N-CSR 1 d852076dncsr.htm KP FUNDS KP Funds

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number 811-22838

The KP Funds

(Exact name of registrant as specified in charter)

 

 

SEI Investments

One Freedom Valley Drive

Oaks, PA 19456

(Address of principal executive offices) (Zip code)

CT Corporation

101 Federal Street

Boston, MA 02110

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 342-5734

Date of fiscal year end: December 31, 2014

Date of reporting period: December 31, 2014


Item 1.     Reports to Stockholders.


 

The KP Funds     LOGO     

LOGO

KP Retirement Path 2015 Fund: KPRAX

KP Retirement Path 2020 Fund: KPRBX

KP Retirement Path 2025 Fund: KPRCX

KP Retirement Path 2030 Fund: KPRDX

KP Retirement Path 2035 Fund: KPREX

KP Retirement Path 2040 Fund: KPRFX

KP Retirement Path 2045 Fund: KPRGX

KP Retirement Path 2050 Fund: KPRHX

KP Retirement Path 2055 Fund: KPRIX

KP Retirement Path 2060 Fund: KPRJX

KP Large Cap Equity Fund: KPLCX

KP Small Cap Equity Fund: KPSCX

KP International Equity Fund: KPIEX

KP Fixed Income Fund: KPFIX

 

 

Annual Report

December 31, 2014


THE KP FUNDS    December 31, 2014

 

 

 

 

TABLE OF CONTENTS      

Letter to Shareholders

    1   

Management’s Discussion and Analysis of Fund Performance

    2   

Schedules of Investments

    19   

Statements of Assets and Liabilities

    101   

Statements of Operations

    105   

Statements of Changes in Net Assets

    109   

Financial Highlights

    113   

Notes to Financial Statements

    114   

Report of Independent Registered Public Accounting Firm

    124   

Trustees and Officers of the Trust

    126   

Disclosure of Fund Expenses

    134   

Notice to Shareholders

    136   

The Funds file their complete schedules of investments with the Securities and Exchange Commission (the “Commission”) for the first and third quarters of each fiscal year on Form N-Q within sixty days after period end. The Funds’ Forms N-Q are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, as well as information relating to how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available (i) without charge, upon request, by calling 855-457-3637 (855-4KPFNDS); and (ii) on the Commission’s website at http://www.sec.gov.


THE KP FUNDS    December 31, 2014

 

 

 

 

Dear Shareholder,

Fiscal Year 2014 was characterized by a recovering economy in the US, continuing weakness across Europe and Asia, declining global interest rates, and a precipitous drop in oil prices. The top performing major asset class for the year was large capitalization US stocks with the Russell 1000 Index returning over 13%. US bonds also performed surprisingly well with the Barclays US Aggregate Index returning almost 6% for the year. Non-US equity markets did not fare as well with the MSCI EAFE Index losing over 4% for the year and the MSCI Emerging Markets Equity Index losing just over 1.8%. Returns for inflation sensitive (or real) assets were mixed with US REITs (as measured by the FTSE NAREIT Composite Index) returning over 27% for the year and commodities (as measured by the Bloomberg Commodity Total Return Index) posting a loss of over 17%.

The KP Retirement Path Funds (the “Funds”) were launched during the early part of January 2014 to provide participants in KP sponsored defined contribution plans with diversified exposure to all of these asset classes, as well as a number of others including small cap US equity, natural resource equity, global listed infrastructure, Treasury Inflation Protected Securities, floating rate notes, emerging market debt, and short term bonds. The Funds were open to investment by participants in KP sponsored defined contribution plans on January 31st, and over that first weekend in February, more than $3.4 billion in assets was mapped into the Funds. These assets were subsequently invested into a broad array of investment strategies and asset classes to provide the Funds’ shareholders with efficient and diversified exposure to a full spectrum of investment opportunities across the global capital markets.

Each of the 10 KP Retirement Path Funds is designed with a specific retirement date in mind. Participants are expected to choose the Fund that best aligns with the year that they turn 65 and then contribute to the Fund appropriately over the course of their career. The Funds are designed to take care of the rest by investing in a diversified mix of strategies and asset classes which automatically adjusts to become increasingly conservative over time. By gradually changing its asset allocation in this way, each Fund is designed to help shareholders achieve the appropriate balance between long-term capital growth, inflation protection, and current income for each stage of their savings and investing career.

Over the course of the first year for the Funds we have been quite satisfied with their design. We have also been satisfied with the performance of the operational infrastructure that was assembled to coordinate the activities of the 16 different investment management organizations responsible for the management of the Funds’ assets. From an overall investment performance standpoint, however, we were somewhat disappointed with the first year. We will discuss this in greater detail in the performance section of the report, but all of the Funds lagged their strategic performance benchmarks during the period from inception (January 10, 2014), through December 31, 2014. The relative underperformance ranged from the 2035 Fund lagging its benchmark by -1.08%, to the 2050 Fund lagging by -2.19%.

While we regret the relative underperformance in our first fiscal year, we must acknowledge the fact that it was generally a difficult year for active management across most major markets. We continue to believe that we have assembled a highly capable team of sub-advisors, and that the Funds are well positioned to achieve their objectives going into 2015 and beyond.

Respectfully Submitted,

 

LOGO    LOGO   
Gregory C. Allen    Ivan S. Cliff, CFA   
Portfolio Manager    Portfolio Manager   
President, Director of Research    Director of Investment Research   

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth less than their original cost and current performance may be lower than the performance quoted. Returns greater than one year are average annual total returns. For performance data current to the most recent month end, please call 855-4-KPFNDS.

 

1


THE KP FUNDS    December 31, 2014

 

 

 

 

MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Performance for the KP Retirement Path Funds for Fiscal Year ended December 31, 2014 was positive on an absolute basis but was disappointing on a relative basis compared to the Funds’ strategic benchmarks. In order to better understand the sources of underperformance for the year it is helpful to review the design of the Funds.

Each of the KP Retirement Path Funds is itself a “fund-of-funds”. This means that each of the Funds is composed of a collection of sub-funds, each with a specific purpose that contributes to the overall design. At the highest level these sub-funds can be grouped into six major categories which include: large cap US equities, small cap US equities, international equities, broad fixed income, real (or inflation sensitive) assets, and short term fixed income. Each of the KP Retirement Path Funds varies its exposure to these asset categories over time to ensure that it is achieving the appropriate balance of capital appreciation, current income, inflation protection, and capital preservation. The 2060 Fund, for example, is primarily invested in large cap US equity, small cap US equity, and international equity. The 2015 Fund, on the other hand, has a much greater emphasis on broad fixed income, real assets, and short term fixed income.

The performance of each Fund is compared to its own strategic benchmark. The strategic benchmarks are designed to reflect the target asset allocation for each Fund, while also assuming that each of the underlying asset classes is implemented using a passive index. While Management makes extensive use of passive strategies in the Funds’ implementation to keep costs low, we also employ a number of active strategies in our attempt to add value relative to the strategic benchmarks. Management does not attempt to add value by trying to time markets using tactical asset allocation. Instead we have designed a sophisticated rebalancing algorithm that keeps the Funds very close to their strategic asset allocation targets over time. As a result, virtually all of the relative performance of the Funds versus their strategic benchmarks can be explained by the relative performance of the strategies within each of the six underlying asset classes. Given this understanding, we can now put the relative performance of the KP Retirement Path Funds into perspective by examining the relative performance of each of the underlying asset classes.

Throughout the performance discussion, unless otherwise noted, the performance period will be from the Funds’ inception on January 10, 2014, through December 31, 2014 (“the performance period”).

