UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07813
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KOBREN INSIGHT FUNDS
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(Exact name of registrant as specified in charter)
20 William Street, Suite 310
P.O. Box 9135
WELLESLEY HILLS, MA 02481
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(Address of principal executive offices) (Zip code)
Gail A. Hanson, Esq.
PFPC Inc.
99 High Street, 27th Floor
BOSTON, MA 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: 617-338-4057
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Date of fiscal year end: DECEMBER 31, 2004
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Date of reporting period: JUNE 30, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
DELPHI VALUE FUND
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SEMI-ANNUAL REPORT JUNE 30, 2004
[GRAPHIC OMITTED]
KOBREN
INSIGHT
FUNDS
[PIC]
SCOTT M. BLACK
Dear Fellow Shareholders,
The performance of the U.S. equity markets in the first half of 2004 can be
logically segmented into two phases. Prior to the tragic events in Madrid on
March 11th, the S&P 500 and the small-cap Russell 2000 Value indices rallied to
year-to-date highs of 1163.23 and 864.36, respectively, fueled by the
combination of low nominal interest rates and rising corporate profits.
Concomitantly, on March 5th, the Delphi Value Fund reached its record high of
$16.78 ($16.99 institutional class) per share, up 6.3% versus 4.4% for the S&P
500. Unfortunately, the terrorist attack raised the risk premium on equities and
triggered a major stock market reversal. In April, the combination of the
strengthening U.S. employment figures and an incipient whiff of inflation roiled
the domestic bond markets and pummelled "so called" interest rate sensitive
stocks like housing and financial services. Despite these barrages, your Fund
narrowly trailed the S&P 500, +3.1% (+3.3% institutional class) to +3.3% for the
first six months. The Russell Midcap Value Index returned +7.2% for the same
period. The irony of this underperformance is that over 85% of the Delphi Value
holdings posted quarterly earnings advances over the previous year.
Additionally, all of the fund's investments in homebuilders (D.R. Horton,
Lennar, and Toll Brothers) registered record earnings and backlogs. Similarly,
all of the bank, insurance, and miscellaneous finance holdings realized positive
earnings comparisons in their latest reports. As Benjamin Graham was wont to
say, "In the short-term, the stock market is a voting machine; in the long-term,
a weighing machine."
In reviewing the individual positions, you will find that the first half
winners were concentrated in the energy sector, not surprising given the upsurge
in oil prices to $40 per barrel. Domestic exploration companies like Denbury
Resources (+50.6%), XTO Energy (+31.6%) and Whiting Petroleum (+29.9%) led the
group. Oil tanker corporations like OMI (+33.3%) and Teekay Shipping (+31.1%)
benefited from the worldwide pickup in oil demand. Special situations like
Lamson & Sessions (+39.3%), a manufacturer of polyvinyl chloride pipe, and Pepsi
Bottling Group (+26.3%), the largest independent U.S. Pepsi bottler, contributed
favorably to the period performance. On the downside, the two disc drive
manufacturers, Western Digital and Maxtor, both declined more than 25%.
Unfortunately, their leading competitor, Seagate Technology, in an
overinventoried position broke its pricing discipline causing severe
industrywide earnings erosion.
During the first half, the portfolio additions were rather eclectic. Two
semiconductor companies, Applied Micro Circuits and Integrated Silicon
Solutions, were acquired below 1.4x book value with essentially debt free
balance sheets and earnings turnarounds in place. Two superior Bermuda
reinsurers, Aspen Insurance and Montpelier Re Holdings, were purchased below 8x
2004's expected earnings. Whiting Petroleum, the Denver based independent
producer of oil and gas, was acquired below 4x this year's forecast cash flow
with anticipated drillbit production growth above 10%. Two names, Westport
Resources and Local Financial, exited the portfolio because of takeovers. Three
diverse businesses, Tidewater (oil service), Plum Creek (timber), and
PepsiAmericas (bottling) were divested because of full valuations.
At the June 30th close of 1140.75, in my opinion the S&P 500 is fairly valued
at 18x 2004 estimated earnings. Given the confluence of two key factors, (i) the
mounting accumulated U.S. federal deficit of $7.4 trillion and the relative
unattractiveness of investing in medium or longterm treasuries; and (ii) the
expectation that second quarter 2004 corporate earnings should accrete by 20%
year over year, I expect that, barring another terrorist incident, U.S. equities
should rally in the second half of this year. I thank you for your continued
support.
Very truly yours,
/S/SCOTT M. BLACK
Scott M. Black
Portfolio Manager
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PORTFOLIO OF INVESTMENTS
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JUNE 30, 2004 (UNAUDITED)
SHARES VALUE (NOTE 1)
COMMON STOCKS - 92.66%
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AEROSPACE/TECHNOLOGY - 6.92%
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171,042 Applied Micro Circuits Corp. (1) $ 909,943
119,000 Cable Design Technologies Corp. (1) 1,261,400
20,600 General Cable Corp. (1) 176,130
38,400 Integrated Silicon Solution, Inc. (1) 468,864
86,075 Kemet Corp. (1) 1,051,837
135,000 LSI Logic Corp. (1) 1,028,700
122,300 Maxtor Corp. (1) 810,849
90,000 Micron Technology, Inc. (1) 1,377,900
108,000 Western Digital Corp. (1) 935,280
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8,020,903
BANKING - 9.11%
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40,000 Banknorth Group, Inc. 1,299,200
35,000 BB&T Corp. 1,293,950
71,000 Colonial BancGroup, Inc. 1,290,070
50,400 Community Bank System, Inc. 1,148,616
31,850 North Fork Bancorporation, Inc. 1,211,893
73,500 Southwest Bancorp, Inc. 1,341,375
28,400 Webster Financial Corp. 1,335,368
28,615 Wells Fargo & Co. 1,637,637
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10,558,109
BASIC MATERIALS - 4.73%
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37,600 Alcoa, Inc. 1,241,928
30,050 Cytec Industries, Inc. 1,365,772
32,400 Dow Chemical Co. 1,318,680
40,500 Inco, Ltd. (1) 1,399,680
19,000 Yara International ASA, ADR (1) 153,502
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5,479,562
CONGLOMERATES - 4.95%
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1,081 Berkshire Hathaway, Inc., Class B (1) 3,194,355
19,000 Norsk Hydro ASA, SP ADR 1,243,550
21,800 Textron, Inc. 1,293,830
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5,731,735
CONSTRUCTION & REAL ESTATE - 4.89%
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26,000 Boston Properties, Inc., REIT 1,302,080
49,627 D.R. Horton, Inc. 1,409,407
30,830 Lennar Corp., Class A 1,378,718
37,300 Toll Brothers, Inc. (1) 1,578,536
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5,668,741
CONSUMER RELATED - 2.34%
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51,000 Disney (Walt) Co. 1,299,990
20,500 Whirlpool Corp. 1,406,300
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2,706,290
ENERGY - 8.01%
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81,000 Denbury Resources, Inc. (1) 1,696,950
37,058 GlobalSantaFe Corp. 982,037
39,450 Nexen, Inc. 1,539,339
67,200 Talisman Energy, Inc. 1,460,928
56,500 Whiting Petroleum Corp. (1) 1,420,975
73,166 XTO Energy, Inc. 2,179,615
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9,279,844
FINANCIAL SERVICES - 9.23%
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27,000 American Express Co. 1,387,260
