Kobren Insight Funds
Semi Annual Report
June 30, 1999
Message To Shareholders
Market Remains Strong As
Leadership Broadens
In many respects, 1999 began in much the same way that 1998 left off. The
popular stock market averages reached record highs. The U.S. economy continued
to grow with little evidence of running out of steam and little evidence of
inflation. On average, corporate profits remained robust and ahead of Wall
Street expectations. Encouraged by a higher stock market, low inflation and low
unemployment, consumer confidence reached record high levels. But, that's about
where the similarities end.
Last year and during the first quarter of this year, we saw the S&P 500
Index surge to record highs based on the performance of a handful of companies.
Because this index is weighted by the size of its component companies (i.e.
market capitalization), the tremendous performance of the very largest growth
stocks overwhelmed the more modest performance of the vast majority of publicly
traded stocks. Last year, for example, the average stock in the S&P 500 rose
only 7%, while the index itself rose 28%. This narrow market advance caused a
great deal of investor anxiety, which continued throughout the first quarter of
this year.
A More Democratic Market
In April, the market's dynamics changed significantly. Investors took
profits in many of their mega-cap, highly valued growth stocks in favor of more
reasonably valued companies that could benefit from the strong economy.
Investors also flocked to small-cap stocks which had been ignored for well over
a year. In our opinion, the broadening out of the market was long overdue, and
our investment strategy of maintaining a fairly broad exposure to a variety of
fund types allowed both funds to benefit from this dramatic shift.
We are confident that the market will continue its more "democratic" tone,
with the market averages no longer being dominated by a few select companies.
This bodes well for our approach to managing both funds, which maintain
carefully measured exposure to several areas of the market through a diversified
mix of mutual funds.
Where do we go from here? We remain cautiously optimistic. On one hand, we
have to be sensitive to the continued high valuations of stock prices relative
to earnings, growth rates and book value. Yes, the market is more reasonably
valued when you get beyond those mega-cap growth stocks. But the overall market
remains expensive, prompting us to pay close attention to "downside risk." We
are also concerned that the prospects of higher inflation could lead the Federal
Reserve to further raise interest rates, which could hurt stocks even more than
bonds. It is something we are watching.
On the other hand, the economy and corporate profits continue to grow as
companies gain efficiencies through cost-cutting and technology. We are also
encouraged by merger and takeover activity. If the market doesn't assign a
reasonable value to a company, a competitor will (through acquisition). Most
importantly, we are encouraged that the majority of fund managers we've spoken
to recently continue to find attractive investment opportunities. During the
past few months we met and spoke with dozens of fund managers, and most of them
are very upbeat about the broadening out of the market and the ability to find
companies that meet their investment criteria.
Year 2000 (Y2K) Draws Near
As we enter the last six months of the millennium, more and more is being
written about Y2K and its implications. The theories range from a non-event to
Armageddon. In terms of the securities markets, we are very confident that it is
one of the most prepared industries and that any glitches will be contained and
corrected in short order.
Okay, but will there be a large stock market decline as investors panic and
sell all of their securities? Anything is possible, but we believe such an event
is highly unlikely. In fact, just as many investors are likely to view a
millennium sell-off as an opportunity to buy equities. Indeed, investors could
go on a buying binge as the millennium approaches, once it's clear that the
world will not come to an end. Please be assured that we are monitoring the
situation carefully and will continue to invest your assets with the best
managers we can find.
Sincerely,
/s/ ERIC M. KOBREN
Eric M. Kobren
President
<PAGE>
Kobren Growth Fund (6/30/99)
Kobren Growth Fund (Ticker: KOGRX): While the first quarter of 1999 was largely
a continuation of 1998's market action, the second quarter saw dramatic changes
to market leadership. Many investors found it difficult to stay patient and
disciplined as overpriced large cap growth funds captured all the headlines
through this year's first quarter. But patience paid off as small cap and value
funds far outpaced growth funds in the second quarter, helping Kobren Growth
achieve a 15.4% gain during the first six months of 1999.
During the first quarter, Janus Twenty, which represented approximately
18% of the portfolio, surged 23% as fund manager Scott Schoelzel continued his
preference for large cap technology stocks. However, we reduced our weighting in
this sector early in the second quarter in favor of more economically sensitive
funds. In fact, in April we invested 10% of the fund into Fidelity Value which
gained 26% for the second quarter - one of the top returns of any fund we track.
