KOBRICK CAPITAL FUND
KOBRICK EMERGING GROWTH FUND
KOBRICK GROWTH FUND
Where the best minds meet(R)
Semiannual Report-- March 31, 2000
<PAGE>
TABLE OF CONTENTS
SEMIANNUAL REPORT MARCH 31, 2000
--------------------------------
Presidents' Message...................................1
Portfolio Managers' Commentary and Performance
Kobrick Capital Fund.........................2
Kobrick Emerging Growth Fund.................4
Kobrick Growth Fund..........................6
Schedules of Investments
Kobrick Capital Fund.........................8
Kobrick Emerging Growth Fund................10
Kobrick Growth Fund.........................12
Financial Statements
Statements of Assets and Liabilities........14
Statements of Operations....................15
Statements of Changes in Net Assets.........16
Financial Highlights........................17
Notes to Financial Statements........................20
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NOTES: EQUITY SECURITIES ARE SUBJECT TO MARKET RISKS. THIS MEANS YOU MAY LOSE
MONEY ON YOUR INVESTMENT BECAUSE THE VALUE OF SHARES OF MUTUAL FUNDS FLUCTUATE.
YOUR SHARES, WHEN YOU REDEEM, MAY BE WORTH MORE OR LESS THAN YOUR ORIGINAL COST.
GROWTH STOCKS ARE GENERALLY MORE SENSITIVE TO MARKET MOVEMENTS BECAUSE THEIR
STOCK PRICES ARE BASED ON FUTURE EXPECTATIONS. INITIAL PUBLIC OFFERINGS ("IPOS")
MAY HAVE SIGNIFICANT RISK AND MAY IMPACT THE FUND'S PERFORMANCE, RESULTING IN
INCREASED TAX LIABILITY TO SHAREHOLDERS. FREQUENT PORTFOLIO TURNOVER MAY
INCREASE YOUR RISK OF GREATER TAX LIABILITY, WHICH, IN TURN, COULD LOWER YOUR
RETURN FROM THESE FUNDS.
RECENT RETURNS OCCURRED DURING FAVORABLE MARKET CONDITIONS, WHICH MAY NOT
CONTINUE. RECENT RETURNS MAY BE HIGHER OR LOWER THAN THOSE SHOWN. SMALL-CAP AND
EMERGING GROWTH COMPANIES ARE MORE VOLATILE THAN THE OVERALL MARKET. THESE RISKS
AFFECT YOUR INVESTMENT'S VALUE. SEE THE PROSPECTUS FOR DETAILS.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
<PAGE>
KOBRICK FUNDS
(a picture of John Hailer)
John T. Hailer
President and
Chief Executive Officer,
Nvest Funds
(a picture of Frederick Kobrick)
Frederick R. Kobrick
President and
Chief Executive Officer,
Kobrick Funds LLC
PRESIDENTS' MESSAGE APRIL 24, 2000
DEAR FELLOW SHAREHOLDER:
We are pleased to report the investment results for the Kobrick Funds for the
six months ended March 31, 2000. Coming off a tremendous surge in the stock
markets in the last quarter of 1999 during which most major indices rose to new
highs, investors encountered increased volatility that included wild price
gyrations in many stocks and extreme point swings in the indices for the first
three months of 2000. Much of the volatility was attributable to the stock
market's lofty valuations, concerns about the earnings prospects of many
Internet companies and actions by the Federal Reserve, which has raised interest
rates five times since June 1999, including twice in 2000 (as of this writing),
in an attempt to moderate the increased growth of the U.S. economy.
We believe a lot of the volatility is a highly emotional response, but an
important factor in what could be the final stages of a bear market for many
equities. The 100 largest Nasdaq stocks and a couple of hundred Internet stocks
were the primary drivers of the Nasdaq Index's success in 1999 and early 2000,
but most of the 4,400 issues in the index were down during the period. This same
lack of breadth holds true for the S&P 500 and New York Stock Exchange. Taking
out the speculation and margin debt excesses could be the end stage preceding
what we believe will be a new broad bull market.
OUR PARTNERSHIP
The Kobrick Funds partnership with Nvest and Nvest Funds has blossomed into an
outstanding relationship that has not only benefited our firms, but our
shareholders as well. We are pleased with this development and expect even
greater success from this union in the future.
New England Funds became Nvest Funds in February of this year to align more
closely with the parent company, Nvest Companies, as well as with its fine
management teams, such as Kobrick Funds. The companies that comprise Nvest
represent a breadth of investment resources and experience that is difficult to
match. Kobrick Funds has helped Nvest extend that tradition. The following pages
discuss how we addressed the challenges and opportunities the markets presented
in managing the three Kobrick Funds: Kobrick Capital, Emerging Growth and
Growth.
We look forward to working with you as you invest toward your personal goals.
For our part, we are committed to continuing to support you with quality
investment products and outstanding customer service.
Sincerely,
/s/ John T.Hailer /s/ Frederick R. Kobrick
John T. Hailer Frederick R. Kobrick
President and Chief Executive Officer President and Chief Executive Officer
Nvest Funds Kobrick Funds LLC
<PAGE>
KOBRICK CAPITAL FUND
(a picture of Frederick Kobrick)
Frederick R. Kobrick
President and Chief Executive Officer,
Kobrick Funds LLC,
Portfolio Manager,
Kobrick Capital Fund
PORTFOLIO PROFILE
OBJECTIVE:
Maximum capital
appreciation
STRATEGY:
Invests primarily in equity securities of companies with small, medium and large
capitalizations.
INCEPTION DATE:
December 31, 1997
MANAGER:
Frederick R. Kobrick
SYMBOLS:
Class A KFCFX
Class B KCFBX
Class C KCFCX
Class Y KCFYX
NET ASSET VALUE
PER SHARE:
(MARCH 31, 2000)
Class A $24.89
Class B 24.82
Class C 24.83
Class Y 24.91
Questions & Answers with Your Portfolio Manager
-----------------------------------------------
Kobrick Capital Fund
Q. How did Kobrick Capital Fund perform during the six months ended March 31,
2000?
Kobrick Capital Fund did extremely well. While most stock market indices rose to
new heights at the end of 1999, the first three months of 2000 saw increased
volatility and greater challenges for investors in stocks of all sizes. Market
leadership in the past six months went to a small group of companies, primarily
in technology-related businesses. For the period, the Fund's Class A shares
returned 67.23% at net asset value, more than triple the 21.52% return of its
benchmark, the Russell 3000 Index. The Fund's results were also above the
average for comparable funds. (See tables next page.)
Q. What were some of the reasons for the Fund's strong performance over the past
six months?
We had a nice blend of stocks of all capitalizations, with much of the portfolio
centered around mid-cap stocks, and participated selectively in some of the New
Economy stocks that have helped drive the market. We stuck to the old-fashioned
investment disciplines we apply in any economy: new, old or a mixture of the
two. I believe what we sold was as big a factor in the Capital Fund's
performance as what we bought. We monitored valuations and had a very diverse
portfolio. We were heavily weighted in a number of different sectors in
technology because that's where a lot of the strong earnings were; however we
took profits near the end of the period, putting assets into companies in a
variety of sectors that showed more realistic valuations, such as radio and
media as well as some retail and financials.
Q. What are these "old-fashioned investment disciplines" you mentioned?
They are the same buy and sell disciplines I have used during my entire three
decades in the investment business. We select stocks one at a time, bottom up,
with more emphasis on individual companies than the industries in which they
compete. We focus on traditional factors, such as a company's financial
information and products, and we place a heavy emphasis on the ability of the
company's management to execute its strategy. We also prefer to supplement our
quantitative techniques with what we call 360-degree research.(TM) We meet and
talk with company management, employees, customers, competition and even
suppliers to make sure what these people say aligns with the company's
strategies and objectives.
Q. You said you decreased your technology holdings near the end of the period.
What is your outlook for tech stocks and the overall market for the coming
year?
We invested in a variety of subsectors of technology stocks in anticipation of
the surge that occurred during the last two months of 1999. However, we are
always mindful of controlling risk and, with the significant appreciation that
resulted, we gradually brought our technology positions down, selling the most
highly valued companies.
In the market we've experienced lately, many technology companies' prices have
come down substantially. We will be selectively adding technology, but we see
opportunities in companies in a number of other areas with low valuation and
strong growth potential. I believe we will see a substantial broadening of the
market that will include many of the currently cheap growth stocks as investors
realize that interest-rate increases are healthy and necessary to moderate the
economy. The markets will continue to reward good stock pickers, and we will
continue to invest using the same disciplines that have helped us reward Capital
Fund investors.
The portfolio manager's commentary reflects conditions and actions taken during
the reporting period, which are subject to change. A shift in opinion may result
in strategic and other portfolio changes.
2
<PAGE>
KOBRICK CAPITAL FUND
INVESTMENT RESULTS THROUGH MARCH 31, 2000
--------------------------------------------------------------------------------
Putting Performance in Perspective
The chart comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the differences between the two. Your
Fund's total return for the period shown below reflects Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged and does not have expenses that
affect the results. It is not possible to invest directly in an index. In
addition, few investors could purchase all of the securities necessary to match
the index and would incur transaction costs and other expenses even if they
could. Your Fund's benchmark is the Russell 3000 Index.
GROWTH OF A $10,000 INVESTMENT IN CLASS A SHARES
BAR GRAPH APPEARS HERE
<TABLE>
December 31, 1997 (Inception)Through March 31, 2000
Kobrick Capital Kobrick Capital Russell 3000 Index(4)
Net Asset Value(1) Maximum Sales Charge(2)
<S>
<C> <C> <C> <C>
12/31/97 10,000 9,425 10,000
1/31/98 10,180 9,595 10,052
2/28/98 11,280 10,631 10,771
3/31/98 11,520 10,858 11,305
4/30/98 11,890 11,206 11,416
5/31/98 11,320 10,669 11,134
6/30/98 12,410 11,696 11,511
7/31/98 12,090 11,395 11,302
8/31/98 9,830 9,265 9,570
9/30/98 10,710 10,094 10,223
10/31/98 11,580 10,914 10,999
11/30/98 12,940 12,196 11,672
12/31/98 15,000 14,138 12,414
1/31/99 17,560 16,550 12,835
2/28/99 16,280 15,344 12,381
3/31/99 17,740 16,720 12,835
4/30/99 18,220 17,172 13,414
5/31/99 16,740 15,777 13,159
6/30/99 17,990 16,956 13,824
7/31/99 17,410 16,409 13,405
8/31/99 17,410 16,409 13,253
9/30/99 17,200 16,211 12,914
10/31/99 18,084 17,045 13,724
11/30/99 20,651 19,464 14,108
12/31/99 25,982 24,488 15,009
1/31/00 26,097 24,597 14,420
2/29/00 31,948 30,111 14,554
3/31/00 28,780 27,125 15,694
</TABLE>
The illustration represents past performance of Class A shares and does not
guarantee future results. Share price and return will vary and you may have a
gain or a loss when you sell your shares. Class B, C and Y share performance
will differ from that shown based on differences in inception date, fees and
sales charges. All index and Fund performance assumes reinvestment of
distributions.
AVERAGE ANNUAL TOTAL RETURNS-- MARCH 31, 2000
<TABLE>
Six Since Fund's
Months 1 Year Inception
<S>
<C> <C> <C> <C>
Class A (Inception 12/31/97)
Net Asset Value(1) 67.23% 62.23% 60.09%
With Maximum Sales Charge(2) 57.61 52.90 55.92
-----------------------------------------------------------------------------------------------
Class B (Inception 10/29/99)
Net Asset Value(1) -- -- 58.70%
With CDSC(3) -- -- 53.70
-----------------------------------------------------------------------------------------------
Class C (Inception 10/29/99)
Net Asset Value(1) -- -- 58.76%
With CDSC(3) -- -- 57.76
-----------------------------------------------------------------------------------------------
Class Y (Inception 10/29/99)
Net Asset Value(1) -- -- 59.27%
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Since Fund's Since Fund's
Class A Class B,C & Y
Comparative Performance Inception Inception
----------------------------------------------------------------------------------------------------------
<S>
<C> <C> <C> <C> <C>
Russell 3000 Index(4) 21.52% 22.27% 22.18% 14.35%
Morningstar Midcap Growth Funds Average(5) 66.44 86.17 42.96 53.75
Lipper Multi-Cap Growth Funds Average(6) 55.59 65.29 41.50 44.56
</TABLE>
Portfolio Characteristics at March 31, 2000
-------------------------------------------
% of
Your Fund's Composition Net Assets
--------------------------------------------------------------------
Common Stocks 92.7
Short Term Investments and Other 7.3
% of
Your Fund's Ten Largest Holdings Net Assets
--------------------------------------------------------------------
EchoStar Communications Corp. 3.7
Starbucks Corp. 3.3
Apache Corp. 3.3
Lehman Brothers Holdings, Inc. 3.3
Chevron Corp. 3.0
AT&T Corp. (Liberty Media Group) 3.0
TJX Companies, Inc. 2.7
Cendant Corp. 2.5
Burlington Resources, Inc. 2.1
Costco Wholesale Corp. 2.1
% of
Your Fund's Five Largest Industries Net Assets
--------------------------------------------------------------------
Retail-Specialty 14.0
Oil & Gas-Exploration & Production 13.1
Broadcast Media 10.0
Investment Banking/Brokerage 8.5
Computer Hardware 5.6
Portfolio holdings and asset allocations will vary.