17,084 Bear Stearns Cos., Inc. 1,440,352
33,000 Citigroup, Inc. 1,534,500
14,200 Goldman Sachs Group, Inc. 1,337,072
26,500 H&R Block, Inc. 1,263,520
25,615 iStar Financial, Inc., REIT 1,024,600
18,000 Lehman Brothers Holdings, Inc. 1,354,500
25,755 Morgan Stanley 1,359,091
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10,700,895
FOOD & BEVERAGE - 2.52%
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52,300 Pepsi Bottling Group, Inc. 1,597,242
83,500 Ryan's Restaurant Group, Inc. (1) 1,319,300
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2,916,542
INSURANCE - 8.03%
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60,000 Aspen Insurance Holdings, Ltd. 1,393,800
39,000 IPC Holdings, Ltd. 1,440,270
29,400 Montpelier Re Holdings, Ltd. 1,027,530
25,000 Radian Group, Inc. 1,197,500
32,200 RenaissanceRe Holdings, Ltd. 1,737,190
32,060 SAFECO Corp. 1,410,640
SHARES VALUE (NOTE 1)
INSURANCE (CONTINUED)
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14,600 XL Capital, Ltd., Class A $ 1,101,716
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9,308,646
MANUFACTURING - 5.46%
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37,850 Amer. Axle & Manufacturing Holdings, Inc. 1,376,226
148,375 Lamson & Sessions Co. (1) 1,192,935
23,800 Lear Corp. 1,403,962
44,275 Masco Corp. 1,380,495
98,000 Polyair Inter Pack, Inc. (1) 975,100
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6,328,718
PHARMACEUTICALS - 1.16%
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28,400 Merck & Co., Inc. 1,349,000
PUBLISHING & BROADCASTING - 14.87%
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49,900 Comcast Corp., Class A (1) 1,377,739
48,350 Cox Communications, Inc., Class A (1) 1,343,647
23,800 Dow Jones & Co., Inc. 1,073,380
21,150 Gannett, Inc. 1,794,577
30,000 Lee Enterprises, Inc. 1,440,300
140,600 Liberty Media Corp., Class A (1) 1,263,994
20,600 McClatchy Co., Class A 1,445,090
14,700 McGraw-Hill Cos., Inc. 1,125,579
40,200 News Corp., Ltd., SP ADR 1,423,884
30,400 Pulitzer, Inc. 1,486,560
41,100 Viacom, Inc., Class B 1,468,092
2,135 Washington Post Co., Class B 1,985,571
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17,228,413
RETAIL - 3.87%
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29,000 Ethan Allen Interiors, Inc. 1,041,390
28,300 Federated Department Stores, Inc. 1,389,530
29,225 May Department Stores Co. (The) 803,395
46,500 Ross Stores, Inc. 1,244,340
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4,478,655
TEXTILES & APPAREL - 3.48%
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32,500 Jones Apparel Group, Inc. 1,283,100
42,400 Liz Claiborne, Inc. 1,525,552
35,500 Polo Ralph Lauren Corp. 1,222,975
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4,031,627
TRANSPORTATION - 3.09%
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150,500 OMI Corp. 1,790,950
47,730 Teekay Shipping Corp. 1,784,147
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3,575,097
TOTAL COMMON STOCKS 107,362,777
(Cost $77,362,541)
INVESTMENT COMPANY - 7.94%
9,205,789 Dreyfus Cash Management Plus Fund(2) 9,205,789
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TOTAL INVESTMENT COMPANY 9,205,789
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(Cost $9,205,789)
TOTAL INVESTMENTS - 100.60% 116,568,566
(Cost $86,568,330*)
LIABILITIES NET OF CASH
& OTHER ASSETS - (0.60)% (697,765)
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TOTAL NET ASSETS - 100.00% $115,870,801
===============
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(1) Non-income producing.
(2) An affiliate of the Custodian.
ADR American Depositary Receipt
REIT Real Estate Investment Trust
SP ADR Sponsored American Depositary Receipt
* For Federal income tax purposes, cost is $86,568,330 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $31,941,826
Unrealized depreciation: (1,941,590)
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Net unrealized appreciation: $30,000,236
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SEE NOTES TO FINANCIAL STATEMENTS
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2 DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT
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STATEMENT OF ASSETS AND LIABILITIES
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JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 116,568,566
Cash 6,285
Dividends receivable 111,113
Receivable for investments sold 617,119
Receivable for shares sold 460,000
Prepaid expenses and other assets 1,437
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Total assets 117,764,520
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LIABILITIES:
Payable for investments purchased 1,736,464
Payable for shares redeemed 399
Investment advisory fee payable (Note 2) 93,246
Distribution fee payable (Note 2) 13,423
Accrued trustees' fees and expenses (Note 2) 11,554
Accrued expenses and other payables 38,633
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Total liabilities 1,893,719
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NET ASSETS $ 115,870,801
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Investments, at cost $ 86,568,330
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NET ASSETS CONSIST OF:
Accumulated net investment loss $ (55,210)
Accumulated net realized gain on investments sold 4,292,849
Net unrealized appreciation of investments 30,000,236
Par value 7,076
Paid-in capital in excess of par value 81,625,850
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NET ASSETS $ 115,870,801
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COMPUTATION OF NET ASSET VALUE
RETAIL CLASS SHARES:
Net asset value, offering and redemption price
per share ($65,677,515 / 4,034,076 shares) $ 16.28
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INSTITUTIONAL CLASS SHARES:
Net asset value, offering and redemption price
per share ($50,193,286 / 3,042,286 shares) $ 16.50
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SEE NOTES TO FINANCIAL STATEMENTS
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DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT 3
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STATEMENT OF OPERATIONS
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FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 744,388
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Total investment income 744,388
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EXPENSES:
Investment advisory fee (Note 2) 554,887
Administration fee (Note 2) 41,657
Transfer agent fees (Note 2) 36,348
Sub-transfer agent fee (Retail Class) (Note 3) 14,644
Custodian fees (Note 2) 13,243
Professional fees 22,874
Trustees' fees and expenses (Note 2) 17,885
Registration and filing fees 11,500
Reports to shareholders 3,992
Distribution fees (Retail Class) (Note 2) 79,505
Other 3,063
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Total expenses 799,598
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NET INVESTMENT LOSS (55,210)
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions 3,293,411
Net increase in unrealized appreciation of securities 49,359
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Net realized and unrealized gain on investments 3,342,770
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,287,560
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STATEMENT OF CHANGES IN NET ASSETS
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FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2004 (UNAUDITED) DECEMBER 31, 2003
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Net investment loss $ (55,210) $ (76,385)
Net realized gain from security transactions 3,293,411 2,118,228
Net change in unrealized appreciation of investments 49,359 23,629,068
