<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE KENT FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
[KENT FUNDS LOGO]
Dear Kent Funds Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of the
Kent Funds to be held on August 17, 1998 in the Board Room at BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio at 9:00 a.m. Eastern Time.
We are pleased to provide you with proxy materials relating to four items
important to the management of the Kent Funds that will be addressed at the
Meeting. First, is the election of the Funds' Board of Trustees including a new
nominee, Michelle Van Dyke. Michelle has been nominated to the Board to fill the
seat vacated last year by Anne Coughlan who resigned from the Board.
The second and third items relate to a redesignation of certain investment
objectives and policies from "fundamental" to "non-fundamental." The essential
difference between these types of policies is that investment provisions deemed
to be fundamental require shareholder approval in order to be changed.
Non-fundamental policies may be changed without the approval of Fund
shareholders.
Kent Fund management does not currently intend to alter any of the existing
policies other than the two described in the proxy materials. One of these
changes would allow the Kent International Growth Fund to invest up to 10% of
its assets in companies with limited operating histories. This limitation would
be raised from the current 5%. The second policy change relates to the Funds'
ability to invest in other investment companies. Both of these changes are
described in greater detail in the proxy materials.
Finally, the agenda calls for a vote ratifying KPMG Peat Marwick LLP as the
Funds' independent accountant.
Whether or not you plan to be present at the Meeting, your vote is needed. If
you do not plan to be present at the Meeting, please complete, sign and return
the enclosed proxy card(s) promptly. A postage paid envelope is enclosed for
this purpose.
We look forward to seeing you at the Meeting or receiving your proxy card(s) so
your shares may be voted.
Very truly yours,
/s/ James F. Duca, II
James F. Duca, II
President
<PAGE> 3
THE KENT FUNDS
P.O. Box 182201
Columbus, Ohio 43218-2201
1-800-633-KENT (5368)
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on August 17, 1998
------------------------
August 5, 1998
To the Shareholders of THE KENT FUNDS:
A Special Meeting of Shareholders (the "Meeting") of The Kent Funds (the
"Company") will be held on August 17, 1998 in the Board Room at BISYS Fund
Services, 3435 Stelzer Road, Columbus, Ohio 43219 at 9:00 a.m. Eastern Time.
During the Meeting, the Shareholders will vote on the following proposals:
1. To elect Messrs. Joseph F. Damore, Walter B. Grimm, James F. Rainey and
Ronald F. VanSteeland and Ms. Michelle Van Dyke to the Board of Trustees
of the Company.
2. To approve a change in the investment objective of each Fund from a
fundamental policy to a non-fundamental policy.
3. To approve certain changes to the following fundamental investment
restrictions, including a change that would make all of such
restrictions non-fundamental:
(a) the restriction on purchases of securities on margin;
(b) the restriction on investments in illiquid securities;
(c) the restriction on investments in securities of companies with less
than a three year operating history;
(d) the restriction on short sales of securities; and
(e) the restriction on investments in other investment companies.
4. To ratify the selection of KPMG Peat Marwick LLP as the independent
accountants of the Company for the fiscal year ending December 31, 1998.
5. To consider and vote upon such other matters as may properly come before
the Meeting or any adjournment thereof.
These items are discussed in greater detail in the attached Proxy
Statement. Shareholders of record at the close of business on July 2, 1998 are
entitled to be present and vote at the Meeting or any adjournment thereof.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE
COMPANY. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE
COMPLETE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES.
By Order of the Board of Trustees
/s/ Robert L. Tuch
ROBERT L. TUCH
Secretary
<PAGE> 4
THE KENT FUNDS
P.O. Box 182201
Columbus, Ohio 43218-2201
1-800-633-KENT (5368)
------------------------
SPECIAL MEETING OF SHAREHOLDERS
AUGUST 17, 1998
------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of The Kent Funds (the "Company") for use at
the Special Meeting of Shareholders of the Company to be held on August 17, 1998
at 9:00 a.m. Eastern Time at the offices of BISYS Fund Services, 3435 Stelzer
Road, Columbus, Ohio 43219, and at any adjournments thereof (the "Meeting").
This Proxy Statement and the enclosed proxy card were mailed to Shareholders on
or about August 5, 1998.
You may attend the Meeting and vote in person or you may complete and
return the enclosed proxy. Proxies that are properly signed, dated and received
before the Meeting will be voted as specified. If you simply sign and date the
proxy but do not specify a vote for any of the proposals, your shares will be
voted in favor of each of the nominees for Trustee and in favor of each of the
other proposals.
It is expected that the solicitation of proxies will be primarily by mail.
The Company's officers and service contractors may also solicit proxies by
telephone, telegraph, facsimile or personal interview. The Company will bear all
proxy solicitation costs. Any Shareholder submitting a proxy may revoke it at
any time before it is exercised by submitting to the Company a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
voting in person.
