As filed with the Securities and Exchange Commission on April 17, 1998
Securities Act File No. 333-12075
Investment Company Act File No. 811-07813
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment
No.
Post-Effective Amendment No. 2
X
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REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 3
X
KOBREN INSIGHT FUNDS
(Exact Name of Registrant as Specified in Charter)
20 William Street, Suite 310, Wellesley Hills, Massachusetts 02181
Registrant's Telephone Number, including Area Code: (617) 573-1557
Name and Address of Agent for Service: Copies to:
Gail A. Hanson, Esq. Pamela Wilson, Esq.
Kobren Insight Funds Hale and Dorr
One Exchange Place 60 State Street
Boston, MA 02109 Boston, MA 02109
It is proposed that this filing will become effective:
_ immediately upon filing pursuant to paragraph (b)
X on April 22, 1998 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1) on pursuant to
paragraph (a)(1) 75 days after filing pursuant to paragraph
(a)(2) on __________ pursuant to paragraph (a)(2) of Rule 485.
The Registrant filed a Rule 24f-2 Notice for its most recent fiscal year ended
December 31, 1997 on March 31, 1998.
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5
g:\shared\clients\insight\peas\peano.2\prospect\040198.doc
KOBREN INSIGHT FUNDS
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495 (a)
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Part A.
Item No. Prospectus Caption
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Investment
Objectives and Policies; Additional
Information
5. Management of the Fund Cover Page; Expense Information;
Investment Objectives and Policies;
Management of the Funds;
Additional Information
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other Securities How to Redeem Shares;
Dividends, Distributions and Taxes;
Additional Information
7. Purchase of Securities Being Offered Determination of Net Asset Value;
How to Purchase Shares;
Exchange Privilege
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
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Part B. Statement of Additional
Item No. Information Caption
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions
14. Management of the Registrant Management of the Trust and the Funds
15. Control Persons and Principal Holders of Securities Management of the Trust and the Funds
16. Investment Advisory and Other Services Management of the Trust and the Funds;
Custodian, Counsel and Independent
Accountants; Portfolio Transactions
17. Brokerage Allocation and Other Practices Portfolio Transactions
18. Capital Stock and Other Securities Description of the Trust
19. Purchase, Redemption and Pricing of Purchase, Redemption and
Securities Being Offered Determination of Net Asset Value;
Special Redemptions
20. Tax Status Dividends, Distributions and Taxes
21. Underwriters Management of the Trust and the Funds
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
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KOBREN INSIGHT FUNDS
Kobren Growth Fund
Kobren Moderate Growth Fund
Kobren Conservative Allocation Fund
Prospectus - April 22, 1998
Kobren Insight Funds is a no-load open-end diversified investment company that
currently includes three series: Kobren Growth Fund, Kobren Moderate Growth Fund
and Kobren Conservative Allocation Fund. Each fund pursues the investment
objectives outlined below by investing in a diversified portfolio consisting
primarily of mutual funds. The primary focus of each fund is to develop an
appropriate asset allocation strategy and to select from the wide range of
mutual funds currently available.
The investment adviser to the funds is Kobren Insight Management, Inc.
("KIM"). KIM has extensive experience in managing mutual fund portfolios for
high net worth individuals and corporations with a minimum account size of
$400,000. KIM currently manages over 1,000 client accounts with assets totaling
approximately $1 billion.
As the funds' investment adviser, KIM may select from virtually all publicly
available mutual funds. The funds' strategy of investing in other mutual funds
results in greater expenses than shareholders would incur if they invested
directly in mutual funds.
Kobren Growth Fund seeks long-term growth of capital without regard to current
income and with a volatility level approximating that of the S&P 500 Index.
Kobren Moderate Growth Fund seeks long-term growth of capital without regard to
current income and with a volatility level below that of the S&P 500 Index.
Kobren Conservative Allocation Fund seeks enough long-term growth of capital to
maintain purchasing power in the face of inflation (as measured by the Consumer
Price Index) with a volatility level below that of the S&P 500 Index.
Shares of the funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus contains information about the funds that you should consider
before investing. Please read the prospectus carefully and retain it for future
reference. A statement of additional information dated April 22, 1998 has
been filed with the Securities and Exchange Commission ("SEC"). The statement of
additional information contains more information about the funds and is
incorporated by reference into this prospectus. The statement of additional
information is available without charge and can be obtained by writing the
distributor at the address shown on the back page or by calling the telephone
number shown below. The statement of additional information and other related
materials are also available on the SEC's Internet Website (http://www.sec.gov).
The principal distributor (the "Distributor") of the funds' shares is
Kobren Insight Brokerage, Inc. For further information, please call the Kobren
Insight funds toll free at 1-800-4KOBREN (1-800-456-2736).
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TABLE OF CONTENTS
Expense Information.........................................................2
Financial Highlights........................................................3
Investment Objectives and Policies..........................................7
Management of the Funds....................................................14
Determination of Net Asset Value...........................................15
How to Purchase Shares.....................................................15
How to Redeem Shares.......................................................17
Exchange Privilege.........................................................19
Dividends, Distributions and Taxes.........................................19
Additional Information.....................................................20
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EXPENSE INFORMATION
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
<S> <C> <C> <C>
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None None None
Sales Load Imposed on
Reinvested Dividends None None None
Deferred Sales Load None None None
Exchange Fee None None None
Redemption Fee None None None
Annual Fund Operating Expenses
(As a Percentage of Average Net Assets)
Advisory fees 0.75% 0.75% 0.75%
Revenues from underlying funds1 (0.11%) (0.08%) (0.00%)
Distribution (Rule 12b-1) fees None None None
Other expenses (after expense limitation)2 0.25% 0.25% 0.25%
Total fund operating expenses
(after expense limitation)2 0.89% 0.92% 1.00%
1 A Kobren Insight fund may invest in shares of an underlying mutual fund (1)
that makes payments of Rule 12b-1 revenues with respect to shares held by the
Kobren Insight fund or (2) whose investment adviser is willing to share a
portion of the underlying fund's advisory fee attributable to underlying fund
shares held by the Kobren Insight fund. Any Rule 12b-1 or revenue sharing
payments made with respect to shares of any underlying fund will be applied to
the advisory fees owed to KIM by the affected Kobren Insight fund.
2 KIM has voluntarily agreed to limit each fund's other expenses until January
1, 2001 to no more than 0.25% of the fund's average daily net assets. Without
this expense limitation and without the revenues from underlying funds
(described in note 1 above), the other expenses and total fund operating
expenses, respectively, of each fund would be -- Growth Fund: 0.53% and 1.28%;
Moderate Growth Fund: 0.83% and 1.58%; and Conservative Allocation Fund: 2.07%
and 2.82%.
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Example
You would pay the following expenses on a hypothetical $1,000 investment
assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
Kobren Kobren Kobren
Growth Moderate Conservative
Fund Growth Fund Allocation Fund
1 year $ 9 $ 9 $ 10
3 years $ 28 $ 29 $ 32
5 years $ 49 $ 51 $ 55
10 years $ 109 $ 113 $ 122
The purpose of the tables on this page is to help you understand the various
costs and expenses that investors in the funds will directly bear (see also page
9). These expenses are based on the actual expenses for each fund's past
fiscal year, after any applicable underlying fund revenues and expense
limitation. The expenses in the example should not be considered representative
of past or future expenses. Actual expenses may be greater or less than those
shown. Also, while the example assumes a 5% annual return, a fund's actual
performance may vary and may result in a return greater or less than 5%.
FINANCIAL HIGHLIGHTS
The tables on the following pages provide financial highlights of the
funds for each of the periods presented and should be read in conjunction with
the financial statements and related notes that appear in Kobren Insight funds'
annual report dated December 31, 1997 and which are incorporated by reference
into the statement of additional information. The financial statements and
related notes contained in the annual report have been audited by Coopers &
Lybrand L.L.P., independent accountants. Additional information concerning the
performance of the funds is included in the annual report which may be obtained
without charge by writing to the Kobren Insight funds (address shown on back
cover).
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For a fund share outstanding throughout the year. Kobren Growth Fund
<S> <C> <C>
For the Year For the Period Ended
Ended 12/31/96 (a)
12/31/97
Net asset value - beginning of year $10.24 $10.00
Net investment income 0.05 0.00 (d)
Short term capital gains 0.22 ---
Net realized and unrealized gain on investments 1.05 0.24
---- ----
Net increase in net assets resulting from
investment operations 1.32 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 year $11.51 10.24
====== =====
Total return (b) 15.03% 2.40%
====== =====
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $62,509 $251
Ratio of net investment income/(loss)
to average net assets 0.60% (.97)% (c)(e)
Ratio of operating expenses to average net assets
after reimbursements and reductions 0.89% 1.00 (c)
Portfolio turnover rate 43.00% n/a (e)
Ratioof operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser, administrator and transfer
agent and other reductions 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 $0.02 ($0.42)
(a) The 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.
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For a fund share outstanding throughout the year. Kobren Moderate Growth Fund
<S> <C> <C>
For the Year For the Period Ended
Ended 12/31/96 (a)
12/31/97
Net asset value - beginning of year $10.06 $10.00
Net investment income 0.19 0.00 (d)
Short term capital gains 0.27 ---
Net realized and unrealized gain on investments 1.61 0.06
---- ----
Net increase in net assets resulting from
investment operations 2.07 0.06
Distributions from net investment income (0.19) ---
Distributions from net realized short term capital gains (0.27) ---
Distributions from net realized capital gains (0.00) (d) ---
------ ---
Total Distributions (0.46) ---
Net asset value - end of year $11.94 10.06
====== =====
Total return (b) 23.25% 0.60%
====== =====
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $43,381 $190
Ratio of net investment income to average net assets 2.76% 8.95% (c)(e)
Ratio of operating expenses to average net assets
after reimbursements and reductions 0.92% 1.00% (c)
Portfolio turnover rate 14.00% n/a (e)
Ratioof operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser, administrator and transfer
agent and other reductions 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 $0.14 ($0.50)
(a) The 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.
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For a fund share outstanding throughout the year. Kobren Conservative Allocation Fund
<S> <C> <C>
For the Year For the Period Ended
Ended 12/31/96 (a)
12/31/97
Net asset value - beginning of year $9.98 $10.00
Net investment income 0.57 0.00 (d)
Short term capital gains 0.04 ---
Net realized and unrealized gain/loss on investments 1.44 (0.02)
---- ------
Net increase/(decrease) in net assets resulting from
investment operations 2.05 (0.02)
Distributions from net investment income (0.57) ---
Distributions from net realized short term capital gains (0.04) ---
Distributions from net realized capital gains (0.03) ---
------ ---
Total Distributions (0.64) ---
Net asset value - end of year $11.39 9.98
====== ====
Total return (b) 20.64% (0.20)%
====== =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $17,475 $165
Ratio of net investment/(loss) income
to average net assets 3.99% (1.00)% (c)(e)
Ratio of operating expenses to average net assets
after reimbursements and reductions 1.00% 1.00% (c)
Portfolio turnover rate 13.00% n/a (e)
Ratioof operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment adviser, administrator and transfer
agent and other reductions 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 $0.31 ($0.56)
(a) The 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.
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INVESTMENT OBJECTIVES AND POLICIES
Kobren Growth Fund, Kobren Moderate Growth Fund and Kobren Conservative
Allocation Fund are diversified mutual funds. Each fund has its own investment
objective, policies and practices, as described below. Each fund pursues its
investment objective by investing primarily in other mutual funds, but may also
invest directly in securities that are suitable investments for that fund. There
is no guarantee that a fund will be able to achieve its objectives.
Kobren Growth Fund
Investment Objective
The investment objective of Kobren Growth Fund is long-term growth of capital
without regard to current income. By using the active asset allocation strategy
described on this page, the fund seeks reduced volatility (risk) over a full
market cycle to a level approximating that of the S&P 500 Index. However, at any
particular time, the fund's volatility may be higher or lower than its target
volatility. Under normal market conditions, at least 65% of the fund's total
assets will be invested in open-end and closed-end, U.S. and international stock
funds. The fund may invest up to 35% of total assets in fixed income funds or
directly in stocks, bonds, money market instruments, options, futures contracts
and other permissible investments.
Who Should Invest in the Fund?
Kobren Growth Fund is designed for investors seeking growth of capital and a
volatility level approximating that of the S&P 500 Index. These investors should
have a minimum five-year time horizon and no need for current income.
Kobren Moderate Growth Fund
Investment Objective
The investment objective of Kobren Moderate Growth Fund is long-term growth of
capital without regard to current income. By using the active asset allocation
strategy described on this page, the fund seeks reduced volatility (risk) over a
full market cycle to a level approximately 20% below that of the S&P 500 Index.
However, at any particular time, the fund's volatility may be higher or lower
than its target volatility. Under normal market conditions, at least 65% of the
fund's total assets will be invested in open-end and closed-end, growth and
growth and income funds. These may include both U.S. and international funds.
The fund may invest up to 35% of total assets in fixed income funds or directly
in stocks, bonds, money market instruments, options, futures contracts and other
permissible investments.
Who Should Invest in the Fund?
Kobren Moderate Growth Fund is designed for investors seeking growth of capital
and a volatility level below that of the S&P 500 Index. These investors should
have a minimum 3- to 5-year time horizon and modest income needs.
Kobren Conservative Allocation Fund
Investment Objective
The investment objective of Kobren Conservative Allocation Fund is enough
long-term growth of capital to maintain purchasing power in the face of
inflation. Current income is a secondary objective. By using the active asset
allocation strategy described on this page, the fund seeks reduced volatility
(risk) over a full market cycle to a level approximately 30% below that of the
S&P 500 Index. However, at any particular time, the fund's volatility may be
higher or lower than its target volatility. The fund expects, under normal
market conditions, to invest at least 40% of its total assets in open-end and
closed-end, growth and growth and income funds. These may include both U.S. and
international funds. In addition, at least 20% of the fund's total assets will
be invested in income producing funds or securities. The fund may invest up to
40% of its total assets directly in stocks, bonds, money market instruments,
options, futures contracts and other permissible investments.
Who Should Invest in the Fund?
Kobren Conservative Allocation Fund is designed for investors seeking enough
long-term growth of capital to offset the loss of purchasing power due to
inflation, as well as current income. Although not without risk, the fund may be
suitable for conservative investors willing to sacrifice some growth potential
in exchange for less volatility.
All Funds:
Characteristics and Risks of Investment Securities and Practices
Kobren Insight Management's Investment Process
Kobren Insight Management intends to construct for each Kobren Insight
fund a diversified portfolio in a risk controlled manner consistent with the
fund's investment objectives. KIM uses a multi-faceted approach and
relies on fundamental valuations and analysis to make investment decisions for
the funds. KIM identifies asset classes and investment styles that appear
to be undervalued relative to their earnings potential or other characteristics.
For example, the price to earnings ("P/E") ratio of small capitalization growth
stocks is often between 0.6 and 1.0 times their earnings growth rate. P/E ratios
significantly above or below this range may prompt trading action or equity
style shifts in a fund's portfolio. KIM seeks to identify and avoid
industries or types of securities that appear overvalued.
KIM monitors stock valuations for issuers in a particular industry
relative to current and historical stock valuations for industries represented
in the S&P 500 Index. When stock valuations in a particular industry are outside
their norms, that industry may be accordingly underweighted or overweighted in a
fund's portfolio. In selecting investments in other mutual funds, KIM
considers a variety of quantitative factors such as historical total returns,
style analysis, volatility levels, expenses and underlying fund size. In
addition to quantitative analysis techniques, a variety of qualitative factors
may be used to identify appropriate funds for investment. These may include
interviews with underlying fund managers and their research staff. KIM
will combine the underlying funds in such a manner as to achieve an asset
allocation mix that reflects its views of the financial markets as well as the
objectives of each fund.
By using an active asset allocation strategy, each fund seeks reduced volatility
over a full market cycle to a specified level relative to the volatility of the
S&P 500 Index. Risk is reduced by first determining the appropriate mix of
stocks, bonds and cash most likely to achieve the fund's target volatility. For
example, Kobren Growth Fund would typically invest a greater percentage of its
assets in stocks than would the other two funds. Once the stock allocation is
determined, KIM determines the style allocation (i.e., growth vs. value
stocks or small capitalization vs. large capitalization stocks). Finally,
KIM selects specific funds (including their managers). During this three
step process, KIM analyzes historical and expected returns, underlying
fund volatility levels and correlations between underlying funds in order to
construct for each fund a portfolio with an appropriate risk level.
Investments in Other Mutual Funds
Each fund will invest primarily in the shares of open-end and closed-end funds
(sometimes referred to in this prospectus as "mutual funds"). Mutual funds pool
the investments of many investors and use professional management to select and
purchase securities and other investments for their portfolios. The Kobren
Insight funds are authorized to invest in underlying funds with investment
objectives that do not match those of the funds. KIM believes that, by
investing in a combination of funds with a broad range of objectives and
offsetting risk characteristics, a Kobren Insight fund can achieve a higher
composite rate of return while assuming a level of risk commensurate with the
fund's objective.
The underlying funds in the Kobren Insight funds' portfolios may invest in any
or all of the investments described in this prospectus and will expose the
Kobren Insight funds to all of the risks that would be associated with the
direct ownership of these investments. The underlying funds may be authorized by
their investment policies to engage in investment practices that the Kobren
Insight funds do not engage in directly.
As the funds' investment adviser, KIM may select from virtually all
publicly available open-end and closed-end funds. Due to KIM's size and
buying power, many mutual funds that would otherwise be sold with a front-end
sales charge may be available to the Kobren Insight funds at net asset value.
The funds will not purchase shares of open-end mutual funds if a front-end sales
charge would be imposed on such purchase. However, the funds may purchase shares
of an underlying fund that are subject to a deferred sales charge or redemption
fee.
Investing in mutual funds through the Kobren Insight funds involves additional
and duplicative expenses and certain tax results that would not be present if
you were to make a direct investment in the underlying mutual funds. By
investing in mutual funds indirectly through the funds, you bear not only your
proportionate share of the expenses of the funds (including operating costs and
investment advisory and administrative fees) but also, indirectly, similar
expenses of the underlying funds. Investment decisions by the investment
advisers of the underlying funds are made independently of KIM and the
Kobren Insight funds. At any particular time, one underlying fund may be
purchasing shares of an issuer whose shares are being sold by another underlying
fund. As a result, a Kobren Insight fund would incur indirectly certain
transaction costs without accomplishing any investment purpose. In addition, an
underlying fund may incur service fees or expenses related to the distribution
of the underlying fund's shares. As a shareholder of the Kobren Insight funds,
you may receive taxable capital gains distributions to a greater extent than if
you invested directly in the underlying funds.
A fund, together with the other Kobren Insight funds, KIM and any of
their affiliated persons, may purchase only up to 3% of the total outstanding
securities of an underlying fund. Accordingly, each fund's ability to invest
fully in shares of an underlying fund is limited to the extent that the other
Kobren Insight funds, KIM or their affiliates also hold shares of the
same underlying fund.
Equity Securities
The funds and the underlying funds in their portfolios invest in equity
securities of U.S. and foreign companies. Equity securities consist of
exchange-traded, over-the-counter ("OTC") and unlisted common and preferred
stocks, warrants, rights, convertible debt securities, trust certificates,
limited partnership interests and equity participations. The prices of the
funds' equity investments will change in response to stock market movements.
Warrants and Convertible Securities
Warrants acquired by a fund (or an underlying fund in its portfolio) will
entitle it to buy common stock from the issuer at a specified price and time.
Warrants are subject to the same market risks as stocks, but may be more
volatile in price. A fund's investment in warrants will not entitle it to
receive dividends or exercise voting rights and will become worthless if the
warrants cannot be profitably exercised before their expiration dates.
Convertible debt securities and preferred stock acquired by a fund will entitle
it to acquire the issuer's stock by exchange or purchase. Convertible securities
are subject both to the credit and interest rate risks associated with fixed
income securities and to the stock market risk associated with equity
securities.
<PAGE>
Fixed Income Securities
Each fund (and the underlying funds in its portfolio) may invest, to the extent
permitted by its investment policies, in any type of fixed income security.
Fixed income securities include: (1) securities issued or guaranteed by the U.S.
government and any of its agencies and instrumentalities ("U.S. government
securities") and custodial receipts based on U.S. government securities; (2)
securities issued or guaranteed by a foreign government, any of its political
subdivisions, authorities, agencies and instrumentalities or supranational
entities such as the World Bank; (3) debt securities issued by U.S. and foreign
companies; (4) certificates of deposit, bankers' acceptances and time deposits
issued by or maintained at U.S. and foreign banks; (5) commercial paper; and (6)
mortgage-backed, asset-backed, indexed and derivative securities.
The value of fixed income securities, including U.S. government securities,
varies inversely with changes in interest rates. When interest rates decline,
the value of fixed income securities tends to rise. When interest rates rise,
the value of fixed income securities tends to decline. The market prices of zero
coupon, delayed coupon and payment-in-kind securities are affected to a greater
extent by interest rate changes and tend to be more volatile than the market
prices of securities providing for regular cash interest payments.
In addition, fixed income securities are subject to the risk that the issuer may
default on its obligation to pay principal and interest. The value of fixed
income securities may also be reduced by the actual or perceived deterioration
in an issuer's creditworthiness, including credit rating downgrades.
Fixed income securities may be subject to both call (prepayment) risk and
extension risk. Call risk is the risk that an issuer of a security will exercise
its right to pay principal on an obligation earlier than scheduled. Early
principal payments tend to be made during periods of declining interest rates.
This forces the affected fund to reinvest the unanticipated cash flow in lower
yielding securities. Extension risk is the risk that an issuer will exercise its
right to pay principal later than scheduled. This typically happens during
periods of rising interest rates and prevents the affected fund from reinvesting
in higher yielding securities. Unscheduled principal prepayments and delays in
payment can both reduce the value of an affected security. Unlike most
conventional fixed income securities, mortgage-backed and asset-backed
securities are generally subject to both call (prepayment) risk and extension
risk.
High Yield "Junk" Bonds
Each fund will not invest directly more than 35% of its total assets in below
investment grade fixed income securities, which are often referred to as "junk
bonds." Junk bonds are securities rated below the top four bond rating
categories of Standard & Poor's Ratings Group, Moody's Investors Service, Inc.
or another nationally recognized statistical rating organization or, if unrated,
determined by the investment adviser to be of comparable credit quality. There
is no minimum credit quality standard for fixed income securities held by the
Kobren Insight funds or by the underlying funds.
The prices of high yield bonds can be very volatile and may decline more steeply
following an economic downturn or increase in interest rates than would the
prices of investment grade debt securities. An adverse economic or interest rate
climate may also impair the ability of high yield bond issuers to repay
principal and interest, resulting in a default or credit downgrade that may
substantially reduce the yield on, or value of, a fund's investment.
Repurchase Agreements
Each fund (and the underlying funds in its portfolio) may, to the extent
permitted by its investment policies, enter into repurchase agreements. A
repurchase agreement consists of the sale to a fund of a U.S. government
security or other debt obligation together with an agreement to have the selling
counterparty repurchase the security at a specified future date and repurchase
price. If a repurchase agreement counterparty defaults on its repurchase
obligation, a fund may, under some circumstances, be limited or delayed in
disposing of the repurchase agreement collateral, which could result in a loss
to the fund.
<PAGE>
Defensive Investing
For temporary defensive purposes under abnormal market conditions, Kobren Growth
Fund and Kobren Moderate Growth Fund each may hold or invest more than 35% of
total assets in cash, investment grade fixed income securities, repurchase
agreements and/or money market fund shares. Kobren Conservative Allocation Fund
may hold more than 35% of total assets in these securities regardless of market
conditions.
Restricted and Illiquid Securities
Each fund may invest up to 15% of its net assets in illiquid securities,
including certain restricted and private placement securities. It may be
difficult to dispose of illiquid securities quickly or at a price that fully
reflects their fair value. Restricted securities that are eligible for resale in
reliance on Rule 144A under the Securities Act of 1933, as amended (the
"1933 Act") , and commercial paper offered under Section 4(2) of the 1933 Act
are not subject to the funds' 15% limit on illiquid investments, if they are
determined to be liquid.
An underlying fund whose shares are held by a Kobren Insight fund is obligated
to redeem these shares only in an amount up to 1% of the underlying fund's
outstanding securities during any period of less than 30 days. Accordingly,
because the funds and their affiliates may together acquire up to 3% of an
underlying fund's shares, a fund that has decided to sell its entire position in
an underlying fund may need up to 90 days to completely implement this decision.
In addition, a fund's holdings of underlying fund shares representing more than
1% of the underlying fund's outstanding securities may be subject to the 15%
limitation on illiquid investments. However, the funds have reserved the right
to pay redemption requests in portfolio securities and therefore, these
positions may be treated as liquid.
An underlying fund may elect to pay the proceeds of a redemption by a Kobren
Insight fund through a distribution in kind of securities of portfolio
securities, instead of cash. If a fund receives securities that are not
considered by KIM to be desirable investments, the fund will incur additional
transaction costs in disposing of the securities.
Foreign Investments
Each fund (and the underlying funds in its portfolio) may, to the extent
permitted by its investment policies, invest in securities of foreign issuers.
These investments may be in the form of American Depositary Receipts ("ADRs") or
similar securities representing interests in an underlying foreign security.
ADRs are not necessarily denominated in the same currency as the underlying
foreign securities. If an ADR is not sponsored by the issuer of the underlying
foreign security, the institution issuing the ADR may have reduced access to
information about the issuer.
Investments in foreign securities involve risks in addition to those associated
with investments in the securities of U.S. issuers. These risks include less
publicly-available financial and other information about foreign companies; less
rigorous securities regulation; the potential imposition of currency controls,
foreign withholding and other taxes; and war, expropriation or other adverse
governmental actions. Foreign equity markets may be less liquid than United
States markets and may be subject to delays in the settlement of portfolio
transactions. Brokerage commissions and other transaction costs in foreign
markets tend to be higher than in the United States. The value of foreign
securities denominated in a foreign currency will vary in accordance with
changes in currency exchange rates, which can be very volatile.
Mortgage-Backed, Asset-Backed, Indexed and Derivative Securities
Each fund (and the underlying funds in its portfolio) may invest in
mortgage-backed, asset-backed and indexed securities. Some of these securities
are considered to be derivative securities. Mortgage-backed securities represent
participation interests in pools of adjustable and fixed-rate mortgage loans.
Mortgage-backed securities either may be issued or guaranteed by agencies or
instrumentalities of the U.S. Government or may be privately issued. Unlike
conventional debt obligations, mortgage-backed securities provide monthly
payments derived from the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans.
A fund's investments in mortgage-backed securities may include conventional
mortgage pass through securities, stripped mortgage-backed securities ("SMBS")
and certain classes of multiple class collateralized mortgage obligations
("CMOs"). Examples of SMBS include interest only ("IO") and principal only
("PO") securities. Senior CMO classes typically have priority over less senior
and residual CMO classes as to the receipt of principal and/or interest payments
on the underlying mortgages. The CMO classes in which the fund may invest
include sequential and parallel pay CMOs, including planned amortization class
securities ("PACs").
The principal and interest on asset-backed securities are collateralized by
pools of assets such as auto loans, credit card receivables, leases, installment
contracts and personal property. Asset-backed securities generally are not
collateralized as securely as mortgage-backed securities.
A fund may invest in floating rate and other indexed securities. The interest
rate and/or the principal payable at the maturity of an indexed security may
change positively or inversely in relation to one or more interest rates,
financial indices, currency rates or other reference prices. In addition,
changes in the amount payable on a leveraged indexed security may be a multiple
of changes in the reference rate or price. Examples of indexed securities
include IOs, POs, inverse floaters, inverse IOs, super floaters, capped
floaters, range floaters, dual index or yield curve floaters and Cost of Funds
Index ("COFI") floaters.