The KP Retirement Path Funds achieve their large cap US equity exposure through the use of the KP Large Cap Equity Fund. This Fund is benchmarked to the Russell 1000 Index. The Fund employs three strategies including a passive S&P 500 index strategy, an active large cap growth strategy, and an active large cap value strategy. The Fund returned 11.21% over the performance period versus 13.41% for the benchmark. This underperformance of -2.20% was largely explained by the large cap growth strategy which significantly underperformed its benchmark during the first half of the year. This was an extremely difficult period for active growth strategies relative to the benchmark with over 80% of active strategies underperforming the Russell 1000 Growth index. During this time in particular, the large cap growth strategy was hurt by poor stock selection in the Information Technology and Consumer Discretionary sectors. Notable securities in these sectors included an underweight to Apple, which performed well over the period, and an overweight to Amazon.com which performed poorly. Because large cap is a significant part of the asset allocation for all of the KP Retirement Path Funds, this was the greatest source of relative underperformance across the entire family.

The KP Retirement Path Funds achieve their small cap US equity exposure through the use of the KP Small Cap Equity Fund. This Fund is benchmarked to the Russell 2000 Index. The Fund employs five strategies including a passive Russell 2000 strategy, two active small cap growth strategies, and two active small cap value strategies. The Fund returned 4.06% over the performance period versus 4.80% for the benchmark. This underperformance of -0.74% was the result of a very difficult fourth quarter during which over 75% of actively-managed small cap strategies underperformed the Russell 2000 index. Because small cap is a relatively small part of the asset allocation for the KP Retirement Path Funds, this was not a significant source of relative underperformance.

The KP Retirement Path Funds achieve their international equity exposure through the use of the KP International Equity Fund. This Fund is benchmarked to the MSCI ACWI ex-US Index. The Fund employs four strategies including a passive MSCI EAFE strategy, two active ACWI ex-US strategies, and a dedicated active emerging markets strategy. The Fund returned -3.83% over the performance period versus -3.18% for the benchmark. This underperformance of -0.65% was primarily attributable to the first quarter with the Fund steadily gaining ground over the rest of the year. Because international equity is a large part of the asset allocation for the KP Retirement Path Funds, this was a significant source of relative underperformance.

 

2


THE KP FUNDS    December 31, 2014

 

 

 

 

MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

The KP Retirement Path Funds achieve their broad fixed income exposure through the use of the KP Fixed Income Fund. This Fund is benchmarked to the Barclays US Aggregate Index. The Fund employs four strategies including a passive Barclays Intermediate Government/Credit Index strategy, an active core bond strategy, an active emerging markets debt strategy, and an active bank loans strategy. The Fund returned 2.68% over the performance period versus 5.21% for the benchmark. This underperformance of -2.53% came primarily from two sources. Roughly -1.46% (almost 3/5 of the total) of the underperformance was achieved during the period between January 13, 2014 and January 31, 2014, before KP participants were invested in the Fund. During this period Management elected to pre-fund the emerging markets and bank loans strategies in order to facilitate the transition of participant assets into the fund and to save them significant transactions costs. Over this period the Fund was almost entirely invested in those two strategies, both of which underperformed the index. The remaining roughly 1.07% of underperformance was largely explained by the shorter duration of the Fund relative to the Barclays Aggregate Index during a period of falling interest rates. The underperformance of the Fixed Income allocation had a greater impact on the 2025, 2020, and 2015 Funds than on the rest of the series.

The KP Retirement Path Funds achieve their real assets exposure through the use of a diversified collection of non-affiliated sub-funds each specializing in a different inflation-sensitive strategy. Collectively these strategies returned 6.69% over the measurement period versus 5.08% for their composite benchmark. Six of the seven underlying real assets funds met or exceeded the performance of their respective benchmarks over the measurement period. The international real estate, global infrastructure, and commodities strategies did particularly well outperforming by 6.94%, 3.83% and 2.43% respectively. Because real assets are a relatively small part of the asset allocation for the KP Retirement Path Funds, they did not contribute significantly to relative performance across the series.

The KP Retirement Path Funds achieve their short term fixed income exposure through the use of a low-cost index strategy. This sub-fund outperformed its benchmark by 1.14%. This outperformance primarily impacted the 2025, 2020 and 2015 Funds, as the rest of the Funds in the series have little to no exposure to this asset class.

The following tables show the performance of each of the KP Retirement Path Funds since inception through December 31, 2014.

To determine if one of these funds is an appropriate investment for you, carefully consider the fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information may be found in the fund’s summary and full prospectuses, which may be obtained by calling (855)4-KPFNDS or by visiting the website at www.kp-funds.com. Please read the prospectus carefully before investing.

The KP Retirement Path Funds and the KP Core Funds are mutual funds. They are part of The KP Funds Series Trust, an open-end management investment company that offers shares of diversified portfolios. The funds are advised by Callan Associates Inc., a registered investment advisor. They are administered by SEI Investments Global Funds Services and distributed by SEI investments Distribution Co., which are not affiliated with Callan Associates.

Only participants in the Kaiser Permanente defined contribution plans and 403(b) plans can invest in the funds.

There can be no assurance that a Fund will achieve its stated objectives. An investor may experience losses, at any time, including near, at or after the Fund’s target year. In addition, there is no guarantee that an investor’s investment in the fund will provide any income at or through the years following the Fund’s target year in amounts adequate to meet the investor’s goals or retirement needs.

Investing involves risk including loss of principal. Bond and bond funds are subject to interest rate risk and will decline in value as interest rates rise. Mortgage-backed securities are subject to pre-payment and extension risk and therefore react differently to changes in interest rates than other bonds. Small movements in interest rates may quickly and significantly reduce the value of certain mortgage-backed securities. Non-investment grade bonds involve greater risks of default and are more volatile than investment grade securities, due to the speculative nature of the investment. International investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. These risks are heightened when investing in emerging markets or in a single state.

Currency risk is the risk that foreign currencies will decline in value relative to the U.S. dollar or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in the Underlying Fund would be adversely affected. The use of leverage by the fund managers may accelerate the velocity of potential losses. Furthermore, the use of derivatives are often more volatile than other investments and magnify the Fund’s gains or losses. Diversification does not protect against market loss.

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth less than their original cost and current performance may be lower than the performance quoted. Returns greater than one year are average annual total returns. For performance data current to the most recent month end, please call 855-4-KPFNDS.

 

3


THE KP FUNDS    December 31, 2014

 

 

 

 

MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Definition of Comparitive Indices

The S&P Target Date® Series comprises eleven multi-asset class indices, each corresponding to a particular target retirement date. Each index provides varying levels of exposure to equities and fixed income. Each target date allocation is created and retired according to a pre-determined schedule related to the respective target date.

The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the Russell 3000 Index.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.

The MSCI ACWI ex-US Index captures large, mid and small cap representation across 22 of 23 Developed Markets countries (excluding the United States) and 23 Emerging Markets countries. With 6,092 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.

The MSCI EAFE Index captures large, mid, small and micro cap representation across 21 Developed Markets countries (excluding Canada and the United States).

The MSCI Emerging Markets Equity Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.

The Barclays US Aggregate Index is a broad-based and measures the performance of the U.S. investment grade bond market. It invests in a wide spectrum of public, investment-grade, taxable, fixed income securities in the United States – including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.

The FTSE NAREIT Composite Index is a headline index that consists of all REITs included in the FTSE NAREIT All REITs Index that also meet the minimum size and liquidity criteria. The FTSE NAREIT Composite Index is free float adjusted.

The Bloomberg Commodity Total Return Index is composed of futures contracts and reflects the returns on a fully collateralized investment in the Bloomberg Commodity Index (“BCOM”). This combines the returns of the BCOM with the returns on cash collateral invested in 13 week (3 Month) US Treasury Bills.

