As filed with the Securities and Exchange Commission on September 30, 1999
1933 Act Registration Number: 33-78234
1940 Act Registration Number: 811-8488
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
|X| Preliminary Proxy Statement
| | Confidential, For Use of the Commission only (as permitted by Rule
14a-6(e)(2))
| | Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KPM Funds, Inc. Fixed Income Portfolio
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
| | Fee paid previously with preliminary materials:
| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement
(3) Filing Party:
(4) Date Filed:
KPM FIXED INCOME PORTFOLIO
KPM FUNDS, INC.
10250 REGENCY CIRCLE
OMAHA, NEBRASKA 68114
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Our Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of KPM Fixed Income Portfolio (the "Fund") will be held on
__________________, 1999, at 10:00 a.m. (Omaha time), at the Fund's offices
located at 10250 Regency Circle, Omaha, Nebraska, for the following purposes:
1. To consider and act upon a plan of complete liquidation and
dissolution of the Fund (the "Plan"), providing for, among
other things, the sale of all of the assets of the Fund, the
distribution in cash of the net proceeds from such sale of
assets to the shareholders in accordance with the Plan in
complete liquidation of their interests in the Fund, and the
subsequent termination of the Fund's existence.
2. To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
Only shareholders of record at the close of business on October __,
1999, are entitled to notice of, and to vote at, this Meeting or any adjournment
thereof.
Brian P. McGinty
Secretary
Dated: October __, 1999
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
KPM FIXED INCOME PORTFOLIO
KPM FUNDS, INC.
10250 REGENCY CIRCLE
OMAHA, NEBRASKA, 68114
PROXY STATEMENT
This statement is furnished by the Board of Directors of KPM Funds,
Inc. in connection with the solicitation of Proxies for use at a Special Meeting
of Shareholders (the "Meeting") of the KPM Fixed Income Portfolio (the "Fund")
to be held on ________________, 1999, at 10:00 a.m. (Omaha time), at the Fund's
offices located at 10250 Regency circle in Omaha Nebraska. It is expected that
the Notice of Special Meeting, Proxy Statement and form of Proxy will first be
mailed to shareholders on or about October ___, 1999.
The purpose of the Meeting and the matters to be acted upon are to
terminate the Fund as set forth in the accompanying Notice of Special Meeting of
Shareholders and as more fully described herein. If the accompanying form of
Proxy is executed properly and returned, shares represented by it will be voted
at the Meeting in accordance with the instructions on the Proxy. If no
instructions are specified on the Proxy, shares will be voted FOR the proposal
to terminate and liquidate the Fund (the "Liquidation Proposal"). A Proxy may be
revoked at any time prior to the time it is voted by written notice to the
Secretary of the Fund or by attendance at the Meeting.
The Board has fixed the close of business on October ___, 1999 as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the Meeting and at any adjournment thereof. On that date, the Fund had
____________ shares of Common Stock outstanding and entitled to vote. Each share
will be entitled to one vote at the Meeting.
The expense of solicitation will be borne by the Fund. However, because
KPM Investment Management, Inc., the Fund's investment adviser, reimburses the
Fund to the extent of its investment advisory fee paid for annual expenses of
the Fund exceeding 1.25% of the average annual daily net assets, based on
expected expenses of the solicitation and the Fund's other expenses, the Fund
should not incur any expense of the solicitation after such reimbursement.
Expenses of the solicitation will include legal fees, costs of printing proxy
materials, postage, filing expenses and reimbursement to brokerage firms and
others for expenses in forwarding proxy solicitation materials to beneficial
owners. The solicitation of Proxies will be largely by mail, but may include,
without cost to the Fund, telephonic, telegraphic or oral communications by
regular employees of the Fund's investment adviser, KPM Investment Management,
Inc. (the "Adviser") and the Fund's Distributor, Kirkpatrick Pettis Smith
Polian, Inc. (the "Distributor" or "KPSP"). Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation material to their
principals to obtain authorization for the execution of proxies and will be
reimbursed by the Fund for out-of-pocket expenses incurred in this connection.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR
ITS FISCAL YEAR ENDED June 30, 1999 TO ANY SHAREHOLDER REQUESTING SUCH REPORTS.
