STRADLEY, RONON, STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103
(215) 564-8000
Direct Dial: (215) 564-8047
December 27, 1996
FILED via EDGAR
Filing Desk
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kiewit Mutual Fund
Post-Effective Amendment Nos. 3/6
Gentlemen:
Pursuant to Rule 485(a) under the Securities Act of 1933,
submitted electronically via the EDGAR system, please find Post-Effective
Amendment Nos. 3/6 (the "Amendment") to the Registration Statement of Kiewit
Mutual Fund (the "Fund"). The Amendment relates to each of the Fund's series
of shares ("Portfolios").
This Amendment is being filed to: (1) add a new series of shares
to the Fund, Kiewit Rated Money Market Portfolio; (2) include disclosure
relating to the conversion of the Fund's Portfolios to feeder portfolios in a
master fund-feeder fund structure, subject to the approval of the Portfolios'
shareholders of changes in certain investment limitations of the Portfolios
and (3) include disclosure relating to the proposed offering of S Class
Shares, bearing Rule 12b-1 fees, by each Portfolio of the Fund.
Please direct questions or comments relating to this filing to me
at the above referenced phone number or, in my absence, to Michael V. Farrell,
Esquire at (215) 564-8095.
Sincerely,
/s/ Joseph V. Del Raso
Joseph V. Del Raso
JVD/djs
Enclosures
cc: Kenneth D. Gaskins, Esquire (w/encl.)
Carl Rizzo, Esquire (w/encl.)
Steve Booth (w/encl.)
Michael Farrell, Esquire (w/encl.)
Filed with the Securities and Exchange Commission on December 27, 1996.
1933 Act Registration File No. 33-84762
1940 Act File No. 811-8648
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 3 *
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 *
KIEWIT MUTUAL FUND
(Exact Name of Registrant as Specified in Charter)
1000 Kiewit Plaza, Omaha, NE 68131-3374
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (402) 342-2052
Kenneth D. Gaskins, Esq., Secretary Copy to:
Kiewit Mutual Fund Joseph V. Del Raso, Esq.
1000 Kiewit Plaza Stradley, Ronan, Stevens & Young
Omaha, NE 68131-3374 2600 One Commerce Square
(Name and Address of Agent for Service) Philadelphia, PA 19102
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
on pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. Registrant filed the notice required by Rule 24f-2 for its fiscal
year ended June 30, 1996 on or about August 27, 1996
KIEWIT MUTUAL FUND
K CLASS SHARES
PROSPECTUS
_________, 1997
This prospectus describes the Kiewit Money Market Portfolio, Kiewit Rated
Money Market Portfolio, Kiewit Short-Term Government Portfolio, Kiewit
Intermediate-Term Bond Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity
Portfolio (collectively the "Portfolios" or "Feeder Portfolios" and
individually a "Portfolio"), each a series of shares issued by Kiewit Mutual
Fund (the "Fund"), 1000 Kiewit Plaza, Omaha, NE 68131-3344, (800) 2KIEWIT.
Each Portfolio is an open-end, diversified, management investment company which
currently offers two separate classes of shares: K Class Shares and S Class
Shares. Shares of each class represent equal, pro-rata interests in a
Portfolio and accrue dividends in the same manner, except that S Class Shares
bear distribution expenses payable by the Class as compensation for
distribution of the S Class shares. The securities offered in this Prospectus
are K Class Shares, which are not subject to any sales or distribution charges.
Information concerning the Fund's S Class shares may be obtained by calling
the Fund at the telephone number stated above.
The Fund issues six series of shares, each of which represents a separate
class of the Fund's shares of beneficial interest, having its own investment
objective and policies. The investment objective of the Kiewit Money Market
Portfolio and Kiewit Rated Money Market Portfolio is to provide high current
income while maintaining a stable share price. The investment objective of the
Kiewit Short-Term Government Portfolio is to provide investors with as high a
level of current income as is consistent with the maintenance of principal and
liquidity. The investment objective of the Kiewit Intermediate-Term Bond
Portfolio is to provide as high a level of current income as is consistent with
reasonable risk. The investment objective of the Kiewit Tax-Exempt Portfolio
is to provide as high a level of current income exempt from federal income tax
as is consistent with reasonable risk. The investment objective of the Kiewit
Equity Portfolio is to achieve long-term capital appreciation.
Unlike many other investment companies which directly acquire and manage
their own portfolio of securities, each Portfolio seeks to achieve its
investment objective by investing all of its investable assets in a
corresponding series of shares of Kiewit Investment Trust (the "Trust"), an
open-end, management investment company that issues series of shares
(individually and collectively, the "Series") having the same investment
objective, policies and limitations as each of the Portfolios. The investment
experience of each Feeder Portfolio will correspond directly with the
investment experience of its corresponding Series. Investors should carefully
consider this investment approach. For additional information, see "Special
Information About The Portfolios' Structure."
This prospectus contains information about the Portfolios that
prospective investors should know before investing and should be read carefully
and retained for future reference. A Statement of Additional Information dated
_________, 1997, including the Fund's most recent Annual Report to
Shareholders, is incorporated herein by reference, has been filed with the
Securities and Exchange Commission and is available upon request, without
charge, by writing or calling the Fund at the above address or telephone
number.
The shares of the Kiewit Money Market Portfolio and Kiewit Rated Money Market
Portfolio are neither insured nor guaranteed by the U.S. Government. While
such Portfolios will make every effort to maintain a stable net asset value of
$1.00 per share, there is no assurance that the Portfolios will be able to do
so.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
HIGHLIGHTS 4
EXPENSE TABLE 7
FINANCIAL HIGHLIGHTS 9
SPECIAL INFORMATION ABOUT THE PORTFOLIOS' STRUCTURE 10
INVESTMENT OBJECTIVES AND POLICIES 11
Kiewit Money Market Portfolio 11
Kiewit Rated Money Market Portfolio 12
Kiewit Short-Term Government Portfolio 13
Kiewit Intermediate-Term Bond Portfolio 13
Kiewit Tax-Exempt Portfolio 14
Kiewit Equity Portfolio 15
Other Investment Policies 16
RISK FACTORS 17
MANAGEMENT OF THE FUND 18
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES 20
PURCHASE OF SHARES 21
SHAREHOLDER ACCOUNTS 22
VALUATION OF SHARES 23
EXCHANGE OF SHARES 24
REDEMPTION OF SHARES 24
PERFORMANCE INFORMATION 26
GENERAL INFORMATION 26
APPENDIX - DESCRIPTION OF RATINGS 29
HIGHLIGHTS
The Fund
The Fund is an open-end, diversified management investment company
commonly known as a "mutual fund." The Fund was organized as a Delaware
business trust on June 1, 1994. The Fund currently offers six series of
shares: Kiewit Money Market Portfolio, Kiewit Rated Money Market Portfolio,
Kiewit Short-Term Government Portfolio, Kiewit Intermediate-Term Bond
Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity Portfolio. Each
Portfolio offers two classes of shares, K Class Shares and S Class Shares. All
shares that were registered and outstanding as of ________, 1997 are
redesignated as K Class Shares.
Investment Objectives
The investment objective of each Portfolio of Kiewit Mutual Fund is to
provide its investors with:
Money Market High current income, while maintaining a stable share
price. The Money Market Portfolio will invest
all of its assets in the Money Market Series of
the Trust, which in turn invests in short-term
money market securities.
Rated Money Market High current income, while maintaining a stable share
price and a credit rating in the highest
category for money market funds as determined
by an independent rating agency. The Rated
Money Market Portfolio will invest all of its
assets in the Rated Money Market Series of the
Trust, which in turn invests in securities
issued or guaranteed by the U.S. Government or
its agencies or instrumentalities.
Short-Term Government High level of current income, consistent with
the maintenance of principal and liquidity. The
Short-Term Government Bond Portfolio will invest
all of its assets in the Short-Term Government
Bond Series of the Trust, which in turn invests
in securities issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities.
Intermediate-Term Bond High level of current income, consistent with
reasonable risk. The Portfolio will invest all
of its assets in the Kiewit Intermediate-Term
Bond Series of the Trust, which in turn invests
in investment grade debt securities.
Tax-Exempt High level of current income, exempt from
federal income tax, consistent with reasonable
risk. The Tax-Exempt Portfolio will invest all
of its assets in the Tax-Exempt Series of the
Trust, which in turn invests primarily in
municipal obligations exempt from federal income
tax.
Equity Long-term capital appreciation. The Portfolio
will invest all of its assets in the Kiewit
Equity Series of the Trust, which in turn
invests in the equity securities of companies
which appear, in the opinion of the investment
adviser, to be undervalued in the marketplace at
the time of purchase.
Although the investment objective of each Portfolio is not fundamental and may
be changed by the Board of Trustees without shareholder approval, the Fund
intends to notify shareholders before making any material change. Due to the
inherent risks of investments, there can be no assurance that a Portfolio will
achieve its objective. See "Investment Objectives And Policies."
How to Purchase Shares
After you open an account, you may purchase K Class Shares by (a) writing
the Fund and enclosing your check as payment or (b) by calling the Fund at
(800) 2KIEWIT to arrange for payment by wire transfer. You may open an account
by mailing a completed application form to the Fund. The public offering price
of the shares of each Portfolio is the net asset value per share next
determined after acceptance of the purchase order and payment. The K Class
Shares may be purchased without a sales load, exchange fee, or distribution fee
under a Rule 12b-1 plan. See "Purchase Of Shares."
How to Redeem Shares
You may redeem K Class Shares by mailing written instructions to the Fund
or by calling the Fund at (800) 2KIEWIT (if you requested telephone redemption
privileges on an application form). Shares will be redeemed at the net asset
value per share next determined after acceptance of a redemption request. The
Fund will promptly mail you a check, unless other arrangements have been made.
See "Redemption Of Shares."
Dividend Reinvestment
Each Portfolio, except the Kiewit Equity Portfolio, intends to pay
monthly dividends from its net investment income and will pay net capital
gains, if any, annually. The Kiewit Equity Portfolio intends to pay annual
dividends from net investment income, together with any net capital gains.
You may choose to receive dividends and capital gains distributions in
cash or you may choose to automatically reinvest them in additional shares of
the Portfolio. See "Dividends, Capital Gains Distributions And Taxes."
Investment Manager, Underwriter and Servicing Agents
Kiewit Investment Management Corp. serves as the investment manager of
each Series of the Trust and also provides the Portfolios with certain
administrative services. Rodney Square Distributors, Inc. serves as the
Portfolios' underwriter. Wilmington Trust Company serves as the custodian of
the Portfolios' assets and Rodney Square Management Corporation serves as the
Portfolios' administrator, transfer agent and accounting services agent.
Treasury Strategies, Inc. serves as the Portfolios' sub-administrator. See
"Management Of The Fund."
Risk Factors
Each Portfolio, through its investment in a corresponding Series of the
Trust, is subject to certain risks. Investors should consider a number of
factors: (i) each Series of the Trust invests in securities that fluctuate in
value, and there can be no assurance that the objective of any Portfolio will
be achieved; (ii) each Series of the Trust may invest in repurchase and reverse
repurchase agreements, which involve the risk of loss if the counterparty
defaults on its obligations under the agreement; (iii) each Series of the Trust
has reserved the right to borrow amounts not exceeding 33% of its net assets;
and (iv) the Kiewit Intermediate-Term Bond Series may invest in mortgage
securities, whose market values may vary with changes in market interest rates
to a greater or lesser extent than the market values of other debt securities.
Additionally, the policy of the Portfolios to invest in the corresponding
Series of the Trust also involves certain risks. See "Risk Factors."
Peter Kiewit Sons', Inc.
