family of Funds2
- --------------------------------------------------------------------------------
Thomas A. Brown $ 986.73 $44,500
Robert W. Doering, M.D. 975.64 44,000
Linsley L. Lundgaard 1,019.99 46,000
Donald H. Pratt 853.69 38,500
Lloyd T. Silver Jr. 975.64 44,000
M. Jeannine Strandjord 964.56 43,500
John M. Urie 1,019.99 46,000
- --------------------------------------------------------------------------------
1 Includes compensation actually paid by the corporation during the fiscal year
ended March 31, 1996.
2 Includes compensation paid by the six investment company members of the
Twentieth Century family of funds for the calendar year ended December 31,
1995.
Those directors who are "interested persons," as defined in the Investment
Company Act, receive no fee as such for serving as a director. The salaries of
such individuals, who also are officers of the corporation, are paid by
Investors Research Corporation.
MANAGEMENT
A description of the responsibilities and method of compensation of
Twentieth Century's investment manager, Investors Research Corporation
("Investors Research"), appears in the prospectus under the caption
"Management."
During the fiscal years ended March 31, 1994, 1995 and 1996, the management
fees paid by Twentieth Century Value and Twentieth Century Equity Income to
Investors Research were:
12
FUND Year Ended March 31
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
VALUE
Management fees $ 5,747,940 $ 1,514,154 $ 309,388*
Average net assets 590,608,755 151,415,400 30,938,800*
EQUITY INCOME
Management fees 831,887 145,270**
Average net assets 84,610,230 14,527,000**
- --------------------------------------------------------------------------------
* Since inception (September 1, 1992) through March 31, 1994.
**Since inception (August 1, 1994) through March 31, 1995.
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (i) the board of
directors of Twentieth Century or by the vote of a majority of outstanding votes
(as defined in the Investment Company Act) and (ii) by the vote of a majority of
the directors of Twentieth Century who are not parties to the agreement or
interested persons of Investors Research, cast in person at a meeting called for
the purpose of voting on such approval.
The management agreement provides that it may be terminated at any time
without payment of any penalty by the board of directors of Twentieth Century,
or by a vote of Twentieth Century's shareholders, on 60 days' written notice to
Investors Research and that it shall be automatically terminated if it is
assigned.
The management agreement provides that Investors Research shall not be
liable to Twentieth Century or its shareholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
The management agreement also provides that Investors Research and its
officers, directors and employees may engage in other business, devote time and
attention to any other business whether of a similar or dissimilar nature, and
render services to others.
Certain investments may be appropriate for the funds and also for other
clients advised by Investors Research. Investment decisions for the funds and
other clients are made with a view to achieving their respective investment
objectives after consideration of such factors as their current holdings,
availability of cash for investment, and the size of their investment generally.
A particular security may be bought or sold for only one client, or in different
amounts and at different times for more than one but less than all clients. In
addition, purchases or sales of the same security may be made for two or more
clients on the same date. Such transactions will be allocated among clients in a
manner believed by Investors Research to be equitable to each. In some cases
this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.
In addition to managing the funds, on August 1, 1996, Investors Research
was also acting as an investment adviser to 9 institutional accounts and to six
registered investment companies within the Twentieth Century mutual fund
complex: Twentieth Century Investors, Inc., Twentieth Century World Investors,
Inc., Twentieth Century Premium Reserves, Inc., TCI Portfolios, Inc., Twentieth
Century Capital Portfolios, Inc. and Twentieth Century Strategic Asset
Allocations, Inc.
Twentieth Century Services, Inc. provides physical facilities, including
computer hardware and software and personnel, for the day-to-day administration
of Twentieth Century and Investors Research. Investors Research pays Twentieth
Century Services, Inc., for such services.
As stated in the prospectus, all of the stock of Twentieth Century
Services, Inc., and Investors Research is owned by Twentieth Century Companies,
Inc.
CUSTODIANS
Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York
10003-9598, Boatmen's First National Bank of Kansas City, 10th and Baltimore,
Kansas City, Missouri 64105
13
and United Missouri Bank of Kansas City, N.A., 10th and Grand, Kansas City,
Missouri 64105, each serves as custodian of the assets of the funds. The
custodians take no part in determining the investment policies of the funds or
in deciding which securities are purchased or sold by the funds. The funds,
however, may invest in certain obligations of the custodians and may purchase or
sell certain securities from or to the custodians.
INDEPENDENT AUDITORS
Ernst & Young LLP, One Kansas City Place, 1200 Main Street, Kansas City,
Missouri 64105, serves as Twentieth Century's independent auditors, providing
services including (1) audit of the annual financial statements, (2) assistance
and consultation in connection with SEC filings and (3) review of the annual
federal income tax return filed for each fund by Twentieth Century.
CAPITAL STOCK
Twentieth Century's capital stock is described in the prospectus under the
caption "Further Information About Twentieth Century."
Twentieth Century currently has two series of shares outstanding: Twentieth
Century Value and Twentieth Century Equity Income. Twentieth Century may in the
future issue one or more additional series of shares without a vote of the
shareholders. The assets belonging to each series of shares are held separately
by the custodian and the shares of each series represent a beneficial interest
in the principal, earnings and profits (or losses) of investment and other
assets held for that series. Your rights as a shareholder are the same for all
series of securities unless otherwise stated. Within their respective series,
all shares will have equal redemption rights. Each share, when issued, is fully
paid and non-assessable. Each share, irrespective of series, is entitled to one
vote for each dollar of net asset value represented by such share on all
questions.
In the event of complete liquidation or dissolution of Twentieth Century,
shareholders of each series of shares will be entitled to receive, pro rata, all
of the assets less the liabilities of that series.
As of June 30, 1996, in excess of 5% of the outstanding shares of either
series of Twentieth Century were owned of record as follows: Charles Schwab &
Co., San Francisco, California, owned 14.9% of Twentieth Century Value and 21.5%
of Twentieth Century Equity Income.
As of June 30, 1996, the shares of the corporation owned beneficially and
of record by the officers and directors of the corporation in the aggregate were
less than 1% of either series of shares offered by Twentieth Century.
TAXES
Each fund intends to qualify under the Internal Revenue Code (the "Code")
as a regulated investment company. If they qualify, they will not be subject to
U.S. federal income tax on net investment income and net capital gains, which
are distributed to its shareholders within certain time periods specified in the
Code. Amounts not distributed on a timely basis would be subject to federal and
state corporate income tax and to a nondeductible 4% excise tax.
Each fund intends to distribute annually all of its net ordinary income and
net capital gains.
Distributions from net investment income and net short-term capital gains
are taxable to shareholders as ordinary income. The dividends received deduction
available to corporate shareholders for dividends received from a fund will
apply to ordinary income distributions only to the extent that they are
attributable to the fund's dividend income from U.S. corporations. In addition,
the dividends received deduction will be limited if the shares with respect to
which the dividends are received are treated as debt-financed or are deemed to
have been held less than 46 days by a fund.
14
Distributions from net long-term capital gains are taxable to a shareholder
as long-term capital gains regardless of the length of time the shares on which
such distributions are paid have been held by the shareholder. However,
shareholders should note that any loss realized upon the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any distribution of long-term capital gain to the shareholder
with respect to such shares.
Redemption of shares of a fund will be a taxable transaction for federal
income tax purposes and shareholders will generally recognize gain or loss in an
amount equal to the difference between the basis of the shares and the amount
received. Assuming that shareholders hold such shares as a capital asset, the
gain or loss will be a capital gain or loss and will generally be long term if
shareholders have held such shares for a period of more than one year. If a loss
is realized on the redemption of fund shares, the reinvestment in additional
fund shares within 30 days before or after the redemption may be subject to the
"wash sale" rules of the Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes.
In addition to the federal income tax consequences described above relating
to an investment in shares of the funds, there may be other federal, state or
local tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisers with respect to the effect of this investment on their own situations.
BROKERAGE
Under the terms of the Management Agreement between Twentieth Century and
Investors Research, Investors Research has the responsibility of selecting
brokers to execute portfolio transactions. Twentieth Century's policy is to
secure the most favorable prices and execution of orders on its portfolio
transactions. So long as that policy is met, Investors Research may take into
consideration the factors discussed below when selecting brokers.
Investors Research receives statistical and other information and services
without cost from brokers and dealers. Investors Research evaluates such
information and services, together with all other information that it may have,
in supervising and managing the investment portfolios of Twentieth Century.
Because such information and services may vary in amount, quality and
reliability, their influence in selecting brokers varies from none to very
substantial. Investors Research proposes to continue to place some of Twentieth
Century's brokerage business with one or more brokers who provide information
and services.
Such information and services will be in addition to and not in lieu of the
services required to be performed by Investors Research. Investors Research does
not utilize brokers who provide such information and services for the purpose of
reducing the expense of providing required services to Twentieth Century.
In the years ended March 31, 1996, 1995 and 1994, the brokerage commissions
of each fund were as follows:
FUND Year Ended March 31
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
VALUE $2,929,681 $607,139 $175,983
EQUITY INCOME $325,185 $51,427 --
- --------------------------------------------------------------------------------
The brokerage commissions paid by the funds may exceed those that another
broker might have charged for effecting the same transactions because of the
value of the brokerage and/or research services provided by the broker. Research
services furnished by brokers through whom Twentieth Century effects securities
transactions may be used by Investors Research in servicing all of its accounts,
and not all such services may be used by Investors Research in managing the
portfolios of Twentieth Century.
15
The staff of the Securities and Exchange Commission has expressed the view
that the best price and execution of over-the-counter transactions in portfolio
securities may be secured by dealing directly with principal market makers,
thereby avoiding the payment of compensation to another broker. In certain
situations, the officers of Twentieth Century and the manager believe that the
facilities, expert personnel and technological systems of a broker enable the
corporation to secure as good a net price by dealing with a broker instead of a
principal market maker, even after payment of the compensation to the broker.
Twentieth Century normally places its over-the-counter transactions with
principal market makers but also may deal on a brokerage basis when utilizing
electronic trading networks or as circumstances warrant.
PERFORMANCE ADVERTISING
Individual fund performance may be compared to various indices, including
the Standard & Poor's 500 index, the Consumer Price Index, the Dow Jones
Industrial Average and the S&P/Barra Value (with regard to Twentieth Century
Value) and the Lipper Equity Income Fund Index (with regard to Twentieth Century
Equity Income). Fund performance also may be compared to the rankings prepared
by Lipper Analytical Services, Inc.
The following table sets forth the average annual total return of the funds
for the periods indicated. Average annual total return is calculated by
determining each fund's cumulative total return for the stated period and then
computing the annual compound return that would produce the cumulative total
return if the fund's performance had been constant over that period. Cumulative
total return includes all elements of return, including reinvestment of
dividends and capital gains distributions. Annualization of a fund's return
assumes that the partial year performance will be constant throughout the
period. Actual return through the period may be greater or less than the
annualized date.
Average Annual
TWENTIETH CENTURY VALUE Total Return
- --------------------------------------------------------------------------------
Year ended March 31, 1996 28.06%
September 1, 1993 (Inception)
through March 31, 1996 17.94%
- --------------------------------------------------------------------------------
Average Annual
TWENTIETH CENTURY EQUITY INCOME Total Return
- --------------------------------------------------------------------------------
Year Ended March 31, 1996 25.67%
August 1, 1994 (Inception)
through March 31, 1996 21.92%
- --------------------------------------------------------------------------------
The funds also may advertise average annual total return over periods of
time other than one, five and 10 years and cumulative total return over various
time periods.
The funds also may elect to advertise cumulative total return and average
annual total return, computed as described above. The following table shows the
cumulative total returns and the average annual returns for the funds since
their respective dates of inception.
Cumulative Total Average Annual
FUND Return Since Inception Compound Rate
- --------------------------------------------------------------------------------
VALUE 53.10% 17.94%
EQUITY INCOME 39.12% 21.92%
- --------------------------------------------------------------------------------
REDEMPTIONS IN KIND
In order to protect the investments of the remaining shareholders,
Twentieth Century has adopted a policy regarding large redemptions. That policy
is described in detail in the prospectuses under the heading "Redemption
Proceeds--Special Requirements for Large Redemptions."
