<PAGE>
VIA EDGAR
May 4, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: THE KENT FUNDS (the "Trust") (File Nos. 33-00398 and 811-4824)
Ladies and Gentlemen:
Pursuant to Rule 497(c) under the Securities Act of 1933, as amended,
transmitted herewith are the Trust's Prospectus and Statement of Additional
Information dated May 1, 1999.
If you have any questions concerning this matter, please call me at
(614) 470-8038.
Very truly yours,
/s/ Martin R. Dean
Martin R. Dean
Treasurer
The Kent Funds
Copies to: Diana McCarthy
<PAGE>
[KENT FUNDS RIGHT ON THE MONEY LOGO APPEARS HERE]
Prospectus EQUITY FUNDS
May 1, 1999 Kent Growth and Income Fund
Kent Index Equity Fund
Kent Large Company Growth Fund
Kent Small Company Growth Fund
Kent International Growth Fund
BOND FUNDS
Kent Income Fund
Kent Intermediate Bond Fund
Kent Short Term Bond Fund
MUNICIPAL BOND FUNDS
Kent Tax-Free Income Fund
Kent Intermediate Tax-Free Fund
Kent Michigan Municipal Bond Fund
MONEY MARKET FUNDS
Kent Money Market Fund
Kent Government Money Market Fund
Kent Michigan Municipal Money Market Fund
-----------------------------------------------
NEED INFORMATION?
Call 1-800-633-KENT (5368)
or your Investment Representative.
-----------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THE SHARES DESCRIBED IN
THIS PROSPECTUS OR DETERMINED WHETHER THIS PRO-
SPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF
CONTENTS
Carefully review RISK/RETURN SUMMARY AND FUND EXPENSES
this important sec-
tion, which summa-
rizes each Fund's
investments, risks,
past performance,
and fees.
3 Overview
EQUITY FUNDS
4 Investment Objectives,
Principal Investment Strategies and
Performance Information
9 Principal Risks
11 Fees and Expenses
BOND FUNDS
12 Investment Objectives,
Principal Investment Strategies and
Performance Information
16 Principal Risks
17 Fees and Expenses
MUNICIPAL BOND FUNDS
18 Investment Objectives,
Principal Investment Strategies and
Performance Information
21 Principal Risks
23 Fees and Expenses
MONEY MARKET FUNDS
24 Investment Objectives,
Principal Investment Strategies and
Performance Information
27 Principal Risks
29 Fees and Expenses
1
<PAGE>
ADDITIONAL INFORMATION
30 Investing for Defensive Purposes
30 Year 2000 and the Kent Funds
Review this section FUND MANAGEMENT
for details
on the people and 31 Investment Adviser
organizations
who oversee the 32 Portfolio Managers
Funds.
32 Distributor, Administrator and Sub-Administrator
Review this section SHAREHOLDER INFORMATION
for details on
how shares are 33 Pricing of Fund Shares
valued, how to pur-
chase, sell and 34 Purchasing and Selling Your Investment Shares
exchange shares,
related charges and 40 Purchasing and Selling Your Institutional Shares
payments of
dividends and 40 General Policies on Selling Shares
distributions.
41 Distribution and Service Fees
42 Exchanging Your Shares
43 Dividends and Distributions
43 Taxation
45 FINANCIAL HIGHLIGHTS
BACK COVER
Where to learn more about the Funds
2
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
OVERVIEW
This prospectus describes the following funds offered by the Kent Funds (the
"Funds"). On the following pages, you will find important information about
each Fund, including:
.the investment objective
.principal investment strategy
.performance information
.fees and expenses, and
.principal risks associated with each Fund
The Funds are managed by Lyon Street Asset Management Company ("Lyon Street" or
the "Adviser").
Equity Funds
Growth and Income Fund Risk/Return Profile of Mutual Funds
Index Equity Fund [CHART APPEARS HERE]
Large Company Growth Fund
Small Company Growth Fund
International Growth Fund
Bond Funds
Income Fund
Intermediate Income Fund
Short Term Bond Fund
Municipal Bond Funds
Tax-Free Income Fund
Intermediate Tax-Free Fund
Michigan Municipal Bond Fund
Money Market Funds
Money Market Fund
Government Money Market Fund
Michigan Municipal Money Market Fund
Principal Risks of the Funds
<TABLE>
<CAPTION>
Foreign Interest
Market Selection Investment Rate Credit Concentration
Risk Risk Risk Risk Risk Risk
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income Fund X X
- -------------------------------------------------------------------------------------
Index Equity Fund X X
- -------------------------------------------------------------------------------------
Large Company Growth
Fund X X
- -------------------------------------------------------------------------------------
Small Company Growth
Fund X X
- -------------------------------------------------------------------------------------
International Growth
Fund X X X X
- -------------------------------------------------------------------------------------
Income Fund X X X X
- -------------------------------------------------------------------------------------
Intermediate Income Fund X X X X
- -------------------------------------------------------------------------------------
Short Term Bond Fund X X X X
- -------------------------------------------------------------------------------------
Tax-Free Income Fund X X X X
- -------------------------------------------------------------------------------------
Intermediate Tax-Free
Fund X X X X
- -------------------------------------------------------------------------------------
Michigan Municipal Bond
Fund X X X X X
- -------------------------------------------------------------------------------------
Money Market Fund X X X X
- -------------------------------------------------------------------------------------
Government Money Market
Fund X X X X
- -------------------------------------------------------------------------------------
Michigan Municipal Money
Market Fund X X X X X
</TABLE>
A complete description of these and other risks can be found in the sections
"Equity Funds - Principal Risks," "Bond Funds - Principal Risks," "Municipal
Bond Funds - Principal Risks" and "Money Market Funds - Principal Risks."
3
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES--EQUITY FUNDS
KENT GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES
Long-term capital growth with current income as a
secondary objective.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in equity securities of U.S. companies each
having $100 million or more in market capitalization,
- -------------------- that are traded on the New York Stock Exchange, Amer-
Market ican Stock Exchange or over-the-counter. The Fund in-
Capitalization tends to invest at least 65% of its total assets in
is a common equity securities that Lyon Street believes have po-
measure of the tential primarily for capital growth and secondarily
size of a for income. A portion of the Fund's assets may be in-
company. It is vested in preferred stock or bonds convertible into
the market price common stock. The Fund expects to earn current income
of a share of mainly from stock dividends and from interest on con-
the company's vertible bonds. The average market capitalization of
stock multiplied the Fund's portfolio securities was $32.7 billion as
by the number of of December 31, 1998.
shares that are
outstanding.
- ----------------------
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to
broad-based securities in-dex. The Standard and Poor's 500 Composite Stock Price
Index (the "S&P 500") in the table below is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock Exchange.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 11.98%
1994 0.51%
1995 34.91%
1996 19.47%
1997 24.14%
1998 28.07%
Best quarter: Q4 199821.19%
Worst quarter: Q3 1998-9.38%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/1/92 27.68% 20.58% 18.90%
- -----------------------------------------------------------------------------
Institutional Shares 11/2/92 28.07% 20.83% 19.46%
- -----------------------------------------------------------------------------
S&P 500 Index 10/31/92 28.60% 24.05% 21.86%
- -----------------------------------------------------------------------------
</TABLE>
4
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT INDEX EQUITY FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES Long-term capital appreciation with current income as
a secondary objective.
PRINCIPAL INVESTMENT To achieve its objectives, the Fund invests substan-
STRATEGIES tially all of its assets in common stock of companies
that make up the S&P 500. Lyon Street will generally
try to match the industry composition of the S&P 500;
however, the Fund may be invested in the S&P 500 com-
panies in different proportions. The Fund will try to
achieve a close correlation between the performance
that it generates and that of the S&P 500. Several
factors may affect the Fund's ability to exactly
track the S&P 500's performance, including the timing
of purchases and redemptions, changes in securities
markets and in the size of the Fund.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- -----------------------
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Standard and Poor's 500 Composite Stock Price
Index (the "S&P 500") in the table below is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock Exchange.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 9.11%
1994 0.86%
1995 36.23%
1996 22.18%
1997 32.55%
1998 28.26%
Best quarter: Q4 199821.26%
Worst quarter: Q3 1998-9.99%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 11/25/92 27.93% 23.05% 20.60%
- -----------------------------------------------------------------------------
Institutional Shares 11/2/92 28.26% 23.33% 21.08%
- -----------------------------------------------------------------------------
S&P 500 Index 10/31/92 28.60% 24.05% 21.86%
- -----------------------------------------------------------------------------
</TABLE>
5
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT LARGE COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in equity securities of U.S. companies with
at least $4 billion in market capitalization. The
Fund intends to invest at least 65% of its total
assets in securities of companies which Lyon Street
believes have potential for above-average growth as
measured by projected earnings per share and growth
in sales.
- --------------------------------------------------------------------------------
No performance information
is shown for the Large
Company Growth Fund which
has not commenced
operations as of the date
of this prospectus.
6
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT SMALL COMPANY GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES Long-term capital appreciation.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in the equity securities of a diverse group of
companies whose market capitalizations are less than
- ---------------------- $2 billion at the time of purchase. The Fund intends
Market to invest at least 65% of its total assets in equity
Capitalization securities of companies that Lyon Street believes
is a common have above-average potential for growth in revenues,
measure of the earnings or assets. The Fund intends generally to
size of a purchase common stock issued by companies that meet
company. It is this market capitalization criteria that are listed
the market price on the New York Stock Exchange, but may also purchase
of a share of shares of companies that meet this capitalization
the company's criteria that are listed on other U.S. securities ex-
stock multiplied changes or trade over the counter. The value of the
by the number of shares purchased will be based on the company's capi-
shares that are talization relative to all of the other eligible com-
outstanding. panies. Lyon Street may elect to exclude an eligible
- ---------------------- company from the Fund's portfolio if it believes the
company is in financial difficulty or if it believes
that the company's stock is too illiquid. Lyon Street
will consider selling shares if the issuer's market
capitalization increases to the point that it is
ranked in the top half of all NYSE companies.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- -----------------------
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Russell 2000 In-dex, in the table below, is
an unmanaged index of the smallest 2,000 companies in the Russell 3000 Index,
as ranked by total market capitalization. The Russell 2000 is widely regarded
in the industry as an index that accurately reflects the universe of small
capitalization stocks.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 17.04%
1994 -0.06%
1995 23.75%
1996 19.56%
1997 27.56%
1998 -6.15%
Best quarter: Q2 199718.02%
Worst quarter: Q3 1998-21.20%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/4/92 -6.40% 11.94% 12.94%
- -----------------------------------------------------------------------------
Institutional Shares 11/2/92 -6.15% 12.17% 14.15%
- -----------------------------------------------------------------------------
Russell 2000 Index 10/31/92 -2.55% 11.87% 14.62%
- -----------------------------------------------------------------------------
</TABLE>
7
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Long-term capital appreciation.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in the common and preferred stocks of compa-
nies located in at least three countries in Europe,
Australia and the Far East.
Lyon Street considers a country's Gross Domestic
Product and market capitalization relative to other
countries when determining region and country alloca-
tions among Europe, Australia and the Pacific Rim.
Allocation among companies is determined based on a
stock's market capitalization and industry attrac-
tiveness. Stocks are selected from the companies rep-
resented in the Morgan Stanley Capital International
Europe, Australia and Far East Index (the "EAFE In-
dex"). The allocation of Fund assets may shift from
time to time from countries that the Fund considers
overvalued to countries that it considers underval-
ued. Although the Fund seeks to equal or exceed the
return of the EAFE Index, the Fund may invest its as-
sets in proportions that differ from this index. The
Fund is not, therefore, an "index" fund, which typi-
cally holds securities in approximately the same pro-
portion as the index it attempts to replicate. The
Fund may at times invest more than 25% of its total
assets in a particular country.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- -----------------------
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Morgan Stanley Capital International Europe,
Australia and Far East Index is a widely recognized, unmanaged index composed of
a sample of companies representative of the market structure of 20 European and
Pacific Basin countries; the Morgan Stanley Capital International Europe Index
is an unmanaged index of European stocks; and the Morgan Stanley Capital
International Pacific Index is an unmanaged index of stocks in the Pacific re-
gion.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
[BAR CHART APPEARS HERE]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
30.32% 5.73% 13.00% 5.87% 2.54% 17.92%
Best quarter: Q4 1998 19.50%
Worst quarter: Q3 1998 -13.69%
Past performance does not indicate how the
Fund will perform in the future.
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
Average Annual Total Returns (for the periods ending December 31, 1998)
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/4/92 17.60% 8.62% 11.77%
- ----------------------------------------------------------------------------------------
Institutional Shares 12/4/92 17.92% 8.87% 12.07%
- ----------------------------------------------------------------------------------------
Morgan Stanley Capital
International Europe, Australia
and Far East Index 11/30/92 20.33% 9.50% 13.01%
- ----------------------------------------------------------------------------------------
Morgan Stanley Capital
International Europe Index 11/30/92 28.91% 19.53% 21.33%
- ----------------------------------------------------------------------------------------
Morgan Stanley Capital
International Pacific Index 11/30/92 2.69% -3.95% 1.57%
- ----------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS
- --------------------------------------------------------------------------------
Principal Investing in the Equity Funds involves risks common
Investment Risks - to any investment in securities. By itself, no Fund
All Equity Funds constitutes a balanced investment program.
An investment in an Equity Fund is not a bank deposit
and is not insured or guaranteed by the Federal De-
posit Insurance Corporation or any other government
agency.
The Equity Funds will invest principally in common
stocks, which have historically presented greater po-
tential for capital appreciation than fixed income
securities, but do not provide the same protection of
capital or assurance of income. There is no guarantee
that the Funds will meet their goals. When you sell
your shares in the Funds, they may be worth more or
less than you paid for them. It is possible to lose
money by investing in the Funds.
Two principal risks of equity investing are market
risk and selection risk. Market risk means that the
stock market in general has ups and downs, which may
affect the performance of any individual stock. Se-
lection risk means that the particular stocks that
are selected for a Fund may underperform the market
or other funds with similar objectives.
Additional Investment Style Risk
Principal While stocks of smaller companies can provide greater
Investment Risks growth potential and potentially higher returns, they
carry higher risks than those of larger companies.
They may trade infrequently or in lower volumes, mak-
ing it difficult for a Fund to sell its shares at the
price it wants. Smaller companies may be more sensi-
tive to changes in the economy overall. Historically,
small company stocks have been more volatile than
those of larger companies. As a result, the Small
Company Growth Fund's net asset value may be subject
to rapid and substantial changes. The Growth and In-
come Fund is also subject to the same risk.
Growth stocks offer strong revenue and earnings po-
tential and accompanying capital growth, with less
dividend income than value stocks. Growth stocks
present the risk that they may not perform as well as
other types of stocks, such as value stocks. Each of
the Equity Funds may invest in growth stocks.
Value stocks are those that appear to be underpriced
based upon valuation measures, such as lower price-
to-earnings ratios and price-to-book ratios. Value
stocks present the risk that they may not perform as
well as other types of stocks, such as growth stocks.
Each of the Equity Funds may invest in value stocks.
Indexing is a strategy whereby the Index Equity Fund
attempts to weight its securities to match those of a
broadly-based securities index (the S&P 500) in an
attempt to approximate the index's performance. There
is the risk that the Index Equity Fund's investment
results may fail to match those of the S&P 500. There
is also the risk that if the S&P 500 does not perform
well, the investment results of the Index Equity Fund
may not be as favorable as other funds.