An investment in the Fund is not a direct or indirect investment in the
common stock of Peter Kiewit Sons', Inc. ("PKS"). Virtually all of PKS' common
stock is owned by employees or former employees of PKS. The Fund is restricted
from investing in the securities of PKS and its affiliates. PKS and its
affiliates do not guarantee that an investment in the Fund will result in
satisfactory results.
EXPENSE TABLE
Shareholder Transaction Costs None
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
Rated
Money Money Short-Term Intermediate-
Market Market Government Term Bond Tax-Exempt Equity
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C> <C>
Management Fees
(after fee waiver)
.13% .13% .17% .33% .36% .45%
12b-1 Fees none none none none none none
Other
Expenses .07% .07% .13% .17% .14% .35%
Total Portfolio
Operating Expenses
.20% .20% .30% .50% .50% .80%
</TABLE>
The information in the Expense Table has been restated to reflect changes in
the amounts of management fees waived and Fund expenses assumed.
Prior to __________________, 1997, the Portfolios sought to achieve their
investment objectives by acquiring and managing their own portfolios of
securities rather than by investing all of their assets in the corresponding
Series of the Trust. The above figures have been restated to reflect estimated
aggregate annualized operating expenses of each Feeder Portfolio and its
corresponding Series as though the Feeder Portfolio's assets had been invested
in the Series during the fiscal year ended June 30, 1996.
Example
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Money Market Portfolio
2 6 11 26
Rated Money Market Portfolio
2 6 n/a n/a
Short-Term Government
Portfolio 3 10 17 38
Intermediate-Term Bond
Portfolio 5 16 28 63
Tax-Exempt Portfolio 5 16 28 63
Equity Portfolio 8 26 44 99
The purpose of the above Expense Table and Example is to assist investors
in understanding the various costs and expenses that an investor in the
Portfolios' K Class Shares will bear directly or indirectly. The information
set forth above relates only to the Portfolios' K Class Shares, which shares
are subject to different total fees and expenses than S Class Shares.
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The above
Example is based on actual expenses for the most recent fiscal period.
The table summarizes the aggregate estimated annual operating expenses of
both the Portfolios' K Class Shares and the Series of the Trust in which the
Portfolios invest. (See "Management Of The Fund" for a description of
Portfolio and Series expenses.) Through June 30, 1997, Kiewit Investment
Management Corp. has agreed to waive all or a portion of its advisory fee and
to assume certain expenses in order to limit annual operating expenses of the K
Class Shares to not more than the following percentage of the average daily net
assets of each Portfolio: Kiewit Money Market Portfolio .20%; Kiewit Rated
Money Market Portfolio .20%; Kiewit Short-Term Government Portfolio .30%;
Kiewit Intermediate Term Bond Portfolio .50%; Kiewit Tax-Exempt Bond Portfolio
.50%; and Kiewit Equity Portfolio .80%. Without the waiver of fees by Kiewit
Investment Management Corp., the total expenses of each Portfolio's K Class
Shares for the fiscal year ended June 30, 1996, would have been: Kiewit Money
Market Portfolio 0.27%; Kiewit Short-Term Government Portfolio 0.43%; Kiewit
Intermediate-Term Bond Portfolio 0.57%; Kiewit Tax-Exempt Portfolio 0.54% and
Kiewit Equity Portfolio 1.05%.
The Board of Trustees of the Fund has considered whether such expenses
will be more or less than they would be if the Feeder Portfolios invest
directly in the securities held by the Trust Series. The aggregate amount of
expenses for a Feeder Portfolio and the corresponding Trust Series may be
greater than if the Portfolio were to invest directly in the securities held by
the corresponding Trust Series. However, the total expense ratios for the
Feeder Portfolios and the Trust Series are expected to be less over time than
such ratios would have been if the Portfolios had continued to invest
directly in the underlying securities. This is because this arrangement
enables various institutional investors, including the Feeder Portfolios,
to pool their assets, which may be expected to result in economies by
spreading certain fixed costs over a larger asset base. Each shareholder in
a Trust Series, including a Feeder Portfolio,
will pay its proportionate share of the expenses of that Trust Series.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a K Class Share outstanding
from the effective date of the Fund's registration statement under the
Securities Act of 1933 (December 6, 1994) or commencement of operations,
whichever occurs later, through the end of the Fund's fiscal year on
June 30, 1996.* The amounts in this table are audited and should be read in
conjunction with the Fund's audited financial statements, the notes thereto,
and the auditor's report thereon, all of which are included in the Fund's
Statement of Additional Information.
<TABLE>
<CAPTION>
Money Market Short-Term Intermediate-
Portfolio Government Term Bond Tax-Exempt Equity
Portfolio Portfolio Portfolio Portfolio
<S> <C> <C> <C> <C> <C>
For the Periods ended June 30,
1996 1995* 1996 1995* 1996 1995* 1996 1995* 1996 1995*
Net asset value -
Beginning of period
$1.00 $1.00 $2.03 $1.98 $2.05 $1.96 $2.02 $1.96 $14.04 $12.50
Investment Operations:
0.05 0.03 0.12 0.07 0.13 0.08 0.09 0.05 0.13 0.11
Net investment
income
Net realized and unrealized
gain (loss)
on investments - - (0.03) 0.05 (0.04) 0.09 - 0.06 2.56 1.43
Total from investment
operations 0.05 0.03 0.09 0.12 0.09 0.17 0.09 0.11 2.69 1.54
Distributions:
From net investment
income (0.05) (0.03) (0.12) (0.07) (0.13) (0.08) (0.09) (0.05) (0.15) -
Net asset value
End of period $1.00 $1.00 $2.00 $2.03 $2.01 $2.05 $2.02 $2.02 $16.58 $14.04
Total Return 5.61% 3.31%+ 4.66% 6.18%+ 4.48% 8.63%+ 4.55% 5.73%+ 19.24% 12.32%+
Ratios (to average net assets)/Supplemental Data:
Expenses** 0.20% 0.30%++ 0.30% 0.40%++ 0.50% 0.50%++ 0.50% 0.50%++ 0.80% 0.80%++
Net investment income
5.47% 5.82%++ 6.06% 6.17%++ 6.37% 6.72%++ 4.47% 4.50%++ 1.34% 3.06%++
Portfolio turnover rate
N/A N/A 57.52% 69.57%++86.06%121.36%++100.61%92.53%++ 16.95% 0.00%++
Net assets at end of period
(000 omitted)
$389,967$380,708$183,316$132,828$122,952$105,020$142,185$135,518$66,137$20,865
Average Commission rate paid
- - - - - - - - $0.0637 -
* The periods shown for the Money Market Portfolio, Short-Term Government
Portfolio, Intermediate-Term Bond Portfolio, and Tax-Exempt Portfolio each
begin on December 6, 1994 with the effectiveness of the Fund's registration
statement. The period shown for the Equity Portfolio begins with its
commencement of operations on January 5, 1995, after the effectiveness of
the Fund's registration statement.
** For the period from December 6, 1994 through June 30, 1995, Kiewit
Investment Management Corp. (the "Manager") agreed to waive all or a portion
of its fee in an amount that limited annual operating expenses of the (i)
Money Market Portfolio to not more than 0.30% of the average daily net
assets of the Portfolio; (ii) Short-Term Government Portfolio to not more
than 0.40% of the average daily net assets of the Portfolio; (iii)
Intermediate-Term Bond Portfolio to not more than 0.50% of the average
daily net assets of the Portfolio, (iv) Tax-Exempt Portfolio to not more
than 0.50% of the average daily net assets of the Portfolio; (v)
Equity Portfolio to not more than 0.80% of the average daily net assets of
the Portfolio.
The annualized expense ratio, had there been no assumption of expenses or
fee waivers by the Manager, would have been 0.27%, 0.43%, 0.57%, 0.54% and
1.05%, and 0.30%, 0.46%, 0.63%, 0.53% and 2.56% for the fiscal year ended
June 30, 1996 and for the period ended June 30, 1995,
respectively for each Portfolio.
Effective July 1, 1995 through June 30, 1997, the Manager has agreed to
waive all or a portion of its fee in an amount that will limit annual
operating expenses of the (i) Money Market Portfolio to not more than 0.20%
of the average daily net assets of the Portfolio; (ii) Short-Term Government
Portfolio to not more than 0.30% of the average daily net assets
of the Portfolio, (iii) Intermediate-Term Bond Portfolio to not more than
0.50% of the average daily net assets of the Portfolio, (iv) Tax-Exempt
Portfolio to not more than 0.50% of the average daily net assets of the
Portfolio, and (v) Equity Portfolio to not more than 0.80% of the average
daily net assets of the Portfolio. The annualized expense ratio, had
there been no fee waivers by the Manager, would have been 0.27%, 0.43%,
0.57%, 0.54% and 1.05% for the fiscal year ended June 30, 1996, respectively
for each Portfolio.
+ Not Annualized.
++ Annualized.
SPECIAL INFORMATION ABOUT THE PORTFOLIOS' STRUCTURE
Each of the six Portfolios of the Fund, unlike many other investment companies
which directly acquire and manage their own portfolio of securities, seeks to
achieve its investment objective by investing all of its investable assets in a
corresponding Series of the Trust, an open-end, management investment company,
registered under the Investment Company Act of 1940, that issues Series having
the same investment objective as each of the Portfolios. The investment
objectives of the Portfolios and their corresponding Series may be changed
without shareholder approval. Shareholders of a Feeder Portfolio will receive
written notice at least 30 days prior to the effective date of any change in
the investment objective of the Portfolio or its corresponding Trust Series.
This prospectus describes the investment objective, policies and restrictions
of each Feeder Portfolio and its corresponding Series. (See "Portfolio
Characteristics And Policies - Kiewit Money Market Portfolio, Kiewit Rated
Money Market Portfolio, Kiewit Short-Term Government Portfolio, Kiewit
Intermediate-Term Bond Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity
Portfolio." In addition, an investor should read "Management Of The Fund" for
a description of the management and other expenses associated with the Feeder
Portfolios' investment in the Trust. Other institutional investors, including
other mutual funds, may invest in each Series, and the expenses of such other
funds and, correspondingly, their returns may differ from those of the
Portfolios. Please contact the Fund at 1000 Kiewit Plaza, Omaha, NE 08131-
3344, 1-800-2KIEWIT for information about the availability of investing in a
Series of the Trust other than through a Feeder Portfolio.
The shares of the Trust Series will be offered to institutional investors for
the purpose of increasing the funds available for investment, to reduce
expenses as a percentage of total assets and to achieve other economies that
might be available at higher asset levels. While investment in a Series by
other institutional investors offers potential benefits to the Series and,
through their investment in the Series, the Feeder Portfolios also,
institutional investment in the Series also entails the risk that economies and
expense reductions might not be achieved, and additional investment
opportunities, such as increased diversification, might not be available if
other institutions do not invest in the Series. Also, if an institutional
investor were to redeem its interest in a Series, the remaining investors in
that Series could experience higher pro rata operating expenses, thereby
producing lower returns, and the Series' security holdings may become less
diverse, resulting in increased risk. Institutional investors that have a
greater pro rata ownership interest in a Series than the corresponding Feeder
Portfolio could have effective voting control over the operation of the Series.
