KENT FUNDS, N-30D, 1997-03-11

KENT FUNDS
N-30D, 1997-03-11

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<PAGE> 1
ANNUAL REPORT

DECEMBER 31, 1996

[GRAPHIC]

YOUR FOUNDATION FOR INVESTMENT STRENGTH

THE THE KENT MONEY MARKET FUND
KENT
FUNDS(R) THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND

<PAGE> 2

MESSAGE TO SHAREHOLDERS

Dear Kent Fund Shareholder:

We are pleased to provide The 1996 annual report to shareholders of The
Kent Money Market Fund and The Kent Michigan Municipal Money Market Fund.

Please see your investment representative or call us at 1-800-633-KENT
(1-800-633-5368) if you have questions about your investments. A Shareholder
Services Representative is available to assist you. We are always pleased to
answer questions from shareholders.

Sincerely,

The Kent Funds

<PAGE> 3

INVESTMENT ADVISOR

Old Kent Bank
One Vandenberg Center
Grand Rapids, MI 49503

DISTRIBUTOR

BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219

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 preceded or
accompanied 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. Please 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 are not federally insured by the U.S. Government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other
[GRAPHIC] agency. Investment return and principal value will vary as a result
of market conditions and other factors, so that shares of the fund,
when redeemed, maybe 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> 4

ECONOMIC OUTLOOK

REAL ECONOMIC ACTIVITY

Economy in Best Fundamental Shape in 25 Years.

As 1997 begins, the economy appears to be in the best fundamental shape in
25 years:

- - Despite a sharp rebound in the fourth quarter, economic growth for this
business expansion at 2.6 percent remains below the economy's long-run growth
rate of 3.2 percent, which has helped prolong the longevity of the current
expansion.

- - Inflation remains in check, although worries surface from time-to-time.

- - Even though the economy is running near full employment levels, the labor
markets appear to be "comfortably tight" with few signs of accelerating wage
pressures.

- - The level of interest rates and bond yields is moderate, ranging from 5.0 to
7.0 percent in the Treasury market.

- - Corporate earnings are still rising, albeit at a slower rate in some
industries than earlier in the expansion.

- - The international competitiveness of U.S. companies has increased markedly in
recent years and cost-cutting and restructuring efforts seem likely to
continue.

- - The Federal budget deficit shrunk from $290 billion in FY1992 to $107 billion
in FY1996.

- - And finally, U.S. companies continue to lead the world in the development and
proliferation of new information and telecommunications technologies.

REAL GROSS DOMESTIC PRODUCT
ANNUALIZED GROWTH RATE
----------------------
2Q 1991 1.7
1
1

1Q 1992 4.7
2.5
3
4.3

1Q 1993 -0.1
1.9
2.3
4.8

1Q 1994 2.5
4.9
3.5
3

1Q 1995 0.4
0.7
3.8
0.3

1Q 1996 2
4.7
2.1

4Q 1996 4.7

Long-Run Growth Rate = 3.2%
2Q91 to 4Q96 Growth Rate = 2.6%
[GRAPHIC]

This business expansion will be six years old next quarter and is now the
third longest expansion since World War II. In fact, the previous business
expansion, which ended in 1990, is the second longest, with the expansion in the
1960s that was fueled by the military buildup associated with the Vietnam War
being the longest. So, the last two expansions are two of the three longest on
record, with the current expansion still rolling along. Most likely this is a
reflection of the vastly improved inventory-control technologies that have been
developed in recent years and the proclivity of the Federal Reserve under the
guidance of Alan Greenspan to engage in pre-emptive strikes against any signs of
the economy overheating and/or inflationary pressures building.

Exports Boost Fourth-Quarter Growth.

The economy's "stop/go" pattern of growth, as depicted in the previous
graph, continued in the fourth quarter. Real Gross Domestic Product (GDP)
sprinted ahead at a 4.7 percent pace compared to the 2.1 percent gain recorded
in the third quarter. Exports surged at a 25.5 percent rate, causing a
significant improvement in net exports that accounted for almost half of the
rise in real GDP. Capital goods, particularly aircraft, were primarily
responsible for the extraordinary gain in exports. Domestic private final sales,
which excludes net exports, government spending and inventory swings, rose at
the more moderate pace of 3.2 percent. This measure probably gives a more
realistic picture of the economy's underlying strength as 1996 drew to a close.

<TABLE>
<CAPTION>
REAL ECONOMIC ACTIVITY
----------------------

4Q1996* 4Q95 to 4Q96
------ ------------
<S> <C> <C>
Gross Domestic Product 4.7% 3.4%
Domestic Private Final Sales 3.2% 3.6%
Personal Consumption Expenditures 3.4% 2.7%

<FN>
* Annualized.

</TABLE>

[GRAPHIC]

Despite reports of only a moderately successful holiday season for the
nation's retailers and the sharp rise in consumer indebtedness, delinquencies
and bankruptcies, consumer spending rebounded at a 3.4 percent rate last quarter
from the paltry 0.5 percent pace of the third quarter. Durable goods

<PAGE> 5

ECONOMIC OUTLOOK

spending was the strongest component, with furniture outlays leading the way. At
first blush, the rise in spending on furniture doesn't seem to be consistent
with the decline in residential construction outlays over the past two quarters,
which resulted from the rise in mortgage rates last year. The housing market
proved to be very resilient during 1996, however, as aggressive switching to
adjustable-rate mortgages and some purchases in anticipation of even higher

<TABLE>
<CAPTION>
PERCENT OF REAL GDP ANNUALIZED GROWTH RATE
------------------- ----------------------
2Q91 4Q96 2Q91 to 4Q96
---- ---- ------------
<S> <C> <C> <C>
Producers' Durable Equipment 6.0% 8.5% 9.3%
High Technology Equipment 1.9% 3.7% 15.6%
Computers 0.5% 2.1% 32.9%

Real GDP 2.6%
</TABLE>

mortgage rates actually led to an 8.8 percent gain in housing starts last year.
The strong job market and high levels of consumer confidence also contributed to
a record sales year for existing homes as 4.09 million homes exchanged hands,
eclipsing the previous high of 3.99 million reached in 1978.

Aside from exports, business capital spending was again the strongest
sector of the economy during the fourth quarter. The contribution from the
various components was somewhat different than over the previous 23 quarters,
however. Capital outlays on structures grew at a 22.5 percent rate as the high
level of capacity utilization, falling commercial and industrial vacancy rates,
and ongoing retail expansion spurred additional construction. In a somewhat
unexpected turn, producers' durable

<TABLE>
<CAPTION>
BUSINESS CAPITAL SPENDING* 4Q1996
---------------------------------
<S> <C>
Structures 22.5%
Producers' Durable Equipment -1.7%
High Technology Equipment 11.5%
Computers 26.8%
Industrial Machinery -6.0%
Transportation Equipment -15.7%

*Annualized

</TABLE>

equipment outlays fell for the first time in over four years. Equipment outlays
have been the strongest sector of the economy during the business expansion, as
demand for computers, telecommunications equipment and other forms of
information technology has surged.

