As filed with the Securities and Exchange Commission on February 15, 2002
Securities Act File No. 333-12075
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. __
KOBREN INSIGHT FUNDS
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(Exact Name of Registrant as Specified in Charter)
(617) 535-0525
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(Area Code and Telephone Number)
20 William Street, Suite 310, Wellesley Hills, Massachusetts 02181
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(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Name and Address of Agent for Service: Copies to:
Gail A. Hanson, Esq. Michelle H. Rhee, Esq.
Kobren Insight Funds Hale and Dorr LLP
101 Federal Street, 6th Floor 60 State Street
Boston, MA 02110 Boston, MA 02109
Title of Securities Being Registered:
Shares of beneficial interest, par value $.001 per share
No filing fee is due because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940.
This Registration Statement relates to shares previously registered on Form
N-1A (File Nos. 333-12075, 811-07813).
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
It is proposed that this filing will become effective on March 18, 2002.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant files a further
amendment that specifically states that this Registration Statement will
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933, as amended, or until this Registration Statement becomes effective
on such date as the Commission, acting pursuant to Section 8(a) of the
Securities Act of 1933, as amended, may determine.
PROSPECTUS DATED [MARCH 18], 2002 OF
KOBREN GROWTH FUND
(A SERIES OF KOBREN INSIGHT FUNDS)
This prospectus contains the information about the proposed
reorganization of your fund, Kobren Moderate Growth Fund, into Kobren Growth
Fund. Please read it carefully and retain it for future reference. THIS
PROSPECTUS IS FOR INFORMATION PURPOSES ONLY AND DOES NOT REQUIRE ANY ACTION ON
YOUR PART. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND
US A PROXY.
HOW THE REORGANIZATION WILL WORK
o Your fund will transfer all of its assets to Kobren Growth Fund. Kobren
Growth Fund will assume your fund's liabilities.
o Kobren Growth Fund will issue shares to your fund with an aggregate
value equal to the aggregate value of your fund's shares outstanding on
the reorganization date. Your fund will distribute these shares to its
shareholders in proportion to their holdings on the reorganization date.
o The reorganization will be tax-free. It will not result in income, gain
or loss for federal income tax purposes.
o Your fund will be liquidated and you will end up as a shareholder of
Kobren Growth Fund.
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INVESTMENT GOALS
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YOUR FUND - KOBREN MODERATE GROWTH FUND KOBREN GROWTH FUND
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Long-term growth of capital Long term growth of capital
without regard to income. A without regard to income. A
volatility level over a full volatility level over a full
market cycle approximately 20% market cycle approximating that
below that of the S&P 500 Index. of the S&P 500 Index.
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WHERE TO GET MORE INFORMATION
Prospectus of your fund and In the same envelope as this
Kobren Growth Fund, dated May 1, prospectus. Incorporated by
2001. reference into this prospectus.
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Latest annual report to
shareholders for your fund and
Kobren Growth Fund.
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A statement of additional Call our toll-free telephone
information, dated [March 18], number: 1-800-4KOBREN
2002. It contains additional (1-800-456-2736) E-mail:
information about your fund and kifcon@kobren.com
Kobren Growth Fund.
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To ask questions about this
prospectus and the
reorganization.
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The address of your fund and Kobren Growth Fund is:
20 William Street, Suite 310, P.O. Box 9150, Wellesley Hills, MA 02481.
Additional information about Kobren Growth Fund, including Kobren Growth Fund's
latest annual report and the Statement of Additional Information, has been filed
with the Securities and Exchange Commission and is available without charge upon
request. It may be obtained by calling 1-800-4KOBREN or by writing the Trust at
the address above.
An investment in Kobren Growth Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES AGENCY
HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY STATEMENT TO THE CONTRARY IS A CRIME.
TABLE OF CONTENTS
Page
SUMMARY...................................................................1
FEES AND EXPENSES.........................................................6
THE REORGANIZATION........................................................7
CAPITALIZATION............................................................9
ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES.......................10
BOARD'S EVALUATION.......................................................11
OWNERSHIP OF SHARES OF THE FUNDS.........................................12
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS........................12
AVAILABLE INFORMATION....................................................12
EXHIBITS
A Agreement and Plan of Reorganization between Kobren Moderate Growth Fund and
Kobren Growth Fund (attached to this document)
B Combined prospectus, dated May 1, 2001 of Kobren Moderate Growth Fund and
Kobren Growth Fund
C Combined annual report, dated December 31, 2001 of Kobren Moderate Growth
Fund and Kobren Growth Fund
SUMMARY
The following is a summary of more complete information appearing later
in this prospectus. You should read the entire prospectus, Exhibit A and the
enclosed documents carefully because they contain details that are not in the
summary. THIS PROSPECTUS AND THE OTHER DOCUMENTS ARE FOR INFORMATION PURPOSES
ONLY AND DO NOT REQUIRE ANY ACTION ON YOUR PART.
COMPARISON OF KOBREN MODERATE GROWTH FUND TO KOBREN GROWTH FUND
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KOBREN MODERATE GROWTH KOBREN GROWTH
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BUSINESS Each fund is a diversified series of Kobren Insight
Funds, a Massachusetts business trust. The trust is
an open-end management investment company.
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NET ASSETS AS OF $ ________________ $ ________________
FEBRUARY 28, 2002
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INVESTMENT ADVISER The funds' investment adviser is Kobren Insight Management, Inc. ("KIM"). Eric M. Kobren is
AND PORTFOLIO MANAGER the portfolio manager for each fund. Mr. Kobren has been the president of KIM and the funds'
distributor since their inception in 1987 and of Mutual Fund Investors Association, Inc.
since its inception in 1985. Mr. Kobren has been in the investment business since 1976.
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INVESTMENT OBJECTIVES AND POLICIES
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INVESTMENT GOALS Long-term growth of capital without regard to Long-term growth of capital without regard to
income. A volatility level over a full income. A volatility level over a full
market cycle approximately 20% below that of market cycle approximating that of the S&P
the S&P 500 Index. 500 Index.
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o Volatility means price changeability. A full market cycle is the market's peak to its
trough.
o The funds' board of trustees may change each fund's investment goals without obtaining the
approval of the fund's shareholders.
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PRINCIPAL INVESTMENTS At least 65% of assets in open-end and closed-end, growth and growth and income funds. These
may include both U.S. and international funds.
Up to 35% of assets in fixed income funds and direct investments in stocks, bonds and other
permitted investments.
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PRINCIPAL INVESTMENT 1. ASSET ALLOCATION--KIM begins with a fundamental analysis of the economy and
STRATEGY investment markets in the U.S. and foreign countries. In deciding what percentage of a
fund's assets should be allocated to U.S. stocks, foreign stocks, U.S. bonds and cash
equivalents, KIM focuses on:
|X| A fund's risk tolerance and its target volatility relative to the S&P 500 Index
|X| Economic factors such as inflation, employment and interest rates
|X| The outlook for corporate earnings
|X| Current stock valuations (e.g., price to earnings and price to book ratios)
|X| Supply and demand for various asset classes
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2. INVESTMENT STYLES--Next KIM determines the percentage of fund assets to allocate to
each of the following six global equity styles:
|X| U.S. Growth--Large Cap |X| U.S. Value--Large Cap
|X| U.S. Growth--Small Cap |X| U.S. Value--Small Cap
|X| Diversified International Equity |X| Specialized International Equity
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In allocating among styles, KIM first reviews the broad-based economic factors that will
influence the earnings prospects for each style. Then, to determine each style's relative
attractiveness, KIM compares the resulting earnings outlook for each style with the style's
current valuation in relation to historical norms and other styles.
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3. SELECTING FUNDS--KIM looks for funds appearing to offer the highest risk-adjusted return
potential for the style relative to each fund's target volatility. KIM applies its internally
developed screening process to virtually all publicly available mutual funds--a risk-adjusted
return analysis and the evaluation of each fund against its peers. Based on interviews with
and other information from fund portfolio managers, KIM evaluates each portfolio fund's asset
allocation, sector weightings, individual holdings and risk characteristics.
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Industry allocation The funds' strategies are designed to identify and avoid industries that appear overvalued.
process KIM compares stock valuations for companies in a particular industry to current and historical
valuations for industries represented in the S&P 500 Index. When stock valuations in a
particular industry are outside their normal range, that industry may be underweighted or
overweighted in a fund's portfolio.
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Investing in underlying Both funds invest primarily in other mutual funds, including those whose investment objectives
funds do not match those of the funds. KIM believes that, by investing in a combination of
underlying funds with a broad range of goals and offsetting risk characteristics, each fund
can achieve a higher composite rate of return while meeting its volatility targets.
Underlying funds may engage in all types of investment practices, even those in which the
Kobren Insight funds do not engage directly. The funds will bear all the risks associated with
the underlying funds' investments.
Due to KIM's size and buying power, the funds can invest at net asset value in underlying
funds that would otherwise be sold with a front-end sale charge. Neither Fund will buy an
underlying fund shares if the fund would have to pay a front-end sales charge on the purchase.
However, the funds may buy underlying fund shares that are subject to a deferred sales charge,
redemption fee or 12b-1 fee.
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Equity investments The funds and the underlying funds in their portfolios may invest in equity securities of U.S.
and foreign companies. These securities include exchange-traded and over-the-counter (OTC)
common and preferred stocks, warrants, rights, convertible debt securities, trust
certificates, partnership interests and equity participations.
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Fixed income investments The funds and the underlying funds in their portfolios may invest in fixed income securities
of any maturity or duration. These securities may be issued by the U.S. government or any of
its agencies, foreign governments, supranational entities (such as the World Bank) and U.S.
and foreign companies.
The funds' investments in fixed income securities may be of any credit quality and may have
all types of interest rate payment and reset terms. They may include mortgage-backed,
asset-backed and derivative securities as well as junk bonds. Junk bonds involve more credit
risk and interest-rate risk than investment grade bonds.
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Defensive investing Each fund (and each underlying fund in its portfolio) may depart from its principal investment
strategies by taking temporary defensive positions in short-term debt securities in response
to adverse market, economic or political conditions for up to 100% of the portfolio. A fund
could give up potential gains and minimize losses while defensively invested.
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Derivative contracts The funds and the underlying funds in their portfolios may, but are not required to, use
derivative contracts for any of the following purposes:
o To hedge against adverse changes in the market value of securities held by or to be bought
for a fund. These changes may be caused by changing interest rates, stock market prices or
currency exchange rates.
o As a substitute for purchasing or selling securities or foreign currencies.
o To shorten or lengthen the effective maturity or duration of a fund's fixed income
portfolio.
o In non-hedging situations, to attempt to profit from anticipated market developments.
A derivative contract will obligate or entitle a fund to deliver or receive an asset or a cash
payment that is based on the change in value of a designated security, index or currency.
Examples of derivative contracts are futures contracts, options, forward contracts, swaps,
caps, collars and floors.
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PRINCIPAL You could lose money on your investment in either fund or a fund could perform less well than
INVESTMENT RISKS other possible investments if any of the following occurs:
o The U.S. or a foreign stock market goes down.
o Interest rates go up, which will make bond prices and the value of the fund's investments in
fixed income funds and securities go down.
o An adverse event, such as an unfavorable earnings report or credit downgrade, depresses the
value of a particular issuer's stocks or bonds that are held by the fund or an underlying
fund.
o The adviser's judgments about the attractiveness and risk adjusted return potential of
particular asset classes, investment styles, industries, underlying funds or other issuers
prove to be wrong.
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Special risks of investing The funds' practice of investing primarily in other mutual funds presents special risks.
in other mutual funds
o You will bear, not just your proportionate share of the funds' operating expenses, but also,
indirectly, the operating expenses of the underlying funds.
o One underlying fund may be buying the same securities that another underlying fund is
selling. You would indirectly bear the costs of these transactions without accomplishing any
investment purpose.
o You may receive higher taxable capital gains distributions than if you invested directly in
the underlying funds.
o Because of regulatory restrictions, a fund's ability to invest in an attractive underlying
fund may be limited to the extent that the underlying fund's shares are already held by the
other Kobren Insight funds, KIM or their affiliates.
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Foreign country and Prices of a fund's investments in foreign securities may go down because of unfavorable
currency risks foreign government actions, political instability or the absence of accurate information about
foreign issuers. Also, a decline in the value of foreign currencies relative to the U.S.
dollar will reduce the value of securities denominated in those currencies. Foreign securities
are sometimes less liquid and harder to value than securities of U.S. issuers. These risks are
more severe for securities of issuers in emerging market countries.
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Credit risk
An issuer of a debt security or OTC derivative contract could default on its obligation to pay
principal and interest, or a rating organization could downgrade the credit rating of the
issuer. Junk bonds involve more credit risk than higher quality debt securities.
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Prepayment or call risk The issuer of a debt security may exercise its right when interest rates are falling to prepay
principal earlier than scheduled, forcing the fund to reinvest in lower yielding securities.
Prepayments will also depress the value of interest-only securities. Corporate bonds,
mortgage-backed securities and asset-backed securities are especially susceptible to
prepayment risk.
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Extension risk The issuer of a debt security may exercise its right when interest rates are rising to extend
the time for paying principal. This will lock in a below-market interest rate, increase the
security's duration and reduce the value of the security. Mortgage-backed securities and
asset-backed securities are especially susceptible to extension risk.
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Leverage risk Because of borrowing or investments in derivative contracts or leveraged derivative
securities, a fund may suffer disproportionately heavy losses relative to the amount of its
investment. Leverage can magnify the impact of poor asset allocation or investment decisions.
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Correlation risk Changes in the value of a fund's derivative contracts or other hedging instruments may not
match or fully offset changes in the value of the hedged portfolio securities.
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Liquidity and valuation Securities that were liquid when purchased by a fund may become temporarily illiquid and hard
risks to value, especially in declining markets.
Also, an underlying fund's obligation to redeem shares held by a Kobren Insight fund is
limited to 1% of the underlying fund's outstanding shares per 30-day period. Because the
Kobren Insight funds and their affiliates may together acquire up to 3% of an underlying
fund's shares, it may take up to 90 days for the funds to completely dispose of their
underlying fund shares.
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Impact of high portfolio Each fund or any underlying fund in its portfolio may engage in active and frequent trading
turnover to achieve its principal investment strategies. As a result, a fund may realize and
distribute to shareholders higher capital gains, which would increase their tax liability.
Frequent trading also increases transaction costs, which could detract from a fund's
performance. Each fund anticipates that its annual turnover will be less than 100%.
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You should note the similarities and differences between the investment
objectives and policies of your fund and Kobren Growth Fund. In particular, you
should consider whether the amount and character of investment risk involved in
the authorized investments of Kobren Growth Fund is commensurate with the amount
and character of investment risk involved in the authorized investments of your
fund. The investment policies and risks of the two funds are similar but not
identical. In that regard, you should note that Kobren Growth Fund invests in a
portfolio that in the aggregate seeks a higher rate of return and has a higher
level of volatility than your fund. The corollary to this is that Kobren Growth
Fund has a higher level of risk. KIM does not believe that any significant
portion of your fund's assets would be sold as a condition to or as a result of
the reorganization.
EACH FUND'S PAST PERFORMANCE
The bar chart and table indicate the risks of investing in each fund by
showing how the funds have performed in the past. Each fund's performance varies
from year to year. A fund's past performance does not necessarily indicate how
it will perform in the future. As a shareholder, you may lose or make money on
your investment.
The chart shows the performance of each fund's shares for each full
calendar year since your fund's inception on December 24, 1996 and Kobren Growth
Fund's inception on December 16, 1996.
[Insert chart: Data points]
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1997 1998 1999 2000 2001
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Kobren Moderate Growth 23.25% 3.44% 16.06% (1.29)% (9.01)%
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Kobren Growth 15.03% 11.45% 29.7% (9.75)% (7.28)%
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Your fund's highest calendar quarterly return was 13.11% in 4th quarter
1999; Kobren Growth Fund's highest calendar quarterly return was 20.48% in 4th
quarter, 1999
Your fund's lowest calendar quarterly return was (13.08)% in 3rd
quarter 1998; Kobren Growth Fund's lowest calendar quarterly return was (15.33)%
in 3rd quarter, 2001
Comparative Performance
The table shows the average annual total before and after-tax returns
of each fund over time and compares these returns to the returns of the S&P 500
Index, a widely recognized measure of the performance of 500 commonly held
stocks. Unlike either fund, the index is not managed and does not incur
expenses. After-tax returns are calculated using the historical highest
individual federal marginal income tax rates, and do not reflect the impact of
state and local taxes. Actual after-tax returns depend on the investor's tax
situation and may differ from those shown, and the after-tax returns shown are
not relevant to investors who hold their fund shares through tax-deferred
arrangements such as 401(k) plans or individual retirement accounts.
The table assumes (1) that you sell your shares at the end of the
period and (2) you reinvest all of your dividends and distributions.
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AVERAGE ANNUAL TOTAL RETURNS
(for periods ended December 31, 2001)
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1 YEAR 5 YEARS SINCE INCEPTION
INCEPTION DATE
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KOBREN GROWTH FUND return before taxes (7.28)% 6.83% 7.28% 12/16/96
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return after taxes on (7.36)% 5.71% 6.16%
distributions
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return after taxes on (4.35)% 5.46% 5.83%
distributions and sale of
fund shares
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KOBREN MODERATE GROWTH FUND return before taxes (9.01)% 5.85% 5.96% 12/24/96
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return after taxes on (9.48)% 4.37% 4.47%
distributions
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return after taxes on (5.35)% 4.41% 4.50%
distributions and sale of
fund shares
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S&P 500 INDEX (11.88)% 10.70% 11.41%* N/A
(reflects no deduction for [fees, expenses, or taxes]
10.54%**
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* Return of index since 12/16/96.
** Return of index since 12/24/96.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of a fund. The table also shows pro forma expenses of Kobren Growth Fund
as if the reorganization had occurred on December 31, 2001. The fees and
expenses shown in the table are in addition to those paid by the underlying
funds in which a fund may invest.
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KOBREN
FOR YEAR ENDED 12/31/01 KOBREN MODERATE PRO FORMA
GROWTH GROWTH KOBREN GROWTH
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Shareholder fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases None None None
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Maximum deferred sales charge (load) None None None
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Redemption fee None None None
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Exchange fee None None None
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Annual fund operating expenses before expense limitation(1)
(expenses that are deducted from fund assets)
Management fees 0.75% 0.75% 0.75%
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Distribution (12b-1) and/or service fees None None None
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Other expenses 0.33% 0.54% 0.28%
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Total annual fund operating expenses 1.08% 1.29% 1.03%(2)
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(1) Each fund has an expense limitation which continues until January 1, 2003,
but is voluntary and may be revoked at any time. Under this expense limitation,
the maximum expenses other than management fees for the funds, is 0.25%. In
addition, payments made by an underlying fund or its adviser will serve to
reduce the total operating expenses of the funds. For the year ended December
31, 2001, pro forma and actual expense reductions and total annual fund
operating expenses would have been or were:
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Expense reductions and limitations (0.12)% (0.32)% (0.07)%
Total annual fund operating expenses 0.96% 0.97% 0.96%
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(2) Because the above expense information is calculated as if the reorganization
occurred on December 31, 2001, the actual expense limit may be higher or lower
than shown on the actual date of reorganization.
The example for each fund assumes that:
This example is intended
to help you compare the o You invest $10,000 in the fund for the time periods indicated;
cost of investing in o Your investment has a 5% return each year;
each fund with the cost o The fund's operating expenses remain the same; and
of investing in other o You redeem your investment at the end of each period.
mutual funds.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
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Pro Forma
Kobren Growth Kobren Moderate Growth Kobren Growth
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1 year $110 $131 $105
3 years $343 $409 $328
5 years $595 $708 $569
10 years $1,317 $1,556 $1,259
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THE REORGANIZATION
TERMS OF THE REORGANIZATION
At a meeting of the board of trustees on February 11, 2002, the funds'
trustees approved an Agreement and Plan of Reorganization, a copy of which is
attached as Exhibit A. The Agreement provides for a reorganization on the
following terms:
o The reorganization is scheduled to occur at 5:00 p.m., Eastern time, on
April 26, 2002, but may occur on any later date before December 31, 2002.
o Your fund will transfer all of its assets to Kobren Growth Fund. Kobren
Growth Fund will assume your fund's liabilities. This will result in the
addition of your fund's assets to Kobren Growth Fund's portfolio. The net
asset value of both funds will be computed as of 4:00 p.m., Eastern time,
on the reorganization date.
o Kobren Growth Fund will issue to your fund shares in an amount equal to the
aggregate net asset value of your fund's shares outstanding on the
reorganization date. As part of the liquidation of your fund, your fund
will immediately distribute these shares to your fund's shareholders of
record in proportion to their holdings on the reorganization date. As a
result, shareholders of your fund will end up as shareholders of Kobren
Growth Fund.
o After the shares are issued, your fund will be terminated.
TAX STATUS OF THE REORGANIZATION
The reorganization will be tax-free and will not result in income, gain or
loss for federal income tax purposes and will not take place unless both funds
receive a satisfactory opinion from Hale and Dorr LLP, counsel to the funds,
substantially to the effect that the reorganization described above will be a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
As a result, for federal income tax purposes:
o No gain or loss will be recognized by your fund upon (1) the transfer of
all of its assets to Kobren Growth Fund as described above or (2) the
distribution by your fund of Kobren Growth Fund shares to your fund's
shareholders;
o No gain or loss will be recognized by Kobren Growth Fund upon the receipt
of your fund's assets solely in exchange for the issuance of Kobren Growth
Fund shares and the assumption of all of your fund's liabilities by Kobren
Growth Fund;
o The basis of the assets of your fund acquired by Kobren Growth Fund will be
the same as the basis of those assets of your fund immediately before the
transfer;
o The tax holding period of the assets of your fund in Kobren Growth Fund
will include your fund's tax holding period for those assets;
o The shareholders of your fund will not recognize gain or loss upon the
exchange of all their shares of your fund solely for Kobren Growth Fund
shares as part of the reorganization;
o The basis of Kobren Growth Fund shares received by your fund's shareholders
in the reorganization will be the same as the basis of the shares of your
fund surrendered in exchange;
o The tax holding period of Kobren Growth Fund shares received by your fund's
shareholders will include, for each shareholder, the tax holding period of
the shares of your fund surrendered in exchange, provided that Kobren
Growth Fund shares were held as capital assets on the date of the exchange;
and
o In addition, the use of certain tax attributes of your fund, such as
capital loss carryforwards by Kobren Growth Fund may be limited after the
reorganization.
