<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1997
[KENT LOGO]
THE KENT FUNDS
THE KENT GROWTH AND INCOME FUND
THE KENT SMALL COMPANY GROWTH FUND
THE KENT INTERNATIONAL GROWTH FUND
THE KENT INDEX EQUITY FUND
THE KENT SHORT TERM BOND FUND
THE KENT INTERMEDIATE BOND FUND
THE KENT INCOME FUND
THE KENT LIMITED TERM TAX-FREE FUND
THE KENT INTERMEDIATE TAX-FREE FUND
THE KENT TAX-FREE INCOME FUND
THE KENT MICHIGAN MUNICIPAL BOND FUND
THE KENT MONEY MARKET FUND
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
THE KENT GOVERNMENT MONEY MARKET FUND
<PAGE> 2
MESSAGE TO SHAREHOLDERS
Dear Kent Funds Shareholder:
I am pleased to present the annual report of The Kent Funds for the year
ended December 31, 1997. Again this year, we are including our Economic Outlook,
which discusses our view of the U.S. and global economies. Our Report also
includes a Portfolio Review of each Kent Fund. In these Reviews our managers
describe each Fund's investment strategy and positioning for the coming months.
We hope you take the time to read through this material to become more familiar
with our investment style and, perhaps, to discover additional Kent Funds that
may have a place in your investment portfolio.
Last year marked several important changes and significant growth for The
Kent Funds. In May, the Funds became no-load, making it more cost effective and
efficient than ever for our clients to invest with us. In June, we introduced
the Kent Government Money Market Fund to provide another alternative for
management of our client's cash portfolios. Response from investors has been
very favorable. Today, the Kent Government Money Market Fund's assets exceed
$100 million. Since January 1997, the assets of the Kent Funds have grown by
over $1.2 billion and, on February 23, 1998, The Kent Funds exceeded $5.5
billion for the first time.
To assist investors further, the Kent Funds investment advisor, Old Kent
Bank, through its Lyon Street Asset Management Company subsidiary, recently
introduced a new asset management program called, MoneyWise. The MoneyWise uses
investment portfolios made up of Kent Funds and other strategically selected
funds designed to match your personal investment objectives and tolerance for
risk. MoneyWise assists investors in selecting an appropriate combination of
funds and then maintains that portfolio over time. If you are interested in
learning more about MoneyWise, please contact your Old Kent Bank representative
or call 1-800-462-4636.
We are planning many exciting innovations for the Kent Funds in 1998 -- all
of which will make it easier for you to invest with us. We will keep you
informed as these new features are put in place.
Should you have questions regarding your investment, please contact your
Old Kent Financial Consultant or call 1-800-633-KENT (1-800-633-5368) to speak
with a Kent Funds shareholder services representative.
Thank you again for choosing The Kent Funds.
Very truly yours,
/s/ James F. Duca, II
James F. Duca, II
President
February 28, 1998
INVESTMENT ADVISER
Old Kent Bank
One Vandenberg Center
Grand Rapids, MI 49503
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, OLD KENT BANK OR ANY OF ITS AFFILIATES. SHARES OF THE FUNDS ARE NOT
FEDERALLY INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENT RETURN
AND PRINCIPAL VALUE WILL VARY AS A RESULT OF MARKET CONDITIONS AND OTHER
FACTORS, SO THAT SHARES OF THE FUNDS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT THE
MONEY MARKET FUNDS WILL BE ABLE TO SUSTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
This report is submitted for the general information of shareholders of The Kent
Funds. It is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus for the funds, which contains
more information concerning the funds' investment policies as well as fees and
expenses and other pertinent information. Please read the prospectus carefully
before investing. The distributor for the Kent Funds is BISYS Fund Services.
The performance indices used for comparison in this report are unmanaged
indices. Unlike actual mutual fund performance, the performance of an index does
not reflect any management fees, other expenses or sales charges. A direct
investment in the unmanaged index is not possible.
1
<PAGE> 3
ECONOMIC OUTLOOK
REAL ECONOMIC ACTIVITY
Best Showing for the Economy in Nine Years.
The acceleration in the economy's growth rate during the fourth quarter
capped off a year of strong growth and certainly provides the material for a
series of strong economy comments. Digging into the report on the economy's
performance, however, paints a picture of an economy considerably softer than
the 4.3 percent gain in Real Gross Domestic Product last quarter would suggest.
First, we offer the strong economy observations. The 3.8 percent gain in
economic activity for 1997 was the fastest pace in nine years. The economy grew
at an identical rate in 1988 after the Federal Reserve was stimulating the
economy to cushion the impact of the 1987 stock market crash. The economy's
growth rate hasn't been stronger since 1984, when the Reagan administration tax
cuts helped produce a seven percent increase in output. A truly remarkable
feature of the economy's performance last year is that it was the strongest
annual gain over the six calendar years of the current business expansion. This
is an unprecedented event for a peacetime expansion, which typically experiences
its sharpest gains early on as it emerges from the preceding recession.
REAL ECONOMIC ACTIVITY*
<TABLE>
<CAPTION>
4Q 1997* 1997
-------- ----
<S> <C> <C>
Gross Domestic Product 4.3% 3.8%
Personal Consumption Expenditures 3.2% 3.3%
Business Capital Spending -3.6% 9.7%
Domestic Private Final Sales 2.6% 4.1%
</TABLE>
* Annualized
** Source: U.S. Commerce Department
The economy was led last year by a technology-driven business capital
spending boom. Producers' durable equipment spending grew 12.2 percent, its
strongest gain in thirteen years. The high-technology component of equipment
spending roared ahead 20.6 percent. The surging demand for computers,
telecommunications equipment and other forms of information technology has not
only been a driving force in the economy over the past year, but also over the
course of the current business expansion. In fact, 1997 marked the third
consecutive year that expenditures on high-technology equipment grew at a rate
in excess of twenty percent. Consumer spending, spurred on by a wealth effect
arising out of the sharp rise in common stock prices, gained 3.3 percent. This
matched its best performance during the current expansion since 1994 and marked
the sharpest rise in consumer spending since 1988.
CONSUMER SPENDING*
FOURTH QUARTER 1997
<TABLE>
<CAPTION>
4Q 1997
-------
<S> <C>
Durable Goods 2.6%
Motor Vehicles -4.4%
Furniture 6.5%
Nondurable Goods -0.4%
Food -1.3%
Apparel -1.0%
Services 5.1%
</TABLE>
* Annualized
** Source: U.S. Commerce Department
The dynamics behind the economy's growth rate during the fourth quarter
were quite a bit different than for 1997 as a whole, however, and portend a
coming slowdown. While real GDP grew at a 4.3 percent rate, our measure of
domestic private final sales (the sum of consumer spending, business capital
spending and housing) rose at a much more moderate pace of 2.6 percent. What
explains the principal differences? First, a pickup in business inventories
added 0.7 percent to the economy's growth rate. This pace of inventory building
was necessary last year to keep up with the strong pace of consumer demand. The
need for even higher levels of inventory building should not be evident this
year due, to an expected slowdown in demand for domestically produced goods as
one of the fallouts from the recent events in Southeast Asia.
Another major source of strength last quarter was a sharp improvement in
our foreign trade balance. Exports rose at a healthy 11.3 percent rate, while
imports rose only 1.3 percent. Taken together, this resulted in a
2
<PAGE> 4
ECONOMIC OUTLOOK
$22.8 billion improvement in net exports, which contributed 1.3 percent to the
economy's fourth quarter growth rate. Our expectation is that foreign trade will
be a major source of weakness for the economy in 1998, another fallout of the
financial crises in Southeast Asia.
BUSINESS CAPITAL SPENDING*
FOURTH QUARTER 1997
<TABLE>
<CAPTION>
4Q 1997
-------
<S> <C>
Producers' Durable Equipment -3.9%
High Technology Equipment 2.0%
Computers 10.5%
Industrial Equipment -1.6%
Transportation Equipment -10.0%
</TABLE>
* Annualized
** Source: U.S. Commerce Department
Additionally, consumer spending showed some signs of stress, as outlays
for nondurable goods, particularly food and apparel, fell at a 0.4 percent rate
and business capital spending declined at a 3.6 percent rate, its first drop
since the fourth quarter of 1991. While outlays for high-technology equipment
rose for the twenty-seventh consecutive quarter (though barely at 2.0 percent),
industrial equipment spending fell. This well could have been the first sign of
the coming slowdown in the economy emanating from Southeast Asia.
The Asian Impact.
The financial market and economic crises in Southeast Asia have emerged as
the key events that will shape the outlook for the economy in 1998. While there
is little debate over the directional impact these crises will have on economic
growth and inflation, the extent of the economic fallout on the U.S. economy is
certainly open to question. In evaluating the impact of the developments in
Southeast Asia, keep in mind that there are a number of ways that their impact
is transmitted to our economy:
- Domestic demand for U.S. manufactured goods could fall as the
devaluation of Asian currencies lowers the dollar cost of goods
imported from that region of the world. Additionally, demand for
U.S. exports will weaken due to the corresponding rise in their
price in the Asian currencies and from the virtual implosion of
several of the Southeast Asian economies. The net effect will be a
rather significant widening of our foreign trade deficit, which we
believe will reduce domestic growth between a half to a full percent
this year. An indirect effect via reduced business capital spending
plans could also reduce growth by another half percent.
- Economic growth may slow across the globe, and the resultant slower
pace of final demand will serve to aggravate the extent of the
worldwide excess capacity in many capital-intensive industries, such
as steel, chemicals, oil refining, automobile and semiconductors.
This excess capacity will exert deflationary influences through a
number of distribution channels.
- Commodity prices could remain under pressure from the generalized
slowdown in worldwide economic growth, providing further downward
pressure on U.S. inflation. Lower import prices will directly, and
indirectly through competitive pressures, restrain domestic
inflation.
- Fears of the Federal Reserve tightening monetary policy any time
soon have been greatly reduced due to the coming slowdown in
economic growth and the acknowledgment that any further rise in the
value of the U.S. dollar against the Asian currencies will only
aggravate an already precarious situation.
There are a number of positive elements that could balance the negative
influences from Southeast Asia and may allow the U.S. economy to continue
growing during 1998. Consumer spending is being supported by a 24-year low
unemployment rate, very high consumer confidence readings, strong growth in real
income and a rise in discretionary household income due to the recent surge in
mortgage refinance activity. Housing is being supported by the drop in mortgage
rates and the rise in the affordability index. While business capital spending
on equipment is likely to slow from its breakneck pace of the past six years,
the case for additional spending on high-technology equipment remains very
compelling.
We look for the economy's growth rate to moderate to a 2.5 percent pace
this year, with growth somewhat below that pace during the first half of the
year and somewhat above it during the second half of the year. The current
economic expansion
3
<PAGE> 5
ECONOMIC OUTLOOK
should easily make it through the full year, which would qualify it as the
longest peacetime expansion on record.
INFLATION
Could Inflation Really Move Lower?
The economy's inflation rate was extraordinarily tame last year despite
the advanced age of the business expansion. In fact, the economy's inflation
rate has never been this low at this point in an economic cycle. The Gross
Domestic Product price index rose 2.0 percent during 1997, its smallest increase
since 1965, and increased at a scant 1.5 percent rate during the fourth quarter.
Reflecting a 3.9 percent decline in import prices last year, the Gross Domestic
Purchases price index rose an even lower 1.7 percent for the year. Not to be
outdone, the Consumer Price Index (CPI) gained 1.7 percent in 1997, and the core
CPI (excluding the volatile food and energy components) rose only 2.2 percent,
the slowest pace in 32 years.
The strength in the U.S. dollar heightened competitive pressures on a
global basis and worldwide excess capacity in many capital-intensive industries
such as steel, chemicals, oil refining, automobiles, and semiconductors, caused
the goods component of the CPI to rise a minuscule 0.2 percent. The first
deflationary hints from Southeast Asia were probably evident in the decline in
goods' prices during the fourth quarter. The somewhat more insulated nature of
services industries led to a still low, but relatively larger gain in the
services component of the CPI at 2.8 percent.
Our positive long-run outlook for inflation has only been reinforced by
the recent events in Southeast Asia. Import prices on Asian goods should be
lower in 1998 due to the dramatic decline in value of a number of the Asian
currencies versus the U.S. dollar late last year. Additionally, commodity prices
have fallen still further and domestic producers should be facing even stiffer
price competition from overseas. While the U.S. labor market is unquestionably
tight and wage increases have begun to pickup, there is no evidence that higher
labor costs are being passed through to consumers. Instead, businesses are being
forced to innovate to achieve even higher productivity gains to maintain
operating margins. Inflation should rise about 1.5 percent in 1998, with the
strong likelihood that the prices of manufactured goods will actually decline,
while services prices remain on a disinflationary trend.
INFLATION MEASURES
<TABLE>
<CAPTION>
4Q 1997* 1997
-------- ----
<S> <C> <C>
Gross Domestic Purchases Price Index 1.5% 1.7%
Consumer Price Index 1.6% 1.7%
CPI - Goods -0.4% 0.2%
CPI - Services 2.8% 2.8%
</TABLE>
* Annualized
** Source: U.S. Commerce Department
JOSEPH T. KEATING
Chief Investment Officer
**The information contained herein is based on U.S. Commerce Department data
released January 30, 1998.
4
<PAGE> 6
PORTFOLIO REVIEWS
THE KENT GROWTH AND INCOME FUND
BY ALLAN J. MEYERS
PORTFOLIO MANAGER
A variety of factors affected stock prices during 1997. Surprisingly
strong economic growth early in the year caused the Federal Reserve to raise
short-term interest rates. But economic growth slowed during the rest of the
year, and inflation remained low, fueling stock market gains. A large number of
mergers, acquisitions and stock repurchases during the period also boosted
demand for stocks, especially shares of large, well-established firms. Currency
problems in Southeast Asia had a negative impact on U.S. stocks during the
fourth quarter. Nonetheless, the S&P 500 Stock Index posted an unprecedented
third consecutive year of 20% or greater gains.
For the 12 months ended December 31, 1997, the Fund's Institutional and
Investment shares had total returns of 24.14% and 23.89%, respectively. That
compares with returns of 26.96% for the average of growth and income funds
tracked by Lipper Analytical Services, and 33.36% for the S&P 500 Stock Index.
FAVORING LARGE FIRMS
Shares of larger, growth-oriented companies outperformed small company
stocks during the first half of the year. Smaller, value-oriented stocks briefly
rallied during the third quarter, before Asia's economic problems caused
risk-averse investors to shift their interest, once again, to larger firms.
We increased our exposure to large, established companies in several
sectors that have performed well, including technology, health-care and
financial stocks. We increased the Fund's positions in General Electric (3.1% of
the Fund's assets) and Coca-Cola (2.0%) and purchased shares of Microsoft
(2.0%), Intel (1.5%) and Merck (1.8%). The Fund's largest holding, AT&T (2.4%),
performed well throughout the year. We reduced our holdings in smaller companies
across several sectors.
THE KENT GROWTH AND INCOME FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Consumer Basic Computer &
Staples Utilities Conglomerates Retail Oil/Energy Other Materials Medical Finance Technology
- ------- --------- ------------- ------ ---------- ----- --------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12.2% 9.9% 4.7% 5.8% 9.2% 11.5% 4.4% 11.4% 17.0% 13.9%
</TABLE>
Portfolio composition is subject to change.
AVOIDING ASIAN TROUBLES
We continue to be concerned about how conditions in Asia will affect U.S.
stocks. For example, we may see a slowdown in Asian demand for U.S. goods or an
increase in exports from Asia, either of which could dampen domestic corporate
profits. We continue to favor shares of large, well-established companies in
sectors such as technology, pharmaceuticals, utilities and regional banks. In
addition, the number of securities in the Fund's portfolio was increased to 273
companies from 193 during the fourth quarter, to provide additional
diversification.
Going forward we will continue to invest in companies with strong growth
prospects, when their shares appear undervalued based on factors such as
price/earnings and price/book ratio, while trying to maintain a dividend yield
that is slightly higher than that of the S&P 500 Stock Index.
5
<PAGE> 7
PORTFOLIO REVIEWS
THE KENT GROWTH AND INCOME FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 11/2/92) (inception: 12/1/92)
-------------------- --------------------
<S> <C> <C>
One Year 24.14% 23.89%
Three Years 26.01% 25.71%
Five Years 17.56% 17.42%
Life of Fund 17.84% 17.23%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON WITH STANDARD & POOR'S COMPOSITE INDEX
OF 500 STOCKS
<TABLE>
<CAPTION>
THE KENT GROWTH AND
INCOME FUND INSTITUTIONAL STANDARD & POOR'S COMPOSITE
CLASS SHARES INDEX OF 500 STOCKS
------------------- ---------------------------
<S> <C> <C>
11/2/92 $10,000 $10,000
12/31/92 10,398 10,472
12/31/93 11,610 11,518
12/31/94 11,669 11,669
12/31/95 15,743 16,036
12/31/96 18,809 19,737
12/31/97 23,351 26,321
</TABLE>
<TABLE>
<CAPTION>
THE KENT GROWTH
AND INCOME FUND STANDARD & POOR'S
INVESTMENT CLASS SHARES COMPOSITE INDEX OF 500 STOCKS
----------------------- -----------------------------
<S> <C> <C>
12/1/92 $10,000 $10,000
12/31/92 10,059 10,131
12/31/93 11,247 11,143
12/31/94 11,302 11,288
12/31/95 15,213 15,514
12/31/96 18,124 19,093
12/31/97 22,454 25,464
</TABLE>
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Standard & Poor's Composite Index of 500 Stocks is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
Total return is based on changes in net asset value, assuming reinvestment of
all dividends and capital gains distributions. Certain fees were waived. Had
these waivers not been in effect, total returns would have been lower.
6
<PAGE> 8
PORTFOLIO REVIEWS
THE KENT SMALL COMPANY GROWTH FUND
BY DAVID C. EDER
PORTFOLIO MANAGER
Small-company stocks trailed shares of larger firms during 1997 but posted
strong gains on an absolute basis. Our diversified, value-oriented approach
helped the Fund when small-company shares rallied in the third quarter, and help
reduce losses when small stocks were hurt due to the economic and financial
market crises in Southeast Asia during the fourth quarter.
As a result, the Kent Small Company Growth Fund performed very well
compared to its benchmark. For the 12 months ended December 31, 1997, the Fund's
Institutional and Investment shares returned 27.94% and 27.71%, respectively.
The average of small company growth funds tracked by Lipper Analytical Services
returned 15.10%, and the Russell 2000 Index of small-capitalization stocks
returned 22.36% during the same period.
FINDING OPPORTUNITIES IN DIFFERENT SECTORS
During the period, we found opportunities in several sectors and types of
companies. In March, we increased the Fund's exposure to technology stocks from
7% of the portfolio to 17% after those shares' prices declined to very
attractive levels. That helped the Fund's performance when technology stocks
rallied during the second and third quarters. We also maintained a significant
weighting in the finance sector, which saw a large number of mergers and
acquisitions and performed very well.
All told, 19 companies included in the Fund's portfolio for the entire
year gained more than 100%. The Fund's strongest performer was NS Group (0.09%
of the Fund's assets), a basic materials company that gained 280% during 1997.
The Fund's average beta at the end of December was .95(1) compared to the
Russell 2000 Index, indicating that the Fund was slightly less volatile than
that benchmark.
THE KENT SMALL COMPANY GROWTH FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
Oil/Energy 5.3%
Industrial Products 7.6%
Utilities 6.8%
Other 9.6%
Retail 6.9%
Medical 5.8%
Basic Materials 7.7%
Computer & Technology 16.3%
Construction 4.1%
Consumer Staples 4.8%
Consumer Discretionary 6.9%
Finance 18.2%
</TABLE>
Portfolio composition is subject to change.
THE OUTLOOK
Many small-company stocks underperformed the shares of large, more
established firms during the financial and economic crises emanating from
Southeast Asia during the fourth quarter, even though profits of smaller firms
are likely to be less affected by the events in that region of the world. As a
result, valuations of small-company shares in many sectors -- particularly
technology -- are very attractive now.
We will take advantage of opportunities as they arise during the coming
months, while maintaining the fund's value-oriented approach. That approach
should help us to meet investors' long-term goals while avoiding unnecessary
risks.
(1)Beta is a coefficient measuring a stock's relative volatility. The beta is
the covariance of a stock in relation to the rest of the stock market. The
Standard & Poor's 500 Stock Index has a beta coefficient of 1. Any stock with a
higher beta is more volatile than the market, and any with a lower beta can be
expected to rise and fall more slowly than the market.
7
<PAGE> 9
PORTFOLIO REVIEWS
THE KENT SMALL COMPANY GROWTH FUND+
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 11/2/92) (inception: 12/4/92)
-------------------- --------------------
<S> <C> <C>
One Year 27.94% 27.71%
Three Years 23.71% 23.40%
Five Years 17.21% 17.02%
Life of Fund 18.54% 17.18%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
KENT SMALL COMPANY GROWTH FUND
INSTITUTIONAL CLASS SHARES RUSSELL 2000 INDEX
-------------------------- ------------------
<S> <C> <C>
11/2/92 $10,000 $10,000
12/31/92 10,885 11,140
12/31/93 12,729 13,246
12/31/94 12,722 13,005
12/31/95 15,745 16,704
12/31/96 18,825 19,466
12/31/97 24,085 23,819
</TABLE>
<TABLE>
<CAPTION>
KENT SMALL COMPANY GROWTH FUND
INVESTMENT CLASS SHARES RUSSELL 2000 INDEX
----------------------- ------------------
<S> <C> <C>
12/4/92 $10,000 $10,000
12/31/92 10,197 10,348
12/31/93 11,915 12,304
12/31/94 11,906 12,080
12/31/95 14,702 15,516
12/31/96 17,518 18,081
12/31/97 22,372 22,124
</TABLE>
+Small-Cap funds typically carry additional risks since smaller companies
generally have a higher risk of failure. Historically, stocks of smaller
companies have experienced a greater degree of market volatility than stocks on
average.
Past performance is no guarantee of future performance. The investment
return and principal value will fluctuate, so that shares, when redeemed, may be
worth more or less than the original cost. Performance for each class will
differ based on differences in expenses for each class of shares. Return figures
and investment values are quoted after deducting all expenses.
The Russell 2000 Index is an unmanaged index of the smallest 2,000 companies in
the Russell 3000 Index, as ranked by total market capitalization. The Russell
2000 is widely regarded in the industry to accurately capture the universe of
small-cap stocks. Total return is based on changes in net asset value, assuming
reinvestment of all dividends and capital gains distributions. Certain fees were
waived. Had these waivers not been in effect, total returns would have been
lower.
8
<PAGE> 10
PORTFOLIO REVIEWS
THE KENT INTERNATIONAL GROWTH FUND
BY DAVID C. EDER
PORTFOLIO MANAGER
Overseas markets performed well during the first three quarters of 1997.
However, severe currency and economic problems throughout Southeast Asia caused
stock prices there to plummet during the fourth quarter, effectively erasing
Asian markets' gains for the year. The economic and financial market crises in
Southeast Asia also adversely affected markets in Europe and Latin America.
The Fund's Institutional and Investment Shares returned 2.54% and 2.25%,
respectively, for the period. That compares to a 1.78% return for the Morgan
Stanley Capital International Europe, Australia and Far East (MSCI EAFE) Index,
an unmanaged index generally representative of foreign stocks. The average
international fund tracked by Lipper Analytical Services posted a total return
of 7.27%.
BETTER RETURNS IN EUROPE
During the period, we overweighted Europe (59.4% of total assets in
January, versus 56.6% of the EAFE Index). That strategy boosted the Fund's
performance, as some European markets delivered strong gains. In particular, the
Fund benefited from its investments in Switzerland (up 44.2%), Denmark (up
35.4%) and Italy (up 35.5%).
The Fund underweighted the Pacific Rim (40.6% of total assets, versus
43.4% of the EAFE Index). Our relatively small exposure to the Pacific Rim
helped the Fund avoid some of the worst losses in that region. For example, the
Fund held only 1% of its total assets in Malaysian stocks, which declined 68.3%
for the year.
Overall, the Fund was able to outperform the EAFE Index without
taking undue risk. The Fund's beta at the end of December was .98(1), indicating
that the Fund was about 98% as volatile as its benchmark.
THE KENT INTERNATIONAL GROWTH FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
Germany 11.9%
Other 10.0%
United Kingdom 18.7%
Netherlands 3.5%
Italy 4.9%
Switzerland 5.2%
France 9.0%
Japan 26.4%
Denmark 2.4%
Australia 2.9%
Spain 2.7%
Hong Kong 2.4%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
Pacific Rim markets likely will remain volatile during the first half of
1998 as policymakers in that region of the world attempt to correct their
economic problems. Meanwhile, we expect European economies to continue to grow
at healthy rates, with European shares in demand among international investors
who are wary of the Asian markets. Therefore, we will continue to invest the
bulk of the Fund's assets in shares of European companies. At the same time, we
will keep some exposure to Asian markets with an eye toward maintaining the
Fund's diversification and eventually benefiting from the turnaround in that
region of the world.
(1)Beta is a coefficient measuring a stock's relative volatility. The beta is
the covariance of a stock in relation to the rest of the stock market. The
Standard & Poor's 500 Stock Index has a beta coefficient of 1. Any stock with a
higher beta is more volatile than the market, and any with a lower beta can be
expected to rise and fall more slowly than the market.
9
<PAGE> 11
PORTFOLIO REVIEWS
THE KENT INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 12/4/92) (inception: 12/4/92)
-------------------- --------------------
<S> <C> <C>
One Year 2.54% 2.25%
Three Years 7.06% 6.80%
Five Years 11.05% 10.80%
Life of Fund 10.92% 10.65%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST
INDEX, THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE INDEX AND THE MORGAN
STANLEY CAPITAL INTERNATIONAL PACIFIC INDEX
<TABLE>
<CAPTION>
MORGAN STANLEY CAPITAL
KENT INTERNATIONAL GROWTH FUND, INTERNATIONAL EUROPE, AUSTRALIA MORGAN STANLEY CAPITAL MORGAN STANLEY CAPITAL
INSTITUTIONAL CLASS SHARES AND FAR EAST INDEX INTERNATIONAL EUROPE INDEX INTERNATIONAL PACIFIC INDEX
------------------------------- ------------------------------- -------------------------- ---------------------------
<S> <C> <C> <C> <C>
12/4/92 $10,000 $10,000 $10,000 $10,000
12/31/92 10,020 10,054 10,233 9,887
12/31/93 13,045 13,367 13,282 13,444
12/31/94 13,794 14,444 13,636 15,195
12/31/95 15,591 16,113 16,653 15,650
12/31/96 16,507 17,138 20,246 14,335
12/31/97 16,926 17,443 25,063 10,681
</TABLE>
<TABLE>
<CAPTION>
KENT INTERNATIONAL GROWTH MORGAN STANLEY CAPITAL MORGAN STANLEY MORGAN STANLEY CAPITAL
FUND, INVESTMENT INTERNATIONAL EUROPE, AUSTRALIA CAPITAL INTERNATIONAL INTERNATIONAL PACIFIC
CLASS SHARES AND FAR EAST INDEX EUROPE INDEX INDEX
------------------------- ------------------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
12/4/92 $10,000 $10,000 $10,000 $10,000
12/31/92 10,010 10,054 10,233 9,887
12/31/93 13,006 13,367 13,282 13,444
12/31/94 13,723 14,444 13,636 15,195
12/31/95 15,487 16,113 16,653 15,650
12/31/96 16,350 17,138 20,245 14,335
12/31/97 16,719 17,443 25,063 10,681
</TABLE>
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Morgan Stanley Capital International Europe, Australia and Far East Index is
composed of a sample of companies representative of the market structure of 20
European and Pacific Basin countries. The Morgan Stanley Capital International
Europe Index and the Morgan Stanley Capital International Pacific Index are
unmanaged indices of stocks in their respective regions. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capitals gain distributions. Certain fees were waived. Had these waivers not
been in effect, total returns would have been lower. Investors are reminded
that, while investing globally can be rewarding, investments in foreign
securities involve certain risks and considerations in addition to those
inherent with investing in U.S. companies, such as currency fluctuations and
political instability.
10
<PAGE> 12
PORTFOLIO REVIEWS
THE KENT INDEX EQUITY FUND
BY DAVID C. EDER
PORTFOLIO MANAGER
Strong economic growth and continued low inflation helped boost the
performance of the S&P 500 Stock Index and the Fund during the 12 months ended
December 31, 1997. A large number of mergers, acquisitions and share repurchase
programs also increased demand for stocks. Those gains were accompanied by
volatility, however, particularly late in the year. In October, for example,
financial market and economic problems in Southeast Asia caused stock prices to
decline in the United States and elsewhere. Among other concerns, investors
worried that Asian countries might try to rekindle their economies by selling
exports at low prices, reducing demand for U.S. products.
The Kent Index Equity Fund's Institutional and Investment shares posted
total returns of 32.55% and 32.24%, respectively. That compares to a 27.70%
return for the average of growth and income funds tracked by Lipper Analytical
Services, and a 33.4% return for the S&P 500 Stock Index. During most of the
period, investors favored shares of large, well-established firms that are
leaders in their industries. As a result, the market's gains were led by a
rather small number of stocks. Roughly 7.5% of the stocks that make up the S&P
500 accounted for 50% of that index's return in 1997, and a mere 21% of the S&P
500 stocks accounted for 75% of the index's return. That fact made it difficult
for many actively managed diversified funds to compete with the index last year.
FUNDAMENTALS REMAIN POSITIVE FOR
COMMON STOCKS.
Many factors have come together to drive the U.S. equity market higher
over the past three years. Strong earnings growth, a decline in bond yields,
heightened merger and acquisition activity, the shrinkage of the federal budget
deficit, and widespread share repurchase programs are some of the drivers that
have propelled common stock prices higher. We continue to believe, however, that
the key underpinning behind the unprecedented rise in the equity market over the
past three years is the low inflation foundation that exists in the economy.
THE KENT INDEX EQUITY FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Computer & Basic Consumer Consumer
Oil/Energy Other Utilities Technology Materials Finance Retail Conglomerates Medical Discretionary Staples
- ---------- ----- --------- ---------- --------- ------- ------ ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.9% 8.1% 9.6% 13.8% 4.4% 17.1% 6.0% 4.7% 11.3% 3.9% 12.2%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
Many investors likely will take a cautious approach in the months ahead,
favoring U.S. stocks rather than overseas markets. We believe that the
fundamentals behind U.S. stocks are such that they should continue to post gains
over time. Additionally, we feel the likelihood of a severe decline in stock
prices has a relatively low probability.
11
<PAGE> 13
PORTFOLIO REVIEWS
THE KENT INDEX EQUITY FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 11/2/92) (inception: 11/25/92)
-------------------- ---------------------
<S> <C> <C>
One Year 32.55% 32.24%
Three Years 30.17% 29.84%
Five Years 19.41% 19.19%
Life of Fund 19.72% 19.20%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE STANDARD & POOR'S COMPOSITE INDEX OF 500 STOCKS
<TABLE>
<CAPTION>
THE KENT INDEX EQUITY FUND STANDARD & POOR'S COMPOSITE
INSTITUTIONAL CLASS SHARES INDEX OF 500 STOCKS
-------------------------- -------------------
<S> <C> <C>
11/2/92 $10,000 $10,000
12/31/92 10,440 10,472
12/31/93 11,390 11,518
12/31/94 11,488 11,669
12/31/95 15,648 16,036
12/31/96 19,119 19,737
12/31/97 25,342 26,321
</TABLE>
<TABLE>
<CAPTION>
THE KENT INDEX EQUITY FUND STANDARD & POOR'S COMPOSITE
INVESTMENT CLASS SHARES INDEX OF 500 STOCKS
------------------------------------- -------------------
<S> <C> <C>
11/25/92 $10,000 $10,000
12/31/92 10,185 10,131
12/31/93 11,111 11,143
12/31/94 11,194 11,288
12/31/95 15,199 15,514
12/31/96 18,531 19,093
12/31/97 24,505 25,464
</TABLE>
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Standard & Poor's Composite Index of 500 Stocks is an unmanaged index of 500
selected common stocks, most of which are listed on the New York Stock Exchange.
Total return is based on changes in net asset value, assuming reinvestment of
all dividends and capital gains distributions. Certain fees were waived. Had
these waivers not been in effect, total returns would have been lower.
12
<PAGE> 14
PORTFOLIO REVIEWS
THE KENT SHORT TERM BOND FUND
BY MITCHELL STAPLEY
PORTFOLIO MANAGER
Bond yields rose through mid-April, due to fears of rising inflation
brought on by rapid economic growth in the first quarter of 1997. Such fears
prompted the Federal Reserve to increase short-term interest rates early in
March. Yields generally fell after that as economic growth slowed to more
moderate levels and inflation remained low. Severe economic problems in
Southeast Asia also contributed to the decline in yields as investors worried
that the turmoil in those markets would slow domestic economic growth. The yield
on two-year Treasury notes fell from 5.94% to 5.65% during 1997.
The Fund's Institutional and Investment Shares posted total returns of
6.42% and 6.26%, respectively. That compares to a 9.59% return for the Fund's
benchmark, the Lehman Brothers 1-3-Year Government Bond Index, an unmanaged
index generally representative of the short-term government bond market.
A FOCUS ON QUALITY
Throughout much of the period, the Fund maintained an average maturity
longer than that of its benchmark. We extended the Fund's average maturity from
2.5 years in January to around 2.7 years, when yields peaked in April. As yields
declined to less attractive levels later in the year, we allowed the Fund's
average maturity to fall to around 2.0 years, where it stood at the end of the
period.
We continued to hold a mix of government securities and high-quality
corporate issues. The average credit rating of the Fund's portfolio remains high
at AA2. We purchased select high-quality corporate issues in April and October,
when corporate bonds' yield advantage over Treasury securities increased. That
captured a high level of income without exposing shareholders to unnecessary
credit risk. All told, we increased the Fund's allocation to corporate
securities from 47% at the beginning of the year to 62% at the end.
THE KENT SHORT TERM BOND FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
CORPORATE NOTES & BONDS CASH EQUIVALENTS NET OTHER ASSETS & LIABILITIES U.S. GOVERNMENT & AGENCY ISSUES
- ----------------------- ----------------------------------------------- -------------------------------
<S> <C> <C>
61.8% 4.4% 33.8%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
We expect bond yields to be relatively stable during the coming months. In
that environment, we will continue to maintain a relatively long average
maturity to lock in additional yield for shareholders. We also will continue to
look for opportunities to purchase high-quality corporate securities when they
trade at attractive prices.
THE KENT SHORT TERM BOND FUND+
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
------------------- ----------------
<S> <C>
5.36% 5.21%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period ended
December 31, 1997. Yield calculations represent past performance and will
fluctuate.
+ Certain fees were being waived. Had these waivers not been in effect, the
30-day SEC yields would have been 5.35% for Institutional Shares and 5.10% for
Investment Shares.
13
<PAGE> 15
PORTFOLIO REVIEWS
THE KENT SHORT TERM BOND FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 11/2/92) (inception: 12/4/92)
-------------------- --------------------
<S> <C> <C>
One Year 6.42% 6.26%
Three Years 7.02% 6.84%
Five Years 5.00% 4.89%
Life of Fund 5.01% 4.87%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS 1-3-YEAR GOVERNMENT BOND INDEX, CONSUMER PRICE INDEX
AND 91-DAY TREASURY BILL
<TABLE>
<CAPTION>
THE KENT SHORT TERM BOND FUND CONSUMER PRICE 91-DAY THE LEHMAN BROTHERS
INVESTMENT CLASS SHARES INDEX TREASURY BILL* 1-3 YEAR GOVERNMENT BOND INDEX
----------------------- ----- -------------- ------------------------------
<S> <C> <C> <C> <C>
11/2/92 $10,000 $10,000 $10,000 $10,000
12/31/92 10,087 9,992 10,053 10,078
12/31/93 10,395 10,267 10,356 10,621
12/31/94 10,502 10,542 10,798 10,675
12/31/95 11,608 10,809 11,393 11,832
12/31/96 12,098 11,213 11,965 12,433
12/31/97 12,875 11,404 12,593 13,625
</TABLE>
<TABLE>
<CAPTION>
THE KENT SHORT TERM BOND FUND CONSUMER PRICE 91-DAY THE LEHMAN BROTHERS
INVESTMENT CLASS SHARES INDEX TREASURY BILL* 1-3 YEAR GOVERNMENT BOND INDEX
----------------------- ----- -------------- ------------------------------
<S> <C> <C> <C> <C>
12/4/92 $10,000 $10,000 $10,000 $10,000
12/31/92 10,030 9,992 10,027 10,093
12/31/93 10,335 10,267 10,329 10,637
12/31/94 10,439 10,542 10,770 10,691
12/31/95 11,514 10,809 11,364 11,850
12/31/96 11,982 11,197 11,935 12,452
12/31/97 12,732 11,387 12,562 13,646
</TABLE>
*Treasury Bills are insured by the U. S. Government as to timely payment of
principal and interest and tend to be less volatile than longer maturity bonds.
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Lehman Brothers 1-3-Year Government Bond Index is an unmanaged index of U.S.
Treasury issues and publicly issued debt of U.S. Government agencies with
maturities of one to three years. The 91-day Treasury Bill return tracks the
investment returns paid on U.S. Treasury bills maturing in 91 days. The Consumer
Price Index is an unmanaged index measuring price increases in a standardized
"market basket" of consumer products. Total return is based on changes in net
asset value, assuming reinvestment of all dividends and capital gains
distributions. Certain fees were waived. Had these waivers not been in effect
total returns would have been lower.
14
<PAGE> 16
PORTFOLIO REVIEWS
THE KENT INTERMEDIATE BOND FUND
BY MITCHELL STAPLEY
PORTFOLIO MANAGER
Strong economic growth and increased fears about inflation caused bond
yields to rise through mid-April. But yields generally declined over the
remainder of the year, in part due to continued low inflation and a slower pace
of economic growth. Additionally, investors worried that the financial and
economic turmoil in Asia would slow the U.S. economy. The yield on a 10-year
Treasury note began the period at 6.42%, rose to a high of 6.98% in April and
finished the period at 5.74%.
Since bond prices rise when their yields decline, the Fund performed well
during the 12 months ended December 31, 1997. The Fund's Institutional and
Investment Shares, respectively, gained 7.80% and 7.62%, compared to a 7.87%
return for the Lehman Brothers Intermediate Government/Corporate Bond Index.
MANAGING THE PORTFOLIO
The Fund's average maturity was slightly longer than that of its benchmark
throughout the period. We increased the Fund's average maturity early in the
year to take advantage of higher yields, which helped the Fund's performance as
yields declined. The Fund's average maturity peaked at 6.8 years in April and
then declined to around 5.2 years by the end of the year as yields fell to less
attractive levels.
The Fund's portfolio consisted of U.S. government and high-quality
corporate issues, and its average credit rating remained high at AAA. That
helped the Fund's performance during the Asian currency crisis, when risk-averse
investors rushed to sell lower-rated corporate bonds. Certain higher quality
corporate bonds also declined in price, and we were able to purchase those
securities at attractive prices.
THE KENT INTERMEDIATE BOND FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
Cash Equivalents Net Other Assets & Liabilities 2.4%
Corporate Notes & Bonds 29.2%
U.S. Government & Agency Issues 68.4%
</TABLE>
Portfolio composition is subject to change.
GOING FORWARD
We will continue to maintain the Fund's relatively long average maturity to
lock in higher yields. If yields continue to decline, the Fund will benefit due
to rising bond prices and the attractive yield levels that were locked in. We
also will use any temporary declines in bond prices to purchase high-quality
issues at attractive prices for the Fund.
THE KENT INTERMEDIATE BOND FUND+
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
------------------- ----------------
<S> <C>
5.35% 5.09%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period ended
December 31, 1997. Yield calculations represent past performance and will
fluctuate.
+ Certain fees were waived. Had these waivers not been in effect, the 30-day
SEC yields would have been 5.34% for Institutional Shares and 5.08% for
Investment Shares.
15
<PAGE> 17
PORTFOLIO REVIEWS
THE KENT INTERMEDIATE BOND FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 11/2/92) (inception: 11/25/92)
-------------------- ---------------------
<S> <C> <C>
One Year 7.80% 7.62%
Three Years 8.86% 8.58%
Five Years 6.16% 6.08%
Life of Fund 6.21% 6.06%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX
<TABLE>
<CAPTION>
THE KENT INTERMEDIATE BOND FUND THE LEHMAN BROTHERS INTERMEDIATE
INSTITUTIONAL CLASS SHARES GOVERNMENT/CORPORATE BOND INDEX
-------------------------- -------------------------------
<S> <C> <C>
11/2/92 $10,000 $10,000
12/31/92 10,125 10,095
12/31/93 10,934 10,976
12/31/94 10,585 10,762
12/31/95 12,298 12,410
12/31/96 12,667 12,913
12/31/97 13,655 13,929
</TABLE>
<TABLE>
<CAPTION>
THE KENT INTERMEDIATE BOND FUND THE LEHMAN BROTHERS INTERMEDIATE
INVESTMENT CLASS SHARES GOVERNMENT/CORPORATE BOND INDEX
----------------------- -------------------------------
<S> <C> <C>
11/25/92 $10,000 $10,000
12/31/92 10,050 10,134
12/31/93 10,873 11,018
12/31/94 10,545 10,803
12/31/95 12,207 12,457
12/31/96 12,544 12,962
12/31/97 13,500 13,982
</TABLE>
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged
index comprised of U.S. Treasury issues, publicly issued debt of U.S. Government
agencies, corporate debt guaranteed by the U.S. Government and all publicly
issued, fixed-rate, nonconvertible investment-grade dollar-denominated,
SEC-registered corporate debt. Total return is based on changes in net asset
value, assuming reinvestment of all dividends and capital gains distributions.
Certain fees were waived. Had these waivers not been in effect total returns
would have been lower.
16
<PAGE> 18
PORTFOLIO REVIEWS
THE KENT INCOME FUND
BY MITCHELL STAPLEY
PORTFOLIO MANAGER
Yields on long-term bonds rose during the early months of 1997, due to
unexpectedly strong economic growth and concerns about the potential for higher
inflation. However, those concerns faded in the second quarter as economic
growth began to slow. As a result, long-term bond yields declined. The yield on
the 30-year Treasury bond fell from its peak of 7.17% in April to 5.92% by the
end of the 12-month period ended December 31, 1997.
The Fund generally maintains a relatively long average maturity in order to
provide shareholders with a high level of current income. That approach helped
boost the Fund's performance as yields declined last year. The Fund's
Institutional and Investment Shares posted returns of 10.55% and 10.19%,
respectively, for the 12 months ended December 31, 1997. That compares to a
14.52% return for the Lehman Brothers Long Government/Corporate Bond Index.
MANAGING AVERAGE MATURITY
We increased the Fund's average maturity from 14.2 years to 14.9 years as
bond yields rose through mid-April. But as long-term yields declined to less
attractive levels by year-end, we reduced the Fund's average maturity to 10.8
years. We accomplished that by investing some assets in relatively short-term
securities that mature in four to seven years. Those securities yielded only
slightly less than longer term issues at the time of purchase, and also helped
reduce the Fund's volatility.
The Fund maintained a very high average credit rating of AA1. Its portfolio
of government securities and high-quality corporate bonds held up well during
March and October, when prices of lower rated bonds declined sharply. We
purchased select high-quality corporate issues in March and October, when they
offered especially attractive yields relative to government issues.
THE KENT INCOME FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
U.S. Government & Agency Obligations 55.9%
Corporate Notes & Bonds 38.6%
Cash Equivalents
Net Other Assets & Liabilities 5.5%
</TABLE>
Portfolio composition is subject to change.
THE OUTLOOK
Going forward, we will continue to maintain a relatively long average
maturity to provide a high level of current income to shareholders. We will also
maintain the Fund's high credit quality, using any correction in the bond market
to purchase additional high-quality corporate issues at attractive prices.
THE KENT INCOME FUND
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
------------------- ----------------
<S> <C>
5.79% 5.53%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period ended
December 31, 1997. Yield calculations represent past performance and will
fluctuate.
+ Certain fees were being waived. Had these waivers not been in effect, the
30-day SEC yields would have been 5.78% for Institutional Shares and 5.52%
for Investment Shares.
17
<PAGE> 19
PORTFOLIO REVIEWS
THE KENT INCOME FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 3/20/95) (inception: 3/22/95)
-------------------- --------------------
<S> <C> <C>
One Year 10.55% 10.19%
Life of Fund 9.44% 9.16%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
AND THE LEHMAN BROTHERS LONG GOVERNMENT/CORPORATE BOND INDEX
<TABLE>
<CAPTION>
THE LEHMAN BROTHERS THE LEHMAN BROTHERS
THE KENT INCOME FUND GOVERNMENT/ LONG GOVERNMENT/
INSTITUTIONAL CLASS SHARES CORPORATE BOND INDEX CORPORATE BOND INDEX
-------------------------- -------------------- --------------------
<S> <C> <C> <C>
3/20/95 $10,000 $10,000 $10,000
12/31/95 11,506 11,358 12,190
12/31/96 11,643 11,688 12,207
12/31/97 12,871 12,828 13,979
</TABLE>
<TABLE>
<CAPTION>
THE LEHMAN BROTHERS THE LEHMAN BROTHERS
THE KENT INCOME FUND GOVERNMENT/CORPORATE LONG GOVERNMENT/
INVESTMENT CLASS SHARES BOND INDEX CORPORATE BOND INDEX
-------------------------- -------------------- --------------------
<S> <C> <C> <C>
3/20/95 $10,000 $10,000 $10,000
12/31/95 11,464 11,358 12,190
12/31/96 11,597 11,688 12,207
12/31/97 12,779 12,828 13,979
</TABLE>
Past performance is no guarantee of future performance. The investment return
and principal value will fluctuate, so that shares, when redeemed, may be worth
more or less than the original cost. Performance for each class will differ
based on differences in expenses for each class of shares. Return figures and
investment values are quoted after deducting all expenses.
The Lehman Brothers Government/Corporate Bond Index and the Lehman Brothers Long
Government/Corporate Bond Index are unmanaged indices comprised of U.S. Treasury
issues, debt of U.S. Government agencies, corporate debt guaranteed by the U.S.
Government and all publicly issued, fixed-rate, nonconvertible investment-grade
dollar-denominated, SEC-registered corporate debt. Total return is based on
changes in net asset value, assuming the reinvestment of dividends and capital
gains distributions. Certain fees were waived. Had these waivers not been in
effect total returns would have been lower.
18
<PAGE> 20
PORTFOLIO REVIEWS
THE KENT LIMITED TERM TAX-FREE FUND
BY MICHAEL J. MARTIN
PORTFOLIO MANAGER
Municipal bond yields generally rose during the early months of 1997 due to
stronger than expected economic growth and investor concerns about the
possibility of higher inflation. In March, the Federal Reserve increased
short-term interest rates in an effort to address concerns. Yields generally
declined during the remainder of the year, reflecting a slower pace of economic
activity and continued low inflation readings, as well as concerns that the
economic and financial market turmoil in Asia would slow our economy during
1998. Yields on three-year AAA-rated general obligation municipal securities
began the year at 4.20%, rose to a peak of 4.60% in April and finished the
period at 3.95%.
Early in the year, we reduced the Fund's average maturity target range from
between one and one half to five years to between one and three years. The
Fund's Institutional and Investment Shares posted total returns of 4.78% and
4.61%, respectively, for the 12 months through December 31, 1997. That compares
to a total return of 4.62% for the Lehman Brothers One-Year General Obligation
Municipal Bond Index and 5.41% for the Lehman Brothers Three-Year General
Obligation Municipal Bond.
TAKING ADVANTAGE OF FALLING YIELDS
The Fund's average maturity began the period at 3.84 years. The average
maturity fell to 3.0 years when we reduced the Fund's maturity target range.
However, the maturity of the Fund's portfolio remained near the high end of its
new target range, ending the period at 2.87 years. That strategy benefited the
Fund's performance as yields declined from their April peak.
We maintained the Fund's AA credit quality. At the same time, we increased
the Fund's yield by boosting its investment in securities that are subject to
the federal alternative minimum tax.
THE KENT LIMITED TERM TAX-FREE FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
NORTH CENTRAL SOUTH EAST MOUNTAIN PACIFIC OTHER
- ------------- ----- ---- -------- ------- -----
<S> <C> <C> <C> <C> <C>
36.2% 20.6% 19.9% 12.3% 6.5% 4.5%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
We will continue to hold a portfolio with an average maturity near the long
end of the Fund's target range, reflecting our view that yields could fall
further in the coming months. We also will maintain the Fund's high credit
quality. We will continue to look for any decline in municipal yields as an
opportunity to purchase higher yielding securities for the Fund.
THE KENT LIMITED TERM TAX-FREE FUND
TAX EQUIVALENT YIELDS+ AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
----------- ------------------- ----------------
<S> <C> <C>
28.0% 5.01% 4.81%
31.0% 5.23% 5.01%
36.0% 5.64% 5.41%
39.6% 5.98% 5.73%
</TABLE>
+Based on an SEC 30-day yield on 12/31/97 of 3.61% for the Institutional Class
and 3.46% for the Investment Class. SEC 30-day yield is computed based on net
income during the 30-day period ended December 31, 1997. Yield calculations
represent past performance and will fluctuate.
Certain fees were being waived. Had these waivers not been in effect, the 30-day
SEC yields would have been 3.60% for Institutional Shares and 3.35% for
Investment Shares.
19
<PAGE> 21
PORTFOLIO REVIEWS
THE KENT LIMITED TERM TAX-FREE FUND++
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 9/1/94) (inception: 11/1/94)
------------------- --------------------
<S> <C> <C>
One Year 4.78% 4.61%
Three Year 5.56% 5.49%
Life of Fund 4.74% 5.20%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS ONE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
AND THE LEHMAN BROTHERS THREE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
THE LEHMAN BROTHERS ONE-YEAR THE LEHMAN BROTHERS THREE-YEAR
THE KENT LIMITED TERM TAX-FREE FUND GENERAL OBLIGATION MUNICIPAL GENERAL OBLIGATION MUNICIPAL
INSTITUTIONAL CLASS SHARES BOND INDEX BOND INDEX
-------------------------- ---------- ----------
<S> <C> <C> <C>
9/1/94 $10,000 $10,000 $10,000
12/31/94 9,923 10,108 9,943
12/31/95 10,760 10,767 10,821
12/31/96 11,140 11,245 11,319
12/31/97 11,672 11,762 11,931
</TABLE>
<TABLE>
<CAPTION>
THE LEHMAN BROTHERS ONE-YEAR THE LEHMAN BROTHERS THREE-YEAR
THE KENT LIMITED TERM TAX-FREE FUND GENERAL OBLIGATION MUNICIPAL GENERAL OBLIGATION MUNICIPAL
INVESTMENT CLASS SHARES BOND INDEX BOND INDEX
----------------------- ---------- ----------
<S> <C> <C> <C>
11/1/94 $10,000 $10,005 $10,000
12/31/94 10,003 10,198 10,132
12/31/95 10,843 10,863 11,027
12/31/96 11,224 11,343 11,534
12/31/97 11,742 11,867 12,158
</TABLE>
++The Fund's income may be subject to certain state and local taxes and
depending on your tax status, the federal alternative minimum tax. Past
performance is no guarantee of future performance. The investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost. Performance for each class will differ based on
differences in expenses for each class of shares. Return figures and investment
values are quoted after deducting all expenses.
The Lehman Brothers One-Year General Obligation Municipal Bond Index and the
Lehman Brothers Three-Year General Obligation Municipal Bond Index are unmanaged
indices of debt instruments issued by municipalities. Total return is based on
changes in net asset value, assuming reinvestment of all dividends and capital
gains distributions. Certain fees were waived. Had these waivers not been in
effect, total return would have been lower.
20
<PAGE> 22
PORTFOLIO REVIEWS
THE KENT INTERMEDIATE TAX-FREE FUND+
BY MICHAEL J. MARTIN
PORTFOLIO MANAGER
Yields in the municipal market rose during the first quarter of 1997,
before declining significantly over the remainder of the year. The rise in
municipal yields early in the year resulted from an unexpectedly strong surge in
economic growth and fears of higher inflation. The Federal Reserve raised
short-term interest rates in March in response to the unexpectedly strong pace
of economic growth. Yields generally declined during the spring as the pace of
economic activity moderated and inflation concerns subsided. Municipal yields
fell further later in the year as investors became concerned that the economic
and financial market turmoil in Southeast Asia would further slow the U.S.
economy during 1998.
The yield on a ten-year AAA-rated general obligation municipal bond began
the year at 4.80%, rose to a peak of 5.20% in mid-April and then declined to
4.35% by the end of 1997. The Fund's Institutional and Investment Shares posted
total returns of 7.07% and 6.80%, respectively, for the 12 months ended December
31, 1997. That compares to a total return of 5.41% for the Lehman Brothers
Three-Year General Obligation Municipal Bond Index and 6.49% for the Lehman
Brothers Five-Year General Obligation Municipal Bond Index .
A CONSISTENT STRATEGY
We maintained the Fund's average credit rating at AA during the period. The
Fund's average maturity began the year at 7.8 years and rose slightly to 8.1
years in April as municipal bond prices declined and yields rose. From there, we
allowed the Fund's average maturity to gradually decline along with municipal
bond yields. The average maturity ended 1997 at 7.1 years. The shifts in average
maturity were consistent with our strategy of increasing the Fund's average
maturity to lock in higher income when yields are rising, and letting the Fund's
average maturity decline as yields become less attractive.
THE KENT INTERMEDIATE TAX-FREE FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
East 19.0%
Other 10.0%
Mountain 4.8%
Pacific 16.3%
South 20.0%
North Central 29.9%
</TABLE>
Portfolio composition is subject to change.
GOING FORWARD
The Fund is well positioned to take advantage of any additional increases
in municipal bond prices during 1998. Additionally, we will maintain the Fund's
high credit quality to reduce the impact of any detrimental effects to the
municipal bond market in the event concerns over the impact on the U.S. economy
from the events in Southeast Asia become even more of an investor focus during
1998.
THE KENT INTERMEDIATE TAX-FREE FUND+
TAX EQUIVALENT YIELDS+ AS OF DECEMBER 31,1997
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
----------- ------------------- ----------------
<S> <C> <C>
28.0% 5.19% 4.85%
31.0% 5.42% 5.06%
36.0% 5.84% 5.45%
39.6% 6.19% 5.78%
</TABLE>
+ Based on an SEC 30-day yield on 12/31/97 of 3.74% for the Institutional Class
and 3.49% for the Investment Class. SEC 30-day yield is computed based on net
income during the 30-day period ended December 31, 1997. Yield calculations
represent past performance and will fluctuate.
Certain fees were being waived. Had these waivers not been in effect, the 30-day
SEC yields would have been 3.73% for Institutional Shares and 3.48% for
Investment Shares.
21
<PAGE> 23
PORTFOLIO REVIEWS
THE KENT INTERMEDIATE TAX-FREE FUND++
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 12/16/92) (inception: 12/18/92)
--------------------- ---------------------
<S> <C> <C>
One Year 7.07% 6.80%
Three Years 7.76% 7.51%
Five Years 5.62% 5.47%
Life of Fund 5.69% 5.50%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS THREE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
AND THE LEHMAN BROTHERS FIVE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
<TABLE>
<CAPTION>
THE KENT INTERMEDIATE THE LEHMAN BROTHERS THE LEHMAN BROTHERS
TAX-FREE FUND THREE-YEAR GENERAL OBLIGATION FIVE-YEAR GENERAL OBLIGATION
INSTITUTIONAL CLASS SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
<S> <C> <C> <C>
12/16/92 $10,000 $10,000 $10,000
12/31/92 10,060 10,300 10,500
12/31/93 10,895 10,673 10,930
12/31/94 10,567 10,755 10,779
12/31/95 11,941 11,705 12,032
12/31/96 12,349 12,243 12,589
12/31/97 13,222 12,905 13,406
</TABLE>
<TABLE>
<CAPTION>
THE KENT INTERMEDIATE THE LEHMAN BROTHERS THE LEHMAN BROTHERS
TAX-FREE FUND THREE-YEAR GENERAL OBLIGATION FIVE-YEAR GENERAL OBLIGATION
INVESTMENT CLASS SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
<S> <C> <C> <C>
12/18/92 $10,000 $10,000 $10,000
12/31/92 10,040 10,200 10,600
12/31/93 10,873 10,673 10,930
12/31/94 10,543 10,755 10,779
12/31/95 11,889 11,705 12,032
12/31/96 12,266 12,243 12,581
12/31/97 13,100 12,905 13,406
</TABLE>
++ The Funds income may be subject to certain state and local taxes and
depending on your tax status, the federal alternative minimum tax. Past
performance is no guarantee of future performance. The investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost. Performance for each class will differ based on
differences in expenses for each class of shares. Return figures and investment
values are quoted after deducting all expenses.
The Lehman Brothers Three-Year General Obligation Municipal Bond Index and the
Lehman Brothers Five-Year General Obligation Municipal Bond Index are unmanaged
indices of debt instruments issued by municipalities. Total return is based on
changes in net asset value, assuming reinvestment of all dividends and capital
gains distributions. Certain fees were waived. Had these waivers not been in
effect, total return would have been lower.
22
<PAGE> 24
PORTFOLIO REVIEWS
THE KENT TAX-FREE INCOME FUND
BY MICHAEL J. MARTIN
PORTFOLIO MANAGER
Yields on municipal bonds rose early in 1997, before lowering in the third
quarter of the year. Yields on 30-year AAA-rated general obligation municipal
bonds rose from 5.45% in January to 5.75% in April, before declining to 5.03% at
the end of December.
The increase in municipal bond yields early in the year reflected investor
concerns over stronger economic growth and the potential for higher inflation.
The Federal Reserve responded to the stronger economic environment by increasing
short-term interest rates in March. Municipal bond yields peaked in mid-April,
before steadily declining during the remainder of the year as the pace of
economic activity subsided and concerns about inflation evaporated. Municipal
yields fell further late in the year as investors looked to the U.S. bond market
as a "safe haven" in response to the crises in Southeast Asia.
The Fund's Institutional and Investment Shares had total returns of 8.59%
and 8.32%, respectively, for the 12-month period ending December 31, 1997. That
compares to a total return of 9.20% for the Lehman Brothers Municipal Bond
Index.
PORTFOLIO CHARACTERISTICS
The Fund maintained an average credit quality of AA during the year. The
Fund's average maturity began 1997 at 12.9 years and increased to 13.7 years as
yields peaked in April. As yields fell, we allowed the average maturity to drift
lower, finishing the year at 11.9 years. This strategy benefited the Fund by
locking in attractive municipal yields in the first quarter of 1997 and
realizing favorable price appreciation as municipal yields declined during the
rest of the year.
THE KENT TAX-FREE INCOME FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
East 14.9%
Other 5.9%
Mountain 8.4%
Pacific 15.7%
South 14.3%
North Central 40.8%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
We expect municipal new issuance to be $210 billion during 1998, down
slightly from 1997's level. The lower supply should provide some support for the
municipal market. However, mid-term elections may revive concerns about tax
reform, which could put some downward pressure on tax-exempt issues. We will
take advantage of those opportunities, should they arise, to enhance the Fund's
yield by purchasing undervalued issues that can enhance shareholders' long-term
returns.
THE KENT TAX-FREE INCOME FUND+
TAX EQUIVALENT YIELDS+ AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
----------- ------------------- ----------------
<S> <C> <C>
28.0% 5.44% 5.10%
31.0% 5.68% 5.32%
36.0% 6.13% 5.73%
39.6% 6.49% 6.08%
</TABLE>
+ Based on an SEC 30-day yield on 12/31/97 of 3.92% for the Institutional Class
and 3.67% for the Investment Class. SEC 30-day yield is computed based on net
income during the 30-day period ended December 31, 1997. Yield calculations
represent past performance and will fluctuate.
Certain fees were waived. Had these waivers not been in effect, the 30-day SEC
yields would have been 3.91% for Institutional Shares and 3.66% for Investment
Shares.
23
<PAGE> 25
PORTFOLIO REVIEWS
THE KENT TAX-FREE INCOME FUND++
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31,1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 3/20/95) (inception: 3/31/95)
-------------------- --------------------
<S> <C> <C>
One Year 8.59% 8.32%
Life of Fund 7.56% 7.32%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON WITH THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX
<TABLE>
<CAPTION>
The Kent Tax-Free Income Fund The Lehman Brothers Municipal
Institutional Class Shares Bond Index
<S> <C> <C>
3/20/95 $10,000 $10,000
12/31/95 10,860 10,971
12/31/96 11,290 11,457
12/31/97 12,261 12,511
</TABLE>
<TABLE>
<CAPTION>
The Kent Tax-Free Income The Lehman Brothers Municipal
Institutional Class Shares Bond Index
<S> <C> <C>
3/31/95 $10,000 $10,000
12/31/95 10,834 10,971
12/31/96 11,217 11,457
12/31/97 12,150 12,511
</TABLE>
++ The Funds income may be subject to certain state and local taxes and
depending on your tax status, the federal alternative minimum tax. Past
performance is no guarantee of future performance. The investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost. Performance for each class will differ based on
differences in expenses for each class of shares. Return figures and investment
values are quoted after deducting all expenses.
The Lehman Brothers Municipal Bond Index is an unmanaged index of general
obligation municipal debt instruments. Total return is based on changes in net
asset value, assuming reinvestment of all dividends and capital gains
distributions. Certain fees were waived. Had these waivers not been in effect,
total return would have been lower.
24
<PAGE> 26
PORTFOLIO REVIEWS
THE KENT MICHIGAN MUNICIPAL BOND FUND
BY MICHAEL J. MARTIN
PORTFOLIO MANAGER
Municipal bond yields increased during the first quarter of 1997,
reflecting investor concerns about the strong U.S. economy and the effects on
inflation. The Federal Reserve increased short-term interest rates in March in
response to these concerns. After peaking in April, municipal bond yields fell
throughout the rest of the year as the pace of economic activity slowed and
concerns about a flare-up in inflation fell. Municipal yields renewed their
decline later in the year as investors became concerned that the economic and
financial market turmoil in Southeast Asia would slow the U.S. economy in 1998.
The yield on a five-year AAA-rated general obligation municipal bond rose from
4.35% in January to a 4.85% in April, before declining to 4.10% at the end of
December.
For 1997, the Fund's Institutional and Investor shares had total returns of
5.52% and 5.38%, respectively. That compares to a 5.41% total return for the
Lehman Brothers Three-Year General Obligation Municipal Bond Index.
MANAGING THE PORTFOLIO
The Fund's performance last year reflected a number of factors. In addition
to the benefits realized from the overall decline in municipal yields,
Michigan's economy remained strong during the year. This fact is evidenced by
the state's unemployment rate of 4.2%, compared to the national average of 4.7%.
During the first quarter of 1997, we changed the Fund's average maturity
target range from one-to-five years to three-to-five years. Consequently, the
Fund's average maturity rose from 3.83 years at the beginning of the year to
4.33 years in February, in response to the change of the target range. The
average maturity peaked in April at 4.37 years and declined to 4.06 by the end
of 1997. We maintained the Fund's AA credit quality.
THE KENT MICHIGAN MUNICIPAL BOND FUND
DISTRIBUTION OF NET ASSETS
AS OF DECEMBER 31, 1997
<TABLE>
<S> <C>
Cash Equivalents & Net Other Assets & Liabilities ............ 1.4%
Municipal Securities ......................................... 98.6%
</TABLE>
Portfolio composition is subject to change.
LOOKING AHEAD
We expect to maintain the portfolio's average maturity close to four years
to seek to benefit from any further declines in municipal bond yields that could
be realized in response to a slowing U.S. economy during 1998, and also to
maintain a high level of income in the Fund.
THE KENT MICHIGAN MUNICIPAL BOND FUND+
TAX EQUIVALENT YIELDS+ AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
<S> <C> <C>
28.0% 5.56% 5.35%
31.0% 5.80% 5.58%
36.0% 6.25% 6.02%
39.6% 6.62% 6.37%
</TABLE>
+ Based on an SEC 30-day yield on 12/31/97 of 4.00% for the Institutional Class
and 3.85% for the Investment Class. SEC 30-day yield is computed based on net
income during the 30-day period ended December 31, 1997. Yield calculations
represent past performance and will fluctuate.
Certain fees were waived. Had these waivers not been in effect, the 30-day SEC
yields would have been 3.99% for Institutional Shares and 3.74% for Investment
Shares.
25
<PAGE> 27
PORTFOLIO REVIEWS
THE KENT MICHIGAN MUNICIPAL BOND FUND++
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception: 5/3/93) (inception: 5/11/93)
------------------- --------------------
<S> <C> <C>
One Year 5.52% 5.38%
Three Years 5.72% 5.57%
Life of Fund 4.39% 4.22%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS THREE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
<TABLE>
<S> <C> <C>
The Kent Michigan Municipal Lehman Brothers
Bond Fund Institutional Three-Year General Obligation
Class Shares Municipal Bond Index
5/3/93 $10,000 $10,000
12/31/93 $10,300 $10,311
12/31/94 $10,340 $10,390
12/31/95 $11,190 $11,308
12/31/96 $11,580 $11,828
12/31/97 $12,222 $12,468
</TABLE>
<TABLE>
<S> <C> <C>
The Kent Michigan Municipal Lehman Brothers
Bond Fund Investment Three-Year General Obligation
Class Shares Municipal Bond Index
5/11/93 $10,000 $10,000
12/31/93 $10,285 $10,311
12/31/94 $10,301 $10,390
12/31/95 $11,126 $11,308
12/31/96 $11,500 $11,828
12/31/97 $12,119 $12,468
</TABLE>
++ The Funds income may be subject to certain state and local taxes and
depending on your tax status, the federal alternative minimum tax. Past
performance is no guarantee of future performance. The investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost. Performance for each class will differ based on
differences in expenses for each class of shares. Return figures and investment
values are quoted after deducting all expenses.
The Lehman Brothers Three-Year General Obligation Municipal Bond Index is an
unmanaged index of debt obligations issued by municipalities. Total return is
based on changes in net asset value, assuming reinvestment of dividends and
capital gains distributions. Certain fees were waived. Had these waivers not
been in effect, total return would have been lower.
26
<PAGE> 28
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS -- 97.8%
ADVERTISING -- 0.1%
15,200 Interpublic Group Companies
Inc............................. $ 757,150
------------
AEROSPACE & DEFENSE -- 1.2%
104,274 Boeing Co....................... 5,102,908
21,300 Lockheed Martin Corp............ 2,098,050
1 Raytheon Co. -- Class A......... 19
29,000 Raytheon Co. -- Class B......... 1,464,500
------------
8,665,477
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.2%
25,200 Maytag Corp..................... 940,275
14,900 Whirlpool Corp.................. 819,500
------------
1,759,775
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 0.2%
15,000 Dana Corp....................... 712,500
16,800 TRW Inc......................... 896,700
------------
1,609,200
------------
AUTO/TRUCK -- REPLACEMENT
EQUIPMENT -- 0.1%
24,550 Genuine Parts Co................ 833,166
------------
AUTOMOTIVE -- 1.6%
121,500 Ford Motor Co................... 5,915,531
100,100 General Motors Corp............. 6,068,563
------------
11,984,094
------------
BANKS -- MAJOR REGIONAL -- 6.1%
69,200 Banc One Corp................... 3,758,425
36,300 Bank of New York Co., Inc....... 2,098,594
17,100 BankBoston Corp................. 1,606,331
10,400 Comerica, Inc................... 938,600
18,500 Corestates Financial Corp....... 1,481,156
17,000 Fifth Third Bancorp............. 1,389,750
27,900 First Chicago NBD Corp.......... 2,329,650
52,900 First Union Corp................ 2,711,125
23,500 Fleet Financial Group, Inc...... 1,761,031
19,300 Huntington Bancshares........... 694,800
31,500 KeyCorp......................... 2,230,594
29,900 Mellon Bank Corp................ 1,812,688
20,300 National City Corp.............. 1,334,725
63,000 NationsBank..................... 3,831,187
100,000 Norwest Corp.................... 3,862,499
42,500 PNC Bank Corp................... 2,425,156
6,900 Republic New York Corp.......... 787,894
15,900 State Street Corp............... 925,181
20,800 SunTrust Banks, Inc............. 1,484,600
23,300 U.S. Bancorp.................... 2,608,144
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BANKS -- MAJOR REGIONAL (CONTINUED)
24,000 Wachovia Corp................... $ 1,947,000
8,400 Wells Fargo & Co................ 2,851,275
------------
44,870,405
------------
BANKS -- MONEY CENTER -- 2.4%
67,300 BankAmerica Corp................ 4,912,900
8,900 Bankers Trust New York Corp..... 1,000,694
40,800 Chase Manhattan Corp............ 4,467,600
44,500 Citicorp........................ 5,626,468
16,400 J.P. Morgan & Co., Inc.......... 1,851,150
------------
17,858,812
------------
BEVERAGES -- ALCOHOLIC -- 0.7%
70,200 Anheuser-Busch Co., Inc......... 3,088,800
53,300 Seagram Co., Ltd................ 1,722,256
------------
4,811,056
------------
BEVERAGES -- SOFT DRINKS -- 3.0%
227,200 Coca-Cola Co.................... 15,137,199
181,600 PepsiCo, Inc.................... 6,617,050
------------
21,754,249
------------
BROADCASTING/CABLE -- 0.5%
14,200 Clear Channel Communications*... 1,128,013
31,700 Comcast Corp. Special........... 1,000,531
55,795 Tele-Communications Inc.*....... 1,558,773
------------
3,687,317
------------
BUILDING & CONSTRUCTION --
MISCELLANEOUS -- 0.3%
9,900 Armstrong World Industries,
Inc............................. 740,025
24,200 Masco Corp...................... 1,231,175
------------
1,971,200
------------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 0.2%
11,600 Centex Corp..................... 730,075
18,600 Pulte Corp...................... 777,713
------------
1,507,788
------------
BUILDING PRODUCTS --
RETAIL/WHOLESALE -- 0.7%
69,200 Home Depot, Inc................. 4,074,150
17,300 Lowe's Cos., Inc................ 824,994
------------
4,899,144
------------
BUILDING PRODUCTS -- WOOD -- 0.1%
18,600 Weyerhaeuser Co................. 912,563
------------
CHEMICALS -- DIVERSIFIED -- 1.9%
32,500 Dow Chemical Co................. 3,298,749
109,200 E.I. du Pont de Nemours & Co.... 6,558,824
22,600 Hercules, Inc................... 1,131,413
37,100 PPG Industries, Inc............. 2,119,338
23,700 Union Carbide Corp.............. 1,017,619
------------
14,125,943
------------
</TABLE>
Continued
27
<PAGE> 29
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CHEMICALS -- SPECIALTY -- 0.3%
25,700 Great Lakes Chemical Corp....... $ 1,153,287
27,500 Nalco Chemical Co............... 1,087,969
------------
2,241,256
------------
COMPUTER SOFTWARE -- 2.5%
12,400 Adobe Systems, Inc.............. 511,500
115,800 Microsoft Corp.................. 14,967,149
27,700 Nextlevel Systems Inc.*......... 495,138
97,800 Oracle Corp.*................... 2,182,162
------------
18,155,949
------------
COMPUTERS -- LOCAL AREA NETWORK -- 0.9%
19,400 Cabletron Systems*.............. 291,000
99,750 Cisco Systems, Inc.*............ 5,561,063
60,200 Novell, Inc.*................... 451,500
------------
6,303,563
------------
COMPUTERS -- MAINFRAME -- 1.4%
94,800 International Business Machines
Corp............................ 9,912,525
------------
COMPUTERS -- MEMORY DEVICES -- 0.1%
45,800 Seagate Technology, Inc......... 881,650
------------
COMPUTERS -- MICRO -- 1.0%
80,800 Compaq Computer Corp............ 4,560,150
33,600 Dell Computer Corp.*............ 2,822,400
------------
7,382,550
------------
COMPUTERS -- MINI -- 1.3%
32,100 Digital Equipment Corp.*........ 1,187,700
101,000 Hewlett-Packard Co.............. 6,312,499
34,500 Silicon Graphics, Inc.*......... 429,094
36,100 Sun Microsystems, Inc.*......... 1,439,488
------------
9,368,781
------------
COMPUTERS -- SERVICES -- 0.7%
57,100 Automatic Data Processing,
Inc............................. 3,504,512
15,800 Ceridian Corp.*................. 723,838
30,000 First Data Corp................. 877,500
------------
5,105,850
------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.6%
13,500 American Greetings Corp......... 528,188
60,800 Unilever NV, ADR................ 3,796,200
------------
4,324,388
------------
CONTAINERS & PACKAGING -- 0.1%
20,500 Owens-Illinois*................. 777,719
------------
CONTAINERS -- METAL & GLASS -- 0.1%
26,100 Ball Corp....................... 921,656
------------
COSMETICS & TOILETRIES -- 0.7%
4,700 Alberto Culver Co., Class B..... 150,694
52,600 Gillette Co..................... 5,283,012
------------
5,433,706
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED -- 4.9%
54,600 Allied Signal, Inc.............. $ 2,125,988
314,200 General Electric Co............. 23,054,424
23,900 Johnson Controls, Inc........... 1,141,225
38,800 Minnesota Mining &
Manufacturing Co................ 3,184,025
49,700 Rockwell International Corp..... 2,596,825
24,900 Tenneco, Inc.................... 983,550
22,700 Textron, Inc.,.................. 1,418,750
22,500 United Technologies Corp........ 1,638,281
------------
36,143,068
------------
ELECTRICAL COMPONENTS --
SEMICONDUCTORS -- 2.0%
160,200 Intel Corp...................... 11,254,049
28,200 LSI Logic Corp.*................ 556,950
38,800 Micron Technology, Inc.*........ 1,008,800
39,200 Texas Instruments, Inc.......... 1,764,000
------------
14,583,799
------------
ELECTRONIC -- CONNECTORS -- 0.3%
46,500 AMP, Inc........................ 1,953,000
9,000 Thomas & Betts Corp............. 425,250
------------
2,378,250
------------
ELECTRONIC MEASURING EQUIPMENT -- 0.2%
40,900 Tektronix, Inc.................. 1,623,219
------------
ELECTRONIC MEASURING MACHINES -- 0.2%
40,600 Applied Materials, Inc.*........ 1,223,075
------------
ELECTRONICS -- 0.0%
3,600 Raychem Corp.................... 155,025
------------
FINANCIAL -- CONSUMER LOANS -- 0.1%
6,100 Beneficial Corp................. 507,063
------------
FINANCIAL -- INVESTMENT BANKERS -- 0.6%
38,800 Merrill Lynch & Co., Inc........ 2,829,975
31,300 Schwab (Charles) Corp........... 1,312,644
------------
4,142,619
------------
FINANCIAL -- LEASING COMPANY -- 0.0%
10,000 Ryder Systems, Inc.............. 327,500
------------
FINANCIAL -- MISCELLANEOUS SERVICES -- 1.0%
44,800 American Express Co............. 3,998,400
56,300 Morgan Stanley, Dean Witter,
Discover & Co................... 3,328,738
------------
7,327,138
------------
FINANCIAL -- MORTGAGE & RELATED
SERVICES -- 1.2%
100,100 Fannie Mae...................... 5,711,956
66,400 Freddie Mac..................... 2,784,650
------------
8,496,606
------------
FINANCIAL -- SAVINGS & LOAN -- 0.1%
11,400 H.F. Ahmanson & Co.............. 763,088
------------
</TABLE>
Continued
28
<PAGE> 30
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FOOD -- CANNED -- 0.6%
42,600 Campbell Soup Co................ $ 2,476,125
44,900 H.J. Heinz Co................... 2,281,481
------------
4,757,606
------------
FOOD -- CONFECTIONARY -- 0.1%
12,600 Hershey Foods Corp.............. 780,413
------------
FOOD -- DIVERSIFIED -- 1.5%
45,500 ConAgra, Inc.................... 1,492,969
13,300 CPC International, Inc.......... 1,433,075
23,300 General Mills, Inc.............. 1,668,863
38,100 Kellogg Co...................... 1,890,713
20,300 Quaker Oats Co.................. 1,070,825
10,400 Ralston Purina Group............ 966,550
46,300 Sara Lee Corp................... 2,607,268
------------
11,130,263
------------
FOOD -- FLOUR & GRAIN -- 0.2%
54,000 Archer-Daniels-Midland Co....... 1,171,125
------------
FOOD ITEMS -- WHOLESALE -- 0.1%
24,100 Supervalu, Inc.................. 1,009,188
------------
FOREST PRODUCTS -- 0.1%
28,400 Fort James Corporation.......... 1,086,300
------------
GAMING -- 0.1%
16,500 Mirage Resorts*................. 375,375
------------
GAS & ELECTRIC UTILITY -- 1.2%
82,000 PG & E Corp..................... 2,495,875
192,400 Public Service Enterprises...... 6,096,675
------------
8,592,550
------------
HOTELS & LODGING -- 0.4%
40,000 Hilton Hotels Corp.............. 1,190,000
10,700 ITT Corp.*...................... 886,763
12,600 Marriott International, Inc..... 872,550
------------
2,949,313
------------
INSTRUMENTS -- CONTROL -- 0.2%
9,800 General Signal Corp............. 413,438
12,800 Honeywell, Inc.................. 876,800
------------
1,290,238
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.2%
19,600 Aon Corp........................ 1,149,050
------------
INSURANCE -- BROKERS -- 0.2%
15,100 Marsh & McLennan Cos., Inc...... 1,125,894
------------
INSURANCE -- LIFE -- 0.7%
48,100 American General Corp........... 2,600,406
27,500 Torchmark Corp.................. 1,156,719
12,400 TransAmerica Corp............... 1,320,600
------------
5,077,725
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INSURANCE -- MULTI-LINE -- 1.9%
15,100 Aetna, Inc...................... $ 1,065,494
13,700 CIGNA Corp...................... 2,370,956
11,000 Hartford Financial Services
Group, Inc...................... 1,029,188
20,000 Loews Corp...................... 2,122,500
10,800 MBIA, Inc....................... 721,575
123,904 Travelers Group, Inc............ 6,675,328
------------
13,985,041
------------
INSURANCE -- PROPERTY & CASUALTY -- 2.4%
48,000 Allstate Corp................... 4,362,000
67,800 American International Group.... 7,373,249
9,300 Chubb Corp...................... 703,313
11,800 General Re Corp................. 2,501,600
14,200 Lincoln National Corp........... 1,109,375
21,700 Safeco Corp..................... 1,057,875
28,000 USF&G Corp...................... 617,750
------------
17,725,162
------------
LEISURE & RECREATION/GAMING -- 0.0%
11,700 Harrah's Entertainment, Inc.*... 220,838
------------
MACHINE TOOLS & RELATED PRODUCTS -- 0.2%
48,200 Cincinnati Milacron, Inc........ 1,250,188
------------
MACHINERY -- CONSTRUCTION/MINING -- 0.2%
36,900 Caterpillar, Inc................ 1,791,956
------------
MACHINERY -- ELECTRICAL -- 0.5%
41,500 Emerson Electric Co............. 2,342,156
10,800 W.W. Grainger, Inc.............. 1,049,625
------------
3,391,781
------------
MACHINERY -- FARM -- 0.3%
19,900 Briggs & Stratton Corp.......... 966,394
24,500 Deere & Co...................... 1,428,656
------------
2,395,050
------------
MACHINERY -- GENERAL INDUSTRIAL -- 0.2%
34,500 Cooper Industries, Inc.......... 1,690,500
------------
MACHINERY -- THERMAL PROCESSOR -- 0.2%
26,500 Thermo Electron Corp.*.......... 1,179,250
------------
MEDIA CONGLOMERATES -- 1.4%
56,100 Time Warner, Inc................ 3,478,200
67,400 Walt Disney Co.................. 6,676,813
------------
10,155,013
------------
MEDICAL -- BIOMEDICAL/GENETIC -- 0.2%
25,400 Amgen, Inc...................... 1,374,775
------------
MEDICAL -- DRUGS -- 8.4%
73,700 Abbott Laboratories............. 4,831,956
5,800 Alza Corp.*..................... 184,513
64,400 American Home Products Corp..... 4,926,600
118,500 Bristol-Myers Squibb Co......... 11,213,062
131,300 Eli Lilly & Co.................. 9,141,763
125,800 Merck & Co., Inc................ 13,366,249
124,700 Pfizer, Inc..................... 9,297,944
</TABLE>
Continued
29
<PAGE> 31
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL -- DRUGS (CONTINUED)
47,600 Pharmacia & Upjohn, Inc......... $ 1,743,350
70,600 Schering-Plough Corp............ 4,386,025
26,500 Warner-Lambert Co............... 3,286,000
------------
62,377,462
------------
MEDICAL -- HEALTH MEDICAL
ORGANIZATION -- 0.1%
21,500 Humana, Inc.*................... 446,125
------------
MEDICAL -- HOSPITAL -- 0.2%
61,000 Columbia/HCA Healthcare Corp.... 1,807,125
------------
MEDICAL -- WHOLESALE DRUG -- 0.2%
14,900 Cardinal Health, Inc............ 1,119,363
------------
MEDICAL INSTRUMENTS -- 0.1%
42,700 Biomet, Inc..................... 1,094,188
------------
MEDICAL PRODUCTS -- 0.3%
4,600 Allergan, Inc................... 154,388
38,000 Baxter International, Inc....... 1,916,625
8,500 Mallinckrodt, Inc............... 323,000
------------
2,394,013
------------
MEDICAL/DENTAL SUPPLIES -- 1.5%
20,000 Becton, Dickinson & Co.......... 1,000,000
56,800 C.R. Bard, Inc.................. 1,778,550
127,900 Johnson & Johnson............... 8,425,413
------------
11,203,963
------------
METAL -- GOLD -- 0.6%
151,500 Barrick Gold Corp............... 2,821,687
50,500 Newmont Mining Corp............. 1,483,438
------------
4,305,125
------------
METAL -- MISCELLANEOUS -- 0.2%
76,800 Cyprus Amax Minerals Co......... 1,180,800
------------
METAL -- NON-FERROUS -- 0.5%
30,000 Asarco, Inc..................... 673,125
18,500 Phelps Dodge Corp............... 1,151,625
25,000 Reynolds Metals Co.............. 1,500,000
------------
3,324,750
------------
OFFICE AUTOMATION & EQUIPMENT -- 0.3%
20,900 Pitney Bowes, Inc............... 1,879,694
------------
OFFICE SUPPLIES & FORMS -- 0.2%
29,100 IKON Office Solutions, Inc...... 818,438
62,500 Moore Corp., Ltd................ 945,312
------------
1,763,750
------------
OIL & GAS -- DRILLING -- 0.6%
50,200 Schlumberger Ltd................ 4,041,100
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OIL -- INTERNATIONAL INTEGRATED -- 3.5%
64,000 Chevron Corp.................... $ 4,928,000
242,400 Exxon Corp...................... 14,831,849
77,200 Mobil Corp...................... 5,572,875
------------
25,332,724
------------
OIL -- PRODUCTION/PIPELINE -- 0.1%
9,600 Columbia Gas System, Inc........ 754,200
------------
OIL -- U.S. EXPLORATION & PRODUCTION -- 0.1%
20,000 Union Pacific Resources Group,
Inc............................. 485,000
------------
OIL -- U.S. INTEGRATED -- 4.4%
144,700 Amoco Corp...................... 12,317,587
92,900 Atlantic Richfield Co........... 7,443,612
13,100 Kerr-Mcgee Corp................. 829,394
15,900 Pennzoil Co..................... 1,062,319
76,000 Phillips Petroleum Co........... 3,695,499
95,100 Unocal Corp..................... 3,691,069
88,500 USX-Marathon Group.............. 2,986,875
------------
32,026,355
------------
OIL REFINING -- 0.4%
30,900 Ashland, Inc.................... 1,658,944
35,680 Sun Co., Inc.................... 1,500,790
------------
3,159,734
------------
PAPER & RELATED PRODUCTS -- 0.6%
12,600 Georgia Pacific Corp............ 765,450
39,900 International Paper Co.......... 1,720,687
20,000 Mead Corp....................... 560,000
19,700 Union Camp Corp................. 1,057,644
10,000 Westvaco Corp................... 314,375
------------
4,418,156
------------
PHOTOGRAPHY -- 0.2%
26,500 Polaroid Corp................... 1,290,219
------------
POLLUTION CONTROL -- 0.1%
38,600 Safety-Kleen Corp............... 1,059,088
------------
PROTECTION -- SAFETY -- 0.4%
60,800 Tyco International Ltd.......... 2,739,800
------------
PUBLISHING -- BOOKS -- 0.1%
14,000 McGraw-Hill Cos., Inc........... 1,036,000
------------
PUBLISHING -- NEWSPAPERS -- 0.8%
9,200 Dow Jones & Co.................. 493,925
40,700 Gannett, Inc.................... 2,515,769
14,600 Knight-Ridder, Inc.............. 759,200
10,000 New York Times Co............... 661,250
9,400 Times Mirror Co................. 578,100
17,900 Tribune Co...................... 1,114,275
------------
6,122,519
------------
</TABLE>
Continued
30
<PAGE> 32
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RESTAURANTS -- 0.5%
66,100 McDonald's Corp................. $ 3,156,275
20,000 Wendy's International, Inc...... 481,250
------------
3,637,525
------------
RETAIL -- APPAREL/SHOES -- 0.5%
59,100 Gap, Inc........................ 2,094,356
58,700 Limited, Inc.................... 1,496,850
------------
3,591,206
------------
RETAIL -- DISCOUNT -- 2.4%
31,300 Dayton-Hudson Corp.............. 2,112,750
38,500 Toys 'R' Us, Inc.*.............. 1,210,344
365,600 Wal-Mart Stores, Inc. (b)....... 14,418,349
------------
17,741,443
------------
RETAIL -- DRUG STORE -- 0.2%
49,300 Walgreen Co..................... 1,546,788
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.6%
30,400 J.C. Penney, Inc................ 1,833,500
23,100 May Department Stores Co........ 1,217,081
37,600 Sears, Roebuck & Co............. 1,701,400
------------
4,751,981
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.2%
20,000 Dillards Department Stores,
Inc............................. 705,000
20,500 Federated Department Stores,
Inc.*........................... 882,781
------------
1,587,781
------------
RETAIL -- SUPERMARKETS -- 0.1%
34,600 American Stores Co.............. 711,463
------------
RETAIL/WHOLESALE -- AUTO PARTS -- 0.2%
38,300 Autozone, Inc.*................. 1,110,700
------------
RUBBER -- TIRES -- 0.2%
17,400 Goodyear Tire & Rubber Co....... 1,107,075
------------
SHOES & RELATED APPAREL -- 0.1%
14,200 Nike, Inc....................... 557,350
3,200 Reebok International Ltd.*...... 92,200
------------
649,550
------------
SOAP & CLEANING PREPARATIONS -- 1.4%
127,200 Procter & Gamble Co............. 10,152,150
------------
STEEL -- PRODUCERS -- 0.2%
36,000 USX-U.S. Steel Group, Inc....... 1,125,000
------------
TELECOMMUNICATIONS -- 0.2%
59,400 US West Media Group*............ 1,715,175
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 2.2%
16,000 Harris Corp..................... 734,000
64,200 Lucent Technologies, Inc........ 5,127,975
181,600 Motorola, Inc................... 10,362,549
------------
16,224,524
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TEXTILE -- APPAREL -- 0.1%
20,000 VF Corp......................... $ 918,750
------------
TOBACCO -- 1.9%
286,500 Philip Morris Cos., Inc......... 12,982,031
29,000 U.S.T., Inc..................... 1,071,188
------------
14,053,219
------------
TOOLS -- HAND HELD -- 0.1%
12,500 Snap-On, Inc.................... 545,312
9,700 The Stanley Works............... 457,719
------------
1,003,031
------------
TOYS/GAME/HOBBY -- 0.4%
33,800 Hasbro, Inc..................... 1,064,700
47,600 Mattel, Inc..................... 1,773,100
------------
2,837,800
------------
TRANSPORTATION -- AIR FREIGHT -- 0.1%
14,900 Federal Express Corp.*.......... 909,831
------------
TRANSPORTATION -- AIRLINE -- 0.4%
9,100 AMR Corp.*...................... 1,169,350
7,300 Delta Air Lines, Inc............ 868,700
43,900 Southwest Airlines Co........... 1,081,038
------------
3,119,088
------------
TRANSPORTATION -- RAILROAD -- 0.7%
35,000 CSX Corp........................ 1,890,001
34,500 Norfolk Southern Corp........... 1,063,031
29,500 Union Pacific Corp.............. 1,841,906
------------
4,794,938
------------
UTILITIES -- ELECTRIC POWER -- 3.0%
67,700 Baltimore Gas & Electric Co..... 2,306,031
129,200 Consolidated Edison Co. of New
York, Inc....................... 5,297,199
33,700 Detroit Edison Co............... 1,168,969
64,600 Dominion Resources, Inc......... 2,749,537
30,000 Entergy Corp.................... 898,125
92,300 First Energy Corp.*............. 2,676,700
16,800 Florida Power & Light, Inc...... 994,350
19,400 Houston Industries, Inc......... 517,738
15,400 Northern States Power Co........ 897,050
65,700 PacifiCorp...................... 1,794,431
44,600 PECO Energy Corp................ 1,081,550
35,100 Texas Utilities Co.............. 1,458,844
9,700 Union Electric Co............... 419,525
------------
22,260,049
------------
UTILITIES -- GAS DISTRIBUTION -- 0.2%
20,000 Eastern Enterprises............. 900,000
8,700 ONEOK Inc....................... 351,263
------------
1,251,263
------------
</TABLE>
Continued
31
<PAGE> 33
THE KENT FUNDS
GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- TELEPHONE -- 5.3%
293,200 AT&T Corp....................... $ 17,958,499
73,000 Bell Atlantic Corp.............. 6,643,000
94,700 BellSouth Corp.................. 5,332,794
87,901 SBC Communications, Inc......... 6,438,748
49,100 U.S. West, Inc.................. 2,215,638
------------
38,588,679
------------
TOTAL COMMON STOCKS............. 716,892,238
(Cost $607,045,067) ------------
COMMERCIAL PAPER -- 2.1%
AUTOMOTIVE -- 2.1%
$15,500,886 General Motors Acceptance Corp.,
5.65%, 1/2/98................... 15,500,886
------------
TOTAL COMMERCIAL PAPER 15,500,886
(Cost $15,500,886) ------------
TOTAL INVESTMENTS -- 99.9%.................. 732,393,124
(Cost $622,545,953)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.1%....................... 922,510
------------
TOTAL NET ASSETS -- 100.0%.................. $733,315,634
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $72,274.
Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $119,844,634
Unrealized depreciation...............
(10,069,737)
------------
Net unrealized appreciation...........
$109,774,897
============
</TABLE>
(b) Security has been deposited as initial margin on open futures contracts.
* Non-income producing security
ADR American Depositary Receipt
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING CURRENT MARKET
CONTRACTS CONTRACT TYPE POSITION VALUE
- --------- ------------------ ----------- -----------
<S> <C> <C> <C>
58 Standard & Poor's $13,921,880 $14,196,950
500, 3/19/98
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 34
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS -- 97.3%
ADVERTISING -- 0.6%
53,400 Catalina Market Corp.*.......... $ 2,469,750
66,300 True North Communications....... 1,640,925
------------
4,110,675
------------
AEROSPACE & DEFENSE -- 0.3%
35,800 Alliant Techsystems, Inc.*...... 1,995,850
------------
AEROSPACE/DEFENSE EQUIPMENT -- 1.2%
47,500 AAR Corp........................ 1,840,624
57,800 Aviall, Inc.*................... 863,388
69,100 Banner Aerospace, Inc.*......... 764,419
30,000 Curtiss-Wright Corp............. 1,089,375
48,800 Fairchild Corp., Class A*....... 1,213,900
100,000 Hexcel Corp.*................... 2,493,749
16,800 Whitehall Corp.*................ 302,400
32,600 Whittaker Corp.*................ 358,600
------------
8,926,455
------------
AGRICULTURAL OPERATIONS -- 0.0%
27,900 Orange Co., Inc................. 224,944
------------
AGRICULTURE -- 0.1%
18,600 Delta Pine & Land Co............ 567,300
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.3%
119,900 Fedders Corp.................... 749,375
20,800 National Presto Industries,
Inc............................. 822,900
69,400 Royal Appliance Manufacturing
Co.*............................ 459,775
------------
2,032,050
------------
AUDIO/VIDEO PRODUCTION -- 0.4%
48,280 Harman International Industries,
Inc............................. 2,048,883
182,369 Zenith Electronics Corp.*....... 991,631
------------
3,040,514
------------
AUTO PARTS -- 0.0%
6,900 Tower Automotive, Inc.*......... 290,231
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 1.2%
61,800 Arvin Industries, Inc........... 2,058,712
71,500 Detroit Diesel Corp.*........... 1,698,125
54,800 Smith (A.O.) Corp............... 2,315,299
21,200 Sparton Corp.*.................. 215,975
48,700 Standard Products Co............ 1,247,938
64,975 Titan International Inc......... 1,303,561
------------
8,839,610
------------
AUTO/TRUCK --
REPLACEMENT EQUIPMENT -- 0.3%
38,000 Standard Motor Products, Inc.... 857,375
41,225 Wynn's International, Inc....... 1,314,047
------------
2,171,422
------------
AUTOMOTIVE -- 0.0%
10,300 Polaris Industries, Inc......... 314,794
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BANKING -- 1.3%
57,800 BancorpSouth, Inc............... $ 2,731,049
50,900 CNB Bancshares, Inc............. 2,452,743
42,900 Commerce Bancorp, Inc........... 2,187,900
57,200 Hubco, Inc...................... 2,237,950
7,500 Irwin Financial Corp............ 314,063
------------
9,923,705
------------
BANKING & FINANCE -- 0.2%
44,400 Capmac Holdings, Inc............ 1,542,900
------------
BANKS -- NORTHEAST -- 0.4%
72,600 First Commonwealth Financial.... 2,545,538
21,800 Sterling Bancorp................ 523,200
------------
3,068,738
------------
BANKS -- SOUTHEAST -- 0.3%
5,300 Colonial Bancgroup, Inc......... 182,519
62,300 F & M National Corp............. 2,137,669
------------
2,320,188
------------
BROADCASTING/CABLE -- 0.5%
53,500 BET Holdings, Inc.*............. 2,922,438
12,000 Gray Communications Systems,
Inc............................. 315,000
35,600 Spelling Entertainment Group*... 249,200
------------
3,486,638
------------
BUILDING -- 0.9%
65,400 Calmat Co....................... 1,823,025
62,400 Centex Construction Products,
Inc............................. 1,879,800
40,800 Dravo Corp.*.................... 448,800
32,700 Lone Star Industries, Inc....... 1,737,188
15,500 Puerto Rican Cement Co.......... 777,906
------------
6,666,719
------------
BUILDING & CONSTRUCTION --
MISCELLANEOUS -- 0.4%
11,200 Ameron International Corp....... 708,400
37,050 Elcor Corp...................... 889,200
11,600 International Aluminum Co....... 362,500
32,800 Nortek, Inc.*................... 871,250
44,000 Robertson-Ceco Corp.*........... 429,000
------------
3,260,350
------------
BUILDING -- HEAVY CONSTRUCTION -- 0.5%
24,600 Dycom Industries, Inc.*......... 530,438
143,000 Morrison Knudsen Corp.*......... 1,394,250
37,700 Stone & Webster, Inc............ 1,767,187
------------
3,691,875
------------
BUILDING -- MAINTENANCE & SERVICE -- 0.2%
57,800 ABM Industries Inc.............. 1,766,513
------------
BUILDING -- MOBILE/MANUFACTURING &
RECREATIONAL VEHICLES -- 0.5%
30,500 Cavalier Homes, Inc............. 297,375
45,100 Coachmen Industries, Inc........ 972,468
28,600 Skyline Corp.................... 786,500
</TABLE>
Continued
33
<PAGE> 35
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUILDING -- MOBILE/MANUFACTURING &
RECREATIONAL VEHICLES (CONTINUED)
24,400 Thor Industries, Inc............ $ 837,225
68,900 Winnebago Industries, Inc....... 611,488
------------
3,505,056
------------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 1.0%
21,000 Beazer Homes USA, Inc.*......... 418,688
19,600 Continental Home Holding Corp... 788,900
107,000 Kaufman & Broad Home Corp....... 2,400,812
23,900 M/I Schottenstein Homes,
Inc.*........................... 448,125
52,900 MDC Holdings, Inc............... 796,806
44,800 Ryland Group, Inc............... 1,058,400
84,500 Standard-Pacific Corp........... 1,330,875
------------
7,242,606
------------
BUILDING PRODUCTS -- 0.1%
33,760 Republic Gypsum Co.............. 552,820
------------
BUILDING PRODUCTS -- AIR CONDITIONING/
HEAT -- 0.2%
24,100 Mestek, Inc.*................... 451,875
41,975 Watsco, Inc..................... 1,036,258
------------
1,488,133
------------
BUILDING PRODUCTS -- DOORS & TRUSSES -- 0.1%
103,900 Premdor, Inc.*.................. 961,075
------------
BUILDING PRODUCTS -- LIGHTING/FIXTURES -- 0.1%
45,000 Thomas Industries, Inc.......... 888,750
------------
BUILDING PRODUCTS -- RETAIL/WHOLESALE -- 0.3%
59,900 Hughes Supply, Inc.............. 2,092,756
------------
BUSINESS INFORMATION -- 0.6%
17,000 Duff & Phelps Credit Rating
Co.............................. 690,625
60,800 Metromail Corp.*................ 1,086,800
68,800 Primark Corp.*.................. 2,799,300
------------
4,576,725
------------
BUSINESS SERVICES -- 1.3%
72,600 ADVO, Inc.*..................... 1,415,700
52,400 Caribiner International,
Inc.*........................... 2,331,800
38,300 Fair Issac & Co., Inc........... 1,275,869
61,700 Franklin Covey Co.*............. 1,357,400
101,200 Interim Services, Inc.*......... 2,618,549
17,100 Union Corp.*.................... 537,581
------------
9,536,899
------------
CAPITAL GOODS -- 0.1%
18,600 Watts Industries Inc Class A.... 526,613
------------
CHEMICALS -- DIVERSIFIED -- 0.6%
44,222 B.F. Goodrich Co................ 1,832,470
60,700 ChemFirst, Inc.................. 1,714,775
57,413 Schawk, Inc., Class A........... 645,896
------------
4,193,141
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CHEMICALS -- PLASTIC -- 0.7%
68,300 Geon Co......................... $ 1,596,513
76,600 Spartech Corp................... 1,158,575
34,945 Tredegar Industries, Inc........ 2,302,001
------------
5,057,089
------------
CHEMICALS -- SPECIALTY -- 1.1%
55,600 Bush Boake Allen, Inc.*......... 1,456,025
28,500 Chemed Corp..................... 1,180,969
38,600 LeaRonal, Inc................... 907,100
67,200 Lilly Industries, Inc........... 1,386,000
30,300 McWhorter Technologies, Inc.*... 780,225
137,000 NL Industries, Inc.*............ 1,866,624
18,500 Oil-Dri Corp.................... 305,250
------------
7,882,193
------------
COAL -- 0.2%
85,300 Zeigler Coal Holding Co......... 1,391,456
------------
COMMERCIAL SERVICES -- 0.4%
20,300 Affiliated Computer Services --
Class A*........................ 534,144
10,800 CDI Corp.*...................... 494,100
11,400 Norrell Corp.................... 226,575
19,800 NOVA Corp.*..................... 495,000
86,700 Paymentech, Inc.*............... 1,278,825
------------
3,028,644
------------
COMPUTER SOFTWARE -- 1.8%
60,700 Bell & Howell Co.*.............. 1,468,181
210,000 Computervision Corp.*........... 800,625
60,000 Excalibur Technologies Corp.*... 513,750
17,100 Factset Research Systems*....... 525,825
129,500 Learning Co., Inc.*............. 2,080,093
44,900 Media 100, Inc.*................ 224,500
87,000 Microprose, Inc.*............... 190,313
18,300 National Data Corp.............. 661,088
135,000 Physician Computer Network,
Inc.*........................... 540,000
68,400 Platinum Software, Inc.*........ 803,700
29,400 Project Software & Development,
Inc.*........................... 690,900
25,100 Rainbow Technologies, Inc.*..... 727,900
15,800 Software Spectrum, Inc.*........ 187,625
88,500 SPS Transaction Services,
Inc.*........................... 1,996,780
41,200 State of the Art, Inc.*......... 669,500
114,300 Vanstar Corp.*.................. 1,293,019
27,700 Vmark Software, Inc.*........... 221,600
------------
13,595,399
------------
COMPUTERS -- GRAPHICS -- 0.1%
105,366 Chyron Corp.*................... 467,562
19,200 STB Systems, Inc.*.............. 422,400
------------
889,962
------------
COMPUTERS -- INTEGRATED SYSTEMS -- 0.3%
90,200 Cerner Corp.*................... 1,905,475
------------
</TABLE>
Continued
34
<PAGE> 36
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTERS -- MEMORY DEVICES -- 0.3%
68,911 Applied Magnetics Corp.*........ $ 766,635
49,300 Hutchinson Technology, Inc.*.... 1,078,438
49,400 Syquest Technology, Inc.*....... 165,181
------------
2,010,254
------------
COMPUTERS -- MICRO -- 0.2%
105,700 Data General Corp.*............. 1,843,144
------------
COMPUTERS -- OPTICAL RECOGNITION -- 0.2%
54,200 BancTec, Inc.*.................. 1,453,238
------------
COMPUTERS -- PERIPHERAL EQUIPMENT -- 0.8%
35,700 Analogic Corp................... 1,356,599
35,550 Davox Corp.*.................... 1,159,819
31,100 ENCAD, Inc.*.................... 855,250
24,300 MICROS Systems, Inc.*........... 1,093,500
69,500 Mylex Corp.*.................... 625,500
28,500 Par Technology Corp.*........... 258,281
24,200 Printronix, Inc.*............... 409,888
12,462 TransAct Technologies, Inc.*.... 138,640
12,400 Tridex Corp.*................... 60,450
------------
5,957,927
------------
COMPUTERS -- SERVICES -- 1.1%
61,800 Analysts International Corp..... 2,132,099
24,500 Broadway & Seymour, Inc.*....... 235,813
20,400 BTG, Inc.*...................... 201,450
64,950 Computer Horizons Corp.*........ 2,922,749
57,600 Computer Task Group, Inc........ 2,048,400
106,300 PSINet, Inc.*................... 544,788
------------
8,085,299
------------
CONSUMER GOODS & SERVICES -- 0.2%
102,100 Carter-Wallace Inc.............. 1,722,938
------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.6%
61,200 Department 56, Inc.*............ 1,759,499
49,900 Ekco Group, Inc.*............... 386,725
21,300 Jostens, Inc.................... 491,231
60,600 Mikasa, Inc..................... 882,488
47,550 Oneida, Ltd..................... 1,268,991
------------
4,788,934
------------
CONTAINERS -- METAL & GLASS -- 0.3%
37,400 United States Can Corp.*........ 631,125
43,700 Zero Corp....................... 1,294,613
------------
1,925,738
------------
CONTAINERS -- PAPER & PLASTIC -- 0.3%
77,300 ACX Technologies, Inc.*......... 1,889,019
------------
COSMETICS & TOILETRIES -- 0.4%
143,000 Playtex Products, Inc.*......... 1,465,750
54,400 Windmere-Durable Holding,
Inc............................. 1,227,400
------------
2,693,150
------------
DATA PROCESSING & REPRODUCTION -- 0.2%
67,700 Pegasystems, Inc.*.............. 1,366,694
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED -- 1.7%
41,850 Allied Products Corp............ $ 1,004,400
29,400 Bairnco Corp.................... 292,163
45,600 Clarcor, Inc.................... 1,350,900
17,700 Craig Corp.*.................... 359,531
90,800 Gencorp, Inc.................... 2,269,999
95,700 Griffon Corp.*.................. 1,399,613
52,850 Manitowoc Co., Inc.............. 1,717,625
19,500 Nashua Corp.*................... 229,125
41,500 Standex International Corp...... 1,462,875
99,300 Triarc Cos., Inc.*.............. 2,705,924
------------
12,792,155
------------
ELECTRICAL & ELECTRONIC -- 0.4%
22,800 Ametek, Inc..................... 615,600
28,500 Berg Electronics Corp.*......... 648,375
39,000 Integrated Process Equipment*... 614,250
9,600 MDU Resources Group, Inc........ 303,600
28,500 MEMC Electronic Materials,
Inc.*........................... 434,625
------------
2,616,450
------------
ELECTRICAL COMPONENTS --
SEMICONDUCTORS -- 1.4%
60,800 Cypress Semiconductor Corp.*.... 516,800
70,600 Dallas Semi-Conductors Corp..... 2,876,949
65,800 General Semiconductor, Inc.*.... 760,813
34,100 Integrated Circuit Systems,
Inc.*........................... 971,850
84,300 PMC-Sierra, Inc.*............... 2,613,299
66,200 Unitrode Corp.*................. 1,423,300
65,900 Zilog, Inc.*.................... 1,256,219
------------
10,419,230
------------
ELECTRICAL EQUIPMENT -- 0.3%
8,800 C&D Technologies, Inc........... 424,600
39,600 United Illuminating Co.......... 1,819,125
------------
2,243,725
------------
ELECTRONIC -- MANUFACTURING &
MACHINERY -- 0.5%
55,300 Kulicke & Soffa Industries,
Inc.*........................... 1,029,963
40,800 PRI Automation, Inc.*........... 1,178,100
34,600 SpeedFam International, Inc.*... 916,900
27,600 Watkins-Johnson Co.............. 715,875
------------
3,840,838
------------
ELECTRONIC -- MILITARY -- 0.1%
34,800 ESCO Electronics Corp.*......... 587,250
36,100 United Industrial Corp.......... 392,588
------------
979,838
------------
ELECTRONIC -- MISCELLANEOUS
COMPONENTS -- 2.1%
24,100 ACT Manufacturing, Inc.*........ 340,413
67,300 BMC Industries, Inc............. 1,085,213
46,800 California Amplifier, Inc.*..... 99,450
64,900 Computer Products, Inc.*........ 1,468,362
44,256 CTS Corp........................ 1,413,425
24,100 Del Global Technologies
Corp.*.......................... 241,000
</TABLE>
Continued
35
<PAGE> 37
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC -- MISCELLANEOUS COMPONENTS
(CONTINUED)
30,900 Hadco Corp.*.................... $ 1,398,225
34,200 Innovex, Inc.................... 784,463
56,700 Littlefuse, Inc.*............... 1,410,413
61,300 Oak Industries, Inc.*........... 1,819,843
47,500 OEA, Inc........................ 1,374,531
37,700 Park Electrochemical Corp....... 1,069,738
68,600 Photronics Corp.*............... 1,663,549
35,200 Plexus Corp.*................... 523,600
23,500 RadiSys Corp.*.................. 875,375
17,900 Reptron Electronics, Inc.*...... 185,713
------------
15,753,313
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 0.3%
29,400 Cable Design Technologies*...... 1,142,925
35,100 International Rectifier
Corp.*.......................... 414,619
31,400 Technitrol Inc.................. 942,000
------------
2,499,544
------------
ELECTRONIC MEASURING MACHINES -- 0.5%
58,200 Fluke Corp...................... 1,516,838
78,300 Genrad, Inc.*................... 2,363,680
32,500 Microtest, Inc.*................ 150,313
------------
4,030,831
------------
ELECTRONIC PARTS -- DISTRIBUTION -- 0.6%
29,418 Bell Industries, Inc.*.......... 404,498
74,900 Kent Electronics Corp.*......... 1,881,862
51,500 Marshall Industries*............ 1,545,000
29,200 Nu Horizons Electronics
Corp.*.......................... 182,500
23,501 Sterling Electronics Corp.*..... 490,583
------------
4,504,443
------------
ELECTRONIC PRODUCTS -- MISCELLANEOUS -- 0.7%
43,900 Aeroflex, Inc.*................. 384,125
23,500 American Precision
Industries*..................... 489,094
31,300 Electronic Retailing Systems
International, Inc.*............ 136,938
26,400 Franklin Electronic Publishers,
Inc.*........................... 330,000
31,700 Kollmorgen Corp................. 580,506
27,500 Kopin Corp.*.................... 462,344
80,600 MagneTek, Inc.*................. 1,571,700
43,100 Recoton Corp.*.................. 581,850
19,700 SL Industries, Inc.............. 232,706
25,300 Three-Five Systems, Inc.*....... 417,450
------------
5,186,713
------------
ENERGY -- ALTERNATIVE SOURCES -- 0.1%
33,600 Trigen Energy Corp.............. 663,600
------------
ENGINEERING -- RESEARCH & DEVELOPMENT
SERVICES -- 0.1%
17,800 Corrpro Companies, Inc.*........ 262,550
26,490 URS Corp.*...................... 412,251
------------
674,801
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT -- 0.1%
19,200 Vail Resorts, Inc.*............. $ 498,000
------------
FERTILIZERS -- 0.2%
63,636 Mississippi Chemical Corp....... 1,161,357
------------
FINANCE -- 1.1%
20,000 Aames Financial Corp............ 258,750
31,000 CB Commercial Real Estate
Services Group, Inc.*........... 997,813
41,700 Everen Capital Corp............. 1,980,750
109,100 Imperial Credit Industries,
Inc.*........................... 2,236,549
39,500 National Discount Brokers
Group*.......................... 525,844
14,100 Oppenheimer Capital, L.P........ 426,525
7,500 Trans Financial, Inc............ 291,563
75,100 United Cos. Financial Corp...... 1,164,050
------------
7,881,844
------------
FINANCIAL -- CONSUMER LOANS -- 0.4%
123,500 Arcadia Financial Ltd.*......... 918,531
45,400 Student Loan Corp............... 2,241,625
------------
3,160,156
------------
FINANCIAL -- INVESTMENT BANKERS -- 1.8%
28,200 Advest Group, Inc............... 696,188
38,750 Inter-Regional Financial Group,
Inc............................. 2,673,749
17,900 Interstate/Johnson Lane, Inc.... 474,350
69,800 Jefferies Group, Inc............ 2,857,437
59,300 McDonald & Co. Investments,
Inc............................. 1,682,638
100,325 Morgan Keegan, Inc.............. 2,539,476
61,500 Piper Jaffray Cos., Inc......... 2,240,906
------------
13,164,744
------------
FINANCIAL -- INVESTMENT MANAGEMENT
COS. -- 0.5%
26,400 Atlanta Sosnoff Capital Corp.... 316,800
107,300 Insignia Financial Group,
Inc.*........................... 2,467,900
144,500 Phoenix Duff & Phelps Corp...... 1,156,000
------------
3,940,700
------------
FINANCIAL -- LEASING COMPANY -- 0.6%
36,200 DVI, Inc.*...................... 669,700
81,250 Interpool, Inc.................. 1,203,516
92,930 National Auto Credit, Inc.*..... 493,691
123,100 Rollins Truck Leasing Corp...... 2,200,412
------------
4,567,319
------------
FINANCIAL -- MISCELLANEOUS SERVICES -- 0.2%
13,600 Hallwood Group, Inc.*........... 506,600
20,200 Stewart Information Services
Corp............................ 585,800
28,500 Transmedia Network, Inc......... 147,844
------------
1,240,244
------------
FINANCIAL -- SAVINGS & LOAN -- 1.9%
83,475 Commercial Federal Corp......... 2,968,579
87,130 Downey Financial Corp........... 2,477,759
25,826 First Republic Bancorp, Inc.*... 824,818
50,650 Firstbank Puerto Rico........... 1,725,266
</TABLE>
Continued
36
<PAGE> 38
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL -- SAVINGS & LOAN (CONTINUED)
34,700 Firstfed Financial Corp.*....... $ 1,344,625
69,033 New York Bancorp, Inc........... 2,739,746
18,100 PonceBank....................... 341,638
80,273 Westcorp........................ 1,354,607
------------
13,777,038
------------
FINANCIAL -- SMALL BUSINESS INVESTMENT
CO. & COMMERCIAL -- 0.5%
61,200 PEC Israel Economic Corp.*...... 1,323,450
82,000 Safeguard Scientifics, Inc...... 2,572,750
------------
3,896,200
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.1%
12,300 Dominick's Supermarkets,
Inc.*........................... 448,950
------------
FOOD -- DIVERSIFIED -- 0.5%
54,400 Earthgrains Co.................. 2,556,800
41,500 Smucker (J.M.) Co............... 954,500
------------
3,511,300
------------
FOOD -- FLOUR & GRAIN -- 0.2%
50,600 International Multi-Foods
Corp............................ 1,432,613
------------
FOOD -- MEAT PRODUCTS -- 0.4%
85,600 Hudson Foods, Inc., Class A..... 1,760,150
77,500 Pilgrim's Pride Corp............ 1,206,094
------------
2,966,244
------------
FOOD PRODUCTS -- 90.1%
8,000 Suiza Foods Corp.*.............. 476,500
------------
FURNITURE -- 0.3%
40,387 Bush Industries, Inc............ 1,050,062
16,800 Chromcraft Revington, Inc.*..... 537,600
36,250 Rowe Furniture Corp............. 290,000
24,900 Shelby Williams Industries,
Inc............................. 410,850
------------
2,288,512
------------
GLASS PRODUCTS -- 0.2%
43,800 Libbey, Inc..................... 1,658,925
------------
HEALTH CARE -- 0.8%
47,600 Apria Healthcare Group, Inc.*... 639,625
23,700 Harborside Health*.............. 468,075
40,800 Orthodontic Centers of
America*........................ 678,300
165,400 Paracelsus Health*.............. 558,225
142,692 Paragon Health Network*......... 2,791,412
23,100 Renal Treatment Centers,
Inc.*........................... 834,488
------------
5,970,125
------------
HOTELS & LODGING -- 1.0%
9,200 Capstar Hotel Co.*.............. 315,675
84,450 Marcus Corp..................... 1,557,047
107,500 Prime Hospitality Corp.*........ 2,190,312
79,900 Red Roof Inns, Inc.*............ 1,223,469
54,000 Wyndham Hotel*.................. 2,180,250
------------
7,466,753
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HOUSEHOLD PRODUCTS -- 0.0%
7,100 La-Z-Boy Inc.................... $ 306,188
------------
INDUSTRIAL -- AUTOMOTIVE/ROBOTICS -- 0.4%
28,400 Esterline Technologies Corp.*... 1,022,400
76,000 Gerber Scientific, Inc.......... 1,510,500
35,500 Medar, Inc.*.................... 190,813
------------
2,723,713
------------
INDUSTRIAL GOODS & SERVICES -- 0.5%
63,800 Genl Chemical................... 1,706,650
25,500 Terra Industries Inc............ 333,094
77,400 U S Rentals, Inc.*.............. 1,818,900
------------
3,858,644
------------
INSTRUMENTS -- CONTROL -- 0.2%
9,400 Flowserve Corp.................. 262,613
39,600 Pacific Scientific Co........... 950,400
------------
1,213,013
------------
INSTRUMENTS -- SCIENTIFIC -- 0.6%
33,600 Dionex Corp.*................... 1,688,400
50,300 Dynatech Corp.*................. 2,357,813
31,700 EG&G, Inc....................... 659,756
------------
4,705,969
------------
INSURANCE -- 1.7%
77,300 Allied Group, Inc............... 2,212,713
29,855 Amerus Life Holdings Inc........ 1,100,887
50,200 CNA Surety Corp.*............... 774,963
32,900 Highlands Insurance Group*...... 933,538
62,900 Lasalle Re Holdings Ltd......... 2,225,087
43,100 Mid Atlantic Medical Services,
Inc.*........................... 549,525
46,900 NAC Re Corp..................... 2,289,305
62,500 Nationwide Financial Services... 2,257,812
9,100 PXRE Corp....................... 302,006
------------
12,645,836
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.4%
54,200 Penncorp Financial Group,
Inc............................. 1,934,263
25,550 RLI Corp........................ 1,272,709
------------
3,206,972
------------
INSURANCE -- BROKERS -- 0.6%
58,500 Arthur J. Gallagher & Co........ 2,014,593
43,300 Blanch (E.W.) Holdings, Inc..... 1,491,144
43,800 Hilb, Rogal & Hamilton Co....... 845,888
------------
4,351,625
------------
INSURANCE -- LIFE -- 1.5%
111,700 American Annuity Group, Inc..... 2,457,400
45,100 American Heritage Life
Investment Corp................. 1,623,600
51,510 Delphi Financial Group*......... 2,317,950
76,800 John Alden Financial Corp....... 1,843,200
41,800 Life Re Corp.................... 2,724,837
------------
10,966,987
------------
</TABLE>
Continued
37
<PAGE> 39
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INSURANCE -- MULTI-LINE -- 1.3%
46,500 Enhance Financial Services
Group, Inc...................... $ 2,766,749
62,100 FBL Financial Group Inc., Class
A............................... 2,491,763
51,600 Fidelity National Financial,
Inc............................. 1,606,047
100,000 Mutual Risk Management Ltd...... 2,993,749
------------
9,858,308
------------
INSURANCE -- PROPERTY & CASUALTY -- 2.7%
49,600 Acceptance Insurance Cos.*...... 1,199,700
42,200 Capital Re Corp................. 2,619,037
32,600 Executive Risk, Inc............. 2,275,887
37,300 First American Financial
Corp............................ 2,755,537
77,380 Frontier Insurance Group,
Inc............................. 1,770,068
93,500 HCC Insurance Holdings, Inc..... 1,986,875
39,100 MMI Cos., Inc................... 982,388
33,400 Nymagic, Inc.................... 920,588
16,392 USF&G Corp...................... 361,643
49,050 Vesta Insurance Group, Inc...... 2,912,343
58,300 Zenith National Insurance Co.... 1,501,225
------------
19,285,291
------------
LASERS -- SYSTEMS/COMPONENTS -- 0.4%
27,900 Coherent, Inc.*................. 979,988
12,700 Cyberoptics Corp.*.............. 288,925
28,600 Electro Scientific Industries,
Inc.*........................... 1,086,800
37,800 VISX, Inc.*..................... 836,325
------------
3,192,038
------------
LEISURE -- 0.0%
20,900 Coleman*........................ 335,706
------------
LEISURE & RECREATION PRODUCTS -- 0.5%
25,200 Coastcast Corp.*................ 349,650
38,000 Huffy Corp...................... 513,000
47,530 K2, Inc......................... 1,081,308
76,400 Sturm, Ruger & Co., Inc......... 1,408,625
------------
3,352,583
------------
LEISURE & RECREATION SERVICES -- 0.3%
32,100 Carmike Cinemas, Inc.*.......... 920,869
314,300 Cineplex Odeon Corp.*........... 392,875
22,300 GC Cos., Inc.*.................. 1,056,462
------------
2,370,206
------------
LEISURE & RECREATION/GAMING -- 0.9%
129,900 Aztar Corp.*.................... 811,875
173,400 Boyd Gaming Corp.*.............. 1,148,775
121,550 Grand Casinos, Inc.*............ 1,656,119
27,900 Harveys Casino Resorts*......... 578,925
25,300 Jackpot Enterprises, Inc........ 286,206
26,400 Midway Games, Inc.*............. 480,150
46,200 Showboat, Inc................... 1,357,125
68,700 Trump Hotels & Casino Resorts,
Inc.*........................... 459,431
------------
6,778,606
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
LINEN SUPPLY & RELATED -- 0.3%
26,000 Angelica Corp................... $ 588,250
58,200 Unifirst Corp................... 1,633,238
------------
2,221,488
------------
MACHINE TOOLS & RELATED PRODUCTS -- 0.5%
37,700 Applied Power, Inc.............. 2,601,300
23,600 Brown & Sharpe Manufacturing
Co.*............................ 240,425
30,400 Gleason Corp.................... 818,900
------------
3,660,625
------------
MACHINERY -- CONSTRUCTION/MINING -- 0.4%
14,600 Christiana Cos., Inc.*.......... 578,525
55,400 CMI Corp., Class A.............. 287,388
44,050 Commercial Intertech Corp....... 914,038
40,600 Terex Corp.*.................... 954,099
------------
2,734,050
------------
MACHINERY -- ELECTRICAL -- 0.2%
40,157 Kuhlman Corp.................... 1,571,143
------------
MACHINERY -- FARM -- 0.1%
27,400 Alamo Group Inc................. 594,238
------------
MACHINERY -- GENERAL INDUSTRIAL -- 1.3%
40,500 Chart Industries, Inc........... 923,906
64,400 Global Industrial Technologies,
Inc.*........................... 1,090,775
49,325 Graco, Inc...................... 1,840,438
65,025 Idex Corp....................... 2,267,746
23,700 Katy Industries, Inc............ 482,888
101,266 Paxar Corp.*.................... 1,500,003
29,800 Scotsman Industries, Inc........ 728,238
10,100 Sequa Corp., Class B*........... 747,400
7,400 Twin Disc, Inc.................. 242,350
------------
9,823,744
------------
MACHINERY -- MATERIAL HANDLING -- 0.4%
62,600 Interlake Corp.*................ 293,438
23,700 Nacco Industries, Inc........... 2,540,343
------------
2,833,781
------------
MANUFACTURING -- CAPITAL GOODS -- 0.1%
17,200 Imation Corp.*.................. 275,200
21,300 Roper Industries, Inc........... 601,725
------------
876,925
------------
MATERIALS -- 0.1%
17,600 Longview Fibre Co............... 267,300
7,500 OM Group, Inc................... 274,688
------------
541,988
------------
MEDICAL -- BIOMEDICAL/GENETIC -- 0.2%
41,600 Diagnostic Products Corp........ 1,154,400
52,889 Molecular Biosystems, Inc.*..... 449,557
------------
1,603,957
------------
</TABLE>
Continued
38
<PAGE> 40
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL -- BIOTECHNOLOGY -- 0.1%
29,800 Cryolife, Inc.*................. $ 406,025
------------
MEDICAL -- DRUGS -- 0.3%
65,400 Alpharma, Inc................... 1,422,450
42,060 Vitalink Pharmacy Services,
Inc.*........................... 1,014,698
------------
2,437,148
------------
MEDICAL -- HEALTH MEDICAL
ORGANIZATION -- 0.5%
41,200 PHP Healthcare Corp.*........... 620,575
53,500 Sierra Health Services, Inc.*... 1,798,938
41,400 United Wisconsin Services,
Inc............................. 1,066,050
------------
3,485,563
------------
MEDICAL -- HOSPITAL -- 0.4%
45,200 Healthplan Services Corp........ 949,200
46,900 Pediatrix Medical Group,
Inc.*........................... 2,004,975
------------
2,954,175
------------
MEDICAL -- HOSPITAL MANAGEMENT &
SERVICES -- 0.0%
82,100 Physicians Resource Group,
Inc.*........................... 359,188
------------
MEDICAL -- HOSPITAL SERVICES -- 0.3%
26,700 Magellan Health Services,
Inc.*........................... 574,050
89,400 Quest Diagnostics, Inc.*........ 1,508,625
------------
2,082,675
------------
MEDICAL -- NURSING HOMES -- 0.2%
58,100 Integrated Health Services,
Inc............................. 1,811,994
------------
MEDICAL -- OUTPATIENT/HOME CARE -- 0.6%
126,900 Coram Healthcare Corp.*......... 428,288
78,700 Genesis Health Ventures,
Inc.*........................... 2,075,713
165,100 NovaCare, Inc.*................. 2,156,618
------------
4,660,619
------------
MEDICAL -- WHOLESALE DRUG -- 0.1%
35,300 Bindley Western Industries,
Inc............................. 1,089,888
------------
MEDICAL EQUIPMENT & SUPPLIES -- 0.0%
27,700 Oakley, Inc.*................... 251,031
------------
MEDICAL INSTRUMENTS -- 0.5%
84,700 Acuson Corp.*................... 1,402,844
46,560 Elscint, Ltd.*.................. 372,480
72,690 Graham-Field Health Products,
Inc.*........................... 1,213,014
38,800 OEC Medical Systems, Inc.*...... 773,575
------------
3,761,913
------------
MEDICAL PRODUCTS -- 0.5%
45,800 BEC Group, Inc.*................ 271,938
83,200 Haemonetics Corp.*.............. 1,164,800
24,800 Maxxim Medical, Inc.*........... 539,400
96,200 Owens & Minor, Inc.............. 1,394,900
------------
3,371,038
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL SUPPLIES -- 0.1%
22,700 Sola International, Inc.*....... $ 737,750
------------
MEDICAL/DENTAL SUPPLIES -- 0.8%
82,000 Ballard Medical Products........ 1,988,500
35,500 Cooper Cos, Inc.*............... 1,451,063
57,100 Sunrise Medical, Inc.*.......... 881,481
50,000 West Co., Inc................... 1,487,500
------------
5,808,544
------------
METAL -- GOLD -- 0.2%
107,800 Agnico-Eagle Mines, Ltd......... 586,163
73,800 Glamis Gold, Ltd................ 272,138
148,100 Hecla Mining Co.*............... 731,243
------------
1,589,544
------------
METAL -- IRON -- 0.4%
34,000 Cleveland Cliffs, Inc........... 1,557,625
125,300 National Steel Corp.*........... 1,448,781
------------
3,006,406
------------
METAL -- MISCELLANEOUS -- 0.3%
47,200 Brush Wellman, Inc.............. 1,156,400
21,400 Tremont Corp.*.................. 1,118,150
1 Zemex Corp.*.................... 1
------------
2,274,551
------------
METAL -- NON-FERROUS -- 0.2%
131,400 Kaiser Aluminum Corp.*.......... 1,157,963
------------
METAL -- PROCESSING & FABRICATION -- 0.7%
25,000 Amcast Industrial Corp.......... 573,438
26,300 Ampco-Pittsburgh Corp........... 514,494
29,200 Chase Industries, Inc.*......... 744,600
44,533 Commercial Metals Co............ 1,405,572
24,600 Huntco, Inc., Class A........... 415,125
6,000 Mueller Industries, Inc.*....... 354,000
41,100 Wolverine Tube, Inc.*........... 1,274,100
------------
5,281,329
------------
METAL -- SILVER -- 0.1%
63,400 Coeur d'Alene Mines Corp.*...... 570,600
516,672 Sunshine Mining & Refining
Co.*............................ 516,672
------------
1,087,272
------------
METAL PRODUCTS -- DISTRIBUTION -- 0.4%
53,925 Applied Industrial Technology,
Inc............................. 1,442,493
45,450 Reliance Steel & Aluminum Co.... 1,352,138
------------
2,794,631
------------
METAL PRODUCTS -- FASTENERS -- 0.3%
34,500 SPS Technologies, Inc.*......... 1,505,062
13,800 TransTechnology Corp............ 390,713
------------
1,895,775
------------
</TABLE>
Continued
39
<PAGE> 41
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OFFICE AUTOMATION & EQUIPMENT -- 0.3%
17,000 Daisytek International Corp.*... $ 590,750
34,300 In Focus Systems, Inc.*......... 1,041,863
9,200 Standard Register Co............ 319,700
------------
1,952,313
------------
OFFICE SUPPLIES & FORMS -- 0.7%
46,600 American Business Products,
Inc............................. 1,007,725
29,700 BT Office Products
International*.................. 230,175
31,500 CSS Industries, Inc.*........... 1,004,063
46,700 Ennis Business Forms, Inc....... 431,975
43,400 Hunt Manufacturing Corp......... 1,028,038
42,500 New England Business Service,
Inc............................. 1,434,374
------------
5,136,350
------------
OIL & GAS -- 0.1%
9,600 Barrett Resources Corp.*........ 290,400
5,400 Seacor Holdings, Inc.*.......... 325,350
------------
615,750
------------
OIL & GAS -- DRILLING -- 0.4%
180,200 Parker Drilling Co.*............ 2,196,188
89,020 Zapata Corp..................... 600,885
------------
2,797,073
------------
OIL -- PRODUCTION/PIPELINE -- 0.5%
88,400 Aquila Gas Pipeline Corp........ 1,138,150
101,200 Kaneb Services, Inc.*........... 524,975
7,900 Northern Border Partners,
L.P............................. 268,600
80,000 Western Gas Resources, Inc...... 1,770,000
------------
3,701,725
------------
OIL -- U.S. EXPLORATION & PRODUCTION -- 2.5%
66,000 Berry Petroleum Co.............. 1,150,875
68,700 Cabot Oil & Gas Corp............ 1,335,356
75,700 Cross Timers Oil Co............. 1,887,769
53,000 HS Resources, Inc.*............. 732,063
71,900 KCS Energy, Inc................. 1,491,925
83,600 Louis Dreyfus Natural Gas*...... 1,562,275
97,700 Newfield Exploration Co.*....... 2,277,630
32,000 Nuevo Energy Co.*............... 1,304,000
86,000 Snyder Oil Corp................. 1,569,500
36,000 Stone Energy Corp.*............. 1,206,000
50,036 Swift Energy Co.*............... 1,053,883
103,800 Vintage Petroleum, Inc.......... 1,972,199
77,400 Wainoco Oil Corp.*.............. 614,363
24,700 Wiser Oil Co.................... 348,888
------------
18,506,726
------------
OIL -- U.S. INTEGRATED -- 0.1%
13,600 Howell Corp..................... 235,450
26,100 USX-Delhi Group................. 535,050
------------
770,500
------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.1%
51,300 Daniel Industries, Inc.......... 987,525
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OIL REFINING -- 0.7%
38,100 Getty Realty Corp............... $ 842,963
33,500 Giant Industries, Inc........... 636,500
107,900 Quaker State Corp............... 1,537,575
80,600 Tesoro Petroleum Corp.*......... 1,249,300
21,600 Tokheim Corp.*.................. 446,850
37,050 World Fuel Services Corp........ 778,050
------------
5,491,238
------------
OIL-FIELD SERVICES -- 0.6%
72,600 Oceaneering International,
Inc.*........................... 1,433,850
87,600 RPC Energy Services, Inc........ 1,034,775
64,600 Seitel, Inc.*................... 1,106,275
73,800 Unit Corp.*..................... 710,325
------------
4,285,225
------------
PAPER & RELATED PRODUCTS -- 0.2%
6,500 Buckeye Technologies, Inc.*..... 300,625
8,000 Chesapeake Corp................. 275,000
35,100 Paragon Trade Brands, Inc.*..... 451,913
38,700 Pope & Talbot, Inc.............. 582,918
------------
1,610,456
------------
PHOTOGRAPHY -- 0.1%
39,900 CPI Corp........................ 902,738
------------
POLLUTION CONTROL -- 0.9%
114,700 Calgon Carbon Corp.............. 1,233,025
61,300 Dames & Moore, Inc.............. 812,225
34,700 Imco Recycling, Inc............. 557,369
171,400 Laidlaw Environmental Services,
Inc.*........................... 835,575
51,100 Lydall, Inc.*................... 996,450
76,600 OHM Corp.*...................... 584,075
41,200 Osmonics, Inc.*................. 651,475
35,500 Zurn Industries, Inc............ 1,116,031
------------
6,786,225
------------
PRECIOUS METALS -- JEWELRY -- 0.2%
38,100 Handy & Harman.................. 1,314,450
------------
PRINTING & PUBLISHING -- 0.0%
17,100 Journal Register Co.*........... 359,100
------------
PRINTING -- COMMERCIAL -- 0.0%
51,800 American Banknote Corp.*........ 259,000
------------
PROTECTION -- SAFETY -- 0.5%
63,200 Borg-Warner Security Corp.*..... 1,113,900
41,725 Wackenhut Corp., Class A........ 967,498
64,100 Wackenhut Corrections Corp.*.... 1,722,688
------------
3,804,086
------------
PUBLISHING -- BOOKS -- 0.4%
46,200 John Wiley & Sons, Inc.......... 2,506,350
46,300 Thomas Nelson, Inc.............. 535,344
------------
3,041,694
------------
</TABLE>
Continued
40
<PAGE> 42
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PUBLISHING -- PERIODICALS -- 0.2%
117,400 American Media, Inc.*........... $ 909,850
57,100 Playboy Enterprises, Inc.*...... 895,756
------------
1,805,606
------------
REAL ESTATE -- 0.3%
65,100 Grubb & Ellis Co.*.............. 891,056
58,300 Webb -- (Del) Corp.............. 1,515,800
------------
2,406,856
------------
RESTAURANTS -- 0.9%
30,600 Cooker Restaurant Corp.......... 292,613
116,400 Foodmaker, Inc.*................ 1,753,274
69,700 Luby's Cafeteria, Inc........... 1,224,106
19,000 Morton's Restaurant Group,
Inc.*........................... 384,750
31,000 Piccadilly Cafeterias, Inc...... 406,875
60,200 Sbarro, Inc..................... 1,584,013
78,000 Sizzler International, Inc.*.... 209,625
73,900 TCBY Enterprises, Inc........... 558,869
33,775 UNO Restaurant Corp.*........... 232,203
------------
6,646,328
------------
RETAIL -- 0.2%
10,100 Brylane, Inc.*.................. 497,425
17,700 Footstar, Inc.*................. 475,688
23,600 Heilig Meyers Co................ 283,200
6,800 MSC Industrial Direct Co. --
Class A*........................ 288,150
13,400 Talbots Inc..................... 242,875
------------
1,787,338
------------
RETAIL -- APPAREL/SHOES -- 0.8%
75,700 Ann Taylor Stores Corp.*........ 1,012,487
132,480... Burlington Coat Factory
Warehouse Corp.................. 2,177,639
147,000 CML Group, Inc.*................ 486,938
40,000 Cole (Kenneth) Productions,
Inc.*........................... 642,500
28,300 Gottschalks, Inc.*.............. 237,013
97,700 Hartmarx Corp.*................. 744,963
81,800 Starter Corp.*.................. 250,513
52,200 Syms Corp.*..................... 619,875
------------
6,171,928
------------
RETAIL -- CONSUMER ELECTRONICS -- 0.1%
98,900 Handleman Co.*.................. 686,119
27,500 Rex Stores Corp.*............... 281,875
------------
967,994
------------
RETAIL -- DISCOUNT -- 1.0%
16,100 Alexander's, Inc.*.............. 1,462,081
66,800 Mac Frugal's Bargains --
Close-Outs, Inc.*............... 2,747,150
87,000 Shopko Stores, Inc.*............ 1,892,250
62,600 Smart & Final, Inc.............. 1,126,800
------------
7,228,281
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- GENERAL MERCHANDISE -- 1.7%
83,600 AmeriCredit Corp.*.............. $ 2,314,674
85,900 Cash America Intl., Inc......... 1,111,331
35,200 Cole National Corp.*............ 1,053,800
54,700 Fabri-Centers of America,
Inc.*........................... 1,220,494
126,800 Furniture Brands International,
Inc.*........................... 2,599,399
63,500 Hancock Fabrics, Inc............ 920,750
67,500 Jenny Craig, Inc.*.............. 510,469
64,350 Russ Berrie & Co., Inc.......... 1,689,188
95,550 The Sports Authority, Inc.*..... 1,409,363
------------
12,829,468
------------
RETAIL -- HOME FURNISHINGS -- 0.1%
111,500 Bombay Co., Inc.*............... 515,688
------------
RETAIL -- JEWELRY -- 0.4%
118,800 Claire's Stores, Inc............ 2,309,175
20,300 Zale Corp.*..................... 466,900
------------
2,776,075
------------
RETAIL -- MAIL ORDER -- 0.2%
72,800 National Media Corp.*........... 236,600
52,900 Stanhome Inc.................... 1,358,869
------------
1,595,469
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.3%
48,900 Carson Pirie Scott & Co.*....... 2,451,113
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.1%
93,500 Value City Department Stores,
Inc.*........................... 829,813
------------
RETAIL -- SPECIAL LINE -- 0.2%
8,500 Budget Group, Inc. -- Class
A*.............................. 293,781
15,400 Global Directmail, Inc.*........ 266,613
8,000 Linens 'n Things, Inc.*......... 349,000
26,900 Ruddick Corp.................... 469,069
------------
1,378,463
------------
RETAIL -- SUPERMARKETS -- 0.0%
32,100 Penn Traffic Co.*............... 264,825
------------
RETAIL/WHOLESALE -- AUTO PARTS -- 0.1%
48,900 Discount Auto Parts, Inc.*...... 935,213
------------
RUBBER & PLASTICS -- 0.2%
51,800 Furon Co........................ 1,081,325
36,100 Lamson & Sessions Co.*.......... 209,831
------------
1,291,156
------------
RUBBER -- TIRES -- 0.0%
25,400 China Tire Holdings, Ltd........ 206,375
------------
SCHOOLS -- 0.3%
27,100 Berlitz International, Inc.*.... 704,600
77,200 ITT Educational Services,
Inc.*........................... 1,722,525
------------
2,427,125
------------
</TABLE>
Continued
41
<PAGE> 43
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SHOES & RELATED APPAREL -- 0.5%
25,175 Barry(R.G.) Corp.*.............. $ 292,659
49,800 Brown Group, Inc................ 662,963
45,300 Converse, Inc.*................. 271,800
72,500 Genesco, Inc.*.................. 924,375
29,900 Timberland Co., Class A*........ 1,736,069
------------
3,887,866
------------
SOAP & CLEANING PREPARATIONS -- 0.4%
54,800 Church & Dwight Co., Inc........ 1,537,825
21,600 NCH Corp........................ 1,414,800
------------
2,952,625
------------
STEEL -- PIPES & TUBES -- 0.2%
40,000 NS Group, Inc.*................. 685,000
40,000 Quanex Corp..................... 1,125,000
------------
1,810,000
------------
STEEL -- PRODUCERS -- 0.9%
308,600 Armco, Inc.*.................... 1,523,713
82,900 Birmingham Steel Corp........... 1,305,675
6,600 Carpenter Technology............ 317,213
83,100 Chaparral Steel Co.............. 1,282,856
16,600 Inland Steel Industries, Inc.... 284,275
63,200 Rouge Industries Inc............ 766,300
116,700 Weirton Steel Corp.*............ 313,631
72,600 WHX Corp.*...................... 862,125
------------
6,655,788
------------
STEEL -- SPECIALTY -- 0.8%
112,000 J & L Specialty Steel, Inc...... 1,127,000
42,800 Lukens, Inc..................... 1,222,475
45,300 Material Sciences Corp.*........ 552,094
76,100 Oregon Steel Mills, Inc......... 1,621,881
58,630 RMI Titanium Co.*............... 1,172,600
------------
5,696,050
------------
TECHNOLOGY -- 0.1%
41,300 DBT Online, Inc.*............... 1,029,919
------------
TELECOMMUNICATIONS -- 0.1%
14,100 Boston Technology, Inc.*........ 354,263
12,800 Mastec, Inc.*................... 292,800
------------
647,063
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 1.3%
70,300 American Mobile Satelllite
Corp.*.......................... 492,100
37,200 C-Cor Electronics, Inc.......... 571,950
27,600 Centigram Communications
Corp.*.......................... 467,475
42,000 CommNet Cellular, Inc.*......... 1,493,625
68,100 General DataComm Industries,
Inc.*........................... 319,219
57,300 InterVoice, Inc.*............... 429,750
69,400 Network Equipment Technologies,
Inc.*........................... 1,014,975
57,800 Plantronics, Inc.*.............. 2,311,999
24,000 Superior Telecom Inc.*.......... 829,500
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- EQUIPMENT (CONTINUED)
20,300 Tech-Sym Corp.*................. $ 516,381
35,200 Telco Systems, Inc.*............ 341,000
100,500 Telular Corp.*.................. 244,969
45,900 Titan Corp.*.................... 286,875
------------
9,319,818
------------
TELECOMMUNICATIONS -- SERVICES AND
EQUIPMENT -- 0.4%
75,800 Allen Telecom Inc.*............. 1,397,563
25,800 Federal Signal Corp............. 557,925
36,100 Smartalk Teleservices, Inc.*.... 821,275
------------
2,776,763
------------
TEXTILE -- APPAREL -- 0.8%
63,000 Authentic Fitness Corp.......... 1,161,563
21,700 Burlington Industries, Inc.*.... 299,731
26,500 Chic by H.I.S., Inc.*........... 193,781
66,500 Delta Woodside Industries,
Inc............................. 324,188
57,650 Kellwood Co..................... 1,729,499
24,700 Oxford Industries, Inc.......... 802,750
75,900 Phillips-Van Heusen Corp........ 1,081,575
81,000 Tultex Corp.*................... 329,063
39,200 Worldtex, Inc.*................. 311,150
------------
6,233,300
------------
TEXTILE -- HOME FURNISHINGS -- 0.4%
29,800 Cort Business Services Corp.*... 1,186,413
21,700 Crown Crafts, Inc............... 339,063
47,700 O' Sullivan Industries*......... 477,000
37,013 Pillowtex Corp.................. 1,290,838
------------
3,293,314
------------
TEXTILE -- PRODUCTS -- 0.6%
75,300 Cone Mills Corp.*............... 583,575
38,500 Dyersburg Corp.................. 437,938
33,700 Galey & Lord, Inc.*............. 602,388
61,550 Guilford Mills, Inc............. 1,684,930
90,800 Polymer Group, Inc.*............ 862,600
------------
4,171,431
------------
TOBACCO -- 0.6%
50,300 Brooke Group, Ltd............... 433,838
10,800 Consolidated Cigar Holdings
Inc.*........................... 297,675
63,446 General Cigar Holdings*......... 1,352,193
45,100 Schweitzer-Mauduit
International................... 1,679,974
25,740 Standard Commercial Corp........ 426,319
------------
4,189,999
------------
TOOLS -- HAND HELD -- 0.3%
20,000 Starrett (L.S.) Co.............. 731,250
35,200 Toro Co......................... 1,500,400
------------
2,231,650
------------
TOYS/GAME/HOBBY -- 0.1%
49,700 Galoob (Lewis) Toys, Inc.*...... 506,319
------------
</TABLE>
Continued
42
<PAGE> 44
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION -- 0.2%
5,000 Florida East Coast Industries... $ 480,624
19,800 Overseas Shipholding Group...... 431,888
5,900 Xtra Corp....................... 345,888
------------
1,258,400
------------
TRANSPORTATION -- AIR FREIGHT -- 0.2%
58,900 Pittston Burlington Group....... 1,546,125
------------
TRANSPORTATION -- AIRLINE -- 0.3%
44,000 Alaska Airgroup, Inc.*.......... 1,705,000
17,300 America West Holding Corp. --
Class B*........................ 322,213
------------
2,027,213
------------
TRANSPORTATION -- EQUIPMENT & LEASING -- 0.5%
43,000 Greenbrier Cos., Inc............ 744,438
102,300 Westinghouse Air Brake Co....... 2,621,437
------------
3,365,875
------------
TRANSPORTATION -- SHIPPING -- 0.6%
20,250 International Shipholding
Corp............................ 349,313
35,500 Maritrans, Inc.................. 346,125
129,900 OMI Corp.*...................... 1,193,456
40,700 Sea Containers, Ltd............. 1,289,681
47,200 Teekay Shipping Corp............ 1,584,150
------------
4,762,725
------------
UTILITIES -- ELECTRIC POWER -- 2.5%
15,000 Baldor Electric Co.............. 325,313
40,600 Black Hills Corp................ 1,431,150
49,400 Central Hudson Gas & Electric
Corp............................ 2,167,424
91,200 Central Maine Power Co.......... 1,390,800
31,500 Central Vermont Public Service
Corp............................ 480,375
38,200 CILCORP, Inc.................... 1,867,024
60,500 Commonwealth Energy Systems
Co.............................. 2,011,624
46,100 Empire District Electric Co..... 904,713
13,100 Green Mountain Power Corp....... 239,894
27,100 Interstate Power Co............. 1,014,556
50,100 Northwestern Public Service
Co.............................. 1,152,300
38,400 Orange & Rockland Utilities..... 1,788,000
14,000 Public Service New Mexico....... 331,625
21,100 St. Joseph Light & Power Co..... 375,844
36,600 TNP Enterprises, Inc............ 1,216,950
90,320 Tucson Electric Power Co.*...... 1,637,050
10,300 WPL Holdings, Inc............... 341,188
------------
18,675,830
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- GAS DISTRIBUTION -- 3.0%
45,150 Atmos Energy Corp............... $ 1,365,787
37,800 Bay State Gas Co................ 1,403,324
25,950 Cascade Natural Gas Corp........ 486,563
10,100 Chesapeake Utilities Corp....... 207,050
25,400 Connecticut Energy Corp......... 765,175
29,900 Connecticut Natural Gas Corp.... 779,269
6,800 Eastern Enterprises............. 306,000
31,600 Energen Corp.................... 1,256,100
8,700 Energynorth, Inc................ 250,669
63,500 Indiana Energy, Inc............. 2,091,530
49,400 Laclede Gas Co.................. 1,386,287
50,800 New Jersey Resources Corp....... 2,035,174
18,500 North Carolina Natural Gas...... 642,875
31,200 NUI Corp........................ 895,050
29,000 Pennsylvania Enterprises,
Inc............................. 732,250
53,900 Public Service Co. of North
Carolina........................ 1,246,438
30,200 South Jersey Industries, Inc.... 915,438
50,405 Southern Union Co.*............. 1,203,425
74,900 Southwest Gas Corp.............. 1,399,693
69,500 Southwestern Energy Co.......... 894,813
11,000 UGI Corp........................ 322,438
6,200 Wicor Inc....................... 287,913
29,400 Yankee Energy System, Inc....... 784,613
------------
21,657,874
------------
UTILITIES -- WATER SUPPLY -- 0.9%
19,600 Aquarion Co..................... 677,425
17,700 California Water Service Co..... 1,045,406
21,700 E'Town Corp..................... 872,069
54,450 Philadelphia Suburban Corp...... 1,602,872
22,500 Southern California Water....... 565,313
96,600 United Water Resources, Inc..... 1,889,737
------------
6,652,822
------------
WHOLESALE DISTRIBUTION -- 0.3%
69,437 JP Foodservice, Inc.*........... 2,564,825
------------
WIRE & CABLE PRODUCTS -- 0.4%
32,600 Anixter International, Inc.*.... 537,900
56,900 Barnes Group, Inc............... 1,294,475
14,100 Belden, Inc..................... 497,025
13,200 General Cable Corp.............. 477,675
24,680 Keystone Consolidated
Industries*..................... 296,160
------------
3,103,235
------------
TOTAL COMMON STOCKS............. 722,778,366
------------
(Cost $534,978,452)
</TABLE>
Continued
43
<PAGE> 45
THE KENT FUNDS
SMALL COMPANY GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- ------------
<C> <S> <C>
COMMERCIAL PAPER -- 2.5%
AUTOMOTIVE -- 2.5%
$18,251,221 General Motors Acceptance Corp.,
5.65%, 1/2/98................... $ 18,251,221
------------
TOTAL COMMERCIAL PAPER.......... 18,251,221
(Cost $18,251,221) ------------
U.S. GOVERNMENT OBLIGATIONS -- 0.1%
1,000,000 U.S. Treasury Bills,
5.05** 3/26/98 (b).............. 988,100
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS..................... 988,100
(Cost $987,890) ------------
TOTAL INVESTMENTS -- 99.9%.................. 742,017,687
(Cost $554,217,563) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.1%....................... 764,001
------------
TOTAL NET ASSETS -- 100.0%.................. $742,781,688
============
</TABLE>
- ---------------
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax of $22,800. Cost for
federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $222,533,317
Unrealized depreciation...............
(34,755,993)
------------
Net unrealized appreciation...........
$187,777,324
============
</TABLE>
(b) Security has been deposited as initial margin on open futures contracts.
* Non-income producing security
** Annualized yield at time of purchase
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING CURRENT MARKET
CONTRACTS CONTRACT TYPE POSITION VALUE
- --------- ------------------ ----------- -----------
<S> <C> <C> <C>
84 Standard & $20,291,015 $20,561,100
Poor's............
500, 3/19/98
</TABLE>
See Notes to Financial Statements.
44
<PAGE> 46
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS -- 97.3%
AUSTRALIA -- 2.7%
BANKING -- 0.7%
142,787 National Australia Bank Ltd...... $ 1,993,744
191,512 Westpac Banking Corp., Ltd....... 1,224,867
------------
3,218,611
------------
BEVERAGES & TOBACCO -- 0.1%
85,167 Coca-Cola Amatil Ltd............. 636,271
------------
BREWERY -- 0.1%
178,336 Fosters Brewing Group Ltd........ 339,297
------------
BROADCASTING & PUBLISHING -- 0.2%
197,062 News Corp., Ltd.................. 1,087,539
------------
BUILDING PRODUCTS -- 0.1%
105,708 Boral Ltd........................ 267,238
34,780 Hardie (James) Industries Ltd.... 101,365
80,788 Pioneer International Ltd........ 220,556
------------
589,159
------------
CHEMICALS -- 0.0%
22,970 ICI Australia Ltd................ 160,890
------------
CLOSED END FUNDS -- 0.0%
28,285 Stockland Trust Group............ 65,554
------------
DIVERSIFIED -- 0.1%
16,044 Smith (Howard Ltd.).............. 133,181
53,703 Southcorp Holdings Ltd........... 177,754
------------
310,935
------------
ENERGY -- 0.5%
207,143 Broken Hill Proprietary Co.
Ltd.............................. 1,923,286
------------
ENGINEERING -- 0.0%
22,400 Leighton Holdings Ltd............ 78,230
------------
ENTERTAINMENT -- 0.0%
62,916 Crown Ltd. *..................... 27,876
40,300 Sydney Harbour Casino Holdings
Ltd. *........................... 38,206
26,100 TABCORP Holdings Ltd............. 122,442
------------
188,524
------------
FOOD PRODUCTS -- 0.0%
39,301 Burns, Philp & Co., Ltd.......... 6,146
108,833 Goodman Fielder Ltd.............. 173,025
------------
179,171
------------
GAS UTILITY -- 0.0%
25,100 Australian Gas Light Co., Ltd.... 174,991
------------
INDUSTRIAL GOODS & SERVICES -- 0.1%
91,818 CSR Ltd. 311,093
88,700 Pacific Dunlop Ltd............... 187,830
------------
498,923
------------
INSURANCE -- 0.1%
53,074 GIO Australia Holdings Ltd....... 135,662
32,135 QBE Insurance Group Ltd.......... 144,620
------------
280,282
------------
MANUFACTURING-CAPITAL GOODS -- 0.0%
25,575 Email Ltd........................ 60,390
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
AUSTRALIA (CONTINUED)
METALS -- 0.0%
142,760 M.I.M. Holdings Ltd.............. $ 87,436
15,796 RGC Ltd.......................... 24,084
------------
111,520
------------
METALS & MINING -- 0.2%
68,058 Australian National Industries
Ltd.............................. 62,525
16,145 Great Central Mines Ltd.......... 17,357
17,377 Newcrest Mining Ltd. *........... 18,908
143,578 Normandy Mining Ltd.............. 139,390
61,905 North Ltd........................ 163,035
11,700 Plutonic Resources Ltd........... 32,628
48,055 QCT Resources Ltd................ 38,826
29,836 Rio Tinto Ltd.................... 348,037
103,907 WMC Ltd.......................... 362,208
------------
1,182,914
------------
OIL & GAS -- 0.0%
52,241 Santos Ltd....................... 215,123
------------
PACKAGING -- 0.1%
58,093 Amcor Ltd........................ 255,497
------------
PHARMACEUTICALS -- 0.0%
10,369 Faulding (F.H.) & Co., Ltd....... 51,887
------------
REAL ESTATE -- 0.2%
105,816 General Property Trust Units..... 187,534
24,339 Lend Lease Corp., Ltd............ 475,754
101,055 Westfield Trust Units............ 192,923
------------
856,211
------------
REAL ESTATE INVESTMENT TRUST -- 0.0%
14,411 Schroders Property Fund.......... 22,272
------------
RETAIL STORES -- 0.1%
115,528 Coles Myer Ltd................... 554,771
------------
SERVICES -- 0.1%
20,119 Brambles Industries Ltd.......... 399,165
------------
TOBACCO -- 0.0%
8,400 Rothmans Holdings Ltd............ 44,333
------------
13,485,746
------------
AUSTRIA -- 1.6%
AIRLINES -- 0.0%
9,000 Austrian Airlines *.............. 191,371
------------
BANKING -- 0.2%
23,650 Bank Austria AG.................. 1,196,441
100 Bank Austria AG, Participating
Certificates..................... 2,688
------------
1,199,129
------------
BEVERAGES & TOBACCO -- 0.0%
3,100 Oesterreichische
Brau-Beteiligungs AG............. 154,622
------------
BUILDING PRODUCTS -- 0.1%
3,433 Wienerberger Baustoffindustrie
AG............................... 658,061
------------
CHEMICALS -- 0.0%
600 Lenzing AG *..................... 35,523
------------
</TABLE>
Continued
45
<PAGE> 47
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
AUSTRIA (CONTINUED)
CONSTRUCTION -- 0.0%
1,455 Bau Holding AG................... $ 90,860
------------
ELECTRIC UTILITY -- 0.4%
12,669 Oesterreichische
Elektrizitaetswirtschafts AG,
Class A.......................... 1,341,923
------------
ELECTRICAL EQUIPMENT -- 0.0%
1,000 Austria Mikro Systeme
International AG................. 50,590
------------
ENGINEERING -- 0.2%
6,100 VA Technologie AG................ 924,824
------------
INSURANCE -- 0.1%
2,780 EA-Generali AG................... 729,344
------------
MANUFACTURING-CONSUMER GOODS -- 0.0%
100 Steyr-Daimler-Puch AG............ 2,680
------------
METALS & MINING -- 0.0%
4,775 Radex-Heraklith
Industriebeteiligungs AG......... 164,189
------------
OIL & GAS -- 0.4%
11,140 OMV AG........................... 1,541,003
------------
PAPER PRODUCTS -- 0.0%
4,100 Mayr-Melnhof Karton AG........... 220,413
------------
STEEL -- 0.1%
4,400 Boehler-Uddeholm AG.............. 257,548
------------
TRANSPORTATION -- 0.1%
7,400 Flughafen Wien AG................ 293,640
------------
7,855,720
------------
BELGIUM -- 1.3%
BANKING -- 0.2%
1,583 Generale de Banque SA............ 688,959
1,252 Kredietbank NV................... 525,470
------------
1,214,429
------------
BUILDING PRODUCTS -- 0.0%
1,925 Cimenteries CBR Cementbedrijven.. 173,017
------------
CHEMICALS -- 0.1%
8,510 Solvay SA........................ 535,178
------------
ELECTRIC UTILITY -- 0.1%
6,840 Tractebel........................ 596,309
------------
ENERGY -- 0.2%
2,297 PetroFina SA..................... 847,815
------------
GAS & ELECTRIC UTILITY -- 0.4%
5,500 Electrabel SA.................... 1,272,204
------------
INDUSTRIAL HOLDING COMPANY -- 0.1%
2,000 Groupe Bruxelles Lambert SA...... 289,340
------------
INSURANCE -- 0.2%
4,100 Fortis AG........................ 855,415
1,350 Royale Belge..................... 384,414
------------
1,239,829
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BELGIUM (CONTINUED)
MERCHANDISING -- 0.0%
4,400 Delhaize-Le Lion SA.............. $ 223,266
------------
TECHNOLOGY -- 0.0%
1,000 Barco NV......................... 183,536
------------
TRANSPORTATION -- 0.0%
1,422 Union Miniere SA *............... 98,638
------------
6,673,561
------------
DENMARK -- 2.4%
AGRICULTURE -- 0.0%
1,185 Korn-OG Foderstof Kompagniet AS.. 32,882
2,780 Superfos AS...................... 70,320
------------
103,202
------------
BANKING & FINANCE -- 0.5%
10,147 Den Danske Bank.................. 1,352,991
9,693 Unidanmark AS, Class A........... 712,053
------------
2,065,044
------------
BEVERAGES & TOBACCO -- 0.1%
6,360 Carlsberg AS, Class A............ 344,017
5,205 Carlsberg AS, Class B............ 279,740
------------
623,757
------------
COMMERCIAL SERVICES -- 0.1%
2,190 ISS International Service System
AS, Series B*.................... 80,599
327 Sophus Berendsen AS -- Class A... 54,019
3,506 Sophus Berendsen AS -- Class B... 578,598
------------
713,216
------------
DIVERSIFIED -- 0.0%
6,974 Ostasiatiske Kompagni AS *....... 63,148
------------
ELECTRICAL & ELECTRONIC -- 0.0%
111 NKT Holding AS................... 8,844
------------
ENGINEERING -- 0.0%
8,215 FLS Industries AS -- Class B..... 196,041
------------
FOOD PRODUCTS -- 0.1%
28 Aarhus Oliefabrk AS -- Class A... 1,247
9 Aarhus Oliefabrk AS -- Class B... 401
10,095 Danisco AS....................... 560,243
------------
561,891
------------
MEDICAL SUPPLIES -- 0.0%
84 Radiometer AS -- Class B......... 3,410
------------
PHARMACEUTICALS -- 0.5%
14,846 Novo Nordisk AS, Class B......... 2,124,819
------------
TELECOM EQUIPMENT -- 0.0%
210 GN Store Nord AS................. 3,527
------------
TELECOMMUNICATIONS -- 0.3%
26,100 Tele Danmark AS, Class B......... 1,620,003
------------
</TABLE>
Continued
46
<PAGE> 48
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DENMARK (CONTINUED)
TRANSPORTATION & SHIPPING -- 0.8%
39 D/S 1912, Class B................ $ 1,799,857
29 D/S Svendborg AS, Class B........ 1,905,885
134 Lauritzen (J.) Holding AS *...... 11,253
320 SAS Danmark AS................... 4,673
------------
3,721,668
------------
11,808,570
------------
FINLAND -- 0.4%
BANKING & FINANCE -- 0.0%
36,906 Merita Ltd., Class A............. 201,965
------------
DIVERSIFIED -- 0.0%
800 Amer Group Ltd. *................ 15,352
1,500 Instrumentarium Group, Series
B................................ 52,337
------------
67,689
------------
ENGINEERING -- 0.0%
8,200 Metra AB......................... 192,747
------------
FOOD PRODUCTS -- 0.0%
1,300 Cultor OY, Series 2.............. 70,425
------------
FOREST PRODUCTS -- 0.1%
15,560 UPM-Kymmene Corp................. 311,458
------------
INSURANCE -- 0.0%
800 Pohjola Insurance Group, Class
B................................ 29,676
------------
MACHINERY & EQUIPMENT -- 0.0%
500 Kone Corp. -- Class B............ 60,601
------------
RETAIL-GENERAL MERCHANDISE -- 0.0%
750 Stockmann AB -- Class B.......... 46,828
------------
TELECOMMUNICATIONS -- 0.3%
11,600 Nokia AB, Class A................ 824,390
5,900 Nokia AB, Class K................ 422,552
------------
1,246,942
------------
2,228,331
------------
FRANCE -- 9.0%
ADVERTISING -- 0.1%
8,378 Havas SA......................... 603,018
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.0%
3,050 Moulinex *....................... 75,390
------------
AUTO PARTS -- 0.1%
7,267 Valeo SA......................... 493,095
------------
AUTOMOTIVE -- 0.1%
5,162 PSA Peugeot Citroen.............. 651,271
------------
BANKING -- 0.7%
22,474 Banque Nationale de Paris........ 1,195,079
13,164 Compagnie Financiere de
Paribas -- Class A............... 1,144,436
9,947 Societe Generale................. 1,355,839
------------
3,695,354
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
BEVERAGES & TOBACCO -- 0.4%
9,220 LVMH (Moet Hennessy Louis
Vuitton)......................... $ 1,531,082
5,400 Pernod Ricard.................... 317,760
------------
1,848,842
------------
BROADCASTING/CABLE -- 0.1%
3,136 Canal Plus....................... 583,322
------------
BUILDING PRODUCTS -- 0.2%
1,195 Imetal SA........................ 148,584
9,721 Lafarge SA....................... 638,117
------------
786,701
------------
CHEMICALS -- 0.6%
7,673 L'Air Liquide.................... 1,201,485
35,514 Rhone-Poulenc SA................. 1,591,555
------------
2,793,040
------------
COMMERCIAL SERVICES -- 0.1%
78 Sodexho *........................ 40,777
710 Sodexho SA....................... 380,383
------------
421,160
------------
CONSTRUCTION -- 0.0%
1,466 Bouygues......................... 166,196
------------
DEFENSE -- 0.1%
200 Sagem SA......................... 89,098
12,325 Thomson CSF...................... 388,648
------------
477,746
------------
DIVERSIFIED -- 0.1%
498 Chargeurs International SA....... 29,801
12,106 Lagardere SCA.................... 400,457
1,350 Nord-Est SA...................... 26,929
------------
457,187
------------
ELECTRICAL & ELECTRONIC -- 0.7%
17,137 Alcatel Alsthom.................. 2,179,206
2,800 Legrand SA....................... 558,058
14,200 Schneider SA..................... 771,387
------------
3,508,651
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 0.1%
25,100 Unisor Sacilor SA................ 362,573
------------
ENERGY -- 1.3%
28,967 Elf Aquitane SA.................. 3,370,572
25,700 Total SA, Class B................ 2,798,186
------------
6,168,758
------------
ENGINEERING -- 0.0%
200 Groupe Gtm....................... 13,464
------------
FINANCE -- 0.4%
13,618 Compagnie Generale des Eaux...... 1,901,493
523 CPR (Compagnie Parisenne de
Reescompte)...................... 42,599
844 Credit National.................. 49,244
192 Eurafrance....................... 78,193
------------
2,071,529
------------
</TABLE>
Continued
47
<PAGE> 49
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS -- 0.1%
2,600.... Eridania Beghin-Say SA $ 406,692
------------
FOOD PRODUCTS -- 0.3%
7,621 Groupe Danone.................... 1,361,829
------------
HEALTH & PERSONAL CARE -- 0.8%
7,109 L'OREAL.......................... 2,782,925
11,023 Sanofi SA........................ 1,227,656
------------
4,010,581
------------
INDUSTRIAL GOODS & SERVICES -- 0.1%
14,090 Michelin Class B, Registered..... 709,669
------------
INDUSTRIAL HOLDING COMPANY -- 0.3%
14,280 Lyonnaise des Eaux SA............ 1,580,901
------------
INSURANCE -- 0.5%
34,100 Axa -- UAP....................... 2,639,750
------------
LEISURE -- 0.1%
3,650 Accor SA......................... 678,930
500 Club Mediterranee SA *........... 35,332
------------
714,262
------------
MACHINE-DIVERSIFIED -- 0.0%
1,600 Sidel SA......................... 106,119
------------
MEDIA -- 0.0%
498 Pathe SA......................... 96,688
------------
MEDICAL SUPPLIES -- 0.0%
500 Essilor International............ 149,605
------------
MERCHANDISING -- 0.9%
4,098 Carrefour SA..................... 2,138,965
6,600 Etablissements Economiques du
Casino Guichard-Perrachon........ 367,528
2,248 Pinault-Printemps-Redoute SA..... 1,199,883
1,950 Promodes......................... 809,385
------------
4,515,761
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.3%
9,133 Compagnie de Saint Gobain........ 1,298,021
------------
OFFICE EQUIPMENT & SERVICES -- 0.1%
5,700 Bic.............................. 416,235
------------
OIL & GAS -- 0.0%
50 Cie Gen Geophysiq *.............. 6,400
1,300 Primagaz Cie..................... 108,696
------------
115,096
------------
REAL ESTATE -- 0.1%
2,600 SEFIMEG.......................... 129,657
918 Simco SA......................... 61,802
800 Unibail.......................... 79,922
572 Union Immobiliere de France...... 41,551
------------
312,932
------------
RETAIL-SPECIAL LINE -- 0.0%
320 Comptoirs Modernes............... 163,834
------------
TELECOMMUNICATIONS-SERVICES &
EQUIPMENT -- 0.3%
35,000 France Telecom *................. 1,270,059
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
TEXTILE PRODUCTS -- 0.0%
1,050 Dollfus-Mieg & Cie *............. $ 18,676
------------
TOBACCO -- 0.0%
3,200 SEITA............................ 114,896
------------
45,178,903
------------
GERMANY -- 11.4%
AIRLINES -- 0.1%
34,680 Lufthansa AG *................... 651,922
------------
AUTOMOTIVE -- 1.2%
58,970 Daimler-Benz AG.................. 4,165,189
761 MAN AG........................... 219,872
3,093 Volkswagen AG.................... 1,728,805
------------
6,113,866
------------
BANKING -- 2.3%
80,840 Bayer AG......................... 3,001,080
26,228 Bayerische Vereinsbank AG........ 1,692,089
57,260 Deutsche Bank AG................. 4,006,193
50,960 Dresdner Bank AG................. 2,318,369
------------
11,017,731
------------
BANKING & FINANCE -- 0.2%
23,320 Bayerische Hypotheken-und
Weschel-Bank AG.................. 1,131,603
------------
BUILDING PRODUCTS -- 0.1%
4,070 Heidelberger Zement AG........... 285,436
------------
CHEMICALS -- 0.6%
69,880 BASF AG.......................... 2,495,100
7,320 Degussa AG....................... 362,327
------------
2,857,427
------------
CLOTHING -- 0.1%
4,100 Adidas AG........................ 542,701
------------
COMPUTER SOFTWARE -- 0.3%
5,500 SAP AG........................... 1,668,620
------------
CONSTRUCTION -- 0.0%
4,730 Hochtief AG...................... 194,667
------------
DIVERSIFIED -- 1.1%
1,331 Preussag AG...................... 409,358
55,990 VEBA AG.......................... 3,814,577
2,312 Viag AG.......................... 1,266,555
------------
5,490,490
------------
ELECTRICAL & ELECTRONIC -- 0.8%
64,170 Siemens AG....................... 3,872,235
------------
ENGINEERING -- 0.4%
2,040 AGIV-AG *........................ 39,596
2,970 Bilfinger & Berger Bau AG........ 93,822
4,080 Mannesmann AG.................... 2,049,028
------------
2,182,446
------------
GAS & ELECTRIC UTILITY -- 0.4%
38,650 RWE AG........................... 2,074,325
------------
HEALTH & PERSONAL CARE -- 0.1%
7,860 Beiersdorf AG, Series ABC........ 334,414
------------
</TABLE>
Continued
48
<PAGE> 50
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
GERMANY (CONTINUED)
HEALTH CARE -- 0.1%
6,200 Schering AG...................... $ 598,262
------------
INSURANCE -- 2.2%
1,780 Aachener & Muenchener............ 196,013
25,970 Allianz AG....................... 6,701,775
3,660 Amb Aachener & Muenchener........ 403,038
9,160 Muenchener Rueckver.............. 3,484,589
------------
10,785,415
------------
MACHINERY & EQUIPMENT -- 0.1%
3,830 Kloeckner-Humbolt-Deutz AG *..... 28,330
765 Linde AG......................... 464,180
------------
492,510
------------
METALS & MINING -- 0.1%
2,480 FAG Kugelfischer Georg Schaefer
AG............................... 32,413
2,834 Thyssen AG....................... 605,245
------------
637,658
------------
PHARMACEUTICALS -- 0.1%
15,600 Merck KGaA....................... 524,904
------------
RETAIL STORES -- 0.2%
791 Karstadt AG...................... 273,632
19,773 Metro AG......................... 701,606
------------
975,238
------------
RETAIL-GENERAL MERCHANDISE -- 0.0%
1,630 Douglas Holding AG............... 49,406
------------
TELECOMMUNICATIONS -- 0.9%
251,800 Deutsche Telekom AG.............. 4,663,370
------------
TIRE & RUBBER -- 0.0%
4,870 Continental AG................... 109,694
------------
57,254,340
------------
HONG KONG -- 2.4%
AIRLINES -- 0.0%
12,600 Hong Kong Aircraft Engineering
Co., Ltd......................... 31,710
------------
BANKING -- 0.3%
96,666 Bank of East Asia Ltd............ 226,436
135,800 Hang Seng Bank Ltd............... 1,310,106
------------
1,536,542
------------
BANKING & FINANCE -- 0.0%
20,995 Wing Lung Bank................... 100,528
------------
BROADCASTING & PUBLISHING -- 0.0%
130,000 South China Morning Post Holdings
Ltd.............................. 91,439
30,000 Television Broadcasts Ltd........ 85,568
------------
177,007
------------
DISTRIBUTION -- 0.0%
18,000 Dickson Concepts Intl............ 26,251
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HONG KONG (CONTINUED)
DIVERSIFIED -- 0.2%
111,000 Swire Pacific Ltd., Class A...... $ 608,846
163,000 Wharf Holdings Ltd............... 357,628
------------
966,474
------------
ELECTRIC UTILITY -- 0.2%
175,400 China Light & Power Co., Ltd..... 973,405
------------
ELECTRICAL & ELECTRONIC -- 0.0%
31,200 Johnson Electric Holdings Ltd.... 89,796
------------
ELECTRICAL EQUIPMENT -- 0.0%
65,000 Elec & Eltek International
Holdings Ltd..................... 16,107
------------
FINANCE -- 0.0%
44,000 Peregrine Investment Holdings.... 31,233
------------
GAS UTILITY -- 0.1%
258,250 Hong Kong & China Gas Co., Ltd... 499,951
------------
HOTELS & LODGING -- 0.0%
82,500 Hong Kong & Shanghai Hotels
Ltd.............................. 68,144
41,000 Miramar Hotel & Investment
Ltd.............................. 69,319
284,714 Regal Hotels International....... 54,016
------------
191,479
------------
INDUSTRIAL HOLDING COMPANY -- 0.5%
307,000 Hutchison Whampoa Ltd. 1,925,617
------------
MANUFACTURING-CONSUMER GOODS -- 0.0%
20,000 Varitronix International Ltd..... 34,330
------------
PRINTING & PUBLISHING -- 0.0%
102,000 Oriental Press Group Ltd......... 30,936
------------
REAL ESTATE -- 0.7%
162,000 Cheung Kong Holdings Ltd......... 1,061,076
136,000 Chinese Estates Ltd.............. 60,117
310,000 Hopewell Holdings Ltd............ 77,217
72,000 Hysan Development Co., Ltd....... 143,568
26,000 Kumagai Gumi (Hong Kong)......... 19,798
135,462 New World Development Co., Ltd... 468,541
112,000 Shagri-La Asia Ltd............... 94,679
214,000 Sino Land Company................ 129,119
168,100 Sun Hung Kai Properties Ltd...... 1,171,539
43,270 Tai Cheung Holdings Ltd.......... 17,172
------------
3,242,826
------------
REAL ESTATE INVESTMENT TRUST -- 0.0%
95,100 Hang Lung Development Co......... 133,783
------------
RETAIL STORES -- 0.0%
50,000 Giordano International Ltd....... 17,262
------------
TELECOMMUNICATIONS -- 0.4%
872,032 Hong Kong Telecommunications
Ltd.............................. 1,795,100
------------
TRANSPORTATION -- 0.0%
242,000 Cathay Pacific Airways........... 196,767
106,258 Shun Tak Holdings Ltd............ 28,456
------------
225,223
------------
12,045,560
------------
</TABLE>
Continued
49
<PAGE> 51
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ITALY -- 4.8%
AGRICULTURE -- 0.0%
134,100 Parmalat Finanziaria SpA......... $ 191,897
------------
AUTO PARTS -- 0.0%
38,500 Magneti Marelli SpA.............. 65,873
------------
AUTOMOTIVE -- 0.3%
413,138 Fiat SpA......................... 1,202,262
69,740 Fiat SpA di Risp
(Non-convertible)................ 115,379
------------
1,317,641
------------
BANKING -- 0.5%
162,400 Banca Commerciale Italiana....... 564,911
54,694 Banco Ambrosiano Veneto SpA...... 209,434
38,900 Banco Ambrosiano Veneto SpA di
Risp, (Non-convertible).......... 75,908
18,400 Banco Popolare de Milano......... 115,521
202,900 Credito Italiano SpA............. 626,030
76,900 Istituto Bancario San Paolo di
Torino........................... 735,075
10,923 Riunione Adriatica di Sicurta SpA
di Risp, (Non-convertible)....... 74,138
------------
2,401,017
------------
BROADCASTING & PUBLISHING -- 0.1%
106,400 Mediaset SpA..................... 522,974
------------
BUILDING PRODUCTS -- 0.0%
1,900 Cementir SpA..................... 1,805
15,350 Italcementi SpA.................. 107,051
900 Italcementi SpA di Risp, (Non-
convertible)..................... 2,698
------------
111,554
------------
CHEMICALS -- 0.1%
451,862 Montedison SpA................... 406,115
12,800 Montedison SpA di Risp, (Non-
convertible)..................... 8,405
62,600 Snia BPD SpA..................... 64,441
900 Snia BPD SpA di Risp, (Non-
convertible)..................... 718
------------
479,679
------------
ENGINEERING -- 0.0%
7,900 Impregilo SpA *.................. 6,028
------------
FINANCE -- 0.2%
54,300 Istituto Mobiliare Italiano
SpA.............................. 644,968
43,075 Mediobanca SpA................... 338,412
------------
983,380
------------
GAS & ELECTRIC UTILITY -- 0.1%
57,400 Edison SpA....................... 347,388
------------
GAS UTILITY -- 0.0%
59,900 Italgas SpA...................... 247,325
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ITALY (CONTINUED)
INSURANCE -- 0.8%
100,763 Assicurazioni Generali........... $ 2,476,335
457,400 Istituto Nazionale delle
Assicurazioni.................... 927,479
29,762 Riuniune Adriatici de Sicurta
SpA.............................. 292,065
10,800 Societa Assicuratrice Industriale
(SAI) SpA........................ 120,340
------------
3,816,219
------------
JEWELRY -- 0.0%
26,000 Bulgari SpA...................... 132,353
------------
OFFICE EQUIPMENT & SERVICES -- 0.0%
210,496 Olivetti SpA *................... 127,274
------------
OIL & GAS -- 1.0%
914,900 ENI SpA.......................... 5,190,309
------------
PAPER PRODUCTS -- 0.0%
11,300 Burgo (Cartiere) SpA............. 67,589
------------
PRINTING & PUBLISHING -- 0.0%
11,400 Mondadori (Arnoldo) Editore SpA.. 89,627
------------
RETAIL STORES -- 0.0%
16,800 La Rinascente SpA................ 125,430
------------
STEEL -- 0.0%
10,400 Falck, Acciaierie & Ferriere
Lombarde SpA..................... 47,588
------------
TELECOMMUNICATIONS -- 1.5%
19,400 Sirti SpA........................ 117,410
141,660 Telecom Italia Mobile SpA........ 403,027
759,260 Telecom Italia Mobile SpA di Risp
(Non-convertible)................ 3,506,430
421,811 Telecom Italia SpA*.............. 2,695,970
82,360 Telecom Italia SpA-Rnc*.......... 363,354
------------
7,086,191
------------
TEXTILE PRODUCTS -- 0.1%
16,432 Benetton Group SpA............... 269,065
------------
TIRE & RUBBER -- 0.1%
132,900 Pirelli SpA...................... 355,554
20,900 Pirelli SpA di Risp, (Non-
convertible)..................... 37,946
------------
393,500
------------
24,019,901
------------
JAPAN -- 26.5%
ALUMINUM -- 0.0%
38,000 Nippon Light Metal Co., Ltd...... 55,530
13,000 Sankyo Aluminum Industry Co...... 11,598
------------
67,128
------------
</TABLE>
Continued
50
<PAGE> 52
THE KENT FUNDS
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
APPLIANCES & HOUSEHOLD PRODUCTS -- 1.6%
193,000 Matsushita Electric Industrial
Co., Ltd......................... $ 2,835,155
16,000 Pioneer Electronic Corp.......... 247,344
179,000 Sanyo Electric Co................ 468,078
103,000 Sharp Corp....................... 711,377
36,000 Sony Corp........................ 3,211,787
------------
7,473,741
------------
AUTOMOTIVE -- 3.0%
2,000 Autobacs Seven Co., Ltd.......... 57,683
89,000 Honda Motor Co., Ltd............. 3,278,776
1,000 Nippon Sharyo Ltd................ 2,792
230,000 Nissan Motor Co., Ltd............ 955,230
26,000 Toyoda Automatic Loom Works...... 479,922
349,000 Toyota Motor Corp................ 10,038,833
------------
14,813,236
------------
BANKING -- 3.5%
35,000 77 Bank.......................... 250,344
213,000 Asahi Bank Ltd................... 868,244
44,000 Ashikaga Bank Ltd................ 71,065
428,000 Bank of Tokyo -- Mitsubishi
Ltd.............................. 5,925,193
104,000 Bank of Yokohama Ltd............. 275,155
71,000 Chiba Bank Ltd................... 221,156
266,000 Fuji Bank, Ltd................... 1,080,194
47,000 Gunma Bank Ltd................... 307,258
49,000 Hokuriku Bank.................... 64,067
233,000 Industrial Bank of Japan......... 1,666,576
81,000 Joyo Bank........................ 286,569
110,000 Mitsui Trust & Banking Co.,
Ltd.............................. 214,042
314,000 Sakura Bank Ltd.................. 900,792
73,000 Shizuoka Bank.................... 786,026
288,000 Sumitomo Bank Ltd................ 3,300,388
186,000 Tokai Bank....................... 869,767
18,000 Yamaguchi Bank................... 221,503
------------
17,308,339
------------
BEVERAGES & TOBACCO -- 0.3%
43,000 Asahi Breweries Ltd.............. 628,360
96,000 Kirin Brewery Co., Ltd........... 701,424
11,000 Takara Shuzo..................... 41,032
------------
1,370,816
------------
BREWERY -- 0.0%
31,000 Sapporo Breweries Ltd............ 97,753
------------
BROADCASTING & PUBLISHING -- 0.0%
16,000 Tokyo Broadcasting System........ 203,044
------------
BUILDING PRODUCTS -- 0.1%
52,000 Chichibu Onoda Cement Corp....... 95,984
17,000 Nihon Cement Co., Ltd............ 35,171
16,000 Sanwa Shutter Corp............... 80,725
23,000 Sumitomo Osaka Cement Co., Ltd... 29,011
20,000 Tostem Corp...................... 215,350
------------
456,241
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
CHEMICALS -- 1.1%
132,000 Asahi Chemical Industry Co.,
Ltd.............................. $ 448,727
19,000 Daicel Chemical Industries
Ltd.............................. 24,842
72,000 Dainippon Ink & Chemicals,
Inc.............................. 182,740
27,000 Denki Kagaku Kogyo Kabushiki
Kaisha........................... 40,909
32,000 Kaneka Corp...................... 144,961
32,000 Konica Corp...................... 147,668
201,000 Mitsubishi Chemical Corp......... 289,084
35,000 Mitsubishi Gas Chemical Co....... 92,331
10,000 Nippon Shokubai Kabushiki Kaisha
Co............................... 40,686
50,000 Sekisui Chemical Co., Ltd........ 254,959
34,000 Shin-Etsu Chemical Co., Ltd...... 651,125
95,000 Showa Denko Kabushiki Kaisha..... 83,294
148,000 Sumitomo Chemical Co............. 341,483
80,000 Takeda Chemical Industries....... 2,288,860
128,000 Toray Industries, Inc............ 575,907
42,000 Tosoh Corp. *.................... 70,742
76,000 Ube Industries Ltd............... 97,030
------------
5,775,348
------------
CLOTHING -- 0.0%
5,000 Tokyo Style...................... 45,377
------------
COMMERCIAL SERVICES -- 0.0%
1,155 Oyo Corp. 16,700
------------
COMPUTER SOFTWARE -- 0.0%
5,000 CSK Corp......................... 128,441
------------
CONSTRUCTION -- 0.2%
22,000 Aoki Corp. *..................... 7,107
48,000 Daiwa House Industry Co., Ltd.... 254,728
32,000 Haseko *......................... 16,490
35,000 Kumagai Gumi Co., Ltd............ 19,112
13,000 Okumura Corp..................... 30,995
18,000 Penta-Ocean Construction......... 25,334
65,000 Sekisui House Ltd................ 419,433
72,000 Shimizu Corp..................... 167,234
93,000 Taisei Corp...................... 153,067
------------
1,093,500
------------
CONSUMER GOODS & SERVICES -- 0.1%
22,000 Nippon Sheet Glass Co., Ltd...... 30,795
12,000 Shimano, Inc..................... 221,502
34,000 Toto Ltd......................... 218,088
------------
470,385
------------
COSMETICS/PERSONAL CARE -- 0.1%
38,000 Shiseido Co., Ltd................ 520,223
------------
DATA PROCESSING & REPRODUCTION -- 0.4%
170,000 Fujitsu Ltd...................... 1,830,472
------------
DISTRIBUTION -- 0.0%
130,000 Itochu Corp...................... 204,967
------------
DIVERSIFIED -- 0.0%
18,000 Yamaha Corp...................... 204,890
------------
</TABLE>
Continued
51
<PAGE> 53
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
ELECTRIC UTILITY -- 0.9%
88,900 Kansai Electric Power Co.,
Inc.............................. $ 1,511,055
45,500 Tohoku Electric Power............ 692,888
124,000 Tokyo Electric Power Co.......... 2,269,785
------------
4,473,728
------------
ELECTRICAL & ELECTRONIC -- 0.6%
25,000 Casio Computer Co., Ltd.......... 179,971
17,000 Kyocera Corp..................... 774,028
197,000 Mitsubishi Electric Corp......... 506,056
33,000 Nikon Corp....................... 327,408
24,000 Omron Corp....................... 376,554
10,000 Rohm Co., Ltd.................... 1,022,912
------------
3,186,929
------------
ELECTRICAL EQUIPMENT -- 0.1%
16,000 Alps Electric Co., Ltd........... 151,360
5,000 SMC Corp......................... 442,236
------------
593,596
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 1.1%
7,940 Advantest Corp................... 451,896
8,000 Dainippon Screen Manufacturing
Co., Ltd......................... 36,917
21,100 Fanuc Ltd........................ 801,670
3,000 Hirose Electric Co., Ltd......... 153,898
306,000 Hitachi Ltd...................... 2,188,722
146,000 NEC Corp......................... 1,560,824
23,000 Yokogawa Electric Corp........... 142,577
------------
5,336,504
------------
ELECTRONICS -- 0.0%
13,000 Nitto Denko Corp................. 224,964
------------
ENERGY -- 0.1%
51,000 Cosmo Oil Co., Ltd............... 77,664
100,000 Japan Energy Corp................ 94,600
112,000 Nippon Oil Co., Ltd.............. 290,292
------------
462,556
------------
ENGINEERING -- 0.2%
7,000 Daito Trust Construction Co.,
Ltd.............................. 42,908
25,000 Fujita Corp...................... 9,037
9,000 JGC Corp......................... 19,035
88,000 Kajima Corp...................... 222,672
14,000 Kandenko Co., Ltd................ 71,711
127,000 Kawasaki Heavy Industries Ltd.... 197,306
24,000 Kinden Corp...................... 256,575
5,000 Maeda Road Construction.......... 19,997
19,000 Nishimatsu Construction.......... 59,913
68,000 Obayashi Corp.................... 232,208
13,000 Sato Kogyo Co., Ltd.............. 8,099
------------
1,139,461
------------
ENTERTAINMENT -- 0.1%
1,700 Toho Co.......................... 181,740
11,000 Tokyo Dome Corp.................. 73,434
22,000 Tokyotokeiba..................... 28,426
------------
283,600
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
FINANCE -- 1.1%
13,000 Acom Co., Ltd.................... $ 719,883
123,000 Daiwa Securities Co., Ltd........ 425,700
23,000 Higo Bank........................ 116,750
119,000 Mitsubishi Trust & Banking
Corp............................. 1,198,959
17,000 Nippon Shinpan Co................ 19,220
180,000 Nomura Securities Co., Ltd....... 2,408,840
24,000 Orient Corp...................... 38,948
5,000 Orix Corp........................ 349,943
6,000 Uni-Charm........................ 213,196
83,000 Yasuda Trust & Banking........... 82,987
------------
5,574,426
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.4%
59,000 Ajinomoto Co., Inc............... 576,291
56,000 Kao Corp......................... 809,714
20,000 Nippon Meat Packers, Inc......... 273,802
12,000 Nissin Food Products Co., Ltd.... 218,734
------------
1,878,541
------------
FOOD PRODUCTS -- 0.2%
65,000 Daiei, Inc....................... 269,956
10,000 House Foods Industry............. 130,748
12,000 Itoham Foods..................... 57,037
10,000 Kikkoman Corp.................... 50,838
15,000 Meiji Milk Products Co., Ltd..... 38,994
16,000 Nichirei Corp.................... 34,456
8,000 QP Corp.......................... 48,915
23,000 Snow Brand Milk Products Co.,
Ltd.............................. 62,090
20,000 Yamazaki Baking Co., Ltd......... 195,353
------------
888,387
------------
FOREST PRODUCTS -- 0.2%
17,000 Mitsubishi Paper Mills........... 23,927
87,000 Nippon Paper Industries Co....... 342,591
94,000 Oji Paper Co., Ltd............... 375,215
12,000 Sumitomo Forestry Co., Ltd....... 58,606
------------
800,339
------------
GAS UTILITY -- 0.2%
232,000 Osaka Gas Co., Ltd............... 531,729
258,000 Tokyo Gas Co., Ltd............... 587,351
------------
1,119,080
------------
HEALTH & PERSONAL CARE -- 0.4%
22,000 Chugai Pharmaceutical Co.,
Ltd.............................. 113,366
40,000 Kyowa Hakko Kogyo Co............. 173,818
15,000 Lion Corp........................ 44,531
42,000 Sankyo Co., Ltd.................. 952,923
30,000 Yamanouchi Pharmaceutical Co.,
Ltd.............................. 646,049
------------
1,930,687
------------
HOTELS & LODGING -- 0.0%
8,000 Fujita Kanko, Inc................ 86,140
------------
</TABLE>
Continued
52
<PAGE> 54
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
INDUSTRIAL GOODS & SERVICES -- 0.9%
75,000 Bridgestone Corp................. $ 1,632,427
82,000 Denso Corp....................... 1,482,067
17,000 Inax Corp........................ 49,554
58,000 Mitsui Engineering & Shipbuilding
Co., Ltd.*....................... 37,025
34,000 NGK Insulators Ltd............... 303,335
20,000 NGK Spark Plug Co., Ltd.......... 113,828
66,000 Sumitomo Electric Industries
Ltd.............................. 903,546
------------
4,521,782
------------
INSURANCE -- 0.5%
66,000 Mitsui Marine & Fire Insurance
Co., Ltd......................... 338,068
41,000 Nichido Fire & Marine Insurance
Co., Ltd......................... 214,427
53,000 Nippon Fire & Marine Insurance
Co............................... 199,329
60,000 Sumitomo Marine & Fire Insurance
Co............................... 318,410
142,000 Tokio Marine & Fire Insurance
Co............................... 1,616,353
------------
2,686,587
------------
JEWELRY -- 0.1%
29,000 Citizen Watch Co., Ltd........... 195,161
10,000 Hoya Corp........................ 315,333
------------
510,494
------------
LEASING -- 0.1%
7,000 Daiwa Kosho Lease Co., Ltd....... 28,534
36,000 Yamato Transport Co., Ltd........ 484,537
------------
513,071
------------
LEISURE -- 0.0%
4,000 Namco............................ 116,596
------------
MACHINE-DIVERSIFIED -- 0.0%
4,000 Komori Corp...................... 59,683
12,000 Kurita Water Industries Ltd...... 122,749
------------
182,432
------------
MACHINERY & EQUIPMENT -- 0.8%
27,000 Amada Co., Ltd................... 100,714
14,000 Brother Industries Ltd........... 32,087
10,000 Chiyoda Corp..................... 10,767
5,000 Daifuku Co., Ltd................. 24,419
22,000 Daikin Industries Ltd............ 83,248
26,000 Ebara Corp....................... 275,955
90,000 Komatsu Ltd...................... 453,389
10,000 Koyo Seiko Co., Ltd.............. 40,147
129,000 Kubota Corp...................... 341,298
36,000 Minebea Co., Ltd................. 387,630
309,000 Mitsubishi Heavy Industries
Ltd.............................. 1,292,837
5,000 Mori Seiki Co.................... 51,915
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
MACHINERY & EQUIPMENT (CONTINUED)
51,000 NSK Ltd.......................... $ 127,479
42,000 NTN Corp......................... 97,553
7,000 Okuma Corp....................... 24,981
63,000 Sumitomo Heavy Industries,
Ltd.............................. 193,330
15,000 Tokyo Electron Ltd............... 482,230
------------
4,019,979
------------
MANUFACTURING-CAPITAL GOODS -- 0.2%
31,000 Fujikura Ltd..................... 205,997
12,000 Kokuyo Co........................ 207,659
14,000 Makita Corp...................... 134,594
21,000 Murata Manufacturing Co., Ltd.... 529,759
8,000 Noritake Co., Ltd................ 38,271
7,000 Takara Standard Co............... 34,456
------------
1,150,736
------------
MANUFACTURING-CONSUMER GOODS -- 0.8%
79,000 Canon, Inc....................... 1,847,085
47,000 Fuji Photo Film Co., Ltd......... 1,807,399
8,700 Sega Enterprises Ltd............. 157,913
------------
3,812,397
------------
MEDICAL SUPPLIES -- 0.0%
24,000 Olympus Optical Co., Ltd. 166,311
------------
MERCHANDISING -- 0.6%
38,000 Ito-Yokado Co., Ltd.............. 1,943,531
29,000 JUSCO Co., Ltd................... 410,395
33,000 Marui Co., Ltd................... 515,224
------------
2,869,150
------------
METALS -- 0.4%
42,000 Daido Steel Co., Ltd............. 52,976
298,000 Kawasaki Steel Corp.............. 407,965
104,000 Mitsubishi Materials Corp........ 167,973
633,000 Nippon Steel Corp................ 939,609
323,000 NKK Corp......................... 258,358
288,000 Sumitomo Metal Industries Ltd.... 369,909
11,000 Tokyo Steel Manufacturing Co..... 37,309
------------
2,234,099
------------
METALS & MINING -- 0.1%
92,000 Hitachi Zosen Corp............... 147,884
46,000 Mitsui Mining & Smelting Co...... 185,385
52,000 Sumitomo Metal Mining Co......... 171,972
------------
505,241
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.1%
107,000 Asahi Glass Co., Ltd............. 510,225
------------
OFFICE EQUIPMENT & SERVICES -- 0.3%
69,000 Dai Nippon Printing Co., Ltd..... 1,300,174
------------
OIL & GAS -- 0.0%
3,100 Arabian Oil Co., Ltd............. 47,208
32,000 Mitsubishi Oil Co., Ltd.......... 47,500
14,000 Teikoko Oil Co., Ltd............. 36,609
------------
131,317
------------
</TABLE>
Continued
53
<PAGE> 55
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
PACKAGING -- 0.1%
19,600 Toyo Seikan Kaisha Ltd........... $ 280,385
------------
PHARMACEUTICALS -- 0.4%
25,000 Dai-Ichi Pharmaceuticals......... 282,646
25,000 Eisai Co., Ltd................... 382,630
3,000 Kissei Pharmaceutical Co.,
Ltd.............................. 43,378
35,000 Meiji Seika Co................... 116,827
32,000 Shionogi & Co., Ltd.............. 147,176
31,000 Taisho Pharmacuetical Co......... 793,949
------------
1,766,606
------------
REAL ESTATE -- 0.4%
119,000 Mitsubishi Estate Co., Ltd....... 1,299,636
74,000 Mitsui Fudosan Co., Ltd.......... 717,114
------------
2,016,750
------------
RESTAURANTS -- 0.0%
5,000 Skylark Co., Ltd................. 48,069
------------
RETAIL STORES -- 0.1%
6,000 Aoyama Trading Co., Ltd.......... 107,521
13,000 Hankyu Department Stores Co...... 72,488
15,000 Isetan Co........................ 62,874
29,000 Mycal Corp....................... 243,115
28,000 Takashimaya Co., Ltd............. 170,126
------------
656,124
------------
RETAIL-GENERAL MERCHANDISE -- 0.1%
14,300 Credit Saison Co., Ltd........... 354,143
14,000 Daimuru, Inc..................... 33,164
34,000 Mitsukoshi Ltd................... 90,739
------------
478,046
------------
RETAIL-SPECIAL LINE -- 0.1%
15,000 Seiyu Ltd........................ 47,531
2,000 Shimachu Co...................... 31,533
17,000 Uny Co., Ltd..................... 234,039
------------
313,103
------------
SERVICES -- 0.3%
10,000 Secom Co., Ltd................... 641,434
64,000 Toppan Printing Co., Ltd......... 836,788
------------
1,478,222
------------
STORAGE -- 0.0%
15,000 Mitsubishi Logistics Corp........ 156,898
------------
TELECOMMUNICATIONS -- 2.1%
11,000 Nippon Comsys Corp............... 136,209
1,171 Nippon Telegraph & Telephone
Corp............................. 10,086,979
------------
10,223,188
------------
TEXTILE PRODUCTS -- 0.2%
12,000 Gunze Ltd........................ 19,935
26,000 Kanebo Ltd. *.................... 18,997
31,000 Kuraray Co., Ltd................. 257,497
57,000 Mitsubishi Rayon Co., Ltd........ 140,285
16,000 Nisshinbo Industries, Inc........ 67,681
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
15,000 Onward Kashiyama Co., Ltd........ $ 174,203
89,000 Teijin Ltd....................... 186,870
49,000 Toyobo Ltd....................... 59,544
25,000 Unitika Ltd. *................... 13,459
14,000 Wacoal Corp...................... 139,977
------------
1,078,448
------------
TRANSPORTATION -- 1.0%
368 East Japan Railway Co............ 1,667,052
78,000 Hankyu Corp...................... 366,541
163,000 Japan Airlines Co. *............. 445,043
148,000 Kinki Nippon Railway Co.......... 793,379
75,000 Nagoya Railroad Co., Ltd......... 258,420
46,000 Nankai Electric Railway Co....... 201,660
98,000 Nippon Express Co., Ltd.......... 489,921
67,000 Odakyu Electric Railway Co....... 290,630
78,000 Tobu Railway Co., Ltd............ 244,760
100,000 Tokyu Corp....................... 387,629
------------
5,145,035
------------
TRANSPORTATION & SHIPPING -- 0.1%
13,000 Kamigumi Co., Ltd................ 38,594
30,000 Kawasaki Kisen Kaisha Ltd. *..... 36,456
47,000 Keihin Electric Express Railway
Co., Ltd......................... 164,473
101,000 Mitsui OSK Lines, Ltd. *......... 140,600
108,000 Nippon Yusen Kabushiki Kaisha.... 297,367
8,000 Seino Transportation............. 40,055
------------
717,545
------------
WHOLESALE & INTERNATIONAL TRADE -- 0.6%
137,000 Marubeni Corp.................... 241,292
143,000 Mitsubishi Corp.................. 1,132,816
145,000 Mitsui & Co...................... 860,937
97,000 Sumitomo Corp.................... 544,604
------------
2,779,649
------------
WHOLESALE DISTRIBUTION -- 0.0%
1,000 Nagse & Co....................... 2,923
------------
WIRE & CABLE PRODUCTS -- 0.1%
60,000 Furukawa Electric Co., Ltd....... 257,958
------------
132,689,079
------------
MALAYSIA -- 0.8%
AGRICULTURE -- 0.1%
130,000 Golden Hope Plantations Berhad... 150,294
37,500 Highlands & Lowlands Berhad...... 38,344
52,000 IOI Corporated Berhad............ 16,833
72,000 Kuala Lumpur Kepong Berhad....... 154,457
------------
359,928
------------
AIRLINES -- 0.0%
47,000 Malaysian Airlines............... 37,673
12,000 Malaysian Pacific................ 28,826
------------
66,499
------------
</TABLE>
Continued
54
<PAGE> 56
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MALAYSIA (CONTINUED)
AUTOMOTIVE -- 0.0%
13,000 Ederan Otomobil.................. $ 26,552
19,200 Oriental Holdings................ 23,480
41,000 Tan Chong Motors................. 17,907
------------
67,939
------------
AUTOMOTIVE PARTS-REPLACEMENT -- 0.0%
33,000 Perusahaan Otomobil Nasional
Berhad........................... 32,217
------------
BANKING -- 0.1%
24,000 AMMB Holdings Berhad............. 15,723
48,000 Commerce Asset Holdings Berhad... 22,937
31,000 Ekran Berhad *................... 21,902
115,500 Malayan Banking Berhad........... 335,310
123,600 Public Bank...................... 42,551
104,000 RHB Capital Berhad............... 50,232
------------
488,655
------------
BEVERAGES & TOBACCO -- 0.0%
18,000 Guinness Anchor.................. 22,197
------------
BUILDING PRODUCTS -- 0.0%
15,000 Hume Ind Malaysia................ 15,723
15,000 Jaya Tiasa Holdings Berhad....... 27,554
25,000 Kedah Cement Holdings............ 4,592
25,000 Malayan Cement................... 17,021
46,000 Pan-Malaysia Cement Works
Berhad........................... 17,727
------------
82,617
------------
CHEMICALS -- 0.0%
8,000 Malaysian Oxygen Berhad.......... 17,881
------------
CONSTRUCTION -- 0.0%
77,400 YTL Corp. Berhad................. 104,397
------------
DIVERSIFIED -- 0.1%
54,000 Berjaya Group Berhad............. 10,960
113,000 Malayan United Industries........ 19,741
64,000 Mulpha International Berhad...... 7,481
58,000 Multi-Purpose Holdings Berhad.... 14,901
22,500 Perlis Plantations Berhad........ 31,793
235,040 Sime Darby Berhad................ 225,840
46,000 Time Engineering Berhard......... 11,818
------------
322,534
------------
ELECTRIC UTILITY -- 0.2%
313,000 Tenaga Nasional Berhad........... 667,434
------------
ENERGY -- 0.0%
16,000 Umw Holdings Berhard............. 12,126
------------
ENGINEERING -- 0.0%
180,000 Amsteel Corp. Berhad............. 31,446
49,326 United Engineers (Malaysia)
Ltd.............................. 41,059
------------
72,505
------------
ENTERTAINMENT -- 0.0%
94,000 Magnum Corp. Berhad.............. 56,511
110,000 Resorts World Berhad............. 185,106
------------
241,617
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MALAYSIA (CONTINUED)
FINANCE -- 0.0%
48,000 MBf Capital Berhad............... $ 11,160
23,000 Rashid Hussain Berhad............ 17,846
------------
29,006
------------
FOOD PRODUCTS -- 0.0%
15,000 Nestle (Malaysia) Berhad......... 69,367
------------
HOME FURNISHINGS -- 0.0%
47,000 Technology Resources Industries
Berhad........................... 27,772
------------
INVESTMENT COMPANIES -- 0.0%
13,000 Hong Leong Industries............ 13,226
44,000 Ta Enterprise Berhad............. 8,930
------------
22,156
------------
LEISURE -- 0.0%
38,000 Berjaya Land Berhad.............. 23,235
------------
MANUFACTURING-CAPITAL GOODS -- 0.0%
11,000 Sugei Way Holdings............... 3,561
------------
METALS & MINING -- 0.0%
92,400 Malaysia Mining Corp. Berhad..... 36,320
------------
OIL & GAS -- 0.0%
17,500 Shell Refining Co. (Malaysia)
Berhad........................... 27,425
------------
PRINTING & PUBLISHING -- 0.0%
11,000 New Straits Time Press........... 13,622
------------
REAL ESTATE -- 0.0%
43,000 Hong Leong Properties............ 7,844
60,000 Malaysian Resources.............. 13,873
51,000 Metroplex Berhad................. 13,037
51,000 Selangor Properties Berhad....... 15,592
------------
50,346
------------
TELECOMMUNICATIONS -- 0.3%
303,000 Telekom Malaysia Berhad.......... 895,213
------------
TOBACCO -- 0.0%
15,000 RJ Reynolds...................... 24,471
28,300 Rothmans of Pall Mall (Malaysia)
Berhad........................... 219,937
------------
244,408
------------
TRANSPORTATION -- 0.0%
101,000 Malaysian International
Shipping......................... 147,905
------------
4,148,882
------------
NETHERLANDS -- 3.5%
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.2%
16,840 Philips Electronics NV........... 1,010,121
------------
BANKING -- 0.3%
67,585 ABN Amro Holding NV.............. 1,316,876
------------
</TABLE>
Continued
55
<PAGE> 57
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
NETHERLANDS (CONTINUED)
BEVERAGES & TOBACCO -- 0.1%
2,670 Heineken NV...................... $ 464,926
------------
BROADCASTING & PUBLISHING -- 0.1%
38,430 Elsevier NV...................... 621,787
------------
CHEMICALS -- 0.2%
4,383 Akzo Nobel NV.................... 755,859
------------
COMPUTER SOFTWARE -- 0.0%
2,952 Getronics NV..................... 94,069
------------
ENERGY -- 1.4%
126,588 Royal Dutch Petroleum Co......... 6,950,008
------------
FINANCE -- 0.3%
40,887 ING Groep NV..................... 1,722,427
------------
FOOD PRODUCTS -- 0.4%
36,124 Unilever NV-CVA.................. 2,227,427
------------
INSURANCE -- 0.0%
1,117 Stad Rotterdam NV................ 60,775
------------
MANUFACTURING-CONSUMER GOODS -- 0.0%
255 Stork NV......................... 8,805
------------
OFFICE EQUIPMENT & SERVICES -- 0.0%
981 Oce Van Griten................... 106,945
------------
PACKAGING -- 0.0%
5,120 Kniniklijke KNP BT NV............ 117,946
------------
PRINTING & PUBLISHING -- 0.1%
3,211 Wolters Kluwer CVA............... 414,833
------------
RETAIL-SPECIAL LINE -- 0.1%
19,619 Ahold............................ 511,953
------------
SERVICES -- 0.2%
23,687 Koninklijke Royal PTT Nederland
NV............................... 988,503
------------
STEEL -- 0.0%
1,305 Koninklijke Hoogovens NV......... 53,495
------------
TRANSPORTATION -- 0.1%
1,950 IHC Caland NV.................... 101,192
3,909 KLM Royal Dutch Air Lines NV..... 144,619
1,133 Pakhoed NV Kon................... 32,695
------------
278,506
------------
17,705,261
------------
NEW ZEALAND -- 0.4%
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.0%
13,249 Fisher & Paykel Industries
Ltd.............................. 42,312
------------
BEVERAGES & TOBACCO -- 0.0%
62,000 Lion Nathan Ltd.................. 138,962
------------
BUILDING PRODUCTS -- 0.0%
36,983 Fletcher Challenge Building...... 75,590
------------
FINANCE -- 0.0%
303,100 Brierley Investments Ltd......... 216,475
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
NEW ZEALAND (CONTINUED)
FOREST PRODUCTS -- 0.1%
195,881 Carter Holt Harvey Ltd........... $ 302,546
93,679 Fletcher Challenge Forests....... 77,785
72,922 Fletcher Challenge Paper......... 95,271
------------
475,602
------------
OIL & GAS -- 0.0%
37,968 Fletcher Challenge Energy........ 132,939
------------
TELECOMMUNICATIONS -- 0.3%
204,065 Telecom Corp. of New Zealand
Ltd.............................. 989,402
------------
2,071,282
------------
NORWAY -- 1.3%
BANKING -- 0.0%
61,300 Christiania Bank Og
Kreditkasse...................... 247,788
------------
CHEMICALS -- 0.0%
1,000 Dyno Industrier ASA.............. 19,262
------------
ELECTRIC UTILITY -- 0.0%
15,650 Hafslund ASA, Series A........... 95,528
10,326 Hafslund ASA, Series B........... 49,304
------------
144,832
------------
ENGINEERING -- 0.1%
8,950 Kvaerner ASA, Series A........... 456,472
------------
FOREST PRODUCTS -- 0.0%
3,200 Norske Skogindustrier ASA --
Class A.......................... 92,890
------------
INDUSTRIAL GOODS & SERVICES -- 0.0%
1,200 Unitor ASA....................... 14,650
------------
INSURANCE -- 0.1%
73,500 Storebrand ASA *................. 518,435
------------
MANUFACTURING-CONSUMER GOODS -- 0.2%
10,500 Orkla ASA, Series A.............. 904,412
------------
OIL & GAS -- 0.8%
10,500 Aker RGI ASA, Series A........... 189,428
2,100 Aker RGI ASA, Series B........... 34,183
60,850 Norsk Hydro ASA.................. 2,967,310
8,300 Petroleum Geo-Services ASA *..... 523,521
------------
3,714,442
------------
TRANSPORTATION -- 0.1%
14,100 Bergesen d.y. ASA -- Class A..... 332,791
1,400 Bergesen d.y. ASA -- Class B..... 32,663
2,200 Leif Hoegh & Co. ASA............. 44,763
------------
410,217
------------
6,523,400
------------
SINGAPORE -- 0.8%
AUTOMOTIVE -- 0.0%
1,000 Cycle & Carriage................. 4,125
------------
</TABLE>
Continued
56
<PAGE> 58
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SINGAPORE (CONTINUED)
BANKING -- 0.3%
48,750 Development Bank Of Singapore
Ltd.............................. $ 416,632
86,042 Oversea-Chinese Banking Corp.,
Ltd.............................. 500,439
70,350 United Overseas Bank Ltd......... 390,384
------------
1,307,455
------------
BEVERAGES & TOBACCO -- 0.0%
21,000 Fraser & Neave Ltd............... 90,983
------------
ELECTRICAL EQUIPMENT -- 0.0%
3,000 Creative Technology Ltd. *....... 60,892
------------
FINANCE -- 0.0%
29,600 Haw Par Brothers International
Ltd.............................. 38,297
------------
HOTELS & LODGING -- 0.0%
1,000 Overseas Union Enterprise Ltd.... 2,397
1,100 Shangri-La Hotel Ltd............. 2,011
------------
4,408
------------
METALS & MINING -- 0.0%
7,000 Straits Trading Co., Ltd......... 8,309
------------
PRINTING & PUBLISHING -- 0.1%
28,320 Singapore Press Holdings......... 354,643
------------
REAL ESTATE -- 0.1%
56,600 City Developments Ltd............ 262,015
72,000 DBS Land Ltd..................... 110,247
8,000 United Industrial Corp., Ltd..... 3,134
52,000 United Overseas Land Ltd......... 43,824
------------
419,220
------------
STEEL -- 0.0%
60,750 NatSteel Ltd..................... 82,205
------------
TELECOMMUNICATIONS -- 0.2%
471,000 Singapore Telecommunications
Ltd.............................. 877,741
------------
TRANSPORTATION -- 0.1%
59,000 Neptune Orient Lines Ltd......... 23,286
91,000 Singapore Airlines Ltd........... 594,087
------------
617,373
------------
TRANSPORTATION & SHIPPING -- 0.0%
49,000 Keppel Corp...................... 140,753
------------
WHOLESALE DISTRIBUTION -- 0.0%
11,000 Inchcape Berhad.................. 16,909
------------
4,023,313
------------
SPAIN -- 2.7%
BANKING -- 0.6%
25,342 Banco Central Hispanoamericano
SA............................... 616,859
45,096 Banco Santander SA............... 1,506,007
10,100 Corporacion Bancaria de Espana
SA............................... 614,288
------------
2,737,154
------------
BANKING & FINANCE -- 0.4%
63,441 Banco Bilbao Vizcaya SA.......... 2,052,051
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SPAIN (CONTINUED)
BEVERAGES & TOBACCO -- 0.0%
1,650 El Aguila SA *................... $ 6,474
2,806 Tabacalera SA, Class A........... 227,366
------------
233,840
------------
BUILDING PRODUCTS -- 0.0%
820 Portland Valderrivas SA.......... 73,707
5,400 Uralita SA....................... 61,647
------------
135,354
------------
CHEMICALS -- 0.0%
700 Ercros SA *...................... 680
------------
COMMERCIAL SERVICES -- 0.0%
500 Prosegur, CIA de Seguridad SA.... 5,019
------------
ENERGY -- 0.2%
28,298 Repsol SA........................ 1,206,814
------------
ENGINEERING -- 0.1%
18,613 Autopistas Concesionaria Espanola
SA............................... 249,735
3,400 Dragados & Construcciones SA..... 72,388
200 Urbis SA *....................... 1,890
------------
324,013
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.0%
400 Ebro Agricolas, Compania de
Alimentacion SA.................. 7,033
------------
FOREST PRODUCTS -- 0.0%
100 Empresa Nacional de Celulosas
SA............................... 1,361
2,498 Sarrio SA........................ 9,047
------------
10,408
------------
GAS & ELECTRIC UTILITY -- 0.7%
97,880 Endesa-Empresa Nac Elec.......... 1,737,131
3,008 Fomento de Construcciones y
Contratas SA..................... 114,466
86,924 Iberdrola SA..................... 1,143,471
23,666 Union Electrica Fenosa SA........ 226,699
------------
3,221,767
------------
INDUSTRIAL HOLDING COMPANY -- 0.0%
675 Corporacion Financiara Alba SA... 71,080
------------
INSURANCE -- 0.0%
4,600 Corporacion Mapfre............... 121,930
------------
METALS -- 0.0%
400 Acerinox SA...................... 59,233
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.0%
1,221 Viscofan Industria Navarra de
Envolturas Celulosicassa SA...... 30,642
------------
NATURAL GAS UTILITY -- 0.1%
13,824 Gas Natural SDG SA............... 716,526
------------
REAL ESTATE -- 0.0%
247 Inmobiliaria Metropolitana Vasco
Central SA....................... 11,133
2,361 Vallehermoso SA.................. 72,341
------------
83,474
------------
</TABLE>
Continued
57
<PAGE> 59
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SPAIN (CONTINUED)
TELECOMMUNICATIONS -- 0.6%
88,875 Telefonica de Espana............. $ 2,536,530
------------
WATER UTILITY -- 0.0%
3,442 Aquas De Barcelona............... 141,821
------------
13,695,369
------------
SWEDEN -- 1.4%
AUTOMOTIVE -- 0.1%
19,000 Volvo AB, Series B............... 510,060
------------
BANKING & FINANCE -- 0.0%
6,300 Svenska Handlesbanken, Class B... 202,871
------------
BUILDING PRODUCTS -- 0.0%
4,400 Scancem AB -- Class A............ 180,229
------------
ENGINEERING -- 0.2%
39,000 ABB AB, Series A................. 462,042
28,500 ABB AB, Series B................. 335,849
100 Skanska AB, Series B............. 4,102
------------
801,993
------------
FOREST PRODUCTS -- 0.1%
14,500 Stora Kopparbergs Bergslags
Aktiebolag, Series A............. 182,749
3,250 Stora Kopparbergs Bergslags
Aktiebolag, Series B............. 40,347
3,800 Svenska Cellusoa AB, Series B.... 85,489
------------
308,585
------------
INSURANCE -- 0.1%
12,000 Skandia Forsakrings AB........... 566,397
------------
MACHINERY & EQUIPMENT -- 0.1%
8,250 Atlas Copco AB, Series A......... 246,428
500 Atlas Copco AB, Series B......... 14,904
------------
261,332
------------
MANUFACTURING-CONSUMER GOODS -- 0.1%
3,700 Electrolux AB, Series B.......... 256,946
------------
METAL FABRICATE/HARDWARE -- 0.0%
9,300 SKF AB, Series A................. 186,367
------------
METALS & MINING -- 0.1%
10,100 SKF AB, Series B................. 215,128
7,960 Trelleborg AB, Series B.......... 100,323
------------
315,451
------------
OFFICE EQUIPMENT & SERVICES -- 0.0%
300 Esselte AB, Series B............. 6,087
------------
PHARMACEUTICALS -- 0.3%
76,400 Astra AB, Series A............... 1,323,987
13,333 Astra AB, Series B............... 224,335
------------
1,548,322
------------
TELECOMMUNICATIONS -- 0.3%
54,600 Telefonaktiebolaget LM Ericsson,
Series B......................... 2,054,115
------------
7,198,755
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SWITZERLAND -- 5.2%
AIRLINES -- 0.1%
220 Sairgroup........................ $ 301,669
------------
BANKING -- 0.3%
4,380 Swiss Bank Corp.................. 1,363,353
------------
BUILDING PRODUCTS -- 0.1%
436 Holderbank Financiere Glarus
AG............................... 356,321
------------
COMMERCIAL SERVICES -- 0.0%
390 Addeco SA........................ 113,239
------------
81 SGS Societe Generale de
Surveillance Holding SA.......... 155,497
------------
268,736
------------
DIVERSIFIED -- 0.2%
450 ABB AG, Bearer Shares *.......... 566,144
225 Alusuisse-Lonza Holding AG,
Registered....................... 216,431
------------
782,575
------------
ENGINEERING -- 0.0%
15 Schindler Holding AG,
Participating Certificates....... 15,653
------------
FINANCE -- 0.7%
11,720 Credit Suisse Group,
Registered....................... 1,815,994
1,179 UBS -- Union Bank of Switzerland,
Bearer........................... 1,707,207
------------
3,523,201
------------
FOOD PRODUCTS -- 0.7%
2,468 Nestle SA, Registered............ 3,703,985
------------
INSURANCE -- 0.5%
715 Swiss Reinsurance Co.,
Registered....................... 1,339,261
2,350 Zuerich Verichrng Gesellschft
Rg............................... 1,121,387
------------
2,460,648
------------
MANUFACTURING-CONSUMER GOODS -- 0.0%
182 Sulzer AG, Registered............ 115,548
------------
METAL FABRICATE/HARDWARE -- 0.0%
30 Fischer (George) AG, Bearer...... 41,137
------------
METALS -- 0.0%
40 Alusuisse-Lonza Holding AG,
Bearer........................... 38,202
------------
PHARMACEUTICALS -- 2.6%
461 Novartis AG, Bearer.............. 750,659
3,879 Novartis AG, Registered.......... 6,303,638
439 Roche Holding AG................. 4,365,768
94 Roche Holding AG, Bearer......... 1,450,069
------------
12,870,134
------------
RETAIL-GENERAL MERCHANDISE -- 0.0%
65 Jelmoli Holding AG, Bearer....... 56,151
260 Valora Holding AG................ 54,904
------------
111,055
------------
RETAIL-SPECIAL LINE -- 0.0%
325 Jelmoli Holding AG, Registered... 54,369
------------
</TABLE>
Continued
58
<PAGE> 60
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SWITZERLAND (CONTINUED)
TRANSPORTATION -- 0.0%
5 Danzas Holding AG, Registered.... $ 984
------------
26,007,570
------------
UNITED KINGDOM -- 18.7%
AEROSPACE -- 0.1%
21,664 Smiths Industries PLC............ 308,516
------------
AEROSPACE & MILITARY TECHNOLOGY -- 0.2%
30,897 British Aerospace PLC............ 885,090
800 Cobham PLC....................... 11,011
------------
896,101
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.1%
56,200 EMI Group PLC.................... 484,782
------------
AUTO PARTS -- 0.1%
19,014 BBA Group PLC.................... 127,646
3,446 Laird Group PLC.................. 25,147
39,582 T & N PLC........................ 165,425
------------
318,218
------------
AUTOMOTIVE -- 0.1%
3,101 Lex Service PLC.................. 23,803
106,709 Rolls-Royce PLC.................. 403,832
------------
427,635
------------
BANKING -- 2.3%
100,737 Abbey National PLC............... 1,738,748
109,128 Barclays PLC..................... 2,899,886
67,568 HSBC Holdings PLC................ 1,746,584
140,367 HSBC Holdings PLC (Hong Kong
Dollars)......................... 3,478,260
60,801 Royal Bank of Scotland Group
PLC.............................. 778,328
13,979 Schroders PLC.................... 431,270
------------
11,073,076
------------
BEVERAGES & TOBACCO -- 0.6%
288,938 Guinness Giageo PLC.............. 2,655,217
44,161 Scottish & Newcastle PLC......... 534,434
------------
3,189,651
------------
BREWERY -- 0.2%
67,527 Bass PLC......................... 1,039,981
------------
BROADCASTING/CABLE -- 0.2%
122,800 British Sky Broadcasting Group
PLC.............................. 917,332
43,042 Carlton Communications PLC....... 331,444
------------
1,248,776
------------
BUILDING PRODUCTS -- 0.3%
53,502 Blue Circle Industries PLC....... 313,176
37,736 BPB PLC.......................... 209,867
27,842 Hepworth PLC..................... 100,556
8,499 Marley PLC....................... 13,355
9,467 Meyer International PLC.......... 59,660
18,454 RMC Group PLC.................... 260,525
77,228 Rugby Group PLC.................. 173,452
55,474 Tarmac PLC....................... 104,512
54,273 Williams PLC..................... 300,051
------------
1,535,154
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
CHEMICALS -- 0.3%
34,748 BOC Group PLC.................... $ 575,461
21,004 Courtaulds PLC................... 102,816
51,551 Imperial Chemical Industries
PLC.............................. 797,328
------------
1,475,605
------------
COMPUTER HARDWARE MANUFACTURING -- 0.0%
1,793 Viglen Technology PLC............ 0
------------
CONGLOMERATES -- 0.4%
237,175 B.A.T. Industries PLC............ 2,163,927
40,924 Lonrho PLC....................... 62,623
------------
2,226,550
------------
CONSTRUCTION -- 0.0%
56,510 Taylor Woodrow PLC............... 165,972
------------
DISTRIBUTION -- 0.4%
399,610 BG PLC........................... 1,801,601
315,594 Centrica PLC *................... 456,966
------------
2,258,567
------------
ELECTRIC UTILITY -- 0.3%
122,969 National Grid Group PLC.......... 587,273
84,283 Scottish Power PLC............... 744,015
34,209 Southern Electric PLC............ 284,815
------------
1,616,103
------------
ELECTRICAL & ELECTRONIC -- 0.3%
25,643 Bowthorpe PLC.................... 158,857
32,574 Electrocomponents PLC............ 242,260
198,960 General Electric Co., PLC........ 1,306,203
------------
1,707,320
------------
ELECTRICAL EQUIPMENT -- 0.0%
6,722 Delta PLC........................ 29,089
------------
ENERGY -- 1.2%
441,578 British Petroleum Co., PLC....... 5,816,222
------------
ENGINEERING -- 0.0%
10,902 AMEC PLC......................... 21,078
171 Barratt Developments PLC......... 651
------------
21,729
------------
FINANCE -- 1.3%
56,913 Cardon PLC....................... 165,751
418,478 Lloyds TSB Group PLC............. 5,412,119
13,726 Mercury Asset Management Group
PLC.............................. 383,490
19,913 Provident Financial PLC.......... 261,136
25,910 St. James's Place Capital PLC.... 72,049
------------
6,294,545
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.6%
71,702 Cadbury Schweppes PLC............ 713,771
248,748 Unilever PLC..................... 2,132,404
------------
2,846,175
------------
</TABLE>
Continued
59
<PAGE> 61
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
FOOD PRODUCTS -- 0.2%
64,400 Associated British Foods PLC..... $ 552,072
23,280 Tate & Lyle PLC.................. 192,291
9,334 Unigate PLC...................... 92,380
34,759 United Biscuits (Holdings) PLC... 128,111
------------
964,854
------------
FOREST PRODUCTS -- 0.0%
43,404 Arjo Wiggins Appleton PLC........ 116,410
------------
GAS & ELECTRIC UTILITY -- 0.2%
86,766 National Power PLC............... 860,159
------------
HEALTH & PERSONAL CARE -- 1.8%
271,959 Glaxo Wellcome PLC............... 6,434,792
72,169 Zeneca Group PLC................. 2,541,187
------------
8,975,979
------------
HOMEBUILDERS -- 0.0%
30,094 George Wimpey PLC................ 52,488
31,929 Wilson Connolly Holdings PLC..... 81,956
------------
134,444
------------
INDUSTRIAL HOLDING COMPANY -- 0.3%
26,483 BICC Group PLC................... 74,949
292,639 BTR PLC.......................... 898,015
42,127 Hanson PLC....................... 188,886
34,133 TI Group PLC..................... 261,717
------------
1,423,567
------------
INSURANCE -- 2.2%
65,168 Boots Co., PLC................... 946,820
49,041 Commercial Union PLC............. 724,616
72,016 Great Universal Stores PLC....... 888,715
65,046 Guardian Royal Exchange PLC...... 347,837
89,407 Legal & General Group PLC........ 782,628
215,326 Marks & Spencer PLC.............. 2,122,244
137,833 Prudential Corp., PLC............ 1,602,277
110,873 Royal & Sun Alliance Insurance
Group PLC........................ 1,112,827
133,038 Sainsbury (J) PLC................ 1,115,301
16,318 Sedgwick Group PLC............... 37,858
157,137 Tesco PLC........................ 1,266,913
28,938 Willis Corroon Group PLC......... 70,708
------------
11,018,744
------------
LEISURE -- 0.3%
62,992 Granada Group PLC................ 971,175
84,471 Ladbroke Group PLC............... 366,930
56,900 Rank Group PLC................... 317,383
------------
1,655,488
------------
MACHINE-DIVERSIFIED -- 0.0%
21,296 FKI PLC.......................... 67,278
------------
MACHINERY & EQUIPMENT -- 0.1%
25,300 GKN PLC.......................... 519,110
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
MANUFACTURING-CAPITAL GOODS -- 0.1%
18,984 IMI PLC.......................... $ 126,663
40,592 Wolseley PLC..................... 322,597
------------
449,260
------------
MERCHANDISING -- 0.1%
78,023 Safeway PLC...................... 442,908
------------
METALS -- 0.2%
145,916 British Steel PLC................ 316,319
76,682 Rio Tinto PLC, Registered........ 890,149
------------
1,206,468
------------
METALS & MINING -- 0.0%
24,630 English China Clays PLC.......... 109,016
10,804 Johnson Matthey PLC.............. 96,262
------------
205,278
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.0%
15,900 Harrisons & Crosfield PLC........ 36,627
30,432 Pilkington PLC................... 64,093
11,415 Vickers PLC...................... 44,514
------------
145,234
------------
OIL & GAS -- 0.1%
9,771 Burmah Castrol PLC............... 169,936
69,182 LASMO PLC........................ 307,917
------------
477,853
------------
PAPER PRODUCTS -- 0.0%
24,358 Rexam PLC........................ 119,635
------------
PHARMACEUTICALS -- 0.9%
425,140 SmithKline Beecham PLC........... 4,375,538
------------
PRINTING & PUBLISHING -- 0.5%
4,808 De La Rue PLC.................... 31,328
40,873 Pearson PLC...................... 531,295
81,796 Reed International PLC........... 797,430
120,955 Reuters Holdings PLC............. 1,330,447
------------
2,690,500
------------
RAILROADS -- 0.1%
35,800 Railtrack Group PLC.............. 569,615
------------
REAL ESTATE -- 0.3%
34,009 British Land Co., PLC............ 372,123
2,436 Great Portland Estates PLC....... 9,620
35,421 Hammerson PLC.................... 275,382
37,045 Land Securities PLC.............. 597,348
13,249 MEPC PLC......................... 111,071
23,972 Slough Estates PLC............... 135,489
------------
1,501,033
------------
RETAIL STORES -- 0.1%
26,826 Next PLC......................... 305,446
------------
RETAIL-GENERAL MERCHANDISE -- 0.2%
12,736 Argos PLC........................ 115,467
48,507 Kingfisher PLC................... 676,818
83,403 Sears PLC........................ 72,047
------------
864,332
------------
</TABLE>
Continued
60
<PAGE> 62
The Kent INTERNATIONAL GROWTH FUND
Funds PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
RETAIL-SPECIAL LINE -- 0.1%
101,624 LucasVarity PLC.................. $ 359,507
------------
TELECOMMUNICATIONS -- 1.4%
480,466 British Telecommunications PLC... 3,792,712
172,196 Cable & Wireless PLC............. 1,514,408
219,768 Vodafone Group PLC............... 1,603,726
------------
6,910,846
------------
TELECOMMUNICATIONS-EQUIPMENT -- 0.0%
16,186 Racal Electronic PLC............. 70,576
------------
TEXTILE PRODUCTS -- 0.0%
36,816 Coats Viyella PLC................ 55,428
3,534 Courtaulds Textiles PLC.......... 20,730
------------
76,158
------------
TRANSPORTATION -- 0.3%
74,172 British Airways PLC.............. 727,986
13,207 Ocean Group PLC.................. 128,429
44,646 Peninsular & Oriental Steam
Navigation Co.................... 510,184
23,478 Transport Development Group PLC.. 79,193
------------
1,445,792
------------
WATER UTILITY -- 0.2%
19,357 Anglian Water PLC................ 257,985
27,099 Thames Water PLC................. 406,204
38,414 United Utilities PLC............. 496,171
------------
1,160,360
------------
94,092,139
------------
TOTAL COMMON STOCKS.............. 488,705,682
(Cost $423,047,484) ------------
PREFERRED STOCKS -- 0.7%
AUSTRALIA -- 0.2%
PRINTING & PUBLISHING -- 0.2%
175,105 News Corp. Ltd................... 866,419
------------
AUSTRIA -- 0.1%
BANKING -- 0.1%
2,600 Bank Austria AG -- Vorguz........ 123,312
7,244 Bank Austria Preferred *......... 321,807
------------
445,119
------------
GERMANY -- 0.4%
AUTOMOTIVE -- 0.1%
168 MAN AG Preferred................. 38,121
527 Volkswagen AG Preferred.......... 225,978
------------
264,099
------------
COMPUTER SOFTWARE -- 0.2%
3,800 SAP AG Preferred................. 1,234,653
------------
GAS & ELECTRIC UTILITY -- 0.1%
19,640 RWE AG........................... 841,070
------------
2,339,822
------------
ITALY -- 0.0%
AUTOMOTIVE -- 0.0%
90,420 Fiat SpA Preferred............... 138,085
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
- --------- ------
<C> <S> <C>
PREFERRED STOCKS (CONTINUED)
TOTAL PREFERRED STOCKS........... $ 3,789,445
(Cost $2,471,524) ------------
RIGHTS -- 0.1%
AUSTRALIA -- 0.0%
ENTERTAINMENT -- 0.0%
22,876 Crown Ltd. Rights *.............. 1,938
------------
ITALY -- 0.1%
BANKING -- 0.1%
38,900 Banco Ambrosiano Veneto SpA*..... 48,625
54,694 Banco Ambrosiano Veneto SpA*..... 34,648
54,694 Banco Ambrosiano Veneto SpA*..... 232,789
38,900 Banco Ambrosiano Veneto SpA*..... 5,259
------------
321,321
MALAYSIA -- 0.0%
BANKING -- 0.0%
103,000 Public Bank...................... 0
------------
TOTAL RIGHTS..................... 323,259
(Cost $94,665) ------------
WARRANTS -- 0.0%
BELGIUM -- 0.0%
BANKING -- 0.0%
568 Generale Banque Warrants *....... 1,456
------------
FRANCE -- 0.0%
FINANCE -- 0.0%
12,918 Compagnie Generale des Eaux *.... 8,783
------------
TOTAL WARRANTS................... 10,239
(Cost $0) ------------
COMMERCIAL PAPER -- 1.1%
UNITED STATES -- 1.1%
AUTOMOTIVE -- 1.1%
$5,714,579 General Motors Acceptance Corp... 5,714,579
------------
TOTAL COMMERCIAL PAPER........... 5,714,579
(Cost $5,714,579) ------------
TOTAL INVESTMENTS -- 99.2%.................. 498,543,204
(Cost $431,328,252) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.8%....................... 3,835,505
------------
TOTAL NET ASSETS -- 100.0%.................. $502,378,709
============
</TABLE>
- ---------------
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of mark to market adjustment
for passive foreign investment companies of $2,685,051. Cost for federal
income tax purposes differs from value by net unrealized appreciation of
securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $128,496,401
Unrealized depreciation............... (63,966,500)
------------
Net unrealized appreciation........... $ 64,529,901
============
</TABLE>
* Non-income producing security.
61
<PAGE> 63
The Kent Funds
INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
At December 31, 1997, the International Growth Fund's open forward foreign
currency exchange contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
DELIVERY CONTRACT CONTRACT CONTRACT MARKET APPRECIATION
CURRENCY DATE PRICE** AMOUNT** VALUE VALUE (DEPRECIATION)
- -------------------------------- ------------- -------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Short Contracts:
Austrian Schilling............ 1/5/98 12.5990 $(9,723,653) $ (771,780) $ (768,617) $(3,163)
Belgian Franc................. 1/15/98 36.9860 (5,695,549) (153,992) (153,726) 266
British Pound................. 1/6/98 0.5970 (443,342) (742,598) (729,476) 13,122
British Pound................. 1/7/98 0.6035 (131,207) (217,410) (215,888) 1,522
German Marks.................. 1/8/98 1.7910 (444,121) (247,974) (247,002) 971
French Franc.................. 1/30/98 5.9620 (2,976,299) (499,212) (494,742) 4,470
New Zealand Dollar............ 1/8/98 1.5267 (7.537) (4,937) (4,377) 560
Singapore Dollars............. 1/6/98 1.6790 (101,293) (60,329) (60,117) 213
Japanese Yen.................. 1/7/98 130.1000 (7,866,538) (60,465) (60,502) (37)
----------- ----------- -------
Total Short Contracts: $(2,758,697) $(2,734,447) $24,250
=========== =========== =======
Long Contracts:
U.S. Dollar................... 1/5/98 1.0000 $ 771,780 $ 771,780 $ 771,780 $ 0
U.S. Dollar................... 1/6/98 1.0000 802,927 802,927 802,927 0
U.S. Dollar................... 1/7/98 1.0000 277,875 277,875 277,875 0
U.S. Dollar................... 1/8/98 1.0000 252,911 252,911 252,911 0
U.S. Dollar................... 1/15/98 1.0000 153,992 153,992 153,992 0
U.S. Dollar................... 1/30/98 1.0000 499,212 499,212 499,212 0
----------- ----------- -------
Total Long Contracts: $ 2,758,697 $ 2,758,697 $ 0
=========== =========== =======
</TABLE>
- ---------------
** Contract price is in local currency.
See Notes to Financial Statements.
62
<PAGE> 64
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS -- 98.8%
ADVERTISING -- 0.1%
10,200 Interpublic Group Companies
Inc............................. $ 508,088
6,600 Omnicom Group................... 279,675
------------
787,763
------------
AEROSPACE & DEFENSE -- 1.3%
80,892 Boeing Co....................... 3,958,653
5,100 General Dynamics Corp........... 440,831
15,694 Lockheed Martin Corp............ 1,545,859
5,400 Northrop Grumman Corp........... 621,000
1 Raytheon Co. -- Class A......... 20
27,500 Raytheon Co. -- Class B......... 1,388,750
------------
7,955,113
------------
AGRICULTURE -- 0.1%
5,300 Pioneer Hi Bred, Inc............ 568,425
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.1%
7,900 Maytag Corp..................... 294,769
6,100 Whirlpool Corp.................. 335,500
------------
630,269
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 0.4%
3,100 Cummins Engine, Inc............. 183,094
8,500 Dana Corp....................... 403,750
6,200 Eaton Corp...................... 553,349
6,120 Navistar International Corp.*... 151,853
6,250 PACCAR Inc...................... 328,125
10,000 TRW Inc......................... 533,750
------------
2,153,921
------------
AUTO/TRUCK -- REPLACEMENT EQUIPMENT -- 0.1%
5,100 Echlin, Inc..................... 184,556
14,425 Genuine Parts Co................ 489,549
------------
674,105
------------
AUTOMOTIVE -- 1.6%
53,838 Chrysler Corp................... 1,894,425
97,100 Ford Motor Co................... 4,727,556
58,200 General Motors Corp............. 3,528,375
------------
10,150,356
------------
BANKS -- MAJOR REGIONAL -- 5.8%
47,544 Banc One Corp................... 2,582,233
30,500 Bank of New York Co., Inc....... 1,763,281
11,800 BankBoston Corp................. 1,108,463
15,900 Barnett Banks, Inc.............. 1,142,813
8,500 Comerica, Inc................... 767,125
16,200 Corestates Financial Corp....... 1,297,013
12,500 Fifth Third Bancorp............. 1,021,875
23,553 First Chicago NBD Corp.......... 1,966,675
50,850 First Union Corp................ 2,606,062
20,207 Fleet Financial Group, Inc...... 1,514,262
15,500 Huntington Bancshares........... 558,000
17,800 KeyCorp......................... 1,260,463
20,600 Mellon Bank Corp................ 1,248,875
17,300 National City Corp.............. 1,137,475
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BANKS -- MAJOR REGIONAL (CONTINUED)
57,588 NationsBank..................... $ 3,502,069
61,100 Norwest Corp.................... 2,359,987
24,700 PNC Bank Corp................... 1,409,444
4,400 Republic New York Corp.......... 502,425
13,000 State Street Corp............... 756,438
17,100 SunTrust Banks, Inc............. 1,220,513
19,854 U.S. Bancorp.................... 2,222,406
16,500 Wachovia Corp................... 1,338,563
7,000 Wells Fargo & Co................ 2,376,062
------------
35,662,522
------------
BANKS -- MONEY CENTER -- 2.5%
56,148 BankAmerica Corp................ 4,098,804
7,900 Bankers Trust New York Corp..... 888,256
11,100 BB&T Corp....................... 711,094
34,058 Chase Manhattan Corp............ 3,729,351
37,000 Citicorp........................ 4,678,187
14,400 J.P. Morgan & Co., Inc.......... 1,625,400
------------
15,731,092
------------
BEVERAGES -- ALCOHOLIC -- 0.5%
3,000 Adolph Coors Co................. 99,750
39,670 Anheuser-Busch Co., Inc......... 1,745,480
5,600 Brown-Forman Corp............... 309,400
29,600 Seagram Co., Ltd................ 956,450
------------
3,111,080
------------
BEVERAGES -- SOFT DRINKS -- 2.9%
200,100 Coca-Cola Co.................... 13,331,662
122,800 PepsiCo, Inc.................... 4,474,525
------------
17,806,187
------------
BROADCASTING/CABLE -- 0.4%
7,900 Clear Channel Communications*... 627,556
28,200 Comcast Corp. Special........... 890,063
41,046 Tele-Communications Inc.*....... 1,146,722
------------
2,664,341
------------
BUILDING & CONSTRUCTION --
MISCELLANEOUS -- 0.2%
3,300 Armstrong World Industries,
Inc............................. 246,675
13,400 Masco Corp...................... 681,725
4,300 Owens-Corning Fiberglass
Corp............................ 146,738
------------
1,075,138
------------
BUILDING -- HEAVY CONSTRUCTION -- 0.1%
6,800 Fluor Corp...................... 254,150
3,300 Foster Wheeler Corp............. 89,306
------------
343,456
------------
BUILDING -- MAINTENANCE & SERVICE -- 0.1%
5,200 Ecolab, Inc..................... 288,275
------------
BUILDING -- MOBILE/MANUFACTURING &
RECREATIONAL VEHICLES -- 0.0%
2,900 Fleetwood Enterprises, Inc...... 123,069
------------
</TABLE>
Continued
63
<PAGE> 65
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUILDING -- RESIDENTIAL/COMMERCIAL -- 0.1%
2,400 Centex Corp..................... $ 151,050
3,140 Kaufman & Broad Home Corp....... 70,454
1,700 Pulte Corp...................... 71,081
------------
292,585
------------
BUILDING PRODUCTS -- RETAIL/WHOLESALE -- 0.7%
59,231 Home Depot, Inc................. 3,487,225
14,100 Lowe's Cos., Inc................ 672,394
------------
4,159,619
------------
BUILDING PRODUCTS -- WOOD -- 0.2%
8,900 Louisiana-Pacific Corp.......... 169,100
16,150 Weyerhaeuser Co................. 792,359
------------
961,459
------------
BUSINESS INFORMATION -- 0.2%
13,165 Cognizant Corp.................. 586,665
13,765 Dun & Bradstreet Corp........... 425,855
------------
1,012,520
------------
BUSINESS SERVICES -- 0.1%
8,400 H & R Block..................... 376,425
------------
CAPITAL GOODS -- 0.3%
57,000 CBS Corp........................ 1,677,938
------------
CHEMICALS -- DIVERSIFIED -- 2.0%
4,400 B.F. Goodrich Co................ 182,325
18,300 Dow Chemical Co................. 1,857,450
91,600 E.I. du Pont de Nemours & Co.... 5,501,724
6,300 Eastman Chemical Co............. 375,244
7,900 Hercules, Inc................... 395,494
48,000 Monsanto Co..................... 2,016,000
14,400 PPG Industries, Inc............. 822,600
5,000 Rohm & Haas Co.,................ 478,750
10,000 Union Carbide Corp.............. 429,375
6,000 W.R. Grace & Co................. 482,625
------------
12,541,587
------------
CHEMICALS -- SPECIALTY -- 0.4%
8,900 Air Products & Chemical Inc..... 732,025
11,737 Engelhard Corp.................. 203,930
4,800 Great Lakes Chemical Corp....... 215,400
11,200 Morton International, Inc....... 385,000
5,400 Nalco Chemical Co............... 213,638
12,800 Praxair, Inc.................... 576,000
8,100 Sigma-Aldrich Corp.............. 321,975
------------
2,647,968
------------
COMPUTER SOFTWARE -- 2.9%
5,900 Adobe Systems, Inc.............. 243,375
44,218 Computer Associates
International, Inc.............. 2,338,026
97,600 Microsoft Corp.*................ 12,614,799
12,000 Nextlevel Systems Inc.*......... 214,500
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE (CONTINUED)
79,375 Oracle Corp.*................... $ 1,771,055
10,300 Parametric Technology Corp.*.... 487,963
------------
17,669,718
------------
COMPUTERS -- LOCAL AREA NETWORK -- 1.0%
28,000 3COM Corp.*..................... 978,250
17,100 Bay Networks, Inc.*............. 437,119
12,800 Cabletron Systems*.............. 192,000
81,400 Cisco Systems, Inc.*............ 4,538,050
28,300 Novell, Inc.*................... 212,250
------------
6,357,669
------------
COMPUTERS -- MAINFRAME -- 1.4%
78,700 International Business Machines
Corp............................ 8,229,069
14,200 Unisys Corp..................... 197,025
------------
8,426,094
------------
COMPUTERS -- MEMORY DEVICES -- 0.2%
40,100 EMC Corp.*...................... 1,100,244
19,800 Seagate Technology, Inc.*....... 381,150
------------
1,481,394
------------
COMPUTERS -- MICRO -- 1.0%
10,300 Apple Computer, Inc.*........... 135,188
61,267 Compaq Computer Corp............ 3,457,756
3,900 Data General Corp.*............. 68,006
26,400 Dell Computer Corp.*............ 2,217,600
------------
5,878,550
------------
COMPUTERS -- MINI -- 1.2%
12,200 Digital Equipment Corp.*........ 451,400
84,200 Hewlett-Packard Co.............. 5,262,500
15,200 Silicon Graphics, Inc.*......... 189,050
30,300 Sun Microsystems, Inc.*......... 1,208,213
------------
7,111,163
------------
COMPUTERS -- SERVICES -- 0.6%
23,700 Automatic Data Processing,
Inc............................. 1,454,587
6,400 Ceridian Corp.*................. 293,200
6,300 Computer Science*............... 526,050
12,200 Equifax, Inc.................... 432,338
35,400 First Data Corp................. 1,035,450
2,000 Shared Medical Systems Corp..... 132,000
------------
3,873,625
------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.7%
6,000 American Greetings Corp......... 234,750
3,195 Jostens, Inc.................... 73,685
12,900 Newell Cos., Inc................ 548,250
12,100 Rubbermaid, Inc................. 302,500
4,900 Tupperware Corp................. 136,588
51,800 Unilever NV, ADR................ 3,234,262
------------
4,530,035
------------
CONTAINERS & PACKAGING -- 0.1%
11,400 Owens-Illinois*................. 432,488
------------
</TABLE>
Continued
64
<PAGE> 66
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CONTAINERS -- METAL & GLASS -- 0.1%
2,400 Ball Corp....................... $ 84,750
10,400 Crown Cork & Seal Co., Inc...... 521,300
------------
606,050
------------
CONTAINERS -- PAPER & PLASTIC -- 0.0%
4,300 Bemis Co........................ 189,469
------------
COSMETICS & TOILETRIES -- 0.9%
4,500 Alberto Culver Co., Class B..... 144,281
10,700 Avon Products, Inc.............. 656,713
45,332 Gillette Co..................... 4,553,033
8,800 International Flavors &
Fragrances, Inc................. 453,200
------------
5,807,227
------------
DIVERSIFIED -- 4.7%
14,120 Allegheny Teledyne, Inc......... 365,355
45,600 Allied Signal, Inc.............. 1,775,550
3,750 Crane Co........................ 162,656
3,000 FMC Corp.*...................... 201,938
264,800 General Electric Co. (b)........ 19,429,699
9,600 ITT Industries, Inc............. 301,200
6,800 Johnson Controls, Inc........... 324,700
33,200 Minnesota Mining & Manufacturing
Co.............................. 2,724,475
3,600 National Service Industries,
Inc............................. 178,425
16,900 Rockwell International Corp..... 883,025
13,800 Tenneco, Inc.................... 545,100
13,300 Textron, Inc.,.................. 831,250
18,900 United Technologies Corp........ 1,376,156
8,200 Whittman Corp................... 213,713
------------
29,313,242
------------
ELECTRICAL & ELECTRONIC -- 0.0%
6,800 KLA-Tencor Corp.*............... 262,650
------------
ELECTRICAL COMPONENTS --
SEMICONDUCTORS -- 1.9%
11,500 Advanced Micro Devices, Inc.*... 206,281
132,400 Intel Corp...................... 9,301,099
11,500 LSI Logic Corp.*................ 227,125
17,100 Micron Technology, Inc.*........ 444,600
13,200 National Semiconductor Corp.*... 342,375
31,600 Texas Instruments, Inc.......... 1,422,000
------------
11,943,480
------------
ELECTRONIC -- CONNECTORS -- 0.2%
17,836 AMP, Inc........................ 749,112
4,500 Thomas & Betts Corp............. 212,625
------------
961,737
------------
ELECTRONIC MEASURING EQUIPMENT -- 0.0%
4,100 Tektronix, Inc.................. 162,719
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC MEASURING MACHINES -- 0.1%
29,500 Applied Materials, Inc.*........ $ 888,688
------------
ELECTRONICS -- 0.1%
7,000 Raychem Corp.................... 301,438
------------
ENERGY -- 0.0%
8,600 Orxy Energy Co.*................ 219,300
------------
FINANCE -- 0.3%
15,800 Sunamerica, Inc................. 675,450
20,830 Washington Mutual, Inc.......... 1,329,214
------------
2,004,664
------------
FINANCIAL -- BANKING -- 0.1%
14,200 Synovus Financial Corp.......... 465,050
------------
FINANCIAL -- CONSUMER LOANS -- 0.4%
4,300 Beneficial Corp................. 357,438
8,700 Household International, Inc.... 1,109,794
40,587 MBNA Corp....................... 1,108,532
------------
2,575,764
------------
FINANCIAL -- INVESTMENT BANKERS -- 0.5%
27,000 Merrill Lynch & Co., Inc........ 1,969,313
21,450 Schwab (Charles) Corp........... 899,559
------------
2,868,872
------------
FINANCIAL -- LEASING COMPANY -- 0.0%
6,200 Ryder Systems, Inc.............. 203,050
------------
FINANCIAL -- MISCELLANEOUS SERVICES -- 1.0%
37,600 American Express Co............. 3,355,800
47,916 Morgan Stanley, Dean Witter,
Discover & Co................... 2,833,034
------------
6,188,834
------------
FINANCIAL -- MORTGAGE & RELATED
SERVICES -- 1.3%
8,700 Country Wide Credit Industries,
Inc............................. 373,013
85,900 Fannie Mae...................... 4,901,668
56,200 Freddie Mac..................... 2,356,887
11,000 Green Tree Financial Corp....... 288,063
------------
7,919,631
------------
FINANCIAL -- SAVINGS & LOAN -- 0.2%
4,600 Golden West Financial Corp...... 449,938
7,800 H.F. Ahmanson & Co.............. 522,112
------------
972,050
------------
FOOD -- CANNED -- 0.6%
37,000 Campbell Soup Co................ 2,150,625
29,700 H.J. Heinz Co................... 1,509,131
------------
3,659,756
------------
FOOD -- CONFECTIONARY -- 0.2%
11,600 Hershey Foods Corp.............. 718,475
9,400 Wm. Wrigley Jr. Co.............. 747,888
------------
1,466,363
------------
</TABLE>
Continued
65
<PAGE> 67
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FOOD -- DIVERSIFIED -- 1.4%
38,150 ConAgra, Inc.................... $ 1,251,797
11,600 CPC International, Inc.......... 1,249,900
12,800 General Mills, Inc.............. 916,800
33,300 Kellogg Co...................... 1,652,513
11,200 Quaker Oats Co.................. 590,800
8,580 Ralston Purina Group............ 797,404
38,800 Sara Lee Corp................... 2,184,924
------------
8,644,138
------------
FOOD -- FLOUR & GRAIN -- 0.2%
45,163 Archer-Daniels-Midland Co....... 979,473
------------
FOOD ITEMS -- WHOLESALE -- 0.1%
4,900 Supervalu, Inc.................. 205,188
13,900 Sysco Corp...................... 633,318
------------
838,506
------------
FOREST PRODUCTS -- 0.1%
16,900 Fort James Corporation.......... 646,425
------------
FUNERAL SERVICES -- 0.1%
20,400 Service Corp. International..... 753,525
------------
GAMING -- 0.1%
14,500 Mirage Resorts*................. 329,875
------------
GAS & ELECTRIC UTILITY -- 0.3%
35,500 PG & E Corp..................... 1,080,531
18,800 Public Service Enterprises...... 595,725
------------
1,676,256
------------
GLASS PRODUCTS -- 0.1%
18,700 Corning, Inc.................... 694,238
------------
HOTELS & LODGING -- 0.3%
20,300 Hilton Hotels Corp.............. 603,925
9,400 ITT Corp.*...................... 779,025
10,300 Marriott International, Inc..... 713,275
------------
2,096,225
------------
INSTRUMENTS -- CONTROL -- 0.1%
4,022 General Signal Corp............. 169,678
10,300 Honeywell, Inc.................. 705,550
------------
875,228
------------
INSTRUMENTS -- SCIENTIFIC -- 0.1%
3,700 EG&G, Inc....................... 77,006
3,500 Millipore Corp.................. 118,781
3,600 Perkin-Elmer Corp............... 255,826
------------
451,613
------------
INSURANCE -- 0.2%
4,400 Cincinnati Financial Corp....... 619,300
5,800 Progressive Corp-Ohio........... 695,275
------------
1,314,575
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.1%
13,600 Aon Corp........................ 797,300
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INSURANCE -- BROKERS -- 0.2%
13,700 Marsh & McLennan Cos., Inc...... $ 1,021,506
------------
INSURANCE -- LIFE -- 0.7%
19,798 American General Corp........... 1,070,330
15,200 Conseco, Inc.................... 690,650
5,750 Jefferson-Pilot Corp............ 447,781
7,700 Providian Financial............. 347,944
11,300 Torchmark Corp.................. 475,306
5,082 TransAmerica Corp............... 541,233
11,200 UNUM Corp....................... 609,000
------------
4,182,244
------------
INSURANCE -- MULTI-LINE -- 1.6%
12,070 Aetna, Inc...................... 851,689
6,000 CIGNA Corp...................... 1,038,375
9,600 Hartford Financial Services
Group, Inc...................... 898,200
9,300 Loews Corp...................... 986,963
7,200 MBIA, Inc....................... 481,050
9,200 MGIC Investment Corp............ 611,800
92,794 Travelers Group, Inc............ 4,999,277
------------
9,867,354
------------
INSURANCE -- PROPERTY & CASUALTY -- 2.2%
34,699 Allstate Corp................... 3,153,271
56,720 American International Group.... 6,168,299
13,800 Chubb Corp...................... 1,043,625
6,400 General Re Corp................. 1,356,800
8,300 Lincoln National Corp........... 648,438
11,400 Safeco Corp..................... 555,750
6,800 St. Paul Cos., Inc.............. 558,025
9,100 USF&G Corp...................... 200,769
------------
13,684,977
------------
LEISURE & RECREATION PRODUCTS -- 0.0%
8,100 Brunswick Corp.................. 245,531
------------
LEISURE & RECREATION/GAMING -- 0.0%
8,200 Harrah's Entertainment, Inc.*... 154,775
------------
MACHINE TOOLS & RELATED PRODUCTS -- 0.0%
3,200 Cincinnati Milacron, Inc........ 83,000
------------
MACHINERY -- CONSTRUCTION/MINING -- 0.3%
30,100 Caterpillar, Inc................ 1,461,731
13,350 Ingersoll-Rand Co............... 540,675
------------
2,002,406
------------
MACHINERY -- ELECTRICAL -- 0.4%
35,900 Emerson Electric Co............. 2,026,106
4,000 W.W. Grainger, Inc.............. 388,750
------------
2,414,856
------------
MACHINERY -- FARM -- 0.3%
2,000 Briggs & Stratton Corp.......... 97,125
6,100 Case Corp....................... 368,669
20,400 Deere & Co...................... 1,189,575
------------
1,655,369
------------
</TABLE>
Continued
66
<PAGE> 68
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MACHINERY -- GENERAL INDUSTRIAL -- 0.5%
2,300 Aeroquip-Vickers Inc............ $ 112,844
9,800 Cooper Industries, Inc.......... 480,200
18,000 Dover Corp...................... 650,250
4,022 Harnischfeger Industries,
Inc............................. 142,027
20,200 Illinois Tool Works, Inc........ 1,214,525
9,025 Parker-Hannifin Corp............ 414,022
------------
3,013,868
------------
MACHINERY -- MATERIAL HANDLING -- 0.0%
700 Nacco Industries, Inc........... 75,031
------------
MACHINERY -- THERMAL PROCESSOR -- 0.1%
12,200 Thermo Electron Corp.*.......... 542,900
------------
MEDIA CONGLOMERATES -- 1.5%
45,260 Time Warner, Inc................ 2,806,120
28,600 Viacom, Inc.*................... 1,185,113
54,600 Walt Disney Co.................. 5,408,812
------------
9,400,045
------------
MEDICAL -- BIOMEDICAL/GENETIC -- 0.2%
21,300 Amgen, Inc...................... 1,152,863
------------
MEDICAL -- DRUGS -- 7.8%
61,900 Abbott Laboratories............. 4,058,319
6,900 Alza Corp.*..................... 219,506
52,600 American Home Products Corp..... 4,023,900
80,500 Bristol-Myers Squibb Co......... 7,617,313
89,800 Eli Lilly & Co.................. 6,252,325
97,000 Merck & Co., Inc................ 10,306,249
104,700 Pfizer, Inc..................... 7,806,693
41,030 Pharmacia & Upjohn, Inc......... 1,502,724
59,200 Schering-Plough Corp............ 3,677,800
22,000 Warner-Lambert Co............... 2,728,000
------------
48,192,829
------------
MEDICAL -- HEALTH MEDICAL
ORGANIZATION -- 0.2%
13,300 Humana, Inc.*................... 275,975
15,200 United Healthcare Corp.......... 755,250
------------
1,031,225
------------
MEDICAL -- HOSPITAL -- 0.4%
52,449 Columbia/HCA Healthcare Corp.... 1,553,801
24,700 Tenet Healthcare Corp.*......... 818,188
------------
2,371,989
------------
MEDICAL -- NURSING HOMES -- 0.0%
5,100 Manor Care, Inc................. 178,500
------------
MEDICAL -- OUTPATIENT/HOME CARE -- 0.1%
31,900 HEALTHSOUTH Corp.*.............. 885,225
------------
MEDICAL -- WHOLESALE DRUG -- 0.1%
8,800 Cardinal Health, Inc............ 661,100
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL INSTRUMENTS -- 0.4%
9,000 Biomet, Inc..................... $ 230,625
38,000 Medtronic, Inc.................. 1,987,875
7,400 St. Jude Medical, Inc........... 225,700
6,100 U.S. Surgical Corp.............. 178,806
------------
2,623,006
------------
MEDICAL PRODUCTS -- 0.6%
5,300 Allergan, Inc................... 177,881
22,700 Baxter International, Inc....... 1,144,931
15,700 Boston Scientific Corp.*........ 720,238
12,000 Guidant Corp.................... 747,000
16,200 HBO & Co........................ 777,600
5,900 Mallinckrodt, Inc............... 224,200
------------
3,791,850
------------
MEDICAL/DENTAL SUPPLIES -- 1.3%
4,500 Bausch & Lomb, Inc.............. 178,313
9,900 Becton, Dickinson & Co.......... 495,000
4,600 C.R. Bard, Inc.................. 144,038
108,800 Johnson & Johnson............... 7,167,199
------------
7,984,550
------------
METAL -- GOLD -- 0.2%
30,200 Barrick Gold Corp............... 562,474
18,600 Battle Mountian Gold Co......... 109,275
11,300 Echo Bay Mines Ltd.............. 27,544
11,900 Homestake Mining Co............. 105,613
12,615 Newmont Mining Corp............. 370,565
19,400 Placer Dome, Inc................ 246,138
------------
1,421,609
------------
METAL -- MISCELLANEOUS -- 0.1%
7,600 Cyprus Amax Minerals Co......... 116,850
13,500 Inco, Ltd....................... 229,500
------------
346,350
------------
METAL -- NON-FERROUS -- 0.4%
18,350 Alcan Aluminum, Ltd............. 506,919
14,000 Aluminum Co. of America......... 985,249
3,400 Asarco, Inc..................... 76,288
15,900 Freeport-McMoran Copper &
Gold, Inc. -- Class B........... 250,425
4,800 Phelps Dodge Corp............... 298,800
6,000 Reynolds Metals Co.............. 360,000
------------
2,477,681
------------
METAL -- PROCESSING & FABRICATION -- 0.1%
5,100 Timken Co....................... 175,312
7,825 Worthington Industries, Inc..... 129,113
------------
304,425
------------
MOVIE/TELEVISION PRODUCTION &
DISTRIBUTION -- 0.0%
2,950 King World Productions, Inc..... 170,363
------------
NON-HAZARDOUS WASTE DISPOSAL -- 0.2%
36,800 Waste Management Inc............ 1,012,000
------------
</TABLE>
Continued
67
<PAGE> 69
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OFFICE AUTOMATION & EQUIPMENT -- 0.5%
11,700 Pitney Bowes, Inc............... $ 1,052,269
26,367 Xerox Corp...................... 1,946,214
------------
2,998,483
------------
OFFICE SUPPLIES & FORMS -- 0.2%
8,300 Avery Dennison Corp............. 371,425
6,600 Deluxe Corp..................... 227,700
10,744 IKON Office Solutions, Inc...... 302,175
2,500 John H. Harland Co.............. 52,500
7,200 Moore Corp., Ltd................ 108,900
------------
1,062,700
------------
OIL & GAS -- 0.1%
4,800 Anadarko Petroleum Corp......... 291,300
7,300 Apache Corp..................... 255,956
------------
547,256
------------
OIL & GAS -- DRILLING -- 0.6%
7,000 Rowan Cos., Inc.*............... 213,500
40,100 Schlumberger Ltd................ 3,228,050
------------
3,441,550
------------
OIL -- FIELD SERVICES -- 0.2%
21,200 Halliburton Co.................. 1,101,075
4,400 Western Atlas*.................. 325,600
------------
1,426,675
------------
OIL -- INTERNATIONAL INTEGRATED -- 5.6%
53,100 Chevron Corp.................... 4,088,700
199,500 Exxon Corp...................... 12,206,905
63,500 Mobil Corp...................... 4,583,906
173,500 Royal Dutch Petroleum Co., ADR.. 9,401,531
44,300 Texaco, Inc..................... 2,408,813
------------
32,689,855
------------
OIL -- PRODUCTION/PIPELINE -- 0.5%
8,550 Coastal Corp.................... 529,566
4,500 Columbia Gas System, Inc........ 353,531
25,700 Enron Corp...................... 1,068,156
6,900 Sonat, Inc...................... 315,675
25,800 Williams Co..................... 732,075
------------
2,999,003
------------
OIL -- U.S. EXPLORATION & PRODUCTION -- 0.2%
14,265 Burlington Resources, Inc....... 639,250
2,000 Helmerich & Payne, Inc.......... 135,750
20,523 Union Pacific Resources Group,
Inc............................. 497,683
------------
1,272,683
------------
OIL -- U.S. INTEGRATED -- 1.6%
7,400 Amerada Hess Corp............... 406,075
39,400 Amoco Corp...................... 3,353,924
26,000 Atlantic Richfield Co........... 2,083,249
3,900 Kerr-Mcgee Corp................. 246,919
27,400 Occidental Petroleum Corp....... 803,163
3,800 Pennzoil Co..................... 253,888
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OIL -- U.S. INTEGRATED (CONTINUED)
21,300 Phillips Petroleum Co........... $ 1,035,713
19,900 Unocal Corp..................... 772,369
23,300 USX-Marathon Group.............. 786,375
------------
9,741,675
------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.2%
13,700 Baker Hughes, Inc............... 597,662
14,200 Dresser Industries, Inc......... 595,513
4,500 McDermott International, Inc.... 164,813
------------
1,357,988
------------
OIL REFINING -- 0.1%
6,100 Ashland, Inc.................... 327,494
5,774 Sun Co., Inc.................... 242,869
------------
570,363
------------
PAINTS & RELATED PRODUCTS -- 0.1%
14,000 Sherwin-Williams Co............. 388,500
------------
PAPER & RELATED PRODUCTS -- 0.9%
4,508 Boise Cascade Corp.............. 136,367
7,800 Champion International Co....... 353,438
7,500 Georgia Pacific Corp............ 455,625
24,424 International Paper Co.......... 1,053,285
44,440 Kimberly-Clark Corp............. 2,191,447
8,500 Mead Corp....................... 238,000
2,300 Potlatch Corp................... 98,900
8,046 Stone Container Corp............ 83,980
4,600 Temple-Inland, Inc.............. 240,638
5,600 Union Camp Corp................. 300,650
8,250 Westvaco Corp................... 259,359
9,000 Williamette Industries, Inc..... 289,688
------------
5,701,377
------------
PHOTOGRAPHY -- 0.3%
26,300 Eastman Kodak Co................ 1,599,369
3,589 Polaroid Corp................... 174,739
------------
1,774,108
------------
POLLUTION CONTROL -- 0.2%
16,100 Browning-Ferris Industries,
Inc............................. 595,700
26,600 Laidlaw, Inc.................... 362,425
10,299 Pall Corp....................... 213,061
4,700 Safety-Kleen Corp............... 128,956
------------
1,300,142
------------
PRINTING -- COMMERCIAL -- 0.1%
11,800 R.R. Donnelley & Sons Co........ 439,550
------------
PROTECTION -- SAFETY -- 0.3%
43,100 Tyco International Ltd.......... 1,942,194
------------
PUBLISHING -- BOOKS -- 0.1%
8,000 McGraw-Hill Cos., Inc........... 592,000
------------
PUBLISHING -- NEWSPAPERS -- 0.6%
7,800 Dow Jones & Co.................. 418,763
23,000 Gannett, Inc.................... 1,421,687
7,000 Knight-Ridder, Inc.............. 364,000
</TABLE>
Continued
68
<PAGE> 70
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PUBLISHING -- NEWSPAPERS (CONTINUED)
7,800 New York Times Co............... $ 515,775
7,800 Times Mirror Co................. 479,700
9,900 Tribune Co...................... 616,275
------------
3,816,200
------------
PUBLISHING -- PERIODICALS -- 0.0%
4,300 Meredith Corp................... 153,456
------------
RESTAURANTS -- 0.6%
12,400 Darden Restaurants, Inc......... 155,000
55,700 McDonald's Corp................. 2,659,675
12,310 Tricon Global Restaurants*...... 357,759
10,700 Wendy's International, Inc...... 257,469
------------
3,429,903
------------
RETAIL -- 0.4%
64,019 Cendant Corp.*.................. 2,200,653
------------
RETAIL -- APPAREL/SHOES -- 0.4%
8,600 Charming Shoppes, Inc.*......... 40,313
32,550 Gap, Inc........................ 1,153,490
21,978 Limited, Inc.................... 560,439
6,200 Nordstrom, Inc.................. 374,325
13,200 TJX Companies, Inc.............. 453,750
------------
2,582,317
------------
RETAIL -- CONSUMER ELECTRONICS -- 0.1%
8,000 Circuit City Stores, Inc........ 284,500
------------
RETAIL -- DISCOUNT -- 1.7%
17,150 Costco Cos., Inc.*.............. 765,319
17,600 Dayton-Hudson Corp.............. 1,188,000
39,500 Kmart Corp.*.................... 456,719
23,150 Toys 'R' Us, Inc.*.............. 727,778
182,400 Wal-Mart Stores, Inc............ 7,193,399
10,900 Woolworth Corp.*................ 222,088
------------
10,553,303
------------
RETAIL -- DRUG STORE -- 0.5%
13,900 CVS Corp........................ 890,469
3,100 Longs Drug Stores Corp.......... 99,588
10,100 Rite Aid Corp................... 592,744
39,800 Walgreen Co..................... 1,248,724
------------
2,831,525
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.6%
5,716 Harcourt General, Inc........... 312,951
20,200 J.C. Penney, Inc................ 1,218,313
18,700 May Department Stores Co........ 985,256
31,675 Sears, Roebuck & Co............. 1,433,294
------------
3,949,814
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.2%
9,000 Dillards Department Stores,
Inc............................. 317,250
17,000 Federated Department Stores,
Inc.*........................... 732,063
3,000 Mercantile Stores Co............ 182,625
------------
1,231,938
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- SUPERMARKETS -- 0.5%
19,900 Albertsons, Inc................. $ 942,762
22,100 American Stores Co.............. 454,431
4,900 Giant Food Inc.................. 165,069
3,100 Great Atlantic & Pacific Tea
Co., Inc........................ 92,031
20,600 Kroger Co.*..................... 760,913
12,000 Winn-Dixie Stores, Inc.......... 524,250
------------
2,939,456
------------
RETAIL/WHOLESALE -- AUTO PARTS -- 0.1%
12,200 Autozone, Inc.*................. 353,800
5,100 Pep Boys-Manny, Moe & Jack...... 121,763
------------
475,563
------------
RETAIL/WHOLESALE -- COMPUTERS -- 0.1%
8,428 Tandy Corp...................... 325,005
------------
RUBBER -- TIRES -- 0.2%
6,400 Cooper Tire & Rubber Co......... 156,000
12,700 Goodyear Tire & Rubber Co....... 808,038
------------
964,038
------------
SHOES & RELATED APPAREL -- 0.2%
23,500 Nike, Inc....................... 922,375
4,600 Reebok International Ltd.*...... 132,538
------------
1,054,913
------------
SOAP & CLEANING PREPARATIONS -- 1.8%
8,400 Clorox, Inc..................... 664,125
23,900 Colgate-Palmolive Co............ 1,756,650
108,800 Procter & Gamble Co............. 8,683,600
------------
11,104,375
------------
STEEL -- PRODUCERS -- 0.1%
8,700 Armco, Inc.*.................... 42,956
9,100 Bethlehem Steel Corp.*.......... 78,488
4,000 Inland Steel Industries, Inc.... 68,500
7,100 Nucor Corp...................... 343,019
6,940 USX-U.S. Steel Group, Inc....... 216,875
------------
749,838
------------
TECHNOLOGY -- SOFTWARE -- 0.0%
3,900 Auto Desk....................... 144,300
------------
TELECOMMUNICATIONS -- 0.2%
49,100 US West Media Group*............ 1,417,763
------------
TELECOMMUNICATIONS -- CELLULAR -- 0.3%
40,800 Airtouch Communications,
Inc.*........................... 1,695,750
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 1.7%
7,255 Andrew Corp.*................... 174,120
9,500 DSC Communications Corp.*....... 228,000
6,500 Harris Corp..................... 298,188
51,923 Lucent Technologies, Inc........ 4,147,349
48,300 Motorola, Inc................... 2,756,118
21,200 Northern Telecom, Ltd........... 1,886,800
</TABLE>
Continued
69
<PAGE> 71
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- EQUIPMENT (CONTINUED)
6,400 Scientific-Atlanta, Inc......... $ 107,200
14,700 Tellabs, Inc.*.................. 777,263
------------
10,375,038
------------
TEXTILE -- APPAREL -- 0.2%
5,900 Fruit of the Loom, Inc.*........ 151,188
5,600 Liz Claiborne, Inc.............. 234,150
3,000 Russell Corp.................... 79,688
10,000 VF Corp......................... 459,374
------------
924,400
------------
TEXTILE -- HOME FURNISHINGS -- 0.0%
1,600 Springs Industries, Inc......... 83,200
------------
TOBACCO -- 1.6%
13,900 Fortune Brands Inc.............. 515,169
196,200 Philip Morris Cos., Inc......... 8,890,312
14,900 U.S.T., Inc..................... 550,369
------------
9,955,850
------------
TOOLS -- HAND HELD -- 0.1%
7,700 Black & Decker Corp............. 300,781
4,950 Snap-On, Inc.................... 215,944
7,200 The Stanley Works............... 339,750
------------
856,475
------------
TOYS/GAME/HOBBY -- 0.2%
10,200 Hasbro, Inc..................... 321,300
23,547 Mattel, Inc..................... 877,126
------------
1,198,426
------------
TRANSPORTATION -- AIR FREIGHT -- 0.1%
9,300 Federal Express Corp.*.......... 567,881
------------
TRANSPORTATION -- AIRLINE -- 0.4%
7,400 AMR Corp.*...................... 950,900
6,000 Delta Air Lines, Inc............ 714,000
17,750 Southwest Airlines Co........... 437,094
7,400 US Airways Group, Inc.*......... 462,500
------------
2,564,494
------------
TRANSPORTATION -- RAILROAD -- 0.7%
12,600 Burlington Northern Santa Fe
Corp............................ 1,171,013
17,608 CSX Corp........................ 950,832
30,500 Norfolk Southern Corp........... 939,781
20,000 Union Pacific Corp.............. 1,248,750
------------
4,310,376
------------
TRANSPORTATION -- TRUCKING -- 0.0%
3,200 Caliber Systems, Inc............ 155,800
------------
UTILITIES -- ELECTRIC POWER -- 2.4%
15,300 American Electric Power Co...... 789,863
11,900 Baltimore Gas & Electric Co..... 405,344
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- ELECTRIC POWER (CONTINUED)
12,200 Carolina Power & Light Co....... $ 517,738
17,200 Central & South West Corp....... 465,475
12,735 CINergy Corp.................... 487,910
19,000 Consolidated Edison Co. of New
York, Inc....................... 779,000
11,700 Detroit Edison Co............... 405,844
15,150 Dominion Resources, Inc......... 644,822
29,106 Duke Power Co................... 1,611,744
31,700 Edison International............ 861,843
19,700 Entergy Corp.................... 589,769
18,600 First Energy Corp.*............. 539,400
14,700 Florida Power & Light, Inc...... 870,055
9,800 General Public Utilities
Corp............................ 412,825
23,044 Houston Industries, Inc......... 614,987
11,700 Niagara Mohawk Power Corp.*..... 122,850
6,000 Northern States Power Co........ 349,500
24,000 PacifiCorp...................... 655,500
18,000 Peco Energy Corp................ 436,500
13,400 PP&L Resources, Inc............. 320,763
55,800 Southern Co..................... 1,443,824
19,970 Texas Utilities Co.............. 830,003
17,500 Unicom Corp..................... 538,125
8,300 Union Electric Co............... 358,975
------------
15,052,659
------------
UTILITIES -- GAS DISTRIBUTION -- 0.2%
7,700 Consolidated Natural Gas Co..... 465,849
1,600 Eastern Enterprises............. 72,000
3,900 Nicor, Inc...................... 164,531
2,500 ONEOK Inc....................... 100,938
6,700 Pacific Enterprises............. 252,088
2,800 People's Energy Corp............ 110,250
------------
1,165,656
------------
UTILITIES -- TELEPHONE -- 6.6%
15,000 Alltel Corp..................... 615,938
44,300 Ameritech Corp.................. 3,566,150
131,456 AT&T Corp....................... 8,051,679
62,820 Bell Atlantic Corp.............. 5,716,619
80,200 BellSouth Corp.................. 4,516,263
13,300 Frontier Corp................... 320,031
77,500 GTE Corp........................ 4,049,375
56,400 MCI Communications Corp......... 2,414,625
74,209 SBC Communications, Inc......... 5,435,809
34,800 Sprint Corp..................... 2,040,150
39,100 U.S. West, Inc.................. 1,764,388
73,100 WorldCom, Inc.*................. 2,211,275
------------
40,702,302
------------
TOTAL COMMON STOCKS............. 611,246,056
------------
(Cost $428,692,981)
</TABLE>
Continued
70
<PAGE> 72
The Kent Funds
INDEX EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 1.0%
AUTOMOTIVE -- 1.0%
$5,896,442 General Motors Acceptance Corp.,
5.65%, 1/2/98................... $ 5,896,442
------------
TOTAL COMMERCIAL PAPER 5,896,442
------------
(Cost $5,896,442)
TOTAL INVESTMENTS -- 99.8%.................. $617,142,498
(Cost $434,589,423)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.2%....................... 1,021,028
------------
TOTAL NET ASSETS -- 100.0%.................. $618,163,526
============
</TABLE>
- ---------------
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal tax reporting of $838,110. Cost for
federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...............
$192,447,182
Unrealized depreciation...............
(10,732,217)
------------
Net unrealized appreciation...........
$181,714,965
============
</TABLE>
(b) Security has been deposited as initial margin on open future contracts.
* Non-income producing security.
ADR American Depositary Receipt
At December 31, 1997, the Portfolio's open futures contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING CURRENT MARKET
CONTRACTS CONTRACT TYPE POSITION VALUE
- --------- ----------------- ---------- ----------
<S> <C> <C> <C>
Standard & Poor's
24 500, 3/19/98 $5,748,390 $5,874,600
</TABLE>
See Notes to Financial Statements.
71
<PAGE> 73
The Kent Funds
SHORT TERM BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 2.7%
FINANCE -- 2.7%
$ 4,036,781 General Electric Capital Corp.,
5.65%, 1/2/98.................. $ 4,036,781
------------
TOTAL COMMERCIAL PAPER......... 4,036,781
------------
(Cost $4,036,781)
CORPORATE NOTES & BONDS -- 61.8%
BANKING -- 6.8%
5,000,000 ABN Amro Bank, 6.63%,
10/31/01....................... 5,074,505
5,000,000 Chase Manhattan Corp., 5.88%,
8/4/99......................... 4,981,400
------------
10,055,905
------------
BROKERS -- 10.1%
5,000,000 Goldman Sachs Group L.P.,
6.10%, 4/15/98................. 4,995,900
6,000,000 Morgan Stanley Group, Inc.,
6.50%, 3/30/01................. 6,071,160
3,750,000 Salomon, Inc., 6.50%, 3/1/00... 3,769,650
------------
14,836,710
------------
FINANCE -- 24.4%
5,329,000 Associates Corp N.A., 5.25%,
3/30/00........................ 5,231,906
5,000,000 CIT Group Holdings, 6.10%,
8/9/99......................... 5,008,600
5,000,000 General Motors Acceptance
Corp., 8.25%, 1/23/98.......... 5,005,600
5,000,000 Household International, 7.28%,
7/22/99........................ 5,101,950
5,000,000 MCN Investment Corp., 6.89%,
1/16/02........................ 5,121,800
5,000,000 New England Education, Loan
Marketing Corp., 6.13%,
7/17/98........................ 5,004,550
5,000,000 Norwest Financial, Inc., 7.88%,
2/15/02........................ 5,296,899
------------
35,771,305
------------
INDUSTRIAL GOODS & SERVICES -- 5.7%
4,375,000 Enron Corp., 6.45%, 11/15/01... 4,383,794
4,000,000 SuperValu, Inc., 7.25%,
7/15/99........................ 4,060,440
------------
8,444,234
------------
PHARMACEUTICALS -- 3.5%
5,000,000 American Home Products Corp.,
7.70%, 2/15/00................. 5,146,850
------------
RETAIL -- 3.8%
5,500,000 Sears Roebuck Co., 8.45%,
11/1/98........................ 5,599,550
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
TELECOMMUNICATIONS -- 4.1%
$ 6,000,000 Southwestern Bell Telephone
Co., 6.13%, 3/12/01............ $ 6,014,520
------------
UTILITIES -- 3.4%
5,000,000 Georgia Power Co., First
Mortgage, 6.13%, 9/1/99........ 4,999,450
------------
TOTAL CORPORATE NOTES & BONDS.. 90,868,524
------------
(Cost $90,517,034)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 10.2%
5,000,000 Federal Home Loan Bank, 5.81%,
11/4/99........................ 5,000,000
5,000,000 Federal Home Loan Mortgage
Corp., 4.65%*, 3/11/98......... 4,990,650
5,000,000 Federal National Mortgage
Assoc., 6.03%, 7/2/99.......... 5,020,300
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 15,010,950
------------
(Cost $14,991,941)
U.S. GOVERNMENT OBLIGATIONS (23.6%)
U.S. TREASURY NOTES (23.6%)
6,000,000 5.50%, 11/15/98................ 5,993,460
20,000,000 7.50%, 10/31/99................ 20,618,800
5,000,000 6.00%, 8/15/00................. 5,035,950
3,000,000 6.63%, 7/31/01................. 3,084,360
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 34,732,570
------------
(Cost $34,315,957)
TOTAL INVESTMENTS - 98.3%................... 144,648,825
(Cost $143,861,713) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7%....................... 2,522,839
------------
TOTAL NET ASSETS -- 100.0%.................. $147,171,664
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 1,315,282
Unrealized depreciation............... (528,170)
------------
Net unrealized appreciation........... $ 787,112
============
</TABLE>
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
See Notes to Financial Statements.
72
<PAGE> 74
The Kent Funds
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 0.7%
FINANCE -- 0.7%
$ 5,007,999 General Electric Capital Corp.,
5.65%, 1/2/98.................. $ 5,007,999
------------
TOTAL COMMERCIAL PAPER......... 5,007,999
------------
(Cost $5,007,999)
CORPORATE NOTES & BONDS -- 27.9%
BANKING -- 7.4%
6,000,000 Bank of Montreal-Chicago,
7.80%, 4/1/07.................. 6,515,520
8,000,000 Chase Manhattan Corp., 7.25%,
6/1/07......................... 8,368,640
5,000,000 J.P. Morgan & Co., 7.63%,
9/15/04........................ 5,338,800
5,000,000 MBNA American Bank NA, 7.25%,
9/15/02........................ 5,136,450
5,000,000 NCNB Corp., 9.38%, 9/15/09..... 6,111,150
8,000,000 Royal Bank of Scotland, 6.38%,
2/1/11......................... 7,679,040
7,000,000 Societe Generale New York,
9.88%, 7/15/03................. 8,119,860
9,350,000 Societe Generale New York,
7.40%, 6/1/06.................. 9,768,413
------------
57,037,873
------------
BROKERS -- 1.3%
5,000,000 Salomon, Inc., 6.08%*,
2/15/98........................ 5,023,800
5,000,000 Salomon, Inc., 7.25%, 5/1/01... 5,131,600
------------
10,155,400
------------
FINANCE -- 12.9%
5,000,000 American Financial Group,
7.13%, 12/15/07................ 5,046,200
5,000,000 Associates Corp., N.A., 6.52%,
10/11/02....................... 5,075,850
5,500,000 Bear Stearns Co., 6.75%,
4/15/03........................ 5,579,860
11,000,000 Caterpillar Financial Services,
6.95%, 11/1/00................. 11,250,580
5,000,000 First Union Institutional
Capital I, 8.04%, 12/1/26,
Callable 12/1/06 @ 104.02...... 5,269,900
10,000,000 Ford Capital Guaranteed Notes,
9.88%, 5/15/02................. 11,315,700
8,400,000 Ford Motor Credit Corp., 9.03%,
12/30/09, Callable 12/30/04 @
100............................ 9,555,672
5,000,000 General Electric Capital Corp.,
6.66%*, 5/1/18, Callable 5/1/00
@100........................... 5,064,000
5,000,000 Household Finance Corp., 8.00%,
8/1/04......................... 5,394,550
8,000,000 HSBC America Capital II, 8.38%,
5/15/27, Callable 5/15/07 @
104.19......................... 8,529,760
5,000,000 Lehman Brothers, Inc., 7.38%,
1/15/07........................ 5,252,050
10,000,000 New England Education, Loan
Marketing Corp., 6.13%,
7/17/98........................ 10,009,100
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
FINANCE (CONTINUED)
$ 7,000,000 Safeco Corp., 6.88%, 7/15/07
(b)............................ $ 7,162,330
5,000,000 Smith Barney Holdings, Inc.,
6.63%, 11/15/03................ 5,042,800
------------
99,548,352
------------
INDUSTRIAL GOODS & SERVICES -- 4.1%
14,800,000 Comdisco, Inc., 6.94%,
5/2/00......................... 15,045,828
6,000,000 ConAgra, Inc., 6.70%, 8/1/27... 6,158,220
10,000,000 SuperValu, Inc., 7.25%,
7/15/99........................ 10,151,100
------------
31,355,148
------------
RETAIL -- 0.7%
5,000,000 Sears Roebuck Acceptance Corp.,
6.86%, 8/6/01.................. 5,103,850
------------
TELECOMMUNICATIONS -- 0.8%
6,000,000 Bell Canada, 7.75%, 4/1/06..... 6,513,960
------------
UTILITIES -- 0.7%
5,000,000 Western Resorces, Inc., 6.88%,
8/1/04......................... 5,074,700
------------
TOTAL CORPORATE NOTES & BONDS.. 214,789,283
------------
(Cost $208,980,613)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 7.5%
10,000,000 Federal Farm Credit Bank,
6.30%, 9/23/04................. 10,175,000
5,000,000 Federal Home Loan Bank, 6.49%,
1/08/04........................ 5,150,800
5,000,000 Federal Home Loan Mortgage
Corp., 4.65%*, 3/11/98......... 4,990,650
10,410,000 Federal Home Loan Mortgage
Corp., 8.12%, 1/31/05.......... 11,631,509
3,000,000 Federal Home Loan Mortgage
Corp., 7.22%, 6/14/06.......... 3,224,070
7,950,000 Federal National Mortgage
Assoc., 7.35%, 3/28/05......... 8,549,987
9,100,000 Federal National Mortgage
Assoc., 6.00%, 11/15/22........ 8,937,838
5,000,000 Tennessee Valley Authority,
6.25%, 12/15/17................ 4,990,600
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 57,650,454
------------
(Cost $56,241,166)
U.S. GOVERNMENT OBLIGATIONS -- 60.9%
8,000,000 U.S. Treasury Bond, 9.13%,
5/15/09........................ 9,357,520
10,000,000 U.S. Treasury Note, 8.88%,
2/15/99........................ 10,345,300
35,000,000 U.S. Treasury Note, 6.38%,
5/15/99........................ 35,322,700
68,250,000 U.S. Treasury Note, 7.75%,
1/31/00........................ 70,980,000
</TABLE>
Continued
73
<PAGE> 75
The Kent Funds
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (CONTINUED)
$23,050,000 U.S. Treasury Note, 6.88%,
3/31/00........................ $ 23,619,105
24,000,000 U.S. Treasury Note, 8.75%,
8/15/00........................ 25,754,880
33,500,000 U.S. Treasury Note, 6.25%,
8/31/00........................ 33,950,240
70,300,000 U.S. Treasury Note, 6.38%,
3/31/01........................ 71,618,125
56,000,000 U.S. Treasury Note, 6.50%,
5/31/01........................ 57,330,000
77,000,000 U.S. Treasury Note, 7.50%,
11/15/01....................... 81,632,319
35,000,000 U.S. Treasury Note, 6.25%,
2/15/03........................ 35,793,100
6,000,000 U.S. Treasury Note, 6.50%,
8/15/05........................ 6,260,640
6,800,000 U.S. Treasury Note, 6.13%,
8/15/07........................ 6,988,088
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 468,952,017
------------
(Cost $466,513,738)
YANKEE CERTIFICATES OF DEPOSIT -- 1.3%
10,000,000 Potash Corp. Saskatchewan,
7.13%, 6/15/07................. 10,227,600
------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT........................ 10,227,600
------------
(Cost $10,026,500)
TOTAL INVESTMENTS -- 98.3%.................. 756,627,353
(Cost $746,770,016)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7%....................... 13,084,148
------------
TOTAL NET ASSETS -- 100.0%.................. $769,711,501
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................ $12,213,872
Unrealized depreciation................ (2,356,535)
-----------
Net unrealized appreciation............ $ 9,857,337
===========
</TABLE>
(b) 144A security which is restricted as to resale to institutional investors.
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
See Notes to Financial Statements.
74
<PAGE> 76
The Kent Funds
INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 4.0%
FINANCE -- 4.0%
$ 9,469,120 General Electric Capital Corp.,
5.65%, 1/2/98.................. $ 9,469,120
------------
TOTAL COMMERCIAL PAPER......... 9,469,120
------------
(Cost $9,469,120)
CORPORATE NOTES & BONDS -- 37.2%
BANKING -- 16.9%
2,700,000 Bank of Montreal-Chicago,
7.80%, 4/1/07.................. 2,931,984
2,000,000 Bank of New York, 8.50%,
12/15/04....................... 2,239,600
2,000,000 BankAmerica Corp., 7.20%,
4/15/06........................ 2,089,080
2,000,000 Chase Manhattan Corp., 7.13%,
3/1/05......................... 2,069,960
2,000,000 Fleet/Norstar Group, 8.63%,
1/15/07........................ 2,275,920
2,000,000 Midland Bank PLC, 7.63%,
6/15/06........................ 2,125,160
3,000,000 National City Bank of
Cleveland, 7.25%, 7/15/10...... 3,205,710
5,000,000 NCNB Corp., 10.20%, 7/15/15.... 6,690,150
2,250,000 PNC Bank N.A., 7.88%,
4/15/05........................ 2,420,865
2,000,000 Republic New York Corp., 7.00%,
3/22/11........................ 2,061,780
3,000,000 Royal Bank of Scotland, 6.38%,
2/1/11......................... 2,879,640
4,600,000 Societe Generale New York,
7.40%, 6/1/06.................. 4,805,850
2,000,000 Southtrust Bank NA, 6.57%,
12/15/27....................... 2,036,600
2,000,000 Swiss Bank Corp. -- New York,
7.38%, 7/15/15................. 2,132,380
------------
39,964,679
------------
BROKERS -- 0.9%
2,000,000 Salomon, Inc., 6.75%,
2/15/03........................ 2,023,140
------------
FINANCE -- 7.3%
2,000,000 Discover Credit, 9.26%,
03/20/12....................... 2,498,700
2,000,000 Ford Motor Credit Corp., 9.03%,
12/30/09, Callable 12/30/04 @
100............................ 2,275,160
3,500,000 Great Western Financial Trust
II, 8.21%, 2/1/27, Callable
2/1/07 @ 104.1................. 3,712,170
2,000,000 HSBC America Capital II, 8.38%,
5/15/27, Callable 5/15/07 @
104.19......................... 2,132,440
2,000,000 Lehman Brothers Holdings, Inc.,
8.75%, 3/15/05................. 2,231,420
4,000,000 St. Paul Cos, Inc., 7.25%,
8/9/07......................... 4,276,960
------------
17,126,850
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
GAS TRANSMISSION -- 1.1%
$ 2,500,000 Enserch Corp., 7.13%,
6/15/05........................ $ 2,591,850
------------
INDUSTRIAL GOODS &
SERVICES -- 4.4%
2,000,000 ConAgra, Inc., 6.70%, 8/1/27... 2,052,740
3,000,000 Engelhard Corp., 7.38%,
8/1/06......................... 3,159,210
2,000,000 General Motors Corp., 9.13%,
7/15/01........................ 2,175,900
2,950,000 Raytheon Co., 6.75%, 8/15/07... 3,009,502
------------
10,397,352
------------
INSURANCE -- 0.9%
2,000,000 Travelers Capital III, 7.63%,
12/1/36........................ 2,170,060
------------
OIL & GAS -- 2.6%
5,000,000 Phillips Petroleum, 9.38%,
2/15/11........................ 6,182,300
------------
RETAIL -- 2.2%
4,893,277 Fred Meyer, Inc., Lease Trust,
8.50%, 7/15/17 (b)............. 5,146,749
------------
UTILITIES -- 0.9%
2,000,000 Pacific Gas & Electric, 6.25%,
3/1/04......................... 2,003,920
------------
TOTAL CORPORATE NOTES & BONDS.. 87,606,900
------------
(Cost $83,245,779)
FOREIGN GOVERNMENT AGENCIES -- 0.5%
1,000,000 Hydro-Quebec, 9.41%, 3/23/00... 1,067,220
------------
TOTAL FOREIGN GOVERNMENT
AGENCIES....................... 1,067,220
------------
(Cost $1,059,483)
MUNICIPAL BOND -- TAXABLE -- 0.9%
CALIFORNIA -- 0.9%
2,000,000 San Bernardino County,
Financing Authority Pension
Obligation Revenue, 6.99%,
8/1/10 (Insured by MBIA)....... 2,102,500
------------
TOTAL MUNICIPAL BOND --
TAXABLE........................ 2,102,500
------------
(Cost $2,030,920)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.5%
2,500,000 Federal Home Loan Mortgage
Corp., 7.22%, 6/14/06.......... 2,686,725
5,000,000 Federal National Mortgage
Assoc., 7.40%, 7/1/04.......... 5,379,700
5,000,000 Tennessee Valley Authority,
6.25%, 12/15/17................ 4,990,600
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 13,057,025
------------
(Cost $12,477,563)
</TABLE>
Continued
75
<PAGE> 77
The Kent Funds
INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS -- 50.4%
$ 9,500,000 U.S. Treasury Bond, 10.75%,
8/15/05........................ $ 12,358,930
15,000,000 U.S. Treasury Bond, 9.13%,
5/15/09........................ 17,545,350
25,000,000 U.S. Treasury Bond, 10.38%,
11/15/09....................... 31,257,750
19,000,000 U.S. Treasury Bond, 10.38%,
11/15/12....................... 25,246,250
30,000,000 U.S. Treasury Note, 8.00%,
5/15/01........................ 32,048,400
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 118,456,680
------------
(Cost $116,142,038)
TOTAL INVESTMENTS -- 98.5%.................. 231,759,445
(Cost $224,424,903) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.5%....................... 3,628,860
------------
TOTAL NET ASSETS -- 100.0%.................. $235,388,305
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................. $7,334,542
Unrealized depreciation................. 0
----------
Net unrealized appreciation............. $7,334,542
==========
</TABLE>
(b) 144A security which is restricted as to resale to institutional investors
MBIA Municipal Bond Insurance Association
See Notes to Financial Statements.
76
<PAGE> 78
THE KENT FUNDS
LIMITED TERM TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 98.4%
ALASKA -- 2.9%
$ 500,000 Alaska State Housing Finance
Corp., 4.35%, 6/1/98 (Insured by
MBIA)........................... $ 501,335
530,000 Alaska State Housing Finance
Corp., 4.60%, 12/1/00 (Insured
by MBIA)........................ 540,600
------------
1,041,935
------------
ARIZONA -- 3.1%
1,000,000 Arizona State University
Revenue, 7.10%, 7/1/16,
Prerefunded 7/1/01 @102......... 1,113,750
------------
CALIFORNIA -- 3.4%
1,000,000 University of California
Revenue, Multiple Purpose
Projects, Series B, 9.00%,
9/1/03 (Insured by MBIA)........ 1,238,750
------------
CONNECTICUT -- 2.9%
1,000,000 Connecticut State, GO, Series C,
5.38%, 8/15/02.................. 1,051,250
------------
DISTRICT OF COLUMBIA -- 2.8%
1,000,000 District of Columbia, GO, 5.10%,
12/1/99 (Insured by MBIA)....... 1,020,000
------------
ILLINOIS -- 9.2%
500,000 Chicago, Illinois Metropolitan
Water Reclamation District,
Capital Improvement, 6.20%,
1/1/98.......................... 500,000
1,000,000 Chicago, Illinois Metropolitan
Water Reclamation District,
Working Cash Fund, 5.90%,
12/1/04......................... 1,097,500
1,000,000 Illinois Educational Facilities
Authority Revenue, Loyola
University, Series A, 6.30%,
7/1/98 (Insured by MBIA)........ 1,012,640
745,000 University of Illinois Revenue,
Health Service Facility, 4.90%,
10/1/01 (Insured by AMBAC)...... 762,694
------------
3,372,834
------------
KENTUCKY -- 2.8%
1,000,000 Kentucky State Property &
Buildings Commission, Project
No. 53, 5.80%, 10/1/98.......... 1,015,040
------------
LOUISIANA -- 2.8%
1,000,000 Louisiana State Gas & Fuels Tax
Revenue, Series A, 7.00%,
11/15/98 (Insured by FGIC)...... 1,026,190
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MARYLAND -- 2.8%
$1,000,000 Washington Suburban Sanitation
District, Water Revenue, Series
A, 6.13%, 6/1/98................ $ 1,009,650
------------
MICHIGAN -- 16.6%
1,235,000 Detroit, GO, 8.00%, 4/1/11,
Prerefunded 4/1/01 @102......... 1,403,269
1,000,000 Detroit, Self Insurance, Series
A, GO, 5.20%, 5/1/98............ 1,002,290
1,000,000 Michigan State Hospital Finance
Authority Revenue, Detroit
Medical Group, Series A, 5.00%,
8/15/06, (Insured by AMBAC)..... 1,037,500
1,600,000 Michigan State Hospital Finance
Authority Revenue, Sisters of
Mercy Health Corp. Bond 1993,
Series F, 4.60%, 8/15/02
(Insured by MBIA)............... 1,623,999
1,000,000 Michigan State Housing
Development Authority, Rental
Housing Revenue, 5.15%, 10/1/00
(Insured by MBIA)............... 1,023,750
------------
6,090,808
------------
NEVADA -- 3.0%
1,090,000 Las Vegas, GO, 6.75%, 8/1/98
(Insured by MBIA)............... 1,108,083
------------
NEW JERSEY -- 3.1%
1,000,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Series A 1994,
7.00%, 7/1/03 (Insured by
MBIA)........................... 1,131,250
------------
NEW YORK -- 2.8%
1,000,000 New York State Dormitory
Authority Revenue, State
University Educational
Facilities, 4.70%, 5/15/99...... 1,010,000
------------
OHIO -- 4.4%
500,000 Cleveland Airport System
Revenue, 5.50%, 1/1/04, (Insured
by FSA)......................... 527,500
565,000 Cleveland-Cuyahoga County Port
Authority, Rock & Roll Hall of
Fame, Refunding, Subordinate
Bonds, 4.30%, 12/1/98........... 567,814
500,000 Cleveland-Cuyahoga County Port
Authority, Rock & Roll Hall of
Fame, Refunding, Subordinate
Bonds, 4.90%, 12/1/00........... 507,500
------------
1,602,814
------------
</TABLE>
Continued
77
<PAGE> 79
THE KENT FUNDS
LIMITED TERM TAX-FREE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
OKLAHOMA -- 3.2%
$1,115,000 Tulsa Industrial Authority
Revenue, University of Tulsa,
Series A, 5.50%, 10/1/00
(Insured by MBIA)............... $ 1,159,600
------------
PENNSYLVANIA -- 5.5%
1,000,000 Allegheny County Airport
Revenue, Pittsburgh
International Airport, 5.00%,
1/1/99 (Insured by MBIA)........ 1,008,020
1,000,000 Pennsylvania State, First
Series, GO, 5.00%, 5/1/99....... 1,013,750
------------
2,021,770
------------
TEXAS -- 10.8%
700,000 Eagle Pass Independent School
District, GO, 6.50%, 8/15/03.... 778,750
1,000,000 Harris County Flood Control
District, Series C, GO, 6.50%,
11/1/10, Prerefunded 11/1/99 @
100 (Insured by MBIA)........... 1,043,750
1,000,000 Houston Independent School
District, GO, Public Property
Finance Contractual Obligation,
6.25%, 7/15/99.................. 1,033,750
1,000,000 Pasadena Independent School
District, GO, Prerefunded
8/15/01 @ 100, 6.75%, 8/15/05
(Insured by FGIC)............... 1,086,250
------------
3,942,500
------------
UTAH -- 3.7%
1,310,000 Salt Lake City Redevelopment
Agency, Neighborhood
Redevelopment Tax, Inc., Series
A, 5.25%, 10/1/99............... 1,332,925
------------
VIRGINIA -- 4.2%
1,500,000 Norfolk, GO, 5.13%, 6/1/01...... 1,550,625
------------
WISCONSIN -- 2.8%
1,000,000 Green Bay, GO, Series A, 5.10%,
4/1/00.......................... 1,025,000
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
WYOMING -- 5.6%
$ 1,000,000 Campbell County School
District, No. 001 Gillette, GO,
5.15%, 6/1/02.................. $ 1,040,000
1,000,000 Wyoming Community Development,
4.45%, 6/1/99.................. 1,003,750
------------
2,043,750
------------
TOTAL MUNICIPAL BONDS.......... 35,908,524
------------
(Cost $35,175,240)
INVESTMENT COMPANIES -- 0.2%
82,999 Dreyfus Tax Exempt Money
Market......................... 82,999
------------
TOTAL INVESTMENT COMPANIES..... 82,999
------------
(Cost $82,999)
TOTAL INVESTMENTS -- 98.6%.................. 35,991,523
(Cost $35,258,239) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.4%....................... 506,047
------------
TOTAL NET ASSETS -- 100.0%.................. $ 36,497,570
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 733,284
Unrealized depreciation............... 0
------------
Net unrealized appreciation........... $ 733,284
============
AMBAC AMBAC Indemnity Corp.
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
MBIA Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
78
<PAGE> 80
THE KENT FUNDS
INTERMEDIATE TAX-FREE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 98.0%
ALASKA -- 3.3%
$1,520,000 Alaska Municipal Bond Bank
Authority, Series A, GO, 4.75%,
10/1/99......................... $ 1,533,300
1,000,000 Anchorage Electric Utility,
Revenue Bond, Senior Lien,
5.50%, 12/1/03, Callable 6/1/03
@ 102 (Insured by MBIA)......... 1,062,500
1,000,000 Anchorage, GO, 6.30%, 7/1/99
(Insured by MBIA)............... 1,033,750
5,000,000 North Slope Boro, Series B, GO,
7.50%, 6/30/01 (Insured by
FSA)............................ 5,543,750
------------
9,173,300
------------
ARIZONA -- 3.2%
1,750,000 Phoenix, GO, Series A, 4.90%,
7/1/02.......................... 1,806,875
1,500,000 Pima County Unified School
District No. 1 Tucson, Series B,
GO, ETM, 6.80%, 7/1/00.......... 1,597,500
5,000,000 Salt River Project Agricultural
Improvement & Power District
Electric System, Series A,
5.63%, 1/1/06................... 5,418,750
------------
8,823,125
------------
CALIFORNIA -- 6.4%
3,400,000 California State, GO, 6.60%,
2/1/10.......................... 4,007,750
3,000,000 Orange County, Series A, 6.00%,
6/1/10 (Insured by MBIA)........ 3,360,000
2,000,000 Riverside County Transportation
Commission, Sales Tax Revenue,
Series A, 5.60%, 6/1/05 (Insured
by AMBAC)....................... 2,162,500
2,000,000 Turlock Irrigation District
Revenue, Series A, 6.00%, 1/1/06
(Insured by MBIA)............... 2,225,000
4,850,000 University of California
Revenue, Multiple Purpose
Projects, Series B, 9.00%,
9/1/03 (Insured by MBIA)........ 6,007,938
------------
17,763,188
------------
COLORADO -- 3.8%
4,000,000 Arapahoe County, School District
No. 005, Cherry Creek, Series A,
GO, 5.25%, 12/15/02............. 4,195,000
1,400,000 Boulder Valley School District,
5.50%, 12/1/07.................. 1,520,750
1,000,000 Colorado Springs Utility
Revenue, Series A, 6.50%,
11/15/03, Callable 11/15/01 @
102............................. 1,093,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
COLORADO (CONTINUED)
$1,000,000 E-470 Public Highway Authority
Revenue, Series C, 6.00%, 9/1/07
(Insured by MBIA)............... $ 1,118,750
2,500,000 Regional Transportation
District, Sales Tax Revenue,
5.50%, 11/1/04.................. 2,693,750
------------
10,622,000
------------
CONNECTICUT -- 1.5%
4,000,000 Connecticut State, Series A,
6.00%, 5/15/02.................. 4,295,000
------------
FLORIDA -- 1.9%
1,000,000 Broward County School District,
GO, 5.20%, 2/15/03.............. 1,038,750
2,000,000 Lakeland Electric & Water
Revenue, 5.90%, 10/1/07......... 2,220,000
1,000,000 Tampa Guaranteed Entitlement
Revenue, 6.60%, 10/1/00 (Insured
by AMBAC)....................... 1,068,750
1,000,000 Tampa Utilities, Tax & Special
Revenue, 6.30%, 10/1/00 (Insured
by AMBAC)....................... 1,061,250
------------
5,388,750
------------
GEORGIA -- 3.0%
2,670,000 Atlanta Airport Facilities
Revenue, Series B, (AMT), 5.50%,
1/1/03 (Insured by AMBAC)....... 2,800,163
1,000,000 Georgia State Tollway Authority
Revenue, Georgia 400 Project,
6.25%, 7/1/00................... 1,056,250
4,000,000 Georgia State, Series B, GO,
5.95%, 3/1/08................... 4,490,000
------------
8,346,413
------------
HAWAII -- 1.2%
1,025,000 Honolulu City & County, Series
A, GO, 5.60%, 1/1/05............ 1,100,594
1,000,000 Honolulu City & County, Series
D, GO, ETM, 6.50%, 12/1/00...... 1,068,750
1,150,000 Maui County, Series A, GO,
6.80%, 12/1/03, Prerefunded
12/1/00 @ 101 (Insured by
AMBAC).......................... 1,249,187
------------
3,418,531
------------
ILLINOIS -- 6.2%
2,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 6.80%,
1/1/03.......................... 2,140,000
3,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 5.50%,
12/1/10......................... 3,228,750
4,270,000 Du Page & Will Counties,
Community School District No.
204, GO, 4.95%, 12/30/01
(Insured by FGIC)............... 4,398,100
</TABLE>
Continued
79
<PAGE> 81
THE KENT FUNDS
INTERMEDIATE TAX-FREE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
$4,000,000 Illinois Development Finance
Authority, Pollution Control
Revenue, Commonwealth Edison,
5.30%, 1/15/04 (Insured by
MBIA)........................... $ 4,180,000
3,135,000 Northwest Suburban Municipal
Joint Action, Water Agency,
Water Supply System, Series A,
5.25%, 5/1/04 (Insured by
MBIA)........................... 3,283,913
------------
17,230,763
------------
INDIANA -- 3.4%
2,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 5.88%, 1/1/10 (Insured by
MBIA)........................... 2,217,500
3,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 6.00%, 1/1/13 (Insured by
MBIA)........................... 3,371,250
1,000,000 Indiana Transportation Finance
Authority, Highway Revenue,
Series A, 5.75%, 6/1/12 (Insured
by AMBAC)....................... 1,095,000
1,000,000 Purdue University Dormitory
System Revenue, Series A, 6.40%,
7/1/99 (Insured by AMBAC)....... 1,033,750
1,000,000 Purdue University Student Fee
Revenue, Series D, 6.50%,
7/1/03, Callable 1/1/00 @ 103... 1,075,000
500,000 St. Joseph County Educational
Facilities Revenue, University
of Notre Dame, 6.50%, 3/1/26.... 617,500
------------
9,410,000
------------
LOUISIANA -- 2.7%
4,000,000 Louisiana State, Series A, GO,
5.30%, 8/1/04 (Insured by
MBIA)........................... 4,240,000
3,000,000 Louisiana State, Series A, GO,
6.00%, 4/15/07 (Insured by
FGIC)........................... 3,352,500
------------
7,592,500
------------
MASSACHUSETTS -- 5.4%
5,000,000 Massachusetts Bay Transportation
Authority, Series A, 5.00%,
3/1/02.......................... 5,150,000
2,000,000 Massachusetts State Turnpike
Authority, Metropolitan Highway,
Series A, 5.00%, 1/1/10,
Callable 1/1/07 @ 102........... 2,015,000
3,000,000 Massachusetts State Turnpike
Authority, Series A, Bond
Anticipation Note, 5.00%,
6/1/99, ETM..................... 3,041,250
1,000,000 Massachusetts State Turnpike
Authority, Series A, Bond
Anticipation Note, 5.00%,
6/1/99.......................... 1,013,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MASSACHUSETTS (CONTINUED)
$3,750,000 Massachusetts State, Special
Obligation Revenue, Series A,
5.25%, 6/1/08 (Insured by
AMBAC).......................... $ 3,975,000
------------
15,195,000
------------
MICHIGAN -- 17.8%
2,215,000 Battle Creek Downtown
Development Authority, 6.00%,
5/1/07.......................... 2,453,113
4,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 7.30%,
5/1/10, Callable 5/1/04 @ 102... 4,705,000
2,100,000 Caledonia Community Schools, GO,
6.70%, 5/1/22, Prerefunded
5/1/02 @ 102 (Insured by
AMBAC).......................... 2,341,500
3,000,000 Detroit Sewage Disposal Revenue,
Series B, 6.00%, 7/1/09 (Insured
by MBIA)........................ 3,390,000
6,000,000 Detroit Water Supply System,
Permanent Linked Bonds, 5.25%,
7/1/13 (Insured by FGIC)........ 6,089,999
1,000,000 Detroit Water Supply System,
Second Lien, Series A, 5.20%,
7/1/08 (Insured by MBIA)........ 1,067,500
3,000,000 Detroit, GO, Distributable State
Aid, 5.70%, 5/1/01 (Insured by
AMBAC).......................... 3,146,250
2,840,000 Grand Ledge Public Schools
District, GO, 5.35%, 5/1/10
(Insured by MBIA)............... 3,038,800
1,700,000 Greater Detroit Resource
Recovery Authority, Series A,
5.50%, 12/13/04 (Insured by
AMBAC).......................... 1,812,625
2,000,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 5.35%, 5/15/06
(Insured by MBIA)............... 2,127,500
2,000,000 Michigan State Comprehensive
Transportation, Series B, 5.50%,
5/15/02......................... 2,110,000
1,000,000 Michigan State Hospital Finance
Authority Revenue, Detroit
Medical Group, Series A, 5.00%,
8/15/06, (Insured by AMBAC)..... 1,037,500
1,450,000 Michigan State Hospital Finance
Authority, St. John Hospital &
Medical Center, 5.00%, 5/15/06
(Insured by AMBAC).............. 1,508,000
1,000,000 Michigan State South Central
Power Agency, Power Supply
System Revenue, 5.80%, 11/1/05
(Insured by MBIA)............... 1,096,250
</TABLE>
Continued
80
<PAGE> 82
THE KENT FUNDS
INTERMEDIATE TAX-FREE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,300,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Ford
Motor Co. Project, Series A,
7.10%, 2/1/06................... $ 2,708,250
2,500,000 Michigan State Trunk Line,
Series A, 5.50%, 10/1/02........ 2,646,875
3,500,000 Michigan State Underground
Storage Tank Financial Assurance
Authority, Series I, 6.00%,
5/1/05 (Insured by AMBAC)....... 3,863,125
2,000,000 Northville Public Schools,
Series A, GO, 7.00%, 5/1/08..... 2,185,000
1,575,000 South Redford School District,
5.25%, 5/1/09 (Insured by
FGIC)........................... 1,645,875
1,000,000 Western Michigan University
Revenue, GO, 5.40%, 11/15/01
(Insured by FGIC)............... 1,045,000
------------
50,018,162
------------
MINNESOTA -- 0.4%
1,000,000 Minneapolis Community
Development Agency, Tax
Increment Revenue, 7.00%, 9/1/00
(Insured by MBIA)............... 1,077,500
------------
NEVADA -- 1.0%
2,500,000 Clark County School District,
Group 2, GO, 7.20%, 5/1/01,
Prerefunded 5/1/00 @ 102
(Insured by FGIC)............... 2,718,750
------------
NEW JERSEY -- 4.2%
6,000,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Senior Lien,
7.00%, 7/1/04 (Insured by
MBIA)........................... 6,915,000
1,375,000 New Jersey State, Series D, GO,
5.25%, 2/15/01.................. 1,424,844
3,000,000 Ocean County Utilities
Authority, Wastewater Revenue,
Refunding, GO, 6.00%, 1/1/07.... 3,360,000
------------
11,699,844
------------
NEW YORK -- 2.2%
1,130,000 Metropolitan Transportation
Authority, Series M, 5.50%,
7/1/08 (Insured by FGIC)........ 1,223,225
1,660,000 New York State Urban Development
Corp., Refunding, Syracuse
University Center, 5.50%,
1/1/15.......................... 1,728,475
3,000,000 Triborough Bridge & Tunnel
Authority, General Purpose,
Series Y, 5.50%, 1/1/17......... 3,213,750
------------
6,165,450
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
NORTH CAROLINA -- 0.8%
$2,000,000 North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, 5.90%, 1/1/03.......... $ 2,115,000
------------
OHIO -- 0.8%
2,125,000 Columbus, Sewer Improvement, GO,
6.30%, 9/15/99.................. 2,210,000
------------
OKLAHOMA -- 0.8%
2,000,000 Tulsa Industrial Authority,
University of Tulsa, Series A,
6.00%, 10/1/16 (Insured by
MBIA)........................... 2,250,000
------------
PENNSYLVANIA -- 3.0%
2,000,000 Allegheny County Airport
Revenue, (AMT), 5.00%, 1/1/02... 2,042,500
4,330,000 Chartiers Valley Joint School,
ETM, 6.15%, 3/1/07.............. 4,800,888
1,475,000 Pennsylvania State, Series A,
GO, 7.00%, 5/1/05, Prerefunded
5/1/00 @ 101.5.................. 1,591,156
------------
8,434,544
------------
PUERTO RICO -- 2.7%
3,055,000 Puerto Rico Commonwealth Aqeduct
& Sewer Authority, 6.00%,
7/1/06.......................... 3,379,594
2,000,000 Puerto Rico Commonwealth Highway
& Transportation Authority,
Highway Revenue, Series X,
4.90%, 7/1/01................... 2,052,500
2,000,000 Puerto Rico Electric Power
Authority Revenue, Series W,
5.00%, 7/1/98................... 2,013,060
------------
7,445,154
------------
RHODE ISLAND -- 2.7%
1,000,000 Providence, GO, 6.70%, 1/15/02
Callable 1/15/00 @ 102 (Insured
by MBIA)........................ 1,070,000
3,025,000 Rhode Island State, GO, Series
A, 5.50%, 8/1/04 (Insured by
MBIA)........................... 3,229,188
2,000,000 State Depositors Economic
Protection Corp., Series A,
Special Obligation, 6.15%,
8/1/99 (Insured by MBIA)........ 2,065,000
1,000,000 State Depositors Economic
Protection Corp., Series B,
Special Obligation, 5.20%,
8/1/03 (Insured by MBIA)........ 1,045,000
------------
7,409,188
------------
TENNESSEE -- 0.5%
1,230,000 Tennessee State, Series B, GO,
6.20%, 6/1/01................... 1,316,100
------------
</TABLE>
Continued
81
<PAGE> 83
THE KENT FUNDS
INTERMEDIATE TAX-FREE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
TEXAS -- 9.6%
$1,000,000 Austin Independent School
District, GO, 6.20%, 8/1/99..... $ 1,033,750
2,245,000 Dallas Independent School
District, GO, 5.40%, 8/15/03.... 2,374,088
1,190,000 Hays Consolidated Independent
School District, 6.00%,
9/1/04.......................... 1,310,488
1,500,000 Houston Water & Sewer System
Revenue, Junior Lien, Series C,
5.75%, 12/1/03 (Insured by
MBIA)........................... 1,614,375
1,000,000 Houston Water & Sewer System
Revenue, Prior Lien, Series A,
7.00%, 12/1/01 (Insured by
AMBAC).......................... 1,101,250
3,000,000 Lower Colorado River Authority,
4.90%, 1/1/07................... 3,082,499
1,050,000 Round Rock Independent School
District, GO, 5.25%, 2/15/05.... 1,107,750
2,800,000 Texas Municipal Power Agency,
5.60%, 9/1/01 (Insured by
MBIA)........................... 2,936,500
5,595,000 Texas State Public Finance
Authority, GO, Series A, 6.50%,
10/1/04......................... 6,329,343
4,450,000 Texas State, Series A, GO,
5.70%, 10/1/03.................. 4,800,437
1,015,000 University of Texas, University
Revenue, Series A, 6.60%,
8/15/02......................... 1,121,575
------------
26,812,055
------------
VIRGINIA -- 1.1%
3,000,000 Arlington County GO, 5.70%,
12/1/00......................... 3,146,250
------------
WASHINGTON -- 6.7%
1,000,000 King County Washington School
District, 4.60%, 12/1/03........ 1,026,250
2,695,000 Tacoma Electric System,
Refunding, 6.00%, 1/1/06
(Insured by AMBAC).............. 2,961,131
2,000,000 Washington State Public Power
Supply System, Nuclear Project
No. 1 Bond Revenue, Series C,
7.25%, 7/1/00 (Insured by
FGIC)........................... 2,147,500
8,000,000 Washington State, Series A, GO,
5.50%, 9/1/05................... 8,539,999
2,940,000 Washington State, Series A, GO,
Public Improvements, 5.25%,
1/1/06.......................... 3,116,400
850,000 Washington State, Series III-H,
Motor Vehicle Fuel Tax, 5.75%,
9/1/12.......................... 930,750
------------
18,722,030
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
WEST VIRGINIA -- 0.4%
$ 1,095,000 West Virginia School Building
Authority Revenue, Capital
Improvement, Series A, 6.70%,
7/1/00 (Insured by MBIA)...... $ 1,160,700
--------------
WISCONSIN -- 1.3%
1,025,000 Milwaukee Metropolitan Sewer
District, Series A, GO, 6.60%,
10/1/99....................... 1,068,563
1,500,000 Milwaukee Metropolitan Sewer
District, Series A, GO, 6.70%,
10/1/00....................... 1,599,375
1,000,000 Wisconsin State Public Power,
Inc., Supply System, Series A,
7.00%, 7/1/01 (Insured by
AMBAC)........................ 1,085,000
--------------
3,752,938
--------------
TOTAL MUNICIPAL BONDS......... 273,712,235
--------------
(Cost $257,614,807)
INVESTMENT COMPANIES -- 0.4%
1,117,598 Dreyfus Tax Exempt Money
Market........................ 1,117,598
--------------
TOTAL INVESTMENT COMPANIES.... 1,117,598
--------------
(Cost $1,117,598)
TOTAL INVESTMENTS -- 98.4%................. 274,829,833
(Cost $258,732,405)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.6%...................... 4,345,919
--------------
TOTAL NET ASSETS -- 100.0%................. $ 279,175,752
==============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 16,097,428
Unrealized depreciation............... 0
------------
Net unrealized appreciation........... $ 16,097,428
============
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
ETM Escrowed to Maturity
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
MBIA Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
82
<PAGE> 84
THE KENT FUNDS
TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 97.8%
ARIZONA -- 1.4%
$1,500,000 Arizona State University
Revenue, 7.00%, 7/1/15,
Prerefunded 7/1/02 @ 101
(Insured by AMBAC)............. $ 1,681,875
------------
CALIFORNIA -- 10.2%
1,000,000 Anaheim Public Financing
Authority, Lease Revenue,
Public Improvements Project,
Series A, 6.00%, 9/1/24
(Insured by FSA)............... 1,146,250
1,400,000 California State, GO, 7.00%,
6/1/05......................... 1,634,500
2,000,000 California State, GO, 6.25%,
9/1/12......................... 2,305,000
3,000,000 Northern California Power
Agency Revenue, Geothermal
Project, Series A, 5.50%,
7/1/05 (Insured by AMBAC)...... 3,217,500
2,000,000 Orange County, Series A, 6.00%,
6/1/10 (Insured by MBIA)....... 2,240,000
1,380,000 Turlock Irrigation District
Revenue, Series A, 6.00%,
1/1/07 (Insured by MBIA)....... 1,540,425
------------
12,083,675
------------
COLORADO -- 2.1%
1,580,000 Denver City & County Airport
Revenue, (AMT), 6.75%,
11/15/22....................... 1,718,250
650,000 Denver City & County Airport
Revenue, Series C, (AMT),
6.75%, 11/15/22, Callable
11/15/02 @ 102................. 726,375
------------
2,444,625
------------
FLORIDA -- 1.5%
1,400,000 Port Everglades Authority, Port
Improvement, ETM, 7.13%,
11/1/16........................ 1,723,750
------------
GEORGIA -- 0.9%
1,000,000 Georgia State, Series B, GO,
5.95%, 3/1/08.................. 1,122,500
------------
HAWAII -- 2.8%
2,000,000 Hawaii State, Series CB, GO,
5.75%, 1/1/07.................. 2,185,000
1,000,000 Honolulu City & County, Series
A, GO, 5.75%, 4/1/10........... 1,092,500
------------
3,277,500
------------
ILLINOIS -- 8.1%
2,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 5.50%,
12/1/10........................ 2,152,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
$1,000,000 Chicago Public Building
Commission, Series A, ETM,
7.00%, 1/1/20 (Insured by
MBIA).......................... $ 1,252,500
2,000,000 Chicago School Finance
Authority, Series A, GO, 4.90%,
6/1/05 (Insured by MBIA)....... 2,065,000
2,000,000 Du Page & Will Counties,
Community School District No.
204, GO, 4.95%, 12/30/01
(Insured by FGIC).............. 2,060,000
1,000,000 Illinois State Sales Tax,
Series S, 5.00%, 6/15/08....... 1,033,750
1,000,000 Will County Forest Preserve
District, GO, 5.90%, 12/1/03,
Callable 12/1/02 @ 100 (Insured
by AMBAC)...................... 1,077,500
------------
9,641,250
------------
INDIANA -- 5.7%
2,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 6.00%, 1/1/13 (Insured by
MBIA).......................... 2,247,500
2,250,000 Indiana State Office Building
Commission, Capital Complex,
Government Center Parking
Facilities, Series A, 4.80%,
7/1/03 (Insured by AMBAC)...... 2,300,625
1,000,000 Indiana Transportation Finance
Authority, Highway Revenue,
Series A, 5.75%, 6/1/12
(Insured by AMBAC)............. 1,095,000
1,000,000 Marion County Hospital
Authority Revenue, Community
Hospital, Indianapolis Project,
ETM, 6.00%, 5/1/06............. 1,090,000
------------
6,733,125
------------
IOWA -- 2.1%
2,055,000 Iowa Finance Authority, Private
College Revenue, Drake
University Project, 6.50%,
12/1/11 (Insured by MBIA)...... 2,432,606
------------
KENTUCKY -- 1.1%
1,315,000 Louisville & Jefferson County,
Metropolitan Sewer District,
Sewer & Drain System Revenue,
Series A, 5.25%, 5/15/27,
Callable 5/15/07 @ 101 (Insured
by MBIA)....................... 1,321,575
------------
</TABLE>
Continued
83
<PAGE> 85
THE KENT FUNDS
TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
LOUISIANA -- 2.7%
$3,000,000 Louisiana State Gas & Fuels Tax
Revenue, Series A, 7.25%,
11/15/00, Callable 11/15/99 @
102............................ $ 3,228,750
------------
MARYLAND -- 1.7%
2,000,000 Prince Georges County,
Consolidated Public
Improvement, GO, 5.00%, 1/1/02
(Insured by MBIA).............. 2,062,500
------------
MASSACHUSETTS -- 4.3%
1,000,000 Massachusetts State Industrial
Finance Agency, Resource
Recovery Revenue, Refusetech,
Inc. Project, Series A, 5.25%,
7/1/99 (Insured by FSA)........ 1,017,500
1,000,000 Massachusetts State Water,
Resource Authority, Series B,
5.00%, 12/1/25 (Insured by
MBIA).......................... 967,500
1,000,000 Massachusetts State, Series B,
GO, 5.40%, 11/1/06............. 1,067,500
2,000,000 Massachusetts Turnpike
Authority, Metropolitan
Highway, Series A, 5.00%,
1/1/10, Callable 1/1/07 @
102............................ 2,015,000
------------
5,067,500
------------
MICHIGAN -- 20.2%
2,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 7.30%,
5/1/10, Callable 5/1/04 @
102............................ 2,352,500
1,300,000 Berkley School District, GO,
7.00%, 1/1/07 (Insured by
FGIC).......................... 1,548,625
2,000,000 Detroit Sewage Disposal
Revenue, Series B, 6.00%,
7/1/09 (Insured by MBIA)....... 2,260,000
1,000,000 Detroit Water Supply System,
Series B, 5.10%, 7/1/07
(Insured by MBIA).............. 1,056,250
930,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.50%, 1/1/07,
Callable 1/1/05 @ 102.......... 997,425
2,000,000 Michigan State Hospital Finance
Authority, Sisters of Mercy,
Series P, 5.25%, 8/15/21
(Insured by MBIA).............. 1,985,000
2,365,000 Michigan State Hospital Finance
Authority, Detroit Medical
Center, Series B, 5.00%,
8/15/06 (Insured by AMBAC)..... 2,459,599
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,000,000 Michigan State Hospital Finance
Authority, Henry Ford Health,
Series A, 5.25%, 11/15/20
(Insured by AMBAC)............. $ 1,995,000
1,300,000 Michigan State Housing
Development Authority, Rental
Housing Revenue, Series A,
5.15%, 4/1/02 (Insured by
AMBAC)......................... 1,340,625
1,000,000 Michigan State South Central
Power Agency, Power Supply
System Revenue, 5.80%, 11/1/05
(Insured by MBIA).............. 1,096,250
1,500,000 Michigan State Strategic Fund,
Detroit Edition, 5.00%*, 1/2/98
(LOC: Barclays)................ 1,500,000
2,000,000 Michigan State Trunk Line,
5.50%, 11/1/16 (Insured by
FGIC).......................... 2,060,000
1,000,000 Michigan State Underground
Storage Tank Financial
Assurance Authority, Series I,
6.00%, 5/1/05 (Insured by
AMBAC)......................... 1,103,750
2,000,000 Michigan State University
Revenue, Series A, 5.50%,
8/15/22........................ 2,052,500
------------
23,807,524
------------
MISSOURI -- 1.8%
1,625,000 Missouri State, DFB
Infrastructure Facilities,
Science City Union Station A,
4.10%, 12/1/99................. 1,627,031
500,000 Missouri State, Health &
Education Facilities, Lake of
Ozarks General Hospital, 6.50%,
2/15/21, Callable 2/15/06 @
102............................ 541,250
------------
2,168,281
------------
NEBRASKA -- 1.0%
1,075,000 Omaha Public Power District,
5.10%, 2/1/08.................. 1,126,063
------------
NEVADA -- 3.7%
1,805,000 Clark County School District,
GO, 5.75%, 6/15/10, Callable
6/15/06 @ 101 (Insured by
FGIC).......................... 1,938,119
2,000,000 Nevada State, Nevada Municipal
Bond Bank, Series A, GO, 8.00%,
11/1/05........................ 2,487,500
------------
4,425,619
------------
NEW JERSEY -- 2.9%
1,500,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Senior Lien,
7.00%, 7/1/04 (Insured by
MBIA).......................... 1,728,750
</TABLE>
Continued
84
<PAGE> 86
THE KENT FUNDS
TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
$1,500,000 New Jersey State Transportation
Trust Fund Authority,
Transportation System, Series
A, 6.00%, 12/15/06 (Insured by
MBIA).......................... $ 1,670,625
------------
3,399,375
------------
NEW YORK -- 3.4%
1,350,000 New York City, Municipal Water
& Sewer Revenue, 5.50%,
6/15/24, Callable 6/15/06 @
101............................ 1,388,813
1,500,000 New York City, Tax Revenue
Anticipation Note, Livingston
Plaza Project, 5.40%, 1/1/18... 1,567,500
1,000,000 New York State Thruway
Authority, Series 1997 B,
6.00%, 4/1/07.................. 1,090,000
------------
4,046,313
------------
OKLAHOMA -- 1.9%
1,000,000 Grand River Dam Authority,
5.75%, 6/1/08 (Insured by
FSA)........................... 1,112,500
1,000,000 Tulsa Industrial Authority,
University of Tulsa, Series A,
6.00%, 10/1/16 (Insured by
MBIA).......................... 1,125,000
------------
2,237,500
------------
PENNSYLVANIA -- 1.7%
2,000,000 Pennsylvania State, First
Series, GO, 5.38%, 5/15/16
(Insured by FGIC).............. 2,065,000
------------
PUERTO RICO -- 0.9%
1,000,000 Puerto Rico Commonwealth
Highway & Transportation
Authority, Highway Revenue,
Series X, 4.90%, 7/1/01........ 1,026,250
------------
RHODE ISLAND -- 0.9%
1,000,000 Convention Center Authority,
Series B, 5.00%, 5/15/09
(Insured by MBIA).............. 1,041,250
------------
SOUTH CAROLINA -- 1.0%
1,200,000 Myrtle Beach Water & Sewer
Revenue, 4.90%, 3/1/02 (Insured
by MBIA)....................... 1,234,500
------------
TENNESSEE -- 1.1%
1,225,000 Tennessee Housing Development
Agency, Mortgage Finance,
Series C, (AMT), 5.95%, 7/1/09,
Callable 7/1/05 @ 102 (Insured
by MBIA)....................... 1,307,688
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
TEXAS -- 6.0%
$ 1,000,000 Brownsville Utility System,
6.25%, 9/1/11 (Insured by
AMBAC)......................... $ 1,146,250
1,000,000 Harris County, Certificates of
Obligation, 6.00%, 12/15/11.... 1,133,750
2,000,000 Texas City Industrial
Development Corp., Marine
Terminal Revenue, Arco Pipeline
Co. Project, 7.38%, 10/1/20.... 2,627,500
2,000,000 Texas State, Series A, GO,
5.70%, 10/1/03................. 2,157,500
------------
7,065,000
------------
UTAH -- 2.6%
2,175,000 Intermountain Power Agency,
Utah Power Supply, Series D,
5.00%, 7/1/23.................. 2,096,156
1,000,000 St. George, Parks &
Recreational Facilities, GO,
5.38%, 8/1/21, Callable 8/1/07
@ 101 (Insured by FGIC)........ 1,022,500
------------
3,118,656
------------
WASHINGTON -- 4.1%
1,000,000 Douglas County Public Utility
District No. 001, Electric
Distribution System, 5.90%,
1/1/11, Callable 1/1/05 @ 102
(Insured by MBIA).............. 1,073,750
2,500,000 Port Seattle Limited, GO,
(AMT), 5.35%, 5/1/04........... 2,625,000
1,000,000 Washington State, Motor Vehicle
Fuel Tax, R-92D, GO, 6.25%,
9/1/07......................... 1,140,000
------------
4,838,750
------------
TOTAL MUNICIPAL BONDS.......... 115,729,000
------------
(Cost $108,371,163)
INVESTMENT COMPANIES -- 0.8%
972,571 Dreyfus Tax Exempt Money
Market......................... 972,571
------------
TOTAL INVESTMENT COMPANIES..... 972,571
------------
(Cost $972,571)
TOTAL INVESTMENTS -- 98.6%.................. 116,701,571
(Cost $109,343,734)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.4%....................... 1,662,588
------------
TOTAL NET ASSETS -- 100.0%.................. $118,364,159
============
</TABLE>
Continued
85
<PAGE> 87
THE KENT FUNDS
TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................. $7,357,837
Unrealized depreciation................. 0
----------
Net unrealized appreciation............. $7,357,837
==========
</TABLE>
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
<TABLE>
<S> <C>
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
ETM Escrowed to Maturity
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
86
<PAGE> 88
THE KENT FUNDS
MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 98.6%
MICHIGAN -- 95.9%
$1,785,000 Allegan Sanitary Sewer System,
(AMT), 5.45%, 11/1/02........... $ 1,836,319
2,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 6.90%,
5/1/04.......................... 2,222,500
1,000,000 Bay City Electric Utility
Revenue, 5.15%, 1/1/07 (Insured
by AMBAC)....................... 1,045,000
745,000 Bay City School District, GO,
5.50%, 5/1/98................... 749,239
560,000 Chippewa County Hospital Finance
Authority, 4.20%, 11/1/98....... 560,235
290,000 Chippewa County Hospital Finance
Authority, 4.40%, 11/1/99....... 290,725
585,000 Chippewa County Hospital Finance
Authority, 4.40%, 11/1/99....... 586,463
260,000 Chippewa County Hospital Finance
Authority, 4.60%, 11/1/00....... 260,975
1,000,000 Chippewa Valley School District,
GO, 6.38%, 5/1/05, Prerefunded
5/1/01 @ 101.5 (Insured by
FGIC)........................... 1,085,000
1,445,000 Chippewa Valley School District,
Series A, GO, 5.60%, 5/1/99..... 1,475,706
1,700,000 Clintondale Community School
District, GO, 4.65%, 5/1/03..... 1,725,500
2,000,000 Dearborn School District, GO,
6.63%, 5/1/09, Prerefunded
5/1/00 @ 102 (Insured by
MBIA)........................... 2,152,500
1,000,000 Dearborn School District, GO,
6.38%, 5/1/10, Prerefunded
5/1/00 @ 102 (Insured by
MBIA)........................... 1,071,250
1,075,000 Dearborn Sewage Disposal System,
7.00%, 4/1/99 (Insured by
MBIA)........................... 1,113,969
965,000 Dearborn Sewage Disposal System,
6.90%, 4/1/02 (Insured by
MBIA)........................... 1,065,119
1,000,000 Detroit, GO, 5.00%, 4/1/04...... 1,036,250
750,000 Detroit, GO, 5.05%, 4/1/06...... 829,688
2,800,000 Detroit Sewage Disposal, Series
A, 4.85%, 7/1/01 (Insured by
FGIC)........................... 2,866,499
580,000 Detroit, Distributable State
Aid, GO, 5.60%, 5/1/00 (Insured
by AMBAC)....................... 599,575
2,000,000 East China Township School
District, GO, 6.00%, 5/1/02,
Callable 5/1/01 @ 102........... 2,117,500
1,000,000 Eastern Michigan University, GO,
5.80%, 6/1/01 (Insured by
AMBAC).......................... 1,052,500
445,000 Farmington Hills Economic
Development Corp. Revenue,
Botsford Continuing Care, Series
A, 5.10%, 2/15/04 (Insured by
MBIA)........................... 463,356
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$ 470,000 Farmington Hills Economic
Development Corp. Revenue,
Botsford Continuing Care, Series
A, 5.20%, 2/15/05 (Insured by
MBIA)........................... $ 493,500
1,000,000 Grand Haven Area Public Schools,
GO, 5.45%, 5/1/04 (Insured by
MBIA)........................... 1,067,500
1,250,000 Greater Detroit Resource
Recovery Authority, Series B,
5.00%, 12/13/02 (Insured by
AMBAC).......................... 1,289,063
1,000,000 Holland Electric Revenue, 6.40%,
7/1/02, Prerefunded 7/1/99 @
100............................. 1,035,000
1,100,000 Holland Electric Revenue, 6.50%,
7/1/03, Prerefunded 7/1/99 @
100............................. 1,139,875
675,000 Hudsonville Public Schools,
Series B, GO, 4.50%, 5/1/98
(Insured by FGIC)............... 676,661
1,250,000 Huron Valley School District,
GO, 7.10%, 5/1/08, Prerefunded
5/1/01 @ 102 (Insured by
FGIC)........................... 1,389,063
1,810,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 4.95%, 5/15/02
(Insured by MBIA)............... 1,859,775
1,000,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 5.25%, 5/15/05
(Insured by MBIA)............... 1,053,750
1,295,000 Kenowa Hills Public Schools, GO,
5.50%, 5/1/05................... 1,388,888
500,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.25%, 1/1/04... 523,125
505,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.30%, 1/1/05... 531,513
1,150,000 Kent Hospital Finance Authority,
Butterworth Hospital, 4.90%,
1/15/05......................... 1,178,750
2,000,000 Lake Orion Community School
District, GO, 6.20%, 5/1/04
(Insured by AMBAC).............. 2,212,500
3,032,379 Michigan Department of State
Police Lease, 4.95%, 3/10/02.... 3,051,331
1,020,000 Michigan Municipal Bond
Authority, Local Government Loan
Program, Qualified School,
6.35%, 5/15/01.................. 1,092,675
1,000,000 Michigan Municipal Bond
Authority, Local Government Loan
Program, Series B, 6.90%, 5/1/99
(Insured by FGIC)............... 1,036,250
</TABLE>
Continued
87
<PAGE> 89
THE KENT FUNDS
MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 Michigan Municipal Bond
Authority, Pooled Projects,
Series B, 5.10%, 10/1/04........ $ 1,050,000
1,000,000 Michigan Municipal Bond
Authority, State Revolving Fund,
5.50%, 10/1/99.................. 1,025,000
2,000,000 Michigan Municipal Bond
Authority, State Revolving Fund,
5.50%, 10/1/06.................. 2,157,500
2,000,000 Michigan Public Power Agency,
Belle River Project, Series A,
5.30%, 1/1/00................... 2,050,000
750,000 Michigan Public Power Agency,
Belle River Project, Series A,
5.70%, 1/1/03................... 796,875
1,000,000 Michigan State Building
Authority, Series II, 6.10%,
10/1/01......................... 1,071,250
3,000,000 Michigan State Comprehensive
Transportation, Series B, 5.63%,
5/15/03, Callable 7/1/02 @
102............................. 3,194,999
1,000,000 Michigan State Hospital Finance
Authority Revenue, Sisters of
Mercy Health Corp. Bond 1993,
Series F, 4.60%, 8/15/02
(Insured by MBIA)............... 1,015,000
1,855,000 Michigan State Hospital Finance
Authority, Bay Medical Center,
Series A, 5.38%, 7/1/06 (Insured
by FSA)......................... 1,977,894
750,000 Michigan State Hospital Finance
Authority, GO, Detroit Medical
Center Group A, 5.00%, 8/15/04
(Insured by AMBAC).............. 776,250
2,000,000 Michigan State Hospital Finance
Authority, Mclaren Obligated
Group, Series A, 5.75%,
10/15/03........................ 2,122,500
1,500,000 Michigan State Hospital Finance
Authority, Mercy Health
Services, Series S, 6.00%,
8/15/06......................... 1,651,875
1,060,000 Michigan State Hospital Finance
Authority, Sisters of Mercy
Health Corp., Series J, 7.15%,
2/15/99......................... 1,097,100
2,800,000 Michigan State Hospital Finance
Authority, Sisters of Mercy
Health Corp., Series J, 7.38%,
2/15/11, Prerefunded 2/15/01 @
102............................. 3,118,499
1,150,000 Michigan State Hospital Finance
Authority, St. John Hospital &
Medical Center, 4.50%, 5/15/01
(Insured by AMBAC).............. 1,161,500
1,000,000 Michigan State Hospital Finance
Authority, St. John Hospital &
Medical Center, 5.00%, 5/15/05
(Insured by AMBAC).............. 1,038,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,680,000 Michigan State Housing
Development Authority, Rental
Housing Revenue, Series A,
(AMT), 5.25%, 10/1/01 (Insured
by MBIA)........................ $ 2,760,399
415,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Lutheran Social Services
Project, 4.40%, 9/1/98 (LOC:
First of America)............... 416,677
860,000 Michigan State Strategic Fund,
Industrial Development Revenue,
Grand Rapids Motel Project,
(AMT), 5.25%*, 6/1/98 Mandatory
Put 6/1/98 @ 100 (LOC: Comerica
Bank)........................... 862,537
2,000,000 Michigan State Underground
Storage, Tank Financial
Assurance Authority, Series I,
5.00%, 5/1/00 (Insured by
AMBAC).......................... 2,040,000
1,270,000 Michigan State Underground
Storage, Tank Financial
Assurance Authority, Series I,
6.00%, 5/1/06 (Insured by
AMBAC).......................... 1,412,875
1,000,000 Mount Clemens Community School
District, GO, 6.60%, 5/1/20,
Prerefunded 5/1/02 @ 102
(Insured by MBIA)............... 1,110,000
1,580,000 Oakland County Economic
Development Corp. Revenue,
Boardwalk Shopping Center,
Limited Obligation Revenue,
4.75%*, 6/30/98 (LOC: NBD)...... 1,585,088
600,000 Oakland County Economic
Development Corp., Sugartree
Shopping Center, 4.75%, 1/1/14,
Mandatory Put 7/1/98 (LOC:
NBD)............................ 600,444
1,000,000 Oakland Washtenaw County
Community College, 6.65%,
5/1/11, Prerefunded 5/1/02 @
100............................. 1,110,000
3,000,000 Okemos Public School District,
Series I, GO, 6.90%, 5/1/11,
Prerefunded 5/1/01 @ 102........ 3,311,249
3,200,000 Plymouth-Canton Community School
District, Series B, GO, 6.80%,
5/1/17, Prerefunded 5/1/01 @
101............................. 3,491,999
735,000 Reeths-Puffer Schools, GO,
6.75%, 5/1/01 (Insured by
FGIC)........................... 795,638
750,000 Reeths-Puffer Schools, GO,
6.25%, 5/1/02 (Insured by
FGIC)........................... 811,875
2,000,000 Rockford Public Schools, GO,
7.38%, 5/1/19, Prerefunded
5/1/00 @ 101.................... 2,165,000
</TABLE>
Continued
88
<PAGE> 90
THE KENT FUNDS
MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 South Lyon Community Schools,
GO, 7.80%, 5/1/14, Prerefunded
5/1/98 @ 102.................... $ 1,032,870
1,000,000 University of Michigan, Medical
Service Plan, Series A, 4.25%*,
1/2/98.......................... 1,000,000
2,035,000 Walled Lake Consolidated School
District, GO, 4.70%, 5/1/01..... 2,078,244
2,235,000 Walled Lake Consolidated School
District, GO, 4.80%, 5/1/02..... 2,296,463
2,000,000 Walled Lake Consolidated School
District, Series II, GO, 7.10%,
5/1/05, Prerefunded 5/1/00 @
102............................. 2,170,000
945,000 Warren Consolidated School
District, GO, 6.00%, 5/1/01..... 1,000,519
1,025,000 Washtenaw Community College, GO,
4.70%, 4/1/03 (Insured by
FGIC)........................... 1,046,781
550,000 Wayne County Downriver System
Sewer Disposal, GO, 3.75%,
5/1/98.......................... 548,400
550,000 Wayne County Downriver System
Sewer Disposal, GO, 3.75%,
5/1/99.......................... 547,938
550,000 Wayne County Downriver System
Sewer Disposal, GO, 3.75%,
5/1/00.......................... 544,500
1,750,000 Western Michigan University,
Series A, 6.50%, 7/15/01,
Prerefunded 7/15/01 @ 102
(Insured by AMBAC).............. 1,916,250
1,000,000 Wyandotte Electric Revenue,
6.20%, 10/1/03 (Insured by
MBIA)........................... 1,098,750
1,150,000 Ypsilanti School District,
4.50%, 5/01/00 (Insured by
FGIC)........................... 1,161,500
------------
111,446,075
------------
PUERTO RICO -- 2.7%
3,000,000 Puerto Rico Commonwealth Highway
& Transportation Authority,
Highway Revenue, Series X,
4.90%, 7/1/01................... 3,078,750
------------
TOTAL MUNICIPAL BONDS........... 114,524,825
------------
(Cost $111,182,602)
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
INVESTMENT COMPANIES -- 0.1%
154,117 Dreyfus Tax Exempt Money
Market......................... $ 154,117
------------
TOTAL INVESTMENT COMPANIES..... 154,117
------------
(Cost $154,117)
TOTAL INVESTMENTS -- 98.7%.................. 114,678,942
(Cost $111,336,719)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.3%....................... 1,469,357
------------
TOTAL NET ASSETS -- 100.0%.................. $116,148,299
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................. $3,342,223
Unrealized depreciation.................
0
----------
Net unrealized appreciation.............
$3,342,223
==========
</TABLE>
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
<TABLE>
<S> <C>
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
FGIC Financial Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
89
<PAGE> 91
THE KENT FUNDS
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
- --------- ---------
<C> <S> <C>
BANKERS ACCEPTANCES -- $8.1%
$5,000,000 Bank of America, 5.48%,
3/11/98......................... $ 4,947,483
4,398,113 Chase Manhattan Corp., 5.52%,
2/17/98......................... 4,366,417
5,000,000 Corestates Bank N.A., 5.53%,
1/30/98......................... 4,977,726
5,000,000 First Chicago NBD Corp., 5.51%,
3/2/98.......................... 4,954,083
5,000,000 Mellon Bank N.A., 5.53%,
1/20/98......................... 4,985,408
5,000,000 Mellon Bank N.A., 5.51%,
2/6/98.......................... 4,972,450
4,545,172 SunTrust Bank N.A., 5.70%,
1/16/98......................... 4,534,377
5,000,000.. SunTrust Bank N.A., 5.57%,
2/5/98.......................... 4,972,924
------------
TOTAL BANKERS ACCEPTANCES ... 38,710,868
------------
(Amortized Cost $38,710,868)
CERTIFICATES OF DEPOSIT -- 3.6%
3,084,303 First Chicago Corp., 5.35%,
1/5/98.......................... 3,084,172
10,000,000 J. P. Morgan & Co., 5.71%,
1/6/98.......................... 9,999,788
4,000,000 J. P. Morgan & Co., 5.60%,
2/5/98.......................... 3,999,086
------------
TOTAL CERTIFICATES OF DEPOSIT... 17,083,046
------------
(Amortized Cost $17,083,046)
COMMERCIAL PAPER -- 42.1%
7,230,000 ABN Amro North America Finance,
5.60%, 4/20/98.................. 7,107,412
5,000,000 Amoco Corp., 5.52%, 3/4/98...... 4,952,467
5,000,000 Banque National De Paris Canada,
5.55%, 1/5/98................... 4,996,917
4,400,000 Banque National De Paris Canada,
5.53%, 1/21/98.................. 4,386,482
5,000,000 Cargill, Inc., 5.62%, 1/21/98... 4,984,389
5,000,000 Daimler-Benz N.A. Corp., 5.72%,
1/23/98......................... 4,982,522
5,000,000 Daimler-Benz N.A. Corp., 5.52%,
2/12/98......................... 4,967,800
5,000,000 Daimler-Benz N.A. Corp., 5.54%,
2/17/98......................... 4,963,836
5,000,000 Daimler-Benz N.A. Corp., 5.53%,
2/27/98......................... 4,956,221
4,000,000 Daimler-Benz N.A. Corp., 5.65%,
3/26/98......................... 3,947,267
5,000,000 Dresdner US Finance, Inc.,
5.74%, 1/5/98................... 4,996,811
5,000,000 Dresdner US Finance, Inc.,
5.60%, 1/5/98................... 4,996,889
5,300,000 E.I. du Pont de Nemours & Co.,
5.53%, 4/20/98.................. 5,211,259
5,000,000 E.I. du Pont de Nemours & Co.,
5.53%, 6/4/98................... 4,881,719
5,000,000 Ford Motor Credit Co., 5.49%,
1/9/98.......................... 4,993,900
5,000,000 Ford Motor Credit Co., 5.51%,
1/26/98......................... 4,980,868
5,000,000 Gannett Co., Inc., 5.55%,
1/7/98.......................... 4,995,375
5,000,000 General Electric Capital Corp.,
5.59%, 1/12/98.................. 4,991,460
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
- --------- ---------
<C> <S> <C>
COMMERCIAL PAPER (CONTINUED)
$5,000,000 General Electric Capital Corp.,
5.68%, 2/11/98.................. $ 4,967,656
5,000,000 General Electric Capital Corp.,
5.72%, 3/16/98.................. 4,941,211
5,000,000 General Electric Capital Corp.,
5.50%, 6/15/98.................. 4,873,958
5,000,000 General Motors Acceptance Corp.,
5.57%, 1/12/98.................. 4,991,490
5,000,000 General Motors Acceptance Corp.,
5.74%, 4/15/98.................. 4,917,089
5,000,000 General Motors Acceptance Corp.,
5.60%, 4/20/98.................. 4,915,222
4,000,000 GTE Corp., 5.98%, 1/8/98........ 3,995,349
5,000,000 GTE Corp., 6.20%, 1/16/98....... 4,987,083
5,000,000 HJ Heinz Co., 5.70%, 1/6/98..... 4,996,042
5,000,000 HJ Heinz Co., 5.75%, 2/17/98.... 4,962,465
5,000,000 Michigan Consolidated Gas Co.,
5.58%, 1/20/98.................. 4,985,275
5,000,000 Michigan Consolidated Gas Co.,
5.58%, 2/3/98................... 4,974,425
5,000,000 Michigan Consolidated Gas Co.,
5.68%, 2/17/98.................. 4,962,922
5,000,000 Michigan Consolidated Gas Co.,
5.56%, 2/27/98.................. 4,955,983
5,000,000 National Australia Bank, Ltd.,
5.55%, 1/9/98................... 4,993,833
5,000,000 Schering-Plough Corp., 5.70%,
3/17/98......................... 4,940,625
6,900,000 Sony Capital Corp., 5.75%,
1/7/98(c)....................... 6,893,388
5,500,000 Sony Capital Corp., 5.95%,
2/24/98(c)...................... 5,450,913
5,000,000 Southern New England
Telecommunications, 5.87%,
1/20/98......................... 4,984,510
5,000,000 Toyota Motor Credit Corp.,
5.75%, 2/20/98.................. 4,960,069
5,000,000 Toyota Motor Credit Corp.,
5.70%, 2/27/98.................. 4,954,875
5,000,000 Toyota Motor Credit Corp.,
5.71%, 3/26/98.................. 4,933,383
------------
TOTAL COMMERCIAL PAPER ... 200,831,360
------------
(Amortized Cost $200,831,360)
DEMAND NOTES -- 19.4%
6,000,000 American Healthcare Funding
L.L.C., 5.80%*, 1/8/98 (LOC:
LaSalle National Bank).......... 6,000,000
4,000,000 American Mfg. Co., Inc., Series
1997, 5.95%*, 1/8/98 (LOC:
Mellon Bank).................... 4,000,000
7,500,000 Arboretum Properties, L.L.C.,
6.08%*, 1/7/98 (LOC: Michigan
National Bank).................. 7,500,000
2,500,000 Buckeye Corrugated, Inc.,
6.08%*, 1/7/98 (LOC: Keybank)... 2,500,000
</TABLE>
Continued
90
<PAGE> 92
THE KENT FUNDS
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
- --------- ---------
<C> <S> <C>
DEMAND NOTES (CONTINUED)
$5,915,000 FC Bellevue, Inc., 6.10%*,
1/8/98 (LOC: National City Bank
Cleveland, Ohio)................ $ 5,915,000
5,000,000 First Metro Title Co., 6.08%*,
1/8/98 (LOC: Michigan National
Bank)........................... 5,000,000
4,790,000 Harry W. Albright, Jr.,
6.10%*,1/8/98................... 4,790,000
3,500,000 HWP Co., Ltd. Project, 6.10%*,
1/8/98 (LOC: National City Bank
Cleveland, Ohio)................ 3,500,000
4,730,000 Labelle Capital Funding L.L.C.,
6.10%*, 1/8/98 (LOC: First of
America Bank-Michigan).......... 4,730,000
4,000,000 Macroe Properties, Inc., 6.10%*,
1/8/98 (LOC: Huntington Bank)... 4,000,000
8,700,000 Ordeal Properties L.L.C.,
6.08%*, 1/7/98 (LOC: Keybank)... 8,700,000
2,500,000 Patt's Enterprises L.L.C.,
6.10%*, 1/8/98 (LOC: Huntington
National Bank).................. 2,500,000
5,000,000 PRA at Glenwood Hills Corporate,
Centre Limited Liability Co.,
6.05%*, 1/8/98 (LOC: First of
America Bank-Michigan).......... 5,000,000
8,530,000 PRD Finance L.L.C., 6.05%*,
1/8/98 (LOC: First of America
Bank-Michigan).................. 8,530,000
3,000,000 Royal Town Center L.L.C.
Project, 6.10%*, 1/8/98 (LOC:
Comerica Bank).................. 3,000,000
2,685,000 Rumpf Development Ltd., 6.08%*,
1/7/98 (LOC: Keybank)........... 2,685,000
5,000,000 Sheperd Capital L.L.C., 6.10%*,
1/8/98 (LOC: Comerica Bank)..... 5,000,000
2,000,000 South Bend MAC, L.P., 6.10%*,
1/7/98 (LOC: LaSalle National
Bank)........................... 2,000,000
1,075,000 The Economic Development Corp.
of the County of Marquette,
Pioneer Laboratories, Inc.
Project, 6.10%*, 1/8/98 (LOC:
NBD Bank)....................... 1,075,000
5,645,000 Zeigler Realty, L.L.C, 6.10%*,
1/2/98 (LOC: First of America
Bank-Michigan).................. 5,645,000
------------
TOTAL DEMAND NOTES ... 92,070,000
------------
(Amortized Cost $92,070,000)
EURO CERTIFICATES OF DEPOSIT -- 3.2%
5,000,000 Bayerische Landesbank, 5.77%,
2/27/98......................... 4,999,729
5,000,000 Rabobank Nederland, 5.58%,
1/12/98......................... 4,999,970
5,000,000 Societe Generale, 5.71%,
4/3/98.......................... 4,999,355
------------
TOTAL EURO CERTIFICATES OF
DEPOSIT ........................ 14,999,054
------------
(Amortized Cost $14,999,054)
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
- --------- ---------
<C> <S> <C>
FUNDING AGREEMENTS -- $3.2%
$5,000,000 Allstate Financial Corp.,
5.84%*, 1/2/98 (b).............. $ 5,000,000
5,000,000 Allstate Financial Corp.,
5.84%*, 1/2/98 (b).............. 5,000,000
5,000,000 General American Life Insurance
Co., 5.89%*, 1/2/98 (b)......... 5,000,000
------------
TOTAL FUNDING AGREEMENTS ... 15,000,000
------------
(Amortized Cost $15,000,000)
MUNICIPAL BOND -- TAXABLE -- 1.1%
5,200,000 City of Cloquet, Minnesota
Taxable Industrial Bond, Series
1996B, 5.80%*, 1/7/98 (LOC:
Credit Suisse).................. 5,200,000
------------
TOTAL MUNICIPAL
BOND -- TAXABLE ................ 5,200,000
------------
(Amortized Cost $5,200,000)
YANKEE CERTIFICATES OF DEPOSIT -- 17.9%
5,000,000 ABN Amro Bank, 5.83%, 1/9/98.... 4,999,956
5,000,000 ABN Amro Bank, 5.70%, 3/2/98.... 4,999,993
5,000,000 ABN Amro Bank, 5.82%, 7/17/98... 4,999,683
5,000,000 Bank of Nova Scotia, 5.75%,
2/12/98......................... 5,000,000
5,000,000 Bankers Trust Co., 5.90%,
8/10/98......................... 4,998,553
5,000,000 Banque National De Paris, 5.78%,
2/4/98.......................... 4,999,197
5,000,000 Banque National De Paris, 5.73%,
3/9/98.......................... 5,000,090
5,000,000 Banque National De Paris, 5.96%,
6/30/98......................... 5,001,738
5,000,000 Barclays Bank PLC, 5.87%,
3/9/98.......................... 4,999,870
5,000,000 Barclays Bank PLC, 5.93%,
6/24/98......................... 5,001,370
5,000,000 Canadian Imperial Bank of
Commerce, 5.82%, 2/27/98........ 4,998,082
5,000,000 Commerzebank Group, 5.81%,
3/4/98.......................... 4,999,520
5,000,000 National Westminster Bank,
5.86%, 3/10/98.................. 5,000,181
5,000,000 Societe Generale, 5.81%,
3/16/98......................... 5,000,092
5,000,000 Societe Generale, 5.69%,
3/19/98......................... 4,999,708
5,000,000 Swiss Bank Corp., 5.75%,
2/12/98......................... 5,000,058
5,000,000 Swiss Bank Corp., 6.05%,
5/22/98......................... 5,004,346
------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT 85,002,437
------------
(Amortized Cost $85,002,437)
</TABLE>
Continued
91
<PAGE> 93
THE KENT FUNDS
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMORTIZED
SHARES COST
------ ---------
<C> <S> <C>
INVESTMENT COMPANIES -- 1.1%
5,230,364 Dreyfus Cash Management Money
Market.......................... $5,230,364
------------
TOTAL INVESTMENT COMPANIES ... 5,230,364
------------
(Amortized Cost $5,230,364)
TOTAL INVESTMENTS -- 99.7% ... 474,127,129
(Amortized Cost $474,127,129) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.3% .................... 1,430,086
------------
TOTAL NET ASSETS -- 100.0% .... $475,557,215
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes is the same.
(b) Illiquid security.
(c) Section 4(2) Commercial Paper.
Security is subject to contractual or legal restrictions on its resale and
is deemed liquid by guidelines established by the Board of Trustees.
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
LOC Letter of Credit
See Notes to Financial Statements.
92
<PAGE> 94
THE KENT FUNDS
MICHIGAN MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS -- 91.9%
MICHIGAN -- 85.8%
$ 605,000 Bay City Electric Revenue,
5.00%, 1/1/98 (Insured by
AMBAC).......................... $ 605,000
440,000 Calhoun County, GO, 3.95%,
7/1/98 (Insured by AMBAC)....... 440,000
675,000 Clinton Township Economic
Development Corp., Pointe
Village Square, 4.00%, 2/1/98**
(LOC: First of America)......... 675,000
1,200,000 Dearborn Economic Development,
Oakbrook Community, 3.70%*,
1/7/98 (LOC: Mellon Bank)....... 1,200,000
1,100,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series C,
5.10%*, 2/17/98 (LOC: Bank of
Nova Scotia).................... 1,100,000
2,840,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., 3.75%,
1/22/98 (LOC: Union Bank of
Switzerland).................... 2,840,000
1,000,000 Detroit City School District,
State Aid, 4.50%, 5/1/98........ 1,001,912
1,000,000 Detroit Water Revenue, 7.88%,
7/1/19, Prerefunded 7/1/98 @
102............................. 1,039,305
680,000 Ecorse Public School District,
3.90%, 5/1/98 (Insured by
FGIC)........................... 680,000
390,000 Farmington Hills Michigan
Education, Marketing Displays,
3.80%, 3/2/98** (LOC: Comerica
Bank)........................... 390,000
1,780,000 Genesse County Economic
Development Corp., Grand Blanc
Convention Center, 3.85%,
5/1/98** (LOC: Citizens Banking
Corp.).......................... 1,780,000
2,500,000 Grand Rapids Water Supply,
7.88%, 1/1/18, Prerefunded
1/1/98 @ 102.................... 2,550,000
2,225,000 Leelanau County Economic
Development Corp., American
Mutual Insurance Co., 3.85%,
6/15/98 (LOC: First of
America)........................ 2,225,000
445,000 Livonia County Economic
Development Corp., American
Community Mutual Insurance Co.,
3.85%, 5/15/98 ** (LOC: First of
America)........................ 445,000
1,300,000 Marquette County Economic
Development Corp., Pioneer Labs,
Inc., (AMT), 4.15%*, 1/7/98,
(LOC: NBD)...................... 1,300,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,800,000 Meridian, Hannah Technology,
4.05%*, 1/15/98 (LOC: Comerica
Bank)........................... $ 1,800,000
1,000,000 Michigan Municipal Bond
Authority, 6.80%, 5/1/98
(Insured by FGIC)............... 1,009,253
5,570,000 Michigan Municipal Bond
Authority, 4.75%, 5/1/98........ 5,583,206
2,500,000 Michigan Municipal Bond
Authority, 4.50%, 7/2/98........ 2,508,407
1,670,000 Michigan Municipal Bond
Authority, Revenue Note, Series
1997C, 4.50%, 9/18/98........... 1,676,870
3,000,000 Michigan State, 4.50%,
9/30/98......................... 3,015,803
9,000,000 Michigan State Building
Authority, 3.75%, 3/2/98 (LOC:
CIBC)........................... 8,999,999
1,150,000 Michigan State Building
Authority, 3.70%, 4/1/98........ 1,150,000
1,000,000 Michigan State Building
Authority, 4.50%, 10/1/98....... 1,004,348
2,045,000 Michigan State Building
Authority, 4.50%, 10/15/98...... 2,055,590
595,000 Michigan State Hospital Finance
Authority Revenue, Mercy Health
Services, 5.00%, 8/15/98........ 598,756
3,450,000 Michigan State Housing
Development Authority,
Multifamily, Series A, 3.80%,
1/28/98 (LOC: Credit Suisse).... 3,450,000
1,000,000 Michigan State Housing
Development Authority,
Multifamily, Series A, 3.80%,
2/24/98 (LOC: Credit Suisse).... 1,000,000
3,600,000 Michigan State Housing
Development Authority,
Multifamily, Series A, 3.75%,
2/24/98 (LOC: Credit Suisse).... 3,600,000
3,300,000 Michigan State Job Development
Authority, BASF Wyandotte,
4.00%*, 1/7/98 (LOC: Credit
Suisse)......................... 3,300,000
415,000 Michigan State Strategic Fund,
3.90%, 3/1/98 (LOC: Michigan
National Bank).................. 415,000
4,000,000 Michigan State Strategic Fund,
John A. Brewer, (AMT), 4.20%*,
1/7/98 (LOC: NBD)............... 4,000,000
3,100,000 Michigan State Strategic Fund,
Rochester Gear Project, (AMT),
3.95%*, 1/7/98 (LOC: Comerica
Bank)........................... 3,100,000
5,100,000 Michigan State Strategic Fund,
Dow Chemical Co. Project, (AMT),
5.00%*, 1/2/98.................. 5,100,000
</TABLE>
Continued
93
<PAGE> 95
THE KENT FUNDS
MICHIGAN MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$3,000,000 Michigan State Strategic Fund,
Van Andel Research Project,
4.15%*, 1/9/98 (LOC: Michigan
National Bank).................. $ 3,000,000
2,510,000 Michigan State Strategic Fund,
Atmosphere Annealing, (AMT),
4.15%*, 1/8/98 (LOC: First of
America)........................ 2,510,000
1,160,000 Michigan State Strategic Fund,
B.K. Hardwoods, (AMT), 4.35%*,
1/2/98, (LOC: Huntington Bank).. 1,160,000
4,500,000 Michigan State Strategic Fund,
Banks Hardwoods, Inc., (AMT),
4.25%*, 1/8/98 (LOC: Bank One).. 4,500,000
1,000,000 Michigan State Strategic Fund,
C-Tec Inc. Project, (AMT),
4.30%*, 1/7/98 (LOC: SunTrust
Bank)........................... 1,000,000
2,500,000 Michigan State Strategic Fund,
Delta Containers, Inc. Project,
(AMT), 4.10%*, 1/7/98 (LOC:
NBD)............................ 2,500,000
2,500,000 Michigan State Strategic Fund,
Donnelly Corp., Series B, (AMT),
4.00%, 4/1/98** (LOC: Dresdner
Bank)........................... 2,500,000
1,275,000 Michigan State Strategic Fund,
Environmental Powder Co., (AMT),
4.35%*, 1/8/98 (LOC: Michigan
National Bank).................. 1,275,000
1,500,000 Michigan State Strategic Fund,
Gollin Block & Supply Co.,
(AMT), 4.15%*, 1/7/98 (LOC:
Northern Trust)................. 1,499,985
2,000,000 Michigan State Strategic Fund,
I.V.C. Industrial Coatings,
Inc., (AMT), 4.25%*, 1/8/98
(LOC: Bank One)................. 2,000,000
1,700,000 Michigan State Strategic Fund,
Industrial Development, Kinder
Care, (AMT), 3.90%*, 1/7/98
(LOC: Toronto Dominion)......... 1,700,000
205,000 Michigan State Strategic Fund,
Kazoo, Inc. Project, (AMT),
3.90%, 3/15/98 (LOC: First of
America)........................ 205,000
3,155,000 Michigan State Strategic Fund,
Kerkstra Precast Project, (AMT),
4.35%*, 1/8/98 (LOC: Huntington
Bank)........................... 3,155,000
630,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Tawas Bay Associates Project,
(AMT), 3.85%, 6/1/98 (LOC: First
of America)..................... 630,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,750,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Advanced Tooling, (AMT), 4.10%*,
1/2/98 (LOC: Huntington Bank)... $ 2,750,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Cincinnati Milacron, (AMT),
4.40%*, 1/2/98 (LOC: PNC Bank).. 2,500,000
1,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Dickinson Press, Inc. Project,
(AMT), 4.35%*, 1/2/98 (LOC:
Huntington Bank)................ 1,000,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Donnelly Corp., (AMT), 4.20%*,
1/2/98 (LOC: Dresdner Bank)..... 2,500,000
2,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Eclipse Mold, (AMT), 4.10%*,
1/7/98 (LOC: NBD)............... 2,000,000
4,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue, H.P.
Pelzer, Inc. Project, (AMT),
4.20%*, 1/2/98 (LOC: NBD)....... 4,000,000
4,800,000 Michigan State Strategic Fund,
Limited Obligation Revenue, JB
Labs, Inc., Michigan HDA Rental
Revenue, Series C, (AMT),
4.35%*, 1/2/98 (LOC: Credit
Suisse)......................... 4,800,000
5,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Karona, Inc., (AMT), 4.35%*,
1/2/98 (LOC: First of
America)........................ 5,498,114
2,430,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Kay
Screen Printing, (AMT), 4.15%*,
1/2/98 (LOC: Comerica Bank)..... 2,430,000
365,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Kay
Screen Printing, (AMT), 4.15%*,
1/8/98 (LOC: Comerica Bank)..... 365,000
3,025,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Midbrook Products, Inc. Project,
(AMT), 4.35%*, 1/7/98 (LOC:
Comerica Bank).................. 3,025,000
715,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Patten Monument, (AMT), 4.35%*,
1/2/98 (LOC: Huntington Bank)... 715,000
1,800,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Pilot Industries, (AMT), 4.25%*,
1/8/98 (LOC: NBD)............... 1,800,000
</TABLE>
Continued
94
<PAGE> 96
THE KENT FUNDS
MICHIGAN MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$ 980,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Stephenson Land, (AMT), 4.35%*,
1/2/98 (LOC: Comerica Bank)..... $ 980,000
500,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Tom
Miller, Inc., (AMT), 4.30%*,
1/2/98 (LOC: First Union)....... 500,000
4,595,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
United Fixtures, (AMT), 4.15%*,
1/2/98 (LOC: LaSalle National
Bank)........................... 4,595,000
1,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue.
Autocam Corp., (AMT), 4.10%*,
1/8/98 (LOC: Comerica Bank)..... 1,000,000
905,000 Michigan State Strategic Fund,
Molmec, Inc. (AMT), 4.35%*,
1/2/98 (LOC: Comerica Bank)..... 905,000
1,000,000 Michigan State Strategic Fund,
NSF International Project,
Series 1997B, 4.15%*, 1/7/98
(LOC: First of America)......... 1,000,000
1,750,000 Michigan State Strategic Fund,
Omni Technical Services, Inc.,
(AMT), 4.35%*, 1/8/98 (LOC:
First of America)............... 1,750,000
2,865,000 Michigan State Strategic Fund,
Ort Tool & Die Corp., (AMT),
4.35%*, 1/8/98 (LOC: National
City Bank)...................... 2,865,000
945,000 Michigan State Strategic Fund,
Plascore, Inc., 4.35%*, 1/2/98,
(LOC: Huntington Bank).......... 945,000
5,000,000 Michigan State Strategic Fund,
Solid Waste Disposal, Grayling
Generating Project, (AMT),
3.75%*, 1/7/98 (LOC: Barclays
Bank)........................... 5,000,000
2,200,000 Michigan State Strategic Fund,
Sunrise Windows Ltd. Project,
4.04%*, 1/7/98 (LOC: Keybank)... 2,200,000
2,800,000 Michigan State Strategic Fund,
Unidet Waste System, (AMT),
3.80%*, 2/4/98, (LOC: Bank of
America)........................ 2,800,000
1,400,000 Michigan State Strategic Fund,
Waltec American Forgings, (AMT),
4.20%*, 1/7/98 (LOC: NBD)....... 1,400,000
1,075,000 Michigan State Strategic Fund,
Wright -- Technology, Inc.,
Series 1997, 4.35%*, 1/8/98
(LOC: First of America)......... 1,075,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$4,000,000 Midland County Economic
Development Corp., Limited
Obligation Revenue, Dow Chemical
Project, Series A, (AMT), Series
A, 5.10%*, 1/8/98............... $ 4,000,000
3,000,000 Oakland County Economic
Development Corp., Cranbrook
Community, 4.15%*, 1/8/98 (LOC:
SPA Comerica)................... 3,000,000
675,000 Oakland County Economic
Development Corp., Orchard Maple
Project, 3.70%, 5/15/98** (LOC:
First of America)............... 675,000
310,000 Rochester Hills Economic
Development Corp., BRG Assoc.,
4.00%, 6/1/98** (LOC: Comerica
Bank)........................... 310,000
825,000 Saginaw Township School
Refunding, QSBLF, 3.90%,
12/1/98......................... 825,000
955,000 St. Clair Shores, Michigan
Education, Borman's, Inc.
Project, 3.85%*, 4/15/98 (LOC:
Huntington Bank)................ 955,000
1,800,000 University of Michigan Hospital
Revenue, Series A, 5.10%*,
1/2/98.......................... 1,800,000
4,200,000 University of Michigan Hospital
Revenue, Series A, 5.10%*,
1/2/98.......................... 4,200,000
1,205,000 Warren Economic Development
Corp. (Cross Country Inn),
3.75%, 6/1/98 (LOC: Huntington
Bank)........................... 1,205,000
1,855,000 Warren Economic Development
Corp., CMX Corp. Project, 3.90%,
3/15/98 (LOC: First of
America)........................ 1,855,000
550,000 Warren Economic Development
Corp., Limited Obligation
Revenue, Elias Brothers, 4.00%,
6/1/98 (LOC: Comerica Bank)..... 550,000
1,000,000 Waterford Township School
District, QSBLF, 4.30%,
6/1/98.......................... 1,002,203
910,000 Wayne County Airport, Detroit
Airport, Series A, (AMT),
3.75%*, 1/7/98 (LOC: Baerische
Landesbank)..................... 910,000
------------
180,958,751
------------
PUERTO RICO -- 6.1%
2,500,000 Commonwealth of Puerto Rico, Tax
& Revenue Anticipation Notes,
Series A,, 4.50%, 7/30/98....... 2,510,585
3,000,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Abbott Labs Project, 3.75%,
3/2/98.......................... 3,000,000
</TABLE>
Continued
95
<PAGE> 97
THE KENT FUNDS
MICHIGAN MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
PUERTO RICO (CONTINUED)
$2,750,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Reynolds Metals, 3.80%, 9/1/98**
(LOC: ABN/Amro)................. $ 2,750,000
4,200,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
4.00%, 12/1/98.................. 4,200,000
500,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Reynolds Metals, 3.80%*,
9/1/98** (LOC: ABN/Amro)........ 500,321
------------
12,960,906
------------
TOTAL MUNICIPAL BONDS........... 193,919,657
------------
(Amortized Cost $193,919,657)
TAX FREE COMMERCIAL PAPER -- 7.5%
MICHIGAN -- 7.5%
1,100,000 Cornell Township Economic
Development Corp., Industrial
Development Revenue, Mead
Escanaba Paper Co., 3.65%,
2/26/98 (LOC: Credit Suisse).... 1,100,000
1,000,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., 3.70%,
1/22/98 (LOC: Union Bank of
Switzerland).................... 1,000,000
2,700,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series A,
3.75%, 1/27/98 (LOC: Morgan
Guaranty)....................... 2,700,000
1,500,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series A,
3.70%, 2/2/98 (LOC: Morgan
Guaranty)....................... 1,500,000
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
TAX FREE COMMERCIAL PAPER (CONTINUED)
MICHIGAN (CONTINUED)
$1,500,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series A,
3.75%, 2/2/98 (LOC: Morgan
Guaranty)....................... $ 1,500,000
9,000,000 Michigan State Underground Tank
Storage, 3.75%, 2/5/98 (LOC:
CIBC)........................... 9,000,000
------------
TOTAL TAX FREE COMMERCIAL
PAPER........................... 16,800,000
------------
(Amortized Cost $16,800,000)
INVESTMENT COMPANIES -- 0.2%
50,956 Dreyfus Tax Exempt Money
Market.......................... 50,956
455,877 Federated Tax Exempt Money
Market.......................... 455,877
------------
TOTAL INVESTMENT COMPANIES...... 506,833
------------
(Amortized Cost $506,833)
TOTAL INVESTMENTS -- 99.6%.................. 211,226,490
(Amortized Cost $211,226,490)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.4%....................... 744,703
------------
TOTAL NET ASSETS -- 100.0% $211,971,193
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes is the same.
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
** Putable security. Maturity date reflects next put date.
AMBAC AMBAC Indemnity Corp.
AMT Alternative Minimum Tax Paper
FGIC Financial Guaranty Insurance Corp.
GO General Obligation
LOC Letter of Credit
QSBLF Qualified School Bond Loan Fund
See Notes to Financial Statements.
96
<PAGE> 98
THE KENT FUND
GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 98.9%
FEDERAL FARM CREDIT BANK -- 12.6%
$5,000,000 5.65%, 2/2/98.................... $ 5,000,000
5,000,000 5.52%, 3/18/98................... 4,941,733
2,000,000 5.54%, 4/27/98................... 1,964,298
-----------
11,906,031
-----------
FEDERAL HOME LOAN BANK -- 24.8%
3,000,000 5.36%, 1/2/98.................... 2,999,553
1,300,000 5.50%, 1/9/98.................... 1,298,411
1,008,000 5.62%, 1/20/98................... 1,005,010
5,000,000 5.59%, 1/21/98................... 4,984,472
1,602,000 5.50%, 1/27/98................... 1,595,637
6,700,000 5.43%, 1/30/98................... 6,670,672
5,000,000 5.43%, 3/18/98................... 4,942,683
-----------
23,496,438
-----------
FEDERAL HOME LOAN MORTGAGE CORP -- 35.8%
5,000,000 5.47%, 1/7/97.................... 4,995,442
5,000,000 5.60%, 1/9/98.................... 4,993,783
3,990,000 5.63%, 1/14/98................... 3,981,878
4,000,000 5.69%, 1/22/98................... 3,986,723
6,000,000 5.55%, 1/23/98................... 5,979,486
5,000,000 5.65%, 3/6/98.................... 4,949,778
1,000,000 5.42%, 3/26/98................... 987,353
4,000,000 5.69%, 8/21/98................... 3,997,535
-----------
33,871,978
-----------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 25.7%
3,000,000 5.43%, 1/9/98.................... 2,996,380
2,000,000 5.49%, 1/21/98................... 1,993,900
2,125,000 5.63%, 2/2/98.................... 2,114,366
2,000,000 5.47%, 2/5/98.................... 1,989,364
2,000,000 5.58%, 3/5/98.................... 1,980,470
2,360,000 5.42%, 3/23/98................... 2,331,220
5,000,000 5.79%, 3/25/98................... 5,000,914
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOC. (CONTINUED)
$ 1,985,000 5.42%, 3/30/98................. $ 1,958,701
4,000,000 5.91%*, 1/6/98................. 4,000,000
------------
24,365,315
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 93,639,762
------------
(Amortized Cost $93,639,762)
INVESTMENT COMPANIES -- 1.3%
705,378 Dreyfus Cash Management Money
Market......................... 705,378
498,216 Federated Government
Obligations Money Market....... 498,216
------------
TOTAL INVESTMENT COMPANIES..... 1,203,594
------------
(Amortized Cost $1,203,594)
TOTAL INVESTMENTS -- 100.2%................. 94,843,356
(Amortized Cost $94,843,356)(a)
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.2)%............................ (216,895)
------------
TOTAL NET ASSETS -- 100.0%.................. $ 94,626,461
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes is the same.
* Variable rate security. Rate presented represents rate in effect at December
31, 1997. Maturity date reflects next rate change date.
See Notes to Financial Statements.
97
<PAGE> 99
THE KENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH AND SMALL COMPANY INTERNATIONAL INDEX
INCOME FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Investments at cost.................................... $622,545,953 $554,217,563 $431,328,252 $434,589,423
Net unrealized appreciation (depreciation)............. 109,847,171 187,800,124 67,214,952 182,553,075
------------ ------------ ------------ ------------
Total investments at value............................. 732,393,124 742,017,687 498,543,204 617,142,498
Foreign currency at value (cost $334,607)................ -- -- 333,053 --
Receivable for investments sold.......................... 12,588,542 10,378,556 2,734,447 394,786
Receivable for capital shares issued..................... 171,358 42,646 1,000 149,471
Interest and dividends receivable........................ 1,260,449 630,273 673,254 833,927
Tax reclaim receivable................................... -- -- 422,188 --
Net receivable for open foreign currency contracts....... -- -- 24,250 --
Net receivable for variation margin on futures
contracts.............................................. -- -- -- 430
Prepaid expenses......................................... 242 176 1,631 131
------------ ------------ ------------ ------------
Total Assets........................................... 746,413,715 753,069,338 502,733,027 618,521,243
------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased........................ 12,970,762 10,103,824 133,042 259,042
Payable for capital shares redeemed...................... 10,519 -- 811 9,152
Withholding taxes payable................................ -- -- 64,382 --
Net payable for variation margin on futures contracts.... 2,890 26,448 -- --
Cash overdraft........................................... -- 40,107 -- --
Payable to adviser....................................... 27,928 28,137 20,531 8,391
Payable to administrator................................. 7,254 7,308 4,977 4,089
Payable to transfer agent................................ 13,515 12,453 9,439 1,223
Payable to distributor (Investment Shares)............... 7,182 4,636 2,057 5,684
Payable to custodian..................................... 1,986 9,589 77,910 13,889
Payable to auditor....................................... 14,877 14,688 9,206 11,549
Payable to legal counsel................................. 4,937 4,962 2,989 3,616
Registration & filing fees payable....................... 12,286 5,574 6,752 21,818
Printing fees payable.................................... 11,802 13,173 8,735 9,659
Accrued expenses and other liabilities................... 12,143 16,751 13,487 9,605
------------ ------------ ------------ ------------
Total Liabilities...................................... 13,098,081 10,287,650 354,318 357,717
------------ ------------ ------------ ------------
NET ASSETS................................................. $733,315,634 $742,781,688 $502,378,709 $618,163,526
============ ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital.......................................... $567,102,155 $516,979,693 $437,400,010 $436,155,073
Accumulated undistributed (distributions in excess of)
net investment income.................................. 50,009 (6,180) (2,157,265) (4,723)
Accumulated undistributed net realized gains (losses) on
investments, foreign currency and futures contracts
sold................................................... 56,041,229 37,737,966 (58,580) (666,108)
Net unrealized appreciation (depreciation) of
investments, foreign currency, forward foreign currency
exchange contracts and futures contracts............... 110,122,241 188,070,209 67,194,544 182,679,284
------------ ------------ ------------ ------------
TOTAL NET ASSETS........................................... $733,315,634 $742,781,688 $502,378,709 $618,163,526
============ ============ ============ ============
INSTITUTIONAL SHARES:
Net Assets............................................... $697,972,970 $719,997,908 $492,598,359 $590,241,426
Shares Outstanding....................................... 44,881,954 39,149,106 33,089,656 30,834,874
Net Asset Value, offering and redemption price per
share.................................................. $ 15.55 $ 18.39 $ 14.89 $ 19.14
============ ============ ============ ============
INVESTMENT SHARES:
Net Assets............................................... $ 35,342,664 $ 22,783,780 $ 9,780,350 $ 27,922,100
Shares Outstanding....................................... 2,289,511 1,243,018 661,385 1,458,041
Net Asset Value, offering and redemption price per
share.................................................. $ 15.44 $ 18.33 $ 14.79 $ 19.15
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
98
<PAGE> 100
THE KENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHORT TERM INTERMEDIATE
BOND FUND BOND FUND INCOME FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments at cost..................................... $143,861,713 $746,770,016 $224,424,903
Net unrealized appreciation (depreciation).............. 787,112 9,857,337 7,334,542
------------ ------------ ------------
Total investments at value.............................. 144,648,825 756,627,353 231,759,445
Cash...................................................... 9,698 65,084 49,843
Receivable for capital shares issued...................... 38,388 42,400 113,566
Interest and dividends receivable......................... 2,507,001 13,123,115 3,520,427
Prepaid expenses.......................................... 568 216 1,919
------------ ------------ ------------
Total Assets............................................ 147,204,480 769,858,168 235,445,200
------------ ------------ ------------
LIABILITIES:
Payable for investments purchased......................... 4,729 37,064 20,922
Payable for capital shares redeemed....................... 4,500 5,000 3,100
Payable to adviser........................................ 4,016 23,142 7,720
Payable to administrator.................................. 1,460 7,650 2,339
Payable to transfer agent................................. 4,130 18,599 3,014
Payable to distributor (Investment Shares)................ 920 1,471 1,108
Payable to custodian...................................... 399 703 348
Payable to auditor........................................ 1,228 13,999 3,361
Payable to legal counsel.................................. 1,150 5,458 1,909
Registration & filing fees payable........................ -- 8,142 25
Printing fees payable..................................... 5,854 12,327 8,571
Accrued expenses and other liabilities.................... 4,430 13,112 4,478
------------ ------------ ------------
Total Liabilities....................................... 32,816 146,667 56,895
------------ ------------ ------------
NET ASSETS.................................................. $147,171,664 $769,711,501 $235,388,305
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital........................................... $153,081,385 $770,245,558 $227,743,701
Accumulated undistributed (distributions in excess of) net
investment income....................................... 3,131 39,097 13,070
Accumulated undistributed net realized gains (losses) on
investments sold........................................ (6,699,964) (10,430,491) 296,992
Net unrealized appreciation (depreciation) of
investments............................................. 787,112 9,857,337 7,334,542
------------ ------------ ------------
TOTAL NET ASSETS............................................ $147,171,664 $769,711,501 $235,388,305
============ ============ ============
INSTITUTIONAL SHARES:
Net Assets................................................ $139,739,111 $762,739,586 $229,777,500
Shares Outstanding........................................ 14,338,849 77,010,336 22,313,511
Net Asset Value, offering and redemption price per
share................................................... $ 9.75 $ 9.90 $ 10.30
============ ============ ============
INVESTMENT SHARES:
Net Assets................................................ $ 7,432,553 $ 6,971,915 $ 5,610,805
Shares Outstanding........................................ 763,364 702,443 545,475
Net Asset Value, offering and redemption price per
share................................................... $ 9.74 $ 9.93 $ 10.29
============ ============ ============
</TABLE>
See Notes to Financial Statements
99
<PAGE> 101
THE KENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MICHIGAN
LIMITED TERM INTERMEDIATE TAX-FREE MUNICIPAL
TAX-FREE FUND TAX-FREE FUND INCOME FUND BOND FUND
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Investments at cost..................................... $35,258,239 $258,732,405 $109,343,734 $111,336,719
Net unrealized appreciation (depreciation).............. 733,284 16,097,428 7,357,837 3,342,223
----------- ------------ ------------ ------------
Total investments at value.............................. 35,991,523 274,829,833 116,701,571 114,678,942
Interest and dividends receivable......................... 522,947 4,400,489 1,680,842 1,504,817
Unamortized organizational costs.......................... -- -- 2,548 --
Prepaid expenses.......................................... 16 2,996 1,540 20
----------- ------------ ------------ ------------
Total Assets............................................ 36,514,486 279,233,318 118,386,501 116,183,779
----------- ------------ ------------ ------------
LIABILITIES:
Payable for capital shares redeemed....................... 8,000 4,000 -- --
Payable to adviser........................................ 905 7,655 3,566 2,867
Payable to administrator.................................. 366 2,784 1,179 1,158
Fund accounting fees payable.............................. 1,034 4,195 2,142 2,626
Payable to transfer agent................................. 2,415 3,132 2,639 3,470
Payable to distributor (Investment Shares)................ 61 743 354 540
Payable to custodian...................................... 410 1,075 2,473 788
Payable to auditor........................................ 1,826 3,561 1,761 1,109
Payable to legal counsel.................................. 260 2,245 885 840
Registration & filing fees payable........................ 473 15,700 3,401 6,209
Printing fees payable..................................... 795 -- 1,054 2,358
Accrued expenses and other liabilities.................... 371 12,476 2,888 13,515
----------- ------------ ------------ ------------
Total Liabilities....................................... 16,916 57,566 22,342 35,480
----------- ------------ ------------ ------------
NET ASSETS.................................................. $36,497,570 $279,175,752 $118,364,159 $116,148,299
=========== ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital........................................... $35,758,635 $263,066,394 $110,915,251 $112,834,960
Accumulated undistributed (distributions in excess of) net
investment income....................................... 3,510 30,476 (1,369) 40,046
Accumulated undistributed net realized gains (losses) on
investments sold........................................ 2,141 (18,546) 92,440 (68,930)
Net unrealized appreciation (depreciation) of
investments............................................. 733,284 16,097,428 7,357,837 3,342,223
----------- ------------ ------------ ------------
TOTAL NET ASSETS............................................ $36,497,570 $279,175,752 $118,364,159 $116,148,299
=========== ============ ============ ============
INSTITUTIONAL SHARES:
Net Assets................................................ $36,023,151 $275,641,260 $116,652,429 $111,735,337
Shares Outstanding........................................ 3,534,456 25,809,044 10,954,275 10,944,576
Net Asset Value, offering and redemption price per
share................................................... $ 10.19 $ 10.68 $ 10.65 $ 10.21
=========== ============ ============ ============
INVESTMENT SHARES:
Net Assets................................................ $ 474,419 $ 3,534,492 $ 1,711,730 $ 4,412,962
Shares Outstanding........................................ 46,374 330,953 160,364 432,714
Net Asset Value, offering and redemption price per
share................................................... $ 10.23 $ 10.68 $ 10.67 $ 10.20
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements
100
<PAGE> 102
THE KENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MICHIGAN
MUNICIPAL GOVERNMENT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments in securities at amortized cost............. $474,127,129 $211,226,490 $94,843,356
------------ ------------ -----------
Total investments at amortized cost..................... 474,127,129 211,226,490 94,843,356
Interest and dividends receivable......................... 3,884,471 1,400,326 267,814
Prepaid expenses.......................................... 6,680 218 4,836
------------ ------------ -----------
Total Assets............................................ 478,018,280 212,627,034 95,116,006
------------ ------------ -----------
LIABILITIES:
Dividends payable......................................... 2,341,377 629,509 474,933
Cash overdraft............................................ 77,988 -- --
Payable to adviser........................................ 10,508 4,690 1,039
Payable to administrator.................................. 2,984 1,219 559
Payable to transfer agent................................. 4,240 2,643 665
Payable to custodian...................................... 3,554 5,058 --
Payable to auditor........................................ 8,766 3,546 2,018
Payable to legal counsel.................................. 3,740 1,552 744
Accrued expenses and other liabilities.................... 7,908 7,624 9,587
------------ ------------ -----------
Total Liabilities....................................... 2,461,065 655,841 489,545
------------ ------------ -----------
NET ASSETS.................................................. $475,557,215 $211,971,193 $94,626,461
============ ============ ===========
NET ASSETS CONSIST OF:
Paid-in capital........................................... $475,546,186 $211,982,881 $94,624,247
Accumulated undistributed (distributions in excess of) net
investment income....................................... 13,072 781 2,214
Accumulated undistributed net realized gains (losses) on
investments sold........................................ (2,043) (12,469) --
------------ ------------ -----------
TOTAL NET ASSETS............................................ $475,557,215 $211,971,193 $94,626,461
============ ============ ===========
INSTITUTIONAL SHARES:
Net Assets................................................ $474,377,775 $211,682,179 $94,624,448
Shares Outstanding........................................ 474,371,951 211,671,569 94,624,444
Net Asset Value, offering and redemption price per
share................................................... $ 1.00 $ 1.00 $ 1.00
============ ============ ===========
INVESTMENT SHARES:
Net Assets................................................ $ 1,179,440 $ 289,014 $ 2,013
Shares Outstanding........................................ 1,179,430 288,995 2,013
Net Asset Value, offering and redemption price per
share................................................... $ 1.00 $ 1.00 $ 1.00
============ ============ ===========
</TABLE>
See Notes to Financial Statements.
101
<PAGE> 103
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
GROWTH AND SMALL COMPANY INTERNATIONAL INDEX
INCOME FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 16,501,498 $ 7,646,361 $ 9,365,340 $ 7,982,276
Interest........................................... 2,433 32,327 520,830 18,020
Less: Net foreign taxes withheld................... (40,067) (4,583) (1,172,538) (27,698)
------------ ------------ ----------- ------------
Total Investment Income.......................... 16,463,864 7,674,105 8,713,632 7,972,598
------------ ------------ ----------- ------------
EXPENSES:
Investment advisory fees........................... 4,568,032 4,597,213 3,529,317 1,278,392
Administration fees................................ 1,169,235 1,176,682 842,845 766,851
Fund accounting and custodian fees................. 107,230 146,571 420,287 119,844
Audit fees......................................... 19,428 21,465 14,181 15,661
Legal fees......................................... 10,892 10,410 9,514 6,955
Transfer agent fees................................ 141,594 155,246 137,303 106,843
Trustees' fees and expenses........................ 11,333 11,347 8,761 8,289
Distribution fees (Investment Shares).............. 59,946 45,018 23,388 45,030
Printing expenses.................................. 3,402 15,401 20,896 3,555
Registration fees.................................. 32,886 21,741 30,478 5,921
Other expenses..................................... 1,776 2,204 4,137 331
------------ ------------ ----------- ------------
Total expenses before waivers.................... 6,125,754 6,203,298 5,041,107 2,357,672
Less: waivers.................................... (77,411) (77,831) (56,062) (485,961)
------------ ------------ ----------- ------------
Net Expenses..................................... 6,048,343 6,125,467 4,985,045 1,871,711
------------ ------------ ----------- ------------
NET INVESTMENT INCOME................................ 10,415,521 1,548,638 3,728,587 6,100,887
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) on investments, foreign
currency, and foreign currency contracts......... 111,932,563 78,087,896 2,742,836 1,138,162
Net realized gains (losses) on futures contracts... (61,005) 524,810 -- 1,370,043
Net change in unrealized appreciation/depreciation
of futures contracts............................. 275,070 227,785 -- 120,014
Net change in unrealized appreciation/depreciation
of investments, foreign currency, and foreign
currency contracts............................... 15,661,888 81,347,122 4,769,670 98,353,714
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS........................................ 127,808,516 160,187,613 7,512,506 100,981,933
------------ ------------ ----------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $138,224,037 $161,736,251 $11,241,093 $107,082,820
============ ============ =========== ============
</TABLE>
See Notes to Financial Statements
102
<PAGE> 104
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHORT TERM INTERMEDIATE
BOND FUND BOND FUND INCOME FUND
---------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $11,152,170 $51,050,679 $18,158,378
Dividends................................................. 418,796 1,514,383 382,540
----------- ----------- -----------
Total Investment Income................................. 11,570,966 52,565,062 18,540,918
----------- ----------- -----------
EXPENSES:
Investment advisory fees.................................. 857,575 4,262,333 1,489,950
Administration fees....................................... 306,274 1,386,330 444,179
Fund accounting and custodian fees........................ 26,634 116,074 39,981
Audit fees................................................ 10,509 25,302 10,856
Legal fees................................................ 1,542 10,722 3,892
Transfer agent fees....................................... 45,140 81,993 49,488
Trustees' fees and expenses............................... 2,348 9,884 3,830
Distribution fees (Investment Shares)..................... 9,174 17,259 8,849
Amortization of organization costs........................ -- -- 6,024
Printing expenses......................................... 2,389 9,109 2,190
Registration fees......................................... 7,759 18,896 10,328
Other expenses............................................ 37 446 2,793
----------- ----------- -----------
Total expenses before waivers........................... 1,269,381 5,938,348 2,072,360
Less: waivers........................................... (24,820) (93,254) (29,904)
----------- ----------- -----------
Net Expenses............................................ 1,244,561 5,845,094 2,042,456
----------- ----------- -----------
NET INVESTMENT INCOME....................................... 10,326,405 46,719,968 16,498,462
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investments sold........... (1,502,731) (3,309,390) 3,441,169
Net change in unrealized appreciation/depreciation of
investments............................................. 1,638,919 15,305,110 5,214,704
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS... 136,188 11,995,720 8,655,873
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $10,462,593 $58,715,688 $25,154,335
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
103
<PAGE> 105
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MICHIGAN
LIMITED TERM INTERMEDIATE TAX-FREE MUNICIPAL
TAX-FREE FUND TAX-FREE FUND INCOME FUND BOND FUND
------------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest............................................. $1,696,028 $14,164,975 $5,900,518 $5,830,519
Dividends............................................ 25,281 154,379 79,656 75,421
---------- ----------- ---------- ----------
Total Investment Income............................ 1,721,309 14,319,354 5,980,174 5,905,940
---------- ----------- ---------- ----------
EXPENSES:
Investment advisory fees............................. 167,800 1,424,578 642,997 563,275
Administration fees.................................. 66,670 509,532 209,139 223,672
Distribution fees (Investment Shares)................ 773 8,298 2,621 7,499
Fund accounting and custodian fees................... 7,938 56,335 25,517 28,492
Audit fees........................................... 5,045 15,742 7,146 9,059
Legal fees........................................... 449 4,311 1,785 3,184
Transfer agent fees.................................. 37,236 40,987 39,201 37,521
Trustees' fees and expenses.......................... -- 4,365 525 1,814
Amortization of organization costs................... -- -- 1,668 --
Printing expenses.................................... -- 13,464 7,177 6,906
Registration fees.................................... 1,147 6,876 4,558 27
Other expenses....................................... -- 222 1,512 513
---------- ----------- ---------- ----------
Total expenses before waivers...................... 287,058 2,084,710 943,846 881,962
Less: waivers...................................... (4,821) (34,406) (14,069) (18,246)
---------- ----------- ---------- ----------
Net Expenses....................................... 282,237 2,050,304 929,777 863,716
---------- ----------- ---------- ----------
NET INVESTMENT INCOME.................................. 1,439,072 12,269,050 5,050,397 5,042,224
---------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) on investments sold...... 159,864 691,582 376,069 49,676
Net change in unrealized appreciation/depreciation of
investments........................................ 136,663 6,286,893 4,279,292 1,602,539
---------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS.......................................... 296,527 6,978,475 4,655,361 1,652,215
---------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... $1,735,599 $19,247,525 $9,705,758 $6,694,439
========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements
104
<PAGE> 106
The Kent STATEMENTS OF OPERATIONS
Funds FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MICHIGAN
MUNICIPAL GOVERNMENT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND(1)
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $28,553,830 $7,265,643 $2,957,599
Dividends................................................. 909,527 138,215 193,020
----------- ---------- ----------
Total Investment Income................................. 29,463,357 7,403,858 3,150,619
----------- ---------- ----------
EXPENSES:
Investment advisory fees.................................. 2,092,414 781,668 226,041
Administration fees....................................... 936,013 349,391 103,600
Fund accounting and custodian fees........................ 82,972 34,928 13,744
Audit fees................................................ 17,337 7,568 3,348
Legal fees................................................ 8,442 2,074 927
Transfer agent fees....................................... 55,039 39,410 16,905
Trustees' fees and expenses............................... 8,347 3,207 1,418
Amortization of organization costs........................ -- -- 4,275
Printing expenses......................................... 9,267 2,834 3,172
Registration fees......................................... 21,889 640 12,939
Other expenses............................................ 132 -- 673
----------- ---------- ----------
Total expenses before waivers........................... 3,231,852 1,221,720 387,042
Less: waivers........................................... (509,838) (199,790) (189,098)
----------- ---------- ----------
Net Expenses............................................ 2,722,014 1,021,930 197,944
----------- ---------- ----------
NET INVESTMENT INCOME....................................... 26,741,343 6,381,928 2,952,675
----------- ---------- ----------
NET REALIZED GAINS (LOSSES) ON INVESTMENT................... (1,165) (12,469) 4
----------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $26,740,178 $6,369,459 $2,952,679
=========== ========== ==========
</TABLE>
- ---------------
(1) For the period from June 2, 1997 (commencement of operations) through
December 31, 1997.
See Notes to Financial Statements.
105
<PAGE> 107
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND SMALL COMPANY GROWTH FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........................ $515,920,253 $412,450,592 $558,516,596 $ 461,027,443
------------ ------------ ------------ -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income.................................. 10,415,521 9,952,979 1,548,638 3,966,391
Net realized gains (losses) on investments, foreign
currency, and foreign currency contracts............. 111,932,563 39,233,025 78,087,896 32,298,684
Net realized gains (losses) on futures contracts....... (61,005) 2,415,000 524,810 3,527,985
Net change in unrealized appreciation/depreciation of
futures contracts.................................... 275,070 -- 227,785 87,425
Net change in unrealized appreciation/depreciation of
investments, foreign currency, and foreign currency
contracts............................................ 15,661,888 30,902,403 81,347,122 53,847,793
------------ ------------ ------------ -------------
Net increase in net assets resulting from operations... 138,224,037 82,503,407 161,736,251 93,728,278
------------ ------------ ------------ -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income.................................. (10,051,899) (9,772,575) (1,572,242) (3,891,501)
In excess of net investment income..................... -- -- (570,748) --
Net realized gains on investments...................... (58,514,755) (49,510,778) (52,695,021) (24,783,337)
In excess of net realized gains........................ -- -- -- --
------------ ------------ ------------ -------------
Total dividends and distributions -- Institutional
Shares............................................. (68,566,654) (59,283,353) (54,838,011) (28,674,838)
------------ ------------ ------------ -------------
INVESTMENT:
Net investment income.................................. (322,621) (246,918) -- (70,033)
In excess of net investment income..................... -- (18,400) (36,830) (7,537)
Net realized gains on investments...................... (2,725,491) (1,458,817) (1,565,329) (629,504)
In excess of net realized gains........................ -- -- -- --
------------ ------------ ------------ -------------
Total dividends and distributions -- Investment
Shares............................................. (3,048,112) (1,724,135) (1,602,159) (707,074)
------------ ------------ ------------ -------------
Total dividends and distributions to shareholders.... (71,614,766) (61,007,488) (56,440,170) (29,381,912)
------------ ------------ ------------ -------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................ 269,087,243 153,847,838 216,183,011 135,473,783
Reinvestment of distributions.......................... 33,077,724 27,411,595 28,070,255 14,891,206
Cost of shares redeemed................................ (151,378,857) (99,285,691) (165,284,255) (117,222,202)
------------ ------------ ------------ -------------
TOTAL NET INCREASE (DECREASE) FROM CAPITAL
TRANSACTIONS........................................... 150,786,110 81,973,742 78,969,011 33,142,787
------------ ------------ ------------ -------------
Net increase (decrease) in net assets.................. 217,395,381 103,469,661 184,265,092 97,489,153
------------ ------------ ------------ -------------
NET ASSETS AT END OF PERIOD.............................. $733,315,634 $515,920,253 $742,781,688 $ 558,516,596
============ ============ ============ =============
</TABLE>
See Notes to Financial Statements
106
<PAGE> 108
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND INDEX EQUITY FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD......................... $396,597,865 $294,093,096 $253,362,463 $190,488,589
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income................................... 3,728,587 3,169,685 6,100,887 4,133,408
Net realized gains (losses) on investments, foreign
currency, and foreign currency contracts.............. 2,742,836 3,330,884 1,138,162 1,057,376
Net realized gains (losses) on futures contracts........ -- -- 1,370,043 1,498,615
Net change in unrealized appreciation/depreciation of
futures contracts..................................... -- -- 120,014 49,520
Net change in unrealized appreciation/depreciation of
investments, foreign currency, and foreign currency
contracts............................................. 4,769,670 11,892,070 98,353,714 37,969,480
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations.... 11,241,093 18,392,639 107,082,820 44,708,399
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income................................... (3,055,002) (2,589,632) (5,884,290) (3,996,731)
In excess of net investment income...................... (1,831,420) (504,939) (65,127) --
Net realized gains on investments.......................
In excess of net realized gains......................... (341,685) (161,046) (585,460) (668,004)
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares.............................................. (7,629,204) (6,581,114) (8,147,919) (9,048,415)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income................................... (35,702) (49,833) (215,864) (137,968)
In excess of net investment income...................... (59,234) -- (9,227) (5,705)
Net realized gains on investments....................... (47,965) (82,522) (88,824) (199,306)
In excess of net realized gains......................... (6,876) -- (11,017) --
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares.............................................. (149,777) (132,355) (324,932) (342,979)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders..... (7,778,981) (6,713,469) (8,472,851) (9,391,394)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 193,400,718 139,625,382 339,198,444 72,390,118
Reinvestment of distributions........................... 3,565,223 3,275,693 6,673,196 6,280,152
Cost of shares redeemed................................. (94,647,209) (52,075,476) (79,680,546) (51,113,401)
------------ ------------ ------------ ------------
TOTAL NET INCREASE (DECREASE) FROM CAPITAL TRANSACTIONS... 102,318,732 90,825,599 266,191,094 27,556,869
------------ ------------ ------------ ------------
Net increase (decrease) in net assets................... 105,780,844 102,504,769 364,801,063 62,873,874
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD............................... $502,378,709 $396,597,865 $618,163,526 $253,362,463
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
107
<PAGE> 109
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT TERM BOND FUND INTERMEDIATE BOND FUND INCOME FUND
----------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF
PERIOD.......................... $237,096,910 $312,313,894 $776,722,838 $861,662,351 $242,781,715 $128,017,408
------------ ------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income........... 10,326,405 17,428,126 46,719,968 50,745,83 16,498,462 13,248,046
Net realized gains (losses) on
investments sold.............. (1,502,731) (937,245) (3,309,390) (7,025,161) 3,441,169 2,157,485
Net change in unrealized
appreciation/depreciation of
investments................... 1,638,919 (5,032,357) 15,305,110 (20,975,605) 5,214,704 (7,015,717)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations..... 10,462,593 11,458,524 58,715,688 22,745,066 25,154,335 8,389,814
------------ ------------ ------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income........... (10,203,409) (17,416,111) (46,492,693) (51,337,391) (16,298,443) (13,204,524)
In excess of net investment
income........................ -- -- -- (2,304,413) -- (1,956,281)
Net realized gains on
investments................... -- -- -- -- (4,496,656) (717,482)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions --
Institutional Shares........ (10,203,409) (17,416,111) (46,492,693) (53,641,804) (20,795,099) (15,878,287)
------------ ------------ ------------ ------------ ------------ ------------
INVESTMENT:
Net investment income........... (230,620) (85,476) (400,310) (422,949) (236,638) (143,574)
In excess of net investment
income........................ -- (9,055) -- (38,057) -- (20,998)
Net realized gains on
investments................... -- -- -- -- (85,457) (2,063)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions -- Investment
Shares...................... (230,620) (94,531) (400,310) (461,006) (322,095) (166,635)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions to
shareholders................ (10,434,029) (17,510,642) (46,893,003) (54,102,810) (21,117,194) (16,044,922)
------------ ------------ ------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued..... 55,848,711 71,401,214 201,540,137 200,094,674 67,917,967 155,448,604
Reinvestment of distributions... 6,828,762 11,174,796 25,204,467 29,128,985 4,339,793 2,778,971
Cost of shares redeemed......... (152,631,283) (151,740,876) (245,578,626) (282,805,428) (83,688,311) (35,808,160)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL NET INCREASE (DECREASE) FROM
CAPITAL TRANSACTIONS............ (89,953,810) (69,164,866) (18,834,022) (53,581,769) (11,430,551) 122,419,415
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
assets........................ (89,925,246) (75,216,984) (7,011,337) (84,939,513) (7,393,410) 114,764,307
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD....... $147,171,664 $237,096,910 $769,711,501 $776,722,838 $235,388,305 $242,781,715
============ ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
108
<PAGE> 110
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LIMITED TERM TAX-FREE FUND INTERMEDIATE TAX-FREE FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD......................... $41,577,319 $55,401,190 $289,042,905 $287,540,348
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income................................... 1,439,072 1,861,546 12,269,050 12,643,123
Net realized gains (losses) on investments sold......... 159,864 82,971 691,582 1,079,288
Net change in unrealized appreciation/depreciation of
investments........................................... 136,663 (270,758) 6,286,893 (3,796,119)
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations.... 1,735,599 1,673,759 19,247,525 9,926,292
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income................................... (1,432,406) (1,883,853) (12,149,068) (12,639,182)
In excess of net investment income...................... -- (22,303) -- (101,729)
Net realized gains on investments....................... (170,851) (45,972) (86,552) --
In excess of net realized gains......................... -- -- (17,244) --
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares.............................................. (1,603,257) (1,952,128) (12,252,864) (12,740,911)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income................................... (11,595) (2,384) (135,115) (137,261)
In excess of net investment income...................... -- (206) -- (7,740)
Net realized gains on investments....................... (2,045) (87) (863) --
In excess of net realized gains......................... -- -- (441) --
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares.............................................. (13,640) (2,677) (136,419) (145,001)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders..... (1,616,897) (1,954,805) (12,389,283) (12,885,912)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................. 9,736,272 8,696,402 44,265,909 63,415,595
Reinvestment of distributions........................... 27,364 18,971 207,641 120,131
Cost of shares redeemed................................. (14,962,087) (22,258,198) (61,198,945) (59,073,549)
------------ ------------ ------------ ------------
TOTAL NET INCREASE (DECREASE) FROM CAPITAL TRANSACTIONS... (5,198,451) (13,542,825) (16,725,395) 4,462,177
------------ ------------ ------------ ------------
Net increase (decrease) in net assets................... (5,079,749) (13,823,871) (9,867,153) 1,502,557
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD............................... $36,497,570 $41,577,319 $279,175,752 $289,042,905
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
109
<PAGE> 111
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE INCOME FUND MICHIGAN MUNICIPAL BOND FUND
--------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------------------- -----------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........................ $110,883,746 $122,384,290 $155,044,170 $187,365,585
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income.................................. 5,050,397 4,737,111 5,042,224 6,577,753
Net realized gains (losses) on investments sold........ 376,069 1,968,582 49,676 86,964
Net realized gains (losses) on futures contracts....... -- (363,313) -- --
Net change in unrealized appreciation/depreciation of
investments.......................................... 4,279,292 (1,887,284) 1,602,539 (795,155)
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations... 9,705,758 4,455,096 6,694,439 5,869,562
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income.................................. (5,016,230) (4,725,879) (4,914,390) (6,489,955)
In excess of net investment income..................... (610) -- -- --
Net realized gains on investments...................... (330,223) (1,679,825) -- --
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares............................................. (5,347,063) (6,405,704) (4,914,390) (6,489,955)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income.................................. (42,572) (32,116) (121,577) (77,375)
In excess of net investment income..................... (929) -- -- (3,313)
Net realized gains on investments...................... (4,346) (9,292) -- --
In excess of net realized gains........................ -- (3,147) -- --
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares............................................. (47,847) (44,555) (121,577) (80,688)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders.... (5,394,910) (6,450,259) (5,035,967) (6,570,643)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................ 33,039,586 35,182,548 35,519,586 28,108,486
Reinvestment of distributions.......................... 116,653 68,391 131,586 74,582
Cost of shares redeemed................................ (29,986,674) (44,756,320) (76,205,515) (59,803,402)
------------ ------------ ------------ ------------
TOTAL NET INCREASE (DECREASE) FROM CAPITAL
TRANSACTIONS........................................... 3,169,565 (9,505,381) (40,554,343) (31,620,334)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.................. 7,480,413 (11,500,544) (38,895,871) (32,321,415)
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD.............................. $118,364,159 $110,883,746 $116,148,299 $155,044,170
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
110
<PAGE> 112
The Kent
Funds STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GOVERNMENT
MICHIGAN MUNICIPAL MONEY
MONEY MARKET FUND MONEY MARKET FUND MARKET FUND
------------------------------- --------------------------- ------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997(1)
-----------------------------
---------------------------
------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF YEAR.................... $ 484,722,709 $ 426,042,320 $156,205,940 $146,818,028 $ --
--------------- ------------- ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income............................ 26,741,343 21,617,630 6,381,928 4,998,349 2,952,675
Net realized gains (losses) on investments....... (1,165) (27) (12,469) 251 4
--------------- ------------- ------------ ------------ ------------
Net increase in net assets resulting from
operations..................................... 26,740,178 21,617,603 6,369,459 4,998,600 2,952,679
--------------- ------------- ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income............................ (26,699,476) (21,564,398) (6,369,567) (4,966,358) (2,952,603)
--------------- ------------- ------------ ------------ ------------
Total dividends and
distributions -- Institutional Shares........ (26,699,476) (21,564,398) (6,369,567) (4,966,358) (2,952,603)
--------------- ------------- ------------ ------------ ------------
INVESTMENT:
Net investment income............................ (41,867) (53,232) (12,361) (31,991) (72)
--------------- ------------- ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares....................................... (41,867) (53,232) (12,361) (31,991) (72)
--------------- ------------- ------------ ------------ ------------
Total dividends and distributions to
shareholders................................. (26,741,343) (21,617,630) (6,381,928) (4,998,349) (2,952,675)
--------------- ------------- ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...................... 1,153,447,515 845,431,796 279,204,632 258,441,230 328,636,541
Reinvestment of distributions.................... 1,731,961 587,156 205,995 28,579 2,413,698
Cost of shares redeemed.......................... (1,164,343,805) (787,338,536) (223,632,905) (249,082,148) (236,423,732)
--------------- ------------- ------------ ------------ ------------
TOTAL NET INCREASE (DECREASE) FROM CAPITAL
TRANSACTIONS..................................... (9,164,329) 58,680,416 55,777,722 9,387,661 94,626,457
--------------- ------------- ------------ ------------ ------------
Net increase (decrease) in net assets............ (9,165,494) 58,680,389 55,765,253 9,387,912 94,626,461
--------------- ------------- ------------ ------------ ------------
NET ASSETS AT END OF YEAR.......................... $ 475,557,215 $ 484,722,709 $211,971,193 $156,205,940 $ 94,626,461
=============== ============= ============ ============ ============
</TABLE>
- ---------------
(1) For the period from June 2, 1997 (commencement of operations) through
December 31, 1997.
See Notes to Financial Statements.
111
<PAGE> 113
The Kent
Funds NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Kent Funds (the "Trust") was organized as a Massachusetts business trust
on May 9, 1986 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company. As of
the date of this report, the Trust offered fourteen managed investment
portfolios. The accompanying financial statements and financial highlights are
those of The Kent Growth and Income Fund, The Kent Small Company Growth Fund,
The Kent International Growth Fund, The Kent Index Equity Fund, The Kent Short
Term Bond Fund, The Kent Intermediate Bond Fund, The Kent Income Fund, The Kent
Limited Term Tax-Free Fund, The Kent Intermediate Tax-Free Fund, The Kent
Tax-Free Income Fund, The Kent Michigan Municipal Bond Fund, The Kent Money
Market Fund, The Kent Michigan Municipal Money Market Fund and The Kent
Government Money Market Fund (individually, a "Portfolio" and collectively, the
"Portfolios").
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest without par value. It allows for the
creation of one or more classes of shares within each series, each of which,
regardless of class designation, represents an equal proportionate interest in
the Portfolios with each other share of that series.
The Trust may issue more than one series of shares investing in portfolios of
securities. The Trust currently issues fourteen series of shares with two
separate classes in each series: Investment Shares and Institutional Shares.
Each class of shares is entitled upon liquidation of a series to a pro rata
share in the net assets of that class of such series. Each share in each series
or class has identical voting, dividend, liquidation and other rights, except in
matters affecting only a particular series or class, in which case only shares
of the affected series or class are entitled to vote. Class specific expenses,
if any, are currently limited to expenses directly attributable to the
Investment Shares under the Distribution Plan, shareholder services fees and
certain printing and postage expenses incurred as they relate to a particular
class of shares.
The investment objectives of the Portfolios are as follows:
Growth and Income Fund -- To seek long-term capital growth with current income
as a secondary goal.
Small Company Growth Fund -- To seek long-term capital appreciation by
investing in equity securities of small companies.
International Growth Fund -- To seek long-term growth of capital and
additional diversification for U.S. investors by investing in a varied portfolio
of foreign equity securities.
Index Equity Fund -- To seek investment results which mirror the capital
performance and dividend income of the Standard & Poor's 500 Composite Stock
Price Index.
Short Term Bond Fund -- To seek current income by investing primarily in a
limited range of investment quality fixed income securities.
Intermediate Bond Fund -- To seek current income by investing primarily in a
broad range of investment quality debt securities.
Income Fund -- To seek a high level of current income by investing in a broad
range of investment quality debt securities.
Limited Term Tax-Free Fund -- To seek current income, exempt from federal
income tax, while preserving capital.
Intermediate Tax-Free Fund -- To seek current income, exempt from federal
income tax, while preserving capital.
Tax-Free Income Fund -- To seek to provide as high a level of current income
exempt from federal income tax as is consistent with prudent investing, while
preserving capital.
Michigan Municipal Bond Fund -- To seek current income, exempt from federal
and State of Michigan personal income taxes, while preserving capital.
Money Market Fund -- To seek current income from short-term securities while
preserving capital and maintaining liquidity.
Michigan Municipal Money Market Fund -- To seek current income from short-term
securities that is exempt from federal and State of Michigan personal income
taxes, while preserving capital and maintaining liquidity.
Government Money Market Fund -- To seek current income from short-term United
States Government securities while preserving capital and maintaining liquidity.
112
<PAGE> 114
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Portfolios in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual amounts could differ from those estimates.
PORTFOLIO VALUATION: Securities in the Money Market Fund, Government Money
Market Fund and Michigan Municipal Money Market Fund (the "Money Market
Portfolios") are valued utilizing the amortized cost valuation method permitted
in accordance with Rule 2a-7 under the 1940 Act, which approximates market
value. This method involves valuing a portfolio security initially at its cost
on the date of purchase and thereafter assuming a constant amortization to
maturity of the difference between the principal amount due at maturity and
initial cost.
In the Limited Term Tax-Free Fund, the Intermediate Tax-Free Fund, the
Tax-Free Income Fund, the Michigan Municipal Bond Fund, the Short Term Bond
Fund, the Intermediate Bond Fund, and the Income Fund, corporate debt
securities, municipal securities and debt securities of the U.S. government and
its agencies (other than short-term investments maturing in 60 days or less) are
valued on the basis of valuations provided by dealers or by an independent
pricing service approved by the Board of Trustees. Short-term obligations that
mature in 60 days or less are valued at amortized cost, which constitutes fair
value and approximates market value. All other securities and other assets are
appraised at their fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of the Board
of Trustees.
The Growth and Income Fund, Small Company Growth Fund, International Growth
Fund and the Index Equity Fund value securities at the last sales price on the
principal exchange where such securities are traded. Listed securities for which
last sales prices are not available are valued at the last bid price. Unlisted
securities are valued at the mean of the current bid and asked prices in the
principal market where such securities trade. Short-term obligations that mature
in 60 days or less are valued at amortized cost, which constitutes fair value
and approximates market value. All other securities and other assets are
appraised at their fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of the Board
of Trustees.
REPURCHASE AGREEMENTS: The Trust's custodian and other banks acting in a
sub-custodian capacity, take possession of the collateral pledged for
investments in repurchase agreements. The underlying collateral is valued daily
on a mark-to-market basis to determine that the value, including accrued
interest, exceeds the repurchase price. In the event of the seller's default of
the obligation to repurchase, the Portfolios have the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of the default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings.
FOREIGN CURRENCY TRANSLATION: Investments and other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars based upon current exchange rates. Realized gains and losses on
foreign investments and foreign income and expenses are converted into U.S.
dollars based upon exchange rates prevailing on the respective dates of such
transactions. That portion of unrealized gains or losses on investments due to
fluctuations in foreign currency exchange rates is not separately disclosed.
Foreign currency-denominated receivables and payables are "marked-to-market"
using the current exchange rate. The fluctuation between the original exchange
rate and the current exchange rate is recorded as unrealized currency gain or
loss. Upon receipt of payment, a Portfolio realizes a gain or loss on foreign
currency amounting to the difference between the original value and the ending
value of the receivable or payable.
FUTURES CONTRACTS: The Growth and Income Fund, Small Company Growth Fund,
International Growth Fund, Index Equity Fund, Limited Term Tax-Free Fund,
Intermediate Tax-Free Fund, Tax-Free Income Fund and Michigan Municipal Bond
Fund may invest in futures contracts. These Portfolios generally enter into
futures contracts to hedge against declines in the value of their portfolios'
securities. This investment involves, to varying degrees, elements of market
risk and risks in
113
<PAGE> 115
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
excess of the amount recognized in the Statement of Assets and Liabilities. The
face or contract amounts reflect the extent of the involvement the Portfolios
have in the particular classes of instruments. Risks include an imperfect
correlation between the movements in the price of the instruments and the price
of the underlying securities and interest rates. Risks may also arise if there
is an illiquid secondary market for the instruments or due to the inability of
counterparties to perform under the terms of the contract.
Cash or securities are deposited with brokers in order to maintain a position.
Subsequent payments made or received daily by the Portfolio based on the change
in the market value of the position are recorded as an unrealized gain or loss
until the contract is closed out at which time the gain or loss is recognized.
Futures contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
To the extent that the Portfolio enters into futures contracts on an index or
group of securities, the Portfolio exposes itself to an indeterminate liability
and will be required to pay or receive a sum of money measured by the change in
the market value of the index or group of securities. Upon entering into a
futures contract, the Portfolio is required to deposit either cash or securities
in an amount ("initial margin") equal to a certain percentage of the contract
value with a broker. Subsequent payments ("variation margin") equal to changes
in the daily settlement price or last sale on the exchanges where they trade are
paid or received each day and are recorded as a gain or loss on futures
contracts.
The average market value of futures contracts held during the year ended
December 31, 1997 was as follows:
<TABLE>
<CAPTION>
AVERAGE
FUND MARKET VALUE
---- ------------
<S> <C>
Growth and Income Fund.................... $10,090,452
Small Company Growth Fund................. 8,180,496
Index Equity Fund......................... 7,361,783
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The International Growth Fund may
enter into forward foreign currency exchange contracts. The purpose of these
contracts is to hedge against fluctuation in the value of the underlying
currency of certain portfolio investments. A forward foreign currency exchange
contract is an agreement to purchase or sell a specified currency at a specified
price on a future date. Risks associated with the contract include changes in
the value of the foreign currency relative to the U.S. dollar and/or the
counterparty's potential inability to perform under the contract.
The forward foreign currency exchange contracts are valued daily using the
current exchange rate of the underlying currency with any fluctuations recorded
as unrealized gains or losses. Realized gains or losses are recognized when
entering a closing or offsetting forward foreign currency exchange contract with
the same settlement date and broker.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Net realized gains and losses on investments sold
and on foreign currency transactions are recorded on the basis of identified
cost. Interest income is recorded on the accrual basis and includes, where
applicable, the amortization of premiums or accretion of discounts. Dividend
income is recorded on the ex-dividend date.
The International Growth Fund, upon the purchase or sale of a security
denominated in a foreign currency, may enter into foreign currency exchange
contracts for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of foreign currency involved in the underlying security transaction to
hedge the portfolio against currency fluctuations during the settlement period.
In such cases, the Portfolio has not realized currency gains or losses between
the trade and settlement dates on these security transactions.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Portfolios declare and
distribute dividends from net investment income monthly, with the exception of
the International Growth Fund which declares and pays dividends annually and the
Money Market Portfolios which declare daily and pay monthly. Net investment
income for this purpose consists of interest accrued, discount earned (including
both original issue and market discount), dividends earned less amortization of
any market premium and accrued expenses. Net realized capital gains, if any, are
distributed at least annually.
The amounts of income and capital gains to be distributed are determined in
accordance with income tax regulations. Such amounts may vary from income and
capital gains recognized in accordance with generally accepted accounting
principles.
114
<PAGE> 116
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
As of December 31, 1997, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments to
paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN/(LOSS)
INCOME ON INVESTMENTS
------ --------------
<S> <C> <C>
Growth and Income Fund... $ -- $ --
Small Company Growth
Fund................... 603,541 (603,541)
International Growth
Fund................... (266,611) 289,981
Index Equity Fund........ 69,631 (69,631)
Short Term Bond Fund..... 1,757 (1,757)
Intermediate Bond Fund... 80,298 (80,298)
Income Fund.............. -- --
Limited Term Tax-Free
Fund................... 1,428 (1,428)
Intermediate Tax-Free
Fund................... 861 (861)
Tax-Free Income Fund..... 170 (170)
Michigan Municipal Bond
Fund................... 11,352 (11,352)
Money Market............. -- --
Michigan Municipal Money
Market Fund............ 781 (781)
Government Money Market
Fund................... 2,214 (4)
</TABLE>
FEDERAL INCOME TAXES: For federal income tax purposes, each Portfolio is
treated as a separate entity for the purpose of determining its qualification as
a regulated investment company under the Internal Revenue Code (the "Code"). It
is the policy of each Portfolio to meet the requirements of the Code applicable
to regulated investment companies, including the requirement that it distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required. Withholding taxes on foreign dividends have
been paid or provided for in accordance with the applicable country's tax rules
and rates.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
At December 31, 1997, the following Portfolios had the following capital loss
carryforwards which will expire in the years indicated:
<TABLE>
<CAPTION>
FUND AMOUNT YEAR
---- ----------- ----
<S> <C> <C>
Short Term Bond Fund................ $ 656,100 2001
3,015,994 2002
467,881 2003
438,260 2004
1,927,928 2005
-----------
6,506,163
===========
Intermediate Bond Fund.............. $ 6,353,600 2004
4,043,228 2005
-----------
$10,396,828
===========
Michigan Municipal Bond Fund........ $ 68,930 2003
-----------
Money Market Fund................... $ 433 1999
224 2002
194 2003
27 2004
432 2005
-----------
$ 1,310
===========
Michigan Municipal Money Market
Fund.............................. $ 12,469 2005
</TABLE>
EXPENSES: Expenses directly attributable to a Portfolio are charged to the
Portfolio, while expenses which are attributable to more than one series of the
Trust are allocated among the respective series based upon relative net assets
or another appropriate basis. In addition, investors in Investment Shares will
pay the expenses directly attributable to the Investment Shares as a class, and
investors in Institutional Shares will pay the expenses directly attributable to
the Institutional Shares as a class.
ORGANIZATIONAL COSTS: The Tax-Free Income Fund bears all costs in connection
with its organization, including the fees and expenses of registering and
qualifying their initial shares for distribution under federal and state
securities laws. All such costs are amortized using the straight-line method
over a period of five years beginning with the respective Portfolio's
commencement of operations. In the event that any of the initial shares
purchased by the Portfolio's sponsors are redeemed during such period by any
holder thereof, the Portfolio will be reimbursed by such holder
115
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The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
for any unamortized organization costs in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of redemption. The other Portfolios beared all costs in connection
with their organization. All such costs were fully amortized as of December 31,
1997.
3. RELATED PARTY TRANSACTIONS
Old Kent Bank ("Investment Adviser") serves as the investment adviser to the
Trust. The Investment Adviser is a member of Michigan State Banking Association
and the principal subsidiary of Old Kent Financial Corporation. The Investment
Adviser is entitled to receive a fee, computed daily and paid monthly, based on
each Portfolio's average daily net assets at the following annual rates:
<TABLE>
<S> <C>
Growth and Income Fund........................... 0.70%
Small Company Growth Fund........................ 0.70%
International Growth Fund........................ 0.75%
Index Equity Fund................................ 0.30%
Short Term Bond Fund............................. 0.50%
Intermediate Bond Fund........................... 0.55%
Income Fund...................................... 0.60%
Limited Term Tax-Free Fund....................... 0.45%
Intermediate Tax-Free Fund....................... 0.50%
Tax-Free Income Fund............................. 0.55%
Michigan Municipal Bond Fund..................... 0.45%
Money Market Fund................................ 0.40%
Michigan Municipal Money Market Fund............. 0.40%
Government Money Market Fund..................... 0.40%
</TABLE>
The Index Equity Fund and Government Money Market Fund had investment advisory
fees waived by Old Kent Bank equal to $119,782 and $113,145, respectively.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
serves the Portfolios as Administrator and Distributor. BISYS Fund Services,
Inc. serves the Portfolios as Fund Accountant and Transfer Agent. BISYS and
BISYS Fund Services, Inc. are both wholly owned subsidiaries of The BISYS Group,
Inc. The Administrator is entitled to receive a fee computed daily and paid
monthly, at the annual rate of 0.185% of the average daily net assets of the
Trust up to $5 billion; 0.165% of the average daily net assets of the Trust in
excess of $5 billion up to $7.5 billion; and 0.135% of the average daily net
assets of the Trust in excess of $7.5 billion. Fund Accounting fees are computed
daily and paid monthly at the annual rate of 0.015% of the average daily net
assets of the Trust and are included as part of the fees paid to the
Administrator.
Gross administration fees and fees waived for the year ended December 31, 1997
were as follows for the Portfolios indicated:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
- ----- ---------- -----------
<S> <C> <C>
Growth and Income Fund......... $1,169,235 $ --
Small Company Growth Fund...... 1,176,682 --
International Growth Fund...... 842,845 --
Index Equity Fund.............. 766,851 302,110
Short Term Bond Fund........... 306,274 --
Intermediate Bond Fund......... 1,386,330 --
Income Fund.................... 444,179 --
Limited Term Tax-Free Fund..... 66,670 --
Intermediate Tax-Free Fund..... 509,532 --
Tax-Free Income Fund........... 209,139 --
Michigan Municipal Bond Fund... 223,672 --
Money Market Fund.............. 936,013 431,371
Michigan Municipal Money Market
Fund......................... 349,391 170,474
Government Money Market Fund... 103,600 67,476
</TABLE>
Beginning June 1, 1997, Old Kent Bank provided certain administration services
to the Trust pursuant to a Sub-Administration Agreement between Old Kent Bank
and BISYS. BISYS agreed to pay Old Kent Bank a fee, calculated daily and paid
monthly, at an annual rate of up to 0.05% of each Portfolio's average daily net
assets. The fees paid to Old Kent Bank by BISYS for such administrative services
come out of BISYS' administrative fee and are not an additional charge to the
Portfolios.
<TABLE>
<CAPTION>
FUNDS SUB-ADMINISTRATION FEES
----- -----------------------
<S> <C>
Growth and Income Fund........... $166,029
Small Company Growth Fund........ 167,566
International Growth Fund........ 117,605
Index Equity Fund................ 156,303
Short Term Bond Fund............. 36,851
Intermediate Bond Fund........... 185,578
Income Fund...................... 59,261
Limited Term Tax-Free Fund....... 8,723
Intermediate Tax-Free Fund....... 67,234
Tax-Free Income Fund............. 28,022
Michigan Municipal Bond Fund..... 28,435
Money Market Fund................ 123,614
Michigan Municipal Money Market
Fund........................... 37,248
Government Money Market Fund..... 28,520
</TABLE>
116
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Transfer agent fees for each Portfolio for the year ended December 31, 1997
are as follows:
<TABLE>
<CAPTION>
FUNDS TRANSFER AGENT FEES
----- -------------------
<S> <C>
Growth and Income Fund............... $141,594
Small Company Growth Fund............ 155,246
International Growth Fund............ 137,303
Index Equity Fund.................... 106,843
Short Term Bond Fund................. 45,140
Intermediate Bond Fund............... 81,993
Income Fund.......................... 49,488
Limited Term Tax-Free Fund........... 37,236
Intermediate Tax-Free Fund........... 40,987
Tax-Free Income Fund................. 39,201
Michigan Municipal Bond Fund......... 37,521
Money Market Fund.................... 55,039
Michigan Municipal Money Market
Fund............................... 39,410
Government Money Market Fund......... 16,905
</TABLE>
Fund Accounting Fees and fees waived for each Portfolio for the year ended
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
----- ---------- -----------
<S> <C> <C>
Growth and Income Fund.......... $ 97,976 $77,411
Small Company Growth Fund....... 98,587 77,831
International Growth Fund....... 70,630 56,062
Index Equity Fund............... 64,069 64,069
Short Term Bond Fund............ 25,690 21,127
Intermediate Bond Fund.......... 116,243 93,254
Income Fund..................... 37,246 29,904
Limited Term Tax-Free Fund...... 5,591 4,511
Intermediate Tax-Free Fund...... 42,733 34,406
Tax-Free Income Fund............ 17,539 14,069
Michigan Municipal Bond Fund.... 18,760 15,238
Money Market Fund............... 78,467 78,467
Michigan Municipal Money Market
Fund.......................... 29,316 29,316
Government Money Market Fund.... 8,477 8,477
</TABLE>
Certain officers of the Trust are affiliated with BISYS. Such officers receive
no direct payments or fees from the Portfolios for serving as officers.
The Trust has adopted a distribution plan (the "Plan") on behalf of the
Investment Shares of the Portfolios pursuant to Rule 12b-1 of the 1940 Act. The
Plan provides for payments to the Distributor of up to 0.25% of the average
daily net assets of the Investment Shares of the Portfolios. Although the money
market Portfolios are authorized to pay 12b-1 fees of up to 0.25% in connection
with the sale of Investment Shares, none of the Portfolios currently intends to
pay such fees.
