<PAGE>
- ----------------------------------------
ANNUAL REPORT
- ----------------------------------------
- ----------------------------------------
DECEMBER 31, 1995 [ARTWORK APPEARS HERE]
- ----------------------------------------
- ----------------------------------------
YOUR FOUNDATION FOR INVESTMENT STRENGTH
- ----------------------------------------
The The Kent Limited Term Tax-Free Fund
Kent The Kent Intermediate Tax-Free Fund
Funds/(R)/ The Kent Tax-Free Income Fund
The Kent Michigan Municipal Bond Fund
<PAGE>
- ----------------------------------------
MESSAGE TO SHAREHOLDERS
- ----------------------------------------
Dear Kent Fund Shareholder:
The 1995 annual report to shareholders of The Kent Funds includes a new
feature - a "Market Overview" from Kent Fund portfolio managers that explains
how and why municipal bond markets performed as they did in 1995. It also
explains the strategy followed by the portfolio managers to increase your
returns while keeping risk low. In addition, you will continue to find
information about the performance of individual funds.
While we have changed the format of our annual report to keep investors
better informed, we have not altered our investment goal of providing investors
with good value and opportunities for growth without undue risk.
This report provides a great deal of information about The Kent Funds, but
you may still have questions. Please call us at 1-800-633-KENT (1-800-633-5368).
A Kent Funds Specialist is available to assist you. We are always pleased to
answer questions from shareholders.
Sincerely,
The Kent Funds
-----
1
-----
<PAGE>
- ----------------------------------------
TAX-FREE BOND MARKET OVERVIEW
- ----------------------------------------
The municipal bond market recorded one of its best years ever during 1995.
The Lehman Brothers Municipal Bond Index, which represents the broad universe of
municipal bonds, posted a 17.5% return for 1995. It was the fourth best return
since 1980, when the index was established, and the best return since 1986, when
the index gained 19.3%.
Reflecting the municipal bond market as a whole, the Kent municipal bond
funds also posted strong returns during 1995, largely because of declining
interest rates. Interest rates declined throughout 1995 because of the economy's
perceived "soft landing" and subsequent efforts by the Federal Reserve Board
(the "Fed") to lower rates. As the accompanying table shows, the yield on the
30-year AAA-rated general obligation municipal bonds declined from 6.55% at the
end of 1994 to 5.20% at the end of 1995.
The municipal bond market, even more than the bond market as a whole,
entered 1995 in a state of disarray. With the Fed increasing rates a half-dozen
times during 1994 to slow down the economy, investors witnessed one of the
largest increases in interest rates on record. With rising rates creating a
steady decline in the value of municipal bonds, investors began selling their
bonds to stem their losses. The bankruptcy of Orange County, which was caused by
investments in high-risk derivatives, added to investors' woes.
The Kent municipal bond funds took advantage of the declining market by
systematically increasing the average maturity of each Fund. When a 10-year,
high-quality bond that is yielding 4.60% is purchased for The Kent Funds and the
same bond later becomes available with a yield of 5.75% because of rising
interest rates, typically our strategy is to buy more. We recognize that trends
often continue and that the yield of the same bond may later climb to 6.75%.
While no one can say for certain at what point interest rates will peak when
they are increasing, the goal of minimizing risk while maximizing returns can
best be achieved by consistently purchasing more bonds to lengthen the average
maturity of the funds.
Likewise, when interest rates decline, we typically reduce the average
maturity of The Kent Funds, locking in gains by selling some of the assets that
have increased in price and declined in yield. This strategy worked well for the
Kent municipal bond funds in 1995.
Flat-Tax Proposals
Flat-tax proposals were the other major factor impacting municipal bond
performance in 1995. When a flat tax system replaces a gradu-
- --------------------------------------------------------------------------------
AAA-Rated General Obligations Municipal Bond Yields
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
- -----
2
- -----
<PAGE>
----------------------------------------
TAX-FREE BOND MARKET OVERVIEW
----------------------------------------
ated tax system, only earned income is taxed. Since capital gains and interest
income would no longer be taxed, the tax-free status of municipal bonds would no
longer provide an advantage to investors. Fear that a flat tax system would be
approved caused municipal bonds to be priced at higher yields relative to U.S.
Treasury securities. Historically, 30-year, AAA-rated general obligations
municipal bond yields are, on average, 83% as high as yields of U.S. Treasury
bonds with comparable maturities. At the end of September, 1995, however, such
bonds had yields 90% as high as yields of U.S. Treasuries with the same
maturity. Under these conditions, even an investor in an 11% tax bracket would
theoretically be better off owning the tax-free municipal bond than the U.S.
Treasury security. Some type of tax reform is likely, but, given the impact of a
flat-tax on government financing, we believe it is unlikely that a flat-tax
proposal will be adopted.
OTHER FACTORS
The Orange County crisis created an opportunity to purchase high-quality
California municipal bonds at bargain prices. Many investors feared that other
municipalities in California and throughout the nation had followed Orange
County's risky practice of leveraging derivative investments. Given the State of
California's already weak economy, California bonds became attractively priced
relative to other municipal bonds.
Typically, California bonds trade at lower yields than the bonds of other
states. However, the supply of California municipals sometimes exceeds the
demand; when that happens, the yield rises to increase demand and clear the
market. With some investors refusing to purchase California paper, yields had to
increase more on a relative basis than they normally would. After thorough
credit analyses, The Kent Municipal Bond Funds purchased high-quality California
bonds as long-term investments.
The low level of new municipal issues also played a role in tax-free fund
performance during 1995. Securities Data Company tallied an aggregate of $156.2
billion in municipal issues during 1995, a decline from $164.5 billion in 1994
and well below 1993's record of $292.0 billion. The low supply was somewhat
positive for the market, as it resulted in a better match between supply and
demand. Refunding issues declined 15%, from $38.9 billion in 1994 to $32.9
billion in 1995. Refunding, like refinancing a home mortgage, is the process of
replacing a higher interest rate issue with a lower rate issue. We believe the
decline in interest rates during 1995 is likely to result in increased refunding
during 1996.
OUTLOOK
Going into 1996, the bond market is held hostage by the budget stalemate in
Washington. A meaningful reduction in the budget deficit during the next seven
years should be positive for the fixed-income market, even though the immediate
impact on the economy would be minimal.
In addition, we believe that the Fed will reduce short-term interest rates
by another 50 basis points (0.5%) during the next six months. The rate reduction
would have a positive impact on bonds maturing within five years.
Because of 1995's declining interest rates, the average maturities of the
Kent municipal bond funds portfolios were shortened and are now only slightly
longer than the maturities of their benchmark indexes. The average maturities
will likely remain slightly longer than those of the benchmark indexes until
there are signs of stronger economic activity.
The municipal bond market will be volatile in 1996 as the various flat-tax
proposals are discussed. While legislation that would affect the tax-free status
of municipal bonds is not expected to pass, we will continue to use periods of
uncertainty as opportunities to purchase high-quality municipal bonds for The
Kent Municipal Bond Funds.
-----
3
-----
<PAGE>
- ----------------------------------------
PORTFOLIO REVIEWS
- ----------------------------------------
THE KENT LIMITED TERM TAX-FREE FUND
BY ALLAN J. MEYERS,
CO-PORTFOLIO MANAGER
AND
MICHAEL J. MARTIN,
CO-PORTFOLIO MANAGER
The average maturity of The Kent Limited Term Tax-Free Fund was reduced
modestly from 3.4 years at the end of 1994 to 3.2 years at the end of 1995. With
interest rates declining in 1995, yields declined. The yield on a five-year
AAA-rated general obligation municipal security fell from 4.35% on September 30,
1995 to 4.10% on December 29, 1995, the last trading day of the year.
For the 12 months ended December 31, 1995, the Fund's total returns were
8.43% for Institutional Shares, and 8.40% for Investment Shares, before the
deduction of sales charges. For the same period, the total return for the Lehman
Brothers One-Year General Obligations Municipal Bond Index was 6.51%, and the
Lehman Brothers Three-Year General Obligations Municipal Bond Index was 8.84%.
The Fund was well positioned to take advantage of a continuing decline in
rates. Fund purchases were oriented toward AAA-rated and AA-rated municipals
maturing in three to six years. Purchases for the Fund during 1995 included
Pennsylvania Higher Education Student Loan Revenue Bonds, Letter of Credit -
Student Loan Mar-
- --------------------------------------------------------------------------------
THE KENT LIMITED TERM TAX-FREE FUND
Distribution of Net Assets
as of December 31, 1995
- --------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Cash Equivalents & Net Other Assets & Liabilities 1.72%
Other Regions 7.35%
South 17.43%
Pacific 2.31%
East 18.08%
Mountain 12.51%
North Central 40.60%
</TABLE>
- --------------------------------------------------------------------------------
keting Association securities, securities from the Alaska Housing Finance
Corporation, MBIA Insured, and Indiana University Revenue Student-Fee Bonds.
OUTLOOK
We believe that the Fund is well structured to take advantage of the
additional interest rate reductions by the Fed that we expect during 1996. The
Fund will continue to concentrate its purchases on municipal bonds with three-
to six-year maturities. These bonds should benefit greatly from any reductions
in short-term rates.
Conversely, if any increase occurs in tax-free yields on municipal bonds as
a result of investor uncertainty over flat-tax proposals, then the average
maturity of the Fund's portfolio will be increased.
- --------------------------------------------------------------------------------
THE KENT LIMITED TERM TAX-FREE FUND
TAX EQUIVALENT YIELDS/+/ AS OF DECEMBER 31, 1995
- ------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INVESTMENT CLASS INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
28% 4.46% 4.85%
31% 4.65% 5.06%
36% 5.02% 5.45%
39.6% 5.31% 5.78%
</TABLE>
/+/ Based on an SEC 30-day yield at 12/31/95 of 3.21% for the Investment Class
and 3.49% for the Institutional Class.
- --------------------------------------------------------------------------------
- -----
4
- -----
<PAGE>
----------------------------------------
PORTFOLIO REVIEWS
----------------------------------------
- --------------------------------------------------------------------------------
THE KENT LIMITED TERM TAX-FREE FUND
Average Annual Return as of December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT CLASS* INSTITUTIONAL CLASS
(inception: 11/1/94) (inception: 9/1/94)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year 4.05% 8.43%
Life of Fund 3.51% 5.65%
</TABLE>
* Reflects deduction of 4.00% sales charge.
Growth of $10,000 Investment Comparison
with the Lehman Brothers One-Year General Obligations Municipal Bond Index
and the Lehman Brothers Three-Year General Obligations Municipal Bond Index
- ---------------------------------------------------------------------------
[GRAPH APPEARS HERE] Past performance is no guarantee of future performance.
The investment return and principal value will
fluctuate so that your shares, when redeemed, may be
[GRAPH APPEARS HERE] worth more or less than the original cost. Performance
for each class will differ based on differences in
sales charges and expenses for each class of shares.
Return figures and investment values are quoted after
deducting class expenses and sales charges (if
applicable). Investment class shares are sold with a
maximum front-end sales charge of 4.00%. The Lehman
Brothers One-Year General Obligations Municipal Bond
Index and the Lehman Brothers Three-Year General
Obligations Municipal Bond Index are unmanaged indexes
of debt instruments issued by municipalities. Total
Returns reflect reinvestment of all dividends and
capital gains distributions.
- --------------------------------------------------------------------------------
-----
5
-----
<PAGE>
- ----------------------------------------
PORTFOLIO REVIEWS
- ----------------------------------------
THE KENT INTERMEDIATE TAX-FREE FUND
BY ALLAN J. MEYERS,
PORTFOLIO MANAGER
By following the strategy used for other Kent tax-free funds, The Kent
Intermediate Tax-Free Fund provided outstanding performance, locking in gains
for shareholders by reducing its average maturity during 1995. In 1994, the Fund
increased its average maturity from 6.6 years to 9.4 years. As interest rates
fell in 1995, the Fund's average maturity was systematically reduced to 7.4
years by December 29, the last trading day of the year.
For the 12 months ended December 31, 1995, the Fund's total returns were
12.90% for Institutional Shares, and 12.66% for Investment Shares, before the
deduction of sales charges. For the same period, the total return for the Lehman
Brothers Three-Year General Obligations Municipal Bond Index was 8.84%, and the
Lehman Brothers Five-Year General Obligations Municipal Bond Index was 11.64%.
During the first quarter of 1995, the Fund reduced its holdings of bonds
with maturities of 20 to 30 years and reinvested the funds in securities
maturing in three to five years. The Fund finished the year with an average
maturity slightly longer than that of its benchmark index.
Portfolio quality remained high, with an average rating of AA. At the
current stage of the economic cycle, the additional yield available by
purchasing lower-quality
- --------------------------------------------------------------------------------
THE KENT INTERMEDIATE TAX-FREE FUND
Distribution of Net Assets At December 31, 1995
- -----------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Cash Equivalents & Net Other Assets & Liabilities 1.81%
Other Regions 5.35%
South 23.80%
Pacific 13.57%
East 12.89%
Mountain 4.43%
North Central 38.15%
</TABLE>
- --------------------------------------------------------------------------------
municipal securities (BAA) is narrow and does not warrant the additional risk.
Only 2.2% of the portfolio's assets are BAA-rated municipal bonds.
OUTLOOK
Since municipal securities in the 5- to 15-year maturity range are
currently the most attractive sector of the market, in our opinion The Kent
Intermediate Tax-Free Fund is especially well positioned for 1996. If the
Federal Reserve Board eases interest rates again during the next six months, the
securities in the five-year maturity range should perform well.
Securities in the 10- to 15-year range are especially attractive during
periods of rising interest rates. If market aberrations, such as concerns over
the flat tax proposals, cause a period of rising rates, the Fund's average
maturity will be increased modestly. A sustained decline in interest rates would
result in a further shortening of the Fund's average maturity.
- --------------------------------------------------------------------------------
THE KENT INTERMEDIATE TAX-FREE FUND
TAX EQUIVALENT YIELDS/+/ AS OF DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INVESTMENT CLASS INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
28% 4.96% 5.51%
31% 5.17% 5.75%
36% 5.58% 6.20%
39.6% 5.91% 6.57%
</TABLE>
/+/ Based on an SEC 30-day yield at 12/31/95 of 3.57% for the Investment Class
and 3.97% for the Institutional Class.
- --------------------------------------------------------------------------------
- -----
6
- -----
<PAGE>
----------------------------------------
PORTFOLIO REVIEWS
----------------------------------------
- --------------------------------------------------------------------------------
THE KENT INTERMEDIATE TAX-FREE FUND
Average Annual Return as of December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT CLASS* INSTITUTIONAL CLASS
(inception: 12/18/92) (inception: 12/16/92)
<S> <C> <C>
- --------------------------------------------------------------------------------
One Year 8.11% 12.90%
Three Years 4.32% 5.92%
Life of Fund 4.42% 5.97%
</TABLE>
* Reflects deduction of 4.00% sales charge.
Growth of $10,000 Investment Comparison
with the Lehman Brothers Three-Year General Obligations Municipal Bond Index
and the Lehman Brothers Five-Year General Obligations Municipal Bond Index
- --------------------------------------------------------------------------------
[PLOT POINTS TO COME]
[GRAPH APPEARS HERE] Past performance is no guarantee of future performance.
The investment return and principal value will
fluctuate so that your shares, when redeemed, may be
[GRAPH APPEARS HERE] worth more or less than the original cost. Performance
for each class will differ based on differences in
sales charges and expenses for each class of shares.
Return figures and investment values are quoted after
deducting class expenses and sales charges (if
applicable). Investment class shares are sold with a
maximum front-end sales charge of 4.00%. The Lehman
Brothers Three-Year General Obligations Municipal Bond
Index and the Lehman Brothers Five-Year General
Obligations Municipal Bond Index are unmanaged indexes
of debt instruments issued by municipalities. Total
Returns reflect reinvestment of all dividends and
capital gains distributions.
- --------------------------------------------------------------------------------
-----
7
-----
<PAGE>
- ----------------------------------------
PORTFOLIO REVIEWS
- ----------------------------------------
THE KENT TAX-FREE INCOME FUND
BY ALLAN J. MEYERS,
PORTFOLIO MANAGER
The Kent Tax-Free Income Fund's average maturity range of 10 to 25 years is
designed to return a higher level of tax-free income over time, but the Fund's
longer maturity range makes it more volatile than other Kent tax-free funds.
Since inception, the Fund's total returns were 8.64% for Institutional
Shares, and 8.34% for Investment Shares, before the deduction of sales charges.
From the end of March through December 31, 1995, the total return for the Lehman
Brothers Municipal Bond Index was 9.70%. Because Lehman bond indices only
measure results at month end periods, an exact correlation with the Fund's
inception date cannot be provided.