Looking at the components of equipment spending shows that all of the
decline last quarter was contained in the industrial machinery and volatile
transportation equipment sectors and that outlays for high-technology equipment,
particularly computers, remained strong. The main motivation behind the surge in
equipment purchases over the past five and a half years is the desire of
businesses to improve their competitiveness by increasing productivity,
restraining costs and boosting quality. The fact that the price of capital goods
has been declining relative to labor compensation is an added incentive to
invest in equipment.

Companies have responded aggressively during this expansion to the
heightened competitive pressures coming at them from both domestic and
international competitors. The table below depicts how large the representative
share of the nation's total output equipment spending has become over the course
of this expansion. In the second quarter of 1991 when the economy turned from
recession to expansion, equipment outlays accounted for 6 percent of total
output; the high technology portion was less than 2 percent; and business
computers were half of one percent.

Five and a half years later, equipment production, and particularly
high-technology equipment, has become a much more significant portion of the
economy and has grown at rates far in excess of the 2.6 percent growth rate for
the entire economy. Equipment outlays now account for the highest proportion of
real GDP since World War II, when

3
<PAGE> 6

ECONOMIC OUTLOOK

wartime manufacturing sharply boosted equipment production and consumer spending
was severely curtailed. When students of the business cycle look back on this
expansion, what occurred in the business equipment sector will likely be the
most remarkable feature of this economic expansion.

Another Year of Moderate Growth for 1997.

As the business expansion is about to enter its seventh year, the economy
appears to be on the path toward another year of moderate growth. No serious
imbalances are evident in the economy, which lowers the odds of the economy
falling into recession during 1997. The rapid rise in consumer indebtedness over
the past three years and the attendant burden of servicing that debt buildup
points to, at best, further moderate gains in consumer spending. The housing
sector should be flat to modestly lower due to the late point in the economic
cycle and the higher level of mortgage rates. Business capital spending for
equipment should be the strongest sector of the economy as the continued
advancement of electronic technology permits sharp declines in equipment prices,
which provides incentives to substitute high-technology equipment, for labor
and/or other types of capital goods. We do anticipate that it will be tough for
spending on high-technology equipment to match the heady pace reached earlier in
the expansion, however. Exports had such a blockbuster quarter that a slower
growth rate is likely, particularly given the U.S. dollar's recent strength. We
expect the economy to grow at a rate near two percent during 1997.

INFLATION

Negligible Inflation.

The inflation data for 1996 was excellent, particularly considering the
advanced age of the current business expansion. Except for a sharp run-up in
energy costs last year, overall inflation remained very well behaved, in part
because increased competition is restraining the ability of many businesses to
raise their prices. Consumers are little influenced in their buying decisions by
expectations of price

<TABLE>
<CAPTION>
INFLATION MEASURES
1996
------------------
<S> <C>
Consumer Price Index (CPI) 3.3%
CPI less Food & Energy 2.6%
Producer Price Index (PPI) 2.8%
PPI less Food & Energy 0.1%
GDP Fixed-Weight Price Index 2.2%
</TABLE>

increases in the future. Pricing leverage remains the exception and not the rule
in the domestic economy.

The Federal Reserve remains concerned that a slow but steady increase in
labor costs could translate into higher consumer prices. The low unemployment
rate, however, has not yet empowered labor to exact higher wage increases. The
employment cost index rose only 2.9 percent last year, the lowest annual figure
on record. Companies' emphasis on cutting labor costs, which represent about 70
percent of production expenses, has made them more resistant to higher wage
demands. At the same time, wage earners have placed more emphasis on job
security rather than wage increases as the tidal wave of substituting equipment
for labor continues to wash over Corporate America. The battle for market share
from both domestic and foreign producers remains intense, exerting additional
restraint on prices. We expect inflation to remain in the two to three percent
range for 1997.

JOSEPH T. KEATING
Chief Investment Officer

The information discussed herein is based on Commerce Department data released
January 31, 1997.

4
<PAGE> 7

The Kent MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ------------ -------------
<S> <C> <C>
BANK NOTES -- 1.0%
$ 5,000,000 Bank of New York, 5.63%,
3/3/97......................... $ 4,999,269
-------------
TOTAL BANK NOTES............... 4,999,269
-------------
(amortized cost $4,999,269)

YANKEE CERTIFICATES OF DEPOSIT -- 16.1%
5,000,000 ABN Amro Bank, 5.68%, 4/17/97.. 4,997,768
5,000,000 Bank of Nova Scotia, 5.36%,
1/6/97......................... 5,000,000
5,000,000 Bank of Nova Scotia, 5.36%,
2/18/97........................ 5,000,000
5,000,000 Banque National de Paris,
5.62%, 2/10/97................. 5,000,121
5,000,000 Banque National de Paris,
5.52%, 6/27/97................. 5,000,000
5,000,000 Bayerische Landesbank, 5.37%,
2/3/97......................... 5,000,080
5,000,000 Canadian Imperial Bank of Com-
merce, 5.42%, 1/8/97........... 5,000,056
5,000,000 Commerzbank Group, 5.37%,
1/9/97......................... 5,000,010
7,000,000 Commerzbank Group, 5.52%,
3/14/97........................ 6,995,550
6,000,000 Societe Generale, 5.52%,
1/10/97........................ 6,000,101
5,000,000 Societe Generale, 5.57%,
4/3/97......................... 5,001,781
5,000,000 Societe Generale, 5.60%,
4/3/97......................... 5,002,110
5,000,000 Swiss Bank Corp., 5.75%,
3/4/97......................... 5,001,085
5,000,000 Swiss Bank Corp., 5.71%,
3/19/97........................ 5,002,587
5,000,000 Sumitomo Bank, Ltd., 5.87%,
1/29/97........................ 5,000,039
-------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT........................ 78,001,288
-------------
(amortized cost $78,001,288)

BANKER'S ACCEPTANCES -- 17.9%
5,000,000 Bank of Nova Scotia, 5.27%,
4/28/97........................ 4,914,442
3,000,000 Chase Manhattan Bank, N.A.,
5.29%, 1/10/97................. 2,996,031
4,947,775 Chase Manhattan Bank, N.A.,
5.28%, 1/13/97................. 4,939,067
5,000,000 Chase Manhattan Bank, N.A.,
5.27%, 1/27/97................. 4,980,970
5,000,000 Chase Manhattan Bank, N.A.,
5.28%, 2/27/97................. 4,958,200
10,000,000 Corestates Bank, 5.40%,
3/25/97........................ 9,875,500
5,000,000 First National Bank of Chicago,
5.26%, 1/3/97.................. 4,998,539

<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ------------ -------------
<S> <C> <C>
BANKER'S ACCEPTANCES (CONTINUED)
$ 5,000,000 First National Bank of Chicago,
5.26%, 4/1/97.................. 4,934,250
5,100,000 Mellon Bank, N.A.,
5.31%,1/3/97................... $ 5,098,496
5,000,000 Mellon Bank, N.A., 5.31%,
1/9/97......................... 4,994,100
5,000,000 Mellon Bank, N.A., 5.34%,
6/13/97........................ 4,879,108
7,672,826 National City Bank, 5.26%,
3/5/97......................... 7,602,198
6,000,000 Republic National Bank of New
York, 5.35%, 2/28/97........... 5,948,283
5,500,000 Wachovia Bank of Georgia, N.A.,
5.29%, 1/17/97................. 5,487,069
5,000,000 Wachovia Bank of Georgia, N.A.,
5.38%, 2/14/97................. 4,967,122
5,000,000 Wachovia Bank of North Caro-
lina, 5.32%, 3/17/97........... 4,944,584
-------------
TOTAL BANKER'S ACCEPTANCES..... 86,517,959
-------------
(amortized cost $86,517,959)

