NEW CENTURY PORTFOLIOS
40 WILLIAM STREET, SUITE 100
WELLESLEY, MA 02481
July 8, 2005
VIA EDGAR TRANSMISSION
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U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
RE: NEW CENTURY PORTFOLIOS
SEC FILE NOS. 33-24041/811-5646
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Ladies and Gentlemen:
On June 24, 2005, New Century Portfolios (the "Trust"), filed preliminary
proxy materials pursuant to paragraph (a) of Rule 20a-1 under the Investment
Company Act of 1940, as amended (the "1940 Act") and pursuant to the
requirements of Rule 14a-6(a) under the Securities Exchange Act of 1934. These
proxy materials were filed in connection with a Special Meeting of Shareholders
to be held on August 17, 2005 (the "Special Meeting"). The proxy materials will
first be sent to shareholders on or about July 8, 2005.
The Portfolios of the Trust are the: New Century Capital Portfolio, New
Century Balanced Portfolio, New Century Aggressive Portfolio, New Century
International Portfolio and New Century Alternative Strategies Portfolio.
At the Special Meeting, shareholders will be asked to approve or disapprove
separate new investment advisory agreements between the Trust, on behalf of each
Portfolio, and Weston Financial Group, Inc. ("Weston"), the Trust's current
investment adviser. These new investment advisory agreements are being submitted
to the Trust in connection with a proposed change in control at Weston. The new
investment advisory agreements have substantially the same terms and conditions,
including the provisions for fees, as the Trust's current investment advisory
agreements. The Trust also may transact such other business as may properly come
before the Special Meeting or any adjournment thereof.
On July 1, 2005, John M. Ganley from the Division of Investment Management
at the U.S. Securities and Exchange Commission (the "Commission") spoke with the
Trust's outside counsel, Terrance James Reilly of Greenberg Traurig, LLP,
concerning the preliminary proxy materials. The following responds to Mr.
Ganley's comments to the preliminary proxy materials, as discussed in the
telephone call of July 1, 2005. The Commission's comments are in italics and the
Trust's response follows below.
U.S. Securities and Exchange Commission
July 8, 2005
Page 2
1. THE COMMISSION REQUESTED THAT THE TRUST CLARIFY THE PARAGRAPH FOUND ON PAGE
12 CONCERNING WESTON'S COMPLIANCE WITH SECTION 15(F) OF THE 1940 ACT BY
ADDING THE REQUIREMENTS OF SECTION 15(F) AND THE POSSIBLE CONSEQUENCES IF
WESTON WERE UNABLE TO RELY UPON THE SAFE HARBOR PROVISIONS OF SUCH SECTION.
The Trust has amended the disclosure. It now reads:
^SECTION 15(F) OF THE 1940 ACT PERMITS AN INVESTMENT ADVISER TO AN
INVESTMENT COMPANY TO RETAIN ANY PROFIT FROM THE SALE OF ITS POSITION AS AN
ADVISER IF: (I) FOR THREE YEARS THEREAFTER AT LEAST 75% OF THE TRUSTEES OF
THE INVESTMENT COMPANY ARE NOT "INTERESTED PERSONS" (AS THAT TERM IS
DEFINED IN THE 1940 ACT) OF THE OUTGOING OR INCOMING INVESTMENT ADVISER;
AND (II) THERE IS NOT IMPOSED AN "UNFAIR BURDEN" (AS THAT TERM IS USED IN
THE 1940 ACT) ON SUCH INVESTMENT COMPANY AS A RESULT OF SUCH TRANSACTIONS
OR ANY EXPRESS OR IMPLIED TERMS, CONDITIONS, OR UNDERSTANDINGS APPLICABLE
