As filed with the Securities and Exchange Commission on February 28, 2000
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. 14 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18
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.
<PAGE>
PROSPECTUS
NEW CENTURY PORTFOLIOS
February 28, 2000
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 28, 2000
Table of Contents Page
An Introduction to Funds of Funds 1
Profile: New Century Capital Portfolio 1
Investment Objective 1
Investment Strategies 1
Risk Factors 2
Past Performance 3
Fund Expenses 4
Profile: New Century Balanced Portfolio 5
Investment Objective 5
Investment Strategies 5
Risk Factors 6
Past Performance 7
Fund Expenses 8
More Investment Policies of Each Portfolio 9
Trend Analysis 9
Investments In Investment Companies and The Investment
Company Industry 9
Underlying Funds 11
Money Market Securities 13
Investments in Individual Securities 14
Portfolio Turnover 14
Investment Advisor 14
Distribution of Shares 15
Share Price 16
Buying Shares 16
Exchanging Shares 16
Redeeming (Selling) Shares 17
Mail Redemptions 17
Telephone Redemptions 18
Account Minimum 18
Redemptions In-Kind 19
Dividends, Capital Gains and Taxes 19
Frequency 19
Reinvestment 19
Taxes 19
Tax Withholding 20
Transaction Procedures 20
How and When Priced 20
Proper Form 20
Written Instructions 21
Joint Accounts 21
Signature Guarantees 21
Telephone 22
Other Services 22
Automatic Investment Program 22
Systematic Withdrawal Program 22
Special Plans 22
Fund and Account Updates 22
Statements 22
Confirmations 22
Financial Reports 22
Financial Highlights 23
<PAGE>
An Introduction to Funds of Funds
New Century Portfolios is a family of specialized mutual funds. The two
Portfolios of New Century are actively managed portfolios of mutual funds. With
one purchase, an investor can invest in a Portfolio of actively managed mutual
funds that are not limited to any one company's family of funds.
Profile: New Century Capital Portfolio
Investment Objective. The investment objective of the Portfolio is to provide
capital growth, with a secondary objective to provide income, while managing
risk.
Investment Strategies. 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
primarily 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.
Risk Factors. You should consider a number of factors before investing in the
Portfolio:
* The Portfolio concentrates (invests more than 25% and up to 100% of
the value of its assets) in the shares of registered open-end and
closed-end investment companies. Thus, the Portfolio is affected by
the performance of those companies. Investing in investment companies
does not eliminate investment risk. Loss of money is a risk of
investing in the Portfolio. (See "Investments in Investment Companies
and the Investment Company Industry" and "Underlying Funds.")
* You should recognize that you may invest directly in mutual funds. By
investing in mutual funds indirectly through the Portfolio, you will
bear both your proportionate share of the expenses of the Portfolio
(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 the Portfolio's shares and you also may indirectly
bear expenses paid by an underlying fund for the distribution of its
shares. The Portfolio has the right to invest in investment companies
which charge a "sales load" and other sales charges. The Portfolio
will seek to minimize such charges, but they can reduce the
Portfolio's investment results. (See "Investments in Investment
Companies and the Investment Company Industry.")
* The Portfolio may invest in investment companies which concentrate in
a particular industry. These companies tend to have greater
fluctuation in value than other investment companies. (See "Underlying
Funds.")
<PAGE>
Past Performance. The bar chart and table below show the Portfolio's annual
returns and its long-term performance. The bar chart shows how the Portfolio's
return has changed from year to year. The second table shows how the 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 chart and table 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 Portfolio. Past performance is not necessarily an indication of how the
Portfolio will perform in the future. (See "More Investment Performance" for
further information about the performance of the Portfolio.)
[OBJECT OMITTED]
Best Quarter Q 4 '99 = 26.67%
Worst Quarter Q3 '90= -- 15.02%
Average Annual Total Return
as of December 31, 1999
1 Year 5 Years 10 Years
New Century Capital
Portfolio 34.72% 24.51% 16.11%
S&P Index 21.04% 28.56% 18.21%
<PAGE>
Fund Expenses. This table describes the fees and expenses that you may pay if
you buy and hold shares of the Portfolio.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on None
Purchases
Maximum Deferred Sales Charge (Load) None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses (expenses that are deducted from Portfolio
assets)
Management and Advisory Fees 0.98%
Distribution (12b-1) Fees 0.17%
Other Expenses 0.24%
-----
Total Annual Operating Expenses 1.39%
=====
The Example below is meant to help you compare the cost of investing in the
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
$139 $432 $747 $1,639
<PAGE>
Profile: New Century Balanced Portfolio
Investment Objective. The investment objective of the Portfolio is to provide
income, with a secondary objective to provide capital growth, while managing
risk.
Investment Strategies. 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 the Portfolio:
* The Portfolio concentrates (invests more than 25% and up to 100% of
the value of its assets) in the shares of registered open-end and
closed-end investment companies. Thus, the Portfolio is affected by
the performance of those companies. Loss of money is a risk of
investing in the Portfolio. (See "Investments in Investment Companies
and the Investment Company Industry" and "Underlying Funds.")
* You should recognize that you may invest directly in mutual funds. By
investing in mutual funds indirectly through the Portfolio, you will
bear both your proportionate share of the expenses of the Portfolio
(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 the Portfolio's shares and you also may indirectly
bear expenses paid by an underlying fund for the distribution of its
shares. The Portfolio has the right to invest in investment companies
which charge a "sales load" and other sales charges. The Portfolio
will seek to minimize such charges, but they can reduce the
Portfolio's investment results. (See "Investments in Investment
Companies and the Investment Company Industry.")
* The Portfolio may invest in investment companies which concentrate in
a particular industry. These companies tend to have greater
fluctuation in value than other investment companies. (See "Underlying
Funds.")
<PAGE>
Past Performance. The bar chart and table below show the Portfolio's annual
returns and its long-term performance. The bar chart shows how the Portfolio's
return has changed from year to year. The second table shows how the 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 chart and table assumes
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 Portfolio. Past performance is not necessarily an indication of how the
Portfolio will perform in the future. (See "More Investment Performance" for
further information about the performance of the Portfolio.)
[OBJECT OMITTED]
Best Quarter Q4 '99 = 15.45%
Worst Quarter Q3 '90 = - 9.35%
Average Annual Total Return
as of December 31, 1999
1 Year 5 Years 10 Years
New Century Balanced
Portfolio 18.34% 17.03% 12.00%
S&P Index 21.04% 28.56% 18.21%
Lehman Bros. Government
Corporate Index ("LB
Index") -2.14% 7.60% 7.65%
Blended 50% S&P
Index/40%
LB Index 11.76% 20.18% 13.99%
<PAGE>
Fund Expenses. This table describes the fees and expenses that you may pay if
you buy and hold shares of the Portfolio.
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on None
Purchases
Maximum Deferred Sales Charge (Load) None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses (expenses that are deducted from Portfolio
assets)
Management and Advisory Fees 1.00%
Distribution (12b-1) Fees 0.19%
Other Expenses 0.27%
-----
Total Annual Operating Expenses 1.46%
=====
The Example below is meant to help you compare the cost of investing in the
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
$146 $454 $784 $1,715
<PAGE>
More Investment Policies of Each Portfolio
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. During such periods, the
Portfolios may not meet their investment objectives.
