<PAGE> 1
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1998
[KENT FUNDS LOGO] KENT FUNDS
KENT GROWTH AND INCOME FUND
KENT SMALL COMPANY GROWTH FUND
KENT INTERNATIONAL GROWTH FUND
KENT INDEX EQUITY FUND
KENT SHORT TERM BOND FUND
KENT INTERMEDIATE BOND FUND
KENT INCOME FUND
KENT LIMITED TERM TAX-FREE FUND
KENT INTERMEDIATE TAX-FREE FUND
KENT TAX-FREE INCOME FUND
KENT MICHIGAN MUNICIPAL BOND FUND
KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
KENT GOVERNMENT MONEY MARKET FUND
KENT MONEY MARKET FUND
<PAGE> 2
Message to Shareholders
Dear Kent Funds Shareholder:
Following is the Annual Report for the Kent Funds for the twelve months ended
December 31, 1998. The report contains the following features:
- Economic Outlook by Joseph T. Keating, Chief Investment Officer, Lyon
Street Asset Management Company
- Fund Manager Updates -- investment strategy, performance overview and
outlook for the coming months for each of the Kent Funds
- Schedules of Portfolio Investments -- summary of the holdings in each fund
by industry
- Statements of Assets and Liabilities -- summary of the assets and
liabilities of each fund
- Statements of Operations -- summary of operations and its effect on the
assets of each fund
- Statements of Changes in Net Assets -- summary of changes in net assets
during period
- Notes to Financial Statements
- Financial Highlights -- per share summary of activity affecting net asset
value
We appreciate the confidence you have placed in us and continue to focus on
providing our shareholders with good value and attractive potential for growth.
If you have any questions about your investments after reading this report,
please call the Kent Funds Shareholder Servicing Center at 1-800-633-KENT (5368)
between the hours of 8:00 a.m. and 9:00 p.m. EST.
We remain committed to sound investment principles and to providing you with
useful information that can help you make the most of your investments.
Sincerely,
/s/ JAMES F. DUCA, II
James F. Duca, II
President
INVESTMENT ADVISER
Lyon Street Asset Management Company
111 Lyon Street N.W.
Grand Rapids, MI 49503
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, LYON STREET ASSET MANAGEMENT COMPANY 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
Strong, Sustained Growth With Virtual Price Stability.
The U.S. economy crossed the finish line at the end of December to earn the
distinction as the longest peacetime expansion on record. The economy was not
the picture of the exhausted marathon runner struggling to finish the race as
1998 drew to a close, however. Rather, the economy sprinted across the finish
line with roaring investment-led growth combined with virtual price stability.
Consider these remarkable achievements:
- Real Gross Domestic Product grew at a 5.6 percent annualized rate during
the fourth quarter, the economy's second fastest quarterly growth rate
since the fourth quarter of 1983.
- For the full year, the economy grew 3.9 percent, matching 1997's pace. This
marked the third straight year of growth above 3.0 percent, the longest
string of yearly gains above 3.0 percent since the 1983-1986 period.
- Expenditures on business equipment rose 17.5 percent during the year, the
sharpest gain since a 19.2 percent increase in 1984. Outlays for computers
rose 71.5 percent.
- Consumer spending grew 4.8 percent during 1998, the largest increase in
consumer outlays since a 5.2 percent rise in 1984.
- Depending upon the measure one uses, the economy's inflation rate reached
either a forty or fifty year low last year.
- Comparing current conditions with the final quarter of the 1982-1990
business expansion, the unemployment rate is almost a full percentage point
lower; inflation is three percentage points lower; interest rates and bond
yields are four to five percentage points lower; and Corporate America is
three times as productive.
The economy's strong performance occurred despite the economic and financial
market crises that washed over the global markets over the past eighteen months.
The only business expansion greater in length occurred between 1961 and 1969 and
coincided with the buildup for the Vietnam War. Should this expansion remain
intact through January of next year, it will become the longest expansion on
record, peacetime or wartime. We think the economy will break the record and
continue growing well into the year 2000.
REAL ECONOMIC ACTIVITY
<TABLE>
<CAPTION>
4Q 4Q '97 to
1998* 4Q '98
<S> <C> <C>
Gross Domestic Product 5.6% 4.1%
Personal Consumption Expenditures 4.4% 5.2%
Business Capital Spending 16.7% 12.3%
Residential Construction Outlays 10.1% 12.6%
</TABLE>
*Annualized
Strong Consumer Spending and the Wealth Effect.
Consumer spending grew at a strong 4.4 percent rate last quarter, with
durable goods outlays leading the way with a gain of 21.4 percent. Automobile
and light truck sales, which were boosted by the end of the General Motors
strike, rose at a robust 41.7 percent rate. The other major component of durable
goods -- home furnishings -- was also strong; rising at an 11.0 percent rate.
The year-long surge in mortgage refinance activity, the 3.6 percent rate of gain
in real disposable income, the 3.3 million jobs created during the year, the
sharp drop in gasoline prices, the flood of less expensive imported goods, and
the sharp rise in purchases of new and existing homes all combined to push
consumer outlays, higher despite the advanced age of the business expansion.
Another factor that has helped push along consumer spending in recent
quarters has been the much debated wealth effect. This effect arises from
consumers feeling wealthier from higher asset prices, such as from four years of
robust returns in the domestic equity market. This effect boosted consumer
spending as the personal savings rate fell to zero in the fourth quarter from
over 3.0 percent of disposable income as recently as 1996.
2
<PAGE> 4
CONSUMER SPENDING*
FOURTH QUARTER 1998 Economic Outlook
<TABLE>
<S> <C>
Durable Goods 21.4%
Motor Vehicles 41.7%
Furniture 11.0%
Nondurable Goods 3.2%
Food 4.1%
Apparel 3.5%
Services 1.7%
Electricity & Gas -23.4%
</TABLE>
*Annualized
While a recent change by the Commerce Department in the definition of
personal savings that excludes capital gains distributions by mutual funds from
income has distorted the consistency of the savings data, it is very clear that
a wealth effect from rising asset prices, including both real estate and common
stock prices, has boosted consumer outlays.
Robust Housing Market.
A dramatic surge in affordability spurred by strong income gains and the
sharp drop in mortgage rates supported a very high level of activity in the
housing market last year. It is also very likely that the sharp gains in the
stock market over the past four years has helped support the housing market.
Residential construction outlays rose at a 10.1 percent rate last quarter and
gained 12.6 percent for all of 1998. Sales of previously owned homes registered
a third consecutive annual record, while new housing starts climbed to a
twelve-year high in December. Building permits reached a cycle high during
December, pointing to a substantial amount of near-term momentum in the housing
industry as 1999 unfolds.
The Remarkable Story of Business Equipment Purchases.
The remarkable story of business expenditures on equipment during this
business expansion continues. Outlays on producers' durable equipment were, once
again, the fastest growing major sector of the economy during the fourth
quarter, increasing at a 21.0 percent annual rate. For the full year, equipment
outlays grew 17.5 percent, the sixth consecutive year of double-digit growth. In
fact, during each of those six years, equipment spending was the strongest
sector in the economy -- and most of those years, was strongest by far.
BUSINESS CAPITAL SPENDING
<TABLE>
<CAPTION>
4Q 4Q '97 to
1998* 4Q '98
<S> <C> <C>
Producers' Durable Equipment 21.0% 17.5%
High Technology Equipment 26.5% 32.1%
Computers 59.7% 71.5%
Structures 5.5% -0.4%
</TABLE>
*Annualized
Spending on high-technology equipment again led the way last quarter, growing
at a 26.5 percent rate. Computer purchases rose at a 59.7 percent pace and grew
an astounding 71.5 percent over the four quarters of 1998. The economy-wide,
relentless search for productivity gains, more efficient production processes,
higher quality and cost savings continues to drive the explosive growth in
high-technology equipment. The virtual elimination of pricing power has turned
the focus of the business world to productivity gains as a reliable source of
profit margin expansion.
The further acceleration in the pace of equipment spending over the past two
years is largely a result of the huge push in Corporate America and government
to become year 2000 compliant. The required spending on hardware and software to
address the Y2K problem is not unlike a natural disaster that requires remedial
action, except for the fact that the timing of this disaster is predictable. The
looming obsolescence of the nation's older computer systems will continue to
spur a higher level of technology purchases throughout 1999.
A key question for later this year and into next is what happens to the level
of high-technology equipment expenditures once the massive push to upgrade
operating, accounting and peripheral systems is behind us? Will high-technology
equipment outlays hit an air pocket and plunge, bringing the economy down with
it? We do not expect this to happen. The business environment will remain
intensely competitive, and we expect companies will divert all, or a majority at
the very least, of their Y2K expenditures to productivity and quality-
enhancing equipment purchases. The concern for a company contemplating saving
their Y2K expendi-
3
<PAGE> 5
Economic Outlook
ture budget is that their competitors may not, placing that enterprise in a very
precarious position. While the growth rate on high-technology equipment may drop
from the 32.1 percent of the past four quarters, it will not likely drop much
below ten percent.
No Near Term Threats to the Expansion.
The economy proved quite resilient to the turmoil that arose from the
economic and financial market crises that reverberated around the globe during
1998. Although growth in the manufacturing sector ground to a halt during the
second half of the year due to weakness in exports and the flood of imports into
the United States, the strong momentum in the other sectors of the economy
continued to push the economy forward at a brisk pace.
Riding the wave created by a series of rapid cuts in short term interest
rates by the Federal Reserve Board and the remarkable rebound in the equity
market, the current expansion has entered 1999 with solid forward momentum. We
look for the expansion to continue into the year 2000 and for the economy to
grow at a rate close to its long-run average of three percent this year.
Consumer spending should remain strong in the face of continued job and
income growth, a favorable interest rate environment, and no significant
deterioration in asset values. Housing activity may be reaching a peak, as there
is a demographic limit to how high the demand for housing can reach, despite
further gains in the affordability measure. As long as mortgage rates remain
low, however, we do not expect a significant downturn in the housing sector, but
we are also not looking for further sharp gains. The recent decline in the
capacity utilization rate is probably more related to the idling of older, less
efficient equipment than a harbinger of a looming drop-off in equipment
purchases, particularly high-technology equipment outlays. There are no serious
imbalances evident that would seem ready to trigger a downturn in the economy.
Some distortions in the pattern of economic growth may appear at year-end as
consumers and business take actions to ensure that they limit the potential
impact on them from suppliers and service providers that may not be year 2000
compliant. These actions, to the extent they occur, would represent a shuffling
of activity from the first quarter of next year to the fourth quarter of this
year and would not represent any fundamental difficulties in the underlying
strength of the domestic economy.
Inflation
Take Your Pick, Lowest Inflation Rate in Forty or Fifty Years.
The pervasive low inflation/deflationary environment was, once again, very
evident in the domestic economy last quarter and for all of 1998. The 0.9
percent rise for 1998 in the Gross Domestic Price Index was the lowest in forty
years, while the 0.5 percent gain in the Gross Domestic Purchases Price Index,
which captures the full impact of import prices, was the lowest in fifty years.
The Consumer Price Index has been below two percent for two years in a row, a
feat last achieved in 1964-1965. The Producer Price Index fell for the second
year in a row and indicates that there are no inflationary pressures in the
production pipeline; intermediate goods prices fell 3.1 percent last year, while
crude material prices fell 17.6 percent.
INFLATION MEASURES
<TABLE>
<CAPTION>
4Q 4Q '97 to
1998* 4Q '98
<S> <C> <C>
Gross Domestic Product Price Index 0.8% 0.9%
Gross Domestic Purchases Price Index 0.9% 0.5%
Consumer Price Index 2.2% 1.6%
Producer Price Index 1.6% -0.1%
</TABLE>
*Annualized
The causes of the current low inflation/deflationary environment have been
well documented in this report over the years. The combination of intense
worldwide competition that has been fostered by the end of the Cold War, falling
commodity prices that have declined further with the weakness in many
emerging/developing economies, and the conservative monetary and fiscal policies
that are being followed in the major developed economies around the globe have
brought about the current environment where inflationary pressures are virtually
nil.
4
<PAGE> 6
Economic Outlook
Recent events have not altered our outlook for an inflation rate very close
to zero in the United States over the next year or so. If anything, the
continued weakness in Japan, the softening in Europe and the recent turbulence
in Brazil suggest that the prospects for global economic activity this year have
dimmed. These events, combined with a game plan by most foreign economies that
are experiencing problems to export their way out of their troubles via the U.S.
economy, should suppress any material upward movement in prices for the
foreseeable future.
JOSEPH T. KEATING
President and Chief Investment Officer
The information contained herein is based on Commerce Department data released
January 29, 1999.
5
<PAGE> 7
Portfolio Reviews
KENT GROWTH AND INCOME FUND
by Allan J. Meyers
Portfolio Manager
The stock market was unusually volatile during the 12-month period ended
December 31, 1998. For the first six months of the year, strong economic growth,
low inflation and falling interest rates combined to provide an ideal investment
environment. The Standard & Poor's 500 Index reached an all-time high in
mid-July.
Then, events such as the Russian short-term loan default and the
near-bankruptcy of Long Term Capital Management, a hedge fund, along with
lingering concerns about the Asian financial crisis, shook investor confidence.
Fears that a global economic slowdown would sharply reduce U.S. corporate
profits led to a sharp stock market decline through most of the third quarter.
But the Federal Reserve cut interest rates three times in an effort to halt the
economic backslide, and investors began to buy shares of companies at depressed
prices. As a result, stock prices took a sharp upturn in the fourth quarter.
For the 12 months ended December 31, 1998, the Kent Growth and Income Fund's
Institutional and Investment shares had total returns of 28.07% and 27.68%,
respectively. That compared with the Lipper Growth and Income Funds Average(1)
return of 15.61% and 28.74% for the S&P 500 Index.
Favoring Large Firms
Shares of large growth companies significantly outperformed shares of small
companies during the period. Fears of a global recession prompted investors to
seek the safety of blue-chip stocks, and liquidity concerns kept most investors
away from small-company shares.
The Fund was slightly overweight in the health-care sector. Large, brand-name
companies such as Warner Lambert Co. (0.73%), Pfizer Inc. (1.76%),
Schering-Plough Corp. (0.91%) and Bristol-Meyers Squibb (1.60%) comprised the
bulk of the Fund's
KENT GROWTH AND INCOME FUND*
Distribution of Net Assets
as of December 31, 1998
Finance 15.6%
Computer & Technology 19.4%
Consumer Discretionary 3.5%
Consumer Staples 11.0%
Utilities 10.5%
Conglomerates 4.9%
Retail 7.0%
Oil/Energy 6.8%
Other 5.7%
Basic Materials 2.9%
Medical 12.7%
positions in the sector. The Fund also added to its existing investments in
Microsoft Corp. (3.66%), Lucent Technologies Corp. (1.81%) and IBM Corp.
(2.02%). The Fund is currently building positions in EMC Corp. (0.32%), Northern
Telecom (0.33%), Waste Management (0.26%) and HEALTHSOUTH (0.13%).*
Growth and Volatility to Come
In our view, low inflation and low interest rates should help bolster the
U.S. economy during the coming year. But we expect more volatility in the
financial markets. For example, economic instability in Asia, Russia or Latin
America could dampen corporate earnings. That said, we will attempt to seek
long-term values in the market, with the expectation that such an approach could
be rewarded in the long run.
(1)The Lipper Growth and Income Funds Average consists of managed funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends.
*The Fund's portfolio composition is subject to change.
6
<PAGE> 8
SHADOW BAR Portfolio Reviews
KENT GROWTH AND INCOME FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 11/2/92) (inception 12/1/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 28.07% 27.68%
Three Years 23.84% 23.52%
Five Years 20.83% 20.58%
Life of Fund 19.46% 18.90%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON WITH STANDARD & POOR'S 500 STOCK INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE KENT GROWTH AND INCOME FUND STANDARD & POOR'S COMPOSITE OF
INSTITUTIONAL CLASS SHARES 500 STOCKS
------------------------------- ------------------------------
<S> <C> <C>
11/2/92 10000 10000
12/31/92 10398 10472
12/31/93 11610 11518
12/31/94 11669 11669
12/31/95 15743 16036
12/31/96 18809 19737
12/31/97 23351 26321
12/31/98 29907 33886
</TABLE>
<TABLE>
<CAPTION>
THE KENT GROWTH AND INCOME FUND STANDARD & POOR'S COMPOSITE INDEX
INVESTMENT CLASS SHARES OF 500 STOCKS
------------------------------- ---------------------------------
<S> <C> <C>
'12/1/92' 10000 10000
'12/31/92' 10059 10131
'12/31/93' 11247 11143
'12/31/94' 11302 11288
'12/31/95' 15213 15514
'12/31/96' 18124 19093
12/31/97 22454 25464
12/31/98 28666 32782
</TABLE>
The Fund's performance is being measured against the Standard & Poor's 500 Stock
Index, which is an unmanaged index that generally represents the performance of
the U.S. stock market as a whole. The index is unmanaged and does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The performance of the Fund does reflect
the deduction of fees for these value-added services.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
7
<PAGE> 9
Portfolio Reviews
KENT SMALL COMPANY GROWTH FUND+
by Robert Cummisford
Portfolio Manager
The year that ended December 31, 1998, was a difficult period for
small-company stocks, whose performance once again trailed large-company stocks
by a wide margin. Investors seeking safety and liquidity amid market volatility
turned to larger firms.
The Kent Small Company Growth Fund's Institutional and Investment shares'
total returns were -6.15% and -6.40%, respectively, during the period. During
this same period, the Lipper Small-Cap Funds Average(1) posted a return of
- -0.33%, and the Russell 2000 Index returned -2.55%.
We found promising opportunities in underperforming sectors, such as
technology and finance. Our approach has been to look for companies whose shares
we believe are undervalued, then lighten up on those stocks when their prices
rise, pushing them out of the small-cap universe. In this way, the Fund is able
to maintain its small-cap focus and reinvest the sale proceeds into additional
small-cap companies.
Although small-company stocks remained out of favor during the period, some
individual issues performed well. For example, shares of PSInet (0.40% of the
portfolio), an Internet service provider, climbed 360%, and shares of Intervoice
(0.26%), a company that makes wireless headsets for telephones, rose 82%.*
The average capitalization of companies held in the Fund rose approximately
$684 million over the period, as we started purchasing shares of companies with
market capitalizations in the $800 million to $1 billion ranges. Purchasing
shares of firms with these larger market caps gave the Fund more liquidity
without losing its small-company focus. Previously, the stocks in the Fund had
an average market capitalization of $520 million, which is significantly smaller
than its benchmark index, the Russell 2000.
KENT SMALL COMPANY GROWTH FUND*
Distribution of Net Assets
as of December 31, 1998
Consumer Staples 4.6%
Consumer Discretionary 5.8%
Finance 20.0%
Oil/Energy 3.1%
Industrial Products 7.0%
Utilities 5.5%
Other 11.2%
Retail 7.1%
Medical 8.3%
Basic Materials 5.5%
Computer & Technology 20.6%
Construction 1.1%
The Outlook
The Kent Small Company Growth Fund continues to be a well-diversified fund,
with 660 securities in the portfolio as of December 31, 1998. We believe the
market is currently experiencing a sentimental shift in favor of small-cap
stocks, a view that draws support from the Fund's strong 14.14% (Investment
Shares) and 14.18% (Institutional Shares) gain during the fourth quarter of
1998. Meanwhile, we continue to find excellent opportunities in several
high-growth sectors of the small-cap segment of the market, and we are taking
advantage of them as they arise.
(+)Small-capitalization funds typically carry additional risks, since smaller
companies generally have a higher risk of failure and, by definition, are not as
well established as "blue-chip" companies. Historically, smaller companies'
stock has experienced a greater degree of market volatility than large company
stocks on average.
(1)Lipper Small-Cap Funds Average is comprised of funds that by prospectus or
portfolio practice invest primarily in companies with market capitalizations of
less than $1 billion at time of purchase.
(*)The Fund's portfolio composition is subject to change.
8
<PAGE> 10
SHADOW BAR Portfolio Reviews
KENT SMALL COMPANY GROWTH FUND+
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 11/2/92) (inception 12/4/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year -6.15% -6.40%
Three Years 12.81% 12.51%
Five Years 12.17% 11.94%
Life of Fund 14.15% 12.94%
</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 10000 10000
12/31/92 10885 11140
12/31/93 12729 13246
12/31/94 12722 13005
12/31/95 15745 16704
12/31/96 18825 19466
12/31/97 24085 23819
12/31/98 22600 23212
</TABLE>
<TABLE>
<CAPTION>
KENT SMALL COMPANY GROWTH FUND
INVESTMENT CLASS SHARES RUSSELL 2000 INDEX
------------------------------ ------------------
<S> <C> <C>
12/4/92 10000 10000
12/31/92 10197 10348
12/31/93 11915 12304
12/31/94 11906 12080
12/31/95 14702 15516
12/31/96 17518 18081
12/31/97 22372 22124
12/31/98 20937 21560
</TABLE>
The Fund's performance is being measured against the Russell 2000 Index, which
is an unmanaged index that represents the performance of domestically traded
common stocks of small to mid-sized companies. The index is unmanaged and does
not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The performance of the Fund does
reflect the deduction of fees for these value-added services.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. The investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
9
<PAGE> 11
Portfolio Reviews
KENT INTERNATIONAL GROWTH FUND+
by David Eder
Portfolio Manager
During the 12 months ended December 31, 1998, the Kent International Growth
Fund's Institutional and Investment shares had a total return of 17.92% and
17.60%, respectively. Those returns compared to a 20.33% return for the Morgan
Stanley Capital International (MSCI) Europe, Australia and Far East (EAFE)
Index, and a return of 13.02% for the Lipper International Funds Average(1) for
the period.
The year proved to be an exceptional one for European stocks. The eleven
countries participating in the European Monetary Union (EMU) generated the
highest returns. The advent of a single currency, the euro, forced most EMU
participants to lower their interest rates to meet criteria for membership in
the union. Low interest rates in conjunction with low inflation created an
extremely positive investment environment. The MSCI Europe Index gained 28.5%
for the year, with markets in Finland (+122%), Belgium (+68%) and Italy (+53%)
boasting especially high returns. We also added two countries to the Fund during
the period -- Ireland (+33%) and Portugal (+28%) both of which are participating
in the EMU.
Lingering economic troubles in Asia continued to pose problems for investors.
The MSCI Pacific Rim Index gained only 2.44% for the year, as investors avoided
markets in countries such as Malaysia (-29%) and New Zealand (-23%). Despite
Asia's economic troubles, the Fund has recently moved to a slightly overweighted
position in the Pacific Rim countries, where valuations are very attractive
compared to Europe and an eventual economic recovery is likely.
KENT INTERNATIONAL GROWTH FUND*
Distribution of Net Assets
as of December 31, 1998
Japan 26.6%
Denmark 0.8%
Australia 3.3%
Spain 3.4%
Hong Kong 2.5%
Germany 9.8%
Other 3.4%
Singapore 1%
United Kingdom 19.5%
Netherlands 5.0%
Italy 4.6%
Switzerland 7.1%
France 8.1%
Finland 0.9%
Belgium 1.7%
Sweden 2.3%
The Outlook
The Kent International Growth Fund remains a well-diversified fund, with
investments in 851 securities as of December 31, 1998. We aim to reduce risk by
maintaining a well-diversified portfolio in each country in which the Fund
invests.
Looking ahead, we believe the global economy will continue to be
characterized by low inflation and low interest rates. We believe Europe's stock
markets can advance further despite lofty valuations, thanks in part to the
advent of a single currency. We also remain confident that the Pacific Rim is
slated for a recovery. However, the timing of such a rebound depends upon
whether governments in countries such as Japan hold true to their promises to
stimulate the economy through tax cuts and restructured banking systems.
(+)International investing involves increased risk and volatility.
(1)The Lipper International Funds Average is comprised of managed funds that
invest their assets in securities whose primary trading markets are outside of
the United States.
*The Fund's portfolio composition is subject to change.
10
<PAGE> 12
SHADOW BAR Portfolio Reviews
KENT INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 12/4/92) (inception 12/4/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 17.92% 17.60%
Three Years 8.58% 8.28%
Five Years 8.87% 8.62%
Life of Fund 12.07% 11.77%
</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
RIM INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
KENT INTERNATIONAL MORGAN STANLEY
GROWTH FUND, CAPITAL INTERNATIONAL MORGAN STANLEY MORGAN STANLEY
INSTITUTIONAL CLASS EUROPE, AUSTRALIA AND CAPITAL INTERNATIONAL CAPITAL INTERNATIONAL
SHARES FAR EAST INDEX EUROPE INDEX PACIFIC INDEX
------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
'12/4/92' 10000 10000 10000 10000
'12/31/92' 10020 10054 10233 9887
'12/31/93' 13045 13367 13282 13444
'12/31/94' 13794 14444 13636 15195
'12/31/95' 15591 16113 16653 15650
'12/31/96' 16507 17138 20246 14335
'12/31/97' 16926 17443 25063 10681
'12/31/98' 19976 20989 32213 10942
</TABLE>
<TABLE>
<CAPTION>
KENT INTERNATIONAL MORGAN STANLEY
GROWTH FUND, CAPITAL INTERNATIONAL MORGAN STANLEY MORGAN STANLEY
INVESTMENT CLASS EUROPE, AUSTRALIA AND CAPITAL INTERNATIONAL CAPITAL INTERNATIONAL
SHARES FAR EAST INDEX EUROPE INDEX PACIFIC INDEX
------------------ --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
'12/4/92' 10000 10000 10000 10000
'12/31/92' 10010 10054 10233 9887
'12/31/93' 13006 13367 13282 13444
'12/31/94' 13723 14444 13636 15195
'12/31/95' 15487 16113 16653 15650
'12/31/96' 16350 17138 20245 14335
'12/31/97' 16719 17443 25063 10681
'12/31/98' 19661 20989 32213 10942
</TABLE>
The Fund's performance is being measured against the Morgan Stanley Capital
International Europe, Australia and Far East Index (EAFE), which is an unmanaged
index that is comprised 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
Rim Index are unmanaged indices of stocks in their respective regions. 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. The indices are unmanaged and do not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The performance of the Fund does reflect the deduction
of fees for these value-added services.
The Morgan Stanley Capital International (MSCI) indices measure performance for
a diverse range of developed country global stock markets including the United
States, Canada, Europe, Australia, New Zealand and the Far East. The foundation
of the various MSCI indices is the database of approximately 1,500 companies
listed on the stock exchanges of the 24 countries for which there are MSCI
national indices. The indices are capitalization weighted. Furthermore,
companies included in the indices replicate the industry composition of each
local market and, in addition, represent samplings of large-, medium- and
small-capitalization companies from each local market, taking into account the
stocks' liquidity.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
11
<PAGE> 13
Portfolio Reviews
KENT INDEX EQUITY FUND
by David Eder
Portfolio Manager
The year ended December 31, 1998, was characterized by strong economic
growth, low interest rates, and low inflation in the United States. Those
factors supported significant gains in large-company stocks, despite severe
volatility. The Standard & Poor's 500 Index posted a gain of greater than 20%
for the fourth consecutive year.
Investors flocked to shares of the largest companies in order to find safety
and liquidity in the face of overseas economic troubles that seemed to threaten
the U.S. expansion. Thus, the 50 largest companies in the S&P 500 accounted for
over two thirds of the returns of the index. Large-company stocks in technology
and the financial services market were especially strong performers. For
example, technology giants such as Dell (+248%), Lucent Technologies (+176%) and
Microsoft (+115%) and financial companies such as Charles Schwab (+101%) and
Providian Financial (+150%) were among the top performers.*
A Rebound Late in the Year
After the Federal Reserve reduced interest rates in the fall -- the federal
funds rate was lowered by one quarter percentage point three times -- investors
regained confidence in the liquidity of many global markets and economies. The
U.S. stock market rebounded sharply, and both large- and small-company stocks
performed well.
For the year ended December 31, 1998, Institutional and Investment Shares of
the Kent Index Equity Fund posted total returns of 28.26% and 27.93%,
respectively. During the same period, the Lipper Growth and Income Funds
Average(1) returned 15.61%. The Standard & Poor's 500 Index posted a return of
28.74%.
KENT INDEX EQUITY FUND*
Distribution of Net Assets
as of December 31, 1998
Medical 12.2%
Consumer Discretionary 4.2%
Consumer Staples 10.4%
Oil/Energy 6.2%
Other 6.4%
Utilities 10.5%
Computer & Technology 19.4%
Basic Materials 2.9%
Finance 15.6%
Retail 7.6%
Conglomerates 4.6%
Changes in the Index
The S&P 500 Index -- and therefore the Kent Index Equity Fund -- underwent
significant changes during the year. No fewer than 48 changes in the index took
place, with 13 occurring during the third quarter alone. The pace of change in
the composition of the index reflected in part a large number of corporate
mergers.
The combination of continued strong performance of the largest companies and
lower earnings expectations has resulted in historically high valuations among
many stocks in the S&P 500. Thus, we believe it may be difficult for the index
to duplicate its recent performance during the coming year. That said, low
inflation, low interest rates and modest economic growth continue to form a
sound basis for continued gains among shares of large companies that make up the
Fund and its benchmark index.
(1)The Lipper Growth and Income Funds Average consists of managed funds that
combine a growth-of-earnings orientation and an income requirement for level
and/or rising dividends.
*The Fund's portfolio composition is subject to change.
12
<PAGE> 14
SHADOW BAR Portfolio Reviews
KENT INDEX EQUITY FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 11/2/92) (inception 11/25/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 28.26% 27.93%
Three Years 27.59% 27.29%
Five Years 23.33% 23.05%
Life of Fund 21.08% 20.60%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON WITH THE STANDARD & POOR'S 500 STOCK
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE KENT INDEX EQUITY FUND STANDARD & POOR'S COMPOSITE INDEX
INSTITUTIONAL CLASS SHARES OF 500 STOCKS
-------------------------- ---------------------------------
<S> <C> <C>
11/2/92 10000 10000
12/31/92 10440 10472
12/31/93 11390 11518
12/31/94 11488 11669
12/31/95 15648 16036
12/31/96 19119 19737
12/31/97 25342 26321
12/31/98 32503 33886
</TABLE>
<TABLE>
<CAPTION>
THE KENT INDEX EQUITY FUND STAND & POOR'S COMPOSITE INDEX OF
INVESTMENT CLASS SHARES 500 STOCKS
-------------------------- ---------------------------------
<S> <C> <C>
11/25/92 10000 10000
12/31/92 10185 10131
12/31/93 11111 11143
12/31/94 11194 11288
12/31/95 15199 15514
12/31/96 18531 19093
12/31/97 24505 25464
12/31/98 31347 32782
</TABLE>
The Fund's performance is being measured against the Standard & Poor's 500 Stock
Index, which is an unmanaged index that generally represents the performance of
the U.S. stock market as a whole. The index is unmanaged and does not reflect
the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The performance of the Fund does reflect
the deduction of fees for these value-added services.
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. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capital gain distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
13
<PAGE> 15
Portfolio Reviews
KENT SHORT TERM BOND FUND
by Mitchell Stapley
Portfolio Manager
Yields on short-term notes declined dramatically during the 12-month period
ending December 31, 1998, as global economic uncertainty caused investors to buy
very liquid, high-quality issues. The yield on two-year Treasury securities fell
from 5.55% at the beginning of the period to 3.82% in October, as investors
moved money from riskier investments into the safety of short-term Treasury
notes. Subsequently, however, conditions in worldwide financial markets
stabilized somewhat, and yields on two-year Treasury securities rose to 4.53%.
The Fund's Institutional and Investment shares posted total returns of 6.14%
and 6.00%, respectively. That compares to a 6.55% return for the Fund's
benchmark, the Lehman Brothers 1-3-Year Government Bond Index.
Longer Maturities
During the period, we extended the Fund's average maturity from 1.9 years to
2.1 years to lock in the higher yields that longer-term issues carried. We
maintained the Fund's average credit rating at AA2. That high credit quality
helped insulate the Fund from some of the market's volatility.
The Fund's assets were invested primarily in high-quality corporate notes and
Treasury securities. Investors' concerns that the global economic crisis would
hurt the U.S. economy caused them to shift money from corporate securities to
Treasury securities. This widening of corporate yield spreads provided an
outstanding opportunity to lock in additional yield for the Fund. The Fund ended
the period with 64.3% of its assets in corporate securities.*
KENT SHORT TERM BOND FUND*
Distribution of Net Assets
as of December 31, 1998
U.S. Government & Agency Issues 34.0%
Corporate Notes & Bonds 61.0%
Cash Equivalents
Net Other Assets & Liabilities 5.0%
Looking Ahead
The domestic economy continues to experience growth in the 3% to 4% range,
along with low and declining inflation, low unemployment and high consumer
confidence. While we expect the economy to slow somewhat in the coming year,
those economic underpinnings should continue to provide a beneficial environment
for fixed-income securities and corporate securities, in particular. We will
seek to maintain a relatively long average maturity to help provide extra yield
for shareholders, and we will continue to look for opportunities to lock in
higher yields by investing in select corporate bonds.
KENT SHORT TERM BOND FUND+
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1998
-------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
<S> <C> <C>
--------------------------------------------------------------------------------------------
4.59% 4.44%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period
ended December 31, 1998. 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 4.58% for Institutional Shares and 4.34% for
Investment Shares.
*The Fund's portfolio composition is subject to change.
14
<PAGE> 16
SHADOW BAR Portfolio Reviews
KENT SHORT TERM BOND FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 11/2/92) (inception 12/4/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 6.14% 6.00%
Three Years 5.58% 5.44%
Five Years 5.62% 5.48%
Life of Fund 5.20% 5.06%
</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 CONSUMER PRICE INDEX 91-DAY TREASURY BILL* THE LEHMAN BROTHERS
BOND FUND|INSTITUTIONAL -------------------- --------------------- 1-3 YEAR GOVERNMENT
CLASS SHARES BOND INDEX
-------------------- -------------------
<S> <C> <C> <C> <C>
11/2/92 10000 10000 10000 10000
12/31/92 10087 9992 10053 10078
12/31/93 10395 10267 10356 10621
12/31/94 10502 10542 10798 10675
12/31/95 11608 10809 11393 11832
12/31/96 12098 11213 11965 12433
12/31/97 12875 11404 12593 13625
12/31/98 13663 11580 13160 14517
</TABLE>
<TABLE>
<CAPTION>
THE KENT SHORT TERM CONSUMER PRICE INDEX 91-DAY TREASURY BILL* THE LEHMAN BROTHERS
BOND FUND|INVESTMENT -------------------- --------------------- 1-3 YEAR GOVERNMENT
CLASS SHARES BOND INDEX
-------------------- -------------------
<S> <C> <C> <C> <C>
12/4/92 10000 10000 10000 10000
12/31/92 10030 9992 10027 10093
12/31/93 10335 10267 10329 10637
12/31/94 10439 10542 10770 10691
12/31/95 11514 10809 11364 11850
12/31/96 11982 11197 11935 12452
12/31/97 12732 11387 12562 13646
12/31/98 13495 11563 13127 14540
</TABLE>
The Fund's performance is being measured against the Lehman Brothers 1-3-Year
Government Bond Index, which is an unmanaged index comprised of U.S. Treasury
issues and publicly issued debt of U.S. government agencies with maturities of
one to three years. The index is unmanaged and does not reflect the deduction of
fees associated with a mutual fund, such as investment management and fund
accounting fees. The performance of the Fund does reflect the deduction of fees
for these value-added services.
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.
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. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capital gain distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
15
<PAGE> 17
Portfolio Reviews
KENT INTERMEDIATE BOND FUND
by Mitchell Stapley
Portfolio Manager
Uncertainty in world financial markets caused investors to seek the safety
and liquidity of Treasury bonds during the 12 months ended December 31, 1998.
Corporate bonds underperformed Treasury securities, as investors worried that a
global economic downturn would make it more difficult for companies to pay their
debts. The period was also characterized by a great deal of volatility in the
bond market. The yield on ten-year Treasury securities began the period at
5.75%, fell to as low as 4.16% in October, and then rebounded to 4.65% at the
close of the year.
The Kent Intermediate Bond Fund performed well during the period, with
returns similar to those of its benchmark. The Fund's Institutional and
Investment shares had total returns of 7.65% and 7.26%, respectively, compared
to an 8.44% return for the Lehman Brothers Intermediate Government/Corporate
Bond Index.
Managing the Portfolio
The average maturity of the Fund was slightly longer than that of its
benchmark at the start of the period, and we extended the average maturity over
the year, from 5.2 years to 5.8 years. That strategy benefited the Fund as
yields fell during most of the period.
The Fund began the period with an allocation between Treasury and corporate
securities close to that of its benchmark. The relatively poor performance of
corporate securities compared to Treasury securities during most of the period
led to some outstanding opportunities in the corporate sector. We took advantage
of those opportunities by investing in bonds with credit ratings of A and above
KENT INTERMEDIATE BOND FUND*
Distribution of Net Assets
as of December 31, 1998
Cash Equivalents
Net Other Assets & Liabilities 5.5%
Corporate Notes & Bonds 30.1%
U.S. Government & Agency Issues 64.4%
issued by high-quality financial and industrial companies. The Fund's credit
rating remained high throughout the period, at AA1.
Going Forward
Given the one percentage point decline in the yield of the ten-year Treasury
note during the past year, we do not expect yields to move significantly lower
in the coming months. However, low inflation and low interest rates should
prevent yields from rising significantly. Therefore, we expect fixed-income
securities to trade in a narrow range going forward, and we do anticipate some
narrowing of the yield spread on corporate securities. We plan to maintain the
Fund's average maturity longer than that of its benchmark to help lock in higher
yield for shareholders.
KENT INTERMEDIATE BOND FUND+
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1998
-------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
<S> <C> <C>
--------------------------------------------------------------------------------------------
4.57% 4.34%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period
ended December 31, 1998. Yield calculations represent past performance and
will fluctuate.
(+)Certain fees were waived. Had these waivers not been in effect, the 30-day
SEC yield would have been 4.56% for Institutional Shares and 4.33% for
Investment Shares.
*The Fund's portfolio composition is subject to change.
16
<PAGE> 18
SHADOW BAR Portfolio Reviews
KENT INTERMEDIATE BOND FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 11/2/92) (inception 11/25/92)
--------------------------------------------------------------------------------------------
<S> <C> <C>
One Year 7.65% 7.26%
Three Years 6.12% 5.85%
Five Years 6.09% 5.89%
Life of Fund 6.45% 6.22%
</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 10000 10000
12/31/92 10125 10095
12/31/93 10934 10976
12/31/94 10585 10762
12/31/95 12298 12410
12/31/96 12667 12913
12/31/97 13655 13929
12/31/98 14699 15105
</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 10000 10000
12/31/92 10050 10134
12/31/93 10873 11018
12/31/94 10545 10803
12/31/95 12207 12457
12/31/96 12544 12962
12/31/97 13500 13982
12/31/98 14448 15162
</TABLE>
The Fund's performance is being measured against the Lehman Brothers
Intermediate Government/Corporate Bond Index, which 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. The index is unmanaged and does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The performance of the Fund does reflect the deduction
of fees for these value-added services.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
17
<PAGE> 19
Portfolio Reviews
KENT INCOME FUND
by Mitchell Stapley
Portfolio Manager
Yields on long-term bonds declined significantly during the 12-month period
ended December 31, 1998. The year was characterized by considerable volatility
in the bond market. During the first 10 months of the period, investors were
concerned about the impact that overseas economic financial troubles would have
on the U.S. economy, and they turned to the liquidity and safety of Treasury
bonds. This pushed yields on Treasury instruments lower by over a full
percentage point. As a result, the gap between yields on corporate bonds and
Treasury securities widened to levels not seen since the last recession. During
the final months of 1998, however, conditions in overseas markets seemed to
stabilize, and investors began to shift money back into corporate issues. The
yield on the 30-year Treasury bond began the period at 5.85%, then fell to as
low as 4.75% in October and finished the period at 5.10%.
The Fund's relatively long average maturity helped its returns, with the
rather significant drop in yields that occurred over the course of the year. The
Fund's Institutional and Investment Shares posted total returns of 9.29% and
9.04%, respectively, for the 12 months ended December 31, 1998. That compared to
an 11.77% return for the Lehman Brothers Long Government/Corporate Bond Index.
Opportunities in Corporate Bonds
Throughout the period, we aggressively bought high-quality corporate issues
as their yield spread rose relative to Treasury yields. That strategy helped the
Fund's performance during the last two months of the period. We kept the credit
rating of
KENT INCOME FUND*
Distribution of Net Assets
as of December 31, 1998
U.S. Government & Agency Obligations 40.7%
Corporate Notes & Bonds 53.4%
Cash Equivalents Net Other
Assets & Liabilities 4.6%
Municipal Bonds 0.9%
Foreign Government Agencies 0.4%
the Fund's holdings high, at AA1, and that high-quality orientation helped the
Fund weather some of the volatility in the market over the August-to-October
period.*
The Outlook
Going forward, we expect long-term bonds to trade in a relatively narrow
range, in an environment of moderate economic growth, low inflation, and low
interest rates. We will seek to maintain the Fund's relatively long average
maturity to help lock in extra yield, particularly on corporate securities.
Meanwhile, we believe that some of the securities we purchased at attractive
prices during the market's recent volatility could provide solid returns for the
Fund's shareholders.
KENT INCOME FUND+
SEC 30-DAY YIELDS AS OF DECEMBER 31, 1998
-------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
<S> <C> <C>
--------------------------------------------------------------------------------------------
4.97% 4.71%
</TABLE>
SEC 30-day yield is computed based on net income during the 30-day period
ended December 31, 1998. 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 4.96% for Institutional Shares and 4.71% for
Investment Shares.
*The Fund's portfolio composition is subject to change.
18
<PAGE> 20
SHADOW BAR Portfolio Reviews
KENT INCOME FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 3/20/95) (inception 3/22/95)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 9.29% 9.04%
Three Years 6.92% 6.72%
Life of Fund 9.41% 9.14%
</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 LONG
THE KENT INCOME FUND GOVERNMENT/CORPORATE GOVERNMENT/CORPORATE
INSTITUTIONAL CLASS SHARES BOND INDEX BOND INDEX
-------------------------- -------------------- ------------------------
<S> <C> <C> <C>
3/20/95 10000 10000 10000
12/31/95 11506 11358 12190
12/31/96 11643 11688 12207
12/31/97 12828 12871 13979
12/31/98 14063 14043 15624
</TABLE>
<TABLE>
<CAPTION>
THE LEHMAN BROTHERS THE LEHMAN BROTHERS LONG
THE KENT INCOME FUND GOVERNMENT/CORPORATE GOVERNMENT/CORPORATE
INVESTMENT CLASS SHARES BOND INDEX BOND INDEX
----------------------- -------------------- ------------------------
<S> <C> <C> <C>
3/22/95 10000 10000 10000
12/31/95 11464 11358 12190
12/31/96 11597 11688 12207
12/31/97 12779 12828 13979
12/31/98 13933 14043 15624
</TABLE>
The Fund's performance is being measured against the Lehman Brothers
Government/Corporate Bond Index and the Lehman Brothers Long
Government/Corporate Bond Index. The indices are 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. The indices are unmanaged and
do not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The performance of the Fund does
reflect the deduction of fees for these value-added services.
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. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capital gain distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
19
<PAGE> 21
Portfolio Reviews
KENT LIMITED TERM TAX-FREE FUND+
by Michael Martin
Portfolio Manager
The massive amount of new supply that came to the municipal market during
1998 and the 75-basis-point cut in the federal funds rate each had a
significant, yet somewhat offsetting, impact on short-term municipal securities
during the 12 months ended December 31, 1998. The yield on a three-year
AAA-rated general obligation municipal bond decreased by 40 basis points during
the period, ending the year at 3.55%; down from 3.95% on December 31, 1997. That
decline pales, however, when compared to the 110-basis-point decline in
comparable-maturity Treasury securities. The ratio of the yield of a five-year
municipal security to the yield of a five-year Treasury security ended the year
at 82.6%, up from 72% at the beginning of the year.
The Fund's Institutional and Investment shares posted total returns of 4.08%
and 3.91%, respectively, for the 12 months ended December 31, 1998. That
compares to a total return of 4.77% for the Lehman Brothers One-Year General
Obligation Municipal Bond Index.
Managing the Fund
During the period, we maintained the Fund's average maturity at the upper end
of the permissible range in order to provide an attractive level of yield for
shareholders. The Fund's average maturity finished the year at 2.89 years,
essentially unchanged from 2.9 years at the start of the period. Throughout the
period, we looked for opportunities to increase the Fund's yield while
maintaining the portfolio's high average credit rating of AA. We did not feel
that the extra yield available from lower-rated securities was enough to warrant
taking on the extra credit risk.
KENT LIMITED TERM TAX-FREE FUND*
Distribution of Net Assets
as of December 31, 1998
Pacific 10.0%
East 14.5%
Other 7.4%
North Central 45.2%
South 13.9%
Mountain 9.0%
Looking Ahead
We believe it is likely that there will continue to be a very heavy supply of
new municipal issues coming to market in the months ahead, which could continue
to dampen the performance of municipal securities somewhat. Nevertheless, we
believe that the outlook for the municipal market is quite favorable, as the
inflation rate is projected to remain low. As a result, we will seek to keep the
Fund's average maturity slightly longer than that of its benchmark, to lock in
yield for the Fund's shareholders. We will also attempt to take advantage of any
market declines to help increase the average maturity further.
THE KENT LIMITED TERM TAX-FREE FUND
TAX EQUIVALENT YIELDS(++) AS OF DECEMBER 31, 1998
-----------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
------------------------------------------------------------------------------
<S> <C> <C>
28.0% 4.60% 4.39%
31.0% 4.80% 4.58%
36.0% 5.17% 4.94%
39.6% 5.48% 5.23%
</TABLE>
++Based on an SEC 30-day yield on 12/31/98 of 3.31% for the Institutional
Class and 3.16% for the Investment Class, SEC 30-day yield is computed based
on net income during the 30-day period ended December 31, 1998. 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 3.31% for Institutional Shares and 3.04% for Investment
Shares.
(+)The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
*The Fund's portfolio composition is subject to change.
20
<PAGE> 22
SHADOW BAR Portfolio Reviews
KENT LIMITED TERM TAX-FREE FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 9/1/94) (inception 11/1/94)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 4.08% 3.91%
Three Years 4.13% 4.01%
Life of Fund 4.60% 4.89%
</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 KENT LIMITED TERM TAX- THE LEHMAN BROTHERS ONE- THE LEHMAN BROTHERS THREE-
FREE FUND INSTITUTIONAL CLASS YEAR GENERAL OBLIGATION YEAR GENERAL OBLIGATION
SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
----------------------------- ------------------------ --------------------------
<S> <C> <C> <C>
9/1/94 10000 10000 10000
12/31/94 9923 10108 9943
12/31/95 10760 10767 10821
12/31/96 11140 11245 11319
12/31/97 11672 11762 11931
21/31/98 12148 12323 12548
</TABLE>
<TABLE>
<CAPTION>
THE KENT LIMITED TERM TAX- THE LEHMAN BROTHERS ONE- THE LEHMAN BROTHERS THREE-
FREE FUND INVESTMENT CLASS YEAR GENERAL OBLIGATION YEAR GENERAL OBLIGATION
SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
-------------------------- ------------------------ --------------------------
<S> <C> <C> <C>
11/1/94 10000 10005 10000
12/31/94 10003 10198 10132
12/31/95 10843 10863 11027
12/31/96 11224 11343 11534
12/31/97 11742 11867 12158
12/31/98 12201 12433 12787
</TABLE>
The Fund's performance is being measured against the Lehman Brothers One-Year
General Obligation Municipal Bond Index and the Lehman Brothers Three-Year
General Obligation Municipal Bond Index, which are unmanaged indices that are
comprised of debt instruments issued by municipalities. The indices are
unmanaged and do not reflect the deduction of fees associated with a mutual
fund, such as investment management and fund accounting fees. The performance of
the Fund does reflect the deduction of fees for these value-added services.
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. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capital gain distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
21
<PAGE> 23
Portfolio Reviews
KENT INTERMEDIATE TAX-FREE FUND+
by Michael Martin
Portfolio Manager
Intermediate municipal bond returns lagged returns for Treasury securities of
comparable maturities during the 12-month period ended December 31, 1998. For
example, the yield on the ten-year AAA-rated general obligation municipal
security declined by 25 basis points, compared to a 109-basis-point decrease in
the yield on a ten-year Treasury note. As a result, the ratio of the yield on a
ten-year AAA-rated general obligation security to the yield on a ten-year
Treasury security increased from 75.8% at the beginning of the year to 87.7% as
of December 31, 1998.
The performance of intermediate municipal securities lagged that of Treasury
securities for several reasons. A very heavy supply of municipal issues met with
lukewarm demand from retail investors, who were attracted by strong returns in
the equity markets. Also, investors favored the liquidity of Treasury securities
over municipal securities, given the increasingly unsettled condition of the
financial markets over the August-to-October period.
For the 12 months ended December 31, 1998, the Fund's Institutional and
Investment shares posted total returns of 5.37% and 5.09%, respectively. That
performance compared to a total return of 5.17% for the Fund's benchmark, the
Lehman Brothers Three-Year General Obligation Municipal Bond Index.
The average maturity of the Fund began the period at 7.14 years and ended the
year at 6.89 years. We kept the average credit quality of the portfolio high at
AA because we saw few opportunities to purchase lower quality issues at
attractive prices.
KENT INTERMEDIATE TAX-FREE FUND*
Distribution of Net Assets
as of December 31, 1998
North Central 36.5%
East 15.9%
Other 6.7%
Mountain 7.3%
Pacific 14.1%
South 19.5%
The Outlook
We believe the municipal market will once again have to contend with heavy
supply coming into the market and with competition from the stock market in the
months ahead. But we believe that the outlook for the municipal market -- as
well as for the overall bond market -- is favorable given prospects for
continued low inflation. Thus, we intend to maintain the Fund's relatively long
average maturity to help provide an attractive yield for shareholders. We also
look to extend the Fund's average maturity during market setbacks.
KENT INTERMEDIATE TAX-FREE FUND+
TAX EQUIVALENT YIELDS(++) AS OF DECEMBER 31, 1998
-----------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
------------------------------------------------------------------------------
<S> <C> <C>
28.0% 4.76% 4.42%
31.0% 4.97% 4.61%
36.0% 5.36% 4.97%
39.6% 5.68% 5.26%
</TABLE>
(++)Based on an SEC 30-day yield on 12/31/98 of 3.43% for the Institutional
Class and 3.18% for the Investment Class, SEC 30-day yield is computed based
on net income during the 30-day period ended December 31, 1998. 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 3.42% for Institutional Shares and 3.17% for Investment
Shares.
(+)The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
*The Fund's portfolio composition is subject to change.
22
<PAGE> 24
SHADOW BAR Portfolio Reviews
KENT INTERMEDIATE TAX-FREE FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 12/16/92) (inception 12/18/92)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 5.37% 5.09%
Three Years 5.27% 5.01%
Five Years 5.04% 4.83%
Life of Fund 5.64% 5.44%
</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 TAX- THE LEHMAN BROTHERS THREE- THE LEHMAN BROTHERS FIVE-
FREE FUND INSTITUTIONAL CLASS YEAR GENERAL OBLIGATION YEAR GENERAL OBLIGATION
SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
----------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
12/16/92 10000 10000 10000
12/31/92 10060 10300 10500
12/31/93 10895 10673 10930
12/31/94 10567 10755 10779
12/31/95 11941 11705 12032
12/31/96 12349 12243 12589
12/31/97 13222 12905 13406
12/31/98 13929 13572 14189
</TABLE>
<TABLE>
<CAPTION>
THE KENT INTERMEDIATE TAX- THE LEHMAN BROTHERS THREE- THE LEHMAN BROTHERS FIVE-
FREE FUND INVESTMENT CLASS YEAR GENERAL OBLIGATION YEAR GENERAL OBLIGATION
SHARES MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
-------------------------- -------------------------- -------------------------
<S> <C> <C> <C>
12/18/92 10000 10000 10000
12/31/92 10040 10200 10600
12/31/93 10873 10673 10930
12/31/94 10543 10755 10779
12/31/95 11889 11705 12032
12/31/96 12266 12243 12581
12/31/97 13100 12905 13406
12/31/98 13765 13572 14189
</TABLE>
The Fund's performance is being measured against the Lehman Brothers Three-Year
General Obligation Municipal Bond Index and the Lehman Brothers Five-Year
General Obligation Municipal Bond Index which are unmanaged indices comprised of
debt instruments issued by municipalities. The indices are unmanaged and do not
reflect the deduction of fees associated with a mutual fund, such as investment
management and fund accounting fees. The performance of the Fund does reflect
the deduction of fees for these value-added services.
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. Total return is based
on changes in net asset value, assuming reinvestment of all dividends and
capital gain distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
23
<PAGE> 25
Portfolio Reviews
KENT TAX-FREE INCOME FUND+
by Michael Martin
Portfolio Manager
The main factor holding back the municipal market during 1998 was the
tremendous supply of new issues, which amounted to $284 billion for the
year -- second only to the $293 billion of new supply seen in 1993. That
tremendous increase in supply was met with lukewarm demand by retail investors,
who comprise fully one third of the municipal market. These investors continued
to be attracted to the very high returns in the equity markets compared to the
low relatively level of yields available on municipal securities.
In addition, many investors became increasingly concerned about how the
economic and financial market problems around the globe would affect the U.S.
economy. These concerns brought about a tremendous flight to safety and
liquidity in Treasury securities. For the year, the yield on a thirty-year
AAA-rated general obligation municipal bond declined by only nine basis points,
ending the period at 4.94%. By comparison, the thirty-year Treasury bond's yield
declined by 84 basis points.
This underperformance of the municipal market relative to the Treasury market
caused hedge funds and other non-traditional buyers to exit the municipal
market. This sell-off caused the ratio of the yield on a thirty-year municipal
bond to the yield of a thirty-year Treasury security to steadily increase during
the period, from 84.8% to 96%. During the flight-to-quality rally that occurred
in the Treasury market over the August-to-October period, the
municipal-to-Treasury yield ratio actually approached 100%.
The Fund's Institutional and Investment shares delivered total returns of
5.71% and 5.43%, respectively, for the 12 months through December 31, 1998. That
compared to a 5.84% return for the Lehman Brothers Municipal Bond Index.
Managing Average Maturity
During the brief moments that the fixed-income markets sold off during 1998,
we took the opportunity to extend the average maturity of the portfolio.
Conversely, when the fixed-income markets ral-
KENT TAX-FREE INCOME FUND*
Distribution of Net Assets
as of December 31, 1998
East 12.1%
Other 0.3%
Mountain 11.6%
Pacific 19.1%
South 15.2%
North Central 41.7%
lied, we generally decreased the average maturity the portfolio. The Fund
started the year with an average maturity of 11.9 years and ended the year with
an average maturity close to 10 years.
The average credit rating of the portfolio remained high at AA. We saw little
incentive to purchase lower-rated credits given their very small yield advantage
over higher-rated issues. This quality-spread differential has narrowed sharply
in recent years.
The Outlook
Although the municipal market may once again have to contend with a heavy
supply of new issues in 1999, we believe that the outlook for the municipal
market and the bond market, in general, is favorable given the likelihood of
continued low inflation. We will continue to seek to maintain an average
maturity slightly longer than that of our index, and will take advantage of any
market declines to increase the average maturity of the portfolio.
KENT TAX-FREE INCOME FUND+
TAX EQUIVALENT YIELDS++ AS OF DECEMBER 31, 1998
---------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
------------------------------------------------------------------------------
<S> <C> <C>
28.0% 4.94% 4.60%
31.0% 5.16% 4.80%
36.0% 5.56% 5.17%
39.6% 5.89% 5.48%
</TABLE>
(++)Based on an SEC 30-day yield on 12/31/98 of 3.56% for the Institutional
Class and 3.31% for the Investment Class. SEC 30-day yield is computed based
on net income during the 30-day period ended December 31, 1998. 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 3.55% for Institutional Shares and 3.30% for Investment
Shares.
(+)The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
*The Fund's portfolio composition is subject to change.
24
<PAGE> 26
SHADOW BAR Portfolio Reviews
KENT TAX-FREE INCOME FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
---------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 3/20/95) (inception 3/31/95)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 5.71% 5.43%
Three Years 6.05% 5.74%
Life of Fund 7.07% 6.82%
</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 10000 10000
12/31/95 10860 10971
12/31/96 11290 11457
12/31/97 12261 12511
12/31/98 12957 13242
</TABLE>
<TABLE>
<CAPTION>
THE KENT TAX-FREE INCOME FUND THE LEHMAN BROTHERS MUNICIPAL
INVESTMENT CLASS SHARES BOND INDEX
----------------------------- -----------------------------
<S> <C> <C>
3/31/95 10000 10000
12/31/95 10834 10971
12/31/96 11217 11457
12/31/97 12150 12511
12/31/98 12809 13242
</TABLE>
The Fund's performance is being measured against the Lehman Brothers Municipal
Bond Index, which is an unmanaged index comprised of general obligation
municipal debt instruments. The index is unmanaged and does not reflect the
deduction of fees associated with a mutual fund, such as investment management
and fund accounting fees. The performance of the Fund does reflect the deduction
of fees for these value-added services.
Past performance is no guarantee of future results. 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
25
<PAGE> 27
Portfolio Reviews
KENT MICHIGAN MUNICIPAL BOND FUND+
by Michael Martin
Portfolio Manager
Municipal securities underperformed Treasury securities during the 12 months
ended December 31, 1998. The main reason was the tremendous amount of new issues
hitting the municipal market during the year. That supply met with lukewarm
demand by retail investors who comprise fully one third of the municipal market.
These investors continued to be attracted to the very high returns in the equity
markets compared to the relatively low level of yields available on municipal
securities.
The yield on the five-year AAA-rated general obligation municipal security
ended the year at 3.75%, down from 4.10% at the beginning of the year. That
35-basis point decline compares to a 117-basis point decline for a five-year
Treasury security. The ratio of the yield on a five-year AAA-rated municipal
security to the yield on a five-year Treasury security ended the year at 82.6%,
compared to 72% at the beginning of the period.
During the 12 months ending December 31, 1998, the Fund's Institutional and
Investor shares had total returns of 4.75% and 4.60%, respectively. That
compared to a 5.17% total return for the Lehman Brothers Three-Year General
Obligation Municipal Bond Index.
A Focus on Quality
The decline in municipal and Treasury yields last year partially reflected
concerns about potential weakness in the U.S. economy due to overseas economic
problems. Those concerns led the Federal Reserve to cut the federal funds rate
three times from September through November. Municipal securities underperformed
Treasury securities because worried investors favored issues backed by the
federal government and due to the very strong supply of new municipal issues
that came to market. In the state of Michigan, new issue volume rose almost 50%
compared to 1997.
KENT MICHIGAN MUNICIPAL FUND*
Distribution of Net Assets
as of December 31, 1998
Cash Equivalents & Net Other Assets & Liabilities 1.7%
Municipal Securities 98.3%
The average maturity of the portfolio ended the year at 4.10 years, up only
slightly from 4.06 years at the start of the period. During the year, we
increased the Fund's yield by purchasing issues such as Chippewa County War
Memorial Hospital bonds with a 4.60% coupon due in 2000. We also maintained the
Fund's high average credit rating of AA. Yields on lower quality bonds were not
attractive enough to compensate for the additional risk in those issues.*
Looking Ahead
We believe Michigan's economy should continue to benefit from solid economic
growth in 1999. We expect new supply to be strong -- but not as strong as it was
in 1998. In addition, the market should benefit from continued low inflation. We
will look for opportunities in a variety of sectors, but we believe that
education and transportation issues might be especially strong.
KENT MICHIGAN MUNICIPAL BOND FUND(+)
TAX EQUIVALENT YIELDS(++) AS OF DECEMBER 31, 1998
-----------------------------------------------------
<TABLE>
<CAPTION>
TAX BRACKET INSTITUTIONAL CLASS INVESTMENT CLASS
------------------------------------------------------------------------------
<S> <C> <C>
28.0% 5.17% 4.96%
31.0% 5.39% 5.17%
36.0% 5.81% 5.58%
39.6% 6.16% 5.91%
</TABLE>
++Based on an SEC 30-day yield on 12/31/98 of 3.72% for the Institutional
Class and 3.57% for the Investment Class, SEC 30-day yield is computed based
on net income during the 30-day period ended December 31, 1998. 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 3.71% for Institutional Shares and 3.51% for Investment
Shares.
