KOBREN INSIGHT FUNDS
Kobren Growth
Kobren Moderate Growth
Semi-Annual Report
June 30, 2000
Message To Shareholders
First Quarter Gains Reversed
In Turbulent Second Quarter
The volatile markets of 1999 continued over the past six months as this year's
first and second quarter saw decidedly different results. The technology stocks
that drove the market to record highs last year (and into mid-March) declined
dramatically from March 10th through the end of May. In fact, during the second
quarter virtually all areas of the stock market declined; it was just a matter
of degree. While some of these losses were reversed in June, the Nasdaq
Composite, which is dominated by very large technology companies, still suffered
a 13.2% loss during the second quarter bringing year-to-date returns into
negative territory. International markets fared no better than the U.S. markets
during the second quarter, as the Morgan Stanley EAFE Index declined 3.9% and is
now down 5.5% for the year.
After a profitable first quarter, have the last few months simply been
another one of the violent but short-term declines that the market has shrugged
off time and time again? Or, is this economy finally going to exhibit some of
the classic signs that have accompanied past economic cycles and result in an
extended period of deteriorating stock prices? Last year, we were quite
confident that the economy was healthier than most thought, and we were
confident that corporate earnings would propel stock prices higher. The economic
prospects are less clear as we enter the second half of 2000.
Economy Strong; Interest Rates a Concern
On one hand we still have a very healthy economy. Economic activity grew at
a robust 5.5% rate during the first quarter, and a none-too-shabby 4.1% or so
during the second quarter. Consumer confidence remains at near record high
levels and corporate earnings rose a healthy 20% during the first quarter, and
will likely show double digit growth during the second quarter. On the other
hand, the effects of six interest rate hikes over the past 12 months, along with
other factors such as rising energy costs, may put a crimp in earnings during
the second half of the year. Indeed, recent warnings of less than expected
second quarter earnings may be a precursor of more difficult times ahead.
While higher interest rates will hurt corporate profits, so will
inflationary pressures (if the rate hikes don't have their desired effect).
Higher crude oil prices affect just about every business that relies on
transportation to move their products. Today's low unemployment rate of about 4%
has also caused firms to increase wages and curtail their growth plans because
they can't find help. Demand for real estate, especially in major cities, is
also at a premium sending rents and property prices dramatically higher. All of
these factors will likely slow the economy during the second half of 2000. The
questions are. . . by how much; whether the Federal Reserve will apply the
brakes too heavily; and to what extent has the market already factored these
variables into stock prices?
With the Dow Jones Industrial Average down 8.4%, the worst may be over. We
think it has actually been worse than even this index suggests. In the first
half, only nine of the 30 Dow stocks had positive returns. The average New York
Stock Exchange company is down 26% from its 52-week high, while the average
Nasdaq stock is down 44%.
As we write this report, we are reducing the economic sensitivity inherent
in the funds and placing a greater emphasis on core growth holdings. We continue
to maintain a healthy balance of different market sectors and so-called "New"
versus "Old" Economy stocks. We acknowledge that increased market volatility,
like we've seen during the first half, will likely continue for the remainder of
the year and as we said in last years annual report, "diversification will hold
the key".
Despite our macroeconomic concerns, we still believe that decent gains can
be realized in stock funds during the second half of the year. We will continue
to ferret out those funds run by the best stock-pickers we know that will not be
adversely impacted by a general slowdown in the economy. While we never like to
report negative returns, given all that has happened over the past six months,
we feel the Kobren Insight Funds have held up quite well. By remaining well
diversified, and placing our confidence in the best mutual fund managers in the
industry, we look forward to more profitable times ahead.
Sincerely,
/s/Eric M. Kobren
Eric M. Kobren
President and Portfolio Manager
<PAGE>
KOBREN GROWTH FUND (6/30/00)
Kobren Growth Fund (Ticker: KOGRX): The first half of 2000 saw a tale of two
markets as the impressive performance of growth funds for the first 2 1/2 months
of the year took a back seat to value funds in the second quarter. When all was
said and done, the Kobren Growth fund declined 2.6% for the first half of the
year.
The most impressive performances for the past six months were turned in by
our two industry specific funds, Fidelity Select Biotechnology (+36.6%) and
Fidelity Select Energy Service (+42.3%). While we don't plan to increase
exposure to industry specific funds, we are pleased by the contribution to total
returns. Our top diversified domestic fund this year has been Fidelity
Aggressive Growth which withstood the second quarter technology correction and
eked out a 2.6% gain. While we were disappointed to see manager Erin Sullivan
leave, we believe new manager Robert Bertelson will do an admirable job.
On the international front, Artisan International continues to post
impressive gains appreciating 5.8% so far this year. Manager Mark Yockey has
proven to be an adept stock picker and has found a number of winners in the
telecommunications and technology sectors.
Going forward, we plan to remain diversified across the growth and value
spectrum. However, slower economic growth may lead to a reduction in
economically sensitive funds.