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Net increase in net assets resulting from operations 3,287,560 25,670,911
Net increase in net assets from fund share transactions (Note 5) 6,207,723 3,300,452
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Net increase in net assets 9,495,283 28,971,363
NET ASSETS:
Beginning of period 106,375,518 77,404,155
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End of period (including line A) $ 115,870,801 $ 106,375,518
======================== =================
(A) Accumulated net investment loss $ (55,210) $ --
======================== =================
SEE NOTES TO FINANCIAL STATEMENTS
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4 DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT
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FINANCIAL HIGHLIGHTS
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FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
RETAIL CLASS SHARES
--------------------------------------------------------------------
For the
Six Months Ended
6/30/2004 ________________For the Year Ended____________________
(unaudited) 12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999
----------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 15.79 $ 11.91 $ 13.18 $ 13.00 $ 11.19 $ 10.12
Net investment income (loss) (0.02) (0.03) (0.02) (0.02) (0.01) -- (b)(c)(d)
Net realized and unrealized gain (loss) on
investments 0.51 3.91 (1.25) 0.27 1.94 1.14
----------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from investment operations 0.49 3.88 (1.27) 0.25 1.93 1.14
Distributions from net investment income -- -- -- -- -- --(c)
Distributions from net realized gains on
investments -- -- -- (0.07) (0.12) (0.07)
----------- ---------- ---------- ---------- ---------- ----------
Total distributions -- -- -- (0.07) (0.12) (0.07)
Net asset value - end of period $ 16.28 $ 15.79 $ 11.91 $ 13.18 $ 13.00 $ 11.19
=========== ========== ========== ========== ========== ==========
Total return (a) 3.10%(e) 32.58% (9.64)% 1.90% 17.30% 11.30%
=========== ========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 65,678 $ 61,197 $ 43,808 $ 44,744 $ 45,312 $ 31,055
Ratio of net investment income (loss) to average
net assets (0.23)% (0.21)% (0.13)% (0.12)% (0.12)% 0.00%(d)
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment adviser and administrator 1.57% 1.64% 1.63% 1.64% 1.71% 1.86%
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.57% 1.64% 1.63% 1.64% 1.71% 1.75%
Portfolio turnover rate 13%(e) 22% 23% 29% 45% 17%
<FN>
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(a) Total return represents aggregate total return for the period indicated and would have been lower during periods in which fees
werewaived and expenses reimbursed and assumes reinvestment of all distributions.
(b) The selected per share data was calculated using the weighted average share method for the period.
(c) The selected amounts are less than $0.005.
(d) Net investment income would have been lower during periods in which fees were waived and expenses reimbursed.
(e) Not annualized.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
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DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT 5
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FINANCIAL HIGHLIGHTS
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FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
INSTITUTIONAL CLASS SHARES
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For the
Six Months Ended
6/30/2004 ________________For the Year Ended____________________
(unaudited) 12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999
----------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 15.98 $ 12.02 $ 13.26 $ 13.05 $ 11.20 $ 10.12
Net investment income 0.01 0.01 0.02 0.02 0.02 0.03(b)(c)
Net realized and unrealized gain (loss) on
investments 0.51 3.95 (1.26) 0.26 1.95 1.14
----------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from investment operations 0.52 3.96 (1.24) 0.28 1.97 1.17
Distributions from net investment income -- -- -- -- -- (0.02)
Distributions from net realized gains on
investments -- -- -- (0.07) (0.12) (0.07)
----------- ---------- ---------- ---------- ---------- ----------
Total distributions -- -- -- (0.07) (0.12) (0.09)
Net asset value - end of period $ 16.50 $ 15.98 $ 12.02 $ 13.26 $ 13.05 $ 11.20
=========== ========== ========== ========== ========== ==========
Total return (a) 3.25%(d) 32.95% (9.35)% 2.12% 17.64% 11.61%
=========== ========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 50,193 $ 45,179 $ 33,596 $ 27,938 $ 23,956 $ 22,763
Ratio of net investment income to average
net assets 0.07% 0.08% 0.17% 0.18% 0.18% 0.25% (c)
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment adviser and administrator 1.27% 1.35% 1.33% 1.34% 1.41% 1.57%
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.27% 1.35% 1.33% 1.34% 1.41% 1.50%
Portfolio turnover rate 13%(d) 22% 23% 29% 45% 17%
<FN>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Total return represents aggregate total return for the period indicated and would have been lower during periods in which fees
were waived and expenses reimbursed and assumes reinvestment of all distributions.
(b) The selected per share data was calculated using the weighted average share method for the period.
(c) Net investment income would have been lower during periods in which fees were waived and expenses reimbursed.
(d) Not annualized.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
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6 DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT
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NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 2004 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Kobren Insight Funds (the
"Trust") was organized on September 13, 1996, as a Massachusetts business trust.
The Trust is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a no-load, open-end diversified management investment
company. As of June 30, 2004, the Trust offered shares of two funds, Kobren
Growth Fund and Delphi Value Fund. Information presented in these financial
statements pertains only to the Delphi Value Fund (the "Fund"). The Fund is
authorized to issue two classes of shares - the Retail Class and the
Institutional Class. Each class of shares outstanding bears the same voting,
dividend, liquidation and other rights and conditions, except that the expenses
incurred in the distribution and marketing of such shares are different for each
class. Additionally, the Retail Class is subject to 12b-1 fees and sub-transfer
agent fees. The Fund seeks to achieve its investment objective by investing
primarily in equity securities of U.S. companies. Investment income, common
expenses and realized and unrealized gains and losses are allocated among the
share classes of the Fund based on the relative net assets of each class. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
USE OF ESTIMATES -- The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
PORTFOLIO VALUATION -- Investment securities are valued at the last sale price
on the securities exchange or national securities market on which such
securities primarily are traded or for NASDAQ traded securities, the NASDAQ
Official Closing Price. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the average of the most recent bid and asked prices. Bid price is used when
no asked price is available. Short-term securities with remaining maturities of
60 days or less are valued at amortized cost, which approximates market value.
Any securities or other assets for which recent market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Trustees.