9
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS, Continued
- --------------------------------------------------------------------------------
Foreign Investment Risk
-----------------------
Investment in the International Growth Fund involves
additional risks not present in equity funds which
invest in shares of U.S. companies.
Stocks of foreign companies are subject to special
risks:
. Currency risk means that fluctuations in foreign
exchange rates could affect the dollar value of a
Fund's securities. A decline in the value of a for-
eign currency versus the U.S. dollar reduces the
dollar value of securities denominated in that cur-
rency.
. Compared to companies in the U.S., there is gener-
ally less publicly available information about for-
eign companies and there may be less government
oversight of foreign stock exchanges and the compa-
nies traded on them. There may also be less strin-
gent accounting, auditing and financial reporting
standards. In addition, foreign markets may have
lower trading volumes, resulting in stocks that may
be more difficult to sell and more volatile in
price. Investments in some foreign countries could
be subject to such factors as expropriation, con-
fiscation or difficulties enforcing contracts. All
of these factors can make foreign investments more
risky than U.S. investments.
. Furthermore, transaction fees may be higher for
foreign investments, due to higher brokerage com-
missions, fees on currency exchanges, and possible
imposition of dividend or interest withholding by
foreign governments. These may cause higher trans-
action costs which can result in lower returns or
decreased liquidity.
Concentration Risk
------------------
The International Growth Fund may invest more than
25% of its assets in a particular foreign country. A
concentration of investments in any one country could
expose the Fund to increased risk due to changes in
the economic or political environment within that
country.
A full discussion of all permissible investments can
be found in the Statement of Additional Information.
Who May Want to Consider investing in an Equity Fund if you are:
Invest? .pursuing a long-term goal such as retirement
.seeking to add a growth component to your portfolio
.willing to accept higher risks of investing in the
stock market in exchange for potentially higher long
term returns
The Equity Funds will not be appropriate for anyone:
.seeking monthly income
.pursuing a short-term goal or investing emergency
reserves
.seeking safety of principal
10
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
GROWTH AND INDEX LARGE COMPANY
INCOME FUND EQUITY FUND GROWTH FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Fees
(fees paid
directly from
your investment)
Maximum Sales
Charge (Load)
Imposed on
Purchases None None None None None None
Annual Fund
Operating
Expenses
(expenses that
are deducted
from Fund
assets)
Management Fees 0.70% 0.70% 0.30%/2/ 0.30%/2/ 0.70% 0.70%
Distribution
(12b-1) Fees/6/ 0.25% None 0.25% None 0.25% None
Other Expenses 0.24%/1/ 0.24%/1/ 0.25%/2/ 0.25%/2/ 0.40%/3/ 0.40%/3/
-------- -------- -------- -------- -------- --------
Total Annual
Fund
Operating Expenses 1.19%/1/ 0.94%/1/ 0.80%/2/ 0.55%/2/ 1.35%/3/ 1.10%/3/
Fee Waiver 0.01%/1/ 0.01%/1/ 0.13%/2/ 0.13%/2/ - -
-------- -------- -------- -------- -------- --------
Net Annual Fund
Operating Expenses 1.18%/1/ 0.93%/1/ 0.67%/2/ 0.42%/2/ 1.35% 1.10%
- --------------------------------------------------
======== ======== ======== ======== ======== ========
<CAPTION>
SMALL COMPANY INTERNATIONAL
GROWTH FUND GROWTH FUND
Investment Institutional Investment Institutional
Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shareholder Fees
(fees paid
directly from
your investment)
Maximum Sales
Charge (Load)
Imposed on
Purchases None None None None
Annual Fund
Operating
Expenses
(expenses that
are deducted
from Fund
assets)
Management Fees 0.70% 0.70% 0.75% 0.75%
Distribution
(12b-1) Fees/6/ 0.25% None 0.25% None
Other Expenses 0.25%/4/ 0.25%/4/ 0.31%/5/ 0.31%/5/
---------- ------------- ---------- -------------
Total Annual
Fund
Operating Expenses 1.20%/4/ 0.95%/4/ 1.31%/5/ 1.06%/5/
Fee Waiver 0.01%/4/ 0.01%/4/ 0.01%/5/ 0.01%/5/
---------- ------------- ---------- -------------
Net Annual Fund
Operating Expenses 1.19%/4/ 0.94%/4/ 1.30%/5/ 1.05%/5/
- --------------------------------------------------
========== ============= ========== =============
</TABLE>
1 The Fund's Administrator has contractually agreed to waive a portion of
the administration fee at least until December 31, 1999. As a result,
Other Expenses would be 0.23%. You will be notified if the waiver is
discontinued after that date.
2 The Fund's Investment Adviser and its Administrator have contractually
agreed to waive a portion of their investment advisory and administration
fees at least until December 31, 1999. As a result, Management Fees would
be 0.25% for each class and Other Expenses would be 0.17% for each class.
You will be notified if either of these waivers is discontinued after that
date.
3 The Fund's Administrator has contractually agreed to waive a portion of
the administration fee at least until December 31, 1999. As a result,
Other Expenses are expected to be 0.39% for both classes. You will be
notified if the waiver is discontinued after that date. Expenses for the
Large Company Growth Fund are estimated based on expenses expected to be
incurred in the current fiscal year.
4 The Fund's Administrator has contractually agreed to waive a portion of
the administration fee at least until December 31, 1999. As a result,
Other Expenses would be 0.24% for each class. You will be notified if the
waiver is discontinued after that date.
5 The Fund's Administrator has contractually agreed to waive a portion of
the administration fee at least until December 31, 1999. As a result,
Other Expenses would be 0.30% for each class. You will be notified if the
waiver is discontinued after that date.
6 Investors should be aware that, due to the distribution fees, a long term
shareowner in a Fund may pay over time more than the economic equivalent of
the maximum front-end sales charge permitted under the rules of the
National Association of Securities Dealers, Inc.
Example: This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The Example as-
sumes:
. $10,000 investment
. 5% annual return
. redemption at the end of each period
. no changes in the Fund's operating expenses, except for the expiration of
the current contractual fee waivers on December 31, 1999 (with the
exception of the Large Company Growth Fund which assumes no contractual
fee waivers)
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:
<TABLE>
<CAPTION>
GROWTH AND INDEX LARGE COMPANY SMALL COMPANY
INCOME FUND EQUITY FUND GROWTH FUND GROWTH FUND
Investment Institutional Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares Shares Shares
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
One Year
After Purchase $ 120 $ 95 $ 68 $ 43 $ 137 $ 112 $ 121 $ 96
Three Years
After Purchase $ 377 $ 299 $242 $163 $ 428 $ 350 $ 381 $ 302
Five Years
After Purchase $ 653 $ 519 $431 $294 $ 739 $ 606 $ 660 $ 525
Ten Years
After Purchase $1,442 $1,154 $978 $677 $1,624 $1,340 $1,458 $1,165
<CAPTION>
INTERNATIONAL
GROWTH FUND
Investment Institutional
Shares Shares
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
One Year
After Purchase $ 132 $ 107
Three Years
After Purchase $ 414 $ 336
Five Years
After Purchase $ 717 $ 584
Ten Years
After Purchase $1,578 $1,293
</TABLE>
11
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES -- BOND FUNDS
KENT INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in corporate and government debt securities.
The Fund is permitted to purchase U.S. Government ob-
ligations (those that are issued or guaranteed by the
U.S. Government or its agencies or instrumentalities)
and investment-grade corporate debt obligations
(those that are rated in one of the four highest cat-
egories by Nationally Recognized Statistical Rating
Organizations ("Rating Agencies"), or unrated securi-
ties of comparable quality. However, the Fund intends
to invest at least 65% of its total assets in U.S.
Government obligations and corporate debt obligations
that are rated in one of the three highest categories
by Rating Agencies (or unrated securities of compara-
ble quality). The Fund will maintain a dollar-
weighted average portfolio maturity between seven and
twenty years.
While maturity and credit quality are the most impor-
tant investment factors, the Fund also considers the
following when making investment decisions:
.Current yield and yield to maturity.
.Potential for capital gain.
While the Fund will not normally engage in frequent
trading of portfolio securities, it will make changes
in its investment portfolio from time to time as eco-
nomic conditions and market prices dictate based on
the Fund's investment objective. The Fund may also
sell a security if it falls below the minimum credit
quality required for purchase. If the Fund does buy
and sell securities frequently, there will be
increased transaction costs, which can negatively im-
pact Fund performance, and cause additional taxable
gains to shareholders.
12
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT INCOME FUND, Continued
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Lehman Brothers Government/ Corporate Bond
Index and the Lehman Brothers Long Government/Corporate Bond Index, in the
table below, are unmanaged indices comprised of U.S. Treasury issues, debt of
U.S. Government agencies, corporate debt guaranteed by the U.S. Government
and all publicly issued, fixed-rate, nonconvertible investment-grade dollar-
denominated, SEC-registered corporate debt.
Performance Bar Chart and Table Year-by-Year Total Returns as of 12/31 for
Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1996 1997 1998
---- ---- ----
1.19% 10.55% 9.29%
Best quarter: Q2 1997 4.63%
Worst quarter: Q1 1996 -3.63%
Past performance does not indicate how the Fund
will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Since Inception
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Shares 3/22/95 9.04% 9.14%
- --------------------------------------------------------------------------------------
Institutional Shares 3/20/95 9.29% 9.41%
- --------------------------------------------------------------------------------------
Lehman Brothers
Government/Corporate Bond Index 3/31/95 9.47% 9.48%
- --------------------------------------------------------------------------------------
Lehman Brothers
Long Government/Corporate Bond Index 3/31/95 11.77% 12.63%
- --------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT INTERMEDIATE BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in corporate and government debt securities.
The Fund is permitted to purchase U.S. Government ob-
ligations (those that are issued or guaranteed by the
U.S. Government or its agencies or instrumentalities)
and investment-grade corporate debt obligations
(those that are rated in one of the four highest cat-
egories by Rating Agencies), or unrated securities of
comparable quality. The Fund will maintain a dollar-
weighted average portfolio maturity between three and
ten years.
While maturity and credit quality are the most impor-
tant investment factors, the Fund also considers the
following when making investment decisions:
.Current yield and yield to maturity.
.Potential for capital gain.
The Fund will actively buy and sell securities or
types of securities based on changing economic and
market conditions. The Fund may also sell a security
if it falls below the minimum credit quality required
for purchase. If the Fund buys and sells securities
frequently, there will be increased transaction
costs, which can negatively impact Fund performance,
and cause additional taxable gains to shareholders.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- -----------------------
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Lehman Brothers Intermediate
Government/Corporate Bond Index in the table below, is an unmanaged index com-
prised 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.
Performance Bar Chart and Table Year-by-Year Total Returns as of 12/31 for
Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
8.42% -3.19% 16.18% 3.01% 7.80% 7.65%
Best quarter: Q2 1995 5.56%
Worst quarter: Q1 1994 -2.55%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 11/25/92 7.26% 5.89% 6.22%
- ---------------------------------------------------------------------------------
Institutional Shares 11/2/92 7.65% 6.09% 6.45%
- ---------------------------------------------------------------------------------
Lehman Brothers
Intermediate Government/
Corporate Bond Index 10/31/92 8.44% 6.60% 6.93%
- ---------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income.
PRINCIPAL INVESTMENT The Fund normally invests at least 65% of its total
STRATEGIES assets in corporate and government debt securities.
The Fund is permitted to purchase U.S. Government ob-
ligations (those that are issued or guaranteed by the
U.S. Government or its agencies or instrumentalities)
and investment-grade corporate debt obligations
(those that are rated in one of the four highest cat-
egories by Rating Agencies), or unrated securities of
comparable quality. The Fund will maintain a dollar-
weighted average portfolio maturity between one and
three years.
While maturity and credit quality are the most impor-
tant investment factors, the Fund also considers the
following when making investment decisions:
.Current yield and yield to maturity.
.Potential for capital gain.
The Fund may also sell a security if it falls below
the minimum credit quality required for purchase.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. In the table below, the Lehman Brothers 1-3 Year
Government Bond Index is an unmanaged index of U.S. Treasury issues and publicly
issued debt of U.S. Government agencies with maturities of one to three years;
the 91-day Treasury Bill return tracks the investment returns paid on U.S.
Treasury bills maturing in 91 days; and, the Consumer Price Index is an
unmanaged index measuring price increases in a standardized "market basket" of
consumer products.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and
distributions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
3.36% 1.03% 10.53% 4.22% 6.42% 6.14%
Best quarter: Q2 1995 3.16%
Worst quarter: Q1 1996 -0.01%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Class Inception Past Year Past 5 Years Since Inception
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/4/92 6.00% 5.48% 5.06%
- ----------------------------------------------------------------------------------
Institutional Shares 11/2/92 6.14% 5.62% 5.20%
- ----------------------------------------------------------------------------------
Lehman Brothers 1-3 Year
Government Bond Index 10/31/92 6.97% 5.96% 5.84%
- ----------------------------------------------------------------------------------
Consumer Price Index 10/31/92 1.61% 2.37% 2.38%
- ----------------------------------------------------------------------------------
91-Day Treasury Bill 10/31/92 4.88% 5.02% 4.65%
- ----------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS
- --------------------------------------------------------------------------------
Principal Investment Investing in the Bond Funds involves the risks common
Risks - All Bond Funds to any investment in securities. By itself, no Fund
constitutes a balanced investment program.
The Bond Funds will invest primarily in fixed income
securities, which provide income and a level of pro-
tection of capital, but present a lesser potential
for capital appreciation than equity securities.
There is no guarantee that the Funds will meet their
goals. When you sell your shares in the Funds, they
may be worth more or less than you paid for them. It
is possible to lose money by investing in the Funds.
An investment in a Bond Fund is not a bank deposit
and is not insured or guaranteed by the Federal De-
posit Insurance Corporation or any other government
agency.
Two principal risks of fixed income (bond) investing
are market risk and selection risk. Market risk means
that the bond market in general has ups and downs,
which may affect the performance of any individual
fixed income security. Selection risk means that the
particular bonds that are selected for a Fund may
underperform the market or other funds with similar
objectives.
Interest Rate Risk
------------------
All bonds fluctuate in value as interest rates fluc-
tuate. Generally, as interest rates rise, the value
of a Fund's bond investments will decline, resulting
in capital losses to shareholders. In general, the
shorter the maturity, the lower the risk and the
lower the return.
Credit Risk
-----------
The Bond Funds can acquire corporate bonds that carry
investment grade credit ratings, which are bonds
rated by a Rating Agency in the four highest rating
categories. Obligations rated in the fourth highest
rating category are considered to have speculative
characteristics. In addition, interest and principal
payments on these securities may not be insured or
guaranteed.
An issuer of fixed income securities could default on
its obligations to pay interest and repay principal.
A bond's credit rating could be downgraded. Both of
these events could cause a Fund to lose money.
A full discussion of all permissible investments can
be found in the SAI.
Who May Want to Invest? Consider investing in a Bond Fund if you are:
. seeking to add a monthly income component to your
portfolio
. seeking higher potential returns than those provided
by money market funds
. willing to accept the risks of price and dividend
fluctuations
These Funds will not be appropriate for anyone:
. seeking safety of principal
16
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
INTERMEDIATE SHORT TERM
INCOME FUND BOND FUND BOND FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (Load) Imposed on Purchases None None None None None None
Annual Fund Operating Expenses (expenses that
are deducted from Fund assets)
Management Fees 0.60% 0.60% 0.55% 0.55% 0.50% 0.50%
Distribution (12b-1) Fees/4/ 0.25% None 0.25% None 0.25%/3/ None
Other Expenses 0.24%/1/ 0.24%/1/ 0.22%/2/ 0.22%/2/ 0.27%/3/ 0.27%/3/
----- ----- ----- ----- ----- -----
Total Annual Fund Operating Expenses 1.09%/1/ 0.84%/1/ 1.02%/2/ 0.77%/2/ 1.02%/3/ 0.77%/3/
Fee Waiver 0.01%/1/ 0.01%/1/ 0.01%/2/ 0.01%/2/ 0.11%/3/ 0.01%/3/
----- ----- ----- ----- ----- -----
Net Annual Fund Operating Expenses 1.08%/1/ 0.83%/1/ 1.01%/2/ 0.76%/2/ 0.91%/3/ 0.76%
===== ===== ===== ===== ===== =====
</TABLE>
1 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.23% for both classes. You will be notified if the
waiver is discontinued after that date.
2 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.21% for both classes. You will be notified if the
waiver is discontinued after that date.
3 The Fund's Distributor has contractually agreed to waive a portion of the
Fund's 12b-1 fees for Investment Shares at least until December 31, 1999.
In addition, the Fund's Administrator has contractually agreed to waive a
portion of the administration fee at least until December 31, 1999.
Accordingly, Distribution Fees would be 0.15% and Other Expenses would be
0.26% for the Investment Shares and Other Expenses would be 0.26% for the
Institutional Shares. You will be notified if either of these waivers is
discontinued after that date.
4 Investors should be aware that, due to the distribution fees, a long term
shareowner in a Fund may pay over time more than the economic equivalent of
the maximum front-end sales charge permitted under the rules of the
National Association of Securities Dealers, Inc.
Example: This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The Example as-
sumes:
. $10,000 investment
. 5% annual return
. redemption at the end of each period
. no changes in the Fund's operating expenses, except for the expiration of
the current contractual fee waivers on December 31, 1999
Although your actual costs may be higher or lower, based upon these assump-
tions, your costs would be:
<TABLE>
<CAPTION>
INTERMEDIATE SHORT TERM
INCOME FUND BOND FUND BOND FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
One Year After Purchase $ 110 $ 85 $ 103 $ 78 $ 93 $ 78
Three Years
After Purchase $ 346 $ 267 $ 324 $245 $ 314 $245
Five Years
After Purchase $ 600 $ 465 $ 562 $427 $ 553 $427
Ten Years After Purchase $1,328 $1,036 $1,247 $953 $1,238 $953
</TABLE>
17
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES--MUNICIPAL BOND FUNDS
KENT TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income that is exempt from federal income tax
The Fund normally invests at least 80% of its net as-
PRINCIPAL INVESTMENT sets in federally tax-exempt obligations. Federally
STRATEGIES tax-exempt obligations consist of municipal bonds,
notes and commercial paper issued by states and other
local governments that are exempt from federal taxes.
Securities whose interest is considered a tax prefer-
ence item under the federal alternative minimum tax
will be considered taxable for purposes of this poli-
cy. The Fund maintains a dollar-weighted average
portfolio maturity between ten and twenty-five
years.
The Fund will purchase securities rated in one of the
four highest rating categories by Rating Agencies or
unrated securities of comparable quality.
While maturity and credit quality are the most impor-
tant investment factors, the Fund also considers the
following when making investment decisions:
. Current yield and yield to maturity.
. Potential for capital gain.
The Fund may also sell a security if it falls below
the minimum credit quality required for purchase.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Lehman Brothers Municipal Bond Index is an
unmanaged index generally representative of general obligation municipal debt
instruments with long-term maturities greater than two years.
Performance Bar Chart and Table Year-by-Year Total Returns as of 12/31 for
Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1996 1997 1998
---- ---- ----
3.92% 8.59% 5.71%
Best quarter: Q2 19973.44%
Worst quarter: Q1 1996-0.89%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Since Inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Shares 3/31/95 5.43% 6.82%
- --------------------------------------------------------------------------------
Institutional Shares 3/20/95 5.71% 7.07%
- --------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index 3/31/95 6.48% 7.94%
- --------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT INTERMEDIATE TAX-FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income that is exempt from federal income tax
PRINCIPAL INVESTMENT The Fund normally invests at least 80% of its net
STRATEGIES assets in federally tax-exempt obligations. Federally
tax-exempt obligations consist of municipal bonds,
notes and commercial paper issued by states and other
local governments that are exempt from federal taxes.
Securities whose interest is considered a tax
preference item under the federal alternative minimum
tax will be considered taxable for purposes of this
policy. The Fund maintains a dollar-weighted average
portfolio maturity between three and ten years.
The Fund will purchase securities rated in one of the
four highest rating categories by Rating Agencies or
unrated securities of comparable quality.
While maturity and credit quality are the most
important investment factors, the Fund also considers
the following when making investment decisions:
.Current yield and yield to maturity.
.Potential for capital gain.
The Fund may also sell a security if it falls below
the minimum credit quality required for purchase.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities in dex. The Lehman Brothers Three-Year General Obliga-
tion Municipal Bond Index and the Lehman Brothers Five-Year General Obliga tion
Municipal Bond Index are unmanaged indices of debt instruments issued by
municipalities.
Performance Bar Chart and Table Year-by-Year Total Returns as of 12/31 for
Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
8.51% -3.00% 12.90% 3.41% 7.07% 5.37%
Best quarter: Q1 1995 5.42%
Worst quarter: Q1 1994 -3.95%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/18/92 5.09% 4.83% 5.44%
- -------------------------------------------------------------------------------------
Institutional Shares 12/16/92 5.37% 5.04% 5.64%
- -------------------------------------------------------------------------------------
Lehman Brothers Three-Year
General Obligation Municipal
Bond Index 12/31/92 5.17% 4.93% 5.12%
- -------------------------------------------------------------------------------------
Lehman Brothers Five-Year
General Obligation Municipal
Bond Index 12/31/92 5.84% 5.36% 5.88%
- -------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income that is exempt from federal income tax
and Michigan personal income tax
PRINCIPAL INVESTMENT The Fund normally invests at least 80% of its net
STRATEGIES assets in federally tax-exempt obligations. Federally
tax-exempt obligations consist of municipal bonds,
notes and commercial paper issued by states and other
local governments that are exempt from federal taxes.
In addition, under normal market conditions, at least
65% of the Fund's total assets will be invested in
municipal obligations issued by the State of Michigan
or its political subdivisions. The Fund maintains a
dollar-weighted average portfolio maturity between
three and five years. No security in the Fund will
have a remaining maturity of more than ten years.
The Fund will purchase securities rated in one of the
four highest rating categories by Rating Agencies or
unrated securities of comparable quality.
While maturity and credit quality are the most
important investment factors, the Fund also considers
the following when making investment decisions:
.Current yield and yield to maturity.
.Potential for capital gain.
The Fund may also sell a security if it falls below
the minimum credit quality required for purchase.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year and as compared to a
broad-based securities index. The Lehman Brothers Three-Year General Obligation
Municipal Bond Index is an unmanaged index of debt obligations issued by
municipalities.
Performance Bar Chart and Table Year-by-Year Total Returns as of 12/31 for
Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
0.36% 8.20% 3.51% 5.52% 4.75%
Best quarter: Q1 1995 3.01%
Worst quarter: Q1 1994 -1.48%
Past performance does not indicate
how the Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Inception Date Past Year Past 5 Years Since Inception
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 5/11/93 4.60% 4.27% 4.29%
- -----------------------------------------------------------------------------------
Institutional Shares 5/3/93 4.75% 4.43% 4.46%
- -----------------------------------------------------------------------------------
Lehman Brothers Three-Year
General Obligation
Municipal Bond Index 4/30/93 5.17% 4.93% 4.96%
- -----------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS
- --------------------------------------------------------------------------------
Principal Investing in the Municipal Bond Funds involves the
Investment Risks - risks common to any investment in securities. By it-
All Municipal Bond self, no Fund constitutes a balanced investment pro-
Funds gram.
The Municipal Bond Funds will invest primarily in
fixed income securities, which provide income and a
level of protection of capital, but present a lower
potential for capital appreciation than equity secu-
rities.
There is no guarantee that the Funds will meet their
goals. When you sell your shares in the Funds, they
may be worth more or less than you paid for them. It
is possible to lose money by investing in the Funds.
An investment in a Municipal Bond Fund is not a bank
deposit and is not insured or guaranteed by the Fed-
eral Deposit Insurance Corporation or any other gov-
ernment agency.
Two principal risks of fixed income (bond) investing
are market risk and selection risk. Market risk means
that the bond market in general has ups and downs,
which may affect the performance of any individual
fixed income security. Selection risk means that the
particular bonds that are selected for a Fund may
underperform the market or other Funds with similar
objectives.
Interest rate risk
All bonds fluctuate in value as interest rates fluc-
tuate. Generally, as interest rates rise, the value
of a Fund's bond investments will decline, resulting
in capital losses to shareholders. In general, the
shorter the maturity, the lower the risk and the
lower the return.
Credit risk
The Bond Funds can acquire bonds that carry invest-
ment grade credit ratings, which are bonds rated by a
Rating Agency in the four highest rating categories.
Obligations rated in the fourth highest rating cate-
gory are considered to have speculative characteris-
tics. In addition, interest and principal payments on
these securities may not be insured or guaranteed.
An issuer of fixed income securities could default on
its obligations to pay interest and repay principal.
A bond's credit rating could be downgraded. Both of
these events could cause a Fund to lose money.
The types of obligations the Funds generally invest
in are listed below in descending order of credit
quality:
. general obligation bonds, which are backed by the
full faith, credit and taxing power of the munici-
pality
. revenue bonds, which are backed only by revenues
from a particular facility or revenue source
. private activity bonds issued by industrial devel-
opment authorities, which are used to finance pri-
vately owned facilities and which are backed by
private entities. The credit quality of these bonds
is a function of the creditworthiness of the pri-
vate entity.
21
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS, Continued
- --------------------------------------------------------------------------------
. moral obligation securities, which are typically
issued by special purpose public authorities and
are backed by a reserve fund. If the issuer draws
on the reserve fund, the municipality is under no
legal obligation to restore the funds.
Additional Principal Concentration (State) Risk - Michigan Municipal Bond
Investment Risks Fund
Due to the level of investment in municipal obliga-
tions issued by the State of Michigan and its politi-
cal subdivisions, the performance of the Fund will be
closely tied to the economic and political conditions
in the State of Michigan, and, therefore, an invest-
ment in the Fund may be riskier than an investment in
other types of municipal bond funds. The State's
economy is principally dependent upon manufacturing
(particularly automobiles, office equipment and other
durable goods), tourism and agriculture and histori-
cally has been highly cyclical. When a Fund's assets
are concentrated in obligations from revenues of sim-
ilar projects issued by issuers located in the same
state or in industrial development bonds, the Fund
will be subject to the particular risks (including
legal and economic conditions) related to such secu-
rities to a greater extent than if its assets were
not so concentrated.
Who May Want to
Invest? Consider investing in a Municipal Bond Fund if you
are:
.seeking to add a monthly income component to your
portfolio
.seeking higher potential returns than those provided
by money market funds
.willing to accept the risks of price and dividend
fluctuations
.seeking current income that is exempt from federal
income taxes (and, in the case of the Michigan
Municipal Bond Fund, current income that is exempt
from Michigan personal income taxes)
.willing to receive dividend distributions a portion
of which may be subject to the federal alternative
minimum tax
The Municipal Bond Funds are not appropriate for:
.tax-exempt institutions and certain retirement plans
that are unable to benefit from the receipt of tax-
exempt dividends
.anyone seeking safety of principal
22
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE MICHIGAN MUNICIPAL
INCOME FUND TAX-FREE FUND BOND FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales (Load) Charge Imposed on Purchases None None None None None None
Annual Fund Operating Expenses (expenses that
are deducted from Fund assets) 0.55% 0.55% 0.50% 0.50% 0.45% 0.45%
Management Fees
Distribution (12b-1) Fees/4/ 0.25% None 0.25% None 0.25%/3/ None
Other Expenses 0.27%/1/ 0.27%/1/ 0.24%/2/ 0.24%/2/ 0.25%/3/ 0.25%/3/
----- ----- ----- ----- ----- -----
Total Annual Fund Operating Expenses 1.07%/1/ 0.82%/1/ 0.99%/2/ 0.74%/2/ 0.95%/3/ 0.70%/3/
Fee Waiver 0.01%/1/ 0.01%/1/ 0.01%/2/ 0.01%/2/ 0.11%/3/ 0.01%/3/
----- ----- ----- ----- ----- -----
Net Annual Fund Operating Expenses 1.06%/1/ 0.81%/1/ 0.98%/2/ 0.73%/2/ 0.84%/3/ 0.69%/3/
===== ===== ===== ===== ===== =====
</TABLE>
1 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.26% for each class. You will be notified if the waiver
is discontinued after that date.
2 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.23% for each class. You will be notified if the waiver
is discontinued after that date.
3 The Fund's Distributor has contractually agreed to waive a portion of the
Fund's 12b-1 fees for Investment Shares at least until December 31, 1999.
In addition, the Fund's Administrator has contractually agreed to waive a
portion of the administration fee at least until December 31, 1999.
Accordingly, Distribution Fees would be 0.15% for the Investment Shares,
and Other Expenses would be 0.24%, for the Investment Shares and
Institutional Shares. You will be notified if either of these waivers is
discontinued after that date.
4 Investors should be aware that, due to the distribution fees, a long term
shareowner in a Fund may pay over time more than the economic equivalent of
the maximum front-end sales charge permitted under the rules of the
National Association of Securities Dealers, Inc.
Example: This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The Example as-
sumes:
. $10,000 investment
. 5% annual return
. redemption at the end of each period
. no changes in the Fund's operating expenses, except for the expiration of
the current contractual fee waivers on December 31, 1999
Although your actual costs may be higher or lower, based upon these assump-
tions, your cost would be:
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE MICHIGAN MUNICIPAL
INCOME FUND TAX-FREE FUND BOND FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
One Year
After Purchase $ 108 $ 83 $ 100 $ 75 $ 86 $ 70
Three Years
After Purchase $ 339 $ 261 $ 314 $236 $ 292 $223
Five Years
After Purchase $ 589 $ 454 $ 546 $410 $ 515 $389
Ten Years
After Purchase $1,305 $1,013 $1,212 $917 $1,156 $870
</TABLE>
23
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES--MONEY MARKET FUNDS
KENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income.
PRINCIPAL INVESTMENT The Fund invests in a broad range of U.S. Gov-
STRATEGIES ernment, bank and commercial obligations which
are considered to be of high credit quality and
easily sold in the secondary market. These se-
curities will have short term debt ratings in
the two highest rating categories of at least
two Rating Agencies or will be unrated securi-
ties of comparable quality. The Fund's dollar-
weighted average portfolio maturity will not
exceed 90 days. The Fund will not purchase any
security which matures in more than 397 days.