In addition to the policy just mentioned, Twentieth Century has elected to
be governed by Rule 18f-1 under the Investment Company Act of 1940, pursuant to
which it is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of a fund during any 90-day period for any
one shareholder. Should redemptions by any shareholder exceed such limitation,
Twentieth Century will
16
have the option of redeeming the excess in cash or in kind. If shares are
redeemed in kind, the redeeming shareholder might incur brokerage costs in
converting the assets to cash. The securities delivered will be selected at the
sole discretion of Twentieth Century and will not necessarily be representative
of the entire portfolio and will be securities that Twentieth Century regards as
least desirable. The method of valuing securities used to make redemptions in
kind will be the same as the method of valuing portfolio securities described in
the prospectus under the heading "How Share Price is Determined," and such
valuation will be made as of the same time the redemption price is determined.
HOLIDAYS
Twentieth Century does not determine the net asset value of its shares on
days when the New York Stock Exchange is closed. Currently, the Exchange is
closed on Saturdays and Sundays and on holidays, namely New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
FINANCIAL STATEMENTS
The financial statements of the various series of shares of Twentieth
Century for the fiscal year ended March 31, 1996, are included in the annual
report to shareholders, which are incorporated herein by reference. You may
receive copies without charge upon request to Twentieth Century at the address
and phone numbers shown on the cover of this statement.
17
This page left blank for your notes.
18
TWENTIETH CENTURY
CAPITAL PORTFOLIOS
STATEMENT OF
ADDITIONAL INFORMATION
August 1, 1996
[Company logo]
Investments That Work(TM)
- -----------------------------------------------------------
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
- -----------------------------------------------------------
PERSON-TO-PERSON ASSISTANCE:
1-800-345-2021 OR 816-531-5575
- -----------------------------------------------------------
AUTOMATED INFORMATION LINE:
1-800-345-8765
- -----------------------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-753-1865
- -----------------------------------------------------------
FAX: 816-340-7962
- -----------------------------------------------------------
INTERNET ADDRESS: HTTP://WWW.TWENTIETH-CENTURY.COM
- -----------------------------------------------------------
[Company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-5394 [Recycled logo]
9608 Recycled
<PAGE>
PART C OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
(i) Financial Statements filed in Part A of Registration Statement:
1. Financial Highlights
(ii) Financial Statements filed in Part B of the Registration
Statement (each of the following financial statements is
contained in the Registrant's Annual Report dated March 31, 1996,
and which are incorporated by reference in Part B of this
Registration Statement):
1. Statements of Assets and Liabilities at March 31, 1996.
2. Statements of Operations for the year ended March 31, 1996.
3. Statements of Changes in Net Assets for the year ended
March 31, 1996.
4. Notes to Financial Statements as of March 31, 1996.
5. Schedule of Investments at March 31, 1996.
6. Report of Independent Auditors dated April 26, 1996.
(b) Exhibits (all exhibits not filed herein are being incorporated
herein by reference).
1. (a) Articles of Incorporation of Twentieth Century Capital
Portfolios, Inc., dated June 11, 1993 (filed herein
as EX-99.B1a).
(b) Articles Supplementary of Twentieth Century Capital
Portfolios, Inc., dated March 11, 1996 (filed herein
as EX-99.B1b).
2. By-Laws of Twentieth Century Capital Portfolios, Inc.
(filed herein as Ex-99.B2).
3. Voting Trust Agreements - None.
4. Specimen securities (filed as Exhibit 4 to Pre-Effective
Amendment No. 2 to the Registration Statement on Form N-1A
of the Registrant, Commission File No. 33-64872).
5. (a) Management Agreement dated as of August 1, 1993,
between Twentieth Century Capital Portfolios, Inc. and
Investors Research Corporation (filed herein as
EX-99.B5a).
(b) Addendum to Management Agreement dated as of May 11,
1994, between Twentieth Century Capital Portfolios,
Inc. and Investors Research Corporation (filed
herein as EX-99.B5b).
6. Underwriting Agreements - None.
7. Bonus and Profit Sharing Plan, Etc. - None.
8. (a) Custodian Agreement, dated as of August 1, 1993, by and
between Twentieth Century Capital Portfolios, Inc. and
United States Trust Company of New York (filed
herein as EX-99.B8a).
(b) Custodian Agreement, dated as of August 1, 1993, by and
between Twentieth Century Capital Portfolios, Inc. and
Boatmen's First National Bank of Kansas City (filed
herein as EX-99.B8b).
(c) Custodian Agreement, dated as of September 21, 1994, by
and between Twentieth Century Capital Portfolios, Inc.
and United Missouri Bank, N.A. (filed herein as
EX-99.B8c).
(d) Custody Agreement dated September 12, 1995, between
UMB Bank, N.A., Investors Research Corporation,
Twentieth Century Investors, Inc., Twentieth Century
World Investors, Inc., Twentieth Century Premium
Reserves, Inc. and Twentieth Century Capital
Portfolios, Inc. (filed as an Exhibit to Pre-Effective
Amendment No. 4 on Form N-1A of Twentieth Century
Strategic Asset Allocations, Inc., Commission File No.
33-79482).
(e) Amendment No. 1 to Custody Agreement dated January 25,
1996, between UMB Bank, N.A., Investors Research
Corporation, Twentieth Century Investors, Inc.,
Twentieth Century World Investors, Inc., Twentieth
Century Premium Reserves, Inc. and Twentieth Century
Capital Portfolios, Inc. (filed as an Exhibit to
Pre-Effective Amendment No. 4 on Form N-1A of Twentieth
Century Strategic Asset Allocations, Inc., Commission
File No. 33-79482).
9. Transfer Agency Agreement, dated as of August 1, 1993, by
and between Twentieth Century Capital Portfolios, Inc. and
Twentieth Century Services, Inc. (filed herein as EX-99.B9).
10. Opinion and consent of Counsel (filed herein as EX-99.B10).
11. Consent of Ernst & Young LLP (filed herein as EX-99.B11).
12. (a) Annual Report of the Registrant dated March 31, 1996
(filed electronically on May 17, 1996).
(b) Semiannual Report of the Registrant dated September 30,
1995 (filed electronically on November 27, 1995).
13. Agreements for Initial Capital, Etc. - None.
14. Model Retirement Plans (filed as Exhibits 14(a)-(d) to
Pre-Effective Amendment No. 2 to the Registration Statement
on Form N-1A of Twentieth Century World Investors, Inc.,
Commission File No. 33-39242, filed on May 6, 1991).
15. 12b-1 Plans - None.
16. Schedule of Computation for Performance Advertising
Quotations (filed herein as EX-99.B16).
17. Power of Attorney (filed herein as EX-99.B17).
27. (a) Financial Data Schedule for Twentieth Century Value,
(EX-27.1.1).
(b) Financial Data Schedule for Twentieth Century Equity
Income (EX-27.1.2).
ITEM 25. Persons Controlled by or Under Common Control with Registrant - None.
ITEM 26. Number of Holders of Securities.
Number of Record Holders
Title of Series As of June 30, 1996
--------------- ------------------------
Twentieth Century Value 62,707
Twentieth Century Equity Income 11,131
ITEM 27. Indemnification.
The Registrant is a Maryland corporation. Section 2-418 of the
Maryland General Corporation Law allows a Maryland corporation to
indemnify its officers, directors, employees and agents to the extent
provided in such statute.
Article XIII of the Registrant's Articles of Incorporation, Exibit 1,
requires the indemnification of the Registrant's directors and
officers to the extent permitted by Section 2-418 of the Maryland
General Corporation Law, the Investment Company Act of 1940 and all
other applicable laws.
The Registrant has purchased an insurance policy insuring its officers
and directors against certain liabilities which such officers and
directors may incur while acting in such capacities and providing
reimbursement to the Registrant for sums which it may be permitted or
required to pay to its officers and directors by way of
indemnification against such liabilities, subject in either case to
clauses respecting deductibility and participation.
ITEM 28. Business and Other Connections of Investment Advisor.
Investors Research Corporation, the investment advisor, is engaged in
the business of managing investments for registered investment
companies, deferred compensation plans and other institutional
investors.
ITEM 29. Principal Underwriters - None.
ITEM 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules promulgated thereunder,
are in the possession of Registrant, Twentieth Century Services, Inc.
and Investors Research Corporation, all located at 4500 Main Street,
Kansas City, Missouri 64111.
ITEM 31. Management Services - None.
ITEM 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
(d) The Registrant hereby undertakes that it will, if requested to
do so by the holders of at least 10% of the Registrant's
outstanding votes, call a meeting of shareholders for the purpose
of voting upon the question of the removal of a director and to
assist in communication with other shareholders as required by
Section 16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 5 to its
Registration Statement pursuant to Rule 485(b) promulgated under the Securities
Act of 1933, as amended, and has duly caused this Post-Effective Amendment No. 5
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Kansas City, State of Missouri on the
31st day of July, 1996.
Twentieth Century Capital Portfolios, Inc.
(Registrant)
By: /s/ James E. Stowers III
James E. Stowers III, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ James E. Stowers, Jr. Chairman of the Board, July 31, 1996
- ------------------------- Director and Principal
James E. Stowers, Jr. Executive Officer
/s/ James E. Stowers III President and Director July 31, 1996
- -------------------------
James E. Stowers, III
/s/ Robert T. Jackson Executive Vice President-Finance July 31, 1996
- ------------------------- and Principal
Robert T. Jackson Financial Officer
*Maryanne Roepke Treasurer and Principal July 31, 1996
- ------------------------- Accounting Officer
Maryanne Roepke
*Thomas A. Brown Director July 31, 1996
- -------------------------
Thomas A. Brown
*Robert W. Doering, M.D. Director July 31, 1996
- -------------------------
Robert W. Doering, M.D.
*Linsley L. Lundgaard Director July 31, 1996
- -------------------------
Linsley L. Lundgaard
*Donald H. Pratt Director July 31, 1996
- -------------------------
Donald H. Pratt
*Lloyd T. Silver, Jr. Director July 31, 1996
- -------------------------
Lloyd T. Silver, Jr.
*M. Jeannine Strandjord Director July 31, 1996
- -------------------------
M. Jeannine Strandjord
*John M. Urie Director July 31, 1996
- -------------------------
John M. Urie
*By /s/ James E. Stowers III
James E. Stowers III
Attorney-in-Fact
</TABLE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
EX-99.B1a Articles of Incorporation of Twentieth Century Capital
Portfolios, Inc..
EX-99.B1b Articles Supplementary of Twentieth Century Capital Portfolios,
Inc.
EX-99.B2 By-Laws of Twentieth Century Capital Portfolios, Inc.
EX-99.B4 Specimen certificate representing shares of common stock of
Twentieth Century Capital Portfolios, Inc. (filed as Exhibit 4 to
Pre-Effective Amendment No. 2 to the Registration Statement,
filed on August 18, 1993, and incorporated herein by reference).
EX-99.B5a Management Agreement, dated as of August 1, 1993, between
Twentieth Century Capital Portfolios, Inc. and Investors Research
Corporation.
EX-99.B5b Addendum to Management Agreement, dated as of May 11, 1994,
between Twentieth Century Capital Portfolios, Inc. and Investors
Research Corporation.
EX-99.B8a Custodian Agreement, dated as of August 1, 1993, by and between
Twentieth Century Capital Portfolios, Inc. and United States
Trust Company of New York.
EX-99.B8b Custodian Agreement, dated as of August 1, 1993, by and between
Twentieth Century Capital Portfolios, Inc. and Boatmen's First
National Bank of Kansas City.
EX-99.B8c Custodian Agreement, dated as of September 21, 1994, by and
between Twentieth Century Capital Portfolios, Inc. and United
Missouri Bank, N.A.
EX-99.B8d Custody Agreement dated September 12, 1995, between UMB Bank,
N.A., Investors Research Corporation, Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Premium Reserves, Inc. and Twentieth Century
Capital Portfolios, Inc. (filed as an Exhibit to Pre-Effective
Amendment No. 4 on Form N-1A of Twentieth century Strategic Asset
Allocations, Inc., Commission File No. 33-79482, filed February
5, 1996, and incorporated herein by reference).
