<PAGE>
Semi-Annual Report
June 30, 2000
Lyon Street Institutional
Money Market Fund
Investment Adviser
Lyon Street
-----------
Asset Management Company
<PAGE>
<TABLE>
<CAPTION>
Lyon Street Institutional Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS June 30, 2000
(Unaudited)
Principal Security Amortized
Amount Description Cost
------ ----------- ----
<S> <C> <C>
COMMERCIAL PAPER (40.6%):
Automotive (8.3%):
$ 750,000 Daimler Chrysler, 6.81%, 7/12/00 $ 748,439
204,000 Daimler Chrysler, 6.28%, 11/8/00 199,374
500,000 Daimler Chrysler, 6.30%, 1/19/01 482,325
500,000 Ford Motor Credit Co., 6.55%, 7/6/00 499,545
350,000 Ford Motor Credit Co., 6.20%, 9/7/00 345,901
500,000 General Motors Acceptance Corp., 6.58%, 9/14/00 493,146
-----------
2,768,730
-----------
Beverages - Soft Drinks (1.8%):
600,000 Coca Cola Co., 6.55%, 7/13/00 598,690
-----------
Chemicals - Diversified (3.0%):
1,000,000 Dow Chemical, 6.90%, 7/3/00 999,617
-----------
Finance (4.8%):
600,000 General Electric Capital Corp., 6.65%, 7/5/00 599,556
500,000 General Electric Capital Corp., 6.23%, 8/16/00 496,020
500,000 General Electric Capital Corp., 6.76%, 10/6/00 490,893
-----------
1,586,469
-----------
Food (3.8%):
750,000 H.J. Heinz Co., 6.54%, 7/7/00 749,183
500,000 General Mills, Inc., 6.87%, 7/12/00 498,950
-----------
1,248,133
-----------
Foreign Banking (8.9%):
750,000 Deutsche Bank AG, 6.05%, 8/1/00 746,093
750,000 Rabobank Nederland, 6.15%, 10/31/00 734,368
1,500,000 UBS Financial Inc., 6.92%, 7/5/00 1,498,847
-----------
2,979,308
-----------
Industrial Goods & Services (3.2%):
530,000 Dupont, 6.25%, 7/7/00 529,448
543,000 Dupont, 6.50%, 7/20/00 541,137
-----------
1,070,585
-----------
Medical - Drugs (2.3%):
750,000 Schering-Plough Corp., 6.11%, 7/12/00 748,600
-----------
Multi-Media (1.5%):
490,000 McGraw Hill, 6.57%, 7/20/00 488,301
-----------
Utilities - Telephone (3.0%):
1,000,000 BellSouth Co., 6.52%, 7/18/00 996,921
-----------
Total COMMERCIAL PAPER 13,485,354
-----------
DEMAND NOTES (41.0%):
Agriculture (2.6%):
875,000 The Economic Development Corp. of the 875,000
-----------
County of Marquette, 6.77%*, 7/5/00 (LOC: Bank One)
Finance (6.9%):
2,285,000 Patt's Enterprises LLC, 6.77%*, 7/5/00 (LOC: Huntington National Bank) 2,285,000
-----------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Lyon Street Institutional Money Market Fund
SCHEDULE OF PORTFOLIO INVESTMENTS June 30, 2000
(Unaudited)(continued)
Shares or
Principal Security Amortized
Amount Description Cost
------ ----------- ----
<S> <C> <C> <C>
Electronics and Electrical (6.0%):
$ 2,000,000 Olathe Kansas, 6.73%/*/, 7/5/00 $ 2,000,000
-------------
Health Care (5.9%):
1,950,000 Butler County Surgical Properties, 6.69%/*/, 7/6/00 (LOC: Fifth Third Bank) 1,950,000
-------------
Manufacturing - Capital Goods (7.1%):
1,500,000 Neenah Wisc. Industrial Development, 6.70%/*/, 7/5/00 (LOC: Banc One) 1,500,000
855,000 Ordeal Properties LLC, 6.85%/*/, 7/5/00 (LOC: Keybank) 855,000
-------------
2,355,000
-------------
Real Estate (12.5%):
1,245,000 Jefferson Land Development, 6.76%/*/, 7/6/00 (LOC: National City) 1,245,000
1,800,000 South Bend MAC, L.P., 6.70%/*/, 7/6/00 (LOC: ABN/AMRO) 1,800,000
1,100,000 Stoney Brook Court LLC, 6.73%/*/, 7/5/00 (LOC: Citibank) 1,100,000
-------------
4,145,000
-------------
Total DEMAND NOTES 13,610,000
-------------
MUNICIPAL BONDS (6.9%):
New York (3.0%):
995,000 Approach Partnership NY, 6.85%/*/, 7/5/00 (LOC: Keybank) 995,000
-------------
Michigan (3.9%):
1,300,000 Michigan State Strategic Fund, Phipps 1,300,000
-------------
Emmett Assoc, (AMT), 6.77%/*/, 7/5/00 (LOC: National Australia Bank)
Total MUNICIPAL BONDS 2,295,000
-------------
YANKEE CERTIFICATES OF DEPOSIT (6.8%):
750,000 Bank of Nova Scotia, 6.11%, 7/5/00 750,000
