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: 800-456-2736
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: DECEMBER 31, 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.
[GRAPHIC OMITTED]
KOBREN INSIGHT FUNDS LOGO
KOBREN INSIGHT MANAGEMENT, INC.
KOBREN GROWTH FUND
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ANNUAL REPORT DECEMBER 31, 2004
[GRAPHIC OMITTED]
ERIC KOBREN PIC
OUTLOOK FOR 2005:
LESS OF THE SAME
In last year's Annual Report, I summarized our outlook for 2004 by saying we
liked all the same themes we had profited from in 2003, just less so. I also
cautioned that we would be watching for some of these themes to reverse. It
turns out, that caution wasn't needed.
On the equity side, these themes were: small-cap stocks should do better than
large-caps (the Russell 2000 Index surged 18.3% compared to 11.4% for the
Russell 1000 Index); foreign stocks should outperform U.S. stocks (the EAFE
Index rose 20.2% compared to 10.9% for the S&P 500 Index); and emerging market
stocks should be the hot spot within international equities (the MSCI Emerging
Markets Index gained 25.6%).
In the fixed-income markets, the story was much the same with 2003's winners --
high-yield bonds, TIPS, foreign bonds and emerging market bonds -- all repeating
their outperformance in 2004.
The majority of Wall Street strategists expect a continuation of these same
themes for a third consecutive year. While that may be true, we are concerned
that some of these themes may, in fact, reverse. That may not happen, but we
would rather leave a little money on the table, than subject your fund to
unnecessary risk. As a result, moving into 2005, Kobren Growth is closer to our
neutral weightings across all assets classes than it has been in several years.
FOREIGN STOCKS VERSUS DOMESTIC STOCKS
The conventional view is that the dollar must get weaker. We have also been
proponents of that position in recent years, but moving forward, we don't quite
have the same level of conviction. The trade and federal budget deficits are the
biggest negatives for the dollar, but it's reasonable that both could improve in
2005.
It takes a while for the effect of a lower currency (which makes exports
more attractive) to be felt in a country's balance of trade. This year we could
see the effects of the dollar's decline over the past two years start to reduce
the trade deficit. Now that the election is over and the economy has recovered,
the budget deficit could improve.
We still believe that foreign stocks offer better growth prospects at cheaper
valuations than our own, but those advantages have diminished from prior years.
Moreover, if the dollar does strengthen, it would REDUCE the returns on foreign
stocks, rather than boost them as it did over the past two years. On balance,
we are essentially neutral on the foreign/domestic asset mix.
SMALL CAPS VERSUS LARGE CAPS
We have correctly underweighted large-caps for the last couple of years, but
they now represent one of the few areas that appears undervalued relative to the
general market. If economic growth continues to slow as we expect, large-caps
should have an advantage as small-caps tend to be more levered to the economic
cycle. Also larger companies tend to be larger exporters and, as noted earlier,
the dollar's decline over the past two years may generate higher exports this
year.
BONDS VERSUS CASH
In 2004, the prevailing wisdom was that inflation would heat up and long-term
bond rates would rise sharply. How many times last year did you hear that only a
fool would buy bonds? Well, short-term rates did indeed rise, but long rates
didn't, and bonds beat cash rather handily. And high-yield bonds once again
rivaled some equities.
Heading into 2005, we think high-yield bonds are fully priced as their yield
advantage over U.S. Treasuries has shrunk considerably. In fact, we are less
enthusiastic about bonds in general. As short rates rose in 2004, while long
rates held steady, the yield curve "flattened." In such an environment you don't
get a lot of extra yield by going out towards the longer end of the maturity
spectrum. And the risk of a rise in long-term rates offsets that extra yield. In
fact, under these conditions, "cash is not trash." If stocks and bonds both have
below-average returns, then the riskfree, low volatility, money market fund --
with yields beginning to approach intermediate-term U.S. Treasuries -- doesn't
look all that bad.
/S/ ERIC KOBREN
Eric M. Kobren
President and Portfolio Manager
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KOBREN GROWTH FUND (12/31/04)
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[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
VALUE OF $10,000 INVESTED 12/16/96
Kobren Growth Fund S&P 500 Index
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12/16/1996 $10,000.00 $10,000.00
12/31/1996 $10,240.00 $10,282.00
3/31/1997 $10,420.00 $10,557.00
6/30/1997 $11,560.00 $12,400.00
9/30/1997 $12,170.00 $13,329.00
12/31/1997 $11,779.00 $13,712.00
3/31/1998 $13,089.00 $15,624.00
6/30/1998 $13,181.00 $16,140.00
9/30/1998 $11,226.00 $14,535.00
12/31/1998 $13,128.00 $17,630.00
3/31/1999 $13,965.00 $18,509.00
6/30/1999 $15,148.00 $19,813.00
9/30/1999 $14,133.00 $18,576.00
12/31/1999 $17,027.00 $21,340.00
3/31/2000 $17,693.00 $21,829.00
6/30/2000 $16,583.00 $21,250.00
9/30/2000 $16,383.00 $21,044.00
12/31/2000 $15,367.00 $19,397.00
3/31/2001 $14,219.00 $17,098.00
6/30/2001 $15,217.00 $18,098.00
9/30/2001 $12,885.00 $15,442.00
12/31/2001 $14,249.00 $17,092.00
3/31/2002 $14,650.00 $17,139.00
6/30/2002 $13,610.00 $14,843.00
9/30/2002 $12,006.00 $12,278.00
12/31/2002 $12,644.00 $13,314.00
3/31/2003 $12,328.00 $12,895.00
6/30/2003 $14,046.00 $14,880.00
9/30/2003 $14,475.00 $15,274.00
12/31/2003 $16,179.00 $17,134.00
3/31/2004 $16,664.00 $17,424.00
6/30/2004 $16,524.00 $17,724.00
9/30/2004 $16,473.00 $17,393.00
12/31/2004 $17,968.00 $18,998.00
12 MONTHS 5 YEAR ANNUALIZED
ENDED ANNUALIZED SINCE INCEPTION
TOTAL RETURN (%) 12/31/04 RETURN (12/16/96)
- --------------- -------- -------- ---------
Kobren Growth +11.1% +1.1% +7.6%
S&P 500 Index +10.9% -2.3% +8.3%
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ASSET ALLOCATION*
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[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. Stocks 72.7%
International 15.9%
Bond 11.0%
Cash & Net Other Assets and Liab. 0.4%
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STYLE ALLOCATION*
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[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Large Cap Growth 34.6%
Large Cap Value 29.3%
International 15.9%
Small Cap Value 8.8%
Specialty 5.3%
Bond 5.7%
Cash & Net Other Assets and Liab. 0.4%
* Based on total net assets.
KOBREN GROWTH FUND (Ticker: KOGRX): After a strong fourth quarter, we are
pleased the Fund was able to finish the year with a double-digit return and
ahead of the S&P 500 Index and most peers. This is especially gratifying given
the risk averse manner in which we invest the Fund.
Our success in 2004 was primarily due to asset allocation and style decisions.
Significant positions in international securities, including emerging markets,
as well as a position in commodities via PIMCO COMMODITY REAL RETURN STRATEGY,
all provided nice boosts to our returns. Also assisting the Fund were positions
in domestic small and mid-cap funds as well as an over emphasis in
value-oriented versus growth funds.
Although on balance we are pleased with the funds we selected, we acknowledge
that certain individual fund performances were below average. That said, the
funds currently being used have excellent long-term track records, including
OAKMARK SELECT and LONGLEAF PARTNERS. We still have a high level of conviction
in these funds and their portfolio managers.
Our most notable portfolio moves toward the end of 2004 included adding to our
large-cap, blue chip funds, such as T. ROWE PRICE BLUE CHIP GROWTH. Not only do
these types of funds provide stable market exposures and strong security
selection skills, we feel that blue chip stocks are more attractive than usual
given relative valuations and current market conditions.