EX-99.B8e Amendment No. 1 to Custody Agreement dated January 25, 1996,
between UMB Bank, N.A., Investors Research Corporation, Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Premium Reserves, Inc. and Twentieth Century
Capital Portfolios, Inc. (filed as an Exhibit to Pre-Effective
Amendment No. 4 on Form N-1A of Twentieth Century Strategic
Asset Allocations, Inc., Commission File No. 33-79482, filed
February 5, 1996, and incorporated herein by reference).
EX-99.B9 Transfer Agency Agreement dated as of August 1, 1993, by and
between Twentieth Century Capital Portfolios, Inc. and Twentieth
Century Services, Inc.
EX-99.B10 Opinion and Consent of Counsel.
EX-99.B11 Consent of Ernst & Young LLP.
EX-99.B12a Annual Report of the Registrant dated March 31, 1996 (filed
electronically on May 17, 1996, and incorporated herein by
reference).
EX-99.B12b Semiannual Report of the Registrant dated September 30, 1995
(filed electronically on November 27, 1995, and incorporated
herein by reference).
EX-99.B14 Model Retirement Plans (filed as Exhibits 14(a),14(b),14(c) and
14(d) to Pre-Effective Amendment No. 2 to the Registration
Statement and incorporated herein by reference).
EX-99.B16 Schedule for Computation of Advertising Performance Quotations.
EX-99.B17 Power of Attorney.
EX-27.1.1 Financial Data Schedule for Twentieth Century Value.
EX-27.1.2 Financial Data Schedule for Twentieth Century Equity Income.
ARTICLES OF INCORPORATION
OF
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
FIRST: I, the undersigned, Patrick A. Looby, whose post office address
is 4500 Main Street, P.O. Box 418210, Kansas City, Missouri 64141-9210, being at
least 18 years of age, do, under and by virtue of the general laws of the State
of Maryland, execute and acknowledge these Articles of Incorporation as
incorporator with the intention of forming a corporation.
SECOND: The name of the Corporation is Twentieth Century Capital
Portfolios, Inc.
THIRD: The purposes for which the Corporation is formed are:
1. To carry on the business of an investment company.
2. To engage in any or all lawful business for which corporations may be
organized under the Maryland General Corporation Law except insofar as such
business may be limited by the Investment Company Act of 1940 as from time to
time amended, or by any other law of the United States regulating investment
companies, or by limitations imposed by the laws of the several states wherein
the Corporation offers its shares.
FOURTH: The name of the resident agent of the Corporation in this state
is The Corporation Trust Company, a corporation of this state, and the post
office address of the resident agent is 32 South Street, Baltimore, Maryland
21202. The current address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Company, 32 South Street,
Baltimore, Maryland 21202.
FIFTH:
1. The total number of shares of stock which the Corporation shall have
authority to issue is 100,000,000 shares of a par value of $0.01 each, and an
aggregate value of $1,000,000. All such shares are herein classified as "Common
Stock" subject, however, to the authority herein granted to the Board of
Directors to divide such shares into such classes and series as the Board of
Directors may from time to time determine. The Board of Directors shall have
the power to fix the number of shares in each such class or series and to fix
such preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms or conditions of
redemption thereof as are not stated in these Articles of Incorporation.
2. The preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption thereof shall be as follows:
(a) Holders of shares of stock of the Corporation shall be entitled to one
vote for each dollar of net asset value per share for each share of stock held,
irrespective of the class or series; provided, however, that (1) matters
affecting only one class or series shall be voted upon only by that class or
series, and (2) where required by the Investment Company Act of 1940 or the
regulations adopted thereunder or any other applicable law, certain matters
shall be voted on separately by each class or series of shares affected.
(b) All payments received by the Corporation for the sale of stock of each
class or series and the investment and reinvestment thereof and the income,
earnings and profits thereon shall belong to the class or series and the
investment and reinvestment thereof and the income, earnings and profits
thereon shall belong to the class or series of shares with respect to which such
payments were received, and are herein referred to as "assets belonging to" such
class or series. Any assets which are not readily identifiable as belonging to
any particular class or series shall be allocated to any one or more of any
class or series in such manner as the Board of Directors in its sole discretion
deems fair and equitable.
(c) The assets belonging to each class or series shall be charged with the
liabilities of the Corporation in respect of that class or series, and any
liabilities of the Corporation that are not readily identifiable as belonging
to any particular class or series in such manner as the Board of Directors in
its sole discretion deems fair and equitable.
(d) The holders of the outstanding shares of each class or series of
capital stock of the Corporation shall be entitled to receive dividends from
ordinary income and distributions from capital gains of the assets belonging to
such class or series in such amounts, if any, and payable in such manner, as the
Board of Directors may from time to time determine. Such dividends and
distributions may be declared and paid by means of a formula or other method of
determination at meetings held less frequently than the declaration and payment
of such dividends and distributions.
(e) In the event of the liquidation or dissolution of the Corporation or
of any class or series thereof, stockholders of each class or series shall be
entitled to receive the assets belonging to such class or series to be
distributed among them in proportion to the number of shares of such class or
series held by them.
(f) Each holder of any class or series of stock of the Corporation, upon
proper documentation and the payment of all taxes in connection therewith, may
require the Corporation to redeem or repurchase such stock at the net asset
value thereof, less a redemption charge or discount determined by the Board
of Directors. Payment shall be made in cash or in kind as determined by the
Corporation.
(g) Each holder of any class or series of stock of the Corporation may,
upon proper documentation and the payment of all taxes in connection therewith,
convert the shares represented thereby into shares of stock of any other class
or series of the Corporation on the basis of their relative net asset values
less a conversion charge or discount determined by the Board of Directors,
PROVIDED, HOWEVER, that the Board of Directors may abolish, limit or suspend
such right of conversion.
(h) The Corporation may cause the shares of any class or series owned by
any stockholder to be redeemed whenever the number of such shares or their
dollar value is below the minimum fixed by the Board of Directors for such class
or series.
SIXTH: The number of directors of the Corporation shall be seven, which
number may be changed in accordance with the By-Laws of the Corporation but
shall never be less than three. The names of the directors who shall act until
the first annual meeting of stockholders and until their successors are elected
and qualify are:
Thomas A. Brown
Robert W. Doering, M.D.
Linsley L. Lundgaard
Lloyd T. Silver
James E. Stowers, Jr.
James E. Stowers, III
John M. Urie
SEVENTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation, its directors
and stockholders:
1. The Board of Directors has exclusive authority to make, amend, and
repeal the By-Laws of the Corporation.
2. The Board of Directors is authorized to increase or decrease the
number of shares of any series or class, and to classify and reclassify any
unissued stock into classes and series within classes that may be established
and designated from time to time and to set or change the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of stock, of any
class or series, which are not stated in these Articles of Incorporation.
3. No holder of shares of stock of any class or series shall be
entitled as a matter of right to subscribe for or purchase or receive any part
of any new or additional issue of shares of stock of any class or series or of
any class or series, whether now or hereafter authorized or whether issued for
money, for a consideration other than money, or by way of dividend.
4. Notwithstanding any provisions of law requiring a greater proportion
than a majority of the votes of all classes or series or of any class or series
of stock entitled to be cast to take or authorize any action, the Corporation
may take or authorize such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.
5. The Corporation reserves the right from time to time to make any
amendments of its charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
charter, or any outstanding stock.
6. The Corporation is not required to hold an annual meeting in any
year in which the election of directors is not required to be acted upon under
the Investment Company Act of 1940.
7. Unless a greater number therefor shall be specified in the By-Laws of
the Corporation, the presence at any stockholders meeting, in person or by
proxy, of stockholders entitled to cast one-third of the votes thereat shall be
necessary and sufficient to constitute a quorum for the transaction of business
at such meeting.
EIGHTH: The Corporation shall indemnify to the full extent permitted by
law each person who has served at any time as director or officer of the
Corporation, and his heirs, administrators, successors and assigns, against any
and all reasonable expenses, including counsel fees, amounts paid upon
judgments, and amounts paid in settlement (before or after suit is commenced)
actually incurred by such person in connection with the defense or settlement
of any claim, action, suit or proceeding in which he is made a party, or which
may be asserted against him, by reason of being or having been a director or
officer of the Corporation. Such indemnification shall be in addition to any
other rights to which such person may be entitled under any law, by-law,
agreement, vote of stockholders, or otherwise. Notwithstanding the foregoing,
no officer or director of the Corporation shall be indemnified against any
liability, whether or not there is an adjudication of liability, arising by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duties within the meaning of Section 17 (and the interpretations
thereunder) of the Investment Company Act of 1940. Any determination to
indemnify under this Article Eighth shall be made by "reasonable and fair means"
within the meaning of Section 17 and shall otherwise comply with the Investment
Company Act and interpretations thereunder.
NINTH: All of the provisions of these Articles of Incorporation are
subject to, and shall be effective only in compliance with, the Investment
Company Act of 1940, all other applicable laws of the United States, the
applicable laws of the several states and the applicable rules and regulations
of administrative agencies having jurisdiction, as such laws, rules and
regulations may from time to time be amended.
IN WITNESS WHEREOF, the undersigned, who executed the foregoing Articles
of Incorporation, hereby acknowledges the same to be his act and states, that
to the best of his knowledge, information and belief, the matters and facts
therein are true in all material respects, and that this statement is made under
penalties of perjury.
Dated this 11th day of June, 1993
/s/Patrick A. Looby
Patrick A. Looby
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
ARTICLES SUPPLEMENTARY
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC., a Maryland corporation
whose principal Maryland office is located in Baltimore, Maryland (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article SEVENTH of the Charter of the Corporation, the
Board of Directors of the Corporation has duly established two (2) different
series for the Corporation's stock (each hereinafter referred to as a "Series").
On February 24, 1996, the Board of Directors, acting in accordance with Section
2-105(c) of the Maryland General Corporation Law, increased the total number of
shares of capital stock that the Corporation has the authority to issue.
Immediately prior to the increase, the Corporation had the authority to issue
Two Hundred Million (200,000,000) shares of capital stock. As increased, the
Corporation has the authority to issue One Billion One Hundred Million
(1,100,000,000) shares of capital stock. Both immediately before the increase
and after the increase, all shares authorized are classified as common stock,
subject to serialization as set forth below. The par value of its common stock
immediately before the increase was, and after the increase is, One Cent ($.01)
per share. Immediately prior to the increase the aggregate par value of all
shares of all classes of stock that the Corporation is authorized to issue was
Two Million Dollars ($2,000,000). After giving effect to the increase, the
aggregate par value of all shares of all series of stock that the Corporation is
authorized to issue is Eleven Million Dollars ($11,000,000). The Board of
Directors has serialized One Billion (1,000,000,000) shares of the One Billion
One Hundred Million (1,100,000,000) shares of authorized capital stock of the
Corporation, par value One Cent ($.01) per share, among the Series as follows:
<TABLE>
<CAPTION>
Number
Number of Shares of Shares Aggregate
Series Before Increase As Increased Par Value
- ------ ---------------- ------------ ---------
<S> <C> <C> <C>
Twentieth Century Value 130,000,000 700,000,000 $ 7,000,000
Twentieth Century Equity Income 20,000,000 300,000,000 3,000,000
The par value of each share of stock in each Series is One Cent ($0.01) per share.
</TABLE>
SECOND: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to serialize, classify or
reclassify and issue any unissued shares of any Series or any unissued shares
that have not been allocated to a Series, and to fix or alter all terms thereof,
to the full extent provided by the Charter of the Corporation.
THIRD: A description of the Series, including the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions for redemption is set forth
in the Charter of the Corporation and is not changed by these Articles
Supplementary, except with respect to the creation of the various Series.
FOURTH: The Board of Directors of the Corporation duly adopted
resolutions dividing into Series the authorized capital stock of the Corporation
and allocating shares to each Series as set forth in these Articles
Supplementary.
IN WITNESS WHEREOF, TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC. has
caused these Articles Supplementary to be signed and acknowledged in its name
and on its behalf by its Executive Vice President and its corporate seal to be
hereunto affixed and attested to by its Secretary on this 11 day of March, 1996.