[Line chart for Value of $10,000 invested 12/16/96]
[Box under line chart]
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
------------------------------ ----------------------------- ----------------------------- -----------------------------
Total Return % YTD 12 Months Ended Annualized Since Inception
6/30/00 6/30/00 (12/16/96)
------------------------------ ----------------------------- ----------------------------- -----------------------------
------------------------------ ----------------------------- ----------------------------- -----------------------------
Kobren Growth Fund -2.6% +9.5% +15.4%
------------------------------ ----------------------------- ----------------------------- -----------------------------
</TABLE>
[Pie Chart for Asset Allocation]
U.S. Stocks 76%
International 21%
Cash 3%
[Pie Chart for Style Allocation]
Style Allocation* %
Large / Mid Cap 35%
Growth
International 21%
Mid Cap Value 14%
Large Cap Value 13%
Small Cap Blend 8%
Small Cap Value 6%
Cash 3%
* Based on total net assets
Top Sectors**
(Totals may not equal 100%)
Services 27.4
Technology 18.4
Financials 14.8
Industrial Cyclicals 11.8
Health 8.7
Energy 8.7
Consumer Durables 3.9
Retail 3.1
Consumer Staples 2.3
Utilities 0.9
0% 5% 10% 15% 20% 25% 30%
**Equities Only
Top Ten Holdings*
Kobren Growth Style Alloc (%)
Longleaf Partners Mid Cap Value 14.1%
Artisan International
Institutional International 14.1%
Fidelity Equity Income Large Cap Value 12.9%
Janus Twenty Large Cap Growth 9.6%
Marsico Growth & Income Large Cap Growth 9.4%
Hotchkis & Wiley International International 7.4%
Fidelity Select Energy Services Small Cap Blend 7.3%
Longleaf Partners Small Cap Small Cap Value 6.1%
Fidelity Large Cap Growth 6.0%
Fidelity Aggressive Growth Large Cap Growth 5.9%
Total Fund Assets $71,398,307
*Based on total net assets
[Footnote]
Kobren Insight Management, Inc. is the registered investment adviser for 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. The S&P 500 Index is an unmanaged index of common stocks.
<PAGE>
KOBREN MODERATE GROWTH FUND (6/30/00)
Kobren Moderate Growth Fund (Ticker: KOMGX): After an impressive first quarter
of 2000, the equity markets cooled in this year's second quarter. Moderate
Growth's well diversified portfolio proved beneficial as we saw only a modest
1.6% decline over the first half of the year.
Our top performing fund so far this year is Fidelity Growth Company lead by
manager Steven Wymer with a 9.1% first half return. Steve's job is getting
tougher as the fund has more than tripled in size over the last few years. We
still have a great deal of confidence, however, in Steve's industry and stock
picking abilities. Our largest domestic holding and stalwart of the last few
years, Marsico Growth & Income has been hurt by the correction in the NASDAQ
market. For the year this fund has declined 7.5%. Despite an agreement to sell
the remainder of his firm to Bank of America, Tom Marsico remains committed to
running this fund and the outlook is bright as many of Tom's holdings are now
selling at much more attractive valuations.
Internationally, Tweedy, Browne Global Value continues to provide much
needed diversification to the portfolio. This fund's 5.8% first half return can
be attributed to an absence of technology holdings and fully hedging against
foreign currency fluctuations. Managers Christopher Browne, William Browne and
John Spears continue to impress us through a variety of market conditions.
[Line chart for Value of $10,000 invested 12/24/96]
[Box under line chart]
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
------------------------------ ----------------------------- ----------------------------- -----------------------------
Total Return % YTD 12 Months Ended Annualized Since Inception
6/30/00 6/30/00 (12/24/96)
------------------------------ ----------------------------- ----------------------------- -----------------------------
------------------------------ ----------------------------- ----------------------------- -----------------------------
Kobren Moderate Growth Fund -1.6% +4.5% +11.5%
------------------------------ ----------------------------- ----------------------------- -----------------------------
</TABLE>
[Pie Chart for Asset Allocation]
Asset Allocation* %
U.S. Stocks 67%
International 16%
Bonds 14%
Cash 3 %
Style Allocation* %
Large Cap Growth 33%
Mid Cap Value 17%
International 17%
Bonds 14%
Large Cap Value 8%
Small Cap Value 8%
Cash 3%
*Based on total net assets
Top Ten Holdings*
Kobren Moderate Growth Style Alloc (%)
Tweedy, Browne Global Value International 16.5%
Marsico Growth & Income Large Cap Growth 14.0%
Fidelity Growth Company Large Cap Growth 10.8%
Longleaf Partners Mid Cap Value 9.2%
Fidelity Equity Income Large Cap Value 8.4%
Longleaf Partners Small Cap Small Cap Value 8.3%
Fidelity Value Mid Cap Value 8.0%
Fidelity Large Cap Growth 7.9%
U.S. Treasury Note 7 1/2 2/15/05 Bonds 7.5%
PIMCo Total Return Inst'l Bonds 3.4%
Total Fund Assets $35,149,846
*Based on total net assets
Top Sectors**
(Totals may not equal 100%)
Services 23.0
Technology 16.7
Industrial Cyclicals 16.2
Financial 15.3
Health 8.6
Consumer Staples 5.7
Consumer Durables 4.7
Retail 4.6
Energy 4.6
Utilities 0.6
0% 5% 10% 15% 20% 25%
**Equities only
[Footnote] The adviser absorbs certain expenses of each Kobren Insight Fund,
without which total returns would have been lower. Portfolio holdings are also
subject to change. Copyright (C) 2000. 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, P.O.