The Company currently offers fourteen (14) investment portfolios which are
each referred to herein as a "Fund" and collectively, as the "Funds." Only
Shareholders of record of the Funds at the close of business on July 2, 1998
will be entitled to vote at the Meeting. Each whole share is entitled to one
vote and each fractional share is entitled to a proportional fractional vote.
The following table summarizes the proposals to be voted on at the Meeting and
indicates those Shareholders who are being solicited with respect to each
proposal:
<PAGE> 5
SUMMARY OF VOTING RIGHTS ON PROXY PROPOSALS
PROPOSAL
1. To elect Messrs. Joseph F. Damore, Walter B. Grimm, James F. Rainey and
Ronald F. VanSteeland and Ms. Michelle Van Dyke to the Board of Trustees of
the Company.
SHAREHOLDERS SOLICITED
The Shareholders of all Funds of the Company will vote together.
2. To approve a change in the investment objective of each Fund from a
fundamental policy to a non-fundamental policy.
The Shareholders of each Fund will vote separately on a Fund-by-Fund basis. All
classes of shares of the same Fund will vote together.
3. To approve certain changes to the following fundamental investment
restrictions, including a change that would make all of such restrictions
non-fundamental:
The Shareholders of each Fund will vote separately on a Fund-by-Fund basis. All
classes of shares of the same Fund will vote together.
(a) the restriction on purchases of securities on margin;
(b) the restriction on investments in illiquid securities;
(c) the restriction on investments in securities of companies with less
than a three year operating history;
(d) the restriction on short sales of securities; and
(e) the restriction on investments in other investment companies.
4. To ratify the selection of KPMG Peat Marwick LLP as the independent
accountants of the Company for the fiscal year ending December 31, 1998.
The Shareholders of all Funds of the Company will vote together.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE APPROVAL
OF EACH PROPOSAL DESCRIBED IN THIS PROXY STATEMENT.
2
<PAGE> 6
PROPOSAL 1: ELECTION OF TRUSTEES
Five Trustees, constituting the entire Board of Trustees, are to be elected
at the Meeting. Each Trustee so elected will hold office until the next meeting
of Shareholders and until his or her successor is elected and qualifies, or
until his or her term as a Trustee is terminated as provided in the Trust's
Restatement of Declaration of Trust. The persons named as proxies in the
accompanying proxy have been designated by the Board of Trustees and intend to
vote for the nominees named below.
Messrs. Damore, Grimm, Rainey and VanSteeland are incumbent Trustees.
Messrs. Damore, Rainey and VanSteeland were last elected by Shareholders at a
meeting held on December 30, 1993. Mr. Grimm was appointed to the Board of
Trustees on August 2, 1996. In addition, Messrs. Damore, Rainey and VanSteeland,
the non-interested Trustees who comprise the Nominating Committee of the Board
of Trustees, have nominated Ms. Van Dyke as an additional Trustee to be voted on
by the Shareholders.
All shares represented by valid proxies will be voted in the election of
Trustees for each nominee named below, unless authority to vote for a particular
nominee is withheld. All of the nominees have consented to serve as Trustees of
the Company, if elected. Should any nominee withdraw from the election or
otherwise be unable to serve, the named proxies will vote for the election of
such substitute nominee as the Board of Trustees may recommend unless a decision
is made to reduce the number of Trustees serving on the Board. The following
table sets forth certain information about the nominees:
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION DURING
NAME AND ADDRESS THE COMPANY PAST 5 YEARS AND OTHER AFFILIATIONS
- ---------------- -------------- -----------------------------------
<S> <C> <C>
Joseph F. Damore Trustee since October, 1990. President and Chief Executive
Sparrow Health System Officer of Sparrow Hospital and
1215 East Michigan Avenue Health System since October 1990;
P.O. Box 30480 formerly, Director and Executive
Lansing, MI 48909 Vice President of Sisters of Mercy
Age: 45 Health Corporation.
Walter B. Grimm* Trustee and Chairman since August, Senior Vice President of Client
BISYS Fund Services 1996; Vice President since August, Services of BISYS Fund Services
3435 Stelzer Road 1997. since June 1992.
Columbus, OH 43219
Age: 53
James F. Rainey Trustee since December, 1990. Associate Dean for Academic Affairs
The Eli Broad Graduate at The Eli Broad Graduate School of
School of Management Management at Michigan State
N520 Business College Complex University since 1974.
