<PAGE>
[PHOTO]
Harley K. Sefton
Chairman, Kennebec Funds Trust
President and Chief Executive Officer,
Kennebec Capital Management, Inc.
Prior to founding Kennebec Capital Management, Inc., Mr. Sefton was President
of First Interstate Capital Management, Inc. (formerly San Diego Financial
Capital Management, Inc., a wholly owned subsidiary of San Diego Trust &
Savings Bank). There he was instrumental in creating the Pacifica Family of
Mutual Funds which achieved $1.2 billion in assets under management. Mr.
Sefton was also associated with San Diego Trust & Savings Bank for almost 20
years, where he most recently served as Vice Chairman of the Board and
Executive Vice President/Division Manager of Financial Services. Mr. Sefton
received his B.A. in History from the University of San Diego.
DEAR SHAREHOLDER:
Enclosed is your copy of the Kennebec Funds Annual report for the period
ended March 31, 1996. Many new shareholders have joined us since our last
report and we would like to welcome all of you, and thank you for placing
your trust in us.
At this time of the year we find ourselves concerned with taxes and the
effect they have on our financial lives. Now is an excellent time for
investors to be reviewing their portfolios to be sure that everything
possible is being done to minimize the impact of taxes. It is not so much
what you make, but what you keep that is important.
If you are a California resident in the top tax brackets, you are paying
between 40-46% of your income to the State of California and to the U.S.
Government. There are, of course, a number of ways to try to minimize the
effect of taxes on your income. If you have access to any company sponsored
retirement plans, such as a 401(k) or a 403(b), utilizing them to the fullest
extent is a very good way to defer income for retirement purposes; as any
salary deferred into one of these plans is not subject to income taxes until
withdrawal (subject to penalties for early withdrawals).
Not to be forgotten is the Individual Retirement Account (IRA). The tax
law concerning these types of retirement accounts was changed several years
ago, which affected the deductibility of contributions. There generally are
still advantages to continuing to make annual contributions or, if you don't
have an IRA, to beginning one now. Every dollar set aside into an IRA is
allowed to grow untaxed until retirement - a powerful advantage! And don't
wait until
1
<PAGE>
the end of the year to make your contribution; make your 1996
contribution right now and put time and money to work for you now.
The Kennebec Funds are a San Diego mutual fund group created to serve
the needs of San Diego people. Of course, you don't have to live in San Diego
to enjoy the benefits of our Funds! With our exceptional team of investment
managers, you have the security of knowing that your investment is being
managed on a full time basis by professionals, combining value with
outstanding personal service.
Over the past year, the Kennebec Funds have gone through many changes
and experienced excellent growth. In keeping pace with our growth and to
reflect our strong ties to the San Diego community, the Fund will effect a
name change in the near future; the new name for the Funds will be the SEFTON
FUNDS.
If there is anything we can do to help, please call us at 800-524-2276.
Sincerely,
[SIG CUT]
Harley K. Sefton
Chairman
OVERALL ECONOMIC REVIEW
During the second quarter of 1995, interest rates fell dramatically as
investors reacted to evidence of a weaker economy. Subsequently, the Federal
Reserve reduced the federal funds rate in July by 25 basis points and lowered
the federal funds rate by 50 basis points over the next six months.
Coincidentally, the third and fourth quarters of 1995 saw generally weak
economic growth as businesses worked through high inventories. Moreover, a
partial shutdown of the Federal government caused by budget indecisions
placed additional pressures on the economy. Fortunately, recent evidence
suggests that the economic weakness experienced over the last year has
subsided. For example, vibrant employment reports and strong retail sales
suggest an improving economy.
2
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
[PHOTO]
Ted J. Piorkowski, C.F.A.
Vice President and Portfolio Manager
(U.S. Government & California Tax-Free Fund)
Joining Kennebec Capital Management, Inc. at its inception, Mr. Piorkowski
was previously with First Interstate Capital Management, Inc. (formerly San
Diego Financial Capital Management, Inc., a wholly owned subsidiary of San
Diego Trust & Savings Bank) as Vice President and Portfolio Manager for six
years. Mr. Piorkowski functioned as a fixed-income Portfolio Manager for
Pacifica Mutual Funds, managing $350 million in assets. His responsibilities
also included independent credit analysis and review, short-term liquidity
management and individual issue management. He was also associated with San
Diego Trust & Savings Bank as an Accounting Officer in the Comptroller's
office for two years. Mr. Piorkowski received his B.S. in Finance and an
M.B.A. from San Diego State University. He received his Chartered Financial
Analyst designation in 1991 and is a member of the Financial Analysts Society
of San Diego.
AN INTERVIEW WITH TED PIORKOWSKI,
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
A. The Kennebec U.S. Government Fund has a since inception (4/3/95) total
return of 9.06% for the period ended March 31, 1996. This return was produced
with a neutral maturity/duration positioning for most of the time period. As
of March 31, 1996, the Fund has a weighted average maturity of 7.3 years. We
position our sector allocation relative to broad fixed income indices. As of
March 31, 1996, we are underweighted in the corporate sector, overweighted in
the treasury/agency sector and neutrally weighted in the mortgage sector.
Q. WHAT IS YOUR APPROACH TO FIXED INCOME MANAGEMENT?
A. Our fundamental approach relies upon horizon analysis, which describes
differing measures of total return, based upon changes in prevailing interest
rates, reinvestment rates and time periods. Total return scenarios from
horizon analysis are then weighted against the inherent risks of bond
investing. The types of risk that we aggressively manage include interest
rate risk, reinvestment rate risk, call risk, default risk, and liquidity
risk.
3
<PAGE>
AN INTERVIEW WITH TED PIORKOWSKI,
PORTFOLIO MANAGER (CONTINUED)
Q. DO YOU FORECAST INTEREST RATES?
A. No (our crystal ball is as flawed as anyone else's)! While we do not
forecast interest rates, we do express an informed, professional opinion
about the direction of relevant interest rates. We develop our opinion using
fundamental economic, technical and market-based sources of information. We
do believe inherent in any bond purchase or bond fund there is an implied
interest rate forecast.
Q. WHAT ARE THE MAJOR ISSUES CONCERNING BONDS FOR THE REMAINDER OF 1996?
A. We believe bonds will continue to focus on the strength of the economy
and whether or not economic strength will be accompanied by increasing
inflation. At this time we think that the economy will experience moderate
growth with low inflation.
KENNEBEC U.S. GOVERNMENT FUND
PORTFOLIO HIGHLIGHTS AS OF MARCH 31, 1996
Net Assets $19,096,348
Sector Diversification Significant Holdings
Other U.S. Treasury Note 6.25%
2% Due 2/15/2003
Agency U.S. Treasury Note 7.50%
8% Due 2/15/2005
[PIE CHART] FHLMC 8.53%
Due 2/02/2005
Corporate
8% FHLMC 7.50%
Due 4/01/2014
Mortgage
23%
Treasury
59%
4
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
PORTFOLIO PERFORMANCE
Results of a hypothetical $10,000 investment in the
Kennebec U.S. Government Fund, the Lipper Intermediate U.S. Government
Funds Average(1) and the Lehman Brothers Government Bond Index(2).
(FUND INCEPTION DATE: APRIL 3, 1995)
[CHART]
Performance figures reflect the reinvestment of dividends, capital gains
distributions, all fee waivers and expense reimbursements. Without the
absorption of fee waivers and expense reimbursements, total return figures
would have been lower. Performance data quoted represents past performance
and is not indicative of future results. Share price, investment return, and
principal value will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost.
(1) Lipper Intermediate U.S. Government Funds Average - This average is
composed of 118 funds with an investment objective to invest at least
65% of assets in securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities with dollar-weighted average maturities
of 5 to 10 years.
(2) Lehman Brothers Government Bond Index - This index includes fixed rate
debt issues (all public obligations of the U.S. Treasury, all publicly
issued debt of U.S. Government agencies and quasi-federal corporations
and corporate debt guaranteed by the U.S. Government) rated investment
grade or higher by Moody's Investors Services, Standard & Poor's Corporation
or Fitch Investor's Service, in that order. It is an unmanaged index.