The Fund seeks to maintain a stable net asset
value of $1.00 per share, although there is no
guarantee that the net asset value will not
vary.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an invest-ment in
the Fund by show-ing its performance from year to year.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and distribu-
tions.)
The returns for Invest-ment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because ex-penses of the classes differ.
[BAR CHART APPEARS HERE]
1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ----
5.65% 3.40% 2.68% 3.75% 5.58% 5.06% 5.23% 5.13%
Best quarter: Q1 19911.56%
Worst quarter: Q4 19930.55%
Past performance does not indicate how the Fund
will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Class Inception Past Year Past 5 Years Since Inception
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/9/92 5.13% 4.94% 4.48%
- ------------------------------------------------------------------------------
Institutional Shares 12/3/90 5.13% 4.95% 4.58%
- ------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income.
PRINCIPAL INVESTMENT The Fund invests in a broad range of U.S. Treasury
STRATEGIES bills and notes and other obligations issued by the
U.S. Government and its agencies, repurchase agree-
ments based on these securities and shares of regis-
tered money market investment companies that invest
exclusively in these securities. The Fund's dollar-
weighted average portfolio maturity will not exceed
90 days. The Fund will not purchase any security
which matures in more than 397 days. The Fund seeks
to maintain a stable net asset value of $1.00 per
share, although there is no guarantee that the net
asset value per share will not vary.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance for its first full fiscal year.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and
distributions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1998
----
5.17%
Best quarter: Q3 1998 1.30%
Worst quarter: Q4 1998 1.21%
Past performance does not indicate how the Fund
will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Class Inception Past Year Since Inception
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Shares 6/2/97 5.17% 5.23%
- -------------------------------------------------------------------------------------
Institutional Shares 6/2/97 5.17% 5.25%
- -------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
KENT MICHIGAN MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Current income that is exempt from federal income tax
and Michigan personal income tax.
PRINCIPAL INVESTMENT The Fund normally invests at least 80% of its net as-
STRATEGIES sets in federally tax-exempt obligations, which con-
sist of municipal bonds, notes and commercial paper
issued by states and local governments that are ex-
empt from federal taxes. The securities will have
short term debt ratings in the two highest rating
categories of at least two Rating Agencies or will be
unrated securities of comparable quality. Normally,
the Fund will invest at least 65% of its total assets
in municipal obligations issued by the State of Mich-
igan and its localities. The Fund's dollar-weighted
average portfolio maturity will not exceed 90 days.
The Fund will not purchase any security which matures
in more than 397 days. The Fund seeks to maintain a
stable net asset value of $1.00 per share, although
there is no guarantee that the net asset value will
not vary.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing its performance from year to year.
Performance Bar Chart and Table
Year-by-Year Total Returns as of 12/31 for Institutional Shares
(Both the chart and the table assume reinvestment of dividends and
distributions.)
The returns for Investment Shares will be lower than the Institutional Shares'
returns shown in the bar chart because expenses of the classes differ.
[BAR CHART APPEARS HERE]
1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ----
2.63% 2.00% 2.40% 3.50% 3.11% 3.31% 3.06%
Best quarter: Q4 1995 0.90%
Worst quarter: Q4 1993 0.40%
Past performance does not indicate how the
Fund will perform in the future.
Average Annual Total Returns (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Class Inception Past Year Past 5 Years Since Inception
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Shares 12/15/92 3.06% 3.07% 2.83%
- ------------------------------------------------------------------------------
Institutional Shares 6/3/91 3.06% 3.07% 2.94%
- ------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS
- --------------------------------------------------------------------------------
Principal Investment Investing in the Money Market Funds involves the
Risks - risks common to any investing in securities. By it-
All Money Market Funds self, no Fund constitutes a balanced investment pro-
gram.
An investment in a Money Market Fund is not a bank
deposit and is not insured or guaranteed by the Fed-
eral Deposit Insurance Corporation or any other gov-
ernment agency.
The Money Market Funds expect to maintain a net asset
value of $1.00 per share, but there is no assurance
that they will be able to do so on a continuous ba-
sis.
There can be no assurance that the investment objec-
tives of each Money Market Fund will be achieved.
Market Risk and Selection Risk
The Funds' performance per share will change daily
based on many factors, including fluctuation in in-
terest rates, the quality of the instruments in each
Fund's investment portfolio, national and interna-
tional economic conditions and general market condi-
tions.
Credit Risk
The Money Market Funds may also be subject to credit
risks. Therefore, they could lose money if the issuer
of a security is unable to meet its financial obliga-
tions.
Additional Principal Concentration (State) Risk - Michigan Municipal Money
Investment Risks Market Fund
Due to the level of investment in municipal obliga-
tions issued by the State of Michigan and its local
governments, the performance of the Michigan Munici-
pal Money Market Fund will be closely tied to the
economic and political conditions in the State of
Michigan, and, therefore, an investment in the Fund
may be riskier than an investment in other types of
money market funds. The State's economy is princi-
pally dependent upon manufacturing (particularly au-
tomobiles, office equipment and other durable goods),
tourism and agriculture and historically has been
highly cyclical. The Michigan Municipal Money Market
Fund may also be subject to credit risks of municipal
issuers which may have historically experienced peri-
ods of financial difficulties. When a Fund's assets
are concentrated in obligations from revenues of sim-
ilar projects issued by issuers located in the same
state or in industrial development bonds, the Fund
will be subject to the particular risks (including
legal and economic conditions) related to such secu-
rities to a greater extent than if its assets were
not so concentrated.
Who May Want to
Invest? Consider investing in a Money Market Fund if you:
.are seeking preservation of capital
.have a low risk tolerance
.are willing to accept lower potential returns in
exchange for a high degree of safety
.are investing short-term reserves
.(in the case of the Michigan Municipal Money Market
Fund) are seeking current income exempt from federal
income taxes and Michigan state personal income
taxes
27
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
PRINCIPAL RISKS, Continued
- --------------------------------------------------------------------------------
The Money Market Funds will not be appropriate for
anyone:
.seeking high total returns
.pursuing a long-term goal or investing for
retirement
The Michigan Municipal Money Market Fund will not be
appropriate for:
.tax-exempt institutions and certain retirement plans
that are unable to benefit from the receipt of tax-
exempt dividends
.residents of states other than Michigan that are
unable to benefit from the receipt of dividends
exempt from Michigan personal income taxes
28
<PAGE>
RISK/RETURN SUMMARY AND FUND EXPENSES
FEES AND EXPENSES
- --------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
MONEY GOVERNMENT MONEY MICHIGAN MUNICIPAL
MARKET FUND MARKET FUND MONEY MARKET FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from your
investment)
Maximum Sales (Load) Charge Imposed on Purchases None None None None None None
Annual Fund Operating Expenses (expenses that
are deducted from Fund assets)
Management Fees 0.40% 0.40% 0.40%/2/ 0.40%/2/ 0.40% 0.40%
Distribution (12b-1) Fees/4/ None None None None None None
Other Expenses 0.24%/1/ 0.24%/1/ 0.29%/2/ 0.29%/2/ 0.24%/3/ 0.24%/3/
----- ----- ----- ----- ----- -----
Total Annual Fund Operating Expenses 0.64%/1/ 0.64%/1/ 0.69%/2/ 0.69%/2/ 0.64%/3/ 0.64%/3/
Fee Waiver 0.09%/1/ 0.09%/1/ 0.31%/2/ 0.31%/2/ 0.10%/3/ 0.10%/3/
----- ----- ----- ----- ----- -----
Net Annual Fund Operating Expenses 0.55%/1/ 0.55%/1/ 0.38%/2/ 0.38%/2/ 0.54%/3/ 0.54%/3/
===== ===== ===== ===== ===== =====
</TABLE>
1 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.15% for both classes. You will be notified if the
waiver is discontinued after that date.
2 The Fund's Investment Adviser and its Administrator have contractually
agreed to waive a portion of their investment advisory and administration
fees at least until December 31, 1999. As a result, Management Fees would
be 0.20% and Other Expenses would be 0.18% for both classes. You will be
notified if either of these waivers is discontinued after that date.
3 The Fund's Administrator has contractually agreed to waive a portion of the
administration fee at least until December 31, 1999. As a result, Other
Expenses would be 0.14% for both classes. You will be notified if the
waiver is discontinued after that date.
4 Investors should be aware that, due to the distribution fees, a long term
shareowner in a Fund may pay over time more than the economic equivalent of
the maximum front-end sales charge permitted under the rules of the
National Association of Securities Dealers, Inc.
Example: This Example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The Example as-
sumes:
. $10,000 investment
. 5% annual return
. redemption at the end of each period
. no changes in the Fund's operating expenses, except for the expiration of
the current contractual fee waivers on December 31, 1999
Although your actual costs may be higher or lower, based upon these assump-
tions, your costs would be:
<TABLE>
<CAPTION>
MONEY GOVERNMENT MICHIGAN MUNICIPAL
MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
Investment Institutional Investment Institutional Investment Institutional
Shares Shares Shares Shares Shares Shares
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
One Year
After Purchase $ 56 $ 56 $ 39 $ 39 $ 55 $ 55
Three Years
After Purchase $196 $196 $190 $190 $195 $195
Five Years
After Purchase $348 $348 $353 $353 $347 $347
Ten Years
After Purchase $790 $790 $829 $829 $789 $789
</TABLE>
29
<PAGE>
ADDITIONAL INFORMATION
Investing for
Defensive Purposes When Lyon Street determines that market conditions
are appropriate, each of the Equity, Bond and Munici-
pal Bond Funds may, for temporary defensive purposes,
invest up to 100% of its assets in money market in-
struments. Each of the Bond and Municipal Bond Funds
may also shorten its dollar-weighted average maturity
below its normal range if such action is deemed ap-
propriate by Lyon Street for temporary defensive pur-
poses. In addition, the Michigan Municipal Bond Fund
may invest up to 100% of its total assets for tempo-
rary defensive purposes in municipal bonds the income
on which is exempt from federal income tax but not
exempt from Michigan personal income taxes. The Mich-
igan Municipal Money Market Fund may, for temporary
defensive purposes, hold uninvested cash reserves or
invest in short-term taxable money market obligations
in such proportions as, in the opinion of Lyon
Street, prevailing market or economic conditions war-
rant. If a Fund is investing defensively, it will not
be pursuing its investment objective.
Year 2000 and the Like other funds and business organizations around
Kent Funds the world, the Fund could be adversely affected if
the computer systems used by the Adviser and the
Fund's other service providers do not properly proc-
ess and calculate date-related information for the
year 2000 and beyond. In addition, year 2000 issues
may adversely affect companies in which the Funds in-
vest where, for example, such companies incur sub-
stantial costs to address year 2000 issues or suffer
losses caused by the failure to adequately or timely
do so.
The Funds have been assured that the Adviser and
other service providers have developed and are imple-
menting clearly defined and documented plans intended
to minimize risks to services critical to the Funds'
operations associated with year 2000 issues. Internal
efforts include a commitment to dedicate adequate
staff and funding to identify and remedy year 2000
issues, and specific actions such as inventorying
software systems, determining inventory items that
may not function properly after December 31, 1999,
reprogramming or replacing such systems, and retest-
ing for year 2000 readiness. The Adviser and the
Funds' service providers are likewise seeking assur-
ances from their respective vendors and suppliers
that such entities are addressing any year 2000 is-
sues, and each provider intends to engage, where ap-
propriate, in private and/or industry interface test-
ing of systems for year 2000 readiness.
In the event that any systems upon which the Funds
are dependent are not year 2000 ready by December 31,
1999, administrative errors and account maintenance
failure would like occur.
While the ultimate costs or consequences of incom-
plete or untimely resolution of year 2000 issues by
the Adviser or the Funds' service providers cannot be
accurately assessed at this time, the Fund currently
has no reason to believe that the year 2000 plans of
the Adviser and the Funds' service providers will not
be completed by December 31, 1999, or that the antic-
ipated costs associated with full implementation of
their plans will have a material adverse impact on
either their business operations or financial condi-
tions or those of the Funds. The Funds and the Ad-
viser will continue to closely monitor developments
relating to this issue, including development by the
Adviser and the Funds' service providers of contin-
gency plans for providing back-up computer services
in the event of a systems failure or the inability of
any provider to achieve year 2000 readiness. Sepa-
rately, the Adviser will monitor potential investment
risk related to year 2000 issues.
30
<PAGE>
FUND MANAGEMENT
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
The Funds are advised by Lyon Street, a wholly owned subsidiary of Old Kent
Bank. Lyon Street maintains offices at 111 Lyon Street, NW, Grand Rapids, Mich-
igan 49503. Old Kent Bank is a wholly owned subsidiary of Old Kent Financial
Corporation, which is a financial services company with total assets as of De-
cember 31, 1998 of approximately $16.6 billion. The Investment Management Group
("IMG") at Lyon Street has managed the Kent Funds since their inception. Prior
to 1998, IMG managed the Funds as a division of Old Kent Bank. Old Kent Bank
has managed the financial assets of individual and institutional investors for
over 100 years. Lyon Street employs an experienced staff of professional in-
vestment analysts, portfolio managers and traders, and uses several proprietary
computer-based systems in conjunction with fundamental analysis to identify
investment opportunities.
For these advisory services, the Funds paid fees as follows during the fiscal
year ended December 31, 1998:
<TABLE>
<CAPTION>
As a percentage of
average net assets
as of 12 /31/98
- -----------------------------------------------------------
<S> <C>
Growth and Income Fund 0.70%
- -----------------------------------------------------------
Index Equity Fund 0.25%*
- -----------------------------------------------------------
Large Company Growth Fund N/A**
- -----------------------------------------------------------
Small Company Growth Fund 0.70%
- -----------------------------------------------------------
International Growth Fund 0.75%
- -----------------------------------------------------------
Income Fund 0.60%
- -----------------------------------------------------------
Intermediate Bond Fund 0.55%
- -----------------------------------------------------------
Short Term Bond Fund 0.50%
- -----------------------------------------------------------
Tax-Free Income Fund 0.55%
- -----------------------------------------------------------
Intermediate Tax-Free Fund 0.50%
- -----------------------------------------------------------
Michigan Municipal Bond Fund 0.45%
- -----------------------------------------------------------
Money Market Fund 0.40%
- -----------------------------------------------------------
Government Money Market Fund 0.20%*
- -----------------------------------------------------------
Michigan Municipal Money Market Fund 0.40%
</TABLE>
*Lyon Street waived a portion of its contractual fees for these Funds for the
most recent fiscal year. Contractual fees (without waivers) are 0.30% for the
Index Equity Fund and 0.40% for the Government Money Market Fund.
**The Large Company Growth Fund was not operational during the fiscal year
ended December 31, 1998. Contractual investment advisory fees for the Fund are
0.70%.
31
<PAGE>
FUND MANAGEMENT
PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
Lyon Street has several portfolio managers committed to the day-to-day manage-
ment of the Funds:
<TABLE>
<CAPTION>
Manager Fund Experience
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Joseph T. Keating, Mr. Keating is responsible for . Mr. Keating has over twenty-two
President and Chief developing and implementing the years of portfolio management
Investment Officer Funds' investment policies. experience, including eleven years
at Lyon Street with IMG
- ---------------------------------------------------------------------------------------------------
Allan J. Meyers, CFA, Mr. Meyers is portfolio manager for . Mr. Meyers has over twenty-three
Chief Equity Officer the Growth and Income Fund and the years of portfolio management
at Lyon Street Large Company Growth Fund. Mr. Meyers experience, including fourteen
has been portfolio manager for the years with IMG.