THERETO. THIS IS REFERRED TO AS A "SAFE HARBOR" PROVISION. IN AN EFFORT TO
RELY UPON THE PROVISIONS OF SECTION 15(F) OF THE 1940 ACT, ONE OF THE
PROVISIONS OF THE AGREEMENT BETWEEN WESTON AND WASHINGTON TRUST WITH
RESPECT TO THE TRANSACTION PROVIDES THAT: (i) for a period of three years
after the closing date of the Transaction, Washington Trust shall not
cause, and shall use all commercially reasonable efforts not to permit, any
"interested person" (as that term is defined in the 1940 Act) of Washington
Trust or Weston to become, or to continue as, a member of the Board of
Trustees, unless, taking into account that "interested person," at least
75% of the members of the Board of Trustees are not "interested persons"
(as that term is defined in the 1940 Act) of Washington Trust or Weston;
and (ii) Washington Trust shall not engage in or cause, and shall use all
commercially reasonable efforts to prevent any person directly or
indirectly controlling, controlled by, or under common control with
Washington Trust from engaging in or causing, any act, practice or
arrangement that, as a result of the transactions contemplated by this
Agreement or any express or implied terms, conditions or understandings
applicable thereto, imposes an "unfair burden" (as that term is used in the
1940 Act) on any of the Portfolios within the meaning of Section 15(f) of
the 1940 Act. IF THE REQUIREMENTS OF THE "SAFE HARBOR" ARE NOT MET FOR THE
REQUISITE PERIODS, THEN WESTON MAY BE UNABLE TO RELY UPON THE SAFE HARBOR
TO SHELTER ANY PROFITS DERIVED FROM THE TRANSFER OF CONTROL OF WESTON TO
WASHINGTON TRUST.
2. IN THE SECTION OF THE PROXY MATERIALS ENTITLED "TRUSTEES' CONSIDERATIONS
AND RECOMMENDATIONS" FOUND ON PAGES 12 AND 13, THE COMMISSION ASKED FOR
ADDITIONAL DISCLOSURE CONCERNING THE BOARD'S FINDINGS WITH RESPECT TO THE
FEES PAID BY EACH PORTFOLIO IN COMPARISON TO OTHER, SIMILAR FUNDS WITHIN
THE INDUSTRY.
The Trust has amended the disclosure. It now reads:
U.S. Securities and Exchange Commission
July 8, 2005
Page 3
In addition, the TRUSTEES WERE ADVISED THAT THE INVESTMENT ADVISORY FEE
CHARGED BY THE ALTERNATIVE STRATEGIES PORTFOLIO WAS COMPARABLE TO THE
INVESTMENT ADVISORY FEES CHARGED BY OTHER SIMILAR FUNDS WITHIN THE INDUSTRY
AND THAT THE INVESTMENT ADVISORY FEES CHARGED BY THE OTHER PORTFOLIOS WERE
HIGHER THAN OTHER SIMILAR FUNDS WITHIN THE INDUSTRY; HOWEVER, THE CAPITAL,
BALANCED, AGGRESSIVE AND INTERNATIONAL PORTFOLIOS DID OFFER A BREAKPOINT
FOR ASSETS IN EXCESS OF $100 MILLION THAT COULD LOWER THE INVESTMENT
ADVISORY FEES.
3. IN THE SECTION OF THE PROXY MATERIALS ENTITLED "TRUSTEES' CONSIDERATIONS
AND RECOMMENDATIONS" FOUND ON PAGES 12 AND 13, THE COMMISSION ASKED FOR
ADDITIONAL DISCLOSURE CONCERNING THE BOARD'S FINDINGS WITH RESPECT TO THE
PERFORMANCE OF EACH PORTFOLIO IN COMPARISON TO ITS BENCHMARK.
The Trust has amended the disclosure. It now reads:
The trustees noted that FOR THE YEAR-TO-DATE PERIOD ENDED MAY 31, 2005, THE
AGGRESSIVE AND INTERNATIONAL PORTFOLIOS HAD EACH OUTPERFORMED THEIR
RESPECTIVE BENCHMARKS AND THAT THE CAPITAL, BALANCED AND THE ALTERNATIVE
STRATEGIES PORTFOLIOS HAD EACH SLIGHTLY UNDERPERFORMED THEIR RESPECTIVE
BENCHMARKS. IN GENERAL, THE TRUSTEES NOTED THAT The Portfolios had been
performing competitively in the industry and were pleased with their
results.
