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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number ___811-05646_________________
New Century Portfolios
(Exact name of registrant as specified in charter)
100 William Street, Suite 200 Wellesley, Massachusetts 02481
(Address of principal executive offices) (Zip code)
Nicole M. Tremblay, Esq.
Weston Financial Group, Inc. 100 William Street, Suite 200 Wellesley, MA 02481
(Name and address of agent for service)
Registrant's telephone number, including area code: (781) 235-7055
Date of fiscal year end: October 31, 2013
Date of reporting period: October 31, 2013
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
| Item 1. | Reports to Stockholders. |
 New Century Capital New Century Balanced New Century International New Century Alternative Strategies ANNUAL REPORT Year Ended October 31, 2013 100 William Street, Suite 200, Wellesley MA 02481 781-239-0445 888-639-0102 Fax 781-237-1635 |
CONTENTS
| LETTER TO SHAREHOLDERS | 2-4 |
| PERFORMANCE CHARTS | 5-8 |
| NEW CENTURY PORTFOLIOS | |
| New Century Capital Portfolio | |
| Portfolio Information | 9 |
| Schedule of Investments | 10-11 |
| New Century Balanced Portfolio | |
| Portfolio Information | 12 |
| Schedule of Investments | 13-14 |
| New Century International Portfolio | |
| Portfolio Information | 15 |
| Schedule of Investments | 16-17 |
| New Century Alternative Strategies Portfolio | |
| Portfolio Information | 18 |
| Schedule of Investments | 19-21 |
| Statements of Assets and Liabilities | 22 |
| Statements of Operations | 23 |
| Statements of Changes in Net Assets | 24-25 |
| Financial Highlights | 26-29 |
| Notes to Financial Statements | 30-39 |
| Report of Independent Registered Public Accounting Firm | 40 |
| Board of Trustees and Officers | 41-42 |
| About Your Portfolios’ Expenses | 43-45 |
| Trustees’ Approval of Investment Advisory Agreements | 46-50 |
LETTER TO SHAREHOLDERS | December 2013 |
We are pleased to present our 24th Annual Report. The report summarizes the 12-month period ended October 31, 2013. In addition, this report presents important financial information for each of the New Century Portfolios. We invite you to visit our website at www.newcenturyportfolios.com for additional information.
As we look back over the 12 months ended October 31, 2013, U.S. markets finished with robust returns as demonstrated by the increase in the S&P 500 Index by 27.18%. During this past summer, markets fluctuated over the potential “tapering” of the Federal Reserve’s Quantitative Easing program and intense discussions over the U.S. debt ceiling caused a government shutdown. Nevertheless, with Ben Bernanke’s handling, broad domestic indexes regained the global lead in the second half of fiscal 2013. International markets also produced positive returns. For example, developed international markets, as measured by the MSCI EAFE Index, gained 26.88% and the MSCI Emerging Markets Index increased 6.53% during the year ended October 31, 2013. Even though market activity is forecasted to be tepid, the European debt crisis appears to be behind us and the Eurozone is slowly coming out of a recession. However, a number of emerging market economies are coming off cyclical peaks and global growth is in low but in positive gear. (IMF Executive Summary October 2013). Although, mediocre global growth has also impacted the price of commodities.
Several themes were implemented within the New Century Portfolios over the year. We began tilting towards active managers and away from passive managers. During a bear market, investors typically flee unstable lower quality stocks. Conversely, these same stocks rally strongly in the initial phase of a market recovery. As the cycle matures, participants approach investing more cautiously and evaluate investments according to fundamentals. Companies with good earnings growth and solid balance sheets typically start to outperform, benefiting active management. As the S&P 500 Index has already garnered 184% since the 2009 market low through October 31, 2013, active management may now come to the forefront. As such, the New Century Capital, Balanced and International Portfolios have begun replacing a number of passive index positions with actively managed mutual funds.
We have also attempted to temper the effects of rising interest rates. Even though the Federal Reserve will not likely begin tapering until the spring of 2014, some investors may anticipate this move. In the period between May and September 2013, the 10-year Treasury yields soared from 1.7% to 3.0% as the word “taper” dominated the headlines. Over the year the Portfolios sold longer duration funds and invested proceeds in strategies that are less impacted by rising interest rates. In fixed income, the Portfolios shifted to shorter durations or funds that have wider investment mandates. In equities, dividend focused mandates were sold in favor of other types of value or more growth-tilted strategies. These trades were most evident in New Century Capital and New Century Balanced Portfolios. Within New Century Alternative Strategies Portfolio, the long/short, arbitrage, global macro styles were seen to be effective themes to employ.
On the international front, we favor developed markets. We believe European stock valuations are below average and could benefit from early cycle dynamics. The Global PMI suggests manufacturing momentum could continue for larger international economies. Emerging markets indexes have suffered under the weight of China’s structural reform and
2
a lower growth mandate, however a recent policy shift has assisted with stabilizing growth. In May, expectations of a “taper” and higher U.S. Treasury yields caused carry trades to unwind, resulting in capital outflows from emerging markets. Over the year, New Century Capital, Balanced and International Portfolios have shifted some exposure away from emerging markets to the developed markets.
For the fiscal year ended October 31, 2013, New Century Capital Portfolio (NCCPX) returned 24.45% vs. 27.18% for the S&P 500 Index, the Portfolio’s benchmark index. This large-cap domestic Portfolio opportunistically invests in smaller-cap, sector and international areas. The Portfolio’s mid- and smaller-cap funds added the most to returns. In a year of strong equity performance, riskier mid- and smaller-cap indexes outperformed large-cap indexes. New Century Capital Portfolio’s growth tilt was also beneficial as some of the largest contributors to performance were funds in the large growth style. The sector group was a minor detractor relative to the benchmark. Healthcare funds were strong performers, but they were offset by commodity-related funds such as gold and energy. Finally, the allocation to international funds served as a drag on performance.
New Century Balanced Portfolio (NCIPX) outperformed the Morningstar Moderate Allocation category for the fiscal year ended October 31, 2013. New Century Balanced Portfolio gained 15.97% vs. 15.85% for the Morningstar Moderate Allocation category. Compared to the Morningstar Moderate Allocation category, the Portfolio’s allocation to stocks vs. bonds, and selection of fixed income sectors explained most of the outperformance. Active fixed income managers with flexible mandates were particularly beneficial to the Portfolio. Similar to the New Century Capital Portfolio, the equity portion’s slight growth tilt was also additive to overall performance.
New Century International Portfolio (NCFPX) finished its fiscal year ended October 31, 2013 with a 17.95% gain. In comparison, the MSCI EAFE Index rallied 26.88% and the MSCI ACWI ex USA Index garnered 20.29%. The latter index is an appropriate benchmark considering the Portfolio’s emerging markets exposure. Meanwhile, the Morningstar Foreign Large Blend category rallied on average by 23.08%. Over the year the Portfolio reduced underperforming emerging markets exposure to slightly below the ACWI benchmark exposure. Further, the Portfolio’s emerging markets and Latin America exposures detracted from the annual performance. In the second half of the year, exposure to Japan was increased in order to capture returns of one of the strongest performing countries in 2013. Overall, New Century International Portfolio is bullish on Europe, long-term optimistic on emerging markets, and neutral on Japan.
New Century Alternative Strategies Portfolio (NCHPX) gained 6.99% vs. the Morningstar Multi-Alternative category’s 3.69% as of October 31, 2013. This four star fund1 has continued to outperform the average fund in its Morningstar category for the one, three, five and ten-year periods ended October 31, 2013. New Century Alternative Strategies Portfolio opportunistically invests among a broad-based portfolio of different alternative asset classes. Over the fiscal year ended October 31, 2013, New Century Alternative Strategies Portfolio mitigated volatility by selling funds in highly correlated strategies and redeploying the proceeds to different sources of alpha. The natural resource category was a detractor, whereas the Portfolio benefited from exposure to the long/short equities, global macro and
3
asset allocation categories. Further, redeployment of assets into better performing funds within categories and timely purchases of discounted closed-end funds after the summer’s market pullback were also beneficial.
As we embark on the 2014 fiscal year, we have positioned New Century Portfolios for the continuation of several trends – better markets for active managers, volatility in interest rates and recovering developed international markets. A significant event in 2014 will likely be the slowing of the Federal Reserve’s Quantitative Easing program. We remain vigilant for opportunities this event may bring.
We appreciate your business and thank you for your trust in New Century Portfolios.
Sincerely,
 |  |
Nicole M. Tremblay, Esq. President, CEO | Susan K. Arnold Portfolio Manager |
 |  |
Andre M. Fernandes Portfolio Manager | Ronald A. Sugameli Portfolio Manager |
1 Morningstar Ratings reflect risk-adjusted performance and are derived from weighted average of the Fund’s 3-, 5- and 10-year (if applicable) Ratings. For the periods ended October 31, 2013, the Portfolio received 4-Stars Overall and for the 3- and 5-year periods among 142, 142 and 87 funds respectively. The Morningstar Ratings formula measures the amount of variation in a fund’s performance and gives more emphasis to downward variations. Ratings are subject to change every month. The top 10% of the funds in the category receive 5 stars; the next 22.5% 4 stars; the next 35% 3 stars; the next 22.5% 2 stars; and the last 10% 1 star.
Investors should take into consideration the investment objectives, risks, charges and expenses of the New Century Portfolios carefully before investing. The prospectus contains these details and other information and should be read carefully before investing. Principal value of an investment will fluctuate and shares when redeemed may be worth more or less than your original investment. Past performance is not indicative of future results. Portfolio and opinions expressed herein are subject to change.
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NEW CENTURY CAPITAL PORTFOLIO PERFORMANCE CHARTS (Unaudited) |
Comparison of the Change in Value of a $10,000 Investment
in New Century Capital Portfolio and S&P 500® Composite Index
Average Annual Total Returns For Periods Ended October 31, 2013 | ||||
1 Year | 5 Years | 10 Years | ||
New Century Capital Portfolio (a) | 24.45% | 13.42% | 6.53% | |
S&P 500® Composite Index * | 27.18% | 15.17% | 7.46% | |
| (a) | The total returns do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. |
| * | The S&P 500® Composite Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment. |
5
NEW CENTURY BALANCED PORTFOLIO PERFORMANCE CHARTS (Unaudited) |
Comparison of the Change in Value of a $10,000 Investment
in New Century Balanced Portfolio, S&P 500® Composite Index and
Barclays U.S. Intermediate Government/Credit Bond Index
Average Annual Total Returns For Periods Ended October 31, 2013 | ||||
1 Year | 5 Years | 10 Years | ||
New Century Balanced Portfolio (a) | 15.97% | 11.23% | 5.87% | |
S&P 500® Composite Index * | 27.18% | 15.17% | 7.46% | |
Barclays U.S. Intermediate Government/Credit Bond Index * | -0.03% | 5.37% | 4.26% | |
| (a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. |
| * | The S&P 500® Composite Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. The Barclays U.S. Intermediate Government/Credit Bond Index is the non-securitized component of the U.S. Aggregate Index, and includes Treasuries, government-related issues, and corporate. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment. |
6
NEW CENTURY INTERNATIONAL PORTFOLIO PERFORMANCE CHARTS (Unaudited) |
Comparison of the Change in Value of a $10,000 Investment
in New Century International Portfolio and MSCI EAFE Index
Average Annual Total Returns For Periods Ended October 31, 2013 | |||
1 Year | 5 Years | 10 Years | |
New Century International Portfolio (a) | 17.95% | 10.92% | 8.19% |
| MSCI EAFE Index * | 26.88% | 11.99% | 7.71% |
| (a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. |
| * | The MSCI EAFE (Europe, Australasia and Far East) Index is a free float weighted capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment. |
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NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO PERFORMANCE CHARTS (Unaudited) |
Comparison of the Change in Value of a $10,000 Investment
in New Century Alternative Strategies Portfolio, S&P 500® Composite Index
and Barclays U.S. Intermediate Government/Credit Bond Index
Average Annual Total Returns For Periods Ended October 31, 2013 | |||
1 Year | 5 Years | 10 Years | |
New Century Alternative Strategies Portfolio (a) | 6.99% | 6.77% | 4.76% |
S&P 500® Composite Index * | 27.18% | 15.17% | 7.46% |
Barclays U.S. Intermediate Government/Credit Bond Index * | -0.03% | 5.37% | 4.26% |
| (a) | The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or the redemption of Portfolio shares. |
| * | The S&P 500® Composite Index is comprised of 500 U.S. stocks and is an indicator of the performance of the overall U.S. stock market. The Barclays U.S. Intermediate Government/Credit Bond Index is the non-securitized component of the U.S. Aggregate Index, and includes Treasuries, government-related issues, and corporate. An investor cannot invest in an index and its returns are not indicative of the performance of any specific investment. |
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NEW CENTURY CAPITAL PORTFOLIO PORTFOLIO INFORMATION (Unaudited) October 31, 2013 |
Asset Allocation (% of Net Assets) |
| Top Ten Long-Term Holdings |
| Security Description | % of Net Assets | |
| Wells Fargo Advantage Growth Fund - Administrator Class | 6.6% | |
| Vanguard Dividend Growth Fund - Investor Shares | 6.4% | |
| MFS Growth Fund - Class I | 6.2% | |
| Putnam Equity Income Fund - Class Y | 5.2% | |
| Vanguard 500 Index Fund - Signal Shares | 5.0% | |
| iShares S&P 500 Value Index Fund | 4.4% | |
| iShares Dow Jones U.S. Energy Sector Index Fund | 4.0% | |
| iShares Core S&P 500 ETF | 3.9% | |
| Gabelli Asset Fund (The) - Class I | 3.9% | |
| Fidelity Select Health Care Portfolio | 3.7% |
9
NEW CENTURY CAPITAL PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2013 |
INVESTMENT COMPANIES — 99.2% | Shares | Value | ||||||
| Large-Cap Funds — 63.0% | ||||||||
American Funds AMCAP Fund - Class A | 141,961 | $ | 3,893,982 | |||||
| Columbia Dividend Opportunity Fund - Class A | 290,005 | 3,013,155 | ||||||
Gabelli Asset Fund (The) - Class I | 67,398 | 4,414,538 | ||||||
iShares Core S&P 500 ETF (a) | 25,050 | 4,426,335 | ||||||
iShares Russell 1000 Index Fund (a) | 40,000 | 3,930,800 | ||||||
iShares S&P 500 Growth Index Fund (a) | 41,800 | 3,911,644 | ||||||
iShares S&P 500 Value Index Fund (a) | 60,800 | 4,970,400 | ||||||
| JPMorgan Value Advantage Fund - Institutional Class | 118,250 | 3,153,725 | ||||||
MFS Equity Opportunities Fund - Class I | 58,571 | 1,500,000 | ||||||
MFS Growth Fund - Class I (b) | 107,775 | 7,008,605 | ||||||
Putnam Equity Income Fund - Class Y | 279,505 | 5,858,419 | ||||||
| RidgeWorth Large Cap Value Equity Fund - I Shares | 110,620 | 1,993,363 | ||||||
Vanguard 500 Index Fund - Signal Shares | 42,217 | 5,654,179 | ||||||
| Vanguard Dividend Growth Fund - Investor Shares | 353,316 | 7,274,771 | ||||||
Weitz Partners Value Fund (b) | 88,133 | 2,724,205 | ||||||
Wells Fargo Advantage Growth Fund - Administrator Class (b) | 137,143 | 7,398,888 | ||||||
| 71,127,009 | ||||||||
| Sector Funds — 13.9% | ||||||||
Fidelity Select Health Care Portfolio | 22,045 | 4,139,569 | ||||||
iShares Dow Jones U.S. Energy Sector Index Fund (a) | 91,400 | 4,487,740 | ||||||
Ivy Science and Technology Fund - Class I (b) | 51,869 | 2,735,594 | ||||||
PowerShares Dynamic Pharmaceuticals Portfolio (a) | 67,000 | 3,208,630 | ||||||
SPDR Gold Trust (a) (b) (c) | 9,000 | 1,149,660 | ||||||
| 15,721,193 | ||||||||
| Mid-Cap Funds — 9.0% | ||||||||
iShares S&P MidCap 400 Growth Index Fund (a) | 12,600 | 1,808,730 | ||||||
iShares S&P MidCap 400 Value Index Fund (a) | 31,600 | 3,557,212 | ||||||
Putnam Equity Spectrum Fund - Class Y | 50,518 | 1,980,298 | ||||||
SPDR S&P MidCap 400 ETF Trust (a) | 11,702 | 2,744,353 | ||||||
| 10,090,593 | ||||||||
| International Funds — 8.8% | ||||||||
| Aberdeen Emerging Markets Fund - Institutional Class | 84,636 | 1,295,781 | ||||||
Harding, Loevner International Equity Portfolio - Institutional Class | 109,470 | 1,967,181 | ||||||
| Oppenheimer Developing Markets Fund - Class Y | 41,942 | 1,587,927 | ||||||
| Oppenheimer International Growth Fund - Class Y | 104,350 | 3,875,564 | ||||||
| Wells Fargo Advantage Intrinsic World Equity Fund - Administrator Class | 52,549 | 1,146,085 | ||||||
| 9,872,538 | ||||||||
See accompanying notes to financial statements.
