As filed with the Securities and Exchange Commission on February 26, 1999
File No. 33-24041/811-5646
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 13 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 17 [X]
NEW CENTURY PORTFOLIOS
(Exact name of Registrant as specified in Charter)
20 William Street, Suite 330, Wellesley, MA 02481-4102
(Address of Principal Executive Offices)
Registrant's Telephone Number: (781) 239-0445
Wayne M. Grzecki, President, New Century Portfolios
20 William Street, Suite 330, Wellesley, MA 02481-4102
(Name and Address of Agent for Service)
Please send copies of all communications to:
Steven M. Felsenstein, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 Commerce Square
Philadelphia, PA 19103-7098
Approximate date of Proposed Public Offering:
As soon as practicable after the effective date of the registration
statement.
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph (b).
on (date), pursuant to paragraph (b).
60 days after filing pursuant to paragraph (a) (1).
on (date) pursuant to paragraph (a) (1).
75 days after filing pursuant to paragraph (a)(2).
on (date) pursuant to paragraph (a) (2) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
PROSPECTUS
NEW CENTURY PORTFOLIOS
February 26, 1999
Each Portfolio has a specific investment objective. There is no assurance the
objectives will be achieved.
NEW CENTURY CAPITAL PORTFOLIO. The investment objective of the Portfolio is to
provide capital growth, with a secondary objective to provide income, while
managing risk. The Portfolio seeks to achieve these objectives by investing
primarily in shares of other registered investment companies that emphasize
investments in equities (domestic and foreign).
NEW CENTURY BALANCED PORTFOLIO. The investment objective of the Portfolio is to
provide income, with a secondary objective to provide capital growth, while
managing risk. The Portfolio seeks to achieve these objectives by investing
primarily in shares of other registered investment companies that emphasize
investments in equities (domestic and foreign), and fixed income securities
(domestic and foreign).
- --------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved these
securities. The Commission does not assure the adequacy of any prospectus. It is
not legal to claim that the Commission has done so.
<PAGE>
New Century Portfolios
- -------------------------------------------------------------------
Prospectus
February 26, 1999
Table of Contents Page
Summary Investment Objectives And Policies 1
Investment Objectives 1
Investment Policies 1
New Century Capital Portfolio 1
New Century Balanced Portfolio 2
Risk Factors 3
Past Performance 3
Fund Expenses 6
More Investment Policies Of Each Portfolio 7
Investments in Individual Securities 7
Trend Analysis 7
Investments In Investment Companies And
The Investment Company Industry 8
Underlying Funds 10
Money Market Securities 11
Investment Advisor 12
Distribution of Shares 14
Buying Shares 15
Exchanging Shares 15
Selling (Redeeming) Shares 16
Mail Redemptions 16
Telephone Redemptions 17
Account Minimum 17
Redemptions In-Kind 17
Distributions 18
Frequency 18
Reinvestment 18
Taxes 18
Tax Withholding 19
Transaction Procedures and Special Requirements 19
Share Price 19
How and When Priced 19
Proper Form 20
Written Instructions 20
Joint Accounts 20
Signature Guarantees 20
Telephone 21
Other Services 21
Automatic Investment Program 21
Systematic Withdrawal Programs 21
Special Plans 21
Statements and Reports 22
Financial Highlights 23
<PAGE>
Summary Investment Objectives And Policies
Investment Objectives
NEW CENTURY CAPITAL PORTFOLIO. The investment objective of the Portfolio is to
provide capital growth, with a secondary objective to provide income, while
managing risk.
NEW CENTURY BALANCED PORTFOLIO. The investment objective of the
Portfolio is to provide income, with a secondary objective to
provide capital growth, while managing risk.
Investment Policies
New Century Capital Portfolio
The New Century Capital Portfolio seeks to achieve its investment objective by
investing primarily in shares of other registered investment companies that
emphasize investments in equities (domestic and foreign). (The Portfolio's
objective, including its policy to concentrate in shares of other registered
investment companies, cannot be changed without approval by the shareholders.)
The Advisor will diversify equity investments by investing the assets of the
Portfolio primarily in investment companies that concentrate in different
segments of the equity markets. For example, the Portfolio may be invested in
investment companies that emphasize growth, growth and income, equity income,
small company, aggressive, and foreign equities.
The Advisor may invest a portion of the Portfolio assets in those investment
companies that use different versions of so-called defensive strategies to
minimize risk. These defensive strategies may include the purchase of low
volatility stocks, a combination of stocks and bonds or convertible bonds, money
market funds, cash and cash equivalents, as well as high dividend paying stocks.
In addition, the Portfolio may commit a portion of its assets to certain
investment companies whose assets do not necessarily move in accordance with the
United States stock market. These would include investment companies that invest
in foreign stocks and bonds, real estate and other tangible assets, as well as
investment companies that concentrate their assets in one segment of the
equities market.
The Advisor will monitor and respond to changing economic and market conditions
and then, if necessary, reposition the assets of the Portfolio. The Advisor uses
a number of techniques to make investment decisions, one of which is trend
analysis. Trends are analyzed by using a variety of technical and fundamental
indicators, such as the direction of interest rates, economic growth and various
moving averages. The Advisor manages risk through diversification and asset
allocation and by monitoring activities of underlying funds in which the
Portfolio invests.
New Century Balanced Portfolio
The New Century Balanced Portfolio seeks to achieve its investment objective by
investing primarily in shares of other registered investment companies that
emphasize investments in equities (domestic and foreign) and fixed income
securities (domestic and foreign). (The Portfolio's objective, including its
policy to concentrate in shares of other registered investment companies cannot
be changed without approval by the shareholders.) To produce its return, the
Portfolio will use a variety of investment techniques designed to generate
primarily, dividends (including dividends of funds in which we invest which is
derived from interest), interest, and other income. The Advisor will diversify
equity and fixed income investments by investing the assets of the Portfolio
primarily in investment companies that concentrate in different segments of the
equity markets and investment companies that concentrate in different segments
of the fixed income markets. (The Portfolio determines that the structure of its
investments is "balanced" by evaluating the composite investments of the
investment companies in which it has invested.) For example, the portion of the
Portfolio that is invested in equities may be invested in investment companies
that emphasize growth, growth and income, equity income, small company and
foreign equities. The portion of the Portfolio that is invested in fixed income
securities may be invested in investment companies that emphasize domestic, high
yield and foreign fixed income securities.
The Advisor may invest a portion of the Portfolio assets in those investment
companies that use different versions of so-called defensive strategies to
minimize risk. These defensive strategies may include the purchase of low
volatility stocks, a combination of stocks and bonds or convertible bonds, money
market funds, cash and cash equivalents, as well as high dividend paying stocks.
For example, a fund may be chosen because it primarily invests in intermediate
or short-term bonds, which are less volatile than funds emphasizing longer-term
bonds.
In addition, the Portfolio may commit a portion of its assets to certain
investment companies whose assets do not necessarily move in accordance with the
United States stock market. These would include investment companies that invest
in foreign stocks and bonds, real estate and other tangible assets, as well as
investment companies that concentrate their assets in one segment of the
equities market.
The Advisor will monitor and respond to changing economic and market conditions
and then, if necessary, reposition the assets of the Portfolio. The Advisor uses
a number of techniques to make investment decisions, one of which is trend
analysis. Trends are analyzed by using a variety of technical and fundamental
indicators, such as the direction of interest rates, economic growth and various
moving averages. The Advisor manages risk through diversification and asset
allocation, and by monitoring activities of underlying funds in which the
Portfolio invests.
Risk Factors
You should consider a number of factors before investing in either of the
Portfolios:
(a) The Portfolios concentrate (invest more than 25% and up to 100% of the
value of their respective assets) in the shares of registered open-end and
closed-end investment companies. Thus, the Portfolios are affected by the
performance of those companies. Loss of money is a risk of investing in the
Portfolios. The Portfolios also contribute to the expenses of operating those
companies (including their advisory or operating fees). (See "Investments in
Investment Companies and the Investment Company Industry.") Each Portfolio has
the right to invest in investment companies which charge a "sales load" and
other sales charges. Each Portfolio will seek to minimize such charges, but they
can reduce the Portfolio's investment results.
(b) You should recognize that you may invest directly in mutual funds. By
investing in mutual funds indirectly through the Portfolios, you will bear both
your proportionate share of the expenses of the Portfolios (including operating
costs and investment advisory and administrative fees) and similar expenses of
the underlying funds. In addition, you will bear your proportionate share of
expenses related to the distribution of that Portfolio's shares and you also may
indirectly bear expenses paid by an underlying fund for the distribution of its
shares.
(c) The Portfolios may invest in investment companies which concentrate in
a particular industry. These companies tend to have greater fluctuation in value
than other investment companies.
(d) Like other mutual funds, as well as other financial and business
organizations around the world, the Portfolios could be adversely affected if
the computer systems used by the Portfolios' Advisor, Transfer Agent and other
service providers do not properly process and calculate date-related information
and data as of and after January 1, 2000. The Advisor is taking steps that it
believes are reasonably designed to address the year 2000 issue with respect to
computer systems that it uses. It is also asking for reasonable assurances that
the Portfolios' other major service providers are taking comparable steps. At
this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Portfolios.
Past Performance
The bar charts and tables below show each Portfolio's annual returns and its
long-term performance. The bar charts show how each Portfolio's return has
changed from year to year. The second table shows how each Portfolio's average
annual returns for certain periods compare with those of the S&P Index, a widely
recognized index of stock performance. The bar charts and tables assume that all
dividends and capital gain distributions have been reinvested in new shares of
the Portfolio. This information indicates the risks of investing in the
Portfolios. Past performance is not necessarily an indication of how a Portfolio
will perform in the future. (See "More Investment Performance" for further
information about the performance of each Portfolio.)
NEW CENTURY CAPITAL PORTFOLIO
40.00% |
| 36.45%
30.00% | 28.10%
| 26.06%
20.00% | 20.09%
| 13.82% 14.54%
10.00% |
|
0% |---------------0.55%-----------0.06%------------------------------------
-4.76%
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best Quarter Q4 '98 = 20.62%
Worst Quarter Q3 '90 = -15.02%
NEW CENTURY BALANCED PORTFOLIO
40.00% |
|
30.00% |
|
20.00% | 22.93% 22.86%
| 15.52% 18.57%
10.00% | 12.22% 13.48%
|
0% |---------------2.82%---------------------------------------------------
-0.74%
-2.41%
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best Quarter Q4 '98 = 12.17%
Worst Quarter Q3 '90 = - 9.35%
<PAGE>
Average Annual Total Return as of December 31, 1998
Inception
1 Year 5 Years (Jan. 31, 1989)
------ ------- ---------------
New Century Capital
Portfolio 20.09% 17.32% 14.03%
New Century Balanced
Portfolio 13.48% 12.61% 11.29%
S&P Index 28.58% 24.05% 18.53%
<PAGE>
Fund Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of a Portfolio.
Shareholder Fees (fees paid directly New Century New Century
from your investment) Capital Balanced
Portfolio Portfolio
Maximum Sales Charge (Load) Imposed none None
on Purchases
Maximum Deferred Sales Charge (Load) none None
Redemption Fee none None
Exchange Fee none None
Annual Fund Operating Expenses (expenses that are deducted from
Portfolio assets)
Management and Advisory Fees 1.00% 1.00%
Distribution (12b-1) Fees 0.18% 0.17%
Other Expenses 0.26% 0.29%
----- -----
Total Annual Operating Expenses 1.44% 1.46%
===== =====
The Example below is meant to help you compare the cost of investing in a
Portfolio with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
1 year 3 years 5 years 10 years
New Century Capital $147 $456 $787 $1,724
Portfolio
New Century Balanced $149 $462 $797 $1,746
Portfolio
<PAGE>
More Investment Policies of Each Portfolio
Investments in Individual Securities
While it is not currently the intention of the Portfolios, each Portfolio
retains the right, when the Advisor deems appropriate, to invest in individual
securities. The Advisor will not invest in individual securities without prior
approval by the Board of Trustees. The Portfolios will invest in common stocks
or bonds when the Advisor believes from its analysis of economic and market
trends that the investment environment favors investing in those securities.
Securities are selected from particular industry groups and particular companies
which may be experiencing favorable demand. The Portfolios have not set limits
on asset size for the issuers of such securities. While it is not currently the
intent of the Portfolios, each Portfolio retains the right when the Advisor
deems appropriate to invest in fixed income securities.
The Portfolios may invest only in investment grade fixed income securities.
There are four categories which are referred to as investment grade. These are
the four highest ratings or categories as defined by Moody's Investors Service,
Inc. ("Moody's) and Standard and Poor's Corporation ("Standard & Poor's").
Categories below this have lower ratings and are considered more speculative in
nature. The following are bond ratings classified as investment grade by Moody's
and Standard and Poor's. Baa and BBB rated securities are considered to have
speculative characteristics.
Moody's Standard & Poor's
High Grade Aaa AAA
High Quality Aa AA
Upper Medium Grade AA A
Medium Grade Baa BBB
Ratings from "AA" to" B" may be modified by a plus or minus sign to show
relative standings within the categories.
Trend Analysis
The Advisor will attempt to monitor and respond to changing economic and market
conditions and if necessary reposition the portfolios' assets depending on the
trend analysis. Trends are analyzed by using a variety of technical and
fundamental indicators. Among the factors which are included in the analysis are
the direction of interest rates, economic growth, industry trends and various
moving averages.
When the Advisor identifies an upward trend, the New Century Capital Portfolio
will seek to obtain growth over income while managing risk and the New Century
Balanced Portfolio will seek to obtain income over growth while managing risk.
When a downward trend has been identified, protection of principal may be
emphasized over opportunities for gains in both the New Century Capital and New
Century Balanced Portfolios. When the Advisor believes that income producing
assets are more appropriate due to the economic and market conditions an
emphasis will be placed on income producing investment vehicles. During periods
of time when the Advisor believes there may be unacceptable high risks, the
Portfolios may invest in cash, money market accounts, or money market
instruments to protect the value of the Portfolios.
Investments In Investment Companies And The Investment Company Industry
The Portfolios, by investing in shares of investment companies, indirectly pay a
portion of the operating expenses, management expenses and brokerage costs of
such companies as well as the expense of operating the Portfolio. Thus, the
Portfolios' investors will indirectly pay higher total operating expenses and
other costs than they would pay by owning the underlying investment companies
directly. The Portfolios attempt to identify investment companies that have
demonstrated superior management in the past, thus possibly offsetting these
factors by producing better results and/or lower costs and expenses than other
investment companies. There can be no assurance that this result will be
achieved.
Investing in an investment company does not eliminate investment risk. When the
Advisor has identified a significant upward trend in a particular industry
sector, each Portfolio retains the right to invest in investment companies which
concentrate in a particular industry sector. Such investment companies tend to
have greater fluctuations in value when compared to other categories of
investment companies.
The Portfolios must also structure their investments in other investment company
shares to comply with certain provisions of federal and state securities laws.
Currently, the law limits the amount of the investment of New Century
Portfolios' assets in any investment company to 3% of total asset value of any
such company. These laws and regulations also may adversely affect the
operations of each Portfolio with respect to purchases or redemption of shares
issued by an investment company. As a result of this restriction, a Portfolio
would have to select alternative investments, which may be less desirable than
the previously acquired investment company securities. Shares held by New
Century Portfolios in excess of 1% of an issuer's outstanding securities will be
considered illiquid and, together with other illiquid securities, may not exceed
10 percent of each Portfolio's assets. (The underlying investment company may be
allowed to delay redemption of its shares held by an investment company, such as
New Century Portfolios, in excess of 1% of its total assets for 30 days.)
Consequently, if a Portfolio were more heavily concentrated in a small
investment company, it might not be able to readily dispose of such investment
company shares and might be forced to redeem Portfolio shares in kind to
redeeming shareholders by delivering shares of investment companies that are
held by the Portfolio. Each Portfolio will generally limit the portion of its
assets which will be invested in any underlying fund so as to minimize or
eliminate the effects of this restriction. Although a Portfolio may be
restricted in its ability to redeem, Portfolio shareholders who receive shares
upon redemption are not so restricted. If shares are redeemed in kind, the
redeeming Shareholder may incur redemption fees or brokerage costs in converting
the assets into cash. Applicable fundamental policies are reflected in the
Portfolio's investment restrictions. Holdings of affiliated persons are included
in the 3 percent limitation on investment in any other investment company and in
the computation of the 1% of an underlying issuer's securities for purposes of
the illiquidity restriction, and possible delay in redemption of underlying
investment company securities, described above. When affiliated persons hold
shares of any of the underlying funds, New Century Portfolios' ability to invest
is restricted. In that case, the Portfolios could be forced to select
alternative, and perhaps less preferable, investments. This restriction applies
to New Century Portfolios as a whole, not each Portfolio separately.
Investment decisions by the investment advisors of the underlying funds are made
independently of the Portfolios and its Advisor. Therefore, the investment
advisor of one underlying fund may be purchasing shares of the same issuer whose
shares are being sold by the investment advisor of another such fund. The result
of this would be an indirect expense to a Portfolio without accomplishing any
investment purpose.
Each Portfolio expects that it will select the investment companies in which it
will invest based, in part, upon an analysis of the past and projected
performance and investment structure of the investment companies. However, each
Portfolio must consider other factors in the selection of investment companies.
These other factors include, but are not limited to, the investment company's
size, shareholder services, liquidity, investment objective and investment
techniques, etc. Each Portfolio will be affected by the losses of its underlying
investment companies, and the level of risk arising from the investment
practices of such investment companies (such as repurchase agreements, quality
standards, or lending of securities) and has no control over the risks taken by
such investment companies. Each Portfolio can also elect to redeem (subject to
the 1% limitation discussed above) its investment in an underlying investment
company (or sell it if the company is a closed-end one) if that action is
considered necessary or appropriate. The following is a list of many of the
types of investment companies which are eligible for inclusion in the
Portfolios:
Growth Funds Income (Equity) Funds
Growth and Income Funds Income (Mixed) Funds
Bond and Preferred Funds Option/Income Funds
Balanced Funds U.S. Government Income
Funds
Precious Metals International Equity
Funds/Gold Funds Funds
Money Market Funds International Bond Funds
GNMA Funds International Money
Market Funds
Global Bond Funds Global Money Market Funds
Global Equity Funds Aggressive Growth Funds
Municipal Bonds Municipal Bond Funds
Sector Funds Short Term Bond Funds
High Yield Bond Funds Intermediate Term Bond
Funds
Income (Bond) Funds
The Portfolios will not invest in an investment company which charges a
contingent deferred sales load.
Underlying Funds
The underlying funds in which the Portfolios invest may invest in various
obligations and employ various investment techniques. The following describes
some of the most common of such obligations and techniques.
Illiquid And Restricted Securities. An underlying fund may invest up to 15% of
its net assets in illiquid securities for which there is no readily available
market. Illiquid Securities may include restricted securities the disposition of
which would be subject to legal restrictions. During the time it takes to
dispose of illiquid securities, the value of the securities (and therefore the
value of the underlying fund's shares held by a Portfolio) could decline.
Foreign Securities. An underlying fund may invest its assets in securities of
foreign issuers. There may be less publicly available information about these
issuers than is available about companies in the U.S. and such information may
be less reliable. Foreign securities are subject to heightened political, social
and economic risks, including the possibility of expropriation, nationalization,
confiscation, confiscatory taxation, exchange controls or other foreign
governmental restrictions. All of these risks are heightened for investments in
emerging markets.
Foreign Currency Transactions. In connection with its portfolio transactions in
securities traded in a foreign currency, an underlying fund may enter into
forward contracts to purchase or sell an agreed upon amount of a specific
currency at a future date which may be any fixed number of days from the date of
the contract agreed upon by the parties at a price set at the time of the
contract. Although such contracts tend to minimize the risk of loss due to a
change in the value of the subject currency, they tend to limit any potential
gain which might result should the value of such currency change favorably
during the contract period.
Industry Concentration. An underlying fund may concentrate its investments
within one industry. Because investments within a single industry would all be
affected by developments within that industry, a fund which concentrates in an
industry is subject to greater risk than a fund which invests in a broader range
of securities. Also, the value of the shares of such an underlying fund may be
subject to greater market fluctuation than an investment in a more diversified
fund.
Repurchase Agreements. Like the Portfolios, underlying funds, particularly money
market mutual funds, may enter into repurchase agreements. If the seller should
default on its obligation to repurchase the securities, the underlying fund may
experience delays or difficulties in exercising its rights to realize upon the
securities held as collateral and might incur a loss if the value of the
securities should decline.
Loans Of Portfolio Securities. An underlying fund may lend its portfolio
securities equal in value up to one-third of its total assets. The loan is
secured continuously; however, loans of securities involve a risk that the
borrower may fail to return the securities or may fail to provide additional
collateral.
Short Sales. An underlying fund may sell securities short. In a short sale, the
fund sells stock which it does not own, making delivery with securities
"borrowed" from a broker. The fund will incur a loss as a result of the short
sale if the price of the security increases between the date of the short sale
and the date on which the fund replaces the borrowed security. The fund may be
required to pay a premium, dividend or interest.
Risk Factors Regarding Options, Futures And Options On Futures. Successful use
by an underlying fund of options on stock or bond indices, financial and
currency futures contracts and related options, and currency options will be
subject to the investment manager's ability to predict correctly movements in
the direction of the securities and currency markets generally or of a
particular segment. If a fund's investment manager is not successful in
employing such instruments in managing a fund's investments, the fund's
performance will be worse than if it did not employ such strategies. In
addition, a fund will pay commissions and other costs in connection with such
investments, which may increase the fund's expenses and reduce the return. In
writing options on futures, a fund's loss is potentially unlimited and may
exceed the amount of the premium received.
Certain derivative positions may be closed out only on an exchange which
provides a secondary market. There can be no assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any specific time. Thus, it may not be possible to close such a position and
this could have an adverse impact on a fund. When trading options on foreign
exchanges or in the OTC market many of the protections afforded to exchange
participants will not be available and a secondary market may not exist.
Leverage Through Borrowing. An underlying fund may borrow to increase its
holdings of portfolio securities. The fund is required to maintain continuous
asset coverage of 300% with respect to such borrowings and to sell (within three
days) sufficient portfolio holdings to restore such coverage if it should
decline to less than 300%, even if disadvantageous. Leveraging will exaggerate
the effect of any increase or decrease in the value of portfolio securities on
the fund's net asset value, and money borrowed will be subject to interest costs
and fees which may exceed the interest and gains, if any, received from the
securities purchased with borrowed funds.
Money Market Securities
Each Portfolio may invest in money market securities, which include:
o marketable securities issued or guaranteed as to principal
and interest by the government of the United
States or by its agencies or instrumentalities;
o domestic bank certificates of deposit;
o bankers' acceptances;
o prime commercial paper; and
o repurchase agreements (secured by United States Treasury or
agency obligations).
The cash will be invested in high quality money market instruments while seeking
maximum current income and maintaining preservation of capital. These
instruments are considered safe because of their short-term maturities,
liquidity and high quality ratings.
Commercial paper is limited to the two highest ratings of Moody's and Standard
and Poor's. Firms rate borrowers differently according to their classifications.
Standard and Poor's rates companies from A for the highest quality to D for the
lowest quality rating. The A-rated companies are also subdivided into three
groups depending on relative strength. Moody's uses P1 as their highest rating
along with P2 and P3. Commercial Paper may be purchased that is rated Prime 1 or
2 by Moody's or A-1 or A-2 by the Standard and Poor's Corporation. Instruments
such as Commercial paper and notes which are issued by companies having an
outstanding debt rated within these two highest ratings may be purchased.
Bank Certificates of Deposit and Banker's Acceptances are limited to U.S. dollar
denominated instruments of domestic banks (generally limited to institutions
with a net worth of at least $100,000,000) and of domestic branches of foreign
banks (limited to institutions having total assets of not less than $1 billion
or its equivalent).
Under a repurchase agreement the Portfolio acquires a debt instrument for a
relatively short period (usually not more than one week) subject to the
obligations of the seller to repurchase and of the Portfolio to resell such
instrument at a fixed price. The use of repurchase agreements involves certain
risks. For example, if the seller of the agreement defaults on its obligation to
repurchase the underlying securities at a time when the value of these
securities has declined, the Portfolio may incur a loss upon disposition of
them. If the seller of the agreement becomes insolvent and subject to
liquidation or reorganization under the Bankruptcy Code or other laws, a
bankruptcy court may determine that the underlying securities are collateral not
within the control of the Portfolio and therefore subject to sale by the trustee
in bankruptcy. Finally, it is possible that the Portfolio may not be able to
substantiate its interest in the underlying securities. While management of the
Portfolio acknowledges these risks, it is expected that they can be controlled
through stringent security selection and careful monitoring procedures.