NOTES
The returns in the Average Annual Total Returns table at left represent past
performance of the Fund and do not guarantee future results. Share price and
return will vary and you may have a gain or a loss when you sell your shares.
Fund perfo rmance also reflects waived fees and expenses. Returns would have
been lower without these waivers, which can be discontinued. Periods of less
than one year are not annualized. All index and Fund performance assumes
reinvestment of distributions. Class Y shares are available to certain
institutional investors only.
(1) Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect a sales charge.
(2) With Maximum Sales Charge performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 5.75% at the time of
purchase of Class A shares. Until October 29, 1999, the Fund had only one
class of shares and was offered without a sales charge. Historical
performance has been recalculated to include a sales charge.
(3) With Contingent Deferred Sales Charge (CDSC) performance assumes
reinvestment of all distributions and, for Class B shares, assumes that a
maximum 5.00% sales charge is applied to redemptions. The sales charge will
decrease over time, declining to zero six years after the purchase of
shares. With CDSC performance for Class C shares assumes a maximum 1.00%
sales charge on redmeptions within the first year of purchase.
(4) Russell 3000 Index is an unmanaged index of the 3,000 largest U.S.
companies selected for their growth orientation. You may not invest
directly in an index.
(5) Morningstar Midcap Growth Funds Average is the average performance without
sales charges of all mutual funds with similar investment objectives as
calculated by Morningstar, Inc. Since inception returns for Class B, C and
Y shares are calculated from 11/1/99.
(6) Lipper Multi-Cap Growth Funds Average is the average performance without
sales charges of all mutual funds with similar current investment style or
objective as calculated by Lipper Inc.
3
<PAGE>
KOBRICK EMERGING GROWTH FUND
(a picture of Frederick Kobrick)
Frederick R. Kobrick
President and Chief Executive Officer,
Kobrick Funds LLC and Portfolio Manager,
Kobrick Emerging Growth Fund
PORTFOLIO PROFILE
OBJECTIVE:
Provide growth of
capital
STRATEGY:
Invests primarily in equity securities of emerging growth companies,
with an emphasis on companies with small capitalizations.
INCEPTION DATE:
December 31, 1997
MANAGER:
Frederick R. Kobrick
SYMBOLS:
Class A KFEGX
Class B KEGBX
Class C KEGCX*
Class Y KEGYX*
NET ASSET VALUE
PER SHARE:
(MARCH 31, 2000)
Class A $24.11
Class B 24.05
Class C 24.06
Class Y 24.13
* proposed
QUESTIONS & ANSWERS WITH YOUR PORTFOLIO MANAGER
--------------------------------------------------------------------------------
KOBRICK EMERGING GROWTH FUND
Q. How did Kobrick Emerging Growth Fund perform during the six months ended
March 31, 2000?
In six months notable for substantial gains in the major stock indices as well
as increased volatility, Kobrick Emerging Growth Fund posted strong results. For
the period, the Fund's Class A shares returned 72.60% at net asset value,
handily outdistancing the 26.83% return of its benchmark, the Russell 2000
Index. The Fund's results were also above the average for comparable funds. (See
tables next page.)
Q. Small stocks are generally more volatile by nature. What is it about your
investment process that helped you succeed in this environment?
We use a very carefully defined investment process that keys on our buy and sell
disciplines. We screen the overall small stock universe to determine which
stocks have the potential to meet our buy disciplines. Then we look for
companies with management that can execute, compelling valuations and high
earnings growth, and choose companies that meet all three disciplines. With the
abundance of small companies to invest in, we place particular emphasis on
strong management that can overcome the hurdles often faced by emerging
companies. We will generally sell a stock if even one of the following occurs:
the stock reaches its target price, there is a change in company management or
strategy or the company fails to execute its strategy.
There is also a theme to investing in emerging growth companies that we don't
encounter in our other funds. Although the Fund emphasizes small-cap stocks, we
generally avoid investing in speculative little companies that don't have much
operating history. There is a significant difference between emerging growth
companies and those that are simply immature. Immature is an earlier stage, and
we do our research to avoid those companies and limit exposure to initial public
offering (IPO) stocks.
Q. What segments of the portfolio worked the best for the Fund over the past six
months?
Let me answer that by saying first that we select stocks one at a time, bottom
up, with emphasis on individual companies rather than the industries in which
they compete. If we are overweighted or underweighted in a particular industry,
it's because we are either finding good companies in that industry or not. We
try not to play investment themes, such as buying all the techs or all the
banks. In a broad overview, the Fund benefited from our investment in companies
in diverse sectors, including communications, wireless, semiconductor
electronics and equipment, software, services and broadcast media.
Q. What's your outlook for emerging growth companies and the Fund going forward?
Despite recent volatility, the economic fundamentals that helped propel the
markets to record highs are still in place. We're still seeing economic growth
with low inflation. The recent volatility in the market has brought a lot of
companies down substantially in price. This creates great opportunity for
bottom-up stock pickers like us, and we'll be sticking to our disciplines to
find the good stocks and avoid the bad. Emerging growth stocks may continue to
be volatile, but that's where the biggest opportunity will be. There are many
smaller companies that look to be very undervalued, and it is a great area of
research for us right now. We believe the interest rate increases will come to
an end later this year, and the market will broaden, which will make a more
rational market. And while technology stocks offer a core area to invest for the
Fund, the strength in the market will no longer be limited to just technology,
and we will see a bull market in more sectors, which should benefit the Fund and
its shareholders.
The portfolio manager's commentary reflects conditions and actions taken during
the reporting period, which are subject to change. A shift in opinion may result
in strategic and other portfolio changes.
4
<PAGE>
KOBRICK EMERGING GROWTH FUND
INVESTMENT RESULTS THROUGH MARCH 31, 2000
--------------------------------------------------------------------------------
PUTTING PERFORMANCE IN PERSPECTIVE
The chart comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the differences between the two. Your
Fund's total return for the period shown below reflects Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged and does not have expenses that
affect the results. It is not possible to invest directly in an index. In
addition, few investors could purchase all of the securities necessary to match
the index and would incur transaction costs and other expenses even if they
could. Your Fund's benchmark is the Russell 2000 Index.
Growth of a $10,000 Investment in Class A Shares
BAR GRAPH APPEARS HERE
<TABLE>
December 31, 1997 (inception) through March 31, 2000
Kobrick Kobrick Russell
Emerging Growth Emerging Growth 2000 Index(4)
Net Asset Value(1) Maximum Sales Charge(2)
<S>
<C> <C> <C> <C>
12/31/97 10,000 9,425 10,000
1/31/98 10,260 9,670 9,842
2/28/98 11,330 10,679 10,570
3/31/98 11,700 11,027 11,006
4/30/98 12,050 11,357 11,067
5/31/98 11,490 10,829 10,471
6/30/98 12,560 11,838 10,493
7/31/98 11,920 11,235 9,643
8/31/98 9,350 8,812 7,771
9/30/98 10,140 9,557 8,379
10/31/98 10,560 9,953 8,721
11/30/98 12,440 11,725 9,177
12/31/98 13,950 13,148 9,745
1/31/99 15,310 14,430 9,875
2/28/99 13,960 13,157 9,075
3/31/99 15,180 14,307 9,217
4/30/99 15,770 14,863 10,043
5/31/99 15,420 14,533 10,189
6/30/99 16,720 15,759 10,650
7/31/99 16,660 15,702 10,358
8/31/99 16,500 15,551 9,975
9/30/99 16,540 15,589 9,977
10/31/99 17,987 16,952 10,017
11/30/99 22,036 20,769 10,615
12/31/99 26,014 24,519 11,817
1/31/00 24,606 23,191 11,627
2/29/00 30,822 29,050 13,547
3/31/00 28,549 26,907 12,654
</TABLE>
The illustration represents past performance of Class A shares and does not
guarantee future results. Share price and return will vary and you may have a
gain or a loss when you sell your shares. Class B, C and Y share performance
will differ from that shown based on differences in inception date, fees and
sales charges. All index and Fund performance assumes reinvestment of
distributions.
Average Annual Total Returns-- March 31, 2000
<TABLE>
Six Since Fund's
Months 1 Year Inception
<S>
<C> <C> <C> <C>
Class A (Inception 12/31/97)
Net Asset Value(1) 72.60% 88.07% 59.51%
With MSC(2) 62.68 77.26 55.36
-----------------------------------------------------------------------------------------------
Class B (Inception 10/29/99)
Net Asset Value(1) -- -- 58.33%
With CDSC(3) -- -- 53.33
-----------------------------------------------------------------------------------------------
Class C (Inception 10/29/99)
Net Asset Value(1) -- -- 58.39%
With CDSC(3) -- -- 57.39
-----------------------------------------------------------------------------------------------
Class Y (Inception 10/29/99)
Net Asset Value(1) -- -- 58.86%
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Since Fund's Since Fund's
Class A Class B,C & Y
Comparative Performance Inception Inception
---------------------------------------------------------------------------------------------------------
<S>
<C> <C> <C> <C> <C>
Russell 2000 Index(4) 26.83% 37.29% 11.03% 25.77%
Morningstar Small Cap Growth Funds Average(5) 62.88 89.95 35.32 54.17
Lipper Small Cap Growth Funds Average(6) 65.68 93.41 36.39 56.20
</TABLE>
Portfolio Characteristics at March 31, 2000
-------------------------------------------
% of
Your Fund's Composition Net Assets
--------------------------------------------------------------------
Common Stocks 96.8
Short Term Investments and Other 3.2
% of
Your Fund's Ten Largest Holdings Net Assets
--------------------------------------------------------------------
American Eagle Outfitters, Inc. 5.1
The Men's Warehouse, Inc. 4.8
Westwood One, Inc. 3.9
Pegasus Communications Corp. 3.5
TJX Companies, Inc. 3.2
Pier 1 Imports, Inc. 3.2
Family Dollar Stores, Inc. 3.0
Ashland, Inc. 3.0
AutoNation, Inc. 2.8
Starbucks, Corp. 2.7
% of
Your Fund's Five Largest Industries Net Assets
--------------------------------------------------------------------
Retail-Specialty 16.6
Retail-Apparel 14.5
Broadcast Media 10.0
Semiconductor-Equipment 6.6
Computer Software 5.6
Portfolio holdings and asset allocation will vary.
NOTES
The returns in the Average Annual Total Returns table at left represent past
performance of the Fund and do not guarantee future results. Share price and
return will vary and you may have a gain or a loss when you sell your shares.
Fund performance also reflects waived fees and expenses. Returns would have been
lower without these waivers, which can be discontinued. Periods of less than one
year are not annualized. All index and Fund performance assumes reinvestment of
distributions. Class Y shares are available to certain institutional investors
only.
(1) Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect a sales charge.
(2) With Maximum Sales Charge performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 5.75% at the time of
purchase of Class A shares. Until October 29, 1999, the Fund had only one
class of shares and was offered without a sales charge. Historical
performance has been recalculated to include a sales charge.
(3) With Contingent Deferred Sales Charge (CDSC) performance assumes
reinvestment of all distributions and, for Class B shares, assumes that a
maximum 5.00% sales charge is applied to redemptions. The sales charge will
decrease over time, declining to zero six years after the purchase of
shares. With CDSC performance for Class C shares assumes a maximum 1.00%
sales charge on redmeptions within the first year of purchase.
(4) Russell 2000 Index is an unmanaged index of 2000 smaller U.S. companies
selected for their growth orientation. You may not invest directly in an
index.
(5) Morningstar Small Cap Growth Funds Average is the average performance
without sales charges of all mutual funds with similar investment
objectives as calculated by Morningstar, Inc. Since inception returns for
Class B, C and Y shares are calcualted from 11/1/99.
(6) Lipper Small Cap Growth Funds Average is the average peformance without
sales charges of all mutual funds with similar investment style or
objective as calculated by Lipper Inc.
5
<PAGE>
KOBRICK GROWTH FUND
(a picture of Michael Nance)
Michael E. Nance
Senior Vice President, Kobrick Funds LLC, and Portfolio Manager,
Kobrick Growth Fund
PORTFOLIO PROFILE
OBJECTIVE:
Provide long-term growth of capital
STRATEGY:
Invests primarily in equity securities of companies with large capitalizations,
that the adviser believes have better than average long-term growth potential.