REQUESTS FOR THE ANNUAL REPORTS SHOULD BE MADE IN WRITING TO THE FUND AT THE
FUND'S ADDRESS INDICATED ABOVE OR BY CALLING 1-877-KPM-FUND.
The holders of a majority of shares of the Fund outstanding at the
close of business on the record date, present in person or by proxy, will
constitute a quorum for the Meeting. Properly executed proxies that are marked
"abstain" and broker non-votes (as defined below) will be treated as present for
purposes of determining whether a quorum has been achieved at the Meeting. In
the event that a quorum is not present or represented, the holders of a majority
of the shares present in person or by proxy may adjourn the Meeting, without
notice other than announcement at the Meeting, until the requisite number of
shares entitled to vote at the Meeting shall be present. If a quorum is present,
but sufficient votes to approve the Liquidation Proposal are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitations of proxies of shareholders of the Fund.
Any such adjournment will require the affirmative vote of a majority of
those shares present at the Meeting or represented by proxy. When voting on a
proposed adjournment, the persons named as proxies will vote for the proposed
adjournment all shares that they are entitled to vote with respect to the
Liquidation Proposal, unless directed to vote against the Liquidation Proposal,
in which case such shares will be voted against the proposed adjournment.
Under Nebraska law, abstentions and broker non-votes generally do not
constitute a vote "for" or "against" a matter and will be disregarded in
determining the "votes cast" on an issue. A broker "non-vote" results from a
properly executed proxy returned by a broker or nominee which indicates that
such person has not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which the
broker or nominee does not have discretionary power and that the authority to
vote is therefore withheld. Because the approval of the Liquidation Proposal
will be determined by reference to all shares of the Fund outstanding and
entitled to vote on the issue rather than to votes cast, abstentions and broker
non-votes will have the same effect as votes "against" such Proposal.
The approval of the Liquidation Proposal requires the affirmative vote
of a majority of the shares of the Fund outstanding and entitled to vote
thereon. The Fund has been advised that______________________ ("_________"),
which beneficially owned in the aggregate _____% of the outstanding shares of
the Fund on the record date, intends to vote such shares in favor of the
Liquidation Proposal. See "Security Ownership of Certain Beneficial Owners" and
"--Background of the Liquidation Proposal". Therefore, approval of the
Liquidation Proposal at the Meeting is expected.
APPROVAL OF A PLAN OF COMPLETE LIQUIDATION AND TERMINATION
BACKGROUND INFORMATION CONCERNING THE FUND AND ITS SHARES
The Fund is organized as a separate series of shares of KPM Funds,
Inc., a Nebraska corporation and is registered under the Investment Company Act
of 1940 as amended (the "1940 Act"), as a diversified open-end management
investment company. The Fund's investment objective is to provide total return
over a market cycle of 3 to 5 years consistent with preservation of capital and
prudent investment management. To achieve its objective, the Fixed Income
Portfolio invests at least 65% of its assets in fixed-income securities with an
emphasis on income. The secondary objective of capital appreciation is more
difficult to achieve, however the Adviser seeks to identify fixed income
securities that provide above-average relative yield, appreciation potential and
safety of principle. The Adviser places particular emphasis on analyzing the
credit of corporate issuers to enhance income return and protect against credit
losses. The Adviser balances the potential for capital appreciation with the
need for capital preservation and the stability of income. The Fixed Income
Portfolio will invest only in:
o U.S. Government and corporate investment-grade securities which are
securities rated BBB or better by Standard & Poor's Corporation ("S&P")
or Baa or better by Moody's Investors Services ("Moody's"),
o preferred stock,
o mortgage-backed securities, and
o asset-backed securities.
In the event the rating of an investment grade security is lowered to
below investment grade, the Adviser will assess the creditworthiness of the
issuer, evaluate the likelihood of the security being upgraded to investment
grade or being further down-graded and may choose to hold or sell the security
as appropriate. Securities rated below BBB by S&P or below Baa by Moody's are
considered to have speculative characteristics and, as a result, are more
susceptible to fluctuations in market value than higher rated securities.