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TOP TEN HOLDINGS*
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KOBREN GROWTH STYLE ALLOC (%)
T.Rowe Price Blue Chip Growth Large Cap Growth 20.2
Oakmark Select - Class I Large Cap Value 14.2
Julius Baer Int'l Equity - Class I International 12.3
Fidelity Blue Chip Growth Large Cap Growth 10.8
Longleaf Partners Small Cap Small Cap Value 8.8
Fidelity Equity-Income Large Cap Value 7.7
Longleaf Partners L Large Cap Value 7.3
Fidelity Advisor High Income - Class I High Yield Bond 5.7
Pimco Comm Real Ret. Strat. - Class I Specialty 5.3
SSgA Emerging Markets International 3.6
TOTAL FUND NET ASSETS $56,842,660
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TOP SECTORS*
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(TOTALS MAY NOT EQUAL 100%)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Financial Services 20.7
Consumer Services 12.9
Healthcare 11.1
Industrial Materials 10.1
Consumer Goods 9.7
Media 7.8
Business Services 7.1
Telecom 6.6
Hardware 6.4
Energy 3.8
Software 3.0
Utilities 0.8
*Equities only
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Kobren Insight Management, Inc. is the Adviser for the Kobren Growth Fund, and
Kobren Insight Brokerage, Inc., a NASD broker/dealer, is the distributor for the
Fund. Performance data reflects past performance and is not a guarantee of
future results. Performance data does not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares and
would have been lower in the absence of fee waivers and expense reimbursements.
Total return figures include reinvestment of all distributions. Investment
return and principal value will fluctuate with market conditions and an
investor's shares when redeemed may be worth more or less than their original
cost.
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2 Kobren Insight Funds -- 2004 Annual Report
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PORTFOLIO OF INVESTMENTS
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DECEMBER 31, 2004
SHARES MUTUAL FUNDS - 100.05% VALUE (NOTE 1)
LARGE CAP GROWTH - 34.64%
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147,647 Fidelity Blue Chip Growth Fund $ 6,158,342
78,291 Fidelity Capital Appreciation Fund 2,037,915
371,728 T. Rowe Price Blue Chip Growth 11,493,828
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19,690,085
LARGE CAP VALUE - 29.29%
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83,340 Fidelity Equity-Income Fund 4,398,672
133,076 Longleaf Partners Fund 4,167,936
242,421 Oakmark Select Fund - Class I 8,084,752
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16,651,360
INTERNATIONAL-15.87%
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216,989 Julius Baer Int'l Equity Fund - Class I 6,976,205
136,376 SSgA Emerging Markets Fund 2,047,004
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9,023,209
SMALL CAP VALUE - 8.79%
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167,425 Longleaf Partners Small Cap Fund 4,997,654
BOND - 5.72%
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339,481 Fid. Adv High Income Fund - Class I 3,248,834
SPECIALTY - 5.34%
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204,360 PIMCO Commodity RealReturn Strategy
Fund - Class I 3,034,745
SHARES MUTUAL FUNDS - 100.05% VALUE (NOTE 1)
MONEY MARKET - 0.40%
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224,664 Dreyfus Cash Mgmt. Plus Fund (1) $ 224,664
TOTAL MUTUAL FUNDS
(COST $44,278,251) 56,870,551
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TOTAL INVESTMENTS 100.05% 56,870,551
(Cost $44,278,251)
LIABILITIES NET OF CASH
AND OTHER ASSETS -0.05% (27,891)
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TOTAL NET ASSETS 100.00% $56,842,660
======= ===========
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(1) An affiliate of the Custodian.
* For Federal income tax purposes,
cost is $44,344,883 and appreciation (depreciation) is as follows:
Unrealized appreciation: $12,525,668
Unrealized depreciation: --
-----------
Net unrealized appreciation: $12,525,668
===========
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STATEMENT OF ASSETS AND LIABILITIES
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ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 56,870,551
Dividends receivable 31,601
Receivable for fund shares sold 41,399
Prepaid expenses and other assets 5,919
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Total assets 56,949,470
--------------
LIABILITIES:
Payable for dividend distribution 5,537
Payable for fund shares redeemed 26,422
Investment advisory fee payable (Note 2) 29,581
Accrued Trustees' fees and expenses (Note 2) 5,815
Accrued expenses and other payables 39,455
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Total liabilities 106,810
--------------
NET ASSETS: $ 56,842,660
==============
Investments, at cost $ 44,278,251
==============
NET ASSETS consist of:
Accumulated undistributed net investment income $ 262,637
Accumulated undistributed net realized gain on investments sold 1,155,992
Net unrealized appreciation of investments 12,592,300
Par value 4,054
Paid-in capital 42,827,677
--------------
NET ASSETS $ 56,842,660
==============
SHARES OUTSTANDING 4,054,157
==============
Net asset value, offering and redemption price per share
(Net Assets/Shares Outstanding) $ 14.02
==============
SEE NOTES TO FINANCIAL STATEMENTS
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International investing has special risks, including currency fluctuation,
political and economic instability, and the volatility of emerging markets. The
S&P 500 Index is an unmanaged index of common stocks. The Adviser absorbs
certain expenses of the Kobren Growth 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 by calling a Kobren Insight Fund representative at
1-800-4KOBREN (1-800-456-2736) or by visiting www.kobren.com. Copyright (C)2004
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KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT 3
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STATEMENT OF OPERATIONS
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FOR THE YEAR ENDED DECEMBER 31, 2004
INVESTMENT INCOME:
Dividends $ 881,281
------------
Total investment income 881,281
------------
EXPENSES:
Investment advisory fee (Note 2) 411,679
Administration fee (Note 2) 75,854
Transfer agent fees (Note 2) 47,187
Sub-transfer agent fees (Note 3) 15,352
Custodian fees (Note 2) 3,000
Professional fees 35,437
Trustees' fee and expenses (Note 2) 15,578
Registration and filing fees 20,261
Reports to shareholders 5,367
Other 5,240
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Total expenses 634,955
Expenses waived by investment adviser (Note 2) (86,045)
Other reductions (Note 2) (11,839)
------------
Net expenses 537,071
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NET INVESTMENT INCOME 344,210
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions 2,670,193
Short-term capital gain distributions received 111,433
Long-term capital gain distributions received 823,619
Net increase in unrealized appreciation of securities 1,857,615
------------
Net realized and unrealized gain on investments 5,462,860
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,807,070
============
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STATEMENTS OF CHANGES IN NET ASSETS
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YEARS ENDED DECEMBER 31,
2004 2003
---------- ----------
Net investment income $ 344,210 $ 520,646
Net realized gain from security transactions 2,670,193 1,953,313
Short-term capital gain distributions received 111,433 94,991
Long-term capital gain distributions received 823,619 23,876
Net change in unrealized appreciation of investments 1,857,615 9,784,184
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Net increase in net assets resulting from operations 5,807,070 12,377,010
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Distribution to shareholders from:
Net investment income (293,054) (515,589)
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Total distributions (293,054) (515,589)
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Net decrease in net assets from fund share transactions (Note 5) (3,319,183) (3,704,214)
------------- -------------
Net increase in net assets 2,194,833 8,157,207
NET ASSETS:
Beginning of period 54,647,827 46,490,620
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End of period (including line A) $ 56,842,660 $ 54,647,827
============= =============
(A) Accumulated undistributed net investment income $ 262,637 $ 100,048
============= =============
SEE NOTES TO FINANCIAL STATEMENTS
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4 KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT
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FINANCIAL HIGHLIGHTS
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For a fund share outstanding throughout the year.
