<PAGE>
[logo] NvestFunds(SM) KOBRICK funds [logo]
Where The Best Minds Meet(R) IT'S ALL ABOUT VISION(SM)
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Kobrick Funds
STOCK FUNDS
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ALL-CAP EQUITY
Kobrick Capital Fund
SMALL-CAP EQUITY
Kobrick Emerging Growth Fund
LARGE-CAP EQUITY
Kobrick Growth Fund
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[graphic omitted]
The Securities and Exchange Commission has not approved the Fund's shares or
determined whether this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
For general information on the Funds or any of their services and for
assistance in opening an account, contact your financial representative or
call Nvest Funds.
PROSPECTUS
November 1, 1999
(as revised February 1, 2000)
WHAT'S INSIDE
[graphic omitted] GOALS, STRATEGIES & RISKS
PAGE 2
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[graphic omitted] FUND FEES & EXPENSES
PAGE 8
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[graphic omitted] MANAGEMENT TEAM
PAGE 11
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[graphic omitted] FUND SERVICES
PAGE 12
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[graphic omitted] FUND PERFORMANCE
PAGE 24
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Nvest Funds
399 Boylston Street, Boston, Massachusetts 02116
800-225-5478
<PAGE>
TABLE OF CONTENTS
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GOALS, STRATEGIES & RISKS
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Kobrick Capital Fund ..........................................................2
Kobrick Emerging Growth Fund ..................................................4
Kobrick Growth Fund ...........................................................6
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FUND FEES & EXPENSES.
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Fund Fees & Expenses ..........................................................8
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MORE ABOUT RISK.
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More About Risk ..............................................................10
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MANAGEMENT TEAM
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Meet the Funds' Investment Adviser ...........................................11
Meet the Funds' Portfolio Managers ...........................................11
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FUND SERVICES
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Investing in the Funds .......................................................12
How Sales Charges are Calculated .............................................13
Ways to Reduce or Eliminate Sales Charges ....................................14
It's Easy to Open an Account .................................................15
Buying Shares ................................................................16
Selling Shares ...............................................................17
Selling Shares in Writing ....................................................18
Exchanging Shares ............................................................19
Restrictions on Buying, Selling and Exchanging Shares ........................19
How Fund Shares are Priced ...................................................20
Dividends and Distributions ..................................................21
Tax Consequences .............................................................21
Compensation to Securities Dealers ...........................................22
Additional Investor Services .................................................23
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FUND PERFORMANCE
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Fund Performance .............................................................24
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GLOSSARY OF TERMS
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Glossary of Terms ............................................................25
If you have any questions about any of the terms used in this Prospectus, please
refer to the "Glossary of Terms."
To learn more about the possible risks of investing in a Fund, please refer to
the section entitled "More About Risk." This section details the risks of
practices in which the Funds may engage. Please read this section carefully
before you invest.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
the Federal Deposit Insurance Corporation or any other government agency, and
are subject to investment risks, including possible loss of the principal
invested.
<PAGE>
[graphic omitted] GOALS, STRATEGIES & RISKS FUND FOCUS
------------------------- Stability Income Growth
KOBRICK CAPITAL FUND ------------------------
High X
ADVISER: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med.
MANAGER: Frederick R. Kobrick --------- ------ -------
Low X X
CATEGORY: All-Cap Equity
TICKER SYMBOL: CLASS A CLASS B CLASS C
-----------------------------
KFCFX KCFBX pending
INVESTMENT GOAL
The Capital Fund seeks maximum capital appreciation by investing primarily in
equity securities of companies with small, medium and large capitalizations.
INVESTMENT STRATEGIES
Under normal market conditions, the Capital Fund will invest substantially all
of its assets in equity securities of companies with small, medium and large
capitalizations, including those that the Adviser believes are undervalued
special situations and emerging growth companies. This approach provides the
Adviser with flexibility to emphasize in the Fund companies with different
capitalizations as market conditions change. The Adviser considers emerging
growth companies to be those companies that are less mature and have the
potential to grow substantially faster than the economy. The Adviser's bottom-up
approach utilizes fundamental and qualitative analysis to select individual
companies, not sectors, with the greatest potential for growth. In selecting
investments for the Fund, the Adviser generally seeks companies in a wide range
of industries and considers a variety of factors, including any one or more of
the following:
x the strength of a company's management team
x relative financial condition
x entrepreneurial character
x expected growth in earnings
x competitive position and business strategy
x new or innovative products, services or processes
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation
companies which, because of unique circumstances, such as an ability to fill
a particular niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and financial
environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Capital Fund's assets will be
invested in equity securities, the Fund may invest at any time up to 35% of its
total assets in other types of securities (including corporate bonds and
securities of the U.S. government). Because the Fund's investment goal provides
flexibility to emphasize companies having different capitalizations as market
conditions change, the Fund may engage in frequent trading of securities. This
may produce higher transaction costs and a higher level of capital gains, which
may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Capital Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Small capitalization and emerging growth companies may be
subject to more abrupt price movements, limited markets and less liquidity
than larger, more established companies, which could adversely affect the
value of the portfolio. With special situation companies, the primary risk is
that they may not achieve their expected value because events do not
materialize as the Adviser anticipated. Because the Fund invests in, among
other things, undervalued special situations, emerging growth companies and
companies with small capitalizations, an investment in the Fund involves
greater than average risks. Accordingly, the value of the Fund's shares may
fluctuate more widely than the value of shares of a fund that invests in
larger, more established companies.
EVALUATING THE FUND'S PAST PERFORMANCE
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Capital Fund. The Fund's past performance does not necessarily
indicate how the Fund will perform in the future. The bar chart shows the Fund's
adjusted total returns for Class A shares for the two calendar years since the
Fund's inception on December 31, 1997. The returns for the other classes of
shares offered by this Prospectus differ from the Class A returns shown in the
bar chart, depending upon the respective expenses of each class. The chart does
not reflect any sales charge that you may be required to pay when you buy or
redeem the Fund's shares. A sales charge will reduce your return.
(total return)
1998 50.00%
1999 73.21%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 51.07%
\/ Lowest Quarterly Return: Third Quarter 1998, down 13.86%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the Russell 3000
Index, a market value-weighted, unmanaged index of large company stocks. They
are also compared to the Morningstar Mid Cap Growth Fund Average and Lipper
Multi-Cap Growth Fund Average, each an average of the total returns of all
mutual funds with a current investment style similar to that of the Capital
Fund, as calculated by Morningstar, Inc. and Lipper, Inc., respectively. It is
not possible to invest directly in an index. The Fund's total returns are
adjusted to reflect the Fund's expenses for Class A, B, and C shares and the
maximum sales charge that you may pay when you buy or redeem the Fund's shares.
The Russell 3000 Index returns have not been adjusted for ongoing management,
distribution and operating expenses and sales charges applicable to mutual fund
investments. The Morningstar Mid Cap Growth Fund Average and Lipper Multi-Cap
Growth Fund Average returns have been adjusted for these expenses but do not
reflect any sales charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (12/31/97)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Kobrick Capital Fund: Class A* (inception 12/31/97) 63.20% 56.49%
Russell 3000 Index 20.90% 22.51%
Morningstar Mid Cap Growth Fund Average 59.70% 36.47%
Lipper Multi-Cap Growth Fund Average 52.34% 40.04%
Kobrick Capital Fund: Class B* (inception 11/1/99) 67.46% 56.44%
Russell 3000 Index 20.90% 22.51%
Morningstar Mid Cap Growth Fund Average 59.70% 36.47%
Lipper Multi-Cap Growth Fund Average 52.34% 40.04%
Kobrick Capital Fund: Class C* (inception 11/1/99) 71.46% 60.44%
Russell 3000 Index 20.90% 22.51%
Morningstar Mid Cap Growth Fund Average 59.70% 36.47%
Lipper Multi-Cap Growth Fund Average 52.34% 40.04%
</TABLE>
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect the
expenses and sales loads of the Fund's new multiple class structure. See "Fund
Fees & Expenses."
<PAGE>
[graphic omitted] GOALS, STRATEGIES & RISKS FUND FOCUS
------------------------- Stability Income Growth
KOBRICK EMERGING GROWTH FUND ------------------------
High X
ADVISER: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med.
MANAGER: Frederick R. Kobrick --------- ------ -------
Low X X
CATEGORY: Small-Cap Equity
TICKER SYMBOL: CLASS A CLASS B CLASS C
-----------------------------
KFEGX pending pending
INVESTMENT GOAL
The Emerging Growth Fund seeks to provide growth of
capital by investing primarily in equity securities of emerging growth
companies, with an emphasis on companies with small capitalizations.
INVESTMENT STRATEGIES
Under normal market conditions, the Emerging Growth Fund will invest
substantially all of its assets in equity securities of emerging growth
companies in any industry, with emphasis on companies with small
capitalizations. The Adviser considers emerging growth companies to be those
companies which are less mature and have the potential to grow substantially
faster than the economy. The small capitalization companies in which the Fund
invests are generally comparable to the size of companies included in the
Russell 2000 Index, which is a commonly used index of small stock performance.
The median market capitalization in this index as of September 30, 1999 was
approximately $421 million and the largest market capitalization in this index
as of such date was approximately $3 billion. Levels of capitalization and the
companies constituting the Russell 2000 Index could vary over time because of
market conditions and other factors relating to small capitalization companies
generally and investments in such companies. While a company's market
capitalization may be small at the time the Fund first invests in the company,
the Fund may continue to hold and acquire shares of the company after its market
capitalization increases. Small and emerging growth companies that are
identified as good candidates for the Fund can be found in a variety of
industries. In selecting investments for the Fund, the Adviser may consider a
variety of factors, including any one or more of the following:
x the strength of a company's management team
x relative financial condition
x competitive position and business strategy
x new or innovative products, services or processes
x expected growth in earnings
x cash flow
x overall potential as an enterprise
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation
companies which, because of unique circumstances, such as an ability to fill
a particular niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and financial
environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Emerging Growth Fund's assets will
be invested in equity securities of emerging growth companies, the Fund may
invest at any time up to 35% of its total assets in other types of securities
(including corporate bonds and securities of the U.S. government) and in
securities issued by larger, more mature companies and undervalued special
situation companies. The Fund may engage in frequent trading of securities,
which may produce higher transaction costs and a higher level of capital gains.
This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Emerging Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Small capitalization and emerging growth companies may be
subject to more abrupt price movements, limited markets and less liquidity
than larger, more established companies, which could adversely affect the
value of the portfolio. With special situation companies, the primary risk is
that they may not achieve their expected value because events do not
materialize as the Adviser anticipated. Because the Fund invests in, among
other things, undervalued special situations, emerging growth companies and
companies with small capitalizations, an investment in the Fund involves
greater than average risks. Accordingly, the value of the Fund's shares may
fluctuate more widely than the value of shares of a fund that invests in
larger, more established companies.
EVALUATING THE FUND'S PAST PERFORMANCE
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Emerging Growth Fund. The Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
two calendar years since the Fund's inception on December 31, 1997. The returns
for the other classes of shares offered by this Prospectus differ from the Class
A returns shown in the bar chart, depending upon the respective expenses of each
class. The chart does not reflect any sales charge that you may be required to
pay when you buy or redeem the Fund's shares. A sales charge will reduce your
return.
(total return)
1998 39.50%
1999 86.49%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 57.28%
\/ Lowest Quarterly Return: Third Quarter 1998, down 19.27%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the Russell 2000
Index, a market value-weighted, unmanaged index of small company stocks. It is
also compared to the Morningstar Small Cap Growth Fund Average and Lipper
Small-Cap Growth Fund Average, each an average of the total returns of all
mutual funds with a current investment style similar to that of the Emerging
Growth Fund, as calculated by Morningstar Inc. and Lipper, Inc., respectively.
It is not possible to invest directly in an index. The Fund's total returns are
adjusted to reflect the Fund's expenses for Class A, B, and C shares and the
maximum sales charge that you may pay when you buy or redeem the Fund's shares.
The Russell 2000 Index returns have not been adjusted for ongoing management,
distribution and operating expenses and sales charges applicable to mutual fund
investments. The Morningstar Small Cap Growth Fund Average and Lipper Small-Cap
Growth Fund Average returns have been adjusted for these expenses but do not
reflect any sales charges.
Goals, Strategies & Risks
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (12/31/97)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kobrick Emerging Growth Fund: Class A* (inception 12/31/97) 75.78% 56.59%
Russell 2000 Index 21.26% 8.70%
Morningstar Small Cap Growth Fund Average 61.76% 31.41%
Lipper Small-Cap Growth Fund Average 62.63% 30.10%
Kobrick Emerging Growth Fund: Class B* (inception 11/1/99) 80.74% 56.54%
Russell 2000 Index 21.26% 8.70%
Morningstar Small Cap Growth Fund Average 61.76% 31.41%
Lipper Small-Cap Growth Fund Average 62.63% 30.10%
Kobrick Emerging Growth Fund: Class C* (inception 11/1/99) 84.74% 60.54%
Russell 2000 Index 21.26% 8.70%
Morningstar Small Cap Growth Fund Average 61.76% 31.41%
Lipper Small-Cap Growth Fund Average 62.63% 30.10%
* Until November 1, 1999, the Fund had only one class of shares and was offered without a sales charge.
These returns have been adjusted to reflect the expenses and sales loads of the Fund's new multiple
class structure. See "Fund Fees & Expenses."
</TABLE>
<PAGE>
[graphic omitted] GOALS, STRATEGIES & RISKS FUND FOCUS
------------------------- Stability Income Growth
KOBRICK GROWTH FUND ------------------------
High X
ADVISER: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med. X
MANAGER: Michael E. Nance --------- ------ -------
Low X
CATEGORY: Large-Cap Equity
TICKER SYMBOL: CLASS A CLASS B CLASS C
-----------------------------
KFGRX pending pending
INVESTMENT GOAL
The Growth Fund seeks long-term growth of capital by investing primarily in
equity securities of companies with large capitalizations that the Adviser
believes have better than average long-term growth potential.
INVESTMENT STRATEGIES
Under normal market conditions, the Growth Fund will be primarily invested in
equity securities of large capitalization companies that the Adviser expects
will have better than average long-term growth potential. The Adviser's
bottom-up approach utilizes fundamental and qualitative analysis to select
individual companies, not sectors, with the greatest potential for growth. The
Fund invests in a diversified portfolio of securities of larger, more
established companies in a broad range of industries. The Adviser seeks to
invest in companies which offer the greatest potential for profitable expansion
and sustained growth and considers a variety of factors, including any one or
more of the following:
x management that can execute business plans
x expected growth in earnings
x a sound business strategy
x compelling valuations
A company's valuations are based on a variety of measures including
price/earnings to growth rates, price to book value and price to sales.
Potential income is not a major factor in the selection of investments.
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that has the potential to meet its buy disciplines described
below.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and financial
environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Growth Fund's assets will be
invested in equity securities of companies with large capitalizations, the Fund
may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in smaller capitalization and emerging growth companies. The Fund may engage in
frequent trading of securities, which may produce higher transaction costs and a
higher level of capital gains. This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to sudden,
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Because of these and other risks, the Fund may underperform
certain other stock funds during periods when large company growth stocks are
generally out of favor.
EVALUATING THE FUND'S PAST PERFORMANCE
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Growth Fund. The Fund's past performance does not necessarily
indicate how the Fund will perform in the future. The bar chart shows the Fund's
adjusted total return for Class A shares for the one calendar year since the
Fund's inception on September 1, 1998. The returns for the other classes of
shares offered by this Prospectus differ from the Class A returns shown in the
bar chart, depending upon the respective expenses of each class. The chart does
not reflect any sales charge that you may be required to pay when you buy or
redeem the Fund's shares. A sales charge will reduce your return.
(total return)
1999 54.58%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 38.03%
\/ Lowest Quarterly Return: Third Quarter 1999, down 0.32%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the S&P Composite
Index of 500 stocks ("S&P 500"), a market value-weighted, unmanaged index of
common stock prices for 500 selected stocks. It is also compared to the
Morningstar Large Cap Growth Fund Average and Lipper Large-Cap Growth Fund
Average, each an average of the total returns of all mutual funds with a current
investment style similar to that of the Growth Fund, as calculated by
Morningstar, Inc. and Lipper, Inc., respectively. It is not possible to invest
directly in an index. The Fund's total returns are adjusted to reflect the
Fund's expenses for Class A, B and C shares and the maximum sales charge that
you may pay when you buy or redeem the Fund's shares. The S&P 500 returns have
not been adjusted for ongoing management, distribution and operating expenses
and sales charges applicable to mutual fund investments. The Morningstar Large
Cap Growth Fund Average and Lipper Large-Cap Growth Fund Average returns have
been adjusted for these expenses but do not reflect any sales charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (9/1/98)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kobrick Growth Fund: Class A* (inception 9/1/98) 45.68% 68.44%
S&P 500 21.04% 39.83%
Morningstar Large Cap Growth Fund Average 37.72% 59.35%
Lipper Large-Cap Growth Fund Average 38.09% 60.15%**
Kobrick Growth Fund: Class B* (inception 11/1/99) 48.83% 71.33%
S&P 500 21.04% 39.83%
Morningstar Large Cap Growth Fund Average 37.72% 59.35%
Lipper Large-Cap Growth Fund Average 38.09% 60.15%**
Kobrick Growth Fund: Class C* (inception 11/1/99) 52.83% 75.33%
S&P 500 21.04% 39.83%
Morningstar Large Cap Growth Fund Average 37.72% 59.35%
Lipper Large-Cap Growth Fund Average 38.09% 60.15%**
* Until November 1, 1999, the Fund had only one class of shares and was offered without a sales charge.
These returns have been adjusted to reflect expenses and sales loads of the Fund's new multiple class
structure. See "Fund Fees & Expenses."
** Calculated from August 31, 1998.
</TABLE>
<PAGE>
FUND FEES & EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of each Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
CLASS A CLASS B CLASS C
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price)(1)(2) 5.75% None None
Maximum deferred sales charge (load)
(as a percentage of original purchase price
or redemption proceeds, as applicable)(2) (3) 5.00% 1.00%
Redemption fees None* None* None*
(1) A reduced sales charge on Class A shares applies in some cases. See "Ways to
Reduce or Eliminate Sales Charges."
(2) Does not apply to reinvested distributions.
(3) A 1.00% contingent deferred sales charge applies with respect to certain
purchases of Class A shares greater than $1,000,000 redeemed within 1 year
after purchase, but not to any other purchases or redemptions of Class A
shares. See "How Sales Charges are Calculated."
* Generally, a transaction fee will be charged for expedited payment of
redemption proceeds such as by wire or overnight delivery.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets, as a percentage of average daily
net assets)
<TABLE>
<CAPTION>
KOBRICK KOBRICK KOBRICK
CAPITAL FUND EMERGING GROWTH FUND GROWTH FUND
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or service (12b-1) fees 0.25% 1.00%* 1.00%* 0.25% 1.00%* 1.00%* 0.25% 1.00%* 1.00%*
Other expenses 0.52% 0.52% 0.52% 0.83% 0.83% 0.83% 0.88% 0.88% 0.88%
Total annual fund operating expenses (a) 1.77% 2.52% 2.52% 2.08% 2.83% 2.83% 2.13% 2.88% 2.88%
Fee waiver and/or expense reimbursement (b) -0.27% -0.27% -0.27% -0.58% -0.58% -0.58% -0.73% -0.73% -0.73%
Net expenses 1.50% 2.25% 2.25% 1.50% 2.25% 2.25% 1.40% 2.15% 2.15%
* Because of the higher 12b-1 fees, long-term shareholders may pay more than the economic equivalent of the maximum front-end
sales charge permitted by rules of the National Association of Securities Dealers, Inc.
(a) Until November 1, 1999, the Funds had only one class of shares and were offered without a sales charge and therefore total
expenses have been restated to account for fees and expenses under the Funds' new multiple class structure.
(b) The Adviser has agreed to cap the amount of Total Expenses at 1.50%, 2.25% and 2.25% for the Class A, B and C shares,
respectively of the Kobrick Capital Fund and Kobrick Emerging Growth Fund and 1.40%, 2.15% and 2.15% for the Class A, B and
C shares, respectively of the Kobrick Growth Fund. Accordingly, to the extent Total Expenses exceed the amount of the
respective cap, the Adviser will reduce its management fees and/or reimburse the Funds for certain expenses. With respect to
each Fund, the Adviser 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 deferred fees more than one year after the end of the
fiscal year in which the fee was deferred. If the Adviser had not agreed to the cap and if the reimbursements and waivers
were not in effect for a Fund, performance would be reduced accordingly.
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that:
o You invest $10,000 in a Fund for the time periods indicated;
o Your investment has a 5% return each year; and
o A Fund's operating expenses remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
KOBRICK CAPITAL FUND
CLASS A CLASS B CLASS C
(1) (2) (1) (2)
1 year $ 719 $ 728 $ 228 $ 328 $ 228
3 years $1,022 $1,003 $ 703 $ 703 $ 703
5 years $1,346 $1,405 $1,205 $1,205 $1,205
10 years* $2,263 $2,514 $2,396 $2,585 $2,585
KOBRICK EMERGING GROWTH FUND
CLASS A CLASS B CLASS C
(1) (2) (1) (2)
1 year $ 719 $ 728 $ 228 $ 328 $ 228
3 years $1,022 $1,003 $ 703 $ 703 $ 703
5 years $1,346 $1,405 $1,205 $1,205 $1,205
10 years* $2,263 $2,514 $2,396 $2,585 $2,585
KOBRICK GROWTH FUND
CLASS A CLASS B CLASS C
(1) (2) (1) (2)
1 year $ 709 $ 718 $ 218 $ 318 $ 218
3 years $ 993 $ 973 $ 673 $ 673 $ 673
5 years $1,297 $1,354 $1,154 $1,154 $1,154
10 years* $2,158 $2,410 $2,292 $2,483 $2,483
(1) Assumes redemption at end of period
(2) Assumes no redemption at end of period
* Class B shares automatically convert to Class A shares after 8 years;
therefore, Class B amounts are calculated using Class A expenses in years 9
and 10.
<PAGE>
MORE ABOUT RISK
The Funds have principal investment strategies that come with inherent risks.
The following is a list of risks to which each Fund may be subject by investing
in various types of securities or engaging in various practices.
MARKET RISK (All Funds) The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably based upon change in a company's
financial condition as well as overall market and economic conditions.
RISK OF SMALL CAPITALIZATION COMPANIES (Capital and Emerging Growth Funds) These
companies carry special risks, including narrower markets, limited financial and
management resources, less liquidity and greater volatility than large company
stocks.
MANAGEMENT RISK (All Funds) The risk that a strategy used by a Fund's portfolio
management may fail to produce the intended result.
CREDIT RISK (All Funds) The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to honor a
financial obligation.
INTEREST RATE RISK (All Funds) The risk of market losses attributable to changes
in interest rates. In general, the prices of fixed-income securities rise when
interest rates fall, and fall when interest rates rise.
INFORMATION RISK (All Funds) The risk that key information about a security is
inaccurate or unavailable.
OPPORTUNITY RISK (All Funds) The risk of missing out on an investment
opportunity because the assets necessary to take advantage of it are invested in
less profitable investments.
LIQUIDITY RISK (All Funds) The risk that certain securities may be difficult or
impossible to sell at the time and at the price that the seller would like. This
may result in a loss or may be costly to a Fund.
VALUATION RISK (All Funds) The risk that a Fund has valued certain securities at
a higher price than it can sell them for.
POLITICAL RISK (All Funds) The risk of losses directly attributable to
government or political actions.
YEAR 2000 (All Funds) Many computer systems today cannot distinguish between the
year 1900 and the year 2000. The Adviser does not currently anticipate that
computer problems related to the year 2000 will have a material effect on any
Fund. However, there can be no assurances in this area, including the
possibility that year 2000 computer problems could negatively affect
communication systems, investment markets including investments by a Fund or the
economy in general. The Funds and the Adviser have and will take steps that they
believe are reasonable to address this problem in their own computer systems and
to obtain assurances that reasonable steps are being taken by the Funds' major
service providers.
MANAGEMENT TEAM [graphic omitted]
---------------
MEET THE FUNDS' INVESTMENT ADVISER
The Kobrick Funds family consists of three mutual funds designed to offer
investors a range of growth oriented investment opportunities. Kobrick Funds are
distributed through Nvest Funds Distributor, L.P. (the "Distributor"). This
Prospectus covers Class A, Class B, and Class C shares of Kobrick Capital Fund,
Kobrick Emerging Growth Fund and Kobrick Growth Fund, all of which constitute
the "Kobrick Funds." As a shareholder of one or more of the Kobrick Funds, you
are entitled to the same benefits and privileges as a shareholder of the Nvest
Funds, including the ability to exchange into or out of any fund in the Nvest
Funds family (see "Exchanging Shares"). The Nvest Funds family, which includes
the Kobrick Funds, includes 25 mutual funds with a total of over $8 billion in
assets under management as of December 31, 1999. Nvest Stock Funds, Nvest Bond
Funds, Nvest Star Funds and Nvest State Tax-Free Funds, constitute the "Nvest
Funds." Nvest Cash Management Trust Money Market Series and Nvest Tax Exempt
Money Market Trust constitute the "Money Market Funds."
ADVISER
The Adviser, Kobrick Funds LLC, located at 101 Federal Street, Boston,
Massachusetts 02110, serves as the investment adviser to each of the Funds and
is a subsidiary of Nvest Companies, L.P. ("Nvest Companies"). The Adviser, the
predecessor to which was formed in 1997, focuses primarily on managing
growth-oriented equity funds including each of the Funds. Nvest Companies is
part of an affiliated group including Nvest, L.P., a publicly-traded company
listed on the New York Stock Exchange. Nvest Companies' 14 principal subsidiary
or affiliated asset management firms, collectively, had $127 billion in assets
under management as of September 30, 1999.
In 1998, the Funds paid 1.00% of their respective average daily net assets to
the Adviser in advisory fees.
PORTFOLIO TRADES
In placing portfolio trades, the Adviser may use brokerage firms that market the
Funds' shares or are affiliated with Nvest Companies or the Adviser. In placing
trades, the Adviser will seek to obtain the best combination of price and
execution, which involves a number of judgmental factors. Such portfolio trades
are subject to applicable regulatory restrictions and related procedures adopted
by the Funds' Board of Trustees.
MEET THE FUNDS' PORTFOLIO MANAGERS
FREDERICK R. KOBRICK
Frederick Kobrick has managed Kobrick Capital Fund from its inception and
Kobrick Emerging Growth Fund from its inception until February 1, 1999 and
returned as its portfolio manager on April 9, 1999. Mr. Kobrick previously
managed the Kobrick Growth Fund from its inception until June 30, 1999. He has
been in the investment business for more than 28 years. For the 12 year period
immediately prior to becoming President of the predecessor to Kobrick Funds LLC
in 1997, he was an equity portfolio manager at State Street Research &
Management Company, where he served as Senior Vice President since 1989 and as a
member of the firm's Equity Investment Committee since 1985. He received an
M.B.A. from Harvard Business School and a B.A. from Boston University. Mr.
Kobrick is also a Chartered Financial Analyst. In addition to serving as senior
officer of the Adviser, Mr. Kobrick is also a portfolio manager and a principal
in private investment partnerships and may act in that capacity with respect to
other similar investment partnerships.
MICHAEL E. NANCE
Michael Nance has managed Kobrick Growth Fund since July 1, 1999. Mr. Nance,
Senior Vice President of the Adviser, joined the company in June 1999. Prior to
joining the Adviser, he was a Senior Vice President at Putnam Investments, where
he was a co-manager of the Putnam Voyager Fund, as well as other institutional
accounts. Mr. Nance joined Putnam in 1994 as an Assistant Vice President and
equity analyst in the Global Equity Research Group. Mr. Nance received an M.B.A.
from the University of Chicago Graduate School of Business and a B.S. in
Industrial Engineering from Drexel University. In addition to serving as Senior
Vice President of the Adviser, Mr. Nance is also a portfolio manager in private
investment partnerships and may act in that capacity with respect to other
similar investment partnerships.
[graphic omitted] FUND SERVICES
-------------
INVESTING IN THE FUNDS
CHOOSING A SHARE CLASS
Each Fund offers Class A, Class B and Class C shares to the public. Each class
has different costs associated with buying, selling and holding Fund shares,
which allows you to choose the class that best meets your needs. Which class you
choose will depend upon the size of your investment and how long you intend to
hold your shares. Class B shares, Class C shares and certain shareholder
features may not be available to you if you hold your shares in a street name
account. Your financial representative can help you decide which class of shares
is most appropriate for you.
CLASS A SHARES
o You pay a sales charge when you buy Fund shares. There are several ways to
reduce this charge. See the section entitled "Ways to Reduce or Eliminate
Sales Charges."
o You pay lower annual expenses than Class B and Class C shares, giving you
the potential for higher returns per share.
o You do not pay a sales charge on orders of $1 million or more, but you may
pay a charge on redemption if you redeem these shares within 1 year of
purchase.
CLASS B SHARES
o You do not pay a sales charge when you buy Fund shares. All of your money
goes to work for you right away.
o You pay higher annual expenses than Class A shares.
o You will pay a charge on redemptions if you sell your shares within 6 years
of purchase, as described in the section "How Sales Charges are Calculated."
o Your Class B shares will automatically convert into Class A shares after 8
years, which reduces your annual expenses.
o We will not accept an order for $1 million or more of Class B shares. You
may, however, purchase $1 million or more of Class A shares, which will have
no sales charge as well as lower annual expenses. You may pay a charge on
redemption if you redeem these shares within 1 year of purchase.
CLASS C SHARES
o You do not pay a sales charge when you buy Fund shares. All of your money
goes to work for you right away.
o You pay higher annual expenses than Class A shares. o You will pay a charge
on redemptions if you sell your shares within 1 year of purchase.
o Your Class C shares will not automatically convert into Class A shares. If
you hold your shares for longer than 8 years, you'll pay higher expenses
than other classes.
o We will not accept an order for $1 million or more of Class C shares. You
may, however, purchase $1 million or more of Class A shares, which will have
no sales charge as well as lower annual expenses. You may pay a charge on
redemption if you redeem these shares within 1 year of purchase.
For expenses associated with Class A, B and C shares, see the section entitled
"Fund Fees & Expenses" in this Prospectus.
CERTIFICATES
Certificates will not be automatically issued for any class of shares. Upon
written request, you may receive certificates for Class A shares only.
<PAGE>
FUND SERVICES [graphic omitted]
-------------
HOW SALES CHARGES ARE CALCULATED
CLASS A SHARES
The price that you pay when you buy Class A shares ("offering price") is their
net asset value plus a sales charge (sometimes called a "front-end sales
charge") which varies depending upon the size of your purchase.
CLASS A SALES CHARGES
YOUR INVESTMENT AS A % OF OFFERING PRICE AS A % OF YOUR INVESTMENT
----------------------------------------------------------------------------
Less than $ 50,000 5.75% 6.10%
$ 50,000 - $ 99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 or more* 0.00% 0.00%
* For purchases of Class A shares of the Funds of $1 million or more or
purchases by Retirement Plans (Plans under Sections 401(a) or 401(k) of the
Internal Revenue Code with investments of $1 million or more or that have
100 or more eligible employees), there is no front-end sales charge, but a
contingent deferred sales charge of 1.00% may apply to redemptions of your
shares within one year of the date of purchase. See the section entitled
"Ways to Reduce or Eliminate Sales Charges."
CLASS B SHARES
The offering price of Class B shares is their net asset value, without a
front-end sales charge. However, there is a contingent deferred sales charge
("CDSC") on shares that you sell within 6 years of buying them. The amount of
the CDSC, if any, declines each year that you own your shares. The holding
period for purposes of timing the conversion to Class A shares and determining
the CDSC will continue to run after an exchange to Class B shares of another
Kobrick Fund or Nvest Fund. The CDSC equals the following percentages of the
dollar amounts subject to the charge:
CLASS B CONTINGENT DEFERRED SALES CHARGES
YEAR SINCE PURCHASE CDSC ON SHARES BEING SOLD
------------------------------------------------------
1st 5.00%
2nd 4.00%
3rd 3.00%
4th 3.00%
5th 2.00%
6th 1.00%
Thereafter 0.00%
CLASS C SHARES
The offering price of Class C shares is their net asset value, without a
front-end sales charge. However, Class C shares are subject to a CDSC of 1.00%
on redemptions made within one year of the date of purchase. The holding period
for determining the CDSC will continue to run after an exchange to Class C
shares of another Kobrick Fund or Nvest Fund.
CLASS C CONTINGENT DEFERRED SALES CHARGES
YEAR SINCE PURCHASE CDSC ON SHARES BEING SOLD
------------------------------------------------------
1st 1.00%
Thereafter 0.00%
HOW THE CDSC IS APPLIED TO YOUR SHARES
The CDSC is a sales charge you pay when you redeem certain Fund shares.
The CDSC:
o is calculated based on the number of shares you are selling;
o is based on either your original purchase price or the current net asset
value of the shares being sold, whichever is lower;
o is deducted from the proceeds of the redemption, not from the amount
remaining in your account; and
o for year one applies to redemptions through the day one year after the date
on which your purchase was accepted, and so on for subsequent years.
A CDSC WILL NOT BE CHARGED ON:
o increases in net asset value above the purchase price; or
o shares you acquired by reinvesting your dividends or capital gains
distributions.