Growth and Income Fund since November
10, 1997.
- ---------------------------------------------------------------------------------------------------
David C. Eder, Mr. Eder has been co-portfolio . Mr. Eder has over six years of
Director of manager of the Index Equity Fund and portfolio management experience
Structured Equity International Growth Fund since with IMG.
Management at Lyon January 1995.
Street
- ---------------------------------------------------------------------------------------------------
Brian J. Smolinski, Mr. Smolinski has been co-portfolio . Prior to joining IMG in June 1998,
Investment Officer manager for the Index Equity Fund, Mr. Smolinski worked as an
and International Growth Funds since Applications Business Analyst at
June 1998. Old Kent Bank for nine years.
Mr. Smolinski is also responsible for
developing and maintaining
proprietary software that is used in
researching structured equity
investments.
- ---------------------------------------------------------------------------------------------------
Robert Cummisford, Mr. Cummisford is portfolio manager . Mr. Cummisford has over six years
CFA, Director of for the Small Company Growth Fund. of portfolio management
Small Company Stock experience, including over two
Management years with IMG.
at Lyon Street .Prior to joining Old Kent, he was
a Senior Consultant with Ibbotson
Associates.
- ---------------------------------------------------------------------------------------------------
Mitchell L. Stapley, Mr. Stapley is the portfolio manager . He has over fifteen years of
CFA, Chief Fixed of the Income Fund and Intermediate portfolio management experience,
Income Officer Bond Fund, which he has managed since including eleven years with IMG.
at Lyon Street their inception, and the Short Term
Bond Fund, which he has managed since
November 1996.
- ---------------------------------------------------------------------------------------------------
Michael J. Martin, Mr. Martin is co-portfolio manager . Mr. Martin has over seven years of
CFA, Director of Tax- for each of the Municipal Bond Funds experience at Old Kent, including
Free Fixed Income and is responsible for their day-to- four years of portfolio management
Management day management. Mr. Martin has experience with IMG.
at Lyon Street managed the Tax-Free Income Fund and .Prior to IMG, Mr. Martin was an
Intermediate Tax-Free Fund since Analyst of Special Assets at Old
November 10, 1997. He has been co- Kent.
portfolio manager for the Michigan
Municipal Bond Fund since January
1995.
- ---------------------------------------------------------------------------------------------------
Sarah M. Quirk, Ms. Quirk has been co-portfolio . Prior to joining Lyon Street, she
Investment Officer manager for each of the Municipal was a Retail Trader-Fixed Income
Bond Funds since May 1, 1998. Securities at Tucker Anthony, Inc.
</TABLE>
The Statement of Additional Information has more detailed information about
Lyon Street and the Funds' other service providers.
- --------------------------------------------------------------------------------
DISTRIBUTOR, ADMINISTRATOR AND SUB-ADMINISTRATOR
BISYS Fund Services ("BISYS") provides management and administrative services
to the Funds, including providing office space, equipment and clerical
personnel to the Funds and supervising custodial, auditing, valuation,
bookkeeping and legal services. BISYS is also the distributor of the Funds'
shares. BISYS Fund Services, Inc., an affiliate of BISYS, acts as the fund
accountant, transfer agent and dividend paying agent of the Funds. BISYS and
BISYS Fund Services, Inc. are each located at 3435 Stelzer Road, Columbus, Ohio
43219.
Old Kent provides certain administrative services to the Funds pursuant to a
Sub-Administration Agreement between Old Kent and BISYS. BISYS has agreed to
pay 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 paid to Old Kent by
BISYS for such administrative services come out of BISYS' administration fees
and are not an additional charge to the Funds.
32
<PAGE>
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
How NAV is Money Market Funds
Calculated
The NAV is Each Money Market Fund's net asset value, or NAV, is
calculated by adding expected to be constant at $1.00 per share, although
the total value of a this value is not guaranteed. The NAV is determined
Fund's invest- ments at 12 noon Eastern time for the Michigan Municipal
and other assets, Money Market Fund and at 2:00 p.m. Eastern time for
subtracting its the Money Market Fund and Government Money Market
liabilities and then Fund on days the New York Stock Exchange is open.
dividing that figure The Money Market Funds value their securities at
by the number of their amortized cost. The amortized cost method in-
outstanding shares volves valuing a portfolio security initially at its
of the Fund: cost on the date of the purchase and thereafter as-
suming a constant amortization to maturity of the
difference between the principal amount due at matu-
rity and initial cost.
- ----------------------------
NAV =
Total Assets - Liabilities
--------------------------
Number of Shares
Outstanding
- ----------------------------
Other Funds
1. NAV is calculated The per share NAV for each non-Money Market Fund is
separately for determined and its shares are priced at the close of
the Investment regular trading on the New York Stock Exchange, nor-
Shares and the mally at 4:00 p.m. Eastern time, on days the Ex-
Institutional change is open.
Shares.
2. You can find most
Funds' NAV daily Your order for purchase, sale or exchange of shares
in The Wall is priced at the next NAV calculated after your or-
Street Journal der is received in good order by the Fund on any day
and in that both the New York Stock Exchange and the Funds'
other newspapers. custodian are open for business. For example: If you
place a purchase order to buy shares of the Income
Fund, it must be received by 4:00 p.m. Eastern time
in order to receive the NAV calculated at 4:00 p.m.
Eastern time. If your order is received after 4:00
p.m. Eastern time, you will receive the NAV calcu-
lated on the next day at 4:00 p.m. Eastern time.
The non-Money Market Funds' securities, other than
short-term debt obligations, are generally valued at
current market prices unless market quotations are
not available, in which case securities will be val-
ued by a method that the Board of Trustees believes
accurately reflects fair value. Debt obligations
with remaining maturities of 60 days or less are
valued at amortized cost or based on their acquisi-
tion cost.
33
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
- --------------------------------------------------------------------------------
Purchasing and Adding To Your Shares
You may purchase shares of the Funds through the Funds' Distributor or through
banks, brokers and other investment representatives, which may charge addi-
tional fees and may require higher minimum investments or impose other limita-
tions on buying and selling shares. If you purchase shares through an invest-
ment representative, that party is responsible for transmitting orders by close
of business and may have an earlier cut-off time for purchase and sale re-
quests. Consult your investment representative or institution for specific in-
formation.
- --------------------------------------------------------------------------------
Minimum Minimum
Account type Initial Investment* Subsequent Investment
.Non-retirement accounts 1,000 None
.Retirement accounts $ 100 None
.Automatic investment plans $ 1,000 $50
- --------------------------------------------------------------------------------
. All purchases must be in U.S. dollars.
. A fee will be charged for any checks that do not clear.
. Third-party checks are not accepted.
. Investment Shares of certain Funds may be purchased through IRAs and Rollover
IRAs, which are available through the Kent Funds.
. For details and application forms, call 1-800-633-KENT (5368) or write to:
Kent Funds, PO Box 182201, Columbus, OH 43218-2201.
A Fund may waive its minimum investment requirements and the Distributor may
reject a purchase order if it considers it in the best interests of the Funds
and their shareholders.
*Minimum initial investments may be waived for Lyon Street and Old Kent
employees, investors in tax-sheltered plans, and investors in certain qualified
retirement accounts.
- --------------------------------------------------------------------------------
Avoid 31% Tax Withholding
Each Fund is required to withhold 31% of taxable dividends, capital gains dis-
tributions and redemptions paid to shareholders who have not provided the Fund
with their certified taxpayer identification number in compliance with IRS
rules. To avoid this, make sure you provide your correct Tax Identification
Number (Social Security Number for most investors) on your account application.
- --------------------------------------------------------------------------------
34
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
- --------------------------------------------------------------------------------
Instructions for Opening or Adding to an Account (For Institutional Shares, see
"Purchasing and Selling Your Institutional Shares")
By Regular Mail or Overnight Service
Initial Investment:
If purchasing through your financial adviser or broker, simply tell your ad-
viser or broker that you wish to purchase shares of the Funds and he or she
will take care of the necessary documentation. For all other purchases, follow
the instructions below.
1. Carefully read and complete the application. Establishing your account
privileges now saves you the inconvenience of having to add them later.
2. Make check, bank draft or money order payable to the "Kent Funds" and
include the name of the appropriate Fund(s) on the check.
3. Send by regular mail to: Kent Funds, P.O. Box 182201, Columbus, OH 43218-
2201. If by overnight service, send to: Kent Funds, c/o BISYS Fund Services,
Attn: T.A. Operations, 3435 Stelzer Road, Columbus, OH 43219.
Subsequent Investments:
1. Use the investment slip attached to your account statement, or, if
unavailable, include the following information in writing:
.Fund name
.Share class
.Amount invested
.Account name
.Account number
Include your account number on your check.
2. Make check, bank draft or money order payable to the "Kent Funds."
3. If by regular mail to: Kent Funds, P.O. Box 182201, Columbus, OH 43218-2201.
If by overnight service, send to: Kent Funds, c/o BISYS Fund Services, Attn:
T.A. Operations, 3435 Stelzer Road, Columbus, OH 43219.
Electronic Purchases
Your bank must participate in the Automated Clearing House (ACH) and must be a
U.S. bank. Your bank or broker may charge for this service.
Establish electronic purchase option on your account application or call 1-800-
633-KENT (5368). Your account can generally be set up for electronic purchases
within 15 days.
Call 1-800-633-KENT (5368) to arrange a transfer from your bank account.
35
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
- --------------------------------------------------------------------------------
------------------------------------------------------------
Electronic vs. Wire Transfer
Wire transfers allow financial institutions to send funds
to each other, almost instantaneously. With an electronic
purchase or sale, the transaction is made through the
Automated Clearing House (ACH). ACH transactions usually
clear within 2 to 3 days, but may take up to 8 days.
There is generally no fee for ACH transactions.
------------------------------------------------------------
By Wire Transfer
For Initial Investments: Call 1-800-633-KENT (5368) for a confirmation number
and instructions for returning your completed application.
For Initial and Subsequent Investments:
Instruct your bank to wire transfer your investment to:
Name of Bank: The Bank of New York
Routing Number: ABA #021000018
DDA# 8900375507
Include:
Your name
Your confirmation number
After instructing your bank to wire the funds, call 1-800-633-KENT (5368) to
advise us of the amount being transferred and the name of your bank.
Note: Your bank may charge a wire transfer fee.
- --------------------------------------------------------------------------------
You can add to your account by using the convenient options described below.
The Funds reserve the right to change or eliminate these privileges at any
time with 60 days' notice.
- --------------------------------------------------------------------------------
36
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
- --------------------------------------------------------------------------------
Automatic Investment Plan
(Investment Shares Only)
You can make automatic investments in the Funds from your bank account, through
payroll deduction or from your federal employment, Social Security Supplemental
Security Income, or other regular government checks. Automatic investments can
be as little as $50, once you've invested the $1,000 minimum required to open
the account. Make sure you note:
To invest regularly from your bank account:
. Complete the Automatic Investment Plan portion on your Account Application.
.Your bank name, address and account number
.The amount you wish to invest automatically (minimum $50)
.How often you want to invest (every month, 4 times a year, twice a year
or once a year)
. Attach a voided personal check.
To invest regularly from your paycheck or government check:
Call 1-800-633-KENT (5368) for an enrollment form.
- --------------------------------------------------------------------------------
Directed Dividend Option
(Investment Shares Only)
By selecting the appropriate box in the Account Application, you can elect to
receive your distributions in cash (check) or have distributions (capital gains
and dividends) reinvested in another Kent Fund. You must maintain the minimum
balance in each Fund into which you plan to reinvest dividends or the
reinvestment will be suspended and your dividends will be paid to you. The Funds
may modify or terminate this reinvestment option without notice. You can change
or terminate your participation in the reinvestment option at any time.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dividends and Distributions
All dividends and distributions will be automatically reinvested unless you re-
quest otherwise. You can receive them in cash or by electronic funds transfer
to your bank account if you are not a participant in an IRA account or in a
tax-qualified plan. Dividends are higher for Institutional Shares than for In-
vestment Shares, because Institutional Shares have lower distribution expenses.
Capital gains are distributed at least annually.
Distributions are made on a per share basis regardless of how long you've owned
your shares. Therefore, if you invest shortly before the distribution date,
some of your investment will be returned to you in the form of a taxable
distribution.
37
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
- --------------------------------------------------------------------------------
Instructions for selling shares
- --------------------------------------------------------------------------------
WITHDRAWING MONEY FROM YOUR FUND ACCOUNT
You may sell your shares at any time the New York Stock Exchange and custodian
are open for business. Your sales price will be the next NAV after your sell
order is received by the Kent Funds, the Funds' transfer agent, or your
investment representative. Normally you will receive your proceeds within a week
after your request is received. See section on "General Policies on Selling
Shares" below.
- --------------------------------------------------------------------------------
As a mutual fund shareholder, you are technically selling shares when you
request a withdrawal in cash. This is also known as redeeming shares or a
redemption of shares. If you intend to redeem shares worth more than $1,000,000,
you should notify the Funds at least one day in advance.
- --------------------------------------------------------------------------------
If selling shares through your financial adviser or broker, ask him or her for
redemption procedures. Your adviser and/or broker may have transaction minimums
and/or transaction times which will affect your redemption. For all other sales
transactions, follow the instructions on the following page.
38
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INVESTMENT SHARES
WITHDRAWING MONEY FROM YOUR FUND ACCOUNT
- --------------------------------------------------------------------------------
By telephone You can redeem up to $50,000 worth of Investment Shares
(unless you by calling 1-800-633-KENT (5368). If the amount redeemed
have declined is less than $2,500, then a check will be mailed to you
telephone sales and if equal to or greater than $2,500, then the
privileges) proceeds will be mailed or sent by wire or electronic
funds transfer to the bank listed on your account
application.
- --------------------------------------------------------------------------------
By mail 1.Call 1-800-633-KENT (5368) to request redemption forms
or write a letter of instruction indicating:
(See "General .your Fund and your account number
Policies on .amount you wish to redeem
Selling .address where your check should be sent
Shares - When .account owner signature
Written Redemp- If you have a stock certificate, you must sign on the
tion Requests back and send it to the Kent Funds.*
are Required"
below.)
2.Mail to:
*Signatures on Kent Funds
stock
certificates P.O. Box 182201
must be Columbus, OH 43218-2201
guaranteed if
the amount
is greater than
$50,000 or your
address has
changed within
the last 3
months. See
"General
Policies on
Selling Shares"
for instructions
regarding
signature
guarantees.
- --------------------------------------------------------------------------------
By overnight service See instruction 1 above.
Send to:
Kent Funds
c/o BISYS Fund Services
Attn: T.A. Operations
3435 Stelzer Road
Columbus, OH 43219
- --------------------------------------------------------------------------------
Wire Transfer Call 1-800-633-KENT (5368) to request a wire transfer.
You must If you call by 4 p.m. Eastern time, your payment will
indicate this normally be wired to your bank on the next business day.
option on your
application.
The Funds may
charge a wire
transfer fee.
Note: Your
financial
institution may
also charge a
separate fee.