INCEPTION DATE:
September 1, 1998
MANAGER:
Michael E. Nance
SYMBOLS:
Class A KFGRX
Class B KFGBX
Class C KFGCX*
Class Y KFGYX*
NET ASSET VALUE
PER SHARE:
(MARCH 31, 2000)
Class A $24.07
Class B 24.01
Class C 24.02
Class Y 24.09
* proposed
Questions & Answers with Your Portfolio Manager
-----------------------------------------------
Kobrick Growth Fund
Q. How did Kobrick Growth Fund perform during the six months ended March 31,
2000?
Kobrick Growth Fund had a very strong six months in a stock market generally
characterized by substantial advancement in the last quarter of 1999 and extreme
volatility in the first quarter of 2000. For the period, the Fund's Class A
shares returned 56.20% at net asset value, substantially outperforming the
17.51% return of the S&P 500 Stock Index, the Fund's benchmark. The Fund's
results were also above the average for comparable funds. (See tables next
page.)
Q. What was it about your investment style that helped you achieve such strong
returns relative to the S&P 500?
A lot of the Growth Fund's success over the past six months had to do with
sticking to our core disciplines. When examining companies, we look for three
things: strong management, strong growth - both earnings and cash flow - and
undervaluation. We are always looking for those same things, no matter what's
happening in the market or the Fund, which helps take the emotion out of buying
and selling stocks. These disciplines combined with our research have led me to
a few areas of the market that I think are going to see explosive growth. More
importantly, it's growth that hasn't been recognized by the market. The key is
finding ideas before everyone else does and before that is reflected in the
valuations.
Q. What are a couple of those areas of "explosive growth" you mentioned that
have helped the Fund?
Wireless has been a great area of unrecognized growth, and the companies in that
arena have far exceeded expectations for subscriber growth and for the demand of
new products over the wireless phone, like data. People are accessing the
Internet, shopping and e-mailing from their wireless devices. These types of
devices are new, and I think will evolve into bigger and more important product
sets. Again, this isn't widely recognized, so valuations in those stocks are
still compelling. Another area that has helped the Fund is derivative plays off
the Internet. Growth Fund owns a number of companies that will benefit from the
continued growth of the Internet itself. As the Internet network becomes more
complex, companies will need software to manage operations more efficiently. One
such holding is Computer Associates International (3.1% as of 3/31/00), a
software company that enables corporations to better manage their network and
operations. Other holdings that helped the Fund uncluded long haul fiber
companies and telecommunication service providers, like AT&T (2.8% as of
3/31/00) and Quest/U.S. West, which was sold before the close of the period.
Most people see these two companies as long-distance companies, but they are
also deriving an increasing portion of their revenues and profits from data
transport over the Internet.
Q. What's your outlook for large-cap growth stocks going forward?
Recent volatility aside, I see much of what happened in terms of market growth
accelerating over the next couple of years. The strength in the stock market has
been helped by the economy, which has been driven by low inflation and strong
growth. Companies are increasing their productivity, and a big reason is the
Internet, which allows for more efficient purchasing and distribution, not only
business-to-consumer commerce, but increasingly for business-to-business. I
believe future business-to-business commerce over the Internet will dwarf what
we've seen so far and will continue to improve companies' efficiency, and bigger
companies will benefit the most.
The portfolio manager's commentary reflects conditions and actions taken during
the reporting period, which are subject to change. A shift in opinion may result
in strategic and other portfolio changes.
6
<PAGE>
KOBRICK GROWTH FUND
INVESTMENT RESULTS THROUGH MARCH 31, 2000
--------------------------------------------------------------------------------
PUTTING PERFORMANCE IN PERSPECTIVE
The chart comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the differences between the two. Your
Fund's total return for the period shown below reflects Fund expenses and
management fees. A securities index measures the performance of a theoretical
portfolio. Unlike a fund, the index is unmanaged and does not have expenses that
affect the results. It is not possible to invest directly in an index. In
addition, few investors could purchase all of the securities necessary to match
the index and would incur transaction costs and other expenses even if they
could. Your Fund's benchmark is the S&P 500 Index.
Growth of a $10,000 Investment in Class A Shares
--------------------------------------------------------------------------------
BAR GRAPH APPEARS HERE
<TABLE>
September 1, 1998 (inception) through March 31, 2000
Kobrick Growth Kobrick Growth S&P 500 Index(4)
Net Asset Value(1) Maximum Sales Charge(2)
<S>
<C> <C> <C> <C>
9/1/98 10,000 9,425 10,000
9/30/98 10,320 9,727 10,641
10/31/98 11,130 10,490 11,506
11/30/98 12,100 12,971 12,203
12/31/98 13,762 12,970 12,907
1/31/99 15,763 14,856 13,446
2/28/99 14,572 13,735 13,029
3/31/99 15,473 14,583 13,550
4/30/99 15,713 14,809 14,075
5/31/99 14,742 13,895 13,742
6/30/99 15,463 14,574 14,505
7/31/99 15,153 14,281 14,052
8/31/99 14,983 14,121 13,983
9/30/99 15,413 14,526 13,599
10/31/99 16,212 15,281 14,460
11/30/99 17,773 16,751 14,754
12/31/99 21,274 20,050 15,623
1/31/00 20,283 19,117 14,838
2/29/00 22,544 21,248 14,557
3/31/00 24,074 22,690 15,981
</TABLE>
Average Annual Total Returns-- March 31,2000
<TABLE>
Months 1 Year Inception
<S>
<C> <C> <C> <C>
Class A (Inception 9/1/98)
Net Asset Value(1) 56.20% 55.59% 74.33%
With Maximum Sales Charge(2) 47.22 46.65 67.92
-----------------------------------------------------------------------------------------------
Class B (Inception 10/29/99)
Net Asset Value(1) -- -- 48.12%
With CDSC(3) -- -- 43.12
-----------------------------------------------------------------------------------------------
Class C (Inception 10/29/99)
Net Asset Value(1) -- -- 48.18%
With CDSC(3) -- -- 47.18
-----------------------------------------------------------------------------------------------
Class Y (Inception 10/29/99)
Net Asset Value(1) -- -- 48.61%
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Since Fund's Since Fund's
Class A Class B,C & Y
Comparative Performance Inception Inception
--------------------------------------------------------------------------------------------------------
<S>
<C> <C> <C> <C> <C>
S&P 500 Index(4) 17.51% 17.94% 34.46% 10.52%
Morningstar Large Cap Growth Funds Average(5) 37.87 39.24 56.19 29.26
Lipper Large-Cap Growth Funds Average(6) 38.47 38.08 58.04 28.32
</TABLE>
Portfolio Characteristics at March 31, 2000
% of
Your Fund's Composition Net Assets
--------------------------------------------------------------------
Common Stocks 96.8
Short Term Investments and Other 3.2
% of
Your Fund's Ten Largest Holdings Net Assets
--------------------------------------------------------------------
Tyco International, Ltd. 6.1
MediaOne Group, Inc. 5.2
EchoStar Communications Corp. 5.0
Microsoft Corp. 3.8
AT&T Corp. (Liberty Media Group) 3.5
Sprint Corp. (PCS Group) 3.2
Computer Associates International, Inc. 3.1
First Data Corp. 3.0
AT&T Corp. 2.8
Software.com, Inc. 2.8
% of
Your Fund's Five Largest Industries Net Assets
--------------------------------------------------------------------
Broadcast Media 16.4
Computer Software 13.2
Manufacturer-Diversified 8.5
Telecommunications-Cellular 7.5
Banks-Major Regional 5.0
Portfolio holdings and asset allocations will vary.
NOTES
The returns in the Average Annual Total Returns table at left represent past
performance of the Fund and do not guarantee future results. Share price and
return will vary and you may have a gain or a loss when you sell your shares.
Fund performance also reflects waived fees and expenses. Returns would have been
lower without these waivers, which can be discontinued. Periods of less than one
year are not annualized. Periods of less than one year are not annualized. All
index and Fund performance assumes reinvestment of distributions. Class Y shares
are available to certain institutional investors only.
(1) Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect a sales charge.
(2) With Maximum Sales Charge performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 5.75% at the time of
purchase of Class A shares. Until October 29, 1999, the Fund had only one
class of shares and was offered without a sales charge. Historical
performance has been recalculated to include a sales charge.
(3) With Contingent Deferred Sales Charge (CDSC) performance assumes
reinvestment of all distributions and, for Class B shares, assumes that a
maximum 5.00% sales charge is applied to redemptions. The sales charge will
decrease over time, declining to zero six years after the purchase of
shares. With CDSC performance for Class C shares assumes a maximum 1.00%
sales charge on redmeptions within the first year of purchase.
(4) Standard & Poor's Composite Index of 500 Stocks (S&P 500(R)) is an
unmanaged index of U.S. common stock performance. You may not invest
directly in an index. Since inception return calculated from 8/31/98 for
Class A shares.
(5) Morningstar Large Cap Growth Funds Average is the average performance
without sales charges of all mutual funds with similar investment
objectives as calculated by Morningstar, Inc. Since inception return is
calculated from 8/31/98. for Class A shares and from 11/1/99 for Class B, C
and Y shares.
(6) Lipper Large-Cap Growth Funds Average is the average performance without
sales charges of all mutual funds with similar investment style or
objective as calculated by Lipper Inc. Since inception return calculated
from 8/31/98 Class A shares.
7
<PAGE>
KOBRICK CAPITAL FUND -- SCHEDULE OF INVESTMENTS
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 97.0% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
--------------------------------------------------------------------------------
COMMON STOCKS-- 92.7%
BANKS-MAJOR REGIONAL-- 2.7%
First Union Corp. 161,000 $ 5,997,250
Wachovia Corp. 70,000 4,729,375
-----------
10,726,625
-----------
BROADCAST MEDIA-- 10.0%
AT&T Corp. (Liberty Media Group) (c) 201,200 11,921,100
CBS Corp. 63,100 3,573,037
EchoStar Communications Corp. (c) 183,500 14,496,500
MediaOne Group, Inc. (c) 74,700 6,050,700
Wink Communications, Inc. (c) 103,400 3,450,975
-----------
39,492,312
-----------
COMMUNICATION-EQUIPMENT-- 0.3%
Next Level Communications, Inc. (c) 9,100 989,625
-----------
COMPUTER HARDWARE-- 5.6%
Apple Computer, Inc. 59,200 7,892,100
Compaq Computer Corp. 216,600 5,942,962
Dell Computer Corp. (c) 141,400 7,547,225
Palm, Inc. (c) 13,100 587,863
-----------
21,970,150
-----------
COMPUTER NETWORKING-- 0.1%
Arrowpoint Communications, Inc. (c) 2,800 331,756
-----------
COMPUTER SOFTWARE-- 3.2%
Selectica, Inc. (c) 1,000 88,250
Software.com, Inc. (c) 43,300 5,580,287
Symantec Corp. (c) 43,300 3,252,913
VERITAS Software Corp. (c) 29,600 3,877,600
-----------
12,799,050
-----------
ENTERTAINMENT-- 0.5%
Tickets.com, Inc. (c) 139,900 1,329,050
Youthstream Media Networks, Inc. (c)(e) 44,100 463,050
-----------
1,792,100
-----------
HEALTHCARE-DRUGS-- 0.0%
OraPharma, Inc. (c) 700 12,950
-----------
INTERNET-- 0.8%
Amdocs, Ltd. (c) 32,200 2,372,737
Digital Impact, Inc. (c) 23,800 846,388
-----------
3,219,125
-----------
INVESTMENT BANKING/BROKERAGE-- 8.5%
E*TRADE Group, Inc. (c) 157,500 4,744,688
Lehman Brothers Holdings, Inc. 132,500 12,852,500
Merrill Lynch & Company, Inc. 37,200 3,906,000
Morgan Stanley Dean Witter & Co. 91,300 7,446,656
Paine Webber Group, Inc. 105,900 4,659,600
-----------
33,609,444
-----------
MANUFACTURER-DIVERSIFIED-- 1.8%
Tyco International, Ltd. 142,500 7,107,188
-----------
OIL & GAS-DRILLING & EQUIPMENT-- 3.2%
Global Marine, Inc. (c) 307,400 7,800,275
Smith International, Inc. (c) 60,200 4,665,500
-----------
12,465,775
-----------
OIL & GAS-EXPLORATION & PRODUCTION-- 13.1%
Apache Corp. 259,000 12,885,250
Burlington Resources, Inc. 224,400 8,302,800
Chevron Corp. 130,100 12,026,119
Noble Affiliates, Inc. 201,300 6,605,156
Occidental Petroleum Corp. 194,100 4,027,575
Texaco, Inc. 72,100 3,866,363
USX-Marathon Group 161,300 4,203,881
-----------
51,917,144
-----------
PAPER & FOREST PRODUCT-- 2.6%
Georgia Pacific Corp. (Timber Group) 80,500 3,340,750
International Paper Co. 161,000 6,892,813
-----------
10,233,563
-----------
RESTAURANTS-- 3.3%
Starbucks Corp. (c) 295,200 13,228,650
-----------
RETAIL-APPAREL-- 3.9%
AnnTaylor Stores Corp. (c) 163,400 3,860,325
The Men's Wearhouse, Inc. (c) 20,100 570,337
TJX Companies, Inc. 487,600 10,818,625
-----------
15,249,287
-----------
RETAIL-DEPARTMENT STORE-- 3.5%
Costco Wholesale Corp. 155,200 8,148,000
Family Dollar Stores, Inc. 276,100 5,746,331
-----------
13,894,331
-----------
RETAIL-SPECIALTY-- 14.0%
AutoNation, Inc. (c) 769,500 6,107,906
Bed Bath & Beyond, Inc. (c) 155,700 6,130,688
Circuit City Stores 133,800 8,145,075
Kohl's Corp. (c) 75,700 7,882,262
Lowe's Cos. 137,300 8,014,887
Pacific Sunwear of California, Inc. (c) 102,900 3,556,481
Pier 1 Imports, Inc. 152,100 1,806,188
See accompanying notes to financial statements.