To keep your CDSC as low as possible, each time that you place a request to sell
shares we will first sell any shares in your account that carry no CDSC. If
there are not enough of these shares available to meet your request, we will
sell the shares with the lowest CDSC.
EXCHANGES INTO SHARES OF ANY NVEST MONEY MARKET FUND
If you exchange shares of a Fund into shares of the Nvest Money Market Funds,
the holding period for purposes of determining the CDSC and conversion to Class
A shares stops until you exchange back into shares of another Kobrick Fund or
Nvest Fund. If you choose to redeem those Nvest Money Market Fund shares, a CDSC
may apply.
<PAGE>
[graphic omitted] FUND SERVICES
-------------
WAYS TO REDUCE OR ELIMINATE SALES CHARGES
CLASS A SHARES
REDUCING SALES CHARGES
There are several ways you can lower your sales charge, including:
o LETTER OF INTENT -- allows you to purchase Class A shares of any Kobrick
Fund or Nvest Fund over a 13-month period but pay sales charges as if you
had purchased all shares at once. This program can save you money if you
plan to invest $50,000 or more over 13 months. Purchases in Class B and
Class C shares may be used toward meeting the letter of intent.
o COMBINING ACCOUNTS -- allows you to combine shares of multiple Kobrick Funds
and other Nvest Funds and classes for purposes of calculating your sales
charge. You may combine your purchases with those of qualified accounts of a
spouse, parents, children, siblings, grandparents, grandchildren, in-laws,
individual fiduciary accounts, sole proprietorships, single trust estates
and any other group of individuals acceptable to the Distributor.
These privileges do not apply to the Nvest Money Market Funds unless shares are
purchased through an exchange from another Kobrick Fund or Nvest Fund.
ELIMINATING SALES CHARGES AND CDSC
Class A shares may be offered without front-end sales charges or a CDSC to the
following individuals and institutions:
o Any government entity that is prohibited from paying a sales charge or
commission to purchase mutual fund shares;
o Selling brokers, sales representatives or other intermediaries;
o Fund Trustees and other individuals who are affiliated with any Kobrick
Fund, Nvest Fund or Money Market Fund (this also applies to any spouse,
parents, children, siblings, grandparents, grandchildren and in-laws of
those mentioned);
o Participants in certain Retirement Plans with at least 100 members (one-year
CDSC may apply);
o Non-discretionary and non-retirement accounts of bank trust departments or
trust companies only if they principally engage in banking or trust
activities;
o Investments of $25,000 or more in Kobrick Funds, Nvest Funds or Money Market
Funds by clients of an adviser or subadviser to any Kobrick Fund, Nvest Fund
or Money Market Fund; and
o Accounts open as of October 31, 1999 that became Class A shareholders of the
relevant Fund, are not subject to applicable sales charges and may exchange
into Class A shares of another Kobrick Fund or Nvest Fund without the
imposition of a sales charge.
REPURCHASING FUND SHARES
You may apply proceeds from redeeming Class A shares of the Funds WITHOUT PAYING
A SALES CHARGE to repurchase Class A shares of any Kobrick Fund or Nvest Fund.
To qualify, you must reinvest some or all of the proceeds within 120 days after
your redemption and notify Nvest Funds or your financial representative at the
time of reinvestment that you are taking advantage of this privilege. You may
reinvest your proceeds either by returning the redemption check or by sending a
new check for some or all of the redemption amount. Please note: For federal
income tax purposes, A REDEMPTION IS A SALE THAT INVOLVES TAX CONSEQUENCES, EVEN
IF THE PROCEEDS ARE LATER REINVESTED. Please consult your tax adviser for how a
redemption would affect you. If you repurchase Class A shares of $1 million or
more within 30 days after you redeem such shares, the Distributor will rebate
the amount of the CDSC charged on the redemption.
CLASS A, B OR C SHARES
ELIMINATING THE CDSC
As long as we are notified at the time you sell, the CDSC for any share class
will generally be eliminated in the following cases:
o to make distributions from a retirement plan (a plan termination or total
plan redemption may incur a CDSC);
o to make payments through a systematic withdrawal plan; or
o due to shareholder death or disability.
If you think you may be eligible for a sales charge elimination or reduction,
contact your financial representative or Nvest Funds.
FUND SERVICES
IT'S EASY TO OPEN AN ACCOUNT
TO OPEN AN ACCOUNT WITH NVEST FUNDS:
1. Read this Prospectus carefully.
2. Determine how much you wish to invest. The following chart shows the
investment minimums for various types of accounts:
<TABLE>
<CAPTION>
MINIMUM TO OPEN AN
MINIMUM TO ACCOUNT USING MINIMUM FOR
TYPE OF ACCOUNT OPEN AN ACCOUNT INVESTMENT BUILDER EXISTING ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Any account other than those listed below $2,500 $100 $100
Accounts registered under the Uniform Gifts
to Minors Act or the Uniform Transfers to $2,000 $100 $100
Minors Act
Individual Retirement Accounts (IRAs) $500 $100 $100
Retirement plans with tax benefits such as
corporate pension, profit sharing and Keogh $250 $100 $100
plans
Payroll Deduction Investment Programs for
SARSEP, SEP, SIMPLE, 403(b)(7) $25 N/A N/A
and certain other retirement plans
</TABLE>
3. Complete the appropriate parts of the account application, carefully
following the instructions. If you have any questions, please call your
financial representative or Nvest Funds at 800-225-5478. For more
information on Nvest Funds' investment programs, refer to the section
entitled "Additional Investor Services" in this Prospectus.
4. Use the following sections as your guide for purchasing shares.
SELF-SERVICING YOUR ACCOUNT
Buying or selling shares is easy with the services described below:
NVEST FUNDS PERSONAL ACCESS LINE (R) NVEST FUNDS WEB SITE
800-225-5478, press 1 www.nvestfunds.com
You have access to your account 24 hours a day by calling Personal Access
Line(R) from a touch-tone telephone or by visiting us online. By using these
customer service options, you may:
o purchase, exchange or redeem shares in your existing accounts (certain
restrictions may apply);
o review your account balance, recent transactions, Fund prices and
recent performance;
o order duplicate account statements; and
o obtain tax information.
Please see the following pages for other ways to buy, exchange or sell your
shares.
[graphic omitted] FUND SERVICES
-------------
BUYING SHARES
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
THROUGH YOUR INVESTMENT DEALER
o Call your investment dealer for o Call your investment dealer for
information. information.
BY MAIL
[graphic omitted]
o Make out a check in U.S. dollars for o Make out a check in U.S. dollars for
the investment amount, payable to the investment amount, payable to
"Nvest Funds." Third party checks "Nvest Funds." Third party checks
will generally not be accepted. will generally not be accepted.
o Mail the check with your completed o Fill out the detachable investment
application to Nvest Funds, P.O. Box slip from an account statement. If
8551, Boston, MA 02266-8551. no slip is available, include with
the check a letter specifying the
Fund name, your class of shares,
your account number and the
registered account name(s). To make
investing even easier, you can order
more investment slips by calling
800-225-5478.
BY EXCHANGE
[graphic omitted]
o The exchange must be for a minimum o The exchange must be for a minimum
of $1,000 or for all of your shares. of $1,000 or for all of your shares.
o Obtain a current prospectus for the o Call your investment dealer or Nvest
Fund into which you are exchanging Funds at 800-225-5478 to request an
by calling your investment dealer or exchange.
Nvest Funds at 800-225-5478.
o See the section entitled "Exchanging
o Call your investment dealer or Nvest Shares."
Funds to request an exchange.
o See the section entitled "Exchanging
Shares."
BY WIRE
[graphic omitted]
o Call Nvest Funds at 800-225-5478 to o Instruct your bank to transfer funds
obtain an account number and wire to State Street Bank & Trust
transfer instructions. Your bank may Company, ABA#
charge you for such a transfer. 011000028, DDA# 99011538.
o Specify the Fund name, your class of
shares, your account number and the
registered account name(s). Your
bank may charge you for such a
transfer.
AUTOMATIC INVESTING THROUGH INVESTMENT BUILDER
[graphic omitted]
o Indicate on your application that o Please call Nvest Funds at
you would like to begin an automatic 800-225-5478 for a Service Options
investment plan through Investment Form. A signature guarantee may be
Builder and the amount of the required to add this privilege.
monthly investment ($100 minimum).
o See the section entitled "Additional
o Send a check marked "Void" or a Investor Services."
deposit slip from your bank account
along with your application.
THROUGH AUTOMATED CLEARING HOUSE (ACH)
[graphic omitted]
o Ask your bank or credit union o Call Nvest Funds at 800-225-5478 to
whether it is a member of the ACH add shares to your account through
system. ACH.
o Complete the "Telephone Withdrawal o If you have not signed up for the
and Exchange" and "Bank Information" ACH system, please call Nvest Funds
sections on your account for a Service Options Form. A
application. signature guarantee may be required
to add this privilege.
o Mail your completed application to
Nvest Funds, P.O. Box 8551, Boston,
MA 02266-8551.
<PAGE>
FUND SERVICES [graphic omitted]
-------------
SELLING SHARES
TO SELL SOME OR ALL OF YOUR SHARES
Certain restrictions may apply. See section entitled "Restrictions on Buying,
Selling and Exchanging Shares."
THROUGH YOUR INVESTMENT DEALER
o Call your investment dealer for information.
BY MAIL
[graphic omitted]
o Write a letter to request a redemption specifying the name of the Fund, the
class of shares, your account number, the exact registered account name(s),
the number of shares or the dollar amount to be redeemed and the method by
which you wish to receive your proceeds. Additional materials may be
required. See the section entitled "Selling Shares in Writing."
o The request must be signed by all of the owners of the shares including the
capacity in which they are signing, if appropriate.
o Mail your request to Nvest Funds, P.O. Box 8551, Boston, MA 02266-8551.
o Your proceeds (less any applicable CDSC) will be delivered by the method
chosen in your letter. If you choose to have your proceeds delivered by
mail, they will generally be mailed to you on the business day after the
request is received. You may also choose to redeem by wire or through ACH
(see below).
BY EXCHANGE
[graphic omitted]
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or Nvest Funds at 800-225-5478.
o Call Nvest Funds to request an exchange.
o See the section entitled "Exchanging Shares" for more details.
BY WIRE
[graphic omitted]
o Fill out the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Call Nvest Funds at 800-225-5478 or indicate in your redemption request
letter (see above) that you wish to have your proceeds wired to your bank.
o Proceeds (less any applicable CDSC) will generally be wired on the next
business day. A wire fee (currently $5.00) will be deducted from the
proceeds.
THROUGH AUTOMATED CLEARING HOUSE (ACH)
[graphic omitted]
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o If you have not signed up for the ACH system on your application, please
call Nvest Funds at 800-225-5478 for a Service Options Form.
o Call Nvest Funds to request a redemption through this system.
o Proceeds (less any applicable CDSC) will generally arrive at your bank
within three business days.
BY TELEPHONE
[graphic omitted]
o You may receive your proceeds by mail, by wire or through ACH (see above).
o Call Nvest Funds at 800-225-5478 to choose the method you wish to use to
redeem your shares.
[graphic omitted] FUND SERVICES
-------------
SELLING SHARES IN WRITING
If you wish to redeem your shares in writing, all owners of the shares must sign
the redemption request in the exact names in which the shares are registered and
indicate any special capacity in which they are signing. In certain situations,
you will be required to make your request to sell shares in writing. In these
instances, a letter of instruction signed by the authorized owner is necessary.
In certain situations we also may require a signature guarantee or additional
documentation.
A signature guarantee protects you against fraudulent orders and is necessary
if:
o your address of record has been changed within the past 30 days;
o you are selling more than $100,000 worth of shares and you are requesting
the proceeds by check; or
o a proceeds check for any amount is mailed to an address other than the
address of record or not payable to the registered owner(s).
A notary public CANNOT provide a signature guarantee. A signature guarantee can
be obtained from one of the following sources:
o a financial representative or securities dealer;
o a federal savings bank, cooperative or other type of bank;
o a savings and loan or other thrift institution;
o a credit union; or
o a securities exchange or clearing agency.
SELLER (ACCOUNT TYPE) REQUIREMENTS FOR WRITTEN REQUESTS
INDIVIDUAL, JOINT, SOLE o The signatures on the letter must
PROPRIETORSHIP, UGMA/UTMA (MINOR include all persons authorized to
ACCOUNTS) sign, including title, if
applicable.
o Signature guarantee, if applicable
(see above).
CORPORATE OR ASSOCIATION ACCOUNTS o The signatures on the letter must
include all persons authorized to
sign, including title.
OWNERS OR TRUSTEES OF TRUST ACCOUNTS o The signature on the letter must
include all trustees authorized to
sign, including title.
o If the names of the trustees are not
registered on the account, please
provide a copy of the trust document
certified within the past 60 days.
o Signature guarantee, if applicable
(see above).
JOINT TENANCY WHOSE CO-TENANTS o The signatures on the letter must
ARE DECEASED include all surviving tenants of the
account.
o Copy of the death certificate.
o Signature guarantee if proceeds
check is issued to other than the
surviving tenants.
POWER OF ATTORNEY (POA) o The signatures on the letter must
include the attorney-in-fact,
indicating such title.
o A signature guarantee.
o Certified copy of the POA document
stating it is still in full force
and effect, specifying the exact
Fund and account number, and
certified within 30 days of receipt
of instructions.*
QUALIFIED RETIREMENT BENEFIT PLANS o The signature on the letter must
EXCEPT NVEST FUNDS PROTOTYPE include all signatures of those
DOCUMENTS) authorized to sign, including title.
o Signature guarantee, if applicable
(see above).
EXECUTORS OF ESTATES, ADMINISTRATORS, o The signature on the letter must
GUARDIANS, CONSERVATORS include those authorized to sign,
including capacity.
o A signature guarantee.
o Certified copy of court document
where signer derives authority,
e.g.: Letters of Administration,
Conservatorship, Letters
Testamentary.*
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) o Additional documentation and
distribution forms are required.
* Certification may be made on court documents by the court, usually certified
by the clerk of the court. POA certification may be made by a commercial bank,
broker/member of a domestic stock exchange or a practicing attorney.
<PAGE>
FUND SERVICES [graphic omitted]
-------------
EXCHANGING SHARES
In general, you may exchange shares of your Fund for shares of the same class of
another Kobrick Fund or other Nvest Fund without paying a sales charge or a CDSC
(see the sections entitled "Buying Shares" and "Selling Shares"). The exchange
must be for a minimum of $1,000 (or the total net asset value of your account,
whichever is less), or $100 if made under the Automatic Exchange Plan (see the
section entitled "Additional Investor Services"). All exchanges are subject to
the eligibility requirements of the Kobrick Fund, Nvest Fund or Money Market
Fund into which you are exchanging. The exchange privilege may be exercised only
in those states where shares of the Kobrick Funds, Nvest Funds or Money Market
Funds may be legally sold. For federal income tax purposes, an exchange of Fund
shares for shares of another Kobrick Fund, Nvest Fund or Money Market Fund is
generally treated as a sale on which gain or loss may be recognized. Please
refer to the Statement of Additional Information (the "SAI") for more detailed
information on exchanging Fund shares.
RESTRICTIONS ON BUYING, SELLING AND EXCHANGING SHARES
PURCHASE AND EXCHANGE RESTRICTIONS
Although the Funds do not anticipate doing so, they reserve the right to suspend
or change the terms of purchasing or exchanging shares. Each Fund and the
Distributor reserve the right to refuse or limit any purchase or exchange order
by a particular purchaser (or group of related purchasers) if the transaction is
deemed harmful to the best interest of the Fund's other shareholders or would
disrupt the management of the Fund. The Funds and the Distributor reserve the
right to restrict purchases and exchanges for the accounts of "market timers" by
limiting the transaction to a maximum dollar amount. An account will be deemed
to be one of a market timer if: (i) more than two exchange purchases of a given
Fund are made for the account in a calendar quarter or (ii) the account makes
one or more exchange purchases of a given Fund in a calendar quarter in an
aggregate amount in excess of 1% of the Fund's total net assets.
SELLING RESTRICTIONS
The table below describes restrictions placed on selling shares of any Fund
described in this Prospectus:
RESTRICTION SITUATION
The Fund may suspend the right of o When the New York Stock Exchange is
redemption or postpone payment for closed (other than a
more than 7 days: weekend/holiday)
o During an emergency
o Any other period permitted by the
SEC
The Fund reserves the right to suspend o With a notice of a dispute between
account services or refuse transaction registered owners
requests:
o With suspicion/evidence of a
fraudulent act
The Fund may pay the redemption price o When it is detrimental for the Fund
in whole or part by a distribution in to make cash payments as determined
kind of readily marketable securities in the sole discretion of the
in lieu of cash or may take up to 7 adviser
days to pay a redemption request in
order to raise capital:
The Fund may close your account and o When the Fund account falls below a
send you the proceeds. You will have set minimum (currently $1,000 as set
60 days after being notified of the by the Fund's Board of Trustees)
Fund's intention to close your account
to increase the account to the set
minimum. This does not apply to
certain qualified retirement plans,
automatic investment plans or accounts
that have fallen below the minimum
solely because of fluctuations in the
Fund's net asset value per share:
The Fund may withhold redemption o When redemptions are made within 10
proceeds until the check or funds have calendar days of purchase by check
cleared: or ACH of the shares being redeemed
Telephone redemptions are not accepted for tax-qualified retirement accounts.
If you hold certificates representing your shares, they must be sent with your
request for it to be honored. The Fund recommends that certificates be sent by
registered mail.
<PAGE>
[graphic omitted] FUND SERVICES
-------------
HOW FUND SHARES ARE PRICED
"Net asset value" is the price of one share of the Fund without a sales charge,
and is calculated each business day using this formula:
NET TOTAL MARKET VALUE OF SECURITIES + CASH AND OTHER ASSETS - LIABILITIES
ASSET = ----------------------------------------------------------------------
VALUE NUMBER OF OUTSTANDING SHARES
The net asset value of Fund shares is determined according to this schedule:
o A share's net asset value is determined at the close of regular trading on
the New York Stock Exchange (the "Exchange") on the days the Exchange is
open for trading. This is normally 4:00 p.m. Eastern time.
o The price you pay for purchasing, redeeming or exchanging a share will be
based upon the net asset value next calculated after your order is received
"in good order" by State Street Bank and Trust Company, the Fund's custodian
(plus or minus applicable sales charges as described earlier in this
Prospectus).
o Requests received by the Distributor after the Exchange closes will be
processed based upon the net asset value determined at the close of regular
trading on the next day that the Exchange is open, with the exception that
those orders received by your investment dealer before the close of the
Exchange and received by the Distributor before 5:00 p.m. Eastern time* on
the same day will be based on the net asset value determined on that day.
o A Fund heavily invested in foreign securities may have net asset value
changes on days when you cannot buy or sell its shares.
* Under limited circumstances, the Distributor may enter into a contractual
agreement where it may accept orders after 5:00 p.m., but not later than
8:00 p.m.
Generally, during times of substantial economic or market change, it may be
difficult to place your order by phone. During these times, you may deliver your
order in person to the Distributor or send your order by mail as described in
"Buying Shares" and "Selling Shares."
Generally, Fund securities are valued as follows:
o EQUITY SECURITIES -- most recent sales or quoted bid price as provided by a
pricing service.
o DEBT SECURITIES (OTHER THAN SHORT-TERM OBLIGATIONS) -- based upon pricing
service valuations.
o SHORT-TERM OBLIGATIONS (REMAINING MATURITY OF LESS THAN 60 DAYS)-- amortized
cost (which approximates market value).
o SECURITIES TRADED ON FOREIGN EXCHANGES -- most recent sale/bid price on the
non-U.S. exchange, unless an occurrence after the close of the exchange will
materially affect its value. In that case, it is given fair value as
determined by or under the direction of the Funds' Board of Trustees at the
close of regular trading on the Exchange.
o OPTIONS -- last sale price, or if not available, last offering price.
o FUTURES -- unrealized gain or loss on the contract using current settlement
price. When a settlement price is not used, futures contracts will be valued
at their fair value as determined by or under the direction of the Funds'
Board of Trustees.
o ALL OTHER SECURITIES -- fair market value as determined by the Adviser under
the direction of the Funds' Board of Trustees.
The effect of fair value pricing as described above for "Securities traded on
foreign exchanges" and "All other securities" is that securities may not be
priced on the basis of quotations from the primary market in which they are
traded but rather, may be priced by another method that the Funds' Board of
Trustees believes actually reflects fair value.
FUND SERVICES [graphic omitted]
-------------
DIVIDENDS AND DISTRIBUTIONS
The Funds generally distribute most or all of their net investment income
annually (other than capital gains) in the form of dividends. Each Fund
distributes all net realized long- and short-term capital gains annually, after
applying any available capital loss carryovers. The Funds' Board of Trustees may
adopt a different schedule as long as payments are made at least annually.
Depending on your investment goals and priorities, you may choose to:
o participate in the Dividend Diversification Program, which allows you to have
all dividends and distributions automatically invested at net asset value in
shares of the same class of another Kobrick Fund or other Nvest Fund registered
in your name. Certain investment minimums and restrictions may apply. For more
information about this program, see the section entitled "Additional Investor
Services."
o receive distributions from dividends and interest in cash while reinvesting
distributions from capital gains in additional shares of the same class of
the Fund or in the same class of another Kobrick Fund or Nvest Fund.
o receive all distributions in cash.
Unless you select one of the options set forth above, distributions will
automatically be reinvested in shares of the same class of
the Fund at net asset value.
For more information or to change your distribution option, contact Nvest Funds
in writing or call 800-225-5478.
If you earn more than $10 annually in taxable income from a non-retirement plan
Fund, you will receive a Form 1099 to help you report the prior calendar year's
distributions on your federal income tax return. Be sure to keep the Form 1099
as a permanent record. A fee may be charged for any duplicate information
requested.
TAX CONSEQUENCES
Each Fund intends to meet all requirements of the Internal Revenue Code
necessary to qualify as a "regulated investment company" and thus does not
expect to pay any federal income tax on income and capital gains distributed to
shareholders.
Fund distributions paid to you either in cash or reinvested in additional shares
are generally taxable to you either as ordinary income or as capital gains.
Distributions derived from short-term capital gains or investment income are
generally taxable at ordinary income rates. If you are a corporation investing
in a Fund, a portion of these dividends may qualify for the dividends-received
deduction provided that you meet certain holding period requirements.
Distributions of gains from investments that a Fund owned for more than one year
that are designated by a Fund as capital gain dividends will generally be
taxable to a shareholder receiving such distributions as long-term capital gain,
regardless of how long the shareholder has held Fund shares.
An exchange of shares for shares of another Kobrick Fund, or other Nvest Fund or
Money Market Fund is generally treated as a sale, and any resulting gain or loss
may be subject to federal income tax. If you purchase shares of a Fund shortly
before it declares a capital gain distribution or a dividend, a portion of the
purchase price may be returned to you as a taxable distribution.
You should consult your tax adviser about any federal, state and local taxes
that may apply to the distributions you receive.
As of the date of this Prospectus, a single investor owns a significant portion
of the shares of each Fund. Redemption by this investor of all or a substantial
part of its investment in a Fund could require the Adviser to sell a large
amount of portfolio securities. Such sales could result in the realization of
capital gains, which would be required to be distributed to shareholders of the
affected Fund.
<PAGE>
[graphic omitted] FUND SERVICES
-------------
COMPENSATION TO SECURITIES DEALERS
As part of their business strategies, the Funds pay securities dealers that sell
their shares. This compensation originates from two sources: sales charges
(front-end or deferred) and 12b-1 fees (comprising the annual service and/or
distribution fees of a plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940). The sales charges are detailed in the section entitled
"How Sales Charges are Calculated." Each class of Fund shares pays an annual
service fee of 0.25% of its average daily net assets. In addition to this
service fee, Class B shares pay an annual distribution fee of 0.75% of their
average daily net assets for 8 years (at which time they automatically convert
into Class A shares). Class C shares are subject to a distribution fee of 0.75%
of their average daily net assets. Generally, the 12b-1 fees are paid to
securities dealers on a quarterly basis. The Distributor retains the first year
of such fees for Class C shares. Because these distribution fees are paid out of
the Fund's assets on an ongoing basis, over time these fees for Class B and
Class C shares will increase the cost of your investment and may cost you more
than paying the front-end sales charge on Class A shares.
The Distributor may, at its expense, pay concessions in addition to the payments
described above to dealers which satisfy certain criteria established from time
to time by the Distributor relating to increasing net sales of shares of the
Kobrick Funds or other Nvest Funds over prior periods, and certain other
factors. See the SAI for more details.
FUND SERVICES [graphic omitted]
-------------
ADDITIONAL INVESTOR SERVICES
RETIREMENT PLANS
Nvest Funds offers a range of retirement plans, including IRAs, SEPs, SARSEPs,
SIMPLEs, 403(b) plans and other pension and profit sharing plans. Refer to the
section entitled "It's Easy to Open an Account" for investment minimums. For
more information about our Retirement Plans, call us at 800-225-5478.
INVESTMENT BUILDER PROGRAM
This is Nvest Funds' automatic investment plan. You may authorize automatic
monthly transfers of $100 or more from your bank checking or savings account to
purchase shares of one or more Kobrick Funds or Nvest Funds. To join the
Investment Builder Program, please refer to the section entitled "Buying
Shares."
DIVIDEND DIVERSIFICATION PROGRAM
This program allows you to have all dividends and any other distributions
automatically invested in shares of the same class of another Kobrick Fund,
Nvest Fund or Money Market Fund, subject to the eligibility requirements of that
other Fund and to state securities law requirements. Shares will be purchased at
the selected Fund's net asset value without a front-end sales charge or CDSC on
the dividend record date. Before establishing a Dividend Diversification Program
into any other Kobrick Fund, Nvest Fund or Money Market Fund, please read its
prospectus carefully.
AUTOMATIC EXCHANGE PLAN
Nvest Funds has an automatic exchange plan under which shares of a class of a
Fund are automatically exchanged each month for shares of the same class of
other Kobrick Funds or Nvest Funds or Money Market Funds. There is no fee for
exchanges made under this plan, but there may be a sales charge in certain
circumstances. Please refer to the SAI for more information on the Automatic
Exchange Plan.
SYSTEMATIC WITHDRAWAL PLAN
This plan allows you to redeem shares and receive payments from your Fund on a
regular schedule. Redemption of shares that are part of the Systematic
Withdrawal Plan are not subject to a CDSC. However, the amount or percentage
that you specify in the plan may not exceed, on an annualized basis, 10% of the
value of your Fund account based upon the value of your Fund account on the day
you establish your plan. To establish a Systematic Withdrawal Plan, please refer
to the section entitled "Selling Shares."
NVEST FUNDS PERSONAL ACCESS LINE(R)
This automated customer service system allows you to have access to your account
24 hours a day by calling 800-225-5478, press 1. With a touch-tone telephone,
you can obtain information about your current account balance, recent
transactions, Fund prices and recent performance. You may also use Personal
Access Line(R) to purchase, exchange or redeem shares in any of your existing
accounts. Certain restrictions may apply.
NVEST FUNDS WEB SITE
Visit us at www.nvestfunds.com to review your account balance and recent
transactions, to view daily prices and performance information or to order
duplicate account statements and tax information. You may also go online to
purchase, exchange or redeem shares in any of your existing accounts. Certain
restrictions may apply.
<PAGE>
[graphic omitted] FUND PERFORMANCE
----------------
The financial highlights table is intended to help you understand each Fund's
financial performance since the Fund's commencement of operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the return that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
KOBRICK FUNDS
<TABLE>
<CAPTION>
KOBRICK CAPITAL FUND KOBRICK EMERGING GROWTH FUND
CLASS A CLASS A
FOR THE PERIOD FOR THE PERIOD
DECEMBER 31, DECEMBER 31,
YEAR ENDED 1997* THROUGH YEAR ENDED 1997* THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.71 $ 10.00 $ 10.14 $ 10.00
Income (Loss) from investment operations:
Net investment income (loss) (c) (0.18) (0.13) (0.18) (0.11)
Net realized and unrealized gain (loss) on investments 6.68 0.84 6.58 0.25(d)
----------- ----------- ----------- -----------
Total from investment operations 6.50 0.71 6.40 0.14
----------- ----------- ----------- -----------
Net asset value, end of period $ 17.21 $ 10.71 $ 16.54 $ 10.14
=========== =========== =========== ===========
Total Return (a) 60.69% 7.10% 63.12% 1.40%
Ratios and Supplemental Data
Net Assets, end of period (000s) $ 102,879 $ 27,463 $ 52,175 $ 18,330
Ratios to average net assets:
Net expenses (b) 1.75% 1.75% 1.75% 1.75%
Expenses before fee waiver (b) 1.77% 2.21% 2.08% 2.24%
Net investment income (loss)(b) (1.09)% (1.38)% (1.24)% (1.16)%
Portfolio turnover rate 778% 350% 442% 287%
<CAPTION>
KOBRICK GROWTH FUND
CLASS A
FOR THE PERIOD
SEPTEMBER 1,
YEAR ENDED 1998* THROUGH
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
------------- -------------
<S> <C> <C>
Net asset value, beginning of period $ 10.32 $ 10.00
Income (Loss) from investment operations:
Net investment income (loss) (c) (0.08) 0.00
Net realized and unrealized gain (loss) on investments 5.17(d) 0.32
----------- -----------
Total from investment operations 5.09 0.32
----------- -----------
Net asset value, end of period $ 15.41 $ 10.32
=========== ===========
Total Return (a) 49.35% 3.20%
Ratios and Supplemental Data
Net Assets, end of period (000s) $ 46,827 $ 1,054
Ratios to average net assets:
Net expenses (b) 1.40% 1.40%
Expenses before fee waiver (b) 2.13% 11.11%
Net investment income (loss)(b) (0.55)% 0.32%
Portfolio turnover rate 632% 11%
* Commencement of Operations
(a) Total Returns are historical and assume changes in share price and reinvestments of dividends.
Had certain expenses not been reduced during the periods shown, total returns would have been lower.
Periods of less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Computed using the average shares method.
(d) 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>
<PAGE>
GLOSSARY OF TERMS
BID PRICE -- The price a prospective buyer is ready to pay. This term is used by
traders who maintain firm bid and offer prices in a given security by standing
ready to buy or sell security units at publicly quoted prices.
BOTTOM-UP APPROACH -- The search for outstanding performance by first
considering individual companies before considering the impact of industry and
economic trends.
CAPITAL GAIN DISTRIBUTIONS -- Payments to a Fund's shareholders of profits
earned from selling securities in a Fund's portfolio. Capital gain distributions
are usually paid once a year.
DERIVATIVE -- A financial instrument whose value and performance are based on
the value and performance of another security or financial instrument.
DIVERSIFICATION -- The strategy of investing in a wide range of companies or
industries to reduce the risk if an individual company or sector of the market
suffers losses.
EARNINGS GROWTH -- A pattern of increasing rate of growth in earnings per share
from one period to another, which usually causes a stock's price to rise.
FUNDAMENTAL ANALYSIS -- An analysis of the balance sheet and income statements
of a company in order to forecast its future stock price movements. Fundamental
analysis considers records of assets, earnings, sales, products, research and
development and markets in predicting future trends in these indicators of a
company's success or failure.
GROWTH INVESTING -- An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.
INCOME DISTRIBUTIONS -- Payments to a Fund's shareholders resulting from the net
interest or dividend income earned by a Fund's portfolio.
MARKET CAPITALIZATION -- Market price multiplied by number of shares
outstanding. The figures used to distinguish small, medium and large market
capitalizations may vary depending upon the index being used and/or the
guidelines set by the portfolio manager.
NET ASSET VALUE (NAV) -- The market value of one share of the Fund on any given
day without a front-end sales charge or CDSC. It is determined by dividing the
Fund's total net assets by the number of shares outstanding.
QUALITATIVE ANALYSIS -- An analysis of the qualities possessed by a company,
including its management, products and competitive positions, to help determine
if the company can execute its strategy.
TARGET PRICE -- Price that an investor is hoping a stock he or she has just
bought will rise to within a specified period of time. An investor may buy XYZ
at $20, with a target price of $40 in one year's time, for instance.
TOTAL RETURN -- The change in value of an investment in the Fund over a specific
time period expressed as a percentage. Total returns assume all earnings are
reinvested in additional shares of the Fund.
VOLATILITY -- The general variability of a portfolio's value resulting from
price fluctuations of its investments. In most cases, the more diversified a
portfolio is, the less volatile it will be.
<PAGE>
[graphic omitted]
IF YOU WOULD LIKE MORE INFORMATION ABOUT THE FUND, THE
FOLLOWING DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL AND SEMIANNUAL REPORTS -- Provide additional
information about the Fund's investments. Each report includes a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI) -- Provides
more detailed information about the Fund, has been filed
with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
TO ORDER A FREE COPY OF THE FUND'S ANNUAL OR
SEMIANNUAL REPORT OR ITS SAI, CONTACT YOUR FINANCIAL
REPRESENTATIVE, OR THE FUNDS AT:
Nvest Funds Distributor, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Telephone: 800-225-5478
Internet: www.nvestfunds.com
Your financial representative or Nvest Funds
will also be happy to answer your questions or to provide any
additional information that you may require.