The Fixed Income Portfolio does not have a stated policy on portfolio
maturity, but the Adviser anticipates average dollar-weighted portfolio maturity
to range between seven and ten years. Longer portfolio maturities result in
greater fluctuation in the net asset value during periods of interest rate
volatility.
KPM Investment Management, Inc. ("KPM" or the "Adviser") acts as
investment manager for the Fund. The Adviser has acted as investment manager for
the Fund since the Fund commenced its investment operations. The Adviser is a
wholly-owned subsidiary of KFS Corporation, a Nebraska corporation which is, in
turn, a wholly owned subsidiary of Mutual of Omaha Insurance company, a mutual
insurance company organized under Nebraska law and engaged in the business of
providing life, health, accident, and related insurance products throughout the
United States. KPM is registered under the Investment Advisers Act of 1940 and
provides portfolio management to the Fund as well as the KPM Equity Portfolio,
an open-end management investment company also organized as a separate series of
the KPM Funds, Inc., taxable and nontaxable institutions, and individuals
investing in United States. The address of the Adviser is the same as the Fund.
BACKGROUND OF THE LIQUIDATION PROPOSAL
The Adviser and Distributor informed the Board of Directors of the Fund
(hereinafter the "Board" or "Board of Directors") on September 16, 1999, that
because of the Fund's size and the Distributor's projection of flat sales,
possible net redemptions in the foreseeable future and increasing competition by
other fixed income funds, liquidation of the Fund was recommended. Over the
twelve months ended June 30, 1999, the Fund's net assets declined 29%, from
$11,744,000 to $8,329,000, largely the result of redemptions. The Fund's net
asset value as of September 30, 1999 was $_________________ and total net assets
were $____________. Total number of shareholders dropped from _____ to _________
over the period July 1, 1998 to June 30, 1999 and there were _____ shareholders
on September 30, 1999. Net asset value per share remained generally constant,
ranging from $10.42 per share on June 30 of 1998 to $10.90 on June 30 of 1999.
The Fund's total return for the periods ending June 30, 1998 and 1999 were 9.39%
and 1.86%, respectively. The Fund's total return for the three-month period
ending September 30, 1999 was _____%.
At its meeting held on September 16, 1999, the Board of Directors
considered various possible actions to be taken in response. The Board of
Directors considered alternative actions that might have allowed the Fund to
continue its operations. However, the Board concluded, based in part on the
advice of the Adviser and the Distributor, that the diminished Fund would be too
small to manage on an efficient and cost-effective basis. The Board also decided
that it was in the best interest of all shareholders not to permit a slow
redemption, but instead to set a time table for liquidation that was both
financially prudent and in conformance with the requirements of the 1940 Act,
the Nebraska Business Corporation Act, ("Nebraska Corporate Law") and other
applicable law. Pursuant to subsequent action by consent, the Board then adopted
the Plan of Complete Liquidation and Termination attached hereto as Exhibit A
(the "Plan"), approved the filing of this Proxy Statement, and set the record
date and the date for the Meeting.
PLAN OF COMPLETE LIQUIDATION AND TERMINATION
The Plan provides for the liquidation of all assets of the Fund, the
payment and discharge of, or other provision for, all liabilities and
obligations of the Fund, the distribution of the remaining net assets to
shareholders, and the termination of the Fund. All references to the Plan
contained in this Proxy Statement should be treated as summary in nature and are
qualified in their entirety by reference to provisions of the Plan.
Shareholders are urged to read carefully both this Proxy Statement and
the Plan.
The Plan is a Plan of Complete Liquidation and Termination in
accordance with the Nebraska Corporate Law and the Internal Revenue Code of
1986, as amended (the "Code"). The Plan will be effective on the day on which it
is approved by the requisite vote of shareholders (the "Effective Date"). As
soon as practicable after shareholder approval of the Plan, the Fund shall cease
to conduct business except as may be necessary in connection with its
liquidation, termination and winding-up.
As soon as practicable after the Effective Date, the Fund will send
notice of the liquidation and dissolution to all its known creditors and
claimants. The Fund will authorize the Adviser to liquidate all the assets of
the Fund and engage in such other transactions as may be appropriate to its
liquidation and dissolution in accordance with the Plan. On a date as soon as
practicable after the Effective Date, and in any event no later than December
31, 1999, the Fund will liquidate and distribute to the shareholders of record
as of the close of business on the date of liquidation determined by the Fund
(the "Liquidation Date"), pro rata in accordance with their proportionate
interests in the Fund, all of the assets of the Fund remaining after payment and
discharge of liabilities and obligations of the Fund, less any amounts retained
or set aside in a reserve fund as referred to below, in complete cancellation
and redemption of the outstanding shares of the Fund. Although no assurances can
be given, the Fund anticipates that the Liquidation Date will be within 45 days
after the Effective Date. From the proceeds of the liquidation of assets, the
Fund may retain, set aside in a reserve or otherwise provide for an amount
necessary to (1) discharge any unpaid liabilities of the Fund on the Fund's
books as of the Liquidation Date and (2) pay or otherwise provide for such
contingent or unascertained liabilities as the Board of Directors shall
reasonably deem to exist against the assets of the Fund.
The Fund may make one or more subsequent liquidation distributions to
the shareholders. Cash or other assets retained or held in a reserve fund for
the payment of contingent or unascertained liabilities in accordance with the
Plan in excess of the amounts ultimately required for the payment or discharge
of the Fund's liabilities and obligations will be distributed to shareholders at
the time and under the conditions established with respect to such reserve fund
or other arrangements providing for such payment.
The Board may modify or amend the Plan at any time without shareholder
approval if it determines that such action would be advisable and in the best
interests of the Fund and its shareholders. If any amendment or modification to
the Plan appears necessary and in the judgment of the Board would materially and
adversely affect the interests of the shareholders, such an amendment or
modification will be submitted to the shareholders for approval. In addition,
the Board may abandon the Plan without shareholder approval at any time if it
determines that abandonment would be advisable and in the best interests of the
Fund and its shareholders.
The stock transfer books of the Fund will be permanently closed as of
the close of business on the Effective Date. As of the Liquidation Date, all of
the issued and outstanding shares of the Fund shall be deemed to be retired,
canceled, and no longer outstanding, and the holders thereof will cease to be
shareholders with respect to such shares, but will have the right to receive
liquidating distributions, without interest.
VOTING REQUIREMENT
The Nebraska Corporate Law requires the affirmative vote of the holders
of a majority of the outstanding shares of the Fund for the adoption of the
Liquidation Proposal. If the Liquidation Proposal is not approved, the Board of
Directors will consider alternatives available at that time, including other
courses of action previously considered by the Directors before adopting the
Plan.
APPRAISAL RIGHTS
Shareholders are not entitled to appraisal or dissenter's rights in
connection with the Plan.
EFFECTS OF ADOPTION OF PLAN
The liquidation of the Fund will result in the sale or other
disposition of all of the assets of the Fund according to the Plan, the
accumulation of all proceeds from such sale, and the distribution of the
proceeds, less payment or other provision for all outstanding liabilities, to
all shareholders of the Fund. Although no assurances can be given, the Fund
anticipates that the Liquidation Date will be within 45 days after the Effective
Date. As of the Liquidation Date, all issued and outstanding shares of the Fund
shall be deemed to be retired and canceled, and beneficial owners of such shares
shall cease to be shareholders with respect to such shares, but will have the
right to receive liquidating distributions, without interest. Beneficial owners
whose shares are held in "street name" should consult their brokers or other
financial intermediaries for information on the timing of receipt of
distributions with respect to their respective interests in the Fund.
The Adviser has advised the Fund that it does not expect to experience
any difficulties in liquidating the portfolio in an orderly fashion if the Plan
is approved by the shareholders. The Adviser intends to liquidate the Fund's
assets at market prices and on such terms and conditions as the Adviser shall
determine to be reasonable and in the best interests of the shareholders.