Further, if a Series changes its investment objective in a manner which is
inconsistent with the investment objective of a corresponding Feeder Portfolio
and the Portfolio does not make a similar change in its investment objective,
the Portfolio would be forced to withdraw its investment in the Series and
either seek to invest its assets in another registered investment company with
the same investment objective as the Portfolio, which might not be possible, or
retain an investment advisor to manage the Portfolio's assets in accordance
with its own investment objective, possibly at increased cost. A withdrawal by
a Feeder Portfolio of its investment in the corresponding Series could result
in a distribution in kind of portfolio securities (as opposed to a cash
distribution) to the Portfolio. Should such a distribution occur, the
Portfolio could incur brokerage fees or other transaction costs in converting
such securities to cash in order to pay redemptions. In addition, a
distribution in kind to the Portfolio could result in a less diversified
portfolio of investments and could affect adversely the liquidity of the
Portfolio. Moreover, a distribution in kind may constitute a taxable exchange
for federal income tax purposes resulting in gain or loss to the Feeder
Portfolios. Any net capital gains so realized will be distributed to such a
Portfolio's shareholders as described in "Dividends, Capital Gains
Distributions And Taxes" below.
Finally, the Feeder Portfolios' investment in the shares of a registered
investment company such as the Trust is relatively new and results in certain
operational and other complexities. However, management believes that the
benefits to be gained by shareholders outweigh the additional complexities and
that the risks attendant to such investment are not inherently different from
the risks of direct investment in securities of the type in which the Trust
Series invest.
INVESTMENT OBJECTIVES AND POLICIES
Kiewit Money Market Portfolio
The Kiewit Money Market Portfolio pursues its investment objective by
investing all of its assets in the Money Market Series of the Trust (the "Money
Market Series") which has the same investment objective and policies as the
Portfolio. The investment objective of the Money Market Series is to provide
high current income while maintaining a stable share price by investing in
short-term money market securities. The Money Market Series invests in U.S.
dollar-denominated money market instruments that mature in 13 months or less,
maintains an average weighted maturity of 90 days or less and limits its
investments to those investments which the Board of Trustees determines present
minimal credit risks.
The Money Market Series will invest in the following money market
obligations issued by financial institutions, nonfinancial corporations, and
the U.S. Government, state and municipal governments and their agencies or
instrumentalities:
(1) United States Treasury obligations including bills, notes, bonds
and other debt obligations issued by the United States Treasury. These
securities are backed by the full faith and credit of the U.S. Government.
(2) Obligations of agencies and instrumentalities of the U.S.
Government which are supported by the full faith and credit of the U.S.
Government, such as securities of the Government National Mortgage Association,
or which are supported by the right of the issuer to borrow from the U.S.
Treasury, such as securities issued by the Federal Financing Bank; or which are
supported by the credit of the agency or instrumentality itself, such as
securities of Federal Farm Credit Banks.
(3) Repurchase agreements that are fully collateralized by the
securities listed in (1) and (2) above.
(4) Commercial paper rated in the two highest categories of short-term
debt ratings of any two Nationally Recognized Statistical Ratings Organization
("NRSROs") (such as Moody's Investor Services, Inc. and Standard & Poor's
Rating Services) or, if unrated, issued by a corporation having outstanding
comparable obligations that are rated in the two highest categories of short-
term debt ratings. See "Appendix - Description Of Ratings."
(5) Corporate obligations having a remaining maturity of 397 calendar
days or less, issued by corporations having outstanding comparable obligations
that are (a) rated in the two highest categories of any two NRSROs or (b) rated
no lower than the two highest long-term debt ratings categories by any NRSRO.
See "Appendix - Description Of Ratings."
(6) Obligations of U.S. banks, such as certificates of deposit, time
deposits and bankers acceptances. The banks must have total assets exceeding
$1 billion.
(7) Short-term Eurodollar and Yankee obligations of banks having total
assets exceeding one billion dollars. Eurodollar bank obligations are dollar-
denominated certificates of deposit or time deposits issued outside the U.S.
capital markets by foreign branches of U.S. banks or by foreign banks; Yankee
bank obligations are dollar-denominated obligations issued in the U.S. capital
markets by foreign banks.
The Money Market Series will not invest more than 5% of its total assets in
the securities of a single issuer. With respect to any security rated in the
second highest rating category by an NRSRO, the Money Market Series will not
invest more than (i) 1% of its total assets in such securities issued by a
single issuer and (ii) 5% of its total assets in such securities of all
issuers. Up to 10% of the Money Market Series' net assets may be invested in
"restricted" and other illiquid money market securities, which are not freely
marketable under the Securities Act of 1933 (the "1933 Act").
The Money Market Series may invest in repurchase agreements. A repurchase
agreement is a means of investing monies for a short period. In a repurchase
agreement, a seller--a U.S. commercial bank or recognized U.S. securities
dealer--sells securities to the Money Market Series and agrees to repurchase
the securities at the Money Market Series' cost plus interest within a
specified period (normally one day). In these transactions, the securities
purchased by the Money Market Series will have a total value equal to or in
excess of the value of the repurchase agreement, and will be held by the Money
Market Series' custodian bank until repurchased. Under the Investment Company
Act of 1940 (the "1940 Act"), a repurchase agreement is deemed to be the loan
of money by the Money Market Series to the seller, collateralized by the
underlying securities.
Eurodollar and Yankee obligations are subject to the same risks that pertain
to domestic issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar (and to a limited extent, Yankee) obligations are
subject to certain sovereign risks. One such risk is the possibility that a
foreign government might prevent dollar-denominated funds from flowing across
its borders. Other risks include: adverse political and economic developments
in a foreign country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign withholding
taxes; and expropriation or nationalization of foreign issuers. However,
Eurodollar and Yankee obligations will undergo the same credit analysis as
domestic issues in which the Money Market Series invests, and foreign issuers
will be required to meet the same tests of financial strength as the domestic
issuers approved for the Money Market Series.
Kiewit Rated Money Market Portfolio
The Kiewit Rated Money Market Portfolio pursues its investment objective by
investing all of its assets in the Rated Money Market Series of the Trust (the
"Rated Money Market Series"). The investment objective of the Rated Money
Market Series is to provide high current income while maintaining a stable
share price and a rating in the highest category of short-term debt ratings by
an NRSRO by investing in securities issued by the U.S. Government, its agencies
or instrumentalities. The Series invests in U.S. dollar-denominated money
market instruments that mature in 13 months or less and will maintain an
average weighted maturity of 60 days or less.
The Series will invest in the following money market obligations issued by the
U.S. government, its agencies or instrumentalities:
(1) United States Treasury obligations including bills, notes, bonds and other
debt obligations issued by the United States Treasury. These securities are
backed by the full faith and credit of the United States government
(2) Obligations of agencies and instrumentalities of the U.S. Government which
are supported by the full faith and credit of the U.S. Government, such as
securities of the Government National Mortgage Association, or which are
supported by the right of the issuer to borrow from the U.S. Treasury, such
as securities issued by the Federal Financing Bank; or which are supported
by the credit of the agency or instrumentality itself, such as securities of
Federal Farm Credit Banks.
(3) Repurchase agreements that are fully collateralized by the securities
listed in (1) and (2) above.
The Series has and will maintain an AAAm credit rating from Standard & Poor's
Rating Group. The AAAm credit rating indicates that the Series is composed
exclusively of investments that are rated AAA and/or eligible short-term
investments.
The Series may invest in repurchase agreements. A repurchase agreement is a
means of investing monies for a short period. In a repurchase agreement, a
seller--a U.S. commercial bank or recognized U.S. securities dealer--sells
securities to the Series and agrees to repurchase the securities at the Series'
cost plus interest within a specified period (normally one day). In these
transactions, the securities purchased by the Series will have a total value
equal to or in excess of the value of the repurchase agreement, and will be
held by the Series' custodian bank until repurchased. Under the Investment
Company Act of 1940 (the "1940 Act"), a repurchase agreement is deemed to be
the loan of money by the Series to the seller, collateralized by the underlying
securities.
Kiewit Short-Term Government Portfolio
The Kiewit Short-Term Government Portfolio pursues its investment objective
by investing all of its assets in the Kiewit Short-Term Government Series of
the Trust (the "Short-Term Government Series") which has the same investment
objective and policies as the Portfolio. The investment objective of the
Short-Term Government Series is to provide investors with as high a level of
current income as is consistent with the maintenance of principal and
liquidity. The Short-Term Government Series invests at least 65% of its assets
in U.S. Treasury securities and U.S. Government agency securities. The Short-
Term Government Series may also invest in repurchase agreements collateralized
by U.S. Treasury or U.S. Government agency securities. In an effort to minimize
fluctuations in market value, the Short-Term Government Series will maintain a
dollar-weighted average maturity between one and three years.
U.S. Government agency securities are debt obligations of agencies and
instrumentalities of the U.S. Government which are supported by the full faith
and credit of the U.S. Government, such as securities of the Government
National Mortgage Association; or which are supported by the right of the
issuer to borrow from the U.S. Treasury, such as securities issued by the
Federal Financing Bank; or which are supported by the credit of the agency or
instrumentality itself, such as securities of Federal Farm Credit Banks.
Kiewit Intermediate-Term Bond Portfolio
The Kiewit Intermediate-Term Bond Portfolio pursues its investment objective
by investing all of its assets in the Kiewit Intermediate-Term Bond Series of
the Trust (the "Intermediate-Term Bond Series") which has the same investment
objective and policies as the Portfolio. The investment objective of the
Intermediate-Term Bond Series is to provide as high a level of current income
as is consistent with reasonable risk. It seeks to achieve its objective by
investing substantially all of its total assets in a diversified portfolio of
the following investment grade debt securities: U.S. Treasury and U.S.
Government agency securities, mortgage-backed securities, asset-backed
securities and corporate bonds. The Intermediate-Term Bond Series may also
invest in repurchase agreements collateralized by U.S. Treasury and U.S.
Government agency securities and other short-term debt securities. The
Intermediate-Term Bond Series will have an average effective maturity (i.e.,
the market value weighted average time to repayment of principal) of between
three and ten years.
Debt securities rated by an NRSRO, in the lowest investment grade debt
category, have speculative characteristics; a change in economic conditions
could lead to a weakened capacity of the issuer to make principal and interest
payments. To the extent that the rating of a debt obligation held by the
Intermediate-Term Bond Series falls below investment grade, the Intermediate-
Term Bond Series, as soon as practicable, will dispose of the security, unless
such disposal would be detrimental to the Intermediate-Term Bond Series in
light of market conditions. See "Appendix - Description Of Ratings."
The Intermediate-Term Bond Series may invest in both fixed and variable or
floating rate instruments. Variable and floating rate securities bear interest
at rates which vary with changes in specified market rates or indices, such as
a Federal Reserve composite index. The interest rate on these securities may
be reset daily, weekly, quarterly or some other reset period, and may have a
floor or ceiling on interest rate changes. There is a risk that the current
interest rate on such securities may not accurately reflect existing market
interest rates. Some of these securities carry a demand feature which permits
the Intermediate-Term Bond Series to sell them during a predetermined time
period at par value plus accrued interest. The demand feature is often backed
by a credit instrument, such as a letter of credit, or by a creditworthy
insurer. The Intermediate-Term Bond Series may rely on such instrument or the
creditworthiness of the insurer in purchasing a variable or floating rate
security.
Kiewit Tax-Exempt Portfolio
The Kiewit Tax-Exempt Portfolio pursues its investment objective by
investing all of its assets in the Kiewit Tax-Exempt Series of the Trust (the
"Tax-Exempt Series") which has the same investment objective and policies as
the Portfolio. The investment objective of the Tax-Exempt Series is to provide
as high a level of current income exempt from federal income tax as is
consistent with reasonable risk. Because of this emphasis, capital
appreciation is not an investment objective. The Tax-Exempt Series pursues its
objective by investing primarily in municipal obligations whose interest is, in
the opinion of counsel to the issuer, exempt from federal income tax. As a
fundamental policy, the Tax-Exempt Series will normally invest at least 80% of
its net assets in securities the interest on which is exempt from federal
income tax, including the alternative minimum tax. However, the Tax-Exempt
Series may invest up to 20% of its net assets in municipal securities, the
interest on which is a preference item for purposes of the federal alternative
minimum tax ("AMT bonds"). When the Manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Tax-Exempt Series
may invest up to 20% of its net assets in the following: cash, cash equivalent
short-term obligations, certificates of deposit, commercial paper, obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, and repurchase agreements.