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, 2000 (unaudited)
SHARES Mutual Funds - 100.11% VALUE (Note 1)
Large Cap Growth - 30.89%
70,948 Fidelity Aggressive Growth Fund $ 4,233,448
102,258 Fidelity Fund 4,275,423
88,351 Janus Twenty Fund 6,822,453
332,653 Marsico Growth & Income Fund 6,726,248
22,057,572
International - 21.44%
332,282 Artisan International Fund, Inst'l. Class 10,041,573
192,778 Hotchkis & Wiley International Fund 5,268,619
15,310,192
Mid Cap Value - 14.11%
479,378 Longleaf Partners Fund 10,076,520
Large Cap Value - 12.94%
183,445 Fidelity Equity Income Fund 9,240,113
Small Cap Blend - 7.33%
147,707 Fidelity Select Energy Service Portfolio 5,234,749
Small Cap Value - 6.07%
211,216 Longleaf Partners Small Cap Fund 4,329,934
Mid Cap Growth - 4.24%
33,867 Fidelity Select Biotechnology Portfolio 3,023,983
Small Cap Growth - 0.31%
3,459 RS Emerging Growth Fund 222,947
Money Market Fund - 2.78%
1,981,147 Dreyfus Cash Management Plus Fund 1,981,147
Total Mutual Funds
(Cost $58,484,558) 71,477,157
TOTAL INVESTMENTS
(Cost $58,484,558*) 100.11% 71,477,157
NET OTHER ASSETS
AND LIABILITIES -0.11% (78,850)
TOTAL NET ASSETS 100.00% $ 71,398,307
* For Federal income tax purposes, cost is $58,484,558 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $16,360,460
Unrealized depreciation: (3,367,861)
Net unrealized appreciation: $12,992,599
Kobren Moderate Growth Fund
June 30, 2000 (unaudited)
SHARES Mutual Funds - 89.74% VALUE (Note 1)
Large Cap Growth - 32.68%
66,300 Fidelity Fund $ 2,772,017
41,926 Fidelity Growth Company Fund 3,810,627
242,602 Marsico Growth & Income Fund 4,905,407
11,488,051
Mid Cap Value - 17.21%
67,950 Fidelity Value Fund 2,815,176
153,862 Longleaf Partners Fund 3,234,183
6,049,359
International - 16.50%
271,213 Tweedy, Browne Global Value Fund 5,798,538
Large Cap Value - 8.38%
58,488 Fidelity Equity Income Fund 2,946,045
Small Cap Value - 8.31%
142,389 Longleaf Partners Small Cap Fund 2,918,977
Bond - 3.43%
120,714 PIMCo Total Return Institutional Fund 1,203,518
Money Market Fund - 3.23%
1,136,565 Dreyfus Cash Management Plus Fund 1,136,565
Total Mutual Funds
(Cost $27,568,849) 31,541,053
Principal U.S. Treasury Obligations - 10.9%
Amount
U.S. Treasury Notes - 10.09%
$650,0007.250%, 08/15/04 671,938
2,500,0007.500%, 02/15/05 2,622,657
250,000 6.500%, 08/15/05 252,735
3,547,330
Total U.S. Treasury Obligations
(Cost $3,566,947) 3,547,330
TOTAL INVESTMENTS
(Cost $31,135,796*) 99.83% 35,088,383
NET OTHER ASSETS
AND LIABILITIES 0.17% 61,463
TOTAL NET ASSETS 100.00% $35,149,846
* For Federal income tax purposes, cost is $31,135,796 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $4,571,683
Unrealized depreciation: (619,096)
Net unrealized appreciation: $3,952,587
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
Kobren Insight Funds
June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
<S><C> <C> <C>
ASSETS: Kobren Growth Fund Kobren Moderate Growth Fund
Investments, at value
See accompanying schedules $71,477,157 $ 35, 088,383
Interest and dividend receivable 16,208 107,119
Receivable for fund shares sold 1,200 ----
Unamortized organization costs 6,121 3,062
Prepaid expenses and other net assets 338 338
Total assets 71,501,024 35,198,902
LIABILITIES:
Payable for fund shares redeemed 17,439 ----
Investment advisory fee payable 43,750 16,872
Accrued Trustee's fees and expenses 3,286 1,844
Accrued expenses and other payables 38,242 30,340
Total liabilities 102,717 49,056
NET ASSETS $ 71, 398,307 $ 35,149,846
Investments, at cost $ 58,484,558 $ 31,135,796
NET ASSETS consist of:
Undistributed net investment income (loss) $ (223,321) $ 24,335
Accumulated net realized gain on investments sold 6,294,677 2,785,652
Net unrealized appreciation of investments 12,992,599 3,952,587
Par value (Shares of beneficial interest, $0.01 per share) 4,778 2,744
Paid-in capital in excess of par value 52,329,574 28,384,528
NET ASSETS $ 71,398,307 $ 35,149,846
SHARES OUTSTANDING 4,778,453 2,743,513
Net asset value, offering and redemption price per share $ 14.94 $ 12.81
</TABLE>
<PAGE>
Statements of Operations
Kobren Insight Funds
For the Six Months Ended June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
<S><C> <C> <C>
Kobren
Kobren Moderate
Growth Fund Growth Fund
INVESTMENT INCOME:
Dividends $133,719 $ 97,761
Interest -- 109,520
Total investment income 133,719 207,281
EXPENSES:
Investment advisory fee 267,703 136,958
Administration fee 33,750 33,750
Transfer agent fees 26,453 20,742
Custodian fees 1,495 1,500
Professional fees 13,001 6,135
Trustees' fees and expenses 8,916 4,476
Registration and filing fees 8,755 7,244
Amortization of organization costs 2,095 1,046
Other 12,084 6,297
Total expenses 374,252 218,148
Expenses reimbursed by investment adviser (17,212) (35,202)
Net expenses 357,040 182,946
NET INVESTMENT INCOME (LOSS) (223,321) 24,335
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 3,139,704 662,229
Short term capital gain distributions received 256,874 23,900
Long term capital gain distributions received 96,239 37,464
Change in unrealized depreciation of securities (5,135,672) (1,327,329)
Net realized and unrealized loss on investments (1,642,855) (603,736)
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (1,866,176) $ (579,401)
</TABLE>
<PAGE>
Statements of Changes in Net Assets
Kobren Growth Fund
<TABLE>
<CAPTION>
<S><C> <C> <C>
For the Six
Months Ended For the Year
June 30, 2000 Ended December 31,
(unaudited) 1999
Net investment loss $ (223,321) $ (226,300)
Net realized gain from security transactions 3,139,704 1,828,303
Short term capital gains distributions received 256,874 672,939
Long term capital gains distributions received 96,239 3,386,572
Change in unrealized appreciation (depreciation) of investments (5,135,672) 11,644,001