In terms of asset allocation changes, early in the year we eliminated
our bond position, more fully invested our cash and decreased our international
holdings. In addition, we added sector funds Fidelity Select Air Transportation
late in 1998 and Fidelity Select Energy Services early in 1999 which both
represent 3% of the portfolio. Our timing couldn't have been better as they have
gained 51% and 61% respectively since our initial purchase.
[Single Line Chart]
Value of $10,000 invested 12/16/96
Year to 12 Months Annualized
Date Ended Since Inception
Total Return (%) 1999 6/30/99 (12/16/96)
Kobren Growth +15.4% +14.9% +17.8%
[Pie Chart]
Asset Allocation*
Cash 3%
International 10%
U.S. Stocks 87%
[Pie Chart]
Style Allocation*
Cash 3%
Small Cap Growth 3%
International 10%
Small Cap Value 15%
Large Cap Value 19%
Large Cap Growth 24%
Mid Cap Value 26%
Top Holdings*
Kobren Growth Style Alloc (%)
Longleaf Partners Mid Cap Value 15.8
Oakmark Large Cap Value 15.4
Longleaf Partners Small Cap Small Cap Value 14.8
Janus Twenty Large Cap Growth 13.4
Marsico Growth & Income Large Cap Growth 10.5
Fidelity Value Mid Cap Value 10.2
Artisan International Inst'l International 7.0
Fidelity Select Energy Services Small Cap Growth 3.5
Fidelity Select Air Transportation Large Cap Value 3.3
Dreyfus Cash Management Plus Cash 3.3
Total Fund Assets $68,235,289
[Pie Chart]
Top Sectors**
(Total may not equal 100%)
Services 31.4
Industrial Cyclicals 15.4
Financials 13.0
Technology 12.9
Consumer Durables 6.3
Consumer Staples 6.3
Energy 6.2
Health 5.8
Retail 1.9
Utilities 0.8
* Based on total investments
** Equities only.
Kobren Insight Management, Inc. is the registered investment adviser for the
Kobren Insight Funds, and Kobren Insight Brokerage, Inc., a NASD broker/dealer,
is the distributor for the Funds. Performance data reflects past performance and
is not a guarantee of future results. Total return figures include reinvestment
of all distributions. Investment return and principal value will fluctuate with
market conditions and an investor's shares when redeemed may be worth more or
less than their original cost. International investing has special risks,
including currency fluctuation, political and economic instability, and the
volatility of emerging markets.
<PAGE>
Kobren Moderate Growth (6/30/99)
Kobren Moderate Growth Fund (Ticker: KOMGX): Our reluctance to invest too
heavily in large cap growth funds, which held back performance in 1998, proved
beneficial as this sector of the market faltered in this year's second quarter.
Value stole the show as investors finally rediscovered these forgotten funds.
Our decision to invest 8% of the fund in Fidelity Value in April proved
fortuitous as the fund gained 26% in the second quarter. In total, Kobren
Moderate Growth bounced back nicely after a disappointing 1998 to return 9.3%
for the first half of this year.
Other major changes to the fund this year included reducing our bond
exposure in favor of U.S. stock funds. Although it's important to keep some
bonds in the portfolio to dampen volatility, a stronger economy prompted us to
cut back in this area. In contrast, our U.S. stock fund allocation rose from 59%
at year-end to 68% on June 30th.
Marsico Growth & Income currently represents our largest equity fund at
19% of assets. Manager Tom Marsico continues to focus on financials and airlines
while cutting back on technology relative to other aggressive growth funds. For
the first half of the year Marsico Growth & Income gained a very respectable 16%
after a remarkable 43% in 1998. With our diversified approach, Kobren Moderate
Growth is well positioned for what we believe will be a broader market during
the second half.