The Fund opened in mid-March 1995 with assets of $53 million and ended the
year with assets slightly exceeding $122 million. Income, not overall return, is
the primary performance consideration for the Fund.
Because interest rates already had declined significantly by the Fund's
inception, the decision was made to start the Fund with an average portfolio
maturity of 10 years and to increase the average maturity gradually during
market pullbacks and as opportunities presented themselves.
Following this strategy, the average maturity was increased to 11.1 years
by the end of June, to 12.2 years by the end of Sep-
- --------------------------------------------------------------------------------
THE KENT TAX-FREE INCOME FUND
Distribution of Net Assets as of December 31, 1995
- --------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Cash Equivalents & Net Other Assets & Liabilities 2.82%
Other 2.48%
Pacific 19.44%
South 20.16%
East 14.79%
Mountain 3.74%
North Central 36.57%
</TABLE>
- --------------------------------------------------------------------------------
tember and to 12.6 years by the end of the year. The Fund's average maturity is
still slightly shorter than the 14.5-year average maturity of the Lehman
Brothers Municipal Bond Index. The average maturity was lengthened primarily
through the purchase of municipal bonds with an average maturity of 15 to 30
years.
At the end of September, municipal bonds with a 30-year maturity were
yielding 90% as much as U.S. Treasury securities with comparable maturities,
making them very attractive to purchase. These bonds performed very well during
the fourth quarter.
California bonds became a very attractive long-term investment early in
1995, as the Orange County crisis decreased the prices of other California
municipals. With supply exceeding demand, other opportunities for purchasing
California bonds at attractive prices occurred throughout 1995. The California
economy now seems to have
- --------------------------------------------------------------------------------
THE KENT TAX-FREE INCOME FUND
TAX EQUIVALENT YIELDS/+/ AS OF DECEMBER 31, 1995
- ------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INVESTMENT CLASS INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
28% 5.75% 6.35%
31% 6.00% 6.62%
36% 6.47% 7.14%
39.6% 6.85% 7.57%
</TABLE>
/+/ Based on an SEC 30-day yield at 12/31/95 of 4.14% for the Investment
Class and 4.57% for the Institutional Class.
- --------------------------------------------------------------------------------
- -----
8
- -----
<PAGE>
----------------------------------------
PORTFOLIO REVIEWS
----------------------------------------
bottomed out and, as a result, California municipal bonds should recover and
perform well during the next five years. At December 31, 1995, California bonds
accounted for 14% of the Fund's assets, second only to Michigan bonds, which
made up 18.5% of the portfolio.
OUTLOOK
The Fund will use any temporary increase in interest rates to increase its
average maturity until it is slightly longer than the average maturity of the
Lehman Brothers Municipal Bond Index.
- --------------------------------------------------------------------------------
THE KENT TAX-FREE INCOME FUND
Total Return as of December 31, 1995
- ------------------------------------
<TABLE>
<CAPTION>
INVESTMENT CLASS* INSTITUTIONAL CLASS
(inception: 3/31/95) (inception: 3/20/95)
- --------------------------------------------------------------------------------
<S> <C> <C>
Life of Fund 3.97% 8.64
</TABLE>
* Reflects deduction of 4.00% sales charge.
Growth of $10,000 Investment Comparison with the Lehman Brothers
- ----------------------------------------------------------------
Municipal Bond Index
- --------------------
[GRAPH APPEARS HERE] Past performance is no guarantee of future performance.
The investment return and principal value will
fluctuate so that your shares, when redeemed, may be
[GRAPH APPEARS HERE] worth more or less than the original cost. Performance
for each class will differ based on differences in
sales charges and expenses for each class of shares.
Return figures and investment values are quoted after
deducting class expenses and sales charges (if
applicable). Investment class shares are sold with a
maximum front-end sales charge of 4.00%. The Lehman
Brothers Municipal Bond Index is an unmanaged index of
general obligation municipal debt instruments. Total
Returns reflect reinvestment of all dividends and
capital gains distributions.
- --------------------------------------------------------------------------------
-----
9
-----
<PAGE>
- ----------------------------------------
PORTFOLIO REVIEWS
- ----------------------------------------
THE KENT MICHIGAN MUNICIPAL BOND FUND
BY ALLAN J. MEYERS,
CO-PORTFOLIO MANAGER
AND
MICHAEL J. MARTIN,
CO-PORTFOLIO MANAGER
Boosted by strong demand for automobiles and durable goods, the Michigan
economy has outperformed the U.S. economy as a whole since 1993.
For the 12 months ended December 31, 1995, the Fund's total returns were
8.20% for Institutional Shares, and 8.01% for Investment Shares, before the
deduction of sales charges. For the same period, the total return for the Lehman
Brothers Three-Year General Obligations Municipal Bond Index was 8.84%.
The financial condition of the state has improved so much that Moody's
Investors Service Inc. upgraded the State of Michigan's credit rating in July
1995 to AA-, the highest rating the state has held since 1980, when the rating
was first downgraded to A. In May 1982, Michigan's rating was downgraded to
Baa1, the lowest credit rating of any state in the country. Michigan's long
climb back to financial well being is a major accomplishment.
The Kent Michigan Municipal Bond Fund was able to take full advantage of
the decline in interest rates during 1995. The Fund began the year with an
average maturity of 3.5 years. As interest rates declined, the average maturity
was gradually reduced to 3.1 years by the end of 1995. Given the shorter average
maturity of the Fund, Michigan municipals are frequently purchased for the Fund
just to maintain its average maturity. Even when the average maturity is
permitted to decline, the Fund typically is still looking at opportunities to
purchase shorter maturity Michigan municipal bonds.
At times, the supply of new issues or previously issued Michigan municipal
bonds is very low. As a result, the yield available is somewhat lower than it
should be. This was not the case, however, during the second half of 1995 when
the supply of Michigan municipal bonds exceeded expecations. During the last
week of October and the first week of November alone, 38 issues with a total
valuation of $952 million came on to the market. The Fund has purchased, and
will continue to purchase, issues in the three- to six-year maturity range.
OUTLOOK
After several years of outstanding performance, the Michigan economy is
showing signs of slowing down. Personal income and employment are not growing as
quickly as they had for the past several years. But even if the economy enters a
recession, Michigan is better positioned to weather the downturn than it has
been during previous recessions. Economic diversification efforts and structural
changes in the automotive industry have given the economy greater financial
stability. The state's finances continue to be in excellent condition, and a
- --------------------------------------------------------------------------------
THE KENT MICHIGAN MUNICIPAL BOND FUND
TAX EQUIVALENT YIELDS/+/ AS OF DECEMBER 31, 1995
- ------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INVESTMENT CLASS INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
28% 4.56% 4.96%
31% 4.75% 5.17%
36% 5.13% 5.58%
39.6% 5.43% 5.91%
</TABLE>
/+/ Based on an SEC 30-day yield at 12/31/95 of 3.28% for the Investment Class
and 3.57% for the Institutional Class.
- --------------------------------------------------------------------------------
- -----
10
- -----
<PAGE>
----------------------------------------
PORTFOLIO REVIEWS
----------------------------------------
Budget Stabilization Fund that exceeds $1 billion will help the state weather
any downturn. Flat-tax proposals and a continuing stalemate in federal budget
negotiations could cause temporary market weakness, creating an opportunity to
modestly increase the average maturity of the portfolio.
- --------------------------------------------------------------------------------
THE KENT MICHIGAN MUNICIPAL BOND FUND
Average Annual Return as of December 31, 1995
- ---------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT CLASS* INSTITUTIONAL CLASS
(inception: 5/11/93) (inception: 5/3/93)
- --------------------------------------------------------------------------------
<S> <C> <C>
One Year 3.64% 8.20%
Life of Fund 2.53% 4.31%
</TABLE>
* Reflects deduction of 4.00% sales charge.
Growth of $10,000 Investment Comparison
with the Lehman Brothers Three-Year General Obligations Municipal Bond Index
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE] Past performance is no guarantee of future performance.
The investment return and principal value will
fluctuate so that your shares, when redeemed, may be
[GRAPH APPEARS HERE] worth more or less than the original cost. Performance
for each class will differ based on differences in
sales charges and expenses for each class of shares.
Return figures and investment values are quoted after
deducting class expenses and sales charges (if
applicable). Investment class shares are sold with a
maximum front-end sales charge of 4.00%. The Lehman
Brothers Three-Year General Obligations Municipal Bond
Index is an unmanaged index of debt obligations issued
by municipalities. Total Returns reflect reinvestment
of dividends and capital gains distributions.
- --------------------------------------------------------------------------------
-----
11
-----
<PAGE>
INVESTMENT ADVISER
Old Kent Bank
Grand Rapids, MI 49503
DISTRIBUTOR
440 Financial Distributors, Inc.
290 Donald Lynch Boulevard
Marlboro, MA 01752
This report is submitted for the general information of shareholders of The Kent
Limited Term Tax-Free Fund, The Kent Intermediate Tax-Free Fund, The Kent
Tax-Free Income Fund, and The Kent Michigan Municipal Bond Fund. It is not
authorized for distribution to prospective investors unless accompanied or
preceded by an effective prospectus for the funds, which contains more
information concerning the funds' investment policies, as well as fees and
expenses and other pertinent information. Read the prospectus carefully before
investing.
The performance indices used for comparison in this report, including the Lehman
Brothers 1-Year General Obligations Municipal Bond Index, the Lehman Brothers
3-Year General Obligations Municipal Bond Index, the Lehman Brothers 5-Year
General Obligations Municipal Bonds Index, the Lehman Brothers Municipal Bond
Index and the Lehman Brothers Long-Term Municipal Bond Index are unmanaged
indices and do not include the effects of annual and operating expenses or sales
charges experienced by the funds.
[LOGO APPEARS HERE] Shares of the Fund are not deposits or obligations of,
or guaranteed or endorsed by, Old Kent Bank or any of
its affiliates. Shares of the funds are not federally
insured by the U.S. Government, the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any
other agency. Investment return and principal value
will vary as a result of market conditions or other
factors so that shares of the funds, when redeemed may
be worth more or less than their original cost. An
investment in the funds involves investment risks,
including the possible loss of principal.
- -----
12
- -----
<PAGE>
- ------------
LIMITED TERM TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MUNICIPAL SECURITIES - 98.28%
ALASKA - 3.69%
$ 500,000 Alaska Housing Finance Corp.
1995 Series A
Government Purpose
4.35%, 06/01/98
Insured: MBIA.......................................................... $ 502,500
530,000 Alaska Housing Finance Corp.
1995 Series A
Government Purpose
4.60%, 12/01/00
Insured: MBIA.......................................................... 535,962
1,000,000 North Slope Boro, UTGO, Series A
4.45%, 06/30/96
Insured: MBIA.......................................................... 1,003,220
------------
2,041,682
------------
CALIFORNIA - 2.31%
1,000,000 University of California, Series B
Multi Purpose Project
9.00%, 09/01/03
Insured: MBIA.......................................................... 1,278,750
------------
COLORADO - 2.95%
1,600,000 Colorado Springs Utilities, Series A
5.90%, 11/15/96........................................................ 1,632,448
------------
CONNECTICUT - 1.90%
1,000,000 Connecticut State, UTGO, Series C
5.38%, 08/15/02........................................................ 1,055,000
------------
GEORGIA - 2.96%
1,500,000 Georgia State, UTGO, Series B
5.95%, 03/01/03........................................................ 1,642,500
------------
ILLINOIS - 8.56%
500,000 Chicago Metropolitan Water
Reclamation District, UTGO
Capital Improvement
6.20%, 01/01/98........................................................ 519,375
1,000,000 Chicago Metropolitan Water
Reclamation District, UTGO
Working Cash Fund
5.90%, 12/01/04........................................................ 1,091,250
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
ILLINOIS (CONTINUED)
$ 1,000,000 Illinois Educational Facilities Authority
Series A, Loyola University
6.30%, 07/01/98
Insured: MBIA.......................................................... $ 1,052,500
1,000,000 Illinois State, UTGO
5.25%, 10/01/96........................................................ 1,011,830
1,000,000 Illinois State Sales Tax , Series O
5.90%, 06/15/01........................................................ 1,066,250
------------
4,741,205
------------
INDIANA - 6.36%
1,500,000 Indiana University Revenue, Series J
Student Fees
4.35%, 08/01/00........................................................ 1,500,000
1,000,000 Indianapolis Local Public Improvement
Bond Bank Transportation Revenue
4.75%, 07/01/97........................................................ 1,012,500
1,000,000 Purdue University, Series A
Dormitory System
5.90%, 07/01/96
Insured: AMBAC......................................................... 1,010,850
------------
3,523,350
------------
IOWA - 1.90%
1,050,000 Davenport, UTGO, Series A
4.13%, 12/01/97........................................................ 1,055,250
------------
LOUISIANA - 1.94%
1,000,000 Louisiana State Gas & Fuel Tax, Series A
7.00%, 11/15/98
Insured: FGIC.......................................................... 1,076,250
------------
KENTUCKY - 1.88%
1,000,000 Kentucky State Property &
Buildings Commissions
Project No. 53
5.80%, 10/01/98........................................................ 1,041,250
------------
MARYLAND- 3.85%
1,000,000 Washington Suburban Sanitary
District, UTGO
Sewage Disposal, First Series
6.13%, 06/01/98........................................................ 1,048,750
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
- ------------
LIMITED TERM TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MARYLAND (CONTINUED)
$ 1,000,000 Washington Suburban Sanitary
District, UTGO
General Construction
Prerefunded 12/01/97
7.50%, 12/01/10........................................................ $ 1,083,750
------------
2,132,500
------------
MICHIGAN - 14.29%
1,000,000 Detroit, UTGO, Series 1995
Self-Insurance
5.20%, 05/01/98........................................................ 1,008,750
1,235,000 Detroit, UTGO
Prerefunded 04/01/01
8.00%, 04/01/11........................................................ 1,463,475
300,000 Michigan State Hospital Finance Authority
Series A, Genesys Health System
6.10%, 10/01/96........................................................ 303,195
500,000 Michigan State Hospital Finance
Authority, Series A
Genesys Health System
6.40%, 10/01/97........................................................ 512,500
1,000,000 Michigan State Hospital Finance
Authority, Series A
Rental Housing Revenue
5.15%, 10/01/00
Insured: MBIA.......................................................... 1,025,000
1,600,000 Michigan State Hospital Finance
Authority, Series F
Sisters of Mercy
4.60%, 08/15/02
Insured: MBIA.......................................................... 1,604,000
1,000,000 Midland County Economic
Development, Series A
Dow Chemical Co. Project
6.10%, 12/01/23 (A).................................................... 1,000,000
1,000,000 University of Michigan, Series A
Hospital Revenue
5.90%, 12/01/19 (A).................................................... 1,000,000
------------
7,916,920
------------
MINNESOTA - 4.58%
$ 1,500,000 Minnesota State, UTGO
6.40%, 08/01/96........................................................ 1,525,770
1,000,000 University of Minnesota
4.80%, 08/15/03........................................................ 1,012,500
------------
2,538,270
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
NEVADA - 2.10%
$ 1,090,000 Las Vegas, LTGO
6.75%, 08/01/98
Insured: MBIA.......................................................... $ 1,162,212
------------
NEW JERSEY - 4.12%
1,000,000 Cherry Hill Township, UTGO
8.25%, 06/01/99........................................................ 1,130,000
1,000,000 New Jersey Economic Development
Authority, Series A
Market Transition Facility Revenue,
Senior Lien
7.00%, 07/01/03
Insured: MBIA.......................................................... 1,150,000
------------
2,280,000
------------
NEW YORK - 1.81%
1,000,000 New York, Municipal Water Finance
Authority, Series C
Water & Sewer Revenue
5.90%, 06/15/22 (A)
Insured: FGIC.......................................................... 1,000,000
------------
OKLAHOMA - 1.87%
1,000,000 Oklahoma County Independent
School, UTGO
Oklahoma City, No. 89
5.40%, 02/01/99........................................................ 1,037,500
------------
PENNSYLVANIA - 6.40%
1,500,000 Pennsylvania Intergovernmental
Coop Authority
Special Tax, City of Philadelphia
Funding Program
5.20%, 06/15/96
Insured: FGIC.......................................................... 1,508,955
1,000,000 Pennsylvania State Higher Education
Assistance Agency, Series A
Student Loan Revenue
4.63%, 12/01/00
LOC: Student Loan
Marketing Association.................................................. 1,011,250
1,000,000 Pennsylvania State University
5.20%, 03/01/98........................................................ 1,025,000
------------
3,545,205
------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- ------------
LIMITED TERM TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
TEXAS - 8.64%
$ 1,000,000 Harris County Flood Control District
LTGO, Series C
Prerefunded 11/01/99
6.50%, 11/01/10
Insured: MBIA.......................................................... $ 1,080,000
1,000,000 Houston Independent School
District, LTGO
Public Property Finance Contractual
Obligation
6.25%, 07/15/99........................................................ 1,066,250
1,500,000 Houston Water & Sewer System
Series 1992 C, Junior Lien
4.75%, 12/01/97
Insured: MBIA.......................................................... 1,522,500
1,000,000 Pasadena Independent School
District, UTGO
Prerefunded 08/15/01
6.75%, 08/15/05
Insured: FGIC.......................................................... 1,118,750
------------
4,787,500
------------
UTAH - 3.85%
1,000,000 Intermountain Power Agency, Series A
Utah Power Supply
Prerefunded 07/01/99
7.00%, 07/01/21........................................................ 1,107,500
1,000,000 Salt Lake County, UTGO
Jail Bonds
5.00%, 12/15/98........................................................ 1,027,500
------------
2,135,000
------------
WEST VIRGINIA - 2.01%
1,000,000 West Virginia State Hospital
Finance Authority, Series B
Cabell Huntington Hospital, Inc.
Prerefunded 01/01/99
7.70%, 01/01/19........................................................ 1,115,000
------------
WISCONSIN - 3.04%
1,700,000 Wisconsin State Transportation, Series A
3.75%, 07/01/98........................................................ 1,683,000
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
WYOMING - 3.61%
$ 1,000,000 Green River
Rhone-Poulenc LP
6.15%, 10/01/18 (A)
LOC: Societe Generale.................................................. $ 1,000,000
1,000,000 Lincoln County, PCR, Series B
Exxon Project
6.00%, 07/01/17 (A).................................................... 1,000,000
------------
2,000,000
------------
OTHER TERRITORIES - 3.66%
1,000,000 District of Columbia, UTGO, Series C
5.10%, 12/01/99
Insured: MBIA.......................................................... 1,022,500
1,000,000 Puerto Rico Electric Power Authority
Series W
4.25%, 07/01/97........................................................ 1,002,500
------------
2,025,000
------------
TOTAL MUNICIPAL SECURITIES............................................. 54,445,792
(Cost $ 53,578,413) ------------
<CAPTION>
SHARES
- ------------
<C> <S> <C>
INVESTMENT COMPANY- 0.54%
303,118 Dreyfus Tax Exempt Cash
Management Fund........................................................ 303,118
------------
TOTAL INVESTMENT COMPANY............................................................... 303,118
(Cost $ 303,118) ------------
TOTAL INVESTMENTS - 98.82%............................................................. 54,748,910
(Cost $ 53,881,531) ** ------------
NET OTHER ASSETS AND LIABILITIES - 1.18%............................................... 652,280
------------
NET ASSETS - 100.00%................................................................... $ 55,401,190
============
</TABLE>
- ----------------------------------------
** Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon one, seven or thirty business
days notice. Put bonds and notes have demand features which mature within
one year. The interest rate shown reflects the rate in effect at
December 31, 1995.
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guarantee Insurance Corp.
LOC Letter of Credit
LTGO Limited Tax General Obligation
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
UTGO Unlimited Tax General Obligation
See Notes to Financial Statements.
15
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MUNICIPAL SECURITIES - 98.19%
ALABAMA - 0.70%
$ 2,000,000 Alabama State Public School
& College Authority
3.90%, 12/01/97........................................................ $ 2,000,000
------------
ALASKA - 3.94%
1,520,000 Alaska Municipal Bond Bank
Authority, GO, Series A
4.75%, 10/01/99........................................................ 1,539,000
1,000,000 Anchorage, GO
6.30%, 07/01/99
Insured: MBIA.......................................................... 1,062,500
1,000,000 Anchorage Electric Utility
Revenue Bond, Senior Lien
5.50%, 12/01/03
Insured: MBIA.......................................................... 1,046,250
2,000,000 Anchorage Telephone Utility, Series A
Revenue Bond
3.75%, 12/01/97
Insured: AMBAC......................................................... 1,990,000
5,000,000 North Slope Boro, GO, Series B
7.50%, 06/30/01
LOC: CGIC.............................................................. 5,687,500
------------
11,325,250
------------
ARIZONA - 2.43%
1,500,000 Pima County, GO, ETM, Series B
Unified School District, No. 1, Tucson
6.80%, 07/01/00........................................................ 1,655,625
5,000,000 Salt River Project Agricultural
Improvement, Series A
Power District Electric System
5.63%, 01/01/06........................................................ 5,318,750
------------
6,974,375
------------
ARKANSAS - 0.70%
2,000,000 North Little Rock Electric Revenue, Series A
5.20%, 07/01/96
Insured: MBIA.......................................................... 2,014,560
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
CALIFORNIA - 4.00%
$ 3,000,000 Orange County, Series A
Refunding Recovery Bonds
6.00%, 06/01/10
Insured: MBIA.......................................................... $ 3,153,750
2,000,000 Riverside County Transportation
Commission, Series A
Sales Tax Revenue
5.60%, 06/01/05
Insured: AMBAC......................................................... 2,130,000
4,850,000 University of California, Series B
Multiple Purpose Projects
9.00%, 09/01/03
Insured: MBIA.......................................................... 6,201,937
------------
11,485,687
------------
COLORADO - 1.07%
1,000,000 Colorado Springs Utility Revenue
Series A
6.50%, 11/15/03........................................................ 1,127,500
2,000,000 Jefferson County School
District No. 001, GO, Series A
4.00%, 12/15/98........................................................ 1,960,000
------------
3,087,500
------------
FLORIDA - 4.41%
1,000,000 Broward County School District, GO
5.20%, 02/15/03........................................................ 1,040,000
3,000,000 Florida State, GO, Series A
Broward County Expressway Authority
5.90%, 07/01/97........................................................ 3,089,130
2,000,000 Florida State Board of Education
Capital Outlay, GO, Series A
Prerefunded 06/01/96
7.25%, 06/01/97........................................................ 2,092,500
2,000,000 Homestead Special Insurance Assessment
Hurricane Andrew Covered Claim
5.13%, 03/01/02
Insured: MBIA.......................................................... 2,082,500
2,000,000 Lakeland Electric & Water Revenue
5.90%, 10/01/07........................................................ 2,195,000
1,000,000 Tampa Guaranteed Entitlement Revenue
6.60%, 10/01/00
Insured: AMBAC......................................................... 1,100,000
1,000,000 Tampa Utility Tax & Special Revenue
6.30%, 10/01/00
Insured: AMBAC......................................................... 1,086,250
------------
12,685,380
------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
GEORGIA - 3.57%
$ 2,670,000 Atlanta Airport Facilities, Series B
5.50%, 01/01/03
Insured: AMBAC......................................................... $ 2,786,812
4,000,000 Georgia State, GO, Series B
5.95%, 03/01/08........................................................ 4,390,000
2,000,000 Georgia State Municipal Electric
Authority, Series B
7.10%, 01/01/96........................................................ 2,000,340
1,000,000 Georgia State Tollway Authority
Georgia 400 Project
6.25%, 07/01/00........................................................ 1,087,500
------------
10,264,652
------------
HAWAII - 1.21%
1,025,000 Honolulu City & County, GO, Series A
5.60%, 01/01/05........................................................ 1,095,469
1,000,000 Honolulu City & County, GO, ETM
Series D
6.50%, 12/01/00........................................................ 1,103,750
1,150,000 Maui County, GO, Series A
Prerefunded 12/01/00
6.80%, 12/01/03
Insured: AMBAC......................................................... 1,293,750
------------
3,492,969
------------
ILLINOIS - 8.03%
1,000,000 Chicago Metropolitan Water
Reclamation District, GO
Capital Improvement
4.90%, 12/01/01........................................................ 1,025,000
2,000,000 Chicago Metropolitan Water
Reclamation District, GO
Capital Improvement
6.80%, 01/01/03........................................................ 2,205,000
3,000,000 Chicago Metropolitan Water
Reclamation District, GO
Capital Improvement
5.50%, 12/01/10........................................................ 3,097,500
2,000,000 Chicago School Finance Authority
GO, Series A
4.90%, 06/01/05
Insured: MBIA.......................................................... 1,990,000
5,000,000 Cook County, GO, Series B
5.40%, 11/15/08
Insured: MBIA.......................................................... 5,100,000
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
ILLINOIS (CONTINUED)
$ 6,270,000 Du Page & Will Counties
Community School, GO
District No. 204
4.95%, 12/30/01
Insured: FGIC.......................................................... $ 6,473,775
3,135,000 Northwest Suburban Municipal
Joint Action, Series A
Water Agency, Water Supply System
5.25%, 05/01/04
Insured: MBIA.......................................................... 3,197,700
------------
23,088,975
------------
INDIANA - 3.90%
2,400,000 Hamilton Southeastern
Consolidated School
Building Corp., First Mortgage
6.65%, 07/01/05
Insured: AMBAC......................................................... 2,625,000
2,000,000 Indiana Municipal Power Supply System
Agency, Series B
5.88%, 01/01/10
Insured: MBIA.......................................................... 2,132,500
3,000,000 Indiana Municipal Power Supply
Agency, Series B
6.00%, 01/01/13
Insured: MBIA.......................................................... 3,217,500
1,000,000 Indiana Transportation Finance
Authority, Series A
Highway Revenue
5.75%, 06/01/12
Insured: AMBAC......................................................... 1,063,750
1,000,000 Purdue University, Series A
6.40%, 07/01/99
Insured: AMBAC......................................................... 1,071,250
1,000,000 Purdue University, Series D
Student Fee
6.50%, 07/01/03........................................................ 1,098,750
------------
11,208,750
------------
LOUISIANA - 1.46%
4,000,000 Louisiana State, GO, Series A
5.30%, 08/01/04
Insured: MBIA.......................................................... 4,190,000
------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MASSACHUSETTS - 1.07%
$ 3,000,000 New England Education Loan
Marketing Corp., Series G
Massachusetts Student Loan Revenue
5.20%, 08/01/02........................................................ $ 3,067,500
------------
MICHIGAN - 22.69%
4,000,000 Battle Creek Downtown
Development Authority
Tax Increment Revenue
7.30%, 05/01/10........................................................ 4,560,000
2,100,000 Caledonia Community Schools, GO
Prerefunded 05/01/02
6.70%, 05/01/22
Insured: AMBAC......................................................... 2,396,625
2,000,000 Delta County Economic
Development Corp.
Environmental Improvement, Mead
Escanaba Paper Co.
6.00%, 12/01/23 (A)
LOC: Union Bank of Switzerland......................................... 2,000,000
3,000,000 Detroit, GO
Revenue Bonds, Distributable State Aid
5.70%, 05/01/01
Insured: AMBAC......................................................... 3,161,250
3,000,000 Detroit Sewage Disposal Revenue
Series B
6.00%, 07/01/09........................................................ 3,258,750
6,000,000 Detroit Water Supply System
Permanent Linked Bonds
5.25%, 07/01/13
Insured: FGIC.......................................................... 6,007,500
1,675,000 Lanse Creuse Public Schools, GO
5.30%, 05/01/07........................................................ 1,712,687
5,000,000 Michigan Higher Education Student
Loan Authority, Series XII-G
4.90%, 10/01/03
Insured: AMBAC......................................................... 5,006,250
1,730,000 Michigan State Building Authority
ETM, Series II
Jackson Regional Prison
6.80%, 09/01/97........................................................ 1,812,175
2,565,000 Michigan State Building Authority
ETM, Series II
Iona Maximum Security Prison
6.80%, 09/01/97........................................................ 2,686,838
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 2,760,000 Michigan State Building Authority
ETM, Series II
Lapeer Regional Prison
6.80%, 09/01/97........................................................ $ 2,901,450
2,000,000 Michigan State Comprehensive
Transportation, Series B
5.50%, 05/15/02........................................................ 2,095,000
3,000,000 Michigan State South Central
Power Agency
Power Supply System
5.70%, 11/01/04
Insured: MBIA.......................................................... 3,213,750
1,000,000 Michigan State South Central
Power Agency
Power Supply System
5.80%, 11/01/05
Insured: MBIA.......................................................... 1,077,500
2,000,000 Michigan State Strategic Fund, Series A
Ford Motor Co. Project
7.10%, 02/01/06........................................................ 2,325,000
2,500,000 Michigan State Strategic Fund
Dow Chemical Co. Project
6.20%, 12/01/14 (A).................................................... 2,500,000
3,000,000 Michigan State Strategic Fund
Limited Obligation, Krona, Inc. Project
5.50%, 12/01/15 (A)
LOC: First of America.................................................. 3,000,000
3,000,000 Michigan State Trunk Line, Series 1
7.00%, 07/01/96........................................................ 3,047,760
2,500,000 Michigan State Trunk Line, Series A
5.50%, 10/01/02........................................................ 2,625,000
2,100,000 Midland County, EDC, Series A
Dow Chemical Co. Project
6.10%, 12/01/23 (A).................................................... 2,100,000
3,300,000 Midland County, EDC, Series B
6.00%, 12/01/15 (A).................................................... 3,300,000
2,000,000 Northville Public Schools, GO, Series A
7.00%, 05/01/08........................................................ 2,192,500
1,200,000 Rochester Community School
District, GO
7.10%, 05/01/96........................................................ 1,213,812
1,000,000 Western Michigan University
5.40%, 11/15/01
Insured: FGIC.......................................................... 1,053,750
------------
65,247,597
------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MINNESOTA - 0.39%
$ 1,000,000 Minneapolis Community Development
Agency
Tax Increment Revenue
7.00%, 09/01/00
Insured: MBIA.......................................................... $ 1,118,750
------------
NEVADA - 0.98%
2,500,000 Clark County School District, GO, Group 2
Prerefunded 05/01/00
7.20%, 05/01/01
Insured: FGIC.......................................................... 2,831,250
------------
NEW JERSEY - 2.92%
6,000,000 New Jersey Economic Development
Authority Market, Series A, Senior Lien
Transition Facility Revenue
7.00%, 07/01/04
Insured: MBIA.......................................................... 6,952,500
1,375,000 New Jersey State, GO, Series D
5.25%, 02/15/01........................................................ 1,433,438
------------
8,385,938
------------
NEW MEXICO - 1.79%
5,000,000 New Mexico Mortgage Finance
Authority, Series F
Mortgage Backed
6.30%, 07/01/08........................................................ 5,157,800
------------
NEW YORK - 1.94%
2,500,000 Battery Park City Authority, Series B
Junior Lien
4.50%, 11/01/98........................................................ 2,506,250
3,000,000 Triborough Bridge & Tunnel
Authority, Series Y
General Purpose
5.50%, 01/01/17........................................................ 3,086,250
------------
5,592,500
------------
NORTH CAROLINA - 0.72%
2,000,000 North Carolina Municipal
Power Agency, No. 1
Catawba Electric Revenue
5.90%, 01/01/03........................................................ 2,080,000
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
OHIO - 0.80%
$ 2,125,000 Columbus, GO
Sewer Improvement
6.30%, 09/15/99........................................................ $ 2,287,031
------------
OKLAHOMA - 0.99%
2,742,000 Grand River Dam Authority
Prerefunded 06/0/97
7.20%, 06/01/98........................................................ 2,851,680
------------
PENNSYLVANIA - 3.64%
4,410,000 Chartiers Valley Joint School
District Authority, ETM
School Revenue
6.15%, 03/01/07........................................................ 4,784,850
1,475,000 Pennsylvania State, GO, Series A
Prerefunded 05/01/00
7.00%, 05/01/05........................................................ 1,648,313
4,000,000 Pennsylvania State Higher Education
Assistance Agency, Series A
Student Loan Revenue
4.63%, 12/01/00
LOC: Student Loan
Marketing Association.................................................. 4,045,000
------------
10,478,163
------------
RHODE ISLAND - 3.32%
1,000,000 Providence, GO
6.70%, 01/15/02
Insured: MBIA.......................................................... 1,097,500
2,000,000 Rhode Island Depositors Economic
Protection Corp., SP OB, Series A
6.15%, 08/01/99
Insured: MBIA.......................................................... 2,130,000
1,000,000 Rhode Island Depositors Economic
Protection Corp., SP OB, Series B
5.20%, 08/01/03
Insured: MBIA.......................................................... 1,038,750
5,250,000 Rhode Island State Public Buildings
Authority, Series A
State Projects Revenue
5.25%, 02/01/08........................................................ 5,282,813
------------
9,549,063
------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
TENNESSEE - 0.47%
$ 1,230,000 Tennessee State, GO, Series B
6.20%, 06/01/01........................................................ $ 1,343,775
------------
TEXAS - 8.88%
1,000,000 Austin Independent School District, GO
6.20%, 08/01/99........................................................ 1,065,000
830,000 Dallas Independent School District, GO
5.40%, 08/15/03........................................................ 874,613
2,245,000 Dallas Independent School District, GO
Unrefunded Balance
5.40%, 08/15/03........................................................ 2,385,312
1,500,000 Houston, GO, Series A
Public Improvement
6.00%, 04/01/97........................................................ 1,537,500
1,000,000 Houston Water & Sewer System, Series A
Prior Lien
7.00%, 12/01/01
Insured: AMBAC......................................................... 1,131,250
1,500,000 Houston Water & Sewer System, Series C
Junior Lien
5.75%, 12/01/03
Insured: MBIA.......................................................... 1,612,500
1,050,000 Round Rock Independent School
District, GO
5.25%, 02/15/05........................................................ 1,099,875
2,800,000 Texas Municipal Power Agency
5.60%, 09/01/01
Insured: MBIA.......................................................... 2,971,500
4,450,000 Texas State, GO, Series A
5.70%, 10/01/03........................................................ 4,806,000
5,595,000 Texas State, GO, Series A
Texas Public Finance Authority
6.50%, 10/01/04........................................................ 6,371,306
1,500,000 University of Texas, Series A
Finance System
6.60%, 08/15/02........................................................ 1,676,250
------------
25,531,106
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
UTAH - 0.59%
$ 1,690,000 Davis County Solid Waste
Management & Recovery
Special Service District
4.90%, 06/15/97........................................................ $ 1,687,888
------------
VIRGINIA - 2.47%
5,000,000 Fairfax County, GO, Series A
4.70%, 06/01/99........................................................ 5,100,000
2,000,000 Norfolk, GO
5.40%, 06/01/12........................................................ 2,015,000
------------
7,115,000
------------
WASHINGTON - 5.93%
1,100,000 Seattle Metropolitan Municipality
Prerefunded 01/01/96
7.88%, 01/01/20........................................................ 1,122,000
2,400,000 Seattle Municipal Light & Power
Prerefunded 10/01/96
6.60%, 10/01/97........................................................ 2,497,872
8,000,000 Washington State, GO, Series A
5.50%, 09/01/05........................................................ 8,400,000
850,000 Washington State, GO, Series III-H
Motor Vehicle Fuel Tax
5.75%, 09/01/12........................................................ 894,625
2,000,000 Washington State Public
Power Supply System, Series C
Nuclear Project No. 1, Revenue Bond
7.25%, 07/01/00
Insured: FGIC.......................................................... 2,232,500
1,745,000 Washington State Public Power
Supply System
Nuclear Project No. 1, Unrefunded Balance
7.50%, 07/01/15
Insured: MBIA.......................................................... 1,908,594
------------
17,055,591
------------
WEST VIRGINIA - 0.42%
1,095,000 West Virginia School Building Authority
Series A, Capital Improvement
6.70%, 07/01/00
Insured: MBIA.......................................................... 1,203,131
------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
WISCONSIN - 1.35%
$ 1,500,000 Milwaukee Metropolitan Sewer
District, GO, Series A
6.70%, 10/01/00........................................................ $ 1,650,000
1,025,000 Milwaukee Metropolitan Sewer
District, GO, Series A
6.60%, 10/01/99........................................................ 1,107,000
1,000,000 Wisconsin Public Power Supply
System, Series A
7.00%, 07/01/01
Insured: AMBAC......................................................... 1,116,250
------------
3,873,250
------------
OTHER TERRITORIES - 1.41%
2,000,000 Puerto Rico Commonwealth Highway &
Transportation, Series X
Authority Highway Revenue
4.90%, 07/01/01........................................................ 2,027,500
2,000,000 Puerto Rico Electric Power Authority
Series W
5.00%, 07/01/98........................................................ 2,035,000
------------
4,062,500
------------
TOTAL MUNICIPAL SECURITIES............................................. 282,337,611
(Cost $ 268,730,957) ------------
<CAPTION>
VALUE
SHARES (NOTE 2)
- ---------- ------------
<C> <S> <C>
INVESTMENT COMPANY - 0.19%
550,945 Dreyfus Tax Exempt Cash
Management Fund........................................................ $ 550,945
------------
TOTAL INVESTMENT COMPANY............................................................... 550,945
(Cost $ 550,945) ------------
TOTAL INVESTMENTS - 98.38%............................................................. 282,888,556
(Cost $ 269,281,902)** ------------
NET OTHER ASSETS AND LIABILITIES - 1.62%............................................... 4,651,792
------------
NET ASSETS - 100.00%................................................................... $287,540,348
============
</TABLE>
- ----------------------------------------
** Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty days notice. Put bonds and notes have demand features which
mature within one year. The interest rate shown reflects the rate in
effect at December 31, 1995.