You can review the Fund's reports and SAI at the
Public Reference Room of the Securities and Exchange
Commission. Text-only copies are available free from
the Commission's Web site at: www.sec.gov.
Copies of these publications are also available for a fee by
writing or calling the Public Reference Room of the SEC,
Washington, D.C. 20549-6009
Telephone: 800-SEC-0330
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.
KOBRICK FUNDS
-------------
KOBRICK CAPITAL FUND
KOBRICK EMERGING GROWTH FUND
KOBRICK GROWTH FUND
Investment Company Act File No. 811-8435
- --------------------------------------------------------------------------------
XK51-0200
<PAGE>
KOBRICK funds [logo]
IT'S ALL ABOUT VISION(SM)
- --------------------------------------------------------------------------------
Kobrick Funds
STOCK FUNDS
CLASS A AND Y SHARES
[graphic omitted]
The Securities and Exchange Commission has not approved any Fund's shares or
determined whether this Prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.
For general information on the Funds or any of their services and for assistance
in opening an account, contact your financial representative or call Kobrick
Funds.
KOBRICK CAPITAL FUND
KOBRICK EMERGING GROWTH FUND
KOBRICK GROWTH FUND
PROSPECTUS
November 1, 1999
(as revised February 1, 2000)
WHAT'S INSIDE
GOALS, STRATEGIES & RISKS
PAGE 2
FUND FEES & EXPENSES
PAGE 8
MANAGEMENT TEAM
PAGE 10
FUND SERVICES
PAGE 11
FUND PERFORMANCE
PAGE 20
Kobrick Funds
P.O. Box 8551, Boston, Massachusetts 02266-8551
1-888-KCFUND1 (1-888-523-8631)
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GOALS, STRATEGIES & RISKS
- --------------------------------------------------------------------------------
Kobrick Capital Fund .........................................................2
Kobrick Emerging Growth Fund .................................................4
Kobrick Growth Fund ..........................................................6
- --------------------------------------------------------------------------------
FUND FEES & EXPENSES.
- --------------------------------------------------------------------------------
Fund Fees & Expenses .........................................................8
- --------------------------------------------------------------------------------
MORE ABOUT RISK.
- --------------------------------------------------------------------------------
More About Risk ..............................................................9
- --------------------------------------------------------------------------------
MANAGEMENT TEAM
- --------------------------------------------------------------------------------
Meet the Funds' Investment Adviser ..........................................10
Meet the Funds' Portfolio Managers ..........................................10
- --------------------------------------------------------------------------------
FUND SERVICES
- --------------------------------------------------------------------------------
Investing in the Funds ......................................................11
How Sales Charges are Calculated ............................................12
It's Easy to Open an Account ................................................12
Buying Shares ...............................................................13
Selling Shares ..............................................................14
Selling Shares in Writing ...................................................15
Exchanging Shares ...........................................................16
Restrictions on Buying, Selling and Exchanging Shares .......................16
How Fund Shares are Priced ..................................................17
Dividends and Distributions .................................................18
Tax Consequences ............................................................18
Compensation to Securities Dealers ..........................................19
- --------------------------------------------------------------------------------
FUND PERFORMANCE
- --------------------------------------------------------------------------------
Fund Performance ............................................................20
- --------------------------------------------------------------------------------
GLOSSARY OF TERMS
- --------------------------------------------------------------------------------
Glossary of Terms ...........................................................21
If you have any questions about any of the terms used in this Prospectus, please
refer to the "Glossary of Terms."
To learn more about the possible risks of investing in a Fund, please refer to
the section entitled "More About Risk." This section details the risks of
practices in which the Funds may engage. Please read this section carefully
before you invest.
Fund shares are not bank deposits and are not guaranteed, endorsed or insured by
the Federal Deposit Insurance Corporation or any other government agency, and
are subject to investment risks, including possible loss of the principal
invested.
<PAGE>
GOALS, STRATEGIES & RISKS FUND FOCUS
- ------------------------- Stability Income Growth
KOBRICK CAPITAL FUND ------------------------
High X
Adviser: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med.
Manager: Frederick R. Kobrick --------- ------ -------
Low X X
TICKER SYMBOL: CLASS A CLASS Y
------------------
KFCFX KCFYX
INVESTMENT GOAL
The Capital Fund seeks maximum capital appreciation by investing primarily in
equity securities of companies with small, medium and large capitalizations.
INVESTMENT STRATEGIES
Under normal market conditions, the Capital Fund will invest substantially all
of its assets in equity securities of companies with small, medium and large
capitalizations, including those that the Adviser believes are undervalued
special situations and emerging growth companies. This approach provides the
Adviser with flexibility to emphasize in the Fund companies with different
capitalizations as market conditions change. The Adviser considers emerging
growth companies to be those companies that are less mature and have the
potential to grow substantially faster than the economy. The Adviser's bottom-up
approach utilizes fundamental and qualitative analysis to select individual
companies, not sectors, with the greatest potential for growth. In selecting
investments for the Fund, the Adviser generally seeks companies in a wide range
of industries and considers a variety of factors, including any one or more of
the following:
x the strength of a company's management team
x relative financial condition
x entrepreneurial character
x expected growth in earnings
x competitive position and business strategy
x new or innovative products, services or processes
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation
companies which, because of unique circumstances, such as an ability to fill
a particular niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and financial
environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Capital Fund's assets will be
invested in equity securities, the Fund may invest at any time up to 35% of its
total assets in other types of securities (including corporate bonds and
securities of the U.S. government). Because the Fund's investment goal provides
flexibility to emphasize companies having different capitalizations as market
conditions change, the Fund may engage in frequent trading of securities. This
may produce higher transaction costs and a higher level of capital gains, which
may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Capital Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Small capitalization and emerging growth companies may be
subject to more abrupt price movements, limited markets and less liquidity
than larger, more established companies, which could adversely affect the
value of the portfolio. With special situation companies, the primary risk is
that they may not achieve their expected value because events do not
materialize as the Adviser anticipated. Because the Fund invests in, among
other things, undervalued special situations, emerging growth companies and
companies with small capitalizations, an investment in the Fund involves
greater than average risks. Accordingly, the value of the Fund's shares may
fluctuate more widely than the value of shares of a fund that invests in
larger, more established companies.
EVALUATING THE FUND'S PAST PERFORMANCE
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Capital Fund. The returns shown are those of the Fund's Class A
shares. Class Y shares would have substantially similar annual returns because
they would be invested in the same portfolio of securities as the Class A shares
and would only differ to the extent that the classes do not have the same
expenses. The Fund also offers Class B and Class C shares in a separate
prospectus. The Fund's past performance does not necessarily indicate how the
Fund will perform in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
two calendar years since the Fund's inception on December 31, 1997. The returns
for Class B, C and Y shares differ from the Class A returns shown in the bar
chart, depending upon the respective expenses of each class. The chart does not
reflect any sales charge that you may be required to pay when you buy or redeem
the Fund's shares. A sales charge will reduce your return.
(total return)
1998 50.00%
1999 73.21%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 51.07%
\/ Lowest Quarterly Return: Third Quarter 1998, down 13.86%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the Russell 3000
Index, a market value-weighted, unmanaged index of large company stocks. They
are also compared to the Morningstar Mid Cap Growth Fund Average and Lipper
Multi-Cap Growth Fund Average, each an average of the total returns of all
mutual funds with a current investment style similar to that of the Capital
Fund, as calculated by Morningstar, Inc. and Lipper, Inc., respectively. It is
not possible to invest directly in an index. The Fund's total returns are
adjusted to reflect the Fund's expenses for Class A and Y shares and the maximum
sales charge that you may pay when you buy or redeem the Fund's shares. The
Russell 3000 Index returns have not been adjusted for ongoing management,
distribution and operating expenses and sales charges applicable to mutual fund
investments. The Morningstar Mid Cap Growth Fund Average and Lipper Multi-Cap
Growth Fund Average returns have been adjusted for these expenses but do not
reflect any sales charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (12/31/97)
<S> <C> <C>
Kobrick Capital Fund: Class A* (inception 12/31/97) 63.20% 56.49%
Russell 3000 Index 20.90% 22.51%
Morningstar Mid Cap Growth Fund Average 59.70% 36.47%
Lipper Multi-Cap Growth Fund Average 52.34% 40.04%
Kobrick Capital Fund: Class Y* (inception 11/1/99) 73.46% 61.44%
Russell 3000 Index 20.90% 22.51%
Morningstar Mid Cap Growth Fund Average 59.70% 36.47%
Lipper Multi-Cap Growth Fund Average 52.34% 40.04%
</TABLE>
* Until November 1, 1999, the Fund had only one class of shares and was offered
without a sales charge. These returns have been adjusted to reflect expenses
and sales loads of the Fund's new multiple class structure. See "Fund Fees &
Expenses."
<PAGE>
GOALS, STRATEGIES & RISKS FUND FOCUS
- ------------------------- Stability Income Growth
KOBRICK EMERGING GROWTH FUND ------------------------
High X
Adviser: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med.
Manager: Frederick R. Kobrick --------- ------ -------
Low X X
TICKER SYMBOL: CLASS A CLASS Y
------------------
KFEGX pending
INVESTMENT GOAL
The Emerging Growth Fund seeks to provide growth of capital by investing
primarily in equity securities of emerging growth companies, with an emphasis on
companies with small capitalizations.
INVESTMENT STRATEGIES
Under normal market conditions, the Emerging Growth Fund will invest
substantially all of its assets in equity securities of emerging growth
companies in any industry, with emphasis on companies with small
capitalizations. The Adviser considers emerging growth companies to be those
companies which are less mature and have the potential to grow substantially
faster than the economy. The small capitalization companies in which the Fund
invests are generally comparable to the size of companies included in the
Russell 2000 Index, which is a commonly used index of small stock performance.
The median market capitalization in this index as of September 30, 1999 was
approximately $421 million and the largest market capitalization in this index
as of such date was approximately $3 billion. Levels of capitalization and the
companies constituting the Russell 2000 Index could vary over time because of
market conditions and other factors relating to small capitalization companies
generally and investments in such companies. While a company's market
capitalization may be small at the time the Fund first invests in the company,
the Fund may continue to hold and acquire shares of the company after its market
capitalization increases. Small and emerging growth companies that are
identified as good candidates for the Fund can be found in a variety of
industries. In selecting investments for the Fund, the Adviser may consider a
variety of factors, including any one or more of the following:
x the strength of a company's management team
x relative financial condition
x competitive position and business strategy
x new or innovative products, services or processes
x expected growth in earnings
x cash flow
x overall potential as an enterprise
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below. Many of the companies within this group are special situation
companies which, because of unique circumstances, such as an ability to fill
a particular niche, are attractive investments.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and
financial environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Emerging Growth Fund's assets will
be invested in equity securities of emerging growth companies, the Fund may
invest at any time up to 35% of its total assets in other types of securities
(including corporate bonds and securities of the U.S. government) and in
securities issued by larger, more mature companies and undervalued special
situation companies. The Fund may engage in frequent trading of securities,
which may produce higher transaction costs and a higher level of capital gains.
This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Emerging Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Small capitalization and emerging growth companies may be
subject to more abrupt price movements, limited markets and less liquidity
than larger, more established companies, which could adversely affect the
value of the portfolio. With special situation companies, the primary risk is
that they may not achieve their expected value because events do not
materialize as the Adviser anticipated. Because the Fund invests in, among
other things, undervalued special situations, emerging growth companies and
companies with small capitalizations, an investment in the Fund involves
greater than average risks. Accordingly, the value of the Fund's shares may
fluctuate more widely than the value of shares of a fund that invests in
larger, more established companies.
EVALUATING THE FUND'S PAST PERFORMANCE
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Emerging Growth Fund. The returns are those of the Fund's Class A
shares. Class Y shares would have substantially similar annual returns because
they would be invested in the same portfolio of securities as the Class A shares
and would differ to the extent that the classes do not have the same expenses.
The Fund also offers Class B and Class C shares in a separate prospectus. The
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
The bar chart shows the Fund's adjusted total returns for Class A shares for the
two calendar years since the Fund's inception on December 31, 1997. The returns
for Class B, C and Y shares differ from the Class A returns shown in the bar
chart, depending upon the respective expenses of each class. The chart does not
reflect any sales charge that you may be required to pay when you buy or redeem
the Fund's shares. A sales charge will reduce your return.
(total return)
1998 39.50%
1999 86.49%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 57.28%
\/ Lowest Quarterly Return: Third Quarter 1998, down 19.27%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the Russell 2000
Index, a market value-weighted, unmanaged index of small company stocks. It is
also compared to the Morningstar Small Cap Growth Fund Average and Lipper
Small-Cap Growth Fund Average, each an average of the total returns of all
mutual funds with a current investment style similar to that of the Emerging
Growth Fund, as calculated by Morningstar, Inc. and Lipper, Inc., respectively.
It is not possible to invest directly in an index. The Fund's total returns are
adjusted to reflect the Fund's expenses for Class A and Y shares and the maximum
sales charge that you may pay when you buy or redeem the Fund's shares. The
Russell 2000 Index returns have not been adjusted for ongoing management,
distribution and operating expenses and sales charges applicable to mutual fund
investments. The Morningstar Small Cap Growth Fund Average and Lipper Small-Cap
Growth Fund Average returns have been adjusted for these expenses but do not
reflect any sales charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (12/31/97)
<S> <C> <C>
Kobrick Emerging Growth Fund: Class A* (inception 12/31/97) 75.78% 56.59%
Russell 2000 Index 21.26% 8.70%
Morningstar Small Cap Growth Fund Average 61.76% 31.41%
Lipper Small-Cap Growth Fund Average 62.63% 30.10%
Kobrick Emerging Growth Fund: Class Y* (inception 11/1/99) 86.74% 61.54%
Russell 2000 Index 21.26% 8.70%
Morningstar Small Cap Growth Fund Average 61.76% 31.41%
Lipper Small-Cap Growth Fund Average 62.63% 30.10%
* Until November 1, 1999, the Fund had only one class of shares and was offered without a sales charge.
These returns have been adjusted to reflect expenses and sales loads of the Fund's new multiple class
structure. See "Fund Fees & Expenses."
</TABLE>
<PAGE>
GOALS, STRATEGIES & RISKS FUND FOCUS
- ------------------------- Stability Income Growth
KOBRICK GROWTH FUND ------------------------
High X
Adviser: Kobrick Funds LLC (the "Adviser") --------- ------ -------
Med. X
Manager: Michael E. Nance --------- ------ -------
Low X
TICKER SYMBOL: CLASS A CLASS Y
------------------
KFGRX pending
INVESTMENT GOAL
The Growth Fund seeks long-term growth of capital by investing primarily in
equity securities of companies with large capitalizations that the Adviser
believes have better than average long-term growth potential.
INVESTMENT STRATEGIES
Under normal market conditions, the Growth Fund will be primarily invested in
equity securities of large capitalization companies that the Adviser expects
will have better than average long-term growth potential. The Adviser's
bottom-up approach utilizes fundamental and qualitative analysis to select
individual companies, not sectors, with the greatest potential for growth. The
Fund invests in a diversified portfolio of securities of larger, more
established companies in a broad range of industries. The Adviser seeks to
invest in companies which offer the greatest potential for profitable expansion
and sustained growth and considers a variety of factors, including any one or
more of the following:
x management that can execute business plans
x expected growth in earnings
x a sound business strategy
x compelling valuations
A company's valuations are based on a variety of measures including
price/earnings to growth rates, price to book value and price to sales.
Potential income is not a major factor in the selection of investments.
In making investment decisions, the Adviser employs the following four-part
investment approach:
o Screening: The Adviser analyzes thousands of companies in order to find a
select group that have the potential to meet its buy disciplines described
below.
o Portfolio Construction: The Adviser applies buy disciplines which emphasize
strong management, compelling valuations and high earnings growth. At the
core of this approach is regular contact with a company's management team to
assess its ability to execute the company's strategy. The Adviser considers
potential risks in selecting securities to construct a diversified portfolio
that limits volatility.
o Portfolio Supervision: The Adviser closely monitors each holding in the
Fund's portfolio to determine whether it continues to possess the factors
identified when the original investment was made. This process includes
continuous review of absolute and relative valuations, evaluation of
management's execution of the company's strategy and assessment of the
company's prospects relative to the overall economic, political and financial
environment.
o Portfolio Realignment: The Adviser will generally sell a position when its
target price, which is continuously evaluated, is reached, when there is a
change in a company's management or strategy, or when a company fails to
execute its strategy.
Although it is anticipated that most of the Growth Fund's assets will be
invested in equity securities of companies with large capitalizations, the Fund
may invest at any time up to 35% of its total assets in other types of
securities (including corporate bonds and securities of the U.S. government) and
in smaller capitalization and emerging growth companies. The Fund may engage in
frequent trading of securities, which may produce higher transaction costs and a
higher level of capital gains. This may lower your return.
A "snapshot" of the Fund's investments may be found in the current annual or
semiannual report (see back cover).
INVESTMENT RISKS
EQUITY SECURITIES: Because the Growth Fund invests primarily in equity
securities, its major risks are those commonly associated with investing in
stocks. This means that you may lose money on your investment due to sudden,
unpredictable drops in a stock's value or periods of below-average
performance in a given stock or in the stock market as a whole. Growth stocks
are generally more sensitive to market movements than other types of stocks,
primarily because their stock prices are based heavily on future
expectations. Because of these and other risks, the Fund may underperform
certain other stock funds during periods when large company growth stocks are
generally out of favor.
Evaluating the Fund's Past Performance
The bar chart and table shown below give an indication of the risks of investing
in Kobrick Growth Fund. The return is that of the Fund's Class A shares. Class Y
shares would have a substantially similar annual returns because it would be
invested in the same portfolio of securities as the Class A shares and would
differ to the extent that the classes do not have the same expenses. The Fund
also offers Class B and Class C shares in a separate prospectus. The Fund's past
performance does not necessarily indicate how the Fund will perform in the
future. The bar chart shows the Fund's adjusted total return for Class A shares
for the one calendar year since the Fund's inception on September 1, 1998. The
returns for Class B, C and Y shares differ from the Class A returns shown in the
bar chart, depending upon the respective expenses of each class. The chart does
not reflect any sales charge that you may be required to pay when you buy or
redeem the Fund's shares. A sales charge will reduce your return.
1999 54.58%
/\ Highest Quarterly Return: Fourth Quarter 1999, up 38.03%
\/ Lowest Quarterly Return: Third Quarter 1999, down 0.32%
The table below shows how the Fund's average annual total returns for the
one-year and since Fund inception periods compared to those of the S&P Composite
Index of 500 stocks ("S&P 500"), a market value-weighted, unmanaged index of
common stock prices for 500 selected stocks. It is also compared to the
Morningstar Large Cap Growth Fund Average and Lipper Large-Cap Growth Fund
Average, each an average of the total returns of all mutual funds with a current
investment style similar to that of the Growth Fund, as calculated by
Morningstar, Inc. and Lipper, Inc., respectively. It is not possible to invest
directly in an index. The Fund's total returns are adjusted to reflect the
Fund's expenses for Class A and Y shares and the maximum sales charge that you
may pay when you buy or redeem the Fund's shares. The S&P 500 returns have not
been adjusted for ongoing management, distribution and operating expenses and
sales charges applicable to mutual fund investments. The Morningstar Large Cap
Growth Fund Average and Lipper Large-Cap Growth Fund Average returns have been
adjusted for these expenses but do not reflect any sales charges.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ended December 31, 1999)
SINCE FUND INCEPTION
PAST 1 YEAR (9/1/98)
<S> <C> <C>
Kobrick Growth Fund: Class A* (inception 9/1/98) 45.68% 68.44%
S&P 500 21.04% 39.83%
Morningstar Large Cap Growth Fund Average 37.72% 59.35%
Lipper Large-Cap Growth Fund Average 38.09% 60.15%**
Kobrick Growth Fund: Class Y* (inception 11/1/99) 54.83% 76.33%
S&P 500 21.04% 39.83%
Morningstar Large Cap Growth Fund Average 37.72% 59.35%
Lipper Large-Cap Growth Fund Average 38.09% 60.15%**
* Until November 1, 1999, the Fund had only one class of shares and was offered without a sales charge.
These returns have been adjusted to reflect expenses and sales loads of the Fund's new multiple class
structure. See "Fund Fees & Expenses."
** Calculated from August 31, 1998.
</TABLE>
<PAGE>
FUND FEES & EXPENSES
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of each Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
CLASS A CLASS Y
Maximum sales charge (load) imposed on purchases 5.75%+ None
Maximum deferred sales charge (load) None None
Redemption fees None* None*
* Generally, a transaction fee will be charged for expedited payment of
redemption proceeds such as by wire or overnight delivery.
+ The front-end sales charge typically charged on Class A shares is waived for
investors who meet certain eligibility and minimum investment requirements
(see "Investing in the Funds.")
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets, as a percentage of average daily net assets)
KOBRICK KOBRICK KOBRICK
CAPITAL FUND EMERGING GROWTH FUND GROWTH FUND
CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or service (12b-1) fees 0.25% 0.00% 0.25% 0.00% 0.25% 0.00%
Other expenses 0.52% 0.52% 0.83% 0.83% 0.88% 0.88%
Total annual fund operating expenses (a) 1.77% 1.52% 2.08% 1.83% 2.13% 1.88%
Fee waiver and/or expense reimbursement (b) -0.27% -0.27% -0.58% -0.58% -0.73% -0.73%
Net expenses 1.50% 1.25% 1.50% 1.25% 1.40% 1.15%
(a) Until November 1, 1999, the Funds had only one class of shares and were offered without a sales charge and
therefore total expenses have been restated to account for fees and expenses under the Funds' new multiple
class structure.
(b) The Adviser has agreed to cap the amount of Total Expenses at 1.50% for Class A shares (1.25% for Class Y
shares) for the Kobrick Capital Fund and Kobrick Emerging Growth Fund and 1.40% for Class A shares (1.15%
for Class Y shares) for the Kobrick Growth Fund. Accordingly, to the extent Total Expenses exceed the amount
of the respective cap, the Adviser will reduce its management fees and/or reimburse the Funds for certain
expenses. With respect to each Fund, the Adviser 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 deferred fees more than one year after the end of the fiscal year in which the fee
was deferred. If the Adviser had not agreed to the cap and if the reimbursements and waivers were not in
effect for a Fund, performance would be reduced accordingly.
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that:
o You invest $10,000 in a Fund for the time periods indicated;
o Your investment has a 5% return each year; and
o A Fund's operating expenses remain the same.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
KOBRICK CAPITAL FUND KOBRICK EMERGING GROWTH FUND KOBRICK GROWTH FUND
CLASS A CLASS Y CLASS A CLASS Y CLASS A CLASS Y
<S> <C> <C> <C> <C> <C> <C>
1 year $ 719 $ 127 $ 719 $ 127 $ 709 $ 117
3 years $1,022 $ 397 $1,022 $ 397 $ 993 $ 365
5 years $1,346 $ 686 $1,346 $ 686 $1,297 $ 633
10 years $2,263 $1,511 $2,263 $1,511 $2,158 $1,398
</TABLE>
MORE ABOUT RISK
The Funds have principal investment strategies that come with inherent risks.
The following is a list of risks to which each Fund may be subject by investing
in various types of securities or engaging in various practices
MARKET RISK (All Funds) The risk that the market value of a security may move up
and down, sometimes rapidly and unpredictably based upon change in a company's
financial condition as well as overall market and economic conditions.
RISK OF SMALL CAPITALIZATION COMPANIES (Capital and Emerging Growth Funds) These
companies carry special risks, including narrower markets, limited financial and
management resources, less liquidity and greater volatility than large company
stocks.
MANAGEMENT RISK (All Funds) The risk that a strategy used by a Fund's portfolio
management may fail to produce the intended result.
CREDIT RISK (All Funds) The risk that the issuer of a security, or the
counterparty to a contract, will default or otherwise become unable to honor a
financial obligation.
INTEREST RATE RISK (All Funds) The risk of market losses attributable to changes
in interest rates. In general, the prices of fixed-income securities rise when
interest rates fall, and fall when interest rates rise.
INFORMATION RISK (All Funds) The risk that key information about a security is
inaccurate or unavailable.
OPPORTUNITY RISK (All Funds) The risk of missing out on an investment
opportunity because the assets necessary to take advantage of it are invested in
less profitable investments.
LIQUIDITY RISK (All Funds) The risk that certain securities may be difficult or
impossible to sell at the time and at the price that the seller would like. This
may result in a loss or may be costly to a Fund.
VALUATION RISK (All Funds) The risk that a Fund has valued certain securities at
a higher price than it can sell them for.
POLITICAL RISK (All Funds) The risk of losses directly attributable to
government or political actions.
YEAR 2000 (All Funds) Many computer systems today cannot distinguish between the
year 1900 and the year 2000. The Adviser does not currently anticipate that
computer problems related to the year 2000 will have a material effect on any
Fund. However, there can be no assurances in this area, including the
possibility that year 2000 computer problems could negatively affect
communication systems, investment markets including investments by a Fund or the
economy in general. The Funds and the Adviser have and will take steps that they
believe are reasonable to address this problem in their own computer systems and
to obtain assurances that reasonable steps are being taken by the Funds' major
service providers.
MANAGEMENT TEAM
- ---------------
MEET THE FUNDS' INVESTMENT ADVISER
The Kobrick Funds family consists of three mutual funds designed to offer
investors a range of growth oriented investment opportunities. Kobrick Funds are
distributed through Nvest Funds Distributor, L.P. (the "Distributor"). This
Prospectus covers Class A and Class Y shares of Kobrick Capital Fund, Kobrick
Emerging Growth Fund and Kobrick Growth Fund, all of which constitute the
"Kobrick Funds." As a shareholder of one or more of the Kobrick Funds, you are
entitled to the same benefits and privileges as a shareholder of the Nvest
Funds, including the ability to exchange into or out of any fund in the Nvest
Funds family (See "Exchanging Shares"). The Nvest Funds family, which includes
the Kobrick Funds, includes 25 mutual funds with a total of over $8 billion in
assets under management as of December 31, 1999. Nvest Stock Funds, Nvest Bond
Funds, Nvest Star Funds and Nvest State Tax-Free Funds, constitute the "Nvest
Funds." Nvest Cash Management Trust Money Market Series and Nvest Tax Exempt
Money Market Trust constitute the "Money Market Funds."
ADVISER
The Adviser, Kobrick Funds LLC, located at 101 Federal Street, Boston,
Massachusetts 02110, serves as the investment adviser to each of the Funds and
is a subsidiary of Nvest Companies, L.P. ("Nvest Companies"). The Adviser, the
predecessor to which was formed in 1997, focuses primarily on managing
growth-oriented equity funds including the Funds. Nvest Companies is part of an
affiliated group including Nvest, L.P., a publicly-traded company listed on the
New York Stock Exchange. Nvest Companies' 14 principal subsidiary or affiliated
asset management firms, collectively, had $127 billion in assets under
management as of September 30, 1999.
In 1998, the Funds paid 1.00% of their respective average daily net assets to
the Adviser in advisory fees.
PORTFOLIO TRADES
In placing portfolio trades, the Adviser may use brokerage firms that market the
Fund's shares or are affiliated with Nvest Companies or the Adviser. In placing
trades, the Adviser will seek to obtain the best combination of price and
execution, which involves a number of judgmental factors. Such portfolio trades
are subject to applicable regulatory restrictions and related procedures adopted
by the Funds' Board of Trustees.
MEET THE FUNDS' PORTFOLIO MANAGERS
FREDERICK R. KOBRICK
Frederick Kobrick has managed Kobrick Capital Fund from its inception and
Kobrick Emerging Growth Fund from its inception until February 1, 1999 and
returned as its portfolio manager on April 9, 1999. Mr. Kobrick previously
managed the Kobrick Growth Fund from its inception until June 30, 1999. He has
been in the investment business for more than 28 years. For the 12 year period
immediately prior to becoming President of the predecessor to Kobrick Funds LLC
in 1997, he was an equity portfolio manager at State Street Research &
Management Company, where he served as Senior Vice President since 1989 and as a
member of the firm's Equity Investment Committee since 1985. He received an
M.B.A. from Harvard Business School and a B.A. from Boston University. Mr.
Kobrick is also a Chartered Financial Analyst. In addition to serving as senior
officer of the Adviser, Mr. Kobrick is also a portfolio manager and a principal
in private investment partnerships and may act in that capacity with respect to
other similar investment partnerships.
MICHAEL E. NANCE
Michael Nance has managed Kobrick Growth Fund since July 1, 1999. Mr. Nance,
Senior Vice President of the Adviser, joined the company in June 1999. Prior to
joining the Adviser, he was a Senior Vice President at Putnam Investments, where
he was a co-manager of the Putnam Voyager Fund, as well as other institutional
accounts. Mr. Nance joined Putnam in 1994 as an Assistant Vice President and
equity analyst in the Global Equity Research Group. Mr. Nance received an M.B.A.
from the University of Chicago Graduate School of Business and a B.S. in
Industrial Engineering from Drexel University. In addition to serving as Senior
Vice President of the Adviser, Mr. Nance is also a portfolio manager in private
investment partnerships and may act in that capacity with respect to other
similar investment partnerships.
<PAGE>
FUND SERVICES
-------------
INVESTING IN THE FUNDS
CHOOSING A SHARE CLASS
Each Fund offers Class A, B, C and Y shares. This prospectus is intended to
offer Class Y shares, and Class A shares to investors eligible for a waiver of
the front-end sales load (listed below). If you are interested in purchasing
Class A (retail), B or C shares, please call Nvest Funds at 1-800-225-5478. Each
class has different eligibility and minimum investment requirements. Each class
also has different costs associated with buying, selling and holding Fund
shares, which allows you to choose the class that best meets your needs. Your
financial representative can help you decide which class of shares is most
appropriate for you.
CLASS A SHARES
o You pay a sales charge when you buy Fund shares unless you qualify for a
waiver as described below.
o You pay higher annual expenses than Class Y shares.
Class A shares may be offered without front-end sales charges or a CDSC to the
following individuals and institutions:
o Any government entity that is prohibited from paying a sales charge or
commission to purchase mutual fund shares;
o Selling brokers, sales representatives or other intermediaries;
o Fund Trustees and other individuals who are affiliated with any Kobrick
Fund, Nvest Fund or Money Market Fund (this also applies to any spouse,
parents, children, siblings, grandparents, grandchildren and in-laws of
those mentioned);
o Participants in certain Retirement Plans with at least 100 members (one-year
CDSC may apply);
o Non-discretionary and non-retirement accounts of bank trust departments or
trust companies only if they principally engage in banking or trust
activities; and
o Investments of $25,000 or more in Kobrick Funds, Nvest Funds or Money Market
Funds by clients of an adviser or subadviser to any Kobrick Fund, Nvest Fund
or Money Market Fund.
o Accounts open as of October 31, 1999 that became Class A shareholders of the
relevant Fund, are not subject to applicable sales charges and may exchange
into Class A shares of another Kobrick Fund or Nvest Fund without the
imposition of a sales charge.
o You do not pay a sales charge on orders of $1 million or more, but you may
pay a charge on redemption if you redeem these shares within 1 year of
purchase.
CERTIFICATES
Certificates will not be issued automatically for any class of shares. Upon
written request, you may receive certificates for Class A shares only.
CLASS Y SHARES
o You do not pay a sales charge when you buy Fund shares. All of your money
goes to work for you right away.
o You pay lower annual expenses than Class A shares, giving you the potential
for higher returns per share.
Class Y shares of the Funds may be purchased by the following entities at the
following investment minimums.
There is no initial or subsequent investment minimum for:
o RETIREMENT PLANS (401(a), 401(k), 457 or 403(b) plans) that have total
investment assets of at least $10 million. Plan sponsor accounts can be
aggregated to meet this minimum.
o INSURANCE COMPANY ACCOUNTS of Metropolitan Life Insurance Company
("MetLife") or its affiliates.
o SEPARATE ACCOUNTS of MetLife or its affiliates.
o WRAP FEE PROGRAMS of certain broker-dealers not being paid by the Funds or
the Distributor. Such wrap fee programs may be subject to additional or
different conditions, including a wrap account fee. Each broker-dealer is
responsible for transmitting to its customer a schedule of fees and other
information regarding any such conditions. If the participant who purchased
Class Y shares through a wrap fee program should terminate the wrap fee
arrangement with the broker-dealer, then the Class Y shares will, at the
discretion of the broker-dealer, automatically be converted to a number of
Class A shares of the same Fund having the same net asset value of the
shares converted, and the broker-dealer may thereafter be entitled to
receive from that Fund an annual service fee of 0.25% of the value of Class
A shares owned by that shareholder.
o CERTAIN INDIVIDUAL RETIREMENT ACCOUNTS if the amounts invested represent
rollover distributions from investments by any of the Retirement Plans set
forth above.
o DEFERRED COMPENSATION PLAN ACCOUNTS of New England Life Insurance Company
("NELICO"), MetLife or their affiliates ("Deferred Compensation Accounts").
o SERVICE ACCOUNTS through an omnibus account by investment advisers,
financial planners, broker-dealers or other intermediaries who have entered
into a service agreement with a Fund. A fee may be charged to shareholders
purchasing through a service account if they effect transactions through
such parties and should contact such parties regarding information about
such fees.