[Single Line Chart]
Value of $10,000 invested 12/24/96
Year to 12 Months Annualized
Date Ended Since Inception
Total Return (%) 1999 6/30/99 (12/16/96)
Kobren Moderate
Growth +9.3% +5.7% +14.4%
[Pie Chart]
Asset Allocation*
Cash 5%
International 14%
Bonds 13%
U.S. Stocks 68%
[Pie Chart]
Style Allocation*
Cash 5%
Large Cap Value 8%
Small Cap Value 10%
Bonds 13%
International 14%
Mid Cap Value 18%
Large Cap Growth 32%
Top Holdings*
Kobren Moderate Growth Style Alloc (%)
Marsico Growth & Income Large Cap Growth 19.0
Tweedy, Browne Global Value International 14.2
Longleaf Partners Mid Cap Value 9.8
Fidelity Value Mid Cap Value 8.0
MAS Pooled Value Large Cap Value 7.9
Skyline Special Equity Small Cap Value 7.6
Fidelity Advisor Growth
Opportunities T Large Cap Growth 6.7
Gabelli Growth Large Cap Growth 6.2
U.S. Treasury Note 7.50% 2/15/05 Bonds 5.9
Dreyfus Cash Management Plus Cash 5.1
Total Fund Assets $45,918,412
[Pie Chart]
Top Sectors**
(Total may not equal 100%)
Services 24.8
Financials 17.0
Industrial Cyclicals 14.5
Technology 10.8
Consumer Staples 8.6
Health 7.7
Consumer Durables 7.2
Retail 6.0
Energy 2.9
Utilities 0.5
* Based on total investments
** Equities only.
The adviser absorbs certain expenses of each Kobren Insight Fund, without which
total return would have been lower. Portfolio holdings are also subject to
change. Copyright (C)1999. Reproductions in whole or in part are prohibited
except by permission. Data sources: Kobren Insight Management, Inc. and
Morningstar. Postmaster: Send address changes to Kobren Insight Funds, PO Box
5146, Westborough, MA 01581-9936. This report must be preceded or accompanied by
a prospectus. Please read it carefully before investing. You may obtain a
prospectus by calling a Kobren Insight Fund representative at 1-800-4KOBREN
(1-800-456-2736) or by visiting www.kobren.com.
<PAGE>
Portfolio of Investments
Kobren Growth Fund
June 30, 1999
(unaudited)
SHARE MUTUAL FUNDS - 100.03% VALUE (Note 1)
Mid Cap Value - 26.05%
122,548 Fidelity Value Fund $ 6,969,284
365,302 Longleaf Partners Fund 10,805,649
17,774,933
Large Cap Growth - 23.82%
145,176 Janus Twenty Fund 9,115,585
428,546 Marsico Growth & Income Fund 7,135,296
16,250,881
Large Cap Value - 18.67%
69,247 Fidelity Select Air Transportation Fund 2,260,242
263,637 Oakmark Fund 10,482,220
12,742,462
Small Cap Value - 14.82%
416,482 Longleaf Partners Small Cap Fund 10,112,174
International - 9.80%
101,569 Artisan International Fund 1,896,296
256,163 Artisan International Fund, Institutional Class 4,790,241
6,686,537
Small Cap Growth - 3.62%
108,696 Fidelity Select Energy Service Portfolio 2,418,478
1,712 RBB Fund Inc. Numeric Investors Growth Fund 25,745
1,479 RBB Fund Inc. Numeric Investors Micro Cap Fund 26,840
2,471,063
Money Market Fund - 3.25%
2,220,762 Dreyfus Cash Management Plus Fund 2,220,762
Total Mutual Funds (Cost $53,952,358) 68,258,812
TOTAL INVESTMENTS
(Cost $53,952,358*) 100.03% 68,258,812
NET OTHER ASSETS AND LIABILITIES -0.03% (23,523)
TOTAL NET ASSETS 100.00% $ 68,235,289
*For Federal income tax purposes, cost is $53,952,358 and appreciation/
(depreciation) is as follows:
Unrealized appreciation: $14,321,200
Unrealized depreciation: (14,746)
Net unrealized appreciation: $14,306,454
See Notes to Financial Statements
<PAGE>
Portfolio of Investments
Kobren Moderate Growth Fund
June 30, 1999
(unaudited)
SHARE MUTUAL FUNDS - 100.03% VALUE (Note 1)
Large Cap Growth - 31.88%
57,483 Fidelity Advisor Growth Opportunities
Fund, Class T $ 3,077,044
523,333 Marsico Growth & Income Fund 8,713,495
68,871 Gabelli Growth Fund 2,849,862
14,640,401
Mid Cap Value - 17.71%
64,235 Fidelity Value Fund 3,653,061
151,527 Longleaf Partners Fund 4,482,171