Mortgage-backed, asset-backed and indexed securities are subject to different
combinations of call (prepayment), extension, interest-rate and other market
risks. These risks and the price volatility of a security are magnified to the
extent that a security has imbedded leverage. Under adverse market conditions,
any of these risks could lead to a decline in the yield on or market value of
these securities. In addition, these securities can at times be difficult to
price accurately or to liquidate at a fair price.
Conventional mortgage-backed securities and sequential pay CMOs are subject to
all of these risks, but are typically not leveraged. PACs and other senior
classes of sequential and parallel pay CMOs usually involve less exposure to
prepayment, extension and interest-rate risk than other mortgage-backed
securities, provided that prepayment rates stay within expected prepayment
ranges or collars. Call or prepayment risk is the risk primarily associated with
mortgage IOs and superfloaters. Mortgage POs, inverse IOs, inverse floaters,
capped floaters and COFI floaters are especially susceptible to extension and
interest rate risk. Range floaters are subject to the risk that a designated
interest rate will float outside the specified interest rate collar. Dual index
floaters are subject to depreciation if there is an unfavorable change in the
spread between two designated interest rates.
When-Issued and Forward Commitment Transactions
The funds (and the underlying funds in their portfolios) may purchase
when-issued securities and enter into other forward commitments to purchase or
sell securities. The value of securities purchased on a when-issued or forward
commitment basis may decline between the purchase date and the settlement date.
Futures, Options, Swaps and Currency Contracts
Each fund (and the underlying funds in its portfolio) may enter into derivative
contracts to hedge against fluctuations in securities prices or, for non-hedging
purposes, as a substitute for the purchase or sale of securities. These
derivative contracts may include the purchase or sale of futures contracts on
securities, indices or currencies; options on futures contracts; options on
securities, indices or currencies; interest rate and currency swaps, caps,
floors and collars; and forward contracts to buy or sell foreign currencies.
Any transactions in derivative contracts involve a risk of loss or depreciation
due to unanticipated adverse changes in securities prices, interest rates or
currency exchange rates. A fund incurs liability to a counterparty in connection
with transactions in futures contracts, swaps and forward contracts and the
selling of options, caps, floors and collars. As a result, the loss on these
derivative contracts may exceed a fund's initial investment. A fund may also
lose the entire premium paid for purchased options, caps, floors and collars
that expire before they can be profitably exercised by the fund. In addition,
the funds incur transaction costs in opening and closing positions in derivative
contracts.
Derivative contracts may sometimes increase or leverage a fund's exposure to a
particular market risk. Leverage magnifies the price volatility of derivative
contracts held by a fund. A fund may cover, or partially offset, the leverage
inherent in derivative contracts by maintaining a segregated account consisting
of cash and liquid securities, by holding offsetting portfolio securities or
contracts or by covering written options.
A fund's success in using derivative contracts to hedge portfolio assets depends
on the degree of price correlation between the derivative contract and the
hedged asset. Imperfect correlation may be caused by several factors, including
temporary price disparities among the trading markets for the derivative
contract, the assets underlying the derivative contract and the fund's portfolio
assets.
During periods of extreme market volatility, a commodity or options exchange may
suspend or limit trading in an exchange-traded derivative contract, which may
make the contract temporarily illiquid and difficult to price. Some
over-the-counter options may be illiquid, while others may be determined to be
liquid in accordance with procedures established by the Trustees. The funds'
ability to terminate over-the-counter options, swaps, caps, floors, collars and
forward contracts may depend on the cooperation of the counterparties to such
contracts. For thinly traded derivative contracts, the only source of price
quotations may be the selling dealer or counterparty. In addition,
over-the-counter derivative contracts involve a risk that the counterparty will
fail to perform its contractual obligations.
Portfolio Securities Loans
Each fund (and the underlying funds in its portfolio) may lend portfolio
securities with a value equal to one-third of its total assets. Each loan must
be fully collateralized by cash or other eligible assets. The funds may pay
reasonable fees in connection with securities loans. KIM will evaluate
the creditworthiness of prospective institutional borrowers and monitor the
adequacy of the collateral to reduce the risk of default by borrowers from the
Kobren Insight funds.
Borrowing and Reverse Repurchase Agreements
An underlying fund in a fund's portfolio may borrow money from banks or through
reverse repurchase agreements for emergency and/or leverage purposes. Using the
cash proceeds of reverse repurchase agreements to finance the purchase of
additional investments is a form of leverage. Leverage magnifies the sensitivity
of a fund's net asset value to changes in the market prices of the fund's
portfolio securities. However, each Kobren Insight fund will borrow solely for
temporary or emergency (and not for leverage) purposes. The aggregate amount of
such borrowings and reverse repurchase agreements may not exceed one-third of
any fund's total assets.
Short-Term Trading
Each fund is actively managed, but is not expected to have a portfolio turnover
rate that exceeds 200%. A 100% annual portfolio turnover rate would be achieved
if each security in a fund's portfolio (other than securities with less than one
year remaining to maturity) were replaced once during the year. Trading may also
increase transaction costs and the realization of capital gains, distributions
of which are taxable to shareholders.
Investment Policies and Restrictions
Except as otherwise stated in this prospectus or the funds' statement of
additional information, the funds' investment objectives, policies and
restrictions are not fundamental and may be changed without shareholder
approval. Each Kobren Insight fund is diversified and therefore may not, with
respect to 75% of its total assets, (1) invest more than 5% of its total assets
in the securities of any one issuer, other than U.S. government securities and
other mutual funds, or (2) acquire more than 10% of the outstanding voting
securities of any one issuer. No Kobren Insight fund will concentrate (invest
25% or more of its total assets) in the securities of issuers in any one
industry.
MANAGEMENT OF THE FUNDS
Trustees
The funds are series of Kobren Insight Funds (the "Trust"). The Trustees of the
Trust decide upon matters of general policy and review the actions of KIM
and other service providers. The Trustees of the Trust are identified in the
statement of additional information.
Investment Adviser
Each fund has retained the services of KIM as investment adviser. KIM
provides investment advice and portfolio management services to the funds.
Subject to the supervision of the Trustees, KIM makes the funds' day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages the funds' investments.
Kobren Insight Management, a registered investment adviser, was established
in 1987. Although KIM has not previously managed a mutual fund, KIM has
extensive experience in managing mutual fund portfolios for high net worth
individuals and corporations with minimum $400,000 account sizes. KIM currently
manages over 1,000 client accounts with assets totaling approximately $1
billion. KIM has historically used mutual funds, rather than individual
securities, as the primary investment vehicle for its client accounts. Eric M.
Kobren, the President and Director of KIM, owns all of KIM's stock. Mr. Kobren
is also the sole shareholder of the Distributor, and principal shareholder of
Mutual Fund Investors Association, Inc., the publisher of Fidelity Insight and
FundsNet Insight reports with approximately 100,000 paid subscribers.
Mr. Kobren is the primary portfolio manager for each of the Kobren
Insight funds. Mr. Kobren has been the President of KIM and the Distributor
since their inception in 1987 and of Mutual Fund Investors Association, Inc.
since inception in 1985. Mr. Kobren has been in the investment business since
1976.
As compensation for the services rendered and related expenses borne by
KIM under its investment advisory agreement with each fund, each fund has
agreed to pay to KIM a monthly fee at the annual rate of 0.75% of that
fund's average daily net assets, as a percentage of that fund's average
daily net assets, shown below.
A Kobren Insight fund may invest in shares of an underlying mutual fund (1) that
makes payments of Rule 12b-1 revenues with respect to shares held by the Kobren
Insight fund or (2) whose investment adviser is willing to share a portion of
the underlying fund's advisory fee attributable to underlying fund shares held
by the Kobren Insight fund. Any Rule 12b-1 or revenue sharing payments made with
respect to shares of any underlying fund will be applied to the advisory fees
owed to KIM by the affected Kobren Insight fund. In addition, certain 12b-1
fee and sub-transfer fee revenues will be used to defray the costs associated
with participation in certain no fund network programs.
Expenses
Kobren Insight Management has voluntarily agreed to reimburse each fund to
the extent necessary to maintain each fund's operating expenses (excluding
investment advisory fees, brokerage commissions, taxes, interest and litigation,
indemnification and other extraordinary expenses) at no more than 0.25% annually
of the fund's average daily net assets. Although this reimbursement can be
revoked at any time, KIM has agreed to continue this arrangement until January
1, 2001 .
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Administrator First Data Investor Services Group, Inc. ("Investor
Services Group") serves as each fund's administrator, accounting agent and
transfer agent. As the funds' administrator, subject to the oversight of the
Trustees,
Investor Services Group supervises each fund's day-to-day
operations, other than the management of the
fund's investments.
DETERMINATION OF NET ASSET VALUE
Each fund computes the net asset value per share ("NAV") of its shares at the
close of regular trading on the New York Stock Exchange (normally 4:00 p.m. New
York time) on each weekday that is not a holiday listed in the statement of
additional information (a "business day"). If the New York Stock Exchange closes
early, the time of computing the NAV and the deadlines for purchasing and
redeeming shares will be accelerated to the earlier closing time. The NAV of
each fund's shares is determined by subtracting from the value of the fund's
total assets the amount of the fund's liabilities and dividing the remainder by
the number of outstanding fund shares. Exchange listed stocks are valued on the
basis of reported market prices or dealer quotations. Shares of underlying funds
are valued at their reported NAVs. All other investments are valued at fair
value, which may include the use of a pricing service or matrix pricing.
Although the NAV will be calculated at the close of all regular trading days,
the NAV reported to NASDAQ for distribution to news agencies will be delayed by
one business day.
HOW TO PURCHASE SHARES
Shares of the funds are available to individuals, institutions, companies and
fiduciaries. Prospectuses, sales material and applications can be obtained from
the Distributor or Investor Services Group at the address and telephone
number listed on the back of this prospectus. Shares of each fund may be
purchased without a sales charge at the NAV next calculated after receipt of an
order in proper form.
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HOW TO PURCHASE SHARES
Method of Purchase Purchase Procedures
By Check:
Initial Purchase: You may open an account and make an initial investment in any fund by
sending a minimum $25,000 check made payable to Kobren Insight Funds and a
completed account application form to Kobren Insight Funds, P.O. Box 5146,
Westborough, MA 01581. An account application is included with the
prospectus.
Subsequent Purchases: The minimum subsequent purchase amount is $1,000. The check must be
accompanied by the account name and number to permit proper crediting. For
your convenience, a deposit slip is attached to the bottom of all account
statements. For additional IRA purchases, please include the contribution
year.
All Purchases: Checks drawn on a United
States bank or savings institution should
be made payable to Kobren Insight Funds.
If an order to purchase shares is
canceled because your check does not
clear, you will be responsible for any
resulting losses or fees incurred by the
Trust, the Distributor or Investor
Services Group in the transaction.
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By Wire:
Initial Purchases: You may purchase shares of the funds by wire. Please call Investor
Services Group at 800-895-9936 for instructions. You should be prepared to
give the name in which the account will be opened, the address, telephone
number and taxpayer identification number for the account, and the name of
the bank that will wire the purchase amount. You will be assigned a new
account number which must be referenced on a completed new account
application sent promptly to Investor Services Group. Shares will not be
purchased until the wire is received and the order is accepted by the fund.
No redemptions will be processed until a completed application is received.
In addition, if a signed application is not received within 60 days, your
account will be subject to backup withholding.
Subsequent Purchases: Each additional wire purchase request must contain your fund, account
name and account number to permit proper crediting. You must call and
inform Investor Services Group that a wire is being sent to ensure timely
credit to your account.
All Purchases: Banks may impose a charge for sending a wire. Investor Services Group
does not currently charge any fee for accepting wired funds, but reserves
the right to charge shareholders for this service in the future.
By Automated You may purchase shares for non-retirement accounts via electronic
Clearing House (ACH): transfer of funds if you have selected this option in Section 5 of the
application. If you call Investor Services Group by 4:00 p.m. Eastern time,
your purchase will be made at that day's NAV and your bank account will be
debited within 1-2 business days.
By Automatic After your initial investment of $25,000 or more, you can make automatic
Investment Plan: monthly, quarterly or annual purchases (on the day of your choice) of $500
or more. To use this option, you must complete Section 6 of the
application. You can change this amount or terminate this option by written
notice to the fund at any time.
Through Broker-Dealers Contact your dealer to find out about its procedures for processing
and Fund Networks: orders to purchase fund shares. Purchase orders received by dealers or
their designees prior to 4:00 p.m.
Eastern time on any business day receive
that day's NAV. It is the responsibility
of dealers to transmit properly completed
orders to Investor Services Group .
Dealers or other agents may charge you a
fee for effecting transactions.
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The Kobren Insight funds are also available with a $2,500 minimum from the
following fund networks:
Fidelity Investments 800-544-9697 (no transaction fee)
Charles Schwab & Company 800-266-5623
Jack White & Company 800-323-3263
Waterhouse Securities 800-934-4443
<PAGE>
Minimum Investment Amounts
The minimum initial investment in a fund is $25,000, but the officers of the
Trust may, in their sole discretion, waive or reduce the minimum initial
investment amount for certain investors and financial intermediaries. Multiple
accounts under common ownership can be combined to reach the $25,000 minimum
provided each individual account is at least $10,000. The minimum initial
investment is waived for purchases by Trustees, directors, officers and
employees of the Trust and KIM, private clients of KIM and members of exempt
persons' immediate families. The minimum subsequent investment is $1,000. The
minimum initial investment for purchases of fund shares through the following
networks is $2,500: Charles Schwab Mutual Fund Marketplace, Fidelity
FundsNetwork, Waterhouse Securities and Jack White Mutual Fund Network.
Tax-Deferred Retirement Plans Shares of the funds are available through Investor
Services Group for traditional individual retirement account (IRA) plans and
Roth individual retirement account plans. The following tax-deferred retirement
plans are available through the mutual fund networks listed above: Keogh Plans
for self-employed individuals; SEP and SARSEP plans for corporations; individual
retirement account (IRA) plans for individuals and their non-employed spouses;
and qualified pension and profit-sharing plans for employees, including 401(k)
plans and 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations. Other Information
About Purchasing Shares Certificates representing shares will not be issued. The
Trust and the Distributor reserve the right to limit the amount of investments
and to reject any order to purchase fund shares.
HOW TO REDEEM SHARES
Shares of the funds may be redeemed on each business day. You will receive
the NAV next determined after the receipt of a redemption request in the proper
form. Payment is ordinarily sent by mail or by wire the following business day
after the effective date of the redemption. However, the payment of redemption
proceeds for shares purchased by check will be made only after the check has
cleared, which may take up to fifteen days from the purchase date. The Trust
reserves the right to suspend the right of redemption or to postpone the date of
payment under unusual circumstances as determined by the SEC. In addition, the
Trust may redeem shares involuntarily (1) as described below under "Redemptions
of Sub-Minimum Accounts" or (2) if the shareholder's exchange privileges have
been canceled for the reasons described under "Exchange Privilege" below.
HOW TO REDEEM SHARES
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Method of Redemption Redemption Procedures
By Mail: Shares of the funds may be redeemed by sending a written redemption
request to Kobren Insight Funds, P.O. Box 5146, Westborough, MA 01581. The
request must state the number of shares or the dollar amount to be redeemed
and the applicable account number. The request must be signed exactly as
your name appears on the account registration. If the shares to be redeemed
have a value of $50,000 or more, your signature must be guaranteed by one of
the eligible guarantor institutions listed in "Signature Guarantees" above.
Written redemption requests may direct
that the proceeds be deposited directly
in the bank account or brokerage account
designated on an investor's account
application.
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By Telephone: To redeem by telephone, call
Investor Services Group toll-free
at 800-895-9936. The proceeds will be
sent by mail to the address designated on
your account or wired directly to your
existing account in any commercial bank
or brokerage firm in the United States,
as designated on the application.
The telephone redemption privilege is
automatically available to you. You may
change the bank or brokerage account
designated under this procedure at any
time by sending to Investor Services
Group a written request or completed
supplemental telephone redemption
authorization form (available from
Investor Services Group ) that has
been signature guaranteed by any eligible
guarantor institution. Further
documentation will be required to change
the designated account if shares are held
by a company, fiduciary or other
organization.
Through Broker-Dealers Contact your dealer to find out about its procedures for processing
and Fund Networks: orders to redeem fund shares. Redemption orders received by dealers or
their designees prior to 4:00 p.m. Eastern time on any business day will
receive that day's NAV. It is the responsibility of broker-dealers to
transmit properly completed orders to Investor Services Group. Dealers or
other agents may charge you a fee for effecting transactions.
Systematic Withdrawal Plans: If the shares in your
account have a value of at least $25,000,
you may elect to receive, or may
designate another person to receive,
monthly, quarterly, or annual payments in
a specified amount. There is no charge
for this service. Contact Investor
Services Group at 800-895-9936 for more
complete information.
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Payment of Redemption Proceeds by Wire or ACH Transfer
Although the funds' custodian does not currently charge a fee for redemption
proceeds paid by wire, it reserves the right to assess a fee in the future. Your
bank or brokerage firm may impose a charge for processing the wire. In the event
that the wire transfer of redemption proceeds is impossible or impracticable,
the redemption proceeds will be sent by mail to the shareholder's record
address.
Redemption requests may direct that the proceeds be deposited directly in a
shareholder's account with a commercial bank or other depository institution by
way of an Automated Clearing House (ACH) transaction. There is currently no
charge for ACH transactions. Contact Investor Services Group for more
information about ACH transactions.
Signature Guarantees
Written requests to redeem shares of $50,000 or more or to change account
information for telephone redemptions should be accompanied by a signature
guarantee. The institutions from whom the funds will accept a signature
guarantee include banks, brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. In addition, shareholders that are corporations, partnerships,
trusts, estates or other associations may be required to furnish appropriate
evidence that a redemption request has been properly authorized.
Responsibility for Unauthorized Telephone Instructions
Neither the Trust, the Distributor, Investor Services Group nor their respective
affiliates will be liable for complying with telephone instructions which they
reasonably believe to be genuine or for any loss, damage, cost or expense in
acting on such telephone instructions. The shareholder will bear the risk of any
such loss. The Trust and Investor Services Group will employ reasonable
procedures to determine that telephone instructions are genuine. If the Trust or
Investor Services Group employs such procedures, it will not be liable for
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
Redemptions of Sub-Minimum Accounts
The Trust reserves the right to require you to close your account if at any time
the value of the shares is less than $5,000 (based on actual amounts invested,
without regard to market fluctuations) or such other minimum amount as the
Trustees may establish. After notification of the Trust's intention to close
your account, you will be given sixty days to increase the value of your account
to the minimum amount.
EXCHANGE PRIVILEGE
Shares of each fund may be exchanged for shares of the other funds at net
asset value. Exchanges may be requested by telephone. You may also request an
exchange by sending a written request to Investor Services Group. The request
must be signed exactly as your name appears on the account registration. If you
are unable to execute a transaction by telephone (for example during times of
unusual market activity) you should consider requesting the exchange by mail. An
exchange will be effected at the next determined NAV of each fund after receipt
of a request. Exchanges are subject to the applicable minimum initial investment
requirements of each fund as stated under "Minimum Investment Amounts" on page
17. To protect the interests of other shareholders of the fund, a fund may
cancel the exchange privileges of any persons that, in the opinion of the fund,
are using market timing strategies or making more than four exchanges per owner
or controlling person per calendar year. The exchange privilege may be modified
or terminated by the Trustees upon 60 days' prior notice to shareholders. An
exchange involves a sale of fund shares, which may cause you to recognize a gain
or loss for tax purposes.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions
The net investment income and realized net capital gains, if any, of Kobren
Growth Fund, Kobren Moderate Growth Fund and Kobren Conservative Allocation Fund
will ordinarily be declared and paid in accordance with the schedule below.
Dividends and distributions will be payable to shareholders of record on
record date. If investors purchase shares shortly before the record date of a
dividend or distribution, they may be subject to adverse tax consequences as
described under "Taxes."
DIVIDENDS & DISTRIBUTIONS
Type of Distribution and Name of Fund Declared and Paid
Dividends from net investment income
Kobren Growth Fund Declared and paid annually
Kobren Moderate Growth Fund Declared and paid annually
Kobren Conservative Allocation Fund Declared and paid quarterly
Distributions from realized net capital gains
All Funds Declared and paid annually
Dividends and distributions will be payable to shareholders of record on the
record date. If investors purchase shares shortly before the record date of a
dividend or distribution, they may be subject to adverse tax consequences as
described under "Taxes."
A fund's dividends and distributions are paid in additional shares of
the same fund unless the shareholder elects to have them paid in cash. Cash
dividends and distributions are the same whether they are paid in shares or
cash.
Taxes
Each fund is treated as a separate entity for tax purposes. Each fund intends to
elect to be treated and qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986 (the "Code"). To qualify as
such, each fund must satisfy certain requirements relating to the sources of its
income, diversification of its assets and distribution of its income to
shareholders. As a regulated investment company, each fund will not be subject
to federal income or excise tax on any net investment income and net realized
capital gains that are distributed to shareholders in accordance with certain
timing requirements of the Code.
Dividends paid by a fund from net investment income, certain net foreign
currency gains, and the excess of short-term capital gain over net long-term
capital loss will be taxable to its shareholders as ordinary income.
Distributions paid by a fund from the excess of net long-term capital gain over
net short-term capital loss and designated as "capital gain dividends" will be
taxable as long-term capital gains regardless of how long shareholders have held
their shares. These tax consequences will apply whether distributions are
received in additional shares or in cash. The dividends paid by each fund to its
corporate shareholders that are attributable to qualifying dividends received by
the fund from U.S. domestic corporations may be eligible, in the hands of these
corporate shareholders, for the corporate dividends-received deduction, subject
to certain holding period requirements and debt financing limitations under the
Code. Shareholders will be informed annually about the amount and character, for
federal income tax purposes, of distributions received from the funds.
Investors should consider the adverse tax implications of buying fund shares
immediately before a distribution. Investors who purchase shares shortly before
the record date for a distribution will pay a per share price that includes the
value of the anticipated distribution and will be taxed on the distribution even
though the distribution represents a return of a portion of the purchase price.
Redemptions of shares, whether for cash or in-kind, are taxable events on which
a shareholder may recognize a gain or loss. Individuals and certain other
shareholders may be subject to 31% backup withholding of federal income tax on
distributions and redemptions (including exchanges) if they fail to furnish
their correct taxpayer identification number and certain certifications or if
they are otherwise subject to backup withholding.
In addition to federal taxes, a shareholder may be subject to state, local or
other taxes on distributions received from the funds, redemptions or exchanges
of fund shares, or the value of their investment in a fund. Shareholders are
urged to consult their own tax advisers concerning specific questions about
federal, state, local or other taxes.
ADDITIONAL INFORMATION
Shareholder Reports and Confirmations
Each fund sends to its shareholders annual and semiannual reports. The
financial statements appearing in annual reports are audited by independent
accountants. Shareholders will also be sent confirmations of each transaction
and quarterly statements reflecting all account activity.
Performance Advertising
Each fund may advertise historical performance information and compare its
performance to other investments or relevant indexes. An advertisement may also
include data supplied by Lipper Analytical Services, Inc., Micropal Inc.,
Morningstar Inc., Ibbotson Associates and other industry publications or
services.
The funds may advertise average annual total return and other forms of total
return data. Average annual total return is determined by computing the average
annual percentage change in value of $1,000 invested at NAV for specified
periods ending with the most recent calendar quarter. The total return
calculation assumes a complete redemption of the investment at the end of the
relevant period. Each fund may also advertise total return on a cumulative,
average, year-by-year or other basis for specified periods. The investment
results of a fund will fluctuate over time and should not be considered a
prediction of the fund's performance in the future.
In addition, each fund may advertise its yield. Yield reflects a fund's rate of
income on portfolio investments as a percentage of its NAV. The yield on fund
shares is computed by annualizing the result of dividing the net investment
income per share over a 30 day period by the NAV on the last day of that period.
Yield is calculated by accounting methods that are standardized for all stock
and bond funds and differ from the methods used for other accounting purposes.
Therefore, the yield on fund shares may not equal the income paid on these
shares or the income reported in a fund's financial statements.
Organization
The Trust was organized on September 13, 1996 as a Massachusetts business trust.
The Trust currently has three series of shares of a single class, which are the
funds and shares offered by this prospectus. The Trustees reserve the right to
authorize and issue additional series and classes of shares.
Shareholders of each fund are entitled to one full or fractional vote for each
share. There is no cumulative voting and shares have no preemption or conversion
rights. The Trust does not intend to hold annual meetings of shareholders. The
Trustees will call special meetings of shareholders to the extent required by
the Trust's Declaration of Trust or the Investment Company Act of 1940 , as
amended (the "1940 Act"). The 1940 Act requires the Trustees, under certain
circumstances, to call a meeting to allow shareholders to vote on the removal of
a Trustee and to assist shareholders in communicating with each other.
<PAGE>
PRINCIPAL DISTRIBUTOR OF THE KOBREN INSIGHT FUNDS
Kobren Insight Brokerage, Inc.
20 William Street, Suite 310
P.O. Box 9135
Wellesley Hills, MA 02181
Toll-free: 1-800-456-2736
INVESTMENT ADVISER: TRANSFER AGENT:
Kobren Insight Management, Inc. First Data Investor Services Group, Inc.
20 William Street, Suite 310 4400 Computer Drive
P.O. Box 9135 Westborough, MA 01581
Wellesley Hills, MA 02181 Toll-free: 1-800-895-9936
Toll-free: 1-800-456-2736
ADMINISTRATOR: CUSTODIAN:
First Data Investor Services Group,Inc. Boston Safe Deposit and Trust Company
One Exchange Place One Boston Place
Boston, MA 02109-2873 Boston, MA 02108
LEGAL COUNSEL: INDEPENDENT ACCOUNTANTS:
Hale and Dorr LLP Coopers & Lybrand L.L.P.
60 State Street One Post Office Square
Boston, MA 02109 Boston, MA 02109
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KOBREN INSIGHT FUNDS
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NEW ACCOUNT APPLICATION
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Please return your check and this application to: Please call 1-800-895-9936 if you have any questions about
completing this application.
KOBREN INSIGHT FUNDS
4400 Computer Drive, P.O. Box 5146 This application is for all account types except IRAs, SEP-IRAs
Westborough, MA 01581-5146 or Keogh accounts (call for special applications).
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Section 1 Investment Selection B. Gifts/Transfers to a Minor (UGMA/UTMA)
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Please make my (our) investment(s) in the Fund(s) below. Custodian's Name:
|_| Fund #10 Kobren Growth $
First Middle Last
|_| Fund #11 Kobren Moderate Growth $
|_| Fund #12 Kobren Conservative Allocation $ As Custodian for (minor's name):
------------
Make check payable to the Kobren Insight Funds. Minimum is
$25,000 per fund. (Please call 1-800-895-9936 for instructions First Middle Last
if you prefer to wire the funds.)
Under the ______ Uniform Gifts/Transfers to Minors Act
State
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Section 2 Account Ownership
- --------------
Minor's Social Security Number/Date of Birth:
Please complete either Section A, B or C depending on the type of account you
wish to open, write in pen and print clearly in
capital letters. SS# Date of Birth
A. Individual or Joint Account C. |_| Trust |_| Corporation |_| Partnership
Owner's Name: Trustee or Authorized Signatory Name(s):
First Middle Last First Middle Last
Owner's Social Security Number (used for tax reporting purposes):
First Middle Last
Owner's Date of Birth: Name of Trust or Corporation:
Month Day Year
Joint Owner's Name: If Trust Account, for the Benefit of:
First Middle Last
Joint Owner's Social Security Number: Taxpayer Identification Number:
Joint Owner's Date of Birth: If Trust Account, Date of Trust:
Month Day Year
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Section 3 Address Investment Frequency (check one below):
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|_| Monthly
Street or P.O. Box Apt. Number
|_| Quarterly
City State Zip Code Begin on:
Month Day Year
Daytime Telephone Number Evening Telephone Number Fund to Accept Deposits:
Note: This feature may take up to two weeks to establish.