8
<PAGE>
KOBRICK CAPITAL FUND -- SCHEDULE OF INVESTMENTS (CONTINUED)
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 97.0% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
--------------------------------------------------------------------------------
RETAIL-SPECIALTY-- (continued)
Staples, Inc. (c) 210,000 $ 4,200,000
Tandy Corp. 107,800 6,009,850
Tweeter Home Entertainment Group, Inc. (c) 81,300 3,597,525
-----------
55,450,862
-----------
SEMICONDUCTOR-ELECTRONICS-- 3.4%
Cypress Semiconductor Corp. (c) 44,900 2,214,131
Infineon Technologies AG (ADR) 4,200 241,238
Insilicon, Inc. (c) 5,600 88,550
Integrated Device Technology, Inc. (c) 69,800 2,765,825
Intel Corp. 58,900 7,693,812
Intersil Holding Corp. (c) 5,100 263,606
-----------
13,267,162
-----------
SEMICONDUCTOR-EQUIPMENT-- 2.9%
KLA-Tencor Corp. (c) 57,800 4,869,650
Lam Research Corp. (c) 115,200 5,191,200
Novellus Systems, Inc. (c) 25,000 1,403,125
-----------
11,463,975
-----------
SERVICES-COMMERCIAL & CONSUMER-- 2.8%
Cendant Corp. (c)(d) 537,100 9,936,350
MDC Corporation, Inc. (c) 103,700 1,205,513
-----------
11,141,863
-----------
SERVICES-DATA PROCESSING-- 1.1%
First Data Corp. 101,100 4,473,675
-----------
TELECOMMUNICATIONS-CELLULAR-- 2.9%
Alamosa PCS Holdings, Inc. (c) 22,000 830,500
Nextel Communications, Inc. (c) 32,500 4,818,125
Sprint Corp. (PCS Group) (c) 90,600 5,917,313
-----------
11,565,938
-----------
TELECOMMUNICATIONS-EQUIPMENT-- 0.5%
P-Com, Inc. (c) 106,200 1,964,700
-----------
TELEPHONE-- 2.0%
Net2000 Communications, Inc. (c) 4,100 97,375
U.S. West, Inc. 109,800 7,974,225
-----------
8,071,600
-----------
TOTAL COMMON STOCK
(Identified Cost $352,798,538) 366,438,850
-----------
PRINCIPAL
DESCRIPTION AMOUNT (000) VALUE(A)
--------------------------------------------------------------------------------
SHORT TERM INVESTMENT - 4.3%
Repurchase Agreement with State
Street Bank & Trust Co., 5.250%,
dated 3/31/2000, to be repurchased
for $16,992,431 on 4/3/2000
(collateralized by U.S. Treasury
Note, 6.500%, 8/31/2001,
market value $17,328,655) $16,985 $ 16,985,000
-----------
TOTAL SHORT TERM INVESTMENT 16,985,000
(Identified Cost $16,985,000) -----------
TOTAL INVESTMENTS - 97.0%
(Identified Cost $369,783,538)(b) 383,423,850
Other assets less liabilities 11,797,845
-----------
TOTAL NET ASSETS - 100% $395,221,695
============
(a) See Note 2 of Notes to Financial Statements.
(b) Federal Tax Information: At March 31, 2000
the net unrealized appreciation on investments
based on cost of $369,783,538 for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation
for all investments in which there is an excess
of value over tax cost. $ 22,301,608
Aggregate gross unrealized depreciation for all
investments in which there is an excess of
tax cost over value -8,661,296
-----------
Net unrealized appreciation $ 13,640,312
============
(c) Non-income producing security.
(d) Affiliated company. See Note 7 of Notes to Financial Statements.
(e) Security valued at fair value as determined in good faith by or under the
direction of the Board of Trustees.
ADR American Depositary Receipt (ADR) is a certificate issued by a custodian
bank representing the right to receive securities of the foreign issuer
described. The value of ADRs are significantly influenced by trading on
exchanges not located in the United States.
9
See accompanying notes to financial statements.
<PAGE>
KOBRICK EMERGING GROWTH FUND -- SCHEDULE OF INVESTMENTS
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 106.5% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
---------------------------------------------------------------------------
COMMON STOCKS-- 96.8%
BROADCAST MEDIA-- 10.0%
Pegasus Communications Corp. (c) 44,200 $ 6,221,150
Westwood One, Inc. 191,400 6,938,250
Wink Communications, Inc. (c) 145,000 4,839,375
-----------
17,998,775
-----------
CHEMICALS-SPECIALTY-- 3.0%
Ashland, Inc. 160,100 5,353,344
-----------
COMMUNICATION-EQUIPMENT-- 0.7%
CapRock Communications Corp. (c) 25,600 1,254,400
-----------
COMMUNICATION-SOFTWARE-- 0.3%
Maxcom Corp. (c) 100,000 619,408
-----------
COMPUTER HARDWARE-- 0.2%
Palm, Inc. (c) 6,000 269,250
-----------
COMPUTER NETWORKING-- 0.1%
Arrowpoint Communications, Inc. (c) 1,300 154,030
-----------
COMPUTER SOFTWARE-- 5.6%
Exchange Applications, Inc. (c) 32,400 1,714,669
Extensity, Inc. (c) 19,900 955,200
Great Plains Software, Inc. (c) 29,500 1,574,562
Selectica, Inc. (c) 600 52,950
Software.com, Inc. (c) 14,200 1,830,025
Viador, Inc. (c) 82,000 4,007,750
-----------
10,135,156
-----------
ELECTRONICS-INSTRUMENT-- 3.4%
Parker-Hannifin Corp. 92,200 3,809,013
St. Assembly Test Services, Ltd. (ADR) 49,300 2,391,050
-----------
6,200,063
-----------
ENTERTAINMENT-- 0.3%
YouthStream Media Networks, Inc. (c) 37,100 486,938
-----------
HEALTHCARE-DRUGS-- 0.0%
OraPharma, Inc. (c) 300 5,550
-----------
HEALTHCARE-MANAGED CARE-- 0.7%
Sunrise Assisted Living, Inc. (c) 100,000 1,325,000
-----------
HOUSEHOLD FURNITURE-- 1.1%
Leggett & Platt, Inc. 92,000 1,978,000
-----------
INTERNET-- 1.2%
Breakaway Solutions, Inc. (c) 18,800 855,400
Digital Impact, Inc. (c) 6,600 234,712
Lante Corp. (c) 1,100 33,413
Netpliance, Inc. (c) 73,900 1,071,550
-----------
2,195,075
-----------
INVESTMENT BANKING/BROKERAGE-- 4.1%
A.G. Edwards, Inc. 94,100 3,764,000
E*TRADE Group, Inc. (c) 67,500 2,033,437
Legg Mason, Inc. 38,300 1,656,475
-----------
7,453,912
-----------
LODGING-HOTELS-- 1.2%
Extended Stay America, Inc. (c) 290,700 2,180,250
-----------
OIL & GAS-DRILLING & EQUIPMENT-- 3.7%
R&B Falcon Corp. (c) 180,000 3,825,000
Smith International, Inc. (c) 35,000 2,819,688
-----------
6,644,688
-----------
OIL & GAS-EXPLORATION & PRODUCTION-- 4.3%
Apache Corp. 76,100 3,785,975
Noble Affiliates, Inc. 119,600 3,924,375
-----------
7,710,350
-----------
OIL & GAS-REFINING & MARKETING-- 1.5%
Sunoco, Inc. 96,700 2,677,381
-----------
RESTAURANTS-- 2.7%
Starbucks Corp. (c) 110,400 4,947,300
-----------
RETAIL-APPAREL-- 14.5%
American Eagle Outfitters, Inc. 240,000 9,105,000
AnnTaylor Stores Corp. (c) 110,900 2,620,012
The Men's Wearhouse, Inc. (c) 292,200 8,656,425
TJX Companies, Inc. 259,200 5,751,000
-----------
26,132,437
-----------
RETAIL-DEPARTMENT STORE-- 5.4%
Dollar Tree Stores, Inc. (c) 84,600 4,409,775
Family Dollar Stores, Inc. 258,000 5,369,625
-----------
9,779,400
-----------
RETAIL-SPECIALTY-- 16.6%
AutoNation, Inc. (c) 645,900 5,126,831
Bed Bath & Beyond, Inc. (c) 70,500 2,775,937
garden.com, Inc. (c) 7,500 60,938
Gerald Stevens, Inc. (c)(d) 167,000 1,175,680
Office Depot, Inc. (c) 329,300 3,807,531
Pacific Sunwear of California, Inc.(c) 105,100 4,046,350
Pier 1 Imports, Inc. 554,400 5,682,600
Staples, Inc. (c) 123,800 2,476,000
Tweeter Home Entertainment
Group, Inc. (c) 107,200 4,743,600
-----------
29,895,467
-----------
SEMICONDUCTOR-ELECTRONICS--2.8%
Infineon Technologies AG (ADR) (c) 1,900 109,131
Insilicon, Inc. (c) 2,500 39,531
10
See accompanying notes to financial statements.
<PAGE>
KOBRICK EMERGING GROWTH FUND -- SCHEDULE OF INVESTMENTS (CONTINUED)
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 106.5% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
---------------------------------------------------------------------------
SEMICONDUCTOR-ELECTRONICS--(continued)
Integrated Device Technology, Inc. (c) 12,400 $ 491,350
Intersil Holding Corp. (c) 34,200 1,767,713
Microchip Technology, Inc. (c) 39,100 2,570,825
-----------
4,978,550
-----------
SEMICONDUCTOR-EQUIPMENT-- 6.6%
Lam Research Corp. (c) 90,400 4,073,650
LTX Corp. (c) 100,000 4,518,750
Novellus Systems, Inc (c) 57,900 3,249,637
-----------
11,842,037
-----------
SERVICES-COMMERCIAL & CONSUMER-- 3.9%
AnswerThink Consulting Group, Inc. (c) 75,600 1,847,475
CacheFlow, Inc. 4,500 533,250
Heidrick & Struggles
International, Inc. (c) 20,000 802,500
Lightspan Partnership, Inc. (c) 1,600 28,400
MDC Corporation, Inc. (c) 124,700 1,449,637
Pathways Group, Inc. (c) 92,500 219,688
Sapient Corp. (c) 17,700 1,484,587
Tanning Technology Corp. (c) 15,000 645,938
-----------
7,011,475
-----------
SERVICES-DATA PROCESSING-- 0.1%
VIA NET.WORKS, Inc. (c) 4,300 114,219
-----------
TELECOMMUNICATIONS-CELLULAR-- 0.2%
Alamosa PCS Holdings, Inc. (c) 9,800 369,950
-----------
TELECOMMUNICATIONS-EQUIPMENT-- 0.7%
P-Com, Inc. (c) 65,100 1,204,350
-----------
TELEPHONE-- 1.9%
CTC Communications Group, Inc. (c) 81,300 3,465,413
Net2000 Communication, Inc. (c) 1,800 42,750
-----------
3,508,163
-----------
TOTAL COMMON STOCK
(Identified Cost $166,195,554) 174,424,918
-----------
PRINCIPAL
DESCRIPTION AMOUNT (000) VALUE(A)
--------------------------------------------------------------------------------
SHORT TERM INVESTMENT-- 9.7%
----------------------------
Repurchase Agreement with State Street
Bank & Trust Co.,5.250%, dated
3/31/2000, to be repurchased for
$17,462,637 on 4/3/2000
(collateralized by U.S. Treasury
Bond, 8.125%, 5/15/2021, market
value $17,809,636) $17,455 $17,455,000
-----------
Total Short Term Investment
(Identified Cost $17,455,000) 17,455,000
-----------
Total Investments-- 106.5%
(Identified Cost $183,650,554) (b) 191,879,918
Other assets less liabilities -11,699,503
-----------
Total Net Assets-- 100% $180,180,415
============
(a) See Note 2 of Notes to Financial Statements.