DIVIDENDS AND DISTRIBUTIONS -- It is the policy of the Fund to declare and pay
dividends from net investment income annually. The Fund will distribute net
realized capital gain (including net short-term capital gain), if any, annually,
unless offset by any available capital loss carryforward. Additional
distributions of net investment income and capital gains for the Fund may be
made in order to avoid the application of a 4% non-deductible excise tax on
certain undistributed amounts of ordinary income and capital gain. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. These differences are due primarily to differing treatments of
income and gain on various investment securities held by the Fund.
As of December 31, 2003, the components of distributable earnings on a tax basis were as follows:
CAPITAL LOSS UNDISTRIBUTED UNDISTRIBUTED UNREALIZED
CARRYFORWARD ORDINARY INCOME LONG TERM GAIN APPRECIATION
------------ --------------- -------------- ------------
Delphi Value Fund $ -- $ -- $ 940,708 $ 30,009,607
These amounts are as of the most recent tax year end.
Net investment income and realized gain and loss for federal income tax purposes
may differ from that reported in the financial statements because of permanent
book and tax basis differences.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the exdividend date. Dividend income on foreign securities is
recognized as soon as the Fund is informed of the ex-dividend date. The Fund
estimates the components of distributions received from Real Estate Investment
Trusts (REITs). Distributions received in excess of income are recorded as a
reduction of cost of investments and/or as a realized gain. Interest income is
recognized on the accrual basis. All discounts/premiums are accreted/amortized
using the effective yield method.
FEDERAL INCOME TAX -- The Fund has qualified and intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code, applicable to regulated investment companies, by distributing
substantially all of its earnings to its shareholders. Therefore, no federal
income or excise tax provision is applicable.
EXPENSES -- Expenses of the Trust which are directly identifiable to a specific
fund are allocated to that fund. Other expenses of the Trust are allocated among
the funds based upon relative net assets of each fund. Other expenses of the
Trust are allocated equally to those funds in the Trust.
COMMITMENTS AND CONTINGENCIES -- In the normal course of business, the Trust
enters into contracts on behalf of the Fund that contain a variety of provisions
for general indemnifications. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that are not known at this time. However, based on experience,
the Fund believes the risk of loss is remote.
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DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT 7
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2004 (UNAUDITED)
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE, DISTRIBUTION AND SHAREHOLDER
SERVICING FEES AND OTHER RELATED PARTY TRANSACTIONS
The Trust has entered into an investment advisory agreement (the "Advisory
Agreement") with Kobren Insight Management, Inc. ("KIM" or the "Adviser") who
has engaged Delphi Management, Inc. ("Delphi") as the Fund's sub-adviser. The
Advisory Agreement provides that the Fund pays KIM a fee, computed daily and
paid monthly, at the annual rate of 1.00% of the Fund's average daily net
assets. KIM is solely responsible for the payment of the sub-adviser fee to
Delphi. KIM has voluntarily agreed to limit the Fund's total annual operating
expenses of the Retail Class and Institutional Class to no more than 1.75% and
1.50%, respectively, of the Fund's average daily net assets. This voluntary
agreement may be terminated at the discretion of the Adviser.
The Trust has also entered into an administration agreement (the "Administration
Agreement") with PFPC Inc. (the "Administrator"), a member of PNC Financial
Services Group, Inc. The Administrator also serves as the Trust's transfer agent
and dividend paying agent. Mellon Trust of New England, N.A., an indirectly
wholly-owned subsidiary of Mellon Financial Corporation, serves as the Trust's
custodian. Kobren Insight Brokerage, Inc. ("KIB"), an affiliate of KIM, serves
as distributor of the Fund.
The Retail Class of the Fund has adopted a Shareholder Servicing and
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The
Fund pays KIB a monthly 12b-1 fee for distribution services provided, at an
annual rate of 0.25% of the average daily net assets attributable to the Retail
Class of shares.
No officer, director or employee of KIM, KIB, the Administrator, or any
affiliate thereof, receives any compensation from the Trust for serving as a
trustee or officer of the Trust. Each trustee who is not an "affiliated person"
receives an annual retainer fee of $5,000 plus $1,000 for each board meeting
attended and $500 for each committee meeting attended. The Trust also reimburses
out-of-pocket expenses incurred by each trustee in attending such meetings.
3. SUB-TRANSFER AGENT FEES
The Retail Class of the Fund is subject to sub-transfer agent fees consisting of
broker-dealer and fund network fees. The Fund pays participating networks a
monthly fee for maintaining shareholder accounts at an annual rate of 0.10% of
the average daily balance of fund accounts invested through those networks.
4. PURCHASES AND SALES
The aggregate amounts of purchases and sales of the Fund's investment
securities, other than short-term securities, for the six months ended June 30,
2004, were $16,654,520 and $12,886,253 of non-governmental issues, respectively.
5. SHARES OF BENEFICIAL INTEREST
As of June 30, 2004, an unlimited number of shares of beneficial interest, par
value $0.001, was authorized for the Trust. Changes in shares of beneficial
interest for the Fund were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2004 (UNAUDITED) DECEMBER 31, 2003
------------------------ -------------------------
RETAIL CLASS: SHARES AMOUNT SHARES AMOUNT
------- ------- ------- -------
Shares sold 468,915 $ 7,574,522 782,257 $ 10,512,019
Shares issued as reinvestment of distributions -- -- -- --
Shares redeemed (309,400) (5,014,229) (585,812) (7,536,897)
-------- ---------- -------- ----------
Net increase 159,515 $ 2,560,293 196,445 $ 2,975,122
======== ========== ======== ==========
INSTITUTIONAL CLASS:
Shares sold 421,344 $ 7,016,291 525,944 $ 7,000,814
Shares issued as reinvestment of distributions -- -- -- --
Shares redeemed (205,873) (3,368,861) (494,890) (6,675,484)
-------- ---------- -------- ----------
Net increase 215,471 3,647,430 31,054 325,330
======== ========== ======== ==========
Total net increase from fund share transactions $ 6,207,723 $ 3,300,452
At June 30, 2004, KIM, Delphi and their affiliates owned 573,987 Retail Class
shares of the Fund representing 14.2% of the outstanding shares. Discretionary
accounts managed by KIM for management clients collectively held 1,826,787
shares of the Institutional Class representing 60.0% of the outstanding shares.
- --------------------------------------------------------------------------------
Descriptions of Delphi Value Fund's Proxy Voting Policies and Procedures are
available upon request and without charge on Delphi Value Fund's website at
www.delphivalue.com or by calling toll free 1-800-4KOBREN (800-456-2736) or on
the Securities and Exchange Commissions's website at www.sec.gov.
- --------------------------------------------------------------------------------
8 DELPHI VALUE FUND -- 2004 SEMI-ANNUAL REPORT
KOBREN INSIGHT MANAGEMENT, INC.