The minimum initial investment is $1 million and the minimum for each subsequent
investment is $10,000 for:
o Other mutual funds, endowments, foundations, bank trust departments or trust
companies.
For expenses associated with Class A and Y shares, see the section entitled
"Fund Fees & Expenses" in this Prospectus.
<PAGE>
FUND SERVICES
- -------------
HOW SALES CHARGES ARE CALCULATED
CLASS A SHARES
The price that you pay when you buy Class A shares ("offering price") is their
net asset value plus a sales charge (sometimes called a "front-end sales
charge") which varies depending upon the size of your purchase. However, for
purchases of Class A shares of the Funds of $1 million or more or purchases by
Retirement Plans (Plans under Sections 401(a) or 401(k) of the Internal Revenue
Code with investments of $1 million or more or that have 100 or more eligible
employees), there is no front-end sales charge, but a contingent deferred sales
charge of 1.00% may apply to redemptions of such shares within one year of the
date of purchase. See the eligibility requirements for sales charge waivers in
the section entitled "Investing in the Funds -- Class A."
CLASS A SALES CHARGES
YOUR INVESTMENT AS A % OF OFFERING PRICE AS A % OF YOUR INVESTMENT
Less than $ 50,000 5.75% 6.10%
$ 50,000 - $ 99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 or more 0.00% 0.00%
IT'S EASY TO OPEN AN ACCOUNT
TO OPEN AN ACCOUNT WITH KOBRICK FUNDS:
1. Read this Prospectus carefully.
2. Read the eligibility and minimum investment requirements described above
under "Investing in the Funds" and choose the class of shares that best
meets your needs.
3. You should contact Kobrick Funds at 1-888-523-8631 if you have any questions
about purchasing Fund shares.
4. Use the sections of this Prospectus that follow as your guide for purchasing
shares.
<PAGE>
FUND SERVICES
-------------
BUYING SHARES
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
THROUGH YOUR INVESTMENT DEALER
o Call your investment dealer for o Call your investment dealer for
information. information.
By Mail
[graphic omitted]
o Make out a check in U.S. dollars for o Make out a check in U.S. dollars for
the investment amount, payable to the investment amount, payable to
"Kobrick Funds." Third party checks "Kobrick Funds." Third party checks
will generally not be accepted. will generally not be accepted.
o Mail the check with your completed o Fill out the detachable investment
application to Kobrick Funds, P.O. slip from an account statement. If
Box 8551, Boston, MA 02266-8551. no slip is available, include with
the check a letter specifying the
Fund name, your class of shares,
your account number and the
registered account name(s). To make
investing even easier, you can order
more investment slips by calling
1-888-523-8631.
BY EXCHANGE
[graphic omitted]
o Obtain a current prospectus for the o Call your investment dealer or
Fund into which you are exchanging Kobrick Funds at 1-888-523-8631 to
by calling your investment dealer or request an exchange.
Kobrick Funds at 1-888-523-8631.
o See the section entitled "Exchanging
o Call your investment dealer or Shares."
Kobrick Funds to request an
exchange.
o See the section entitled "Exchanging
Shares."
BY WIRE
[graphic omitted]
o Call Kobrick Funds at 1-888-523-8631 o Instruct your bank to transfer funds
to obtain an account number and wire to State Street Bank & Trust
transfer instructions. Your bank may Company, ABA# 011000028, DDA#
charge you for such a transfer. 99011538.
o Specify the Fund name, your class of
shares, your account number and the
registered account name(s). Your
bank may charge you for such a
transfer.
THROUGH AUTOMATED CLEARING HOUSE ("ACH")
[graphic omitted]
o Ask your bank or credit union o Call Kobrick Funds at 1-888-523-8631
whether it is a member of the ACH to add shares to your account
system. through ACH.
o Complete the "Telephone Withdrawal o If you have not signed up for the
and Exchange" and "Bank Information" ACH system, please call Kobrick
sections on your account Funds for a Service Options Form. A
application. signature guarantee may be required
to add this privilege.
o Mail your completed application to
Kobrick Funds, P.O. Box 8551,
Boston, MA 02266-8551.
<PAGE>
Fund Services
- -------------
Selling Shares
TO SELL SOME OR ALL OF YOUR SHARES
Certain restrictions may apply. See section entitled "Restrictions on Buying,
Selling and Exchanging Shares."
THROUGH YOUR INVESTMENT DEALER
o Call your investment dealer for information.
BY MAIL
[graphic omitted]
o Write a letter to request a redemption specifying the name of the Fund, your
class of shares, your account number, the exact registered account name(s),
the number of shares or the dollar amount to be redeemed and the method by
which you wish to receive your proceeds. Additional materials may be required.
See the section entitled "Selling Shares in Writing."
o The request must be signed by all of the owners of the shares including the
capacity in which they are signing, if appropriate.
o Mail your request to Kobrick Funds, P.O. Box 8551, Boston, MA 02266-8551.
o Your proceeds will be delivered by the method chosen in your letter. If you
choose to have your proceeds delivered by mail, they will generally be mailed
to you on the business day after the request is received in good order. You
may also choose to redeem by wire or through ACH (see below).
BY EXCHANGE
[graphic omitted]
o Obtain a current prospectus for the Fund into which you are exchanging by
calling your investment dealer or Kobrick Funds at 1-888-523-8631.
o Call Kobrick Funds to request an exchange.
o See the section entitled "Exchanging Shares" for more details.
BY WIRE
[graphic omitted]
o Fill out the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o Call Kobrick Funds at 1-888-523-8631 or indicate in your redemption request
letter (see above) that you wish to have your proceeds wired to your bank.
o Proceeds will generally be wired on the next business day. A wire fee
(currently $5.00) will be deducted from the proceeds.
THROUGH AUTOMATED CLEARING HOUSE ("ACH")
[graphic omitted]
o Ask your bank or credit union whether it is a member of the ACH system.
o Complete the "Telephone Withdrawal and Exchange" and "Bank Information"
sections on your account application.
o If you have not signed up for the ACH system on your application, please call
Kobrick Funds at 1-888-523-8631 for a Service Options Form.
o Call Kobrick Funds to request a redemption through this system.
o Proceeds will generally arrive at your bank within three business days.
BY TELEPHONE
[graphic omitted]
o You may receive your proceeds by mail, by wire or through ACH (see above).
o Call Kobrick Funds at 1-888-523-8631 to choose the method you wish to use to
redeem your shares.
FUND SERVICES
-------------
SELLING SHARES IN WRITING
If you wish to redeem your shares in writing, all owners of the shares must sign
the redemption request in the exact names in which the shares are registered and
indicate any special capacity in which they are signing. In certain situations,
you will be required to make your request to sell shares in writing. In these
instances, a letter of instruction signed by the authorized owner is necessary.
In certain situations we also may require a signature guarantee or additional
documentation.
A signature guarantee protects you against fraudulent orders and is necessary
if:
o your address of record has been changed within the past 30 days;
o you are selling more than $100,000 worth of shares and you are requesting the
proceeds by check; or
o a proceeds check for any amount is mailed to an address other than the address
of record or not payable to the registered owner(s).
A notary public cannot provide a signature guarantee. A signature guarantee can
be obtained from one of the following sources:
o a financial representative or securities dealer;
o a federal savings bank, cooperative or other type of bank;
o a savings and loan or other thrift institution;
o a credit union; or
o a securities exchange or clearing agency.
FUND SERVICES
- -------------
EXCHANGING SHARES
You may exchange shares of your Kobrick Fund for shares of the same class of
another Kobrick Fund or another Nvest Fund or for Class A shares of the Money
Market Funds. At the discretion of NELICO or MetLife, Class Y shares of any
Deferred Compensation Accounts may be exchanged for Class A shares of any other
Kobrick Fund or Nvest Fund which does not offer Class Y shares. Class A shares
of any Kobrick Fund or Nvest Fund in a Deferred Compensation Account may also be
exchanged for Class Y shares of any Kobrick Fund or Nvest Fund. All exchanges
are subject to the eligibility requirements of the Kobrick Fund, Nvest Fund or
Money Market Fund into which you are exchanging. The exchange privilege may be
exercised only in those states where shares of Kobrick Funds, Nvest Funds or
Money Market Funds may be legally sold. For federal income tax purposes, an
exchange of Fund shares for shares of another Kobrick Fund, Nvest Fund or Money
Market Fund is generally treated as a sale on which gain or loss may be
recognized. Please refer to the Statement of Additional Information (the "SAI")
for more detailed information on exchanging Fund shares.
RESTRICTIONS ON BUYING, SELLING AND EXCHANGING SHARES
PURCHASE AND EXCHANGE RESTRICTIONS
Although the Funds do not anticipate doing so, they reserve the right to suspend
or change the terms of purchasing or exchanging shares. Each Fund and the
Distributor reserve the right to refuse or limit any purchase or exchange order
by a particular purchaser (or group of related purchasers) if the transaction is
deemed harmful to the best interest of the Fund's other shareholders or would
disrupt the management of the Fund. The Funds and the Distributor reserve the
right to restrict purchases and exchanges for the accounts of "market timers" by
limiting the transaction to a maximum dollar amount. An account will be deemed
to be one of a market timer if: (i) more than two exchange purchases of a given
Fund are made for the account in a calendar quarter or (ii) the account makes
one or more exchange purchases of a given Fund in a calendar quarter in an
aggregate amount in excess of 1% of the Fund's total net assets.
SELLING RESTRICTIONS
The table below describes restrictions placed on selling shares of any Fund
described in this Prospectus:
RESTRICTION SITUATION
The Fund may suspend the right of o When the New York Stock Exchange is
redemption or postpone payment for closed (other than a
more than 7 days: weekend/holiday)
o During an emergency
o Any other period permitted by the
SEC
The Fund reserves the right to suspend o With a notice of a dispute between
account services or refuse transaction registered owners
requests:
o With suspicion/evidence of a
fraudulent act
The Fund may pay the redemption price o When it is detrimental for the Fund
in whole or part by a distribution in to make cash payments as determined
kind of readily marketable securities in the sole discretion of the
in lieu of cash or may take up to 7 adviser
days to pay a redemption request in
order to raise capital:
The Fund may withhold redemption o When redemptions are made within 10
proceeds until the check or funds have calendar days of purchase by check
cleared: or ACH of the shares being redeemed
Telephone redemptions are not accepted for tax-qualified retirement accounts.
If you hold certificates representing your shares, they must be sent with your
request for it to be honored. The Fund recommends that certificates be sent by
registered mail.
FUND SERVICES
-------------
HOW FUND SHARES ARE PRICED
"Net asset value" is the price of one share of the Fund without a sales charge,
and is calculated each business day using this formula:
NET TOTAL MARKET VALUE OF SECURITIES + CASH AND OTHER ASSETS - LIABILITIES
ASSET = ----------------------------------------------------------------------
VALUE NUMBER OF OUTSTANDING SHARES
The net asset value of Fund shares is determined according to this schedule:
o A share's net asset value is determined at the close of regular trading on the
New York Stock Exchange (the "Exchange") on the days the Exchange is open for
trading. This is normally 4:00 p.m. Eastern time.
o The price you pay for purchasing, redeeming or exchanging a share will be
based upon the net asset value next calculated after your order is received
"in good order" by State Street Bank and Trust Company, the Fund's custodian
(plus or minus applicable sales charges as described earlier in this
Prospectus).
o Requests received by the Distributor after the Exchange closes will be
processed based upon the net asset value determined at the close of regular
trading on the next day that the Exchange is open, with the exception that
those orders received by your investment dealer before the close of the
Exchange and received by the Distributor before 5:00 p.m. Eastern time* on the
same day will be based on the net asset value determined on that day.
o A Fund heavily invested in foreign securities may have net asset value changes
on days when you cannot buy or sell its shares.
* Under limited circumstances, the Distributor may enter into a contractual
agreement where it may accept orders after 5:00 p.m., but not later than 8:00
p.m.
Generally, during times of substantial economic or market change, it may be
difficult to place your order by phone. During these times, you may deliver your
order in person to the Distributor or send your order by mail as described in
"Buying Shares" and "Selling Shares." Generally, Fund securities are valued as
follows:
o EQUITY SECURITIES -- most recent sales or quoted bid price as provided by a
pricing service.
o DEBT SECURITIES (OTHER THAN SHORT-TERM OBLIGATIONS) -- based upon pricing
service valuations.
o SHORT-TERM OBLIGATIONS (REMAINING MATURITY OF LESS THAN 60 DAYS)-- amortized
cost (which approximates market value).
o SECURITIES TRADED ON FOREIGN EXCHANGES -- most recent sale/bid price on the
non-U.S. exchange, unless an occurrence after the close of the exchange will
materially affect its value. In that case, it is given fair value as
determined by or under the direction of the Funds' Board of Trustees at the
close of regular trading on the Exchange.
o OPTIONS -- last sale price, or if not available, last offering price.
o FUTURES -- unrealized gain or loss on the contract using current settlement
price. When a settlement price is not used, futures contracts will be valued
at their fair value as determined by or under the direction of the Funds'
Board of Trustees.
o ALL OTHER SECURITIES -- fair market value as determined by the Adviser under
the direction of the Funds' Board of Trustees.
The effect of fair value pricing as described above for "Securities traded on
foreign exchanges" and "All other securities" is that securities may not be
priced on the basis of quotations from the primary market in which they are
traded but rather, may be priced by another method that the Funds' Board of
Trustees believes actually reflects fair value.
<PAGE>
FUND SERVICES
- -------------
DIVIDENDS AND DISTRIBUTIONS
The Funds generally distribute most or all of their net investment income
annually (other than capital gains) in the form of dividends. Each Fund
distributes all net realized long- and short-term capital gains annually, after
applying any available capital loss carryovers. The Funds' Board of Trustees may
adopt a different schedule as long as payments are made at least annually.
Depending on your investment goals and priorities, you may choose to:
o receive distributions from dividends and interest in cash while reinvesting
distributions from capital gains in additional shares of the same class of the
Fund, or in the same class of another Kobrick Fund or Nvest Fund.
o receive all distributions in cash.
Unless you select one of the options set forth above, distributions will
automatically be reinvested in shares of the same class of the Fund.
For more information or to change your distribution option, contact Kobrick
Funds in writing or call 1-888-523-8631.
If you earn more than $10 annually in taxable income from a non-retirement plan
Fund, you will receive a Form 1099 to help you report the prior calendar year's
distributions on your federal income tax return. Be sure to keep the Form 1099
as a permanent record. A fee may be charged for any duplicate information
requested.
TAX CONSEQUENCES
Each Fund intends to meet all requirements of the Internal Revenue Code
necessary to qualify as a "regulated investment company" and thus does not
expect to pay any federal income tax on income and capital gains distributed to
shareholders.
Fund distributions paid to you either in cash or reinvested in additional shares
are generally taxable to you either as ordinary income or as capital gains.
Distributions derived from short-term capital gains or investment income are
generally taxable at ordinary income rates. If you are a corporation investing
in a Fund, a portion of these dividends may qualify for the dividends-received
deduction provided that you meet certain holding period requirements.
Distributions of gains from investments that a Fund owned for more than one year
that are designated by a Fund as capital gain dividends will generally be
taxable to a shareholder receiving such distributions as long-term capital gain,
regardless of how long the shareholder has held Fund shares.
An exchange of shares for shares of another Kobrick Fund, Nvest Fund or Money
Market Fund is generally treated as a sale, and any resulting gain or loss may
be subject to federal income tax. If you purchase shares of a Fund shortly
before it declares a capital gain distribution or a dividend, a portion of the
purchase price may be returned to you as a taxable distribution.
You should consult your tax adviser about any federal, state and local taxes
that may apply to the distributions you receive.
As of the date of this Prospectus, a single investor owns a significant portion
of the shares of each Fund. Redemption by this investor of all or a substantial
part of its investment in a Fund could require the Adviser to sell a large
amount of portfolio securities. Such sales could result in the realization of
capital gains, which would be required to be distributed to shareholders of the
affected Fund.
<PAGE>
FUND SERVICES
-------------
COMPENSATION TO SECURITIES DEALERS
As part of their business strategies, the Funds may pay securities dealers that
sell their shares. This compensation originates from two sources: sales charges
(front-end or deferred) and 12b-1 fees (comprising the annual service and/or
distribution fees of a plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940). The sales charges are detailed in the section entitled
"How Sales Charges are Calculated." Class A shares pays an annual service fee of
0.25% of its average daily net assets. Generally, the 12b-1 fees are paid to
securities dealers on a quarterly basis.
The Distributor may, at its expense, pay concessions in addition to the payments
described above to dealers which satisfy certain criteria established from time
to time by the Distributor relating to increasing net sales of shares of the
Kobrick Funds or other Nvest Funds over prior periods and certain other factors.
See the SAI for more details.
<PAGE>
FUND PERFORMANCE
- ----------------
The financial highlights table is intended to help you understand each Fund's
financial performance since the Fund's commencement of operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the return that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with each Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
KOBRICK FUNDS
<TABLE>
<CAPTION>
KOBRICK CAPITAL FUND KOBRICK EMERGING GROWTH FUND KOBRICK GROWTH FUND
CLASS A CLASS A CLASS A
----------------------------- ---------------------------- -----------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
DECEMBER 31, DECEMBER 31, SEPTEMBER 1,
YEAR ENDED 1997* THROUGH YEAR ENDED 1997* THROUGH YEAR ENDED 1998* THROUGH
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998 1999 1998
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.71 $ 10.00 $ 10.14 $ 10.00 $ 10.32 $ 10.00
Income (Loss) from investment operations:
Net investment income (loss) (c) (0.18) (0.13) (0.18) (0.11) (0.08) 0.00
Net realized and unrealized gain
(loss) on investments 6.68 0.84 6.58 0.25(d) 5.17(d) 0.32
--------- ------- ------- ------- ------- -------
Total from investment operations 6.50 0.71 6.40 0.14 5.09 0.32
--------- ------- ------- ------- ------- -------
Net asset value, end of period $ 17.21 $ 10.71 $ 16.54 $ 10.14 $ 15.41 $ 10.32
========= ======= ======= ======= ======= =======
Total Return (a) 60.69% 7.10% 63.12% 1.40% 49.35% 3.20%
Ratios and Supplemental Data
Net Assets, end of period (000s) $ 102,879 $27,463 $52,175 $18,330 $46,827 $ 1,054
Ratios to average net assets:
Net expenses (b) 1.75 % 1.75% 1.75% 1.75% 1.40% 1.40%
Expenses before fee waiver (b) 1.77 % 2.21% 2.08% 2.24% 2.13% 11.11%
Net investment income (loss)(b) (1.09) % (1.38)% (1.24) % (1.16)% (0.55)% 0.32%
Portfolio turnover rate 778 % 350% 442% 287% 632% 11%
* Commencement of Operations
(a) Total Returns are historical and assume changes in share price and reinvestments of dividends. Had certain expenses not been
reduced during the periods shown, total returns
would have been lower. Periods of less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Computed using the average shares method.
(d) 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>
<PAGE>
GLOSSARY OF TERMS
BID PRICE -- The price a prospective buyer is ready to pay. This term is used by
traders who maintain firm bid and offer prices in a given security by standing
ready to buy or sell security units at publicly quoted prices.
BOTTOM-UP APPROACH -- The search for outstanding performance by first
considering individual companies before considering the impact of industry and
economic trends.
CAPITAL GAIN DISTRIBUTIONS -- Payments to a Fund's shareholders of profits
earned from selling securities in a Fund's portfolio. Capital gain distributions
are usually paid once a year.
DERIVATIVE -- A financial instrument whose value and performance are based on
the value and performance of another security or financial instrument.
DIVERSIFICATION -- The strategy of investing in a wide range of companies or
industries to reduce the risk if an individual company or sector of the market
suffers losses.
EARNINGS GROWTH -- A pattern of increasing rate of growth in earnings per share
from one period to another, which usually causes a stock's price to rise.
FUNDAMENTAL ANALYSIS -- An analysis of the balance sheet and income statements
of a company in order to forecast its future stock price movements. Fundamental
analysis considers records of assets, earnings, sales, products, research and
development and markets in predicting future trends in these indicators of a
company's success or failure.
GROWTH INVESTING -- An investment style that emphasizes companies with strong
earnings growth. Growth investing is generally considered more aggressive than
"value" investing.
INCOME DISTRIBUTIONS -- Payments to a Fund's shareholders resulting from the net
interest or dividend income earned by a Fund's portfolio.
MARKET CAPITALIZATION -- Market price multiplied by number of shares
outstanding. The figures used to distinguish small, medium and large market
capitalizations may vary depending upon the index being used and/or the
guidelines set by the portfolio manager.
NET ASSET VALUE (NAV) -- The market value of one share of the Fund on any given
day without a front-end sales charge or CDSC. It is determined by dividing the
Fund's total net assets by the number of shares outstanding.
QUALITATIVE ANALYSIS -- An analysis of the qualities possessed by a company,
including its management, products and competitive positions, to help determine
if the company can execute its strategies.
TARGET PRICE -- Price that an investor is hoping a stock he or she has just
bought will rise to within a specified period of time. An investor may buy XYZ
at $20, with a target price of $40 in one year's time, for instance.
TOTAL RETURN -- The change in value of an investment in the Fund over a specific
time period expressed as a percentage. Total returns assume all earnings are
reinvested in additional shares of the Fund.
VOLATILITY -- The general variability of a portfolio's value resulting from
price fluctuations of its investments. In most cases, the more diversified a
portfolio is, the less volatile it will be.
<PAGE>
[graphic omitted]
IF YOU WOULD LIKE MORE INFORMATION ABOUT THE FUND, THE
FOLLOWING DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL AND SEMIANNUAL REPORTS -- Provide additional
information about the Fund's investments. Each report includes a
discussion of the market conditions and investment strategies
that significantly affected the Fund's performance during its
last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI) -- Provides
more detailed information about the Fund, has been filed
with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference.
TO ORDER A FREE COPY OF THE FUND'S ANNUAL OR
SEMIANNUAL REPORT OR ITS SAI, CONTACT YOUR FINANCIAL
REPRESENTATIVE, OR THE FUNDS AT:
Nvest Funds Distributor, L.P.
399 Boylston Street
Boston, Massachusetts 02116
Telephone: 800-225-5478
Internet: www.nvestfunds.com
Your financial representative or Nvest Funds
will also be happy to answer your questions or to provide any
additional information that you may require.
You can review the Fund's reports and SAI at the
Public Reference Room of the Securities and Exchange
Commission. Text-only copies are available free from
the Commission's Web site at: www.sec.gov.
Copies of these publications are also available for a fee by
writing or calling the Public Reference Room of the SEC,
Washington, D.C. 20549-6009
Telephone: 800-SEC-0330
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.
[graphic omitted]
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KOBRICK FUNDS
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CLASS A AND Y SHARES OF:
KOBRICK CAPITAL FUND
KOBRICK EMERGING GROWTH FUND
KOBRICK GROWTH FUND
Investment Company Act File No. 811-8435
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YK51-0200
<PAGE>
NVEST KOBRICK INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1999
As Revised February 1, 2000
Kobrick Capital Fund
Kobrick Emerging Growth Fund
Kobrick Growth Fund
This Statement of Additional Information (the "Statement") is not a prospectus.
This Statement relates to the Prospectuses of Kobrick Capital Fund, Kobrick
Emerging Growth Fund and Kobrick Growth Fund Classes A, B, and C shares and
Classes A and Y shares, each dated November 1, 1999 as revised February 1, 2000
(the "Prospectus" or "Prospectuses") and should be read in conjunction
therewith. A copy of the Prospectuses can be obtained from Nvest Funds
Distributor, L.P. (the "Distributor"), 399 Boylston Street, Boston,
Massachusetts 02116.
The Nvest Kobrick Investment Trust's financial statements and accompanying notes
are incorporated by reference into this Statement. The Trust's annual and
semiannual reports contain additional performance information and are available
upon request and without charge by calling 800-225-5478.
<PAGE>
Nvest Kobrick Investment Trust
101 Federal Street
Boston, Massachusetts 02110
Table of Contents
The Trust 3
Investment Limitations 3
Additional Information Concerning Certain Investment Techniques 5
Debt Instruments and Permitted Cash Investments 11
Quality Ratings of Corporate Bonds and Preferred Stocks 13
Trustees and Officers 14
The Investment Adviser 17
Distribution Agreement and 12b-1 Plans 18
Securities Transactions 23
Portfolio Turnover 24
How to Buy Shares 25
Net Asset Value and Public Offering Price 25
Reduced Sale Charges - Class A Shares Only 26
Shareholder Services 28
Open Accounts 29
Automatic Investment Plans 29
Retirement Plans Offering Tax Benefits 29
Systematic Withdrawal Plans 30
Dividend Diversification Program 30
Exchange Privilege 30
Automatic Exchange Plan 33
Broker Trading Privileges 33
NvestPRO 33
Self-Servicing Your Account 33
Redemptions 35
Standard Performance Measures 37
Investment Performance of the Funds 40
Income Dividends, Capital Gain Distributions and Tax Status 42
Financial Statements 44
Appendix A - Publications That May Contain Fund Information 45
Appendix B - Advertising and Promotional Literature 46
<PAGE>
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THE TRUST
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Nvest Kobrick Investment Trust (the "Trust") was organized as a
Massachusetts business trust on October 10, 1997. The Trust currently offers
three series of shares to investors: the Kobrick Capital Fund, the Kobrick
Emerging Growth Fund and the Kobrick Growth Fund (referred to individually as a
"Fund" and collectively as the "Funds"). Each Fund has its own investment
objective and policies. The Trust is a diversified, open-end management
investment company.
Each share of a Fund represents an equal proportionate interest in the
assets and liabilities belonging to that Fund with each other share of that Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interest in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees determine to be fair and equitable. Generally, the
Trustees allocate such expenses on the basis of relative net assets or number of
shareholders. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
Under Massachusetts law, under certain circumstances, shareholders of a
Massachusetts business trust could be deemed to have the same type of personal
liability for the obligations of the Trust as does a partner of a partnership.
However, numerous investment companies registered under the Investment Company
Act of 1940 have been formed as Massachusetts business trusts and the Trust is
not aware of any instance where such result has occurred. In addition, the
Master Trust Agreement disclaims shareholder liability for acts or obligations
of the Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or the
Trustees. The Master Trust Agreement also provides for the indemnification out
of the Trust property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Moreover, it provides that
the Trust will, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. As a result, and particularly because the Trust assets are readily
marketable and ordinarily substantially exceed liabilities, management believes
that the risk of shareholder liability is slight and limited to circumstances in
which the Trust itself would be unable to meet its obligations. Management
believes that, in view of the above, the risk of personal liability is remote.
Under the Master Trust Agreement of the Trust, no annual or regular
meeting of shareholders is required. Thus, there will ordinarily be no
shareholder meetings unless required by the Investment Company Act of 1940. At
that time, a meeting of shareholders will be called. Under the Master Trust
Agreement, any Trustee may be removed by vote of two-thirds of the outstanding
Trust shares and holders of 10% or more of the outstanding shares of the Trust
can require that the Trustees call a meeting of shareholders for purposes of
voting on the removal of one or more Trustees. In connection with such meetings
called by shareholders, shareholders will be assisted in shareholder
communications to the extent required by applicable law.
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INVESTMENT LIMITATIONS
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The Trust has adopted certain fundamental investment limitations designed
to reduce the risk of an investment in the Funds. These limitations may not be
changed with respect to any Fund without the affirmative vote of a majority of
the outstanding shares of that Fund. The vote of a majority of the outstanding
voting shares of a Fund means the vote (A) of 67% or more of the voting shares
present at a meeting, if the holders of more than 50% of the outstanding voting
shares of the Trust are present or represented by proxy; or (B) of more than 50%
of the outstanding voting shares of the Trust, whichever is less.
The limitations applicable to each Fund are:
1. Borrowing Money. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is asset coverage of 300%
for all borrowings of the Fund; or (b) from a bank for temporary purposes only,
provided that, when made, such temporary borrowings are in an amount not
exceeding 5% of the Fund's total assets.
2. Pledging. The Fund will not mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any security owned or held by the Fund
except as may be necessary in connection with borrowings described in limitation
(1) above. The Fund will not mortgage, pledge or hypothecate more than one-third
of its assets in connection with borrowings. Deposit of payment by the Fund of
initial or maintenance margin in connection with futures contracts and related
options is not considered a pledge or hypothecation of assets.
3. Margin Purchases. The Fund will not purchase any securities on "margin"
(except such short-term credits as are necessary for the clearance of
transactions). The deposit of funds in connection with transactions in options,
futures contracts, and options on such contracts will not be considered a
purchase on "margin."
4. Short Sales. The Fund will not make short sales of securities, or maintain a
short position, other than short sales "against the box."
5. Commodities. The Fund will not purchase or sell commodities or commodity
contracts including futures, or purchase or write put or call options on
commodities, except that the Fund may purchase or sell financial futures
contracts and related options.
6. Underwriting. The Fund will not act as underwriter of securities issued by
other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities, a Fund may be deemed an
underwriter under certain federal securities laws.
7. Real Estate. The Fund will not purchase, hold or deal in real estate or real
estate mortgage loans, including real estate limited partnership interests,
except that the Fund may purchase (a) securities of companies (other than
limited partnerships) which deal in real estate or (b) securities which are
secured by interests in real estate or by interests in mortgage loans including
securities secured by mortgage-backed securities.
8. Loans. The Fund will not make loans to other persons, except (a) by loaning
portfolio securities, or (b) by engaging in repurchase agreements. For purposes
of this limitation, the term "loans" shall not include the purchase of bonds,
debentures, commercial paper or corporate notes, and similar marketable
evidences of indebtedness.
9. Industry Concentration. The Fund will not invest more than 25% of its total
assets in any particular industry, except in the case of U.S.
Government securities.
10. Senior Securities. The Fund will not issue or sell any senior security as
defined by the Investment Company Act of 1940 except in so far as any borrowing
that the Fund may engage in may be deemed to be an issuance of a senior
security.
The Trust does not intend to pledge, mortgage or hypothecate the assets of
any Fund. The statements of intention in this paragraph reflect nonfundamental
policies which may be changed by the Board of Trustees without shareholder
approval.
Other current investment policies of each of the Funds, which are not
fundamental and which may be changed by action of the Board of Trustees without
shareholder approval, are as follows:
1. Illiquid Investments. The Fund will not purchase securities for which no
readily available market exists or engage in a repurchase agreement maturing in
more than seven days if, as a result thereof, more than 15% of the value of the
net assets of the Fund would be invested in such securities and the Fund will
not purchase restricted securities (excluding securities eligible for resale
under Rule 144A and commercial paper issued under Section 4(2) of the Securities
Act of 1933) if, as a result thereof, more than 10% of the value of the net
assets of the Fund would be invested in such securities.
2. Investing for Control. The Fund will not invest in companies for the purpose
of exercising control or management.
3. Issuer Concentration. The Fund will not purchase a security of any one issuer
if such purchase at the time thereof would cause (a) more than 10% of the Fund's
total assets to be invested in the securities of any one issuer or (b) cause
more than 10% of any class of securities of such issuer to be held by the Fund.
4. Other Investment Companies. The Fund will not invest more than 10% of its
total assets in securities of other investment companies. The Fund will not
invest more than 5% of its total assets in the securities of any single
investment company. The Fund will not hold more than 3% of the outstanding
voting stock of any single investment company.
With respect to the percentages adopted by the Trust as maximum
limitations on a Fund's investment policies and restrictions, an excess above
the fixed percentage (except for the percentage limitations relative to the
borrowing of money and the holding of illiquid securities) will not be a
violation of the policy or restriction unless the excess results immediately and
directly from the acquisition of any security or the action taken.
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ADDITIONAL INFORMATION CONCERNING CERTAIN INVESTMENT TECHNIQUES
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Among other investments described below, each Fund may buy and sell
futures contracts, options on securities, options on securities indices, options
on futures contracts, foreign investments, currencies, repurchase agreements,
reverse repurchase agreements, swap arrangements, "when issued" securities and
may enter into closing transactions with respect to each of the foregoing, and
invest in other derivatives and engage in securities lending under circumstances
in which such instruments and techniques are expected by Kobrick Funds LLC (the
"Investment Adviser") to aid in achieving the investment objective of the Funds.
Each Fund on occasion may also purchase instruments with characteristics of both
futures and securities (e.g., debt instruments with interest and principal
payments determined by reference to the value of a currency at a future time)
and which, therefore, possess the risks of both futures and securities
investments. In addition, each Fund may purchase securities offered pursuant to
an initial public offering.
Futures Contracts
Futures contracts are publicly traded contracts to buy or sell underlying
assets, such as certain securities, currencies, or an index of securities, at a
future time at a specified price. A contract to buy establishes a "long"
position while a contract to sell establishes a "short" position.
The purchase of a futures contract on securities or an index of securities
normally enables a buyer to participate in the market movement of underlying
asset or index after paying a transaction charge and posting margin in an amount
equal to a small percentage of the value of the underlying asset or index. Each
Fund will initially be required to deposit with the Trust's custodian or the
broker effecting the futures transaction an amount of "initial margin" in cash
or U.S. Treasury obligations.
