REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
KPM Equity Portfolio
In planning and performing our audit of the financial statements of the KPM
Equity Portfolio (the "Portfolio"), a series of KPM Funds, Inc., for the year
ended June 30, 2000 (on which we have issued our report dated August 22, 2000),
we considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, and not to provide assurance on the Portfolio's
internal control.
The management of the Portfolio is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with accounting principles generally accepted
in the United States of America. Those controls include the safeguarding of
assets against unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control, misstatements due to
error or fraud may occur and not be detected. Also, projections of any
evaluation of internal control to future periods are subject to the risk that
the internal control may become inadequate because of changes in conditions, or
that the degree of compliance with policies or procedures may deteriorate.
Our consideration of the Portfolio's internal control would not necessarily
disclose all matters in the internal control that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or operation
of one or more of the internal control components does not reduce to a
relatively low level the risk that misstatements caused by error or fraud in
amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the Portfolio's internal control and its operation, including
controls for safeguarding securities, that we consider to be material weaknesses
as defined above as of June 30, 2000.
This report is intended solely for the information and use of the Portfolio's
management, the Board of Directors and Shareholders of the KPM Equity Portfolio,
and the Securities and Exchange Commission and is not intended to be and should
not be used by anyone other than these specified parties.
/s/ Deloitte & Touche LLP
August 22, 2000