REASONS FOR THE PROPOSED REORGANIZATION
The board of trustees of your fund believes that the proposed
reorganization will be advantageous to the shareholders of your fund and has
considered the following matters, among others, in approving the reorganization.
Possible Reduction in Expense Ratios
A combined fund offers economies of scale that may lead to better control
over expenses than is possible for either fund alone. Both funds incur
substantial expenses for accounting, legal, transfer agency services, insurance,
and custodial and administrative services. Many of these expenses are fixed,
which means that they do not depend on the level of the funds' assets.
KIM has voluntarily agreed to cap these expenses at no more than 0.25%
annually of each fund's average daily net assets. However, this cap will expire
on January 1, 2003. KIM estimates that the funds' projected gross expense ratios
(before reimbursement) will be approximately as follows:
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IF ASSETS STAY THE SAME
AS ON FEBRUARY 28, 2002 IF ASSETS DECREASE 10% IF ASSETS INCREASE 10%
----------------------- ---------------------- ----------------------
Kobren Moderate Growth
Kobren Growth
Combined fund
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Thus, the gross expense ratio (before reimbursement) of the combined fund
after the reorganization is expected to be at least ___ basis points (______%)
lower than that of Kobren Growth Fund alone and at least ____ basis points
(________%) lower than that of Kobren Moderate Growth Fund alone.
Viability of Kobren Moderate Growth Fund
Mutual fund investors have in general been channeling a relatively
insignificant portion of their investable assets into conservatively managed
growth funds, such as Kobren Moderate Growth Fund. Based on current trends and
KIM's projections, your fund's board is not optimistic that the fund will grow
to a viable asset size in the near future.
Similarity to Kobren Growth Fund
Although Kobren Moderate Growth Fund and Kobren Growth Fund have slightly
different investment goals, in practice, both funds have used almost identical
asset and style allocation strategies, have held similar investments and have
experienced similar returns. Thus, the board has concluded that Kobren Growth
Fund shares received in the reorganization will provide your fund's shareholders
with substantially the same investment advantages as they currently have at a
slightly higher level of risk.
In addition, it is not advantageous to operate and market your fund
separately from Kobren Growth Fund. Offering each fund separately hinders the
other fund's potential for asset growth.
Benefits to Funds' Adviser and Distributor
The board considered that the adviser and the funds' distributor, Kobren
Insight Brokerage, Inc., will also benefit from the reorganization. For example,
the adviser would incur a lower cost to cap the funds' expenses and might be
able to reduce the time it spends managing the funds' portfolios and preparing
prospectuses, reports and regulatory filings.
Comparative Performance
The trustees also took into consideration the relative performance of your
fund and Kobren Growth Fund. As shown in the table in the Summary, Kobren Growth
Fund has outperformed your fund.
ADDITIONAL TERMS OF REORGANIZATION
Conditions to Closing the Reorganization
The obligation of your fund to consummate the reorganization is subject to
the satisfaction of certain conditions, including the performance by Kobren
Growth Fund of all its obligations under the Agreement and the receipt of all
consents, orders and permits necessary to consummate the reorganization (see the
Agreement, sections 6 and 8).
The obligation of the Kobren Growth Fund to consummate the reorganization
is subject to the satisfaction of certain conditions, including your fund's
performance of all of its obligations under the Agreement, the receipt of
certain documents and financial statements from your fund and the receipt of all
consents, orders and permits necessary to consummate the reorganization (see the
Agreement, sections 7 and 8).
The obligations of both funds are subject to the receipt of a favorable
opinion of Hale and Dorr LLP as to certain federal income tax consequences of
the reorganization (see Agreement, section 8).
Termination of Agreement
The funds' board may terminate the Agreement on behalf of either fund at
any time before the reorganization occurs, if the board believes that proceeding
with the reorganization would no longer be advisable.
Expenses of the Reorganization
Kobren Growth Fund and your fund will each be responsible for its own
expenses incurred in connection with entering into and carrying out the
provisions of the Agreement, whether or not the reorganization occurs. These
expenses are estimated to be approximately $_______ per fund.
Dissenters' Rights
Massachusetts law does not give shareholders of your fund any dissenters'
rights.
CAPITALIZATION
The following table sets forth the capitalization of each fund as of
February 28, 2002 and the pro forma combined capitalization of both funds as if
the reorganization had occurred on that date. The table reflects pro forma
exchange ratios of approximately 0.______ Kobren Growth Fund shares for each
share of your fund. If the reorganization is consummated, the actual exchange
ratio on the reorganization date may vary from the exchange ratio indicated due
to changes in any of the following:
o The market value of the portfolio securities of both Kobren Growth Fund and
your fund between February 28, 2002 and the reorganization date.
o Changes in the amount of undistributed net investment income and net
realized capital gains of Kobren Growth Fund and your fund during that
period resulting from income and distributions.
o Changes in the accrued liabilities of Kobren Growth Fund and your fund
during the same period.
- --------------------------------------------------------------------------------
AS OF MODERATE PRO FORMA
FEBRUARY 28, 2002 GROWTH KOBREN GROWTH COMBINED(1)
- ----------------- ------ ------------- ---------
Net assets
Net asset value per share
Shares outstanding
- --------------------------------------------------------------------------------
(1) If the reorganization had taken place on February 28, 2002, your fund would
have received _________________ shares of Kobren Growth Fund, which would have
been available for distribution to the shareholders of your fund.
It is impossible to predict how many shares of Kobren Growth Fund will
actually be received and distributed by your fund on the reorganization date.
You should not rely on the above table to determine the amount of Kobren Growth
Fund shares that you will actually receive.
ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES
- ----------------------------------------------------------------------------------------------------------------------------
BUYING, EXCHANGING AND REDEEMING SHARES
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Each fund calculates its net asset value per share (NAV) at the close of regular trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern time) on each business day. Shares
of underlying funds are valued at their reported NAVs. Each fund's other portfolio
securities are valued on the basis of either market quotations or at fair value, which may
include the use of pricing services. Fair value means estimating a security's value at other
than the market quotation.
- ----------------------------------------------------------------------------------------------------------------------------
BUYING SHARES Effective April 8, 2002, Kobren Moderate Growth Fund will not offer its shares except in
connection with dividend reinvestments. The procedures for buying shares of Kobren Growth
Fund are identical to those previously in effect for Kobren Moderate Growth Fund.
Individuals, institutions, companies and fiduciaries may buy shares of Kobren Growth Fund
without a sales charge at its NAV next calculated after the order has been received in proper
form.
- ----------------------------------------------------------------------------------------------------------------------------
MINIMUM INVESTMENT AMOUNTS Kobren Growth Fund has, and Kobren Moderate Growth Fund had, the same initial investment
minimums. These are $2,500 for regular accounts, $2,000 for Individual Retirement Accounts
and $2,500 for accounts with shares purchased through the following fund networks:
o Charles Schwab Mutual Fund Marketplace
o Fidelity FundsNetwork
o Waterhouse Securities
o Jack White Mutual Fund Network
Each fund's minimum subsequent investment is $500.
- ----------------------------------------------------------------------------------------------------------------------------
EXCHANGING SHARES Shareholders of both funds may exchange their shares for shares of any other Kobren Insight
fund at the NAV of each fund next determined after receipt of the exchange request.
- ----------------------------------------------------------------------------------------------------------------------------
REDEEMING SHARES A shareholder may redeem shares of each fund on any business day at the NAV next
calculated after the receipt of the redemption request in proper form.
- ----------------------------------------------------------------------------------------------------------------------------
The following table shows where in the funds' combined prospectus you
can find additional information about the business of each fund.
- ----------------------------------------------------------------------------------------------------------------------------
TYPE OF INFORMATION HEADINGS IN COMBINED PROSPECTUS OF BOTH FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
RISK/RETURN SUMMARY FACTORS EVERY INVESTOR SHOULD KNOW
- ----------------------------------------------------------------------------------------------------------------------------
Investment objectives/goals INVESTMENT GOALS
- ----------------------------------------------------------------------------------------------------------------------------
Principal investment strategies PRINCIPAL INVESTMENTS
KOBREN INSIGHT MANAGEMENT (KIM) INVESTMENT STRATEGY
- ----------------------------------------------------------------------------------------------------------------------------
Principal risks of investing in the PRINCIPAL INVESTMENT RISKS
funds: narrative disclosure
WHO MAY WANT TO INVEST IN THE KOBREN INSIGHT FUNDS
- ----------------------------------------------------------------------------------------------------------------------------
Principal risks of investing in the Summary of Past Performance
funds: risk/return bar chart and table
- ----------------------------------------------------------------------------------------------------------------------------
Fee table Fees and Expenses
- ----------------------------------------------------------------------------------------------------------------------------
BODY OF PROSPECTUS
- ----------------------------------------------------------------------------------------------------------------------------
Investment objectives, principal THE FUND'S INVESTMENTS
investment strategies and related risks INDUSTRY ALLOCATION PROCESS
INVESTING IN UNDERLYING FUNDS
PRINCIPAL INVESTMENTS
DEFENSIVE INVESTING
DERIVATIVE CONTRACTS
ADDITIONAL INVESTMENT RISKS
IMPACT OF HIGH PORTFOLIO TURNOVER
THE FUNDS' INVESTMENT GOALS
- ----------------------------------------------------------------------------------------------------------------------------
Management: investment adviser and INVESTMENT ADVISER
portfolio manager KOBREN INSIGHT MANAGEMENT, INC.
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder information: pricing of fund INVESTMENT AND ACCOUNT POLICIES
shares CALCULATION OF NET ASSET VALUE
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder information: purchase of INVESTMENT AND ACCOUNT POLICIES
fund shares PURCHASING FUND SHARES
TAX-DEFERRED RETIREMENT PLANS
WIRE AND ACH TRANSFERS
TELEPHONE TRANSACTIONS
MINIMUM INVESTMENT AMOUNTS
- ----------------------------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder information: redemption of HOW TO EXCHANGE/REDEEM SHARES
fund shares INVESTMENT AND ACCOUNT POLICIES
REDEEMING FUND SHARES
SIGNATURE GUARANTEES
CLOSING SUB-MINIMUM ACCOUNTS
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder information: dividends and INVESTMENT AND ACCOUNT POLICIES
distributions; tax consequences DIVIDENDS, DISTRIBUTIONS AND TAXES
- ----------------------------------------------------------------------------------------------------------------------------
Financial highlights information FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------
BOARD'S EVALUATION
For the reasons described above, the board of trustees of the funds,
including the trustees who are not "interested persons" of either fund or the
adviser, approved the reorganization. In particular, the trustees determined
that the reorganization was in the best interests of each fund and that the
interests of each fund's shareholders would not be diluted as a result of the
reorganization.
OWNERSHIP OF SHARES OF THE FUNDS
As of February 28, 2002, _______ shares of beneficial interest of your fund
were outstanding. To the best knowledge of your fund, as of February 28, 2002,
the following persons owned or would have owned, of record or beneficially, 5%
or more of the outstanding shares of your fund, Kobren Growth Fund (before
reorganization) and Kobren Growth Fund (after reorganization).
- -------------------------------- ------------------------------ ------------------------------ -----------------------------
NAMES AND ADDRESSES OF OWNERS KOBREN GROWTH FUND* KOBREN GROWTH FUND*
OF MORE THAN 5% OF SHARES KOBREN MODERATE GROWTH FUND (BEFORE REORGANIZATION) (AFTER REORGANIZATION)
- -------------------------------- ------------------------------ ------------------------------ -----------------------------
Eric M. Kobren $_________* $___________________ $ ________
20 William Street
Suite 310, P.O. Box 9150
Wellesley Hills, MA 02481.
- -------------------------------- ------------------------------ ------------------------------ -----------------------------
* Mr. Kobren is/will be a "control person" of this fund as that term is defined
in the Investment Company Act of 1940, as amended. Should the fund hold annual
meetings of shareholders, the effect of other shareholders' voting rights could
be diminished by the influence of Mr. Kobren's substantial voting power.
Your fund's Board of Trustees have set March 15, 2002 (the "Record Date")
as the record date for determining the number of shares and the shareholders of
the Fund entitled to receive this information statement. On the Record Date
there were ______________ shares of beneficial interest of your fund were
outstanding. The Trust's Declaration of Trust permits the Board of Trustees to
approve the reorganization of your fund into another investment company, such as
Kobren Growth Fund, without the approval of your fund's shareholders. As a
result, these proposals were approved as required by applicable law and no
further votes or consents are needed.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
The financial statements and the financial highlights of each fund included
in the December 31, 2001 Annual Report have been independently audited by
PricewaterhouseCoopers LLP, as stated in its report appearing as Exhibit C to
this prospectus. These financial statements and highlights are included in
reliance upon the reports given upon the authority of such firms as experts in
accounting and auditing.
AVAILABLE INFORMATION
Each fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the 1940 Act and files reports, proxy statements and
other information with the SEC. You can view these reports, proxy statements and
other information at the SEC's Public Reference Room in Washington, D.C. Call
1-202-942-8090 for information. The SEC charges a fee for copies. You can get
the same information free from the SEC's EDGAR database on the Internet
(http://www.sec.gov). You may also e-mail requests for these documents to
publicinfo@sec.gov or make a request in writing to the SEC's Public Reference
Section Washington, D.C. 20549-0102.
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
this ______ day of ____________________, 2002, by and between Kobren Growth Fund
(the "Acquiring Fund") and Kobren Moderate Growth Fund (the "Acquired Fund"),
each a series of Kobren Insight Trust, a Massachusetts business trust (the
"Trust") and each with their principal place of business at 20 William Street,
Suite 310, Wellesley Hills, Massachusetts 02481. The Acquiring Fund and the
Acquired Fund are sometimes referred to collectively herein as the "Funds" and
individually as a "Fund."
This Agreement is intended to be and is adopted as a plan of
"reorganization," as such term is used in Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for the issuance of shares of beneficial interest of the
Acquiring Fund (the "Acquiring Fund Shares") to the Acquired Fund and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund,
followed by the distribution by the Acquired Fund, on or promptly after the
Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation and termination of the Acquired
Fund as provided herein, all upon the terms and conditions set forth in this
Agreement.
In consideration of the premises of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF
LIABILITIES AND ISSUANCE OF ACQUIRING FUND SHARES, LIQUIDATION OF THE
ACQUIRED FUND
1.1 The Acquired Fund will transfer all of its assets (consisting,
without limitation, of portfolio securities and instruments, dividends and
interest receivables, cash and other assets), as set forth in the statement of
assets and liabilities referred to in Paragraph 7.2 hereof (the "Statement of
Assets and Liabilities"), to the Acquiring Fund free and clear of all liens and
encumbrances, except as otherwise provided herein, in exchange for (i) the
assumption by the Acquiring Fund of the known and unknown liabilities of the
Acquired Fund, including the liabilities set forth in the Statement of Assets
and Liabilities (the "Acquired Fund Liabilities"), which shall be assigned and
transferred to the Acquiring Fund by the Acquired Fund and assumed by the
Acquiring Fund, and (ii) delivery by the Acquiring Fund to the Acquired Fund,
for distribution pro rata by the Acquired Fund to its shareholders in proportion
to their respective ownership of shares of beneficial interest of the Acquired
Fund, as of the close of business on April 26, 2002 (the "Closing Date"), of a
number of the Acquiring Fund Shares having an aggregate net asset value equal to
the value of the assets, less such liabilities (herein referred to as the "net
value of the assets") assumed, assigned and delivered, all determined as
provided in Paragraph 2.1 hereof and as of a date and time as specified therein.
Such transactions shall take place at the closing provided for in Paragraph 3.1
hereof (the "Closing"). All computations shall be provided by PFPC Inc. ("PFPC")
pricing agent for the Acquiring Fund and the Acquired Fund.
1.2 The Acquired Fund has provided the Acquiring Fund with a list of
the current securities holdings of the Acquired Fund as of the date of execution
of this Agreement. The Acquired Fund reserves the right to sell any of these
securities (except to the extent sales may be limited by representations made in
connection with issuance of the tax opinion provided for in paragraph 8.5
hereof) but will not, without the prior approval of the Acquiring Fund, acquire
any additional securities other than securities of the type in which the
Acquiring Fund is permitted to invest.
1.3 The Acquiring Fund and the Acquired Fund shall each bear its own
expenses in connection with the transactions contemplated by this Agreement.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the Acquired Fund will liquidate and distribute pro
rata to shareholders of record (the "Acquired Fund shareholders"), determined as
of the close of regular trading on the New York Stock Exchange on the Closing
Date, the Acquiring Fund Shares received by the Acquired Fund pursuant to
Paragraph 1.1 hereof. Such liquidation and distribution will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund, to open accounts on the share
records of the Acquiring Fund in the names of the Acquired Fund shareholders and
representing the respective pro rata number of Acquiring Fund Shares due such
shareholders. The Acquiring Fund will not issue certificates representing
Acquiring Fund Shares in connection with such exchange.
1.5 Any transfer taxes payable upon issuance of Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund Shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.
1.6 The existence of the Acquired Fund shall be terminated as promptly
as practicable following the Liquidation Date.
1.7 Any reporting responsibility of the Acquired Fund, including, but
not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commissions, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
2. VALUATION
2.1 The net asset values of the Acquiring Fund Shares and the net
values of the assets and liabilities of the Acquired Fund to be transferred
shall, in each case, be determined as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. Eastern time) on the Closing Date. The
net asset values of the Acquiring Fund Shares shall be computed by PFPC in the
manner set forth in the Acquiring Fund's Declaration of Trust as amended and
restated (the "Declaration"), or By-Laws and the Acquiring Fund's then-current
prospectus and statement of additional information and shall be computed in each
case to not fewer than four decimal places. The net values of the assets of the
Acquired Fund to be transferred shall be computed by PFPC by calculating the
value of the assets transferred by the Acquired Fund and by subtracting
therefrom the amount of the liabilities assigned and transferred to and assumed
by the Acquiring Fund on the Closing Date, said assets and liabilities to be
valued in the manner set forth in the Acquired Fund's then current prospectus
and statement of additional information and shall be computed in each case to
not fewer than four decimal places.
2.2 The number of Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall be
determined by dividing the value of the Acquired Fund's assets less the
liabilities assumed by the Acquiring Fund, by the Acquiring Fund's net asset
value per share, all as determined in accordance with Paragraph 2.1 hereof.
2.3 All computations of value shall be made by PFPC in accordance with
its regular practice as pricing agent for the Funds.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be April 26, 2002 or such other date on or
before December 31, 2002 as the parties may agree. The Closing shall be held as
of 5:00 p.m. at the offices of the Funds, 20 William Street, Suite 310,
Wellesley Hills, Massachusetts 02481, or at such other time and/or place as the
parties may agree.
3.2 Portfolio securities that are not held in book-entry form in the
name of Boston Safe Deposit & Trust Co. (the "Custodian") as record holder for
the Acquired Fund shall be presented by the Acquired Fund to the Custodian for
examination no later than three business days preceding the Closing Date.
Portfolio securities which are not held in book-entry form shall be delivered by
the Acquired Fund to the Custodian for the account of the Acquiring Fund on the
Closing Date, duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof. Portfolio securities held of
record by the Custodian in book-entry form on behalf of the Acquired Fund shall
be delivered to the Acquiring Fund by the Custodian by recording the transfer of
beneficial ownership thereof on its records. The cash delivered shall be in the
form of currency or by the Custodian crediting the Acquiring Fund's account
maintained with the Custodian with immediately available funds.
3.3 In the event that on the Closing Date (a) the New York Stock
Exchange shall be closed to trading or trading thereon shall be restricted or
(b) trading or the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored; provided that if
trading shall not be fully resumed and reporting restored on or before December
31, 2002, this Agreement may be terminated by the Acquiring Fund or by the
Acquired Fund upon the giving of written notice to the other party.
3.4 The Acquired Fund shall deliver at the Closing a list of the names,
addresses, federal taxpayer identification numbers and backup withholding and
nonresident alien withholding status of the Acquired Fund shareholders and the
number of outstanding shares of beneficial interest of the Acquired Fund owned
by each such shareholder, all as of the close of business on the Closing Date,
certified by its Treasurer, Secretary or other authorized officer (the
"Shareholder List"). The Acquiring Fund shall issue and deliver to the Acquired
Fund a confirmation evidencing the Acquiring Fund Shares to be credited on the
Closing Date, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, stock certificates, receipts or
other documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Trust on behalf of the Acquired Fund represents, warrants and
covenants to the Acquiring Fund as follows:
(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of The Commonwealth of Massachusetts and has
the power to own all of its properties and assets and to carry out the
Agreement. Neither the Trust nor the Acquired Fund is required to qualify to do
business in any jurisdiction in which it is not so qualified or where failure to
qualify would subject it to any material liability or disability. The Trust has
all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted;
(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect. The Acquired Fund is a diversified series of the
Trust;
(c) The Trust and the Acquired Fund are not, and the execution,
delivery and performance of their obligations under this Agreement will not
result, in violation of any provision of the Trust's Declaration of Trust, as
amended, or By-Laws or of any agreement, indenture, instrument, contract, lease
or other undertaking to which either the Trust or the Acquired Fund is a party
or by which it is bound;
(d) Except as otherwise disclosed in writing and accepted by the
Acquiring Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently pending
or threatened against the Trust or the Acquired Fund or any of the Acquired
Fund's properties or assets. The Trust knows of no facts which might form the
basis for the institution of such proceedings, and neither the Trust nor the
Acquired Fund is a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and adversely
affects the Acquired Fund's business or its ability to consummate the
transactions herein contemplated;
(e) Neither the Trust nor the Acquired Fund has any material
contract or other commitments (other than this Agreement or agreements for the
purchase of securities entered into in the ordinary course of business and
consistent with its obligations under this Agreement) which will not be
terminated without liability to the Trust or the Acquired Fund at or prior to
the Closing Date;
(f) The audited statement of assets and liabilities, including the
schedule of investments, of the Acquired Fund as of December 31, 2001 and the
related statement of operations (copies of which have been furnished to the
Acquiring Fund) present fairly in all material respects the financial condition
of the Acquired Fund as of December 31, 2001 and the results of its operations
for the period then ended in accordance with generally accepted accounting
principles consistently applied, and there were no known actual or contingent
liabilities of the Acquired Fund as of the respective dates thereof not
disclosed therein;
(g) Since December 31, 2001, there has not been any material
adverse change in the Acquired Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund;
(h) At the date hereof and by the Closing Date, all federal, state
and other tax returns and reports, including information returns and payee
statements, of the Acquired Fund required by law to have been filed or furnished
by such dates shall have been filed or furnished, and all federal, state and
other taxes, interest and penalties shall have been paid so far as due, or
provision shall have been made for the payment thereof, and to the best of the
Acquired Fund's knowledge no such return is currently under audit and no
assessment has been asserted with respect to such returns or reports;
(i) The Acquired Fund has qualified as a regulated investment
company for each taxable year of its operation and the Acquired Fund will
qualify as such as of the Closing Date with respect to its taxable year ending
on the Closing Date;
(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest, with a par value of $0.001. All issued
and outstanding shares of beneficial interest of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable by the trust. All of the issued and outstanding shares of
beneficial interest of the Acquired Fund will, at the time of Closing, be held
by the persons and in the amounts set forth in the Shareholder List submitted to
the Acquiring Fund pursuant to Paragraph 3.4 hereof. The Acquired Fund does not
have outstanding any options, warrants or other rights to subscribe for or
purchase any of its shares of beneficial interest, nor is there outstanding any
security convertible into any of its shares of beneficial interest;
(k) At the Closing Date, the Trust on behalf of the Acquired Fund
will have good and marketable title to the assets to be transferred to the
Acquiring Fund pursuant to Paragraph 1.1 hereof, and full right, power and
authority to sell, assign, transfer and deliver such assets hereunder, and upon
delivery and payment for such assets, the trust on behalf of the Acquiring Fund
will acquire good and marketable title thereto subject to no restrictions on the
full transfer thereof, including such restrictions as might arise under the
Securities Act of 1933, as amended (the "1933 Act");
(l) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary action on the part of the Trust on behalf
of the Acquired Fund, and this Agreement constitutes a valid and binding
obligation of the Acquired Fund enforceable in accordance with its terms;
(m) The information to be furnished by the Acquired Fund to the
Acquiring Fund for use in applications for orders, registration statements,
proxy materials and other documents which may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete and shall
comply in all material respects with federal securities and other laws and
regulations thereunder applicable thereto;
(n) The information statement of the Acquired Fund (the
"Information Statement") to be included in the Registration Statement referred
to in Paragraph 4.2(c) hereof (other than written information furnished by the
Acquiring Fund for inclusion therein, as covered by the Acquiring Fund's
warranty in Paragraph 4.2(m) hereof), on the effective date of the Registration
Statement and on the Closing Date, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading;
(o) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated by this Agreement;
(p) All of the issued and outstanding shares of beneficial interest
of the Trust on behalf of the Acquired Fund have been offered for sale and sold
in conformity with all applicable federal and state securities laws;
(q) The prospectus of the Acquired Fund, dated May 1, 2001 (the
"Acquired Fund Prospectuses"), furnished to the Acquiring Fund, does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
(r) The Acquired Fund Tax Representation Certificate to be
delivered by the Acquired Fund to the Acquiring Fund at Closing pursuant to
Section 7.5 (the "Acquired Fund Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading.
4.2 The Trust on behalf of the Acquiring Fund represents, warrants and
covenants to the Acquired Fund as follows:
(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of The Commonwealth of Massachusetts and has
the power to own all of its properties and assets and to carry out the
Agreement. Neither the Trust nor the Acquiring Fund is required to qualify to do
business in any jurisdiction in which it is not so qualified or where failure to
qualify would subject it to any material liability or disability. The Trust has
all necessary federal, state and local authorizations to own all of its
properties and assets and to carry on its business as now being conducted;
(b) The Trust is a registered investment company classified as a
management company and its registration with the Commission as an investment
company under the 1940 Act is in full force and effect. The Acquiring Fund is a
diversified series of the Trust;
(c) The prospectus (the "Acquiring Fund Prospectus") and statement
of additional information of the Acquiring Fund, each dated May 1, 2001, and any
amendments or supplements thereto on or prior to the Closing Date, and the
Registration Statement on Form N-14 filed in connection with this Agreement (the
"Registration Statement") (other than written information furnished by the
Acquired Fund for inclusion therein, as covered by the Acquired Fund's warranty
in Paragraph 4.1(n) hereof) will conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder, the Acquiring Fund Prospectus does not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading and,
other than written information furnished by the Acquired Fund for inclusion
therein, as covered by the Acquired Fund's warranty in Paragraph 4.1(n) hereof,
the Registration Statement shall not, on its effective date and on Closing Date,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(d) At the Closing Date, the Trust on behalf of the Acquiring Fund
will have good and marketable title to the assets of the Acquiring Fund;
(e) The Trust and the Acquiring Fund are not, and the execution,
delivery and performance of their obligations under this Agreement will not
result in a violation of any provisions of the Trust's Declaration of Trust, as
amended, or By-Laws or of any agreement, indenture, instrument, contract, lease
or other undertaking to which the Trust or the Acquiring Fund is a party or by
which the Trust or the Acquiring Fund is bound;
(f) Except as otherwise disclosed in writing and accepted by the
Acquired Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is currently pending
or threatened against the Trust or the Acquiring Fund or any of the Acquiring
Fund's properties or assets. The Trust knows of no facts which might form the
basis for the institution of such proceedings, and neither the Trust nor the
Acquiring Fund is a party to or subject to the provisions of any order, decree
or judgment of any court or governmental body which materially and adversely
affects the Acquiring Fund's business or its ability to consummate the
transactions herein contemplated;
(g) The audited statement of assets and liabilities, including the
schedule of investments, of the Acquiring Fund as of December 31, 2001 and the
related statement of operations (copies of which have been furnished to the
Acquired Fund) present fairly in all material respects the financial condition
of the Acquiring Fund as of December 31, 2001 and the results of its operations
for the period then ended in accordance with generally accepted accounting
principles consistently applied, and there were no known actual or contingent
liabilities of the Acquiring Fund as of the respective dates thereof not
disclosed therein;
(h) Since December 31, 2001, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Trust on behalf of the Acquiring Fund of indebtedness
maturing more than one year from the date such indebtedness was incurred, except
as disclosed to and accepted by the Acquired Fund;
(i) The Acquiring Fund has qualified as a regulated investment
company for each taxable year of its operation and the Acquiring Fund will
qualify as such as of the Closing Date;
(j) The authorized capital of the Trust consists of an unlimited
number of shares of beneficial interest, with a par value per share of $0.001.
All issued and outstanding shares of beneficial interest of the Acquiring Fund
are, and at the Closing Date will be, duly and validly issued and outstanding,
fully paid and nonassessable by the Trust. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any of its shares of beneficial interest, nor is there outstanding any security
convertible into any of its shares of beneficial interest;
(k) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Trust on behalf
of the Acquiring Fund, and this Agreement constitutes a valid and binding
obligation of the Acquiring Fund enforceable in accordance with its terms;
(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund pursuant to the terms of this Agreement, when so issued and
delivered, will be duly and validly issued shares of beneficial interest of the
Acquiring Fund and will be fully paid and nonassessable by the Trust;
(m) The information to be furnished by the Acquiring Fund for use
in applications for orders, registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete and shall comply in all
material respects with federal securities and other laws and regulations
applicable thereto;
(n) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated by the Agreement, except for the registration of
the Acquiring Fund Shares under the 1933 Act and the 1940 Act; and
(o) The Acquiring Fund Tax Representation Certificate to be
delivered by the Acquiring Fund to the Acquired Fund at Closing pursuant to
Section 6.3 (the "Acquiring Fund Tax Representation Certificate") will not on
the Closing Date contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 Except as expressly contemplated herein to the contrary, the Trust
on behalf of the Acquired Fund and the Trust on behalf of the Acquiring Fund,
will operate their respective businesses in the ordinary course between the date
hereof and the Closing Date, it being understood that such ordinary course of
business will include customary dividends and distributions and any other
distributions necessary or desirable to avoid federal income or excise taxes.
5.2 The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired by the Acquired Fund for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.3 The Acquired Fund will provide such information within its
possession or reasonably obtainable as the Trust on behalf of the Acquiring Fund
requests concerning the beneficial ownership of the Acquired Fund's shares of
beneficial interest.
5.4 Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund each shall take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate the transactions contemplated by this Agreement.
5.5 The Acquired Fund shall furnish to the Trust on behalf of the
Acquiring Fund on the Closing Date the Statement of Assets and Liabilities of
the Acquired Fund as of the Closing Date, which statement shall be prepared in
accordance with generally accepted accounting principles consistently applied
and shall be certified by the Acquired Fund's Treasurer or Assistant Treasurer.
As promptly as practicable but in any case within 60 days after the Closing
Date, the Acquired Fund shall furnish to the Acquiring Fund, in such form as is
reasonably satisfactory to the Trust, a statement of the earnings and profits of
the Acquired Fund for federal income tax purposes and of any capital loss
carryovers and other items that will be carried over to the Acquiring Fund as a
result of Section 381 of the Code, and which statement will be certified by the
President of the Acquired Fund.
5.6 The Trust on behalf of the Acquiring Fund will prepare and file
with the Commission the Registration Statement in compliance with the 1933 Act
and the 1940 Act in connection with the issuance of the Acquiring Fund Shares as
contemplated herein.
5.7 The Acquired Fund will prepare an Information Statement, to be
included in the Registration Statement in compliance with the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act
and the rules and regulations thereunder (collectively, the "Acts").
5.8 Neither the Acquired Fund nor the Acquiring Fund shall take any
action that is inconsistent with the representations set forth in, with respect
to the Acquired Fund, the Acquired Fund Tax Representation Certificate, and with
respect to the Acquiring Fund, the Acquiring Fund Tax Representation
Certificate, to the extent such action would prevent the reorganization from
qualifying as a "reorganization" under Section 368(a) of the Code.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Trust on behalf of the Acquiring Fund of all the obligations to be performed by
it hereunder on or before the Closing Date, and, in addition thereto, the
following further conditions:
6.1 All representations and warranties of the Trust on behalf of the
Acquiring Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
6.2 The Trust on behalf of the Acquiring Fund shall have delivered to
the Acquired Fund a certificate executed in its name by the Trust's President or
Vice President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing Date, to the
effect that the representations and warranties of the Trust on behalf of the
Acquiring Fund made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquired Fund shall
reasonably request; and
6.3 The Acquiring Fund shall have delivered to the Acquired Fund an
Acquiring Fund Tax Representation Certificate, satisfactory to the Acquired
Fund, substantially in the form attached to this Agreement as Annex A concerning
certain tax-related matters with respect to the Acquiring Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TRUST ON BEHALF OF THE
ACQUIRING FUND
The obligations of the Trust on behalf of the Acquiring Fund to
complete the transactions provided for herein shall be, at its election, subject
to the performance by the Trust on behalf of the Acquired Fund of all the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following conditions:
7.1 All representations and warranties of the Trust on behalf of the
Acquired Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The Trust on behalf of the Acquired Fund shall have delivered to
the Acquiring Fund the Statement of Assets and Liabilities of the Acquired Fund,
together with a list of its portfolio securities showing the federal income tax
bases and holding periods of such securities, as of the Closing Date, certified
by the Treasurer or Assistant Treasurer of the Acquired Fund;
7.3 The Acquired Fund shall have delivered to the Trust on behalf of
the Acquiring Fund on the Closing Date a certificate executed in the name of the
Acquired Fund by a President or Vice President and a Treasurer or Assistant
Treasurer of the Acquired Fund, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Fund in this Agreement are true
and correct at and as of the Closing Date, except as they may be affected by the
transactions contemplated by this Agreement, and as to such other matters as the
Trust on behalf of the Acquiring Fund shall reasonably request;
7.4 At or prior to the Closing Date, the Acquired Fund's investment
adviser, or an affiliate thereof, shall have made all payments, or applied all
credits, to the Acquired Fund required by any applicable contractual expense
limitation; and
7.5 The Acquired Fund shall have delivered to the Acquiring Fund an
Acquired Fund Tax Representation Certificate, satisfactory to the Acquiring
Fund, substantially in the form attached to this Agreement as Annex B concerning
certain tax-related matters with respect to the Acquired Fund.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND
THE TRUST ON BEHALF OF THE ACQUIRING FUND
The obligations hereunder of the Trust on behalf of the Acquiring Fund
and of the Trust on behalf of the Acquired Fund are each subject to the further
conditions that on or before the Closing Date:
8.1 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain changes or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and their "no-action" positions) deemed necessary by the Acquired
Fund or the Trust to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the Acquiring Fund or the
Acquired Fund, provided that either party hereto may waive any such conditions
for itself;
8.3 The Registration Statement shall have become effective under the
1933 Act and the 1940 Act and no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the parties hereto,
no investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act or the 1940 Act;
8.4 The Acquired Fund shall have distributed to its shareholders, in a
distribution or distributions qualifying for the deduction for dividends paid
under Section 561 of the Code, all of its investment company taxable income (as
defined in Section 852(b)(2) of the Code determined without regard to Section
852(b)(2)(D) of the Code) for its taxable year ending on the Closing Date, all
of the excess of (i) its interest income excludable from gross income under
Section 103(a) of the Code over (ii) its deductions disallowed under Sections
265 and 171(a)(2) of the Code for its taxable year ending on the Closing Date,
and all of its net capital gain (as such term is used in Sections 852(b)(3)(A)
and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date; and
8.5 The parties shall have received an opinion of Hale and Dorr LLP,
satisfactory to the Acquired Fund and the Trust on behalf of the Acquiring Fund,
substantially to the effect that for federal income tax purposes the acquisition
by the Acquiring Fund of all of the assets of the Acquired Fund solely in
exchange for the issuance of Acquiring Fund Shares to the Acquired Fund and the
assumption of all of the Acquired Fund Liabilities by the Acquiring Fund,
followed by the distribution by the Acquired Fund, in liquidation of the
Acquired Fund, of Acquiring Fund Shares to the shareholders of the Acquired Fund
in exchange for their shares of beneficial interest of the Acquired Fund and the
termination of the Acquired Fund, will constitute a "reorganization" within the
meaning of Section 368(a) of the Code.
Notwithstanding anything herein to the contrary, neither the Acquired
Fund nor the Trust may waive the conditions set forth in this Paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Trust on behalf of the Acquiring Fund and the Trust on behalf
of the Acquired Fund each represent and warrant to the other that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
9.2 The Acquiring Fund and the Acquired Fund shall each be liable
solely for its own expenses incurred in connection with entering into and
carrying out the provisions of this Agreement whether or not the transactions
contemplated hereby are consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust on behalf of the Acquiring Fund and the Trust on behalf
of the Acquired Fund agree that neither party has made any representation,
warranty or covenant not set forth herein or referred to in Paragraph 4 hereof
and that this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Trust on behalf of the Acquiring Fund and the Acquired Fund. In addition, either
party may at its option terminate this Agreement at or prior to the Closing
Date:
(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained herein to be performed
at or prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which reasonably
appears will not or cannot be met;
(c) by resolution of the Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquiring Fund's
shareholders; or
(d) by resolution of the Acquired Fund's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquired Fund's
shareholders.
11.2 In the event of any such termination, there shall be no
liability for damages on the part of the Trust, the Acquiring Fund, or the
Acquired Fund, or the Trustees or officers of the Trust or the Acquired Fund,
but each party shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon by the authorized officers of the Trust and the
Acquired Fund. No such amendment may have the effect of changing the provisions
regarding the method for determining the number of Acquiring Fund Shares to be
received by the Acquired Fund shareholders under this Agreement to the detriment
of such shareholders without their further approval; provided that nothing
contained in this Article twelve shall be construed to prohibit the parties from
amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquiring Fund or to the
Acquired Fund, each at 20 William Street, Suite 310, Wellesley Hills,
Massachusetts 02481, Attention: Eric J. Godes and, in either case, with copies
to Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, Attention:
Michelle H. Rhee, Esq.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the laws of The Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the prior written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
14.5 All persons dealing with the Trust on behalf of the Acquiring Fund
or Trust on behalf of the Acquired Fund must look solely to the property of the
Acquiring Fund or the Acquired Fund, respectively, for the enforcement of any
claims against the Acquiring Fund or the Acquired Fund as the Trustees,
officers, agents and shareholders of the Trust on behalf of either Fund assume
no personal liability for obligations entered into on behalf of the Trust on
behalf of the Acquiring Fund or Trust on behalf of the Acquired Fund,
respectively. None of the other series of the Trust shall be responsible for any
obligations assumed by on or behalf of the either Fund under this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by its President
or Vice President and has caused its corporate seal to be affixed hereto.
KOBREN INSIGHT TRUST on behalf of
KOBREN GROWTH FUND
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By:
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KOBREN INSIGHT TRUST on behalf of
KOBREN GROWTH FUND
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By:
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Annex A
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TAX REPRESENTATION CERTIFICATE OF
KOBREN GROWTH FUND
This certificate is being delivered in connection with the transaction to
be effected pursuant to the Agreement and Plan of Reorganization made as of
March ____, 2002 between Kobren Growth Fund ("Acquiring Fund") and Kobren
Moderate Growth Fund ("Acquired Fund"), each a series of Kobren Insight Funds
(the "Agreement"). Pursuant to the Agreement, Acquiring Fund will acquire all of
the assets of Acquired Fund in exchange solely for (i) the assumption by
Acquiring Fund of certain liabilities of Acquired Fund (the "Acquired Fund
Liabilities") and (ii) the issuance of shares of beneficial interest of
Acquiring Fund (the "Acquiring Fund Shares") to Acquired Fund, followed by the
distribution by Acquired Fund, in liquidation of Acquired Fund, of the Acquiring
Fund Shares to the shareholders of Acquired Fund and the termination of Acquired
Fund (the foregoing together constituting the "transaction").
The undersigned officer of Acquiring Fund, after consulting with its
counsel and auditors regarding the meaning of and factual support for the
following representations, on behalf of Acquiring Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Agreement.
1. Acquiring Fund is a series of Kobren Insight Funds, a business trust
established under the laws of the Commonwealth of Massachusetts.
2. Neither Acquiring Fund nor any person treated as related to
Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) or by virtue of
being a partnership of which Acquiring Fund or a related person is a partner (a
"Related Person") has any plan or intention to redeem or otherwise reacquire any
of the Acquiring Fund Shares received by shareholders of Acquired Fund in the
transaction except in the ordinary course of Acquiring Fund's business in
connection with its legal obligation under Section 22(e) of the Investment
Company Act of 1940, as amended, as a registered open-end investment company to
redeem its own shares (which obligation is not in connection with, modified in
connection with, or in any way related to the transaction).
3. After the transaction, Acquiring Fund will continue the historic
business of Acquired Fund or will use all or a significant portion of the
historic assets acquired from Acquired Fund in the ordinary course of a
business. For this purpose, Acquiring Fund shall be treated as conducting the
business and holding the assets of certain related entities, as described in
Treasury Regulation Section 1.368-1(d)(4).
4. Acquiring Fund has no plan or intention to sell or otherwise dispose
of any assets of Acquired Fund acquired in the transaction, except for
dispositions made in the ordinary course of its business, and except for
transfers of assets to certain related entities, as described in Section
368(a)(2)(C) of the Internal Revenue Code of 1986, as amended (the "Code") or
Treasury Regulation Section 1.368-2(k)(1).
5. Each of Acquiring Fund and Acquired Fund will pay its own expenses
related to the transaction. The shareholders of Acquiring Fund and Acquired Fund
will bear their respective expenses, if any, in connection with the transaction.
6. There is no indebtedness between Acquiring Fund and Acquired Fund.
7. Acquiring Fund has elected to be treated as a regulated investment
company under Subchapter M of the Code, has qualified as a regulated investment
company for each taxable year since inception, qualifies as such as of the date
of the transaction, and intends to qualify as such after the transaction.
8. Acquiring Fund meets the requirements of a regulated investment
company as defined in Section 368(a)(2)(F) of the Code.
9. Acquiring Fund is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Fund does not now and has never owned, directly or
indirectly, any shares of Acquired Fund.
11. Acquiring Fund will not pay cash in lieu of fractional shares in
connection with the transaction.
12. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquiring Fund will not furnish any consideration in
connection with the acquisition of Acquired Fund's assets other than the
assumption of these Acquired Fund Liabilities and the issuance of these
Acquiring Fund Shares.
13. Acquired Fund shareholders will not be in control (within the
meaning of Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that
control means the ownership of shares possessing at least 50% of the total
combined voting power of all classes of shares that are entitled to vote or at
least 50% of the total value of shares of all classes) of Acquiring Fund after
the transaction.
14. The principal business purposes of the transaction are to combine
the assets of Acquiring Fund and Acquired Fund in order to capitalize on
potential economies of scale in expenses, including the costs of accounting,
legal, transfer agency, insurance, custodial, and administrative services, and
to increase diversification.
15. No Acquired Fund shareholder is acting as agent for Acquiring Fund
in connection with the transaction or approval thereof. Acquiring Fund will not
reimburse any Acquired Fund shareholder for Acquired Fund shares such
shareholder may have purchased or for other obligations such shareholder may
have incurred.
The undersigned officer of Acquiring Fund is authorized to make all of the
representations set forth herein, and the undersigned is authorized to execute
this certificate on behalf of Acquiring Fund. The undersigned recognizes that
Hale and Dorr LLP will rely upon the foregoing representations in evaluating the
United States federal income tax consequences of the transaction. If, prior to
the date of the transaction, any of the representations set forth herein cease
to be accurate in any material respect, the undersigned agrees to deliver to
Hale and Dorr LLP immediately a written notice to that effect.
KOBREN GROWTH FUND
By:
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Name:
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Title:
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Dated: April , 2002
Annex B
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TAX REPRESENTATION CERTIFICATE OF
KOBREN MODERATE GROWTH FUND
This certificate is being delivered in connection with the transaction to
be effective pursuant to the Agreement and Plan of Reorganization made as of
March __, 2002 between Kobren Growth Fund ("Acquiring Fund") and Kobren Moderate
Growth Fund ("Acquired Fund"), each a series of Kobren Insight Funds (the
"Agreement"). Pursuant to the Agreement, Acquiring Fund will acquire all of the
assets of Acquired Fund in exchange solely for (i) the assumption by Acquiring
Fund of certain liabilities of Acquired Fund (the "Acquired Fund Liabilities")
and (ii) the issuance of shares of beneficial interest of Acquiring Fund (the
"Acquiring Fund Shares") to Acquired Fund, followed by the distribution by
Acquired Fund, in liquidation of Acquired Fund, of the Acquiring Fund Shares to
the shareholders of Acquired Fund and the termination of Acquired Fund (the
foregoing together constituting the "transaction").
The undersigned officer of Acquired Fund, after consulting with its
counsel and auditors regarding the meaning of and factual support for the
following representations, on behalf of Acquired Fund, hereby certifies and
represents that the following statements are true, complete and correct and will
be true, complete and correct on the date of the transaction and thereafter as
relevant. Unless otherwise indicated, all capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Agreement.
1. Acquired Fund is a series of Kobren Insight Funds, a business trust
established under the laws of the Commonwealth of Massachusetts.
2. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares received by each shareholder that holds shares of Acquired
Fund (the "Acquired Fund Shares") will be approximately equal to the fair market
value of the Acquired Fund Shares surrendered by such shareholder, and the
aggregate consideration received by Acquired Fund shareholders in exchange for
their Acquired Fund Shares will be approximately equal to the fair market value
of all of the outstanding Acquired Fund Shares immediately prior to the
transaction. No property other than Acquiring Fund Shares will be distributed to
shareholders of Acquired Fund in exchange for their Acquired Fund Shares, nor
will any such shareholder receive cash or other property as part of the
transaction.
3. There is no plan or intention on the part of any shareholder of
Acquired Fund that owns beneficially 5% or more of the Acquired Fund Shares and,
to the best knowledge of management of Acquired Fund, there is no plan or
intention on the part of the remaining shareholders of Acquired Fund, in
connection with the transaction, to engage in any transaction with Acquired
Fund, Acquiring Fund, or any person treated as related to Acquired Fund or
Acquiring Fund under Treasury Regulation Section 1.368-1(e)(3) or by virtue of
being a partnership of which Acquired Fund, Acquiring Fund, or a related person
is a partner involving the sale, redemption, exchange, transfer, pledge, or
other disposition resulting in a direct or indirect transfer of the risks of
ownership (a "Sale") of any of the Acquired Fund Shares or any of the Acquiring
Fund Shares to be received in the transaction that, considering all Sales, would
reduce the aggregate ownership of the Acquiring Fund Shares by former Acquired
Fund shareholders to a number of shares having a value, as of the date of the
transaction, of less than fifty percent (50%) of the value of all of the
formerly outstanding Acquired Fund Shares as of the same date. All Sales
involving shares of Acquired Fund and Acquiring Fund held by Acquired Fund
shareholders that have occurred or will occur in connection with the transaction
are taken into account for purposes of this representation. No such Sale that is
in connection with the transaction has, to the best knowledge of management of
Acquired Fund, occurred on or prior to the date of the transaction.
4. Acquired Fund assets transferred to Acquiring Fund will comprise at
least ninety percent (90%) of the fair market value of the net assets and at
least seventy percent (70%) of the fair market value of the gross assets held by
Acquired Fund immediately prior to the transaction. For purposes of this
representation, amounts used by Acquired Fund to pay expenses of the transaction
and all redemptions and distributions (except for redemptions in the ordinary
course of business upon demand of a shareholder that Acquired Fund is required
to make as an open-end investment company pursuant to Section 22(e) of the
Investment Company Act of 1940, as amended, and regular, normal dividends) made
by Acquired Fund immediately preceding the transaction are taken into account as
assets of Acquired Fund held immediately prior to the transaction.
5. As of the date of the transaction, the fair market value of the
Acquiring Fund Shares issued to Acquired Fund in exchange for the assets of
Acquired Fund will be approximately equal to the fair market value of the assets
of Acquired Fund received by Acquiring Fund, minus the Acquired Fund Liabilities
assumed by Acquiring Fund. Acquiring Fund will not furnish any consideration in
connection with the acquisition of Acquired Fund's assets other than the
assumption of these Acquired Fund Liabilities and the issuance of these
Acquiring Fund Shares.
6. The Acquired Fund Liabilities assumed by Acquiring Fund plus the
liabilities, if any, to which the transferred assets are subject were incurred
by Acquired Fund in the ordinary course of its business.
7. The fair market value of the Acquired Fund assets transferred to
Acquiring Fund will equal or exceed the sum of the Acquired Fund Liabilities
assumed by Acquiring Fund plus the amount of liabilities, if any, to which the
transferred assets are subject.
8. Substantially all of the Acquired Fund assets transferred to
Acquiring Fund will be Acquired Fund's historic business assets, i.e., assets
not acquired by Acquired Fund as part of or in contemplation of the transaction.
9. Acquired Fund will distribute to its shareholders the Acquiring Fund
Shares it receives, and its other properties, if any, pursuant to the
transaction and will be liquidated promptly thereafter.
Each of Acquiring Fund and Acquired Fund will pay its own expenses
related to the transaction. The shareholders of Acquiring Fund and
Acquired Fund will bear their respective expenses, if any, in
connection with the transaction.
10. There is no indebtedness between Acquiring Fund and Acquired Fund.
11. Acquired Fund has elected to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), has qualified as a regulated investment company for each taxable year
since inception, and qualifies as such for its taxable year ending on the
closing date of the transaction.
12. Acquired Fund meets the requirements of a regulated investment
company as defined in Section 368(a)(2)(F) of the Code.
13. Acquired Fund is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
14. Acquired Fund does not pay compensation to any
shareholder-employee.
15. Acquired Fund shareholders will not be in control (within the
meaning of Sections 368(a)(2)(H)(i) and 304(c) of the Code, which provide that
control means the ownership of shares possessing at least 50% of the total
combined voting power of all classes of shares that are entitled to vote or at
least 50% of the total value of shares of all classes) of Acquiring Fund after
the transaction.
16. Acquired Fund shareholders will not have dissenters' or appraisal
rights in the transaction.
17. The principal business purposes of the transaction are to combine
the assets of Acquiring Fund and Acquired Fund in order to capitalize on
potential economies of scale in expenses, including the costs of accounting,
legal, transfer agency, insurance, custodial, and administrative services, and
to increase diversification.
The undersigned officer of Acquired Fund is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquired Fund. The undersigned recognizes
that Hale and Dorr LLP will rely upon the foregoing representations in
evaluating the United States federal income tax consequences of the transaction.
If, prior to the date of the transaction, any of the representations set forth
herein cease to be accurate in any material respect, the undersigned agrees to
deliver to Hale and Dorr LLP immediately a written notice to that effect.
KOBREN MODERATE GROWTH FUND
By:
--------------------------------
Name:
----------------------
Title:
----------------------
Dated: April __, 2002
Exhibit B
[Logo appears in center of cover page]
Kobren Growth Fund
Kobren Moderate Growth Fund
[Picture depicting eyeglasses on a financial newspaper
page appears in center of cover page in a colored box]
P R O S P E C T U S
May 1, 2001
[The following statement appears in a colored box]
The Securities and Exchange Commission has not approved any fund's shares as an
investment or determined whether this prospectus is accurate or complete. It is
a criminal offense to state otherwise.
TABLE OF CONTENTS
FACTORS EVERY INVESTOR SHOULD KNOW 3
Investment goals 3
Principal investments 3
Investment strategy 3
Principal investment risks 4
Performance 4
Who may want to invest 5
Fees and expenses 5
THE FUNDS' INVESTMENTS 6
INVESTMENT ADVISER 8
INVESTMENT AND ACCOUNT POLICIES 9
Calculation of net asset value 9
How to purchase shares 10
How to exchange shares 11
How to redeem shares 11
Dividends, distributions and taxes 12
FINANCIAL HIGHLIGHTS 13
FOR MORE INFORMATION back cover
FACTORS EVERY INVESTOR SHOULD KNOW
The Fund
Growth Fund
- -----------
Investment Goals:
Long term growth of capital without regard to income. A price changeability or
"volatility" level over a full market cycle approximating that of the S&P 500
Index. A full market cycle is the market's peak to its trough.
Principal Investments:
- - At least 65% of assets in open-end and closed-end growth and growth and
income funds. These may include both U.S. and international funds.
- - Up to 35% of assets in fixed income funds and direct investments in stocks,
bonds and other permitted investments.
Moderate Growth Fund
- --------------------
Investment Goals:
Long term growth of capital without regard to income. A volatility level over a
full market cycle approximately 20% below that of the S&P 500 Index.
Principal Investments:
- - At least 65% of assets in open-end and closed-end growth and growth and
income funds. These may include both U.S. and international funds.
- - Up to 35% of assets in fixed income funds and direct investments in stocks,
bonds and other permitted investments.
[Kobren Logo]
Kobren Insight Management (KIM) Investment Strategy
1. ASSET ALLOCATION -- KIM begins with a fundamental analysis of the economy and
investment markets in the U.S. and foreign countries. In deciding what
percentage of the funds' assets should be allocated to U.S. stocks, foreign
stocks, U.S. bonds and cash equivalents, KIM focuses on:
- - A fund's risk tolerance and its target volatility relative to the S&P 500
Index
- - Economic factors such as inflation, employment and interest rates
- - The outlook for corporate earnings
- - Current stock valuations (e.g., price to earnings and price to book ratios)
- - Supply and demand for various asset classes
2. INVESTMENT STYLES -- Next KIM determines the percentage of fund assets
allocated to each of the following six global equity styles:
- - U.S. Growth--Large Cap
- - U.S. Growth--Small Cap
- - U.S. Value--Large Cap
- - U.S. Value--Small Cap
- - Diversified International Equity
- - Specialized International Equity
In allocating among styles, KIM first reviews the broad-based economic factors
that will influence the earnings prospects for each style. Then, to determine
each style's relative attractiveness, KIM compares the resulting earnings
outlook for each style with the style's current valuation in relation to
historical norms and other styles.
3. SELECTING FUNDS -- KIM looks for funds appearing to offer the highest
risk-adjusted return potential for the style relative to each fund's target
volatility. KIM applies its internally developed screening process to virtually
all publicly available mutual funds - a risk-adjusted return analysis and the
evaluation of each fund against its peers. Based on interviews with and other
information from fund portfolio managers, KIM evaluates each fund's portfolio
asset allocation, sector weightings, individual holdings and risk
characteristics.
FACTORS EVERY INVESTOR SHOULD KNOW
[Picture of a bull and a bear appears in upper left-hand corner]
PRINCIPAL INVESTMENT RISKS
[sidebar] An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
You could lose money on your investment in a Kobren Insight fund or the fund
could perform worse than other possible investments if any of the following
occurs:
- - The U.S. or a foreign stock market goes down.
- - Interest rates go up, which will make bond prices and the value of the
fund's investments in fixed income funds and securities go down.
- - An adverse event, such as an unfavorable earnings report or credit
downgrade, depresses the value of a particular issuer's stocks or bonds
that are held by the fund or an underlying fund.
- - The adviser's judgments about the attractiveness and risk adjusted return
potential of particular asset classes, investment styles, industries,
underlying funds or other issuers prove to be wrong.
[sidebar] Special risks of investing in other mutual funds
The funds' practice of investing primarily in other mutual funds presents
special risks.
- - You will bear not just your proportionate share of the funds' operating
expenses, but also, indirectly, the operating expenses of the underlying
funds.
- - One underlying fund may be buying the same securities that another
underlying fund is selling. You would indirectly bear the costs of these
transactions without accomplishing any investment purpose.
- - You may receive higher taxable capital gains distributions than if you
invested directly in the underlying funds.
- - Because of regulatory restrictions, a fund's ability to invest in an
attractive underlying fund may be limited to the extent that the underlying
fund's shares are already held by another Kobren Insight fund, KIM or their
affiliates.
Summary of past performance
[This section appears in a colored box]
The bar chart and table shown below may help illustrate the risks of investing
in the Kobren Insight funds. The bar chart shows the performance of the funds
for the period indicated. The table shows how each fund's average annual returns
for the periods indicated compare to that of a widely recognized, unmanaged
index of common stock prices. A fund's past performance does not necessarily
indicate how the fund will perform in the future.
[Bar chart showing the performance of the funds for 1997, 1998, 1999 and 2000,
respectively.
Growth Fund Moderate Growth Fund
1997 15.03% 23.25%
1998 11.45% 3.44%
1999 29.70% 16.06%
2000 (9.75)% (1.29)% ]
Average Annual Returns
For Periods Ended 12/31/00
Fund (Inception) One year Since Inception
- --------------------------------------------------------------------------------
Growth (12/16/96) (9.75)% 11.22%
S&P 500 Index (9.10)% 17.80%
- --------------------------------------------------------------------------------
Moderate Growth (12/24/96) (1.29)% 10.05%
S&P 500 Index (9.10)% 16.71%
- --------------------------------------------------------------------------------
Footnote:
Growth Moderate Growth
Best quarterly 20.48% in 4th 13.11% in 4th
returns quarter 1999 quarter 1999
Worst quarterly (14.83)% in 3rd (13.08)% in 3rd
returns quarter 1998 quarter 1998
FACTORS EVERY INVESTOR SHOULD KNOW
[Picture of people appears in upper left-hand corner]
WHO MAY WANT TO INVEST IN THE KOBREN INSIGHT FUNDS
Growth Fund
- - Investors seeking growth of capital and a volatility level approximating
that of the S&P 500 Index.
- - Investors with a minimum five year time horizon and no need for current
income.
Moderate Growth Fund
- - Investors seeking growth of capital and a volatility level below that of
the S&P 500 Index.
- - Investors with a minimum time horizon of three to five years and modest
income needs.
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of a Kobren Insight fund. These fees and expenses are in addition to
those paid by the underlying funds in which a fund may invest.
For year ended 12/31/00 Moderate
Growth Growth
Fund Fund
- --------------------------------------------------------------------------------
Shareholder fees
(fees paid directly from your investment)
Maximum sales charge (load) imposed
on purchases None None
Maximum deferred sales charge (load) None None
Redemption fee None None
Exchange fee None None
- --------------------------------------------------------------------------------
Annual fund operating expenses before expense limitation(1)
(expenses that are deducted from fund assets)
Management fees 0.75% 0.75%
Distribution (12b-1) and/or service fees None None
Other expenses 0.31% 0.46%
Total annual fund operating expenses 1.06% 1.21%
- --------------------------------------------------------------------------------
1 Each fund has an expense limitation that continues until January 1, 2002,
but is voluntary and may be revoked at any time. Under this expense
limitation, maximum expenses other than management fees for the funds are
0.25%. In addition, payments made by an underlying fund or its adviser will
serve to reduce the total annual operating expenses of the Kobren Insight
fund. For the year ended December 31, 2000, expense reductions and total
annual fund operating expenses were:
Expense reductions and limitations (0.07%) (0.21%)
Total annual fund operating expenses 0.99% 1.00%
[sidebar] This example is intended to help you compare the cost of investing in
each fund with the cost of investing in other mutual funds.
The example for each fund assumes that:
- You invest $10,000 in the fund for the time periods indicated;
- Your investment has a 5% return each year;
- The fund's operating expenses remain the same; and
- You redeem your investment at the end of each period.
Although your actual costs may be higher or lower, under these assumptions your
costs prior to reductions would be:
Growth Moderate
Growth
1 year $ 108 $ 123
3 years $ 337 $ 384
5 years $ 585 $ 665
10 years $1,294 $1,466
THE FUNDS' INVESTMENTS
[sidebar] The Kobren Insight funds' strategies and investments.
INDUSTRY ALLOCATION PROCESS
The funds' strategies are designed to identify and avoid industries that appear
overvalued. KIM compares stock valuations for companies in a particular industry
to current and historical valuations for industries represented in the S&P 500
Index. When stock valuations in a particular industry are outside their normal
range, that industry may be underweighted or overweighted in a fund's portfolio.
INVESTING IN UNDERLYING FUNDS
The Kobren Insight funds invest primarily in other mutual funds, including those
whose investment objectives do not match those of the funds. KIM believes that,
by investing in a combination of funds with a broad range of goals and
offsetting risk characteristics, a Kobren Insight fund can achieve a higher
composite rate of return while meeting its volatility targets.
Underlying funds may engage in all types of investment practices, even those
that the Kobren Insight funds do not engage in directly. The funds will bear all
the risks associated with underlying funds' investments.
Due to KIM's size and buying power, the funds can invest at net asset value in
underlying funds that would otherwise be sold with a front-end sales charge. A
fund will not buy underlying fund shares if the fund would have to pay a
front-end sales charge on the purchase. However, the funds may buy underlying
fund shares subject to a deferred sales charge, redemption fee or 12b-1 fee.
PRINCIPAL INVESTMENTS
- - Equity
The funds and the underlying funds in their portfolios may invest in equity
securities of U.S. and foreign companies. These securities include
exchange-traded and over-the-counter (OTC) common and preferred stocks,
warrants, rights, convertible debt securities, trust certificates, partnership
interests and equity participations.
- - Fixed income
The funds and the underlying funds in their portfolios may invest in fixed
income securities of any maturity or duration. These securities may be issued by
the U.S. government or any of its agencies, foreign governments, supranational
entities such as the World Bank and U.S. and foreign companies.
The funds' investments in fixed income securities may be of any credit quality
and may have all types of interest rate payment and reset terms. They may
include mortgage-backed, asset-backed and derivative securities as well as junk
bonds. Junk bonds involve more credit risk and interest-rate risk than
investment grade bonds.
DEFENSIVE INVESTING
Each fund (and each underlying fund in its portfolio) may depart from its
principal investment strategies by taking temporary defensive positions in
short-term debt securities in response to adverse market, economic or political
conditions for up to 100% of the portfolio. A fund would give up potential gains
and minimize losses while defensively invested.
DERIVATIVE CONTRACTS
The funds and the underlying funds in their portfolios may, but are not required
to, use derivative contracts for any of the following purposes:
- - To hedge against adverse changes in the market value of securities held by
or to be bought for a fund. These changes may be caused by changing
interest rates, stock market prices or currency exchange rates.
- - As a substitute for purchasing or selling securities or foreign currencies.
- - To shorten or lengthen the effective maturity or duration of a fund's fixed
income portfolio.
- - In non-hedging situations, to attempt to profit from anticipated market
developments.
A derivative contract will obligate or entitle a fund to deliver or receive an
asset or a cash payment that is based on the change in value of a designated
security, index or currency. Examples of derivative contracts are futures
contracts, options, forward contracts, swaps, caps, collars and floors.
THE FUNDS' INVESTMENTS
More about the Kobren Insight funds' strategies and investments.
ADDITIONAL INVESTMENT RISKS
The funds (and the underlying funds in their portfolios) could lose money or
underperform for the reasons listed in the "Factors Every Investor Should Know"
section or for the following additional reasons:
- - Foreign country and currency risks
Prices of a fund's investments in foreign securities may go down because of
unfavorable foreign government actions, political instability or the absence of
accurate information about foreign issuers. Also, a decline in the value of
foreign currencies relative to the U.S. dollar will reduce the value of
securities denominated in those currencies. Foreign securities are sometimes
less liquid and harder to value than securities of U.S. issuers. These risks are
more severe for securities of issuers in emerging market countries.
- - Credit risk
An issuer of a debt security or OTC derivative contract could default on its
obligation to pay principal and interest, or a rating organization could
downgrade the credit rating of the issuer. Junk bonds involve more credit risk
than higher quality debt securities.
- - Prepayment or call risk
The issuer of a debt security may exercise its right when interest rates are
falling to prepay principal earlier than scheduled, forcing the fund to
re-invest in lower yielding securities. Prepayments will also depress the value
of interest-only securities. Corporate bonds, mortgage-backed securities and
asset-backed securities are especially susceptible to prepayment risk.
- - Extension risk
The issuer of a debt security may prepay principal more slowly than expected
when interest rates are rising. This will lock in a below-market interest rate,
increase the security's duration and reduce the value of the security.
Mortgage-backed securities and asset-backed securities are especially
susceptible to extension risk.
- - Leverage risk
Because of borrowing or investments in derivative contracts or leveraged
derivative securities, a fund may suffer disproportionately heavy losses
relative to the amount of its investment. Leverage can magnify the impact of
poor asset allocation or investment decisions.
- - Correlation risk
Changes in the value of a fund's derivative contracts or other hedging
instruments may not match or fully offset changes in the value of the hedged
portfolio securities.
- - Liquidity and valuation risks
Securities that were liquid when purchased by a fund may become temporarily
illiquid and hard to value, especially in declining markets.
Also, an underlying fund's obligation to redeem shares held by a Kobren Insight
fund is limited to 1% of the underlying fund's outstanding shares per 30-day
period. Because the Kobren Insight funds and their affiliates may together
acquire up to 3% of an underlying fund's shares, it may take up to 90 days for
the funds to completely dispose of their underlying fund shares.
IMPACT OF HIGH PORTFOLIO TURNOVER
Each fund or any underlying fund in its portfolio may engage in active and
frequent trading to achieve its principal investment strategies. As a result, a
fund may realize and distribute to shareholders higher capital gains, which
would increase their tax liability. Frequent trading also increases transaction
costs, which could detract from a fund's performance. Each fund anticipates its
annual turnover will be less than 100%.
THE FUNDS' INVESTMENT GOALS
The funds' board of trustees may change each fund's investment goals without
obtaining the approval of the fund's shareholders. A fund might not succeed in
achieving its goals.
INVESTMENT ADVISER
[Kobren Logo appears in upper left-hand corner]
KOBREN INSIGHT MANAGEMENT, INC.
Kobren Insight Management, Inc. (KIM) provides investment advice and portfolio
management services to the Kobren Insight funds. Under the supervision of the
funds' board of trustees, KIM makes the funds' day-to-day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
funds' investments.
Kobren Insight Management, Inc., a registered investment adviser, was
established in 1987. KIM has historically used mutual funds, rather than
individual securities, as the primary investment vehicle for client accounts.
KIM has extensive experience managing mutual fund portfolios for high net worth
individuals and corporations with minimum $400,000 account sizes. KIM currently
manages over 800 client accounts with assets totaling over $700 million.
Eric M. Kobren owns all of the stock of KIM and of the funds' distributor. He is
also the principal shareholder of Mutual Fund Investors Association, Inc., the
publisher of Fidelity Insight and FundsNet Insight reports.
Mr. Kobren is the primary portfolio manager for Kobren Growth and Kobren
Moderate Growth. He has been the president of KIM and the funds' distributor
since their inception in 1987 and of the Mutual Fund Investors Association, Inc.
since its inception in 1985. Mr. Kobren has been in the investment business
since 1976.
Each fund has agreed to pay KIM a monthly advisory fee at the annual rate of
0.75% of the fund's average daily net assets.
A Kobren Insight fund may invest in shares of an underlying mutual fund:
- - that makes payments of Rule 12b-1 or service fee revenues based on the
amount of shares held by the Kobren Insight fund; or
- - whose investment adviser is willing to share a portion of the underlying
fund's advisory fee attributable to the underlying fund shares held by the
Kobren Insight fund.
Rule 12b-1, service fee or revenue sharing payments made as to shares of any
underlying fund will be applied to advisory fees owed to KIM by the affected
Kobren Insight fund. Each fund will pay a portion of the costs of participation
in various network programs.