Net increase (decrease) in net assets resulting from operations (1,866,176) 17,305,515
Distribution to shareholders from:
Net investment income and short term capital gains -- (446,672)
Net realized gains on investments -- (3,770,595)
Total distributions -- (4,217,267)
Net increase (decrease) in net assets from fund share
transactions 113,145 (4,443,655)
Net increase (decrease) in net assets (1,753,031) 8,644,593
Net Assets:
Beginning of period 73,151,338 64,506,745
End of period $ 71,398,307 $ 73,151,338
Net investment loss at end of period $ (223,321) $ --
</TABLE>
Kobren Moderate Growth Fund
<TABLE>
<CAPTION>
<S><C> <C> <C>
For the Six
Months Ended For the Year
June 30, 2000 Ended December 31,
(unaudited) 1999
Net investment loss $ 24,335 $ 244,305
Net realized gain from security transactions 662,229 1,291,233
Short term capital gains distributions received 23,900 224,923
Long term capital gains distributions received 37,464 1,632,320
Change in unrealized appreciation (depreciation) of investments (1,327,329) 3,669,826
Net increase (decrease) in net assets resulting from operations (579,401) 7,062,607
Distribution to shareholders from:
Net investment income and short term capital gains -- (469,256)
Net realized gains on investments -- (1,759,380)
Total distributions -- (2,228,636)
Net decrease in net assets from fund share
transactions (5,054,722) (11,007,983)
Net decrease in net assets (5,634,123) (6,174,012)
Net Assets:
Beginning of period 40,783,969 46,957,981
End of period $ 35,149,846 $ 40,783,969
Undistributed net investment income at end of period $ 24, 335 $ _____
</TABLE>
Financial Highlights
Kobren Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C> <C>
For the Six Months For the Year For the Year For the Year For the Period
Ended June 30, 2000 Ended Ended Ended Ended
(unaudited) 12/31/99 12/31/98 (f) 12/31/97 12/31/96(a)
Net asset value-- beginning of period $ 15.34 $ 12.54 $ 11.51 $ 10.24 $ 10.00
Net investment income (loss) (0.05) (0.04) (0.02) 0.05 --
(d)
Short term capital gains 0.05 0.14 0.05 0.22 --
Net realized and unrealized gain (loss)
on investments (0.40) 3.63 1.29 1.27 0.24
Net increase (decrease) in net assets
resulting from investment operations (0.40) 3.73 1.32 1.54 0.24
Distributions from net investment income -- -- -- (0.05) --
Distributions from net realized short
term capital gains -- (0.10) (0.03) (0.22)
--
Distributions from net realized capital gains -- (0.83) (0.26 -- (d) --
Total distributions -- (0.93) (0.29) (0.27) --
Net asset value-- end of period $ 14.94 $ 15.34 $ 12.54 $ 11.51 $ 10.24
Total return (b) (2.61)% 29.70% 11.45% 15.03% 2.40%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 71,398 $ 73,151 $ 64,507 $ 62,509 $ 251
Ratio of net investment income (loss) to
average net assets (0.63)% (c) (0.34)% (0.19)% 0.60% (0.97)%(c)(e)
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment advisor and other reductions 1.05% (c) 1.07% 1.07% 1.28% n/a(e)
Ratio of operating expenses to average net assets
after reimbursements and reductions 1.00% (c) 0.98% 0.91% 0.89% 1.00%(c)
Portfolio turnover rate 37% 66% 62% 43% n/a(e)
</TABLE>
(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.
<PAGE>
Kobren Moderate Growth Fund
For a fund share outstanding throughout the period.
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C> <C>
For the Six Months For the Year For the Year For the Year For the Period
Ended June 30, 2000 Ended Ended Ended Ended
(unaudited) 12/31/99 12/31/98 12/31/97 12/31/96(a)
Net asset value - beginning of period $ 13.02 $ 11.86 $ 11.94 $ 10.06 $ 10.00
Net investment income 0.01 0.09 0.16 0.19 --
(d)
Short term capital gains 0.01 0.07 0.06 0.27 --
Net realized and unrealized gain (loss)
on investments (0.23) 1.75 0.20 1.88
0.06
Net increase (decrease) in net assets
resulting from investment operations (0.21) 1.91 0.42 2.34 0.06
Distributions from net investment income -- (0.08) (0.16) (0.19) --
Distributions from net realized
short term capital gains -- (0.08) (0.06) (0.27) --
Distributions from net realized capital gains -- (0.59) (0.28) -- (d) --
Total distributions -- (0.75) (0.50) (0.46) --
Net asset value-- end of period $ 12.81 $ 13.02 $ 11.86 $ 11.94 $ 10.06
Total return (b) (1.61)% 16.06% 3.44% 23.25% 0.60%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 35,150 $ 40,784 $ 46,958 $ 43,381 $ 190
Ratio of net investment income (loss) to
average net assets 0.13% (c) 0.61% 1.15% 2.76% 8.95%(c)(e)
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment advisor and other reductions 1.19% (c) 1.21% 1.13% 1.58% n/a(e)
Ratio of operating expenses to average net assets
after reimbursements and reductions 1.00% (c) 0.95% 0.91% 0.92% 1.00%(c)
Portfolio turnover rate 34% 57% 50% 14% n/a(e)
</TABLE>
(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.
<PAGE>
Notes to Financial Statements
Kobren Insight Funds - June 30, 2000 (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. As of June 30, 2000, the Trust
offered shares of three funds, Kobren Growth Fund, Kobren Moderate Growth Fund
and Delphi Value Fund. Information presented in these financial statements
pertains only to Kobren Growth Fund and Kobren Moderate Growth Fund
(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 primary securities exchange or national securities market on
which such securities 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 the Funds to declare and pay
dividends from net investment income annually. Each Fund will distribute net
realized capital gains if any (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. Certain of the Trust's other expenses are
allocated equally to those funds which make up the Trust. Other expenses of the
Trust are allocated among the funds based upon relative net assets of each fund.