[GRAPHIC OMITTED]
KOBREN
INSIGHT
FUNDS
KOBREN GROWTH FUND
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT JUNE 30, 2004
[PHOTO]
ERIC M. KOBREN
MESSAGE TO SHAREHOLDERS
STOCKS END A SEE-SAW
FIRST HALF WITH MODEST GAINS
The S&P 500's quarterly returns this year look like the very model of
consistency: up 1.7% for the first quarter and 1.7% for the second. But that
masks what has actually been a turbulent market. The market roared ahead in
January and February, rising 3.3% in a continuation of 2003's solid performance.
Then the specter of terrorism reared its ugly head with the Madrid bombings and
the markets gave back about half of those gains in March. The second quarter was
a near mirror image. The quarter started off weak as fears of rising inflation
and interest rates scuttled both stock and bond prices in April. But in May and
June, the markets rallied as very strong corporate earnings provided a solid
foundation for stocks and investors gradually began to believe that inflation
and interest rate fears were overdone.
A TOUGH ENVIRONMENT TO NAVIGATE
This environment with all its twists and turns proved difficult for most
managers, as the average U.S. stock fund significantly trailed the broad market.
We also trailed the broad market gaining 2.1% during the first six months of
2004, versus a 3.4% gain for the S&P 500 Index. The underperformance can be
explained by our diversification into non-S&P 500 areas of the market, as well
as some rough patches for some of our core holdings.
One of our largest holdings, Oakmark Select (currently 14.5% of fund assets)
was particularly hard hit as some of the fund's financial service holdings
declined in the face of increasing interest rates and a drop in mortgage
refinancings. Due to the fund's concentrated portfolio structure, wide swings up
and down are to be expected.
Our international diversification was also a drag on performance during the
first half. SSgA Emerging Markets Fund is currently a modest 3.5% of Kobren
Growth, but it contributed significantly to our performance in 2003 and during
the first quarter of 2004. In the second quarter, this area of the securities
market hit a pothole in the face of rising U.S. interest rates, a stronger U.S.
dollar and China's attempts to slow down its overheated economy.
While we are constantly reassessing our investments, we continue to maintain
an exposure in emerging markets. We believe this area still offers greater
growth prospects than developed markets, and many of these stocks are more
reasonably valued. We also believe that the U.S. dollar will resume its decline
against other currencies.
There were some very nice bright spots in the portfolio, most notably Pimco
Commodity RealReturn Strategy (representing 5.1% of the Fund). Despite a
difficult second quarter, the fund was our best performer this year to date,
with a gain of 8.2%. This unique fund is tied to commodity prices (a good
portion of that is oil prices) and we purchased it last year to provide the
portfolio a hedge against rising inflation, which is exactly what it did.
SECOND HALF CHALLENGES
Looking to the second half of the year, we expect continued market volatility
as many uncertainties, from the presidential election (and the wild card of
terrorism as we approach that election), to the fate of the new government in
Iraq, lie ahead. Also, it is unclear what will happen to the economy now that
the refinancing boom (which put a lot of cash in consumer's pockets) is over and
the effects of the massive fiscal stimulus start to wane.
At least one uncertainty has recently been removed with the Federal Reserve's
1/4 point rate hike on June 30. While uncertainty over the length and magnitude
of this cycle of rising interest rates remains, at least the waiting game for
the first hike is over. And market history suggests that things usually start to
get better (for stocks and bonds) within a few months after the first hike. The
second half of election years has also typically been a better time for the
stock market than the first halves.
KEEPING OUR EYE ON THE BALL
We will remain vigilant in our review of changes in the general direction of
the market during the second half as we contine to review our asset and style
allocations. Nevertheless, shifts to different market areas will continue to be
rather modest, as we generally avoid making major market calls. As always, our
primary focus is on identifying the best fund managers in each area of the
market. That is how we add the most value for our shareholders.
Sincerely,
/S/ ERIC M. KOBREN
Eric M. Kobren
President and Portfolio Manager
- --------------------------------------------------------------------------------
KOBREN GROWTH FUND (6/30/04)
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
VALUE OF $10,000 INVESTED 12/16/96
12/16/1996 10,000.00
12/31/1996 10,240.00
3/31/1997 10,420.00
6/30/1997 11,560.00
9/30/1997 12,170.00
12/31/1997 11,779.00
3/31/1998 13,089.00
6/30/1998 13,181.00
9/30/1998 11,226.00
12/31/1998 13,128.00
3/31/1999 13,965.00
6/30/1999 15,148.00
9/30/1999 14,133.00
12/31/1999 17,027.00
3/31/2000 17,693.00
6/30/2000 16,583.00
9/30/2000 16,383.00
12/31/2000 15,367.00
3/31/2001 14,219.00
6/30/2001 15,217.00
9/30/2001 12,885.00
12/31/2001 14,249.00
3/31/2002 14,650.00
6/30/2002 13,610.00
9/30/2002 12,006.00
12/31/2002 12,644.00
3/31/2003 12,328.00
6/30/2003 14,046.00
9/30/2003 14,475.00
12/31/2003 16,179.00
3/31/2004 16,664.00
6/30/2004 16,524.00
12 MONTHS ANNUALIZED
YTD ENDED SINCE INCEPTION
TOTAL RETURN (%) 6/30/04 6/30/04 (12/16/96)
- ---------------- --------- ----------- ----------------
Kobren Growth 2.1% 17.6% 6.9%
- --------------------------------------------------------------------------------
ASSET ALLOCATION*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Cash & Net Other Assets and Liab. 1.8%
International 20.5%
U.S. Stocks 67.1%
Bond 10.6%
- --------------------------------------------------------------------------------
STYLE ALLOCATION (%)
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Large Cap Growth 26.7%
Mid Cap Value 21.8%
International 20.5%
Bond 5.5%
Specialty 5.1%
Large Cap Value 7.4%
Small Cap Value 11.2%
Cash & Net Other Assets and Liab. 1.8%
KOBREN GROWTH FUND (Ticker: KOGRX): Your fund returned 2.1% for the first half
of 2004, compared to the S&P 500's return of 3.4%. Though the Fund maintained a
lower volatility profile relative to the S&P and peers, which accounts for some
of the underperformance, we were not satisfied with our returns in the first
half of 2004.
Our asset allocation decisions added value in the first half of the year.
Compared to our neutral weights, we overweighted international securities
relative to domestic and underweighted large-caps relative to small and mid-cap
stocks. Our non-equity allocations in the aggregate added value as the high
yield bond and commodity combination also produced a superior return to the S&P
500.
So what went wrong? Interestingly, it was the funds that did the best in
absolute terms that did not perform as well as they should have. Our three best
performing funds for the first half of the year - LONGLEAF PARTNERS SMALL CAP,
ARTISAN INTERNATIONAL SMALL CAP, and PIMCO COMMODITY REALRETURN STRATEGY - all
performed below average relative to peers.
