N-CSRS 1 cent40774-ncsr.txt CENTURY CAPITAL MANAGEMENT TRUST UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number: 811-09561 Century Capital Management Trust ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) c/o Century Capital Management, LLC 100 Federal Street, Boston, Massachusetts 02110 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Century Capital Management, LLC 100 Federal Street, Boston, Massachusetts 02110 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (617) 482-3060 -------------- Date of fiscal year end: October 31 ----------------- Date of reporting period: April 30, 2007 ----------------- ITEM 1. Report to Shareholders. [LOGO] CENTURY FUNDS Seventy-Nine Years of Investing 1928 - 2007 CENTURY Century Shares Trust Century Small Cap Select Fund Semi-Annual Report April 30, 2007 PEOPLE and IDEAS that WORK TM CENTURY FUNDS AVERAGE ANNUAL TOTAL RETURNS AS OF APRIL 30, 2007
SINCE INCEPTION/ CENTURY SHARES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------------------------------------------------------- Investor Shares (7/18/05) 10.17% N/A N/A 9.27% Institutional Shares 10.91% 8.97% 7.24% 9.81% CENTURY SMALL CAP SELECT FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------------------------------------------------------- Investor Shares (02/24/00) 5.57% 9.86% 12.75% 17.26% Institutional Shares (12/09/99) 5.86% 10.20% 13.18% 17.38%
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. For the most recent month end performance, please call 1-800-321-1928 or visit the Funds' website at www.centuryfunds.com. As stated in the prospectus dated February 28, 2007, the total annual fund operating expenses, gross of any fee waivers or expense reimbursements, for Century Small Cap Select Fund are 1.45% for the Investor Shares and 1.07% for the Institutional Shares, and the total annual fund operating expenses, gross of any fee waivers or expense reimbursements, for Century Shares Trust are 2.15% for the Investor Shares and 1.11% for the Institutional Shares. The Adviser has agreed contractually to waive a portion of its fees and/or reimburse operating expenses for the Investor Shares of Century Shares Trust to maintain total operating expenses at 1.45% through February 28, 2008. Please see the Financial Highlights and Notes to the Financial Statements sections of this report for gross and net expense related disclosure for the period ended April 30, 2007. Shares held less than 90 days for both Funds may be subject to a 1.0% redemption fee. Returns include the reinvestment of dividends and capital gains. Performance for Century Small Cap Select Fund and the Investor Shares of Century Shares Trust would have been lower during relevant periods if certain fees had not been waived or expenses reimbursed. Performance information for the Funds does not reflect the deduction of taxes that shareholders would pay on Fund distributions or the redemption of Fund shares. CENTURY SMALL CAP SELECT FUND CONCENTRATES ITS INVESTMENTS IN THE FINANCIAL SERVICES AND HEALTH CARE GROUP OF INDUSTRIES. CENTURY SHARES TRUST CURRENTLY HAS MORE THAN 25% OF ITS ASSETS INVESTED IN COMPANIES IN THE INSURANCE INDUSTRY. CONCENTRATION IN A PARTICULAR INDUSTRY SUBJECTS THE FUNDS TO THE RISKS ASSOCIATED WITH THAT INDUSTRY AND, AS A RESULT, MAY BE SUBJECT TO GREATER PRICE VOLATILITY THAN FUNDS WITH LESS CONCENTRATED PORTFOLIOS. IN ADDITION, THE CENTURY SMALL CAP SELECT FUND INVESTS IN SMALLER COMPANIES WHICH POSE GREATER RISKS THAN THOSE ASSOCIATED WITH LARGER, MORE ESTABLISHED COMPANIES. This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors unless preceded or accompanied by the Funds' prospectus. The views in this report were those of Century Funds' Chief Investment Officer and Director of Research as of April 30, 2007 and may not reflect their views on the date this report is first published or anytime thereafter. These views are intended to assist shareholders of the Funds in understanding their investments and do not constitute investment advice. There is no assurance that the Funds will continue to invest in the securities mentioned. Foreside Fund Services, LLC, Distributor. CENTURY FUNDS DEAR FELLOW SHAREHOLDERS: The equity markets continue their fifth consecutive year of significant earnings growth and price appreciation. The rise of global trade and easy credit terms are feeding a liquidity boom that may further, lift stock valuations. The economy is benefiting from some of the highest profit margins and lowest interest rates in forty years. Meanwhile, inflation and declining home prices are raising concerns about future growth. We are keeping a sharp eye on both of these issues since they could lead to a slowdown or a pullback in the economy. We are anxious optimists about the equity markets today. Earnings remain strong, valuations appear fair but growth continues to slow. As the world begins to appreciate the potential for heightened "risks" in a maturing economic cycle, we remain focused on investing the Funds in companies with resilient franchises and consistent returns. With this as a backdrop, for the six months ended April 30, 2007, Century Small Cap Select Fund was up +8.57% (Institutional Shares) and +8.48% (Investor Shares) versus the +7.42% return for the Russell 2000 Growth Index; and Century Shares Trust was up +6.50% (Institutional Shares) and +6.20% (Investor Shares) versus the +8.60% return for the S&P 500 Index. MARKET COMMENTARY The investment environment today is dominated by a number of noteworthy issues. In this report, we focus on three: 1) private equity's growing influence, 2) corporate earnings growth, and 3) the U.S. housing market. We believe 2007 will continue to see low unemployment and continued economic growth. PRIVATE EQUITY: AN EMERGING PRESENCE For eighty years, the public equity markets (represented by the NASDAQ and New York Stock Exchanges) have been the primary source of low-cost money when an established company seeks to finance its growth through issuing equity. Once a company underwent an Initial Public Offering (IPO), it remained publicly-traded and financed its future growth through either its internal cash flows, borrowing from a bank or issuing more equity through the public markets. Meanwhile, private equity pools historically invested in small, incubating or turnaround companies and nursed them to strength before bringing them to the public investors through an IPO. Rising global trade and economic expansion are driving increased liquidity into the equity and debt markets. This ravenous appetite by high risk-high return investors has led to dramatic growth in the demand for private equity and hedge funds over the last four years. CENTURY FUNDS 1 BREAKING NEW GROUND In our opinion, there is a seismic shift in the world of corporate ownership. Corporate capital structures are "going private" at a surprising pace, and debt is replacing equity on balance sheets. The equity markets are in a tug-of-war between "public" securities holders (individual, institutional and mutual fund investors) and "private" equity pools (including venture, buyout and hedge funds). There are two campaigns being fought: one battle for assets to invest and a second battle for companies in which to invest. In terms of battling for assets, Private Equity is gaining market share. In 2006, U.S.-based private equity firms raised an aggregate $215.4 billion in commitments. And that total is 4 times larger than total commitments in 2003. In 2004, the change in dollars invested in public equity outnumbered the -------------------------------------------------------------------------------- Bar Chart: PRIVATE EQUITY FUND COMMITMENTS BY YEAR ($ IN BILLIONS) 63% CAGR 2003 $49 2004 $92 2005 $152 2006 $215 Source: KBW Research report 5-29-2007 -------------------------------------------------------------------------------- dollars of new private equity commitments by a ratio of 35:1. In 2006, the ratio declined to 20:1. The amount of money Private Equity has raised in terms of fund commitments has grown at the enviable compound annual growth rate (CAGR) of 63% since 2003 and a very healthy 19% since 1996. This influence grows even larger when you consider that Private Equity firms use debt to finance acquisitions. Assuming Private Equity firms finance an acquisition with 75% debt and 25% capital from one of their funds, the total amount of capital at their disposal is approximately $860 billion (based on 2006 commitments alone), when viewed relative to overall equity markets, this $860 billion represents almost 3% of the $29.1 trillion in total public equity market capitalization. If this number is multiplied by funds raised in recent and future years, private equity's impact on the equity markets is shocking and continues to grow. PRICING FOR PERFECTION: SHORT TERM GAIN, LONG TERM PAIN? Why does this private equity trend matter to our Funds' investors? In the short term, private equity capital may help our Funds' returns as acquisition prices raise stock valuations. However, in the long term, we believe private equity's influence increases the stock market's risk profile without a commensurate increase in return expectations. As investors who are focused on risk-adjusted returns, this potential scenario is a concern. 