E-mail Address
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Section 7 Signature
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I am a:
Each owner must sign this section exactly as their name appears
|_| United States Citizen or Resident Alien in Section 2.
|_| Non-Resident Alien
Country of Residence By signing this
application, I certify that:
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Section 4 Dividend and Distribution Options
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Check one box (if no box is checked, we will reinvest all
distributions). I have received and read the prospectus for the fund in
which I am investing, and I agree to the terms of the
|_| Reinvest all dividends and capital gains prospectus. I have the authority and legal capacity to
purchase mutual fund shares, am of legal age and believe
|_| Pay all dividends and capital gains to me by check each investment is suitable for me. It is my responsibility
to read the prospectus of any fund into which I exchange.
I understand that all information provided in this
|_| Pay all dividends to me by check and reinvest all capital application will apply to any new fund into which my shares
gains may be exchanged.
I
understand that neither this fund nor Insight Brokerage
- ------------- --------------------------------------------------- Services, Inc. is a bank, and fund shares are not backed or
Section 5 Transfer Between Your Bank guaranteed by any bank or insured by the FDIC.
& Kobren Insight Funds
Please complete this section if you would like to make purchases I ratify any
instructions, including telephone of fund shares directly from your bank
account. You may also instructions, given on this account, I agree that neither
send the proceeds of a redemption directly to your bank account. the fund nor
First Data Services will be liable for any loss, cost or expense for acting
upon any instructions if it follows reasonable procedures designed to prevent
unauthorized transactions.
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Name of Bank: I understand that for joint tenant accounts, "I" refers to
all account owners, and each of the account owners agrees
Bank ABA Number: that any account owner has the authority to act on the
account without notice to the other account owners.
Bank Address: If I am a U.S. Citizen or Resident Alien, as I have
indicated above, I certify under penalties of perjury that
Name(s) on Bank Account: (1) the Social Security or taxpayer identification number
provided is correct, and (2) I am not subject to IRS backup
Bank Account Number: withholding because (a) I am exempt from backup withholding,
or (b) I have not been notified by the IRS that I am subject
to backup withholding as a result of a failure to report all
Please attach a voided check or deposit slip. interest and dividends, or (c) I have been notified by the
IRS that I am no longer subject to backup withholding.
(Please cross out item 2 above if it does not apply to you).
If I am a Non-Resident Alien, as I have indicated above, I
- ------------- --------------------------------------------------- certify under penalties of perjury that I am not a U.S.
Section 6 Automatic Investment Plan Citizen or Resident Alien, and that I am not an "exempt
foreign person" as defined under IRS regulations.
This service lets you invest automatically (monthly or quarterly) The Internal
Revenue Service does not require your consent from your bank account to your
Kobren Insight Fund account. To to any provision of this document other than the
establish this feature, complete the information below as well as certifications
required to avoid backup withholding.
Section 5 above.
Signature of Owner:
Investment Amount: $ Date:
-------------------------------------------
$500 minimum
Signature of Joint Owner:
Date:
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For Kobren Insight Funds Use Only
Registered Representative Information
Name: Number:
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April 22, 1998
KOBREN INSIGHT FUNDS
STATEMENT OF ADDITIONAL INFORMATION
This statement of additional information is not a prospectus, but expands upon
and supplements the information contained in the prospectus of Kobren Insight
Funds (the "Trust"), dated April 22, 1998. The statement of additional
information should be read in conjunction with the prospectus. The Trust's
prospectus may be obtained by writing to the Trust at P.O. Box 5146,
Westborough, Massachusetts 01581 or by telephoning the Trust toll free at
800-895-9936. Capitalized terms not otherwise defined herein have the same
meaning as in the prospectus.
TABLE OF CONTENTS
PAGE
I. INVESTMENT OBJECTIVES AND POLICIES.............................2
II. INVESTMENT RESTRICTIONS.......................................14
III. MANAGEMENT OF THE TRUST AND THE FUNDS
A. Trustees and Officers..................................16
B. Investment Adviser.....................................19
C. Distributor............................................20
D.Administrator, Transfer Agent and Dividend Paying Agent................20
IV. PURCHASE, REDEMPTION AND DETERMINATION
OF NET ASSET VALUE....................................21
V. SPECIAL REDEMPTIONS..........................................21
VI. PORTFOLIO TRANSACTIONS.......................................22
VII. PERFORMANCE INFORMATION
A. Total Return.........................................23
B. Non-Standardized Total Return.........................24
C. Other Information Concerning Fund Performance.........24
VIII. DIVIDENDS, DISTRIBUTIONS AND TAXES...........................29
IX. CUSTODIAN, COUNSEL AND INDEPENDENT ACCOUNTANTS...............34
X. DESCRIPTION OF THE TRUST.....................................34
XI. ADDITIONAL INFORMATION.......................................35
XII. FINANCIAL STATEMENTS.........................................35
APPENDIX - RATINGS OF DEBT INSTRUMENTS......................A-1
................. .....
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I. INVESTMENT OBJECTIVES AND POLICIES
Kobren Insight Funds (the "Trust") is a no-load open-end,
diversified investment company, registered as such under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Trust currently consists of three
separate series, each with different investment objectives (each, a "fund" and
collectively, the "funds"). The funds seek to achieve their investment
objectives by investing primarily in shares of other investment companies
("underlying funds" or "mutual funds"). As of the date of this statement of
additional information, the Trust's series are:
KOBREN GROWTH FUND, which seeks long-term growth of capital without
regard to current income and with a volatility level approximating that of the
S&P 500 Index;
KOBREN MODERATE GROWTH FUND, which seeks long-term growth of capital
without regard to current income and with a volatility level below that of the
S&P 500 Index; and
KOBREN CONSERVATIVE ALLOCATION FUND, which seeks enough long-term
growth of capital to maintain purchasing power in the face of inflation (as
measured by the Consumer Price Index) with a volatility level below that of the
S&P 500 Index.
Each fund will concentrate its investments in the shares of mutual
funds. Mutual funds pool the investments of many investors and use professional
management to select and purchase securities of different issuers for their
portfolios. Some mutual funds invest in particular types of securities (i.e.,
equity or debt), some concentrate in certain industries, and others may invest
in a variety of securities to achieve a particular type of return or tax result.
Some of the underlying funds are, like the funds, "open-end" funds and, as such,
stand ready to redeem their shares. Any investment in a mutual fund involves
risk. Even though the funds may invest in a number of mutual funds, this
investment strategy cannot eliminate investment risk. Investing in mutual 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. See "Expense Information" and "Dividends,
Distributions and Taxes" in the prospectus. 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
mutual fund. Accordingly, when affiliated persons of Kobren Insight
Management, Inc. ("KIM" or the "Adviser") hold shares of any of
the underlying funds, each fund's ability to invest fully in shares of such
mutual funds is restricted, and the Adviser must then, in some instances, select
alternative investments for the fund that would not have been its first
investment choice.
The 1940 Act also provides that a mutual fund whose shares are
purchased by a fund is obliged to redeem shares held by the fund only in an
amount up to 1% of the underlying mutual fund's outstanding securities during
any period of less than 30 days. Accordingly, because the funds and their
affiliates may together acquire up to 3% of an underlying fund's shares, a fund
that has decided to sell its entire position in an underlying fund may need up
to 90 days to completely implement this decision. In addition, shares held by a
fund in excess of 1% of an underlying mutual fund's outstanding securities may
be considered not readily marketable securities. Together with other illiquid
securities, these mutual funds may not exceed 15% of net assets of each Kobren
Insight fund. However, since the funds have reserved the right to pay redemption
requests in portfolio securities, these positions may be treated as liquid.
These limitations are not fundamental and may therefore be changed by the Board
of Trustees of the Trust without shareholder approval. Under certain
circumstances an underlying fund may determine to make payment of a redemption
by a fund (wholly or in part) by a distribution in kind of securities from its
portfolio, instead of in cash. As a result, a fund may hold securities
distributed by an underlying fund until such time as KIM
determines it appropriate to dispose of such securities. Such disposition will
impose additional costs on the fund.
In the case of an issuer that concentrates in a particular industry or
industry group, events may occur that impact that industry or industry group
more significantly than the stock market as a whole. Accordingly, an investment
in an investment company that concentrates can normally be expected to have
greater fluctuations in value than an investment in a fund that includes a
broader range of investments. To the extent a fund invests in investment
companies that do not have a policy of concentration, the impact of conditions
affecting an industry or industry group will be decreased.
Investment decisions by the investment advisers of the underlying funds
are made independently of the funds and the Adviser. At any particular time, one
underlying fund may be purchasing shares of an issuer whose shares are being
sold by another underlying fund. As a result, a fund would incur indirectly
certain transaction costs without accomplishing any investment purpose. Each
fund limits its investments in underlying funds to mutual funds whose shares a
fund may purchase without the imposition of an initial sales load. The
underlying funds may incur distribution expenses in the form of Rule 12b-1 fees.
An investor could invest directly in the underlying funds. By investing in
mutual funds indirectly through the funds, the investor bears not only his or
her proportionate share of the expenses of the funds (including operating costs
and investment advisory and administrative fees) but also, indirectly, similar
expenses of the underlying funds. An investor may indirectly bear expenses paid
by underlying funds related to the distribution of such mutual funds' shares. As
a result of the funds' policies of investing in other mutual funds, an investor
may receive taxable capital gains distributions to a greater extent than would
be the case if he or she invested directly in the underlying funds.
See "Dividends, Distributions and Taxes" below.
The types of securities that may be acquired by the funds and the
underlying funds and the various investment techniques which either may employ,
including the risks associated with these investments, are described herein.
FOREIGN INVESTMENTS
Foreign Securities. A fund or an underlying fund may invest a portion of its
assets in securities of foreign issuers. Investments in foreign securities
involve special risks and considerations that are not present when a fund
invests in domestic securities.
Exchange Rates. Since a fund or an underlying fund may purchase securities
denominated in foreign currencies, changes in foreign currency exchange rates
will affect the value of the assets from the perspective of U.S. investors.
Changes in foreign currency exchange rates may also affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to the
investor by a mutual fund. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. A fund or an underlying fund may seek to protect
itself against the adverse effects of currency exchange rate fluctuations by
entering into currency-forward, futures, options or swaps contracts. Hedging
transactions will not, however, always be fully effective in protecting against
adverse exchange rate fluctuations. Furthermore, hedging transactions involve
transaction costs and the risk that the fund or the underlying fund will lose
money, either because exchange rates move in an unexpected direction, because
another party to a hedging contract defaults, or for other reasons.
Exchange Controls. The value of foreign investments and the investment income
derived from them may also be affected (either favorably or unfavorably) by
exchange control regulations. Although it is expected that a fund or an
underlying fund will invest only in securities denominated in foreign currencies
that are fully exchangeable into U.S. dollars without legal restriction at the
time of investment, there is no assurance that currency controls will not be
imposed after the time of investment. In addition, the value of foreign
fixed-income investments will fluctuate in response to changes in U.S. and
foreign interest rates.
Limitations of Foreign Markets. There is often less information publicly
available about a foreign issuer than about a U.S. issuer. Foreign issuers are
not generally subject to accounting, auditing, and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions, custodial expenses, and
other fees are also generally higher than for securities traded in the United
States. Foreign settlement procedures and trade regulations may involve certain
risks (such as delay in payment or delivery of securities or in the recovery of
a fund's assets held abroad) and expenses not present in the settlement of
domestic investments. A delay in settlement could hinder the ability of a fund
or an underlying fund to take advantage of changing market conditions, with a
possible adverse effect on net asset value. There may also be difficulties in
enforcing legal rights outside the United States.
Foreign Laws, Regulations and Economies. There may be a possibility of
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability, and
diplomatic developments that could affect the value of a fund's or an underlying
fund's investments in certain foreign countries. Legal remedies available to
investors in certain foreign countries may be more limited than those available
with respect to investments in the United States or in other foreign countries.
The laws of some foreign countries may limit a fund or an underlying fund's
ability to invest in securities of certain issuers located in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth or gross national product, inflation
rate, capital reinvestment, resource self-sufficiency and balance of payment
positions.
Foreign Tax Considerations. Income (possibly including, in some cases, capital
gains) received by a fund or an underlying fund from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes in some cases. Any such taxes paid by a fund will
reduce the net income of the fund available for distribution. Special tax
considerations apply to foreign securities.
Emerging Markets. Risks may be intensified in the case of investments by a fund
or an underlying fund in emerging markets or countries with limited or
developing capital markets. Security prices in emerging markets can be
significantly more volatile than in more developed nations, reflecting the
greater uncertainties of investing in less established markets and economies. In
particular, countries with emerging markets may have relatively unstable
governments, present the risk of nationalization of businesses, restrictions on
foreign ownership, or prohibitions on repatriation of assets, and may have less
protection of property rights than more developed countries. The economies of
countries with emerging markets may be predominantly based on only a few
industries, may be highly vulnerable to changes in local or global trade
conditions, and may suffer from extreme and volatile debt or inflation rates.
Local securities markets may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially making
prompt liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements. Debt obligations of developing countries may involve a high degree of
risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unwilling to repay
principal and interest when due, and may require renegotiation or rescheduling
of debt payments. In addition, prospects for repayment of principal and interest
may depend on political as well as economic factors.
Foreign Currency Transactions. A fund or an underlying fund may enter into
forward contracts to purchase or sell an agreed-upon amount of a specific
currency at a future date that may be any fixed number of days from the date of
the contract agreed upon by the parties at a price set at the time of the
contract. Under such an arrangement, a fund would, at the time it enters into a
contract to acquire a foreign security for a specified amount of currency,
purchase with U.S. dollars the required amount of foreign currency for delivery
at the settlement date of the purchase; the fund would enter into similar
forward currency transactions in connection with the sale of foreign securities.
The effect of such transactions would be to fix a U.S. dollar price for the
security to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the particular foreign currency
during the period between the date the security is purchased or sold and the
date on which payment is made or received (usually 3 to 14 days). These
contracts are traded in the interbank market between currency traders (usually
large commercial banks) and their customers. A forward contract usually has no
deposit requirement and no commissions are charged for trades. While forward
contracts tend to minimize the risk of loss due to a decline in the value of the
currency involved, they also tend to limit any potential gain that might result
if the value of such currency were to increase during the contract period.
Calculation of Net Asset Value. The funds and the underlying funds will
generally calculate their net asset values and complete orders to purchase,
exchange or redeem shares only on a Monday through Friday basis, excluding
holidays on which the New York Stock Exchange ("NYSE") is closed (see
"Purchase, Redemption and Determination of Net Asset Value" below). Foreign
securities in which the funds or the underlying funds may invest may be listed
primarily on foreign stock exchanges that may trade on other days (i.e.,
Saturday). Accordingly, the net asset value of a fund's or an underlying fund's
portfolio may be significantly affected by such trading on days when
KIM
does not have access to the underlying funds and an investor does not
have access to the funds.
Portfolio Securities Loans. A fund or an underlying fund may lend its portfolio
securities as long as: (1) the loan is continuously secured by collateral
consisting of U.S. government securities or cash or cash equivalents maintained
on a daily mark-to-market basis in an amount at least equal to the current
market value of the securities loaned; (2) the fund or the underlying fund may
at any time call the loan and obtain the securities loaned; (3) the fund or the
underlying fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of the securities loaned will not
at any time exceed one-third of the total assets of the fund or the underlying
fund. Lending portfolio securities involves risk of delay in the recovery of the
loaned securities and in some cases, the loss of rights in the collateral if the
borrower fails.
Short Sales. A fund or an underlying fund may sell securities short. In a short
sale the fund sells stock it does not own and makes delivery with securities
"borrowed" from a broker. The fund then becomes obligated to replace the
security borrowed by purchasing it at the market-price at the time of
replacement. This price may be more or less than the price at which the security
was sold by the fund. Until the security is replaced, the fund is obligated to
pay to the lender any dividends or interest accruing during the period of the
loan. In order to borrow the security, the fund may be required to pay a premium
that would increase the cost of the security sold. The proceeds of the short
sale will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
When it engages in short sales, a fund or an underlying fund must also
deposit in a segregated account an amount of cash or U.S. government securities
equal to the difference between (1) the market value of the securities sold
short at the time they were sold short and (2) the value of the collateral
deposited with the broker in connection with the short sale (not including the
proceeds from the short sale). While the short position is open, the fund must
maintain daily the segregated account at such a level that (1) the amount
deposited in the account plus the amount deposited with the broker as collateral
equals the current market value of the securities sold short, and (2) the amount
deposited in it plus the amount deposited with the broker as collateral is not
less than the market value of the securities at the time they were sold short.
Depending upon market conditions, up to 80% of the value of a fund's net assets
may be deposited as collateral for the obligation to replace securities borrowed
to effect short sales and allocated to a segregated account in connection with
short sales.
A fund will incur a loss as a result of a short sale if the price of
the security increases between the date of the short sale and the date on which
the fund replaces the borrowed security. The fund will realize a gain if the
security declines in price between such dates. The amount of any gain will be
decreased and the amount of any loss increased by the amount of any premium,
dividends or interest the fund may be required to pay in connection with a short
sale.
Short Sales "Against the Box". A short sale is "against the box" if at all times
when the short position is open the fund or an underlying fund owns an equal
amount of the securities or securities convertible into, or exchangeable without
further consideration for, securities of the same issue as the securities sold
short. The extent to which such a transaction may be used to defer a gain for
federal income tax purposes was significantly curtailed by federal tax
legislation enacted in 1997.
<PAGE>
Industry Concentration. An underlying fund may concentrate its investments
within one industry. Since the investment alternatives within an industry are
limited, the value of the shares of such a fund may be subject to greater market
fluctuation than an investment in a fund that invests in a broader range of
securities.
Master Demand Notes. An underlying fund (particularly an underlying money market
fund) may invest up to 100% of its assets in master demand notes. These are
unsecured obligations of U.S. corporations redeemable upon notice that permit
investment by a mutual fund of fluctuating amounts at varying rates of interest
pursuant to direct arrangements between the mutual fund and the issuing
corporation. Because master demand notes are direct arrangements between the
mutual fund and the issuing corporation, there is no secondary market for the
notes. The notes are, however, redeemable at face value plus accrued interest at
any time.
Options. A fund or an underlying fund may write (sell) listed call options
("calls") if the calls are covered through the life of the option. A call is
covered if the fund owns the optioned securities. When a fund writes a call, it
receives a premium and gives the purchaser the right to buy the underlying
security at any time during the call period (usually not more than nine months
in the case of common stock) at a fixed exercise price regardless of market
price changes during the call period. If the call is exercised, the fund will
forgo any gain from an increase in the market price of the underlying security
over the exercise price.
A fund or an underlying fund may purchase a call on securities to
enhance total return or to effect a "closing purchase transaction." This is the
purchase of a call covering the same underlying security and having the same
exercise price and expiration date as a call previously written by the fund on
which it wishes to terminate its obligation. If the fund is unable to effect a
closing purchase transaction, it will not be able to sell the underlying
security until the call previously written by the fund expires (or until the
call is exercised and the fund delivers the underlying security).
A fund or an underlying fund may write and purchase put options
("puts"). When a fund writes a put, it receives a premium and gives the
purchaser of the put the right to sell the underlying security to the fund at
the exercise price at any time during the option period. When a fund purchases a
put, it pays a premium in return for the right to sell the underlying security
at the exercise price at any time during the option period. A fund or an
underlying fund also may purchase stock index puts, which differ from puts on
individual securities in that they are settled in cash based upon values of the
securities in the underlying index rather than by delivery of the underlying
securities. Purchase of a stock index put is designed to protect against a
decline in the value of the portfolio generally rather than an individual
security in the portfolio. If any put is not exercised or sold, it will become
worthless on its expiration date.
A mutual fund's option positions may be closed out only on an exchange
which provides a secondary market for options of the same series, but there can
be no assurance that a liquid secondary market will exist at any given time for
any particular option. It is impossible to predict to what extent liquid markets
will develop or continue.
<PAGE>
A custodian, or a securities depository acting for it, generally acts
as escrow agent for the securities upon which the fund has written puts or
calls, or as to other securities acceptable for such escrow so that no margin
deposit is required of the fund. Until the underlying securities are released
from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable in
the exercise of an option, the Options Clearing Corporation has the authority to
permit other generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures.
Options Trading Markets. Options in which the funds or the underlying funds will
invest are generally listed on exchanges. Exchanges on which such options
currently are traded are the Chicago Board Options Exchange and the American,
New York, Pacific, and Philadelphia Stock Exchanges. Options on some securities
may not, however, be listed on any exchange, but may be traded in the
over-the-counter market. Options traded in the over-the-counter market involve
the additional risk that securities dealers participating in such transactions
would fail to meet their obligations to the fund. The use of options traded in
the over-the-counter market may be subject to limitations imposed by certain
state securities authorities. In addition to the limits on the use of options
discussed herein, a mutual fund is subject to the investment restrictions
described in its prospectus and the statement of additional information.
The staff of the Securities and Exchange Commission currently takes the
position that the premiums that a mutual fund pays for the purchase of unlisted
options, and the value of securities used to cover unlisted options written by
the fund, are considered to be invested in illiquid securities or assets for the
purpose of calculating whether a mutual fund is in compliance with its
limitation on illiquid investments.
Futures Contracts. A fund or an underlying fund may enter into futures contracts
for the purchase or sale of debt securities and stock indexes. A futures
contract is an agreement between two parties to buy and sell a security or an
index for a set price on a future date. Futures contracts are traded on
designated "contract markets" which, through their clearing corporations,
guarantee performance of the contracts.
A financial futures contract sale creates an obligation by the seller
to deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
financial instrument called for in the contract in a specified delivery month at
a stated price. The specific instruments delivered or taken, respectively, at
settlement date are not determined until on or near such date. The determination
is made in accordance with the rules of the exchange on which the futures
contract sale or purchase was made. Futures contracts are traded in the United
States only on commodity exchanges or boards of trade (known as "contract
markets") approved for such trading by the Commodity Futures Trading Commission
(the "CFTC"), and must be executed through a futures commission merchant or
brokerage firm that is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of commodities or securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out a futures contract sale is effected by purchasing a futures contract for the
same aggregate amount of the specific type of financial instrument or commodity
with the same delivery date. If the price of the initial sale of the futures
contract exceeds the price of the offsetting purchase, the seller is paid the
difference and realizes a gain. On the other hand, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller realizes a
loss. The closing out of a futures contract purchase is effected by the
purchaser's entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the purchaser realizes a gain, and if the initial
purchase price exceeds the offsetting sale price, the purchaser realizes a loss.
A fund or an underlying fund may sell financial futures contracts in
anticipation of an increase in the general level of interest rates. Generally,
as interest rates rise, the market value of the securities held by a fund will
fall, thus reducing its net asset value. This interest rate risk may be reduced
without the use of futures as a hedge by selling such securities and either
reinvesting the proceeds in securities with shorter maturities or by holding
assets in cash. This strategy, however, entails increased transaction costs in
the form of dealer spreads and brokerage commissions and would typically reduce
the fund's average yield as a result of the shortening of maturities.
The sale of financial futures contracts serves as a means of hedging
against rising interest rates. As interest rates increase, the value of a fund's
short position in the futures contracts will also tend to increase, thus
offsetting all or a portion of the depreciation in the market value of the
fund's investments being hedged. While a fund will incur commission expenses in
selling and closing out futures positions (by taking an opposite position in the
futures contract), commissions on futures transactions tend to be lower than
transaction costs incurred in the purchase and sale of portfolio securities.
A fund or an underlying fund may purchase interest rate futures
contracts in anticipation of a decline in interest rates when it is not fully
invested. As such purchases are made, a fund would probably expect that an
equivalent amount of futures contracts will be closed out.
Unlike when a fund purchases or sells a security, no price is paid or
received by the fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the fund is required to deposit with its custodian in
a segregated account in the name of the futures broker an amount of cash and/or
U.S. government securities. This is known as "initial margin." Initial margin is
similar to a performance bond or good faith deposit which is returned to the
fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. Futures contracts also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin",
to and from the broker (or the custodian) are made on a daily basis as the price
of the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable. This is known as
"marking to the market."
<PAGE>
A fund or an underlying fund may elect to close some or all of its
futures positions at any time prior to their expiration in order to reduce or
eliminate a hedge position then currently held by the fund. The fund may close
its positions by taking opposite positions that will operate to terminate the
fund's position in the futures contracts. Final determinations of variation
margin are then made, additional cash is required to be paid by or released to
the fund, and the fund realizes a loss or a gain. Such closing transactions
involve additional commission costs.
A stock index futures contract may be used to hedge a fund or an
underlying fund's portfolio with regard to market risk as distinguished from
risk related to a specific security. A stock index futures contract is a
contract to buy or sell units of an index at a specified future date at a price
agreed upon when the contract is made. A stock index futures contract does not
require the physical delivery of securities, but merely provides for profits and
losses resulting from changes in the market value of the contract to be credited
or debited at the close of each trading day to the respective accounts of the
parties to the contract. On the contract's expiration date, a final cash
settlement occurs. Changes in the market value of a particular stock index
futures contract reflect changes in the specified index of equity securities on
which the future is based.
In the event of an imperfect correlation between the futures contract
and the portfolio position that is intended to be protected, the desired
protection may not be obtained and the fund may be exposed to risk of loss.
Further, unanticipated changes in interest rates or stock price movements may
result in a poorer overall performance for the fund than if it had not entered
into futures contracts on debt securities or stock indexes.
The market prices of futures contracts may also be affected by certain
factors. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, an investor may close futures contracts through offsetting
transactions, which could distort the normal relationship between the securities
and futures markets. Second, the deposit requirements in the futures market are
less stringent than margin requirements in the securities market. Accordingly,
increased participation by speculators in the futures market may also cause
temporary price distortions.
Positions in futures contracts may be closed out only on an exchange or
board of trade providing a secondary market for such futures. There is no
assurance that a liquid secondary market on an exchange or board of trade will
exist for any particular contract or at any particular time.
In order to assure that mutual funds have sufficient assets to satisfy
their obligations under their futures contracts, the funds are required to
establish segregated accounts with their custodians. Such segregated accounts
are required to contain an amount of cash and liquid securities equal in value
to the current value of the underlying instrument less the margin deposit.
The risk to a fund or an underlying fund from investing in futures is
potentially unlimited. Gains and losses on investments in options and futures
depend upon the fund's investment adviser's ability to predict correctly the
direction of stock prices, interest rates and other economic factors.
<PAGE>
Options on Futures Contracts. A fund or an underlying fund may also purchase and
sell listed put and call options on futures contracts. An option on a futures
contract gives the purchaser the right in return for the premium paid, to assume
a position in a futures contract (a long position if the option is a call and a
short position if the option is a put), at a specified exercise price at any
time during the option period. When an option on a futures contract is
exercised, delivery of the futures position is accompanied by cash representing
the difference between the current market price of the futures contract and the
exercise price of the option. The fund may also purchase put options on futures
contracts in lieu of, and for the same purpose as, a sale of a futures contract.
A fund may also purchase such put options in order to hedge a long position in
the underlying futures contract in the same manner as it purchases "protective
puts" on securities.
The holder of an option may terminate the position by selling an option
of the same series. There is, however, no guarantee that such a closing
transaction can be effected. A fund is required to deposit initial and
maintenance margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those applicable to
futures contracts described above and, in addition, net option premiums received
will be included as initial margin deposits.