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"). 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 PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) (the "Administrator"), a member of PNC Financial
Services Group (formerly known as PNC Bank Corp.). The Administrator also serves
as the Trust's transfer agent and dividend paying agent. Boston Safe Deposit and
Trust Company, an indirectly wholly-owned subsidiary of Mellon Bank Corporation,
serves as the Trust's custodian. Kobren Insight Brokerage, Inc. ("KIB"), an
affiliate of KIM, serves as distributor of the funds' shares and bears all
distribution costs. No distribution fees are paid by the funds.
For the six months ended June 30, 2000, expense reimbursements are as
follows:
Expenses Reimbursed
By Investment Adviser
Kobren Growth Fund $ 17,212
Kobren Moderate Growth Fund 35,202
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. Sub-Transfer Agent Fees
The funds are subject to sub-transfer agent fees consisting of
broker-dealer and fund network fee at an annual rate of up to 0.10% of the
average daily balances of accounts invested through those networks.
4. 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, 2000, were as follows:
<TABLE>
<CAPTION>
<S><C> <C> <C>
Purchases Sales
</TABLE>
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C>
U.S. Government Other U.S. Government Other
Kobren Growth Fund $ -- $25,400,449 $ -- $27,212,457
Kobren Moderate Growth Fund -- 12,327,879 -- 18,251,487
</TABLE>
5. Shares of Beneficial Interest
As of June 30, 2000, 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> <C>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C>
Shares Amount Shares Amount
Kobren Growth Fund:
Shares sold 504,195 $7,768,699 1,303,646 $ 18,015,548
Shares issued as reinvestment of distributions -- -- 219,206 3,362,783
Shares redeemed (494,409) (7,655,554) (1,898,381) (25,821,986)
Net increase (decrease) 9,786 $ 113,145 (375,529) $ (4,443,655)
Kobren Moderate Growth Fund:
Shares sold 80,933 $ 1,043,477 306,806 $ 3,806,795
Shares issued in connection with
reorganization (Note 8) -- -- 1,259,682 14,316,241
Shares issued as reinvestment of distributions -- -- 146,353 1,905,573
Shares redeemed (470,364) (6,098,199) (2,539,624) (31,036,592)
Net decrease (389,431) $ (5,054,722) (826,783) $ (11,007,983)
</TABLE>
At June 30, 2000, KIM and its affiliates owned 1,122,972 and 418,135 shares of
Kobren Growth Fund and Kobren Moderate Growth Fund, respectively.
6. 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.
7. Risk Factors of the Funds
Investing in underlying funds through a Kobren Insight 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.
8. 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.
<PAGE>
DELPHI VALUE FUND
Semi-Annual Report
June 30, 2000
Dear Shareholder,
Despite the wild gyrations in the NASDAQ Composite and the persistence of
"gambling fever" amongst the general investing public, the Delphi Value Fund
adhered to its long-term investment approach and advanced a respectable 7.6% for
the retail class and 7.8% for the institutional class in the first half of 2000.
Your portfolio outpaced all of the relevant indices such as the S&P 500 (-0.5%),
the Russell 2500 Value (+4.0%), and the Russell 2000 Value (+5.8%).
Thirty individual holdings appreciated a minimum of 30% with the winners
concentrated in the energy and technology sectors. The stellar performers for
the first half of the year included Cross Timbers Oil (+144.1%), Varian
Semiconductor (+84.7%), Teledyne Tech (+76.2%), and Devon Energy (+70.9%).
Conversely, "old economy" manufacturing stalwarts like Ak Steel, Honeywell,
Arvin Industries, and Lear Corporation posted declines despite solid management
teams, sustainable earning power, and low multiple valuations. The following
five portfolio holdings benefited from takeover bids: Time Warner, Pittway,
Tech-Sym, Santa Fe Snyder, and Central Newspapers.
Throughout the first half of the year, we utilized rallies in the technology
arena to trim positions that we thought had gotten ahead of themselves. Notably,
cutbacks were effectuated in Arrow Electronics, Avnet, Cohu, Kulicke & Soffa,
LTX Corp, Speedfam, and Varian Semiconductor. We attempted to be opportunistic
in purchasing "franchise" stocks at depressed prices. These additions included
Interpublic Group, General Dynamics, Wells Fargo, USA Networks, and Fedex Corp.
While interviewing pundits on the direction of the stock market,
highlighting the price action of "new economy" stocks like JDS Uniphase and
Amazon.com, and topping the Wall Street consensus earnings estimates makes for
lively conversation on business news networks, we find these exercises
pointless. After thirty plus years of personal investing, I have not uncovered
the magic formula to predict the fluctuations in the Dow Jones Industrial
Average or S&P 500 Index. Call me cynical, but it is difficult to fathom how
corporations with little or no earnings can support market capitalizations in
the mega billions. Most disturbing is the new fad of trading in companies which
beat the I/B/E/S estimates irrespective of the price/earnings ratio of that
given entity. Realistically, a $0.04 quarter ($0.16 annualized) should not
maintain a $50 stock price for Wall Street's favorite internet auction site.
From a more positive standpoint, the U.S. economy remains the envy of the
world. Real economic growth of 3 1/2% to 4%, coupled with 4% unemployment, and
core inflation below 3% bode well for the capital markets. With the S&P 500
Index at 1455 on June 30th, or 24x forecast 2001 earnings, the overall market is
now fairly valued given the level of nominal interest rates.
I appreciate your continued support and remain dedicated to earning your
trust.