2 CENTURY FUNDS We are concerned this disruptive trend could end badly. In our opinion, the high valuation multiples (10-15 times annual operating profits) being paid to acquire firms will make it difficult for private equity investors to generate an attractive return on their investment. In addition, we believe that the high amount of debt (up to 90% of deal value in some cases) involved in these deals will be a burden on the operating companies and may make it difficult for these firms to thrive, should their operating experience distress. After six years of rapid economic expansion, we think that rosy assumptions of future growth and/or expense saving "synergies" is a recipe for possible failure. Investor caution is warranted. EARNINGS GROWTH While earnings per share growth has been robust for both large stocks and small cap stocks over the past few years, a divergence seems to be occurring in terms of next year's growth. Over the past four years, the S&P 500 has generated compound annual earnings per share (EPS) growth of 16% from 2002 through 2006. -------------------------------------------------------------------------------- Bar Chart: LARGE CAP GROWTH RATES Earnings Per Share - % Change Year over Year S&P 500 2003 15% 2004 21% 2005 14% 2006 16% 2007E 5% 2008E 7% Source: Baseline As of 6/8/2007 -------------------------------------------------------------------------------- The Russell 2000 Growth Index experienced even better growth, with annual EPS up 34% since 2002. EPS for the Russell 2000 Growth Index rebounded sharply after the dot-com collapse from 2000 to 2002. Furthermore, the inclusion of stock option expensing, beginning in 2006, negatively hurt EPS growth on a year-over-year basis. -------------------------------------------------------------------------------- SMALL CAP GROWTH RATES Earnings Per Share - % Change Year over Year RUSSELL 2000 GROWTH INDEX 2003 92% 2004 38% 2005 15% 2006 8% 2007E 20% 2008E 34% Source: Baseline As of 6/8/2007 -------------------------------------------------------------------------------- In terms of the S&P 500 Index, the consensus EPS growth rate seems to be naturally decelerating after four strong years of 14% or better growth. This is inline with our expectations. However, in our view, consensus EPS estimates for the small cap benchmark (i.e. The Russell 2000 Growth Index) remain optimistic. The annual growth rate in EPS for 2007 is estimated to be 20%, with almost all of the growth backend loaded into the third and fourth quarter (+58%) as shown on the next page. We are monitoring the expectations for second half earnings and the CENTURY FUNDS 3 fourth quarter earnings in particular, given the various housing and inflationary pressures weighing on consumers. -------------------------------------------------------------------------------- Bar Chart: SMALL CAP QUARTERLY EARNINGS Earnings Per Share - % Change Year over Year Growth by Quarter 2007 FULL YEAR 20% MAR -4% JUN 8% SEP 23% DEC 58% RUSSELL 2000 GROWTH INDEX Source: Baseline As of 6/8/2007 -------------------------------------------------------------------------------- If the current market expectations turn out to be too optimistic, we believe that the Century Small Cap Select Fund will be well positioned due to our investment approach of investing in more predictable, higher quality companies. We believe that this investment philosophy results in a below-average risk profile. We always strive to generate above average returns over a full market cycle, through our intensive bottom-up research process. HOUSING MARKET SLOWDOWN The housing market is suffering from a modest downturn after years of meaningful appreciation. Residential housing represents an important part of the economy and is a bellwether of consumer spending and attitudes. Consumer spending represents over 70% of U.S. economic activity. Investing in a home has been one of the best investments you could have made over the past 20+ years. Housing prices for the U.S. market in aggregate have increased at over 300% from 1980 to 2006. New England and California experienced the greatest increase at about 500%. These cumulative price increases do not factor in the use of mortgage debt, which in many cases serves to increase the rate of return by 2x to 4x. -------------------------------------------------------------------------------- HOUSE PRICE CHANGES Period Ended 12/31/06 CUMULATIVE ANNUAL RATE SINCE SINCE DIVISION 1980 1980 ---------------------------------------------------- Mountain 283.2% 5.2% West South Central 124.4% 3.1% South Atlantic 325.3% 5.6% East South Central 187.2% 4.0% Pacific 498.4% 6.9% Middle Atlantic 436.5% 6.5% West North Central 203.3% 4.2% East North Central 221.3% 4.5% New England 532.2% 7.1% ------ ---- United States(1) 307.5% 5.4% (1) - U.S. figures based on weighted division average. Source: Office of Federal Housing Enterprise Oversight 3-1-2007 -------------------------------------------------------------------------------- However, in March 2007, the rapid deterioration of sub-prime real estate sent shockwaves throughout the entire real estate industry and capital markets. 'Sub-prime' refers to borrowers who have poor credit histories. Even in the more stable 'prime' market, credit losses or delinquencies rose as well. Though delinquencies remain below long-term averages, lending standards are likely to tighten. This situation will reduce liquidity and might cause economic growth to slow. 4 CENTURY FUNDS With a decline in the housing market, the consumers' health has weakened from a very strong position. Since consumers are the lifeblood of almost every sector in the economy, we incorporate the consumer trends into our analysis of almost every company in which we consider investing. It ranges from the customers ability to repay loans (i.e credit quality) to his/her appetite to buy personal computers or home furnishings or eat at restaurants. CURRENT FUND POSITIONING Have our views on private equity and earnings growth affected our positioning in the Funds? Yes, but only on the margin. First, it has led us to focus on companies that are benefiting from secular rather than cyclical trends. As an example, in the Century Select Small Cap Fund, we own more payment processing companies that, in our view, are benefiting from increased volume rather than traditional banks that are experiencing narrowing net interest margins and rising mortgage delinquencies. Second, we are paying attention to balance sheets as much as income statements. We believe that a strong balance sheet is important if a firm is to weather unforeseen events in the future. Our goal is to invest in well capitalized, sustainable growth companies rather than firms characterized by high leverage, fast growing receivables, or deteriorating cash flows. CENTURY SMALL CAP SELECT FUND PERFORMANCE For the six months ended April 30, 2007, the Fund's Institutional Shares and the Investor Shares returns were up +8.57% and +8.48%, respectively, versus +7.42% for the Russell 2000 Growth Index. The Health Care and Financial Services sectors were top contributors, followed by Consumer Discretionary. The Producer Durables and Materials & Processing sectors were the main underperformers. -------------------------------------------------------------------------------- PERFORMANCE COMPARISON 4/30/2007 CSCS RUSSELL 2000 RUSSELL 2000 INSTITUTIONAL SHARES GROWTH INDEX INDEX* 1 YEAR 5.86 4.53 7.83 3 YEARS 10.2 12.27 14.65 5 YEARS 13.18 8.91 11.14 SINCE INCEPT. (12/9/99) 17.38 1.95 9.25 -------------------------------------------------------------------------------- * Russell 2000 Index is an unmanaged, market value weighted index, which measures performance of the 2000 companies that are between 1000th and 3000th largest in the market. One cannot invest directly in an index. During this same period, the Fund's exposure to the Financial Services and Technology sectors increased modestly, while exposure to the Materials & Processing, Other Energy and Consumer Staples sectors decreased. CENTURY FUNDS 5 -------------------------------------------------------------------------------- BAR CHART: CSCSF HOLDINGS BY SECTOR 4/30/2007 FINANCIAL SERVICES 25.0% CONSUMER DISCRETIONARY 24.4% HEALTH CARE 20.7% TECHNOLOGY 16.8% PRODUCER DURABLES 5.4% CASH 3.7% OTHER INDUSTRIES 4.0% -------------------------------------------------------------------------------- The largest contributors to Fund performance over the last six months included Smart Modular Technologies (electronics manufacturer), HealthExtras (pharmacy benefit manager), GATX Corp (leasing and financing servicer), and Wright Express (payment processor). The Fund's underperformers included Benchmark Electronics (electronics manufacturer), Casual Male Retail Group (men's apparel retailer) and Semitool Inc. (semiconductor equipment manufacturer). In general, we are pleased that we exceeded the benchmark in a reasonably strong market environment. CENTURY SHARES TRUST PERFORMANCE For the six months ended April 30, 2007, the Trust's Institutional Shares were up +6.50% and the Investors Shares were up +6.20% versus +8.60% for the S&P 500 Index. The Technology, Consumer Discretionary, and Healthcare sectors were positive contributors for the period, while Financial Services, Producer Durables, and Consumer Staples sectors detracted from performance. -------------------------------------------------------------------------------- BAR CHART: PERFORMANCE COMPARISON 4/30/2007 CENTURY SHARES TRUST (INSTITUTIONAL SHARES) S&P 500 INDEX 1 YEAR 10.91% 15.24% 3 YEARS 8.97% 12.25% 5 YEARS 7.24% 8.54% 10 YEARS 9.81% 8.04% -------------------------------------------------------------------------------- During the period, we modestly reduced our Financial Services weighting while increasing our holdings in Technology and Health Care sectors. As we have mentioned in the past, our sector weightings tend to be a function of bottom up stock selection and changes in market value, rather than a top-down macro approach to asset allocation. -------------------------------------------------------------------------------- BAR CHART: CST HOLDINGS BY SECTOR 4/30/2007 FINANCIAL SERVICES 29.6% HEALTH CARE 18.9% CONSUMER DISCRETIONARY 15.1% TECHNOLOGY 10.9% PRODUCER DURABLES 6.2% CONSUMER STAPLES 5.7% CASH 5.0% OTHER INDUSTRIES 8.6% -------------------------------------------------------------------------------- 6 CENTURY FUNDS The top contributors to performance for the 6 month period ended April 30, 2007 included Caremark (a pharmacy benefit manager acquired by CVS), Nokia (cell phone manufacturer), Alcon Inc. (vision products) and Tiffany's (luxury retailer). Underperformers included Varian Medical (medical equipment), Progressive (auto insurance) and FedEx Corp. (transportation services). The Trust's performance was driven by sector weightings rather than stock selection. Specifically, the Trust's large exposure to the financial services sector detracted from performance for the 6 months. While we have reduced the Trust's exposure to the Financial Services sector over the past few years, it still represented 29% of the Trust's assets on average during the period. In addition, the Trust did not have exposure to the Integrated Oils and Utilities sectors, which performed well. These sector allocation decisions caused much of the underperformance for the 6 months. Though sector weightings may change in the future, our bottom up style favors resilient franchises at the expense of capital intensive industries (e.g. automobile or steel industries). A CENTURY SNAPSHOT: INVESTING IN FRANCHISE BUSINESSES Continuing a tradition, we share a couple of examples of holdings in each of the Funds. We believe these companies possess many of the characteristics that are hallmarks of Century's investment style. McGraw-Hill Companies (MHP) is one of Century Shares Trust's holdings. This firm serves three different industry segments: Financial Services, Education and Information & Media. It owns some very well-known brands (Business Week, Standard & Poor's and