Growth Program

Growth Program Investment Strategy

Objectives: Long-term capital appreciation and preservation of capital.

Portfolio Characteristics

• Diversified large cap growth-style equity portfolio. 

June 30, 2010 Composite:
Weighted Average Market Capitalization: $29.0 billion
Median Market Capitalization: $8.0 billion
Top Ten Positions: 25.20% of portfolio

APPLE INC
MADDEN STEVEN LTD
LUBRIZOL CORP
COACH INC
CREE INC
CSX CORP
BUCYRUS INTL INC NEW
PETROLEO BRASILEIRO SA - PETRO ADR
GENL ELECTRIC
VISA INC (CL A)
 

• Fully invested philosophy with option to raise a reserve of up to 15% in cash equivalents.
• Limited exposure to ADR/ADS and dual listed foreign equities trading on U.S. exchanges (e.g., dual-listed Canadian stock) unless restricted by contract.
• Separate account typically with 45 to 75 equity positions.
• Low Turnover: 35.78% annualized sales turnover from inception through December 31, 2009.
• Inherently tax efficient process.

Estimated Product Capacity:  $8 Billion in Assets (combined with Institutional Large Cap Growth Program)

Growth Program Investment Strategy

• Top-down economic and sector analysis to determine sector exposures relative to primary benchmark, the S&P 500™ Index. Russell 1000® Growth Index is a secondary or supplemental benchmark. 
• Value added by systematic prudent overweighting and underweighting of sectors relative to benchmark rather than making large, potentially risky sector bets.
• Bottom-up stock picking to populate sector targets.
• Stocks are selected using a Growth at a Reasonable Price (“GARP”) system consisting of a proprietary quantitative model front-end combined with traditional fundamental and technical analysis.  Attractive core holdings may also be included in new portfolios to help assure best performance and minimize dispersion among accounts.  If this methodology fails to provide an adequate selection of appropriate purchase candidates to fully satisfy a sector target, complementary growth-style techniques will be employed to assure portfolio diversification, risk-control and the large cap mandate.  These secondary methods have been utilized since product inception and are part of the Growth Program long-term track record.
• Dual Identification -- value added via especially effective bottom-up stock picking using both advanced modern quantitative and traditional analysis.
• We seek solid singles and doubles, but let winners run (subject to position ceiling weight constraints).
• Holdings weighted to achieve diversification, desired sector exposures and targeted aggregate portfolio characteristics.

Investment Process Basic Outline

Customary Periods Performance

Ending with June 30, 2010

Note:  The S&P 500 Index is the "official" benchmark for this investment process.  The Russell 1000 Growth Index provides a picture of large cap growth stock performance.  Investors seeking an investment process with the Russell 1000 Growth Index as primary benchmark should examine our Institutional Large Cap Growth Program.

Disclosures

New Century Investment Management, Incorporated (the “Firm” or “New Century”) claims compliance with the Global Investment Performance Standards (GIPS®). New Century has been independently verified for the periods July 1, 1998 through June 30, 2010.

Verification assesses whether (1) the firm has complied with all the composite construction requirements for the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The Growth Program composite has been examined for the periods from inception, April 1, 1995, through June 30, 2010. The verification and performance examination reports are available upon request.

The Firm is an independent investment adviser registered with the United States Securities and Exchange Commission under the Investment Advisers Act of 1940. The accounts are normally fully invested in diversified portfolio of domestically traded growth-style equity securities (including potential exposure to ADR/ADS and dual-listed foreign stocks trading on U.S. exchanges), primarily large capitalization, selected and weighted pursuant to the Firm’s Growth Program investment process. Sector weightings are set relative to those of the Standard and Poor’s 500 Index. The composite is comprised of all fee-paying discretionary accounts managed within the defined investment style during the periods presented, including terminated accounts for the periods during which they were included in the composite. Composite returns are exclusive of custodial fees, and gross or net of investment advisory fees, respectively, as indicated by “gross” or “net.” Valuations are computed and performance is reported in U.S. dollars. Investment performance has been presented herein as of the stated date, and may vary materially thereafter. The performance of accounts within a composite may vary.  Composite performance includes the reinvestment of all income.

The designated benchmark for the Growth Program is the total return on the Standard and Poor’s 500 Index. It is a diversified index including both growth-style and value-style holdings that is customarily used as benchmark by large cap managers. The total return on the Russell 1000 Growth Index is secondary benchmark or supplemental data. The Russell 1000 Growth Index measures the performance of those of the 1,000 largest companies in the Russell 3000® Index that have higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Growth Index is more style-specific benchmark, better reflective of the large cap, growth-style nature of Growth Program portfolios, that is used to help identify performance attributable to style when material and in cases where performance is being evaluated over a period less than a full market cycle. The Standard and Poor’s 500 Index and Russell 1000 Growth Index are indices that are not actively managed and may differ materially in volatility from a Growth Program portfolio.

Past performance is not indicative of future results.

To receive a GIPS compliant presentation and/or the Firm’s list of composite descriptions, contact Karen G. Modell, Esq., Managing Director, at telephone (248) 262-3140 or send a written request to New Century Investment Management, Inc., 1 Towne Square Suite 1690, Southfield, Michigan 48076.  Please see the Legal section of this web-site for additional disclosures and information.