Municipal obligations are issued by states, territories and possessions of
the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities to raise money for various public
purposes. Municipal obligations consist of general obligation bonds, revenue
bonds and notes. General obligation bonds are backed by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest and are considered the safest type of municipal investment. Revenue
bonds are backed by revenues derived from a specific project, facility or
revenue source. At times, the Tax-Exempt Series may invest more than 25% of
the value of its assets in industrial development bonds, a type of revenue
bond. Although issued by a public authority, some industrial revenue bonds may
be backed only by the credit and security of a private issuer and may involve
greater credit risk. Municipal notes are issued to finance short-term capital
needs of a municipality and include tax and revenue anticipation notes, bond
anticipation notes and commercial paper. Municipal obligations bear fixed,
floating and variable rates of interest.
AMT bonds are tax-exempt "private activity" bonds issued after August 7,
1986, whose proceeds are directed at least in part to a private, for-profit
organization. While the income from AMT bonds is exempt from regular federal
income tax, it is a tax preference item for purposes of the alternative minimum
tax. The alternative minimum tax is a special separate tax that applies to a
limited number of taxpayers who have certain adjustments to income or tax
preference items.
The Tax-Exempt Series also may invest up to 5% of its total assets in the
following municipal-based obligations: municipal lease obligations, inverse
floaters, tender option bonds, when-issued securities and zero coupon bonds.
See the Fund's Statement of Additional Information for a discussion of these
types of investments.
The Tax-Exempt Series may invest in the various types of municipal
securities in any proportion. Although the Tax-Exempt Series does not currently
intend to do so on a regular basis, it may invest more than 25% of its assets
in tax-exempt securities that are repayable out of revenue streams generated
from economically related projects or facilities, if such investment is deemed
necessary or appropriate by the Manager. To the extent that the Tax-Exempt
Series' assets are concentrated in tax-exempt securities payable from revenues
on economically related projects and facilities, the Tax-Exempt Series will be
subject to the risks presented by such projects to a greater extent than it
would be if the Tax-Exempt Series' assets were not so concentrated.
The Tax-Exempt Series will invest only in investment grade obligations, or
if unrated, in obligations that the Manager determines to be of comparable
quality. The Tax-Exempt Series will have an average effective maturity (i.e.,
the market value weighted average time to repayment of principal) of between
three and ten years. See "Appendix - Description Of Ratings."
Kiewit Equity Portfolio
The Kiewit Equity Portfolio pursues its investment objective by investing
all of its assets in the Kiewit Equity Series of the Trust (the "Equity
Series") which has the same investment objective and policies as the Portfolio.
The Equity Series invests primarily in a diversified portfolio of equity
securities, including common stocks, preferred stocks and securities
convertible into common stock, which, in the Manager's opinion, are undervalued
in the marketplace at the time of purchase. Dividend income is an incidental
consideration compared to growth in capital. In selecting securities for the
Equity Series, the Manager or sub-adviser may evaluate factors it believes are
likely to affect long-term capital appreciation such as the issuer's
background, industry position, historical returns on equity and experience and
qualifications of the management team. The Manager may rotate the Equity
Series' holdings among various market sectors based on economic analysis of the
overall business cycle. Under normal conditions, at least 65 percent of the
Equity Series' net assets will be invested in equity securities.
The Equity Series invests in equity securities only if they are listed on
registered exchanges or actively traded in the over-the-counter market. Under
normal circumstances the Equity Series, to the extent not invested in the
securities described above, may invest in investment grade securities issued by
corporations and U.S. Government securities. In order to meet liquidity needs,
the Equity Series may hold cash reserves and invest in money market instruments
(including securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, repurchase agreements, certificates of deposit and
bankers acceptances issued by banks or savings and loan associations, and
commercial paper) rated at time of purchase in the top two categories by an
NRSRO or determined to be of comparable quality by the Manager at the time of
purchase.
The Equity Series may also purchase and sell American Depository Receipts
("ADRs"). ADRs are receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. Generally, ADRs in registered form are designed for use in the
U.S. securities markets. The Equity Series may invest in ADRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depository, whereas a
depository may establish an unsponsored facility without participation of the
issuer of the deposited security. The Series does not consider any ADR
purchase to be foreign. Holders of unsponsored ADRs generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR.
The Equity Series may invest in convertible securities issued by U.S.
companies. Convertible debentures include corporate bonds and notes that may
be converted into or exchanged for common stock. These securities are
generally convertible either at a stated price or a stated rate (that is, for a
specific number of shares of common stock or other security). As with other
fixed income securities, the price of a convertible debenture to some extent
varies inversely with interest rates. While providing a fixed-income stream, a
convertible debenture also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. Common stock acquired by the Equity Series
upon conversion of a convertible debenture will generally be held for so long
as the Manager anticipates such stock will provide the Series with
opportunities which are consistent with the Series' investment objective and
policies.
For temporary defensive purposes when the Manager determines that market
conditions warrant, the Equity Series may invest up to 100% of its assets in
the money market instruments described above and other short-term debt
instruments that are rated, at the time of purchase, investment grade, and may
hold a portion of its assets in cash.
Other Investment Policies
Other Registered Investment Companies. Each Portfolio's corresponding
Series reserves the right to invest in the shares of other registered
investment companies. By investing in shares of investment companies, a Series
would indirectly pay a portion of the operating expenses, management expenses
and brokerage costs of such companies as well as the expense of operating the
Series. Thus, the Series' investors may pay higher total operating expenses
and other costs than they might pay by owning the underlying investment
companies directly. The Manager will attempt to identify investment companies
that have demonstrated superior management in the past, thus possibly
offsetting these factors by producing better results and/or lower expenses than
other investment companies with similar investment objectives and policies.
There can be no assurance that this result will be achieved. However, the
Manager will waive its advisory fee with respect to the assets of a Series
invested in other investment companies, to the extent of the advisory fee
charged by any investment adviser to such investment company. In addition, the
1940 Act limits investment by a Series in shares of other investment companies
to no more than 10% of the value of the Series' total assets.
Securities Loans. Each Series may lend securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of earning
additional income. While a Series may earn additional income from lending
securities, such activity is incidental to the investment objective of a
Series. The value of securities loaned may not exceed 33 1/3% of the value of
a Series' total assets. In connection with such loans, a Series will receive
collateral consisting of cash or U.S. Government securities, which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. In addition, the Series will be able to
terminate the loan at any time, will retain the authority to vote the loaned
securities and will receive reasonable interest on the loan, as well as amounts
equal to any dividends, interest or other distributions on the loaned
securities. In the event of the bankruptcy of the borrower, the Fund could
experience delay in recovering the loaned securities. Management believes that
this risk can be controlled through careful monitoring procedures.
Reverse Repurchase Agreements. A Series may enter into reverse repurchase
agreements with banks and broker-dealers. Reverse repurchase agreements
involve sales by a Series of its assets concurrently with an agreement by the
Series to repurchase the same assets at a later date at a fixed price. A
Series will establish a segregated account with its custodian bank in which it
will maintain cash, U.S. government securities or other liquid obligations
equal in value to its obligations with respect to reverse repurchase
agreements.
Options. The Kiewit Short-Term Government Series, Kiewit Intermediate-Term
Bond Series and Kiewit Equity Series each may sell and/or purchase exchange-
traded call options and purchase exchange-traded put options on securities in
the Portfolio. Options will be used to generate income and to protect against
price changes and will not be engaged in for speculative purposes. The
aggregate value of option positions may not exceed 10% of each Series' net
assets as of the time the Series enters into such options.
A put option gives the purchaser of the option the right to sell, and the
writer the obligation to buy, the underlying security at any time during the
option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
There are risks associated with option transactions including the following:
(i) the success of an options strategy may depend on the ability of the Manager
to predict movements in the prices of the individual securities, fluctuations
in markets and movements in interest rates; (ii) there may be an imperfect
correlation between the changes in market value of the securities held by a
Series and the prices of options; (iii) there may not be a liquid secondary
market for options; and (iv) while a Series will receive a premium when it
writes covered call options, it may not participate fully in a rise in the
market value of the underlying security.
RISK FACTORS
Each Series has reserved the right to borrow amounts not exceeding 33% of
its net assets for the purposes of making redemption payments. When
advantageous opportunities to do so exist, a Series may also borrow amounts not
exceeding 5% of the value of the Series' net assets for the purpose of
purchasing securities. Such purchases can be considered to result in
"leveraging," and in such circumstances, the net asset value of the Series may
increase or decrease at a greater rate than would be the case if the Series had
not leveraged. A Series would incur interest on the amount borrowed and if the
appreciation and income produced by the investments purchased when the Series
has borrowed are less than the cost of borrowing, the investment performance of
the Series may be further reduced as a result of leveraging.
In addition, each Series may invest in repurchase agreements and reverse
repurchase agreements. The use of repurchase agreements involves certain
risks. For example, if the seller of the agreement defaults on its obligation
to repurchase the underlying securities at a time when the value of these
securities has declined, a Series may incur a loss upon disposition of them. If
the seller of the agreement becomes insolvent and subject to liquidation or
reorganization under the bankruptcy code or other laws, a bankruptcy court may
determine that the underlying securities are collateral not within the control
of the Series and therefore subject to sale by the trustee in bankruptcy.
Finally, it is possible that a Series may not be able to substantiate its
interest in the underlying securities. While the Fund's management
acknowledges these risks, it is expected that they can be controlled through
stringent security selection and careful monitoring. Reverse repurchase
agreements involve the risk that the market value of the securities retained by
the Series may decline below the price of the securities the Series has sold
but is obligated to repurchase under the agreement. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or become
insolvent, the Series' use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Series' obligation to repurchase the securities. Reverse
repurchase agreements are considered borrowings by the Series and as such are
subject to the investment limitations discussed above.
The mortgage-backed and asset-backed securities in which the Kiewit
Intermediate-Term Bond Series may invest differ from conventional bonds in that
principal is paid back over the life of the security rather than at maturity.
As a result, the holder of those types of securities (the Series) receives
monthly scheduled payments of principal and interest, and may receive
unscheduled principal payments representing prepayments on the underlying
mortgages or assets. Such prepayments occur more frequently during periods of
declining interest rates. When the holder reinvests the payments and any
unscheduled prepayments of principal it receives, it may receive a rate of
interest which is lower than the rate on the existing mortgage-backed and
asset-backed securities. For this reason, these securities may be less
effective than other types of securities as a means of "locking in" long-term
interest rates.
The market value of mortgage securities, like other debt securities,
generally varies inversely with changes in market interest rates, declining
when interest rates rise and rising when interest rates decline. However,
mortgage securities, due to changes in the rates of prepayments on the
underlying mortgages, may experience less capital appreciation in declining
interest rate environments and greater capital losses in periods of increasing
interest rates than other investments of comparable maturities.
In addition, to the extent mortgage securities are purchased at a premium,
mortgage foreclosures and unscheduled principal prepayments may result in some
loss of the holders' principal investment to the extent of the premium paid.
On the other hand, if mortgage securities are purchased at a discount, both a
scheduled payment of principal and an unscheduled prepayment of principal
increases current and total returns and accelerates the recognition of income
which, when distributed to shareholders, is taxable as ordinary income.
MANAGEMENT OF THE FUND
The Fund was organized as a Delaware business trust. Under Delaware law the
Fund's Board of Trustees is responsible for establishing Fund policies and for
overseeing the management of the Fund.
