<PAGE>
- -------------------------------------------
ANNUAL REPORT
- -------------------------------------------
- -------------------------------------------
DECEMBER 31, 1995 K-158 Money Market Funds
- ------------------------------------------- Front Cover -
Front Cover -
A Logo for the Funds
- ------------------------------------------- representing a Roman
YOUR FOUNDATION FOR INVESTMENT STRENGTH column appears on the
- ------------------------------------------- page.
The Kent
Money Market Fund
The
Kent The Kent Michigan Municipal
Funds/(R)/ Money Market Fund
<PAGE>
- -------------------------------------------
MESSAGE TO SHAREHOLDERS
- -------------------------------------------
Dear Kent Fund Shareholder:
We are pleased to provide The 1995 annual report to shareholders of The Kent
Money Market Fund and The Kent Michigan Municipal Money Market Fund.
Throughout 1995, we have maintained our investment goal of providing investors
with good value and opportunities for growth without undue risk.
Please call us at 1-800-633-KENT (1-800-633-5368) if you have questions about
your investments. A Kent Funds Specialist is available to assist you. We are
always pleased to answer questions from shareholders.
Sincerely,
The Kent Funds
<PAGE>
- ------------
MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
COMMERCIAL PAPER - 46.27%
$ 5,000,000 ABN AMRO North America Finance, Inc.
5.43%, 02/05/96........................................................ $ 4,972,826
5,000,000 ABN AMRO North America Finance, Inc.
5.47%, 03/05/96........................................................ 4,950,578
5,000,000 Ameritech Capital Funding
5.22%, 01/16/96........................................................ 4,988,396
4,795,000 Ameritech Corp.
5.50%, 03/05/96........................................................ 4,747,348
5,000,000 Budget Funding Corp.
5.47%, 01/24/96........................................................ 4,981,760
5,000,000 Cargill, Inc.
4.29%, 01/04/96........................................................ 4,997,617
5,000,000 Cargill Financial Services Corp.
5.48%, 03/04/96........................................................ 4,951,263
5,000,000 Daimler Benz North America Corp.
5.49%, 03/15/96........................................................ 4,942,856
8,600,000 Ford Motor Credit Co.
5.37%, 03/25/96........................................................ 8,491,038
3,010,053 Ford Motor Credit Co.
5.34%, 04/29/96........................................................ 3,010,053
5,000,000 General Electric Capital Corp.
5.37%, 01/31/96........................................................ 4,976,875
5,000,000 General Electric Capital Corp.
5.50%, 03/01/96........................................................ 4,953,417
5,000,000 General Electric Capital Corp.
5.31%, 07/26/96........................................................ 4,846,475
5,000,000 General Motors Acceptance Corp.
5.56%, 01/29/96........................................................ 4,977,600
5,000,000 General Motors Acceptance Corp.
5.68%, 02/26/96........................................................ 4,955,044
5,000,000 General Motors Acceptance Corp.
5.50%, 03/01/96........................................................ 4,953,417
5,000,000 General Motors Acceptance Corp.
5.47%, 05/14/96........................................................ 4,897,453
5,000,000 GTE North, Inc.
5.43%, 02/02/96........................................................ 4,975,111
3,000,000 Hanson Finance, Inc.
5.25%, 01/12/96........................................................ 2,994,748
5,000,000 Hanson Finance, Inc.
5.51%, 02/05/96........................................................ 4,972,438
5,000,000 Hanson Finance, Inc.
5.53%, 02/09/96........................................................ 4,969,288
5,000,000 Hanson Finance, Inc.
5.54%, 02/16/96........................................................ 4,963,839
7,965,000 Hanson Finance, Inc.
5.55%, 02/28/96........................................................ 7,892,496
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
$ 6,000,000 Heinz (H.J.) Co.
5.01%, 01/08/96........................................................ $ 5,993,315
5,000,000 Heinz (H.J.) Co.
5.44%, 02/05/96........................................................ 4,972,778
5,000,000 Heinz (H.J.) Co.
5.55%, 02/08/96........................................................ 4,969,917
5,000,000 Household Finance Corp.
5.42%, 01/19/96........................................................ 4,985,700
5,000,000 Lilly (Eli) & Co.
5.13%, 01/12/96........................................................ 4,991,444
5,000,000 Michigan Consolidated Gas Co.
5.54%, 02/12/96........................................................ 4,966,925
6,000,000 Michigan Consolidated Gas Co.
5.53%, 02/16/96........................................................ 5,956,683
5,000,000 Morgan (J.P.) & Co.
5.44%, 01/31/96........................................................ 4,976,583
4,200,000 Oakland-Alameda County California
Coliseum Authority Lease Revenue
5.78%, 01/10/96 (B).................................................... 4,200,000
5,000,000 Oakland-Alameda County California
Coliseum Authority Lease Revenue
5.85%, 01/16/96 (B).................................................... 5,000,000
7,000,000 Oakland-Alameda County California
Coliseum Authority Lease Revenue
5.82%, 01/19/96 (B).................................................... 7,000,000
7,000,000 Oakland-Alameda County California
Coliseum Authority Lease Revenue
5.78%, 02/01/96 (B).................................................... 7,000,000
6,000,000 PepsiCo, Inc.
5.58%, 05/10/96........................................................ 5,878,233
5,000,000 Xerox Corp.
5.18%, 01/11/96........................................................ 4,992,083
5,000,000 Xerox Credit Corp.
5.56%, 05/20/96........................................................ 4,891,111
------------
TOTAL COMMERCIAL PAPER................................................. 197,136,708
(Cost $ 197,136,708) ------------
CERTIFICATES OF DEPOSIT - 36.38%
5,000,000 ABN AMRO Bank
5.74%, 01/18/96........................................................ 4,999,849
5,000,000 ABN AMRO Bank
5.73%, 03/13/96........................................................ 4,999,994
5,000,000 Bank of Nova Scotia
5.80%, 01/02/96........................................................ 5,000,000
5,000,000 Bank of Nova Scotia
5.72%, 03/05/96........................................................ 5,000,000
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
- ------------
MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS (continued)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
$ 5,000,000 Banque Nationale de Paris
5.81%, 01/05/96........................................................ $ 5,000,000
5,000,000 Banque Nationale de Paris
5.78%, 01/29/96........................................................ 5,000,103
5,000,000 Banque Nationale de Paris
5.84%, 02/26/96........................................................ 5,000,061
5,000,000 Banque Nationale de Paris
5.77%, 02/29/96........................................................ 5,000,224
5,000,000 Banque Nationale de Paris
5.67%, 04/09/96........................................................ 5,000,000
5,000,000 Barclays Bank
5.79%, 01/17/96........................................................ 5,000,044
5,000,000 Bayerische Landesbank
5.78%, 01/02/96........................................................ 4,999,999
5,000,000 Bayerische Landesbank
5.79%, 01/24/96........................................................ 5,000,063
5,000,000 Commerzbank A.G.
5.82%, 01/08/96........................................................ 5,000,000
5,000,000 Commerzbank A.G.
5.80%, 01/31/96........................................................ 5,000,041
5,000,000 Commerzbank A.G.
5.74%, 02/06/96........................................................ 5,000,184
5,000,000 Credit Suisse
5.73%, 01/09/96........................................................ 4,999,989
5,000,000 Credit Suisse
5.79%, 01/19/96........................................................ 5,000,086
5,000,000 Dresdner Bank A.G.
5.81%, 01/02/96........................................................ 5,000,001
5,000,000 Dresdner Bank A.G.
5.71%, 04/16/96........................................................ 5,000,748
5,000,000 Deutsche Bank
5.80%, 01/04/96........................................................ 5,000,007
5,000,000 Deutsche Bank
5.79%, 01/12/96........................................................ 5,000,004
5,000,000 Deutsche Bank
5.77%, 01/19/96........................................................ 4,999,957
5,000,000 Lloyds Bank Plc
5.79%, 01/08/96........................................................ 5,000,010
5,000,000 National Westminster Bank
5.82%, 01/12/96........................................................ 5,000,059
5,000,000 National Westminster Bank
5.57%, 06/04/96........................................................ 5,000,419
5,000,000 Rabobank Nederland
5.75%, 03/05/96........................................................ 5,000,346
5,000,000 Rabobank Nederland
5.71%, 04/26/96........................................................ 5,001,432
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
$ 5,000,000 Societe Generale
5.73%, 01/16/96........................................................ $ 5,000,073
5,000,000 Societe Generale
5.79%, 01/26/96........................................................ 5,000,034
5,000,000 Societe Generale
5.60%, 06/03/96........................................................ 5,000,832
5,000,000 Societe Generale
5.56%, 06/04/96........................................................ 5,000,209
------------
TOTAL CERTIFICATES OF DEPOSIT.......................................... 155,004,768
(Cost $ 155,004,768) ------------
BANKERS' ACCEPTANCES - 6.49%
5,000,000 ABN AMRO Bank
5.39%, 05/13/96........................................................ 4,899,696
4,775,000 Chemical Bank
5.34%, 01/16/96........................................................ 4,763,659
5,000,000 Chemical Bank
5.51%, 02/29/96........................................................ 4,954,111
5,000,000 Mellon Bank
5.48%, 03/21/96........................................................ 4,938,333
3,120,000 Morgan Bank
5.34%, 01/16/96........................................................ 3,112,590
5,000,000 Republic National Bank of New York
5.46%, 02/16/96........................................................ 4,964,350
------------
TOTAL BANKERS' ACCEPTANCES............................................. 27,632,739
(Cost $ 27,632,739) ------------
U.S. GOVERNMENT OBLIGATIONS - 3.18%
U.S. TREASURY BILLS - 3.18%
4,000,000 5.49%, 07/25/96........................................................ 3,873,768
10,000,000 5.17%, 08/22/96........................................................ 9,662,323
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS...................................... 13,536,091
(Cost $ 13,536,091) ------------
DEMAND NOTE - 1.76%
7,500,000 Commonwealth Life Insurance Co.
6.11%, 12/31/99 (A).................................................... 7,500,000
------------
TOTAL DEMAND NOTE...................................................... 7,500,000
(Cost $ 7,500,000) ------------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
- ------------
MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS (continued)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
CORPORATE NOTE - 1.18%
$ 5,000,000 Exxon Capital Corp.
7.88%, 04/15/96........................................................ $ 5,029,614
------------
TOTAL CORPORATE NOTE................................................... 5,029,614
(Cost $ 5,029,614) ------------
REPURCHASE AGREEMENT - 4.69%
20,000,000 Donaldson, Lufkin & Jenrette
5.80%, Due 01/02/96, Dated 12/29/95
Maturity Value $ 20,012,889
(Collateralized By U.S. Treasury Note 5.50%,
Due 1996; Par Value $ 20,201,000; Market
Value $ 20,213,626).................................................... 20,000,000
------------
TOTAL REPURCHASE AGREEMENT............................................. 20,000,000
(Cost $ 20,000,000) ------------
TOTAL INVESTMENTS - 99.95%............................................................. 425,839,920
(Cost $ 425,839,920)** ------------
NET OTHER ASSETS AND LIABILITIES - 0.05%............................................... 202,400
------------
NET ASSETS - 100.00%................................................................... $426,042,320
============
</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. The interest rate shown reflects the rate in
effect at December 31, 1995.
(B) Securities are tax-exempt.
See Notes to Financial Statements.
3
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MUNICIPAL SECURITIES - 99.56%
MICHIGAN - 92.78%
$ 500,000 Armada Area Schools, UTGO, Q-SBLF
3.80%, 05/01/96........................................................ $ 500,000
2,000,000 Battle Creek, EDC
Michigan Carton & Paperboard Co.