8,135,232
International - 14.22%
314,659 Tweedy, Browne Global Value Fund 6,529,172
Small Cap Value - 10.07%
46,781 Longleaf Partners Small Cap Fund 1,135,843
173,418 Skyline Special Equities Fund 3,485,697
4,621,540
Large Cap Value - 7.92%
223,386 MAS Pooled Value Fund 3,636,728
Money Market Fund - 5.12%
2,348,707 Dreyfus Cash Management Plus Fund 2,348,707
Bond - 0.78%
35,557 PIMCo Total Return Institutional Fund 360,197
Total Mutual Funds (Cost $34,396,629) 40,271,977
Principal Amount U.S. Treasury Obligations - 12.06%
U.S. Treasury Notes - 11.40%
$650,000 7.250%, 08/15/04 690,853
2,500,000 7.500%, 02/15/05 2,694,238
250,000 6.500%, 08/15/05 258,037
1,500,000 7.000%, 07/15/06 1,589,707
5,232,835
U.S. Treasury Bond - 0.66%
250,000 8.125%, 08/15/19 302,178
Total U.S. Treasury Obligations
(Cost $5,508,613) 5,535,013
TOTAL INVESTMENTS
(Cost $39,905,242*) 99.76% 45,806,990
NET OTHER ASSETS AND LIABILITIES 0.24% 111,422
TOTAL NET ASSETS 100.00% $ 45,918,412
*For Federal income tax purposes, cost is $39,905,242 and appreciation/
(depreciation) is as follows:
Unrealized appreciation: $6,057,314
Unrealized depreciation: (155,566)
Net unrealized appreciation: $5,901,748
<PAGE>
Statement of Assets and Liabilities
Kobren Insight Funds
June 30, 1999
(unaudited)
Kobren
Kobren Moderate
Growth Growth
Fund Fund
ASSETS:
Investments, at value
See accompanying schedules $ 68,258,812 $ 45,806,990
Interest and dividend receivable 7,279 156,803
Receivable for fund shares sold 25,019 --
Unamortized organization costs 10,333 5,167
Receivable from Investment Advisor -- 5,318
Prepaid expenses and other net assets 1,841 14,046
Total assets 68,303,284 45,988,324
LIABILITIES:
Payable for investment securities purchased -- 8,280
Investment advisory fee payable 33,215 17,423
Accrued Trustees' fees and expenses 2,084 662
Accrued expenses and other payables 32,696 43,547
Total liabilities 67,995 69,912
NET ASSETS $ 68,235,289 $ 45,918,412
Investments, at cost $ 53,952,358 $ 39,905,242
NET ASSETS consist of:
Undistributed (distributions in excess of)
net investment income (loss) $ (174,305) $ 76,298
Accumulated net realized gain
on investments sold 2,781,387 1,376,368
Net unrealized appreciation of investments 14,306,454 5,901,748
Par value (Shares of beneficial interest,
$0.001 per share) 4,716 3,544
Paid-in capital in excess of par value 51,317,037 38,560,454
NET ASSETS $ 68,235,289 $ 45,918,412
SHARES OUTSTANDING 4,716,151 3,543,658
Net asset value, offering and
redemption price per share $ 14.47 $ 12.96
See Notes to Financial Statements
<PAGE>
Statement of Operations
Kobren Insight Funds
For the Six Months Ended June 30, 1999
(unaudited)
Kobren
Kobren Moderate
Growth Growth
Fund Fund
INVESTMENT INCOME:
Dividends $ 53,488 $ 51,471
Interest 3,928 206,418
Total investment income 137,416 257,889
EXPENSES:
Investment advisory fee 238,580 143,326
Administration fee 33,750 33,750
Transfer agent fees 26,756 22,516
Custodian fees 1,570 1,976
Professional fees 13,801 13,181
Trustees' fees and expenses 9,806 3,888
Registration and filing fees 8,687 7,208
Amortization of organization costs 2,083 1,041
Other 6,212 3,938
Total expenses 341,245 230,824
Expenses reimbursed by investment advisor (23,470) (37,813)
Other reductions (6,054) (11,420)
Net expenses 311,721 181,591
NET INVESTMENT INCOME (LOSS) (174,305) 76,298
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security
transactions 1,381,750 477,091
Short-term capital gain distributions
received 38,635 --
Long term capital gain distributions
received 3,389 1,363
Change in unrealized appreciation of
securities (Note 7) 7,822,184 4,291,658
Net realized and unrealized gain on