In addition to the risks which apply to all options transactions, there
are several risks relating to options on futures contracts. The ability to
establish and close out positions on such options is subject to the development
and maintenance of a liquid secondary market. It is not certain that this market
will be liquid. In comparison with the use of futures contracts, the purchase of
options on futures contracts involves less potential risk to a fund because the
maximum amount of risk is the premium paid for the option (plus transaction
costs). There may, however, be circumstances when the use of an option on a
futures contract would result in a loss to a fund when the use of a futures
contract would not, such as when there is no movement in the prices of the
underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
Hedging. A fund or an underlying fund may employ many of the investment
techniques described for investment and hedging purposes. For example, a fund
may purchase or sell put and call options on common stocks to hedge against
movements in individual common stock prices, or purchase and sell stock index
futures and related options to hedge against market wide movements in common
stock prices. Although such hedging techniques generally tend to minimize the
risk of loss that is hedged against, they also may limit the potential gain that
might have resulted had the hedging transaction not occurred. Also, the desired
protection generally resulting from hedging transactions may not always be
achieved.
Leverage. An underlying fund may borrow on an unsecured basis from banks to
increase its holdings of portfolio securities. Under the 1940 Act, such fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient portfolio holdings in
order to restore such coverage if it should decline to less than 300% due to
market fluctuation or otherwise. Such sale must occur even if disadvantageous
from an investment point of view. Leveraging aggregates the effect of any
increase or decrease in the value of portfolio securities on the underlying
fund's net asset value. In addition, money borrowed is subject to interest costs
(which may include commitment fees and/or the cost of maintaining minimum
average balances) which may or may not exceed the income and gains from the
securities purchased with borrowed funds.
HIGH YIELD INVESTMENTS
High Yield Securities and Their Risks. A fund or an underlying fund may invest
in high yield, high-risk, lower-rated securities, commonly known as "junk
bonds." Such fund's investment in such securities is subject to the risk factors
outlined below.
Growth of the High Yield Bond Market. The high yield, high risk market is at
times subject to substantial volatility. An economic downturn or increase in
interest rates may have a more significant effect on the high yield, high risk
securities in a fund's portfolio and their markets, as well as on the ability of
securities' issuers to repay principal and interest. Issuers of high yield, high
risk securities may be of low credit worthiness and the high yield, high risk
securities may be subordinated to the claims of senior lenders. During periods
of economic downturn or rising interest rates, the issuers of high yield, high
risk securities may have greater potential for insolvency and a higher incidence
of high yield, high risk bond defaults may be experienced.
Sensitivity of Interest Rate and Economic Changes. The prices of high yield,
high risk securities may be more or less sensitive to interest rate changes than
higher-rated investments but are more sensitive to adverse economic changes or
individual corporate developments. During an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress that would adversely affect their ability to service their
principal and interest payment obligations, to meet projected business goals,
and to obtain additional financing. If the issuer of a high yield, high risk
security owned by an underlying fund defaults, the fund may incur additional
expenses in seeking recovery. Periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of high yield, high
risk securities and the fund's net asset value. Yields on high yield, high risk
securities will fluctuate over time. Furthermore, in the case of high yield,
high risk securities structured as zero coupon or pay-in-kind securities, their
market prices are affected to a greater extent by interest rate changes and
thereby tend to be more volatile than market prices of securities which pay
interest periodically and in cash.
Payment Expectations. Certain securities held by a fund or an underlying fund,
including high yield, high risk securities, may contain redemption or call
provisions. If an issuer exercises these provisions in a declining interest rate
market, such fund would have to replace the security with a lower yielding
security, resulting in a decreased return for the investor. Conversely, a high
yield, high risk security's value will decrease in a rising interest rate
market.
Liquidity and Valuation. The secondary market may at times become less liquid or
respond to adverse publicity or investor perceptions, making it more difficult
for a fund or an underlying fund to accurately value high yield, high risk
securities or dispose of them. To the extent such fund owns or may acquire
illiquid or restricted high yield, high risk securities, these securities may
involve special registration responsibilities, liabilities and costs, and
liquidity difficulties, and judgment will play a greater role in valuation
because there is less reliable and objective data available.
<PAGE>
Taxation. Special tax considerations are associated with investing in high yield
bonds structured as zero coupon or pay-in-kind securities or other securities
that have "original issue discount." A fund will report the accrued interest on
these securities as income each year even though it receives no cash interest
until the security's maturity or payment date. Further, a fund must distribute
substantially all of its income for each year to its shareholders to qualify for
pass-through treatment under the tax law. Accordingly, such a fund may have to
dispose of its portfolio securities under disadvantageous circumstances to
generate cash or may have to leverage itself by borrowing the cash to satisfy
distribution requirements.
Credit Ratings. Credit ratings evaluate the safety of principal and interest
payments, not the market value risk of high yield, high risk securities. Since
credit rating agencies may fail to change the credit ratings in a timely manner
to reflect subsequent events, the investment adviser to the funds or an
underlying fund should monitor the issuers of high yield, high risk securities
in the fund's portfolio to determine if the issuers will have sufficient cash
flow and profits to meet required principal and interest payments, and to
attempt to assure the securities' liquidity so the fund can meet redemption
requests. To the extent that an underlying fund invests in high yield, high risk
securities, the achievement of the fund's investment objective may be more
dependent on the underlying fund's own credit analysis than is the case for
higher quality bonds. A fund or an underlying fund may retain a portfolio
security whose rating has been changed. See "Appendix" for credit rating
information.
Mortgage-Backed, Asset-Backed, Indexed and Derivative Securities. A fund or an
underlying fund may invest in mortgage pass-through securities, which are
securities representing interest in pools of mortgage loans secured by
residential or commercial real property in which payments of both interest and
principal on the securities are generally made monthly, in effect passing
through monthly payments made by individual borrowers on mortgage loans which
underlie the securities (net of fees paid to the issuer or guarantor of the
securities). Early repayment of principal on some mortgage-related securities
(arising from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose a fund to a lower rate of return upon reinvestment of principal. Also, if
a security subject to prepayment has been purchased at a premium, in the event
of prepayment the value of the premium would be lost.
Like other fixed income securities, when interest rates rise, the value
of a mortgage-related security generally will decline; however, when interest
rates are declining, the value of mortgage-related securities with prepayment
features may not increase as much as other fixed income securities.
A fund or an underlying fund may invest in collateralized mortgage
obligations (CMOs), which are hybrid mortgage-related instruments. Similar to a
bond, interest and pre-paid principal on a CMO are paid, in most cases,
semiannually. CMOs are collateralized by portfolios of mortgage pass-through
securities and are structured into multiple classes with different stated
maturities. Monthly payments of principal, including prepayments, are first
returned to investors holding the shortest maturity class; investors holding the
longer maturity classes receive principal only after the first class has been
retired.
<PAGE>
Other mortgage-related securities in which a fund or an underlying fund
may invest include other securities that directly or indirectly represent a
participation in, or are secured by and payable from, mortgage loans on real
property, such as CMO residuals or stripped mortgage-backed securities, and may
be structured in classes with rights to receive varying proportions of principal
and interest. In addition, the funds or the underlying funds may invest in other
asset-backed securities that have been offered to investors or will be offered
to investors in the future. Several types of asset-backed securities have
already been offered to investors, including certificates for automobile
receivables, which represent undivided fractional interests in a trust whose
assets consist of a pool of motor vehicle retail installment sales contracts and
security interest in the vehicles securing the contracts. Year 2000 Risks.
Like other mutual funds, financial and business organizations and individuals
around the world, a fund could be adversely affected if the computer systems
used by its Adviser and other service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." Insight Management is taking steps
that it believes are reasonably designed to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain satisfactory
assurances that comparable steps are being taken by each of the funds' other
major service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact on the funds.
II. INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT POLICIES. Each fund has adopted certain
fundamental investment policies. These fundamental investment policies cannot be
changed unless the change is approved by the lesser of (1) 67% or more of the
voting securities present at a meeting, if the holders of more than 50% of the
outstanding voting securities of the fund are present or represented by proxy,
or (2) more than 50% of the outstanding voting securities of the fund. These
fundamental policies provide that a fund may not:
1. Invest 25% or more of its total assets in securities of issuers in
any one industry (securities issued or guaranteed by the United States
government, its agencies or instrumentalities are not considered to
represent industries) or in shares of underlying funds ("sector funds")
that each have a policy of concentrating in the same industry. This
limitation does not apply to underlying funds that have a policy against
concentrating in any one industry and does not preclude a fund from
investing 25% or more of its assets in sector funds generally, provided
that cumulative investments in sector funds that all concentrate as a
matter of policy in the same industry do not equal or exceed 25% of the
fund's total assets. Each fund will concentrate in the mutual fund
industry.
2. Borrow money or issue senior securities except to the extent
permitted by the 1940 Act.
3. Make loans of securities to other persons, except loans of
securities not exceeding 33 1/3% of the fund's total assets,
investments in debt obligations and transactions in repurchase
agreements.
4. Underwrite securities of other issuers, except insofar as the
fund may be deemed an underwriter under the Securities Act of
1933, as amended (the "1933 Act") in selling portfolio
securities.
5. Purchase or sell real estate or any interest therein,
including interests in real estate limited partnerships,
except securities issued by companies (including real estate
investment trusts) that invest in real estate or interests
therein and real estate acquired as a result of owning
securities.
6. Invest in commodities or commodity futures contracts, provided
that this limitation shall not prohibit the purchase or sale
by the fund of forward currency contracts; financial futures
contracts and options on financial futures contracts; options
on securities, currencies and securities indices; and swaps,
caps, floors and collars, as permitted by the fund's
prospectus.
The 1940 Act currently prohibits the funds from issuing senior
securities or borrowing money, except that each fund may borrow from banks or
pursuant to reverse repurchase agreements in an amount not exceeding one-third
of total assets (including the amount borrowed). A fund is required to reduce
the amount of its borrowings to not more than one-third of total assets within
three days after such borrowings first exceed this one-third limitation.
Additional investment restrictions adopted by the funds, which may be
changed by the Board of Trustees, provide that a fund may not:
1. With respect to 75% of the fund's assets, invest more than 5%
of the fund's assets (taken at a market value at the time of
purchase) in the outstanding securities of any single issuer
or own more than 10% of the outstanding voting securities of
any one issuer, in each case other than (1) securities issued
or guaranteed by the United States government, its agencies or
instrumentalities, or (2) securities of other investment
companies.
2. Invest more than 15% of its net assets (taken at market value
at the time of purchase) in illiquid securities.
3. Make investments for the purpose of exercising control or
management.
4. Invest in other investment companies except as permitted under the
1940 Act.
The mutual funds in which the funds may invest may, but need not, have
the same investment objectives or policies as a fund. Although all of the funds
may from time to time invest in shares of the same underlying mutual fund, the
percentage of each fund's assets so invested may vary, and KIM
will determine that such investments are consistent with the investment
objective and policies of each fund. The investments that may, in general, be
made by underlying funds in which the funds may invest, as well as the risks
associated with such investments, are described in the prospectus.
<PAGE>
III. MANAGEMENT OF THE TRUST AND THE FUNDS
A. Trustees and Officers
The principal occupations of the Trustees and officers of the Trust
during the past five years are set forth below: Each Trustee who is deemed to be
an "interested person" of the Trust, as defined in the 1940 Act, is indicated by
an asterisk.
*ERIC M. KOBREN, 20 William Street, Suite 310, P.O. Box 9135,
Wellesley Hills, Massachusetts 02181 - Chairman of the Board, President and
Trustee. Mr. Kobren has served as President of Mutual Fund Investors
Association, Inc. since 1985 and as President of Kobren Insight
Management,
Inc., and Kobren Insight Brokerage, Inc. since 1987.
These are a financial publishing concern, a registered investment advisory
firm and a registered broker-dealer, respectively. Mr. Kobren is 44
years old.
*MICHAEL P. CASTELLANO, 134 Redspruce Drive, Lake Naomi,
Pennsylvania, 18350 - Trustee. Retired. From December 1994 to June 1997,
Mr. Castellano served as Chief Administrative Officer of
Kobren Insight
Management, Inc. and as a Registered Representative of
Kobren Insight
Brokerage, Inc. . From October 1993 to December 1994, Mr.
Castellano was
employed as Executive Vice President and Chief Administrative Officer
of Wall
Street Investor Services, a registered broker-dealer. Prior to
that time, he was a
Senior Vice President with Fidelity Investments, a registered
investment advisory firm
and broker-dealer. Mr. Castellano is 56 years old.
EDWARD B. BLOOM, International Data Group Inc., 5 Speen Street, P.O.
Box 9192, Framingham, Massachusetts 01701 - Trustee. Mr. Bloom, Vice
President and Treasurer of International Data Group Inc., a publishing
company, has been employed there since November 1967. He is 47 years
old.
ARTHUR DUBROFF, 335 Madison Avenue, 25th Floor, New York,
New York 10017 - Trustee. Since July 1996, Mr. Dubroff has served
as Executive Vice President and Chief Financial Officer of
Enhance Financial Services Group, Inc. ("Enhance Financial"). Mr.
Dubroff also acted as a Director of Enhance Financial from 1986
to 1991 and 1992 to 1996. From November 1993 to July 1996,
he was employed as a Senior Vice President of First Data
Corporation, a financial services company. From February 1992 to
November 1993, Mr. Dubroff was employed as an Executive Vice
President of Shearson Lehman Brothers, Inc. Mr. Dubroff is 47
years old.
STUART J. NOVICK, Children's Hospital, 300 Longwood Avenue,
Boston, Massachusetts 02115 - Trustee. Since April 1997, Mr.
Novick has served as Senior Vice President and General Counsel of
Children's Hospital. From July 1984 to April 1997, Mr. Novick
served as Vice President and General Counsel of Children's
Hospital. He is 47
years old.
ERIC J. GODES, 20 William Street, Suite 310, P.O. Box 9135,
Wellesley Hills, Massachusetts 02181 - Vice President,
Treasurer and Secretary. Mr. Godes, an
investment advisory
representative of Kobren Insight Management, Inc.
and Vice
President and a registered representative of
Kobren Insight Brokerage, Inc
. has been associated with both companies since 1990.
He is 37 years
old.
EDWARD R. GOLDFARB, 20 William Street, Suite 310, P.O. Box 9135, Wellesley
Hills, Massachusetts 02181 - Vice President. Since September 1995, Mr. Goldfarb
has been Director of Research and Chief Strategist of Kobren Insight
Management,
Inc. as well as a registered representative of Kobren Insight
Brokerage, Inc. .
From June 1992 to September 1995, he was employed as a registered
representative of
Aeltus Capital, Inc. and, from March 1994 to September 1995, he also served as
Managing Director of Aeltus Investment Management, Inc. From September 1982
to September 1995, Mr. Goldfarb was employed as a Vice President of Aetna
Life &
Casualty serving in various capacities. During that time, he was also a
registered
representative of Aetna Financial Services, Inc. and, from May 1992 to March
1994, a registered representative of Aetna Capital Management, Inc. Mr. Goldfarb
is 37 years old.
The Trustees who are not employed by the Adviser each receive a $5,000
annual retainer paid in quarterly installments, a $1,000 fee for each board
meeting attended and a $500 fee per committee meeting attended, plus
out-of-pocket expenses incurred in attending such meetings.
Compensation Table
The following table sets forth the compensation paid to the Trustees
of the Trust for the fiscal year ended December 31, 1997. No compensation is
paid to any officers of the Trust by the funds.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE FROM THE TRUST
NAME OF PERSON COMPENSATION AND FUND COMPLEX
AND POSITION FROM THE TRUST PAID TO TRUSTEES
<S> <C> <C>
Eric M. Kobren, $ 0 $ 0
Chairman of the Board,
President and Trustee
Michael P. Castellano, $ 0 $ 0
Trustee
Edward B. Bloom, $ 6,750 $ 6,750
Trustee
Arthur Dubroff, $ 7,250 $ 7,250
Trustee
Stuart J. Novick, $ 6,750 $ 6,750
Trustee
Scott A. Schoen* $ 6,250 $ 6,250
* (Resigned as Trustee effective 1/22/98)
</TABLE>
<PAGE>
Control Persons and Principal Holders of Securities
As of March 31, 1998, the following entities/individuals owned of
record or beneficially 5% or more of the outstanding shares of the funds:
<TABLE>
<CAPTION>
Kobren Growth Fund
------------------------------------------------------
<S> <C> <C>
Name and Address % of Fund Nature of Ownership
National Financial Services Corporation 26.84% Record (a)
One World Financial Center
200 Liberty Street
New York, NY 10281
Mutual Fund Investors Association, Inc. 6.39% Beneficial
P.O. Box 9135
Wellesley, MA 02181
Kobren Moderate Growth Fund
------------------------------------------------------
Name and Address % of Fund Nature of Ownership
National Financial Services Corporation 26.85% Record (a)
One World Financial Center
200 Liberty Street
New York, NY 10281
Eric M. Kobren & Catherine S. Kobren JT WROS 6.6% Beneficial
20 William Street, Suite 310
P.O.Box 9135
Wellesley Hill, MA 02181
Kobren Conservative Allocation Fund
------------------------------------------------------
Name and Address % of Fund Nature of Ownership
National Financial Services Corporation 33.18% Record (a)
One World Financial Center
200 Liberty Street
New York, NY 10281
(a) National Financial Services Corporation disclaims beneficial ownership and
no one underlying shareholder owns beneficially more than 5% of the shares
of the fund.
</TABLE>
<PAGE>
The Trust's Declaration of Trust provides that the Trust will indemnify
its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved as a result of their
positions with the Trust, unless, as to liability to the Trust or its
shareholders, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in their offices, or unless with respect to any other matter it is
finally adjudicated that they did not act in good faith in the reasonable belief
that their actions were in the best interests of the Trust and its funds. In the
case of settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees or in a written
opinion of independent counsel, that such officers or Trustees have not engaged
in willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
B. Investment Adviser
KIM serves as investment adviser to the Trust and its
funds pursuant to a written investment advisory agreement. KIM is
a Massachusetts corporation organized in 1987, and is a registered investment
adviser under the Investment Advisers Act of 1940, as amended.
Certain services provided by KIM under the investment
advisory agreement are described in the prospectus. In addition to those
services, KIM may, from time to time, provide the funds with
office space for managing their affairs, with the services of required executive
personnel, and with certain clerical services and facilities. These services are
provided without reimbursement by the funds for any costs incurred. As
compensation for its services, each fund pays KIM a fee computed
daily and paid monthly at the annual rate of 0.75% of the fund's average daily
net assets. This fee will be reduced by agreements the Kobren Insight funds have
structured with underlying funds to receive 12b-1 fees and share in a portion of
their advisory fee revenue. For the fiscal period ended December 31, 1996 and
the fiscal year ended December 31, 1997, the Adviser was paid $23 and $324,325,
respectively, by Kobren Growth Fund; $6 and $178,947, respectively, by Kobren
Moderate Growth Fund; and $1 and $66,652, respectively, by Kobren Conservative
Allocation Fund.
Each fund is responsible for all expenses not expressly assumed by
KIM or the administrator. These include, among other things,
organization expenses, legal fees, audit and accounting expenses, insurance
costs, the compensation and expenses of the Trustees, the expenses of printing
and mailing reports, notices and proxy statements to fund shareholders,
registration fees under federal and state securities laws, brokerage
commissions, interest, taxes and extraordinary expenses (such as for
litigation).
KIM has agreed to reimburse each fund to the extent
necessary to maintain each fund's operating expenses (excluding investment
advisory fees, brokerage commissions, taxes, interest and litigation,
indemnification and other extraordinary expenses) at 0.25% annually of the
fund's average daily net assets.
<PAGE>
By its terms, the Trust's investment advisory agreement will remain in
effect through November 15, 1998 and from year to year thereafter, subject to
annual approval by (a) the Board of Trustees or, with respect to a particular
fund, (b) a vote of the majority of that fund's outstanding voting securities;
provided that in either event continuance is also approved by a majority of the
Trustees who are not interested persons of the Trust, by a vote cast in person
at a meeting called for the purpose of voting such approval. The Trust's
investment advisory agreement may be terminated at any time, on sixty days'
written notice, without the payment of any penalty, by the Board of Trustees, by
a vote of the majority of a particular fund's outstanding voting securities, or
by KIM . The investment advisory agreement automatically
terminates in the event of its assignment, as defined by the 1940 Act and the
rules thereunder.
C. Distributor
Kobren Insight Brokerage, Inc., an affiliate of Insight
Management, 20 William Street, Suite 310, P.O. Box 9135, Wellesley Hills,
Massachusetts 02181, serves as each fund's distributor pursuant to an agreement
which is renewable annually. Each fund's shares are sold on a continuous basis
by Kobren Insight Brokerage, Inc. as agent, although Kobren
Insight
Brokerage, Inc. is not obligated to
sell any particular amount of shares. The distributor pays the cost of printing
and distributing prospectuses to persons who are not shareholders of a fund
(excluding preparation and printing expenses necessary for the continued
registration of a fund's shares) and of preparing, printing and distributing all
sales literature.
D. Administrator, Transfer Agent and Dividend Paying Agent
The Board of Trustees of the Trust has approved an Administration
Agreement between the Trust and First Data Investor Services Group, Inc.
("Investor Services Group"), a subsidiary of First Data Corporation, pursuant to
which Investor Services Group serves as administrator to the Trust and to each
of the funds. Investor Services Group is located at One Exchange Place, Boston,
Massachusetts 02109. The administrative services necessary for the operation of
the Trust and its funds provided by Investor Services Group include among other
things: (i) preparation of shareholder reports and communications, (ii)
regulatory compliance, such as reports to and filings with the Securities and
Exchange Commission ("SEC") and state securities commissions and (iii) general
supervision of the operation of the Trust and its funds, including coordination
of the services performed by the transfer agent, custodian, independent
accountants, legal counsel and others. For these services, Investor Services
Group is entitled to receive $67,500 annually for administration and fund
accounting on a per fund basis. Of the $3,144 payable by each fund for the
fiscal period ended December 31, 1996 and the $67,500 payable by each fund for
the fiscal year ended December 31, 1997, $3,144 and $6,381, respectively, was
waived for each fund by Investor Services Group.
Investor Services Group also serves as the Trust's transfer and
dividend paying agent and performs shareholder service activities. The location
for these services is 4400 Computer Drive, Westborough, Massachusetts 01581. The
services of Investor Services Group are provided pursuant to a Transfer Agency
and Services Agreement between the Trust and Investor Services Group. Pursuant
to such Agreement, Investor Services Group receives from the Trust, with respect
to each fund, an annual fee of $14 per shareholder account (subject to a $32,000
annual minimum per fund). Investor Services Group also receives
reimbursement under the Transfer Agency and Services Agreement for certain
out-of-pocket expenses incurred in rendering such services.
IV. PURCHASE, REDEMPTION AND DETERMINATION
OF NET ASSET VALUE
Detailed information on purchase and redemption of shares is included
in the prospectus. The Trust may suspend the right to redeem its shares or
postpone the date of payment upon redemption for more than three business days
(i) for any period during which the NYSE is closed (other than customary
weekend or holiday closings) or trading on the exchange is restricted; (ii) for
any period during which an emergency exists as a result of which disposal by a
fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for a fund fairly to determine the value of its net
assets; or (iii) for such other periods as the SEC may permit for the
protection of shareholders of the Trust.
Each fund's underlying funds are valued according to the net asset
value per share ("NAV") furnished by that fund's accounting agent. Each fund's
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 carried 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. Income, expenses and fees, including the advisory and administration
fees, are accrued daily and taken into account for the purpose of determining
the net asset value of each fund's shares.
Each fund computes the NAV of its shares at the close of regular
trading on the NYSE (normally 4:00 p.m. New York time) on each weekday that is
not a holiday. The holidays (as observed) on which the NYSE is scheduled
to be closed currently are: New Year's Day, Martin Luther King's
Birthday, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas. If the NYSE closes early, the time
of computing the NAV and the deadlines for purchasing and redeeming shares will
be accelerated to the earlier closing time. The NAV of each fund's shares is
determined by subtracting from the value of the fund's total assets the amount
of the fund's liabilities and dividing the remainder by the number of
outstanding fund shares. Although the NAV will be calculated at the close of all
regular trading days, the NAV reported to NASDAQ for distribution to news
agencies will be delayed by one business day.
V. SPECIAL REDEMPTIONS
If the Board of Trustees of the Trust determines that it would be
detrimental to the best interests of the remaining shareholders of a fund to
make payment wholly or partly in cash, that fund may pay the redemption price in
whole or in part by a distribution in kind of securities from the portfolio of
that fund, instead of in cash, in conformity with any applicable rules of the
SEC. The proceeds of redemption may be more or less than the amount
invested and, therefore, a redemption may result in a gain or loss for federal
income tax purposes.
<PAGE>
VI. PORTFOLIO TRANSACTIONS
KIM is responsible for decisions to buy and sell
securities for the funds and for the placement of the funds' portfolio business
and negotiation of commissions, if any, paid on these transactions.
In placing portfolio transactions with brokers and dealers,
KIM attempts to
obtain the best overall terms for the funds, taking into
account such factors as price (including dealer spread), the size, type and
difficulty of the transaction involved, and the financial condition and
execution capability of the broker or dealer. In selecting broker-dealers and to
the extent that the execution and price offered by more than one dealer are
comparable, KIM may consider research, including statistical or
pricing information, and brokerage services furnished to the funds or
KIM . In addition, the funds may pay brokerage commissions to
brokers or
dealers in excess of those otherwise available upon a determination that the
commission is reasonable in relation to the value of the brokerage services
provided, viewed in terms of either a specific transaction or overall brokerage
services provided with respect to the funds' portfolio transactions by such
broker or dealer. KIM may use this research information in
managing the funds' assets, as well as assets of other clients.
Stocks, other equity securities and options may be traded through
brokers on an agency basis with a stated brokerage commission or on a principal
basis in the over-the-counter market. Fixed income securities are generally
traded on the over-the-counter market on a "net" basis without a stated
commission, through dealers acting for their own account and not as brokers.
Prices paid to a dealer on principal transactions will generally include a
"spread", which is the difference between the prices at which the dealer is
willing to purchase and sell the specific security at that time. Shares of
underlying funds may be purchased or redeemed in transactions with the funds,
their principal underwriters or independent dealers. Certain money market
instruments and government agency securities may be purchased directly from the
issuer, in which case no commissions or premiums are paid. Futures contracts are
traded on an agency basis with a futures commission merchant. Swaps and other
over-the-counter contracts are traded directly with the counterparty, which is
usually a dealer, a bank or other institution.
Other investment advisory clients advised by KIM may
also invest in the same securities as a fund. When these clients buy or sell the
same securities at substantially the same time, KIM may average
the transactions as to price and allocate the amount of available investments in
a manner which KIM believes to be equitable to each client,
including the funds. In some instances, this investment procedure may adversely
affect the price paid or received by a fund or the size of the position
obtainable for it. On the other hand, to the extent permitted by law,
KIM
may aggregate the securities to be sold or purchased for a fund with
those to be sold or purchased for other funds or clients managed by it in order
to obtain best execution.
The funds will arrange to be included within a class of investors
entitled not to pay sales charges by purchasing initial load fund shares under
letters of intent, rights of accumulation, cumulative purchase privileges and
other quantity discount programs.
<PAGE>
VII. PERFORMANCE INFORMATION
A. Total Return
From time to time, quotations of a fund's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures may be calculated in the following manner:
Total return is computed by finding the average annual compounded rates of
return over the designated periods that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the designated period
assuming a hypothetical $1,000 payment made at the beginning of the
designated period
The calculation set forth above is based on the further assumptions
that: (i) all dividends and distributions of a fund during the period were
reinvested at the net asset value on the reinvestment dates; and (ii) all
recurring expenses that were charged to all shareholder accounts during the
applicable period were deducted.
Total returns quoted in advertising reflect all aspects of a fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the fund's net asset value per share (NAV) over
the period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in a fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady
annual return rate that would equal 100% growth on a compounded basis in ten
years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that a fund's performance is
not constant over time, but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the fund.
