Kobren Insight Management
Kobren Insight Funds
A Semi-Annual Report On The Kobren Insight Funds
June 30, 1998 Hotline 1-888-3KOBREN
Message To Shareholders
U.S. Stock Funds Slow After
Torrid First Quarter Pace
Back in 1990, at the beginning of this current bull market, who would have
predicted this on-going rally in stock prices? We're only half way through the
year and already the Dow Jones Industrial Average and S&P 500 Index are showing
double-digit gains. Many shareholders I've spoken with have come to expect these
gains year after year. And although I'm still fairly bullish, this investing
nirvana can't last forever. (a picture of Eric Kobren appears here)
Performance differentials among asset classes (stocks, bonds, cash,
real estate and international securities) widened during the second quarter, and
even within the U.S. market there were substantial performance differences by
category. For example, funds that focused on large-cap growth stocks gained an
average of 5% during the quarter, while small- and mid-cap value-oriented funds
declined about 3-4%. Differences outside the U.S. were even more dramatic.
European stock funds gained about 4.5%, while Latin American funds declined
about 19%, and the average Southeast Asian fund dropped more than 26%.
Despite this market turbulence, investors continue to favor stocks.
After an impressive $61 billion in net new cash flow into stock mutual funds in
the first quarter, investors poured another estimated $69 billion in the second
quarter. This cash flow has served as a "floor," particularly for the large-cap
growth funds as well as the ever-popular index funds.
Global Economy Portends Caution
Much has been written about the problems in Japan and emerging
Southeast Asian economies. For the first few months of the year, the market more
or less ignored the impact that these deteriorating economies would have on the
rest of the world. But, more recently, we are seeing the effects that these
situations are having on our global economy. U.S. exports to Southeast Asian
countries have substantially declined across many industries. At the same time,
less expensive imports from these countries are being shipped to the U.S. in
greater quantities. It is a complex situation, but the fact is that we really do
live in a global economy, and we believe the weakness across the Pacific will
have a slowing effect on the U.S. economy.
At the same time, our economy remains in relatively good shape.
Inflation and interest rates remain low and are likely to stay that way given
the dampening effect of Asia. Unemployment is low, home sales are high and
consumer confidence is the highest it has been in 29 years. As we said in the
first quarter report, this is the "best of times" for our economy. But, unlike
six months ago, we are now seeing signs of fatigue.
Stock prices are primarily a reflection of a company's future earnings
stream. And today, earnings expectations for large-cap growth companies are
very, very high. Wall Street is now expecting profits to rise substantially late
this year. It is their only way to rationalize the extraordinarily high
valuations in this area of the market. We have seen this before and we are
skeptical.
Today's Market Strategy
How do we invest in this type of market environment? First, we select
the best stock pickers we can find in the most reasonably priced areas of the
market. Where we believe it's prudent to buy already expensive large-cap growth
stocks, we focus on funds that hold relatively few stocks. These funds are less
likely to be surprised by a negative earnings report, or a general correction in
their area of the market. Second, we've diversified across asset classes and
investment styles to construct what I believe is the right mix for each fund's
volatility target. I know how tempting it is to invest the majority of your
assets in the hottest areas of the market, but we consciously avoided this
approach. I started the Kobren Insight Funds not only to make mutual fund
investing easy again, but to provide you with the discipline to stay diversified
and true to your investment objective. This risk-averse approach has served me
well for many years and I'm pleased to be managing a part of your investment
portfolio in this same time-tested and proven style.
Sincerely,
Eric M. Kobren
President and Portfolio Manager
Kobren Growth Fund (6/30/98)
Value of $10,000 invested 12/16/96
(a line chart appears here depicting the growth of a $10,000 investment in the
fund at inception)
12/16/96 $10,000
6/30/98 $13,181
12 Months Annualized
YTD Ended Since Inception
Total Return (%)6/30/98 6/30/98 (12/16/96)
Kobren Growth +11.9 +14.0 +19.6
Asset Allocation*
(a pie chart appears here depicting the allocation of investments among asset
categories)
Cash 1%
US Stocks 81
International 18
Style Allocation*
(a pie chart appears here depicting the allocation of investments among style
categories)
Real Estate 5%
Cash 1
Large Cap Value 30
Large Cap Growth 27
Small Cap Value 18
Small Cap Growth 1
International 18
*Based on total investments.
Kobren Growth Fund (Ticker: KOGRX): The second quarter equity markets saw mixed
results as the S&P 500 Index continued to surge ahead while the Russell 2000
declined by 4.6%. Kobren Growth faired quite well in this choppy environment,
gaining 0.7% in the second quarter and 11.9% since the beginning of the year.
Two of our largest holdings, Janus Twenty and Artisan Int'l, added
14.5% and 8.5%, respectively, in the second quarter. For the year, Janus Twenty
has gained a very impressive 35.8% and Artisan Int'l has returned 30.4%. These
are among the top performing funds in their respective categories. Artisan's
manager, Mark Yockey, continues to show his stock picking prowess as he deftly
avoided problems in Asia while remaining well diversified in 26 countries.
Europe remains his region of choice with over 82% of fund assets. Scott
Schoelzel, Janus Twenty's manager, still likes the largest of the large caps
such as Dell, Microsoft and AOL, despite their very lofty valuations.