Each of the Trustees and officers of the Fund is also a Trustee and officer
of the Trust. The Trustees of the Fund, including all of the disinterested
Trustees, have adopted written procedures to monitor potential conflicts of
interest that might develop between the Feeder Portfolios and the Trust.
Information as to the Trustees and Officers of the Fund and the Trust is set
forth in the Statement of Additional Information under "Trustees and Officers."
Investment Management Agreement. Kiewit Investment Management Corp. (the
"Manager"), 1000 Kiewit Plaza, Omaha, NE 68131-3344, serves as the investment
manager to each Series of the Trust. The Manager, organized in 1994, is an
indirect wholly-owned subsidiary of Peter Kiewit Sons', Inc., a construction,
mining and telecommunications company. The Manager provides the Trust with
records concerning the Manager's activities which the Trust is required to
maintain and renders regular reports to the Trust's officers and the Board of
Trustees. The Manager also selects brokers and dealers to effect securities
transactions. Under the investment management agreement between the Manager
and the Trust on behalf of each Series, the monthly fees of the Series are at
the following annual rates of their average monthly net assets: Kiewit Money
Market Series .20%; Kiewit Rated Money Market Series .20%; Kiewit Short-Term
Government Series .30%; Kiewit Intermediate-Term Series .40%; Kiewit Tax-
Exempt Series .40%; and Kiewit Equity Series .70%. Through June 30,
1997, the Manager has agreed to waive all or a portion of its advisory fee
and assume certain Fund expenses
in an amount that will limit annual operating expenses to not more than the
following percentage of the average daily net assets of the K Class Shares of
each Portfolio: Kiewit Money Market Portfolio - .20%; Kiewit Rated Money
Market Portfolio - .20%; Kiewit Short-Term Government Portfolio - .30%;
Kiewit Intermediate-Term Bond Portfolio - .50%; Kiewit Tax-Exempt Portfolio
- - .50%; and Kiewit Equity Portfolio - .80%.
Mr. P. Greggory Williams manages the investments of the Kiewit Short-Term
Government Series and co-manages the Kiewit Equity Series. Mr. Williams is the
Chief Investment Officer and a Vice President of the Manager, Chief Financial
Officer and a Vice President of the Fund and a Chartered Financial Analyst.
From June 1983 to December 1986, he served as Assistant Vice President-
Investments at Mutual of Omaha Fund Management Company. His duties included
managing three investment companies. From December 1986 to November 1990, Mr.
Williams served as Senior Vice President and Chief Investment Officer of
Jefferson National Life Insurance Company in Indianapolis, Indiana. From June
1991 to August 1994, Mr. Williams was Vice President-Investments and Treasurer
of Shenandoah Life Insurance Company of Roanoke, Virginia.
Brian J. Mosher manages the Kiewit Intermediate-Term Bond Series and the
Kiewit Tax-Exempt Series, and co-manages the Kiewit Equity Series. Mr. Mosher
is a Vice President of the Manager, a Vice President of the Fund and a
Chartered Financial Analyst. From April 1984 to March 1989, he was Vice
President and Trust Officer of The Provident Bancorporation of Cincinnati,
Ohio. From March 1989 to December 1994, Mr. Mosher served as Investment
Manager of Meridian Mutual Insurance Company in Indianapolis, Indiana.
The Fund has entered into an Administrative Services Agreement with the
Manager, on behalf of each Feeder Portfolio. Pursuant to this agreement, the
Manager performs various services, including: supervision of the services
provided by the Portfolio's custodian and transfer and dividend disbursing
agent and others who provide services to the Fund for the benefit of the
Portfolio; providing shareholders with information about the Portfolio and
their investments as they or the Fund may request; assisting the Portfolio in
conducting meetings of shareholders; furnishing information as the Board of
Trustees may require regarding the corresponding Series; and any other
administrative services for the benefit of the Portfolio as the Board of
Trustees may reasonably request. For its services, each Feeder Portfolio pays
the Manager a monthly fee equal to one-twelfth of .02% of the Portfolio's
average net assets.
Administration and Accounting Services Agreements. Under separate
Administration Agreements and Accounting Services Agreements with the Trust and
the Fund, Rodney Square Management Corporation ("Rodney Square"), 1100 North
Market Street, Wilmington, Delaware 19890, serves, respectively, as
Administrator and Accounting Services Agent for the Trust and the Fund. In
these joint capacities, Rodney Square manages and administers all regular day-
to-day operations (other than management of the Trust's investments) of each of
the Trust's various Series and each of the Fund's various Portfolios, subject
to the supervision of the Trust's and the Fund's respective Boards of Trustees.
Pursuant to its respective agreements with Rodney Square, the Trust has agreed
to pay Rodney Square, on behalf of each Trust Series, the Series' proportionate
share of a complex-wide annual: (a) administration services charge of 0.015% of
the Trust's aggregate total assets in excess of $125 million; and (b)
accounting services charge of 0.015% of the Trust's aggregate total assets in
excess of $100 million. The foregoing Rodney Square annual asset-based fees
are determined on an average daily total asset basis, and are subject to
prescribed fixed minimums.
Transfer Agency Agreement. Rodney Square serves as Transfer Agent and
Dividend Paying Agent for each Portfolio of the Fund pursuant to a Transfer
Agency Agreement with the Fund.
Investment Management Expenses. The Fund and the Trust each bears all of
its own costs and expenses, including: services of its independent accountants,
legal counsel, brokerage fees, commissions and transfer taxes in connection
with the acquisition and disposition of portfolio securities, taxes, insurance
premiums, costs incidental to meetings of its shareholders and directors or
trustees, the cost of filing its registration statements under the federal
securities laws and the cost of any notice filings required under state
securities laws, reports to shareholders, and transfer and dividend disbursing
agency, administrative services and custodian fees. Expenses allocable to a
particular Portfolio or Series are so allocated, and expenses which are not
allocable to a particular Portfolio or Series are borne by each Portfolio or
Series on the basis of the fees paid by the Fund or Trust.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Portfolios seek to achieve their investment objectives by investing all
of their investable assets in a corresponding Series of shares of Trust. Each
Series is classified as a partnership for U.S. federal income tax purposes. A
Portfolio is allocated its proportionate share of the income and realized and
unrealized gains and losses of its corresponding Series.
Each Portfolio of the Fund is treated as a separate entity for federal
income tax purposes. Each Portfolio intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As such, each Portfolio will not be subject to federal
income tax, or to any excise tax, to the extent its earnings are distributed as
provided in the Code and by satisfying certain other requirements relating to
the sources of its income and diversification of its assets.
Dividends paid by a Portfolio with respect to its K Class Shares and S Class
Shares are calculated in the same manner and at the same time. Both K Class
Shares and S Class Shares of a Portfolio will share proportionally in the
investment income and expenses of the Portfolio, except that the per share
dividends of S Class Shares will ordinarily be lower than the per share
dividends of K Class Shares as a result of the distribution expenses charged to
S Class Shares.
Dividends consisting of substantially all of the ordinary income of each
Portfolio, except the Kiewit Equity Portfolio, are declared daily and are
payable to shareholders of record at the time of declaration. Such dividends
are paid on the first business day of each month. Net capital gains
distributions, if any, will be made annually. The Fund's policy is to
distribute substantially all net investment income from the Kiewit Equity
Portfolio, together with any net realized capital gains annually.
Shareholders of the Fund will automatically receive all income dividends and
capital gains distributions in additional shares of the Portfolio whose shares
they hold at net asset value (as of the business date following the dividend
record date), unless as to each Portfolio, upon written notice to the Fund's
Transfer Agent, Rodney Square, the shareholder selects one of the following
options: (i) Income Option -- to receive income dividends in cash and capital
gains distributions in additional shares at net asset value; (ii) Capital Gains
Option -- to receive capital gains distributions in cash and income dividends
in additional shares at net asset value; or (iii) Cash Option -- to receive
both income dividends and capital gains distributions in cash.
Distributions paid by a Portfolio from long-term capital gains (which are
allocated from a Series), whether received in cash or in additional shares, are
taxable to investors as long-term capital gains, regardless of the length of
time an investor has owned shares in the Portfolio. The Portfolios (through
the operation of the Series) do not seek to realize any particular amount of
capital gains during a year; rather, realized gains are a byproduct of
management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, if purchases of shares
in a Portfolio are made shortly before the record date for a capital gains
distribution or a dividend, a portion of the investment will be returned as a
taxable distribution.
Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated for
tax purposes as if paid by a Portfolio and received by the shareholder on
December 31 of the calendar year in which they are declared.
A sale or redemption of shares of a Portfolio is a taxable event and may
result in a capital gain or loss to shareholders subject to tax. Any loss
incurred on sale or exchange of a Portfolio's shares held for six months or
less will be treated as a long-term capital loss to the extent of any capital
gain dividends received with respect to such shares.
The Portfolios may be required to report to the Internal Revenue Service
("IRS") any taxable dividend or other reportable payment (including share
redemption proceeds) and withhold 31% of any such payments made to shareholders
who have not provided a correct taxpayer identification number and made certain
required certifications. A shareholder may also be subject to backup
withholding if the IRS or a broker notifies the Fund that the number furnished
by the shareholder is incorrect or that the shareholder is subject to backup
withholding for previous under-reporting of interest or dividend income.
Shareholders of the Portfolios who are not U.S. persons for purposes of
federal income taxation, should consult with their financial or tax advisors
regarding the applicability of U.S. withholding and other taxes to
distributions received by them from the Portfolios and the application of
foreign tax laws to these distributions. Shareholders should also consult
their tax advisors with respect to the applicability of any state and local
intangible property or income taxes to their shares of the Portfolios and
distributions and redemption proceeds received from the Portfolios.
Shareholders who hold shares of a Portfolio in an employer-sponsored 401(k) or
profit sharing plan, or other tax-advantaged plan, such as an IRA, should read
their plan documents with respect to options available for receipt of dividends
and federal tax treatment of transactions involving such shares.
The tax discussion set forth above is included for general information only.
Prospective investors should consult their own tax advisers concerning the
federal, state, local or foreign tax consequences of an investment in a
Portfolio.
PURCHASE OF SHARES
After you open an account with the Fund, you may purchase K Class Shares by
(a) writing to the Fund and enclosing your check as payment or (b) by calling
(800) 2KIEWIT to arrange for payment by wire transfer.
To Open an Account. Send a completed application form by regular mail to
Kiewit Mutual Fund, c/o Rodney Square, P.O. Box 8987, Wilmington, DE 19899,
or
by express mail to Kiewit Mutual Fund, c/o Rodney Square, 1105 N. Market
Street, Wilmington, DE 19801. You may request an application form by calling
(800) 2KIEWIT.
To Purchase by Mail. Your initial purchase may be indicated on your
application. For additional purchases, you may send the Fund a simple letter
or use order forms supplied by the Fund. Please enclose your check drawn on a
U.S. bank payable to "Kiewit Mutual Fund." Please indicate the amount to be
invested in each Portfolio and your Portfolio account number.
To Purchase by Wire Transfer: Please call the Fund at (800) 2KIEWIT to make
specific arrangements before each wire transfer. Then, instruct your bank to
wire federal funds to Rodney Square Management Corporation, c/o Wilmington
Trust Company, Wilmington, DE -- ABA #0311-0009-2, attention: Kiewit Mutual
Fund, DDA# 2648-0337, further credit -- your account number, the desired
Portfolio and class of shares and your name.
Minimum Initial Investment. The minimum initial investment is $10,000, but
subsequent investments may be made in any amount.
Purchase Price and Timing. K Class Shares of each Portfolio are offered at
their net asset value next determined after a purchase order is received and
accepted. Purchase orders received by and accepted before the close of regular
trading on the New York Stock Exchange ("NYSE"), usually 4:00 p.m. Eastern
time, on any Business Day of the Fund will be priced at the net asset value per
share that is determined as of the close of regular trading on the NYSE.