<PAGE>
The funds' average annual total returns were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Series One Year Life of Fund
Kobren Growth Fund 15.03% 17.04% (a)
Kobren Moderate Growth Fund 23.25% 23.50% (b)
Kobren Conservative Allocation Fund 20.64% 20.34% (c)
(a) The fund commenced operations on December 16, 1996
(b) The fund commenced operations on December 24, 1996
(c) The fund commenced operations on December 30, 1996
</TABLE>
B. Non-Standardized Total Return
In addition to the performance information described above, a fund may
provide total return information for designated periods, such as for the most
recent rolling six months or most recent rolling twelve months. A fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, and/or a series of redemptions over
any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns and other performance information may be quoted
numerically or in a table, graph or similar illustration.
C. Other Information Concerning Fund Performance
A fund may quote its performance in various ways, using various types
of comparisons to market indices, other funds or investment alternatives, or to
general increases in the cost of living. All performance information supplied by
a fund in advertising is historical and is not intended to indicate future
returns. A fund's share prices and total returns fluctuate in response to market
conditions and other factors, and the value of a fund's shares when redeemed may
be more or less than their original cost.
A fund may compare its performance over various periods to various
indices or benchmarks or combinations of indices and benchmarks, including the
performance record of the Standard & Poor's 500 Composite Stock Price Index
("S&P"), the Dow Jones Industrial Average ("DJIA"), the NASDAQ Industrial Index,
the Ten Year Treasury Benchmark and the cost of living (measured by the Consumer
Price Index, or CPI) over the same period. Comparisons may also be made to
yields on certificates of deposit, treasury instruments or money market
instruments. The comparisons to the S&P and DJIA show how such fund's total
return compared to the record of a broad average of common stock prices (S&P)
and a narrower set of stocks of major industrial companies (DJIA). The fund may
have the ability to invest in securities or underlying funds not included in
either index, and its investment portfolio may or may not be similar in
composition to the indices. Figures for the S&P and DJIA are based on the prices
of unmanaged groups of stocks, and unlike the fund's returns, their returns do
not include the effect of paying brokerage commissions and other costs of
investing.
Comparisons may be made on the basis of a hypothetical initial
investment in the fund (such as $1,000), and reflect the aggregate cost of
reinvested dividends and capital gain distributions for the period covered (that
is, their cash value at the time they were reinvested). Such comparisons may
also reflect the change in value of such an investment assuming distributions
are not reinvested. Tax consequences of different investments may not be
factored into the figures presented.
A fund's performance may be compared in advertising to the performance
of other mutual funds in general or to the performance of particular types of
mutual funds, especially those with similar objectives.
Other groupings of funds prepared by Lipper Analytical
Services, Inc. ("Lipper") and other organizations may also be
used for comparison to the funds. Although Lipper and other
organizations such as Investment Company Data, Inc. ("ICD"), CDA
Investment Technologies, Inc. ("CDA") and Morningstar Investors,
Inc. ("Morningstar"), include funds within various
classifications based upon similarities in their investment
objectives and policies, investors should be aware that these may
differ significantly among funds within a grouping.
From time to time a fund may publish the ranking of the performance of
its shares by Morningstar, an independent mutual fund monitoring service that
ranks mutual funds, including the funds, in broad investment categories (equity,
taxable bond, tax-exempt and other) monthly, based upon each fund's one-,
three-, five- and ten-year average annual total returns (when available) and a
risk adjustment factor that reflects fund performance relative to three-month
U.S. treasury bill monthly returns. Such returns are adjusted for fees and sales
loads. There are five ranking categories with a corresponding number of stars:
highest (5), above average (4), neutral (3), below average (2) and lowest (1).
Ten percent of the funds, series or classes in an investment category receive 5
stars, 22.5% receive 4 stars, 35% receive 3 stars, 22.5% receive 2 stars, and
the bottom 10% receive one star.
From time to time, in reports and promotional literature, a fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper's "Lipper - Fixed Income Fund Performance
Analysis," a monthly publication which tracks net assets, total return, and
yield on approximately 1,700 fixed income mutual funds in the United States.
Ibbotson Associates, CDA Wiesenberger and F.C. Towers are also used for
comparison purposes as well as the Russell and Wilshire Indices. Comparisons may
also be made to bank certificates of deposit ("CD"), which differ from mutual
funds, such as the funds, in several ways. The interest rate established by the
sponsoring bank is fixed for the term of a CD, there are penalties for early
withdrawal from CDs, and the principal on a CD is insured. Comparisons may also
be made to the 10 year Treasury Benchmark.
Performance rankings and ratings reported periodically in national
financial publications such as Money Magazine, Forbes, Business Week, The Wall
Street Journal, Micropal, Inc., Morningstar, Stanger's, Barron's, etc.
will also be used.
<PAGE>
Ibbotson Associates of Chicago, Illinois ("Ibbotson") and others
provide historical returns of the capital markets in the United States. A fund
may compare its performance to the long-term performance of the U.S. capital
markets in order to demonstrate general long-term risk versus reward investment
scenarios. Performance comparisons could also include the value of a
hypothetical investment in common stocks, long-term bonds or treasuries. A fund
may discuss the performance of financial markets and indices over various time
periods.
The capital markets tracked by Ibbotson are common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury Bills, and the U.S. rate of
inflation. These capital markets are based on the returns of several different
indices. For common stocks the S&P is used. For small capitalization stocks,
return is based on the return achieved by Dimensional Fund Advisors Small
Company Fund. This fund is a market value-weighted index of the ninth and tenth
deciles of the NYSE, plus stocks listed on the American Stock Exchange
and over-the-counter with the same or less capitalization as the upper bound of
the NYSE ninth decile.
Long-term corporate bond returns are based on the performance of the
Salomon Brothers Long-Term-High-Grade Corporate Bond Index which includes nearly
all Aaa- and Aa-rated bonds. Returns on intermediate-term government bonds are
based on a one-bond portfolio constructed each year, containing a bond which is
the shortest noncallable bond available with a maturity not less than five
years. This bond is held for the calendar year and returns are recorded. Returns
on long-term government bonds are based on a one-bond portfolio constructed each
year, containing a bond that meets several criteria, including having a term of
approximately 20 years. The bond is held for the calendar year and returns are
recorded. Returns on U.S. Treasury bills are based on a one-bill portfolio
constructed each month, containing the shortest-term bill having not less than
one month to maturity. The total return on the bill is the month-end price
divided by the previous month-end price, minus one. Data up to 1976 is from the
U.S. Government Bond file at the University of Chicago's Center for Research in
Security Prices; the Wall Street Journal is the source thereafter.
Inflation rates are based on the CPI. Ibbotson calculates total returns
in the same method as the fund.
Other widely used indices that the funds may use for comparison
purposes include the Lehman Bond Index, the Lehman Aggregate Bond Index, The
Lehman GNMA Single Family Index, the Lehman Government/Corporate Bond Index, the
Salomon Brothers Long-Term High Yield Index, the Salomon Brothers Non-Government
Bond Index, the Salomon Brothers Non-U.S. Government Bond Index, the Salomon
Brothers World Government Bond Index and the J.P. Morgan Government Bond Index.
The Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. Lehman Government/Corporate Bond Index
generally represents the performance of intermediate and long-term government
and investment grade corporate debt securities. The Lehman Aggregate Bond Index
measures the performance of U.S. corporate bond issues, U.S. government
securities and mortgage-backed securities. The J.P. Morgan Government Bond Index
generally represents the performance of government bonds issued by various
countries including the United States. The foregoing bond indices are unmanaged
indices of securities that do not reflect reinvestment of capital gains or take
investment costs into consideration, as these items are not applicable to
indices.
The funds may also discuss in advertising the relative performance of
various types of investment instruments, such as stocks, treasury securities and
bonds, over various time periods and covering various holding periods. Such
comparisons may compare these investment categories to each other or to changes
in the CPI. In addition, the funds may employ historical mutual fund performance
data and industry asset allocation studies in their advertisements.
A fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, the
investor invests a fixed dollar amount in a fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares had been purchased at those intervals. In evaluating
such a plan, investors should consider their ability to continue purchasing
shares through periods of low price levels.
The funds may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually, compounded monthly, would have an
after-tax value of $2,009 after ten years, assuming tax was deducted from the
return each year at a 31% rate. An equivalent tax-deferred investment would have
an after-tax value of $2,178 after ten years, assuming tax was deducted at a 31%
rate from the deferred earnings at the end of the ten year period.
Evaluations of fund performance made by independent sources may also be
used in advertisements concerning the funds, including reprints of, or
selections from, editorials or articles about the fund. These editorials or
articles may include quotations of performance from other sources such as Lipper
or Morningstar. Sources for fund performance information and articles about the
funds may include the following:
BANXQUOTE, an on-line source of national averages for
leading money market and bank CD interest rates, published
on a weekly basis by Masterfund, Inc. of Wilmington, Delaware.
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly
that periodically reviews mutual fund
performance data.
THE BOSTON GLOBE, a regional daily newspaper.
BUSINESS WEEK, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing abroad.
CDA INVESTMENT TECHNOLOGIES, INC., an organization which provides performance
and ranking information through examining the dollar results of hypothetical
mutual fund investments and comparing these results against appropriate market
indices.
CONSUMER DIGEST, a monthly business/financial magazine that includes a "Money
Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes a "Market
Watch" department reporting on activities in the mutual fund industry.
FORBES, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
FORTUNE, a national business publication that periodically rates the performance
of a variety of mutual funds.
IBC/DONOGHUES' MONEY FUND REPORT, a weekly publication of the Donoghue
Organization, Inc. of Holliston, Massachusetts, reporting on the performance of
the nation's money market funds, summarizing money market fund activity, and
including certain averages as performance benchmarks, specifically "Donoghue's
Money Fund Average," and "Donoghue's Government Money Fund Average."
IBBOTSON ASSOCIATES, INC., a company specializing in investment research and
data.
INVESTMENT COMPANY DATA, INC., an independent organization which provides
performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial, economic, and
business news.
KIPLINGER'S PERSONAL FINANCE, a monthly business publication.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS, a weekly
publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both specific funds
and the mutual fund industry as a whole.
MORNINGSTAR INVESTOR and MORNINGSTAR PRINCIPIA, monthly mutual fund
reporting services.
MUTUAL FUND MAGAZINE, a monthly business magazine published by the Institute for
Econometric Research.
MUTUAL FUND VALUES, a bi-weekly Morningstar, Inc. publication that provides
ratings of mutual funds based on fund performance, risk and portfolio
characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which regularly covers
financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often reports on
investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that includes a
"Mutual Funds Outlook" section reporting on mutual fund performance measures,
yields, indices and portfolio holdings.
SMART MONEY, a Dow Jones & Company, Inc. monthly business magazine.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs and growing
business, often featuring mutual fund performance data.
USA TODAY, a nationally distributed newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that periodically reports
mutual fund performance data.
THE WALL STREET JOURNAL, a Dow Jones & Company, Inc. newspaper which regularly
covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of information
about mutual funds and other investment companies, including comparative data on
funds' background, management policies, salient features, management results,
income and dividend records, and price ranges.
WORTH MAGAZINE, a Fidelity Investments-owned monthly business publication.
When comparing yield, total return and investment risk of shares of a
fund with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares of
the funds. For example, certificates of deposit may have fixed rates of return
and may be insured as to principal and interest by the FDIC, while a fund's
returns will fluctuate and its share values and returns are not guaranteed.
Money market accounts offered by banks also may be insured by the FDIC and may
offer stability of principal. U.S. Treasury securities are guaranteed as to
principal and interest by the full faith and credit of the U.S. government.
Money market mutual funds may seek to offer a fixed price per share.
The performance of the funds is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of a
fund for any period in the future. The performance of a fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions, purchases and sales of underlying funds, sales
and redemptions of shares of beneficial interest, and changes in operating
expenses are all examples of items that can increase or decrease a fund's
performance.
VIII. DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. If a shareholder has elected to receive
dividends and/or capital gain distributions in cash and the postal or other
delivery service is unable to deliver checks to the shareholder's address of
record, such shareholder's distribution option will automatically be converted
to having all dividend and other distributions reinvested in additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks.
<PAGE>
Taxes. Each fund has qualified and intends to continue to
qualify as a separate regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). In any year in which a
fund qualifies as a regulated investment company and distributes to its
shareholders substantially all of its investment company taxable income (which
includes, among other items, interest, dividends and the excess of net
short-term capital gain over net long-term capital loss) and its net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
the fund will not be subject to federal income tax on the amounts distributed to
shareholders in the manner required under the Code. A fund would be taxed at
regular corporate income tax rates on any amounts not distributed to
shareholders in accordance with these requirements.
Amounts not distributed on a timely basis in accordance with a separate
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To avoid imposition of the excise tax, each fund must distribute for each
calendar year an amount equal to the sum of (1) at least 98% of its net ordinary
income (excluding any capital gains or losses) for the calendar year, (2) at
least 98% of the excess of its capital gains over capital losses (adjusted for
certain ordinary losses) realized during the one-year period ending October 31
of such year, and (3) all ordinary income and capital gains for the previous
year that were not distributed during such year and on which the fund has not
paid income tax. A distribution will be treated as paid by a fund, and taxable
to shareholders as if received, on December 31 of the year if it is
declared by a fund in October, November or December of that year with a record
date in such a month and paid by the fund during January of the following
year. Each fund intends to seek to distribute its income in accordance
with this requirement to avoid or minimize any excise tax. Shortly after the end
of each year, the Trust will notify shareholders of the federal tax status of
dividends and distributions for that year.
All income and capital gains received by a fund from a mutual fund
in that fund's portfolio will be distributed by the fund (after deductions for
the fund's allowable losses and expenses) and will be taxable to shareholders as
ordinary income, except for any distributions attributable to the fund's net
capital gain, which will be taxable to shareholders as long-term capital gains.
These long-term capital gains may be subject to tax at different maximum rates
for individual (noncorporate) investors, depending upon each investor's tax
bracket, the assets from which the fund or underlying mutual fund realized the
gains, and the fund's or underlying fund's holding periods for those assets.
Because each fund is actively managed and may realize taxable net short-term
capital gains by selling shares of a mutual fund in its portfolio with
unrealized appreciation, or capital losses that might be disallowed under wash
sale rules or recharacterized, investing in a fund rather than directly in the
underlying funds may result in increased tax liability to a shareholder since
the fund must distribute its net realized gains in accordance with the rules
described above.
Distributions of net capital gain received by a fund from the
underlying funds (as described above), as well as net capital gain realized by a
fund from the sale (or redemption) of mutual fund shares or other securities,
after reduction by allowable capital losses, will be taxable to a shareholder as
long-term capital gain (even if the shareholder has held the shares for less
than one year).
<PAGE>
Redemptions and exchanges are taxable events for shareholders that are
subject to tax. Shareholders should consult their own tax advisers with
reference to their individual circumstances to determine whether any particular
transaction in fund shares is properly treated as a sale for tax purposes, as
the following discussion assumes, and the character of and tax rate applicable
to any gains or losses recognized in such transactions under the new rate
structure for capital gains and losses that was added to the Code by federal tax
legislation enacted in 1997. If a shareholder who has received a capital gain
distribution suffers a loss on the redemption or other sale of his or her fund
shares that have a tax holding period of six months or less, the loss on those
shares will be treated as a long-term capital loss to the extent of the capital
gain distribution received on those shares. Also, any loss realized on a
redemption or other sale of fund shares may be disallowed to the extent the
shares disposed of are replaced with other shares of the same fund within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of, such as pursuant to automatic dividend reinvestments.
For purposes of determining the character of income received by a fund
when an underlying fund distributes net capital gain to a fund, the fund will
treat the distribution as a long-term capital gain, even if the fund has held
shares of the underlying fund for less than one year. Any loss incurred by a
fund on the redemption or other sale of such mutual fund's shares that have a
tax holding period of six months or less, however, if it is not disallowed
under wash sale rules, will be treated as a long-term capital loss to the
extent of the gain distribution received on the shares disposed of by the fund.
If a fund acquires any equity interest in certain foreign
corporations that receive at least 75% of their annual gross income from passive
sources (such as interest, dividends, certain rents and royalties, or capital
gain) or hold at least 50% of their assets in investments producing such passive
income ("passive foreign investment companies"), the fund could be subject to
federal income tax and additional interest charges on "excess distributions"
received from such companies or gain from the sale of stock in such companies,
even if all income or gain actually received by the fund is timely distributed
to its shareholders. The fund would not be able to pass through to its
shareholders any credit or deduction for such a tax. An election may generally
be available to ameliorate these adverse tax consequences, but any such election
could require the fund to recognize taxable income or gain without the
concurrent receipt of cash. These investments could also result in the treatment
of associated capital gains as ordinary income. Each fund may limit and/or
manage its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
Each fund may be subject to foreign withholding or other foreign taxes
imposed by foreign countries with respect to the fund's investments in foreign
securities. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes in some cases. The funds do not except to qualify to pass
such taxes or associated foreign tax credits or deductions through to their
shareholders, who consequently are not expected to take them into account on
their own tax returns.
Foreign exchange gains and losses realized by a fund in connection
with certain transactions involving foreign currency-denominated debt
securities, foreign currency forward contracts, certain options and futures
contracts relating to foreign currency, foreign currencies, or payables or
receivables denominated in foreign currency are subject to Section 988 of the
Code, which generally causes such gains and losses to be treated as ordinary
income and losses and may affect the amount, timing and character of
distributions to shareholders. Any such transactions that are not
directly-related to a fund's investment in stock or securities, possibly
including any such transaction not used for hedging purposes, may under future
Treasury regulations produce income not among the types of "qualifying income"
from which the fund must derive at least 90% of its gross income for each
taxable year. If the net foreign exchange loss for a year treated as ordinary
loss under Section 988 were to exceed the fund's investment company taxable
income computed without regard to such loss, the resulting overall ordinary loss
for such year would not be deductible by the fund or its shareholders in future
years.
Limitations imposed by the Code on regulated investment companies like
the funds may restrict each fund's ability to enter into options and futures
contracts, foreign currency positions and foreign currency forward contracts.
Certain of these transactions may cause a fund to recognize gains or losses from
marking to market even though its positions have not been sold or terminated and
may affect the character as long-term or short-term (or, in the case of certain
foreign currency options, futures and forward contracts, as ordinary income or
loss) of some capital gains and losses realized by the fund. A fund may also be
required to recognize gain if an option, futures contract, forward contract,
short sale or other transaction that is not subject to the mark to market rules
is treated as a "constructive sale" of an "appreciated financial position" held
by the fund under Section 1259 of the Code. Any net mark to market gains and/or
gains from constructive sales may also have to be distributed to satisfy the
distribution requirements referred to above even though no corresponding cash
amounts may concurrently be received, possibly requiring the disposition of
portfolio securities or borrowing to obtain the necessary cash. Additionally,
certain of a fund's losses on transactions involving options, futures, forward
contracts, and any offsetting or successor positions in its portfolio, may be
deferred rather than being taken into account currently in calculating the
fund's taxable income or gain. Certain of such transactions may also cause the
fund to dispose of investments sooner than would otherwise have occurred. These
transactions may therefore affect the amount, timing and character of a fund's
distributions to shareholders. The funds will take into account the special tax
rules applicable to options, futures or forward contracts, including
consideration of available elections, in order to seek to minimize any potential
adverse tax consequences.
The federal income tax rules applicable to interest rate swaps, caps,
floors and collars and currency swaps are unclear in certain respects, and a
fund may be required to account for these instruments under tax rules in a
manner that, under certain circumstances, may limit its transactions in these
instruments.
Investments in debt obligations that are at risk of or are in default
(i.e., junk bonds) present special tax issues for the funds. Tax rules are not
entirely clear about issues such as when the funds may cease to accrue interest,
original issue discount, or market discount, when and to what extent deductions
may be taken for bad debts or worthless securities, how payments received on
obligations in default should be allocated between principal and income, and
whether exchanges of debt obligations in a workout context are taxable. These
and other issues will be addressed by a fund that holds such obligations in
order to reduce the risk of distributing insufficient income to preserve its
status as a regulated investment company and seek to avoid becoming subject to
federal income or excise tax.
<PAGE>
The tax treatment of distributions from a fund is the same whether the
distributions are received in additional shares or in cash. Shareholders
receiving distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share received equal to the amount of
cash that could have been received instead.
A fund may invest in mutual funds with capital loss carry-forwards. If
such a mutual fund realizes capital gains, it will be able to offset the gains
to the extent of its loss carryforwards in determining the amount of capital
gains which must be distributed to shareholders. To the extent that gains are
offset in this manner, distributions to a fund and its shareholders will likely
be reduced. Similarly, a fund may incur capital losses that it may carry forward
to future taxable years, to the extent provided by the Code and applicable
regulations, to offset capital gains it may realize in such years.
Depending upon a shareholder's residence for tax purposes,
distributions and the value of fund shares may also be subject to state and
local taxes, or other taxes. Shareholders should consult their own tax advisers
regarding the tax consequences of ownership of shares of, and receipt of
distributions from, a fund in their particular circumstances.
The funds are generally required to withhold federal income tax at a
rate of 31% ("backup withholding") from dividends and other distributions,
including redemption proceeds, paid to individuals and other non-exempt
shareholders if (1) the shareholder fails to furnish the Trust with and to
certify his or her correct social security number or other taxpayer
identification number, (2) the Internal Revenue Service (the "IRS") or a broker
notifies the Trust that the shareholder is subject to withholding or (3) the
shareholder fails to certify that he or she is not subject to backup
withholding.
Each fund will distribute investment company taxable income and any net
capital gain at least annually. All dividends and distributions will be
reinvested automatically at net asset value in additional shares of the fund
making the distribution, unless the shareholder notifies the fund in writing of
his or her election to receive distributions in cash.
The foregoing discussion relates solely to U.S. federal
income tax law as applicable to U.S. persons (i.e., U.S. citizens
or residents and U.S. domestic corporations, partnerships, trusts
or estates) subject to tax under such law. The discussion does
not address special tax rules applicable to certain classes of
investors, such as retirement plans, tax-exempt entities,
insurance companies and financial institutions.
Non-U.S. investors not engaged in a U.S. trade or
business with which their fund investment is effectively
connected will be subject to U.S. federal income tax
treatment that is different from that described above. These
investors may be subject to non-resident alien withholding
tax at the rate of 30% (or a lower rate under an applicable
tax treaty) on amounts treated as ordinary dividends from a
fund and, unless an effective Form W-8 is on file, 31%
backup withholding on certain other payments from the fund.
Non-U.S. investors should consult their tax advisers
regarding such treatment and the applicability of foreign
taxes to an investment in the funds.
The funds are not subject to Massachusetts corporate excise or
franchise taxes. Provided that each fund qualifies as a regulated investment
company under the Code, the funds will also not be required to pay Massachusetts
income tax.
IX. CUSTODIAN, COUNSEL AND INDEPENDENT ACCOUNTANTS
Pursuant to a Custody Agreement between the Trust and Boston Safe
Deposit and Trust Company ("Boston Safe"), a subsidiary of Mellon Bank
Corporation, Boston Safe provides custodial services to the Trust and
each of the funds. The principal business address of Boston Safe is One Boston
Place, Boston, Massachusetts 02108.
Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
is counsel for the Trust.
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109, are the independent accountants of the Trust.
X. DESCRIPTION OF THE TRUST
The Trust is an open-end, diversified series management investment
company established as a business trust under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust dated September 13, 1996. The
name of the Trust, formerly Insight Premier Funds, was changed to Kobren Insight
Funds in November 1996 by amendment to the Declaration of Trust.
The Trustees of the Trust have authority to issue an unlimited number
of shares of beneficial interest in an unlimited number of series, each share
with a par value of $.001. Currently, the Trust consists of three series. Each
share in a particular series represents an equal proportionate interest in that
series with each other share of that series and is entitled to such dividends
and distributions as are declared by the Trustees of the Trust. Upon any
liquidation of a series, shareholders of that series are entitled to share pro
rata in the net assets of that series available for distribution. Shareholders
in one of the series have no interest in, or rights upon liquidation of, any of
the other series.
The Trust will normally not hold annual meetings of shareholders to
elect Trustees. If less than a majority of the Trustees of the Trust holding
office have been elected by shareholders, a meeting of shareholders of the Trust
will be called to elect Trustees. Under the Declaration of Trust and the 1940
Act, the record holders of not less than two-thirds of the outstanding shares of
the Trust may remove a Trustee by votes cast in person or by proxy at a meeting
called for the purpose or by a written declaration filed with the Trust's
custodian bank. Except as described above, the Trustees will continue to hold
office and may appoint successor Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by the funds
or the Trustees. The Declaration of Trust provides for indemnification out of
the Trust's property for all loss and expense of any shareholder held personally
liable for obligations of the Trust and its funds. Accordingly, the risk of a
shareholder of the Trust incurring a financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its obligations. The likelihood of such circumstances is remote.
XI. ADDITIONAL INFORMATION
The prospectus and this statement of additional information do not
contain all of the information included in the Trust's registration statement
filed with the Securities and Exchange Commission under the 1933 Act,
with respect to the securities offered hereby. Certain portions of the
registration statement have been omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. Such registration statement,
including the exhibits filed therewith, may be examined at the offices of the
Securities and Exchange Commission in Washington, D.C.
Statements contained in the prospectus and this statement of additional
information as to the contents of any agreement or other documents referred to
are not necessarily complete, and, in each instance, reference is made to the
copy of such agreement or other documents filed as an exhibit to the
registration statement, each such statement being qualified in all respects by
such reference.
XII. FINANCIAL STATEMENTS
The following financial statements for the fiscal year ended
December 31, 1997 as well as the related Notes to Financial Statements and
Report of Independent Accountants are incorporated into this statement of
additional information by reference to the Trust's Annual Report for the fiscal
year ended December 31, 1997: Portfolios of Investment at December 31, 1997;
Statements of Assets and Liabilities at December 31, 1997; Statements of
Operations for the year ended December 31, 1997; and Statements of Changes in
Net Assets for the year ended December 31, 1997 and for the period ended
December 31, 1996.
<PAGE>
APPENDIX
RATINGS OF DEBT INSTRUMENTS
Standard & Poor's Ratings Group ("S&P") Corporate Bond Ratings. An S&P corporate
bond rating is a current assessment of the credit worthiness of an obligor, with
respect to a specific obligation. This assessment may take into consideration
obligors such as guarantors, insurers or lessees. The debt rating is not a
recommendation to purchase, sell or hold a security inasmuch as it does not
comment as to market price or suitability for a particular investor. The ratings
are based on current information furnished by the issuer or obtained by S&P from
other sources it considers reliable. S&P does not perform any audit in
connection with the ratings and may, on occasion, rely on unaudited financial
information.
The ratings are based, in varying degrees, on the following
considerations: (a) likelihood of default capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (b) nature of and provisions of the
obligation; and (c) protection afforded by and relative position of the
obligation in the event of bankruptcy reorganization or other arrangement under
the laws of bankruptcy and other laws affecting creditors' rights. To provide
more detailed indications of credit quality, ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the
successful completion of the project being financed by the debt being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.
Bond ratings are as follows:
AAA -- Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A -- Bonds rated A have strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC -- Bonds rated BB, B, CCC or CC are regarded on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C -- The rating C is reserved for income bonds on which no interest is being
paid.
D -- Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
S&P Note Ratings. An S&P note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria are used in making that
assessment: (a) amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note), and (b) source
of payment (the more dependent the issue is on the market for its refinancing,
the more likely it will be treated as a note).
Note ratings are as follows:
SP-1 -- Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
Demand Bonds. S&P assigns "Dual" ratings to all long-term debt issues that have
as part of their provisions a demand or double feature. The first rating
addresses the likelihood of repayment of principal and interest as due, and the
second rating addresses only the demand feature. The long-term debt rating
symbols are used for bonds to denote the long-term maturity and the commercial
paper rating symbols are used to denote the put options (for example,
"AAA/A-1+). For the newer "Demand Notes," S&P note rating symbols, combined with
the commercial paper symbols, are used (for example, "SP-1+/A-1+").
<PAGE>
Moody's Investors Service, Inc. ("Moody's") Corporate Bond Ratings.