(+)The Fund's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
*The Fund's portfolio composition is subject to change.
Regional investing may involve additional risks since investments are limited
to one geographical area.
26
<PAGE> 28
SHADOW BAR Portfolio Reviews
KENT MICHIGAN MUNICIPAL BOND FUND
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 1998
--------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTMENT CLASS
(inception 5/3/93) (inception 5/11/93)
<S> <C> <C>
--------------------------------------------------------------------------------------------
One Year 4.75% 4.60%
Three Years 4.59% 4.44%
Five Years 4.43% 4.27%
Life of Fund 4.46% 4.29%
</TABLE>
GROWTH OF $10,000 INVESTMENT COMPARISON
WITH THE LEHMAN BROTHERS THREE-YEAR GENERAL OBLIGATION MUNICIPAL BOND INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LEHMAN BROTHERS THREE-YEAR
THE KENT MICHIGAN MUNICIPAL BOND GENERAL OBLIGATION MUNICIPAL
FUND INSTITUTIONAL CLASS SHARES BOND INDEX
-------------------------------- ----------------------------
<S> <C> <C>
5/3/93 10000 10000
12/31/93 10300 10311
12/31/94 10340 10390
12/31/95 11190 11308
12/31/96 11580 11828
12/31/97 12222 12468
12/31/98 12802 13113
</TABLE>
<TABLE>
<CAPTION>
LEHMAN BROTHERS THREE-YEAR
THE KENT MICHIGAN MUNICIPAL BOND GENERAL OBLIGATION MUNICIPAL
FUND INVESTMENT CLASS SHARES BOND INDEX
-------------------------------- ----------------------------
<S> <C> <C>
5/11/93 10000 10000
12/31/93 10285 10311
12/31/94 10301 10390
12/31/95 11126 11308
12/31/96 11500 11828
12/31/97 12119 12468
12/31/98 12676 13113
</TABLE>
The Fund's performance is being measured against the Lehman Brothers Three-Year
General Obligation Municipal Bond Index, which is an unmanaged index comprised
of debt instruments issued by municipalities. The index is unmanaged and does
not reflect the deduction of fees associated with a mutual fund, such as
investment management and fund accounting fees. The performance of the Fund does
reflect the deduction of fees for these value-added services.
Past performance is no guarantee of future results. 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. Total return is based on changes
in net asset value, assuming reinvestment of all dividends and capital gain
distributions.
Certain fees were waived during the period. Had these waivers not been in
effect, total returns would have been lower.
27
<PAGE> 29
THE KENT GROWTH AND INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 1.8%
OIL -- U.S. INTEGRATED -- 1.8%
$15,795,000 Shell Oil Co., 5.00%, 1/4/99.... $ 15,788,419
------------
TOTAL COMMERCIAL PAPER.......... 15,788,419
------------
(Cost $15,788,419)
COMMON STOCKS -- 98.2%
ADVERTISING -- 0.1%
15,100 Interpublic Group Cos., Inc. ... 1,204,225
------------
AEROSPACE & DEFENSE -- 0.7%
87,800 Boeing Co. ..................... 2,864,475
20,400 Lockheed Martin Corp. .......... 1,728,900
30,300 Raytheon Co., Class B........... 1,613,475
------------
6,206,850
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.2%
24,900 Maytag Corp. ................... 1,550,025
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 0.2%
15,000 Dana Corp. ..................... 613,125
16,200 TRW, Inc. ...................... 910,238
------------
1,523,363
------------
AUTO/TRUCK -- REPLACEMENT EQUIPMENT -- 0.1%
16,650 Genuine Parts Co. .............. 556,734
------------
AUTOMOTIVE -- 1.3%
116,700 Ford Motor Co. ................. 6,848,832
66,100 General Motors Corp. ........... 4,730,281
------------
11,579,113
------------
BANKS -- MIDWEST -- 0.3%
24,400 Fifth Third Bancorp............. 1,740,025
20,300 Huntington Bancshares........... 610,269
------------
2,350,294
------------
BANKS -- MONEY CENTER -- 2.1%
174,064 BankAmerica Corp. .............. 10,465,598
8,600 Bankers Trust New York Corp. ... 734,763
84,900 Chase Manhattan Corp. .......... 6,027,900
16,100 J.P. Morgan & Co., Inc. ........ 1,691,506
------------
18,919,767
------------
BANKS -- NORTHEAST -- 0.2%
23,500 State Street Corp. ............. 1,634,719
------------
BANKS -- MAJOR REGIONAL -- 4.8%
73,800 Bank of New York Co., Inc. ..... 2,970,450
124,346 Bank One Corp. ................. 6,349,417
32,900 BankBoston Corp. ............... 1,281,044
13,700 Comerica, Inc. ................. 934,169
95,900 First Union Corp. .............. 5,831,919
50,300 Fleet Financial Group, Inc. .... 2,247,781
60,200 KeyCorp......................... 1,926,400
29,700 Mellon Bank Corp. .............. 2,041,875
29,200 National City Corp. ............ 2,117,000
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ---------- -------------------------------- ------------
<C> <S> <C>
COMMON STOCKS -- 98.2%
BANKS -- MAJOR REGIONAL -- (CONTINUED)
20,400 Northern Trust Corp. ........... $ 1,781,175
40,700 PNC Bank Corp. ................. 2,202,888
27,800 SunTrust Banks, Inc. ........... 2,126,700
67,000 U.S. Bancorp.................... 2,378,500
26,800 Wachovia Corp. ................. 2,343,325
160,000 Wells Fargo Co. ................ 6,389,999
------------
42,922,642
------------
BEVERAGES -- ALCOHOLIC -- 0.3%
45,200 Anheuser-Busch Co., Inc. ....... 2,966,250
------------
BEVERAGES -- SOFT DRINKS -- 2.4%
212,600 Coca-Cola Co. .................. 14,217,625
168,089 PepsiCo, Inc. .................. 6,881,143
------------
21,098,768
------------
BROADCASTING/CABLE -- 1.0%
28,500 Clear Channel Communications,
Inc.*........................... 1,553,250
33,700 Comcast Corp., Special
Class A......................... 1,977,769
57,700 MediaOne Group, Inc.*........... 2,711,900
55,800 Tele-Communications, Inc.,
Class A*........................ 3,086,437
------------
9,329,356
------------
BUILDING & CONSTRUCTION --
MISCELLANEOUS -- 0.2%
48,000 Masco Corp. .................... 1,380,000
------------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 0.1%
12,800 Centex Corp. ................... 576,800
16,800 Pulte Corp. .................... 467,250
------------
1,044,050
------------
BUILDING PRODUCTS -- RETAIL/WHOLESALE -- 1.1%
132,400 Home Depot, Inc. ............... 8,101,225
33,200 Lowe's Cos., Inc. .............. 1,699,425
------------
9,800,650
------------
BUILDING PRODUCTS -- WOOD -- 0.1%
18,400 Weyerhaeuser Co. ............... 934,950
------------
CHEMICALS -- DIVERSIFIED -- 1.3%
25,700 Dow Chemical Co. ............... 2,337,094
101,700 E.I. du Pont de Nemours &
Co. ............................ 5,396,456
21,700 Hercules, Inc. ................. 594,038
35,500 PPG Industries, Inc. ........... 2,067,875
22,800 Union Carbide Corp. ............ 969,000
------------
11,364,463
------------
CHEMICALS -- SPECIALTY -- 0.3%
24,600 Great Lakes Chemical Corp. ..... 984,000
26,400 Nalco Chemical Co. ............. 818,400
20,000 Sigma-Aldrich Corp. ............ 587,500
------------
2,389,900
------------
</TABLE>
Continued
28
<PAGE> 30
THE KENT GROWTH AND INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE -- 4.0%
58,000 Computer Associates
International, Inc. ............ $ 2,472,250
231,700 Microsoft Corp.*................ 32,133,893
21,000 Oracle Corp.*................... 905,625
------------
35,511,768
------------
COMPUTERS -- LOCAL AREA NETWORK -- 1.7%
159,275 Cisco Systems, Inc.*............ 14,782,711
------------
COMPUTERS -- MAINFRAME -- 2.0%
96,000 IBM Corp. ...................... 17,736,000
------------
COMPUTERS -- MEMORY DEVICES -- 0.4%
33,000 EMC Corp.*...................... 2,805,000
30,000 Seagate Technology, Inc.*....... 907,500
------------
3,712,500
------------
COMPUTERS -- MICRO -- 1.7%
154,874 Compaq Computer Corp. .......... 6,495,028
113,800 Dell Computer Corp.*............ 8,328,738
------------
14,823,766
------------
COMPUTERS -- MINI -- 1.2%
109,340 Hewlett-Packard Co. ............ 7,469,289
34,600 Sun Microsystems, Inc.*......... 2,962,625
------------
10,431,914
------------
COMPUTERS -- SERVICES -- 0.7%
52,870 Automatic Data Processing,
Inc. ........................... 4,239,513
14,700 Computer Sciences Corp. ........ 947,231
40,800 First Data Corp. ............... 1,292,850
------------
6,479,594
------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.8%
13,000 American Greetings Corp.,
Class A......................... 533,813
28,800 Newell Co. ..................... 1,188,000
60,900 Unilever NV, ADR................ 5,050,893
------------
6,772,706
------------
CONTAINERS & PACKAGING -- 0.1%
19,700 Owens-Illinois, Inc.*........... 603,313
------------
COSMETICS & TOILETRIES -- 0.9%
106,712 Gillette Co. ................... 5,155,524
52,400 Kimberly-Clark Corp. ........... 2,855,800
------------
8,011,324
------------
DIVERSIFIED -- 4.9%
52,300 Allied Signal, Inc. ............ 2,317,544
308,000 General Electric Co............. 31,435,249
23,000 Johnson Controls, Inc. ......... 1,357,000
35,200 Minnesota Mining & Manufacturing
Co. ............................ 2,503,599
44,900 Seagram Co., Ltd. .............. 1,706,200
23,900 Tenneco, Inc. .................. 814,094
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED (CONTINUED)
22,500 Textron, Inc. .................. $ 1,708,594
22,300 United Technologies Corp. ...... 2,425,125
------------
44,267,405
------------
ELECTRICAL COMPONENTS -- SEMICONDUCTORS --
2.7%
40,100 Applied Materials, Inc.*........ 1,711,769
144,700 Intel Corp. .................... 17,155,993
18,700 Micron Technology, Inc.*........ 945,519
29,100 Rockwell International Corp. ... 1,413,169
37,500 Texas Instruments, Inc. ........ 3,208,593
------------
24,435,043
------------
ELECTRONIC -- CONNECTORS -- 0.0%
8,700 Thomas & Betts Corp. ........... 376,819
------------
FINANCE -- 0.6%
61,114 Associates First Capital Corp.,
Class A......................... 2,589,706
63,216 Washington Mutual, Inc. ........ 2,414,061
------------
5,003,767
------------
FINANCIAL -- CONSUMER LOANS -- 0.2%
45,300 Household International,
Inc. ........................... 1,795,013
------------
FINANCIAL -- INVESTMENT BANKERS -- 0.3%
37,200 Merrill Lynch & Co., Inc. ...... 2,483,100
------------
FINANCIAL -- MISCELLANEOUS SERVICES -- 1.0%
45,200 American Express Co. ........... 4,621,700
66,000 Morgan Stanley, Dean Witter &
Co. ............................ 4,686,000
------------
9,307,700
------------
FINANCIAL -- MORTGAGE &
RELATED SERVICES -- 1.3%
99,200 Fannie Mae...................... 7,340,800
62,300 Freddie Mac..................... 4,014,456
------------
11,355,256
------------
FINANCIAL SERVICES -- DIVERSIFIED -- 1.2%
217,650 Citigroup, Inc. ................ 10,773,675
------------
FOOD -- CANNED -- 0.6%
46,700 Campbell Soup Co. .............. 2,568,500
44,991 H.J. Heinz Co. ................. 2,547,615
------------
5,116,115
------------
FOOD -- CONFECTIONARY -- 0.1%
13,400 Hershey Foods Corp. ............ 833,313
------------
FOOD -- DIVERSIFIED -- 1.2%
26,300 Bestfoods....................... 1,400,475
45,600 ConAgra, Inc. .................. 1,436,400
22,700 General Mills, Inc. ............ 1,764,925
37,300 Kellogg Co. .................... 1,272,863
19,800 Quaker Oats Co. ................ 1,178,100
</TABLE>
Continued
29
<PAGE> 31
THE KENT GROWTH AND INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FOOD -- DIVERSIFIED (CONTINUED)
30,500 Ralston Purina Group............ $ 987,438
90,000 Sara Lee Corp. ................. 2,536,874
------------
10,577,075
------------
FOOD -- FLOUR & GRAIN -- 0.1%
55,960 Archer-Daniels-Midland Co. ..... 961,813
------------
FOOD ITEMS -- WHOLESALE -- 0.1%
47,000 Supervalu, Inc. ................ 1,316,000
------------
GAS & ELECTRIC UTILITY -- 0.4%
40,500 PG & E Corp. ................... 1,275,750
56,200 Public Service Enterprise Group,
Inc. ........................... 2,248,000
------------
3,523,750
------------
HOTELS & LODGING -- 0.2%
49,800 Marriott International, Inc.,
Class A......................... 1,444,200
------------
INSTRUMENTS -- CONTROL -- 0.2%
20,400 Honeywell, Inc. ................ 1,536,375
------------
INSTRUMENTS -- SCIENTIFIC -- 0.1%
22,700 EG&G, Inc. ..................... 631,344
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.1%
21,400 Aon Corp. ...................... 1,185,025
------------
INSURANCE -- BROKERS -- 0.2%
34,000 Marsh & McLennan Cos., Inc. .... 1,986,875
------------
INSURANCE -- LIFE -- 0.5%
32,000 American General Corp. ......... 2,496,000
19,300 Torchmark Corp. ................ 681,531
11,900 Transamerica Corp. ............. 1,374,450
------------
4,551,981
------------
INSURANCE -- MULTI-LINE -- 0.5%
14,500 Aetna, Inc. .................... 1,140,063
29,500 CIGNA Corp. .................... 2,280,719
12,500 MBIA, Inc. ..................... 819,531
------------
4,240,313
------------
INSURANCE -- PROPERTY & CASUALTY -- 1.8%
107,500 Allstate Corp. ................. 4,152,187
105,700 American International Group,
Inc. ........................... 10,213,262
15,700 Chubb Corp. .................... 1,018,538
23,400 Safeco Corp. ................... 1,004,738
------------
16,388,725
------------
LEISURE & RECREATION/GAMING -- 0.0%
11,300 Harrah's Entertainment, Inc.*... 177,269
16,800 Mirage Resorts*................. 250,950
------------
428,219
------------
MACHINERY & EQUIPMENT -- 0.1%
46,200 Milacron, Inc. ................. 889,350
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MACHINERY -- CONSTRUCTION/MINING -- 0.2%
35,400 Caterpillar, Inc. .............. $ 1,628,400
------------
MACHINERY -- ELECTRICAL -- 0.4%
41,000 Emerson Electric Co. ........... 2,480,500
20,800 W.W. Grainger, Inc. ............ 865,800
------------
3,346,300
------------
MACHINERY -- GENERAL INDUSTRIAL -- 0.3%
27,200 Cooper Industries, Inc. ........ 1,297,100
22,000 Illinois Tool Works, Inc. ...... 1,276,000
------------
2,573,100
------------
MEDIA CONGLOMERATES -- 1.4%
112,200 Time Warner, Inc. .............. 6,963,413
180,655 Walt Disney Co. ................ 5,419,650
------------
12,383,063
------------
MEDICAL -- BIOMEDICAL/GENETIC -- 0.3%
24,300 Amgen, Inc.*.................... 2,540,869
------------
MEDICAL -- DRUGS -- 9.5%
148,700 Abbott Laboratories............. 7,286,300
127,000 American Home Products Corp. ... 7,151,688
105,100 Bristol-Myers Squibb Co. ....... 14,063,694
98,400 Eli Lilly & Co. ................ 8,745,300
112,100 Merck & Co., Inc. .............. 16,555,768
123,310 Pfizer, Inc. ................... 15,467,697
45,600 Pharmacia & Upjohn, Inc. ....... 2,582,100
144,000 Schering-Plough Corp. .......... 7,956,000
84,800 Warner-Lambert Co. ............. 6,375,900
------------
86,184,447
------------
MEDICAL -- HEALTH MEDICAL ORGANIZATION -- 0.0%
21,200 Humana, Inc.*................... 377,625
------------
MEDICAL -- OUTPATIENT/HOME CARE -- 0.1%
71,200 HEALTHSOUTH Corp.*.............. 1,099,150
------------
MEDICAL -- WHOLESALE DRUG -- 0.2%
25,100 Cardinal Health, Inc. .......... 1,904,463
------------
MEDICAL INSTRUMENTS -- 0.1%
18,700 Biomet, Inc. ................... 752,675
------------
MEDICAL PRODUCTS -- 0.4%
26,500 Baxter International, Inc. ..... 1,704,281
20,700 Guidant Corp. .................. 2,282,175
------------
3,986,456
------------
MEDICAL/DENTAL SUPPLIES -- 1.5%
32,500 Becton, Dickinson & Co. ........ 1,387,344
24,600 C.R. Bard, Inc. ................ 1,217,700
125,720 Johnson & Johnson............... 10,544,765
------------
13,149,809
------------
</TABLE>
Continued
30
<PAGE> 32
THE KENT GROWTH AND INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
METAL -- GOLD -- 0.2%
57,500 Barrick Gold Corp. ............. $ 1,121,250
30,500 Homestake Mining Co. ........... 280,219
------------
1,401,469
------------
METAL -- MISCELLANEOUS -- 0.0%
37,000 Cyprus Amax Minerals Co. ....... 370,000
------------
METAL -- NON-FERROUS -- 0.4%
22,700 Aluminum Co. of America......... 1,692,569
29,600 Freeport-McMoran Copper & Gold,
Inc., Class B................... 308,950
23,900 Reynolds Metals Co. ............ 1,259,231
------------
3,260,750
------------
OFFICE AUTOMATION & EQUIPMENT -- 0.7%
40,000 Pitney Bowes, Inc. ............. 2,642,500
29,400 Xerox Corp. .................... 3,469,200
------------
6,111,700
------------
OIL -- FIELD SERVICES -- 0.2%
51,200 Halliburton Co. ................ 1,516,800
------------
OIL -- INTERNATIONAL INTEGRATED -- 4.5%
66,000 Chevron Corp. .................. 5,473,875
231,700 Exxon Corp. .................... 16,943,062
73,800 Mobil Corp. .................... 6,429,825
184,200 Royal Dutch Petroleum Co., ADR.. 8,818,575
47,000 Texaco, Inc. ................... 2,485,125
------------
40,150,462
------------
OIL -- PRODUCTION/PIPELINE -- 0.3%
14,050 Columbia Gas System, Inc. ...... 811,388
30,000 Enron Corp. .................... 1,711,875
------------
2,523,263
------------
OIL -- U.S. INTEGRATED -- 1.3%
82,400 Amoco Corp. .................... 4,861,600
45,300 Atlantic Richfield Co. ......... 2,955,825
34,400 Phillips Petroleum Co. ......... 1,466,300
38,300 Unocal Corp. ................... 1,117,881
49,300 USX-Marathon Group.............. 1,485,163
------------
11,886,769
------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.1%
34,500 Baker Hughes, Inc. ............. 610,219
------------
OIL REFINING -- 0.3%
21,600 Ashland, Inc. .................. 1,044,900
34,100 Sunoco, Inc. ................... 1,229,731
------------
2,274,631
------------
PAPER & RELATED PRODUCTS -- 0.6%
28,500 Fort James Corp. ............... 1,140,000
39,400 International Paper Co. ........ 1,765,612
29,900 Mead Corp. ..................... 876,444
18,900 Union Camp Corp. ............... 1,275,750
------------
5,057,806
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PHOTOGRAPHY -- 0.2%
29,300 Eastman Kodak Co. .............. $ 2,109,600
------------
POLLUTION CONTROL -- 0.3%
48,600 Waste Management, Inc. ......... 2,265,975
------------
PROTECTION -- SAFETY -- 0.6%
72,800 Tyco International Ltd. ........ 5,491,850
------------
PUBLISHING -- BOOKS -- 0.2%
13,800 McGraw-Hill Cos., Inc. ......... 1,405,875
------------
PUBLISHING -- NEWSPAPERS -- 0.7%
8,900 Dow Jones & Co. ................ 428,313
36,600 Gannett, Inc. .................. 2,360,700
14,000 Knight-Ridder, Inc. ............ 715,750
19,900 New York Times Co., Class A..... 690,281
9,100 Times Mirror Co., Class A....... 509,600
17,700 Tribune Co. .................... 1,168,200
------------
5,872,844
------------
RESTAURANTS -- 0.6%
66,200 McDonald's Corp. ............... 5,072,575
------------
RETAIL -- APPAREL/SHOES -- 0.5%
59,100 Gap, Inc. ...................... 3,324,375
40,600 Limited, Inc. .................. 1,182,475
------------
4,506,850
------------
RETAIL -- DISCOUNT -- 2.9%
61,700 Dayton-Hudson Corp. ............ 3,347,225
43,200 Kmart Corp.*.................... 661,500
270,400 Wal-Mart Stores, Inc. (b)....... 22,020,699
------------
26,029,424
------------
RETAIL -- DRUG STORE -- 0.3%
51,778 Walgreen Co. ................... 3,032,249
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.5%
29,200 J.C. Penney, Inc. .............. 1,368,750
22,900 May Department Stores Co. ...... 1,382,588
37,100 Sears, Roebuck & Co. ........... 1,576,750
------------
4,328,088
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.1%
19,700 Federated Department Stores,
Inc.*........................... 858,181
------------
RETAIL -- SUPERMARKETS -- 0.3%
27,100 Albertson's, Inc. .............. 1,725,931
33,700 American Stores Co. ............ 1,244,794
------------
2,970,725
------------
RETAIL/WHOLESALE -- AUTO PARTS -- 0.1%
27,600 Auto Zone, Inc.*................ 909,075
------------
RUBBER -- TIRES -- 0.1%
16,800 Goodyear Tire & Rubber Co. ..... 847,350
------------
</TABLE>
Continued
31
<PAGE> 33
THE KENT GROWTH AND INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SOAP & CLEANING PREPARATIONS -- 1.6%
29,178 Colgate-Palmolive Co. .......... $ 2,709,907
127,300 Procter & Gamble Co. ........... 11,624,081
------------
14,333,988
------------
STEEL -- PRODUCERS -- 0.1%
16,800 Nucor Corp. .................... 726,600
13,800 USX-U.S. Steel Group............ 317,400
------------
1,044,000
------------
TELECOMMUNICATIONS -- CELLULAR -- 0.5%
59,100 Airtouch Communications,
Inc.*........................... 4,262,588
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 2.9%
26,600 General Instrument Corp.*....... 902,738
15,400 Harris Corp. ................... 564,025
144,804 Lucent Technologies, Inc. ...... 15,928,439
71,900 Motorola, Inc. ................. 4,390,393
57,625 Northern Telecom Ltd. .......... 2,888,453
21,100 Tellabs, Inc.*.................. 1,446,669
------------
26,120,717
------------
TEXTILE -- APPAREL -- 0.1%
19,200 VF Corp. ....................... 900,000
------------
TOBACCO -- 1.6%
252,800 Philip Morris Cos., Inc. ....... 13,524,800
28,200 U.S.T., Inc. ................... 983,475
------------
14,508,275
------------
TOOLS -- HAND HELD -- 0.0%
12,000 Snap-On, Inc. .................. 417,750
------------
TOYS/GAME/HOBBY -- 0.2%
22,400 Hasbro, Inc. ................... 809,200
25,000 Mattel, Inc. ................... 570,313
------------
1,379,513
------------
TRANSPORTATION -- AIR FREIGHT -- 0.1%
14,300 FDX Corp.*...................... 1,272,700
------------
TRANSPORTATION -- AIRLINE -- 0.3%
17,500 AMR Corp.*...................... 1,039,062
16,100 Delta Air Lines, Inc. .......... 837,200
45,300 Southwest Airlines Co. ......... 1,016,419
------------
2,892,681
------------
TRANSPORTATION -- EQUIPMENT & LEASING -- 0.0%
14,500 Ryder Systems, Inc. ............ 377,000
------------
TRANSPORTATION -- RAILROAD -- 0.4%
28,600 CSX Corp. ...................... 1,186,900
33,100 Norfolk Southern Corp. ......... 1,048,856
28,300 Union Pacific Corp. ............ 1,275,269
------------
3,511,025
------------
UTILITIES -- ELECTRIC POWER -- 2.0%
12,900 Ameren Corp. ................... 550,669
38,900 Baltimore Gas & Electric Co. ... 1,201,038
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- ELECTRIC POWER (CONTINUED)
47,200 Consolidated Edison, Inc. ...... $ 2,495,699
32,800 Detroit Edison Co. ............. 1,406,300
36,700 Dominion Resources, Inc. ....... 1,715,725
21,500 Entergy Corp. .................. 669,188
49,100 First Energy Corp. ............. 1,598,819
27,631 Florida Power & Light, Inc. .... 1,702,760
25,400 Houston Industries, Inc. ....... 815,975
38,500 Northern States Power Co. ...... 1,068,375
43,300 Peco Energy Corp. .............. 1,802,362
56,140 Southern Co. ................... 1,631,569
34,100 Texas Utilities Co. ............ 1,592,044
------------
18,250,523
------------
UTILITIES -- GAS DISTRIBUTION -- 0.1%
19,500 Eastern Enterprises............. 853,125
8,500 ONEOK, Inc. .................... 307,063
------------
1,160,188
------------
UTILITIES -- TELEPHONE -- 7.5%
108,798 Ameritech Corp. ................ 6,895,073
163,400 AT&T Corp. ..................... 12,295,849
155,800 Bell Atlantic Corp. ............ 8,257,400
191,000 BellSouth Corp. ................ 9,526,125
80,900 GTE Corp. ...................... 5,258,500
133,341 MCI Worldcom, Inc.*............. 9,567,216
177,000 SBC Communications, Inc. ....... 9,491,625
39,100 Sprint Corp. ................... 3,289,288
50,097 US West, Inc. .................. 3,237,519
------------
67,818,595
------------
TOTAL COMMON STOCKS............. 862,070,396
------------
(Cost $569,967,757)
TOTAL INVESTMENTS -- 100.0%................. 877,858,815
(Cost $585,756,176)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.0%....................... 427,017
------------
TOTAL NET ASSETS -- 100.0%.................. $878,285,832
============
</TABLE>
- ---------------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...............
$301,020,370
Unrealized depreciation...............
(9,093,759)
------------
Net unrealized appreciation...........
$291,926,611
============
</TABLE>
(b) Security has been deposited as initial margin on open futures contract
* Non-income producing security
ADR -- American Depositary Receipt
At December 31, 1998 the Fund's open future contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING FACE MARKET
CONTRACTS CONTRACT TYPE AMOUNT VALUE
- --------- ----------------- ----------- -----------
<S> <C> <C> <C>
49 Standard & Poor's $14,455,365 $15,257,375
500, 3/18/99
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 34
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 3.7%
ENERGY -- 1.9%
$15,126,000 Duke Energy, 5.25%, 1/4/99...... $ 15,119,382
------------
OIL & GAS -- 1.8%
14,023,000 Shell Oil Co., 5.00%, 1/4/99.... 14,017,157
------------
TOTAL COMMERCIAL PAPER.......... 29,136,539
------------
(Cost $29,136,539)
COMMON STOCKS -- 95.9%
ADVERTISING -- 1.0%
51,000 Catalina Market Corp.*.......... 3,487,125
54,600 Ha-Lo Industries, Inc.*......... 2,054,325
173,400 Sitel Corp.*.................... 422,663
68,200 True North Communications....... 1,832,875
------------
7,796,988
------------
AEROSPACE & DEFENSE -- 0.4%
20,400 Alliant Techsystems, Inc.*...... 1,681,725
54,800 Newport News Shipbuilding....... 1,832,375
------------
3,514,100
------------
AEROSPACE/DEFENSE EQUIPMENT -- 0.4%
43,150 AAR Corp. ...................... 1,030,207
42,800 Aviall, Inc.*................... 502,900
39,100 Banner Aerospace, Inc.*......... 369,006
3,600 Ducommun, Inc.*................. 49,725
23,800 Fairchild Corp., Class A*....... 374,850
57,800 Hexcel Corp.*................... 484,075
------------
2,810,763
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.1%
119,900 Fedders Corp. .................. 696,919
63,500 Royal Appliance Manufacturing
Co.*............................ 234,156
------------
931,075
------------
AUDIO/VIDEO PRODUCTION -- 0.2%
50,280 Harman International Industries,
Inc. ........................... 1,916,925
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 1.0%
46,800 Arvin Industries, Inc. ......... 1,950,974
49,100 Breed Technologies, Inc.*....... 402,006
56,500 Detroit Diesel Corp.*........... 1,168,844
3,100 Excel Industries, Inc. ......... 54,250
37,500 Miller Industries, Inc.*........ 168,750
27,700 Standard Products Co. .......... 564,388
23,000 Superior Industries
International................... 639,688
64,975 Titan International, Inc. ...... 617,263
79,100 Tower Automotive, Inc.*......... 1,972,555
5,800 Wabash National Corp. .......... 117,813
------------
7,656,531
------------
AUTO/TRUCK -- REPLACEMENT EQUIPMENT -- 0.3%
16,200 Exide Corp. .................... 263,250
38,000 Standard Motor Products,
Inc.*........................... 921,500
46,837 Wynn's International, Inc. ..... 1,036,269
------------
2,221,019
------------
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ---------- -------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BANKS -- CENTRAL US -- 1.2%
175,000 Community First Bankshares...... $ 3,685,937
80,700 MAF Bancorp, Inc. .............. 2,138,550
75,000 Republic Bancorp................ 1,021,875
82,500 St. Paul Bancorp, Inc. ......... 2,245,547
------------
9,091,909
------------
BANKS -- EAST -- 0.8%
27,000 Community Bank System, Inc. .... 791,438
114,000 Roslyn Bancorp, Inc. ........... 2,451,000
122,000 UST Corp. ...................... 2,874,625
------------
6,117,063
------------
BANKS -- MIDWEST -- 0.6%
71,900 First Midwest Bancgroup,
Inc. ........................... 2,736,693
81,000 Irwin Financial Corp. .......... 2,202,188
------------
4,938,881
------------
BANKS -- NORTHEAST -- 1.2%
73,606 Commerce Bancorp, Inc. ......... 3,864,315
79,200 First Commonwealth Financial.... 1,940,400
79,573 Hubco, Inc. .................... 2,397,137
52,200 Independent Bank Corp. ......... 906,975
25,300 Sterling Bancorp................ 577,156
------------
9,685,983
------------
BANKS -- SOUTH -- 0.7%
111,300 Firstbank Corp. ................ 3,359,868
91,500 Republic Security Financial
Corp. .......................... 1,109,438
77,100 Triangle Bancorp, Inc. ......... 1,219,144
------------
5,688,450
------------
BANKS -- SOUTHEAST -- 0.6%
159,800 BancorpSouth, Inc. ............. 2,886,388
72,800 F & M National Corp. ........... 2,179,450
------------
5,065,838
------------
BANKS -- SOUTHWEST -- 0.1%
46,800 Texas Regional Bancshares....... 1,172,925
------------
BANKS -- WEST -- 0.6%
33,326 First Republic Bancorp, Inc.*... 835,233
140,000 Imperial Bancorp................ 2,327,500
72,500 Silicon Valley Bankshares....... 1,234,766
------------
4,397,499
------------
BEVERAGES -- ALCOHOLIC -- 0.0%
31,000 Boston Beer Company, Inc. --
Class A*........................ 263,500
------------
BEVERAGES -- SOFT DRINKS -- 0.0%
2,145 Buenos Aires Embotella
Doro -- ADR*.................... 0
8,000 Pepsi-Cola Puerto Rico Bottling
Co.*............................ 41,500
------------
BROADCASTING/CABLE -- 0.0%
48,300 Spelling Entertainment Group*... 362,250
------------
</TABLE>
Continued
33
<PAGE> 35
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUILDING -- 0.5%
35,400 Calmat Co. ..................... $ 1,092,975
37,400 Centex Construction Products,
Inc. ........................... 1,519,375
35,400 Lone Star Industries, Inc....... 1,303,163
------------
3,915,513
------------
BUILDING & CONSTRUCTION -- MISCELLANEOUS
-- 0.4%
2,200 Butler Manufacturing Co. ....... 49,225
70,900 Dal-Tile International, Inc.*... 735,588
1,700 Dayton Superior Corp.*.......... 32,725
37,050 Elcor Corp. .................... 1,197,178
27,800 Nortek, Inc.*................... 767,975
33,760 Republic Gypsum Co. ............ 677,310
4,400 Willbros Group, Inc.*........... 24,475
------------
3,484,476
------------
BUILDING -- HEAVY CONSTRUCTION -- 0.3%
15,600 Dycom Industries, Inc.*......... 891,150
42,700 Granite Construction, Inc. ..... 1,433,119
------------
2,324,269
------------
BUILDING -- MAINTENANCE & SERVICE -- 0.3%
48,800 ABM Industries, Inc. ........... 1,689,700
52,500 Rollins, Inc. .................. 918,750
4,100 Service Experts, Inc.*.......... 119,925
------------
2,728,375
------------
BUILDING -- MOBILE/MANUFACTURING &
RECREATIONAL VEHICLES -- 0.2%
30,500 Cavalier Homes, Inc. ........... 346,938
25,100 Coachmen Industries, Inc. ...... 658,874
38,300 Winnebago Industries, Inc. ..... 579,288
------------
1,585,100
------------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 1.1%
10,000 Beazer Homes USA, Inc.*......... 250,000
53,400 D. R. Horton, Inc. ............. 1,228,199
63,200 Kaufman & Broad Home Corp. ..... 1,816,999
22,600 M/I Schottenstein Homes,
Inc. ........................... 497,200
24,900 MDC Holdings, Inc. ............. 532,238
35,400 Pulte Corp. .................... 984,563
21,800 Ryland Group, Inc. ............. 629,475
59,500 Standard-Pacific Corp. ......... 840,438
53,300 Toll Brothers, Inc.*............ 1,202,581
18,300 U.S. Home Corp.*................ 608,475
------------
8,590,168
------------
BUILDING PRODUCTS -- AIR CONDITIONING/HEAT --
0.1%
47,962 Watsco, Inc. ................... 803,364
------------
BUILDING PRODUCTS -- LIGHTING/FIXTURES -- 0.1%
23,000 Thomas Industries, Inc. ........ 451,375
------------
BUILDING PRODUCTS -- RETAIL/WHOLESALE -- 0.3%
86,400 HomeBase, Inc.*................. 550,800
59,900 Hughes Supply, Inc. ............ 1,752,075
------------
2,302,875
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUSINESS INFORMATION -- 0.3%
75,900 Primark Corp.*.................. $ 2,058,788
------------
BUSINESS SERVICES -- 1.3%
67,000 ADVO, Inc.*..................... 1,767,125
54,600 Budget Group, Inc. --
Class A*........................ 866,775
38,300 Fair Issac & Co., Inc. ......... 1,768,981
69,300 Franklin Covey Co.*............. 1,160,775
45,200 Healthplan Services Corp. ...... 519,800
136,100 Interim Services, Inc.*......... 3,181,337
------------
9,264,793
------------
CHEMICALS -- DIVERSIFIED -- 0.1%
47,800 ChemFirst, Inc. ................ 944,050
------------
CHEMICALS -- PLASTIC -- 0.4%
62,600 Borden Chemicals & Plastics
LP.............................. 293,438
50,100 Geon Co. ....................... 1,152,300
61,700 Spartech Corp. ................. 1,357,399
66,600 Wellman, Inc. .................. 678,488
------------
3,481,625
------------
CHEMICALS -- SPECIALTY -- 1.2%
41,100 Bush Boake Allen, Inc.*......... 1,448,774
45,800 General Chemical Group, Inc. ... 635,475
97,100 Lawter International, Inc. ..... 1,128,788
30,400 LeaRonal, Inc. ................. 1,029,800
53,000 Lilly Industries, Inc. ......... 1,056,688
44,300 Material Sciences Corp.*........ 376,550
24,000 McWhorter Technologies, Inc.*... 549,000
111,400 NL Industries, Inc. ............ 1,580,487
47,300 OM Group, Inc. ................. 1,726,449
5,000 TETRA Technologies, Inc.*....... 54,688
------------
9,586,699
------------
COMMERCIAL SERVICES -- 1.3%
40,400 CDI Corp.*...................... 815,575
27,800 InaCom Corp.*................... 413,525
40,100 Maximus, Inc.*.................. 1,483,700
28,500 Metamor Worldwide, Inc. ........ 712,500
143,400 National Processing, Inc.*...... 788,700
72,700 Norrell Corp. .................. 1,072,325
107,200 NOVA Corp.*..................... 3,718,499
60,000 Personnel Group of America,
Inc.*........................... 1,050,000
------------
10,054,824
------------
COMPUTER HARDWARE MANUFACTURING -- 0.1%
33,100 Sequent Computer*............... 399,269
------------
COMPUTER SOFTWARE -- 2.0%
30,800 Ardent Software, Inc.*.......... 708,400
20,700 Documentum, Inc. ............... 1,106,156
60,000 Excalibur Technologies Corp.*... 367,500
25,600 Hyperion Solutions Corp. ....... 460,800
105,100 Infoseek Corp. ................. 5,189,312
50,300 MacNeal-Schwendler Corp.*....... 352,100
141,208 Midway Games, Inc.*............. 1,553,288
82,700 Platinum Software, Inc.*........ 1,059,594
12,800 Progress Software Corp. ........ 432,000
</TABLE>
Continued
34
<PAGE> 36
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE (CONTINUED)
36,600 Project Software & Development,
Inc.*........................... $ 1,226,100
42,650 Rainbow Technologies, Inc.*..... 802,353
61,300 Sybase, Inc.*................... 454,003
159,200 Vanstar Corp.*.................. 1,472,600
------------
15,184,206
------------
COMPUTERS -- INTEGRATED SYSTEMS -- 0.8%
122,000 Cerner Corp.*................... 3,263,500
58,900 MICROS Systems, Inc.*........... 1,936,338
51,500 Systems & Computer Technology
Corp. .......................... 708,125
------------
5,907,963
------------
COMPUTERS -- LOCAL AREA NETWORK -- 0.5%
175,700 Anixter International, Inc.*.... 3,568,906
------------
COMPUTERS -- MEMORY DEVICES -- 1.0%
92,011 Applied Magnetics Corp.*........ 569,318
72,700 Hutchinson Technology, Inc.*.... 2,589,938
298,100 Western Digital Corp. .......... 4,490,130
------------
7,649,386
------------
COMPUTERS -- MICRO -- 0.3%
150,300 Data General Corp.*............. 2,470,556
------------
COMPUTERS -- OPTICAL RECOGNITION -- 0.1%
78,800 BancTec, Inc.*.................. 989,925
------------
COMPUTERS -- PERIPHERAL EQUIPMENT -- 0.4%
46,700 Analogic Corp. ................. 1,757,088
78,600 Mylex Corp.*.................... 943,200
30,800 Printronix, Inc.*............... 442,750
------------
3,143,038
------------
COMPUTERS -- SERVICES -- 2.1%
82,700 Analysts International Corp. ... 1,591,975
60,400 BA Merchant Services, Inc.*..... 1,215,550
83,800 Bell & Howell Co.*.............. 3,168,687
33,000 Computer Horizons Corp.*........ 878,625
66,500 Computer Task Group, Inc. ...... 1,803,813
67,600 DBT Online, Inc.*............... 1,685,775
40,100 Factset Research Systems*....... 2,476,175
148,800 PSINet, Inc.*................... 3,106,199
------------
15,926,799
------------
COMPUTERS -- NETWORKING PRODUCTS -- 0.1%
29,500 Visual Networks, Inc. .......... 1,106,250
------------
CONSTRUCTION -- 0.1%
84,200 Morrison Knudsen Corp.*......... 820,950
------------
CONSUMER NON-DURABLE -- 0.2%
107,900 Wolverine World Wide, Inc. ..... 1,429,675
------------
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.8%
61,200 Department 56, Inc.*............ 2,298,825
67,500 Jenny Craig, Inc.*.............. 405,000
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- MISCELLANEOUS (CONTINUED)
105,700 Jostens, Inc. .................. $ 2,768,019
46,950 Oneida, Ltd. ................... 695,447
------------
6,167,291
------------
CONTAINERS -- METAL & GLASS -- 0.1%
17,900 BWAY Corp.*..................... 269,619
37,400 United States Can Corp.*........ 668,525
------------
938,144
------------
CONTAINERS -- PAPER & PLASTIC -- 0.3%
58,700 ACX Technologies, Inc.*......... 777,775
110,700 Longview Fibre Co. ............. 1,279,969
------------
2,057,744
------------
COSMETICS & TOILETRIES -- 0.3%
128,300 Playtex Products, Inc.*......... 2,060,819
39,400 Windmere-Durable Holding,
Inc.*........................... 305,350
------------
2,366,169
------------
DATA PROCESSING & REPRODUCTION -- 0.4%
39,600 Choicepoint, Inc.*.............. 2,554,200
105,700 Pegasystems, Inc.*.............. 439,316
------------
2,993,516
------------
DIVERSIFIED -- 1.4%
33,850 Allied Products Corp. .......... 213,678
17,700 Chemed Corp. ................... 592,950
38,400 Clarcor, Inc. .................. 768,000
65,400 Federal Signal Corp. ........... 1,790,324
60,800 Gencorp, Inc. .................. 1,516,199
41,700 Griffon Corp.*.................. 443,063
54,900 Imation Corp.*.................. 960,750
51,239 IT Group, Inc. ................. 570,034
23,350 Manitowoc Co., Inc. ............ 1,036,156
45,900 MascoTech, Inc. ................ 786,038
31,500 Standex International Corp. .... 826,875
84,300 Triarc Cos., Inc.*.............. 1,348,800
------------
10,852,867
------------
ELECTRICAL & ELECTRONIC -- 0.2%
40,400 Sigcorp, Inc. .................. 1,441,775
47,000 VLSI Technology, Inc.*.......... 514,063
------------
1,955,838
------------
ELECTRICAL COMPONENTS -- SEMICONDUCTORS --
1.3%
328,300 Cypress Semiconductor Corp.*.... 2,728,993
136,700 General Semiconductor, Inc.*.... 1,119,231
40,100 Integrated Circuit Systems,
Inc.*........................... 706,763
189,500 International Rectifier
Corp.*.......................... 1,847,625
153,700 MEMC Electronic Materials,
Inc.*........................... 1,306,450
20,000 PMC-Sierra, Inc.*............... 1,262,500
87,100 Unitrode Corp.*................. 1,524,250
------------
10,495,812
------------
</TABLE>
Continued
35
<PAGE> 37
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRICAL EQUIPMENT -- 0.4%
46,500 C&D Technologies, Inc. ......... $ 1,278,750
27,100 United Illuminating Co. ........ 1,395,650
23,448 World Access, Inc.*............. 501,201
------------
3,175,601
------------
ELECTRONIC -- MANUFACTURING & MACHINERY --
0.6%
84,100 Kulicke & Soffa Industries,
Inc.*........................... 1,492,774
55,600 PRI Automation, Inc.*........... 1,445,600
57,500 SpeedFam International, Inc.*... 984,688
30,500 Watkins-Johnson Co. ............ 621,438
------------
4,544,500
------------
ELECTRONIC -- MILITARY -- 0.1%
29,800 ESCO Electronics Corp.*......... 270,063
36,100 United Industrial Corp. ........ 354,231
------------
624,294
------------
ELECTRONIC -- MISCELLANEOUS COMPONENTS -- 2.1%
102,100 BMC Industries, Inc. ........... 638,125
58,256 CTS Corp. ...................... 2,534,135
38,900 Hadco Corp.*.................... 1,361,500
53,500 Innovex, Inc. .................. 733,953
73,100 Littlefuse, Inc.*............... 1,407,175
66,200 Oak Industries, Inc.*........... 2,316,999
76,300 OEA, Inc. ...................... 901,294
41,900 Park Electrochemical Corp. ..... 1,199,388
88,200 Photronics Corp.*............... 2,114,044
54,400 Plexus Corp.*................... 1,842,800
28,800 RadiSys Corp.*.................. 864,000
------------
15,913,413
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 0.6%
88,600 Artesyn Technologies, Inc.*..... 1,240,400
64,300 Cable Design Technologies*...... 1,189,550
59,800 Technitrol, Inc. ............... 1,906,125
10,600 Triumph Group, Inc.*............ 339,200
------------
4,675,275
------------
ELECTRONIC MEASURING EQUIPMENT -- 0.7%
169,500 Tektronix, Inc. ................ 5,095,594
------------
ELECTRONIC MEASURING MACHINES -- 0.2%
99,100 Genrad, Inc.*................... 1,560,825
------------
ELECTRONIC PARTS -- DISTRIBUTION -- 0.4%
34,918 Bell Industries, Inc.*.......... 397,192
103,000 Kent Electronics Corp.*......... 1,313,250
61,800 Marshall Industries*............ 1,514,100
------------
3,224,542
------------
ELECTRONIC PRODUCTS -- MISCELLANEOUS -- 1.1%
48,300 Aeroflex, Inc.*................. 730,538
100,300 Allen Telecom, Inc.*............ 670,756
27,300 American Precision
Industries*..................... 281,531
122,700 Ametek, Inc. ................... 2,737,743
61,500 Integrated Process Equipment*... 661,125
36,200 Kollmorgen Corp. ............... 552,050
40,500 Kopin Corp.*.................... 850,500
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC PRODUCTS -- MISCELLANEOUS
(CONTINUED)
115,200 MagneTek, Inc.*................. $ 1,332,000
42,100 Recoton Corp.*.................. 755,169
------------
8,571,412
------------
ENGINEERING -- 0.3%
40,100 Jacobs Engineering Group,
Inc.*........................... 1,634,075
33,200 Stone & Webster, Inc. .......... 1,103,900
------------
2,737,975
------------
ENGINEERING -- RESEARCH & DEVELOPMENT
SERVICES -- 0.1%
19,490 URS Corp.*...................... 455,579
------------
ENTERTAINMENT -- 0.3%
60,500 Acclaim Entertainment........... 741,125
25,900 Marvel Enterprises, Inc. ....... 160,256
9,700 Scientific Games Holdings
Corp.*.......................... 183,088
71,900 Vail Resorts, Inc.*............. 1,581,800
------------
2,666,269
------------
FERTILIZERS -- 0.5%
59,536 Mississippi Chemical Corp. ..... 833,504
160,500 Terra Industries, Inc. ......... 993,094
38,500 Terra Nitrogen Company LP....... 397,031
39,900 The Scotts Company*............. 1,533,656
------------
3,757,285
------------
FINANCIAL -- CONSUMER LOANS -- 0.6%
209,200 AmeriCredit Corp.*.............. 2,889,574
136,500 Arcadia Financial Ltd.*......... 494,813
35,900 Student Loan Corp. ............. 1,611,013
------------
4,995,400
------------
FINANCIAL -- INVESTMENT BANKER/BROKER -- 3.1%
31,400 Advest Group, Inc. ............. 580,900
104,000 Ameritrade Holding Corp. --
Class A*........................ 3,276,000
44,250 Dain Rauscher Corp. ............ 1,305,375
124,000 E*Trade Group, Inc.*............ 5,800,874
122,700 Everen Capital Corp. ........... 2,791,425
87,700 Hambrecht & Quist Group*........ 1,989,694
22,000 Interstate/Johnson Lane,
Inc. ........................... 688,875
71,800 Jefferies Group, Inc. .......... 3,563,075
113,225 Morgan Keegan, Inc. ............ 2,130,045
39,500 National Discount Brokers
Group*.......................... 787,531
34,630 Southwest Securities Group,
Inc. ........................... 696,929
------------
23,610,723
------------
FINANCIAL -- INVESTMENT MANAGEMENT COS. --
0.3%
127,500 Eaton Vance Corp. .............. 2,661,563
------------
FINANCIAL -- LEASING COMPANY -- 0.3%
45,800 Cort Business Services Corp.*... 1,110,649
39,700 DVI, Inc.*...................... 719,563
53,400 Rental Service Corp.*........... 837,713
------------
2,667,925
------------
</TABLE>
Continued
36
<PAGE> 38
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL -- MORTGAGE & RELATED SERVICES --
0.2%
47,600 Triad Guaranty, Inc.*........... $ 1,050,175
115,700 United Cos. Financial Corp. .... 390,488
------------
1,440,663
------------
FINANCIAL -- SAVINGS & LOAN -- 0.6%
100,686 Downey Financial Corp. ......... 2,561,200
72,800 FirstFed Financial Corp.*....... 1,301,300
93,873 Westcorp........................ 651,244
------------
4,513,744
------------
FINANCIAL SERVICES -- DIVERSIFIED -- 0.6%
34,600 Healthcare Financial
Partners*....................... 1,373,188
125,200 Paymentech, Inc.*............... 2,316,200
157,900 Phoenix Investment Partners..... 1,332,281
------------
5,021,669
------------
FOOD -- DIVERSIFIED -- 0.6%
18,900 Morrison Health Care, Inc. ..... 360,281
83,200 Ralcorp Holding, Inc.*.......... 1,518,400
73,500 Smucker (J.M.) Co. ............. 1,626,188
2,900 Tasty Baking Co. ............... 44,044
64,020 Zapata Corp. ................... 784,245
------------
4,333,158
------------
FOOD -- FLOUR & GRAIN -- 0.2%
50,600 International Multi-Foods
Corp. .......................... 1,306,113
------------
FOOD -- MEAT PRODUCTS -- 0.2%
77,500 Pilgrim's Pride Corp. .......... 1,545,156
------------
FOOD ITEMS -- WHOLESALE -- 0.1%
42,500 Fleming Co., Inc. .............. 440,938
------------
FOREST PRODUCTS -- 0.0%
3,700 Deltic Timber Corp. ............ 75,388
------------
FUNERAL SERVICES -- 0.2%
52,100 Equity Corp. International*..... 1,383,906
------------
FURNITURE -- 0.2%
40,387 Bush Industries, Inc. .......... 502,313
3,900 Falcon Products, Inc. .......... 46,800
47,700 O'Sullivan Industries*.......... 500,850
24,900 Shelby Williams Industries,
Inc. ........................... 298,800
------------
1,348,763
------------
GLASS PRODUCTS -- 0.1%
36,200 Libbey, Inc. ................... 1,047,538
------------
HAZARDOUS WASTE DISPOSAL -- 0.1%
62,500 Safety-Kleen Corp. ............. 882,813
------------
HEALTH CARE -- 0.4%
122,600 IDEXX Laboratories, Inc.*....... 3,298,706
------------
HOTELS & LODGING -- 0.5%
54,450 Marcus Corp. ................... 884,813
127,500 Prime Hospitality Corp.*........ 1,346,719
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HOTELS & LODGING (CONTINUED)
79,900 Red Roof Inns, Inc.*............ $ 1,348,312
35,500 Sunburst Hospitality Corp.*..... 150,875
------------
3,730,719
------------
INDUSTRIAL -- AUTOMOTIVE/ROBOTICS -- 0.4%
63,700 Esterline Technologies Corp.*... 1,385,475
86,700 Gerber Scientific, Inc. ........ 2,064,544
------------
3,450,019
------------
INSTRUMENTS -- CONTROL -- 0.5%
115,200 Roper Industries, Inc. ......... 2,347,200
100,500 Watts Industries, Inc. --
Class A......................... 1,670,813
------------
4,018,013
------------
INSTRUMENTS -- SCIENTIFIC -- 0.9%
86,200 Dionex Corp.*................... 3,157,075
151,700 EG&G, Inc. ..................... 4,219,155
------------
7,376,230
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.5%
83,800 Arm Financial Group, Inc. --
Class A......................... 1,859,313
26,900 Penn Treaty American Corp.*..... 724,619
42,137 RLI Corp. ...................... 1,401,055
------------
3,984,987
------------
INSURANCE -- BROKERS -- 0.7%
59,100 Arthur J. Gallagher & Co. ...... 2,607,787
46,600 Blanch (E.W.) Holdings, Inc. ... 2,210,588
47,200 Hilb, Rogal & Hamilton Co. ..... 938,100
------------
5,756,475
------------
INSURANCE -- LIFE -- 1.2%
113,800 American Heritage Life
Investment Corp. ............... 2,780,987
53,000 American Medical Security
Group, Inc. .................... 758,563
65,054 Amerus Life Holdings, Inc. ..... 1,455,582
68,584 Delphi Financial Group*......... 3,596,373
74,500 Life USA Holding, Inc. ......... 959,188
------------
9,550,693
------------
INSURANCE -- MULTI-LINE -- 0.9%
126,000 Enhance Financial Services
Group, Inc. .................... 3,780,000
119,800 FBL Financial Group, Inc. --
Class A......................... 2,905,150
------------
6,685,150
------------
INSURANCE -- PROPERTY & CASUALTY -- 3.9%
54,900 Acceptance Insurance Cos.*...... 1,111,725
104,600 Capital Re Corp. ............... 2,098,537
42,600 Centris Group, Inc. ............ 415,350
34,400 Chartwell Re Corp. ............. 817,000
37,900 Executive Risk, Inc. ........... 2,082,131
60,279 Fidelity National Financial,
Inc. ........................... 1,838,506
60,000 First American Financial
Corp. .......................... 1,927,500
98,500 Foremost Corporation of
America......................... 2,068,500
</TABLE>
Continued
37
<PAGE> 39
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INSURANCE -- PROPERTY & CASUALTY (CONTINUED)
32,300 FPIC Insurance Group, Inc.*..... $ 1,544,344
105,618 Frontier Insurance Group,
Inc. ........................... 1,359,832
76,400 Gainsco, Inc. .................. 467,950
9,500 Gryphon Holdings, Inc.*......... 176,938
133,700 HCC Insurance Holdings, Inc. ... 2,356,462
52,400 Highlands Insurance Group*...... 684,475
86,800 LaSalle Re Holdings Ltd......... 1,898,750
41,700 MMI Cos., Inc. ................. 698,475
65,900 NAC Re Corp. ................... 3,093,180
15,700 Penn-America Group, Inc. ....... 142,281
43,700 Philadelphia Consolidated
Holding Corp.*.................. 988,713
49,300 PXRE Corp. ..................... 1,235,581
45,900 SCPIE Holdings, Inc. ........... 1,391,344
63,700 Zenith National Insurance
Co. ............................ 1,473,063
------------
29,870,637
------------
LASERS -- SYSTEMS/COMPONENTS -- 0.9%
83,900 Coherent, Inc.*................. 1,043,506
36,900 Electro Scientific Industries,
Inc.*........................... 1,672,031
52,400 VISX, Inc.*..................... 4,581,726
------------
7,297,263
------------
LEISURE & RECREATION PRODUCTS -- 0.9%
38,000 Huffy Corp. .................... 627,000
42,530 K2, Inc. ....................... 438,591
197,600 Oakley, Inc.*................... 1,877,200
71,600 Polaris Industries, Inc. ....... 2,805,825
21,900 Steinway Musical Instruments*... 569,400
76,400 Sturm, Ruger & Co., Inc. ....... 912,025
------------
7,230,041
------------
LEISURE & RECREATION SERVICES -- 0.1%
32,100 Carmike Cinemas, Inc.*.......... 652,031
------------
LEISURE & RECREATION/GAMING -- 0.7%
104,400 Aztar Corp.*.................... 528,525
173,400 Boyd Gaming Corp.*.............. 574,388
101,550 Grand Casinos, Inc.*............ 818,747
27,900 Harveys Casino Resorts.......... 772,481
44,900 Hollywood Park, Inc.*........... 373,231
25,300 Jackpot Enterprises, Inc.*...... 238,769
58,100 Rio Hotel & Casino, Inc.*....... 922,337
96,300 Station Casinos, Inc.*.......... 788,456
57,300 WMS Industries, Inc.*........... 422,588
------------
5,439,522
------------
LINEN SUPPLY & RELATED -- 0.1%
26,000 Angelica Corp. ................. 484,250
27,900 Unifirst Corp. ................. 636,469
------------
1,120,719
------------
MACHINE TOOLS & RELATED PRODUCTS -- 0.5%
87,145 Applied Power, Inc. ............ 3,289,724
23,600 Brown & Sharpe
Manufacturing Co.*.............. 188,800
20,400 Gleason Corp. .................. 369,750
------------
3,848,274
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MACHINERY -- CONSTRUCTION/MINING -- 0.4%
40,400 CMI Corp., Class A.............. $ 320,675
35,150 Commercial Intertech Corp. ..... 454,753
92,500 JLG Industries, Inc. ........... 1,445,312
40,600 Terex Corp.*.................... 1,159,638
------------
3,380,378
------------
MACHINERY -- DIVERSIFIED -- 0.1%
22,500 Cascade Corp. .................. 355,781
3,800 Gardner Denver Machinery,
Inc.*........................... 56,050
------------
411,831
------------
MACHINERY -- ELECTRICAL -- 0.5%
76,000 Baldor Electric Co. ............ 1,539,000
31,657 Kuhlman Corp. .................. 1,199,009
57,900 Smith (A.O.) Corp. ............. 1,422,169
------------
4,160,178
------------
MACHINERY -- GENERAL INDUSTRIAL -- 0.9%
66,830 Albany International Corp.,
Class A......................... 1,265,601
42,725 Applied Industrial
Technology, Inc. ............... 592,809
53,100 Chart Industries, Inc. ......... 404,888
52,900 Global Industrial Technologies,
Inc.*........................... 565,369
55,487 Graco, Inc. .................... 1,636,866
62,425 Idex Corp. ..................... 1,529,412
83,566 Paxar Corp.*.................... 746,871
27,700 Scotsman Industries, Inc. ...... 569,581
------------
7,311,397
------------
MACHINERY -- MATERIAL HANDLING -- 0.2%
17,200 Nacco Industries, Inc. ......... 1,582,400
------------
MEDICAL -- BIOMEDICAL/GENETIC -- 0.8%
73,100 Affymetrix, Inc.*............... 1,781,813
67,100 Alkermes, Inc.*................. 1,488,781
107,300 Creative Biomolecules, Inc.*.... 395,669
93,400 Millennium Pharmaceuticals*..... 2,416,725
------------
6,082,988
------------
MEDICAL -- BIOTECHNOLOGY -- 0.0%
31,900 Cryolife, Inc.*................. 378,813
------------
MEDICAL -- DRUGS -- 1.3%
75,400 Alpharma, Inc. ................. 2,662,563
149,200 Carter-Wallace, Inc. ........... 2,928,049
62,700 Guilford Pharmaceuticals*....... 893,475
106,200 Ligand Pharmaceuticals*......... 1,234,575
45,300 Medicus Pharmaceuticals,
Inc.*........................... 2,701,012
------------
10,419,674
------------
MEDICAL -- HEALTH MEDICAL ORGANIZATION -- 0.5%
149,800 Mid Atlantic Medical Services,