J.D. Power) and has been gaining market share. The main driver of results over the past 10+ years is the Financial Services segment (which provides credit ratings and indices to investors), which has benefited from strong growth in capital markets around the world. These credit ratings are a key component of the analytical work when evaluating investment opportunities. In our opinion, over the past 10 years, management has consistently generated a very attractive Return on Equity (ROE) of about 25%-30% while growing EPS at a 15% compound annual growth rate. This firm is a classic investment for Century due to its brand name franchise businesses, low capital expenditures and high level of recurring revenue. HealthExtras (HLEX), a pharmacy benefit manager (PBM), is one of Century Small Cap Select Fund's holdings. HLEX manages pharmacy benefits and reimbursement costs for managed care organizations and large employer groups such as corporations, unions and government agencies. We believe that the company is taking share from the larger PBMs through better and more transparent client service. The company has visible growth opportunities, no net debt (not capital intensive), generates a 15% ROE, and has a relatively predictable revenue stream. Thank you for your continued interest and support. As always, we look forward to a continuing dialogue with our investors. Please contact us anytime via phone (1-800-321-1928) with any questions or comments. Respectfully submitted, /s/ Alexander L. Thorndike Alexander L. Thorndike Chairman & Chief Investment Officer /s/ Kevin W. Callahan Kevin W. Callahan Director of Research The views expressed in this report reflect those of the portfolio managers as of the end of the period covered by this report. These views are subject to change at any time based on market and other conditions and should not be construed as a recommendation with respect to any security. CENTURY FUNDS 7 CENTURY FUNDS INVESTMENT PRINCIPLES Goals: > We strive to deliver exceptional risk-adjusted performance over time > We seek to develop long-term relationships with our shareholders and clients > We aim to be an ethical leader in the investment industry Objectives: o Performance is our primary goal - We pursue a research-intensive process, resulting in a disciplined investment strategy o Hire the best people - We seek curious individuals who challenge consensus, thrive on adversity and possess a competitive spirit - We value a sense of humor and humility o Continuous improvement is a high priority o Maintain a culture of teamwork and mutual respect Core Values: Create a culture of excellence and integrity o Think long term ... always do the "right" thing o Remember why people entrust us with their money o Value our independence, entrepreneurial spirit and flexibility o Learn from our weaknesses o Encourage innovation and creativity o Leverage our talent, resources and contacts o Reward excellence Investment Philosophy: Quality Growth Investors We believe: o Capital markets are semi-efficient o In-depth original research is a competitive advantage o Reassessing each investment's risks and rewards will benefit performance We seek: o Credible, capable management with a history of success o Franchises with high recurring revenues, barriers to entry and improving fundamentals o Firms with expanding profit margins and ROE's o Companies growing consistently faster than the overall market and peers o Attractively valued stocks relative to the overall market and peers o Firms operating in favorable competitive environments o Companies with shareholder orientation and transparent accounting 8 CENTURY FUNDS PERFORMANCE OF A $10,000 INVESTMENT Line Chart: CENTURY SMALL CAP SELECT FUND INSTITUTIONAL SHARES CSF Institutional Russell 2000 Growth Russell 2000 Dec-99 10000 10000 10000 10010 11145 10870 Mar-00 11160 11042 11640 11610 11282 11200 Sep-00 14010 10834 11324 15510 8646 10542 Mar-01 14101 7331 9856 16086 8649 11264 Sep-01 15356 6220 8922 16410 7848 10804 Mar-02 17436 7694 11234 16752 6486 10296 Sep-02 15239 5091 8093 16533 5473 8591 Mar-03 16437 5261 8205 19436 6531 10127 Sep-03 21368 7215 11046 24351 8130 12650 Mar-04 25317 8583 13442 25374 8591 13505 Sep-04 24857 8075 13119 27352 9293 14969 Mar-05 27409 8658 14170 27904 8960 14781 Sep-05 28549 9526 15475 28458 9679 15650 Mar-06 30866 11069 17832 29299 10266 16936 Sep-06 29510 10086 17010 31184 10970 18525 32058 11242 18885 Apr-07 32675 11537 19225 This chart compares the performance through April 30, 2007 of a hypothetical $10,000 investment in Century Small Cap Select Fund's Institutional Shares (12/9/99 inception date) including reinvested dividends and distributions, and the Russell 2000 Growth Index and the Russell 2000 Index. On February 28, 2007, the Russell 2000 Growth index replaced the Russell 2000 index as the Fund's comparative index. The Adviser believes that the Russell 2000 Growth index is a more appropriate benchmark because the Fund invests principally in companies that exhibit growth characteristics similar to those of companies included in the Russell 2000 Growth index. (Institutional shares inception date). The Russell 2000(R) Growth Index is widely regarded in the industry as the premier measure of small cap growth stocks. On the other hand, its results are not adjusted for the costs to manage and trade a portfolio of securities, so that they are not directly comparable to an actual investors' results. The index is not available for investment. Performance for other share classes may vary. Line Chart: CENTURY SHARES TRUST INSTITUTIONAL SHARES CST Institutional S&P 500 Apr-97 10000 10000 Apr-98 15064 14107 Apr-99 14948 17185 Apr-00 12474 18926 Apr-01 16506 16471 Apr-02 17970 14391 Apr-03 15891 12476 Apr-04 19703 15330 Apr-05 20301 16302 Apr-06 22987 18815 Apr-07 25493 21671 This chart compares the performance over the past ten years, through April 30, 2007, of a hypothetical $10,000 investment in Century Shares Trust Institutional Shares, including reinvested dividends and distributions, with that of a broad-based securities market index. The S&P 500(R) Index is a well known gauge of how large capitalization U.S. equities are doing. On the other hand, its results are not adjusted for the costs to manage and trade a portfolio of securities, so they are not directly comparable to an actual investor's results, and it is not available for investment. Performance for other share classes may vary. CENTURY FUNDS 9 SHAREHOLDER EXPENSE EXAMPLE As a shareholder of a Fund, you incur two types of costs: (1) transaction costs including redemption fees, and (2) ongoing costs, including management fees, distribution and service fees (in the case of Investor Shares of both Funds) and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare those costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (November 1, 2006 to April 30, 2007). ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00=8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. An annual maintenance fee of $10.00 that is charged once a year may apply for certain IRA accounts. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs such as redemption fees. Therefore, the second line of the table is useful in comparing ongoing cost only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. CENTURY SHARES TRUST
EXPENSES PAID BEGINNING ENDING DURING PERIOD* ACCOUNT VALUE ACCOUNT VALUE SIX MONTHS ENDING NOVEMBER 1, 2006 APRIL 30, 2007 APRIL 30, 2007 Based on Actual Fund Return Institutional Shares $1,000.00 $1,065.00 $ 5.53 Investor Shares $1,000.00 $1,062.00 $ 8.49 Based on Hypothetical 5% Yearly Return before expenses Institutional Shares $1,000.00 $1,019.50 $ 5.41 Investor Shares $1,000.00 $1,008.32 $ 8.30
* These calculations are based on expenses incurred in the most recent fiscal half-year. The Fund's annualized expense ratios are 1.08% for Institutional Shares and 1.66% for Investor Shares. The dollar amounts shown as "Expenses Paid" are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. CENTURY SMALL CAP SELECT FUND
EXPENSES PAID BEGINNING ENDING DURING PERIOD* ACCOUNT VALUE ACCOUNT VALUE SIX MONTHS ENDING NOVEMBER 1, 2006 APRIL 30, 2007 APRIL 30, 2007 Based on Actual Fund Return Institutional Shares $1,000.00 $1,085.70 $ 5.53 Investor Shares $1,000.00 $1,084.80 $ 6.87 Based on Hypothetical 5% Yearly Return before expenses Institutional Shares $1,000.00 $1,019.53 $ 5.36 Investor Shares $1,000.00 $1,018.23 $ 6.66
* These calculations are based on expenses incurred in the most recent fiscal half-year. The Fund's annualized expense ratios are 1.07% for Institutional Shares and 1.33% for Investor Shares. The dollar amounts shown as "Expenses Paid" are equal to the annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365. 10 CENTURY FUNDS CENTURY SHARES TRUST APRIL 30, 2007 - (UNAUDITED) PORTFOLIO OF INVESTMENTS COMMON STOCK - 95% SHARES VALUE --------------------------------------------------------- AUTO & TRANSPORT - 2.9% 48,500 FedEx Corp. $ 5,113,840 63,000 Oshkosh Truck Corp. 3,524,220 ------------ 8,638,060 ------------ CONSUMER DISCRETIONARY - 15.1% 142,950 Bed Bath & Beyond, Inc. * 5,823,783 62,920 CDW Corp. 4,530,869 28,350 Costco Wholesale Corp. 1,518,710 141,600 Fastenal Co. 5,822,592 127,550 Home Depot, Inc. 4,830,319 85,300 McGraw-Hill Companies, Inc. 5,589,709 26,150 Nordstrom, Inc. 1,436,158 127,250 Scientific Games Corp. * 4,236,153 294,765 Staples, Inc. 7,310,172 65,160 Tiffany & Co. 3,107,480 ------------ 44,205,944 ------------ CONSUMER STAPLES - 5.7% 92,200 PepsiCo, Inc. 6,093,498 103,900 Proctor & Gamble Co. 6,681,809 88,420 Walgreen Co. 3,881,638 ------------ 16,656,945 ------------ FINANCIAL SERVICES - 29.6% 73,100 AFLAC, Inc. 3,752,954 55,594 Allstate Corp. 3,464,618 147,866 American International Gr., Inc. 10,337,312 105,000 Aon Corp. 4,068,750 100 Berkshire Hathaway, Inc. CL A * 10,920,000 170,600 The Chubb Corp. 9,183,398 206,300 J.P. Morgan Chase & Co. 10,748,230 413,600 The Progressive Corp. 9,541,752 194,350 Protective Life Corp. 9,115,015 58,850 RenaissanceRe Holdings Ltd. 3,186,728 151,850 Torchmark Corp. 10,371,355 87,666 Waddell & Reed Fin'l, Inc. CL A 2,123,271 ------------ 86,813,382 ------------ HEALTH CARE - 18.9% 36,700 Alcon, Inc. 4,951,931 88,700 Biomet, Inc. 3,831,840 110,336 CVS/Caremark Corp. 3,998,577 109,050 Covance, Inc. * 6,597,525 31,500 Henry Schein, Inc. * 1,642,095 100,550 IMS Health, Inc. 2,949,132 73,450 Johnson & Johnson, Inc. 4,716,959 62,400 Millipore Corp. 4,606,992 SHARES/FACE AMOUNT VALUE --------------------------------------------------------- HEALTH CARE (CONTINUED) 32,250 Roche Holdings Ltd. $ 3,031,500 187,481 UnitedHealth Group, Inc. 