(b) Federal Tax Information: At March 31, 2000 the net
unrealized appreciation on invest- ments based on cost of $183,650,554
for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for
all investments in which there is an excess
of value over tax cost. $ 14,204,261
Aggregate gross unrealized depreciation
for all investments in which there is an
excess of tax cost over value -5,974,897
-----------
Net unrealized appreciation $ 8,229,364
============
(c) Non-income producing security.
(d) Security valued at fair value as determined in good faith by
or under the direction of the Board of Trustees.
ADR American Depositary Receipt (ADR) is a certificate issued by a custodian
bank representing the right to receive securities of the foreign issuer
described. The value of ADRs are significantly influenced by trading on
exchanges not located in the United States.
See accompanying notes to financial statements.
11
<PAGE>
KOBRICK GROWTH FUND -- SCHEDULE OF INVESTMENTS
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 99.9% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
--------------------------------------------------------------------------------
COMMON STOCKS-- 96.8%
BANKS-MAJOR REGIONAL-- 5.0%
Comerica, Inc. 28,200 $ 1,180,875
First Union Corp. 76,800 2,860,800
Firstar Corp. 103,200 2,367,150
-----------
6,408,825
-----------
BROADCAST MEDIA-- 16.4%
AT&T Corp.(Liberty Media Group) (c) 77,000 4,562,250
EchoStar Communications Corp. (c) 82,200 6,493,800
MediaOne Group, Inc. (c) 82,800 6,706,800
Pegasus Communications Corp. (c) 24,100 3,392,075
-----------
21,154,925
-----------
CHEMICALS-SPECIALTY-- 0.9%
Waters Corp. (c) 12,400 1,181,100
-----------
COMMUNICATION-EQUIPMENT-- 3.6%
Ericsson LM Telephone Co. (ADR) (c) 23,500 2,204,594
Motorola, Inc. 7,700 1,096,287
Nokia Corp. (ADR) 6,100 1,325,225
-----------
4,626,106
-----------
COMMUNICATION-SOFTWARE/SERVICES-- 3.6%
BroadWing, Inc. 68,700 2,554,781
Global Crossing, Ltd. (c) 17,900 732,781
Teligent, Inc. (c) 20,700 1,383,019
-----------
4,670,581
-----------
COMPUTER NETWORKING-- 2.1%
Arrowpoint Communications, Inc. (c) 900 106,636
Cisco Systems, Inc. (c) 34,200 2,644,087
-----------
2,750,723
-----------
COMPUTER SOFTWARE-- 13.2%
Computer Associates International, Inc. 66,900 3,959,644
Extensity, Inc. (c) 14,900 715,200
Microsoft Corp. (c) 46,100 4,898,125
Oracle Corp. (c) 17,200 1,342,675
Software.com, Inc. (c) 28,400 3,660,050
The 3DO Co. (c) 87,500 847,656
VeriSign, Inc. (c) 6,500 971,750
WatchGuard Technologies (c) 7,300 657,000
-----------
17,052,100
-----------
CONSUMER FINANCE-- 1.9%
Providian Financial Corp. 28,400 2,460,150
-----------
ELECTRIC COMPANIES-- 1.6%
Dynegy, Inc. 32,400 $ 2,033,100
-----------
ELECTRONICS-INSTRUMENT-- 2.9%
Tektronix, Inc. 50,200 2,811,200
Thermo Electron Corp. (c) 46,800 953,550
-----------
3,764,750
-----------
HEALTHCARE-DIVERSIFIED-- 2.2%
American Home Products Corp. 51,800 2,777,775
-----------
HEALTHCARE-DRUGS-- 3.7%
Pfizer, Inc. 68,700 2,511,844
Priority Healthcare Corp. (c) 43,600 2,190,900
-----------
4,702,744
-----------
INTERNET-- 0.1%
Quokka Sports, Inc. (c) 14,700 156,188
-----------
INVESTMENT BANKING/BROKERAGE-- 1.0%
Merrill Lynch & Company, Inc. 11,600 1,218,000
-----------
MANUFACTURER-DIVERSIFIED-- 8.5%
General Electric Co. 20,600 3,196,862
Tyco International, Ltd. 156,600 7,810,425
-----------
11,007,287
-----------
OIL & GAS-DRILLING & EQUIPMENT-- 0.9%
Pride International, Inc. (c) 51,300 1,170,281
-----------
OIL & GAS-EXPLORATION & PRODUCTION-- 1.0%
Exxon Mobil Corp. 15,800 1,271,900
-----------
RETAIL-APPAREL-- 1.1%
TJX Companies, Inc. 61,000 1,353,438
-----------
RETAIL-GENERAL MERCHANDISE-- 0.9%
Wal-Mart Stores, Inc. 21,700 1,204,350
-----------
RETAIL-SPECIALTY-- 2.1%
CVS Corp. 73,500 2,760,844
-----------
SEMICONDUCTOR-ELECTRONIC--0.4%
National Semiconductor Corp. (c) 7,500 454,688
-----------
SEMICONDUCTOR-EQUIPMENT-- 4.0%
KLA-Tencor Corp. (c) 32,200 2,712,850
Lam Research Corp. (c) 54,500 2,455,906
-----------
5,168,756
-----------
See accompanying notes to financial statements.
12
<PAGE>
KOBRICK GROWTH FUND -- SCHEDULE OF INVESTMENTS (CONTINTUED)
Investments as of March 31, 2000
(Unaudited)
INVESTMENTS -- 99.9% OF TOTAL NET ASSETS
DESCRIPTION SHARES VALUE (A)
--------------------------------------------------------------------------------
SERVICES-COMMERCIAL & CONSUMER-- 3.2%
Aviall, Inc. 55,000 $ 464,063
Cendant Corp. (c)(d) 138,900 2,569,650
Heidrick & Struggles
International, Inc. (c) 28,100 1,127,512
-----------
4,161,225
SERVICES-DATA PROCESSING-- 4.0%
Electronic Data Systems Corp. 19,900 1,277,331
First Data Corp. 86,600 3,832,050
-----------
5,109,381
TELECOMMUNICATIONS-CELLULAR-- 7.5%
Nextel Communications, Inc. (c) 17,400 2,579,550
Sprint Corp. (PCS Group) (c) 63,500 4,147,344
Vodafone AirTouch PLC (ADR) (c) 29,600 1,644,650
VoiceStream Wireless Corp. (c) 10,100 1,301,006
-----------
9,672,550
TELECOMMUNICATIONS-EQUIPMENT-- 0.8%
P-Com, Inc. (c) 57,100 1,056,350
-----------
TELECOMMUNICATIONS-LONG DISTANCE-- 2.8%
AT&T Corp. 65,100 3,661,875
-----------
TELEPHONE-- 1.4%
CTC Communications Group, Inc. 42,550 1,813,694
-----------
TOTAL COMMON STOCK
(Identified Cost $108,184,318) 124,823,686
-----------
PRINCIPAL
DESCRIPTION AMOUNT (000) VALUE (A)
---------------------------------------------------------------------------
SHORT TERM INVESTMENT-- 3.1%
----------------------------
Repurchase Agreement with State Street
Bank & Trust Co., 3.500%, dated 3/31/2000,
to be repurchased for $4,058,183 on
4/3/2000 (collateralized by U.S.
Treasury Note, 6.375%, 8/15/2002,
market valu $4,142,040) $ 4,057 $ 4,057,000
-----------
TOTAL SHORT TERM INVESTMENT
(Identified Cost $4,057,000) 4,057,000
-----------
TOTAL INVESTMENTS-- 99.9%
(Identified Cost $112,241,318) (b) 128,880,686
Other assets less liabilities 76,296
-----------
TOTAL NET ASSETS-- 100% $128,956,982
============
(a) See Note 2 of Notes to Financial Statements.
(b) Federal Tax Information: At March 31, 2000
the net unrealized appreciation on
investments based on cost of $112,241,318
for federal income tax purposes was
as follows:
Aggregate gross unrealized appreciation
for all investments in which there is
an excess of value over tax cost $18,818,071
Aggregate gross unrealized depreciation
for all investments in which there is
an excess of tax cost over value -2,178,703
-----------
Net unrealized appreciation $16,639,368
===========
(c) Non-income producing security.
(d) Affiliated company. See Note 7 of Notes to Financial Statements.
ADR American Depositary Receipt (ADR) is a certificate issued
by a custodian bank representing the right to receive securities
of the foreign issuer described. The value of ADRs are significantly
influenced by trading on exchanges not located in the United States.
See accompanying notes to financial statements.
13
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
March 31, 2000
(Unaudited)
<TABLE>
KOBRICK KOBRICK KOBRICK
CAPITAL EMERGING GROWTH GROWTH
FUND FUND FUND
-----------------------------------------------------
<S>
<C> <C> <C> <C>
ASSETS
Investments, at value
Securities (cost $352,798,538, $166,195,554
and $108,184,318, respectively) $ 366,438,850 $ 174,424,918 $ 124,823,686
Repurchase Agreements 16,985,000 17,455,000 4,057,000
Cash 951 754 943
Dividends and interest receivable 40,866 3,080 42,327
Receivable for securities sold 208,053,673 26,405,059 3,800
Receivable for Fund shares sold 5,772,276 2,655,695 1,525,466
Deferred organizational costs 23,095 23,094 --
------------ ------------ ------------
TOTAL ASSETS 597,314,711 220,967,600 130,453,222
LIABILITIES
Payable for securities purchased 201,165,890 40,406,671 1,292,671
Payable for Fund shares redeemed 428,444 190,433 89,060
Investment advisory fee payable 260,487 48,172 13,843
Accounts payable and accrued expenses 238,195 141,909 100,666
------------ ------------ ------------
TOTAL LIABILITIES 202,093,016 40,787,185 1,496,240
------------ ------------ ------------
NET ASSETS $ 395,221,695 $ 180,180,415 $ 128,956,982
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital $ 300,268,971 $ 130,936,216 $ 95,283,870
Undistributed net investment income (loss) -1,226,589 -538,898 -317,024
Accumulated net realized gain (loss) on
investments 82,539,001 41,553,733 17,350,768
Net unrealized appreciation
(depreciation) of investments 13,640,312 8,229,364 16,639,368
------------ ------------ ------------
NET ASSETS $ 395,221,695 $ 180,180,415 $ 128,956,982
============ ============ ============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:
CLASS A SHARES:
Net assets $ 258,521,848 $ 130,330,163 $ 101,387,780
============ ============ ============
Shares of beneficial interest 10,387,569 5,406,613 4,213,005
============ ============ ============
Net asset value and redemption price per share $ 24.89 $ 24.11 $ 24.07
====== ====== ======
Offering price per share (based on single
purchases of less than $50,000;
reduced sales charges apply for purchases in
excess of this amount) $ 26.41 $ 25.58 $ 25.53
====== ====== ======
CLASS B SHARES: (redemption price is equal to
net asset value less any applicable
contingent deferred sales charges)
Net assets $ 78,916,678 $ 34,840,871 $ 21,520,861
============ ============ ============
Shares of beneficial interest 3,179,237 1,448,858 896,456
============ ============ ============
Net asset value and offering price per share $ 24.82 $ 24.05 $ 24.01
====== ====== ======
CLASS C SHARES: (redemption price is equal
to net asset value less any applicable
contingent deferred sales charges)
Net assets $ 14,466,801 $ 9,024,362 $ 5,601,818
============ ============ ============
Shares of beneficial interest 582,572 375,095 233,246
============ ============ ============
Net asset value and offering price per share $ 24.83 $ 24.06 $ 24.02
====== ====== ======
CLASS Y SHARES:
Net assets $ 43,316,368 $ 5,985,019 $ 446,523
============ ============ ============
Shares of beneficial interest 1,738,924 248,032 18,532
============ ============ ============
Net asset value, offering
and redemption price per share $ 24.91 $ 24.13 $ 24.09
====== ====== ======
</TABLE>
14
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
For the Six Months Ended March 31, 2000
(Unaudited)
<TABLE>
KOBRICK KOBRICK KOBRICK
CAPITAL EMERGING GROWTH GROWTH
FUND FUND FUND
---------------------------------------------------
<S>
<C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign withholding taxes
of $0, $0 and $720, respectively) $ 100,650 $ 4,717 $ 136,113
Interest 527,027 323,241 133,906
-------- -------- --------
627,677 327,958 270,019
Expenses
Investment advisory fees 1,164,404 535,957 395,927
Service fees - Class A 217,651 113,313 87,845
Service and distribution fees - Class B 131,337 57,066 32,156
Service and distribution fees - Class C 27,431 15,589 11,764
Trustees' fees and expenses 13,000 13,000 13,000
Accounting and administrative fees 71,187 38,515 25,000
Custodian fees 70,116 46,254 45,068
Transfer agent fees 94,881 62,331 56,206
Audit and tax services 17,633 17,530 14,581
Legal fees 17,504 10,322 7,057
Printing 10,272 5,086 4,655
Registration fees 137,185 97,947 65,676
Other 24,632 12,013 6,191
-------- -------- --------
Total expenses 1,997,233 1,024,923 765,126
-------- -------- --------
Fees waived and/or expenses
reimbursed by investment adviser -142,967 -158,067 -178,083
-------- -------- --------
Net expenses 1,854,266 866,856 587,043
-------- -------- --------
Net investment income (loss) -1,226,589 -538,898 -317,024
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on investments - net 82,931,897 41,835,899 18,429,200
Change in unrealized appreciation
(depreciation) of investments - net 8,774,395 3,489,775 15,618,683
---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments 91,706,292 45,325,674 34,047,883
---------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING FROM OPERATIONS $ 90,479,703 $ 44,786,776 $ 33,730,859
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
KOBRICK
CAPITAL
FUND
----------------------------------------
SIX MONTHS
ENDED YEAR
MARCH 31, ENDED
2000 SEPTEMBER 30,
(UNAUDITED) 1999
------------- -------------
<S>
<C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ -1,226,589 $ -852,881
Net realized gain (loss) on investments 82,931,897 16,177,706
Change in unrealized appreciation (depreciation)
on investments 8,774,395 1,627,744
----------- -----------
Increase (decrease) in net assets resulting