investments 9,245,958 4,770,112
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $9,071,653 $ 4,846,410
See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets
Kobren Insight Funds
For the Six Months Ended June 30, 1999
(unaudited)
Kobren
Kobren Moderate
Growth Growth
Fund Fund
Net investment income (loss) $ (174,305) $ 76,298
Net realized gain from security
transactions 1,381,750 477,091
Short term capital gains distributions
received 38,635 --
Long term capital gains distributions
received 3,389 1,363
Change in unrealized appreciation
of investments 7,822,184 4,291,658
Net increase in net assets resulting
from operations 9,071,653 4,846,410
Net decrease in net assets from
fund share
Transactions (5,343,109) (5,885,979)
Net increase (decrease) in net assets 3,728,544 (1,039,569)
NET ASSETS:
Beginning of period 64,506,745 46,957,981
End of period $ 68,235,289 $ 45,918,412
Undistributed (distributions in excess
of) net investment income (loss) at
end of period $ (174,305) $ 76,298
Kobren Insight Funds
For the Year Ended December 31, 1998
Kobren
Kobren Moderate
Growth Growth
Fund Fund
Net investment income (loss) $ (128,324) $ 597,833
Net realized (loss) from security
transactions (1,711,222) (1,938,559)
Short term capital gains distributions
received 266,876 224,103
Long term capital gains distributions
received 3,925,774 2,836,492
Change in unrealized appreciation
(depreciation) of investments 3,983,749 (371,379)
Net increase in net assets resulting
from operations 6,336,853 1,348,490
Distribution to shareholders from:
Net investment income and
short term capital gains (138,552) (821,936)
Net realized gains on investments (1,309,372) (1,048,296)
Total distributions (1,447,924) (1,870,232)
Net increase (decrease) in net assets from fund
share transactions (2,891,457) 4,098,746
Net increase in net assets 1,997,472 3,577,004
NET ASSETS:
Beginning of period 62,509,273 43,380,977
End of period $ 64,506,745 $ 46,957,981
Undistributed net investment
income at end of period $ -- $ --
See Notes to Financial Statements
<PAGE>
Financial Highlights
Kobren Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year For the Year For the Period
Ended 6/30/99 Ended Ended Ended
(unaudited) 12/31/98 (f) 12/31/97 12/31/96 (a)
Net asset value - beginning of period $ 12.54 $ 11.51 $ 10.24 $ 10.00
Net investment income (loss) (0.04) (0.02) 0.05 -- (d)
Short term capital gains 0.01 0.05 0.22 --
Net realized and unrealized gains
on investments 1.96 1.29 1.27 0.24
Net increase in net assets resulting from
investment operations 1.93 1.32 1.54 0.24
Distributions from net investment income -- -- (0.05) --
Distributions from net realized short term
capital gains -- (0.03) (0.22) --
Distributions from net realized capital gains -- (0.26) -- (d) --
Total distributions -- (0.29) (0.27) --
Net asset value - end of period $ 14.47 $ 12.54 $ 11.51 $ 10.24
Total return (b) 15.39% 11.45% 15.03% 2.40%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 68,235 $ 64,507 $ 62,509 $ 251
Ratio of net investment income (loss)
to average net assets -0.55% (c) -0.19% 0.60% -0 .97% (c)(e)
Ratio of operating expenses to average net
assets after reimbursement and reductions 0.98% (c) 0.91% 0.89% 1.00% (c)
Portfolio turnover rate 24% 62% 43% n/a (e)
Ratio of operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment advisor and
other reductions 1.07% (c) 1.07% 1.28% n/a (e)
(a) Kobren Growth Fund commenced operations on December 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Growth Fund was in operation for a short period of time, these
ratios are not meaningful. (f) Per share net investment income has been
calculated using the monthly average share method.