In connection with the liquidation and termination, KPM Funds, Inc.
will terminate or amend contracts with its service providers with respect to the
Fund at the earliest opportunity consistent with maintaining services to the
Fund for the limited purposes of carrying out the Plan.
IMPACT OF THE PLAN ON THE FUND'S STATUS UNDER THE 1940 ACT
On the Effective Date, the Fund will end its normal investment
operations as a registered investment company. Insofar as the Fund is one of two
funds organized under KPM Funds, Inc., the corporate existence of KPM Funds,
Inc, will continue, but without any active operations of the Fund.
PROCEDURE FOR LIQUIDATION AND TERMINATION
Pursuant to the Nebraska Corporate Law, if a majority of the aggregate
outstanding shares of the Fund are voted for the proposed liquidation and
termination of the Fund, to the extent necessary and appropriate, any filings
required by the Nebraska Corporate Law will be made and when such filings are
made, or if no filings are to be made then according to the Plan, the Fund will
be legally terminated, but thereafter the Board will take such steps as are
necessary for the purpose of paying, satisfying, and discharging any existing
debts or obligations, collecting and distributing its assets, and doing all
other acts required to liquidate and wind up its business and affairs, but not
for the purpose of continuing the business for which the Fund was organized.
FEDERAL INCOME TAX CONSEQUENCES
The following summary provides general information with regard to the
federal income tax consequences to shareholders on receipt of liquidation
distribution(s) from the Fund pursuant to the provisions of the Plan. This
summary also discusses the effect of federal income tax provisions on the Fund
resulting from its liquidation and termination; however, the Fund has not sought
a ruling from the Internal Revenue Service with respect to the liquidation of
the Fund. This summary is based upon the tax laws and regulations in effect on
the date of this Proxy Statement, and is subject to change.
The information set forth below is only a summary of some of the
federal income tax consequences generally affecting the Fund and its individual
U.S. shareholders resulting from the liquidation of the Fund. The summary does
not address the particular federal income tax consequences applicable to other
persons, including corporations, trusts, estates, tax-exempt organizations,
pension plans, individual retirement accounts, or individual shareholders other
than U.S. individuals. This summary does not address state or local tax
consequences. The tax consequences of the liquidation of the Fund may affect
shareholders differently depending upon their particular tax situations and,
accordingly, this summary is not a substitute for careful tax planning on an
individual basis.
SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS TO DETERMINE THE
FEDERAL, STATE AND OTHER INCOME TAX CONSEQUENCES OF RECEIVING LIQUIDATION
DISTRIBUTION(S) WITH RESPECT TO THEIR PARTICULAR TAX CIRCUMSTANCES.
The Fund currently qualifies, and intends to continue to qualify
through the end of the liquidation period, for treatment as a regulated
investment company under the Code, so that it will be relieved of federal income
tax on any investment company taxable income or net capital gain (the excess of
net long-term capital gain over net short-term capital loss) from the sale of
its assets.
Shareholders will be notified of their respective amounts of ordinary
and capital gain dividends for the Fund's final fiscal year in normal
tax-reporting fashion. For federal income tax purposes, the payment of any
liquidating distributions will be a taxable sale or exchange to shareholders.
Each shareholder will be viewed as having sold his shares for an amount equal to
the liquidating distribution(s) received. Each shareholder will recognize gain
or loss in an amount equal to the difference between the liquidating
distributions received in respect of such shares and the adjusted tax basis of
such shares. This gain or loss will be treated as a capital gain or loss if the
shareholder held the shares as a capital asset. The gain or loss will generally
be long-term capital gain or loss if the shares have been held for more than one
year; otherwise, the gain or loss will constitute short-term capital gain or
loss. Long-term capital gain is eligible for a reduced rate of tax to
individuals; the rate is still further reduced if the individual's holding
period exceeds eighteen months.
