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
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: June 30, 2005
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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.
K O B R E N
I N S I G H T
F U N D S
DELPHI VALUE FUND
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SEMI-ANNUAL REPORT JUNE 30, 2005
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[GRAPHIC OMITTED] SCOTT M. BLACK PHOTO
Dear Shareholders,
I am pleased to report that the Delphi Value Fund registered a 1.3% gain
(institutional class, +1.5%) in the first half of 2005 while all of the popular
indices - the S&P 500, the Dow Jones Industrials, and NASDAQ Composite -
recorded losses. The year commenced propitiously as your Fund attained an all
time high of $17.81 per share for the retail class (institutional class, $18.10)
on March 4th. However, the confluence of three salient factors undermined our
early success: (i) Skyrocketing oil prices threatened the discretionary
purchasing power of the U.S. consumer; (ii) Core CPI (consumer price index)
accelerated to an annualized 3.3% with the Federal Reserve raising rates; (iii)
The U.S. dollar strengthened against the Euro sending metals stocks sharply
lower. Consequently, the net asset value declined to a period low of $16.16 for
the retail class (institutional class, $16.43), down 6.2% year-to-date on May
13th. With the subsequent rally in the overall stock market, the Fund surged
8.0% during the last six weeks of the period.
With the S&P 500 at 1191.33, or 16.7x estimated 2005 earnings, it would
appear that U.S. equities, as a whole, are fairly valued by historical
standards. Nonetheless, given the environment of low nominal interest rates,
approximately a 4% yield on the ten year U.S. Treasury, equities are a far more
attractive homogeneous risk class than fixed income securities. Despite all of
the naysayers in the financial media, the underpinnings of the U.S. economy are
quite healthy. Growth in real Gross Domestic Product should average 3 1/2% to 4%
for the remainder of 2005. Corporate profits climbed 13% year over year in the
first quarter and are slated for continued pacings of 7% to 8%. Notwithstanding
$60 per barrel oil, personal consumption has been resilient with nearly 4%
growth. Mortgage rates are highly attractive in the 5 5/8% range for thirty-year
conforming loans. Employment growth has averaged 150,000 new jobs per month
lowering unemployment to 5.1% at the latest reading. Finally, overall economic
growth has accelerated tax revenues shrinking the projected U.S. Federal
budgetary deficit to $335 Billion.
An analysis of the individual holdings indicates that energy, housing, and
technology issues dominated the first half winners list. Nexen (+49.4%), Denbury
Resources (+44.9%), Talisman Energy (+39.4%), and XTO Energy (+28.1%) benefited
from the upsurge in global oil and gas prices. Toll Brothers (+48.0%) and D.R.
Horton (+24.4%) profited from the continued housing boom. Finally, MEMC
Electronics (+37.1%), a producer of silicon wafers, and Western Digital
(+23.8%), a leading disc drive manufacturer, advanced on good fundamental
earning power. Despite record first quarter earnings, two industrial companies,
Cytec Industries (specialty chemicals) and Alcoa declined 22.6% and 16.8%,
respectively.
In reviewing portfolio activity, one finds that six positions were
eliminated in the first half. Pulitzer was acquired by another portfolio
holding, Lee Enterprises. Abercrombie & Fitch and Textron were divested with
significant gains because they were fully valued with 20+ price/earnings
multiples. Pier 1 Imports and Pogo Producing were disposed profitably despite
weakening results. Finally, Lear, an OEM auto supplier, was sold with a loss
concomitant with the reduced build rate for the U.S. automobile industry. The
latest portfolio acquisitions were eclectic comprising retailing, energy,
technology, industrial, and transportation equities. Foot Locker, the sporting
goods chain, was acquired at 13x forecast 2005 earnings; Arrow Electronics, a
leading electronics distribution company, at 11x estimated eps; POSCO, the
Korean steel producer, at a 4x multiple; and Dryships, a bulk cargo concern, at
3.5x projected earnings. Marathon Oil, with a rising production profile, was
bought at 4x forecast 2005 cash flow.
While we foresee some economic headwinds in the second half of 2005;
namely, a weak Eurozone, a burgeoning U.S. trade deficit above $600 Billion, and
an overheated bicoastal housing market, we are sanguine about the prospects of
the U.S. equity markets for the remainder of the year. We feel the Delphi Value
Fund owns superior businesses (return on equity of 18.2%) at low valuations
(11.7x forecast earnings per share), a combination with proven historical
success. I thank you for your continued support.
Best regards,
/S/ SCOTT M. BLACK
Scott M. Black
President
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PORTFOLIO OF INVESTMENTS
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JUNE 30, 2005 (UNAUDITED)
SHARES VALUE (NOTE 1)
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COMMON STOCKS - 95.05%
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AEROSPACE/TECHNOLOGY - 4.44%
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37,400 Arrow Electronics, Inc. (1) $ 1,015,784
107,000 MEMC Electronic Materials, Inc. (1) 1,687,390
118,400 Micron Technology, Inc. (1) 1,208,864
108,000 Western Digital Corp. (1) 1,449,360
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5,361,398
BANKING - 9.46%
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35,500 Citigroup, Inc. 1,641,165
71,000 Colonial BancGroup, Inc. 1,566,260
50,400 Community Bank System, Inc. 1,229,256
51,525 North Fork Bancorporation, Inc. 1,447,337
61,500 Southwest Bancorp, Inc. 1,259,520
37,400 TD Banknorth, Inc. 1,114,520
29,700 Webster Financial Corp. 1,386,693
28,815 Wells Fargo & Co. 1,774,428
------------
11,419,179
BASIC MATERIALS - 6.56%
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47,100 Alcoa, Inc. 1,230,723
30,050 Cytec Industries, Inc. 1,195,990
33,600 Dow Chemical Co. 1,496,208
41,500 Inco, Ltd. 1,566,625
69,000 Metals USA, Inc. (1) 1,312,380
25,475 POSCO, ADR 1,120,136
------------
7,922,062
CONGLOMERATES - 4.12%
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1,164 Berkshire Hathaway, Inc., Class B (1) 3,239,994
19,200 Norsk Hydro ASA, SP ADR 1,741,824
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4,981,818
CONSTRUCTION & REAL ESTATE - 7.60%
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24,700 Boston Properties, Inc., REIT 1,729,000
66,169 D.R. Horton, Inc. 2,488,616
30,330 Lennar Corp., Class A 1,924,438
16,100 Toll Brothers, Inc. (1) 1,634,955
73,400 U-Store-It Trust, REIT 1,398,270
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9,175,279
CONSUMER RELATED - 4.30%
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58,000 Disney (Walt) Co. 1,460,440
45,096 Helen of Troy Ltd. (1) 1,148,144
88,700 La-Z-Boy, Inc. 1,292,359
18,100 Toyota Motor Corp., SP ADR 1,293,969
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5,194,912
ENERGY - 10.95%
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74,000 Denbury Resources, Inc. (1) 2,942,980
29,000 Marathon Oil Corp. 1,547,730
70,000 Nexen, Inc. 2,125,200
57,300 Talisman Energy, Inc. 2,152,761
48,700 Whiting Petroleum Corp. (1) 1,768,297
78,888 XTO Energy, Inc. 2,681,403
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13,218,371
FINANCIAL SERVICES - 8.50%
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26,800 American Express Co. 1,426,564
17,084 Bear Stearns Cos., Inc. 1,775,711
15,000 Goldman Sachs Group, Inc. 1,530,300
30,900 H&R Block, Inc. 1,803,015
11,015 iStar Financial, Inc., REIT 458,114
18,700 Lehman Brothers Holdings, Inc. 1,856,536
26,955 Morgan Stanley 1,414,329
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10,264,569
FOOD & BEVERAGE - 2.30%
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52,000 Pepsi Bottling Group, Inc. 1,487,720
92,000 Ryan's Restaurant Group, Inc. (1) 1,288,920
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2,776,640
INSURANCE - 10.28%
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64,500 Aspen Insurance Holdings, Ltd. 1,777,620
39,000 IPC Holdings, Ltd. 1,545,180
42,900 Montpelier Re Holdings, Ltd. 1,483,482
37,900 PMI Group, Inc. (The) 1,477,342
29,500 Radian Group, Inc. 1,392,990
31,200 RenaissanceRe Holdings, Ltd. 1,536,288
SHARES VALUE (NOTE 1)
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INSURANCE (CONT'D.)
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32,060 SAFECO Corp. $ 1,742,140
19,600 XL Capital, Ltd., Class A 1,458,632
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12,413,674
MANUFACTURING - 4.78%
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26,550 BorgWarner, Inc. 1,424,938
32,000 Briggs & Stratton Corp. 1,107,840
150,775 Lamson & Sessions Co. (1) 1,782,161
46,075 Masco Corp. 1,463,342
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5,778,281
PHARMACEUTICALS - 1.04%
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45,400 Pfizer, Inc. 1,252,132
PUBLISHING & BROADCASTING - 9.96%
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49,900 Comcast Corp., Class A (1) 1,494,505
21,800 Gannett, Inc. 1,550,634
33,500 Lee Enterprises, Inc. 1,343,015
140,600 Liberty Media Corp., Class A (1) 1,432,714
21,100 McClatchy Co., Class A 1,380,784
35,000 McGraw-Hill Cos., Inc. 1,548,750
88,800 News Corp., Ltd., SP ADR 1,497,168
2,135 Washington Post Co., Class B 1,782,789
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12,030,359
RETAIL - 3.74%
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36,400 Ethan Allen Interiors, Inc. 1,219,764
28,300 Federated Department Stores, Inc. 2,073,824
45,000 Foot Locker, Inc. 1,224,900
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4,518,488
TEXTILES & APPAREL - 3.70%
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42,500 Jones Apparel Group, Inc. 1,319,200
40,700 Liz Claiborne, Inc. 1,618,232
35,500 Polo Ralph Lauren Corp. 1,530,405
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4,467,837
TRANSPORTATION - 3.32%
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70,000 Dryships, Inc. 1,155,700
77,400 OMI Corp. 1,471,374
31,430 Teekay Shipping Corp. 1,379,777
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4,006,851
TOTAL COMMON STOCKS 114,781,850
(Cost $76,722,080)
INVESTMENT COMPANY - 4.98%
6,010,891 Dreyfus Cash Management
Plus Fund (2) 6,010,891
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TOTAL INVESTMENT COMPANY 6,010,891
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(Cost $6,010,891)
TOTAL INVESTMENTS - 100.03% 120,792,741
(Cost $82,732,971*)
LIABILITIES NET OF CASH &
OTHER ASSETS - (0.03)% (32,866)
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TOTAL NET ASSETS - 100.00% $120,759,875
============
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(1) Non-income producing.
(2) An affiliate of the Custodian.
ADR American Depositary Receipt
REIT Real Estate Investment Trust
SP ADR Sponsored American Depositary Receipt
* For Federal income tax purposes, cost is $82,732,971 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 39,041,148
Unrealized depreciation: (981,378)
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Net unrealized appreciation: $ 38,059,770
============
SEE NOTES TO FINANCIAL STATEMENTS
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2 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
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STATEMENT OF ASSETS AND LIABILITIES
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JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 120,792,741
Dividends receivable 153,276
Receivable for shares sold 8,631
Prepaid expenses and other assets 2,079
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Total assets 120,956,727
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LIABILITIES:
Payable for investments purchased 33,154
Investment advisory fee payable (Note 2) 99,407
Distribution fee payable (Note 2) 13,261
Accrued Trustees' fees and expenses (Note 2) 7,834
Accrued expenses and other payables 43,196
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Total liabilities 196,852
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NET ASSETS $ 120,759,875
==============
Investments, at cost $ 82,732,971
==============
NET ASSETS CONSIST OF:
Accumulated net investment income $ 263,222
Accumulated net realized gain on investments sold 4,346,527
Net unrealized appreciation of investments 38,059,770
Par value (Note 5) 6,866
Paid-in capital 78,083,490
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NET ASSETS $ 120,759,875
==============
COMPUTATION OF NET ASSET VALUE
RETAIL CLASS SHARES:
Net asset value, offering and redemption price
per share ($63,948,509 / 3,664,468 shares) $ 17.45
==============
INSTITUTIONAL CLASS SHARES:
Net asset value, offering and redemption price
per share ($56,811,366 / 3,201,315 shares) $ 17.75
==============
SEE NOTES TO FINANCIAL STATEMENTS
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DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT 3
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STATEMENT OF OPERATIONS
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FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 1,120,484
--------------
Total investment income 1,120,484
--------------
EXPENSES:
Investment advisory fee (Note 2) 592,364
Administration fee (Note 2) 48,874
Transfer agent fees (Note 2) 34,834
Sub-transfer agent fee (Retail Class) (Note 3) 14,228
Custodian fees (Note 2) 12,656
Professional fees 32,439
Trustees' fees and expenses (Note 2) 17,006
Registration and filing fees 15,250
Reports to shareholders 3,820
Distribution fees (Retail Class) (Note 2) 79,596
Other 6,195
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Total expenses 857,262
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NET INVESTMENT INCOME 263,222
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 3,210,274
Net change in unrealized depreciation of investments (1,869,703)
--------------
Net realized and unrealized gain on investments 1,340,571
--------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,603,793
==============
SEE NOTES TO FINANCIAL STATEMENTS
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4 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
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STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2005 (UNAUDITED) DECEMBER 31, 2004
------------------------ ------------------
Net investment income (loss) $ 263,222 $ (167,929)
Net realized gain from security transactions 3,210,274 3,900,950
Net change in unrealized appreciation (depreciation) of investments (1,869,703) 9,919,259
--------------------- ------------------
Net increase in net assets resulting from operations 1,603,793 13,652,280
Distribution to shareholders from:
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 (decrease) in net assets from fund share
transactions (Note 5) (1,680,616) 4,514,305
---------------------- ------------------
Net increase (decrease) in net assets (76,823) 14,461,180
NET ASSETS:
Beginning of period 120,836,698 106,375,518
---------------------- ------------------
End of period (including line A) $ 120,759,875 $ 120,836,698
====================== ==================
(A) Accumulated undistributed net investment income $ 263,222 $ --
====================== ==================
SEE NOTES TO FINANCIAL STATEMENTS
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DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT 5
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FINANCIAL HIGHLIGHTS
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FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
RETAIL CLASS SHARES
--------------------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED
6/30/2005 ------------------ FOR THE YEAR ENDED ---------------------------------
(UNAUDITED) 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
----------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 17.23 $ 15.79 $ 11.91 $ 13.18 $ 13.00 $ 11.19
--------- --------- --------- --------- --------- ---------
Net investment income (loss) 0.03 (0.05) (0.03) (0.02) (0.02) (0.01)
Net realized and unrealized gain (loss)
on investments 0.19 2.04 3.91 (1.25) 0.27 1.94
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from investment operations 0.22 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 $ 17.45 $ 17.23 $ 15.79 $ 11.91 $ 13.18 $ 13.00
========= ========= ========= ========= ========= =========
Total return (a) 1.34% (b) 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) $63,949 $65,446 $61,197 $43,808 $44,744 $45,312
Ratio of net investment income (loss) to
average net assets 0.31% (0.28)% (0.21)% (0.13)% (0.12)% (0.12)%
Ratio of operating expenses to average
net assets before fees waived and/or
expenses reimbursed by investment
adviser and administrator 1.58% 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% 1.58% 1.64% 1.63% 1.64% 1.71%
Portfolio turnover rate 10% (b) 31% 22% 23% 29% 45%
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(a) Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
(b) Not Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
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6 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
INSTITUTIONAL CLASS SHARES
--------------------------------------------------------------------------------------------
FOR THE
SIX MONTHS ENDED
6/30/2005 ------------------ FOR THE YEAR ENDED ---------------------------------
(UNAUDITED) 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
----------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 17.49 $ 15.98 $ 12.02 $ 13.26 $ 13.05 $ 11.20
--------- --------- --------- --------- --------- ---------
Net investment income 0.05 -- 0.01 0.02 0.02 0.02
Net realized and unrealized gain (loss)
on investments 0.21 2.06 3.95 (1.26) 0.26 1.95
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from investment operations 0.26 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 $ 17.75 $ 17.49 $ 15.98 $ 12.02 $13.26 $13.05
========= ========= ========= ========= ======== ========
Total return (a) 1.49% (b) 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) $56,811 $55,390 $45,179 $33,596 $27,938 $23,956
Ratio of net investment income to average
net assets 0.60% 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 1.29% 1.28% 1.35% 1.33% 1.34% 1.41%
Ratio of operating expenses to average net
assets after waivers and/or expense
reimbursements 1.29% 1.28% 1.35% 1.33% 1.34% 1.41%
Portfolio turnover rate 10% (b) 31% 22% 23% 29% 45%
- ------------------------------------------------------------------------------------------------------------------------------------
(a) Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
(b) Not Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
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DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT 7
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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JUNE 30, 2005
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Kobren Insight Funds
(the "Trust") was organized on September 13, 1996, as a Massachusetts business
trust. The Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a no-load, open-end diversified management
investment company. As of June 30, 2005, the Trust offered shares of two funds,
Kobren Growth Fund and Delphi Value Fund (the "Funds"). 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
These amounts are as of the most recent tax year-end.
Net investment income and realized gain and loss for federal income tax purposes
may differ from that reported in the financial statements because of permanent
book and tax basis differences.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the exdividend date. Dividend income on foreign securities is
recognized as soon as the Fund is informed of the ex-dividend date. The Fund
estimates the components of distributions received from Real Estate Investment
Trusts (REITs). Distributions received in excess of income are recorded as a
reduction of cost of investments and/or as a realized gain. Interest income is
recognized on the accrual basis. All discounts/premiums are accreted/amortized
using the effective yield method.
FEDERAL INCOME TAX -- The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code, applicable to regulated investment companies by distributing
substantially all of its earnings to its shareholders. Therefore, no federal
income or excise tax provision is applicable.
EXPENSES -- Expenses of the Trust which are directly identifiable to a
specific fund are allocated to that fund. Other expenses of the Trust are
allocated 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.
- --------------------------------------------------------------------------------
8 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
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 six
months ended June 30, 2005, were $12,456,994 and $10,673,804 of non-governmental
issues, respectively.
5. SHARES OF BENEFICIAL INTEREST: As of June 30, 2005, an unlimited number of
shares of beneficial interest, par value $0.001, was authorized for the Trust.
Changes in shares of beneficial interest for the Fund were as follows:
SIX MONTHS ENDED JUNE 30, 2005 YEAR ENDED DECEMBER 31, 2004
------------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------- ------------
Shares sold 163,431 $ 2,794,264 739,617 $ 12,001,530
Shares issued as reinvestment of distributions -- -- 105,381 1,814,669
Shares redeemed (298,223) (5,068,064) (920,299) (15,010,419)
------------ ------------- ------------ -------------
Net decrease (134,792) $ (2,273,800) (75,301) $ (1,194,220)
============ ============= ============ =============
Institutional Class:
Shares sold 132,781 $ 2,289,375 651,692 $ 10,841,916
Shares issued as reinvestment of distributions -- -- 94,655 1,654,567
Shares redeemed (98,331) (1,696,191) (406,297) (6,787,958)
------------ ------------- ------------ -------------
Net increase 34,450 $ 593,184 340,050 $ 5,708,525
============ ------------- ============ -------------
Total net increase (decrease) from fund share transactions $ (1,680,616) $ 4,514,305
============= =============
At June 30, 2005, KIM, Delphi and their affiliates owned 592,195 Retail Class
shares and 24,515 Institutional Class shares of the Fund representing 16.2% and
0.8%, respectively, of the outstanding shares. Discretionary accounts managed by
KIM for management clients collectively held 1,859,388 shares of the
Institutional Class representing 58.1% of the outstanding shares.
- --------------------------------------------------------------------------------
DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT 9
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
6. SUBSEQUENT EVENT: As of August 1, 2005, Mr. Eric Kobren and E*Trade Financial
Corporation ("E*Trade") have entered into a stock purchase agreement pursuant to
which Mr. Kobren has agreed to sell to E*Trade all of the outstanding stock of
Kobren Insight Management, Inc., the Fund's investment adviser. The closing of
the transaction is expected to occur in the fourth quarter of 2005, subject to
satisfaction of a number of customary closing conditions. The Board of Trustees
of Kobren Insight Funds will call a special meeting of shareholders of the Fund
to approve certain matters in connection with the proposed transaction.
Shareholders of the Fund of record as of August 10, 2005 will receive a proxy
statement and be entitled to vote at the special meeting of shareholders.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
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 as of
the following August 31 (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.
APPROVAL OF INVESTMENT ADVISORY CONTRACTS: The Investment Company Act of 1940
requires that the Fund's investment advisory agreement and the subadvisory
agreement (the "Agreements") be approved annually by both the Board of Trustees
and a majority of the Independent Trustees voting separately. The continuance of
the Agreements was most recently considered and approved at a meeting of the
Board of Trustees called for that purpose and held on May 3, 2005. The Board,
including the Independent Trustees, determined that the terms of the Agreements
are fair and reasonable and approved the continuance of the Agreements. In
making such determinations, the Independent Trustees met independently from the
interested Trustees of the Trust and officers of Kobren Insight Management, Inc.
("KIM" or the "Adviser"), Delphi Management, Inc. ("Delphi" or the
"Subadviser"), and their affiliates. The Independent Trustees also relied upon
the assistance of counsel to the Trust and KIM, but did not engage their own
counsel.
Both in meetings specifically addressed to continuance of the Agreements and at
other meetings during the course of the year, the Board, including the
Independent Trustees, received materials relating to KIM's and Delphi's
investment and management services under the Agreements. These materials
included: (i) information on the investment performance of the Fund, a peer
group of funds and relevant indices over various time periods, (ii) sales and
redemption data in respect of the Fund, (iii) the general investment outlook in
the markets in which the Fund invests, (iv) arrangements in respect of the
distribution of the Fund's shares, (v) the procedures employed to determine the
value of the Fund's assets, (vi) the allocation of the Fund's brokerage, and
(vii) the record of compliance with the Fund's investment policies and
restrictions and with the Code of Ethics and the structure and responsibilities
of KIM's and Delphi's compliance department.
In evaluating the Agreements, the Board, including the Independent Trustees,
requested, reviewed and considered materials furnished by KIM and Delphi,
including without limitation information regarding their affiliates, personnel,
operations and financial condition. The Board, including the Independent
Trustees, discussed with representatives of KIM and Delphi (including the Fund
portfolio manager) the operations of the Fund and the capabilities of KIM to
provide advisory and other services to the Fund and to supervise Delphi and of
Delphi to provide subadvisory services to the Fund. Among other written and oral
information, the Board, including the Independent Trustees, requested and was
provided specific information regarding:
o the investment performance of the Fund over various time periods both by
itself and in relation to its peer group and relevant indices;
o the fees charged by KIM for investment advisory, as well as other
compensation received by KIM and its affiliates;
o the fees paid to Delphi by KIM;
o the waivers of fees and reimbursements of expenses at times by KIM and
current expense cap arrangements;
o the total operating expenses of the Fund and comparison of current expenses
to the previous year's expenses;
o the investment performance, fees and total expenses of mutual funds with
similar objectives and strategies managed by other investment advisers
(prepared by a third party analytic firm);
o investment management staffing and the experience of the investment
advisory, administrative and other personnel (including the personnel of KIM
and Delphi) providing services to the Fund and the historical quality of the
services provided by KIM and Delphi; and
o the profitability to KIM and Kobren Insight Brokerage, Inc., the Fund's
principal underwriter ("KIB"), of managing, administering and distributing
the Fund and the methodology in allocating expenses to the management of the
Fund.
- --------------------------------------------------------------------------------
10 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
The following is a summary of the Board's discussion and views regarding the
factors it considered in evaluating the continuation of the Agreements:
NATURE, EXTENT, AND QUALITY OF SERVICES -The Board, including the Independent
Trustees, considered the nature, quality and extent of advisory services
performed by the Adviser, including supervision of the Subadviser for the Fund,
supervision of operations for the Fund and compliance and regulatory filings and
disclosures to shareholders, general oversight of the Subadviser and other
service providers, coordination of Fund marketing initiatives, review of Fund
legal issues, assisting the Board, including the Independent Trustees, in their
capacity as trustees and other services. The Board, including the Independent
Trustees, noted the Fund's record of compliance with its investment policies and
restrictions, and the quality of managerial services provided by the Adviser in
an increasingly regulated industry. The Board, including the Independent
Trustees, concluded that the services are extensive in nature and that the
Adviser consistently delivered a high level of service for the Fund.
With regard to the Subadviser, the Board, including the Independent Trustees,
considered the nature, quality and extent of the services provided by Delphi,
particularly portfolio management, and concluded that the services are
appropriate and consistent with its agreement with the Fund.
INVESTMENT PERFORMANCE OF THE FUND, THE ADVISER AND THE SUBADVISER -The Board,
including the Independent Trustees, considered the investment performance for
the Fund over various periods of time as compared to both relevant indices and
the performance of the Fund's peer group, and concluded that KIM and Delphi were
delivering solid performance results both over the long term and the short term
consistent with the investment strategies being pursued by the Fund.
COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER:
FEES AND EXPENSES - The Independent Trustees considered the Fund's
management fee rate and expense ratio relative to industry averages for the
Fund's peer group category and the advisory fees charged by KIM and Delphi
to other accounts. The Board viewed favorably the current and historic
willingness of KIM to limit the total expense ratios of the Fund.
The Board, including the Independent Trustees, noted that while the fee is
higher than the mean for the Fund's peer group, the Fund's performance is
good and the standard management fee charged by Delphi is significantly
higher than the fee that it receives with respect to the Fund. Recognizing
this, the Board concluded that, for the Fund, the advisory fee is
acceptable based upon qualifications, experience, reputation and
performance of KIM and Delphi and that the overall expense ratio of the
Fund reflects the relatively small size of the Fund and the Fund complex.
PROFITABILITY AND COSTS OF SERVICES TO KIM - The Board, including the
Independent Trustees, considered estimates of KIM's profitability and costs
attributable to the Fund as part of the Kobren fund complex. The Board
recognized that increased fixed costs, particularly legal and audit fees,
have a greater impact on smaller fund families, such as the Kobren funds,
than on larger fund complexes. Given this, the Board recognized that the
Fund's expenses compare unfavorably to some funds identified as peers. The
Board also considered whether the amount of KIM's profit is a fair
entrepreneurial profit for the management of the Fund.
The Board, including the Independent Trustees, concluded that KIM's
profitability bore a reasonable relationship to the services rendered and
is fair for the management of the Fund in light of the business risks
involved. The Independent Trustees did not review profitability data for
the Subadviser because this fee had been negotiated on an arm's-length
basis by KIM and that the Fund is not directly responsible for paying the
Subadviser's fees.
EXTENT OF ECONOMIES OF SCALE AS FUND GROWS - The Board, including the
Independent Trustees, considered whether there have been economies of scale
with respect to the management of the Fund and whether the Fund has
appropriately benefited from any economies of scale. The Independent
Trustees noted the Fund does not have breakpoints on its advisory fees that
would otherwise allow investors to benefit directly in the form of lower
fees as Fund assets grow. However, given the relatively small size of the
Fund and the fund complex, the Board did not believe that significant (if
any) economies of scale have been achieved.
WHETHER FEE LEVELS REFLECT ECONOMIES OF SCALE - The Board, including the
Independent Trustees, also considered enhancements in personnel and
services provided to the Fund by KIM, particularly in the area of
administration, investor services and regulatory compliance, without an
increase in fees.
OTHER RELEVANT CONSIDERATIONS:
PERSONNEL AND METHODS - The Board, including the Independent Trustees,
considered the size, education and experience of the staff of KIM and
Delphi, their fundamental research capabilities and approach to recruiting,
training and retaining portfolio managers and other research and management
personnel, and concluded that these enable them to provide a high level of
services to the Fund. The Board also considered the favorable history,
reputation, qualifications and background of KIM and Delphi, as well as the
qualifications of their personnel.
OTHER BENEFITS - The Board also considered the character and amount of
other direct and incidental benefits received by KIM, Delphi and their
affiliates from their association with the Fund, including the amount of
12b-1 fees retained by KIB. The Board concluded that potential "fall-out"
benefits that KIM, Delphi and their affiliates may receive, such as greater
name recognition, appear to be reasonable, and may in some cases benefit
the Fund.
- --------------------------------------------------------------------------------
DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT 11
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
CONCLUSIONS: In considering the Agreements, the Board, including the Independent
Trustees, did not identify any factor as all-important or all-controlling and
instead considered the above listed and other factors collectively in light of
the Fund's surrounding circumstances. Based on this review, it was the judgment
of the Board that shareholders had received favorable performance at reasonable
fees for the Fund and, therefore, the continuance of the Agreements was in the
best interests of the Fund and its shareholders. As a part of its
decision-making process, the Board noted KIM and Dephi have long-standing
relationships with the Fund they advise or subadvise, as applicable, and the
Board believes that a long-term relationship with capable, conscientious
advisers is in the best interests of the Fund. The Board considered, generally,
that shareholders were invested in the Fund knowing that KIM and Delphi managed
the Fund and knowing the Fund's investment management fee schedules. As such,
the Board considered, in particular, whether KIM and Delphi managed the Fund in
accordance with their investment objectives and policies as disclosed to
shareholders and the Board was of the view that they were.
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 01/01/05 VALUE 06/30/05 RATIO (1) DURING PERIOD (2)
-------------- -------------- --------- -----------------
ACTUAL FUND RETURN
- ------------------
Retail Class $ 1,000 $ 1,013.40 1.58% $ 7.89
Institutional Class 1,000 1,014.90 1.29% 6.44
HYPOTHETICAL 5% RETURN
- ----------------------
Retail Class $ 1,000 $ 1,016.96 1.58% $ 7.90
Institutional Class 1,000 1,018.40 1.29% 6.46
(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 365.
- --------------------------------------------------------------------------------
12 DELPHI VALUE FUND - 2005 SEMI-ANNUAL REPORT
KOBREN INSIGHT MANAGEMENT, INC.
K O B R E N KOBREN GROWTH FUND
I N S I G H T ---------------------------------------------
F U N D S SEMI-ANNUAL REPORT JUNE 30, 2005
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
ERIC M. KOBREN PIC
Eric M. Kobren
MESSAGE TO SHAREHOLDERS
STOCKS STRUGGLE
AGAINST A SEA OF QUESTIONS
We're half-way through 2005, and the best way to describe the performance
of the stock market so far might be "mediocre at best." The popular market
gauge, the S&P 500 Index, ended the first half with a loss of 0.8%. The more
narrowly focused Dow Jones Industrials were off 3.7%, and the technology-rich
Nasdaq fell 5.1%.
All was not bleak for stocks, however, as most of the damage occurred in
the first part of the year, and the markets managed a mild rebound in the second
quarter.
The beginning months of the year were dominated by one thing investors
hate: uncertainty. Back then, we wondered if oil prices would keep rising and,
if they did, whether that would set off a new round of inflation and hurt
consumer spending. If oil and commodity prices did keep going up, would the
Federal Reserve (the "Fed") be able to maintain its "measured pace" of quarter
percentage point (25 basis points) interest-rate hikes? Finally, how strong were
corporate earnings?
In the second quarter, some of that uncertainty started to lift. The Fed
did, indeed, stick with 25-basis point rate hikes. In fact, following the Fed's
ninth rate increase in a year on June 30, it appears that this round of
increases may end later this year. Oil prices did keep going up, topping $60 a
barrel at one point. However, consumer confidence stayed high, which seemed to
suggest that Americans will keep spending in spite of higher oil prices.
Outside of stocks, things were brighter. Despite the Fed raising interest
rates another four times this year, bonds actually turned in pretty good
returns. Commodities, largely on the back of oil which has soared more than 30%
so far in 2005, were strong as well. And despite losses in the broad
international market (largely the result of the U.S. dollar appreciating over
10% against a basket of major currencies), the emerging markets were a great
destination for investors.
DIVERSIFICATION PAYS DIVIDENDS
Kobren Growth's diversification away from domestic stocks helped the fund
to modestly outperform the S&P 500 Index with a first half loss of 0.1%. Around
30% of the portfolio was invested outside of domestic stocks. In particular,
though a small portion of the portfolio, SSgA Emerging Markets Fund helped our
performance with a gain of 7.4%. We were also aided by some commodity exposure
through another relatively small holding, PIMCO Commodity RealReturn Strategy
Fund which rose 8.0%. Both of these funds can be quite volatile which is why we
have only modest exposures.
On the negative side, with the exception of Longleaf Partners Small Cap
Fund (which gained a solid 4.6%) and Oakmark Select Fund (which lost just 0.2%),
the majority of our domestic stock funds trailed the S&P 500 Index. The silver
lining, as noted before, is that most of these funds rebounded along with the
stock market in the second quarter.
REMAINING CAUTIOUS
While some of the uncertainty has been lifted, there are still questions to
be answered. While it appears that the Fed may be near the end of their
tightening cycle, we don't know for sure when they will stop. They gave no
indication of that at their last meeting in late June -- which caused the market
to sell-off that day. And even if they do announce they are done later this
year, that doesn't mean that will boost the stock market immediately. In fact,
history suggests that the stock market is typically lower 6 months after the
Fed's final rate hike. Will corporate profits succumb to the pressures of higher
raw materials costs (i.e. oil)? Can longterm rates continue to "defy gravity"
and remain low as short-term rates continue to rise?
These and other concerns mean we are keeping Kobren Growth in a modestly
defensive posture as we enter the second half of the year. Investments outside
of domestic stocks still make up about 30% of the portfolio and international
investments make up the lion's share of that (we don't expect the dollar to rise
another 10% in the second half). We even have a small (4%) cash position.
As conditions unfold (and some more questions get answered), we will make
adjustments to the portfolio as necessary. By staying well diversified and
making modest shifts (we generally avoid making major market calls) we believe
we offer our investors a solid combination of return and risk control.
Sincerely,
[SIG] ERIC M. KOBREN
Eric M. Kobren
President and Portfolio Manager
- --------------------------------------------------------------------------------
KOBREN GROWTH FUND (6/30/05)
- --------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED 12/16/96
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/16/1996 10,000
12/31/1996 10,240
03/31/1997 10,420
06/30/1997 11,560
09/30/1997 12,170
12/31/1997 11,779
03/31/1998 13,089
06/30/1998 13,181
09/30/1998 11,226
12/31/1998 13,128
03/31/1999 13,965
06/30/1999 15,148
09/30/1999 14,133
12/31/1999 17,027
03/31/2000 17,693
06/30/2000 16,583
09/30/2000 16,383
12/31/2000 15,367
03/31/2001 14,219
06/30/2001 15,217
09/30/2001 12,885
12/31/2001 14,249
03/31/2002 14,650
06/30/2002 13,610
09/30/2002 12,006
12/31/2002 12,644
03/31/2003 12,328
06/30/2003 14,046
09/30/2003 14,475
12/31/2003 16,179
03/31/2004 16,664
06/30/2004 16,524
09/30/2004 16,473
12/31/2004 17,968
03/31/2005 17,763
06/30/2005 17,942
- --------------------------------------------------------------------------------
12 MONTHS ANNUALIZED ANNUALIZED
YTD ENDED FIVE SINCE INCEPTION
TOTAL RETURN (%) 6/30/05 6/30/05 YEARS (12/16/96)
- ---------------- ------- ------- ------- ---------
Kobren Growth -0.1% 8.6% 1.6% 7.1%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET ALLOCATION*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
U.S. Stocks 69.0%
International 21.3%
Bond 5.9%
Cash & Net Other Assets and Liab. 3.8%
- --------------------------------------------------------------------------------
STYLE ALLOCATION*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Large Cap Growth 34.6%
Large Cap Value 26.1%
International 21.3%
Small Cap Value 8.3%
Cash & Net Other Assets and Liab. 3.8%
Bond 3.2%
Specialty 2.7%
*Based on total net assets.
KOBREN GROWTH FUND (Ticker: KOGRX): Your Fund dropped slightly (-0.1%) for
the first half of 2005, compared to the S&P 500 Index return of -0.8%. We
continue to maintain a lower volatility profile relative to the S&P 500 Index,
exhibiting 27% lower volatility than that broad-based index. On a total return
basis we're quite pleased with our performance versus both the broad market
indexes as well as the various peer groups we are measured against.
Our two best performers for the first half were SSGA EMERGING MARKETS and
PIMCO COMMODITY REAL RETURN. We continue to like these non-traditional funds
moving forward, though we did tactically trim the PIMCO fund on price strength
recently. We continue to favor international markets, despite the dollar rally
in the first half of the year, as international markets still appear to offer
superior earnings growth prospects at lower valuations. JULIUS BAER
INTERNATIONAL EQUITY continues to perform quite well for us, particularly
relative to other diversified equity funds. Another recent addition to our
international holdings was THIRD AVENUE INTERNATIONAL VALUE.