Our stalwart value funds: OAKMARK SELECT and LONGLEAF PARTNERS also did not
help. Oakmark Select was hit hard in June due to a missed earnings report by a
top holding. Longleaf was held back this year by its heavy cash position. We
continue to expect that these funds will maintain prominent roles in Kobren
Growth given their excellent management teams.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
KOBREN GROWTH STYLE ALLOC (%)
- --------------- ------- -------------
Oakmark Select Mid Cap Value 14.5%
T. Rowe Price Blue Chip Growth Large Cap Growth 12.4%
Longleaf Partners Small Cap Small Cap Value 11.2%
Fidelity Blue Chip Growth Large Cap Growth 10.9%
Julius Baer Intl. Equity- I International 10.6%
Fidelity Equity-Income Large Cap Value 7.5%
Longleaf Partners Mid Cap Value 7.3%
Artisan Int'l Small Cap International 6.0%
Fidelity Advisor High Income - I High Yield Bond 5.4%
PIMCO Commodity RealReturn Specialty 5.1%
TOTAL FUND NET ASSETS $54,799,349
- --------------------------------------------------------------------------------
TOP SECTORS**
- --------------------------------------------------------------------------------
(Totals may not equal 100%)
Financial Services 20.9
Consumer Services 14.0
Industrial Materials 9.8
Healthcare 9.6
Consumer Goods 9.2
Media 8.9
Hardware 6.9
Business Services 6.9
Energy 5.8
Telecom 5.1
Software 2.1
Utilities 0.8
- --------------------------------------------------------------------------------
*Based on total net assets. **Equities only
Kobren Insight Management, Inc. is the adviser for Kobren Insight Funds, and
Kobren Insight Brokerage, Inc., a NASD broker/dealer, is the distributor for the
Funds. PERFORMANCE DATA REFLECTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF
FUTURE RESULTS. PERFORMANCE DATA DOES NOT REFLECT TAXES THAT A SHAREHOLDER WOULD
PAY ON DISTRIBUTIONS OR THE REDEMPTION OF SHARES AND WOULD HAVE BEEN LOWER IN
THE ABSENCE OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS. RETURN FIGURES INCLUDE
REINVESTMENT OF DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE WITH MARKET CONDITIONS AND SHARES WHEN REDEEMED MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
- --------------------------------------------------------------------------------
2 KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES MUTUAL FUNDS - 100.08% VALUE (NOTE 1)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH - 26.68%
- --------------------------------------------------------------------------------
146,239 Fidelity Blue Chip Growth Fund $ 5,954,863
74,731 Fidelity Capital Appreciation Fund 1,898,915
231,166 T. Rowe Price Blue Chip Growth Fund 6,768,547
------------
14,622,325
MID CAP VALUE - 21.80%
- --------------------------------------------------------------------------------
129,761 Longleaf Partners Fund 4,009,617
256,926 Oakmark Select Fund - Class I 7,936,447
------------
11,946,064
INTERNATIONAL - 20.50%
- --------------------------------------------------------------------------------
200,281 Artisan International Small Cap Fund 3,296,618
210,098 Julius Baer Int'l Equity Fund - Class I 5,828,118
170,814 SSgA Emerging Markets Fund 2,109,551
------------
11,234,287
SMALL CAP VALUE - 11.17%
- --------------------------------------------------------------------------------
201,940 Longleaf Partners Small Cap Fund 6,120,813
LARGE CAP VALUE - 7.46%
- --------------------------------------------------------------------------------
80,869 Fidelity Equity-Income Fund 4,087,123
BOND - 5.45%
- --------------------------------------------------------------------------------
322,142 Fidelity Adv. High Inc. Fund - Class I 2,983,037
- --------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
- --------------------------------------------------------------------------------
SPECIALTY - 5.13%
- --------------------------------------------------------------------------------
194,471 PIMCO Commodity RealReturn
Strategy Fund - Class I $ 2,812,050
MONEY MARKET FUND - 1.89%
- --------------------------------------------------------------------------------
1,036,371 Dreyfus Cash Mgmt. Plus Fund (1) 1,036,371
TOTAL MUTUAL FUNDS
(COST $43,973,754) 54,842,070
------------
TOTAL INVESTMENTS
(Cost $43,973,754*)
100.08% 54,842,070
LIABILITIES NET OF CASH
AND OTHER ASSETS -0.08% (42,721)
--------- -------------
TOTAL NET ASSETS 100.00% $ 54,799,349
========= =============
- --------------------------------------------------------------------------------
(1) An affiliate of the Custodian.
* For Federal income tax purposes, cost is $43,973,754 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $ 10,938,449
Unrealized depreciation: (70,133)
------------
Net unrealized appreciation: $ 10,868,316
============
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
JUNE 30, 2004 (UNAUDITED)
ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 54,842,070
Dividends receivable 18,725
Receivable for fund shares sold 4,327
Prepaid expenses and other assets 3,761
--------------
Total assets 54,868,883
--------------
LIABILITIES:
Payable for fund shares redeemed 10,617
Investment advisory fee payable (Note 2) 25,118
Accrued Trustees' fees and expenses (Note 2) 5,571
Accrued expenses and other payables 28,228
--------------
Total liabilities 69,534
--------------
NET ASSETS: $ 54,799,349
==============
Investments, at cost $ 43,973,754
==============
NET ASSETS CONSIST OF:
Accumulated net investment income $ 41,912
Accumulated net realized loss on investments sold (1,183,292)
Net unrealized appreciation of investments 10,868,316
Par value 4,227
Paid-in capital in excess of par value 45,068,186
--------------
NET ASSETS $ 54,799,349
==============
SHARES OUTSTANDING 4,227,459
==============
Net asset value, offering and redemption price per share
(Net Assets/Shares Outstanding) $ 12.96
==============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INTERNATIONAL INVESTING HAS SPECIAL RISKS, INCLUDING CURRENCY FLUCTUATION,
POLITICAL AND ECONOMIC INSTABILITY, AND THE VOLATILITY OF EMERGING MARKETS. The
Adviser absorbs certain expenses of each Kobren Insight Fund, without which
total returns would have been lower. Portfolio holdings are also subject to
change. Data sources: Kobren Insight Management, Inc. and Morningstar. This
report must be preceded or accompanied by a prospectus. Please read it carefully
before investing. You may obtain a prospectus or current performance information
by calling 1-800-4KOBREN (1-800-456-2736) or by visiting www.kobren.com.