----------------------------FOR THE YEAR ENDED-------------------------
12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
------------ ------------ ------------ ------------ ------------
Net asset value - beginning of period $ 12.69 $ 10.01 $ 11.37 $ 12.32 $ 15.34
Net investment income (loss) (a)(b) 0.08 0.12 0.07 (0.04) (0.04)
Short-term capital gains distributions received 0.03 0.02 0.01 0.01 0.22
Net realized and unrealized gain (loss) on investments 1.29 2.66 (1.36) (0.87) (1.68)
------------ ------------ ------------ ------------ ------------
Net increase
(decrease) in net assets resulting
from investment operations 1.40 2.80 (1.28) (0.90) (1.50)
Distributions from net investment income (0.07) (0.12) (0.07) -- --
Distributions from net realized short-term
capital gain distributions received -- -- (0.01) -- (0.19)
Distributions from net realized capital gains
on investments -- -- -- (0.05) (1.33)
------------ ------------ ------------ ------------ ------------
Total distributions (0.07) (0.12) (0.08) (0.05) (1.52)
Net asset value - end of period $ 14.02 $ 12.69 $ 10.01 $ 11.37 $ 12.32
============ ============ ============ ============ ============
Total return (c) 11.05% 27.96% (11.26)% (7.28)% (9.75)%
============ ============ ============ ============ ============
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 56,843 $ 54,648 $ 46,491 $ 55,335 $ 63,105
Ratio of net investment income (loss)
to average net assets (b) 0.63% 1.06% 0.61% (0.32)% (0.41)%
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed by
investment adviser and other reductions (d) 1.16% 1.18% 1.21% 1.08% 1.06%
Ratio of operating expenses to average net assets after
reimbursements and reductions (d) 0.98% 0.96% 0.96% 0.96% 0.99%
Portfolio turnover rate 30% 81% 143% 80% 93%
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<FN>
(a) Recognition 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) Does not include expenses of the investment companies in which the Fund invests.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
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NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2004
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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 December 31, 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 2004 and 2003 was as follows:
DISTRIBUTIONS PAID IN 2004 DISTRIBUTIONS PAID IN 2003
ORDINARY INCOME LONG-TERM CAPITAL GAINS ORDINARY INCOME LONG-TERM CAPITAL GAINS
--------------- ----------------------- --------------- -----------------------
Kobren Growth Fund $ 293,054 $ -- $ 515,589 $ --
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KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT 5
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NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2004
- --------------------------------------------------------------------------------
As of December 31, 2004, the components of distributable earnings on a tax
basis were as follows:
CAPITAL LOSS UNDISTRIBUTED UNDISTRIBUTED UNREALIZED
CARRYFORWARD ORDINARY INCOME LONG-TERM GAIN APPRECIATION
------------ --------------- -------------- -------------
Kobren Growth Fund $ -- $ 268,174 $ 1,222,624 $ 12,525,668
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. Permanent book and tax differences of $111,433
and $(111,433) were reclassified at December 31, 2004 among undistributed net
investment income and accumulated net realized gain on investments,
respectively, for the Fund. This reclass is related to short-term capital gain
dividends received. The difference between book basis and tax-basis unrealized
appreciation is attributable to tax deferral of losses on wash sales.
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.
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
between 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 year ended December 31, 2004, expense reimbursements and other
reductions were as follows:
EXPENSES REIMBURSED BY INVESTMENT ADVISER OTHER REDUCTIONS (1)
------------------------------------------- ---------------------
Kobren Growth Fund $ 86,045 $ 11,839
<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 whollyowned 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
up to 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 year
ended December 31, 2004, were $16,338,962 and $19,342,026 of non-governmental
issues, respectively.
5. SHARES OF BENEFICIAL INTEREST: As of December 31, 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:
YEAR ENDED DECEMBER 31, 2004 YEAR ENDED DECEMBER 31, 2003
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
Shares sold 374,224 $ 4,846,804 458,246 $ 5,053,499
Shares issued as reinvestment of distributions 20,508 287,517 39,123 496,467
Shares redeemed (648,447) (8,453,504) (832,993) (9,254,180)
---------- ------------ ----------- ------------
Net decrease (253,715) $(3,319,183) (335,624) $(3,704,214)
========== ============ =========== ============
At December 31, 2004, KIM and its affiliates owned 433,671 shares of the Fund
representing 10.7% 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.
- --------------------------------------------------------------------------------
6 KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Kobren Insight Funds and the Shareholders of Kobren
Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Kobren Growth Fund ("Fund") at
December 31, 2004, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2004 by
correspondence with the custodian, provides a reasonable basis for our opinion.
Boston, Massachusetts PricewaterhouseCoopers LLP
Feburary 11, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) - DECEMBER 31, 2004
- --------------------------------------------------------------------------------
FORM N-Q: The Trust files complete Portfolio of Investments for the Fund with
the Securities and Exchange Commission (the "SEC") for the Trust's first and
third quarters of each fiscal year on Form N-Q. The Trust's Forms N-Q are
available on the SEC's website at www.sec.gov. and are available for review and
copying at the SEC's Public Reference Room in Washington, DC. Information on the
operations of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
PROXY VOTING: Kobren Growth Fund's Proxy Voting Policies and Procedures, used to
determine how to vote proxies relating to portfolio securities, are included in
the Trust's Statement of Additional Information, and are also available (i) upon
request, without charge, by calling 1-800-4KOBREN (800-456-2736); (ii) on Kobren
Growth Fund's website at www.kobren.com; and (iii) on the SEC's website at
www.sec.gov. Kobren Growth Fund's Proxy Voting Record for the most recent
twelve-month period ended June 30 is available i) upon request, without charge,
by calling 1-800-4KOBREN (800-456-2736); (ii) on Kobren Growth Fund's website at
www.kobren.com; and (iii) on the SEC's website at www.sec.gov.
DISCLOSURE OF FUND EXPENSES: We believe it is important for you to understand
the impact of fees regarding your investment. All mutual funds have operating
expenses. As a shareholder of a mutual fund, you incur ongoing costs, which
include costs for portfolio management, administrative services, and shareholder
reports (like this one), among others. Operating expenses, which are deducted
from a fund's gross income, directly reduce the investment return of the fund. A
fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing fees (in dollars) of investing in your Fund and
to compare these costs with those of other mutual funds. The examples are based
on an investment of $1,000 made at the beginning of the period shown and held
for the entire period.
This table illustrates your fund's costs in two ways:
ACTUAL FUND RETURN: This section helps you to estimate the actual expenses,
after any applicable fee waivers, that you paid over the period. The "Ending
Account Value" shown is derived from the Fund's actual return for the past six
month period, the "Expense Ratio" column shows the period's annualized expense
ratio, and the "Expenses Paid During Period" column shows the dollar amount that
would have been paid by an investor who started with $1,000 in the Fund at the
beginning of the period.
You may use the information here, together with your account value, to estimate
the expenses that you paid over the period. To do so, simply divide your account
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6),
then multiply the result by the number given for your Fund in the first line
under the heading entitled "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN: This section is intended to help you compare your Fund's
costs with those of other mutual funds. It assumes that the Fund had an annual
return of 5% before expenses, but that the expense ratio is unchanged. In this
case, because the return used is not the Fund's actual return, the results do
not apply to your investment. This example is useful in making comparisons to
other mutual funds because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on an assumed 5% annual return. You can
assess your Fund's costs by comparing this hypothetical example with the
hypothetical examples that appear in shareholder reports of other funds.
Please note that the expense shown in the table are meant to highlight and help
you compare your ongoing costs only and do not reflect any transactional costs
such as sales charges (loads) and redemption fees, which are described in the
Prospectus. If these costs were applied to your account, your costs would be
higher.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSE EXPENSES PAID
VALUE 7/01/04 VALUE 12/31/04 RATIO (1) DURING PERIOD (2)
----------------- --------------- --------- -----------------
ACTUAL FUND RETURN
- ------------------
Retail Class $ 1,000 $ 1,087.40 1.00% $ 5.25
HYPOTHETICAL 5% RETURN
- -----------------------
Retail Class $ 1,000 $ 1,020.11 1.00% $ 5.08
<FN>
(1) Annualized, based on the Fund's most recent fiscal half-year expenses.
(2) Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by the number of days in the most
recent fiscal half-year, then divided by 366. Period represents 7/1/04 - 12/31/04.
</FN>
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT 7
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) - DECEMBER 31, 2004
- --------------------------------------------------------------------------------
TAX INFORMATION:
The percentage of income from direct obligations of the U.S. Government in the
Fund was 17.51%.
During the year ended December 31, 2004, the Fund intends to declare long-term
capital gains of $1,222,624.
For the fiscal year ended December 31, 2004 certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth
Tax Relief Reconciliation Act of 2003. Kobren Growth Fund designated $293,054
(from 01/01/04 to 12/31/04), as taxed at a rate of 15%. Complete information
will be computed and reported in conjunction with your 2004 Form 1099-DIV.
INFORMATION ABOUT TRUSTEES AND OFFICERS
Information pertaining to the Trustees and officers of the Trust is set forth
below. The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function. The Statement of Additional Information (SAI) includes additional
information about the Trustees and is available without charge, upon request
by calling (toll free) 1-800-456-2736.