The Portfolio will select money market securities for investment when such
securities offer a current market rate of return which the Advisor considers
reasonable in relation to the risk of the investment, and the issuer can satisfy
suitable standards of credit-worthiness set by the Advisor and described in the
Statement of Additional Information.
Portfolio Turnover. Each Portfolio presently estimates that its annualized
portfolio turnover rate generally will not exceed 200%. High portfolio turnover
might adversely affect a Portfolio's performance due to additional transaction
costs (such as brokerage commissions or sales charges) and adverse tax effects.
(See "Dividends, Distributions and Taxes".)
More Investment Performance
The following line graph illustrates the past performance of $10,000 in each of
the Portfolios, as compared to the Standard & Poor's 500 Index, a broad-based
securities index. The chart which appears after the line graph illustrates the
average annual returns for one-Year, five-year and since inception time periods.
<TABLE>
<CAPTION>
Comparison of the change in a $10,000 investment in the New Century Portoflios
and the Standard & Poor's 500 Index as of October 31, 1998.
<S> <C>
$50,000 |
|
$45,000 | o
|
Dollars - $ $40,000 |
| o
$35,000 |
|
$30,000 | z
| o z
$25,000 | x
| o z x
$20,000 | z x
| o o o x
$15,000 | o o xz xz x
|o xz xz
$10,000 |xz---------|----------|---------|--------|---------|----------|--------|----------|--------|----
1/31/89 10/31/89 10/31/90 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96 10/31/97 10/31/98
--------------------------------------------------------------------------
| z New Century Capital x New Century Balanced o S&P 500 Index |
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION> 1/31/89 10/31/89 10/31/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96 10/31/97 10/31/98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500 Index $10,000 $12,032 $11,652 $15,169 $16,300 $17,925 $18,136 $24,928 $29,979 $37,530 $45,783
New Century Capital $10,000 $11,228 $10,693 $14,591 $14,670 $16,698 $16,708 $21,403 $24,515 $30,118 $32,519
New Century
Balanced $10,000 $11,109 $11,026 $13,554 $13,937 $16,100 $15,712 $19,304 $21,663 $25,095 $26,844
</TABLE>
Average Annual Returns for the periods ended October 31, 1998*:
Inception
1 Year 5 Year (1/31/89)
New Century Capital 7.97% 14.60% 12.74%
New Century Balanced 6.76% 11.02% 10.56%
* Average annual return for the Portfolios assumes the reinvestment of all
dividends and distributions and the deduction of all fees and expenses.
Performance and data represent past performance. Investment return and principal
value of an investment in the Fund will fluctuate. Your shares, when redeemed,
may be worth more or less than their original cost.
The Trust's Annual Report contains further information about the performance of
each Portfolio. (See the back cover for information about how to get a free
copy of the Annual Report.)
Investment Advisor
The investments of each Portfolio are managed by Weston Financial Group, Inc.
(the "Advisor"), 20 William Street, Suite 330, Wellesley, Massachusetts
02481-4102, under separate investment advisory agreements (previously defined as
the "Advisory Agreements") which became effective on February 28, 1990. The
Advisory Agreements provide that the Advisor shall supervise and manage the
Portfolio's investments and shall determine the Portfolio's portfolio
transactions, subject to periodic review by the Board of Trustees. The Advisor
is responsible for selecting brokers and dealers to execute transactions for the
Portfolio.
On October 16, 1998, the Fund's shareholders approved new investment advisory
agreements with the Advisor to replace the current Advisory Agreements. The new
agreements contain the same terms and conditions as the current Advisory
Agreements, except for effective dates and termination dates. Shareholders were
asked to approve the new agreements because the Advisor plans to merge with
Weston Advisors, Inc., an affiliated Company, which will result in a change in
control of the Advisor.
The fees paid under the Advisory Agreements are higher than the investment
advisory fees paid by most other mutual funds. The Advisor currently provides
investment advisory services for approximately $416 million of assets of
individuals, trusts and estates. The Advisor has provided discretionary
investment advisory services relating to investments in mutual funds since 1981.
Pursuant to its Advisory Agreement with each Portfolio, the Advisor will manage
the assets of each Portfolio in accordance with the stated objective, policies
and restrictions of the Portfolio (subject to the supervision of the New Century
Portfolios' Board of Trustees and officers). The Advisor will also keep certain
books and records in connection with its services to the New Century Portfolios.
The Advisor has also authorized any of its directors, officers and employees who
have been elected as Trustees or officers of the New Century Portfolios to serve
in the capacities in which they have been elected. Services furnished by the
Advisor under the agreement may be furnished through the medium of any such
directors and officers.
As compensation for its services as investment advisor, the Advisor receives a
fee, computed daily and payable monthly, at the annualized rate of 1% of each
Portfolio's average daily net assets for the first $100 million in assets and
.75% of the assets exceeding that amount. The Advisor's fee is higher than that
paid by most other investment companies. For the fiscal year ended October 31,
1998, the Advisor received $875,355 (1% of average net assets) for the New
Century Capital Portfolio and $533,425 (1% of average net assets) for the New
Century Balanced Portfolio.
The Advisor uses an investment team approach to analyze investment trends and
strategies for the Portfolios. Members of the investment team are responsible
for the continuous review and administration of each Portfolio's investment
program, subject to the objectives specified in the Prospectus and supplemental
guidelines approved by the New Century Portfolios' Board of Trustees. Wayne M.
Grzecki, who has 21 years of investment experience, is the coordinator of the
team. Mr. Grzecki has served in various management positions with the Advisor
since 1986 and is President of the New Century Portfolios. Douglas A. Biggar and
Ronald A. Sugameli are the other members of the team. Mr. Biggar, a Principal of
the Advisor and Trustee of the Portfolios, served as the New Century Portfolios'
portfolio manager from inception to 1994. Mr. Sugameli, a Vice President of the
Portfolios, has served in various management positions with the Advisor since
1984, advising individuals concerning financial planning and investment advice.
The Advisor was organized in 1981 and principally provides investment advice to
individuals. The Advisor does not provide investment advice to any other
investment companies.
The Advisor also serves as the Portfolios' administrator under an agreement with
each Portfolio the "Administration Agreement"). The Administration Agreements
provide that the Advisor will furnish the New Century Portfolios with office
facilities, and with any ordinary clerical and bookkeeping services not
furnished by the custodian, transfer agent or Distributor. The Administration
Agreements were approved by the Board of Trustees. As compensation for its
services as an administrator, the Advisor receives an amount equal to the
salaries and expenses of the personnel who perform the administrative duties.
Distribution Of Shares
Weston Securities Corporation is each Portfolio's Distributor. The Distributor
promotes the distribution of the shares of each Portfolio in accordance with
those agreements and the terms of the Distribution Plan for each Portfolio (the
"Plan") adopted pursuant to Rule l2b-1 under the 1940 Act. Each Plan provides
for the use of Portfolio assets to pay expenses of distributing Portfolio
shares.
The Plan provides that each Portfolio may incur distribution costs which may not
exceed .25% per annum of the Portfolio's net assets for payments to the
Distributor for items such as advertising expenses, selling expenses,
commissions or travel reasonably intended to result in sales of shares of the
Portfolio. The Distribution Agreement adopted under each Plan provides that each
Portfolio will pay the Distributor a monthly fee at an annual rate of .25% of
the Portfolio's average daily net assets. Thus, each Portfolio will not bear any
distribution expenses in excess of its payments to the Distributor. The Plans do
not limit the amounts paid to the Distributor by each Portfolio to amounts
actually expended by the Distributor. It is therefore possible for payments to
the Distributor to exceed its expenses in a particular year.
Because these fees are paid out of the Portfolios' assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
<PAGE>
Buying Shares
To purchase shares of a Portfolio please complete the application form and mail
it together with your check payable to New Century Portfolios to:
First Data Investor Services Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
Subsequent investments may be made at any by mailing a check, payable to New
Century Portfolios to the Transfer Agent at the address above. Mail orders
should include, when possible, the "Invest by Mail" stub which accompanies any
Portfolio confirmation statement. The Distributor may be reached at (888)
639-0102.
Purchases are made at the net asset value per share next computed after receipt
of your order by the Portfolio's Transfer Agent, First Data Investor Services
Inc. There is no sales load or charge assessed on the New Century Capital
Portfolio or the New Century Balanced Portfolio.
Each Portfolio reserves the right in its sole discretion (i) to suspend the
offering of its shares, (ii) to reject purchase orders when in the best interest
of the Portfolio, (iii) to reduce or waive the minimum for initial and
subsequent investments as set forth above. Your purchase will be made in full
and fractional shares of the Portfolio calculated to three decimal places.
Shares are normally held in an open account for shareholders by each Portfolio,
which will send to shareholders a statement of shares owned at the time of each
transaction. Share certificates for full shares are, of course, available at any
time at written request at no additional cost to the shareholder. No
certificates will be issued for fractional shares.
Exchanging Shares
You may exchange all or part of your shares into any other New Century
Portfolio, at net asset value. The amount invested must equal or exceed the
required minimum investment of the Portfolio which is purchased. If you request
an exchange, you will be sent a current prospectus and an exchange authorization
form to authorize the exchange. No fees or sales loads are charged for the
exchange privilege.
You may also request an exchange by telephoning the Distributor at (888)
639-0102 if you have previously submitted the telephone exchange option
available from the Portfolio. An exchange is technically a sale of one Portfolio
and the purchase of another, and is a taxable transaction. The sale may involve
either a capital gain or loss to you for tax purposes. The exchange privilege is
subject to termination and its terms are subject to change.
Selling (Redeeming) Shares
You may redeem your shares of the Portfolios without charge on any day on which
the Portfolios calculate their net asset values (see "Share Price"). Redemptions
will be effective at the net asset value per share next determined after the
receipt of a redemption request meeting the requirements described below. After
we receive your request in good order, we normally send redemption proceeds on
the next business day, and in any event, within seven days (or earlier if
required under applicable law). There is no charge for redemptions by the
Portfolios or repurchases by the Distributor.
You may sell shares by mail or by telephone.
Mail Redemptions
To sell shares by mail you must send us signed written instructions. The written
request must:
o include the Portfolio and the shareholder's account number,
o state the number of shares to be redeemed, and
o be signed by each registered owner exactly as the shares are
registered.
If you would like your redemption proceeds wired to a bank account, your
instructions should include:
o the name, address, and telephone number of the bank where
you want the proceeds sent
o your bank account number
o the Federal Reserve ABA Routing number.
If the shares to be redeemed were issued in certificate form, the certificates
must be endorsed for transfer (or be accompanied by an endorsed stock power) and
must be submitted to the Transfer Agent together with the redemption request.
The Transfer Agent may require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees and guardians. The
Transfer Agent will not consider a redemption request to be complete until it
receives all required documents in proper form. You should call the Transfer
Agent at (800) 441-8580 with questions about the proper form for redemption
requests. Delivery of the proceeds of a redemption of shares purchased and paid
for by check shortly before the receipt of the request may be delayed until the
Portfolio determines that its Custodian Bank has completed collection of the
purchase check which may take up to 15 days. The Board of Trustees may suspend
the right of redemption or postpone the date of payment during any period when:
o trading on the New York Stock Exchange is restricted
as determined by the Securities and Exchange Commission,
o such Exchange is closed for other than weekends and holidays,
o the Securities and Exchange Commission has by order
permitted such suspension, or
o an emergency, as defined by rules of the Commission, exists during which
time the sale of portfolio securities or valuation of securities held by
the Portfolio are not reasonably practicable.
Telephone Redemptions
You may redeem shares by telephoning the Distributor at (888) 639-0102 if you
have previously submitted the telephone redemption form available from the
Portfolio. (Telephone redemption will not be available for shares held in tax
qualified accounts, for amounts less than $5,000, or for shares for which
certificates are outstanding.) The proceeds will be paid to the registered share
owner(s):
o by mail at the address specified on the Telephone Redemption
Form, or
o by wire to the bank account designated on the Form.
All registered owners of an account must complete the Telephone Redemption Form
and the signatures must be guaranteed as described above. The Portfolio or its
Distributor may cancel the telephone redemption privilege at any time without
prior notice. They may require the use of written redemption procedures when
deemed necessary to protect the Portfolio and its shareholders.
We will not be responsible for any losses resulting from unauthorized
transactions if it follows reasonable procedures designed to verify the identity
of the caller. We will request personalized security codes or other information,
and may also record calls. You should verify the accuracy of your transaction
statements immediately after you receive them.
Account Minimum
Your account may be closed if it is worth less than the minimum initial
investment required when the account is established, presently $5,000. (If you
redeem shares from an inactive account established with a minimum investment,
the account may fall below the minimum initial investment, and could be closed).
We would advise you in writing at least sixty (60) days prior to closing the
account, during which time you may purchase additional shares in any amount
necessary to bring the account back to $5,000. We will not close your account if
it falls below $5,000 solely because of a market decline.
Redemptions In-Kind
If the Board determines that it would be detrimental to the best interest of the
remaining shareholders of a Portfolio to make payment in cash, the Portfolio may
pay the redemption price in whole or in part by distribution in kind of
securities from the Portfolio. Such securities will be valued on the basis of
the procedures used to determine the net asset value at the time of the
redemption. If your shares are redeemed in kind, you may be required to comply
with normal procedures to redeem shares of an underlying fund, or you may incur
either normal processing delays or brokerage costs in converting the assets into
cash.
Distributions
Frequency
The New Century Capital Portfolio intends to declare and pay annual dividends to
its shareholders. The New Century Balanced Portfolio intends to declare and pay
quarterly dividends to its shareholders, of substantially all of its net
investment income, if any, earned during the year from its investments. Each
Portfolio will distribute net realized capital gains, if any, once each year.
Reinvestment
Your dividends and distributions will be reinvested in additional shares of a
Portfolio unless you elect in writing to receive dividends or distributions in
cash. To change your election you must notify the Transfer Agent in writing
fifteen days prior to record date. Reinvestments will be made on the payment
date at the net asset value determined on the record date of the dividend or
distribution.
Dividend payments are not guaranteed, are subject to the Board's discretion and
may vary with each payment. The Portfolios do not pay "interest" or guarantee
any fixed rate of return on an investment in its shares.
Taxes
If you buy shares shortly before the record date, any distribution will lower
the value of the Portfolio's shares by the amount of the distribution and you
will then receive a portion of the price you paid back in the form of a taxable
distribution. If you are subject to federal income taxes, distributions from
long-term capital gains are taxable as such, whether paid in cash or reinvested
in shares and regardless of the length of time you have owned Portfolio shares.
In addition, dividends from net investment income or net short-term gains will
be taxable to you as ordinary income, whether paid in cash or shares.
We will provide an information return to you describing the Federal tax status
of the dividends paid by a Portfolio during the preceding calendar year within
60 days after the end of each year as required by present tax law. You should
consult your tax advisor concerning the state or local taxation of such
dividends, and the Federal, state and local taxation of capital gains
distributions. Dividends declared in October, November or December of any year
to investors of record will be deemed to have been paid and received by the
investors on December 31 of the year, provided such dividends are paid before
February 1 of the following year.
The dividends paid by a Portfolio may qualify for the 70% dividends received
deduction for corporations. Distributions from long-term capital gains are not
eligible for the dividends received deduction for corporations. Corporate
investors should recognize that the investor must hold Portfolio shares for more
than 45 days during the period beginning 45 days before each dividend date and
ending 90 days thereafter to qualify any dividends (or portion thereof) for the
dividends received deduction. Tax Withholding
In accordance with law, we may be required to withhold a portion of dividends or
redemptions or capital gains paid to you and remit such amount to the Internal
Revenue Service, if you fail to furnish us with a correct taxpayer
identification number, if you fail to supply us with a tax identification number
altogether, if you fail to make a required certification, or if the Internal
Revenue Service notifies us to withhold a portion of such distributions from
your account. Certain entities, such as certain types of trusts, may be exempt
from this withholding provided they file an appropriate exemption certificate
with us.
Transaction Procedures and Special Requirements
Share Price
The Net Asset Value we use when you buy or sell shares is the one next
calculated after we receive your transaction request in proper form.
How and When Priced
The net asset value of a Portfolio share is determined as of 5 p.m. Eastern time
on each day the New York Stock Exchange is open for unrestricted trading from
Monday through Friday. Portfolio shares will not be priced on national holidays
when the New York Stock Exchange is closed. The net asset value is determined by
dividing the value of the Portfolio's securities, plus any cash and other
assets, less all liabilities, by the number of shares outstanding. Expenses and
fees of the Portfolio, including the advisory and the distributor fees, are
accrued daily and taken into account for the purpose of determining the net
asset value. Each Portfolio will value redeemable securities issued by open-end
investment companies at their respective net asset values last computed at 5
p.m. A portfolio security listed or traded on a securities exchange will be
valued at the last sale price on the security's principal exchange on that day.
Listed securities not traded on an exchange that day, and other securities which
are traded in the over-the-counter market, will be valued at the last reported
bid price in the market on that day, if any. Securities for which market
quotations are not readily available and all other assets will be valued at
their respective fair market value as determined in good faith by, or under
procedures established by, the Board of Trustees. The Portfolios will value
money market securities with less than sixty days remaining to maturity when
acquired on an amortized cost basis, excluding unrealized gains or losses
thereon from the valuation. This is accomplished by valuing the security at cost
and then assuming a constant amortization to maturity of any premium or
discount. If the Portfolio acquires a money market security with more than sixty
days remaining to its maturity, it will value the money market security at
current market value until the 60th day prior to maturity. The money market
security will then be valued on an amortized cost basis based upon the value on
such date unless the Board determines during such 60-day period that this
amortized cost value does not represent fair market value.
Proper Form
An order to buy shares is in proper form when we receive your signed shareholder
application and check. Written requests to sell or exchange shares are in proper
form when we receive signed written instructions, with a signature guarantee if
necessary. We must also receive any outstanding share certificates for those
shares.
Written Instructions
Written instructions must be signed by all registered owners. To avoid any delay
in processing your transaction, they should include:
o Your name,
o The Portfolio's name
o A description of the request
o For exchanges, the name of the fund you are exchanging into
o Your account number
o The dollar amount or number of shares, and
o A telephone number where we may reach you during the day or
in the evening, if preferred.
Joint Accounts
For accounts with more than one registered owner, we accept written instructions
signed only by one owner for certain types of transactions or account changes.
These include transactions or account changes you could also make by phone, such
as certain redemptions of $5,000 or less, exchanges between identically
registered accounts, and changes to the address of record. For most other types
of transactions or changes, all registered owners must sign written
instructions.
Please keep in mind that if you have previously told us that you do not want
telephone exchange or redemption privileges on your account, then we can only
accept written instructions to exchange or redeem shares if they are signed by
all registered owners on the account.
Signature Guarantees
A signature guarantee verifies the authenticity of your signature. You should be
able to obtain a signature guarantee from a bank, broker, credit union, savings
association, clearing agency, etc. The Distributor (888) 639 0102 may also
provide a signature guarantee
Signature guarantees must be included in a redemption request for:
o an amount in excess of $5,000,
o payment other than to the shareholder of record, or
o for proceeds to be sent elsewhere than the address of
record.
A notarized signature is not sufficient.
Telephone
You may initiate many transactions and changes to your account by phone. When
you call, we may request personal or other identifying information to confirm
that instructions are genuine. We may also record calls. For your protection, we
may delay a transaction or not implement one if we are not reasonably satisfied
that the instructions are genuine. If this occurs, we will not be liable for any
loss. We will also not be liable for any loss if we follow instructions by phone
that we reasonably believe are genuine or if you are unable to execute a
transaction by phone.
Other Services
Automatic Investment Program
Our automatic investment plan offers a convenient way to invest in the Fund.
Under the plan you can have money transferred automatically from your checking
account to the Fund each month to buy additional shares. If you are interested
in this program, please refer to the shareholder application included with this
prospectus. The market value of the Fund's share may fluctuate and a systematic
investment plan such as this will not assure a profit or protect against a loss.
You may discontinue the program at any time by notifying the Transfer Agent or
Distributor by mail or phone.
Systematic Withdrawal Programs
Our systematic withdrawal plan allows you to sell your shares and receive
regular payments from your account on a monthly, quarterly or annual basis. The
value of your account must be at least $10,000 and the minimum payment for each
withdrawal must be at least $50.00.
If you would like to establish a systematic withdrawal plan, please complete the
systematic withdrawal section of the shareholder application included with this
prospectus and indicate how you would like to receive your payments. When you
sell your shares under a systematic withdrawal plan, it is a taxable
transaction.
Special Plans
Each Portfolio also offers its shares for use in certain Tax
Sheltered accounts, including IRA, Roth IRA, Keogh, 401(k) and
403(b)(7) plans. Information on these types of accounts is
available from the Portfolios' Distributor or by reviewing the
Statement of Additional Information.
Statements and Reports
We will send you the following statements and reports on a regular basis:
o Confirmation and account statements reflecting transactions in your
account, including additional purchases and dividend reinvestments.
Please verify the accuracy of your statements when you receive
them.
o Financial reports of the fund will be sent every six months.
<PAGE>
NEW CENTURY CAPITAL PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Years ended October 31,
1998 1997 1996 1995 1994
- -------------------------- ------ ---- ---- ----- -----
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period $14.67 $13.51 $13.12 $12.31 $12.74
Income (loss) from invest-
ment operations
Net investment loss (0.09) (0.10) (0.09) (0.06) (0.08)
Net gain on securities
(both realized and
unrealized) 1.18 3.29 1.90 2.16 0.64
Total from investment
operations 1.09 3.19 1.81 2.10 0.56
Less distributions
Distributions from
capital gains (1.46) (2.03) (1.42) (1.29) (0.99)
Net asset value, end of
period $14.30 $14.67 $13.51 $13.12 $12.31
TOTAL RETURN 7.97% 27.22% 14.91% 19.60% 4.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of yeaR $90,164 $78,391 $62,741 $50,889 $37,968
Ratio of expenses to
average net assets 1.44% 1.43% 1.47% 1.61% 1.60%
Ratio of net investment
loss to average net
assets -0.67% -0.76% -0.69% -0.52% -0.68%
Portfolio turnover Rate 102% 93% 214% 206% 107%
<PAGE>
NEW CENTURY BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Years ended October 31,
1998 1997 1996 1995 1994
- -------------------------- ------ ---- ---- ----- -----
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period $13.23 $12.21 $11.82 $11.22 $11.94
Income from investment
operations
Net investment
income (loss) 0.21 0.21 0.18 0.24 0.20
Net gain (loss) on
securities
(both realized and
unrealized) 0.66 2.01 1.30 1.28 (0.05)
Total from investment
operations 0.87 2.22 1.48 1.52 0.15
Less distributions
Dividends from net
investment income (0.21) (0.21) (0.18) (0.24) (0.19)
Distributions from
capital gains (1.06) (0.99) (0.91) (0.68) (0.68)
Total distributions (1.27) (1.20) (1.09) (0.92) (0.87)
Net asset value, end of
period $12.83 $13.23 $12.21 $11.82 $11.22
TOTAL RETURN 6.97% 19.64% 13.24% 14.93% 1.26%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
year $56,190 $48,893 $40,423 $30,124 $23,803
Ratio of expenses to
average net assets 1.46% 1.41% 1.61% 1.72% 1.73%
Ratio of net investment
income to average
net assets 1.51% 1.58% 1.45% 2.14% 1.57%
Portfolio turnover Rate 59% 80% 172% 191% 130%
<PAGE>
INVESTMENT ADVISOR
Weston Financial Group, Inc.
20 William Street, Suite 330
Wellesley, MA 02481-4102
DISTRIBUTOR
Weston Securities Corporation
20 William Street, Suite 330
Wellesley, MA 02481-4102
CUSTODIAN
The Bank of New York
90 Washington Street, 22nd Floor
New York, New York 10286-0001
TRANSFER AGENT
First Data Investor Services Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Briggs Bunting & Dougherty, LLP
Two Logan Square, Suite 2121
Philadelphia, PA 19103-4901
<PAGE>
ADDITIONAL INFORMATION
You can find more information about New Century Portfolios and its Portfolios in
the Statement of Additional Information (SAI) and Annual and Semi-Annual
Reports.