4. IN THE SECTION OF THE PROXY MATERIALS ENTITLED "TRUSTEES' CONSIDERATIONS
AND RECOMMENDATIONS" FOUND ON PAGES 12 AND 13, THE COMMISSION ASKED WHETHER
OR NOT THE TRUSTEES HAD CONSIDERED THE EXTENT TO WHICH ECONOMIES OF SCALE
WOULD BE REALIZED AS THE PORTFOLIOS GROW, AND WHETHER THE FEE LEVELS
REFLECT THESE ECONOMIES OF SCALE FOR THE BENEFIT OF THE PORTFOLIOS'. IF
THIS FACTOR WAS NOT RELEVANT TO THE BOARD'S EVALUATION, NOTE THIS FACT AND
DESCRIBE WHY SUCH FACTOR WAS NOT DEEMED RELEVANT.
See the reply to Item No. 5 (below).
5. IN THE SECTION OF THE PROXY MATERIALS ENTITLED "TRUSTEES' CONSIDERATIONS
AND RECOMMENDATIONS" FOUND ON PAGES 12 AND 13, THE COMMISSION ASKED WHETHER
THE BOARD RELIED UPON COMPARISONS OF THE SERVICES TO BE RENDERED AND THE
AMOUNTS TO BE PAID UNDER THE CONTRACT WITH THOSE UNDER OTHER INVESTMENT
ADVISORY CONTRACTS, SUCH AS CONTRACTS OF THE SAME AND OTHER INVESTMENT
ADVISERS WITH OTHER REGISTERED INVESTMENT COMPANIES OR OTHER TYPES OF
CLIENTS (E.G., PENSION FUNDS AND OTHER INSTITUTIONAL INVESTORS). IF THIS
FACTOR WAS NOT RELEVANT TO THE BOARD'S EVALUATION, NOTE THIS FACT AND
DESCRIBE WHY SUCH FACTOR WAS NOT DEEMED RELEVANT.
The Trust has added the following disclosure which applies to both Items
Nos. 4 and 5:
U.S. Securities and Exchange Commission
July 8, 2005
Page 4
IN THEIR DELIBERATIONS, THE TRUSTEES DID NOT CONSIDER THE EXTENT TO
WHICH ECONOMIES OF SCALE WOULD BE REALIZED AS A PORTFOLIO GROWS, NOR DID
THEY RELY UPON COMPARISONS OF THE SERVICES TO BE RENDERED AND THE AMOUNTS
TO BE PAID UNDER THE CONTRACT WITH THOSE UNDER OTHER INVESTMENT ADVISORY
CONTRACTS, SUCH AS CONTRACTS OF THE SAME AND OTHER INVESTMENT ADVISERS WITH
OTHER REGISTERED INVESTMENT COMPANIES OR OTHER TYPES OF CLIENTS (E.G.,
PENSION FUNDS AND OTHER INSTITUTIONAL INVESTORS). THESE FACTORS WERE
CONSIDERED NOT TO BE RELEVANT IN THIS SITUATION WHERE THE TRUSTEES WERE
TRYING TO APPROVE NEW AGREEMENTS ON SUBSTANTIALLY THE SAME TERMS AND
CONDITIONS AS THE CURRENT ADVISORY AGREEMENTS. SUCH FACTORS WOULD BE
RELEVANT TO CONSIDERING AND APPROVING NEW INVESTMENT ADVISORY AGREEMENTS
WITH OTHER INVESTMENT ADVISORY ENTITIES.
6. ADD THE APPROPRIATE "TANDY" REPRESENTATIONS.
In responding to the Commission's comments, please note that the Trust
hereby acknowledges and represents:
o The Trust is responsible for the adequacy and accuracy of the
disclosure in these proxy materials;
o Staff comments or changes to disclosure in response to staff
comments in these proxy materials, which was reviewed by the
staff, does not foreclose the Commission from taking any action
with respect to these proxy materials; and
o The Trust may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
Questions concerning this letter may be directed to the Trust's counsel,
Terrance James Reilly at (215) 988-7815, or in his absence, Steven M.
Felsenstein at (215) 988-7837.
Very truly yours,
/s/ Nicole M. Tremblay
Nicole M. Tremblay
cc: Steven M. Felsenstein
Jackson B. R. Galloway
John M. Ganley
Wayne M. Grzecki
Terrance James Reilly