Initial margin in futures transactions is different from margin in
securities transactions in that the former does not involve the borrowing of
funds by the customer to finance the transaction. Rather, the initial margin is
like a performance bond or good faith deposit on the contract. Subsequent
payments (called "maintenance margin") to and from the broker will be made on a
daily basis as the price of the underlying assets fluctuates. This process is
known as "marking to market." For example, when a Fund has taken a long position
in a futures contract and the value of the underlying asset has risen, that
position will have increased in value and the applicable Fund will receive from
the broker a maintenance margin payment equal to the increase in value of the
underlying asset. Conversely, when a Fund has taken a long position in a futures
contract and the value of the underlying instrument has declined, the position
would be less valuable, and the applicable Fund would be required to make a
maintenance margin payment to the broker. At any time prior to expiration of the
futures contract, the Fund may elect to close the position by taking an opposite
position which will terminate the Fund's position in the futures contract. A
final determination of maintenance margin is then made, additional cash is
required to be paid by or released to the Fund, and the Fund realizes a loss or
a gain. While futures contracts with respect to securities do provide for the
delivery and acceptance of such securities, such delivery and acceptance are
seldom made.
Futures contracts will be executed primarily (a) to establish a short
position, and thus protect the Fund from experiencing the full impact of an
expected decline in market value of portfolio holdings without requiring the
sale of holdings, or (b) to establish a long position, and thus to participate
in an expected rise in market value of securities or currencies which the Fund
intends to purchase. Subject to the limitations described above, each Fund may
also enter into futures contracts for purposes of enhancing return. In
transactions establishing a long position in a futures contract, money market
instruments equal to the face value of the futures contract will be identified
by the Fund to the Trust's custodian for maintenance in a separate account to
insure that the use of such futures contracts is unleveraged. Similarly, a
representative portfolio of securities having a value equal to the aggregate
face value of the futures contract will be identified with respect to each short
position. Each Fund will employ any other appropriate method of cover which is
consistent with applicable regulatory and exchange requirements.
Options on securities
Each Fund may use options on securities to implement its investment
strategy. A call option on a security, for example, gives the purchaser of the
option the right to buy, and the writer the obligation to sell, the underlying
asset at the exercise price during the option period. Conversely, a put option
on a security gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying asset at the exercise price during the option
period.
Purchased options have defined risk, i.e., the premium paid for the
option, no matter how adversely the price of the underlying asset moves, while
affording an opportunity for gain corresponding to the increase or decrease in
the value of the optioned asset.
Written options have varying degrees of risk. An uncovered written call
option theoretically carries unlimited risk, as the market price of the
underlying asset could rise far above the exercise price before its expiration.
This risk is tempered when the call option is covered, i.e., when the option
writer owns the underlying asset. In this case, the writer runs the risk of the
lost opportunity to participate in the appreciation in value of the asset rather
than the risk of an out-of-pocket loss. A written put option has defined risk,
i.e., the difference between the agreed-upon price that a Fund must pay to the
buyer upon exercise of the put and the value, which could be zero, of the asset
at the time of exercise.
The obligation of the writer of an option continues until the writer
effects a closing purchase transaction or until the option expires. To secure
his obligation to deliver the underlying asset in the case of a call option, or
to pay for the underlying asset in the case of a put option, a covered writer is
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the applicable clearing corporation and exchanges.
Options on securities indices
Each Fund may engage in transactions in call and put options on securities
indices. For example, a Fund may purchase put options on indices of securities
in anticipation of or during a market decline to attempt to offset the decrease
in market value of its securities that might otherwise result.
Put options on indices of securities are similar to put options on the
securities themselves except that the delivery requirements are different.
Instead of giving the right to make delivery of a security at a specified price,
a put option on an index of securities gives the holder the right to receive an
amount of cash upon exercise of the option if the value of the underlying index
has fallen below the exercise price. The amount of cash received will be equal
to the difference between the closing price of the index and the exercise price
of the option expressed in dollars times a specified multiple. As with options
on securities, a Fund may offset its position in index options prior to
expiration by entering into a closing transaction on an exchange or it may let
the option expire unexercised.
A securities index assigns relative values to the securities included in
the index and the index options are based on a broad market index. Although
there are at present few available options on indices of fixed income
securities, other than tax-exempt securities, or futures and related options
based on such indices, such instruments may become available in the future. In
connection with the use of such options, a Fund may cover its position by
identifying a representative portfolio of securities having a value equal to the
aggregate face value of the option position taken. However, a Fund may employ
any appropriate method to cover its positions that is consistent with applicable
regulatory and exchange requirements.
Options on Futures Contracts
An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option.
Options Strategy
A basic option strategy for protecting a Fund against a decline in
securities prices could involve (a) the purchase of a put -- thus "locking in"
the selling price of the underlying securities or securities indices -- or (b)
the writing of a call on securities or securities indices held by the Fund --
thereby generating income (the premium paid by the buyer) by giving the holder
of such call the option to buy the underlying asset at a fixed price.The premium
will offset, in whole or in part, a decline in portfolio value; however, if
prices of the relevant securities or securities indices rose instead of falling,
the call might be exercised, thereby resulting in losing the ability to
participate in the appreciation of the underlying securities or securities
indices.
A basic option strategy when a rise in securities prices is anticipated is
the purchase of a call -- thus "locking in" the purchase price of the
underlying security or other asset. In transactions involving the purchase of
call options by a Fund, money market instruments equal to the aggregate exercise
price of the options will be identified by the Fund to the Trust's custodian to
insure that the use of such investments is unleveraged.
Each Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and concurrently write a call option
against that security. If the call option is exercised in such a transaction,
the Fund's maximum gain will be the premium received by it for writing the
option, adjusted upward or downward by the difference between the Fund's
purchase price of the security and the exercise price of the option. If the
option is not exercised and the price of the underlying security declines, the
amount of such decline will be offset in part, or entirely, by the premium
received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund's return will be the premium received from
writing the put option minus the amount by which the market price of the
security is below the exercise price.
Limitations and Risks of Options and Futures Activity
Each Fund will engage in transactions in futures contracts or options
primarily as a hedge against changes resulting from market conditions which
produce changes in the values of its securities or the securities which it
intends to purchase (e.g., to replace portfolio securities which will mature in
the near future) or subject to the limitations described below, to enhance
return. No Fund will purchase any futures contract or purchase any call option
if, immediately thereafter, more than one third of such Fund's net assets would
be represented by long futures contracts or call options. No Fund will write a
covered call or put option if, immediately thereafter, the aggregate value of
the assets (securities in the case of written calls and cash or cash equivalents
in the case of written puts) underlying all such options, determined as of the
dates such options were written, would exceed 25% of such Fund's net assets. In
addition, no Fund may establish a position in a commodity futures contract or
purchase or sell a commodity option contract for other than bona fide hedging
purposes if immediately thereafter the sum of the amount of initial margin
deposits and premiums required to establish such positions for such nonhedging
purposes would exceed 5% of the market value of such Fund's net assets.
Although effective hedging can generally capture the bulk of a desired
risk adjustment, no hedge is completely effective. A Fund's ability to hedge
effectively through transactions in futures and options depends on the degree to
which price movements in its holdings correlate with price movements of the
futures and options.
Some positions in futures and options may be closed out only on an
exchange which provides a secondary market therefor. There can be no assurance
that a liquid secondary market will exist for any particular futures contract or
option at any specific time. Thus, it may not be possible to close such an
option or futures position prior to maturity. The inability to close options and
futures positions also could have an adverse impact on the Fund's ability to
effectively hedge its securities and might in some cases require the Fund to
deposit cash to meet applicable margin requirements. The Funds will enter into
an option or futures position only if it appears to be a liquid investment.
Foreign Investments
The Funds reserve the right to invest without limitation in securities of
non-U.S. issuers directly, or indirectly in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs") or similar securities
representing interests in the securities of foreign issuers. Under current
policy, however, each Fund limits such investments, including ADRs and EDRs, to
a maximum of 35% of its total assets.
ADRs are receipts, typically issued by a U.S. bank or trust company, which
evidence ownership of underlying securities issued by a foreign corporation or
other entity. EDRs are receipts issued in Europe which evidence a similar
ownership arrangement. Generally, ADRs in registered form are designed for use
in U.S. securities markets and EDRs are designed for use in European securities
markets. The underlying securities are not always denominated in the same
currency as the ADRs or EDRs. Although investment in the form of ADRs or EDRs
facilitates trading in foreign securities, it does not mitigate all the risks
associated with investing in foreign securities.
ADRs are available through facilities which may be either "sponsored" or
"unsponsored." In a sponsored arrangement, the foreign issuer establishes the
facility, pays some or all of the depository's fees, and usually agrees to
provide shareholder communications. In an unsponsored arrangement, the foreign
issuer is not involved, and the ADR holders pay the fees of the depository.
Sponsored ADRs are generally more advantageous to the ADR holders and the issuer
than are unsponsored ADRs. More and higher fees are generally charged in an
unsponsored program compared to a sponsored facility. Only sponsored ADRs may be
listed on the New York or American Stock Exchanges. Unsponsored ADRs may prove
to be more risky, due to (a) the additional costs involved to the Funds; (b) the
relative illiquidity of the issue in U.S. markets; and (c) the possibility of
higher trading costs in the over-the-counter market as opposed to exchange based
trading. Each Fund will take these and other risk considerations into account
before making an investment in an unsponsored ADR.
To the extent a Fund invests in securities of issuers in less developed
countries or emerging foreign markets, it will be subject to a variety of
additional risks, including risks associated with political instability,
economies based on relatively few industries, lesser market liquidity, high
rates of inflation, significant price volatility of portfolio holdings and high
levels of external debt in the relevant country.
Although each Fund may invest in securities denominated in foreign
currencies, each Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of a Fund's shares may fluctuate with U.S. dollar
exchange rates as well as with price changes of the Fund's securities in the
various local markets and currencies. Thus, an increase in the value of the U.S.
dollar compared to the currencies in which a Fund makes its investments could
reduce the effect of increases and magnify the effect of decreases in the prices
of the Fund's securities in their local markets. Conversely, a decrease in the
value of the U.S. dollar will have the opposite effect of magnifying the effect
of increases and reducing the effect of decreases in the prices of a Fund's
securities in the local markets.
Currency Transactions
Each Fund's dealings in forward currency exchange contracts will be
limited to hedging involving either specific transactions or aggregate portfolio
positions. A forward currency contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are not commodities and are entered into
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. Although spot and forward contracts
will be used primarily to protect the Fund from adverse currency movements, they
also involve the risk that anticipated currency movements will not be accurately
predicted, which may result in losses to each Fund. This method of protecting
the value of a Fund's portfolio securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices of the
securities. It simply establishes a rate of exchange that can be achieved at
some future point in time. Although such contracts tend to minimize the risk of
loss due to a decline in the value of hedged currency, they tend to limit any
potential gain that might result should the value of such currency increase.
Repurchase Agreements
Each Fund may enter into repurchase agreements. Repurchase agreements
occur when a Fund acquires a security and the seller, which may be either (i) a
primary dealer in U.S. Government securities or (ii) an FDIC-insured bank having
gross assets in excess of $500 million, simultaneously commits to repurchase it
at an agreed-upon price on an agreed-upon date within a specified number of days
(usually not more than seven) from the date of purchase. The repurchase price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the acquired security. A Fund will
only enter into repurchase agreements involving U.S. Government securities.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities. Repurchase
agreements with maturities greater than seven days when combined with other
illiquid securities will be limited to 15% of each Fund's net assets.
Reverse Repurchase Agreements
Each Fund may enter into reverse repurchase agreements. However, a Fund
may not engage in reverse repurchase agreements in excess of 5% of the
applicable Fund's total assets. In a reverse repurchase agreement the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed-upon rate. The ability to use
reverse repurchase agreements may enable, but does not ensure the ability of, a
Fund to avoid selling portfolio instruments at a time when a sale may be deemed
to be disadvantageous. When effecting reverse repurchase agreements, assets of
the applicable Fund in a dollar amount sufficient to make payment of the
obligations to be purchased are segregated on the applicable Fund's records at
the trade date and maintained until the transaction is settled.
Swap Arrangements
Each Fund may enter into various forms of swap arrangements with
counterparties with respect to interest rates, currency rates, securities or
indices, including the purchase of caps, floors and collars as described below.
In an interest rate swap a Fund could agree for a specific period to pay a bank
or investment banker the floating rate of interest on a so-called notional
principal amount (i.e., an assumed figure selected by the parties for this
purpose) in exchange for agreement by the bank or investment banker to pay the
Fund a fixed rate of interest on the notional principal amount. In a currency
swap a Fund would agree with the other party to exchange cash flows based on the
relative differences in values of a notional amount of two (or more) currencies;
in an index swap, a Fund would agree to exchange cash flows on a notional amount
based on changes in the values of the selected indices. Purchase of a cap
entitles the purchaser to receive payments from the seller on a notional amount
to the extent that the selected index exceeds an agreed upon interest rate or
amount whereas purchase of a floor entitles the purchaser to receive such
payments to the extent the selected index falls below an agreed upon interest
rate or amount. A collar combines a cap and a floor.
Most swaps entered into by a Fund will be on a net basis; for example, in
an interest rate swap, amounts generated by application of the fixed rate and
the floating rate to the notional principal amount would first offset one
another, with the Fund either receiving or paying the difference between such
amounts. In order to be in a position to meet any obligations resulting from
swaps, the applicable Fund will set up a segregated custodial account to hold
appropriate liquid assets, including cash; for swaps entered into on a net
basis, assets will be segregated having a daily net asset value equal to any
excess of the applicable Fund's accrued obligations over the accrued obligations
of the other party, while for swaps on other than a net basis assets will be
segregated having a value equal to the total amount of the applicable Fund's
obligations.
These arrangements will be made primarily for hedging purposes, to
preserve the return on an investment or on a portion of the applicable Fund's
portfolio. However, a Fund may enter into such arrangements for income purposes
to the extent permitted by the Commodities Futures Trading Commission for
entities which are not commodity pool operators, such as the Fund. In entering a
swap arrangement, a Fund is dependent upon the creditworthiness and good faith
of the counterparty. Each Fund attempts to reduce the risks of nonperformance by
the counterparty by dealing only with established, reputable institutions. The
swap market is still relatively new and emerging; positions in swap arrangements
may become illiquid to the extent that nonstandard arrangements with one
counterparty are not readily transferable to another counterparty or if a market
for the transfer of swap positions does not develop. The use of interest rate
swaps is a highly specialized activity which involves investment techniques and
risks different from those associated with ordinary portfolio securities
transactions. If the Investment Adviser is incorrect in its forecasts of market
values, interest rates and other applicable factors, the investment performance
of the applicable Fund would diminish compared with what it would have been if
these investment techniques were not used. Moreover, even if the Investment
Adviser is correct in its forecast, there is a risk that the swap position may
correlate imperfectly with the price of the asset or liability being hedged.
When-issued Securities
Each Fund may purchase "when-issued" equity securities, which are traded
on a price basis prior to actual issuance. Such purchases will be made only to
achieve a Fund's investment objective and not for leverage. The when-issued
trading period generally lasts from a few days to months, or over a year or
more; during this period dividends on equity securities are not payable. No
dividend income accrues to the Fund prior to the time it takes delivery. A
frequent form of when-issued trading occurs when corporate securities to be
created by a merger of companies are traded prior to the actual consummation of
the merger. Such transactions may involve a risk of loss if the value of the
securities fall below the price committed to prior to the actual issuance. The
Trust's custodian will establish a segregated account for each Fund when it
purchases securities on a when- issued basis consisting of cash or liquid
securities equal to the amount of the when-issued commitments. Securities
transactions involving delayed deliveries or forward commitments are frequently
characterized as when-issued transactions and are similarly treated by each
Fund.
Securities Lending
Each Fund may seek additional income by lending portfolio securities to
qualified institutions having a value of up to 33 1/3% of each Fund's assets.
The Fund will receive cash or cash equivalent (e.g. Government obligations) as
collateral in an amount at least equal to 100% of the current market value of
the loaned securities plus accrued interest. The collateral will generally be
held in the form received, although cash may be invested in securities issued or
guaranteed by the U.S. Government and/or irrevocable stand-by letters of credit.
By reinvesting cash it receives in these transactions, a Fund could magnify any
gain or loss it realizes on the underlying investment. If the borrower fails to
return the securities and the collateral is insufficient to cover the loss, the
Fund could lose money.
Illiquid Securities (Rule 144 and Section 4(2) commercial paper)
Illiquid securities are those which are not readily resalable, which may
include securities whose disposition is restricted by federal securities laws.
Rule 144A securities are privately offered securities that can be resold only to
certain qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933. Certain Funds may also purchase commercial paper issued
under Section 4(2) of the Securities Act of 1933. Investing in Rule 144A
securities and Section 4(2) commercial paper could have the effect of increasing
the level of a Fund's illiquidity to the extent that qualified institutional
buyers become, for a time, uninterested in purchasing these securities. Rule
144A securities and Section 4(2) commercial paper are treated as illiquid,
unless the Investment Advisor has determined, under guidelines established by
the Trust's Board of Trustees, that the particular issue of Rule 144A securities
is liquid. Also, a Fund may incur expenses, losses or delays in the process of
registering restricted securities prior to resale, which would have an adverse
effect on the Fund.
Short Sales
Each Fund may sell securities short against the box, that is: (1) enter
into short sales of securities that it currently owns or has the right to
acquire through the conversion or exchange of other securities that it owns
without additional consideration; and (2) enter into arrangements with the
broker-dealers through which such securities are sold short to receive income
with respect to the proceeds of short sales during the period the Fund's short
positions remain open. A Fund may make short sales of securities only if at all
times when a short position is open the Fund owns at least an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.
In a short sale against the box, a Fund does not deliver from its
portfolio the securities sold and does not receive immediately the proceeds from
the short sale. Instead, the Fund borrows the securities sold short from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the purchaser of such
securities. Such broker-dealer is entitled to retain the proceeds from the short
sale until the Fund delivers to such broker-dealer the securities sold short. In
addition, the Fund is required to pay to the broker-dealer the amount of any
dividends paid on shares sold short. Finally, to secure its obligation to
deliver to such broker-dealer the securities sold short, the Fund must deposit
and continuously maintain in a separate account with the Fund's custodian an
equivalent amount of the securities sold short or securities convertible into or
exchangeable for such securities without the payment of additional
consideration. A Fund is said to have a short position in the securities sold
until it delivers to the broker-dealer the securities sold, at which time the
Fund receives the proceeds of the sale. A Fund may close out a short position by
purchasing on the open market and delivering to the broker-dealer an equal
amount of the securities sold short, rather than by delivering portfolio
securities.
Short sales may protect a Fund against risk of losses in the value of its
portfolio securities because any unrealized losses with respect to such
portfolio securities should be wholly or partially offset by a corresponding
gain in the short position. However, any potential gains in such portfolio
securities should be wholly or partially offset by a corresponding loss in the
short position. The extent to which such gains or losses are offset will depend
upon the amount of securities sold short relative to the amount the Fund owns,
either directly or indirectly, and, in the case where the Fund owns convertible
securities, changes in the conversion premium.
Short sale transactions involve certain risks. If the price of the
security sold short increases between the time of the short sale and the time
the Fund replaces the borrowed security, the Fund will incur a loss and if the
price declines during this period, the Fund will realize a short-term capital
gain. Any realized short-term capital gain will be decreased, and any incurred
loss increased, by the amount of transaction costs and any premium, dividend or
interest which the Fund may have to pay in connection with such short sale.
Certain provisions of the Internal Revenue Code of 1986, as amended, (the
"Code") may limit the degree to which a Fund is able to enter into short sales.
There is no limitation on the amount of each Fund's assets that, in the
aggregate, may be deposited as collateral for the obligation to replace
securities borrowed to effect short sales and allocated to segregated accounts
in connection with short sales. No Fund currently expects that more than 5% of
its total assets would be involved in short sales against the box.
Initial Public Offerings
The Funds may purchase securities of companies that are offered pursuant
to an initial public offering ("IPO"). An IPO is a company's first offering of
stock to the public in the primary market typically to raise additional capital.
The Funds may purchase a "hot" IPO (also known as a "hot issue") which is an IPO
that is oversubscribed and, as a result, is an investment opportunity of limited
availability. As a consequence, the price at which these IPO shares open in the
secondary market may be significantly higher than the original IPO price. IPO
securities tend to involve greater risk due, in part, to public perception and
the lack of publicly available information and trading history. There is the
possibility of losses resulting from the difference between the issue price and
potential diminished value of the stock once traded in the secondary market.
Although the Funds will make diligent efforts to research a company prior to
purchasing IPO securities, including reviewing the company's prospectus, there
is no guarantee against significant losses. The Funds' investment in IPO
securities may have a significant impact on a Fund's performance and may result
in significant capital gains.
- --------------------------------------------------------------------------------
DEBT INSTRUMENTS AND PERMITTED CASH INVESTMENTS
- --------------------------------------------------------------------------------
As indicated in the Funds' Prospectus, a Fund may invest in long-term and
short-term debt securities. Certain debt securities and money market instruments
in which a Fund may invest are described below.
U.S. Government and Related Securities
U.S. Government securities are securities which are issued or guaranteed
as to principal or interest by the U.S. Government, a U.S. Government agency or
instrumentality, or certain mixed-ownership Government corporations as described
herein. The U.S. Government securities in which each Fund invests include, among
others: direct obligations of the U.S. Treasury, i.e., U.S. Treasury bills,
notes, certificates and bonds; obligations of U.S. Government agencies or
instrumentalities such as the Federal Home Loan Banks, the Federal Farm Credit
Banks, the Federal National Mortgage Association, the Government National
Mortgage Association and the Federal Home Loan Mortgage Corporation; and
obligations of mixed-ownership Government corporations such as Resolution
Funding Corporation.
U.S. Government securities which each Fund may buy are backed in a variety
of ways by the U.S. Government, its agencies or instrumentalities. Some of these
obligations, such as Government National Mortgage Association mortgage- backed
securities, are backed by the full faith and credit of the U.S. Treasury. Other
obligations, such as those of the Federal National Mortgage Association, are
backed by the discretionary authority of the U.S. Government to purchase certain
obligations of agencies or instrumentalities, although the U.S. Government has
no legal obligation to do so. Obligations such as those of the Federal Home Loan
Banks, the Federal Farm Credit Banks, the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation are backed by the credit of the
agency or instrumentality issuing the obligations. Certain obligations of
Resolution Funding Corporation, a mixed-ownership Government corporation, are
backed with respect to interest payments by the U.S. Treasury, and with respect
to principal payments by U.S. Treasury obligations held in a segregated account
with a Federal Reserve Bank. Except for certain mortgage- related securities,
each Fund will only invest in obligations issued by mixed- ownership Government
corporations where such securities are guaranteed as to payment of principal or
interest by the U.S. Government or a U.S. Government agency or instrumentality,
and any unguaranteed principal or interest is otherwise supported by U.S.
Government obligations held in a segregated account.
U.S. Government securities may be acquired by each Fund in the form of
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities ("STRIPS") program. Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Obligations of Resolution Funding Corporation are similarly divided into
principal and interest components and maintained as such on the book entry
records of the Federal Reserve Banks.
In addition, each Fund may invest in custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds in connection with programs sponsored by banks and
brokerage firms. Such notes and bonds are held in custody by a bank on behalf of
the owners of the receipts. These custodial receipts are known by various names,
including "Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts"
("TIGRs") and "Certificates of Accrual on Treasury Securities" ("CATS") , and
may not be deemed U.S. Government securities. Each Fund may also invest from
time to time in collective investment vehicles, the assets of which consist
principally of U.S. Government securities or other assets substantially
collateralized or supported by such securities, such as Government trust
certificates.
Bank Money Investments
Bank money investments include but are not limited to certificates of
deposit, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term (i.e., less than one year), interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (to finance the import, export, transfer or
storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank, including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nonnegotiable deposits for a fixed period of time at
a stated interest rate. The Funds will not invest in any such bank money
investment unless the investment is issued by a U.S. bank that is a member of
the Federal Deposit Insurance Corporation ("FDIC"), including any foreign branch
thereof, a U.S. branch or agency of a foreign bank, a foreign branch of a
foreign bank, or a savings bank or savings and loan association that is a member
of the FDIC and which at the date of investment has capital, surplus and
undivided profits (as of the date of its most recently published financial
statements) in excess of $50 million. The Funds will not invest in time deposits
maturing in more than seven days and will not invest more than 10% of the total
assets of the applicable Fund in time deposits maturing in two to seven days.
U.S. branches and agencies of foreign banks are offices of foreign
banks and are not separately incorporated entities. They are chartered and
regulated either federally or under state law. U.S. federal branches or
agencies of foreign banks are chartered and regulated by the Comptroller of
the Currency, while state branches and agencies are chartered and regulated
by authorities of the respective states or the District of Columbia. U.S.
branches of foreign banks may accept deposits and thus are eligible for FDIC
insurance; however, not all such branches elect FDIC insurance. Unlike U.S.
branches of foreign banks, U.S. agencies of foreign banks may not accept
deposits and thus are not eligible for FDIC insurance. Both branches and
agencies can maintain credit balances, which are funds received by the office
incidental to or arising out of the exercise of their banking powers and can
exercise other commercial functions, such as lending activities.
Short-Term Corporate Debt Instruments
Short-term corporate debt instruments include commercial paper to finance
short-term credit needs (i.e., short-term, unsecured promissory notes) issued by
corporations including but not limited to (a) domestic or foreign bank holding
companies or (b) their subsidiaries or affiliates where the debt instrument is
guaranteed by the bank holding company or an affiliated bank or where the bank
holding company or the affiliated bank is unconditionally liable for the debt
instrument. Commercial paper is usually sold on a discounted basis and has a
maturity at the time of issuance not exceeding nine months.
Commercial Paper Ratings
Commercial paper investments at the time of purchase will be rated within
the "A" major rating category by Standard & Poor's Ratings Group ("S&P") or
within the "Prime" major rating category by Moody's Investors Service, Inc.
("Moody's"), or, if not rated, issued by companies having an outstanding long-
term unsecured debt issue rated at least within the "A" rating category by S&P
or by Moody's. The money market investments in corporate bonds and debentures
(which must have maturities at the date of settlement of one year or less) must
be rated at the time of purchase at least within the "A" rating category by S&P
or by Moody's.
Commercial paper rated within the "A" category (highest quality) by S&P is
issued by entities which have liquidity ratios which are adequate to meet cash
requirements. Long-term senior debt is rated within the "A" category or better,
although in some cases credits within the BBB category may be allowed. The
issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality of
management are unquestioned. The relative strength or weakness of the above
factors determines whether the issuer's commercial paper is rated A-l, A-2 or
A-3. (Those A-l issues determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign: A-l+.)
The rating Prime is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: evaluation of the management of the issuer; economic evaluation of
the issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; evaluation of the issuer's products in
relation to competition and customer acceptance; liquidity; amount and quality
of long-term debt; trend of earnings over a period of 10 years; financial
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. These
factors are all considered in determining whether the commercial paper is rated
Prime-l, Prime-2 or Prime-3.
- --------------------------------------------------------------------------------
QUALITY RATINGS OF CORPORATE BONDS AND PREFERRED STOCKS
- --------------------------------------------------------------------------------
Corporate Bonds
The ratings of Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group for corporate bonds in which the Funds may invest are as
follows:
Moody's Investors Service, Inc.
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Standard & Poor's Ratings Group
AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's to a
debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
Preferred Stocks
The ratings of Moody's Investors Service, Inc. and Standard & Poor's Ratings
Group for preferred stocks in which the Funds may invest are as follows:
Moody's Investors Service, Inc.
aaa - An issue which is rated aaa is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a - An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.
Standard & Poor's Ratings Group
AAA - This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the diverse effects of
changes in circumstances and economic conditions.
BBB - An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The Funds are governed by a Board of Trustees, which is responsible for
generally overseeing the conduct of Fund business and for protecting the
interests of shareholders. The Trustees meet periodically throughout the year to
oversee the Funds' activities, review contractual arrangements with companies
that provide services to the Funds and review the Funds' performance.
The following is a list of the Trustees and executive officers of the
Trust. Each Trustee who is an "interested person" of the Trust, as defined by
the Investment Company Act of 1940, as amended (the "1940 Act"), is indicated by
an asterisk.
NAME AGE POSITION HELD
*Frederick R. Kobrick 56 President/Trustee
Jay H. Atlas 54 Trustee
Samuel L. Hayes, III 64 Trustee
Joseph P. Paster 54 Trustee
Sherri A. Brown 33 Treasurer
Richard A. Goldman 39 Secretary
The principal occupations of the Trustees and executive officers of the Trust
during the past five years are set forth below:
*Frederick R. Kobrick, 101 Federal Street, Boston, MA 02110, serves as a Trustee
and President of the Trust. His principal occupation currently is President of
Kobrick Funds LLC. Prior to becoming President of the predecessor to Kobrick
Funds LLC in 1997, he served from 1985 as a senior vice president and portfolio
manager for State Street Research & Management Company. He is also currently a
principal in certain private investment partnerships.
Jay H. Atlas, 2540 Route 130, Cranbury, NJ 08512, serves as a Trustee of the
Trust. His principal occupation is as Chief Executive Officer, President and
Director of Ariel Corporation. During the past five years, and prior to joining
Ariel Corporation, he has provided consulting services as a sole proprietor to
information technology businesses and served as a Vice President and General
Manager of Sales and Marketing for Convex Computer Corporation and as Vice
President of Computervision Corporation.
Samuel L. Hayes, III, Harvard University, Graduate School of Business
Administration, Soldiers Field Road, Boston, MA 02163, serves as a Trustee of
the Trust. His principal occupation is as a Professor at the Harvard Business
School. Professor Hayes has taught at Harvard since 1972.
Joseph P. Paster, John Hancock Place, Post Office Box 111, Boston, MA 02117,
serves as a Trustee of the Trust. His principal occupation is as a Vice
President of John Hancock Mutual Life Insurance Company, where he has served in
various capacities since 1967.
Sherri A. Brown, 101 Federal Street, Boston, MA 02110, serves as Treasurer of
the Trust. Her principal occupation currently is Chief Financial Officer of
Kobrick Funds LLC. Prior to becoming Chief Financial Officer in June 1999, she
was Director of Accounting at Vinik Asset Management Co. from November 1996 to
June 1999, an operations consultant with Deloitte & Touche LLP from February
1996 to November 1996 and a Vice President at Manchester Growth Fund L.P. from
June 1990 to February 1996.
Richard A. Goldman, 101 Federal Street, Boston, MA 02110, serves as Secretary of
the Trust. His principal occupation currently is Chief Operating Officer of
Kobrick Funds LLC. Prior to becoming Chief Operating Officer of the predecessor
to Kobrick Funds LLC in 1997, he was associated with Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C. from August 1989 until October 1997.
The Audit Committee of the Trust is comprised of Messrs. Atlas and Paster,
both not interested persons of the Trust (as defined in the 1940 Act)
("Independent Trustees"), and considers matters relating to the scope and
results of the Funds' audits and serves as a forum in which the independent
accountants can raise any issues or problems identified in the audit with the
Board of Trustees. This Committee also reviews and monitors compliance with
stated investment objectives and policies and SEC and IRS regulations.
Each Independent Trustee (Messrs. Atlas, Hayes and Paster) will receive an
annual retainer of $4,000 and a $500 fee from each Fund for each Board meeting
and committee meeting attended and will be reimbursed for travel and other
expenses incurred in the performance of his duties. No other compensation or
pension or retirement benefits will be paid to or accrued by any other officer
or Trustee as part of the expenses of the Funds.
<PAGE>
Compensation Table
During the fiscal year ended September 30, 1999, the Trustees of the Trust
received the compensation shown in the following table for serving as Trustee of
the Trust.
<TABLE>
<CAPTION>
Pension or Estimated Total
Retirement Annual Compensation From
Name of Aggregate Benefits Benefits Registrant and
Person, Compensation Accrued as Part Upon Fund Complex Paid
Position From Registrant of Fund Expenses Retirement to Directors
- ------------ --------------- --------------- ---------- -----------------
<S> <C> <C> <C> <C>
Jay H. Atlas $10,000 -0- -0- $10,000
Trustee
Samuel L. Hayes, III $ 7,000 -0- -0- $ 7,000
Trustee
Joseph P. Paster $10,000 -0- -0- $10,000
Trustee
</TABLE>
As of September 30, 1999, to the Trust's knowledge, the following persons
owned of record or beneficially 5% or more of the outstanding shares of the
indicated Funds set forth below. In addition, each person that has direct or
indirect beneficial ownership of more than 25% of the outstanding shares of the
indicated Funds set forth below may be deemed to control that Fund as defined in
the 1940 Act.
As of September 30, 1999, the officers and Trustees of the Trust as a
group owned less than 1% of the outstanding shares of each Fund.