COMMERCIAL PAPER -- 49.2%
5,000,000 ABN Amro North America
Finance Inc.,
5.44%, 2/28/97................. 4,956,178
5,000,000 Ameritech Corp., 5.27%,
1/10/97........................ 4,993,412
5,000,000 Ameritech Corp., 5.29%,
3/4/97......................... 4,954,447
5,000,000 BellSouth Telecommunications,
5.31%, 1/30/97................. 4,978,612
5,000,000 BellSouth Telecommunications,
5.30%, 3/26/97................. 4,938,167
5,000,000 Budget Funding Corp., 5.32%,
1/7/97......................... 4,995,567
5,000,000 Budget Funding Corp., 5.33%,
1/14/97........................ 4,990,376
5,000,000 Daimler Benz N.A. Corp., 5.42%,
1/15/97........................ 4,989,461
5,000,000 Daimler Benz N.A. Corp., 5.31%,
1/17/97........................ 4,988,200
5,000,000 Daimler Benz N.A. Corp., 5.39%,
2/5/97......................... 4,973,799
5,000,000 Daimler Benz N.A. Corp., 5.30%,
3/3/97......................... 4,955,097
5,500,000 Eli Lilly & Co., 5.57%,
2/24/97........................ 5,454,047
5,000,000 Ford Motor Credit Co., 5.36%,
1/28/97........................ 4,979,900
5,000,000 Ford Motor Credit Co., 5.47%,
3/17/97........................ 4,942,917
5,000,000 General Electric Capital Corp.,
5.33%, 1/22/97................. 4,984,454
5,000,000 General Electric Capital Corp.,
5.31%, 1/23/97................. 4,983,775
</TABLE>

Continued

<PAGE> 8

The Kent MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ------------ -------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
$ 5,000,000 General Electric Capital Corp.,
5.29%, 3/10/97................. $ 4,950,039
5,000,000 General Electric Capital Corp.,
5.50%, 5/30/97................. 4,886,181
5,000,000 General Motors Acceptance
Corp., 5.50%, 1/2/97........... 4,999,236
5,000,000 General Motors Acceptance
Corp., 5.35%, 1/15/97.......... 4,989,597
5,000,000 General Motors Acceptance
Corp., 5.33%, 1/27/97.......... 4,980,753
5,000,000 General Motors Acceptance
Corp., 5.34%, 6/16/97.......... 4,876,883
5,000,000 General Motors Acceptance
Corp., 5.42%, 6/26/97.......... 4,867,511
5,000,000 H.J. Heinz Co., 5.40%,
1/13/97........................ 4,991,000
5,000,000 H.J. Heinz Co., 5.50%,
2/6/97......................... 4,972,500
5,000,000 Household Finance Corp., 5.31%,
1/7/97......................... 4,995,575
5,000,000 Household Finance Corp., 5.30%,
1/13/97........................ 4,991,167
5,000,000 Household Finance Corp., 5.37%,
1/16/97........................ 4,988,812
5,000,000 Household Finance Corp., 5.33%,
1/24/97........................ 4,982,974
5,000,000 John Deere Capital Corp.,
5.29%, 1/6/97.................. 4,996,326
5,000,000 John Deere Capital Corp.,
5.30%, 1/14/97................. 4,990,431
5,000,000 John Deere Capital Corp.,
5.29%, 1/16/97................. 4,988,979
5,000,000 John Deere Capital Corp.,
5.27%, 5/2/97.................. 4,911,435
5,000,000 Michigan Consolidated Gas Co.,
5.40%, 2/3/97.................. 4,975,250
5,000,000 Michigan Consolidated Gas Co.,
5.35%, 2/4/97.................. 4,974,736
5,000,000 Michigan Consolidated Gas Co.,
5.32%, 2/6/97.................. 4,973,400
5,000,000 National Australia Funding
(Delaware), 5.28%, 1/6/97...... 4,996,320
5,000,000 National Australia Funding
(Delaware), 5.30%, 1/6/97...... 4,996,333
5,000,000 Pitney Bowes Credit Corp.,
5.58%, 2/19/97................. 4,962,025
5,000,000 Sandoz Corp., 5.31%, 1/21/97... 4,985,250
5,000,000 Sandoz Corp., 5.30%, 1/31/97... 4,977,917
4,400,000 Schering Corp., 5.27%,
5/13/97........................ 4,314,977

AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ------------ -------------
COMMERCIAL PAPER (CONTINUED)
$ 5,000,000 UBS Finance, 8.00%, 1/2/97..... $ 4,998,889
5,000,000 Weyerhaeuser Co., 5.29%,
1/29/97........................ 4,979,428
5,000,000 Weyerhaeuser Co., 5.30%,
2/6/97......................... 4,973,500
5,000,000 Weyerhaeuser Co., 5.30%,
2/7/97......................... 4,972,764
5,000,000 Xerox Corp., 5.31%, 1/13/97.... 4,991,150
5,000,000 Xerox Credit Corp., 5.30%,
1/13/97........................ 4,991,167
-------------
TOTAL COMMERCIAL PAPER......... 238,480,914
-------------
(amortized cost $238,480,914)

DEMAND NOTES -- 7.5%
5,000,000 Allstate Financial Corp.,
Funding Agreement, 5.51%*,
1/2/97(b)...................... 5,000,000
7,500,000 Commonwealth Life Insurance
Co., 5.64%*, 1/2/97(b)......... 7,500,000
5,000,000 Kerasotes Theaters, Inc., Se-
ries 96-A, 5.67%*, 1/2/97 (LC
First of America Bank-Illinois,
N.A.).......................... 5,000,000
3,000,000 La Mirada, CA, Industrial
Development Authority, 5.70%*,
1/2/97 (LC First National Bank,
Chicago)....................... 3,000,000
5,000,000 Labelle Capital Funding L.L.C.,
5.82%*, 1/2/97 (LC First of
America Bank-Michigan)......... 5,000,000
5,000,000 Sheperd Capital L.L.C., 5.82%*,
1/2/97 (LC Comerica Bank)...... 5,000,000
6,000,000 Zeigler Realty, L.L.C., 5.82%*,
1/2/97 (LC First of America
Bank-Michigan)................. 6,000,000
-------------
TOTAL DEMAND NOTES 36,500,000
-------------
(amortized cost $36,500,000)

INVESTMENT COMPANY -- 1.2%

<CAPTION>
SHARES
- ------------
<S> <C> <C>
5,772,341 Dreyfus Cash Management Money
Market Fund.................... 5,772,341
-------------
TOTAL INVESTMENT COMPANY....... 5,772,341
-------------
(cost $5,772,341)
TOTAL INVESTMENTS, AT VALUE.................. 450,271,771
-------------
(amortized cost $450,271,771)
</TABLE>

Continued

6
<PAGE> 9

The Kent MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ------------ -------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 7.2%
$ 35,000,000 Donaldson, Lufkin & Jenrette,
6.25%, dated 12/31/96, due
1/2/97, (collateralized by
$34,324,000 U.S. Treasury Note,
6.375%, 7/15/99, market value
$35,789,624)................... $ 35,000,000
-------------
TOTAL REPURCHASE AGREEMENT..... 35,000,000
-------------
(cost $35,000,000)

TOTAL -- 100.1%.............................. 485,271,771
(amortized cost $485,271,771) (a)
LIABILITIES IN EXCESS OF OTHER ASSETS --
(0.1%)....................................... (549,062)
-------------
NET ASSETS -- 100.0%......................... $484,722,709
=============

- ---------------------------------------
<FN>
Percentages indicated are based on net assets of $484,722,709.
* Variable rate security. Rate presented represents rate in effect at December
31, 1996. Maturity date reflects next rate change date.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Illiquid security
LC Letter of Credit
</TABLE>

See Notes to Financial Statements.