AMBAC American Municipal Bond Assurance Corp.
CGIC Capital Guarantee Insurance Corp.
EDC Economic Development Corp.
ETM Escrowed to Maturity
FGIC Financial Guarantee Insurance Corp.
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
SP OB Special Obligation
See Notes to Financial Statements.
21
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MUNICIPAL SECURITIES - 97.18%
ALABAMA - 0.82%
$ 1,000,000 Phoenix City, Series A
Industrial Development Board
Environmental Improvement
Mead Coated Board Project
6.05%, 06/01/28 (A)
LOC: Toronto Dominion Bank............................................. $ 1,000,000
------------
ALASKA - 1.65%
2,000,000 Alaska Municipal Bond Bank
Authority, GO, Series A
4.75%, 10/01/99........................................................ 2,024,996
------------
ARKANSAS - 1.21%
1,470,000 North Little Rock Electric, Series A
5.20%, 07/01/96
Insured: MBIA.......................................................... 1,480,702
------------
CALIFORNIA - 13.96%
2,000,000 Beverly Hills Unified School
District, GO, Series A
5.75%, 05/01/20........................................................ 2,047,500
1,845,000 California Rural Home Mortgage
Finance Authority, Series B
Family Mortgage Revenue
Mortgage Backed Securities Program
5.50%, 09/01/10........................................................ 1,879,594
1,400,000 California State, GO
7.00%, 06/01/05........................................................ 1,636,250
2,000,000 California State
6.25%, 09/01/12........................................................ 2,230,000
1,000,000 Foothill/Eastern Transportation
Corridor Agency, Series A
California Toll Road Revenue,
Senior Lien
6.00%, 01/01/16........................................................ 1,003,750
2,000,000 Los Angeles Department
of Airports, Series D
Los Angeles International Airport
5.63%, 05/15/12
Insured: FGIC.......................................................... 2,032,500
1,000,000 Los Angeles Department of
Water & Power
Electric Plant Revenue
5.20%, 02/15/17
Insured: FGIC.......................................................... 977,500
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
CALIFORNIA (CONTINUED)
$ 3,000,000 Northern California Power Agency
Public Power Revenue, Geothermal
Project
5.50%, 07/01/05
Insured: AMBAC......................................................... $ 3,172,500
2,000,000 Orange County, Series A
6.00%, 06/01/10
Insured: MBIA.......................................................... 2,102,500
------------
17,082,094
------------
COLORADO - 1.70%
2,000,000 Denver City & County Airport, Series C
6.75%, 11/15/22........................................................ 2,082,500
------------
FLORIDA - 2.52%
1,355,000 Florida State Board of Education
Capital Outlay, GO, Series E
Public Education
5.10%, 06/01/12........................................................ 1,338,063
1,400,000 Port Everglades Authority
Port Improvement
7.13%, 11/01/16........................................................ 1,746,500
------------
3,084,563
------------
GEORGIA - 0.90%
1,000,000 Georgia State, GO, Series B
5.95%, 03/01/08........................................................ 1,097,500
------------
HAWAII - 2.66%
1,000,000 Honolulu City & County, GO, Series A
5.75%, 04/01/10........................................................ 1,060,000
2,000,000 Maui County, UTGO
6.00%, 12/15/07
Insured: FGIC.......................................................... 2,195,000
------------
3,255,000
------------
ILLINOIS - 8.68%
2,000,000 Chicago Metropolitan Water
Reclamation District, GO
Capital Improvement
5.50%, 12/01/10........................................................ 2,065,000
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
ILLINOIS (CONTINUED)
$ 2,000,000 Chicago Public Building Commission
ETM, Series A
Building Revenue
7.00%, 01/01/20
Insured: MBIA.......................................................... $ 2,440,000
2,000,000 Chicago School Finance Authority
GO, Series A
4.90%, 06/01/05
Insured: MBIA.......................................................... 1,990,000
2,000,000 Du Page & Will Counties Community
School, GO, District No. 204
4.95%, 12/30/01........................................................ 2,065,000
Insured: FGIC
1,000,000 Illinois State Sales Tax, Series S
5.00%, 06/15/08........................................................ 986,250
1,000,000 Will County Forest Preserve
District, GO
5.90%, 12/01/03
Insured: AMBAC......................................................... 1,078,750
------------
10,625,000
------------
INDIANA - 7.02%
2,000,000 Indiana Municipal Power Supply
Agency, Series B
6.00%, 01/01/13
Insured: MBIA.......................................................... 2,145,000
1,000,000 Indiana State, HFA, SFMR, 1995
Series A-2
6.45%, 07/01/14........................................................ 1,032,500
1,000,000 Indiana State, HFA, SFMR, 1995
Series A-2
6.10%, 07/01/25........................................................ 1,012,500
2,250,000 Indiana State Office Building
Commission Capital Complex, Series A
Indiana Government Center
Parking Facilities
4.80%, 07/01/03
Insured: AMBAC......................................................... 2,261,250
1,000,000 Indiana Transportation Finance
Authority, Series A
Highway Revenue
5.75%, 06/01/12
Insured: AMBAC......................................................... 1,063,750
1,000,000 Marion County Hospital Facility
Authority, ETM
Community Hospital Indianapolis
6.00%, 05/01/06........................................................ 1,073,750
------------
8,588,750
------------
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
KENTUCKY - 1.82%
$ 1,000,000 Ashland Sewage & Solid Waste
Revenue
Ashland, Inc. Project
7.13%, 02/01/22........................................................ $ 1,088,750
1,000,000 Kentucky State Turnpike Authority
Economic Development Road Revenue,
Revitalization Projects
6.50%, 07/01/07
Insured: AMBAC......................................................... 1,138,750
------------
2,227,500
------------
LOUISIANA - 2.74%
3,000,000 Louisiana State Gas & Fuels Tax, Series A
7.25%, 11/15/00........................................................ 3,348,750
------------
MARYLAND - 2.60%
2,000,000 Prince Georges County, GO
Consolidated Public Improvement
5.00%, 01/01/02
Insured: MBIA.......................................................... 2,065,000
1,050,000 Washington Suburban Sanitary
District,GO
Sewage Disposal, First Series
6.25%, 06/01/99........................................................ 1,119,563
------------
3,184,563
------------
MASSACHUSETTS - 1.70%
1,000,000 Massachusetts State, GO, Series B
5.40%, 11/01/06........................................................ 1,043,750
1,000,000 Massachusetts State Industrial
Finance Agency, Series A
Resource Recovery Revenue
Refusetech., Inc. Project
5.25%, 07/01/99
Insured: FSA........................................................... 1,033,750
------------
2,077,500
------------
MICHIGAN - 18.51%
2,000,000 Battle Creek Downtown
Development Authority
Tax Increment Revenue
7.30%, 05/01/10........................................................ 2,280,000
1,300,000 Berkley City School District, GO
7.00%, 01/01/07
Insured: FGIC.......................................................... 1,525,875
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 2,000,000 Detroit Sewage Disposal Revenue
Series B
6.00%, 07/01/09
Insured: MBIA.......................................................... $ 2,172,500
1,500,000 Farmington Hills, EDC, Series A
Botsford Continuing Care
5.70%, 02/15/15
Insured: MBIA.......................................................... 1,530,000
930,000 Kent County Airport Facility
Kent County International Airport
5.50%, 01/01/07........................................................ 986,963
1,000,000 Michigan Municipal Bond Authority
Revenue
Local Government Loan, Revenue Share
7.25%, 11/01/10........................................................ 1,102,500
2,365,000 Michigan State Hospital Financing
Authority, Series B
Detroit Medical Center
5.00%, 08/15/06
Insured: AMBAC......................................................... 2,373,869
1,300,000 Michigan State Housing
Development Authority, Series A
Rental Housing Revenue
5.15%, 04/01/02
Insured: AMBAC......................................................... 1,339,000
1,000,000 Michigan State South Central
Power Agency
Power Supply System
5.80%, 11/01/05
Insured: MBIA.......................................................... 1,077,500
2,500,000 Michigan State Strategic Fund, PCR
General Motors Corp.
6.20%, 09/01/20........................................................ 2,600,000
1,000,000 Michigan State Strategic Fund, Series BB
Detroit Edison Co. Project Collateral
6.20%, 08/15/25
Insured: MBIA.......................................................... 1,066,250
1,000,000 Michigan State Strategic Fund, PCR
Series 1995 CC
Detroit Edison Co.
6.00%, 09/01/30 (A)
LOC: Barclays Bank..................................................... 1,000,000
2,000,000 Rockford Public Schools, GO
5.88%, 05/01/12........................................................ 2,057,500
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,400,000 University of Michigan, Series 1995 A
Student Fees Revenue
6.00%, 04/01/07........................................................ $ 1,540,000
------------
22,651,957
------------
NEVADA - 2.04%
2,000,000 Nevada State, GO, Series A
Nevada Municipal Bond Bank
8.00%, 11/01/05........................................................ 2,497,500
------------
NEW JERSEY - 3.23%
1,500,000 New Jersey Economic Development
Authority, Series A
Market Transition Facility Revenue
Senior Lien
7.00%, 07/01/04
Insured: MBIA.......................................................... 1,738,125
2,000,000 New Jersey State Turnpike
Authority, Series C
6.50%, 01/01/16........................................................ 2,220,000
------------
3,958,125
------------
NEW YORK - 2.13%
1,575,000 Battery Park City Authority, Series B
Junior Lien
4.50%, 11/01/98........................................................ 1,578,938
1,000,000 Triborough Bridge & Tunnel
Authority, Series Y
General Purpose
5.50%, 01/01/17........................................................ 1,028,750
------------
2,607,688
------------
OHIO - 1.48%
1,805,000 Cleveland City School District,
SP OB, RAN
4.20%, 06/01/96
Insured: AMBAC......................................................... 1,808,845
------------
OKLAHOMA - 0.88%
1,000,000 Grand River Dam Authority
5.75%, 06/01/08
Insured: FSA........................................................... 1,075,000
------------
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
PENNSYLVANIA - 1.65%
$ 2,000,000 Pennsylvania State Higher
Education Assistance Agency, Series A
Student Loan Revenue
4.63%, 12/01/00
LOC: Student Loan Marketing
Association............................................................ $ 2,022,500
------------
RHODE ISLAND - 3.48%
1,000,000 Convention Center Authority, Series B
5.00%, 05/15/09
Insured: MBIA.......................................................... 983,750
1,230,000 Rhode Island State, GO, Series A
Consolidated Capital Development Loan
5.63%, 08/01/13
Insured: FGIC.......................................................... 1,262,288
2,000,000 Rhode Island State Public
Buildings Authority, Series A
State Projects Revenue
5.25%, 02/01/08
Insured: AMBAC......................................................... 2,012,500
------------
4,258,538
------------
SOUTH CAROLINA - 2.25%
1,200,000 Myrtle Beach Water & Sewer
4.90%, 03/01/02
Insured: MBIA.......................................................... 1,221,000
1,500,000 Myrtle Beach Water & Sewer
5.00%, 03/01/03
Insured: MBIA.......................................................... 1,530,000
------------
2,751,000
------------
TENNESSEE - 1.04%
1,225,000 Tennessee Housing Development
Agency, Series C
Mortgage Finance
5.95%, 07/01/09
Insured: MBIA.......................................................... 1,270,938
------------
TEXAS - 4.52%
1,000,000 Brazos River Authority, Project D
Houston Light & Power Co.
7.75%, 10/01/15........................................................ 1,093,750
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
TEXAS (CONTINUED)
$ 1,000,000 Brownsville Utility System
Series 1995
Revenue Refunding Bonds
6.25%, 09/01/11
Insured: AMBAC......................................................... $ 1,118,750
1,190,000 Houston, GO
Public Improvement
5.00%, 03/01/12........................................................ 1,163,225
2,000,000 Texas State, GO, Series A
5.70%, 10/01/03........................................................ 2,160,000
------------
5,535,725
------------
VIRGINIA - 2.34%
1,600,000 Fairfax County , GO, Series A
4.70%, 06/01/99........................................................ 1,632,000
1,230,000 Norfolk, GO
5.40%, 06/01/12........................................................ 1,239,225
------------
2,871,225
------------
WASHINGTON - 2.82%
1,000,000 Douglas County Public Utility
District No. 001, Electric Distribution
System
5.90%, 01/01/11
Insured: MBIA.......................................................... 1,046,250
1,250,000 Washington State, GO, Series 93A
5.75%, 10/01/12........................................................ 1,315,625
1,000,000 Washington State Public Power
Supply System
Nuclear Project No. 1 Revenue
Unrefunded Balance
7.50%, 07/01/15
Insured: MBIA.......................................................... 1,093,750
------------
3,455,625
------------
OTHER TERRITORIES - 0.83%
1,000,000 Puerto Rico Commonwealth Highway
& Transportation Authority, Series X
Highway Revenue
4.90%, 07/01/01........................................................ 1,013,750
------------
TOTAL MUNICIPAL SECURITIES............................................. 118,937,834
(Cost $ 113,972,005) ------------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
Shares (NOTE 2)
- ------------ ------------
<C> <S> <C>
INVESTMENT COMPANY - 1.17%
1,426,877 Dreyfus Tax Exempt Cash
Management Fund........................................................ $ 1,426,877
------------
TOTAL INVESTMENT COMPANY............................................... 1,426,877
(Cost $ 1,426,877) ------------
TOTAL INVESTMENTS - 98.35%............................................................ 120,364,711
(Cost $ 115,398,882) ** ------------
NET OTHER ASSETS AND LIABILITIES - 1.65%............................................... 2,019,579
------------
NET ASSETS - 100.00%................................................................... $122,384,290
============
</TABLE>
- ----------------------------------------
** Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty business days notice. Put bonds and notes have demand features
which mature within one year. The interest rate shown reflects the rate
in effect at December 31, 1995.
AMBAC American Municipal Bond Assurance Corp.
EDC Economic Development Corp.
ETM Escrowed to Maturity
LOC Letter of Credit
FGIC Financial Guarantee Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
HFA Housing Finance Authority
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
RAN Revenue Anticipation Note
SFMR Single Family Mortgage Revenue
SP OB Special Obligation
UTGO Unlimited Tax General Obligation
See Notes to Financial Statements.
26
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MUNICIPAL SECURITIES - 98.69%
MICHIGAN - 94.20%
$ 2,280,000 Allegheny Sanitary Sewer System
5.45%, 11/01/02........................................................ $ 2,311,350
1,220,000 Auburn Hills Local Development
Authority, Series A
Tax Increment Revenue
6.75%, 11/01/97
LOC: Dai-Ichi Kangyo................................................... 1,274,890
2,000,000 Battle Creek Downtown
Development Authority
Tax Increment Revenue
6.90%, 05/01/04........................................................ 2,225,000
560,000 Bay City School District, UTGO
5.30%, 05/01/96........................................................ 563,315
695,000 Bay City School District, UTGO
5.30%, 05/01/97........................................................ 707,163
745,000 Bay City School District, UTGO
5.50%, 05/01/98........................................................ 768,281
500,000 Central Michigan University
6.70%, 10/01/97........................................................ 522,500
1,015,000 Chelsea School District, GO
3.75%, 05/01/96
Insured: FGIC.......................................................... 1,014,817
1,445,000 Chippewa Valley School District
UTGO, Series A
5.60%, 05/01/99........................................................ 1,508,219
1,000,000 Chippewa Valley School District, GO
6.38%, 05/01/05
Insured: FGIC.......................................................... 1,110,000
1,175,000 Chippewa Valley School District, GO
6.38%, 05/01/21
Insured: FGIC.......................................................... 1,304,250
1,700,000 Clintondale Community School
District, UTGO
4.65%, 05/01/03........................................................ 1,700,000
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,075,000 Dearborn School District, GO
7.00%, 04/01/99
Insured: MBIA.......................................................... $ 1,165,031
965,000 Dearborn Sewage Disposal System
6.90%, 04/01/02
Insured: MBIA.......................................................... 1,084,419
2,000,000 Dearborn School District, GO
Prerefunded 05/01/00
6.63%, 05/01/09
Insured: MBIA.......................................................... 2,222,500
1,000,000 Dearborn School District, GO
Prerefunded 05/01/00
6.38%, 05/01/10
Insured: MBIA.......................................................... 1,101,250
500,000 Delta County, EDC, Series E
Environmental Improvement,
Mead Escanaba Paper Co.
6.10%, 12/01/23 (A)
LOC: Bank Of Nova Scotia............................................... 500,000
2,500,000 Detroit, GO
Prerefunded 05/01/99
7.20%, 05/01/09
Insured: AMBAC......................................................... 2,778,125
580,000 Detroit, GO
Distributable State Aid
5.60%, 05/01/00
Insured: AMBAC......................................................... 605,375
1,550,000 Detroit, GO, Series A
Prerefunded 04/01/97
8.63%, 04/01/07........................................................ 1,668,188
1,000,000 Detroit City School District, GO
State School Aid Notes
4.50%, 05/01/96........................................................ 1,002,820
2,090,000 Detroit Convention Facility
Cobo Hall Expansion Project
3.75%, 09/30/96........................................................ 2,088,997
2,000,000 Detroit Convention Facility
Cobo Hall Expansion Project
4.00%, 09/30/97........................................................ 1,990,000
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 550,000 Detroit Sewage Disposal
7.40%, 07/01/96
Insured: FGIC.......................................................... $ 559,361
2,800,000 Detroit Sewage Disposal
4.85%, 07/01/01
Insured: FGIC.......................................................... 2,863,000
720,000 Detroit Water Supply System
4.30%, 07/01/00
Insured: FGIC.......................................................... 721,800
2,000,000 East China Township School
District, UTGO
6.00%, 05/01/02........................................................ 2,135,000
720,000 Eastern Michigan University, GO
3.95%, 06/01/98
Insured: AMBAC......................................................... 716,400
1,000,000 Eastern Michigan University, GO
5.80%, 06/01/01
Insured: AMBAC......................................................... 1,065,000
405,000 Farmington Hills, EDC, Series A
Botsford Continuing Care
4.90%, 02/15/02
Insured: MBIA.......................................................... 412,594
425,000 Farmington Hills, EDC, Series A
Botsford Continuing Care
5.00%, 02/15/03
Insured: MBIA.......................................................... 434,563
445,000 Farmington Hills, EDC, Series A
Botsford Continuing Care
5.10%, 02/15/04
Insured: MBIA.......................................................... 455,013
470,000 Farmington Hills, EDC, Series A
Botsford Continuing Care
5.20%, 02/15/05
Insured: MBIA.......................................................... 481,750
480,000 Ferris State College, SP OB
7.50%, 08/15/03........................................................ 495,624
1,635,000 Flint Hospital Building Authority
Series A
Hurley Medical Center
7.00%, 07/01/96........................................................ 1,654,555
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,915,000 Flint Hospital Building Authority
Series A
Hurley Medical Center
7.00%, 07/01/97........................................................ $ 1,977,238
1,000,000 Grand Haven Area Public Schools, GO
5.45%, 05/01/04
Insured: MBIA.......................................................... 1,051,250
500,000 Grand Rapids Water Supply System
6.50%, 01/01/96
Insured: FGIC.......................................................... 500,065
920,000 Grand Rapids Water Supply System
7.20%, 01/01/96........................................................ 920,193
500,000 Grand Rapids Water Supply System
6.60%, 01/01/97
Insured: FGIC.......................................................... 512,710
990,000 Grand Rapids Water Supply System
7.40%, 01/01/97........................................................ 1,024,353
900,000 Grand Traverse County Hospital
Finance Authority, Series A
Munson Healthcare
4.60%, 07/01/96
Insured: AMBAC......................................................... 902,808
680,000 Hartland Consolidated School
District, GO
4.80%, 05/01/99........................................................ 690,200
1,500,000 Haslett Public School District, GO
Prerefunded 05/01/00
7.50%, 05/01/20........................................................ 1,702,500
1,000,000 Holland Electric Revenue
Prerefunded 07/01/99
6.40%, 07/01/02........................................................ 1,072,500
1,100,000 Holland Electric Revenue
Prerefunded 07/01/99
6.50%, 07/01/03........................................................ 1,181,125
675,000 Hudsonville Public Schools, GO, Series B
4.50%, 05/01/98
Insured: FGIC.......................................................... 683,438
500,000 Hudsonville Public Schools, GO, Series B
4.50%, 05/01/99
Insured: FGIC.......................................................... 508,125
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,250,000 Huron Valley School District, GO
Prerefunded 05/01/01
7.10%, 05/01/08
Insured: FGIC.......................................................... $ 1,434,375
590,000 Jackson County Hospital Finance
Authority, Series A
W.A. Foote Memorial Hospital
6.40%, 06/01/96........................................................ 596,956
500,000 Kent County Airport Facility
Kent County International Airport
5.25%, 01/01/04........................................................ 521,875
505,000 Kent County Airport Facility
Kent County International Airport
5.30%, 01/01/05........................................................ 529,619
2,195,000 Kent Hospital Finance Authority
Pine Rest Christian Hospital
5.40%, 11/01/98
Insured: FGIC.......................................................... 2,274,569
500,000 Kent Hospital Finance Authority, Series A
Butterworth Hospital
6.50%, 01/15/97........................................................ 512,790
500,000 Kent Hospital Finance Authority, Series A
Butterworth Hospital
6.60%, 01/15/98........................................................ 524,375
2,000,000 Lake Orion Community School
District, GO
6.20%, 05/01/04
Insured: AMBAC......................................................... 2,220,000
850,000 Lanse Creuse Public Schools, GO
Prerefunded 05/01/97
7.70%, 05/01/04........................................................ 907,375
1,000,000 Lansing Water Supply & Electric
Utility, Series A
6.50%, 07/01/96........................................................ 1,015,300
2,250,000 Michigan Higher Education
Student Loan Authority, Series XII-E
6.00%, 10/01/97
Insured: AMBAC......................................................... 2,328,750
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,000,000 Michigan Higher Education Student
Loan Authority, Series XII-G
4.45%, 10/01/99
Insured: AMBAC......................................................... $ 1,006,250
1,000,000 Michigan Municipal Bond Authority
Local Government, Wayne County
Project, Group 12b
6.90%, 12/01/96
Insured: MBIA.......................................................... 1,029,180
1,000,000 Michigan Municipal Bond Authority
State Revolving Fund
5.50%, 10/01/99........................................................ 1,053,750
1,000,000 Michigan Municipal Bond Authority
Series B
Local Government Loan Program
6.90%, 05/01/99
Insured: FGIC.......................................................... 1,081,250
1,810,000 Michigan Public Power Agency
Belle River Project
Prerefunded 01/01/96
7.25%, 01/01/12
Insured: AMBAC......................................................... 1,846,200
2,000,000 Michigan Public Power Agency, Series A
Belle River Project
5.30%, 01/01/00........................................................ 2,085,000
750,000 Michigan Public Power Agency, Series A
Belle River Project
5.70%, 01/01/03........................................................ 800,625
1,000,000 Michigan State Building Authority
Series A
Equipment Program
4.45%, 10/01/97........................................................ 1,011,250
1,280,000 Michigan State Building Authority
Series II
Lapeer Regional Prison
6.60%, 09/01/96........................................................ 1,305,101
1,000,000 Michigan State Building Authority
Series II
6.10%, 10/01/01........................................................ 1,088,750
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 3,000,000 Michigan State Comprehensive
Transportation, Series B
5.63%, 05/15/03........................................................ $ 3,187,500
1,060,000 Michigan State Hospital
Finance Authority, Series J
Sisters of Mercy Health Corp.
7.15%, 02/15/99........................................................ 1,132,875
1,000,000 Michigan State Hospital
Finance Authority
Mercy Memorial Hospital
4.00%, 06/01/99
Insured: MBIA.......................................................... 992,500
1,000,000 Michigan State Hospital
Finance Authority
Oakwood Hospital Obligation Group
6.95%, 07/01/02
Insured: FGIC.......................................................... 1,127,500
500,000 Michigan State Hospital Finance
Authority, Series A
Pontiac Osteopathic
4.40%, 02/01/96........................................................ 499,945
1,000,000 Michigan State Hospital Finance
Authority, Series A
Henry Ford Health
Prerefunded 05/01/96
8.00%, 05/01/08........................................................ 1,033,740
1,200,000 Michigan State Hospital Finance
Authority, Series A
McLaren Obligation Group
3.80%, 10/15/96........................................................ 1,196,016
1,000,000 Michigan State Hospital Finance
Authority, Series A
Oakwood Hospital Obligation Corp.
3.90%, 11/01/96
Insured: FGIC.......................................................... 1,000,840
745,000 Michigan State Hospital Finance
Authority, Series A
Crittenton Hospital
6.50%, 12/01/96........................................................ 762,284
585,000 Michigan State Hospital Finance
Authority, Series A
St. Joseph Hospital Corp.
Prerefunded 01/01/96
7.65%, 01/01/97
Insured: FGIC.......................................................... 596,700
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 500,000 Michigan State Hospital Finance
Authority, Series A
Pontiac Osteopathic
4.65%, 02/01/97........................................................ $ 499,515
1,500,000 Michigan State Hospital Finance
Authority, Series A
Oakwood Hospital Obligation Group
4.00%, 11/01/97
Insured: FGIC.......................................................... 1,500,000
2,800,000 Michigan State Hospital Finance
Authority, Series J
Sisters of Mercy Health Corp.
Prerefunded 02/15/01
7.38%, 02/15/11........................................................ 3,230,500
1,000,000 Michigan State Hospital Finance
Authority, Series P
Sisters of Mercy Health Corp.
4.60%, 08/15/02
Insured: MBIA.......................................................... 1,002,500
440,000 Michigan State Housing Development
Authority
Mercy Bellbrook Project
3.90%, 04/01/96
Insured: MBIA.......................................................... 440,392
475,000 Michigan State Housing Development
Authority
Mercy Bellbrook Project
4.40%, 04/01/98
Insured: MBIA.......................................................... 479,156
1,000,000 Michigan State Housing Development
Authority, Series A
Rental Housing Revenue
5.75%, 10/01/96........................................................ 1,007,550
2,680,000 Michigan State Housing Development
Authority, Series A
Rental Housing Revenue
5.25%, 10/01/01
Insured: MBIA.......................................................... 2,760,400
400,000 Michigan State Strategic Fund
Collins & Aikman Corp. Project
6.00%, 08/01/96
LOC: National Bank of Detroit.......................................... 405,124
620,000 Michigan State Strategic Fund
Environmental Research Institute
5.00%, 08/15/96........................................................ 624,743
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 420,000 Michigan State Strategic Fund
Lutheran Social Services Project
4.25%, 09/01/97
LOC: First of America.................................................. $ 422,625
415,000 Michigan State Strategic Fund
Lutheran Social Services Project
4.40%, 09/01/98
LOC: First of America.................................................. 419,150
480,000 Michigan State Strategic Fund
Lutheran Social Services Project
4.55%, 09/01/99
LOC: First of America.................................................. 486,600
1,675,000 Michigan State Strategic Fund
Lutheran Social Services Project
6.50%, 02/15/06
LOC: First of America.................................................. 1,678,501
1,045,000 Michigan State Strategic Fund
Limited Obligation Revenue
Rotary Center of Traverse County
4.90%, 08/01/12
LOC: National Bank of Detroit.......................................... 1,054,102
5,800,000 Michigan State Strategic Fund
Dow Chemical Co. Project
6.20%, 12/01/14 (A).................................................... 5,800,000
910,000 Michigan State Strategic Fund
Industrial Development, Grand Rapids
Hotel Co.
5.25%, 12/01/15........................................................ 921,375
6,200,000 Michigan State Strategic Fund, PCR
Consumers Power Project
5.95%, 04/01/18 (A)
LOC: Union Bank of Switzerland......................................... 6,200,000
6,000,000 Michigan State Strategic Fund, Reserve 1
6.00%, 09/01/30 (A).................................................... 6,000,000
1,000,000 Michigan State Trunk Line, Series B
4.50%, 11/15/97
Insured: FGIC.......................................................... 1,008,750
1,010,000 Michigan State University, Series A
4.45%, 08/15/96........................................................ 1,014,333
1,075,000 Michigan State University, Series A
4.70%, 08/15/97........................................................ 1,087,094
1,000,000 Mount Clemens Community School
District, GO
Prerefunded 05/01/02
6.60%, 05/01/20
Insured: MBIA.......................................................... 1,135,000
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,735,000 Oakland County, EDC
Browalk Shopping Center
4.75%, 01/01/09........................................................ $ 1,743,675
630,000 Oakland County, EDC
Sugar Tree Shopping Center
4.82%, 01/01/14 (A).................................................... 629,213
3,000,000 Okemos Public School District, GO, Series I
Prerefunded 05/01/01
6.90%, 05/01/11........................................................ 3,408,750
665,000 Pinckney Community Schools, GO
Livingston & Washtenaw Counties
3.50%, 05/01/96
Insured: FGIC.......................................................... 664,694
3,200,000 Plymouth-Canton Community School
District, GO, Series B
Prerefunded 05/01/01
6.80%, 05/01/17........................................................ 3,596,000
415,000 Reeths-Puffer Schools, GO
6.75%, 05/01/97
Insured: FGIC.......................................................... 430,563
275,000 Reeths-Puffer Schools, GO
6.75%, 05/01/98
Insured: FGIC.......................................................... 291,156
630,000 Reeths-Puffer Schools, GO
6.75%, 05/01/99
Insured: FGIC.......................................................... 681,188
725,000 Reeths-Puffer Schools, GO
6.75%, 05/01/00
Insured: FGIC.......................................................... 795,688
735,000 Reeths-Puffer Schools, GO
6.75%, 05/01/01
Insured: FGIC.......................................................... 817,688
750,000 Reeths-Puffer Schools, GO
6.25%, 05/01/02
Insured: FGIC.......................................................... 824,063
1,600,000 Rochester Community School District
Prerefunded 05/01/98
7.25%, 05/01/03........................................................ 1,726,000
2,000,000 Rockford Public Schools
State Aid Notes
4.10%, 05/15/96........................................................ 2,003,360
2,000,000 Rockford Public Schools, GO
Prerefunded 05/01/00
7.38%, 05/01/19........................................................ 2,260,000
1,000,000 South Lyon Community Schools, GO
Prerefunded 05/01/98
7.80%, 05/01/14........................................................ 1,101,250
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 1,200,000 St. Joseph Hospital Finance Authority
Mercy Memorial Medical Center Obligation
3.65%, 01/01/96
Insured: AMBAC......................................................... $ 1,199,988
1,200,000 St. Joseph Hospital Finance Authority
Mercy Memorial Medical Center Obligation
3.95%, 01/01/97
Insured: AMBAC......................................................... 1,200,336
860,000 Traverse City Area Public Schools, GO
4.15%, 05/01/00
Insured: FGIC.......................................................... 855,700
555,000 University of Michigan
Intercollegiate Athletic
3.60%, 06/01/96........................................................ 554,678
630,000 University of Michigan
Intercollegiate Athletic
3.80%, 06/01/97........................................................ 629,213
5,500,000 University of Michigan, Series A
Medical Service Plan
5.90%, 12/01/27 (A).................................................... 5,500,000
2,035,000 Walled Lake Consolidated School
District, GO
4.70%, 05/01/01........................................................ 2,070,613
2,235,000 Walled Lake Consolidated School
District, GO
4.80%, 05/01/02........................................................ 2,262,938
2,000,000 Walled Lake Consolidated School
District, GO, Series II
Prerefunded 05/01/00
7.10%, 05/01/05........................................................ 2,255,000
945,000 Warren Consolidated School District, GO
6.00%, 05/01/01........................................................ 1,018,238
1,000,000 Warren Consolidated School District, GO
Prerefunded 05/01/02
6.63%, 05/01/21........................................................ 1,133,750
450,000 Wayne County Downriver System
Sewage Disposal, GO
3.75%, 05/01/97........................................................ 443,813
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 550,000 Wayne County Downriver System
Sewage Disposal, GO
3.75%, 05/01/98........................................................ $ 534,188
550,000 Wayne County Downriver System
Sewage Disposal, GO
3.75%, 05/01/99........................................................ 522,500
550,000 Wayne County Downriver System
Sewage Disposal, GO
3.75%, 05/01/00........................................................ 511,500
2,005,000 Wayne State University, GO
3.90%, 11/15/96
Insured: AMBAC......................................................... 2,007,286
980,000 Wyandotte Electric
6.85%, 10/01/96
Insured: AMBAC......................................................... 1,003,030
------------
176,494,364
------------
OTHER TERRITORIES - 4.49%
3,000,000 Puerto Rico Commonwealth
Highway & Transportation Authority,
Series X
Highway Revenue
4.90%, 07/01/01........................................................ 3,041,250
4,000,000 Puerto Rico Electric Power Authority
Series W
5.00%, 07/01/98........................................................ 4,070,000
1,300,000 Puerto Rico Individual Medical &
Environmental Pollution Control, Series A
Facilities Financing Authority, Intel Corp.
4.00%, 09/01/98........................................................ 1,300,000
------------
8,411,250
------------
TOTAL MUNICIPAL SECURITIES............................................. 184,905,614
(Cost $ 182,370,775) ------------
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent PORTFOLIO OF INVESTMENTS (CONTINUED)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- ------------ ------------
<C> <S> <C>
INVESTMENT COMPANY - 0.00%
8,079 Reich & Tang Michigan
Tax Exempt Fund........................................................ $ 8,079
------------
TOTAL INVESTMENT COMPANY............................................... 8,079
(Cost $ 8,079) ------------
TOTAL INVESTMENTS - 98.69%............................................................. 184,913,693
(Cost $ 182,378,854) ** ------------
NET OTHER ASSETS AND LIABILITIES - 1.31%............................................... 2,451,892
------------
NET ASSETS - 100.00%................................................................... $187,365,585
============
</TABLE>
- ----------------------------------------
** Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty business days notice. Put bonds and notes have demand features
which mature within one year. The interest rate shown reflects the rate
in effect at December 31, 1995.
AMBAC American Municipal Bond Assurance Corp.
EDC Economic Development Corp.
FGIC Financial Guarantee Insurance Corp.
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
UTGO Unlimited Tax General Obligation
See Notes to Financial Statements.
33
<PAGE>
- ------------
The Kent STATEMENTS OF ASSETS AND LIABILITIES
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
LIMITED INTERMEDIATE TAX-FREE MICHIGAN
TERM TAX-FREE TAX-FREE INCOME MUNICIPAL
FUND FUND FUND BOND FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost............................ $ 53,881,531 $ 269,281,902 $ 115,398,882 $ 182,378,854
Net unrealized appreciation
(depreciation)................................. 867,379 13,606,654 4,965,829 2,534,839
------------- ------------- ------------- -------------
Total investments at value................. 54,748,910 282,888,556 120,364,711 184,913,693
Cash............................................. -- -- 3,522 --
Receivable from Investment Adviser (Note 3)...... 6,677 5,547 148,468 1,319
Interest and dividend receivables................ 764,013 4,715,171 1,965,982 2,513,048
Deferred organizational expense (Note 2)......... -- -- 5,591 --
------------- ------------- ------------- -------------
Total Assets............................... 55,519,600 287,609,274 122,488,274 187,428,060
------------- ------------- ------------- -------------
LIABILITIES:
Payable for Trust shares repurchased............. 85,042 -- 178 129
Advisory fee payable (Note 3).................... 2,759 15,828 7,366 14,648
Payable to administrator and
transfer agent (Note 3)........................ 342 11,831 5,100 1,946
Payable to custodian............................. 4,155 -- -- 249
Accrued expenses and other payables.............. 26,112 41,267 91,340 45,503
------------- ------------- ------------- -------------
Total Liabilities.......................... 118,410 68,926 103,984 62,475
------------- ------------- ------------- -------------
NET ASSETS......................................... $ 55,401,190 $ 287,540,348 $ 122,384,290 $ 187,365,585
============= ============= ============= =============
NET ASSETS CONSIST OF:
Paid-in-capital.................................. $ 54,499,911 $ 275,329,612 $ 117,251,067 $ 185,009,637
Undistributed (overdistributed) net
investment income.............................. 24,691 133,320 29,289 --
Accumulated net realized gain (loss) on
investments sold............................... 9,209 (1,529,238) 138,105 (178,891)
Net unrealized appreciation (depreciation)
of investments................................. 867,379 13,606,654 4,965,829 2,534,839
------------- ------------- ------------- -------------
TOTAL NET ASSETS................................... $ 55,401,190 $ 287,540,348 $ 122,384,290 $ 187,365,585
============= ============= ============= =============
INSTITUTIONAL SHARES:
Net Assets....................................... $ 55,347,335 $ 283,733,624 $ 121,855,534 $ 185,466,388
Shares Outstanding............................... 5,416,282 26,977,765 11,611,059 18,328,669
Net Asset Value, offering and redemption
price per share................................ $ 10.22 $ 10.52 $ 10.49 $ 10.12
============= ============= ============= =============
INVESTMENT SHARES:
Net Assets....................................... $ 53,855 $ 3,806,724 $ 528,756 $ 1,899,197
Shares Outstanding............................... 5,258 361,926 50,253 187,833
Net Asset Value and redemption
price per share................................ $ 10.24 $ 10.52 $ 10.52 $ 10.11
============= ============= ============= =============
Maximum offering price per share -
Investment Class (NAV/0.96).................... $ 10.67 $ 10.96 $ 10.96 $ 10.53
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
- ------------
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE PERIOD ENDED DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
LIMITED INTERMEDIATE TAX-FREE MICHIGAN
TERM TAX-FREE TAX-FREE INCOME MUNICIPAL
FUND FUND FUND/(1)/ BOND FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest......................................... $ 2,186,058 $ 15,955,238 $ 4,087,871 $ 7,255,266
Dividends........................................ 43,011 216,807 72,554 125,767
------------- ------------- ------------- -------------
Total Investment Income.................... 2,229,069 16,172,045 4,160,425 7,381,033
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fee (Note 3)................. 219,989 1,582,089 442,275 738,023
Administration fee (Note 3)...................... 97,773 632,836 160,827 328,010
Custodian fee (Note 3)........................... 5,395 8,291 6,509 14,183
Fund accounting fee (Note 3)..................... 3,292 11,962 6,234 12,111
Legal fee (Note 3)............................... 1,825 8,007 2,855 5,909
Audit fee........................................ 6,151 8,480 5,011 5,481
Shareholder services (Notes 3 & 4)............... 13,210 11,425 12,189 14,031
Trustees' fees and expenses (Note 3)............. 2,476 3,194 1,007 3,194
Amortization of organization costs (Note 2)...... -- -- 1,021 --
Distribution fee (Note 3)........................ 62 9,611 786 2,774
Printing expense (Note 4)........................ 2,606 7,165 809 6,513
Registration fees................................ 5,479 2,884 93,664 19,633
Miscellaneous.................................... 1,724 7,406 2,674 6,622
------------- ------------- ------------- -------------
Total Expenses before
reimbursement/waiver................. 359,982 2,293,350 735,861 1,156,484
Less: Reimbursement/waiver
(Note 3)............................. (20,789) -- (148,468) (20,055)
------------- ------------- ------------- -------------
Total Expenses net of
reimbursement/waiver................. 339,193 2,293,350 587,393 1,136,429
------------- ------------- ------------- -------------
NET INVESTMENT INCOME.............................. 1,889,876 13,878,695 3,573,032 6,244,604
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 2):
Net realized gain (loss) on investments sold..... 145,910 1,348,408 148,330 180,555
Net change in unrealized appreciation
(depreciation) of investments................ 1,744,380 25,697,939 4,965,829 5,672,314
------------- ------------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS......................... 1,890,290 27,046,347 5,114,159 5,852,869
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS......................................... $ 3,780,166 $ 40,925,042 $ 8,687,191 $ 12,097,473
============= ============= ============= =============
</TABLE>
- ----------------------------------------
(1) The Fund commenced operations on March 20, 1995.
See Notes to Financial Statements.
35
<PAGE>
- ------------
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------
<TABLE>
<CAPTION>
LIMITED TERM
TAX-FREE FUND
--------------------------------------------
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994/(1)/
----------------- ----------------------
<S> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD................................ $ 43,503,375 $ --
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income.......................................... 1,889,876 616,082
Net realized gain (loss) on investments sold................... 145,910 (118,333)
Net change in unrealized appreciation
(depreciation) of investments................................ 1,744,380 (877,001)
------------- -------------
Net increase (decrease) in net assets resulting
from operations.............................................. 3,780,166 (379,252)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 2 & 5):
Net investment income.......................................... (1,913,256) (586,379)
In excess of net investment income............................. -- --
Net realized gain on investments............................... -- --
------------- -------------
Total Distributions...................................... (1,913,256) (586,379)
------------- -------------
SHARE TRANSACTIONS (NOTE 5):
INSTITUTIONAL SHARES:
Shares issued.................................................. 31,715,093 60,290,213
Reinvestment of distributions.................................. 1,677 388
Shares redeemed................................................ (21,731,961) (15,828,369)
------------- -------------
Net Institutional Share transactions..................... 9,984,809 44,462,232
------------- -------------
INVESTMENT SHARES:
Shares issued.................................................. 55,976 6,731
Reinvestment of distributions.................................. 1,583 43
Shares redeemed................................................ (11,463) --
------------- -------------
Net Investment Share transactions........................ 46,096 6,774
------------- -------------
Net increase (decrease) from share transactions.......... 10,030,905 44,469,006
------------- -------------
Net increase (decrease) in net assets............................ 11,897,815 43,503,375
------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A)................... $ 55,401,190 $ 43,503,375
============= =============
(A) Accumulated undistributed (overdistributed)
net investment income....................................... $ 24,691 $ 29,703
============= =============
</TABLE>
- ----------------------------------------
(1) The Fund commenced operations on September 1, 1994.
(2) The Fund commenced operations on March 20, 1995.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TAX-FREE
TAX-FREE FUND INCOME FUND
------------------------------- -----------------------
YEAR ENDED DECEMBER 31, PERIOD ENDED
------------------------------- -----------------------
1995 1994 DECEMBER 31, 1995/(2)/
------------- ------------- ----------------------
<S> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD................................ $ 385,220,246 $ 139,169,495 $ --
------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income.......................................... 13,878,695 11,691,136 3,573,032
Net realized gain (loss) on investments sold................... 1,348,408 (2,780,361) 148,330
Net change in unrealized appreciation
(depreciation) of investments................................ 25,697,939 (14,982,450) 4,965,829
------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations.............................................. 40,925,042 (6,071,675) 8,687,191
------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 2 & 5):
Net investment income.......................................... (13,556,403) (11,652,637) (3,553,968)
In excess of net investment income............................. (286,257) (322,292) --
Net realized gain on investments............................... -- -- --
------------- ------------- -------------
Total Distributions...................................... (13,842,660) (11,974,929) (3,553,968)
------------- ------------- -------------
SHARE TRANSACTIONS (NOTE 5):
INSTITUTIONAL SHARES:
Shares issued.................................................. 56,260,448 364,702,605 134,004,667
Reinvestment of distributions.................................. 25,763 25,670 13,880
Shares redeemed................................................ (180,059,789) (102,143,430) (17,275,708)
------------- ------------- -------------
Net Institutional Share transactions..................... (123,773,578) 262,584,845 116,742,839
------------- ------------- -------------
INVESTMENT SHARES:
Shares issued.................................................. 558,623 3,560,764 530,148
Reinvestment of distributions.................................. 78,263 94,974 12,658
Shares redeemed................................................ (1,625,588) (2,143,228) (34,578)
------------- ------------- -------------
Net Investment Share transactions........................ (988,702) 1,512,510 508,228
------------- ------------- -------------
Net increase (decrease) from share transactions.......... (124,762,280) 264,097,355 117,251,067
------------- ------------- -------------
Net increase (decrease) in net assets............................ (97,679,898) 246,050,751 122,384,290
------------- ------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A)................... $ 287,540,348 $ 385,220,246 $ 122,384,290
============= ============= =============
(A) Accumulated undistributed (overdistributed)
net investment income....................................... $ 133,320 $ (322,292) $ 29,289
============= ============= =============
<CAPTION>
MICHIGAN MUNICIPAL
BOND FUND
----------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD................................ $ 120,464,659 $ 74,929,911
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income.......................................... 6,244,604 4,169,048
Net realized gain (loss) on investments sold................... 180,555 (339,652)
Net change in unrealized appreciation
(depreciation) of investments................................ 5,672,314 (3,403,446)
-------------- --------------
Net increase (decrease) in net assets resulting
from operations.............................................. 12,097,473 425,950
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 2 & 5):
Net investment income.......................................... (6,111,731) (4,130,738)
In excess of net investment income............................. (159,284) (132,873)
Net realized gain on investments............................... -- --
-------------- --------------
Total Distributions...................................... (6,271,015) (4,263,611)
-------------- --------------
SHARE TRANSACTIONS (NOTE 5):
INSTITUTIONAL SHARES:
Shares issued.................................................. 116,065,628 135,169,205
Reinvestment of distributions.................................. 46,344 42,012
Shares redeemed................................................ (54,884,598) (87,595,339)
-------------- --------------
Net Institutional Share transactions..................... 61,227,374 47,615,878
-------------- --------------
INVESTMENT SHARES:
Shares issued.................................................. 372,427 2,973,020
Reinvestment of distributions.................................. 31,264 23,677
Shares redeemed................................................ (556,597) (1,240,166)
-------------- --------------
Net Investment Share transactions........................ (152,906) 1,756,531
-------------- --------------
Net increase (decrease) from share transactions.......... 61,074,468 49,372,409
-------------- --------------
Net increase (decrease) in net assets............................ 66,900,926 45,534,748
-------------- --------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A)................... $ 187,365,585 $ 120,464,659
============== ==============
(A) Accumulated undistributed (overdistributed)
net investment income....................................... $ -- $ (132,873)
============== ==============
</TABLE>
37
<PAGE>
- ------------
LIMITED TERM TAX-FREE
The Kent FINANCIAL HIGHLIGHTS
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
- ------------
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTMENT SHARES
------------------------- -------------------------
PERIOD ENDED DECEMBER 31, PERIOD ENDED DECEMBER 31,
------------------------- -------------------------
1995 1994/(1)/ 1995 1994/(2)/
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period........................ $ 9.80 $ 10.00 $ 9.81 $ 9.87
-------- -------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.39 0.13 0.37 0.06
Net realized and unrealized gain (loss) on investments.... 0.42 (0.21) 0.44 (0.06)
-------- -------- -------- --------
Total from Investment Operations:....................... 0.81 (0.08) 0.81 --
-------- -------- -------- --------
Less Distributions from:
Net investment income..................................... (0.39) (0.12) (0.38) (0.06)
In excess of net investment income........................ -- -- -- --
Net realized gain on investments.......................... -- -- -- --
-------- -------- -------- --------
Total Distributions:.................................... (0.39) (0.12) (0.38) (0.06)
-------- -------- -------- --------
Net increase (decrease) in net asset value.................. 0.42 (0.20) 0.43 (0.06)
-------- -------- -------- --------
Net Asset Value, End of period.............................. $ 10.22 $ 9.80 $ 10.24 $ 9.81
======== ======== ======== ========
Total Return for period indicated (A)....................... 8.43% (0.77)% 8.40% 0.03%
Ratios/Supplemental Data:
Net Assets, End of period (000's)........................... $ 55,347 $ 43,497 $ 54 $ 7
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 3.87% 3.81%* 3.69% 3.86%*
Net investment income excluding reimbursement/waiver...... 3.82% 3.64%* 3.69% 3.75%*
Operating expenses including reimbursement/waiver......... 0.69% 0.79%* 0.84% 0.87%*
Operating expenses excluding reimbursement/waiver......... 0.74% 0.96%* 0.85% 0.98%*
Portfolio Turnover Rate..................................... 51% 10% 51% 10%
</TABLE>
- ----------------------------------------
* Annualized
(1) The Institutional Class commenced operations on September 1, 1994.
(2) The Investment Class date of initial public investment was November 1, 1994.
(A) Calculation does not include sales charge for Investment shares.
See Notes to Financial Statements.
38
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent FINANCIAL HIGHLIGHTS
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
- ------------
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
------------------------------------------------------
1995 1994 1993 1992/(1)/
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period........................ $ 9.74 $ 10.45 $ 10.02 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.45 0.40 0.37 0.01
Net realized and unrealized gain (loss) on investments.... 0.79 (0.71) 0.47 0.03
-------- -------- -------- --------
Total from Investment Operations:....................... 1.24 (0.31) 0.84 0.04
-------- -------- -------- --------
Less Distributions from:
Net investment income..................................... (0.45) (0.39) (0.36) (0.01)
In excess of net investment income........................ (0.01) (0.01) -- (0.01)
Net realized gain on investments.......................... -- -- (0.05) --
-------- -------- -------- --------
Total Distributions:.................................... (0.46) (0.40) (0.41) (0.02)
-------- -------- -------- --------
Net increase (decrease) in net asset value.................. 0.78 (0.71) 0.43 0.02
-------- -------- -------- --------
Net Asset Value, End of period.............................. $ 10.52 $ 9.74 $ 10.45 $ 10.02
======== ======== ======== ========
Total Return for period indicated........................... 12.90% (3.00)% 8.51% 0.40%
Ratios/Supplemental Data:
Net Assets, End of period (000's)........................... $283,733 $380,715 $135,862 $ 36,938
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 4.39% 4.07% 3.62% 1.77%*
Net investment income excluding reimbursement/waiver...... 4.39% 4.07% 3.62% 1.77%*
Operating expenses including reimbursement/waiver......... 0.72% 0.78% 0.84% 0.11%**
Operating expenses excluding reimbursement/waiver......... 0.72% 0.78% 0.84% 0.11%**
Portfolio Turnover Rate..................................... 6% 36% 14% 0%
</TABLE>
- ----------------------------------------
* Annualized
** Not Annualized
(1) The Institutional Class commenced operations on December 16, 1992.
See Notes to Financial Statements.
39
<PAGE>
- ------------
INTERMEDIATE TAX-FREE FUND
The Kent FINANCIAL HIGHLIGHTS (CONTINUED)
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
- ------------
INVESTMENT SHARES
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
------------------------------------------------------
1995 1994 1993 1992/(1)/
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period........................ $ 9.74 $ 10.45 $ 10.04 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.42 0.40 0.36 ***
Net realized and unrealized gain (loss) on investments.... 0.79 (0.71) 0.46 0.04
-------- -------- -------- --------
Total from Investment Operations:....................... 1.21 (0.31) 0.82 0.04
-------- -------- -------- --------
Less Distributions from:
Net investment income..................................... (0.42) (0.39) (0.33) --
In excess of net investment income........................ (0.01) (0.01) (0.03) --
Net realized gain on investments.......................... -- -- (0.05) --
-------- -------- -------- --------
Total Distributions:.................................... (0.43) (0.40) (0.41) --
-------- -------- -------- --------
Net increase (decrease) in net asset value.................. 0.78 (0.71) 0.41 0.04
-------- -------- -------- --------
Net Asset Value, End of period.............................. $ 10.52 $ 9.74 $ 10.45 $ 10.04
======== ======== ======== ========
Total Return for period indicated (A)....................... 12.66% (3.03)% 8.29% 0.40%
Ratios/Supplemental Data:
Net Assets, End of period (000's)
Ratios to average net assets:............................... $ 3,807 $ 4,505 $ 3,307 $ 92
Net investment income including reimbursement/waiver...... 4.13% 3.99% 3.44% 1.37%*
Net investment income excluding reimbursement/waiver...... 4.13% 3.99% 3.44% 1.37%*
Operating expenses including reimbursement/waiver......... 0.97% 0.79% 1.08% 0.10%**
Operating expenses excluding reimbursement/waiver......... 0.97% 0.79% 1.08% 0.10%**
Portfolio Turnover Rate..................................... 6% 36% 14% 0%
</TABLE>
- ----------------------------------------
* Annualized
** Not Annualized
*** The amount is less than $0.005
(1) The Investment Class date of initial public investment was
December 18, 1992.
(A) Calculation does not include sales charge for the Investment Shares.
See Notes to Financial Statements.
40
<PAGE>
- ------------
TAX-FREE INCOME FUND
The Kent FINANCIAL HIGHLIGHTS
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
- ------------
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES INVESTMENT SHARES
---------------------- ----------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1995/(1)/ DECEMBER 31, 1995/(2)/
---------------------- ----------------------
<S> <C> <C>
Net Asset Value, Beginning of period........................... $ 10.00 $ 10.00
--------- ---------
Income from Investment Operations:
Net investment income........................................ 0.36 0.31
Net realized and unrealized gain (loss) on investments....... 0.49 0.51
--------- ---------
Total from Investment Operations:.......................... 0.85 0.82
--------- ---------
Less Distributions from:
Net investment income........................................ (0.36) (0.30)
Net realized gain on investments............................. -- --
--------- ---------
Total Distributions........................................ (0.36) (0.30)
--------- ---------
Net increase (decrease) in net asset value..................... 0.49 0.52
--------- ---------
Net Asset Value, End of period................................. $ 10.49 $ 10.52
========= =========
Total Return for period indicated (A).......................... 8.64% 8.34%
Ratios/Supplemental Data:
Net Assets, End of period (000's).............................. $ 121,855 $ 529
Ratios to average net assets:
Net investment income including reimbursement/waiver......... 4.44%* 4.25%*
Net investment income excluding reimbursement/waiver......... 4.26%* 4.03%*
Operating expenses including reimbursement/waiver............ 0.73%* 0.95%*
Operating expenses excluding reimbursement/waiver............ 0.91%* 1.17%*
Portfolio Turnover Rate........................................ 10% 10%
</TABLE>
- ----------------------------------------
* Annualized
(1) The Institutional Class commenced operations on March 20, 1995.
(2) The Investment Class Date of initial public investment was March 31, 1995.
(A) Calculation does not include sales charge for the Investment Shares.
See Notes to Financial Statements.
41
<PAGE>
- ------------
MICHIGAN MUNICIPAL BOND FUND
The Kent FINANCIAL HIGHLIGHTS
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
- ------------
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993/(1)/
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of period........................ $ 9.72 $ 10.06 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.39 0.37 0.23
Net realized and unrealized gain (loss) on investments.... 0.39 (0.34) 0.07
-------- -------- --------
Total from Investment Operations:....................... 0.78 0.03 0.30
-------- -------- --------
Less Distributions from:
Net investment income..................................... (0.37) (0.36) (0.22)
In excess of net investment income........................ (0.01) (0.01) (0.01)
Net realized gain on investments.......................... -- -- (0.01)
In excess of net realized gain on investments............. -- -- ***
-------- -------- --------
Total Distributions:.................................... (0.38) (0.37) (0.24)
-------- -------- --------
Net increase (decrease) in net asset value.................. 0.40 (0.34) 0.06
-------- -------- --------
Net Asset Value, End of period.............................. $ 10.12 $ 9.72 $ 10.06
======== ======== ========
Total Return for period indicated (A)....................... 8.20% 0.36% 3.06%
Ratios/Supplemental Data:
Net Assets, End of period (000's)........................... $185,466 $118,485 $ 74,647
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 3.81% 3.74% 3.34%*
Net investment income excluding reimbursement/waiver...... 3.80% 3.50% 3.61%*
Operating expenses including reimbursement/waiver......... 0.69% 0.49% 0.24%*
Operating expenses excluding reimbursement/waiver......... 0.70% 0.74% 0.68%*
Portfolio Turnover Rate..................................... 42% 27% 10%
</TABLE>
- ----------------------------------------
* Annualized
*** Amount is less than $0.005
(1) The Institutional Class commenced operations on May 3, 1993.
(2) The Investment Class date of initial public investment was on May 11, 1993.
(A) Calculation does not include sales charge for the Investment shares.
See Notes to Financial Statements.
42
<PAGE>
INVESTMENT SHARES
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993/(2)/
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value, Beginning of period........................ $ 9.72 $ 10.08 $ 10.02
-------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.37 0.35 0.21
Net realized and unrealized gain (loss) on investments.... 0.40 (0.34) 0.07
-------- -------- --------
Total from Investment Operations:....................... 0.77 0.01 0.28
-------- -------- --------
Less Distributions from:
Net investment income..................................... (0.37) (0.34) (0.21)
In excess of net investment income........................ (0.01) (0.03) ***
Net realized gain on investments.......................... -- -- (0.01)
In excess of net realized gain on investments............. -- -- --
-------- -------- --------
Total Distributions:.................................... (0.38) (0.37) (0.22)
-------- -------- --------
Net increase (decrease) in net asset value.................. 0.39 (0.36) 0.06
-------- -------- --------
Net Asset Value, End of period.............................. $ 10.11 $ 9.72 $ 10.08
======== ======== ========
Total Return for period indicated (A)....................... 8.01% 0.16% 2.85%
Ratios/Supplemental Data:
Net Assets, End of period (000's)........................... $ 1,900 $ 1,980 $ 283
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 3.68% 3.80% 3.43%*
Net investment income excluding reimbursement/waiver...... 3.67% 2.74% 2.60%*
Operating expenses including reimbursement/waiver......... 0.83% 0.49% 0.25%*
Operating expenses excluding reimbursement/waiver......... 0.85% 0.84% 1.08%*
Portfolio Turnover Rate..................................... 42% 27% 10%
</TABLE>
43
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS
- ------------
1. ORGANIZATION
The Kent Funds (the "Trust") was organized as a Massachusetts business
trust on May 9, 1986 and is registered under the Investment Company Act of 1940,
as amended, as an open-end management investment company. As of the date of this
report, the Trust offered thirteen managed investment portfolios. The
accompanying financial statements and financial highlights are those of the
Limited Term Tax-Free Fund (formerly the Limited Maturity Tax Exempt Bond Fund),
Intermediate Tax-Free Fund (formerly the Medium Term Tax Exempt Bond Fund), Tax-
Free Income Fund and Michigan Municipal Bond Fund (formerly the Michigan
Municipal Limited Maturity Bond Fund) (individually, a "Portfolio",
collectively, the "Portfolios") only. The Trust offers two classes of shares:
Investment and Institutional. The Investment Shares are offered with a 4.00%
sales load.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies in conformity with
generally accepted accounting principles consistently followed by the Portfolios
in the preparation of the financial statements.
PORTFOLIO VALUATION: Corporate debt securities, municipal securities and debt
securities of the U.S. government and its agencies (other than short-term
investments maturing in 60 days or less) are valued on the basis of valuations
provided by dealers or by an independent pricing service approved by the Board
of Trustees. Short-term obligations that mature in 60 days or less are valued at
amortized cost, which constitutes fair value and approximates market value. All
other securities and other assets are appraised at their fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Net realized gains and losses on investments sold
are recorded on the basis of identified cost. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Portfolios declare and
distribute dividends from net investment income monthly. Net investment income
for this purpose consists of interest accrued and discount earned (including
both original issue and market discount), less amortization of any market
premium on municipal securities and accrued expenses. Net realized capital
gains, if any, are distributed at least annually.
The amounts of income and capital gains to be distributed are determined in
accordance with income tax regulations. Such amounts may vary from income and
capital gains recognized in accordance with generally accepted accounting
principles.
FEDERAL TAXES: The Trust treats each Portfolio as a separate entity for Federal
income tax purposes. Each Portfolio intends to continue to qualify each year as
a "regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Portfolio will not be subject to
Federal income taxes to the extent that it distributes all of its taxable or
44
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
tax-exempt income. In addition, by distributing during each calendar year
substantially all of its net investment income and capital gains, each Portfolio
will not be subject to a Federal excise tax. Therefore, no Federal income tax
provision is required.
EXPENSES: Expenses directly attributable to a Portfolio are charged to the
Portfolio, while expenses which are attributable to more than one investment
portfolio of the Trust are allocated among the respective portfolios. In
addition, investors in Investment Shares will pay the expenses directly
attributable to the Investment Shares as a class, and investors in Institutional
Shares will pay the expenses directly attributable to the Institutional Shares
as a class.
ORGANIZATIONAL COSTS: The Kent Tax-Free Income Fund bears all costs in
connection with its organization, including the fees and expenses of registering
and qualifying its initial shares for distribution under Federal and state
securities laws. All such costs are amortized using the straight-line method
over a period of five years beginning with the Portfolio's commencement of
operations. In the event that any of the initial shares purchased by the
Portfolio's sponsor are redeemed during such period, the Portfolio will be
reimbursed by such holder for any unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
3. INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND OTHER FEES
Old Kent Bank ("Investment Adviser") serves as the investment adviser to
the Trust. The Investment Adviser is a Michigan State Banking Association and
the principal subsidiary of Old Kent Financial Corporation. The Investment
Adviser is entitled to receive a fee, computed daily and paid monthly, at the
annual rate of 0.45% of the average daily net assets of each of the Limited Term
Tax-Free Fund and the Michigan Municipal Bond Fund, 0.50% of the average daily
net assets of the Intermediate Tax-Free Fund and 0.55% of the average daily net
assets of the Tax-Free Income Fund.
Effective March 31, 1995, First Data Investor Services Group, Inc.
("FDISG"), formerly known as The Shareholder Services Group, Inc. doing business
as 440 Financial, a wholly-owned subsidiary of First Data Corporation ("First
Data"), serves as the Trust's administrator and transfer agent. FDISG (the
"Administrator"), receives a fee computed daily and paid monthly, at the annual
rate of 0.20% for up to $5.0 billion, 0.18% for $5.0 to $7.5 billion and 0.15%
for over $7.5 billion of the Trust's aggregate net assets. In addition, FDISG
also receives a separate fee from each Portfolio for certain transfer agent
services ("shareholder services fees"). Prior to March 31, 1995, the
administration, fund accounting and transfer agency services described above
were provided by 440 Financial Group of Worcester, Inc., a wholly-owned
subsidiary of State Mutual Life Assurance Company of America ("State Mutual")
for the same annual fees. On March 31, 1995, FDISG acquired substantially all
the assets of 440 Financial Group of Worcester, Inc.
The Investment Adviser has voluntarily reduced the advisory fee for the
Limited Term Tax-Free Fund, Tax-Free Income Fund and Michigan Municipal Bond
Fund for the year ended December 31, 1995. The Investment Adviser has reimbursed
the Investment Shares and Institutional Shares of the Limited Term Tax-Free
Fund, Tax-Free Income Fund, and Michigan Municipal Bond Fund, $2 and $20,787;
$680 and $147,788 and $295 and $19,760, respectively.
Prior to April 1, 1994, Keystone Custodian Funds, Inc. ("Keystone") and
Keystone Investor Resource Center, Inc. served as administrator and transfer
agent, respectively, for the Portfolios. Fee rates paid to Keystone and Keystone
Investor Resource Center, Inc. were the same as those paid to FDISG.
45
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
Each Portfolio has adopted a distribution plan (the "Plans") on behalf of
the Investment Shares pursuant to Rule 12b-1 of the Investment Company Act of
1940. The Plans provide for payments to 440 Financial Distributors, Inc. (the
"Distributor"), an indirect wholly-owned subsidiary of First Data, of up to
0.25% of the average daily net assets of the Investment Shares of the
Portfolios. Currently, the Limited Term Tax-Free Fund and Michigan Municipal
Bond Fund make payments at the rate of only 0.15% of the average daily net
assets of their Investment Shares pursuant to the Plans.
The Distributor acts as the exclusive distributor of the Trust's shares.
Prior to March 31, 1995, the Distributor was an indirect wholly-owned subsidiary
of State Mutual. Prior to April 1, 1994, Fiduciary Investment Company, Inc.
acted as the distributor of the Trust's shares. Fee rates charged by the
Distributor are the same as those charged by Fiduciary Investment Company, Inc.
One trustee and certain officers of the Trust are also officers of the
current Administrator and/or the Distributor. Such Trustee and officers receive
no compensation from the Trust for serving in their respective roles.
Expenses for the Trust include legal fees paid to Drinker Biddle & Reath. A
partner of that firm serves as Secretary of the Trust.
Bankers Trust Company acts as the Trust's custodian. Prior to October 25,
1995, the Trust's custodian was The Chase Manhattan Bank, N.A., a wholly-owned
subsidiary of The Chase Manhattan Corporation.
4. CLASS LEVEL EXPENSES
Each of the Portfolios has established two classes of shares, Investment
Shares and Institutional Shares. Each share in each Portfolio, regardless of
class, represents an equal pro rata interest in a Portfolio and has identical
voting, dividend, liquidation and other rights, except in matters affecting only
a particular Portfolio or class, in which case only shares of the affected
Portfolio or class are entitled to vote. Each class may bear class specific
expenses.
Class specific expenses, if any, are currently limited to expenses directly
attributable to the Investment Shares under the Plans, shareholder services fees
and certain printing and postage expenses incurred as they relate to a
particular class of shares. Shareholder services fees were borne by each of the
Investment and Institutional Shares for each Portfolio for the year ended
December 31, 1995 as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL INVESTMENT
------------- ----------
<S> <C> <C>
Limited Term Tax Free......................... $ 13,200 $ 10
Intermediate Tax Free......................... 11,288 137
Tax Free Income............................... 12,144 45
Michigan Municipal Bond....................... 13,869 162
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest without par value. It allows
for the creation of one or more classes of shares within each series, each of
which, regardless of class designation, represents an equal proportionate
interest in the Portfolios with each other share of that series. The Portfolios
may issue more than one series of shares investing in portfolios of securities.
The Trust currently issues thirteen series of shares with two separate classes
in each series, Investment Shares and Institutional Shares. Each class of shares
is entitled upon liquidation of the Portfolios to a pro rata share in the net
assets of the class of such series. Transactions in capital shares and
distributions to shareholders are summarized below for each Portfolio.
46
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
TRANSACTIONS IN CAPITAL SHARES:
LIMITED TERM TAX-FREE FUND
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
--------------------------------
1995 1994*
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Shares issued.................................... 3,132,279 6,036,399
Reinvestment of distributions.................... 166 39
Shares redeemed.................................. (2,152,975) (1,599,626)
------------ ------------
Net increase (decrease)........................ 979,470 4,436,812
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Shares issued.................................... 5,537 681
Reinvestment of distributions.................... 156 4
Shares redeemed.................................. (1,120) --
------------ ------------
Net increase (decrease)........................ 4,573 685
============ ============
</TABLE>
INTERMEDIATE TAX-FREE FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Shares issued.................................... 5,509,613 36,434,473
Reinvestment of distributions.................... 2,519 2,589
Shares redeemed.................................. (17,626,244) (10,350,419)
------------ ------------
Net increase (decrease)........................ (12,114,112) 26,086,643
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Shares issued.................................... 54,764 351,948
Reinvestment of distributions.................... 7,646 9,538
Shares redeemed.................................. (162,915) (215,526)
------------ ------------
Net increase (decrease)........................ (100,505) 145,960
============ ============
</TABLE>
TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1995**
-------------------
INSTITUTIONAL SHARES
<S> <C>
Shares issued.................................... 13,298,723
Reinvestment of distributions.................... 1,362
Shares redeemed.................................. (1,689,026)
------------
Net increase (decrease)........................ 11,611,059
============
<CAPTION>
INVESTMENT SHARES
<S> <C>
Shares issued.................................... 52,334
Reinvestment of distributions.................... 1,235
Shares redeemed.................................. (3,316)
------------
Net increase (decrease)........................ 50,253
============
</TABLE>
MICHIGAN MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Shares issued.................................... 11,603,278 13,670,695
Reinvestment of distributions.................... 4,643 4,263
Shares redeemed.................................. (5,467,888) (8,907,100)
------------ ------------
Net increase (decrease)........................ 6,140,033 4,767,858
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Shares issued.................................... 37,453 299,679
Reinvestment of distributions.................... 3,149 2,408
Shares redeemed.................................. (56,394) (126,547)
------------ ------------
Net increase (decrease)........................ (15,792) 175,540
============ ============
</TABLE>
- ----------------------------------------
* The Institutional Class of the Limited Term Tax-Free Fund commenced
operations on September 1, 1994. The Investment Class date of initial public
investment was November 1, 1994.
** The Institutional Class of the Tax-Free Income Fund commenced operations on
March 20, 1995. The Investment Class date of initial public investment was
March 31, 1995.
47
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
LIMITED TERM TAX-FREE FUND
<TABLE>
<CAPTION>
PERIOD ENDED DECEMBER 31,
--------------------------------
1995 1994*
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Net investment income............................ $ 1,911,674 $ 586,336
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 1,911,674 $ 586,336
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Net investment income............................ $ 1,582 $ 43
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 1,582 $ 43
============ ============
</TABLE>
INTERMEDIATE TERM TAX-FREE FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Net investment income............................ $ 13,398,449 $ 11,498,139
In excess of net investment income............... 282,467 318,019
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 13,680,916 $ 11,816,158
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Net investment income............................ $ 157,954 $ 154,498
In excess of net investment income............... 3,790 4,273
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 161,744 $ 158,771
============ ============
</TABLE>
TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31, 1995**
-------------------
INSTITUTIONAL SHARES
<S> <C>
Net investment income............................ $ 3,541,310
Net realized gains............................... --
------------
Total distributions............................ $ 3,541,310
============
<CAPTION>
INVESTMENT SHARES
<S> <C>
Net investment income............................ $ 12,658
Net realized gains............................... --
------------
Total distributions............................ $ 12,658
============
</TABLE>
MICHIGAN MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994
------------ ------------
INSTITUTIONAL SHARES
<S> <C> <C>
Net investment income............................ $ 6,043,639 $ 4,091,258
In excess of net investment income............... 157,669 131,603
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 6,201,308 $ 4,222,861
============ ============
<CAPTION>
INVESTMENT SHARES
<S> <C> <C>
Net investment income............................ $ 68,092 $ 39,480
In excess of net investment income............... 1,615 1,270
Net realized gains............................... -- --
------------ ------------
Total distributions............................ $ 69,707 $ 40,750
============ ============
</TABLE>
- ----------------------------------------
* The Institutional Class of the Limited Term Tax-Free Fund commenced
operations on September 1, 1994. The Investment Class date of initial public
investment was November 1, 1994.
** The Institutional Class of the Tax-Free Income Fund commenced operations on
March 20, 1995. The Investment Class date of initial public investment was
March 31, 1995.
48
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
6. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- -------------- ------------ ------------
<S> <C> <C>
Limited Term Tax-Free........................ $ 30,671,485 $ 22,382,898
Intermediate Tax-Free........................ 18,794,450 145,381,256
Tax-Free Income.............................. 121,647,924 9,705,008
Michigan Municipal Bond...................... 100,526,307 61,443,096
</TABLE>
At December 31, 1995, aggregate gross unrealized appreciation in which there was
an excess of value over tax cost, and aggregate gross unrealized depreciation in
which there was an excess of tax cost over value for all securities were as
follows:
<TABLE>
<CAPTION>
TAX BASIS
---------
UNREALIZED UNREALIZED
FUND APPRECIATION DEPRECIATION
- -------------- ------------ ------------
<S> <C> <C>
Limited Term Tax-Free........................ $ 867,379 $ --
Intermediate Tax-Free........................ 13,683,664 (77,010)
Tax-Free Income.............................. 4,985,699 (19,870)
Michigan Municipal Bond...................... 2,599,797 (64,958)
<CAPTION>
NET UNREALIZED
APPRECIATION
FUND (DEPRECIATION)
- -------------- --------------
<S> <C>
Limited Term Tax-Free........................ $ 867,379
Intermediate Tax-Free........................ 13,606,654
Tax-Free Income.............................. 4,965,829
Michigan Municipal Bond...................... 2,534,839
</TABLE>
As of December 31, 1995, the following Portfolios had capital loss carryforwards
which will expire in the year indicated:
<TABLE>
<CAPTION>
FUND 2002 2003
- -------------- ---- ----
<S> <C> <C>
Intermediate Tax-Free........................ $ 245,080 $ 1,065,189
Michigan Municipal Bond...................... 47,669 131,222
</TABLE>
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occuring on the first day of the following fiscal year. The
deferred loss for the Intermediate Tax-Free Fund of $218,969 will be treated as
arising on the first day of the fiscal year ended December 31, 1996.
7. CONCENTRATION OF CREDIT
The Michigan Municipal Bond Fund invests primarily in debt obligations
issued by the State of Michigan and its respective political subdivisions,
agencies and public authorities to obtain funds for various public purposes.
The Portfolio is more susceptible to economic and political factors adversely
affecting issuers of Michigan specific municipal bonds than funds that are not
concentrated in these issuers to the same extent.
49
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Trustees
The Kent Funds:
We have audited the accompanying statements of assets and liabilities (page 34)
of The Kent Limited Term Tax-Free Fund (formerly The Kent Limited Maturity Tax
Exempt Bond Fund), The Kent Intermediate Tax-Free Fund (formerly The Kent Medium
Term Tax Exempt Bond Fund), The Kent Tax-Free Income Fund, and The Kent Michigan
Municipal Bond Fund (formerly The Kent Michigan Municipal Limited Maturity Bond
Fund), portfolios of The Kent Funds, including the portfolios of investments
(pages 13-33), as of December 31, 1995, the related statements of operations for
the year or period then ended (page 35), the statements of changes in net assets
for each of the years or periods in the two-year period then ended (pages 36-
37), and the financial highlights for Institutional and Investment shares for
each of the years or periods in the four-year period then ended (pages 38-43).
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Kent Limited Term Tax-Free Fund, The Kent Intermediate Tax-Free Fund, The Kent
Tax-Free Income Fund and The Kent Michigan Municipal Bond Fund as of December
31, 1995, the results of their operations for the year or period then ended, the
changes in their net assets for each of the years or periods in the two-year
period then ended, and the financial highlights for each of the years or periods
in the four-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 9, 1996
<PAGE>
This page left blank intentionally.
<PAGE>
This page left blank intentionally.
<PAGE>
-------
T H E ----------------
------- BULK RATE
KENT FUNDS /(R)/ US POSTAGE
PAID
4400 COMPUTER DRIVE PERMIT NO. 54201
WESTBORO, MA 01581 BOSTON, MA
----------------
K-157 (12/95)
<PAGE>
This is a guide for graphical content in the Kent Funds Annual Reports:
K-158-Tax-Free Bond Funds
Front Cover -
A logo for the Funds representing a Roman column appears on the page.
Page2
Line chart representing the AAA Rated General Obligations Municipal
Bond Yields at 12/31/95 and 12/31/94 appears on this page
12/31/95 12/31/94
1yr 3.45 4.9
3years 3.85 5.2
5years 4.1 5.4
7years 4.3 5.55
10years 4.6 5.75
12yrs 4.8 5.75
15yrs 5 5.95
20yrs 5.15 6.25
25yrs 5.15 6.55
30yrs 5.2 6.55
Page4
Pie chart representing the investments owned by the Limited Term
Tax-Free Fund as of 12/31/95 appears on this page
Other regions 7.35%
Cash Equivalents & Net Other Assets & Liabilities 1.72
South 17.43
East 18.08
Mountain 12.51
North Central 40.60
Pacific 2.31
Page5
A mountain chart comparing the growth of $10,000 invested in institutional
and investment shares of the Limited Term Tax Free Fund and the Lehman
Brothers 1-Year General Obligations Municipal Bond Index and the Lehman
Brothers 3-Year General Obligations Municipal Bond Index appears here:
Municipal Bond Index appears here:
Institutional Shares
Start End
Institutional Shares
Fund $10,000 $10,760
Lehman Brothers 1-Year
General Obligations Mun-
icipal Bond Index 10,000 10,631
<PAGE>
Lehman Brothers 3-Year
General Obligations Mun-
icipal Bond Index 10,000 10,924
Investment Shares
Fund $9,600 $10,410
Lehman Brothers 1-Year
General Obligations Mun-
icipal Bond Index 10,000 10,656
Lehman Brothers 3-Year
General Obligations Mun-
icipal Bond Index 10,000 10,923
Page6
Pie chart representing the investments owned by the Intermediate Tax-
Free Fund as of 12/31/95 appears on this page
Other regions 5.35%
Cash Equivalents & Net Other Assets & Liabilities 1.81
South 23.80
East 12.89
Mountain 4.43
North Central 38.15
Pacific 13.57
Page7
A mountain chart comparing the growth of $10,000 invested in
institutional and investment shares of the Intermediate Tax Free Fund
and the Lehman Brothers 3-Year General Obligations Municipal Bond
Index and the Lehman Brothers 5-Year General Obligations Municipal
Bond Index appears here:
Institutional Shares
Start End
Institutional Shares
Fund $10,000 $11,903
Lehman Brothers 3-Year
General Obligations Mun-
icipal Bond Index 10,000 11,503
Lehman Brothers 5-Year
General Obligations Mun-
icipal Bond Index 10,000 11,797
Investment Shares
Fund $9,600 $11,402
Lehman Brothers 3-Year
General Obligations Mun-
icipal Bond Index 10,000 11,503
Lehman Brothers 5-Year
General Obligations Mun-
icipal Bond Index 10,000 11,747
<PAGE>
Page8
Pie chart representing the investments owned by the Tax-Free Income
Fund as of 12/31/95 appears on this page
Other 2.48%
Cash Equivalents & Net Other Assets & Liabilities 2.82
South 20.16
East 14.79
Mountain 3.74
North Central 36.57
Pacific 19.44
Page9
A mountain chart comparing the growth of $10,000 invested in
institutional and investment shares of the Tax Free Income Fund and
the Lehman Brothers Municipal Bond Index appears here:
Institutional Shares
Start End
Institutional Shares
Fund $10,000 $10,864
Lehman Brother Mun-
icipal Bond Index 10,000 10,970
Investment Shares
Fund $9,600 $10,401
Lehman Brothers Mun-
icipal Bond Index 10,000 110,970
Page11
A mountain chart comparing the growth of $10,000 invested in
institutional and investment shares of the Michigan Municipal Bond
Fund and the Lehman Brothers Three-Year general Obligations
Municipal Bond Index appears here:
Institutional Shares
Start End
Institutional Shares
Fund $10,000 $10,864
Lehman Brothers
Three Year General
Obligations Mun-
icipal Bond Index 10,000 10,970
Investment Shares
Fund $9,600 $10,681
Lehman Brothers
Three Year General
Obligations Mun-
icipal Bond Index 10,000 11,234