750,000 Bayerische Hypo-Und Verensbank AG, 6.77%, 2/22/01 750,151
750,000 Credit Suisse, 5.72%, 7/3/00 749,975
-------------
Total YANKEE CERTIFICATES OF DEPOSIT 2,250,126
-------------
INVESTMENT COMPANIES (4.7%):
300,000 Dreyfus Cash Management Money Market Fund 300,000
1,259,820 Federated Prime Value Obligations Money Market Fund 1,259,820
-------------
Total INVESTMENT COMPANIES 1,559,820
-------------
Total Investments (Cost $33,200,300) (a) - 100.0% 33,200,300
Other assets in excess of liabilities - 0.0% 2,148
-------------
TOTAL NET ASSETS - 100.0% $ 33,202,448
-------------
</TABLE>
____________
(a) Cost for federal income tax and financial reporting purposes is the same.
/*/ Variable rate security. Rate presented represents rate in effect at June
30, 2000. Maturity date reflects next rate change date.
AG Aktiengesellschaft (German Stock Company)
AMT Alternative Minimum Tax Paper
LOC Letter of Credit
2
<PAGE>
Lyon Street Institutional Money Market Fund
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments at amortized cost $ 33,200,300
Interest and dividends receivable 195,078
--------------
Total Assets 33,395,378
--------------
LIABILITIES:
Dividends payable 184,337
Payable to adviser 2,317
Payable to administrator 85
Accrued expenses and other liabilities 6,191
--------------
Total Liabilities 192,930
--------------
NET ASSETS consist of:
Paid-in capital $ 33,202,448
--------------
TOTAL NET ASSETS $ 33,202,448
==============
Net Assets $ 33,202,448
Shares Outstanding 33,202,448
Net Asset Value, offering and redemption price per share $ 1.00
==============
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
Lyon Street Institutional Money Market Fund
STATEMENT OF OPERATIONS
Period Ended June 30, 2000 (a) (Unaudited)
INVESTMENT INCOME:
Dividends $ 36,841
Interest 489,672
----------
Total Investment Income 526,513
----------
EXPENSES:
Investment advisory fees 32,787
Administration fees 14,798
Fund accounting fees 831
Transfer agent fees 224
Custodian fees 887
Printing 3,776
Other expenses 9,680
----------
Total expenses before waivers or reimbursements 62,983
Less: expenses voluntarily waived or reimbursed (44,949)
----------
Net Expenses 18,034
----------
NET INVESTMENT INCOME 508,479
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 508,479
==========
________
(a) For the period from April 11, 2000 (commencement of operations) to June 30,
2000.
See Notes to Financial Statements.
4
<PAGE>
Lyon Street Institutional Money Market Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
April 11, 2000
to
June 30, 2000(a)
(Unaudited)
--------------
<S> <C>
NET ASSETS at beginning of period $ --
--------------
Increase in net assets resulting from operations:
Net investment income 508,479
--------------
Net increase in net assets resulting from operations 508,479
--------------
Dividends and distributions to shareholders from:
Net investment income (508,479)
--------------
Total dividends and distributions to shareholders (508,479)
--------------
Net increase from capital transactions 33,202,448
--------------
Net increase in net assets 33,202,448
--------------
NET ASSETS at end of period $ 33,202,448
==============
</TABLE>
______
(a) Period from commencement of operations.
See Notes to Financial Statements.
5
<PAGE>
Lyon Street Institutional Money Market Fund
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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 (the "1940 Act"), as an open-end management investment company. The
Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest without par value. 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. As of the date
of this report, the Trust offered fifteen separate series, each with its own
investment objective.