The SAI includes expanded information about investment practices, risks and
operations. The SAI supplements, and is technically a part of, this Prospectus.
The Annual and Semi-Annual Reports focus on information about each Portfolio's
investments and performance. In these reports, you will find a discussion of the
market conditions and investment strategies that significantly affected each
Portfolio's performance during the last fiscal year.
The SAI and Annual and Semi-Annual Reports are available free of charge. To get
these materials and other information about the portfolios:
o Call collect or write New Century Portfolios as shown below.
o Visit the SEC's Public Reference Room in Washington, DC
(1-800-SEC-0330).
o Visit the SEC's Internet site at http://www.sec.gov.
o Request copies of this information by writing to the Public Reference
Section of the SEC, Washington, DC 20549-6009 (a copying fee may be
charged).
811-5646
NEW CENTURY PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
Dated February 26, 1999
- -------------------------------------------------------------------------------
20 William Street, Suite 330, Wellesley, Massachusetts 02481-4102
The Distributor may be telephoned at (888) 639-0102
- -------------------------------------------------------------------------------
Free copies of the Prospectus and Annual Report of New Century Portfolios ("the
Trust") are available by calling the above number collect or by writing to the
above address.
The Trust is an open-end diversified investment company currently offering two
series of shares (each a "Portfolio"): New Century Capital Portfolio and New
Century Balanced Portfolio. The shares of each Portfolio may be purchased or
redeemed at any time. Purchases and redemptions will be effected at net asset
value next computed after the receipt of the investor's request.
The investment objective of the New Century Capital Portfolio is to provide
capital growth, with a secondary objective to provide income, while managing
risk. The investment objective of the New Century Balanced Portfolio is to
provide income, with a secondary objective to provide capital growth, while
managing risk. The Portfolios seek to achieve their objectives by investing
primarily in shares of other registered investment companies that emphasize
investments in equities (domestic and foreign) and, for New Century Balanced
portfolio, fixed income securities (domestic and foreign). There can be no
assurance that the objectives of the Portfolios will be achieved.
- ------------------------------------------------------------------------------
This statement of additional information is not a prospectus and should be read
in connection with the Trust's prospectus dated February 26, 1999. Retain this
statement of additional information for future reference. Certain information
from the Trust's Annual Report to Shareholders for the fiscal year ended October
31, 1998 is incorporated by reference into this statement of additional
information.
- ------------------------------------------------------------------------------
<PAGE>
NEW CENTURY PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 26, 1999
TABLE OF CONTENTS
Page
Investments by the Portfolios 4
Rising Trend Strategy 4
Declining Trend Strategy 4
Other Factors 5
Investment Company Securities 5
Money Market Securities 5
Portfolio Turnover 7
Investment Restrictions 7
Underlying Funds 9
Illiquid And Restricted Securities 9
Foreign Securities 9
Foreign Currency Transactions 9
Industry Concentration 10
Master Demand Notes 10
Repurchase Agreements 10
Loans Of Portfolio Securities 10
Short Sales 10
Options Activities 11
Futures Contracts 12
Options On Futures Contracts 13
Risk Factors Regarding Options,
Futures And Options On Futures 14
Leverage Through Borrowing 14
Warrants 14
Description Of Bond Ratings 15
Investment Advisor 16
Distributor 16
Allocation Of Portfolio Brokerage 17
Transfer Agent 18
Purchase Of Shares 19
Tax-Sheltered Retirement Plans 19
Individual Retirement Accounts (IRA) 19
KEOGH Plans for Self-Employed 19
Tax-Sheltered Custodial Accounts 20
How to Establish Retirement Accounts 20
Systematic Withdrawal Plan 20
Officers And Trustees Of New
Century Portfolios 20
General Information 22
Beneficial Shares 22
Audits and Reports 23
Taxes 23
Expenses 23
Custodian 24
Performance 24
Comparisons and Advertisements 25
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Investments by the Portfolios
Each Portfolio seeks to achieve its objective by concentrating in shares of
investment companies and by making other investments selected in accordance with
the Portfolio's investment restrictions and policies. Each Portfolio will vary
its investment strategy as described in the Portfolios' prospectus to seek to
achieve its objective. This Statement of Additional Information contains further
information concerning the techniques and operations of each Portfolio, the
securities in which it will invest, and the policies it will follow.
Rising Trend Strategy
During periods when the Portfolios' investment advisor Weston Financial Group,
Inc. (the "Advisor") determines that there is a rising trend in the securities
markets, it will seek to achieve the Portfolios' investment objective by
concentrating in a portfolio of shares of investment companies which the advisor
believes will benefit from such a trend. The Advisor will use a risk adjusted
analysis (which considers the relative volatility of its various investments) to
evaluate the investment companies' performance under various market conditions
and to consider the potential reward and potential risk. The Advisor will not
select such investment companies based solely upon their previous performance.
(See "Investments in Investment Companies and the Investment Company Industry"
in the prospectus.) In order to make allowance for cash flow needs of each
Portfolio or when a Portfolio is otherwise pursuing appreciation, a Portfolio
may also invest up to 75% of its asset value in other investment vehicles such
as common or preferred stocks of companies which are not investment companies,
investment companies which are money market funds, cash equivalents, or may hold
its assets as cash. Though not required by its policies to do so, the Portfolios
may make such investments, if necessary, to qualify as a "regulated investment
company" under the Internal Revenue Code (the "IRC"). (See "Dividends,
Distributions and Taxes" in the prospectus for a discussion of qualification
under sub chapter M of the IRC.)
Declining Trend Strategy
The primary emphasis of the New Century Capital Portfolio is on capital growth
over income and for the New Century Balanced Portfolio is on income over growth.
Nevertheless, when the Advisor determines that there is a generally declining
trend in the securities markets, it may seek to reduce risk by investing some or
all of either Portfolio in investments, including investment company securities,
which are believed by the manager to present a lower degree of risk. During such
periods, the Trust may recognize a more conservative strategy to achieve its
objective. The primary objective of the respective portfolios will remain that
of capital growth over income and income over growth while managing risk. The
extent of the restructuring of the Portfolio during these periods will depend
upon the advisor's opinion as to the extent of the market decline and relative
risk of these investments.
Other Factors
Each Portfolio also seeks to protect the value of its assets when volatile or
abnormal market conditions are anticipated (as indicated by rapidly accelerating
inflation or interest rates, sharply declining stock markets, increasing
deterioration in the banking situation and/or increasing threats to national or
world security). This will involve the selection of high proportions, up to
100%, of temporary defensive investments such as U.S. Government securities or
other money market securities (see "Money Market Securities"), the use of very
short portfolio maturities of 60 days or less, other investments which protect
the value of the series, and similar techniques such as holding cash.
Investment Company Securities
The other investment companies in which each Portfolio invests will be
diversified investment companies managed by a number of investment advisors and
portfolio managers. This will offer each Portfolio an opportunity to benefit
from a variety of diversified portfolios.
Each such company will be a registered investment company, and will operate
subject to a variety of regulatory constraints. While such regulation does not
guarantee the investment success of an investment company, or assure that it
will not suffer investment losses, the Advisor believes that such investment
companies provide a sound foundation upon which to base an investment portfolio.
By investing in a broad spectrum of such companies each Portfolio hopes to
benefit from the collective research and analysis of many experienced investment
personnel.
There are many types of investment companies. All maintain portfolios which are
generally liquid, but can be composed of different kinds of securities and
involve different objectives. Such companies may seek only income, only
appreciation, or various combinations of these. They may invest in money market
securities, short or long term bonds, dividend producing stocks, tax-exempt
municipal securities, or a variety of other instruments. They may seek
speculative or conservative investments ranging from securities issued by new
companies to securities issued by "blue-chip" companies. An investment company
which has a policy of holding 80% of its assets in debt securities maturing in
thirteen months or less, or which holds itself out as a "money market fund" will
be treated as a money market fund by the Portfolios.
The Advisor will be responsible for monitoring and evaluating these kinds of
factors to select investment company fund securities for each of the Portfolios
in accordance with the policies and techniques described in the prospectus.
Money Market Securities
Although each Portfolio intends to concentrate its investments in registered
investment company securities, each Portfolio may invest its assets directly in
money market securities whenever deemed appropriate by the advisor to achieve
the Portfolio's investment objective. It may invest without limitation in such
securities on a temporary basis for defensive purposes.
Securities issued or guaranteed as to principal and interest by the United
States government ("Government Securities") include a variety of Treasury
securities, which differ in their interest rates, maturities and date of issue.
Treasury bills have a maturity of one year or less; Treasury notes have
maturities of one to ten years; Treasury bonds generally have a maturity of
greater than five years. The Portfolios will only acquire Government Securities
which are supported by the "full faith and credit" of the United States.
Securities which are backed by the full faith and credit of the United States
include Treasury bills, Treasury notes, Treasury bonds, and obligations of the
Government National Mortgage Association, the Farmers Home Administration, and
the Export-Import Bank. The Portfolios' direct investments in money market
securities will generally favor securities with shorter maturities (maturities
of less than 60 days) which are less affected by price fluctuations than those
with longer maturities. Certificates of deposit are certificates issued against
funds deposited in a commercial bank or a savings and loan association for a
definite period of time and earning a specified return. Bankers' acceptances are
negotiable drafts or bills of exchange, normally drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Investments in bank certificates of deposit and
bankers' acceptances are limited to domestic banks and savings and loan
associations that are members of the Federal Deposit Insurance Corporation or
Federal Savings and Loan Insurance Corporation having total assets in excess of
five hundred million dollars ("Domestic Banks").
Investments in prime commercial paper may be made in notes, drafts, or similar
instruments payable on demand or having a maturity at the time of issuance not
exceeding nine months, exclusive of days of grace, or any renewal thereof
payable on demand or having a maturity likewise limited.
Under a repurchase agreement the Portfolio acquires a debt instrument for a
relatively short period (usually not more than one week) subject to the
obligation of the seller to repurchase and the Portfolio to resell such debt
instrument at a fixed price. The Portfolio will enter into repurchase agreements
only with banks which are members of the Federal Reserve System, or securities
dealers who are members of a national securities exchange or are market makers
in government securities and in either case, only where the debt instrument
collateralizing the repurchase agreement is a U.S. Treasury or agency obligation
supported by the full faith and credit of the U.S. A repurchase agreement may
also be viewed as the loan of money by the Portfolio to the seller. The resale
price specified is normally in excess of the purchase price, reflecting an
agreed upon interest rate. The rate is effective for the period of time the
Portfolio is invested in the agreement and may not be related to the coupon rate
on the underlying security. The term of these repurchase agreements will usually
be short (from overnight to one week) and at no time will the Portfolio invest
in repurchase agreements of more than sixty days. The securities which are
collateral for the repurchase agreements, however, may have maturity dates in
excess of sixty days from the effective date of the repurchase agreement. The
Portfolio will always receive, as collateral, securities whose market value,
including accrued interest, will be at least equal to 100% of the dollar amount
to be paid to the Portfolio under each agreement at its maturity, and the
Portfolio will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the Custodian. If the seller
defaults, the Portfolio might incur a loss if the value of the collateral
securing the repurchase agreement declines, and might incur disposition costs in
connection with liquidation of the collateral. In addition, if bankruptcy
proceedings are commenced with respect to the seller of the security, collection
of the collateral by the Portfolio may be delayed or limited. The Portfolio may
not enter into a repurchase agreement with more than seven days to maturity if,
as a result, more than 15% of the market value of the Portfolio's net assets
would be invested in such repurchase agreements together with any other illiquid
assets.
Portfolio Turnover
It is not the policy of the Portfolios to purchase or sell securities for
short-term trading purposes, but each Portfolio may sell securities to recognize
gains or avoid potential for loss. A Portfolio of the Trust will, however, sell
any portfolio security (without regard to the time it has been held) when the
Advisor believes that market conditions, credit worthiness factors or general
economic conditions warrant such a step. Each Portfolio of the Trust presently
estimates that its annualized portfolio turnover rate generally will not exceed
200%. High portfolio turnover might involve additional transaction costs (such
as brokerage commissions or sales charges) which are borne by the Portfolio, or
adverse tax effects. (See " Distributions" in the prospectus.)
Investment Restrictions
The investment restrictions set forth below have been adopted for each Portfolio
to limit certain risks that may result from investment in specific types of
securities or from engaging in certain kinds of transactions addressed by such
restrictions. They may not be changed without the affirmative vote of a majority
of the outstanding voting securities of the Portfolio. As provided in the
Investment Company Act of 1940 (the "1940 Act") a "vote of a majority of the
outstanding voting securities" of the Portfolio means the affirmative vote of
the lesser of (i) more than 50% of the outstanding shares of the Portfolio or
(ii) 67% or more of the shares present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy. These
investment restrictions provide that the Portfolios will not:
(a) as to 75% of the Portfolio's total assets, invest more than 5% of its
total assets in the securities of any one issuer. (This limitation does not
apply to cash and cash items, obligations issued or guaranteed by the United
States Government, its agencies or instrumentalities or securities of other
investment companies.)
(b) invest in any investment company if a purchase of its shares would
result in New Century Portfolios and its affiliates owning more than 3% of the
total outstanding voting stock of such investment company.
(c) purchase more than 10% of the voting securities, or more than 10% of
any class of securities of any issuer. For purposes of this restriction, all
outstanding fixed income securities of an issuer are considered as one class.
(d) purchase or sell commodities or commodity futures contracts.
(e) make loans of money or securities, except (i) by the purchase of fixed
income obligations in which the Portfolio may invest consistent with its
investment objective and policies; or (ii) by investment in repurchase
agreements.
(f) borrow money, except the Portfolio may borrow from banks (i) for
temporary or emergency purposes in an amount not exceeding 5% of the Portfolio's
assets or (ii) to meet redemption requests that might otherwise require the
untimely disposition of portfolio securities, in an amount up to 33 1/3% of the
value of the portfolio's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing was made. While borrowings exceed 5% of the value of the Portfolio's
total assets, the Portfolio will not make additional investments. Interest paid
on borrowings will reduce net income.
(g) pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 33 1/3% of the value of its net assets but only to secure
borrowings for temporary or emergency purposes, such as to effect redemptions.
(h) purchase the securities of any issuer, if, as a result, more than 10%
of the value of New Century Portfolios' net assets would be invested in
securities that are subject to legal or contractual restrictions on resale
("restricted securities"), in securities for which there are no readily
available market quotations, in repurchase agreements maturing in more than
seven days, or in shares in excess of 1% of an underlying fund's outstanding
securities, if all such securities would constitute more than 10% of the
Portfolio's net assets.
(i) issue senior securities.
(j) engage in the underwriting of securities except insofar as the
Portfolio may be deemed an underwriter under the Securities Act of 1933 in
disposing of a portfolio security.
(k) purchase or sell real estate or interests therein, although it may
purchase securities of issuers which engage in real estate operations and
securities which are secured by real estate or interests therein.
(l) invest for the purpose of exercising control or management of another
company.
(m) concentrate its investments in any industry other than registered
investment companies.
(n) make purchases of securities on "margin." With respect to investment
restriction (m) above, although New Century Portfolios may not concentrate in a
particular industry other than registered investment companies, it may
concentrate in investment companies which concentrate in a particular industry.
As a result, New Century Portfolios may concentrate in an industry indirectly by
virtue of its investments. So long as percentage restrictions are observed by
each Portfolio at the time it purchases any security, changes in values of
particular Portfolio assets or the assets of the Portfolio as a whole will not
cause a violation of any of the foregoing restrictions.
Underlying Funds
The underlying funds in which the New Century Portfolios invest may invest in
various obligations and employ various investment techniques. Some of these
securities and techniques are described below.
Illiquid And Restricted Securities. An underlying fund may invest up to 15% of
its net assets in illiquid securities. Illiquid Securities are securities that
can not be disposed of within seven days and in the ordinary course of business
at approximately the amount at which the fund has valued it. Illiquid Securities
may include securities the disposition of which would be subject to legal
restrictions (so-called "restricted securities") and repurchase agreements
having more than seven days to maturity. A considerable period of time may
elapse between an underlying fund's decision to dispose of such securities and
the time when the fund is able to dispose of them. During such time the value of
the securities (and therefore the value of the underlying fund's shares held by
a Portfolio) could decline.
Foreign Securities. An underlying fund may invest up to 100% of its assets in
securities of foreign issuers. There may be less publicly available information
about these issuers than is available about companies in the U.S. and such
information may be less reliable. Foreign securities are subject to heightened
political, social and economic risks, including the possibility of
expropriation, nationalization, confiscation, confiscatory taxation, exchange
controls or other foreign governmental restrictions. An underlying fund may
maintain its foreign securities in custody of non U.S. banks and securities
depositories. All of these risks are heightened for investments in emerging
markets .
Foreign Currency Transactions. In connection with its portfolio transactions in
securities traded in a foreign currency, an underlying fund may enter into
forward contracts to purchase or sell an agreed upon amount of a specific
currency at a future date which may be any fixed number of days from the date of
the contract agreed upon by the parties at a price set at the time of the
contract. Under such an agreement, concurrently with the entry into a contract
to acquire a foreign security for a specified amount of currency, the fund would
purchase with U.S. dollars the required amount of foreign currency for delivery
at the settlement date of the purchase; the fund would enter into similar
forward currency transactions in connection with the sale of foreign securities.
The effect of such transactions would be to fix a U.S. dollar price for the
security to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received, the normal range of which is three to
fourteen days. These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and their
customers. A forward contract generally has no deposit requirement and no
commissions are charged at any stage for trades. Although such contracts tend to
minimize the risk of loss due to a decline in the value of the subject currency,
they tend to limit any potential gain which might result should the value of
such currency increase during the contract period.
Industry Concentration. An underlying fund may concentrate its investments
within one industry. Because investments within a single industry would all be
affected by developments within that industry, a fund which concentrates in an
industry is subject to greater risk than a fund which invests in a broader range
of securities. Also, the value of the shares of such an underlying fund may be
subject to greater market fluctuation than an investment in a more diversified
fund.
Master Demand Notes. Although the Portfolios themselves will not do so,
underlying funds (particularly money market mutual funds) may invest up to 100%
of their assets in master demand notes. Master demand notes are unsecured
obligations of U.S. corporations redeemable upon notice that permit investment
by a fund of fluctuating amounts at varying rates of interest pursuant to direct
arrangements between the fund and the issuing corporation. Because they are
direct arrangements between the fund and the issuing corporation, there is no
secondary market for the notes. However, they are redeemable at face value, plus
accrued interest, at any time.
Repurchase Agreements. Underlying funds, particularly money market mutual funds,
may enter into repurchase agreements with banks and broker-dealers under which
they acquire securities subject to an agreement that the seller will repurchase
the securities at an agreed upon time and price. The Portfolios also may enter
into repurchase agreements. These agreements are considered under the 1940 Act
to be loans by the fund. If the seller should default on its obligation to
repurchase the securities, the underlying fund may experience delays or
difficulties in exercising its rights to realize upon the securities held as
collateral and might incur a loss if the value of the securities should decline.
Loans Of Portfolio Securities. An underlying fund may lend its portfolio
securities provided: (1) the loan is secured continuously by collateral
consisting of U.S. Government securities or cash or cash equivalents maintained
on a daily mark-to-market basis in an amount at least equal to the current
market value of the securities loaned; (2) the fund may at any time call the
loan and obtain the return of the securities loaned; (3) the fund will receive
any interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed one-third of the
total assets of the fund. Loans of securities involve a risk that the borrower
may fail to return the securities or may fail to provide additional collateral.
Short Sales. An underlying fund may sell securities short. In a short sale, the
fund sells stock which it does not own, making delivery with securities
"borrowed" from a broker. The fund is then obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. This
price may or may not be less than the price at which the security was sold by
the fund. Until the security is replaced, the fund is required to pay to the
lender any dividends or interest which accrue during the period of the loan. In
order to borrow the security, the fund may also have to pay a premium which
would increase the costs of the security sold. The proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
The fund also must deposit in an segregated account an amount of cash or U.S.
Government securities equal to the difference between (a) the market value of
the securities sold short at the time they were sold short and (b) the value of
the collateral deposited with the broker in connection with the short sale (not
including the proceeds from the short sale). While the short position is open,
the fund must maintain daily the segregated account at such a level that (1) the
amount deposited in it plus the amount deposited with the broker as collateral
equals the current market value of the securities sold short and (2) the amount
deposited in it plus the amount deposited with the broker as collateral is not
less than the market value of the securities at the time they were sold short.
Depending upon market conditions, up to 80% of the value of a fund's net assets
may be deposited as collateral for the obligation to replace securities borrowed
to effect short sales and allocated to a segregated account in connection with
short sales.
The fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which the
fund replaces the borrowed security. The fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased and the amount of any loss increased by the amount of any premium,
dividend or interest the fund may be required to pay in connection with a short
sale.
A short sale is "against the box" if at all times when the short position is
open the fund owns an equal amount of the securities or securities convertible
into, or exchangeable without further consideration for, securities of the same
issue as the securities sold short.
Options Activities. An underlying fund may write (i.e., sell) call options
("calls") and put options ("puts") only if the positions are "covered"
throughout the life of the option. Generally, a position is "covered" if the
fund establishes a segregated account containing the cash or securities
necessary to cover the option when exercised or if the fund owns an offsetting
position.
When a fund writes a call, it receives a premium and gives the purchaser the
right to buy the underlying security at any time during the call period (usually
not more than nine months in the case of common stock) at a fixed exercise price
regardless of market price changes during the call period. If the call is
exercised, the fund will forgo any gain from an increase in the market price of
the underlying security over the exercise price. If the fund is unable to effect
a closing purchase transaction, it will not be able to sell the underlying
security until the call previously written by the fund expires (or until the
call is exercised and the fund delivers the underlying security). When a fund
writes a put, it receives a premium and gives the purchaser of the put the right
to sell the underlying security to the fund at the exercise price at any time
during the option period.
A fund also may purchase puts and calls. When a fund purchases an option, it
pays a premium in return for the right to sell (put) or buy (call) the
underlying security at the exercise price at any time during the option period.
An underlying fund also may purchase stock index options which differ from
options on individual securities in that they are settled in cash based on the
values of the securities in the underlying index rather than by delivery of the
underlying securities. Purchase of a stock index put is designed to protect
against a decline in the value of the portfolio generally rather than an
individual security in the portfolio. If any put is not exercised or sold, it
will become worthless on its expiration date. A fund's option positions may be
closed out only on an exchange which provides a secondary market for options of
the same series, but there can be no assurance that a liquid secondary market
will exist at a given time for any particular option. The underlying fund's
custodian, or a securities depository acting for it, generally acts as escrow
agent as to the securities on which the fund has written puts or calls, or as to
other securities acceptable for such escrow so that no margin deposit is
required of the fund. Until the underlying securities are released from escrow,
they can not be sold by the fund.
Futures Contracts. An underlying fund may enter into futures contracts for the
purchase or sale of debt securities and stock indices. A futures contract is an
agreement between two parties to buy and sell a security or an index for a set
price on a future date. Futures contracts are traded on designated "contract
markets" which, through their clearing corporations, guarantee performance of
the contracts. If a fund enters into a futures contract or an option on a
futures contract (see below) for other than bona fide hedging purposes, only up
to 5% of its net assets may then consist of initial margin deposits and premiums
required to establish such positions.
Generally, if market interest rates increase, the value of outstanding debt
securities declines (and vice versa). Entering into a futures contract for the
sale of securities has an effect similar to the actual sale of securities,
although sale of the futures contract might be accomplished more easily and
quickly. For example, if a fund holds long-term U.S. Government securities and
it anticipates a rise in long-term interest rates, it could, in lieu of
disposing of its portfolio securities, enter into futures contracts for the sale
of similar long term securities. If rates increased and the value of the fund's
portfolio securities declined, the value of the fund's futures contracts would
increase, thereby protecting the fund by preventing net asset value from
declining as much as it otherwise would have. Similarly, entering into futures
contracts for the purchase of securities has an effect similar to the actual
purchase of the underlying securities, but permits the continued holding of
securities other than the underlying securities. For example, if the fund
expects long-term interest rates to decline, it might enter into futures
contracts for the purchase of long-term securities so that it could gain rapid
market exposure that may offset anticipated increases in the cost of securities
it intends to purchase while continuing to hold higher-yield short-term
securities or waiting for the long-term market to stabilize. A stock index
futures contract may be used to hedge an underlying fund's portfolio with regard
to market risk as distinguished from risk relating to a specific security. A
stock index futures contract does not require the physical delivery of
securities, but merely provides for profits and losses resulting from changes in
the market value of the contract to be credited or debited at the close of each
trading day to the respective accounts of the parties to the contract. On the
contract's expiration date, a final cash settlement occurs. Changes in the
market value of a particular stock index futures contract reflect changes in the
specified index of equity securities on which the future is based.