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 investment companies 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
Small Company Funds International Equity 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 Precious Metals Funds/Gold 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.
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.
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.
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:
* marketable securities issued or guaranteed as to principal and interest by
the government of the United States or by its agencies or
instrumentalities;
* domestic bank certificates of deposit;
* bankers' acceptances;
* prime commercial paper; and
* 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.
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. While it
is not currently the intent of the Portfolios, each Portfolio also retains the
right, when the Advisor deems appropriate, to invest in investment grade fixed
income securities.
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, Capital Gains and Taxes".)
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"). 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 November 30, 1998, the Advisor merged with Weston Advisors, Inc., an
affiliated company. The Portfolios' shareholders approved new investment
advisory agreements with the Advisor which took affect upon the merger. The new
agreements contain the same terms and conditions as the earlier agreements.
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 $850 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
0.75% 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,
1999, the Advisor received $1,069,099 (0.98% of average net assets) for the New
Century Capital Portfolio and $624,526 (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 and manager of the Portfolios. 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 Agreements"). 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
The shares of each Portfolio are distributed by Weston Securities Corporation,
the "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 0.25% 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 0.25% 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. Therefore, it is 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.
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.
Buying Shares
Purchases are made at the net asset value per share next computed after receipt
of your order by the Portfolio's Transfer Agent, PFPC Global Fund Services.
There is no sales load or charge assessed on the New Century Capital Portfolio
or the New Century Balanced Portfolio.
To purchase shares of a Portfolio please complete the application form and mail
it together with your check payable to New Century Portfolios to:
PFPC Global Fund Services
211 South Gulph Road
P.O. Box 61767
King of Prussia, PA 19406
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.
Each Portfolio reserves the right in its sole discretion (i) to waive or lower
investment minimums, (ii) to accept initial purchases by telephone or mailgram,
and (iii) to refuse any purchase or exchange order, including purchase orders
from any investor who engages in excessive purchases and redemptions in their
account.
These actions will be taken when, in the sole discretion of management, they are
deemed to be in the best interest of a Portfolio.
Your purchase will be made in full and fractional shares of the Portfolio
calculated to three decimal places. 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.
Redeeming (Selling) 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:
* include the Portfolio and the shareholder's account number,
* state the number of shares to be redeemed, and
* 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:
* the name, address, and telephone number of the bank where you want the
proceeds sent
* your bank account number
* 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 Distributor
at (888) 639-0102 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:
* trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission,
* such Exchange is closed for other than weekends and holidays,
* the Securities and Exchange Commission has by order permitted such
suspension, or
* 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):
* by mail at the address specified on the Telephone Redemption Form, or
* 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. We reserve the right to close your account if it is worth less
than $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. The Portfolios have reserved the right to pay redemption
proceeds by a distribution in-kind of portfolio securities (rather than cash).
In the event that the Portfolio makes an in-kind distribution, you could incur
brokerage and transaction charges when converting the securities to cash. You
could be required to comply with normal procedures to redeem shares of an
underlying fund and could experience normal processing delays. In-kind
redemptions will be made when the Board determines that it would be detrimental
to a Portfolio to make payment in cash.
Dividends, Capital Gains and Taxes
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, at least once
each year. The New Century Capital Portfolio may declare additional dividends if
necessary under IRS regulations.
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 ex-dividend date.
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 by
January 31 of each year. You should consult your tax advisor concerning the
federal, state, local, or foreign tax consequences of your investment in the
fund. Non-U.S. shareholders may be subject to U.S. withholding or estate tax.
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.
A portion of 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 90-day period beginning 45 days before
each dividend date to qualify any dividends (or portion thereof) for the
dividends received deduction.
When you sell your shares of the Portfolio, you may have a capital gain or loss.
For tax purposes, an exchange of your Portfolio shares for shares of another
Portfolio is the same as a sale.
Tax Withholding. In accordance with law, we may be required to withhold 31
percent 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
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 redeem 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, please include:
* Your name,
* The Portfolio's name
* A description of the request
* For exchanges, the name of the Portfolio you are exchanging into
* Your account number(s)
* The dollar amount or number of shares, and
* 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
at (888) 639-0102 may also provide a signature guarantee. A notarized signature
is not sufficient. You may call the Distributor to request a waiver of the
signature guarantee requirement.
Signature guarantees must be included in a redemption request for:
* wire transfers,
* an amount in excess of $5,000,
* payment other than to the shareholder of record, or
* for proceeds to be sent elsewhere than the address of record.
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 program offers a
convenient way to invest in the Portfolios. Under the program you can have money
transferred automatically from your checking account to a Portfolio 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 Portfolio's shares may fluctuate and a systematic investment program 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 Program. Our systematic withdrawal program allows you to
sell your shares and receive regular payments from your account on a monthly,
quarterly or annual basis. We may refuse to establish a systematic withdrawal
program for an account under $10,000 or a withdrawal payment under $50.
If you would like to establish a systematic withdrawal program, 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 program, it is a taxable
transaction.
Special Plans. Each Portfolio also offers its shares for use in certain Tax
Sheltered accounts, including IRA, Roth IRA, 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.
Fund and Account Updates
Statements. Statements reporting all account activity including systematic
transactions and dividends and capital gains paid will be sent at least
quarterly.
Confirmations. Confirmations of transactions in your account will be sent
periodically.
Financial Reports. Financial Reports of the Portfolios will be sent every six
months.
<PAGE>
FINANCIAL HIGHLIGHTS
NEW CENTURY CAPITAL PORTFOLIO
(For a Share Outstanding Throughout each Period)
Years ended October 31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period $14.30 $14.67 $13.51 $13.12 $12.31
------ ----- ------ ------ ------
Income (loss) from investment
operations
Net investment loss (0.14) (0.09) (0.10) (0.09) (0.06)
Net gain on securities
(both realized and unrealized) 4.08 1.18 3.29 1.90 2.16
------ ----- ------ ------ ------
Total from investment operations 3.94 1.09 3.19 1.81 2.10
====== ===== ====== ====== ======
Less distributions
Distributions from capital gains (1.53) (1.46) (2.03) (1.42) (1.29)
Net asset value, end of
period $16.71 $14.30 $14.67 $13.51 $13.12
====== ===== ====== ====== ======
TOTAL RETURN 28.94% 7.97% 27.22% 14.91% 19.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $120,583 $90,164 $78,391 $62,741 $50,889
Ratio of expenses to
average net assets 1.39% 1.44% 1.43% 1.47% 1.61%
Ratio of net investment loss to
average net assets -0.91% -0.67% -0.76% -0.69% -0.52%
Portfolio turnover Rate 64% 102% 93% 214% 206%
<PAGE>
FINANCIAL HIGHLIGHTS
NEW CENTURY BALANCED PORTFOLIO
(For a Share Outstanding Throughout each Period)
Years ended October
31,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period $12.83 $13.23 $12.21 $11.82 $11.22
------ ----- ------ ------ ------
Income from investment operations
Net investment income (loss) 0.20 0.21 0.21 0.18 0.24
Net gain (loss) on securities
(both realized and unrealized) 1.68 0.66 2.01 1.30 1.28
------ ----- ------ ------ ------
Total from investment operations 1.88 0.87 2.22 1.48 1.52
====== ===== ====== ====== ======
Less distributions
Dividends from net investment
income (0.20) (0.21) (0.21) (0.18) (0.24)
Distributions from capital gains(1.09) (1.06) (0.99) (0.91) (0.68)
------ ----- ------ ------ ------
Total distributions (1.29) (1.27) (1.20) (1.09) (0.92)
------ ----- ------ ------ ------
Net asset value, end of
period $13.42 $12.83 $13.23 $12.21 $11.82
====== ===== ====== ====== ======
TOTAL RETURN 15.26% 6.97% 19.64% 13.24% 14.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year $65,721 $56,190 $48,893 $40,423 $30,124
Ratio of expenses to
average net assets 1.46% 1.46% 1.41% 1.61% 1.72%
Ratio of net investment income to
average net assets 1.45% 1.51% 1.58% 1.45% 2.14%
Portfolio turnover Rate 60% 59% 80% 172% 191%
<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
PFPC Global Fund Services
211 South Gulph Road
P.O. Box 61767
King of Prussia, PA 19406-3101
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:
* Call collect or write New Century Portfolios as shown below.
* Visit the SEC's Public Reference Room in Washington, DC (1-800-SEC-0330).
* Visit the SEC's Internet site at http://www.sec.gov.
* 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).
NEW CENTURY PORTFOLIOS
20 William Street, Suite 330
Wellesley, MA 02481-4102
(888) 639-0102
<PAGE>
811-5646
NEW CENTURY PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
Dated February 28, 2000
- -------------------------------------------------------------------------
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 28, 2000. 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, 1999 is incorporated by reference into this statement of additional
information.
- -----------------------------------------------------------------------
<PAGE>
NEW CENTURY PORTFOLIOS
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 2000
TABLE OF CONTENTS
Page
Investments by the Portfolios 4
Rising Trend Strategy 4
Declining Trend Strategy 4
Other Factors 4
Investment Company Securities 5
Money Market Securities 5
Individual Securities 6
Portfolio Turnover 7
Investment Restrictions 7
Underlying Funds 9
Illiquid And Restricted Securities 9
Foreign Securities 9
Foreign Currency Transactions 10
Industry Concentration 10
Master Demand Notes 10
Repurchase Agreements 10
Loans Of Portfolio Securities 11
Short Sales 11
Options Activities 11
Futures Contracts 12
Options On Futures Contracts 13
Risk Factors Regarding Options,
Futures And Options On Futures 14
Leverage Through Borrowing 15
Warrants 15
Description Of Bond Ratings 15
Investment Advisor 16
Distributor 17
Allocation Of Portfolio Brokerage 19
Transfer Agent 19
Purchase Of Shares 20
Tax-Sheltered Retirement Plans 20
Individual Retirement Accounts (IRA) 20
Tax-Sheltered Custodial Accounts 21
How to Establish Retirement Accounts 21
Systematic Withdrawal Plan 21
Officers And Trustees Of New Century
Portfolios 21
Ownership of the Portfolio 23
General Information 23
Beneficial Shares 23
Audits and Reports 24
Taxes 24
Expenses 25
Custodian 25
Code of Ethics 25
Performance 25
Average Annual Total Returns 26
Comparisons and Advertisements 26
Financial Statements 27
<PAGE>
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 "General Information - Taxes" in this SAI 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 10% of the market value of the Portfolio's net assets
would be invested in such repurchase agreements together with any other illiquid
assets.
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 also
retains the right, when the Advisor deems appropriate, to invest in investment
grade 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.
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 its services as investment advisor, the Advisor receives a monthly fee, 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. For
the fiscal years ended October 31, 1999, 1998 and 1997, the Advisor received
fees related to its management of the New Century Capital Portfolio and the New
Century Balanced Portfolio of $1,069,099 and $624,526; $875,355 and $533,425;
and $703,591 and $455,053, respectively. For the fiscal years ended October 31,
1999, 1998 and 1997, the Advisor received fees related to administrative
services provided to the New Century Capital Portfolio and the New Century
Balanced Portfolio of $71,863 and $39,254; $68,180 and $41,385; and $58,965 and
$27,593, 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
Distributor is the exclusive agent for the Portfolios' shares, and has the right
to select selling dealers to offer the shares to investors. The Portfolios each
have a Distribution Plan ("Plan") adopted pursuant to Rule 12b-1 under the 1940
Act, which allows each Portfolio to pay up to 0.25% of its average daily net
assets to the Distributor for activities primarily intended to sell shares of
the Portfolio. In addition, the Distributor receives sales commissions and other
compensation in connection with the purchase of investment company shares by
each Portfolio. The Distributor has voluntarily agreed to waive payments made by
each Portfolio pursuant to the Plan in amounts equal to the sales commissions
and other compensation that it receives in connection with the purchase of
investment company shares by each Portfolio. The following table sets forth the
corresponding dollar amounts for the last three fiscal years.
Fiscal Year Fiscal Year Fiscal Year
Ended Ended Ended
October 31, October 31, October 31,
1997 1998 1999
------------- ----------- ------------
New Century Capital
Gross amount payable by
Portfolio under Plan $171,713 $208,476 $273,707
Amount waived by Distributor
(equals sales commissions and
compensation it received in
connection with the
transactions by the
Portfolios) $(77,284) $(56,576) $(83,399)
------- ------- --------
Net amount paid by Portfolio
to Distributor under Plan. $94,429 $151,900 $190,308
======= ======= ========
New Century Balanced
Gross amount payable by
Portfolio under Plan $113,764 $125,861 $156,161
Amount waived by Distributor
(equals sales commissions and
compensation it received in
connection with the
transactions by the
Portfolios) $(31,283) $(38,766) $(38,176)
-------- --------- ---------
Net amount paid by Portfolio
to Distributor under Plan. $82,481 $87,095 $117,985
======= ======= ========
The principal expenses incurred during the stated period were for administration
staff and advertising. Under the Distribution Agreements, 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.
On February 28, 1990, 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 "12b-1 Trustees"). The Plans may be terminated at any
time by the vote of the Board or the 12b-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 12b-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 12b-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.
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,
1999, 1998 and 1997, the aggregate amounts of brokerage commissions (including
markups on principal transactions) paid by the Trust were $0, $0 and $108,567,
respectively.
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
PFPC Global Fund Services 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.
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 Program. You can arrange to make systematic cash
withdrawals from your account monthly, quarterly or annually. 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 Distributor to obtain information or an application. We
may refuse to establish a systematic withdrawal program for an account under
$10,000 or a withdrawal payment under $50.
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 53 Chairman and Executive Vice President and Clerk,
20 William Street, Trustee Weston Financial Group, Inc.;
Suite 330 Clerk and Treasurer of Weston
Wellesley, MA 02481 Securities Corporation.
*Joseph Robbat, Jr. 49 Trustee Chief Executive Officer and
20 William St., Treasurer,
Suite 330 Weston Financial Group, Inc.
Wellesley, MA 02481
Stanley H. Cooper,
Esq. 52 Trustee Attorney in private practice
One Ashford Lane
Andover, MA 01810
Roger Eastman, CPA 69 Trustee Executive Vice President and Chief
32 Meetinghouse Square Operating Officer, Danvers Savings
Middleton, MA 01949 Bank; Formerly Partner, Arthur
Andersen & Co.
Michael A.
Diorio, CPA 54 Trustee Consultant in private practice,
11 Calvin Drive Formerly Partner, Diorio, Hudson &
Milford, MA 01757 Pavento, P.C.
Wayne M. Grzecki 49 President Vice President and Senior
20 William St., Counselor, Weston Financial
Suite 330 Group, Inc.
Wellesley, MA 02481
<PAGE>
Ronald A. Sugameli 49 Vice President Vice President and Senior
20 William St., Counselor, Weston Financial
Suite 330 Group, Inc.
Wellesley, MA 02481
Ellen M. Bruno 34 Treasurer Vice President, Weston Financial
20 William St. and Secretary Group, Inc.;
Suite 330 Consultant, United Asset
Wellesley, MA 02481 Management
Corporation
Clara Prokup 52 Assistant Director of Investment
20 William St., Secretary Operations and Comptroller,
Suite 330 Weston Financial Group, Inc.
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, 1999.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Total
Position Compensation Retirement Benefits Upon Compensation
From Registrant Benefits Accrued Retirement
As Part of Trust
Expenses
<S> <C> <C> <C> <C>
Stanley H. Cooper, $4,000 $0 $0 $4,000
Esquire -Trustee
Roger Eastman, $4,000 $0 $0 $4,000
CPA - Trustee
Michael A. Diorio, $4,000 $0 $0 $4,000
CPA - Trustee
</TABLE>
Ownership of the Portfolios
As of January 31, 2000, the following persons were control persons or principal
holders of each Portfolio's shares. Control persons are persons deemed to
control a Portfolio because they own beneficially over 25% of the outstanding
shares of the Portfolio. Principal holders are persons that own beneficially 5%
or more of a Portfolio's outstanding shares. As of that date, the Trust's
officers and Trustees as a group owned less than 1% of the outstanding shares of
the Portfolios.
New Century Capital
Dean K. Webster Ltd. Partnership 5.18%
218 Madrid Boulevard
Punta Gorda, FL 33950-7901
New Century Balanced
FTC & Co. 6.64%
Datalynx 093
P.O. Box 173736
Denver, CO 80217-3736
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, Two Logan Square, Suite 2121, Philadelphia, PA 19103,
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 in accordance with certain
timing requirements 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, among other things, 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 the sum of (i) 98% of its calendar year ordinary income, plus
(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, plus (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 entity 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, 90 Washington Street,
22nd Floor, New York, NY 10286, to act as Custodian of the securities and cash
of the Trust and its Portfolios.
Code of Ethics. The Trust has adopted a Code of Ethics for certain access
persons of the Portfolios, which includes its Trustees and certain officers and
employees of the Trust, the Advisor and the Distributor. The Code of Ethics is
designed to ensure that insiders act in the interest of the Portfolios and their
shareholders with respect to any personal trading of securities. Under the Code
of Ethics, access persons are prohibited from directly or indirectly buying or
selling securities (except for mutual funds, U.S. government securities and
money market instruments) which to his or her actual knowledge are being
purchased, sold or considered for purchase or sale by the Portfolios. The Code
of Ethics contains even more stringent investment restrictions and prohibitions
for insiders who participate in the Portfolios' investment decisions. The Code
of Ethics also contains certain reporting requirements and securities trading
clearance procedures.
Performance
From time to time a Portfolio may advertise its total return and yield. "Total
return" is the total of all income and capital gains paid to shareholders,
assuming reinvestment of all distributions, plus (or minus) the change in the
value of the original investment, expressed as a percentage of purchase price.
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. A
portfolio may also include its distribution rate in its advertisements. The
distribution rate is the amount of distributions per share made over a 12-month
period divided by the current net asset value.
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" 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 average annual total returns for each
Portfolio for one-year, five-years and ten-years periods ending on December 31,
1999 are set forth in the Prospectus.
Average Annual Returns for the Periods Ended October 31, 1999.
1 Year 5 Years 10 Years
------ -------- --------
New Century Capital Portfolio 28.94% 19.47% 14.30%
New Century Balanced Portfolio 15.26% 13.94% 10.91%
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.
Financial Statements
The Trust's audited financial statements, related notes and the report of Briggs
Bunting & Dougherty, LLP for the fiscal year ended October 31, 1999, as set
forth in the Trust's Annual Report to Shareholders dated October 31, 1999, are
incorporated herein by reference. You may obtain a free copy of the Annual
Report to Shareholders by contacting the Trust at the address or telephone
number appearing on the cover of this Statement of Additional Information.
<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
PFPC Global Fund Services
211 South Gulph Road
P.O. Box 61767
King of Prussia, PA 19406-3101
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>
PART C
OTHER INFORMATION
Item 23. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are attached hereto, except as otherwise noted:
(a) (1) Declaration of Trust. (Filed with Post-effective amendment No.3)*
(2) First Amendment to Declaration of Trust. (Filed with Post-Effective
Amendment No. 13)*
(b) (1) Trust Bylaws. (Filed with Post-effective amendment No. 3)*
(c) (1) Specimen copy of beneficial share certificates. (Filed with Post-
Effective Amendment No. 3)*
(d) (1) Investment Advisory Agreement between the Registrant, on behalf of
New Century Capital Portfolio, and Weston Financial Group, Inc.,
dated November 30, 1998. (Filed with Post-Effective Amendment
No. 13)*
(2) Investment Advisory Agreement between the Registrant, on behalf of
New Century Balanced Portfolio, and Weston Financial Group, Inc.,
dated November 30, 1998. (Filed with Post-Effective Amendment
No. 13)*
(e) (1) Form of principal Underwriting Agreement between Weston Securities
Corporation and the Registrant for the New Century Capital Portfolio,
dated February 1990. (Filed with Post-Effective Amendment No. 3)*
(2) Form of principal Underwriting Agreement between Weston Securities
Corporation and the Registrant for the New Century Balanced Portfolio
(formerly New Century I Portfolio), dated February 1990. (Filed with
Post-Effective Amendment No. 3)*
(3) Amendment to Distribution Agreement, dated February 16, 2000, between
Weston Securities Corporation and the Registrant for the New Century
Capital Portfolio is electronically filed herewith as Exhibit
EX-99.e1.
(4) Amendment to Distribution Agreement, dated February 16, 2000, between
Weston Securities Corporation and the Registrant for the New Century
Balanced Portfolio is electronically filed herewith as Exhibit
EX-99.e2.
(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. (Filed with Post-Effective Amendment No. 13)1
(h) (1) Form of Administration Agreement between Weston Financial Group, Inc.
and the Registrant for the New Century Capital Portfolio. (Filed with
Post-Effective Amendment No. 3)*
(2) Form of Administration Agreement between Weston Financial Group, Inc.
and the Registrant for the New Century Balanced Portfolio (formerly
New Century I Portfolio.) (Filed with Post-Effective Amendment No.
3)*
(3) 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
Exhibit EX-99.b11.
(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 Post-Effective Amendment No. 3)*
(2) 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) Not applicable.
(o) Not applicable.
(p) Code of Ethics of the Registrant is electronically filed herewith as
Exhibit EX-99.p.
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 Weston Securities Corp.,
the only underwriter named in answer to Item 20 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, PFPC Global Fund
Services, 211 South Gulph Road, King of Prussia, Pennsylvania 19406 or The Bank
of New York, 90 Washington Street, 22nd Floor, New York, New York 10286.
Item 29. MANAGEMENT SERVICES.
All management services are covered in the investment advisory and
administration agreements 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 23 day of February, 2000.
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 February ___, 2000
Douglas A. Biggar
Trustee
/S/ Joseph Robbat, Jr. February 23, 2000
Joseph Robbat, Jr.
Trustee
/S/ Stanley H. Cooper February 23, 2000
Stanley H. Cooper
President
/S/ Wayne M. Grzecki February 23, 2000
Wayne M. Grzecki
Trustee February ___, 2000
Michael A. Diorio
Trustee
/S/ Roger Eastman February 23, 2000
Roger Eastman
<PAGE>
EXHIBIT INDEX
N-1A Exhibit Edgar Exhibit Description
No. No.
- ---------------- --------------- -------------------
23(e) EX-99.e1 Amendment to
Distribution
Agreement
23(e) EX-99.e2 Amendment to
Distribution
Agreement
23(j) EX-99.j Consent of
Auditors
23(p) EX-99.p Code of Ethics
- --------
* Previously filed and incorporated by reference.
1 Previously filed and incorporated by reference.
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, New Century Portfolios (formerly Weston Portfolios) (the
"Trust"), on behalf of its New Century Balanced Portfolio (formerly New Century
I Portfolio) (the "Fund) and Weston Securities Corp. (the "Distributor") are
parties to the Distribution Agreement, dated February 28, 1990 (the
"Agreement");
WHEREAS, effective as of October 30, 1998, the Trust changed its name from
Weston Portfolios to New Century Portfolios and the Fund changed its name from
New Century I Portfolio to New Century Balanced Portfolio;
WHEREAS, the parties hereto each desire to amend the Agreement to reflect
the current names of the Trust and the Fund;
NOW, THEREFORE, effective as of October 30, 1998, the Agreement is hereby
amended as follows:
1. When used in the Agreement, the terms "Weston Portfolios" and "Trust"
shall mean New Century Portfolios.
2. When used in the Agreement, the terms "New Century I Portfolio" and
"Fund" shall mean New Century Balanced Portfolio.
IN WITNESS WHEREOF, the parties have duly executed this Amendment.
NEW CENTURY PORTFOLIOS
Attest: /S/ Ellen Bruno /S/ Wayne M. Grzecki
By: Ellen M. Bruno By: Wayne M. Grzecki
Title: Treasurer and Secretary Title: President
WESTON SECURITIES CORP.
Attest: /S/ Joe Robbat /S/ I. Richard Horowitz
By: By: I. Richard Horowitz
Title: Title: President
AMENDMENT TO DISTRIBUTION AGREEMENT
WHEREAS, New Century Portfolios (formerly Weston Portfolios) (the
"Trust"), on behalf of its New Century Capital Portfolio (the "Fund) and Weston
Securities Corp. (the "Distributor") are parties to the Distribution Agreement,
dated February 28, 1990 (the "Agreement");
WHEREAS, effective as of October 30, 1998, the Trust changed its name from
Weston Portfolios to New Century;
WHEREAS, the parties hereto each desire to amend the Agreement to reflect
the current name of the Trust;
NOW, THEREFORE, effective as of October 30, 1998, the Agreement is hereby
amended as follows:
1. When used in the Agreement, the terms "Weston Portfolios" and "Trust"
shall mean New Century Portfolios.
IN WITNESS WHEREOF, the parties have duly executed this Amendment.
NEW CENTURY PORTFOLIOS
Attest: /S/ Ellen Bruno /S/ Wayne M. Grzecki
By: Ellen M. Bruno By: Wayne M. Grzecki
Title: Treasurer and Secretary Title: President
WESTON SECURITIES CORP.
Attest: /S/ Joe Robbat /S/ I. Richard Horowitz
By: By: I. Richard Horowitz
Title: Title: President
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated November 24, 1999, accompanying the October 31,
1999 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 the Post-Effective Amendment 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, 2000
New Century Portfolios
Weston Securities Corporation
Weston Financial Group, Inc.
CODE OF ETHICS
and
STATEMENT ON INSIDER TRADING
Effective as of October 1, 1998
<PAGE>
CODE OF ETHICS
New Century Portfolios / Weston Securities Corporation
Rule 17j-1 under the Investment Company Act of 1940 (the "Act") requires
registered investment companies ("investment companies") and their investment
advisers and principal underwriters to adopt written codes of ethics designed to
prevent fraudulent trading by those persons covered under Rule 17j-1. Rule 17j-1
also makes it unlawful for certain persons, including any officer or director of
an investment company, in connection with the purchase or sale by such person of
a security held or to be acquired by an investment company to:
1. employ any device, scheme or artifice to defraud the investment
company;
2. make to the investment company any untrue statement of a material
fact or omit to state to the investment company a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
3. engage in any act, practice or course of business which operates or
would operate as a fraud or deceit upon the investment company; or
4. engage in any manipulative practice with respect to the investment
company.
Rule 17j-1 also requires that each investment company and its affiliates
use reasonable diligence, and institute procedures reasonably necessary, to
prevent violations of its code of ethics.
In addition to Rule 17j-1 of the Act, the Insider Trading and Securities
Fraud Enforcement Act of 1988 ("ITSFEA") requires that all investment advisors
and broker-dealers establish, maintain, and enforce written policies and
procedures designed to detect and prevent the misuse of material non-public
information by such investment advisor and/or broker-dealer. Section 204A of the
Investment Advisors Act of 1940 (the "Advisors Act") states that an investment
advisor must adopt and disseminate written policies with respect to ITSFEA, and
an investment advisor must also vigilantly review, update, and enforce them.
Section 204A provides that every person subject to Section 204 of the Advisors
Act shall be required to establish procedures to prevent insider trading.
Attached to this Code of Ethics (the "Code"), as Exhibit A, is a Statement
on Insider Trading. Any investment advisor who acts as such for any series of
New Century Portfolios (the "Trust") and any broker-dealer who acts as the
principal underwriter for any series of the Trust must comply with the policy
and procedures outlined in the Statement on Insider Trading unless such
investment advisor or principal underwriter has adopted a similar policy and
procedures with respect to insider trading which are determined by the Trust's
Board of Trustees to comply with ITSFEA's requirements.
This Code is being adopted by the Trust (1) for implementation with respect
to covered persons of the Trust; and (2) for implementation by any investment
advisor to the Trust as that term is defined under the Act (each such investment
advisor being deemed an "Investment Advisor" for purposes of this Code), and for
any principal underwriter for the Trust, unless such investment advisor or
principal underwriter has adopted a code of ethics and plan of implementation
thereof which is determined by the Trust's Board of Trustees to comply with the
requirements of Rule 17j-1 and to be sufficient to effectuate the purpose and
objectives of Rule 17j-1.
STATEMENT OF GENERAL PRINCIPLES
This Code is based on the principal that the officers, directors, and
employees of the Trust and the officers, directors, and employees of the Trust's
investment advisor(s) owe a fiduciary duty to the shareholders of the Trust and,
therefore, the Trust's and investment advisor's personnel must place the
shareholders' interests ahead of their own. The Trust's and investment advisor's
personnel must also avoid any conduct which could create a potential conflict of
interest, and must ensure that their personal securities transactions do not in
any way interfere with the Trust's portfolio transactions and that they do not
take inappropriate advantage of their positions. All persons covered by this
Code must adhere to these general principles as well as the Code's specific
provisions, procedures, and restrictions.
DEFINITIONS
For purposes of this Code:
"Access Person" means any director, officer, employee, or advisory person
of the Trust, or those persons who have an active part in the management,
portfolio selection, or underwriting functions of the Trust, or who, in the
course of their normal duties, obtain prior information about the Trust's
purchases or sales of securities (i.e. traders and analysts).
"Advisory Person" With respect to an Investment Advisor, an Advisory Person
means any director, officer, general partner, or employee who, in connection
with his/her regular functions or duties, makes, participates in, or obtains
current information regarding the purchase or sale of a security by the Trust,
or whose functions relate to the making of any recommendations with respect to
such purchases or sales, including any natural person in a control relationship
to the Trust who obtains current information concerning recommendations made
with regard to the purchase or sale of a security by the Trust.
"Investment Personnel" shall mean any securities analyst, portfolio
manager, or a member of an investment committee who is directly involved in the
decision making process as to whether or not to purchase or sell a portfolio
security and those persons who provide information and advice to a Portfolio
Manager or who help execute a Portfolio Manager's decisions.
"Trust Personnel" shall mean an Access Person, Advisory Person, and/or
Investment Personnel.
"Portfolio Manager" shall mean an employee of an Investment Advisor
entrusted with the direct responsibility and authority to make investment
decisions affecting the Trust.
"Beneficial Ownership" shall be as defined in Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder, which, generally
speaking, encompass those situations where the beneficial owner has the right to
enjoy some economic benefits which are substantially equivalent to ownership
regardless of who is the registered owner. This would include:
(i) securities which a person holds for his or her own benefit either in
bearer form, registered in his or her own name or otherwise, regardless of
whether the securities are owned individually or jointly;
(ii) securities held in the name of a member of his or her immediate family
sharing the same household;
(iii) securities held by a trustee, executor, administrator, custodian or
broker;
(iv) securities owned by a general partnership of which the person is a
member or a limited partnership of which such person is a general partner;
(v) securities held by a corporation which can be regarded as a personal
holding company of a person; and
(vi) securities recently purchased by a person and awaiting transfer into
his or her name.
"Security" shall have the meaning set forth in Section 2(a)(36) of the Act,
except that it shall not include shares of registered open-end investment
companies, securities issued by the Government of the United States or by
Federal agencies which are direct obligations of the United States, bankers'
acceptances, bank certificates of deposits, and commercial paper. A future or an
option on a future will be deemed to be a security subject to this Code.
"Purchase or Sale of a Security" includes the writing of an option to
purchase or sell a security.
A security is "being considered for purchase or sale" or is "being
purchased or sold" when a recommendation to purchase or sell the security has
been made by an Investment Advisor and such determination has been communicated
to the Trust. With respect to the Investment Advisor making the recommendation,
a security is being considered for purchase or sale when an officer, director or
employee of such Investment Advisor seriously considers making such a
recommendation.
Solely for purposes of this Code, any agent of the Trust charged with
arranging the execution of a transaction shall be subject to the reporting
requirements of this Code as to any such security as and from the time the
security is identified to such agent as though such agent was an Investment
Advisor hereunder.
NOTE: An officer or employee of the Trust or an Investment Advisor whose
duties do not include the advisory functions described above, who does not have
access to the advisory information contemplated above, and whose assigned place
of employment is at a location where no investment advisory services are
performed for the Trust, is not an "Advisory Person" or an "Access Person"
unless actual advance knowledge of a covered transaction is furnished to such
person.
PROHIBITED TRANSACTIONS
Trust Personnel shall not engage in any act, practice or course of conduct
which would violate the provisions of Rule 17j-1 set forth above. No Access
Person or Advisory Person shall purchase or sell, directly or indirectly, any
security in which he/she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which, to his/her actual knowledge,
at the time of such purchase or sale (i) is being considered for purchase or
sale by the Trust; or (ii) is being purchased or sold by the Trust; except that
the prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control;
(2) purchases or sales which are non-volitional on the part of either the
Access Person, the Advisory Person, or the Trust;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Trust Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
PROHIBITED TRANSACTIONS BY INVESTMENT PERSONNEL
No Investment Personnel shall:
(a) acquire any securities in an initial public offering; or
(b) acquire securities in a private placement without prior written
approval of the Registered Principal designated by the Board
of Trustees.
In considering a request to invest in a private placement, the Registered
Principal will take into account, among other factors, whether the investment
opportunity should be reserved for the Trust, and whether the opportunity is
being offered to Investment Personnel by virtue of their/his/her position with
the Trust. Should Investment Personnel be authorized to acquire securities
through a private placement, they/he/she shall, in addition to reporting the
transaction on the quarterly report to the Trust, disclose the interest in that
investment to other Investment Personnel participating in that investment
decision if and when they/he/she plays a part in the Trust's subsequent
consideration of an investment in that issuer. In such a case, the Trust's
decision to purchase securities of that issuer will be subject to an independent
review by Investment Personnel who have no personal interest in the issuer.
BLACKOUT PERIODS
No Access Person or Advisory Person shall execute a securities transaction
on a day during which the Trust has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn. In addition, a Portfolio
Manager is expressly prohibited from purchasing or selling a security within
seven (7) calendar days before or after the Trust that he/she manages trades in
that security.
Should Trust Personnel trade within the proscribed period, such trade
should be canceled if possible. If it is not possible to cancel the trade, all
profits from the trade must be disgorged and the profits will be paid to a
charity selected by the Trust Personnel and approved by the officers of the
Trust.
The prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control if the person making the investment decision with respect to
such account has no actual knowledge about the Trust's pending "buy"
or "sell" order;
(2) purchases or sales which are non-volitional on the part of either the
Access Person, the Advisory Person, or the Trust;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Trust Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
SHORT-TERM TRADING
No Investment Personnel shall profit from the purchase and sale, or sale
and purchase, of the same (or equivalent) securities which are owned by the
Trust or which are of a type suitable for purchase by the Trust, within sixty
(60) calendar days. Any profits realized on such short-term trades must be
disgorged and the profits will be paid to a charity selected by the Investment
Personnel and approved by the officers of the Trust. The Registered Principal
designated by the Board of Trustees may permit in writing exemptions to the
prohibition of this section, on a case-by-case basis, when no abuse is involved
and the equities of the circumstances support an exemption.
GIFTS
No Investment Personnel shall accept a gift or other thing of more than de
minimis value ("gift") from any person or entity that does business with or on
behalf of the Trust if such gift is in relation to the business of the employer
of the recipient of the gift. In addition, any Investment Personnel who receive
an unsolicited gift or a gift with an unclear status under this section shall
promptly notify the Registered Principal and accept the gift only upon written
approval of the Registered Principal.
SERVICE AS A TRUSTEE
No Investment Personnel shall serve as a director of a publicly traded
company absent prior written authorization from the Board of Trustees based upon
a determination that such board service would not be inconsistent with the
interests of the Trust and its shareholders.
COMPLIANCE PROCEDURES
1. All Trust Personnel shall preclear their personal securities transactions
prior to executing an order. A written request must be submitted to the
Trust's Registered Principal, and the Registered Principal must give
his/her written authorization prior to Trust Personnel placing a purchase
or sell order with a broker. Should the Registered Principal deny the
request, he/she will give a reason for the denial. An approved request will
remain valid for two (2) business days from the date of the approval.
2. Trust Personnel shall instruct their broker(s) to supply the Registered
Principal, on a timely basis, with duplicate copies of confirmations of all
personal securities transactions and copies of all periodic statements for
all securities accounts.
3. Trust Personnel, other than trustees or officers required to report their
securities transactions to a registered investment advisor pursuant to Rule
204-2(a)(12) or (13) under the Investment Advisors Act, shall submit
reports showing all transactions in securities as defined herein in which
the person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership.
4. Each trustee, who is not an interested person of the Trust as defined in
the Act, shall submit reports as required under subparagraph 3 above, but
only for transactions in reportable securities where at the time of the
transaction the trustee knew, or in the ordinary course of fulfilling
his/her official duties as a trustee should have known, that during the
seven (7) day period immediately preceding the date of the transaction by
the trustee, such security was purchased or sold by the Trust or was being
considered for purchase or sale by the Trust.
5. Every report required to be made under subparagraphs 3 and 4 above shall be
made not later than ten (10) days after the end of the calendar quarter in
which the transaction to which the report relates was effected. The report
shall contain the following information concerning any transaction required
to be reported therein:
(a) the date of the transaction;
(b) the title and number of shares;
(c) the principal amount involved;
(d) the nature of the transaction (i.e. purchase, sale, or other type of
acquisition or disposition);
(e) the price at which the transaction was effected; and
(f) the name of the broker, dealer or bank with or through whom the
transaction was effected.
6. The Registered Principal shall identify all Trust Personnel who have a
duty to make the reports required hereunder and shall inform each such
person of such duty, and shall receive all reports required hereunder.
7. The Registered Principal shall promptly report to the Trust's Board of
Trustees (a) any apparent violation of the prohibitions contained in this
Code and (b) any reported transactions in a security which was purchased
or sold by the Trust within seven (7) days before or after the date of the
reported transaction.
8. The Trust's Board of Trustees, or a Committee of Trustees created by the
Board of Trustees for that purpose, shall consider reports made to the
Board of Trustees hereunder and shall determine whether or not this Code
has been violated and what sanctions, if any, should be imposed.
9. This Code, a list of all persons required to make reports hereunder from
time to time, a copy of each report made by Trust Personnel, each
memorandum made by the Registered Principal hereunder, and a record of any
violation hereof and any action taken as a result of such violation, shall
be maintained by the Trust as required under Rule 17j-1.
10. Upon the commencement of employment of a person who would be deemed to be
fall within the definition of "Trust Personnel", that person must disclose
all personal securities holdings to the Registered Principal.
11. All Trust Personnel must report, on an annual basis, all personal
securities holdings.
12. At least annually, all Trust Personnel will be required to certify that
they (a) have read and understand the Code; (b) recognize that they are
subject to the requirements outlined therein; (c) have complied with the
requirements of the Code; (d) have disclosed and reported all personal
securities transactions required to be disclosed; and (e) have disclosed
all personal securities holdings.
13. The Registered Principal shall prepare an annual report to the Trust's
Board of Trustees. Such report shall (a) include a copy of the Trust's
Code; (b) summarize existing procedures concerning personal investing and
any changes in the Code's policies or procedures during the past year; (c)
identify any violations of the Code; and (d) identify any recommended
changes in existing restrictions, policies or procedures based upon the
Trust's experience under the Code, any evolving industry practices, or
developments in applicable laws or regulations.
<PAGE>
EXHIBIT A
STATEMENT ON INSIDER TRADING
The Insider Trading and Securities Fraud Enforcement Act of 1988 ("ITSFEA")
requires that all investment advisors and broker-dealers establish, maintain,
and enforce written policies and procedures designed to detect and prevent the
misuse of material non-public information by such investment advisor and/or
broker-dealer, or any person associated with the investment advisor and/or
broker dealer.
Section 204A of the Investment Advisers Act of 1940 (the "Advisers Act")
states that an investment advisor must adopt and disseminate written policies
with respect to ITSFEA, and an investment advisor must also vigilantly review,
update, and enforce them. Section 204A provides that every person subject to
Section 204 of the Advisers Act shall be required to establish procedures to
prevent insider trading.
Each investment advisor who acts as such for any series of New Century
Portfolios. (the "Trust") and each broker-dealer which acts as principal
underwriter to any series of the Trust has adopted the following policy,
procedures, and supervisory procedures in addition to the Trust's Code of
Ethics. Throughout this document the investment advisor(s) and principal
underwriter(s) shall collectively be called the "Providers".
SECTION I - POLICY
The purpose of this Section 1 is to familiarize the officers, trustees, and
employees of the Providers with issues concerning insider trading and to assist
them in putting into context the policy and procedures on insider trading.
Policy Statement:
No person to whom this Statement on Insider Trading applies, including
officers, trustees, and employees, may trade, either personally or on behalf of
others (such as mutual funds and private accounts managed by a Provider) while
in possession of material, non-public information; nor may any officer,
director, or employee of a Provider communicate material, non-public information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." This policy applies to every officer, director, and employee
of a Provider and extends to activities within and outside their duties as a
Provider. It covers not only personal transactions of covered persons, but
indirect trading by family, friends and others, or the non-public distribution
of inside information from you to others. Every officer, trustee, and employee
must read and retain this policy statement. Any questions regarding the policy
and procedures should be referred to the Registered Principal.
The term "insider trading" is not defined in the Federal securities laws,
but generally is used to refer to the use of material non-public information to
trade in securities (whether or not one is an "insider") or the communications
of material non-public information to others who may then seek to benefit from
such information.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(a) trading by an insider, while in possession of material non-public
information, or
(b) trading by a non-insider, while in possession of material non-public
information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential
or was misappropriated, or
(c) communicating material non-public information to others.
The elements of insider trading and the penalties for such unlawful conduct
are discussed below.
1. Who is an Insider? The concept of "insider" is broad. It includes officers,
trustees, and employees of a company. In addition, a person can be a
"temporary insider" if he or she enters into a special confidential
relationship in the conduct of a company's affairs and as a result is given
access to information solely for the company's purposes. A temporary
insider can include, among others, a company's attorneys, accountants,
consultants, bank lending officers, and the employees of such
organizations. In addition, an investment advisor may become a temporary
insider of a company it advises or for which it performs other services.
According to the Supreme Court, the company must expect the outsider to
keep the disclosed non-public information confidential and the relationship
must at least imply such a duty before the outsider will be considered an
insider.
2. What is Material Information? Trading on inside information can be the
basis for liability when the information is material. In general,
information is "material" when there is a substantial likelihood that a
reasonable investor would consider it important in making his or her
investment decisions, or information that is reasonably certain to have a
substantial effect on the price of a company's securities. Information that
officers, trustees, and employees should consider material includes, but is
not limited to: dividend changes, earnings estimates, changes in previously
released earnings estimates, significant merger or acquisition proposals or
agreements, major litigation, liquidation problems, and extraordinary
management developments.
3. What is Non-public Information? Information is non-public until it has been
effectively communicated to the market place. One must be able to point to
some fact to show that the information is generally public. For example,
information found in a report filed with the SEC, or appearing in Dow
Jones, Reuters Economic Services, the Wall Street Journal or other
publications of general circulation would be considered public. (Depending
on the nature of the information, and the type and timing of the filing or
other public release, it may be appropriate to allow for adequate time for
the information to be "effectively" disseminated.)
4. Reason for Liability. (a) Fiduciary duty theory - in 1980 the Supreme Court
found that there is no general duty to disclose before trading on material
non-public information, but that such a duty arises only where there is a
direct or indirect fiduciary relationship with the issuer or its agents.
That is, there must be a relationship between the parties to the
transaction such that one party has a right to expect that the other party
will disclose any material non-public information or refrain from trading.
(b) Misappropriation theory - another basis for insider trading liability
is the "misappropriation" theory, where liability is established when
trading occurs on material non-public information that was stolen or
misappropriated from any other person.
5. Penalties for Insider Trading. Penalties for trading on or communicating
material non-public information are severe, both for individuals and their
employers. A person can be subject to some or all of the penalties below
even if he or she does not personally benefit from the violation. Penalties
include:
* civil injunctions
* treble damages
* disgorgement of profits
* jail sentences
* fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
* fines for the employer or other controlling person of up to the
greater of $1 million or three times the amount of the profit gained
or loss avoided.
In addition, any violation of this policy statement can be expected to
result in serious sanctions by a Provider, including dismissal of the
persons involved.
SECTION II - PROCEDURES
The following procedures have been established to aid the officers,
trustees, and employees of a Provider in avoiding insider trading, and to aid in
preventing, detecting, and imposing sanctions against insider trading. Every
officer, director, and employee of a Provider must follow these procedures or
risk serious sanctions, including dismissal, substantial personal liability,
and/or criminal penalties. If you have any questions about these procedures you
should consult the Registered Principal.
1. Identifying Inside Information. Before trading for yourself or others,
including investment companies or private accounts managed by a Provider, in the
securities of a company about which you may have potential inside information,
ask yourself the following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially affect the market price
of the securities if generally disclosed?
ii. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in Reuters, The Wall Street Journal or
other publications of general circulation?
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
(a) Report the matter immediately to the Registered Principal.
(b) Do not purchase or sell the security on behalf of yourself or others,
including investment companies or private accounts managed by a
Provider.
(c) Do not communicate the information to anybody, other than to the
compliance official.
(d) After the compliance official has reviewed the issue, you will be
instructed to either continue the prohibitions against trading and
communication, or you will be allowed to communicate the information
and then trade.
2. Personal Security Trading. All officers, directors, and employees of a
Provider (other than officers, directors and employees who are required to
report their securities transactions to a registered investment company in
accordance with a Code of Ethics) shall submit to the Registered Principal, on a
quarterly basis, a report of every securities transaction in which they, their
families (including the spouse, minor children, and adults living in the same
household as the officer, director, or employee), and trusts of which they are
trustees or in which they have a beneficial interest have participated, or at
such lesser intervals as may be required from time to time. The report shall
include the name of the security, date of the transaction, quantity, price, and
broker-dealer through which the transaction was effected. All officers,
directors and employees must also instruct their broker(s) to supply the
Registered Principal, on a timely basis, with duplicate copies of confirmations
of all personal securities transactions and copies of all periodic statements
for all securities accounts.
3. Restricting Access to Material Non-public Information. Any information in
your possession that you identify as material and non-public may not be
communicated other than in the course of performing your duties to anyone,
including persons within your company, except as provided in paragraph 1 above.
In addition, care should be taken so that such information is secure. For
example, files containing material non-public information should be sealed;
access to computer files containing material non-public information should be
restricted.
4. Resolving Issues Concerning Insider Trading. If, after consideration of the
items set forth in paragraph 1, doubt remains as to whether information is
material or non-public, or if there is any unresolved question as to the
applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, it must be discussed with the Registered Principal
before trading or communicating the information to anyone.
<PAGE>
SECTION III - SUPERVISION
The role of the Registered Principal is critical to the implementation and
maintenance of this Statement on Insider Trading. These supervisory procedures
can be divided into two classifications, (1) the prevention of insider trading,
and (2) the detection of insider trading.
1. Prevention of Insider Trading:
To prevent insider trading the compliance official should:
(a) answer promptly any questions regarding the Statement on Insider
Trading;
(b) resolve issues of whether information received by an officer, trustee,
or employee is material and non-public;
(c) review and ensure that officers, trustees, and employees review, at
least annually, and update as necessary, the Statement on Insider
Trading; and
(d) when it has been determined that an officer, trustee, or employee has
material non-public information,
(i) implement measures to prevent dissemination of such
information, and
(ii) if necessary, restrict officers, trustees, and employees from
trading the securities.
2. Detection of Insider Trading:
To detect insider trading, the Registered Principal should:
(a) review the trading activity reports filed by each officer, trustee,
and employee, to ensure no trading took place in securities in which
the Provider has material non-public information;
(b) review the trading activity of the mutual funds managed by the
investment advisor and the mutual funds which the broker dealer acts
as principal underwriter;
(c) coordinate, if necessary, the review of such reports with other
appropriate officers, trustees, or employees of a Provider and New
Century Portfolios.
3. Special Reports to Management:
Promptly, upon learning of a potential violation of the Statement on
Insider Trading, the Registered Principal must prepare a written report to
management of the Provider, and provide a copy of such report to the Board of
Trustees of New Century Portfolios, providing full details and recommendations
for further action.
4. Annual Reports: On an annual basis, the Registered Principal of each Provider
will prepare a written report to the management of the Provider, and provide a
copy of such report to the Board of Trustees of New Century Portfolios, setting
forth the following:
(a) a summary of the existing procedures to detect and prevent insider
trading;
(b) full details of any investigation, either internal or by a regulatory
agency, of any suspected insider trading and the results of such
investigation;
(c) an evaluation of the current procedures and any recommendations for
improvement.
<PAGE>
Exhibit B
New Century Portfolios
CODE OF ETHICS
INITIAL REPORT
To the Registered Principal of New Century Portfolios.:
1. I hereby acknowledged receipt of a copy of the Code of Ethics for New
Century Portfolios.
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Trust Personnel."
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Trust, such as any economic relationship between my transactions and
securities held or to be acquired by the Trust.
4. As of the date below I had a direct or indirect beneficial ownership in
the following securities:
Type of Interest
Name of Security Number of Shares (Direct or Indirect)
Date: Signature:
Print Name:
<PAGE>
Exhibit C
New Century Portfolios
CODE OF ETHICS
ANNUAL REPORT
To the Registered Principal of New Century Portfolios.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Trust Personnel."
2. I hereby certify that, during the year ended December 31, 19__, I have
complied with the requirements of the Code and I have reported all securities
transactions required to be reported pursuant to the Code.
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Trust, such as any economic relationship between my transactions and
securities held or to be acquired by the Trust.
4. As of December 31, 19__, I had a direct or indirect beneficial
ownership in the following securities:
Type of Interest
Name of Security Number of Shares (Direct or Indirect)
Date: Signature:
Print Name:
<PAGE>
Exhibit D
New Century Portfolios
Securities Transactions Report
For the Calendar Quarter Ended: _________
To the Registered Principal of New Century Portfolios:
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics adopted by New Century Portfolios.
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SECURITY DATE OF No. of DOLLAR NATURE OF PRICE BROKER/DEALER
TRANSACTION SHARES AMOUNT OF TRANSACTION OR BANK
TRANSACTION (Purchase, THROUGH
Sale, WHOM EFFECTED
Other)
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This report (i) excludes transactions with respect to which I had no direct
or indirect influence or control, (ii) other transactions not required to be
reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that I
have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Trust, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
the Trust.
Date: Signature:
Print Name:
