THE KENT FUNDS
Supplement dated September 24, 1998
to the Prospectus dated May 1, 1998
On September 21, 1998, during a Special Meeting of Shareholders (the "Meeting"),
the shareholders of the Kent Funds approved the redesignation of each Fund's
investment objective from a fundamental policy to a non-fundamental policy.
Accordingly, the following paragraph replaces the first paragraph on page 36
within the section entitled "FUND CHOICES - Which Funds are Offered?":
The Trust currently offers fourteen Funds, each of which is described
below. Each Fund's investment objective is considered "non-fundamental"
and may be changed by a Fund without the approval of its shareholders.
Unless expressly identified as "fundamental," the other investment
policies described below, including the dollar-weighted average
portfolio maturity range of each Bond and Municipal Bond Fund, are also
considered "non-fundamental" and may be changed by the Trust's Board of
Trustees without shareholder approval.
The shareholders also approved during the Meeting the redesignation of certain
investment restrictions applicable to the Funds from fundamental to
non-fundamental. Accordingly, the following paragraph replaces the third full
paragraph on page 43 within the section entitled "FUND CHOICES - What
Investments do the Funds Invest In?":
The Funds also have in place various investment restrictions. Certain
of these investment restrictions have been designated as "fundamental,"
which means that they cannot be changed for a Fund without the approval
of a "majority" (as defined in the SAI) of that Fund's outstanding
shares. Other investment restrictions have been designated as
"non-fundamental" and may be changed by the Trust's Board of Trustees
without shareholder approval. Some of these fundamental and
non-fundamental restrictions are set forth below. The first two
restrictions are fundamental. The third restriction is non-fundamental.
A complete list of investment restrictions for the Funds is contained
in the SAI.
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The section entitled "STRUCTURE AND MANAGEMENT OF THE FUNDS - Who Manages and
Services the Funds?" is being revised as a result of an addition to the
portfolio management staff at Lyon Street Asset Management Company. The second
paragraph under the heading "INVESTMENT ADVISER" on page 53 shall be amended by
adding the following at the end of the paragraph:
Brian J. Smolinski has been co-portfolio manager for the Index Equity,
Small Company Growth and International Growth Funds since June, 1998.
Mr. Smolinski is also responsible for developing and maintaining
proprietary software that is used in researching structured equity
investments. Prior to joining IMG, Mr. Smolinski worked as an
Applications Business Analyst at Old Kent for nine years.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT
WITH THE PROSPECTUS FOR FUTURE REFERENCE
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THE KENT FUNDS
Supplement dated September 24, 1998
to the
Statement of Additional Information
dated May 1, 1998
On September 21, 1998, during a Special Meeting of Shareholders (the
"Meeting"), the shareholders of the Kent Funds approved the redesignation of
certain investment restrictions applicable to the Funds from fundamental
policies to non-fundamental policies. In addition, the shareholders approved
amendments to the investment restrictions pertaining to (i) investments in
securities of companies with less than a three-year operating history and (ii)
investments in other investment companies. Accordingly, the section entitled
"INVESTMENT RESTRICTIONS" is replaced in its entirety with the following
provisions:
INVESTMENT RESTRICTIONS
The following investment restrictions include those that have
been designated as "fundamental," which may not be changed with respect
to a Fund without the vote of a "majority" of the Fund's outstanding
shares (as defined in "Declaration of Trust--Voting Rights"), and those
that have been designated as "non-fundamental," which may be changed
without shareholder approval. If a percentage limitation is satisfied
at the time of investment, a later increase in such percentage
resulting from a change in the value of a Fund's assets will not
constitute a violation of the limitation. Unless otherwise stated, each
restriction applies to all Funds.
The following investment restrictions are fundamental:
A Fund may not:
(1) Purchase any security (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities)
of any issuer if as a result more than 5% of its total assets would be
invested in securities of the issuer, except that up to 25% of its
total assets may be invested without regard to this limit;
(2) Borrow money, which includes entering into reverse
repurchase agreements, except that a Fund may enter into reverse
repurchase agreements or borrow money from banks for temporary or
emergency purposes in aggregate amounts up to one-third of the value of
the Fund's net assets; provided that while borrowings from banks exceed
5% of a Fund's net assets, any such borrowings and reverse repurchase
agreements will be repaid before additional investments are made;
(3) Pledge more than 15% of its net assets to secure
indebtedness; the purchase or sale of securities on a "when issued"
basis, or collateral arrangements with respect to the writing of
options on securities, are not deemed to be a pledge of assets;
(4) Issue senior securities; the purchase or sale of
securities on a "when issued" basis, or collateral arrangements with
respect to the writing of options on securities, are not deemed to be
the issuance of a senior security;
(5) Make loans, except that a Fund may purchase or hold debt
securities consistent with its investment objective, lend Fund
securities valued at not more than 33 1/3% of its total assets to
brokers, dealers and financial institutions, and enter into repurchase
agreements;
(6) With respect to each Fund, other than the Municipal Funds,
purchase any security of any issuer if as a result more than 25% of its
total assets would be invested in a single industry; except that there
is no restriction with respect to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities;
(7) With respect to the Municipal Funds, purchase any security
(other than obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities) of any issuer if as a result more
than 25% of its total assets would be invested in a single industry,
including industrial development bonds from the same facility or
similar types of facilities if backed solely by non-governmental users;
governmental issuers of municipal bonds are not regarded as members of
an industry, and the Michigan Municipal Bond Fund and the Michigan
Municipal Money Market Fund may invest more than 25% of its assets in
industrial development bonds;
(8) Purchase or sell commodities or commodity contracts or
real estate, except a Fund may purchase and sell securities secured by
real estate and securities of companies which deal in real estate and
may engage in currency or other financial futures contracts and related
options transactions;
(9) Underwrite securities of other issuers, except that a Fund
may purchase securities from the issuer or others and dispose of such
securities in a manner consistent with its investment objective; or
(10) With respect to the Equity Funds, purchase any security
(other than U.S. Government securities) of any issuer if as a result
the Fund would hold more than 10% of the voting securities of the
issuer.