Gross distribution fees and fees waived for each Portfolio for the year ended
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
- ----- ---------- -----------
<S> <C> <C>
Growth and Income Fund......... $59,946 $ --
Small Company Growth Fund...... 45,018 --
International Growth Fund...... 23,388 --
Index Equity Fund.............. 45,030 --
Short Term Bond Fund........... 9,174 3,693
Intermediate Bond Fund......... 17,259 --
Income Fund.................... 8,849 --
Limited Term Tax-Free Fund..... 773 310
Intermediate Tax-Free Fund..... 8,298 --
Tax-Free Income Fund........... 2,621 --
Michigan Municipal Bond Fund... 7,499 3,008
Money Market Fund.............. -- --
Michigan Municipal Money Market
Fund......................... -- --
Government Money Market Fund... -- --
</TABLE>
Expenses for the Trust include legal fees paid to Drinker Biddle & Reath LLP.
A partner of the firm serves as Assistant Secretary of the Trust.
117
<PAGE> 119
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Portfolios are summarized below:
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND SMALL COMPANY GROWTH FUND
----------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued...................................... $ 249,081,909 $150,224,731 $ 208,702,084 $ 132,474,283
Reinvestment of distributions...................... 30,110,268 25,727,424 26,503,462 14,200,151
Shares redeemed.................................... (147,058,160) (97,365,654) (161,953,808) (115,454,666)
------------- ------------ ------------- -------------
Net increase (decrease) from Institutional shares
transactions................................... $ 132,134,017 $78,586,501 $ 73,251,738 $ 31,219,768
------------- ------------ ------------- -------------
INVESTMENT:
Shares issued...................................... $ 20,005,334 $ 3,623,107 $ 7,480,927 $ 2,999,500
Reinvestment of distributions...................... 2,967,456 1,684,171 1,566,793 691,055
Shares redeemed.................................... (4,320,697) (1,920,037) (3,330,447) (1,767,536)
------------- ------------ ------------- -------------
Net increase (decrease) from Investment shares
transactions................................... $ 18,652,093 $ 3,387,241 $ 5,717,273 $ 1,923,019
------------- ------------ ------------- -------------
Total net increase (decrease) from shares
transactions................................... $ 150,786,110 $81,973,742 $ 78,969,011 $ 33,142,787
============= ============ ============= =============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued...................................... 16,279,124 10,889,808 11,956,401 8,964,612
Reinvestment of distributions...................... 1,971,493 1,890,610 1,547,774 937,802
Shares redeemed.................................... (9,401,038) (7,034,231) (9,131,520) (7,693,348)
------------- ------------ ------------- -------------
Net increase (decrease) from Institutional shares
transactions................................... 8,849,579 5,746,187 4,372,655 2,209,066
------------- ------------ ------------- -------------
INVESTMENT:
Shares issued...................................... 1,283,992 265,482 419,135 203,920
Reinvestment of distributions...................... 195,172 124,536 91,169 45,725
Shares redeemed.................................... (280,261) (139,590) (191,859) (118,619)
------------- ------------ ------------- -------------
Net increase (decrease) from Investment shares
transactions................................... 1,198,903 250,428 318,445 131,026
------------- ------------ ------------- -------------
Total net increase (decrease) from shares
transactions................................... 10,048,482 5,996,615 4,691,100 2,340,092
============= ============ ============= =============
</TABLE>
118
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND INDEX EQUITY FUND
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued........................................ $189,937,844 $137,648,487 $323,258,744 $ 69,650,513
Reinvestment of distributions........................ 3,418,753 3,147,652 6,357,380 5,950,954
Shares redeemed...................................... (92,021,615) (50,898,479) (77,077,375) (50,001,044)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions..................................... $101,334,982 $89,897,660 $252,538,749 $ 25,600,423
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................ $ 3,462,874 $ 1,976,895 $15,939,700 $ 2,739,605
Reinvestment of distributions........................ 146,470 128,041 315,816 329,198
Shares redeemed...................................... (2,625,594) (1,176,997) (2,603,171) (1,112,357)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions..................................... $ 983,750 $ 927,939 $13,652,345 $ 1,956,446
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions..................................... $102,318,732 $90,825,599 $266,191,094 $ 27,556,869
============ ============ ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued........................................ 12,562,555 9,359,272 18,391,993 5,172,550
Reinvestment of distributions........................ 230,973 215,585 353,825 434,418
Shares redeemed...................................... (5,990,183) (3,491,780) (4,462,155) (3,699,843)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions..................................... 6,803,345 6,083,077 14,283,663 1,907,125
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................ 227,807 137,013 915,280 205,672
Reinvestment of distributions........................ 9,962 8,820 17,611 24,012
Shares redeemed...................................... (175,388) (81,019) (149,114) (81,276)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions..................................... 62,381 64,814 783,777 148,408
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions..................................... 6,865,726 6,147,891 15,067,440 2,055,533
============ ============ ============ ============
</TABLE>
119
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
SHORT TERM INTERMEDIATE
BOND FUND BOND FUND INCOME FUND
---------------------------- ----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued...................... $48,001,662 $ 71,054,235 $ 199,760,848 $ 198,301,060 $64,474,285 $154,129,760
Reinvestment of distributions...... 6,604,162 11,089,747 24,873,643 28,757,725 4,044,114 2,631,559
Shares redeemed.................... (150,317,030) (151,375,676) (243,018,554) (281,359,682) (82,779,834) (35,226,634)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Institutional shares
transactions................... $(95,711,206) $ (69,231,694) $ (18,384,063) $ (54,300,897) $(14,261,435) $121,534,685
------------ ------------- ------------- ------------- ------------ ------------
INVESTMENT:
Shares issued...................... $ 7,847,049 $ 346,979 $ 1,779,289 $ 1,793,614 $ 3,443,682 $ 1,318,844
Reinvestment of distributions...... 224,600 85,049 330,824 371,260 295,679 147,412
Shares redeemed.................... (2,314,253) (365,200) (2,560,072) (1,445,746) (908,477) (581,526)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Investment shares
transactions................... $ 5,757,396 $ 66,828 $ (449,959) $ 719,128 $ 2,830,884 $ 884,730
------------ ------------- ------------- ------------- ------------ ------------
Total net increase (decrease)
from shares transactions....... $(89,953,810) $ (69,164,866) $ (18,834,022) $ (53,581,769) $(11,430,551) $122,419,415
============ ============= ============= ============= ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued...................... 4,932,559 7,222,192 20,424,141 20,156,864 6,376,298 15,175,279
Reinvestment of distributions...... 681,245 1,133,650 2,553,873 2,949,495 400,874 259,124
Shares redeemed.................... (15,426,349) (15,396,719) (24,790,453) (28,751,972) (8,087,197) (3,437,207)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Institutional shares
transactions................... (9,812,545) (7,040,877) (1,812,439) (5,645,613) (1,310,025) 11,997,196
------------ ------------- ------------- ------------- ------------ ------------
INVESTMENT:
Shares issued...................... 806,758 35,323 180,929 182,449 338,211 129,967
Reinvestment of distributions...... 23,130 8,703 33,899 38,010 29,196 14,507
Shares redeemed.................... (237,636) (37,044) (261,548) (148,005) (89,859) (57,824)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Investment shares
transactions................... 592,252 6,982 (46,720) 72,454 277,548 86,650
------------ ------------- ------------- ------------- ------------ ------------
Total net increase (decrease)
from shares transactions....... (9,220,293) (7,033,895) (1,859,159) (5,573,159) (1,032,477) 12,083,846
============ ============= ============= ============= ============ ============
</TABLE>
120
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
LIMITED TERM INTERMEDIATE
TAX-FREE FUND TAX-FREE FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued............................................. $ 9,059,260 $ 8,644,704 $43,176,593 $ 62,493,861
Reinvestment of distributions............................. 13,903 16,368 124,001 42,417
Shares redeemed........................................... (14,638,082) (22,256,093) (60,115,232) (57,683,879)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions.......................................... $(5,564,919) $(13,595,021) $(16,814,638) $ 4,852,399
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued............................................. $ 677,012 $ 51,698 $ 1,089,316 $ 921,734
Reinvestment of distributions............................. 13,461 2,603 83,640 77,714
Shares redeemed........................................... (324,005) (2,105) (1,083,713) (1,389,670)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions.......................................... $ 366,468 $ 52,196 $ 89,243 $ (390,222)
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions.......................................... $(5,198,451) $(13,542,825) $(16,725,395) $ 4,462,177
============ ============ ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued............................................. 888,774 849,971 4,110,419 5,988,213
Reinvestment of distributions............................. 1,369 1,612 11,820 4,102
Shares redeemed........................................... (1,435,754) (2,187,798) (5,717,526) (5,565,749)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions.......................................... (545,611) (1,336,215) (1,595,287) 426,566
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued............................................. 66,418 5,061 103,878 89,120
Reinvestment of distributions............................. 1,317 256 7,978 7,510
Shares redeemed........................................... (31,731) (205) (104,039) (135,420)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions.......................................... 36,004 5,112 7,817 (38,790)
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions.......................................... (509,607) (1,331,103) (1,587,470) 387,776
============ ============ ============ ============
</TABLE>
121
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
TAX-FREE MICHIGAN MUNICIPAL
INCOME FUND BOND FUND
--------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ---------------- ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued.......................................... $31,815,166 $34,651,840 $ 32,654,052 $ 27,099,860
Reinvestment of distributions.......................... 76,956 28,992 70,141 44,917
Shares redeemed........................................ (29,459,976) (44,605,879) (75,229,474) (59,293,642)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions....................................... $ 2,432,146 $(9,925,047) $(42,505,281) $(32,148,865)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued.......................................... $ 1,224,420 $ 530,708 $ 2,865,534 $ 1,008,626
Reinvestment of distributions.......................... 39,697 39,399 61,445 29,665
Shares redeemed........................................ (526,698) (150,441) (976,041) (509,760)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions....................................... $ 737,419 $ 419,666 $ 1,950,938 $ 528,531
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions....................................... $ 3,169,565 $(9,505,381) $(40,554,343) $(31,620,334)
============ ============ ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued.......................................... 3,066,893 3,371,900 3,222,928 2,693,878
Reinvestment of distributions.......................... 7,401 2,825 6,941 4,468
Shares redeemed........................................ (2,828,842) (4,276,961) (7,426,189) (5,886,119)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions....................................... 245,452 (902,236) (4,196,320) (3,187,773)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued.......................................... 116,872 51,428 283,459 100,489
Reinvestment of distributions.......................... 3,802 3,826 6,073 2,956
Shares redeemed........................................ (51,267) (14,550) (97,266) (50,830)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions....................................... 69,407 40,704 192,266 52,615
------------ ------------ ------------ ------------
Total net increase (decrease) from shares
transactions....................................... 314,859 (861,532) (4,004,054) (3,135,158)
============ ============ ============ ============
</TABLE>
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Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT
MICHIGAN MUNICIPAL MONEY
MONEY MARKET FUND MONEY MARKET FUND MARKET FUND
------------------------------- ----------------------------- -------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997(1)
--------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued.............................. $ 1,151,538,209 $ 844,257,954 $ 279,013,482 $ 258,305,060 $ 328,632,081
Reinvestment of distributions.............. 1,693,047 540,797 192,298 -- 2,413,585
Shares redeemed............................ (1,162,770,824) (785,695,077) (222,935,437) (248,095,918) (236,421,222)
--------------- ------------- ------------- ------------- -------------
Net increase (decrease) from
Institutional shares transactions...... $ (9,539,568) $ 59,103,674 $ 56,270,343 $ 10,209,142 $ 94,624,444
--------------- ------------- ------------- ------------- -------------
INVESTMENT:
Shares issued.............................. $ 1,909,306 $ 1,173,842 $ 191,150 $ 136,170 $ 4,460
Reinvestment of distributions.............. 38,914 46,359 13,697 28,579 63
Shares redeemed............................ (1,572,981) (1,643,459) (697,468) (986,230) (2,510)
--------------- ------------- ------------- ------------- -------------
Net increase (decrease) from Investment
shares transactions.................... $ 375,239 $ (423,258) $ (492,621) $ (821,481) $ 2,013
--------------- ------------- ------------- ------------- -------------
Total net increase (decrease) from shares
transactions........................... $ (9,164,329) $ 58,680,416 $ 55,777,722 $ 9,387,661 $ 94,626,457
=============== ============= ============= ============= =============
SHARE AMOUNTS
INSTITUTIONAL:
Shares issued.............................. 1,151,538,209 844,257,954 279,013,482 258,305,060 328,632,081
Reinvestment of distributions.............. 1,693,047 540,797 192,298 -- 2,413,585
Shares redeemed............................ (1,162,770,823) (785,695,077) (222,935,438) (248,095,918) (236,421,222)
--------------- ------------- ------------- ------------- -------------
Net increase (decrease) from
Institutional shares transactions...... (9,539,567) 59,103,674 56,270,342 10,209,142 94,624,444
--------------- ------------- ------------- ------------- -------------
INVESTMENT:
Shares issued.............................. 1,909,306 1,173,842 191,151 136,170 4,460
Reinvestment of distributions.............. 38,916 46,359 13,697 28,579 63
Shares redeemed............................ (1,572,981) (1,643,459) (697,467) (986,230) (2,510)
--------------- ------------- ------------- ------------- -------------
Net increase (decrease) from Investment
shares transactions.................... 375,241 (423,258) (492,619) (821,481) 2,013
--------------- ------------- ------------- ------------- -------------
Total net increase (decrease) from shares
transactions........................... (9,164,326) 58,680,416 55,777,723 9,387,661 94,626,457
=============== ============= ============= ============= =============
</TABLE>
- ---------------
(1) From the period June 2, 1997 (commencement of operations) through December
31, 1997.
123
<PAGE> 125
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---- ------------ ------------
<S> <C> <C>
Growth and Income Fund...... $632,120,553 $555,377,838
Small Company Growth Fund... 216,037,006 205,751,523
International Growth Fund... 96,638,427 15,470,957
Index Equity Fund........... 269,077,302 4,027,004
Short Term Bond Fund........ 138,965,062 231,314,649
Intermediate Bond Fund...... 832,771,422 860,725,166
Income Fund................. 198,416,661 222,640,748
Limited Term Tax-Free
Fund...................... 10,477,564 15,166,490
Intermediate Tax-Free
Fund...................... 62,249,579 74,531,186
Tax-Free Income Fund........ 24,828,380 17,964,881
Michigan Municipal Bond
Fund...................... 15,860,879 55,589,588
</TABLE>
6. RISKS ASSOCIATED WITH FOREIGN SECURITIES AND CURRENCIES
The Growth and Income Fund and the International Growth Fund can purchase
securities of foreign issuers. Investing in securities of foreign issuers
involves special risks not typically associated with investing in securities of
U.S. issuers.
The risks include devaluation of currencies and future adverse political and
economic developments. Moreover, securities of many foreign issuers and their
markets may be less liquid and their prices more volatile than those of
securities of comparable U.S. issuers.
7. CONCENTRATION OF CREDIT RISK
The Michigan Municipal Money Market Fund and Michigan Municipal Bond Fund
invest primarily in debt obligations issued by the State of Michigan and its
respective political subdivisions, agencies and public authorities to obtain
funds for various public purposes. The Portfolios are more susceptible to
economic and political factors adversely affecting issuers of Michigan specific
municipal securities than are municipal bond funds that are not concentrated in
these issuers to the same extent.
The Limited Term Tax-Free Fund, Intermediate Tax-Free Fund, Tax-Free Income
Fund, Michigan Municipal Bond Fund, and Michigan Municipal Money Market Fund had
the following concentrations by industry sector at December 31, 1997 (as a
percentage of total investments):
124
<PAGE> 126
The Kent
Funds NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
MICHIGAN MICHIGAN
LIMITED TERM INTERMEDIATE TAX-FREE MUNICIPAL MUNICIPAL MONEY
TAX-FREE FUND TAX-FREE FUND INCOME FUND BOND FUND MARKET FUND
------------- ------------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Airport.................................... 4.27% 1.76% 2.95% 0.92% 0.43%
Chemical................................... -- -- -- -- 10.17%
Development................................ 18.15% 10.88% 28.56% 8.44% 5.54%
Education.................................. 17.50% 4.48% 5.28% 4.43% --
Environmental.............................. -- -- -- -- 5.10%
General Obligation......................... 25.49% 30.33% 21.69% 15.04% 19.79%
Manufacturing.............................. -- -- -- -- 21.13%
Materials.................................. -- -- -- -- 13.01%
Medical.................................... 7.39% 1.70% 6.92% 15.74% 3.12%
Multifamily Housing........................ 2.89% -- -- 2.41% 4.71%
Mutual Funds............................... 0.23% 0.41% 0.83% 0.13% 0.24%
Sewer...................................... 2.81% 3.43% 3.08% 5.53% 3.70%
Power...................................... -- 8.06% 8.38% 5.34% 0.29%
Printing................................... -- -- -- -- 3.98%
Resource Recovery.......................... -- -- -- 1.12% --
Retail..................................... -- -- -- -- 1.13%
School District............................ 10.94% 13.65% 6.52% 34.52% 1.65%
Technology................................. -- -- -- -- 4.31%
Transportation............................. 2.99% 11.14% 6.74% 5.47% --
Utilities.................................. -- 3.52% 1.90% 0.91% --
Water...................................... 7.34% 10.64% 7.15% -- 1.70%
----- ----- ----- ----- -----
100% 100% 100% 100% 100%
===== ===== ===== ===== =====
</TABLE>
125
<PAGE> 127
The Kent GROWTH AND INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 13.90 $ 13.25 $ 10.50 $ 10.91 $ 10.31
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.25 0.30 0.33 0.31 0.27
Net realized and unrealized gains (losses) on
investments and futures contracts................... 3.04 2.16 3.28 (0.26) 0.95
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 3.29 2.46 3.61 0.05 1.22
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.25) (0.30) (0.33) (0.31) (0.27)
In excess of net investment income.................... -- -- -- ** (0.01)
Net realized gains on investments and futures
contracts........................................... (1.39) (1.51) (0.53) (0.15) (0.34)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (1.64) (1.81) (0.86) (0.46) (0.62)
-------- -------- -------- -------- --------
Net change in net asset value........................... 1.65 0.65 2.75 (0.41) 0.60
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 15.55 $ 13.90 $ 13.25 $ 10.50 $ 10.91
======== ======== ======== ======== ========
Total return............................................ 24.14% 19.47% 34.91% 0.51% 11.98%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $697,973 $500,857 $401,371 $308,825 $180,864
Ratio of expenses to average net assets............... 0.92% 0.95% 0.94% 0.98% 1.03%
Ratio of net investment income to average net
assets.............................................. 1.61% 2.18% 2.73% 3.04% 2.61%
Ratio of expenses to average net assets*.............. 0.93% 0.95% *** *** ***
Ratio of net investment income to average net
assets*............................................. 1.60% 2.18% *** *** ***
Portfolio turnover rate(1)............................ 88% 39% 58% 28% 54%
Average commission rate paid(2)....................... $ 0.0571 $ 0.0539 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred,
the ratios would have been as indicated.
** Amount is less than $0.005.
*** During the period, there were no waivers and/or reimbursements.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(2) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
126
<PAGE> 128
The Kent GROWTH AND INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 13.81 $ 13.19 $ 10.46 $ 10.87 $ 10.29
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.21 0.26 0.30 0.32 0.27
Net realized and unrealized gains (losses) on
investments and futures contracts................... 3.02 2.15 3.26 (0.27) 0.93
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 3.23 2.41 3.56 0.05 1.20
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.21) (0.26) (0.30) (0.31) (0.23)
In excess of net investment income.................... -- (0.02) -- ** (0.05)
Net realized gains on investments and futures
contracts........................................... (1.39) (1.51) (0.53) (0.15) (0.20)
In excess of net realized gains....................... -- -- -- -- (0.14)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (1.60) (1.79) (0.83) (0.46) (0.62)
-------- -------- -------- -------- --------
Net change in net asset value........................... 1.63 0.62 2.73 (0.41) 0.58
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 15.44 $ 13.81 $ 13.19 $ 10.46 $ 10.87
======== ======== ======== ======== ========
Total return(1)......................................... 23.89% 19.14% 34.61% 0.50% 11.81%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $ 35,343 $ 15,063 $ 11,079 $ 8,005 $ 4,607
Ratio of expenses to average net assets............... 1.17% 1.09% 1.18% 0.98% 1.22%
Ratio of net investment income to average net
assets.............................................. 1.31% 1.77% 2.48% 3.03% 2.43%
Ratio of expenses to average net assets*.............. 1.18% 1.09% *** *** ***
Ratio of net investment income to average net
assets*............................................. 1.30% 1.77% *** *** ***
Portfolio turnover rate(2)............................ 88% 39% 58% 28% 54%
Average commission rate paid(3)....................... $ 0.0571 $ 0.0539 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
*** During the period, there were no waivers and/or reimbursements.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(3) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
127
<PAGE> 129
The Kent SMALL COMPANY GROWTH FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 15.65 $ 13.82 $ 11.99 $ 12.50 $ 10.85
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.04 0.12 0.10 0.10 0.08
Net realized and unrealized gains (losses) on
investments and futures contracts................... 4.19 2.55 2.64 (0.10) 1.76
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 4.23 2.67 2.74 -- 1.84
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.04) (0.12) (0.10) (0.09) (0.08)
In excess of net investment income.................... (0.02) -- -- (0.01) (0.01)
Net realized gains on investments and futures
contracts........................................... (1.43) (0.72) (0.81) (0.41) (0.10)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (1.49) (0.84) (0.91) (0.51) (0.19)
-------- -------- -------- -------- --------
Net change in net asset value........................... 2.74 1.83 1.83 (0.51) 1.65
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 18.39 $ 15.65 $ 13.82 $ 11.99 $ 12.50
======== ======== ======== ======== ========
Total return............................................ 27.94% 19.56% 23.75% (0.06%) 17.04%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $719,998 $544,081 $450,072 $304,179 $252,401
Ratio of expenses to average net assets............... 0.93% 0.96% 0.97% 0.98% 1.06%
Ratio of net investment income to average net
assets.............................................. 0.24% 0.78% 0.83% 0.79% 0.74%
Ratio of expenses to average net assets*.............. 0.94% 0.96% *** *** ***
Ratio of net investment income to average net
assets*............................................. 0.23% 0.78% *** *** ***
Portfolio turnover rate(1)............................ 32% 16% 30% 20% 14%
Average commission rate paid(2)....................... $ 0.0447 $ 0.0481 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(2) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
128
<PAGE> 130
The Kent SMALL COMPANY GROWTH FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 15.61 $ 13.81 $ 11.98 $12.49 $10.86
------- ------- ------- ------ ------
Income (Loss) from Investment Operations:
Net investment income..................................... -- 0.07 0.07 0.10 0.08
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 4.19 2.54 2.64 (0.11) 1.74
------- ------- ------- ------ ------
Total Income (Loss) from Investment Operations.............. 4.19 2.61 2.71 (0.01) 1.82
------- ------- ------- ------ ------
Less Dividends and Distributions from:
Net investment income..................................... -- (0.08) (0.07) (0.08) (0.06)
In excess of net investment income........................ (0.04) (0.01) -- (0.01) (0.03)
Net realized gains on investments and futures contracts... (1.43) (0.72) (0.81) (0.41) (0.10)
------- ------- ------- ------ ------
Total Dividends and Distributions....................... (1.47) (0.81) (0.88) (0.50) (0.19)
------- ------- ------- ------ ------
Net change in net asset value............................... 2.72 1.80 1.83 (0.51) 1.63
------- ------- ------- ------ ------
Net asset value, end of period.............................. $ 18.33 $ 15.61 $ 13.81 $11.98 $12.49
======= ======= ======= ====== ======
Total return(1)............................................. 27.71% 19.16% 23.47% (0.08%) 16.84%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $22,784 $14,436 $10,955 $8,433 $5,345
Ratio of expenses to average net assets................... 1.18% 1.21% 1.20% 0.98% 1.25%
Ratio of net investment income (loss) to average net
assets.................................................. (0.01%) 0.53% 0.59% 0.79% 0.59%
Ratio of expenses to average net assets*.................. 1.19% 1.21% *** *** ***
Ratio of net investment income (loss) to average net
assets*................................................. (0.02%) 0.53% *** *** ***
Portfolio turnover rate(2)................................ 32% 16% 30% 20% 14%
Average commission rate paid(3)........................... $0.0447 $0.0481 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(3) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
129
<PAGE> 131
The Kent INTERNATIONAL GROWTH FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 14.75 $ 14.18 $ 13.06 $ 12.84 $ 10.01
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................. 0.11 0.13 0.13 0.12 0.09
Net realized and unrealized gains (losses) on
investments and foreign currency..................... 0.26 0.70 1.54 0.61 2.95
-------- -------- -------- -------- --------
Total Income from Investment Operations.................. 0.37 0.83 1.67 0.73 3.04
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.09) (0.10) (0.13) (0.07) (0.08)
In excess of net investment income..................... (0.06) (0.02) (0.11) (0.03) (0.04)
Net realized gains on investments and foreign
currency............................................. (0.07) (0.13) (0.31) (0.41) (0.08)
In excess of net realized gains........................ (0.01) (0.01) -- -- (0.01)
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.23) (0.26) (0.55) (0.51) (0.21)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.14 0.57 1.12 0.22 2.83
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 14.89 $ 14.75 $ 14.18 $ 13.06 $ 12.84
======== ======== ======== ======== ========
Total return............................................. 2.54% 5.87% 13.00% 5.73% 30.32%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $492,598 $387,799 $286,545 $178,186 $157,716
Ratio of expenses to average net assets................ 1.05% 1.09% 1.17% 1.22% 1.33%
Ratio of net investment income to average net assets... 0.80% 0.97% 1.35% 0.87% 0.86%
Ratio of expenses to average net assets*............... 1.06% 1.09% *** *** ***
Ratio of net investment income to average net
assets*.............................................. 0.79% 0.97% *** *** ***
Portfolio turnover rate(1)............................. 3% 13% 6% 20% 5%
Average commission rate paid(2)........................ $ 0.0148 $ 0.0219 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(2) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
130
<PAGE> 132
The Kent INTERNATIONAL GROWTH FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 14.69 $ 14.13 $ 13.00 $12.81 $10.03
------- ------- ------- ------ ------
Income from Investment Operations:
Net investment income..................................... 0.08 0.12 0.14 0.14 0.13
Net realized and unrealized gains on investments and
foreign currency........................................ 0.25 0.66 1.50 0.56 2.85
------- ------- ------- ------ ------
Total Income from Investment Operations..................... 0.33 0.78 1.64 0.70 2.98
------- ------- ------- ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.06) (0.08) (0.09) (0.07) (0.02)
In excess of net investment income........................ (0.09) -- (0.11) (0.03) (0.09)
Net realized gains on investments and foreign currency.... (0.07) (0.14) (0.31) (0.41) (0.05)
In excess of net realized gains........................... (0.01) -- -- -- (0.04)
------- ------- ------- ------ ------
Total Dividends and Distributions....................... (0.23) (0.22) (0.51) (0.51) (0.20)
------- ------- ------- ------ ------
Net change in net asset value............................... 0.10 0.56 1.13 0.19 2.78
------- ------- ------- ------ ------
Net asset value, end of period.............................. $ 14.79 $ 14.69 $ 14.13 $13.00 $12.81
======= ======= ======= ====== ======
Total return(1)............................................. 2.25% 5.57% 12.86% 5.51% 29.67%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 9,780 $ 8,799 $ 7,548 $6,539 $3,202
Ratio of expenses to average net assets................... 1.30% 1.34% 1.40% 1.25% 1.43%
Ratio of net investment income to average net assets...... 0.53% 0.74% 1.11% 0.81% 0.32%
Ratio of expenses to average net assets*.................. 1.31% 1.34% *** *** ***
Ratio of net investment income to average net assets*..... 0.52% 0.74% *** *** ***
Portfolio turnover rate(2)................................ 3% 13% 6% 20% 5%
Average commission rate paid(3)........................... $0.0148 $0.0219 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(3) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
131
<PAGE> 133
The Kent INDEX EQUITY FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 14.71 $ 12.56 $ 10.68 $ 11.04 $ 10.41
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................. 0.25 0.26 0.26 0.25 0.23
Net realized and unrealized gains (losses) on
investments and futures contracts.................... 4.50 2.47 3.44 (0.15) 0.71
-------- -------- -------- -------- --------
Total Income from Investment Operations.................. 4.75 2.73 3.70 0.10 0.94
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.25) (0.26) (0.25) (0.26) (0.23)
In excess of net investment income..................... -- -- -- -- **
Net realized gains on investments and futures
contracts............................................ (0.05) (0.28) (1.57) (0.20) (0.08)
In excess of net realized gains........................ (0.02) (0.04) -- -- --
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.32) (0.58) (1.82) (0.46) (0.31)
-------- -------- -------- -------- --------
Net change in net asset value............................ 4.43 2.15 1.88 (0.36) 0.63
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 19.14 $ 14.71 $ 12.56 $ 10.68 $ 11.04
======== ======== ======== ======== ========
Total return............................................. 32.55% 22.18% 36.23% 0.86% 9.11%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $590,241 $243,438 $183,877 $245,550 $233,451
Ratio of expenses to average net assets................ 0.43% 0.49% 0.56% 0.58% 0.65%
Ratio of net investment income to average net assets... 1.44% 1.91% 2.14% 2.32% 2.18%
Ratio of expenses to average net assets*............... 0.54% 0.59% 0.56% 0.58% 0.65%
Ratio of net investment income to average net
assets*.............................................. 1.33% 1.81% 2.14% 2.32% 2.18%
Portfolio turnover rate(1)............................. 1% 2% 3% 50% 1%
Average commission rate paid(2)........................ $ 0.0508 $ 0.0496 -- -- --
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(2) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
132
<PAGE> 134
The Kent INDEX EQUITY FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 14.72 $ 12.57 $ 10.70 $ 11.07 $ 10.44
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income..................................... 0.20 0.22 0.23 0.26 0.22
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 4.51 2.48 3.44 (0.17) 0.72
------- ------- ------- ------- -------
Total Income from Investment Operations..................... 4.71 2.70 3.67 0.09 0.94
------- ------- ------- ------- -------
Less Dividends and Distributions from:
Net investment income..................................... (0.20) (0.22) (0.23) (0.26) (0.20)
In excess of net investment income........................ (0.01) (0.01) -- -- (0.03)
Net realized gains on investments and futures contracts... (0.06) (0.32) (1.57) (0.20) (0.06)
In excess of net realized gains........................... (0.01) -- -- -- (0.02)
------- ------- ------- ------- -------
Total Dividends and Distributions....................... (0.28) (0.55) (1.80) (0.46) (0.31)
------- ------- ------- ------- -------
Net change in net asset value............................... 4.43 2.15 1.87 (0.37) 0.63
------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 19.15 $ 14.72 $ 12.57 $ 10.70 $ 11.07
======= ======= ======= ======= =======
Total return (1)............................................ 32.24% 21.92% 35.81% 0.75% 9.09%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $27,922 $ 9,925 $ 6,612 $ 4,736 $ 3,776
Ratio of expenses to average net assets................... 0.68% 0.74% 0.80% 0.60% 0.86%
Ratio of net investment income to average net assets...... 1.20% 1.67% 1.86% 2.30% 2.04%
Ratio of expenses to average net assets*.................. 0.79% 0.84% 0.81% 0.60% 0.86%
Ratio of net investment income to average net assets*..... 1.09% 1.57% 1.85% 2.30% 2.04%
Portfolio turnover rate (2)............................... 1% 2% 3% 50% 1%
Average commission rate paid (3).......................... $0.0508 $0.0496 -- -- --
</TABLE>
- ---------------
(*) During the period, certain fees were voluntarily reduced and/or
reimbursed. If such voluntary fee reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
(3) The average commission represents the total dollar amount of commissions
paid on portfolio transactions divided by total number of portfolio shares
purchased and sold for which commissions were charged. Disclosure is not
required for periods prior to 1996.
See Notes to Financial Statements.
133
<PAGE> 135
The Kent SHORT TERM BOND FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................... $ 9.75 $ 9.96 $ 9.52 $ 9.91 $ 9.99
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................... 0.61 0.61 0.55 0.48 0.42
Net realized and unrealized gains (losses) on
investments........................................... -- (0.21) 0.43 (0.38) (0.09)
-------- -------- -------- -------- --------
Total Income from Investment Operations................... 0.61 0.40 0.98 0.10 0.33
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................... (0.61) (0.61) (0.54) (0.49) (0.41)
In excess of net investment income...................... -- -- -- ** --
-------- -------- -------- -------- --------
Total Dividends and Distributions..................... (0.61) (0.61) (0.54) (0.49) (0.41)
-------- -------- -------- -------- --------
Net change in net asset value............................. -- (0.21) 0.44 (0.39) (0.08)
-------- -------- -------- -------- --------
Net asset value, end of period............................ $ 9.75 $ 9.75 $ 9.96 $ 9.52 $ 9.91
======== ======== ======== ======== ========
Total return.............................................. 6.42% 4.22% 10.53% 1.03% 3.36%
Ratios/Supplemental Data:
Net Assets, end of period (000's)......................... $139,739 $235,430 $310,680 $176,765 $255,892
Ratio of expenses to average net assets................. 0.72% 0.70% 0.77% 0.73% 0.81%
Ratio of net investment income to average net assets.... 6.04% 6.17% 5.60% 4.75% 4.24%
Ratio of expenses to average net assets*................ 0.73% 0.70% *** *** ***
Ratio of net investment income to average net assets*... 6.03% 6.17% *** *** ***
Portfolio turnover rate (1)............................. 89% 32% 75% 56% 50%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
*** During the period, there were no waivers and/or reimbursements.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
134
<PAGE> 136
The Kent SHORT TERM BOND FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.74 $ 9.95 $ 9.52 $ 9.91 $ 10.02
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.57 0.59 0.52 0.47 0.38
Net realized and unrealized gains (losses) on
investments ........................................ 0.02 (0.20) 0.44 (0.37) (0.08)
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 0.59 0.39 0.96 0.10 0.30
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.59) (0.54) (0.53) (0.48) (0.41)
In excess of net investment income.................... -- (0.06) -- (0.01) --
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (0.59) (0.60) (0.53) (0.49) (0.41)
-------- -------- -------- -------- --------
Net change in net asset value........................... -- (0.21) 0.43 (0.39) (0.11)
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 9.74 $ 9.74 $ 9.95 $ 9.52 $ 9.91
======== ======== ======== ======== ========
Total return(1)......................................... 6.26% 4.06% 10.30% 1.01% 3.04%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $ 7,433 $ 1,667 $ 1,634 $ 1,649 $ 1,427
Ratio of expenses to average net assets............... 0.88% 0.85% 0.91% 0.74% 1.24%
Ratio of net investment income to average net
assets.............................................. 5.75% 6.02% 5.40% 4.79% 3.91%
Ratio of expenses to average net assets*.............. 0.99% 0.96% *** *** ***
Ratio of net investment income to average net
assets*............................................. 5.64% 5.91% *** *** ***
Portfolio turnover rate(2)............................ 89% 32% 75% 56% 50%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
135
<PAGE> 137
The Kent INTERMEDIATE BOND FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.76 $ 10.12 $ 9.29 $ 10.18 $ 10.00
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income................................. 0.59 0.60 0.65 0.56 0.51
Net realized and unrealized gains (losses) on
investments ........................................ 0.14 (0.32) 0.81 (0.88) 0.32
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations.......... 0.73 0.28 1.46 (0.32) 0.83
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.59) (0.61) (0.63) (0.54) (0.51)
In excess of net investment income.................... -- (0.03) -- (0.01) **
Net realized gains on investments..................... -- -- -- (0.02) (0.14)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (0.59) (0.64) (0.63) (0.57) (0.65)
-------- -------- -------- -------- --------
Net change in net asset value........................... 0.14 (0.36) 0.83 (0.89) 0.18
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 9.90 $ 9.76 $ 10.12 $ 9.29 $ 10.18
======== ======== ======== ======== ========
Total return............................................ 7.80% 3.01% 16.18% (3.19%) 8.42%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $762,740 $769,395 $854,801 $977,865 $434,264
Ratio of expenses to average net assets............... 0.75% 0.77% 0.77% 0.80% 0.85%
Ratio of net investment income to average net
assets.............................................. 6.03% 6.18% 6.50% 6.03% 5.03%
Ratio of expenses to average net assets*.............. 0.76% 0.78% *** *** ***
Ratio of net investment income to average net
assets*............................................. 6.02% 6.17% *** *** ***
Portfolio turnover rate(1)............................ 114% 135% 166% 124% 126%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
*** During the period, there were no waivers and/or reimbursements.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
136
<PAGE> 138
The Kent INTERMEDIATE BOND FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 9.78 $ 10.14 $ 9.32 $ 10.19 $ 10.03
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income................................. 0.57 0.58 0.61 0.57 0.47
Net realized and unrealized gains (losses) on
investments ........................................ 0.15 (0.32) 0.82 (0.87) 0.34
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations.......... 0.72 0.26 1.43 (0.30) 0.81
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.57) (0.57) (0.61) (0.54) (0.46)
In excess of net investment income.................... -- (0.05) -- (0.01) (0.05)
Net realized gains on investments..................... -- -- -- (0.02) (0.14)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (0.57) (0.62) (0.61) (0.57) (0.65)
-------- -------- -------- -------- --------
Net change in net asset value........................... 0.15 (0.36) 0.82 (0.87) 0.16
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 9.93 $ 9.78 $ 10.14 $ 9.32 $ 10.19
======== ======== ======== ======== ========
Total return(1)......................................... 7.62% 2.76% 15.76% (3.01%) 8.19%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $ 6,972 $ 7,327 $ 6,862 $ 9,196 $ 4,966
Ratio of expenses to average net assets............... 1.00% 1.02% 1.01% 0.81% 1.13%
Ratio of net investment income to average net
assets.............................................. 5.79% 5.92% 6.24% 5.94% 4.75%
Ratio of expenses to average net assets*.............. 1.01% 1.03% *** *** ***
Ratio of net investment income to average net
assets*............................................. 5.78% 5.91% *** *** ***
Portfolio turnover rate(2)............................ 114% 135% 166% 124% 126%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
*** During the period, there were no waivers and/or reimbursements.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
137
<PAGE> 139
The Kent INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------------------
1997 1996 1995(1)
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.16 $ 10.84 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.68 0.66 0.55
Net realized and unrealized gains (losses) on
investments............................................. 0.34 (0.56) 0.92
-------- -------- --------
Total Income from Investment Operations..................... 1.02 0.10 1.47
-------- -------- --------
Less Dividends and Distributions from:
Net investment income..................................... (0.68) (0.65) (0.54)
In excess of net investment income........................ -- (0.10) --
Net realized gains on investments......................... (0.20) (0.03) (0.09)
-------- -------- --------
Total Dividends and Distributions....................... (0.88) (0.78) (0.63)
-------- -------- --------
Net change in net asset value............................... 0.14 (0.68) 0.84
-------- -------- --------
Net asset value, end of period.............................. $ 10.30 $ 10.16 $ 10.84
======== ======== ========
Total return................................................ 10.55% 1.19% 15.05%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $229,778 $240,060 $126,056
Ratio of expenses to average net assets................... 0.82% 0.83% 0.91%+
Ratio of net investment income to average net assets...... 6.65% 6.57% 6.65%+
Ratio of expenses to average net assets*.................. 0.83% 0.83% **
Ratio of net investment income to average net assets*..... 6.64% 6.57% **
Portfolio turnover rate(2)................................ 84% 102% 50%
</TABLE>
- ---------------
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** During the period, there were no waivers and/or reimbursements.
(1) The Institutional Class commenced operations on March 20, 1995.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
138
<PAGE> 140
The Kent INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
1997 1996 1995(1)
------ ------ -------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $10.16 $10.82 $10.00
------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.63 0.66 0.52
Net realized and unrealized gains (losses) on
investments............................................. 0.35 (0.56) 0.91
------ ------ ------
Total Income from Investment Operations..................... 0.98 0.10 1.43
------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.65) (0.64) (0.52)
In excess of net investment income........................ -- (0.09) --
Net realized gains on investments......................... (0.20) (0.03) (0.09)
------ ------ ------
Total Dividends and Distributions....................... (0.85) (0.76) (0.61)
------ ------ ------
Net change in net asset value............................... 0.13 (0.66) 0.82
------ ------ ------
Net asset value, end of period.............................. $10.29 $10.16 $10.82
====== ====== ======
Total return(2)............................................. 10.19% 1.16% 14.63%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $5,611 $2,722 $1,961
Ratio of expenses to average net assets................... 1.07% 1.08% 1.14%+
Ratio of net investment income to average net assets...... 6.38% 6.31% 6.40%+
Ratio of expenses to average net assets*.................. 1.08% 1.08% **
Ratio of net investment income to average net assets*..... 6.37% 6.31% **
Portfolio turnover rate(3)................................ 84% 102% 50%
</TABLE>
- ---------------
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** During the period, there were no waivers and/or reimbursements.
(1) The Investment Class date of initial public investment was March 22, 1995.
(2) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(3) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
139
<PAGE> 141
The Kent LIMITED TERM TAX-FREE FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995 1994(1)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.16 $ 10.22 $ 9.80 $ 10.00
------- ------- ------- -------
Income (Loss) from Investment Operations:
Net investment income..................................... 0.40 0.39 0.39 0.13
Net realized and unrealized gains (losses) on
investments............................................. 0.08 (0.04) 0.42 (0.21)
------- ------- ------- -------
Total Income (Loss) from Investment Operations.............. 0.48 0.35 0.81 (0.08)
------- ------- ------- -------
Less Dividends and Distributions from:
Net investment income..................................... (0.40) (0.40) (0.39) (0.12)
In excess of net investment income........................ -- ** -- --
Net realized gains on investments......................... (0.05) (0.01) -- --
------- ------- ------- -------
Total Dividends and Distributions....................... (0.45) (0.41) (0.39) (0.12)
------- ------- ------- -------
Net change in net asset value............................... 0.03 (0.06) 0.42 (0.20)
------- ------- ------- -------
Net asset value, end of period.............................. $ 10.19 $ 10.16 $ 10.22 $ 9.80
======= ======= ======= =======
Total return................................................ 4.78% 3.54% 8.43% (0.77%)++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $36,023 $41,472 $55,347 $43,497
Ratio of expenses to average net assets................... 0.76% 0.75% 0.69% 0.79%+
Ratio of net investment income to average net assets...... 3.86% 3.84% 3.87% 3.81%+
Ratio of expenses to average net assets*.................. 0.77% 0.75% 0.74% 0.96%+
Ratio of net investment income to average net assets*..... 3.85% 3.84% 3.82% 3.64%+
Portfolio turnover rate(2)................................ 29% 32% 51% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
(1) The Institutional Class commenced operations on September 1, 1994.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
140
<PAGE> 142
The Kent LIMITED TERM TAX-FREE FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995 1994(1)
------ ------ ------ -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.20 $10.24 $ 9.81 $ 9.87
------ ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.38 0.37 0.37 0.06
Net realized and unrealized gains (losses) on
investments............................................. 0.08 (0.02) 0.44 (0.06)
------ ------ ------ ------
Total Income from Investment Operations..................... 0.46 0.35 0.81 --
------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.38) (0.35) (0.38) (0.06)
In excess of net investment income........................ -- (0.03) -- --
Net realized gains on investments......................... (0.05) (0.01) -- --
------ ------ ------ ------
Total Dividends and Distributions....................... (0.43) (0.39) (0.38) (0.06)
------ ------ ------ ------
Net change in net asset value............................... 0.03 (0.04) 0.43 (0.06)
------ ------ ------ ------
Net asset value, end of period.............................. $10.23 $10.20 $10.24 $ 9.81
====== ====== ====== ======
Total return(2)............................................. 4.61% 3.51% 8.40% 0.03%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 474 $ 106 $ 54 $ 7
Ratio of expenses to average net assets................... 0.93% 0.87% 0.84% 0.87%+
Ratio of net investment income to average net assets...... 3.67% 3.69% 3.69% 3.86%+
Ratio of expenses to average net assets*.................. 1.04% 0.97% 0.85% 0.98%+
Ratio of net investment income to average net assets*..... 3.56% 3.59% 3.69% 3.75%+
Portfolio turnover rate(3)................................ 29% 32% 51% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) The Investment Class date of initial public investment was November 1,
1994.
(2) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(3) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
141
<PAGE> 143
The Kent INTERMEDIATE TAX-FREE FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 10.42 $ 10.52 $ 9.74 $ 10.45 $ 10.02
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income.................................... 0.45 0.44 0.45 0.40 0.37
Net realized and unrealized gains (losses) on
investments............................................ 0.26 (0.08) 0.79 (0.71) 0.47
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations............. 0.71 0.36 1.24 (0.31) 0.84
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................... (0.45) (0.46) (0.45) (0.39) (0.36)
In excess of net investment income....................... -- ** (0.01) (0.01) --
Net realized gains on investments........................ -- -- -- -- (0.05)
-------- -------- -------- -------- --------
Total Dividends and Distributions...................... (0.45) (0.46) (0.46) (0.40) (0.41)
-------- -------- -------- -------- --------
Net change in net asset value.............................. 0.26 (0.10) 0.78 (0.71) 0.43
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 10.68 $ 10.42 $ 10.52 $ 9.74 $ 10.45
======== ======== ======== ======== ========
Total return............................................... 7.07% 3.41% 12.90% (3.00%) 8.51%
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $275,641 $285,674 $283,733 $380,715 $135,862
Ratio of expenses to average net assets.................. 0.72% 0.73% 0.72% 0.78% 0.84%
Ratio of net investment income to average net assets..... 4.31% 4.34% 4.39% 4.07% 3.62%
Ratio of expenses to average net assets*................. 0.73% 0.73% 0.72% 0.78% 0.84%
Ratio of net investment income to average net assets*.... 4.30% 4.34% 4.39% 4.07% 3.62%
Portfolio turnover rate(1)............................... 23% 35% 6% 36% 14%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
(1) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
142
<PAGE> 144
The Kent INTERMEDIATE TAX-FREE FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.42 $10.52 $ 9.74 $10.45 $10.04
------ ------ ------ ------ ------
Income (Loss) from Investment Operations:
Net investment income..................................... 0.43 0.42 0.42 0.40 0.36
Net realized and unrealized gains (losses) on
investments............................................. 0.26 (0.09) 0.79 (0.71) 0.46
------ ------ ------ ------ ------
Total Income (Loss) from Investment Operations.............. 0.69 0.33 1.21 (0.31) 0.82
------ ------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.43) (0.41) (0.42) (0.39) (0.33)
In excess of net investment income........................ -- (0.02) (0.01) (0.01) (0.03)
Net realized gains on investments......................... -- -- -- -- (0.05)
------ ------ ------ ------ ------
Total Dividends and Distributions....................... (0.43) (0.43) (0.43) (0.40) (0.41)
------ ------ ------ ------ ------
Net change in net asset value............................... 0.26 (0.10) 0.78 (0.71) 0.41
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.68 $10.42 $10.52 $ 9.74 $10.45
====== ====== ====== ====== ======
Total return(1)............................................. 6.80% 3.17% 12.66% (3.03%) 8.29%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $3,534 $3,368 $3,807 $4,505 $3,307
Ratio of expenses to average net assets................... 0.97% 0.98% 0.97% 0.79% 1.08%
Ratio of net investment income to average net assets...... 4.06% 4.09% 4.13% 3.99% 3.44%
Ratio of expenses to average net assets*.................. 0.98% 0.98% 0.97% 0.79% 1.08%
Ratio of net investment income to average net assets*..... 4.05% 4.09% 4.13% 3.99% 3.44%
Portfolio turnover rate(2)................................ 23% 35% 6% 36% 14%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
143
<PAGE> 145
The Kent TAX-FREE INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------
1997 1996 1995(1)
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.27 $ 10.49 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.45 0.46 0.36
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 0.41 (0.06) 0.49
-------- -------- --------
Total Income from Investment Operations..................... 0.86 0.40 0.85
-------- -------- --------
Less Dividends and Distributions from:
Net investment income..................................... (0.45) (0.46) (0.36)
Net realized gains on investments and futures contracts... (0.03) (0.16) --
-------- -------- --------
Total Dividends and Distributions....................... (0.48) (0.62) (0.36)
-------- -------- --------
Net change in net asset value............................... 0.38 (0.22) 0.49
-------- -------- --------
Net asset value, end of period.............................. $ 10.65 $ 10.27 $ 10.49
======== ======== ========
Total return................................................ 8.59% 3.92% 8.64%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $116,652 $109,948 $121,855
Ratio of expenses to average net assets................... 0.79% 0.82% 0.73%+
Ratio of net investment income to average net assets...... 4.32% 4.38% 4.44%+
Ratio of expenses to average net assets*.................. 0.80% 0.82% 0.91%+
Ratio of net investment income to average net assets*..... 4.31% 4.38% 4.26%+
Portfolio turnover rate(2)................................ 16% 40% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) The Institutional Class commenced operations on March 20, 1995.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
144
<PAGE> 146
The Kent TAX-FREE INCOME FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------
1997 1996 1995(1)
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.29 $ 10.52 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.42 0.41 0.31
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 0.42 (0.05) 0.51
-------- -------- --------
Total Income from Investment Operations..................... 0.84 0.36 0.82
-------- -------- --------
Less Dividends and Distributions from:
Net investment income..................................... (0.42) (0.43) (0.30)
In excess of net investment income........................ (0.01) -- --
Net realized gains on investments and futures contracts... (0.03) (0.12) --
In excess of net realized gains........................... -- (0.04) --
-------- -------- --------
Total Dividends and Distributions....................... (0.46) (0.59) (0.30)
-------- -------- --------
Net change in net asset value............................... 0.38 (0.23) 0.52
-------- -------- --------
Net asset value, end of period.............................. $ 10.67 $ 10.29 $ 10.52
======== ======== ========
Total return(2)............................................. 8.32% 3.53% 8.34%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 1,712 $ 936 $ 529
Ratio of expenses to average net assets................... 1.04% 1.07% 0.95%+
Ratio of net investment income to average net assets...... 4.05% 4.14% 4.25%+
Ratio of expenses to average net assets*.................. 1.05% 1.07% 1.17%+
Ratio of net investment income to average net assets*..... 4.04% 4.14% 4.03%+
Portfolio turnover rate (3)............................... 16% 40% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) The Investment Class date of the initial public investment was March 31,
1995.
(2) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(3) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
145
<PAGE> 147
The Kent MICHIGAN MUNICIPAL BOND FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.08 $ 10.12 $ 9.72 $ 10.06 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.41 0.39 0.39 0.37 0.23
Net realized and unrealized gains (losses) on
investments......................................... 0.13 (0.04) 0.39 (0.34) 0.07
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 0.54 0.35 0.78 0.03 0.30
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.41) (0.39) (0.37) (0.36) (0.22)
In excess of net investment income.................... -- -- (0.01) (0.01) (0.01)
Net realized gains on investments..................... -- -- -- -- (0.01)
In excess of net realized gains....................... -- -- -- -- **
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (0.41) (0.39) (0.38) (0.37) (0.24)
-------- -------- -------- -------- --------
Net change in net asset value........................... 0.13 (0.04) 0.40 (0.34) 0.06
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 10.21 $ 10.08 $ 10.12 $ 9.72 $ 10.06
======== ======== ======== ======== ========
Total return............................................ 5.52% 3.51% 8.20% 0.36% 3.06%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $111,735 $152,623 $185,466 $118,485 $ 74,647
Ratio of expenses to average net assets............... 0.69% 0.70% 0.69% 0.49% 0.24%+
Ratio of net investment income to average net
assets.............................................. 4.04% 3.83% 3.81% 3.74% 3.34%+
Ratio of expenses to average net assets*.............. 0.70% 0.70% 0.70% 0.74% 0.68%+
Ratio of net investment income to average net
assets*............................................. 4.03% 3.83% 3.80% 3.50% 3.61%+
Portfolio turnover rate(2)............................ 13% 24% 42% 27% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
(1) The Institutional Class commenced operations on May 3, 1993.
(2) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
146
<PAGE> 148
The Kent MICHIGAN MUNICIPAL BOND FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.07 $ 10.11 $ 9.72 $ 10.08 $ 10.02
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.39 0.38 0.37 0.35 0.21
Net realized and unrealized gains (losses) on
investments......................................... 0.14 (0.05) 0.40 (0.34) 0.07
-------- -------- -------- -------- --------
Total Income from Investment Operations................. 0.53 0.33 0.77 0.01 0.28
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................. (0.40) (0.35) (0.37) (0.34) (0.21)
In excess of net investment income.................... -- (0.02) (0.01) (0.03) **
Net realized gains on investments..................... -- -- -- -- (0.01)
-------- -------- -------- -------- --------
Total Dividends and Distributions................... (0.40) (0.37) (0.38) (0.37) (0.22)
-------- -------- -------- -------- --------
Net change in net asset value........................... 0.13 (0.04) 0.39 (0.36) 0.06
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 10.20 $ 10.07 $ 10.11 $ 9.72 $ 10.08
======== ======== ======== ======== ========
Total return(2)......................................... 5.38% 3.36% 8.01% 0.16% 2.85%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $ 4,413 $ 2,422 $ 1,900 $ 1,980 $ 283
Ratio of expenses to average net assets............... 0.84% 0.85% 0.83% 0.49% 0.25%+
Ratio of net investment income to average net
assets.............................................. 3.88% 3.68% 3.68% 3.80% 3.43%+
Ratio of expenses to average net assets*.............. 0.95% 0.95% 0.85% 0.84% 1.08%+
Ratio of net investment income to average net
assets*............................................. 3.77% 3.58% 3.67% 2.74% 2.60%+
Portfolio turnover rate(3)............................ 13% 24% 42% 27% 10%
</TABLE>
- ---------------
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Amount is less than $0.005.
(1) The Investment Class date of initial public investment was May 11, 1993.
(2) Calculation does not include sales charge. Effective May 1, 1997, the
Investment Shares were not assessed a sales charge.
(3) Portfolio turnover is calculated on the basis of the Portfolio as a whole
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
147
<PAGE> 149
The Kent MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.051 0.050 0.050 0.040 0.030
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income................................. (0.051) (0.050) (0.050) (0.040) (0.030)
-------- -------- -------- -------- --------
Net change in net asset value........................... -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total return............................................ 5.23% 5.06% 5.58% 3.75% 2.68%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $474,378 $483,919 $424,815 $323,539 $359,624
Ratio of expenses to average net assets............... 0.52% 0.52% 0.55% 0.60% 0.60%
Ratio of net investment income to average net
assets.............................................. 5.11% 4.95% 5.45% 3.65% 2.65%
Ratio of expenses to average net assets*.............. 0.62% 0.62% 0.63% 0.65% 0.68%
Ratio of net investment income to average net
assets*............................................. 5.01% 4.85% 5.37% 3.59% 2.57%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
See Notes to Financial Statements.
148
<PAGE> 150
The Kent MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................. 0.051 0.050 0.050 0.040 0.030
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income................................. (0.051) (0.050) (0.050) (0.040) (0.030)
-------- -------- -------- -------- --------
Net change in net asset value........................... -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period.......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total return............................................ 5.23% 5.06% 5.56% 3.71% 2.67%
Ratios/Supplemental Data:
Net Assets, end of period (000's)....................... $ 1,179 $ 804 $ 1,227 $ 369 $ 593
Ratio of expenses to average net assets............... 0.52% 0.52% 0.55% 0.63% 0.63%
Ratio of net investment income to average net
assets.............................................. 5.11% 4.94% 5.41% 3.58% 2.63%
Ratio of expenses to average net assets*.............. 0.62% 0.62% 0.62% 0.68% 4.49%
Ratio of net investment income (loss) to average net
assets*............................................. 5.01% 4.84% 5.33% 3.53% (1.24%)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
See Notes to Financial Statements.
149
<PAGE> 151
The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................. 0.033 0.030 0.030 0.020 0.020
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income.................................. (0.033) (0.030) (0.030) (0.020) (0.020)
-------- -------- -------- -------- --------
Net change in net asset value............................ -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total return............................................. 3.31% 3.11% 3.50% 2.40% 2.00%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $211,682 $155,424 $145,215 $128,164 $183,366
Ratio of expenses to average net assets................ 0.52% 0.54% 0.56% 0.60% 0.60%
Ratio of net investment income to average net assets... 3.27% 3.06% 3.45% 2.33% 1.96%
Ratio of expenses to average net assets*............... 0.63% 0.64% 0.65% 0.70% 0.69%
Ratio of net investment income to average net
assets*.............................................. 3.16% 2.96% 3.36% 2.23% 1.87%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
See Notes to Financial Statements.
150
<PAGE> 152
The Kent MICHIGAN MUNICIPAL MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 1.000 $ 1.00 $ 1.000 $ 1.000 $1.000
------- ------- ------- ------- ------
Income from Investment Operations:
Net investment income..................................... 0.033 0.030 0.030 0.020 0.020
------- ------- ------- ------- ------
Less Dividends from:
Net investment income..................................... (0.033) (0.030) (0.030) (0.020) (0.020)
------- ------- ------- ------- ------
Net change in net asset value............................... -- -- -- -- --
------- ------- ------- ------- ------
Net asset value, end of period.............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $1.000
======= ======= ======= ======= ======
Total return................................................ 3.31% 3.11% 3.48% 2.38% 1.98%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 289 $ 782 $ 1,603 $ 379 $ 149
Ratio of expenses to average net assets................... 0.52% 0.54% 0.54% 0.63% 0.63%
Ratio of net investment income to average net assets...... 3.22% 3.06% 3.48% 2.47% 2.01%
Ratio of expenses to average net assets*.................. 0.63% 0.64% 0.62% 0.73% 3.77%
Ratio of net investment income (loss) to average net
assets*................................................. 3.11% 2.96% 3.39% 2.37% (1.13%)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
See Notes to Financial Statements.
151
<PAGE> 153
The Kent GOVERNMENT MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
PERIOD
ENDED
DECEMBER 31,
1997(1)
------------
<S> <C>
Net asset value, beginning of period........................ $ 1.000
-------
Income from Investment Operations:
Net investment income..................................... 0.031
-------
Less Dividends from:
Net investment income..................................... (0.031)
-------
Net change in net asset value............................... --
-------
Net asset value, end of period.............................. $ 1.000
=======
Total return................................................ 3.10%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $94,624
Ratio of expenses to average net assets................... 0.35%+
Ratio of net investment income to average net assets...... 5.23%+
Ratio of expenses to average net assets*.................. 0.69%+
Ratio of net investment income to average net assets*..... 4.89%+
</TABLE>
- ---------------
+ Annualized
++ Not Annualized
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) The Fund commenced operations June 2, 1997.
See Notes to Financial Statements.
152
<PAGE> 154
The Kent GOVERNMENT MONEY MARKET FUND
Funds FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
PERIOD
ENDED
DECEMBER 31,
1997(1)
------------
<S> <C>
Net asset value, beginning of period........................ $ 1.000
-------
Income from Investment Operations:
Net investment income..................................... 0.030
-------
Less Dividends from:
Net investment income..................................... (0.030)
-------
Net change in net asset value............................... --
-------
Net asset value, end of period.............................. $ 1.000
=======
Total return................................................ 3.06%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 2
Ratio of expenses to average net assets................... 0.43%+
Ratio of net investment income to average net assets...... 5.17%+
Ratio of expenses to average net assets*.................. 0.77%+
Ratio of net investment income to average net assets*..... 4.83%+
</TABLE>
- ---------------
+ Annualized
++ Not Annualized
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(1) The Fund commenced operations June 2, 1997.
See Notes to Financial Statements.
153
<PAGE> 155
The Kent
Funds INDEPENDENT AUDITOR'S REPORT
The Shareholders and Board of Trustees of
The Kent Funds
We have audited the accompanying statements of assets and liabilities of The
Kent Funds--Growth and Income Fund, Small Company Growth Fund, International
Growth Fund, Index Equity Fund, Short Term Bond Fund, Intermediate Bond Fund,
Income Fund, Limited Term Tax-Free Fund, Tax-Free Income Fund, Michigan
Municipal Bond Fund, Money Market Fund, Michigan Municipal Money Market Fund,
and Government Money Market Fund including the portfolios of investments, as of
December 31, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of The Kent Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1997, by confirmation with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Kent Funds at December 31, 1997, the
results of their operations, the changes in their net assets and the financial
highlights for each of the periods indicated herein, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 20, 1998
154
<PAGE> 156
[LOGO] THE KENT FUNDS
P.O. BOX 182201
COLUMBUS, OHIO 43218-2201
KKF-0160 (2/98)