However, purchase orders for shares of the Kiewit Money Market Portfolio and
the Kiewit Rated Money Market Portfolio received and accepted before 2:00 p.m.,
Eastern time, on any Business Day of the Fund will be priced at the net asset
value per share that is determined at 2:00 p.m., Eastern time. (See "Valuation
Of Shares.") Purchase orders received and accepted after those daily deadlines
will be priced as of the deadline on the following Business Day of the Fund. A
"Business Day of the Fund" is any day on which the NYSE and Federal Reserve
Bank are open for business. The Fund and RSD each reserves the right to reject
any purchase order and may suspend the offering of shares of any Portfolio for
a period of time.
In Kind Purchases. If accepted by the Fund, K Class Shares of each
Portfolio may be purchased in exchange for securities which are eligible
for acquisition by the Portfolio and its corresponding Series of the Trust as
described in the Statement of Additional Information. Please contact Rodney
Square about this purchase method.
SHAREHOLDER ACCOUNTS
Shareholder Inquiries. Shareholder inquiries may be made by writing the
Fund at 1100 North Market Street, Wilmington, DE 19890 or calling (800)
2KIEWIT.
Shareholder Statements. The Fund will mail a statement at least quarterly
showing all purchases, redemptions and balances in each Portfolio.
Shareholdings are expressed in terms of full and fractional shares of each
Portfolio rounded to the nearest 1/1000th of a share. In the interest of
economy and convenience, the Portfolios do not issue share certificates.
Individual Retirement Accounts. Shares of the Portfolios may be purchased
for a tax-deferred retirement plan such as an individual retirement account
("IRA"). For an IRA Application, call Rodney Square at (800) 2KIEWIT.
Wilmington Trust Company ("WTC") provides IRA custodial services for each
shareholder account that is established as an IRA. For these services, WTC
receives an annual fee of $10.00 per account, which fee is paid directly to WTC
by the IRA shareholder. If the fee is not paid by the date due, Portfolio
shares owned by the IRA shareholder will be redeemed automatically for purposes
of making the payment.
Non-Individual Accounts. Corporations, partnerships, fiduciaries and other
non-individual investors may be required to furnish certain additional
documentation to make purchases, exchanges and redemptions.
Minimum Account Size. Due to the relatively high cost of maintaining small
shareholder accounts, the Fund reserves the right to automatically close any
account with a current value of less than $5,000 by involuntarily redeeming all
shares in the account and mailing the proceeds to the shareholder. Shareholders
will be notified if their account value is less than $5,000 and will be allowed
60 days in which to increase their account balance to $5,000 or more to prevent
the account from being closed. Reductions in value that result solely from
market activity will not trigger an involuntary redemption.
VALUATION OF SHARES
The net asset values per share of each Portfolio's K Class Shares and shares
of corresponding Series are calculated by dividing the total market value of
the corresponding Series' investments and other assets, less any liabilities,
by the total outstanding shares of the stock of the Portfolio or Series.
The value of the shares of each Series will fluctuate in relation to its own
investment experience. The value of the shares of the Feeder Portfolios
will fluctuate in relation to the investment experience of the Trust Series
in which such Portfolios invest. On each Business Day of the Fund, net
asset value is determined as of the close of
business of the NYSE, usually 4:00 p.m. Eastern time; except for the Kiewit
Money Market Portfolio and Kiewit Rated Money Market Portfolio, which is
determined at 2:00 p.m., Eastern time. Securities held by the Series which are
listed on a securities exchange and for which market quotations are available
are valued at the last quoted sale price of the day or, if there is no such
reported sale, at the mean between the most recent quoted bid and asked prices.
Price information on listed securities is taken from the exchange where the
security is primarily traded. Unlisted securities for which market quotations
are readily available are valued at the mean between the most recent bid and
asked prices. The value of other assets and securities for which no quotations
are readily available (including restricted securities) are determined in good
faith at fair value in accordance with procedures adopted by the Board of
Trustees.
Money market instruments with a maturity of more than 60 days are valued at
current market value, as discussed above. Money market instruments with a
maturity of 60 days or less are valued at their amortized cost, which the Board
of Trustees has determined in good faith constitutes fair value for purposes of
complying with the 1940 Act. This valuation method will continue to be used
until such time as the Trustees determine that it does not constitute fair
value for such purposes.
The net asset value of the shares of each Portfolio, except the Kiewit Money
Market Portfolio and the Kiewit Rated Money Market Portfolio, will fluctuate in
relation to its own investment experience. The Kiewit Money Market Portfolio
and Kiewit Rated Money Market Portfolio will attempt to maintain a stable net
asset value of $1.00 per share.
The offering price of shares of each Portfolio is the net asset value next
determined after the purchase order is received and accepted; no sales charge
or reimbursement fee is imposed.
EXCHANGE OF SHARES
You may exchange all or a portion of your K Class Shares in a Portfolio for
K Class Shares of any other Portfolio of the Fund that currently offers its
shares to investors. A redemption of shares through an exchange will be
effected at the net asset value per share next determined after receipt by the
Fund of the request, and a purchase of shares through an exchange will be
effected at the net asset value per share next determined.
Exchange transactions will be subject to the minimum initial investment and
other requirements of the Portfolio into which the exchange is made. An
exchange may not be made if the exchange would leave a balance in a
shareholder's Portfolio account of less than $5,000.
To obtain more information about exchanges, or to place exchange orders,
contact the Fund. The Fund, on behalf of the Portfolios, reserves the right to
terminate or modify the exchange offer described here. This exchange offer is
valid only in those jurisdictions where the sale of the Portfolio's shares to
be acquired through such exchange may be legally made.
REDEMPTION OF SHARES
You may redeem K Class Shares by mailing instructions to the Fund or calling
the Fund at (800) 2KIEWIT. The Fund will promptly mail you a check or wire
transfer funds to your bank, as described below.
To Redeem By Mail: You may send written instructions, with signature
guarantees, by regular mail to: Kiewit Mutual Fund, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752, or by express
mail to Kiewit Mutual Fund, c/o Rodney Square Management Corporation, 1105 N.
Market Street, Wilmington, DE 19801. The instructions should indicate the
Portfolio from which shares are to be redeemed, the number of shares or dollar
amount to be redeemed, the Portfolio account number and the name of the person
in whose name the account is registered. A signature and a signature guarantee
are required for each person in whose name the account is registered. A
signature may be guaranteed by an eligible institution acceptable to the Fund,
such as a bank, broker, dealer, municipal securities dealer, government
securities dealer, credit union, national securities exchange, registered
securities association, clearing agency, or savings association.
To Redeem By Telephone: If you want to redeem your shares by telephone you
must elect to do so by checking the appropriate box of your initial Application
or by calling the Fund at (800) 2KIEWIT to obtain a separate application for
telephone redemptions. In order to redeem by telephone, you must call the Fund
Monday through Friday during normal business hours of 9 a.m. to 4 p.m., Eastern
time, and indicate your name, Kiewit Mutual Fund, the Portfolio's name, your
Portfolio account number and the number of shares you wish to redeem. The Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine and will not be liable for any losses to a shareholder
due to unauthorized or fraudulent telephone transactions. If the Fund, the
Manager, the Transfer Agent or any of their employees fails to abide by their
procedures, the Fund may be liable to a shareholder for losses he/she suffers
from any resulting unauthorized transactions. During times of drastic economic
or market changes, the telephone redemption privilege may be difficult to
implement. In the event that you are unable to reach the Fund by telephone,
you may make a redemption request by mail.
Additional Redemption Information. You may redeem all or any part of the
value of your account on any Business Day. Redemptions are made at the net
asset value next calculated after the Fund has received and accepted your
redemption request. (See "Valuation Of Shares.") The Fund imposes no fee when
shares are redeemed.
Redemption checks are mailed on the next Business Day of the Fund following
acceptance of redemption instructions but in no event later than 7 days
following such receipt and acceptance. Amounts redeemed by wire from each
Portfolio, except the Kiewit Money Market Portfolio, are normally wired on the
next business day after acceptance of redemption instructions (if received by
Rodney Square before the close of regular trading on the NYSE or 2:00 p.m.
Eastern time, for the Kiewit Money Market Portfolio). In no event are
redemption proceeds wired later than 7 days following such receipt and
acceptance. If the shares to be redeemed were purchased by check, the Fund
reserves the right not to make the redemption proceeds available until it has
reasonable grounds to believe that the check has been collected (which could
take up to 10 days).
Redemption proceeds exceeding $10,000 may be wired to your predesignated
bank account in any commercial bank in the United States. The receiving bank
may charge a fee for this service. Alternatively, proceeds may be mailed to
your bank or, for amounts of less than $10,000, mailed to your Portfolio
account address of record if the address has been established for a minimum of
60 days. In order to authorize the Fund to mail redemption proceeds to your
Portfolio account address of record, complete the appropriate section of the
application for telephone redemptions or include your Portfolio account address
of record when you submit written instructions. You may change the account
which you have designated to receive amounts redeemed at any time. Any request
to change the account designated to receive redemption proceeds should be
accompanied by a guarantee of the shareholder's signature by an eligible
institution. A signature and a signature guarantee are required for each
person in whose name the account is registered. Further documentation will be
required to change the designated account when shares are held by a
corporation, partnership, fiduciary or other non-individual investor.
For more information on redemption services, call the Fund at (800) 2KIEWIT.
Redemption Policies. Redemption payments in cash will ordinarily be made
within seven days after receipt of the redemption request in good form.
However, the right of redemption may be suspended or the date of payment
postponed in accordance with the 1940 Act. The amount received upon redemption
may be more or less than the amount paid for the shares depending upon the
fluctuations in the market value of the assets owned by the Portfolio. If the
Board of Trustees determines that it would be detrimental to the best interests
of the remaining shareholders of any Portfolio to make a particular payment in
cash, the Fund may pay all or part of the redemption price by distributing
portfolio securities from the Portfolio of the shares being redeemed in
accordance with Rule 18f-1 under the 1940 Act. Investors may incur brokerage
charges and other transaction costs selling securities that were received in
payment of redemptions.
PERFORMANCE INFORMATION
From time to time, performance information, such as yield or total return
for a Portfolio, may be quoted in advertisements or in communications to
shareholders. Performance quotations represent past performance and should not
be considered as representative of future results. The current yield will be
calculated by dividing the net investment income earned per share during the
period stated in the advertisement (based on the average daily number of shares
entitled to receive dividends outstanding during the period) by the closing net
asset value per share on the last day of the period and annualizing the result
on a semi-annual compounded basis. A Portfolio's total return may be
calculated on an annualized and aggregate basis for various periods (which
periods will be stated in the advertisement). Average annual return reflects
the average percentage change per year in value of an investment in a
Portfolio. Aggregate total return reflects the total percentage change in
value of an investment in the Portfolio over the stated period.
The principal value of an investment in a Portfolio will fluctuate so that
an investor's shares when redeemed, may be worth more or less than the
investor's original cost. Performance will be calculated separately for K
Class and S Class Shares. The K Class Shares have different expenses from the
S Class Shares which may affect performance.
Further information about the performance of each Portfolio and Class is
included in the Fund's Annual Report to Shareholders which may be obtained
without charge by contacting the Fund at (800) 2KIEWIT.
GENERAL INFORMATION
The Fund, formerly named "Kiewit Institutional Fund", issues two separate
classes of shares of beneficial interest for each Portfolio with a par value of
$.01 per share. The shares of each Portfolio, when issued and paid for in
accordance with the Fund's prospectus, will be fully paid and non-assessable
shares, with equal, non-cumulative voting rights and no preferences as to
conversion, exchange, dividends, redemption or any other feature.