- --------------------------------------------------------------------------------
Electronic Redemptions Call 1-800-633-KENT (5368) to request an electronic
Your bank must redemption.
participate in
the Automated
Clearing House If you call by 4 p.m. Eastern time, the NAV of your
(ACH) and must shares will normally be determined on the same day and
be a U.S. bank. the proceeds will be credited within 8 days.
Your bank may
charge for this
service.
- --------------------------------------------------------------------------------
Automatic Withdrawal Plan
You can receive automatic payments from your account on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $100 and no more than
1.5% per month when your Automatic Withdrawal Plan was started. To activate
this feature:
. Make sure you've checked the appropriate box on the Account Application or
call 1-800-633-KENT (5368).
. Include a voided personal check.
. Your account must have a value of $10,000 or more to start automatic
redemptions of Investment Shares.
. If the value of your account falls below $1,000, you may be asked to add
sufficient funds to bring the account back to $1,000, or the Funds may close
your account and mail the proceeds to you.
39
<PAGE>
SHAREHOLDER INFORMATION
PURCHASING AND SELLING YOUR INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
Instructions for Accounts To Sell Shares
Choose from which Fund you wish to sell
your shares.
To Open An Account
To open an account, call 1- You can sell Institutional Shares by mail, by
800-633-KENT (5368) to telephone or through a broker by following
obtain an account or wire the procedures described for Investment
identification number and Shares. We will send your Institutional Share
to place an order.* proceeds by wire in federal funds to your
commercial bank. To change the bank account,
Each Fund's minimum initial you should call the Funds at 1-800-633-KENT
investment amount for (5368).
Institutional Shares is
$100,000. Subsequent
investments may be made in
any amount.
- --------------------------------------------------------------------------------
*Your purchase of Institutional Shares will not be completed until the Funds
receive the actual purchase proceeds by wire transfer. Banks may charge for
wiring federal funds.
GENERAL POLICIES ON SELLING SHARES
- --------------------------------------------------------------------------------
When Written Redemption Requests are Required
You must request redemptions in writing in the following situations:
1.Redemptions from Individual Retirement Accounts ("IRAs").
2.Redemption requests requiring a signature guarantee, which include each of
the following:
.Redemptions over $50,000
.The account address has changed within the last 90 days
.The check is not being mailed to the address on your account
.The check is not being made payable to the owner of the account
.The redemption proceeds are being transferred to another Fund account with
a different registration.
Signature guarantees can be obtained from a U.S. stock exchange member, a U.S.
commercial bank or trust company, or any other financial institution that is a
member of the STAMP (Securities Transfer Agents Medallion Program), MSP (New
York Stock Exchange Medallion Signature Program) or SEMP (Stock Exchanges Me-
dallion Program) or is approved by the Kent Funds.
Verifying Telephone Redemptions
The Funds make every effort to ensure that telephone redemptions are only made
by authorized shareholders. All telephone calls are recorded for your protec-
tion and you will be asked for information to verify your identity. Given these
precautions, unless you have specifically indicated on your application that
you do not want the telephone redemption feature, you may be responsible for
any fraudulent telephone orders.
Redemptions Within 10 Days of Investment
When you have made your investment by check, you cannot redeem any portion of
it until the Transfer Agent is satisfied that the check has cleared (which may
require up to 10 business days). You can avoid this delay by purchasing shares
with a certified check.
40
<PAGE>
SHAREHOLDER INFORMATION
GENERAL POLICIES ON SELLING SHARES
- --------------------------------------------------------------------------------
Refusal of Redemption Request
The Funds may postpone payment for shares at times when the New York Stock Ex-
change is closed or under any emergency circumstances as determined by the U.S.
Securities and Exchange Commission. If you experience difficulty making a tele-
phone redemption during periods of drastic economic or market change, you can
send the Funds your request by regular or express mail. Follow the instructions
above under "Withdrawing Money From Your Fund Account--By Mail" in this sec-
tion.
Redemption In Kind
The Funds reserve the right to make payment in securities rather than cash,
known as a "redemption in kind." This could occur under extraordinary circum-
stances, such as a very large redemption that could affect Fund operations (for
example, more than 1% of a Fund's net assets). If the Funds deem it advisable
for the benefit of all shareholders, a redemption in kind will consist of secu-
rities equal in market value to your shares. When you convert these securities
to cash, you will pay brokerage charges.
Closing of Small Accounts
If your account falls below $1,000 ($100 for IRA Accounts) for Investment
Shares or $100,000 for Institutional Shares, a Fund may ask you to increase
your balance. If it is still below the minimum level after 60 days, the Fund
may close your account and send you the proceeds at the current NAV.
Undeliverable Redemption Checks
For any shareholder who chooses to receive distributions in cash: If distribu-
tion checks (1) are returned and marked as "undeliverable" or (2) remain
uncashed for six months, your account will be changed automatically so that all
future distributions are reinvested in your account. Checks that remain
uncashed for six months will be canceled and the money reinvested in the Fund.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE FEES
12b-1 fees compensate the Distributor and other dealers and investment repre-
sentatives for services and expenses relating to the sale and distribution of
Investment Shares and for providing shareholder services to purchasers of In-
vestment Shares. 12b-1 fees are paid from Fund assets relating to Investment
Shares on an ongoing basis and will increase the cost of your investment. 12b-1
fees may cost you more than paying other types of sales charges.
<TABLE>
<CAPTION>
Investment Shares Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Distribution (12b-1) Subject to annual distribution and shareholder N/A
Fees* servicing fees of up to 0.25% of the average
daily net assets of each Fund's Investment Shares
- -----------------------------------------------------------------------------------------------------------------------
Fund Expenses Higher annual expenses than Institutional shares. Lower annual expenses than Investment shares.
</TABLE>
*For Non-Money Market Funds Only.
41
<PAGE>
SHAREHOLDER INFORMATION
EXCHANGING YOUR SHARES
- --------------------------------------------------------------------------------
Instructions for exchanging shares You can exchange your
shares in one Fund
for shares of the
Exchanges may be made by sending a same class of another
written request to Kent Funds, Kent Fund. No trans-
P.O. Box 182201, Columbus OH action fees are
43218-2201, or by calling 1-800- charged for ex-
633-KENT (5368). Please provide changes.
the following information:
. Your name and telephone number
You must meet the
. The exact name on your account minimum investment
and account number requirements for the
Fund into which you
. Taxpayer identification number are exchanging. Ex-
(usually your Social Security changes from one Fund
number) to another are tax-
able.
. Dollar value or number of shares
to be exchanged
. The name of the Fund from which
the exchange is to be made
. The name of the Fund into which the exchange is being made.
See "General Policies on Selling your Shares" above for important information
about telephone transactions.
To prevent disruption in the management of the Funds, due to market timing
strategies, exchange activity may be limited to five exchanges within a year,
or no more than three exchanges in a calendar quarter. Although unlikely, the
Funds may reject exchanges, or change or terminate rights to exchange shares.
- --------------------------------------------------------------------------------
Notes on Exchanges
The registration and tax identification numbers of the two accounts must be
identical. If you don't have an account with the new Fund, a new account will
be opened with the same features unless you write to tell us to change them.
The exchange privilege (including automatic exchanges) may be changed or elimi-
nated at any time.
Be sure to read the Prospectus carefully of any Fund into which you wish to ex-
change shares.
The exchange privilege is available only in states where shares of the new Fund
may be sold.
If shares of a Fund are purchased by check, those shares cannot be exchanged
until your check has been collected. This could take 10 days or more.
All exchanges are based on the relative net asset value next determined after
the exchange order is received by the Funds.
When Institutional Shares are distributed to the beneficial owners of trust ac-
counts, 401(k) plans, fiduciary or agency accounts, they can be in the form of
Investment Shares.
42
<PAGE>
SHAREHOLDER INFORMATION
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Funds pay dividends to their shareholders from the Funds' respective net
investment income. The Funds distribute any net capital gains that have been
realized. Income dividends on each Fund are declared and paid monthly, except
for the Money Market Funds, which declare dividends daily and pay them monthly,
and the International Growth Fund, which pays dividends annually. Capital
gains, if any, for all Funds are distributed at least annually.
Dividends on each share class of the Funds are determined in the same manner
and are paid in the same amount. However, each share class bears all expenses
associated with that particular class. Since Investment Shares have higher dis-
tribution and service fees than Institutional Shares, the dividends paid to
shareholders owning Investment Shares will be lower than those paid to share-
holders owning Institutional Shares.
TAXATION
- --------------------------------------------------------------------------------
Federal Taxes
Each Fund contemplates declaring as dividends each year all or substantially
all of its taxable income, including its net capital gain (the excess of long-
term capital gain over short-term capital loss). You will be subject to income
tax on these distributions regardless of whether they are paid in cash or rein-
vested in additional shares. Distributions attributable to the net capital gain
of a Fund will be taxable to you as long-term capital gain, regardless of how
long you have held your shares. Other Fund distributions will generally be tax-
able as ordinary income. You will be notified annually of the tax status of
distributions to you.
You should note that if you purchase shares just prior to a capital gain dis-
tribution, the purchase price will reflect the amount of the upcoming distribu-
tion, but you will be taxable on the entire amount of the distribution re-
ceived, even though, as an economic matter, the distribution simply constitutes
a return of capital. This is known as "buying into a dividend."
Except in the case of the Money Market Funds, you will recognize taxable gain
or loss on a sale, exchange or redemption of your shares, including an exchange
for shares of another Fund based on the difference between your tax basis in
the shares and the amount you receive for them. (To aid in computing your tax
basis, you generally should retain your account statements for the periods dur-
ing which you held shares.) Any loss realized on shares held for six months or
less will be treated as a long-term capital loss to the extent of any capital
gain dividends that were received on the shares.
The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other tax-quali-
fied plan) will not be currently taxable.
The International Growth Fund. It is expected that the International Growth
Fund will be subject to foreign withholding taxes with respect to dividends or
interest received from sources in foreign countries. The International Growth
Fund may make an election to treat a proportionate amount of such taxes as con-
stituting a distribution to each shareholder, which would allow each share-
holder either (1) to credit such proportionate amount of taxes against U.S.
federal income tax liability or (2) to take such amount as an itemized deduc-
tion.
The Michigan Municipal Money Market Fund and the Municipal Bond Funds. It is
expected that the Michigan Municipal Money Market Fund and the Municipal Bond
Funds will distribute dividends derived from interest earned on tax-exempt se-
curities, and these "exempt interest dividends" will be exempt income for
shareholders for federal income tax purposes. However, distributions, if any,
derived from net capital gains will generally be taxable to you as capital
gains. The Municipal Bond Funds may pay such capital gains distributions from
time to time. Dividends, if any, derived from taxable interest income will be
taxable to you as ordinary income.
43
<PAGE>
SHAREHOLDER INFORMATION
TAXATION
- --------------------------------------------------------------------------------
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of the Michigan Municipal Money Market Fund and the Municipal Bond Funds gener-
ally will not be deductible for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Michigan Municipal Money Market Fund and the Municipal Bond Funds may consti-
tute an item of tax preference for purposes of determining federal alternative
minimum tax liability. Exempt-interest dividends will also be considered along
with other adjusted gross income in determining whether any Social Security or
railroad retirement payments received by you are subject to federal income tax-
es.
If you receive an exempt-interest dividend with respect to any share and the
share is held by you for six months or less, any loss on the sale or exchange
of the share will be disallowed to the extent of such dividend amount.
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. You should consult your tax
adviser for further information regarding federal, state, local and/or foreign
tax consequences relevant to your specific situation.
State and Local Taxes
Shareholders may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Fund's distributions, if any, that are attributable to interest on federal se-
curities or interest on securities of the particular state or an agency there-
of.
Because the Michigan Municipal Bond Fund and the Michigan Municipal Money
Market Fund intend to invest substantially all of their assets in tax-exempt
obligations of the State of Michigan or its political subdivisions,
shareholders who are subject to Michigan state income tax will generally not be
subject to tax on dividends paid by these Funds to the extent that the
dividends are attributable to interest income of these Funds. Shareholders
should consult their tax advisers regarding the tax status of distributions in
their state and locality.
44
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the Funds'
financial performance for the past 5 years or, if shorter, the period of each
Fund's operations. Certain information reflects financial results for a single
Fund share. The total returns in the tables represent the rate that an investor
would have earned or lost on an investment in a Fund (assuming reinvestment of
all dividends and distributions). This information has been audited by KPMG
LLP, whose report, along with the Funds' financial statements, are included in
the Funds' annual report, which is available upon request.
45
<PAGE>
FINANCIAL HIGHLIGHTS
EQUITY FUNDS
INSTITUTIONAL SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from
Investment Operations Less Dividends and Distributions from
---------------------------- -------------------------------------------
Net Realized and
Unrealized Gains Net Realized
(Losses) on Gains on
Investments, Total Investments, In
Net Asset Futures Contracts Income In Excess Futures Excess Net
Value, Net and Foreign (Loss) from Net of Net Contracts of Net Total Change in
Beginning Investment Currency Investment Investment Investment and Foreign Realized Dividends and Net Asset
of Period Income Translations Operations Income Income Currency Gains Distributions Value
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND
Ticker Symbol: KNVEX
1994 $10.91 0.31 (0.26) 0.05 (0.31) ** (0.15) -- (0.46) (0.41)
1995 $10.50 0.33 3.28 3.61 (0.33) -- (0.53) -- (0.86) 2.75
1996 $13.25 0.30 2.16 2.46 (0.30) -- (1.51) -- (1.81) 0.65
1997 $13.90 0.25 3.04 3.29 (0.25) -- (1.39) -- (1.64) 1.65
1998 $15.55 0.13 4.03 4.16 (0.13) (0.01) (1.54) -- (1.68) 2.48
---------------------------------------------------------------------------------------------------------------------------
INDEX EQUITY FUND
Ticker Symbol: KNIEX
1994 $11.04 0.25 (0.15) 0.10 (0.26) -- (0.20) -- (0.46) (0.36)
1995 $10.68 0.26 3.44 3.70 (0.25) -- (1.57) -- (1.82) 1.88
1996 $12.56 0.26 2.47 2.73 (0.26) -- (0.28) (0.04) (0.58) 2.15
1997 $14.71 0.25 4.50 4.75 (0.25) -- (0.05) (0.02) (0.32) 4.43
1998 $19.14 0.24 5.14 5.38 (0.24) -- (0.04) -- (0.28) 5.10
---------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
Ticker Symbol: KNEEX
1994 $12.50 0.10 (0.10) -- (0.09) (0.01) (0.41) -- (0.51) (0.51)
1995 $11.99 0.10 2.64 2.74 (0.10) -- (0.81) -- (0.91) 1.83
1996 $13.82 0.12 2.55 2.67 (0.12) -- (0.72) -- (0.84) 1.83
1997 $15.65 0.04 4.19 4.23 (0.04) (0.02) (1.43) -- (1.49) 2.74
1998 $18.39 0.03 (1.08) (1.05) (0.03) -- (1.85) -- (1.88) (2.93)
---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
Ticker Symbol: KNINX
1994 $12.84 0.12 0.61 0.73 (0.07) (0.03) (0.41) -- (0.51) 0.22
1995 $13.06 0.13 1.54 1.67 (0.13) (0.11) (0.31) -- (0.55) 1.12
1996 $14.18 0.13 0.70 0.83 (0.10) (0.02) (0.13) (0.01) (0.26) 0.57
1997 $14.75 0.11 0.26 0.37 (0.09) (0.06) (0.07) (0.01) (0.23) 0.14
1998 $14.89 0.14 2.48 2.62 (0.07) (0.12) (1.41) -- (1.60) 1.02
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data:
-------------------------------------------------------
Ratio of
Net
Net Asset Net Assets, Ratio of Investment Ratio of
Value, End of Expenses Income to Expenses Portfolio
End of Total Period to Average Average to Average Turnover
Period Return (000's) Net Assets Net Assets Net Assets* Rate(1)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND
Ticker Symbol: KNVEX
1994 $10.50 0.51% $308,825 0.98% 3.04% *** 28%
1995 $13.25 34.91% $401,371 0.94% 2.73% *** 58%
1996 $13.90 19.47% $500,857 0.95% 2.18% 0.95% 39%
1997 $15.55 24.14% $697,973 0.92% 1.61% 0.93% 88%
1998 $18.03 28.07% $827,828 0.93% 0.77% 0.94% 20%
------------------------------------------------------------------------------
INDEX EQUITY FUND
Ticker Symbol: KNIEX
1994 $10.68 0.86% $245,550 0.58% 2.32% 0.58% 50%
1995 $12.56 36.23% $183,877 0.56% 2.14% 0.56% 3%
1996 $14.71 22.18% $243,438 0.49% 1.91% 0.59% 2%
1997 $19.14 32.55% $590,241 0.43% 1.44% 0.54% 1%
1998 $24.24 28.26% $771,147 0.42% 1.10% 0.55% 12%
------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
Ticker Symbol: KNEEX
1994 $11.99 (0.06%) $304,179 0.98% 0.79% *** 20%
1995 $13.82 23.75% $450,072 0.97% 0.83% *** 30%
1996 $15.65 19.56% $544,081 0.96% 0.78% 0.96% 16%
1997 $18.39 27.94% $719,998 0.93% 0.24% 0.94% 32%
1998 $15.46 (6.15%) $760,335 0.94% 0.18% 0.95% 41%
------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
Ticker Symbol: KNINX
1994 $13.06 5.73% $178,186 1.22% 0.87% *** 20%
1995 $14.18 13.00% $286,545 1.17% 1.35% *** 6%
1996 $14.75 5.87% $387,799 1.09% 0.97% 1.09% 13%
1997 $14.89 2.54% $492,598 1.05% 0.80% 1.06% 3%
1998 $15.91 17.92% $528,500 1.05% 0.87% 1.06% 22%
------------------------------------------------------------------------------
</TABLE>
* 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.
