-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PT3wXpuiH1EXianVwuIWHNQBiuqfZTBznyvXenT6jBgwxwZtRRCAhi4rhDTMXLAM BZUAtGn4AEVo/k89TXEBSQ== 0000908186-96-000005.txt : 19960801 0000908186-96-000005.hdr.sgml : 19960801 ACCESSION NUMBER: 0000908186-96-000005 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 19960731 EFFECTIVENESS DATE: 19960731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TWENTIETH CENTURY CAPITAL PORTFOLIOS INC CENTRAL INDEX KEY: 0000908186 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 431646043 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-64872 FILM NUMBER: 96602049 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-07820 FILM NUMBER: 96602050 BUSINESS ADDRESS: STREET 1: P O BOX 419200 STREET 2: TWENTIETH CENTURY TOWER CITY: KANSAS CITY STATE: MO ZIP: 64141-6200 BUSINESS PHONE: 8165315575 485BPOS 1 POST-EFFECTIVE AMENDMENT As filed with the Securities and Exchange Commission on July 31, 1996 1933 Act File No. 33-64872; 1940 Act File No. 811-7820 - -------------------------------------------------------------------------------- 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. - --------------------------------------------------------------------------------
========================================================================================================= Cross Reference Sheet - --------------------------------------------------------------------------------------------------------- Item No. Page No. ========================================================================================================= Part A. - Prospectus - --------------------------------------------------------------------------------------------------------- 1. Cover Page Cover Page - --------------------------------------------------------------------------------------------------------- 2. Synopsis N/A - --------------------------------------------------------------------------------------------------------- 3. Condensed Financial Information N/A - --------------------------------------------------------------------------------------------------------- 4. General Description of Registrant Cover Page, 2, 4-14, 26-28 - --------------------------------------------------------------------------------------------------------- 5. Management of the Fund 28-30 - --------------------------------------------------------------------------------------------------------- 6. Capital Stock and Other Securities 29-30 - --------------------------------------------------------------------------------------------------------- 7. Purchase of Securities Being Offered Cover Page, 15-18 - --------------------------------------------------------------------------------------------------------- 8. Redemption or Repurchase 18-22 - --------------------------------------------------------------------------------------------------------- 9. Pending Legal Proceedings N/A - --------------------------------------------------------------------------------------------------------- Part B. - Statement of Additional Information - --------------------------------------------------------------------------------------------------------- 10. Cover Page Cover Page - --------------------------------------------------------------------------------------------------------- 11. Table of Contents Cover Page - --------------------------------------------------------------------------------------------------------- 12. General Information and History N/A - --------------------------------------------------------------------------------------------------------- 13. Investment Objectives and Policies 3-7, 9-10 - --------------------------------------------------------------------------------------------------------- 14. Management of the Fund 10-13 - --------------------------------------------------------------------------------------------------------- 15. Control Persons and Principal Holders of Securities N/A - --------------------------------------------------------------------------------------------------------- 16. Investment Advisory and Other Services 12-13 - --------------------------------------------------------------------------------------------------------- 17. Brokerage Allocation 15-16 - --------------------------------------------------------------------------------------------------------- 18. Capital Stock and Other Securities 14 - --------------------------------------------------------------------------------------------------------- 19. Purchase, Redemption and Pricing of Securities Being Offered 16-17 - --------------------------------------------------------------------------------------------------------- 20. Tax Status 14-15 - --------------------------------------------------------------------------------------------------------- 21. Underwriters N/A - --------------------------------------------------------------------------------------------------------- 22. Calculation of Performance Data N/A - --------------------------------------------------------------------------------------------------------- 23. Financial Statements 17 - ---------------------------------------------------------------------------------------------------------
TWENTIETH CENTURY CAPITAL PORTFOLIOS PROSPECTUS AUGUST 1, 1996 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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. 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. - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (CONTINUED)--EQUITY INCOME (For a share outstanding throughout the period.) August 1, 1994 Year Ended (inception) through 1996 March 31, 1995 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- 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) - -------------------------------------------------- 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-5393 [Recycled logo] 9608 Recycled TWENTIETH CENTURY CAPITAL PORTFOLIOS STATEMENT OF ADDITIONAL INFORMATION August 1, 1996 - -------------------------------------------------------------------------------- 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 -- ================================================================================ - -------------------------------------------------------------------------------- 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. 3 (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 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). 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.
Signature Title Date /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
EX-99 2 EXHIBIT INDEX 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. EX-99.B1A 3 ARTICLES OF INCORPORATION 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 EX-99.B1B 4 ARTICLES SUPPLEMENTARY 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:
Number Number of Shares of Shares Aggregate Series Before Increase As Increased Par Value - ------ ---------------- ------------ --------- 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.
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 EX-99.B2 5 BY-LAWS 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 EX-99.B5A 6 MANAGEMENT AGREEMENT 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 EX-99.B5B 7 ADDENDUM TO MANAGEMENT AGREEMENT 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 EX-99.B8A 8 CUSTODIAN AGREEMENT 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 EX-99.B8B 9 CUSTODIAN AGREEMENT 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 EX-99.B8C 10 CUSTODIAN AGREEMENT 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 EX-99.B9 11 TRANSFER AGENCY AGREEMENT 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 EX-99.B10 12 OPINION AND CONSENT OF COUNSEL 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 EX-99.B11 13 CONSENT OF INDEPENDENT AUDITORS 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 EX-99.B16 14 SCHEDULE OF COMPUTATION 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% EX-99.B17 15 POWER OF ATTORNEY 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 EX-27.1.1 16 FINANCIAL DATA SCHEDULE
6 1 CAPITAL PORTFOLIOS- VALUE FUND YEAR MAR-31-1996 MAR-31-1996 824640952 881924376 46788343 2249064 0 930961783 47325446 0 1751097 49076543 1396082 775215617 139608208 63735844 44482 0 48078497 0 57150562 881885240 15209513 3387482 0 5754510 12842485 93357747 42011788 148212020 0 13540711 47886954 0 108909750 43370111 10332725 533604189 0 3521148 170736 0 5747940 0 5754510 590608755 5.46 0.13 1.34 0.13 0.48 0.00 6.32 0.97 0 0.00
EX-27.1.2 17 FINANCIAL DATA SCHEDULE
6 2 CAPITAL PORTFOLIOS- EQUITY INCOME YEAR MAR-31-1996 MAR-31-1996 108789923 115495318 4249895 629626 0 120374839 3310183 0 372298 3682481 191431 104823922 19143127 9627797 22485 0 4974092 0 6680428 116692358 2575445 1228449 0 832837 2971057 11637714 4726626 19335397 0 3070813 6912073 0 14703393 6860307 1672244 64479518 0 389558 18866 0 831887 0 832837 84640230 5.42 0.20 1.13 0.20 0.45 0.00 6.10 0.98 0 0.00
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