Inc.*........................... 1,469,913
86,250 Sierra Health Services, Inc.*... 1,816,640
53,000 United Wisconsin Services....... 460,438
------------
3,746,991
------------
</TABLE>
Continued
38
<PAGE> 40
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL -- HOSPITAL -- 0.7%
40,300 Curative Health Services,
Inc.*........................... $ 1,350,050
228,792 Mariner Post-Acute Network,
Inc. ........................... 1,043,864
177,200 Paracelsus Health*.............. 276,875
48,500 Pediatrix Medical Group,
Inc.*........................... 2,906,968
------------
5,577,757
------------
MEDICAL -- HOSPITAL SERVICES -- 0.3%
92,800 Magellan Health Services,
Inc.*........................... 777,200
95,700 Quest Diagnostics, Inc.*........ 1,704,656
------------
2,481,856
------------
MEDICAL -- NURSING HOMES -- 0.6%
36,700 American Retirement Corp.*...... 575,731
335,000 Beverly Enterprises, Inc. ...... 2,261,250
80,100 Integrated Health Services,
Inc.*........................... 1,131,413
159,725 Sun Healthcare Group, Inc.*..... 1,048,195
------------
5,016,589
------------
MEDICAL -- OUTPATIENT/HOME CARE -- 0.8%
165,500 Apria Healthcare Group, Inc.*... 1,479,156
138,200 Coram Healthcare Corp.*......... 259,125
112,800 Genesis Health Ventures,
Inc.*........................... 987,000
196,100 NovaCare, Inc.*................. 490,250
141,700 Orthodontic Centers of
America*........................ 2,754,294
------------
5,969,825
------------
MEDICAL -- WHOLESALE DRUG -- 0.4%
47,066 Bindley Western Industries,
Inc. ........................... 2,318,001
10,000 Express Scripts, Inc. --
Class A*........................ 671,250
------------
2,989,251
------------
MEDICAL EQUIPMENT & SUPPLIES -- 0.4%
48,300 Conmed Corp.*................... 1,593,900
63,800 Respironics, Inc.*.............. 1,277,994
------------
2,871,894
------------
MEDICAL INSTRUMENTS -- 0.3%
93,100 Acuson Corp.*................... 1,384,862
43,000 OEC Medical Systems, Inc.*...... 1,351,813
------------
2,736,675
------------
MEDICAL PRODUCTS -- 0.7%
44,000 Diagnostic Products Corp. ...... 1,369,500
86,800 Haemonetics Corp.*.............. 1,974,700
27,500 Maxxim Medical, Inc.*........... 818,125
103,400 Owens & Minor, Inc. ............ 1,628,550
------------
5,790,875
------------
MEDICAL SUPPLIES -- 0.4%
65,800 Ocular Sciences, Inc.*.......... 1,760,150
78,500 Sola International, Inc.*....... 1,354,125
------------
3,114,275
------------
MEDICAL/DENTAL SUPPLIES -- 0.7%
91,900 Ballard Medical Products........ 2,234,318
46,500 Cooper Cos., Inc.*.............. 961,969
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL/DENTAL SUPPLIES (CONTINUED)
62,200 Sunrise Medical, Inc.*.......... $ 773,613
53,000 West Co., Inc. ................. 1,891,438
------------
5,861,338
------------
METAL -- GOLD -- 0.1%
106,100 Hecla Mining Co.*............... 384,613
70,000 Meridian Gold, Inc.*............ 398,125
------------
782,738
------------
METAL -- IRON -- 0.1%
24,300 Cleveland Cliffs, Inc. ......... 979,594
------------
METAL -- MISCELLANEOUS -- 0.1%
37,400 Brush Wellman, Inc. ............ 652,163
------------
METAL -- NON-FERROUS -- 0.2%
153,500 Kaiser Aluminum Corp.*.......... 748,313
43,730 RTI International Metals,
Inc. ........................... 612,220
------------
1,360,533
------------
METAL -- PROCESSING & FABRICATION -- 0.5%
25,000 Amcast Industrial Corp. ........ 478,125
30,300 Chase Industries, Inc.*......... 316,256
35,233 Commercial Metals Co. .......... 977,716
77,700 Mueller Industries, Inc.*....... 1,578,281
32,500 Wolverine Tube, Inc.*........... 682,500
------------
4,032,878
------------
METAL -- SILVER -- 0.0%
36,400 Coeur d'Alene Mines Corp.*...... 168,350
------------
METAL PRODUCTS -- DISTRIBUTION -- 0.1%
32,550 Reliance Steel & Aluminum
Co. ............................ 899,194
------------
METAL PRODUCTS -- FASTENERS -- 0.2%
27,500 SPS Technologies, Inc.*......... 1,529,688
13,800 TransTechnology Corp. .......... 286,350
------------
1,816,038
------------
OFFICE SUPPLIES & FORMS -- 0.8%
38,400 American Business Products,
Inc. ........................... 902,400
34,000 Daisytek International Corp.*... 646,000
29,700 Ennis Business Forms, Inc. ..... 295,144
32,200 Hunt Manufacturing Corp. ....... 342,125
62,900 John H. Harland Co. ............ 994,606
33,800 New England Business Service,
Inc. ........................... 1,322,425
50,200 Standard Register Co. .......... 1,553,063
------------
6,055,763
------------
OIL & GAS -- DRILLING -- 0.1%
29,000 Atwood Oceanics, Inc.*.......... 493,000
165,800 Parker Drilling Co.*............ 528,488
------------
1,021,488
------------
OIL -- FIELD SERVICES -- 0.7%
57,700 Hanover Compressor Co.*......... 1,482,168
49,600 Oceaneering International,
Inc.*........................... 744,000
62,700 RPC Energy Services, Inc. ...... 462,413
29,500 Seacor Holdings, Inc.*.......... 1,458,406
</TABLE>
Continued
39
<PAGE> 41
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OIL -- FIELD SERVICES (CONTINUED)
54,600 Seitel, Inc.*................... $ 679,088
53,800 Unit Corp.*..................... 225,288
46,600 Veritas DGC, Inc.*.............. 605,800
------------
5,657,163
------------
OIL -- PRODUCTION/PIPELINE -- 0.6%
62,900 Aquila Gas Pipeline Corp. ...... 538,581
56,900 Kaneb Services, Inc.*........... 231,156
55,000 Northern Border Partners, LP.... 1,797,813
61,800 Teppco Partners................. 1,506,375
68,500 Western Gas Resources, Inc. .... 393,875
------------
4,467,800
------------
OIL -- U.S. EXPLORATION & PRODUCTION -- 1.4%
67,500 Belco Oil & Gas Corp. .......... 375,469
50,600 Benton Oil & Gas Co.*........... 151,800
48,200 Berry Petroleum Co. ............ 683,838
44,600 Cabot Oil & Gas Corp. .......... 669,000
37,500 Comstock Resources, Inc.*....... 114,844
83,850 Cross Timbers Oil Co. .......... 628,875
40,500 Forcenergy, Inc.*............... 106,313
64,700 Forest Oil Corp.*............... 549,950
49,700 Houston Exploration Co.*........ 987,787
28,700 HS Resources, Inc.*............. 213,456
56,900 KCS Energy, Inc. ............... 174,256
3,800 Key Production Company, Inc.*... 19,950
54,200 Louis Dreyfus Natural Gas*...... 772,350
24,900 Meridian Resource Corp.*........ 79,369
76,100 Newfield Exploration Co.*....... 1,588,587
41,900 Nuevo Energy Co.*............... 481,850
26,300 Range Resources Corp. .......... 90,406
63,100 Snyder Oil Corp. ............... 840,019
32,000 Stone Energy Corp.*............. 919,999
32,836 Swift Energy Co.*............... 242,166
109,900 Vintage Petroleum, Inc. ........ 947,887
------------
10,638,171
------------
OIL -- U.S. INTEGRATED -- 0.1%
61,530 Pennzoil-Quaker State Co.*...... 911,413
------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.1%
36,400 Daniel Industries, Inc. ........ 441,350
------------
OIL REFINING -- 0.2%
46,100 Frontier Oil Corp.*............. 227,619
33,500 Giant Industries, Inc. ......... 314,063
57,200 Tesoro Petroleum Corp.*......... 693,549
27,050 World Fuel Services Corp. ...... 290,788
------------
1,526,019
------------
PAPER & RELATED PRODUCTS -- 0.6%
82,100 Buckeye Technologies, Inc.*..... 1,226,369
50,200 Chesapeake Corp. ............... 1,851,124
11,100 Fibermark, Inc.*................ 151,238
38,700 Pope & Talbot, Inc. ............ 324,113
50,700 Rock-Tenn Company............... 858,731
------------
4,411,575
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PAPER & RELATED PRODUCTS (CONTINUED)
POLLUTION CONTROL -- 0.4%
78,700 Calgon Carbon Corp. ............ $ 590,250
47,500 Dames & Moore, Inc. ............ 611,563
34,700 Imco Recycling, Inc. ........... 535,681
20,700 Ionics, Inc.*................... 619,706
41,000 Lydall, Inc.*................... 486,875
28,200 Osmonics, Inc.*................. 237,938
------------
3,082,013
------------
PRINTING -- COMMERCIAL -- 0.3%
26,500 Consolidated Graphics, Inc.*.... 1,790,406
73,600 Mail-Well, Inc.*................ 841,800
------------
2,632,206
------------
PROTECTION -- SAFETY -- 0.3%
42,100 Borg-Warner Security Corp.*..... 789,375
48,400 Checkpoint Systems, Inc.*....... 598,950
46,900 Wackenhut Corrections Corp.*.... 1,342,513
------------
2,730,838
------------
PUBLISHING -- BOOKS -- 0.1%
46,300 Thomas Nelson, Inc. ............ 625,050
------------
PUBLISHING -- NEWSPAPERS -- 0.2%
122,000 Journal Register Co.*........... 1,830,000
------------
PUBLISHING -- PERIODICALS -- 0.3%
117,400 American Media, Inc.*........... 653,038
38,500 Big Flower Holdings, Inc.*...... 849,406
41,100 Playboy Enterprises, Inc.*...... 860,531
------------
2,362,975
------------
REAL ESTATE -- 0.5%
71,500 Castle & Cooke, Inc.*........... 1,054,625
47,500 CB Richard Ellis Services*...... 860,938
69,900 Grubb & Ellis Co.*.............. 563,569
64,000 Webb (Del) Corp. ............... 1,763,999
------------
4,243,131
------------
RESTAURANTS -- 1.1%
8,375 Consolidated Products, Inc.*.... 172,734
116,400 Foodmaker, Inc.*................ 2,568,074
79,300 Host Marriott Services Corp.*... 822,738
69,700 Luby's Cafeteria, Inc. ......... 1,075,994
19,000 Morton's Restaurant Group,
Inc.*........................... 358,625
67,900 Ruby Tuesday, Inc. ............. 1,442,875
60,200 Sbarro, Inc. ................... 1,576,487
65,500 Shoney's, Inc.*................. 85,969
73,900 TCBY Enterprises, Inc. ......... 517,300
------------
8,620,796
------------
RETAIL -- APPAREL/SHOES -- 1.4%
57,800 Ann Taylor Stores Corp.*........ 2,279,487
113,880 Burlington Coat Factory
Warehouse Corp. ................ 1,857,668
40,000 Cole (Kenneth) Productions,
Inc.*........................... 750,000
69,500 Footstar, Inc.*................. 1,737,500
55,500 Genesco, Inc.*.................. 315,656
52,200 Syms Corp.*..................... 469,800
</TABLE>
Continued
40
<PAGE> 42
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- APPAREL/SHOES (CONTINUED)
77,300 Talbots Inc. ................... $ 2,425,287
49,050 The Buckle, Inc.*............... 1,177,200
------------
11,012,598
------------
RETAIL -- AUTOMOBILE -- 0.1%
24,300 Circuit City
Stores -- Carmax*............... 132,131
6,000 Cross-Continent Auto
Retailer*....................... 58,500
27,700 United Auto Group, Inc.*........ 254,494
------------
445,125
------------
RETAIL -- CONSUMER ELECTRONICS -- 0.1%
73,900 Handleman Co.*.................. 1,039,219
------------
RETAIL -- DISCOUNT -- 0.7%
52,875 99 Cents Only Stores*........... 2,597,484
58,900 Shopko Stores, Inc.*............ 1,958,425
62,600 Smart & Final, Inc. ............ 602,525
------------
5,158,434
------------
RETAIL -- FABRIC & CRAFT -- 0.1%
54,700 Jo-Ann Stores, Inc., --
Class A*........................ 882,038
------------
RETAIL -- GENERAL MERCHANDISE -- 0.7%
55,900 Cash America Intl., Inc. ....... 848,981
35,200 Cole National Corp.*............ 602,800
63,500 Hancock Fabrics, Inc. .......... 531,813
80,500 Musicland Stores Corp.*......... 1,202,469
64,350 Russ Berrie & Co., Inc. ........ 1,512,224
82,650 The Sports Authority, Inc.*..... 433,913
------------
5,132,200
------------
RETAIL -- HOME FURNISHINGS -- 0.8%
81,500 Bombay Co., Inc.*............... 453,344
128,900 Heilig Meyers Co. .............. 862,019
149,300 La-Z-Boy, Inc. ................. 2,659,406
44,200 Linens 'n Things, Inc.*......... 1,751,425
33,800 Maxim Group, Inc.*.............. 811,200
------------
6,537,394
------------
RETAIL -- JEWELRY -- 0.6%
102,300 Claire's Stores, Inc. .......... 2,097,150
83,100 Zale Corp.*..................... 2,679,975
------------
4,777,125
------------
RETAIL -- MAIL ORDER -- 0.4%
52,900 Enesco Group, Inc. ............. 1,229,925
85,900 Global Directmail, Inc.*........ 2,007,913
------------
3,237,838
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.1%
73,500 Value City Department Stores,
Inc.*........................... 1,024,406
------------
RETAIL -- SPECIAL LINE -- 0.0%
4,000 Heritage Propane Partners LP.... 90,250
------------
RETAIL -- SUPERMARKETS -- 0.3%
110,700 Ruddick Corp. .................. 2,421,563
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL/WHOLESALE -- AUTO PARTS -- 0.2%
48,900 Discount Auto Parts, Inc.*...... $ 1,072,744
41,000 Tyler Corp. .................... 251,125
------------
1,323,869
------------
RUBBER & PLASTICS -- 0.1%
34,300 Furon Co. ...................... 585,244
------------
SHOES & RELATED APPAREL -- 0.6%
25,175 Barry (R.G.) Corp.*............. 276,925
49,800 Brown Group, Inc. .............. 874,613
90,000 Reebok International Ltd.*...... 1,338,750
115,200 Stride Rite Corp. .............. 1,008,000
29,900 Timberland Co., Class A*........ 1,362,318
------------
4,860,606
------------
SOAP & CLEANING PREPARATIONS -- 0.3%
54,800 Church & Dwight Co., Inc. ...... 1,969,375
------------
STEEL -- PIPES & TUBES -- 0.1%
42,800 NS Group, Inc.*................. 189,925
31,900 Quanex Corp. ................... 719,744
12,300 Shaw Group, Inc.*............... 98,400
------------
1,008,069
------------
STEEL -- PRODUCERS -- 0.6%
229,200 Armco, Inc.*.................... 1,002,749
12,600 Atchison Casting Corp.*......... 116,550
48,900 Birmingham Steel Corp. ......... 204,769
41,800 Carpenter Technology............ 1,418,587
39,300 Lone Star Technologies, Inc.*... 397,913
92,700 National Steel Corp. ........... 660,488
50,200 Rouge Industries, Inc. ......... 439,250
76,700 Weirton Steel Corp.*............ 119,844
55,800 WHX Corp.*...................... 561,488
------------
4,921,638
------------
STEEL -- SPECIALTY -- 0.1%
54,200 Oregon Steel Mills, Inc. ....... 643,625
------------
TECHNOLOGY -- 0.2%
53,400 Security Dynamics Technologies,
Inc. ........................... 1,228,200
25,000 Structural Dynamics*............ 496,875
------------
1,725,075
------------
TELECOMMUNICATIONS -- CELLULAR -- 0.1%
93,500 American Mobile Satelllite
Corp.*.......................... 490,875
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 1.7%
37,200 C-Cor Electronics, Inc.*........ 511,500
67,500 Dsp Communications Inc. ........ 1,033,594
60,100 InterVoice, Inc.*............... 2,073,450
78,600 Network Equipment
Technologies, Inc.*............. 810,563
58,800 Plantronics, Inc.*.............. 5,056,799
60,000 Superior Telecom, Inc. ......... 2,834,999
22,300 Tech-Sym Corp.*................. 496,175
54,300 Titan Corp. .................... 298,650
------------
13,115,730
------------
</TABLE>
Continued
41
<PAGE> 43
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- SERVICES AND
EQUIPMENT -- 0.2%
42,700 Mastec, Inc.*................... $ 896,700
60,400 Smartalk Teleservices, Inc.*.... 160,438
37,000 Western Wireless Corp. -- Class
A............................... 814,000
------------
1,871,138
------------
TEXTILE -- APPAREL -- 1.0%
63,000 Authentic Fitness Corp. ........ 1,149,750
154,300 Burlington Industries, Inc.*.... 1,697,299
66,500 Delta Woodside Industries,
Inc. ........................... 399,000
23,000 Donna Karan International,
Inc.*........................... 173,938
37,700 Guess ?, Inc.*.................. 181,431
82,700 Hartmarx Corp.*................. 465,188
57,650 Kellwood Co. ................... 1,441,250
24,700 Oxford Industries, Inc. ........ 697,775
75,900 Phillips-Van Heusen Corp. ...... 545,531
33,500 St. John Knits, Inc. ........... 871,000
------------
7,622,162
------------
TEXTILE -- HOME FURNISHINGS -- 0.1%
34,013 Pillowtex Corp. ................ 909,848
------------
TEXTILE -- PRODUCTS -- 0.3%
99,900 Collins & Aikman Corp.*......... 511,988
75,300 Cone Mills Corp.*............... 423,563
4,800 Culp, Inc. ..................... 37,800
20,700 Galey & Lord, Inc.*............. 178,538
47,550 Guilford Mills, Inc. ........... 793,490
74,900 Polymer Group, Inc.*............ 744,318
------------
2,689,697
------------
TOBACCO -- 0.2%
38,300 Brooke Group, Ltd. ............. 933,563
45,100 Schweitzer-Mauduit
International................... 696,231
25,740 Standard Commercial Corp. ...... 220,399
------------
1,850,193
------------
TOOLS -- HAND HELD -- 0.1%
35,200 Toro Co. ....................... 1,003,200
------------
TRANSPORTATION -- 0.2%
36,000 Coach USA, Inc.*................ 1,248,750
79,900 OMI Corp.*...................... 259,675
------------
1,508,425
------------
TRANSPORTATION -- AIR FREIGHT -- 0.4%
20,600 AirNet Systems, Inc.*........... 296,125
47,900 Atlas Air, Inc.*................ 2,344,106
58,900 Pittston Burlington Group....... 655,263
------------
3,295,494
------------
TRANSPORTATION -- AIRLINE -- 0.4%
31,900 Alaska Airgroup, Inc.*.......... 1,411,575
95,300 America West Holding Corp. --
Class B*........................ 1,620,100
11,250 Midwest Express Holdings*....... 296,016
------------
3,327,691
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION -- EQUIPMENT & LEASING -- 0.9%
43,000 Greenbrier Cos., Inc. .......... $ 607,375
51,250 Interpool, Inc. ................ 858,438
33,700 Motivepower Industries, Inc.*... 1,084,719
146,650 Rollins Truck Leasing Corp. .... 2,163,087
49,800 Westinghouse Air Brake Co. ..... 1,216,988
32,500 Xtra Corp. ..................... 1,344,687
------------
7,275,294
------------
TRANSPORTATION -- RAILROAD -- 0.3%
75,300 Florida East Coast Industries... 2,649,619
------------
TRANSPORTATION -- SHIPPING -- 0.2%
77,800 Overseas Shipholding Group...... 1,249,663
------------
UTILITIES -- ELECTRIC POWER -- 2.2%
29,900 Black Hills Corp. .............. 788,613
5,900 Calpine Corp.*.................. 148,975
29,400 Central Hudson Gas & Electric
Corp. .......................... 1,315,650
31,500 Central Vermont Public Service
Corp. .......................... 326,813
25,200 CILCORP, Inc. .................. 1,541,924
37,700 Cleco Corp. .................... 1,293,581
55,200 CMP Group, Inc. ................ 1,041,900
41,600 Commonwealth Energy Systems
Co. ............................ 1,684,799
26,200 Eastern Utilities Assoc. ....... 740,150
35,200 Empire District Electric Co. ... 871,200
32,800 Northwestern Corp. ............. 867,150
25,900 Orange & Rockland Utilities..... 1,476,300
70,700 Public Service New Mexico....... 1,444,931
23,300 TNP Enterprises, Inc. .......... 883,944
55,320 UniSource Energy Corp.*......... 746,820
40,000 WPS Resources Corp. ............ 1,410,000
------------
16,582,750
------------
UTILITIES -- GAS DISTRIBUTION -- 2.4%
33,150 Atmos Energy Corp. ............. 1,069,088
25,800 Bay State Gas Co. .............. 1,027,163
15,400 Connecticut Energy Corp. ....... 469,700
18,900 Connecticut Natural Gas
Corp. .......................... 496,125
27,800 Eastern Enterprises............. 1,216,250
51,200 Energen Corp. .................. 998,400
53,466 Indiana Energy, Inc. ........... 1,316,600
30,400 Laclede Gas Co. ................ 813,200
34,300 New Jersey Resources Corp. ..... 1,354,850
11,750 North Carolina Natural Gas...... 389,953
22,900 NUI Corp. ...................... 614,006
38,900 Public Service Co. of North
Carolina........................ 1,011,400
20,200 South Jersey Industries,
Inc. ........................... 528,988
56,077 Southern Union Co.*............. 1,366,876
54,900 Southwest Gas Corp. ............ 1,475,437
59,500 Southwestern Energy Co. ........ 446,250
49,800 UGI Corp. ...................... 1,182,750
62,600 Wicor, Inc. .................... 1,365,460
24,400 Yankee Energy System, Inc. ..... 710,648
------------
17,853,144
------------
</TABLE>
Continued
42
<PAGE> 44
THE KENT SMALL COMPANY GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- WATER SUPPLY -- 0.5%
15,500 American States Water Co. ...... $ 422,375
14,600 Aquarion Co. ................... 598,600
36,200 Philadelphia Suburban Corp. .... 1,070,163
71,600 United Water Resources, Inc. ... 1,713,925
------------
3,805,063
------------
WHOLESALE DISTRIBUTION -- 0.1%
16,300 Aviation Sales Co.*............. 662,188
------------
WIRE & CABLE PRODUCTS -- 0.5%
6,900 Alpine Group, Inc.*............. 103,500
42,100 Barnes Group, Inc. ............. 1,236,688
45,100 Belden, Inc. ................... 955,556
77,800 General Cable Corp. ............ 1,594,900
------------
3,890,644
------------
TOTAL COMMON STOCKS............. 751,544,035
------------
(Cost $663,135,103)
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- -------------------------------- ------------
<C> <S> <C>
RIGHTS -- 0.0%
BEVERAGES -- SOFT DRINKS -- 0.0%
105,105 Buenos Aires Embotella*......... 0
------------
ELECTRONIC -- MISCELLANEOUS COMPONENTS -- 0.0%
153,700 MEMC Electronic Materials,
Inc.*........................... 0
------------
TOTAL RIGHTS.................... 0
------------
(Cost $0)
U.S. GOVERNMENT OBLIGATIONS -- 0.2%
$1,720,000 United States Treasury Bills,
4.54%**, 6/24/99 (b)............ 1,684,379
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS..................... 1,684,379
------------
TOTAL INVESTMENTS -- 99.8%.................. 782,364,951
(Cost $693,952,947) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.2%....................... 1,425,522
------------
TOTAL NET ASSETS -- 100.0%.................. $783,790,477
============
</TABLE>
- ---------------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...............
$187,339,580
Unrealized depreciation...............
(98,999,832)
------------
Net unrealized appreciation...........
$ 88,339,748
============
</TABLE>
(b) Security has been deposited as initial margin on open futures contract.
* Non-income producing security
** Effective yield at purchase
ADR -- American Depositary Receipt
At December 31, 1998 the Fund's open future contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING FACE MARKET
CONTRACTS CONTRACT TYPE AMOUNT VALUE
- --------- ------------------ ----------- -----------
<S> <C> <C> <C>
50 Russell 2000, $10,212,250 $10,631,253
3/18/99
62 Standard & Poor's 18,531,433 19,305,250
500, 3/19/99
</TABLE>
See Notes to Financial Statements.
43
<PAGE> 45
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS -- 98.7%
AUSTRALIA -- 3.1%
BANKING -- 0.7%
142,414 National Australia Bank Ltd. .... $ 2,148,837
177,015 Westpac Banking Corp., Ltd. ..... 1,185,627
------------
3,334,464
------------
BEVERAGES & TOBACCO -- 0.1%
70,676 Coca-Cola Ltd. .................. 263,567
107,952 Coca-Cola Amatil Ltd. ........... 198,706
------------
462,273
------------
BREWERY -- 0.1%
178,336 Fosters Brewing Group Ltd. ...... 483,478
------------
BROADCASTING & PUBLISHING -- 0.2%
193,020 News Corp., Ltd. ................ 1,276,252
------------
BUILDING PRODUCTS -- 0.1%
111,203 Boral Ltd. ...................... 158,241
34,780 Hardie (James) Industries
Ltd. ............................ 71,123
80,788 Pioneer International Ltd. ...... 170,955
------------
400,319
------------
CHEMICALS -- 0.0%
24,206 Orica Ltd. ...................... 126,051
------------
DIVERSIFIED -- 0.1%
16,044 Smith (Howard) Ltd. ............. 106,241
55,564 Southcorp Holdings Ltd. ......... 177,390
------------
283,631
------------
ENERGY -- 0.3%
198,507 Broken Hill Proprietary Co.,
Ltd. ............................ 1,463,388
------------
ENGINEERING -- 0.0%
22,400 Leighton Holdings Ltd. .......... 96,175
------------
ENTERTAINMENT -- 0.0%
40,300 Star City Holdings Ltd.* ........ 35,669
26,100 TABCORP Holdings Ltd. ........... 160,087
------------
195,756
------------
FOOD PRODUCTS -- 0.0%
109,521 Goodman Fielder Ltd. ............ 110,840
------------
GAS UTILITY -- 0.0%
26,021 Australian Gas Light Co.,
Ltd. ............................ 187,597
------------
INDUSTRIAL GOODS & SERVICES -- 0.1%
91,818 CSR Ltd. ........................ 224,707
88,700 Pacific Dunlop Ltd. ............. 143,629
------------
368,336
------------
INSURANCE -- 0.3%
102,900 AMP Ltd.* ....................... 1,304,897
53,578 GIO Australia Holdings Ltd. ..... 176,144
33,545 QBE Insurance Group Ltd. ........ 138,882
------------
1,619,923
------------
MANUFACTURING -- CAPITAL GOODS -- 0.0%
27,129 Email Ltd. ...................... 38,787
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
AUSTRALIA (CONTINUED)
METALS -- 0.0%
147,691 M.I.M. Holdings Ltd. ............ $ 65,223
------------
METALS & MINING -- 0.2%
68,058 Australian National Industries
Ltd. ............................ 48,006
16,914 Great Central Mines Ltd. ........ 12,138
17,377 Newcrest Mining Ltd.* ........... 24,109
151,360 Normandy Mining Ltd. ............ 140,186
64,635 North Ltd. ...................... 105,454
51,258 QCT Resources Ltd. .............. 30,811
29,836 Rio Tinto Ltd. .................. 354,200
10,352 Westralian Sands Ltd. ........... 25,081
104,971 WMC Ltd. ........................ 316,774
------------
1,056,759
------------
OIL & GAS -- 0.0%
52,241 Santos Ltd. ..................... 140,346
------------
PACKAGING -- 0.0%
58,093 Amcor Ltd. ...................... 248,461
------------
PHARMACEUTICALS -- 0.0%
10,670 Faulding (F.H.) & Co., Ltd. ..... 50,393
------------
REAL ESTATE -- 0.2%
113,230 General Property Trust Units..... 211,825
50,194 Lend Lease Corp., Ltd. .......... 677,313
107,728 Westfield Trust Units............ 237,874
------------
1,127,012
------------
REAL ESTATE INVESTMENT TRUST -- 0.0%
14,411 Schroders Property Fund.......... 23,512
------------
RETAIL STORES -- 0.1%
115,754 Coles Myer Ltd. ................. 607,040
------------
SERVICES -- 0.1%
20,119 Brambles Industries Ltd. ........ 490,523
------------
TELECOM EQUIPMENT -- 0.5%
493,400 Telstra Corporation Ltd. ........ 2,309,082
------------
TOBACCO -- 0.0%
8,400 Rothmans Holdings Ltd. .......... 60,281
------------
16,625,902
------------
AUSTRIA -- 0.5%
BANKING -- 0.2%
11,885 Bank Austria AG.................. 604,694
------------
BEVERAGES & TOBACCO -- 0.0%
3,100 Oesterreichische
Brau-Beteiligungs AG............. 177,221
------------
BUILDING PRODUCTS -- 0.0%
1,133 Wienerberger Baustoffindustrie
AG............................... 225,477
------------
CHEMICALS -- 0.0%
600 Lenzing AG* ..................... 37,378
------------
</TABLE>
Continued
44
<PAGE> 46
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
AUSTRIA (CONTINUED)
CONSTRUCTION -- 0.0%
1,455 Bau Holding AG................... $ 68,292
------------
ELECTRIC UTILITY -- 0.2%
3,569 Oesterreichische
Elektrizitaetswirtschafts AG,
Class A.......................... 545,794
------------
ENGINEERING -- 0.0%
1,800 VA Technologie AG................ 156,067
------------
INSURANCE -- 0.0%
880 EA-Generali AG................... 216,282
------------
METALS & MINING -- 0.0%
2,575 Radex-Heraklith
Industriebeteiligungs AG......... 67,133
------------
OIL & GAS -- 0.1%
3,240 OMV AG........................... 305,529
------------
PAPER PRODUCTS -- 0.0%
2,100 Mayr-Melnhof Karton AG........... 98,207
------------
STEEL -- 0.0%
1,800 Boehler-Uddeholm AG.............. 83,824
------------
TRANSPORTATION -- 0.0%
4,100 Austrian Airlines................ 146,953
2,500 Flughafen Wien AG................ 122,738
------------
269,691
------------
2,855,589
------------
BELGIUM -- 1.7%
BANKING -- 0.3%
1,116 Generale de Banque SA............ 524,657
12,520 KBC Bancassurance Holding NV..... 991,315
------------
1,515,972
------------
BUILDING PRODUCTS -- 0.0%
1,925 Cimenteries CBR
Cementbedrijven.................. 190,523
------------
CHEMICALS -- 0.1%
8,510 Solvay SA........................ 641,605
------------
ELECTRIC UTILITY -- 0.2%
5,840 Tractebel........................ 1,133,906
------------
ENERGY -- 0.2%
1,897 PetroFina SA..................... 869,734
------------
GAS & ELECTRIC UTILITY -- 0.3%
3,800 Electrabel SA.................... 1,670,318
------------
INDUSTRIAL HOLDING COMPANY -- 0.1%
2,000 Groupe Bruxelles Lambert SA...... 407,537
------------
INSURANCE -- 0.3%
2,900 Fortis AG........................ 1,051,007
1,350 Royale Belge..................... 546,245
------------
1,597,252
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BELGIUM (CONTINUED)
MERCHANDISING -- 0.1%
4,400 Delhaize-Le Lion SA.............. $ 389,372
------------
PHARMACEUTICALS -- 0.0%
40 UCB SA........................... 246,851
------------
TECHNOLOGY -- 0.1%
1,000 Barco NV......................... 282,365
------------
8,945,435
------------
DENMARK -- 0.8%
BANKING & FINANCE -- 0.1%
4,547 Den Danske Bank.................. 610,854
4,693 Unidanmark AS, Class A........... 423,999
------------
1,034,853
------------
BEVERAGES & TOBACCO -- 0.1%
3,060 Carlsberg AS, Class A............ 177,897
2,305 Carlsberg AS, Class B............ 133,280
------------
311,177
------------
COMMERCIAL SERVICES -- 0.0%
2,390 ISS International Service System
AS, Series B..................... 155,469
------------
ENGINEERING -- 0.0%
3,615 FLS Industries AS -- Class B..... 73,841
------------
FOOD PRODUCTS -- 0.1%
5,195 Danisco AS....................... 281,612
------------
PHARMACEUTICALS -- 0.1%
4,946 Novo Nordisk AS, Class B......... 652,799
------------
TELECOMMUNICATIONS -- 0.2%
7,000 Tele Danmark AS, Class B......... 944,795
------------
TRANSPORTATION & SHIPPING -- 0.2%
70 D/S 1912, Class B................ 489,445
53 D/S Svendborg AS, Class B........ 537,133
------------
1,026,578
------------
4,481,124
------------
FINLAND -- 0.9%
BANKING & FINANCE -- 0.1%
57,106 Merita PLC, Class A.............. 363,166
------------
CHEMICALS -- 0.0%
8,900 Kemira........................... 64,158
------------
DIVERSIFIED -- 0.0%
800 Amer Group Ltd. ................. 8,327
1,500 Instrumentarium Group,
Series B......................... 61,886
------------
70,213
------------
ENGINEERING -- 0.0%
5,500 Metra OYJ........................ 95,590
------------
FOOD PRODUCTS -- 0.0%
3,300 Cultor -- Series 2............... 33,891
------------
</TABLE>
Continued
45
<PAGE> 47
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FINLAND (CONTINUED)
FOREST PRODUCTS -- 0.1%
13,860 UPM-Kymmene Corp. ............... $ 388,704
------------
INSURANCE -- 0.0%
800 Pohjola Insurance Group, Class
B................................ 43,924
4,300 Sampo Insurance Co. ............. 164,330
------------
208,254
------------
MACHINERY & EQUIPMENT -- 0.0%
500 Kone Corp. -- Class B............ 58,263
------------
METALS -- 0.0%
8,700 Outokumpu OYJ.................... 80,414
------------
RETAIL -- GENERAL MERCHANDISE -- 0.0%
6,300 Kesko............................ 94,563
2,250 Stockmann AB-B Share............. 42,482
------------
137,045
------------
TELECOMMUNICATIONS -- 0.7%
22,500 Nokia -- Class A................. 2,755,127
6,500 Nokia -- Class K................. 795,925
------------
3,551,052
------------
5,050,750
------------
FRANCE -- 8.0%
ADVERTISING -- 0.0%
3 Havas SA......................... 306
------------
ALUMINUM -- 0.0%
2,000 Pechiney SA -- A Shares.......... 65,342
------------
AUTO PARTS -- 0.1%
7,345 Valeo SA......................... 579,079
------------
AUTOMOTIVE -- 0.1%
3,662 PSA Peugeot Citroen.............. 567,065
------------
BANKING -- 0.6%
14,898 Banque Nationale de Paris........ 1,227,363
11,664 Paribas.......................... 1,014,178
6,247 Societe Generale................. 1,012,089
------------
3,253,630
------------
BEVERAGES & TOBACCO -- 0.3%
6,120 LVMH (Moet Hennessy Louis
Vuitton)......................... 1,211,727
5,400 Pernod Ricard.................... 350,913
------------
1,562,640
------------
BROADCASTING/CABLE -- 0.2%
3,136 Canal Plus....................... 856,139
------------
BUILDING PRODUCTS -- 0.1%
1,195 Imetal SA........................ 119,799
6,721 Lafarge SA....................... 638,892
------------
758,691
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
CHEMICALS -- 0.4%
5,932 L'Air Liquide.................... $ 1,088,488
24,814 Rhone-Poulenc SA................. 1,277,568
------------
2,366,056
------------
COMMERCIAL SERVICES -- 0.1%
2,840 Sodexho SA....................... 635,517
------------
COMPUTER SOFTWARE -- 0.0%
3,000 Dassault Systems SA.............. 141,085
------------
CONSTRUCTION -- 0.1%
1,466 Bouygues......................... 302,333
------------
DEFENSE -- 0.1%
200 Sagem SA......................... 132,474
12,325 Thomson CSF...................... 529,537
------------
662,011
------------
DIVERSIFIED -- 0.1%
498 Chargeurs International SA....... 27,548
12,106 Lagardere S.C.A.................. 514,710
1,350 Nord-Est SA...................... 36,251
------------
578,509
------------
ELECTRICAL & ELECTRONIC -- 0.4%
9,837 Alcatel Alsthom.................. 1,204,530
2,100 Legrand SA....................... 556,766
10,800 Schneider SA..................... 655,423
------------
2,416,719
------------
ENERGY -- 0.6%
16,567 Elf Aquitane SA.................. 1,915,909
14,700 Total SA, Class B................ 1,489,472
------------
3,405,381
------------
ENGINEERING -- 0.0%
200 Groupe Gtm....................... 20,766
------------
FINANCE -- 0.5%
9,588 Compagnie Generale des Eaux...... 2,488,825
546 CPR (Compagnie Parisenne de
Reescompte)...................... 25,218
863 Credit National.................. 55,618
202 Societe Eurafrance SA............ 133,534
------------
2,703,195
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.1%
2,600 Eridania Beghin-Say SA........... 450,089
------------
FOOD PRODUCTS -- 0.3%
5,121 Groupe Danone.................... 1,466,808
------------
HEALTH & PERSONAL CARE -- 0.8%
4,047 L'OREAL.......................... 2,926,935
7,623 Sanofi SA........................ 1,255,487
------------
4,182,422
------------
</TABLE>
Continued
46
<PAGE> 48
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
INDUSTRIAL GOODS & SERVICES -- 0.1%
9,801 Michelin Class B, Registered..... $ 392,145
------------
INDUSTRIAL HOLDING COMPANY -- 0.3%
8,380 Lyonnaise des Eaux SA............ 1,722,203
------------
INSURANCE -- 0.6%
20,600 Axa -- UAP....................... 2,987,107
2,000 Cap Gemini....................... 321,160
------------
3,308,267
------------
LEISURE -- 0.1%
2,650 Accor SA......................... 574,024
541 Club Mediterranee SA*............ 48,618
------------
622,642
------------
MACHINE -- DIVERSIFIED -- 0.0%
1,600 Sidel SA......................... 135,768
------------
MEDIA -- 0.0%
498 Pathe SA......................... 139,076
------------
MEDICAL SUPPLIES -- 0.0%
500 Essilor International............ 196,921
------------
MERCHANDISING -- 1.0%
2,303 Carrefour SA..................... 1,739,410
6,600 Etablissements Economiques du
Casino........................... 687,647
7,885 Pinault Printemps Redoute........ 1,507,549
1,450 Promodes......................... 1,054,922
------------
4,989,528
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.2%
6,333 Compagnie de Saint Gobain........ 894,510
------------
OFFICE EQUIPMENT & SERVICES -- 0.1%
5,700 Bic.............................. 316,326
------------
OIL & GAS -- 0.0%
50 Cie Gen Geophysique*............. 2,915
1,300 Primagaz Cie..................... 123,344
------------
126,259
------------
REAL ESTATE -- 0.1%
2,600 SEFIMEG.......................... 183,852
918 Simco SA......................... 83,320
800 Unibail.......................... 116,720
572 Union Immobiliere de France...... 51,609
------------
435,501
------------
STEEL -- 0.1%
25,100 Unisor Sacilor SA................ 278,814
------------
TELECOMMUNICATIONS -- SERVICES & EQUIPMENT --
0.5%
35,000 France Telecom................... 2,781,951
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FRANCE (CONTINUED)
TOBACCO -- 0.0%
3,200 SEITA............................ $ 200,501
------------
43,514,195
------------
GERMANY -- 9.3%
AUTOMOTIVE -- 1.3%
52,287 Daimler Chrysler AG*............. 5,164,310
761 MAN AG........................... 223,888
22,270 Volkswagen AG.................... 1,778,365
------------
7,166,563
------------
BANKING -- 1.1%
26,968 Bayerische Vereinsbank AG........ 2,113,043
34,660 Deutsche Bank AG................. 2,040,447
37,160 Dresdner Bank AG................. 1,561,791
------------
5,715,281
------------
BUILDING PRODUCTS -- 0.1%
4,070 Heidelberger Zement AG........... 317,678
------------
CHEMICALS -- 0.8%
45,780 BASF AG.......................... 1,748,163
49,840 Bayer AG......................... 2,081,250
7,120 Degussa AG....................... 391,370
------------
4,220,783
------------
CLOTHING -- 0.1%
3,500 Adidas AG........................ 380,361
------------
COMPUTER SOFTWARE -- 0.4%
4,403 SAP AG........................... 1,903,401
------------
CONSTRUCTION -- 0.0%
4,730 Hochtief AG...................... 184,597
------------
DIVERSIFIED -- 0.7%
1,231 Preussag AG...................... 556,547
35,890 VEBA AG.......................... 2,148,413
2,007 Viag AG.......................... 1,177,311
------------
3,882,271
------------
ELECTRICAL & ELECTRONIC -- 0.4%
37,370 Siemens AG....................... 2,412,019
------------
ENGINEERING -- 0.5%
2,040 AGIV-AG.......................... 52,668
25,420 Mannesmann AG.................... 2,915,131
------------
2,967,799
------------
GAS & ELECTRIC UTILITY -- 0.3%
29,050 RWE AG........................... 1,591,579
------------
HEALTH & PERSONAL CARE -- 0.1%
7,860 Beiersdorf AG, Series ABC........ 542,712
------------
HEALTH CARE -- 0.1%
5,300 Schering AG...................... 665,872
------------
</TABLE>
Continued
47
<PAGE> 49
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
GERMANY (CONTINUED)
INSURANCE -- 1.8%
1,780 Aachener & Muenchener............ $ 209,578
15,970 Allianz AG....................... 5,858,618
3,660 AMB Aachener & Muenchener........ 538,389
1,000 Axa Colonia Konzern AG........... 113,478
5,547 Muenchener Rueckver AG........... 2,687,700
------------
9,407,763
------------
MACHINERY & EQUIPMENT -- 0.1%
3,830 Kloeckner-Humbolt-Deutz AG*...... 35,643
636 Linde AG......................... 391,409
------------
427,052
------------
METALS & MINING -- 0.1%
2,480 FAG Kugelfischer Georg Schaefer
AG............................... 21,070
2,734 Thyssen AG....................... 507,395
------------
528,465
------------
PHARMACEUTICALS -- 0.1%
13,100 Merck KGaA....................... 589,904
------------
RETAIL STORES -- 0.1%
791 Karstadt AG...................... 413,185
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.2%
17,073 Metro AG......................... 1,363,360
------------
RETAIL -- GENERAL MERCHANDISE -- 0.0%
1,630 Douglas Holding AG............... 98,846
------------
TELECOMMUNICATIONS -- 0.9%
142,500 Deutsche Telekom AG.............. 4,688,615
------------
TIRE & RUBBER -- 0.0%
4,870 Continental AG................... 134,504
------------
TRANSPORTATION -- 0.1%
28,980 Lufthansa AG..................... 640,317
------------
50,242,927
------------
HONG KONG -- 2.5%
AIRLINES -- 0.0%
12,600 Hong Kong Aircraft Engineering
Co., Ltd. ....................... 17,240
------------
BANKING -- 0.3%
364,218 Bank of East Asia Ltd. .......... 634,688
108,800 Hang Seng Bank Ltd. ............. 972,555
14,695 Wing Lung Bank................... 51,025
------------
1,658,268
------------
BROADCASTING & PUBLISHING -- 0.0%
96,000 South China Morning Post Holdings
Ltd. ............................ 49,258
25,000 Television Broadcasts Ltd. ...... 64,541
------------
113,799
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HONG KONG (CONTINUED)
DIVERSIFIED -- 0.1%
94,500 Swire Pacific Ltd., Class A...... $ 423,279
262,500 Wharf Holdings Ltd. ............. 382,889
------------
806,168
------------
ELECTRIC UTILITY -- 0.1%
141,400 CLP Holdings Ltd. ............... 704,534
------------
ELECTRICAL & ELECTRONIC -- 0.2%
323,400 Johnson Electric Holdings
Ltd. ............................ 830,727
------------
ELECTRICAL EQUIPMENT -- 0.0%
65,000 Elec & Eltek International
Holdings Ltd. ................... 12,418
------------
GAS UTILITY -- 0.1%
402,232 Hong Kong & China Gas Co.,
Ltd. ............................ 511,420
------------
HOTELS & LODGING -- 0.1%
65,500 Hong Kong & Shanghai
Hotels Ltd. ..................... 46,502
33,000 Miramar Hotel & Investment
Ltd. ............................ 33,865
384,000 Shangri-La Asia Ltd. ............ 327,144
------------
407,511
------------
INDUSTRIAL HOLDING COMPANY -- 0.5%
357,000 Hutchison Whampoa Ltd. .......... 2,523,000
------------
MANUFACTURING -- CONSUMER GOODS -- 0.0%
20,000 Varitronix International Ltd. ... 37,434
------------
REAL ESTATE -- 0.5%
133,000 Cheung Kong Holdings Ltd. ....... 957,109
369,557 Hysan Development Co., Ltd. ..... 550,971
116,525 New World Development Co.,
Ltd. ............................ 293,305
135,136 Sun Hung Kai Properties Ltd. .... 985,562
------------
2,786,947
------------
REAL ESTATE INVESTMENT TRUST -- 0.1%
455,100 Hang Lung Development Co. ....... 487,585
------------
TELECOMMUNICATIONS -- 0.3%
845,855 Hong Kong
Telecommunications Ltd. ......... 1,479,450
------------
TRANSPORTATION -- 0.2%
1,092,000 Cathay Pacific Airways........... 1,085,372
------------
13,461,873
------------
IRELAND -- 0.4%
AIRLINES -- 0.0%
7,300 Ryanair Holdings PLC*............ 52,244
------------
BANKING -- 0.3%
59,200 Allied Irish Banks............... 1,061,852
------------
BUILDING PRODUCTS -- 0.1%
17,480 C.R.H. PLC....................... 302,326
------------
</TABLE>
Continued
48
<PAGE> 50
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
IRELAND (CONTINUED)
CONSUMER GOODS & SERVICES -- 0.0%
29,000 Waterford Wedgewood.............. $ 24,646
------------
DIVERSIFIED -- 0.0%
3,227 DCC PLC.......................... 27,425
------------
FINANCE -- 0.0%
4,200 Irish Permanent PLC.............. 63,248
------------
FOOD PRODUCTS -- 0.0%
11,700 Fyffes PLC....................... 26,167
7,660 Greencore Group.................. 35,405
7,300 Kerry Group PLC.................. 99,591
------------
161,163
------------
HOTELS & LODGING -- 0.0%
1,900 Jurys Hotel Group PLC............ 14,448
------------
INDUSTRIAL GOODS & SERVICES -- 0.0%
49,400 Smurfit (Jefferson) Group........ 89,123
------------
INSURANCE -- 0.0%
14,630 Irish Life PLC................... 137,860
------------
MEDIA -- 0.0%
10,026 Independent Newspapers PLC....... 40,362
------------
OIL & GAS -- 0.0%
9,100 Tullow Oil*...................... 7,462
------------
PRINTING & PUBLISHING -- 0.0%
1,608 Clondalkin Group PLC............. 11,508
------------
TRANSPORTATION & SHIPPING -- 0.0%
1,000 Irish Continental Group PLC...... 11,853
------------
2,005,520
------------
ITALY -- 4.6%
AGRICULTURE -- 0.0%
94,400 Parmalat Finanziaria SpA......... 180,912
------------
AUTO PARTS -- 0.0%
72,520 Magneti Marelli SpA.............. 125,786
------------
AUTOMOTIVE -- 0.2%
233,938 Fiat SpA......................... 814,368
70,340 Fiat SpA di Risp.,
(Non-convertible)................ 140,774
90,820 Fiat SpA Preferred............... 175,428
------------
1,130,570
------------
BANKING -- 0.7%
114,300 Banca Commerciale Italiana....... 790,240
117,282 Banca Intesa Veneto SpA.......... 705,232
46,200 Banca Ambrosiano Veneto SpA di
Risp., (Non-convertible)......... 141,215
17,100 Banca Popolare de Milano......... 155,559
269,200 Credito Italiano SpA............. 1,599,142
11,723 Riunione Adriatica di Sicurta SpA
di Risp., (Non-convertible)...... 117,664
------------
3,509,052
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ITALY (CONTINUED)
BROADCASTING & PUBLISHING -- 0.1%
75,600 Mediaset SpA..................... $ 614,376
------------
BUILDING PRODUCTS -- 0.0%
1,900 Cementir SpA..................... 2,189
10,950 Italcementi SpA.................. 120,863
900 Italcementi SpA di Risp.,
(Non-convertible)................ 4,585
------------
127,637
------------
CHEMICALS -- 0.1%
317,962 Montedison SpA................... 423,270
12,800 Montedison SpA di Risp.,
(Non-convertible)................ 12,809
84,200 Snia BPD SpA..................... 132,768
900 Snia BPD SpA di Risp.,
(Non-convertible)................ 993
------------
569,840
------------
ENGINEERING -- 0.0%
7,900 Impregilo SpA*................... 7,158
------------
FINANCE -- 0.4%
89,312 Banc San Paolo Torino............ 1,581,614
36,470 Mediobanca SpA................... 507,605
------------
2,089,219
------------
GAS & ELECTRIC UTILITY -- 0.1%
40,500 Edison SpA....................... 478,098
------------
GAS UTILITY -- 0.0%
44,500 Italgas SpA...................... 241,406
------------
INSURANCE -- 0.9%
65,363 Assicurazioni Generali........... 2,735,197
357,500 Istituto Nazionale delle
Assicurazioni.................... 946,385
27,062 Riuniune Adriatici de Sicurta
SpA.............................. 393,073
10,900 Societa Assicuratrice Industriale
(SAI) SpA........................ 131,549
298,200 Unione Immobiliare*.............. 155,892
------------
4,362,096
------------
JEWELRY -- 0.0%
21,300 Bulgari SpA...................... 127,240
------------
OFFICE EQUIPMENT & SERVICES -- 0.1%
179,696 Olivetti SpA*.................... 626,634
------------
OIL & GAS -- 0.6%
509,300 ENI SpA.......................... 3,335,839
------------
PAPER PRODUCTS -- 0.0%
15,200 Burgo (Cartiere) SpA............. 97,991
------------
PRINTING & PUBLISHING -- 0.0%
11,400 Mondadori (Arnoldo) Editore
SpA.............................. 151,065
------------
RETAIL STORES -- 0.0%
14,200 La Rinascente SpA................ 146,358
------------
</TABLE>
Continued
49
<PAGE> 51
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ITALY (CONTINUED)
TELECOMMUNICATIONS -- 1.2%
19,400 Sirti SpA........................ $ 117,302
99,760 Telecom Italia Mobile SpA........ 470,699
422,760 Telecom Italia Mobile SpA di
Risp, (Non-convertible).......... 3,127,960
234,911 Telecom Italia SpA............... 2,008,770
57,260 Telecom Italia SpA-RNC........... 361,154
------------
6,085,885
------------
TEXTILE PRODUCTS -- 0.1%
115,720 Benetton Group SpA............... 233,701
4,200 Marzotto (Gaetano) & Figli SpA... 46,358
------------
280,059
------------
TIRE & RUBBER -- 0.1%
120,700 Pirelli SpA...................... 387,598
10,600 Pirelli SpA di Risp,
(Non-convertible)................ 26,164
------------
413,762
------------
24,700,983
------------
JAPAN -- 27.3%
ALUMINUM -- 0.0%
38,000 Nippon Light Metal Co., Ltd. .... 39,753
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 1.5%
203,000 Matsushita Electric Industrial
Co., Ltd. ....................... 3,597,599
16,000 Pioneer Electronic Corp. ........ 268,802
187,000 Sanyo Electric Co. .............. 580,248
108,000 Sharp Corp. ..................... 975,668
39,000 Sony Corp. ...................... 2,845,564
------------
8,267,881
------------
AUTOMOTIVE -- 2.6%
3,000 Autobacs Seven Co., Ltd. ........ 101,067
93,000 Honda Motor Co., Ltd. ........... 3,058,869
241,000 Nissan Motor Co., Ltd. .......... 739,260
381,000 Toyota Motor Corp. .............. 10,369,727
------------
14,268,923
------------
BANKING -- 3.1%
36,000 77 Bank.......................... 360,649
228,000 Asahi Bank Ltd. ................. 836,834
44,000 Ashikaga Bank Ltd. .............. 78,797
449,000 Bank of Tokyo -- Mitsubishi
Ltd. ............................ 4,657,321
104,000 Bank of Yokohama Ltd. ........... 249,866
73,000 Chiba Bank Ltd. ................. 290,585
300,000 Fuji Bank Ltd. .................. 1,106,416
49,000 Gunma Bank Ltd. ................. 389,666
23,000 Higo Bank........................ 105,420
62,000 Hokuriku Bank.................... 111,581
265,000 Industrial Bank of Japan......... 1,224,017
85,000 Joyo Bank........................ 333,077
125,000 Mitsubishi Trust & Banking
Corp. ........................... 805,654
110,000 Mitsui Trust & Banking Co.,
Ltd. ............................ 125,802
359,000 Sakura Bank Ltd. ................ 824,324
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
BANKING (CONTINUED)
77,000 Shizuoka Bank.................... $ 952,289
305,000 Sumitomo Bank Ltd. .............. 3,136,619
199,000 Tokai Bank....................... 942,103
18,000 Yamaguchi Bank................... 170,112
------------
16,701,132
------------
BREWERY -- 0.4%
46,000 Asahi Breweries Ltd. ............ 679,010
101,000 Kirin Brewery Co., Ltd. ......... 1,289,400
31,000 Sapporo Breweries Ltd. .......... 134,667
------------
2,103,077
------------
BROADCASTING & PUBLISHING -- 0.0%
16,000 Tokyo Broadcasting System........ 179,154
------------
BUILDING PRODUCTS -- 0.1%
21,000 Sanwa Shutter Corp. ............. 91,971
23,000 Sumitomo Osaka Cement Co.,
Ltd. ............................ 43,024
72,400 Taiheiyo Cement Corp. ........... 181,647
20,000 Tostem Corp. .................... 397,176
------------
713,818
------------
CHEMICALS -- 1.3%
138,000 Asahi Chemical Industry Co.,
Ltd. ............................ 659,435
19,000 Daicel Chemical Industries
Ltd. ............................ 56,597
72,000 Dainippon Ink & Chemicals
Inc. ............................ 197,240
27,000 Denki Kagaku Kogyo Kabushiki
Kaisha........................... 44,044
32,000 Kaneka Corp. .................... 240,291
201,000 Mitsubishi Chemical Corp. ....... 424,108
45,000 Mitsubishi Gas Chemical Co. ..... 124,871
10,000 Nippon Shokubai Kabushiki
Kaisha Co. ...................... 53,902
52,000 Sekisui Chemical Co., Ltd. ...... 350,365
37,000 Shin-Etsu Chemical Co., Ltd. .... 892,225
155,000 Sumitomo Chemical Co. ........... 604,628
89,000 Takeda Chemical Industries....... 3,432,285
54,000 Tosoh Corp. ..................... 77,556
76,000 Ube Industries Ltd. ............. 115,216
------------
7,272,763
------------
COMMERCIAL SERVICES -- 0.0%
100 Oyo Corp. ....................... 1,618
------------
CONSTRUCTION -- 0.3%
50,000 Daiwa House Industry Co.,
Ltd. ............................ 533,261
35,000 Kumagai Gumi Co., Ltd.*.......... 26,995
13,000 Okumura Corp. ................... 57,741
18,000 Penta-Ocean Construction......... 36,065
68,000 Sekisui House Ltd. .............. 720,412
74,000 Shimizu Corp. ................... 248,642
93,000 Taisei Corp. .................... 178,915
------------
1,802,031
------------
</TABLE>
Continued
50
<PAGE> 52
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
CONSUMER GOODS & SERVICES -- 0.1%
22,000 Nippon Sheet Glass Co., Ltd. .... $ 62,023
35,000 Toto Ltd. ....................... 281,436
------------
343,459
------------
COSMETICS/PERSONAL CARE -- 0.4%
59,000 Kao Corp. ....................... 1,333,817
15,000 Lion Corp. ...................... 62,635
40,000 Shiseido Co., Ltd. .............. 514,909
------------
1,911,361
------------
DATA PROCESSING & REPRODUCTION -- 0.5%
197,000 Fujitsu Ltd. .................... 2,628,492
------------
DISTRIBUTION -- 0.0%
137,000 Itochu Corp. .................... 264,777
------------
DIVERSIFIED -- 0.0%
18,000 Yamaha Corp. .................... 186,708
------------
ELECTRIC UTILITY -- 1.2%
107,900 Kansai Electric Power Co.,
Inc. ............................ 2,367,558
47,500 Tohoku Electric Power............ 842,224
132,000 Tokyo Electric Power Co. ........ 3,264,991
------------
6,474,773
------------
ELECTRICAL & ELECTRONIC -- 0.6%
25,000 Casio Computer Co., Ltd. ........ 184,846
18,000 Kyocera Corp. ................... 952,688
206,000 Mitsubishi Electric Corp. ....... 648,335
25,000 Omron Corp. ..................... 343,095
11,000 Rohm Co., Ltd. .................. 1,003,488
------------
3,132,452
------------
ELECTRICAL EQUIPMENT -- 0.2%
16,000 Alps Electric Co., Ltd. ......... 294,335
6,000 SMC Corp. ....................... 479,801
10,000 Taiyo Yuden Co., Ltd. ........... 118,621
------------
892,757
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 1.0%
8,600 Advantest Corp. ................. 545,903
22,100 Fanuc Ltd. ...................... 758,241
3,000 Hirose Electric Co., Ltd. ....... 210,379
330,000 Hitachi Ltd. .................... 2,047,933
153,000 NEC Corp. ....................... 1,410,681
13,000 Nitto Denko Corp. ............... 216,673
23,000 Yokogawa Electric Corp. ......... 114,188
------------
5,303,998
------------
ENERGY -- 0.0%
100,000 Japan Energy Corp. .............. 94,861
------------
ENGINEERING -- 0.3%
7,000 Daito Trust Construction Co.,
Ltd. ............................ 60,755
92,000 Kajima Corp. .................... 240,610
18,000 Kandenko Co., Ltd. .............. 121,919
131,000 Kawasaki Heavy Industries
Ltd. ............................ 307,766
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
ENGINEERING (CONTINUED)
25,000 Kinden Corp. .................... $ 380,774
25,000 Nishimatsu Construction.......... 146,281
71,000 Obayashi Corp. .................. 341,163
------------
1,599,268
------------
ENTERTAINMENT -- 0.1%
4,000 NAMCO............................ 80,499