Very truly yours,
/S/ Scott M. Black
Scott M. Black
<PAGE>
Portfolio of Investments
June 30, 2000
(Unaudited)
Shares Value (Note 1)
COMMON STOCKS - 94.34%
ADVERTISING - 2.31%
1,500 Grey Advertising, Inc. $ 756,000
14,000 Interpublic Group of Cos., Inc. 602,000
-------
1,358,000
AEROSPACE/TECHNOLOGY - 16.77%
21,600 Arrow Electronics, Inc. (1) 669,600
11,700 Avnet, Inc. 693,225
25,600 Cohu, Inc. 690,400
24,800 Electroglas, Inc. (1) 533,200
12,400 General Dynamics Corp. 647,900
16,000 Hubbell, Inc.(Class B) 408,000
20,400 Kemet Corp. (1) 511,275
12,400 Kulicke and Soffa Industries, Inc. (1) 736,250
10,500 Litton Industries, Inc. (1) 441,000
15,500 LSI Logic Corp. (1) 838,937
14,100 LTX Corp. (1) 492,619
34,100 SpeedFam-IPEC, Inc. (1) 620,194
14,500 Tech-Sym Corp. (1) 407,813
66,000 Teledyne Technologies, Inc. (1) 1,221,000
15,300 Varian Semicon. Equip. Assoc., Inc. (1) 961,031
9,872,444
BANKING - 6.75%
8,000 Bank of America Corp. 344,000
30,000 Banknorth Group, Inc. 459,375
42,250 Colonial BancGroup, Inc. 406,656
22,000 Community Bank System 488,125
31,500 First Essex Bancorp, Inc. 502,031
31,000 North Fork Bancorporation, Inc. 468,875
42,900 Sovereign Bancorp, Inc. 301,641
18,000 Webster Financial Corp. 399,375
15,500 Wells Fargo & Co. 600,625
3,970,703
CONGLOMERATES - 6.89%
560 Berkshire Hathaway, Inc., Class B (1) 985,600
14,900 Honeywell International, Inc. 501,944
14,000 Norsk Hydro A/S Sponsored, ADR 588,875
27,000 St. Joe Co. 810,000
10,000 Textron, Inc. 543,125
15,000 Williams Cos., Inc. 625,313
4,054,857
CONSTRUCTION & REAL ESTATE - 4.49%
43,000 D. R. Horton, Inc. 583,188
25,000 Lennar Corp. 506,250
14,500 Smith (Charles E.) Res. Realty, Inc. 551,000
9,000 Southdown, Inc. 519,750
22,600 Sovran Self Storage, Inc. 484,488
2,644,676
CONSUMER RELATED - 1.75%
26,550 Disney (Walt) Co. 1,030,472
ENERGY - 9.86%
34,000 Cabot Oil & Gas Corp. 720,375
49,000 Cross Timbers Oil Co. 1,084,125
12,500 Devon Energy Corp. 702,344
31,500 Global Marine, Inc. (1) 887,906
23,500 Santa Fe International Corp. 821,031
13,300 Santa Fe Snyder Corp. (1) 151,288
20,500 Tidewater, Inc. 738,000
21,000 Unocal Corp. 695,625
5,800,694
MISCELLANEOUS - 3.65%
14,684 Bear Stearns Cos., Inc. 611,222
11,670 Donaldson Lufkin & Jenrette, Inc., NW 495,246
11,000 Goldman Sachs Group, Inc. 1,043,625
2,150,093
FOOD & BEVERAGE - 3.44%
10,500 Coca-Cola Bottling Co. 451,664
30,000 Pepsi Bottling Group, Inc. 875,625
51,500 Ryan Family Steak Houses, Inc. (1) 434,531
25,000 Schultz Sav-O Stores, Inc. 259,375
2,021,195
INSURANCE - 3.53%
9,300 Chubb Corp. 571,950
25,600 IPC Holdings, Ltd. 358,400
13,300 Renaissance Re Holdings, Ltd. $ 579,381
10,500 XL Capital, Ltd., Class A 568,312
2,078,043
MANUFACTURING - 2.65%
20,700 Arvin Industries, Inc. 359,662
25,000 Banta Corp. 473,437
18,100 Dana Corp. 383,494
7,000 Lear Corp. (1) 340,000
1,556,593
PUBLISHING & BROADCASTING - 25.99%
29,200 AT & T Corp. - Liberty Media Group (1) 708,100
20,900 Central Newspapers, Inc., Class A 1,321,925
37,000 Charter Comm., Inc., Class A (1) 608,187
32,000 Comcast Corp., Class A 1,296,000
21,900 Cox Communications, Inc., Class A (1) 997,819
14,100 Gannett, Inc. 843,356
26,000 Harte-Hanks, Inc. 650,000
21,000 Hearst-Argyle Television, Inc. (1) 409,500
11,500 Knight Ridder, Inc. 611,656
21,200 Lee Enterprises, Inc. 494,225
16,000 McClatchy Co., Class A 530,000
16,000 McGraw-Hill Cos., Inc. 864,000
13,500 MediaOne Group (2) 546,750
17,000 News Corp., Ltd, ADR 926,500
26,500 Penton Media, Inc. 927,500
13,100 Scripps (E.W.) Co., Class A 645,175
9,900 United States Cellular Corp. (1) 623,700
28,600 USA Networks, Inc. (1) 618,475
14,600 Viacom, Inc., Class B (1) 995,537
1,423 Washington Post, Class B 680,194
15,298,599
RETAIL - 3.55%
27,900 Claire's Stores, Inc. 537,075
14,100 Federated Department Stores, Inc. (1) 475,875
19,300 May Department Stores Co. 463,200
36,000 Ross Stores, Inc. 614,250
2,090,400
STEEL - 0.39%
29,000 AK Steel Holding Corp. 232,000
TEXTILES & APPAREL - 0.96%
20,000 Hilfiger (Tommy) Corp. (1) 150,000
29,200 Polo Ralph Lauren Corp. (1) 416,100
566,100
TRANSPORTATION - 1.36%
21,000 FedEx Corp. (1) 798,000
TOTAL COMMON STOCKS 55,522,869
(Cost $50,386,387)
INVESTMENT COMPANY - 5.78%
3,402,955 Dreyfus Cash Management Plus Fund 3,402,955
TOTAL INVESTMENT COMPANY 3,402,955
(Cost $3,402,955)
TOTAL INVESTMENTS - 100.12% 58,925,824
(Cost $53,789,342*)
NET OTHER ASSETS AND
LIABILITIES - (0.12)% (69,905)
TOTAL NET ASSETS - 100.00% $ 58,855,919
(1) Non-Income producing
(2) Convertible preferred security
ADR American Depositary Receipt
* For Federal Income tax purposes, cost is $53, 789,342 and
appreciation (deprecation) is as follows:
Unrealized appreciation: $11,150,711
Unrealized depreciation: ($6,014,229)
Net unrealized appreciation: $5,136,482
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S><C> <C>