TWENTIETH CENTURY CAPITAL
ATTEST: PORTFOLIOS, INC.
/s/Patrick A. Looby By: /s/William M. Lyons
Name: Patrick A. Looby Name: William M. Lyons
Title: Secretary Title: Executive Vice President
THE UNDERSIGNED Executive Vice President of TWENTIETH CENTURY CAPITAL
PORTFOLIOS, INC., who executed on behalf of said Corporation the foregoing
Articles Supplementary to the Charter, of which this certificate is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, the
foregoing Articles Supplementary to the Charter to be the corporate act of said
Corporation, and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects under the penalties of
perjury.
Dated: March 11, 1996 /s/William M. Lyons
William M. Lyons,
Executive Vice President
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
BY-LAWS
OFFICES
SECTION 1. The registered office shall be in the City of Baltimore,
State of Maryland.
SECTION 2. The Corporation may also have offices at such other places
both within and without the State of Maryland as the Board of Directors may from
time to time determine or the business of the Corporation may require.
MEETING OF STOCKHOLDERS
SECTION 3. Meetings of the stockholders shall be held at the office of
the Corporation in Kansas City, Missouri or at any other place within the United
States as shall be designated from time to time by the Board of Directors and
stated in the notice of meeting.
SECTION 4. The Corporation shall not be required to hold an annual
meeting of its stockholders in any year in which the election of Directors is
not required by the Investment Company Act of 1940, as amended (the "Investment
Company Act"), to be acted upon by the holders of any class or series of stock
of the Corporation. The use of the term "annual meeting," wherever found in
these By-Laws, shall not be construed to imply a requirement that a stockholder
meeting be held annually. In the event that the Corporation shall be required
by the Investment Company Act to hold an annual meeting of stockholders to elect
Directors, such meeting shall be held at a date and time set by the Board of
Directors in accordance with the Investment Company Act (but in no event later
than 120 days after the occurrence of the event requiring the election of
Directors). Any annual meeting that is not required by the Investment Company
Act shall be held on a date and time during the month of July set by the Board
of Directors. At any annual meeting, the stockholders shall elect a Board of
Directors and may transact any business within the powers of the Corporation.
Any business of the Corporation may be transacted at an annual meeting without
being specially designated in the notice, except such business as is
specifically required by statute to be stated in the notice.
SECTION 5. The presence at any stockholders meeting, in person or by
proxy, of stockholders entitled to cast one third of the votes entitled to vote
thereat shall constitute a quorum for the transaction of business, except as
otherwise provided by law, by the Articles of Incorporation, or by these
By-Laws. Where the approval of any particular item of business to come before
a meeting requires the approval of one or more than one class or series of
stock, voting separately, the holders of one third of the votes of each of such
classes or series entitled to be voted must be present to constitute a quorum
for the transaction of such item of business. If, however, a quorum shall not
be present or represented at any meeting of the stockholders, a majority of the
voting stock represented in person or by proxy may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified. If the adjournment is
for more than 90 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote thereat.
SECTION 6. When a quorum is present at any meeting, a majority of all
the votes cast is sufficient to approve any matter which properly comes before
the meeting, unless a different vote for such matter is specified by law, by the
Articles of Incorporation or by these By-Laws, in which case such different
specified vote shall be required to approve such matter.
SECTION 7. Special meetings of the stockholders may be called at any
time by the Board of Directors, or by the Chairman of the Board, the President,
a Vice President, the Secretary or an Assistant Secretary.
SECTION 8. Special meetings of the stockholders shall be called by the
Secretary upon written request of stockholders entitled to cast at least 10
percent of all the votes entitled to be cast at such meeting. Such request
shall state the purpose or purposes of such meeting and the matters proposed to
be acted on thereat. After verification of the sufficiency of such request,
the Secretary shall then inform the requesting stockholders of the reasonably
estimated cost of preparing and mailing such notice of the meeting. Upon
payment to the Corporation of such costs the Secretary shall give notice stating
the purpose or purposes of the meeting to all stockholders entitled to notice of
such meeting; provided, however, unless requested by stockholders entitled to
cast a majority of all the votes entitled to be cast at the meeting, no special
meeting need be called to consider any matter which is substantially the same as
a matter voted upon at any special meeting of the stockholders held during the
preceding 12 months.
SECTION 9. Not less than ten nor more than 90 days before the date of
every stockholders' meeting, the Secretary shall give to each stockholder
entitled to vote at such meeting, and to each stockholder not entitled to vote
who is entitled by statute to notice, written or printed notice stating (i) the
time and place of the meeting and, (ii) the purpose or purposes for which the
meeting is called if the meeting is a special meeting, or if notice of the
purpose of the meeting is required by statute to be given. Such notice shall
be given either by mail or by presenting it to the stockholder personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid.
SECTION 10. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice of the meeting.
SECTION 11. At all meetings of stockholders, a stockholder may vote the
shares owned of record by him on the record date (determined in accordance with
Section 39 hereof) for each such stockholders' meeting either in person or by
written proxy signed by the stockholder or by his duly authorized
attorney-in-fact. No proxy shall be valid after 11 months from its date, unless
otherwise provided in the proxy. At all meetings of stockholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting.
DIRECTORS
SECTION 12. The number of Directors of the Corporation shall be seven.
By vote of a majority of the entire Board of Directors, the number of Directors
fixed by the Articles of Incorporation or by these By-Laws may be increased or
decreased from time to time to a number not exceeding 15 nor less than three,
but the tenure of office of a Director shall not be affected by any decrease in
the number of Directors so made by the Board. Until the first annual meeting of
stockholders or until successors are duly elected and qualify, the Board shall
consist of the persons named as such in the Articles of Incorporation. At the
first annual meeting of stockholders and at each annual meeting thereafter, the
stockholders shall elect Directors to hold office until the next annual meeting
or until their successors are elected and qualify. A plurality of all the votes
cast at an annual meeting at which a quorum is present shall be required to
elect Directors of the Corporation. Each Director, upon his election, shall
qualify by accepting the Office of Director, and his attendance at, or his
written approval of the minutes of, any meeting of the newly-elected directors
shall constitute his acceptance of such office, or he may execute such
acceptance by a separate writing, which shall be placed in the minute book.
Directors need not be stockholders of the Corporation.
SECTION 13. The business and affairs of the Corporation shall be
managed by its Board of Directors, which may exercise all the powers of the
Corporation, except such as are by law and by the Articles of Incorporation or
by these By-Laws conferred upon or reserved to the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 14. Meetings of the Board of Directors, regular or special, may
be held at any place in or out of the State of Maryland as the Board may from
time to time determine.
SECTION 15. The first meeting of each newly-elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly-elected Directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly-elected
Board of Directors, or if such meeting is not held at the time and place so
fixed by the stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the Directors.
SECTION 16. Regular meetings of the Board of Directors may be held at
such time and place as shall from time to time be fixed by resolution adopted by
the full Board of Directors. Adoption of such resolution shall constitute
notice of all meetings held pursuant thereto.
SECTION 17. Special meetings of the Board of Directors may be called at
any time by the Board of Directors or the Executive Committee, if one be
constituted, by vote at a meeting, or by the Chairman of the Board, the
President or by a majority of the Directors or a majority of the members of the
Executive Committee in writing with or without a meeting. Special meetings may
be held at such place or places within or without Maryland as may be designated
from time to time by the Board of Directors; in the absence of such
designation, such meetings shall be held at such places as may be designated in
the call.
SECTION 18. Notice of the place and time of every special meeting of the
Board of Directors shall be served on each Director or sent to him by telegraph,
or by leaving the same at his residence or usual place of business at least
three days before the date of the meeting, or by mail at least seven days before
the date of the meeting. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the Director at his
address as it appears on the records of the Corporation, with postage thereon
prepaid.
SECTION 19. At all meetings of the Board a majority of the entire Board
of Directors shall constitute a quorum for the transaction of business and the
action of a majority of the Directors present at any meeting at which a quorum
is present shall be the action of the Board of Directors unless the concurrence
of a greater proportion is required for such action by law, the Articles of
Incorporation or these By-Laws. If a quorum shall not be present at any meeting
of Directors, the Directors present thereat may by a majority vote adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 20. Unless otherwise restricted by the Articles of
Incorporation or these By-Laws, members of the Board of Directors of the
Corporation, or any committee designated by the Board, may participate in a
meeting of the Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by that means shall
constitute presence in person at such meeting.
SECTION 21. Any action required or permitted to be taken at any meeting
of the Board of Directors or any committee thereof may be taken without a
meeting, if a written consent to such action is signed by all members of the
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of the proceedings of the Board or committee.
COMMITTEES OF DIRECTORS
SECTION 22. The Board of Directors may appoint from among its members an
Executive Committee and other committees composed of two or more Directors, and
may delegate to such committees any of the powers of the Board of Directors
except the power to declare dividends or distributions on stock, recommend to
the stockholders any action which requires stockholder approval, amend the
By-Laws, approve any merger or share exchange which does not require stockholder
approval or issue stock. However, if the Board of Directors, subject to the
terms and provisions of the Articles of Incorporation, has given general
authorization for the issuance of stock, a committee of the Board, in accordance
with a general formula or method specified by the Board of Directors by
resolution or by adoption of a stock option or other plan, may fix the terms of
stock subject to classification or reclassification and the terms on which any
stock may be issued. In the absence of an appropriate resolution of the Board
of Directors, each committee may adopt such rules and regulations governing its
duties, proceedings, quorum and manner of acting as it shall deem proper and
desirable, provided that the quorum shall not be less than two Directors. In
the absence of any member of such committee, the members thereof present at any
meeting, whether or not they constitute a quorum, may appoint a member of the
Board of Directors to act in the place of such absent member.
SECTION 23. All committees of the Board of Directors shall keep minutes
of their proceedings and shall report the same to the Board of Directors at the
next Board of Directors meeting. Any action by any of such committees shall be
subject to the revision and alteration by the Board of Directors, provided that
no rights of the third persons shall be affected by any such revision or
alteration.
WAIVER OF NOTICE
SECTION 24. Whenever any notice of the time, place or purpose of any
meeting of stockholders, Directors or committee is required to be given under
the provisions of a statute or under the provisions of the Articles of
Incorporation or these By-Laws, each person who is entitled to the notice waives
notices if (i) he, before or after the meeting, signs a waiver of notice which
is filed with the records of the meeting, or (ii) such person is present in
person at the meeting if the meeting in question is of the Board of Directors or
a committee or, if the meeting in question is of the stockholders, if such
person is present either in person or by proxy.
OFFICERS
SECTION 25. The officers of the Corporation shall be chosen by the Board
of Directors and shall include a President, a Vice President, a Secretary and a
Treasurer. The President shall be selected from among the Directors. The Board
of Directors may also choose a Chairman of the Board, additional Vice
Presidents, one or more Assistant Secretaries and Assistant Treasurers. If
chosen, the Chairman of the Board shall be selected from among the Directors.
Except as otherwise specified in these By-Laws, officers of the Corporation need
not be members of the Board of Directors. Officers of the Corporation shall be
elected by the Board of Directors at its first meeting after each annual meeting
of stockholders. If no annual meeting of stockholders shall be held in any
year, such election of officers may be held at any regular or special meeting of
the Board of Directors as shall be determined by the Board of Directors.
SECTION 26. Two or more offices, except those of President and Vice
President, may be held by the same person but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the Articles of Incorporation or these By-Laws to
be executed, acknowledged or verified by two or more officers.
SECTION 27. The Board of Directors, at any meeting thereof, may appoint
such additional officers and agents as it shall deem necessary, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board.
SECTION 28. The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
SECTION 29. The officers of the Corporation shall serve for one year and
until their successors are chosen and qualify. Any officer or agent may be
removed by the Board of Directors whenever, in its judgment, the best interests
of the Corporation will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. If the
office of any officer or officers becomes vacant for any reason, the vacancy
may be filled by the Board of Directors at any meeting thereof.