KIM has voluntarily agreed to cap each fund's other expenses at no more than
0.25% annually of the fund's average daily net assets. This cap does not apply
to brokerage commissions, taxes, interest and litigation, indemnification and
other extraordinary expenses. Although this expense cap arrangement can be
revoked at any time, KIM plans to continue this arrangement until January 1,
2002.
INVESTMENT AND ACCOUNT POLICIES
[Picture depicting a calculator appears in upper left-hand corner]
[sidebar] The funds calculate their NAVs every business day.
CALCULATION OF NET ASSET VALUE
Each fund calculates its net asset value per share (NAV) at the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time) on each
business day. A business day is a weekday that is not a holiday listed in the
Statement of Additional Information. If the New York Stock Exchange closes
early, the time for calculating the NAV and the deadlines for share transactions
will be accelerated to the earlier closing times.
Shares of underlying funds are valued at their reported NAVs. Each fund's other
portfolio securities are valued on the basis of either market quotations or at
fair value, which may include the use of pricing services. Fair value means
estimating a security's value at other than the market quotation. Fair value
pricing may cause the price used by a fund to be different than other funds'
pricing derived from market quotations. Although each Kobren Insight fund's NAV
will be calculated every business day, the NAV reported to NASDAQ for
distribution to news agencies will be delayed by one business day.
PURCHASING FUND SHARES
Individuals, institutions, companies and authorized fiduciaries may buy shares
of each Kobren Insight fund without a sales charge at its NAV next calculated
after the order has been received in proper form.
TAX-DEFERRED RETIREMENT PLANS
Both traditional individual retirement accounts (IRA) and Roth individual
retirement accounts are offered directly through Kobren Insight funds. The
following retirement plans are available through the mutual fund networks listed
in the box below:
- - Keough plans for self-employed individuals.
- - SEP and SARSEP plans for corporations.
- - Qualified pension and profit-sharing plans for employees, including 401(k)
plans and 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit organizations.
WIRE AND ACH TRANSFERS
The funds currently impose no fee for wire and Automated Clearing House (ACH)
transfers of purchase payments and redemption proceeds. However, the funds'
custodian may charge a fee in the future.
TELEPHONE TRANSACTIONS
The funds have procedures designed to verify that telephone instructions are
genuine. If they follow these procedures, they will not be liable for any losses
caused by acting on unauthorized telephone instructions.
Minimum investment amounts
[This section appears in a colored box]
The following minimum investment requirements apply to initial purchases:
Type of account Minimum
Regular accounts $2,500
Individual Retirement Accounts $2,000
Accounts purchased through the following $2,500 fund networks:
- - Charles Schwab Mutual Fund Marketplace
- - Fidelity FundsNetwork
- - TD Waterhouse Securities
The minimum subsequent investment is $500. Fund officers have discretion to
waive or reduce any of the minimum investment requirements.
You can get prospectuses, sales literature and applications from the funds'
distributor at the address and telephone number listed on the back cover of this
prospectus.
The funds and their distributor may reject all or part of any order to buy fund
shares.
HOW TO PURCHASE SHARES
Method of Purchase
By Check [Picture of a check appears here]
Purchase Procedures
OPEN AN ACCOUNT
- - To open an account and make an initial investment, send a minimum $2,500
check ($2,000 for IRAs) and a completed account application to the address
shown below.
- - An account application is included with this prospectus.
ADD TO AN ACCOUNT
- - Send a check for no less than $500 with your account name and number to
permit proper crediting. You can use the deposit slip attached to the
bottom of all account statements.
- - If you are adding to an IRA account, please provide the contribution year.
All PURCHASES
- - Your checks should be drawn on a U.S. bank or savings institution and
should be made payable to Kobren Insight Funds.
- - If an order to purchase shares is cancelled because your check does not
clear, you will be responsible for any resulting losses to the funds, their
distributor or transfer agent.
By Wire [Picture of a bank appears here]
OPEN AN ACCOUNT
- - To purchase shares by wire, call customer service for instructions at the
number shown below.
- - Be prepared to give the name in which the account will be opened, the
address, telephone number and taxpayer identification number for the
account and the name of the bank that will wire the purchase payment.
- - You will be assigned a new account number. You should write this number on
and complete an account application, which must be sent promptly to the
address shown below.
- - Your purchase order will not take effect until both the wire and the
purchase order are received by the funds.
- - You will be able to redeem shares of a fund, but not receive the proceeds,
before the fund has received your completed account application form. Also,
if a signed application form is not received within 60 days, your account
will be subject to backup tax withholding.
ADD TO AN ACCOUNT
- - When you purchase more shares by wire, provide your fund name, account name
and account number to permit proper crediting. - To receive timely credit,
you must call and tell customer service that your bank is sending a wire.
By Automated Clearing House Transfer (ACH)
- - If you want to purchase shares for non-retirement accounts via electronic
funds transfer, check this option in section 5 of your application.
- - Call customer service before 4:00 p.m. eastern time.
By Automatic Investment Plan [Picture of a calendar appears here]
- - After your initial investment of $2,500 or more, you can make automatic
monthly, quarterly or annual purchases (on the day you choose in advance)
of $100 or more.
- - To use this plan, complete section 6 of the application. You can change the
purchase amount or terminate the plan at any time by notifying the funds in
writing.
Through Broker-Dealers and Fund Networks
- - Contact your dealer to find out about its procedures for processing orders
to purchase fund shares. Purchase orders received by your dealer or its
agent before 4:00 p.m. eastern time on any business day receive that day's
NAV. Your dealer is responsible for promptly transmitting properly
completed orders to the transfer agent.
- - The Kobren Insight funds may also be purchased with a $2,500 minimum
through the following fund networks:
Fidelity Investments 800-544-9697 No transaction fee.
TD Waterhouse Securities 800-934-4448 No transaction fee.
Charles Schwab & Company, Inc. 800-435-4000 Transaction fee applies.
[This section appears in a box]
Send mail to
Kobren Insight Funds
P.O. Box 5146
4400 Computer Drive
Westborough, MA 01581
Call
Customer Service
toll-free at
800-895-9936
HOW TO EXCHANGE/REDEEM SHARES
Method of Exchange
All Exchanges [Picture of a dollar sign with arrow pointing to upper right
appears here]
Exchange Procedures
- - You may exchange shares of any Kobren Insight fund for shares of the other
funds at the NAV of each fund next determined after receipt of your
exchange request.
- - Exchanges must meet the applicable minimum initial investment requirements
for each fund.
- - To protect other shareholders of the funds, the funds may cancel the
exchange privileges of any person that, in the opinion of the funds, is
using market timing strategies or making more than four exchanges per owner
or controlling person per calendar year. The funds may also close the
accounts of shareholders whose exchange privilege has been cancelled.
- - The funds' trustees may change or terminate the exchange privilege on 60
days' prior notice to shareholders.
By Mail [Picture of an envelope appears here]
- - Send a written request to the address shown below.
- - Your request must state the number of shares or the dollar amount to be
exchanged, both funds' names and the applicable account numbers for both
funds.
- - The request must be signed exactly as your name appears on the account
registration.
By Telephone [Picture of a telephone appears here]
- - Call customer service at the toll-free number shown below.
- - If you are unable to execute a telephone exchange (for example during times
of unusual market activity), you should consider requesting an exchange by
mail.
Method of Redemption
By Mail [Picture of an envelope appears here]
Redemption Procedures
- - You may redeem shares of the funds by sending a written redemption request
to the Kobren Insight funds at the address shown below.
- - Your request must state the number of shares or dollar amount to be
redeemed and the applicable account number.
- - The request must be signed exactly as your name appears on the account
registration.
- - If the shares to be redeemed have a value of $50,000 or more, your
signature must be guaranteed by one of the eligible medallion programs
listed under "Signature Guarantees" on page 12.
- - If you want redemption proceeds deposited directly through an ACH transfer
in the bank account or brokerage account designated on your account
application, you should specify this in your written redemption request.
Call customer service for more information about ACH transfers.
By Telephone [Picture of a telephone appears here]
- - To redeem by telephone, call customer service at the number shown below.
- - You can request that redemption proceeds be deposited directly through an
ACH transfer in the bank account or brokerage account designated on your
account application.
Through Broker-Dealers and Fund Networks
- - Contact your dealer to find out about its procedures for processing orders
to redeem fund shares. Redemption orders received by your dealers or its
agent before 4:00 p.m. eastern time on any business day receive that day's
NAV. Your dealer is responsible for promptly transmitting properly
completed orders to the transfer agent.
Systematic Withdrawal Plan [Picture of a calendar appears here]
- - If shares in your account have a value of at least $5,000, you may elect to
receive, or may designate another person to receive, monthly, quarterly or
annual payments in a specified amount. There is no charge for this service.
- - Call customer service at the number shown below for more information.
[This section appears in a box]
Send mail to
Kobren Insight Funds
P.O. Box 5146
4400 Computer Drive
Westborough, MA 01581
Call
Customer Service
toll-free at
800-895-9936
INVESTMENT AND ACCOUNT POLICIES
REDEEMING FUND SHARES
[sidebar] You may redeem shares of the funds on any business day at the NAV next
calculated after the receipt of your redemption request in proper form.
Redemption proceeds are usually sent on the business day after the effective
date of a redemption. However, the payment of redemption proceeds for shares
purchased by check will be delayed until after the check has cleared, which may
take up to 15 days. Under unusual circumstances, the funds may suspend
redemptions, if allowed by the SEC, or postpone payment.
Redemption proceeds are paid by wire or, at your request, ACH transfer to the
bank or brokerage account designated on your account application. If you have
not designated an account or if it is impossible or impractical to wire
redemption proceeds, they will be sent by mail to your record address. You may
change your designated account by sending to the address on the previous page a
written request or supplemental telephone redemption authorization form
(available from customer service) that has been signature guaranteed by an
eligible medallion program.
CLOSING SUB-MINIMUM ACCOUNTS
The funds may close your account if, for reasons other than market losses, the
value of your shares falls below $1,000, or any other minimum set by the funds'
trustees. After the funds notify you of their intention to close your account,
you will have 60 days to bring the account back to the minimum level.
SIGNATURE GUARANTEES
A medallion signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency, savings association, or other
financial institution which is participating in a medallion program recognized
by the Securities Transfer Association. The three recognized medallion programs
are Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges
Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion
Signature Program (NYSE MSP). Signature guarantees from financial institutions
which are not participating in one of these programs will not be accepted.
Shareholders that are corporations, partnerships, trusts, estates or other
organizations may be required to provide documents evidencing that a request to
redeem shares or change a designated bank or brokerage account has been properly
authorized.
DIVIDENDS, DISTRIBUTIONS AND TAXES
[This section appears in a colored box]
[sidebar] Each fund declares and pays dividends according to the schedule on
the right.
Redemptions and exchanges of fund shares are taxable events on which you may
recognize a gain or loss. Dividends and distributions are also taxable, as
described in the chart below, whether they are received in additional shares or
cash.
Type of Distribution Declared Federal Tax Status
and Paid
Dividends from net Annually Taxable as ordinary income.
investment income
Distributions of short Annually Taxable as ordinary income.
term capital gain
Distributions of long Annually Taxable as capital gain.
term capital gain
[sidebar] Dividends are paid in additional shares of the same fund unless you
elect to receive them in cash.
You should generally avoid investing in a fund shortly before an expected
dividend or distribution. Otherwise, you may pay taxes on dividends or
distributions that are economically equivalent to a partial return of your
investment.
You should consult your tax adviser about particular federal, state, local and
other taxes that may apply to you.
Every January, the funds will send you information about the fund's dividends
and distributions during the previous calendar year. Most of the funds'
distributions are expected to be capital gains.
If you do not provide the funds with a correct taxpayer identification number
and required certifications, you may be subject to federal backup withholding
tax.
FINANCIAL HIGHLIGHTS
Kobren Growth Fund
For a fund share outstanding throughout the period.
For the
For the For the For the Year For the Period
Year Ended Year Ended Ended Year Ended Ended
12/31/00 12/31/99 12/31/98(f) 12/31/97 12/31/96(a)
Net asset value - beginning of period $15.34 $12.54 $11.51 $10.24 $10.00
Net investment income (loss) (0.04) (0.04) (0.02) 0.05 --(d)
Short term capital gains distributions
received 0.22 0.14 0.05 0.22 --
Net realized and unrealized gain (loss) on
investments (1.68) 3.63 1.29 1.27 0.24
------ ------ ------ ------ ------
Net increase (decrease) in net assets (1.50) 3.73 1.32 1.54 0.24
resulting from investment operations
Distributions from net investment income -- -- -- (0.05) --
Distributions from net realized short term
capital gains from operations and
distributions received (0.19) (0.10) (0.03) (0.22) --
Distributions from net realized capital gains (1.33) (0.83) (0.26) --(d) --
------ ------ ------ ------ ------
Total distributions (1.52) (0.93) (0.29) (0.27) --
Net asset value - end of period $12.32 $15.34 $12.54 $11.51 $10.24
------ ------ ------ ------ ------
Total return (b) (9.75)% 29.70% 11.45% 15.03% 2.40%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $63,105 $73,151 $64,507 $62,509 $251
Ratio of net investment income (loss) to (0.41)% (0.34)% (0.19)% 0.60% (0.97)%(c)
average net assets (e)
Ratio of operating expenses to average net
assets before fees waived and/or expenses
reimbursed by investment adviser and other
reductions 1.06% 1.07% 1.07% 1.28% n/a(e)
Ratio of operating expenses to average net
assets after reimbursements and reductions 0.99% 0.98% 0.91% 0.89% 1.00%(c)
Portfolio turnover rate 93% 66% 62% 43% n/a(e)
- ----------------------------------------------------------------------------------------------------------------
(a) Kobren Growth Fund commenced operations on December 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Growth Fund was in operation for a short period of time, these
ratios are not meaningful.
(f) Per share net investment income has been calculated using the monthly
average share method.
FINANCIAL HIGHLIGHTS
Kobren Moderate Growth Fund
For a fund share outstanding throughout the period.
For the
For the For the For the Year For the Period
Year Ended Year Ended Ended Year Ended Ended
12/31/00 12/31/99 12/31/98(f) 12/31/97 12/31/96(a)
Net asset value - beginning of period $13.02 $11.86 $11.94 $10.06 $10.00
Net investment income 0.05 0.09 0.16 0.19 --(d)
Short term capital gain distributions received 0.08 0.07 0.06 0.27 --
Net realized and unrealized gain (loss) on
investments (0.30) 1.75 0.20 1.88 0.06
------ ------ ------ ------ ------
Net increase (decrease) in net assets
resulting from investment operations (0.17) 1.91 0.42 2.34 0.06
Distributions from net investment income (0.05) (0.08) (0.16) (0.19) --
Distributions from net realized short term
capital gains from operations and
distributions received (0.25) (0.08) (0.06) (0.27) --
Distributions from net realized capital gains (1.07) (0.59) (0.28) --(d) --
------ ------ ------ ------ ------
Total distributions (1.37) (0.75) (0.50) (0.46) --
Net asset value - end of period $11.48 $13.02 $11.86 $11.94 $10.06
------ ------ ------ ------ ------
Total return (b) (1.29)% 16.06% 3.44% 23.25% 0.60%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $32,924 $40,784 $46,958 $43,381 $190
Ratio of net investment income to average net
assets 0.37% 0.61% 1.15% 2.76% 8.95%(c)(e)
Ratio of operating expenses to average net
assets before fees waived and/or expenses
reimbursed by investment adviser and other
reductions 1.21% 1.21% 1.13% 1.58% n/a(e)
Ratio of operating expenses to average net
assets after reimbursements and reductions 1.00% 0.95% 0.91% 0.92% 1.00%(c)
Portfolio turnover rate 70% 57% 50% 14% n/a (e)
- ---------------------------------------------------------------------------------------------------------------
(a) Kobren Moderate Growth Fund commenced operations on December 24, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
(e) Since Kobren Moderate Growth Fund was in operation for a short period of
time, these ratios are not meaningful.
INVESTMENT ADVISER Kobren Insight Management, Inc.
20 William Street, PO Box 9135
Wellesley Hills, MA 02481
Toll-free: 800-456-2736
LEGAL COUNSEL Hale and Dorr LLP
ADMINISTRATOR PFPC Inc.
INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP
TRANSFER AGENT PFPC Inc.
Toll-free: 800-895-9936
CUSTODIAN Boston Safe Deposit & Trust Co.
[Picture depicting eyeglasses on a financial newspaper page appears
in lower right hand corner of page in a colored box]
FOR MORE INFORMATION
For investors who want more information about the Kobren Insight funds, the
following documents are available free upon request:
Annual/Semiannual Reports
Additional information about the funds' investments is available in the funds'
annual and semiannual reports to shareholders. These reports contain a
discussion of the market conditions and investment strategies that significantly
affected each fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the funds and is incorporated
into this prospectus by reference.
Contacting Principal Distributor
Investors can get free copies of reports and SAIs, request other information and
discuss their questions about the funds by contacting the funds' principal
distributor at:
Address: Kobren Insight Brokerage, Inc.
20 William Street, Suite 310
P.O. Box 9150
Wellesley Hills, MA 02481
Phone: 800-4KOBREN (800-456-2736)
E-mail: kifcon@kobren.com
Internet: http://www.kobren.com
Contacting the SEC
Investors can review the funds' reports and SAIs at the Public Reference Room of
the Securities and Exchange Commission. Information on the operation of the
Public Reference room may be obtained by calling the Commission at 202-942-8090.
Investors can get text-only copies:
- - For a fee, by writing to the Public Reference Room of the Commission,
Washington, D.C. 20549-6009
- - Free from the Commission's Internet website at http://www.sec.gov.
Investment Company Act File No: 811-07813
Exhibit C
[Kobren Insight Funds logo]
Kobren Insight Management, Inc.
Kobren Insight Funds
Kobren Growth
Kobren Moderate Growth
Annual Report
December 31, 2001
Message to Shareholders
TODAY'S RECESSION FOLLOWS NEAR PERFECT CONDITIONS
It's been frustrating. For the past year we've experienced a weakening economy,
declining corporate profits, tumbling stock prices, terrorist attacks and war.
This is not the first time we've faced a challenging environment, but this time
does seem worse to many investors. Part of these feelings stem from the fact
that the late '90s were as nirvana-like as you can get. The economy grew
rapidly, corporate profits rose at double-digit rates, inflation remained in
check, technology was going to change the world, everyone who wanted to work was
employed and we were at peace. Many thought that this blissful environment was
the beginning of a new paradigm that would last forever. It wasn't and it
didn't. If last year's economic and market declines weren't enough to convince
investors that the new paradigm was a fantasy, the terrorist attacks of
September 11 certainly gave us all a disquieting dose of reality. Kobren Growth
and Moderate Growth both saw a nice rebound in the fourth quarter, but it wasn't
enough to offset the rough first and third quarters of 2001.
[Eric Kobren photo]
As we begin 2002, we are in a recession. Instead of growing, the economy is
shrinking. Economic output (GDP) for the third quarter of 2001 was recently
revised downward to -1.3% and fourth quarter figures will contract further. The
consensus on Wall Street is that the economy will turn the corner and begin
growing again in the second half of this year. The stock market's strong advance
over the past three months (and recent jump in consumer confidence) suggests
that investors believe that forecast is correct. They are betting that corporate
profits will be a lot better six-to-nine months from now.
DON'T FIGHT THE FED?
"Don't fight the Fed" is an expression I learned more than 25 years ago. It
means that if the Fed is cutting rates to boost the economy (or vice versa)
don't bet against them. The prospect of lower interest rates was one of the main
reasons we did not get more defensive in our funds early in the year. Indeed,
the Federal Reserve cut interest rates 11 times last year, bringing the Federal
Funds rate down to a measly 1.75%. That's the lowest level we've seen in 40
years.
Despite the aggressive rate cuts and some fiscal stimulus as well, the
economy, corporate profits and stock prices continued to weaken through
September. Would it have been a lot worse without the rate cuts? Absolutely.
Plus, it also takes a good 6-12 months to see the effects of a rate cut on the
economy. Using this time frame, the economy won't feel the full impact of more
than half of those 11 cuts until mid-2002 or later. That's one reason why Wall
Street expects the economy will be much better in the second half. While I agree
that things should be better in the second half of the year, I think the
recovery will both take longer and be less robust than Wall Street is expecting.
EQUITY FUNDS STILL MAKE SENSE
Despite our economic outlook and view that many stocks remain overvalued
relative to their earnings, there are several reasons why we do not decrease
equity exposure in our funds even more. First, the stock market often ignores
the short-term fundamental weaknesses and climbs the "wall of worry." Second,
with so much money now in bonds and money markets, even a modest shift back to
stocks can push equity prices higher. Third, even in a tough market, there are
funds that focus on attractive industries or areas of the market. Finally, there
are managers that have proven to be good stock pickers regardless of market
conditions.
Investing in growth versus value funds will be quite a delicate balance in
2002. Non-tech growth-stock funds (such as those with health care exposure) are,
by definition, less sensitive to the economy and should, therefore, hold up
better if the economy shows more signs of weakness. At the other end of the
spectrum are value-oriented funds. Our diversified portfolios do own more
economically sensitive value funds, but we have been careful to limit our
exposure, and avoid the most economically sensitive funds.
While the market could look beyond the current challenges, we remain
somewhat cautious and have positioned the funds for a sluggish economy and weak
corporate profits during the first half of 2002. Nonetheless, we are confident
that there will be investment opportunities as the year unfolds. We appreciate
your confidence and look forward to helping you reach your financial goals in
the years ahead.
Sincerely,
/s/ Eric Kobren
Eric M. Kobren
President and Portfolio Manager
Kobren Growth Fund (12/31/01)
[Value of $10,000 invested 12/16/96 Line Graph]
12 MONTHS ANNUALIZED
ENDED SINCE INCEPTION
TOTAL RETURN (%) 12/31/01 (12/16/96)
Kobren Growth -7.3% +7.3%
S&P 500 Index -11.9% +11.2%
KOBREN GROWTH FUND (Ticker: KOGRX): Volatility has become part of every
investor's vocabulary and 2001 was no exception. Although we can take some
solace in beating major market indices such as the S&P 500 Index (-11.9%) and
the tech-heavy Nasdaq (-20.8%), losing 7.3% is still painful. Strong returns in
the fourth quarter were outweighed by losses in February and March as well as
the post-September 11 sell-off. Fortunately, many of the moves we did make
proved prescient and helped to dampen the negative returns.
Large-cap growth funds, bellwethers of the 1990's, were reduced in favor of
value funds early in the year. OAKMARK fund was our largest value holding, which
increased from 15.7% of assets to 22.6% as the year came to a close. Manager
Bill Nygren continued to prove his investment acumen in difficult markets, as
the fund returned 18.3%. Growth funds struggled, including MARSICO GROWTH &
INCOME, which comprised about 8.5% of fund assets during the year. Down 21.5%,
Manager Tom Marsico was particularly hard hit, despite selling off most of his
technology positions.
Last year we added a bond fund, PIMCO REAL RETURN, for the first time in our
five year history. This fund is indexed to inflation and boasts an award-winning
management team. It outdistanced 98% of its rivals in 2001 and we hold it to
dampen volatility in the overall portfolio while still seeking a modest level of
capital appreciation.
[Asset Allocation* pie chart]
Cash 0.1%
Bond 6.4%
U.S. Stocks 93.5%
Top Ten Holdings*
KOBREN GROWTH STYLE ALLOC (%)
Oakmark Mid Cap Value 22.6
Fidelity Blue Chip Growth Large Cap Growth 11.6
Fidelity Equity Income Large Cap Value 10.7
Fidelity Dividend Growth Large Cap Blend 9.7
Longleaf Partners Small Cap Small Cap Value 9.2
Marsico Growth & Income Large Cap Growth 7.8
PIMCo Real Return - Instl. Bond 6.4
Longleaf Partners Mid Cap Value 6.1
Fidelity Select Energy Large Cap Value 5.7
Fidelity Select Medical Equip. & Syst. Mid Cap Growth 5.1
TOTAL FUND ASSETS $55,334,549
[Style Allocation* pie chart]
Cash 0.1%
Bonds 6.4%
Small Cap Value 9.2%
Large Cap Blend 9.7%
Mid Cap Growth 10.0%
Large Cap Value 16.4%
Large Cap Growth 19.4%
Mid Cap Value 28.8%
*Based on total net assets.
[Top Sectors** bar graph (Growth)]
(Totals may not equal 100%)
Services 16.3
Financials 16.3
Technology 13.8
Health 12.9
Energy 11.6
Industrial Cyclicals 10.6
Consumer Staples 7.3
Retail 6.7
Consumer Durables 3.7
Utilities 0.8
**Equities only
Kobren Insight Management, Inc. is the registered investment 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. Total return figures include reinvestment of all
distributions. Investment return and principal value will fluctuate with market
conditions and an investor's shares when redeemed may be worth more or less than
their original cost. International investing has special risks, including
currency fluctuation, political and economic instability, and the volatility of
emerging markets. The S&P 500 Index is an unmanaged index of common stocks.
Kobren Moderate Growth Fund (12/31/01)
KOBREN MODERATE GROWTH FUND (Ticker: KOMGX): The past year has been challenging
for virtually all segments of the market and Kobren Moderate Growth suffered as
well, declining 9.0%. Nevertheless, performance relative to most major market
indices was reasonable. Major reallocations during the year included increasing
our bond exposure as well as decreasing our growth fund concentration in favor
of more value-oriented funds.
PIMCO REAL RETURN became our largest individual holding this past summer and
remained in that position as we closed out the year. This unusual bond fund is
not very interest-rate-sensitive and should benefit if inflation ever becomes a
concern. Our other bond holding, PIMCO HIGH YIELD, invests in the lower end of
the credit-quality spectrum. Despite a tough time in the junk bond market, this
fund outperformed most of its peers and ended the year up 4.6%.
On the equity side of the ledger, our largest holding is the OAKMARK fund
which we first purchased in April. Manager Bill Nygren continues to generate
positive results by sticking only to what he understands and being
opportunistic. Oakmark is one of the few funds to post double-digit positive
results. Long-time top holding TWEEDY, BROWNE GLOBAL VALUE was jettisoned early
in 2001 as we saw better opportunities in the U.S. However, international
markets have looked more attractive to us lately, and we will be closely
evaluating opportunities overseas as the year unfolds.
[Value of $10,000 invested 12/24/96 Line Graph]
12 MONTHS ANNUALIZED
ENDED SINCE INCEPTION
TOTAL RETURN (%) 12/31/01 (12/24/96)
Kobren Moderate Growth -9.0% +6.0%
S&P 500 Index -11.9% +10.4%
Top Ten Holdings*
KOBREN MODERATE GROWTH STYLE ALLOC (%)
PIMCo Real Return Inst'l Bond 21.8
Oakmark Mid Cap Value 16.1
Longleaf Partners Small Cap Small Cap Value 15.4
Marsico Growth & Income Large Cap Growth 13.4
Fidelity Blue Chip Growth Large Cap Growth 13.2
PIMCo High Yield Bond 11.9
Longleaf Partners Mid Cap Value 5.5
Fidelity Dividend Growth Large Cap Blend 2.2
Dreyfus Cash Mgmt. Plus Cash 0.5
Oakmark Select Mid Cap Value 0.1
TOTAL FUND ASSETS $21,124,062
[Asset Allocation* pie chart]
Cash 0.4%
Bond 33.7%
U.S. Stocks 65.9%
[Top Sectors** bar graph (Moderate Growth)]
(Totals may not equal 100%)
Financials 20.9
Services 17.9
Technology 13.4
Industrial Cyclicals 12.7
Retail 9.8
Consumer Staples 9.2
Health 8.9
Consumer Durables 3.7
Energy 2.9
Utilities 0.6
**Equities only
[Style Allocation* pie chart]
Cash 0.4%
Large Cap Blend 2.2%
Small Cap Value 15.4%
Mid Cap Value 21.7%
Large Cap Growth 26.6%
Bond 33.7%
*Based on total net assets.
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. Copyright(C)2002. Reproductions in whole or in part are prohibited
except by permission. Data sources: Kobren Insight Management, Inc. and
Morningstar. Postmaster: Send address changes to Kobren Insight Funds, PO Box
5146, Westborough, MA 01581-9936. This report must be preceded or accompanied by
a prospectus. Please read it carefully before investing. You may obtain a
prospectus by calling a Kobren Insight Fund representative at 1-800-4KOBREN
(1-800-456-2736) or by visiting www.kobren.com.
Portfolio of Investments
Kobren Growth Fund
December 31, 2001
SHARES MUTUAL FUNDS - 100.20% VALUE (NOTE 1)
MID CAP VALUE - 28.77%
138,378 Longleaf Partners Fund $ 3,391,654
354,764 Oakmark Fund - Class I 12,512,530
574 Oakmark Select Fund - Class I 15,643
15,919,827
LARGE CAP GROWTH - 19.43%
149,445 Fidelity Blue Chip Growth Fund 6,417,174
308,196 Marsico Growth & Income Fund 4,333,231
10,750,405
LARGE CAP VALUE - 16.41%
121,741 Fidelity Equity Income Fund 5,937,291
134,610 Fidelity Select Energy Portfolio 3,140,455
9,077,746
MID CAP GROWTH - 9.97%
169,789 Fidelity Sel. Med. Equip. & Sys. Fund 2,811,699
245,036 MFS Mid Cap Growth Fund 2,685,594
697 RS Emerging Growth Fund 22,322
5,519,615
LARGE CAP BLEND - 9.70%
189,446 Fidelity Dividend Growth Fund 5,367,016
SMALL CAP VALUE - 9.17%
234,073 Longleaf Partners Small Cap Fund 5,074,709
BOND - 6.42%
348,840 PIMCo Real Return Inst'l Fund 3,551,194
MONEY MARKET FUND - 0.33%
185,091 Dreyfus Cash Mgmt. Plus Fund 185,091
TOTAL MUTUAL FUNDS
(COST $51,563,751) 55,445,603
TOTAL INVESTMENTS
(COST $51,563,751*) 100.20% 55,445,603
LIABILITIES NET OF CASH &
OTHER ASSETS -0.20% (111,054)
TOTAL NET ASSETS 100.00% $ 55,334,549
* For Federal income tax purposes, cost is $51,739,129 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $4,374,633
Unrealized depreciation: (668,159)
--------------
Net unrealized appreciation: $3,706,474
Portfolio of Investments
Kobren Moderate Growth Fund
December 31, 2001
SHARES MUTUAL FUNDS - 100.07% VALUE (NOTE 1)
BOND - 33.73%
268,706 PIMCo High Yield Inst'l Fund $ 2,515,084
452,796 PIMCo Real Return Inst'l Fund 4,609,463
7,124,547
LARGE CAP GROWTH - 26.57%
64,995 Fidelity Blue Chip Growth Fund 2,790,884
200,664 Marsico Growth & Income Fund 2,821,333
5,612,217
MID CAP VALUE - 21.66%
47,052 Longleaf Partners Fund 1,153,244
96,566 Oakmark Fund - Class I 3,405,871
574 Oakmark Select Fund - Class I 15,644
4,574,759
SMALL CAP VALUE - 15.45%
150,505 Longleaf Partners Small Cap Fund 3,262,958
LARGE CAP BLEND - 2.16%
16,144 Fidelity Dividend Growth Fund 457,349
MONEY MARKET FUND - 0.50%
106,086 Dreyfus Cash Mgmt. Plus Fund 106,086
TOTAL MUTUAL FUNDS
(COST $20,375,365) 21,137,916
TOTAL INVESTMENTS
(COST $20,375,365*) 100.07% 21,137,916
LIABILITIES NET OF CASH &
OTHER ASSETS -0.07% (13,854)
TOTAL NET ASSETS 100.00% $ 21,124,062
* For Federal income tax purposes, cost is $20,386,039 and appreciation
(depreciation) is as follows:
Unrealized appreciation: $1,055,626
Unrealized depreciation: (303,749)
-----------
Net unrealized appreciation: $ 751,877
See Notes to Financial Statements
Statement of Assets and Liabilities
KOBREN INSIGHT FUNDS DECEMBER 31, 2001
KOBREN GROWTH FUND KOBREN MODERATE GROWTH FUND
ASSETS:
Investments, at value (Note 1) See Portfolio
of Investments $55,445,603 $ 21,137,916
Dividends receivable 6,010 28,215
Receivable for fund shares sold 1,383 765
Prepaid expenses and other assets 13,386 4,140
Total assets 55,466,382 21,171,036
LIABILITIES:
Payable for fund shares redeemed 58,315 10,447
Investment advisory fee payable (Note 2) 31,017 7,580
Accrued Trustees' fees and expenses (Note 2) 4,329 2,011
Accrued expenses and other payables 38,172 26,936
Total liabilities 131,833 46,974
NET ASSETS: $55,334,549 $ 21,124,062
Investments, at cost $51,563,751 $ 20,375,365
NET ASSETS CONSIST OF:
Accumulated net realized loss on investments sold $(1,724,260) $ (572,538)
Net unrealized appreciation of investments 3,881,852 762,551
Par value (Shares of beneficial interest, $0.001 per share) 4,866 2,057
Paid-in capital in excess of par value 53,172,091 20,931,992
NET ASSETS $55,334,549 $ 21,124,062
SHARES OUTSTANDING 4,866,400 2,057,276
Net asset value, offering and redemption price per share $11.37 $ 10.27
See Notes to Financial Statements
Statement of Operations
KOBREN INSIGHT FUNDS FOR THE YEAR ENDED DECEMBER 31, 2001
KOBREN GROWTH FUND KOBREN MODERATE GROWTH FUND
INVESTMENT INCOME:
Dividends $ 386,907 $ 429,452
Interest -- 7,609
Total investment income 386,907 437,061
EXPENSES:
Investment advisory fee (Note 2) 452,786 212,244
Administration fee (Note 2) 67,500 67,500
Transfer agent fees 49,231 39,622
Custodian fees 3,026 3,023
Professional fees 20,705 9,697
Trustees' fees and expenses (Note 2) 14,275 6,532
Registration and filing fees 14,587 13,758
Amortization of organization costs 4,003 2,003
Other 23,201 10,748
Total expenses 649,314 365,127
Expenses reimbursed by investment adviser (Note 2) (45,600) (82,135)
Other reductions (Note 2) (24,879) (7,533)
Net expenses 578,835 275,459
NET INVESTMENT INCOME (LOSS) (191,928) 161,602
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from security transactions (2,192,087) (811,416)
Short term capital gain distributions received 26,417 35,002
Long term capital gain distributions received 709,196 366,285
Change in unrealized depreciation of securities (3,171,868) (2,568,673)
Net realized and unrealized loss on investments (4,628,342) (2,978,802)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(4,820,270) $(2,817,200)
See Notes to Financial Statements
Statements of Changes in Net Assets
KOBREN GROWTH FUND
YEAR ENDED DECEMBER 31,
2001 2000
Net investment loss $ (191,928) $ (286,487)
Net realized gain (loss) from security transactions (2,192,087) 1,311,955
Short term capital gains distributions received 26,417 1,108,720
Long term capital gains distributions received 709,196 2,044,424
Change in unrealized depreciation of investments (3,171,868) (11,074,551)
Net decrease in net assets resulting from operations (4,820,270) (6,895,939)
Distribution to shareholders from:
Net investment income and short term capital gain
distributions received -- (822,278)
Net realized gains on investments (261,877) (6,137,721)
Total distributions (261,877) (6,959,999)
Net increase (decrease) in net assets from fund share
transactions (2,688,530) 3,809,826
Net decrease in net assets (7,770,677) (10,046,112)
NET ASSETS:
Beginning of period 63,105,226 73,151,338
End of period $55,334,549 $ 63,105,226
KOBREN MODERATE GROWTH FUND
YEAR ENDED DECEMBER 31,
2001 2000
Net investment income $ 161,602 $ 133,234
Net realized loss from security transactions (811,416) (356,942)
Short term capital gains distributions received 35,002 239,199
Long term capital gains distributions received 366,285 1,489,485
Change in unrealized depreciation of investments (2,568,673) (1,948,692)
Net decrease in net assets resulting from operations (2,817,200) (443,716)
Distribution to shareholders from:
Net investment income and short term capital gain
distributions received (196,654) (372,437)
Net realized gains on investments (161,427) (3,160,625)
Total distributions (358,081) (3,533,062)
Net decrease in net assets from fund share
transactions (8,624,317) (3,883,531)
Net decrease in net assets (11,799,598) (7,860,309)
NET ASSETS:
Beginning of period 32,923,660 40,783,969
End of period $ 21,124,062 $ 32,923,660
See Notes to Financial Statements
Financial Highlights
KOBREN GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE YEAR.
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/2001 12/31/2000 12/31/1999 12/31/1998(a) 12/31/1997
Net asset value - beginning of period $ 12.32 $ 15.34 $ 12.54 $ 11.51 $ 10.24
Net investment income (loss)(1) (0.04) (0.04) (0.04) (0.02) 0.05
Short term capital gains distributions received 0.01 0.22 0.14 0.05
0.22
Net realized and unrealized gain (loss)
on investments (0.87) (1.68) 3.63 1.29 1.27
Net increase (decrease) in net assets resulting
from investment operations (0.90) (1.50) 3.73 1.32 1.54
Distributions from net investment income -- -- -- -- (0.05)
Distributions from net realized short term capital gains
from operations and distributions received -- (0.19) (0.10) (0.03) (0.22)
Distributions from net realized capital gains (0.05) (1.33) (0.83) (0.26) --
Total distributions (0.05) (1.52) (0.93) (0.29) (0.27)
Net asset value - end of period $ 11.37 $ 12.32 $ 15.34 $ 12.54 $ 11.51
Total return (7.28)% (9.75)% 29.70% 11.45% 15.03%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 55,335 $ 63,105 $ 73,151 $ 64,507 $ 62,509
Ratio of net investment income (loss) to average
net assets (0.32)% (0.41)% (0.34)% (0.19)%
0.60%
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment adviser and other reductions(2) 1.08% 1.06% 1.07% 1.07%
1.28%
Ratio of operating expenses to average net assets after
reimbursements and reductions(2) 0.96% 0.99% 0.98% 0.91% 0.89%
Portfolio turnover rate 80% 93% 66% 62% 43%
(a) Per share net investment income has been calculated using the monthly average share method.
(1) 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.
(2) Does not include expenses of the investment companies in which the Fund invests.
See Notes to Financial Statements
Financial Highlights
KOBREN MODERATE GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE YEAR.
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/2001 12/31/2000 12/31/1999 12/31/1998 12/31/1997
Net asset value - beginning of period $ 11.48 $ 13.02 $ 11.86 $ 11.94 $ 10.06
Net investment income(1) 0.08 0.05 0.09 0.16 0.19
Short term capital gains distributions received 0.02 0.08 0.07 0.06
0.27
Net realized and unrealized gain (loss)
on investments (1.13) (0.30) 1.75 0.20 1.88
Net increase (decrease) in net assets resulting
from investment operations (1.03) (0.17) 1.91 0.42 2.34
Distributions from net investment income (0.10) (0.05) (0.08) (0.16) (0.19)
Distributions from net realized short term capital gains
from operations and distributions received -- (0.25) (0.08) (0.06) (0.27)
Distributions from net realized capital gains (0.08) (1.07) (0.59) (0.28) --
Total distributions (0.18) (1.37) (0.75) (0.50) (0.46)
Net asset value - end of period $ 10.27 $ 11.48 $ 13.02 $ 11.86 $ 11.94
Total return (9.01)% (1.29)% 16.06% 3.44% 23.25%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 21,124 $ 32,924 $ 40,784 $ 46,958 $ 43,381
Ratio of net investment income to average
net assets 0.57% 0.37% 0.61% 1.15% 2.76%
Ratio of operating expenses to average net assets
before fees waived and/or expenses reimbursed
by investment adviser and other reductions(2) 1.29% 1.21% 1.21% 1.13%
1.58%
Ratio of operating expenses to average net assets after
reimbursements and reductions(2) 0.97% 1.00% 0.95% 0.91% 0.92%
Portfolio turnover rate 94% 70% 57% 50% 14%
(1) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying
investment companies in which the Fund invests.
(2) Does not include expenses of the investment companies in which the Fund invests.
See Notes to Financial Statements
Notes to Financial Statements
KOBREN INSIGHT FUNDS DECEMBER 31, 2001
1. SIGNIFICANT ACCOUNTING POLICIES
Kobren Insight Fund (the "Trust") was organized on September 13, 1996, as a
Massachusetts business trust. The Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a no-load, open-end
diversified management investment company. As of December 31, 2001 the Trust
offered shares of three funds, Kobren Growth Fund, Kobren Moderate Growth Fund
and Delphi Value Fund. Information presented in these financial statements
pertains only to Kobren Growth Fund and Kobren Moderate Growth Fund
(individually, a "Fund" and collectively, the "Funds"). These Funds seek to
achieve their investment objectives by investing primarily in shares of other
investment companies ("underlying funds"), but also may invest directly in
securities that are suitable investments for that Fund. The following is a
summary of significant accounting policies followed by the Funds in the
preparation of their 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. Each Fund's other investment securities are valued at the last
sale price on the primary securities exchange or national securities market on
which such securities are traded. 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 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 Kobren Growth Fund and Kobren
Moderate Growth Fund to declare and pay dividends from net investment income
annually. Each Fund will distribute net realized capital gain if any (including
net short-term capital gains) annually, unless offset by any available capital
loss carryforward. Additional distributions of net investment income and capital
gain for each 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. The tax character of distributions
paid during 2000 and 2001 were as follows:
KOBREN GROWTH KOBREN MODERATE GROWTH
DISTRIBUTIONS PAID FROM: 2001 2000 2001 2000
Ordinary Income $ -- $ 822,278 $ 161,652 $ 372,436
Short-Term capital gain -- 33,242 35,002 400,355
Long-Term capital gain 261,877 6,104,479 161,427 2,760,271
$ 261,877 $ 6,959,999 $ 358,081 $3,533,062
As of December 31, 2001, the components of distributable earnings on a tax basis were as follows:
KOBREN GROWTH KOBREN MODERATE GROWTH
Capital Loss Carryforward (expires in 2009) $ (1,548,882) $ (561,864)
Unrealized appreciation 3,706,474 751,877
$ 2,157,592 $ 190,013
Net investment income and realized gain and loss for federal income tax
purposes may differ from that reported in the financial statements because of
permanent book and tax basis differences. Permanent book and tax basis
differences of $(191,928), $26,382 and $165,546 were reclassified at December
31, 2001 between undistributed net investment income, accumulated net realized
loss on investments and paid-in capital, respectively, for the Kobren Growth
Fund. These reclasses related to short term capital gains dividends received and
net operating losses. Permanent book and tax basis differences of $35,052,
$(34,955) and $(97) were reclassified at December 31, 2001 between undistributed
net investment income, accumulated net realized loss on investments and paid-in
capital, respectively, for the Kobren Moderate Growth Fund. These reclasses
related to short term capital gains dividends received. The difference between
book basis and tax-basis unrealized appreciation is attributable to the tax
deferral of losses on wash sales.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the specific identified cost basis. Dividend income
is recognized on the ex-dividend date. Interest income is recognized on the
accrual basis. All discounts/premiums are accreted/amortized using the effective
yield method.
FEDERAL INCOME TAX -- Each 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. Certain of the Trust's other expenses are
allocated equally to those Funds which make up the Trust. Other expenses of the
Trust are allocated among the funds based upon relative net assets of each Fund.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
The Trust has entered into an investment advisory agreement (the "Advisory
Agreement") with Kobren Insight Management, Inc. ("KIM"). The Advisory Agreement
provides that each Fund pays KIM a fee, computed daily and paid monthly, at the
annual rate of 0.75% of each Fund's average daily net assets. KIM has
voluntarily agreed to limit each Fund's other operating expenses, exclusive of
payments made by an underlying fund or its adviser, to 0.25% of each Fund's
average daily net assets until January 1, 2003.
The Trust has also entered into an administration agreement (the
"Administration Agreement") with PFPC Inc. (the "Administrator"), a member of
PNC Financial Services Group. The Administrator also serves as the Trust's
transfer agent and dividend paying agent. Boston Safe Deposit and Trust Company,
an indirectly wholly-owned subsidiary of Mellon Bank Corporation, serves as the
Trust's custodian. Kobren Insight Brokerage, Inc. ("KIB"), an affiliate of KIM,
serves as distributor of the Funds' shares and bears all distribution costs. No
distribution fees are paid by the Funds.
For the year ended December 31, 2001 expense reimbursements are as follows:
EXPENSES REIMBURSED
BY INVESTMENT ADVISER OTHER REDUCTIONS (1)
Kobren Growth Fund $ 45,600 $ 24,879
Kobren Moderate Growth Fund 82,135 7,533
(1) Reimbursement to Funds of 12b-1 distribution fees paid to KIB by certain
fund investments held in the portfolios owned by the Funds.
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 Funds are subject to sub-transfer agent fees consisting of
broker-dealer and fund network fees at an annual rate of up to 0.10% of the
average daily balances of accounts invested through those networks. Costs of
$13,256 and $5,805 were incurred by Kobren Growth Fund and Kobren Moderate
Growth Fund, respectively, for the year ended December 31, 2001.
4. PURCHASES AND SALES
The aggregate amounts of purchases and sales of underlying funds and
investment securities, other than short-term securities, for the year ended
December 31, 2001, were as follows:
PURCHASES SALES
U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
Kobren Growth Fund $ -- $47,994,566 $ -- $ 49,194,866
Kobren Moderate Growth Fund -- 26,259,971 2,728,125 31,751,004
5. SHARES OF BENEFICIAL INTEREST
As of December 31, 2001, an unlimited number of shares of beneficial
interest, par value $0.001, was authorized for the Trust. Changes in shares of
beneficial interest were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 2001 DECEMBER 31, 2000
KOBREN GROWTH FUND: SHARES AMOUNT SHARES AMOUNT
Shares sold 687,505 $ 8,208,286 699,011 $ 10,519,049
Shares issued as reinvestment
of distributions 22,777 260,805 559,144 6,888,651
Shares redeemed (965,330) (11,157,621) (905,374) (13,597,874)
Net increase (decrease) (255,048) $ (2,688,530) 352,781 $ 3,809,826
KOBREN MODERATE GROWTH FUND:
Shares sold 70,607 $ 770,681 175,658 $ 2,249,527
Shares issued as reinvestment
of distributions 33,440 345,112 293,814 3,373,020
Shares redeemed (915,694) (9,740,110) (733,493) (9,506,078)
Net decrease (811,647) $ (8,624,317) (264,021) $(3,883,531)
At December 31, 2001, KIM and its affiliates owned 1,753,564 and 115,889 shares of Kobren Growth Fund
and Kobren Moderate Growth Fund, respectively.
6. ORGANIZATION EXPENSES
Expenses incurred in connection with the organization of each Fund were
amortized on a straight-line basis over a period of sixty months from the date
upon which each Fund commenced its operations.
7. RISK FACTORS OF THE FUND
Investing in underlying fund through a Kobren Insight 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 fund.
A fund, together with the other funds and 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, each 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.
8. SUBSEQUENT EVENT
At a meeting held on February 11, 2002, the Board of Trustees approved an
Agreement and Plan of Reorganization between Kobren Moderate Growth Fund and
Kobren Growth Fund in which Kobren Growth Fund will acquire the assets and
certain liabilities of Kobren Moderate Growth Fund on or about May 1, 2002. The
reorganization will be structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code.
9. TAX INFORMATION (UNAUDITED)
The percentage of income from direct obligations of the U.S. Government in
Kobren Growth Fund and Kobren Moderate Growth Fund was 8.49% and 12.70%,
respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Kobren Insight Funds and the Shareholders of Kobren
Growth Fund and Kobren Moderate Growth Fund: In our opinion, the accompanying
statements of assets and liabilities, including the portfolios of investments,
and the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of Kobren Growth Fund and Kobren Moderate Growth Fund (the "Funds") at
December 31, 2001, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2001 by correspondence with the custodian, provide a reasonable
basis for our opinion.
Boston, Massachusetts PricewaterhouseCoopers LLP
February 11, 2002
Additional Information (unaudited)
INFORMATION ABOUT TRUSTEES AND OFFICERS
Information pertaining to the Trustees and officers* of the Trust is set forth
below. The Statement of Additional Information (SAI) includes additional
information about the Trustees and is available without charge, upon request.
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF OTHER
TERM OF PORTFOLIOS IN TRUSTEESHIPS/
NAME, ADDRESS, AGE AND OFFICE AND FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH TRUST LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
TIME SERVED(1) DURING PAST 5 YEARS TRUSTEE TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
Edward B. Bloom 5 years Vice President Corporate Controller and 3 Mediregs, Inc.
c/o 20 William Street, Suite Treasurer of International Data Group
310 Inc., a publishing company.
Wellesley Hills, MA 02481
Age: 51, Trustee
- -------------------------------------------------------------------------------------------------------------------------
Arthur Dubroff 5 years Chief Financial Officer of Virtual 3 Virtual
c/o 20 William Street, Suite Communities, Inc, a software provider, Communities,
310 from July 2000 to the present; Managing Inc.
Wellesley Hills, MA 02481 Principal of Turnberry Consulting, LLC
Age: 51, Trustee from October 1999 to present; Executive
V.P.and Chief Financial Officer of Enhance
Financial Ser-vices Group, Inc. from July
1996 to September 1999.
- -------------------------------------------------------------------------------------------------------------------------
Robert I. Goldfarb 3 years Counsel to Andrx Corporation since March 3 None
c/o 20 William Street, Suite 2000; Partner at Hughes Hubbard & Reed
310 LLP, a law firm, and associated with the
Wellesley Hills, MA 02481 firm from July 1989 through July 2000.
Age: 46, Trustee
- -------------------------------------------------------------------------------------------------------------------------
Stuart J. Novick 5 years Senior Vice President and General Counsel 3 Mediregs, Inc.
c/o 20 William Street, Suite of Children's Hospital Boston since April
310 1997; Vice President and General Counsel
Wellesley Hills, MA 02481 of Children's Hospital Boston from April
Age: 51, Trustee 1986 to April 1997.
- -------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES(2)
- -------------------------------------------------------------------------------------------------------------------------
Eric M. Kobren 5 years President of Mutual Fund Investors 3 Mediregs, Inc.
20 William Street, Suite 310 Association, Inc. since 1985; President of Children's
Wellesley Hills, MA 02481 Kobren Insight Management, Inc. and Kobren Hospital
Age: 48 Insight Brokerage, Inc. since 1987. These Boston
Chairman and President are a financial publishing concern, a
registered investment advisory firm
and a registered broker-dealer,
respectively. Since 2001, Managing
Member of Alumni Capital, LLC, a
General Partner to a private
investment partnership.
- -------------------------------------------------------------------------------------------------------------------------
Michael P. Castellano 5 years Retired. From December 1994 to June 1997, 3 puraDYN
c/o 20 William Street, Suite Chief Administrative Officer of Kobren Filter
310 Insight Management, Inc. and a registered Technologies,
Wellesley Hills, MA 02481 representative of Kobren Insight Inc.
Age: 60, Trustee Brokerage, Inc.
- -------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
Eric J. Godes 5 years Managing Director of Kobren Insight N/A N/A
20 William Street, Suite 310 Management, Inc. and Managing Director and
Wellesley Hills, MA 02481 a registered representative of Kobren
Age: 40 Insight Brokerage, Inc. Since 2001,
Chief Financial Officer, Managing Director of Alumni Capital, LLC,
Vice President, Treasurer, a General Partner to a private investment
Secretary partnership.
- -------------------------------------------------------------------------------------------------------------------------
* The term "officer" means the president, vice president, secretary, treasurer, controller or any other officer who performs
a policy making function.
(1) Trustees will serve for an indefinite term until the earliest of a Trustee's: (i) removal by two-thirds of the Board of
Trustees or shareholders, (ii) resignation, (iii) death, (iv) bankruptcy or (v) adjudicated incompetence.
(2) "Interested person" of the Trust as defined in the Investment Company Act of 1940. Messrs. Kobren and
Castellano are each considered an "interested person" because of their affiliation with Kobren Insight
Management, Inc. and Kobren Insight Brokerage, Inc., which acts as the Trust's investment adviser and
distributor, respectively.
KOBREN INSIGHT FUNDS (THE "TRUST")
on behalf of
KOBREN GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
March ___, 2002
This statement of additional information is not a prospectus, but expands
upon and supplements the information contained in the prospectus of Kobren
Growth Fund, dated March ____, 2002. This statement of additional information
should be read in conjunction with the prospectus.
The Fund's prospectus is being delivered with this statement of additional
information. Additional copies of the prospectus may be obtained by writing to
the Fund at 20 William Street, Suite 310, P.O. Box 9150 Wellesley Hills,
Massachusetts 02481 or by telephoning the Fund toll free at (800)-4KOBREN
(1-800-456-2736).
This statement of additional information is accompanied by and incorporates
by reference the combined statement of additional information dated May 1, 2001
(the "combined SAI") of Kobren Growth Fund and Kobren Moderate Growth Fund
(collectively, the "Funds").
MANAGEMENT OF THE TRUST AND THE FUNDS
Information pertaining to the trustees and officers* of the Trust is set
forth below. The Statement of Additional Information (SAI) includes additional
information about the trustees and is available without charge, upon request.
- --------------------- -------------- -------------------------------------------- --------------- --------------
NUMBER OF OTHER
NAME, ADDRESS, AGE TERM OF PORTFOLIOS IN TRUSTEESHIPS/
AND OFFICE AND PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH LENGTH OF DURING PAST 5 YEARS OVERSEEN BY HELD BY
TRUST TIME SERVED(1) TRUSTEE TRUSTEE
- ----------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- --------------------- -------------- -------------------------------------------- --------------- --------------
Edward B. Bloom 5 years Vice President Corporate Controller and 3 Mediregs,
c/o 20 William Treasurer of International Data Group Inc.
Street, Suite 310 Inc., a publishing company.
Wellesley Hills, MA
02481
Age: 51, Trustee
- ----------------------------------------------------------------------------------------------------------------
Arthur Dubroff 5 years Chief Financial Officer of Virtual 3 Virtual
c/o 20 William Communities, Inc, a software provider, Communities,
Street, Suite 310 from July 2000 to the present; Managing Inc.
Wellesley Hills, MA Principal of Turnberry Consulting, LLC
02481 from October 1999 to present; Executive
Age: 51, Trustee V.P. and Chief Financial Officer of
Enhance Financial Ser-vices Group, Inc.
from July 1996 to September 1999.
- ----------------------------------------------------------------------------------------------------------------
Robert I. Goldfarb 3 years Counsel to Andrx Corporation since March 3 None
c/o 20 William 2000; Partner at Hughes Hubbard & Reed
Street, Suite 310 LLP, a law firm, and associated with the
Wellesley Hills, MA firm from July 1989 through July 2000.
02481
Age: 46, Trustee
- ----------------------------------------------------------------------------------------------------------------
Stuart J. Novick 5 years Senior Vice President and General Counsel 3 Mediregs,
c/o 20 William of Children's Hospital Boston since April Inc.,
Street, Suite 310 1997; Vice President and General Counsel
Wellesley Hills, MA of Children's Hospital Boston from April
02481 1986 to April 1997.
Age: 51, Trustee
- ----------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES(2)
- ----------------------------------------------------------------------------------------------------------------
Eric M. Kobren 5 years President of Mutual Fund Investors 3 Mediregs,
20 William Street, Association, Inc. since 1985; President of Inc.
Suite 310 Kobren Insight Management, Inc. and Kobren Children's
Wellesley Hills, MA Insight Brokerage, Inc. since 1987. These Hospital
02481 are a financial publishing concern, a Boston
Age: 48 registered investment advisory firm and a
Chairman and registered broker-dealer, respectively.
President Since 2001, Managing Member of Alumni
Capital, LLC, a General Partner to a
private investment partnership.
- ----------------------------------------------------------------------------------------------------------------
Michael P. 5 years Retired. From December 1994 to June 1997, 3 puraDYN
Castellano Chief Administrative Officer of Kobren Filter
c/o 20 William Insight Management, Inc. and a registered Technologies,
Street, Suite 310 representative of Kobren Insight Inc.
Wellesley Hills, MA Brokerage, Inc.
02481
Age: 60, Trustee
- ----------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------
Eric J. Godes 5 years Managing Director of Kobren Insight N/A N/A
20 William Street, Management, Inc. and Managing Director and
Suite 310 a registered representative of Kobren
Wellesley Hills, MA Insight Brokerage, Inc. Since 2001,
02481 Managing Director of Alumni Capital, LLC,
Age: 40 a General Partner to a private investment
Chief Financial partnership.
Officer, Vice
President,
Treasurer, Secretary
- ----------------------------------------------------------------------------------------------------------------
* The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
(1) Trustees serve for an indefinite term until the earliest of a trustee's:
(i) removal by a two-thirds vote of the Board of Trustees or shareholders,
(ii) resignation, (iii) death, (iv) bankruptcy or (v) adjudicated
incompetence.
(2) "Interested person" of the Trust as defined in the Investment Company Act
of 1940 as amended (the "1940 Act"). Messrs. Kobren and Castellano are each
considered an "interested person" because of their affiliation with Kobren
Insight Management, Inc. and Kobren Insight Brokerage, Inc., which acts as
the Trust's investment adviser and distributor, respectively.
The Board of Trustees has established an Audit Committee consisting of four
members, including a Chairman of the Committee. The Audit Committee members are
Messrs Dubroff (Chairman), Bloom, Novick and Goldfarb (the "Independent
Trustees"). The functions performed by the Audit Committee are to oversee the
integrity of the Trust's accounting policies, financial reporting process and
system of internal controls regarding finance and accounting. The Audit
Committee also monitors the independence and performance of the Trust's
independent auditors and provides an open avenue of communication among the
independent auditors, Trust management and the Board of Trustees. The Audit
Committee held one meeting during the fiscal year ended December 31, 2001.
The Board of Trustees has also established a Pricing Committee consisting
of two members, including a Chairman of the Committee. The Pricing Committee
members are Messrs. Kobren (Chairman) and Castellano. The Pricing Committee is
responsible for ensuring the fair valuation of the Funds' securities as may be
necessary from time to time.
Set forth in the table below is the dollar range of equity securities held
in the Funds and the aggregate dollar range of securities in the Fund complex
beneficially owned by each trustee as of December 31, 2001.
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES OVERSEEN BY
DOLLAR RANGE OF EQUITY TRUSTEE IN FAMILY OF
NAME OF TRUSTEE NAME OF FUND SECURITIES IN THE FUND INVESTMENT COMPANIES
--------------- ------------ ---------------------- --------------------
- ----------------------------------------------------------------------------------------------------------------------
Eric M. Kobren,
Chairman of the Board, President
- ----------------------------------------------------------------------------------------------------------------------
Michael P. Castellano
- ----------------------------------------------------------------------------------------------------------------------
Edward B. Bloom
- ----------------------------------------------------------------------------------------------------------------------
Arthur Dubroff
- ----------------------------------------------------------------------------------------------------------------------
Robert I. Goldfarb
- ----------------------------------------------------------------------------------------------------------------------
Stuart J. Novick
- ----------------------------------------------------------------------------------------------------------------------
The trustees who are not employed by KIM each receive from the Trust a
$5,000 annual retainer paid in quarterly installments, a $1,000 fee for each
board meeting attended and a $500 fee per committee meeting attended, plus
reimbursement for out-of-pocket expenses incurred in attending such meetings. No
officer, trustee or employee of KIM or any affiliate thereof, receives any
compensation from the Trust for serving as a trustee or officer of the Trust.
The table below shows the total fees which were paid to each of the
trustees who are not "interested persons" during the fiscal year ended December
31, 2001.
AGGREGATE PENSION OR
COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION
RECEIVED FROM ACCRUED (AS PART OF BENEFITS UPON FROM TRUST AND FUND
INDEPENDENT TRUSTEE THE TRUST FUND EXPENSES) RETIREMENT COMPLEX
------------------- ------------- ------------------- ---------------- -------------------
Edward B. Bloom
Arthur Dubroff
Robert I. Goldfarb
Stuart J. Novick
MATERIAL RELATIONSHIPS OF THE INDEPENDENT TRUSTEES
For purposes of the statements below:
o the immediate family members of any person are their spouse, children in
the person's household (including step and adoptive children) and any
dependent of the person.
o an entity in a control relationship means any person who controls, is
controlled by or is under common control with the named person.
o a related fund is an registered investment company or an entity exempt from
the definition of an investment company pursuant to Sections 3(c)(1) or
3(c)(7) of the 1940 Act, in each case for which KIM or any of its
affiliates acts as investment adviser or for which KIB or any of its
affiliates acts as principal underwriter. For example, the related funds of
the fund include all of the Kobren Insight funds.
As of December 31, 2001, none of the Independent Trustees, nor any of the
members of their immediate family, beneficially own any securities issued by KIM
to or any other entity in a control relationship to KIM or KIB or any person in
a control relationship to Kobren Insight Brokerage ("KIB"). During the calendar
years 2000 and 2001, none of the Independent Trustees, nor any member of their
immediately family, had any direct or indirect interest (the value of which
exceeds $60,000), whether by contract, arrangement or otherwise, in KIM or any
other entity in a control relationship to KIM or KIB or any person that controls
KIB. During the calendar years 2000 and 2001, none of the Independent Trustees,
nor any member of their immediately family, has had an interest in a transaction
or a series of transactions in which the aggregate amount involved exceeded
$60,000 and to which any of the following were a party (each a "fund-related
party"):
o either Fund
o an officer of either Fund
o a related fund;
o an officer of any related fund;
o KIM;
o KIB;
o an officer of KIB;
o any affiliate of KIM or KIB; or
o an officer of any such affiliate.
During the calendar years 2000 and 2001, none of the Independent Trustees,
nor any members of their immediate family, had any relationship (the value of
which exceeded $60,000) with any fund-related party, including, but not limited
to, relationships arising out of (i) the payments for property and services,
(ii) the provisions of legal services, (iii) the provision of investment bonding
services (other than as a member of the underwriting syndicate) or (iv) the
provision of consulting service.
During the calendar years 2000 and 2001, Messrs. Bloom and Novick, both
Independent Trustees, and Mr. Kobren, Chairman and President of the Trust and an
interested trustee, served as members of the board of directors of Mediregs,
Inc.
None of the Trust's trustees or officers has any arrangement with any other
person pursuant to which the trustee or officer serve in that capacity. During
the calendar years 2000 and 2001, none of the Independent Trustees, nor any
member of their immediate family, had any position, including as an officer,
employee, director or partner, with any of:
o the Trust
o an officer of the Trust
o a related fund;
o an officer of any related fund;
o KIM;
o KIB; or
o any other entity in a control relationship to the Trust.
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN APPROVING THE INVESTMENT
ADVISORY AGREEMENT.
The 1940 Act requires that the investment advisory agreement between KIM
and the Trust on behalf of each Fund be approved annually both by the Board of
Trustees and also by a majority of the Independent Trustees voting separately.
The Independent Trustees determined that the terms of the investment advisory
agreement are fair and reasonable and approved of the investment advisory
agreement as being in the best interests of the fund. The Independent Trustees
believe that the current investment advisory agreement enables the fund to enjoy
high quality investment advisory services at costs which they deem appropriate,
reasonable and in the best interests of the Trust and its shareholders. In
making such determinations, the Independent Trustees met independently from the
interested trustees of the Trust and any officers of KIM or its affiliates. The
Independent Trustees also relied upon the assistance of counsel to the
Independent Trustees and counsel to the Trust.
In evaluating the investment advisory agreement, the Independent Trustees
reviewed materials furnished by KIM, including information regarding KIM, its
affiliates and personnel, operations and financial condition. The Independent
Trustees discussed with representatives of KIM the operations of the Trust and
the capabilities of KIM to provide advisory and other services to the Trust.
Among other information, the Independent Trustees reviewed information
regarding:
o the investment performance of each Fund;
o the fees charged by KIM for investment advisory services, as well as
other compensation received by KIB;
o the projected total operating expenses of each Fund;
o the investment performance, fees and total expenses of investment
companies with similar objectives and strategies managed by other
investment advisers;
o the experience of the investment advisory and other personnel
providing services to the fund and the historical quality of the
services provided by KIM; and
o the profitability to KIM of managing each Fund.
The Independent Trustees specifically considered the following as relevant
to their recommendations: (1) the favorable history, reputation, qualification
and background of KIM, as well as the qualifications of their personnel and
their respective financial conditions; (2) that the fee and expense ratios of
each Fund are reasonable given the quality of services expected to be provided
and are comparable to the fee and expense ratios of similar investment
companies; (3) the relative performance of the Funds since commencement of
operations to comparable investment companies and unmanaged indices; and (4)
other factors that the Independent Trustees deemed relevant. The Independent
Trustees deemed each of these factors to be relevant to their consideration of
the investment advisory agreement.
CALCULATION OF PERFORMANCE DATA.
Each Fund may, from time to time, advertise certain total return
information. A Fund's average annual total return, including average annual
total return after taking into account taxes paid on distributions from the Fund
and taxes paid upon the complete liquidation of the investment in the Fund, is
calculated by finding the average annual compound rates of return over the 1-,
5-, and 10-year periods (or for the periods of the Fund's operations if shorter)
that would equate the initial amount invested to the ending value according to
the following formulas:
Average annual return : P(1+T)(n) = ERV
Average annual return after taxes on distributions: P(1+T1)(n) = ATV[D]
Average annual return after taxes on distributions and redemptions:
P(1+T2)(n) = ATV[DR]
Where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
T1 = average annual total return (after taxes on distributions).
T2 = average annual total return (after taxes on distributions and
redemptions).
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year
periods (or fractional portion).
ATV[D] = ending value of a hypothetical payment made at the beginning of
the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or
fractional portion), after taxes on fund distributions but not after taxes on
redemptions.
ATV[DR] = ending value of a hypothetical payment made at the beginning of
the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or
fractional portion), after taxes on fund distributions and redemptions.
For average annual total return calculations which reflect the payment of
taxes, the highest individual marginal federal income tax rates in effect on the
date of reinvestment of the dividend is applied to each component of the
distribution (e.g., ordinary income, short-term capital gain or long-term
capital gain). No taxes are due on the portions of the distributions which are
classified as exempt interest or which are non-taxable, such as returns of
capital. When calculating taxes on redemptions, a complete redemption at the end
of the 1-, 5- or 10-year periods is assumed and net redemption proceeds are
determined by subtracting capital gains taxes resulting from the redemption and
adding the benefits, if any, from capital losses resulting from the redemption.
The highest federal individual capital gains rate for each type of gain (e.g.,
short-term or long-term) in effect on the date of the redemption is used to
determine the net taxes due on the redemption. The applicable tax rates used for
determining taxes on distributions and redemptions may vary over the measurement
periods. State and local taxes are not considered in these calculations.
The table shows the Funds' average annual total return for the one-year,
five-year and since inception periods ended December 31, 2001 were as follows:
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(for periods ended December 31, 2001)
- ------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS SINCE INCEPTION
INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------
KOBREN GROWTH FUND return before taxes (7.28)% 6.83% 7.28% 12/16/96
------------------------------------------------------------------
return after taxes on (7.36)% 5.71% 6.16%
distributions
------------------------------------------------------------------
return after taxes on (4.35)% 5.46% 5.83%
distributions and sale
of fund shares
- ------------------------------------------------------------------------------------------------------------
KOBREN MODERATE GROWTH return before taxes (9.01)% 5.85% 5.96% 12/24/96
FUND
------------------------------------------------------------------
return after taxes on (9.48)% 4.37% 4.47%
distributions
------------------------------------------------------------------
return after taxes on (5.35)% 4.41% 4.50%
distributions and sale
of fund shares
- ------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT KOBREN GROWTH FUND AND KOBREN MODERATE GROWTH FUND
Except as provided above, the following table shows where in the Funds'
combined SAI you can find additional information about each Fund.
- ----------------------------------------------------------------------------------------------------------------------
TYPE OF INFORMATION HEADINGS IN COMBINED SAI OF BOTH FUNDS
- ----------------------------------------------------------------------------------------------------------------------
Fund history X. Description of the Trust
- ----------------------------------------------------------------------------------------------------------------------
Description of each Fund and its investments I. Investment Objectives and Policies
and risks
II. Investment Restrictions
- ----------------------------------------------------------------------------------------------------------------------
Management of the Funds, including the board of III. Management of the Trust and the Funds
trustees, officers and trustees, Trustees and
Officers compensation
- ----------------------------------------------------------------------------------------------------------------------
Control persons, principal holders of III. Management of the Trust and the Funds:
securities and management ownership
A. Trustees and Officers: Control Persons and
Principal Holders of Securities
- ----------------------------------------------------------------------------------------------------------------------
Investment advisory and other services III. Management of the Trust and the Funds:
B. Investment Adviser
C. Distributor
D. Administrator, Transfer Agent and Dividend
Paying Agent
IX. Custodian, Counsel and Independent Accountants
- ----------------------------------------------------------------------------------------------------------------------
Brokerage allocation and other practices VI. Portfolio Transactions
- ----------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest X. Description of the Trust
- ----------------------------------------------------------------------------------------------------------------------
Purchase, redemption and pricing of shares IV. Purchase, Redemption and Determination of Net Asset Value
V. Special Redemptions
- ----------------------------------------------------------------------------------------------------------------------
Taxation of the Funds VIII. Dividends, Distributions and Taxes
- ----------------------------------------------------------------------------------------------------------------------
Underwriters III. Management of the Trust and the Funds:
C. Distributor
- ----------------------------------------------------------------------------------------------------------------------
Calculation of performance data VII. Performance Information
A. Total Return
B. Non-Standardized Total Return
C. Other Information Concerning Fund Performance
- ----------------------------------------------------------------------------------------------------------------------
Financial statements XII. Financial Statements
This section incorporates by
reference the Funds' annual
report dated December 31, 2001.
- ----------------------------------------------------------------------------------------------------------------------
KOBREN GROWTH FUND
KOBREN MODERATE GROWTH FUND
PROFORMA COMBINING SCHEDULE OF INVESTMENTS (UNAUDITED)
DECEMBER 31, 2001
SHARES MARKET VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
KOBREN
KOBREN MODERATE KOBREN
GROWTH GROWTH KOBREN MODERATE PROFORMA
FUND FUND PROFORMA DESCRIPTION GROWTH FUND GROWTH FUND ADJUSTMENT PROFORMA
- -----------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE - 26.80%
138,378 47,052 185,430 Longleaf Partners Fund $ 3,391,654 $ 1,153,244 $ - $ 4,544,898
354,764 96,566 451,330 Oakmark Fund - Class I 12,512,530 3,405,871 - 15,918,401
574 574 1,148 Oakmark Select Fund - Class I 15,643 15,644 - 31,287
-----------------------------------------------------------
15,919,827 4,574,759 - 20,494,586
-----------------------------------------------------------
LARGE CAP GROWTH - 21.40%
149,445 64,995 214,440 Fidelity Blue Chip Growth Fund 6,417,174 2,790,884 - 9,208,058
308,196 200,664 508,860 Marsico Growth & Income Fund 4,333,231 2,821,333 - 7,154,564
-----------------------------------------------------------
10,750,405 5,612,217 - 16,362,622
-----------------------------------------------------------
LARGE CAP VALUE - 11.87%
121,741 - 121,741 Fidelity Equity Income Fund 5,937,291 - - 5,937,291
134,610 - 134,610 Fidelity Select Energy Portfolio 3,140,455 - - 3,140,455
-----------------------------------------------------------
9,077,746 - - 9,077,746
-----------------------------------------------------------
MID CAP GROWTH - 7.22%
169,789 - 169,789 Fidelity Select Medical Equipment &
Systems Fund 2,811,699 - - 2,811,699
245,036 - 245,036 MFS Mid Cap Growth Fund 2,685,594 - - 2,685,594
697 - 697 RS Emerging Growth Fund 22,322 - - 22,322
-----------------------------------------------------------
5,519,615 - - 5,519,615
-----------------------------------------------------------
LARGE CAP BLEND - 7.62%
189,446 16,144 205,590 Fidelity Dividend Growth Fund 5,367,016 457,349 - 5,824,365
-----------------------------------------------------------
SMALL CAP VALUE - 10.91%
234,073 150,505 384,578 Longleaf Partners Small Cap Fund 5,074,709 3,262,958 - 8,337,667
-----------------------------------------------------------
BOND - 13.96%
- 268,706 268,706 PIMCo High Yield Inst'l Fund - 2,515,084 - 2,515,084
348,840 452,796 801,636 PIMCo Real Return Inst'l Fund 3,551,194 4,609,463 - 8,160,657
-----------------------------------------------------------
3,551,194 7,124,547 - 10,675,741
-----------------------------------------------------------
MONEY MARKET FUND - 0.38%
185,091 106,086 291,177 Dreyfus Cash Mgmt. Plus Fund 185,091 106,086 - 291,177
-----------------------------------------------------------
TOTAL MUTUAL FUNDS $55,445,603 21,137,916 - 76,583,519
-----------------------------------------------------------
(COST $51,563,751 AND $20,375,365)
TOTAL INVESTMENTS
(COST $51,563,751 AND $20,375,365*) 55,445,603 21,137,916 - 76,583,519
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS (111,054) (13,854) 1,632 (123,276)
-----------------------------------------------------------
TOTAL NET ASSETS $55,334,549 $21,124,062 $ 1,632 $ 76,460,243
-----------------------------------------------------------
- ---------------------------------------------------------------
* Cost for Federal income tax purposes is $72,125,168.
KOBREN GROWTH FUND
KOBREN MODERATE GROWTH FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
DECEMBER 31, 2001
---------------------------------------------------------------------
KOBREN PROFORMA
KOBREN MODERATE PROFORMA COMBINED
GROWTH FUND GROWTH FUND ADJUSTMENT (N0TE 1)
---------------------------------------------------------------------
Assets:
Investments, at value $ 55,445,603 $21,137,916 $ - $76,583,519
Dividends receivable 6,010 28,215 - 34,225
Receivable for fund shares sold 1,383 765 - 2,148
Prepaid expenses and other assets 13,386 4,140 - 17,526
---------------------------------------------------------------------
Total assets 55,466,382 21,171,036 - 76,637,418
---------------------------------------------------------------------
LIABILITIES:
Payable for fund shares redeemed 58,315 10,447 - 68,762
Investment advisory fee payable 31,017 7,580 - 38,597
Accrued Trustees' fees and expenses 4,329 2,011 - 6,340
Accrued expenses and other payables 38,172 26,936 (1,632) (a) 63,476
---------------------------------------------------------------------
Total liabilities 131,833 46,974 (1,632) 177,175
---------------------------------------------------------------------
NET ASSETS: $ 55,334,549 $21,124,062 $ 1,632 $76,460,243
---------------------------------------------------------------------
Investments, at cost $ 51,563,751 $20,375,365 $ - $71,939,116
---------------------------------------------------------------------
NET ASSETS CONSISTS OF:
Undistributed net investment income $ - $ - $ 1,632 $ 1,632
Accumulated net realized loss on investments sold (1,724,260) (572,538) - (2,296,798)
Net unrealized appreciation of investments 3,881,852 762,551 - 4,644,403
Par value (Shares of beneficial interest, $0.001 per share) 4,866 2,057 - 6,923
Paid-in capital in excess of par value 53,172,091 20,931,992 - 74,104,083
---------------------------------------------------------------------
NET ASSETS $ 55,334,549 $21,124,062 $ 1,632 $76,460,243
---------------------------------------------------------------------
NET ASSETS $ 55,334,549 $21,124,062 $ 1,632 76,460,243
SHARES OUTSTANDING 4,866,400 2,057,276 (199,376) (b) 6,724,300
Net asset value, offering and redemption price per share $ 11.37 $ 10.27 N/A $ 11.37
---------------------------------------------------------------------
(a) Reflects expected savings of duplicative costs.
(b) Reflects net effect of combining existing Kobren Moderate Growth Fund into the Kobren Growth Fund.
KOBREN GROWTH FUND
KOBREN MODERATE GROWTH FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2001
KOBREN GROWTH FUND
KOBREN MODERATE GROWTH FUND
---------------------------------------------------------------------
KOBREN PROFORMA
KOBREN MODERATE PROFORMA COMBINED
GROWTH FUND GROWTH FUND ADJUSTMENT (N0TE 1)
---------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 386,907 $ 429,452 $ - $ 816,359
Interest - 7,609 - 7,609
---------------------------------------------------------------------
Total investment income 386,907 437,061 - 823,968
---------------------------------------------------------------------
EXPENSES:
Investment advisory fee 452,786 212,244 - 665,030
Administration fees 67,500 67,500 (67,500) (a) 67,500
Transfer agent fees 49,231 39,622 (31,967) (b) 56,886
Custodian fees 3,026 3,023 (3,023) (b) 3,026
Professional fees 20,705 9,697 (9,675) (b) 20,727
Trustees' fees and expenses 14,275 6,532 - 20,807
Registration and filing fees 14,587 13,758 (14,379) (b) 13,966
Amortization of organization costs 4,003 2,003 6,006
Other 23,201 10,748 (2,823) (b) 31,126
---------------------------------------------------------------------
Total expenses 649,314 365,127 (129,367) 885,074
Expenses reimbursed by investment adviser (45,600) (82,135) 127,735 (c) -
Other reductions (24,879) (7,533) - (32,412)
---------------------------------------------------------------------
Net expenses 578,835 275,459 (1,632) 852,662
---------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (191,928) 161,602 1,632 (28,694)
---------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from security transactions (2,192,087) (811,416) - (3,003,503)
Short term capital gain distributions received 26,417 35,002 - 61,419
Long term capital gain distributions received 709,196 366,285 - 1,075,481
Change in unrealized depreciation of securities (3,171,868) (2,568,673) - (5,740,541)
---------------------------------------------------------------------
Net realized and unrealized loss on investments (4,628,342) (2,978,802) - (7,607,144)
---------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(4,820,270) $(2,817,200) $ 1,632 $(7,635,838)
=====================================================================
(a) Reflects adjustment to the acquired fund contractual fee level.
(b) Reflects expected savings of duplicative costs.
(c) Reflects adjustment to the acquired fund's contractual expense limitation.
KOBREN GROWTH FUND
KOBREN MODERATE GROWTH FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION
The Kobren Funds, 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 management investment company. As of December 31, 2001, the
Trust offered three managed investment portfolios. The unaudited Pro Forma
Combining Portfolio of Investments and the unaudited Pro Forma Statement of
Assets and Liabilities assumes the exchange described in the next paragraph
occurred as of December 31, 2001 and the unaudited Pro Forma Combining Statement
of Operations assumes the exchange occurred as of January 1, 2001. These
statements have been derived from books and records utilized in calculating the
net asset value of each fund at December 31, 2001 and for the year then ended.
The pro forma statements give effect to the proposed transfer of substantially
all of the assets and stated liabilities of the Kobren Moderate Growth Fund in
exchange for shares of the Kobren Growth Fund. Under generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity and the results of operations of the
Kobren Moderate Growth Fund for pre-combination periods will not be restated.
The pro forma statements do not reflect the expenses of either fund in carrying
out its obligations under the proposed Agreement and Plan of Reorganization. The
Kobren Moderate Growth Fund will distribute all of its ordinary income and
capital gains, if any, prior to the Fund merging.
The unaudited Pro Forma Combining Financial Statements should be read in
conjunction with the historical financial statements of the funds incorporated
by reference in the Statement of Additional Information.
For the year ended December 31, 2001, the Kobren Growth Fund's investment
advisory fee was computed based on the annual rate of 0.75% of its average daily
net assets. The administration fee was computed based on the minimum annual rate
of $67,500.
2. SECURITY VALUATION
The underlying funds are valued according to their stated net asset value. Each
Fund's other investment securities are valued at the last sales price on the
primary securities exchange or national securities market on which such
securities are traded. Securities not listed on an exchange or national
securities market, or securities in which there are 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 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.
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional
shares of the Kobren Growth Fund that would have been issued at December 31,
2001 in connection with the proposed reorganization. The pro forma number of
shares outstanding of 6,724,300 consists of 1,857,900 shares assumed issued in
the reorganization plus 4,866,400 shares of the Kobren Growth Fund at December
31, 2001.
4. PRO FORMA ADJUSTMENTS AND PRO FORMA COMBINED COLUMNS
The pro forma adjustments and pro forma combined columns of the statement of
operations reflect the adjustments necessary to show expenses at the rates which
would have been in effect if the Kobren Moderate Growth Fund was included in the
Kobren Growth Fund for the period January 1, 2001 to December 31, 2001.
Investment Advisory, Administration and 12b-1 fees in the pro forma combined
column are calculated at the rates in effect for the Kobren Growth Fund based
upon the combined net assets of the Kobren Moderate Growth Fund and Kobren
Growth Fund.
The pro forma Statement of Assets and Liabilities and Schedule of Investments
give effect to the proposed transfer of such assets as if the reorganization had
occurred at December 31, 2001.
5. COSTS OF REORGANIZATION
Reorganization expenses incurred by the Kobren Funds will be paid by each Fund.
Reorganization expenses include, without limitation: (a) expenses associated
with the preparation and filing of this Prospectus/Proxy Statement; (b) postage;
(c) printing; (d) accounting fees; (e) legal fees incurred by each Fund; (f)
solicitation costs; and (g) brokerage cost of any necessary rebalancing of the
Funds' investment portfolios.
6. FEDERAL INCOME TAXES
The Fund has elected to be treated as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and to distribute substantially all of
its respective taxable income. Accordingly, no provisions for federal income
taxes have been made in the accompanying financial statements at this time.
PART C:
OTHER INFORMATION
Item 15. Indemnification.
The response to this Item 15 is incorporated by reference to Item 27 of
Pre-Effective Amendment No. 1 (Accession No. 0000927405-96-000432) to the
Registrant's Registration Statement on Form N-1A as filed with the SEC on
November 8, 1996.
Item 16. Exhibits.
(1)(a)(i) Declaration of Trust is incorporated by reference to Exhibit 1 of
the Registrant's Registration Statement on Form N-1A (File Nos.
333-12075, 811-07813) as filed with the SEC on September 16, 1996
(Accession No. 0000927405-96-000374)(the "Form N-1A Registration
Statement").
(a)(ii) Amendment to the Declaration of Trust on behalf of Kobren Delphi
Value Fund is incorporated by reference to Exhibit 23(a) of
Post-Effective Amendment No. 9 to the Form N-1A Registration
Statement as filed with the SEC on December 17, 1998 (Accession No.
0000927405-98-000378) ("Post-Effective Amendment No. 9").
(2) By-Laws are incorporated by reference to Exhibit 2 of the Form N-1A
Registration Statement.
(3) Not Applicable.
(4) Form of Agreement and Plan of Reorganization is filed herewith as
Exhibit A to Part A of this Registration Statement.
(5) Not Applicable.
(6)(a) Investment Advisory Agreement with Kobren Insight Management, Inc. dated
November 15, 1996 is incorporated by reference to Exhibit 5 of
Post-Effective Amendment No. 2 to the Form N-1A Registration Statement
filed with the SEC on April 22, 1998 (Accession No.
0000927405-98-000133) ("Post-Effective Amendment No. 2").
(b) Amendment to Investment Advisory Agreement with Kobren Insight
Management, Inc. on behalf of Kobren Delphi Value Fund is incorporated
by reference to Exhibit 23(d) of Post-Effective Amendment No. 9.
(c) Form of Amendment to Investment Advisory Agreement with Kobren Insight
Management, Inc. on behalf of Kobren Growth Fund and Kobren Moderate
Growth Fund is incorporated by reference to Exhibit (d) of
Post-Effective Amendment No. 12 to the Form N-1A Registration Statement
filed with the SEC on April 30, 1999 (Accession No.
0000927405-99-000161) ("Post-Effective Amendment No. 12").
(d) Subadvisory Agreement with Delphi Management, Inc. on behalf of Kobren
Delphi Value Fund is incorporated by reference to Exhibit 23(d) of
Post-Effective Amendment No. 9.
(7)(a) Distribution Agreement with Kobren Insight Brokerage, Inc. dated
November 15, 1996 is incorporated by reference to Exhibit 6 of
Post-Effective Amendment No. 2.
(b) Amendment to Distribution Agreement with Kobren Insight Brokerage, Inc.
on behalf of Kobren Delphi Value Fund is incorporated by reference to
Exhibit 23(e) of Post-Effective Amendment No. 9.
(c) Form of Amendment to Distribution Agreement with Kobren Insight
Brokerage, Inc. on behalf of Kobren Growth Fund is incorporated by
reference to Exhibit (e) of Post-Effective Amendment No. 12.
(8) Not Applicable.
(9)(a) Custody Agreement with Boston Safe Deposit and Trust Company dated
November 18, 1996 is incorporated by reference to Exhibit 8(a) of
Post-Effective Amendment No. 2.
(b) Amendment to Custody Agreement with Boston Safe Deposit and Trust
Company dated January 8, 1998 is incorporated by reference to Exhibit
8(b) of Post-Effective Amendment No. 2.
(c) Sub-Custodian Agreement with Boston Safe Deposit and Trust Company and
National Financial Services Corporation dated January 8, 1998 is
incorporated by reference to Exhibit 8(c) of Post-Effective Amendment
No. 2.
(d) Amendment to Custody Agreement with Boston Safe Deposit and Trust
Company on behalf of Kobren Delphi Value Fund dated October 8, 1998 is
incorporated by reference to Exhibit 23(g) of Post-Effective Amendment
No. 5 to the Form N-1A Registration Statement as filed with the SEC on
October 27, 1998 (Accession No. 0000927405-97-000313) ("Post-Effective
Amendment No. 5").
(10)(a) Plan of Distribution pursuant to Rule 12b-1 on behalf of the Kobren
Delphi Value Fund is incorporated by reference to Exhibit 23(m) of
Post-Effective Amendment No. 5.
(b) Plan pursuant to Rule 18f-3 on behalf of Kobren Delphi Value Fund is
incorporated by reference to Exhibit 23(o) of Post-Effective Amendment
No. 5.
(11) Opinion of Hale and Dorr LLP concerning legality of shares of Kobren
Growth Fund is filed herewith.
(12) Form of opinion of Hale and Dorr LLP concerning the tax matters and
consequences to shareholders of the reorganization discussed in the
prospectus is filed herewith.
(13)(a) Transfer Agency Agreement with First Data Investor Services Group, Inc.
dated November 15, 1996 is incorporated by reference to Exhibit 9(a) of
Post-Effective Amendment No. 1 to the Form N-1A Registration Statement
as filed with the SEC on June 13, 1997 (Accession No.
0000927405-97-000202) ("Post-Effective Amendment No. 1").
(b) Amendment to Transfer Agency Agreement with First Data Investor Services
Group, Inc. dated June 30, 1998 is incorporated by reference to Exhibit
9(b) of Post-Effective Amendment No. 3 to the Form N-1A Registration
Statement as filed with the SEC on September 4, 1998 (Accession No.
0000927405-98-000293) ("Post-Effective Amendment No. 3").
(c) Amendment to Transfer Agency Agreement with First Data Investor Services
Group, Inc. on behalf of Kobren Delphi Value Fund is incorporated by
reference to Exhibit 23(h) of Post-Effective Amendment No. 9.
(d) Administration Agreement with First Data Investor Services Group, Inc.
dated November 15, 1996 is incorporated by reference to Exhibit 9(b) of
Post-Effective Amendment No. 1.
(e) Amendment to Administration Agreement with First Data Investor Services
Group, Inc. on behalf of Kobren Delphi Value Fund is incorporated by
reference to Exhibit 23(h) of Post-Effective Amendment No. 9.
(14) Consents of Independent Accountants is filed herewith.
(15) Not Applicable.
(16) Power of attorney is filed herewith.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
registration statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, KOBREN INSIGHT FUNDS, has duly caused this Registration Statement on
Form N-14 to be signed on its behalf by the undersigned, duly authorized, in the
City of Wellesley, and Commonwealth of Massachusetts on the 15th day of
February, 2002.
KOBREN INSIGHT FUNDS
By: /s/ Eric M. Kobren
Eric M. Kobren, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
- ---------------------------------------- -------------------------------------------------- --------------------------
Signatures Title Date
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Eric M. Kobren President, Chairman of the Board and Trustee February 15, 2002
- ----------------------- (Chief Executive Officer)
Eric M. Kobren
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Eric J. Godes Treasurer, Chief Financial Officer and Chief February 15, 2002
- ----------------------- Accounting Officer
Eric J. Godes
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Edward B. Bloom Trustee February 15, 2002
- -----------------------
Edward B. Bloom
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Michael P. Castellano Trustee February 15, 2002
- -----------------------
Michael P. Castellano
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Arthur Dubroff Trustee February 15, 2002
- -----------------------
Arthur Dubroff
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Robert I. Goldfarb Trustee February 15, 2002
- -----------------------
Robert I. Goldfarb
- ---------------------------------------- -------------------------------------------------- --------------------------
/s/ Stuart J. Novick Trustee February 15, 2002
- -----------------------
Stuart J. Novick
- ---------------------------------------- -------------------------------------------------- --------------------------
EXHIBIT INDEX
Exhibit
Number Description
(11) Opinion of Hale and Dorr LLP concerning legality of shares of
Kobren Growth Fund
(12) Form of opinion of Hale and Dorr LLP concerning tax matters and
consequences to shareholders of the reorganization
(14) Consents of Independent Accountants
(16) Power of attorney