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Other
Term of Portfolios in Trusteeships/
Office and Fund Complex Directorships
Name, Address, Age and Length of Overseen by Held by
Position(s) with Trust Time Served1 Principal Occupation(s) During Past 5 Years Trustee Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
Edward B. Bloom 8 years Chief Financial Officer and Treasurer 2 None
c/o 20 William Street, Suite 310 of International Data Group Inc., a
Wellesley Hills, MA 02481 publishing company.
Age: 54, Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
Arthur Dubroff 8 years Chief Financial Officer of Net2Phone, Inc., a provider 2 Virtual
c/o 20 William Street, Suite 310 of Voice over Internet Protocol telephony services, Communities, Inc.,
Wellesley Hills, MA 02481 from November 2002 to present; Chief Financial Emisphere
Age: 54, Trustee Officer of Virtual Communities, Inc, a software Technologies, Inc.
provider, from July 2000 to the present; Consultant for
Turnberry Consulting, LLC from October 1999 to
present.
- ----------------------------------------------------------------------------------------------------------------------------------
Robert I. Goldfarb 6 years Vice President and Asst. General Counsel of Andrx 2 None
c/o 20 William Street, Suite 310 Corporation since March 2000; Partner at Hughes
Wellesley Hills, MA 02481 Hubbard & Reed LLP, a law firm, and associated with
Age: 49, Trustee the firm from July 1989 through July 2000.
- ----------------------------------------------------------------------------------------------------------------------------------
Stuart J. Novick 8 years Senior Vice President, General Counsel and Secretary 2 None
c/o 20 William Street, Suite 310 of Children's Hospital Boston.
Wellesley Hills, MA 02481
Age: 54, Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES 2
- ----------------------------------------------------------------------------------------------------------------------------------
Eric M. Kobren 8 years President of Mutual Fund Investors Association, Inc.; 2 None
20 William Street, Suite 310 President of Kobren Insight Management, Inc. and
Wellesley Hills, MA 02481 Kobren Insight Brokerage, Inc. These are a financial
Age: 51 publishing company, a registered investment advisory
Chairman and President firm and a registered broker-dealer, respectively.
Since 2001, Managing Member of Alumni Capital, LLC,
a General Partner to a private investment partnership.
- ----------------------------------------------------------------------------------------------------------------------------------
Michael P. Castellano 8 years Registered representative of Kobren Insight 2 Director, Puradyn
c/o 20 William Street, Suite 310 Brokerage, Inc. From December 1994 to June 1997, Filter Technologies,
Wellesley Hills, MA 02481 Chief Administrative Officer of Kobren Insight Inc.; Trustee, Sun
Age 63, Trustee Management, Inc. Capital Advisers
Trust (7 funds)
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
Eric J. Godes 8 years Managing Director of Kobren Insight Management, Inc. N/A N/A
20 William Street, Suite 310 and Managing Director and a registered representative
Wellesley Hills, MA 02481 of Kobren Insight Brokerage, Inc. Since 2001,
Age: 43 Managing Director of Alumni Capital, LLC, a General
Chief Financial Officer, Vice Partner to a private investment partnership.
President, Treasurer, Secretary
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Trustees serve for an indefinite term until the earliest of a Trustee's:
(i) removal by a two-thirds vote of the Board of Trustees or shareholders,
(ii) resignation, (iii) death, (iv) bankruptcy or (v) adjudicated
incompetence.
2 "Interested person" of the Trust as defined in the 1940 Act. Messrs. Kobren
and Castellano are each considered an "interested person" because of their
affiliation with Kobren Insight Management, Inc. and Kobren Insight
Brokerage, Inc., which acts as the Trust's investment adviser and
distributor, respectively.
</FN>
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2004 ANNUAL REPORT 8
[GRAPHIC OMITTED]
KOBREN
INSIGHT
FUNDS
LOGO
DELPHI VALUE FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT DECEMBER 31, 2004
[PIC]
SCOTT M. BLACK
- --------------------------------------------------------------------------------
Dear Shareholders,
We are pleased to report that the Delphi Value Fund appreciated 12.5% (12.9%
institutional class) in 2004. During the second half of the year your Fund
rallied 9.1% (9.3% institutional class) accounting for the majority of the
annual gain. An analysis of the general market index during the second semester
reflects quirky investor expectations. From July 1st through Election Day,
November 2nd, the S&P 500 actually declined 0.3%. Notwithstanding massive twin
deficits, fiscal budgetary and balance of trade, and an eroding U.S. position in
Iraq, the reelection of George Bush was greeted with ebullience as the S&P 500
rallied 7.5% through year end. Overall, the U.S. economy performed well in 2004.
Corporate profits reached $900 billion, or 7.6% of nominal Gross Domestic
Product ("GDP"), the highest level since 1946; real GDP growth approximated 4%;
and the 10- year U.S. Treasury yield essentially finished the year where it
commenced at 4.25%. Fortuitously, Japan and China were willing to recycle their
surplus trade dollars into purchases of our Treasury bonds.
Surveying the overall U.S. economic environment, we are mildly bullish on the
prospects for the U.S. equity markets in 2005. Real growth should approximate 3
1/2% and consumer prices should advance 2 1/2%, generating 6% growth in nominal
GDP. Since US corporate profits as a percent of GDP are already at a record
high, we expect S&P 500 earnings to grow in lockstep with the economy at 6%.
With the S&P selling at 16.8x forecast 2005 earnings, the overall market is not
expensive by historical standards. Conversely, the prospects for the US bond
market are bleaker. With the pickup in inflation, we expect the 10 year U.S.
Treasury to back up to 4.75-5.00% yields; hence, the total return would be under
3%. The basic conclusion is that equities should outperform fixed income in
2005. For the record, the companies in the Fund have superior characteristics to
those in the S&P 500. The historic five year growth rates in sales and earnings
per share outshine the general market -- revenue 9.4% per annum versus 6.6%; eps
12.2% per annum against 9.6%. Yet, our portfolio is statistically much cheaper;
discounts of 20.8% and 30.2%, respectively, to the price/earnings and price/book
valuations of the S&P 500.
A review of the individual holdings indicates that the housing and energy
related holdings contributed favorably to the second half of 2004 results.
Despite continued investor concern about a "housing bubble", Toll Brothers
(+62.1%), D.R. Horton (+41.9%), and Lennar (+26.7%) rallied smartly. Similarly,
energy stocks seem to trade congruently with the first derivative of oil and gas
prices. Nonetheless, we stayed the course and were rewarded. OMI (+41.6%),
Denbury Resources (+31.0%), Talisman Energy (+24.0%), Whiting Petroleum
(+20.3%), and Norsk Hydro (+20.3%) appreciated nicely. One portfolio addition,
the specialty retailer, Abercrombie & Fitch, was purchased at 11x forecast 2005
earnings Scott M. Black and has already climbed 48.5%. In the interest of
fairness, Micron Technology declined 19.3% despite solid latest quarter year
over year gains in sales and earnings ($.23 versus $.14).
Among the latest period portfolio additions, we attempted to effect a balance
between consumer and industrial stocks. On the consumer side, good businesses
like Abercrombie & Fitch, Helen of Troy, and Toyota Motor were purchased.
Industrial acquisitions comprised Pogo Producing, Briggs & Stratton, and Metals
USA. To enhance tax efficiency, we realized losses in a handful of technology
issues (Applied Micro Circuits, Integrated Silicon, Kemet, LSI Logic, and
Maxtor) where the prospects for a major rebound were not imminent. Given our
relatively low portfolio turnover, we are proud to report that only three of the
seventythree year end positions have unrealized losses. This fact supports the
contention that we are not committing an abundance of errors in our fundamental
research.
The SEC requires that each mutual fund select an appropriate broad-based
securities index for comparative purposes. In the "Fund Overview" on page two,
you will find that the Russell Midcap Value Index has been designated. While
this benchmark may be among the most appropriate indices available for
comparative purposes, we do not manage the Fund relative to the composition of
any index. Accordingly, the Fund's monthly returns do not correlate well with
many broad-based securities indices, including the benchmark index. Utilizing
the Sharpe capital asset pricing model, we find that the Fund has only a 79%
correlation (r2 = .79) with the Fund's benchmark; 70% and 66% with the S&P 500
Index and Russell 2000 Value Index, respectively. Three key points are salient:
1. we strive for absolute investment returns irrespective of any benchmark
considerations; 2. we look for value candidates throughout the full spectrum of
market capitalizations; if Berkshire Hathaway, Washington Post and XTO Energy
remain attractive businesses with favorable stock market valuations, we shall
retain them even though their capitalization sizes are larger than the Midcap
benchmark; 3. similarly, we pay no attention to benchmark industry weightings.