Payments of liquidating distributions by the Fund or any agent are
generally subject to information reporting and possibly to "backup withholding"
at a rate of 31% unless holders of Fund shares meet certain certification
requirements.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE FOR THE LIQUIDATION
PROPOSAL.
FINANCIAL HIGHLIGHTS
The financial highlights table set forth below provides the Portfolio's
financial performance for the past 5 years or for the Portfolios' period of
operations, as the case may be. Certain information reflects financial results
with respect to a single Portfolio share. The total returns in the tables
represent the rates that an investor would have earned (or lost) on an
investment in a Portfolio (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche, LLP,
whose report, along with the Portfolios' financial statements are included in
the KPM Fund's annual report.
<TABLE>
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended July 5, 1994<F1>(1)
To
June 30, 1999 June 30, 1998 June 30, 1997 June 30, 1996 June 30, 1995
------------- ------------- ------------- ------------- -------------
Net Asset Value - Beginning of Period $10.80 $10.42 $10.23 $10.47 $10.00
Income from Investment Operations:
Net investment income 0.60 0.59 0.61 0.63 0.57
Net realized gain (loss) and unrealized
appreciation (depreciation) (0.40 0.38 0.19 (0.23) 0.47
Total from investment operations 0.20 0.97 0.80 0.40 1.04
---- ---- ---- ---- ----
Less Distributions:
Dividends from net investment income (0.60) (0.59) (0.61) (0.62) (0.57)
Distributions from net realized gain from
investment transactions (0.07) 0.00 (0.00) (0.02) (0.00)
Total Distributions (0.67) (0.59) (0.61) (0.64) (0.57)
------ ----- ------ ------ ------
Net Asset Value - End of Period $10.33 $10.80 $10.42 $10.23 $10.47
====== ====== ====== ====== ======
Total Return 1.86% 9.39% 7.96% 3.63% 9.63<F2>%(2)
Ratios/Supplemental Data
Net assets, end of period (thousands) $8,329 $11,744 $8,872 $8,465 $5,868
Ratio of net expenses to average net assets:
Before expense reimbursement 1.78% 1.33% 1.51% 1.29% 1.56%<F3>(3)
After expense reimbursement 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to average
net assets:
Before expense reimbursement 4.87% 5.44% 5.56% 5.90% 5.28%<F3>(3)
After expense reimbursement 5.40% 5.52% 5.82% 5.95% 5.59%<F3>(3)
Portfolio Turnover Rate 34.25% 19.33% 26.14% 19.52% 40.34%
</TABLE>
<F1>(1) Commencement of Operations.
<F2>(2) Not annualized.
<F3>(3) Annualized.
AUDITORS
Representatives of Deloitte Touche, LLP, the Fund's independent
accountants, are expected to be present at the Meeting and will have the
opportunity to make a statement if they desire to do so. They will be available
to respond to appropriate questions relating to matters coming before the
Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Fund's management, the following persons owned
beneficially more than 5% of the Fund's outstanding shares at October ___, 1999:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
* Fund's knowledge based solely on records available to it.
OTHER MATTERS
No business other than as set forth herein is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
SHAREHOLDER PROPOSALS
It is expected that the Fund will be liquidated as soon as practicable
after the Meeting and that no future meetings of shareholders will be held. In
the event that the Fund is not liquidated, the Fund's Bylaws provide that it is
not required to, and as a matter of policy the Fund does not intend to, hold
shareholder meetings unless required to for certain purposes specified in the
1940 Act. A shareholder proposal intended to be presented at any meeting
hereafter called must be received by the Fund within a reasonable time before
the solicitation relating thereto is made in order to be included in the proxy
statement and form of proxy related to such meeting. The submission by a
shareholder of a proposal for inclusion in the proxy statement does not
guarantee that it will be included. Shareholder proposals are subject to certain
regulations under Federal securities laws. If the Fund is not dissolved,
shareholders wishing to submit proposals for inclusion in the Fund's proxy
statement for such a subsequent shareholders' meeting should send their written
submissions to the principal executive office of the Fund indicated on the cover
page hereof.