9,947,742 95,250 Varian Medical Systems, Inc. * 4,020,503 67,440 Wellpoint, Inc. * 5,325,737 ------------ 55,620,531 ------------ MATERIALS & PROCESSING - 1.2% 38,100 Fluor Corp. 3,643,122 ------------ OTHER - 3.7% 81,650 3M Co. 6,758,171 50,650 Fortune Brands, Inc. 4,057,065 ------------ 10,815,236 ------------ OTHER ENERGY - .8% 31,550 Valero Energy Corp. 2,215,757 ------------ PRODUCER DURABLES - 6.2% 50,100 Danaher Corp. 3,566,619 136,600 Donaldson Co., Inc. 4,906,672 145,960 United Technologies Corp. 9,798,295 ------------ 18,271,586 ------------ TECHNOLOGY - 10.9% 244,000 Cisco Systems, Inc. * 6,524,560 70,300 Cognos, Inc. * 3,030,633 240,540 Microsoft Corp. 7,201,768 256,350 Nokia Corp. 6,472,838 257,900 Oracle Corp. * 4,848,520 118,650 Texas Instruments, Inc. 4,078,001 ------------ 32,156,319 ------------ (Identified cost, $159,066,424) 279,036,881 ------------ CASH EQUIVALENTS - 6.3% Time Deposits 18,514,000 ------------ TOTAL INVESTMENTS AND TIME DEPOSITS - 101.3% (Identified cost, $177,580,424) 297,550,881 ------------ CASH AND RECEIVABLES LESS LIABILITIES - (1.3)% Liabilities in excess of other assets (3,747,333) ------------ NET ASSETS - 100% $293,803,548 ============ * Non-income producing security See notes to financial statements. CENTURY FUNDS 11 CENTURY SMALL CAP SELECT FUND APRIL 30, 2007 - (UNAUDITED) PORTFOLIO OF INVESTMENTS COMMON STOCK - 96.3% SHARES VALUE --------------------------------------------------------- CONSUMER DISCRETIONARY - 24.4% 80,200 Advisory Board Co. * $ 3,807,896 438,950 aQuantive, Inc. * 13,436,260 529,450 Bright Horizons Family Solutions, Inc. * 20,447,359 540,950 Casual Male Retail Group, Inc. * 6,226,335 1,787,450 CMGI, Inc. * 3,753,645 126,050 CRA International, Inc. * 6,500,399 556,200 Global Imaging Systems, Inc. * 16,068,618 367,950 Guitar Center, Inc. * 17,036,085 414,025 Jarden Corp. * 17,447,014 529,700 Kforce, Inc. * 7,272,781 350,500 LECG Corp. * 5,134,825 506,750 Red Lion Hotels Corp. * 6,461,063 595,000 Scientific Games Corp. * 19,807,550 452,570 Tractor Supply Co. * 23,415,972 623,615 Tuesday Morning Corp. 8,705,665 244,902 USANA Health Sciences, Inc. * 9,756,896 609,800 World Fuel Services Corp. 28,178,858 ------------ 213,457,218 ------------ FINANCIAL SERVICES - 25.0% 86,450 Capital Trust, Inc. 4,095,137 296,300 Cohen & Steers, Inc. 15,203,153 443,250 Employers Holdings, Inc. * 8,789,648 238,450 Euronet Worldwide, Inc. * 6,640,833 638,600 GATX Corp. 31,297,786 925,500 Old National Bancorp 16,547,940 695,600 Online Resources Corp. * 7,679,424 459,350 optionsXpress Holdings, Inc. 11,336,758 858,540 Platinum Underwriters Holdings, Ltd. 29,379,239 97,700 Portfolio Recovery Associates, Inc. * 5,437,005 1,904,910 Primus Guaranty Ltd. * 23,030,362 309,250 Protective Life Corp. 14,503,825 170,080 Redwood Trust, Inc. 8,539,717 451,950 Waddell & Reed Financial, Inc. 10,946,229 792,700 Wright Express Corp. * 24,977,977 ------------ 218,405,031 ------------ HEALTH CARE - 20.7% 66,900 Adams Respiratory Therapeutics, Inc. * 2,509,419 762,900 Bruker BioSciences Corp. * 8,780,979 374,650 Computer Programs & Systems, Inc. 11,932,603 101,746 Haemonetics Corp. * 4,867,529 604,500 Healthextras, Inc. * 18,709,275 387,775 Healthways, Inc. * 16,449,416 367,850 IRIS International, Inc. * 4,988,046 SHARES VALUE --------------------------------------------------------- HEALTH CARE (CONTINUED) 166,300 Kendle International, Inc. * $ 5,667,504 151,000 LifeCell Corp. * 4,439,400 144,050 Millipore Corp. 10,635,212 123,300 Molecular Insight Pharm., Inc. * 1,457,406 378,100 Perrigo Co. 7,183,900 307,250 Psychiatric Solutions, Inc. * 10,775,258 417,250 QIAGEN N.V. * 7,397,843 538,762 Quality Systems, Inc. 21,803,698 106,950 Respironics, Inc. * 4,359,282 394,863 Sunrise Senior Living, Inc. * 15,119,304 181,201 Surmodics, Inc. * 7,362,197 287,500 TECHNE Corp. * 16,953,875 ------------ 181,392,143 ------------ MATERIALS AND PROCESSING - 1.1% 457,430 RPM International, Inc. 9,729,536 ------------ OTHER ENERGY - 2.9% 224,850 Aventine Renewable Energy, Inc. * 4,319,369 286,050 Berry Petroleum Co. 9,742,863 282,500 Foundation Coal Holdings, Inc. 11,127,675 ------------ 25,189,907 ------------ PRODUCER DURABLES - 5.4% 122,950 Donaldson Co., Inc. 4,416,364 606,400 Measurement Specialties, Inc. * 12,413,008 271,000 MTS Systems Corp. 11,520,210 154,600 Ryland Group, Inc. 6,848,780 1,177,867 Semitool, Inc. * 12,226,259 ------------ 47,424,621 ------------ TECHNOLOGY - 16.8% 832,455 Benchmark Electronics, Inc. * 17,631,397 933,953 Blackbaud, Inc. 20,621,682 105,418 Cognos, Inc. * 4,544,570 211,850 DRS Technologies, Inc. 10,658,174 1,626,750 Epicor Software Corp. * 23,587,875 570,250 J2 Global Communication * 16,400,390 1,092,200 Lawson Software, Inc. * 9,720,580 197,450 MICROS Systems, Inc. * 10,820,260 2,501,950 SMART Modular Technologies, Inc. * 33,275,935 ------------ 147,260,863 ------------ (Identified cost, $781,211,103) $842,859,319 ------------ See notes to financial statements. 12 CENTURY FUNDS CENTURY SMALL CAP SELECT FUND (CONT.) APRIL 30, 2007 - (UNAUDITED) PORTFOLIO OF INVESTMENTS SHARES/FACE AMOUNTS VALUE --------------------------------------------------------- CASH EQUIVALENTS - 8.2% Time Deposits $ 71,627,000 ------------ TOTAL INVESTMENTS AND TIME DEPOSITS - 104.5% (Identified cost, $852,838,103) 914,486,319 ------------ CASH AND RECEIVABLES LESS LIABILITIES - (4.5)% Liabilities in excess of other assets (39,375,395) ------------ NET ASSETS - 100% $875,110,924 ============ *Non-income producing security See notes to financial statements. CENTURY FUNDS 13 STATEMENT OF ASSETS AND LIABILITIES - APRIL 30, 2007 - (UNAUDITED)
Century Shares Century Small Cap Trust Select Fund ------------ ------------ ASSETS: Investments, at value (Note 1A) (Identified cost of, $177,580,424 and $852,838,103, respectively) $ 297,550,881 $ 914,486,319 Cash 133 866 Dividends and interest receivable 109,428 84,890 Receivable for investments sold 2,195,290 9,918,724 Receivable for Trust/Fund shares sold 3,806 1,434,114 ------------- ------------- Total Assets 299,859,538 925,924,913 ------------- ------------- LIABILITIES: Payable to Affiliates: Management fee (Note 4) 191,184 697,795 Administration fee (Note 5) 35,985 -- Distribution fees (Note 7) 73 -- Accrued expenses and other liabilities 105,768 265,775 Payable for investments purchased 5,489,168 44,400,726 Payable for Trust/Fund shares repurchased 233,813 5,449,693 ------------- ------------- Total Liabilities 6,055,991 50,813,989 ------------- ------------- NET ASSETS $ 293,803,548 $ 875,110,924 ============= ============= At April 30, 2007, net assets consisted of: Capital paid-in $ 151,723,992 $ 768,985,316 Accumulated distributions in excess of net investment income (247,377) -- Accumulated undistributed net realized gains on investments 22,356,474 44,477,393 Unrealized appreciation in value of investments 119,970,457 61,648,217 ------------- ------------- Net assets applicable to outstanding capital stock $ 293,803,548 $ 875,110,924 ============= ============= Net Assets consist of: Investor Class $ 1,701,342 $ 310,540,316 Institutional Class $ 292,102,205 $ 564,570,608 Shares Outstanding consist of (Note 2): Century Shares Trust Investor Class 60,427 12,392,202 Institutional Class 10,330,273 22,205,651 NET ASSET VALUE PER SHARE (Represents both the offering and redemption price*) Investor Class $ 28.16 $ 25.06 Institutional Class $ 28.28 $ 25.42
* In general, shares of the Trust and fund may be redeemed at net asset value. However, upon the redemption of shares held less than 90 days, a redemption fee of 1% of the current net asset value of the shares may be assessed and retained by each for the benefit of their respective remaining shareholders. The redemption fee is accounted for as an addition to paid-in-capital. See notes to financial statements. 14 CENTURY FUNDS STATEMENT OF OPERATIONS - SIX MONTHS ENDED APRIL 30, 2007 - (UNAUDITED)
Century Shares Century Small Cap Trust Select Fund ------------- ---------------- INVESTMENT INCOME/(LOSS): Dividends (net of withholding tax of $25,449 and $0, respectively) $ 1,944,350 $ 4,509,398 Interest 255,708 1,260,146 ------------ ------------ Total income 2,200,058 5,769,545 EXPENSES: Investment adviser fee (Note 4) 1,168,225 4,189,823 Non-interested trustees' remuneration 15,655 74,085 Transfer agent Institutional Class 31,080 29,985 Investor Class 5,430 181,000 Custodian 31,675 47,200 Administration (Note 5) 219,042 -- Insurance 1,810 9,050 Professional fees 25,630 55,510 Registration 33,350 27,150 Printing and other 45,750 271,500 Distribution fee (Note 7) 2,180 281,598 ------------ ------------ Total expenses 1,579,827 5,166,901 Advisor reimbursement (Note 6) (2,347) -- ------------ ------------ Net expenses 1,577,480 5,166,901 ------------ ------------ Net investment income/(loss) 622,579 602,644 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain from investment transactions 21,928,655 49,404,051 (Decrease) / Increase in unrealized appreciation on investments (4,137,203) 23,007,884 ------------ ------------ Net realized and unrealized gain on investments 17,791,452 72,411,935 ------------ ------------ Net increase in net assets resulting from operations $ 18,414,031 $ 73,014,579 ============ ============
See notes to financial statements. CENTURY FUNDS 15 STATEMENT OF CHANGES IN NET ASSETS
Century Small Cap Century Shares Trust Select Fund Six Months Six Months INCREASE (DECREASE) Ended Ended IN NET ASSETS: April 30, 2007 Year Ended April 30, 2007 Year Ended (unaudited) October 31, 2006 (unaudited) October 31, 2006 ------------ -------------- ------------ -------------- Operations: Net investment income/(loss) $ 622,579 $ 879,585 $ 602,644 $ 1,408,894 Net realized gain on investment transactions 21,928,655 79,595,230 49,404,051 80,347,261 Change in net unrealized appreciation (4,137,203) (50,132,170) 23,007,884 (56,826) ------------ ------------ ------------ ------------ Net increase in net assets resulting from operations 18,414,031 30,342,645 73,014,579 81,699,329 Distributions to shareholders from: Net Investment Income Century Shares Trust Institutional Class (2,688,437) (7,217,847) Investor Class -- (26,346) Century Small Cap Select Fund Institutional Class (7,516,448) (2,271,628) Investor Class (4,411,492) (512,770) Realized gain from investment transactions Century Shares Trust Institutional Class (75,570,929) (21,454,737) Investor Class (459,673) (78,306) Century Small Cap Select Fund Institutional Class (42,614,264) (6,886,193) Investor Class (27,610,318) (4,754,069) Trust/Fund share transactions - net 47,092,002 (19,338,500) (10,039,530) (165,917,361) Redemption fees 834 7,107 9,640 150,395 ------------ ------------ ------------ ------------ Total (decrease)/increase (13,212,172) (17,765,984) (19,167,833) (98,492,297) NET ASSETS: At beginning of period 307,015,718 324,781,702 894,278,757 992,771,054 ------------ ------------ ------------ ------------ At end of period $293,803,548 $307,015,718 $875,110,924 $894,278,757 ============ ============ ============ ============ Distributions in excess of net investment income at end of period $ 247,377 $ 247,377 $ -- $ -- ============ ============ ============ ============
See notes to financial statements. 16 CENTURY FUNDS FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED PERIOD APRIL 30, ENDED YEAR ENDED CENTURY SHARES TRUST 2007 YEAR ENDED OCTOBER 31, OCTOBER 31, DECEMBER 31, INSTITUTIONAL SHARES (UNAUDITED) 2006 2005 2004 2003 2002 (a) 2001 ------ ------ ------ ------ ------ ------ ------ Net Asset Value, beginning of period $35.69 $35.40 $35.62 $35.66 $33.95 $38.12 $42.97 ------ ------ ------ ------ ------ ------ ------ Income/(loss) from Investment Operations: Net investment income (b) 0.06 0.10 0.19 0.03 0.07 0.08 0.17 Net realized and unrealized gain/(loss) on investments 1.63 3.31 3.54 3.02 5.03 (4.20) (1.26) ------ ------ ------ ------ ------ ------ ------ Total income/(loss) from investment operations 1.69 3.41 3.73 3.05 5.10 (4.12) (1.09) ------ ------ ------ ------ ------ ------ ------ Less Distributions From: Net investment income (0.25) (0.77) (0.32) (0.34) (0.10) (0.05) (0.17) Net realized gain on investment transactions (8.85) (2.35) (3.63) (2.75) (3.29) -- (3.60) ------ ------ ------ ------ ------ ------ ------ Total distributions (9.10) (3.12) (3.95) (3.09) (3.39) (0.05) (3.77) ------ ------ ------ ------ ------ ------ ------ Redemption fees --+ --+ --+ --+ --+ --+ 0.01 ------ ------ ------ ------ ------ ------ ------ Net Asset Value, end of period $28.28 $35.69 $35.40 $35.62 $35.66 $33.95 $38.12 ====== ====== ====== ====== ====== ====== ====== Total Return 6.50%** 10.17% 11.18% 9.06% 16.99% -10.82%** -2.52% Ratios and supplemental data Net assets, end of period (000 omitted) $292,102 $305,172 $323,643 $362,392 $342,679 $291,311 $345,849 Ratio of expenses to average net assets 1.08%* 1.11% 1.12% 1.15% 1.17% 1.19%* 1.05% Ratio of net investment income to average net assets 0.43%* 0.29% 0.55% 0.07% 0.21% 0.26%* 0.41% Portfolio Turnover Rate 12% 48% 19% 43% 37% 22% 17%
(a) For the period from January 1, 2002 to October 31, 2002. Effective September 5, 2002, CST changed its fiscal year end from December 31 to October 31. (b) Calculated based on average shares outstanding during the period. + Amount represents less than $0.01 per share. * Annualized ** Not annualized See notes to financial statements. CENTURY FUNDS 17 FINANCIAL HIGHLIGHTS SIX MONTHS ENDED YEAR PERIOD APRIL 30, ENDED ENDED CENTURY SHARES TRUST 2007 OCTOBER 31, OCTOBER 31, INVESTOR SHARES (UNAUDITED) 2006 2005 (a) ------ ------ ------ Net Asset Value, beginning of period $35.41 $35.35 $35.00 ------ ------ ------ Income/(loss) from Investment Operations: Net investment income (b) (0.02) (0.19) (0.03) Net realized and unrealized gain/(loss) on investments 1.62 3.27 0.29 ------ ------ ------ Total income/(loss) from investment operations 1.60 3.08 0.26 ------ ------ ------ Less Distributions From: Net investment income -- (0.68) -- Net realized gain on investment transactions (8.85) (2.35) -- ------ ------ ------ Total distributions (8.85) (3.03) -- ------ ------ ------ Redemption fees --+ 0.01 0.09 ------ ------ ------ Net Asset Value, end of period $28.16 $35.41 $35.35 ====== ====== ====== Total Return 6.20%** 9.18% 1.00%** Ratios and supplemental data Net assets, end of period (000 omitted) $1,701 $1,844 $1,139 Ratio of expenses to average net assets 1.66%* 2.00% 1.20%* Ratio of expenses to average net assets without giving effect to voluntary expense agreement 1.93%* 2.15% 1.35%* Ratio of net investment income to average net assets -0.16%* -0.58% -0.36%* Portfolio Turnover Rate 12% 48% 19% (a) From the commencement date of operations, July 18, 2005 to October 31, 2005 (b) Calculated based on average shares outstanding during the period. + Amount represents less than $0.01 per share. * Annualized ** Not annualized See notes to financial statements. 18 CENTURY FUNDS FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED CENTURY SMALL CAP APRIL 30, 2007 YEAR ENDED OCTOBER 31, SELECT FUND - INSTITUTIONAL SHARES (UNAUDITED) 2006 2005 2004 2003 2002 ------ ------ ------ ------ ------ ------ Net Asset Value, beginning of period $25.74 $24.15 $22.46 $21.53 $15.42 $14.68 ------ ------ ------ ------ ------ ------ Income from Investment Operations: Net investment (loss)/income (a) 0.05 0.06 0.03 (0.08) (0.09) (0.10) Net realized and unrealized gain on investments 1.99 1.90 2.22 2.14 6.64 0.93 ------ ------ ------ ------ ------ ------ Total income from investment operations 2.04 1.96 2.25 2.06 6.55 0.83 ------ ------ ------ ------ ------ ------ Less Distributions From: Net investment income (0.35) (0.09) -- (0.94) (0.11) -- Net realized gain on investment transactions (2.01) (0.28) (0.56) (0.19) (0.35) (0.13) ------ ------ ------ ------ ------ ------ Total distributions (2.36) (0.37) (0.56) (1.13) (0.46) (0.13) ------ ------ ------ ------ ------ ------ Redemption fees --+ --+ --+ --+ 0.02 0.04 ------ ------ ------ ------ ------ ------ Net Asset Value, end of period $25.42 $25.74 $24.15 $22.46 $21.53 $15.42 ====== ====== ====== ====== ====== ====== Total Return 8.57%** 8.21% 10.19% 9.83% 43.76% 5.87% Ratios and supplemental data Net assets, end of period (000 omitted) $564,571 $540,697 $585,723 $140,208 $42,936 $12,938 Ratio of expenses to average net assets 1.07%* 1.07% 1.06% 1.13% 1.26% 1.45% Ratio of expenses to average net assets without giving effect to voluntary expense agreement 1.07%* 1.07% 1.06% 1.13% 1.40% 1.87% Ratio of net investment (loss)/income to average net assets 0.23%* 0.25% 0.13% -0.36% -0.50% -0.70% Portfolio Turnover Rate 52% 127% 96% 103% 88% 123%
(a) Calculated based on average shares outstanding during the period. + Amount represents less than $0.01 per share. * Annualized ** Not annualized See notes to financial statements. CENTURY FUNDS 19 FINANCIAL HIGHLIGHTS
SIX MONTHS ENDED CENTURY SMALL CAP APRIL 30, 2007 YEAR ENDED OCTOBER 31, SELECT FUND - INVESTOR SHARES (UNAUDITED) 2006 2005 2004 2003 2002 ------ ------ ------ ------ ------ ------ Net Asset Value, beginning of period $25.40 $23.86 $22.26 $21.39 $15.35 $14.60 ------ ------ ------ ------ ------ ------ Income from Investment Operations: Net investment (loss) (a) -- (0.02) (0.04) (0.15) (0.15) (0.18) Net realized and unrealized gain on investments 1.99 1.86 2.20 2.12 6.60 0.94 ------ ------ ------ ------ ------ ------ Total income from investment operations 1.99 1.84 2.16 1.97 6.45 0.76 ------ ------ ------ ------ ------ ------ Less Distributions From: Net investment income (0.32) (0.03) -- (0.91) (0.07) -- Net realized gain on investment transactions (2.01) (0.28) (0.56) (0.19) (0.35) (0.03) ------ ------ ------ ------ ------ ------ Total distributions (2.33) (0.31) (0.56) (1.10) (0.42) (0.03) ------ ------ ------ ------ ------ ------ Redemption fees --+ 0.01 --+ --+ 0.01 0.02 ------ ------ ------ ------ ------ ------ Net Asset Value, end of period $25.06 $25.40 $23.86 $22.26 $21.39 $15.35 ====== ====== ====== ====== ====== ====== Total Return 8.48%** 7.83% 9.87% 9.45% 43.12% 5.34% Ratios and supplemental data Net assets, end of period (000 omitted) $310,540 $353,581 $407,048 $150,418 $78,959 $10,119 Ratio of expenses to average net assets 1.33%* 1.45% 1.35% 1.50% 1.61% 1.80% Ratio of expenses to average net assets without giving effect to voluntary expense agreement 1.33%* 1.45% 1.35% 1.50% 1.76% 2.53% Ratio of net investment (loss)/income to average net assets -0.02%* -0.09% -0.17% -0.69% -0.86% -1.05% Portfolio Turnover Rate 52% 127% 96% 103% 88% 123%
(a) Calculated based on average shares outstanding during the period. + Amount represents less than $0.01 per share. * Annualized ** Not annualized See notes to financial statements. 20 CENTURY FUNDS NOTES TO FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES -- Century Capital Management Trust (the "Master Trust") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Century Shares Trust (the "Trust") and Century Small Cap Select Fund (the "Fund" and together with the Trust, the "Funds") are diversified series of the Master Trust. The following is a summary of significant accounting policies consistently followed by both the Trust and the Fund in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. Investment Security Valuations -- Securities listed on national securities exchanges are valued at closing prices. Unlisted securities or listed securities for which closing prices are not available generally are valued at the latest bid prices. Short-term obligations, maturing in 60 days or less, are valued at amortized cost, which approximates value. In the absence of readily available market quotes, the Funds' portfolio securities and other assets will be valued at fair value, as determined in good faith by the Board of Trustees, its Valuation Committee, or the Adviser or a Delegate pursuant to instructions from the Board of Trustees or its Valuation Committee. When determining the price for a fair value asset, the investment advisor shall seek to determine the price that the funds might reasonably expect to receive from the current sale of that asset in an arm's-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor deems relevant. In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. At this time, management is evaluating the implications of SFAS 157 and its impact on the Funds' financial statements has not yet been determined. B. Securities Transactions -- Investment security transactions are recorded on a trade date basis. Gain or loss on sales is determined by the use of specific identification method, for both financial reporting and federal income tax purposes. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Foreign dividend income is recorded on ex-dividend date or as soon as practical after the Fund or Trust determine the existence of a dividend declaration after exercising reasonable due diligence. Foreign income and capital gain on some foreign securities may be subject to foreign withholding taxes, which are accrued as applicable. Interest income is recorded daily on an accrual basis. C. Use of Estimates -- The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America incorporates estimates made by management in determining the reported amounts of assets, liabilities, revenues and expenses of the Trust and Fund. Actual results could differ from those estimates. D. Risks and Uncertainty -- Century Shares Trust adopted a fundamental policy not to concentrate its investments in any industry or group of industries in 2001; however, prior to that time the Fund concentrated its investments in insurance companies and banks. As a result, long-term holdings in insurance companies comprise more than 25% of the Trust's total assets, which subjects the Trust to risks associated with those industries (such as increases in claims activity and exposure to property-casualty risks). E. Multiple Classes of Shares -- The Funds offers multiple classes of shares, which differ in their respective distribution and transfer agent fees. Transfer agent fees for each Fund's class are based on a per shareholder account charge. All shareholders bear the common expenses of the Funds based upon daily net assets of each class, without distinction between share classes. F. Redemption Fees -- In general, shares of the Trust and Fund may be redeemed at net asset value. However, upon the redemption of shares held less than 90 days, a fee of 1% of the current net asset value of the shares may be assessed and retained by each for the benefit of their respective remaining shareholders. The redemption fee is accounted for as an addition to paid-in-capital. CENTURY FUNDS 21 G. Income Tax Information and Distributions to Shareholders -- Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Income dividends and capital gain distributions are declared separately for each class. Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. In June 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in Income Taxes". FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken in the course of preparing the Trusts' tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be booked as a tax expense in the current year and recognized as: a liability for unrecognized tax benefits; a reduction of an income tax refund receivable; a reduction of deferred tax asset; an increase in deferred tax liability; or a combination thereof. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006. At this time, management is evaluating the implications of FIN 48 and its impact in the financial statements has not yet been determined. Book-tax differences are primarily due to equalization, partnership income, net operating losses and losses deferred due to wash sales and excise tax regulations. The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows: FOR THE TRUST APRIL 30, 2007 ------------- Unrealized appreciation .................................... $ 120,589,467 Unrealized depreciation .................................... 619,010 ------------- Unrealized net appreciation ................................ $ 119,970,457 ============= Cost for federal income tax purposes ....................... $ 177,580,424 FOR THE FUND Unrealized appreciation .................................... $ 88,162,947 Unrealized depreciation .................................... 26,514,730 ------------- Unrealized net appreciation ................................ $ 61,648,217 ============= Cost for federal income tax purposes ....................... $ 852,838,103 22 CENTURY FUNDS (2) TRANSACTIONS IN SHARES A. TRUST SHARES-- The number of authorized shares is unlimited. Shares of the Trust are currently divided into Investor Shares and Institutional Shares. Transactions in Trust shares were as follows:
CENTURY SHARES TRUST PERIOD ENDED APRIL 30, 2007 INSTITUTIONAL SHARES INVESTOR SHARES SHARES AMOUNT SHARES AMOUNT --------- ------------ --------- ----------- Sold .......................................................... 111,635 $ 3,060,177 8,722 $ 239,317 Issued to shareholders in reinvestment of distributions from: Net investment income ...................................... 80,627 2,208,745 -- -- Realized gain on investment transactions ................... 2,436,217 65,004,501 17,333 457,249 --------- ------------ --------- ----------- 2,628,479 70,273,422 26,055 696,565 Repurchased ................................................... (847,731) (23,393,587) (17,702) (484,398) --------- ------------ --------- ----------- Net increase (decrease) .................................... 1,780,748 $ 46,879,835 8,354 $ 212,167 ========= ============ ========= =========== YEAR ENDED OCTOBER 31, 2006 INSTITUTIONAL SHARES INVESTOR SHARES SHARES AMOUNT SHARES AMOUNT --------- ------------ --------- ----------- Sold .......................................................... 140,521 $ 4,811,501 35,367 $ 1,201,981 Issued to shareholders in reinvestment of distributions from: Net investment income ...................................... 164,017 5,489,498 2,425 83,289 Realized gain on investment transactions ................... 502,439 17,339,169 635 21,336 --------- ------------ --------- ----------- 806,977 27,640,168 38,427 1,306,606 Repurchased ................................................... (1,398,778) (47,651,748) (18,576) (633,526) --------- ------------ --------- ----------- Net increase (decrease) .................................... (591,801) $(20,011,580) 19,851 $ 673,080 ========= ============ ========= ===========
CENTURY FUNDS 23 B. FUND SHARES - The number of authorized shares is unlimited. Shares of the Fund are currently divided into Investor Shares and Institutional Shares. Transactions in Fund shares were as follows:
CENTURY SMALL CAP SELECT FUND PERIOD ENDED APRIL 30, 2007 INSTITUTIONAL SHARES INVESTOR SHARES SHARES AMOUNT SHARES AMOUNT --------- ------------ ---------- ------------ Sold .......................................................... 2,701,576 $ 67,212,638 1,149,481 $ 28,058,137 Issued to shareholders in reinvestment of distributions from: Net investment income ...................................... 1,019,877 24,487,404 589,489 13,959,316 Realized gain on investment transactions ................... 922,382 22,736,723 547,709 13,314,927 --------- ------------ ---------- ------------ 4,643,835 114,436,764 2,286,678 55,332,380 Repurchased ................................................... (3,445,843) (85,932,473) (3,813,170) (93,900,983) --------- ------------ ---------- ------------ Net increase (decrease) .................................... 1,197,991 $ 28,504,291 (1,526,492) $(38,568,603) ========= ============ ========== ============ YEAR ENDED OCTOBER 31, 2006 INSTITUTIONAL SHARES INVESTOR SHARES SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold .......................................................... 10,410,981 $262,260,196 2,973,244 $73,988,591 Issued to shareholders in reinvestment of distributions from: Net investment income ...................................... 87,940 2,140,457 18,553 446,932 Realized gain on investment transactions ................... 276,459 6,693,063 174,747 4,179,953 ---------- ------------ ---------- ------------ 10,775,380 271,093,716 3,166,544 78,615,476 Repurchased ................................................... (14,025,479) (358,745,524) (6,304,203) (156,881,029) ---------- ------------ ---------- ------------ Net increase (decrease) .................................... (3,250,099) $(87,651,808) (3,137,659) $(78,265,553) ========== ============ ========== ============
24 CENTURY FUNDS (3) INVESTMENT SECURITY TRANSACTIONS FOR THE TRUST, other than U.S. Government obligations and certificates of deposit, purchases and sales of investment securities aggregated $33,515,073 and $63,174,251, respectively, during the period ended April 30, 2007. FOR THE FUND, other than U.S.Government obligations and certificates of deposit, purchases and sales of investment securities aggregated $439,305,077 and $528,724,846, respectively, during the period ended April 30, 2007. (4) INVESTMENT ADVISER FEE FOR THE TRUST, the investment adviser fee is earned by Century Capital Management, LLC ("CCM"), as compensation for providing investment advisory services to the Trust. CCM receives a monthly fee equal on an annualized basis to 0.8% of the first $500 million and 0.7% of the amounts exceeding $500 million of the Trust's net asset value. For the period ended April 30, 2007, the fee amounted to $1,168,225. Officers and Trustees of the Master Trust who are employed by CCM receive remuneration for their services out of such investment adviser fee. The Trust has guaranteed retirement benefits to be paid to one former Trustee. Under the terms of the Trust's Investment Advisory and Management Agreement with CCM, CCM has assumed the obligation to make all such payments on behalf of the Trust during the term of the agreement. The amount of potential future payments owed by the Trust cannot be estimated with certainty due to the variability of amounts used to determine the payment and therefore are not reflected in the Trust's financial statements. Retirement benefits are payable over various periods. FOR THE FUND, the investment adviser fee is earned by CCM as compensation for providing investment advisory, management and administrative services to the Fund. CCM receives a monthly fee equal on an annualized basis to 0.95% of the Fund's net asset value. For the period ended April 30, 2007, the fee amounted to $4,189,873. Officers and Trustees of the Master Trust who are employed by CCM receive remuneration for their services out of such investment adviser fee. (5) ADMINISTRATION FEES -- The Trust has an Administration Agreement with CCM. Under the agreement CCM shall provide or procure, at its expense, non-investment advisory services to the Trust. CCMwill receive a monthly fee equal on an annualized basis to 0.15% of the Trust's net asset value. The fee was $219,042 for the period ended April 30, 2007. Per the Investment Advisory and Management Services Agreement between CSCS and CCM, the Fund will reimburse CCM for expenses associated with having the adviser's personnel perform shareholder service functions and certain financial, accounting, administrative and clerical services. (6) ADVISER REIMBURSEMENT -- CCM contractually agreed to reimburse the Trust for 0.15% of the distribution and service fees paid by the Trust's Investor Shares through February 28, 2007. In addition, effective as of February 28, 2007, CCM has contractually agreed to waive a portion of its management fee and reimburse or pay operating expenses of the Trust's Investor Shares to the extend necessary to maintain the total operating expenses of the Investor Shares at 1.45% through February 28, 2008. During the period ended April 30,2007, CCM made a reimbursement of $2,347. (7) DISTRIBUTION AND SERVICE PLAN -- The Trust and the Fund have adopted a distribution and service plan for the Investor Shares under Rule 12b-1 of the 1940 