The accompanying financial statements and financial highlights are those of the
Lyon Street Institutional Money Market Fund (the "Fund"). The Fund currently
offers one class of shares: Institutional Shares.
The investment objective of the Fund is to seek current income 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
Fund in the preparation of its 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
may 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.
Security Valuation: Securities in the Fund 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 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.
Repurchase Agreements: The Fund may agree to purchase portfolio securities from
financial institutions subject to the seller's agreement to repurchase them at a
mutually agreed upon date and price ("repurchase agreement"). Securities subject
to repurchase agreements are held either by the Trust's custodian and other
banks acting in a sub-custodian capacity or in the Federal
Reserve/Treasury Book-Entry System. 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 Fund has 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 Lending: The Fund may lend portfolio securities valued up to one-
third of its total assets (including the value of the collateral received for
the loan), pursuant to agreements requiring that the loan be continuously
secured by collateral, which may consist of cash, securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities,
irrevocable bank letters of credit or any other liquid high-grade short-term
instrument approved for use as collateral by the Securities and Exchange
Commission (or any combination thereof). The Funds continue to earn interest on
securities loaned while simultaneously seeking to earn interest on the
investment of collateral. Collateral is marked to market daily to provide a
level of collateral at least equal to the market value of securities loaned.
When cash is received as collateral for securities loaned, the Fund may invest
such cash in short-term U.S. Government securities, repurchase agreements, or
other securities with maturities equal to or less than maturity
6
<PAGE>
Lyon Street Institutional Money Market Fund
NOTES TO FINANCIAL STATEMENTS
(Unaudited)(continued)
date of the applicable lending transaction. The cash or subsequent short-term
investments are recorded as assets of the Fund, offset by a corresponding
liability to repay the cash at the termination of the loan. In addition, the
short-term securities purchased with the cash collateral are included in the
accompanying schedules of portfolio investments. Fixed income securities
received as collateral are not recorded as an asset or liability of the Fund
because the Fund does not have effective control of such securities.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers deemed by Lyon Street Asset
Management Company ("Lyon Street"), to be of good standing under guidelines
established by the Board of Trustees and when, in Lyon Street's judgment, the
income to be earned from the loan justifies the attendant risks. Loans are
subject to termination by the Funds or the borrower at any time, and are,
therefore, not considered to be illiquid investments. As of June 30, 2000, the
Fund had no securities on loan.
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 and includes, where applicable, the amortization of premiums or
accretion of discounts. Dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders: The Fund declares dividends daily
from net investment income and pays such dividends monthly. Net realized capital
gains, if any, are distributed at least annually.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of paid-in-capital.
Federal Income Taxes: For federal income tax purposes, the Fund 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 the Fund 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.
Expenses: Expenses directly attributable to the Fund are charged to the Fund,
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 a class will pay the expenses
directly attributable to that class.
3. Related Party Transactions
The Fund is advised by Lyon Street. Lyon Street is entitled to receive
management fees in the amount of 0.40% of the average daily net assets of the
Fund.
Old Kent Securities Corporation, 111 Lyon Street NW, Grand Rapids, Michigan
49503 ("OKSC"), serves as the Administrator, Fund Accountant and Transfer Agent
to the Trust. As compensation for the services and facilities provided to the
Trust pursuant to the Administration Agreement, OKSC is entitled to receive an
7
<PAGE>
Lyon Street Institutional Money Market Fund
NOTES TO FINANCIAL STATEMENTS
(Unaudited)(continued)
annual fee, payable monthly as one twelfth of the annual fee, based on the
Trust's aggregate average daily net assets as follows: up to $5.0 billion-0.185%
of such assets; between $5.0 and $7.5 billion-0.165% of such assets; and over
$7.5 billion-0.135% of such assets, provided, however, that such annual fee
shall be subject to an annual minimum fee of $45,000 per fund that is applicable
to certain Funds of the Trust. As compensation for the services provided to the
Trust pursuant to the Fund Accounting Agreement, OKSC is entitled to receive a
fee computed daily at the annual rate of 0.015% of the Trust's average daily net
assets, provided, however, that such annual fee shall be subject to an annual
minimum fee of $10,000 per fund that is applicable to certain Funds of the
Trust. As compensation for the services provided to the Trust pursuant to the
Transfer Agency Agreement, OKSC is entitled to receive an annual fee of $16.50
per account for active accounts and $7.50 per account for closed accounts,
provided, however, that such annual fee shall be subject to an annual minimum
fee of $15,000 per fund that is applicable to certain Funds of the Trust.