1,700 Toho Co. ........................ 233,304
14,000 Tokyo Dome Corp. ................ 74,719
------------
388,522
------------
FINANCE -- 0.7%
14,000 Acom Co., Ltd. .................. 901,091
128,000 Daiwa Securities Co., Ltd. ...... 438,027
195,000 Nomura Securities Co., Ltd. ..... 1,702,843
24,000 Orient Corp. .................... 53,619
6,000 Orix Corp. ...................... 448,950
------------
3,544,530
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.2%
62,000 Ajinomoto Co., Inc. ............. 659,594
21,000 Nippon Meat Packers Inc. ........ 338,840
12,000 Nissin Food Products Co.,
Ltd. ............................ 302,669
------------
1,301,103
------------
FOOD PRODUCTS -- 0.2%
65,000 Daiei Inc. ...................... 176,911
10,000 House Foods Industry............. 169,331
12,000 Itoham Foods..................... 51,172
17,000 Kikkoman Corp. .................. 108,212
15,000 Meiji Milk Products Co., Ltd. ... 45,214
16,000 Nichirei Corp. .................. 38,157
8,000 QP Corp. ........................ 65,889
23,000 Snow Brand Milk Products
Co., Ltd. ....................... 105,216
20,000 Yamazaki Baking Co., Ltd. ....... 261,179
------------
1,021,281
------------
FOREST PRODUCTS -- 0.2%
17,000 Mitsubishi Paper Mills........... 34,815
91,000 Nippon Paper Industries Co. ..... 414,676
99,000 Oji Paper Co., Ltd. ............. 515,201
12,000 Sumitomo Forestry Co., Ltd. ..... 86,173
6,000 Uni-Charm........................ 281,923
------------
1,332,788
------------
GAS UTILITY -- 0.3%
243,000 Osaka Gas Co., Ltd. ............. 838,030
270,000 Tokyo Gas Co., Ltd. ............. 710,926
------------
1,548,956
------------
HEALTH & PERSONAL CARE -- 0.2%
40,000 Kyowa Hakko Kogyo Co. ........... 197,878
44,000 Sankyo Co., Ltd. ................ 963,504
------------
1,161,382
------------
</TABLE>
Continued
51
<PAGE> 53
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
HEALTH CARE -- 0.1%
11,000 Hoya Corp. ...................... $ 536,364
------------
HOTELS & LODGING -- 0.0%
11,000 Fujita Kanko Inc. ............... 97,813
------------
INDUSTRIAL GOODS & SERVICES -- 1.0%
88,000 Bridgestone Corp. ............... 2,001,124
97,000 Denso Corp. ..................... 1,797,306
17,000 Inax Corp. ...................... 110,021
58,000 Mitsui Engineering & Shipbuilding
Co., Ltd.*....................... 57,590
35,000 NGK Insulators Ltd. ............. 452,097
20,000 NGK Spark Plug Co., Ltd. ........ 204,084
70,000 Sumitomo Electric Industries
Ltd. ............................ 788,765
------------
5,410,987
------------
INSURANCE -- 0.6%
74,000 Mitsui Marine & Fire Insurance
Co., Ltd. ....................... 390,349
41,000 Nichido Fire & Marine Insurance
Co., Ltd. ....................... 201,735
53,000 Nippon Fire & Marine Insurance
Co. ............................. 195,467
64,000 Sumitomo Marine & Fire Insurance
Co. ............................. 406,253
170,000 Tokio Marine & Fire Insurance
Co. ............................. 2,034,635
------------
3,228,439
------------
JEWELRY -- 0.0%
29,000 Citizen Watch Co., Ltd. ......... 174,828
------------
LEASING -- 0.1%
7,000 Daiwa Kosho Lease Co., Ltd. ..... 28,795
39,000 Yamato Transport Co., Ltd. ...... 546,293
------------
575,088
------------
MACHINE -- DIVERSIFIED -- 0.1%
7,000 Komori Corp. .................... 147,699
12,000 Kurita Water Industries Ltd. .... 176,388
27,000 Toyoda Automatic Loom Works...... 478,499
------------
802,586
------------
MACHINERY & EQUIPMENT -- 0.8%
27,000 Amada Co., Ltd. ................. 130,935
14,000 Brother Industries Ltd. ......... 43,689
24,000 Daikin Industries Ltd. .......... 238,305
26,000 Ebara Corp. ..................... 224,280
93,000 Komatsu Ltd. .................... 488,924
10,000 Koyo Seiko Co., Ltd. ............ 55,498
135,000 Kubota Corp. .................... 403,337
38,000 Minebea Co., Ltd. ............... 435,935
324,000 Mitsubishi Heavy Industries
Ltd. ............................ 1,263,868
5,000 Mori Seiki Co. .................. 56,739
51,000 NSK Ltd. ........................ 190,804
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
MACHINERY & EQUIPMENT (CONTINUED)
42,000 NTN Corp. ....................... $ 135,536
16,000 Tokyo Electron Ltd. ............. 608,529
------------
4,276,379
------------
MANUFACTURING -- CAPITAL GOODS -- 0.3%
31,000 Fujikura Ltd. ................... 166,548
12,000 Kokuyo Co. ...................... 161,813
14,000 Makita Corp. .................... 156,264
23,000 Murata Manufacturing Co.,
Ltd. ............................ 956,322
8,000 Noritake Co., Ltd. .............. 41,420
7,000 Takara Standard Co. ............. 58,956
------------
1,541,323
------------
MANUFACTURING -- CONSUMER GOODS -- 0.9%
88,000 Canon Inc. ...................... 1,884,099
54,000 Fuji Photo Film Co., Ltd. ....... 2,010,698
32,000 Konica Corp. .................... 146,104
35,000 Nikon Corp. ..................... 341,322
8,700 Sega Enterprises Ltd. ........... 193,211
13,000 Shimano Inc. .................... 335,959
------------
4,911,393
------------
MEDICAL SUPPLIES -- 0.1%
25,000 Olympus Optical Co., Ltd. ....... 287,908
------------
MERCHANDISING -- 0.8%
41,000 Ito-Yokado Co., Ltd. ............ 2,871,540
31,000 JUSCO Co., Ltd. ................. 627,989
35,000 Marui Co., Ltd. ................. 674,887
------------
4,174,416
------------
METALS -- 0.5%
42,000 Daido Steel Co., Ltd. ........... 55,480
312,000 Kawasaki Steel Corp. ............ 467,461
104,000 Mitsubishi Materials Corp. ...... 175,183
662,000 Nippon Steel Corp. .............. 1,203,139
338,000 NKK Corp. ....................... 230,734
343,000 Sumitomo Metal Industries
Ltd. ............................ 392,272
11,000 Tokyo Steel Manufacturing Co. ... 55,197
------------
2,579,466
------------
METALS & MINING -- 0.1%
92,000 Hitachi Zosen Corp. ............. 127,238
46,000 Mitsui Mining & Smelting Co. .... 227,153
52,000 Sumitomo Metal Mining Co. ....... 169,189
------------
523,580
------------
MISCELLANEOUS MATERIALS & COMMODITIES -- 0.1%
113,000 Asahi Glass Co., Ltd. ........... 702,264
------------
OIL & GAS -- 0.1%
3,100 Arabian Oil Co., Ltd. ........... 39,878
57,000 Cosmo Oil Co., Ltd. ............. 86,412
32,000 Mitsubishi Oil Co., Ltd.*........ 56,456
</TABLE>
Continued
52
<PAGE> 54
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
OIL & GAS (CONTINUED)
118,000 Nippon Oil Co., Ltd. ............ $ 412,176
14,000 Teikoko Oil Co., Ltd. ........... 41,579
------------
636,501
------------
PACKAGING -- 0.1%
21,000 Toyo Seikan Kaisha Ltd. ......... 357,085
------------
PHARMACEUTICALS -- 0.7%
22,000 Chugai Pharmaceutical Co.,
Ltd. ............................ 220,397
26,000 Dai-Ichi Pharmaceuticals......... 440,031
28,000 Eisai Co., Ltd. ................. 546,116
3,000 Kissei Pharmaceutical Co.,
Ltd. ............................ 53,060
35,000 Meiji Seika Co. ................. 139,632
33,000 Shionogi & Co., Ltd. ............ 241,949
33,000 Taisho Pharmaceutical Co. ....... 909,868
32,000 Yamanouchi Pharmaceutical Co.,
Ltd. ............................ 1,032,654
------------
3,583,707
------------
PRINTING & PUBLISHING -- 0.4%
73,000 Dai Nippon Printing Co., Ltd. ... 1,166,223
67,000 Toppan Printing Co., Ltd. ....... 819,705
------------
1,985,928
------------
REAL ESTATE -- 0.3%
124,000 Mitsubishi Estate Co., Ltd. ..... 1,113,615
78,000 Mitsui Fudosan Co., Ltd. ........ 591,241
------------
1,704,856
------------
RETAIL STORES -- 0.2%
6,000 Aoyama Trading Co., Ltd. ........ 168,090
14,000 Daimuru Inc. .................... 42,200
16,000 Hankyu Department Stores Co. .... 105,110
20,000 Isetan Co. ...................... 214,900
43,000 Mitsukoshi Ltd. ................. 114,365
29,000 Mycal Corp. ..................... 173,285
5,000 Skylark Co., Ltd. ............... 74,515
28,000 Takashimaya Co., Ltd. ........... 236,071
------------
1,128,536
------------
RETAIL -- GENERAL MERCHANDISE -- 0.1%
15,300 Credit Saison Co., Ltd. ......... 377,764
------------
RETAIL-SPECIAL LINE -- 0.1%
2,000 Shimachu Co. .................... 39,895
18,000 Uny Co., Ltd. ................... 329,531
------------
369,426
------------
SERVICES -- 0.2%
11,000 Secom Co., Ltd. ................. 912,793
------------
STORAGE -- 0.0%
15,000 Mitsubishi Logistics Corp. ...... 175,537
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
TELECOMMUNICATIONS -- 1.9%
11,000 Nippon Comsys Corp. ............. $ 150,084
1,314 Nippon Telegraph & Telephone
Corp. ........................... 10,158,178
------------
10,308,262
------------
TEXTILE PRODUCTS -- 0.4%
12,000 Gunze Ltd. ...................... 28,937
33,000 Kuraray Co., Ltd. ............... 364,825
57,000 Mitsubishi Rayon Co., Ltd. ...... 156,148
21,000 Nisshinbo Industries Inc. ....... 73,353
15,000 Onward Kashiyama Co., Ltd. ...... 201,868
89,000 Teijin Ltd. ..................... 328,237
5,000 Tokyo Style...................... 50,711
134,000 Toray Industries Inc. ........... 700,908
49,000 Toyobo Ltd. ..................... 63,424
14,000 Wacoal Corp. .................... 180,342
------------
2,148,753
------------
TOBACCO -- 0.0%
11,000 Takara Shuzo..................... 65,631
------------
TRANSPORTATION -- 1.1%
422 East Japan Railway Co. .......... 2,360,727
82,000 Hankyu Corp. .................... 360,578
171,000 Japan Airlines Co.*.............. 451,769
155,000 Kinki Nippon Railway Co. ........ 831,364
77,000 Nagoya Railroad Co., Ltd. ....... 279,884
46,000 Nankai Electric Railway Co. ..... 232,046
103,000 Nippon Express Co., Ltd. ........ 580,762
67,000 Odakyu Electric Railway Co. ..... 234,626
78,000 Tobu Railway Co., Ltd. .......... 228,198
105,000 Tokyu Corp. ..................... 276,471
------------
5,836,425
------------
TRANSPORTATION & SHIPPING -- 0.2%
25,000 Kamigumi Co., Ltd. .............. 121,679
30,000 Kawasaki Kisen Kaisha Ltd. ...... 40,427
47,000 Keihin Electric Express Railway
Co., Ltd. ....................... 147,921
101,000 Mitsui OSK Lines Ltd. ........... 162,966
113,000 Nippon Yusen Kabushiki Kaisha.... 357,644
8,000 Seino Transportation............. 45,817
------------
876,454
------------
WHOLESALE & INTERNATIONAL TRADE -- 0.5%
143,000 Marubeni Corp. .................. 245,947
150,000 Mitsubishi Corp. ................ 864,388
152,000 Mitsui & Co., Ltd. .............. 850,309
102,000 Sumitomo Corp. .................. 497,355
------------
2,457,999
------------
WIRE & CABLE PRODUCTS -- 0.0%
60,000 Furukawa Electric Co., Ltd. ..... 204,793
------------
147,434,902
------------
</TABLE>
Continued
53
<PAGE> 55
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MALAYSIA -- 0.6%
AGRICULTURE -- 0.0%
130,000 Golden Hope Plantations Berhad... $ 98,160
37,500 Highlands & Lowlands Berhad...... 17,197
52,000 IOI Corp. Berhad................. 20,877
79,000 Kuala Lumpur Kepong Berhad....... 94,570
------------
230,804
------------
AUTOMOTIVE -- 0.0%
13,000 Ederan Otomobil.................. 14,365
19,200 Oriental Holdings................ 20,686
33,000 Perusahaan Otomobil Nasional
Berhad........................... 34,945
41,000 Tan Chong Motors................. 9,288
------------
79,284
------------
BANKING -- 0.2%
24,000 AMMB Holdings Berhad............. 19,802
48,000 Commerce Asset Holdings Berhad... 25,990
343,000 Malayan Banking Berhad........... 486,403
213,600 Public Bank Berhad............... 72,775
187,000 RHB Capital Berhad............... 73,011
------------
677,981
------------
BEVERAGES & TOBACCO -- 0.0%
18,000 Guinness Anchor.................. 12,663
------------
BUILDING PRODUCTS -- 0.0%
15,000 Jaya Tiasa Holdings Berhad....... 13,951
113,000 Malayan United Industries........ 17,169
------------
31,120
------------
CHEMICALS -- 0.0%
8,000 Malaysian Oxygen Berhad.......... 10,608
------------
DIVERSIFIED -- 0.1%
60,000 Malaysian Resources.............. 15,249
58,000 Multi-Purpose Holdings Berhad*... 10,895
22,500 Perlis Plantations Berhad........ 16,161
247,040 Sime Darby Berhad................ 198,365
132,500 YTL Corp. Berhad................. 120,546
------------
361,216
------------
ELECTRIC UTILITY -- 0.1%
327,000 Tenaga Nasional Berhad........... 469,736
------------
ELECTRICAL & ELECTRONIC -- 0.0%
12,000 Malaysian Pacific................ 11,492
------------
ENERGY -- 0.0%
16,000 UMW Holdings Berhard............. 11,787
------------
ENGINEERING -- 0.0%
180,000 Amsteel Corp. Berhad*............ 17,570
6,300 Silverstone Berhad*.............. 0
46,000 Time Engineering Berhard*........ 7,497
49,326 United Engineers (Malaysia)
Ltd.*............................ 25,163
------------
50,230
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MALAYSIA (CONTINUED)
ENTERTAINMENT -- 0.0%
38,000 Berjaya Land Berhad.............. $ 12,807
141,000 Magnum Corp. Berhad.............. 42,327
118,000 Resorts World Berhad............. 95,185
------------
150,319
------------
FINANCE -- 0.0%
48,000 MBf Capital Berhad*.............. 7,558
23,000 Rashid Hussain Berhad*........... 11,437
------------
18,995
------------
FOOD PRODUCTS -- 0.0%
26,000 Nestle (Malaysia) Berhad......... 72,783
------------
METALS & MINING -- 0.0%
92,400 Malaysia Mining Corp. Berhad..... 37,097
------------
OIL & GAS -- 0.0%
17,500 Shell Refining Co. (Malaysia)
Berhad........................... 12,892
------------
PRINTING & PUBLISHING -- 0.0%
11,000 New Straits Time Press........... 5,409
------------
TELECOMMUNICATIONS -- 0.2%
47,000 Technology Resources Industries
Berhad........................... 17,139
351,000 Telekom Malaysia Berhad.......... 646,425
------------
663,564
------------
TOBACCO -- 0.0%
15,000 RJ Reynolds...................... 11,879
29,300 Rothmans of Pall Mall (Malaysia)
Berhad........................... 120,872
------------
132,751
------------
TRANSPORTATION -- 0.0%
47,000 Malaysian Airlines............... 18,004
91,000 Malaysian International
Shipping......................... 83,796
------------
101,800
------------
3,142,531
------------
NETHERLANDS -- 5.0%
BANKING -- 0.4%
91,835 ABN Amro Holding NV.............. 1,932,939
------------
BEVERAGES & TOBACCO -- 0.2%
19,937 Heineken NV...................... 1,200,469
------------
BROADCASTING & PUBLISHING -- 0.1%
48,430 Elsevier NV...................... 678,708
------------
CHEMICALS -- 0.2%
18,132 Akzo Nobel NV.................... 826,085
------------
COMPUTER SOFTWARE -- 0.1%
6,665 Getronics NV..................... 330,290
------------
CONSUMER GOODS & SERVICES -- 0.6%
40,624 Unilever NV-CVA.................. 3,474,325
------------
</TABLE>
Continued
54
<PAGE> 56
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
NETHERLANDS (CONTINUED)
ELECTRONICS -- 0.3%
23,240 Philips Electronics NV........... $ 1,560,341
------------
FINANCE -- 0.7%
59,683 ING Groep NV..................... 3,641,404
------------
FOOD PRODUCTS -- 0.3%
30,149 Koninklijke Ahold NV............. 1,510,127
------------
INSURANCE -- 0.1%
6,400 Aegon NV......................... 786,415
------------
MANUFACTURING -- CONSUMER GOODS -- 0.0%
262 Stork NV......................... 5,989
------------
OIL & GAS -- 1.2%
135,788 Royal Dutch Petroleum Co. ....... 6,765,281
------------
PACKAGING -- 0.0%
5,696 Buhrmann NV...................... 101,982
------------
PRINTING & PUBLISHING -- 0.2%
6,216 Oce NV........................... 223,577
4,461 Wolters Kluwer CVA............... 955,114
------------
1,178,691
------------
RETAIL -- SPECIAL LINE -- 0.3%
38,917 Ahold............................ 1,439,168
------------
STEEL -- 0.0%
3,036 Koninklijke Hoogovens NV......... 84,124
------------
TRANSPORTATION -- 0.3%
1,986 IHC Caland NV.................... 82,544
10,159 KLM Royal Dutch Air Lines NV..... 307,477
1,133 Pakhoed NV....................... 28,617
30,151 TNT Post Group NV................ 972,008
------------
1,390,646
------------
26,906,984
------------
NEW ZEALAND -- 0.2%
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.0%
8,949 Fisher & Paykel Industries
Ltd. ............................ 32,383
------------
BEVERAGES & TOBACCO -- 0.0%
41,300 Lion Nathan Ltd. ................ 105,376
------------
FOREST PRODUCTS -- 0.0%
130,281 Carter Holt Harvey Ltd. ......... 116,997
------------
TELECOMMUNICATIONS -- 0.2%
131,965 Telecom Corp. of
New Zealand Ltd. ................ 575,120
------------
829,876
------------
NORWAY -- 0.4%
BANKING -- 0.1%
68,900 Christiania Bank Og
Kreditkasse...................... 238,748
37,000 Den Norske Bank ASA.............. 127,724
------------
366,472
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
NORWAY (CONTINUED)
CHEMICALS -- 0.0%
1,000 Dyno Industrier ASA.............. $ 14,832
------------
DIVERSIFIED -- 0.2%
26,150 Norsk Hydro ASA.................. 882,104
------------
ELECTRIC UTILITY -- 0.0%
15,650 Hafslund ASA, Series A........... 98,599
10,326 Hafslund ASA, Series B........... 43,913
------------
142,512
------------
FOREST PRODUCTS -- 0.0%
3,200 Norske Skogindustrier ASA --
Class A.......................... 93,243
------------
INDUSTRIAL GOODS & SERVICES -- 0.0%
1,200 Unitor ASA....................... 11,655
------------
INSURANCE -- 0.0%
34,100 Storebrand ASA................... 257,358
------------
MANUFACTURING -- CONSUMER GOODS -- 0.1%
18,800 Orkla ASA -- Class A............. 280,072
------------
OIL & GAS -- 0.0%
10,500 Aker RGI ASA, Series A........... 110,254
2,100 Aker RGI ASA, Series B........... 18,743
9,700 Petroleum Geo-Services ASA....... 123,498
------------
252,495
------------
TRANSPORTATION -- 0.0%
2,200 Leif Hoegh & Co. ASA............. 25,700
------------
2,326,443
------------
PORTUGAL -- 0.3%
BANKING -- 0.1%
10,500 Banco Commercial Portuguese...... 322,822
6,300 Banco Espirito Santo............. 195,539
------------
518,361
------------
ELECTRICAL & ELECTRONIC -- 0.1%
32,100 Electricidade De Portugal........ 706,766
------------
TELECOMMUNICATIONS -- 0.1%
10,100 Portugal Telecom SA.............. 463,095
------------
TRANSPORTATION -- 0.0%
2,000 Brisa Auto-Estradas.............. 117,732
------------
1,805,954
------------
SINGAPORE -- 1.0%
AUTOMOTIVE -- 0.0%
1,000 Cycle & Carriage................. 3,424
------------
</TABLE>
Continued
55
<PAGE> 57
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SINGAPORE (CONTINUED)
BANKING -- 0.4%
77,375 Development Bank of Singapore
Ltd. ............................ $ 698,738
115,676 Oversea-Chinese Banking Corp.,
Ltd. ............................ 785,214
117,350 United Overseas Bank Ltd. ....... 753,905
------------
2,237,857
------------
BEVERAGES & TOBACCO -- 0.0%
47,000 Fraser & Neave Ltd. ............. 137,301
------------
FINANCE -- 0.0%
29,600 Haw Par Brothers International
Ltd. ............................ 33,189
------------
HOTELS & LODGING -- 0.0%
1,400 Overseas Union Enterprise
Ltd. ............................ 2,783
1,100 Shangri-La Hotel Ltd. ........... 1,787
------------
4,570
------------
PRINTING & PUBLISHING -- 0.1%
46,023 Singapore Press Holdings Ltd. ... 499,289
------------
REAL ESTATE -- 0.1%
69,600 City Developments Ltd. .......... 301,608
115,000 DBS Land Ltd. ................... 169,368
8,000 United Industrial Corp., Ltd. ... 3,200
52,000 United Overseas Land Ltd. ....... 35,298
------------
509,474
------------
STEEL -- 0.0%
60,750 NatSteel Ltd. ................... 66,643
------------
TELECOMMUNICATIONS -- 0.2%
635,000 Singapore Telecommunications
Ltd. ............................ 969,843
------------
TRANSPORTATION -- 0.2%
133,000 Singapore Airlines Ltd. ......... 975,359
------------
TRANSPORTATION & SHIPPING -- 0.0%
79,000 Keppel Corp. .................... 211,630
------------
5,648,579
------------
SPAIN -- 3.4%
AGRICULTURE -- 0.0%
5,700 Azucarera Ebro Agricolas SA...... 125,915
------------
BANKING -- 0.7%
79,726 Banco Central Hispanoamericano
SA............................... 948,106
84,322 Banco Santander SA............... 1,678,212
1,676 Banco Santander SA............... 33,365
35,400 Corporation Bancaria De Espana
SA............................... 918,158
------------
3,577,841
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SPAIN (CONTINUED)
BANKING & FINANCE -- 0.4%
147,123 Banco Bilbao Vizcaya............. $ 2,310,294
2,460 Portland Valoerrivass............ 100,698
------------
2,410,992
------------
BEVERAGES & TOBACCO -- 0.1%
1,650 El Aguila SA*.................... 15,954
13,330 Tabacalera SA -- Class A......... 336,798
------------
352,752
------------
BUILDING PRODUCTS -- 0.0%
5,400 Uralita SA....................... 60,215
------------
CHEMICALS -- 0.0%
700 Ercros SA*....................... 944
------------
COMMERCIAL SERVICES -- 0.0%
500 Prosegur, CIA de Seguridad SA.... 5,840
------------
CONSTRUCTION -- 0.1%
4,100 ACS, Actividades de Construccion
y Servicios SA................... 162,042
5,308 Fomento de Construcciones y
Contratas SA..................... 395,222
------------
557,264
------------
ENGINEERING -- 0.1%
20,163 Autopistas Concesionaria Espanola
SA............................... 335,834
5,800 Dragados & Construcciones SA..... 214,085
200 Urbis SA*........................ 3,112
------------
553,031
------------
FOOD PRODUCTS -- 0.0%
18,700 Telepizza SA*.................... 178,169
1,282 Viscofan Industria Navarra de
Envolturas Celulosicassa SA...... 41,530
------------
219,699
------------
FOREST PRODUCTS -- 0.0%
100 Empresa Nacional de Celulosas
SA............................... 1,680
2,498 Sarrio SA*....................... 12,429
------------
14,109
------------
GAS & ELECTRIC UTILITY -- 1.0%
68,880 Endesa SA........................ 1,827,838
10,824 Gas Natural SDG SA............... 1,180,247
65,024 Iberdrola SA..................... 1,218,414
22,066 Union Electrica Fenosa SA........ 382,324
------------
4,608,823
------------
HOTELS & LODGING -- 0.0%
2,700 Sol Melia SA..................... 94,325
------------
INDUSTRIAL HOLDING COMPANY -- 0.0%
1,475 Corporacion Financiara Alba SA... 246,716
------------
</TABLE>
Continued
56
<PAGE> 58
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SPAIN (CONTINUED)
INSURANCE -- 0.0%
5,500 Corporacion Mapfre............... $ 149,445
------------
MACHINERY & EQUIPMENT -- 0.0%
6,416 Zardoya Otis SA.................. 200,597
------------
METALS -- 0.0%
6,000 Acerinox SA...................... 139,952
------------
OIL & GAS -- 0.2%
21,698 Repsol SA........................ 1,159,237
------------
REAL ESTATE -- 0.1%
4,268 Metrovacesa SA................... 128,319
13,083 Vallehermoso SA.................. 187,439
------------
315,758
------------
TELECOMMUNICATIONS -- 0.6%
73,909 Telefonica de Espana............. 3,291,421
------------
WATER UTILITY -- 0.1%
4,747 Aquas de Barcelona............... 318,273
------------
18,403,149
------------
SWEDEN -- 2.3%
AUTOMOTIVE -- 0.1%
11,300 Volvo AB, Series A............... 253,031
18,300 Volvo AB, Series B............... 419,935
------------
672,966
------------
BANKING & FINANCE -- 0.3%
21,000 ForeningsSparbanken AB........... 544,072
35,400 Skandiaviska Enskilda Banken,
Series A......................... 373,411
13,000 Svenska Handelsbanken,
Series A......................... 548,514
6,300 Svenska Handlesbanken,
Series B......................... 241,724
------------
1,707,721
------------
CHEMICALS -- 0.0%
10,200 Aga AB, Series A................. 135,277
8,900 Aga AB, Series B................. 116,939
------------
252,216
------------
COMPUTER HARDWARE MANUFACTURING -- 0.0%
5,800 WM-Data AB, Series B............. 247,584
------------
CONSUMER GOODS & SERVICES -- 0.1%
19,600 Securitas AB, Series B........... 304,680
------------
ENGINEERING -- 0.2%
40,200 ABB AB, Series A................. 429,002
28,500 ABB AB, Series B................. 302,386
9,300 Drott AB*........................ 85,479
9,300 Skanska AB, Series B............. 258,157
------------
1,075,024
------------
FINANCE -- 0.0%
5,800 Om Gruppen AB.................... 72,987
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SWEDEN (CONTINUED)
FOREST PRODUCTS -- 0.1%
700 Korsnas AB, Series B............. $ 9,500
21,500 Stora Kopparbergs Bergslags
Aktiebolag, Series A............. 236,073
3,250 Stora Kopparbergs Bergslags
Aktiebolag, Series B............. 36,086
11,900 Svenska Cellusoa AB, Series B.... 259,859
------------
541,518
------------
INDUSTRIAL GOODS & SERVICES -- 0.0%
14,900 Sandvik AB, Series A............. 259,193
------------
INSURANCE -- 0.1%
30,800 Skandia Forsakrings AB........... 471,184
------------
MACHINERY & EQUIPMENT -- 0.0%
10,050 Atlas Copco AB, Series A......... 220,701
500 Atlas Copco AB, Series B......... 10,857
------------
231,558
------------
MANUFACTURING -- CONSUMER GOODS -- 0.1%
22,000 Electrolux AB, Series B.......... 378,630
------------
METALS & MINING -- 0.0%
7,960 Trelleborg AB, Series B.......... 64,815
------------
OFFICE EQUIPMENT & SERVICES -- 0.0%
300 Esselte AB, Series B............. 4,923
------------
PHARMACEUTICALS -- 0.4%
79,400 Astra AB, Series A............... 1,621,200
18,433 Astra AB, Series B............... 375,230
------------
1,996,430
------------
RETAIL -- SPECIAL LINE -- 0.2%
12,400 Hennes & Mauritz AB, Series B.... 1,012,739
------------
TELECOMMUNICATIONS -- 0.7%
7,300 Netcom AB, Series B*............. 297,204
115,800 Telefonaktiebolaget LM Ericsson,
Series B......................... 2,757,299
------------
3,054,503
------------
12,348,671
------------
SWITZERLAND -- 7.0%
AIRLINES -- 0.1%
1,100 SAirGroup........................ 273,102
------------
BUILDING PRODUCTS -- 0.2%
700 Holderbank Financiere Glarus
AG -- Class A.................... 175,321
542 Holderbank Financiere Glarus
AG -- Class B.................... 641,648
------------
816,969
------------
COMMERCIAL SERVICES -- 0.1%
1,690 Addeco SA........................ 771,492
------------
</TABLE>
Continued
57
<PAGE> 59
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
SWITZERLAND (CONTINUED)
DIVERSIFIED -- 0.3%
704 ABB AG, Bearer Shares............ $ 825,231
579 Alusuisse-Lonza Holding AG,
Registered*...................... 674,490
------------
1,499,721
------------
ELECTRONIC COMPONENTS/INSTRUMENTS -- 0.1%
285 The Swatch Group AG, Bearer...... 176,376
1,100 The Swatch Group AG, Registered.. 164,782
------------
341,158
------------
FINANCE -- 1.1%
14,820 Credit Suisse Group,
Registered....................... 2,319,870
12,842 UBS AG, Registered............... 3,945,682
------------
6,265,552
------------
FOOD PRODUCTS -- 1.0%
2,469 Nestle SA, Registered............ 5,374,887
------------
INSURANCE -- 0.9%
927 Swiss Reinsurance Co.,
Registered....................... 2,416,914
2,940 Zuerich Verichrng Gesellschft
Registered....................... 2,204,761
------------
4,621,675
------------
MANUFACTURING -- CONSUMER GOODS -- 0.0%
281 Sulzer AG, Registered............ 171,037
------------
PHARMACEUTICALS -- 3.0%
578 Novartis AG, Bearer.............. 1,136,236
3,824 Novartis AG, Registered.......... 7,518,031
470 Roche Holding AG................. 5,735,204
133 Roche Holding AG, Bearer......... 2,408,750
------------
16,798,221
------------
TELECOMMUNICATIONS -- 0.2%
2,500 Swisscom AG, Registered*......... 1,046,610
------------
37,980,424
------------
UNITED KINGDOM -- 19.4%
AEROSPACE -- 0.1%
25,464 Smiths Industries PLC............ 356,730
------------
AEROSPACE & MILITARY TECHNOLOGY -- 0.2%
119,388 British Aerospace PLC............ 1,014,046
7,300 Cobham PLC....................... 83,380
------------
1,097,426
------------
AIRLINES -- 0.1%
26,000 BAA PLC.......................... 301,946
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.1%
65,300 EMI Group PLC.................... 460,116
------------
AUTO PARTS -- 0.0%
34,514 BBA Group PLC.................... 215,054
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
AUTOMOTIVE -- 0.1%
124,647 Rolls-Royce PLC.................. $ 512,247
------------
BANKING -- 1.9%
93,637 Abbey National PLC............... 2,005,058
101,328 Barclays PLC..................... 2,179,862
58,483 HSBC Holdings PLC................ 1,592,866
120,292 HSBC Holdings PLC (Hong Kong
Dollars)......................... 3,040,153
57,404 Royal Bank of Scotland Group
PLC.............................. 923,570
24,268 Schroders PLC.................... 438,495
------------
10,180,004
------------
BEVERAGES & TOBACCO -- 0.6%
237,642 Diageo PLC....................... 2,670,850
51,361 Scottish & Newcastle PLC......... 582,372
------------
3,253,222
------------
BREWERY -- 0.2%
62,127 Bass PLC......................... 873,967
------------
BROADCASTING/CABLE -- 0.2%
114,000 British Sky Broadcasting Group
PLC.............................. 873,919
48,242 Carlton Communications PLC....... 442,260
------------
1,316,179
------------
BUILDING PRODUCTS -- 0.2%
63,291 Blue Circle Industries PLC....... 365,404
42,536 BPB PLC.......................... 152,158
21,454 RMC Group PLC.................... 292,700
50,900 Rugby Group PLC.................. 79,606
80,155 Tarmac PLC....................... 132,695
58,313 Williams Holdings................ 327,446
------------
1,350,009
------------
CHEMICALS -- 0.2%
40,448 BOC Group PLC.................... 592,216
29,410 Elementis PLC.................... 40,859
60,251 Imperial Chemical Industries
PLC.............................. 520,275
------------
1,153,350
------------
COMPUTER SOFTWARE -- 0.0%
12,540 Mysis PLC........................ 91,332
------------
CONSTRUCTION -- 0.0%
31,469 Taylor Woodrow PLC............... 78,799
------------
DISTRIBUTION -- 0.4%
260,409 BG PLC........................... 1,645,337
366,494 Centrica PLC*.................... 736,300
------------
2,381,637
------------
DIVERSIFIED -- 0.1%
70,000 Rentokil Initial PLC............. 527,590
52,000 Siebe PLC........................ 205,047
------------
732,637
------------
</TABLE>
Continued
58
<PAGE> 60
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
ELECTRIC UTILITY -- 0.4%
121,353 National Grid Group PLC.......... $ 965,116
39,709 Scottish & Southern Energy PLC... 445,627
79,283 Scottish Power PLC............... 811,912
------------
2,222,655
------------
ELECTRICAL & ELECTRONIC -- 0.4%
15,800 Bowthorpe PLC.................... 91,614
35,374 Electrocomponents PLC............ 236,010
180,203 General Electric Co., PLC........ 1,619,036
------------
1,946,660
------------
ENERGY -- 1.1%
388,928 British Petroleum Co., PLC....... 5,804,471
------------
FINANCE -- 1.3%
56,913 Cardon PLC....................... 96,586
108,200 Halifax PLC...................... 1,535,597
357,273 Lloyds TSB Group PLC............. 5,070,493
22,109 Provident Financial PLC.......... 319,293
31,900 St. James's Place Capital PLC.... 153,653
------------
7,175,622
------------
FOOD & HOUSEHOLD PRODUCTS -- 0.7%
67,002 Cadbury Schweppes PLC............ 1,141,534
215,948 Unilever PLC..................... 2,427,032
------------
3,568,566
------------
FOOD PRODUCTS -- 0.3%
74,900 Associated British Foods PLC..... 699,110
15,000 Compass Group.................... 171,829
37,080 Tate & Lyle PLC.................. 206,674
19,834 Unigate PLC...................... 142,559
38,630 United Biscuits Holdings PLC..... 154,415
------------
1,374,587
------------
FOREST PRODUCTS -- 0.0%
68,504 Arjo Wiggins Appleton PLC........ 125,944
------------
GAS & ELECTRIC UTILITY -- 0.2%
94,871 National Power PLC............... 838,164
------------
HEALTH & PERSONAL CARE -- 2.0%
236,685 Glaxo Wellcome PLC............... 8,116,143
62,969 Zeneca Group PLC................. 2,750,154
------------
10,866,297
------------
INDUSTRIAL GOODS & SERVICES -- 0.0%
10,000 Bunzl PLC........................ 39,099
------------
INDUSTRIAL HOLDING COMPANY -- 0.2%
314,244 BTR PLC.......................... 643,092
54,127 Hanson PLC....................... 427,993
39,633 TI Group PLC..................... 213,815
------------
1,284,900
------------
INSURANCE -- 2.2%
102,941 Allied Zurich PLC*............... 1,540,602
60,568 Boots Co., PLC................... 1,029,396
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
INSURANCE (CONTINUED)
57,041 Commercial Union PLC............. $ 891,630
83,616 Great Universal Stores PLC....... 875,762
71,949 Guardian Royal Exchange PLC...... 402,221
84,407 Legal & General Group PLC........ 1,098,914
189,526 Marks & Spencer PLC.............. 1,294,443
128,433 Prudential Corp., PLC............ 1,941,345
106,541 Royal & Sun Alliance Insurance
Group PLC........................ 862,384
126,338 Sainsbury (J) PLC................ 983,216
441,269 Tesco PLC........................ 1,266,466
------------
12,186,379
------------
LEISURE -- 0.3%
59,792 Granada Group PLC................ 1,060,974
100,282 Ladbroke Group PLC............... 400,438
69,606 Rank Group PLC................... 265,206
------------
1,726,618
------------
MACHINE -- DIVERSIFIED -- 0.0%
44,496 FKI PLC.......................... 99,574
------------
MACHINERY & EQUIPMENT -- 0.1%
58,800 GKN PLC.......................... 786,075
------------
MANUFACTURING -- CAPITAL GOODS -- 0.1%
28,784 IMI PLC.......................... 113,741
47,801 Wolseley PLC..................... 301,821
------------
415,562
------------
MERCHANDISING -- 0.1%
92,836 Safeway PLC...................... 462,995
------------
METALS -- 0.2%
169,516 British Steel PLC................ 258,772
71,082 Rio Tinto PLC, Registered........ 820,768
------------
1,079,540
------------
METALS & MINING -- 0.0%
18,004 Johnson Matthey PLC.............. 121,468
------------
OIL & GAS -- 0.1%
17,571 Burmah Castrol PLC............... 252,441
80,282 LASMO PLC........................ 132,237
------------
384,678
------------
PAPER PRODUCTS -- 0.0%
32,556 Rexam PLC -- New................. 91,813
19,673 Rexam PLC -- B Shares*........... 31,587
------------
123,400
------------
PHARMACEUTICALS -- 1.0%
368,827 SmithKline Beecham PLC........... 5,176,173
------------
PRINTING & PUBLISHING -- 0.5%
47,573 Pearson PLC...................... 948,240
94,996 Reed International PLC........... 756,290
97,327 Reuters Group PLC................ 1,020,985
------------
2,725,515
------------
</TABLE>
Continued
59
<PAGE> 61
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
RAILROADS -- 0.2%
33,667 Railtrack Group PLC.............. $ 880,558
------------
REAL ESTATE -- 0.3%
42,809 British Land Co., PLC............ 316,598
31,336 Great Portland Estates PLC....... 102,188
35,421 Hammerson PLC.................... 203,026
44,945 Land Securities PLC.............. 538,412
28,788 MEPC PLC......................... 193,985
32,472 Slough Estates PLC............... 147,493
------------
1,501,702
------------
RETAIL STORES -- 0.0%
31,126 Next PLC......................... 252,723
------------
RETAIL -- GENERAL MERCHANDISE -- 0.2%
90,385 Kingfisher PLC................... 977,487
11,990 Sear PLC......................... 51,867
------------
1,029,354
------------
RETAIL -- SPECIAL LINE -- 0.1%
120,111 LucasVarity PLC.................. 395,684
------------
TELECOMMUNICATIONS -- 2.2%
424,768 British Telecommunications PLC... 6,392,362
158,777 Cable & Wireless PLC............. 1,953,560
204,651 Vodafone Group PLC............... 3,316,453
------------
11,662,375
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 0.0%
22,300 Racal Electronic PLC............. 128,746
------------
TOBACCO -- 0.2%
102,941 British American Tobacco......... 913,742
------------
TRANSPORTATION -- 0.3%
87,761 British Airways PLC.............. 594,288
11,886 Ocean Group PLC.................. 149,806
52,509 Peninsular & Oriental Steam
Navigation Co. .................. 620,288
30,200 Stagecoach Holdings.............. 120,215
------------
1,484,597
------------
WATER UTILITY -- 0.3%
21,666 Anglian Water.................... 300,645
12,412 Hyder PLC........................ 156,432
28,874 Thames Water PLC................. 550,545
46,044 United Utilities PLC............. 638,144
------------
1,645,766
------------
104,784,844
------------
TOTAL COMMON STOCKS.............. 533,496,655
------------
(Cost $449,100,450)
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
CLOSED END FUNDS -- 0.0%
AUSTRALIA -- 0.0%
30,253 Stockland Trust Group............ $ 75,337
------------
TOTAL CLOSED END FUNDS........... 75,337
------------
(Cost $74,093)
PREFERRED STOCKS -- 0.6%
AUSTRALIA -- 0.2%
PRINTING & PUBLISHING -- 0.2%
133,541 News Corp., Ltd. ................ 813,353
------------
GERMANY -- 0.4%
AUTOMOTIVE -- 0.1%
5,270 Den Volkswagen................... 262,626
168 MAN AG........................... 33,993
------------
296,619
------------
COMPUTER SOFTWARE -- 0.2%
3,300 SAP AG........................... 1,575,577
------------
GAS & ELECTRIC UTILITY -- 0.1%
16,540 RWE AG........................... 603,793
------------
2,475,989
------------
TOTAL PREFERRED STOCKS........... 3,289,342
------------
(Cost $1,648,486)
RIGHTS -- 0.0%
FINLAND -- 0.0%
MEDICAL SUPPLIES -- 0.0%
1,500 Instrumentarium Rights*.......... 4,002
------------
ITALY -- 0.0%
BUILDING PRODUCTS -- 0.0%
190 Cementir SpA Rights*............. 0
------------
NETHERLANDS -- 0.0%
MACHINERY & EQUIPMENT -- 0.0%
10 Stork Rights*.................... 7
------------
SPAIN -- 0.0%
TELECOMMUNICATIONS -- 0.0%
73,909 Telefonica Rights*............... 65,724
------------
TOTAL RIGHTS..................... 69,733
------------
(Cost $0)
</TABLE>
Continued
60
<PAGE> 62
THE KENT INTERNATIONAL GROWTH FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
WARRANTS -- 0.0%
GERMANY -- 0.0%
INSURANCE -- 0.0%
209 Munchener Ruckversicherungs
Warrants*........................ $ 9,788
------------
HONG KONG -- 0.0%
REAL ESTATE -- 0.0%
11,529 Chinese Estates Ltd. Warrants*... 610
11,529 Chinese Estates Ltd. Warrants*... 506
5,200 Kumagai Gumi Company Warrants*... 416
------------
1,532
------------
ITALY -- 0.0%
FINANCIAL -- BANKING -- 0.0%
8,395 Mediobanca Warrants*............. 30,441
------------
TOTAL WARRANTS................... 41,761
------------
(Cost $0)
TOTAL INVESTMENTS -- 99.3%.................. 536,972,828
(Cost $450,823,029) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.7%....................... 3,916,358
------------
TOTAL NET ASSETS -- 100.0%.................. $540,889,186
============
</TABLE>
- ---------------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $154,292,546
Unrealized depreciation............... (70,583,850)
------------
Net unrealized appreciation........... $ 83,708,696
============
</TABLE>
* Non-income producing
<TABLE>
<S> <C>
AB -- Aktiebolag (Swedish Stock Company)
AG -- Aktiengesellschaft (German Stock Company)
NV -- Naamloze Vennootschap (Dutch Corporation)
PLC -- Public Limited Company (British)
SA -- Sociedad Anonima (Spanish Corporation)
SpA -- Societa per Azioni (Italian Corporation)
</TABLE>
See Notes to Financial Statements.
61
<PAGE> 63
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 1.0%
OIL -- U.S. INTEGRATED -- 1.0%
$7,701,000 Shell Oil Co., 5.00%, 1/4/99.... $ 7,697,791
------------
TOTAL COMMERCIAL PAPER.......... 7,697,791
------------
(Cost $7,697,791)
COMMON STOCKS -- 98.6%
ADVERTISING -- 0.2%
11,100 Interpublic Group Cos., Inc. ... 885,225
13,800 Omnicom Group................... 800,400
------------
1,685,625
------------
AEROSPACE & DEFENSE -- 0.8%
80,892 Boeing Co. ..................... 2,639,101
10,300 General Dynamics Corp. ......... 603,838
15,894 Lockheed Martin Corp. .......... 1,347,017
5,600 Northrop Grumman Corp. ......... 409,500
27,500 Raytheon Co., Class B........... 1,464,375
------------
6,463,831
------------
AGRICULTURE -- 0.1%
19,600 Pioneer Hi-Bred, Inc. .......... 529,200
------------
APPLIANCES & HOUSEHOLD PRODUCTS -- 0.1%
7,400 Maytag Corp. ................... 460,650
6,200 Whirlpool Corp. ................ 343,325
------------
803,975
------------
AUTO/TRUCK -- ORIGINAL EQUIPMENT -- 0.3%
3,100 Cummins Engine, Inc. ........... 110,050
13,432 Dana Corp. ..................... 549,033
5,800 Eaton Corp. .................... 409,988
5,420 Navistar International Corp.*... 154,470
6,350 PACCAR, Inc. ................... 261,144
9,900 TRW, Inc. ...................... 556,256
------------
2,040,941
------------
AUTO/TRUCK -- REPLACEMENT EQUIPMENT -- 0.1%
14,525 Genuine Parts Co. .............. 485,680
------------
AUTOMOTIVE -- 1.2%
98,500 Ford Motor Co. ................. 5,780,719
53,200 General Motors Corp. ........... 3,807,125
------------
9,587,844
------------
BANKS -- MIDWEST -- 0.3%
21,800 Fifth Third Bancorp............. 1,554,613
17,170 Huntington Bancshares........... 516,173
------------
2,070,786
------------
BANKS -- MONEY CENTER -- 2.0%
140,142 BankAmerica Corp. .............. 8,426,037
7,800 Bankers Trust New York Corp. ... 666,413
23,300 BB&T Corp. ..................... 939,281
68,516 Chase Manhattan Corp. .......... 4,864,635
14,300 J.P. Morgan & Co., Inc. ........ 1,502,394
------------
16,398,760
------------
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
- ---------- -------------------------------- ------------
<C> <S> <C>
COMMON STOCK (CONTINUED)
BANKS -- NORTHEAST -- 0.1%
13,100 State Street Corp. ............. $ 911,269
------------
BANKS -- MAJOR REGIONAL -- 4.2%
60,700 Bank of New York Co., Inc. ..... 2,443,175
95,211 Bank One Corp. ................. 4,861,711
23,900 BankBoston Corp. ............... 930,606
12,650 Comerica, Inc. ................. 862,572
78,770 First Union Corp. .............. 4,790,200
46,114 Fleet Financial Group, Inc. .... 2,060,719
35,700 KeyCorp......................... 1,142,400
21,200 Mellon Bank Corp. .............. 1,457,500
26,800 National City Corp. ............ 1,943,000
9,000 Northern Trust Corp. ........... 785,813
24,500 PNC Bank Corp. ................. 1,326,063
8,800 Republic New York Corp. ........ 400,950
14,100 Summit Bancorp.................. 615,994
17,000 SunTrust Banks, Inc. ........... 1,300,500
58,762 U.S. Bancorp.................... 2,086,051
16,800 Wachovia Corp. ................. 1,468,950
131,400 Wells Fargo Co. ................ 5,247,787
------------
33,723,991
------------
BEVERAGES -- ALCOHOLIC -- 0.4%
3,000 Adolph Coors Co. ............... 169,313
39,170 Anheuser-Busch Co., Inc. ....... 2,570,531
5,600 Brown-Forman Corp. ............. 423,850
------------
3,163,694
------------
BEVERAGES -- SOFT DRINKS -- 2.2%
197,700 Coca-Cola Co. .................. 13,221,187
119,700 PepsiCo, Inc. .................. 4,900,218
------------
18,121,405
------------
BROADCASTING/CABLE -- 0.9%
20,200 Clear Channel
Communications, Inc.*........... 1,100,900
30,000 Comcast Corp., Special
Class A......................... 1,760,625
49,500 MediaOne Group, Inc.*........... 2,326,500
42,546 Tele-Communications, Inc.,
Class A*........................ 2,353,326
------------
7,541,351
------------
BUILDING & CONSTRUCTION --
MISCELLANEOUS -- 0.1%
3,300 Armstrong World Industries,
Inc. ........................... 199,031
27,600 Masco Corp. .................... 793,500
4,400 Owens-Corning Fiberglass
Corp. .......................... 155,925
------------
1,148,456
------------
BUILDING -- HEAVY CONSTRUCTION -- 0.0%
6,400 Fluor Corp. .................... 272,400
3,300 Foster Wheeler Corp. ........... 43,519
------------
315,919
------------
BUILDING -- MAINTENANCE & SERVICE -- 0.0%
10,500 Ecolab, Inc. ................... 379,969
------------
</TABLE>
Continued
62
<PAGE> 64
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
BUILDING -- MOBILE/MANUFACTURING &
RECREATIONAL VEHICLES -- 0.0%
2,800 Fleetwood Enterprises, Inc. .... $ 97,300
------------
BUILDING -- RESIDENTIAL/COMMERCIAL -- 0.1%
4,800 Centex Corp. ................... 216,300
3,240 Kaufman & Broad Home Corp. ..... 93,150
3,500 Pulte Corp. .................... 97,344
------------
406,794
------------
BUILDING PRODUCTS -- RETAIL/WHOLESALE -- 1.1%
119,462 Home Depot, Inc. ............... 7,309,581
28,600 Lowe's Cos., Inc. .............. 1,463,963
------------
8,773,544
------------
BUILDING PRODUCTS -- WOOD -- 0.1%
8,900 Louisiana-Pacific Corp. ........ 162,981
16,150 Weyerhaeuser Co. ............... 820,622
------------
983,603
------------
BUSINESS EQUIPMENT & SERVICES -- 0.6%
14,300 AES Corp.*...................... 677,463
40,000 Electronic Data Systems
Corp. .......................... 2,009,999
13,300 Paychex, Inc. .................. 684,119
25,300 Staples, Inc.*.................. 1,105,294
------------
4,476,875
------------
BUSINESS SERVICES -- 0.0%
8,200 H & R Block, Inc. .............. 369,000
------------
CAPITAL GOODS -- 0.2%
57,200 CBS Corp. ...................... 1,873,300
------------
CHEMICALS -- DIVERSIFIED -- 1.4%
6,000 B.F. Goodrich Co. .............. 215,250
18,200 Dow Chemical Co. ............... 1,655,063
92,000 E.I. du Pont de Nemours &
Co. ............................ 4,881,749
6,400 Eastman Chemical Co. ........... 286,400
7,700 Hercules, Inc. ................. 210,788
48,800 Monsanto Co. ................... 2,317,999
14,400 PPG Industries, Inc. ........... 838,800
13,500 Rohm & Haas Co. ................ 406,688
11,000 Union Carbide Corp. ............ 467,500
6,200 W.R. Grace & Co.*............... 97,263
------------
11,377,500
------------
CHEMICALS -- SPECIALTY -- 0.3%
18,800 Air Products & Chemical,
Inc. ........................... 752,000
11,737 Engelhard Corp. ................ 228,872
4,800 Great Lakes Chemical Corp. ..... 192,000
10,600 Morton International, Inc. ..... 259,700
5,400 Nalco Chemical Co. ............. 167,400
12,900 Praxair, Inc. .................. 454,725
8,200 Sigma-Aldrich Corp. ............ 240,875
------------
2,295,572
------------
COMMERCIAL SERVICES -- 0.2%
69,719 Cendant Corp.*.................. 1,329,018
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE -- 4.2%
5,500 Adobe Systems, Inc. ............ $ 257,125
43,618 Computer Associates
International, Inc. ............ 1,859,217
200,200 Microsoft Corp.*................ 27,765,237
79,075 Oracle Corp.*................... 3,410,109
22,126 Parametric Technology Corp.*.... 362,313
------------
33,654,001
------------
COMPUTERS -- LOCAL AREA NETWORK -- 1.7%
29,2003 COM Corp.*...................... 1,308,525
13,400 Cabletron Systems*.............. 112,225
126,350 Cisco Systems, Inc.*............ 11,726,859
28,700 Novell, Inc.*................... 520,188
------------
13,667,797
------------
COMPUTERS -- MAINFRAME -- 1.8%
74,800 IBM Corp. ...................... 13,819,299
20,700 Unisys Corp.*................... 712,856
------------
14,532,155
------------
COMPUTERS -- MEMORY DEVICES -- 0.5%
40,600 EMC Corp.*...................... 3,451,000
19,800 Seagate Technology, Inc.*....... 598,950
------------
4,049,950
------------
COMPUTERS -- MICRO -- 1.8%
10,900 Apple Computer, Inc.*........... 446,219
135,774 Compaq Computer Corp. .......... 5,694,022
4,000 Data General Corp.*............. 65,750
102,100 Dell Computer Corp.*............ 7,472,443
12,700 Gateway 2000, Inc.*............. 650,081
------------
14,328,515
------------
COMPUTERS -- MINI -- 1.1%
84,500 Hewlett-Packard Co. ............ 5,772,406
15,300 Silicon Graphics, Inc.*......... 196,988
30,800 Sun Microsystems, Inc.*......... 2,637,250
------------
8,606,644
------------
COMPUTERS -- SERVICES -- 0.6%
24,500 Automatic Data Processing,
Inc. ........................... 1,964,594
5,900 Ceridian Corp.*................. 411,894
12,800 Computer Sciences Corp. ........ 824,800
12,000 Equifax, Inc. .................. 410,250
36,300 First Data Corp. ............... 1,150,256
2,200 Shared Medical Systems Corp. ... 109,725
------------
4,871,519
------------
CONSUMER DURABLE -- 0.1%
10,800 Danaher Corp. .................. 586,575
------------
CONSUMER NON-DURABLE -- 0.2%
31,700 Coca-Cola Enterprises, Inc. .... 1,133,275
26,400 RJR Nabisco Holdings Corp. ..... 783,750
------------
1,917,025
------------
</TABLE>
Continued
63
<PAGE> 65
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- MISCELLANEOUS -- 0.7%
5,700 American Greetings Corp.,
Class A......................... $ 234,056
2,995 Jostens, Inc. .................. 78,432
13,200 Newell Co. ..................... 544,500
12,200 Rubbermaid, Inc. ............... 383,538
4,700 Tupperware Corp. ............... 77,256
52,000 Unilever NV, ADR................ 4,312,750
------------
5,630,532
------------
CONSUMER SERVICES -- 0.1%
10,000 Carnival Cruise Lines, Inc. .... 480,000
------------
CONTAINERS & PACKAGING -- 0.1%
12,600 Owens-Illinois, Inc.*........... 385,875
6,816 Sealed Air Corp.*............... 348,042
------------
733,917
------------
CONTAINERS -- METAL & GLASS -- 0.1%
2,500 Ball Corp. ..................... 114,375
10,100 Crown Cork & Seal Co., Inc. .... 311,206
------------
425,581
------------
CONTAINERS -- PAPER & PLASTIC -- 0.0%
4,300 Bemis Co. ...................... 163,131
------------
COSMETICS & TOILETRIES -- 1.0%
4,500 Alberto Culver Co., Class B..... 120,094
21,400 Avon Products, Inc. ............ 946,950
89,864 Gillette Co. ................... 4,341,555
8,700 International Flavors &
Fragrances, Inc. ............... 384,431
44,440 Kimberly-Clark Corp. ........... 2,421,980
------------
8,215,010
------------
DIVERSIFIED -- 4.7%
16,020 Allegheny Teledyne, Inc. ....... 327,409
45,600 Allied Signal, Inc. ............ 2,020,650
5,625 Crane Co. ...................... 169,805
2,800 Freeport-McMoran-Cooper Corp.*.. 156,800
262,800 General Electric Co. (b)........ 26,822,024
13,465 IMS Health, Inc. ............... 1,015,766
9,600 ITT Industries, Inc. ........... 381,600
6,900 Johnson Controls, Inc. ......... 407,100
32,800 Minnesota Mining & Manufacturing
Co. ............................ 2,332,899
3,400 National Service Industries,
Inc. ........................... 129,200
32,000 Seagram Co., Ltd. .............. 1,216,000
13,800 Tenneco, Inc. .................. 470,063
13,300 Textron, Inc. .................. 1,009,969
18,500 United Technologies Corp. ...... 2,011,875
------------
38,471,160
------------
ELECTRICAL & ELECTRONIC -- 0.0%
7,100 KLA-Tencor Corp.*............... 307,963
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ELECTRICAL COMPONENTS --
SEMICONDUCTORS -- 2.8%
11,700 Advanced Micro Devices, Inc.*... $ 338,569
29,800 Applied Materials, Inc.*........ 1,272,088
135,000 Intel Corp. .................... 16,005,937
11,500 LSI Logic Corp.*................ 185,438
17,300 Micron Technology, Inc.*........ 874,731
13,300 National Semiconductor Corp.*... 179,550
15,500 Rockwell International Corp. ... 752,719
31,700 Texas Instruments, Inc. ........ 2,712,330
------------
22,321,362
------------
ELECTRONIC -- CONNECTORS -- 0.1%
16,255 AMP, Inc. ...................... 846,275
4,600 Thomas & Betts Corp. ........... 199,238
------------
1,045,513
------------
ELECTRONIC MEASURING EQUIPMENT -- 0.0%
3,800 Tektronix, Inc. ................ 114,238
------------
ELECTRONICS -- 0.0%
6,800 Raychem Corp. .................. 219,725
------------
ENERGY -- 0.0%
8,600 Orxy Energy Co.*................ 115,563
------------
FINANCE -- 1.2%
56,254 Associates First Capital Corp.,
Class A......................... 2,383,762
9,200 Bear Stearns Companies, Inc. ... 343,850
5,400 Capital One Financial Corp. .... 621,000
20,600 Franklin Resources, Inc. ....... 659,200
12,400 Mercantile Bancorporation....... 571,950
11,000 Provident Cos., Inc. ........... 456,500
17,400 Regions Financial Corp. ........ 701,438
13,600 SLM Holding Corp. .............. 652,800
15,900 SunAmerica, Inc. ............... 1,289,888
10,300 Union Planters Corp. ........... 466,719
48,169 Washington Mutual, Inc. ........ 1,839,454
------------
9,986,561
------------
FINANCIAL -- BANKING -- 0.1%
21,400 Synovus Financial Corp. ........ 521,625
------------
FINANCIAL -- CONSUMER LOANS -- 0.4%
38,693 Household International,
Inc. ........................... 1,533,211
61,130 MBNA Corp. ..................... 1,524,429
------------
3,057,640
------------
FINANCIAL -- INVESTMENT BANKER/BROKER -- 0.1%
9,600 Lehman Brothers Holding,
Inc. ........................... 423,000
------------
FINANCIAL -- INVESTMENT BANKERS -- 0.5%
28,300 Merrill Lynch & Co., Inc. ...... 1,889,025
32,475 Schwab (Charles) Corp. ......... 1,824,689
------------
3,713,714
------------
</TABLE>
Continued
64
<PAGE> 66
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
FINANCIAL -- MISCELLANEOUS SERVICES -- 0.9%
36,600 American Express Co. ........... $ 3,742,350
46,816 Morgan Stanley, Dean Witter &
Co.............................. 3,323,936
------------
7,066,286
------------
FINANCIAL -- MORTGAGE & RELATED
SERVICES -- 1.3%
9,000 Countrywide Credit
Industries, Inc. ............... 451,688
84,300 Fannie Mae...................... 6,238,200
55,100 Freddie Mac..................... 3,550,506
------------
10,240,394
------------
FINANCIAL -- SAVINGS & LOAN -- 0.1%
4,700 Golden West Financial Corp. .... 430,931
------------
FINANCIAL SERVICES -- DIVERSIFIED -- 1.1%
183,944 Citigroup, Inc. ................ 9,105,228
------------
FOOD -- CANNED -- 0.5%
36,500 Campbell Soup Co. .............. 2,007,500
29,400 H.J. Heinz Co. ................. 1,664,775
------------
3,672,275
------------
FOOD -- CONFECTIONERY -- 0.2%
11,600 Hershey Foods Corp. ............ 721,375
9,400 Wm. Wrigley Jr. Co. ............ 841,888
------------
1,563,263
------------
FOOD -- DIVERSIFIED -- 1.0%
23,400 Bestfoods....................... 1,246,050
39,650 ConAgra, Inc. .................. 1,248,975
12,600 General Mills, Inc. ............ 979,650
33,100 Kellogg Co. .................... 1,129,538
11,100 Quaker Oats Co. ................ 660,450
25,340 Ralston Purina Group............ 820,383
76,000 Sara Lee Corp. ................. 2,142,249
------------
8,227,295
------------
FOOD -- FLOUR & GRAIN -- 0.1%
48,666 Archer-Daniels-Midland Co. ..... 836,447
------------
FOOD ITEMS -- WHOLESALE -- 0.1%
9,800 Supervalu, Inc. ................ 274,400
27,400 Sysco Corp. .................... 751,788
------------
1,026,188
------------
FOOD PRODUCTS -- 0.3%
39,300 Safeway, Inc.*.................. 2,394,844
------------
FUNERAL SERVICES -- 0.1%
20,900 Service Corp. International..... 795,506
------------
GAS & ELECTRIC UTILITY -- 0.2%
31,000 PG & E Corp. ................... 976,500
18,900 Public Service Enterprise
Group, Inc. .................... 756,000
------------
1,732,500
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
GLASS PRODUCTS -- 0.1%
18,800 Corning, Inc. .................. $ 846,000
------------
HEALTH CARE -- 0.0%
8,800 HCR Manor Care, Inc.*........... 258,500
------------
HOTELS & LODGING -- 0.1%
21,000 Hilton Hotels Corp. ............ 401,625
20,300 Marriott International, Inc.,
Class A......................... 588,700
------------
990,325
------------
INSTRUMENTS -- CONTROL -- 0.1%
10,300 Honeywell, Inc. ................ 775,719
------------
INSTRUMENTS -- SCIENTIFIC -- 0.1%
3,700 EG&G, Inc. ..................... 102,906
3,600 Millipore Corp. ................ 102,375
4,000 Perkin-Elmer Corp. ............. 390,250
------------
595,531
------------
INSURANCE -- 0.3%
13,600 Cincinnati Financial Corp. ..... 498,100
9,300 Loews Corp. .................... 913,725
5,900 Progressive Corp. .............. 999,313
------------
2,411,138
------------
INSURANCE -- ACCIDENT & HEALTH -- 0.1%
13,700 Aon Corp. ...................... 758,638
------------
INSURANCE -- BROKERS -- 0.1%
20,750 Marsh & McLennan Cos., Inc. .... 1,212,578
------------
INSURANCE -- LIFE -- 0.7%
20,598 American General Corp. ......... 1,606,644
25,364 Conseco, Inc. .................. 775,187
8,625 Jefferson-Pilot Corp. .......... 646,875
11,550 Providian Financial Corp. ...... 866,250
11,400 Torchmark Corp. ................ 402,563
5,082 TransAmerica Corp. ............. 586,971
11,200 UNUM Corp. ..................... 653,800
------------
5,538,290
------------
INSURANCE -- MULTI-LINE -- 0.5%
11,770 Aetna, Inc. .................... 925,416
16,700 CIGNA Corp. .................... 1,291,119
19,000 Hartford Financial Services
Group, Inc. .................... 1,042,625
8,100 MBIA, Inc. ..................... 531,056
9,200 MGIC Investment Corp. .......... 366,275
------------
4,156,491
------------
</TABLE>
Continued
65
<PAGE> 67
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
INSURANCE -- PROPERTY & CASUALTY -- 1.7%
67,298 Allstate Corp. ................. $ 2,599,385
85,380 American International Group,
Inc. ........................... 8,249,842
13,500 Chubb Corp. .................... 875,813
8,200 Lincoln National Corp. ......... 670,863
11,500 Safeco Corp. ................... 493,781
19,234 St. Paul Cos., Inc. ............ 668,382
------------
13,558,066
------------
LEISURE & RECREATION PRODUCTS -- 0.0%
8,100 Brunswick Corp. ................ 200,475
------------
LEISURE & RECREATION/GAMING -- 0.0%
8,200 Harrah's Entertainment, Inc.*... 128,638
14,600 Mirage Resorts, Inc.*........... 218,087
------------
346,725
------------
MACHINERY & EQUIPMENT -- 0.0%
3,200 Milacron, Inc. ................. 61,600
------------
MACHINERY -- CONSTRUCTION/MINING -- 0.2%
29,600 Caterpillar, Inc. .............. 1,361,600
13,450 Ingersoll-Rand Co. ............. 631,309
------------
1,992,909
------------
MACHINERY -- ELECTRICAL -- 0.3%
35,800 Emerson Electric Co. ........... 2,165,900
7,900 W.W. Grainger, Inc. ............ 328,838
------------
2,494,738
------------
MACHINERY -- FARM -- 0.1%
2,000 Briggs & Stratton Corp. ........ 99,750
6,000 Case Corp. ..................... 130,875
19,900 Deere & Co. .................... 659,188
------------
889,813
------------
MACHINERY -- GENERAL INDUSTRIAL -- 0.3%
2,300 Aeroquip-Vickers, Inc. ......... 68,856
8,400 Cooper Industries, Inc. ........ 400,575
18,100 Dover Corp. .................... 662,913
3,922 Harnischfeger Industries,
Inc. ........................... 39,955
20,300 Illinois Tool Works, Inc. ...... 1,177,400
9,025 Parker Hannifin Corp. .......... 295,569
------------
2,645,268
------------
MACHINERY -- MATERIAL HANDLING -- 0.0%
700 Nacco Industries, Inc. ......... 64,400
------------
MACHINERY -- THERMAL PROCESSOR -- 0.0%
13,500 Thermo Electron Corp.*.......... 228,656
------------
MEDIA CONGLOMERATES -- 1.6%
97,320 Time Warner, Inc. .............. 6,039,923
28,200 Viacom, Inc., Class B*.......... 2,086,800
166,500 Walt Disney Co. ................ 4,995,000
------------
13,121,723
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
MEDICAL -- BIOMEDICAL/GENETIC -- 0.3%
20,600 Amgen, Inc.*.................... $ 2,153,988
------------
MEDICAL -- DRUGS -- 8.8%
122,900 Abbott Laboratories............. 6,022,100
7,000 ALZA Corp.*..................... 365,750
106,900 American Home Products Corp. ... 6,019,806
79,700 Bristol-Myers Squibb Co. ....... 10,664,856
89,500 Eli Lilly & Co. ................ 7,954,313
96,400 Merck & Co., Inc. .............. 14,237,075
105,100 Pfizer, Inc. ................... 13,183,481
41,330 Pharmacia & Upjohn, Inc. ....... 2,340,311
119,400 Schering-Plough Corp. .......... 6,596,850
66,700 Warner-Lambert Co. ............. 5,015,006
------------
72,399,548
------------
MEDICAL -- HEALTH MEDICAL ORGANIZATION -- 0.1%
13,600 Humana, Inc.*................... 242,250
15,900 United Healthcare Corp. ........ 684,694
------------
926,944
------------
MEDICAL -- HOSPITAL -- 0.2%
52,449 Columbia HCA Healthcare Corp. .. 1,298,113
25,100 Tenet Healthcare Corp.*......... 658,875
------------
1,956,988
------------
MEDICAL -- OUTPATIENT/HOME CARE -- 0.1%
34,300 HEALTHSOUTH Corp.*.............. 529,506
------------
MEDICAL -- WHOLESALE DRUG -- 0.2%
16,200 Cardinal Health, Inc. .......... 1,229,175
------------
MEDICAL INSTRUMENTS -- 0.4%
9,100 Biomet, Inc. ................... 366,275
38,100 Medtronic, Inc. ................ 2,828,925
6,800 St. Jude Medical, Inc.*......... 188,275
------------
3,383,475
------------
MEDICAL PRODUCTS -- 0.7%
5,300 Allergan, Inc. ................. 343,175
23,200 Baxter International, Inc. ..... 1,492,049
31,800 Boston Scientific Corp.*........ 852,638
12,300 Guidant Corp. .................. 1,356,075
37,800 HBO & Co. ...................... 1,084,388
5,900 Mallinckrodt, Inc. ............. 181,794
------------
5,310,119
------------
MEDICAL/DENTAL SUPPLIES -- 1.3%
4,500 Bausch & Lomb, Inc. ............ 270,000
20,100 Becton, Dickinson & Co. ........ 858,019
4,600 C.R. Bard, Inc. ................ 227,700
109,300 Johnson & Johnson............... 9,167,537
------------
10,523,256
------------
</TABLE>
Continued
66
<PAGE> 68
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
METAL -- GOLD -- 0.2%
30,300 Barrick Gold Corp. ............. $ 590,850
18,700 Battle Mountian Gold Co. ....... 77,138
17,200 Homestake Mining Co. ........... 158,025
13,315 Newmont Mining Corp. ........... 240,502
20,300 Placer Dome, Inc. .............. 233,450
------------
1,299,965
------------
METAL -- MISCELLANEOUS -- 0.0%
7,600 Cyprus Amax Minerals Co. ....... 76,000
13,500 Inco, Ltd. ..................... 142,594
------------
218,594
------------
METAL -- NON-FERROUS -- 0.3%
18,450 Alcan Aluminum, Ltd. ........... 499,303
15,200 Aluminum Co. of America......... 1,133,350
3,200 Asarco, Inc. ................... 48,200
14,600 Freeport-McMoran Copper & Gold,
Inc., Class B................... 152,388
4,800 Phelps Dodge Corp. ............. 244,200
5,900 Reynolds Metals Co. ............ 310,856
------------
2,388,297
------------
METAL -- PROCESSING & FABRICATION -- 0.0%
5,100 Timken Co. ..................... 96,263
7,825 Worthington Industries, Inc. ... 97,812
------------
194,075
------------
MOVIE/TELEVISION PRODUCTION &
DISTRIBUTION -- 0.0%
5,900 King World Productions, Inc.*... 173,681
------------
OFFICE AUTOMATION & EQUIPMENT -- 0.6%
11,044 IKON Office Solutions, Inc. .... 94,564
22,300 Pitney Bowes, Inc. ............. 1,473,194
26,667 Xerox Corp. .................... 3,146,706
------------
4,714,464
------------
OFFICE SUPPLIES & FORMS -- 0.1%
9,500 Avery Dennison Corp. ........... 428,093
6,600 Deluxe Corp. ................... 241,313
7,200 Moore Corp., Ltd. .............. 79,200
------------
748,606
------------
OIL & GAS -- 0.1%
9,800 Anadarko Petroleum Corp. ....... 302,575
8,000 Apache Corp. ................... 202,500
------------
505,075
------------
OIL & GAS -- DRILLING -- 0.3%
6,900 Rowan Cos., Inc.*............... 69,000
44,200 Schlumberger, Ltd. ............. 2,038,725
------------
2,107,725
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
OIL -- FIELD SERVICES -- 0.1%
35,700 Halliburton Co. ................ $ 1,057,613
------------
OIL -- INTERNATIONAL INTEGRATED -- 4.3%
53,200 Chevron Corp. .................. 4,412,275
196,900 Exxon Corp. .................... 14,398,312
63,500 Mobil Corp. .................... 5,532,437
174,300 Royal Dutch Petroleum Co., ADR.. 8,344,612
43,500 Texaco, Inc. ................... 2,300,063
------------
34,987,699
------------
OIL -- PRODUCTION/PIPELINE -- 0.5%
17,300 Coastal Corp. .................. 604,419
6,750 Columbia Gas System, Inc. ...... 389,813
26,800 Enron Corp. .................... 1,529,274
8,900 Sonat, Inc. .................... 240,856
34,500 Williams Co. ................... 1,075,969
------------
3,840,331
------------
OIL -- U.S. EXPLORATION & PRODUCTION -- 0.1%
14,465 Burlington Resources, Inc. ..... 518,028
4,100 Helmerich & Payne, Inc. ........ 79,438
20,423 Union Pacific Resources Group,
Inc. ........................... 185,083
------------
782,549
------------
OIL -- U.S. INTEGRATED -- 0.8%
7,400 Amerada Hess Corp. ............. 368,150
27,500 Amoco Corp. .................... 1,622,500
26,100 Atlantic Richfield Co. ......... 1,703,024
3,900 Kerr-Mcgee Corp. ............... 149,175
28,700 Occidental Petroleum Corp. ..... 484,313
21,000 Phillips Petroleum Co. ......... 895,125
19,600 Unocal Corp. ................... 572,075
23,900 USX-Marathon Group.............. 719,988
------------
6,514,350
------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.1%
25,780 Baker Hughes, Inc. ............. 455,984
4,800 McDermott International,
Inc. ........................... 118,500
------------
574,484
------------
OIL REFINING -- 0.1%
6,200 Ashland, Inc. .................. 299,925
7,574 Sunoco, Inc. ................... 273,137
------------
573,062
------------
PAINTS & RELATED PRODUCTS -- 0.1%
14,100 Sherwin-Williams Co. ........... 414,188
------------
</TABLE>
Continued
67
<PAGE> 69
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PAPER & RELATED PRODUCTS -- 0.5%
4,608 Boise Cascade Corp. ............ $ 142,848
7,800 Champion International Co. ..... 315,900
17,900 Fort James Corp. ............... 716,000
7,600 Georgia Pacific Corp. .......... 445,075
24,924 International Paper Co. ........ 1,116,907
8,400 Mead Corp. ..................... 246,225
2,400 Potlatch Corp. ................. 88,500
4,500 Temple-Inland, Inc. ............ 266,906
5,600 Union Camp Corp. ............... 378,000
8,250 Westvaco Corp. ................. 221,203
9,100 Williamette Industries, Inc. ... 304,850
------------
4,242,414
------------
PHOTOGRAPHY -- 0.2%
26,200 Eastman Kodak Co. .............. 1,886,400
3,589 Polaroid Corp. ................. 67,069
------------
1,953,469
------------
POLLUTION CONTROL -- 0.4%
14,100 Browning-Ferris Industries,
Inc. ........................... 400,969
26,800 Laidlaw, Inc. .................. 269,675
10,099 Pall Corp. ..................... 255,631
46,442 Waste Management, Inc. ......... 2,165,358
------------
3,091,633
------------
PRINTING & PUBLISHING -- 0.1%
13,865 Dun & Bradstreet Corp. ......... 437,614
------------
PRINTING -- COMMERCIAL -- 0.1%
11,300 R.R. Donnelley & Sons Co. ...... 495,081
------------
PROTECTION -- SAFETY -- 0.5%
52,343 Tyco International Ltd. ........ 3,948,625
------------
PUBLISHING -- BOOKS -- 0.1%
8,100 McGraw-Hill Cos., Inc. ......... 825,188
------------
PUBLISHING -- NEWSPAPERS -- 0.5%
7,600 Dow Jones & Co. ................ 365,750
23,100 Gannett, Inc. .................. 1,489,950
6,400 Knight-Ridder, Inc. ............ 327,200
15,400 New York Times Co., Class A..... 534,188
7,000 Times Mirror Co., Class A....... 392,000
9,900 Tribune Co. .................... 653,400
------------
3,762,488
------------
PUBLISHING -- PERIODICALS -- 0.0%
4,300 Meredith Corp. ................. 162,863
------------
RESTAURANTS -- 0.6%
11,300 Darden Restaurants, Inc. ....... 203,400
54,800 McDonald's Corp. ............... 4,199,050
12,410 Tricon Global Restaurants,
Inc.*........................... 622,051
10,300 Wendy's International, Inc. .... 224,669
------------
5,249,170
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- 0.3%
8,900 Consolidated Stores*............ $ 179,669
15,050 Dollar General, Corp. .......... 355,556
12,500 Fred Meyer, Inc.*............... 753,125
12,800 Kohl's Corp.*................... 786,400
------------
2,074,750
------------
RETAIL -- APPAREL/SHOES -- 0.5%
46,925 Gap, Inc. ...................... 2,639,531
18,478 Limited, Inc. .................. 538,172
12,100 Nordstrom, Inc. ................ 419,719
25,800 TJX Companies, Inc. ............ 748,200
------------
4,345,622
------------
RETAIL -- CONSUMER ELECTRONICS -- 0.0%
8,100 Circuit City Stores, Inc. ...... 404,494
------------
RETAIL -- DISCOUNT -- 2.3%
17,550 Costco Cos., Inc.*.............. 1,266,891
35,700 Dayton-Hudson Corp. ............ 1,936,724
40,000 Kmart Corp.*.................... 612,500
21,250 Toys 'R' Us, Inc.*.............. 358,594
181,700 Wal-Mart Stores, Inc. .......... 14,797,193
------------
18,971,902
------------
RETAIL -- DRUG STORE -- 0.7%
31,600 CVS Corp. ...................... 1,738,000
3,200 Longs Drug Stores Corp. ........ 120,000
21,000 Rite Aid Corp. ................. 1,040,813
40,400 Walgreen Co. ................... 2,365,925
------------
5,264,738
------------
RETAIL -- MAJOR DEPARTMENT STORES -- 0.5%
5,716 Harcourt General, Inc. ......... 304,020
20,600 J.C. Penney, Inc. .............. 965,625
18,800 May Department Stores Co. ...... 1,135,050
31,875 Sears, Roebuck & Co. ........... 1,354,687
------------
3,759,382
------------
RETAIL -- REGIONAL DEPARTMENT STORES -- 0.1%
9,000 Dillards Department Stores,
Inc. ........................... 255,375
17,100 Federated Department
Stores, Inc.*................... 744,919
------------
1,000,294
------------
RETAIL -- SUPERMARKETS -- 0.5%
20,000 Albertson's, Inc. .............. 1,273,749
22,300 American Stores Co. ............ 823,706
3,100 Great Atlantic & Pacific Tea
Co., Inc. ...................... 91,838
20,800 Kroger Co.*..................... 1,258,400
12,100 Winn-Dixie Stores, Inc. ........ 542,988
------------
3,990,681
------------
</TABLE>
Continued
68
<PAGE> 70
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
RETAIL/WHOLESALE -- AUTO PARTS -- 0.1%
12,400 Auto Zone, Inc.*................ $ 408,425
5,200 Pep Boys-Manny, Moe & Jack...... 81,575
------------
490,000
------------
RETAIL/WHOLESALE -- COMPUTERS -- 0.0%
8,128 Tandy Corp. .................... 334,772
------------
RUBBER -- TIRES -- 0.1%
6,300 Cooper Tire & Rubber Co. ....... 128,756
12,800 Goodyear Tire & Rubber Co. ..... 645,600
------------
774,356
------------
SHOES & RELATED APPAREL -- 0.1%
23,400 Nike, Inc., Class B............. 949,163
4,600 Reebok International Ltd.*...... 68,425
------------
1,017,588
------------
SOAP & CLEANING PREPARATIONS -- 1.6%
8,400 Clorox, Inc. ................... 981,225
24,000 Colgate-Palmolive Co. .......... 2,229,000
106,400 Procter & Gamble Co. ........... 9,715,650
------------
12,925,875
------------
STEEL -- PRODUCERS -- 0.1%
10,500 Bethlehem Steel Corp.*.......... 87,938
7,200 Nucor Corp. .................... 311,400
7,140 USX-U.S. Steel Group............ 164,220
------------
563,558
------------
TECHNOLOGY -- 0.1%
16,800 BMC Software, Inc.*............. 748,650
18,700 Peoplesoft, Inc.*............... 354,131
------------
1,102,781
------------
TECHNOLOGY -- SOFTWARE -- 0.0%
3,800 AutoDesk, Inc. ................. 162,213
------------
TELECOMMUNICATIONS -- 0.1%
34,000 Sprint Corp., PCS*.............. 786,250
------------
TELECOMMUNICATIONS -- CELLULAR -- 0.4%
46,600 Airtouch Communications,
Inc.*........................... 3,361,025
------------
TELECOMMUNICATIONS -- EQUIPMENT -- 2.5%
6,955 Andrew Corp.*................... 114,758
16,400 Ascend Communications, Inc.*.... 1,078,300
12,300 General Instrument Corp.*....... 417,431
6,500 Harris Corp. ................... 238,063
105,446 Lucent Technologies, Inc. ...... 11,599,059
48,600 Motorola, Inc. ................. 2,967,637
53,000 Northern Telecom Ltd. .......... 2,656,625
6,400 Scientific-Atlanta, Inc. ....... 146,000
15,700 Tellabs, Inc.*.................. 1,076,431
------------
20,294,304
------------
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TEXTILE -- APPAREL -- 0.1%
5,900 Fruit of the Loom, Inc.*........ $ 81,494
5,400 Liz Claiborne, Inc. ............ 170,438
2,900 Russell Corp. .................. 58,906
9,900 VF Corp. ....................... 464,062
------------
774,900
------------
TEXTILE -- HOME FURNISHINGS -- 0.0%
1,500 Springs Industries, Inc. ....... 62,156
------------
TOBACCO -- 1.4%
14,000 Fortune Brands, Inc. ........... 442,750
195,200 Philip Morris Cos., Inc. ....... 10,443,200
15,100 U.S.T., Inc. ................... 526,613
------------
11,412,563
------------
TOOLS -- HAND HELD -- 0.1%
7,600 Black & Decker Corp. ........... 426,075
4,850 Snap-On, Inc. .................. 168,841
7,200 The Stanley Works............... 199,800
------------
794,716
------------
TOYS/GAME/HOBBY -- 0.1%
10,700 Hasbro, Inc. ................... 386,538
23,747 Mattel, Inc. ................... 541,728
------------
928,266
------------
TRANSPORTATION -- AIR FREIGHT -- 0.1%
11,960 FDX Corp.*...................... 1,064,440
------------
TRANSPORTATION -- AIRLINE -- 0.3%
14,800 AMR Corp.*...................... 878,750
12,400 Delta Air Lines, Inc. .......... 644,800
27,325 Southwest Airlines Co. ......... 613,105
7,600 US Airways Group, Inc.*......... 395,200
------------
2,531,855
------------
TRANSPORTATION -- EQUIPMENT & LEASING -- 0.0%
6,000 Ryder Systems, Inc. ............ 156,000
------------
TRANSPORTATION -- RAILROAD -- 0.5%
38,400 Burlington Northern Santa Fe
Corp. .......................... 1,296,000
17,808 CSX Corp. ...................... 739,032
30,800 Norfolk Southern Corp. ......... 975,975
20,100 Union Pacific Corp. ............ 905,756
------------
3,916,763
------------
UTILITIES -- ELECTRIC POWER -- 2.2%
11,200 Ameren Corp. ................... 478,100
15,500 American Electric Power Co. .... 729,469
12,100 Baltimore Gas & Electric Co. ... 373,588
12,300 Carolina Power & Light Co. ..... 578,869
17,300 Central & South West Corp. ..... 474,669
12,835 CINergy Corp. .................. 441,203
19,000 Consolidated Edison, Inc. ...... 1,004,624
11,800 Detroit Edison Co. ............. 505,925
</TABLE>
Continued
69
<PAGE> 71
THE KENT INDEX EQUITY FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- ELECTRIC POWER (CONTINUED)
15,950 Dominion Resources, Inc. ....... $ 745,663
29,306 Duke Power Co.*................. 1,877,415
28,700 Edison International............ 800,012
20,000 Entergy Corp. .................. 622,500
19,300 First Energy Corp. ............. 628,456
14,700 Florida Power & Light, Inc. .... 905,887
10,400 General Public Utilities
Corp. .......................... 459,550
24,044 Houston Industries, Inc. ....... 772,414
9,000 New Century Energies, Inc. ..... 438,750
15,200 Niagara Mohawk Power Corp.*..... 245,100
12,300 Northern States Power Co. ...... 341,325
24,200 PacifiCorp...................... 509,713
18,100 Peco Energy Corp. .............. 753,413
12,300 PP&L Resources, Inc. ........... 342,863
56,700 Southern Co. ................... 1,647,843
22,670 Texas Utilities Co. ............ 1,058,405
17,600 Unicom Corp. ................... 678,700
------------
17,414,456
------------
UTILITIES -- GAS DISTRIBUTION -- 0.2%
7,800 Consolidated Natural Gas Co. ... 421,200
1,700 Eastern Enterprises............. 74,375
3,900 Nicor, Inc. .................... 164,775
2,600 ONEOK, Inc. .................... 93,925
2,900 People's Energy Corp. .......... 115,638
19,525 Sempra Energy................... 495,446
------------
1,365,359
------------
UTILITIES -- TELEPHONE -- 7.7%
22,300 Alltel Corp. ................... 1,333,819
89,600 Ameritech Corp. ................ 5,678,400
146,756 AT&T Corp. ..................... 11,043,388
126,240 Bell Atlantic Corp. ............ 6,690,720
158,400 BellSouth Corp. ................ 7,900,200
13,900 Frontier Corp. ................. 472,600
78,300 GTE Corp. ...................... 5,089,500
144,299 MCI Worldcom, Inc.*............. 10,353,453
23,200 Nextel Communications, Inc. --
Class A*........................ 548,100
</TABLE>
<TABLE>
<CAPTION>
SECURITY MARKET
SHARES DESCRIPTION VALUE
------ ----------- ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
UTILITIES -- TELEPHONE (CONTINUED)
156,818 SBC Communications, Inc. ....... $ 8,409,365
35,000 Sprint Corp. ................... 2,944,375
40,760 US West, Inc. .................. 2,634,115
------------
63,098,035
------------
TOTAL COMMON STOCKS............. 798,574,754
------------
(Cost $447,287,779)
TOTAL INVESTMENTS -- 99.6%.................. 806,272,545
(Cost $454,985,570)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.4%....................... 3,078,807
------------
TOTAL NET ASSETS -- 100.0%.................. $809,351,352
============
</TABLE>
- ---------------
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $366,424,228
Unrealized depreciation............... (16,800,065)
------------
Net unrealized appreciation........... $349,624,163
============
</TABLE>
(b) Security has been deposited as initial margin on open future contracts.
* Non-income producing security.
ADR -- American Depositary Receipt
At December 31, 1998, the Fund's open future contracts were as follows:
<TABLE>
<CAPTION>
# OF OPENING FACE MARKET
CONTRACTS CONTRACT TYPE AMOUNT VALUE
- --------- ----------------- ---------- ----------
<S> <C> <C> <C>
30 Standard & Poor's $9,066,650 $9,341,249
500, 3/18/99
</TABLE>
See Notes to Financial Statements.
70
<PAGE> 72
THE KENT SHORT TERM BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 3.3%
ENERGY -- 3.3%
$ 4,857,000 Duke Energy, 5.25%, 1/4/99..... $ 4,854,875
------------
TOTAL COMMERCIAL PAPER......... 4,854,875
------------
(Cost $4,854,875)
CORPORATE NOTES & BONDS -- 61.0%
AEROSPACE -- 4.2%
6,000,000 Boeing Capital Corp., 6.83%,
5/21/01........................ 6,172,500
------------
BANKING -- 7.0%
5,000,000 ABN Amro Bank, 6.63%,
10/31/01....................... 5,109,350
5,000,000 Bankers Trust Corp., 5.85%,
5/11/00........................ 5,031,250
------------
10,140,600
------------
BROKERS -- 6.8%
6,000,000 Morgan Stanley Group, Inc.,
6.50%, 3/30/01................. 6,127,500
3,750,000 Salomon, Inc., 6.50%, 3/1/00... 3,787,500
------------
9,915,000
------------
COMPUTER HARDWARE MANUFACTURING -- 3.5%
5,000,000 IBM Corp., 5.76%, 7/10/00...... 5,037,500
------------
FINANCE -- 26.7%
5,000,000 Aristar, Inc., 6.00%, 8/1/01... 5,025,000
4,000,000 Beneficial Corp., 6.28%,
1/15/02........................ 4,045,000
5,000,000 Ford Motor Credit Corp., 7.50%,
1/15/03........................ 5,343,750
3,000,000 General Motors Acceptance
Corp., 6.80%, 5/22/01.......... 3,086,250
4,000,000 Household Netherlands BV,
6.20%, 12/1/03................. 4,095,000
5,000,000 MCN Investment Corp., 6.89%,
1/16/02........................ 5,168,750
5,000,000 Merrill Lynch & Co., Inc.,
6.64%, 9/19/02................. 5,156,250
5,000,000 Norwest Financial, Inc., 7.88%,
2/15/02........................ 5,368,750
1,500,000 Transamerica Financial Corp.,
6.13%, 11/1/01................. 1,501,875
------------
38,790,625
------------
INDUSTRIAL GOODS & SERVICES -- 5.8%
4,375,000 Enron Corp., 6.45%, 11/15/01... 4,478,906
2,000,000 Monsanto Co., 5.38%,
12/1/01 (b).................... 1,990,000
2,000,000 SuperValu, Inc., 7.25%,
7/15/99........................ 2,017,500
------------
8,486,406
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
PHARMACEUTICALS -- 3.5%
$ 5,000,000 American Home Products Corp.,
7.70%, 2/15/00................. $ 5,131,250
------------
UTILITIES -- 3.5%
5,000,000 Georgia Power Co., First
Mortgage, 6.13%, 9/1/99........ 5,031,250
------------
TOTAL CORPORATE NOTES &
BONDS.......................... 88,705,131
------------
(Cost $87,676,049)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 12.5%
FANNIE MAE -- 3.5%
5,000,000 6.03%, 7/2/99.................. 5,027,150
------------
FEDERAL HOME LOAN BANK -- 3.5%
5,000,000 5.81%, 11/4/99................. 5,035,700
------------
FREDDIE MAC -- 5.5%
3,000,000 4.95%, 2/4/99.................. 2,985,975
5,000,000 5.75%, 7/15/03................. 5,138,000
------------
8,123,975
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 18,186,825
------------
(Cost $18,214,923)
U.S. GOVERNMENT OBLIGATIONS -- 21.5%
U.S. TREASURY NOTES -- 21.5%
2,000,000 5.00%, 2/15/99................. 2,001,180
20,000,000 7.50%, 10/31/99................ 20,453,200
2,250,000 6.00%, 8/15/00................. 2,297,273
2,250,000 6.63%, 7/31/01................. 2,358,720
3,900,000 6.25%, 1/31/02................. 4,074,330
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 31,184,703
------------
(Cost $30,909,269)
TOTAL INVESTMENTS -- 98.3%.................. 142,931,534
(Cost $141,655,116) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7%....................... 2,423,522
------------
TOTAL NET ASSETS -- 100.0%.................. $145,355,056
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 1,608,301
Unrealized depreciation............... (331,883)
------------
Net unrealized appreciation........... $ 1,276,418
------------
------------
</TABLE>
(b) 144a security which is restricted as to resale to institutional investors.
This security has been deemed liquid by the Board of Trustees.
See Notes to Financial Statements.
71
<PAGE> 73
THE KENT INTERMEDIATE BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 4.2%
ENERGY -- 4.2%
$37,787,000 Duke Energy, 5.25%, 1/4/99..... $ 37,770,468
------------
TOTAL COMMERCIAL PAPER......... 37,770,468
------------
(Cost $37,770,468)
CORPORATE NOTES & BONDS -- 28.9%
BANKING -- 7.5%
6,000,000 Bank of Montreal-Chicago,
7.80%, 4/1/07.................. 6,720,000
10,000,000 Bankers Trust Corp., 5.85%,
5/11/00........................ 10,062,500
10,000,000 Chase Manhattan Corp., 6.75%,
9/15/06........................ 10,525,000
8,000,000 Chase Manhattan Corp.-New,
6.50%, 1/15/09................. 8,370,000
5,000,000 J.P. Morgan & Co., 7.63%,
9/15/04........................ 5,375,000
5,000,000 MBNA American Bank NA, 7.25%,
9/15/02........................ 5,318,750
5,000,000 MBNA Master Credit Card Trust,
5.65%*, 1/15/99................ 5,004,500
5,000,000 NCNB Corp., 9.38%, 9/15/09..... 6,325,000
10,000,000 Wachovia Corp., 6.38%,
2/1/09......................... 10,550,000
------------
68,250,750
------------
BROKERS -- 0.6%
5,000,000 Salomon, Inc., 5.64%*,
2/15/99........................ 4,993,750
------------
COMPUTER HARDWARE MANUFACTURING -- 0.6%
5,000,000 IBM Corp., 5.76%, 7/10/00...... 5,037,500
------------
FINANCE -- 10.2%
5,000,000 Associates Corp., N.A., 6.52%,
10/11/02....................... 5,156,250
5,500,000 Bear Stearns Co., 6.75%,
4/15/03........................ 5,644,375
5,000,000 First Union Institutional
Capital I, 8.04%, 12/1/26,
Callable 12/1/06 @ 104.02...... 5,312,500
10,000,000 Ford Capital Guaranteed Notes,
9.88%, 5/15/02................. 11,300,000
8,400,000 Ford Motor Credit Corp., 9.03%,
12/30/09, Callable 12/30/04 @
100............................ 9,912,000
5,000,000 General Electric Capital Corp.,
6.66%*, 5/1/00, Putable 5/1/00
@ 100.......................... 5,087,500
10,000,000 General Motors Acceptance
Corp., 5.35%, 12/7/01.......... 9,937,500
5,000,000 Household Finance Corp., 8.00%,
8/1/04......................... 5,531,250
8,000,000 Household Netherlands BV,
6.20%, 12/1/03................. 8,190,000
8,000,000 HSBC America Capital II, 8.38%,
5/15/27, Callable 5/15/07 @
104.19......................... 8,150,000
7,000,000 Safeco, 6.88%, 7/15/07 (b)..... 7,271,250
5,000,000 Salomon Smith Barney, 7.13%,
10/1/06........................ 5,331,250
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
FINANCE (CONTINUED)
$ 5,100,000 Travelers Group, Inc., 6.88%,
12/15/03....................... $ 5,335,875
------------
92,159,750
------------
INDUSTRIAL GOODS & SERVICES -- 5.7%
5,500,000 Boston Scientific, 6.63%,
3/15/05........................ 5,190,625
11,500,000 Champion International Corp.,
7.70%, 12/15/99................ 11,686,875
7,500,000 Comdisco, Inc., 6.13%*,
2/1/99......................... 7,640,625
6,000,000 ConAgra, Inc., 6.70%, 8/1/27... 6,307,500
10,000,000 General Motors, 6.25%,
5/1/05......................... 10,275,000
10,000,000 Tyco International Group,
5.88%, 11/1/04 (b)............. 10,012,500
------------
51,113,125
------------
INSURANCE -- 1.2%
5,000,000 American Annuity Group, 6.88%,
6/1/08......................... 5,050,000
5,000,000 St. Paul Companies, Inc.,
7.19%, 8/2/07.................. 5,475,000
------------
10,525,000
------------
TELECOMMUNICATIONS -- 1.7%
6,000,000 Bell Canada, 7.75%, 4/1/06..... 6,630,000
8,000,000 Sprint Cap Corp., 6.88%,
11/15/28....................... 8,360,000
------------
14,990,000
------------
TRANSPORTATION -- RAILROAD -- 0.8%
7,000,000 Union Pacific Co., 6.34%,
11/25/03....................... 7,070,000
------------
UTILITIES -- 0.6%
5,000,000 Western Resources, Inc., 6.88%,
8/1/04......................... 5,268,750
------------
TOTAL CORPORATE NOTES &
BONDS.......................... 259,408,625
------------
(Cost $251,831,173)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 13.0%
FANNIE MAE -- 4.5%
7,950,000 7.35%, 3/28/05................. 8,817,902
10,000,000 5.75%, 6/15/05................. 10,369,600
9,100,000 6.00%, 11/15/22................ 9,180,808
12,000,000 6.25%, 11/18/23................ 12,167,760
------------
40,536,070
------------
FEDERAL FARM CREDIT BANK -- 1.2%
10,000,000 6.30%, 9/23/04................. 10,552,300
------------
FEDERAL HOME LOAN BANK -- 0.6%
5,000,000 6.49%, 1/8/04.................. 5,288,050
------------
FREDDIE MAC -- 6.1%
39,000,000 5.75%, 7/15/03................. 40,076,400
10,410,000 8.12%, 1/31/05................. 11,931,942
3,000,000 7.22%, 6/14/06................. 3,358,200
------------
55,366,542
------------
</TABLE>
Continued
72
<PAGE> 74
THE KENT INTERMEDIATE BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
U.S. GOVERNMENT AGENCY
OBLIGATIONS (CONTINUED)
TENNESSEE VALLEY AUTHORITY -- 0.6%
$ 5,000,000 6.25%, 12/15/17................ $ 5,287,500
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 117,030,462
------------
(Cost $113,663,258)
U.S. GOVERNMENT OBLIGATIONS -- 51.4%
U.S. TREASURY BONDS -- 3.8%
28,275,000 9.13%, 5/15/09................. 33,916,145
------------
U.S. TREASURY NOTES -- 47.6%
31,500,000 6.38%, 5/15/99................. 31,698,765
39,500,000 7.75%, 1/31/00................. 40,761,235
23,050,000 6.88%, 3/31/00................. 23,656,907
33,500,000 6.25%, 8/31/00................. 34,345,540
56,000,000 6.50%, 5/31/01................. 58,365,999
13,300,000 6.25%, 10/31/01................ 13,866,048
77,000,000 7.50%, 11/15/01................ 82,853,539
2,650,000 6.25%, 2/28/02................. 2,771,185
3,200,000 6.63%, 4/30/02................. 3,388,064
2,000,000 6.25%, 2/15/03................. 2,113,340
35,900,000 5.50%, 2/28/03................. 36,960,486
7,000,000 5.75%, 4/30/03................. 7,282,170
2,900,000 5.50%, 5/31/03................. 2,992,829
4,600,000 5.75%, 8/15/03................. 4,802,860
14,850,000 7.50%, 2/15/05................. 17,001,468
2,100,000 6.88%, 5/15/06................. 2,378,586
7,800,000 7.00%, 7/15/06................. 8,900,346
2,300,000 6.50%, 10/15/06................ 2,557,508
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (CONTINUED)
U.S. TREASURY NOTES (CONTINUED)
$ 1,420,000 6.25%, 2/15//07................ $ 1,561,049
26,000,000 6.63%, 5/15/07................. 29,294,460
18,135,000 6.13%, 8/15/07................. 19,841,504
------------
427,393,888
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 461,310,033
------------
(Cost $453,745,914)
YANKEE CERTIFICATES OF DEPOSIT -- 1.2%
10,000,000 Potash Corp. Saskatchewan,
7.13%, 6/15/07................. 10,437,500
------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT........................ 10,437,500
------------
(Cost $10,026,500)
TOTAL INVESTMENTS -- 98.7%................... 885,957,088
(Cost $867,037,313) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.3%........................ 11,935,787
------------
TOTAL NET ASSETS -- 100%..................... $897,892,875
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................ $20,659,028
Unrealized depreciation................ (1,739,253)
-----------
Net unrealized appreciation............ $18,919,775
===========
</TABLE>
(b) 144a security which is restricted as to resale to institutional investors.
This security has been deemed liquid by the Board of Trustees.
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. Maturity date reflects next rate change date.
See Notes to Financial Statements.
73
<PAGE> 75
THE KENT INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
COMMERCIAL PAPER -- 3.0%
ENERGY -- 3.0%
$ 7,230,000 Duke Energy, 5.25%, 1/4/99..... $ 7,226,837
------------
TOTAL COMMERCIAL PAPER......... 7,226,837
------------
(Cost $7,226,837)
CORPORATE NOTES & BONDS -- 53.4%
BANKING -- 16.7%
2,700,000 Bank of Montreal-Chicago,
7.80%, 4/1/07.................. 3,024,000
2,000,000 Bank of New York, 8.50%,
12/15/04....................... 2,322,500
2,000,000 BankAmerica Corp., 7.20%,
4/15/06........................ 2,172,500
2,000,000 Chase Manhattan Corp., 7.13%,
3/1/05......................... 2,132,500
4,000,000 First Union Corp., 9.45%,
8/15/01........................ 4,430,000
2,000,000 Fleet/Norstar Group, 8.63%,
1/15/07........................ 2,370,000
2,000,000 Midland Bank PLC, 7.63%,
6/15/06........................ 2,212,500
3,000,000 National City Bank of
Cleveland, 7.25%, 7/15/10...... 3,412,500
5,000,000 NCNB Corp., 10.20%, 7/15/15.... 6,793,749
5,000,000 PNC Bank N.A., 7.88%, 4/15/05.. 5,556,250
2,000,000 Republic New York Corp., 7.00%,
3/22/11........................ 2,082,500
2,000,000 South Trust Bank NA, 6.57%,
12/15/27....................... 2,015,000
2,000,000 Swiss Bank Corp.-New York,
7.38%, 7/15/15................. 2,137,500
------------
40,661,499
------------
BROADCASTING/CABLE -- 1.6%
3,000,000 Time Warner, Inc., 9.13%,
1/15/13........................ 3,795,000
------------
BROKERS -- 0.9%
2,000,000 Salomon, Inc., 6.75%,
2/15/03........................ 2,067,500
------------
FINANCE -- 10.8%
5,000,000 Associates Corp. NA, 6.25%,
11/1/08........................ 5,193,750
3,500,000 British Gas Finance, 6.63%,
6/1/18......................... 3,486,875
2,000,000 Discover Credit, 9.26%,
3/20/12........................ 2,610,000
2,000,000 Ford Motor Credit Corp., 9.03%,
12/30/09, Callable 12/30/04 @
100............................ 2,360,000
3,500,000 Great Western Financial Trust
II, 8.21%, 2/1/27, Callable
2/1/07 @ 104.10................ 3,745,000
2,000,000 HSBC America Capital II, 8.38%,
5/15/27, Callable 5/15/07 @
104.19......................... 2,037,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
CORPORATE NOTES & BONDS (CONTINUED)
FINANCE (CONTINUED)
$ 2,000,000 Lehman Brothers Holdings, Inc.,
8.75%, 3/15/05................. $ 2,215,000
4,000,000 St. Paul Cos., Inc., 7.25%,
8/9/07......................... 4,400,000
------------
26,048,125
------------
GAS TRANSMISSION -- 1.1%
2,500,000 Enserch Corp., 7.13%,
6/15/05........................ 2,681,250
------------
INDUSTRIAL GOODS & SERVICES -- 10.1%
2,000,000 ConAgra, Inc., 6.70%, 8/1/27... 2,102,500
5,000,000 Cyprus Amax, 7.38%, 5/15/07.... 5,025,000
3,000,000 Engelhard Corp., 7.38%,
8/1/06......................... 3,255,000
2,000,000 General Motors Corp., 9.13%,
7/15/01........................ 2,175,000
3,650,000 Hasbro, Inc., 6.60%, 7/15/28... 3,700,188
5,000,000 Protection One Alarm, 7.38%,
08/15/05 (b)................... 5,162,500
2,950,000 Raytheon Co., 6.75%, 8/15/07... 3,104,875
------------
24,525,063
------------
INSURANCE -- 0.9%
2,000,000 Travelers Capital III, 7.63%,
12/1/36........................ 2,070,000
------------
OIL & GAS -- 2.7%
5,000,000 Phillips Petroleum, 9.38%,
2/15/11........................ 6,518,750
------------
RETAIL -- 2.2%
4,740,009 Fred Meyer, Inc., Lease Trust,
8.50%, 7/15/17................. 5,196,235
------------
TELECOMMUNICATIONS -- 5.5%
3,500,000 GTE Florida, Inc., 6.86%,
2/1/28......................... 3,762,500
4,000,000 Sprint Capital Corp., 6.88%,
11/15/28....................... 4,180,000
5,000,000 US West Cap Funding, Inc.,
6.88%, 7/15/28................. 5,262,500
------------
13,205,000
------------
UTILITIES -- 0.9%
2,000,000 Pacific Gas & Electric, 6.25%,
3/1/04......................... 2,057,500
------------
TOTAL CORPORATE NOTES &
BONDS.......................... 128,825,922
------------
(Cost $121,789,409)
FOREIGN GOVERNMENT AGENCIES -- 0.4%
1,000,000 Hydro-Quebec, 9.41%, 3/23/00... 1,045,000
------------
TOTAL FOREIGN GOVERNMENT
AGENCIES....................... 1,045,000
------------
(Cost $1,059,483)
</TABLE>
Continued
74
<PAGE> 76
THE KENT INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
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)....... $ 2,172,500
------------
TOTAL MUNICIPAL BONDS --
TAXABLE........................ 2,172,500
------------
(Cost $2,030,920)
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 10.6%
FANNIE MAE -- 7.2%
10,000,000 7.40%, 7/1/04.................. 11,024,200
3,000,000 6.05%, 12/1/08................. 3,057,188
3,500,000 6.25%, 11/18/23................ 3,548,930
------------
17,630,318
------------
FREDDIE MAC -- 1.2%
2,500,000 7.22%, 6/14/06................. 2,798,500
------------
TENNESSEE VALLEY AUTHORITY -- 2.2%
5,000,000 6.25%, 12/15/17................ 5,287,500
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 25,716,318
------------
(Cost $24,588,632)
U.S. GOVERNMENT OBLIGATIONS -- 30.1%
U.S. TREASURY BONDS -- 4.7%
2,200,000 7.50%, 11/15/16................ 2,732,356
6,000,000 8.75%, 5/15/20................. 8,534,940
------------
11,267,296
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (CONTINUED)
U.S. TREASURY NOTES -- 25.4%
$10,000,000 6.75%, 6/30/99................. $ 10,107,000
12,500,000 8.00%, 5/15/01................. 13,431,125
12,000,000 7.50%, 5/15/02................. 13,036,440
12,000,000 5.50%, 2/28/03................. 12,354,480
11,000,000 7.50%, 2/15/05................. 12,593,680
------------
61,522,725
------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS.................... 72,790,021
------------
(Cost $72,433,984)
TOTAL INVESTMENTS -- 98.4%................... 237,776,598
(Cost $229,129,265) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.6%........................ 3,869,748
------------
TOTAL NET ASSETS -- 100%..................... $241,646,346
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................ $9,165,346
Unrealized depreciation................ (518,013)
----------
Net unrealized appreciation............ $8,647,333
==========
</TABLE>
(b) 144a security which is restricted as to resale to institutional investors.
This security has been deemed liquid by the Board of Trustees.
<TABLE>
<S> <C>
MBIA Municipal Bond Insurance Association
PLC Public Limited Company
</TABLE>
See Notes to Financial Statements.
75
<PAGE> 77
THE KENT LIMITED TERM TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 97.3%
ALASKA -- 1.6%
$ 530,000 Alaska State Housing Finance
Corp., 4.60%, 12/1/00 (Insured
by MBIA)........................ $ 537,950
------------
ARIZONA -- 3.4%
1,000,000 Arizona State University
Revenue, 7.10%, 7/1/16,
Prerefunded 7/1/01 @ 102........ 1,100,000
------------
ARKANSAS -- 3.2%
1,000,000 Arkansas State Economic
Development, (AMT), 5.00%,
2/1/03, (Insured by AMBAC)...... 1,038,750
------------
CALIFORNIA -- 3.7%
1,000,000 University of California
Revenue, Multiple Purpose
Projects, Series B, 9.00%,
9/1/03 (Insured by MBIA)........ 1,218,750
------------
COLORADO -- 1.5%
500,000 Colorado Housing Finance
Authority, 4.50%, 11/1/05....... 499,375
------------
CONNECTICUT -- 3.2%
1,000,000 Connecticut State, GO, Series C,
5.38%, 8/15/02.................. 1,056,250
------------
DISTRICT OF COLUMBIA -- 3.1%
1,000,000 District of Columbia, GO, 5.10%,
12/1/99, (Insured by MBIA)...... 1,016,407
------------
ILLINOIS -- 10.0%
1,000,000 Chicago Metropolitan Water
Reclamation District, Working
Cash Fund, 5.90%, 12/1/04....... 1,103,750
1,400,000 Joliet Illinois Regional Port
District, Marine Term Revenue,
5.10%*, 1/4/99.................. 1,400,000
745,000 University of Illinois Revenue,
Health Service Facility, 4.90%,
10/1/01 (Insured by AMBAC)...... 767,350
------------
3,271,100
------------
INDIANA -- 3.5%
1,100,000 Greenwood Indiana School
Building Corp., 4.75%,
7/15/07......................... 1,139,875
------------
IOWA -- 3.1%
1,000,000 Chillicothe Pollution Control
Revenue Bond, 4.25%, 11/1/23,
Mandatory Put 11/1/03 @ 100..... 1,000,000
------------
MICHIGAN -- 21.9%
1,235,000 Detroit, GO, 8.00%, 4/1/11,
Prerefunded 4/1/01 @102......... 1,373,938
1,050,000 Flint Michigan Hospital Building
Authority Revenue, 5.00%,
7/1/03.......................... 1,072,313
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 Michigan State Hospital Finance
Authority Revenue, Detroit
Medical Group, Series A, 5.00%,
8/15/06 (Insured by AMBAC)...... $ 1,048,750
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)............... 1,637,999
1,000,000 Michigan State Housing
Development Authority, Rental
Housing Revenue, (AMT), 5.15%,
10/1/00 (Insured by MBIA)....... 1,020,000
1,000,000 Western Townships Michigan
Utilities Authority, Sewer
Disposal System, 8.13%, 1/1/09,
Callable 1/1/99 @ 102........... 1,020,000
------------
7,173,000
------------
NEW JERSEY -- 3.5%
1,000,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Series A 1994,
7.00%, 7/1/03 (Insured by
MBIA)........................... 1,130,000
------------
NEW MEXICO -- 3.1%
1,000,000 Albuquerque New Mexico Gross
Receipts Tax, 5.38%, 7/1/01,
Callable 7/1/99 @ 100 (Insured
by MBIA)........................ 1,007,460
------------
OHIO -- 3.2%
500,000 Cleveland Airport System
Revenue, 5.50%, 1/1/04 (Insured
by FSA)......................... 530,625
500,000 Cleveland-Cuyahoga County Port
Authority, Rock & Roll Hall of
Fame, Refunding, Subordinated
Bonds, 4.90%, 12/1/00........... 505,625
------------
1,036,250
------------
OKLAHOMA -- 3.5%
1,115,000 Tulsa Industrial Authority
Revenue, University of Tulsa,
Series A, 5.50%, 10/1/00
(Insured by MBIA)............... 1,154,025
------------
TEXAS -- 7.6%
1,400,000 Guadalupe-Blanco River
Authority, Texas Pollution
Control Revenue, 5.15%*,
1/4/99.......................... 1,400,000
1,000,000 Pasadena Independent School
District, GO, 6.75%, 8/15/05,
Prerefunded 8/15/01 @ 100,
(Insured by FGIC)............... 1,076,250
------------
2,476,250
------------
</TABLE>
Continued
76
<PAGE> 78
THE KENT LIMITED TERM TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
UTAH -- 4.1%
$1,310,000 Salt Lake City Redevelopment
Agency, Neighborhood
Redevelopment Tax, Inc., Series
A, (AMT), 5.25%, 10/1/99........ $ 1,327,397
------------
VIRGINIA -- 4.7%
1,500,000 Norfolk, GO, 5.13%, 6/1/01...... 1,550,625
------------
WISCONSIN -- 3.1%
1,000,000 Green Bay, GO, Series A, 5.10%,
4/1/00.......................... 1,020,000
------------
WYOMING -- 6.3%
1,000,000 Campbell County School District,
No. 001 Gillette, GO, 5.15%,
6/1/02.......................... 1,043,750
1,000,000 Wyoming Community Development,
(AMT), 4.45%, 6/1/30, Callable
2/16/99 @ 100, Mandatory Put
6/30/99 @ 100................... 1,001,990
------------
2,045,740
------------
TOTAL MUNICIPAL BONDS........... 31,799,204
------------
(Cost $30,981,779)
INVESTMENT COMPANIES -- 1.2%
380,067 Dreyfus Tax Exempt Money Market
Fund............................ 380,067
------------
TOTAL INVESTMENT COMPANIES...... 380,067
------------
(Cost $380,067)
TOTAL INVESTMENTS -- 98.5%.................. 32,179,271
(Cost $31,361,846) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.5%....................... 474,288
------------
TOTAL NET ASSETS -- 100%.................... $ 32,653,559
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 818,050
Unrealized depreciation............... (625)
------------
Net unrealized appreciation........... $ 817,425
============
</TABLE>
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. 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
MBIA Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
77
<PAGE> 79
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
DEMAND NOTES -- 3.4%
ILLINOIS -- 0.8%
$2,400,000 Southwestern Illinois
Development Authority, Solid
Waste Disposal Revenue Bond,
5.20%*, 1/4/99.................. $ 2,400,000
------------
MICHIGAN -- 1.0%
3,000,000 University of Michigan,
University Revenue, 5.15%*,
1/4/99.......................... 3,000,000
------------
NEW MEXICO -- 0.3%
1,050,000 Hurley New Mexico Pollution
Control Revenue Bond, 5.10%*,
1/4/99.......................... 1,050,000
------------
TEXAS -- 0.7%
2,000,000 Gulf Coast Waste Disposal
Authority, Texas Pollution
Control Revenue Bond, 5.05%*,
1/4/99.......................... 2,000,000
------------
WYOMING -- 0.6%
1,900,000 Sublette County Pollution
Control Revenue Bond, 5.05%*,
1/4/99.......................... 1,900,000
------------
TOTAL DEMAND NOTES.............. 10,350,000
------------
(Cost $10,350,000)
MUNICIPAL BONDS -- 95.4%
ALASKA -- 2.7%
1,520,000 Alaska Municipal Bond Bank
Authority, Series A, GO, 4.75%,
10/1/99......................... 1,535,717
1,000,000 Anchorage Electric Utility,
Revenue Bond, Senior Lien,
5.50%, 12/1/03, Callable 6/1/03
@ 102 (Insured by MBIA)......... 1,071,250
5,000,000 North Slope Boro, Series B, GO,
7.50%, 6/30/01 (Insured by
FSA)............................ 5,437,500
------------
8,044,467
------------
ARIZONA -- 3.2%
2,000,000 Maricopa County Unified School
District No. 97 Deer Valley,
Series F, GO, 5.00%, 7/1/11,
Callable 7/1/08 @ 100 (Insured
by MBIA)........................ 2,070,000
500,000 Phoenix, GO, 6.00%, 7/1/99...... 506,890
1,500,000 Pima County Unified School
District No. 1 Tucson, Series B,
GO, ETM, 6.80%, 7/1/00.......... 1,571,250
5,000,000 Salt River Project Agricultural
Improvement & Power District
Electric System, Series A,
5.63%, 1/1/06................... 5,456,250
------------
9,604,390
------------
CALIFORNIA -- 5.9%
3,400,000 California State, GO, 6.60%,
2/1/10.......................... 4,084,250
3,000,000 Orange County, Series A, 6.00%,
6/1/10 (Insured by MBIA)........ 3,442,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
CALIFORNIA (CONTINUED)
$2,000,000 Riverside County Transportation
Commission, Sales Tax Revenue,
Series A, 5.60%, 6/1/05 (Insured
by AMBAC)....................... $ 2,187,500
2,000,000 Turlock Irrigation District
Revenue, Series A, 6.00%, 1/1/06
(Insured by MBIA)............... 2,240,000
4,850,000 University of California
Revenue, Multiple Purpose
Projects, Series B, 9.00%,
9/1/03 (Insured by MBIA)........ 5,910,937
------------
17,865,187
------------
COLORADO -- 2.8%
500,000 Arapahoe County, School District
No. 001, Englewood, 4.50%,
12/1/16, Callable 12/1/08 @ 100
(Insured by FSA)................ 474,375
4,000,000 Arapahoe County, School District
No. 005, Cherry Creek, Series A,
GO, 5.25%, 12/15/02............. 4,220,000
1,400,000 Boulder Valley School District,
5.50%, 12/1/07 (Insured by
FGIC)........................... 1,538,250
1,000,000 Colorado Springs Utility
Revenue, Series A, 6.50%,
11/15/03, Callable 11/15/01 @
102............................. 1,088,750
1,000,000 E-470 Public Highway Authority
Revenue, Series C, 6.00%, 9/1/07
(Insured by MBIA)............... 1,130,000
------------
8,451,375
------------
CONNECTICUT -- 1.4%
4,000,000 Connecticut State, Series A,
6.00%, 5/15/02.................. 4,290,000
------------
FLORIDA -- 1.8%
1,000,000 Broward County School District,
GO, 5.20%, 2/15/03.............. 1,048,750
2,000,000 Lakeland Electric & Water
Revenue, 5.90%, 10/1/07......... 2,245,000
1,000,000 Tampa Guaranteed Entitlement
Revenue, 6.60%, 10/1/00 (Insured
by AMBAC)....................... 1,053,750
1,000,000 Tampa Utilities, Tax & Special
Revenue, 6.30%, 10/1/00 (Insured
by AMBAC)....................... 1,048,750
------------
5,396,250
------------
GEORGIA -- 2.8%
2,670,000 Atlanta Airport Facilities
Revenue, (AMT), Series B, 5.50%,
1/1/03 (Insured by AMBAC)....... 2,810,175
4,000,000 Georgia State, Series B, GO,
5.95%, 3/1/08................... 4,565,000
</TABLE>
Continued
78
<PAGE> 80
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
GEORGIA (CONTINUED)
$1,000,000 Georgia State Tollway Authority
Revenue, Georgia 400 Project,
6.25%, 7/1/00................... $ 1,042,500
------------
8,417,675
------------
HAWAII -- 1.1%
1,025,000 Honolulu City & County, Series
A, GO, 5.60%, 1/1/05............ 1,105,719
1,000,000 Honolulu City & County, Series
D, GO, ETM, 6.50%, 12/1/00...... 1,056,250
1,150,000 Maui County, Series A, GO,
6.80%, 12/1/03, Prerefunded
12/1/00 @ 101 (Insured by
AMBAC).......................... 1,231,937
------------
3,393,906
------------
IDAHO -- 0.7%
1,915,000 Ada & Canyon Counties, Joint
School District No. 2, Meridan,
GO, 5.50%, 7/30/14.............. 2,084,956
------------
ILLINOIS -- 6.8%
305,000 Chicago, GO, 6.00%, 1/1/09,
Callable 1/1/08 @ 102 (Insured
by FGIC)........................ 342,744
300,000 Chicago Equipment Notes, GO,
5.60%, 1/1/05 (Insured by
AMBAC).......................... 323,250
2,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 6.80%, 1/1/03,
Prerefunded 1/1/00 @ 102........ 2,103,480
3,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 5.50%,
12/1/10......................... 3,300,000
4,270,000 Du Page & Will Counties,
Community School District No.
204, GO, 4.95%, 12/30/01
(Insured by FGIC)............... 4,414,112
1,865,000 Glenview, Series B, GO, 4.50%,
12/1/10, Callable 12/1/09 @ 100
(b)............................. 1,892,975
4,000,000 Illinois Development Finance
Authority, Pollution Control
Revenue, Commonwealth Edison,
5.30%, 1/15/04 (Insured
by MBIA)........................ 4,235,000
300,000 Kane, Cook, & Du Page Counties,
School District No. 46, Elgin,
GO, 5.05%, 1/1/06 (Insured by
FSA)............................ 314,625
100,000 Lake County, School District No.