 

4


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2015 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2015 Fund

    3.82

S&P Target Date 2015 Index

    5.29

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

5


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2020 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2020 Fund

    3.96

S&P Target Date 2020 Index

    5.55

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

6


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2025 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

   

TOTAL RETURN FOR THE PERIOD ENDED

DECEMBER 31, 2014

 
    Cumulative Inception to Date*  

KP Retirement Path 2025 Fund

    3.92

S&P Target Date 2025 Index

    5.55

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

7


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2030 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2030 Fund

    3.78

S&P Target Date 2030 Index

    5.69

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

8


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2035 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

   

TOTAL RETURN FOR THE PERIOD ENDED

DECEMBER 31, 2014

 
    Cumulative Inception to Date*  

KP Retirement Path 2035 Fund

    3.86

S&P Target Date 2035 Index

    4.94

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

9


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2040 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

   

TOTAL RETURN FOR THE PERIOD ENDED

DECEMBER 31, 2014

 
    Cumulative Inception to Date*  

KP Retirement Path 2040 Fund

    3.91

S&P Target Date 2040 Index

    5.87

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

10


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2045 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2045 Fund

    3.76

S&P Target Date 2045 Index

    5.88

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

11


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2050 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
    Cumulative Inception to Date*

KP Retirement Path 2050 Fund

  3.76%

S&P Target Date 2050 Index

  5.95%

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

12


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2055 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2055 Fund

    3.81

S&P Target Date 2055+ Index

    5.95

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

13


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2060 Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP Retirement Path 2060 Fund

    3.92

S&P Target Date 2055+ Index

    5.95

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

14


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
    Cumulative Inception to Date*

KP Large Cap Equity Fund

  11.21%

Russell 1000 Index

  13.41%

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

15


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Small Cap Equity Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

   

TOTAL RETURN FOR THE PERIOD ENDED

DECEMBER 31, 2014

 
    Cumulative Inception to Date*  

KP Small Cap Equity Fund

    4.06

Russell 2000 Index

    4.80

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

16


THE KP FUNDS    December 31, 2014

 

 

 

 

KP International Equity Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
 
    Cumulative Inception to Date*  

KP International Equity Fund

    (3.83 %) 

MSCI ACWI ex-US Index

    (3.18 %) 

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

17


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Fixed Income Fund   
MANAGEMENT DISCUSSION AND FUND PERFORMANCE (Unaudited):   

Growth of a $10,000 Investment

 

    TOTAL RETURN FOR THE PERIOD ENDED
DECEMBER 31, 2014
    Cumulative Inception to Date*

KP Fixed Income Fund

  2.68%

Barclays US Aggregate Index

  5.21%

 

LOGO

 

* The Fund commenced operations on January 10, 2014.

The performance data quoted herein represents past performance and the return and value of an investment in the Fund will fluctuate so that, when redeemed, may be worth less than its original cost.

The Fund’s performance assumes the reinvestment of dividends and capital gains. Index returns assume reinvestment of dividends and, unlike a Fund’s returns, do not reflect any fees or expenses. If such fees and expenses were included in the index returns, the performance would have been lower. Please note that one cannot invest directly in an unmanaged index.

There are no assurances that the Fund will meet its stated objectives. The Fund’s holdings and allocations are subject to change because it is actively managed and should not be considered recommendations to buy individual securities.

Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

See definition of comparative indices on page 4.

 

18


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2015 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 62.3%

  

KP Fixed Income Fund

     17,927,189         $ 179,272   

KP International Equity Fund

     3,883,571           36,117   

KP Large Cap Equity Fund

     8,425,392           91,163   

KP Small Cap Equity Fund

     1,818,731           18,769   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $316,025) (000)

   

       325,321   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 37.7%

  

DFA Commodity Strategy Portfolio

     670,253           4,699   

DFA International Real Estate Securities Portfolio

     980,821           5,140   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     385,635         $ 5,291   

T Rowe Price Institutional Floating Rate Fund

     513,687           5,152   

T Rowe Price New Era Fund

     144,628           4,982   

Vanguard Inflation-Protected Securities Fund

     7,657,541           80,710   

Vanguard REIT Index Fund

     627,899           11,158   

Vanguard Short-Term Bond Index Fund

     7,604,581           79,696   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $197,972) (000)

    

       196,828   
       

 

 

 

Total Investments — 100.0%
(Cost $513,997) (000)

        $ 522,149   
       

 

 

 

Percentages are based on Net Assets of $522,066 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 200,073       $ (22,178    $ 1,072       $ 305       $ 179,272       $ 4,685   
KP International Equity Fund              47,563         (10,677      (1,290      521         36,117         1,195   
KP Large Cap Equity Fund              114,561         (34,305      8,532         2,375         91,163         2,461   
KP Small Cap Equity Fund              25,006         (7,477      982         258         18,769         157   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

19


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2020 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 69.8%

  

KP Fixed Income Fund

     20,318,286         $ 203,183   

KP International Equity Fund

     8,940,385           83,146   

KP Large Cap Equity Fund

     13,121,488           141,974   

KP Small Cap Equity Fund

     4,431,353           45,732   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $460,246) (000)

   

       474,035   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 30.2%

  

DFA Commodity Strategy Portfolio

     873,498           6,123   

DFA International Real Estate Securities Portfolio

     1,278,243           6,698   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     502,575         $ 6,895   

T Rowe Price Institutional Floating Rate Fund

     669,457           6,715   

T Rowe Price New Era Fund

     188,485           6,493   

Vanguard Inflation-Protected Securities Fund

     7,792,252           82,130   

Vanguard REIT Index Fund

     818,301           14,541   

Vanguard Short-Term Bond Index Fund

     7,216,383           75,628   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $206,277) (000)

    

       205,223   
       

 

 

 

Total Investments — 100.0%
(Cost $666,523) (000)

   

     $ 679,258   
       

 

 

 

Percentages are based on Net Assets of $679,151 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 210,013       $ (7,864    $ 935       $ 99       $ 203,183       $ 5,270   
KP International Equity Fund              95,590         (9,909      (2,994      459         83,146         2,744   
KP Large Cap Equity Fund              151,559         (24,913      13,478         1,850         141,974         3,814   
KP Small Cap Equity Fund              51,807         (8,832      2,370         387         45,732         383   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

20


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2025 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 77.9%

  

KP Fixed Income Fund

     15,410,998         $ 154,110   

KP International Equity Fund

     13,477,277           125,339   

KP Large Cap Equity Fund

     15,048,370           162,823   

KP Small Cap Equity Fund

     6,232,761           64,322   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $491,553) (000)

   

       506,594   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 22.1%

  

DFA Commodity Strategy Portfolio

     834,023           5,847   

DFA International Real Estate Securities Portfolio

     1,220,476           6,395   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     479,862         $ 6,584   

T Rowe Price Institutional Floating Rate Fund

     639,203           6,411   

T Rowe Price New Era Fund

     179,967           6,200   

Vanguard Inflation-Protected Securities Fund

     4,994,157           52,638   

Vanguard REIT Index Fund

     781,321           13,884   

Vanguard Short-Term Bond Index Fund

     4,346,438           45,551   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $144,235) (000)

    

       143,510   
       

 

 

 

Total Investments — 100.0%
(Cost $635,788) (000)

   

     $ 650,104   
       

 

 

 

Percentages are based on Net Assets of $650,003 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 158,302       $ (4,877    $ 596       $ 89       $ 154,110       $ 4,016   
KP International Equity Fund              136,041         (6,417      (4,526      241         125,339         4,148   
KP Large Cap Equity Fund              161,179         (15,044      15,620         1,068         162,823         4,359   
KP Small Cap Equity Fund              68,139         (7,420      3,351         252         64,322         541   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

21


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2030 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 86.4%

  

KP Fixed Income Fund

     10,552,472         $ 105,525   

KP International Equity Fund

     16,652,991           154,873   

KP Large Cap Equity Fund

     15,529,340           168,027   

KP Small Cap Equity Fund

     7,075,690           73,021   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $487,015) (000)