CHAIRMAN OF THE BOARD
SECTION 30. If a Chairman of the Board be elected, he shall preside at
all meetings of the stockholders and Directors at which he may be present and
shall have such other duties, powers and authority as may be prescribed
elsewhere in these By-Laws. The Board of Directors may delegate such other
authority and assign such additional duties to the Chairman of the Board, other
than those conferred by law exclusively upon the President, as it may from time
to time determine, and, to the extent permissible by law, the Board may
designate the Chairman of the Board as the chief executive officer of the
Corporation with all of the powers otherwise conferred upon by the President of
the Corporation under Section 31, or it may, from time to time, divide the
responsibilities, duties and authority for the general control and
management of the Corporation's business and affairs between the Chairman of the
Board and the President.
PRESIDENT
SECTION 31. Unless the Board otherwise provides, the President shall be
the chief executive officer of the Corporation with such general executive
powers and duties of supervision and management as are usually vested in the
office of the chief executive officer of a corporation, and he shall carry into
effect all directions and resolutions of the Board. The President, in the
absence of the Chairman of the Board or if there be no Chairman of the Board,
shall preside at all meetings of the stockholders and Directors. He shall have
such other or further duties and authority as may be prescribed elsewhere in
these By-Laws or from time to time by the Board of Directors. If a Chairman
of the Board be elected or appointed and designated as the chief executive
officer of the Corporation, as provided in Section 30, the President shall
perform such duties as may be specifically delegated to him by the Board of
Directors or are conferred by law exclusively upon him and in the absence,
disability, or inability or refusal to act of the Chairman of the Board, the
President shall perform the duties and exercise the powers of the Chairman of
the Board.
VICE PRESIDENTS
SECTION 32. The Vice President, or if there shall be more than one, the
Vice Presidents in the order determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President, and shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
SECRETARY AND ASSISTANT SECRETARIES
SECTION 33. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he shall be. He shall keep in safe custody
the seal of the Corporation, and when authorized by the Board, affix the same to
any instrument requiring it, and when so affixed it shall be attested by his
signature or by the signature of an Assistant Secretary.
SECTION 34. The Assistant Secretary, if any, or if there be more than
one, the Assistant Secretaries in the order determined by the Board of
Directors, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
THE TREASURER AND ASSISTANT TREASURER
SECTION 35. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipt and
disbursements in books belonging to the Corporation and shall deposit all
monies, and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
SECTION 36. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires an account
of all his transactions as Treasurer and of the financial condition of the
Corporation. He shall perform all of the acts incidental to the office of
Treasurer, subject to the control of the Board of Directors.
SECTION 37. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and for the restoration of the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his
control belonging to the Corporation.
SECTION 38. The Assistant Treasurer, if any, or if there shall be more
than one, the Assistant Treasurers in the order determined by the Board of
Directors, or if there be no such determination, the Assistant Treasurer
designated by the Board of Directors, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
GENERAL PROVISIONS
CLOSING OF TRANSFER BOOKS
SECTION 39. The Board of Directors may fix, in advance, a date as the
record date for the purpose of determining stockholders entitled to notice of,
or to vote at, any meeting of stockholders, or stockholders entitled to receive
payment of any dividend or the allotment of any rights, or in order to make a
determination of stockholders of record for any other proper purpose. Such
date, in any case, shall be not more than 90 days, and in case of a meeting of
stockholders not less than ten days, prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, prior to the date on which the particular action requiring
such determination of stockholders is to be taken, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period not to
exceed, in any case, 20 days. If the stock transfer books are closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting.
SECTION 40. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
shares or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Maryland.
DIVIDENDS
SECTION 41. Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting. Dividends
may be paid in cash, in property, or in its own shares. The authority of the
Board of Directors regarding the declaration and payment of dividends is
subject, however, to the provisions of the Investment Company Act, the law of
Maryland and the Articles of Incorporation.
EXECUTION OF INSTRUMENTS
SECTION 42. All documents, transfers, contracts, agreements,
requisitions or orders, promissory notes, assignments, endorsements, checks,
drafts, and orders for payment of money, notes and other evidences of
indebtedness, issued in the name of the Corporation, and other instruments
requiring execution by the Corporation, shall be signed by such officer or
officers as the Board of Directors may from time to time designate or, in the
absence of such designation, by the President.
FISCAL YEAR
SECTION 43. The fiscal year of the Corporation shall end on March 31 of
each year unless the Board of Directors shall determine otherwise.
SEAL
SECTION 44. The corporate seal of the Corporation shall have inscribed
thereon the name and the state of incorporation of the Corporation. The form of
the seal shall be subject to alteration by the Board of Directors and the seal
may be used by causing it or a facsimile to be impressed or affixed or printed
or otherwise reproduced. In lieu of affixing the corporate seal to any document
it shall be sufficient to meet the requirements of any law, rule, or regulation
relating to a corporate seal to affix the word "(Seal)" adjacent to the
signature of the authorized officer of the Corporation.
STOCK LEDGER
SECTION 45. The Corporation shall maintain at its office in Kansas City,
Missouri, an original stock ledger containing the names and addresses of all
stockholders and the number of shares of each class held by each stockholder.
Such stock ledger may be in written form or any other form capable of being
converted into written form within a reasonable time for visual inspection.
STOCK CERTIFICATES
SECTION 46. Certificates of stock of the Corporation shall be in the
form approved by the Board of Directors. Subject to Section 47 below, every
holder of stock of the Corporation shall be entitled to have a certificate,
signed in the name of the Corporation by the President, or any Vice President
and countersigned by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, certifying the number and kind of shares owned by him in
the Corporation. Such certificate may be sealed with the corporate seal of the
Corporation. Such signatures may be either manual or facsimile signatures and
the seal may be either facsimile or any other form of seal. In case any
officer, transfer agent, or registrar who shall have signed any such
certificate, or whose facsimile signature has been placed thereon, shall cease
to be such an officer, transfer agent or registrar (because of death,
resignation or otherwise) before such certificate is issued, such certificate
may be issued and delivered by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
SECTION 47. The Board of Directors, by resolution, may at any time
authorize the issuance without certificates of some or all of the shares of one
or more of the classes or series of the Corporation's stock. Such issuances
without certificates shall be made in accordance with the requirements therefor
set forth in Sections 2-210(c) and 2-211 of the Maryland General Corporation Law
and Article 8 of the Maryland Commercial Law Article (or any successor
provisions to such statutes). Such authorization will not affect shares already
represented by certificates until such shares are surrendered to the Corporation
for transfer, cancellation or other disposition.
INDEMNIFICATION AND INSURANCE
SECTION 48. (a) The Corporation shall indemnify any individual
("Indemnitee") who is a present or former director, officer, employee, or agent
of the Corporation, or who, while a director, officer, employee, or agent of the
Corporation, is or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan who, by reason of his position was, is, or is threatened to be made
a party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereinafter
collectively referred to to as a "Proceeding") against any judgments, penalties,
fines, settlements, and reasonable expenses (including attorneys' fees) actually
incurred by such Indemnitee in connection with any Proceeding, to the fullest
extent that such indemnification may be lawful under Maryland law. The
Corporation shall pay any reasonable expenses so incurred by such Indemnitee
in defending a Proceeding in advance of the final disposition thereof to the
fullest extent that such advance payment may be lawful under Maryland law.
Subject to any applicable limitations and requirements set forth in the
Corporation's Articles of Incorporation and in these By-Laws, any payment of
indemnification or advance of expenses shall be made in accordance with the
procedures set forth in Maryland law.
(b) Anything in this Section 48 to the contrary
notwithstanding, nothing in this Section 48 shall protect or purport to protect
any Indemnitee against any liability to the Corporation or its stockholders,
whether or not there has been an adjudication of liability, to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office ("Disabling Conduct").
(c) Anything in this Section 48 to the contrary
notwithstanding, no indemnification shall be made by the Corporation to any
Indemnitee unless:
(i) there is a final decision on the merits by a Court
or other body before whom the Proceeding was
brought that the Indemnitee was not liable by
reason of Disabling Conduct; or
(ii) in the absence of such a decision, there is a
reasonable determination, based upon a review of
the facts, that the Indemnitee was not liable by
reason of Disabling Conduct, which determination
shall be made by:
(A) the vote of a majority of a quorum of
directors who are neither "interested
persons" of the Corporation as defined in
Section 2(a) (19) of the Investment Company
Act, nor parties to the Proceeding; or
(B) an independent legal counsel in a written
opinion.
(d) Anything in this Section 48 to the contrary
notwithstanding, any advance of expenses by the Corporation to any Indemnitee
shall be made only upon the undertaking by such Indemnitee to repay the advance
unless it is ultimately determined that such Indemnitee is entitled to
indemnification as above provided, and only if one of the following conditions
is met:
(i) the Indemnitee provides a security for his
undertaking; or
(ii) the Corporation shall be insured against losses
arising by reason of any lawful advances; or
(iii)there is a determination, based on a review of
readily available facts (which review shall not
require a full trial-type inquiry), that there is
reason to believe that the Indemnitee will
ultimately be found entitled to indemnification,
which determination shall be made by:
(A) a majority of a quorum of directors who are
neither "interested persons" of the
Corporation as defined in Section 2(a)(19) of
the Investment Company Act, nor parties to
the Proceeding; or
(B) an independent legal counsel in a written
opinion.
SECTION 49. To the fullest extent permitted by applicable Maryland law
and by Sections 17(h) and 17(i) of the Investment Company Act, or any successor
provisions thereto or interpretations thereunder, the Corporation may purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation, or who is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership, joint venture,
trust, other enterprise, or employee benefit plan, against any liability
asserted against him and incurred by him in any such capacity or arising out of
his position, whether or not the Corporation would have the power to indemnify
him against such liability pursuant to Section 2-418 of the Maryland General
Corporation Law.
AMENDMENTS
SECTION 50. The Board of Directors shall have the power, at any regular
meeting or at any special meeting if notice thereof be included in the notice
of such special meeting, to alter or repeal any or all By-Laws of the
Corporation and to adopt new By-Laws.
-------------------
I, the undersigned, being the Secretary of Twentieth Century Capital
Portfolios, Inc., do hereby certify the foregoing to be the By-Laws of said
Corporation, as adopted as of the 17th day of June, 1993.
/s/Patrick A. Looby
Patrick A. Looby, Secretary
MANAGEMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of August, 1993, is by and between
Twentieth Century Capital Portfolios, Inc., a Maryland Corporation (hereinafter
called the "Corporation") and Investors Research Corporation, a Delaware
corporation (hereinafter called the "Investment Manager").
IN CONSIDERATION of the mutual promises and agreements herein contained,
the parties agree as follows:
1. INVESTMENT MANAGEMENT SERVICES. The Investment Manager shall
supervise the investments of each series of shares of the Corporation
contemplated as of the date hereof, and such subsequent series of shares as the
Corporation shall select the Investment Manager to manage. In such capacity,
the Investment Manager shall maintain a continuous investment program for each
such series, determine what securities shall be purchased or sold by each
series, secure and evaluate such information as it deems proper and take
whatever action is necessary or convenient to perform its functions, including
the placing of purchase and sale orders.
2. COMPLIANCE WITH LAWS. All functions undertaken by the Investment
Manager hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and any rules and regulations promulgated thereunder;
(2) any other applicable provisions of law; (3) the Articles of Incorporation of
the Corporation as amended from time to time; (4) the By-laws of the Corporation
as amended from time to time; and (5) the registration statements of the
Corporation, as amended from time to time, filed under the Securities Act of
1933 and the Investment Company Act.
3. BOARD SUPERVISION. All of the functions undertaken by the Investment
Manager hereunder shall at all times be subject to the direction of the Board of
Directors of the Corporation, its executive committee, or any committee or
officers of the Corporation acting under the authority of the Board of
Directors.
4. PAYMENT OF EXPENSES. The Investment Manager will pay all of the
expenses of each series of the Corporation's shares that it shall manage, other
than interest, taxes, brokerage commissions, extraordinary expenses and the
fees and expenses of those directors who are not "interested persons" as
defined in Investment Company Act (hereinafter referred to as the "Independent
Directors") (including counsel fees). The Investment Manager will provide the
Corporation with all physical facilities and personnel required to carry on the
business of each series that the Investment Manager shall manage, including but
not limited to office space, office furniture, fixtures and equipment, office
supplies, computer hardware and software and salaried and hourly paid personnel.