</TABLE>
See Notes to Financial Statements
<PAGE>
Financial Highlights
Kobren Moderate Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year For the Year For the Period
Ended 6/30/99 Ended Ended Ended
(unaudited) 12/31/98 12/31/97 12/31/96 (a)
Net asset value - beginning of period $ 11.86 $ 11.94 $ 10.06 $ 10.00
Net investment income 0.02 0.16 0.19 -- (d)
Short term capital gains -- 0.06 0.27 --
Net realized and unrealized gains
on investments 1.08 0.20 1.88 0.06
Net increase in net assets resulting from
investment operations 1.10 0.42 2.34 0.06
Distributions from net investment income -- (0.16) (0.19) --
Distributions from net realized short term
capital gains -- (0.06) (0.27) --
Distributions from net realized capital gains -- (0.28) -- (d) --
Total distributions -- (0.50) (0.46) --
Net asset value - end of period $ 12.96 $ 11.86 $ 11.94 $ 10.06
Total return (b) 9.27% 3.44% 23.25% 0.60%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 45,918 $ 46,958 $ 43,381 $ 190
Ratio of net investment income to
average net assets 0.40% (c) 1.15% 2.76% 8.95% (c)(e)
Ratio of operating expenses to average net
assets after reimbursements and reductions 0.94% (c) 0.91% 0.92% 1.00% (c)
Portfolio turnover rate 23% 50% 14% n/a (e)
Ratio of operating expenses to average net assets before fees waived and/or
expenses reimbursed by investment advisor and
other reductions 1.20% (c) 1.13% 1.58% n/a (e)
(a) Kobren Moderate Growth Fund commenced operations on December 24, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e)Since Kobren Moderate Growth Fund was in operation for a short period of
time, these ratios are not meaningful.
</TABLE>
See Notes to Financial Statements
<PAGE>
Notes to Financial Statements
Kobren Insight Funds -- June 30, 1999 (unaudited)
1. Significant Accounting Policies
Kobren Insight Funds (the "Trust") was organized on September 13, 1996,
as a Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a no-load, open-end
diversified management investment company. Effective May 28, 1999, Kobren
Conservative Allocation Fund merged into the Kobren Moderate Growth Fund, in a
tax-exempt merger. As of June 30, 1999, the Trust offered shares of three funds,
Kobren Growth Fund, Kobren Moderate Growth Fund and Kobren Delphi Value Fund.
Information presented in these financial statements pertains only to Kobren
Growth Fund and Kobren Moderate Growth (individually, a "fund" and collectively,
the "funds"). These funds seek to achieve their investment objectives by
investing primarily in shares of other investment companies ("underlying
funds"), but also may invest directly in securities that are suitable
investments for that fund. Use of Estimates -- The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
followed by the funds in the preparation of their financial statements.
Portfolio Valuation -- The underlying funds are valued according to their stated
net asset value. Each fund's other investment securities are valued at the last
sale price on the securities exchange or national securities market on which
such securities primarily are traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices. Bid price is
used when no asked price is available. Short-term investments are valued at
amortized cost, which approximates market value. Any securities or other assets
for which recent market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees. Dividends and Distributions -- It is the policy of Kobren Growth Fund
and Kobren Moderate Growth Fund to declare and pay dividends from net investment
income annually. Each fund will distribute net realized capital gains (including
net short-term capital gains), unless offset by any available capital loss
carryforward, annually. Additional distributions of net investment income and
capital gains for each fund may be made in order to avoid the application of a
4% non-deductible excise tax on certain undistributed amounts of ordinary income
and capital gain. Income distributions and capital gain distributions are
determined in accordance with income tax regulations, which may differ from
generally accepted accounting principles. These differences are due primarily to
differing treatments of income and gain on various investment securities held by
a fund, timing differences and differing characterizations of distributions made
by a fund. Securities Transactions and Investment Income -- Securities
transactions are recorded on a trade date basis. Realized gain and loss from
securities transactions are recorded on the specific identified cost basis.
Dividend income is recognized on the ex-dividend date. Interest income is
recognized on the accrual basis. Federal Income Tax -- Each fund has qualified
and intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and by distributing substantially all of its earnings to its
shareholders. Therefore, no federal income or excise tax provision is
applicable. Expenses -- Expenses of the Trust which are directly identifiable to
a specific fund are allocated to that fund. Other expenses of the Trust are
allocated among the funds based upon relative net assets of each fund.
2. Investment Advisory Fee, Administration Fee and Other Transactions
The Trust has entered into an investment advisory agreement (the
"Advisory Agreement") with Kobren Insight Management, Inc. ("KIM" or the
"advisor"). The Advisory Agreement provides that each fund pays KIM a fee,
computed daily and paid monthly, at the annual rate of 0.75% of each fund's
average daily net assets. KIM has voluntarily agreed to limit each fund's other
operating expenses to 0.25% of each fund's average daily net assets until
January 1, 2001.
The Trust has also entered into an administration agreement (the
"Administration Agreement") with First Data Investor Services Group, Inc. (the
"Administrator"), a wholly-owned subsidiary of First Data Corporation. The
Administrator also serves as the Trust's transfer agent and dividend paying
agent. Kobren Insight Brokerage, Inc. ("KIB"), an affiliate of KIM, serves as
distributor of the funds' shares and pays all distribution costs. No
distribution fees are paid by the funds.