Copyright (C)2004
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT 3
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 213,183
------------
Total investment income 213,183
------------
EXPENSES:
Investment advisory fee (Note 2) 208,064
Administration fee (Note 2) 35,933
Transfer agent fees (Note 2) 25,623
Sub-transfer agent fees (Note 3) 7,618
Custodian fees (Note 2) 1,500
Professional fees 13,282
Trustees' fees and expenses (Note 2) 8,920
Registration and filing fees 7,500
Reports to shareholders 4,076
Other 2,506
------------
Total expenses 315,022
Expenses waived by investment adviser (Note 2) (37,602)
Other reductions (Note 2) (6,101)
------------
Net expenses 271,319
------------
NET INVESTMENT LOSS (58,136)
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions 1,154,528
Net increase in unrealized appreciation of securities 133,631
------------
Net realized and unrealized gain on investments 1,288,159
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,230,023
============
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2004 (UNAUDITED) DECEMBER 31, 2003
------------------------ -----------------
Net investment income (loss) $ (58,136) $ 520,646
Net realized gain from security transactions 1,154,528 1,953,313
Short-term capital gain distributions received -- 94,991
Long-term capital gain distributions received -- 23,876
Net change in unrealized appreciation of investments 133,631 9,784,184
------------- ------------
Net increase in net assets resulting from operations 1,230,023 12,377,010
Distribution to shareholders from:
Net investment income -- (515,589)
------------- ------------
Total distributions -- (515,589)
Net decrease in net assets from fund share transactions (Note 5) (1,078,501) (3,704,214)
------------- ------------
Net increase in net assets 151,522 8,157,207
NET ASSETS:
Beginning of period 54,647,827 46,490,620
------------- ------------
End of period (including line A) $ 54,799,349 $54,647,827
============= ============
(A) Accumulated net investment income $ 41,912 $ 100,048
============= ============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- -----------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
- -----------------------------------------------------
FOR THE
SIX MONTHS
ENDED
6/30/2004 ------------------------ FOR THE YEAR ENDED---------------------------
(UNAUDITED) 12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999
----------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 12.69 $ 10.01 $ 11.37 $ 12.32 $ 15.34 $ 12.54
Net investment income (loss) (a)(b) (0.01) 0.12 0.07 (0.04) (0.04) (0.04)
Short-term capital gains distributions received -- 0.02 0.01 0.01 0.22 0.14
Net realized and unrealized gain (loss) on
investments 0.28 2.66 (1.36) (0.87) (1.68) 3.63
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets resulting
from investment operations 0.27 2.80 (1.28) (0.90) (1.50) 3.73
Distributions from net investment income -- (0.12) (0.07) -- -- --
Distributions from net realized short-term
capital gain distributions received -- -- (0.01) -- (0.19) (0.10)
Distributions from net realized capital gains on
investments -- -- -- (0.05) (1.33) (0.83)
-------- -------- -------- -------- -------- --------
Total distributions -- (0.12) (0.08) (0.05) (1.52) (0.93)
Net asset value - end of period $ 12.96 $ 12.69 $ 10.01 $ 11.37 $ 12.32 $ 15.34
======== ======== ======== ======== ======== ========
Total return (c) 2.13%(d) 27.96% (11.26)% (7.28)% (9.75)% 29.70%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $54,799 $54,648 $46,491 $55,335 $63,105 $73,151
Ratio of net investment income (loss) to average
net assets (b) (0.21)% 1.06% 0.61% (0.32)% (0.41)% (0.34)%
Ratio of operating expenses to average net assets
before fees waived by investment adviser and
other reductions (e) 1.14% 1.18% 1.21% 1.08% 1.06% 1.07%
Ratio of operating expenses to average net assets
after fees waived by investment adviser and
other reductions (e) 0.98% 0.96% 0.96% 0.96% 0.99% 0.98%
Portfolio turnover rate 19%(d) 81% 143% 80% 93% 66%
<FN>
- --------------------------------------------------------------------------------------------------------
(a) Recogniti on of net investment income (loss) by the Fund is affected by the timing of the
declaration of dividends by the underlying investment companies in which the Fund invests.
(b) Net investment income (loss) would have been lower (greater) in the absence of fee waivers and
expense reimbursements.
(c) Total return represents aggregate total return for the period indicated and would have been
lower in the absence of fee waivers and expense reimbursements and assumes reinvestment of all
distributions.
(d) Not annualized.
(e) Does not include expenses of the investment companies in which the Fund invests.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT 5
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2004 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Kobren Insight Funds (the
"Trust") was organized on September 13, 1996, as a Massachusetts business trust.
The Trust is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a no-load, open-end diversified management investment
company.
As of June 30, 2004, the Trust offered shares of two funds, Kobren Growth Fund
and Delphi Value Fund. Information presented in these financial statements
pertains only to Kobren Growth Fund (the "Fund"). The Fund seeks to achieve its
investment objective by investing primarily in shares of other investment
companies ("underlying funds"), but also may invest directly in securities
that are suitable investments for the Fund. The following is a summary of
significant accounting policies followed by the Fund in the preparation
of its financial statements.
USE OF ESTIMATES -- The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
PORTFOLIO VALUATION -- The underlying funds are valued according to their stated
net asset value. The Fund's other investment securities are valued at the last
sale price on the securities exchange or national securities market on which
such securities primarily are traded or for NASDAQ traded securities, the NASDAQ
Official Closing Price. Securities not listed on an exchange or national
securities market, or securities in which there were no transactions, are valued
at the average of the most recent bid and asked prices. Bid price is used when
no asked price is available. Short-term investments are carried at amortized
cost, which approximates value. Any securities or other assets for which recent
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees.
DIVIDENDS AND DISTRIBUTIONS -- It is the policy of the Fund to declare and pay
dividends from net investment income annually. The Fund will distribute net
realized capital gain (including net short-term capital gain), if any, annually,
unless offset by any available capital loss carryforward. Additional
distributions of net investment income and capital gain for the Fund may be made
in order to avoid the application of a 4% non-deductible excise tax on certain
undistributed amounts of ordinary income and capital gain. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
These differences are due primarily to differing treatments of income and gain
on various investment securities held by the Fund. The tax character of
distributions paid during 2003 and 2002 was as follows:
DISTRIBUTIONS PAID IN 2003 DISTRIBUTIONS PAID IN 2002
----------------------------------------------- ------------------------------------------------
ORDINARY INCOME LONG-TERM CAPITAL GAINS ORDINARY INCOME LONG-TERM CAPITAL GAINS
--------------- ----------------------- --------------- ------------------------
Kobren Growth Fund $ 515,589 $ -- $ 365,399 $ --
As of December 31, 2003, the components of distributable earnings on a tax basis
were as follows:
CAPITAL LOSS UNDISTRIBUTED UNDISTRIBUTED UNREALIZED
CARRYFORWARD ORDINARY INCOME LONG TERM APPRECIATION
------------ --------------- ----------- ------------
Kobren Growth Fund $ (2,277,310) $ 119,169 $ -- $ 10,674,175
These amounts are as of the most recent tax year end.