While we remain fully invested in equity funds, we're keeping a very
close eye on portfolio risk and remain diversified across market sectors. For
example, late in 1997 we added Longleaf Partners, one of this year's top value
funds with an 18.1% gain. However, our biggest disappointment has been Neuberger
& Berman Genesis, which fell 5.4% in the second quarter and is virtually flat
for the year. After a stellar 1997 (up 34.9%), the fund has suffered from
positions in energy and REITs, two areas that remain undervalued and attractive
buys at these levels.
<TABLE>
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Top Holdings*
Kobren Growth Style Alloc(%)
Oakmark Large Cap Value 19.0
Janus Twenty Large Cap Growth 14.0
Longleaf Partners Large Cap Value 10.4
Neuberger & Berman Genesis Trust Small Cap Value 10.2
Artisan International International 9.4
Longleaf Partners Small Cap Small Cap Value 8.1
Fidelity Advisor Growth Opp'ty, Cl T Large Cap Growth 7.1
CGM Focus Large Cap Growth 6.3
Artisan International Inst'l Cl International 4.9
Longleaf Partners Realty Real Estate 4.8
Oakmark International Small Cap International 2.6
Morgan Stanley Inst'l Emerging Markets International 1.3
Dreyfus Cash Management Plus Money Market 0.9
Turner Small Cap Equity Small Cap Growth 0.9
Total Net Assets $71,284,871
</TABLE>
Top Sectors**
(Totals may not equal 100%)
(a bar chart appears here depicting the allocation of investments among sectors)
Services 24.2%
Financials 21.9
Industrial Cyclicals 14.2
Technology 9.1
Consumer Staples 8.5
Health 7.8
Consumer Durables 5.8
Retail 3.6
Utilities 2.5
Energy 2.4
**Equities only, excludes real estate funds.
2 Kobren Insight Funds - 1998 Semi-Annual Report
Kobren Moderate Growth Fund (6/30/98)
Kobren Moderate Growth Fund (Ticker: KOMGX): While the S&P 500 Index continued
to grab the headlines over the past few months, more conservative investors who
are still seeking growth found fund selections much more difficult to make.
We've made a conscious decision to avoid the most richly valued mutual funds
with the greatest potential for declines and focus on those that will provide
diversification as well as excellent long-term growth potential.
Our largest position, Tweedy, Browne Global Value took a breather
during the second quarter, but is still up a very respectable 16.2% for the
year. Longleaf Partners, added to the portfolio early in the year, has proven
beneficial, gaining 4.0% for the second quarter and 18.1% for the year. Managers
Mason Hawkins and Staley Cates have been seeking out stocks selling well below
their intrinsic values. The fund is highly concentrated with just 25 stocks;
this should bode well for what we consider a "stock pickers" market.
In an effort to reduce volatility and still provide growth potential,
we've been maintaining about an 11% position in real estate funds. Although
we've held two of the top-performing real estate funds this year in Longleaf
Partners Realty and Morgan Stanley U.S. Real Estate, the sector has been unable
to resume the impressive gains it garnered in 1996 and 1997. We continue to
believe the tremendous values found in the real estate market will again catch
investors' attention and provide a steady rate of return with moderate
volatility.
<TABLE>
<CAPTION>
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Top Holdings*
Kobren Moderate Growth Style Alloc(%)
Tweedy, Browne Global Value International 16.2
Longleaf Partners Large Cap Value 10.5
Oakmark Small Cap Small Cap Value 9.9
Skyline Special Equities Small Cap Value 9.8
Fidelity Advisor Growth Opp'ty, Cl T Large Cap Growth 7.8
Franklin Mutual Qualified Large Cap Value 7.6
PIMCo Capital Appreciation Inst'l Large Cap Growth 7.6
Longleaf Partners Realty Real Estate 6.6
Morgan Stanley Inst'l Real Estate Real Estate 4.3
Treasury Note, 6.50% 08/15/05 Bond 3.2
Vanguard F/I Interm-Term U.S. Treas. Bond 3.1
Treasury Note, 7.50% 02/15/05 Bond 2.9
Treasury Note, 7.25% 08/15/04 Bond 2.9
Treasury Bond, 8.125% 05/15/19 Bond 2.9
Total Net Assets $57,379,806
</TABLE>
Top Sectors**
(Totals may not equal 100%)
**Equities only, excludes real estate funds.
(a bar chart appears here depicting the allocation of investments among sectors)
Services 20.8%
Financial 19.9
Industrial Cyclical 18.1
Consumer Staples 9.2
Consumer Durables 8.9
Retail 7.8
Health 6.1
Technology 4.3
Energy 3.0
Utilities 1.9
Value of $10,000 invested 12/24/96
(a line chart appears here depicting the growth of a $10,000 investment in the
fund at inception)
12/24/96 $10,000
6/30/98 $13,261
12 Months Annualized
YTD Ended Since Inception
Total Return (%) 6/30/98 6/30/98 (12/24/96)
Kobren Moderate Growth +7.0 +17.0 +20.4
Asset Allocation*
(a pie chart appears here depicting the allocation of investments among asset
categories)
Cash 1%
Bonds 19
International 16
US Stocks 64
Style Allocation*
(a pie chart appears here depicting the allocation of investments among style
categories)
Bonds 19%
Cash 1
International 16
Small Cap Value 20
Large Cap Growth 15
Large Cap Value 18
Real Estate 11
*Based on total investments.
Kobren Insight Funds - 1998 Semi-Annual Report 3
Kobren Conservative Allocation Fund (6/30/98)
Value of $10,000 invested 12/30/96
(a line chart appears here depicting the growth of a $10,000 investment in the
fund at inception)
12/30/96 $10,000
6/30/98 $12,547
12 Months Annualized
YTD Ended Since Inception
Total Return (%)6/30/98 6/30/98 (12/30/96)
Kobren Conservative Alloc. +4.2 +13.5 +16.3
Asset Allocation*
(a pie chart appears here depicting the allocation of investments among asset
categories)
Bonds 29%
Cash 1
International 10
US Stocks 60
Style Allocation*
(a pie chart appears here depicting the allocation of investments among style
categories)
Cash 1%
International 10
Small Cap Value 13
Large Cap Value 27
Real Estate 20
Bonds 29
*Based on total investments.
Kobren Conservative Allocation Fund (Ticker: KOCAX): The second quarter saw
a number of changes to the portfolio as we continue to seek growth and a modest
level of income. We've increased our allocation to the large-cap value sector
while decreasing our position in the small-cap area. Two new additions to the
portfolio include Marsico Growth and Income and Gabelli Westwood Equity. Tom
Marsico gained fame for his stellar performance managing the Janus Twenty fund.
Now in his own firm, Tom's concentrated investment style results in a portfolio
of fewer than 50 stocks. And, although this fund is more conservative than
Marsico's other offerings, it has already gained over 30% for the year. Gabelli
Westwood Equity, managed by Susan Byrne, is characterized as a value fund, but
she won't hesitate to buy stocks where she expects positive earnings surprises.
With only $200 million in assets and just 58 positions, the fund can be nimble
in a very unpredictable market environment. To maintain the low volatility that
is this fund's charter, we've maintained a 20% allocation to real estate funds
and have added to our bond holdings. We're particularly pleased with the
performance of our long-term, high-quality bonds. We expect that decreasing
yields will result in rising bond prices for some time to come.
<TABLE>
<CAPTION>
<S> <C> <C>
Top Holdings*
Kobren Conservative Allocation Style Alloc(%)
Morgan Stanley Inst'l Real Estate Real Estate 12.8
Franklin Mutual Beacon Large Cap Value 10.9
Tweedy, Browne Global Value International 10.3
Treasury Note, 7.25% 08/15/04 Bond 7.3
Longleaf Partners Realty Real Estate 6.9
Third Avenue Value Small Cap Value 6.8
Delafield Small Cap Value 6.7
Treasury Bond, 8.125% 08/15/19 Bond 6.5
Gabelli Westwood Equity Large Cap Value 6.1
Scudder Growth and Income Large Cap Value 5.9
Treasury Note, 7.50% 02/15/0 Bond 4.5
PIMCo Total Return Inst'l Bond 4.5
Marsico Growth and Income Large Cap Value 3.8
Treasury Note, 7.00% 7/15/06 Bond 3.3
Total Net Assets $24,794,115
</TABLE>
Top Sectors**
(Totals may not equal 100%)
(a bar chart appears here depicting the allocation of investments among sectors)
Financials 23.1%
Industrial Cyclical 19.1
Services 13.0
Consumer Durables 10.5
Technology 9.3
Consumer Staples 8.4
Health 6.6
Energy 4.9
Retail 3.6
Utilities 1.5
**Equities only, excludes real estate funds.
Kobren Insight Management is the registered investment adviser for the Kobren
Insight Funds, and Kobren Insight Brokerage, Inc., an NASD broker/dealer, is the
distributor for the Funds. Performance data reflects past performance and is not
a guarantee of future results. Cumulative total return figures include
reinvestment of all distributions. Investment return and principal value will
fluctuate with market conditions and an investor's shares when redeemed may be
worth more or less than their original cost. International investing has special
risks, including currency fluctuation, political and economic instability, and
the volatility of emerging markets. Benchmarks are a blend of unmanaged indices
in which an individual cannot invest. The adviser absorbs certain expenses of
each Kobren Insight Fund, without which total return would have been lower.
Portfolio holdings are also subject to change. Copyright (C) 1998. Reproductions
in whole or in part are prohibited except by permission. Data sources: Kobren
Insight Management and Morningstar. Postmaster: Send address changes to Kobren
Insight Funds, P.O. Box 5146, Westborough, MA 01581-5146. This report must be
preceded or accompanied by a prospectus. Please read it carefully before
investing. You may obtain a prospectus by calling a Kobren Insight Fund
representative at 1-800-4KOBREN (1-800-456-2736). 4 Kobren Insight Funds - 1998
Semi-Annual Report
Portfolio of Investments
Kobren Growth Fund
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Mutual Funds - 100.1% Value (Note 1)
Large-Cap Value - 29.5%
242,026 Longleaf Partners Fund $ 7,425,358
313,440 Oakmark Fund 13,550,028
-----------------
20,975,386
-----------------
Large-Cap Growth - 27.4%
417,625 CGM Focus Fund 4,502,001
107,210 Fidelity Advisor Growth Opportunity Fund, Class T5,047,425
237,790 Janus Twenty Fund 10,008,599
-----------------
19,558,025
-----------------
Small-Cap Value - 18.3%
229,846 Longleaf Partners Small-Cap Fund 5,796,708
329,295 Neuberger & Berman Genesis Trust Fund 7,251,066
1,388 Robertson Stephens Partners Fund 22,352
-----------------
13,070,126
-----------------
International - 18.2%
411,519 Artisan International Fund 6,687,190
214,434 Artisan International Fund, Institutional Class3,484,560
965 Janus Overseas Fund 20,564
82,505 Morgan Stanley Institutional
Emerging Markets Fund, Class A 914,976
223,123 Oakmark International Small Cap Fund 1,851,921
-----------------
12,959,211
-----------------
Real Estate - 4.8%
204,422 Longleaf Partners Realty Fund 3,415,896
-----------------
Small-Cap Growth - 1.0%
1,711 RBB Fund Inc. Numeric Growth Fund 23,987
1,364 RBB Fund Inc. Numeric Investors Micro Cap Fund23,522
22,225 Turner Small-Cap Fund 630,964
-----------------
678,473
-----------------
Money Market Fund - 0.9%
670,987 Dreyfus Cash Management Plus Fund 670,986
-----------------
TOTAL INVESTMENTS
(Cost $62,116,397*) 100.1% 71,328,103
-----------------
OTHER ASSETS AND LIABILITIES
(Net) (0.1)% (43,232)
---------------------------
NET ASSETS 100.0% $ 71,284,871
===========================
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements
Kobren Insight Funds - 1998 Semi-Annual Report 5
</TABLE>
Portfolio of Investments
Kobren Moderate Growth Fund
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Mutual Funds - 84.4% Value (Note 1)
Small-Cap Value - 19.7%
247,038 Skyline Special Equities Fund $ 5,629,987
288,512 Oakmark Small-Cap Fund 5,651,947
-------------------------
11,281,934
Large-Cap Value - 18.1%
220,970 Franklin Mutual Qualified Fund, Class Z 4,355,313
196,853 Longleaf Partners Fund 6,039,437
-------------------------
10,394,750
-------------------------
International - 16.2%
487,247 Tweedy, Browne Global Value Fund 9,282,059
-------------------------
Large-Cap Growth - 15.4%
94,991 Fidelity Advisor Growth Opportunities Fund, Class T 4,472,185
166,107 PIMCo Cadence Capital Appreciation Fund,
Institutional Class 4,340,372
-------------------------
8,812,557
-------------------------
Real Estate - 10.9%
226,547 Longleaf Partners Realty Fund 3,785,593
171,007 Morgan Stanley Institutional Real Estate Fund, Class A 2,477,887
-------------------------
6,263,480
-------------------------
Bond - 3.0%
162,475 Vanguard Fixed-Income Intermediate-Term
U.S. Treasury Fund 1,749,853
-------------------------
Money Market Fund - 1.1%
652,186 Dreyfus Cash Management Plus Fund 652,186
-------------------------
Total Mutual Funds (Cost $43,757,671) 48,436,819
-------------------------
Principal Amount
U.S. TREASURY OBLIGATIONS - 15.4%
U.S. Treasury Notes - 12.6%
$ 1,250,000 5.625% 11/30/99 1,247,656
1,500,000 7.250% 08/15/04 1,632,481
1,500,000 7.500% 02/15/05 1,660,664
1,750,000 6.500% 08/15/05 1,846,523
750,000 7.000% 07/15/06 818,789
-------------------------
7,206,113
-------------------------
U.S. Treasury Bond - 2.8%
1,250,000 8.125% 08/15/19 1,613,135
-------------------------
Total U.S. Treasury Obligations
(Cost $8,562,800) 8,819,248
-------------------------
TOTAL INVESTMENTS
(Cost $52,320,471*) 99.8% 57,256,067
OTHER ASSETS AND LIABILITIES
(Net) 0.2% 123,739
---------- -----------------
NET ASSETS 100.0% $ 57,379,806
========== =================
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements
6 Kobren Insight Funds - 1998 Semi-Annual Report
</TABLE>
Portfolio of Investments
Kobren Conservative Allocation Fund
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Mutual Funds - 74.9% Value (Note 1)
Large-Cap Value - 26.6%
171,895 Franklin Mutual Beacon Fund, Class Z $ 2,676,398
152,031 Gabelli Westwood Equity Fund 1,502,068
71,550 Marsico Growth and Income Fund 936,593
49,725 Scudder Growth and Income Fund 1,467,391
-------------------------
6,582,450
-------------------------
Real Estate -19.5%
101,259 Longleaf Partners Realty Fund 1,692,043
217,258 Morgan Stanley Institutional Real Estate Fund, Class A 3,148,074
-------------------------
4,840,117
-------------------------
Small-Cap Value - 13.4%
108,322 Delafield Fund 1,656,249
51,246 Third Avenue Value Fund 1,674,713
-------------------------
3,330,962
-------------------------
International - 10.2%
133,329 Tweedy, Browne Global Value Fund 2,539,923
-------------------------
Bond - 4.5%
103,102 PIMCo Total Return Institutional Fund 1,105,249
-------------------------
Money Market Fund - 0.7%
162,258 Dreyfus Cash Management Plus Fund 162,258
-------------------------
Total Mutual Funds (Cost $18,243,733) 18,560,959
-------------------------
Principal Amount
U.S. TREASURY OBLIGATIONS - 24.6%
U.S. Treasury Notes - 18.1%
$ 500,000 5.750% 08/15/03 505,371
1,650,000 7.250% 08/15/04 1,795,728
1,000,000 7.500% 02/15/05 1,107,109
250,000 6.500% 08/15/05 263,789
750,000 7.000% 07/15/06 818,789
-------------------------
4,490,786
U.S. Treasury Bond - 6.5%
1,250,000 8.125% 08/15/19 1,613,135
-------------------------
Total U.S. Treasury Obligations
(Cost $5,846,765) 6,103,921
-------------------------
TOTAL INVESTMENTS
(Cost $24,090,498*) 99.5% 24,664,880
OTHER ASSETS AND LIABILITIES
(Net) 0.5% 129,235
---------- -----------------
NET ASSETS 100.0% $ 24,794,115
========== =================
* Aggregate cost for federal tax purposes.
See Notes to Financial Statements
Kobren Insight Funds - 1998 Semi-Annual Report 7
</TABLE>
Statements of Assets and Liabilities
Kobren Insight Funds
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
---------------- --------------- -----------------
Assets:
Investments, at value (Note 1)
See accompanying schedules $ 71,328,103 $ 57,256,067 $ 24,664,880
Dividends receivable 166 -- 15,461
Interest receivable 8,855 201,968 155,739
Receivable for fund shares sold 106,956 13,495 31,641
Receivable due from investment adviser (Note 2) -- 6,044 12,524
Unamortized organization costs (Note 5) 14,533 7,267 7,335
Prepaid expenses and other net assets 31,767 55,683 250
---------------- ------------ --------------
Total assets 71,490,380 57,540,524 24,887,830
---------------- ------------ --------------
Liabilities:
Payable for fund shares redeemed 104,855 70,311 35,503
Payable for investment securities purchased -- -- 15,461
Investment advisory fee payable (Note 2) 42,996 35,060 15,355
Administration fee payable (Note 2) 5,625 5,625 5,625
Transfer agent fees payable (Note 2) 7,255 6,576 4,365
Custodian fees payable (Note 2) 21,730 18,801 3,801
Professional fees 13,121 12,326 5,903
Accrued Trustees' fees and expenses (Note 2) 1,667 1,667 1,667
Accrued expenses and other payables 8,260 10,352 6,035
---------------- ------------ --------------
Total liabilities 205,509 160,718 93,715
---------------- ------------ --------------
Net Assets $ 71,284,871 $ 57,379,806 $ 24,794,115
---------------- ------------ --------------
Investments, at cost $ 62,116,397 $ 52,320,471 $ 24,090,498
---------------- ------------ --------------
NET ASSETS consist of:
Undistributed net investment income/accumulated net
investment (loss) $ (277,560) $ 59,331 $ 75,905
Accumulated net realized gain on investments sold 1,355,680 1,629,809 716,055
Net unrealized appreciation of investments 9,211,706 4,935,596 574,382
Par value (Shares of beneficial interest, $.001 per share) 5,534 4,495 2,092
Paid-in capital in excess of par value 60,989,511 50,750,575 23,425,681
---------------- ------------ --------------
NET ASSETS $ 71,284,871 $ 57,379,806 $ 24,794,115
---------------- ------------ --------------
SHARES OUTSTANDING 5,534,145 4,494,757 2,091,670
---------------- ------------ --------------
Net asset value, offering and redemption price per share $ 12.88 $ 12.77 $ 11.85
================ ============ ==============
See Notes to Financial Statements
8 Kobren Insight Funds - 1998 Semi-Annual Report
</TABLE>
Statements of Operations
Kobren Insight Funds
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
---------------- --------------- -----------------
INVESTMENT INCOME:
Dividends $ 125 $ 15,127 $ 55,206
Interest 17,853 289,497 165,259
----------- ------------ --------------
Total investment income 17,978 304,624 220,465
----------- ------------ --------------
EXPENSES:
Investment advisory fee (Note 2) 248,335 201,542 82,029
Administration fee (Note 2) 33,750 33,750 33,750
Transfer agent fees (Note 2) 32,587 28,786 21,209
Custodian fees (Note 2) 1,500 1,760 1,553
Professional fees 12,818 11,739 4,589
Trustees' fees and expenses (Note 2) 4,551 3,879 1,898
Registration and filing fees 8,532 10,307 9,127
Amortization of organization costs (Note 5) 2,083 1,041 1,041
Other 5,254 3,934 2,272
----------- ------------ --------------
Total expenses 349,410 296,738 157,468
Fees waived and/or expenses reimbursed
by investment adviser (Note 2) (18,884) (28,720) (48,546)
Other reductions (Note 2) (34,988) (22,725) --
----------- ------------ --------------
Net expenses 295,538 245,293 108,922
----------- ------------ --------------
NET INVESTMENT INCOME/(LOSS) (277,560) 59,331 111,543
----------- ------------ --------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (Notes 1 and 4):
Net realized gain from security transactions 867,551 563,661 269,646
Short term capital gain distributions received -- -- 2,218
Medium term capital gain distributions received 24,037 12,034 3,972
Long term capital gain distributions received 11,659 5,837 14,198
Change in unrealized appreciation of securities 6,711,185 2,954,127 421,260
----------- ------------ --------------
Net realized and unrealized gain on investments 7,614,432 3,535,659 711,294
----------- ------------ --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $7,336,872 $ 3,594,990 $ 822,837
----------- ------------ --------------
See Notes to Financial Statements
Kobren Insight Funds - 1998 Semi-Annual Report 9
</TABLE>
Statements of Changes in Net Assets
Kobren Insight Funds
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
---------------- --------------- -----------------
Net investment income/(loss) $ (277,560) $ 59,331 $ 111,543
Net realized gain on investment 867,551 563,661 269,646
Short term capital gains distributions received -- -- 2,218
Medium term capital gains distributions received 24,037 12,034 3,972
Long term capital gains distributions received 11,659 5,837 14,198
Change in unrealized appreciation of investments 6,711,185 2,954,127 421,260
--------------- ------------ --------------
Net increase in net assets resulting from operations 7,336,872 3,594,990 822,837
Distribution to shareholders from:
Net investment income -- -- (35,638)
--------------- ------------ --------------
Net increase in net assets from fund share
transactions (Note 4) 1,438,726 10,403,839 6,531,548
--------------- ------------ --------------
Net increase in net assets 8,775,598 13,998,829 7,318,747
Net Assets:
Beginning of period 62,509,273 43,380,977 17,475,368
--------------- ------------ --------------
End of period $ 71,284,871 $57,379,806 $24,794,115
Undistributed net investment income/accumulated
net investment (loss) at end of period $ (277,560) $ 59,331 $ 75,905
--------------- ------------ --------------
Kobren Insight Funds
For the Year Ended December 31, 1997
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
Net investment income $ 261,121 $ 656,855 $ 354,447
Net realized gain/(loss) on investment (1,716,593) (52,046) 2,902
Short term capital gains distributions received 1,165,983 946,535 459,166
Long term capital gains distributions received 2,169,928 1,102,350 470,684
Change in unrealized appreciation of investments 2,499,144 1,981,333 153,396
--------------- ------------ --------------
Net increase in net assets resulting from operations 4,379,583 4,635,027 1,440,595
Distribution to shareholders from:
Net investment income (261,121) (656,929) (354,446)
Short term capital gains (1,165,983) (946,535) (459,166)
Net realized gain on investments (902) (2,027) (47,565)
--------------- ------------ --------------
Total distributions (1,428,006) (1,605,491) (861,177)
Net increase in net assets from fund share
transactions (Note 4) 59,306,348 40,161,231 16,731,225
--------------- ------------ --------------
Net increase in net assets 62,257,925 43,190,767 17,310,643
Net Assets:
Beginning of period 251,348 190,210 164,725
--------------- ------------ --------------
End of period $ 62,509,273 $43,380,977 $17,475,368
Undistributed net investment income at end of period $ -- $ -- $ --
--------------- ------------ --------------
See Notes to Financial Statements
10 Kobren Insight Funds - 1998 Semi-Annual Report
</TABLE>
Financial Highlights
Kobren Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the Six Months
Ended For the Year For the Period
6/30/98 Ended Ended
(Unaudited) 12/31/97 12/31/96(a)
---------------- --------------- -----------------
Net asset value - beginning of period $ 11.51 $ 10.24 $ 10.00
Net investment income/(loss) (0.05) 0.05 0.00(d)
Short term capital gains -- 0.22 --
Net realized and unrealized gain on investments 1.42 1.27 0.24
---------- --------- ----------
Net increase in net assets resulting from
investment operations 1.37 1.54 0.24
Distributions from net investment income -- (0.05) --
Distributions from net realized short term capital gains -- (0.22) --
Distributions from net realized long term capital gains -- (0.00)(d) --
---------- --------- ----------
Total distributions -- (0.27) --
Net asset value - end of period $ 12.88 $ 11.51 $ 10.24
========== ========= ==========
Total return (b) 11.90% 15.03% 2.40%
========== ========= ==========
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 71,285 $ 62,509 $ 251
Ratio of net investment income/(loss)
to average net assets (0.84)%(c) 0.60% (0.97)%(c)(e)
Ratio of operating expenses to average net assets after
reimbursements and reductions 0.89%(c) 0.89% 1.00%(c)
Portfolio turnover rate 18% 43% n/a (e)
Ratio of operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions 1.06%(c) 1.28% n/a (e)
Net investment income/(loss) per share before fees waived
and/or expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions $ (0.06) $ 0.02 $ (0.42)
(a) Kobren Growth Fund commenced operations on December 16, 1996. (b) Total
return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Growth Fund was in operation for a short period of time, these ratios are not meaningful.
See Notes to Financial Statements
Kobren Insight Funds - 1998 Semi-Annual Report 11
</TABLE>
Financial Highlights
Kobren Moderate Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the Six Months
Ended For the Year For the Period
6/30/98 Ended Ended
(Unaudited) 12/31/97 12/31/96(a)
---------------- --------------- -----------------
Net asset value - beginning of period $ 11.94 $ 10.06 $ 10.00
------------- ----------------- -------------
Net investment income 0.01 0.19 0.00(d)
Short term capital gains -- 0.27 --
Net realized and unrealized gain on investments 0.82 1.88 0.06
------------- ----------------- -------------
Net increase in net assets resulting from
investment operations 0.83 2.34 0.06
Distributions from net investment income -- (0.19) --
Distributions from net realized short term capital gains -- (0.27) --
Distributions from net realized long term capital gains -- (0.00)(d) --
------------- ----------------- -------------
Total distributions -- (0.46) --
Net asset value - end of period $ 12.77 $ 11.94 $ 10.06
============= ================= =============
Total return (b) 6.95% 23.25% 0.60%
============= ================= =============
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 57,380 $ 43,381 $ 190
Ratio of net investment income/(loss) to average net assets 0.22%(c) 2.76% 8.95%(c)(e)
Ratio of operating expenses to average net assets after
reimbursements and reductions 0.91%(c) 0.92% 1.00%(c)
Portfolio turnover rate 10% 14% n/a (e)
Ratio of operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions 1.10%(c) 1.58% n/a (e)
Net investment income/(loss) per share before fees waived
and/or expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions $ 0.00 $ 0.14 $ (0.50)
(a) Kobren Moderate Growth Fund commenced operations on December 24, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Moderate Growth Fund was in operation for a short period of
time, these ratios are not meaningful. See Notes to Financial Statements 12
Kobren Insight Funds - 1998 Semi-Annual Report
</TABLE>
Financial Highlights
Kobren Conservative Allocation Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the Six Months
Ended For the Year For the Period
6/30/98 Ended Ended
(Unaudited) 12/31/97 12/31/96(a)
---------------- --------------- -----------------
Net asset value - beginning of period $ 11.39 $ 9.98 $ 10.00
------------- ----------------- -------------
Net investment income 0.07 0.57 0.00(d)
Short term capital gains -- 0.04 --
Net realized and unrealized gain/(loss) on investments 0.41 1.44 (0.02)
------------- ----------------- -------------
Net increase/(decrease) in net assets resulting from
investment operations 0.48 2.05 (0.02)
Distributions from net investment income (0.02) (0.57) --
Distributions from net realized short term capital gains -- (0.04) --
Distributions from net realized long term capital gains -- (0.03) --
------------- ----------------- -------------
Total distributions (0.02) (0.64) --
Net asset value - end of period $ 11.85 $ 11.39 $ 9.98
============= ================= =============
Total return (b) 4.21% 20.64% (0.20)%
============= ================= =============
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 24,794 $17,475 $ 165
Ratio of net investment income/(loss)
to average net assets 1.02%(c) 3.99% (1.00)%(c)(e)
Ratio of operating expenses to average net assets after
reimbursements and reductions 1.00%(c) 1.00% 1.00%(c)
Portfolio turnover rate 18% 13% n/a (e)
Ratio of operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions 1.44%(c) 2.82% n/a (e)
Net investment income/(loss) per share before fees waived
and/or expenses reimbursed by investment adviser,
administrator and transfer agent and other reductions $ 0.04 $ 0.31 $ (0.56)
(a) Kobren Conservative Allocation Fund commenced operations on December 30,
1996. (b) Total return represents aggregate total return for the period
indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Conservative Allocation Fund was in operation for a short period of time, these ratios are not meaningful.
See Notes to Financial Statements
Kobren Insight Funds - 1998 Semi-Annual Report 13
</TABLE>
Notes to Financial Statements (unaudited)
Kobren Insight Funds
June 30, 1998
1. Significant Accounting Policies
Kobren Insight Funds (the "Trust") was organized on September 13, 1996,
as a Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a no-load, open-end
diversified management investment company. As of June 30, 1998, the Trust offers
shares of three funds, Kobren Growth Fund, Kobren Moderate Growth Fund and
Kobren Conservative Allocation Fund (individually, a "fund" and collectively,
the "funds"). Each fund seeks to achieve its investment objective by investing
primarily in shares of other investment companies ("underlying funds") but also
may invest directly in securities that are suitable investments for that fund.
Use of Estimates -- The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the funds
in the preparation of their financial statements.
Portfolio Valuation -- The underlying funds are valued according to their stated
net asset value. Each fund's other investment securities are valued at the last
sale price on the securities exchange or national securities market on which
such securities primarily are traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available. Short-term investments are valued at
amortized cost, which approximates market value. Any securities or other assets
for which recent market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees.
Dividends and Distributions -- It is the policy of Kobren Growth Fund and Kobren
Moderate Growth Fund to declare and pay dividends from net investment income
annually. Kobren Conservative Allocation Fund has a policy of paying such
dividends quarterly. Each fund will distribute net realized capital gains
(including net short-term capital gains), unless offset by any available capital
loss carryforward, annually. Additional distributions of net investment income
and capital gains for each fund may be made in order to avoid the application of
a 4% non-deductible excise tax on certain undistributed amounts of ordinary
income and capital gain. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due primarily to
differing treatments of income and gain on various investment securities held by
a fund, timing differences and differing characterizations of distributions made
by a fund.
Securities Transactions and Investment Income -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Dividend income on foreign securities is
recognized as soon as a fund is informed of the ex-dividend date. Interest
income is recognized on the accrual basis.
Federal Income Tax -- Each fund has qualified and intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the Code, and to make distributions of taxable income to shareholders sufficient
to relieve each fund from all or substantially all federal income taxes.
Expenses -- Certain of the Trust's other expenses are allocated equally to those
funds which make up the Trust. Other expenses of the Trust are allocated among
the funds based upon relative net assets of each fund. Operating expenses
directly attributable to a fund are charged to that fund's operations.
14 Kobren Insight Funds - 1998 Semi-Annual Report
Notes to Financial Statements (unaudited)
2. Investment Advisory Fee, Administration Fee and Other Transactions
The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with Kobren Insight Management, Inc. The Advisory
Agreement provides that each fund pays Kobren Insight Management, Inc. a fee,
computed daily and paid monthly, at the annual rate of 0.75% of each fund's
average daily net assets. This fee is offset by any 12b-1 fee and sub-transfer
agent fee revenue payable under agreements between Kobren Insight Brokerage,
Inc. (the Trust's distributor) and underlying funds. In addition, certain 12b-1
fee and sub-transfer agent fee revenue will be used to defray the costs
associated with participation in certain no transaction fee programs. Kobren
Insight Management, Inc. has voluntarily agreed to limit each fund's other
operating expenses to 0.25% of each fund's average daily net assets until
January 1, 2001.
The Trust also has also entered into an administration agreement (the
"Administration Agreement") with First Data Investor Services Group, Inc. ("the
Administrator"), a wholly-owned subsidiary of First Data Corporation. The
Administrator also serves as the Trust's transfer agent and dividend paying
agent. Boston Safe Deposit and Trust Company, an indirect wholly-owned
subsidiary of Mellon Bank Corporation, serves as the Trust's custodian. Kobren
Insight Brokerage, Inc., an affiliate of Kobren Insight Management, Inc., serves
as distributor of the funds' shares and pays all distribution costs. No
distribution fees are paid by the funds.
For the six months ended June 30, 1998, the investment adviser,
administrator and transfer agent waived fees and/or reimbursed expenses as
follows:
Expenses Reimbursed
by Investment Adviser
Kobren Growth Fund $ 18,884
Kobren Moderate Growth Fund 28,720
Kobren Conservative Allocation Fund 48,546
For the six months ended June 30, 1998, other reductions were as
follows:
Kobren Growth Fund $ 34,988
Kobren Moderate Growth Fund 22,725
No officer, director or employee of Kobren Insight Management, Inc.,
Kobren Insight Brokerage, Inc., the Administrator, or any affiliate thereof,
receives any compensation from the Trust for serving as a trustee or officer of
the Trust. Each Trustee who is not an "affiliated person" receives an annual fee
of $5,000 plus $1,000 for each board meeting attended and $500 for each
committee meeting attended. The Trust also reimburses out-of-pocket expenses
incurred by each Trustee in attending such meetings.
3. Purchases and Sales
The aggregate amounts of purchases and sales of underlying funds and
investment securities, other than U.S. government and short-term securities, for
the six months ended June 30, 1998, were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Purchases Sales
Kobren Growth Fund $ 24,465,222 $ 21,684,339
Kobren Moderate Growth Fund 21,584,127 13,125,373
Kobren Conservative Allocation Fund 14,755,011 9,082,041
Kobren Insight Funds - 1998 Semi-Annual Report 15
</TABLE>
Notes to Financial Statements (unaudited)
4. Shares of Beneficial Interest
As of June 30, 1998, an unlimited number of shares of beneficial
interest, having a par value of $0.001, were authorized for the Trust. Changes
in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended Year Ended
June 30, 1998 December 31, 1997
Shares Amount Shares Amount
Kobren Growth Fund:
Shares Sold 1,170,386 $ 14,324,538 6,040,941 $66,750,421
Shares Issued as Reinvestment of Dividends -- -- 121,905 1,403,131
Shares Redeemed (1,068,850) (12,885,812) (754,794) (8,847,204)
------------ ---------------------------------------------
Net Increase 101,536 $ 1,438,726 5,408,052 $59,306,348
============ =============================================
Kobren Moderate Growth Fund:
Shares Sold 1,395,832 $ 17,165,015 3,867,539 $43,059,814
Shares Issued as Reinvestment of Dividends -- -- 130,811 1,561,885
Shares Redeemed (534,798) (6,761,176) (383,530) (4,460,468)
------------ ---------------------------------------------
Net Increase 861,034 $ 10,403,839 3,614,820 $40,161,231
============ =============================================
Kobren Conservative Allocation Fund:
Shares Sold 989,745 $ 11,678,284 1,763,364 $19,397,323
Shares Issued as Reinvestment of Dividends 2,797 33,812 71,701 818,115
Shares Redeemed (435,600) (5,180,548) (316,837) (3,484,213)
------------ ---------------------------------------------
Net Increase 556,942 $ 6,531,548 1,518,228 $ 16,731,225
============ =============================================
</TABLE>
At June 30, 1998, Kobren Insight Management, Inc. and its affiliates
owned 845,179, 477,022 and 351,832 shares of Kobren Growth Fund, Kobren Moderate
Growth Fund and Kobren Conservative Allocation Fund, respectively.
5. Organization
Expenses incurred in connection with the organization of each fund are
being amortized on a straight-line basis over a period not to exceed sixty
months from the date upon which each fund commenced its operations.
6. Risk Factors of the Funds
Investing in underlying funds through a fund involves additional and
duplicative expenses and certain tax results that would not be present if an
investor were to make a direct investment in the underlying funds. A fund,
together with the other funds and any "affiliated persons" (as such term is
defined in the 1940 Act) may purchase only up to 3% of the total outstanding
securities of an underlying fund. Accordingly, when the Trust, Kobren Insight
Management, Inc. or their affiliates hold shares of any of the underlying funds,
each fund's ability to invest fully in shares of such underlying funds may be
restricted, and Kobren Insight Management, Inc. must then, in some instances,
select alternative investments for the fund that would not have been its first
choice.
16 Kobren Insight Funds - 1998 Semi-Annual Report