   

       501,446   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 13.6%

  

DFA Commodity Strategy Portfolio

     709,469           4,973   

DFA International Real Estate Securities Portfolio

     1,038,209           5,440   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     408,199         $ 5,600   

T Rowe Price Institutional Floating Rate Fund

     543,744           5,454   

T Rowe Price New Era Fund

     153,091           5,274   

Vanguard Inflation-Protected Securities Fund

     2,434,487           25,660   

Vanguard REIT Index Fund

     664,637           11,811   

Vanguard Short-Term Bond Index Fund

     1,416,470           14,845   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $79,533) (000)

    

       79,057   
       

 

 

 

Total Investments — 100.0%
(Cost $566,548) (000)

        $ 580,503   
       

 

 

 

Percentages are based on Net Assets of $580,413 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds from
Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 111,394       $ (6,329    $ 349       $ 111       $ 105,525       $ 2,752   
KP International Equity Fund              165,196         (4,513      (5,917      107         154,873         5,112   
KP Large Cap Equity Fund              163,465         (12,624      16,221         965         168,027         4,495   
KP Small Cap Equity Fund              77,460         (8,557      3,778         340         73,021         617   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

22


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2035 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares       

Value

(000)

 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 91.7%

  

KP Fixed Income Fund

     8,754,462         $ 87,544   

KP International Equity Fund

     20,247,703           188,304   

KP Large Cap Equity Fund

     18,782,792           203,230   

KP Small Cap Equity Fund

     8,700,082           89,785   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $551,628) (000)

   

       568,863   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 8.3%

  

DFA Commodity Strategy Portfolio

     605,819           4,247   

DFA International Real Estate Securities Portfolio

     886,532           4,645   
Description    Shares       

Value

(000)

 
       

Lazard Global Listed Infrastructure Portfolio

     348,563         $ 4,782   

T Rowe Price Institutional Floating Rate Fund

     464,305           4,657   

T Rowe Price New Era Fund

     130,725           4,504   

Vanguard Inflation-Protected Securities Fund

     1,330,872           14,027   

Vanguard REIT Index Fund

     567,537           10,085   

Vanguard Short-Term Bond Index Fund

     466,028           4,884   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $52,123) (000)

    

       51,831   
       

 

 

 

Total Investments — 100.0%
(Cost $603,751) (000)

        $ 620,694   
       

 

 

 

Percentages are based on Net Assets of $620,600 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 93,133       $ (5,952    $ 239       $ 124       $ 87,544       $ 2,283   
KP International Equity Fund              199,851         (4,317      (7,275      45         188,304         6,215   
KP Large Cap Equity Fund              194,767         (12,055      19,610         908         203,230         5,435   
KP Small Cap Equity Fund              93,194         (8,371      4,661         301         89,785         753   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

23


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2040 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

†  Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 94.2%

  

KP Fixed Income Fund

     5,713,302         $ 57,133   

KP International Equity Fund

     19,408,729           180,501   

KP Large Cap Equity Fund

     17,797,123           192,565   

KP Small Cap Equity Fund

     7,930,483           81,843   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $496,672) (000)

   

       512,042   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 5.8%

  

DFA Commodity Strategy Portfolio

     404,071           2,832   

DFA International Real Estate Securities Portfolio

     591,301           3,098   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     232,485         $ 3,190   

T Rowe Price Institutional Floating Rate Fund

     309,684           3,106   

T Rowe Price New Era Fund

     87,191           3,004   

Vanguard Inflation-Protected Securities Fund

     887,669           9,356   

Vanguard REIT Index Fund

     378,538           6,727   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $31,535) (000)

    

       31,313   
       

 

 

 

Total Investments — 100.0%
(Cost $528,207) (000)

        $ 543,355   
       

 

 

 

Percentages are based on Net Assets of $543,274 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds from
Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 59,804       $ (2,877    $ 152       $ 54       $ 57,133       $ 1,481   
KP International Equity Fund              194,140         (5,886      (7,786      33         180,501         5,955   
KP Large Cap Equity Fund              187,685         (15,005      18,811         1,074         192,565         5,141   
KP Small Cap Equity Fund              87,152         (9,855      4,193         353         81,843         689   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

24


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2045 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 95.1%

  

KP Fixed Income Fund

     2,812,707         $ 28,127   

KP International Equity Fund

     13,305,635           123,742   

KP Large Cap Equity Fund

     12,165,202           131,628   

KP Small Cap Equity Fund

     5,205,748           53,723   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $327,563) (000)

   

       337,220   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 4.9%

  

DFA Commodity Strategy Portfolio

     226,918           1,591   

DFA International Real Estate Securities Portfolio

     332,062           1,740   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     130,558         $ 1,791   

T Rowe Price Institutional Floating Rate Fund

     173,912           1,744   

T Rowe Price New Era Fund

     48,965           1,687   

Vanguard Inflation-Protected Securities Fund

     498,497           5,254   

Vanguard REIT Index Fund

     212,579           3,778   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $17,741) (000)

    

       17,585   
       

 

 

 

Total Investments — 100.0%
(Cost $345,304) (000)

        $ 354,805   
       

 

 

 

Percentages are based on Net Assets of $354,753 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from
Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 31,286       $ (3,274    $ 41       $ 74       $ 28,127       $ 732   
KP International Equity Fund              132,905         (3,982      (5,279      98         123,742         4,075   
KP Large Cap Equity Fund              126,661         (7,687      12,239         415         131,628         3,512   
KP Small Cap Equity Fund              57,190         (6,299      2,656         176         53,723         450   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

25


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2050 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares       

Value

(000)

 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 95.1%

  

KP Fixed Income Fund

     1,006,288         $ 10,063   

KP International Equity Fund

     4,636,524           43,120   

KP Large Cap Equity Fund

     4,273,326           46,237   

KP Small Cap Equity Fund

     1,827,322           18,858   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $115,833) (000)

   

       118,278   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 4.9%

  

DFA Commodity Strategy Portfolio

     79,077           554   

DFA International Real Estate Securities Portfolio

     115,717           606   
Description    Shares       

Value

(000)

 
       

Lazard Global Listed Infrastructure Portfolio

     45,496         $ 624   

T Rowe Price Institutional Floating Rate Fund

     60,605           608   

T Rowe Price New Era Fund

     17,064           588   

Vanguard Inflation-Protected Securities Fund

     173,717           1,831   

Vanguard REIT Index Fund

     74,080           1,317   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $6,205) (000)

          6,128   
       

 

 

 

Total Investments — 100.0%
(Cost $122,038) (000)

        $ 124,406   
       

 

 

 

Percentages are based on Net Assets of $124,388 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014 , there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 11,228       $ (1,173    $ (12    $ 20       $ 10,063       $ 258   
KP International Equity Fund              47,171         (1,889      (2,191      29         43,120         1,416   
KP Large Cap Equity Fund              45,592         (3,285      3,778         152         46,237         1,230   
KP Small Cap Equity Fund              20,706         (2,754      870         36         18,858         158   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

26


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2055 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 95.0%

  

KP Fixed Income Fund

     101,358         $ 1,014   

KP International Equity Fund

     475,087           4,418   

KP Large Cap Equity Fund

     432,027           4,674   

KP Small Cap Equity Fund

     186,392           1,924   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $12,075) (000)

   

       12,030   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 5.0%

  

DFA Commodity Strategy Portfolio

     8,125           57   

DFA International Real Estate Securities Portfolio

     11,888           62   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     4,673         $ 64   

T Rowe Price Institutional Floating Rate Fund

     6,226           63   

T Rowe Price New Era Fund

     1,753           61   

Vanguard Inflation-Protected Securities Fund

     17,849           188   

Vanguard REIT Index Fund

     7,612           135   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $647) (000)