<PAGE> 10

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES -- 87.1%
MICHIGAN -- 79.5%
$ $485,000 Alcona Community Schools,
4.10%, 5/1/97 (Insured by
FGIC)........................... $ 485,229
1,725,000 Chippewa Valley Schools, GO,
8.10%, 5/1/97................... 1,750,380
215,000 Clinton Township, Economic
Development Corp., Limited
Obligation Revenue, Pointe
Village Square Project (AMT),
3.95%*, 2/1/97 (LC Resolution
Trust Co.)...................... 215,000
2,550,000 Detroit, Series A, GO,
Prerefunded 4/1/97 @ 102,
8.63%, 4/1/07................... 2,631,737
625,000 Eaton Rapids Public Schools, GO,
7.38%, 5/1/97 (Insured by
MBIA)........................... 632,082
460,000 Farmington Hills, Economic
Development Corp., Limited
Obligation Revenue, Brookfield
Building Associates,
4.15%*, 1/2/97 (LC Comerica
Bank)........................... 460,000
415,000 Farmington Hills, Economic
Development Corp., Limited
Obligation Revenue, Marketing
Displays Project (AMT), 3.75%*,
3/1/97 (LC Comerica Bank)....... 415,000
1,855,000 Genesse County, Economic
Development Corp., Grand Blanc
Convalescent Center,
3.80%*, 5/1/97 (LC Citizens
Commercial & Savings Bank)...... 1,855,000
1,000,000 Grand Rapids Water Supply,
Prerefunded 1/1/98 @ 102, 7.88%,
1/1/18.......................... 1,059,734
3,000,000 Holland, Economic Development
Corp., Thrifty Holland, Inc.,
3.65%*, 1/2/97 (LC Industrial
Bank of Japan).................. 3,000,000
1,180,000 Johannesburg -- Lewiston Area
Schools,
5.25%, 4/1/97................... 1,182,802
695,000 Kenowa Hills Public Schools, GO,
5.13%, 5/1/97................... 697,715
3,000,000 Kent Hospital Finance Authority,
Butterworth Hospital, Series A,
4.00%*, 1/2/97 (LC Rabobank
Nederland)...................... 3,000,000
1,855,000 Leelanau County, Economic
Development Corp., Limited
Obligation Revenue, American
Community Mutual Insurance Co.,
3.80%*, 6/15/97 (LC First of
America)........................ 1,855,000

<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN (CONTINUED)
$ 410,000 Livonia, Economic Development
Corp., American Community Mutual
Insurance Co.,
3.80%*, 5/15/97 (LC First of
America)........................ $ 410,000
2,000,000 Meridian, Economic Development
Corp., Hannah Research &
Technology Center, 3.70%*,
1/15/97 (LC Barclays Bank PLC).. 2,000,000
2,200,000 Michigan Municipal Bond
Authority, Series A,
4.50%, 7/3/97................... 2,206,230
1,000,000 Michigan Municipal Bond
Authority, School State Aid
Notes, Series 1996B,
4.50%, 7/25/97.................. 1,002,971
1,500,000 Michigan State Hospital Finance
Authority Revenue, Oakwood
Hospital Obligation Group,
Series A,
4.00%, 11/1/97 (Insured by
FGIC)........................... 1,504,219
500,000 Michigan State Housing
Development Authority, Pine
Ridge,
4.10%*, 1/2/97 (LC National
Westminster).................... 500,000
1,000,000 Michigan State Housing
Development Authority, Revenue,
Shoal Creek,
4.10%*, 1/2/97 (LC National
Westminster).................... 1,000,000
350,000 Michigan State Housing Rental
Revenue, Series C,
4.15%*, 1/2/97 (LC Credit
Suisse)......................... 350,000
3,300,000 Michigan State Job Development
Authority, BASF Wyandotte Corp.,
3.30%*, 1/2/97 (LC Credit
Suisse)......................... 3,300,000
1,200,000 Michigan State Job Development
Authority, Hitachi Metals,
3.75%*, 1/2/97 (LC Sanwa Bank,
Ltd.)........................... 1,200,000
5,100,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Dow
Chemical Co. Project, (AMT),
5.10%*, 1/2/97.................. 5,100,000
3,500,000 Michigan State Strategic Fund-
Reserve 1, Limited Obligation
Revenue, Detroit Edison,
5.25%*, 1/2/97 (LC Barclays Bank
PLC)............................ 3,500,000
</TABLE>

Continued
8

<PAGE> 11

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN (CONTINUED)
$ 215,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Kazoo Inc. Project (AMT),
3.95%*, 3/15/97 (LC First of
America)........................ $ 215,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Donnelly Corp. Project, Series B
(AMT),
3.80%*, 4/1/97 (LC ABN AMRO
Bank)........................... 2,500,000
1,460,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Plascore, Inc. (AMT),
4.40%*, 1/2/97 (LC First
Michigan Bank).................. 1,460,000
2,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Waltec American Forgings (AMT),
4.35%*, 1/2/97.................. 2,000,000
995,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Molmec, Inc. (AMT),
4.40%*, 1/2/97 (LC Comerica
Bank)........................... 995,000
1,160,000 Michigan State Strategic Fund,
Limited Obligation Revenue, B.K.
Hardwoods Ltd. Project,
Series A (AMT),
4.40%*, 1/2/97 (LC First
Michigan Bank).................. 1,160,000
4,975,000 Michigan State Strategic Fund,
Limited Obligation Revenue, JB
Labs, Inc. (AMT),
4.40%*, 1/2/97 (LC First
Michigan Bank).................. 4,975,000
540,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Tom
Miller, Inc., (AMT),
4.25%*, 1/2/97 (LC First Union
National)....................... 540,000
2,800,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
United Waste System (AMT),
4.25%*, 1/2/97 (LC Bank of
America)........................ 2,800,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Cincinnati Milacron, Inc.
Project, (AMT),
4.25%*, 1/2/97 (LC PNC Bank).... 2,500,000

AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN (CONTINUED)
$ 4,200,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
United Fixtures Co. Project,
(AMT),
4.40%*, 1/8/97 (LC LaSalle
National Bank).................. $ 4,200,000
500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Tenibac Graphion, (AMT),
4.35%*, 1/2/97 (LC NBD)......... 500,000
1,045,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Stephenson Land Co. Project
(AMT),
4.30%*, 1/2/97 (LC Comerica
Bank)........................... 1,045,000
1,600,000 Michigan State Strategic Fund,
Limited Obligation, Rochester
Gear Project (AMT),
4.35%*, 1/2/97 (LC Comerica
Bank)........................... 1,600,000
5,100,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Karona, Inc. Project, (AMT)
4.35%*, 1/2/97 (LC First of
America)........................ 5,098,008
4,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Pelzer (H.P.), Inc., (AMT),
4.35%*, 1/2/97 (LC NBD)......... 4,000,000
2,750,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Advanced Tooling System, (AMT),
4.40%*, 1/2/97 (LC First
Michigan Bank).................. 2,750,000
1,200,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Jet
Enterprises, (AMT),
4.35%*, 1/2/97 (LC NBD)......... 1,200,000
750,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Patten Monument Project, (AMT),
4.40%*, 1/2/97 (LC First
Michigan Bank).................. 750,000
2,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
(AMT), Knight Industries &
Associates, Inc. Project,
4.35%*, 1/2/97 (LC NBD)......... 2,000,000
2,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Horizon Devco LLC Project,
(AMT), 4.35%*, 1/2/97 (LC NBD).. 2,000,000
</TABLE>

Continued
9

<PAGE> 12

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN (CONTINUED)
$ 3,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Ort
Tool & Die Corp. (AMT),
4.40%*, 1/2/97 (LC National City
Bank)........................... $ 3,000,000
1,750,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Omni
Technical Services, Inc. (AMT),
4.35%*, 1/2/97 (LC First of
America)........................ 1,750,000
2,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Solid Waste Disposal, Grayling
Generating Project (AMT),
4.25%*, 1/2/97 (LC Barclays Bank
PLC)............................ 2,000,000
1,700,000 Michigan State Strategic Fund,
Industrial Revenue, Kinder Care
Centers, Series E (AMT),
4.55%*, 1/2/97.................. 1,700,000
250,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Series B-1 (AMT), 4.40%*, 1/2/97
(LC Comerica Bank).............. 250,000
2,820,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Mans
Project (AMT), 4.30%*, 1/2/97
(LC Comerica Bank).............. 2,820,000
1,785,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Kay
Screen Printing, Inc., Series B
(AMT), 4.35%*, 1/2/97 (LC
Comerica Bank).................. 1,785,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Donnelly Corp. Project, Series A
(AMT), 4.60%*, 1/2/97 (LC Bank
of Tokyo, Ltd.)................. 2,500,000
1,700,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Pilot Industries, Inc. Project
(AMT),
4.50%*, 1/2/97 (LC NBD)......... 1,700,000
2,050,000 Michigan State Strategic Fund,
PCR, Consumers Power Project,
4.25%*, 1/2/97 (LC Union Bank of
Switzerland).................... 2,050,000
690,000 Michigan State Trunk Line,
Series B,
6.25%, 11/1/97 (Insured by
FGIC)........................... 703,678
1,000,000 Michigan State Trunk Line,
Series B,
4.50%, 11/15/97 (Insured by
FGIC)........................... 1,005,883
1,075,000 Michigan State University
Revenues, Series A,
4.70%, 8/15/97.................. 1,082,003

AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
MUNICIPAL SECURITIES (CONTINUED)
MICHIGAN (CONTINUED)
$ 500,000 Midland County, Economic
Development Corp., Limited
Obligation Revenue, Series A,
Dow Chemical Project (AMT),
5.30%*, 1/2/97.................. $ 500,000
675,000 Oakland County, Economic
Development Corp., Orchard Maple
Project,
3.75%*, 1/15/97, (LC First of
America)........................ 675,000
340,000 Rochester Hills, Economic
Development Corp., BRG
Association Project,
3.90%*, 12/1/97 (LC Comerica
Bank)........................... 340,000
850,000 Royal Oak Hospital Finance
Authority, William Beaumont
Hospital,
4.50%, 1/1/97................... 850,000
3,700,000 Royal Oak Hospital Finance
Authority, William Beaumont
Hospital,
4.95%*, 1/2/97.................. 3,700,000
1,040,000 St. Clair Shores, Economic
Development Corp. Borman's
Inc.(AMT),
3.95%*, 4/15/97 (LC Michigan
National Bank).................. 1,040,000
1,600,000 University of Michigan, Hospital
Revenue, Series A,
5.10%*, 1/2/97.................. 1,600,000
1,200,000 University of Michigan, Hospital
Revenue, Series A,
5.10%*, 1/2/97.................. 1,200,000
1,940,000 Warren, Economic Development
Corp., CMX Corp. Project (AMT),
3.70%*, 3/15/97 (LC First of
America)........................ 1,940,000
1,295,000 Warren, Economic Development
Corp., Cross Country Inns (AMT),
3.75%*, 5/1/97 (LC Huntington
National Bank).................. 1,295,000
1,000,000 Washtenaw Community College, GO,
Prerefunded 4/1/97 @ 102,
6.20%, 4/1/03................... 1,026,916
1,010,000 Wayne County Airport (Detroit
Airport), Series A, (AMT)
4.25%*, 1/2/97 (LC Bayerische
Landesbank)..................... 1,010,000
1,000,000 Wayne County Airport (Detroit
Airport), Series B, (AMT)
4.10%*, 1/2/97 (LC Bayerische
Landesbank)..................... 1,000,000
-------------
124,124,587
-------------
</TABLE>

Continued

<PAGE> 13

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES (CONTINUED)
PUERTO RICO -- 7.6%
$ 2,000,000 Commonwealth of Puerto Rico, Tax
& Revenue Anticipation Notes,
Series 97 -- A,
4.00%, 7/30/97.................. $ 2,006,454
3,000,000 Puerto Rico Industrial, Medical
& Environmental Pollution
Control, Facilities Financing
Authority, Abbott Labs Project,
3.41%, 3/1/97................... 3,000,000
4,200,000 Puerto Rico Industrial, Medical
& Environmental Pollution
Control, Facilities Financing
Authority, Merck & Co., Series
A,
4.00%, 12/1/97.................. 4,200,000
2,750,000 Puerto Rico Industrial, Medical
& Environmental Pollution
Control, Facilities Financing
Authority, Reynolds Metals,
3.80%*, 9/1/97 (LC ABN AMRO
Bank)........................... 2,750,000
-------------
11,956,454
-------------
TOTAL MUNICIPAL SECURITIES...... 136,081,041
-------------
(amortized cost $136,081,041)

MUNICIPAL COMMERCIAL PAPER -- 11.3%
2,100,000 Cornell Township, Economic
Development Corp., Industrial
Development Revenue,
Mead-Escanaba Paper Co.,
3.40%, 1/28/97 (LC Credit
Suisse)......................... 2,100,000
1,000,000 Cornell Township, Economic
Development Corp., Industrial
Development Revenue,
Mead-Escanaba Paper Co.,
3.40%, 1/28/97 (LC Credit
Suisse)......................... 1,000,000
1,400,000 Delta County, Economic
Development Corp., Environmental
Improvement, Mead-Escanaba
Paper Co., Series B,
3.40%, 3/11/97 (LC Union Bank of
Switzerland).................... 1,400,000
1,200,000 Delta County, Economic
Development Corp., Environmental
Improvement, Mead-Escanaba
Paper Co., Series A,
3.45%, 3/10/97 (LC Swiss
Bank)........................... 1,200,000
1,500,000 Delta County, Economic
Development Corp., Environmental
Improvement, Mead-Escanaba Paper
Co., Series A,
3.45%, 2/11/97 (LC Swiss
Bank)........................... 1,500,000

<CAPTION>
AMORTIZED
PRINCIPAL COST
AMOUNT (NOTE 2)
- ----------- -------------
<S> <C> <C>
MUNICIPAL COMMERCIAL PAPER (CONTINUED)
PUERTO RICO (CONTINUED)
$ 5,000,000 Michigan State Building
Authority,
3.50%, 5/1/97 (LC Canadian
Imperial Bank of Canada)........ $ 5,000,000
3,450,000 Michigan State Housing
Development Authority,
Multi-Family Revenue, GNMA,
Series A (AMT),
3.50%, 2/3/97 (LC Credit
Suisse)......................... 3,450,000
2,034,000 Michigan State Underground
Storage Tank, Financial
Assurance Authority,
3.55%, 2/5/97 (LC Canadian
Imperial Bank of Canada)........ 2,034,000
-------------
TOTAL MUNICIPAL COMMERCIAL
PAPER........................... 17,684,000
-------------
(amortized cost $17,684,000)

MUNICIPAL PUT BONDS -- 1.2%
510,000 Michigan State Strategic Fund,
John A. Biewer Co. (AMT),
3.80%, 2/1/97 (LC Michigan
National Bank).................. 510,000
765,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Tawas Bay Associates Project
(AMT),
3.80%, 6/1/97................... 765,000
575,000 Warren, Economic Development
Corp., Limited Obligation
Revenue, Elias Brothers (AMT),
4.05%, 6/1/97 (LC Resolution
Trust Corp.).................... 575,000
-------------
TOTAL MUNICIPAL PUT BONDS....... 1,850,000
-------------
(amortized cost $1,850,000)

INVESTMENT COMPANIES -- 0.1%
<CAPTION>
SHARES
- -----------
<S> <C> <C>
1 Dreyfus Tax Exempt Cash
Management Fund................. 1
1 Federated Tax Exempt Money
Market Fund..................... 1
174,337 Reich & Tang Tax Exempt Proceeds
Fund............................ 174,337
-------------
TOTAL INVESTMENT COMPANIES...... 174,339
-------------
(cost $174,339)
</TABLE>

Continued
11

<PAGE> 14

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<CAPTION>
AMORTIZED
COST
(NOTE 2)
-------------
<S> <C> <C>
TOTAL INVESTMENTS -- 99.7%................... $ 155,789,380
(amortized cost $155,789,380)(a)
OTHER ASSETS IN EXCESS OF LIABILITIES --
0.3%....................................... 416,560
-------------
NET ASSETS -- 100.0%......................... $ 156,205,940
=============

- ---------------------------------------
<FN>
Percentages indicated are based on net assets of $156,205,940.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Represents variable rate security. Rate presented represents rate at
December 31, 1996. Maturity date reflects next rate change date.

AMT Alternative Minimum Tax Paper
FGIC Financial Guaranty Insurance Corp.
GNMA Government National Mortgage Association
GO General Obligation
LC Letter of Credit
MBIA Municipal Bond Insurance Association
NBD National Bank of Detroit
PCR Pollution Control Revenue
PLC Public Limited Company
</TABLE>

See Notes to Financial Statements.

<PAGE> 15

The Kent STATEMENTS OF ASSETS AND LIABILITIES
Funds DECEMBER 31, 1996

<TABLE>
<CAPTION>
MONEY MICHIGAN MUNICIPAL
MARKET MONEY MARKET
FUND FUND
------------ ------------------
<S> <C> <C>
ASSETS:
Investments (Note 2):
Investments in securities (amortized cost $450,271,771 and $155,789,380,
respectively)................................................................ $450,271,771 $155,789,380
Repurchase agreements (cost $35,000,000 and $0, respectively)................. 35,000,000 --
------------ ------------
Total investments at value............................................... 485,271,771 155,789,380
Interest and dividends receivable............................................... 1,626,705 912,321
Prepaid expenses................................................................ 1,735 309
------------ ------------
Total Assets............................................................. 486,900,211 156,702,010
------------ ------------
LIABILITIES:
Dividends payable............................................................... 2,054,776 433,361
Advisory fee payable (Note 3)................................................... 21,848 6,895
Payable to administrator (Note 3)............................................... 30,903 10,225
Payable to transfer agent (Note 3).............................................. 21,426 8,414
Payable to custodian............................................................ 13,926 5,757
Accrued expenses and other liabilities.......................................... 34,623 31,418
------------ ------------
Total Liabilities........................................................ 2,177,502 496,070
------------ ------------
NET ASSETS........................................................................ $484,722,709 $156,205,940
============ ============
NET ASSETS CONSIST OF:
Paid-in capital................................................................. $484,710,515 $156,205,159
Accumulated undistributed net investment income................................. 13,072 --
Accumulated net realized gains (losses) on investments sold..................... (878) 781
------------ ------------
TOTAL NET ASSETS......................................................... $484,722,709 $156,205,940
============ ============
INSTITUTIONAL SHARES:
Net Assets...................................................................... $483,918,506 $155,424,287
Shares Outstanding.............................................................. 483,911,518 155,401,227
Net Asset Value, offering and redemption price per share........................ $ 1.00 $ 1.00
============ ============
INVESTMENT SHARES:
Net Assets...................................................................... $ 804,203 $ 781,653
Shares Outstanding.............................................................. 804,189 781,614
Net Asset Value, offering and redemption price per share........................ $ 1.00 $ 1.00
============ ============
</TABLE>

See Notes to Financial Statements.

<PAGE> 16

The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
MONEY MICHIGAN MUNICIPAL
MARKET MONEY MARKET
FUND FUND
----------- ------------------
<S> <C> <C>
INVESTMENT INCOME (NOTE 2):
Interest....................................................................... $23,809,865 $5,790,970
Dividends...................................................................... 83,779 94,797
----------- ----------
Total Investment Income...................................................... 23,893,644 5,885,767
----------- ----------
EXPENSES:
Investment advisory fees (Note 3).............................................. 1,747,159 653,417
Administration fees (Note 3)................................................... 872,967 326,500
Custodian fees................................................................. 33,455 14,737
Legal and audit fees (Note 3).................................................. 23,101 15,461
Transfer agent fees (Note 3)................................................... 43,727 20,661
Other expenses................................................................. 2,954 23,365
----------- ----------
Total Expenses before waivers................................................ 2,723,363 1,054,141
Less: Waivers (Note 3)....................................................... (447,349) (166,723)
----------- ----------
Net Expenses................................................................... 2,276,014 887,418
----------- ----------
NET INVESTMENT INCOME............................................................ 21,617,630 4,998,349
----------- ----------
NET REALIZED GAINS (LOSSES) ON INVESTMENTS (NOTE 2):............................. (27) 251
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $21,617,603 $4,998,600
=========== ==========
</TABLE>

See Notes to Financial Statements.