For example, utilities are prominent in the Russell indices. However, utility
companies, like airlines, perennially earn substandard returns of equity and on
total capital. Hence, utilities have no place in our portfolio given our
rigorous return on equity and free cash flow criteria.
Undoubtedly, the new millennium has proven to be a difficult period for U.S.
equity returns. Contrary to the naysayers of active portfolio management, the
Delphi Value Fund has had a total return of 61.1% (63.4% institutional class)
since January 1, 2000. Thankfully, the stock market is not totally efficient. We
thank you for your continued support.
Very truly yours,
/S/SCOTT M. BLACK
Scott M. Black
Portfolio Manager
- --------------------------------------------------------------------------------
FUND OVERVIEW
- --------------------------------------------------------------------------------
DECEMBER 31, 200 4
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DELPHI VALUE FUND RUSSELL MIDCAP
RETAIL CLASS VALUE INDEX
------------ -----------
12/23/1998 $10,000.00 $10,000.00
12/31/1998 $10,120.00 $10,267.00
3/31/1999 $10,240.00 $9,948.00
6/30/1999 $11,450.00 $11,060.00
9/30/1999 $10,340.00 $9,884.00
12/31/1999 $11,264.00 $10,256.00
3/31/2000 $12,391.00 $10,359.00
6/30/2000 $12,119.00 $10,185.00
9/30/2000 $12,834.00 $11,168.00
12/31/2000 $13,212.00 $12,223.00
3/31/2001 $12,897.00 $11,791.00
6/30/2001 $13,741.00 $12,622.00
9/30/2001 $11,678.00 $11,164.00
12/31/2001 $13,463.00 $12,507.00
3/31/2002 $14,382.00 $13,495.00
6/30/2002 $13,596.00 $12,865.00
9/30/2002 $11,727.00 $10,555.00
12/31/2002 $12,166.00 $11,301.00
3/31/2003 $11,573.00 $10,843.00
6/30/2003 $13,545.00 $12,783.00
9/30/2003 $14,199.00 $13,542.00
12/31/2003 $16,129.00 $15,603.00
3/31/2004 $16,865.00 $16,411.00
6/30/2004 $16,630.00 $16,722.00
9/30/2004 $16,783.00 $17,012.00
12/31/2004 $18,148.00 $19,302.00
- --------------------------------------------------------------------------------
TOTAL RETURN
- --------------------------------------------------------------------------------
12 MONTHS 5 YEAR ANNUALIZED
ENDED ANNUALIZED SINCE INCEPTION
12/31/04 RETURN (12/23/98)
-------- ------ ---------
Retail Class +12.5% +10.0% +10.4%
Institutional Class +12.9% +10.3% +10.7%
Russell Midcap Value +23.7% +13.5% +11.5%
- --------------------------------------------------------------------------------
NET ASSET VALUE - 12/31/04
- --------------------------------------------------------------------------------
Retail Class: $17.23 Institutional Class: $17.49
- --------------------------------------------------------------------------------
TOTAL NET ASSETS
- --------------------------------------------------------------------------------
$120,836,698
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS*
- --------------------------------------------------------------------------------
SECURITY SECTOR ALLOC (%)
- --------------------------------------------------------------------------------
Berkshire Hathaway, Class B Conglomerates 2.8
Toll Brothers, Inc. Construction & Real EsTate 2.0
Washington Post Co., Class B Publishing & Broadcasting 1.7
XTO Energy, Inc. Energy 1.7
Pulitzer Inc. Publishing & Broadcasting 1.7
Denbury Resources, Inc. Energy 1.7
D. R. Horton, Inc. Construction & Real Estate 1.7
Southwest Bancorp, Inc. Banking 1.5
Wells Fargo & Co. Banking 1.5
Gannett, Inc. Publishing & Broadcasting 1.5
*As a percent of total net assets.
- --------------------------------------------------------------------------------
SECTORS
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Publishing & Broadcasting 12.5%
Banking 10.5%
Insurance 10.1%
Financial Services 8.8%
Energy 8.2%
Construction & Real Estate 7.4%
Cash & Net Other Assets and Liabilities 6.9%
Manufacturing 5.9%
Basic Materials 5.9%
Retail 4.5%
Conglomerates 4.3%
Textiles & Apparel 3.9%
Consumer Related 3.8%
Food & Beverage 2.3%
Aerospace/Technology 2.0%
Transpotation 2.2%
Pharmaceuticals 0.8%
- --------------------------------------------------------------------------------
ASSET ALLOCATION
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Cash & Net Other Assets and Liabilities 6.9%
Equity 93.1%
- --------------------------------------------------------------------------------
Kobren Insight Management, Inc. is the Fund's adviser, Delphi Management, Inc.
is the sub-adviser and Kobren Insight Brokerage, Inc., a NASD broker/dealer, is
the distributor of the Fund. Performance data reflects past performance and is
not a guarantee of future returns. Performance data does not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or the
redemption of Fund shares. Total return figures include reinvestment of all
distributions. Investment returns and principal values fluctuate with changing
market conditions, so that when redeemed, shares may be worth more or less than
their original cost. The Russell Midcap Value Index is an unmanaged index of
common stocks. The Adviser absorbed certain expenses of the Fund during certain
periods, without which the total return would be lower. Portfolio holdings and
percentages of the Fund may change at any time. You may obtain a prospectus by
calling a Kobren Insight Fund representative at 1-800-456-2736.
- --------------------------------------------------------------------------------
2 DELPHI VALUE FUND-2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
SHARES VALUE (NOTE 1)
COMMON STOCKS - 93.13%
- --------------------------------------------------------------------------
105,000 AEROSPACE/TECHNOLOGY - 2.04%
- --------------------------------------------------------------------------
Micron Technology, Inc. (1) $ 1,296,750
108,000 Western Digital Corp. (1) 1,170,720
----------------
2,467,470
BANKING - 10.55%
- --------------------------------------------------------------------------
40,000 Banknorth Group, Inc. 1,464,000
35,500 Citigroup, Inc. 1,710,390
71,000 Colonial BancGroup, Inc. 1,507,330
50,400 Community Bank System, Inc. 1,423,800
51,525 North Fork Bancorporation, Inc. 1,486,496
76,500 Southwest Bancorp, Inc. 1,872,720
29,700 Webster Financial Corp. 1,504,008
28,615 Wells Fargo & Co. 1,778,422
----------------
12,747,166
BASIC MATERIALS - 5.91%
- --------------------------------------------------------------------------
37,600 Alcoa, Inc. 1,181,392
30,050 Cytec Industries, Inc. 1,545,171
33,200 Dow Chemical Co. 1,643,732
40,500 Inco, Ltd. (1) 1,489,590
69,000 Metals USA, Inc. (1) 1,279,950
----------------
7,139,835
CONGLOMERATES - 4.27%
- --------------------------------------------------------------------------
1,160 Berkshire Hathaway, Inc., Class B (1) 3,405,760
19,200 Norsk Hydro ASA, SP ADR 1,511,424
3,200 Textron, Inc. 236,160
----------------
5,153,344
CONST. & REAL ESTATE - 7.39%
- --------------------------------------------------------------------------
24,700 Boston Properties, Inc., REIT 1,597,349
49,627 D.R. Horton, Inc. 2,000,464
30,330 Lennar Corp., Class A 1,719,105
34,900 Toll Brothers, Inc. (1) 2,394,489
70,500 U-Store-It Trust, REIT 1,223,175
----------------
8,934,582
CONSUMER RELATED - 3.83%
- --------------------------------------------------------------------------
51,000 Disney (Walt) Co. 1,417,800
19,200 Helen of Troy Ltd. (1) 645,312
83,000 La-Z-Boy, Inc. 1,275,710
15,800 Toyota Motor Corp., SP ADR 1,293,546
----------------
4,632,368
ENERGY - 8.17%
- --------------------------------------------------------------------------
74,000 Denbury Resources, Inc. (1) 2,031,300
35,000 Nexen, Inc. 1,422,750
27,000 Pogo Producing Co. 1,309,230
57,300 Talisman Energy, Inc. 1,544,808
48,700 Whiting Petroleum Corp. (1) 1,473,175
59,166 XTO Energy, Inc. 2,093,293
----------------
9,874,556
FINANCIAL SERVICES - 8.75%
- --------------------------------------------------------------------------
26,800 American Express Co. 1,510,716
17,084 Bear Stearns Cos., Inc. 1,747,864
14,700 Goldman Sachs Group, Inc. 1,529,388
30,800 H&R Block, Inc. 1,509,200
25,615 iStar Financial, Inc., REIT 1,159,335
18,500 Lehman Brothers Holdings, Inc. 1,618,380
26,955 Morgan Stanley 1,496,542
----------------
10,571,425
FOOD & BEVERAGE - 2.31%
- --------------------------------------------------------------------------
52,000 Pepsi Bottling Group, Inc. 1,406,080
90,000 Ryan's Restaurant Group, Inc. (1) 1,387,800
----------------
2,793,880
INSURANCE - 10.10%
- --------------------------------------------------------------------------
60,000 Aspen Insurance Holdings, Ltd. 1,471,200
39,000 IPC Holdings, Ltd. 1,696,890
40,000 Montpelier Re Holdings, Ltd. 1,538,000
32,200 PMI Group, Inc. (The) 1,344,350
25,000 Radian Group, Inc. 1,331,000
31,200 RenaissanceRe Holdings, Ltd. 1,624,896
32,060 SAFECO Corp. 1,674,814
19,600 XL Capital, Ltd., Class A 1,521,940
----------------
12,203,090
SHARES VALUE (NOTE 1)
- --------------------------------------------------------------------------
MANUFACTURING - 5.90%
- --------------------------------------------------------------------------
47,450 American Axle & Mfg Holdings, $ 1,454,817
Inc.