ASSETS:
Investments, at value
See accompanying schedules $ 58,925,824
Dividends receivable 37,133
Interest receivable 19,548
Receivable for fund shares sold 26,000
Prepaid expenses 338
Total assets 59,008,843
LIABILITIES:
Payable for investment securities purchased 68,830
Investment advisory fee payable 48,499
Distribution fee payable 7,169
Accrued trustees' fees and expenses 2,891
Accrued expenses and other payables 25,535
Total liabilities 152,924
NET ASSETS $ 58,855,919
Investments, at cost $ 53,789,342
NET ASSETS consist of:
Accumulated net investment loss $ (25,084)
Accumulated net realized gain on investments sold 2,538,959
Net unrealized appreciation of investments 5,136,482
Par value (Shares of beneficial interest, $0.001 per share) 4,883
Paid-in capital in excess of par value 51,200,679
NET ASSETS $ 58,855,919
Computation of net asset value
Retail Class Shares:
Net asset value, offering and redemption price
per share ($36,386,970 / 3,021,200 shares) $ 12.04
Institutional Class Shares:
Net asset value, offering and redemption price
per share ($22,468,949 / 1,861,827 shares) $ 12.07
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
<S><C> <C>
INVESTMENT INCOME:
Dividends (net of withholding tax of $3,938) $413,243
Total investment income 413,243
EXPENSES:
Investment advisory fee 273,990
Administration fee 36,250
Transfer agent fees 28,532
Sub-transfer agent fee (Retail Class) 7,890
Custodian fees 7,278
Professional fees 15,042
Trustees' fees and expenses 6,754
Registration and filing fees 16,756
Distribution fees (Retail Class) 40,769
Other 5,066
Total expenses 438,327
NET INVESTMENT LOSS (25,084)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions 2,718,144
Change in unrealized appreciation of securities 1,284,645
Net realized and unrealized gain on investments 4,002,789
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3,977,705
</TABLE>
<PAGE>
STATEMENT OF CHANGE IN NET ASSETS
For the six months ended June 30, 2000
(unaudited)
<TABLE>
<CAPTION>
<S><C> <C> <C>
For the Six Months For the Year
Ended June 30, 2000 Ended December
(unaudited) 31, 1999
Net investment income (loss) $ 25,084) $ 45,401
Net realized gain from security transactions 2,718,144 143,370
Change in unrealized appreciation of investments 1,284,645 3,793,277
Net increase in net assets resulting from operations 3,977,705 3,982,048
Distribution to shareholders from:
Retail Shares:
Net investment income ---- (5,356)
Net realized gains on investment ---- (81,845)
Distributions in excess of net realized gains on investments ---- (105,633)
Total distributions --- (192,834)
Institutional Shares:
Net investment income ---- (46,306)
Net realized gains on investment ---- (61,525)
Distributions in excess of net realized gains on investments ---- (79,407)
Total distributions --- (187,238)
Total distributions to shareholders --- (380,072)
Net increase in net assets from fund share transactions 1,060,144 44,888,495
Net increase in net assets 5,037,849 48,490,471
Net Assets:
Beginning of period 53,818,070 5,327,599
End of period $ 58,855,919 $ 53,818,070
Accumulated net investment loss at end of period $ (25,084) $ -----
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
For a Fund Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
<S> <C>
RETAIL CLASS SHARES
</TABLE>
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
For the For the Period
Six Months Ended For the December 23, 1998
June 30, 2000 Year Ended (commencement of operations)
(unaudited) December 31, 1999 to December 31, 1999
Net asset value-- beginning of period $ 11.19 $ 10.12 $ 10.00
Net investment income (loss) (0.01) 0.00 (c)(d) 0.01
Net realized and unrealized gain on investments 0.86 1.14 0.11
Net increase in net assets resulting from
investment operations 0.85 1.14 0.12
Distributions from net investment income -- -- (d) --
Distributions from net realized capital gains -- (0.03) --
Distributions in excess of net realized capital gains -- (0.04) --
Total distributions -- (0.07) --
Net asset value-- end of period $ 12.04 $ 11.19 $ 10.12
Total return (a) 7.60% 11.30% 1.20%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 36,387 $ 31,055 $ 5,056
Ratio of net investment income/(loss)
to average net assets (0.21)% (b) 0.00% 0.82%(b)
Ratio of operating expenses to average net
assets before fees waived and/or
expenses reimbursed by investment
adviser and administrator. 1.72% (b) 1.86% 10.91%(b)
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.72% (b) 1.75% 1.75%(b)
Portfolio turnover rate 18% 17% 0%
</TABLE>
(a) Total return represents aggregate total return for the period indicated.
(b) Annualized.
(c) The selected per share data was calculated using the weighted average
share method for the period. (d) The selected amounts are less then $0.005.