046, Grayslake, Series A, GO,
6.10%, 12/1/04, Callable 12/1/99
@ 100 (Insured by MBIA)......... 100,909
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS (CONTINUED)
$3,135,000 Northwest Suburban Municipal
Joint Action, Water Agency,
Water Supply System, Series A,
5.25%, 5/1/04 (Insured by
MBIA)........................... $ 3,330,938
------------
20,358,033
------------
INDIANA -- 4.4%
2,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 5.88%, 1/1/10 (Insured by
MBIA)........................... 2,255,000
3,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 6.00%, 1/1/13 (Insured by
MBIA)........................... 3,408,749
1,000,000 Indiana Transportation Finance
Authority, Highway Revenue,
Series A, 5.75%, 6/1/12 (Insured
by AMBAC)....................... 1,118,750
1,565,000 Indianapolis Utilities District,
Series B, 3.50%, 6/1/18 (Insured
by FGIC)........................ 1,263,738
1,000,000 Purdue University Student Fee
Revenue, Series D, 6.50%,
7/1/03, Prerefunded 1/1/00 @
103............................. 1,058,830
2,500,000 Purdue University Student Fee
Revenue, Series P, 5.25%,
7/1/09.......................... 2,690,625
1,300,000 Purdue University Student Fee
Revenue, Series P, 5.25%,
7/1/13.......................... 1,378,000
------------
13,173,692
------------
IOWA -- 0.3%
1,000,000 Chillicothe Pollution Control
Revenue Bond, 4.25%, 11/1/23,
Mandatory Put 11/1/03 @ 100..... 1,000,000
------------
LOUISIANA -- 3.3%
2,050,000 Baton Rouge, Sales & Use Tax
Revenue, Series A, 5.25%, 8/1/06
(Insured by FGIC)............... 2,190,938
4,000,000 Louisiana State, Series A, GO,
5.30%, 8/1/04 (Insured
by MBIA)........................ 4,275,000
3,000,000 Louisiana State, Series A, GO,
6.00%, 4/15/07 (Insured
by FGIC)........................ 3,382,500
------------
9,848,438
------------
MARYLAND -- 0.0%
50,000 Maryland State Refunding Bond,
GO, 4.20%, 8/1/01............... 50,813
------------
MASSACHUSETTS -- 3.1%
5,000,000 Massachusetts Bay Transportation
Authority, Series A, 5.00%,
3/1/02.......................... 5,181,250
</TABLE>
Continued
79
<PAGE> 81
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<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).......................... $ 4,003,125
------------
9,184,375
------------
MICHIGAN -- 18.1%
2,215,000 Battle Creek Downtown
Development Authority, 6.00%,
5/1/07 (Insured by MBIA)........ 2,486,338
4,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 7.30%,
5/1/10.......................... 4,699,999
250,000 Beaverton Rural, GO, 4.60%,
5/1/07, Callable 5/1/04 @ 101
(Insured by FGIC)............... 255,938
300,000 Cadillac Public Schools, GO,
7.25%, 5/1/05 (Insured by
FGIC)........................... 351,750
2,100,000 Caledonia Community Schools, GO,
6.70%, 5/1/22, Prerefunded
5/1/02 @ 102 (Insured by
AMBAC).......................... 2,331,000
3,000,000 Detroit, GO, Distributable State
Aid, 5.70%, 5/1/01 (Insured by
AMBAC).......................... 3,131,250
3,000,000 Detroit Sewage Disposal Revenue,
Series B, 6.00%, 7/1/09 (Insured
by MBIA)........................ 3,416,250
6,000,000 Detroit Water Supply System,
Permanent Linked Bonds, 5.25%,
7/1/13, Callable 7/1/04 @ 104
(Insured by FGIC)............... 6,232,499
1,000,000 Detroit Water Supply System,
Second Lien, Series A, 5.20%,
7/1/08 (Insured by MBIA)........ 1,068,750
2,840,000 Grand Ledge Public Schools
District, GO, 5.35%, 5/1/10
(Insured by MBIA)............... 3,070,750
1,700,000 Greater Detroit Resource
Recovery Authority, Series A,
5.50%, 12/13/04 (Insured by
AMBAC).......................... 1,833,875
1,000,000 Ingham County, GO, 5.13%,
11/1/12 (Insured by FSA)........ 1,055,000
2,000,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 5.35%, 5/15/06
(Insured by MBIA)............... 2,140,000
300,000 Lincoln School District, 5.00%,
5/1/13, Callable 5/1/08 @ 100
(Insured by FSA)................ 304,875
2,000,000 Michigan State Comprehensive
Transportation, Series B, 5.50%,
5/15/02......................... 2,105,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 Michigan State Hospital Finance
Authority Revenue, Detroit
Medical Group, Series A, 5.00%,
8/15/06 (Insured by AMBAC)...... $ 1,048,750
1,450,000 Michigan State Hospital Finance
Authority, St. John Hospital &
Medical Center, 5.00%, 5/15/06
(Insured by AMBAC).............. 1,518,875
1,000,000 Michigan State South Central
Power Agency, Power Supply
System Revenue, 5.80%, 11/1/05
(Insured by MBIA)............... 1,103,750
1,000,000 Michigan State Strategic Fund,
Hope Network Project, Series B,
4.80%, 9/1/08 (LOC: First of
America)........................ 1,018,750
1,000,000 Michigan State Strategic Fund,
Hope Network Project, Series B,
5.13%, 9/1/13, Callable 9/1/08 @
102 (LOC: First of America)..... 1,020,000
2,300,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Ford
Motor Co. Project, Series A,
7.10%, 2/1/06................... 2,699,625
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)....... 3,880,625
2,000,000 Northville Public Schools,
Series A, GO, 7.00%, 5/1/08..... 2,165,000
1,575,000 South Redford School District,
5.25%, 5/1/09 (Insured by
FGIC)........................... 1,671,469
1,000,000 Western Michigan University
Revenue, 5.40%, 11/15/01
(Insured by FGIC)............... 1,045,000
------------
54,301,993
------------
MINNESOTA -- 0.5%
1,000,000 Minneapolis Community
Development Agency, Tax
Increment Revenue, 7.00%, 9/1/00
(Insured by MBIA)............... 1,056,250
400,000 Minnesota Various Purpose Bonds,
GO, 6.40%, 8/1/01............... 427,000
------------
1,483,250
------------
MISSOURI -- 0.3%
1,000,000 St. Louis Water Revenue, 4.25%,
7/1/09, Callable 1/1/09 @ 101
(Insured by AMBAC).............. 995,000
------------
</TABLE>
Continued
80
<PAGE> 82
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
NEVADA -- 0.9%
$2,500,000 Clark County School District,
Group 2, GO, 7.20%, 5/1/01,
Prerefunded 5/1/00 @ 102
(Insured by FGIC)............... $ 2,671,875
------------
NEW JERSEY -- 4.4%
350,000 Manalapan School District, GO,
5.00%, 12/1/11, Callable 12/1/08
@ 100 (Insured by FGIC)......... 362,688
1,000,000 Monmouth County Improvement
Authority, 4.15%, 12/1/07
(Insured by AMBAC).............. 1,002,500
6,000,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Senior Lien,
7.00%, 7/1/04 (Insured by
MBIA)........................... 6,922,499
1,375,000 New Jersey State, Series D, GO,
5.25%, 2/15/01.................. 1,421,406
3,000,000 Ocean County Utilities
Authority, Wastewater Revenue,
Refunding, GO, 6.00%, 1/1/07.... 3,371,250
------------
13,080,343
------------
NEW MEXICO -- 0.3%
1,000,000 New Mexico Mortgage Financing
Authority, (AMT), 5.35%, 7/1/23,
Callable 7/1/08 @ 102 (Insured
by GNMA, FNMA, FHLMC)........... 1,011,250
------------
NEW YORK -- 2.4%
1,000,000 Long Island Power Authority,
4.10%, 4/1/07 (Insured by
MBIA)........................... 996,250
1,130,000 Metropolitan Transportation
Authority, Series M, 5.50%,
7/1/08 (Insured by FGIC)........ 1,243,000
1,660,000 New York State Urban Development
Corp., Refunding, Syracuse
University Center, 5.50%,
1/1/15.......................... 1,774,125
3,000,000 Triborough Bridge & Tunnel
Authority, General Purpose,
Series Y, 5.50%, 1/1/17......... 3,266,250
------------
7,279,625
------------
NORTH CAROLINA -- 0.7%
2,000,000 North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, 5.90%, 1/1/03.......... 2,127,500
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
OKLAHOMA -- 2.2%
$1,600,000 Oklahoma Housing Finance Agency,
Single Family Mortgage Revenue
Bond, (AMT), 5.15%, 9/1/20,
Callable 9/1/08 @ 101.5......... $ 1,602,000
1,000,000 Oklahoma State Turnpike
Authority, Series A, 5.50%,
1/1/07 (Insured by FGIC)........ 1,095,000
3,500,000 Tulsa Industrial Authority,
University of Tulsa, Series A,
6.00%, 10/1/16 (Insured by
MBIA)........................... 4,003,125
------------
6,700,125
------------
OREGON -- 0.4%
800,000 Chemeketa Community College
District, GO, 5.95%, 6/1/16,
Callable 6/1/06 @ 100 (Insured
by FGIC)........................ 899,000
400,000 Clackamas County Schools, GO,
4.05%, 6/1/07 (Insured by
FGIC)........................... 398,500
------------
1,297,500
------------
PENNSYLVANIA -- 2.8%
2,000,000 Allegheny County Airport
Revenue, (AMT), 5.00%, 1/1/02
(Insured by MBIA)............... 2,055,000
4,285,000 Chartiers Valley Joint School,
ETM, 6.15%, 3/1/07.............. 4,772,419
1,475,000 Pennsylvania State, Series A,
GO, 7.00%, 5/1/05, Prerefunded
5/1/00 @ 101.5.................. 1,565,344
------------
8,392,763
------------
PUERTO RICO -- 1.8%
3,055,000 Puerto Rico Commonwealth
Aqueduct & Sewer Authority,
6.00%, 7/1/06................... 3,398,688
2,000,000 Puerto Rico Commonwealth Highway
& Transportation Authority,
Highway Revenue, Series X,
4.90%, 7/1/01................... 2,052,500
------------
5,451,188
------------
RHODE ISLAND -- 1.8%
1,000,000 Providence, GO, 6.70%, 1/15/02,
Prerefunded 1/15/00 @ 102
(Insured by MBIA)............... 1,052,800
3,025,000 Rhode Island State, Series A,
GO, 5.50%, 8/1/04 (Insured by
MBIA)........................... 3,270,781
1,000,000 State Depositors Economic
Protection Corp., Series B,
Special Obligation, 5.20%,
8/1/03 (Insured by MBIA)........ 1,053,750
------------
5,377,331
------------
</TABLE>
Continued
81
<PAGE> 83
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
SOUTH CAROLINA -- 0.8%
$2,380,000 Charleston Waterworks & Sewer,
4.50%, 1/1/04................... $ 2,442,475
------------
TENNESSEE -- 0.4%
1,230,000 Tennessee State, Series B, GO,
6.20%, 6/1/01................... 1,302,263
------------
TEXAS -- 8.3%
400,000 Arlington Permanent
Improvements, GO, 5.38%,
8/15/08, Callable 8/15/06 @
100............................. 430,500
2,245,000 Dallas Independent School
District, GO, 5.40%, 8/15/03
(Insured by PSFG)............... 2,388,119
1,500,000 Houston Water & Sewer System
Revenue, Junior Lien, Series C,
5.75%, 12/1/03 (Insured by
MBIA)........................... 1,623,750
1,000,000 Houston Water & Sewer System
Revenue, Prior Lien, Series A,
7.00%, 12/1/01 (Insured by
AMBAC).......................... 1,090,000
3,000,000 Lower Colorado River Authority,
4.90%, 1/1/07, Callable 1/1/06 @
102............................. 3,138,750
1,050,000 Round Rock Independent School
District, GO, 5.25%, 2/15/05
(Insured by PSFG)............... 1,116,938
2,800,000 Texas Municipal Power Agency,
5.60%, 9/1/01 (Insured by
MBIA)........................... 2,933,000
4,450,000 Texas State, Series A, GO,
5.70%, 10/1/03.................. 4,789,312
5,595,000 Texas State Public Finance
Authority, Series A, GO, 6.50%,
10/1/04......................... 6,315,355
1,015,000 University of Texas, University
Revenue, Series A, 6.60%,
8/15/02, Callable 8/15/01 @
102............................. 1,102,544
------------
24,928,268
------------
VIRGINIA -- 0.1%
150,000 Newport News Water Utility
Improvements, Series A, GO,
5.30%, 6/1/99................... 151,322
------------
WASHINGTON -- 7.1%
1,000,000 King County School District,
4.60%, 12/1/03 (Insured by
FGIC)........................... 1,028,750
5,000,000 Port Seattle Passenger
Facilities, (AMT), Series B,
5.00%, 12/1/07 (Insured by
AMBAC).......................... 5,262,500
2,695,000 Tacoma Electric System,
Refunding, 6.00%, 1/1/06
(Insured by AMBAC).............. 2,994,819
50,000 Washington State, Series A, GO,
5.30%, 2/1/99, Callable 9/1/04 @
100............................. 50,060
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
WASHINGTON (CONTINUED)
$8,000,000 Washington State, Series A, GO,
5.50%, 9/1/05, Callable 9/1/04 @
100............................. $ 8,659,999
300,000 Washington State, Series B, GO,
5.38%, 5/1/08................... 328,125
850,000 Washington State, Series III-H,
Motor Vehicle Fuel Tax, 5.75%,
9/1/12.......................... 942,438
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)........................... 2,107,500
------------
21,374,191
------------
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)........ 1,145,644
------------
WISCONSIN -- 1.4%
350,000 Milwaukee County, Series A, GO,
5.00%, 10/1/10, Callable 10/1/08
@ 100........................... 367,063
1,025,000 Milwaukee Metropolitan Sewer
District, Series A, GO, 6.60%,
10/1/99......................... 1,050,851
1,500,000 Milwaukee Metropolitan Sewer
District, Series A, GO, 6.70%,
10/1/00......................... 1,580,624
1,000,000 Wisconsin State Public Power,
Inc., Supply System, Series A,
7.00%, 7/1/01, Callable 7/1/00 @
102 (Insured by AMBAC).......... 1,067,500
------------
4,066,038
------------
TOTAL MUNICIPAL BONDS........... 286,743,501
------------
(Cost $268,479,669)
INVESTMENT COMPANIES -- 0.4%
1,078,116 Dreyfus Tax Exempt Money Market
Fund............................ 1,078,116
------------
TOTAL INVESTMENT COMPANIES...... 1,078,116
------------
(Cost $1,078,116)
TOTAL INVESTMENTS -- 99.2%.................. 298,171,617
(Cost $279,907,785)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.8%....................... 2,350,287
------------
TOTAL NET ASSETS -- 100.0%.................. $300,521,904
============
</TABLE>
- ---------------
Continued
82
<PAGE> 84
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................ $18,308,042
Unrealized depreciation................ (44,210)
-----------
Net unrealized appreciation............ $18,263,832
===========
</TABLE>
(b) Represents security purchased on a when issued basis.
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. 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.
FHLMC Freddie Mac
FNMA Fannie Mae
FSA Financial Security Assurance
GNMA Ginnie Mae
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PSFG Permanent School Fund Guarantee
</TABLE>
See Notes to Financial Statements.
83
<PAGE> 85
THE KENT TAX-FREE INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 99.7%
CALIFORNIA -- 12.8%
$1,000,000 Anaheim Public Financing
Authority, Lease Revenue,
Public Improvements Project,
Series A, 6.00%, 9/1/24
(Insured by FSA)............... $ 1,161,250
1,200,000 California State Department of
Water, Resource Center Valley
Project, 5.00%, 12/1/10,
Callable 12/1/08 @ 101......... 1,266,000
1,400,000 California State, GO, 7.00%,
6/1/05......................... 1,638,000
2,000,000 California State, GO, 6.25%,
9/1/12......................... 2,375,000
3,000,000 Northern California Power
Agency Revenue, Geothermal
Project, Series A, 5.50%,
7/1/05 (Insured by AMBAC)...... 3,270,000
2,000,000 Orange County, Series A, 6.00%,
6/1/10 (Insured by MBIA)....... 2,295,000
3,000,000 Sacramento California Municipal
Utility District, 5.10%,
7/1/14, Callable 7/1/07 @ 102
(Insured by AMBAC)............. 3,094,680
1,380,000 Turlock Irrigation District
Revenue, Series A, 6.00%,
1/1/07
(Insured by MBIA).............. 1,561,125
------------
16,661,055
------------
COLORADO -- 1.9%
1,580,000 Denver City & County
Airport Revenue, (AMT),
6.75%, 11/15/22, Callable
11/15/02 @ 102................. 1,708,375
650,000 Denver City & County Airport
Revenue, Series C, (AMT),
6.75%, 11/15/22, Callable
11/15/02 @ 102................. 727,188
------------
2,435,563
------------
GEORGIA -- 0.9%
1,000,000 Georgia State, Series B, GO,
5.95%, 3/1/08.................. 1,141,250
------------
HAWAII -- 2.5%
2,000,000 Hawaii State, Series CB, GO,
5.75%, 1/1/07.................. 2,195,000
1,000,000 Honolulu City & County, Series
A, GO, 5.75%, 4/1/10........... 1,112,500
------------
3,307,500
------------
IDAHO -- 1.9%
1,500,000 Ada & Canyon Counties School
District No. 2, GO, 5.50%,
7/30/13........................ 1,635,000
785,000 Idaho Health Facilities
Authority Hospital, 5.45%,
7/15/23, Callable 7/15/08 @
101............................ 784,019
------------
2,419,019
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
ILLINOIS -- 7.5%
$2,000,000 Chicago Metropolitan, Water
Reclamation District, Capital
Improvement, GO, 5.50%,
12/1/10........................ $ 2,200,000
1,000,000 Chicago Public Building
Commission, Series A, ETM,
7.00%, 1/1/20 (Insured by
MBIA).......................... 1,265,000
2,000,000 Chicago School Finance
Authority, Series A, GO, 4.90%,
6/1/05, Callable 6/1/04 @ 102
(Insured by MBIA).............. 2,085,000
2,000,000 Du Page & Will Counties,
Community School District No
204, GO, 4.95%, 12/30/01
(Insured by FGIC).............. 2,067,500
1,000,000 Illinois State Sales Tax,
Series S, 5.00%, 6/15/08....... 1,060,000
1,000,000 Will County Forest Preserve
District, GO, 5.90%, 12/1/03,
Callable 12/1/02 @ 100 (Insured
by AMBAC)...................... 1,068,750
------------
9,746,250
------------
INDIANA -- 6.1%
2,000,000 Indiana Municipal Power Supply
Agency, System Revenue, Series
B, 6.00%, 1/1/13 (Insured by
MBIA).......................... 2,272,500
2,250,000 Indiana State Office Building
Commission, Capital Complex,
Government Center Parking
Facilities, Series A, 4.80%,
7/1/03 (Insured by AMBAC)...... 2,325,938
1,000,000 Indiana Transportation Finance
Authority, Highway Revenue,
Series A, 5.75%, 6/1/12
(Insured by AMBAC)............. 1,118,750
1,000,000 Marion County Hospital
Authority Revenue, Community
Hospital, Indianapolis Project,
ETM, 6.00%, 5/1/06............. 1,110,000
1,000,000 Purdue University Student Fee
Revenue, Series P, 5.25%,
7/1/09......................... 1,076,250
------------
7,903,438
------------
IOWA -- 1.9%
2,055,000 Iowa Finance Authority, Private
College Revenue, Drake
University Project, 6.50%,
12/1/11 (Insured by MBIA)...... 2,455,725
------------
KENTUCKY -- 1.0%
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).............. 1,346,231
------------
</TABLE>
Continued
84
<PAGE> 86
THE KENT TAX-FREE INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
LOUISIANA -- 2.4%
$3,000,000 Louisiana State Gas & Fuels
Tax Revenue, Series A,
7.25%, 11/15/00, Callable
11/15/99 @ 102................. $ 3,153,150
------------
MARYLAND -- 1.6%
2,000,000 Prince Georges County,
Consolidated Public
Improvement, GO, 5.00%, 1/1/02
(Insured by MBIA).............. 2,072,500
------------
MASSACHUSETTS -- 1.6%
1,000,000 Massachusetts State Water,
Resource Authority, Series B,
5.00%, 12/1/25, Callable
12/1/05 @ 102 (Insured by
MBIA).......................... 987,500
1,000,000 Massachusetts State, Series B,
GO, 5.40%, 11/1/06............. 1,087,500
------------
2,075,000
------------
MICHIGAN -- 20.5%
2,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 7.30%,
5/1/10, Prerefunded
5/14/04 @ 102.................. 2,350,000
1,300,000 Berkley School District, GO,
7.00%, 1/1/07 (Insured
by FGIC)....................... 1,538,875
2,000,000 Detroit Sewage Disposal
Revenue, Series B, 6.00%,
7/1/09 (Insured by MBIA)....... 2,277,500
1,000,000 Detroit Water Supply System,
Series B, 5.10%, 7/1/07
(Insured by MBIA).............. 1,057,500
930,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.50%, 1/1/07,
Callable 1/1/05 @ 102.......... 1,002,075
1,000,000 Michigan Higher Education
Facilities Authority, 5.35%,
5/1/15, Callable 5/1/08 @ 101
(LOC: FOA)..................... 1,017,500
2,000,000 Michigan State Hospital Finance
Authority, Sisters of Mercy,
Series P, 5.25%, 8/15/21,
Callable 8/15/03 @ 102
(Insured by MBIA).............. 2,022,500
2,365,000 Michigan State Hospital Finance
Authority, Detroit Medical
Center, Series B, 5.00%,
8/15/06 (Insured by AMBAC)..... 2,480,294
2,000,000 Michigan State Hospital Finance
Authority, Henry Ford Health,
Series A, 5.25%, 11/15/20,
Callable 5/15/06 @ 102 (Insured
by AMBAC)...................... 2,010,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,300,000 Michigan State Housing
Development Authority,
Rental Housing Revenue,
Series A, 5.15%, 4/1/02
(Insured by AMBAC)............. $ 1,339,000
1,000,000 Michigan State South Central
Power Agency, Power Supply
System Revenue, 5.80%, 11/1/05
(Insured by MBIA).............. 1,103,750
2,000,000 Michigan State Trunk Line,
5.50%, 11/1/16, Prerefunded
11/1/06 @ 101 (Insured by
FGIC).......................... 2,207,500
1,000,000 Michigan State Underground
Storage Tank Financial
Assurance Authority, Series I,
6.00%, 5/1/05 (Insured by
AMBAC)......................... 1,108,750
2,000,000 Michigan State University
Revenue, Series A, 5.50%,
8/15/22, Prerefunded
8/15/02 @ 100.................. 2,117,500
3,000,000 University of Michigan Hospital
Revenue, Series A,
5.15%*, 1/4/99................. 2,999,999
------------
26,632,743
------------
MISSOURI -- 1.2%
500,000 Missouri State, Health &
Education Facilities, Lake of
Ozarks General Hospital, 6.50%,
2/15/21, Callable 2/15/06 @
102............................ 546,250
1,000,000 St. Louis Missouri Water
Revenue, 4.30%, 7/1/10,
Callable 1/1/09 @ 101
(Insured by AMBAC)............. 990,000
------------
1,536,250
------------
NEBRASKA -- 0.9%
1,075,000 Omaha Public Power District,
5.10%, 2/1/08.................. 1,142,188
------------
NEVADA -- 3.4%
1,805,000 Clark County School District,
GO, 5.75%, 6/15/10, Callable
6/15/06 @ 101 (Insured by
FGIC).......................... 1,976,475
2,000,000 Nevada State, Nevada Municipal
Bond Bank, Series A, GO, 8.00%,
11/1/05........................ 2,467,500
------------
4,443,975
------------
NEW JERSEY -- 2.6%
1,500,000 New Jersey Economic Development
Authority, Market Transition
Facility Revenue, Senior Lien,
7.00%, 7/1/04 (Insured by
MBIA).......................... 1,730,625
</TABLE>
Continued
85
<PAGE> 87
THE KENT TAX-FREE INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<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).............. $ 1,695,000
------------
3,425,625
------------
NEW YORK -- 3.9%
1,000,000 Long Island Power Authority,
4.10%, 4/1/07
(Insured by MBIA).............. 996,250
1,350,000 New York City, Municipal Water
& Sewer Revenue, 5.50%,
6/15/24, Callable 6/15/06 @
101............................ 1,400,625
1,500,000 New York City, Tax Revenue
Anticipation Note, Livingston
Plaza Project, 5.40%, 1/1/18
(Insured by FSA)............... 1,608,750
1,000,000 New York State Thruway
Authority, Series 1997 B,
6.00%, 4/1/07.................. 1,112,500
------------
5,118,125
------------
OKLAHOMA -- 2.6%
1,000,000 Grand River Dam Authority,
5.75%, 6/1/08 (Insured by
FSA)........................... 1,123,750
1,000,000 Oklahoma State Turnpike
Authority, Series A, 5.50%,
1/1/07 (Insured by FGIC)....... 1,095,000
1,000,000 Tulsa Industrial Authority,
University of Tulsa, Series A,
6.00%, 10/1/16 (Insured by
MBIA).......................... 1,143,750
------------
3,362,500
------------
PENNSYLVANIA -- 1.6%
2,000,000 Pennsylvania State, First
Series, GO, 5.38%, 5/15/16,
Callable 5/15/06 @ 101.5
(Insured by FGIC).............. 2,082,500
------------
PUERTO RICO -- 0.8%
1,000,000 Puerto Rico Commonwealth
Highway & Transportation
Authority, Highway Revenue,
Series X, 4.90%, 7/1/01........ 1,026,250
------------
RHODE ISLAND -- 0.8%
1,000,000 Convention Center Authority,
Series B, 5.00%, 5/15/09
(Insured by MBIA).............. 1,058,750
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
SOUTH CAROLINA -- 2.5%
$2,000,000 Charleston Water & Sewer
Revenue, 4.50%, 1/1/04......... $ 2,052,500
1,200,000 Myrtle Beach Water & Sewer
Revenue, 4.90%, 3/1/02 (Insured
by MBIA)....................... 1,239,000
------------
3,291,500
------------
TENNESSEE -- 1.0%
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)....................... 1,296,969
------------
TEXAS -- 6.6%
1,000,000 Brownsville Utility System,
6.25%, 9/1/11 (Insured by
AMBAC)......................... 1,168,750
1,000,000 Harris County, Certificates of
Obligation, 6.00%, 12/15/11.... 1,150,000
1,500,000 Richardson Texas Independent
School District, Series C,
4.75%, 2/15/04 (Guaranteed by
PSF) (b)....................... 1,560,000
2,000,000 Texas City Industrial
Development Corp., Marine
Terminal Revenue, Arco Pipeline
Co. Project, 7.38%, 10/1/20.... 2,610,000
2,000,000 Texas State, Series A, GO,
5.70%, 10/1/03................. 2,152,500
------------
8,641,250
------------
UTAH -- 2.4%
2,175,000 Intermountain Power Agency,
Utah Power Supply, Series D,
5.00%, 7/1/23, Callable 7/1/06
@ 102.......................... 2,120,625
1,000,000 St. George, Parks &
Recreational Facilities, GO,
5.38%, 8/1/21, Callable 8/1/07
@ 101 (Insured by FGIC)........ 1,028,750
------------
3,149,375
------------
WASHINGTON -- 3.8%
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).............. 1,087,500
2,500,000 Port Seattle Limited Tax, GO,
(AMT), 5.35%, 5/1/04........... 2,668,750
1,000,000 Washington State, Motor
Vehicle Fuel Tax, R-92D, GO,
6.25%, 9/1/07.................. 1,152,500
------------
4,908,750
------------
</TABLE>
Continued
86
<PAGE> 88
THE KENT TAX-FREE INCOME FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ----------- ------------------------------- ------------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
WISCONSIN -- 1.0%
$1,285,000 Wisconsin State Health and
Education Facility, Lawrence
University, 5.13%, 4/15/28,
Callable 10/1/08 @ 101......... $ 1,254,481
------------
WYOMING -- 2.0%
2,650,000 Sublette County Pollution
Control Revenue Bond, 5.05%*,
1/4/99......................... 2,650,000
------------
TOTAL MUNICIPAL BONDS.......... 129,737,912
------------
(Cost $121,194,230)
INVESTMENT COMPANIES -- 0.2%
294,445 Dreyfus Tax Exempt Money Market
Fund........................... 294,445
------------
TOTAL INVESTMENT COMPANIES..... 294,445
------------
(Cost $294,445)
TOTAL INVESTMENTS -- 99.9%.................. 130,032,357
(Cost $121,488,675)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.1%....................... 137,873
------------
TOTAL NET ASSETS -- 100.0%.................. $130,170,230
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and financial reporting
purposes and differs from value by net unrealized appreciation of securities
as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation................... $8,572,998
Unrealized depreciation................... (29,316)
----------
Net unrealized appreciation............... $8,543,682
==========
</TABLE>
(b) Represents security purchased on a when issued basis.
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. 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.
FOA First of America
FSA Financial Security Assurance
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PSF Permanent School Fund
</TABLE>
See Notes to Financial Statements.
87
<PAGE> 89
THE KENT MICHIGAN MUNICIPAL BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS -- 98.3%
MICHIGAN -- 95.8%
$1,465,000 Allegan Sanitary Sewer System,
(AMT), 5.45%, 11/1/02........... $ 1,512,613
2,000,000 Battle Creek Downtown
Development Authority, Tax
Increment Revenue, 6.90%,
5/1/04.......................... 2,230,000
1,000,000 Bay City Electric Utility
Revenue, 5.15%, 1/1/07 (Insured
by AMBAC)....................... 1,061,250
2,450,000 Brighton Area School District,
5.13%, 5/01/08, (Insured by
FSA)............................ 2,612,313
290,000 Chippewa County Hospital Finance
Authority, 4.40%, 11/1/99....... 291,073
585,000 Chippewa County Hospital Finance
Authority, 4.40%, 11/1/99....... 587,165
260,000 Chippewa County Hospital Finance
Authority, 4.60%, 11/1/00....... 261,950
1,000,000 Chippewa Valley School District,
GO, 6.38%, 5/1/05, Prerefunded
5/1/01 @ 101.5 (Insured by
FGIC)........................... 1,073,750
745,000 Chippewa Valley School District,
Series A, GO, 5.60%, 5/1/99..... 750,699
1,700,000 Clintondale Community School
District, GO, 4.65%, 5/1/03..... 1,755,250
2,000,000 Dearborn School District, GO,
6.63%, 5/1/09, Prerefunded
5/1/00 @ 102 (Insured by
MBIA)........................... 2,122,500
1,000,000 Dearborn School District, GO,
6.38%, 5/1/10, Prerefunded
5/1/00 @ 102 (Insured by
MBIA)........................... 1,058,750
965,000 Dearborn Sewage Disposal System,
6.90%, 4/1/02 (Insured by
MBIA)........................... 1,053,056
580,000 Detroit, Distributable State
Aid, GO, 5.60%, 5/1/00 (Insured
by AMBAC)....................... 595,225
1,000,000 Detroit, GO, 5.00%, 4/1/04
(Insured by FGIC)............... 1,046,250
750,000 Detroit, GO, 6.00%, 4/1/06
(Insured by FGIC)............... 833,438
1,570,000 Detroit, Local Development
Finance Authority, Tax Increment
Revenue, 5.25%, 5/1/07.......... 1,660,275
1,730,000 Dexter Community School
District, GO, 6.25%, 5/1/07
(Insured by FGIC)............... 1,976,525
2,000,000 East China Township School
District, GO, 6.00%, 5/1/02,
Callable 5/1/01 @ 102........... 2,140,000
1,000,000 Eastern Michigan University, GO,
5.80%, 6/1/01 (Insured by
AMBAC).......................... 1,047,500
445,000 Farmington Hills Economic
Development Corp. Revenue,
Botsford Continuing Care, Series
A, 5.10%, 2/15/04 (Insured by
MBIA)........................... 467,250
</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)............... $ 497,613
465,000 Flint Hospital Building
Authority, Hurley Medical
Center, 4.00%, 7/1/99........... 465,037
1,600,000 Flint Hospital Building
Authority, Hurley Medical
Center, Series A, 5.00%,
7/1/03.......................... 1,634,000
305,000 Flint Hospital Building
Authority, Hurley Medical
Center, Series B, 4.00%,
7/1/99.......................... 305,024
740,000 Grand Haven Area Public Schools,
5.45%, 5/1/04 (Insured by MBIA),
Prerefunded 5/1/03 @ 102........ 800,798
260,000 Grand Haven Area Public Schools,
5.45%, 5/1/04 (Insured by MBIA),
Callable 5/1/03 @ 102........... 278,486
1,250,000 Greater Detroit Resource
Recovery Authority, Series B,
5.00%, 12/13/02 (Insured by
AMBAC).......................... 1,301,563
1,575,000 Hamilton Community Schools
District, 5.50%, 5/1/07
(Insured by FGIC)............... 1,716,750
1,250,000 Huron Valley School District,
GO, 7.10%, 5/1/08, Prerefunded
5/1/01 @ 102 (Insured by
FGIC)........................... 1,368,750
1,810,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 4.95%, 5/15/02
(Insured by MBIA)............... 1,871,088
1,000,000 Kalamazoo Hospital Finance
Authority, Refunding &
Improvement, Bronson Methodist
Hospital, 5.25%, 5/15/05
(Insured by MBIA)............... 1,063,750
750,000 Kalamazoo Hospital Finance
Authority, Revenue, Bronson
Methodist Hospital, 5.50%,
5/15/08 (Insured by MBIA)....... 817,500
1,295,000 Kenowa Hills Public Schools, GO,
5.50%, 5/1/05................... 1,401,838
500,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.25%, 1/1/04... 526,250
505,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 5.30%, 1/1/05... 534,038
645,000 Kent County Airport Facility,
Kent County International
Airport, (AMT), 4.30%, 1/1/05
(Insured by MBIA)............... 648,225
</TABLE>
Continued
88
<PAGE> 90
THE KENT MICHIGAN MUNICIPAL BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,150,000 Kent Hospital Finance Authority,
Butterworth Hospital, 4.90%,
1/15/05......................... $ 1,193,125
2,000,000 Lake Orion Community School
District, GO, 6.20%, 5/1/04
(Insured by AMBAC).............. 2,212,500
2,375,055 Michigan Department of State
Police Lease, 4.95%, 3/10/02
(b)............................. 2,392,868
1,265,000 Michigan Higher Education
Facility Authority, Thomas M
Cooley Law School, 4.75%, 5/1/07
(LOC: First of America)......... 1,279,231
1,000,000 Michigan Hospital Finance
Authority, Sisters of Mercy,
7.50%, 2/15/18, Prerefunded
2/15/01 @ 102................... 1,097,500
1,020,000 Michigan Municipal Bond
Authority, Local Government Loan
Program, Qualified School,
6.35%, 5/15/01.................. 1,081,200
1,000,000 Michigan Municipal Bond
Authority, Pooled Projects,
Series B, 5.10%, 10/1/04........ 1,057,500
2,000,000 Michigan Municipal Bond
Authority, State Revolving Fund,
5.50%, 10/1/06.................. 2,182,500
1,500,000 Michigan Municipal Bond
Authority, State Revolving Fund,
Series A, 6.00%, 10/1/03........ 1,633,125
2,000,000 Michigan Public Power Agency,
Belle River Project, Series A,
5.30%, 1/1/00................... 2,033,800
750,000 Michigan Public Power Agency,
Belle River Project, Series A,
5.70%, 1/1/03................... 799,688
1,000,000 Michigan State Building
Authority, Series II, 6.10%,
10/1/01......................... 1,061,250
3,000,000 Michigan State Comprehensive
Transportation, Series B, 5.63%,
5/15/03......................... 3,206,249
1,855,000 Michigan State Hospital Finance
Authority, Bay Medical Center,
Series A, 5.38%, 7/1/06 (Insured
by FSA)......................... 1,989,488
2,000,000 Michigan State Hospital Finance
Authority, Daughters of Charity
National Health System, 4.80%,
11/1/17, Mandatory Put
11/1/04 @ 100................... 2,077,500
750,000 Michigan State Hospital Finance
Authority, GO, Detroit Medical
Center Group A, 5.00%, 8/15/04
(Insured by AMBAC).............. 787,500
2,000,000 Michigan State Hospital Finance
Authority, Mclaren Obligated
Group, Series A, 5.75%,
10/15/03........................ 2,142,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,500,000 Michigan State Hospital Finance
Authority, Mercy Health
Services, Series S, 6.00%,
8/15/06......................... $ 1,661,250
1,000,000 Michigan State Hospital Finance
Authority, Sisters of Mercy
Health Corp. Bond 1993, Series
F, 4.60%, 8/15/02 (Insured by
MBIA)........................... 1,023,750
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............................. 3,065,999
1,000,000 Michigan State Hospital Finance
Authority, St. John Hospital &
Medical Center, 5.00%, 5/15/05
(Insured by AMBAC).............. 1,050,000
2,680,000 Michigan State Housing
Development Authority, Rental
Housing Revenue, Series A,
(AMT), 5.25%, 10/1/01 (Insured
by MBIA)........................ 2,757,049
2,500,000 Michigan State Strategic Fund,
5.05%*, 1/4/99 (LOC:
Barclays)....................... 2,500,000
2,000,000 Michigan State Underground
Storage, Tank Financial
Assurance Authority, Series I,
5.00%, 5/1/00 (Insured by
AMBAC).......................... 2,037,500
3,270,000 Michigan State Underground
Storage, Tank Financial
Assurance Authority, Series I,
6.00%, 5/1/06 (Insured by
AMBAC).......................... 3,637,874
505,000 Michigan Strategic Fund, Clark
Retirement Community Project,
4.50%, 6/1/03................... 506,894
520,000 Michigan Strategic Fund, Clark
Retirement Community Project,
4.60% 6/1/04.................... 522,600
610,000 Michigan Strategic Fund, Clark
Retirement Community Project,
4.85%, 6/1/07................... 613,050
615,000 Michigan Strategic Fund, Hope
Network Project, Series B,
4.75%, 9/1/07 (LOC: First of
America)........................ 628,069
1,000,000 Mount Clemens Community School
District, GO, 6.60%, 5/1/20,
Prerefunded 5/1/02 @ 102
(Insured by MBIA)............... 1,107,500
1,495,000 Oakland County Economic
Development Corp., Boardwalk
Shopping Center, 4.38%*, 2/25/99
(LOC: NBD), Mandatory Put 7/1/03
@ 100........................... 1,495,000
1,080,000 Oakland County Economic
Development Corp., Sugartree
Shopping Center, 4.38%*, 2/25/99
(LOC: NBD), Mandatory Put 7/1/03
@ 100........................... 1,080,000
</TABLE>
Continued
89
<PAGE> 91
THE KENT MICHIGAN MUNICIPAL BOND FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 Oakland Washtenaw County
Community College, 6.65%,
5/1/11, Prerefunded 5/1/02 @
100............................. $ 1,107,500
3,000,000 Okemos Public School District,
Series I, GO, 6.90%, 5/1/11,
Prerefunded 5/1/01 @ 102........ 3,269,999
3,200,000 Plymouth-Canton Community School
District, Series B, GO, 6.80%,
5/1/17, Prerefunded 5/1/01 @
101............................. 3,451,999
735,000 Reeths-Puffer Schools, GO,
6.75%, 5/1/01 (Insured by
FGIC)........................... 784,613
750,000 Reeths-Puffer Schools, GO,
6.25%, 5/1/02 (Insured by
FGIC)........................... 808,125
2,000,000 Rockford Public Schools, GO,
7.38%, 5/1/19, Prerefunded
5/1/00 @ 101.................... 2,122,500
2,035,000 Walled Lake Consolidated School
District, GO, 4.70%, 5/1/01..... 2,080,788
2,235,000 Walled Lake Consolidated School
District, GO, 4.80%, 5/1/02..... 2,307,638
2,000,000 Walled Lake Consolidated School
District, Series II, GO, 7.10%,
5/1/05, Prerefunded 5/1/00 @
102............................. 2,135,000
1,025,000 Washtenaw Community College, GO,
4.70%, 4/1/03 (Insured by
FGIC)........................... 1,057,031
550,000 Wayne County Downriver System
Sewer Disposal, GO, 3.75%,
5/1/99.......................... 550,693
550,000 Wayne County Downriver System
Sewer Disposal, GO, 3.75%,
5/1/00.......................... 550,286
1,750,000 Western Michigan University,
Series A, 6.50%, 7/15/21,
Prerefunded 7/15/01 @ 102
(Insured by AMBAC).............. 1,903,125
1,000,000 Western Townships Michigan
Utilities Authority, Sewer
Disposal System, 8.13%, 1/1/09,
Callable 1/1/99 @ 102........... 1,020,000
1,000,000 Wyandotte Electric Revenue,
6.20%, 10/1/03 (Insured by
MBIA)........................... 1,097,500
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- --------- ----------- ------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
1,150,000 Ypsilanti School District,
4.50%, 5/1/00 (Insured by
FGIC)........................... 1,165,813
------------
118,694,211
------------
PUERTO RICO -- 2.5%
3,000,000 Puerto Rico Commonwealth Highway
& Transportation Authority,
Highway Revenue, Series X,
4.90%, 7/1/01................... 3,078,750
------------
TOTAL MUNICIPAL BONDS........... 121,772,961
------------
(Cost $117,862,360)
INVESTMENT COMPANIES -- 0.5%
655,493 Dreyfus Tax Exempt Money Market
Fund............................ 655,493
------------
TOTAL INVESTMENT COMPANIES...... 655,493
------------
(Cost $655,493)
TOTAL INVESTMENTS -- 98.8%.................. 122,428,454
(Cost $118,517,853)(a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.2%....................... 1,474,409
------------
TOTAL NET ASSETS -- 100.0%.................. $123,902,863
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............... $ 3,921,381
Unrealized depreciation............... (10,780)
------------
Net unrealized appreciation........... $ 3,910,601
============
</TABLE>
(b) 144a security which is restricted as to resale to institutional investors.
This security has been deemed liquid by the Board of Trustees.
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. 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.
90
<PAGE> 92
THE KENT MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
BANK NOTES -- 2.9%
$ 5,000,000 First Union National Bank of
North Carolina, 5.22%,
2/26/99........................ $ 5,000,000
5,000,000 First Union National Bank of
North Carolina, 5.11%,
2/26/99........................ 5,000,000
5,000,000 First Union National Bank of
North Carolina, 5.25%,
9/17/99........................ 5,000,000
5,000,000 Morgan Guaranty Trust, 5.55%,
2/4/99......................... 4,999,105
------------
TOTAL BANK NOTES............... 19,999,105
------------
(Cost $19,999,105)
BANKERS ACCEPTANCES -- 0.7%
5,000,000 First Union National Bank of
North Carolina, 5.00%,
2/23/99........................ 4,963,194
------------
TOTAL BANKERS ACCEPTANCES...... 4,963,194
------------
(Cost $4,963,194)
CERTIFICATES OF DEPOSIT -- 3.6%
5,000,000 Mellon Bank, 5.25%, 2/5/99..... 5,000,000
5,000,000 Mellon Bank, 5.71%, 3/5/99..... 5,000,000
5,000,000 Mellon Bank, 5.06%, 4/16/99.... 5,000,000
5,000,000 Mellon Bank, 4.85%, 4/19/99.... 5,000,000
5,000,000 Mellon Bank, 5.75%, 6/3/99..... 5,000,000
------------
TOTAL CERTIFICATES OF
DEPOSIT........................ 25,000,000
------------
(Cost $25,000,000)
COMMERCIAL PAPER -- 38.7%
5,000,000 Bank of Nova Scotia, 5.65%,
3/23/99........................ 4,998,278
5,000,000 BellSouth Telecommunications,
5.10%, 2/12/99................. 4,970,250
5,000,000 Cargill, Inc., 5.03%, 3/5/99... 4,955,988
5,000,000 Cargill, Inc., 4.98%,
3/18/99........................ 4,947,433
5,000,000 Commerzbank AG, 5.47%,
1/11/99........................ 4,992,403
30,000,000 Commonwealth Bank of Australia,
5.25%, 1/4/99.................. 29,986,876
5,000,000 DaimlerChrysler, 5.25%,
2/23/99........................ 4,961,354
5,000,000 DaimlerChrysler, 5.00%,
4/22/99........................ 4,922,917
5,000,000 Deere & Co., 5.31%, 1/22/99.... 4,984,513
5,000,000 Deere & Co., 5.01%, 3/26/99.... 4,941,550
5,000,000 Deutsche Bank Financial, 5.80%,
1/5/99......................... 4,996,778
5,000,000 Dresdner US Finance, 5.23%,
2/16/99........................ 4,966,586
5,000,000 Dresdner US Finance, 5.26%,
2/18/99........................ 4,964,933
5,000,000 E.I. du Pont de Nemours & Co.,
5.12%, 1/15/99................. 4,990,044
5,000,000 E.I. du Pont de Nemours & Co.,
5.07%, 1/27/99................. 4,981,692
5,000,000 First Union National Bank of
North Carolina, 4.87%,
5/13/99........................ 4,910,717
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
COMMERCIAL PAPER (CONTINUED)
$ 5,000,000 Ford Motor Credit Corp., 5.40%,
1/8/99......................... $ 4,994,749
5,000,000 Ford Motor Credit Corp., 5.15%,
1/19/99........................ 4,987,125
5,000,000 Ford Motor Credit Corp., 5.09%,
1/28/99........................ 4,980,913
5,000,000 Ford Motor Credit Corp., 5.05%,
2/3/99......................... 4,976,854
5,000,000 General Electric Capital Corp.,
5.45%, 2/22/99................. 4,960,639
5,000,000 General Electric Capital Corp.,
5.08%, 2/26/99................. 4,960,489
5,000,000 General Electric Capital Corp.,
5.04%, 3/18/99................. 4,946,800
5,000,000 General Electric Capital Corp.,
5.06%, 3/19/99................. 4,945,886
5,000,000 General Motors Acceptance
Corp., 5.29%, 1/21/99.......... 4,985,306
5,000,000 General Motors Acceptance
Corp., 5.39%, 1/26/99.......... 4,981,285
5,000,000 General Motors Acceptance
Corp., 5.44%, 1/26/99.......... 4,981,111
5,000,000 General Motors Acceptance
Corp., 5.18%, 2/3/99........... 4,976,258
5,000,000 H.J. Heinz Co., 5.13%,
1/29/99........................ 4,980,050
5,000,000 Household Finance, 5.10%,
1/4/99......................... 4,997,875
5,000,000 Household Finance, 5.38%,
1/21/99........................ 4,985,056
4,230,000 Motorola Credit Corp., 5.20%,
2/19/99........................ 4,200,061
5,000,000 Motorola Credit Corp., 5.00%,
2/26/99........................ 4,961,111
5,000,000 National Australia Funding,
5.18%, 1/4/99.................. 4,997,842
10,000,000 National Australia Funding,
5.05%, 3/2/99.................. 9,915,833
5,000,000 Panasonic, 5.10%, 1/26/99...... 4,982,292
989,000 Shell Oil Co., 5.00%, 1/4/99... 988,588
5,000,000 Societe Generale North America,
5.42%, 1/12/99................. 4,991,719
5,000,000 Sony Capital Corp., 5.25%,
1/12/99........................ 4,991,978
5,000,000 Sony Capital Corp., 5.20%,
1/25/99........................ 4,982,666
5,000,000 Sony Capital Corp., 5.20%,
1/29/99........................ 4,979,778
6,250,000 Toronto Dominion, 4.70%,
4/14/99........................ 6,165,955
5,000,000 Toyota Motor Credit Corp.,
5.03%, 3/5/99.................. 4,955,988
15,000,000 Walt Disney Co., 5.00%.
1/6/99......................... 14,989,584
5,000,000 Walt Disney Co., 5.05%,
2/5/99......................... 4,975,451
10,000,000 Xerox Credit Corp., 5.00%,
1/5/99......................... 9,994,444
------------
TOTAL COMMERCIAL PAPER......... 270,185,998
------------
(Cost $270,185,998)
</TABLE>
Continued
91
<PAGE> 93
THE KENT MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
CORPORATE NOTES & BONDS -- 1.1%
$ 7,825,000 General Motors Acceptance
Corp., 6.15%, 9/20/99.......... $ 7,884,530
------------
TOTAL CORPORATE NOTES &
BONDS.......................... 7,884,530
------------
(Cost $7,884,530)
DEMAND NOTES -- 24.3%
4,000,000 Adena Health System, 5.56%*,
1/7/99......................... 4,000,000
8,000,000 American Healthcare Funding
L.L.C., 5.70%*, 1/6/99 (LOC:
LaSalle National Bank)......... 8,000,000
4,000,000 American Mfg. Co., Inc., Series
1997, 5.50%*, 1/7/99 (LOC:
Mellon Bank)................... 4,000,000
7,500,000 Arboretum Properties L.L.C.,
5.56%*, 1/6/99 (LOC: Michigan
National Bank)................. 7,500,000
2,900,000 Buckeye Corrugated, Inc.,
5.56%*, 1/6/99 (LOC:
Keybank)....................... 2,900,000
8,159,000 Capital One Funding Corp.,
5.57%*, 1/7/99................. 8,159,000
4,400,000 City of Cloquet, Minnesota
Taxable Industrial Bond, Series
1996B, 5.70%*, 1/6/99 (LOC:
Credit Suisse)................. 4,400,000
3,920,000 Excel Health Services, Inc.,
5.56%*, 1/7/99................. 3,920,000
4,830,000 First Metro Title Co., 5.56%*,
1/7/99 (LOC: Michigan National
Bank).......................... 4,830,000
6,565,000 GTB Properties L.L.C., 5.80%*,
1/7/99......................... 6,565,000
4,565,000 Harry W. Albright, Jr., 5.58%*,
1/7/99......................... 4,565,000
3,450,000 HWP Co., Ltd. Project, 5.30%*,
1/7/99 (LOC: National City Bank
Cleveland, Ohio)............... 3,450,000
3,450,000 Idaho Associates L.L.C.,
5.70%*, 1/6/99 (LOC: LaSalle
National Bank)................. 3,450,000
5,010,000 Jackson Tube Service, Inc.,
5.56%*, 1/6/99................. 5,010,000
5,000,000 Jefferson County, Kentucky,
5.34%*, 1/7/99 (LOC: Bank One
Kentucky)...................... 5,000,000
11,520,000 Katz Capital Corp., 5.68%*,
1/7/99 (LOC: Citizens Bank).... 11,520,000
4,445,000 Labelle Capital Funding L.L.C.,
5.58%*, 1/7/99 (LOC: First of
America Bank -- Michigan)...... 4,445,000
1,575,000 Laird's Auto Glass & Trim,
Inc., 5.25%*, 1/7/99 (LOC:
Michigan National Bank)........ 1,575,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
DEMAND NOTES (CONTINUED)
$ 3,920,000 Macroe Properties, Inc.,
5.58%*, 1/7/99 (LOC: Huntington
Bank).......................... $ 3,920,000
1,300,000 Michigan State Strategic Fund,
Ltd., 5.65%*, 1/6/99........... 1,300,000
5,000,000 Mississippi Business Finance
Corp., 5.70%*, 1/6/99 (LOC:
First National Bank of
Chicago)....................... 5,000,000
5,000,000 Nationsbank Corp., 5.44%*,
11/18/99....................... 4,999,356
6,000,000 Nationsbank Corp., 5.27%*,
4/1/99......................... 6,009,717
8,385,000 Ordeal Properties L.L.C.,
5.56%*, 1/6/99 (LOC:
Keybank)....................... 8,385,000
2,420,000 Patt's Enterprises L.L.C.,
5.58%*, 1/7/99 (LOC: Huntington
National Bank)................. 2,420,000
4,860,000 PRA at Glenwood Hills
Corporate, Centre Limited
Liability Co., 5.27%*, 1/7/99
(LOC: First of America Bank --
Michigan)...................... 4,860,000
8,350,000 PRD Finance L.L.C., 5.27%*,
1/7/99 (LOC: First of America
Bank -- Michigan).............. 8,350,000
5,140,000 Reynolds Road Fitness Center,
Inc., 5.50%*, 1/6/99 (LOC:
Fifth Third Bank).............. 5,140,000
3,000,000 Royal Town Center L.L.C.
Project, 5.56%*, 1/7/99 (LOC:
Comerica Bank)................. 3,000,000
2,625,000 Rumpf Development Ltd., 5.56%*,
1/6/99 (LOC: Keybank).......... 2,625,000
5,000,000 Sheperd Capital L.L.C., 5.58%*,
1/7/99 (LOC: Comerica Bank).... 5,000,000
1,900,000 South Bend MAC, L.P., 5.65%*,
1/6/99 (LOC: LaSalle National
Bank).......................... 1,900,000
1,075,000 The Economic Development Corp.
of the County of Marquette,
Pioneer Laboratories, Inc.
Project, 5.80%*, 1/6/99 (LOC:
NBD Bank)...................... 1,075,000
4,000,000 Village of Glendale Heights,
Illinois, 5.57%*, 1/7/99....... 4,000,000
3,020,000 White Mountain Imaging, 5.56%*,
1/6/99 (LOC: Keybank).......... 3,020,000
5,275,000 Zeigler Realty L.L.C, 5.58%*,
1/7/99 (LOC: First of America
Bank -- Michigan).............. 5,275,000
------------
TOTAL DEMAND NOTES............. 169,568,073
------------
(Cost $169,568,073)
</TABLE>
Continued
92
<PAGE> 94
THE KENT MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
EURO CERTIFICATES OF DEPOSIT -- 0.7%
$ 5,000,000 Commerzbank AG, 5.42%,
2/16/99........................ $ 5,000,125
------------
TOTAL EURO CERTIFICATES OF
DEPOSIT........................ 5,000,125
------------
(Cost $5,000,125)
FUNDING AGREEMENTS -- 4.3%
5,000,000 Allstate Financial Corp.,
5.29%*, 1/4/99 (b)............. 5,000,000
5,000,000 Allstate Financial Corp.,
5.29%*, 1/4/99 (b)............. 5,000,000
20,000,000 General American Life Insurance
Co., 5.24%*, 1/4/99............ 20,000,000
------------
TOTAL FUNDING AGREEMENTS....... 30,000,000
------------
(Cost $30,000,000)
YANKEE CERTIFICATES OF DEPOSIT -- 17.4%
5,000,000 Bank of New York, 5.50%,
2/17/99........................ 4,998,092
5,000,000 Bank of Nova Scotia, 5.33%,
1/11/99........................ 5,000,000
5,000,000 Bank of Nova Scotia, 5.21%,
11/25/99....................... 5,000,000
5,000,000 Bank of Nova Scotia, 5.23%,
2/4/99......................... 5,000,000
5,000,000 Bank of Nova Scotia, 5.08%,
3/29/99........................ 5,000,000
5,000,000 Barclays Bank PLC, 5.65%,
3/2/99......................... 4,999,567
5,000,000 Bayerische Landesbank, 5.70%,
5/21/99........................ 5,011,136
5,000,000 Canadian Imperial Bank of
Commerce, 5.55%, 2/10/99....... 4,999,132
5,000,000 Canadian Imperial Bank of
Commerce, 5.31%, 3/16/99....... 4,999,900
5,000,000 Canadian Imperial Bank of
Commerce, 4.87%, 4/21/99....... 5,000,298
5,000,000 Commerzbank AG, 5.65%,
2/26/99........................ 4,999,089
4,000,000 Commerzbank AG, 5.67%,
3/5/99......................... 3,999,427
5,000,000 Credit Agricole Indosuez,
5.71%, 1/7/99.................. 4,999,887
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
YANKEE CERTIFICATES OF DEPOSIT (CONTINUED)
$ 5,000,000 Credit Agricole Indosuez,
5.66%, 3/3/99.................. $ 4,999,674
5,000,000 Credit Agricole Indosuez,
5.73%, 4/16/99................. 4,999,177
5,000,000 Credit Agricole Indosuez,
5.78%, 5/14/99................. 5,010,528
7,000,000 Deutche Bank, 5.74%, 4/27/99... 7,006,443
5,000,000 Dresdner US Finance, 5.45%,
1/6/99......................... 5,000,000
5,000,000 Dresdner US Finance, 5.33%,
3/11/99........................ 5,000,057
5,000,000 Rabobank, 5.69%, 4/16/99....... 4,999,311
5,000,000 Societe Generale, 5.70%,
3/23/99........................ 4,999,468
5,000,000 Societe Generale, 5.77%,
4/19/99........................ 4,999,451
5,000,000 Swiss Bank, 5.74%, 6/11/99..... 4,999,789
5,000,000 Toronto Dominion, 5.26%,
2/1/99......................... 5,000,128
------------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT........................ 121,020,554
------------
(Cost $121,020,554)
INVESTMENT COMPANIES -- 5.8%
660,852 Dreyfus Cash Management Money
Market Fund.................... 660,852
39,664,114 Federated Prime Value
Obligations Money Market
Fund........................... 39,664,114
------------
TOTAL INVESTMENT COMPANIES..... 40,324,966
------------
(Cost $40,324,966)
TOTAL INVESTMENTS -- 99.5%................... 693,946,545
(Cost $693,946,545) (a)
OTHER ASSETS IN EXCESS OF LIABILITIES 0.5%... 3,181,074
------------
TOTAL NET ASSETS -- 100.0%................... $697,127,619
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes is the same.
(b) Illiquid security.
* Variable rate security. Rate presented represents rate in effect at December
31, 1998. Maturity date reflects next rate change date.
<TABLE>
<S> <C>
LOC
Letter of Credit
PLC
Public Limited Company
</TABLE>
See Notes to Financial Statements.
93
<PAGE> 95
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS -- 86.3%
MICHIGAN -- 82.2%
$5,000,000 City of Dearborn Economic
Development Corp., Henry Ford
Village, 4.10%*, 1/7/99, (LOC:
Comerica)....................... $ 5,000,000
950,000 Clinton Township Economic
Development Corp., Pointe
Village Square, (AMT), 3.90%,
2/1/99, (LOC: FOA).............. 950,000
760,000 De Witt Michigan Public Schools,
QSBLF, 3.50%, 5/1/99, (Insured
by FSA)......................... 760,000
1,200,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series D,
5.00%*, 1/4/99, (LOC: Credit
Suisse)......................... 1,200,000
2,300,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series F,
5.00%*, 1/4/99, (LOC: Bank of
Nova Scotia).................... 2,300,000
7,700,000 Detroit Michigan City School
District, 4.50%, 7/1/99......... 7,731,290
500,000 Detroit Michigan Downtown
Development Authority Tax
Increment, Project A, 3.60%,
7/1/99, (Insured by MBIA)....... 500,000
1,300,000 Detroit Michigan Sewage
Disposal, 7.18%, 7/1/99,
Prerefunded 7/1/99 @ 101.50,
(Insured by MBIA)............... 1,341,636
700,000 Dexter Michigan Community
Schools, QSBLF, 3.80%, 5/1/99,
(Insured by FGIC)............... 700,000
365,000 Farmington Hills Michigan
Education, Marketing Displays,
(AMT), 3.80%, 3/1/99, (LOC:
Comerica Bank).................. 365,000
5,810,000 Garden City Michigan Hospital,
4.05%*, 1/7/99, (LOC: FOA)...... 5,810,000
7,000,000 Genesee County Economic
Development Corp., Rue
Properties, (AMT), 4.20%*,
1/7/99, (LOC: Nationsbank)...... 7,000,000
3,000,000 Kalamazoo Michigan City School
District, 3.75%, 9/16/99, (LOC:
National City).................. 3,007,166
1,000,000 Kent County Hospital Authority,
Butterworth Hospital, 7.25%,
1/15/12, Prerefunded
1/15/00 @ 102................... 1,061,324
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,060,000 Leelanau County Economic
Development Corp., American
Mutual Insurance Co., 3.25%*,
6/15/99, (LOC: FOA)............. $ 2,060,000
4,500,000 Lenawee County Economic
Development Corp., Rima Mfg. Co.
Project, (AMT), 4.20%*, 1/7/99,
(LOC: Keybank).................. 4,500,000
390,000 Livonia County Economic
Development Corp., American
Community Mutual Insurance Co.,
3.25%*, 5/15/99, (LOC: FOA)..... 390,000
1,400,000 Marquette County Economic
Development Corp., Pioneer Labs,
Inc., (AMT), 4.00%*, 1/6/99,
(LOC: NBD Bank)................. 1,400,000
1,800,000 Meridian Michigan Economic
Development Corp., Hannah
Technology, 3.50%*, 1/15/99,
(LOC: Comerica Bank)............ 1,800,000
2,520,000 Michigan Municipal Bond
Authority, 4.50%, 8/27/99, (LOC:
Comerica)....................... 2,534,263
6,000,000 Michigan Municipal Bond
Authority, 4.25%, 8/27/99, (LOC:
Bank of Nova Scotia)............ 6,025,274
8,000,000 Michigan Municipal Bond
Authority, School Loan, 3.50%,
12/1/99......................... 8,042,881
1,000,000 Michigan Municipal Bond
Authority, Local Government Loan
Program, Series B, 6.90%, 5/1/99
(Insured by FGIC)............... 1,010,272
3,500,000 Michigan Municipal Bond
Authority, Series B-1, 4.50%,
7/2/99.......................... 3,515,148
3,500,000 Michigan Municipal Bond
Authority, Series D-1, 4.25%,
8/27/99......................... 3,518,776
1,000,000 Michigan State Building
Authority, Series 1, 4.20%,
10/1/99, (Insured by AMBAC)..... 1,005,970
1,000,000 Michigan State Comprehensive
Transportation, Series B, 5.10%,
5/15/99......................... 1,004,787
1,060,000 Michigan State Hospital Finance
Authority, Sisters of Mercy
Health Corp., Series J, 7.15%,
2/15/99......................... 1,064,398
</TABLE>
Continued
94
<PAGE> 96
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$2,500,000 Michigan State Hospital Finance
Authority, St. Mary's Hospital
of Livonia, Series A, 3.95%*,
1/6/99, (LOC: Comerica Bank).... $ 2,500,000
3,000,000 Michigan State Housing
Development Authority, Canton
Club East, (AMT), 4.15%*,
1/7/99, (LOC: Keybank).......... 3,000,000
1,650,000 Michigan State Housing
Development Authority, Laurel
Valley, 4.05%*, 1/6/99, (LOC:
Wachovia)....................... 1,650,000
1,500,000 Michigan State Housing
Development Authority, Limited
Obligation Revenue, Pine Ridge,
4.00%*, 1/6/99, (LOC:
Wachovia)....................... 1,500,000
1,190,000 Michigan State Housing
Development Authority, Series B,
(AMT), 3.00%, 12/1/99........... 1,190,000
1,300,000 Michigan State Housing
Development Authority, Woodland
Meadows, (AMT), 4.00%*, 1/6/99,
(LOC: Union Bank of
Switzerland).................... 1,300,000
3,300,000 Michigan State Job Development
Authority, BASF Wyandotte,
3.67%*, 1/7/99, (LOC: Bayerische
Landesbank)..................... 3,300,000
6,900,000 Michigan State Strategic Fund,
Detroit Edison, 5.05%*, 1/4/99,
(LOC: Barclays)................. 6,900,000
2,300,000 Michigan State Strategic Fund,
Jedco Inc., 4.20%*, 1/7/99,
(LOC: NBD Bank)................. 2,300,000
3,000,000 Michigan State Strategic Fund,
Van Andel Research Project,
4.15%*, 1/7/99, (LOC: Michigan
National Bank).................. 3,000,000
2,700,000 Michigan State Strategic Fund,
AACOA Extrusions, Inc., (AMT),
4.20%*, 1/6/99, (LOC: NBD
Bank)........................... 2,700,000
2,510,000 Michigan State Strategic Fund,
Atmosphere Annealing, (AMT),
4.20%*, 1/7/99, (LOC: FOA)...... 2,510,000
1,160,000 Michigan State Strategic Fund,
B.K. Hardwoods, (AMT), 4.20%*,
1/7/99, (LOC: Huntington
Bank)........................... 1,160,000
4,035,000 Michigan State Strategic Fund,
Banks Hardwoods, Inc., (AMT),
4.15%*, 1/7/99, (LOC: Bank
One)............................ 4,035,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,900,000 Michigan State Strategic Fund,
Besser International Sales Inc.