46
<PAGE>
FINANCIAL HIGHLIGHTS
EQUITY FUNDS
INVESTMENT SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from
Investment Operations Less Dividends and Distributions from
---------------------------- -------------------------------------------
Net Realized and
Unrealized Gains Net Realized
(Losses) on Gains on
Investments, Total Investments, In
Net Asset Net Futures Contracts Income In Excess Futures Excess Net
Value, Investment and Foreign (Loss) from Net of Net Contracts of Net Total Change in
Beginning Income Currency Investment Investment Investment and Foreign Realized Dividends and Net Asset
of Period (Loss) Translations Operations Income Income Currency Gains Distributions Value
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND
Ticker Symbol: KNVIX
1994 $10.87 0.32 (0.27) 0.05 (0.31) ** (0.15) -- (0.46) (0.41)
1995 $10.46 0.30 3.26 3.56 (0.30) -- (0.53) -- (0.83) 2.73
1996 $13.19 0.26 2.15 2.41 (0.26) (0.02) (1.51) -- (1.79) 0.62
1997 $13.81 0.21 3.02 3.23 (0.21) -- (1.39) -- (1.60) 1.63
1998 $15.44 0.08 4.00 4.08 (0.08) (0.02) (1.54) -- (1.64) 2.44
---------------------------------------------------------------------------------------------------------------------------
INDEX EQUITY FUND
Ticker Symbol: KNIOX
1994 $11.07 0.26 (0.17) 0.09 (0.26) -- (0.20) -- (0.46) (0.37)
1995 $10.70 0.23 3.44 3.67 (0.23) -- (1.57) -- (1.80) 1.87
1996 $12.57 0.22 2.48 2.70 (0.22) (0.01) (0.32) -- (0.55) 2.15
1997 $14.72 0.20 4.51 4.71 (0.20) (0.01) (0.06) (0.01) (0.28) 4.43
1998 $19.15 0.18 5.14 5.32 (0.18) -- (0.04) -- (0.22) 5.10
---------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
Ticker Symbol: KNEMX
1994 $12.49 0.10 (0.11) (0.01) (0.08) (0.01) (0.41) -- (0.50) (0.51)
1995 $11.98 0.07 2.64 2.71 (0.07) -- (0.81) -- (0.88) 1.83
1996 $13.81 0.07 2.54 2.61 (0.08) (0.01) (0.72) -- (0.81) 1.80
1997 $15.61 -- 4.19 4.19 -- (0.04) (1.43) -- (1.47) 2.72
1998 $18.33 (0.01) (1.08) (1.09) -- -- (1.85) -- (1.85) (2.94)
---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
Ticker Symbol: KNIVX
1994 $12.81 0.14 0.56 0.70 (0.07) (0.03) (0.41) -- (0.51) 0.19
1995 $13.00 0.14 1.50 1.64 (0.09) (0.11) (0.31) -- (0.51) 1.13
1996 $14.13 0.12 0.66 0.78 (0.08) -- (0.14) -- (0.22) 0.56
1997 $14.69 0.08 0.25 0.33 (0.06) (0.09) (0.07) (0.01) (0.23) 0.10
1998 $14.79 0.10 2.46 2.56 -- (0.19) (1.41) -- (1.60) 0.96
---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data:
-------------------------------------------------------
Ratio of
Net
Investment
Net Asset Net Assets, Ratio of Income Ratio of
Value, End of Expenses (Loss) to Expenses Portfolio
End of Total Period to Average Average to Average Turnover
Period Return(1) (000's) Net Assets Net Assets Net Assets* Rate(2)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND
Ticker Symbol: KNVIX
1994 $10.46 0.50% $ 8,005 0.98% 3.03% *** 28%
1995 $13.19 34.61% $11,079 1.18% 2.48% *** 58%
1996 $13.81 19.14% $15,063 1.09% 1.77% 1.09% 39%
1997 $15.44 23.89% $35,343 1.17% 1.31% 1.18% 88%
1998 $17.88 27.68% $50,458 1.18% 0.50% 1.19% 20%
--------------------------------------------------------------------------------
INDEX EQUITY FUND
Ticker Symbol: KNIOX
1994 $10.70 0.75% $ 4,736 0.60% 2.30% 0.60% 50%
1995 $12.57 35.81% $ 6,612 0.80% 1.86% 0.81% 3%
1996 $14.72 21.92% $ 9,925 0.74% 1.67% 0.84% 2%
1997 $19.15 32.24% $27,922 0.68% 1.20% 0.79% 1%
1998 $24.25 27.93% $38,205 0.67% 0.85% 0.80% 12%
--------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
Ticker Symbol: KNEMX
1994 $11.98 (0.08%) $ 8,433 0.98% 0.79% *** 20%
1995 $13.81 23.47% $10,955 1.20% 0.59% *** 30%
1996 $15.61 19.16% $14,436 1.21% 0.53% 1.21% 16%
1997 $18.33 27.71% $22,784 1.18% (0.01%) 1.19% 32%
1998 $15.39 (6.40%) $23,455 1.19% (0.07%) 1.20% 41%
--------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
Ticker Symbol: KNIVX
1994 $13.00 5.51% $ 6,539 1.25% 0.81% *** 20%
1995 $14.13 12.86% $ 7,548 1.40% 1.11% *** 6%
1996 $14.69 5.57% $ 8,799 1.34% 0.74% 1.34% 13%
1997 $14.79 2.25% $ 9,780 1.30% 0.53% 1.31% 3%
1998 $15.75 17.60% $12,390 1.30% 0.59% 1.31% 22%
--------------------------------------------------------------------------------
</TABLE>
* 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.
47
<PAGE>
FINANCIAL HIGHLIGHTS
BOND FUNDS
INSTITUTIONAL SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from Less Dividends and
Investment Operations Distributions from
--------------------------- ----------------------------------
Total
Net Asset Net Realized and Income In Excess Net Net Asset
Value, Net Unrealized Gains (Loss) from Net of Net Net Realized Total Change in Value,
Beginning Investment (Losses) on Investment Investment Investment Gains on Dividends and Net Asset End of
of Period Income Investments Operations Income Income Investments Distributions Value Period
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME FUND
Ticker Symbol: KNIIX
1995(2) $10.00 0.55 0.92 1.47 (0.54) -- (0.09) (0.63) 0.84 $10.84
1996 $10.84 0.66 (0.56) 0.10 (0.65) (0.10) (0.03) (0.78) (0.68) $10.16
1997 $10.16 0.68 0.34 1.02 (0.68) -- (0.20) (0.88) 0.14 $10.30
1998 $10.30 0.65 0.27 0.92 (0.65) -- (0.24) (0.89) 0.03 $10.33
------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
Ticker Symbol: KNFIX
1994 $10.18 0.56 (0.88) (0.32) (0.54) (0.01) (0.02) (0.57) (0.89) $ 9.29
1995 $ 9.29 0.65 0.81 1.46 (0.63) -- -- (0.63) 0.83 $10.12
1996 $10.12 0.60 (0.32) 0.28 (0.61) (0.03) -- (0.64) (0.36) $ 9.76
1997 $ 9.76 0.59 0.14 0.73 (0.59) -- -- (0.59) 0.14 $ 9.90
1998 $ 9.90 0.58 0.16 0.74 (0.58) -- -- (0.58) 0.16 $10.06
------------------------------------------------------------------------------------------------------------------------------
SHORT TERM BOND FUND
Ticker Symbol: KNLMX
1994 $ 9.91 0.48 (0.38) 0.10 (0.49) ** -- (0.49) (0.39) $ 9.52
1995 $ 9.52 0.55 0.43 0.98 (0.54) -- -- (0.54) 0.44 $ 9.96
1996 $ 9.96 0.61 (0.21) 0.40 (0.61) -- -- (0.61) (0.21) $ 9.75
1997 $ 9.75 0.61 -- 0.61 (0.61) -- -- (0.61) -- $ 9.75
1998 $ 9.75 0.56 0.02 0.58 (0.56) -- -- (0.56) 0.02 $ 9.77
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------
Ratio of
Net
Net Assets, Ratio of Investment Ratio of
End of Expenses Income to Expenses Portfolio
Total Period to Average Average to Average Turnover
Return (000's) Net Assets Net Assets Net Assets* Rate(1)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME FUND
Ticker Symbol: KNIIX
1995(2) 15.05%++ $126,056 0.91%+ 6.65%+ *** 50%
1996 1.19% $240,060 0.83% 6.57% 0.83% 102%
1997 10.55% $229,778 0.82% 6.65% 0.83% 84%
1998 9.29% $231,017 0.83% 6.25% 0.84% 108%
-------------------------------------------------------------------------
INTERMEDIATE BOND FUND
Ticker Symbol: KNFIX
1994 (3.19%) $977,865 0.80% 6.03% *** 124%
1995 16.18% $854,801 0.77% 6.50% *** 166%
1996 3.01% $769,395 0.77% 6.18% 0.78% 135%
1997 7.80% $762,740 0.75% 6.03% 0.76% 114%
1998 7.65% $885,580 0.76% 5.77% 0.77% 106%
-------------------------------------------------------------------------
SHORT TERM BOND FUND
Ticker Symbol: KNLMX
1994 1.03% $176,765 0.73% 4.75% *** 56%
1995 10.53% $310,680 0.77% 5.60% *** 75%
1996 4.22% $235,430 0.70% 6.17% 0.70% 32%
1997 6.42% $139,739 0.72% 6.04% 0.73% 89%
1998 6.14% $139,229 0.76% 5.74% 0.77% 72%
-------------------------------------------------------------------------
</TABLE>
+ 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.
*** 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.
(2) The Institutional Class of the Income Fund commenced operations on March
20, 1995.
48
<PAGE>
FINANCIAL HIGHLIGHTS
BOND FUNDS
INVESTMENT SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from Less Dividends and
Investment Operations Distributions from
--------------------------- ----------------------------------
Total
Net Asset Net Realized and Income In Excess Net Net Asset
Value, Net Unrealized Gains (Loss) from Net of Net Net Realized Total Change in Value,
Beginning Investment (Losses) on Investment Investment investment Gains on Dividends and Net Asset End of
of Period Income Investments Operations Income Income Investments Distributions Value Period
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME FUND
Ticker Symbol: N/A
1995(3) $10.00 0.52 0.91 1.43 (0.52) -- (0.09) (0.61) 0.82 $10.82
1996 $10.82 0.66 (0.56) 0.10 (0.64) (0.09) (0.03) (0.76) (0.66) $10.16
1997 $10.16 0.63 0.35 0.98 (0.65) -- (0.20) (0.85) 0.13 $10.29
1998 $10.29 0.62 0.28 0.90 (0.60) (0.03) (0.24) (0.87) 0.03 $10.32
------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
Ticker Symbol: KNFVX
1994 $10.19 0.57 (0.87) (0.30) (0.54) (0.01) (0.02) (0.57) (0.87) $ 9.32
1995 $ 9.32 0.61 0.82 1.43 (0.61) -- -- (0.61) 0.82 $10.14
1996 $10.14 0.58 (0.32) 0.26 (0.57) (0.05) -- (0.62) (0.36) $ 9.78
1997 $ 9.78 0.57 0.15 0.72 (0.57) -- -- (0.57) 0.15 $ 9.93
1998 $ 9.93 0.54 0.16 0.70 (0.55) -- -- (0.55) 0.15 $10.08
------------------------------------------------------------------------------------------------------------------------------
SHORT TERM BOND FUND
Ticker Symbol: KNLIX
1994 $ 9.91 0.47 (0.37) 0.10 (0.48) (0.01) -- (0.49) (0.39) $ 9.52
1995 $ 9.52 0.52 0.44 0.96 (0.53) -- -- (0.53) 0.43 $ 9.95
1996 $ 9.95 0.59 (0.20) 0.39 (0.54) (0.06) -- (0.60) (0.21) $ 9.74
1997 $ 9.74 0.57 0.02 0.59 (0.59) -- -- (0.59) -- $ 9.74
1998 $ 9.74 0.55 0.02 0.57 (0.52) (0.03) -- (0.55) 0.02 $ 9.76
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data:
-------------------------------------------------------
Ratio of
Net
Net Assets, Ratio of Investment Ratio of
End of Expenses Income to Expenses Portfolio
Total Period to Average Average to Average Turnover
Return(1) (000's) Net Assets Net Assets Net Assets* Rate(2)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME FUND
Ticker Symbol: N/A
1995(3) 14.63%++ $ 1,961 1.14%+ 6.40%+ ** 50%
1996 1.16% $ 2,722 1.08% 6.31% 1.08% 102%
1997 10.19% $ 5,611 1.07% 6.38% 1.08% 84%
1998 9.04% $10,629 1.08% 5.97% 1.09% 108%
--------------------------------------------------------------------------
INTERMEDIATE BOND FUND
Ticker Symbol: KNFVX
1994 (3.01%) $ 9,196 0.81% 5.94% ** 124%
1995 15.76% $ 6,862 1.01% 6.24% ** 166%
1996 2.76% $ 7,327 1.02% 5.92% 1.03% 135%
1997 7.62% $ 6,972 1.00% 5.79% 1.01% 114%
1998 7.26% $12,313 1.01% 5.51% 1.02% 106%
--------------------------------------------------------------------------
SHORT TERM BOND FUND
Ticker Symbol: KNLIX
1994 1.01% $ 1,649 0.74% 4.79% ** 56%
1995 10.30% $ 1,634 0.91% 5.40% ** 75%
1996 4.06% $ 1,667 0.85% 6.02% 0.96% 32%
1997 6.26% $ 7,433 0.88% 5.75% 0.99% 89%
1998 6.00% $ 6,126 0.91% 5.60% 1.02% 72%
--------------------------------------------------------------------------
</TABLE>
+ 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) 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.