Moody's ratings are as follows:
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of great amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3, in each generic rating
classification from Aa through Baa in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Ba -- Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments, or of maintenance of
other terms of the contract over any long period of time, may be small.
Caa -- Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca -- Bonds rated Ca represent obligations that are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds rated C are the lowest rated class of bonds and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's Note Ratings. Moody's Short-Term Loan Ratings -- Moody's ratings for
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are ample,
although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security elements are
accounted for, but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4 -- This designation denotes adequate quality. Protection commonly regarded
as required of an investment security is present and, although not distinctly or
predominantly speculative, there is specific risk.
PART C: OTHER INFORMATION
Item 24. Financial Statements and
Exhibits.
(a) Financial
Statements:
Part A: Financial
Highlights
Part B: Audited
financial
statements for
the fiscal year
ended December
31, 1997
are incorporated
into the
Statement of
Additional
Information by
reference to the
Trust's Annual
Report for the
fiscal year ended
December 31,
1997:
Portfolios of Investment
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Accountants
Part C:
Consent of
Independent
Accountants.
<PAGE>
(b) Exhibits:
(1) Declaration of
Trust is
incorporated by
reference to
Exhibit 1 of the
Registration
Statement on Form
N-1A, filed on
September 16,
1996 (the
"Registration
Statement").
(2) By-Laws are
incorporated by
reference to
Exhibit 2 of the
Registration
Statement.
(3) Not Applicable
(4) Not Applicable
(5) Investment
Advisory
Agreement between
Registrant and
Insight
Management, Inc.
(now known as
Kobren Insight
Management, Inc.)
is filed
herein.
(6) Distribution
Agreement between
Registrant and
Insight Brokerage
Services, Inc.
(now known as
Kobren Insight
Brokerage, Inc.)
is filed
herein.
(7) Not Applicable
(8)(a) Custody Agreement
between
Registrant and
Boston Safe
Deposit and Trust
Company is
filed herein.
(b) First Amendment
to the Custody
Agreement between
Registrant and
Boston Safe
Deposit and Trust
Company is filed
herein.
(c) Sub-Custodian
Agreement between
Registrant,
Boston Safe
Deposit and Trust
Company and
National
Financial
Services
Corporation is
filed herein.
(9)(a) Transfer Agency
Agreement between
Registrant and
First Data
Investor Services
Group, Inc.
is
incorporated
by reference to
Exhibit 9(a) of
Post-Effective
Amendment No. 1
to the
Registration
Statement filed
on June 13, 1997
("Post-Effective
Amendment No.
1").
(b) Administration
Agreement between
Registrant and
First Data
Investor Services
Group, Inc. is
incorporated
by reference to
Exhibit 9(b) of
Post-Effective
Amendment No. 1.
(10) Not Applicable
(11)(a) Consent of Independent Accountants is filed herein.
(b) Consent of
Counsel is filed herein.
(12) Not Applicable
(13)(a) Purchase
Agreement
relating to
Initial Capital
between the
Registrant, on
behalf of Insight
Growth Fund
(now known as
Kobren Growth
Fund , and
Insight
Management, Inc.
(now known as
Kobren Insight
Management,
Inc.) is
incorporated by
reference to
Exhibit 13(a) of
Pre-Effective
Amendment No. 1
to the
Registration
Statement, filed
on November 8,
1996
("Pre-Effective
Amendment No. 1")
(b) Purchase
Agreement
relating to
Initial Capital
between the
Registrant, on
behalf of Insight
Moderate Growth
Fund (now
known as Kobren
Moderate Growth
Fund), , and
Insight
Management, Inc.
(now known as
Kobren Insight
Management,
Inc.) is
incorporated by
reference to
Exhibit 13(b) of
Pre-Effective
Amendment No. 1.
(c) Purchase
Agreement
relating to
Initial Capital
between the
Registrant, on
behalf of Insight
Conservative
Allocation Fund
(now known as
Kobren
Conservative
Allocation Fund),
, and Insight
Management,
Inc. (now known
as Kobren Insight
Management,
Inc.) is
incorporated by
reference to
Exhibit 13(c) of
Pre-Effective
Amendment No. 1.
(14) Not Applicable
(15) Not Applicable
(16) Performance
Computation Schedule is
incorporated by reference to Post-
Effective Amendment No. 1.
(17) Financial Data Schedules are filed herein.
(18) Not Applicable
Item 25. Persons Controlled by or
Under Common Control with Registrant.
Not Applicable
<PAGE>
Item 26. Number of Holders of
Securities.
(1)
Title of Class
Shares of Beneficial
Interest,
$.001 par value
(2)
Number of Record Holders
as of March 31, 1998
Kobren Growth Fund
876
Kobren Moderate Growth Fund
678
Kobren Conservative
Allocation Fund
273
Item 27. Indemnification.
The response to this Item 27 is incorporated by reference to Item
27 of Pre-Effective Amendment No.
1.
Item 28. Business and Other
Connections of Investment Adviser.
Kobren Insight
Management, Inc.,
established in 1987,
manages the investment
needs of clients seeking
to invest in the fixed
revenue and equity markets.
The list required by this Item 28 of officers and directors of
Kobren Insight Management, Inc., together with the information
as to any other business, profession, vocation or employment of
substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by Kobren Insight
Management, Inc. pursuant to the Investment Advisers Act of 1940
(SEC File No.
801-30125).
Item 29. Principal Underwriters.
(a) Kobren Insight
Brokerage, Inc., the
Fund's Distributor, does
not act as principal
underwriter, depositor or
investment adviser for any
other mutual funds.
(b) For information with
respect to each Director
and officer of the
principal underwriter of
the Fund, see the
following:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Business Position and Offices with Kobren Insight Position and Offices
--------- --------
Address* Brokerage, Inc. with the Registrant
Eric M. Kobren Director, President and Treasurer President
Cathy Kobren Secretary None
* The business address of the
above-listed persons is 20 William
Street, Suite 310, P.O. Box 9135,
Wellesley Hills, Massachusetts
02181.
</TABLE>
(c) Not Applicable
Item 30. Location of Accounts and
Records.
All accounts, books and other documents required to be maintained
by Registrant by Section 31(a) of the Investment Company Act of
1940, as amended and the Rules thereunder will be maintained at
the offices of:
Kobren Insight
Management, Inc.
20 William Street, Suite
310
P.O. Box 9135
Wellesley Hills,
Massachusetts 02181
(records relating to its
functions as investment
adviser)
Kobren Insight
Brokerage, Inc.
20 William Street, Suite
310
P.O. Box 9135
Wellesley Hills,
Massachusetts 02181
(records relating to its
functions as distributor)
First Data Investor
Services Group, Inc.
One Exchange Place
Boston, Massachusetts
02109
(records relating to its
functions as administrator)
First Data Investor
Services Group, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581
(records relating to its
functions as transfer
agent)
<PAGE>
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
(records relating to its
functions as custodian)
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not Applicable
(b) Not Applicable
(c) The Registrant
will furnish each
person to whom a
prospectus is
delivered with a
copy of the
Registrant's
latest annual
report to
shareholders,
upon request and
without charge.
(d) The Registrant
hereby undertakes
to call a meeting
of its
shareholders for
the purpose of
voting upon the
question of
removal of a
trustee or
trustees of
Registrant when
requested in
writing to do so
by the holders of
at least 10% of
Registrant's
outstanding
shares required
by Section 16(c)
of the Investment
Company Act of
1940, as
amended..
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant, KOBREN INSIGHT
FUNDS, certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and the Registrant has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts on the 17th day of April, 1998.
KOBREN INSIGHT FUNDS
By:
/s/ Eric M. Kobren
Eric M. Kobren, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, this Post-Effective Amendment to the
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signatures Title Date
/s/ Eric M. Kobren President, Chairman of the Board and April 17, 1998
Eric M. Kobren Trustee (Chief Executive Officer)
/s/ Michael P. Castellano Trustee April 17, 1998
- -------------------------------
Michael P. Castellano
/s/ Arthur Dubroff Trustee April 17, 1998
Arthur Dubroff
/s/ Edward B. Bloom Trustee April 17, 1998
- -------------------------------
Edward B. Bloom
/s/ Stuart J. Novick Trustee April 17, 1998
- -------------------------------
Stuart J. Novick
/s/ Eric Godes Treasurer, Chief Financial Officer and April 17, 1998
- -------------------------------
Chief Accounting Officer
Eric Godes
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5 Investment Advisory
Agreement between
Registrant and Insight
Management, Inc. (now
known as Kobren
Insight Management,
Inc.)
6(a) Distribution Agreement
between Registrant and
Insight Brokerage
Services, Inc. (now
known as Kobren
Insight Brokerage,
Inc.)
8(a) Custody Agreement
between Registrant and
Boston Safe Deposit
and Trust Company
8(b) First Amendment to the
Custody Agreement
between Registrant and
Boston Safe Deposit
and Trust Company
8(c) Sub-Custodian
Agreement between
Registrant, Boston
Safe Deposit and Trust
Company and National
Financial Services
Corporation
11(a) Consent of Independent
Accountants
11(b) Consent of Counsel
17 Financial Data
Schedules
<PAGE>
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 15th day of November, 1996 between Insight
Premier Funds, a Massachusetts business trust (the "Trust"), on behalf of its
series (each, a "Fund" and collectively, the "Funds"), and Insight Management,
Inc. (the "Adviser"), registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the Funds in the management of each Fund's assets, and the
Adviser is willing to furnish such services for the Trust on the terms
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Adviser to act as
investment adviser to each Fund for the period and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided. In the event
that the Trust establishes one or more series other than the Funds with respect
to which it desires to retain the Adviser to act as investment adviser
hereunder, it shall notify the Adviser in writing. If the Adviser is willing to
render such services under this Agreement it shall notify the Trust in writing
whereupon such series shall become a Fund hereunder and shall be subject to the
provisions of this Agreement except to the extent that said provisions
(including those relating to the compensation payable by the Fund to the
Adviser) are modified with respect to such Fund in writing by the Trust and the
Adviser at the time.
2. Delivery of Documents. The Trust has furnished the Adviser with
copies, properly certified or authenticated, of each of the following:
(a) The Trust's Declaration of Trust as filed with the
Secretary of the Commonwealth of Massachusetts on September 13, 1996
(such Declaration of Trust, as presently in effect and as it shall from
time to time be amended, is herein called the "Declaration of Trust");
(b) The Trust's By-Laws (such By-Laws, as presently in effect
and as they shall from time to time be amended, are herein called the
"By-Laws");
(c) Votes of the Trust's Board of Trustees authorizin
the appointment of the Adviser and
approving this Agreement;
(d) The Trust's Registration Statement on Form N-1A under the
Securities Act of 1933 (the "1933 Act"), and under the 1940 Act,
relating to shares of beneficial interest of the Trust (herein called
the "Shares") as filed with the Securities and Exchange Commission (the
"SEC") and all amendments thereto; and
(e) The most recent prospectus of the Trust relating to the
Funds (such prospectus together with the related Statement of
Additional Information, as presently in effect and all amendments and
supplements thereto, are herein called the "Prospectus").
The Trust will furnish the Adviser from time to time with copies of all
amendments of or supplements to the foregoing, if any.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Adviser will provide a continuous investment program for each
Fund's assets entrusted to it for portfolio management purposes, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Funds. The Adviser will determine from time to
time what securities and other investments will be purchased, retained or sold
with respect to the Funds and will place the daily purchase or sale orders. The
Adviser will provide the services rendered by it under this Agreement in
accordance with each Fund's investment objective, policies and restrictions as
stated in the Prospectus and votes of the Trust's Board of Trustees. The Adviser
agrees that it will supply the Trust and its Board of Trustees with reports and
statistical data as requested with respect to the securities that each Fund may
hold or contemplate purchasing.
4. Other Covenants. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of
the SEC and will, in addition, conduct its activities under this
Agreement in accordance with regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over its
activities under this Agreement;
(b) will use its best efforts to seek the best overall terms
available in executing transactions for the Funds and soliciting
brokers or dealers. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors that it deems
relevant, including, but not limited to, the breadth of the market in
the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and
in selecting the brokers or dealers to execute a particular
transaction, the Adviser may consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Funds and/or other
accounts over which the Adviser or an affiliate of the Adviser
exercises investment discretion. The Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for a Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Adviser
determines in good faith that such commission is reasonable in relation
to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction
or in terms of all of the accounts over which the Adviser or any
affiliate of the Adviser exercises investment discretion;
(c) will provide certain executive personnel for the Trust as
may be mutually agreed upon from time to time with the Board of
Trustees, the salaries and expenses of such personnel to be borne by
the Adviser unless otherwise mutually agreed upon;
(d) will, at its own expense, maintain such staff and employ
or retain such personnel and consult with such other persons as may be
necessary to render the services required to be provided by the Adviser
or furnished to the Trust under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser
shall be deemed to include persons employed or otherwise retained by
the Adviser to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to
technical and scientific developments, and such other information,
advice and assistance as the Adviser may desire. The Adviser will also
provide such additional management and administrative services as may
be required in connection with the business affairs and operations of
the Trust beyond those furnished by the Trust's administrator;
(e) will bear the cost of rendering the services to be
performed by it under this Agreement, and shall provide the Trust with
such office space, facilities, equipment, clerical help, and other
personnel and services as the Trust shall reasonably require in the
conduct of its business.
5. Services Not Exclusive. The advisory services furnished by the
Adviser hereunder are not to be deemed exclusive, and the Adviser shall be free
to furnish similar services to others so long as its services under this
Agreement are not impaired thereby. To the extent that the purchase or sale of
securities or other investments of the same issuer may be deemed by the Adviser
to be suitable for two or more accounts managed by the Adviser, the available
securities or investments may be allocated in a manner believed by the Adviser
to be equitable to each account. The Trust recognizes that in some cases this
procedure may adversely affect the price paid or received by a Fund or the size
of the position obtainable for or disposed of by that Fund.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser hereby agrees that all records which it
maintains for the benefit of the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. The Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by it
pursuant to Rule 31a-1 under the 1940 Act that are not maintained by others on
behalf of the Trust.
7. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with its investment advisory services
under this Agreement other than the cost of securities, commodities and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for a Fund. Each Fund will bear certain other expenses
incurred in its operation, including: organizational expenses; taxes, interest,
brokerage costs and commissions; fees of Trustees of the Trust who are not
officers, directors, or employees of the Adviser, the distributor or
administrator or any of their affiliates; Securities and Exchange Commission
fees; state Blue Sky qualification fees; charges of the administrator, the
custodian, any subcustodians, and transfer and dividend-paying agents; insurance
premiums; auditing, pricing and legal expenses; costs of maintenance of the
Trust's existence; costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
shareholders of the Funds and of the officers or Board of Trustees of the Trust;
membership fees in trade associations; litigation, indemnification and other
extraordinary or non-recurring expenses.
8. Compensation. For the services provided by the Adviser pursuant to
this Agreement, the Trust will pay the Adviser and the Adviser will accept as
full compensation an investment advisory fee, based upon the average daily net
assets of each Fund, accrued daily and paid monthly as soon as practicable after
the end of each month, at the annual rate set forth below. If the Adviser shall
serve for less than the whole of any month, the foregoing compensation shall be
prorated. The Adviser may, from time to time, waive certain amounts payable
hereunder or reimburse Fund expenses for such period or periods as the Adviser
deems to be advisable.
Insight Growth Fund 0.75%
Insight Moderate Growth Fund 0.75%
Insight Conservative Allocation Fund 0.75%
9. Reimbursement of the Fund. If in any fiscal year the aggregate
expenses of a Fund (as defined under the securities regulations of any state
having jurisdiction over the merits of the offering of Fund Shares) exceed the
expense limitation of any such state, the Adviser will reimburse that Fund for
such excess expenses. The obligation of the Adviser to reimburse a Fund
hereunder is limited in any fiscal year to the amount of its fee hereunder for
such fiscal year, provided, however, that notwithstanding the foregoing, the
Adviser shall reimburse that Fund for such excess expenses regardless of the
amount of fees paid to it during such fiscal year to the extent that the
securities regulations of any state having jurisdiction over the over the merits
of the offering of Fund Shares so requires. Such expense reimbursement, if any,
will be estimated, reconciled and paid on a monthly basis.
10. Corporate Name. The Trust acknowledges that it uses the name
"INSIGHT" in connection with the Funds and the Trust by consent of the Adviser,
which consent was given in reliance upon the provisions hereafter contained. The
Trust agrees that if the Adviser should cease to be the investment adviser of
the Funds, the Trust will, upon written demand of the Adviser, forthwith delete
from the Funds' name and from the Trust's name the word "INSIGHT" or any
approximation thereof. The Trust further agrees that the Adviser may permit
other persons, partnerships (general or limited), associations, trusts,
corporations or other incorporated or unincorporated groups of persons,
including without limitation any investment company or companies of any type
which may be initially sponsored or organized by the Adviser in the future, to
use the word "INSIGHT" or any approximation thereof as part of their names. As
used in this section, "INSIGHT" and "Insight Management, Inc." and "Adviser"
shall include any successor corporation, partnership, limited partnership, trust
or person.
11. Limitation of Liability. The Adviser shall not be liable for any
error of judgment, mistake of law or for any other loss whatsoever suffered by
the Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of its
duties or from reckless disregard by it of its obligation and duties under this
Agreement. The Trust and the Adviser agree that the obligations of the Trust
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Trust, as provided in the Declaration of Trust. No Fund shall be
liable for the obligations incurred by any other Fund hereunder. The execution
and delivery of this Agreement have been authorized by the Board of Trustees and
a majority of the holders of each Fund's outstanding voting securities, and
signed by an authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in the Declaration of Trust.
12. Duration and Termination. This Agreement shall become effective on
November 15, 1996 and, unless sooner terminated as provided herein, shall
continue in effect until June 30, 1998. Thereafter, this Agreement shall be
renewable as to any Fund for successive periods of one year each, provided such
continuance is specifically approved annually:
(a) by the vote of a majority of those members of the Trust's
Board of Trustees who are not interested persons of any such party (as
that term is defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on such approval; and
(b) by the Trust's Board of Trustees or by vote of a majority
of the outstanding voting securities of such Fund, provided, however,
that if the holders of any one Fund fail to approve the Agreement, the
Adviser may continue to act as investment manager of the Fund(s) which
did approve the Agreement, and may continue to act as investment
manager for the Fund which did not approve the Agreement until new
arrangements are made by such Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to a
Fund at any time, without the payment of any penalty, by the Trust (by vote of
the Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund), or by the Adviser, in each case, on sixty days' prior
written notice. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.)
13. Amendment of Agreement. This Agreement may be amended as to any
Fund by mutual written consent, but the consent of the Trust must be approved
(a) by vote of a majority of those members of the Board of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such amendment,
and (b) if required by the 1940 Act, by vote of a majority of the outstanding
voting securities of that Fund. However, the provisions of this Section 13 shall
not restrict or limit the Adviser's ability to waive its fees or reimburse any
Fund's expenses in accordance with Section 8 of this Agreement.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and shall be
governed by the laws of the Commonwealth of Massachusetts. This Agreement may be
executed in one or more counterparts, all of which taken together shall be
deemed one original.
<PAGE>
ATTEST: INSIGHT PREMIER FUNDS
By: /s/ Michael Castellano By: /s/ Eric Godes
Name:Michael Castellano Name:Eric Godes
Title:Chief Accounting Officer Title:Vice President and Secretary
ATTEST: INSIGHT MANAGEMENT, INC.
By: /s/ Michael Castellano By: /s/ Eric M. Kobren
Name:Michael Castellano Name:Eric M. Kobren
Title:Chief Accounting Officer Title:President
<PAGE>
Exhibit 6
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 15th day of November, 1996 by and
between Insight Premier Funds (the "Trust") and Insight Brokerage Services, Inc.
(the "Distributor"), a corporation organized under the laws of the Commonwealth
of Massachusetts, having its principal place of business at 20 William Street,
Wellesley Hills, Massachusetts 02181.
WHEREAS, the Trust is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
intends to offer shares of beneficial interest (such shares of all series are
hereinafter called the "Shares"), representing interests in investment
portfolios of the Trust identified on Schedule A hereto (the "Funds") which are
registered with the Securities and Exchange Commission ("SEC") pursuant to the
Trust's Registration Statement on Form N-1A (the "Registration Statement"); and
WHEREAS, the Trust desires to retain the Distributor as distributor for
the Trust to provide for the sale and distribution of the Shares of the Funds
identified on Schedule A, and for such additional classes or series as the Trust
may issue, and the Distributor is prepared to provide such services commencing
on November 15, 1996.
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein and intending to be legally bound hereby the parties hereto
agree as follows:
1. Service as Distributor
1.1 The Distributor will act on behalf of the Trust for the distribution of
the Shares covered by the Registration Statement under the Securities
Act of 1933 (the "1933 Act"). The Distributor will have no liability
for payment for the purchase of Shares sold pursuant to this Agreement
or with respect to redemptions or repurchases of Shares.
1.2 The Distributor agrees to use efforts deemed appropriate by the
Distributor to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in
connection with such solicitation. The Trust understands that the
Distributor may in the future be the distributor of the shares of
several investment companies or series (collectively, the "Companies")
including Companies having investment objectives similar to those of
the Trust. The Trust further understands that investors and potential
investors in the Trust may invest in shares of such other Companies.
The Trust agrees that the Distributor's duties to such Companies shall
not be deemed in conflict with its duties to the Trust under this
paragraph 1.2.
1.3 The Distributor shall, at its own expense, finance appropriate agreed
upon activities which it deems reasonable which are primarily intended
to result in the sale of the Shares, including, but not limited to,
compensation of underwriters, dealers and sales personnel and the
printing and mailing of prospectuses to other than current
shareholders.
1.4 All activities by the Distributor and its agents and employees, as
distributor of the Shares, shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and
regulations made or adopted pursuant to the 1940 Act by the SEC or the
National Association of Securities Dealers, Inc.
1.5 The Distributor will transmit any orders received by it for
purchase or redemption of the Shares to the
transfer agent for the Trust.
1.6 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, the Distributor or the officers of
the Trust may decline to accept any orders for, or make any sales of,
the Shares until such time as the Distributor or those officers deem it
advisable to accept such orders and to make such sales.
1.7 The Trust agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the
qualification of the Shares for sale in such states as the Distributor
may designate.
1.8 The Trust shall furnish from time to time, for use in connection with
the sale of the Shares, such information with respect to the Trust and
the Shares as the Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall
fairly show or represent what they purport to show or represent.
1.9 The Trust represents to the Distributor that all Registration
Statements and prospectuses filed by the Trust with the SEC under the
1933 Act with respect to the Shares have been prepared in conformity
with the requirements of said Act and the rules and regulations of the
SEC thereunder. As used in this Agreement, the term "Registration
Statement" shall mean any Registration Statement and any prospectus and
any statement of additional information relating to the Trust filed
with the SEC and any amendments or supplements thereto at any time
filed with said Commission. The Trust represents and warrants to the
Distributor that any Registration Statement, when such Registration
Statement becomes effective, will contain statements required to be
stated therein in conformity with the 1933 Act and the rules and
regulations of the SEC; that all statements of fact contained in any
such Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement when such Registration Statement becomes effective will
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The
Trust may but shall not be obligated to propose from time to time such
amendment or amendments to any Registration Statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be necessary
or advisable. The Trust shall promptly notify the Distributor of any
advice given to it by its counsel regarding the necessity or
advisability of amending or supplementing such Registration Statement.
If the Trust shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the
Trust of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement. The Trust
shall not file any amendment to any Registration Statement or
supplement to any prospectus without giving the Distributor reasonable
notice thereof in advance; provided, however, that nothing contained in
this Agreement shall in any way limit the Trust's right to file at any
time such amendments to any Registration Statements and/or supplements
to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.10 The Trust authorizes the Distributor and dealers to use any prospectus
or statement of additional information in the form furnished from time
to time in connection with the sale of the Shares. The Trust agrees to
indemnify and hold harmless the Distributor, its officers, directors,
and employees, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands
or liabilities and any legal fees incurred in connection therewith)
which the Distributor, its officers, directors, employees or any such
controlling person may incur under the 1933 Act, under any other
statute, at common law or otherwise, arising out of or based upon:
(a) any untrue statement, or alleged untrue statement, of a material
fact contained in the Trust's Registration Statement, prospectus,
statement of additional information, or sales literature (including
amendments and supplements thereto), or
(b) any omission, or alleged omission, to state a material fact
required to be stated in the Trust's Registration Statement,
prospectus, statement of additional information or sales literature
(including amendments or supplements thereto), necessary to make the
statements therein not misleading, provided, however, that insofar as
losses, claims, damages, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with
information furnished to the Trust by the Distributor or its affiliated
persons for use in the Trust's Registration Statement, prospectus, or
statement of additional information or sales literature (including
amendments or supplements thereto), such indemnification is not
applicable.
The Distributor, its officers, directors, and employees, and any such
controlling person, as aforesaid, shall notify the Trust of any action
brought against the Distributor, its officers, directors or employees,
or any such controlling person, such notification to be given by letter
or by telegram addressed to the Trust at its principal office in
Wellesley Hills, Massachusetts and sent to the Trust by the person
against whom such action is brought, within 10 days after the summons
or other first legal process shall have been served. The failure to
notify the Trust of any such action shall not relieve the Trust from
any liability which the Trust may have to the person against whom such
action is brought by reason of any such untrue, or allegedly untrue,
statement or omission, or alleged omission, otherwise than on account
of the Trust's indemnity agreement contained in this paragraph 1.10.
The Trust will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the
Trust and approved by the Distributor, which approval shall not
unreasonably be withheld. In the event the Trust elects to assume the
defense of any such suit and retain counsel of good standing approved
by the Distributor, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of
them; but in case the Trust does not elect to assume the defense of any
such suit, or in case the Distributor reasonably does not approve of
counsel chosen by the Trust, or in case there is a conflict of interest
between the Trust and the Distributor, the Trust will reimburse the
Distributor, its officers, directors and employees, or the controlling
person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by the Distributor or
them. The Trust's indemnification agreement contained in this paragraph
1.10 and the Trust's representations and warranties in this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor, its officers,
directors and employees, or any controlling person, and shall survive
the delivery of any Shares. This agreement of indemnity will inure
exclusively to the Distributor's benefit, to the benefit of its several
officers, directors and employees, and their respective estates, and to
the benefit of the controlling persons and their successors. The Trust
agrees promptly to notify the Distributor of the commencement of any
litigation or proceedings against the Trust or any of its officers or
trustees in connection with the issue and sale of any Shares.
1.11 The Distributor agrees to indemnify and hold harmless the Trust, its
several officers and trustees and each person, if any, who controls a
Fund within the meaning of Section 15 of the 1933 Act against any loss,
claims, damages, liabilities and expenses (including the cost of any
reasonable legal fees incurred in connection therewith) which the
Trust, its officers, trustees or any such controlling person may incur
under the 1933 Act, under any other statute, at common law or
otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or trustees, or any controlling
person resulting from such claims or demands arose out of the
acquisition of any Shares by any person which may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Trust's Registration Statement, prospectus, statement
of additional information or sales literature (including amendments and
supplements thereto), or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished or confirmed in writing to
the Trust by the Distributor or its affiliated persons (as defined in
the 1940 Act).