          630   
       

 

 

 

Total Investments — 100.0%
(Cost $12,722) (000)

        $ 12,660   
       

 

 

 

Percentages are based on Net Assets of $12,658 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with t17131he authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
(Loss)
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 1,201       $ (181    $ (9    $ 3       $ 1,014       $ 26   
KP International Equity Fund              5,495         (747      (331      1         4,418         144   
KP Large Cap Equity Fund              5,422         (1,028      226         54         4,674         124   
KP Small Cap Equity Fund              2,303         (443      69         (5      1,924         16   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

27


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Retirement Path 2060 Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

AFFILIATED REGISTERED INVESTMENT COMPANIES — 95.0%

  

KP Fixed Income Fund

     19,618         $ 196   

KP International Equity Fund

     92,216           858   

KP Large Cap Equity Fund

     83,798           907   

KP Small Cap Equity Fund

     35,803           369   
       

 

 

 

Total Affiliated Registered Investment Companies
(Cost $2,372) (000)

   

       2,330   
       

 

 

 

UNAFFILIATED REGISTERED INVESTMENT COMPANIES — 5.0%

  

DFA Commodity Strategy Portfolio

     1,585           11   

DFA International Real Estate Securities Portfolio

     2,317           12   
Description    Shares        Value
(000)
 
       

Lazard Global Listed Infrastructure Portfolio

     910         $ 13   

T Rowe Price Institutional Floating Rate Fund

     1,213           12   

T Rowe Price New Era Fund

     342           12   

Vanguard Inflation-Protected Securities Fund

     3,481           37   

Vanguard REIT Index Fund

     1,484           26   
       

 

 

 

Total Unaffiliated Registered Investment Companies
(Cost $130) (000)

   

       123   
       

 

 

 

Total Investments — 100.0%
(Cost $2,502) (000)

        $ 2,453   
       

 

 

 

Percentages are based on Net Assets of $2,452 (000).

REIT — Real Estate Investment Trust

As of December 31, 2014, all of the Fund’s investments were considered Level 1 in accordance with the authoritative guidance on fair value measurements and disclosure under U.S. generally accepted accounting principles.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period. As of December 31, 2014, there were no Level 3 investments.

 

The following is a summary of the transactions with affiliates for the period ended December 31, 2014 (000):

 

      Value
1/10/2014*
     Purchases
at Cost
     Proceeds
from Sales
     Unrealized
Appreciation
(Depreciation)
     Realized
Gain
(Loss)
     Value
12/31/2014
     Dividend
Income
 
KP Fixed Income Fund    $       $ 820       $ (620    $ (4    $       $ 196       $ 5   
KP International Equity Fund              3,663         (2,680      (69      (56      858         29   
KP Large Cap Equity Fund              3,736         (2,852      19         4         907         25   
KP Small Cap Equity Fund              1,517         (1,151      12         (9      369         3   

 

* The Fund commenced operations on January 10, 2014.

Amounts designated as “—” are $0 or have been rounded to $0.

 

The accompanying notes are an integral part of the financial statements.

 

28


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
SECTOR WEIGHTINGS† (unaudited)

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

COMMON STOCK — 98.3%

       

Consumer Discretionary — 14.9%

       

Advance Auto Parts

     14,523         $ 2,313   

Amazon.com*

     53,596           16,634   

AutoNation*

     1,613           97   

AutoZone*

     709           439   

Bed Bath & Beyond*

     16,755           1,276   

Best Buy

     6,677           260   

BorgWarner

     5,297           291   

Cablevision Systems, Cl A

     5,073           105   

CarMax*

     46,589           3,102   

Carnival

     10,564           479   

CBS, Cl B

     11,376           630   

Chipotle Mexican Grill, Cl A*

     4,264           2,919   

Coach

     6,289           236   

Comcast, Cl A

     132,235           7,639   

Ctrip.com International ADR*

     39,200           1,784   

Darden Restaurants

     3,028           178   

Delphi Automotive PLC

     92,095           6,697   

DIRECTV*

     11,952           1,036   

Discovery Communications, Cl C*

     10,286           349   

Dollar General*

     6,614           468   

Dollar Tree*

     4,863           342   

DR Horton

     8,195           207   

Expedia

     2,380           203   

Family Dollar Stores

     2,269           180   

Ford Motor

     91,076           1,412   

Fossil Group*

     1,186           131   

GameStop, Cl A

     2,704           91   

Gannett

     5,297           169   

Gap

     6,562           276   
Description    Shares        Value
(000)
 
       

Garmin

     2,849         $ 151   

General Motors

     31,986           1,117   

Genuine Parts

     3,569           380   

Goodyear Tire & Rubber

     6,330           181   

H&R Block

     6,176           208   

Hanesbrands

     16,400           1,831   

Harley-Davidson

     4,885           322   

Harman International Industries

     1,603           171   

Hasbro

     31,073           1,709   

Hilton Worldwide Holdings*

     113,478           2,961   

Home Depot

     31,026           3,257   

Interpublic Group of Companies

     9,726           202   

Johnson Controls

     86,809           4,196   

Kohl’s

     18,258           1,114   

L Brands

     5,425           470   

Leggett & Platt

     3,246           138   

Lennar, Cl A

     4,195           188   

Lowe’s

     110,523           7,604   

Macy’s

     7,542           496   

Marriott International, Cl A

     4,892           382   

Mattel

     23,429           725   

McDonald’s

     55,453           5,196   

MGM Resorts International*

     242,718           5,189   

Michael Kors Holdings*

     22,013           1,653   

Mohawk Industries*

     1,406           218   

Netflix*

     7,857           2,684   

Newell Rubbermaid

     6,401           244   

News*

     11,468           180   

NIKE, Cl B

     16,530           1,589   

Nordstrom

     3,349           266   

Omnicom Group

     59,806           4,633   

O’Reilly Automotive*

     2,387           460   

PetSmart

     2,481           202   

priceline.com*

     12,431           14,174   

PulteGroup

     8,202           176   

PVH

     1,942           249   

Ralph Lauren, Cl A

     1,404           260   

Ross Stores

     4,786           451   

Royal Caribbean Cruises

     4,000           330   

Scripps Networks Interactive, Cl A

     2,491           187   

Staples

     14,751           267   

Starbucks

     84,114           6,902   

Starwood Hotels & Resorts Worldwide

     4,253           345   

Target

     91,005           6,908   

Tesla Motors*

     12,450           2,769   

Tiffany

     2,592           277   

Time

     3,690           91   
 

 

The accompanying notes are an integral part of the financial statements.

 

29


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

Time Warner

     55,314         $ 4,725   

Time Warner Cable

     6,691           1,017   

TJX

     16,340           1,121   

Tractor Supply

     53,443           4,212   

TripAdvisor*

     2,593           194   

Twenty-First Century Fox, Cl A

     43,835           1,683   

Under Armour, Cl A*

     15,800           1,073   

Urban Outfitters*

     2,490           87   

VF

     7,614           570   

Viacom, Cl B

     40,002           3,010   

Vipshop Holdings ADR*

     91,300           1,784   

Walt Disney

     74,191           6,988   

Whirlpool

     1,737           337   

Wyndham Worldwide

     2,965           254   

Wynn Resorts

     56,991           8,478   

Yum! Brands

     10,376           756   
       

 

 

 
          169,935   
       

 

 

 

Consumer Staples — 7.9%

       