Lyon Street and OKSC have contractually agreed to waive until December 31, 2000
a portion of their fees so that the total annual operation expenses of the Fund
will not exceed 0.22%. For the period ended June 30, 2000, this waiver amounted
to $44,949.
BISYS Fund Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219
("BISYS"), provides certain administrative services to the Trust pursuant to
agreements between OKSC and BISYS. As compensation for the services provided by
it under the Sub-Administration Agreement, Sub-Fund Accounting Agreement and
Sub-Transfer Agency Agreement, BISYS is entitled to receive a fee from OKSC
computed daily as a percentage of the Trust's average daily net assets. Pursuant
to the Sub-Transfer Agency Agreement, BISYS is also entitled to receive from
OKSC a per account annual processing fee for all Trust accounts in excess of
22,000. The fees paid to BISYS by OKSC for such services come out of OKSC's fees
and are not an additional charge to the Fund.
Kent Fund Distributors, Inc., 3435 Stelzer Road, Columbus, Ohio 43219 ("KFDI"),
is the distributor of the Funds' shares. KFDI and BISYS are each a wholly-owned
subsidiary of The BISYS Group, Inc.
Certain officers of the Trust are affiliated with BISYS and Lyon Street. Such
officers receive no direct payments or fees from the Trust for serving as
officers.
Expenses for the Trust include legal fees paid to Drinker Biddle & Reath LLP. A
partner of that firm serves as Assistant Secretary of the Trust.
4. Capital Share Transactions
Transactions in shares of the Funds are summarized below:
For the
period ended
June 30, 2000(a)
(Unaudited)
---------
DOLLAR AMOUNTS
Shares issued ........................................... $ 57,622,783
Shares redeemed ......................................... (24,420,335)
------------
Net increase from capital transactions................. $ 33,202,448
============
SHARE ACTIVITY
Shares issued ........................................... 57,622,783
Shares redeemed ......................................... (24,420,335)
------------
Net increase from share transactions................... 33,202,448
============
(a) For the period from April 11, 2000 (commencement of operations) to June 30,
2000.
8
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income
from
Investment Less
Net Asset Operations: Dividends Net Net Asset
Value, Net from Net Change in Value,
Beginning Investment Investment Net Asset End of Total
of Period Income Income Value Period Return
LYON STREET INSTITUTIONAL MONEY MARKET FUND
Ticker Symbol: LSIXX
Six months ended
<S> <C> <C> <C> <C> <C> <C>
(Unaudited) 2000 (1) $1.000 0.014 (0.014) - $1.000 1.38%/***/
<CAPTION>
Ratios/Supplemental Data
-----------------------------------------------
Ratio of Ratio of Ratio of
Net Expenses Net Expenses
Assets, to Investment to
End of Average Income to Average
Period Net Average Net
(000's) Assets Net Assets Assets/*/
LYON STREET INSTITUTIONAL MONEY MARKET FUND
Ticker Symbol: LSIXX
Six months ended
<S> <C> <C> <C> <C>
(Unaudited) 2000 (1) $ 33,202 0.22%/**/ 6.20%/**/ 0.77%/**/
</TABLE>
/*/ During the period, certain fees were voluntarily reduced or reimbursed. If
such voluntary fee reductions/reimbursements had not occurred, the ratio
would have been as indicated.
/**/ Annualized.
/***/ Not Annualized.
(1) The Lyon Street Institutional Money Market Fund commenced operations on
April 11, 2000.
See Notes to Financial Statements.
9
<PAGE>
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Shares of the fund are not deposits or obligations of, or guaranteed or endorsed
by, Lyon Street Asset Management Company or its affiliates. Shares of the fund
are not federally insured by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. An investment in the
fund involves investment risks, including the possible loss of principal. There
can be no assurance that the Lyon Street Institutional Money Market Fund will be
able to sustain a stable net asset value of $1.00 per share.
--------------------------------------------------------------------------------
This report is submitted for the general information of shareholders of the Lyon
Street Institutional Money Market Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus
for the Fund, which contains more information concerning the Fund's investment
policies as well as fees, expenses and other pertinent information. Please read
the prospectus carefully before investing. The distributor for the Fund is Kent
Funds Distributors, Inc.
8/00