(3) The date of initial public investment of the Investment Class of the
Income Fund was March 22, 1995.
49
<PAGE>
FINANCIAL HIGHLIGHTS
MUNICIPAL BOND FUNDS
INSTITUTIONAL SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from Less Dividends and
Investment Operations Distributions from
--------------------------- ----------------------------------
Net Realized and
Unrealized Gains Total Net Realized
Net Asset (Losses) on Income In Excess Gains on Net Net Asset
Value, Net Investments and (Loss) from Net of Net Investments Total Change in Value,
Beginning Investment Futures Investment Investment Investment and Futures Dividends and Net Asset End of
of Period Income Contracts Operations Income Income Contracts Distributions Value Period
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME FUND
Ticker Symbol: KNTIX
1995(2) $10.00 0.36 0.49 0.85 (0.36) -- -- (0.36) 0.49 $10.49
1996 $10.49 0.46 (0.06) 0.40 (0.46) -- (0.16) (0.62) (0.22) $10.27
1997 $10.27 0.45 0.41 0.86 (0.45) -- (0.03) (0.48) 0.38 $10.65
1998 $10.65 0.44 0.15 0.59 (0.44) -- (0.05) (0.49) 0.10 $10.75
------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
Ticker Symbol: KNMTX
1994 $10.45 0.40 (0.71) (0.31) (0.39) (0.01) -- (0.40) (0.71) $ 9.74
1995 $ 9.74 0.45 0.79 1.24 (0.45) (0.01) -- (0.46) 0.78 $10.52
1996 $10.52 0.44 (0.08) 0.36 (0.46) ** -- (0.46) (0.10) $10.42
1997 $10.42 0.45 0.26 0.71 (0.45) -- -- (0.45) 0.26 $10.68
1998 $10.68 0.45 0.11 0.56 (0.45) -- (0.03) (0.48) 0.08 $10.76
------------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND
Ticker Symbol: KNMIX
1994 $10.06 0.37 (0.34) 0.03 (0.36) (0.01) -- (0.37) (0.34) $ 9.72
1995 $ 9.72 0.39 0.39 0.78 (0.37) (0.01) -- (0.38) 0.40 $10.12
1996 $10.12 0.39 (0.04) 0.35 (0.39) -- -- (0.39) (0.04) $10.08
1997 $10.08 0.41 0.13 0.54 (0.41) -- -- (0.41) 0.13 $10.21
1998 $10.21 0.40 0.08 0.48 (0.41) -- (0.01) (0.42) 0.06 $10.27
------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratios/Supplemental Data:
-------------------------------------------------------
Ratio of
Net
Net Assets, Ratio of Investment Ratio of
End of Expenses Income to Expenses Portfolio
Total Period to Average Average to Average Turnover
Return (000's) Net Assets Net Assets Net Assets* Rate(1)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME FUND
Ticker Symbol: KNTIX
1995(2) 8.64%++ $121,855 0.73%+ 4.44%+ 0.91%+ 10%
1996 3.92% $109,948 0.82% 4.38% 0.82% 40%
1997 8.59% $116,652 0.79% 4.32% 0.80% 16%
1998 5.71% $128,232 0.81% 4.16% 0.82% 53%
-------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
Ticker Symbol: KNMTX
1994 (3.00%) $380,715 0.78% 4.07% 0.78% 36%
1995 12.90% $283,733 0.72% 4.39% 0.72% 6%
1996 3.41% $285,674 0.73% 4.34% 0.73% 35%
1997 7.07% $275,641 0.72% 4.31% 0.73% 23%
1998 5.37% $296,484 0.73% 4.22% 0.74% 40%
-------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND
Ticker Symbol: KNMIX
1994 0.36% $118,485 0.49% 3.74% 0.74% 27%
1995 8.20% $185,466 0.69% 3.81% 0.70% 42%
1996 3.51% $152,623 0.70% 3.83% 0.70% 24%
1997 5.52% $111,735 0.69% 4.04% 0.70% 13%
1998 4.75% $117,957 0.69% 3.97% 0.70% 51%
-------------------------------------------------------------------------
</TABLE>
+ 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) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(2) The Institutional Class of the Tax-Free Income Fund commenced operations
on March 20, 1995.
50
<PAGE>
FINANCIAL HIGHLIGHTS
MUNICIPAL BOND FUNDS
INVESTMENT SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Income (Loss) from
Investment Operations Less Dividends and Distributions from
--------------------------- -------------------------------------------
Net Realized and
Unrealized Gains Total Net Realized In
Net Asset (Losses) on Income In Excess Gains on Excess Net
Value, Net Investments (Loss) from Net of Net Investments of Net Total Change in
Beginning Investment and Futures Investment Investment Investment and Futures Realized Dividends and Net Asset
of Period Income Contracts Operations Income Income Contracts Gains Distributions Value
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME FUND
Ticker Symbol: N/A
1995(3) $10.00 0.31 0.51 0.82 (0.30) -- -- -- (0.30) 0.52
1996 $10.52 0.41 (0.05) 0.36 (0.43) -- (0.12) (0.04) (0.59) (0.23)
1997 $10.29 0.42 0.42 0.84 (0.42) (0.01) (0.03) -- (0.46) 0.38
1998 $10.67 0.42 0.15 0.57 (0.42) -- (0.05) -- (0.47) 0.10
-----------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
Ticker Symbol: KNMBX
1994 $10.45 0.40 (0.71) (0.31) (0.39) (0.01) -- -- (0.40) (0.71)
1995 $ 9.74 0.42 0.79 1.21 (0.42) (0.01) -- -- (0.43) 0.78
1996 $10.52 0.42 (0.09) 0.33 (0.41) (0.02) -- -- (0.43) (0.10)
1997 $10.42 0.43 0.26 0.69 (0.43) -- -- -- (0.43) 0.26
1998 $10.68 0.42 0.11 0.53 (0.42) -- (0.03) -- (0.45) 0.08
-----------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND
Ticker Symbol: KNMVX
1994 $10.08 0.35 (0.34) 0.01 (0.34) (0.03) -- -- (0.37) (0.36)
1995 $ 9.72 0.37 0.40 0.77 (0.37) (0.01) -- -- (0.38) 0.39
1996 $10.11 0.38 (0.05) 0.33 (0.35) (0.02) -- -- (0.37) (0.04)
1997 $10.07 0.39 0.14 0.53 (0.40) -- -- -- (0.40) 0.13
1998 $10.20 0.39 0.07 0.46 (0.39) -- (0.01) -- (0.40) 0.06
<CAPTION>
Ratios/Supplemental Data
-------------------------------------------------------
Ratio of
Net
Net Asset Net Assets, Ratio of Investment Ratio of
Value, End of Expenses Income to Expenses Portfolio
End of Total Period to Average Average to Average Turnover
Period Return(1) (000's) Net Assets Net Assets Net Assets* Rate(2)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME FUND
Ticker Symbol: N/A
1995(3) $10.52 8.34%++ $ 529 0.95%+ 4.25%+ 1.17%+ 10%
1996 $10.29 3.53% $ 936 1.07% 4.14% 1.07% 40%
1997 $10.67 8.32% $1,712 1.04% 4.05% 1.05% 16%
1998 $10.77 5.43% $1,938 1.06% 3.91% 1.07% 53%
------------------------------------------------------------------------------------
INTERMEDIATE TAX-FREE FUND
Ticker Symbol: KNMBX
1994 $ 9.74 (3.03%) $4,505 0.79% 3.99% 0.79% 36%
1995 $10.52 12.66% $3,807 0.97% 4.13% 0.97% 6%
1996 $10.42 3.17% $3,368 0.98% 4.09% 0.98% 35%
1997 $10.68 6.80% $3,534 0.97% 4.06% 0.98% 23%
1998 $10.76 5.09% $4,038 0.98% 3.97% 0.99% 40%
------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL BOND FUND
Ticker Symbol: KNMVX
1994 $ 9.72 0.16% $1,980 0.49% 3.80% 0.84% 27%
1995 $10.11 8.01% $1,900 0.83% 3.68% 0.85% 42%
1996 $10.07 3.36% $2,422 0.85% 3.68% 0.95% 24%
1997 $10.20 5.38% $4,413 0.84% 3.88% 0.95% 13%
1998 $10.26 4.60% $5,946 0.84% 3.82% 0.95% 51%
------------------------------------------------------------------------------------
</TABLE>
+ 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) 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.
(3) The date of initial public investment of the Investment Class of the Tax-
Free Income Fund was March 31, 1995.
51
<PAGE>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUNDS
INSTITUTIONAL SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
Income ---------------------------------------------
(Loss) from Ratio of
Investment Less Net
Net Asset Operations: Dividends Net Net Asset Net Assets, Ratio of Investment Ratio of
Value, Net from Net Change in Value, End of Expenses Income to Expenses
Beginning Investment Investment Net Asset End of Total Period to Average Average to Average
of Period Income Income Value Period Return (000's) Net Assets Net Assets Net Assets*
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
Ticker Symbol: KIMXX
1994 $1.000 0.040 (0.040) -- $1.000 3.75% $323,539 0.60% 3.65% 0.65%
1995 $1.000 0.050 (0.050) -- $1.000 5.58% $424,815 0.55% 5.45% 0.63%
1996 $1.000 0.050 (0.050) -- $1.000 5.06% $483,919 0.52% 4.95% 0.62%
1997 $1.000 0.051 (0.051) -- $1.000 5.23% $474,378 0.52% 5.11% 0.62%
1998 $1.000 0.050 (0.050) -- $1.000 5.13% $693,399 0.55% 5.00% 0.64%
---------------------------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
Ticker Symbol: KGIXX
1997(1) $1.000 0.031 (0.031) -- $1.000 3.10%++ $ 94,624 0.35%+ 5.23%+ 0.69%+
1998 $1.000 0.051 (0.051) -- $1.000 5.17% $166,922 0.38% 5.03% 0.69%
---------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
Ticker Symbol: KMIXX
1994 $1.000 0.020 (0.020) -- $1.000 2.40% $128,164 0.60% 2.33% 0.70%
1995 $1.000 0.030 (0.030) -- $1.000 3.50% $145,215 0.56% 3.45% 0.65%
1996 $1.000 0.030 (0.030) -- $1.000 3.11% $155,424 0.54% 3.06% 0.64%
1997 $1.000 0.033 (0.033) -- $1.000 3.31% $211,682 0.52% 3.27% 0.63%
1998 $1.000 0.030 (0.030) -- $1.000 3.06% $323,272 0.54% 3.00% 0.64%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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 Government Money Market Fund commenced operations on June 2, 1997.
52
<PAGE>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUNDS
INVESTMENT SHARES
------------------------------------------------------------------------------
Year ended December 31
<TABLE>
<CAPTION>
Ratios/Supplemental Data:
---------------------------------------------
Income from Ratio of
Investment Less Net
Net Asset Operations: Dividends Net Net Asset Net Assets, Ratio of Investment Ratio of
Value, Net from Net Change in Value, End of Expenses Income to Expenses
Beginning Investment Investment Net Asset End of Total Period to Average Average to Average
of Period Income Income Value Period Return (000's) Net Assets Net Assets Net Assets*
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
Ticker Symbol: N/A
1994 $1.000 0.040 (0.040) -- $1.000 3.71% $ 369 0.63% 3.58% 0.68%
1995 $1.000 0.050 (0.050) -- $1.000 5.56% $1,227 0.55% 5.41% 0.62%
1996 $1.000 0.050 (0.050) -- $1.000 5.06% $ 804 0.52% 4.94% 0.62%
1997 $1.000 0.051 (0.051) -- $1.000 5.23% $1,179 0.52% 5.11% 0.62%
1998 $1.000 0.050 (0.050) -- $1.000 5.13% $3,728 0.55% 5.00% 0.64%
---------------------------------------------------------------------------------------------------------------------
GOVERNMENT MONEY MARKET FUND
Ticker Symbol: N/A
1997(1) $1.000 0.030 (0.030) -- $1.000 3.06%++ $ 2 0.43%+ 5.17%+ 0.77%+
1998 $1.000 0.051 (0.051) -- $1.000 5.17% $ 93 0.38% 4.92% 0.69%
---------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL MONEY MARKET FUND
Ticker Symbol: N/A
1994 $1.000 0.020 (0.020) -- $1.000 2.38% $ 379 0.63% 2.47% 0.73%
1995 $1.000 0.030 (0.030) -- $1.000 3.48% $1,603 0.54% 3.48% 0.62%
1996 $1.000 0.030 (0.030) -- $1.000 3.11% $ 782 0.54% 3.06% 0.64%
1997 $1.000 0.033 (0.033) -- $1.000 3.31% $ 289 0.52% 3.22% 0.63%
1998 $1.000 0.030 (0.030) -- $1.000 3.06% $ 346 0.54% 3.02% 0.64%
---------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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 Government Money Market Fund commenced operations on June 2, 1997.
53
<PAGE>
[KENT FUNDS RIGHT ON THE MONEY LOGO APPEARS HERE]
The following additional information is available to you upon request and
without charge:
- --------------------------------------------------------------------------------
Annual/Semi-Annual Reports: Annual and Semi-Annual reports to
shareholders contain additional
information about the Funds'
investments. In the annual report,
you will find a discussion of the
market conditions and investment
strategies that significantly
affected Fund performance during
the previous fiscal year.
Statement of Additional Information (SAI): The SAI provides more detailed
information about the Funds,
including their operations and
investment policies. It is
incorporated by reference and is
legally considered to be a
part of this prospectus.
You can get free copies of Annual and Semi-Annual Reports and the SAI, request
other information and discuss your questions about the Funds by contacting a
broker or other financial institution that sells the Funds. In addition, you
may contact the Funds at Kent Funds, P.O. Box 182201, Columbus, Ohio 43218-2201
or:
-------------------------------------
Telephone: 1-800-633-KENT (5368)
Internet: http://www.kentfunds.com*
-------------------------------------
You can review the Annual and Semi-Annual Reports and the SAI
at the Public Reference Room of the Securities and Exchange
Commission. You can get copies:
. For a fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
. At no charge from the Commission's Website at http://www.sec.gov.
* The Funds' website is not part of this Prospectus.
Investment Company Act file no. 811-4824.
KKF-0390 (5/99)