The Trust, its officers and trustees, and any such controlling person,
as aforesaid, shall notify the Distributor of any action brought
against the Trust, its officers and trustees or any such controlling
person, such notification to be given by letter or by telegram
addressed to the Distributor at its principal office in Wellesley
Hills, Massachusetts and sent to the Distributor by the person against
whom such action is brought, within 10 days after the summons or other
first legal process shall have been served. The failure to notify the
Distributor of any such action shall not relieve the Distributor from
any liability which the Distributor may have to the person against whom
such action is brought by reason of any such untrue, or allegedly
untrue, statement or omission, or alleged omission, otherwise than on
account of the Distributor's indemnity agreement contained in this
paragraph 1.11. The Distributor will be entitled to assume the defense
of any suit brought to enforce any such claim, demand or liability,
but, in such case, such defense shall be conducted by counsel of good
standing chosen by the Distributor and approved by the Trust, which
approval shall not unreasonably be withheld. In the event the
Distributor elects to assume the defense of any such suit and retain
counsel of good standing approved by the Trust, the defendant or
defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Distributor
does not elect to assume the defense of any such suit, or in case the
Trust reasonably does not approve of counsel chosen by the Distributor,
or in case there is a conflict of interest between the Trust and the
Distributor, the Distributor will reimburse the Trust, its officers and
trustees, or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any counsel
retained by the Trust or them. The Distributor's indemnification
agreement contained in this paragraph 1.11 and the Distributor's
representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or
on behalf of the Trust, its officers and trustees, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Trust's benefit, to the benefit
of its several officers and trustees, and their respective estates, and
to the benefit of the controlling persons and their successors. The
Distributor agrees promptly to notify the Trust of the commencement of
any litigation or proceedings against the Distributor or any of its
officers, directors or employees in connection with the issue and sale
of any Shares.
1.12 No Shares shall be offered by either the Distributor or the Trust under
any of the provisions of this Agreement and no orders for the purchase
or sale of Shares hereunder shall be accepted by the Trust if and so
long as effectiveness of the Registration Statement then in effect or
any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a current prospectus
as required by Section 5(b)(2) of said Act is not on file with the SEC;
provided, however, that nothing contained in this paragraph 1.12 shall
in any way restrict or have any application to or bearing upon the
Trust's obligation to repurchase Shares from any shareholder in
accordance with the provisions of the Trust's Registration Statement,
Declaration of Trust, or bylaws.
1.13 The Trust agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, prospectus or statement of additional information then in
effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, prospectus
or statement of additional information then in effect or the initiation
by service of process on the Trust of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, prospectus or
statement of additional information then in effect or that requires the
making of a change in such Registration Statement, prospectus or
statement of additional information in order to make the statements
therein not misleading; and
(d) of all actions of the SEC with respect to any amendments to any
Registration Statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
For purposes of this section, informal requests by or acts of the Staff
of the SEC shall not be deemed actions of or requests by the SEC.
1.14 The Distributor may enter into selling agreements with selected dealers
or other institutions with respect to the offering of the Shares to the
public. Each such selling agreement will provide (a) that all payments
for purchases of Shares will be sent directly from the dealer or such
other institution to the Funds' transfer agent and (b) that, if payment
is not made with respect to purchases of Shares at the customary or
required time for settlement of the transaction, the Distributor will
have the right to cancel the sale of the Shares ordered by the dealer
or such other institution, in which case the dealer or such other
institution will be responsible for any loss suffered by any Fund or
the Distributor resulting from such cancellation. The Distributor may
also act as disclosed agent for a Fund and sell Shares of that Fund to
individual investors, such transactions to be specifically approved by
any officer of that Fund. The Distributor shall enter into selling
agreements only with organizations that are either members in good
standing of the National Association of Securities Dealers, Inc. or
financial institutions that are not required to be such members. All
selling agreements shall be in such form as is approved by the
President of the Fund.
2. Term
This Agreement shall become effective on November 15, 1996 and, unless
sooner terminated as provided herein, shall continue until June 30,
1998 and thereafter shall be renewed for successive one-year terms,
provided such continuance is specifically approved at least annually by
(i) the Trust's Board of Trustees or (ii) by a vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of the
Trust, provided that in either event the continuance is also approved
by a majority of the Trustees who are not parties to this Agreement and
who are not interested persons (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is terminable
with respect to the Trust without penalty, on at least sixty days'
written notice, by the Trust's Board of Trustees, by vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of
the Trust, or by the Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940
Act).
3. Limitation of Liability
The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with
the performance of its obligations and duties under this Agreement,
except a loss resulting from the Distributor's willful misfeasance, bad
faith or gross negligence in the performance of such obligations and
duties, or by reason of its reckless disregard thereof. The Trust will
indemnify the Distributor against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or
suit not resulting from the willful misfeasance, bad faith or gross
negligence of the Distributor in the performance of such obligations
and duties or by reason of its reckless disregard thereof; provided,
however, that as to any matter disposed of by a compromise payment by
the Distributor, pursuant to a consent decree or otherwise, no
indemnification either for such payment or for any other expenses shall
be provided unless there has been a determination that the Distributor
did not engage in willful misfeasance, bad faith or gross negligence or
reckless disregard of the performance of its obligations and duties (i)
by the court or other body approving the settlement or other
disposition; or (ii) based upon a review of readily available facts (as
opposed to a full trial-type inquiry), by written opinion from
independent legal counsel approved by the Board of Trustees; or (iii)
by a majority of the Board of Trustees who are neither interested
persons of the Trust (as defined in the 1940 Act) nor parties to the
matter, based upon a review of readily available facts (as opposed to a
full trial-type inquiry).
4. Notices
All notices and other communications (collectively referred to as a
"Notice" or "Notices" in this paragraph) hereunder shall be in writing
or by telegram, cable, telex or facsimile sending device. Notices shall
be addressed (a) if to the Distributor at its address, 20 William
Street, Suite 310, P.O. Box 9135, Wellesley Hills, Massachusetts 02181;
(b) if to the Trust, at its principal place of business or (c) if to
neither of the foregoing, at such other address as to which the sender
shall have been notified by any such Notice or other communication. The
Notice may be sent by first-class mail, in which case it shall be
deemed to have been given three days after it is sent, or if sent by
telegram, cable, telex or facsimile sending device, it shall be deemed
to have been given immediately.
5. Further Actions
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
6. Amendments
This Agreement or any part hereof may be changed or waived only by an
instrument in writing signed by the party against which enforcement of
such change or waiver is sought.
7. Governing State Law
This Agreement shall be governed by and its provisions shall be
construed in accordance with the laws of the Commonwealth of
Massachusetts.
8. Matters Relating to the Trust as a Massachusetts Business Trust
The names "Insight Premier Funds" and "Trustees of Insight Premier
Funds" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time
under a Declaration of Trust dated September 13, 1996 to which
reference is hereby made and a copy of which is on file at the office
of the Secretary of the Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or
hereafter filed. The obligations of "Insight Premier Funds" entered
into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, Shareholders
or representatives of the Trust personally, but bind only the assets of
the Trust, and all persons dealing with a Fund must look solely to the
assets of the Trust belonging to such Fund for the enforcement of any
claims against the Trust. No Fund shall be responsible for the
obligations of any other Fund hereunder.
9. Miscellaneous
This Agreement embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter thereof. The captions in
this Agreement are included for convenience of reference only and in no
way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit
of the parties hereto and their respective successors. This Agreement
may be executed in one or more counterparts, all of which taken
together shall be deemed one original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
INSIGHT PREMIER FUNDS
By:/s/ Eric Godes
Title:Vice President and Secretary
INSIGHT BROKERAGE SERVICES, INC.
By:/s/ Eric M. Kobren
Title:President
<PAGE>
Page 151
SCHEDULE A
to the Distribution Agreement
between Insight Premier Funds and
Insight Brokerage Services, Inc.
Name of Series
Insight Growth Fund
Insight Moderate Growth Fund
Insight Conservative Allocation Fund
<PAGE>
Exhibit 8(a)
CUSTODY AGREEMENT
AGREEMENT dated as of November 18, 1996, among each of the mutual funds
listed on Appendix A hereto (each referred to herein as the "Fund", each of
which is acting on its own behalf and not on behalf of any other Fund), each
Fund being a business trust or series thereof organized under the laws of the
Commonwealth of Massachusetts, having its principal office and place of business
at 20 William Street, P.O. Box 9135, Wellesley Hills, Massachusetts 02181, and
BOSTON SAFE DEPOSIT AND TRUST COMPANY (the "Custodian"), a Massachusetts trust
company with its principal place of business at One Boston Place, Boston,
Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within
Section 2(a)3 of the 1940 Act.
(b) "Authorized Person" shall be deemed to include the Chairman of the
Board of Trustees, the President, and any Vice President, the Secretary,
the Treasurer or any other person, whether or not any such person is an
officer or employee of the Fund, duly authorized by the Board of
Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the certification annexed hereto as
Appendix B or such other certification as may be received by the
Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(d) "Business Day" shall mean any day on which the Fund, the Custodian,
the Book-Entry System and appropriate clearing corporation(s) are open
for business.
(e) "Certificate" shall mean any notice, instruction or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on
behalf of the Fund by any two Authorized Persons or any two officers
thereof.
(f) "Master Trust Agreement" shall mean the Declaration of Trust of the
Fund dated September 13, 1996 as the same may be amended from time to
time.
(g) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended,
its successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be named
in a Certificate authorized to act as a depository under the 1940 Act,
its successor or successors and its nominee or nominees.
(h) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof ("U.S. government securities"), commercial
paper, bank certificates of deposit, bankers' acceptances and short-term
corporate obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such
purchase or sale, and repurchase and reverse repurchase agreements with
respect to any of the foregoing types of securities.
(i) "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person.
(j) "Prospectus" shall mean the Fund's current prospectus and statement
of additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
(k) "Shares" refers to shares of beneficial interest, $.001 par value
per share of the Fund.
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, other
securities, derivative instruments, commodities interests and other
investments from time to time owned by the Fund.
(m) "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(n) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex.
(o) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as custodian
of all the Securities and monies at the time owned by or in the
possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
<PAGE>
3. Compensation.
(a) The Custodian shall be entitled to receive, and the Fund agrees to
pay to the Custodian, such compensation as may be agreed upon from time
to time between the Custodian and the Fund. The Custodian may charge
against any monies held on behalf of the Fund pursuant to this Agreement
such compensation and any expenses incurred by the Custodian in the
performance of its duties pursuant to this Agreement. The Custodian
shall also be entitled to charge against any money held on behalf of the
Fund pursuant to this Agreement the amount of any loss, damage,
liability or expense incurred with respect to the Fund, including
counsel fees, for which it shall be entitled to reimbursement under the
provisions of this Agreement. The expenses which the Custodian may
charge against such account include, but are not limited to, the
expenses of sub-custodians and foreign branches of the Custodian
incurred in settling transactions outside of Boston, Massachusetts or
New York City, New York involving the purchase and sale of Securities.
(b) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein. Such Fee
Schedule does not include out-of-pocket disbursements of the Custodian
for which the Custodian shall be entitled to bill separately.
Out-of-pocket disbursements shall include, but shall not be limited to,
the items specified in the Schedule of Out-of-Pocket charges annexed
hereto as Schedule B and incorporated herein, which schedule may be
modified by the Custodian upon not less than thirty days prior written
notice to the Fund.
(c) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule A of this Agreement a revised Fee
Schedule, dated and signed by an Authorized Person or authorized
representative of each party hereto.
(d) The Custodian will bill the Fund as soon as practicable after the
end of each calendar month, and said billings will be detailed in
accordance with Schedule A, as amended from time to time. The Fund will
promptly pay to the Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian all
Securities and monies owned by it at any time during the period of this
Agreement. The Custodian will not be responsible for such Securities and
monies until actually received by it. The Fund shall instruct the
Custodian from time to time in its sole discretion, by means of Written
Instructions, or, in connection with the purchase or sale of Money
Market Securities, by means of Oral Instructions confirmed in writing in
accordance with Section 11(h) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies are to be
deposited on behalf of the Fund in the Book-Entry System or the
Depository; provided, however, that prior to the deposit of Securities
of the Fund in the Book-Entry System or the Depository, including a
deposit in connection with the settlement of a purchase or sale, the
Custodian shall have received a Certificate specifically approving such
deposits by the Custodian in the Book-Entry System or the Depository.
Securities and monies of the Fund deposited in the Book-Entry System or
the Depository will be represented in accounts which include only assets
held by the Custodian for customers, including but not limited to
accounts for which the Custodian acts in a fiduciary or representative
capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for the Fund and shall credit to the
separate account all monies received by it for the account of such Fund
and shall disburse the same only:
1. In payment for Securities purchased for the Fund, as
provided in Section 5 hereof;
2. In payment of dividends or distributions with
respect to the Shares, as provided in
Section 7 hereof;
3. In payment of original issue or other taxes with
respect to the Shares, as provided in
Section 8 hereof;
4. In payment for Shares which have been redeemed
by the Fund, as provided in Section 8
hereof;
5. Pursuant to Written Instructions setting forth the name and
address of the person to whom the payment is to be made, the
amount to be paid and the purpose for which payment is to be
made, provided that in the event of disbursements pursuant to
this sub-section 4(b)(5), the Fund shall indemnify and hold the
Custodian harmless from any claims or losses arising out of such
disbursements in reliance on such Written Instructions which it,
in good faith, believes to be received from duly Authorized
Persons; or
6. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as
provided in Sections 3 and 11(i).
(c) Confirmation and Statements. Promptly after the close of business on
each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund during said
day. Where securities purchased by the Fund are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of the Depository or the
Book-Entry System, the Custodian shall by book entry or otherwise
identify the quantity of those securities belonging to the Fund. At
least monthly, the Custodian shall furnish the Fund with a detailed
statement of the Securities and monies held for the Fund under this
Agreement.
(d) Registration of Securities and Physical Separation. All Securities
held for the Fund which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities held for the
Fund may be registered in the name of the Fund, in the name of the
Custodian, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the
name of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund reserves the right to
instruct the Custodian as to the method of registration and safekeeping
of the Securities. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository, any
Securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund. The Custodian
shall hold all such Securities specifically allocated to the Fund which
are not held in the Book-Entry System or the Depository in a separate
account for the Fund in the name of the Fund physically segregated at
all times from those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish segregated accounts on behalf of the Fund to
hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such segregated
accounts only as it shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with
respect to all Securities held for the Fund in accordance with this
Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired or
otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or retirement
dates with respect to put bonds which are owned by the Fund and
held by the Custodian or its nominees. Nor shall the Custodian
have any responsibility or liability to the Fund for any loss by
the Fund for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely notification
from the Fund specifying the time, place and manner for the
presentment of any such put bond owned by the Fund and held by
the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Fund for the
accuracy or completeness of any notification the Custodian may
furnish to the Fund with respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the
account of the Fund all rights and similar Securities issued
with respect to any Securities held by the Custodian hereunder
for the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6, 7,
and 8 of this section 4(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the
Book-Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered to
such persons as may be designated in such Written Instructions,
proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities may
be exercised;
2. Deliver or cause to be delivered any Securities held for the
Fund in exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for the
Fund to any protective committee, reorganization committee or
other person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents
as may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of the
Fund and take such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for
the account of the Fund pursuant to
Section 5;
6. Deliver Securities upon the receipt of payment
in connection with any repurchase
agreement related to such Securities entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof or
its agent when such Securities are called, redeemed, retired or
otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Fund for monitoring or
ascertaining any call, redemption or retirement dates with
respect to the put bonds which are owned by the Fund and held by
the Custodian or its nominee. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund
for any missed payment or other default resulting therefrom;
unless the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect
to put bonds;
8. Deliver Securities in connection with any loans of Securities
made by the Fund but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the Fund;
9. Deliver Securities as security in connection with any
borrowings by the Fund requiring a pledge of Fund assets, but
only against receipt of amounts borrowed;
10. Deliver Securities upon receipt of Written Instructions from
the Fund for delivery to the Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be
described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with
short sales by the Fund;
12. Deliver Securities for any purpose expressly
permitted by and in accordance with
procedures described in the Fund's Prospectus; and
13. Deliver Securities for any other proper business purpose,
but only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Trustees signed
by an Authorized Person and certified by the Secretary of the
Fund, specifying the Securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring
such purpose to be a proper business purpose, and naming the
person or persons to whom delivery of such Securities shall be
made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the account of the
Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Written Instruction,
and (ii) with respect to each purchase of Money Market Securities,
either a Written Instruction or Oral Instruction, in either case
specifying with respect to each purchase: (1) the name of the issuer and
the title of the Securities; (2) the number of shares or the principal
amount purchased and accrued interest, if any; (3) the date of purchase
and settlement; (4) the purchase price per unit; (5) the total amount
payable upon such purchase; (6) the name of the person from whom or the
broker through whom the purchase was made, if any; (7) whether or not
such purchase is to be settled through the Book-Entry System or the
Depository; and (8) whether the Securities purchased are to be deposited
in the Book-Entry System or the Depository. The Custodian shall receive
the Securities purchased by or for the Fund, and upon receipt of
Securities shall pay out of the monies held for the account of the Fund
the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Written or
Oral Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities
which are not Money Market Securities, a Written Instruction, and (ii)
with respect to each sale of Money Market Securities, either Written
Instruction or Oral Instructions, in either case specifying with respect
to such sale: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was made;
and (7) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to be
delivered the Securities to the broker or other person designated by the
Fund upon receipt of the total amount payable to the Fund upon such
sale, provided that the same conforms to the total amount payable to the
Fund as set forth in such Written or Oral Instruction. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
reasonably satisfactory to it, and may deliver Securities and arrange
for payment in accordance with the customs prevailing among dealers in
Securities.
<PAGE>
6. Lending of Securities.
If the Fund is permitted by the terms of the Master Trust
Agreement and as disclosed in its Prospectus to lend securities, within
24 hours before each loan of Securities, the Fund shall deliver to the
Custodian a Written Instruction specifying with respect to each such
loan: (a) the name of the issuer and the title of the Securities; (b)
the number of shares or the principal amount loaned; (c) the date of
loan and delivery; (d) the total amount to be delivered to the
Custodian, and specifically allocated against the loan of the
Securities, including the amount of cash collateral and the premium, if
any, separately identified; (e) the name of the broker, dealer or
financial institution to which the loan was made; and (f) whether the
Securities loaned are to be delivered through the Book-Entry System or
the Depository.
Promptly after each termination of a loan of Securities, the
Fund shall deliver to the Custodian a Written Instruction specifying
with respect to each such loan termination and return of Securities: (a)
the name of the issuer and the title of the Securities to be returned;
(b) the number of shares or the principal amount to be returned; (c) the
date of termination; (d) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Written Instruction); (e) the
name of the broker, dealer or financial institution from which the
Securities will be returned; and (f) whether such return is to be
effected through the Book-Entry System or the Depository. The Custodian
shall receive all Securities returned from the broker, dealer or
financial institution to which such Securities were loaned and upon
receipt thereof shall pay the total amount payable upon such return of
Securities as set forth in the Written Instruction. Securities returned
to the Custodian shall be held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Trustees of the Fund certified by the Secretary (i) authorizing the
declaration of distributions on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount
payable to the Transfer Agent on the payment date, or (ii) setting forth
the date of declaration of any distribution by the Fund, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount
payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions or
Written Instructions, as the case may be, the Custodian shall pay out
the total amount payable to the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver or
cause to be delivered to the Custodian a Written Instruction duly
specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions
may be furnished subsequent to the purchase of Shares and that the
information contained therein will be derived from the sales of Shares
as reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original issue
or other taxes required to be paid in connection with such issuance upon
the receipt of a Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the
Fund shall cause the Transfer Agent to promptly furnish to the Custodian
Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained
in such Written Instructions will be derived from the redemption of
Shares as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and that
such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent of the total amount specified
in a Written Instruction issued pursuant to paragraph (d) of this
Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund,
the Custodian, unless otherwise instructed by a Written Instruction
shall, upon receipt of advice from the Fund or its agent stating that
the redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of such
check redemption privilege out of the monies specifically allocated to
the Fund in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for
temporary administrative or emergency purposes using Securities as
collateral for such borrowings, a notice or undertaking in the form
currently employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian Written
Instructions stating with respect to each such borrowing: (1) the name
of the bank; (2) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly
endorsed by the Fund, or other loan agreement; (3) the time and date, if
known, on which the loan is to be entered into (the "borrowing date");
(4) the date on which the loan becomes due and payable; (5) the total
amount payable to the Fund on the borrowing date; (6) the market value
of Securities to be delivered as collateral for such loan, including the
name of the issuer, the title and the number of shares or the principal
amount of any particular Securities; (7) whether the Custodian is to
deliver such collateral through the Book-Entry System or the Depository;
and (8) a statement that such loan is in conformance with the 1940 Act
and the Fund's Prospectus.
(b) Upon receipt of the Written Instruction referred to in subparagraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth
in the Written Instruction. The Custodian may, at the option of the
lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank
by virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the Fund from
time to time such Securities as may be specified in Written Instruction
to collateralize further any transaction described in this Section 9.
The Fund shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it. In
the event that the Fund fails to specify in Written Instruction all of
the information required by this Section 9, the Custodian shall not be
under any obligation to deliver any Securities. Collateral returned to
the Custodian shall be held hereunder as it was prior to being used as
collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director, employee
or agent of the Fund's investment adviser, of any sub-investment adviser
of the Fund, or of the Fund's administrator, shall have physical access
to the assets of the Fund held by the Custodian or be authorized or
permitted to withdraw any investments of the Fund, nor shall the
Custodian deliver any assets of the Fund to any such person. No officer,
director, employee or agent of the Custodian who holds any similar
position with the Fund's investment adviser, with any sub-investment
adviser of the Fund or with the Fund's administrator shall have access
to the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized
officer, employee or agent of the Fund, or any duly authorized officer,
director, employee or agent of the investment adviser, of any
sub-investment adviser of the Fund or of the Fund's administrator, from
giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (a) of this Section
10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising
out of the negligence or willful misconduct of the Custodian or any of
its employees, sub-custodians or agents. The Custodian may, with respect
to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the Fund,
and shall be fully protected with respect to anything done or omitted by
it in good faith in conformity with such advice or opinion. The
Custodian shall not be liable to the Fund for any loss or damage
resulting from the use of the Book-Entry System or the Depository.
(b) Limit of Duties. Without limiting the generality of the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any Securities
purchased
by the Fund, the legality of the
purchase thereof, or the propriety of the amount paid therefor;
2. The legality of the sale of any Securities by the
Fund or the propriety of the amount
for which the same are sold;
3. The legality of the issue or sale of any Shares,
or the sufficiency of the amount to be
received therefor;
4. The legality of the redemption of any Shares,
or the propriety of the amount to be paid
therefor;
5. The legality of the declaration or payment of
any distribution of the Fund;
6. The legality of any borrowing for temporary or
emergency administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for,
or considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final crediting of
the account representing the Fund's interest in the Book-Entry System or
the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any amount
due to the Fund from the Transfer Agent nor to take any action to effect
payment or distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such
action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may appoint
one or more banking institutions, including but not limited to banking
institutions located in foreign countries, to act as Depository or
Depositories or as sub-custodian or as sub-custodians of Securities and
monies at any time owned by the Fund. Notwithstanding the generality of
the foregoing, however, the Custodian shall not be liable for any losses
resulting from or caused by events or circumstances beyond its
reasonable control, including, but not limited to, losses resulting from
nationalization, expropriation, devaluation, revaluation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition
or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism, insurrection
or revolution; or any other similar act or event beyond the Custodian's
or its agent's control. This Section shall survive the termination of
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held
by the Fund under the provisions of the Master Trust Agreement and the
Prospectus.
(h) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or Authorized
Person of the Fund. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by an
Authorized Person. The Fund agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral Instructions
in such manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by the close of
business on the same day that such Oral Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect
the validity of the transactions or enforceability of the transactions
hereby authorized by the Fund. The Fund agrees that the Custodian shall
incur no liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from a duly
Authorized Person.
(i) Overdraft Facility and Security for Payment. In the event that the
Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(h) hereof) to make any
payment or transfer of monies on behalf of the Fund for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of the Fund, the
Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion
of such payment or transfer. Any Overdraft provided hereunder: (a) shall
be payable on the next Business Day, unless otherwise agreed by the Fund
and the Custodian; and (b) shall accrue interest from the date of the
Overdraft to the date of payment in full by the Fund at a rate agreed
upon in writing, from time to time, by the Custodian and the Fund. The
Custodian and the Fund acknowledge that the purpose of such Overdraft is
to temporarily finance the purchase of Securities for prompt delivery in
accordance with the terms hereof, to meet unanticipated or unusual
redemptions, to allow the settlement of foreign exchange contracts or to
meet other emergency expenses not reasonably foreseeable by the Fund. The
Custodian shall promptly notify the Fund in writing (an "Overdraft
Notice") of any Overdraft by facsimile transmission or in such other
manner as the Fund and the Custodian may agree in writing. To secure
payment of any Overdraft, the Fund hereby grants to the Custodian a
continuing security interest in and right of setoff against the
Securities and cash in the Fund's account from time to time in the full
amount of such Overdraft. Should the Fund fail to pay promptly any
amounts owed hereunder, the Custodian shall be entitled to use available
cash in the Fund's account and to liquidate Securities in the account as
is necessary to meet the Fund's obligations under the Overdraft. In any
such case, and without limiting the foregoing, the Custodian shall be
entitled to take such other actions(s) or exercise such other options,
powers and rights as the Custodian now or hereafter has as a secured
creditor under the Massachusetts Uniform Commercial Code or any other
applicable law.
(j) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the
Book-Entry System or the Depository and with such reports on its own
systems of internal accounting control as the Fund may reasonably
request from time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter
until such time as this Agreement may be terminated in accordance with
the provisions hereof.
(b) Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
it shall be accompanied by a certified vote of the Board of Trustees of
the Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, which shall be a person qualified to
so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a
certified vote of the Board of Trustees of the Fund, designating a
successor custodian or custodians. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian, which shall
be a person qualified to so act under the 1940 Act. If the Fund fails to
designate a successor custodian, the Fund shall upon the date specified
in the notice of termination of this Agreement and upon the delivery by
the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and monies then
owned by the Fund, be deemed to be its own custodian and the Custodian
shall thereby be relieved of all duties and responsibilities pursuant to
this Agreement, other than the duty with respect to Securities held in
the Book-Entry System which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the
Fund under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon
the assets and property of the Fund, as provided in the Master Trust
Agreement. The execution and delivery of this Agreement have been
authorized by the Trustees of the Fund, and signed by an authorized
officer of the Fund, acting as such. Neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed
to have been made by any of them or any shareholder of the Fund
individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets and
property of the Fund as provided in the Master Trust Agreement. No
series of the Fund shall be liable for the obligations of any other
series under this Agreement.
14. Miscellaneous.
(a) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian
a new certification in similar form in the event that any such present
Authorized Person ceases to be such an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons as set
forth in the last delivered certification.
(b) Annexed hereto as Appendix C is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such
present officer ceases to be an officer of the Fund or in the event that
other or additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon the signature of
an officer as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given
if addressed to the Custodian and mailed or delivered to it at its
offices at One Boston Place, Boston, Massachusetts 02108 or at such
other place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 20
William Street, Suite 310, Wellesley, Massachusetts 02181 or at such
other place as the Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement (i) authorized, or ratified and approved by a vote of
the Board of Trustees of the Fund, or (ii) authorized, or ratified and
approved by such other procedures as may be permitted or required by the
1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the
written consent of the Custodian, or by the Custodian without the
written consent of the Fund authorized or approved by a vote of the
Board of Trustees of the Fund provided, however, that the Custodian may
assign the Agreement to an Affiliated Person, and any attempted
assignment without such written consent shall be null and void. Nothing
in this Agreement shall give or be construed to give or confer upon any
third party any rights hereunder.
(g) The Fund represents that a copy of the Master Trust Agreement is on
file with the Secretary of the Commonwealth of Massachusetts and with
the Boston City Clerk's Office.
(h) This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(j) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
[INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
year first above written.
FUNDS LISTED ON APPENDIX A
By: /s/ Eric Kobren
Name: Eric Kobren
Title: President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Christopher Healy
Name: Christopher Healy
Title: Vice President
<PAGE>
APPENDIX A
Kobren Insight Funds
- Kobren Growth Fund
- Kobren Moderate Growth Fund
- Kobren Conservative Allocation Fund
<PAGE>
APPENDIX B
I, Eric Godes, the Secretary of the Funds listed on Appendix A, each a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the Fund
and the specimen signatures set forth opposite their respective names are their
true and correct signatures:
Name Signature
Eric M. Kobren /s/ Eric M. Kobren
Edward R. Goldfarb /s/ Edward R. Goldfarb
Eric Godes /s/ Eric Godes
William J. Joyce, Jr. /s/William J. Joyce, Jr.