from operations 90,479,703 16,952,569
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- --
Net realized capital gains
Class A -15,058,834 --
----------- -----------
-15,058,834 --
----------- -----------
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM
CAPITAL SHARE TRANSACTIONS 216,921,791 58,463,760
----------- -----------
Total increase (decrease) in net assets 292,342,660 75,416,329
----------- -----------
NET ASSETS
Beginning of period 102,879,035 27,462,706
----------- -----------
End of period $ 395,221,695 $ 102,879,035
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) $ -1,226,589 $ --
============= =============
KOBRICK
EMERGING GROWTH
FUND
----------------------------------------
SIX MONTHS
ENDED YEAR
MARCH 31, ENDED
2000 SEPTEMBER 30,
(UNAUDITED) 1999
------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ -538,898 $ -472,282
Net realized gain (loss) on investments 41,835,899 10,214,647
Change in unrealized appreciation (depreciation)
on investments 3,489,775 4,046,441
----------- -----------
Increase (decrease) in net assets resulting
from operations 44,786,776 13,788,806
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- --
Net realized capital gains
Class A -8,538,224 --
----------- -----------
-8,538,224 --
----------- -----------
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM
CAPITAL SHARE TRANSACTIONS 91,757,173 20,055,647
----------- -----------
Total increase (decrease) in net assets 128,005,725 33,844,453
----------- -----------
NET ASSETS
Beginning of period 52,174,690 18,330,237
----------- -----------
End of period $ 180,180,415 $ 52,174,690
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) $ -538,898 $ --
============= =============
KOBRICK
GROWTH
FUND
----------------------------------------
SIX MONTHS
ENDED YEAR
MARCH 31, ENDED
2000 SEPTEMBER 30,
(UNAUDITED) 1999
------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ -317,024 $ -161,123
Net realized gain (loss) on investments 18,429,200 -1,064,205
Change in unrealized appreciation (depreciation)
on investments 15,618,683 975,250
----------- -----------
Increase (decrease) in net assets resulting
from operations 33,730,859 -250,078
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- -273
Net realized capital gains
Class A -- --
----------- -----------
-- -273
----------- -----------
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM
CAPITAL SHARE TRANSACTIONS 48,399,043 46,022,992
----------- -----------
Total increase (decrease) in net assets 82,129,902 45,772,641
----------- -----------
NET ASSETS
Beginning of period 46,827,080 1,054,439
----------- -----------
End of period $ 128,956,982 $ 46,827,080
============= =============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) $ -317,024 $ --
============= =============
</TABLE>
16
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
KOBRICK CAPITAL FUND
For a share outstanding throughout each period.
<TABLE>
SIX MONTHS FOR THE PERIOD
ENDED DECEMBER 31,
MARCH 31, YEAR ENDED 1997(A) THROUGH
2000 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1999 1998
----------------- ----------------- -----------------
CLASS A
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 17.21 $ 10.71 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations
Net investment income (loss) -0.09 -0.18(c) -0.13(c)
Net realized and unrealized gain (loss) on
investments 10.14 6.68 0.84
---------- ---------- ----------
Total from investment operations 10.05 6.50 0.71
---------- ---------- ----------
Less distributions
Distributions from net realized capital gains -2.37 -- --
---------- ---------- ----------
Total distributions -2.37 -- --
---------- ---------- ----------
Net asset value, end of the period $ 24.89 $ 17.21 $ 10.71
========== ========== ==========
Total return (%) (b) 67.23 60.69 7.10
Net assets, end of the period (000) $ 258,522 $ 102,879 $ 27,463
Ratios to average net assets:
Net expenses (%) (d) 1.53 1.75 1.75
Expense before fee waiver (%) (d) 1.57 1.77 2.21
Net investment income (loss) (%) (d) -0.52 -1.09 -1.38
Portfolio turnover rate (%) 686 778 350
</TABLE>
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent deferred sales charge for
Class B and Class C shares is not reflected in total return calculations.
Had certain expenses not been reduced during the periods shown, total
returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
See accompanying notes to financial statements.
17
<PAGE>
<TABLE>
FOR THE PERIOD
OCTOBER 29, 1999(A)
THROUGH
March 31, 2000
(UNAUDITED)
---------------
CLASS B CLASS C CLASS Y
-------------------------------------------
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 15.64 $ 15.64 $ 15.64
----------- ----------- -----------
Income (loss) from investment operations
Net investment income (loss) -0.07 -0.08 -0.06
Net realized and unrealized gain (loss) on
investments 9.25 9.27 9.33
----------- ----------- -----------
Total from investment operations 9.18 9.19 9.27
----------- ----------- -----------
Less distributions
Distributions from net realized capital gains -- -- --
----------- ----------- -----------
Total distributions -- -- --
----------- ----------- -----------
Net asset value, end of the period $ 24.82 $ 24.83 $ 24.91
=========== =========== ===========
Total return (%) (b) 58.70 58.76 59.27
Net assets, end of the period (000) $ 78,917 $ 14,467 $ 43,316
Ratios to average net assets:
Net expenses (%) (d) 2.25 2.25 1.25
Expense before fee waiver (%) (d) 2.30 2.30 1.39
Net investment income (loss) (%) (d) -0.69 -0.69 -0.32
Portfolio turnover rate (%) 686 686 686
</TABLE>
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent deferred sales charge for
Class B and Class C shares is not reflected in total return calculations.
Had certain expenses not been reduced during the periods shown, total
returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
See accompanying notes to financial statements.
17
<PAGE>
FINANCIAL HIGHLIGHTS
KOBRICK EMERGING GROWTH FUND
For a share outstanding throughout each period.
<TABLE>
SIX MONTHS FOR THE PERIOD
ENDED DECEMBER 31,
MARCH 31, YEAR ENDED 1997(A) THROUGH
2000 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1999 1998
----------------- ----------------- -----------------
CLASS A
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 16.54 $ 10.14 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations
Net investment income (loss) -0.09 -0.18(c) -0.11(c)
Net realized and unrealized gain (loss) on
investments 10.37 6.58 0.25(e)
---------- ---------- ----------
Total from investment operations 10.28 6.40 0.14
---------- ---------- ----------
Less distributions
Distributions from net realized capital gains -2.71 -- --
---------- ---------- ----------
Total distributions -2.71 -- --
---------- ---------- ----------
Net asset value, end of the period $ 24.11 $ 16.54 $ 10.14
========== ========== ==========
Total return (%) (b) 72.60 63.12 1.40
Net assets, end of the period (000) $ 130,330 $ 52,175 $ 18,330
Ratios to average net assets:
Net expenses (%) (d) 1.52 1.75 1.75
Expense before fee waiver (%) (d) 1.67 2.08 2.24
Net investment income (loss) (%) (d) -0.54 -1.24 -1.16
Portfolio turnover rate (%) 406 442 287
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent deferred sales charge for
Class B and Class C shares is not reflected in total return calculations.
Had certain expenses not been reduced during the periods shown, total
returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year. (e) Amount
shown for a share outstanding does not correspond with the net realized and
unrealized gain (loss) on investments due to the timing of sales and
repurchases of Fund shares in relation to fluctuating market values of the
investments of the Fund.
</TABLE>
<TABLE>
FOR THE
PERIOD
OCTOBER 29, 1999(A) THROUGH
MARCH 31, 2000
(UNAUDITED)
--------------------------
CLASS B CLASS C CLASS Y
-------------------------------------------
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 15.19 $ 15.19 $ 15.19
----------- ----------- -----------
Income from investment operations
Net investment income (loss) -0.07 -0.07 -0.03
Net realized and unrealized gain (loss) on investments 8.93 8.94 8.97
----------- ----------- -----------
Total from investment operations 8.86 8.87 8.94
----------- ----------- -----------
Less distributions
Distributions from net realized capital gains -- -- --
----------- ----------- -----------
Total distributions -- -- --
----------- ----------- -----------
Net asset value, end of the period $ 24.05 $ 24.06 $ 24.13
=========== =========== ===========
Total return (%) (b) 58.33 58.39 58.86
Net assets, end of the period (000) $ 34,841 $ 9,024 $ 5,985
Ratios to average net assets:
Net expenses (%) (d) 2.25 2.25 1.25
Expenses before fee waiver (%) (d) 2.43 2.43 1.43
Net investment income (loss) (%) (d) -0.71 -0.71 -0.29
Portfolio turnover rate (%) 406 406 406
</TABLE>
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent
deferred sales charge for Class B and Class C shares is not reflected in
total return calculations. Had certain expenses not been reduced
during the periods shown, total returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
(e) Amount shown for a share outstanding does not correspond with the net
realized and unrealized gain (loss) on investments due to the timing of
sales and repurchases of Fund shares in relation to fluctuating market
values of the investments of the Fund.
18
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
KOBRICK GROWTH FUND
For a share outstanding throughout each period.
<TABLE>
SIX MONTHS FOR THE PERIOD
ENDED SEPTEMBER 1,
MARCH 31, YEAR ENDED 1998(A) THROUGH
2000 SEPTEMBER 30, SEPTEMBER 30,
(UNAUDITED) 1999 1998
----------------- ----------------- -----------------
CLASS A
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 15.41 $ 10.32 $ 10.00
---------- ---------- ----------
Income (loss) from investment operations
Net investment income (loss) -0.07 -0.08(c) -0.00(c)(f)
Net realized and unrealized gain (loss) on
investments 8.73 5.17(e) 0.32
---------- ---------- ----------
Total from investment operations 8.66 5.09 0.32
---------- ---------- ----------
Less distributions
Distributions from net realized capital gains -- 0.00(f) --
---------- ---------- ----------
Total distributions -- 0.00 --
---------- ---------- ----------
Net asset value, end of the period $ 24.07 $ 15.41 $ 10.32
========== ========== ==========
Total return (%) (b) 56.20 49.35 3.20
Net assets, end of the period (000) $ 101,388 $ 46,827 $ 1,054
Ratios to average net assets:
Net expenses (%) (d) 1.40 1.40 1.40
Expense before fee waiver (%) (d) 1.54 2.13 11.11
Net investment income (loss) (%) (d) -0.42 -0.55 0.32
Portfolio turnover rate (%) 473 632 11
</TABLE>
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent
deferred sales charge for Class B and Class C shares is not reflected
in total return calculations. Had certain expenses not been reduced
during the periods shown, total returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
(e) Amount shown for a share outstanding does not
correspond with the net realized and unrealized gain (loss) on
investments due to the timing of sales and repurchases of Fund shares
in relation to fluctuating market values of the investments of the Fund.
(f) Amount is less than $0.01.
<TABLE>
OCTOBER 29, 1999(A)
THROUGH
MARCH 31, 2000
(UNAUDITED)
-------------------
Class B Class C Class Y
------------------------------------------
<S>
<C> <C> <C> <C>
Net asset value, beginning of the period $ 16.21 $ 16.21 $ 16.21
----------- ----------- -----------
Income from investment operations
Net investment income (loss) -0.06 -0.08 -0.02
Net realized and unrealized gain (loss) on
investments 7.86 7.89 7.90
----------- ----------- -----------
Total from investment operations 7.80 7.81 7.88
----------- ----------- -----------
Less distributions
Dividends from net investment income -- -- --
----------- ----------- -----------
Total distributions -- -- --
----------- ----------- -----------
Net asset value, end of the period $ 24.01 $ 24.02 $ 24.09
=========== =========== ===========
Total return (%) (b) 48.12 48.18 48.61
Net assets, end of the period (000) $ 21,521 $ 5,602 $ 447
Ratios to average net assets:
Net expenses (%) (d) 2.15 2.15 1.15
Expense before fee waiver (%) (d) 2.28 2.28 1.29
Net investment income (loss) (%) (d) -0.64 -0.66 -0.24
Portfolio turnover rate (%) 473 473 473
</TABLE>
(a) Commencement of operations.