Cumulative Total Return
<TABLE>
FOR THE PERIODS ENDED 3/31/96 KENNEBEC LIPPER U.S. LEHMAN BROTHERS
U.S. GOVERNMENT INTERMEDIATE GOV'T GOVERNMENT
FUND FUNDS AVERAGE BOND INDEX
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
THREE MONTHS (2.59%) (1.68%) (2.26%)
SIX MONTHS 1.74% 1.96% 2.20%
NINE MONTHS 3.30% 3.56% 4.01%
SINCE INCEPTION 9.06% 8.84% 10.46%
</TABLE>
5
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
AN INTERVIEW WITH TED PIORKOWSKI,
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
A. The Kennebec California Tax-Free Fund had a since inception (4/3/95)
total return of 6.60% for the period ended March 31, 1996. This return is
somewhat less than we had hoped, but reflects the significant holding of
lower yielding floating rate municipal issues the Fund held throughout the
year. We held these issues as tax-exempt alternatives to cash as the Fund
experienced significant growth during the year. As of March 31, 1996, the
Fund has net assets of more than $40 million.
Q. HOW DO YOU APPROACH TAX-FREE INVESTING?
A. While we do utilize horizon analysis for the Fund's investment
management, we also focus upon the underlying credit worthiness of a
particular bond issue. We have an "essential service" bias for most given
bond issues. The "essentiality" of a given service that a bond issue
finances is viewed as a positive credit quality consideration. The Fund
reflects this "essential service" bias in its sector allocation. The Fund's
major allocations include water, education, waste, transportation, and power
sectors.
Q. HOW DO YOU VIEW MUNICIPAL BOND INSURANCE?
A. The municipal bond market today has a majority of new bond issues that
carry municipal bond insurance. Insurance is provided by companies including
MBIA (Municipal Bond Investors Assurance Corporation), AMBAC (AMBAC Indemnity
Corporation) and FGIC (Financial Guaranty Insurance Company). We view
insurance as a secondary credit enhancement to a given issuer's underlying
credit quality. As of March 31, 1996, the Fund has approximately 54% of its
net assets enhanced with municipal bond insurance.
Q. WHAT ARE YOUR CONCERNS ABOUT THE TAX-REFORM DEBATE?
A. We believe the tax-reform debate has ended for 1996. We think the debate
could return again in 1997 or later as an agenda item for either party. We
also believe that any future reform should protect the current tax-exempt
status of existing issues with some type of grandfathering consideration,
however, there are no guarantees should such legislation be adopted.
6
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
PORTFOLIO HIGHLIGHTS AS OF MARCH 31, 1996
NET ASSETS $42,592,621
SECTOR DIVERSIFICATION SIGNIFICANT HOLDINGS
Floaters California Educational
7% Facilities-Pomona College
6.125%, Due 02/15/08
Waste
8% Marin Municipal Water District
5.55%, Due 07/01/23
Misc.
Revenues M-S-R Public Power Agency
9% 6.00%, Due 07/01/20
Health San Diego County Regional
9% Transportation District
Commission
General 5.00%, Due 04/01/07
Obligations
7%
Power
10%
[PIE CHART]
Housing
5%
Transportation
11%
Certificate of
Participation
4%
Water
15%
Prisons
2%
Education
13%
7
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
PORTFOLIO PERFORMANCE
Results of a hypothetical $10,000 investment in the
Kennebec California Tax-Free Fund, the Lipper California Municipal Debt
Funds Average(3) and the Lehman Brothers Municipal Bond Index(4)
(FUND INCEPTION DATE: APRIL 3, 1995)
[CHART]
Performance figures reflect the reinvestment of dividends, capital gains
distributions, all fee waivers and expense reimbursements. Without the
absorption of fee waivers and expense reimbursements, total return figures
would have been lower. Performance data quoted represents past performance
and is not indicative of future results. Share price, investment return, and
principal value will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost.
(3) Lipper California Municipal Debt Funds Average - This average is composed
of 97 funds with an investment objective to invest its assets in municipal
debt issues which are exempt from taxation in California.
(4) Lehman Brothers Municipal Bond Index - This index is a total return
performance benchmark for the long-term, investment-grade tax-exempt bond
market. Returns and attributes for the index are calculated semi-monthly
using approximately 25,000 municipal bonds. It is an unmanaged index.
Cumulative Total Return
<TABLE>
FOR THE PERIODS ENDED 3/31/96 KENNEBEC LIPPER LEHMAN BROTHERS
CALIFORNIA TAX-FREE CALIFORNIA MUNICIPAL MUNICIPAL BOND
FUND FUNDS AVERAGE INDEX
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
THREE MONTHS (1.48%) (2.19%) (1.21%)
SIX MONTHS 3.22% 2.95% 2.87%
NINE MONTHS 6.19% 5.39% 5.83%
SINCE INCEPTION 6.60% 7.28% 8.38%
</TABLE>
8
<PAGE>
KENNEBEC EQUITY VALUE FUND
[PHOTO]
Thomas C. Bowden, C.F.A.
Vice President and Portfolio Manager
(Equity Value Fund)
Mr. Bowden joined Kennebec Capital Management, Inc. in February 1995 after
serving as Vice President and Portfolio Manager (Equity) with First
Interstate Capital Management, Inc. (formerly San Diego Financial Capital
Management, Inc., a wholly owned subsidiary of San Diego Trust & Savings
Bank) for nine years. During that time, he worked in the areas of equity
analysis, trading and portfolio management. In addition, Mr. Bowden was
co-manager of the Pacifica Equity Value and Pacifica Balanced Mutual Funds,
managing over $250 million in assets. During his tenure, he was involved in
account management for individuals, corporations and foundations. Previously,
Mr. Bowden was a Commercial Loan Officer with Bank of America for two years.
He received his B.S. in Finance and Business Economics from the University of
Southern California and an M.B.A. from the University of Chicago. He received
his Chartered Financial Analyst designation in 1989. Mr. Bowden is also a
member of the Financial Analysts Society of San Diego.
Leif 0. Sanchez, C.F.A.
Vice President and Portfolio Manager
(Equity Value Fund)
Mr. Sanchez established the equity department at Kennebec Capital Management,
Inc. in February 1995 after ten years as Vice President and Portfolio Manager
with First Interstate Capital Management, Inc. (formerly San Diego Financial
Capital Management, Inc., a wholly owned subsidiary of San Diego Trust &
Savings Bank). During that time he worked in the areas of equity analysis,
trading and portfolio management. Most recently, he was Co-Manager of the
Pacifica Equity Value and Pacifica Balanced Mutual Funds, managing over $250
million in assets. He was also involved in the management of accounts for
individuals, corporations and foundations. Mr. Sanchez received a B.A. in
Engineering from Harvard University in Cambridge, Massachusetts and obtained
his Chartered Financial Analyst designation in 1989. Mr. Sanchez is also a
member of the Financial Analysts Society of San Diego.
9
<PAGE>
AN INTERVIEW WITH THOMAS BOWDEN AND LEIF SANCHEZ,
PORTFOLIO MANAGERS
Q. TOM AND LEIF, HOW HAS THE KENNEBEC EQUITY VALUE FUND PERFORMED DURING ITS
FIRST YEAR?
A. Since inception (4/3/95), the Fund is up 26.31% on a total return basis
(price changes plus reinvested dividends and distributions). We are satisfied
with this return, although it could have been even better had we not been so
cautious about getting the Fund invested in the rapidly rising market that we
experienced during the first three months of operations.
Q. WHAT WERE SOME OF THE STOCKS THAT CONTRIBUTED TO THE STRONG YEAR?
A. Top performers in the Fund included Sears, Eckerd, Pacificare Health
Systems, Allstate, Kroger and LSI Logic. In addition, each of our banks
(Chase Manhattan, BankAmerica, NationsBank and Citicorp) also did very well.