For the six months ended June 30, 1999, expense reimbursement and other
reductions are as follows:
Expenses Reimbursed
By Investment Advisor Other Reductions (1)
Kobren Growth Fund $ 23,470 $ 6,054
Kobren Moderate Growth Fund 37,813 11,420
(1) Payments made by an underlying fund or its investment advisor, based on
shares held by a Kobren Insight Fund. No officer, director or employee of KIM,
KIB, the Administrator, or any affiliate thereof, receives any compensation from
the Trust for serving as a trustee or officer of the Trust. Each trustee who is
not an "affiliated person" receives an annual fee of $5,000 plus $1,000 for each
board meeting attended and $500 for each committee meeting attended. The Trust
also reimburses out-of-pocket expenses incurred by each trustee in attending
such meetings.
3. Purchases and Sales
The aggregate amounts of purchases and sales of underlying funds and
investment securities, other than short-term securities, for the six months
ended June 30, 1999, were as follows:
Purchases Sales
U.S. Government Other U.S. Government Other
Kobren Growth $545,647 $14,492,024 $3,285,875 $15,020,124
Fund
Kobren Moderate 9,084,097 9,033,555 -- 21,399,969
Growth Fund
4. Shares of Beneficial Interest
As of June 30, 1999, an unlimited number of shares of beneficial
interest, par value $0.001, was authorized for the Trust. Changes in shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended
June 30, 1999 Year Ended
(unaudited) December 31, 1998
Shares Amount Shares Amount
Kobren Growth Fund:
Shares sold 885,615 $ 12,030,226 2,046,221 $ 24,949,435
Shares issued as reinvestment of dividends -- -- 114,032 1,429,965
Shares redeemed (1,313,660) (17,373,335) (2,448,666) (29,270,857)
Net decrease (428,045) $ (5,343,109) (288,413) $ (2,891,457)
Kobren Moderate Growth Fund:
Shares sold 200,045 $ 2,454,580 1,885,448 $ 23,034,304
Shares issued in connection with
reorganization (Note 7) 1,259,682 14,316,241 -- --
Shares issued as reinvestment of dividends -- -- 154,509 1,832,481
Shares redeemed (1,875,796) (22,656,800) (1,713,953) (20,768,039)
Net increase (decrease) (416,069) $ (5,885,979) 326,004 $ 4,098,746
At June 30, 1999, KIM and its affiliates owned 1,094,478 and 422,531 shares of
Kobren Growth Fund and Kobren Moderate Growth Fund, respectively.
</TABLE>
5. Organization Expenses
Expenses incurred in connection with the organization of each fund are
being amortized on a straight-line basis over a period not to exceed sixty
months from the date upon which each fund commenced its operations.
6. Risk Factors of the Funds
Investing in underlying funds through a fund involves additional and
duplicative expenses and certain tax results that would not be present if an
investor were to make a direct investment in the underlying funds. A fund,
together with the other funds and any "affiliated persons" (as such term is
defined in the 1940 Act) may purchase only up to 3% of the total outstanding
securities of an underlying fund. Accordingly, when the Trust, KIM or their
affiliates hold shares of any of the underlying funds, each fund's ability to
invest fully in shares of such underlying funds may be restricted, and KIM must
then, in some instances, select alternative investments for the fund that would
not have been its first choice.
7. Reorganization
At a meeting held on April 12, 1999, the Board of Trustees approved an
Agreement and Plan of Reorganization (the "Agreement") between Kobren Moderate
Growth Fund and Kobren Conservative Allocation Fund. On May 28, 1999, Kobren
Moderate Growth Fund acquired the assets and certain liabilities of the Kobren
Conservative Allocation Fund. The reorganization was structured for tax purposes
to qualify as a tax-free reorganization under the Internal Revenue Code. Prior
to the reorganization, the total shares issued by, the value of the shares
issued by, and the total net assets of the Kobren Moderate Growth Fund were
2,343,540, $29,270,820 and $29,261,266, respectively. The total net assets
contributed by the Kobren Conservative Allocation Fund were $15,736,961
(including $1,420,720 of unrealized appreciation). The total net assets of the
Kobren Moderate Growth Fund after reorganization were $44,998,227.