Act. Distribution plans permit a fund to pay for all or a portion of the costs incurred in connection with the distribution and/or servicing of shares. The Investor Shares currently pays a distribution and service fee up to 0.25% of the average daily net assets of the class. During the period ended April 30, 2007, $2,180 and $281,598 for the Trust and Fund, respectively, was paid under the distribution and service plan. The plan may be terminated at any time by the vote of a majority of the independent Trustees or by the vote of the holders of a majority of the outstanding shares of the Investor Shares. CENTURY FUNDS 25 APPROVAL OF INVESTMENT MANAGEMENT AGREEMENTS The Board of Trustees, including the independent Trustees, approved the continuation of each Fund's investment management agreement with Century Capital Management, LLC (CCM) at a meeting held on December 12, 2006. In advance of the meeting, the Board, including all of the independent Trustees, received, among other things: (i) a Lipper Inc. report comparing each Fund's fees and expenses to those of a peer group and peer universe for that Fund, each selected by Lipper; (ii) information regarding each Fund's total returns for the 1 month, 3 month, 1 year, 3 year and 5 year periods ended October 31, 2006 and since inception, the average annual total returns for the 3, 5, 10 and 15 years ended October 31, 2006 (for CST) and for the 2, 3 and 5 years ended October 31, 2006 and since inception (for CSCS), and the five year cumulative total returns for each Fund for the periods ended October 31, 2004, 2005 and 2006, as well as comparative total return information for various securities indices, the applicable Lipper peer group and a CCM selected peer group; (iii) reports from CCM that described (a) the services provided to each Fund and information about the personnel providing those services, (b) the fees paid under the advisory and administration agreements, (c) compliance and oversight, (d) "fall-out" benefits to CCM, (e) brokerage and soft-dollar arrangements, and (f) information about fees paid by and services provided to comparable accounts; (iv) a profitability report prepared by CCM and (v) CCM's Form ADV. The independent Trustees also received a memorandum from their counsel outlining the legal standards and certain other considerations relevant to the Trustees' deliberations. In addition, at each regularly scheduled Board meeting, the Trustees receive and review, among other things, information concerning each Fund's performance and the services provided to each Fund by CCM. The performance information received by the Trustees on a quarterly basis includes (i) total return information for each Fund for the following periods: 1 month, 3 months, 12 months and year to date and (ii) average annual total return information for the following periods: 3, 5, 10 and 15 years for CST and 2, 3 and 5 years and since inception (December, 1999) for CSCS. The Trustees also receive performance information for one or more selected securities indices at each quarterly meeting. After receiving the requested information, the independent Trustees met in executive session to consider the advisory and administrative arrangements. The Trustees then unanimously determined to approve the continuance of the advisory and administration agreements with respect to each Fund. This approval was based on the following conclusions: (i) that CCM has the capabilities, resources and personnel necessary to provide the advisory and administrative services currently required by each Fund; and (ii) that the advisory and administrative fees paid by each Fund represent reasonable compensation to CCM in light of the services provided, the costs to CCM of providing those services, the fees paid by similar funds, and such other matters as the Trustees considered relevant in the exercise of their reasonable judgment. In determining to approve the advisory and administration agreements, the Trustees considered a number of factors as outlined below. The Trustees did not identify any single factor as controlling. The Trustees evaluated all information available to them on a Fund-by-Fund basis, and their determinations were made separately in respect of each Fund. They also took into account the common interests of both of the Funds in their review. Throughout their deliberations, the independent Trustees were represented by counsel. NATURE, QUALITY AND EXTENT OF SERVICES PROVIDED In considering the nature, extent and quality of the services provided by CCM under the advisory and administration agreements, the Board considered the terms of those agreements and reviewed information provided by CCM relating to its operations and personnel. The Trustees also considered their knowledge of the nature and quality of the services provided by CCM to the Funds gained from their experience as trustees of the Funds and noted the expectations of the shareholders who had invested in the Funds. The Board considered that CCM was responsible for the management and administration of each Fund's operations. They also considered that CCM provides day-to day management of each Fund's portfolio of investments, including making purchases and sales of portfolio securities consistent with each Fund's investment objectives and policies. 26 CENTURY FUNDS The Board considered CCM's resources and personnel, focusing in particular on investment and compliance resources and personnel. The Board reviewed each portfolio manager's experience and qualifications, as well as CCM's investment approach and research process. The Board also considered CCM's plans to add a senior level investment professional in 2007. The Board also noted the steps CCM had taken generally to address conflicts of interest in its business, including the oversight of personal trading and the allocation of trades and investment opportunities among the Funds and CCM's other clients. The Board also reviewed CCM's trading procedures and brokerage practices, including information regarding soft dollar-dollar arrangements. The Board also considered that, as administrator, CCM is responsible for the administration of each Fund's business and other affairs. It was noted that CCM supervises and monitors the performance of each Fund's service providers and provides each Fund with personnel (including officers) as are necessary for the Fund's operations. It was noted that CCM pays all of the compensation of Mr. Thorndike and Mr. Fulkerson, the interested Trustees, and the Funds' officers. The Board also noted that CCM assisted the Funds in meeting legal and regulatory requirements and considered, among other things, CCM's compliance program. The Board considered the fees paid to CCM for the provisions of such services. Taking all of the foregoing into account, the Trustees concluded that they were satisfied with the nature, extent and quality of services provided to the Funds under the advisory and administration agreements. COSTS OF SERVICES PROVIDED AND PROFITABILITY The Trustees reviewed information concerning the costs of services provided to the Funds by CCM, and the profitability to CCM of its advisory and administrative relationship with Funds for the periods ended September 30, 2005 and September 30, 2006, along with a description of the methodology used by CCM in preparing the profitability information. It was noted, among other things, that profitability was shown on a Fund-by-Fund basis. The Trustees recognized that CCM should be entitled to earn a reasonable level of profit for the services provided to each Fund, and that it is difficult to make comparisons of profitability from fund advisory and administration contracts because comparative information is not generally available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions about allocations and the adviser's capital structure and cost of capital. The Trustees concluded that, taking all of the foregoing into account, they were satisfied that CCM's level of profitability from its relationship with each Fund was not excessive. FALL-OUT BENEFITS The Trustees considered the extent to which CCM benefited from soft dollar arrangements whereby it receives brokerage and research services from brokers that execute a Fund's purchases and sales of investment securities. It was noted that CCM had represented that it fulfills its fiduciary obligation of seeking best execution when engaging in portfolio transactions for the Funds. The Trustees concluded that the direct and indirect benefits to CCM from its relationship with the Funds were reasonable. ECONOMIES OF SCALE The Trustees considered the extent to which CCM may realize economies of scale or other efficiencies in managing and supporting the Funds. It was noted that as assets increase certain fixed costs may be spread across a larger asset base, and it was noted that any economies of scale or other efficiencies might be realized (if at all) across a variety of products and services, including the Funds, and not only in respect of a single Fund. The Trustees noted that the advisory fee schedule for CST included breakpoints that would allow the shareholders of CST to share in the economies of scale experienced by CCM in managing that Fund as assets under management increased. The Trustees noted that the advisory fee schedule for CSCS did not include breakpoints that would reduce the fee rate on assets above specified levels. The Board determined that the current fee structure for CSCS was acceptable given the fee level, the fees waived by CCM in prior years in respect of CSCS, and the fact that CSCS was closed to most new investments and would not, therefore, experience a significant growth in Fund assets. CENTURY FUNDS 27 INVESTMENT RESULTS CST. The Trustees reviewed comparative information that showed that CST's average annual total return for the Institutional class of shares for both the 5 years and 10 years ended October 31, 2006 was better than the average annual total return of both the Standard & Poor's 500 Index and the Russell 1000 for the same periods. The Trustees also noted that the average annual return for three years ended October 31, 2006 lagged the average annual total return of the Standard & Poor's 500 Index and the Russell 1000 for the same period. The Trustees also noted that the Fund's longer term performance compared favorably to the performance of the funds in its Lipper peer group. The Trustees considered CCM's explanation for CST's relative underperformance in the short term and noted that they were satisfied with CCM's investment strategy and discipline. Based on their review, the Trustees concluded that CST's relative investment performance