Altria Group

     83,911           4,134   

Archer-Daniels-Midland

     15,348           798   

Avon Products

     10,056           95   

Brown-Forman, Cl B

     3,582           315   

Campbell Soup

     3,913           172   

Clorox

     3,025           315   

Coca-Cola

     92,820           3,919   

Coca-Cola Enterprises

     5,521           244   

Colgate-Palmolive

     20,232           1,400   

ConAgra Foods

     9,242           335   

Constellation Brands, Cl A*

     3,662           360   

Costco Wholesale

     10,362           1,469   

CVS Health

     94,124           9,065   

Danone

     39,282           2,588   

Diageo PLC

     164,537           4,740   

Dr Pepper Snapple Group

     13,779           988   

Estee Lauder, Cl A

     42,346           3,227   

General Mills

     106,740           5,692   

Hershey

     3,461           360   

Hormel Foods

     3,035           158   

Imperial Tobacco Group PLC

     16,637           735   

JM Smucker

     2,468           249   

Kellogg

     19,282           1,262   

Keurig Green Mountain

     2,800           371   

Kimberly-Clark

     8,787           1,015   

Kraft Foods Group

     14,039           880   

Kroger

     11,707           752   

Lorillard

     65,497           4,122   
Description    Shares        Value
(000)
 
       

McCormick

     3,030         $ 225   

Mead Johnson Nutrition, Cl A

     4,752           478   

Molson Coors Brewing, Cl B

     3,676           274   

Mondelez International, Cl A

     39,677           1,441   

Monster Beverage*

     3,430           372   

Nestle

     79,092           5,803   

PepsiCo

     35,274           3,336   

Philip Morris International

     178,167           14,512   

Procter & Gamble

     85,150           7,756   

Reynolds American

     7,246           466   

Safeway

     5,730           201   

Sysco

     13,814           548   

Tyson Foods, Cl A

     7,074           284   

Walgreens Boots Alliance

     20,577           1,568   

Wal-Mart Stores

     37,220           3,196   

Whole Foods Market

     8,349           421   
       

 

 

 
          90,641   
       

 

 

 

Energy — 6.1%

       

Anadarko Petroleum

     11,977           988   

Apache

     8,296           520   

Baker Hughes

     21,256           1,192   

Cabot Oil & Gas

     9,934           294   

California Resources*

     1             

Cameron International*

     4,218           211   

Chesapeake Energy

     12,081           236   

Chevron

     90,437           10,145   

Cimarex Energy

     2,100           223   

ConocoPhillips

     29,036           2,005   

CONSOL Energy

     5,447           184   

Denbury Resources

     8,539           69   

Devon Energy

     8,465           518   

Diamond Offshore Drilling

     1,621           59   

Ensco, Cl A

     5,507           165   

EOG Resources

     34,911           3,214   

EQT

     43,263           3,275   

Exxon Mobil

     175,445           16,220   

FMC Technologies*

     5,612           263   

Halliburton

     20,179           794   

Helmerich & Payne

     2,487           168   

Hess

     5,996           443   

Kinder Morgan

     40,174           1,700   

Marathon Oil

     15,714           445   

Marathon Petroleum

     6,525           589   

Murphy Oil

     4,046           204   

Nabors Industries

     7,453           97   

National Oilwell Varco

     10,046           658   
 

 

The accompanying notes are an integral part of the financial statements.

 

30


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

Newfield Exploration*

     3,137         $ 85   

Noble

     5,842           97   

Noble Energy

     7,826           371   

Occidental Petroleum

     65,429           5,274   

ONEOK

     4,860           242   

Phillips 66

     13,145           942   

Pioneer Natural Resources

     38,849           5,783   

QEP Resources

     4,213           85   

Range Resources

     81,071           4,333   

Schlumberger

     56,753           4,847   

Southwestern Energy*

     8,411           230   

Spectra Energy

     14,768           536   

Tesoro

     3,132           233   

Transocean

     8,091           148   

Valero Energy

     12,441           616   

Williams

     15,991           719   
       

 

 

 
          69,420   
       

 

 

 

Financials — 15.9%

       

ACE

     42,829           4,920   

Affiliated Managers Group*

     1,300           276   

Aflac

     10,713           654   

Allstate

     9,993           702   

American Express

     20,977           1,952   

American International Group

     33,060           1,852   

American Tower, Cl A‡

     9,388           928   

Ameriprise Financial

     4,339           574   

Aon PLC

     49,404           4,685   

Apartment Investment & Management, Cl A‡

     3,354           125   

Assurant

     1,627           111   

AvalonBay Communities‡

     3,012           492   

Bank of America

     247,411           4,426   

Bank of New York Mellon

     133,769           5,427   

BB&T

     17,229           670   

Berkshire Hathaway, Cl B*

     42,872           6,437   

BlackRock, Cl A

     12,383           4,428   

Boston Properties‡

     3,567           459   

Capital One Financial

     13,205           1,090   

CBRE Group, Cl A*

     6,385           219   

Charles Schwab

     26,523           801   

Chubb

     31,630           3,273   

Cincinnati Financial

     3,357           174   

Citigroup

     94,645           5,121   

CME Group, Cl A

     7,550           669   

Comerica

     4,219           198   

Crown Castle International‡

     7,782           612   
Description    Shares        Value
(000)
 
       

Discover Financial Services

     10,435         $ 683   

E*TRADE Financial*

     6,701           163   

Equity Residential‡

     8,384           602   

Essex Property Trust‡

     1,500           310   

Fifth Third Bancorp

     18,939           386   

Franklin Resources

     88,095           4,878   

General Growth Properties‡

     13,637           384   

Genworth Financial, Cl A*

     11,362           97   

Goldman Sachs Group

     44,727           8,669   

Hartford Financial Services Group

     9,879           412   

HCP‡

     10,895           480   

Health Care‡

     7,603           575   

Host Hotels & Resorts‡

     18,018           428   

Hudson City Bancorp

     11,129           113   

Huntington Bancshares

     18,948           199   

Intercontinental Exchange

     13,651           2,993   

Invesco

     10,273           406   

Iron Mountain‡

     4,286           166   

JPMorgan Chase

     327,283           20,481   

KeyCorp

     20,963           291   

Kimco Realty‡

     9,745           245   

Legg Mason

     2,485           133   

Leucadia National

     7,347           165   

Lincoln National

     6,257           361   

Loews

     7,233           304   

M&T Bank

     3,127           393   

Macerich‡

     3,245           271   

Marsh & McLennan

     12,857           736   

McGraw Hill Financial

     22,185           1,974   

MetLife

     146,784           7,940   

Moody’s

     4,230           405   

Morgan Stanley

     220,315           8,548   

NASDAQ OMX Group

     57,451           2,755   

Navient

     9,908           214   

Northern Trust

     5,292           357   

People’s United Financial

     7,454           113   

Plum Creek Timber‡

     4,008           171   

PNC Financial Services Group

     43,996           4,014   

Principal Financial Group

     6,477           336   

Progressive

     11,562           312   

Prologis‡

     10,969           472   

Prudential Financial

     49,297           4,459   

Public Storage‡

     3,352           620   

Regions Financial

     32,801           346   

Simon Property Group‡

     7,341           1,337   

State Street

     107,835           8,465   
 

 

The accompanying notes are an integral part of the financial statements.