The Investment Manager may at its expense employ others to provide all or any
part of such facilities and personnel.
5. ACCOUNT FEES. The Corporation, by resolution of the Board of
Directors, including a majority of the Independent Directors, may from time to
time authorize the imposition of a fee as a direct charge against shareholder
accounts of one or more of the series, such fee to be retained by the
Corporation or to be paid to the Investment Manager to defray expenses which
would otherwise be paid by the Investment Manager in accordance with the
provisions of paragraph 4 of this Agreement. At least sixty (60) days prior
written notice of the intent to impose such fee must be given to the
shareholders of the affected series.
6. MANAGEMENT FEES.
(a) In consideration of the services provided by the Investment Manager,
each series of shares of the Corporation managed by the Investment Manager shall
pay to the Investment Manager a per annum management fee (hereinafter, the
"Applicable Fee"), as follows:
NAME OF SERIES APPLICABLE FEE
-------------- --------------
Twentieth Century Value 1.00%
(b) On the first business day of each month, each series of shares shall
pay the management fee at the rate specified by subparagraph (a) of this
paragraph 6 to the Investment Manager for the previous month. The fee for the
previous month shall be calculated by multiplying the Applicable Fee for such
series by the aggregate average daily closing value of the series' net assets
during the previous month, and further multiplying that product by a fraction,
the numerator of which shall be the number of days in the previous month, and
the denominator of which shall be 365 (366 in leap years).
(c) In the event that the Board of Directors of the Corporation shall
determine to issue any additional series of shares for which it is proposed
that the Investment Manager serve as investment manager, the Corporation and the
Investment Manager shall enter into an Addendum to this Agreement setting forth
the name of the series, the Applicable Fee and such other terms and conditions
as are applicable to the management of such series of shares.
7. CONTINUATION OF AGREEMENT. This Agreement shall continue in effect,
unless sooner terminated as hereinafter provided, for a period of two years from
the the execution hereof, and for as long thereafter as its continuance is
specifically approved at least annually (i) by the Board of Directors of the
Corporation or by the vote of a majority of the outstanding voting securities of
the Corporation, and (ii) by the vote of a majority of the directors of the
Corporation, who are not parties to the agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval.
8. TERMINATION. This Agreement may be terminated by the Investment
Manager at any time without penalty upon giving the Corporation 60 days' written
notice, and may be terminated at any time without penalty by the Board of
Directors of the Corporation or by vote of a majority of the outstanding voting
securities of the Corporation on 60 days' written notice to the Investment
Manager.
9. EFFECT OF ASSIGNMENT. This Agreement shall automatically terminate
in the event of assignment by the Investment Manager, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the Investment
Company Act.
10. OTHER ACTIVITIES. Nothing herein shall be deemed to limit or restrict
the right of the Investment Manager, or the right of any of its officers,
directors or employees (who may also be a director, officer or employee of the
Corporation), to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
11. STANDARD OF CARE. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations or duties hereunder
on the part of the Investment Manager, it, as an inducement to it to enter into
this Agreement, shall not be subject to liability to the Corporation or to any
shareholder of the Corporation for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. SEPARATE AGREEMENT. The parties hereto acknowledge that certain
provisions of the Investment Company Act, in effect, treat each series of shares
of an investment company as a separate investment company. Accordingly, the
parties hereto hereby acknowledge and agree that, to the extent deemed
appropriate and consistent with the Investment Company Act, this Agreement shall
be deemed to constitute a separate agreement between the Investment Manager and
each series of shares of the Corporation managed by the Investment Manager.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written.
Attest: TWENTIETH CENTURY CAPITAL
PORTFOLIOS, INC.
/s/Patrick A. Looby By: /s/James E. Stowers, Jr.
Patrick A. Looby James E. Stowers, Jr.
Secretary Chairman
Attest: INVESTORS RESEARCH CORPORATION
/s/John H. Hartenbach By: /s/James E. Stowers, Jr.
John H. Hartenbach James E. Stowers, Jr.
Secretary Chairman
ADDENDUM TO MANAGEMENT AGREEMENT
THIS ADDENDUM, dated as of May 11, 1994, supplements the Management
Agreement (the "Agreement") dated as of August 1, 1993, by and between Twentieth
Century Capital Portfolios, Inc. (the "Corporation") and Investors Research
Corporation (the "Investment Manager"). All capitalized terms used herein and
not otherwise defined have the meaning given them in the Agreement.
IN CONSIDERATION of the mutual promises and conditions herein contained,
the parties agree as follows:
1. The Investment Manager shall manage the following series of shares (the
"New Series") to be issued by the Corporation, and for such management
shall receive the Applicable Fee set forth below:
NAME OF SERIES APPLICABLE FEE
------------------------------------------------------
Twentieth Century Equity Income 1.0%
------------------------------------------------------
2. The Investment Manager shall manage the New Series in accordance with the
terms and conditions specified in the Agreement for its existing management
responsibilities.
IN WITNESS WHEREOF, the parties have caused this Addendum to the Agreement
to be executed by their respective duly authorized officers as of the day and
year first above written.
TWENTIETH CENTURY CAPITAL
PORTFOLIOS, INC.
Attest:
By: /s/James E. Stowers III
/s/Patrick A. Looby James E. Stowers III
Patrick A. Looby President
Secretary
INVESTORS RESEARCH CORPORATION
Attest:
By: /s/James E. Stowers III
/s/William M. Lyons James E. Stowers III
William M. Lyons President
Secretary
CUSTODIAN AGREEMENT
THIS AGREEMENT, made as of the 1st day of August, 1993, is by and between
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC., a Maryland corporation
("Corporation") and UNITED STATES TRUST COMPANY OF NEW YORK, a trust corporaton
organized under the laws of the state of New York ("Custodian").
1. During the life of this Agreement, the Corporation shall place and
maintain its securities and cash with the Custodian. All securities delivered to
the Custodian (other than bearer securities) shall be properly endorsed prior to
such delivery and in negotiable form for transfer or in the name of the
Custodian or its nominee.
2. The Custodian shall keep safely such securities owned by the Corporation
as are delivered to it and, on behalf of the Corporation, shall from time to
time receive securities for safekeeping. The Custodian shall hold all registered
securities owned by the Corporation registered in the name of the Corporation or
of the Custodian, or of any nominee of the Corporation or of the Custodian, or
in the so called street certificate form, in any case with or without any
indication of fiduciary capacity. The Custodian shall deliver securities owned
by the Corporation only:
(a) Upon sales of such securities for the account of the Corporation; such
delivery to be made only upon payment of readily available funds therefor.
(b) When such securities are called, redeemed, retired or otherwise become
payable.
(c) For examination by any broker selling any such securities in accordance
with "street delivery" custom.
(d) In exchange for or upon conversion into other securities alone or other
securities and cash.
(e) Upon exercise of subscription, purchase or other similar rights
represented by such securities.
(f) Upon conversion of such securities pursuant to their terms into other
securities.
(g) For the purpose of exchanging interim receipts or temporary securities
for definitive securities.
(h) For the purpose of redeeming in kind shares of the capital stock of the
Corporation.
(i) For the purpose of pledge or hypothecation to secure any loan incurred
by the Corporation, but only upon payment to the Custodian of the money
borrowed, except that in cases where additional collateral is required to secure
a borrowing already made, further securities may be released for that purpose.
(j) For other proper corporate purposes. The Custodian will act, under this
subparagraph only upon receipt of a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an officer of the
Corporation and certified by its Secretary or an Assistant Secretary, specifying
the securities to be delivered, setting forth the purposes for which such
delivery is to be made, declaring such purposes to be proper corporate purposes,
and naming the person or persons to whom delivery of such securities shall be
made.
(k) Except in the case of delivery pursuant to the terms of subsection (c)
or (g) above, delivery shall be made only upon receipt of proper instructions
from the Corporation. Any securities or cash or other property receivable by
virtue of delivery pursuant to subsections (b), (d), (f) and (g)
of this paragraph shall be deliverable to the Custodian.
3. The Custodian shall retain all funds received by it from or for the
account of the Corporation in an account or accounts, whether with the Custodian
or other bank or banks in the name of the Custodian as custodian for the
Corporation, subject only to draft or order in accordance with the terms of this
Agreement. The Custodian shall make payments from funds received by it from or
for the account of the Corporation only:
(a) For the purchase of securities for the portfolio of the Corporation and
upon the delivery of such securities to the Custodian either in bearer form or
registered as provided in paragraph 2 and negotiable form.
(b) For the repurchase or redemption of shares of the capital stock of the
Corporation.
(c) For the payment of distributions to shareholders, taxes, brokerage,
interest, management fees, custodian fees and extraordinary expenses of the
Corporation.
(d) For payments in connection with the conversion, exchange or surrender
of securities owned by the Corporation.
(e) To pay any loan made to the Corporation and upon redelivery to it of
any securities pledged or hypothecated therefore and upon surrender of the note
or notes evidencing the loan or evidence of the cancellation of the same.
(f) For other proper corporate purposes. The Custodian will act under this
subparagraph only upon receipt of a certified copy of a resolution of the Board
of Directors or of the Executive Committee of the Corporation signed by an
officer of the Corporation and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the purpose, and
naming the person or persons to whom such payment is to be made.
Such payment shall be made only insofar as funds are available for such
purposes and only upon receipt of proper instructions from the Corporation.
4. The Custodian shall collect, receive and deposit in said account or
accounts all income and other payments with respect to the securities held
hereunder, and execute ownership or other certificates and affidavits for all
federal and state tax purposes, and do all things necessary or proper in
connection with the collection of such income and shall without limiting the
generality of the foregoing:
(a) Present for payment all coupons or other income items requiring
presentation
(b) Present for payment, unless otherwise instructed, all securities
which may mature or be called, redeemed, retired or otherwise become payable,
and
(c) Endorse for collection all checks, drafts or other negotiable
instruments.
5. Anything in this Agreement to the contrary notwithstanding, the
Custodian may deposit all or any part of the Corporation's securities in a
clearing agency, securities depository or book entry system in conformance with
applicable law and the regulations from time to time promulgated by appropriate
regulatory agencies.
6. The Custodian shall promptly deliver to the Corporation all financial
reports, notices of meetings, proxies, proxy material and any other notices or
announcements affecting or relating to the securities held by the Custodian.
Proxies issued in the name of the Custodian or its nominee shall be delivered to
the Corporation executed in blank.
7. The Custodian is authorized to accept and rely upon all written
instructions given by one or more officers, employees or agents of the
Corporation authorized by or in accordance with the resolution delivered to the
Custodian which authorizes the opening of the Account (each such officer,
employee or agent or combination of officers, employees and agents is
hereinafter referred to as an "Authorized Officer"), including, without
limitation, instructions to sell, assign, transfer or deliver, or purchase for
the Account, any and all Property or to transfer funds in the Account in
connection with a securities transaction.
The Custodian may also rely on any instructions bearing or purporting to
bear the facsimile signature of any of the individuals designated as a
Authorized Officer pursuant to the resolution described above, regardless of or
by whom or by what means the actual or purported facsimile signature or
signatures thereon may have been affixed thereto if such facsimile signature or
signature resemble the facsimile specimens from time to time furnished to the
Custodian by any of such officers. In addition, the Custodian may rely on
instructions received by telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess acceptable to it which the Custodian believes in good
faith to have been given by an Authorized Officer or which are transmitted with
proper testing or authentication pursuant to terms and conditions which the
Custodian may specify.
The Custodian may also rely on instructions transmitted electronically
through its Asset Management System or any similar electronic instruction system
acceptable to the Custodian. The Custodian shall incur no liability to the
Corporation or otherwise as a result of any act or omission by the Custodian in
accordance with instructions on which the Custodian is authorized to rely
pursuant to the provisions of this Paragraph. Any instructions delivered to the
Custodian by telephone shall promptly thereafter be confirmed in writing by an
Authorized Officer, but the Custodian will incur no liability for the
Corporation's failure to send such confirmation in writing, or the failure of
any such written confirmation to conform to the telephone instructions which the
Custodian received. Unless otherwise expressly provided, all authorizations and
instructions shall continue in full force and effect until cancelled or
superseded by subsequent instructions received by the Custodian.