<TABLE>
<CAPTION>
FUND SHAREHOLDER AND ADDRESS OWNERSHIP PERCENTAGE
- ---- ----------------------- --------------------
<S> <C> <C>
KOBRICK CAPITAL FUND
Cendant Corporation 41.60%
6 Sylvan Way
Parsippany, NJ 07054-3826
National Financial Services 18.20%
Corporation
200 Liberty Street
1 World Financial Center
New York, NY 10281-1003
Charles Schwab & Co., Inc. 11.70%
101 Montgomery Street
San Francisco, CA 94104-4122
KOBRICK EMERGING GROWTH FUND
Cendant Corporation 61.80%
6 Sylvan Way
Parsippany, NJ 07054-3826
Charles Schwab & Co., Inc. 15.30%
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services 5.90%
Corporation
200 Liberty Street
1 World Financial Center
New York, NY 10281-1003
KOBRICK GROWTH FUND
Cendant Corporation 80.57%
6 Sylvan Way
Parsippany, NJ 07054-3826
</TABLE>
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
- --------------------------------------------------------------------------------
Kobrick Funds LLC (the "Investment Adviser") is the Trust's investment
adviser. The Investment Adviser is a wholly owned subsidiary of Nvest Companies,
L.P. ("Nvest"). Nvest has 18 affiliates and divisions and $127 billion in assets
under management (as of September 30, 1999). Under the terms of the Investment
Advisory Agreement between the Trust and the Investment Adviser, the Investment
Adviser manages the Funds' investments. On a monthly basis, each Fund pays the
Investment Adviser an annual advisory fee computed as 1.00% of the average of
the values of the net assets of the Fund as determined at the close of each
business day during the year. The gross advisory fees payable to the
predecessors to the Investment Adviser during the Funds' fiscal year ended
September 30, 1998, were $250,782 with respect to the Capital Fund, $239,480
with respect to the Emerging Growth Fund and $856 with respect to the Growth
Fund. Such advisory fees covered services rendered to the Capital Fund and the
Emerging Growth Fund for nine months and to the Growth Fund for one month. The
gross advisory fees payable to the predecessor to the Investment Adviser (and to
the Investment Adviser effective July 7, 1999) during the Funds' fiscal year
ended September 30, 1999, were $780,662, $381,071 and $295,301 with respect to
the Capital Fund, the Emerging Growth Fund and the Growth Fund, respectively.
Effective November 1, 1999, the Investment Adviser has given a binding
undertaking to the Funds to reduce its management fees and, if necessary, to
bear certain expenses associated with the Funds, through at least January 31,
2001, to the extent necessary to limit the Funds' expenses to the annual rates
set forth below. As set forth in the Prospectus, the Adviser shall be permitted
to recover expenses it has borne after November 1, 1999 in later periods to the
extent that a Fund's expenses fall below the annual rates set forth below;
provided, however, that a Fund is not obligated to pay any such deferred fees
more than one year after the end of any fiscal year in which the fee was
deferred.
Name of Fund Expense Cap
- ------------ -----------
Kobrick Capital Fund 1.50% for Class A shares
2.25% for Class B shares
2.25% for Class C shares
1.25% for Class Y shares
Kobrick Emerging Growth Fund 1.50% for Class A shares
2.25% for Class B shares
2.25% for Class C shares
1.25% for Class Y shares
Kobrick Growth Fund 1.40% for Class A shares
2.15% for Class B shares
2.15% for Class C shares
1.15% for Class Y shares
Prior to November 1, 1999, only one class of each Fund existed and the
Investment Adviser and the predecessors to the Investment Adviser agreed to
reduce the management fee, and if necessary, to bear certain expenses associated
with the Funds, to the extent necessary to limit the expenses to an annual rate
of 1.75%, 1.75% and 1.40% for the Capital Fund, Emerging Growth Fund and the
Growth Fund, respectively. The amount of these voluntary waivers and
reimbursements from the predecessors to the Investment Adviser (and the
Investment Adviser effective July 7, 1999) were as follows:
Fiscal period ended 9/30/98 Fiscal year ended 9/30/99
--------------------------- -------------------------
Capital Fund $126,253 $ 17,427
Emerging Growth Fund $127,193 $126,146
Growth Fund $ 23,912 $206,885
The Funds are responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Funds, including such extraordinary or non-recurring expenses as may arise, such
as litigation to which the Trust may be a party. The operating expenses include
fees and expenses in connection with membership in investment company
organizations, brokerage fees and commissions, legal, auditing and accounting
expenses, expenses related to the distribution of the Funds' shares (which
expenses will be paid from the 12b-1 fees under the 12b-1 Plans; see
"Distribution Agreement and 12b-1 Plans"), insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, transfer agent,
administrator, and accounting and pricing agent of the Funds, fees and expenses
of members of the Board of Trustees who are not interested persons of the Trust,
the cost of preparing and distributing prospectuses, statements, reports and
other documents to shareholders, and expenses of shareholders' meetings and
proxy solicitations. The Funds may have an obligation to indemnify the Trust's
officers and Trustees with respect to such litigation, except in instances of
willful misfeasance, bad faith, gross negligence or reckless disregard by such
officers and Trustees in the performance of their duties. The compensation and
expenses of any officer, Trustee or employee of the Trust who is an officer,
director or employee of the Investment Adviser are paid by the Investment
Adviser.
The Investment Advisory Agreement provides that the Investment Adviser
shall furnish the Trust with suitable office space and facilities and such
management, investment advisory, statistical and research facilities and
services as may be required from time to time by the Trust and the Funds are
responsible for their other expenses and services. In view of the requirements
for management of the Funds' particular investment program, this fee is higher
than those charges for many other funds.
By its terms, the Trust's Investment Advisory Agreement will remain in
force until July 6, 2001 and from year to year thereafter, subject to annual
approval by (a) the Board of Trustees or (b) a vote of the majority of a Fund's
outstanding voting securities; provided that in either event continuance is also
approved by a majority of the Trustees who are not interested persons of the
Trust, by a vote cast in person at a meeting called for the purpose of voting on
such approval. The Trust's Investment Advisory Agreement may be terminated at
any time, on sixty days' written notice, without the payment of any penalty, by
the Board of Trustees, by a vote of the majority of a Fund's outstanding voting
securities, or by the Investment Adviser. The Investment Advisory Agreement
automatically terminates in the event of its assignment, as defined by the 1940
Act and the rules thereunder.
The name "Kobrick" is the property right of the Investment Adviser. The
Investment Adviser may use the name "Kobrick" in other connections and for other
purposes, including in the name of other investment companies. The Trust has
agreed to discontinue any use of the name "Kobrick" if the Investment Adviser
ceases to be employed as the Trust's Investment Adviser.
- --------------------------------------------------------------------------------
DISTRIBUTION AGREEMENT AND 12b-1 PLANS
- --------------------------------------------------------------------------------
Under an agreement with the Trust, Nvest Funds Distributor, L.P., (the
"Distributor"), 399 Boylston Street, Boston, Massachusetts 02116, acts as the
principal distributor of each class of shares of the Funds. Under this
agreement, the Distributor is not obligated to sell a specific number of shares.
The Distributor bears the cost of making information about the Funds available
through advertising and other means and the cost of printing and mailing
Prospectuses to persons other than shareholders. Each Fund pays the cost of
registering and qualifying its shares under state and federal securities laws
and the distribution of Prospectuses to existing shareholders. The Distributor
also serves as the principal distributor for the Nvest Funds, described in more
detail on page 28. Nvest owns the entire limited partnership interest in the
Distributor.
The Distributor is compensated under each agreement through receipt of the
sales charges on Class A shares described below under "Net Asset Value and
Public Offering Price" and is paid by the Funds the service and distribution
fees described in the Prospectus. The Distributor may, at its discretion,
reallow the entire sales charge imposed on the sale of Class A shares of each
Fund to investment dealers from time to time. The SEC is of the view that
dealers receiving all or substantially all of the sales charge may be deemed
underwriters of a Fund's shares.
The Trust has adopted Rule 12b-1 plans (the "Plans") for each Fund's Class
A, Class B, and Class C shares which, among other things, permit the Funds to
pay the Distributor monthly fees out of net assets. These fees consist of a
service fee and a distribution fee. Any such fees that are paid by the
Distributor to securities dealers are known as "trail commissions." Pursuant to
Rule 12b-1 under the 1940 Act, the Plans were approved by the shareholders of
each class of each Fund, and (together with the related Distribution Agreement)
by the Board of Trustees, including a majority of the trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operations of the Plans or the
Distribution Agreement.
Under the Plans, each Fund pays the Distributor a monthly service fee at
an annual rate not to exceed 0.25% of the Fund's average daily net assets
attributable to the Class A, Class B and Class C shares. In the case of the
Class B shares, the Distributor pays investment dealers the first year's service
fee at the time of sale, in the amount of up to 0.25% of the amount invested. In
the case of Class C shares, the Distributor retains the first year's service fee
of 0.25% assessed against such shares. After the first year for Class A, Class B
and Class C shares, the Distributor may pay up to the entire amount of this fee
to securities dealers who are dealers of record with respect to the Fund's
shares, on a quarterly basis, unless other arrangements are made between the
Distributor and the securities dealer, for providing personal services to
investors in shares of the Fund and/or the maintenance of shareholder accounts.
To the extent that the Distributor's reimbursable expenses in any year
exceed the maximum amount payable under the Plan for that year, such expenses
may be carried forward for reimbursement in future years in which the Plan
remains in effect.
Each Fund's Class B and Class C shares also pay the Distributor a monthly
distribution fee at an annual rate not to exceed 0.75% of the average net assets
of the respective Fund's Class B and Class C shares. The Distributor retains the
0.75% distribution fee assessed against both Class B and Class C shares during
the first year of investment. After the first year for Class B shares, the
Distributor retains the annual distribution fee as compensation for its services
as distributor of such shares. After the first year for Class C shares, the
Distributor may pay up to the entire amount of this fee to securities dealers
who are dealers of record with respect to the Fund's shares, as distribution
fees in connection with the sale of the Fund's shares on a quarterly basis,
unless other arrangements are made between the Distributor and the securities
dealer.
Each Plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of the
relevant class of shares of the relevant Fund. Each Plan may be amended by vote
of the Trustees, including a majority of the Independent Trustees, cast in
person at a meeting called for that purpose. Any change in any Plan that would
materially increase the fees payable thereunder by the relevant class of shares
of the relevant Fund requires approval by vote of the holders of a majority of
such shares outstanding. The Trustees review quarterly a written report of such
costs and the purposes for which such costs have been incurred. For so long as a
Plan is in effect, selection and nomination of the Independent Trustees shall be
committed to the discretion of such Independent Trustees.
The Distributor has entered into selling agreements with investment
dealers, including New England Securities, an affiliate of the Distributor, for
the sale of the Funds' shares. The Distributor may, at its expense, pay an
amount not to exceed 0.50% of the amount invested to dealers who have selling
agreements with the Distributor. Class Y shares of the Funds may be offered by
registered representatives of New England Securities who are also employees of
New England Investment Associates, Inc. ("NEIA"), an indirect, wholly-owned
subsidiary of Nvest Companies. NEIA may receive compensation from the Investment
Adviser with respect to sales of Class Y shares.
The Distribution Agreement for any Fund may be terminated at any time on
60 days' written notice without payment of any penalty by the Distributor or by
vote of a majority of the outstanding voting securities of the relevant Fund or
by vote of a majority of the Independent Trustees.
The Distribution Agreements and the Plans will continue in effect for
successive one-year periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the Independent Trustees and (ii) by
the vote of a majority of the entire Board of Trustees cast in person at a
meeting called for that purpose or by a vote of a majority of the outstanding
securities of a Fund (or the relevant class, in the case of the Plans).
With the exception of the Distributor, New England Securities and their
direct and indirect parent companies, no interested person of the Trust or any
Trustee of the Trust had any direct or indirect financial interest in the
operation of the Plans or any related agreement.
Benefits to the Funds and their shareholders resulting from the Plans are
believed to include (1) enhanced shareholder service, (2) asset retention, (3)
enhanced bargaining position with third party service providers and economies of
scale arising from having higher asset levels and (4) portfolio management
opportunities arising from having an enhanced positive cash flow.
The distribution expenses incurred during the Fund's initial fiscal year
ended September 30, 1998 were $62,695 with respect to the Capital Fund, $59,870
with respect to the Emerging Growth Fund and $214 with respect to the Growth
Fund. Such distribution expenses were incurred for Class A only as the other
classes had not yet been established. These expenses were incurred with respect
to the Capital Fund and the Emerging Growth Fund for nine months and to the
Growth Fund for one month. The distribution expenses incurred during the Funds'
fiscal year ended September 30, 1999 were $195,165, $95,268 and $73,825 for the
Capital Fund, Emerging Growth Fund and Growth Fund, respectively.
The portion of the various fees and expenses for Class A, B, and with
respect to certain Funds, C shares that are paid (reallowed) to securities
dealers are shown below:
For Class A shares, the service fee is payable only to reimburse the
Distributor for amounts it pays in connection with providing personal services
to investors and/or maintaining shareholder accounts. To the extent that the
Distributor's reimbursable expenses in any year exceed the maximum amount
payable for that year under the relevant service plan, these expenses may be
carried forward for reimbursement in future years as long as the plan remains in
effect. The portion of the various fees and expenses for Class A shares of the
Funds that are paid to securities dealers are shown below:
<TABLE>
<CAPTION>
MAXIMUM MAXIMUM MAXIMUM MAXIMUM
SALES CHARGE REALLOWANCE OR FIRST YEAR FIRST YEAR
PAID BY INVESTORS COMMISSION SERVICE FEE COMPENSATION
INVESTMENT (% OF OFFERING PRICE) (% OF OFFERING PRICE) (% OF NET INVESTMENT) (% OF OFFERING PRICE)
- ---------- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 5.00% 0.25% 5.25%
$50,000 - $99,999 4.50% 4.00% 0.25% 4.25%
$100,000 - $249,999 3.50% 3.00% 0.25% 3.25%
$250,000 - $499,999 2.50% 2.15% 0.25% 2.40%
$500,000 - $999,999 2.00% 1.70% 0.25% 1.95%
INVESTMENTS OF $1 MILLION OR MORE
First $3 Million none 1.00%(2) 0.25% 1.25%
Excess over $3 Million (1) none 0.50%(2) 0.25% 0.75%
INVESTMENTS WITH NO SALES CHARGE(3) none 0.00% 0.25% 0.25%
(1) For investments by Retirement Plans (Plans under Sections 401(a) or 401(k) of the Code with investments of $1 million or more
that have 100 or more eligible employees), the Distributor may pay a 0.50% commission for investments in excess of $3 million
and up to $10 million. Those Plans with investments of over $10 million are eligible to purchase Class Y shares of the funds,
which are described in a separate prospectus.
(2) These commissions are not payable if the purchase represents the reinvestment of a redemption made during the previous 12
calendar months.
(3) Refers to any investments made by municipalities, financial institutions, trusts and affinity group members as described earlier
in the Prospectus under the section entitled "Ways to Reduce or Eliminate Sales Charges."
</TABLE>
The Class B and Class C service fees are payable regardless of the amount
of the Distributor's related expenses. The portion of the various fees and
expenses for Class B and Class C shares of the Funds that are paid to securities
dealers are shown below:
<TABLE>
<CAPTION>
MAXIMUM REALLOWANCE MAXIMUM FIRST YEAR MAXIMUM FIRST YEAR
OR COMMISSION SERVICE FEE COMPENSATION
INVESTMENT (% OF OFFERING PRICE) (% OF NET INVESTMENT) (% OF OFFERING PRICE)
- ---------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
All amounts for Class B 3.75% 0.25% 4.00%
All amounts for Class C 1.00% 0.00% 1.00%
</TABLE>
Each Fund receives the net asset value next determined after an order is
received on sales of each class of shares. The sales charge is allocated between
the investment dealer and the Distributor. The Distributor receives the
Contingent Deferred Sales Charge (the "CDSC"). Proceeds from the CDSC on Class A
and Class C shares are paid to the Distributor and are used by the Distributor
to defray the expenses for services the Distributor provides the Trusts.
Proceeds from the CDSC on Class B shares are paid to the Distributor and are
remitted to FEP Capital, L.P. to compensate FEP Capital, L.P. for financing the
sale of Class B shares pursuant to certain Class B financing and servicing
agreements between the Distributor and FEP Capital, L.P. The Distributor may, at
its discretion, pay (reallow) the entire sales charge imposed on the sale of
Class A shares to investment dealers from time to time.
For new amounts invested at net asset value by an eligible governmental
authority, the Distributor may, at its expense, pay investment dealers a
commission of 0.025% of the average daily net assets of an account at the end of
each calendar quarter for up to one year. These commissions are not payable if
the purchase represents the reinvestment of redemption proceeds from any other
Nvest Fund or if the account is registered in street name.
The Distributor may, at its expense, provide additional concessions to
dealers who sell shares of the Funds, including: (i) full reallowance of the
sales charge of Class A shares, (ii) additional compensation with respect to the
sale of Class A, B and C shares and (iii) financial assistance programs to firms
who sell or arrange for the sale of Fund shares including, but not limited to,
remuneration for: the firm's internal sales contests and incentive programs,
marketing and sales fees, expenses related to advertising or promotional
activity and events, and shareholder record keeping or miscellaneous
administrative services. Payment for travel, lodging and related expenses may be
provided for attendance at Nvest Funds' seminars and conferences, e.g., due
diligence meetings held for training and educational purposes. The payment of
these concessions and any other compensation offered will conform with state and
federal laws and the rules of any self-regulatory organization, such as the
National Association of Securities Dealers, Inc. The participation of such firms
in financial assistance programs is at the discretion of the firm.
Custodial Arrangements
State Street Bank and Trust Company ("State Street Bank"), 225 Franklin
Street, Boston, Massachusetts 02110, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
each Fund and, in such capacity, is the registered owner of securities in
book-entry form belonging to each Fund. Upon instruction, State Street Bank
receives and delivers cash and securities of each Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. State Street Bank also maintains certain
accounts and records of the Trusts and calculates the total net asset value,
total net income and net asset value per share of each Fund on a daily basis.
Independent Accountants
The Trust's independent accountant is PricewaterhouseCoopers LLP, 160
Federal Street, Boston, Massachusetts 02110. The independent accountants conduct
an annual audit of the Trust financial statements, assist in the preparation of
federal and state income tax returns and consult with the Trust as to matters of
accounting and federal and state income taxation. The information concerning
financial highlights in the Prospectuses, and financial statements contained in
the Funds' annual reports for the year ended September 30, 1999 and incorporated
by reference into this Statement, have been so included in reliance on the
reports of the Trust's independent accountants, given on the authority of such
firms as experts in auditing and accounting.
Other Arrangements
Pursuant to a contract between the Funds and Nvest Services Company, Nvest
Services Company acts as shareholder servicing and transfer agent for the Funds
and is responsible for services in connection with the establishment,
maintenance and recording of shareholder accounts, including all related tax and
other reporting requirements and the implementation of investment and redemption
arrangements offered in connection with the sale of the Funds' shares. The Funds
pay an annual per-account fee to Nvest Services Company for these services in
the amount of $19.70 for Capital, Growth and Emerging Growth Funds. Nvest
Services Company has subcontracted with State Street Bank for it to provide,
through its subsidiary, Boston Financial Data Services, Inc. ("BFDS"),
transaction processing, mail and other services. Prior to October 25, 1999, the
Funds contracted with State Street Bank for these services.
In addition, Nvest Services Company performs certain accounting and
administrative services for the Funds including: (i) expenses for personnel
performing bookkeeping, accounting, internal auditing and financial reporting
functions and clerical functions relating to the Fund, (ii) expenses for
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 Fund
or regulatory authorities and reports and questionnaires for SEC compliance, and
(iii) registration, filing and other fees in connection with requirements of
regulatory authorities. For the services provided by Nvest Services Company to
the Trust hereunder, the Trust shall pay Nvest Services Company the greater of
the following: (1) an annual fee payable in equal monthly installments equal to
$70,000 per outstanding Fund; or (2) a monthly fee (accrued daily) based on the
Funds' average daily net assets during the calendar month, such fee being
calculated at the annualized rates set forth below:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS AS A % OF AVERAGE DAILY NET ASSETS
------------------------ ----------------------------------
$0 - $100,000,000 0.070%
$100,000,000 - $400,000,000 0.050%
Over $400,000,000 0.030%
Nvest Services Company, Inc. will also do business as Nvest Services
Company, Nvest Services Co. and New England Funds Service Company.
Marketing and Sales Support
Kobrick and Nvest Funds Distributor, L.P. have entered into an
agreement, whereby Nvest Funds Distributor, L.P. is providing marketing and
sales support services for the following fee on certain assets:
FEES PAID TO NVEST FUNDS DISTRIBUTOR, L.P.
ASSET RANGE (IN MILLIONS) (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
- ------------------------- ---------------------------------------------
$0 - 1,000 0.20%
1,000 - 2,000 0.35%
Over 2,000 0.30%
Year 2000
The investment management services provided to each Fund by the Investment
Adviser and the services provided to shareholders by Nvest Services Company,
Inc. depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot recognize the year 2000, but revert to 1900
or some other date, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on a Fund's operations,
including the handling of securities trades, pricing and account services. The
Investment Adviser, and Nvest Services Company, Inc. have advised each Fund that
they have been reviewing all of their computer systems and actively working on
necessary changes to their systems to prepare for the year 2000 and expect that
their systems will be compliant before that date. In addition, the Investment
Adviser has been advised by the Fund's custodian, transfer agent and accounting
service agent that they are also in the process of modifying their systems with
the same goal. There can, however, be no assurance that the Investment Adviser,
Nvest Services Company, Inc. or any other service provider will be successful,
or that interaction with other non-complying computer systems will not impair
Fund services at that time. In addition, the ability of issuers to make timely
payments of interest and principal or to continue their operations or services
may be impaired by then adequate preparation of their computer systems for the
year 2000. This may adversely affect the market values of securities of specific
issuers or of securities generally if the inadequacy of preparation is perceived
as widespread or as affecting trading markets.
- --------------------------------------------------------------------------------
SECURITIES TRANSACTIONS
- --------------------------------------------------------------------------------
The Investment Adviser's policy is to seek for its clients, including the
Funds, what in the Investment Adviser's judgment will be the best overall
execution of purchase or sale orders and the most favorable net prices in
securities transactions consistent with its judgment as to the business
qualifications of the various broker or dealer firms with whom the Investment
Adviser may do business, and the Investment Adviser may not necessarily choose
the broker offering the lowest available commission rate. Decisions with respect
to the market where the transaction is to be completed, to the form of
transaction (whether principal or agency) and to the allocation of orders among
brokers or dealers are made in accordance with this policy. In selecting brokers
or dealers to effect portfolio transactions, consideration is given to their
proven integrity and financial responsibility, their demonstrated execution
experience and capabilities both generally and with respect to particular
markets or securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their willingness
to commit capital, and their clearance and settlement capability. The Investment
Adviser makes every effort to keep informed of commission rate structures and
prevalent bid/ask spread characteristics of the markets and securities in which
transactions for the Funds occur. Against this background, the Investment
Adviser evaluates the reasonableness of a commission or a net price with respect
to a particular transaction by considering such factors as difficulty of
execution or security positioning by the executing firm. The Investment Adviser
may or may not solicit competitive bids based on its judgment of the expected
benefit or harm to the execution process for that transaction.
When it appears that a number of firms could satisfy the required
standards in respect of a particular transaction, consideration may also be
given to services other than execution services which certain of such firms have
provided in the past or may provide in the future. Negotiated commission rates
and prices, however, are based upon the Investment Adviser's judgment of the
rate which reflects the execution requirements of the transaction without regard
to whether the broker provides services in addition to execution. Among such
other services are the supplying of supplemental investment research; general
economic, political and business information; analytical and statistical data;
relevant market information, quotation equipment and services; reports and
information about specific companies, industries and securities; purchase and
sale recommendations for stocks and bonds; portfolio strategy services;
historical statistical information; market data services providing information
on specific issues and prices; financial publications; proxy voting data and
analysis services; technical analysis of various aspects of the securities
markets, including technical charts; computer hardware used for brokerage and
research purposes; computer software and databases, including those used for
portfolio analysis and modeling; and portfolio evaluation services and relative
performance of accounts.
Certain nonexecution services provided by broker-dealers may in turn be
obtained by the broker-dealers from third parties who are paid for such services
by the broker-dealers.
The Investment Adviser regularly reviews and evaluates the services
furnished by broker-dealers. Some services may be used for research and
investment decision-making purposes, and also for marketing or administrative
purposes. Under these circumstances, the Investment Adviser allocates the cost
of such services to determine the appropriate proportion of the cost which is
allocable to purposes other than research or investment decision-making and is
therefore paid directly by the Investment Adviser. Some research and execution
services may benefit the Investment Adviser's clients as a whole, while others
may benefit a specific segment of clients. Not all such services will
necessarily be used exclusively in connection with the accounts which pay the
commissions to the broker-dealer producing the services.
The Investment Adviser has no fixed agreements or understanding with any
broker-dealer as to the amount of brokerage business which that firm may expect
to receive for services supplied to the Investment Adviser or otherwise. There
may be, however, understandings with certain firms that in order for such firms
to be able to continuously supply certain services, they need to receive
allocation of a specified amount of brokerage business. These understandings are
honored to the extent possible in accordance with the Investment Adviser's
obligation to best execution and the policies set forth above.
To the extent permitted by applicable law, and in all instances subject to
the foregoing policy of best execution, the Investment Adviser may allocate
brokerage transactions in a manner that takes into account the sale of shares of
one or more Funds distributed by Nvest Funds Distributor, L.P. In addition, the
Investment Adviser may allocate brokerage transactions to broker-dealers
(including affiliates of the Distributor) that have entered into arrangements in
which the broker-dealer allocates a portion of commissions paid by a Fund toward
the reduction of that Fund's expenses, subject to the requirement that the
Investment Adviser will seek best execution.
It is not the Investment Adviser's policy to intentionally pay a firm a
brokerage commission higher that that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services), provided, however, that the Investment Adviser is aware that this is
an area where differences of opinion as to fact and circumstances may exist, and
in such circumstances, if any, the Investment Adviser relies on the provisions
of Section 28(e) of the Securities Act of 1934, to the extent applicable.
The aggregate brokerage commissions paid by each Fund during the fiscal
years ended September 30, 1998 and 1999 were as set forth below:
1998 1999
---- ----
Kobrick Capital Fund $232,149 $1,031,352
Kobrick Emerging Growth Fund $183,965 $279,842
Kobrick Growth Fund $811 $320,297
Code of Ethics
The Trust and the Investment Adviser have each adopted a Code of Ethics
under Rule 17j-1 of the 1940 Act. The Code significantly restricts the personal
investing activities of certain officers and investment personnel of the
Investment Adviser, including having to preclear any personal securities (with
limited exceptions, such as U.S. Government obligations). The preclearance
requirement and associated procedures are designed to identify any substantive
prohibition or limitation applicable to the proposed investment. In addition,
certain officers and investment personnel may not purchase or sell any security
which, at that time, is being purchased or sold (as the case may be), or to the
knowledge of such person, is being considered for purchase or sale, by any of
the Funds. The substantive restrictions applicable to certain officers and
investment personnel of the Investment Adviser include a ban on acquiring any
securities in an initial public offering. Furthermore, the Code provides for
trading "blackout periods" which prohibit trading by certain officers and
investment personnel of the Investment Adviser within periods of trading by any
of the Funds in the same (or equivalent) security.
Grouping of Securities Transactions
Messrs. Kobrick and Nance, in addition to serving as senior officers of
the Investment Adviser, are also the portfolio managers (Mr. Kobrick is also a
principal) in private investment partnerships, and may act in that capacity with
respect to other similar investment partnerships. One or more of such accounts,
may from time to time, purchase or sell securities or have securities under
consideration for purchase or sale that are also being sold or purchased or
considered for sale or purchase by the Funds. In those instances where
securities transactions are carried on at the same time on behalf of any or all
of the Funds and such other accounts, transactions in such securities for such
accounts may be grouped with securities transactions carried out on behalf of
the Funds. The practice of grouping orders of various accounts will be followed
to get the benefit of best prices or commission rates. In certain cases where
the aggregate order may be executed in a series of transactions at various
prices the transactions will be allocated as to amount and price in a manner
considered equitable to each account so that each receives, to the extent
practicable, the average price for such transactions. Transactions will not be
grouped unless it is the judgment of the Investment Adviser that such
aggregation is consistent with its duty to seek best execution (which includes
the duty to seek best price) for the Funds and in each case the books and
records of the Funds and any such other account will separately reflect, for
each account, the orders of which are aggregated and the securities held by and
bought and sold for that account.
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
- --------------------------------------------------------------------------------
A Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities, excluding securities having maturity
dates at acquisition of one year or less, for the fiscal year by the monthly
average of the value of the portfolio securities owned by the Fund during the
fiscal year. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Funds, thereby decreasing the Funds' total return. The Investment Adviser
anticipates that the portfolio turnover rate for the Growth Fund normally will
be in the range of 100% - 200% and for each of the Capital Fund and the Emerging
Growth Fund the portfolio turnover normally will be in the range of 150% - 300%.
The portfolio turnover rate for September 30, 1999 was significantly higher for
each of the Funds due to the unprecedented volatility in the stock market during
the period.
Generally, each Fund intends to invest for long-term purposes. However,
the rate of portfolio turnover will depend upon market and other conditions, and
it will not be a limiting factor when the Investment Adviser believes that
portfolio changes are appropriate.
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The procedures for purchasing shares of the Funds are summarized in the
Prospectuses. All purchases made by check should be in U.S. dollars and made
payable to Nvest Funds (Kobrick Funds for Class Y shares), or, in the case of a
retirement account, the custodian or trustee. Banks may charge a fee for
transmitting funds by wire. With respect to shares purchased by federal funds,
shareholders should bear in mind that wire transfers may take two or more hours
to complete.
For purchase of Fund shares by mail, the settlement date is the first
business day after receipt of the check by the transfer agent so long as it is
received by the close of regular trading of the New York Stock Exchange on a day
when the Exchange is open; otherwise the settlement date is the following
business day. For telephone orders, the settlement date is the third business
day after the order is made.
Shares may also be purchased either in writing, by phone, by electronic
funds transfer using Automated Clearing House ("ACH"), or by exchange as
described in the Prospectuses through firms that are members of the National
Association of Securities Dealers, Inc. and that have selling agreements with
the Distributor. You may also use Nvest Funds Personal Access Line(R)
(800-225-5478, press 1) or Nvest Funds Web site (www.nvestfunds.com) to purchase
Fund Class A, B and C shares. You may call the Kobrick Funds (1-888-523-8631) to
purchase Fund Class Y shares. For more information, see the section entitled
"Shareholder Services" in this Statement.
The Distributor may at its discretion accept a telephone order for the
purchase of $5,000 or more of a Fund's Class A, B and C shares. Payment must be
received by the Distributor within three business days following the transaction
date or the order will be subject to cancellation. Telephone orders must be
placed through the Distributor or your investment dealer.
If you wish transactions in your account to be effected by another person
under a power of attorney from you, special rules as summarized in the
Prospectus may apply.
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NET ASSET VALUE AND PUBLIC OFFERING PRICE
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The method for determining the public offering price and net asset value
per share is summarized in the Prospectus.
The total net asset value of each class of shares of a Fund (the excess of
the assets of such Fund attributable to such class over the liabilities
attributable to such class) is determined as of the close of regular trading
(normally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange
(the "NYSE") is open for trading. The observed holidays that the NYSE is
expected to be closed are New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
Securities listed on a national securities exchange or on the NASDAQ
National Market System are valued at their last sale price, or, if there is no
reported sale during the day, the closing bid price. Unlisted securities traded
in the over-the-counter market are valued at the last reported sale price, or,
if a last sale price is not readily available, at the last reported bid price
quoted by brokers that make a market in the securities. Securities traded in
more than one market are valued using the 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 traded 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 and all other assets are taken at fair value as determined in
good faith by the Board of Trustees, although the actual calculations may be
made by persons acting pursuant to the direction of the board.
Generally, trading in foreign government securities and other fixed-income
securities, as well as trading in equity securities in markets outside the
United States, is substantially completed each day at various times prior to the
close of the NYSE. Securities traded on a non-U.S. exchange will be valued at
their last sale price (or the last reported bid price, if there is no reported
sale during the day), on the exchange on which they principally trade, as of the
close of regular trading on such exchange except for securities traded on the
London Stock Exchange ("British Equities"). British Equities will be valued at
the mean between the last bid and last asked prices on the London Stock
Exchange. The value of other securities principally traded outside the United
States will be computed as of the completion of substantial trading for the day
on the markets on which such securities principally trade. Securities
principally traded outside the United States will generally be valued several
hours before the close of regular trading on the NYSE, generally 4:00 p.m.
Eastern time, when the Funds compute the net asset value of their shares.
Occasionally, events affecting the value of securities principally traded
outside the United States may occur between the completion of substantial
trading of such securities for the day and the close of the NYSE, which events
will not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of a Fund's securities occur during such period,
then these securities will be valued at their fair value as determined in good
faith by or in accordance with procedures approved by the Trusts' Trustees. The
effect of fair value pricing is that securities may not be priced on the basis
of quotations from the primary market in which they are traded but rather, may
be priced by another method that the Board of Trustees believes accurately
reflects fair value.
Trading in some of the portfolio securities of the Funds may take place in
various markets outside the United States on days and at times other than when
the NYSE is open for trading. Therefore, the calculation of these Funds' net
asset value does not take place at the same time as the prices of many of its
portfolio securities are determined, and the value of the Fund's portfolio may
change on days when the Fund is not open for business and its shares may not be
purchased or redeemed.
The per share net asset value of a class of a Fund's shares is computed by
dividing the number of shares outstanding into the total net asset value
attributable to such class. The public offering price of a Class A share of a
Fund is the net asset value per share next-determined after a properly completed
purchase order is accepted by Nvest Services Company or State Street Bank, plus
a sales charge as set forth in the Fund's Prospectus. The public offering price
of a Class B, C or Y share of a Fund is the next-determined net asset value.