Q. WHAT ARE THE CHARACTERISTICS OF THE STOCKS YOU BUY?
A. We are "value" investors, which means that we look for situations where
we believe the stock price of a company does not adequately reflect the
positive fundamentals that the company possesses. We believe that most of our
larger capitalization holdings are companies that are contrarian in nature
because they are involved in unglamorous, out-of-favor industries. Many of
the smaller companies that we buy are, in our view, overlooked, neglected or
misunderstood by the vast majority of investors. Frequently, these stocks may
have already suffered a dramatic price decline or prolonged period of
underperformance that leaves them attractively priced relative to their peer
group. In addition, most of our stocks have a catalyst present that we expect
will unlock their potential within the next twelve months. Examples of
typical catalysts would be things such as new management, new products, major
cost-cutting or a cyclical surge in profitability. In summary, we look for
stocks that possess low relative valuation multiples and a catalyst that will
help them reach normal valuation levels within a year.
Q. HOW DO YOU MANAGE RISK IN THE FUND?
A. One of the primary advantages of stock investing with a "value" approach
is that it should limit the overall downside risk of a portfolio. In other
words, stocks that are relatively underpriced should have less distance to
fall in a market correction than stocks which are fully priced. We seek a
favorable balance between risk and reward by constructing a Fund with high
liquidity and a broad diversification of industries and sectors. For example,
no more than 5% of the Fund's net assets can be invested in a single security
and no economic sector will exceed 20% of the Fund's net assets. On occasion
foreign stocks are held, but they will generally amount to less than 10% of
net assets.
10
<PAGE>
AN INTERVIEW WITH THOMAS BOWDEN AND LEIF SANCHEZ,
PORTFOLIO MANAGERS (CONTINUED)
Q. HOW DO YOU DETERMINE WHEN TO SELL A STOCK?
A. Regardless of whether a stock has gone up or down, it is sold out of the
Fund when the stock no longer appears to be undervalued relative to its peer
group or the broad market. We may also sell a stock if an original catalyst
for higher prices no longer seems plausible or imminent. As a final risk
control measure, we sell any stock that declines by 15% from our cost or
during the course of a calendar year.
Q. WHAT RECENT CHANGES HAVE YOU MADE IN THE FUND AND HOW ARE YOU POSITIONED
FOR THE BALANCE OF 1996?
A. Recent activity in the Fund related primarily to increasing the economic
sensitivity of the portfolio. Numerous purchases were made in the basic
industry, manufacturing, services and technology sectors. Many stocks in
these areas were attractively priced after severely underperforming the
market over the latter half of 1995. As of March 31, 1996, the Fund was
almost neutral with respect to sector exposure, with each industry group plus
or minus 3% versus its respective S&P benchmark. The only exception to this
is the health care area, where we remain very underweighted owing to the lack
of undervalued stocks. We do not anticipate any major changes in the Fund's
composition in the coming months, although we may increase our weight in
electric utilities owing to the group's large underperformance so far during
1996.
KENNEBEC EQUITY VALUE FUND
PORTFOLIO HIGHLIGHTS AS OF MARCH 31, 1996
NET ASSETS $36,325,968
SECTOR DIVERSIFICATION TOP TEN HOLDINGS
---------------------- ----------------
Energy 1. International Business
9.4% Machines 4.3%
2. Tenneco, Inc. 4.0%
Health Care 3. Chemical Banking Corp. 3.9%
2.4% 4. Repsol, S.A. 3.7%
5. Kroger Company 3.5%
Consumer 6. Phillip Morris Companies Inc. 3.3%
Cyclicals 7. American Stores Corporation 3.3%
9.7% 8. Dillard Department Stores 3.3%
9. Ryder System, Inc. 2.9%
Manufacturing 10. Echlin Inc. 2.8%
10.0%
Consumer
Staples
11.4%
Technology
7.7%
[PIE CHART]
Utilities/REITs
12.0%
Basic Industry
8.4%
Finance
13.7%
Services
7.2%
Cash
8.1%
11
<PAGE>
KENNEBEC EQUITY VALUE FUND
PORTFOLIO PERFORMANCE
Results of a hypothetical $10,000 investment in the
Kennebec Equity Value Fund, the Lipper Growth Funds Average(5) and the
S&P 500(6).
(FUND INCEPTION DATE: APRIL 3, 1995)
[CHART]
Performance figures reflect the reinvestment of dividends, capital gains
distributions, all fee waivers and expense reimbursements. Without the
absorption of fee waivers and expense reimbursements, total return figures
would have been lower. Performance data quoted represents past performance
and is not indicative of future results. Share price, investment return, and
principal value will fluctuate so that your shares, when redeemed, may be
worth more or less than their original cost.
(5) Lipper Growth Funds Average - This average is composed of 644 funds with
an investment objective to invest in companies whose long-term earnings
are expected to grow significantly faster than the earnings of the stocks
represented in the major unmanaged stock indices.
(6) Standard & Poor's 500 - The S&P 500 is a broad-based measurement of
changes in stock-market conditions based on the average performance of
500 widely held common stocks. It is an unmanaged index.
Cumulative Total Return
FOR THE PERIODS ENDED 3/31/96 KENNEBEC LIPPER
EQUITY VALUE GROWTH FUNDS S&P 500
FUND AVERAGE INDEX
- ---------------------------------------------------------------------
THREE MONTHS 8.85% 5.35% 5.36%
SIX MONTHS 11.97% 7.88% 11.70%
NINE MONTHS 22.04% 17.20% 20.56%
SINCE INCEPTION 26.31% 28.46% 32.06%
12
<PAGE>
DEFINITION OF COMMON TERMS
GAIN (OR LOSS)
If a stock or bond appreciates in price, there is an unrealized gain; if
it depreciates there is an unrealized loss. A gain or loss is "realized" upon
the sale of a security; if a Fund's net gains exceed net losses, there may be
a capital gain distribution to shareholders. There could also be an ordinary
income distribution if the net gain is short term or no distribution if there
is a capital loss carryover.
DIVIDEND
Net income distributed to shareholders generated by securities in a
Fund. The Kennebec U.S. Government Fund and the Kennebec California Tax-Free
Funds pay dividends monthly. The Kennebec Equity Value Fund pays dividends
quarterly.
NET ASSET VALUE (NAV) PER SHARE
Total market value of all securities and other assets held by a
Portfolio, minus liabilities, divided by the number of shares outstanding. It
is the value of a single share of a mutual fund on a given day. The total
market value of your investment would be the NAV multiplied by the number of
shares you own. NAV generally fluctuates daily for all the Kennebec Funds.
CERTIFICATES OF PARTICIPATION
Certificates of participation (COPs), or lease-secured bonds, represent
a bondholder's proportionate interest in rental payments made under a
municipal lease contract. The payments are normally made pursuant to a lease
and trust agreement. This type of tax-exempt municipal leasing has become an
attractive alternative to traditional bond financing.
INSURED BONDS
Insured Bonds refer to municipal obligations which are covered by an
insurance policy issued by independent insurance companies. The policies
insure the payment of principal and interest of the issuer. Examples of such
companies would be MBIA (Municipal Bond Investors Assurance Corporation),
AMBAC (AMBAC Indemnity Corporation) or FGIC (Federal Guaranty Insurance
Company). Bonds insured by MBIA, AMBAC and FGIC are rated AAA.
GENERAL OBLIGATION BONDS
General obligation bonds (GOs) are debts backed by the general taxing
power of the issuer. Payment of the obligation may be backed by a specific
tax or the issuer's general tax fund. Examples of GOs include sidewalk bonds,
sewer bonds, street bonds and so on. These bonds are also known as FULL FAITH
AND CREDIT bonds because the debt is a general obligation of the issuer.
REVENUE BONDS
Revenue Bonds are issued to provide capital for the construction of a
revenue-producing facility. The interest and principal payments are backed to
the extent that the facility
13
<PAGE>
DEFINITION OF COMMON TERMS (CONTINUED)
REVENUE BONDS (CONTINUED)
produces revenue to pay. Examples of revenue bonds include toll bridges,
roads, parking lots and ports. The municipality is not obligated to cover
debt payments on revenue bonds in default.