25,600 Briggs & Stratton Corp. 1,064,448
150,575 Lamson & Sessions Co. (1) 1,370,233
26,500 Lear Corp. 1,616,765
44,275 Masco Corp. 1,617,366
----------------
7,123,629
PHARMACEUTICALS - 0.84%
- --------------------------------------------------------------------------
37,500 Pfizer, Inc. 1,008,375
PUBLISHING & BROADCASTING - 12.49%
- --------------------------------------------------------------------------
49,900 Comcast Corp., Class A (1) 1,638,716
21,650 Gannett, Inc. 1,768,805
31,000 Lee Enterprises, Inc. 1,428,480
140,600 Liberty Media Corp., Class A (1) 1,543,788
21,100 McClatchy Co., Class A 1,515,191
14,700 McGraw-Hill Cos., Inc. 1,345,638
88,800 News Corp., Ltd., SP ADR 1,704,960
31,500 Pulitzer, Inc. 2,042,775
2,135 Washington Post Co., Class B 2,098,748
----------------
15,087,101
RETAIL - 4.49%
- --------------------------------------------------------------------------
22,700 Abercrombie & Fitch Co., Class A 1,065,765
32,500 Ethan Allen Interiors, Inc. 1,300,650
28,300 Federated Department Stores, Inc. 1,635,457
72,500 Pier 1 Imports, Inc. 1,428,250
----------------
5,430,122
TEXTILES & APPAREL - 3.92%
- --------------------------------------------------------------------------
42,500 Jones Apparel Group, Inc. 1,554,225
39,600 Liz Claiborne, Inc. 1,671,516
35,500 Polo Ralph Lauren Corp. 1,512,300
----------------
4,738,041
TRANSPORTATION - 2.17%
- --------------------------------------------------------------------------
77,400 OMI Corp. 1,304,190
31,430 Teekay Shipping Corp. 1,323,517
----------------
2,627,707
TOTAL COMMON STOCKS 112,532,691
(Cost $72,603,218)
INVESTMENT COMPANY - 7.11%
8,588,544 Dreyfus Cash Mgmt. Plus Fund (2) 8,588,544
----------------
TOTAL INVESTMENT COMPANY 8,588,544
----------------
(Cost $8,588,544)
TOTAL INVESTMENTS - 100.24% 121,121,235
(Cost $81,191,762*)
LIABILITIES NET OF CASH &
OTHER ASSETS - (0.24)% (284,537)
----------------
TOTAL NET ASSETS - 100.00% $ 120,836,698
================
- ------------------------------------------------------
(1) Non-income producing.
(2) An affiliate of the Custodian.
REIT Real Estate Investment Trust
SP ADR Sponsored American Depositary Receipt
* For Federal income tax purposes, cost is $81,191,762 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $ 40,188,500
Unrealized depreciation: (259,027)
------------
Net unrealized appreciation: $ 39,929,473
============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DELPHI VALUE FUND -- 2004 ANNUAL REPORT 3
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
DECEMBER 31, 2004
ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 121,121,235
Dividends receivable 137,736
Receivable for investments sold 68,410
Receivable for shares sold 167,068
Prepaid expenses and other assets 8,153
----------------
Total assets 121,502,602
----------------
LIABILITIES:
Payable for investments purchased 38,399
Payable for shares redeemed 446,313
Investment advisory fee payable (Note 2) 102,168
Distribution fee payable (Note 2) 13,614
Accrued trustees' fees and expenses (Note 2) 12,310
Accrued expenses and other payables 53,100
----------------
Total liabilities 665,904
----------------
NET ASSETS $ 120,836,698
================
Investments, at cost $ 81,191,762
================
NET ASSETS CONSIST OF:
Accumulated undistributed net realized gain on investments sold $ 1,136,253
Net unrealized appreciation of investments 39,929,473
Par value 6,966
Paid-in capital 79,764,006
----------------
NET ASSETS $ 120,836,698
================
COMPUTATION OF NET ASSET VALUE
RETAIL CLASS SHARES:
Net asset value, offering and redemption price
per share ($65,446,307 / 3,799,260 shares) $ 17.23
================
INSTITUTIONAL CLASS SHARES:
Net asset value, offering and redemption price
per share ($55,390,391 / 3,166,865 shares) $ 17.49
================
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 DELPHI VALUE FUND -- 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2004
INVESTMENT INCOME:
Dividends $ 1,470,245
--------------
Total investment income 1,470,245
--------------
EXPENSES:
Investment advisory fee (Note 2) 1,134,089
Administration fee (Note 2) 88,521
Transfer agent fees (Note 2) 70,008
Sub-transfer agent fee (Retail Class) (Note 3) 28,415
Custodian fees (Note 2) 26,357
Professional fees 59,126
Trustees' fees and expenses (Note 2) 28,869
Registration and filing fees 30,320
Reports to shareholders 6,773
Distribution fees (Retail Class)(Note 2) 158,756
Other 6,940
--------------
Total expenses 1,638,174
--------------
NET INVESTMENT LOSS (167,929)
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions 3,900,950
Net increase in unrealized appreciation of securities 9,919,259
--------------
Net realized and unrealized gain on investments 13,820,209
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 13,652,280
==============
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- ------------------
Net investment loss $ (167,929) $ (76,385)
Net realized gain from security transactions 3,900,950 2,118,228
Net change in unrealized appreciation of investments 9,919,259 23,629,068
----------------- ---------------
Net increase in net assets resulting from operations
Distribution to shareholders from: 13,652,280 25,670,911
Retail Shares:
Net realized gains on investments (2,014,197) --
----------------- ---------------
Total distributions (2,014,197) --
Institutional Shares:
Net realized gains on investments (1,691,208) --
----------------- ---------------
Total distributions (1,691,208) --
Total distributions to shareholders (3,705,405) --
----------------- ---------------
Net increase in net assets from fund share transactions (Note 5) 4,514,305 3,300,452
----------------- ---------------
Net increase in net assets 14,461,180 28,971,363
Net Assets:
Beginning of period 106,375,518 77,404,155
----------------- ---------------
End of period (including line A) $ 120,836,698 $ 106,375,518
================= ===============
(A) Accumulated undistributed net investment income $ -- $ --
================= ===============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DELPHI VALUE FUND-- 2004 ANNUAL REPORT 5
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR
RETAIL CLASS SHARES
-------------------------------------------------
-----------------------------FOR THE YEAR ENDED-----------------------------
12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 15.79 $ 11.91 $ 13.18 $ 13.00 $ 11.19
Net investment loss (0.05) (0.03) (0.02) (0.02) (0.01)
Net realized and unrealized gain (loss) on
investments 2.04 3.91 (1.25) 0.27 1.94
------- ------- ------- ------- -------
Net increase (decrease) in net assets resulting
from investment operations 1.99 3.88 (1.27) 0.25 1.93
Distributions from net realized gains on
investments (0.55) -- -- (0.07) (0.12)
------- ------- ------- ------- -------
Total distributions (0.55) -- -- (0.07) (0.12)
Net asset value - end of period $ 17.23 $ 15.79 $ 11.91 $ 13.18 $ 13.00
======= ======= ======= ======= =======
Total return (a) 12.52% 32.58% (9.64)% 1.90% 17.30%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $65,446 $61,197 $43,808 $44,744 $45,312
Ratio of net investment loss to average net (0.28)% (0.21)% (0.13)% (0.12)% (0.12)%
assets
Ratio of operating expenses to average net
assets before fees waived and/or expenses
reimbursed by investment adviser and
administrator 1.58% 1.64% 1.63% 1.64% 1.71%
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.58% 1.64% 1.63% 1.64% 1.71%
Portfolio turnover rate 31% 22% 23% 29% 45%
- -------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 DELPHI VALUE FUND-- 2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR
INSTITUTIONAL CLASS SHARES