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REDUCED SALES CHARGES
CLASS A SHARES ONLY
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The following special purchase plans are summarized in the Prospectuses. See
page 30 for a description of the Nvest Funds.
CUMULATIVE PURCHASE DISCOUNT. A Fund shareholder may make an initial or an
additional purchase of Class A shares and be entitled to a discount on the sales
charge payable on that purchase. This discount will be available if the
shareholder's "total investment" in the Fund reaches the breakpoint for a
reduced sales charge in the table under "How Sales Charges are Calculated-Class
A shares" in the Prospectus. The total investment is determined by adding the
amount of the additional purchase, including sales charge, to the current public
offering price of all series and classes of shares of the Kobrick Funds and the
other Nvest Funds held by the shareholder in one or more accounts. If the total
investment exceeds the breakpoint, the lower sales charge applies to the entire
additional investment even though some portion of that additional investment is
below the breakpoint to which a reduced sales charge applies. For example, if a
shareholder who already owns shares of one or more Kobrick Funds or of the other
Nvest Funds with a value at the current public offering price of $30,000 makes
an additional purchase of $20,000 of Class A shares of another Kobrick Fund or
Nvest Fund, the reduced sales charge of 4.5% of the public offering price will
apply to the entire amount of the additional investment.
LETTER OF INTENT. A Letter of Intent (a "Letter"), which can be effected
at any time, is a privilege available to investors which reduces the sales
charge on investments in Class A shares. Ordinarily, reduced sales charges are
available for single purchases of Class A shares only when they reach certain
breakpoints (e.g., $50,000, $100,000, etc.). By signing a Letter, a shareholder
indicates an intention to invest enough money in Class A shares within 13 months
to reach a breakpoint. If the shareholder's intended aggregate purchases of all
series and classes of the Kobrick Funds or Nvest Funds over a defined 13-month
period will be large enough to qualify for a reduced sales charge, the
shareholder may invest the smaller individual amounts at the public offering
price calculated using the sales load applicable to the 13-month aggregate
investment.
A Letter is a non-binding commitment, the amount of which may be
increased, decreased or canceled at any time. The effective date of a Letter is
the date it is received in good order by the Distributor, or, if communicated by
a telephone exchange or order, at the date of telephoning provided a signed
Letter, in good order, reaches the Distributor within five business days.
A reduced sales charge is available for aggregate purchases of all series
and classes of shares of the Kobrick Funds or Nvest Funds pursuant to a written
Letter effected within 90 days after any purchase. In the event the account was
established prior to 90 days before the effective date of the Letter, the
account will be credited with the Rights of Accumulation ("ROA") towards the
breakpoint level that will be reached upon the completion of the 13 months'
purchases. The ROA credit is the value of all shares held as of the effective
dates of the Letter based on the "public offering price computed on such date."
The cumulative purchase discount, described above, permits the aggregate
value at the current public offering price of Class A shares of any accounts
with the Kobrick Funds or Nvest Funds held by a shareholder to be added to the
dollar amount of the intended investment under a Letter, provided the
shareholder lists them on the account application.
State Street Bank will hold in escrow shares with a value at the current
public offering price of 5% of the aggregate amount of the intended investment.
The amount in escrow will be released when the commitment stated in the Letter
is completed. If the shareholder does not purchase shares in the amount
indicated in the Letter, the shareholder agrees to remit to State Street Bank
the difference between the sales charge actually paid and that which would have
been paid had the Letter not been in effect, and authorizes State Street Bank to
redeem escrowed shares in the amount necessary to make up the difference in
sales charges. Reinvested dividends and distributions are not included in
determining whether the Letter has been completed.
COMBINING ACCOUNTS. Purchases of all series and classes of the Kobrick
Funds or the Nvest Funds (excluding shares of Nvest Cash Management Trust and
Nvest Tax Exempt Money Market Trust [the "Money Market Funds"] unless the shares
were purchased through an exchange of another Kobrick Fund or Nvest Fund) by or
for an investor, the investor's spouse, parents, children, siblings, in-laws,
grandparents or grandchildren and any other account of the investor, including
sole proprietorships, in any Fund or Nvest Fund may be treated as purchases by a
single individual for purposes of determining the availability of a reduced
sales charge. Purchases for a single trust estate or a single fiduciary account
may also be treated as purchases by a single individual for this purpose, as may
purchases on behalf of a participant in a tax-qualified retirement plan and
other employee benefit plans, provided that the investor is the sole participant
in the plan. Any other group of individuals acceptable to the Distributor may
also combine accounts for such purpose. The values of all accounts are combined
to determine the sales charge.
COMBINING WITH OTHER SERIES AND CLASSES OF THE KOBRICK AND NVEST FUNDS. A
shareholder's total investment for purposes of the cumulative purchase discount
includes the value at the current public offering price of any shares of series
and classes of the Kobrick Funds or Nvest Funds that the shareholder owns (which
excludes shares of the Money Market Funds unless such shares were purchased by
exchanging shares of any other Kobrick Fund or Nvest Fund). Shares owned by
persons described in the preceding paragraph may also be included.
UNIT HOLDERS OF UNIT INVESTMENT TRUSTS. Unit investment trust
distributions may be invested in Class A shares of any Fund at a reduced sales
charge of 1.50% of the public offering price (or 1.52% of the net amount
invested); for large purchases on which a sales charge of less than 1.50% would
ordinarily apply, such lower charge also applies to investments of unit
investment trust distributions.
KOBRICK FUND SHAREHOLDERS AS OF OCTOBER 31, 1999 AND CLIENTS OF THE
INVESTMENT ADVISER. Accounts open as of October 31, 1999 that became Class A
shareholders of the relevant Fund and are not subject to applicable sales
charges and may exchange into Class A shares of another Fund or Nvest Fund
without the imposition of a sales charge. No front-end sales charge or
contingent deferred sales charge applies to investments of $25,000 or more in
Class A shares of the Funds by (1) clients of an adviser or subadviser to any
series of the Kobrick Funds or Nvest Funds; any director, officer or partner of
a client of an adviser or subadviser to any series of the Kobrick Funds or Nvest
Funds; and the spouse, parents, children, siblings, in-laws, grandparents or
grandchildren of the foregoing; (2) any individual who is a participant in a
Keogh or IRA Plan under a prototype of an adviser or subadviser to any series of
the Kobrick Funds or Nvest Funds if at least one participant in the plan
qualifies under category (1) above; and (3) an individual who invests through an
IRA and is a participant in an employee benefit plan that is a client of an
adviser or subadviser to any series of the Kobrick Funds or Nvest Funds. Any
investor eligible for this arrangement should so indicate in writing at the time
of the purchase.
OFFERING TO EMPLOYEES OF METLIFE AND ASSOCIATED ENTITIES. There is no
front-end sales charge, CDSC or initial investment minimum related to
investments in Class A shares of the Kobrick Funds by any of the advisers or
subadvisers of the Kobrick Funds or the Nvest Funds, Nvest Funds Distributor,
L.P. or any other company affiliated with New England Financial or Metropolitan
Life Insurance Company ("MetLife"); current and former directors and Trustees of
the Kobrick Funds or Nvest Funds; agents and general agents of New England
Financial or MetLife and their insurance company subsidiaries; current and
retired employees of such agents and general agents; registered representatives
of broker-dealers who have selling arrangements with Nvest Funds Distributor,
L.P.; the spouse, parents, children, siblings, in-laws, grandparents or
grandchildren of the persons listed above and any trust, pension, profit sharing
or other benefit plans for any of the foregoing persons and any separate account
of New England Financial or MetLife or any insurance company affiliated with New
England Financial or MetLife.
ELIGIBLE GOVERNMENTAL AUTHORITIES. There is no sales charge or contingent
deferred sales charge related to investments in Class A shares of any Fund by
any state, county or city or any instrumentality, department, authority or
agency thereof that has determined that a Fund is a legally permissible
investment and that is prohibited by applicable investment laws from paying a
sales charge or commission in connection with the purchase of shares of any
registered investment company.
INVESTMENT ADVISERY ACCOUNTS. Shares of any Fund may be purchased at net
asset value by investment advisers, financial planners or other intermediaries
who place trades for their own accounts or the accounts of their clients and who
charge a management, consulting or other fee for their services; clients of such
investment advisers, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment adviser, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Sections 401(a), 403(b), 401(k) and 457 of the Code and "rabbi
trusts." Investors may be charged a fee if they effect transactions through a
broker or agent.
CERTAIN BROKER-DEALERS AND FINANCIAL SERVICES ORGANIZATIONS. Shares of any
Fund also may be purchased at net asset value through certain broker-dealers
and/or financial services organizations without any transaction fee. Such
organizations may also receive compensation based upon the average value of the
Fund shares held by their customers. This compensation may be paid by Kobrick
out of its own assets, and/or be paid indirectly by the Fund in the form of
servicing, distribution or transfer agent fees.
CERTAIN RETIREMENT PLANS. Shares of the Funds are available at net asset
value for investments by participant-directed 401(a) and 401(k) plans that have
100 or more eligible employees or by retirement plans whose third party
administrator or dealer has entered into a service agreement with the
Distributor to perform certain administrative services, subject to certain
operational and minimum size requirements specified from time to time by the
Distributor. This compensation may be paid indirectly by the Fund in the form of
service and/or distribution fees.
BANK TRUST DEPARTMENTS OR TRUST COMPANIES. Shares of the Funds are
available at net asset value for investments by non-discretionary and
non-retirement accounts of bank trust departments or trust companies, but are
unavailable if the trust department or institution is part of an organization
not principally engaged in banking or trust activities.
SHAREHOLDERS OF REICH AND TANG GOVERNMENT SECURITIES TRUST. Shareholders
of Reich and Tang Government Securities Trust may exchange their shares of that
fund for Class A shares of the Funds at net asset value and without imposition
of a sales charge.
The reduction or elimination of the sales charges in connection with
special purchase plans described above reflects the absence or reduction of
expenses associated with such sales.
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SHAREHOLDER SERVICES
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The Kobrick Funds are organized as separate series of the Nvest Kobrick
Investment Trust, a Massachusetts business trust. The Kobrick Funds are
distributed by Nvest Funds Distributor, L.P., which also serves as the principal
distributor for the Nvest Funds. As a shareholder of one or more of the Kobrick
Funds, you are entitled to the same benefits and privileges as a shareholder of
the Nvest Funds, including participating in numerous shareholder services and
plans and having the ability to exchange into or out of any Nvest Fund (subject
to applicable restrictions). For purchasers of Class Y shares, certain services
may be different. Such purchasers should call Kobrick Funds at 1-888-523-8631.
Open Accounts
A shareholder's investment is automatically credited to an open account
maintained for the shareholder by State Street Bank. Following each transaction
in the account, a shareholder will receive a confirmation statement disclosing
the current balance of shares owned and the details of recent transactions in
the account. After the close of each calendar year, State Street Bank will send
each shareholder a statement providing federal tax information on dividends and
distributions paid to the shareholder during the year. This statement should be
retained as a permanent record. Nvest Services Company may charge a fee for
providing duplicate information.
The open account system provides for full and fractional shares expressed
to three decimal places and, by making the issuance and delivery of stock
certificates unnecessary, eliminates problems of handling and safekeeping, and
the cost and inconvenience of replacing lost, stolen, mutilated or destroyed
certificates. Certificates will not be issued for Class B, Class C or Class Y
shares.
The costs of maintaining the open account system are paid by the Funds and
no direct charges are made to shareholders. Although the Funds have no present
intention of making such direct charges to shareholders, they each reserve the
right to do so. Shareholders will receive prior notice before any such charges
are made.
Automatic Investment Plans (Class A, B and C Shares)
Subject to each Fund's investor eligibility requirements, investors may
automatically invest in additional shares of a Fund on a monthly basis by
authorizing the Distributor to draw checks on an investor's bank account. The
checks are drawn under the Investment Builder Program, a program designed to
facilitate such periodic payments, and are forwarded to Nvest Services Company
for investment in the Fund. A plan may be opened with an initial investment of
$100 or more and thereafter regular monthly checks of $100 or more will be drawn
on the investor's account. The reduced minimum initial investment pursuant to an
automatic investment plan is referred to in the Prospectus. An Investment
Builder application must be completed to open an automatic investment plan. An
application may be found in the Prospectus or may be obtained by calling the
Distributor at 800-225-5478 or your investment dealer.
This program is voluntary and may be terminated at any time by the Kobrick
Funds upon notice to existing plan participants.
The Investment Builder Program plan may be discontinued at any time by the
investor by written notice to Nvest Services Company, which must be received at
least five business days prior to any payment date. The plan may be discontinued
by State Street Bank at any time without prior notice if any check is not paid
upon presentation; or by written notice to you at least thirty days prior to any
payment date. State Street Bank is under no obligation to notify shareholders as
to the nonpayment of any check.
Retirement Plans Offering Tax Benefits (Class A, B and C Shares)
The federal tax laws provide for a variety of retirement plans offering
tax benefits. These plans may be funded with shares of the Funds or with certain
other investments. The plans include H.R. 10 (Keogh) plans for self-employed
individuals and partnerships, individual retirement accounts (IRAs), corporate
pension trust and profit sharing plans, including 401(k) plans, and retirement
plans for public school systems and certain tax-exempt organizations, i.e.,
403(b) plans.
The reduced minimum initial investment available to retirement plans
offering tax benefits is referred to in the Prospectus. For these plans, initial
investments in a Fund must be at least $250 for each participant in corporate
pension and profit sharing plans and Keogh plans, at least $500 for IRAs and at
least $100 for any subsequent investments. There is a special initial and
subsequent investment minimum of $25 for payroll deduction investment programs
for 401(k), SARSEP, SEP, SIMPLE Plans, 403(b) and certain other retirement
plans. Income dividends and capital gain distributions must be reinvested
(unless the investor is over age 59 1/2 or disabled). Plan documents and further
information can be obtained from the Distributor.
An investor should consult a competent tax or other adviser as to the
suitability of a Fund's shares as a vehicle for funding a plan, in whole or in
part, under the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and as to the eligibility requirements for a specific plan and its
state as well as federal tax aspects.
Certain retirement plans may also be eligible to purchase Class Y shares.
See the Prospectus relating to Class Y shares.
Systematic Withdrawal Plans (Class A, B and C Shares)
An investor owning a Fund's shares having a value of $5,000 or more at the
current public offering price may establish a Systematic Withdrawal Plan
providing for periodic payments of a fixed or variable amount. An investor may
terminate the plan at any time. A form for use in establishing such a plan is
available from the servicing agent or your investment dealer. Withdrawals may be
paid to a person other than the shareholder if a signature guarantee is
provided. Please consult your investment dealer or the Distributor.
A shareholder under a Systematic Withdrawal Plan may elect to receive
payments monthly, quarterly, semiannually or annually for a fixed amount of not
less than $50 or a variable amount based on (1) the market value of a stated
number of shares, (2) a specified percentage of the account's market value or
(3) a specified number of years for liquidating the account (e.g., a 20-year
program of 240 monthly payments would be liquidated at a monthly rate of 1/240,
1/239, 1/238, etc.). The initial payment under a variable payment option may be
$50 or more.
In the case of shares subject to a CDSC, the amount or percentage you
specify may not, on an annualized basis, exceed 10% of the value, as of the time
you make the election, of your account with the Fund with respect to which you
are electing the Plan. Withdrawals of Class B shares of a Fund under the Plan
will be treated as redemptions of shares purchased through the reinvestment of
Fund distributions, or, to the extent such shares in your account are
insufficient to cover Plan payments, as redemptions from the earliest purchased
shares of such Fund in your account. No CDSC applies to a redemption pursuant to
the Plan.
All shares under the Plan must be held in an open (uncertificated)
account. Income dividends and capital gain distributions will be reinvested
(without a sales charge in the case of Class A shares) at net asset value
determined on the record date.
Since withdrawal payments represent proceeds from the liquidation of
shares, withdrawals may reduce and possibly exhaust the value of the account,
particularly in the event of a decline in net asset value. Accordingly, a
shareholder should consider whether a Systematic Withdrawal Plan and the
specified amounts to be withdrawn are appropriate in the circumstances. The
Funds and the Distributor make no recommendations or representations in this
regard. It may be appropriate for a shareholder to consult a tax adviser before
establishing such a plan. The Funds may modify or terminate this program at any
time.
It may be disadvantageous for a shareholder to purchase on a regular basis
additional Fund shares with a sales charge while redeeming shares under a
Systematic Withdrawal Plan. Accordingly, the Funds and the Distributor do not
recommend additional investments in Class A shares by a shareholder who has a
withdrawal plan in effect and who would be subject to a sales load on such
additional investments.
Because of statutory restrictions this plan is not available to pension or
profit-sharing plans, IRAs or 403(b) plans that have State Street Bank as
trustee.
Dividend Diversification Program (Class A, B and C shares)
You may also establish a Dividend Diversification Program, which allows
you to have all dividends and any other distributions automatically invested in
shares of the same class of another Nvest Fund, subject to the investor
eligibility requirements of that other fund and to state securities law
requirements. Shares will be purchased at the selected fund's net asset value
(without a sales charge or CDSC) on the dividend record date. A dividend
diversification account must be in the same registration (shareholder name) as
the distributing fund account and, if a new account in the purchased fund is
being established, the purchased fund's minimum investment requirements must be
met. Before establishing a Dividend Diversification Program into any other Nvest
Fund, you must obtain and carefully read a copy of that fund's Prospectus.
Exchange Privilege
A shareholder may exchange the shares of any Kobrick Fund or Nvest Fund
(except for Class A shares of the Nvest Intermediate Term Tax Free Fund of
California only if such shares have been held for at least six months) for
shares of the same class of any other Kobrick Fund or Nvest Fund (subject to the
investor eligibility requirements, if any, of the Kobrick Fund or Nvest Fund
into which the exchange is being made) on the basis of relative net asset values
at the time of the exchange without any sales charge. An exchange of shares in
one fund for shares of another fund is a taxable event on which gain or loss may
be recognized. When an exchange is made from the Class A, Class B or Class C
shares of one fund to the same class of shares of another fund, the shares
received by the shareholder in the exchange will have the same age
characteristics as the shares exchanged. The age of the shares determines the
expiration of the CDSC and, for the Class B shares, the conversion date. If you
own Class A, Class B or Class C shares, you may also elect to exchange your
shares of any fund for shares of the same class of the Money Market Funds. On
all exchanges of Class A or C shares subject to a CDSC and Class B shares into
the Money Market Funds, the exchange stops the aging period relating to the
CDSC, and, for Class B shares only, conversion to Class A shares. The aging
period resumes only when an exchange is made back into Class A, B, or C shares
of a Fund. In addition, you may also exchange Class A shares of the Money Market
Funds that have not previously paid a sales charge to Class B or Class C shares
of any Kobrick Fund or Nvest Fund. If you own Class Y shares, you may exchange
those shares for Class Y shares of other funds or for Class A shares of the
Money Market Funds. These options are summarized in the Prospectus. An exchange
may be effected, provided that neither the registered name nor address of the
accounts are different and provided that a certificate representing the shares
being exchanged has not been issued to the shareholder, by (1) a telephone
request to the Kobrick Funds or Nvest Services Company at 800-225-5478
(1-888-523-8631 for Class Y shares) or (2) a written exchange request to the
Fund or Nvest Services Company, P.O. Box 8551, Boston, MA 02266-8551. You must
acknowledge receipt of a current Prospectus for a fund before an exchange for
that fund can be effected. The minimum amount for an exchange is $1,000.
Agents, general agents, directors and senior officers of New England
Financial and its insurance company subsidiaries may, at the discretion of New
England Financial, elect to exchange Class A shares of any series of the Nvest
Funds or Kobrick Funds acquired in connection with deferred compensation plans
offered by New England Financial for Class Y shares of any series of the Nvest
Funds or Kobrick Funds which offers Class Y shares. To obtain a prospectus and
more information about Class Y shares, please call Kobrick Funds at
1-888-523-8631.
Except as otherwise permitted by SEC rule, shareholders will receive at
least 60 days advance notice of any material change to the exchange privilege.
The investment objectives of the Nvest Funds and the Money Market Funds as set
forth in the respective Prospectuses are as follows:
STOCK FUNDS:
NVEST GROWTH FUND seeks long-term growth of capital through investments in
equity securities of companies whose earnings are expected to grow at a faster
rate than the United States economy.
NVEST CAPITAL GROWTH FUND seeks long-term growth of capital.
NVEST VALUE FUND seeks a reasonable long-term investment return from a
combination of market appreciation and dividend income from equity securities.
NVEST BALANCED FUND seeks a reasonable long-term investment return from a
combination of long-term capital appreciation and moderate current income.
NVEST GROWTH AND INCOME FUND seeks opportunities for long-term growth of
capital and income.
NVEST INTERNATIONAL EQUITY FUND seeks total return from long-term growth
of capital and dividend income primarily through investment in a diversified
portfolio of marketable international equity securities.
NVEST STAR ADVISERS FUND seeks long-term growth of capital.
NVEST STAR WORLDWIDE FUND seeks long-term growth of capital.
NVEST STAR SMALL CAP FUND seeks capital appreciation.
NVEST EQUITY INCOME FUND seeks current income and capital growth.
NVEST BULLSEYE FUND seeks long-term growth of capital.
BOND FUNDS:
NVEST GOVERNMENT SECURITIES FUND seeks a high level of current income
consistent with safety of principal by investing in U.S. Government securities
and engaging in transactions involving related options, futures and options on
futures.
NVEST LIMITED TERM U.S. GOVERNMENT FUND seeks a high current return
consistent with preservation of capital.
NVEST SHORT TERM CORPORATE INCOME FUND seeks a high level of current
income consistent with preservation of capital.
NVEST STRATEGIC INCOME FUND seeks high current income with a secondary
objective of capital growth.
NVEST BOND INCOME FUND seeks a high level of current income consistent
with what the Fund considers reasonable risk.
NVEST HIGH INCOME FUND seeks high current income plus the opportunity for
capital appreciation to produce a high total return.
NVEST MUNICIPAL INCOME FUND seeks as high a level of current income exempt
from federal income taxes as is consistent with reasonable risk and protection
of shareholders' capital.
NVEST MASSACHUSETTS TAX FREE INCOME FUND seeks as high a level of current
income exempt from federal income tax and Massachusetts personal income taxes as
the Fund's subadviser believes is consistent with preservation of capital.
NVEST INTERMEDIATE TERM TAX FREE FUND OF CALIFORNIA seeks as high a level
of current income exempt from federal income tax and its state personal income
tax as is consistent with preservation of capital.
ACCESS SHARES: (NOT CURRENTLY OFFERED FOR SALE)
NVEST CORE EQUITY FUND seeks long-term capital appreciation by investing
all or substantially all of its assets in The Oakmark Fund.
NVEST STOCK AND BOND FUND seeks high current income as well as
preservation and growth of capital by investing all or substantially all of its
assets in The Oakmark Equity and Income Fund.
NVEST SELECT FUND seeks long-term capital appreciation by investing all or
substantially all of its assets in The Oakmark Select Fund.
NVEST SMALL CAP VALUE FUND seeks long-term capital appreciation by
investing all or substantially all of its assets in The Oakmark Small Cap Fund.
NVEST SMALL CAP GROWTH FUND seeks long-term capital growth by investing
all or substantially all of its assets in the Loomis Sayles Small Cap Growth
Fund.
NVEST TOTAL RETURN BOND FUND seeks high total investment return through a
combination of current income and capital appreciation by investing all or
substantially all of its assets in the Loomis Sayles Bond Fund.
MONEY MARKET FUNDS:
NVEST CASH MANAGEMENT TRUST - MONEY MARKET SERIES seeks maximum current
income consistent with preservation of capital and liquidity.
NVEST TAX EXEMPT MONEY MARKET TRUST - seeks current income exempt from
federal income taxes consistent with preservation of capital and liquidity.
As of September 30, 1999, the net assets of the Nvest Funds (including the
Kobrick Funds) and the Money Market Funds totaled over $7.5 billion.
Automatic Exchange Plan (Class A, B and C Shares)
As described in the Prospectus following the caption "Additional Investor
Services," a shareholder may establish an Automatic Exchange Plan under which
shares of a Fund are automatically exchanged each month for shares of the same
class of one or more of the other Nvest Funds (including the Kobrick Funds) and
the Money Market Funds. Registration on all accounts must be identical. The
exchanges are made on the 15th of each month or the first business day
thereafter if the 15th is not a business day until the account is exhausted or
until Nvest Services Company is notified in writing to terminate the plan.
Exchanges may be made in amounts of $100 or more. The Service Options Form is
available from Nvest Services Company or your financial representative to
establish an Automatic Exchange Plan.
Broker Trading Privileges
The Distributor may, from time to time, enter into agreements with one or
more brokers or other intermediaries to accept purchase and redemption orders
for Fund shares until the close of regular trading on the NYSE (normally, 4:00
p.m. Eastern Time on each day that the Exchange is open for trading); such
purchase and redemption orders will be deemed to have been received by the Fund
when the authorized broker or intermediary accepts such orders; and such orders
will be priced using that Fund's net asset value next computed after the orders
are placed with and accepted by such brokers or intermediaries. Any purchase and
redemption orders received by a broker or intermediary under these agreements
will be transmitted daily to the Distributor no later than the time specified in
such agreement; but, in any event, no later than 6:00 a.m. following the day
that such purchase or redemption orders are received by the broker or
intermediary.
Nvest Portfolio Reporting Option ("NvestPRO") (Class A, B and C shares)
Fund Shareholders who are clients of broker-dealers that have entered into
an agreement with Nvest Funds and the Distributor, and have total net assets of
$50,000 or more may be eligible to receive NvestPRO Quarterly Reports in
addition to their standard Nvest Funds quarterly statements. Eligible clients
are defined as clients with a portfolio of regular and IRA accounts that are
assigned to the same social security number having a minimum account value of:
(i) $50,000 in the case of a new account or (ii) $100,000 in the case of an
existing account. NvestPRO Quarterly Reports include graphic performance
illustrations and are designed to provide investors with individualized
performance information on their Nvest Funds holdings. Individualized
performance illustrated in the NvestPRO reports is determined from the first
date of participation in the NvestPRO product, not the account open date.
Clients who elect to participate in the NvestPRO program are also offered
access to an asset allocation questionnaire that is designed to assist them and
their registered representative in choosing an initial portfolio of Nvest Funds
based on their financial profile, objectives, and risk tolerance. This is not an
actively managed asset allocation program as described in Rule 3a-4 of the 1940
Act. The Distributor will charge a fee for this product (currently $35 annually
per portfolio), and has the right to determine account minimums for
participation in the product.
Self-Servicing Your Account with Nvest Funds Personal Access Line(R) and Web
site (Class A, B and C shares)
Shareholders may access account information, including share balances and
recent account activity online, by visiting the Nvest Funds Web site at
www.nvestfunds.com. Transactions may also be processed online for certain
accounts (restrictions may apply). Such transactions include purchases,
redemptions and exchanges, and shareholders are automatically eligible for these
features. Nvest Funds has taken measures to ensure the security of shareholder
accounts, including the encryption of data and the use of personal
identification (PIN) numbers. In addition, you may restrict these privileges
from your account by calling Nvest Funds at 800-225-5478, or writing to us at
P.O. Box 8551, Boston, MA 02116. More information regarding these features may
be found on the Web site at www.nvestfunds.com.
Investor activity through these mediums are subject to the terms and conditions
outlined in the following NVEST FUNDS ONLINE AND TELEPHONIC CUSTOMER AGREEMENT.
This agreement is also posted on our Web site. The initiation of any activity
through the Nvest Funds Personal Access Line(R), or Web site at
www.nvestfunds.com by an investor shall indicate agreement with the following
terms and conditions:
NVEST FUNDS ONLINE AND TELEPHONIC CUSTOMER AGREEMENT
NOTE: ACCESSING OR REQUESTING ACCOUNT INFORMATION OR TRANSACTIONS THROUGH
THIS SITE CONSTITUTES AND SHALL BE DEEMED TO BE AN ACCEPTANCE OF THE
FOLLOWING TERMS AND CONDITIONS.
The accuracy, completeness and timeliness of all mutual fund information
provided is the sole responsibility of the mutual fund company which provides
the information. No party which provides a connection between this web site and
a mutual fund or its transfer agency system can verify or ensure the receipt of
any information transmitted to or from a mutual fund or its transfer agent, or
the acceptance by, or completion of any transaction with, a mutual fund.
The online acknowledgments or other messages which appear on your screen for
transactions entered do not mean that the transactions have been received,
accepted or rejected by the mutual fund. These acknowledgments are only an
indication that the transactional information entered by you has either been
transmitted to the mutual fund, or that it cannot be transmitted. It is the
responsibility of the mutual fund to confirm to you that it has received the
information and accepted or rejected a transaction. It is the responsibility of
the mutual fund to deliver to you a current prospectus, confirmation statement
and any other documents or information required by applicable law.
NO TRANSACTION SHALL BE DEEMED ACCEPTED UNTIL YOU RECEIVE A WRITTEN CONFIRMATION
FROM THE FUND COMPANY.
You are responsible for reviewing all mutual fund account statements received by
you in the mail in order to verify the accuracy of all mutual fund account
information provided in the statement and transactions entered through this
site. You are also responsible for promptly notifying the mutual fund of any
errors or inaccuracies relating to information contained in, or omitted from
your mutual fund account statements, including errors or inaccuracies arising
from the transactions conducted through this site.
TRANSACTIONS ARE SUBJECT TO ALL REQUIREMENTS, RESTRICTIONS AND FEES AS SET FORTH
IN THE PROSPECTUS OF THE SELECTED FUND.
THE CONDITIONS SET FORTH IN THIS AGREEMENT EXTEND NOT ONLY TO TRANSACTIONS
TRANSMITTED VIA THE INTERNET BUT TO TELEPHONIC TRANSACTIONS INITIATED THROUGH
THE NVEST FUNDS PERSONAL ACCESS LINE(R).
You are responsible for the confidentiality and use of your personal
identification numbers, account numbers, social security numbers and any other
personal information required to access the site or transmit telephonically. Any
individual that possesses the information required to pass through all security
measures will be presumed to be you. All transactions submitted by an individual
presumed to be you will be solely your responsibility.
You agree that Nvest Funds does not have the responsibility to inquire as to the
legitimacy or propriety of any instructions received from you or any person
believed to be you, and is not responsible or liable for any losses that may
occur from acting on such instructions.
Nvest Funds is not responsible for incorrect data received via the Internet or
telephonically from you or any person believed to be you. Transactions submitted
over the Internet and telephonically are solely your responsibility and Nvest
Funds makes no warranty as to the correctness, completeness, or the accuracy of
any transmission. Similarly Nvest Funds bears no responsibility for the
performance of any computer hardware, software, or the performance of any
ancillary equipment and services such as telephone lines, modems, or Internet
service providers.
The processing of transactions over this site or telephonically will involve the
transmission of personal data including social security numbers, account numbers
and personal identification numbers. While Nvest Funds has taken reasonable
security precautions including data encryption designed to protect the integrity
of data transmitted to and from the areas of our Web site that relate to the
processing of transactions, we disclaim any liability for the interception of
such data.
You agree to immediately notify Nvest Funds if any of the following occurs:
1. You do not receive confirmation of a transaction submitted via the Internet
or telephonically within five (5) business days.
2. You receive confirmation of a transaction of which you have no knowledge and
was not initiated or authorized by you.
3. You transmit a transaction for which you do not receive a confirmation
number.
4. You have reason to believe that others may have gained access to your
personal identification number (PIN) or other personal data.
5. You notice an unexplained discrepancy in account balances or other changes to
your account, including address changes, and banking instructions on any
confirmations or statements.
Any costs incurred in connection with the use of the Nvest Funds Personal Access
Line(R) or the Nvest Funds Internet site including telephone line costs, and
Internet service provider costs are solely your responsibility. Similarly Nvest
Funds makes no warranties concerning the availability of Internet services, or
network availability.
Nvest Funds reserves the right to suspend, terminate or modify the Internet
capabilities offered to shareholders without notice.
YOU HAVE THE ABILITY TO RESTRICT INTERNET AND TELEPHONIC ACCESS TO YOUR ACCOUNTS
BY NOTIFYING NVEST FUNDS OF YOUR DESIRE TO DO SO.
Written notifications to Nvest Funds should be sent to:
Nvest Funds
P O Box 8551
Boston, MA 02266-8551
Notification may also be made by calling 800-225-5478 during normal business
hours.
- --------------------------------------------------------------------------------
REDEMPTIONS
- --------------------------------------------------------------------------------
The procedures for redemption of shares of a Fund are summarized in the
Prospectus. As described in the Prospectus, a CDSC may be imposed on certain
purchases of Class A, Class B and Class C shares. For purposes of the CDSC, an
exchange of shares from one fund to another fund is not considered a redemption
or a purchase. For federal tax purposes, however, such an exchange is considered
a sale and a purchase and, therefore, would be considered a taxable event on
which you may recognize a gain or loss. In determining whether a CDSC is
applicable to a redemption of Class A, Class B or Class C shares, the
calculation will be determined in the manner that results in the lowest rate
being charged. Therefore, for Class B shares it will be assumed that the
redemption is first of any Class A shares in the shareholder's Fund account,
second of shares held for over six years, third of shares issued in connection
with dividend reinvestment and fourth of shares held longest during the six-year
period. For Class C shares and Class A shares subject to CDSC, it will be
assumed that the redemption is first of any shares that have been in the
shareholder's Fund account for over a year, and second of any shares that have
been in the shareholder's Fund account for under a year. The charge will not be
applied to dollar amounts representing an increase in the net asset value of
shares since the time of purchase or reinvested distributions associated with
such shares. Unless you request otherwise at the time of redemption, the CDSC is
deducted from the redemption, not the amount remaining in the account.