Michael Castellano /s/Michael Castellano
FUNDS LISTED ON APPENDIX A
By: /s/ Eric Godes
Secretary
Dated: November 18, 1996
<PAGE>
APPENDIX C
I, Eric Godes, the Secretary of the Funds listed on Appendix A, each a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's Master Trust Agreement and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
Eric M. Kobren Chairman of the Board /s/ Eric M. Kobren
Eric M. Kobren President /s/ Eric M. Kobren
Michael Castellano Treasurer /s/ Michael Castellano
Eric Godes Secretary /s/ Eric Godes
Edward R. Goldfarb Vice President and
Investment Officer /s/ Edward R. Goldfarb
FUNDS LISTED ON APPENDIX A
By: /s/ Eric Godes
Secretary
Dated: November 18, 1996
<PAGE>
SCHEDULE A
CUSTODY FEE SCHEDULE
Structural Charges
$2,000 per domestic fund
$5,000 per global fund
Administrative Fee
1.5 basis points on first $250 million of USD assets 1.0 basis points
on all USD assets thereafter 3.0 basis points on first on all non-USD
assets
Global Custody Network Fees
Assets held in specific countries will incur additional annualized asset-based
charges, plus transaction charges associated with each region.
Category 1
United States $6 per mutual fund transaction
$8 per book entry transaction
$25 per physical transaction
$25 per futures transaction
$40 per options round-trip
$6 per wire
$8 per paydown
Category II
Australia Germany 2.0 basis points on the market value
Canada Japan $20 per buy/sell transaction
Cedel United Kingdom
Euroclear South Africa
Category III
Belgium Ireland 3.5 basis points on the market value
Netherlands Switzerland $40 per buy/sell transaction
Sweden
Category IV
Finland New Zealand 6.0 basis points on the market value
Denmark Norway $50 per buy/sell transaction
France Spain
Italy Mauritius
Mexico
<PAGE>
Category V
Austria Singapore 12.0 basis points on market value
Hong Kong Thailand $50 per buy/sell transaction
S. Korea Philippines
Category VI
Argentina Shanghai 20.0 basis points on market value
Shenzen Sri Lanka $60 per buy/sell transaction
Indonesia Malaysia
Portugal
Category VII
Zimbabwe Luxembourg 40.0 basis points on market value
Peru Turkey $85 per buy/sell transaction
Brazil Chile
Columbia Cyprus
Greece Israel
Hungary India
Jordan Botswana
Pakistan Poland
Uruguay Venezuela
Bangladesh Ghana
Trinidad/Tobago
Minimum Fee Per Fund: (based of funds net assets)
Assets of $ 0 - $100 million $3,000.00
Assets of $100 - $200 million $5,000.00
Assets of $200 - $300 million $7,500.00
Assets above $300 million $10,000.00
<PAGE>
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of
each month all out-of-pocket expenses reasonably incurred in connection with the
assets of the Fund.
<PAGE>
EXHIBIT 8(B)
FIRST AMENDMENT TO THE
CUSTODY AGREEMENT
This First Amendment is entered into as of the 8th day of January, 1998
in order to amend the Custody Agreement dated November 18, 1996 (the "Custody
Agreement") by and between Kobren Insight Funds on behalf of each of the mutual
funds listed on Appendix A to the Custody Agreement (the "Fund") and Boston Safe
Deposit and Trust Company (the "Custodian").
WHEREAS, the Fund and the Custodian have entered previously into the
Custody Agreement; and
WHEREAS, pursuant to Section 14(c) of the Custody Agreement, the Fund
and the Custodian wish to amend certain provisions of said Agreement.
NOW, THEREFORE, the parties hereto agree to amend the Custody Agreement
as follows:
1. Section 1(g) of the Custody Agreement is amended by deleting the
last sentence thereof and adding the following:
"The term "Depository" shall further mean a securities depository or
clearing agency that acts as a system for the central handling of
securities or equivalent book-entries in the country that is regulated
by a foreign financial regulatory authority as defined under Section
2(a)(50) of the 1940 Act (as the term is defined below), or a
securities depository or clearing agency that acts as a transnational
system for the central handling of securities or equivalent book
entries."
2. Section 11(a) of the Custody Agreement is amended by adding
to the end thereof the following:
"Notwithstanding anything in the Agreement to the contrary, the
Custodian shall not be liable for any loss or damage resulting from the
deposit or maintenance of Securities or other property of the Fund with
a Depository, the Book-Entry System or any other foreign or domestic
clearing facility, book-entry system, centralized custodial depository
or similar organization."
3. Section 11(f) of the Custody Agreement is amended by adding
to the end thereof the following:
"The Fund may appoint one or more custodians or subcustodians other
than the Custodian to hold Securities and monies or other property of
the Fund; provided, however, that the Custodian shall have no
responsibility for such Securities and monies or other property
deposited by the Fund with such custodians or subcustodians except as
may be explicitly hereafter agreed between the Custodian and the Fund.
Upon request of the Fund, the Custodian may maintain records of such
Securities and monies or other property held and transactions effected
by custodians or subcustodians appointed by the Fund as contemplated in
this Section 11(f) to the extent that information with respect to such
Securities and monies or other property are provided to it. The Fund
agrees that the Custodian will not be responsible for the timeliness or
accuracy or integrity of information provided to it by such custodians
or subcustodians."
4. Section 11(h) of the Agreement is amended by adding to the end thereof the
following:
"The Custodian shall be under no duty to question any direction of an
Authorized Person with respect to the portion of the account over which
such Authorized Person has authority, to review any property held in
the account, to make any suggestions with respect to the investment and
reinvestment of the assets in the account, or to evaluate or question
the performance of any Authorized Person. The Custodian shall not be
responsible or liable for any diminution of value of any Securities or
other property held by the Custodian, its subcustodians or, for
purposes of clarity, by other custodians or subcustodians chosen by the
Fund."
5. All other terms and conditions of the Custody Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the date set forth above.
KOBREN INSIGHT FUNDS, on behalf of the
Funds listed on Appendix A to the Custody Agreement
By: /s/ Eric M. Kobren
Name:Eric M. Kobren
Title:President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Christopher Healy
Name:Christopher Healy
Title:Vice President
<PAGE>
Exhibit 8(c)
SUB-CUSTODIAN AGREEMENT
AGREEMENT made this 8th day of January, 1998, between BOSTON SAFE
DEPOSIT AND TRUST COMPANY, a Massachusetts trust company having its principal
office at One Boston Place, Boston, Massachusetts 02108 (hereinafter referred to
as "Custodian"), NATIONAL FINANCIAL SERVICES CORPORATION, a corporation
organized under the laws of the Commonwealth of Massachusetts having its
principal office at _______________________________________ (hereinafter
referred to as "Sub-Custodian"), and KOBREN INSIGHT FUNDS, a business trust
organized under the laws of Massachusetts having its principal office at 20
William Street, Wellesley Hills, Massachusetts 02181 acting for the account of
its ________________ Fund (hereinafter referred to as the "Fund").
WHEREAS, Custodian pursuant to the direction of the Fund, wishes to
establish an account in the name of the Fund with Sub-Custodian, a member of a
national securities exchange for the purpose of effecting various securities
transactions, including, but not limited to, transactions in the shares of
mutual funds acquired for and held in the Fund's portfolio, on behalf of the
Fund; and
WHEREAS, Sub-Custodian agrees to establish such account in its capacity
as a custodian and to hold and maintain all property in an account in accordance
with the terms and conditions herein set forth; and
WHEREAS, Custodian, Sub-Custodian and the Fund wish to set forth the
terms of their agreement (the "Agreement") concerning the custody of assets to
be held by Sub-Custodian.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Fund, and Custodian, at the direction of the Fund, hereby
appoints SubCustodian to hold, acquire, transfer, or otherwise care for certain
property held by the Fund.
2. Sub-Custodian shall establish a custody account in the Fund's name
or as otherwise directed by the Fund or Custodian (hereinafter referred to as
the "Sub-Custody Account") in which shall be held mutual fund shares or other
securities acceptable to Sub-Custodian as may be purchased through or
transferred to the Sub-Custody Account from time to time by or on the order of
Custodian, pursuant to the direction of the Fund, and all monies and other
property received as income or from the maturity, redemption, sale or other
disposition of property held therein. The property in the Sub-Custody Account
shall be held in custody of Sub-Custodian or an agent thereof (hereinafter
referred to as a "Sub-Custodial Agent") and Sub-Custodian and any Sub-Custodial
Agent shall exercise reasonable care in holding, maintaining, servicing and
disposing of property under this Agreement, and in fulfilling any other
obligations hereunder. Sub-Custodian and any Sub-Custodial Agent shall maintain
the indicia of ownership of all assets held in the Sub-Custody Account within
the jurisdiction of the district courts of the United States as if Fund were
subject to the requirements of the Employee Retirement Income Security Act of
1974, as amended, except to the extent authorized under the U.S. Department of
Labor Regulations Section 2550.404b-1.
3. The ownership of the property in the Sub-Custody Account, whether
such property is held by Sub-Custodian, a Sub-Custodial Agent, or a Securities
Depository (as defined below), shall be clearly recorded on Sub-Custodian's
books as belonging to the Fund or the Custodian on behalf of Fund and not for
Custodian's own interest. To the extent that property of the Fund is physically
held by Sub-Custodian, such property shall be held in accordance with general
practices and applicable laws, including the Securities Exchange Act of 1934, as
amended, and rules and regulations promulgated thereunder. In addition,
Sub-Custodian shall maintain such records as may be necessary to identify the
property hereunder as belonging to the Fund.
4. Securities which are ordinarily held in registered form may be
registered in SubCustodian's name, the name of Sub-Custodian's nominee, or the
name of a Sub-Custodial Agent's nominee.
5. Sub-Custodian and any Sub-Custodial Agent are authorized to exchange
certificates of stock when the stated or par value is revised by the issuer
thereof/any corporation.
6. Sub-Custodian and any Sub-Custodial Agent are authorized to deliver
any instrument or document necessary to register the securities in the
Sub-Custody Account to obtain payment of income therefor and to complete any
sales or deliveries of them.
7. The Fund or its duly authorized agents shall have exclusive
authority over and responsibility for the investment management of the property
in the Sub-Custody Account. SubCustodian shall comply with and carry out
instructions from the Fund or its duly authorized agents directing Sub-Custodian
to make settlement with brokers or other persons designated by the Fund to
effect transactions in securities or other property in the Sub-Custody Account.
SubCustodian shall have full authority to do whatever it reasonably deems
necessary in order to effect such instructions.
8. Sub-Custodian shall have the following additional duties and
responsibilities with respect to the property in the Sub-Custody Account:
a. Effect any and all securities transactions, including,
without limitation, short sales and options transactions, and settle all
purchases, sales and other transactions as instructed by the Fund or Custodian;
b. Send to Custodian and to the Fund a statement of all
receipts and disbursements, including a list of assets, cash balance and income,
at fair market value as of the date each month on which Sub-Custodian normally
prepares account statements and at such additional times, no more frequently
than daily, as may be specified by the Custodian or the Fund, which statements
shall be subject to reconciliation with the Fund in accordance with subsection
(h) below;
c. Collect all dividends, interest, and distributions received
by Sub-Custodian and credit any such amounts to the Sub-Custody Account,
provided that neither Sub-Custodian nor Custodian shall be responsible for the
failure to receive payment of (or late payments of) distributions with respect
to securities or other property held in the Sub-Custody Account;
d. Pay or cause to be paid from the Sub-Custody Account any
and all taxes and levies in the nature of taxes imposed on the property held by
Sub-Custodian in such account by any governmental authority, and, to cooperate
in obtaining all tax exemptions, privileges or other benefits, including
reclaiming and recovering any withholding tax, relating to property held by
Sub-Custodian and to execute any declarations, affidavits, or certificates of
ownership which may be necessary in connection therewith;
e. Attend to, as directed by the Fund, capital changes
information and corporate actions affecting securities held in the Sub-Custody
Account, including but not limited to, securities called for redemption, the
expiration of conversion privileges, the organization of protective committees,
subscription or conversion rights, and mergers, consolidations, reorganizations,
recapitalizations or similar proceedings, as well as dividend, interest and
other income payments;
f. Notify the Fund or its duly authorized agents of capital
changes information and corporate actions affecting securities held in the
Sub-Custody Account of which Sub-Custodian receives notice, including but not
limited to, securities called for redemption, the expiration of conversion
privileges, the organization of protective committees, subscription or
conversion rights, and mergers, consolidations, reorganizations,
recapitalizations or similar proceedings;
g. As directed by the Fund or its duly authorized agents,
exercise rights or take other specific action (including action relative to
legal proceedings) relative to securities or other property in the Sub-Custody
Account and advise Custodian promptly after taking such action; and
h. Review account statements with the Fund or its duly
authorized agents monthly or at such greater frequency as Fund (or Custodian
upon Fund's direction) may reasonably request and take appropriate action to
reconcile all differences.
9. Additional details concerning the operational arrangements necessary
for the effective management of the Sub-Custody Account's investment may be set
forth in written agreements among Sub-Custodian, the Fund and, as necessary,
Custodian. A copy of any agreement between Sub-Custodian and the Fund shall be
furnished to Custodian. No such agreement may increase the liability or
obligations of Custodian without its consent. Under no circumstances shall the
Custodian or Sub-Custodian be liable to any party for any indirect,
consequential or special damages with respect to its role as Custodian or
Sub-Custodian.
10. Sub-Custodian shall make distributions from the Sub-Custody Account
only at the direction of the Fund or its duly authorized agents, or, in the
event of termination or resignation of the Sub-Custodian at the direction of
Custodian, as directed by the Fund, as promptly as possible following receipt of
such direction. Directions from Custodian must be in writing, and be executed by
Custodian or a party authorized by Custodian to sign instructions to
Sub-Custodian. Sub-Custodian has the right to require an authorization to meet
its satisfaction as to form, content and authenticity. Fund will comply with all
applicable provisions of Rule 17f-1 under the Investment Company Act of 1940,
including the following requirements:
a. Sub-Custodian will have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any Fund assets held in the
Sub-Custody Account, except in accordance with the direction of the Fund or its
authorized agent and only for the account of the Fund. Fund assets held in the
Sub-Custody Account will be subject to no lien or charge of any kind in favor of
Sub-Custodian or any person claiming through Sub-Custodian.
b. Fund assets held in the Sub-Custody Account will be
verified by actual examination at the end of each annual and semi-annual fiscal
period by an independent public accountant retained by the Fund, and will be
examined by such accountant at least one other time, chosen by the accountant,
during each fiscal year of the Fund, at Fund's expense. Promptly after each such
examination, the Fund will file with the Securities and Exchange Commission
("SEC") a completed Form N-17f-1, accompanied by a certificate of such
accountant stating that an examination of Fund assets held in the Sub-Custody
Account has been made and describing the nature and extent of the examination.
c. Fund assets held in the Sub-Custody Account will at all
times be subject to inspection by the SEC through its employees or agents. The
Fund will transmit a copy of this Agreement to the SEC promptly after its
execution.
d. This Agreement will not become effective until it is
approved by a majority of the Fund's board of trustees. This Agreement must be
approved by a majority of the Fund's board at least annually.
e. Sub-Custodian agrees to cooperate with Fund or Custodian,
as the case may be, in furtherance of Fund's obligations under Rule 17f-1.
11. Sub-Custodian may at any time or times employ (and may at any time
remove) one or more banks or trust companies or one or more Securities
Depositories (as defined below) to serve as Sub-Custodial Agent hereunder with
respect to the Sub-Custody Account subject to prior written approval of the
Fund.
Such Sub-Custodial Agent is understood to be the agent of the Fund and
not the agent of Custodian or Sub-Custodian. Sub-Custodian shall not be
responsible to the Custodian or the Fund, for any loss or damage from the Fund's
use of such Sub-Custodial Agent. Notwithstanding the foregoing, however, the
Custodian shall not be responsible or liable for any losses or damages suffered
by the Fund whatsoever.
As used herein, the term "Securities Depository" shall mean Depository
Trust Company, and such other book-entry systems used for the central handling
of securities as the Fund's board may approve (which may include systems where
all securities of a particular class or series of any issuer are treated as
fungible) where securities deposited within such system may be transferred by
bookkeeping entry without physical delivery of the securities.
12. Sub-Custodian's rights, powers and duties and Custodian's rights,
powers and duties under this Agreement shall be limited to those specifically
listed above unless and until hereafter changed by means of a written agreement
between Custodian, Sub-Custodian, and the Fund. Neither the Sub-Custodian nor
the Custodian shall be under any duty to question any direction of the Fund with
respect to the portion of the Sub-Custody Account over which such Fund has
authority, to review any property held in the Sub-Custody Account, to make any
suggestions with respect to the investment and reinvestment of the assets in the
Sub-Custody Account or to evaluate or question the performance of the Fund.
Neither the Sub-Custodian nor the Custodian shall be responsible or liable for
any diminution of value of any securities or other property held by the
Custodian or Sub-Custodian.
13. Sub-Custodian will supply Custodian with such statements regarding
the SubCustody Account as Custodian may reasonably request in the ordinary
course of Sub-Custodian's business.
14. Neither Sub-Custodian nor Custodian shall be liable for any losses,
costs, damages, liabilities or expenses suffered by or incurred by Fund as a
result of any transaction executed hereunder, or any other action taken or not
taken by Sub-Custodian or Custodian hereunder for the Fund's account at the
direction, of the Fund, its agent or otherwise, except to the extent that such
loss, cost, damage, liability or expense is the result of Sub-Custodian's own,
or Custodian's own, as the case may be, bad faith or negligence. If Custodian
shall cease to act as custodian to Fund, its obligations hereunder shall end,
and the Fund shall ensure that any assets then held in the account shall
continue to be held in accordance with the terms hereof by a substitute
custodian reasonably satisfactory to Sub-Custodian and the Fund. Neither the
Custodian nor Sub-Custodian shall be responsible or liable for any losses
resulting from nationalization, strikes, expropriation, devaluation, seizure, or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the property in the account; or the breakdown, failure or malfunction
of any utilities or telecommunications systems; or any order or regulation of
any banking or securities industry including changes in market rules and market
conditions affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or acts of God, or any other similar
or third party event.
This Section shall survive the termination of this Agreement.
Sub-Custodian hereby agrees to indemnify and hold Custodian and Fund
harmless from and against any claims, liabilities, costs, damages or expenses
(including reasonable attorney's fees) ("Damages") the Custodian and/or the Fund
may incur or pay out by reason of the negligence or willful misconduct or the
part of Sub-Custodian with respect to its duties hereunder. The right to such
indemnification shall remain in full force and effect after termination of this
Agreement.
Sub-Custodian may act in accordance with written or oral instructions
from the Fund or other duly authorized agents, and Sub-Custodian shall be fully
protected in acting in accordance therewith or for failing to act in the absence
thereof. The Fund and Custodian shall certify to Sub-Custodian the names and
specimen signatures of persons authorized to act hereunder. For purposes of
liquidating the Sub-Custody Account, written directions to Sub-Custodian from
the Fund or Custodian shall be signed by an officer (or partner) of the Fund or
Custodian, as the case may be, or by a person specifically designated to act for
the Fund or Custodian, as the case may be, by an officer (or partner) thereof.
Communications to the Sub-Custodian shall be sent to its offices at
_________________________ or to such other address as Sub-Custodian shall
specify, and such communications shall be binding upon Sub-Custodian when
received by it. Notwithstanding anything herein to the contrary, Sub-Custodian
shall be fully protected in acting in accordance with directions with respect to
securities transactions (including without limitation the affirmation and/or
confirmation of such transactions) received by it through a system or
arrangement for the coordination of securities transaction settlements operated
by Depository Trust Company or by any central securities depository, securities
clearing organization or book entry system which serves to link investment
managers, securities brokers and custodian banks, to the same extent as if the
directions were in writing.
The duties of Sub-Custodian shall only be those specifically undertaken
pursuant to this Agreement, and Sub-Custodian shall not be responsible for an
act or omission of another person in carrying out any responsibility imposed
upon such person with respect to the property held under this Agreement whether
such responsibility is allocated to such other person by this Agreement or
pursuant to a procedure established in this Agreement or otherwise.
Sub-Custodian shall discharge its duties under this Agreement with the care,
skill and diligence that it would devote to its own property. Sub-Custodian is
not a fiduciary with respect to the Fund.
15. Unless otherwise specified in this Agreement, all notices and
communications with respect to matters contemplated by this Agreement shall be
in writing, and delivered by mail, postage prepaid, or confirmed telex, to the
following addresses (or to such other addresses as either party hereto may from
time to time designate by notice duly given in accordance with this paragraph):
To Sub-Custodian:
Attn:
To Custodian: Boston Safe Deposit and Trust Company
Client Services Center
One Cabot Road, AIM: 028-003L
Medford, MA 02155-5160
Attn: Chris Healy
<PAGE>
To Fund:
Attn:
16. Sub-Custodian shall be entitled to reasonable compensation for its
services under this Agreement in accordance with a fee schedule agreed upon by
Fund, and Sub-Custodian. The fee schedule may be modified from time to time by
mutual agreement. Sub-Custodian shall also be entitled to reimbursement for the
reasonable expenses incurred by it in the discharge of its duties under this
Agreement.
17. This Agreement shall be binding upon and inure to the benefit of
the parties and their permitted assigns. This Agreement may not be assigned by
either party without prior written consent of the other parties except for an
assignment and delegation of all the Sub-Custodian's rights and obligations
hereunder in whatever form the Sub-Custodian determines may be appropriate to a
partnership, corporation, trust or other organization in whatever form that
succeeds to all or substantially all of the Sub-Custodian's assets and business
and that assumes such obligations by contract, operation of law or otherwise.
Upon any such delegation and assumption of obligations, the Sub-Custodian shall
be relieved of and fully discharged from all obligations hereunder, whether such
obligations arose before or after such delegation and assumption. This Agreement
shall bind any successor in interest of the parties hereto
18. This Agreement will be construed in accordance with applicable
federal law and the laws of the Commonwealth of Massachusetts.
19. This Agreement may be modified by written agreement of the
Sub-Custodian and the Fund; provided that no such modification may increase
Custodian's liability or responsibility or affect any other party's obligations
to Custodian without Custodian's written consent. This Agreement may be
terminated at any time upon thirty (30) days' written notice by Sub-Custodian to
Custodian and the Fund or by Custodian to Sub-Custodian and the Fund, which
thirty (30) days' written notice requirement may be waived by mutual consent, in
either of which events the assets then in the Sub-Custody Account shall be
disposed of as and in such time as the Fund or, upon direction of the Fund,
Custodian, shall direct. Notwithstanding the foregoing, this Agreement shall
remain in full force and effect so long as there are any open or unsettled
positions in the Sub-Custody Account or funds owing to Sub-Custodian.
20. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
21. Limitation on Liability. The obligations of each series of the Fund
under this Agreement are not binding upon any of the trustees, officers or
shareholders of the Fund individually, but are binding only upon that series and
its assets. No series of the Fund will be liable for the obligations of any
other series under this Agreement.
[INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the 8th day of January, 1998.
BOSTON SAFE DEPOSIT AND TRUST COMPANY,
as Custodian
By: /s/Christopher Healy
Title: Vice President
NATIONAL FINANCIAL SERVICES CORPORATION, as Sub-Custodian
By: /s/ Glen Peterson
Title: Senior Vice President
KOBREN INSIGHT FUNDS, for the account of its ________________ Fund,
as Fund
By: /s/ Eric M. Kobren
Title: President
<PAGE>
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Kobren Insight Funds:
Kobren Growth Fund
Kobren Moderate Growth Fund
Kobren Conservative Allocation Fund
We consent to the inclusion of our report dated February 18, 1998 on our audits
of the financial statements and financial highlights of the above referenced
funds, which report is included in the Annual Report to Shareholders for the
period ended December 31, 1997, which is in turn incorporated by reference into
the Statement of Additional Information with respect to the Post Effective
Amendment to the Registration Statement on Form N-1A under the Securities Act of
1933 as amended. We further consent to the reference to our Firm under the
captions "Financial Highlights" and "Additional Information" in the Prospectus
and "Custodian, Counsel and Independent Accountants" in the Statement of
Additional Information.
/s/COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 15, 1998
- -----------------------------------------------------------------------------
Washington, DCBoston, MALondon, UK*
- -----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
HALE AND DORR LLP INCLUDES PROFESSIONAL CORPORATIONS
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
*BROBECK HALE AND DORR INTERNATIONAL (AN INDEPENDENT JOINT VENTURE LAW FIRM)
- -----------------------------------------------------------------------------
Exhibit 11(b)
Counsellors at Law
60 State Street, Boston, Massachusetts 02109
617-526-6000 o fax 617-526-5000
<PAGE>
151
April 17, 1998
Kobren Insight Funds
One Exchange Place
Boston, Massachusetts 02109
Ladies and Gentlemen:
We understand that Kobren Insight Funds (the "Trust") is about to file
with the Securities and Exchange Commission ("SEC") a post-effective amendment
to the Trust's registration statement. We hereby consent to being named in the
post- effective amendment as experts and as counsel to the Trust.
Very truly yours,
/s/Hale and Dorr LLP
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> Kobren Growth Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 58,467,964
<INVESTMENTS-AT-VALUE> 60,968,485
<RECEIVABLES> 1,670,417
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 41,505
<TOTAL-ASSETS> 62,680,407
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 171,134
<TOTAL-LIABILITIES> 171,134
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59,556,319
<SHARES-COMMON-STOCK> 5,432,609
<SHARES-COMMON-PRIOR> 24,557
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 452,433
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,500,521
<NET-ASSETS> 62,509,273
<DIVIDEND-INCOME> 1,776,625
<INTEREST-INCOME> 33,531
<OTHER-INCOME> 0
<EXPENSES-NET> 383,052
<NET-INVESTMENT-INCOME> 1,427,104
<REALIZED-GAINS-CURRENT> 453,335
<APPREC-INCREASE-CURRENT> 2,499,144
<NET-CHANGE-FROM-OPS> 4,379,583
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,427,104)
<DISTRIBUTIONS-OF-GAINS> (902)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,040,941
<NUMBER-OF-SHARES-REDEEMED> (754,794)
<SHARES-REINVESTED> 121,905
<NET-CHANGE-IN-ASSETS> 62,257,925
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (29)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 324,325
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 553,142
<AVERAGE-NET-ASSETS> 43,240,255
<PER-SHARE-NAV-BEGIN> 10.24
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 1.05
<PER-SHARE-DIVIDEND> (0.27)
<PER-SHARE-DISTRIBUTIONS> (0.00)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.51
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> Kobren Moderate Growth Fund
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 39,939,716
<INVESTMENTS-AT-VALUE> 41,921,185
<RECEIVABLES> 1,572,731
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 29,328
<TOTAL-ASSETS> 43,523,244
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 142,267
<TOTAL-LIABILITIES> 142,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,351,231
<SHARES-COMMON-STOCK> 3,633,723
<SHARES-COMMON-PRIOR> 18,903
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,048,277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,981,469
<NET-ASSETS> 43,380,977
<DIVIDEND-INCOME> 1,557,018
<INTEREST-INCOME> 266,475
<OTHER-INCOME> 0
<EXPENSES-NET> 220,103
<NET-INVESTMENT-INCOME> 1,603,390
<REALIZED-GAINS-CURRENT> 1,050,304
<APPREC-INCREASE-CURRENT> 1,981,333
<NET-CHANGE-FROM-OPS> 4,635,027
<EQUALIZATION> 0
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<TABLE> <S> <C>
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<NAME> Kobren Conservative Allocation Fund
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