Some of our largest positions, large-cap funds like T. ROWE PRICE BLUE
CHIP, FIDELITY BLUE CHIP, and OAKMARK SELECT, produced negative returns for the
first half and middling performance relative to peers. These funds performed
better in the second quarter, however, and we remain confident that they will
provide the market exposure and return potential that we expect.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS*
- --------------------------------------------------------------------------------
KOBREN GROWTH STYLE ALLOC (%)
- ------------- ----- ---------
T. Rowe Price Blue Chip Growth Large Cap Growth 17.9%
Fidelity Blue Chip Growth Large Cap Growth 13.6%
Julius Baer Int'l Equity - Class I International 13.4%
Oakmark Select - Class I Large Cap Value 12.8%
Longleaf Partners Small Cap Small Cap Value 8.3%
Fidelity Equity-Income Large Cap Value 6.9%
Longleaf Partners Large Cap Value 6.5%
SSgA Emerging Markets International 5.1%
PIMCO Real Return - Class I Bond 3.2%
Fidelity Capital Appreciation Large Cap Growth 3.1%
TOTAL FUND NET ASSETS $63,280,149
- --------------------------------------------------------------------------------
TOP SECTORS**
- --------------------------------------------------------------------------------
(TOTALS MAY NOT EQUAL 100%)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Financial Services 20.9
Consumer Services 11.3
Consumer Goods 10.1
Industrial Materials 10.1
Healthcare 9.4
Media 8.8
Business Services 7.6
Hardware 7.2
Energy 7.1
Telecom 3.9
Software 2.7
Utilities 0.9
**Equities only
- --------------------------------------------------------------------------------
Kobren Insight Management, Inc. is the adviser for Kobren Insight Funds, and
Kobren Insight Brokerage, Inc., a NASD broker/dealer, is the distributor for the
Funds. PERFORMANCE DATA REFLECTS PAST PERFORMANCE AND IS NOT A GUARANTEE OF
FUTURE RESULTS. PERFORMANCE DATA DOES NOT REFLECT TAXES THAT A SHAREHOLDER WOULD
PAY ON DISTRIBUTIONS OR THE REDEMPTION OF SHARES AND WOULD HAVE BEEN LOWER IN
THE ABSENCE OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS. RETURN FIGURES INCLUDE
REINVESTMENT OF DISTRIBUTIONS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE WITH MARKET CONDITIONS AND SHARES WHEN REDEEMED MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
2 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE (NOTE 1)
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 100.06%
LARGE CAP GROWTH - 34.57%
- ------------------------------------------------------------------------------
210,587 Fidelity Blue Chip Growth Fund $ 8,600,383
78,291 Fidelity Capital Appreciation Fund 1,976,065
371,728 T. Rowe Price Blue Chip Growth Fund 11,300,530
------------
21,876,978
LARGE CAP VALUE - 26.13%
- ------------------------------------------------------------------------------
84,532 Fidelity Equity-Income Fund 4,339,861
133,076 Longleaf Partners Fund 4,122,690
242,421 Oakmark Select Fund - Class I 8,072,631
------------
16,535,182
INTERNATIONAL - 21.28%
- ------------------------------------------------------------------------------
263,244 Julius Baer International Equity Fund - Class I 8,463,280
201,101 SSgA Emerging Markets Fund 3,241,747
90,113 Third Avenue International Value Fund 1,759,011
------------
13,464,038
SMALL CAP VALUE - 8.26%
- ------------------------------------------------------------------------------
167,426 Longleaf Partners Small Cap Fund 5,225,352
BOND - 3.23%
- ------------------------------------------------------------------------------
177,161 PIMCO Real Return Fund - Class I 2,044,442
SPECIALTY - 2.70%
- ------------------------------------------------------------------------------
109,595 PIMCO Commodity RealReturn Strategy Fund - Class I 1,710,785
MONEY MARKET - 3.89%
- ------------------------------------------------------------------------------
2,463,172 Dreyfus Cash Management Plus Fund (1) 2,463,172
TOTAL MUTUAL FUNDS
(COST $51,011,359) 63,319,949
------------
TOTAL INVESTMENTS 100.06% 63,319,949
(Cost $51,011,359) *
LIABILITIES NET OF CASH AND
OTHER ASSETS -0.06% (39,800)
------ ------------
TOTAL NET ASSETS 100.00% $63,280,149
====== ============
(1) An affiliate of the Custodian.
* For Federal income tax purposes, cost is $51,011,359 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $ 12,308,590
Unrealized depreciation: --
------------
Net unrealized appreciation: $ 12,308,590
============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INTERNATIONAL INVESTING HAS SPECIAL RISKS, INCLUDING CURRENCY FLUCTUATION,
POLITICAL AND ECONOMIC INSTABILITY, AND THE VOLATILITY OF EMERGING MARKETS. The
Adviser absorbs certain expenses of each Kobren Insight Fund, without which
total returns would have been lower. Portfolio holdings are also subject to
change. Data sources: Kobren Insight Management, Inc. and Morningstar. This
report must be preceded or accompanied by a prospectus. Please read it carefully
before investing. You may obtain a prospectus or current performance information
by calling 1-800-4KOBREN (1-800-456-2736) or by visiting www.kobren.com.
Copyright (COPYRIGHT)2005
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT 3
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
JUNE 30, 2005 (UNAUDITED)
ASSETS:
Investments, at value (Note 1) (See Portfolio of Investments) $ 63,319,949
Dividends receivable 19,445
Receivable for fund shares sold 1,774
Prepaid expenses and other assets 3,033
--------------
Total assets 63,344,201
--------------
LIABILITIES:
Investment advisory fee payable (Note 2) 30,642
Accrued Trustees' fees and expenses (Note 2) 4,103
Accrued expenses and other payables 29,307
--------------
Total liabilities 64,052
--------------
NET ASSETS: $ 63,280,149
--------------
Investments, at cost $ 51,011,359
==============
NET ASSETS CONSIST OF:
Accumulated net investment income $ 130,864
Accumulated net realized gain on investments sold 1,565,338
Net unrealized appreciation of investments 12,308,590
Par value (Note 5) 4,519
Paid-in capital 49,270,838
--------------
NET ASSETS $ 63,280,149
==============
SHARES OUTSTANDING 4,518,970
==============
Net asset value, offering and redemption price per share
(Net Assets/Shares Outstanding) $ 14.00
==============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
INVESTMENT INCOME:
Dividends $ 154,415
--------------
Total investment income 154,415
--------------
EXPENSES:
Investment advisory fee (Note 2) 219,095
Administration fee (Note 2) 39,451
Transfer agent fees (Note 2) 22,935
Sub-transfer agent fees (Note 3) 8,058
Custodian fees (Note 2) 1,500
Professional fees 14,590
Trustees' fees and expenses (Note 2) 7,858
Registration and filing fees 10,250
Reports to shareholders 2,624
Other 3,145
--------------
Total expenses 329,506
Expenses waived by investment adviser (Note 2) (37,354)
Other reductions (Note 2) (5,964)
--------------
Net expenses 286,188
--------------
NET INVESTMENT LOSS (131,773)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions 362,676
Short-term capital gain distributions received 5,000
Long-term capital gain distributions received 41,670
Net decrease in unrealized appreciation of investments (283,710)
--------------
Net realized and unrealized gain on investments 125,636
--------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (6,137)
==============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT 5
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2005 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2004
-------------- -----------------
Net investment income (loss) $ (131,773) $ 344,210
Net realized gain from security transactions 362,676 2,670,193
Short-term capital gain distributions received 5,000 111,433
Long-term capital gain distributions received 41,670 823,619
Net change in unrealized appreciation of investments (283,710) 1,857,615
------------- -------------
Net increase (decrease) in net assets resulting from operations (6,137) 5,807,070
Distribution to shareholders from:
Net investment income -- (293,054)
------------- -------------
Total distributions -- (293,054)
------------- -------------
Net increase (decrease) in net assets from fund
share transactions (Note 5) 6,443,626 (3,319,183)
------------- -------------
Net increase in net assets 6,437,489 2,194,833
NET ASSETS:
Beginning of period 56,842,660 54,647,827
------------- -------------
End of period (including line A) $ 63,280,149 $ 56,842,660
============= =============
(A) Accumulated undistributed net investment income $ 130,864 $ 262,637
============= =============
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- ---------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
- ---------------------------------------------------
FOR THE SIX MONTHS
ENDED 6/30/2005 -----------------------FOR THE YEAR ENDED---------------------
(UNAUDITED) 12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
---------- ---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 14.02 $ 12.69 $ 10.01 $ 11.37 $ 12.32 $ 15.34
Net investment income (loss) (a)(b) (0.04) 0.08 0.12 0.07 (0.04) (0.04)
Short-term capital gains distributions
received --(c) 0.03 0.02 0.01 0.01 0.22
Net realized and unrealized gain (loss)
on investments 0.02 1.29 2.66 (1.36) (0.87) (1.68)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from investment operations (0.02) 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 $ 14.00 $ 14.02 $ 12.69 $ 10.01 $ 11.37 $ 12.32
======== ======== ======== ======== ======== ========
Total return (d) (0.14)%(e) 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) $63,280 $56,843 $54,648 $46,491 $55,335 $63,105
Ratio of net investment income (loss) to
average net assets (b) (0.45)% 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 (f) 1.13% 1.16% 1.18% 1.21% 1.08% 1.06%
Ratio of operating expenses to average
net assets after reimbursements and
reductions (f) 0.98% 0.98% 0.96% 0.96% 0.96% 0.99%
Portfolio turnover rate 9%(e) 30% 81% 143% 80% 93%
- ------------------------------------------------------------------------------------------------------------------------------------
<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) Represents less than $0.005 per share.
(d) 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.
(e) Not annualized.
(f) Does not include expenses of the investment companies in which the Fund
invests.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT 7
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES: Kobren Insight Funds (the
"Trust") was organized on September 13, 1996, as a Massachusetts business trust.
The Trust is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a no-load, open-end diversified management investment
company.
As of June 30, 2005, 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 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 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 LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAINS INCOME CAPITAL GAINS
------------- -------------- -------------- --------------
Kobren Growth Fund $ 293,054 $ -- $ 515,589 $ --
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
These amounts are as of the most recent tax year-end.
Net investment income and realized gain and loss for federal income tax purposes
may differ from that reported in the financial statements because of permanent
book and tax basis differences.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Interest income is recognized on the
accrual basis. All discounts/premiums are accreted/amortized using the effective
yield method.
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.
- --------------------------------------------------------------------------------
8 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS:
The Trust has entered into an investment advisory agreement with Kobren Insight
Management, Inc. ("KIM"). The Fund pays KIM a fee, computed daily and paid
monthly, at the annual rate of 0.75% of the Fund's average daily net assets. KIM
has voluntarily agreed to limit the Fund's other operating expenses, before
other reductions, to 0.25% of the Fund's average daily net assets. This
voluntary agreement may be terminated at the discretion of the Adviser.
Kobren Insight Brokerage, Inc. ("KIB"), an affiliate of KIM, serves as
distributor of the Fund's shares and bears all distribution costs. No
distribution fees are paid by the Fund. The Fund also receives reimbursement of
12b-1 distribution fees paid to KIB by certain fund investments held in the
portfolio of the Fund.
For the six months ended June 30, 2005, expense reimbursements and other
reductions were as follows:
EXPENSES REIMBURSED
INVESTMENT ADVISER OTHER REDUCTIONS (1)
------------------- -------------------
Kobren Growth Fund $ 37,354 $ 5,964
(1) Reimbursements to the Fund from 12b-1 distribution fees.
The Trust has also entered into an administration agreement with PFPC Inc. (the
"Administrator"), a member of PNC Financial Services Group, Inc. The
Administrator also serves as the Trust's transfer agent and dividend paying
agent. Mellon Trust of New England, N.A., an indirectly wholly-owned subsidiary
of Mellon Financial Corporation, serves as the Trust's custodian.
No officer, director or employee of KIM, KIB, the Administrator, or any
affiliate thereof, receives any compensation from the Trust for serving as a
trustee or officer of the Trust. Each trustee who is not an "affiliated person"
receives an annual retainer fee of $5,000 plus $1,000 for each board meeting
attended and $500 for each committee meeting attended. The Trust also reimburses
out-of-pocket expenses incurred by each trustee in attending such meetings.
3. SUB-TRANSFER AGENT FEES: The Fund is subject to sub-transfer agent fees
consisting of broker-dealer and fund network fees. The Fund pays participating
networks a monthly fee for maintaining shareholder accounts at an annual rate of
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 six
months ended June 30, 2005, were $9,448,308 and $5,302,854 of non-governmental
issues, respectively.
5. SHARES OF BENEFICIAL INTEREST: As of June 30, 2005, an unlimited number of
shares of beneficial interest, par value $0.001, were authorized for the Trust.
Changes in shares of beneficial interest for the Fund were as follows:
SIX MONTHS ENDED JUNE 30, 2005 YEAR ENDED DECEMBER 31, 2004
------------------------------ ----------------------------
SHARES AMOUNT SHARES AMOUNT
-------- -------- -------- --------
Shares sold 790,471 $ 10,954,722 374,224 $ 4,846,804
Shares issued as reinvestment of distributions -- -- 20,508 287,517
Shares redeemed (325,658) (4,511,096) (648,447) (8,453,504)
---------- -------------- ---------- --------------
Net increase (decrease) 464,813 $ 6,443,626 (253,715) $ (3,319,183)
========== ============== ========== ==============
At June 30, 2005, KIM and its affiliates owned 1,010,521 shares of the Fund
representing 22.4% 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.
7. SUBSEQUENT EVENT: As of August 1, 2005, Mr. Eric Kobren and E*Trade Financial
Corporation ("E*Trade") have entered into a stock purchase agreement pursuant to
which Mr. Kobren has agreed to sell to E*Trade all of the outstanding stock of
Kobren Insight Management, Inc., the Fund's investment adviser. The closing of
the transaction is expected to occur in the fourth quarter of 2005, subject to
satisfaction of a number of customary closing conditions. The Board of Trustees
of Kobren Insight Funds will call a special meeting of shareholders of the Fund
to approve certain matters in connection with the proposed transaction.
Shareholders of the Fund of record as of August 10, 2005 will receive a proxy
statement and be entitled to vote at the special meeting of shareholders.
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT 9
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
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 as of
the following August 31 (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.
APPROVAL OF INVESTMENT ADVISORY CONTRACT: The Investment Company Act of 1940
requires that the Fund's investment advisory agreement (the "Agreement") be
approved annually by both the Board of Trustees and a majority of the
Independent Trustees voting separately. The continuance of the Agreement was
most recently considered and approved at a meeting of the Board of Trustees
called for that purpose and held on May 3, 2005. The Board, including the
Independent Trustees, determined that the terms of the Agreement are fair and
reasonable and approved the continuance of the Agreement. In making such
determinations, the Independent Trustees met independently from the interested
Trustees of the Trust and officers of Kobren Insight Management, Inc. ("KIM" or
the "Adviser") and its affiliates. The Independent Trustees also relied upon the
assistance of counsel to the Trust and KIM, but did not engage their own
counsel.
Both in meetings specifically addressed to continuance of the Agreement and at
other meetings during the course of the year, the Board, including the
Independent Trustees, received materials relating to KIM's investment and
management services under the Agreement. These materials included: (i)
information on the investment performance of the Fund, a peer group of funds and
relevant indices over various time periods, (ii) sales and redemption data in
respect of the Fund, (iii) the general investment outlook in the markets in
which the Fund invests, (iv) arrangements in respect of the distribution of the
Fund's shares, (v) the procedures employed to determine the value of the Fund's
assets, and (vi) the record of compliance with the Fund's investment policies
and restrictions and with the Code of Ethics and the structure and
responsibilities of KIM's compliance department.
