KP Fixed Income Fund

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.

2017 was a very favorable year for investment market participants of all types. Stock markets hit a number of record highs, adding trillions of dollars to global market capitalization. U.S. consumer confidence remained near a 17-year high and unemployment at a 17-year low. Risk appetite was robust, fueling returns for traditional and non-traditional assets. In the public realm, emerging market equities outperformed developed markets. High yield corporate bonds posted the best returns within fixed income. Large Cap US stocks as measured by the Russell 1000 Index returned 21.69% for the year. Non-US equity markets fared even better with the MSCI ACWI ex-US IMI Equity Index gaining 27.81% for the year and the MSCI Emerging Markets Equity Index returning 37.75%. Fixed income returns were positive for the year with the Bloomberg Barclays Aggregate Index returning 3.54%. US REITs (as measured by the MSCI US REIT Index) returned 5.07% for the year, while Commodities (as measured by the Bloomberg Commodity Index) increased by 0.75%. The year closed with the passage of the largest tax reform bill in 30 years, lending further support to stocks given the significant cut in corporate tax rates. Estimates as to the likely effect of the package on U.S. annual GDP growth vary from "negligible" to upwards of 3%, while the package is expected to add $1.5 trillion to the budget deficit over 10 years.

The KP Retirement Path 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 bank loans, emerging market debt, and short term bonds. Each of the 10 KP Retirement Path Funds is designed with a specific retirement date in mind, and the asset allocation is automatically adjusted over time to help shareholders achieve the appropriate balance between long-term capital growth, inflation protection, capital preservation and current income for each stage of their savings and investing career.

Since the KP Retirement Path Funds’ inception we have been pleased with the performance of the operational infrastructure that was assembled to coordinate the activities of the 21 different investment management organizations responsible for the management of the Funds’ assets. We have also been satisfied from an investment performance perspective. In terms of absolute performance, fiscal year 2017 was characterized by strong returns across the major asset classes. Consequently the returns for the KP Retirement Path Funds were all positive for the year, ranging from 10.03% (2015 Fund) to 21.66% (2060 Fund). The Funds outperformed their strategic benchmarks in fiscal year 2017, and as a result, also outperformed their benchmarks by between 0.03%-0.17% since their inception in January of 2014 (through December 31, 2017).

We continue to believe that the KP Retirement Path Funds are well-designed and include a diverse set of complementary asset classes and strategies managed by a highly capable team of sub-advisors. We remain confident that the Funds are well-positioned to achieve their objectives going into 2018 and beyond.

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.

Performance for the KP Retirement Path Funds for Fiscal Year 2017 was positive across the board on an absolute basis as well as relative to the Funds’ strategic benchmarks. In order to better understand the sources of outperformance 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. As a result, most 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.

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 five strategies including: a passive S&P 500 index strategy; an active large cap growth strategy; an active large cap value strategy; and two active large cap blend strategies. The Fund returned 23.84% for the year versus 21.69% for the benchmark. This outperformance of 2.15% at the Fund level was largely explained by the outperformance of the active large cap growth strategy and the active large cap value strategy. These strategies beat their benchmarks for the year by 8.26% and 4.76% respectively. Since large cap is a significant part of the asset allocation for all of the KP Retirement Path Funds, this was a meaningful source of outperformance across the entire fund 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 seven strategies including a passive S&P 600 strategy, two active small cap growth strategies, two active small cap value strategies, and two active small cap blend strategies. The Fund returned 17.95% for the year versus 14.65% for the benchmark. The outperformance of 3.30% was largely explained by the outperformance of one active growth strategy, both of the actively managed value strategies, and one of the active small cap blend strategies. These strategies beat their benchmarks by a range of 4.57% to 13.09% with an average outperformance of 7.89%. Small cap is a relatively small part of the asset allocation for the KP Retirement Path Funds, but in combination with the relatively large outperformance versus its index, this contributed to the outperformance across the fund family.

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 IMI Index. The Fund employs seven strategies including two passive strategies: MSCI World ex-US and MSCI World ex-US Small Cap Index strategies. The Fund also employs five active strategies including two active MSCI EAFE strategies, an active MSCI ACWI ex-US strategy, and two active emerging markets strategies. The Fund returned 28.95% for the year versus 27.66% for the benchmark. This outperformance of 1.29% was largely attributable to an active EAFE strategy which outpaced its benchmark by 3.92% and an emerging markets strategy, which outperformed its benchmark by 4.32%. Because international equity is a large part of the asset allocation for the KP Retirement Path Funds, this was a noteworthy source of relative outperformance across the fund family.

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 Bloomberg Barclays Capital US Aggregate Bond Index. The Fund employs four strategies including a passive Bloomberg Barclays Capital US Aggregate Bond Index strategy, an active Bloomberg

Barclays Aggregate strategy, an active emerging markets debt strategy, and an active bank loan strategy. The KP Fixed Income Fund returned 4.41% for the year versus 3.54% for the benchmark. This outperformance of 0.87% was primarily due to the outperformance of the active emerging markets debt strategy, which outperformed its benchmark by 2.56%, as well as the contributions of the active Bloomberg Barclays and active bank loan strategies. Because fixed income is a large part of the asset allocation for the KP Retirement Path Funds, this outperformance had a positive impact on the relative performance of the KP Retirement Path Fund 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 7.26% over the measurement period versus 8.52% for their composite benchmark. The seven underlying real assets funds had a wide range of returns, from 2.73% for the commodities fund to 20.80% for the global listed infrastructure fund. Because real assets are a relatively small part of the asset allocation for the KP Retirement Path Funds, they had only a modest impact on the relative performance across the series.

The KP Retirement Path Funds achieve their short-term fixed income exposure through the use of low-cost index strategies. These sub-funds performed in line with their benchmarks and did not have a material effect on the relative performance across the series.

The tables that follow detail the performance of each of the KP Retirement Path Funds over various periods ended December 31, 2017.

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 LLC, 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 LLC.

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 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 and mid cap representation across 22 of 23 Developed Markets countries (excluding the United States) and 24 Emerging Markets countries. With 1,866 constituents, the index covers approximately 85% of the global equity opportunity set outside the US.

The MSCI ACWI ex-US Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets countries (excluding the United States) and 24 Emerging Markets countries. With 6,216 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 Bloomberg Barclays U.S. Aggregate Bond 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 S&P 500 Index is based on market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or NASDAQ.

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.