 

31


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

SunTrust Banks

     12,233         $ 513   

T Rowe Price Group

     6,055           520   

TD Ameritrade Holding

     163,600           5,854   

Torchmark

     2,987           162   

Travelers

     69,952           7,404   

Unum Group

     6,055           211   

US Bancorp

     195,132           8,771   

Ventas‡

     6,713           481   

Vornado Realty Trust‡

     3,803           448   

Wells Fargo

     320,632           17,577   

Weyerhaeuser‡

     12,430           446   

XL Group, Cl A

     6,393           220   

Zions Bancorporation

     4,622           132   
       

 

 

 
          182,176   
       

 

 

 

Health Care — 17.0%

       

Abbott Laboratories

     127,815           5,754   

AbbVie

     37,573           2,459   

Actavis*

     14,236           3,665   

Aetna

     8,396           746   

Agilent Technologies

     7,977           327   

Alexion Pharmaceuticals*

     53,342           9,870   

Allergan

     33,818           7,189   

AmerisourceBergen, Cl A

     4,901           442   

Amgen

     17,915           2,854   

Anthem

     6,215           781   

Baxter International

     12,846           942   

Becton Dickinson & Company

     4,438           618   

Biogen Idec*

     30,082           10,211   

Boston Scientific*

     31,628           419   

Bristol-Myers Squibb

     39,070           2,306   

Cardinal Health

     7,895           637   

CareFusion*

     4,868           289   

Celgene*

     85,136           9,523   

Cerner*

     7,115           460   

Cigna

     6,082           626   

Covidien PLC

     38,884           3,977   

CR Bard

     1,736           289   

DaVita HealthCare Partners*

     4,108           311   

DENTSPLY International

     3,349           178   

Edwards Lifesciences*

     2,491           317   

Eli Lilly

     77,467           5,345   

Express Scripts Holding*

     61,178           5,180   

Gilead Sciences*

     125,847           11,862   

Hospira*

     3,995           245   

Humana

     27,372           3,932   

Intuitive Surgical*

     14,461           7,649   
Description    Shares        Value
(000)
 
       

Johnson & Johnson

     184,196         $ 19,261   

Laboratory Corp of America Holdings*

     1,952           211   

Mallinckrodt*

     2,800           277   

McKesson

     58,200           12,081   

Medtronic

     86,645           6,256   

Merck

     149,749           8,504   

Mylan*

     8,167           460   

Novartis

     12,266           1,139   

Patterson

     1,945           94   

PerkinElmer

     2,596           114   

Perrigo

     3,332           557   

Pfizer

     455,871           14,200   

Quest Diagnostics

     3,354           225   

Regeneron Pharmaceuticals*

     6,887           2,825   

Roche Holding

     4,932           1,339   

St. Jude Medical

     49,261           3,204   

Stryker

     7,115           671   

Tenet Healthcare*

     2,273           115   

Thermo Fisher Scientific

     39,623           4,964   

UnitedHealth Group

     68,455           6,920   

Universal Health Services, Cl B

     2,200           245   

Valeant Pharmaceuticals International*

     49,600           7,098   

Varian Medical Systems*

     2,384           206   

Vertex Pharmaceuticals*

     26,508           3,149   

Waters*

     2,035           229   

Zimmer Holdings

     3,998           454   

Zoetis, Cl A

     10,972           472   
       

 

 

 
          194,673   
       

 

 

 

Industrials — 14.2%

       

3M

     59,390           9,759   

ADT

     3,849           139   

Allegion

     2,056           114   

American Airlines Group

     183,900           9,863   

AMETEK

     5,727           301   

Boeing

     104,141           13,536   

Canadian National Railway

     30,882           2,128   

Caterpillar

     14,309           1,310   

CH Robinson Worldwide

     3,464           259   

Cintas

     2,376           186   

CSX

     23,104           837   

Cummins

     4,104           592   

Danaher

     197,410           16,920   

Deere

     8,567           758   

Delta Air Lines

     19,891           978   

Dover

     3,997           287   

Dun & Bradstreet

     867           105   
 

 

The accompanying notes are an integral part of the financial statements.

 

32


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

Eaton PLC

     55,962         $ 3,803   

Emerson Electric

     16,418           1,013   

Equifax

     9,892           800   

Expeditors International of Washington

     4,758           212   

Fastenal

     6,376           303   

FedEx

     25,419           4,414   

Flowserve

     35,243           2,109   

Fluor

     3,785           230   

General Dynamics

     7,483           1,030   

General Electric

     236,126           5,967   

Honeywell International

     93,643           9,357   

Illinois Tool Works

     24,933           2,361   

Ingersoll-Rand

     6,267           397   

Jacobs Engineering Group*

     3,130           140   

JB Hunt Transport Services

     43,200           3,640   

Joy Global

     2,485           116   

Kansas City Southern

     19,992           2,440   

L-3 Communications Holdings

     1,954           247   

Lockheed Martin

     43,854           8,445   

Masco

     8,122           205   

Nielsen

     6,941           310   

Norfolk Southern

     7,339           804   

Northrop Grumman

     23,860           3,517   

PACCAR

     7,817           532   

Pall

     2,393           242   

Parker-Hannifin

     3,460           446   

Pentair PLC

     24,917           1,655   

Pitney Bowes

     4,252           104   

Precision Castparts

     35,333           8,511   

Quanta Services*

     5,076           144   

Raytheon

     7,158           774   

Republic Services, Cl A

     5,871           236   

Robert Half International

     3,242           189   

Rockwell Automation

     3,242           361   

Rockwell Collins

     3,136           265   

Roper Industries

     2,373           371   

Ryder System

     1,192           111   

Snap-on

     1,401           192   

Southwest Airlines

     16,215           686   

Stanley Black & Decker

     25,389           2,439   

Stericycle*

     1,949           256   

Textron

     6,490           273   

Tyco International PLC

     102,978           4,517   

Union Pacific

     21,006           2,502   

United Continental Holdings*

     49,100           3,284   

United Parcel Service, Cl B

     67,899           7,548   
Description    Shares        Value
(000)
 
       

United Rentals*

     2,300         $ 235   

United Technologies

     83,132           9,560   

Verisk Analytics, Cl A*

     31,100           1,992   

Wabtec

     42,100           3,658   

Waste Management

     9,361           480   

WW Grainger

     1,458           372   

Xylem

     4,222           161   
       

 

 

 
          162,028   
       

 

 

 

Information Technology — 16.7%

       

Accenture PLC, Cl A

     103,299           9,226   

Adobe Systems*

     11,310           822   

Akamai Technologies*

     4,112           259   

Alibaba Group Holding ADR*

     28,722           2,985   

Alliance Data Systems*

     1,385           396   

Altera

     7,260           268   

Amphenol, Cl A

     6,752           363   

Analog Devices

     7,342           408   

Apple

     173,590           19,161   

Applied Materials

     28,099           700   

ASML Holding, Cl G

     21,200           2,286   

Autodesk*

     5,508           331   

Automatic Data Processing

     11,439           954   

Avago Technologies, Cl A

     5,600           563   

Baidu ADR*

     25,900           5,904   

Broadcom, Cl A

     12,541           543   

CA

     7,466           227   

Cisco Systems

     120,421           3,350   

Citrix Systems*

     3,825           244   

Cognizant Technology Solutions, Cl A*

     14,054           740   

Computer Sciences

     3,157           199   

Corning

     30,523           700   

eBay*

     26,731           1,500   

Electronic Arts*

     6,678           314   

EMC

     48,087           1,430   

F5 Networks*

     1,835           239   

Facebook, Cl A*

     149,367           11,654   

Fidelity National Information Services

     34,764           2,162   

First Solar*

     1,623           72   

Fiserv*

     39,880           2,830   

FLIR Systems

     3,347           108   

Google, Cl A*

     47,758           25,244   

Harris

     2,486           179   

Hewlett-Packard

     44,027           1,767   

Intel

     113,766           4,129   

International Business Machines

     51,739           8,301   
 

 

The accompanying notes are an integral part of the financial statements.