Brian P. McGinty
Secretary
Dated: October ___, 1999
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
EXHIBIT A
PLAN OF COMPLETE LIQUIDATION AND TERMINATION
OF THE
KPM FIXED INCOME PORTFOLIO
OF THE
KPM FUNDS, INC.
WHEREAS, the KPM Fixed Income Portfolio(the "Fund"), a separate series
of the KPM Funds, Inc, a Nebraska corporation, operating as an open-end
management investment company registered as such under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Board of Directors of the Fund (the "Board") has approved
and determined that this Plan of Complete Liquidation and Termination of the
Fund (this "Plan") is advisable and in the best interests of the shareholders of
the Fund; and
WHEREAS, the Board has directed that this Plan be submitted to the
holders of the outstanding voting shares of the Fund's common stock for their
approval or rejection at a special meeting of shareholders in accordance with
the requirements of the Nebraska Business Corporation Act (the "Nebraska
Corporate Law") and the Fund's Articles of Incorporation (the "Articles") and
Bylaws ("Bylaws") and has authorized the filing with the Securities and Exchange
Commission (the "Commission") and distribution of a proxy statement (the "Proxy
Statement") in connection with the solicitation of proxies for such meeting; and
WHEREAS, upon approval of this Plan by its shareholders, the Fund shall
voluntarily liquidate in accordance with the Nebraska Corporate Law and the
Internal Revenue Code of 1986, as amended (the "Code"), upon the terms and
conditions set forth below;
NOW, THEREFORE, the Board hereby adopts and sets forth this Plan of
Complete Liquidation and Termination as follows:
1. Effective Date of Plan. The effective date of this Plan (the
"Effective Date") shall be the date on which this Plan is
approved by the shareholders of the Fund in accordance with
the Nebraska Corporate Law. The stock transfer books of the
Fund shall be permanently closed as of the close of business
on the Effective Date.
2. Sale or Distribution of Assets. As of the Effective Date, the
Fund shall have the authority to, and as soon as practicable
after the Effective Date, but in no event later than December
31, 1999 (the "Liquidation Period"), the Fund shall sell and
liquidate its assets and engage in such other transactions as
may be appropriate to its dissolution and liquidation,
including, without limitation, consummation of the
transactions described in the Proxy Statement and obtaining
all necessary approvals and authorizations from the Commission
and any other regulatory authority having jurisdiction over
the Fund.
3. Provisions for Liabilities. Within the Liquidation Period, the Fund shall pay
or discharge or set aside a reserve fund for, or by other appropriate means
provide for, the payment or discharge of any and all liabilities and
obligations of the Fund, including, without limitation, contingent or
unascertained liabilities. If, for any reason, the Fund is unable to pay out,
discharge, or otherwise provide for payment of any liabilities of the Fund
prior to the Liquidation Date (as defined in paragraph 4), the Fund may retain
or set aside in a reserve fund (a "Reserve Fund") cash or cash equivalents
in an amount which it estimates is necessary to discharge any unpaid
liabilities of the Fund on the Fund's books as of the Liquidation Date
(as defined in paragraph 4) and other liabilities as provided in paragraph 4.
4. Distribution to Shareholders. As soon as practicable after the
Effective Date, but in any event no later than December 31, 1999, the
Fund shall liquidate and distribute to its shareholders of record as
of the close of business on the date of liquidation determined by the
Fund (the "Liquidation Date") pro rata in accordance with
their respective interests all of the remaining assets of the Fund
in complete cancellation and redemption of all the outstanding shares
of the Fund, except, as provided in paragraph 3 hereof, for cash, ban
deposits or cash equivalents in an amount necessary to (i) discharge any
unpaid liabilities of the Fund on the Fund's books on the Liquidation
Date, and (ii) pay or set aside a Reserve Fund or otherwise provide
for payment of such contingent or unascertained liabilities as the
Fund's Board of Directors shall reasonably deem to exist against the
assets of the Fund on the Liquidation Date. The Fund may make one or
more additional liquidating distributions to shareholders
during the Liquidation Period. Cash or other assets held in the Reserve
Fund or as otherwise provided herein for the payment of contingent
or unascertained liabilities in accordance with this Plan in excess
of the amounts ultimately required for the payment or discharge
of the Fund's liabilities and obligations shall be distributed to
shareholders at the time and under the conditions established with
respect to the Reserve Fund or other arrangements hereunder providing
for the payment thereof.