<TABLE>
<CAPTION>
<S> <C>
INSTITUTIONAL CLASS SHARES
</TABLE>
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
For the For the Period
Six Months Ended For the December 23, 1998
June 30, 2000 Year Ended (commencement of operations)
(unaudited) December 31, 1999 to December 31, 1999
Net asset value-- beginning of period $ 11.20 $ 10.12 $ 10.00
Net investment income 0.01 0.03 (c) 0.01
Net realized and unrealized gain on investments 0.86 1.14 0.11
Net increase in net assets resulting from
investment operations 0.87 1.17 0.12
Distributions from net investment income -- (0.02) --
Distributions from net realized capital gains -- (0.03) --
Distributions in excess of net realized capital gains -- (0.04) --
Total distributions -- (0.09) --
Net asset value-- end of period $ 12.07 $ 11.20 $ 10.12
Total return (a) 7.77% 11.61% 1.20%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 22,469 $ 22,763 $ 272
Ratio of net investment income to average
net assets 0.09% (b) 0.25% 1.07%(b)
Ratio of operating expenses to average
net assets before fees waived and/or
expenses reimbursed by investment
adviser and administrator. 1.42% (b) 1.57% 10.66%(b)
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.42% (b) 1.50% 1.50%(b)
Portfolio turnover rate 18% 17% 0%
</TABLE>
(a) Total return represents aggregate total return for the period indicated.
(b) Annualized.
(c) The selected per share data was calculated using the weighted average share
method for the period. (d) The selected amounts are less then $0.005.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (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. As of June 30, 2000 the Trust offered
shares of three funds, Kobren Growth Fund, Kobren Moderate Growth Fund and
Delphi Value Fund. Information presented in these financial statements pertains
only to the Delphi Value Fund (the "Fund"). The Fund is authorized to issue two
classes of shares - the Retail Class and the Institutional Class. Each class of
shares outstanding bears the same voting, dividend, liquidation and other rights
and conditions, except that the expenses incurred in the distribution and
marketing of such shares are different for each class. Additionally, the Retail
Class is subject to 12b-1 fees and sub-transfer agent fees. The Fund seeks to
achieve its investment objective by investing primarily in equity securities of
U.S. companies.
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 Fund
in the preparation of its financial statements.
Portfolio Valuation -- Investment securities are valued at the last sale price
on the securities exchange or national securities market on which such
securities are primarily 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 securities 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 the Fund to declare and pay
dividends from net investment income annually. The 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 the 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 prepaid
expenses.
Securities Transactions and Investment Income -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Dividend income on foreign securities is
recognized as soon as a Fund is informed of the ex-dividend date. Interest
income is recognized on the accrual basis.
Federal Income Tax -- The 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. Certain of the Trust's other expenses are
allocated equally to those funds which make up the Trust. Other expenses of the
Trust are allocated among the funds based upon relative net assets of each fund.
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 "Adviser") who
has engaged Delphi Management, Inc. ("Delphi") as the Fund's subadviser. The
Advisory Agreement provides that the Fund pays KIM a fee, computed daily and
paid monthly, at the annual rate of 1.00% of the Fund's average daily net
assets. KIM is solely responsible for the payment of the subadviser fee to
Delphi. KIM has voluntarily agreed to limit the Fund's total annual operating
expenses of the Retail Class and Institutional Class to no more than 1.75% and
1.50%, respectively, of the Fund's average daily net assets until January 1,
2001.
The Trust has also entered into an administration agreement (the
"Administration Agreement") with PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) (the "Administrator"), a member of PNC Financial
Services Group (formerly known as PNC Bank Corp.). The Administrator also serves
as the Trust's transfer agent and dividend paying agent. Boston Safe Deposit and
Trust Company, an indirect and wholly owned subsidiary of Mellon Bank
Corporation, serves as the Trust's custodian. Kobren Insight Brokerage, Inc.
("KIB"), an affiliate of KIM, serves as distributor of the 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. Distribution and Shareholder Servicing Fees
The Retail Class of the Fund has adopted a Shareholder Servicing and
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under The 1940 Act. The
Fund pays KIB, distributor of the Fund and affiliate of KIM, a monthly fee
("12b-1 Fee") for distribution and/or shareholder services provided, at an
annual rate of 0.25% of the average daily net assets attributable to the Retail
Class of shares.
4. Sub-Transfer Agent Fees
The Retail Class of the Fund is subject to sub-transfer agent fees
consisting of broker-dealer and fund network fees. The Fund pays participating
networks a monthly fee for completing shareholder orders, at an annual rate of
up to 0.10% of the average daily balance of Fund accounts invested through those
networks.
5. Purchases and Sales
The aggregate amounts of purchases and sales of the Fund's investment
securities, other than short-term securities, for the six months ended June 30,
2000, were $9,707,586 and $9,842,900 of non-governmental issues, respectively.
6. Shares of Beneficial Interest
As of June 30, 2000, an unlimited number of shares of beneficial interest,
par value $0.001, was authorized for the Trust. Changes in shares of beneficial
interest for the Fund were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
</TABLE>
<TABLE>
<CAPTION>
<S><C> <C> <C> <C> <C>
Shares Amount Shares Amount
Retail Class:
Shares sold 562,141 $ 6,559,382 2,796,694 $ 29,759,359
Shares issued as reinvestment of distributions -- -- 14,152 154,824
Shares redeemed (315,749) (3,564,487) (535,482) (5,720,041)
Net increase 246,392 $ 2,994,895 2,275,364 $ 24,194,142
Institutional Class:
Shares sold 79,418 $ 918,465 2,523,893 $ 26,186,423
Shares issued as reinvestment of distributions -- -- 16,221 177,451
Shares redeemed (250,757) (2,853,216) (533,797) (5,669,521)
Net increase (decrease) (171,339) $ (1,934,751) 2,006,317 $ 20,694,353
</TABLE>
At June 30, 2000, KIM, Delphi and its affiliates owned 702,889 Retail Class
shares of the Fund.