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NEW CENTURY CAPITAL PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) |
INVESTMENT COMPANIES — 99.2% (Continued) | Shares | Value | ||||||
| Small-Cap Funds — 4.5% | ||||||||
Brown Capital Management Small Company Fund - Institutional Class (b) | 15,316 | $ | 1,109,053 | |||||
iShares S&P SmallCap 600 Growth Index Fund (a) | 15,200 | 1,706,048 | ||||||
iShares S&P SmallCap 600 Value Index Fund (a) | 21,800 | 2,305,132 | ||||||
| 5,120,233 | ||||||||
Total Investment Companies (Cost $75,551,537) | $ | 111,931,566 | ||||||
MONEY MARKET FUNDS — 2.3% | Shares | Value | ||||||
Invesco STIT-STIC Prime Portfolio (The) - Institutional Class, 0.06% (d) (Cost $2,544,729) | 2,544,729 | $ | 2,544,729 | |||||
Total Investments at Value — 101.5% (Cost $78,096,266) | $ | 114,476,295 | ||||||
| Liabilities in Excess of Other Assets — (1.5%) | (1,648,151 | ) | ||||||
Net Assets — 100.0% | $ | 112,828,144 | ||||||
| (a) | Exchange-traded fund. |
| (b) | Non-income producing security. |
| (c) | For federal income tax purposes, structured as a grantor trust. |
| (d) | The rate shown is the 7-day effective yield as of October 31, 2013. |
See accompanying notes to financial statements.
11
NEW CENTURY BALANCED PORTFOLIO PORTFOLIO INFORMATION (Unaudited) October 31, 2013 |
Asset Allocation (% of Net Assets) |
| Top Ten Long-Term Holdings |
| Security Description | % of Net Assets | |
| Loomis Sayles Bond Fund - Institutional Class | 7.7% | |
| First Eagle Global Fund - Class A | 7.4% | |
| Wells Fargo Advantage Growth Fund - Administrator Class | 6.3% | |
| iShares Core S&P 500 ETF | 6.0% | |
| SPDR S&P MidCap 400 ETF Trust | 5.9% | |
| Harding, Loevner International Equity Portfolio - Institutional Class | 5.8% | |
| Templeton Global Bond Fund - Class A | 5.7% | |
| Dodge & Cox Income Fund | 5.2% | |
| American Funds AMCAP Fund - Class A | 4.8% | |
| JPMorgan Value Advantage Fund - Institutional Class | 4.4% |
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NEW CENTURY BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2013 |
INVESTMENT COMPANIES — 98.3% | Shares | Value | ||||||
| Large-Cap Funds — 25.2% | ||||||||
American Funds AMCAP Fund - Class A | 124,832 | $ | 3,424,145 | |||||
iShares Core S&P 500 ETF (a) | 24,400 | 4,311,480 | ||||||
| John Hancock Disciplined Value Fund - Class I | 148,176 | 2,636,053 | ||||||
| JPMorgan Value Advantage Fund - Institutional Class | 117,463 | 3,132,733 | ||||||
Wells Fargo Advantage Growth Fund - Administrator Class (b) | 83,207 | 4,488,999 | ||||||
| 17,993,410 | ||||||||
| Fixed Income/Multi-Sector Bond Funds — 18.5% | ||||||||
Dodge & Cox Income Fund | 270,183 | 3,685,300 | ||||||
| Loomis Sayles Bond Fund - Institutional Class | 359,252 | 5,507,334 | ||||||
PIMCO Income Fund - Institutional Class | 201,604 | 2,495,861 | ||||||
| Vanguard Intermediate-Term Investment-Grade Fund - Admiral Shares | 154,362 | 1,526,640 | ||||||
| 13,215,135 | ||||||||
| Sector Funds — 14.3% | ||||||||
Consumer Staples Select Sector SPDR Fund (a) | 67,300 | 2,850,155 | ||||||
Fidelity Select Health Care Portfolio | 13,918 | 2,613,598 | ||||||
iShares Dow Jones U.S. Energy Sector Index Fund (a) | 46,500 | 2,283,150 | ||||||
Oppenheimer MLP Select 40 Fund - Institutional Class (b) | 147,755 | 1,802,615 | ||||||
SPDR Gold Trust (a) (b) (c) | 5,300 | 677,022 | ||||||
| 10,226,540 | ||||||||
| International Funds — 13.2% | ||||||||
First Eagle Global Fund - Class A | 95,582 | 5,249,367 | ||||||
Harding, Loevner International Equity Portfolio - Institutional Class | 231,605 | 4,161,946 | ||||||
| 9,411,313 | ||||||||
| Worldwide Bond Funds — 8.1% | ||||||||
| Loomis Sayles Global Bond Fund - Institutional Class | 100,018 | 1,670,298 | ||||||
Templeton Global Bond Fund - Class A | 312,494 | 4,106,164 | ||||||
| 5,776,462 | ||||||||
| High Yield Bond Funds — 5.9% | ||||||||
| Loomis Sayles Institutional High Income Fund | 277,329 | 2,348,974 | ||||||
| Oppenheimer Senior Floating Rate Fund - Class A | 222,944 | 1,870,503 | ||||||
| 4,219,477 | ||||||||
| Mid-Cap Funds — 5.9% | ||||||||
SPDR S&P MidCap 400 ETF Trust (a) | 17,980 | 4,216,670 | ||||||
| Small-Cap Funds — 4.5% | ||||||||
Brown Capital Management Small Company Fund - Institutional Class (b) | 7,079 | 512,601 | ||||||
iShares S&P SmallCap 600 Growth Index Fund (a) | 8,100 | 909,144 | ||||||
iShares S&P SmallCap 600 Value Index Fund (a) | 17,200 | 1,818,728 | ||||||
| 3,240,473 | ||||||||
See accompanying notes to financial statements.
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NEW CENTURY BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) |
INVESTMENT COMPANIES — 98.3% (Continued) | Shares | Value | ||||||
| Convertible Bond Funds — 2.7% | ||||||||
| Allianz AGIC Convertible Fund - Institutional Shares | 56,647 | $ | 1,927,122 | |||||
Total Investment Companies (Cost $53,304,339) | $ | 70,226,602 | ||||||
MONEY MARKET FUNDS — 1.9% | Shares | Value | ||||||
Invesco STIT-STIC Prime Portfolio (The) - Institutional Class, 0.06% (d) (Cost $1,338,159) | 1,338,159 | $ | 1,338,159 | |||||
Total Investments at Value — 100.2% (Cost $54,642,498) | $ | 71,564,761 | ||||||
| Liabilities in Excess of Other Assets — (0.2%) | (107,769 | ) | ||||||
Net Assets — 100.0% | $ | 71,456,992 | ||||||
| (a) | Exchange-traded fund. |
| (b) | Non-income producing security. |
| (c) | For federal income tax purposes, structured as a grantor trust. |
| (d) | The rate shown is the 7-day effective yield as of October 31, 2013. |
See accompanying notes to financial statements.
14
NEW CENTURY INTERNATIONAL PORTFOLIO PORTFOLIO INFORMATION (Unaudited) October 31, 2013 |
Asset Allocation (% of Net Assets) |
| Top Ten Long-Term Holdings |
| Security Description | % of Net Assets | |
| Columbia European Equity Fund - Class A | 7.3% | |
| Matthews Japan Fund - Institutional Class | 7.0% | |
| iShares MSCI Germany Index Fund | 6.4% | |
| Franklin Mutual European Fund - Class A | 6.3% | |
| Harding, Loevner International Equity Portfolio- Institutional Class | 6.0% | |
| Oakmark International Fund - Class I | 6.0% | |
| Matthews Pacific Tiger Fund - Investor Class | 5.6% | |
| iShares MSCI Switzerland Index Fund | 5.4% | |
| iShares MSCI United Kingdom Index Fund | 5.1% | |
| Vanguard MSCI Europe ETF | 5.0% |
15
NEW CENTURY INTERNATIONAL PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2013 |
INVESTMENT COMPANIES — 99.4% | Shares | Value | ||||||
| Europe Funds — 38.7% | ||||||||
Columbia European Equity Fund - Class A | 605,650 | $ | 4,572,660 | |||||
Franklin Mutual European Fund - Class A | 155,037 | 3,931,742 | ||||||
iShares MSCI Germany Index Fund (a) | 137,000 | 4,020,950 | ||||||
iShares MSCI Sweden Index Fund (a) | 58,000 | 1,983,020 | ||||||
iShares MSCI Switzerland Index Fund (a) | 105,600 | 3,401,376 | ||||||
iShares MSCI United Kingdom Index Fund (a) | 156,546 | 3,185,711 | ||||||
Vanguard MSCI Europe ETF (a) | 55,200 | 3,134,256 | ||||||
| 24,229,715 | ||||||||
| Diversified Funds — 28.1% | ||||||||
| Columbia Acorn International Select Fund - Class A | 68,807 | 1,977,517 | ||||||
| Harbor International Fund - Institutional Class | 16,993 | 1,202,914 | ||||||
Harding, Loevner International Equity Portfolio - Institutional Class | 210,638 | 3,785,163 | ||||||
iShares MSCI EAFE Growth Index Fund (a) | 10,900 | 761,801 | ||||||
iShares MSCI EAFE Value Index Fund (a) | 11,800 | 667,644 | ||||||
iShares S&P Global Energy Sector Index Fund (a) | 22,400 | 958,272 | ||||||
MFS International Value Fund - Class I | 34,470 | 1,208,875 | ||||||
Oakmark International Fund - Class I | 140,788 | 3,761,848 | ||||||
| Oppenheimer International Growth Fund - Class Y | 26,995 | 1,002,598 | ||||||
Templeton Institutional Funds - Foreign Smaller Companies Series | 103,413 | 2,282,337 | ||||||
| 17,608,969 | ||||||||
| Asia/Pacific Funds — 24.8% | ||||||||
iShares MSCI Australia Index Fund (a) | 42,500 | 1,133,475 | ||||||
iShares MSCI Pacific ex-Japan Index Fund (a) | 49,700 | 2,471,084 | ||||||
| Matthews China Dividend Fund - Investor Class | 83,403 | 1,116,764 | ||||||
Matthews Japan Fund - Institutional Class | 268,349 | 4,382,135 | ||||||
Matthews Pacific Tiger Fund - Investor Class | 136,891 | 3,516,723 | ||||||
WisdomTree Japan Hedged Equity Fund (a) | 61,700 | 2,941,856 | ||||||
| 15,562,037 | ||||||||
| Emerging Markets Funds — 4.4% | ||||||||
| Aberdeen Emerging Markets Fund - Institutional Class | 89,510 | 1,370,395 | ||||||
Vanguard MSCI Emerging Markets ETF (a) | 33,200 | 1,390,084 | ||||||
| 2,760,479 | ||||||||
| Americas Funds — 3.4% | ||||||||
Fidelity Canada Fund | 11,611 | 670,289 | ||||||
JPMorgan Latin America Fund - Select Class | 78,740 | 1,466,929 | ||||||
| 2,137,218 | ||||||||
Total Investment Companies (Cost $45,130,012) | $ | 62,298,418 | ||||||
See accompanying notes to financial statements.
16
NEW CENTURY INTERNATIONAL PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) |
MONEY MARKET FUNDS — 0.4% | Shares | Value | ||||||
Invesco STIT-STIC Prime Portfolio (The) - Institutional Class, 0.06% (b) (Cost $278,696) | 278,696 | $ | 278,696 | |||||
Total Investments at Value — 99.8% (Cost $45,408,708) | $ | 62,577,114 | ||||||
| Other Assets in Excess of Liabilities — 0.2% | 130,427 | |||||||
Net Assets — 100.0% | $ | 62,707,541 | ||||||
| (a) | Exchange-traded fund. |
| (b) | The rate shown is the 7-day effective yield as of October 31, 2013. |
See accompanying notes to financial statements.
17
NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO PORTFOLIO INFORMATION (Unaudited) October 31, 2013 |
Asset Allocation (% of Net Assets) |
| Top Ten Long-Term Holdings |
| Security Description | % of Net Assets | |
| Touchstone Merger Arbitrage Fund - Institutional Shares | 7.7% | |
| MainStay Marketfield Fund - Class I | 7.2% | |
| Calamos Market Neutral Income Fund - Class A | 5.5% | |
| First Eagle Global Fund - Class A | 5.2% | |
| FPA Crescent Fund | 5.1% | |
| Wasatch Long/Short Fund | 4.6% | |
| Berwyn Income Fund | 4.5% | |
| 361 Managed Futures Strategy Fund - Class I | 4.0% | |
| Templeton Global Bond Fund - Class A | 3.6% | |
| TFS Market Neutral Fund | 3.6% |
18
NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2013 |
INVESTMENT COMPANIES — 93.9% | Shares | Value | ||||||
| Long/Short Equity Funds — 22.5% | ||||||||
| BlackRock Emerging Markets Long/Short Equity Fund - Institutional Shares | 182,127 | $ | 1,966,972 | |||||
MainStay Marketfield Fund - Class I (b) | 492,754 | 8,928,708 | ||||||
| Robeco Boston Partners Long/Short Research Fund - Institutional Class | 176,196 | 2,440,310 | ||||||
TFS Market Neutral Fund (b) | 276,049 | 4,469,226 | ||||||
Wasatch Long/Short Fund (b) | 350,729 | 5,730,906 | ||||||
Weitz Partners III Opportunity Fund - Institutional Class (b) | 265,916 | 4,236,044 | ||||||
| 27,772,166 | ||||||||
| Arbitrage Funds — 16.2% | ||||||||
Arbitrage Fund (The) - Class I | 9,885 | 127,127 | ||||||
| Calamos Market Neutral Income Fund - Class A | 520,897 | 6,818,546 | ||||||
Gabelli ABC Fund - Advisor Class | 166,667 | 1,718,333 | ||||||
Merger Fund (The) | 106,557 | 1,733,683 | ||||||
| Touchstone Merger Arbitrage Fund - Institutional Shares | 858,648 | 9,556,755 | ||||||
| 19,954,444 | ||||||||
| Global Macro Funds — 16.1% | ||||||||
BlackRock Global Allocation Fund - Class A | 79,253 | 1,730,887 | ||||||
Eaton Vance Global Macro Absolute Return Advantage Fund - Class I | 177,690 | 1,707,601 | ||||||
First Eagle Global Fund - Class A | 116,324 | 6,388,493 | ||||||
Ivy Asset Strategy Fund - Class A | 105,638 | 3,205,063 | ||||||
John Hancock Global Absolute Return Strategies Fund - Class I | 283,546 | 3,121,847 | ||||||
Mutual Global Discovery Fund - Class Z | 108,098 | 3,741,288 | ||||||
| 19,895,179 | ||||||||
| Asset Allocation Funds — 9.6% | ||||||||
Berwyn Income Fund | 372,500 | 5,494,372 | ||||||
FPA Crescent Fund | 191,266 | 6,309,858 | ||||||
| 11,804,230 | ||||||||
| High Yield/Fixed Income Funds — 9.3% | ||||||||
Aberdeen Asia-Pacific Income Fund, Inc. (d) | 210,000 | 1,352,400 | ||||||
Blackrock Credit Allocation Income Trust (d) | 100,000 | 1,297,000 | ||||||
Ivy High Income Fund - Class A | 221,335 | 1,941,107 | ||||||
PIMCO Income Fund - Institutional Class | 197,692 | 2,447,424 | ||||||
Templeton Global Bond Fund - Class A | 341,723 | 4,490,238 | ||||||
| 11,528,169 | ||||||||
| Natural Resources Funds — 7.4% | ||||||||
Market Vectors Gold Miners ETF (a) | 43,000 | 1,079,730 | ||||||
Oppenheimer MLP Select 40 Fund - Institutional Class (b) | 127,657 | 1,557,417 | ||||||
| PIMCO CommodityRealReturn Strategy Fund - Class A | 270,051 | 1,504,181 | ||||||
RS Global Natural Resources Fund - Class A (b) | 25,949 | 981,642 | ||||||
SPDR Gold Trust (a) (b) (c) | 10,500 | 1,341,270 | ||||||
| Tortoise MLP & Pipeline Fund - Institutional Class | 120,166 | 1,836,144 | ||||||
See accompanying notes to financial statements.
19
NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) |
INVESTMENT COMPANIES — 93.9% (Continued) | Shares | Value | ||||||
| Natural Resources Funds — 7.4% (Continued) | ||||||||
Vanguard Precious Metals and Mining Fund - Investor Shares | 73,522 | $ | 791,828 | |||||
| 9,092,212 | ||||||||
| Real Estate Funds — 6.1% | ||||||||
CBRE Clarion Global Real Estate Income Fund (d) | 100,000 | 837,000 | ||||||
ING Global Real Estate Fund - Class I | 157,454 | 2,968,009 | ||||||
Vanguard REIT ETF (a) | 54,000 | 3,732,480 | ||||||
| 7,537,489 | ||||||||
| Managed Futures Funds — 5.0% | ||||||||
361 Managed Futures Strategy Fund - Class I (b) | 429,271 | 4,940,905 | ||||||
MutualHedge Frontier Legends Fund - Class I (b) | 137,597 | 1,254,888 | ||||||
| 6,195,793 | ||||||||
| Option Hedged Funds — 1.7% | ||||||||
BlackRock Enhanced Capital & Income Fund (d) | 50,000 | 676,000 | ||||||
BlackRock Enhanced Equity Dividend Trust (d) | 90,000 | 694,800 | ||||||
Gateway Fund - Class A | 24,885 | 710,717 | ||||||
| 2,081,517 | ||||||||
Total Investment Companies (Cost $99,254,215) | $ | 115,861,199 | ||||||
STRUCTURED NOTES — 3.9% | Par Value | Value | ||||||
| JPMorgan Chase & Co., Return Note Linked to JPMorgan ETF Efficiente 5 PR Index, due 06/23/2014 | $ | 1,500,000 | $ | 1,518,450 | ||||
JPMorgan Chase & Co., Return Note Linked to the JPMorgan Strategic Volatility Dynamic Index (Series 1), due 09/30/2014 (b) | 1,500,000 | 1,284,150 | ||||||
RBC Capital Markets, Absolute Return Barrier Equity Security Linked Note, due 05/15/2014 (b) | 1,600,000 | 2,067,360 | ||||||
Total Structured Notes (Cost $4,600,000) | $ | 4,869,960 | ||||||
See accompanying notes to financial statements.
20
NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) |
MONEY MARKET FUNDS — 2.8% | Shares | Value | ||||||
Invesco STIT-STIC Prime Portfolio (The) - Institutional Class, 0.06% (e) (Cost $3,478,464) | 3,478,464 | $ | 3,478,464 | |||||
Total Investments at Value — 100.6% (Cost $107,332,679) | $ | 124,209,623 | ||||||
| Liabilities in Excess of Other Assets — (0.6%) | (799,086 | ) | ||||||
Net Assets — 100.0% | $ | 123,410,537 | ||||||
| (a) | Exchange-traded fund. |
| (b) | Non-income producing security. |
| (c) | For federal income tax purposes, structured as a grantor trust. |
| (d) | Closed-end fund. |
| (e) | The rate shown is the 7-day effective yield as of October 31, 2013. |
See accompanying notes to financial statements.
21
NEW CENTURY PORTFOLIOS STATEMENTS OF ASSETS AND LIABILITIES October 31, 2013 |
New Century Capital Portfolio | New Century Balanced Portfolio | New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||
| ASSETS | ||||||||||||||||
| Investments in securities: | ||||||||||||||||
| At acquisition cost | $ | 78,096,266 | $ | 54,642,498 | $ | 45,408,708 | $ | 107,332,679 | ||||||||
| At value (Note 1A) | $ | 114,476,295 | $ | 71,564,761 | $ | 62,577,114 | $ | 124,209,623 | ||||||||
| Dividends receivable | 36 | 22,441 | 10 | 20,237 | ||||||||||||
| Receivable for investment securities sold | — | — | 200,000 | — | ||||||||||||
| Receivable for capital shares sold | 3,550 | 2,656 | 1,601 | 374,177 | ||||||||||||
| Other assets | 5,462 | 3,509 | 3,002 | 6,318 | ||||||||||||
| TOTAL ASSETS | 114,485,343 | 71,593,367 | 62,781,727 | 124,610,355 | ||||||||||||
| LIABILITIES | ||||||||||||||||
Payable for investment securities purchased | 1,500,000 | 17,742 | — | 1,080,944 | ||||||||||||
| Payable for capital shares redeemed | 27,156 | 37,301 | — | 16,496 | ||||||||||||
| Payable to Adviser (Note 2) | 95,004 | 61,773 | 54,376 | 80,341 | ||||||||||||
| Payable to Distributor (Note 3) | 23,000 | 11,500 | 13,000 | 11,500 | ||||||||||||
| Other accrued expenses and liabilities | 12,039 | 8,059 | 6,810 | 10,537 | ||||||||||||
| TOTAL LIABILITIES | 1,657,199 | 136,375 | 74,186 | 1,199,818 | ||||||||||||
| NET ASSETS | $ | 112,828,144 | $ | 71,456,992 | $ | 62,707,541 | $ | 123,410,537 | ||||||||
| Net assets consist of: | ||||||||||||||||
| Paid-in capital | $ | 66,921,762 | $ | 50,504,666 | $ | 40,898,512 | $ | 113,325,197 | ||||||||
Accumulated undistributed net investment income (loss) | — | 185,621 | 361,321 | (233,684 | ) | |||||||||||
Accumulated undistributed net realized gains (losses) on investments | 9,526,353 | 3,844,442 | 4,279,302 | (6,557,920 | ) | |||||||||||
Net unrealized appreciation on investments | 36,380,029 | 16,922,263 | 17,168,406 | 16,876,944 | ||||||||||||
| Net assets | $ | 112,828,144 | $ | 71,456,992 | $ | 62,707,541 | $ | 123,410,537 | ||||||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 5,422,521 | 4,284,965 | 3,860,191 | 9,476,451 | ||||||||||||
Net asset value, offering price and redemption price per share (a) | $ | 20.81 | $ | 16.68 | $ | 16.24 | $ | 13.02 | ||||||||
| (a) | Redemption price may differ from the net asset value per share depending upon the length of time held (Note 1B). |
See accompanying notes to financial statements.
22
NEW CENTURY PORTFOLIOS STATEMENTS OF OPERATIONS For the Year Ended October 31, 2013 |
New Century Capital Portfolio | New Century Balanced Portfolio | New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||
| INVESTMENT INCOME | ||||||||||||||||
| Dividends | $ | 1,462,706 | $ | 1,771,790 | $ | 1,262,611 | $ | 1,791,873 | ||||||||
| Interest | — | — | — | 43,071 | ||||||||||||
| Total investment income | 1,462,706 | 1,771,790 | 1,262,611 | 1,834,944 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Investment advisory fees (Note 2) | 1,008,864 | 681,529 | 600,445 | 907,545 | ||||||||||||
| Distribution costs (Note 3) | 239,677 | 128,113 | 107,550 | 218,046 | ||||||||||||
| Accounting fees | 46,239 | 38,528 | 36,829 | 49,575 | ||||||||||||
| Administration fees (Note 2) | 37,891 | 26,659 | 24,001 | 43,893 | ||||||||||||
| Legal and audit fees | 29,153 | 22,852 | 21,113 | 35,110 | ||||||||||||
| Trustees’ fees and expenses (Note 2) | 30,416 | 20,033 | 17,780 | 35,683 | ||||||||||||
| Transfer agent fees | 24,638 | 21,119 | 20,386 | 25,857 | ||||||||||||
| Custody and bank service fees | 19,907 | 14,962 | 14,624 | 22,175 | ||||||||||||
| Postage & supplies | 9,755 | 5,277 | 5,370 | 7,744 | ||||||||||||
| Insurance expense | 7,646 | 5,472 | 4,621 | 9,700 | ||||||||||||
| Other expenses | 12,405 | 9,491 | 9,196 | 12,243 | ||||||||||||
| Total expenses | 1,466,591 | 974,035 | 861,915 | 1,367,571 | ||||||||||||
| NET INVESTMENT INCOME (LOSS) | (3,885 | ) | 797,755 | 400,696 | 467,373 | |||||||||||
REALIZED AND UNREALIZED GAINS ON INVESTMENTS | ||||||||||||||||
| Net realized gains on investments | 10,120,888 | 4,244,536 | 7,854,026 | 1,535,433 | ||||||||||||
Capital gain distributions from regulated investment companies | 440,532 | 432,660 | 225,293 | 889,507 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | 11,827,607 | 4,608,660 | 1,406,537 | 5,147,864 | ||||||||||||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS | 22,389,027 | 9,285,856 | 9,485,856 | 7,572,804 | ||||||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 22,385,142 | $ | 10,083,611 | $ | 9,886,552 | $ | 8,040,177 | ||||||||
See accompanying notes to financial statements.
23
NEW CENTURY PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS |
New Century Capital Portfolio | New Century Balanced Portfolio | |||||||||||||||
Year Ended October 31, 2013 | Year Ended October 31, 2012 | Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||||
| FROM OPERATIONS | ||||||||||||||||
| Net investment income (loss) | $ | (3,885 | ) | $ | (47,114 | ) | $ | 797,755 | $ | 783,443 | ||||||
| Net realized gains from security transactions | 10,120,888 | 3,780,693 | 4,244,536 | 1,615,147 | ||||||||||||
Capital gain distributions from regulated investment companies | 440,532 | 400,834 | 432,660 | 396,073 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | 11,827,607 | 4,043,331 | 4,608,660 | 2,640,566 | ||||||||||||
| Net increase in net assets from operations | 22,385,142 | 8,177,744 | 10,083,611 | 5,435,229 | ||||||||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||
| From net investment income (Note 1E) | — | — | (794,645 | ) | (828,337 | ) | ||||||||||
From net realized gains on security transactions (Note 1E) | (4,174,787 | ) | (497,600 | ) | — | — | ||||||||||
Decrease in net assets from distributions to shareholders | (4,174,787 | ) | (497,600 | ) | (794,645 | ) | (828,337 | ) | ||||||||
| FROM CAPITAL SHARE TRANSACTIONS | ||||||||||||||||
Net assets received in conjunction with fund merger (Note 1) | 12,773,191 | — | — | — | ||||||||||||
| Proceeds from shares sold | 3,510,261 | 2,037,610 | 2,946,146 | 2,998,862 | ||||||||||||
Proceeds from redemption fees collected (Note 1B) | 724 | — | 1 | 545 | ||||||||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 4,040,782 | 476,833 | 768,274 | 792,109 | ||||||||||||
| Payments for shares redeemed | (13,370,844 | ) | (11,132,882 | ) | (8,371,973 | ) | (6,155,077 | ) | ||||||||
Net increase (decrease) in net assets from capital share transactions | 6,954,114 | (8,618,439 | ) | (4,657,552 | ) | (2,363,561 | ) | |||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 25,164,469 | (938,295 | ) | 4,631,414 | 2,243,331 | |||||||||||
| NET ASSETS | ||||||||||||||||
| Beginning of year | 87,663,675 | 88,601,970 | 66,825,578 | 64,582,247 | ||||||||||||
| End of year | $ | 112,828,144 | $ | 87,663,675 | $ | 71,456,992 | $ | 66,825,578 | ||||||||
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) | $ | — | $ | (47,114 | ) | $ | 185,621 | $ | 182,511 | |||||||
| CAPITAL SHARE ACTIVITY | ||||||||||||||||
Shares issued in conjunction with fund merger (Note 1) | 708,515 | — | — | — | ||||||||||||
| Shares sold | 191,859 | 119,985 | 193,485 | 215,916 | ||||||||||||
| Shares reinvested | 236,580 | 29,877 | 52,478 | 59,467 | ||||||||||||
| Shares redeemed | (708,926 | ) | (656,370 | ) | (552,033 | ) | (437,060 | ) | ||||||||
| Net increase (decrease) in shares outstanding | 428,028 | (506,508 | ) | (306,070 | ) | (161,677 | ) | |||||||||
| Shares outstanding, beginning of year | 4,994,493 | 5,501,001 | 4,591,035 | 4,752,712 | ||||||||||||
| Shares outstanding, end of year | 5,422,521 | 4,994,493 | 4,284,965 | 4,591,035 | ||||||||||||
See accompanying notes to financial statements.
24
NEW CENTURY PORTFOLIOS STATEMENTS OF CHANGES IN NET ASSETS |
New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||||
Year Ended October 31, 2013 | Year Ended October 31, 2012 | Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||||
| FROM OPERATIONS | ||||||||||||||||
| Net investment income | $ | 400,696 | $ | 603,454 | $ | 467,373 | $ | 1,335,732 | ||||||||
Net realized gains from security transactions | 7,854,026 | 993,696 | 1,535,433 | 2,581,537 | ||||||||||||
Capital gain distributions from regulated investment companies | 225,293 | 99,741 | 889,507 | 654,879 | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | 1,406,537 | 835,231 | 5,147,864 | 1,345,836 | ||||||||||||
| Net increase in net assets from operations | 9,886,552 | 2,532,122 | 8,040,177 | 5,917,984 | ||||||||||||
| DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||
| From net investment income (Note 1E) | (642,497 | ) | (434,898 | ) | (668,997 | ) | (1,636,766 | ) | ||||||||
| FROM CAPITAL SHARE TRANSACTIONS | ||||||||||||||||
| Proceeds from shares sold | 2,276,174 | 1,830,688 | 15,300,515 | 14,278,169 | ||||||||||||
Proceeds from redemption fees collected (Note 1B) | 3 | 179 | 2,722 | 5,870 | ||||||||||||
Net asset value of shares issued in reinvestment of distributions to shareholders | 631,930 | 429,919 | 656,678 | 1,604,814 | ||||||||||||
| Payments for shares redeemed | (6,710,756 | ) | (8,354,017 | ) | (17,192,246 | ) | (17,739,389 | ) | ||||||||
Net decrease in net assets from capital share transactions | (3,802,649 | ) | (6,093,231 | ) | (1,232,331 | ) | (1,850,536 | ) | ||||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 5,441,406 | (3,996,007 | ) | 6,138,849 | 2,430,682 | |||||||||||
| NET ASSETS | ||||||||||||||||
| Beginning of year | 57,266,135 | 61,262,142 | 117,271,688 | 114,841,006 | ||||||||||||
| End of year | $ | 62,707,541 | $ | 57,266,135 | $ | 123,410,537 | $ | 117,271,688 | ||||||||
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) | $ | 361,321 | $ | 603,122 | $ | (233,684 | ) | $ | (32,060 | ) | ||||||
| CAPITAL SHARE ACTIVITY | ||||||||||||||||
| Shares sold | 152,928 | 137,479 | 1,205,497 | 1,195,574 | ||||||||||||
| Shares reinvested | 43,581 | 33,852 | 53,258 | 139,792 | ||||||||||||
| Shares redeemed | (449,438 | ) | (624,997 | ) | (1,360,199 | ) | (1,492,107 | ) | ||||||||
| Net decrease in shares outstanding | (252,929 | ) | (453,666 | ) | (101,444 | ) | (156,741 | ) | ||||||||
| Shares outstanding, beginning of year | 4,113,120 | 4,566,786 | 9,577,895 | 9,734,636 | ||||||||||||
| Shares outstanding, end of year | 3,860,191 | 4,113,120 | 9,476,451 | 9,577,895 | ||||||||||||
See accompanying notes to financial statements.
25
NEW CENTURY CAPITAL PORTFOLIO FINANCIAL HIGHLIGHTS |
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year | ||||||||||||||||||||
Years Ended October 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
| PER SHARE OPERATING PERFORMANCE | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 17.55 | $ | 16.11 | $ | 15.41 | $ | 13.26 | $ | 11.76 | ||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||||
| Net investment income (loss) | (0.00 | ) | (0.01 | ) | (0.04 | ) | (0.03 | ) | 0.03 | |||||||||||
Net realized and unrealized gains on investments | 4.11 | 1.54 | 0.74 | 2.21 | 1.50 | |||||||||||||||
| Total from investment operations | 4.11 | 1.53 | 0.70 | 2.18 | 1.53 | |||||||||||||||
| Less distributions: | ||||||||||||||||||||
| Distributions from net investment income | — | — | — | (0.03 | ) | (0.03 | ) | |||||||||||||
| Distributions from net realized gains | (0.85 | ) | (0.09 | ) | — | — | — | |||||||||||||
| Total distributions | (0.85 | ) | (0.09 | ) | — | (0.03 | ) | (0.03 | ) | |||||||||||
| Proceeds from redemption fees collected | 0.00 | (a) | — | — | 0.00 | (a) | 0.00 | (a) | ||||||||||||
| Net asset value, end of year | $ | 20.81 | $ | 17.55 | $ | 16.11 | $ | 15.41 | $ | 13.26 | ||||||||||
TOTAL RETURN (b) | 24.45% | 9.57% | 4.54% | 16.47% | 13.05% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year (000’s) | $ | 112,828 | $ | 87,664 | $ | 88,602 | $ | 93,266 | $ | 85,000 | ||||||||||
Ratio of expenses to average net assets (c) | 1.43% | 1.46% | 1.42% | 1.40% | 1.41% | |||||||||||||||
Ratio of net investment income (loss) to average net assets (c) (d) | (0.00% | ) | (0.05% | ) | (0.25% | ) | (0.20% | ) | 0.27% | |||||||||||
| Portfolio turnover | 28% | 7% | 60% | 10% | 4% | |||||||||||||||
| (a) | Amount rounds to less than $0.01 per share. |
| (b) | Total return is a measure of the change in the value of an investment in the Portfolio over the years covered, which assumes dividends or capital gains distributions, if any, are reinvested in shares of the Portfolio. Returns shown do not reflect the taxes a shareholder would pay on Portfolio distributions, if any, or the redemption of Portfolio shares. |
| (c) | The ratios of expenses and net investment income (loss) to average net assets do not reflect the Portfolio’s proportionate share of expenses of the underlying investment companies in which the Portfolio invests (Note 2). |
| (d) | Recognition of net investment income (loss) by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests (Note 2). |
See accompanying notes to financial statements.
26
NEW CENTURY BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS |
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year | ||||||||||||||||||||
Years Ended October 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
| PER SHARE OPERATING PERFORMANCE | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 14.56 | $ | 13.59 | $ | 13.22 | $ | 11.93 | $ | 10.54 | ||||||||||
| Income from investment operations: | ||||||||||||||||||||
| Net investment income | 0.18 | 0.17 | 0.20 | 0.15 | 0.22 | |||||||||||||||
Net realized and unrealized gains on investments | 2.12 | 0.97 | 0.37 | 1.30 | 1.39 | |||||||||||||||
| Total from investment operations | 2.30 | 1.14 | 0.57 | 1.45 | 1.61 | |||||||||||||||
| Less distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.18 | ) | (0.17 | ) | (0.20 | ) | (0.16 | ) | (0.22 | ) | ||||||||||
| Proceeds from redemption fees collected | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | — | — | ||||||||||||
| Net asset value, end of year | $ | 16.68 | $ | 14.56 | $ | 13.59 | $ | 13.22 | $ | 11.93 | ||||||||||
TOTAL RETURN (b) | 15.97% | 8.54% | 4.29% | 12.23% | 15.57% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year (000’s) | $ | 71,457 | $ | 66,826 | $ | 64,582 | $ | 64,880 | $ | 61,578 | ||||||||||
Ratio of expenses to average net assets (c) | 1.43% | 1.45% | 1.43% | 1.44% | 1.45% | |||||||||||||||
Ratio of net investment income to average net assets (c) (d) | 1.17% | 1.18% | 1.39% | 1.20% | 2.07% | |||||||||||||||
| Portfolio turnover | 21% | 13% | 17% | 7% | 13% | |||||||||||||||
| (a) | Amount rounds to less than $0.01 per share. |
| (b) | Total return is a measure of the change in the value of an investment in the Portfolio over the years covered, which assumes dividends or capital gains distributions, if any, are reinvested in shares of the Portfolio. Returns shown do not reflect the taxes a shareholder would pay on Portfolio distributions, if any, or the redemption of Portfolio shares. |
| (c) | The ratios of expenses and net investment income to average net assets do not reflect the Portfolio’s proportionate share of expenses of the underlying investment companies in which the Portfolio invests (Note 2). |
| (d) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests (Note 2). |
See accompanying notes to financial statements.
27
NEW CENTURY INTERNATIONAL PORTFOLIO FINANCIAL HIGHLIGHTS |
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year | ||||||||||||||||||||
Years Ended October 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
| PER SHARE OPERATING PERFORMANCE | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 13.92 | $ | 13.41 | $ | 14.53 | $ | 12.70 | $ | 10.08 | ||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||||
| Net investment income | 0.11 | 0.15 | 0.10 | 0.09 | 0.13 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 2.37 | 0.46 | (1.14 | ) | 1.82 | 2.61 | ||||||||||||||
| Total from investment operations | 2.48 | 0.61 | (1.04 | ) | 1.91 | 2.74 | ||||||||||||||
| Less distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.16 | ) | (0.10 | ) | (0.08 | ) | (0.08 | ) | (0.12 | ) | ||||||||||
| Proceeds from redemption fees collected | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | ||||||||||
| Net asset value, end of year | $ | 16.24 | $ | 13.92 | $ | 13.41 | $ | 14.53 | $ | 12.70 | ||||||||||
TOTAL RETURN (b) | 17.95% | 4.60% | (7.22% | ) | 15.07% | 27.45% | ||||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year (000’s) | $ | 62,708 | $ | 57,266 | $ | 61,262 | $ | 68,947 | $ | 89,449 | ||||||||||
Ratios of expenses to average net assets (c) | 1.43% | 1.50% | 1.46% | 1.45% | 1.44% | |||||||||||||||
Ratios of net investment income to average net assets (c) (d) | 0.67% | 1.03% | 0.63% | 0.57% | 1.23% | |||||||||||||||
| Portfolio turnover | 32% | 4% | 13% | 4% | 11% | |||||||||||||||
| (a) | Amount rounds to less than $0.01 per share. |
| (b) | Total return is a measure of the change in the value of an investment in the Portfolio over the years covered, which assumes dividends or capital gains distributions, if any, are reinvested in shares of the Portfolio. Returns shown do not reflect the taxes a shareholder would pay on Portfolio distributions, if any, or the redemption of Portfolio shares. |
| (c) | The ratios of expenses and net investment income to average net assets do not reflect the Portfolio’s proportionate share of expenses of the underlying investment companies in which the Portfolio invests (Note 2). |
| (d) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests (Note 2). |
See accompanying notes to financial statements.
28
NEW CENTURY ALTERNATIVE STRATEGIES PORTFOLIO FINANCIAL HIGHLIGHTS |
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Year | ||||||||||||||||||||
Years Ended October 31, | ||||||||||||||||||||
2013 | 2012 | 2011 | 2010 | 2009 | ||||||||||||||||
| PER SHARE OPERATING PERFORMANCE | ||||||||||||||||||||
| Net asset value, beginning of year | $ | 12.24 | $ | 11.80 | $ | 11.87 | $ | 11.11 | $ | 10.14 | ||||||||||
| Income (loss) from investment operations: | ||||||||||||||||||||
| Net investment income | 0.05 | 0.14 | 0.17 | 0.08 | 0.14 | |||||||||||||||
Net realized and unrealized gains (losses) on investments | 0.80 | 0.47 | (0.09 | ) | 0.83 | 1.15 | ||||||||||||||
| Total from investment operations | 0.85 | 0.61 | 0.08 | 0.91 | 1.29 | |||||||||||||||
| Less distributions: | ||||||||||||||||||||
| Distributions from net investment income | (0.07 | ) | (0.17 | ) | (0.15 | ) | (0.15 | ) | (0.32 | ) | ||||||||||
| Proceeds from redemption fees collected | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | 0.00 | (a) | ||||||||||
| Net asset value, end of year | $ | 13.02 | $ | 12.24 | $ | 11.80 | $ | 11.87 | $ | 11.11 | ||||||||||
TOTAL RETURN (b) | 6.99% | 5.26% | 0.62% | 8.21% | 13.16% | |||||||||||||||
| RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||
| Net assets, end of year (000’s) | $ | 123,411 | $ | 117,272 | $ | 114,841 | $ | 135,287 | $ | 139,168 | ||||||||||
Ratio of expenses to average net assets (c) | 1.13% | 1.11% | 1.09% | 1.10% | 1.06% | |||||||||||||||
Ratio of net investment income to average net assets (c) (d) | 0.39% | 1.15% | 1.48% | 0.74% | 1.46% | |||||||||||||||
| Portfolio turnover | 25% | 32% | 31% | 22% | 27% | |||||||||||||||
| (a) | Amount rounds to less than $0.01 per share. |
| (b) | Total return is a measure of the change in the value of an investment in the Portfolio over the years covered, which assumes dividends or capital gains distributions, if any, are reinvested in shares of the Portfolio. Returns shown do not reflect the taxes a shareholder would pay on Portfolio distributions, if any, or the redemption of Portfolio shares. |
| (c) | The ratios of expenses and net investment income to average net assets do not reflect the Portfolio’s proportionate share of expenses of the underlying investment companies in which the Portfolio invests (Note 2). |
| (d) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the underlying investment companies in which the Portfolio invests (Note 2). |
See accompanying notes to financial statements.
29
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS October 31, 2013 |
| (1) | SIGNIFICANT ACCOUNTING POLICIES |
New Century Portfolios (“New Century”) is organized as a Massachusetts business trust which is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company and currently offers shares of four series: New Century Capital Portfolio, New Century Balanced Portfolio, New Century International Portfolio and New Century Alternative Strategies Portfolio (together, the “Portfolios” and each, a “Portfolio”). New Century Capital Portfolio and New Century Balanced Portfolio commenced operations on January 31, 1989. New Century International Portfolio commenced operations on November 1, 2000, and New Century Alternative Strategies Portfolio commenced operations on May 1, 2002.
Weston Financial Group, Inc. (the “Adviser”), a wholly-owned subsidiary of The Washington Trust Company, serves as the investment adviser to each Portfolio. Weston Securities Corporation (the “Distributor”), a wholly-owned subsidiary of Washington Trust Bancorp, Inc., serves as the distributor and principal underwriter to each Portfolio.
On February 28, 2013, New Century Capital Portfolio consummated a tax-free merger with New Century Opportunistic Portfolio, a former series of New Century. Pursuant to the terms of the merger agreement, each share of New Century Opportunistic Portfolio was converted into an equivalent dollar amount of shares of New Century Capital Portfolio, based on each Portfolio’s respective net asset value as of February 28, 2013 ($11.52 and $18.03, respectively), resulting in each share of New Century Opportunistic Portfolio receiving 0.638960 shares of New Century Capital Portfolio. New Century Capital Portfolio issued 708,515 shares to shareholders of New Century Opportunistic Portfolio. Net assets of New Century Capital and New Century Opportunistic Portfolios as of the merger date were $92,126,682 and $12,773,191, respectively, including unrealized appreciation on investments of $26,607,892 and $3,792,313, respectively. In addition, New Century Opportunistic Portfolio’s net assets included accumulated net realized capital losses on investments of $1,123,635. Total net assets of New Century Capital Portfolio immediately after the merger were $104,899,873.
The investment objective of New Century Capital Portfolio is to provide capital growth, with a secondary objective to provide income, while managing risk. This Portfolio seeks to achieve its objective by investing primarily in shares of other registered investment companies, including exchange traded funds (“ETFs”), that emphasize investments in equity securities (domestic and foreign).
The investment objective of New Century Balanced Portfolio is to provide income, with a secondary objective to provide capital growth, while managing risk. This Portfolio seeks to achieve its objective by investing primarily in shares of other registered investment companies, including ETFs, that emphasize investments in equity securities (domestic
30
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
and foreign), fixed income (domestic and foreign), or in a composite of such securities. This Portfolio maintains at least 25% of its assets in fixed income securities by selecting registered investment companies that invest in such securities.
The investment objective of New Century International Portfolio is to provide capital growth, with a secondary objective to provide income, while managing risk. This Portfolio seeks to achieve its objective by investing primarily in shares of registered investment companies, including ETFs, that emphasize investments in equity and fixed income securities (foreign, worldwide, emerging markets and domestic).
The investment objective of New Century Alternative Strategies Portfolio is to provide long-term capital appreciation, with a secondary objective to earn income, while managing risk. This Portfolio seeks to achieve its objective by investing primarily in shares of other registered investment companies, including ETFs, and closed-end funds, that emphasize alternative strategies.
The price of shares of each Portfolio fluctuates daily and there is no assurance that the Portfolios will be successful in achieving their stated investment objectives.
The following is a summary of significant accounting policies consistently followed by the Portfolios in the preparation of their financial statements. These policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
| A. | Investment Valuation |
Investments in shares of other open-end investment companies are valued at their net asset value as reported by such companies. The net asset value as reported by open-end investment companies may be based on fair value pricing; to understand the fair value pricing process used by such companies, consult their most current prospectus. The Portfolios may also invest in closed-end investment companies, exchange-traded funds, and to a certain extent, directly in securities when the Adviser deems it appropriate. Investments in closed-end investment companies, exchange-traded funds and direct investments in securities are valued at market prices, as described in the paragraph below.
Investments in securities traded on a national securities exchange or included in NASDAQ are generally valued at the last reported sales price, the closing price or the official closing price; and securities traded in the over-the-counter market and listed securities for which no sale is reported on that date are valued at the last reported bid price. It is expected that fixed income securities will ordinarily be traded in the over-the-counter market. When market quotations are not readily available, fixed income securities may be valued on the basis of prices provided by an independent pricing service. Other assets and securities for which no quotations are readily available or for which quotations the Adviser believes do not reflect market value are valued at their fair value as determined in good faith by the Adviser under the procedures established by the Board of Trustees, and will be classified as Level 2 or 3 within the fair value hierarchy (see below), depending on the inputs used. Factors considered
31
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
in determining the value of portfolio investments subject to fair value determination include, but are not limited to, the following: only a bid price or an asked price is available; the spread between bid and asked prices is substantial; infrequency of sales; thinness of market; the size of reported trades; a temporary lapse in the provision of prices by any reliable pricing source; and actions of the securities or future markets, such as the suspension or limitation of trading. Short term investments (those with remaining maturities of 60 days or less) may be valued at amortized cost which approximates market value.
GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. Various inputs are used in determining the value of the Portfolios’ investments. These inputs are summarized in the three broad levels listed below:
| • | Level 1 – quoted prices in active markets for identical securities |
| • | Level 2 – other significant observable inputs |
| • | Level 3 – significant unobservable inputs |
For example, Structured Notes held by the New Century Alternative Strategies Portfolio are typically classified as Level 2 since the values for such securities are customarily based on prices provided by an independent pricing service that utilizes various “other significant observable inputs” including bid and ask quotations, prices of similar securities, underlying index values and interest rates, among other factors.
The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level of the fair value hierarchy within which the fair value measurement of that security is determined to fall in its entirety is the lowest level input that is significant to the fair value measurement.
The following is a summary of the inputs used to value each Portfolio’s investments by security type as of October 31, 2013:
| New Century Capital Portfolio | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investment Companies | $ | 111,931,566 | $ | — | $ | — | $ | 111,931,566 | ||||||||
Money Market Funds | 2,544,729 | — | — | 2,544,729 | ||||||||||||
Total | $ | 114,476,295 | $ | — | $ | — | $ | 114,476,295 | ||||||||
| New Century Balanced Portfolio | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investment Companies | $ | 70,226,602 | $ | — | $ | — | $ | 70,226,602 | ||||||||
Money Market Funds | 1,338,159 | — | — | 1,338,159 | ||||||||||||
Total | $ | 71,564,761 | $ | — | $ | — | $ | 71,564,761 | ||||||||
32
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
| New Century International Portfolio | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investment Companies | $ | 62,298,418 | $ | — | $ | — | $ | 62,298,418 | ||||||||
Money Market Funds | 278,696 | — | — | 278,696 | ||||||||||||
Total | $ | 62,577,114 | $ | — | $ | — | $ | 62,577,114 | ||||||||
| New Century Alternative Strategies Portfolio | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investment Companies | $ | 115,861,199 | $ | — | $ | — | $ | 115,861,199 | ||||||||
Structured Notes | — | 4,869,960 | — | 4,869,960 | ||||||||||||
Money Market Funds | 3,478,464 | — | — | 3,478,464 | ||||||||||||
Total | $ | 119,339,663 | $ | 4,869,960 | $ | — | $ | 124,209,623 | ||||||||
Refer to each Portfolio’s schedule of investments for a listing of the securities valued using Level 1 and Level 2 inputs. As of October 31, 2013, the Portfolios did not have any transfers in and out of any Level. In addition, the Portfolios did not have derivative instruments or any assets or liabilities that were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of October 31, 2013. It is the Portfolios’ policy to recognize transfers into and out of any Level at the end of the reporting period.
| B. | Share Valuation |
The net asset value per share of each Portfolio is calculated daily by dividing the total value of each Portfolio’s assets, less liabilities, by the number of shares outstanding. The offering price and redemption price per share of each Portfolio is equal to the net asset value per share, except that shares of each Portfolio are subject to a redemption fee of 2% if redeemed within 30 days of the date of purchase. This redemption fee applies to all shareholders and accounts; however, each Portfolio reserves the right to waive such redemption fees on employer sponsored retirement accounts. No redemption fee is imposed on the exchange of shares among the various Portfolios of the Trust, the redemption of shares representing reinvested dividends or capital gain distributions, or on amounts representing capital appreciation of shares. During the years ended October 31, 2013 and 2012, proceeds from redemption fees totaled $724 and $0, respectively, for New Century Capital Portfolio, $1 and $545, respectively, for New Century Balanced Portfolio, $3 and $179, respectively, for New Century International Portfolio and $2,722 and $5,870, respectively, for New Century Alternative Strategies Portfolio. Any redemption fees collected are credited to paid-in capital of the applicable Portfolio.
| C. | Investment Transactions |
Investment transactions are recorded on a trade date basis for financial reporting purposes. Gains and losses on securities sold are determined on a specific identification method.
33
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
| D. | Income Recognition |
Interest, if any, is accrued on portfolio investments daily. Dividend income and capital gain distributions are recorded on the ex-dividend date or as soon as the information is available if after the ex-date.
| E. | Distributions to Shareholders |
Dividends arising from net investment income, if any, are declared and paid semi-annually to shareholders of New Century Balanced and New Century Alternative Strategies Portfolios. Dividends from net investment income, if any, are declared and paid annually to shareholders of New Century Capital and New Century International Portfolios. Net realized short-term capital gains, if any, may be distributed throughout the year and net realized long-term capital gains, if any, are distributed annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
The tax character of distributions paid during the years ended October 31, 2013 and October 31, 2012 was as follows:
Years Ended | Ordinary Income | Long-Term Capital Gains | Total Distributions | |||||||||
| New Century Capital Portfolio | ||||||||||||
October 31, 2013 | $ | — | $ | 4,174,787 | $ | 4,174,787 | ||||||
October 31, 2012 | $ | — | $ | 497,600 | $ | 497,600 | ||||||
| New Century Balanced Portfolio | ||||||||||||
October 31, 2013 | $ | 794,645 | $ | — | $ | 794,645 | ||||||
October 31, 2012 | $ | 828,337 | $ | — | $ | 828,337 | ||||||
| New Century International Portfolio | ||||||||||||
October 31, 2013 | $ | 642,497 | $ | — | $ | 642,497 | ||||||
October 31, 2012 | $ | 434,898 | $ | — | $ | 434,898 | ||||||
| New Century Alternative Strategies Portfolio | ||||||||||||
October 31, 2013 | $ | 668,997 | $ | — | $ | 668,997 | ||||||
October 31, 2012 | $ | 1,636,766 | $ | — | $ | 1,636,766 | ||||||
| F. | Cost of Operations |
The Portfolios bear all costs of their operations other than expenses specifically assumed by the Adviser. Expenses directly attributable to a Portfolio are charged to that Portfolio; other expenses are allocated proportionately among the Portfolios in relation to the net assets of each Portfolio.
34
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
| G. | Use of Estimates |
In preparing financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities, and revenues and expenses during the reporting period. Actual results could differ from those estimates.
| (2) | INVESTMENT ADVISORY FEES, ADMINISTRATIVE AGREEMENT AND TRUSTEES’ FEES |
Each Portfolio has a separate Investment Advisory Agreement with the Adviser. Investment advisory fees for each Portfolio are computed daily and paid monthly. The investment advisory fees for New Century Capital, New Century Balanced and New Century International Portfolios are computed at an annualized rate of 1.00% (100 basis points) on the first $100 million of average daily net assets and 0.75% (75 basis points) of average daily net assets exceeding that amount. The investment advisory fees for New Century Alternative Strategies Portfolio are computed at an annualized rate of 0.75% (75 basis points) of average daily net assets.
The Adviser has contractually agreed to limit the total expenses (excluding interest, taxes, brokerage, acquired fund fees and expenses and extraordinary expenses) to an annual rate of 1.50% of average net assets for each of the Portfolios. The total expenses do not include a Portfolio’s proportionate share of expenses of the underlying investment companies (i.e. acquired fund fees and expenses) in which such Portfolio invests. This contractual agreement is in place until March 1, 2014. During the fiscal year ended October 31, 2013, no such reduction of advisory fees was necessary with respect to any Portfolio.
Any advisory fee reductions and/or any other operating expenses absorbed by the Adviser pursuant to the expense limitation agreement shall be reimbursed by the Portfolio to the Adviser, if so requested by the Adviser, provided the aggregate amount of the Portfolio’s current total operating expenses for such year does not exceed the applicable existing limitation on Portfolio expenses, and the reimbursement is made within three years after the year in which the Adviser incurred the expense.
Fees paid by the Portfolios pursuant to an Administration Agreement with the Adviser to administer the ordinary course of the Portfolios’ business are paid monthly based on actual expenses incurred in the overseeing of the Portfolios’ affairs.
The Portfolios pay each Trustee who is not affiliated with the Adviser a $16,000 annual retainer, paid quarterly, and a per meeting fee of $5,000. The Portfolios will also pay each Trustee who is not affiliated with the Adviser a $5,000 special meeting fee if held independently of a regularly scheduled meeting. Any Trustee who is affiliated with the Adviser and any officer of New Century does not receive compensation from the Portfolios at this time.
35
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
| (3) | DISTRIBUTION PLAN AND OTHER TRANSACTIONS WITH RELATED PARTIES |
The Portfolios have adopted a Distribution Plan (the “Plan”) under Section 12(b) of the Investment Company Act of 1940 and Rule 12b-1 thereunder. Under the Plan, each Portfolio may pay up to 0.25% (25 basis points) of its average daily net assets to the Distributor for activities primarily intended to result in the sale of shares. Under its terms, the Plan shall remain in effect from year to year, provided such continuance is approved annually by a vote of a majority of the Trustees and a majority of those Trustees who are not “interested persons” of the Portfolios and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan.
During the year ended October 31, 2013, the Distributor received $239,677, $128,113, $107,550 and $218,046 from New Century Capital, New Century Balanced, New Century International and New Century Alternative Strategies Portfolios, respectively, pursuant to the Plan. As described below, these net amounts were offset by the sales commissions and other compensation received by the Distributor.
During the year ended October 31, 2013, the Distributor also received sales commissions and other compensation of $16,111, $42,937, $42,943 and $86,361 in connection with the purchase of investment company shares by New Century Capital, New Century Balanced, New Century International and New Century Alternative Strategies Portfolios, respectively. The Distributor has voluntarily agreed to reduce payments made by each Portfolio pursuant to the Plan in amounts equal to the sales commissions and other compensation it has received as a result of a Portfolio’s investment.
Certain officers and Trustees of New Century are also officers and/or directors of the Adviser and the Distributor.
| (4) | INVESTMENT TRANSACTIONS |
For the year ended October 31, 2013, the cost of purchases and the proceeds from sales of securities other than short-term investments and U.S. government securities were as follows:
New Century Capital Portfolio | New Century Balanced Portfolio | New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||
| Purchase of investment securities | $ | 27,690,491 | $ | 14,231,479 | $ | 18,957,770 | $ | 30,190,418 | ||||||||
| Proceeds from sales of investment securities | $ | 37,219,817 | $ | 18,988,245 | $ | 22,496,435 | $ | 32,206,954 | ||||||||
36
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
| (5) | TAX MATTERS |
It is each Portfolio’s intention to qualify as a regulated investment company under the Internal Revenue Code of 1986 (the “Code”). Qualification generally will relieve the Portfolios of liability for federal income taxes to the extent 100% of their net investment income and net realized gains are distributed in accordance with the Code.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is also each Portfolio’s intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
For the year ended October 31, 2013, the following reclassification was made as a result of permanent differences between the financial statement and income tax reporting:
Increase in Accumulated Net Investment Loss | Increase in Accumulated Net Realized Gains on Investments | Decrease in Paid-in Capital | ||||||||||
| New Century Capital Portfolio | $ | 50,999 | $ | 88,906 | $ | 139,905 | ||||||
This reclassification did not change the net assets of the New Century Capital Portfolio.
The tax character of accumulated earnings at October 31, 2013 was as follows:
New Century Capital Portfolio | New Century Balanced Portfolio | New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||
| Undistributed ordinary income | $ | 100,231 | $ | 185,621 | $ | 361,321 | $ | — | ||||||||
| Net unrealized appreciation | 36,379,634 | 16,767,754 | 17,168,406 | 16,006,018 | ||||||||||||
| Capital loss carryforwards | (722,962 | ) | — | — | (5,686,994 | ) | ||||||||||
| Undistributed long-term gains | 10,149,479 | 3,998,951 | 4,279,302 | — | ||||||||||||
| Qualified ordinary late year losses | — | — | — | (233,684 | ) | |||||||||||
| Total accumulated earnings | $ | 45,906,382 | $ | 20,952,326 | $ | 21,809,029 | $ | 10,085,340 | ||||||||
37
NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
The following information is based upon the federal income tax cost of investment securities as of October 31, 2013:
New Century Capital Portfolio | New Century Balanced Portfolio | New Century International Portfolio | New Century Alternative Strategies Portfolio | |||||||||||||
| Federal income tax cost | $ | 78,096,661 | $ | 54,797,007 | $ | 45,408,708 | $ | 108,203,605 | ||||||||
| Gross unrealized appreciation | $ | 36,412,367 | $ | 16,846,155 | $ | 17,246,882 | $ | 18,896,654 | ||||||||
| Gross unrealized depreciation | (32,733 | ) | (78,401 | ) | (78,476 | ) | (2,890,636 | ) | ||||||||
| Net unrealized appreciation | $ | 36,379,634 | $ | 16,767,754 | $ | 17,168,406 | $ | 16,006,018 | ||||||||
The difference between the federal income tax cost of portfolio investments and the financial statement cost for New Century Capital, New Century Balanced and New Century Alternative Strategies Portfolios is due to certain timing differences in the recognition of capital losses under income tax regulations and GAAP. These “book/tax” differences are temporary in nature and are primarily due to the tax deferral of losses on wash sales.
During the year ended October 31, 2013, the following amounts of capital loss carryforwards were utilized to offset current year realized gains:
| New Century Capital Portfolio | $ | 242,638 | ||
| New Century Balanced Portfolio | $ | 690,036 | ||
| New Century International Portfolio | $ | 3,800,017 | ||
| New Century Alternative Strategies Portfolio | $ | 2,417,518 |
As of October 31, 2013, the Portfolios had capital loss carryforwards for federal income tax purposes (listed below) which may be utilized in future years to offset net realized capital gains, if any, prior to distributing such gains to shareholders. Under the Regulated Investment Company Modernization Act of 2010, the Portfolios are permitted to carry forward capital losses incurred in taxable years beginning after October 31, 2011 for an unlimited period. Capital losses incurred during post-enactment taxable years are required to be utilized prior to those losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards are more likely to expire unused. Also, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
As a result of the merger described in Note 1, pre-merger short-term capital loss carryforwards, which were acquired by New Century Capital Portfolio from New Century Opportunistic Portfolio, are subject to annual limitations under Sections 381-384 of the Code. The amount of capital loss carryforwards that were forfeited due to these limitations was $139,905 for fiscal year 2013. The remaining short-term capital loss carryforwards of $722,962 are subject to limitations of $361,481 and $361,481 for fiscal years 2014 and 2015, respectively.
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NEW CENTURY PORTFOLIOS NOTES TO FINANCIAL STATEMENTS (Continued) October 31, 2013 |
New Century Capital Portfolio | New Century Alternative Strategies Portfolio | |||||||
| Expires October 31, 2016 - short-term | $ | 722,962 | $ | — | ||||
| Expires October 31, 2017 - short-term | — | 3,855,972 | ||||||
| Expires October 31, 2018 - short-term | — | 1,831,022 | ||||||
| $ | 722,962 | $ | 5,686,994 | |||||
Net qualified ordinary late year losses, incurred after December 31, 2012 and within the taxable year, are deemed to arise on the first day of the Portfolios’ next taxable year. For the year ended October 31, 2013, New Century intends to defer to November 1, 2013 for federal tax purposes qualified ordinary late year losses as follows:
| New Century Alternative Strategies Portfolio | $ | 233,684 |
The Portfolios recognize the tax benefits or expenses of uncertain tax positions only when the positions are “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the Portfolios’ tax positions taken on Federal income tax returns for all open tax years (tax years ended October 31, 2010 through October 31, 2013) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. Each Portfolio identifies its major tax jurisdiction as U.S. Federal.
| (6) | CONTINGENCIES AND COMMITMENTS |
New Century indemnifies its officers and Trustees for certain liabilities that might arise from the performance of their duties to the Portfolios. Additionally, in the normal course of business, New Century, on behalf of its Portfolios, enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Portfolios’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Portfolios that have not yet occurred. However, based on experience, New Century expects the risk of loss to be remote.
| (7) | SUBSEQUENT EVENTS |
The Portfolios are required to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the date of the Statements of Assets and Liabilities. For non-recognized subsequent events that must be disclosed to keep the financial statements from being misleading, the Portfolios are required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. Management has evaluated subsequent events through the issuance of these financial statements and has noted no such events.
39
NEW CENTURY PORTFOLIOS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
To the Shareholders and Board of Trustees of
New Century Portfolios
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of New Century Capital Portfolio, New Century Balanced Portfolio, New Century International Portfolio and New Century Alternative Strategies Portfolio, each a series of shares of beneficial interest of New Century Portfolios (the “Portfolios”), as of October 31, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolios’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2013 by correspondence with the custodian and broker. An audit also includes assessing the accounting principles used and signific ant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of New Century Capital Portfolio, New Century Balanced Portfolio, New Century International Portfolio and New Century Alternative Strategies Portfolio as of October 31, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the years in the two-year period then ended, and their financial highlights for the each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
 | |
| BBD, LLP |
Philadelphia, Pennsylvania
December 23, 2013
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NEW CENTURY PORTFOLIOS BOARD OF TRUSTEES AND OFFICERS (Unaudited) |
Overall responsibility for management of New Century rests with the Board of Trustees. Each Trustee serves during his or her lifetime until such Trustee’s termination, or death, resignation, retirement or removal. The Trustees, in turn, elect the officers of New Century to actively supervise its day-to-day operations. The officers have been elected for an annual term. The following table provides information regarding each Trustee and executive officer of New Century:
Name, Address And Birth Year | Length of Time Served | Position(s) Held With the Trust | Principal Occupation(s) During Past 5 Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee |
| Interested Trustee | |||||
*John W. Filoon, III 100 William Street, Ste. 200 Wellesley, MA 02481 1961 | Since 2013 | Trustee | President, Chief Operating Officer and Director, Weston Financial Group, Inc.; CEO, Secretary, Director, and General Securities Principal, Weston Securities Corporation since 5/2011; Managing Director of Investments, SVP Bank of America Merrill Lynch (2009-2011); Market Trust Executive, SVP, U.S. Trust, Bank of America (2007-2009).. | 4 | None |
| Non-Interested Trustees | |||||
Stanley H. Cooper, Esq. One Ashford Lane Andover, MA 01810 1947 | Since 2008 Since 1988 | Chairman Trustee | Attorney in private practice. | 4 | None |
Roger A. Eastman, CPA 10682 Gulfshore Drive C-103 Naples, FL 34108 1930 | Since 1989 | Trustee | Retired. | 4 | None |
Michael A. Diorio, CPA 11 Calvin Drive Milford, MA 01757 1945 | Since 1988 | Trustee | Financial Consultant; Formerly Executive Director, Milford Housing Authority (2004 to 2009). | 4 | Director, The Milford National Bank & Trust Company since 1996. |
| * | John W. Filoon, III is considered to be an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940, as amended. Mr. Filoon is an interested person because he is an officer of the Adviser and the Distributor. |
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NEW CENTURY PORTFOLIOS BOARD OF TRUSTEES AND OFFICERS (Unaudited) (Continued) |
Name, Address And Birth Year | Length of Time Served | Position(s) Held With the Trust | Principal Occupation(s) During Past 5 Years |
| Executive Officers | |||
Nicole M. Tremblay, Esq. 100 William Street, Ste. 200 Wellesley, MA 02481 1973 | Since 2011 Since 2002 2002 to 2011 | President (CEO) Chief Compliance Officer Chief Financial Officer, Treasurer, Secretary | Senior Vice President, Chief Compliance Officer, Weston Financial Group, Inc.; President, Chief Compliance Officer, and General Securities Principal, Weston Securities Corporation. |
Ronald A. Sugameli 100 William Street, Ste. 200 Wellesley, MA 02481 1952 | Since 1997 | Vice President | Portfolio Manager since 2002; Managing Director, Chief Investment Officer, Secretary, Weston Financial Group, Inc.; Vice President, Secretary, Weston Securities Corporation. |
Stephen G. DaCosta 100 William Street, Ste. 200 Wellesley, MA 02481 1955 | Since 2011 | Chief Financial Officer, Treasurer | Vice President, Divisional Controller, Weston Financial Group, Inc.; Vice President, Financial Operations Principal, Weston Securities Corporation. |
Susan K. Arnold 100 William Street, Ste. 200 Wellesley, MA 02481 1959 | Since 1998 1998 to 2011 | Vice President, Assistant Treasurer | Portfolio Manager since 2011; Assistant Portfolio Manager 1998 to 2011; Vice President, Senior Financial Counselor, Weston Financial Group, Inc.; Registered Representative, Weston Securities Corporation |
Andre M. Fernandes 100 William Street, Ste. 200 Wellesley, MA 02481 1978 | Since 2011 | Vice President | Portfolio Manager since 2011; Assistant Portfolio Manager 2002 to 2011; Vice President, Financial Counselor, Weston Financial Group, Inc.; Registered Representative, Weston Securities Corporation |
Additional information about members of the Board of Trustees and executive officers is available in the Statement of Additional Information (“SAI”). To obtain a free copy of the SAI, please call 1-888-639-0102.
Further, the Board of Trustees and New Century’s principal executive officer, principal financial officer and other persons performing similar functions have adopted a Code of Ethics. To obtain a free copy of the Code of Ethics, please call 1-888-639-0102.
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NEW CENTURY PORTFOLIOS ABOUT YOUR PORTFOLIOS’ EXPENSES (Unaudited) |
We believe it is important for you to understand the impact of costs on your investment. As a shareholder of the Portfolios, you may incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees, underlying fund fees and other expenses. The following examples are intended to help you understand ongoing costs (in dollars) of investing in the Portfolios and to compare these costs with the ongoing costs of investing in other mutual funds.
A mutual fund’s ongoing costs are expressed as a percentage of its average net assets. This figure is known as the expense ratio. The examples in the tables below are based on an investment of $1,000 made at the beginning of the period shown (May 1, 2013) and held for the entire period (October 31, 2013).
The table below illustrates each Portfolio’s ongoing costs in two ways:
Actual fund return – This section helps you to estimate the actual expenses that you paid over the period. The “Ending Account Value” shown is derived from each Portfolio’s actual return, and the third column shows the dollar amount of operating expenses that would have been paid by an investor who started with an initial investment of $1,000 in each of the Portfolios. You may use the information here, together with the amount you invested, to estimate the expenses that you paid over the period.
To do so, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number given for the Portfolios under the heading “Expenses Paid During Period.”
Hypothetical 5% return – This section is intended to help you compare the Portfolios’ ongoing costs with those of other mutual funds. It assumes that each Portfolio had an annual return of 5% before expenses during the period shown, but that the expense ratio is unchanged. In this case, because the return used is not the Portfolios’ actual returns, the results do not apply to your investment. The example is useful in making comparisons because the Securities and Exchange Commission (“SEC”) requires all mutual funds to calculate expenses based on a 5% return. You can assess each Portfolio’s ongoing costs by comparing this hypothetical example with the hypothetical examples that appear in shareholder reports of other mutual funds.
Note that expenses shown in the table are meant to highlight and help you compare ongoing costs only. The Portfolios do not charge sales loads. However, a redemption fee of 2% is applied on the sale of shares of the Portfolios held for less than 30 days.
The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions. In addition, the calculations do not reflect the Portfolios’ proportionate shares of expenses of the underlying investment companies in which the Portfolios invest.
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NEW CENTURY PORTFOLIOS ABOUT YOUR PORTFOLIOS’ EXPENSES (Unaudited) (Continued) |
More information about the Portfolios’ expenses, including recent annual expense ratios, can be found in this report. For additional information on operating expenses and other shareholder costs, please refer to the Portfolios’ prospectus.
New Century Capital Portfolio
Beginning Account Value May 1, 2013 | Ending Account Value October 31, 2013 | Expenses Paid During Period* | |
Based on Actual Fund Return | $1,000.00 | $1,104.60 | $7.48 |
| Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,018.10 | $7.17 |
| * | Expenses are equal to the New Century Capital Portfolio’s annualized expense ratio of 1.41% for the period, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
New Century Balanced Portfolio
Beginning Account Value May 1, 2013 | Ending Account Value October 31, 2013 | Expenses Paid During Period* | |
Based on Actual Fund Return | $1,000.00 | $1,061.10 | $7.38 |
| Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,018.05 | $7.22 |
| * | Expenses are equal to the New Century Balanced Portfolio’s annualized expense ratio of 1.42% for the period, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
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NEW CENTURY PORTFOLIOS ABOUT YOUR PORTFOLIOS’ EXPENSES (Unaudited) (Continued) |
New Century International Portfolio
Beginning Account Value May 1, 2013 | Ending Account Value October 31, 2013 | Expenses Paid During Period* | |
Based on Actual Fund Return | $1,000.00 | $1,047.70 | $7.12 |
| Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,018.25 | $7.02 |
| * | Expenses are equal to the New Century International Portfolio’s annualized expense ratio of 1.38% for the period, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
New Century Alternative Strategies Portfolio
Beginning Account Value May 1, 2013 | Ending Account Value October 31, 2013 | Expenses Paid During Period* | |
Based on Actual Fund Return | $1,000.00 | $1,015.60 | $5.74 |
| Based on Hypothetical 5% Return (before expenses) | $1,000.00 | $1,019.51 | $5.75 |
| * | Expenses are equal to the New Century Alternative Strategies Portfolio’s annualized expense ratio of 1.13% for the period, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
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NEW CENTURY PORTFOLIOS TRUSTEES’ APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited) |
Weston Financial Group, Inc. (“Weston” and/or “Adviser”) serves as the investment adviser to each Portfolio of New Century. The Investment Company Act of 1940, as amended (the “1940 Act”), provides, in substance, that each Investment Advisory Agreement between a Portfolio and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the Board of Trustees, including by a vote of majority of the Trustees who are not “interested persons” of the Portfolio (the “Independent Trustees”), cast in person at a meeting called for considering such approval.
At a regularly scheduled meeting of the Board of Trustees (the “Board”) of New Century Portfolios (the “Trust” and/or “New Century”) held on September 25, 2013, the Board, including a majority of the Independent Trustees, voted to approve the continuance of each Investment Advisory Agreement (collectively, the “Advisory Agreements”) on behalf of each of the Capital, Balanced, International and Alternative Strategies Portfolios for an additional one-year period through October 31, 2014. In approving continuance of the Advisory Agreements, the Board, including a majority of the Independent Trustees, determined that the advisory fee structures were fair and reasonable and that continuance of the Advisory Agreements was in the best interests of the Portfolios and their shareholders. The approval of the Advisory Agreements, including the advisory fees proposed in connection with the continuation of agreements, was unanimous and thus included a majority of the Independent Trustees and by a majority of the entire Board.
The Chief Compliance Officer (the “CCO”) who also serves the President and Chief Executive Officer of the Trust is an interested party as defined by the 1940 Act and assisted the Trustees in their review. Additionally, the Independent Trustees’ counsel prepared a written report discussing the key factors for the Trustees to consider in determining whether to continue the Advisory Agreements. In reaching their decision, the Board, advised by the Trustees’ independent counsel, took into account quantitative and qualitative information furnished to the Board throughout the year at regular Board meetings and Audit Committee meetings, as well as materials prepared specifically in connection with the annual review of the Advisory Agreements at the September 25, 2013 Board meeting (the “Meeting”). At such regular meetings, the Trustees typically received investment performance reports and related financial information concerning the Portfolios, brokerage commissions and execution reports provided by the Adviser, and information provided by the Portfolio Managers and their team of assistants and analysts covering the specific performance of each Portfolio and the investment strategies used in pursuing each Portfolio’s investment objectives, among other reports.
The Trustees requested and received materials specifically relating to each Portfolio’s current Advisory Agreement in advance of the Meeting. The materials prepared for the Meeting included the following: (i) an expense ratio analysis chart detailing the net and gross expense ratios for each Portfolio (as compared to each Portfolio’s respective Morningstar category and based on various ranges of assets under management); (ii) expense analysis charts demonstrating fees, expenses and investment performance for each of the Portfolios (as
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NEW CENTURY PORTFOLIOS TRUSTEES’ APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited) (Continued) |
compared to comparable groups of funds as classified by Morningstar and benchmarks for the periods ending July 31, 2012 and June 30, 2013); and (iii) various other performance reports, among others. In its discussion with the CCO of the Trust, the Board was informed of her opinion that the information provided by Weston to the Trustees provided a reasonable basis for the Trustees to conclude that the investment advisory fees proposed in connection with the Advisory Agreements were reasonable with respect to the Portfolios.
The Independent Trustee’s counsel had directed the Board’s attention to the memorandum outlining the key factors to consider and their respective responsibilities in the renewal of the Advisory Agreements. Counsel noted that the Board has always taken a very thorough approach with respect to the annual renewal process, which is one of the most important duties of the Board. He further explained that his firm also served as counsel to the Trust. He noted that his firm does not serve as counsel to Weston or to the Distributor. Counsel discussed the Board’s responsibilities with respect to the continuance of investment advisory and distribution agreements under federal and state law, noting that Section 15(c) of the 1940 Act imposes a duty on all board members to request such information as may be reasonably necessary to evaluate the terms of any investment advisory agreement. He explained that there also is a corresponding duty imposed on the Adviser to provide the requested information, and any additional information as each believes to be reasonably necessary, for the Board to evaluate the terms of the agreements.
Counsel further explained that the Board had discussed its fiduciary duties and responsibilities extensively at prior meetings during the year and in prior years, and that through its oversight of the Adviser the Board had demonstrated that it was sensitive to the Portfolios’ expenses. He noted that the Trustees stay abreast of current topics in the industry, such as the Jones v. Harris and Gallus decisions. He noted that there had been several extended discussions among the Trustees and Counsel regarding the Jones v. Harris Supreme Court decision that affirmed the Gartenberg standard.