<PAGE> 17
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL
MONEY MARKET FUND MONEY MARKET FUND
------------------------------- -------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------------- -------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF YEAR..................... $ 426,042,320 $ 323,908,424 $ 146,818,028 $ 128,542,814
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................. 21,617,630 27,990,784 4,998,349 5,096,533
Net realized gains (losses) on investments sold... (27) 129 251 530
------------- ------------- ------------- -------------
Net increase in net assets resulting from
operations...................................... 21,617,603 27,990,913 4,998,600 5,097,063
------------- ------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM (NOTE 2):
INSTITUTIONAL:
Net investment income............................. (21,564,398) (27,928,222) (4,966,358) (5,073,047)
------------- ------------- ------------- -------------
INVESTMENT:
Net investment income............................. (53,232) (62,562) (31,991) (23,486)
------------- ------------- ------------- -------------
Total Dividends to shareholders................. (21,617,630) (27,990,784) (4,998,349) (5,096,533)
------------- ------------- ------------- -------------
FUND SHARE TRANSACTIONS (NOTE 4):
Proceeds from shares issued....................... 845,431,796 869,845,458 258,441,230 193,538,800
Reinvestment of distributions..................... 587,156 465,013 28,579 23,230
Cost of shares redeemed........................... (787,338,536) (768,176,704) (249,082,148) (175,287,346)
------------- ------------- ------------- -------------
TOTAL NET INCREASE FROM SHARE TRANSACTIONS.......... 58,680,416 102,133,767 9,387,661 18,274,684
------------- ------------- ------------- -------------
Net increase in net assets........................ 58,680,389 102,133,896 9,387,912 18,275,214
------------- ------------- ------------- -------------
NET ASSETS AT END OF YEAR (INCLUDING LINE A)........ $ 484,722,709 $ 426,042,320 $ 156,205,940 $ 146,818,028
============= ============= ============= =============

(A) Accumulated undistributed net investment
income............................................ $ 13,072 $ 13,072 $ -- $ --
============= ============= ============= =============
</TABLE>

See Notes to Financial Statements.

<PAGE> 18
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 (the
"1940 Act"), 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
Kent Money Market Fund and The Kent Michigan Municipal Money Market Fund
(individually, a "Portfolio", collectively, the "Portfolios") only.

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 Trust 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 a series to a pro rata
share in the net assets of that class of such series. Each share in each series
or class has identical voting, dividend, liquidation and other rights, except in
matters affecting only a particular series or class, in which case only shares
of the affected series or class are entitled to vote. Class specific expenses,
if any, are currently limited to expenses directly attributable to the
Investment Shares under the Distribution Plan, shareholder services fees and
certain printing and postage expenses incurred as they relate to a particular
class of shares.

The investment objective of the Money Market Fund is to seek current income
from short-term securities while preserving capital and maintaining liquidity.
The Michigan Municipal Money Market Fund's investment
objective is to seek current income, exempt from federal and State of Michigan
personal income taxes, from short-term securities while preserving capital and
maintaining liquidity.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by the
Portfolios in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual amounts could differ from those estimates.

PORTFOLIO VALUATION: Securities in the Portfolios are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
1940 Act, which approximates market value. This method involves valuing a
portfolio security initially at its cost on the date of purchase and thereafter
assuming a constant amortization to maturity of the difference between the
principal amount due at maturity and initial cost. In addition, the Portfolios
may not (a) purchase any instrument with a remaining maturity greater than
thirteen months unless such instrument is subject to a demand feature, or (b)
maintain a dollar-weighted average maturity which exceeds 90 days.

REPURCHASE AGREEMENTS: The Trust's custodian and other banks acting in a
sub-custodian capacity, take possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to determine that the value, including accrued
interest, exceeds the repurchase price. In the event of the seller's default of
the obligation to repurchase, the Portfolios have the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of the default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings.

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, including
accretion of discounts and amortization of premiums, 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), and dividends earned less amortization
of any market premium and accrued expenses. Net realized capital gains, if any,
are distributed at least annually.

<PAGE> 19
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 INCOME TAXES: For federal income tax purposes, each Portfolio is
treated as a separate entity for the purpose of determining its qualification as
a regulated investment company under the Internal Revenue Code (the "Code"). It
is the policy of each Portfolio to meet the requirements of the Code applicable
to regulated investment companies, including the requirement that it distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.

At December 31, 1996, the Money Market Fund had the following capital loss
carryovers which expire in the years indicated:

<TABLE>
<CAPTION>
AMOUNT YEAR
- ------ -----
<S> <C>
$433......................................... 1999
224......................................... 2002
194......................................... 2003
27......................................... 2004
- ----
$878
</TABLE>

EXPENSES: Expenses directly attributable to a Portfolio are charged to the
Portfolio, while expenses which are attributable to more than one series of the
Trust are allocated among the respective series based upon relative net assets
or another appropriate basis. 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. RELATED PARTY TRANSACTIONS

Old Kent Bank ("Investment Adviser") serves as the investment adviser to the
Trust. The Investment Adviser is a member of the 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 August 5, 1996, BISYS Fund Services Limited Partnership d/b/a BISYS
Fund Services ("BISYS") assumed the duties as Administrator and Distributor for
the Trust from First Data Investor Services Group, Inc. ("First Data") and 440
Financial Distributors, Inc. ("440 Distributors"), an indirect wholly-owned
subsidiary of First Data respectively. Also, effective August 5, 1996, and
October 7, 1996, respectively, BISYS Fund Services, Inc. assumed the duties as
Fund Accountant and Transfer Agent for the Trust from First Data. BISYS and
BISYS Fund Services, Inc. are both wholly owned subsidiaries of The BISYS Group,
Inc. The Administrator is entitled to receive a fee, computed daily and paid
monthly, at the annual rate of 0.185% of the average daily net assets of the
Trust up to $5 billion; 0.165% of the average daily net assets of the Trust in
excess of $5 billion up to $7.5 billion; and 0.135% of the average daily net
assets of the Trust in excess of $7.5 billion. Fund Accounting fees are computed
daily and paid monthly at the annual rate of 0.015% of the average daily net
assets of the Trust and are included as part of the fees paid to the
Administrator.

Transfer agent fees for each Portfolio for the year ended December 31, 1996
are as follows:

<TABLE>
<CAPTION>
INSTITUTIONAL INVESTMENT
SHARES SHARES
------------- ----------
<S> <C> <C>
FUND
- ----
Money Market Fund............ $43,628 $ 99
Michigan Municipal
Money Market Fund.......... 20,532 129
</TABLE>

The current and previous Administrators have voluntarily reduced their fees
for the Portfolios. Total administrative fees waived for the year ended December
31, 1996 were as follows:

<TABLE>
<CAPTION>
INSTITUTIONAL INVESTMENT
SHARES SHARES
------------- ----------
<S> <C> <C>
FUND
Money Market Fund........ $ 446,253 $1,096
Michigan Municipal
Money Market Fund...... 165,662 1,061
</TABLE>

Certain officers of the Trust are affiliated with BISYS. Such officers receive
no direct payments or fees from the Portfolios for serving as officers.

The Trust has adopted a distribution plan (the "Plan") on behalf of the
Investment Shares of the Portfolios pursuant to Rule 12b-1 of the 1940 Act. The
Plan provides for payments to the Distributor of up to 0.25% of the average
daily net assets of the Investment Shares for each of the Portfolios for
providing distribution services. For the year ended December 31, 1996, no
payments were made pursuant to the Plan by either Portfolio.

<PAGE> 20
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Expenses for the Trust include legal fees paid to Drinker Biddle & Reath. A
partner of that firm serves as an Assistant Secretary of the Trust.

4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the Portfolios are summarized below:

SHARE AMOUNTS
INSTITUTIONAL:
Shares issued................................... 844,257,954 866,868,069 258,305,060 191,689,615
Reinvestment of distributions................... 540,797 406,420 -- --
Shares redeemed................................. (785,695,077) (765,999,260) (248,095,918) (174,639,291)
------------- ------------- ------------- -------------
Net increase from Institutional Share
transactions............................... 59,103,674 101,275,229 10,209,142 17,050,324
------------- ------------- ------------- -------------
INVESTMENT:
Shares issued................................... 1,173,842 2,977,389 136,170 1,849,181
Reinvestment of distributions................... 46,359 58,593 28,579 23,230
Shares redeemed................................. (1,643,459) (2,177,444) (986,230) (648,055)
------------- ------------- ------------- -------------
Net increase (decrease) from Investment Share
transactions............................... (423,258) 858,538 (821,481) 1,224,356
------------- ------------- ------------- -------------
Total net increase from share transactions.......... 58,680,416 102,133,767 9,387,661 18,274,680
============= ============= ============= =============
</TABLE>

5. CONCENTRATION OF CREDIT RISK

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.

6. FEDERAL INCOME TAX INFORMATION (UNAUDITED)

During the year ended December 31, 1996, the Michigan Municipal Money Market
Fund declared tax-exempt income distributions of $4,997,568.

<PAGE> 21

The Kent MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS

INSTITUTIONAL SHARES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<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.................................... 0.05 0.05 0.04 0.03 0.03
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income.................................... (0.05) (0.05) (0.04) (0.03) (0.03)
-------- -------- -------- -------- --------
Net change in net asset value.............................. -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========

Total return............................................... 5.06% 5.58% 3.75% 2.68% 3.40%

Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $483,919 $424,815 $323,539 $359,624 $220,508
Ratio of expenses to average net assets................ 0.52% 0.55% 0.60% 0.60% 0.60%
Ratio of net investment income to average net assets... 4.95% 5.45% 3.65% 2.65% 3.23%
Ratio of expenses to average net assets*............... 0.62% 0.63% 0.65% 0.68% 0.91%
Ratio of net investment income to average net
assets*.............................................. 4.85% 5.37% 3.59% 2.57% 2.92%

- ------------------------------------------------------------------------
<FN>
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.

</TABLE>
See Notes to Financial Statements.
19

<PAGE> 22

The Kent MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS

INVESTMENT SHARES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1996 1995 1994 1993 1992(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............................................... 0.05 0.05 0.04 0.03 --
------ ------ ------ ------ -----
Less Dividends from:
Net investment income............................................... (0.05) (0.05) (0.04) (0.03) --
------ ------ ------ ------ -----
Net change in net asset value......................................... -- -- -- -- --
------ ------ ------ ------ -----
Net asset value, end of period........................................ $ 1.00 $ 1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== =====

Total return.......................................................... 5.06% 5.56% 3.71% 2.67% 0.27%++

Ratios/Supplemental Data:
Net Assets, end of period (000's)................................... $ 804 $1,227 $ 369 $ 593 $ 11
Ratio of expenses to average net assets........................... 0.52% 0.55% 0.63% 0.63% 0.63%+
Ratio of net investment income to average net assets.............. 4.94% 5.41% 3.58% 2.63% 3.30%+
Ratio of expenses to average net assets*.......................... 0.62% 0.62% 0.68% 4.49% 0.68%+
Ratio of net investment income (loss) to average net assets*...... 4.84% 5.33% 3.53% (1.24%) 3.25%+

- ------------------------------------------------------------------------
<FN>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as indicated.
(1) The Investment Class date of initial public investment was December 9, 1992.
</TABLE>

See Notes to Financial Statements.
20

<PAGE> 23

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS

INSTITUTIONAL SHARES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- -------
<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 0.03 0.02 0.02 0.03
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income..................................... (0.03) (0.03) (0.02) (0.02) (0.03)
-------- -------- -------- -------- --------
Net change in net asset value............................... -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========

Total return................................................ 3.11% 3.50% 2.40% 2.00% 2.63%

Ratios/Supplemental Data:
Net Assets, end of period (000's)......................... $155,424 $145,215 $128,164 $183,366 $72,906
Ratio of expenses to average net assets................. 0.54% 0.56% 0.60% 0.60% 0.60%
Ratio of net investment income to average net assets.... 3.06% 3.45% 2.33% 1.96% 2.56%
Ratio of expenses to average net assets*................ 0.64% 0.65% 0.70% 0.69% 0.86%
Ratio of net investment income to average net assets*... 2.96% 3.36% 2.23% 1.87% 2.29%

See Notes to Financial Statements.
21

<PAGE> 24

The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS

INVESTMENT SHARES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992(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 0.03 0.02 0.02 **
------ ------ ------ ------ -----
Less Dividends from:
Net investment income............................................. (0.03) (0.03) (0.02) (0.02) --
------ ------ ------ ------ -----
Net change in net asset value....................................... -- -- -- -- --
------ ------ ------ ------ -----
Net asset value, end of period...................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
====== ====== ====== ====== =====

Total return........................................................ 3.11% 3.48% 2.38% 1.98% 0.03%++

Ratios/Supplemental Data:
Net Assets, end of period (000's)................................. $ 782 $1,603 $ 379 $ 149 $ ***
Ratio of expenses to average net assets......................... 0.54% 0.54% 0.63% 0.63% 0.00%+
Ratio of net investment income to average net assets............ 3.06% 3.48% 2.47% 2.01% 2.92%+
Ratio of expenses to average net assets*........................ 0.64% 0.62% 0.73% 3.77% 0.00%+
Ratio of net investment income (loss) to average net assets*.... 2.96% 3.39% 2.37% (1.13%) 2.92%+

- ------------------------------------------------------------------------
<FN>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as indicated.
** Amount is less than $0.005.
*** Amount is less than $1,000.
(1) The Investment Class date of initial public investment was December 15, 1992.
</TABLE>

See Notes to Financial Statements.
22

<PAGE> 25

INDEPENDENT AUDITORS' REPORT

THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
THE KENT FUNDS:

We have audited the accompanying statements of assets and liabilities of The
Kent Funds -- Money Market Fund and Michigan Municipal Money Market Fund,
including the portfolios of investments, as of December 31, 1996, and the
related statements of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and the financial highlights are the responsibility of The Kent
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 verification of securities owned as of
December 31, 1996, by confirmation with the custodian and other appropriate
audit procedures. 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 each
of the aforementioned funds at December 31, 1996, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP

Columbus, Ohio
February 21, 1997
<PAGE> 26

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<PAGE> 27

THE KENT FUNDS(R) BULK RATE
P.O. Box 182201 US POSTAGE
Columbus, Ohio 43218-2201 PAID
PERMIT No. 1
CLEVELAND, OH

KKF-0158 (2/97)