Net investment income and realized gain and loss for federal income tax purposes
may differ from that reported in the financial statements because of permanent
book and tax basis differences.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Interest income is recognized on the
accrual basis. All discounts/premiums are accreted/amortized using the effective
yield method.
- --------------------------------------------------------------------------------
6 KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT
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NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 2004 (UNAUDITED)
FEDERAL INCOME TAX -- The Fund has qualified and intends to continue to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code, applicable to regulated investment companies, by distributing
substantially all of its earnings to its shareholders. Therefore, no federal
income or excise tax provision is applicable. For the year ended December 31,
2003, the Fund had capital loss carryforwards of $326,295 expiring on December
31, 2008 from Kobren Moderate Growth Fund (which merged into the Fund on April
26, 2002) and $1,548,226 and $402,789 expiring on December 31, 2009 and 2011,
respectively.
EXPENSES -- Expenses of the Trust which are directly identifiable to a specific
fund are allocated to that fund. Other expenses of the Trust are allocated among
the funds based upon relative net assets of each fund. Other expenses of the
Trust are allocated equally to those funds in the Trust.
COMMITMENTS AND CONTINGENCIES -- In the normal course of business, the Trust
enters into contracts on behalf of the Fund that contain a variety of provisions
for general indemnifications. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that are not known at this time. However, based on experience,
the Fund believes the risk of loss is remote.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS:
The Trust has entered into an investment advisory agreement with Kobren Insight
Management, Inc. ("KIM"). The Fund pays KIM a fee, computed daily and paid
monthly, at the annual rate of 0.75% of the Fund's average daily net assets. KIM
has voluntarily agreed to limit the Fund's other operating expenses, before
other reductions, to 0.25% of the Fund's average daily net assets. This
voluntary agreement may be terminated at the discretion of the Adviser.
Kobren Insight Brokerage, Inc. ("KIB"), an affiliate of KIM, serves as
distributor of the Fund's shares and bears all distribution costs. No
distribution fees are paid by the Fund. The Fund also receives reimbursement of
12b-1 distribution fees paid to KIB by certain fund investments held in the
portfolio of the Fund.
For the six months ended June 30, 2004, expense reimbursements and other
reductions were as follows:
EXPENSES WAIVED BY INVESTMENT ADVISER OTHER REDUCTIONS (1)
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Kobren Growth Fund $ 37,602 $ 6,101
<FN>
(1) Reimbursements to the Fund from 12b-1 distribution fees.
</FN>
The Trust has also entered into an administration agreement with PFPC Inc. (the
"Administrator"), a member of PNC Financial Services Group, Inc. The
Administrator also serves as the Trust's transfer agent and dividend paying
agent. Mellon Trust of New England, N.A., an indirectly wholly-owned subsidiary
of Mellon Financial Corporation, serves as the Trust's custodian.
No officer, director or employee of KIM, KIB, the Administrator, or any
affiliate thereof, receives any compensation from the Trust for serving as a
trustee or officer of the Trust. Each trustee who is not an "affiliated person"
receives an annual retainer fee of $5,000 plus $1,000 for each board meeting
attended and $500 for each committee meeting attended. The Trust also reimburses
out-of-pocket expenses incurred by each trustee in attending such meetings.
3. SUB-TRANSFER AGENT FEES: The Fund is subject to sub-transfer agent fees
consisting of broker-dealer and fund network fees. The Fund pays participating
networks a monthly fee for maintaining shareholder accounts at an annual rate of
0.10% of the average daily balances of fund accounts invested through those
networks.
4. PURCHASES AND SALES: The aggregate amounts of purchases and sales of the
Fund's investment securities, other than short-term securities, for the six
months ended June 30, 2004, were $10,258,584 and $12,862,187 of non-governmental
issues, respectively.
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KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT 7
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NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 2004 (UNAUDITED)
5. SHARES OF BENEFICIAL INTEREST: As of June 30, 2004, an unlimited number of
shares of beneficial interest, par value $0.001, were authorized for the Trust.
Changes in shares of beneficial interest for the Fund were as follows:
SIX MONTHS ENDED YEAR ENDED
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JUNE 30, 2004 (UNAUDITED) DECEMBER 31, 2003
SHARES AMOUNT SHARES AMOUNT
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Shares sold 304,159 $ 3,934,191 458,246 $ 5,053,499
Shares issued as reinvestment of distributions -- -- 39,123 496,467
Shares redeemed (384,572) (5,012,692) (832,993) (9,254,180)
-------- -------------- -------- -------------
Net decrease (80,413) $ (1,078,501) (335,624) $ (3,704,214)
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At June 30, 2004, KIM and its affiliates owned 431,435 shares of the Fund
representing 10.2% of the total outstanding shares.
6. RISK FACTORS OF THE FUND: Indirectly investing in underlying funds through
Kobren Growth Fund involves additional and duplicative expenses and certain tax
results that would not be present if an investor were to make a direct
investment in the underlying funds. The Fund, together with any "affiliated
persons" (as such term is defined in the 1940 Act) may purchase only up to 3% of
the total outstanding securities of an underlying fund. Accordingly, when the
Trust, KIM or their affiliates hold shares of any of the underlying funds, the
Fund's ability to invest fully in shares of such underlying funds may be
restricted, and KIM must then, in some instances, select alternative investments
for the Fund.
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Descriptions of Kobren Growth Fund's Proxy Voting Policies and Procedures are
available upon request and without charge on Kobren Growth Fund's website at
www.kobren.com or by calling toll free 1-800-4KOBREN (800-456-2736) or on the
Securities and Exchange Commissions's website at www.sec.gov.
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8 KOBREN INSIGHT FUNDS -- 2004 SEMI-ANNUAL REPORT
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not yet applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Kobren Insight Funds (the "Trust") adopted a Nominating Committee Charter
and approved a Nominating Committee at its April 28, 2004 Board Meeting. The
Charter provides a governance structure for the Nominating Committee and sets
forth the Committee's mandate from the Board. The Charter includes procedures
for shareholders of each of the Funds in the Trust to nominate Independent
Trustee candidates.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 302 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act
and Section 906 of the Sarbanes-Oxley Act of 2002 are attached
hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) KOBREN INSIGHT FUNDS
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By (Signature and Title)* /S/ ERIC M. KOBREN
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Eric M. Kobren, Chairman & President
(principal executive officer)
Date AUGUST 20, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ ERIC M. KOBREN
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Eric M. Kobren, Chairman & President
(principal executive officer)
Date AUGUST 20, 2004
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By (Signature and Title)* /S/ ERIC J. GODES
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Eric J. Godes, Chief Financial Officer, Vice President,
Treasurer & Secretary
(principal financial officer)
Date AUGUST 20, 2004
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* Print the name and title of each signing officer under his or her signature.