over time had been sufficient along with other factors considered to merit approval of the continuation of the advisory agreement. CSCS. The Trustees reviewed comparative information that showed that CSCS's average annual total return for both the Institutional class of shares and the Investor class of shares for the 5 years ended October 31, 2006 and period from December, 1999 through October 31, 2006 was better than the average annual return of the Russell 2000 and the Russell 2000 Growth indices and CSCS's Lipper peer universe for the same periods, but that CSCS's average annual total return (for both classes) lagged the average annual total returns of those indices and the peer universe for the 2 and 3 year periods. The Trustees considered CCM's explanation of CSCS's relative underperformance in the short term and noted that they were satisfied with CCM's investment strategy and discipline. Based on their review, the Trustees concluded that CSCS's relative investment performance over time had been sufficient along with other factors considered to merit approval of the continuation of the advisory agreement. FEES AND OTHER EXPENSES The Trustees considered the advisory fees paid by each Fund to CCM. The Trustees also considered the administrative fee rate paid by CST to CCM. The Trustees considered (i) the level of each Fund's advisory fee versus its peer group and peer universe as shown in the Lipper materials and (ii) each Fund's total expense ratio as compared to its peer group and peer universe as shown in the Lipper materials. The Trustees also considered the fees that CCM charges other clients with investment objectives similar to the Funds. The Trustees reviewed materials from CCM describing the differences in services provided to these other clients, which noted that typically more services were provided to the Funds than these other clients and that, because of the constant issuance and redemption of Fund shares, the Funds were more difficult to manage than institutional accounts. The materials showed that the fee rates charged by CCM to other clients were generally similar to (but not necessarily as low as, in all cases) the fees paid by the Funds. The information obtained from Lipper for the meeting compared the advisory fee, transfer agency/custodian fees, distribution fees, other nonmanagement expenses and total expenses for the Institutional class of shares of each Fund and the CSCS Investor class of shares to those of a group of competitor funds of roughly equivalent size, as well as a universe of competitor funds. The Trustees did not independently verify any of the information provided by Lipper. CST. The Trustees reviewed information that showed that CST's advisory fee (which includes administration) was slightly higher than the Lipper peer group and peer universe averages but that CST's total expense ratio was less than the Lipper peer universe average and only slightly higher than the Lipper peer group average. The Trustees considered that certain of the funds in the peer group had lower advisory fees than CST as a result of fee waivers that could be terminated. The Trustees concluded that the advisory fees and total expense ratios were acceptable in light of the performance and the other factors considered. 28 CENTURY FUNDS CSCS. The Trustees reviewed information that showed that CSCS's advisory fees were slightly lower than the Lipper peer universe average and slightly higher than the Lipper peer group average. The Trustees also reviewed information that showed that the total expense ratio for CSCS's Investor class of shares was slightly higher than the average total expense ratio of the Lipper peer group but slightly lower than the average total expense ratio of the Lipper peer universe. The Trustees also considered information provided to them regarding the costs to CCM of providing advisory services to CSCS, noting in particular the competitive market for analysts and portfolio managers and that the research needed to implement CSCS's investment strategy was relatively costly. The Trustees concluded that the advisory fees, administrative fees and total expense ratios of CSCS were acceptable in light of the performance of the Fund and the other factors considered. CENTURY FUNDS 29 Quarterly Portfolio Schedule and Proxy Voting Policies and Procedures. The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year on Form N-Q. A description of the policies and procedures that each Fund uses to determine how to vote proxies relating to portfolio securities and each Fund's proxy voting record for the 12-month period ended June 30 is available, without charge, upon request, by calling 1-800-321-1928. The Funds' Form N-Q, a description of the Funds' proxy voting policies and procedures and proxy voting record are available on the SEC's website at http://www.sec.gov. These materials may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. BOARD OF TRUSTEES Alexander L. Thorndike, Chairman and Chief Investment Officer John E. Beard, Trustee * Davis R. Fulkerson, Trustee William Gray, Trustee Stephen W. Kidder, Trustee Jerrold Mitchell, Trustee Jerry S. Rosenbloom, Trustee David D. Tripple, Trustee INVESTMENT ADVISOR Century Capital Management, LLC 100 Federal Street Boston, Massachusetts 02110 SHAREHOLDER INFORMATION 800-303-1928 www.centuryfunds.com * In accordance with the Board's retirement policy, Mr. Beard is expected to retire from the Board of Trustees as of July 31, 2007. 30 CENTURY FUNDS CENTURY FUNDS PRIVACY POLICY When you become a Century Funds shareholder, you entrust us with not only your investments but your personal and financial data as well. Century has always been committed to maintaining the confidentiality, security and integrity of personal information entrusted to us. We hold ourselves to the highest standards regarding our privacy practices, and we want you to know how we protect your information and how we use it to service your account. THIS MEANS, MOST IMPORTANTLY, THAT WE DO NOT SELL CLIENT INFORMATION--WHETHER IT IS YOUR PERSONAL INFORMATION OR THE FACT THAT YOU ARE A CENTURY FUNDS SHAREHOLDER--TO ANYONE. Instead, we use your information primarily to complete transactions that you request or we share your information within the Century Funds family in order to help us make you better aware of other financial products and services that we offer for your investing needs. In servicing your account, we may also share your information with unaffiliated third parties that perform administrative, marketing or research services for us, or with whom we are developing or offering investment products. When we enter into such a relationship, our contracts restrict these third parties from sharing or using your information for any purpose other than those for which they were hired. THE INFORMATION WE COLLECT ABOUT YOU You typically provide personal information when you complete a Century Funds account application or when you request a transaction that involves one of the Century Funds. This information may include your: o Name and address. o Social Security or taxpayer identification number. o Account balance. o Accounts at other institutions. WE MAINTAIN PHYSICAL, ELECTRONIC, AND PROCEDURAL SAFEGUARDS TO PROTECT YOUR PERSONAL INFORMATION. o We do not disclose any nonpublic personal information about our customers or former customers to unaffiliated third parties without the customer's authorization, except as necessary to process a transaction, service an account, respond to inquiries from governmental agencies, or as otherwise permitted by law. o We restrict access to your personal and account information to those employees and service agents who need to know that information to provide products and services to you. WHAT YOU CAN DO For your protection, we recommend that you do not provide your account information to anyone. If you become aware of any suspicious activity relating to your account, please contact us immediately at the number listed below. UPDATING YOUR PERSONAL INFORMATION. The accuracy of your personal information is important. If you need to correct or update your personal or account information, please call us at 800-303-1928. One of our customer service representatives will be happy to review, correct or update your personal or account information. -------------------------------------------------------------------------------- This Privacy Policy applies to the following Century Funds: Century Shares Trust and Century Small Cap Select Fund. CENTURY FUNDS 31 [LOGO] CENTURY 32 CENTURY FUNDS [LOGO] CENTURY CENTURY FUNDS 33 [LOGO] CENTURY FUNDS 100 Federal Street Boston, Massachusetts 02110 QUALITY GROWTH INVESTORS [LOGO] CENTURY CCMT SAR 50 APR2007 Item 2. Code of Ethics. Not applicable. Item 3. Audit Committee Financial Expert. Not applicable. Item 4. Principal Accountant Fees and Services. Not applicable. Item 5. Audit Committee of Listed Registrants. Not applicable to open-end investment companies. Item 6. Schedule of Investments. Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable to open-end investment companies. Item 8. Portfolio Managers of Closed-End Management Investment Companies Not applicable to open-end investment companies. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases. Not applicable to open-end investment companies. Item 10. Submission of Matters to a Vote of Security Holders. No changes. Item 11. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer, after evaluating the effectiveness of the registrant's "disclosure controls and procedures" (as defined in the Investment Company Act of 1940 Rule 30-a-2(c) under the Act (17 CFR 270.30a-2(c))) as of a date (the "Evaluation Date") within 90 days of the filing date of this report, have concluded that, as of the Evaluation Date, the registrant's disclosure controls and procedures were adequately designed to ensure that the information required to be disclosed by the registrant in this Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. Items 12. Exhibits. (a) Not applicable. (b) Attached hereto. Exhibit 99.CERT A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 of the Investment Company Act of 1940. Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Century Capital Management Trust By: /s/ Alexander L. Thorndike -------------------------------- Alexander L. Thorndike, Chairman Date: July 6, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Alexander L. Thorndike -------------------------------- Alexander L. Thorndike, Principal Executive Officer Date: July 6, 2007 By: /s/ Steven Alfano -------------------------------- Steven Alfano, Principal Financial Officer Date: July 6, 2007