-------------------------------------------------
-----------------------------FOR THE YEAR ENDED-----------------------------
12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 15.98 $ 12.02 $ 13.26 $ 13.05 $ 11.20
Net investment income -- 0.01 0.02 0.02 0.02
Net realized and unrealized gain (loss) on
investments 2.06 3.95 (1.26) 0.26 1.95
------- ------- ------- ------- -------
Net increase (decrease) in net assets resulting
from investment operations 2.06 3.96 (1.24) 0.28 1.97
Distributions from net realized gains on
investments (0.55) -- -- (0.07) (0.12)
------- ------- ------- ------- -------
Total distributions (0.55) -- -- (0.07) (0.12)
Net asset value - end of period $ 17.49 $ 15.98 $ 12.02 $ 13.26 $ 13.05
======= ======= ======= ======= =======
Total return (a) 12.87% 32.95% (9.35)% 2.12% 17.64%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $55,390 $45,179 $33,596 $27,938 $23,956
Ratio of net investment income to average net
assets 0.02% 0.08% 0.17% 0.18% 0.18%
Ratio of operating expenses to average net
assets before fees waived and/or expenses
reimbursed by investment adviser and
administrator 1.28% 1.35% 1.33% 1.34% 1.41%
Ratio of operating expenses to average net assets
after waivers and/or expense reimbursements 1.28% 1.35% 1.33% 1.34% 1.41%
Portfolio turnover rate 31% 22% 23% 29% 45%
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DELPHI VALUE FUND--2004 ANNUAL REPORT 7
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 December 31, 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. The tax
character of distributions paid during 2004 and 2003 was as follows:
DISTRIBUTIONS PAID IN 2004 DISTRIBUTIONS PAID IN 2003
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAINS INCOME CAPITAL GAINS
------------- ------------- ------------- -------------
Delphi Value Fund $ -- $ 3,705,405 $ -- $ --
As of December 31, 2004, 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 $ -- $ -- $ 1,136,253 $ 39,929,473
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. Permanent book and tax differences of $167,929,
$607 and $(168,536) were reclassified at December 31, 2004 among undistributed
net investment income, accumulated net realized loss on investments and paid-in
capital, respectively, for the Fund. These reclasses are related to current year
REIT sales, excise tax paid and the treatment of net operating losses.
- --------------------------------------------------------------------------------
8 DELPHI VALUE FUND--2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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
between 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, 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 up to
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 year ended December 31,
2004, were $32,927,081 and $34,384,569 of non-governmental issues, respectively.
- --------------------------------------------------------------------------------
DELPHI VALUE FUND--2004 ANNUAL REPORT 9
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. SHARES OF BENEFICIAL INTEREST
As of December 31, 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:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2004 DECEMBER 31, 2003
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- -------- --------- --------
RETAIL CLASS:
Shares sold 739,617 $ 12,001,530 782,257 $10,512,019
Shares issued as reinvestment of
distributions 105,381 1,814,669 -- --
Shares redeemed (920,299) (15,010,419) (585,812) (7,536,897)
-------- ------------ -------- -----------
Net increase (decrease) (75,301) $ (1,194,220) 196,445 $ 2,975,122
======== ------------ ======== -----------
INSTITUTIONAL CLASS:
Shares sold 651,692 $ 10,841,916 525,944 $ 7,000,814
Shares issued as reinvestment
of distributions 94,655 1,654,567 -- --
Shares redeemed (406,297) (6,787,958) (494,890) (6,675,484)
-------- ------------ -------- -----------
Net increase 340,050 $ 5,708,525 31,054 $ 325,330
======== ------------ ======== -----------
Total net increase from fund
share transactions $ 4,514,305 $ 3,300,452
============ ===========
At December 31, 2004, KIM, Delphi and their affiliates owned 592,195 Retail
Class shares and 33,220 Institutional Class shares of the Fund representing
15.6% and 1.0%, respectively, of the outstanding shares. Discretionary accounts
managed by KIM for management clients collectively held 1,846,663 shares of the
Institutional Class representing 58.3% of the outstanding shares.
================================================================================
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of Kobren Insight Funds and the Shareholders of Delphi
Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Delphi Value Fund ("the Fund")
at December 31, 2004, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 11, 2005
================================================================================
- --------------------------------------------------------------------------------
10 DELPHI VALUE FUND--2004 ANNUAL REPORT
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
FORM N-Q: The Trust files complete Portfolio of Investments for the Fund
with the Securities and Exchange Commission (the "SEC") for the Trust's
first and third quarters of each fiscal year on Form N-Q. The Trust's Forms
N-Q are available on the SEC's website at www.sec.gov. and are available
for review and copying at the SEC's Public Reference Room in Washington,
DC. Information on the operations of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330.
PROXY VOTING: Delphi Value Fund's Proxy Voting Policies and Procedures,
used to determine how to vote proxies relating to portfolio securities, are
included in the Trust's Statement of Additional Information, and are also
available (i) upon request, without charge, by calling 1-800-4KOBREN
(800-456-2736); (ii) on Delphi Value Fund's website at www.kobren.com; and
(iii) on the SEC's website at www.sec.gov.
Delphi Value Fund's Proxy Voting Record for the most recent twelve-month
period ended June 30 is available (i) upon request, without charge, by
calling 1-800-4KOBREN (800-456-2736); (ii) on Delphi Value Fund's website
at www.kobren.com; and (iii) on the SEC's website at www.sec.gov.
DISCLOSURE OF FUND EXPENSES: We believe it is important for you to
understand the impact of fees regarding your investment. All mutual funds
have operating expenses. As a shareholder of a mutual fund, you incur
ongoing costs, which include costs for portfolio management, administrative
services, and shareholder reports (like this one), among others. Operating
expenses, which are deducted from a fund's gross income, directly reduce
the investment return of the fund. A fund's expenses are expressed as a
percentage of its average net assets. This figure is known as the expense
ratio. The following examples are intended to help you understand the
ongoing fees (in dollars) of investing in your Fund and to compare these
costs with those of other mutual funds. The examples are based on an
investment of $1,000 made at the beginning of the period shown and held for
the entire period.
This table illustrates your Fund's costs in two ways:
ACTUAL FUND RETURN: This section helps you to estimate the actual expenses,
after any applicable fee waivers, that you paid over the period. The
"Ending Account Value" shown is derived from the Fund's actual return for
the past six month period, the "Expense Ratio" column shows the period's
annualized expense ratio, and the "Expenses Paid During Period" column
shows the dollar amount that would have been paid by an investor who
started with $1,000 in the Fund at the beginning of the period.
