ADJ
The letters "ADJ" after an index (Example: S&P 500 ADJ) mean that the index includes dividends in total return as well as appreciation. All Century Management performance composites include dividends as part of the total return.

AIMR
The Association for Investment Management and Research (AIMR) is an international, nonprofit organization of more than 50,000 investment practitioners and educators in over 100 countries. Founded in January 1990, AIMR was created from the merger of the Financial Analysts Federation (FAF) and the Institute of Chartered Financial Analysts (ICFA). The FAF was originally established in 1947 as a service organization for investment professionals. The ICFA was founded in 1959 to examine candidates and award the Chartered Financial Analyst (CFA) designation.

AIMR's mission is to serve its members and investors as a global leader in educating and examining investment managers and analysts and sustaining high standards of professional conduct. AIMR's membership is global in scope, and its activities are worldwide.

The Research Foundation of AIMR sponsors practitioner-oriented research through funding and publishing a diverse assortment of monographs, tutorials, and research papers to broaden investment professionals' knowledge and understanding of their field.

AIMR offers services in three broad categories: Education through seminars and publications; Professional Conduct and Ethics; and Standards of Practice and Advocacy.

AIMR's members are employed as securities analysts, portfolio managers, strategists, consultants, educators, and other investment specialists. These professionals practice in a variety of fields, including investment counseling and management, banking, insurance, and investment banking and brokerage firms.

Capital Expenditures
Capital to maintain and expand plant and equipment.

Cash Flow
Earnings plus depreciation. This is cash flow after taxes but before capital expenditures. If you deducted capital expenditures, it would be free cash flow (see "Free Cash Flow").

CFA
Chartered Financial Analyst. Sponsored by the Association for Investment Management and Research (AIMR), it is the highest professional credential that a securities analyst can have in our industry. The expertise gained from this program is stock and bond analysis, as well as portfolio management. It requires three, 6-hour exams in three years on such topics as financial accounting and quantitative analysis, and three years' experience as an investment professional. As of August 2001 there are 37,150 CFA's. You can search the AIMR web site to look up the complete details regarding this credential.

CFP
Certified Financial Planner. Sponsored by the Certified Financial Planner Board of Standards, the CFP certification is now available in 11 countries. The CFP credential has become recognized as the global symbol for competent and ethical financial planning advice. The expertise gained through this certification process includes knowledge on risk management, investments, retirement planning, tax planning, and estate planning. A two-day, 10-hour exam is required as well as three years of client experience (with bachelor's degree; five years without). As of August 2001, there are 37,573 Certified Financial Planners. You can search the CFP Board web site to look up the complete details regarding this credential.

CM
This is the acronym for Century Management

CM Total Account
This includes all asset classes such as equities, fixed income, money market funds and cash within our CM Standard Composite.

CM Equities Only
This represents the return from just the equities within the CM Standard Composite.

CM Standard Composite
This consists of the accounts of every client both past and present who has had an account with Century Management, for which the investment management charge was fee based and the brokerage fee was transaction based, since the company's inception in September, 1974. The performance of the accounts in this composite is based on all buys, sells, dividends, interest, deposits, and withdrawals for each and every client of record.

CRPS
Chartered Retirement Plans Specialist. Sponsored by the College for Financial Planning, this designation covers the design, installation and administration of retirement plans for the business community. This designation is awarded after successful completion of the program and final exam. You can search the College for Financial Planning web site to look up the complete details regarding this credential.

Dollar Cost Averaging
A method of accumulating assets by investing a fixed amount of dollars of securities at set intervals. The investor buys more shares when the price is low and fewer shares when the price is high. The overall cost is lower than it would be if a constant number of shares were bought at set intervals.

Discounted Cash Flow
Value of future expected cash receipts and expenditures at a common date, calculated by using an Internal Rate of Return. The Internal Rate of Return method finds the average return on investment earned through the life of the investment. It determines the discount rate that equates the present value of future cash flows to the cost of the investment.

Earnings Per Share (EPS)
Portion of a company's profit allocated to each outstanding share of common stock. For example, a corporation that earned $10 million last year and has 10 million shares outstanding would report earnings of $1 per share. This figure is calculated after paying taxes and after paying preferred shareholders and bondholders.

Earnings Yield
Relationship of earnings per share to the current price. Earnings divided by price. This is the inverse of a P/E ratio. The earnings yield allows one to compare the relative attractiveness of stocks, bonds and money market instruments.

EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization. The advantage of looking at a company's earnings before interest, taxes, depreciation, and amortization is that it will make an apple to apple comparison between those companies that have debt and those that do not, as well as those companies that fall under different tax brackets. This will allow you to look at the operating earnings of a company before the expense of interest costs or taxes.

Ernst & Young, LLP
Ernst & Young is one of the world's leading professional services and accounting organizations. Ernst & Young audits 18.4% of Business Week's Global 1,000 companies.

Free Cash Flow
Money that is left after all expenses, which include taxes, interest, and capital expenditures. Therefore, this is money that is not needed to run the business. This is extra and can be paid out in the form of a dividend, it can buy back stock, or it can be reinvested into the company if it will show a good return.

Gross Domestic Product (GDP)
Market value of the goods and services produced by labor and property in the United States. GDP is made up of consumer and government purchases, private domestic investments, and net exports of goods and services. Growth of the U.S. economy is measured by the change in inflation-adjusted GDP.

Gross of Fees
This means before any fees are taken from the account, including those charged by investment advisor, custodian and broker.

Margin of Safety
Difference between the price an investor pays for a security and the securities private market value or intrinsic value. For example, if the "Widget Company" has a private market value of $100 per share and the investor pays only $40 dollars per share in the open market, then the investor has a built in margin of safety in the amount of $60 per share. Using a margin of safety helps reduce the risk level of a portfolio.

Net of Fees
This means after all fees have been taken from the account, including those charged by investment advisor, custodian and broker.

Price/Earnings Ratio (P/E)
Price of a stock divided by its earnings per share. Also known as "Earnings Multiple" or "Multiple". It gives investors an idea of how much they are paying for a company's earning power. The higher the P/E, the more investors are paying and, therefore, the more earnings growth they are expecting.

Private Market Value (PMV)
The price at which sophisticated and informed investors are willing to pay to buy and sell a company. The sellers want the highest price and the buyers want the lowest price. By the time each party has consulted their accountants, lawyers, and business advisors, the price each side is willing to agree upon is Private Market Value. This is also referred to as the intrinsic value, appraised value, or enterprise value of a company.

Recession
Downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's Gross Domestic Product.

S&P 400
Standard & Poor's Midcap 400 index is a capitalization-weighted index that measures the performance of the mid-range sector of the U.S. stock market. The index was developed with a base level of 100 as of December 31, 1990.

S&P 500
Standard & Poor's 500 index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Time-Weighted Return
A "time-weighted" rate of return eliminates the effects of client-initiated additions and withdrawals that are beyond the control of the manager. The result is an accurate and unbiased measure of investment performance that is the same with or without cash-flows.

In calculating a time-weighted return, a portfolio is evaluated each time there is a cash flow transaction in the account (i.e., new purchases and sales, dividend and income payments, deposits or withdrawals). The performances of periods between cash flows are linked together to reflect a return for the whole period. Daily transaction data is used in the linking of each cash flow so that we may achieve the most accurate return calculation.