Project, (AMT), 4.20%*, 1/6/99,
(LOC: NBD Bank)................. $ 1,900,000
3,200,000 Michigan State Strategic Fund,
Bloomfield Valley Properties,
3.40%*, 1/4/99, (LOC: Charter
One)............................ 3,200,000
3,700,000 Michigan State Strategic Fund,
Brazing Concepts Co., (AMT),
4.20%*, 1/6/99, (LOC: NBD
Bank)........................... 3,700,000
1,500,000 Michigan State Strategic Fund,
C-1, (AMT), 4.15%*, 1/6/99,
(LOC: Comerica Bank)............ 1,500,000
1,000,000 Michigan State Strategic Fund,
C-Tec Inc. Project, (AMT),
4.10%*, 1/6/99, (LOC: Suntrust
Bank)........................... 1,000,000
2,000,000 Michigan State Strategic Fund,
Camac LLC, (AMT), 4.20%*,
1/6/99, (LOC: NBD Bank)......... 2,000,000
1,200,000 Michigan State Strategic Fund,
Consumers Power, 5.10%*, 1/4/99,
(LOC: Union Bank of
Switzerland).................... 1,200,000
1,875,000 Michigan State Strategic Fund,
Cyberplast, (AMT), 4.15%*,
1/7/99, (LOC: NBD Bank)......... 1,875,000
5,000,000 Michigan State Strategic Fund,
Dawnbreakers LLC, (AMT), 4.20%*,
1/7/99, (LOC: National City
Bank)........................... 5,000,000
2,500,000 Michigan State Strategic Fund,
Donnelley Corp., Series B,
(AMT), 3.75%*, 4/1/99, (LOC:
Dresdner Bank).................. 2,500,000
5,000,000 Michigan State Strategic Fund,
Dow Chemical Co. Project, (AMT),
5.10%*, 1/4/99.................. 5,000,000
1,000,000 Michigan State Strategic Fund,
Dow Chemical Co. Project,
5.15%*, 1/4/99.................. 1,000,000
1,170,000 Michigan State Strategic Fund,
Enviromental Powder Co., (AMT),
4.20%*, 1/7/99, (LOC: Michigan
National Bank).................. 1,170,000
1,000,000 Michigan State Strategic Fund,
Equad Project, (AMT), 4.20%*,
1/7/99, (LOC: Huntington
Bank)........................... 1,000,000
</TABLE>
Continued
95
<PAGE> 97
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$ 750,000 Michigan State Strategic Fund,
Focus Hope Group, 3.65%,
10/1/99, (LOC: Michigan National
Bank)........................... $ 750,000
1,405,000 Michigan State Strategic Fund,
Gollin Block & Supply Co.,
(AMT), 4.00%*, 1/6/99, (LOC:
Northern Trust)................. 1,404,987
1,510,000 Michigan State Strategic Fund,
Hamilton Industrial Products,
Inc. Project, (AMT), 4.20%*,
1/7/99, (LOC: National Australia
Bank)........................... 1,510,000
1,715,000 Michigan State Strategic Fund,
I.V.C. Industrial Coatings,
Inc., (AMT), 4.15%*, 1/6/99,
(LOC: Bank One)................. 1,715,000
1,700,000 Michigan State Strategic Fund,
Industrial Development, Kinder
Care, 4.15%*, 1/6/99............ 1,700,000
235,000 Michigan State Strategic Fund,
Kazoo, Inc. Project, (AMT),
3.70%*, 3/15/99, (LOC: FOA)..... 235,000
3,005,000 Michigan State Strategic Fund,
Kerkstra Precast Project (AMT),
4.20%*, 1/7/99, (LOC: Huntington
Bank)........................... 3,005,000
1,500,000 Michigan State Strategic Fund,
Kerkstra, (AMT), 4.20%*, 1/6/99,
(LOC: Huntington Bank).......... 1,500,000
1,320,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
John A. Biewer Co. Project,
(AMT), 3.25%*, 3/1/99, (LOC:
Michigan National Bank)......... 1,320,000
960,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Autocam Corp., (AMT), 4.20%*,
1/7/99, (LOC: Comerica Bank).... 960,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Cincinnati Milacron, (AMT),
4.20%*, 1/6/99, (LOC: PNC
Bank)........................... 2,500,000
1,000,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Dickinson Press, Inc. Project,
(AMT), 4.20%*, 1/7/99, (LOC:
Huntington Bank)................ 1,000,000
2,500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Donnelly Corp., (AMT), 4.25%*,
1/6/99, (LOC: Dresdner Bank).... 2,500,000
4,615,000 Michigan State Strategic Fund,
Limited Obligation Revenue, JB
Labratoriess, Inc., (AMT),
4.20%*, 1/7/99, (LOC: Huntington
Bank)........................... 4,615,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$ 295,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Kay
Screen Printing, (AMT), 4.25%*,
1/7/99, (LOC: Manufacturers
Bank)........................... $ 295,000
940,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Kay
Screen Printing, (AMT), 4.25%*,
1/7/99, (LOC: Comercia Bank).... 940,000
3,025,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Midbrook Products, Inc. Project,
(AMT), 4.20%*, 1/7/99, (LOC:
Comerica Bank).................. 3,025,000
715,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Patten Monument, (AMT), 4.20%,
1/7/99, (LOC: Huntington
Bank)........................... 715,000
1,600,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Pilot Industries, (AMT), 4.30%*,
1/7/99, (LOC: NBD Bank)......... 1,600,000
915,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Stephenson Land, (AMT), 4.20%*,
1/7/99, (LOC: Comerica Bank).... 915,000
500,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Tawas Bay Associates, (AMT),
3.25%, 6/1/99, (LOC: FOA)....... 500,000
455,000 Michigan State Strategic Fund,
Limited Obligation Revenue, Tom
Miller, Inc., (AMT), 4.15%*,
1/6/99, (LOC: First Union)...... 455,000
1,840,000 Michigan State Strategic Fund,
Limited Obligation Revenue,
Wayne Disposal Project, (AMT),
4.15%*, 1/6/99, (LOC: Comerica
Bank)........................... 1,840,000
4,000,000 Michigan State Strategic Fund,
Middleville Tool & Die Project,
(AMT), 4.20%*, 1/6/99, (LOC: NBD
Bank)........................... 4,000,000
765,000 Michigan State Strategic Fund,
Molmec, Inc., (AMT), 4.20%*,
1/7/99, (LOC: Comerica Bank).... 765,000
1,000,000 Michigan State Strategic Fund,
Northern Pure Ice Co. Project,
(AMT), 4.00%*, 1/6/99, (LOC:
National Australia Bank)........ 1,000,000
</TABLE>
Continued
96
<PAGE> 98
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$1,000,000 Michigan State Strategic Fund,
NSF International Project,
Series 1997B, 3.75%*, 1/6/99,
(LOC: FOA)...................... $ 1,000,000
1,685,000 Michigan State Strategic Fund,
Omni Technical Services, Inc.,
(AMT), 4.20%*, 1/7/99, (LOC:
FOA)............................ 1,685,000
2,000,000 Michigan State Strategic Fund,
Phipps Emmett Assoc., (AMT),
4.15%*, 1/6/99, (LOC: National
Australia Bank)................. 2,000,000
865,000 Michigan State Strategic Fund,
Plascore, Inc., (AMT), 4.20%*,
1/7/99, (LOC: First Michigan
Bank)........................... 865,000
5,700,000 Michigan State Strategic Fund,
Rochester Gear Project, (AMT),
4.20%*, 1/6/99, (LOC: Comerica
Bank)........................... 5,700,000
11,900,000 Michigan State Strategic Fund,
Solid Waste Disposal, Grayling
Generating Project, (AMT),
4.15%*, 1/6/99, (LOC: Barclays
Bank)........................... 11,900,001
2,120,000 Michigan State Strategic Fund,
Sunrise Windows Ltd. Project,
(AMT), 4.20%*, 1/6/99 (LOC:
Keybank)........................ 2,120,000
1,000,000 Michigan State Strategic Fund,
Thompson Family Holdings, (AMT),
4.20%*, 1/7/99, (LOC: FOA)...... 1,000,000
2,800,000 Michigan State Strategic Fund,
United Waste System, (AMT),
4.05%*, 1/6/99, (LOC: Bank of
America)........................ 2,800,000
1,075,000 Michigan State Strategic Fund,
Wright -- Technology, Inc.,
Series 1997, (AMT), 4.20%*,
1/7/99, (LOC: FOA).............. 1,075,000
2,000,000 Michigan State Strategic Fund,
Xibitz, Inc. Project, (AMT),
4.20%*, 1/6/99, (LOC: NBD
Bank)........................... 2,000,000
1,000,000 Michigan State Trunk Line,
4.70%, 11/15/99, (Insured by
FGIC)........................... 1,014,046
10,000,000 Midland County Economic
Development Corp., Limited
Obligation Revenue, Dow Chemical
Project, Series A, (AMT),
5.15%*, 1/4/99.................. 10,000,001
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$4,300,000 Oakland County Economic
Development Corp., V & M Corp.,
(AMT), 4.20%*, 1/6/99, (LOC: NBD
Bank)........................... $ 4,300,000
3,000,000 Oakland County Economic
Development Corp., Cranbrook
Community, 4.05%*, 1/7/99, (LOC:
SPA Comerica Bank).............. 3,000,000
675,000 Oakland County Economic
Development Corp., Orchard Maple
Project, 3.65%*, 5/15/99, (LOC:
FOA)............................ 675,000
675,000 Oakland County Michigan Building
Authority, West Wing Extension,
5.10%, 9/1/99................... 682,867
280,000 Rochester Hills Economic
Development Corp., BRG Assoc.,
3.40%*, 6/1/99, (LOC: Comerica
Bank)........................... 280,000
1,200,000 Scio Township Economic
Development Corp., Daycroft
School Project, 3.75%*, 1/7/99,
(LOC: National Australia
Bank)........................... 1,200,000
1,070,000 St. Clair Shores, Michigan
Education, Borman's, Inc.
Project, (AMT), 3.50%*, 4/15/99,
(LOC: Michigan National Bank)... 1,070,000
590,000 Standish-Sterling Michigan
Community Schools QSBLF, 4.25%,
5/1/99, (Insured by FGIC)....... 592,395
3,100,000 University of Michigan Hospital
Revenue, 5.15%*, 1/4/99......... 3,100,000
2,000,000 University of Michigan Hospital
Revenue, Series A, 5.15%*,
1/4/99.......................... 2,000,000
1,300,000 University of Michigan Hospital
Revenue, Series A, 5.15%*,
1/4/99.......................... 1,300,000
6,625,000 University of Michigan
University Revenue, 5.15%*,
1/4/99.......................... 6,625,000
3,075,000 University of Michigan, Medical
Service Plan, Series A, 5.15%*,
1/4/99.......................... 3,075,000
1,740,000 Warren Economic Development
Corp., CMX Corp. Project, (AMT),
3.70%*, 3/15/99, (LOC: FOA)..... 1,740,000
1,120,000 Warren Economic Development
Corp., Cross Country Inn, (AMT),
3.65%, 5/1/99, (LOC: Huntington
Bank)........................... 1,120,000
525,000 Warren Economic Development
Corp., Limited Obligation
Revenue, Elias Brothers, (AMT),
3.40%, 6/1/99, (LOC: Comercia
Bank)........................... 525,000
</TABLE>
Continued
97
<PAGE> 99
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
(CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
MUNICIPAL BONDS (CONTINUED)
MICHIGAN (CONTINUED)
$4,410,000 Wayne County Airport, Detroit
Airport, Series A, (AMT),
4.15%*, 1/6/99, (LOC: Baerische
Landesbank)..................... $ 4,410,000
2,000,000 Whitmore Lake Michigan Public
School District, 4.50%,
6/30/99......................... 2,004,741
------------
266,312,223
------------
PUERTO RICO -- 4.1%
4,695,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Abbott Labs, 3.55%*, 3/1/99..... 4,695,000
4,200,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Merck, 2.90%*, 6/1/99........... 4,200,000
4,250,000 Puerto Rico Industrial Medical &
Environmental Pollution Control,
Facilities Financing Authority,
Reynolds Metal, 3.80%*, 9/1/99,
(LOC: ABN/Amro)................. 4,250,783
------------
13,145,783
------------
TOTAL MUNICIPAL BONDS........... 279,458,006
------------
(Cost $279,458,006)
TAX FREE COMMERCIAL PAPER -- 13.2%
MICHIGAN -- 13.2%
4,800,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series A,
2.85%*, 1/5/99, (LOC: Morgan
Guaranty)....................... 4,800,000
3,600,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series A,
2.90%*, 1/6/99, (LOC: Morgan
Guaranty)....................... 3,600,000
4,390,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series B,
3.05%*, 1/7/99, (LOC: Union Bank
of Switzerland)................. 4,390,000
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------- ---------
<C> <S> <C>
TAX FREE COMMERCIAL PAPER (CONTINUED)
MICHIGAN (CONTINUED)
$3,000,000 Delta County Economic
Development Corp., Environmental
Improvement Revenue, Mead
Escanaba Paper Co., Series B,
2.85%*, 1/11/99, (LOC: Union
Bank of Switzerland)............ $ 3,000,000
6,500,000 Michigan State Builders, 3.30%,
2/9/99, (LOC: CIBC)............. 6,500,000
8,050,000 Michigan State Housing
Development Authority,
Multifamily Series A, (AMT),
3.25%, 1/13/99, (LOC: Comerica
Bank)........................... 8,050,000
12,380,000 Michigan State Underground Tank
Storage, 3.25%, 1/20/99, (LOC:
CIBC)........................... 12,380,000
------------
TOTAL TAX FREE COMMERCIAL
PAPER........................... 42,720,000
------------
(Cost $42,720,000)
INVESTMENT COMPANIES -- 0.2%
375,554 Dreyfus Tax Exempt Money Market
Fund............................ 375,554
172,243 Federated Tax Exempt Money
Market.......................... 172,243
------------
TOTAL INVESTMENT COMPANIES...... 547,797
------------
(Cost $547,797)
TOTAL INVESTMENTS -- 99.7%.................. 322,725,803
(Cost $322,725,803) (a)
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.3%......................... 891,690
------------
TOTAL NET ASSETS -- 100.0%.................. $323,617,493
============
</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, 1998.
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
FOA First of America
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
QSBLF Qualified School Board Lending Fund
</TABLE>
See Notes to Financial Statements.
98
<PAGE> 100
THE KENT GOVERNMENT MONEY MARKET FUND
FUNDS SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 80.8%
FANNIE MAE -- 17.3%
$ 1,961,000 5.39%**, 1/4/99................ $ 1,960,119
4,000,000 5.36%**, 1/19/99............... 3,989,280
5,000,000 5.01%*, 2/4/99................. 5,000,000
7,000,000 4.99%**, 2/19/99............... 6,952,471
4,000,000 4.98%**, 3/10/99............... 3,962,373
2,215,000 5.40%, 3/12/99................. 2,214,746
5,000,000 4.55%**, 4/7/99................ 4,939,333
------------
29,018,322
------------
FEDERAL FARM CREDIT BANK -- 5.3%
5,000,000 4.92%**, 2/18/99............... 4,967,200
4,000,000 5.25%**, 3/5/99................ 3,963,250
------------
8,930,450
------------
FEDERAL HOME LOAN BANK -- 21.6%
4,000,000 5.03%**, 1/8/99................ 3,996,088
2,240,000 4.96%**, 1/20/99............... 2,234,136
1,472,000 5.33%**, 2/3/99................ 1,464,808
3,300,000 5.33%**, 2/4/99................ 3,283,388
1,298,000 5.05%**, 2/16/99............... 1,289,624
3,000,000 5.25%**, 2/26/99............... 2,975,500
5,000,000 5.50%, 3/26/99................. 4,999,117
1,941,000 4.71%**, 5/28/99............... 1,903,670
5,000,000 4.95%*, 8/12/99................ 4,998,534
4,000,000 4.94%, 10/27/99................ 4,000,000
5,000,000 5.13%, 11/17/99................ 5,000,000
------------
36,144,865
------------
FREDDIE MAC -- 36.6%
4,000,000 5.03%**, 1/4/99................ 3,998,323
4,000,000 5.27%**, 1/6/99................ 3,997,072
1,132,000 5.39%**, 1/7/99................ 1,130,983
5,000,000 5.05%**, 1/8/99................ 4,995,091
4,000,000 5.10%**, 1/11/99............... 3,994,333
3,000,000 5.10%**, 1/14/99............... 2,994,475
1,000,000 5.10%**, 1/15/99............... 998,017
1,320,000 5.24%**, 1/21/99............... 1,316,157
5,000,000 5.00%**, 1/22/99............... 4,985,593
4,000,000 4.94%**, 1/22/99............... 3,988,170
3,000,000 4.98%**, 2/3/99................ 2,986,305
5,000,000 5.18%**, 2/5/99................ 4,974,819
2,000,000 4.96%**, 2/25/99............... 1,984,844
5,000,000 4.91%**, 2/26/99............... 4,961,811
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
FREDDIE MAC (CONTINUED)
$ 5,000,000 5.00%**, 2/26/99............... $ 4,961,111
4,000,000 4.98%**, 3/9/99................ 3,962,927
5,000,000 4.87%**, 3/30/99............... 4,940,477
------------
61,170,508
------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS.................... 135,264,145
------------
(Cost $135,274,145)
</TABLE>
<TABLE>
<C> <S> <C>
REPURCHASE AGREEMENTS -- 9.6%
16,000,000 Donaldson, Lufkin & Jenrette,
4.85%, dated 12/31/98, due
1/4/99 with a maturity value of
$16,008,622 (collateralized by
$16,070,000 DHLB, 5.13%,
9/15/03, market value
$16,327,120)................... 16,000,000
------------
TOTAL REPURCHASE AGREEMENTS.... 16,000,000
------------
(Cost $16,000,000)
INVESTMENT COMPANIES -- 9.6%
104,738 Dreyfus Cash Management Money
Market Fund.................... 104,738
15,985,868 Federated Government
Obligations Money Market
Fund........................... 15,985,868
------------
TOTAL INVESTMENT COMPANIES..... 16,090,606
------------
(Cost $16,090,606)
TOTAL INVESTMENTS -- 100.2%................. 167,354,751
(Cost $167,354,751) (a)
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (0.2)%............................ (339,207)
------------
TOTAL NET ASSETS -- 100.0%.................. $167,015,544
============
</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, 1998. Maturity date reflects next rate change date.
** Effective yield at purchase.
See Notes to Financial Statements.
99
<PAGE> 101
THE KENT STATEMENTS OF ASSETS AND LIABILITIES
FUNDS DECEMBER 31, 1998
<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.................................... $585,756,176 $693,952,947 $450,823,029 $454,985,570
Net unrealized appreciation/(depreciation)............. 292,102,639 88,412,004 86,149,799 351,286,975
------------ ------------ ------------ ------------
Total investments at value............................. 877,858,815 782,364,951 536,972,828 806,272,545
Cash..................................................... 166 118 16,442 946
Foreign currency at value (cost $0; $0; $2,681,444; $0,
respectively).......................................... -- -- 2,699,230 --
Receivable for investments sold.......................... -- 1,225,645 61,253 2,836,155
Receivable for capital shares issued..................... 2,464 732 4,006 109,574
Interest and dividends receivable........................ 982,914 504,685 1,215,811 850,136
Tax reclaim receivable................................... -- -- 900,067 --
Net receivable for variation margin on future
contracts.............................................. 39,940 244,615 -- 22,575
Prepaid expenses and other assets........................ 209 1,649 1,510 330
------------ ------------ ------------ ------------
Total Assets........................................... 878,884,508 784,342,395 541,871,147 810,092,261
------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased........................ -- -- 196,312 450,500
Payable for capital shares redeemed...................... 4,954 16,445 2,901 44,893
Foreign withholding taxes payable........................ -- -- 336,733 --
Payable to adviser....................................... 508,421 438,532 335,464 166,214
Payable to administrator................................. 17,504 14,998 10,599 10,673
Payable to distributor (Investment Shares)............... 10,422 4,765 2,568 7,903
Payable to trustees...................................... 5,227 4,764 2,722 3,907
Accrued expenses and other liabilities................... 52,148 72,414 94,662 56,819
------------ ------------ ------------ ------------
Total Liabilities...................................... 598,676 551,918 981,961 740,909
------------ ------------ ------------ ------------
NET ASSETS................................................. $878,285,832 $783,790,477 $540,889,186 $809,351,352
============ ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital.......................................... $572,364,316 $679,470,845 $438,225,408 $457,166,312
Accumulated undistributed (distributions in excess of)
net investment income.................................. (7,045) (7,159) (3,835,078) (5,959)
Accumulated undistributed net realized gains/(losses) on
investments, foreign currency and futures contracts
sold................................................... 13,825,922 15,914,787 20,283,904 904,024
Net unrealized appreciation/(depreciation) of investments
and translation of assets and liabilities in foreign
currencies............................................. 292,102,639 88,412,004 86,214,952 351,286,975
------------ ------------ ------------ ------------
TOTAL NET ASSETS........................................... $878,285,832 $783,790,477 $540,889,186 $809,351,352
============ ============ ============ ============
INSTITUTIONAL SHARES:
Net Assets............................................... $827,828,283 $760,335,137 $528,499,548 $771,146,580
Shares Outstanding....................................... 45,923,297 49,175,609 33,209,957 31,818,561
Net Asset Value, offering and redemption price per
share.................................................. $ 18.03 $ 15.46 $ 15.91 $ 24.24
============ ============ ============ ============
INVESTMENT SHARES:
Net Assets............................................... $ 50,457,549 $ 23,455,340 $ 12,389,638 $ 38,204,772
Shares Outstanding....................................... 2,821,601 1,523,843 786,656 1,575,565
Net Asset Value, offering and redemption price per
share.................................................. $ 17.88 $ 15.39 $ 15.75 $ 24.25
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
100
<PAGE> 102
THE KENT STATEMENTS OF ASSETS AND LIABILITIES
FUNDS DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHORT TERM INTERMEDIATE
BOND FUND BOND FUND INCOME FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments at cost..................................... $141,655,116 $867,037,313 $229,129,265
Net unrealized appreciation/(depreciation).............. 1,276,418 18,919,775 8,647,333
------------ ------------ ------------
Total investments at value.............................. 142,931,534 885,957,088 237,776,598
Cash...................................................... 890 39 582
Receivable for capital shares issued...................... -- -- 27,474
Interest and dividends receivable......................... 2,494,507 12,432,459 3,998,891
Prepaid expenses and other assets......................... 4,585 192 3,678
------------ ------------ ------------
Total Assets............................................ 145,431,516 898,389,778 241,807,223
------------ ------------ ------------
LIABILITIES:
Payable for capital shares redeemed....................... -- -- 21,353
Payable to adviser........................................ 61,637 415,751 123,450
Payable to administrator.................................. 2,868 17,650 4,751
Payable to transfer agent................................. 1,369 7,777 95
Payable to distributor (Investment Shares)................ 793 2,606 2,266
Payable to trustees....................................... 1,128 5,178 1,543
Accrued expenses and other liabilities.................... 8,665 47,941 7,419
------------ ------------ ------------
Total Liabilities....................................... 76,460 496,903 160,877
------------ ------------ ------------
NET ASSETS.................................................. $145,355,056 $897,892,875 $241,646,346
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital........................................... $150,876,110 $883,474,535 $232,800,716
Accumulated undistributed (distributions in excess of) net
investment
income.................................................. (1,436) 244,070 (6,610)
Accumulated undistributed net realized gains/(losses) on
investments sold........................................ (6,796,036) (4,745,505) 204,907
Net unrealized appreciation/(depreciation) of
investments............................................. 1,276,418 18,919,775 8,647,333
------------ ------------ ------------
TOTAL NET ASSETS............................................ $145,355,056 $897,892,875 $241,646,346
============ ============ ============
INSTITUTIONAL SHARES:
Net Assets................................................ $139,228,674 $885,579,501 $231,017,204
Shares Outstanding........................................ 14,244,639 88,008,592 22,357,460
Net Asset Value, offering and redemption price per
share................................................... $ 9.77 $ 10.06 $ 10.33
============ ============ ============
INVESTMENT SHARES:
Net Assets................................................ $ 6,126,382 $ 12,313,374 $ 10,629,142
Shares Outstanding........................................ 627,439 1,221,080 1,030,103
Net Asset Value, offering and redemption price per
share................................................... $ 9.76 $ 10.08 $ 10.32
============ ============ ============
</TABLE>
See Notes to Financial Statements.
101
<PAGE> 103
THE KENT STATEMENTS OF ASSETS AND LIABILITIES
FUNDS DECEMBER 31, 1998
<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..................................... $31,361,846 $279,907,785 $121,488,675 $118,517,853
Net unrealized appreciation/(depreciation).............. 817,425 18,263,832 8,543,682 3,910,601
----------- ------------ ------------ ------------
Total investments at value.............................. 32,179,271 298,171,617 130,032,357 122,428,454
Interest and dividends receivable......................... 482,217 4,370,735 1,754,690 1,554,796
Prepaid expenses and other assets......................... 6,832 5,544 9,624 4,309
----------- ------------ ------------ ------------
Total Assets............................................ 32,668,320 302,547,896 131,796,671 123,987,559
----------- ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased......................... -- 1,872,908 1,554,330 --
Payable for capital shares redeemed....................... -- -- -- 27,276
Payable to adviser........................................ 12,643 127,418 60,812 47,655
Payable to administrator.................................. 646 5,924 2,566 2,446
Payable to distributor (Investment Shares)................ 49 844 401 763
Payable to trustees....................................... 264 1,791 668 822
Accrued expenses and other liabilities.................... 1,159 17,107 7,664 5,734
----------- ------------ ------------ ------------
Total Liabilities....................................... 14,761 2,025,992 1,626,441 84,696
----------- ------------ ------------ ------------
NET ASSETS.................................................. $32,653,559 $300,521,904 $130,170,230 $123,902,863
=========== ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital........................................... $31,832,374 $281,950,649 $121,514,637 $119,972,096
Accumulated undistributed (distributions in excess of) net
investment income....................................... 1,397 4,382 414 20,166
Accumulated undistributed net realized gains/(losses) on
investments sold........................................ 2,363 303,041 111,497 --
Net unrealized appreciation/(depreciation) of
investments............................................. 817,425 18,263,832 8,543,682 3,910,601
----------- ------------ ------------ ------------
TOTAL NET ASSETS............................................ $32,653,559 $300,521,904 $130,170,230 $123,902,863
=========== ============ ============ ============
INSTITUTIONAL SHARES:
Net Assets................................................ $32,233,520 $296,483,634 $128,232,124 $117,957,313
Shares Outstanding........................................ 3,155,599 27,557,941 11,928,915 11,485,861
Net Asset Value, offering and redemption price per
share................................................... $ 10.21 $ 10.76 $ 10.75 $ 10.27
=========== ============ ============ ============
INVESTMENT SHARES:
Net Assets................................................ $ 420,039 $ 4,038,270 $ 1,938,106 $ 5,945,550
Shares Outstanding........................................ 40,964 375,322 179,888 579,638
Net Asset Value, offering and redemption price per
share................................................... $ 10.25 $ 10.76 $ 10.77 $ 10.26
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements.
102
<PAGE> 104
THE KENT STATEMENTS OF ASSETS AND LIABILITIES
FUNDS DECEMBER 31, 1998
<TABLE>
<CAPTION>
MICHIGAN
MUNICIPAL GOVERNMENT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments at amortized cost........................... $693,946,545 $322,725,803 $151,354,751
Repurchase agreements (cost $0; $0; and $16,000,000,
respectively)......................................... -- -- 16,000,000
------------ ------------ ------------
Total investments at amortized cost..................... 693,946,545 322,725,803 167,354,751
Cash...................................................... -- 54,360 --
Interest and dividends receivable......................... 6,316,231 1,813,435 303,626
Prepaid expenses and other assets......................... 3,340 124 3,243
------------ ------------ ------------
Total Assets............................................ 700,266,116 324,593,722 167,661,620
------------ ------------ ------------
LIABILITIES:
Dividends payable......................................... 2,723,907 809,470 598,148
Cash overdraft............................................ 91,159 -- --
Payable to adviser........................................ 231,191 114,476 25,412
Payable to administrator.................................. 7,825 3,668 1,200
Payable to trustees....................................... 3,759 1,343 407
Accrued expenses and other liabilities.................... 80,656 47,272 20,909
------------ ------------ ------------
Total Liabilities....................................... 3,138,497 976,229 646,076
------------ ------------ ------------
NET ASSETS.................................................. $697,127,619 $323,617,493 $167,015,544
============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital........................................... $697,119,620 $323,627,308 $167,014,096
Accumulated undistributed (distributions in excess of) net
investment income....................................... 13,072 781 2,214
Accumulated undistributed net realized gains/(losses) on
investments sold........................................ (5,073) (10,596) (766)
------------ ------------ ------------
TOTAL NET ASSETS............................................ $697,127,619 $323,617,493 $167,015,544
============ ============ ============
INSTITUTIONAL SHARES:
Net Assets................................................ $693,399,440 $323,271,698 $166,922,456
Shares Outstanding........................................ 693,397,466 323,259,217 166,923,218
Net Asset Value, offering and redemption price per
share................................................... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
INVESTMENT SHARES:
Net Assets................................................ $ 3,728,179 $ 345,795 $ 93,088
Shares Outstanding........................................ 3,728,406 345,773 93,088
Net Asset Value, offering and redemption price per
share................................................... $ 1.00 $ 1.00 $ 1.00
============ ============ ============
</TABLE>
See Notes to Financial Statements.
103
<PAGE> 105
THE KENT STATEMENTS OF OPERATIONS
FUNDS FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND SMALL COMPANY INTERNATIONAL INDEX
INCOME FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 13,253,212 $ 8,350,306 $11,107,566 $ 10,841,384
Interest........................................... 4,627 62,036 300,671 1,995
Less: Net foreign taxes withheld................... (21,615) (2,201) (1,214,185) (27,631)
------------ ------------ ----------- ------------
Total Investment Income.......................... 13,236,224 8,410,141 10,194,052 10,815,748
------------ ------------ ----------- ------------
EXPENSES:
Investment advisory fees........................... 5,462,664 5,258,368 3,990,372 2,128,823
Administration fees................................ 1,411,202 1,358,690 962,462 1,282,561
Distribution fees (Investment Shares).............. 109,568 59,520 27,994 84,973
Fund accounting fees............................... 131,824 145,893 123,992 131,054
Custodian fees..................................... 9,520 32,853 323,344 19,084
Other expenses..................................... 307,720 326,639 226,820 319,879
------------ ------------ ----------- ------------
Total expenses before waivers.................... 7,432,498 7,181,963 5,654,984 3,966,374
Less: expenses voluntarily waived................ (78,034) (75,116) (53,203) (886,706)
------------ ------------ ----------- ------------
Net Expenses..................................... 7,354,464 7,106,847 5,601,781 3,079,668
------------ ------------ ----------- ------------
NET INVESTMENT INCOME................................ 5,881,760 1,303,294 4,592,271 7,736,080
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON
INVESTMENTS:
Net realized gains/(losses) on investments and
foreign currency transactions.................... 25,901,332 56,249,334 65,343,795 2,640,102
Net realized gains/(losses) on futures contracts... 3,481,810 3,370,391 -- 226,836
Net change in unrealized
appreciation/(depreciation) of investments and
translation of assets and liabilities in foreign
currencies....................................... 164,789,723 (99,658,205) 19,020,408 168,607,691
------------ ------------ ----------- ------------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON
INVESTMENTS........................................ 194,172,865 (40,038,480) 84,364,203 171,474,629
------------ ------------ ----------- ------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $200,054,625 $(38,735,186) $88,956,474 $179,210,709
============ ============ =========== ============
</TABLE>
See Notes to Financial Statements.
104
<PAGE> 106
THE KENT STATEMENTS OF OPERATIONS
FUNDS FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SHORT TERM INTERMEDIATE
BOND FUND BOND FUND INCOME FUND
---------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $8,660,770 $50,056,981 $16,935,762
Dividends................................................. 398,238 1,552,766 548,803
---------- ----------- -----------
Total Investment Income................................. 9,059,008 51,609,747 17,484,565
---------- ----------- -----------
EXPENSES:
Investment advisory fees.................................. 696,368 4,345,604 1,481,491
Administration fees....................................... 251,895 1,429,015 446,634
Distribution fees (Investment Shares)..................... 17,117 24,241 21,966
Fund accounting fees...................................... 25,860 128,198 45,167
Custodian fees............................................ 339 1,200 773
Other expenses............................................ 97,815 205,694 101,258
---------- ----------- -----------
Total expenses before waivers........................... 1,089,394 6,133,952 2,097,289
Less: expenses voluntarily waived....................... (20,774) (79,007) (24,690)
---------- ----------- -----------
Net Expenses............................................ 1,068,620 6,054,945 2,072,599
---------- ----------- -----------
NET INVESTMENT INCOME....................................... 7,990,388 45,554,802 15,411,966
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON INVESTMENTS:
Net realized gains/(losses) on investments sold........... (96,072) 5,947,686 5,514,294
Net change in unrealized appreciation/(depreciation) of
investments............................................. 489,306 5,377,857 1,312,791
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON INVESTMENTS... 393,234 11,325,543 6,827,085
---------- ----------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $8,383,622 $56,880,345 $22,239,051
========== =========== ===========
</TABLE>
See Notes to Financial Statements.
105
<PAGE> 107
THE KENT STATEMENTS OF OPERATIONS
FUNDS FOR THE YEAR ENDED DECEMBER 31, 1998
<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.............................................. $1,604,101 $13,949,025 $6,109,763 $5,743,195
Dividends............................................. 29,610 194,338 97,885 77,727
---------- ----------- ---------- ----------
Total Investment Income............................. 1,633,711 14,143,363 6,207,648 5,820,922
---------- ----------- ---------- ----------
EXPENSES:
Investment advisory fees.............................. 163,210 1,431,252 687,774 561,713
Administration fees................................... 65,607 517,725 226,159 225,753
Distribution fees (Investment Shares)................. 934 9,397 4,710 11,671
Fund accounting fees.................................. 12,025 59,674 30,000 33,272
Custodian fees........................................ 156 1,164 1,111 904
Transfer agent fees................................... 32,712 37,335 33,940 33,718
Other expenses........................................ 9,347 58,010 41,879 20,276
---------- ----------- ---------- ----------
Total expenses before waivers....................... 283,991 2,114,557 1,025,573 887,307
Less: expenses voluntarily waived................... (4,000) (28,624) (12,504) (17,150)
---------- ----------- ---------- ----------
Net Expenses........................................ 279,991 2,085,933 1,013,069 870,157
---------- ----------- ---------- ----------
NET INVESTMENT INCOME................................... 1,353,720 12,057,430 5,194,579 4,950,765
---------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON
INVESTMENTS:
Net realized gains/(losses) on investments sold....... 20,940 1,069,994 628,871 174,981
Net change in unrealized appreciation/(depreciation)
of investments...................................... 84,141 1,761,120 1,185,845 568,378
---------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED GAINS/(LOSSES) ON
INVESTMENTS........................................... 105,081 2,831,114 1,814,716 743,359
---------- ----------- ---------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ $1,458,801 $14,888,544 $7,009,295 $5,694,124
========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
106
<PAGE> 108
THE KENT STATEMENTS OF OPERATIONS
FUNDS FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MICHIGAN
MUNICIPAL GOVERNMENT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $30,020,373 $11,067,121 $5,878,125
Dividends................................................. 1,363,628 275,682 422,930
----------- ----------- ----------
Total Investment Income................................. 31,384,001 11,342,803 6,301,055
----------- ----------- ----------
EXPENSES:
Investment advisory fees.................................. 2,260,092 1,279,122 466,055
Administration fees....................................... 1,019,396 576,690 210,160
Fund accounting fees...................................... 88,851 52,810 19,555
Custodian fees............................................ 10,470 195 5,259
Registration fees......................................... 67,249 50,996 48,206
Other expenses............................................ 162,319 78,899 53,114
----------- ----------- ----------
Total expenses before waivers........................... 3,608,377 2,038,712 802,349
Less: expenses voluntarily waived....................... (479,290) (303,052) (364,797)
----------- ----------- ----------
Net Expenses............................................ 3,129,087 1,735,660 437,552
----------- ----------- ----------
NET INVESTMENT INCOME....................................... 28,254,914 9,607,143 5,863,503
----------- ----------- ----------
NET REALIZED GAINS/(LOSSES) ON INVESTMENTS.................. (3,030) 1,873 (766)
----------- ----------- ----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $28,251,884 $ 9,609,016 $5,862,737
=========== =========== ==========
</TABLE>
See Notes to Financial Statements.
107
<PAGE> 109
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<TABLE>
<CAPTION>
SMALL COMPANY
GROWTH AND INCOME FUND GROWTH FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........................... $733,315,634 $515,920,253 $742,781,688 $558,516,596
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income..................................... 5,881,760 10,415,521 1,303,294 1,548,638
Net realized gains/(losses) on investment and foreign
currency transactions................................... 25,901,332 111,932,563 56,249,334 78,087,896
Net realized gains/(losses) on futures contracts.......... 3,481,810 (61,005) 3,370,391 524,810
Net change in unrealized appreciation/(depreciation) of
investments and translation of assets and liabilities in
foreign currencies...................................... 164,789,723 15,936,958 (99,658,205) 81,574,907
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from
operations.............................................. 200,054,625 138,224,037 (38,735,186) 161,736,251
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income..................................... (5,717,209) (10,051,899) (1,316,803) (1,572,242)
In excess of net investment income........................ (497,079) -- -- (570,748)
Net realized gains on investments......................... (67,102,370) (58,514,755) (78,853,710) (52,695,021)
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares................................................ (73,316,658) (68,566,654) (80,170,513) (54,838,011)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income..................................... (214,560) (322,621) -- --
In excess of net investment income........................ (46,210) -- -- (36,830)
Net realized gains on investments......................... (3,959,835) (2,725,491) (2,576,664) (1,565,329)
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares................................................ (4,220,605) (3,048,112) (2,576,664) (1,602,159)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders....... (77,537,263) (71,614,766) (82,747,177) (56,440,170)
------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) FROM CAPITAL TRANSACTIONS........... 22,452,836 150,786,110 162,491,152 78,969,011
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets..................... 144,970,198 217,395,381 41,008,789 184,265,092
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD................................. $878,285,832 $733,315,634 $783,790,477 $742,781,688
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
108
<PAGE> 110
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND INDEX EQUITY FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........................... $502,378,709 $396,597,865 $618,163,526 $253,362,463
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income..................................... 4,592,271 3,728,587 7,736,080 6,100,887
Net realized gains/(losses) on investments and foreign
currency transactions................................... 65,343,795 2,742,836 2,640,102 1,138,162
Net realized gains/(losses) on futures contracts.......... -- -- 226,836 1,370,043
Net change in unrealized appreciation/(depreciation) of
investments and translation of assets and liabilities in
foreign currencies...................................... 19,020,408 4,769,670 168,607,691 98,473,728
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from
operations.............................................. 88,956,474 11,241,093 179,210,709 107,082,820
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income..................................... (2,352,718) (3,055,002) (7,447,316) (5,884,290)
In excess of net investment income........................ (3,928,519) (1,831,420) (5,750) (65,127)
Net realized gains on investments......................... (43,820,789) (2,401,097) (1,228,000) (1,613,042)
In excess of net realized gains........................... -- (341,685) -- (585,460)
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares................................................ (50,102,026) (7,629,204) (8,681,066) (8,147,919)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income..................................... -- (35,702) (284,041) (215,864)
In excess of net investment income........................ (144,473) (59,234) (7,182) (9,227)
Net realized gains on investments......................... (1,024,896) (47,965) (61,833) (88,824)
In excess of net realized gains........................... -- (6,876) -- (11,017)
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares................................................ (1,169,369) (149,777) (353,056) (324,932)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders....... (51,271,395) (7,778,981) (9,034,122) (8,472,851)
------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) FROM CAPITAL TRANSACTIONS........... 825,398 102,318,732 21,011,239 266,191,094
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets..................... 38,510,477 105,780,844 191,187,826 364,801,063
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD................................. $540,889,186 $502,378,709 $809,351,352 $618,163,526
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
109
<PAGE> 111
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<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,
1998 1997 1998 1997 1998 1997
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF
PERIOD.......................... $147,171,664 $237,096,910 $769,711,501 $776,722,838 $235,388,305 $242,781,715
------------ ------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income........... 7,990,388 10,326,405 45,554,802 46,719,968 15,411,966 16,498,462
Net realized gains/(losses) on
investments sold.............. (96,072) (1,502,731) 5,947,686 (3,309,390) 5,514,294 3,441,169
Net change in unrealized
appreciation/(depreciation) of
investments................... 489,306 1,638,919 5,377,857 15,305,110 1,312,791 5,214,704
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in net
assets resulting from
operations.................... 8,383,622 10,462,593 56,880,345 58,715,688 22,239,051 25,154,335
------------ ------------ ------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income........... (7,612,645) (10,203,409) (45,070,559) (46,492,693) (14,910,611) (16,298,443)
In excess of net investment
income........................ -- -- -- -- (2,725) --
Net realized gains on
investments................... -- -- -- -- (5,347,331) (4,496,656)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions --
Institutional Shares........ (7,612,645) (10,203,409) (45,070,559) (46,492,693) (20,260,667) (20,795,099)
------------ ------------ ------------ ------------ ------------ ------------
INVESTMENT:
Net investment income........... (364,391) (230,620) (541,970) (400,310) (514,425) (236,638)
In excess of net investment
income........................ (17,935) -- -- -- (23,412) --
Net realized gains on
investments................... -- -- -- -- (239,521) (85,457)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions -- Investment
Shares...................... (382,326) (230,620) (541,970) (400,310) (777,358) (322,095)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions to
shareholders................ (7,994,971) (10,434,029) (45,612,529) (46,893,003) (21,038,025) (21,117,194)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) FROM
CAPITAL TRANSACTIONS............ (2,205,259) (89,953,810) 116,913,558 (18,834,022) 5,057,015 (11,430,551)
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in net
assets........................ (1,816,608) (89,925,246) 128,181,374 (7,011,337) 6,258,041 (7,393,410)
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD....... $145,355,056 $147,171,664 $897,892,875 $769,711,501 $241,646,346 $235,388,305
============ ============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
110
<PAGE> 112
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<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,
1998 1997 1998 1997
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD........................... $36,497,570 $41,577,319 $279,175,752 $289,042,905
----------- ----------- ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income..................................... 1,353,720 1,439,072 12,057,430 12,269,050
Net realized gains/(losses) on investments sold........... 20,940 159,864 1,069,994 691,582
Net change in unrealized appreciation/(depreciation) of
investments............................................. 84,141 136,663 1,761,120 6,286,893
----------- ----------- ------------ ------------
Net increase/(decrease) in net assets resulting from
operations.............................................. 1,458,801 1,735,599 14,888,544 19,247,525
----------- ----------- ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income..................................... (1,343,343) (1,432,406) (11,933,893) (12,149,068)
Net realized gains on investments......................... (19,718) (170,851) (738,103) (86,552)
In excess of net realized gains........................... -- -- -- (17,244)
----------- ----------- ------------ ------------
Total dividends and distributions -- Institutional
Shares................................................ (1,363,061) (1,603,257) (12,671,996) (12,252,864)
----------- ----------- ------------ ------------
INVESTMENT:
Net investment income..................................... (13,266) (11,595) (149,636) (135,115)
Net realized gains on investments......................... (224) (2,045) (10,299) (863)
In excess of net realized gains........................... -- -- -- (441)
----------- ----------- ------------ ------------
Total dividends and distributions -- Investment
Shares................................................ (13,490) (13,640) (159,935) (136,419)
----------- ----------- ------------ ------------
Total dividends and distributions to shareholders....... (1,376,551) (1,616,897) (12,831,931) (12,389,283)
----------- ----------- ------------ ------------
NET INCREASE/(DECREASE) FROM CAPITAL TRANSACTIONS........... (3,926,261) (5,198,451) 19,289,539 (16,725,395)
----------- ----------- ------------ ------------
Net increase/(decrease) in net assets..................... (3,844,011) (5,079,749) 21,346,152 (9,867,153)
----------- ----------- ------------ ------------
NET ASSETS AT END OF PERIOD................................. $32,653,559 $36,497,570 $300,521,904 $279,175,752
=========== =========== ============ ============
</TABLE>
See Notes to Financial Statements.
111
<PAGE> 113
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<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,
1998 1997 1998 1997
--------------------------- -----------------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD......................... $118,364,159 $110,883,746 $116,148,299 $155,044,170
------------ ------------ ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income................................... 5,194,579 5,050,397 4,950,765 5,042,224
Net realized gains/(losses) on investments sold......... 628,871 376,069 174,981 49,676
Net change in unrealized appreciation/(depreciation) of
investments........................................... 1,185,845 4,279,292 568,378 1,602,539
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from
operations............................................ 7,009,295 9,705,758 5,694,124 6,694,439
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income................................... (5,118,923) (5,016,230) (4,809,973) (4,914,390)
In excess of net investment income...................... -- (610) -- --
Net realized gains on investments....................... (600,924) (330,223) (80,492) --
------------ ------------ ------------ ------------
Total dividends and distributions -- Institutional
Shares.............................................. (5,719,847) (5,347,063) (4,890,465) (4,914,390)
------------ ------------ ------------ ------------
INVESTMENT:
Net investment income................................... (73,875) (42,572) (182,181) (121,577)
In excess of net investment income...................... -- (929) -- --
Net realized gains on investments....................... (8,888) (4,346) (4,050) --
------------ ------------ ------------ ------------
Total dividends and distributions -- Investment
Shares.............................................. (82,763) (47,847) (186,231) (121,577)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders..... (5,802,610) (5,394,910) (5,076,696) (5,035,967)
------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) FROM CAPITAL TRANSACTIONS......... 10,599,386 3,169,565 7,137,136 (40,554,343)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets................... 11,806,071 7,480,413 7,754,564 (38,895,871)
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD............................... $130,170,230 $118,364,159 $123,902,863 $116,148,299
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
112
<PAGE> 114
THE KENT STATEMENTS OF CHANGES IN NET ASSETS
FUNDS
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
--------------------------- --------------------------- ---------------------------
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997(1)
-------------------------- -------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD....... $475,557,215 $484,722,709 $211,971,193 $156,205,940 $94,626,461 $ --
------------ ------------ ------------ ------------ ------------ -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS:
Net investment income................. 28,254,914 26,741,343 9,607,143 6,381,928 5,863,503 2,952,675
Net realized gains/(losses) on
investments......................... (3,030) (1,165) 1,873 (12,469) (766) 4
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) in net assets
resulting from operations........... 28,251,884 26,740,178 9,609,016 6,369,459 5,862,737 2,952,679
------------ ------------ ------------ ------------ ------------ -----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
INSTITUTIONAL:
Net investment income................. (28,105,841) (26,699,476) (9,596,573) (6,369,567) (5,861,605) (2,952,603)
------------ ------------ ------------ ------------ ------------ -----------
Total dividends and distributions --
Institutional Shares.............. (28,105,841) (26,699,476) (9,596,573) (6,369,567) (5,861,605) (2,952,603)
------------ ------------ ------------ ------------ ------------ -----------
INVESTMENT:
Net investment income................. (149,073) (41,867) (10,570) (12,361) (1,898) (72)
------------ ------------ ------------ ------------ ------------ -----------
Total dividends and distributions --
Investment Shares................. (149,073) (41,867) (10,570) (12,361) (1,898) (72)
------------ ------------ ------------ ------------ ------------ -----------
Total dividends and distributions to
shareholders...................... (28,254,914) (26,741,343) (9,607,143) (6,381,928) (5,863,503) (2,952,675)
------------ ------------ ------------ ------------ ------------ -----------
NET INCREASE/(DECREASE) FROM CAPITAL
TRANSACTIONS.......................... 221,573,434 (9,164,329) 111,644,427 55,777,722 72,389,849 94,626,457
------------ ------------ ------------ ------------ ------------ -----------
Net increase/(decrease) in net
assets.............................. 221,570,404 (9,165,494) 111,646,300 55,765,253 72,389,083 94,626,461
------------ ------------ ------------ ------------ ------------ -----------
NET ASSETS AT END OF PERIOD............. $697,127,619 $475,557,215 $323,617,493 $211,971,193 $167,015,544 $94,626,461
============ ============ ============ ============ ============ ===========
</TABLE>
- ---------------
(1) For the period from June 2, 1997 (commencement of operations) through
December 31, 1997.
See Notes to Financial Statements.
113
<PAGE> 115
THE KENT NOTES TO FINANCIAL STATEMENTS
FUNDS DECEMBER 31, 1998
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 funds.
The accompanying financial statements and financial highlights are those of the
following: Kent Growth and Income Fund, Kent Small Company Growth Fund, Kent
International Growth Fund, Kent Index Equity Fund, Kent Short Term Bond Fund,
Kent Intermediate Bond Fund, Kent Income Fund, Kent Limited Term Tax-Free Fund,
Kent Intermediate Tax-Free Fund, Kent Tax-Free Income Fund, Kent Michigan
Municipal Bond Fund, Kent Money Market Fund, Kent Michigan Municipal Money
Market Fund and Kent Government Money Market Fund (individually, a "Fund" and
collectively, the "Funds").
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest without par value and it allows for the
creation of one or more classes of shares within each series.
The Trust may issue more than one series of shares investing in Funds of
securities. The Trust currently issues fourteen series of shares with two
separate classes in each series: Investment Shares and Institutional Shares.
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.
The investment objectives of the Funds 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 Fund 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.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds 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
114
<PAGE> 116
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
may affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual amounts could differ from those estimates.
SECURITY VALUATION: Securities in the Money Market Fund, Michigan Municipal
Money Market Fund and Government Money Market Fund (the "Money Market Funds")
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 Fund 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 Short Term Bond Fund, Intermediate Bond Fund, Income Fund, Limited Term
Tax-Free Fund, Intermediate Tax-Free Fund, Tax-Free Income Fund and Michigan
Municipal Bond 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 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 listed 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 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: Each Fund may agree to purchase portfolio securities
from financial institutions subject to the seller's agreement to repurchase them
at a mutually agreed upon date and price ("repurchase agreement"). 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 Funds 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
denominated 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 Fund 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 Funds (except for the Money Market Funds) may engage in
transactions in financial futures contracts in order to manage the risk of
unanticipated changes in market values of securities held in the portfolio, or
which it intends to purchase. Such transactions may be considered trading
activity under generally accepted accounting principles. The expectation is that
any gain or loss on such transactions will be substantially offset by any gain
or loss on the securities in the underlying portfolio or on those which are
being considered for purchase. This investment involves, to varying degrees,
elements of market risk
115
<PAGE> 117
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
and risks in excess of the amount recognized in the Statement of Assets and
Liabilities. The face or contract amounts reflect the extent of the involvement
the Funds 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 Fund based on the change in
the market value of the position are recorded as a realized gain or loss.
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 Fund enters into futures contracts on an index or group
of securities, the Fund 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 Fund 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, 1998 was as follows:
<TABLE>
<CAPTION>
AVERAGE
FUNDS MARKET VALUE
- ----- --------------
<S> <C>
Growth and Income Fund............... $13,995,765
Small Company Growth Fund............ 13,571,437
Index Equity Fund.................... 7,242,800
</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 Fund 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 PURCHASED ON A WHEN-ISSUED BASIS: Each Fund may purchase securities
on a "when-issued" basis. When-issued securities are securities purchased for
delivery beyond the normal settlement date at a stated price and/or yield,
thereby, involving the risk that the price and/or yield obtained may be more or
less than those available in the market when delivery takes place. At the time a
Fund makes the commitment to purchase a security on a when-issued basis, the
Fund records the transaction and reflects the value of the security in
determining net asset value. Normally, the settlement date occurs within one
month of the purchase. The Funds maintain cash and marketable securities at
least equal in value to commitments for when-issued securities. Securities
purchased on a when-issued basis do not earn income until settlement date.
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 Fund against currency fluctuations during the settlement period. In
such cases, the Fund has not realized currency gains or losses between the trade
and settlement dates on these security transactions.
116
<PAGE> 118
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Money Market Fund, Michigan
Municipal Money Market Fund and Government Money Market Fund declare dividends
daily from net investment income and pay such dividends monthly. The other Funds
declare and distribute dividends from net investment income monthly, with the
exception of the International Growth Fund, which declares and pays dividends
annually. Net realized capital gains, if any, are distributed at least annually.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of paid-in-capital.
As of December 31, 1998, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments to
paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED
(DISTRIBUTIONS UNDISTRIBUTED
IN EXCESS OF) NET REALIZED
NET INVESTMENT GAINS/(LOSSES)
FUNDS INCOME ON INVESTMENTS
- ----- -------------- --------------
<S> <C> <C>
Growth and Income
Fund................ $536,244 $(536,244)
Small Company Growth
Fund................ 12,530 (12,530)
International Growth
Fund................ 155,626 (155,626)
Index Equity Fund..... 6,973 (6,973)
Short Term Bond Fund.. 16 --
Intermediate Bond
Fund................ 262,700 (262,700)
Income Fund........... 19,527 (19,527)
Limited Term Tax-Free
Fund................ 776 (776)
Intermediate Tax-Free
Fund................ 5 (5)
Tax-Free Income Fund.. 2 (2)
Michigan Municipal
Bond Fund........... 21,509 (21,509)
Money Market.......... -- --
Michigan Municipal
Money Market Fund... -- --
Government Money
Market Fund......... -- --
</TABLE>
FEDERAL INCOME TAXES: For federal income tax purposes, each Fund is treated as
a separate entity for the purpose of determining its qualification as a
regulated investment company under the Internal Revenue Code (the "Code"). It is
the policy of each Fund to meet the requirements of the Code applicable to
regulated investment companies, including the requirement that it distribute
substantially all of its taxable income to shareholders. Therefore, no federal
income tax provision is required. Withholding taxes on foreign dividends have
been paid or provided for in accordance with the applicable country's tax rules
and rates.
At December 31, 1998, the following Funds had the following capital loss
carryforwards which will expire in the years indicated:
<TABLE>
<CAPTION>
FUNDS 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
237,955 2006
----------
$6,744,118
==========
</TABLE>
117
<PAGE> 119
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
<TABLE>
<CAPTION>
FUNDS AMOUNT YEAR
- ----- ---------- ----
<S> <C> <C>
Intermediate Bond Fund.......... $ 682,119 2004
4,043,228 2005
----------
$4,725,347
==========
Money Market Fund............... $ 433 1999
224 2002
194 2003
27 2004
432 2005
3,763 2006
----------
$ 5,073
==========
Michigan Municipal Money Market
Fund.......................... $ 10,596 2005
==========
Government Money Market Fund.... $ 765 2006
==========
</TABLE>
EXPENSES: Expenses directly attributable to a Fund are charged to the Fund,
while expenses which are attributable to more than one series of the Trust are
allocated among the respective series based upon relative net assets or another
appropriate basis. In addition, investors in 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 Funds bear all costs in connection with their
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 Fund's commencement of operations. In
the event that any of the initial shares purchased by the Fund's sponsors are
redeemed during such period by any holder thereof, the Fund will be reimbursed
by such holder 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. All such costs were fully
amortized as of December 31, 1998.
RECLASSIFICATIONS: Certain reclassifications have been made to prior year
financial statements in order to conform to the current presentation.
3. RELATED PARTY TRANSACTIONS
The Funds are advised by Lyon Street Asset Management Company ("Lyon Street" or
the "Investment Adviser"), a wholly-owned subsidiary of Old Kent Bank ("Old
Kent"). Effective as of March 2, 1998, Lyon Street assumed the investment
advisory responsibilities for each of the Funds from the Investment Management
Group of Old Kent. This change did not involve a change in control or management
of the investment adviser or a change in the Funds' portfolio managers. The
Investment Adviser is entitled to receive a fee, computed daily and paid
monthly, based on each Fund'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 Lyon Street equal to $354,807 and $233,025, respectively.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
serves the Funds as Administrator and Distributor. BISYS Fund Services Ohio,
Inc. serves the Funds as Fund Accountant and Transfer Agent. BISYS and BISYS
Fund Services Ohio, 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
118
<PAGE> 120
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
and paid monthly at the annual rate of 0.015% of the average daily net assets of
the Trust.
Gross administration fees and fees waived for the year ended December 31, 1998
were as follows for the Funds indicated:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
- ----- ---------- -----------
<S> <C> <C>
Growth and Income Fund..... $1,411,202 $ --
Small Company Growth
Fund..................... 1,358,690 --
International Growth
Fund..................... 962,462 --
Index Equity Fund.......... 1,282,561 425,483
Short Term Bond Fund....... 251,895 --
Intermediate Bond Fund..... 1,429,015 --
Income Fund................ 446,634 --
Limited Term Tax-Free
Fund..................... 65,607 --
Intermediate Tax-Free
Fund..................... 517,725 --
Tax-Free Income Fund....... 226,159 --
Michigan Municipal Bond
Fund..................... 225,753 --
Money Market Fund.......... 1,019,396 394,533
Michigan Municipal Money
Market Fund.............. 576,590 255,083
Government Money Market
Fund..................... 210,160 114,295
</TABLE>
Old Kent provides certain administrative services to the Trust pursuant to a
Sub-Administration Agreement between Old Kent and BISYS. BISYS pays Old Kent a
fee, calculated daily and paid monthly, at an annual rate of up to 0.05% of each
Fund's average daily net assets. The fees received by Old Kent for such
administrative services were paid out of BISYS' administration fee and are not
an additional charge to the Funds.
Sub-administration fees for each Fund for the year ended December 31, 1998 are
as follows:
<TABLE>
<CAPTION>
FUNDS SUB-ADMINISTRATION FEES
- ----- -----------------------
<S> <C>
Growth and Income Fund........ $390,190
Small Company Growth Fund..... 375,597
International Growth Fund..... 266,025
Index Equity Fund............. 354,803
Short Term Bond Fund.......... 55,710
Intermediate Bond Fund........ 316,044
Income Fund................... 98,766
Limited Term Tax-Free Fund.... 14,508
Intermediate Tax-Free Fund.... 114,500
Tax-Free Income Fund.......... 50,020
Michigan Municipal Bond
Fund........................ 49,930
Money Market Fund............. 226,018
Michigan Municipal Money
Market Fund................. 95,938
Government Money Market
Fund........................ 58,257
</TABLE>
Transfer agent fees for each Fund for the year ended December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
FUNDS TRANSFER AGENT FEES
- ----- -------------------
<S> <C>
Growth and Income Fund............ $171,326
Small Company Growth Fund......... 175,858
International Growth Fund......... 127,054
Index Equity Fund................. 171,097
Short Term Bond Fund.............. 50,162
Intermediate Bond Fund............ 77,676
Income Fund....................... 45,893
Limited Term Tax-Free Fund........ 32,712
Intermediate Tax-Free Fund........ 37,335
Tax-Free Income Fund.............. 33,940
Michigan Municipal Bond Fund...... 33,718
Money Market Fund................. 72,008
Michigan Municipal Money Market
Fund............................ 34,885
Government Money Market Fund...... 34,643
</TABLE>
119
<PAGE> 121
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
Fund accounting fees for each Fund for the year ended December 31, 1998 are as
follows:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
- ----- ---------- -----------
<S> <C> <C>
Growth and Income Fund...... $131,824 $ 78,034
Small Company Growth Fund... 145,893 75,116
International Growth Fund... 123,992 53,203
Index Equity Fund........... 131,054 106,416
Short Term Bond Fund........ 25,860 13,927
Intermediate Bond Fund...... 128,198 79,007
Income Fund................. 45,167 24,690
Limited Term Tax-Free
Fund...................... 12,025 3,627
Intermediate Tax-Free
Fund...................... 59,674 28,624
Tax-Free Income Fund........ 31,111 12,504
Michigan Municipal Bond
Fund...................... 33,272 12,482
Money Market Fund........... 88,851 84,757
Michigan Municipal Money
Market Fund............... 52,810 47,969
Government Money Market
Fund...................... 19,555 17,477
</TABLE>
Certain officers of the Trust are affiliated with BISYS and Lyon Street. Such
officers receive no direct payments or fees from the Funds for serving as
officers.
The Trust has adopted a distribution plan (the "Plan") on behalf of the
Investment Shares of the Funds 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 Funds. Although the Money Market Funds
are authorized to pay 12b-1 fees of up to 0.25% in connection with the sale of
Investment Shares, none of the Funds currently intends to pay such fees.