You may use the information here, together with your account value, to
estimate the expenses that you paid over the period. To do so, simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number given for
your Fund in the first line under the heading entitled "Expenses Paid
During Period."
HYPOTHETICAL 5% RETURN: This section is intended to help you compare your
Fund's costs with those of other mutual funds. It assumes that the Fund had
an annual return of 5% before expenses, but that the expense ratio is
unchanged. In this case, because the return used is not the Fund's actual
return, the results do not apply to your investment. This example is useful
in making comparisons to other mutual funds because the Securities and
Exchange Commission requires all mutual funds to calculate expenses based
on an assumed 5% annual return. You can assess your Fund's costs by
comparing this hypothetical example with the hypothetical examples that
appear in shareholder reports of other funds.
Please note that the expense shown in the table are meant to highlight and
help you compare your ongoing costs only and do not reflect any
transactional costs such as sales charges (loads) and redemption fees,
which are described in the Prospectus.
If these costs were applied to your account, your costs would be higher.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID
VALUE 7/01/04 VALUE 12/31/04 EXPENSE RATIO DURING PERIOD (2)
----------------- -------------- ------------- -----------------
ACTUAL FUND RETURN
Retail Class $ 1,000 $ 1,091.30 1.58% $ 8.29
Institutional Class 1,000 1,093.10 1.28% 6.75
HYPOTHETICAL 5% RETURN
Retail Class $ 1,000 $ 1,017.20 1.58% $ 8.00
Institutional Class 1,000 1,018.69 1.28% 6.51
<FN>
(1) Annualized, based on the Fund's most recent fiscal half-year expenses.
(2) Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by the number of days in the
most recent fiscal half-year, then divided by 366. Period represents 7/1/04 -
12/31/04.
</FN>
- --------------------------------------------------------------------------------
DELPHI VALUE FUND -- 2004 ANNUAL REPORT 11
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED) -- DECEMBER 31, 2004
- --------------------------------------------------------------------------------
TAX INFORMATION:
During the year ended December 31, 2004, the Fund declared long-term capital
gains of $3,705,405 and intends to declare an additional $195,545.
INFORMATION ABOUT TRUSTEES AND OFFICERS:
Information pertaining to the Trustees and officers of the Trust is set
forth below. The term "officer" means the president, vice president,
secretary, treasurer, controller or any other officer who performs a policy
making function. The Statement of Additional Information (SAI) includes
additional information about the Trustees and is available without charge,
upon request by calling (toll free) 1-800-456-2736.
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Other
Term of Portfolios in Trusteeships/
Office and Fund Complex Directorships
Name, Address, Age and Length of Overseen by Held by
Position(s) with Trust TimeServed1 Principal Occupation(s) During Past 5 Years Trustee Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
Edward B. Bloom 8 years Chief Financial Officer and Treasurer of 2 None
c/o 20 William Street, Suite 310 International Data Group Inc., a publishing
Wellesley Hills, MA 02481 company.
Age: 54, Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
Arthur Dubroff 8 years Chief Financial Officer of Net2Phone, Inc., a provider of 2 Virtual
c/o 20 William Street, Suite 310 Voice over Internet Protocol telephony services, from Communities, Inc.,
Wellesley Hills, MA 02481 November 2002 to present; Chief Financial Officer of Emisphere
Virtual Communities, Inc, a software provider, from July Technologies, Inc.
2000 to the present; Consultant for Turnberry Consulting,
LLC from October 1999 to present.
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Robert I. Goldfarb 6 years Vice President and Assistant General Counsel of Andrx 2 None
c/o 20 William Street, Suite 310 Corporation since March 2000; Partner at Hughes Hubbard
Wellesley Hills, MA 02481 & Reed LLP, a law firm, and associated with the firm from
Age: 49, Trustee July 1989 through July 2000.
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Stuart J. Novick 8 years Senior Vice President, General Counsel and 2 None
c/o 20 William Street, Suite 310 Secretary of Children's Hospital Boston.
Wellesley Hills, MA 02481
Age: 54, Trustee
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INTERESTED TRUSTEES 2
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Eric M. Kobren 8 years President of Mutual Fund Investors Association, Inc.; 2 None
20 William Street, Suite 310 President of Kobren Insight Management, Inc. and Kobren
Wellesley Hills, MA 02481 Insight Brokerage, Inc. These are a financial publishing
Age: 51 company, a registered investment advisory firm and a
Chairman and President registered broker-dealer, respectively. Since 2001,
Managing Member of Alumni Capital, LLC, a General
Partner to a private investment partnership.
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Michael P. Castellano 8 years Registered representative and financial operations 2 Director, Puradyn
c/o 20 William Street, Suite 310 principal of Kobren Insight Brokerage, Inc. From Filter Technologies,
Wellesley Hills, MA 02481 December 1994 to June 1997, Chief Administrative Inc.; Trustee, Sun
Age 63, Trustee Officer of Kobren Insight Management, Inc. Capital Advisers
Trust (7 funds)
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OFFICER(S) WHO ARE NOT TRUSTEES
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Eric J. Godes 8 years Managing Director of Kobren Insight Management, Inc. N/A N/A
20 William Street, Suite 310 and Managing Director and a registered representative of
Wellesley Hills, MA 02481 Kobren Insight Brokerage, Inc. Since 2001, Managing
Age: 43 Director of Alumni Capital, LLC, a General Partner to a
Chief Financial Officer, Vice private investment partnership.
President, Treasurer, Secretary
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<FN>
1 Trustees serve for an indefinite term until the earliest of a Trustee's: (i) removal by a two-thirds vote of the
Board of Trustees or shareholders, (ii) resignation, (iii) death, (iv) bankruptcy or (v) adjudicated incompetence.
2 "Interested person" of the Trust as defined in the 1940 Act. Messrs. Kobren and Castellano are each considered an
"interested person" because of their affiliation with Kobren Insight Management, Inc. and Kobren Insight Brokerage,
Inc., which acts as the Trust's investment adviser and distributor, respectively.
</FN>
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DELPHI VALUE FUND -- 2004 ANNUAL REPORT 12
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's board of
trustees has determined that Arthur Dubroff is qualified to serve as an audit
committee financial expert serving on its audit committee and that he is
"independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$39,475 for 2004 and $37,600 for 2003.
AUDIT-RELATED FEES
(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph
(a) of this Item are $2,844 for 2004 and $2,709 for 2003.
TAX FEES
(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $6,636 for 2004 and $6,321
for 2003.
ALL OTHER FEES
(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are $0
for 2004 and $0 for 2003.
(e)(1) The Audit Committee of Kobren Insight Funds (the "Trust") shall
pre-approve all audit, review, attest or non-audit services (other than
DE MINIMIS non-audit services as defined by the Sarbanes-Oxley Act of
2002) to be provided to the Trust by the independent auditors. The
Audit Committee shall also pre-approve all non-audit services (other
than DE MINIMIS non-audit services as defined by the Sarbanes-Oxley Act
of 2002) to be provided by the Trust's independent auditors to the
investment adviser or subadviser to any Fund and any entity
controlling, controlled by, or under common control with any investment
adviser or subadviser that provides ongoing services to the Trust, if
the engagement relates directly to the Trust's operations and financial
reporting. The Audit Committee has delegated, to the extent permitted
by law, pre-approval responsibilities to the Chairman of the Audit
Committee who shall report to the Audit Committee regarding approved
services at the Audit Committee's next regularly scheduled meeting.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) 100% for 2004 and 100% for 2003
(c) 100% for 2004 and 100% for 2003
(d) 0% for 2004 and 0% for 2003
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for each of the last two fiscal years of the
registrant was $17,175 for 2004 and $0 for 2003.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 11. 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 second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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(b) 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
-------------------------------------------------------
Eric M. Kobren, Chairman & President
(principal executive officer)
Date MARCH 2, 2005
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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
-------------------------------------------------------
Eric M. Kobren, Chairman & President
(principal executive officer)
Date MARCH 2, 2005
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By (Signature and Title)* /S/ ERIC J. GODES
-------------------------------------------------------
Eric J. Godes, Chief Financial Officer, Vice
President, Treasurer & Secretary
(principal financial officer)
Date MARCH 2, 2005
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* Print the name and title of each signing officer under his or her signature.