To illustrate, assume an investor purchased 100 Class B shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares under dividend reinvestment. If at such time the investor
makes his or her first redemption of 50 shares (proceeds of $600), 10 shares
will not be subject to the CDSC because of dividend reinvestment. With respect
to the remaining 40 shares, the CDSC is applied only to the original cost of $10
per share and not to the increase in the net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds will be charged at a rate of 4%
(the applicable rate in the second year after purchase).
Signatures on redemption requests must be guaranteed by an "Eligible
Guarantor Institution," as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934. However, a signature guarantee will not be required if the proceeds
of the redemption do not exceed $100,000 and the proceeds check is made payable
to the registered owner(s) and mailed to the record address.
If you select the telephone redemption service in the manner described in
the next paragraph, shares of a Fund may be redeemed by calling toll free
800-225-5478 (1-888-523-8631 for Class Y shares). A wire fee, currently $5.00,
will be deducted from the proceeds. Telephone redemption requests must be
received by the close of regular trading on the NYSE. Requests made after that
time or on a day when the NYSE is not open for business cannot be accepted and a
new request on a later day will be necessary. The proceeds of a telephone
withdrawal will normally be sent on the first business day following receipt of
a proper redemption request.
In order to redeem shares by telephone, a shareholder must either select
this service when completing the Fund application or must do so subsequently on
the Service Options Form, available from Nvest Services Company or your
investment dealer. When selecting the service, a shareholder must designate a
bank account to which the redemption proceeds should be sent. Any change in the
bank account so designated may be made by furnishing to Nvest Services Company
or your investment dealer a completed Service Options Form with a signature
guarantee. Whenever the Service Options Form is used, the shareholder's
signature must be guaranteed as described above. Telephone redemptions may only
be made if the designated bank is a member of the Federal Reserve System or has
a correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System.
The redemption price will be the net asset value per share (less any
applicable CDSC) next determined after the redemption request and any necessary
special documentation are received by State Street Bank or your investment
dealer in proper form. Payment normally will be made by State Street Bank on
behalf of the Fund within seven days thereafter. However, in the event of a
request to redeem shares for which the Fund has not yet received good payment,
the Funds reserve the right to withhold payments of redemption proceeds if the
purchase of shares was made by a check which was deposited less than fifteen
days prior to the redemption request (unless the Fund is aware that the check
has cleared).
The CDSC may be waived on redemptions made from IRA accounts due to
attainment of age 59 1/2 for IRA shareholders who established accounts prior to
January 3, 1995. The CDSC may also be waived on redemptions made from IRA
accounts due to death, disability, return of excess contribution, required
minimum distributions at age 70 1/2 (waivers apply only to amounts necessary to
meet the required minimum amount), certain withdrawals pursuant to a systematic
withdrawal plan, not to exceed 10% annually of the value of the account, and
redemptions made from the account to pay custodial fees.
The CDSC may be waived on redemptions made from 403(b)(7) custodial
accounts due to attainment of age 59 1/2 for shareholders who established
custodial accounts prior to January 3, 1995.
The CDSC may also be waived on redemptions necessary to pay plan
participants or beneficiaries from qualified retirement plans under Section 401
of the Code, including profit sharing plans, money purchase plans, 401(k) and
custodial accounts under Section 403(b)(7) of the Code. Distributions necessary
to pay plan participants and beneficiaries include payment made due to death,
disability, separation from service, normal or early retirement as defined in
the plan document, loans from the plan and hardship withdrawals, return of
excess contributions, required minimum distributions at age 70 1/2 (waivers only
apply to amounts necessary to meet the required minimum amount), certain
withdrawals pursuant to a systematic withdrawal plan, not to exceed 10% annually
of the value of your account, and redemptions made from qualified retirement
accounts or Section 403(b)(7) custodial accounts necessary to pay custodial
fees.
A CDSC will apply in the event of plan level transfers, including
transfers due to changes in investment where assets are transferred outside of
Kobrick Funds or Nvest Funds, including IRA and 403(b)(7) participant-directed
transfers of assets to other custodians (except for the reasons given above) or
qualified transfers of assets due to trustee-directed movement of plan assets
due to merger, acquisition or addition of additional funds to the plan.
The Funds will normally redeem shares for cash; however, the Funds reserve
the right to pay the redemption price wholly or partly in kind if the relevant
Trust's Board of Trustees determines it to be advisable and in the interest of
the remaining shareholders of a Fund. The redemptions in kind will be selected
by the Fund's Investment Adviser in light of the Fund's objective and will not
generally represent a pro rata distribution of each security held in the Fund's
portfolio. If portfolio securities are distributed in lieu of cash, the
shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities. However, the Funds have elected to be
governed by Rule 18f-1 under the 1940 Act, pursuant to which the Funds are
obligated to redeem shares solely in cash for any shareholder during any 90-day
period up to the lesser of $250,000 or 1% of the total net asset value of the
relevant Fund at the beginning of such period. The Funds do not currently intend
to impose any redemption charge (other than the CDSC imposed by the Funds'
distributor), although it reserves the right to charge a fee not exceeding 1% of
the redemption price. A redemption constitutes a sale of shares for federal
income tax purposes on which the investor may realize a long- or short-term
capital gain or loss. See also "Income Dividends, Capital Gain Distributions and
Tax Status," below.
The Funds may also close your account and send you the proceeds if the
balance in your account falls below a minimum amount set by each Trust's Board
of Trustees (currently $1,000 for all accounts except Keogh, pension and profit
sharing plans, automatic investment plans and accounts that have fallen below
the minimum solely because of fluctuations in the net asset value per share).
Shareholders who are affected by this policy will be notified of the Fund's
intention to close the account and will have 60 days immediately following the
notice to bring the account up to the minimum.
Reinstatement Privilege (Class A shares only)
The Prospectus describes redeeming shareholders' reinstatement privileges
for Class A shares. Written notice and the investment check from persons wishing
to exercise this reinstatement privilege must be received by your investment
dealer within 120 days after the date of the redemption. The reinstatement or
exchange will be made at net asset value next determined after receipt of the
notice and the investment check and will be limited to the amount of the
redemption proceeds or to the nearest full share if fractional shares are not
purchased.
Even though an account is reinstated, the redemption will constitute a
sale for federal income tax purposes. Investors who reinstate their accounts by
purchasing shares of the Funds should consult with their tax advisers with
respect to the effect of the "wash sale" rule if a loss is realized at the time
of the redemption.
- --------------------------------------------------------------------------------
STANDARD PERFORMANCE MEASURES
- --------------------------------------------------------------------------------
Calculation of Total Return. Total return is a measure of the change in
value of an investment in a Fund over the period covered, which assumes that any
dividends or capital gains distributions are automatically reinvested in shares
of the same class of that Fund rather than paid to the investor in cash. Each
Fund may show each class's average annual total return for the one-year,
five-year and ten-year periods (or for the life of the class, if shorter)
through the end of the most recent calendar quarter. The formula for total
return used by the Funds is prescribed by the SEC and includes three steps: (1)
adding to the total number of shares of the particular class that would be
purchased by a hypothetical $10,000 investment in the Fund (with or without
giving effect to the deduction of sales charge or CDSC, if applicable) all
additional shares that would have been purchased if all dividends and
distributions paid or distributed during the period had been automatically
reinvested; (2) calculating the value of the hypothetical initial investment as
of the end of the period by multiplying the total of shares owned at the end of
the period by the net asset value per share of the relevant class on the last
trading day of the period; (3) dividing this account value for the hypothetical
investor by the amount of the initial investment, and annualizing the result for
periods of less than one year. Total return may be stated with or without giving
effect to any expense limitations in effect for a Fund. For each Fund that
presents returns reflecting an expense limitation or waiver, its total return
would have been lower if no limitation or waiver were in effect.
Performance Comparisons
Total Return. Total returns will generally be higher for Class A shares
than for Class B and Class C shares of the same Fund, because of the higher
levels of expenses borne by the Class B and Class C shares. Because of its lower
operating expenses, Class Y shares of each Fund can be expected to achieve a
higher total return than the same Fund's Class A, Class B and Class C shares.
The Funds may from time to time include their total return in advertisements or
in information furnished to present or prospective shareholders. Each Fund may
from time to time include in advertisements its total return and the ranking of
those performance figures relative to such figures for groups of mutual funds
categorized by Morningstar, Inc. or Lipper, Inc. as having similar investment
objectives or styles.
Total return may also be used to compare the performance of the Fund
against certain widely acknowledged standards or indices for stock and bond
market performance or against the U.S. Bureau of Labor Statistics' Consumer
Price Index.
The Standard & Poor's Composite Index of 500 Stocks (the "S&P 500") is a
market capitalization-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
NYSE, although the common stocks of a few companies listed on the American Stock
Exchange or traded over-the-counter are included.
The Standard & Poor's Composite Index of 400 Stocks (the "S&P 400") is a
market capitalization-weighted and unmanaged index that includes approximately
10% of the capitalization of U.S. equity securities. This index is comprised of
stocks in the middle capitalization range. Any midcap stocks already included in
the S&P 500 are excluded from this index.
The Dow Jones Industrial Average is a market value-weighted and unmanaged
index of 30 large industrial stocks traded on the NYSE.
The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices of
goods and services in major expenditure groups.
The Funds may cite their ratings, recognition, or other mention by
Morningstar, Inc. ("Morningstar") or any other entity. Morningstar's rating
system is based on risk-adjusted total return performance and is expressed in a
star-rating format. The risk-adjusted number is computed by subtracting a fund's
risk score (which is a function of the fund's monthly returns less the 3-month
T-bill return) from the fund's load-adjusted total return score. This numerical
score is then translated into rating categories, with the top 10% labeled five
star, the next 22.5% labeled four star, the next 35% labeled three star, the
next 22.5% labeled two star, and the bottom 10% one star. A high rating reflects
either above-average returns or below-average risk or both. Each Fund may also
compare its performance or ranking against all funds tracked by Morningstar or
another independent service, including Lipper, Inc. ("Lipper").
Lipper Indices and Averages are calculated and published by Lipper, an
independent service that monitors the performance of more than 1,000 funds. The
Funds may also use comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent service. Should
Lipper or another service reclassify a Fund to a different category or develop
(and place a Fund into) a new category, that Fund may compare its performance or
ranking against other funds in the newly assigned category, as published by the
service.
The Russell 3000 Index is a market capitalization-weighted index which
comprises 3,000 of the largest capitalized U.S. companies whose common stock is
traded in the United States on the NYSE, the American Stock Exchange and NASDAQ.
The Russell 2000 Index represents the smallest 2,000 companies within the
Russell 3000 Index as measured by market capitalization. The Russell 1000 Index
represents the largest 1,000 companies within the Russell 3000 Index. The
Russell 1000 Growth Index is an unmanaged subset of stocks from the larger
Russell 1000 Index, selected for their greater growth orientation. The Russell
1000 Value Index is an unmanaged subset of stocks from the larger Russell 1000
Index, selected for their greater value orientation.
Articles and releases, developed by the Funds and other parties, about the
Funds regarding performance, rankings, statistics and analyses of the individual
Funds' and the fund group's asset levels and sales volumes, numbers of
shareholders by Fund or in the aggregate for the Funds, statistics and analyses
of industry sales volumes and asset levels, and other characteristics may appear
in advertising, promotional literature, publications, including, but not limited
to, those publications listed in Appendix B to this Statement, and on various
computer networks, for example, the Internet. In particular, some or all of
these publications may publish their own rankings or performance reviews of
mutual funds, including, but not limited to, Lipper Analytical Services and
Morningstar. References to these rankings or reviews or reprints of such
articles may be used in the Funds' advertising and promotional literature. Such
advertising and promotional material may refer to Nvest Companies, its
structure, goals and objectives and the Advisory subsidiaries of Nvest
Companies, including their portfolio management responsibilities, portfolio
managers and their categories and background; their tenure, investment styles
and strategies and their shared commitment to fundamental investment principles
and may identify specific clients, as well as discuss the types of institutional
investors who have selected the advisers to manage their investment portfolios
and the reasons for that selection. The references may discuss the independent,
entrepreneurial nature of each Advisory organization and allude to or include
excerpts from articles appearing in the media regarding Nvest Companies, its
Advisory subsidiaries and their personnel. For additional information about the
Funds' advertising and promotional literature, see Appendix B.
The Funds may use the accumulation charts below in their advertisements to
demonstrate the benefits of monthly savings at an 8% and 10% rate of return,
respectively.
INVESTMENTS AT 8% RATE OF RETURN
5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
------- -------- -------- -------- -------- --------
$ 50 $ 3,698 $ 9,208 $ 17,417 $ 29,647 $ 47,868 $ 75,015
75 5,548 13,812 26,126 44,471 71,802 112,522
100 7,396 18,417 34,835 59,295 95,737 150,029
150 11,095 27,625 52,252 88,942 143,605 225,044
200 14,793 36,833 69,669 118,589 191,473 300,059
500 36,983 92,083 174,173 296,474 478,683 750,148
INVESTMENTS AT 10% RATE OF RETURN
5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
------- -------- -------- -------- -------- --------
$ 50 $ 3,904 $ 10,328 $ 20,896 $ 38,285 $ 66,895 $ 113,966
75 5,856 15,491 31,344 57,427 100,342 170,949
100 7,808 20,655 41,792 76,570 133,789 227,933
150 11,712 30,983 62,689 114,855 200,684 341,899
200 15,616 41,310 83,585 153,139 267,578 455,865
500 39,041 103,276 208,962 382,848 668,945 1,139,663
The Funds' advertising and sales literature may refer to historical,
current and prospective political, social, economic and financial trends and
developments that affect domestic and international investment as they relate to
any of the Funds. The Funds' advertising and sales literature may include
historical and current performance and total returns of investment alternatives
to the Funds. Articles, releases, advertising and literature may discuss the
range of services offered by the Trust, the Distributor, and the transfer agent
of the Funds, with respect to investing in shares of the Funds and customer
service. Such materials may discuss the multiple classes of shares available
through the Trust and their features and benefits, including the details of the
pricing structure.
The Distributor may make reference in its advertising and sales literature
to awards, citations and honors bestowed on it by industry organizations and
other observers and raters including, but not limited to, Dalbar's Quality
Tested Service Seal and Key Honors Award. Such reference may explain the
criteria for the award, indicate the nature and significance of the honor and
provide statistical and other information about the award and the Distributor's
selection including, but not limited to, the scores and categories in which the
Distributor excelled, the names of funds and fund companies that have previously
won the award and comparative information and data about those against whom the
Distributor competed for the award, honor or citation.
The Distributor may publish, allude to or incorporate in its advertising
and sales literature testimonials from shareholders, clients, brokers who sell
or own shares, broker-dealers, industry organizations and officials and other
members of the public, including, but not limited to, Fund performance, features
and attributes, or service and assistance provided by departments within the
organization, employees or associates of the Distributor.
Advertising and sales literature may also refer to the beta coefficient of
the Funds. A beta coefficient is a measure of systematic or undiversifiable risk
of a stock. A beta coefficient of more than 1 means that the company's stock has
shown more volatility than the market index (e.g., the S&P 500) to which it is
being related. If the beta is less than 1, it is less volatile than the market
average to which it is being compared. If it equals 1, its risk is the same as
the market index. High variability in stock price may indicate greater business
risk, instability in operations and low quality of earnings. The beta
coefficients of the Funds may be compared to the beta coefficients of other
funds.
The Funds may enter into arrangements with banks exempted from
broker-dealer registration under the Securities Exchange Act of 1934.
Advertising and sales literature developed to publicize such arrangements will
explain the relationship of the bank to the Funds and the Distributor as well as
the services provided by the bank relative to the Funds. The material may
identify the bank by name and discuss the history of the bank including, but not
limited to, the type of bank, its asset size, the nature of its business and
services and its status and standing in the industry.
In addition, sales literature may be published concerning topics of
general investor interest for the benefit of registered representatives and the
Funds' prospective shareholders. These materials may include, but are not
limited to, discussions of college planning, retirement planning and reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE OF THE FUNDS
- --------------------------------------------------------------------------------
PERFORMANCE RESULTS - PERCENT CHANGE*
For The Periods Ended 9/30/99
CAPITAL FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class A shares: As a % of 1 Year 12/31/97** 12/31/97**
- -------------------------- ------ ---------- ---------
Net Asset Value 60.7 72.1 36.4
Maximum Offering Price 51.5 62.2 31.8
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class B shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ---------
Net Asset Value 59.9 70.8 35.6
Redemption at End of Period 54.9 66.8 31.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ---------
Net Asset Value 59.9 70.8 35.6
Redemption at End of Period 58.9 70.8 35.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ---------
Net Asset Value 60.9 72.5 36.6
EMERGING GROWTH FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class A shares: As a % of 1 Year 12/31/97** 12/31/97**
- -------------------------- ------ ---------- ----------
Net Asset Value 63.1 65.4 33.3
Maximum Offering Price 53.7 55.9 28.9
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class B shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 62.4 64.1 32.6
Redemption at End of Period 57.4 60.1 28.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 62.4 64.1 32.6
Redemption at End of Period 61.4 64.1 32.6
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ---------
Net Asset Value 63.4 65.8 33.6
GROWTH FUND+
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class A shares: As a % of 1 Year 9/01/98** 9/01/98**
- -------------------------- ------ --------- ---------
Net Asset Value 49.3 54.1 49.1
Maximum Offering Price 40.8 45.3 41.2
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class B shares: As a % of 1 Year 9/01/98** 9/01/98**
- -------------------------- ------ --------- ----------
Net Asset Value 48.6 53.3 48.4
Redemption at End of Period 43.6 49.3 44.4
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class C shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ --------- ----------
Net Asset Value 48.6 53.3 48.4
Redemption at End of Period 47.6 53.3 48.4
Aggregate Average Annual
Total Return Total Return
-------------------------------------------
Since Since
Class Y shares: As a % of 1 Year 11/01/99** 11/01/99**
- -------------------------- ------ ---------- ----------
Net Asset Value 49.6 54.4 49.4
* Federal regulations require this example to be calculated using a $1,000
investment. The normal minimum initial investment in shares of the Funds is
$2,500, however.
** Commencement of Fund operations or offering of specified class of shares.
+ Until November 1, 1999 the Funds had only one class of shares and were
offered without a sales charge. Therefore performance results have been
restated to account for fees and expenses under the Funds' new multiple class
structure.
The foregoing data represent past performance only and are not a prediction as
to the future returns of any Fund. The investment return and principal value of
an investment in any Fund will fluctuate so that the investor's shares, when
redeemed, may be worth more or less than this original cost.
- --------------------------------------------------------------------------------
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
As described in the Prospectus, it is the policy of each Fund to pay its
shareholders, as dividends, substantially all net investment income and to
distribute annually all net realized long-term capital gains, if any, after
offsetting any capital loss carryovers.
Ordinary income dividends and capital gain distributions are payable in
full and fractional shares of the relevant class of the particular Fund based
upon the net asset value determined as of the close of the NYSE on the record
date for each dividend or distribution. Shareholders, however, may elect to
receive their ordinary income dividends or capital gain distributions, or both,
in cash. The election may be made at any time by submitting a written request
directly to the Funds. In order for a change to be in effect for any dividend or
distribution, it must be received by the Funds on or before the record date for
such dividend or distribution.
If you elect to receive your dividends in cash and the dividend checks
sent to you are returned "undeliverable" to the Fund or remain uncashed for six
months, your cash election will automatically be changed and your future
dividends will be reinvested. No interest will accrue on amounts represented by
uncashed dividend or redemption checks.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to qualify, each Fund must, among other
things, (i) derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to certain securities loans, gains
from the sale of securities or foreign currencies, or other income (including,
but not limited to, gains from options, futures or forward contracts) derived
with respect to its business of investing in such stock, securities or
currencies; (ii) distribute at least 90% of its dividend, interest and certain
other taxable income each year; and (iii) diversify its holdings so that at the
end of each fiscal quarter, (a) at least 50% of the value of its total assets
consists of cash, U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally, with respect to
any one issuer, to no more than 5% of the value of the Fund's total assets and
10% of the outstanding voting securities of such issuer, and (b) not more than
25% of the value of its assets is invested in the securities (other than those
of the U.S. Government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades or businesses. So long as it qualifies
for treatment as a regulated investment company, a Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund is so permitted to elect and so elects) plus undistributed amounts from
prior years. Each Fund intends to make distributions sufficient to avoid
imposition of the excise tax. Distributions declared and payable by a Fund
during October, November or December to shareholders of record on a date in any
such month and paid by the Fund during the following January will be treated for
federal tax purposes as paid by the Fund and received by shareholders on
December 31 of the year in which declared.
Fund distributions paid to you either in cash or reinvested in additional
shares are generally taxable to you either as ordinary income or as capital
gains. Distributions derived from short-term capital gains or investment income
are generally taxable at ordinary income rates. If you are a corporation
investing in a Fund, a portion of these dividends may qualify for the
dividends-received deduction provided that you meet certain holding period
requirements. Distributions of net long-term capital gains (i.e., the excess of
net gains from capital assets held for more than one year over net losses from
capital assets held for not more than one year) that are designated by a Fund as
capital gain dividends will generally be taxable to a shareholder receiving such
distributions as long-term capital gain (generally taxed at a 20% tax rate for
noncorporate shareholders) regardless of how long the shareholder has held Fund
shares. To avoid an excise tax, each Fund intends to distribute dividends prior
to calendar year-end. Some dividends paid in January may be taxable as if they
were received in the previous December.
A loss on the sale of shares held for six months or less will be
disallowed for federal income tax purposes to the extent of exempt-interest
dividends received with respect to such shares and thereafter treated as a
long-term capital loss to the extent of any long-term capital gain dividend paid
to the shareholder with respect to such shares.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.
Each Fund's transactions, if any, in foreign currencies are likely to
result in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to constitute
a return of capital or capital gain for tax purposes or require the Fund to make
distributions exceeding book income to avoid excise tax liability and to qualify
as a regulated investment company.
A Fund's transactions in foreign currency-denominated debt securities and
its hedging activities, if any, will likely produce a difference between its
book income and its taxable income. This difference may cause a part or all of a
Fund's income distributions to constitute returns of capital for tax purposes or
require the Fund to make distributions exceeding book income to avoid federal
income tax liability.
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions.
Generally, if a shareholder redeems or exchanges shares that have been held for
more than one year, gain or loss realized will be recognized and taxed at
long-term federal tax rates (generally 20% for noncorporate shareholders),
provided the shareholder holds the shares as a capital asset. Furthermore, no
loss will be allowed on the sale of Fund shares to the extent the shareholder
acquired other shares of the same Fund within 30 days prior to the sale of the
loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
Each Fund is required to withhold 31% of all income dividends and capital
gains distributions it pays to you if you do not provide a correct, certified
taxpayer identification number, if a Fund is notified that you have
underreported income in the past or if you fail to certify to a Fund that you
are not subject to such withholding. If you are a tax-exempt shareholder,
however, these backup withholding rules will not apply so long as you furnish
the Fund with an appropriate certification.
The foregoing discussion relates solely to U.S. federal income tax
law. Non-U.S. investors should consult their tax advisers concerning the
tax consequences of ownership of shares of the Fund, including the
possibility that distributions may be subject to a 30% United States
withholding tax (or a reduced rate of withholding provided by treaty).
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements and the related report of independent
accountants included in the annual report of the Funds for the fiscal year ended
September 30, 1999 are incorporated by reference.. The Funds' annual and
semiannual reports are available upon request without charge. Shareholders may
request the annual or semiannual report by telephone at (800) 225-5478 or by
writing to the Funds at Nvest Funds Distributor, L.P., 399 Boylston Street,
Boston, Massachusetts 02116.
<PAGE>
APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
ABC and affiliates
Adam Smith's Money World
America On Line
Anchorage Daily News
Arizona Republic
Atlanta Constitution
Atlanta Journal
Austin American Statesman
B'nai B'rith Jewish Monthly
Baltimore Sun
Bank Investment Marketing
Barron's
Bergen County Record (NJ)
Bloomberg Business News
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Fee Adviser
Financial News Network
Financial Planning
Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the) Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Adviser
Investment Company Institute
Investment Dealers Digest
Investment Profiles
Investment Vision
Investor's Business Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
LA Times
Lear's
Leckey, Andrew (syndicated column)
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
Mutual Funds Magazine
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
New York Times
Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Adviser
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UPI
US News and World Report
USA Today
USA TV Network
Value Line
Wall St. Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ
WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
World Wide Web
Worth Magazine
WRKO
<PAGE>
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
References may be included in the Funds' advertising and promotional
literature to Nvest Companies and its affiliates.
The Funds' advertising and promotional material may include, but is not
limited to, discussions of the following information about both affiliated and
unaffiliated entities:
[] Specific and general assessments and forecasts regarding U.S. and world
economies, and the economies of specific nations and their impact on the
Kobrick Funds and Nvest Funds;
[] Specific and general investment emphasis, specialties, fields of
expertise, competencies, operations and functions;
[] Specific and general investment philosophies, strategies, processes,
techniques and types of analysis;
[] Specific and general sources of information, economic models, forecasts
and data services utilized, consulted or considered in the course of
providing advisory or other services;
[] The corporate histories, founding dates and names of founders of the
entities;
[] Awards, honors and recognition given to the entities;
[] The names of those with ownership interest and the percentage of ownership
interest;
[] The industries and sectors from which clients are drawn and specific
client names and background information on current individual, corporate
and institutional clients, including pension and profit sharing plans;
[] Current capitalizations, levels of profitability and other financial and
statistical information;
[] Identification of portfolio managers, researchers, economists, principals
and other staff members and employees;
[] The specific credentials of the above individuals, including, but not
limited to, previous employment, current and past positions, titles and
duties performed, industry experience, educational background and degrees,
awards and honors;
[] Specific and general reference to past and present notable and renowned
individuals including reference to their field of expertise and/or
specific accomplishments;
[] Current and historical statistics regarding:
- total dollar amount of assets managed
- Kobrick Funds' and Nvest Funds' assets managed in total and by fund
- the growth of assets
- asset types managed
- numbers of principal parties and employees, and the length of their
tenure, including officers, portfolio managers, researchers, economists,
technicians and support staff
- the above individuals' total and average number of years of industry
experience and the total and average length of their service to the
adviser or sub-adviser;
[] The general and specific strategies applied by the advisers in the
management of Kobrick Funds and Nvest Funds portfolios including, but not
limited to:
- the pursuit of growth, value, income oriented, risk management or other
strategies
- the manner and degree to which the strategy is pursued
- whether the strategy is conservative, moderate or extreme and an
explanation of other features and attributes
- the types and characteristics of investments sought and specific
portfolio holdings
- the actual or potential impact and result from strategy implementation
- through its own areas of expertise and operations, the value added by
sub-advisers to the management process
- the disciplines it employs
- the systems utilized in management, the features and characteristics of
those systems and the intended results from such computer analysis, and
[] Specific reference to 360 research (sm), 360 degree research(sm), Kobrick
360(degree) research(sm) and Kobrick 360 degree research(sm) as an
approach that involves meeting with companies' management, employees,
customers, competition and suppliers to determine whether what these
people say aligns with company strategies and objectives.
[] Specific and general references to portfolio managers and funds that they
serve as portfolio manager of, other than Kobrick Funds and Nvest Funds,
and those families of funds. Any such references will indicate that
Kobrick Funds, Nvest Funds and the other funds of the managers differ as
to performance, objectives, investment restrictions and limitations,
portfolio composition, asset size and other characteristics, including
fees and expenses. References may also be made to industry rankings and
ratings of the Funds and other funds managed by the Funds' adviser,
including, but not limited to, those provided by Morningstar, Lipper
Analytical Services, Forbes and Worth.
In addition, communications and materials developed by the Funds will make
reference to the following information about Nvest Companies and its affiliates:
Nvest Companies is part of an affiliated group including Nvest, L.P. a
publicly traded company listed on the NYSE. Nvest Companies has 18 principal
subsidiary or affiliated asset management firms, which collectively had $127
billion of assets under management as of September 30, 1999. In addition,
promotional materials may include:
[] Specific and general references to Nvest Funds multi-manager approach
through Nvest Companies affiliates and outside firms including, but not
limited to, the following:
- - that each adviser/manager operates independently on a day-to-day basis and
maintains an image and identity separate from Nvest Companies and the other
Investment Advisers
- - other fund companies are limited to a "one size fits all" approach but Nvest
Funds draws upon the talents of multiple managers whose expertise best matches
the fund objective
- - in this and other contexts reference may be made to Nvest Funds' slogan "Where
The Best Minds Meet"(R) and that Nvest Funds' ability to match the talent to
the task is one more reason it is becoming known as "Where The Best Minds
Meet."
Nvest Advisor Services ("NAS") and Nvest Retirement Services ("NRS"),
divisions of Nvest Companies, may be referenced in Fund advertising and
promotional literature concerning the marketing services it provides to Nvest
Companies affiliated fund groups including: Nvest Funds, Loomis Sayles Funds,
Jurika & Voyles, Back Bay Advisors, Oakmark Funds, Delafield Fund and Kobrick
Funds.
NAS and NRS will provide marketing support to Nvest Companies affiliated
fund groups targeting financial advisers, financial intermediaries and
institutional clients who may transact purchases and other fund-related business
directly with these fund groups. Communications will contain information
including, but not limited to: descriptions of clients and the marketplaces to
which it directs its efforts; the mission and goals of NAS and NRS and the types
of services it provides which may include: seminars; its 1-800 number, web site,
Internet or other electronic facilities; qualitative information about the
funds' investment methodologies; information about specific strategies and
management techniques; performance data and features of the funds; institutional
oriented research and portfolio manager insight and commentary. Additional
information contained in advertising and promotional literature may include:
rankings and ratings of the funds including, but not limited to, those of
Morningstar and Lipper Analytical Services; statistics about the advisers', fund
groups' or a specific fund's assets under management; the histories of the
advisers and biographical references to portfolio managers and other staff
including, but not limited to, background, credentials, honors, awards and
recognition received by the advisers and their personnel; and commentary about
the advisers, their funds and their personnel from third-party sources including
newspapers, magazines, periodicals, radio, television or other electronic media.
References may be included in Kobrick Funds or Nvest Funds' advertising
and promotional literature about its 401(k) and retirement plans. The
information may include, but is not limited to:
[] Specific and general references to industry statistics regarding 401(k)
and retirement plans including historical information, industry trends and
forecasts regarding the growth of assets, numbers of plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and other organizations involved in 401(k) and
retirement programs with whom Nvest Funds may or may not have a
relationship.
[] Specific and general references to comparative ratings, rankings and other
forms of evaluation as well as statistics regarding the Kobrick Funds or
Nvest Funds as a 401(k) or retirement plan funding vehicle produced by,
including, but not limited to, Investment Company Institute and other
industry authorities, research organizations and publications.
[] Specific and general discussion of economic, legislative, and other
environmental factors affecting 401(k) and retirement plans, including,
but not limited to, statistics, detailed explanations or broad summaries
of:
- past, present and prospective tax regulation, Internal Revenue Service
requirements and rules, including, but not limited to, reporting
standards, minimum distribution notices, Form 5500, Form 1099R and other
relevant forms and documents, Department of Labor rules and standards
and other regulations. This includes past, current and future
initiatives, interpretive releases and positions of regulatory
authorities about the past, current or future eligibility, availability,
operations, administration, structure, features, provisions or benefits
of 401(k) and retirement plans;
- information about the history, status and future trends of Social
Security and similar government benefit programs including, but not
limited to, eligibility and participation, availability, operations and
administration, structure and design, features, provisions, benefits and
costs; and
- current and prospective ERISA regulation and requirements.
[] Specific and general discussion of the benefits of 401(k) investment and
retirement plans to the participant and plan sponsor, including explanations,
statistics and other data, about:
- increased employee retention
- reinforcement or creation of morale
- deductibility of contributions for participants
- deductibility of expenses for employers
- tax deferred growth, including illustrations and charts
- loan features and exchanges among accounts
- educational services materials and efforts, including, but not limited
to, videos, slides, presentation materials, brochures, an investment
calculator, payroll stuffers, quarterly publications, releases and
information on a periodic basis and the availability of wholesalers and
other personnel.
[] Specific and general reference to the benefits of investing in mutual funds
for 401(k) and retirement plans, and the Kobrick Funds or Nvest Funds as a
401(k) or retirement plan funding vehicle.
[] Specific and general reference to the role of the investment dealer and the
benefits and features of working with a financial professional including:
- - access to expertise on investments
- - assistance in interpreting past, present and future market trends and economic
events
- - providing information to clients including participants during enrollment and
on an ongoing basis after participation
- - promoting and understanding the benefits of investing, including mutual fund
diversification and professional management.