(b) A sales charge for Class A shares or contingent deferred sales charge for
Class B and Class C shares is not reflected in total return calculations.
Had certain expenses not been reduced during the periods shown, total
returns would have been lower.
(c) Calculated using the average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
(e) Amount shown for a share outstanding does not correspond with the net
realized and unrealized gain (loss) on investments due to the timing of
sales and repurchases of Fund shares in relation to fluctuating market
values of the investments of the Fund.
(f) Amount is less than $0.01.
19
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
For the Six Months Ended March 31, 2000
(Unaudited)
NOTE 1-- ORGANIZATION
The Nvest Kobrick Investment Trust (formerly known as Kobrick Investment Trust),
a Massachusetts business trust (the "Trust"), was organized on October 10, 1997,
and is registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") as a diversified open-end management investment company. The
Declaration of Trust permits the Trustees to issue an unlimited number of shares
of beneficial interest of the Trust in multiple series. The Trust consists
presently of three separate series: Kobrick Capital Fund, Kobrick Emerging
Growth Fund and Kobrick Growth Fund (individually, a "Fund" and, collectively,
the "Funds"). The investment objective of the Kobrick Capital Fund is to seek
maximum capital appreciation by investing primarily in equity securities of
companies with small, medium and large capitalizations. The investment objective
of the Kobrick Emerging Growth Fund is to provide growth of capital by investing
primarily in equity securities of emerging growth companies, with an emphasis on
companies with small capitalizations. The investment objective of the Kobrick
Growth Fund is to provide long-term growth of capital by investing primarily in
equity securities of companies with large capitalizations that the Fund's
investment adviser believes have better than average long-term growth potential.
The Funds' investment adviser is Kobrick Funds LLC ("Kobrick"), a wholly owned
subsidiary of Nvest Companies, L.P. ("Nvest"), which is a subsidiary of
Metropolitan Life Insurance Company. Kobrick was formed in May 1999 and on July
7, 1999 the business carried on by its predecessor ("former adviser") was
contributed to Kobrick.
At a meeting of the Funds' Board of Trustees held on October 5, 1999, the Board
authorized the Funds to issue multiple classes of shares. Effective November 1,
1999, the Funds offer Class A, Class B, Class C and Class Y shares. Class A
shares purchased after October 29, 1999 are sold with a maximum front end sales
charge of 5.75%. All shareholders invested in any of the Funds before the new
share classes became effective were automatically converted to Class A "load
waived" shares and were allowed to continue to invest without paying any
commissions. Class B shares do not pay a front end sales charge, but pay a
higher ongoing distribution fee than Class A shares for eight years (at which
point they automatically convert to Class A shares), and are subject to a
contingent deferred sales charge if those shares are redeemed within six years
of purchase. Class C shares do not pay a front end sales charge and do not
convert to any class of shares, but they do pay a higher ongoing distribution
fee than Class A shares and may be subject to a contingent deferred sales charge
if those shares are redeemed within one year. Class Y shares do not pay a front
end sales charge, a contingent deferred sales charge or distribution fees. They
are intended for institutional investors and impose certain eligibility and
investment requirements. Expenses of a Fund are borne pro rata by the holders of
each class of shares, except that each class bears expenses unique to that class
(including the Rule 12b-1 service and distribution fees applicable to such
class), and votes as a class with respect to its own Rule 12b-1 Plan. Shares of
each class would receive their pro rata share of the net assets of the Fund, if
the Fund were liquidated.
NOTE 2-- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States for investment companies. 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.
SECURITY VALUATION: Each Fund's investment securities which are traded on
stock exchanges or are quoted by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") are valued at the last
reported sale prices as of the close of the regular session of trading on
the New York Stock Exchange ("NYSE") on the day the securities are valued,
or if not traded on a particular day, at the closing bid prices. Securities
traded in the over-the-counter market, and which are not quoted by NASDAQ,
are valued at the last sale prices (or, if the last sale prices are not
readily available, at the last bid prices as quoted by the brokers that
make markets in the securities) as of the close of the regular session of
trading on the NYSE on the day the securities are being valued. Securities
which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative
market. Short-term investments with maturities less than 60 days are valued
at amortized cost which approximates market value. Options, interest rate
futures and options thereon that are tracked on exchanges are valued at
their last sale price as of the close of such exchanges. Securities for
which current market quotations are not readily available are valued at
their fair value as determined in good faith in accordance with procedures
approved by the Board of Trustees.
REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements with
institutions that Kobrick has determined are creditworthy. The repurchase
agreements are collateralized by U.S. Government securities. The Fund's
custodian takes possession of the underlying collateral on behalf of the
Funds. It is the policy of the Funds to value the underlying collateral
daily on a mark-to-market basis to determine that the value of the
collateral held, including accrued interest, is at least equal to 102% of
the repurchase price. In the event of default of the obligation to
repurchase, the Funds have the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. Under certain
circumstances, in the event of default or bankruptcy by the other party to
the agreement, realization and/or retention of the collateral or proceeds
may be subject to delay due to legal proceedings and the Fund may suffer a
loss.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Investment security
transactions are recorded on trade date for financial statement purposes
and the first day after trade date for the calculations of the Funds' net
asset values per share. Accordingly, the Funds' calculated net asset values
per share on March 31, 2000, were adjusted in the financial statements to
reflect investment security transactions that occured on March 31, 2000.
Realized gains and losses on investments sold are recorded based on the
specific identification method. Dividend income on investment securities,
less foreign taxes withheld, if any, is recorded on the ex-dividend date.
Interest income on investment securities is recorded on the accrual basis.
EXPENSES: Certain of the Trust's expenses are allocated equally to those
Funds which make up the Trust. Other expenses of the Trust are allocated to
the respective Funds based upon the relative net assets of each Fund.
Operating expenses directly attributable to a Fund are charged to that
Fund's operations.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Six Months Ended March 31, 2000
(Unaudited)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Trustees approve separate
dividends on each class of shares. It is the policy of each Fund to declare
and pay dividends from net investment income at least annually. Each Fund
will distribute net realized capital gains (including net short-term
capital gains) unless offset by any available capital loss carryforward at
least annually. Income distributions and capital gain distributions are
determined in accordance with federal 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 the Funds, timing differences and differing
characterizations of distributions made by the Funds. Permanent book and
tax differences will result in reclassifications to capital accounts.
FEDERAL INCOME TAXES: Each Fund intends to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"), by complying with the provisions available to
regulated investment companies, as defined in applicable sections of the
Code, and to make distributions of taxable income to shareholders
sufficient to relieve each Fund from all or substantially all federal
income taxes. Accordingly, no provision for federal income tax has been
made. At September 30, 1999, the Kobrick Growth Fund had a capital loss
carryforward of $13,209, all of which will expire on September 30, 2007.
The Kobrick Growth Fund elected to defer to its fiscal year ending
September 30, 2000, a loss of $595,649.
ORGANIZATION COSTS: Offering costs, including the fees and expenses of
registering and qualifying shares of each Fund for distribution under
federal and state securities regulations, had been amortized over the
one-year period from the date each Fund commenced operations. Costs and
expenses of the Trust in connection with the organization of the Trust and
the initial offering of shares of each Fund, excluding the Kobrick Growth
Fund, have been deferred by the Trust and are being amortized on a
straight-line basis from the date operations commenced over a period that a
benefit is expected to be realized, not to exceed sixty months. If any of
the initial shares of the Kobrick Capital Fund and Kobrick Emerging Growth
Fund are redeemed during the amortization period of these organizational
costs by any holder thereof, the redemption proceeds will be reduced by a
pro rata portion of the unamortized organizational costs. Organizational
costs associated with the Kobrick Growth Fund have been borne by Kobrick.
LINE OF CREDIT: The Trust has entered into a committed line of credit with
State Street Bank and Trust Company ("State Street"). This line of credit
agreement includes restrictions that the Trust maintains an asset coverage
ratio of at least 300% and borrowings must not exceed prospectus
limitations. Interest on borrowings is payable at the State Street's Cost
of Funds plus 0.75% per annum. Under this Agreement, the Trust has agreed
to pay a 0.10% per annum fee on the unused portion of the commitment,
payable quarterly in arrears. For the six months ended March 31, 2000, the
Trust had no borrowings against the line of credit.
NOTE 3-- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES: The Trust has entered into an investment advisory
agreement (the "Advisory Agreement") with Kobrick. Under the agreement, Kobrick
provides investment management services to the Trust, and is entitled to receive
a fee, computed daily and paid monthly, at the annual rate of 1.00% based on
average daily net assets of each Fund.
ACCOUNTING AND ADMINISTRATIVE EXPENSE: Nvest Services Company, Inc. ("NSC") is a
subsidiary of Nvest and performs certain accounting and administrative services
for the Funds including : (i) performing bookkeeping, accounting and financial
reporting functions and clerical functions relating to the Funds and (ii)
services required in connection with the preparation of registration statements
and prospectuses, registration of shares in various states, shareholder reports
and notices, proxy solicitation material furnished to shareholders of the Funds
or regulatory authorities and reports and questionnaires for SEC compliance. For
the services provided, each Fund pays NSC the greater of the following: (i) an
annual fee payable in equal monthly installments equal to $70,000 per Fund; or
(ii) at the annual rate of 0.07% of the first $100 million of the Fund's average
daily net assets, 0.05% of the next $300 million and 0.03% of such assets in
excess of $400 million. For the six months ended March 31, 2000, the Kobrick
Capital Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund paid NSC
$46,120, $22,369 and $17,499, respectively. Prior to October 1, 1999, State
Street provided the accounting and administrative services.
TRANSFER AGENT FEES: NSC is the transfer and shareholder servicing agent and
Boston Financial Data Services, Inc. ("BFDS") serves as the sub-transfer agent
for the Funds. For the six months ended March 31, 2000, the Kobrick Capital
Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund paid $76,999, $41,819
and $31,818, respectively, to NSC as compensation for its services in that
capacity. Prior to October 1, 1999, BFDS provided transfer agent and shareholder
services.
SERVICE AND DISTRIBUTION FEES: Pursuant to Rule 12b-1 under the 1940 Act, the
Trust has adopted a Service Plan relating to the Funds' Class A shares (the
"Class A Plan") and Service and Distribution Plans relating to the Funds' Class
B and Class C shares (the "Class B and Class C Plans").
Under the Class A Plan, each Fund pays Nvest Funds Distributor, L.P. ("Nvest
Distributor"), the Funds' distributor, (a wholly owned subsidiary of Nvest) a
monthly service fee at the annual rate of 0.25% of the average daily net assets
attributable to each Fund's Class A shares, as reimbursement for expenses
(including certain payments to securities dealers, who may be affiliated with
Nvest Distributor) incurred by Nvest Distributor in providing personal services
to investors owning Class A shares and/or the maintenance of shareholder
accounts. For the six months ended March 31, 2000, the Kobrick Capital Fund,
Kobrick Emerging Growth Fund and Kobrick Growth Fund paid Nvest Distributor
$217,651, $113,313 and $87,845, respectively under the Class A Plan. If the
expenses of Nvest Distributor that are otherwise reimbursable under the Class A
Plan incurred in any year exceed the amounts payable by a Fund under the Class A
Plan, the unreimbursed amount (together with unreimbursed amounts from prior
years) may be carried forward for reimbursement in future years in which the
Class A Plan remains in effect.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Six Months Ended March 31, 2000
(Unaudited)
Under the Class B and Class C Plans, each Fund pays Nvest Distributor a monthly
service fee at the annual rate of 0.25% of the average daily net assets
attributable to each Fund's Class B and Class C shares, as compensation for
services provided and expenses (including certain payments to securities
dealers, who may be affiliated with Nvest Distributor) incurred by Nvest
Distributor in providing personal services to investors in Class B and Class C
shares or the maintenance of shareholder accounts. For the period ended March
31, 2000, the Kobrick Capital Fund, Kobrick Emerging Growth Fund and Kobrick
Growth Fund paid Nvest Funds $32,834, $14,266 and $8,039 respectively under the
Class B Plan and $6,858, $3,897 and $2,941, respectively under the Class C Plan.