5.20%, 12/01/99 (A)
LOC: American National Bank & Trust.................................... 2,000,001
400,000 Big Swan Creek, LTGO, Series 1995
Intercounty Drain System
3.70%, 06/01/96
Insured: MBIA.......................................................... 399,683
300,000 Byron Center Public Schools, UTGO, Q-SBLF
4.25%, 05/01/96
Insured: MBIA.......................................................... 300,000
170,000 Clinton Township, EDC
Pointe Village Square Project
4.75%, 02/01/14 (A)
LOC: RTC............................................................... 170,000
1,000,000 Cornell Township, EDC
Mead Escanaba Paper Co.
3.55%, 01/30/96
LOC: Credit Suisse..................................................... 1,000,000
2,000,000 Cornell Township, EDC
Mead Escanaba Paper Co.
3.50%, 02/22/96
LOC: Credit Suisse..................................................... 2,000,000
1,100,000 Cornell Township, EDC
Mead Escanaba Paper Co.
3.70%, 03/01/15 (A)
LOC: Credit Suisse..................................................... 1,100,000
3,500,000 Dearborn, EDC
Limited Obligation, Oakbrook Common
5.10%, 03/01/25 (A)
LOC: Mellon Bank....................................................... 3,500,000
500,000 Delta County, EDC
Environmental Improvement, Mead Paper Co.
6.10%, 12/01/23 (A)
LOC: Union Bank of Switzerland......................................... 500,000
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$1,200,000 Delta County, EDC, Series A
Environmental Improvement, Mead Paper Co.
3.60%, 12/01/23 (A)
LOC: Swiss Bank........................................................ $ 1,200,000
1,000,000 Delta County, EDC, Series A
Environmental Improvement, Mead Paper Co.
3.75%, 12/01/23 (A)
LOC: Bank of Nova Scotia............................................... 1,000,000
1,100,000 Delta County, EDC, Series C
Environmental Improvement, Mead Paper Co.
5.90%, 12/01/23 (A)
LOC: Bank of Nova Scotia............................................... 1,100,000
1,000,000 Delta County, EDC, Series D
Environmental Improvement, Mead Paper Co.
6.00%, 12/01/23 (A)
LOC: Credit Suisse..................................................... 1,000,000
500,000 Delta County, EDC, Series E
Environmental Improvement, Mead Paper Co.
6.00%, 12/01/23 (A)
LOC: Bank of Nova Scotia............................................... 500,000
500,000 Detroit City School District, GO
State School Aid Notes
4.50%, 05/01/96........................................................ 501,044
480,000 Farmington Hills, EDC
Limited Obligation, Brookfield Building Associates
5.20%, 11/10/01 (A)
LOC: Comerica Bank..................................................... 480,000
270,000 Farmington Hills, EDC
Marketing Displays
4.15%, 09/01/08 (A)
LOC: Comerica Bank..................................................... 270,000
1,255,000 Farmington Hills, HFA
Botsford General Hospital, Series B
6.00%, 02/15/16 (A)
Insured: MBIA, SBPA: Comerica Bank..................................... 1,255,000
1,025,000 Frankenmuth, EDC
Limited Obligation, Memtron Tech., Inc. Project
5.15%, 11/01/09 (A)
LOC: Comerica Bank..................................................... 1,025,000
1,855,000 Genesee County, EDC
Limited Obligation, Grand Blanc
Convalescent Center
3.95%, 11/01/11 (A)
LOC: Citizens Commercial & Savings..................................... 1,855,000
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS (continued)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$1,400,000 Grand Rapids, EDC
Limited Obligation, Folk Investments
5.10%, 09/01/98 (A)
LOC: First of America.................................................. $ 1,400,000
1,500,000 Grand Rapids Water Supply System
System Revenue, Refunding Bond
Prerefunded 01/01/96
9.50%, 01/01/16........................................................ 1,530,000
1,800,000 Grand Rapids Water Supply System
5.90%, 01/01/20 (A)
LOC: Societe Generale; Insured: FGIC................................... 1,800,000
3,000,000 Holland, EDC
Thrifty Holland, Inc.
3.90%, 03/01/13 (A)
LOC: Industrial Bank of Japan.......................................... 3,000,000
1,000,000 Kalamazoo, HFA
Bronson Methodist Hospital
3.65%, 06/01/96 (A)
LOC: National Bank of Detroit.......................................... 1,000,000
400,000 Lake Orion Community
School District, UTGO
3.80%, 05/01/96
Insured: AMBAC......................................................... 400,000
1,970,000 Leelanau County, EDC
American Mutual
3.90%, 06/15/06 (A)
LOC: First of America.................................................. 1,970,000
300,000 Livonia County, EDC
American Mutual
3.95%, 11/15/04 (A)
LOC: First of America.................................................. 300,000
2,100,000 Meridian, EDC
Hannah Research & Technology Center
4.25%, 11/15/14 (A)
LOC: Barclays Bank..................................................... 2,100,000
1,500,000 Michigan Municipal Bond Authority
Series A
5.00%, 05/03/96........................................................ 1,503,624
1,500,000 Michigan Municipal Bond Authority
Series C
4.50%, 09/06/96........................................................ 1,505,393
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$1,500,000 Michigan Public Power Agency
Belle River Project
Prerefunded 01/01/96
7.25%, 01/01/12........................................................ $ 1,530,000
310,000 Michigan Public Power Agency
Belle River Project
Prerefunded 01/01/96
7.00%, 01/01/18........................................................ 313,100
700,000 Michigan State, HFA, Series A
Hospital Equipment Loan Program
5.20%, 02/01/23 (A)
LOC: First of America.................................................. 700,000
6,000,000 Michigan State Building Authority
4.10%, 01/16/96
LOC: CIBC.............................................................. 6,000,000
500,000 Michigan State Building Authority
Saginaw State University
6.80%, 04/01/96
Insured: AMBAC......................................................... 503,769
500,000 Michigan State Comprehensive
Transportation, Series 2
Prerefunded 02/01/96
7.75%, 08/01/11........................................................ 511,636
500,000 Michigan State Housing
Development Authority
Pine Ridge
5.10%, 10/01/07 (A)
LOC: National Westminster.............................................. 500,000
3,000,000 Michigan State Housing
Development Authority
Shoal Creek
5.10%, 10/01/07 (A)
LOC: National Westminster.............................................. 3,000,000
1,500,000 Michigan State Housing
Development Authority
Woodland Meadows Project
5.20%, 03/01/13 (A)
LOC: Swiss Bank........................................................ 1,500,000
3,450,000 Michigan State Housing
Development Authority, Series A
3.90%, 01/05/96
LOC: Sanwa Bank........................................................ 3,450,000
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET 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 Michigan State Job Development Authority
Hitachi Metals
4.00%, 01/01/04 (A)
LOC: Sanwa Bank........................................................ $ 1,200,000
3,300,000 Michigan State Job Development Authority
BASF Wyandotte Corp.
5.19%, 12/01/09 (A)
LOC: Credit Suisse..................................................... 3,300,000
1,600,000 Michigan State Strategic Fund
Dow Chemical
3.95%, 01/30/96........................................................ 1,600,000
410,000 Michigan State Strategic Fund
Lutheran Social Services Project
4.00%, 09/01/96
LOC: First of America.................................................. 410,000
1,800,000 Michigan State Strategic Fund
Pilot Industries, Inc. Project
5.50%, 06/01/99 (A)
LOC: National Bank of Detroit.......................................... 1,800,000
890,000 Michigan State Strategic Fund Limited
Obligation Revenue
Tawas Bay Associates Project
3.90%, 12/01/01 (A)
LOC: First of America.................................................. 890,000
1,200,000 Michigan State Strategic Fund
Uniflow Corp. Project
5.50%, 06/01/02 (A)
LOC: National Bank of Detroit.......................................... 1,200,000
1,800,000 Michigan State Strategic Fund
Mans Project
5.15%, 10/01/06 (A)
LOC: Comerica Bank..................................................... 1,800,000
225,000 Michigan State Strategic Fund Limited
Obligation Revenue, Kazoo, Inc. Project
4.25%, 03/15/07 (A)
LOC: First of America.................................................. 225,000
1,500,000 Michigan State Strategic Fund
Waltec American Forging
5.20%, 10/01/09 (A)
LOC: Bank of Nova Scotia............................................... 1,500,000
1,535,000 Michigan State Strategic Fund
Plascore, Inc. Project
5.25%, 10/01/09 (A)
LOC: First Michigan Bank............................................... 1,535,000
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$ 500,000 Michigan State Strategic Fund
Tenibac Graphion, Inc. Project
5.20%, 05/01/10 (A)
LOC: National Bank of Detroit.......................................... $ 500,000
1,000,000 Michigan State Strategic Fund
Ironwood Plastics, Inc.
5.15%, 11/01/11 (A)
LOC: First of America.................................................. 1,000,000
2,000,000 Michigan State Strategic Fund
Solid Waste Disposal
Grayling Generating Project
5.10%, 01/01/14 (A)
LOC: Barclays Bank..................................................... 2,000,000
4,900,000 Michigan State Strategic Fund
JB Laboratories, Inc. Project
5.25%, 12/01/14 (A)
LOC: First Michigan Bank............................................... 4,900,000
1,000,000 Michigan State Strategic Fund
Molmec, Inc. Project
5.35%, 12/01/14 (A)
LOC: Comerica Bank..................................................... 1,000,000
3,600,000 Michigan State Strategic Fund
Dow Chemical Co. Project
6.20%, 12/01/14 (A).................................................... 3,600,000
2,500,000 Michigan State Strategic Fund
Cincinnati Milacron, Inc. Project
5.50%, 04/01/15 (A)
LOC: PNC Bank.......................................................... 2,500,000
4,500,000 Michigan State Strategic Fund
United Fixtures Co. Project
5.30%, 05/01/15 (A)
LOC: Lasalle National Bank............................................. 4,500,000
2,100,000 Michigan State Strategic Fund
Limited Obligation Revenue, Karona, Inc. Project
5.50%, 12/01/15 (A)
LOC: First of America.................................................. 2,097,903
2,400,000 Michigan State Strategic Fund, PCR
Consumers Power Project
5.95%, 04/15/18 (A)
LOC: Union Bank of Switzerland......................................... 2,400,000
6,000,000 Michigan State Strategic Fund
Detroit Edison
6.00%, 09/01/30 (A)
LOC: Barclays Bank..................................................... 6,000,000
2,050,000 Michigan State Strategic Fund, PCR, Series A
Consumers Power Project
5.15%, 09/01/00 (A)
LOC: Union Bank of Switzerland......................................... 2,050,000
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS (continued)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$4,000,000 Michigan State Strategic Fund, PCR, Series A
General Motors Corp. Project
5.40%, 04/01/08 (A).................................................... $ 4,000,000
2,500,000 Michigan State Strategic Fund, Series A
Donnelly Corp. Project
5.60%, 03/01/10 (A)
LOC: Bank of Tokyo Ltd................................................. 2,500,000
1,160,000 Michigan State Strategic Fund, Series A
Bk Hardwoods Ltd. Project
5.25%, 12/01/14 (A)
LOC: First Michigan Bank............................................... 1,160,000
1,195,000 Michigan State Strategic Fund, Series B
Kay Screen Printing, Inc.
5.50%, 01/01/07 (A)
LOC: Comerica Bank..................................................... 1,195,000
2,500,000 Michigan State Strategic Fund, Series B
Limited Obligation Revenue, Donnelly Corp.
4.25%, 04/01/08 (A)
LOC: ABN-AMRO.......................................................... 2,500,000
800,000 Michigan State Strategic Fund, Series B-1
5.20%, 01/01/14 (A)
LOC: Comerica Bank..................................................... 800,000
1,700,000 Michigan State Strategic Fund, Series E
Kinder Care Centers
5.35%, 10/01/99 (A)
LOC: Toronto Dominion.................................................. 1,700,000
2,800,000 Michigan State Strategic Fund, Series E
United Waste System, Inc. Project
5.15%, 04/01/10 (A)
LOC: Bank of America................................................... 2,800,000
1,200,000 Midland County, EDC, Series A
Dow Chemical Co. Project
6.10%, 12/01/23 (A).................................................... 1,200,000
2,000,000 Rockford Public Schools
State Aid Notes
4.10%, 05/15/96........................................................ 2,000,688
1,905,000 Sterling Heights, EDC
Sterling Shopping Center
5.15%, 12/01/10 (A)
LOC: National Bank of Detroit.......................................... 1,905,000
800,000 University of Michigan
Athletic Revenue Bonds
5.95%, 06/01/00 (A).................................................... 800,000
2,000,000 University of Michigan, Series A
Hospital Revenue, Prerefunded 12/01/96
7.75%, 12/01/12........................................................ 2,112,949
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- ------------ ------------
<C> <S> <C>
MICHIGAN (CONTINUED)
$2,100,000 University of Michigan, Series A
Hospital Revenue
5.90%, 12/01/19 (A).................................................... $ 2,100,000
1,000,000 University of Michigan, Series A
Hospital Revenue
5.90%, 12/01/27 (A).................................................... 1,000,000
1,120,000 Warren, EDC
Cross Country Inn
4.05%, 11/01/06 (A)
LOC: Huntington Bank................................................... 1,120,000
2,035,000 Warren, EDC
CMX Corp. Project
4.25%, 03/15/07 (A)
LOC: First of America.................................................. 2,035,000
200,000 Warren, EDC
Elias Brothers Restaurants
4.26%, 12/01/11 (A)
LOC: RTC............................................................... 200,000
915,000 Wyoming, EDC
Family One, Inc. Project
5.15%, 11/01/19 (A)
LOC: Comerica Bank..................................................... 915,000
------------
136,224,790
------------
OTHER TERRITORIES - 6.78%
2,750,000 Puerto Rico IM&EPC
Facilities Financing Authority
Reynolds Metals Project
3.75%, 09/01/13 (A)
LOC: ABN-AMRO Bank..................................................... 2,750,000
3,000,000 Puerto Rico IM&EPC
Facilities Financing Authority
Abbott Labs Project
5.10%, 03/01/23 (A).................................................... 3,000,000
4,200,000 Puerto Rico IM&EPC, Series A
Facilities Financing Authority
Merck & Co., Inc.
4.10%, 12/01/18 (A).................................................... 4,203,204
------------
9,953,204
------------
TOTAL MUNICIPAL SECURITIES
(Cost $146,177,994).................................................... 146,177,994
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
The Kent PORTFOLIO OF INVESTMENTS (continued)
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
- ------------ ------------
<C> <S> <C>
INVESTMENT COMPANY - 0.14%
198,789 Reich & Tang Tax Exempt Proceeds Fund.................................. $ 198,789
------------
TOTAL INVESTMENT COMPANY............................................... 198,789
(Cost $198,789) ------------
TOTAL INVESTMENTS - 99.70%............................................................. 146,376,783
(Cost $ 146,376,783)** ------------
NET OTHER ASSETS AND LIABILITIES - 0.30%............................................... 441,245
------------
NET ASSETS - 100.00%................................................................... $146,818,028
============
</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.
CIBC Canadian Imperial Bank of Commerce
EDC Economic Development Corp.
FGIC Financial Guarantee Insurance Corp.
GO General Obligation
HFA Hospital Finance Authority
IM&EPC Individual Medical & Environmental Pollution Control
LOC Letter of Credit
LTGO Limited Tax General Obligation
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
Q-SBLF Qualified for School Bond Loan Fund
RTC Resolution Trust Co.
SBPA Stand-By Purchase Agreement
UTGO Unlimited Tax General Obligation
See Notes to Financial Statements.
8
<PAGE>
- ------------
The Kent STATEMENTS OF ASSETS AND LIABILITIES
Funds DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
MICHIGAN
MONEY MUNICIPAL
MARKET MONEY MARKET
FUND FUND
------------- -------------
<S> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost................................................. $ 405,839,920 $ 146,376,783
Repurchase agreements............................................... 20,000,000 --
------------- -------------
Total investments at value....................................... 425,839,920 146,376,783
Cash.................................................................. -- 4,925
Interest and dividend receivables..................................... 2,337,440 966,861
Receivable for shares sold............................................ 22,391 --
Receivable from Investment Adviser.................................... 17,656 14,137
------------- -------------
Total Assets..................................................... 428,217,407 147,362,706
------------- -------------
LIABILITIES:
Dividends payable..................................................... 2,037,653 492,492
Advisory fee payable (Note 3)......................................... 19,755 6,285
Payable to administrator and transfer agent (Note 3).................. 13,858 4,054
Payable to custodian (Note 3)......................................... 140 --
Accrued expenses and other payables................................... 103,681 41,847
------------- -------------
Total Liabilities................................................ 2,175,087 544,678
------------- -------------
NET ASSETS.............................................................. $ 426,042,320 $ 146,818,028
============= =============
NET ASSETS CONSIST OF:
Paid-in-capital....................................................... $ 426,030,099 $ 146,817,498
Undistributed (overdistributed) net investment income................. 13,072 --
Accumulated net realized gain (loss) on investments sold.............. (851) 530
------------- -------------
TOTAL NET ASSETS........................................................ $ 426,042,320 $ 146,818,028
============= =============
INSTITUTIONAL SHARES
Net Assets............................................................ $ 424,814,858 $ 145,214,896
Shares Outstanding.................................................... 424,807,844 145,192,083
Net Asset Value, offering and redemption price per share.............. $ 1.00 $ 1.00
============= =============
INVESTMENT SHARES
Net Assets............................................................ $ 1,227,462 $ 1,603,132
Shares Outstanding.................................................... 1,227,451 1,603,095
Net Asset Value, offering and redemption price per share.............. $ 1.00 $ 1.00
============= =============
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- ------------
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1995
- ------------
<TABLE>
<CAPTION>
MICHIGAN
MONEY MUNICIPAL
MARKET MONEY MARKET
FUND FUND
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest.............................................................. $ 30,826,476 $ 5,859,712
Dividends............................................................. -- 66,485
-------------- --------------
Total Investment Income........................................... 30,826,476 5,926,197
-------------- --------------
EXPENSES:
Investment advisory fee (Note 3)...................................... 2,056,213 590,771
Administration fee (Note 3)........................................... 1,028,107 295,385
Custodian fee (Note 3)................................................ 52,515 18,375
Fund accounting fee (Note 3).......................................... 1,241 1,956
Legal fee (Note 3).................................................... 24,863 7,601
Audit fee............................................................. 6,543 4,980
Shareholder services fee (Notes 3 and 4).............................. 26,671 15,283
Trustees' fees and expenses (Note 3).................................. 3,194 3,194
Printing expense (Note 4)............................................. 20,076 10,504
Registration fees..................................................... 5,369 5,163
Miscellaneous fees.................................................... 18,478 6,517
-------------- --------------
Total Expenses before reimbursement/waiver........................ 3,243,270 959,729
Less: Reimbursement/waiver (Note 3)............................... (407,578) (130,065)
-------------- --------------
Total Expenses net of reimbursement/waiver........................ 2,835,692 829,664
-------------- --------------
NET INVESTMENT INCOME................................................... 27,990,784 5,096,533
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2)......... 129 530
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......... $ 27,990,913 $ 5,097,063
============== ==============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- ------------
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL MONEY
MONEY MARKET FUND MARKET FUND
------------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- ------------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF YEAR........................ $ 323,908,424 $ 360,217,000 $ 128,542,814 $ 183,514,823
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income................................ 27,990,784 12,474,287 5,096,533 3,205,730
Net realized gain (loss) on investments sold......... 129 (547) 530 6,263
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations.................................... 27,990,913 12,473,740 5,097,063 3,211,993
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTES 2 & 5):
Net investment income................................ (27,990,784) (12,474,287) (5,096,533) (3,205,730)
Net realized gain on investments..................... -- -- -- --
------------- ------------- ------------- -------------
Total Distributions................................ (27,990,784) (12,474,287) (5,096,533) (3,205,730)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS (NOTE 5):
INSTITUTIONAL SHARES:
Shares issued........................................ 866,868,069 639,093,684 191,689,616 209,379,926
Reinvestment of distributions........................ 406,420 -- -- --
Shares redeemed...................................... (765,999,260) (675,177,175) (174,639,291) (264,587,907)
------------- ------------- ------------- -------------
Net Institutional Shares transactions.............. 101,275,229 (36,083,491) 17,050,325 (55,207,981)
------------- ------------- ------------- -------------
INVESTMENT SHARES:
Shares issued........................................ 2,977,389 1,288,667 1,849,184 391,776
Reinvestment of distributions........................ 58,593 16,614 23,230 6,639
Shares redeemed...................................... (2,177,444) (1,529,819) (648,055) (168,706)
------------- ------------- ------------- -------------
Net Investment Shares transactions................. 858,538 (224,538) 1,224,359 229,709
------------- ------------- ------------- -------------
Net increase (decrease) from shares transactions..... 102,133,767 (36,308,029) 18,274,684 (54,978,272)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets................ 102,133,896 (36,308,576) 18,275,214 (54,972,009)
------------- ------------- ------------- -------------
NET ASSETS AT END OF YEAR (INCLUDING LINE A)........... $ 426,042,320 $ 323,908,424 $ 146,818,028 $ 128,542,814
============= ============= ============= =============
(A) UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME................................. $ 13,072 $ 13,072 $ -- $ --
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- ------------
MONEY MARKET FUND
The Kent FINANCIAL HIGHLIGHTS
Funds FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
- ------------
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income................................... 0.05 0.04 0.03 0.03 0.06
Net realized gain (loss) on investments................. -- -- -- -- --
--------- --------- --------- --------- ---------
Total from Investment Operations:................... 0.05 0.04 0.03 0.03 0.06
--------- --------- --------- --------- ---------
Less Distributions from:
Net investment income................................... (0.05) (0.04) (0.03) (0.03) (0.06)
Net realized gains on investments....................... -- -- -- -- --
--------- --------- --------- --------- ---------
Total Distributions:................................ (0.05) (0.04) (0.03) (0.03) (0.06)
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value................ -- -- -- -- --
--------- --------- --------- --------- ---------
Net Asset Value, End of year.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return for period indicated......................... 5.58% 3.75% 2.68% 3.40% 5.65%
Ratios/Supplemental Data:
Net Assets, End of year (000's)........................... $ 424,815 $ 323,539 $ 359,624 $ 220,508 $ $ 28
Ratios to average net assets:
Net investment income including reimbursement/waiver.... 5.45% 3.65% 2.65% 3.23% 5.53%
Net investment income excluding reimbursement/waiver.... 5.37% 3.59% 2.57% 2.92% 5.21%
Operating expenses including reimbursement/waiver....... 0.55% 0.60% 0.60% 0.60% 0.60%
Operating expenses excluding reimbursement/waiver....... 0.63% 0.65% 0.68% 0.91% 0.92%
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- ------------
MONEY MARKET 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...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- ------- ---------
Income from Investment Operations:
Net investment income................................... 0.05 0.04 0.03 --
Net realized gain (loss) on investments................. -- -- -- --
--------- -------- ------- ---------
Total from Investment Operations:................... 0.05 0.04 0.03 --
--------- -------- ------- ---------
Less Distributions from:
Net investment income................................... (0.05) (0.04) (0.03) --
Net realized gains on investments....................... -- -- -- --
--------- -------- ------- ---------
Total Distributions:................................ (0.05) (0.04) (0.03) --
--------- -------- ------- ---------
Net increase (decrease) in net asset value................ -- -- -- --
--------- -------- ------- ---------
Net Asset Value, End of period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======= =========
Total Return for period indicated......................... 5.56% 3.71% 2.67% 0.27%
Ratios/Supplemental Data:
Net Assets, End of period (000's)......................... $ 1,227 $ 369 $ 593 $ 11
Ratios to average net assets:
Net investment income including reimbursement/waiver.... 5.41% 3.58% 2.63% 3.30%*
Net investment income excluding reimbursement/waiver.... 5.33% 3.53% (1.24)% 3.25%*
Operating expenses including reimbursement/waiver....... 0.55% 0.63% 0.63% 0.63%*
Operating expenses excluding reimbursement/waiver....... 0.62% 0.68% 4.49% 0.68%*
</TABLE>
- ----------------------------------------
* Annualized
(1) The Investment Class date of initial public investment was December 9, 1992.
See Notes to Financial Statements.
13
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET 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 1991/(1)/
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ---------
Income from Investment Operations:
Net investment income........................... 0.03 0.02 0.02 0.03 0.02
Net realized gain (loss) on investments......... -- -- -- -- --
-------- -------- -------- -------- ---------
Total from Investment Operations:........... 0.03 0.02 0.02 0.03 0.02
-------- -------- -------- -------- ---------
Less Distributions from:
Net investment income........................... (0.03) (0.02) (0.02) (0.03) (0.02)
Net realized gains on investments............... -- -- -- -- --
-------- -------- -------- -------- ---------
Total Distributions:........................ (0.03) (0.02) (0.02) (0.03) (0.02)
-------- -------- -------- -------- ---------
Net increase (decrease) in net asset value........ -- -- -- -- --
-------- -------- -------- -------- ---------
Net Asset Value, End of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =========
Total Return for period indicated................. 3.50% 2.40% 2.00% 2.63% 2.37%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $145,215 $128,164 $183,366 $ 72,906 $ 49,618
Ratios to average net assets:
Net investment income including
reimbursement/waiver.......................... 3.45% 2.33% 1.96% 2.56% 4.03%*
Net investment income excluding
reimbursement/waiver.......................... 3.36% 2.23% 1.87% 2.29% 3.93%*
Operating expenses including
reimbursement/waiver.......................... 0.56% 0.60% 0.60% 0.60% 0.60%*
Operating expenses excluding
reimbursement/waiver.......................... 0.65% 0.70% 0.69% 0.86% 0.77%*
</TABLE>
- ----------------------------------------
* Annualized
(1) The Institutional Class commenced operations on June 3, 1991.
See Notes to Financial Statements.
14
<PAGE>
- ------------
MICHIGAN MUNICIPAL MONEY MARKET 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............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from Investment Operations:
Net investment income......................................... 0.03 0.02 0.02 ***
Net realized gain (loss) on investments....................... -- -- -- --
------- ------- ------- -------
Total from Investment Operations:......................... 0.03 0.02 0.02 --
------- ------- ------- -------
Less Distributions from:
Net investment income......................................... (0.03) (0.02) (0.02) --
Net realized gains on investments............................. -- -- -- --
------- ------- ------- -------
Total Distributions:...................................... (0.03) (0.02) (0.02) --
------- ------- ------- -------
Net increase (decrease) in net asset value...................... -- -- -- --
------- ------- ------- -------
Net Asset Value, End of period.................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total Return for period indicated............................... 3.48% 2.38% 1.98% 0.03%
Ratios/Supplemental Data:
Net Assets, End of period (000's)............................... $ 1,603 $ 379 $ 149 $ 0
Ratios to average net assets:
Net investment income including reimbursement/waiver.......... 3.48% 2.47% 2.01% 2.92%*
Net investment income excluding reimbursement/waiver.......... 3.39% 2.37% (1.13)% 2.92%*
Operating expenses including reimbursement/waiver............. 0.54% 0.63% 0.63% 0.00%*
Operating expenses excluding reimbursement/waiver............. 0.62% 0.73% 3.77% 0.00%*
</TABLE>
- ----------------------------------------
* Annualized
*** Amount is less than $0.005
(1) The Investment Class date of initial public investment was
December 15, 1992.
See Notes to Financial Statements.
15
<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
Money Market Fund and the Michigan Municipal Money Market Fund (individually, a
"Portfolio", collectively, the "Portfolios") only. The Trust offers two classes
of shares: Investment and Institutional.
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: Securities in the Portfolios are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940, which approximates market value. This method
involves valuing a portfolio security initially at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium.
REPURCHASE AGREEMENTS: Each Portfolio may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Portfolio
takes possession of an underlying debt obligation subject to an obligation of
the seller to repurchase, and the Portfolio to resell, the obligation at an
agreed upon price and time, thereby determining the yield during the Portfolio's
holding period. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Portfolio's holding period. The value
of the collateral is at least equal at all times to the total amount of the
repurchase obligations including interest. In the event of a counterparty
default, the Portfolio has the right to use the collateral to offset losses
incurred. There is potential loss to the Portfolio in the event the Portfolio is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the market value of the
underlying securities during the period while the Portfolio seeks to assure its
rights. The Portfolio's investment adviser, acting under the supervision of the
Trust's Board of Trustees, reviews the value of collateral and the
creditworthiness of those banks and dealers with which the Portfolio enters into
repurchase agreements to evaluate potential risks.
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 dividends
daily from net investment income and pay such dividends monthly. Net investment
income for this purpose consists of interest accrued, discount earned (including
both original issue and market discount), less amortization of any market
premium, dividends earned and accrued expenses. Net realized capital gains, if
any, are distributed at least annually.
16
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
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
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.
3. INVESTMENT ADVISORY, ADMINISTRATION 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 0.40% of the average daily net assets of each of the Money Market
Fund and the Michigan Municipal Money Market Fund.
Effective March 31, 1995, First Data Investors 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"), is entitled to receive 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 annual 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
Money Market Fund and the Michigan Municipal Money Market Fund for the year
ended December 31, 1995. The Investment Adviser has reimbursed the Institutional
Shares and Investment Shares of the Money Market Fund and the Michigan Municipal
Money Market Fund $152,240 and $125, and $54,800 and $50, respectively.
The Administrator has voluntarily limited its fees of the Money Market Fund
and the Michigan Municipal Money Market Fund. The Administrator has waived for
the Institutional Shares and Investment Shares of the Money Market Fund and the
Michigan Municipal Money Market Fund, $254,431 and $782, and $74,695 and $520,
respectively, for the year ended December 31, 1995.
17
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------
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 the Portfolios. Fee rates paid to Keystone and
Keystone Investor Resource Center, Inc. were the same as those paid to FDISG.
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 0.25% of
the average daily net assets of the Investment Shares for each of the
Portfolios. For the year ended December 31, 1995, no payments were made pursuant
to the Plan by either Portfolio.
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.
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 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
Institutional Shares and Investment Shares for each Portfolio for the year ended
December 31, 1995 as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL INVESTMENT
------------- ----------
<S> <C> <C>
Money Market Fund................... $ 26,604 $ 67
Michigan Municipal
Money Market Fund................. 15,213 70
</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
18
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (continued)
- ------------
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.
TRANSACTIONS IN CAPITAL SHARES:
MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INSTITUTIONAL SHARES 1995 1994
------------- -------------
<S> <C> <C>
Shares issued.................................... 866,868,069 639,086,250
Reinvestment of distributions.................... 406,420 --
Shares redeemed.................................. (765,999,260) (675,177,175)
------------- -------------
Net increase (decrease).................... 101,275,229 (36,090,925)
============= =============
INVESTMENT SHARES
Shares issued.................................... 2,977,389 1,288,658
Reinvestment of distributions.................... 58,593 16,614
Shares redeemed.................................. (2,177,444) (1,529,819)
------------- -------------
Net increase (decrease).................... 858,538 (224,547)
============= =============
</TABLE>
MICHIGAN MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INSTITUTIONAL SHARES 1995 1994
------------- -------------
<S> <C> <C>
Shares issued.................................... 191,689,615 209,374,394
Reinvestment of distributions.................... -- --
Shares redeemed.................................. (174,639,291) (264,587,907)
------------- -------------
Net increase (decrease).................... 17,050,324 (55,213,513)
============= =============
INVESTMENT SHARES
Shares issued.................................... 1,849,181 391,761
Reinvestment of distributions.................... 23,230 6,639
Shares redeemed.................................. (648,055) (168,706)
------------- -------------
Net increase (decrease).................... 1,224,356 229,694
============= =============
</TABLE>
DISTRIBUTIONS TO SHAREHOLDERS:
MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INSTITUTIONAL SHARES 1995 1994
------------- -------------
<S> <C> <C>
Net investment income............................ $ 27,928,222 $ 12,456,845
Net realized gains............................... -- --
------------- -------------
Total distributions........................ $ 27,928,222 $ 12,456,845
============= =============
INVESTMENT SHARES
Net investment income............................ $ 62,562 $ 17,442
Net realized gains............................... -- --
------------- -------------
Total distributions........................ $ 62,562 $ 17,442
============= =============
</TABLE>
MICHIGAN MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
INSTITUTIONAL SHARES 1995 1994
------------- -------------
<S> <C> <C>
Net investment income............................ $ 5,073,047 $ 3,199,090
Net realized gains............................... -- --
------------- -------------
Total distributions........................ $ 5,073,047 $ 3,199,090
============= =============
INVESTMENT SHARES
Net investment income............................ $ 23,486 $ 6,640
Net realized gains............................... -- --
------------- -------------
Total distributions........................ $ 23,486 $ 6,640
============= =============
</TABLE>
19
<PAGE>
- ------------
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (continued)
- ------------
6. CAPITAL LOSS CARRYFORWARD
As of December 31, 1995, the Money Market Fund had a capital loss
carryforward for Federal tax purposes of approximately $433 which expires in
1999, $224 which expires in 2002 and $194 which expires in 2003.
7. CONCENTRATION OF CREDIT
The Michigan Municipal Money Market 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 securities than are
municipal bond funds that are not concentrated in these issuers to the same
extent.
20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Trustees
The Kent Funds:
We have audited the accompanying statements of assets and liabilities (page 9)
of The Kent Money Market Fund and The Kent Michigan Municipal Money Market Fund,
portfolios of The Kent Funds, including the portfolios of investments (pages 1 -
8), as of December 31, 1995, and the related statements of operations for the
year then ended (page 10), the statements of changes in net assets for each of
the years in the two-year period then ended (page 11) and the financial
highlights for Institutional and Investment Shares for each of the years or
periods in the five-year period then ended (pages 12 - 15). 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 Money Market Fund and The Kent Michigan Municipal Money Market Fund as of
December 31, 1995, the results of their operations for the year then ended, the
changes in their net assets for each of the years in the two-year period then
ended and the financial highlights for each of the years or periods in the five-
year period then ended, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 9, 1996
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<PAGE>
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<PAGE>
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<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
Money Market Fund and The Kent Michigan Municipal Money Market 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.
Shares of the funds are not deposits or obligations of, or guaranteed or
endorsed by Old Kent Bank or any of its affiliates. Shares of the funds
[LOGO are not federally insured by the U.S. Government, the Federal Deposit
APPEARS Insurance Corporation, the Federal Reserve Board or any other agency.
HERE] Investment return and principal value will vary as a result of market
conditions and other factors so that shares of the fund, 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. There can be no assurance that The Kent Money Market Fund or
The Kent Michigan Municipal Money Market Fund will be able to maintain a
stable net asset value of $1 per share.
<PAGE>
-----
THE
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K E N T F U N D S /(R)/ BULK RATE
US POSTAGE
4400 COMPUTER DRIVE PAID
BOX 5108 PERMIT NO. 54201
WESTBORO, MA 01581-5108 BOSTON, MA
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K-158