 

33


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

Intuit

     6,597         $ 608   

Juniper Networks

     8,580           191   

KLA-Tencor

     3,891           274   

Lam Research

     3,429           272   

Linear Technology

     5,508           251   

LinkedIn, Cl A*

     10,800           2,481   

MasterCard, Cl A

     23,105           1,991   

Microchip Technology

     4,646           210   

Micron Technology*

     25,534           894   

Microsoft

     193,698           8,997   

Motorola Solutions

     4,852           325   

NetApp

     7,194           298   

NetSuite*

     23,900           2,609   

NVIDIA

     11,909           239   

Oracle

     156,687           7,046   

Palo Alto Networks*

     7,800           956   

Paychex

     7,667           354   

QUALCOMM

     39,145           2,910   

Red Hat*

     65,230           4,510   

salesforce.com*

     114,627           6,799   

SanDisk

     5,294           519   

Seagate Technology

     7,169           477   

ServiceNow*

     43,400           2,945   

Symantec

     15,037           386   

TE Connectivity

     9,715           614   

Teradata*

     3,885           170   

Texas Instruments

     102,088           5,458   

Total System Services

     3,991           136   

Twitter*

     35,900           1,288   

Vantiv, Cl A*

     60,600           2,056   

VeriSign*

     2,643           151   

Visa, Cl A

     69,338           18,180   

VMware, Cl A*

     16,600           1,370   

Western Digital

     5,267           583   

Western Union

     12,463           223   

Workday, Cl A*

     20,100           1,640   

Xerox

     24,417           338   

Xilinx

     6,380           276   

Yahoo!*

     20,845           1,053   
       

 

 

 
          190,636   
       

 

 

 

Materials — 2.7%

  

Air Products & Chemicals

     4,468           644   

Airgas

     1,616           186   

Alcoa

     27,565           435   

Allegheny Technologies

     2,588           90   

Avery Dennison

     2,268           118   

Ball

     3,252           222   
Description    Shares        Value
(000)
 
       

CF Industries Holdings

     1,150         $ 313   

Crown Holdings*

     34,503           1,756   

Dow Chemical

     26,205           1,195   

Eastman Chemical

     3,568           271   

Ecolab

     10,173           1,063   

EI du Pont de Nemours

     33,080           2,446   

FMC

     3,032           173   

Freeport-McMoRan

     22,810           533   

International Flavors & Fragrances

     1,842           187   

International Paper

     9,273           497   

LyondellBasell Industries, Cl A

     9,914           787   

Martin Marietta Materials

     1,500           166   

MeadWestvaco

     4,010           178   

Monsanto

     11,446           1,367   

Mosaic

     6,820           311   

Newmont Mining

     11,368           215   

Nucor

     7,555           371   

Owens-Illinois*

     3,988           108   

PPG Industries

     24,153           5,583   

Praxair

     6,714           870   

Sealed Air

     4,642           197   

Sherwin-Williams

     21,150           5,563   

Sigma-Aldrich

     2,840           390   

Vulcan Materials

     62,927           4,136   
       

 

 

 
          30,371   
       

 

 

 

Telecommunication Services — 1.6%

  

AT&T

     150,700           5,062   

CenturyLink

     13,230           524   

Frontier Communications

     23,842           159   

Level 3 Communications*

     6,000           296   

Verizon Communications

     222,197           10,395   

Vodafone Group PLC

     563,419           1,955   

Windstream Holdings

     13,739           113   
       

 

 

 
          18,504   
       

 

 

 

Utilities — 1.3%

       

AES

     15,737           217   

AGL Resources

     2,707           147   

Ameren

     5,623           259   

American Electric Power

     11,649           707   

CenterPoint Energy

     9,947           233   

CMS Energy

     6,164           214   

Consolidated Edison

     6,411           423   

Dominion Resources

     13,812           1,062   

DTE Energy

     4,208           363   

Duke Energy

     27,049           2,260   

Edison International

     7,668           502   
 

 

The accompanying notes are an integral part of the financial statements.

 

34


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Large Cap Equity Fund   
Description    Shares        Value
(000)
 
       

Entergy

     3,954         $ 346   

Exelon

     20,494           760   

FirstEnergy

     9,829           383   

Integrys Energy Group

     1,839           143   

NextEra Energy

     10,351           1,100   

NiSource

     7,346           312   

Northeast Utilities

     7,449           399   

NRG Energy

     7,564           204   

Pepco Holdings

     5,635           152   

PG&E

     10,983           585   

Pinnacle West Capital

     2,492           170   

PPL

     15,299           556   

Public Service Enterprise Group

     11,082           459   

SCANA

     3,245           196   

Sempra Energy

     5,496           612   

Southern

     21,337           1,048   

TECO Energy

     5,411           111   

Wisconsin Energy

     5,195           274   

Xcel Energy

     11,768           423   
       

 

 

 
          14,620   
       

 

 

 

Total Common Stock
(Cost $1,011,868) (000)

          1,123,004   
       

 

 

 

PREFERRED STOCK — 0.2%

  

Air BNB* (A)

     11,406           464   

Dropbox, Cl A* (A)

     29,866           571   

Dropbox, Cl C* (A)

     1,097           21   

Flipkart Online Services* (A)

     3,616           433   

Uber Technologies* (A)

     21,072           702   

United Technologies,
7.500%

     3,560           218   
       

 

 

 

Total Preferred Stock
(Cost $2,419) (000)

          2,409   
       

 

 

 

SHORT-TERM INVESTMENT (B) — 3.0%

  

State Street Institutional Liquid Reserves Fund,
0.000%

     34,425,252           34,425   
       

 

 

 

Total Short-Term Investment
(Cost $34,425) (000)

          34,425   
       

 

 

 

Total Investments — 101.5%
(Cost $1,048,712) (000)

        $ 1,159,838   
       

 

 

 

Percentages are based on net assets of $1,142,880 (000).

A list of the open futures contracts held by the Fund at December 31, 2014, is as follows (000):

 

Type of Contract    Number of
Contracts
Long
   Expiration
Date
   Unrealized
Appreciation
S&P 500 Index EMINI    115    Mar-2015    $144
        

 

For the period ended December 31, 2014, the monthly average value of futures contracts held was $9,603 (000).

 

* Non-income producing security.
Real Estate Investment Trust
(A) Security is fair valued using methods determined in good faith by the Fair Value Committee of the Board of Trustees. The total value of such securities as of December 31, 2014, was $2,191 (000) and represented 0.19% of net assets.
(B) The rate reported is the 7-day effective yield as of December 31, 2014.

ADR — American Depositary Receipt

Cl — Class

PLC — Public Limited Company

S&P — Standard & Poors

The following is a list of the level of inputs used as of December 31, 2014, in valuing the Fund’s investments and other financial instruments carried at value (000):

 

Investments in Securities   Level 1     Level 2     Level 3^     Total  

Common Stock

  $ 1,123,004      $      $      $ 1,123,004   

Preferred Stock

    218               2,191        2,409   

Short-Term Investment

    34,425                      34,425   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Investments in Securities

  $ 1,157,647      $      $   2,191      $ 1,159,838   
 

 

 

   

 

 

   

 

 

   

 

 

 
Other Financial Instruments   Level 1     Level 2     Level 3     Total  

Futures Contracts†

  

     

Unrealized Appreciation 

  $ 144      $      $      $ 144   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total Other Financial Instruments

  $ 144      $     —      $      $ 144   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

Futures contracts are valued at the unrealized appreciation on the instrument.
^ A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments in at the beginning and/or end of the period in relation to net assets.

For the period ended December 31, 2014, there were no transfers between Level 1, Level 2 and Level 3 assets and liabilities. All transfers, if any, are recognized by the Fund at the end of the period.

Amounts designated as “—” are $0 or have been rounded to $0.

 

 

The accompanying notes are an integral part of the financial statements.

 

35


THE KP FUNDS    December 31, 2014

 

 

 

 

KP Small Cap Equity Fund   
SECTOR WEIGHTINGS†

 

LOGO

 

Percentages based on total investments.

 

SCHEDULE OF INVESTMENTS

 

Description    Shares        Value
(000)
 
       

COMMON STOCK — 97.6%

  

Consumer Discretionary — 17.3%

  

1-800-Flowers.com, Cl A*

     1,500         $ 12   

2U*

     500           10   

Abercrombie & Fitch, Cl A

     35,876           1,027