The separate classes of shares each represent interests in the same
portfolio of investments, have the same rights and are identical in all
respects, except that the S Class Shares bear distribution plan expenses, and
have exclusive voting rights with respect to the Rule 12b-1 Distribution Plan
pursuant to which the distribution fee may be paid. The two classes have
different exchange privileges. See "Exchange Of Shares." The net income
attributable to S Class Shares and the dividends payable on S Class Shares will
be reduced by the amount of the distribution fees; accordingly, the net asset
value of the S Class Shares will be reduced by such amount to the extent the
Portfolio has undistributed net income.
Shareholders shall have the right to vote only (i) for removal of Trustees,
(ii) with respect to such additional matters relating to the Fund as may be
required by the applicable provisions of the 1940 Act, including Section 16(a)
thereof, and (iii) on such other matters as the Trustees may consider necessary
or desirable. In addition, the shareholders of each Portfolio will be asked to
vote on any proposal to change a fundamental investment policy (i.e. a policy
that may be changed only with the approval of shareholders) of that Portfolio.
All shares of the Fund entitled to vote on a matter shall vote without
differentiation between the separate Portfolios on a one-vote-per-share basis;
provided however, if a matter to be voted on does not affect the interests of
all Portfolios, then only the shareholders of each affected Portfolio shall be
entitled to vote on the matter. If liquidation of the Fund should occur,
shareholders would be entitled to receive on a per Portfolio basis the assets
of the particular Portfolio whose shares they own, as well as a proportionate
share of Fund assets not attributable to any particular Portfolio then in
existence. Ordinarily, the Fund does not intend to hold annual meetings of
shareholders, except as required by the 1940 Act or other applicable law. The
Fund's by-laws provide that meetings of shareholders shall be called for the
purpose of voting upon the question of removal of one or more Trustees upon the
written request of the holders of not less than 10% of the outstanding shares.
Kiewit Investment Trust was organized as a Delaware business trust on
_______________, 1997. The Trust offers shares of its Series only to
institutional investors in private offerings. The Fund may withdraw the
investment of a Feeder Portfolio in a Series of the Trust at any time, if the
Board of Trustees of the Fund determines that it is in the best interests of
the Portfolio to do so. Upon any such withdrawal, the Board of Trustees of the
Fund would consider what action might be taken, including the investment of all
of the assets of the Portfolio in another pooled investment entity having the
same investment objective as the Portfolio or the hiring of an investment
advisor to manage the Portfolio's assets in accordance with the investment
policies described above.
Whenever a Feeder Portfolio, as an investor in its corresponding Trust
Series, is asked to vote on a shareholder proposal, the Fund will hold a
special meeting of the Feeder Portfolio's shareholders to solicit their votes
with respect to the proposal. The Trustees of the Fund will then vote the
Feeder Portfolio's shares in the Series in accordance with the voting
instructions received from the Feeder Portfolio's shareholders. The Trustees
of the Fund will vote shares of the Feeder Portfolio for which they receive no
voting instructions in accordance with their best judgment.
Peter Kiewit Sons', Inc., a Delaware corporation with principal offices at
1000 Kiewit Plaza, Omaha, NE 68131, is the direct or indirect parent of
shareholders of more than 25% of the voting securities of each Portfolio and
therefore may be deemed to control each Portfolio.
APPENDIX - DESCRIPTION OF RATINGS
Description of Bond Ratings - Moody's Investors Services, Inc. ("Moody's")
description of its bond ratings are:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there maybe other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other market
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and 3 indicates a
ranking toward the lower end of the category.
Standard & Poor's Ratings Group's ("S&P") description of its bond ratings are:
AAA--The highest degree of safety with overwhelming repayment capacity.
AA--Very high degree of safety with very strong capacity for repayment. These
issues differ from higher rated issues only in a small degree.
A--A strong degree of safety and capacity for repayment, but these issues are
somewhat more susceptible in the long term to adverse economic conditions than
those rated in higher categories.
BBB--A satisfactory degree of safety and capacity for repayment, but these
issues are more vulnerable to adverse economic conditions or changing
circumstances than higher-rated issues.
BB--This designation reflects less near-term vulnerability to default than
other speculative issues. However, the issues face major ongoing uncertainties
or exposures to adverse economic or financial conditions threatening capacity
to meet interest and principal payments on a timely basis.
B--This designation indicates that the issues have a greater vulnerability to
default but currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity to pay interest and repay principal.
CCC--Issues rated CCC have currently identifiable vulnerability to default, and
are dependent upon favorable business, financial, and economic conditions to
meet timely interest and principal repayments. Adverse business, financial, or
economic developments would render repayment capacity unlikely.
S&P applies indicators "+," no character, and "-" to its rating categories.
The indicators show relative standing within the major rating categories.
Description of Commercial Paper Ratings
The rating A-1 is the highest commercial paper rating assigned by S&P.
Commercial paper rated A-1 has the following characteristics: (1) liquidity
ratios are adequate to meet cash requirements; (2) long-term senior debt is
rated "A" or better; (3) the issuer has access to at least two additional
channels of borrowing; (4) basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances; (5) typically, the issuer's
industry is well established and the issuer has a strong position within the
industry; and (6) the reliability and quality of management are unquestioned.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
KIEWIT MUTUAL FUND
1000 Kiewit Plaza
Omaha, NE 68131-3344
Telephone: (800) 2KIEWIT
Investment Advisor
KIEWIT INVESTMENT MANAGEMENT CORP.
1000 Kiewit Plaza
Omaha, NE 68131-3344
Custodian
WILMINGTON TRUST COMPANY
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-0001
Administrator and Transfer Agent
RODNEY SQUARE MANAGEMENT CORPORATION
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-0001
Distributor
RODNEY SQUARE DISTRIBUTORS, INC.
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-00014
KIEWIT MUTUAL FUND
S CLASS SHARES
PROSPECTUS
_________, 1997
This prospectus describes the Kiewit Money Market Portfolio, Kiewit Rated
Money Market Portfolio, Kiewit Short-Term Government Portfolio, Kiewit
Intermediate-Term Bond Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity
Portfolio (collectively the "Portfolios" or "Feeder Portfolios" and
individually a "Portfolio"), each a series of shares issued by Kiewit Mutual
Fund (the "Fund"), 1000 Kiewit Plaza, Omaha, NE 68131-3344, (800) 2KIEWIT.
Each Portfolio is an open-end, diversified, management investment company which
currently offers two separate classes of shares: K Class Shares and S Class
Shares. Shares of each class represent equal, pro-rata interests in a
Portfolio and accrue dividends in the same manner, except that S Class Shares
bear distribution expenses payable by the Class as compensation for
distribution of the S Class Shares. The securities offered in this Prospectus
are S Class Shares subject to a distribution charge. Information concerning
the Fund's K Class Shares may be obtained by calling the Fund at the telephone
number stated above.
The Fund issues six series of shares, each of which represents a separate
class of the Fund's shares of beneficial interest, having its own investment
objective and policies. The investment objective of the Kiewit Money Market
Portfolio and Kiewit Rated Money Market Portfolio is to provide high current
income while maintaining a stable share price. The investment objective of the
Kiewit Short-Term Government Portfolio is to provide investors with as high a
level of current income as is consistent with the maintenance of principal and
liquidity. The investment objective of the Kiewit Intermediate-Term Bond
Portfolio is to provide as high a level of current income as is consistent with
reasonable risk. The investment objective of the Kiewit Tax-Exempt Portfolio
is to provide as high a level of current income exempt from federal income tax
as is consistent with reasonable risk. The investment objective of the Kiewit
Equity Portfolio is to achieve long-term capital appreciation.
Unlike many other investment companies which directly acquire and manage
their own portfolio of securities, each Portfolio seeks to achieve its
investment objective by investing all of its investable assets in a
corresponding series of shares of Kiewit Investment Trust (the "Trust"), an
open-end, management investment company that issues series of shares
(individually and collectively, the "Series") having the same investment
objective, policies and limitations as each of the Portfolios. The investment
experience of each Feeder Portfolio will correspond directly with the
investment experience of its corresponding Series. Investors should carefully
consider this investment approach. For additional information, see "Special
Information About The Portfolios' Structure."
This prospectus contains information about the Portfolios that
prospective investors should know before investing and should be read carefully
and retained for future reference. A Statement of Additional Information dated
_________, 1997, including the Fund's most recent Annual Report to
Shareholders, is incorporated herein by reference, has been filed with the
Securities and Exchange Commission and is available upon request, without
charge, by writing or calling the Fund at the above address or telephone
number.
The shares of the Kiewit Money Market Portfolio and Kiewit Rated Money Market
Portfolio are neither insured nor guaranteed by the U.S. Government. While
such Portfolios will make every effort to maintain a stable net asset value of
$1.00 per share, there is no assurance that the Portfolios will be able to do
so.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
HIGHLIGHTS 4
EXPENSE TABLE 7
FINANCIAL HIGHLIGHTS 9
SPECIAL INFORMATION ABOUT THE PORTFOLIOS' STRUCTURE 9
INVESTMENT OBJECTIVES AND POLICIES 10
Kiewit Money Market Portfolio 10
Kiewit Rated Money Market Portfolio 11
Kiewit Short-Term Government Portfolio 12
Kiewit Intermediate-Term Bond Portfolio 13
Kiewit Tax-Exempt Portfolio 14
Kiewit Equity Portfolio 15
Other Investment Policies 16
RISK FACTORS 17
MANAGEMENT OF THE FUND 18
DISTRIBUTION PLAN 20
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES 20
PURCHASE OF SHARES 22
SHAREHOLDER ACCOUNTS 23
VALUATION OF SHARES 23
EXCHANGE OF SHARES 24
REDEMPTION OF SHARES 25
PERFORMANCE INFORMATION 26
GENERAL INFORMATION 27
APPENDIX - DESCRIPTION OF RATINGS 29
HIGHLIGHTS
The Fund
The Fund is an open-end, diversified management investment company
commonly known as a "mutual fund." The Fund was organized as a Delaware
business trust on June 1, 1994. The Fund currently offers six series of
shares: Kiewit Money Market Portfolio, Kiewit Rated Money Market Portfolio,
Kiewit Short-Term Government Portfolio, Kiewit Intermediate-Term Bond
Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity Portfolio. Each
Portfolio offers two classes of shares, K Class Shares and S Class Shares.
Investment Objectives
The investment objective of each Portfolio of Kiewit Mutual Fund is to
provide its investors with:
Money Market High current income, while maintaining a stable share
price. The Money Market Portfolio will invest
all of its assets in the Money Market Series of
the Trust, which in turn invests in short-term
money market securities.
Rated Money Market High current income, while maintaining a stable share
price and a credit rating in the highest
category for money market funds as determined by
an independent rating agency. The Rated Money
Market Portfolio will invest all of its assets
in the Rated Money Market Series of the Trust,
which in turn invests in securities issued or
guaranteed by the U.S. Government, its agencies
or instrumentalities.
Short-Term Government High level of current income, consistent with
the maintenance of principal and liquidity. The
Short-Term Government Bond Portfolio will invest
all of its assets in the Short-Term Government
Bond Series of the Trust, which in turn invests
in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Intermediate-Term Bond High level of current income, consistent with
reasonable risk. The Portfolio will invest all
of its assets in the Kiewit Intermediate-Term
Bond Series of the Trust, which in turn invests
in investment grade debt securities.
Tax-Exempt High level of current income, exempt from
federal income tax, consistent with reasonable
risk. The Tax-Exempt Portfolio will invest all
of its assets in the Tax-Exempt Series of the
Trust, which in turn invests primarily in
municipal obligations exempt from federal income
tax.