BOND RATINGS
The quality of bonds can, to some degree, be determined from the ratings
of the two most prominent rating services: Moody's and Standard & Poor's.
The ratings are used by the government and industry regulatory agencies, the
investing public, and portfolio managers as a guide to the relative security
and value of each bond. The ratings are not used as an absolute factor in
determining the strength of the pledge securing a particular issue. However,
since Moody's and Standard & Poor's rate bonds on a fee basis, some issuers
choose not to be rated. Many non-rated issues are sound investments.
DESCRIPTION OF MOODY'S BOND RATINGS:
Excerpts from Moody's description of its four highest bond ratings are
listed as follows: Aaa - judged to be the best quality and they carry the
smallest degree of investment risk; Aa -judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally know
as high grade bonds; A - possess many favorable investment attributes and are
to be considered as "upper medium grade obligations"; Baa - considered to be
medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Other Moody's
bond descriptions include: Ba - judged to have speculative elements, their
future cannot be considered as well assured; B - generally lack
characteristics of the desirable investment; Caa - are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest; Ca - speculative in a high degree, often in
default; C - lowest rated class of bonds, regarded as having extremely poor
prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating
categories. The modifier 1 indicates that the security is in the higher end
of its rating category; the modifier 2 indicates a mid-range ranking; and
modifier 3 indicates a ranking toward the lower end of the category.
DESCRIPTION OF S&P'S BOND RATINGS:
Excerpts from S&P's description of its four highest bond ratings are
listed as follows: AAA - highest grade obligations, in which capacity to pay
interest and repay principal is extremely strong; AA - also qualify as high
grade obligations, having a very strong capacity to pay interest and repay
principal, and differs from AAA issues only in a small degree; A - regarded
as upper medium grade, having a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories; BBB - regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate
14
<PAGE>
DEFINITION OF COMMON TERMS (CONTINUED)
DESCRIPTION OF S&P'S BOND RATINGS (CONTINUED)
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories. This
group is the lowest which qualifies for commercial bank investment. BB, B,
CCC, CC - predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with terms of the obligations; BB indicates
the highest grade and CC the lowest within the speculative rating categories.
S&P applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
DESCRIPTION OF MOODY'S RATINGS OF NOTES AND VARIABLE RATE DEMAND INSTRUMENTS:
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or MIG. Such ratings recognize the
differences between short-term credit and long-term risk. Short-term ratings
on issues with demand features (variable rate demand obligations) are
differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payments
relying on external liquidity.
MIG 1/VMIG 1: This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This denotes high quality. Margins of protection are
ample although not as large as in the preceding group.
TOTAL RETURN
Total return measures a Portfolio's performance over a stated period of
time, taking into account the combination of dividends paid and the gain or
loss in the value of the securities held in the Portfolio. It may be
expressed on an average annual basis or a cumulative basis (total change over
a given period).
Whenever a Portfolio, other than a Money Market Portfolio, reports any
type of performance, it must also report the average annual total return
according to the standardized calculation developed by the SEC. This
standardized calculation was introduced to help investors compare different
mutual funds on an equal performance basis. The SEC average annual total
return calculation includes the effects of all of the fund's fees and
expenses, and assumes the reinvestment of all dividends and capital gains.
15
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
ASSETS
Investments, at value (cost-$18,540,569) $18,922,035
Cash 464
Interest receivable 273,330
Organizational costs, net of accumulated amortization 32,150
Prepaid expenses 543
- ----------------------------------------------------------------------------
Total Assets 19,228,522
- ----------------------------------------------------------------------------
LIABILITIES
Payables:
Investment advisory fee 414
Administration 5,300
Dividends 93,821
Other 32,639
- ----------------------------------------------------------------------------
Total Liabilities 132,174
- ----------------------------------------------------------------------------
NET ASSETS $19,096,348
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $18,574,086
Accumulated net realized gain from investment transactions 140,796
Net unrealized appreciation of investments 381,466
- ----------------------------------------------------------------------------
NET ASSETS $19,096,348
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Shares of beneficial interest outstanding 1,545,813
- ----------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $12.35
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
See Notes to Financial Statements.
16
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS
March 31, 1996
FACE VALUE MARKET VALUE*
- ---------- -------------
CORPORATE BONDS 8.28%
- ----------------------------------------------------------------------------
Finance 8.28%
- ----------------------------------------------------------------------------
$500,000 Integra Bank, MTN,
6.55%, 06/15/00 $ 498,666
500,000 Lehman Brothers Holdings,
8.75%, 05/15/02 543,387
500,000 Salomon Inc,
9.25%, 05/01/01 538,687
----------
TOTAL CORPORATE BONDS
(Cost $1,532,223) 1,580,740
----------
MORTGAGE-BACKED SECURITIES 22.53%
- ----------------------------------------------------------------------------
828,891 Federal Home Loan Mortgage Corp,
7.50%, 07/01/09 842,878
1,746,276 Federal Home Loan Mortgage Corp,
7.50%, 04/01/14 1,754,762
905,542 Federal National Mortgage Association,
7.00%, 05/01/14 892,139
806,143 Federal National Mortgage Association,
8.00%, 01/01/15 812,849
----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $4,287,764) 4,302,628
----------
U.S GOVERNMENT AGENCIES 7.62%
- ----------------------------------------------------------------------------
500,000 Federal Home Loan Mortgage Corp,
8.625%, 11/29/04 528,813
875,000 Federal Home Loan Mortgage Corp,
8.53%, 02/02/05 925,381
----------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $1,426,200) 1,454,194
----------
U.S. GOVERNMENT TREASURIES 59.32%
- ----------------------------------------------------------------------------
1,000,000 U.S. Treasury Bonds,
7.25%, 05/15/16 1,044,686
U.S. Treasury Notes:
1,000,000 7.75%, 02/15/01 1,068,750
2,000,000 7.50%, 05/15/02 2,129,372
2,800,000 6.25%, 02/15/03 2,791,250
1,000,000 7.25%, 08/15/04 1,054,061
1,000,000 7.875%, 11/15/04 1,095,311
2,000,000 7.50%, 02/15/05 2,145,000
----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $11,038,339) 11,328,430
----------
17
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
STATEMENT OF INVESTMENTS (CONTINUED)
March 31, 1996
FACE VALUE MARKET VALUE*
- ---------- -------------
REPURCHASE AGREEMENT
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 1.34%
- ----------------------------------------------------------------------------
$256,000 Repurchase agreement with State Street
Bank & Trust Company, 2.00%, dated
03/29/96 and maturing 04/01/96,
collateralized by U.S. Treasury
Bonds, 11.25%, due 02/15/15 with a
value of $266,289 (Cost $256,043) $ 256,043
-----------
TOTAL INVESTMENTS
(Cost $18,540,569) 99.09% $18,922,035
Other Assets in Excess of Liabilities 0.91% 174,313
------ -----------
NET ASSETS 100.00% $19,096,348
------ -----------
------ -----------
* See Note 1 to Financial Statements.
18
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996 (1)
INVESTMENT INCOME
Interest $1,252,093
- -----------------------------------------------------------------------------
Total Investment Income 1,252,093
- -----------------------------------------------------------------------------
EXPENSES
Investment advisory fee 112,654
Administration 37,324
Fund accounting 28,393
Legal 8,249
Audit 18,030
Custodian 17,436
Amortization of organization costs 6,380
Transfer agency 12,012
Printing 2,060
Insurance 3,836
Registration 8,001
Trustees fee 1,953
Other 3,930
- -----------------------------------------------------------------------------
Total Expenses 260,258
- -----------------------------------------------------------------------------
Expenses waived by:
Investment adviser (52,605)
Administrator (16,798)
- -----------------------------------------------------------------------------
Net Expenses 190,855
- -----------------------------------------------------------------------------
NET INVESTMENT INCOME 1,061,238
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 175,584
- -----------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 0
End of period 381,466
- -----------------------------------------------------------------------------
Net change in unrealized appreciation 381,466
- -----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 557,050
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,618,288
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(1) Fund began operations on April 3, 1995.
See Notes to Financial Statements.
19
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (1)
FROM INVESTMENT ACTIVITIES
Net investment income $1,061,238
Net realized gain from investment transactions 175,584
Net change in unrealized appreciation 381,466
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,618,288
Dividends to shareholders from net investment income (1,061,238)
Distributions to shareholders from net realized gain from
investment transactions (34,788)
- -----------------------------------------------------------------------------
Change in net assets derived from investment activities 522,262
- -----------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 25,698,168
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 17,651
- -----------------------------------------------------------------------------
25,715,819
Cost of shares redeemed (7,175,070)
- -----------------------------------------------------------------------------
Change in net assets from beneficial interest transactions 18,540,749
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 19,063,011
NET ASSETS:
Beginning of period 33,337(2)
- -----------------------------------------------------------------------------
End of period $19,096,348
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(1) Fund commenced operations April 3, 1995.
(2) Initial Capitalization.
See Notes to Financial Statements.
20
<PAGE>
KENNEBEC U.S. GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the period indicated:
For the Period Ended
March 31, 1996 (1)
-------------------
Net asset value - beginning of period $12.00
- -----------------------------------------------------------------------------
Income from investment operations
Net investment income 0.71
Net realized and unrealized gain from investment transactions 0.37
- -----------------------------------------------------------------------------
Total income from investment operations 1.08
- -----------------------------------------------------------------------------
Dividends and distributions to shareholders
Dividends from net investment income (0.71)
Distributions from net realized gain from investment transactions (0.02)
- -----------------------------------------------------------------------------
Total dividends and distributions (0.73)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net asset value - end of period $12.35
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total return 9.06%(2)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $19,096
- -----------------------------------------------------------------------------
Ratio of expenses to average net assets 1.02%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income to average net assets 5.68%(3)
- -----------------------------------------------------------------------------
Ratio of expenses to average net assets without fee waivers 1.39%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 5.31%(3)
- -----------------------------------------------------------------------------
Portfolio turnover rate (4) 45.41%(3)
- -----------------------------------------------------------------------------
(1) Fund commenced operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized
(4) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities (excluding
securities with maturity dates of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period ended
March 31, 1996 were $26,590,557 and $8,446,943, respectively.
See Notes to Financial Statements.
21
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
ASSETS
Investments, at value (cost-$41,528,198) $42,033,933
Cash 21,764
Interest receivable 741,817
Organizational costs, net of accumulated amortization 32,149
Prepaid expenses 1,122
- -----------------------------------------------------------------------------
Total Assets 42,830,785
- -----------------------------------------------------------------------------
LIABILITIES
Payables:
Investment advisory fee 10,906
Administration 13,606
Dividends 172,100
Other 41,552
- -----------------------------------------------------------------------------
Total Liabilities 238,164
- -----------------------------------------------------------------------------
NET ASSETS $42,592,621
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $42,087,025
Distributions in excess of net realized gains (139)
Net unrealized appreciation of investments 505,735
- -----------------------------------------------------------------------------
NET ASSETS $42,592,621
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Shares of beneficial interest outstanding 3,492,752
- -----------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $12.19
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
See Notes to Financial Statements.
22
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
STATEMENT OF INVESTMENTS
March 31, 1996
BOND RATINGS MARKET
FACE VALUE MOODY'S/S&P VALUE*
- ---------- ------------ ------
CERTIFICATE OF PARTICIPATION 3.62%
- -----------------------------------------------------------------------------
$ 1,500,000 West Covina, California Hospital,
Certificate of Participation, 6.50%,
08/15/14, Callable 08/15/04 @ 102.00 A/A $ 1,540,275
------------
Total Certificates of Participation
(Cost $1,503,609) 1,540,275
------------
GENERAL OBLIGATION BONDS 7.10%
- -----------------------------------------------------------------------------
1,325,000 California State, 6.25%, 04/01/08 A1/A 1,438,817
1,500,000 San Francisco City & County Public
Safety, 6.50%, 06/15/08, Callable
06/15/01 @ 100.00, FGIC Aaa/AAA 1,586,115
------------
TOTAL GENERAL OBLIGATION BONDS
(Cost $2,959,066) 3,024,932
------------
LEASE REVENUE BONDS 3.60%
- -----------------------------------------------------------------------------
1,000,000 California State Public
Works-Department of Corrections,
5.25%, 12/01/08, AMBAC Aaa/AAA 996,720
500,000 California State Public Works
Board Univ, 6.625%, 10/01/10,
Callable 10/01/02 @ 102.00 A/A- 535,525
------------
TOTAL LEASE REVENUE BONDS
(Cost $1,481,103) 1,532,245
------------
REVENUE BONDS 84.37%
- -----------------------------------------------------------------------------
1,500,000 California Educational Facilities
Authorities, Santa Clara, 6.25%,
02/01/16, Callable 02/01/02
@ 102.00 A1/NR 1,531,005
1,690,000 California Educational
Facilities-Pomona, 6.125%, 02/15/08,
Callable 02/15/02 @ 102.00 Aa1/AA 1,762,704
2,000,000 California Health Facilities
Finance-Sutter, 7.00%, 01/01/09,
Callable 01/01/99 @ 102.00, MBIA Aaa/AAA 2,138,880
1,500,000 California Health Facilities-Scripps,
6.25%, 10/01/13, Callable 10/01/01
@ 102.00, MBIA Aaa/AAA 1,549,350
1,460,000 California Housing Finance Agency,
5.95%, 08/01/14, Callable 08/01/05
@ 102.00, MBIA Aaa/AAA 1,464,643
800,000 California Housing Finance Agency,
1995 Ser-L, 5.90%, 08/01/17,
Callable 02/01/06 @ 102.00, MBIA Aaa/AAA 795,128
2,000,000 California Pollution Control
Finance Authority, Southern
California Edison Ser-A, 3.40%,
02/28/08, (1) VMIG-1/A-1 2,000,000
300,000 California Pollution Control
Finance Authority, Southern
California Edison Ser-C, 3.40%,
02/28/08, (1) VMIG-1/A-1 300,000
800,000 California Pollution Control
Finance Authority, Southern
California Edison Ser-D, 3.40%,
02/28/08, (1) VMIG-1/A-1 800,000
23
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
STATEMENT OF INVESTMENTS
March 31, 1996
BOND RATINGS MARKET
FACE VALUE MOODY'S/S&P VALUE*
- ---------- ------------ ------
REVENUE BONDS (continued)
- -----------------------------------------------------------------------------
$ 1,000,000 California State Water Resources,
6.125%, 12/01/13, Callable 12/01/01
@ 101.50 Aa/AA $ 1,020,160
1,000,000 Fairfield-Suisun California Sewer,
6.25%, 05/01/16, Callable 05/01/01
@ 102.00, MBIA Aaa/AAA 1,026,660
2,000,000 Los Angeles County Public Works
Financing, 6.00%, 10/01/15,
Callable 10/01/04 @ 102.00 Aa/AA 2,006,940
1,000,000 Los Angeles Wastewater, 6.25%,
06/01/12, Callable 06/01/02
@ 102.00, AMBAC Aaa/AAA 1,039,070
1,700,000 Marin Municipal Water District,
5.55%, 07/01/13, Callable 07/01/03
@ 102.00 A1/AA 1,638,630
1,500,000 M-S-R Public Power Agency, 6.00%,
07/01/20, Callable 07/01/03
@ 102.00, AMBAC Aaa/AAA 1,503,525
1,500,000 Northern California Power Agency,
6.25%, 07/01/12, Callable 07/01/02
@ 102.00, MBIA Aaa/AAA 1,559,070
2,000,000 Rancho California Water District
Financing Authority, 5.875%,
11/01/10, Callable 11/01/05
@ 102.00, FGIC Aaa/AAA 2,078,320
1,215,000 Sacramento Municipal Utility
District, 5.75%, 01/01/15, Callable
01/01/04 @ 102.00, MBIA Aaa/AAA 1,200,469
1,500,000 San Diego County RTD, 5.00%,
04/01/07, FGIC (2) Aaa/AAA 1,483,125
1,650,000 San Francisco Airport, 6.30%,
05/01/11, Callable 05/01/02
@ 102.00, AMBAC Aaa/AAA 1,724,745
1,500,000 San Francisco Bay Area Rapid Transit,
5.50%, 07/01/15, Callable 07/01/05
@ 101.00, FGIC Aaa/AAA 1,450,605
1,500,000 San Francisco Port Commission, 5.90%,
07/01/09, Callable 07/01/04
@ 102.00 A/BBB+ 1,522,320
1,500,000 San Francisco P.U.C. Water, 6.00%,
11/01/15, Callable 11/01/02 @ 100.00 Aa/AA 1,502,730
1,300,000 Sunnyvale California Financing
Authority, 6.30%, 10/01/17,
Callable 10/01/00 @ 102.00, MBIA Aaa/AAA 1,335,867
1,500,000 University of California Regents,
6.30%, 09/01/15, Callable 09/01/03
@ 102.00 NR/A- 1,502,535
------------
TOTAL REVENUE BONDS
(Cost $35,584,420) 35,936,481
------------
TOTAL INVESTMENTS
(Cost $41,528,198) 98.69% $ 42,033,933
Other Assets in Excess of Liabilities 1.31% 558,688
---------------------
NET ASSETS 100.00% $ 42,592,621
---------------------
---------------------
(1) Floating rate security - rate disclosed as of March 31, 1996.
* See Note 1 to Financial Statements.
24
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996 (1)
INVESTMENT INCOME
Interest $2,161,043
- -----------------------------------------------------------------------------
Total Investment Income 2,161,043
- -----------------------------------------------------------------------------
EXPENSES
Investment advisory fee 228,931
Administration 76,311
Fund accounting 28,393
Legal 13,283
Audit 18,030
Custodian 21,323
Amortization of organization costs 6,380
Transfer agency 14,290
Printing 3,319
Insurance 3,986
Registration 14,168
Trustees fee 3,295
Other 10,386
- -----------------------------------------------------------------------------
Total Expenses 442,095
- -----------------------------------------------------------------------------
Expenses waived by:
Investment adviser (91,958)
Administrator (32,529)
- -----------------------------------------------------------------------------
Net Expenses 317,608
- -----------------------------------------------------------------------------
NET INVESTMENT INCOME 1,843,435
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 22,588
- -----------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 0
End of period 505,735
- -----------------------------------------------------------------------------
Net change in unrealized appreciation 505,735
- -----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 528,323
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,371,758
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(1) Fund began operations on April 3, 1995.
See Notes to Financial Statements.
25
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (1)
FROM INVESTMENT ACTIVITIES
Net investment income $1,843,435
Net realized gain from investment transactions 22,588
Net change in unrealized appreciation 505,735
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,371,758
Dividends to shareholders from net investment income (1,843,435)
Distributions to shareholders from net realized gains from
investment transactions (22,588)
Distribution to shareholders in excess of net realized gains (139)
- -----------------------------------------------------------------------------
Change in net assets derived from investment activities 505,596
- -----------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 43,276,260
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 8,890
- -----------------------------------------------------------------------------
43,285,150
Cost of shares redeemed (1,231,462)
- -----------------------------------------------------------------------------
Change in net assets from beneficial interest transactions 42,053,688
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 42,559,284
NET ASSETS:
Beginning of period 33,337(2)
- -----------------------------------------------------------------------------
End of period $42,592,621
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(1) Fund commenced operations April 3, 1995.
(2) Initial Capitalization.
See Notes to Financial Statements.
26
<PAGE>
KENNEBEC CALIFORNIA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the period indicated:
FOR THE PERIOD ENDED
MARCH 31, 1996 (1)
--------------------
Net asset value - beginning of period $12.00
- -----------------------------------------------------------------------------
Income from investment operations
Net investment income 0.58
Net realized and unrealized gain from investment transactions 0.20
- -----------------------------------------------------------------------------
Total income from investment operations 0.78
- -----------------------------------------------------------------------------
Dividends and distributions to shareholders
Dividends from net investment income (0.58)
Distributions to shareholders from net realized gains from
investment transactions (0.01)
- -----------------------------------------------------------------------------
Total dividends and distributions (0.59)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net asset value - end of period $12.19
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total return 6.60%(2)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $42,593
- -----------------------------------------------------------------------------
Ratio of expenses to average net assets 0.83%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income to average net assets 4.83%(3)
- -----------------------------------------------------------------------------
Ratio of expenses to average net assets without fee waivers 1.16%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income to average net assets without
fee waivers 4.51%(3)
- -----------------------------------------------------------------------------
Portfolio turnover rate (4) 93.90%(3)
- -----------------------------------------------------------------------------
(1) Fund commenced operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized.
(4) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities (excluding
securities with maturity dates of one year or less at the time of
acquisition) for the period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended March 31, 1996 were $77,782,488 and $36,252,475, respectively.
See Notes to Financial Statements.
27
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
ASSETS
Investments, at value (cost-$31,138,395) $36,310,213
Cash 928
Receivables:
Investments sold 120,101
Dividend 77,464
Organizational costs, net of accumulated amortization 32,150
Prepaid expenses 1,116
- -----------------------------------------------------------------------------
Total Assets 36,541,972
- -----------------------------------------------------------------------------
LIABILITIES
Payables:
Investments purchased 143,400
Investment advisory fee 30,376
Administration 9,650
Other 32,578
- -----------------------------------------------------------------------------
Total Liabilities 216,004
- -----------------------------------------------------------------------------
NET ASSETS $36,325,968
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $30,441,746
Distributions in excess of net investment income (4,471)
Accumulated net realized gain from investment transactions 716,875
Net unrealized appreciation of investments 5,171,818
- -----------------------------------------------------------------------------
NET ASSETS $36,325,968
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Shares of beneficial interest outstanding 2,434,083
- -----------------------------------------------------------------------------
Net asset value, offering, and redemption price per share $14.92
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
See Notes to Financial Statements.
28
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF INVESTMENTS
March 31, 1996
SHARES MARKET VALUE*
- ------ -------------
COMMON STOCKS 91.87%
- ----------------------------------------------------------------------------
CONSUMER CYCLICALS 9.72%
- ----------------------------------------------------------------------------
34,500 Dillard Department Stores $ 1,194,563
15,000 J.C. Penney Company Inc 746,250
12,200 May Department Stores 588,650
35,000 Rhodes Inc** 332,500
25,500 Waban Inc** 669,375
------------
3,531,338
------------
CONSUMER STAPLES 11.43%
- ----------------------------------------------------------------------------
36,200 American Stores Co 1,194,600
10,000 Eckerd Corp** 481,250
31,500 Kroger Co** 1,275,750
13,700 Philip Morris Companies Inc 1,202,175
------------
4,153,775
------------
SERVICES 7.24%
- ----------------------------------------------------------------------------
5,000 AMR Corp** 447,500
8,000 CSX Corp 365,000
13,500 Illinois Central Corp 384,750
15,000 Royal Caribbean Cruises Ltd** 365,625
39,100 Ryder System Inc 1,065,475
------------
2,628,350
------------
HEALTH CARE 2.36%
- ----------------------------------------------------------------------------
10,000 Bristol-Myers Squibb Co 856,250
------------
856,250
------------
BASIC INDUSTRY 8.41%
- ----------------------------------------------------------------------------
6,500 Aluminum Co of America 407,062
11,000 Inco Ltd 347,875
10,000 International Paper Co 393,750
6,000 Phelps Dodge Corp 411,750
15,000 PPG Industries 733,125
7,000 Reynolds Metals Co 413,875
10,000 USX - US Steel 346,250
------------
3,053,687
------------
MANUFACTURING 10.02%
- ----------------------------------------------------------------------------
11,500 Dana Corp 383,812
28,000 Echlin Inc 1,015,000
9,000 Magna International 415,125
17,000 Mark IV Industries 374,000
29
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED)
March 31, 1996
SHARES MARKET VALUE*
- ------ -------------
MANUFACTURING (CONTINUED)
- ----------------------------------------------------------------------------
26,000 Tenneco Inc $ 1,452,750
------------
3,640,687
------------
TECHNOLOGY 7.66%
- ----------------------------------------------------------------------------
16,000 Gateway 2000 Inc** 446,000
14,000 International Business Machines 1,555,750
7,000 Seagate Technology** 383,250
11,000 SGS Thomson Microelectronics** 398,750
------------
2,783,750
------------
ENERGY 9.36%
- ----------------------------------------------------------------------------
19,500 Nuevo Energy Co** 560,625
36,000 Repsol S.A.- ADR 1,345,500
20,000 Stone Energy** 335,000
36,000 Swift Energy Co** 472,500
34,600 Union Texas Petroleum Holdings 683,350
------------
3,396,975
------------
FINANCE 13.68%
- ----------------------------------------------------------------------------
20,000 Allmerica Property & Casualty 525,000
19,264 Allstate Corp 811,496
10,000 BankAmerica Corp 775,000
20,000 Chemical Banking Corp 1,410,000
10,000 Citicorp 800,000
8,100 NationsBank Corp 649,013
------------
4,970,509
------------
UTILITIES/REITS 11.99%
- ----------------------------------------------------------------------------
37,000 Boston Edison Co 999,000
16,500 DTE Energy 554,812
16,700 Entergy Corp 467,600
45,000 Equity Inns Inc 573,750
15,000 Reckson Associates Realty Corp 459,375
18,400 Trinet Corporate Realty Trust 529,000
51,000 Westcoast Energy Inc 771,375
------------
4,354,912
------------
TOTAL COMMON STOCKS
(Cost $28,198,415) 33,370,233
------------
30
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF INVESTMENTS (CONTINUED)
March 31, 1996
FACE VALUE MARKET VALUE*
- ---------- -------------
REPURCHASE AGREEMENT
COLLATERALIZED BY U.S.
GOVERNMENT OBLIGATIONS 8.09%
- ----------------------------------------------------------------------------
$2,939,000 Repurchase agreement with State Street Bank &
Trust Company, 4.00%, dated 3/29/96 and
maturing 4/1/96, collateralized by U.S. Treasury
Bonds, 11.25%, due 2/15/15 with a value of
$3,003,150 (Cost $2,939,980)
$ 2,939,980
------------
TOTAL INVESTMENTS
(Cost $31,138,395) 99.96% $36,310,213
Other Assets in Excess of Liabilities 0.04% 15,755
---------------------
NET ASSETS 100.00% $36,325,968
---------------------
* See Note 1 to Financial Statements
** Denotes non-income producing security.
31
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996 (1)
INVESTMENT INCOME
Dividends $557,852
Interest 268,353
- ---------------------------------------------------------------------------
Total Investment Income $826,205
- ---------------------------------------------------------------------------
EXPENSES
Investment advisory fee 255,969
Administration 51,142
Fund accounting 28,538
Legal 8,566
Audit 18,118
Custodian 16,371
Amortization of organization costs 6,380
Transfer agency 15,016
Printing 2,140
Insurance 3,643
Registration 10,877
Trustees fee 2,728
Other 4,010
- ---------------------------------------------------------------------------
Total Expenses 423,498
- ---------------------------------------------------------------------------
Expenses waived by:
Investment adviser (6,226)
Administrator (21,668)
- ---------------------------------------------------------------------------
Net Expenses 395,604
NET INVESTMENT INCOME 430,601
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 716,875
- ---------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of period 0
End of period 5,171,818
- ---------------------------------------------------------------------------
Net change in unrealized appreciation 5,171,818
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 5,888,693
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,319,294
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
(1) Fund began operations April 3, 1995.
See Notes to Financial Statements.
32
<PAGE>
KENNEBEC EQUITY VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (1)
FROM INVESTMENT ACTIVITIES
Net investment income $ 430,601
Net realized gain from investment transactions 716,875
Net change in unrealized appreciation 5,171,818
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,319,294
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (430,601)
Distributions to shareholders in excess of net investment income (4,471)
- ------------------------------------------------------------------------------
Change in net assets derived from investment activities 5,884,222
- ------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Proceeds from sale of shares 31,921,516
Net asset value of shares issued to shareholders from
reinvestment of dividends and distributions 38,478
- ------------------------------------------------------------------------------
31,959,994
Cost of shares redeemed (1,551,574)
- ------------------------------------------------------------------------------
Change in net assets from beneficial interest transactions 30,408,420
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 36,292,642
NET ASSETS:
Beginning of period 33,326(2)
- ------------------------------------------------------------------------------
End of period $36,325,968
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(1) Fund began operations April 3, 1995.
(2) Initial Capitalization.
See Notes to Financial Statements.
33
<PAGE>
KENNEBEC EQUITY VALUE FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the period indicated: FOR THE PERIOD ENDED
MARCH 31, 1996 (1)
------------------
Net asset value - beginning of period $ 12.00
- ------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.21
Net realized and unrealized gain on investments 2.92
- ------------------------------------------------------------------------------
Total income from investment operations 3.13
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.21)
- ------------------------------------------------------------------------------
Net asset value - end of period $ 14.92
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Total return 26.31%(2)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (000) $ 36,326
- ------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.55%(3)
- ------------------------------------------------------------------------------
Ratio of net investment income to average net assets 1.68%(3)
- ------------------------------------------------------------------------------
Ratio of expenses to average net assets without fee waivers 1.66%(3)
- ------------------------------------------------------------------------------
Ratio of net investment income to average net assets without fee
waivers 1.57%(3)
- ------------------------------------------------------------------------------
Portfolio turnover rate (4) 62.76%(3)
- ------------------------------------------------------------------------------
(1) Fund began operations April 3, 1995.
(2) Total return is not annualized.
(3) Annualized.
(4) A portfolio turnover rate is, in general, the percentage
computed by taking the lesser of purchases or sales of
portfolio securities (excluding securities with maturity
dates of one year or less at the time of acquisition for
the period and dividing it by the monthly average of the
market value of such securities during the period.
Purchases and sales of investment securities (excluding
short-term securities) for the period ended March 31,
1996 were $41,033,391 and $ 13,551,837, respectively.
See Notes to Financial Statements.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Kennebec Funds Trust (the "Trust"), a Delaware business trust was
organized on January 6, 1995. The Trust is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as an open-end management
investment company. The Trust offers three series of shares - Kennebec U.S.
Government Fund, Kennebec California Tax-Free Fund, and Kennebec Equity Value
Fund (the "Funds"). The Funds commenced investment operations on April 3,
1995. The assets for each series are segregated and accounted for separately.
The Funds, for book and tax purposes, have a fiscal year-end of
March 31, 1996.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by each Fund in the preparation of its financial
statements. These policies are in conformity with generally accepted
accounting principles. The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. The actual results could differ from those
estimates.
A. INVESTMENT VALUATION: Marketable securities are valued at the
last sales price on the principal exchange or market on which they are
traded; or, if there were no sales that day, the closing bid prices are used.
Securities for which market quotations are not readily available are valued
at their fair market value as determined in good faith by or under the
direction of the Board of Trustees. Short-term securities having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market value.
B. REPURCHASE AGREEMENTS: Repurchase agreements are fully
collateralized by U.S. government securities. All collateral is held by the
Trust's custodian and is monitored daily to ensure that the collateral's
market value equals at least 100% of the repurchase price under the
agreement. However, in the event of default or bankruptcy by the counterparty
to the agreement, realization and/or retention of the collateral may be
subject to legal proceeding. Each Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment
Adviser to have satisfactory creditworthiness.
C. FEDERAL INCOME TAXES: The Funds have made no provision for
federal income tax for the period ended March 31, 1996. The Funds intend to
distribute to shareholders all taxable investment income and realized gains
and otherwise comply with the Internal Revenue Code applicable to regulated
investment companies.
D. SECURITIES TRANSACTIONS: Securities transactions are accounted
for on the date the securities are purchased or sold (trade date).
E. ORGANIZATION COSTS: Each of the Funds have deferred certain
organizational costs of $38,529. Such costs are being amortized over a 60
month period from the commencement of operations.
F. INVESTMENT INCOME: Dividend income is recorded on the ex-dividend
date. Interest income, which includes amortization of premium and accretion
of discount, is accrued and recorded daily.
G. DIVIDENDS, DISTRIBUTIONS AND EXPENSES: The Kennebec Equity Value
Fund will distribute net investment income quarterly. The Kennebec U.S.
Government Fund and Kennebec California Tax-Free Fund will declare and pay
dividends from net investment income daily and monthly, respectively.
Distributions of net realized gains, if any, are declared at least once a
year. Each Fund bears expenses incurred specifically on its behalf as well as
a portion of general expenses.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
H. CAPITAL ACCOUNTS: The Funds follow the provisions of the AICPA's
Statement of Position 93-2 "Determination , Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies" ("SOP").The purpose of this SOP is
to report undistributed net investment income and accumulated net realized
gain or loss in such a manner as to approximate amounts available for future
distributions to shareholders, if any.
NOTE 2 - SHARES OF BENEFICIAL INTEREST
On March 31, 1996 there was an unlimited number of no par value
shares of beneficial interest authorized. Transactions in shares of
beneficial interest for the period April 3, 1995 to March 31, 1996 were as
follows:
- ---------------------------------------------------------------------------
KENNEBEC KENNEBEC KENNEBEC
U.S. GOVERNMENT CALIFORNIA TAX-FREE EQUITY VALUE
FUND FUND FUND
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Shares Sold 2,107,816 3,592,659 2,535,361
- ---------------------------------------------------------------------------
Shares Reinvested 1,396 723 2,800
- ---------------------------------------------------------------------------
Total 2,109,212 3,593,382 2,538,161
- ---------------------------------------------------------------------------
Shares Redeemed (563,399) (100,630) (104,078)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Net Increase 1,545,813 3,492,752 2,434,083
- ---------------------------------------------------------------------------
NOTE 3 - INVESTMENT ADVISORY FEES, ADMINISTRATION FEES AND OTHER RELATED
PARTY TRANSACTIONS
Each Fund entered into an Investment Advisory Agreement with Kennebec
Capital Management, Inc. ("Investment Adviser"). Pursuant to its advisory
agreement with the Funds, the Investment Adviser is entitled to an advisory
fee, computed daily and payable monthly at an annual rate of .60%, .60% and
1.00% of the average net assets for the Kennebec U.S. Government Fund,
Kennebec California Tax-Free Fund and Kennebec Equity Value Fund,
respectively. Kennebec Capital Management, Inc. voluntarily waived a portion
of its advisory fee for the period ended March 31, 1996. Mr. Harley K.
Sefton, President and CEO of the Investment Adviser, is responsible for the
day to day management of the Funds. As of March 31, 1996, affiliates of the
Funds own 97%, 94% and 96% of the Kennebec U.S. Government, Kennebec
California Tax-Free and Kennebec Equity Value Funds' shares outstanding,
respectively.
Each Fund entered into an Administrative Services Contract with
Furman Selz at the inception of the Funds. On August 13, 1995, Furman Selz
resigned as Administrator and each of the Funds entered into an
Administrative Services Contract with ALPS Mutual Funds Services, Inc.
("ALPS") which has provided administrative services through March 31, 1996.
The Administrator is entitled to receive a fee from the Funds for its
services computed daily and payable monthly, at an annual rate of .20% of
each Fund's average daily net assets. Both Furman Selz and ALPS voluntarily
waived a portion of the administration fees for the period April 3, 1995
through August 13, 1995 and August 14, 1995 through March 31, 1996,
respectively. Furman Selz and ALPS, as Administrators for the relevant
periods, assisted in each of the
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Fund's administration and operations, including providing office space and
various legal and accounting services in connection with the regulatory
requirements applicable to each Fund.
Certain Trustees and officers of the Funds are also Members and/or
officers of Kennebec Capital Management, Inc., and ALPS Mutual Funds
Services, Inc. All affiliated and access persons, as defined in the 1940 Act,
follow strict guidelines and policies on personal trading as outlined in the
Trust's Code of Ethics.
Trustees and officers of the Funds who are affiliated persons receive
no compensation from the Funds. Trustees who are not interested persons of
the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $1,953, $3,295 and $2,728 from the Kennebec U.S.
Government Fund, Kennebec California Tax-Free Fund and Kennebec Equity Value
Fund, respectively, for the period ended March 31, 1996.
NOTE 4 - UNREALIZED GAINS AND LOSSES ON INVESTMENTS
As of March 31, 1996:
KENNEBEC KENNEBEC KENNEBEC
U.S. GOVERNMENT CALIFORNIA EQUITY
FUND TAX-FREE FUND VALUE FUND
---- ------------- ----------
Gross Appreciation (excess of
value over cost) $459,261 $616,536 $5,187,578
Gross Depreciation (excess of
cost over value) (77,795) (110,801) (15,760)
- -------------------------------------------------------------------------------
Net Unrealized Appreciation $381,466 $505,735 $5,171,818
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHAREHOLDER TAX INFORMATION (UNAUDITED)
Certain tax information regarding the Kennebec Funds Trust is
required to be provided to shareholders based upon each Fund's income and
distribution for the taxable year ended March 31, 1996. The information and
distributions reported herein may differ from the information and
distributions taxable to the shareholders for the calendar year ended
December 31, 1995.
During the fiscal year ended March 31, 1996, 98% of the dividends
paid by the Kennebec California Tax-Free Fund from net investment income
should be treated as tax-exempt dividends and 37% of the dividends paid by
the Kennebec Equity Value Fund from net investment income qualify for the
corporate dividends received deduction.
37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Kennebec Funds Trust
In our opinion, the accompanying statements of assets and liabilities,
including the statements of investments, and the related statements of
operations and of changes in net assets and financial highlights, present
fairly, in all material respects, the financial position of Kennebec U.S.
Government Fund, Kennebec California Tax-Free Fund and Kennebec Equity Value
Fund (constituting the Kennebec Funds Trust, hereafter referred to as the
"Trust"), at March 31, 1996, the results of each of their operations, the
changes in each of their net assets and the financial highlights for the
period April 3, 1995 (commencement of investment operations) through March
31, 1996, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trusts' management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at March 31, 1996 by correspondence with the
custodian and the application of alternative auditing procedures for
unsettled security transactions, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Denver, Colorado
April 29, 1996
38
<PAGE>
TRUSTEES AND OFFICERS
KENNEBEC FUNDS
BOARD OF TRUSTEES
- -----------------
HARLEY K. SEFTON* Chairman of the Board; Chairman, President and Chief
Executive Officer, Kennebec Capital Management, Inc.
W. ROBERT ALEXANDER* Chairman and Chief Executive Officer, ALPS Mutual Funds
Services, Inc.
GRACE EVANS CHERASHORE Chief Executive Officer, Bahia and Catamaran Hotels.
Member of the Audit Committee and the Nominating
Committee.
GORDON T. FROST, JR. President and General Manager, Frost Hardwood Lumber
Company. Member of the Audit Committee and the
Nominating Committee.
*Trustee is considered an "interested person" of the Trust as that term is
defined in the Investment Company Act of 1940.
OFFICERS
- --------
HARLEY K. SEFTON Chairman of the Board and President
THOMAS C. BOWDEN Vice President
TED J. PIORKOWSKI Vice President
LEIF O. SANCHEZ Vice President
LANI CAPOSSERE Vice President and Secretary
WILLIAM N. PASTON Vice President and Treasurer
MARK A. POUGNET Vice President, Assistant Secretary and
Assistant Treasurer
39