Also under the Class B and Class C Plans, each Fund pays Nvest Distributor a
monthly distribution fee at the annual rate of 0.75% of the average daily net
assets attributable to the Fund's Class B and Class C shares, as compensation
for services provided and expenses (including certain payments to securities
dealers, who may be affiliated with Nvest Distributor) incurred by Nvest
Distributor in connection with the marketing or sale of Class B and Class C
shares. For the six months ended March 31, 2000, the Kobrick Capital Fund,
Kobrick Emerging Growth Fund and Kobrick Growth Fund paid Nvest Distributor
$98,503, $42,800 and $24,117, respectively under the Class B Plan and $20,573,
$11,692 and $8,823, respectively under the Class C Plan.
Commissions (including contingent deferred sales charges) on Fund shares paid to
Nvest Distributor by investors in shares of the Kobrick Capital Fund, Kobrick
Emerging Growth Fund and Kobrick Growth Fund during the period ended March 31,
2000, amounted to $4,855,841 , $2,205,002 and $1,217,692 , respectively.
TRUSTEES FEES AND EXPENSES: No officer, director or employee of Kobrick, or any
affiliate thereof, receives any compensation from the Trust for serving as
Trustee or officer of the Trust. Each Trustee who is not an "affiliated person"
receives an annual retainer fee from the Trust of $4,000 plus $500 from each
Fund for each board meeting attended and $500 from each Fund for each audit
committee meeting attended. The Trust also reimburses out-of-pocket expenses
incurred by each Trustee for attending such meetings.
NOTE 4-- EXPENSE LIMITATIONS
Effective November 1, 1999, Kobrick has given a binding undertaking to the
Funds, through at least January 31, 2001, to limit the amount of total expenses,
excluding certain expenses, to 1.50%, 2.25%, 2.25% and 1.25% of the average
daily net assets for the Class A, B, C and Y shares, respectively of the Kobrick
Capital Fund and Kobrick Emerging Growth Fund and 1.40%, 2.15%, 2.15% and 1.15%
for the Class A, B, C and Y shares, respectively of the Kobrick Growth Fund.
Accordingly, to the extent total expenses exceed the amount of the respective
limit, Kobrick will reduce its management fees and/or reimburse the Funds for
certain expenses. With respect to each Fund, Kobrick shall be permitted to
recover expenses it has borne after November 1, 1999 (whether through reduction
of its management fee or otherwise) in later periods to the extent that a Fund's
expenses fall below the rates set forth above; provided however, that a Fund is
not obligated to pay any such amounts more than one year after the end of the
fiscal year in which the fee was deferred. Until November 1, 1999, the Funds had
only one class of shares and Kobrick agreed to limit expenses to the annual
rates of 1.75%, 1.75% and 1.40% of average daily net assets for the Kobrick
Capital Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund,
respectively.
NOTE 5--PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate amounts of purchases and sales of investment securities, excluding
short-term investments, for the six months ended March 31, 2000, were as
follows:
PURCHASES SALES
---------------- -----------------
Kobrick Capital Fund $ 1,592,918,495 $ 1,415,725,044
Kobrick Emerging Growth Fund $ 470,776,058 $ 389,995,845
Kobrick Growth Fund $ 398,386,951 $ 351,224,328
NOTE 6--CAPITAL SHARES
At March 31, 2000, Cendant Corporation ("Cendant") owned 17.0%, 28.7%, and 43.4%
of the Kobrick Capital Fund, Kobrick Emerging Growth Fund, and Kobrick Growth
Fund, respectively. Cendant no longer maintains an interest in the Funds'
investment adviser as a result of the contribution of business to Kobrick
described in Note 1. In conjunction with this contribution, the former adviser
has entered into an agreement with Cendant whereby certain restrictions have
been placed on Cendant's ability to redeem shares in the Funds through December
31, 2000. Partial redemptions, however, are permitted through December 31, 2000
and such redemptions could have a material impact on the net assets of the
Funds.
At March 31, 2000, there was an unlimited number of shares of beneficial
interest authorized, divided into four classes, Class A, Class B, Class C and
Class Y. Transactions in capital shares were as follows:
<TABLE>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
---------------- ------------------
KOBRICK CAPITAL FUND SHARES AMOUNT SHARES AMOUNT
-------------------- ------ ------ ------ ------
CLASS A*
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 14,182,991 $ 464,542,080 11,084,15 $ 196,225,287
Shares issued in connection with
the reinvestment of:
Distributions from net
realized gain 986,268 14,981,407 -- --
----------- ----------- ----------- -----------
15,169,259 479,523,487 11,084,151 196,225,287
Shares repurchased -10,759,202 -382,428,687 -7,670,163 -137,761,527
----------- ----------- ----------- -----------
Net increase (decrease) 4,410,057 $ 97,094,800 3,413,988 $ 58,463,760
----------- ----------- ----------- -----------
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENT - CONTINTUED
For the Six Months Ended March 31, 2000
(Unaudited)
<TABLE>
FOR THE PERIOD
OCTOBER 29, 1999(A)
THROUGH YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
------------------ ------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
CLASS B
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 3,256,605 $ 76,645,335
Shares repurchased -77,368 -1,931,183
--------- -----------
Net increase (decrease) 3,179,237 $ 74,714,152
--------- -----------
Class C
--------
Shares sold 622,992 $ 14,214,673
Shares repurchased -40,420 -934,803
----------- -----------
Net increase (decrease) 582,572 $ 13,279,870
--------- -----------
Class Y
--------
Shares sold 1,942,049 $ 36,708,610
Shares repurchased -203,125 -4,875,641
----------- -----------
Net increase (decrease) 1,738,924 $ 31,832,969
----------- -----------
Increase (decrease) derived from
capital share transactions 9,910,790 $ 216,921,791 3,413,988 $ 58,463,760
========= ============= ========= =============
</TABLE>
<TABLE>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
------------------ ------------------
KOBRICK EMERGING GROWTH FUND SHARES AMOUNT SHARES AMOUNT
---------------------------- ------ ------ ------ ------
CLASS A*
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 16,168,480 $ 468,912,150 9,037,310 $ 149,214,081
Shares issued in connection with
the reinvestment of:
Distributions from net
realized gain 577,486 8,506,362 -- --
----------- ----------- ----------- -----------
16,745,966 477,418,512 9,037,310 149,214,081
Shares repurchased -14,493,216 -432,069,436 -7,690,691 -129,158,434
----------- ----------- ----------- -----------
Net increase (decrease) 2,252,750 $ 45,349,076 1,346,619 $ 20,055,647
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
FOR THE PERIOD
OCTOBER 29, 1999(A)
THROUGH
MARCH 31, 2000
------------------
SHARES AMOUNT
------ ------
CLASS B
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 1,504,896 33,756,455
Shares repurchased -56,038 -1,308,796
----------- -----------
Net increase (decrease) 1,448,858 $ 32,447,659
----------- -----------
CLASS C
--------
Shares sold 380,132 $ 8,480,736
Shares repurchased -5,037 -118,218
----------- -----------
Net increase (decrease) 375,095 $ 8,362,518
----------- -----------
CLASS Y
--------
Shares sold 254,290 $ 5,760,528
Shares repurchased -6,258 -162,608
----------- -----------
Net increase (decrease) 248,032 $ 5,597,920
----------- -----------
Net increase (decrease) derived
from capital share transactions 4,324,735 $ 91,757,173 1,346,619 $ 20,055,647
========= ============= ========= =============
</TABLE>
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Six Months Ended March 31, 2000
(Unaudited)
<TABLE>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2000 SEPTEMBER 30, 1999
------------------ ------------------
KOBRICK GROWTH FUND SHARES AMOUNT SHARES AMOUNT
-------------------- ------ ------ ------ ------
CLASS A*
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 18,799,517 $ 358,762,944 3,281,085 $ 51,206,741
Shares issued in connection with
the reinvestment of:
Dividends from net investment
income -- -- 21 273
----------- ----------- ----------- -----------
18,799,517 358,762,944 3,281,106 51,207,014
Shares repurchased -17,625,896 -334,517,436 -343,911 -5,184,022
----------- ----------- ----------- -----------
Net increase (decrease) 1,173,621 $ 24,245,508 2,937,195 $ 46,022,992
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
FOR THE PERIOD
OCTOBER 29, 1999(A)
THROUGH
MARCH 31, 2000
------------------
SHARES AMOUNT
------ ------
CLASS B
--------
<S>
<C> <C> <C> <C> <C>
Shares sold 929,772 $ 19,812,434
Shares repurchased -33,316 -740,564
----------- -----------
Net increase (decrease) 896,456 $ 19,071,870
----------- -----------
CLASS C
--------
Shares sold 237,160 $ 4,767,188
Shares repurchased -3,914 -80,712
----------- -----------
Net increase (decrease) 233,246 $ 4,686,476
----------- -----------
CLASS Y
--------
Shares sold 24,312 $ 511,260
Shares repurchased -5,780 -116,071
----------- -----------
Net increase (decrease) 18,532 $ 395,189
----------- -----------
Net increase (decrease) derived
from capital share transactions 2,321,855 $ 48,399,043 2,937,195 $ 46,022,992
========= ============= ========= ============
</TABLE>
(a) Commencement of operations
* Purchases (including reinvestment of dividends) and sales of capital shares of
the Kobrick Capital Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund
by Cendant for the six months ended March 31, 2000, were purchases of 8,970,966
shares with a cost of $195,861,622, 13,722,873 shares with a cost of
$269,589,903 and 17,082,451 shares with a cost of $319,391,004, respectively;
sales of 8,582,715 shares with a value of $189,964,091, 13,365,459 shares with a
value of $264,325,191 and 17,082,451 shares with a value of $319,391,004,
respectively. Purchases (including reinvestment of dividends) and sales of
capital shares of the Kobrick Capital Fund, Kobrick Emerging Growth Fund and
Kobrick Growth Fund by Cendant for the year ended September 30, 1999, were
purchases of 5,360,968 shares with a cost of $102,259,435, 6,251,014 shares with
a cost of $105,436,604 and 2,348,936 shares with a cost of $37,044,805,
respectively; sales of 4,948,434 shares with a value of $90,259,435, 5,793,797
shares with a value of $98,436,604, and 0 shares with a value of $0,
respectively.
NOTE 7-- TRANSACTIONS WITH AFFILIATED COMPANIES
As a result of Cendant's, ownership of shares of the Funds (see Note 6), it is
considered an affiliate of the Funds. Transactions during the period with
companies which are affiliates are as follows:
<TABLE>
. BALANCE
AS OF MARCH 31,
PURCHASES SALES 2000
--------- ----- ----
AFFILIATES COST SHARES COST SHARES VALUE SHARES
---------- ---- ------ ---- ------ ----- ------
<S>
<C> <C> <C> <C> <C> <C> <C> <C>
Kobrick Capital Fund Cendant Corp. $14,458,727 756,000 $4,551,697 746,000 $9,936,350 537,100
Kobrick Growth Fund Cendant Corp. $5,670,943 306,000 $3,481,466 189,200 $2,569,650 138,900
</TABLE>
<PAGE>
NVEST FUNDS
LARGE-CAP EQUITY FUNDS
Capital Growth Fund
Kobrick Growth Fund
Growth Fund
Growth and Income Fund
Balanced Fund
Star Value Fund*
ALL-CAP EQUITY FUNDS
Star Advisers Fund
Kobrick Capital Fund
Bullseye Fund
Equity Income Fund
SMALL-CAP EQUITY FUNDS
Star Small Cap Fund
Kobrick Emerging Growth Fund
GLOBAL/INTERNATIONAL EQUITY
Star Worldwide Fund
International Equity Fund
CORPORATE INCOME FUNDS
Short Term Corporate Income Fund
Bond Income Fund
High Income Fund
Strategic Income Fund
GOVERNMENT INCOME FUNDS
Limited Term U.S. Government Fund
Government Securities Fund
MONEY MARKET FUNDS**
Cash Management Trust
Tax Exempt Money Market Trust
**An investment in the Fund is not
insured or guaranteed by the FDIC
or any other government agency.
TAX-FREE INCOME FUNDS
Municipal Income Fund
Intermediate Term Tax Free
Fund of California
Massachusetts Tax Free Income Fund
* Formerly Value Fund
Note:Equity funds are listed by investment style from growth to value
within their category.
To learn more, and for a free prospectus, contact your financial representative.
VISIT OUR WEB SITE AT WWW.NVESTFUNDS.COM
Nvest Funds Distributor, L.P.
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors when it is
preceded or accompanied by the Fund's current prospectus, which contains
information about distribution charges, management and other items of interest.
Investors are advised to read the prospectus carefully before investing.
Nvest Funds Distributor, L.P., and other firms selling shares of Nvest Funds are
members of the National Association of Securities Dealers, Inc. (NASD). As a
service to investors, the NASD has asked that we inform you of the availability
of a brochure on its Public Disclosure Program. The program provides access to
information about securities firms and their representatives. Investors may
obtain a copy by contacting the NASD at 800-289-9999 or by visiting their Web
site at www.NASDR.com.
<PAGE>
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