The Corporation agrees that test arrangements, authentication methods or
other security devices to be used with respect to instructions which the
Corporation may give by telephone, telex, TWX, facsimile transmission, bank wire
or other teleprocess, or through an electronic instructions system, shall be
processed in accordance with terms and conditions for the use of such
arrangements, methods or devices as the Custodian may put into effect and modify
from time to time. The Corporation shall safeguard any test keys, identification
codes or other security devices which the Custodian makes available to the
Corporation and agrees that the Corporation shall be responsible for any loss,
liability or damage incurred by the Custodian or by the Corporation as a result
of the Custodian's acting in accordance with instructions from any unauthorized
person using the proper security device, provided that such person did not
obtain such security device solely as a result of the Custodian's gross
negligence or willful misconduct. The Custodian may electronically record, but
shall not be obligated to so record, any instructions given by telephone and
other telephone discussions with respect to the Account. In the event that the
Corporation uses the Custodian's Asset Management System or any successor
electronic communications or information system, the Corporation agrees that the
Custodian is not responsible for the consequences of the failure of that System
to perform for any reason or for the failure to perform for any reason of any
communications carrier, utility, communications network or the failure to
perform for any reason of communications or computer equipment. In the event
that System is inoperable, the Corporation agrees to notify the Custodian
immediately, the Custodian agrees that it will accept the communication
transaction instructions by telephone, facsimile transmission on equipment
compatible to the Custodian's facsimile receiving equipment or by letter, at no
additional charge to the Custodian.
8. If the Corporation instructs the Custodian in any capacity to take any
action with respect to any securities or funds held by it hereunder, which
action might subject the Custodian or its nominee in the opinion of the
Custodian to liability for any cost, loss, damage, and expense in any way, as a
prerequisite to taking such action the Custodian shall be and be kept
indemnified in an amount and form satisfactory to it.
9. The Custodian shall be entitled to receive and act upon advice of
counsel (who may be counsel for the Corporation) and shall be without liability
for any action taken or thing done pursuant to such advice; and whether or not
it seeks advice of counsel, the Custodian shall be without liability for any
action taken or thing done by it hereunder in good faith and without negligence
and the Corporation agrees to indemnify and hold the Custodian harmless against
any and all loss, cost, liability, damage and expense resulting with respect
thereto.
10. The Corporation, as sole owner of all securities delivered or to be
delivered to the Custodian hereunder, will indemnify and hold harmless the
Custodian and its nominee from any and all cost, liability, loss, damage and
expense resulting directly or indirectly from the fact that securities are
registered in the name of the Custodian or its nominee.
11. The Custodian shall be entitled to receive from the Corporation, on
demand, reimbursement for its cash disbursements, expenses and charges,
including counsel fees, in connection with its duties as Custodian as aforesaid,
but excluding salaries and usual overhead expenses. All payments which the
Custodian is authorized or required to make hereunder shall be made only from
and to the extent of the funds of the Corporation in its hands and nothing
herein contained shall be construed to impose any obligation upon the Custodian
to make any payments for which such funds are not available.
12. The Custodian shall be protected in acting upon any instruction,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive proof of any
fact or matter required to be ascertained by it hereunder a certificate signed
by any officer of the Corporation or any other person authorized by the Board of
Directors.
13. The Custodian may, at its sole risk, appoint any other bank or trust
company as its agent to carry out any one or more of its functions hereunder.
14. The Corporation shall pay to the Custodian for its services hereunder
such compensation and at such times as may from time to time be agreed upon in
writing by the Corporation and the Custodian.
15. This Agreement may be terminated by the Corporation in whole or in part
upon ten (10) days written notice delivered to the Custodian at 114 West 47th
Street, New York, New York 10036 or by the Custodian upon sixty (60) days
written notice delivered to the Corporation at 4500 Main Street, Kansas City,
Missouri 64111, or such other address as the corporation may from time to time
designate. Such notices shall be sent by registered mail. In the event of the
inability of the Custodian to serve or other termination of this Agreement by
either party, the Corporation shall forthwith appoint a Custodian which
qualifies as such under the Investment Company Act of 1940 or any other
applicable law and the Custodian shall deliver all funds (less unpaid expenses,
including any unpaid compensation to the Custodian) and all securities of the
Corporation duly endorsed and in form for transfer to such succeeding Custodian
and such delivery shall constitute a full and complete discharge of the
Custodian's obligations hereunder. If no such successor shall be found, the
Corporation shall submit to the holders of shares of its capital stock, before
permitting delivery of such cash and securities to anyone other than its
successor custodian, the question whether the Corporation shall be dissolved or
shall function without a Custodian; and pending such decision the Custodian
shall,
(a) Continue to hold said cash and securities hereunder, or
(b) Deliver the same to a Bank or Trust Company in the City of New York,
selected by it, such assets to be held subject to the terms of custody hereunder
and any such delivery shall be a full and complete discharge of its obligation
hereunder.
16. If the Corporation shall be liquidated while this Agreement is in
force, the Custodian shall distribute the property of the Corporation to
creditors and shareholders in such a manner as the Corporation may direct.
17. This Agreement shall be governed by the laws of the state of New York
and shall be binding on and shall inure to the benefit of the Corporation and
the Custodian and their respective successors and assigns and cannot be changed
orally.
18. This Agreement is executed in two counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its officer or officers duly
authorized, as of the day and year first above written.
TWENTIETH CENTURY CAPITAL PORTFIOS, INC.
BY_________________________________________________
Name: James E. Stowers, Jr.
Title: Chairman of the Board
UNITED STATES TRUST COMPANY OF NEW YORK
BY_________________________________________________
Name: Peter C. Arrighetti
Title: Senior Vice President
CUSTODIAN AGREEMENT
THIS AGREEMENT, made as of 1st day of August, 1993, is by and between
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC., a Maryland Corporation
("Corporation") and BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY, a
nationally-chartered banking association ("Custodian").
1. During the term of this Agreement the Corporation shall maintain one or
more custody accounts (the "Accounts") with the Custodian and shall deposit in
the Accounts all currency, checks, drafts, wired funds and other funds delivered
to the Corporation in Kansas City, Missouri in payment for its shares. All
checks, drafts and similar items shall be endorsed in proper form for deposit to
the Accounts.
2. The Custodian shall provide a courier for delivery of deposits from the
Corporation's office to the Custodian, and the courier shall pick up the
deposits at such times as the Corporation and Custodian may from time to time
agree upon.
3. The Custodian promptly and in a business-like manner shall process the
items so deposited in the Accounts and remit the funds deposited to United
States Trust Company of New York, the Corporation's Custodian, for deposit in
Corporation's accounts there. Any funds not remitted by the close of each day
shall be invested for the Corporation's benefit in such manner as the
Corporation and Custodian may from time to time agree upon. All income from such
investments shall be deposited in the Accounts. No funds shall be invested or
otherwise utilized for the benefit of the Custodian.
4. (a)The Custodian shall no later than 9 a.m. on every day (Saturdays,
Sundays and Holidays excluded) report to the Corporation the balance in the
Accounts and the amounts available for transfer to United States Trust Company
of New York.
(b)The Custodian shall furnish monthly bank statements of the Accounts
in the usual form.
(c)At least monthly the Custodian shall provide the Corporation with
an account analysis showing average ledger and collected balance for the month,
total items processed and other bank services used during the period, together
with the Custodian's statement for its services. The Corporation shall
compensate the Custodian for its services in accordance with the schedule of
compensation attached to this Agreement and marked Schedule 1.
5. If the Corporation instructs the Custodian in any capacity to take any
action with respect to any funds held by it hereunder, which action might
subject the Custodian in the opinion of the Custodian to liability for any cost,
loss, damage or expense, as a prerequisite to taking such action the Custodian
shall be and be kept indemnified in an amount and form satisfactory to it.
6. This Agreement may be terminated by the Corporation in whole or in part
upon ten (10) days written notice delivered to the Custodian at 10th &
Baltimore, Kansas City, Missouri 64105 (mailing address P.O. Box 38, Kansas
City, Missouri 64183-0300) or by the Custodian upon sixty (60) days written
notice delivered to the Corporation at 4500 Main Street, Kansas City, Missouri
64111 (mailing address P.O. Box 419200, Kansas City, Missouri 64141), and each
party may from time to time designate another address to which such notice shall
be delivered. Such notices shall be sent by registered mail and shall be deemed
delivered when deposited in the United States Mail, postage prepaid. In the
event of the inability of the Custodian to serve or other termination of this
Agreement by either party, the Corporation shall forthwith appoint a custodian
which qualifies as such under the Investment company Act of 1940 or any other
applicable law and the Custodian shall deliver all funds to such successor
custodian (or to any other Custodian of the Corporation's assets) and such
delivery shall constitute a full and complete discharge of the Custodian's
obligations hereunder. If no such successor shall be found and there should be
no other custodian, the Corporation shall submit to the holders of shares of its
capital stock, before permitting delivery of such cash to anyone other than a
qualified custodian, the question whether the Corporation shall be dissolved or
shall function without a Custodian; and pending such decision the Custodian
shall,
(a)continue to hold the Accounts, or
(b)deliver the funds in the Accounts, and all other assets, if any, to
a Bank or Trust Company selected by it, such funds and assets to be held subject
to the terms of custody hereunder and any such delivery shall be a full and
complete discharge of its obligation hereunder.
7. If the Corporation shall be liquidated while this Agreement is in force,
the Custodian shall distribute the property of the Corporation to creditors and
shareholders in such manner as the Corporation may direct.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its officer or officers duly
authorized, as of the day and year first above written.
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
By: /s/ James E. Stowers
Name: James E. Stowers, Jr.
Title: Chairman of the Board
BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY
By: /s/ Rebecca L. DeHart
Name: Rebecca L. DeHart
Title: Vice President
CUSTODIAN AGREEMENT
WHEREAS, TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC., a Maryland corporation
("Corporation") desires to appoint a custodian with respect to certain monies
received from shareholders for the purchase of its shares; and
WHEREAS, UNITED MISSOURI BANK OF KANSAS CITY, N.A., a nationally-chartered
banking association ("Custodian"), desires to serve as a custodian for these
assets of the Corporation;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the parties hereto agree as follows:
1. During the term of this Agreement the Corporation shall maintain one or
more custody accounts (the "Accounts") with the Custodian and shall deposit in
the Accounts all Automated Clearing House (ACH) purchases designated for the
Corporation in payment for its shares.
2. The Custodian shall process all ACH purchases pursuant to that certain
Electronic Entries Agreement dated September 13, 1994, between the Custodian and
Twentieth Century Services, Inc.
3. The Custodian promptly and in a business-like manner shall process the
items so deposited in the Accounts and remit the funds deposited to United
States Trust Company of New York, the Corporation's Custodian, for deposit in
Corporation's accounts there. Any funds no remitted by the close of each day
shall be invested for the Corporation's benefit in such manner as the
Corporation and Custodian may from time to time agree upon. All income from such
investments shall be deposited in the Accounts. No funds shall be invested or
otherwise utilized for the benefit of the Custodian.
4. (a)The Custodian shall no later than 9 a.m. on every day (Saturdays,
Sundays and Holidays excluded) report to the Corporation the balance in the
Accounts and the amounts available for transfer to United States Trust Company
of New York.
(b)The Custodian shall furnish monthly bank statements of the Accounts
in the usual form.
(c)At least monthly the Custodian shall provide the Corporation with
an account analysis showing average ledger and collected balance for the month,
total items processed and other bank services used during the period.
5. If the Corporation instructs the Custodian in any capacity to take any
action with respect to any funds held by it hereunder, which action might
subject the Custodian in the opinion of the Custodian to liability for any cost,
loss, damage or expense, as a prerequisite to taking such action the Custodian
shall be and be kept indemnified in an amount and form satisfactory to it.