The Trustees then discussed the nature, extent and quality of the materials provided to the Board for each meeting and additional materials provided on a more frequent basis. The Board expressed satisfaction with the CCO’s handling of the many SEC filings, which were accurate and filed on a timely basis. Further, the Board expressed satisfaction with the administration of the Trust’s Anti-Money Laundering Program and the Code of Ethics to name a few areas and was pleased with the Adviser’s handling of various Trust responsibilities.
The CCO added that the Adviser continues to take steps to demonstrate its commitment to the Trust and its shareholders. She further explained that, based on her observations, the Adviser takes its responsibilities seriously and strives to provide quality materials to the Board and provide the Board with opportunities to discuss the Portfolios and their performance with the Portfolio Managers. The CCO described the importance of continuity with regard to the relationship between the Trust and the Board and the importance of the Portfolio Managers
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NEW CENTURY PORTFOLIOS TRUSTEES’ APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited) (Continued) |
and their team, background, education and experience. She noted the value of Weston’s long-term relationship with the Portfolios and noted that the Compliance staff continues to perform many functions for the Portfolios.
The Trustees next reviewed and discussed the background, qualifications, education and experience of the Adviser’s investment professionals and support personnel who provide portfolio management, investment research, and similar services to the Portfolios. The Board also stated that a long-term relationship with a capable, conscientious Adviser and personnel is in the best interest of shareholders and such shareholders have benefited from such continuity and Weston’s strong commitment to compliance. The Board noted its satisfaction with Adviser’s personnel’s dedication and hard work. The Trustees also discussed and considered the quality of shareholder communications, administrative duties, and other services provided by the Adviser to the Trust, the Adviser’s robust compliance program, and the Adviser’s role in coordinating such services and programs for the Trust. The Trustees specifically noted that the Adviser has been exceptionally responsive to any issues raised by the Board and that the Trustees are satisfied with the responses to the Trustees’ inquiries and with their willingness to follow up on matters. The Trustees also expressed their pleasure with the strong relationship that has developed between the Board and the Trust’s CCO. The Trustees also took into consideration the belief that Weston is a quality firm with a reputation for moral integrity and honesty.
The Board reviewed contractual investment advisory fee rates, including administrative fee and distribution fee rates, and considered each of the Portfolios’ investment advisory fees and total expense ratios individually and in comparison to a group of similarly managed funds with similar investment styles, investment objectives, asset sizes as determined by Morningstar. The Board also reviewed each of the Capital, Balanced, International, and Alternative Strategies Portfolios net and gross expense ratios in comparison to a subset of fund-of-fund mutual funds with similar characteristics to the Portfolios.
The Board further discussed the fee structure of each of the Portfolios and the Trustees noted that the Capital, Balanced and International Portfolios offer a breakpoint for assets in excess of $100 million, which could lower the investment advisory fees as assets increase. In addition, the Board discussed the Adviser’s Operating Expense Agreement with the Portfolios. Pursuant to this Agreement, the Adviser has agreed to reduce fees and/or reimburse certain other expenses so that the ratio of total operating expenses of each Portfolio is limited to 1.50% of such Portfolio’s average net assets. Further, the Board was reminded that in January 2013 the Adviser agreed to extend the current Operating Expense Agreement through March 1, 2014. The CCO further reported that after the merger of the Opportunistic Portfolio into the Capital Portfolio in February 2013, Portfolio expense allocations were revised to ensure the equitable allocation of the transfer agency expenses amongst the remaining four Portfolios.
After a thorough discussion, the Board determined that the investment advisory fees paid by the Portfolios were within an acceptable range based on the average of the investment advisory fees charged by similar funds within the industry. The Board also reviewed the
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NEW CENTURY PORTFOLIOS TRUSTEES’ APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited) (Continued) |
average total expense ratios of similar equity mutual funds within the industry. They discussed the Portfolios’ fixed expenses, such as the use of outside service providers for transfer agency, fund accounting and custodial services. It was also noted that the Trust, as a fund-of-funds complex, had a slightly different expense ratio structure than most other funds within the industry. The Board further determined that each Portfolio’s total expense ratio is within the acceptable range based on the indirect expenses each Portfolio incurs through their investments in underlying mutual funds.
The Board discussed the Portfolio’s performance, discussing the fund of funds structure and noted this is a benefit to shareholders. In addition, the Portfolios have been performing competitively in the industry and that their returns, as well as their Morningstar ratings, have been satisfactory, although there is room for improvement. The Board had noted that performance in the equity markets has been quite volatile, but are confident the Portfolios’ performance will continue to improve. The Board expressed its satisfaction with the experience of the Portfolio Managers. Further, the Board noted that many funds-of-funds in the industry have the ability to select intra-family funds and therefore are able keep their expense ratios lower, and with this taken into consideration the Portfolios perform competitively.
The Trustees noted that the Adviser continues to work on refining a succession plan for the Portfolios to ensure there is appropriate coverage of the Portfolios in the event that a Portfolio Manager or research analyst resigns or retires in the future. The Board recognizes the importance of having a solid succession plan in place. It was noted that the Adviser has cooperated and intends to continue to cooperate with the Board to keep the Trust informed on developments within the Adviser, on the officers and employees to whom the functions of the Trust will transition, and on the steps taken to assure the continuity of the effective relationships between the Trust and its Adviser.
The Board next considered whether economies of scale are realized by the Adviser and its affiliates as the Portfolios’ assets increase and the extent to which this is reflected in the level of management fees charged. To support such analysis, the Board reviewed the Portfolios’ gross and net expense ratios and expense caps and noted that certain Portfolio expenses are relatively fixed and unrelated to asset size. The Board also noted that, with respect to three of the four Portfolios, economies of scale are shared with a Portfolio and its shareholders through investment advisory fee breakpoints so that as a Portfolio’s assets increase, its effective advisory fee rate decreases, and noted that the Alternative Strategies Portfolio’s lower fixed investment advisory fee rate of 0.75% is not impacted by asset level. The Capital, Balanced, and International Portfolios’ Agreements, as noted above, pay an investment advisory fee at the rate of 1.00% on the first $100 million of Portfolio net assets; and 0.75% on net assets in excess of $100 million, while the Alternative Strategies Portfolio’s Agreement provides for an investment advisory fee rate of 0.75% on all assets. The Board confirmed that the Adviser may enjoy some economies of scale as a Portfolio’s assets grow but that these economies of scale are currently being shared equitably by the Adviser, its affiliates, and the Portfolios for the benefit of shareholders.
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NEW CENTURY PORTFOLIOS TRUSTEES’ APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (Unaudited) (Continued) |
The Board also considered the extent of profits realized by the Adviser and its affiliates in providing investment advisory and administrative services to the Portfolios. The Board considered the fact that the Adviser and its affiliates received other compensation from its relationship with the Trust, such as administration fees for being fund administrator and distribution fees under a Rule 12b-1 plan. In addition, the Adviser receives other direct and indirect benefits in connection with its relationship with the Portfolios. The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are reasonable.
In its discussions, the Board did not rely upon comparisons of the services to be rendered and the amounts to be paid under the contract with those of other investment advisory contracts, such as contracts of the same or other investment advisers with other registered investment companies or other types of clients (i.e. pension funds and other institutional investors). These factors were again considered irrelevant in a situation where the Independent Trustees were determining whether to approve the continuance of the Advisory Agreements containing the same terms and conditions with the Portfolios.
After a thorough discussion, the Board approved the renewal of the Advisory Agreements for a one-year period commencing November 1, 2013. The Board based its approval upon its evaluation of: (i) the nature, extent and quality of the services provided by Weston; (ii) Weston’s commitment to compliance and the policies and procedures maintained to monitor such compliance; (iii) the investment performance of the Portfolios and the effect of recent market and economic turmoil on the performance, asset levels and expense ratios of each Portfolio; (iv) the costs of the services provided and the profits realized by the Adviser from its relationship with the Portfolios; (v) the extent to which economies of scale may be realized as the Portfolio assets grow; and, (vi) whether fee levels reflect any such economies of scales for the benefit of the Portfolios’ shareholders. Further, the Trustees believed the assurance that the proposed Advisory Agreements would provide a continuity of relationship for the Portfolios was a significant factor to be considered. In evaluating the various factors noted above, each Independent Trustee weighed each factor, relative to one-another, as he saw fit, and each Independent Trustee may have allocated different weight to each such factor.
After considering all of the information described above, and in light of the totality of circumstances including the nature, extent and quality of the services provided by the Adviser, the Board concluded with respect to each Portfolio that the investment advisory fees , as well as the Portfolios’ total expense ratios, were both fair and reasonable. Further, the Board noted the total expense ratios of the Portfolios appear to be fair and reasonable with respect to other funds in the industry that share similar investment strategies. The Trustees also noted that the breakpoints and expense limitation agreements, as applicable, demonstrated Weston’s strong commitment to the Trust and its shareholders.
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INVESTMENT ADVISER AND ADMINISTRATOR Weston Financial Group, Inc. Wellesley, MA DISTRIBUTOR Weston Securities Corporation Wellesley, MA COUNSEL Greenberg Traurig, LLP Philadelphia, PA INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM BBD, LLP Philadelphia, PA TRANSFER AGENT Ultimus Fund Solutions, LLC Cincinnati, OH CUSTODIAN US Bank, N.A. Cincinnati, OH This report and the financial statements contained herein are submitted for the general information of the shareholders of the Portfolios. This report is authorized for distribution to prospective investors in the Portfolios only if preceded or accompanied by an effective Prospectus which contains details concerning the management fees, expenses and other pertinent information. A description of the policies and procedures that the Portfolios use to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling toll-free 1-888-639-0102, or on the SEC’s website at http://www.sec.gov. Information regarding how the Portfolios voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge upon request by calling toll-free 1-888-639-0102, or on the SEC’s website at http://www.sec.gov. The Portfolios file a complete listing of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Portfolios’ Forms N-Q are available without charge upon request by calling 1-888-639-0102, or on the SEC’s website at http://www.sec.gov. The Portfolios’ Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, or by calling 1-800-SEC-0330. |
| Item 2. | Code of Ethics. |
As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. Pursuant to Item 12(a)(1), a copy of registrant’s code of ethics is filed as an exhibit to this Form N-CSR. During the period covered by this report, the code of ethics was not amended, further; the registrant has not granted any waivers, including implicit waivers, from the provisions of the code of ethics.
| Item 3. | Audit Committee Financial Expert. |
The registrant’s board of trustees has determined that the registrant has at least one audit committee financial expert serving on its audit committee. The names of the audit committee’s co-financial experts are Roger Eastman and Michael Diorio. Mr. Eastman and Mr. Diorio are “independent” for purposes of this Item.
| Item 4. | Principal Accountant Fees and Services. |
| (a) | Audit Fees. The aggregate fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $48,000 and $57,500 with respect to the registrant’s fiscal years ended October 31, 2013 and 2012, respectively. |
| (b) | Audit-Related Fees. No fees were billed in either of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. |
| (c) | Tax Fees. The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were $8,400 and $10,500 with respect to the registrant’s fiscal years ended October 31, 2013 and 2012, respectively. The services comprising these fees are the preparation of the registrant’s federal income and excise tax returns. |
| (d) | All Other Fees. No fees were billed in either of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. |
| (e)(1) | The audit committee has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. |
| (e)(2) | None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| (f) | Less than 50% of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees. |
| (g) | During the fiscal years ended October 31, 2013 and 2012, aggregate non-audit fees of $8,400 and $10,500, respectively, were billed by the registrant’s accountant for services rendered to the registrant. No non-audit fees were billed in either of the last two fiscal years by the registrant’s accountant for services rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant. |
| (h) | The principal accountant has not provided any non-audit services that were not previously approved to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant. |
| Item 5. | Audit Committee of Listed Registrants. |
Not applicable
| Item 6. | Schedule of Investments. |
| (a) | Not applicable [schedule filed with Item 1] |
| (b) | Not applicable |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
| Not applicable |
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
| Not applicable |
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
| Not applicable |
| Item 10. | Submission of Matters to a Vote of Security Holders. |
The registrant has a standing nominating committee responsible for the selection and nomination to serve as trustees of the registrant. Although the nominating committee expects to be able to find an adequate number of qualified candidates to serve as trustees, the nominating committee is willing to consider nominations received from shareholders. Shareholders wishing to submit a nomination should do so by notifying the Secretary of the registrant, in writing, at the following address: 100 William Street, Suite 200, Wellesley, Massachusetts 02481-3902.
| Item 11. | Controls and Procedures. |
(a) Based on their evaluation of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) as of a date within 90 days of the filing date of this report, the registrant’s principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are reasonably designed and are operating effectively to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this report is being prepared, and that the information required in filings on Form N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| Item 12. | Exhibits. |
File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: Attached hereto
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)): Attached hereto
| Exhibit 99.CODE ETH | Code of Ethics |
| Exhibit 99.CERT | Certifications required by Rule 30a-2(a) under the Act |
| Exhibit 99.906CERT | Certifications required by Rule 30a-2(b) under the Act |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) New Century Portfolios
| By (Signature and Title)* | /s/ Nicole M. Tremblay | |||
| Nicole M. Tremblay, President | ||||
| Date | January 6, 2014 | |||
| Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. | ||||
| By (Signature and Title)* | /s/ Nicole M. Tremblay | |||
| Nicole M. Tremblay, President | ||||
| Date | January 6, 2014 | |||
| By (Signature and Title)* | /s/ Stephen G. DaCosta | |||
| Stephen G. DaCosta, Treasurer | ||||
| Date | January 6, 2014 | |||
* Print the name and title of each signing officer under his or her signature.