There are several risks in connection with the use of futures contracts. In the
event of an imperfect correlation between the futures contract and the portfolio
position which is intended to be protected, the desired protection may not be
obtained and the fund may be exposed to risk of loss. Further, unanticipated
changes in interest rates or stock price movements may result in a poorer
overall performance for the fund than if it had not entered into any futures on
debt securities or stock index.
In addition, the market prices of futures contracts may be effected by certain
factors. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the securities
and futures markets. Second, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may also cause temporary price distortions.
Finally, positions in futures contracts may be closed out only on an exchange or
board of trade which provides a secondary market for such futures. There is no
assurance that a liquid secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time.
Options On Futures Contracts. An underlying fund also may purchase and sell
listed put and call options on futures contracts. An option on a futures
contract gives the purchaser the right, in return for the premium paid, to
assume a position in a future contract (a long position if the option is a call
and a short position if the option is a put), at a specified exercise price at
any time during the option period. When an option on a futures contract is
exercised, delivery of the futures position is accompanied by cash representing
the difference between the current market price of the futures contract and the
exercise price of the option. The fund may purchase put options on futures
contracts in lieu of, and for the same purpose as a sale of a futures contract.
It also may purchase such put options in order to hedge a long position in the
underlying futures contract in the same manner as it purchases "protective puts"
on securities.
As with options on securities, the holder of an option may terminate his
position by selling an option of the same series. There is no guarantee that
such closing transactions can be effected. The fund is required to deposit
initial margin and maintenance margin with respect to put and call options on
futures contracts written by it pursuant to brokers' requirements similar to
those applicable to futures contracts described above and, in addition, net
option premiums received will be included as initial margin deposits.
In addition to the risks which apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
this market will develop. Compared to the use of futures contracts, the purchase
of options on futures contracts involves less potential risk to the fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the fund when the use of a futures
contract would not, such as when there is no movement in the prices of the
underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
Risk Factors Regarding Options, Futures And Options On Futures. Perfect
correlation between an underlying fund's derivative positions and portfolio
positions will be impossible to achieve. Accordingly, successful use by a fund
of options on stock or bond indices, financial and currency futures contracts
and related options, and currency options will be subject to the investment
manager's ability to predict correctly movements in the direction of the
securities and currency markets generally or of a particular segment. If a
fund's investment manager is not successful in employing such instruments in
managing a fund's investments, the fund's performance will be worse than if it
did not employ such strategies. In addition, a fund will pay commissions and
other costs in connection with such investments, which may increase the fund's
expenses and reduce the return. In writing options on futures, a fund's loss is
potentially unlimited and may exceed the amount of the premium received.
Positions in stock index options, stock and bond index futures contracts,
financial futures contracts, foreign currency futures contracts, related options
on futures and options on currencies may be closed out only on an exchange which
provides a secondary market. There can be no assurance that a liquid secondary
market will exist for any particular option, futures contract or option thereon
at any specific time. Thus, it may not be possible to close such an option or
futures position. This is particularly true when trading options on foreign
exchanges or the OTC market. The inability to close options or futures positions
could have an adverse impact on a fund.
When trading options on foreign exchanges or in the OTC market many of the
protections afforded to exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
Leverage Through Borrowing. An underlying fund may borrow to increase its
holdings of portfolio securities. Under the 1940 Act, the fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if disadvantageous from an investment standpoint. Leveraging
will exaggerate the effect of any increase or decrease in the value of portfolio
securities on the fund's net asset value, and money borrowed will be subject to
interest costs (which may include commitment fees and/or the cost of maintaining
minimum average balances) which may or may not exceed the interest and option
premiums received from the securities purchased with borrowed funds.
Warrants. An underlying fund may invest in warrants, which are options to
purchase equity securities at specific prices valid for a specific period of
time. The prices do not necessarily move parallel to the prices of the
underlying securities.
Warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. If a warrant is not exercised within the
specified time period, it will become worthless and the fund will lose the
purchase price and the right to purchase the underlying security.
Description Of Bond Ratings. Excerpts from Moody's Investors Service, Inc.
("Moody's") description of its four highest bond ratings:
Aaa-- judged to be the best quality. They carry the smallest degree of
investment risk;
Aa-- judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds;
A-- possess many favorable investment attributes and are to be considered
as "upper medium grade obligations";
Baa-- considered as medium grade obligations, i.e., they are neither
highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over
any great length of time; Ba--judged to have speculative elements,
their future cannot be considered as well assured;
B-- generally lack characteristics of the desirable investment;
Caa-- are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or
interest;
Ca-- speculative in a high degree; often in default;
C-- lowest rated class of bonds; regarded as having extremely poor
prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories. The
modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and 3 indicates a
ranking toward the lower end of the category.
Excerpts from Standard & Poor's Corporation ("S&P") description of its five
highest bond ratings:
AAA-- highest grade obligations. Capacity to pay interest and repay
principal is extremely strong;
AA-- also qualify as high grade obligations. A very strong capacity
to pay interest and repay principal and differs from AAA
issues only in a small degree;
A-- regarded as upper medium grade. They have a strong capacity to pay
interest and repay principal although it is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories;
BBB-- regarded as having an adequate capacity to pay interest and repay
principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.
This group is the lowest which qualifies for commercial bank
investment.
BB, B,
CCC, CC-- predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with terms of the
obligations; BB indicates the lowest degree of speculation and CC the
highest.
S&P applies indicators "+", no character, and "-" to its rating categories. The
indicators show relative standing within the major rating categories.
Investment Advisor
A separate Investment Advisory Agreement between New Century Portfolios and the
Advisor on behalf of each Portfolio of the Trust was initially approved (on
February 28, 1990) for a term of two years. On October 16, 1998, the Fund's
shareholders approved new investment advisory agreements with the Advisor to
replace the prior Advisory Agreements. The new agreements contain the same terms
and conditions as the prior Advisory Agreements, except for effective dates and
termination dates. Shareholders were asked to approve the new agreements because
the Advisor merged with Weston Advisors, Inc., an affiliated company, which
resulted in a change of control of the Advisor.
The Agreements continue in effect from year to year thereafter only if such
continuance is approved annually by either the Trust's Board of Trustees or by a
vote of a majority of the outstanding voting securities of the respective
Portfolio of the Trust and in either case by the vote of a majority of the
Trustees who are not parties to the Agreement or interested persons (as such
term is defined in the Investment Company Act of 1940, as amended) of any party
to the Agreement, voting in person at a meeting called for the purpose of voting
on such approval. The Agreement may be terminated at any time without penalty by
the Trust's Board of Trustees or by a majority vote of the outstanding shares of
the Trust, or by the Advisor, in each instance on not less than 60 days written
notice and shall automatically terminate in the event of its assignment. For the
fiscal years ended October 31, 1998, 1997 and 1996, the Advisor received fees
related to its management of the New Century Capital Portfolio and the New
Century Balanced Portfolio of $875,355 and $533,425; $703,591 and $455,053; and
$571,221 and $355,005, respectively. For the fiscal years ended October 31,
1998, 1997 and 1996, the Advisor received fees related to administrative
services provided to the New Century Capital Portfolio and the New Century
Balanced Portfolio of $68,180 and $41,385; $58,965 and $27,593; and $72,631 and
$47,840, respectively.
The officers and trustees of the Advisor (and their positions held with New
Century Portfolios) are as follows: I. Richard Horowitz, President; Douglas A.
Biggar, Executive Vice President and Clerk (Chairman and a Trustee of the
Trust); Joseph Robbat, Jr., Chief Executive Officer and Treasurer (a Trustee of
the Trust); Wayne M. Grzecki (President of the Trust); Ronald A. Sugameli (Vice
President of the Trust); and Robert I. Stock. Together, these individuals may be
deemed to control the Advisor.
Distributor
Pursuant to separate Distribution Agreements between New Century Portfolios and
Weston Securities Corp. (the "Distributor") on behalf of each Portfolio, the
expenses of printing all sales literature, including prospectuses, are to be
borne by the Distributor. I. Richard Horowitz, Douglas A. Biggar and Joseph
Robbat, Jr., officers of the Advisor, are also registered representatives of the
Distributor. Therefore, the Distributor is an affiliated person of New Century
Portfolios. The Distributor's offices are at 20 William Street, Suite 330,
Wellesley, Massachusetts 02481-4102. On July 28, 1988, the Distribution
Agreement and the Distribution (12b-1) Plan for each Portfolio was approved by
the Board of Trustees, including a majority of the Trustees who are not
"interested persons" of New Century Portfolios as defined in the 1940 Act (and
each of whom has no direct or indirect financial interest in the Plans or any
agreement related thereto, referred to herein as the "l2b-1 Trustees"). The
Plans may be terminated at any time by the vote of the Board or the l2b-1
Trustees, or by the vote of a majority of the outstanding voting securities of
the Portfolio. While each Plan continues in effect, the selection of the l2b-1
Trustees is committed to the discretion of such persons then in office.
Although the Plans may be amended by the Board of Trustees, any change in the
Plans which would materially increase the amounts authorized to be paid under
the Plans must be approved by shareholders. The total amounts paid by the
Portfolios under the foregoing arrangements may not exceed the maximum limit
specified in the Plan, and the amounts and purposes of expenditures under the
Plans must be reported to the l2b-1 Trustees quarterly.
The Distribution Agreement for each Portfolio provides that it will continue in
effect from year to year only so long as such continuance is specifically
approved at least annually by either the Trust's Board of Trustees or by a vote
of a majority of the outstanding voting securities of the respective Portfolio
of the Trust and in either case by the vote of a majority of the trustees who
are 12b-1 Trustees, voting in person at a meeting called for the purpose of
voting on such approval. The agreements will terminate automatically in the
event of their assignment. Under the Distribution Agreements, the Distributor is
the exclusive agent for the Portfolios' shares, and has the right to select
selling dealers to offer the shares to investors. For the fiscal year ended
October 31, 1998, the Distributor received the following fees from the Trust for
costs incurred in connection with the distribution of the shares of each
portfolio: the New Century Capital Portfolio, $151,900; the New Century Balanced
Portfolio, $87,095. The principal expenses incurred during the stated period
were for administration staff and advertising.
Allocation Of Portfolio Brokerage
The Advisor, in effecting the purchases and sales of portfolio securities for
the account of the Trust, will seek execution of trades either (i) at the most
favorable and competitive rate of commission charged by any broker, dealer or
member of an exchange, or (ii) at a higher rate of commission charges if
reasonable in relation to brokerage and research services provided to the Trust
or the Advisor by such member, broker, or dealer. Such services may include, but
are not limited to, any one or more of the following: Information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments. The Advisor may use research
and services provided to it by brokers and dealers in servicing all its clients,
however, not all such services will be used by the Advisor in connection with
the Trust. Fund orders may be placed with an affiliated broker-dealer, and in
such case, the Distributor will receive brokerage commissions. However,
portfolio orders will be placed with the Distributor only where the price being
charged and the services being provided compare favorably with those which would
be charged to the Trust by non-affiliated broker-dealers, and with those charged
by the Distributor to other unaffiliated customers, on transactions of a like
size and nature. Brokerage may also be allocated to dealers in consideration of
sales of Portfolio shares but only when execution and price are comparable to
that offered by other brokers. For the three fiscal years ending on October 31,
1998, 1997 and 1996, the aggregate amounts of brokerage commissions (including
markups on principal transactions) paid by the Trust were $0, $108,567 and
$134,718, respectively. The Distributor is an affiliated person of the Trust.
For the fiscal year ending October 31, 1998 the Distributor received sales
commissions and other compensation of $56,576 and $38,766 in connection with the
purchase of investment company shares by New Century Capital Portfolio and New
Century Balanced Portfolio, respectively. The Distributor has voluntarily agreed
to waive payments made by each Portfolio pursuant to the distribution plans in
amounts equal to the sales commissions and other compensation.
The Advisor is responsible for making the Trust's portfolio decisions subject to
instructions described in the prospectus. The Board of Trustees may however
impose limitations on the allocation of portfolio brokerage.
New Century Portfolios expects that most purchases and sales of portfolio
securities, including money market securities, will be principal transactions.
Such securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. There will usually be no
brokerage commissions paid by New Century Portfolios for such purchases.
Purchases from the underwriters will include the underwriter commission or
concession, and purchases from dealers serving as market makers will include the
spread between the bid and asked price.
Transfer Agent
First Data Investor Services Inc. serves as transfer agent, dividend disbursing
agent and redemption agent for redemptions pursuant to a Transfer and Dividend
Disbursing Agency Agreement approved by the Board of Trustees of the Trust at a
meeting held for such purpose on February 28, 1990. The agreement is subject to
annual renewal by the Board of Trustees of the Trust.
The Transfer Agent provides all the necessary facilities, equipment and
personnel to perform the usual or ordinary services of Transfer and Dividend
Paying Agent, including: receiving and processing orders and payments for
purchases of shares, opening stockholder accounts, preparing annual stockholder
meeting lists, mailing proxy material, receiving and tabulating proxies, mailing
stockholder reports and prospectuses, withholding certain taxes on non-resident
alien accounts, disbursing income dividends and capital distributions, preparing
and filing U.S. Treasury Department Form 1099 (or equivalent) for all
stockholders, preparing and mailing confirmation forms to stockholders for all
purposes and redemption of the Trust's shares and all other confirmable
transactions in stockholders' accounts, recording reinvestment of dividends and
distributions of the Trust's shares and causing redemption of shares for and
disbursements of proceeds to withdrawal plan stockholders.
Purchase Of Shares
The shares of each Portfolio of the Trust are continuously offered by the
Distributor. Orders for the purchase of shares of a Portfolio of the Trust
received by the Transfer Agent prior to 4:00 p.m. Eastern time on any day the
New York Stock Exchange is open for trading will be confirmed at the net asset
value next determined (based upon valuation procedures described in the
prospectus) as of the close of the Transfer Agent's business day, normally 4:00
p.m. Eastern time. Orders received by the Transfer Agent after 4:00 p.m. will be
confirmed at the next day's price.
Tax-Sheltered Retirement Plans
Shares of each Portfolio of the Trust are available to all types of tax-deferred
retirement plans including custodial accounts described in Sections 401(k) and
403(b)(7) of the Internal Revenue Code. Qualified investors benefit from the
tax-free compounding of income dividends and capital gains distributions. You
can transfer an existing plan into the Trust or set up a new plan in the manner
described below.
Individual Retirement Accounts (IRA). Individuals, who are not active
participants (and, when a joint return is filed, who do not have a spouse who is
an active participant) in an employer maintained retirement plan are eligible to
contribute on a deductible basis to an IRA account. The IRA deduction is also
retained for individual taxpayers and married couples with adjusted gross
incomes not in excess of certain specified limits. All individuals may make non
deductible IRA contributions to a separate account to the extent that they are
not eligible for a deductible contribution. Income earned by an IRA account will
continue to be tax deferred. A special IRA program is available for corporate
employers under which the employers may establish IRA accounts for their
employees in lieu of establishing corporate retirement plans. Known as SEP-IRA's
(Simplified Employee Pension-IRA), they free the corporate employer of many of
the record keeping requirements of establishing and maintaining a corporate
retirement plan trust.
If you have received a lump sum distribution from another qualified retirement
plan, you may roll over all or part of that distribution into a New Century
Portfolios IRA. Your roll-over contribution is not subject to the limits on
annual IRA contributions. By acting within applicable time limits of the lump
sum distribution you can continue to defer Federal income taxes on your lump sum
contribution and on any income that is earned on that contribution.
KEOGH Plans for Self-Employed. If you are a self-employed individual, you may
establish a Self-Employed Retirement (KEOGH) Plan and contribute up to the
maximum amounts permitted for your plan under current tax laws. Under a Defined
Benefit KEOGH Plan, you may establish a program with a specific amount of
retirement income as your objective. The annual contributions needed to achieve
this goal are calculated actuarially and can sometimes exceed the tax-deductible
contributions allowed under a regular KEOGH Plan.
Tax-Sheltered Custodial Accounts. If you are an employee of a public school,
state college or university, or an employee of a non-profit organization exempt
from tax under Section 501(c)(3) of the Internal Revenue Code, you may be
eligible to make contributions into a custodial account (pursuant to section
493(b)(7) of the IRC) which invests in Trust shares. Such contributions, to the
extent that they do not exceed certain limits, are excludable from the gross
income of the employee for federal income tax purposes.
How to Establish Retirement Accounts. All the foregoing retirement plan options
require special applications or plan documents. Please call us to obtain
information regarding the establishing of retirement plan accounts. In the case
of IRA and KEOGH Plans, Bank of New York acts as the plan custodian and charges
nominal fees in connection with plan establishment and maintenance. These fees
are detailed in the plan documents. You may wish to consult with your attorney
or other tax advisor for specific advice prior to establishing a plan.
Systematic Withdrawal Plan
You can arrange to make systematic cash withdrawals from your account monthly,
quarterly or annually. Your account, initially, must be at least $10,000 in
order to establish this service, although the withdrawals may continue even
though your account subsequently drops below $10,000. Each payment must be for
an amount not less than $50.00. If the periodic amount you elect to withdraw is
more than the increase of any income or gains in your account, the withdrawals
can deplete the value of your account. If the withdrawals are to be sent to
someone who is not a registered owner of the shares, a signature guarantee is
required on your application for this service. New Century Portfolios bears the
cost of providing this plan at the present time. Please contact the Transfer
Agent to obtain information or an application.
Officers And Trustees Of New Century Portfolios
The members of the Board of Trustees of the Trust are fiduciaries for the
Portfolios' shareholders and are governed by the law of the Commonwealth of
Massachusetts in this regard. They establish policy for the operation of the
Portfolios, and appoint the Officers who conduct the daily business of the
Portfolios.
Position and Principal Occupation
Name and Address Age Office with Trust During the past Five Years
*Douglas A. Biggar 52 Chairman and Executive Vice President and
20 William Street Trustee Clerk, Weston Financial
Suite 330 Group, Inc.; Clerk and
Wellesley, MA 02481 Treasurer of Weston
Securities Corporation.
*Joseph Robbat, Jr. 48 Trustee Chief Executive Officer and
20 William St. Treasurer, Weston Financial
Suite 330 Group, Inc.
Wellesley, MA 02481
Stanley H. Cooper, Esq. 51 Trustee Attorney in private
One Ashford Lane practice
Andover, MA 01810
Roger Eastman, C.P.A. 68 Trustee Executive Vice Presidentand
32 Meetinghouse Square Chief Operating Officer,
Middleton, MA 01949 Danvers Savings Bank;
Formerly Partner, Arthur
Andersen & Co.
Michael A. Diorio, 53 Trustee Partner, Diorio, Hudson &
25 Birch St., Unit B-44 Pavento, P.C., C.P.A.
Milford, MA 01757
Wayne M. Grzecki 48 President Senior Counselor, Weston
20 William St. Financial Group, Inc.
Suite 330
Wellesley, MA 02481
Ronald A. Sugameli 48 Vice President Senior Counselor, Weston
20 William St. Financial Group, Inc.
Suite 330
Wellesley, MA 02481
Ellen M. Bruno 33 Treasurer Vice President, Weston
20 William St. and Secretary Financial Group, Inc.;
Suite 330 Consultant, United Asset
Wellesley, MA 02481 Management Corporation
Karl Steinbrecher 34 Assistant Assistant Portfolio Manager,
20 William St. Treasurer Weston Financial Group, Inc.
Suite 330
Wellesley, MA 02481
Clara Prokup 51 Assistant Comptroller, Weston
20 William St., Secretary Financial Group, Inc.
Suite 330
Wellesley, MA 02481
* Interested trustee as defined in the Investment Company Act of 1940
(the "1940 Act").
The officers conduct and supervise the daily business operations of the Trust,
while the trustees, in addition to functions set forth under "Advisor,"
"Administrator" and "Distributor," review such actions and decide on general
policy. Compensation to officers and trustees of New Century Portfolios who are
affiliated with the Administrator, the Advisor or the Distributor is paid by the
Administrator, the Investment Advisor or the Distributor, respectively, and not
by the Trust. The Trust pays each Trustee who is not affiliated with the
Administrator, Advisor or Distributor quarterly fees.
The following table shows aggregate compensation paid to each non-affiliated
Trustee by the Trust in the fiscal year ended October 31, 1998.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Annual Total
Position Compensation Retirement Benefits Upon Compensation
From Benefits Accrued Retirement
Registrant as Part of Trust
Expenses
<S> <C> <C> <C> <C>
Stanley H. Cooper $3,000 $0 $0 $3,000
Esquire -Trustee
Roger Eastman, $3,000 $0 $0 $3,000
C.P.A. - Trustee
Michael A. Diorio, $3,000 $0 $0 $3,000
C.P.A. - Trustee
</TABLE>
General Information
Beneficial Shares
New Century Portfolios was organized as a Maryland corporation on July 20, 1988.
It was reorganized as a Massachusetts business trust on March 20, 1990. Prior to
November 2, 1998, New Century Portfolios was named Weston Portfolios and New
Century Balanced Portfolio was designated as New Century I Portfolio.
It offers an unlimited number of transferable beneficial shares all at $.01 par
value. At the present time, there are two series of shares designated as the
"New Century Capital Portfolio" and the "New Century Balanced Portfolio." Each
share has equal dividend, voting, liquidation and redemption rights. There are
no conversion or pre-emptive rights. Shares, when issued, will be fully paid and
non assessable. Fractional shares have proportional voting rights. Shares of the
Portfolios do not have cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees can elect all of
the Trustees if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any person to the Board of Trustees.
The Portfolios' shareholders will vote together to elect Trustees and on other
matters affecting the entire Trust, but will vote separately on matters
affecting separate Portfolios.
Audits and Reports
The accounts of the Trust are audited each year by Briggs Bunting & Dougherty,
LLP, Philadelphia, PA, independent certified public accountants whose selection
must be approved annually by the Board of Trustees. Shareholders receive
semi-annual and annual reports of the Trust including the annual audited
financial statements and a list of securities owned.
Taxes
The Trust, and each Portfolio, intend to qualify as regulated investment
companies under the Internal Revenue Code of 1986 (the "Code"). Such
qualification removes from the Trust any liability for Federal income taxes upon
the portion of its income distributed to shareholders and makes Federal income
tax upon such distributed income generated by the Portfolios' investments the
sole responsibility of the shareholders. Continued qualification requires the
Trust to distribute to its shareholders each year substantially all of its
income and capital gains. The Code imposes a non deductible, 4% excise tax on
regulated investment companies that do not distribute to investors in each
calendar year, an amount equal to (i) 98% of its calendar year ordinary income,
(ii) 98% of its capital gain net income (the excess of short and long-term
capital gain over short and long-term capital loss) for the one-year period
ending each October 31, and (iii) 100% of any undistributed ordinary or capital
gain net income from the prior year. New Century Portfolios intends to declare
and pay dividends and capital gain distributions in a manner to avoid imposition
of the excise tax. The Trust also proposes to comply with other requirements,
such as (1) appropriate diversification of its portfolio of investments, and (2)
realization of 90% of annual gross income from dividends, interest, gains from
sales of securities, or other "qualifying income."
"The Trust" is a series trust. Each series of the Trust will be treated as a
separate trust for Federal tax purposes. Any net capital gains recognized by a
Series will be distributed to its investors without need to offset (for Federal
tax purposes) such gains against any net capital losses of another series.
Expenses
Except as indicated above, New Century Portfolios is responsible for the payment
of its expenses, including: (a) the fees payable to the Advisor, Administrator
and the Distributor; (b) the fees and expenses of Trustees who are not
affiliated with the Advisor or the Distributor; (c) the fees and certain
expenses of New Century Portfolios' Custodian and Transfer Agent; (d) the
charges and expenses of New Century Portfolios' legal counsel and independent
accountants; (e) brokers' commissions and any issue or transfer taxes chargeable
to a Portfolio in connection with its securities transactions; (f) all taxes and
corporate fees payable by New Century Portfolios to governmental agencies; (g)
the fees of any trade association of which New Century Portfolios is a member;
(h) the cost of stock certificates, if any, representing shares of the
Portfolio; (i) reimbursements of the organization expenses of New Century
Portfolios and the fees and expenses involved in registering and maintaining
registration of New Century Portfolios and its shares with the Securities and
Exchange Commission and registering to distribute its shares in and qualifying
its shares for sale under state securities laws, and the preparation and
printing of New Century Portfolios' registration statements and prospectuses for
such purposes; (j) allocable communications expenses with respect to investor
services and all expenses of shareholder and trustee meetings and of preparing,
printing and mailing prospectuses and reports to shareholders; (k) litigation
and indemnification expenses and other extraordinary expenses not incurred in
the ordinary course of New Century Portfolios' business; and (l) compensation
for employees of New Century Portfolios.
Custodian
The Trust has retained The Bank of New York, New York, NY, to act as Custodian
of the securities and cash of the Trust and its Portfolios.
Performance
From time to time a Portfolio may advertise its total return and yield. The
"total return" of the Portfolio refers to the average annual compounded rates of
return over 1, 5 and 10 year periods or for the life of the Portfolio (which
periods will be stated in the advertisement) that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment.
The "yield" of a Portfolio is computed by dividing the net investment income per
share earned during the period stated in the advertisement (using the average
number of shares entitled to receive dividends) by the maximum offering price
per share on the last day of the period. The calculation includes among expenses
of the Portfolio, for the purpose of determining net investment income, all
recurring charges for the period stated. The yield formula provides for
semi-annual compounding which assumes that net investment income is earned and
reinvested at a constant rate and annualized at the end of a six-month period.
Total return quotations used by the Portfolios are based on standardized methods
of computing performance mandated by Securities and Exchange Commission rules.
The average annual total return for each Portfolio for one-year, five-year and
since inception periods are set forth in the Prospectus.
As the following formula indicates, the average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital
appreciation/depreciation and dividends and distributions paid and reinvested)
for the stated period less any fees charged to all shareholder accounts and
annualizing the result. The calculation assumes that all dividends and
distributions are reinvested at the public offering price on the reinvestment
dates during the period. The quotation assumes the account was completely
redeemed at the end of each period and the deduction of all applicable charges
and fees. According to the Securities and Exchange Commission formula:
P(1 + T)n = ERV
Where
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year periods
at the end of the 1, 5 or 10 year
periods (or fractional portion thereof).
Comparisons and Advertisements
To help investors better evaluate how an investment in the Portfolios might
satisfy their investment objective, advertisements regarding the Portfolios may
discuss yield or total return for the Portfolios as reported by various
financial publications and/or compare yield or total return to yield or total
return as reported by other investments, indices, and averages. The following
publications, indices, and averages may be used:
Lehman Treasury Index;
Salomon Bros. Corporate Bond Index;
U.S. Treasury Bills;
Consumer Price Index;
S&P 500;
Dow Jones Industrial Average; and
Mutual Fund returns calculated by the CDA Technologies, Inc.
<PAGE>
INVESTMENT ADVISOR
Weston Financial Group, Inc.
20 William Street, Suite 330
Wellesley, MA 02481-4102
DISTRIBUTOR
Weston Securities Corporation
20 William Street,
Suite 330 Wellesley, MA 02481-4102
CUSTODIAN
The Bank of New York
90 Washington Street, 22nd Floor
New York, NY 10286-0001
TRANSFER AGENT
First Data Investor Services Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-7098
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
AUDITORS
Briggs Bunting & Dougherty, LLP
Two Logan Square, Suite 2121
Philadelphia, PA 19103-4901
<PAGE>
NEW CENTURY PORTFOLIOS
20 William Street, Suite 330
Wellesley, MA 02481-4102
(888) 639-0102
PART C
OTHER INFORMATION
Item 23. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are attached hereto, except as otherwise noted:
(a) (1) Registrant's Articles of Incorporation.
(Filed with registration on Form N-1A)*
(2) Articles of Amendment. (Filed with Pre-effective amendment No. 1)*
(3) Declaration of Trust. (Filed with Post-effective amendment No.3)*
(4) First Amendment to Declaration of Trust is electronically filed
herewith as EX-99.b1.
(b) (1) Corporate Bylaws. (Filed with registration on Form N-1A)*
(2) Trust Bylaws. (Filed with Post-effective amendment No. 3)*
(c) (1) Specimen copy of each security to be issued by the registrant.
(Filed with registration on Form N-1A)*
(2) Specimen copy of beneficial share certificates. (Filed with Post-
Effective Amendment No. 3)*
(d) (1) New Investment Advisory Agreements between the Registrant, on
behalf of each Portfolio, and Weston Financial Group, Inc. are
electronically filed herewith as EX-99.b5.
(2) Form of Investment Advisory Agreement between Weston
Financial Group, Inc. and the Registrant (Corporate
Form) for the New Century Capital Portfolio. (Filed
with registration on Form N-1A)*
(3) Form of Investment Advisory Agreement between Weston
Financial Group, Inc. and the Registrant (Corporate
Form) for the New Century Balanced Portfolio (formerly
New Century I Portfolio.) (Filed with registration
Form N-1A)*
(4) Form of Investment Advisory Agreement between Weston
Financial Group, Inc. and the Registrant (Trust Form)
Trust for New Century Capital Portfolio. (Filed with
Post-Effective Amendment No. 3)*
(5) Form of Investment Advisory Agreement between Weston
Financial Group, Inc. and the Registrant (Trust Form)
for New Century Balanced Portfolio (formerly New
Century I Portfolio.) (Filed with Post-Effective
Amendment No. 3)*
(e) (1) Form of principal underwriting agreement between Weston
Securities Corp. and the Registrant (Corporate Form) for the New
Century Capital Portfolio. (Filed with registration on Form N-1A)*
(2) Form of principal Underwriting Agreement between Weston Securities
Corporation and the Registrant (Corporate Form) for the New Century
Balanced Portfolio (formerly New Century I Portfolio.) (Filed with
registration on Form N-1A)*
(3) Form of principal Underwriting Agreement between Weston
Securities Corporation and the Registrant (Trust Form)
for the New Century Capital Portfolio. (Filed with
Post-Effective Amendment No. 3)*
(4) Form of principal Underwriting Agreement between Weston
Securities Corporation and the Registrant (Trust Form)
for the New Century Balanced Portfolio (formerly New
Century I Portfolio.) (Filed with Post-Effective
Amendment No. 3)*
(f) Not applicable, because there are no pension, bonus or other agreements
for the benefit of trustees and officers
(g) (1) Custody Agreement dated December 21, 1994 between Registrant and
The Bank of New York is electronically filed herewith as Exhibit
EX-99.b8.
(h) (1) Form of Administration Agreement between Weston
Financial Group, Inc. and the Registrant (Corporate
Form) for the New Century Capital Portfolio. (Filed
with Pre-Effective Amendment No. 2 to Form N-1A)*
(2) Form of Administration Agreement between Weston
Financial Group, Inc. and the Registrant (Corporate
Form) for the New Century Balanced Portfolio (formerly
New Century I Portfolio.) (Filed with Pre-Effective
Amendment No. 2 to Form N-1A)*
(3) Form of Administration Agreement between Weston
Financial Group, Inc. and the Registrant (Trust Form)
for the New Century Capital Portfolio. (Filed with
Post-Effective Amendment No. 3)*
(4) Form of Administration Agreement between Weston
Financial Group, Inc. and the Registrant (Trust Form)
for the New Century Balanced Portfolio (formerly New
Century I Portfolio.) (Filed with Post-Effective
Amendment No. 3)*
(5) Agreement and Plan of Reorganization. (Filed with
Post-Effective Amendment No. 3)*
(i) (1) Opinion and consent of counsel as to the legality of the
registrant's securities being registered. (Filed with Post-Effective
Amendment No. 12)*
(2) Reorganization opinion and consent of counsel. (Filed
with Post- Effective Amendment No. 3)*
(j) (1) The consent of Briggs Bunting & Dougherty, LLP Independent
Certified Public Accountants is electronically filed herewith as
EX-99.b11.
(2) The consent of Tait, Weller & Baker Independent
Certified Public Accountants (Filed with Post-Effective
Amendment No. 10)*
(k) Not applicable
(l) Letter from contributors of initial capital to the Registrant that
purchase was made for investment purposes without any present intention of
redeeming or selling. (Filed with Pre-effective Amendment No. 2 to Form
N-1A)*
(m) (1) Rule 12b-1 Plan of Distribution for the New Century
Capital Portfolio. (Filed with registration on Form
N-1A)*
(2) Rule 12b-1 Plan of Distribution for the New Century
Balanced Portfolio (formerly New Century I Portfolio).
(Filed with registration on Form N-1A)*
(3) Rule 12b-1 Plan of Distribution for the New Century Balanced
Portfolio (formerly New Century I Portfolio). (Filed with
Post-Effective Amendment No. 3)*
(4) Rule 12b-1 Plan of Distribution for the New Century Balanced
Portfolio (formerly New Century I Portfolio). (Filed with
Post-Effective Amendment No.
3)*
(n) Financial Data Schedules electronically filed herewith as EX-27.
(o) Not applicable.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE REGISTRANT.
None
Item 25. INDEMNIFICATION.
The company shall indemnify any person who was or is a trustee, officer or
employee of the Trust; provided however, that any such indemnification (unless
ordered by a court) shall be made by the company only as authorized in the
specific case upon a determination that indemnification of such persons is
proper in the circumstances. Such determination shall be made:
(i) by the Board of Trustees by a majority vote of a quorum which consists
of the trustees who are neither "interested persons" of the company as defined
in Section 2(a)(19) of the 1940 Act, nor parties to the proceedings, or,
(ii) if the required quorum is not obtainable or if a quorum of such
trustees so directs, by independent legal counsel in a written opinion. No
indemnification will be provided by the company to any trustee or officer of the
company for any liability to the company or shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of duty.
As permitted by Article 11.2 (a)(v) of the Declaration of Trust,
reasonable expenses incurred by a trustee who is a party to a proceeding may be
paid by the Trust in advance of the final disposition of the action, after
authorization in the manner described above and upon receipt by the trust of a
written undertaking by the trustee or officer to repay the amount if it is
ultimately determined that he is not entitled to be indemnified by the Trust.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
The principal business of Weston Financial Group, Inc. is to
provide investment counsel and advice to individual and
institutional investors.
Item 27. PRINCIPAL UNDERWRITERS.
(a) Weston Securities Corp., the only principal underwriter of the
Registrant, does not act as principal underwriter, depositor or investment
advisor to any other investment company.
(b) Herewith is the information required by the following table with
respect to each trustee, officer or partner of the only underwriter named
in answer to Item 21 of Part B:
Position and Position and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
I. Richard Horowitz President None
20 William St., Suite 330
Wellesley, MA 02481
Douglas A. Biggar Clerk and Chairman
20 William St., Suite 330 Treasurer and Trustee
Wellesley, MA 02481
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS.
Each account, book or other document required to be maintained by Section
31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to 31a-3) promulgated
thereunder is in the physical possession of Weston Financial Group, Inc., 20
William Street, Suite 330, Wellesley, Massachusetts 02481, First Data Investor
Services Inc., 3200 Horizon Drive, King of Prussia, Pennsylvania 19406-0903 or
The Bank of New York, 90 Washington Street, 22nd Floor, New York, New York
10286-0001.
Item 29. MANAGEMENT SERVICES.
All management services are covered in the management agreement between
the registrant and Weston Financial Group, Inc.
as discussed in Parts A and B.
Item 30. UNDERTAKINGS.
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Wellesley, and State of Massachusetts on
the 22nd day of February, 1999.
NEW CENTURY PORTFOLIOS
Registrant
By: /S/ WAYNE M. GRZECKI
Wayne M. Grzecki
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Trustee /S/ DOUGLAS A. BIGGAR February 22, 1999
Douglas A. Biggar
Trustee /S/ JOSEPH ROBBAT, JR. February 22, 1999
Joseph Robbat, Jr.
Trustee /S/ STANLEY H. COOPER February 22, 1999
Stanley H. Cooper
President /S/ WAYNE M. GRZECKI February 22, 1999
Wayne M. Grzecki
Trustee February __, 1999
Michael A. Diorio
Trustee /S/ ROGER EASTMAN February 22, 1999
Roger Eastman
<PAGE>
EXHIBIT INDEX
N-1A Exhibit No. Exhibit No.
Description
23(a)(4) EX-99.B1 First Amendment to Declaration of Trust
23(d)(1) EX-99.B5 New Investment Advisory Agreements
between the Registrant, on behalf of
each Portfolio, and Weston Financial
Group, Inc.
23(g)(1) EX-99.B8 Custody Agreement dated December 21,
1994 between Registrant and
The Bank of New York is
electronically filed herewith
as Exhibit
23(j) EX-99.B11 Consent of Independent Auditors
23(n) Financial Data Schedules
EX-27.1 * Century Capital Portfolio
EX-27.2 * New Century Balanced Portfolio
FIRST AMENDMENT TO
DECLARATION OF TRUST
OF
WESTON PORTFOLIOS
This First Amendment to the Declaration of Trust (Declaration) of Weston
Portfolios (the "Trust") is made effective this 30th day of October, 1998 by the
parties signatory hereto, as Trustee of the Trust.
WITNESSETH
WHEREAS, the Declaration was made on February 1, 1990 and the Trustees of
the Trust now desire to amend the Declaration and change the name of the Trust;
and
WHEREAS, Article XII, Section 12.6 of the Declaration provides that the
Trust may be amended by the Trustees at any time except for those provisions
which cannot be amended without Beneficial Shareholders' approval.
NOW, THEREFORE, the Trustees hereby declare that Article I be amended to
read as follows:
I. NAME AND PLACE OF BUSINESS
This Trust shall be known as New Century Portfolios (hereinafter
called the "Trust"), and the Trustees may act in that name, which
shall be deemed to refer to the Trustees in their capacity as
trustees hereunder.
The principal place of business of the Trust shall be at 20 William
Street, Wellesley, Massachusetts, or at such other place as shall be
fixed from time to time by the Trustees.
IN WITNESS WHEREOF, the under have executed this instrument this 30th day
of October, 1998.
/S/ Douglas A. Biggar
Douglas A. Biggar, Esq.
NEW CENTURY PORTFOLIOS
NEW CENTURY CAPITAL PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made this 30th day of November, 1998 by
and between New Century Portfolios, a Massachusetts business trust (the "Trust")
for the New Century Capital Portfolio (the "Fund") and Weston Financial Group,
Inc., a Massachusetts corporation (the "Advisor").
BACKGROUND
The Fund, a series of the Trust, is organized and operated as an open-end
diversified management investment company, registered under the Investment
Company Act of 1940 as amended (the "1940 Act"). The Trust desires to retain the
Advisor to render investment advisory services to the Fund, and the Advisor is
willing to render such services on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Trust hereby appoints the Advisor to act as investment advisor to
the Fund for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. Subject to the supervision of the Board of Trustees of the Trust, the
Advisor shall manage the investment operations of the Fund and the composition
of the Fund's portfolio, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objectives, policies and
restrictions as stated in and limited by the statements contained in the various
documents filed with the U.S. Securities and Exchange Commission (the
"Commission") as such documents may from time to time be amended and subject to
the following understandings:
(a) The Advisor shall provide supervision of the Fund's investments
and determine from time to time what investments or securities, including
futures contracts, will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets will be invested, hedged, or held uninvested as cash.
(b) The Advisor shall use its best judgment in the performance of its
duties under this Agreement.
(c) The Advisor, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust and Bylaws, and the Prospectus of the Fund and with the instructions and
directions of the Board of Trustees of the Trust, and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations.
(d) The Advisor shall determine the securities to be purchased or
sold by the Fund and will place orders pursuant to its determination with or
through such persons, brokers or dealers in conformity with the policy with
respect to brokerage as set forth in the Trust's Registration Statement and
Prospectus of the Fund or as the Board of Trustees may direct from time to time.
In providing the Fund with investment supervision, it is recognized that the
Advisor will give primary consideration to securing most favorable price and
efficient execution. Consistent with this policy, the Advisor may consider the
financial responsibility, research and investment information and other services
provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Advisor may be a
party. It is understood that neither the Fund nor the Advisor has adopted a
formula for allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Advisor have access to
supplemental investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the most favorable price and efficient execution. Therefore, the
Advisor is authorized to place orders for the purchase and sale of securities
for the Fund with such brokers, subject to review by the Trust's Board of
Trustees from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Advisor in connection with its services to other clients.
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Advisor, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be so sold or purchased in order
to obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Advisor in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(e) The Advisor shall maintain all books and records with respect to
the Fund's securities transactions required by subparagraphs (b)(5), (6) and
(11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render to the
Trust's Board of Trustees such periodic and special reports as the Board may
reasonably request.
(f) The Advisor shall provide the Fund's custodian and the Fund on
each business day with information relating to all transactions concerning the
Fund's assets.
(g) The investment management services provided by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. While information and recommendations
supplied to the Fund shall, in the Advisor's judgment, be appropriate under the
circumstances and in light of investment objectives and policies of the Fund,
they may be different from the information and recommendations supplied to other
investment companies and customers. The Fund shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and
any other services, but the Fund shall not be entitled to receive preferential
treatment as compared with the treatment given to any other investment company
or customer.
(h) The Advisor shall perform such other services as are reasonably
incidental to the foregoing duties.
3. The Fund has delivered to the Advisor copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Declaration of Trust of the Trust, and any amendments thereto
filed with the Secretary of the Commonwealth of Massachusetts (herein called the
"Declaration of Trust");
(b) Bylaws of the Fund (such Bylaws, as in effect on the date hereof
and as amended from time to time, are herein called the "Bylaws");
(c) Certified resolutions of the Board of Trustees of the Trust
authorizing the appointment of the Advisor and approving the form of this
Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the "Registration Statement"), as filed with
the Commission relating to the Fund and shares of beneficial interest in the
Fund and all amendments thereto;
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission and all amendments thereto; and
(f) Prospectus of the Fund (such Prospectus, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
(g) Any other documents filed with the Commission. The Advisor shall
have no responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act or the Securities Act of 1933
except for information supplied by the Advisor for inclusion therein. On behalf
of the Fund the Trust agrees to indemnify the Advisor to the full extent
permitted by the Trust's governing instruments.
4. The Advisor shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Trust to serve
in the capacities in which they are elected. Services to be furnished by the
Advisor under this Agreement may be furnished through the medium of any of such
directors, officers or employees.
5. The Advisor agrees that no officer or director of the Advisor, or of
any affiliate of the Advisor, will deal for or on behalf of the Fund with
himself as principal or agent, or with any corporation, partnership or other
person in which he may have a financial interest, except that this shall not
prohibit:
(a) Officers and directors of the Advisor or of any affiliate of the
Advisor, from having a financial interest in the Fund, in the Advisor or in any
affiliate of the Advisor.
(b) Officers and directors of the Advisor, or of any affiliate of the
Advisor, from providing services to the Fund of a type usually and customarily
provided to an investment company, pursuant to a written agreement approved by
the Board of Trustees of the Fund, including a majority of the disinterested
trustees of the Fund (as defined in the 1940 Act).
(c) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or dealer, one or more
of whose partners, officers or directors is an officer or a director of the
Advisor, provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
6. If any occasion should arise in which the Advisor or any of its
officers or directors advises persons concerning the shares of the Fund, the
Advisor or such officer or director will act solely on its, her or his own
behalf and not in any way on behalf of the Fund.
7. The Advisor agrees that, except as herein otherwise expressly provided,
neither it nor any of its officers or directors shall at any time during the
period of this Agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the purchase or
sale of securities (except securities issued by the Fund) or other assets by or
for the Fund.
8. The Advisor shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2 hereof. The Advisor agrees that all
records which it maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any of such records upon the Fund's request. The
Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 of
the Commission under the 1940 Act any such records as are required to be
maintained by the Advisor pursuant to paragraph 2 hereof.
9. During the term of this Agreement, the Advisor will pay (i) the
salaries and expenses of all its personnel, and (ii) all expenses incurred by it
in the ordinary course of performing its duties hereunder, but not expenses
assumed by the Administrator of the Fund or the Fund pursuant to the
Administration Agreement. All costs and expenses not expressly assumed by the
Advisor under this Agreement shall be paid by the Administrator or the Fund,
including but not limited to: (i) interest and taxes, including but not limited
to all issue or transfer taxes chargeable to the Fund in connection with its
securities transactions; (ii) brokerage commissions; (iii) insurance premiums;
(iv) compensation and expenses of the Board of Trustees of the Fund; (v) legal
and audit expenses; (vi) fees and expenses of the Fund's Administrator,
custodian, distributor, transfer agent and accounting services agents; (vii)
expenses incident to the issuance of shares, including issuance on the payment
of, or reinvestment of, dividends; (viii) fees and expenses incident to the
registration under Federal or state securities laws of the Fund or its shares;
(ix) expenses of preparing, printing and mailing reports and notices and proxy
material to shareholders of the Fund; (x) all other expenses incidental to
holding meetings of the Trust's trustees and the Fund's shareholders and all
allocable communications expenses with respect to investor services and to
preparing, printing, and mailing prospectuses and reports to shareholders in the
amount necessary for distribution to the shareholders; (xi) dues or assessments
of or contributions to any trade association of which the Fund is a member;
(xii) such nonrecurring expenses as may arise, including litigation affecting
the Fund and the legal obligations which the Trust may have to indemnify its
officers and trustees with respect thereto; (xiii) all expenses which the Trust
agrees to bear in any distribution agreement or in any plan adopted by the Trust
on behalf of the Fund pursuant to Rule 12b-1 under the Act; and (xiv) all
corporate fees payable by the Fund to federal, state or other governmental
agencies.
10. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Advisor as full compensation therefor a fee
at an annualized rate of 1% of the Fund's average daily net assets for the first
$100 million in assets and .75% of the assets exceeding that amount. This fee
will be computed daily as of the close of business and will be paid to the
Advisor monthly within ten (10) business days after the last day of each month
and such advisory fee shall be adjusted, if necessary, at the time of the
payment due in the last month in the fiscal year of the Fund. The Advisory Fee
shall be prorated for any fraction of a month at the commencement or termination
of this Agreement.
11. In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Advisor and the Fund's administrator, but excluding
interest, taxes, brokerage commissions, distribution fees, amortization of
organization expenses and litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the limit set by applicable regulation of state securities
commissions, if any, the compensation due to the Advisor hereunder will be
reduced by twenty percent (20%) of the amount of such excess. If for any month
such expenses exceed such limitation after giving effect to the above reduction
of the fees payable to the Advisor and the Fund's administrator, the payment to
the Advisor for that month will be reduced or postponed so that at no time will
there be any accrued but unpaid liability under this expense limitation. Any
such reductions or payments are subject to readjustment during the year, and the
Advisor's obligation hereunder will be limited to the amount of its fee paid or
accrued with respect to such fiscal year.
12. The Advisor shall give the Fund the benefit of its best judgment and
effort in rendering service hereunder, but the Advisor shall not be liable for
any loss sustained by reason of the purchase, sale or retention of any
securities or hedging instrument, whether or not such purchase, sale or
retention shall have been based upon its own investigation or upon investigation
and research made by any other individual, firm or corporation. The Advisor
shall not be liable for any error of judgment or mistake of law for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act) or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any person
employed by the Advisor, who may be or become an employee of and paid by any
other entity affiliated with the Fund, such as the administrator, distributor,
or custodian to the Fund, shall be deemed, when acting within the scope of his
employment by such other affiliated entity, to be acting in such employment
solely for such other affiliated entity and not as the Advisor's employee or
agent.
13. This Agreement shall continue in effect for a period of more than two
(2) years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Board of Trustees of the Fund
or by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Advisor at any time, without the payment of any
penalty, on not more than sixty (60) days' nor less than thirty (30) days,
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act).
14. Nothing in this Agreement shall limit or restrict the right of any of
the Advisor's directors, officers, or employees who may also be a trustee,
officer or employee of the Fund to engage in any other business or to devote his
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the Advisor's
right to engage in any other business or to render services of any kind to any
other corporation, firm, individual or association. Nothing in this Agreement
shall prevent the Advisor or any affiliated person (as defined in the 1940 Act)
of the Advisor from acting as investment advisor and/or principal underwriter
for any other person, firm or corporation and shall not in any way limit or
restrict the Advisor or any such affiliated person from buying, selling, or
trading any securities or hedging instruments for its or their own accounts or
for the account of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of it obligations
to the Fund under the Agreement.
15. Neither this Agreement nor any transaction made pursuant hereto shall
be invalidated or in any way affected by the fact that trustees, officers,
agents and/or shareholders of the Fund are or may be interested in the Advisor,
or any successor or assignee thereof, as directors, officers, shareholders or
otherwise; that directors, officers, shareholders or agents of the Advisor are
or may be interested in the Fund as trustees, officers, shareholders or
otherwise; or that the Advisor or any successor or assignee, is or may be
interested in the Fund as shareholders or otherwise; provided, however, that
neither the Advisor nor any officer or director of the Advisor or of the Trust
shall sell to or buy from the Fund any property or security other than a
security issued by the Fund, except in accordance with an applicable order or
exemptive rule of the Commission.
16. Except as otherwise provided herein or authorized by the Board of
Trustees of the Trust from time to time, the Advisor shall for all purposes
herein be deemed to be an independent contractor and, except as expressly
provided or authorized in this Agreement, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. The
Fund and the Advisor are not partners or joint ventures with each other and
nothing herein shall be construed so as to make them such partners or joint
ventures or impose any liability as such on either of them.
17. During the term of this Agreement, the Trust agrees to furnish the
Advisor at its principal office with all prospectuses, proxy statements, reports
to stockholders, sales literature, or other material prepared for distribution
to stockholders of the Fund or the public, which refer to the Advisor in any
way, prior to use thereof and not to use such material if the Advisor reasonably
objects in writing within five (5) business days (or such other time as may be
mutually agreed) after receipt thereof. In the event of termination of this
Agreement, the Trust will continue to furnish to the Advisor copies of any of
the above-mentioned materials which refer in any way to the Advisor. The Trust
shall furnish or otherwise make available to the Advisor such other information
relating to the business affairs of the Trust or of the Fund as the Advisor at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder. The Trust agrees that, in the event that the Advisor
ceases to be the Fund's investment advisor for any reason, the Fund will (unless
the Advisor otherwise agrees in writing) promptly take all necessary steps to
propose to the shareholders at the next regular meeting that the Fund change to
a name not including the word "Weston." The Trust agrees that the word "Weston"
in its name is derived from the name of the Advisor and is the property of the
Advisor for copyright and all other purposes and that therefore such word may be
freely used by the Advisor as to other investment activities or other investment
products.
18. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the 1940 Act.
19. This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act.
20. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
21. Compensation to be paid to the Advisor hereunder shall be separate and
distinct from organizational expenses, if any, to be reimbursed to the Advisor.
22. Limitation of Liability. The Declaration of Trust dated February 1,
1990, as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name New Century Portfolios
means the Trustees from time to time serving (as Trustees but not personally)
under Declaration of Trust. It is expressly acknowledged and agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Trust, personally,
but shall bind only the trust property of the Trust, as provided in its
Declaration of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by the President of the
Trust, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Declaration
of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
NEW CENTURY PORTFOLIOS
By: Wayne Grzecki
President
[Corporate Seal] Attest: Ellen M. Bruno
Secretary
WESTON FINANCIAL GROUP, INC.
By: Iven Richard Horowitz
President
[Corporate Seal] Attest: Douglas A. Biggar
Secretary
NEW CENTURY PORTFOLIOS
NEW CENTURY BALANCED PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT made this 30th day of November, 1998 by
and between New Century Portfolios, a Massachusetts business trust (the "Trust")
for the New Century Balanced Portfolio (the "Fund") and Weston Financial Group,
Inc., a Massachusetts corporation (the "Advisor").
BACKGROUND
The Fund, a series of the Trust, is organized and operated as an open-end
diversified management investment company, registered under the Investment
Company Act of 1940 as amended (the "1940 Act"). The Trust desires to retain the
Advisor to render investment advisory services to the Fund, and the Advisor is
willing to render such services on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. The Trust hereby appoints the Advisor to act as investment advisor to
the Fund for the period and on the terms set forth in this Agreement. The
Advisor accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. Subject to the supervision of the Board of Trustees of the Trust, the
Advisor shall manage the investment operations of the Fund and the composition
of the Fund's portfolio, including the purchase, retention and disposition
thereof, in accordance with the Fund's investment objectives, policies and
restrictions as stated in and limited by the statements contained in the various
documents filed with the U.S. Securities and Exchange Commission (the
"Commission") as such documents may from time to time be amended and subject to
the following understandings:
(a) The Advisor shall provide supervision of the Fund's investments
and determine from time to time what investments or securities, including
futures contracts, will be purchased, retained, sold or loaned by the Fund, and
what portion of the assets will be invested, hedged, or held uninvested as cash.
(b) The Advisor shall use its best judgment in the performance of
its duties under this Agreement.
(c) The Advisor, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Trust's Declaration of
Trust and Bylaws, and the Prospectus of the Fund and with the instructions and
directions of the Board of Trustees of the Trust, and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal and state
laws and regulations.
(d) The Advisor shall determine the securities to be purchased or
sold by the Fund and will place orders pursuant to its determination with or
through such persons, brokers or dealers in conformity with the policy with
respect to brokerage as set forth in the Trust's Registration Statement and
Prospectus of the Fund or as the Board of Trustees may direct from time to time.
In providing the Fund with investment supervision, it is recognized that the
Advisor will give primary consideration to securing most favorable price and
efficient execution. Consistent with this policy, the Advisor may consider the
financial responsibility, research and investment information and other services
provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Advisor may be a
party. It is understood that neither the Fund nor the Advisor has adopted a
formula for allocation of the Fund's investment transaction business. It is also
understood that it is desirable for the Fund that the Advisor have access to
supplemental investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher cost to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the most favorable price and efficient execution. Therefore, the
Advisor is authorized to place orders for the purchase and sale of securities
for the Fund with such brokers, subject to review by the Trust's Board of
Trustees from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Advisor in connection with its services to other clients.
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Advisor, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be so sold or purchased in order
to obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Advisor in
the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
(e) The Advisor shall maintain all books and records with respect to
the Fund's securities transactions required by subparagraphs (b)(5), (6) and
(11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render to the
Trust's Board of Trustees such periodic and special reports as the Board may
reasonably request.
(f) The Advisor shall provide the Fund's custodian and the Fund on
each business day with information relating to all transactions concerning the
Fund's assets.
(g) The investment management services provided by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. While information and recommendations
supplied to the Fund shall, in the Advisor's judgment, be appropriate under the
circumstances and in light of investment objectives and policies of the Fund,
they may be different from the information and recommendations supplied to other
investment companies and customers. The Fund shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and
any other services, but the Fund shall not be entitled to receive preferential
treatment as compared with the treatment given to any other investment company
or customer.
(h) The Advisor shall perform such other services as are reasonably
incidental to the foregoing duties.
3. The Fund has delivered to the Advisor copies of each of the following
documents and will deliver to it all future amendments and supplements, if any:
(a) Declaration of Trust of the Trust, and any amendments thereto
filed with the Secretary of the Commonwealth of Massachusetts (herein called the
"Declaration of Trust");
(b) Bylaws of the Fund (such Bylaws, as in effect on the date hereof
and as amended from time to time, are herein called the "Bylaws");
(c) Certified resolutions of the Board of Trustees of
the Trust authorizing the appointment of the Advisor and
approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act
of 1933, as amended, on Form N-1A (the "Registration Statement"), as filed with
the Commission relating to the Fund and shares of beneficial interest in the
Fund and all amendments thereto;
(e) Notification of Registration of the Trust under
the 1940 Act on Form N-8A as filed with the Commission and all
amendments thereto; and
(f) Prospectus of the Fund (such Prospectus, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
(g) Any other documents filed with the Commission. The Advisor shall
have no responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act or the Securities Act of 1933
except for information supplied by the Advisor for inclusion therein. On behalf
of the Fund the Trust agrees to indemnify the Advisor to the full extent
permitted by the Trust's governing instruments.
4. The Advisor shall authorize and permit any of its directors, officers
and employees who may be elected as trustees or officers of the Trust to serve
in the capacities in which they are elected. Services to be furnished by the
Advisor under this Agreement may be furnished through the medium of any of such
directors, officers or employees.
5. The Advisor agrees that no officer or director of the Advisor, or of
any affiliate of the Advisor, will deal for or on behalf of the Fund with
himself as principal or agent, or with any corporation, partnership or other
person in which he may have a financial interest, except that this shall not
prohibit:
(a) Officers and directors of the Advisor or of any affiliate of the
Advisor, from having a financial interest in the Fund, in the Advisor or in any
affiliate of the Advisor.
(b) Officers and directors of the Advisor, or of any affiliate of
the Advisor, from providing services to the Fund of a type usually and
customarily provided to an investment company, pursuant to a written agreement
approved by the Board of Trustees of the Fund, including a majority of the
disinterested trustees of the Fund (as defined in the 1940 Act).
(c) The purchase of securities for the Fund, or the sale of
securities owned by the Fund, through a security broker or dealer, one or more
of whose partners, officers or directors is an officer or a director of the
Advisor, provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
6. If any occasion should arise in which the Advisor or any of its
officers or directors advises persons concerning the shares of the Fund, the
Advisor or such officer or director will act solely on its, her or his own
behalf and not in any way on behalf of the Fund.
7. The Advisor agrees that, except as herein otherwise expressly provided,
neither it nor any of its officers or directors shall at any time during the
period of this Agreement make, accept or receive, directly or indirectly, any
fees, profits or emoluments of any character in connection with the purchase or
sale of securities (except securities issued by the Fund) or other assets by or
for the Fund.
8. The Advisor shall keep the Fund's books and records required to be
maintained by it pursuant to paragraph 2 hereof. The Advisor agrees that all
records which it maintains for the Fund are the property of the Fund and it will
surrender promptly to the Fund any of such records upon the Fund's request. The
Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 of
the Commission under the 1940 Act any such records as are required to be
maintained by the Advisor pursuant to paragraph 2 hereof.
9. During the term of this Agreement, the Advisor will pay (i) the
salaries and expenses of all its personnel, and (ii) all expenses incurred by it
in the ordinary course of performing its duties hereunder, but not expenses
assumed by the Administrator of the Fund or the Fund pursuant to the
Administration Agreement. All costs and expenses not expressly assumed by the
Advisor under this Agreement shall be paid by the Administrator or the Fund,
including but not limited to: (i) interest and taxes, including but not limited
to all issue or transfer taxes chargeable to the Fund in connection with its
securities transactions; (ii) brokerage commissions; (iii) insurance premiums;
(iv) compensation and expenses of the Board of Trustees of the Fund; (v) legal
and audit expenses; (vi) fees and expenses of the Fund's Administrator,
custodian, distributor, transfer agent and accounting services agents; (vii)
expenses incident to the issuance of shares, including issuance on the payment
of, or reinvestment of, dividends; (viii) fees and expenses incident to the
registration under Federal or state securities laws of the Fund or its shares;
(ix) expenses of preparing, printing and mailing reports and notices and proxy
material to shareholders of the Fund; (x) all other expenses incidental to
holding meetings of the Trust's trustees and the Fund's shareholders and all
allocable communications expenses with respect to investor services and to
preparing, printing, and mailing prospectuses and reports to shareholders in the
amount necessary for distribution to the shareholders; (xi) dues or assessments
of or contributions to any trade association of which the Fund is a member;
(xii) such nonrecurring expenses as may arise, including litigation affecting
the Fund and the legal obligations which the Trust may have to indemnify its
officers and trustees with respect thereto; (xiii) all expenses which the Trust
agrees to bear in any distribution agreement or in any plan adopted by the Trust
on behalf of the Fund pursuant to Rule 12b-1 under the Act; and (xiv) all
corporate fees payable by the Fund to federal, state or other governmental
agencies.
10. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Advisor as full compensation therefor a fee
at an annualized rate of 1% of the Fund's average daily net assets for the first
$100 million in assets and .75% of the assets exceeding that amount. This fee
will be computed daily as of the close of business and will be paid to the
Advisor monthly within ten (10) business days after the last day of each month
and such advisory fee shall be adjusted, if necessary, at the time of the
payment due in the last month in the fiscal year of the Fund. The Advisory Fee
shall be prorated for any fraction of a month at the commencement or termination
of this Agreement.
11. In the event the expenses of the Fund for any fiscal year (including
the fees payable to the Advisor and the Fund's administrator, but excluding
interest, taxes, brokerage commissions, distribution fees, amortization of
organization expenses and litigation and indemnification expenses and other
extraordinary expenses not incurred in the ordinary course of the Fund's
business) exceed the limit set by applicable regulation of state securities
commissions, if any, the compensation due to the Advisor hereunder will be
reduced by twenty percent (20%) of the amount of such excess. If for any month
such expenses exceed such limitation after giving effect to the above reduction
of the fees payable to the Advisor and the Fund's administrator, the payment to
the Advisor for that month will be reduced or postponed so that at no time will
there be any accrued but unpaid liability under this expense limitation. Any
such reductions or payments are subject to readjustment during the year, and the
Advisor's obligation hereunder will be limited to the amount of its fee paid or
accrued with respect to such fiscal year.
12. The Advisor shall give the Fund the benefit of its best judgment and
effort in rendering service hereunder, but the Advisor shall not be liable for
any loss sustained by reason of the purchase, sale or retention of any
securities or hedging instrument, whether or not such purchase, sale or
retention shall have been based upon its own investigation or upon investigation
and research made by any other individual, firm or corporation. The Advisor
shall not be liable for any error of judgment or mistake of law for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act) or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any person
employed by the Advisor, who may be or become an employee of and paid by any
other entity affiliated with the Fund, such as the administrator, distributor,
or custodian to the Fund, shall be deemed, when acting within the scope of his
employment by such other affiliated entity, to be acting in such employment
solely for such other affiliated entity and not as the Advisor's employee or
agent.
13. This Agreement shall continue in effect for a period of more than two
(2) years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940 Act;
provided, however, that this Agreement may be terminated by the Fund at any
time, without the payment of any penalty, by the Board of Trustees of the Fund
or by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund, or by the Advisor at any time, without the payment of any
penalty, on not more than sixty (60) days' nor less than thirty (30) days,
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act).
14. Nothing in this Agreement shall limit or restrict the right of any of
the Advisor's directors, officers, or employees who may also be a trustee,
officer or employee of the Fund to engage in any other business or to devote his
time and attention in part to the management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the Advisor's
right to engage in any other business or to render services of any kind to any
other corporation, firm, individual or association. Nothing in this Agreement
shall prevent the Advisor or any affiliated person (as defined in the 1940 Act)
of the Advisor from acting as investment advisor and/or principal underwriter
for any other person, firm or corporation and shall not in any way limit or
restrict the Advisor or any such affiliated person from buying, selling, or
trading any securities or hedging instruments for its or their own accounts or
for the account of others for whom it or they may be acting, provided, however,
that the Advisor expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of it obligations
to the Fund under the Agreement.
15. Neither this Agreement nor any transaction made pursuant hereto shall
be invalidated or in any way affected by the fact that trustees, officers,
agents and/or shareholders of the Fund are or may be interested in the Advisor,
or any successor or assignee thereof, as directors, officers, shareholders or
otherwise; that directors, officers, shareholders or agents of the Advisor are
or may be interested in the Fund as trustees, officers, shareholders or
otherwise; or that the Advisor or any successor or assignee, is or may be
interested in the Fund as shareholders or otherwise; provided, however, that
neither the Advisor nor any officer or director of the Advisor or of the Trust
shall sell to or buy from the Fund any property or security other than a
security issued by the Fund, except in accordance with an applicable order or
exemptive rule of the Commission.
16. Except as otherwise provided herein or authorized by the Board of
Trustees of the Trust from time to time, the Advisor shall for all purposes
herein be deemed to be an independent contractor and, except as expressly
provided or authorized in this Agreement, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. The
Fund and the Advisor are not partners or joint ventures with each other and
nothing herein shall be construed so as to make them such partners or joint
ventures or impose any liability as such on either of them.
17. During the term of this Agreement, the Trust agrees to furnish the
Advisor at its principal office with all prospectuses, proxy statements, reports
to stockholders, sales literature, or other material prepared for distribution
to stockholders of the Fund or the public, which refer to the Advisor in any
way, prior to use thereof and not to use such material if the Advisor reasonably
objects in writing within five (5) business days (or such other time as may be
mutually agreed) after receipt thereof. In the event of termination of this
Agreement, the Trust will continue to furnish to the Advisor copies of any of
the above-mentioned materials which refer in any way to the Advisor. The Trust
shall furnish or otherwise make available to the Advisor such other information
relating to the business affairs of the Trust or of the Fund as the Advisor at
any time, or from time to time, reasonably requests in order to discharge its
obligations hereunder. The Trust agrees that, in the event that the Advisor
ceases to be the Fund's investment advisor for any reason, the Fund will (unless
the Advisor otherwise agrees in writing) promptly take all necessary steps to
propose to the shareholders at the next regular meeting that the Fund change to
a name not including the word "Weston." The Trust agrees that the word "Weston"
in its name is derived from the name of the Advisor and is the property of the
Advisor for copyright and all other purposes and that therefore such word may be
freely used by the Advisor as to other investment activities or other investment
products.
18. This Agreement may be amended by mutual consent, but the consent of
the Fund must be obtained in conformity with the requirements of the 1940 Act.
19. This Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act.
20. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
21. Compensation to be paid to the Advisor hereunder shall be separate and
distinct from organizational expenses, if any, to be reimbursed to the Advisor.
22. Limitation of Liability. The Declaration of Trust dated February 1,
1990, as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name New Century Portfolios
means the Trustees from time to time serving (as Trustees but not personally)
under Declaration of Trust. It is expressly acknowledged and agreed that the
obligations of the Trust hereunder shall not be binding upon any of the
shareholders, Trustees, officers, employees or agents of the Trust, personally,
but shall bind only the trust property of the Trust, as provided in its
Declaration of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by the President of the
Trust, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust as provided in its Declaration
of Trust.
CUSTODY AGREEMENT
Agreement made as of this 21ST day of December, 1994, between WESTON
PORTFOLIO SERIES, a Massachusetts business trust organized and existing under
the laws of the Commonwealth of Massachusetts, having its principal office and
place of business at Wellesley Office Park, 20 William Street, Wellesley, MA
02181, (hereinafter called "Fund"), and THE BANK of NEW YORK, a New York
corporation authorized to do a banking business, having its principal office and
place of business at 48 Wall Street, New York, NY 10286 (hereinafter called the
"Custodian").
W I T N E S S E T H:
WHEREAS, the Fund represents that pursuant to the Custody Administration
and Agency Agreement between Fund/Plan Services, Inc. ("Fund/Plan") and the
Fund, Fund/Plan (a) has agreed to perform certain administrative functions which
may include the functions of administrator, transfer agent and accounting
services agent and (b) has been appointed by the Fund to act as its agent in
respect of certain transactions contemplated in this Agreement; and
WHEREAS, the Fund represents that (a) Fund/Plan has agreed to act as
Fund's agent in respect of certain transactions contemplated in this Agreement
and (b) the Bank is authorized and directed to rely upon and follow Certificates
and instructions given by Fund/Plan, the Fund's agent, in respect of
transactions contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Administrator" shall mean Fund/Plan Services, Inc. and
such successors or permitted assigns as may succeed and perform
its duties under the Administration Agreement.
2. "Administration Agreement" shall mean that certain separate agreement
entitled "Custody Administration and Agency Agreement" dated as of 1994 between
the Fund and the Fund/Plan Services, Inc.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
<PAGE>
exercise price, as specified therein, to purchase from the writer thereof
the specified underlying Securities.
5. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received by the Custodian and signed on behalf of
the Fund by any two officers, and the term Certificate shall also include
instructions communicated to the Custodian by the Administrator by Terminal
Link.
6. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
7. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of (a) any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII herein.
8. "Covered Call Option" shall mean an exchange traded option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying Securities
(excluding Futures Contracts) which are owned by the writer thereof and subject
to appropriate restrictions.
9. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Trustees specifically approving deposits therein by the
Custodian.
10. "Financial Futures Contract" shall mean the firm commitment to buy or
sell fixed income securities including, without limitation, U.S. Treasury Bills,
U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar certificates of deposit, during a specified month at an agreed
upon price.
11. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
12. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
13. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting
an appropriate entry in its books and records.
14. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority, commercial
paper, certificates of deposit and bankers, acceptances, repurchase agreements
with respect to the same and bank time deposits, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale.
15. "O.C.C." shall mean the options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
16. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant ` Secretary, any Assistant Clerk, any Assistant Treasurer, and any
other person or persons, including officers or employees of the Administrator,
whether or not any such other person is an officer of the Fund, duly authorized
by the Board of Trustees of the Fund to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time.
17. "Option" shall mean a Call Option, Covered Call Option, Stock Index
Option and/or a Put Option.
18. "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from an officer or from a person reasonably believed by the
Custodian to be an officer.
19. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
20. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
21. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without limitation, general
obligation bonds, revenue bonds, industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or assets.
22. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
23. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the Fund
and listed on Appendix B hereto as amended from time to time.
24. "Shares" shall mean the shares of beneficial interest of the Fund,
each of which is, in the case of a Fund having Series, allocated to a particular
Series.
25. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
26. "Stock Index Option" shall mean an exchange traded option entitling
the holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
27. "Terminal Link" shall mean an electronic data transmission link
between the Administrator on behalf of the Fund and the Custodian requiring in
connection with each use of the Terminal Link by or on behalf of the
Administrator on behalf of the Fund use of an authorization code provided by the
Custodian and at least two access codes established by the Administrator on
behalf of the Fund.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
the Securities and moneys at any time owned by the Fund during the period of
this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, the Fund will deliver or cause to be delivered to the Custodian
all Securities and all moneys owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate and apart. The
Custodian will not be responsible for any Securities and moneys not actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and moneys are
not finally collected. The Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which the same are
specifically allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities and deliveries and returns of Securities collateral. Prior
to a deposit of Securities specifically allocated to a Series in the Depository,
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities specifically allocated to
such Series eligible for deposit therein, and to utilize the Depository to the
extent possible with respect to such Securities in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Securities and moneys deposited
in either the Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian acts in a
fiduciary or representative capacity and will be specifically allocated on the
Custodian's books to the separate account for the applicable Series. Prior to
the Custodian's accepting, utilizing and acting with respect to Clearing Member
confirmations for options and transactions in Options for a Series as provided
in this Agreement, the Custodian shall have received a certified resolution of
the Fund's Board of Trustees, substantially in the form of Exhibit C hereto,
approving, authorizing and instructing the Custodian on a continuous and
on-going basis, until instructed to the contrary by a Certificate actually
received by the Custodian, to accept, utilize and act in accordance with such
confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all moneys received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be disbursed by
the Custodian only:
(a) _As hereinafter provided;
(b) _Pursuant to Certificates setting forth the name and address of
the person to whom the payment is to be made, the Series account from which
payment is to be made and the purpose for which payment is to be made; or
(c) _In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Administrator with confirmations and a summary, on a per Series
basis, of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance with
this Agreement during said day. Where Securities are transferred to the account
of the Fund for a Series, the Custodian shall also by book-entry or otherwise
identify as belonging to such Series a quantity of Securities in a fungible bulk
of Securities registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Administrator with a detailed statement, on a per Series basis, of the
Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-Entry System or the
Depository or their successor or successors, or their nominee or nominees. The
Fund agrees to furnish or cause to be furnished to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository any Securities which it may hold
hereunder and which may from time to time be registered in the name of the Fund.
The Custodian shall hold all such Securities specifically allocated to a Series
which are not held in the Book-Entry System or in the Depository in a separate
account in the name of such Series physically segregated at all times from those
of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or the Depository with respect to Securities
held hereunder and therein deposited, shall with respect to all Securities held
for the Fund hereunder in accordance with preceding paragraph 4:
(a) _Collect all income due or payable;
(b) _Present for payment and collect the amount payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian without the prior notification or consent of the Fund;
(c) _Present for payment and collect the amount payable
upon all Securities which mature;
(d) _Surrender Securities in temporary form for
definitive Securities;
(e) _Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) _Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) _Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any Securities held by the Custodian
hereunder for the Series specified in such Certificate may be exercised;
(b) _Deliver any Securities held by the Custodian hereunder for the
Series specified in such Certificate in exchange for other Securities or cash
issued or paid in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or the exercise of
any conversion privilege and receive and hold hereunder specifically allocated
to such Series any cash or other Securities received in exchange;
(c) _Deliver any Securities held by the Custodian hereunder for the
Series specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) _Make such transfers or exchanges of the assets of the Series
specified in such Certificate, and take such other steps as shall be stated in
such Certificate to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) _Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain possession of any instrument or certificate
representing any Futures Contract, any option, or any Futures Contract Option
until after it shall have determined, or shall have received a Certificate from
the Fund stating, that any such instruments or certificates are available. The
Fund shall deliver to the Custodian such a Certificate no later than the
business day preceding the availability of any such instrument or certificate.
Prior to such availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940, as amended, in connection with the purchase,
sale, settlement, closing out or writing of Futures Contracts, Options, or
Futures Contract Options by making payments or deliveries specified in
Certificates received by the Custodian in connection with any such purchase,
sale, writing, settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation reasonably
believed by the Custodian to be in the form customarily used by brokers,
dealers, or future commission merchants with respect to such Futures Contracts,
Options, or Futures Contract options, as the case may be, confirming that such
Security is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or any nominee of
the Custodian)' as custodian for the Fund, provided, however, that
notwithstanding the foregoing, payments to or deliveries from the Margin Account
and payments with respect to Securities to which a Margin Account relates, shall
be made in accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or certificate delivered to
the Custodian shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver or cause the Administrator to deliver to the Custodian (i)
with respect to each purchase of Securities which are not Money Market
Securities, a Certificate, and (ii) with respect to each purchase of Money
Market Securities, a Certificate or Oral Instructions, specifying with respect
to each such purchase: (a) the Series to which such securities are to be
specifically allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount purchased and
accrued interest, if any; (d) the date of purchase and settlement; (e) the
purchase price per unit; (f) the total amount payable upon such purchase; (g)
the name of the person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to whom payment is to be made. The Custodian shall, upon receipt of
Securities purchased by or for the Fund, pay to the broker specified in the
Certificate out of the moneys held for the account of such Series the total
amount payable upon such purchase, provided that the same conforms to the total
amount payable as set forth in such Certificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund, other than a sale
of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver or cause the Administrator to
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title of the
Security; (c) the number of shares or principal amount sold, and accrued
interest, if any; (d) the date of sale; (e) the sale price per unit; (f) the
total amount payable to the Fund upon such sale; (g) the name of the broker
through whom or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to whom the Securities
are to be delivered. The Custodian shall deliver the Securities specifically
allocated to such Series to the broker specified in the Certificate against
payment upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to each Option purchased: (a) the Series to which such
Option is specifically allocated; (b) the type of Option (put or call); (c) the
name of the issuer and the title and number of shares subject to such Option or,
in the case of a Stock Index Option, the stock index to which such Option
relates and the number of Stock Index Options purchased; (d) the expiration
date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the
total amount payable by the Fund in connection with such purchase; (h) the name
of the Clearing Member through whom such option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall pay, upon
receipt of a Clearing Member's statement confirming the purchase of such option
held by such Clearing Member for the account of the Custodian (or any duly
appointed and registered nominee of the Custodian) as custodian for the Fund,
out of moneys held for the account of the Series to which such option is to be
specifically allocated, the total amount payable upon such purchase to the
Clearing Member through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant to
paragraph 1 hereof, the Fund shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying with respect to each such sale: (a)
the Series to which such option was specifically allocated; (b) the type of
Option (put or call); (c) the name of the issuer and the title and number of
shares subject to such Option or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Stock Index Options sold;
(d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall consent to
the delivery of the Option sold by the Clearing Member which previously supplied
the confirmation described in preceding paragraph 1 of this Article with respect
to such option against payment to the Custodian of the total amount payable to
the Fund, provided that the same conforms to the total amount payable as set
forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to such Call Option: (a) the Series to which such Call Option was specifically
allocated; (b) the name of the issuer and the title and number of shares subject
to the Call Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount to be paid by
the Fund upon such exercise; and (g) the name of the Clearing Member through
whom such Call Option was exercised. The Custodian shall, upon receipt of the
Securities underlying the Call Option which was exercised, pay out of the moneys
held for the account of the Series to which such Call Option was specifically
allocated the total amount payable to the Clearing Member through whom the Call
Option was exercised, provided that the same conforms to the total amount
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to such Put Option: (a) the Series to which such Put Option was specifically
allocated; (b) the name of the issuer and the title and number of shares subject
to the Put Option; (c) the expiration date; (d) the date of exercise and
settlement; (e) the exercise price per share; (f) the total amount to be paid to
the Fund upon such exercise; and (g) the name of the Clearing Member through
whom such Put Option was exercised. The Custodian shall, upon receipt of the
amount payable upon the exercise of the Put Option, deliver or direct the
Depository to deliver the Securities specifically allocated to such Series,
provided the same conforms to the amount payable to the Fund as set forth in
such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series to which such Stock
Index Option was specifically allocated; (b) the type of Stock Index Option (put
or call); (c) the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the exercise price; (g)
the total amount to be received by the Fund in connection with such exercise;
and (h) the Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the Series for which such Covered
Call option was written; (b) the name of the issuer and the title and number of
shares for which the Covered Call Option was written and which underlie the
same; (c) the expiration date; (d) the exercise price; (e) the premium to be
received by the Fund; (f) the date such Covered Call Option was written; and (g)
the name of the Clearing Member through whom the premium is to be received. The
Custodian shall deliver or cause to be delivered, in exchange for receipt of the
premium specified in the Certificate with respect to such Covered Call Option,
such receipts as are required in accordance with the customs prevailing among
Clearing Members dealing in Covered Call Options and shall impose, or direct the
Depository to impose, upon the underlying Securities specified in the
Certificate specifically allocated to such Series such restrictions as may be
required by such receipts. Notwithstanding the foregoing, the Custodian has the
right, upon prior written notification to the Fund, at any time to refuse to
issue any receipts for Securities in the possession of the Custodian and not
deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate instructing
the Custodian to deliver, or to direct the Depository to deliver, the Securities
subject to such Covered Call Option and specifying: (a) the Series for which
such Covered Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the Clearing Member
to whom the underlying Securities are to be delivered; and (d) the total amount
payable to the Fund upon such delivery. Upon the return and/or cancellation of
any receipts delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the underlying Securities as
specified in the Certificate against payment of the amount to be received as set
forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian a Certificate specifying with
respect to such Put option: (a) the Series for which such Put Option was
written; (b) the name of the issuer and the title and number of shares for which
the Put Option is written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the date
such Put Option is written; (g) the name of the Clearing Member through whom the
premium is to be received and to whom a Put Option guarantee letter is to be
delivered; (h) the amount of cash, and/or the amount and kind of Securities, if
any, specifically allocated to such Series to be deposited in the Senior
Security Account for such Series; and (i) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be deposited
into the Collateral Account for such Series. The Custodian shall, after making
the deposits into the Collateral Account specified in the Certificate, issue a
Put Option guarantee letter substantially in the form utilized by the Custodian
on the date hereof, and deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put Option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Put Option was written; (b) the name of the issuer and
title and number of shares subject to the Put Option; (c) the Clearing Member
from whom the underlying Securities are to be received; (d) the total amount
payable by the Fund upon such delivery; (e) the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of cash and/or
the amount and kind of Securities, specifically allocated to such Series, if
any, to be withdrawn from the Senior Security Account. Upon the return and/or
cancellation of any Put Option guarantee letter or similar document issued by
the Custodian in connection with such Put Option, the Custodian shall pay out of
the moneys held for the .account of the Series to which such Put option was
specifically allocated the total amount payable to the Clearing Member specified
in the Certificate as set forth in such Certificate against delivery of such
Securities, and shall make the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall deliver
or cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which such Stock
Index Option was written; (b) whether such Stock Index Option is a put or a
call; (c) the number of options written; (d) the stock index to which such
option relates; (e) the expiration date; (f) the exercise price; (g) the
Clearing Member through whom such Option was written; (h) the premium to be
received by the Fund; (i) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; (j) the amount of cash and/or the
amount and kind of Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and (k) the amount of
cash and/or the amount and kind of Securities, if any, specifically allocated to
such Series to be deposited in a Margin Account, and the name in which such
account is to be or has been established. The Custodian shall, upon receipt of
the premium specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either (1) deliver
such receipts, if any, which the Custodian has specifically agreed to issue,
which are in accordance with the customs prevailing among Clearing Members in
Stock Index Options and make the deposits into the Collateral Account specified
in the Certificate, or (2) make the deposits into the Margin Account specified
in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which such Stock
Index Option was written; (b) such information as may be necessary to identify
the Stock Index Option being exercised; (c) the Clearing Member through whom
such Stock Index Option is being exercised; (d) the total amount payable upon
such exercise, and whether such amount is to be paid by or to the Fund; (e) the
amount of cash and/or amount and kind of Securities, if any, to be withdrawn
from the Margin Account; and (f) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account for such Series. Upon the return
and/or cancellation of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index option was specifically
allocated to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian a Certificate specifying with
respect to the Option being purchased: (a) that the transaction is a Closing
Purchase Transaction; (b) the Series for which the option was written; (c) the
name of the issuer and the title and number of shares subject to the Option, or,
in the case of a Stock Index Option, the stock index to which such Option
relates and the number of Options held; (d) the exercise price; (e) the premium
to be paid by the Fund; (f) the expiration date; (g) the type of Option (put or
call); (h) the date of such purchase; (i) the name of the Clearing Member to
whom the premium is to be paid; and (j) the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the Collateral Account, a
specified Margin Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or cancellation of any
receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to
the Option being liquidated through the Closing Purchase Transaction, the
Custodian shall remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 Article III herein, and
upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior Security Account as may be specified in a Certificate received
in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Futures Contract, (or with respect to any number
of identical Futures Contract(s)): (a) the series for which the Futures Contract
is being entered; (b) the category of Futures Contract (the name of the
underlying stock index or financial instrument); (c) the number of identical
Futures Contracts entered into; (d) the delivery or settlement date of the
Futures Contract(s); (e) the date the Futures Contract(s) was (were) entered
into and the maturity date; (f) whether the Fund is buying (going long) or
selling (going short) on such Futures Contract(s); (g) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in the Senior
Security Account for such Series; (h) the name of the broker, dealer, or futures
commission merchant through whom the Futures Contract was entered into; and (i)
the amount of fee or commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount is to be paid. The
Custodian shall make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement. The Custodian
shall make payment out of the moneys specifically allocated to such Series of
the fee or commission, if any, specified in the Certificate and deposit in the
Senior Security Account for such Series the amount of cash and/or the amount and
kind of Securities specified in said Certificate.
2. (a) _Any variation margin payment or similar payment required to be
made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) _Any variation margin payment or similar payment from a broker,
dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Fund until delivery or settlement is made on such Futures Contract, the
Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying: (a) the Futures Contract and the Series to which the
same relates; (b) with respect to a Stock Index Futures Contract, the total cash
settlement amount to be paid or received, and with respect to a Financial
Futures Contract, the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission merchant to or from whom
payment or delivery is to be made or received; and (d) the amount of cash and/or
Securities to be withdrawn from the Senior Security Account for such Series. The
Custodian shall make the payment or delivery specified in the Certificate, and
delete such Futures Contract from the statements delivered to the Fund pursuant
to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certificate specifying:
(a) the items of information required in a Certificate described in paragraph 1
of this Article, and (b) the Futures Contract being offset. The Custodian shall
make payment out of the money specifically allocated to such Series of the fee
or commission, if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein, and make such withdrawals from the Senior
Security Account for such Series as may be specified in such Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund,
the Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to such Futures Contract Option: (a) the
Series to which such Option is specifically allocated; (b) the type of Futures
Contract Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract underlying the
Futures Contract Option purchased; (d) the expiration date; (e) the exercise
price; (f) the dates of purchase and settlement; (g) the amount of premium to be
paid by the Fund upon such purchase; (h) the name of the broker or futures
commission merchant through whom such option was purchased; and (i) the name of
the broker, or futures commission merchant, to whom payment is to be made. The
Custodian shall pay out of the moneys specifically allocated to such Series, the
total amount to be paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that the same conforms to
the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the Fund
pursuant to paragraph 1 hereof, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to each such sale: (a) Series to which such Futures Contract Option was
specifically allocated; (b) the type of Future Contract Option (put or call);
(c) the type of Futures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Contract Option; (d) the
date of sale; (e) the sale price; (f) the date of settlement; (g) the total
amount payable to the Fund upon such sale; and (h) the name of the broker of
futures commission merchant through whom the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being closed against
payment to the Custodian of the total amount payable to the Fund, provided the
same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying: (a) the
Series to which such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option (put or call) being exercised; (c) the type
of Futures Contract underlying the Futures Contract Option; (d) the date of
exercise; (e) the name of the broker or futures commission merchant through whom
the Futures Contract Option is exercised; (f) the net total amount, if any,
payable by the Fund; (g) the amount, if any, to be received by the Fund; and (h)
the amount of cash and/or the amount and kind of Securities to be deposited in
the Senior Security Account for such Series. The Custodian shall make, out of
the moneys and Securities specifically allocated to such Series, the payments,
if any, and the deposits, if any, into the Senior Security Account as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the Series for
which such Futures Contract Option was written; (b) the type of Futures Contract
Option (put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract underlying the
Futures Contract Option; (d) the expiration date; (e) the exercise price; (f)
the premium to be received by the Fund; (g) the name of the broker or futures
commission merchant through whom the premium is to be received; and (h) the
amount of cash and/or the amount and kind of Securities, if any, to be deposited
in the Senior Security Account for such Series. The Custodian shall, upon
receipt of the premium specified in the Certificate, make out of the moneys and
Securities specifically allocated to such Series the deposits into the Senior
Security Account, if any, as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract option written by the Fund which is a call
is exercised, the Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying the Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount of
cash and/or the amount and kind of Securities to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon its receipt of the
net total amount payable to the Fund, if any, specified in such Certificate make
the payments, if any, and the deposits, if any, into the Senior Security Account
as specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by ` the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall deliver or cause the Administrator
to deliver to the Custodian a Certificate specifying: (a) the Series to which
such Option was specifically allocated; (b) the particular Futures Contract
Option exercised; (c) the type of Futures Contract underlying such Futures
Contract Option; (d) the name of the broker or futures commission merchant
through whom such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall, upon its receipt
of the net total amount payable to the Fund, if any, specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to a
previously written Futures Contract Option described in this Article in order to
liquidate its position as a writer of such Futures Contract Option, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to the Futures Contract Option being
purchased: (a) the Series to which such Option is specifically allocated; (b)
that the transaction is a closing transaction; (c) the type of Future Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Option Contract; (d) the exercise price; (e) the premium
to be paid by the Fund; (f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be paid; and (h) the
amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing transaction
with respect to, any Futures Contract Option written or purchased by the Fund
and described in this Article, the Custodian shall (a) delete such Futures
Contract Option from the statements delivered to the Fund pursuant to paragraph
3 of Article III herein and, (b) make such withdrawals from and/or in the case
of an exercise such deposits into the Senior Security Account as may be
specified in a Certificate. The deposits to and/or withdrawals from the Margin
Account, if any, shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund
shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale was made; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest or dividends, if any; (d) the
dates of the sale and settlement; (e) the sale price per unit; (f) the total
amount credited to the Fund upon such sale, if any, (g) the amount of cash
and/or the amount and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has been or is to be
established; (h) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale and that the total
amount credited to the Fund upon such sale, if any, as specified in the
Certificate is held by such broker for the account of the Custodian (or any
nominee of the Custodian) as custodian of the Fund, issue a receipt or make the
deposits into the Margin Account and the Senior Security Account specified in
the Certificate.
2. In connection with the closing out of any short sale, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing-out to be delivered to the
broker; (d) the dates of closing-out and settlement; (e) the purchase price per
unit; (f) the net total amount payable to the Fund upon such closing-out; (g)
the net total amount payable to the broker upon such closing-out; (h) the amount
of cash and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to the Fund upon such
closing-out, and the return and/ or cancellation of the receipts, if any, issued
by the Custodian with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account and the
Senior Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with
respect to Securities and money held by the Custodian hereunder, the Fund shall
deliver or cause the Administrator to deliver to the Custodian a Certificate, or
in the event such Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions specifying: (a) the Series for which the
Reverse Repurchase Agreement is entered; (b) the total amount payable to the
Fund in connection with such Reverse Repurchase Agreement and specifically
allocated to such Series; (c) the broker or dealer through or with whom the
Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities
to be delivered by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such Series to be
deposited in a Senior Security Account for such Series in connection with such
Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total
amount payable to the Fund specified in the Certificate or Oral Instructions
make the delivery to the broker or dealer, and the deposits, if any, to the
Senior Security Account, specified in such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in
preceding paragraph 1 of this Article, the Fund shall deliver or cause the
Administrator to deliver a Certificate or, in the event such Reverse Repurchase
Agreement is a Money Market Security, a Certificate or Oral Instructions to the
Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and
the Series for which same was entered; (b) the total amount payable by the Fund
in connection with such termination; (c) the amount and kind of Securities to be
received by the Fund and specifically allocated to such Series in connection
with such termination; (d) the date of termination; (e) the name of the broker
or dealer with or through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind of Securities
to be withdrawn from the Senior Securities Account for such Series. The
Custodian shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate or Oral Instructions, make the
payment to the broker or dealer, and the withdrawals, if any, from the Senior
Security Account, specified in such Certificate or Oral Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated
to a Series held by the Custodian hereunder, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying with respect
to each such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities, (c) the number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be delivered to the Custodian
against the loan of the Securities, including the amount of cash collateral and
the premium, if any, separately identified, and (f) the name of the broker,
dealer, or financial institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the
Book-Entry System or Depository only in the form of a certified or bank
cashier's check payable to the order of the Fund or the Custodian drawn on New
York Clearing House funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event the Certificate fails to specify the Series, the name of the
issuer, the title and the number of shares or the principal amount of any
particular Securities to be deposited by the Custodian into, or withdrawn from,
a Senior Securities Account, the Custodian shall be under no obligation to make
any such deposit or withdrawal and shall so notify the Administrator.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in and
to any property at any time held by the Custodian in `any Collateral Account
described herein. In accordance with applicable law the Custodian may enforce
its lien and realize on any such property whenever the Custodian has made
payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which cash
and/or Securities are maintained in a Collateral Account for any Series, the
Custodian shall furnish the Administrator with a statement with respect to such
Collateral Account specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business next succeeding the
delivery to the Fund of such statement, the Fund shall deliver or cause the
Administrator to deliver to the Custodian a Certificate specifying the then
market value of the Securities described in such statement. In the event such
then market value is indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or similar document, the
Fund shall promptly specify or cause the Administrator to promptly specify in a
Certificate the additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall deliver or cause the Administrator to deliver to the
Custodian a copy of the resolution of the Board of Trustees of the Fund,
certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, either (i) setting forth with respect to the Series specified therein the
date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund on the payment date, or
(ii) authorizing with respect to the Series specified therein the declaration of
dividends and distributions on a daily basis and authorizing the Custodian to
rely on Oral Instructions or a Certificate setting forth the date of the
declaration of such dividend or distribution, the date of payment thereof, the
record date as of which shareholders entitled to payment shall be determined,
the amount payable per Share of such Series to the shareholders of record as of
that date and the total amount payable to the Dividend Agent on the payment
date.
2. Upon the payment date specified in such resolution, Oral Instructions
or Certificate, as the case may be, the Custodian shall pay out of the moneys
held for the account of each Series the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the Fund with respect
to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or cause the
Administrator to deliver to the Custodian a Certificate duly specifying:
(a) _The Series, the number of Shares sold, trade date,
and price; and
(b) _The amount of money to be received by the Custodian for the sale
of such Shares and specifically allocated to the separate account in the name of
such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the separate account in the name of the Series for which
such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money held for
the account of such Series, all original issue or other taxes required to be
paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian
to make payment out of the money held by the Custodian hereunder in connection
with a redemption of any Shares, it shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying:
(a) _The number and Series of Shares redeemed; and
(b) _The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate delivered
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate, shall, upon receipt of an advice
from ,the Fund or its agent setting forth that the redemption is in good form
for redemption in accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out of the moneys
held in the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion advance funds on behalf
of any Series which results in an overdraft because the moneys held by the
Custodian in the separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically allocated to
such Series, as set forth in a Certificate or Oral Instructions, or which
results in an overdraft in the separate account of such Series for some other
reason, or if the Fund is for any other reason indebted to the Custodian with
respect to a Series, including any indebtedness to The Bank of New York under
the Fund's Cash Management and Related Services Agreement, (except a borrowing
for investment or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360 day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such rate
to be adjusted on the effective date of any change in such prime commercial
lending rate but in no event to be less than 6i per annum. in addition, the Fund
hereby agrees that the Custodian shall have a continuing lien and security
interest in and to any property specifically allocated to such Series at any
time held by it for the benefit of such Series or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any balance
of account standing to such Series' credit on the Custodian's books. In
addition, the Fund hereby covenants that on each Business Day on which either it
intends to enter a Reverse Repurchase Agreement and/or otherwise borrow from a
third party, or which next succeeds a Business Day on which at the close of
business the Fund had outstanding a Reverse Repurchase Agreement or such a
borrowing, it shall prior to 9 a.m., New York City time, advise the Custodian,
in writing, of each such borrowing, shall specify the Series to which the same
relates, and shall not incur any indebtedness not so Specified other than from
the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV
TERMINAL LINK
1. At no time and under no circumstances shall the Administrator on behalf
of the Fund be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the Fund in its sole and
absolute discretion directs the Administrator to utilize the Terminal Link to
transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Administrator on behalf of
the Fund only for the purpose of providing Certificates to the Custodian with
respect to transactions involving Securities or for the transfer of money to be
applied to the payment of dividends, distributions or redemptions of Fund
Shares, and shall be utilized by the Custodian only for the purpose of providing
notices to the Administrator. Such use shall commence only after the Fund shall
have delivered or caused the Administrator to have delivered to the Custodian a
Certificate substantially in the form of Exhibit D and shall have established
access codes. Each use of the Terminal Link by the Administrator shall
constitute a representation and warranty that the Terminal Link is being used
only for the purposes permitted hereby, that at least two Officers have each
utilized an access code, that such safekeeping procedures have been established,
and that such use does not contravene the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.
3. The Administrator shall obtain and maintain at its own cost and expense
all equipment and services, including, but not limited to communications
services, necessary for it to utilize the Terminal Link, and the Custodian shall
not be responsible for the reliability or availability of any such equipment or
services.
4. The Fund and the Administrator acknowledges that any data bases made
available as part of, or through the Terminal Link and any proprietary data,
software, processes, information and documentation (other than any such which
are or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the exclusive
and confidential property of the Custodian. The Fund and the Administrator
shall, and shall cause others to which either discloses the Information, to keep
the Information confidential by using the same care and discretion it uses with
respect to its own confidential property and trade secrets, and shall neither
make nor permit any disclosure without the express prior written consent of the
Custodian.
5. Upon termination of this Agreement for any reason, the Fund and the
Administrator shall return to the Custodian any and all copies of the
Information which are in its respective possession or under its respective
control, or which either distributed to third parties. The provisions of this
Article shall not affect the copyright status of any of the Information which
may be copyrighted and shall apply to all Information whether or not
copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from time
to time without notice `to the Fund or the Administrator except that the
Custodian shall give the Administrator notice not less than 75 days in advance
of any modification which would materially adversely affect the Administrator's
operation, and the Administrator agrees that the it shall not modify or attempt
to modify the Terminal Link without the Custodian's prior written consent. The
Fund acknowledges that any software or procedures provided the Fund as part of
the Terminal Link are the property of the Custodian and, accordingly, the
Administrator agrees that any modifications to the Terminal Link, whether by the
Administrator, or by the Custodian and whether with or without the Custodian's
consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it utilizes
or the Fund utilizes in connection with the Terminal Link makes any warranties
or representations, express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a particular purpose.
8. The Administrator will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and the Fund and the Administrator irrevocably authorizes the
Custodian to act in accordance with and rely on Certificates received by it
through the Terminal Link. The Fund and the Administrator acknowledge that it is
their respective responsibility to assure that only officers use the Terminal
Link, and that Custodian shall not be responsible nor liable for use of the
Terminal Link by persons other than such persons or Officers, or by only a
single officer, nor for any alteration, omission, or failure to promptly
forward.
9. (a) _Except as otherwise specifically provided in Section 9(b) of this
Article, the Custodian shall have no liability for any losses, damages,
injuries, claims, costs or expenses arising out of or in connection with any
failure, malfunction or other problem relating to the Terminal Link except for
money damages suffered as the direct result of the negligence of the Custodian
in an amount not exceeding for any incident $25,000 provided, however, that the
Custodian shall have no liability under this Section 9 if the Administrator
fails to comply with the provisions of Section 11.
(b) _The Custodian's liability for its negligence in executing or
failing to execute in accordance with a Certificate received through Terminal
Link shall be only with respect to a transfer of funds which is not made in
accordance with such Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the Administrator
complying with the provisions of Section 12 of this Article, and shall be
limited to (i) restoration of the principal amount mistransferred, if and to the
extent that the Custodian would be required to make such restoration under
applicable law, and (ii) the lesser of (A) the Fund's actual pecuniary loss
incurred by reason of its loss of use of the mistransferred funds or the funds
which were not transferred, as the case may be, or (B) compensation for the loss
of the use of the mistransferred funds or the funds which were not transferred,
as the case may be, at a rate per annum equal to the average federal funds rate
as computed from the Federal Reserve Bank of New York's daily determination of
the effective rate for federal funds, for the period during which a Fund has
lost use of such funds. In no event shall the Custodian have any liability for
failing to execute in accordance with a Certificate a transfer of funds where
the Certificate is received by the Custodian through Terminal Link other than
through the applicable transfer module for the particular instructions contained
in such Certificate.
10. Without limiting the generality of the foregoing, in no event shall
the Custodian or any manufacturer or supplier of its computer equipment,
software or services relating to the Terminal Link be responsible for any
special, indirect, incidental or consequential damages which the Fund or the
Administrator may incur or experience by reason of its use of the Terminal Link
even if the Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the use of the Terminal Link
shall the Custodian or any such manufacturer or supplier be liable for acts of
God, or with respect to the following to the extent beyond such person's
reasonable control: machine or computer breakdown or malfunction, interruption
or malfunction of communication facilities, labor difficulties or any other
similar or dissimilar cause.
11. The Fund shall cause the Administrator to notify the Custodian of any
errors, omissions or interruptions in, or delay or unavailability of, the
Terminal Link as promptly as practicable, and in any event within 24 hours after
the earliest of (i) discovery thereof, (ii) the Business Day on which discovery
should have occurred through the exercise of reasonable care and (iii) in the
case of any error, the date of actual receipt of the earliest notice which
reflects such error, it being agreed that discovery and receipt of notice may
only occur on a business day. The Custodian shall promptly advise the Fund
whenever the Custodian learns of any errors, omissions or interruption in, or
delay or unavailability of, the Terminal Link.
12. The Custodian shall verify to the Administrator, by use of the
Terminal Link, receipt of each Certificate the Custodian receives through the
Terminal Link, and in the absence of such verification the Custodian shall not
be liable for any failure to act in accordance with such Certificate and neither
the Fund nor the Administrator may claim that such Certificate was received by
the Custodian. Such verification, which may occur after the Custodian has acted
upon such Certificate, shall be accomplished on the same day on which such
Certificate is received.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to employ, as sub-custodian
for each Series' Foreign Securities (as such term is defined in paragraph (c)(1)
of Rule 17f-5 under the Investment Company Act of 1940, as amended) and other
assets, the foreign banking institutions and foreign securities depositories and
clearing agencies designated on Schedule I hereto ("Foreign Sub-Custodians") to
carry out their respective responsibilities in accordance with the terms of the
sub-custodian agreement between each such Foreign Sub-Custodian and the
Custodian, copies of which have been previously delivered to the Fund and
receipt of which is hereby acknowledged (each such agreement, a "Foreign
Sub-Custodian Agreement"). The Custodian shall be liable for the acts and
omissions of each Foreign Sub-Custodian constitute negligence or willful
misconduct in the conduct of its responsibilities under the terms of the Foreign
Sub-Custodian Agreement. Upon receipt of a Certificate, together with a
certified resolution substantially in the form attached as Exhibit E of the
Fund's Board of Trustees, the Fund may designate any additional foreign
sub-custodian with which the Custodian has an agreement for such entity to act
as the Custodian's agent, as its sub-custodian and any such additional foreign
sub-custodian shall be deemed added to Schedule I. Upon receipt of a
Certificate, the Custodian shall cease the employment of any one or more Foreign
Sub-Custodians for maintaining custody of the Fund's assets and such Foreign
Sub-Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be substantially in the form
previously delivered to the Fund and will not be amended in a way that
materially adversely affects the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as belonging to each Series
of the Fund the Foreign Securities of such Series held by each Foreign
Sub-Custodian. At the election of the Fund, it shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims by the Fund
or any Series against a Foreign Sub-Custodian as a consequence of any loss,
damage, cost, expense, liability or claim sustained or incurred by the-Fund or
any Series if and to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will, consistent with the terms
of the applicable Foreign Sub-Custodian Agreement, use reasonable efforts to
arrange for the independent accountants of the Fund to be afforded access to the
books and records of any Foreign Sub-Custodian insofar as such books and records
relate to the performance of such Foreign Sub-Custodian under its agreement with
the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Series held by Foreign Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series' Foreign Securities
and other assets, and advices or notifications of any transfers of Foreign
Securities to or from each custodial account maintained by a Foreign
Sub-Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish annually to the Fund, as mutually agreed
upon, information concerning the Foreign Sub-Custodians employed by the
Custodian. Such information shall be similar in kind and scope to that furnished
to the Fund in connection with the Fund's initial approval of such Foreign
Sub-Custodians and, in any event, shall include .information pertaining to (i)
the Foreign Custodians' financial strength, general reputation and standing in
the countries in which they are located and their ability to provide the
custodial services required, and (ii) whether the Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of securities not
materially different form those prevailing in the United States. The Custodian
shall monitor the general operating performance of each Foreign Sub-Custodian,
and at least annually obtain and review the annual financial report published by
such Foreign Sub-Custodian to determine that it meets the financial criteria of
an "Eligible Foreign Custodian" under Rule 17f-5(c)(2)(i) or (ii). The Custodian
will promptly inform the Fund in the event that the Custodian learns that a
Foreign Sub-Custodian no longer satisfies the financial criteria of an "Eligible
Foreign Custodian" under such Rule. The Custodian agrees that it will use
reasonable care in monitoring compliance by each Foreign Sub-Custodian with the
terms of the relevant Foreign Sub-Custodian Agreement and that if it learns of
any breach of such Foreign Sub-Custodian Agreement believed by the Custodian to
- -, have a material adverse effect on the Fund or any Series it will promptly
notify the Fund of such breach. The Custodian also agrees to use reasonable and
diligent efforts to enforce its rights under the relevant Foreign Sub-Custodian
Agreement.
7. The Custodian shall transmit promptly to the Fund all notices, reports
or other written information received pertaining to the Fund's Foreign
Securities, including without limitation, notices of corporate action, proxies
and proxy solicitation materials.
8. Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of any Series and
delivery of securities maintained for the account of such Series may be effected
in accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such securities from such purchaser or dealer.
ARTICLE XVII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in Article XVI neither
the Custodian nor its nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act or otherwise, either
hereunder or under any Margin Account Agreement, except for any such - loss or
damage arising out of its own negligence or willful misconduct. In no event
shall the Custodian be liable to the Fund or any third party for special,
indirect or consequential damages or lost profits or loss of business, arising
under or in connection with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action. The Custodian
may, with respect to questions of law arising hereunder or under any Margin
Account Agreement, apply for and obtain the advice and opinion of counsel to the
Fund or of its own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence or willful misconduct on the
part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) _The validity of the issue of any Securities purchased, sold, or
written by or for the Fund, the legality of the purchase, sale or writing
thereof, or the propriety of the amount paid or received therefor;
(b) _The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(c) _The legality of the declaration or payment of any
dividend by the Fund;
(d) _The legality of any borrowing by the Fund using
Securities as collateral;
(e) _The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to see to it that any cash collateral
delivered to it by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the Fund is
adequate collateral for the Fund against any loss it might sustain as a result
of such loan. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or .
(f) _The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund. In addition, the Custodian
shall be under no duty or obligation to see that any broker, dealer, futures
commission merchant or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund may be entitled to
receive from such broker, dealer, futures commission merchant or Clearing
Member, to see that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's receipt or
non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable for
ascertaining or acting upon any calls, conversions, exchange offers, tenders,
interest rate changes or similar matters relating to Securities held in the
Depository, unless the Custodian shall have actually received timely notice from
the Depository. In no event shall the Custodian have any responsibility or
liability for the failure of the Depository to collect, or for the late
collection or late crediting by the Depository of any amount payable upon
Securities deposited in the Depository which may mature or be redeemed, retired,
called or otherwise become payable. However, upon receipt of a Certificate from
the Fund of an overdue amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the Fund, except that the
Custodian shall not be under any obligation to appear in, prosecute or defend
any action suit or proceeding in respect to any Securities held by the
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
7. The Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Article XVI appoint one or more banking institutions
as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as
Co-Custodian or Co-Custodians including, but not limited to, banking
institutions located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the Custodian, the Fund and
the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it or by
any Foreign Sub-Custodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or such
Series under the provisions of its then current prospectus, or (b) to ascertain
whether any transactions by the Fund, whether or not involving the Custodian,
are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Fund
represents that the Administrator has agreed to pay such compensation and
expenses promptly upon receipt of statements therefor, and hereby directs the
Custodian to (i) send all statements for compensation to its attention care of
Fund/Plan at the following address: Fund/Plan Services, Inc., 2 W. Elm Street,
Conshohocken, PA 19428, Attention: Mr. Elmer Gardner, Senior Vice President, and
(ii) accept all payments made by Fund/Plan in the Fund's name as if such
payments were made directly by the Fund. The Fund shall pay to Fund/Plan fees
for services (including custodian services provided by the Custodian) in
accordance with the Administration Agreement. The Custodian's compensation for
services rendered hereunder is set forth in a separate agreement between the
Custodian and Fund/Plan. Should Fund/Plan fail to pay or remit such compensation
to the Custodian, the Custodian will be entitled to debit the Custody Account
directly for such compensation. The Custodian may charge such compensation and
any expenses with respect to a Series incurred by the Custodian in the
performance of its duties pursuant to such agreement against any money
specifically allocated to such Series. Unless and until the Fund or the
Administrator instructs the Custodian by a Certificate to apportion any loss,
damage, liability or expense among the Series in a specified manner, the
Custodian shall also be entitled to charge against any money held by it for the
account of a Series such Series' pro rata share (based on such Series net asset
value at the time of the charge to the aggregate net asset value of all Series
at that time) of the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement. The expenses for which the Custodian shall be
entitled to reimbursement hereunder shall include, but are not limited to, the
expenses of sub-custodians and foreign branches of the Custodian incurred in
settling outside of New York City transactions involving the purchase and sale
of Securities of the Fund.
10. .The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions actually received by the Custodian. The Fund agrees
to forward or cause the Administrator to forward to the Custodian a Certificate
or facsimile thereof confirming such Oral Instructions in such manner so that
such Certificate or facsimile thereof is received by the Custodian, whether by
hand delivery, telecopier or other similar device, or otherwise, by the close of
business of the same day that such Oral Instructions are given to the Custodian.
The Fund agrees that the fact that such confirming instructions are not received
by the Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund in acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
officer.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records ` during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian-to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on a
computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System,
the Depository or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with this Agreement, including the ` Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article XIII as part of any
check redemption-privilege program of the Fund, except for any such liability,
claim, loss and demand arising out of the Custodian's own negligence or willful
misconduct.
15. Subject to the foregoing provisions of this Agreement, including,
without limitation, those contained in Article XVI the Custodian may deliver and
receive Securities, and receipts with respect to such Securities, and arrange
for payments to be made and received by the Custodian in accordance with the
customs prevailing from time to time among brokers or dealers in such
Securities. When the Custodian is instructed to deliver Securities against
payment, delivery of such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility and liability for
all credit risks involved in connection with the Custodian's delivery of
Securities pursuant to Certificates or instructions of the Fund or the
Administrator which responsibility and liability shall continue until final
payment in full has been received by the Custodian.
16. In the event the Custodian is advised by the Fund that the Fund is no
longer utilizing the services of the Administrator, then the Custodian shall
furnish or give to the Fund the statements or notices described above as to be
furnished or given to the Administrator.
17. The Custodian shall have no duties or, responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian. Without limiting the generality of the foregoing, the
Custodian shall have no duties or responsibilities by reason of any terms or
provisions in the Administration Agreement, and if such Administration Agreement
shall cease to be in effect the Custodian shall have no additional duties
hereunder.
ARTICLE XVIII
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution-of the Board of Trustees of the Fund, certified by the
Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, electing
to terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, designating a successor custodian or custodians. In the absence
of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian
in accordance with the preceding paragraph, the Fund shall upon the date
specified in the notice of termination of this Agreement and upon the delivery
by the Custodian of all Securities (other than Securities held in the Book-Entry
System which cannot be delivered to the Fund) and moneys then owned by the Fund
be deemed to be its own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book Entry System which cannot be
delivered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
ARTICLE XIX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its `seal, setting forth the names and the
signatures of the present Officers. The Fund agrees to furnish to the Custodian
a new Certificate in similar form in the event that any such present Officer
ceases to be an officer or in the event that other or additional officers are
elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the present Officers as set
forth in the last delivered Certificate.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be ` given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other place as the
Custodian may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing, and any notice or other instrument in writing
authorized or required to be given to the Administrator shall be sufficiently
given if addressed to the Administrator at such address as the Administrator may
from time to time designate in writing.
4. This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
5. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
6. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
8. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Board of Trustees of the Fund as
Trustees and not individually and that the obligations of this instrument ate
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
WESTON PORTFOLIO SERIES
[SEAL] BY:/S/ Douglas A. Biggar
Attest:
Signature illegible
THE BANK OF NEW YORK
[SEAL] By: signature illegible
Attest:
Signature illegible
<PAGE>
APPENDIX A
I, , President and I, , of Weston Portfolio Series, a Massachusetts
business trust (the "Fund"), do hereby certify that:
The following individuals including officers and employees of the
Administrator have been duly authorized by the Board of Trustees of the Fund in
conformity with the Fund's Declaration of Trust and By-Laws to give Certificates
or Oral Instructions on behalf of the Fund, and the signatures set forth
opposite their respective names are their true and correct signatures:
Name Signature
/S/ Douglas A. Biggar
<PAGE>
APPENDIX B
SERIES
New Century Capital Portfolio
New Century I Portfolio
<PAGE>
APPENDIX C
I, Vincent Blazewicz, a Vice President with THE BANK OF NEW YORK do hereby
designate the following publications:
The Bond Buyer Depository Trust Company Notices Financial Daily Card
Service JJ Kenney Municipal Bond Service London Financial Times New York
Times Standard & Poor's Called Bond Record Wall Street Journal
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, Douglas A. Biggar, hereby certifies that he or she is the
duly elected and acting Executive Vice President of Weston Portfolio Series, a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on 1994, at which a quorum was at. all times present and that
such resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of ,
1994, (the "Custody Agreement") is authorized and instructed on a
continuous and ongoing basis to deposit in the Book-Entry System, as
defined in the Custody Agreement, all securities eligible for deposit
therein, regardless of the Series to which the same are specifically
allocated, and to utilize the Book-Entry System to the extent possible in
connection with its performance thereunder, including, without limitation,
in connection with settlements of purchases and sales of securities, loans
of securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Weston
Portfolio Series, as of the 21st day of December, 1994.
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, Douglas A Biggar, hereby certifies that he or she is the
duly elected and acting Executive Vice President of Weston Portfolio Series, a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 1994, at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as
of , 1994, (the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Depository, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the Series to
which the same are specifically allocated, and to utilize the
Depository to the extent possible in connection with its performance
thereunder, including, without limitation, in connection with
settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Weston
Portfolio Series, as of the 21st day of December 1994 .
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, Douglas A. Biggar, hereby certifies that he or she is the
duly elected and acting Executive Vice President of Weston Portfolio Series, a
business trust (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Trustees of the Fund at a meeting duly held on ,
1994, at which a quorum was at all times present and that such resolution has
not been modified or rescinded and is in full force and effect as of the date
hereof.
RESOLVED, that The Bank of-New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
December 21, 1994, (the "Custody Agreement") is authorized and instructed
on a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary to
deposit in the Participants Trust Company as Depository, as defined in the
Custody Agreement, all securities eligible for deposit therein, regardless
of the Series to which the same are specifically allocated, and to utilize
the Participants Trust Company to the extent possible in connection with
its performance thereunder, including, without limitation, in connection
with settlements of purchases and sales of securities, loans of
securities, and deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Weston
Portfolio Series, as of the 21st day of December, 1994.
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, Douglas A. Biggar, hereby certifies that he or she is the duly
elected and acting Executive Vice President of Weston Portfolio Series, a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 1994, at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of ,
1994, (the "Custody Agreement") is authorized and instructed on
a-continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary, to
accept, utilize and act with respect to Clearing Member confirmations for
options and transaction in Options, regardless of the Series to which the
same are specifically allocated, as such terms are defined in the Custody
Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Weston
Portfolio Series, as of the 21st day of December, 1994.
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
EXHIBIT D
The undersigned, Douglas A. Biggar, hereby certifies that he or she is the
duly elected and acting Executive Vice President of Weston Portfolio Series, a
Massachusetts business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund at a meeting duly
held on , 1994, at which a quorum was at all times present and that such
resolutions have not been modified or rescinded and are in full force and effect
as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to the Custody
Agreement between The Bank of New York and the Fund dated as of December 21,
1994 (the "Custody Agreement") is authorized and instructed on a continuous and
ongoing basis to act in accordance with, and to rely on Certificates (as defined
in the Custody Agreement) given by to the Custodian by a Terminal Link (as
defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and grant us of such
access codes only to Officers of the fund as defined in the Custody Agreement,
shall establish internal safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes, shall limit its use of
the Terminal Link to those purposes permitted by the Custody Agreement, shall
require at least two such Officers to utilize their respective access codes in
connection with each such Certificate, and shall use the Terminal Link only in a
manner that does not contravene the Investment Company Act of 1940, as amended,
or the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the establishment of
such access codes and such internal safekeeping procedures, advise the Custodian
that the same have been established by delivering a Certificate, as defined in
the Custody Agreement, and the Custodian shall be entitled to rely upon such
advice.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Weston
Portfolio Series, as of the 21st day of December, 1994.
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
EXHIBIT E
The undersigned, Douglas A. Biggar, hereby certifies that he or she is the
duly elected and acting Executive Vice President of Weston Portfolio Series, a
Massachusetts business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund at a meeting duly
held on , 1994, at which a quorum was at all times present and that such
resolutions have not been modified or rescinded and are in full force and effect
as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each country listed
in Schedule I hereto be, and hereby is, approved by the Board of Trustees as
consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with the foreign
branches of The Bank of New York (the "Bank") listed in Schedule I located in
the countries specified therein, and with the foreign sub-custodians and
depositories listed in Schedule I located in the countries specified therein be,
and hereby is, approved by the Board of Directors as consistent with the best
interest of the Fund and its shareholders; and further
RESOLVED, that the Sub-custodian Agreements presented to this meeting
between the Bank and each of the foreign sub-custodians and depositories listed
in Schedule I providing for the maintenance of the Fund's assets with the
applicable entity, be and hereby are, approved by the Board of Trustees as
consistent with the best interests of the Fund and its shareholders; and further
RESOLVED, that the appropriate officers of the Fund are hereby authorized
to place assets of the Fund with the aforementioned foreign branches and foreign
sub-custodians and depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or any of them, are
authorized to do any and all other acts, in the name of the Fund and on its
behalf, as they, or any of them, may determine to be necessary or desirable and
proper in connection with or in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the Seal of Weston
Portfolio Series, as of the 21st day of December, 1994.
/S/ Douglas A. Biggar
[SEAL]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
NEW CENTURY PORTFOLIOS
By: Wayne Grzecki
President
[Corporate Seal] Attest: Ellen M. Bruno
Secretary
WESTON FINANCIAL GROUP, INC.
By: Iven Richard Horowitz
President
[Corporate Seal] Attest: Douglas A. Biggar
Secretary
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated November 25, 1998, accompanying the October 31,
1998 financial statements of New Century Portfolios (comprising, respectively,
the New Century Capital Portfolio and the New Century Balanced Portfolio) which
are incorporated by reference in Part B of Post-Effective Amendment No. 17 to
this Registration Statement and Prospectus. We consent to the use of the
aforementioned report in the Registration Statement and Prospectus.
/S/ BRIGGS, BUNTING & DOUGHERTY, LLP
BRIGGS, BUNTING & DOUGHERTY, LLP
Philadelphia, Pennsylvania
February 24, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the
Registrant's Annual Report to Shareholders dated October 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000838802
<NAME> NEW CENTURY PORTFOLIOS
<SERIES>
<NUMBER> 2
<NAME> NEW CENTURY BALANCED PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> 52,685,200
<INVESTMENTS-AT-VALUE> 56,115,427
<RECEIVABLES> 41,200
<ASSETS-OTHER> 115,107
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,271,734
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 81,300
<TOTAL-LIABILITIES> 81,300
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,402,447
<SHARES-COMMON-STOCK> 4,379,081
<SHARES-COMMON-PRIOR> 3,694,503
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,357,760
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,430,227
<NET-ASSETS> 56,190,434
<DIVIDEND-INCOME> 1,580,613
<INTEREST-INCOME> 2,127
<OTHER-INCOME> 0
<EXPENSES-NET> 777,879
<NET-INVESTMENT-INCOME> 804,861
<REALIZED-GAINS-CURRENT> 4,993,359
<APPREC-INCREASE-CURRENT> (2,511,268)
<NET-CHANGE-FROM-OPS> 3,286,952
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 804,861
<DISTRIBUTIONS-OF-GAINS> 3,906,114
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 689,907
<NUMBER-OF-SHARES-REDEEMED> 348,325
<SHARES-REINVESTED> 342,996
<NET-CHANGE-IN-ASSETS> 7,297,206
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3,270,515
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 533,425
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 777,879
<AVERAGE-NET-ASSETS> 53,341,641
<PER-SHARE-NAV-BEGIN> 13.23
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> .66
<PER-SHARE-DIVIDEND> .21
<PER-SHARE-DISTRIBUTIONS> 1.06
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.83
<EXPENSE-RATIO> 1.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the
Registrant's Annual Report to Shareholders dated October 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000838802
<NAME> NEW CENTURY PORTFOLIOS
<SERIES>
<NUMBER> 1
<NAME> NEW CENTURY CAPITAL PORTFOLIO
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1.00
<INVESTMENTS-AT-COST> 82,382,055
<INVESTMENTS-AT-VALUE> 90,594,408
<RECEIVABLES> 1,532
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 90,595,940
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 431,588
<TOTAL-LIABILITIES> 431,588
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 72,550,869
<SHARES-COMMON-STOCK> 6,307,013
<SHARES-COMMON-PRIOR> 5,345,265
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9,401,130
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,212,353
<NET-ASSETS> 90,164,352
<DIVIDEND-INCOME> 670,387
<INTEREST-INCOME> 5,459
<OTHER-INCOME> 0
<EXPENSES-NET> 1,257,269
<NET-INVESTMENT-INCOME> (581,423)
<REALIZED-GAINS-CURRENT> 11,077,753
<APPREC-INCREASE-CURRENT> (4,543,009)
<NET-CHANGE-FROM-OPS> 5,953,321
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 7,850,147
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 943,259
<NUMBER-OF-SHARES-REDEEMED> 523,418
<SHARES-REINVESTED> 541,907
<NET-CHANGE-IN-ASSETS> 11,773,021
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,754,947
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 875,355
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,257,269
<AVERAGE-NET-ASSETS> 87,081,615
<PER-SHARE-NAV-BEGIN> 14.67
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.46
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.30
<EXPENSE-RATIO> 1.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