In evaluating the Agreement, the Board, including the Independent Trustees,
requested, reviewed and considered materials furnished by KIM, including without
limitation information regarding its affiliates, personnel, operations and
financial condition. The Board, including the Independent Trustees, discussed
with representatives of KIM (including the Fund portfolio managers) the
operations of the Fund and the capabilities of KIM to provide advisory and other
services to the Fund. Among other written and oral information, the Board,
including the Independent Trustees, requested and was provided specific
information regarding:
o the investment performance of the Fund over various time periods both by
itself and in relation to its peer group and relevant indices;
o the fees charged by KIM for investment advisory, as well as other
compensation received by KIM and its affiliates;
o the waivers of fees and reimbursements of expenses at times by KIM and
current expense cap arrangements;
o the total operating expenses of the Fund and comparison of current expenses
to the previous year's expenses;
o the investment performance, fees and total expenses of mutual funds with
similar objectives and strategies managed by other investment advisers
(prepared by a third party analytic firm);
o investment management staffing and the experience of the investment
advisory, administrative and other personnel (including the personnel of
KIM) providing services to the Fund and the historical quality of the
services provided by KIM; and
o the profitability to KIM and Kobren Insight Brokerage, Inc., the Fund's
principal underwriter ("KIB"), of managing, administering and distributing
the Fund and the methodology in allocating expenses to the management of
the Fund.
The following is a summary of the Board's discussion and views regarding the
factors it considered in evaluating the continuation of the Agreement:
NATURE, EXTENT, AND QUALITY OF SERVICES - The Board, including the Independent
Trustees, considered the nature, quality and extent of advisory services
performed by the Adviser, including portfolio management for the Fund,
supervision of operations for the Fund and compliance and regulatory filings and
disclosures to shareholders, general oversight of other service providers,
coordination of Fund marketing initiatives, review of Fund legal issues,
assisting the Board, including the Independent Trustees, in their capacity as
trustees and other services. The Board, including the Independent Trustees,
noted the Fund's record of compliance with its
- --------------------------------------------------------------------------------
10 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
investment policies and restrictions, and the quality of managerial services
provided by the Adviser in an increasingly regulated industry. The Board,
including the Independent Trustees, concluded that the services are extensive in
nature and that the Adviser consistently delivered a high level of service for
the Fund.
INVESTMENT PERFORMANCE OF THE FUND AND THE ADVISER - The Board, including the
Independent Trustees, considered the investment performance for the Fund over
various periods of time as compared to both relevant indices and the performance
of the Fund's peer group, and concluded that KIM was delivering solid
performance results both over the long term and the short term consistent with
the investment strategies being pursued by the Fund.
COSTS OF SERVICES AND PROFITS REALIZED BY THE ADVISER:
FEES AND EXPENSES - The Independent Trustees considered the Fund's
management fee rate and expense ratio relative to industry averages for the
Fund's peer group category and the advisory fees charged by KIM to other
accounts. The Board viewed favorably the current and historic willingness
of KIM to limit the total expense ratio of the Fund.
The Board, including the Independent Trustees, noted that the management
fees and total expense ratio for the Fund were below the median management
fees and total expense ratio for funds in its peer group. Recognizing this,
the Board concluded that, for the Fund, the advisory fee is acceptable
based upon qualifications, experience, reputation and performance of KIM
and that the overall expense ratio of the Fund reflects the relatively
small size of the Fund and the Fund complex.
PROFITABILITY AND COSTS OF SERVICES TO KIM - The Board, including the
Independent Trustees, considered estimates of KIM's profitability and costs
attributable to the Fund as part of the Kobren fund complex. The Board
recognized that increased fixed costs, particularly legal and audit fees,
have a greater impact on smaller fund families, such as the Kobren funds,
than on larger fund complexes. Given this, the Board recognized that the
Fund's expenses generally compare favorably to funds identified as peers.
The Board also considered whether the amount of KIM's profit is a fair
entrepreneurial profit for the management of the Fund. The Board, including
the Independent Trustees, concluded that KIM's profitability bore a
reasonable relationship to the services rendered is fair for the management
of the Fund in light of the business risks involved.
EXTENT OF ECONOMIES OF SCALE AS FUND GROWS - The Board, including the
Independent Trustees, considered whether there have been economies of scale
with respect to the management of the Fund and whether the Fund has
appropriately benefited from any economies of scale. The Independent
Trustees noted the Fund does not have breakpoints on its advisory fees that
would otherwise allow investors to benefit directly in the form of lower
fees as Fund assets grow. However, given the relatively small size of the
Fund and the fund complex, the Board did not believe that significant (if
any) economies of scale have been achieved.
WHETHER FEE LEVELS REFLECT ECONOMIES OF SCALE - The Board, including the
Independent Trustees, also considered enhancements in personnel and
services provided to the Fund by KIM, particularly in the area of
administration, investor services and regulatory compliance, without an
increase in fees.
OTHER RELEVANT CONSIDERATIONS:
PERSONNEL AND METHODS - The Board, including the Independent Trustees,
considered the size, education and experience of the staff of KIM, its
fundamental research capabilities and approach to recruiting, training and
retaining portfolio managers and other research and management personnel,
and concluded that these enable it to provide a high level of services to
the Fund. The Board also considered the favorable history, reputation,
qualifications and background of KIM, as well as the qualifications of its
personnel.
OTHER BENEFITS - The Board also considered the character and amount of
other direct and incidental benefits received by KIM and its affiliates
from its association with the Fund. The Board concluded that potential
"fall-out" benefits that KIM and its affiliates may receive, such as
greater name recognition, appear to be reasonable, and may in some cases
benefit the Fund.
CONCLUSIONS: In considering the Agreement, the Board, including the Independent
Trustees, did not identify any factor as allimportant or all-controlling and
instead considered the above listed and other factors collectively in light of
the Fund's surrounding circumstances. Based on this review, it was the judgment
of the Board that shareholders had received favorable performance at reasonable
fees for the Fund and, therefore, the continuance of the Agreement was in the
best interests of the Fund and its shareholders. As a part of its
decision-making process, the Board noted KIM has a long-standing relationship
with the Fund and the Board believes that a long-term relationship with capable,
conscientious advisers is in the best interests of the Fund. The Board
considered, generally, that shareholders were invested in the Fund knowing that
KIM managed the Fund and knowing the Fund's investment management fee schedules.
As such, the Board considered, in particular, whether the Fund was managed by
KIM in accordance with its investment objectives and policies as disclosed to
shareholders and the Board was of the view that it was.
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
- --------------------------------------------------------------------------------
KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT 11
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 2005
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 01/01/05 VALUE 06/30/05 RATIO(1) DURING PERIOD(2)
-------------- -------------- -------- ----------------
ACTUAL FUND RETURN
- ------------------
Retail Class $ 1,000 $ 998.60 1.00% $ 4.96
HYPOTHETICAL 5% RETURN
- ----------------------
Retail Class $ 1,000 $ 1,019.84 1.00% $ 5.01
<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 365.
</FN>
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12 KOBREN INSIGHT FUNDS -- 2005 SEMI-ANNUAL REPORT
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
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) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(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
----------------------------------------------------------------
By (Signature and Title)* /s/ ERIC M. KOBREN
----------------------------------------------------
Eric M. Kobren, Chairman & President
(principal executive officer)
Date AUGUST 23, 2005
-------------------------------------------------------------------------
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 AUGUST 23, 2005
------------------------------------------------------------------------
By (Signature and Title)* /s/ ERIC J. GODES
---------------------------------------------------
Eric J. Godes, Chief Financial Officer,
Vice President, Treasurer & Secretary
(principal financial officer)
Date August 23, 2005
------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.