6. This Agreement may be terminated by the Corporation in whole or in part
upon ten (10) days written notice delivered to the Custodian at 10th & Grand
Streets, Kansas City, Missouri 64105 (mailing address P.O. Box 419266, Kansas
City, Missouri 64141) or by the Custodian upon sixty (60) days written notice
delivered to the Corporation at 4500 Main Street, Kansas City, Missouri 64111
(mailing address P.O. Box 419200, Kansas City, Missouri 64141), and each party
may from time to time designate another address to which such notice shall be
delivered. Such notices shall be sent by registered mail and shall be deemed
delivered when deposited in the United States Mail, postage prepaid. In the
event of the inability of the Custodian to serve or other termination of this
Agreement by either party, the Corporation shall forthwith appoint a custodian
which qualifies as such under the Investment Company Act of 1940 or any other
applicable law and the Custodian shall deliver all funds to such successor
custodian (or to any other Custodian of the Corporation's assets) and such
delivery shall constitute a full and complete discharge of the Custodian's
obligations hereunder. If no such successor shall be found and there should be
no other custodian, the Corporation shall submit to the holders of shares of its
capital stock, before permitting delivery of such cash to anyone other than a
qualified custodian, the question whether the Corporation shall be dissolved or
shall function without a Custodian; and pending such decision the Custodian
shall,
(a)continue to hold the Accounts, or
(b)deliver the funds in the Accounts, and all other assets, if any, to
a Bank or Trust Company selected by it, such funds and assets to be held subject
to the terms of custody hereunder and any such delivery shall be a full and
complete discharge of its obligations hereunder.
7. If the Corporation shall be liquidated while this Agreement is in force,
the Custodian shall distribute the property of the Corporation to creditors and
shareholders in such manner as the Corporation may direct.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its officer or officers duly
authorized, as of the 21st day of September, 1994.
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
By: /s/ James E. Stowers III
Name: James E. Stowers III
Title: President
UNITED MISSOURI BANK OF KANSAS CITY, N.A.
By: /s/ Michael Porter
Name: Michael Porter
Title: Senior Vice President/Director
of Operations
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT, made as of August 1, 1993, is by and between TWENTIETH
CENTURY CAPITAL PORTFOLIOS, INC., a Maryland corporation ("TCCP"), and TWENTIETH
CENTURY SERVICES, INC., a Missouri Corporation ("Services").
1. By action of its Board of Directors, TCCP on March 16, 1993, appointed
Services as its transfer agent, and Services accepted such appointment.
2. As transfer agent for TCCP, Services shall perform all the functions
usually performed by transfer agents of investment companies, in accordance with
the policies and practices of TCCP as disclosed in its prospectus or otherwise
communicated to Services from time to time, including but not limited to, the
following:
(a) Recording the ownership, transfer, conversion and cancellation of
ownership of shares of TCCP on the books of TCCP;
(b) Causing the issuance, transfer, conversion and cancellation of stock
certificates of TCCP;
(c) Establishing and maintaining records of accounts;
(d) Computing and causing to be prepared and mailed or otherwise
delivered to shareholders payment of redemption proceeds due from TCCP
on redemption of shares and notices of reinvestment in additional
shares of dividends, stock dividends or stock splits declared by TCCP
on shares of TCCP;
(e) Furnishing to shareholders such information as may be reasonably
required by TCCP, including confirmation of shareholder's
transactions and appropriate income tax information;
(f) Addressing and mailing to shareholders prospectuses, annual and
semiannual reports; addressing and mailing proxy materials for
shareholder meetings prepared by or on behalf of TCCP, and
tabulating the proxy votes;
(g) Replacing allegedly lost, stolen or destroyed stock certificates in
accordance with and subject to usual and customary procedures and
conditions;
(h) Maintaining such books and records relating to transactions effected
by Services pursuant to this Agreement as are required by the
Investment Company Act, or by rules or regulations thereunder, or by
any other applicable provisions of law, to be maintained by TCCP or
its transfer agent with respect to such transactions; preserving, or
causing to be preserved, any such books and records for such periods
as may be required by any such law, rule or regulation; furnishing
TCCP such information as to such transactions and at such times as may
be reasonably required by it to comply with applicable laws and
regulations, including but not limited to the laws of the several
states of the United States;
(i) Dealing with and answering all correspondence from or on behalf of
shareholders relating to its functions under this Agreement.
3. TCCP may perform on site inspection of records and accounts and
perform audits directly pertaining to TCCP shareholder accounts serviced by
Services hereunder at Services' facilities in accordance with reasonable
procedures at the frequency necessary to show proper administration of this
agreement and the proper audit of TCCP's financial statements. Services will
cooperate with TCCP's auditors and the representatives of appropriate
regulatory agencies and furnish all reasonably requested records and data.
4. (a) Services will at all times exercise due diligence and good faith
in performing its duties hereunder. Services will make every reasonable effort
and take all reasonably available measures to assure the adequacy of its
personnel and facilities as well as the accurate performance of all services to
be performed by it hereunder within the time requirements of any applicable
statutes, rules or regulations or as disclosed in TCCP's prospectus.
(b) Services shall not be responsible for, and TCCP agrees to
indemnify Services, for any losses, damages or expenses (including reasonable
counsel fees and expenses) (a) resulting from any claim, demand, action or
suit not resulting from Services failure to exercise good faith or due diligence
and arising out of or in connection with Services' duties on behalf of the fund
hereunder; (b) for any delay, error, or omission by reason or circumstance
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties (except with response to Services employees),
fire, mechanical breakdowns beyond its control, flood or catastrophe, act of
God, insurrection, war, riot or failure beyond its control of transportation,
communication or power supply; or (c) for any action taken or omitted to be
taken by Services in good faith in reliance on (i) the authenticity of any
instrument or communication reasonably believed by it to be genuine and to have
been properly made and signed or endorsed by an appropriate person, or (ii) the
accuracy of any records or information provided to it by TCCP, (iii) any
authorization or instruction contained in any officers' instruction, or (iv) any
advise of counsel approved by TCCP who may be internally employed counsel or
outside counsel, in either case for TCCP or Services.
5. Services shall not look to TCCP for compensation for its services
described herein. It shall be compensated entirely by Investors Research
Corporation, pursuant to the management agreement between Investors Research
Corporation and TCCP which requires Investors Research Corporation to pay, with
certain exceptions, all of the expenses of TCCP.
6. (a) This Agreement may be terminated by either party at any time
without penalty upon giving the other party 60 days written notice (which
notice may be waived by either party).
(b) Upon termination, Services will deliver to TCCP all microfilm
records pertaining to shareholder accounts of TCCP, and all records of
shareholder accounts in machine readable form in the format in which they are
maintained by Services.
(c) All data processing programs used by Services in connection with
the performance of its duties under this Agreement are the sole and exclusive
property of Services, and after the termination of this Agreement, TCCP shall
have no right to use the same.
IN WITNESS WHEREOF, the parties have executed this instrument as of the day
and year first above written.
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
By: /s/James E. Stowers, Jr.
James E. Stowers, Jr.
Chairman
TWENTIETH CENTURY SERVICES, INC.
By: /s/William M. Lyons
William M. Lyons
Executive Vice President
CHARLES A. ETHERINGTON
Attorney At Law
4500 Main Street, P.O. Box 418210
Kansas City, Missouri 64141-9210
Telephone (816)340-4051
Telecopier (816)340-4964
July 31, 1996
Twentieth Century Capital Portfolios, Inc.
Twentieth Century Tower I
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to Twentieth Century Capital Portfolios, Inc., I am generally
familiar with its affairs. Based upon this familiarity, and upon the examination
of such documents as I have deemed relevant, it is my opinion that the shares of
the Corporation described in Post-Effective Amendment No. 5 to its Registration
Statement on Form N-1A to be filed with the Securities and Exchange Commission
on July 31, 1996, will, when issued, be validly issued, fully paid and
nonassessable.
For the record, it should be stated that I am an officer and employee of
Twentieth Century Services, Inc., an affiliated corporation of Investors
Research Corporation, the investment adviser of Twentieth Century Capital
Portfolios, Inc.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 5.
Very truly yours,
/s/Charles A. Etherington
Charles A. Etherington
CAE/dnh
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" in the Post-Effective Amendment No. 5 to
the Registration Statement (Form N-1A) and related Prospectus of Twentieth
Century Capital Portfolios, Inc. and to the incorporation by reference therein
of our report dated April 26, 1996, with respect to the financial statements of
Twentieth Century Capital Portfolios, Inc. included in its Annual Report to
Shareholders for the year ended March 31, 1996.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Kansas City, Missouri
July 31, 1996
SCHEDULE OF COMPUTATION OF PERFORMANCE ADVERTISING QUOTATIONS
Set forth below are representative calculations of each type of total
return performance quotation included in the Statement of Additional Information
of Twentieth Century Capital Portfolios, Inc.
1. AVERAGE ANNUAL TOTAL RETURN. The average one-year annual total
return of Twentieth Century Value for the fiscal year ended March 31, 1996,
as quoted in the Statement of Additional Information, was 28.06%.
This return was calculated as follows:
n
P(1+T) = ERV
where,
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 payment at the
end of the period.
Applying the actual return figures of the fund for the one year period
ended March 31, 1996:
1
1,000 (1+28.06%) = $1,280.60
1
T = (1,280.60)
------------ - 1
1,000
T = 28.06%
2. CUMULATIVE TOTAL RETURN. The cumulative total return of Twentieth
Century Value from September 1, 1993 (inception) to March 31, 1996 as
quoted in the Statement of Additional Information, was 53.10%
This return was calculated as follows:
(ERV - P)
C = ---------
P
where,
C = cumulative total return
P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of the hypothetical $1,000 payment at the end
of the period.
Applying the actual return figures of the fund for the period September 1,
1993 through March 31, 1996.
(1,531-1,000)
C = ---------------
1,000
C = 53.10%
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, Twentieth Century
Capital Portfolios, Inc., hereinafter called the "Corporation", and certain
directors and officers of the Corporation, do hereby constitute and appoint
James E. Stowers, Jr., James E. Stowers III, William M. Lyons, and Patrick A.
Looby, and each of them individually, their true and lawful attorneys and agents
to take any and all action and execute any and all instruments which said
attorneys and agents may deem necessary or advisable to enable the Corporation
to comply with the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and any rules, regulations, orders, or other requirements of
the United States Securities and Exchange Commission thereunder, in connection
with the registration under the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended, including specifically, but without limitation
of the foregoing, power and authority to sign the name of the Corporation in its
behalf and to affix its corporate seal, and to sign the names of each of such
directors and officers in their capacities as indicated, to any amendment or
supplement to the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as a
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Corporation has caused this Power to be executed by
its duly authorized officers on this the 29th day of July, 1995.
TWENTIETH CENTURY CAPITAL PORTFOLIOS, INC.
By: /s/ James E. Stowers III
JAMES E. STOWERS III, President
SIGNATURE AND TITLE
/s/ James E. Stowers, Jr. /s/ Robert W. Doering, M.D.
JAMES E. STOWERS, JR. ROBERT W. DOERING, M.D.
Chairman, Director Director
Principal Executive Officer
/s/ James E. Stowers III /s/ Linsley L. Lundgaard
JAMES E. STOWERS III LINSLEY L. LUNDGAARD
President and Director Director
/s/ Robert T. Jackson /s/ Donald H. Pratt
ROBERT T. JACKSON DONALD H. PRATT
Executive Vice President, Director
Principal Financial Officer
/s/ Maryanne Roepke /s/ Lloyd T. Silver
MARYANNE ROEPKE LLOYD T. SILVER
Vice President and Treasurer, Director
Principal Accounting Officer
/s/ Thomas A. Brown /s/ M. Jeannine Strandjord
THOMAS A. BROWN M. JEANNINE STRANDJORD
Director Director
Attest: /s/ John M. Urie
JOHN M. URIE
By: /s/ Patrick A. Looby Director
Patrick A. Looby, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CAPITAL PORTFOLIOS- VALUE FUND
<S> <C>
<PERIOD-TYPE> YEAR
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<NAME> CAPITAL PORTFOLIOS- EQUITY INCOME
<S> <C>
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