Gross distribution fees and fees waived for each Fund for the year ended
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
FUNDS GROSS FEES FEES WAIVED
- ----- ---------- -----------
<S> <C> <C>
Growth and Income Fund...... $109,568 $ --
Small Company Growth Fund... 59,520 --
International Growth Fund... 27,994 --
Index Equity Fund........... 84,973 --
Short Term Bond Fund........ 17,117 6,847
Intermediate Bond Fund...... 24,241 --
Income Fund................. 21,966 --
Limited Term Tax-Free Fund.. 934 373
Intermediate Tax-Free
Fund...................... 9,397 --
Tax-Free Income Fund........ 4,710 --
Michigan Municipal Bond
Fund...................... 11,671 4,668
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 that firm serves as Assistant Secretary of the Trust.
120
<PAGE> 122
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds 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,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued......................................... $ 227,159,369 $ 249,081,909 $ 302,052,649 $ 208,702,084
Reinvestment of distributions......................... 32,729,339 30,110,268 40,424,917 26,503,462
Shares redeemed....................................... (246,102,212) (147,058,160) (184,973,716) (161,953,808)
------------- ------------- ------------- -------------
Net increase (decrease) from Institutional capital
transactions...................................... 13,786,496 132,134,017 157,503,850 73,251,738
------------- ------------- ------------- -------------
INVESTMENT:
Shares issued......................................... 14,780,302 20,005,334 8,768,844 7,480,927
Reinvestment of distributions......................... 4,118,060 2,967,456 2,517,754 1,566,793
Shares redeemed....................................... (10,232,022) (4,320,697) (6,299,296) (3,330,447)
------------- ------------- ------------- -------------
Net increase (decrease) from Investment capital
transactions...................................... 8,666,340 18,652,093 4,987,302 5,717,273
------------- ------------- ------------- -------------
Total net increase (decrease) from capital
transactions...................................... $ 22,452,836 $ 150,786,110 $ 162,491,152 $ 78,969,011
============= ============= ============= =============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued......................................... 14,055,251 16,279,124 18,894,661 11,956,401
Reinvestment of distributions......................... 1,992,365 1,971,493 2,459,426 1,547,774
Shares redeemed....................................... (15,006,273) (9,401,038) (11,327,584) (9,131,520)
------------- ------------- ------------- -------------
Net increase (decrease) from Institutional shares
transactions...................................... 1,041,343 8,849,579 10,026,503 4,372,655
------------- ------------- ------------- -------------
INVESTMENT:
Shares issued......................................... 913,994 1,283,992 511,690 419,135
Reinvestment of distributions......................... 252,348 195,172 152,813 91,169
Shares redeemed....................................... (634,252) (280,261) (383,678) (191,859)
------------- ------------- ------------- -------------
Net increase (decrease) from Investment shares
transactions...................................... 532,090 1,198,903 280,825 318,445
------------- ------------- ------------- -------------
Total net increase (decrease) from shares
transactions...................................... 1,573,433 10,048,482 10,307,328 4,691,100
============= ============= ============= =============
</TABLE>
121
<PAGE> 123
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH FUND INDEX EQUITY FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued.......................................... $ 136,493,110 $189,937,844 $ 190,070,776 $323,258,744
Reinvestment of distributions.......................... 23,365,621 3,418,753 7,019,186 6,357,380
Shares redeemed........................................ (161,041,176) (92,021,615) (178,461,700) (77,077,375)
------------- ------------ ------------- ------------
Net increase (decrease) from Institutional capital
transactions....................................... (1,182,445) 101,334,982 18,628,262 252,538,749
------------- ------------ ------------- ------------
INVESTMENT:
Shares issued.......................................... 7,181,444 3,462,874 8,289,279 15,939,700
Reinvestment of distributions.......................... 1,132,738 146,470 344,605 315,816
Shares redeemed........................................ (6,306,339) (2,625,594) (6,250,907) (2,603,171)
------------- ------------ ------------- ------------
Net increase (decrease) from Investment capital
transactions....................................... 2,007,843 983,750 2,382,977 13,652,345
------------- ------------ ------------- ------------
Total net increase (decrease) from capital
transactions....................................... $ 825,398 $102,318,732 $ 21,011,239 $266,191,094
============= ============ ============= ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued.......................................... 8,614,874 12,562,555 9,139,342 18,391,993
Reinvestment of distributions.......................... 1,492,409 230,973 322,723 353,825
Shares redeemed........................................ (9,986,982) (5,990,183) (8,478,378) (4,462,155)
------------- ------------ ------------- ------------
Net increase (decrease) from Institutional shares
transactions....................................... 120,301 6,803,345 983,687 14,283,663
------------- ------------ ------------- ------------
INVESTMENT:
Shares issued.......................................... 441,796 227,807 394,992 915,280
Reinvestment of distributions.......................... 73,057 9,962 15,815 17,611
Shares redeemed........................................ (389,582) (175,388) (293,283) (149,114)
------------- ------------ ------------- ------------
Net increase (decrease) from Investment shares
transactions....................................... 125,271 62,381 117,524 783,777
------------- ------------ ------------- ------------
Total net increase (decrease) from shares
transactions....................................... 245,572 6,865,726 1,101,211 15,067,440
============= ============ ============= ============
</TABLE>
122
<PAGE> 124
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the Funds are summarized below:
<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,
1998 1997 1998 1997 1998 1997
------------ ------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued................. $46,983,304 $ 48,001,662 $ 338,390,247 $ 199,760,848 $72,628,587 $ 64,474,285
Reinvestment of
distributions............... 4,494,488 6,604,162 23,782,242 24,873,643 4,483,402 4,044,114
Shares redeemed............... (52,355,665) (150,317,030) (250,453,733) (243,018,554) (77,077,231) (82,779,834)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Institutional capital
transactions.............. (877,873) (95,711,206) 111,718,756 (18,384,063) 34,758 (14,261,435)
------------ ------------- ------------- ------------- ------------ ------------
INVESTMENT:
Shares issued................. 1,555,661 7,847,049 8,360,353 1,779,289 7,872,571 3,443,682
Reinvestment of
distributions............... 372,460 224,600 489,509 330,824 742,082 295,679
Shares redeemed............... (3,255,507) (2,314,253) (3,655,060) (2,560,072) (3,592,396) (908,477)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Investment capital
transactions.............. (1,327,386) 5,757,396 5,194,802 (449,959) 5,022,257 2,830,884
------------ ------------- ------------- ------------- ------------ ------------
Total net increase
(decrease) from capital
transactions.............. $(2,205,259) $ (89,953,810) $ 116,913,558 $ (18,834,022) $ 5,057,015 $(11,430,551)
============ ============= ============= ============= ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued................. 4,796,963 4,932,559 33,667,668 20,424,141 6,983,209 6,376,298
Reinvestment of
distributions............... 460,770 681,245 2,384,021 2,553,873 433,651 400,874
Shares redeemed............... (5,351,943) (15,426,349) (25,053,433) (24,790,453) (7,372,911) (8,087,197)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Institutional shares
transactions.............. (94,210) (9,812,545) 10,998,256 (1,812,439) 43,949 (1,310,025)
------------ ------------- ------------- ------------- ------------ ------------
INVESTMENT:
Shares issued................. 159,007 806,758 833,731 180,929 757,461 338,211
Reinvestment of
distributions............... 38,229 23,130 48,917 33,899 71,851 29,196
Shares redeemed............... (333,161) (237,636) (364,011) (261,548) (344,684) (89,859)
------------ ------------- ------------- ------------- ------------ ------------
Net increase (decrease) from
Investment shares
transactions.............. (135,925) 592,252 518,637 (46,720) 484,628 277,548
------------ ------------- ------------- ------------- ------------ ------------
Total net increase
(decrease) from shares
transactions.............. (230,135) (9,220,293) 11,516,893 (1,859,159) 528,577 (1,032,477)
============ ============= ============= ============= ============ ============
</TABLE>
123
<PAGE> 125
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the Funds are summarized below:
<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,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued........................................... $ 8,572,004 $ 9,059,260 $66,076,832 $ 43,176,593
Reinvestment of distributions........................... 8,045 13,903 208,477 124,001
Shares redeemed......................................... (12,452,040) (14,638,082) (47,473,584) (60,115,232)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional capital
transactions........................................ (3,871,991) (5,564,919) 18,811,725 (16,814,638)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................... 222,120 677,012 2,087,564 1,089,316
Reinvestment of distributions........................... 13,490 13,461 116,321 83,640
Shares redeemed......................................... (289,880) (324,005) (1,726,071) (1,083,713)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment capital
transactions........................................ (54,270) 366,468 477,814 89,243
------------ ------------ ------------ ------------
Total net increase (decrease) from capital
transactions........................................ $(3,926,261) $(5,198,451) $19,289,539 $(16,725,395)
============ ============ ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued........................................... 839,153 888,774 6,151,853 4,110,419
Reinvestment of distributions........................... 790 1,369 19,474 11,820
Shares redeemed......................................... (1,218,800) (1,435,754) (4,422,430) (5,717,526)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions........................................ (378,857) (545,611) 1,748,897 (1,595,287)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................... 21,641 66,418 194,674 103,878
Reinvestment of distributions........................... 1,318 1,317 10,869 7,978
Shares redeemed......................................... (28,369) (31,731) (161,174) (104,039)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions........................................ (5,410) 36,004 44,369 7,817
------------ ------------ ------------ ------------
Total net increase (decrease) from share
transactions........................................ (384,267) (509,607) 1,793,266 (1,587,470)
============ ============ ============ ============
</TABLE>
124
<PAGE> 126
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the Funds are summarized below:
<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,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued........................................... $32,537,497 $31,815,166 $40,230,617 $ 32,654,052
Reinvestment of distributions........................... 111,411 76,956 47,874 70,141
Shares redeemed......................................... (22,259,614) (29,459,976) (34,650,281) (75,229,474)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional capital
transactions........................................ 10,389,294 2,432,146 5,628,210 (42,505,281)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................... 1,402,556 1,224,420 3,062,612 2,865,534
Reinvestment of distributions........................... 77,686 39,697 129,291 61,445
Shares redeemed......................................... (1,270,150) (526,698) (1,682,977) (976,041)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment capital
transactions........................................ 210,092 737,419 1,508,926 1,950,938
------------ ------------ ------------ ------------
Total net increase (decrease) from capital
transactions........................................ $10,599,386 $ 3,169,565 $ 7,137,136 $(40,554,343)
============ ============ ============ ============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued........................................... 3,037,158 3,066,893 3,919,445 3,222,928
Reinvestment of distributions........................... 10,424 7,401 4,681 6,941
Shares redeemed......................................... (2,072,941) (2,828,842) (3,382,841) (7,426,189)
------------ ------------ ------------ ------------
Net increase (decrease) from Institutional shares
transactions........................................ 974,641 245,452 541,285 (4,196,320)
------------ ------------ ------------ ------------
INVESTMENT:
Shares issued........................................... 130,884 116,872 298,776 283,459
Reinvestment of distributions........................... 7,256 3,802 12,655 6,073
Shares redeemed......................................... (118,616) (51,267) (164,507) (97,266)
------------ ------------ ------------ ------------
Net increase (decrease) from Investment shares
transactions........................................ 19,524 69,407 146,924 192,266
------------ ------------ ------------ ------------
Total net increase (decrease) from share
transactions........................................ 994,165 314,859 688,209 (4,004,054)
============ ============ ============ ============
</TABLE>
125
<PAGE> 127
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
--------------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997 1998 1997(1)
--------------- --------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
INSTITUTIONAL:
Shares issued............... $ 1,330,695,260 $ 1,151,538,209 $ 559,420,529 $ 279,013,482 $ 525,385,514 $ 328,632,081
Reinvestment of
distributions............. 2,064,457 1,693,047 358,257 192,298 5,375,385 2,413,585
Shares redeemed............. (1,113,735,038) (1,162,770,824) (448,191,138) (222,935,437) (458,462,125) (236,421,222)
--------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from Institutional
capital transactions.... 219,024,679 (9,539,568) 111,587,648 56,270,343 72,298,774 94,624,444
--------------- --------------- ------------- ------------- ------------- -------------
INVESTMENT:
Shares issued............... 19,973,693 1,909,306 5,192,300 191,150 124,496 4,460
Reinvestment of
distributions............. 136,660 38,914 10,702 13,697 1,547 63
Shares redeemed............. (17,561,598) (1,572,981) (5,146,223) (697,468) (34,968) (2,510)
--------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from Investment capital
transactions............ 2,548,755 375,239 56,779 (492,621) 91,075 2,013
--------------- --------------- ------------- ------------- ------------- -------------
Total net increase
(decrease) from capital
transactions............ $ 221,573,434 $ (9,164,329) $ 111,644,427 $ 55,777,722 $ 72,389,849 $ 94,626,457
=============== =============== ============= ============= ============= =============
SHARE ACTIVITY
INSTITUTIONAL:
Shares issued............... 1,330,695,260 1,151,538,209 559,420,529 279,013,482 525,385,514 328,632,081
Reinvestment of
distributions............. 2,064,457 1,693,047 358,257 192,298 5,375,385 2,413,585
Shares redeemed............. (1,113,735,038) (1,162,770,823) (448,191,138) (222,935,438) (458,462,125) (236,421,222)
--------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from Institutional
shares transactions..... 219,024,679 (9,539,567) 111,587,648 56,270,342 72,298,774 94,624,444
--------------- --------------- ------------- ------------- ------------- -------------
INVESTMENT:
Shares issued............... 19,973,693 1,909,306 5,192,299 191,151 124,496 4,460
Reinvestment of
distributions............. 136,660 38,916 10,702 13,697 1,547 63
Shares redeemed............. (17,561,598) (1,572,981) (5,146,223) (697,467) (34,968) (2,510)
--------------- --------------- ------------- ------------- ------------- -------------
Net increase (decrease)
from Investment shares
transactions............ 2,548,755 375,241 56,778 (492,619) 91,075 2,013
--------------- --------------- ------------- ------------- ------------- -------------
221,573,434 (9,164,326) 111,644,426 55,777,723 72,389,849 94,626,457
=============== =============== ============= ============= ============= =============
</TABLE>
- ---------------
(1) From the period June 2, 1997 (commencement of operations) through December
31, 1997.
126
<PAGE> 128
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
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, 1998 were as follows:
<TABLE>
<CAPTION>
FUNDS PURCHASES SALES
- ----- ------------ ------------
<S> <C> <C>
Growth and Income
Fund................. $184,514,729 $154,544,061
Small Company Growth
Fund................. 400,632,671 301,355,298
International Growth
Fund................. 116,319,221 140,654,758
Index Equity Fund...... 96,162,138 80,203,220
Short Term Bond Fund... 93,066,275 100,991,593
Intermediate Bond
Fund................. 825,713,060 781,848,961
Income Fund............ 276,195,724 247,308,500
Limited Term Tax-Free
Fund................. 12,761,283 21,621,733
Intermediate Tax-Free
Fund................. 126,889,869 110,781,032
Tax-Free Income Fund... 73,084,065 63,254,521
Michigan Municipal Bond
Fund................. 67,993,922 61,060,945
</TABLE>
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
LONG TERM CAPITAL GAINS DISTRIBUTIONS: During the year ended December 31,
1998, the following Funds declared long-term capital distributions in the
following amounts:
<TABLE>
<CAPTION>
FUNDS AMOUNT
- ----- -----------
<S> <C>
Growth and Income Fund............... $60,688,954
Small Company Growth Fund............ 75,870,260
International Growth Fund............ 44,306,551
Index Equity Fund.................... 291,970
Income Fund.......................... 2,384,670
Limited Term Tax-Free Fund........... 19,942
Intermediate Tax-Free Fund........... 160,372
Tax-Free Income Fund................. 303,502
Michigan Municipal Bond Fund......... 80,758
</TABLE>
DIVIDEND RECEIVED DEDUCTION: For corporate shareholders the following
percentages of the total ordinary income distributions paid during the fiscal
year ended December 31, 1998, qualify for the corporate dividends received
deductions:
<TABLE>
<CAPTION>
FUNDS PERCENTAGE
- ----- ----------
<S> <C>
Growth and Income Fund................. 68.84%
Small Company Growth Fund.............. 80.55%
Index Equity Fund...................... 99.99%
</TABLE>
TAX-EXEMPT INCOME DISTRIBUTIONS: During the fiscal year ended December 31,
1998, the following Funds declared tax-exempt income distributions in the
following amounts:
<TABLE>
<CAPTION>
FUNDS AMOUNT
- ----- -----------
<S> <C>
Limited Term Tax-Free Fund........... $ 1,351,944
Intermediate Term Tax-Free Fund...... 12,083,528
Tax-Free Income Fund................. 5,192,797
Michigan Municipal Bond Fund......... 4,974,008
Michigan Municipal Money Market
Fund............................... 9,427,033
</TABLE>
7. 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.
8. 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 Funds 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 the Michigan Municipal Money Market Fund
had the following concentrations by industry
127
<PAGE> 129
THE KENT NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FUNDS DECEMBER 31, 1998
sector at December 31, 1998 (as a percentage of total investments):
<TABLE>
<CAPTION>
MICHIGAN
LIMITED MICHIGAN MUNICIPAL
TERM INTERMEDIATE TAX-FREE MUNICIPAL MONEY
TAX-FREE TAX-FREE INCOME BOND MARKET
FUND FUND FUND FUND FUND
-------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Airport.............. 1.65% 1.63% 2.64% 1.40% 1.37%
Development.......... 10.94% 3.62% 2.69% 6.80% 55.78%
Education............ 13.13% 5.81% 7.06% 4.36% 4.37%
Facilities........... 1.57% 5.12% 2.60% 2.69% 0.52%
General Obligation... 21.98% 31.05% 27.98% 10.64% 5.14%
Housing
Development........ -- -- 1.00% 2.25% 5.48%
Law Enforcement...... -- -- -- 1.95% --
Medical.............. 11.68% 1.58% 9.19% 19.10% 3.85%
Multifamily
Housing............ -- -- 1.03% -- 1.33%
Mutual Funds......... 1.18% 0.36% 0.23% 0.54% 0.17%
Nursing Homes........ -- -- -- 1.34% --
Pollution............ 7.46% 6.07% 2.04% 1.06% 5.98%
Public
Improvements....... 3.28% -- -- -- --
Power................ -- 9.61% 11.63% 4.08% --
School District...... 6.59% 12.88% 8.35% 33.97% 7.08%
Sewer................ -- -- -- 0.45% --
Single Family
Housing............ 9.51% 0.88% -- -- 0.37%
Transportation....... 7.86% 9.35% 10.92% 5.13% 0.63%
Utilities............ 3.17% 8.14% 9.33% 3.38% 4.10%
Water................ -- 3.90% 3.31% 0.86% 3.84%
----- ----- ----- ----- -----
100% 100% 100% 100% 100%
===== ===== ===== ===== =====
</TABLE>
9. COMMON TRUST FUND CONVERSIONS:
On December 3, 1998, the net assets of certain common trust funds managed by
the Investment Adviser were exchanged in a tax-free conversion for Institutional
shares of the corresponding Kent Funds. The following is a summary of shares
issued, net assets converted, net asset value per share and unrealized
appreciation of assets acquired as of the conversion date:
<TABLE>
<CAPTION>
NET ASSET
SHARES NET ASSETS VALUE PER UNREALIZED
ISSUED CONVERTED SHARE APPRECIATION
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Growth and Income
Fund............... 3,222,690 $54,431,232 $16.89 $17,190,675
Intermediate Bond
Fund............... 9,258,351 93,787,091 10.13 3,684,581
Intermediate Tax-
Free Fund.......... 1,042,405 11,247,552 10.79 405,284
</TABLE>
10. SUBSEQUENT EVENT:
On November 18, 1998, the Board of Trustees approved a Plan of Reorganization
whereby the assets and liabilities of the Limited Term Tax-Free Fund would be
transferred to the Intermediate Tax-Free Fund. Proxy materials will be mailed to
shareholders of the Limited Term Tax-Free Fund seeking approval of the proposed
reorganization. If the reorganization is approved by the shareholders of the
Limited Term Tax-Free Fund, shareholders of the Limited Term Tax-Free Fund will
become shareholders of the Intermediate Tax-Free Fund upon consummation of the
reorganization.
128
<PAGE> 130
THE KENT GROWTH AND INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 15.55 $ 13.90 $ 13.25 $ 10.50 $ 10.91
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................... 0.13 0.25 0.30 0.33 0.31
Net realized and unrealized gains (losses) on
investments, futures contracts and foreign currency
translations........................................... 4.03 3.04 2.16 3.28 (0.26)
-------- -------- -------- -------- --------
Total Income from Investment Operations.................... 4.16 3.29 2.46 3.61 0.05
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................... (0.13) (0.25) (0.30) (0.33) (0.31)
In excess of net investment income....................... (0.01) -- -- -- **
Net realized gains on investments and futures
contracts.............................................. (1.54) (1.39) (1.51) (0.53) (0.15)
-------- -------- -------- -------- --------
Total Dividends and Distributions...................... (1.68) (1.64) (1.81) (0.86) (0.46)
-------- -------- -------- -------- --------
Net change in net asset value.............................. 2.48 1.65 0.65 2.75 (0.41)
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 18.03 $ 15.55 $ 13.90 $ 13.25 $ 10.50
======== ======== ======== ======== ========
Total return............................................... 28.07% 24.14% 19.47% 34.91% 0.51%
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $827,828 $697,973 $500,857 $401,371 $308,825
Ratio of expenses to average net assets.................. 0.93% 0.92% 0.95% 0.94% 0.98%
Ratio of net investment income to average net assets..... 0.77% 1.61% 2.18% 2.73% 3.04%
Ratio of expenses to average net assets*................. 0.94% 0.93% 0.95% *** ***
Portfolio turnover rate(1)............................... 20% 88% 39% 58% 28%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
129
<PAGE> 131
THE KENT GROWTH AND INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 15.44 $ 13.81 $ 13.19 $ 10.46 $10.87
------- ------- ------- ------- ------
Income from Investment Operations:
Net investment income..................................... 0.08 0.21 0.26 0.30 0.32
Net realized and unrealized gains (losses) on investments,
futures contracts and foreign currency translations..... 4.00 3.02 2.15 3.26 (0.27)
------- ------- ------- ------- ------
Total Income from Investment Operations..................... 4.08 3.23 2.41 3.56 0.05
------- ------- ------- ------- ------
Less Dividends and Distributions from:
Net investment income..................................... (0.08) (0.21) (0.26) (0.30) (0.31)
In excess of net investment income........................ (0.02) -- (0.02) -- **
Net realized gains on investments and futures contracts... (1.54) (1.39) (1.51) (0.53) (0.15)
------- ------- ------- ------- ------
Total Dividends and Distributions....................... (1.64) (1.60) (1.79) (0.83) (0.46)
------- ------- ------- ------- ------
Net change in net asset value............................... 2.44 1.63 0.62 2.73 (0.41)
------- ------- ------- ------- ------
Net asset value, end of period.............................. $ 17.88 $ 15.44 $ 13.81 $ 13.19 $10.46
======= ======= ======= ======= ======
Total return(1)............................................. 27.68% 23.89% 19.14% 34.61% 0.50%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $50,458 $35,343 $15,063 $11,079 $8,005
Ratio of expenses to average net assets................... 1.18% 1.17% 1.09% 1.18% 0.98%
Ratio of net investment income to average net assets...... 0.50% 1.31% 1.77% 2.48% 3.03%
Ratio of expenses to average net assets*.................. 1.19% 1.18% 1.09% *** ***
Portfolio turnover rate(2)................................ 20% 88% 39% 58% 28%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
130
<PAGE> 132
THE KENT SMALL COMPANY GROWTH FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 18.39 $ 15.65 $ 13.82 $ 11.99 $ 12.50
-------- -------- -------- -------- --------
Income (loss) from Investment Operations:
Net investment income.................................... 0.03 0.04 0.12 0.10 0.10
Net realized and unrealized gains (losses) on
investments, futures contracts and foreign currency
translations........................................... (1.08) 4.19 2.55 2.64 (0.10)
-------- -------- -------- -------- --------
Total Income (loss) from Investment Operations............. (1.05) 4.23 2.67 2.74 --
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................... (0.03) (0.04) (0.12) (0.10) (0.09)
In excess of net investment income....................... -- (0.02) -- -- (0.01)
Net realized gains on investments and futures
contracts.............................................. (1.85) (1.43) (0.72) (0.81) (0.41)
-------- -------- -------- -------- --------
Total Dividends and Distributions...................... (1.88) (1.49) (0.84) (0.91) (0.51)
-------- -------- -------- -------- --------
Net change in net asset value.............................. (2.93) 2.74 1.83 1.83 (0.51)
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 15.46 $ 18.39 $ 15.65 $ 13.82 $ 11.99
======== ======== ======== ======== ========
Total return............................................... (6.15%) 27.94% 19.56% 23.75% (0.06%)
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $760,335 $719,998 $544,081 $450,072 $304,179
Ratio of expenses to average net assets.................. 0.94% 0.93% 0.96% 0.97% 0.98%
Ratio of net investment income to average net assets..... 0.18% 0.24% 0.78% 0.83% 0.79%
Ratio of expenses to average net assets*................. 0.95% 0.94% 0.96% ** **
Portfolio turnover rate(1)............................... 41% 32% 16% 30% 20%
</TABLE>
- ---------------
<TABLE>
<S> <C>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
131
<PAGE> 133
THE KENT SMALL COMPANY GROWTH FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 18.33 $ 15.61 $ 13.81 $ 11.98 $12.49
------- ------- ------- ------- ------
Income (loss) from Investment Operations:
Net investment income (loss).............................. (0.01) -- 0.07 0.07 0.10
Net realized and unrealized gains (losses) on investments,
futures contracts and foreign currency translations..... (1.08) 4.19 2.54 2.64 (0.11)
------- ------- ------- ------- ------
Total Income (loss) from Investment Operations.............. (1.09) 4.19 2.61 2.71 (0.01)
------- ------- ------- ------- ------
Less Dividends and Distributions from:
Net investment income..................................... -- -- (0.08) (0.07) (0.08)
In excess of net investment income........................ -- (0.04) (0.01) -- (0.01)
Net realized gains on investments and futures contracts... (1.85) (1.43) (0.72) (0.81) (0.41)
------- ------- ------- ------- ------
Total Dividends and Distributions....................... (1.85) (1.47) (0.81) (0.88) (0.50)
------- ------- ------- ------- ------
Net change in net asset value............................... (2.94) 2.72 1.80 1.83 (0.51)
------- ------- ------- ------- ------
Net asset value, end of period.............................. $ 15.39 $ 18.33 $ 15.61 $ 13.81 $11.98
======= ======= ======= ======= ======
Total return(1)............................................. (6.40%) 27.71% 19.16% 23.47% (0.08%)
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $23,455 $22,784 $14,436 $10,955 $8,433
Ratio of expenses to average net assets................... 1.19% 1.18% 1.21% 1.20% 0.98%
Ratio of net investment income (loss) to average net
assets.................................................. (0.07%) (0.01%) 0.53% 0.59% 0.79%
Ratio of expenses to average net assets*.................. 1.20% 1.19% 1.21% ** **
Portfolio turnover rate(2)................................ 41% 32% 16% 30% 20%
</TABLE>
- ---------------
<TABLE>
<S> <C>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
132
<PAGE> 134
THE KENT INTERNATIONAL GROWTH FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 14.89 $ 14.75 $ 14.18 $ 13.06 $ 12.84
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................... 0.14 0.11 0.13 0.13 0.12
Net realized and unrealized gains (losses) on
investments, futures contracts and foreign currency
translations........................................... 2.48 0.26 0.70 1.54 0.61
-------- -------- -------- -------- --------
Total Income from Investment Operations.................... 2.62 0.37 0.83 1.67 0.73
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................... (0.07) (0.09) (0.10) (0.13) (0.07)
In excess of net investment income....................... (0.12) (0.06) (0.02) (0.11) (0.03)
Net realized gains on investments and foreign currency... (1.41) (0.07) (0.13) (0.31) (0.41)
In excess of net realized gains.......................... -- (0.01) (0.01) -- --
-------- -------- -------- -------- --------
Total Dividends and Distributions...................... (1.60) (0.23) (0.26) (0.55) (0.51)
-------- -------- -------- -------- --------
Net change in net asset value.............................. 1.02 0.14 0.57 1.12 0.22
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 15.91 $ 14.89 $ 14.75 $ 14.18 $ 13.06
======== ======== ======== ======== ========
Total return............................................... 17.92% 2.54% 5.87% 13.00% 5.73%
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $528,500 $492,598 $387,799 $286,545 $178,186
Ratio of expenses to average net assets.................. 1.05% 1.05% 1.09% 1.17% 1.22%
Ratio of net investment income to average net assets..... 0.87% 0.80% 0.97% 1.35% 0.87%
Ratio of expenses to average net assets*................. 1.06% 1.06% 1.09% ** **
Portfolio turnover rate(1)............................... 22% 3% 13% 6% 20%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
133
<PAGE> 135
THE KENT INTERNATIONAL GROWTH FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 1996 1995 1994
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 14.79 $14.69 $14.13 $13.00 $12.81
------- ------ ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.10 0.08 0.12 0.14 0.14
Net realized and unrealized gains (losses) on investments,
futures contracts and foreign currency translations..... 2.46 0.25 0.66 1.50 0.56
------- ------ ------ ------ ------
Total Income from Investment Operations..................... 2.56 0.33 0.78 1.64 0.70
------- ------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... -- (0.06) (0.08) (0.09) (0.07)
In excess of net investment income........................ (0.19) (0.09) -- (0.11) (0.03)
Net realized gains on securities and foreign currency..... (1.41) (0.07) (0.14) (0.31) (0.41)
In excess of net realized gains........................... -- (0.01) -- -- --
------- ------ ------ ------ ------
Total Dividends and Distributions....................... (1.60) (0.23) (0.22) (0.51) (0.51)
------- ------ ------ ------ ------
Net change in net asset value............................... 0.96 0.10 0.56 1.13 0.19
------- ------ ------ ------ ------
Net asset value, end of period.............................. $ 15.75 $14.79 $14.69 $14.13 $13.00
======= ====== ====== ====== ======
Total return(1)............................................. 17.60% 2.25% 5.57% 12.86% 5.51%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $12,390 $9,780 $8,799 $7,548 $6,539
Ratio of expenses to average net assets................... 1.30% 1.30% 1.34% 1.40% 1.25%
Ratio of net investment income to average net assets...... 0.59% 0.53% 0.74% 1.11% 0.81%
Ratio of expenses to average net assets*.................. 1.31% 1.31% 1.34% ** **
Portfolio turnover rate(2)................................ 22% 3% 13% 6% 20%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
134
<PAGE> 136
THE KENT INDEX EQUITY FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 19.14 $ 14.71 $ 12.56 $ 10.68 $ 11.04
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................... 0.24 0.25 0.26 0.26 0.25
Net realized and unrealized gains (losses) on
investments, futures contracts and foreign currency
translations........................................... 5.14 4.50 2.47 3.44 (0.15)
-------- -------- -------- -------- --------
Total Income from Investment Operations.................... 5.38 4.75 2.73 3.70 0.10
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................... (0.24) (0.25) (0.26) (0.25) (0.26)
Net realized gains on investments and futures
contracts.............................................. (0.04) (0.05) (0.28) (1.57) (0.20)
In excess of net realized gains.......................... -- (0.02) (0.04) -- --
-------- -------- -------- -------- --------
Total Dividends and Distributions...................... (0.28) (0.32) (0.58) (1.82) (0.46)
-------- -------- -------- -------- --------
Net change in net asset value.............................. 5.10 4.43 2.15 1.88 (0.36)
-------- -------- -------- -------- --------
Net asset value, end of period............................. $ 24.24 $ 19.14 $ 14.71 $ 12.56 $ 10.68
======== ======== ======== ======== ========
Total return............................................... 28.26% 32.55% 22.18% 36.23% 0.86%
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $771,147 $590,241 $243,438 $183,877 $245,550
Ratio of expenses to average net assets.................. 0.42% 0.43% 0.49% 0.56% 0.58%
Ratio of net investment income to average net assets..... 1.10% 1.44% 1.91% 2.14% 2.32%
Ratio of expenses to average net assets*................. 0.55% 0.54% 0.59% 0.56% 0.58%
Portfolio turnover rate(1)............................... 12% 1% 2% 3% 50%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
(1) Portfolio turnover is calculated on the basis of the Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
135
<PAGE> 137
THE KENT INDEX EQUITY FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 19.15 $ 14.72 $12.57 $10.70 $11.07
------- ------- ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.18 0.20 0.22 0.23 0.26
Net realized and unrealized gains (losses) on investments,
futures contracts and foreign currency translations..... 5.14 4.51 2.48 3.44 (0.17)
------- ------- ------ ------ ------
Total Income from Investment Operations..................... 5.32 4.71 2.70 3.67 0.09
------- ------- ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.18) (0.20) (0.22) (0.23) (0.26)
In excess of net investment income........................ -- (0.01) (0.01) -- --
Net realized gains on investments and futures contracts... (0.04) (0.06) (0.32) (1.57) (0.20)
In excess of net realized gains........................... -- (0.01) -- -- --
------- ------- ------ ------ ------
Total Dividends and Distributions....................... (0.22) (0.28) (0.55) (1.80) (0.46)
------- ------- ------ ------ ------
Net change in net asset value............................... 5.10 4.43 2.15 1.87 (0.37)
------- ------- ------ ------ ------
Net asset value, end of period.............................. $ 24.25 $ 19.15 $14.72 $12.57 $10.70
======= ======= ====== ====== ======
Total return(1)............................................. 27.93% 32.24% 21.92% 35.81% 0.75%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $38,205 $27,922 $9,925 $6,612 $4,736
Ratio of expenses to average net assets................... 0.67% 0.68% 0.74% 0.80% 0.60%
Ratio of net investment income to average net assets...... 0.85% 1.20% 1.67% 1.86% 2.30%
Ratio of expenses to average net assets*.................. 0.80% 0.79% 0.84% 0.81% 0.60%
Portfolio turnover rate(2)................................ 12% 1% 2% 3% 50%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
136
<PAGE> 138
THE KENT SHORT TERM BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 9.75 $ 9.75 $ 9.96 $ 9.52 $ 9.91
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................. 0.56 0.61 0.61 0.55 0.48
Net realized and unrealized gains (losses) on
investments.......................................... 0.02 -- (0.21) 0.43 (0.38)
-------- -------- -------- -------- --------
Total Income from Investment Operations.................. 0.58 0.61 0.40 0.98 0.10
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.56) (0.61) (0.61) (0.54) (0.49)
In excess of net investment income..................... -- -- -- -- **
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.56) (0.61) (0.61) (0.54) (0.49)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.02 0.00 (0.21) 0.44 (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 9.77 $ 9.75 $ 9.75 $ 9.96 $ 9.52
======== ======== ======== ======== ========
Total return............................................. 6.14% 6.42% 4.22% 10.53% 1.03%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $139,229 $139,739 $235,430 $310,680 $176,765
Ratio of expenses to average net assets................ 0.76% 0.72% 0.70% 0.77% 0.73%
Ratio of net investment income to average net assets... 5.74% 6.04% 6.17% 5.60% 4.75%
Ratio of expenses to average net assets*............... 0.77% 0.73% 0.70% *** ***
Portfolio turnover rate(1)............................. 72% 89% 32% 75% 56%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
137
<PAGE> 139
THE KENT SHORT TERM BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 9.74 $ 9.74 $ 9.95 $ 9.52 $ 9.91
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income.................................. 0.55 0.57 0.59 0.52 0.47
Net realized and unrealized gains (losses) on
investments.......................................... 0.02 0.02 (0.20) 0.44 (0.37)
-------- -------- -------- -------- --------
Total Income from Investment Operations.................. 0.57 0.59 0.39 0.96 0.10
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.52) (0.59) (0.54) (0.53) (0.48)
In excess of net investment income..................... (0.03) -- (0.06) -- (0.01)
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.55) (0.59) (0.60) (0.53) (0.49)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.02 -- (0.21) 0.43 (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 9.76 $ 9.74 $ 9.74 $ 9.95 $ 9.52
======== ======== ======== ======== ========
Total return(1).......................................... 6.00% 6.26% 4.06% 10.30% 1.01%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $ 6,126 $ 7,433 $ 1,667 $ 1,634 $ 1,649
Ratio of expenses to average net assets................ 0.91% 0.88% 0.85% 0.91% 0.74%
Ratio of net investment income to average net assets... 5.60% 5.75% 6.02% 5.40% 4.79%
Ratio of expenses to average net assets*............... 1.02% 0.99% 0.96% ** **
Portfolio turnover rate(2)............................. 72% 89% 32% 75% 56%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
138
<PAGE> 140
THE KENT INTERMEDIATE BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 9.90 $ 9.76 $ 10.12 $ 9.29 $ 10.18
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income.................................. 0.58 0.59 0.60 0.65 0.56
Net realized and unrealized gains (losses) on
investments.......................................... 0.16 0.14 (0.32) 0.81 (0.88)
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations........... 0.74 0.73 0.28 1.46 (0.32)
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.58) (0.59) (0.61) (0.63) (0.54)
In excess of net investment income..................... -- -- (0.03) -- (0.01)
Net realized gains on investments...................... -- -- -- -- (0.02)
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.58) (0.59) (0.64) (0.63) (0.57)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.16 0.14 (0.36) 0.83 (0.89)
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 10.06 $ 9.90 $ 9.76 $ 10.12 $ 9.29
======== ======== ======== ======== ========
Total return............................................. 7.65% 7.80% 3.01% 16.18% (3.19%)
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $885,580 $762,740 $769,395 $854,801 $977,865
Ratio of expenses to average net assets................ 0.76% 0.75% 0.77% 0.77% 0.80%
Ratio of net investment income to average net assets... 5.77% 6.03% 6.18% 6.50% 6.03%
Ratio of expenses to average net assets*............... 0.77% 0.76% 0.78% ** **
Portfolio turnover rate(1)............................. 106% 114% 135% 166% 124%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
139
<PAGE> 141
THE KENT INTERMEDIATE BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 9.93 $ 9.78 $ 10.14 $ 9.32 $ 10.19
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income.................................. 0.54 0.57 0.58 0.61 0.57
Net realized and unrealized gains (losses) on
investments.......................................... 0.16 0.15 (0.32) 0.82 (0.87)
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations........... 0.70 0.72 0.26 1.43 (0.30)
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.55) (0.57) (0.57) (0.61) (0.54)
In excess of net investment income..................... -- -- (0.05) -- (0.01)
Net realized gains on investments...................... -- -- -- -- (0.02)
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.55) (0.57) (0.62) (0.61) (0.57)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.15 0.15 (0.36) 0.82 (0.87)
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 10.08 $ 9.93 $ 9.78 $ 10.14 $ 9.32
======== ======== ======== ======== ========
Total return(1).......................................... 7.26% 7.62% 2.76% 15.76% (3.01%)
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $ 12,313 $ 6,972 $ 7,327 $ 6,862 $ 9,196
Ratio of expenses to average net assets................ 1.01% 1.00% 1.02% 1.01% 0.81%
Ratio of net investment income to average net assets... 5.51% 5.79% 5.92% 6.24% 5.94%
Ratio of expenses to average net assets*............... 1.02% 1.01% 1.03% ** **
Portfolio turnover rate(2)............................. 106% 114% 135% 166% 124%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
140
<PAGE> 142
THE KENT INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996 1995(1)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.30 $ 10.16 $ 10.84 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.65 0.68 0.66 0.55
Net realized and unrealized gains (losses) on
investments............................................. 0.27 0.34 (0.56) 0.92
-------- -------- -------- --------
Total Income from Investment Operations..................... 0.92 1.02 0.10 1.47
-------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income..................................... (0.65) (0.68) (0.65) (0.54)
In excess of net investment income........................ -- -- (0.10) --
Net realized gains on investments......................... (0.24) (0.20) (0.03) (0.09)
-------- -------- -------- --------
Total Dividends and Distributions....................... (0.89) (0.88) (0.78) (0.63)
-------- -------- -------- --------
Net change in net asset value............................... 0.03 0.14 (0.68) 0.84
-------- -------- -------- --------
Net asset value, end of period.............................. $ 10.33 $ 10.30 $ 10.16 $ 10.84
======== ======== ======== ========
Total return................................................ 9.29% 10.55% 1.19% 15.05%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $231,017 $229,778 $240,060 $126,056
Ratio of expenses to average net assets................... 0.83% 0.82% 0.83% 0.91%+
Ratio of net investment income to average net assets...... 6.25% 6.65% 6.57% 6.65%+
Ratio of expenses to average net assets*.................. 0.84% 0.83% 0.83% **
Portfolio turnover rate(2)................................ 108% 84% 102% 50%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
141
<PAGE> 143
THE KENT INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996 1995(1)
------- ------ ------ -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.29 $10.16 $10.82 $10.00
------- ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.62 0.63 0.66 0.52
Net realized and unrealized gains (losses) on
investments............................................. 0.28 0.35 (0.56) 0.91
------- ------ ------ ------
Total Income from Investment Operations..................... 0.90 0.98 0.10 1.43
------- ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.60) (0.65) (0.64) (0.52)
In excess of net investment income........................ (0.03) -- (0.09) --
Net realized gains on investments......................... (0.24) (0.20) (0.03) (0.09)
------- ------ ------ ------
Total Dividends and Distributions....................... (0.87) (0.85) (0.76) (0.61)
------- ------ ------ ------
Net change in net asset value............................... 0.03 0.13 (0.66) 0.82
------- ------ ------ ------
Net asset value, end of period.............................. $ 10.32 $10.29 $10.16 $10.82
======= ====== ====== ======
Total return(2)............................................. 9.04% 10.19% 1.16% 14.63%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $10,629 $5,611 $2,722 $1,961
Ratio of expenses to average net assets................... 1.08% 1.07% 1.08% 1.14%+
Ratio of net investment income to average net assets...... 5.97% 6.38% 6.31% 6.40%+
Ratio of expenses to average net assets*.................. 1.09% 1.08% 1.08% **
Portfolio turnover rate(3)................................ 108% 84% 102% 50%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
142
<PAGE> 144
THE KENT LIMITED TERM TAX-FREE FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.19 $ 10.16 $ 10.22 $ 9.80 $ 10.00
------- ------- ------- ------- -------
Income (Loss) from Investment Operations:
Net investment income..................................... 0.37 0.40 0.39 0.39 0.13
Net realized and unrealized gains (losses) on
investments............................................. 0.04 0.08 (0.04) 0.42 (0.21)
------- ------- ------- ------- -------
Total Income (Loss) from Investment Operations.............. 0.41 0.48 0.35 0.81 (0.08)
------- ------- ------- ------- -------
Less Dividends and Distributions from:
Net investment income..................................... (0.38) (0.40) (0.40) (0.39) (0.12)
In excess of net investment income........................ -- -- ** -- --
Net realized gains on investments......................... (0.01) (0.05) (0.01) -- --
------- ------- ------- ------- -------
Total Dividends and Distributions....................... (0.39) (0.45) (0.41) (0.39) (0.12)
------- ------- ------- ------- -------
Net change in net asset value............................... 0.02 0.03 (0.06) 0.42 (0.20)
------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 10.21 $ 10.19 $ 10.16 $ 10.22 $ 9.80
======= ======= ======= ======= =======
Total return................................................ 4.08% 4.78% 3.54% 8.43% (0.77%)++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $32,234 $36,023 $41,472 $55,347 $43,497
Ratio of expenses to average net assets................... 0.77% 0.76% 0.75% 0.69% 0.79%+
Ratio of net investment income to average net assets...... 3.73% 3.86% 3.84% 3.87% 3.81%+
Ratio of expenses to average net assets*.................. 0.78% 0.77% 0.75% 0.74% 0.96%+
Portfolio turnover rate(2)................................ 39% 29% 32% 51% 10%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
143
<PAGE> 145
THE KENT LIMITED TERM TAX-FREE FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1998 1997 1996 1995 1994(1)
------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.23 $10.20 $10.24 $ 9.81 $ 9.87
------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.37 0.38 0.37 0.37 0.06
Net realized and unrealized gains (losses) on
investments............................................. 0.03 0.08 (0.02) 0.44 (0.06)
------ ------ ------ ------ ------
Total Income from Investment Operations..................... 0.40 0.46 0.35 0.81 --
------ ------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.37) (0.38) (0.35) (0.38) (0.06)
In excess of net investment income........................ -- -- (0.03) -- --
Net realized gains on investments......................... (0.01) (0.05) (0.01) -- --
------ ------ ------ ------ ------
Total Dividends and Distributions....................... (0.38) (0.43) (0.39) (0.38) (0.06)
------ ------ ------ ------ ------
Net change in net asset value............................... 0.02 0.03 (0.04) 0.43 (0.06)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.25 $10.23 $10.20 $10.24 $ 9.81
====== ====== ====== ====== ======
Total return(2)............................................. 3.91% 4.61% 3.51% 8.40% 0.03%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 420 $ 474 $ 106 $ 54 $ 7
Ratio of expenses to average net assets................... 0.92% 0.93% 0.87% 0.84% 0.87%+
Ratio of net investment income to average net assets...... 3.59% 3.67% 3.69% 3.69% 3.86%+
Ratio of expenses to average net assets*.................. 1.03% 1.04% 0.97% 0.85% 0.98%+
Portfolio turnover rate(3)................................ 39% 29% 32% 51% 10%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not Annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
144
<PAGE> 146
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..................... $ 10.68 $ 10.42 $ 10.52 $ 9.74 $ 10.45
-------- -------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income.................................. 0.45 0.45 0.44 0.45 0.40
Net realized and unrealized gains (losses) on
investments.......................................... 0.11 0.26 (0.08) 0.79 (0.71)
-------- -------- -------- -------- --------
Total Income (Loss) from Investment Operations........... 0.56 0.71 0.36 1.24 (0.31)
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income.................................. (0.45) (0.45) (0.46) (0.45) (0.39)
In excess of net investment income..................... -- -- ** (0.01) (0.01)
Net realized gains on investments...................... (0.03) -- -- -- --
-------- -------- -------- -------- --------
Total Dividends and Distributions.................... (0.48) (0.45) (0.46) (0.46) (0.40)
-------- -------- -------- -------- --------
Net change in net asset value............................ 0.08 0.26 (0.10) 0.78 (0.71)
-------- -------- -------- -------- --------
Net asset value, end of period........................... $ 10.76 $ 10.68 $ 10.42 $ 10.52 $ 9.74
======== ======== ======== ======== ========
Total return............................................. 5.37% 7.07% 3.41% 12.90% (3.00%)
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................ $296,484 $275,641 $285,674 $283,733 $380,715
Ratio of expenses to average net assets................ 0.73% 0.72% 0.73% 0.72% 0.78%
Ratio of net investment income to average net assets... 4.22% 4.31% 4.34% 4.39% 4.07%
Ratio of expenses to average net assets*............... 0.74% 0.73% 0.73% 0.72% 0.78%
Portfolio turnover rate(1)............................. 40% 23% 35% 6% 36%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
** Amount is less than $0.005.
(1) Portfolio turnover is calculated on the basis of the Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
145
<PAGE> 147
THE KENT INTERMEDIATE TAX-FREE FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.68 $10.42 $10.52 $ 9.74 $10.45
------ ------ ------ ------ ------
Income (Loss) from Investment Operations:
Net investment income..................................... 0.42 0.43 0.42 0.42 0.40
Net realized and unrealized gains (losses) on
investments............................................. 0.11 0.26 (0.09) 0.79 (0.71)
------ ------ ------ ------ ------
Total Income (Loss) from Investment Operations.............. 0.53 0.69 0.33 1.21 (0.31)
------ ------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.42) (0.43) (0.41) (0.42) (0.39)
In excess of net investment income........................ -- -- (0.02) (0.01) (0.01)
Net realized gains on investments......................... (0.03) -- -- -- --
------ ------ ------ ------ ------
Total Dividends and Distributions....................... (0.45) (0.43) (0.43) (0.43) (0.40)
------ ------ ------ ------ ------
Net change in net asset value............................... 0.08 0.26 (0.10) 0.78 (0.71)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.76 $10.68 $10.42 $10.52 $ 9.74
====== ====== ====== ====== ======
Total return(1)............................................. 5.09% 6.80% 3.17% 12.66% (3.03%)
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $4,038 $3,534 $3,368 $3,807 $4,505
Ratio of expenses to average net assets................... 0.98% 0.97% 0.98% 0.97% 0.79%
Ratio of net investment income to average net assets...... 3.97% 4.06% 4.09% 4.13% 3.99%
Ratio of expenses to average net assets*.................. 0.99% 0.98% 0.98% 0.97% 0.79%
Portfolio turnover rate(2)................................ 40% 23% 35% 6% 36%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
146
<PAGE> 148
THE KENT TAX-FREE INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996 1995(1)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 10.65 $ 10.27 $ 10.49 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income..................................... 0.44 0.45 0.46 0.36
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 0.15 0.41 (0.06) 0.49
-------- -------- -------- --------
Total Income from Investment Operations..................... 0.59 0.86 0.40 0.85
-------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income..................................... (0.44) (0.45) (0.46) (0.36)
Net realized gains on investments and futures contracts... (0.05) (0.03) (0.16) --
-------- -------- -------- --------
Total Dividends and Distributions....................... (0.49) (0.48) (0.62) (0.36)
-------- -------- -------- --------
Net change in net asset value............................... 0.10 0.38 (0.22) 0.49
-------- -------- -------- --------
Net asset value, end of period.............................. $ 10.75 $ 10.65 $ 10.27 $ 10.49
======== ======== ======== ========
Total return................................................ 5.71% 8.59% 3.92% 8.64%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $128,232 $116,652 $109,948 $121,855
Ratio of expenses to average net assets................... 0.81% 0.79% 0.82% 0.73%+
Ratio of net investment income to average net assets...... 4.16% 4.32% 4.38% 4.44%+
Ratio of expenses to average net assets*.................. 0.82% 0.80% 0.82% 0.91%+
Portfolio turnover rate(2)................................ 53% 16% 40% 10%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
147
<PAGE> 149
THE KENT TAX-FREE INCOME FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996 1995(1)
------ ------ ------ -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.67 $10.29 $10.52 $10.00
------ ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.42 0.42 0.41 0.31
Net realized and unrealized gains (losses) on investments
and futures contracts................................... 0.15 0.42 (0.05) 0.51
------ ------ ------ ------
Total Income from Investment Operations..................... 0.57 0.84 0.36 0.82
------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.42) (0.42) (0.43) (0.30)
In excess of net investment income........................ -- (0.01) -- --
Net realized gains on investments and futures contracts... (0.05) (0.03) (0.12) --
In excess of net realized gains........................... -- -- (0.04) --
------ ------ ------ ------
Total Dividends and Distributions....................... (0.47) (0.46) (0.59) (0.30)
------ ------ ------ ------
Net change in net asset value............................... 0.10 0.38 (0.23) 0.52
------ ------ ------ ------
Net asset value, end of period.............................. $10.77 $10.67 $10.29 $10.52
====== ====== ====== ======
Total return(2)............................................. 5.43% 8.32% 3.53% 8.34%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $1,938 $1,712 $ 936 $ 529
Ratio of expenses to average net assets................... 1.06% 1.04% 1.07% 0.95%+
Ratio of net investment income to average net assets...... 3.91% 4.05% 4.14% 4.25%+
Ratio of expenses to average net assets*.................. 1.07% 1.05% 1.07% 1.17%+
Portfolio turnover rate(3)................................ 53% 16% 40% 10%
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
148
<PAGE> 150
THE KENT MICHIGAN MUNICIPAL BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................... $ 10.21 $ 10.08 $ 10.12 $ 9.72 $ 10.06
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income................................ 0.40 0.41 0.39 0.39 0.37
Net realized and unrealized gains (losses) on
investments........................................ 0.08 0.13 (0.04) 0.39 (0.34)
-------- -------- -------- -------- --------
Total Income from Investment Operations................ 0.48 0.54 0.35 0.78 0.03
-------- -------- -------- -------- --------
Less Dividends and Distributions from:
Net investment income................................ (0.41) (0.41) (0.39) (0.37) (0.36)
In excess of net investment income................... -- -- -- (0.01) (0.01)
Net realized gains on investments.................... (0.01) -- -- -- --
-------- -------- -------- -------- --------
Total Dividends and Distributions.................. (0.42) (0.41) (0.39) (0.38) (0.37)
-------- -------- -------- -------- --------
Net change in net asset value.......................... 0.06 0.13 (0.04) 0.40 (0.34)
-------- -------- -------- -------- --------
Net asset value, end of period......................... $ 10.27 $ 10.21 $ 10.08 $ 10.12 $ 9.72
======== ======== ======== ======== ========
Total return........................................... 4.75% 5.52% 3.51% 8.20% 0.36%
Ratios/Supplemental Data:
Net Assets, end of period (000's)...................... $117,957 $111,735 $152,623 $185,466 $118,485
Ratio of expenses to average net assets.............. 0.69% 0.69% 0.70% 0.69% 0.49%
Ratio of net investment income to average net
assets............................................. 3.97% 4.04% 3.83% 3.81% 3.74%
Ratio of expenses to average net assets*............. 0.70% 0.70% 0.70% 0.70% 0.74%
Portfolio turnover rate(1)........................... 51% 13% 24% 42% 27%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
(1) Portfolio turnover is calculated on the basis of the Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
149
<PAGE> 151
THE KENT MICHIGAN MUNICIPAL BOND FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $10.20 $10.07 $10.11 $ 9.72 $10.08
------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income..................................... 0.39 0.39 0.38 0.37 0.35
Net realized and unrealized gains (losses) on
investments............................................. 0.07 0.14 (0.05) 0.40 (0.34)
------ ------ ------ ------ ------
Total Income from Investment Operations..................... 0.46 0.53 0.33 0.77 0.01
------ ------ ------ ------ ------
Less Dividends and Distributions from:
Net investment income..................................... (0.39) (0.40) (0.35) (0.37) (0.34)
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) (0.40) (0.37) (0.38) (0.37)
------ ------ ------ ------ ------
Net change in net asset value............................... 0.06 0.13 (0.04) 0.39 (0.36)
------ ------ ------ ------ ------
Net asset value, end of period.............................. $10.26 $10.20 $10.07 $10.11 $ 9.72
====== ====== ====== ====== ======
Total return(1)............................................. 4.60% 5.38% 3.36% 8.01% 0.16%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $5,946 $4,413 $2,422 $1,900 $1,980
Ratio of expenses to average net assets................... 0.84% 0.84% 0.85% 0.83% 0.49%
Ratio of net investment income to average net assets...... 3.82% 3.88% 3.68% 3.68% 3.80%
Ratio of expenses to average net assets*.................. 0.95% 0.95% 0.95% 0.85% 0.84%
Portfolio turnover rate(2)................................ 51% 13% 24% 42% 27%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
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 Fund as
a whole without distinguishing between the classes of shares
issued.
</TABLE>
See Notes to Financial Statements.
150
<PAGE> 152
THE KENT MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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................................ 0.050 0.051 0.050 0.050 0.040
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income................................ (0.050) (0.051) (0.050) (0.050) (0.040)
-------- -------- -------- -------- --------
Net change in net asset value.......................... -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period......................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total return........................................... 5.13% 5.23% 5.06% 5.58% 3.75%
Ratios/Supplemental Data:
Net Assets, end of period (000's)...................... $693,399 $474,378 $483,919 $424,815 $323,539
Ratio of expenses to average net assets.............. 0.55% 0.52% 0.52% 0.55% 0.60%
Ratio of net investment income to average net
assets............................................. 5.00% 5.11% 4.95% 5.45% 3.65%
Ratio of expenses to average net assets*............. 0.64% 0.62% 0.62% 0.63% 0.65%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
</TABLE>
See Notes to Financial Statements.
151
<PAGE> 153
THE KENT MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<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..................................... 0.050 0.051 0.050 0.050 0.040
------- ------- ------- ------- -------
Less Dividends from:
Net investment income..................................... (0.050) (0.051) (0.050) (0.050) (0.040)
------- ------- ------- ------- -------
Net change in net asset value............................... -- -- -- -- --
------- ------- ------- ------- -------
Net asset value, end of period.............................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total return................................................ 5.13% 5.23% 5.06% 5.56% 3.71%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 3,728 $ 1,179 $ 804 $ 1,227 $ 369
Ratio of expenses to average net assets................... 0.55% 0.52% 0.52% 0.55% 0.63%
Ratio of net investment income to average net assets...... 5.00% 5.11% 4.94% 5.41% 3.58%
Ratio of expenses to average net assets*.................. 0.64% 0.62% 0.62% 0.62% 0.68%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
</TABLE>
See Notes to Financial Statements.
152
<PAGE> 154
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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.................................... 0.030 0.033 0.030 0.030 0.020
-------- -------- -------- -------- --------
Less Dividends from:
Net investment income.................................... (0.030) (0.033) (0.030) (0.030) (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............................................... 3.06% 3.31% 3.11% 3.50% 2.40%
Ratios/Supplemental Data:
Net Assets, end of period (000's).......................... $323,272 $211,682 $155,424 $145,215 $128,164
Ratio of expenses to average net assets.................. 0.54% 0.52% 0.54% 0.56% 0.60%
Ratio of net investment income to average net assets..... 3.00% 3.27% 3.06% 3.45% 2.33%
Ratio of expenses to average net assets*................. 0.64% 0.63% 0.64% 0.65% 0.70%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
</TABLE>
See Notes to Financial Statements.
153
<PAGE> 155
THE KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<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..................................... 0.030 0.033 0.030 0.030 0.020
------- ------- ------- ------- -------
Less Dividends from:
Net investment income..................................... (0.030) (0.033) (0.030) (0.030) (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................................................ 3.06% 3.31% 3.11% 3.48% 2.38%
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 346 $ 289 $ 782 $ 1,603 $ 379
Ratio of expenses to average net assets................... 0.54% 0.52% 0.54% 0.54% 0.63%
Ratio of net investment income to average net assets...... 3.02% 3.22% 3.06% 3.48% 2.47%
Ratio of expenses to average net assets *................. 0.64% 0.63% 0.64% 0.62% 0.73%
</TABLE>
- ---------------
<TABLE>
<C> <S>
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
</TABLE>
See Notes to Financial Statements.
154
<PAGE> 156
THE KENT GOVERNMENT MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1998 1997(1)
------------ ------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 1.000 $ 1.000
-------- -------
Income from Investment Operations:
Net investment income..................................... 0.051 0.031
-------- -------
Less Dividends from:
Net investment income..................................... (0.051) (0.031)
-------- -------
Net change in net asset value............................... -- --
-------- -------
Net asset value, end of period.............................. $ 1.000 $ 1.000
======== =======
Total return................................................ 5.17% 3.10%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $166,922 $94,624
Ratio of expenses to average net assets................... 0.38% 0.35%+
Ratio of net investment income to average net assets...... 5.03% 5.23%+
Ratio of expenses to average net assets*.................. 0.69% 0.69%+
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
(1) The Fund commenced operations June 2, 1997.
</TABLE>
See Notes to Financial Statements.
155
<PAGE> 157
THE KENT GOVERNMENT MONEY MARKET FUND
FUNDS FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31,
1998 1997(1)
------------ ------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 1.000 $ 1.000
------- -------
Income from Investment Operations:
Net investment income..................................... 0.051 0.030
------- -------
Less Dividends from:
Net investment income..................................... (0.051) (0.030)
------- -------
Net change in net asset value............................... -- --
------- -------
Net asset value, end of period.............................. $ 1.000 $ 1.000
======= =======
Total return................................................ 5.17% 3.06%++
Ratios/Supplemental Data:
Net Assets, end of period (000's)........................... $ 93 $ 2
Ratio of expenses to average net assets................... 0.38% 0.43%+
Ratio of net investment income to average net assets...... 4.92% 5.17%+
Ratio of expenses to average net assets*.................. 0.69% 0.77%+
</TABLE>
- ---------------
<TABLE>
<C> <S>
+ Annualized.
++ Not annualized.
* During the period, certain fees were voluntarily reduced. If
such voluntary fee reductions had not occurred, the ratio
would have been as indicated.
(1) The Fund commenced operations June 2, 1997.
</TABLE>
See Notes to Financial Statements.
156
<PAGE> 158
INDEPENDENT AUDITORS' 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, Intermediate 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 schedules of
portfolio investments, as of December 31, 1998, 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, 1998, by confirmation with the custodian, correspondence with
brokers 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 as of December 31, 1998,
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 LLP
Columbus, Ohio
February 18, 1999
157
<PAGE> 159
[LOGO] KENT FUNDS
P.O. Box 182201
Columbus, Ohio 43218-2201
KKF-0160 (2/99)