5. Notice of Liquidation. As soon as practicable after the
Effective Date, but in no event later than 20 days prior to
the filing of Articles of Dissolution as provided in paragraph
6 below, the Fund shall mail notice in accordance with the
Nebraska Corporate Law to all its known creditors that this
Plan has been approved by the Board and the shareholders.
6. Articles of Amendment. Pursuant to the Nebraska Corporate Law.
To the extent necessary the Fund shall prepare and file
Articles of Amendment and or any other filing which may be
required under the Nebraska Corporate Law (the "Articles")
with and for acceptance by the Nebraska Secretary of State to
reflect the liquidation and termination.
7. Amendment or Abandonment of Plan. The Board may modify or
amend this Plan at any time without shareholder approval if it
determines that such action would be advisable and in the best
interests of the Fund and its shareholders. If any amendment
or modification to this Plan appears necessary and in the
judgment of the Board will materially and adversely affect the
interests of the shareholders, such an amendment or
modification will be submitted to the shareholders for
approval. In addition, the Board may abandon this Plan without
shareholder approval at any time prior to the filing of the
Articles if it determines that abandonment would be advisable
and in the best interests of the Fund and its shareholders.
8. Powers of Board and Officers. The Board and the officers of the
Fund are authorized to approve such changes to the terms
of any of the transactions referred to herein, to interpret any of
the provisions of this Plan, and to make, execute and deliver such
other agreements, conveyances, assignments, transfers, certificates and
other documents and take such other action as the Board and the officers
of the Fund deem necessary or desirable in order to carry out the
provisions of this Plan and effect the complete liquidation and dissolution
of the Fund in accordance with the Code, the Nebraska Corporate Law
and any rules and regulations of the U.S. Securities and Exchange Commission,
or any state securities commission, including, without limitation,
any instruments of dissolution, Articles of Amendment, or other documents,
and withdrawing any qualification to conduct business in any state in
which the Fund is so qualified as well as the preparation and filing
of any tax returns.
9. Termination of Business Operations. As soon as practicable
upon approval and adoption of the Plan, the Fund shall cease
to conduct business except as shall be necessary in connection
with the effectuation of its liquidation. The current officers
and directors shall continue in office solely for the purpose
of implementing the Plan and any actions to be taken in
connection therewith.
KPM FIXED INCOME PORTFOLIO
KPM FUNDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints ______________________,
and each of them, as proxies for the undersigned, with full power of
substitution and resubstitution, and hereby authorizes said proxies, and each of
them, to represent and vote, as designated below, all stock of the above Company
held of record by the undersigned on __________, 1999 at the Special Meeting of
Shareholders to be held on _________1999, and at any adjournment thereof.
THE UNDERSIGNED HEREBY REVOKES ANY AND ALL PROXIES WITH RESPECT TO SUCH
STOCK HERETOFORE GIVEN BY THE UNDERSIGNED. THE UNDERSIGNED ACKNOWLEDGES RECEIPT
OF THE PROXY STATEMENT DATED ______________, 1999.
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSAL NO. 1. PLEASE SIGN EXACTLY AS YOUR NAME APPEARS BELOW. WHEN JOINT
TENANTS HOLD SHARES, BOTH SHOULD SIGN.
FOR AGAINST ABSTAIN
1. APPROVAL OF PLAN OF COMPLETE |_| |_| |_|
LIQUIDATION AND TERMINATION
2. TO VOTE UPON ANY AND ALL BUSINESS |_| |_| |_|
AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT
THEREOF.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN OR
CUSTODIAN FOR A MINOR, PLEASE SIGN FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN FULL CORPORATE NAME BY AUTHORIZED OFFICER AND INDICATE THE SIGNER'S
OFFICE. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE
Signature: Date:
