NEW CENTURY PORTFOLIOS
40 WILLIAM STREET, SUITE 100
WELLESLEY, MASSACHUSETTS 02481-3902
(888) 639-0102
February 28, 2006
VIA EDGAR TRANSMISSION
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Christian T. Sandoe
U. S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
RE: NEW CENTURY PORTFOLIOS (THE "TRUST")
SEC FILE NOS. 33-24041/811-5646
Dear Mr. Sandoe:
On December 30, 2005, the Trust filed Post-Effective Amendment No. 24 to
its Registration Statement on Form N-1A ("PEA No. 24") with the U.S. Securities
and Exchange Commission (the "SEC" or the "Commission") pursuant to paragraph
(a)(1) of Rule 485 under the Securities Act of 1933, as amended (the "1933
Act"). PEA No. 24 was filed to disclose that the Trust entered into new
investment advisory agreements with its investment adviser, Weston Financial
Group, Inc. ("Weston"), and a new underwriting agreement with its principal
underwriter, Weston Securities Corporation. These new advisory and underwriting
agreements were necessary because the Trust's previous agreements terminated
automatically in connection with a change in control of Weston. PEA No. 24 will
become effective automatically on March 1, 2006 pursuant to the provisions of
paragraph (a)(1) of Rule 485 under the 1933 Act.
The following letter responds to your comments to PEA No. 24, as discussed
in a telephone call on February 10, 2006 between the Trust's counsel, Terrance
James Reilly, and Brion R. Thompson from the SEC's Division of Investment
Management. Mr. Thompson also requested that the Trust direct its reply to your
attention with a copy to Mr. Thompson. Your comments are in italics and the
Trust's response follows below each comment. Please note, a couple of SEC
comments reference the "Aggressive Portfolio." On March 1, 2006, the "Aggressive
Portfolio" changed its name to the "Opportunistic Portfolio." This change in
name was made to better describe the Portfolio and the types of investments it
makes, and does not reflect any change in the investment objectives, policies or
strategies of this Portfolio. References in this letter are to the Portfolio's
prior name (i.e., the "Aggressive Portfolio").
1. THE SEC ASKED THAT THE TRUST CONFIRM IN WRITING THAT NONE OF THE
PORTFOLIOS INVESTS IN ANY AFFILIATED MUTUAL FUNDS.
Christian T. Sandoe
February 28, 2006
Page 2
The Trust hereby confirms that none of the Portfolios invests in any
affiliated mutual funds.
2. THE SEC COMMENTED ON THE PART OF THE COVER PAGE THAT LISTS EACH
PORTFOLIO'S OBJECTIVE AND STRATEGIES. MR. THOMPSON NOTED THAT
TECHNICALLY IT COMPLIED WITH THE REQUIREMENTS OF THE FORM BUT THAT IT
IS TOO WORDY. HE REQUESTED THAT IT EITHER BE EDITED OR ELIMINATED
ALTOGETHER.
The Trust has deleted the language entirely.
3. ON PAGE 3, UNDER THE DISCUSSIONS INVOLVING THE INTERNATIONAL
PORTFOLIO, THE COMMISSION ASKED THAT WE DESCRIBE HOW DIVERSIFIED THE
PORTFOLIO IS OVER OTHER COUNTRIES. SPECIFICALLY, THE SEC WANTS TO
KNOW, GENERALLY, HOW MANY DIFFERENT COUNTRIES ARE REPRESENTED WITHIN
THE UNDERLYING FUNDS?
The Trust is not able to comply with this SEC comment. The prospectus
does carry disclosure that the International Portfolio, through its
investments in underlying funds, will have exposure to the securities
of issuers located in at least three different countries outside of
the U.S. Since the actual investments within other countries is made
by the underlying funds, and not by the International Portfolio, the
Trust is unable to commit to any other level or number of different
countries or regions, nor monitor underlying funds for compliance with
such levels.
4. FOR THE INTERNATIONAL PORTFOLIO, IN THE FIRST SENTENCE OF THE SECOND
PARAGRAPH ON PAGE 3 UNDER "PRINCIPAL INVESTMENT STRATEGIES, " THE
COMMISSION DOES NOT LIKE THE ENDING OF THE SENTENCE WHERE IT STATES
THAT IT CAN INVEST IN ISSUERS "WHICH DERIVE A SIGNIFICANT PORTION OF
THEIR BUSINESS OR PROFITS OUTSIDE THE U.S." MR. THOMPSON USED AS AN
EXAMPLE, A COMPANY LIKE IBM, WHICH CAN DERIVE A SIGNIFICANT PORTION OF
ITS PROFITS OUTSIDE OF THE U.S. BUT IS NOT REALLY A FOREIGN ISSUER OR
INTERNATIONAL SECURITY. THEY REQUESTED THAT THE TRUST EITHER DELETE OR
REVISE THE STATEMENT.
The Trust has deleted the phrase from the sentence.
5. FOR THE INTERNATIONAL PORTFOLIO, IN THE STATEMENT: "AS A GENERAL RULE,
THE UNDERLYING FUNDS IN WHICH THE INTERNATIONAL PORTFOLIO INVESTS IN
WILL INVEST AT LEAST 65%, AND MAY INVEST UP TO 100%, OF THEIR ASSETS
IN INTERNATIONAL SECURITIES", THE COMMISSION ASKED THE TRUST TO
DESCRIBE WHAT IS MEANT BY THE TERM "INTERNATIONAL SECURITIES?"
The term "foreign issuers" has replaced the term "international
securities." This term better describes the International Portfolio's
goal of investing in investment companies that emphasize investment in
securities of issuers that are located outside the U.S.
6. FOR THE ALTERNATIVE STRATEGIES PORTFOLIO, UNDER ITS "PRINCIPAL
INVESTMENT STRATEGIES," IT LISTS ITEMS SUCH AS: "SELL EQUITY
SECURITIES LONG AND SHORT, TAKE MARKET NEUTRAL POSITIONS, INVEST IN
Christian T. Sandoe
February 28, 2006
Page 3
CONVERTIBLE ARBITRAGE SECURITIES, EMPLOY GLOBAL MACRO INVESTMENT
STRATEGIES, EMPLOY ASSET ALLOCATION STRATEGIES, EMPLOY MERGER
ARBITRAGE STRATEGIES, INVEST IN DISTRESSED SECURITIES, INVEST IN THE
NATURAL RESOURCES SECTOR AND INVEST IN REAL ESTATE INVESTMENT TRUSTS
("REITS")." THE STAFF REQUESTED THAT EACH OF THESE STRATEGIES BE
SPECIFICALLY ADDRESSED WHERE THE TRUST DESCRIBES ITS PRINCIPAL RISKS.
The Trust has added disclosure (or modified existing disclosure)
within its risk/return summary to cover each of these topics.
7. ON PAGE 5, UNDER "LONG/SHORT SELLING RISK," IT SAYS: "EACH PORTFOLIO,
EXCEPT FOR THE INTERNATIONAL PORTFOLIO,..." YET ONLY THE ALTERNATIVE
STRATEGIES PORTFOLIO ACTUALLY LISTS LONG/SHORT SELLING AS A PRINCIPAL
INVESTMENT STRATEGY. THE SEC ASKED FOR SUCH DISCLOSURE IN THE OTHER
PORTFOLIOS' PRINCIPAL INVESTMENT STRATEGIES.
The language has been modified. Now, each Portfolio may invest long or
short (including the International Portfolio). However, only the
Alternative Strategies Portfolio uses it as a "principal investment
strategy." The language has been changed to read: "Each Portfolio may
invest in underlying funds that sell securities long or short, and the
Alternative Strategies Portfolio may invest in such underlying funds
as a part of its principal investment strategy."
8. A SIMILAR COMMENT WAS MADE WITH RESPECT TO FIXED INCOME INVESTMENTS.
THE COMMISSION WANTS "CREDIT RISK" TO INCLUDE THE AGGRESSIVE AND
INTERNATIONAL PORTFOLIOS, SINCE THEIR PRINCIPAL INVESTMENT STRATEGIES
REFERENCE DEBT SECURITIES.
The change you requested was made. The section entitled "CREDIT RISK"
has been modified to include all Portfolios.
9. SIMILARLY, THE STAFF DOESN'T BELIEVE THAT "INTEREST RATE RISK" SHOULD
EXCLUDE THE INTERNATIONAL PORTFOLIO SINCE ITS "PRINCIPAL INVESTMENT
STRATEGIES" SECTION INCLUDES THE STATEMENT: "THE INTERNATIONAL
PORTFOLIO MAY ALSO INVEST IN INVESTMENT COMPANIES THAT FOCUS ON
DIFFERENT SEGMENTS OF THE FOREIGN AND DOMESTIC DEBT MARKETS."
The change you requested was made. The section entitled "INTEREST RATE
RISK" has been modified to include all Portfolios.
10. SIMILARLY, THE STAFF NOTED THAT EACH PORTFOLIO STATES THAT IT MAY
INVEST IN UNDERLYING FUNDS THAT HAVE CONVERTIBLE SECURITIES YET THE
RISK DISCLOSURE UNDER "CONVERTIBLE SECURITIES" ONLY REFERENCES THE
BALANCED AND ALTERNATIVE STRATEGIES PORTFOLIOS.
The change you requested was made. The section entitled "CONVERTIBLE
SECURITIES" has been modified to include all Portfolios.
Christian T. Sandoe
February 28, 2006
Page 4
11. THE COMMISSION DISAGREES WITH THE FOLLOWING STATEMENT FOUND ON PAGE 17
AS THE LAST SENTENCE OF THE PARAGRAPH BEGINNING "INVESTMENTS IN
INVESTMENT COMPANIES AND THE INVESTMENT COMPANY INDUSTRY." IT READS:
"A PORTFOLIO'S DIVERSIFICATION AMONG INVESTMENT COMPANIES WOULD
PREVENT IT FROM BEING CONCENTRATED IN THOSE INDUSTRIES OR INVESTMENT
PROGRAMS AS A RESULT OF AN INVESTMENT IN AN UNDERLYING FUND." MR.
THOMPSON GAVE AS AN EXAMPLE THAT A PORTFOLIO COULD INVEST IN A NUMBER
OF UNDERLYING FUNDS THAT CONCENTRATED IN A PARTICULAR ISSUER OR
INDUSTRY. HE REQUESTED THAT THE TRUST EXPLAIN IN WRITING HOW THIS
STATEMENT IS TRUE.
The Trust has deleted the sentence.
12. ON PAGE 19, UNDER "HIGH YIELD SECURITIES," THE STAFF BELIEVES THAT THE
AGGRESSIVE AND INTERNATIONAL PORTFOLIOS SHOULD BE ADDED TOO.
The change you requested was made.
13. ON PAGE 20, THE SEC NOTED THAT SHORT RISK SECTIONS ON TOPICS SUCH AS
NATURAL RESOURCES AND REITS SHOULD GO UP FRONT IN THE RISK/RETURN
SUMMARY. (SEE COMMENT NO. 7, ABOVE)
The change you requested was made.
14. ON PAGE 30, UNDER "REDEMPTION INITIATED BY THE PORTFOLIOS," THE
COMMISSION ASKED WHETHER SUCH REDEMPTIONS WOULD BE SUBJECT TO THE
TRUST'S REDEMPTION FEE?
Redemptions initiated by a Portfolio would not be subject to a
redemption fee. A statement to that effect was added to this section.
15. ON PAGE 30, IN THE SECOND PARAGRAPH UNDER "FREQUENT PURCHASES AND
REDEMPTIONS OF SHARES," THE COMMISSION ASKED THAT THE TRUST EXPLAIN
WHAT IS MEANT BY THE TERM "RESTRICT FUTURE ACCOUNT ACTIVITY."
The Trust has deleted the phrase "restrict future account activity."
It was already covered by the next phrase, "and reject future
purchases from such shareholder."
16. ON PAGE 30, UNDER "FREQUENT PURCHASES AND REDEMPTIONS OF SHARES," THE
SEC ASKED THAT IF THERE ARE CIRCUMSTANCES WHERE ACCOUNT RESTRICTIONS
WOULD NOT BE IMPOSED, TO DESCRIBE THEM.
There are currently no circumstances where account restrictions would
not be imposed on a shareholder account that was engaging in market
timing.
17. ON PAGE 31, WITH RESPECT TO THE FOLLOWING DISCLOSURE: "THIS REDEMPTION
FEE SHALL EQUAL 2.00% OF THE AMOUNT BEING REDEEMED; HOWEVER, NO
REDEMPTION FEE SHALL BE IMPOSED ON THE EXCHANGE OF SHARES BETWEEN THE
VARIOUS PORTFOLIOS OF THE TRUST, THE REDEMPTION OF SHARES REPRESENTING
REINVESTED DIVIDENDS OR CAPITAL GAINS DISTRIBUTIONS, OR ON AMOUNTS
REPRESENTING THE CAPITAL APPRECIATION OF SHARES", THE SEC ASKED THAT
THE TRUST CONFIRM, IN
Christian T. Sandoe
February 28, 2006
Page 5
WRITING THAT THESE ARE THE ONLY CIRCUMSTANCES WHERE THE REDEMPTION FEE
WILL NOT BE IMPOSED.
On behalf of the Trust, I hereby confirm that these circumstances, and
the situation where a Portfolio initiates a shareholder redemption
(see Comment No. 14, above) are the only circumstances where the
redemption fee shall not be imposed.
18. ON THE BACK COVER PAGE, THE SEC HAS CHANGED THEIR PHONE NUMBER TO
(202) 551-8090.
The Back Cover Page has been updated.
19. IN THE SAI, ON PAGE B-15, THE SEC ASKED THAT THE TRUST SPECIFICALLY
IDENTIFY THE CUSTODIAN, FUND ACCOUNTANTS, ETC., AND STATE THE
FREQUENCY WITH WHICH THEY ARE GIVEN NON-STANDARD DISCLOSURE AND THE
LAG TIME OF THE DISCLOSURE.
The change you requested was made.
20. IN THE SAI, ON PAGE B-20, UNDER THE FOURTH PARAGRAPH ON THE PAGE, WITH
RESPECT TO THE FOLLOWING SENTENCE: "SINCE BOTH THE PORTFOLIOS AND THE
PRIVATE ACCOUNTS INVEST ALL OF THEIR ASSETS IN OTHER REGISTERED
INVESTMENT COMPANIES, INCLUDING OPEN-END, CLOSED-END AND EXCHANGE
TRADED FUNDS, THE ALLOCATION OF INVESTMENT OPPORTUNITIES IS NOT AN
ISSUE", THE COMMISSION ASKED THAT THE TRUST EXPLAIN IN WRITING WHY THE
ALLOCATION OF CLOSED-END FUNDS IS NOT AN ISSUE.
The investment adviser believes that the types of closed-end
investment companies that are purchased for the Portfolios and the
private accounts are widely traded on the major securities exchanges
and that there is currently no difficulty in obtaining such
securities. Accordingly, allocating such securities over various
accounts is not an issue.
21. IN THE RESPONSE LETTER TO THE SEC, THE SEC WANTS THE "TANDY"
REPRESENTATIONS.
In responding to the SEC's comments, please note that the Trust
acknowledges and represents:
o The Trust is responsible for the adequacy and accuracy of the
disclosure in PEA No. 24;
o Staff comments or changes to disclosure in response to staff comments
in PEA No. 24, which was reviewed by the staff, does not foreclose the
Commission from taking any action with respect to PEA No. 24; 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.
Christian T. Sandoe
February 28, 2006
Page 6
I believe that this fully covers your comments. Please note that the Trust
will be filing a further Post-Effective Amendment to its Registration Statement
on Form N-1A ("PEA No. 25") on March 1, 2006. PEA No. 25 is being filed to: (i)
incorporate by reference the audited financial information for the Trust for its
most recent fiscal year ended October 31, 2005; (ii) add appropriate exhibits
and consents; and (iii) complete the disclosures in the Prospectus and Statement
of Additional Information.
Very truly yours,
/s/ Nicole M. Tremblay
Nicole M. Tremblay
cc: Steven M. Felsenstein
Terrance James Reilly
Brion R. Thompson