Michigan State University
East Lansing, MI 48824
Age: 59
Michelle Van Dyke* Nominee for Trustee. President of the Central Region of
Old Kent Mortgage Company Old Kent Mortgage Company since
4420 44th Street SE 1996; Director of Old Kent Mortgage
Grand Rapids, MI 49512 Services since July 1997; formerly,
Age: 34 Senior Vice President of Old Kent
Mortgage Company.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION DURING
NAME AND ADDRESS THE COMPANY PAST 5 YEARS AND OTHER AFFILIATIONS
- ---------------- -------------- -----------------------------------
<S> <C> <C>
Ronald F. VanSteeland Trustee since January, 1993. Vice President for Finance and
Grand Valley State University Administration and Treasurer of
1 Campus Drive Grand Valley State University since
Allendale, MI 49401 1973. Treasurer of Grand Valley
Age: 58 State University Foundation since
1970.
</TABLE>
- ---------------
* Mr. Grimm is an "interested person" of the Company, as defined by the
Investment Company Act of 1940, as amended, by virtue of his position as
Chairman and Vice President of the Company and his affiliation with BISYS Fund
Services Limited Partnership, the principal underwriter of the Company's
shares. If elected as a Trustee, Ms. Van Dyke would be an interested person of
the Company by virtue of her affiliation with Old Kent Mortgage Company, an
affiliate of Lyon Street Asset Management Company, the investment adviser for
each Fund.
\The Company pays each Trustee not affiliated with the Company's investment
adviser, principal underwriter or their affiliates a fee of $8,000 per year plus
additional fees of $1,750 for each regular meeting attended, $1,000 for each
special meeting attended and $500 for each telephonic meeting. The Trustees are
also reimbursed for their actual out-of-pocket expenses relating to attendance
at meetings. The aggregate remuneration paid by the Company to its Trustees
during the fiscal year ended December 31, 1997 amounted to $ 43,000. The Board
of Trustees has established The Kent Funds Deferred Compensation Plan (the
"Deferred Compensation Plan") pursuant to which the Trustees may elect to defer
receipt of the compensation payable to them by the Company. Under the terms of
the Deferred Compensation Plan, amounts deferred by the Trustees are credited
with the earnings on certain investment options which may include one or more of
the Funds. Trustees receive payment of their deferred compensation and any
related earnings upon ceasing to be a Trustee of the Company. Such payment is
made, at the election of the Trustee, either in a lump sum or in annual
installments over two to fifteen years. The Company's obligation to pay the
Trustee's deferred compensation is a general unsecured obligation. Listed below
is the compensation paid to each Trustee by the Company for the fiscal year
ended December 31, 1997.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL
COMPENSATION BENEFITS ACCRUED AS PART OF BENEFITS UPON TOTAL COMPENSATION
NAME OF TRUSTEE OR NOMINEE FROM THE COMPANY THE COMPANY'S EXPENSES** RETIREMENT FROM THE COMPANY
-------------------------- ---------------- --------------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Anne T. Coughlan* $ 4,000 $ 0 $ 0 $ 4,000
Joseph F. Damore $13,000 $10,000 $ 0 $13,000
Walter B. Grimm $ 0 $ 0 $ 0 $ 0
James F. Rainey $13,000 $ 6,500 $ 0 $13,000
Michelle Van Dyke *** *** *** ***
Ronald F. VanSteeland $13,000 $ 0 $ 0 $13,000
</TABLE>
- ---------------
* Ms. Coughlan resigned from the Company's Board of Trustees on May 23, 1997.
** Reflects amounts deferred during the fiscal year ended December 31, 1997
pursuant to the Deferred Compensation Plan. As of December 31, 1997, Messrs.
Damore and Rainey had accrued an aggregate of $15,224 and $11,454,
respectively, under 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 Company's Board of
Trustees on May 23, 1997.
*** Ms. Van Dyke is a nominee to become a Trustee of the Company and was not a
Trustee of the Company during the fiscal year ended December 31, 1997.
4
<PAGE> 8
As of the date hereof, the Trustees and officers of the Company as a group
beneficially owned less than 1% of the Company's outstanding shares. As of May
31, 1998, Mr. Damore owned 6,336 shares of the Growth and Income Fund, 996
shares of the Index Equity Fund, 4,542 shares of the Small Company Growth Fund,
3,781 shares of the International Growth Fund, 155 shares of the Income Fund,
2,669 shares of the Tax-Free Income Fund, 4,434 shares of the Intermediate
Tax-Free Fund, 1,597 shares of the Money Market Fund and 3,482 shares of the
Michigan Municipal Money Market Fund; Mr. Grimm owned 852 shares of the Index
Equity Fund; Mr. VanSteeland owned 957 shares of the International Growth Fund;
and Ms. Van Dyke (a nominee to become a Trustee of the Company) owned 21 shares
of the Short Bond Fund and 24,277 shares of the Money Market Fund. As of such
date, Ms. Van Dyke's husband owned 3,939 shares of the Growth and Income Fund,
638 shares of the Index Equity Fund, 2,813 shares of the Small Company Growth
Fund, 2,465 shares of the International Growth Fund, 788 shares of the Tax-Free
Income Fund, 1,305 shares of the Intermediate Tax-Free Fund, 99 shares of the
Michigan Municipal Bond Fund and 1,924 shares of the Michigan Municipal Money
Market Fund. Mr. Rainey does not own shares of the Funds nor do any of the
officers of the Company. During the fiscal year ended December 31, 1997, the
Trustees of the Company met five times, four of which were regular meetings of
the Trustees. Each Trustee then in office attended at least 75% of the meetings
of Trustees and of any Committee of which he or she is a member. Messrs. Damore,
Rainey and VanSteeland serve on the Company's Nominating Committee and are not
"interested persons" of the Company as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). The Nominating Committee of the Board is
responsible for reviewing the credentials of proposed nominees for the Company's
Board and for selecting and nominating those Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Company. Messrs. Damore, Rainey and
VanSteeland also serve on the Company's Audit Committee. The Audit Committee is
responsible for reviewing the results of the audit of the Company by its
independent public accountant. During the fiscal year ended December 31, 1997,
the Nominating Committee met twice and the Audit Committee met once.
Election of each Trustee of the Company requires the affirmative vote of a
majority of the votes cast by Shareholders of the Company represented at the
Meeting if a quorum is present.
THE BOARD OF TRUSTEES RECOMMENDS
THAT YOU VOTE "FOR" THE ELECTION OF
EACH NOMINEE TO THE BOARD OF TRUSTEES.
5
<PAGE> 9
PROPOSAL 2: APPROVAL OF CHANGE IN
THE INVESTMENT OBJECTIVE OF EACH FUND FROM
A FUNDAMENTAL POLICY TO A NON-FUNDAMENTAL POLICY
The following proposals would redesignate the investment objective of each
Fund from a fundamental policy to a non-fundamental policy. Unlike a fundamental
investment objective, a non-fundamental investment objective may be changed
without the approval of Shareholders. The Company's Board of Trustees believes
that these proposals would avoid the delay and expense of a Shareholder vote in
the event that it is decided in the future that these objectives should be
changed. Neither the 1940 Act nor state securities laws require a Fund's
investment objective to be fundamental. The Company will notify Shareholders if
the Board of Trustees approves any changes in the Funds' investment objectives
in the future.
PROPOSAL 2(A)
GROWTH AND INCOME FUND
CURRENT
"seeks long-term capital growth with current income as a secondary goal."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(B)
INDEX EQUITY FUND
CURRENT
"seeks investment results which mirror the capital performance and dividend
income of the Standard & Poor's 500 Composite Stock Price Index."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(C)
SMALL COMPANY GROWTH FUND
CURRENT
"seeks long-term capital appreciation by investing in equity securities of small
companies."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(D)
INTERNATIONAL GROWTH FUND
CURRENT
"seeks long-term growth of capital and additional diversification for U.S.
investors by investing in a varied portfolio of foreign equity securities."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(E)
INCOME FUND
CURRENT
"seeks a high level of current income by investing in a broad range of
investment quality debt securities."
PROPOSED
This investment objective would be made non-fundamental.
6
<PAGE> 10
PROPOSAL 2(F)
INTERMEDIATE BOND FUND
CURRENT
"seeks current income by investing primarily in a broad range of investment
quality debt securities."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(G)
SHORT TERM BOND FUND
CURRENT
"seeks current income by investing primarily in a limited range of investment
quality fixed income securities."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(H)
TAX-FREE INCOME FUND
CURRENT
"seeks to provide as high a level of interest income exempt from Federal income
tax as is consistent with prudent investing, while preserving capital."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(I)
INTERMEDIATE TAX-FREE FUND
CURRENT
"seeks current income exempt from Federal income tax, while preserving capital."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(J)
MICHIGAN MUNICIPAL BOND FUND
CURRENT
"seeks current income exempt from Federal income and State of Michigan personal
income taxes, while preserving capital."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(K)
LIMITED TERM TAX-FREE FUND
CURRENT
"seeks current income exempt from Federal income tax, while preserving capital."
PROPOSED
This investment objective would be made non-fundamental.
7
<PAGE> 11
PROPOSAL 2(L)
MONEY MARKET FUND
CURRENT
"seeks current income from short-term securities while preserving capital and
maintaining liquidity."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(M)
GOVERNMENT MONEY MARKET FUND
CURRENT
"seeks current income from short-term U.S. Government securities while
preserving capital and maintaining liquidity."
PROPOSED
This investment objective would be made non-fundamental.
PROPOSAL 2(N)
MICHIGAN MUNICIPAL MONEY MARKET FUND
CURRENT
"seeks current income exempt from Federal and State of Michigan personal income
taxes from short-term securities, while preserving capital and maintaining
liquidity."
PROPOSED
This investment objective would be made non-fundamental.
In order for proposals 2(a), (b), (c), (d), (e), (f), (g), (h), (i), (j),
(k), (l), (m) and (n) to be adopted for a particular Fund, they must be approved
by a majority of the votes cast by Shareholders of that Fund represented at the
Meeting if a quorum is present.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" THE CHANGES TO THE FUNDAMENTAL INVESTMENT
OBJECTIVES AS SET FORTH IN PROPOSAL 2(A)-(N).
8
<PAGE> 12
PROPOSAL 3: APPROVAL OF CHANGES TO
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS
The following proposals would change certain fundamental investment
restrictions of the Funds and would redesignate each such restriction as
non-fundamental. Unlike a fundamental restriction, a non-fundamental investment
restriction may be changed without the approval of Shareholders. The Company's
Board of Trustees believes that these proposals would avoid the delay and
expense of a Shareholder vote in the event that it is decided in the future that
these restrictions should be changed. Neither the 1940 Act nor state securities
laws require such restrictions to be fundamental. The Company will notify
Shareholders if the Board of Trustees approves any changes in these restrictions
in the future.
PROPOSAL 3(A)
RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING PURCHASES OF SECURITIES ON MARGIN
CURRENT
A Fund may not 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.
PROPOSED
This restriction would be made non-fundamental.
PROPOSAL 3(B)
RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING INVESTMENTS IN ILLIQUID SECURITIES
CURRENT
A Fund may not 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.
PROPOSED
This restriction would be made non-fundamental.
PROPOSAL 3(C)
AMENDMENT TO AND RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING INVESTMENTS IN SECURITIES OF COMPANIES
WITH LESS THAN A THREE YEAR OPERATING HISTORY.
CURRENT
A Fund may not 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 the Small Company Growth Fund may
invest up to 10% of its total assets in such companies.
PROPOSED
A Fund may not 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. This restriction would also be made non-fundamental.
Explanation of Proposed Change: The proposed change would enhance the
ability of the International Growth Fund to pursue attractive opportunities
involving companies with limited operating histories. Investing in companies
with limited operating histories, however, is riskier than investing in more
established companies. Companies with limited operating histories may have
limited product lines, markets, financial resources and distribution channels,
which makes them more sensitive to changing economic conditions.
9
<PAGE> 13
PROPOSAL 3(D)
RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING SHORT SALES OF SECURITIES
CURRENT
A Fund may not 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.
PROPOSED
This restriction would be made non-fundamental.
PROPOSAL 3(E)
AMENDMENT TO AND RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
RESTRICTION REGARDING INVESTMENTS IN OTHER INVESTMENT COMPANIES
CURRENT
With respect to the Money Market Fund, Government Money Market Fund and Michigan
Municipal Money Market Fund, a Fund may not purchase more than 3% of the total
outstanding voting securities of any one investment company or invest more than
10% of its total assets in the securities of other investment companies.
With respect to each of the Company's other Funds, a Fund may not purchase more
than 3% of the total outstanding voting securities of any one investment
company, invest more than 5% of a Fund's total assets in any one investment
company, or invest more than 10% of a Fund's total assets in the securities of
other investment companies in general, except as part of a merger,
consolidation, reorganization, purchase of assets or similar transaction.
PROPOSED
A Fund may not 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. This restriction would also be made non-fundamental.
Explanation of Proposed Changes: The proposed changes would consolidate
separate investment restrictions that are currently applicable to the Funds and
would allow the Funds greater flexibility to invest in other investment
companies. When the Funds make investments in other investment companies they
bear a portion of the expenses of such investment companies, including operating
costs and investment advisory, distribution and administration fees. These
expenses are in addition to the Fund's own expenses.
In order for proposals 3(a), (b), (c), (d) and (e) to be adopted for a
particular Fund, they must be approved by a majority of the votes cast by
Shareholders of that Fund represented at the Meeting if a quorum is present.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU
VOTE "FOR" THE CHANGES TO THE FUNDAMENTAL
INVESTMENT RESTRICTIONS AS SET FORTH IN PROPOSALS 3(A)-(E).
10
<PAGE> 14
PROPOSAL 4: RATIFICATION OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio 43215, was
selected at a meeting held on February 11, 1998 by the vote of a majority of the
Company's Board of Trustees, including all Trustees who are not "interested
persons" of the Company, to serve as independent accountants for the Company's
fiscal year ending December 31, 1998. KPMG Peat Marwick LLP has advised the
Company that it is independent with respect to the Company in accordance with
the applicable requirements of the American Institute of Certified Public
Accountants and the Securities and Exchange Commission.
Representatives of KPMG Peat Marwick LLP are expected to be available by
telephone during the Meeting to answer appropriate questions and will be given
the opportunity to make a statement if they so desire.