The following investment restrictions are "non-fundamental"
and may be changed with respect to a Fund without shareholder approval:
A Fund may not:
(1) Purchase securities on margin, except that it may obtain
such short-term credit as may be necessary for the clearance of
purchases and sales of securities;
(2) Invest more than 15% of its total assets (10% of total
assets for the Money Market Funds) in (i) securities with legal or
contractual restrictions on resale; (ii) securities for which market
quotations are not readily available; and (iii) repurchase agreements
maturing in more than seven days;
(3) Invest more than 5% of its total assets in securities of
any company having a record, together with its predecessors, of less
than three years of continuous operation except that each of the Small
Company Growth Fund and the International Growth Fund may invest up to
10% of its total assets in such companies;
(4) Make short sales of securities or maintain a short
position unless at all times when a short position is open it owns an
equal amount of such securities or of securities which, without payment
of any further consideration, are convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the securities
sold short; or
(5) Invest in the securities of other investment companies
except as permitted by the Investment Company Act of 1940, as amended,
or the rules promulgated thereunder.
With respect to Non-Fundamental Investment Restriction (2),
the Funds currently intend to limit investment in illiquid securities
to no more than 15% (10% for the Money Market Funds) of each Fund's
respective net assets. With respect to Fundamental Investment
Restriction (7), examples of types of facilities using industrial
development bonds purchased by the Municipal Funds include water
treatment plants, educational and hospital facilities.
In order to comply with Securities and Exchange Commission
regulations relating to money market funds, the Money Market Funds will
limit investments in the securities of any single issuer (other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements collateralized by such
securities) to not more than 5% of the value of their total assets at
the time of purchase, except for 25% of the value of their total assets
which, in the case of the Michigan Municipal Money Market Fund, may be
invested without regard to the 5% limit in "First Tier Securities" (as
defined by the Securities and Exchange Commission), and, in the case of
the Money Market Fund and the Government Money Market Fund, may be
invested in First Tier Securities of any one issuer for a period of up
to three business days. In addition, no Money Market Fund will engage
in options or futures as provided in Fundamental Investment
Restrictions (3), (4) and (8), nor will the Money Market Funds borrow
money, pursuant to Fundamental Investment Restriction (2), in excess of
10% of their total assets. With respect to Fundamental Investment
Restrictions (6) and (7), the Money Market Funds are permitted to
invest in excess of 25% of their total assets in obligations of U.S.
banks and domestic branches of foreign banks that are subject to the
same regulation as U.S. banks.
The shareholders also elected Trustees at the Meeting. In addition to
electing incumbent Trustees, the shareholders elected Michelle Van Dyke.
Accordingly, the section entitled "TRUSTEES AND OFFICERS" is amended by adding
the following provisions.
The following shall be added to the list of Trustees and officers on
pages 27 and 28:
* Michelle Van Dyke, Trustee, 34; she is President of the
Central Region of Old Kent Mortgage Company, a director of Old
Kent Mortgage Services, and was formerly Senior Vice President
of Old Kent Mortgage Company.
The following shall be added after the first sentence in the first
paragraph on page 28:
Lyon Street, an affiliate of Old Kent Mortgage Company, of
which Ms. Van Dyke is an employee, receives advisory fees as investment
adviser to the Trust.
The following chart describing Trustee compensation shall replace the
chart following the second paragraph on page 30:
Name of Person Aggregate Compensation Total Compensation
and Position Compensation from the Trust and
from the Trust Fund Complex Paid to Trustees
Anne T. Coughlan, Trustee* $ 4,000** $ 4,000
Joseph F. Damore, Trustee $ 13,000** $ 13,000
Walter B. Grimm, Trustee $ 0 $ 0
James F. Rainey, Trustee $ 13,000** $ 13,000
Michelle Van Dyke $ *** $ ***
Ronald F. VanSteeland, Trustee $ 13,000 $ 13,000
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* Ms. Coughlan resigned from the Trust's Board of Trustees on May 23, 1997.
** During the fiscal year ended December 31, 1997, Mr. Damore deferred
$10,000 of his compensation and Mr. Rainey deferred $6,500 of his
compensation pursuant to the Deferred Compensation Plan. Ms. Coughlan
received payment of all compensation (including compensation that was
previously deferred pursuant to the Deferred Compensation Plan) that
was due and owing to her in conjunction with her resignation from the
Trust's Board of Trustees on May 23, 1997.
*** Ms. Van Dyke became a Trustee on September 21, 1998.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT
WITH THE STATEMENT OF ADDITIONAL INFORMATION
FOR FUTURE REFERENCE
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