Ratification of the selection of KPMG Peat Marwick LLP as independent
accountants requires the affirmative vote of a majority of the votes cast by
Shareholders of the Company represented at the Meeting if a quorum is present.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
"FOR" THE PROPOSAL TO RATIFY THE SELECTION
OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT ACCOUNTANTS OF THE COMPANY.
11
<PAGE> 15
VOTING INFORMATION
OUTSTANDING SECURITIES
As of July 2, 1998, the number of outstanding shares entitled to vote at
the Meeting were as follows:
<TABLE>
<CAPTION>
FUND AND CLASS OF SHARES NUMBER OF SHARES OUTSTANDING
------------------------ ----------------------------
<S> <C>
Growth and Income Fund
Investment Shares 2,787,981.664
Institutional Shares 44,856,840.629
Index Equity Fund
Investment Shares 1,616,719.387
Institutional Shares 31,553,771.858
Small Company Growth Fund
Investment Shares 1,427,858.894
Institutional Shares 42,356,699.863
International Growth Fund
Investment Shares 689,973.103
Institutional Shares 31,743,808.693
Income Fund
Investment Shares 876,479.730
Institutional Shares 24,095,523.952
Intermediate Bond Fund
Investment Shares 986,667.805
Institutional Shares 76,951,770.383
Short Term Bond Fund
Investment Shares 683,093.625
Institutional Shares 13,299,294.857
Tax-Free Income Fund
Investment Shares 187,056.004
Institutional Shares 11,806,535.159
Intermediate Tax-Free Fund
Investment Shares 351,826.750
Institutional Shares 26,771,487.812
Michigan Municipal Bond Fund
Investment Shares 453,723.025
Institutional Shares 11,918,421.361
Limited Term Tax-Free Fund
Investment Shares 28,633.311
Institutional Shares 3,655,361.428
Money Market Fund
Investment Shares 3,500,964.610
Institutional Shares 536,452,562.070
Government Money Market Fund
Investment Shares 32,200.710
Institutional Shares 104,941,561.220
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
FUND AND CLASS OF SHARES NUMBER OF SHARES OUTSTANDING
------------------------ ----------------------------
<S> <C>
Michigan Municipal Money Market Fund
Investment Shares 327,376.330
Institutional Shares 315,095,922.530
</TABLE>
With regard to proposals 1 and 4, the Shareholders of all Funds of the
Company will vote in the aggregate and not by class or Fund. With regard to
proposals 2 and 3, the Shareholders of each Fund will vote separately on a
Fund-by-Fund basis and all classes of shares of the same Fund will vote
together.
QUORUM
A quorum is constituted with respect to the Company and, for proposals 2
and 3, each of the Funds by the presence in person or by proxy of the holders of
a majority of the outstanding shares entitled to vote. For purposes of
determining the presence of a quorum, abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares on a particular matter with respect to which the brokers or nominees
do not have discretionary power), will be treated as shares that are present at
the Meeting but which have not been voted. Abstentions and broker "non-votes"
will have the effect of a "no" vote for purposes of obtaining the requisite
approval of each proposal.
In the event that a quorum is not present at the Meeting or at any
adjournment thereof, or in the event that a quorum is present at the Meeting but
sufficient votes to approve any of the proposals are not received, the persons
named as proxies, or their substitutes, may propose and vote for one or more
adjournments of the Meeting to permit the further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those shares
affected by the adjournment that are represented at the Meeting in person or by
proxy. If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR any of the proposals in favor of
such adjournments, and will vote those proxies required to be voted AGAINST all
proposals against any such adjournments. A Shareholder vote may be taken with
respect to the Company or one or more of the Funds on any of the (but not all)
proposals prior to any such adjournment as to which sufficient votes have been
received for approval.
BENEFICIAL OWNERS OF THE COMPANY
As of July 2, 1998 the following persons owned of record 5 percent or more
of the shares of the Funds of the Company:
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND OWNERSHIP
- ---------------- ---- -------------
<S> <C> <C>
Trent & Co Growth and Income Fund 37.12%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Growth and Income Fund 50.65%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Corelink Financial, Inc. Index Equity Fund 11.44%
P.O. Box 4054
Concord, CA 94524
</TABLE>
13
<PAGE> 17
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND OWNERSHIP
- ---------------- ---- -------------
<S> <C> <C>
Trent & Co Index Equity Fund 17.98%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Index Equity Fund 65.09%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Small Company Growth Fund 41.71%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Small Company Growth Fund 48.66%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co International Growth Fund 40.19%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co International Growth Fund 53.29%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Income Fund 17.27%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Income Fund 74.16%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Intermediate Bond Fund 46.03%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND OWNERSHIP
- ---------------- ---- -------------
<S> <C> <C>
Trent & Co Intermediate Bond Fund 49.61%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Short Term Bond Fund 38.51%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Short Term Bond Fund 53.80%
Reinvestment Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Tax-Free Income Fund 96.48%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Intermediate Tax Free
Trent & Co Fund 96.87%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Michigan Municipal 95.50%
Cash Account Bond Fund
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Limited Term Tax-Free
Trent & Co Fund 98.58%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Money Market Fund 92.16%
Cash Account
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Old Kent Bank Government Money 90.36%
Attn: Funds Management Market Fund
111 Lyon St., N.W
Grand Rapids, MI 49503
</TABLE>
15
<PAGE> 19
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS FUND OWNERSHIP
- ---------------- ---- -------------
<S> <C> <C>
Trent & Co Government Money 9.61%
Cash Account Market Fund
Attn: Kent Fund Trader
4420 44th St., Suite A
Kentwood, MI 49512
Trent & Co Michigan Municipal 95.93%
Attn: Kent Fund Trader Money Market Fund
4420 44th St., Suite A
Kentwood, MI 49512
</TABLE>
As of July 2, 1998, Old Kent Bank, the parent company of the Company's
investment adviser, and its affiliates held of record approximately 91%, 84%,
93%, 96%, 97%, 98%, 93%, 99%, 99%, 97%, 99%, 96%, 100% and 100% of the
outstanding shares of the Growth and Income Fund, Index Equity Fund, Small
Company Growth Fund, International Growth Fund, Income Fund, Intermediate Bond
Fund, Short Term Bond Fund, Tax-Free Income Fund, Intermediate Tax-Free Fund,
Michigan Municipal Bond Fund, Limited Term Tax-Free Fund, Money Market Fund,
Government Money Market Fund and Michigan Municipal Money Market Fund,
respectively, as agent or custodian for their customers. In addition, as of July
2, 1998, Old Kent Bank and its affiliates held investment and/or voting power
with respect to a majority of the Company's outstanding shares on behalf of
their customers. The Company has been advised by Old Kent Bank that Old Kent
Bank and its affiliates intend to exercise their discretion to vote all shares
over which they have voting power in a manner consistent with their fiduciary
responsibilities.
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25 percent of the voting securities of a
company is presumed to "control" such company. Under this definition, Old Kent
Bank and its affiliates may be deemed to be controlling persons of the Company.
ADDITIONAL INFORMATION
OFFICERS
Officers of the Company are elected by, and serve at the pleasure of, the
Trustees and hold office until they resign, are removed or are otherwise
disqualified to serve. The following table sets forth certain information about
the Company's officers who are not also Trustees:
<TABLE>
<CAPTION>
OFFICER POSITION WITH PRINCIPAL OCCUPATIONS DURING
NAME AND ADDRESS AGE SINCE THE FUND PAST 5 YEARS AND OTHER AFFILIATIONS
- ---------------- --- ------- ------------- -----------------------------------
<S> <C> <C> <C> <C>
James F. Duca, II 40 1997 President Vice President of Old Kent
Old Kent Financial Corporation Financial Corporation since May
111 Lyon Street, N.W. 1997. Formerly, Vice President and
Grand Rapids, MI 49503 Trust Counsel for Marshall & Ilsley
Trust Company.
R. Jeffrey Young 33 1996 Vice President and Employee of BISYS Fund Services
BISYS Fund Services Assistant Secretary since October 1993. Formerly,
3435 Stelzer Road employed by Broadway and
Columbus, OH 43219 Seymour/The Heebink Group.
Martin R. Dean 34 1997 Treasurer Employee of BISYS Fund Services
BISYS Fund Services since May 1994. Formerly employed
3435 Stelzer Road by KPMG Peat Marwick LLP.
Columbus, OH 43219
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
OFFICER POSITION WITH PRINCIPAL OCCUPATIONS DURING
NAME AND ADDRESS AGE SINCE THE FUND PAST 5 YEARS AND OTHER AFFILIATIONS
- ---------------- --- ------- ------------- -----------------------------------
<S> <C> <C> <C> <C>
Robert L. Tuch 47 1996 Secretary Employee of BISYS Fund Services
BISYS Fund Services since June 1991.
3435 Stelzer Road
Columbus, OH 43219
W. Bruce McConnel, III 55 1994 Assistant Secretary Partner of the law firm of Drinker
Drinker Biddle & Reath LLP Biddle & Reath LLP.
1345 Chestnut Street
Suite 1100
Philadelphia, PA 19107
Alaina V. Metz 31 1996 Assistant Secretary Employee of BISYS Fund Services
BISYS Fund Services since June 1995. Formerly employed
3435 Stelzer Road by Alliance Capital Management.
Columbus, OH 43219
</TABLE>
The officers of the Company receive no compensation directly from the
Company for performing the duties of their offices. Lyon Street Asset Management
Company, the Company's investment adviser, is an affiliate of Old Kent Financial
Corporation, of which Mr. Duca is an employee. Lyon Street Asset Management
Company receives fees for services it provides to the Company as its investment
adviser. Drinker Biddle & Reath LLP, of which Mr. McConnel is a partner,
receives legal fees for services provided to the Company. Messrs. Grimm, Young,
Dean and Tuch and Ms. Metz are employed by BISYS Fund Services, the Company's
administrator and distributor, which receives fees for administration services
provided to the Company and fees pursuant to a plan adopted by the Company in
accordance with Rule 12b-1 under the 1940 Act. BISYS Fund Services, Inc., an
affiliate of BISYS Fund Services, receives fees for transfer agency and fund
accounting services provided to the Company.
INVESTMENT ADVISER
Lyon Street Asset Management Company, the Company's investment adviser, has
its principal offices located at 111 Lyon Street, N.W., Grand Rapids, Michigan
49503.
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services, the administrator and distributor for the Company, has
its principal offices located at 3435 Stelzer Road, Columbus, Ohio 43219.
OTHER MATTERS
The Company does not intend to hold Annual Meetings of Shareholders except
to the extent that such meetings may be required under the 1940 Act or state
law. Shareholders who wish to submit proposals for inclusion in the Proxy
Statement for a subsequent shareholder meeting should send their written
proposals to the Company at its principal office within a reasonable time before
such meeting.
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of Shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interests of the Company.
17
<PAGE> 21
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO COMPLETE THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. PLEASE ALLOW SUFFICIENT TIME FOR THE PROXY TO BE RECEIVED BEFORE THE
MEETING.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, COPIES OF THE COMPANY'S ANNUAL
REPORT TO SHAREHOLDERS DATED DECEMBER 31, 1997, TO ANY SHAREHOLDER UPON REQUEST.
THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS MAY BE OBTAINED BY WRITING TO THE
COMPANY AT P.O. BOX 182201, COLUMBUS, OHIO 43218-2201 OR BY CALLING
1-800-633-KENT (5368). THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY
SOLICITING MATERIAL.
Dated: August 5, 1998
18
<PAGE> 22
PRELIMINARY PROXY
- -----------------
THE KENT FUNDS
FUND
--------------
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES of The Kent Funds (the
"Company") for use at a Special Meeting of Shareholders (the "Meeting") to be
held on August 17, 1998 in the Board Room at BISYS Fund Services, 3435 Stelzer
Road, Columbus, Ohio 43219 at 9:00 a.m. (Eastern time).
The undersigned hereby appoints Martin R. Dean and Robert L. Tuch and each
of them, with full power of substitution, as proxies of the undersigned to vote
at the above-stated Meeting, and at all adjournments or postponements thereof,
all shares evidencing beneficial interests in the Fund ("Fund") of
the Company that are held of record by the undersigned on the record date for
the Meeting, upon the following matter and upon any other matter which may
properly come before the Meeting, in their discretion:
(1) Proposal to elect Messrs. 1) Joseph F. Damore, 2) Walter B. Grimm,
3) James F. Rainey 4) Ronald F. VanSteeland and 5) Ms. Michelle Van Dyke to
the Board of Trustees of the Company:
[ ] For All [ ] Withhold All [ ] For All Except
To withhold authority to vote, mark "For All Except" and write the nominees
number on the line below.
- --------------------------------------------------------------------------------
(2) Proposal to approve a change in the investment objective of the Fund
from a fundamental policy to a non-fundamental policy:
[ ] For [ ] Against [ ] Abstain
(3) Proposal to approve certain changes to the following fundamental
investment restrictions, including a change that would make all such
restrictions non-fundamental:
(a) the restriction on purchases of securities on margin;
[ ] For [ ] Against [ ] Abstain
(b) the restriction on investments in illiquid securities;
[ ] For [ ] Against [ ] Abstain
(c) the restriction on investments in securities of companies with
less than a three year operating history;
[ ] For [ ] Against [ ] Abstain
(d) the restriction on short sales of securities; and
[ ] For [ ] Against [ ] Abstain
(e) the restriction on investments in other investment companies.
[ ] For [ ] Against [ ] Abstain
<PAGE> 23
(4) Proposal to ratify the selection of KPMG Peat Marwick LLP as the
independent accountants of the Company for the fiscal year ending December 31,
1998;
[ ] For [ ] Against [ ] Abstain
(5) In their discretion, the proxies are authorized to consider and vote
upon such other matters as may properly come before the Meeting or any
adjournment thereof.
Every properly signed proxy will be voted in the manner specified thereon
and, IN THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO
VOTE FOR PROPOSALS (1), (2), (3) AND (4).
PLEASE SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney or executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership
name by an authorized person.
Dated: , 1998
----------------------------
X
----------------------------------------
Signature
X
----------------------------------------
Signature, if held jointly