Equity Long-term capital appreciation. The Portfolio
will invest all of its assets in the Kiewit
Equity Series of the Trust, which in turn
invests in the equity securities of companies
which appear, in the opinion of the investment
adviser, to be undervalued in the marketplace at
the time of purchase.
Although the investment objective of each Portfolio is not fundamental and may
be changed by the Board of Trustees without shareholder approval, the Fund
intends to notify shareholders before making any material change. Due to the
inherent risks of investments, there can be no assurance that a Portfolio will
achieve its objective. See "Investment Objectives And Policies."
How to Purchase Shares
After you open an account, you may purchase S Class Shares by (a) writing
the Fund and enclosing your check as payment or (b) by calling the Fund at
(800) 2KIEWIT to arrange for payment by wire transfer. You may open an account
by mailing a completed application form to the Fund. The public offering price
of the shares of each Portfolio is the net asset value per share next
determined after acceptance of the purchase order and payment. The S Class
Shares may be purchased without a sales load or exchange fee, but are subject
to a distribution fee under a Rule 12b-1 plan. See "Purchase Of Shares."
How to Redeem Shares
You may redeem S Class Shares by mailing written instructions to the Fund
or by calling the Fund at (800) 2KIEWIT (if you requested telephone redemption
privileges on an application form). Shares will be redeemed at the net asset
value per share next determined after acceptance of a redemption request. The
Fund will promptly mail you a check, unless other arrangements have been made.
See "Redemption Of Shares."
Dividend Reinvestment
Each Portfolio, except the Kiewit Equity Portfolio, intends to pay
monthly dividends from its net investment income and will pay net capital
gains, if any, annually. The Kiewit Equity Portfolio intends to pay annual
dividends from net investment income, together with any net capital gains.
You may choose to receive dividends and capital gains distributions in
cash or you may choose to automatically reinvest them in additional shares of
the Portfolio. See "Dividends, Capital Gains Distributions And Taxes."
Investment Manager, Underwriter and Servicing Agents
Kiewit Investment Management Corp. serves as the investment manager of
each Series of the Trust and also provides the Portfolios with certain
administrative services. Rodney Square Distributors, Inc. serves as the
Portfolios' underwriter. Wilmington Trust Company serves as the custodian of
the Portfolios' assets and Rodney Square Management Corporation serves as the
Portfolios' administrator, transfer agent and accounting services agent.
Treasury Strategies, Inc. serves as the Portfolios' sub-administrator. See
"Management Of The Fund."
Risk Factors
Each Portfolio, through its investment in a corresponding Series of the
Trust, is subject to certain risks. Investors should consider a number of
factors: (i) each Series of the Trust invests in securities that fluctuate in
value, and there can be no assurance that the objective of any Portfolio will
be achieved; (ii) each Series of the Trust may invest in repurchase and reverse
repurchase agreements, which involve the risk of loss if the counterparty
defaults on its obligations under the agreement; (iii) each Series of the Trust
has reserved the right to borrow amounts not exceeding 33% of its net assets;
and (iv) the Kiewit Intermediate-Term Bond Series may invest in mortgage
securities, whose market values may vary with changes in market interest rates
to a greater or lesser extent than the market values of other debt securities.
Additionally, the policy of the Portfolios to invest in the corresponding
Series of the Trust also involves certain risks. See "Risk Factors."
Peter Kiewit Sons', Inc.
An investment in the Fund is not a direct or indirect investment in the
common stock of Peter Kiewit Sons', Inc. ("PKS"). Virtually all of PKS' common
stock is owned by employees or former employees of PKS. The Fund is restricted
from investing in the securities of PKS and its affiliates. PKS and its
affiliates do not guarantee that an investment in the Fund will result in
satisfactory results.
EXPENSE TABLE
</TABLE>
<TABLE>
<CAPTION>
Shareholder Transaction Costs None
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Money Rated Short-Term Intermediate- Tax-Exempt Equity
Market Money Government Term Bond Portfolio Portfolio
Portfolio Market Portfolio Portfolio
Portfolio
<S> <C> <C> <C> <C> <C> <C>
Management Fees
(after fee waiver)
.13% .13% .17% .33% .36% .45%
12b-1 Fees
.25% .25% .25% .25% .25% .25%
Other Expenses
(after expenses assumed)
.07 % .07% .13% .17% .14% .35%
Total Portfolio
Operating Expenses
.45% .45% .55% .75% .75% 1.05%
</TABLE>
The information in the Expense Table has been restated to reflect changes in
the amounts of management fees waived and Fund expenses assumed.
Prior to __________________, 1997, the Portfolios sought to achieve their
investment objectives by acquiring and managing their own portfolios of
securities rather than by investing all of their assets in the corresponding
Series of the Trust. The above figures have been restated to reflect estimated
aggregate annualized operating expenses of each Feeder Portfolio and its
corresponding Series as though the Feeder Portfolio's assets had been invested
in the Series during the fiscal year ended June 30, 1996.
Example
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return and redemption at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Money Market Portfolio 5 14 25 57
Rated Money Market
Portfolio 5 14 n/a n/a
Short-Term Government
Portfolio 6 18 31 69
Intermediate-Term Bond
Portfolio 8 24 42 93
Tax-Exempt Portfolio 8 24 42 93
Equity Portfolio 11 33 58 128
The purpose of the above Expense Table and Example is to assist investors
in understanding the various costs and expenses that an investor in the
Portfolios' S Class Shares will bear directly or indirectly. The information
set forth above relates only to the Portfolios' S Class Shares, which shares
are subject to different total fees and expenses than K Class Shares.
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown. The above
Example is based on actual expenses for the most recent fiscal period.
The table summarizes the aggregate estimated annual operating expenses of
both the Portfolios' S Class Shares and the Series of the Trust in which the
Portfolios invest. (See "Management Of The Fund" for a description of
Portfolio and Series expenses.) Through June 30, 1997, Kiewit Investment
Management Corp. has agreed to waive all or a portion of its advisory fee and
to assume certain expenses in order to limit annual operating expenses of the S
Class Shares to not more than the following percentage of the average daily net
assets of each Portfolio: Kiewit Money Market Portfolio .45%; Kiewit Rated
Money Market Portfolio .45%; Kiewit Short-Term Government Portfolio .55%;
Kiewit Intermediate Term Bond Portfolio .75%; Kiewit Tax-Exempt Bond Portfolio
.75%; and Kiewit Equity Portfolio 1.05%. Without the waiver of fees by Kiewit
Investment Management Corp., the total expenses of the Portfolios' S Class
Shares for the fiscal year ended June 30, 1996, would have been: Kiewit Money
Market Portfolio .52%; Kiewit Short-Term Government Portfolio .68%; Kiewit
Intermediate-Term Bond Portfolio .82%; Kiewit Tax-Exempt Portfolio 0.79% and
Kiewit Equity Portfolio 1.30%.
The Board of Trustees of the Fund has considered whether such expenses
will be more or less than they would be if the Feeder Portfolios invest
directly in the securities held by the Trust Series. The aggregate amount of
expenses for a Feeder Portfolio and the corresponding Trust Series may be
greater than if the Portfolio were to invest directly in the securities held by
the corresponding Trust Series. However, the total expense ratios for the
Feeder Portfolios and the Trust Series are expected to be less over time than
such ratios if the Portfolios continue to invest directly in the underlying
securities. This is because this arrangement enables various institutional
investors, including the Feeder Portfolios, to pool their assets, which may be
expected to result in economies by spreading certain fixed costs over a larger
asset base. Each shareholder in a Trust Series, including a Feeder Portfolio,
will pay its proportionate share of the expenses of that Trust Series.
FINANCIAL HIGHLIGHTS
Financial highlights for the Fund's S Class Shares are not provided because the
Portfolios had not commenced selling S Class Shares as of the date of this
Prospectus.
SPECIAL INFORMATION ABOUT THE PORTFOLIOS' STRUCTURE
Each of the six Portfolios of the Fund, unlike many other investment companies
which directly acquire and manage their own portfolio of securities, seeks to
achieve its investment objective by investing all of its investable assets in a
corresponding Series of the Trust, an open-end, management investment company,
registered under the Investment Company Act of 1940, that issues Series having
the same investment objective as each of the Portfolios. The investment
objectives of the Portfolios and their corresponding Series may be changed
without shareholder approval. Shareholders of a Feeder Portfolio will receive
written notice at least 30 days prior to the effective date of any change in
the investment objective of the Portfolio or its corresponding Trust Series.
This prospectus describes the investment objective, policies and restrictions
of each Feeder Portfolio and its corresponding Series. (See "Portfolio
Characteristics And Policies - Kiewit Money Market Portfolio, Kiewit Rated
Money Market Portfolio, Kiewit Short-Term Government Portfolio, Kiewit
Intermediate-Term Bond Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity
Portfolio." In addition, an investor should read "Management Of The Fund" for
a description of the management and other expenses associated with the Feeder
Portfolios' investment in the Trust. Other institutional investors, including
other mutual funds, may invest in each Series, and the expenses of such other
funds and, correspondingly, their returns may differ from those of the
Portfolios. Please contact the Fund at 1000 Kiewit Plaza, Omaha, NE 08131-
3344, 1-800-2KIEWIT for information about the availability of investing in a
Series of the Trust other than through a Feeder Portfolio.
The shares of the Trust Series will be offered to institutional investors for
the purpose of increasing the funds available for investment, to reduce
expenses as a percentage of total assets and to achieve other economies that
might be available at higher asset levels. While investment in a Series by
other institutional investors offers potential benefits to the Series and,
through their investment in the Series, the Feeder Portfolios also,
institutional investment in the Series also entails the risk that economies and
expense reductions might not be achieved, and additional investment
opportunities, such as increased diversification, might not be available if
other institutions do not invest in the Series. Also, if an institutional
investor were to redeem its interest in a Series, the remaining investors in
that Series could experience higher pro rata operating expenses, thereby
producing lower returns, and the Series' security holdings may become less
diverse, resulting in increased risk. Institutional investors that have a
greater pro rata ownership interest in a Series than the corresponding Feeder
Portfolio could have effective voting control over the operation of the Series.
Further, if a Series changes its investment objective in a manner which is
inconsistent with the investment objective of a corresponding Feeder Portfolio
and the Portfolio does not make a similar change in its investment objective,
the Portfolio would be forced to withdraw its investment in the Series and
either seek to invest its assets in another registered investment company with
the same investment objective as the Portfolio, which might not be possible, or
retain an investment advisor to manage the Portfolio's assets in accordance
with its own investment objective, possibly at increased cost. A withdrawal by
a Feeder Portfolio of its investment in the corresponding Series could result
in a distribution in kind of portfolio securities (as opposed to a cash
distribution) to the Portfolio. Should such a distribution occur, the
Portfolio could incur brokerage fees or other transaction costs in converting
such securities to cash in order to pay redemptions. In addition, a
distribution in kind to the Portfolio could result in a less diversified
portfolio of investments and could affect adversely the liquidity of the
Portfolio. Moreover, a distribution in kind may constitute a taxable exchange
for federal income tax purposes resulting in gain or loss to the Feeder
Portfolios. Any net capital gains so realized will be distributed to such a
Portfolio's shareholders as described in "Dividends, Capital Gains
Distributions And Taxes" below.
Finally, the Feeder Portfolios' investment in the shares of a registered
investment company such as the Trust is relatively new and results in certain
operational and other complexities. However, management believes that the
benefits to be gained by shareholders outweigh the additional complexities and
that the risks attendant to such investment are not inherently different from
the risks of direct investment in securities of the type in which the Trust
Series invest.
INVESTMENT OBJECTIVES AND POLICIES
Kiewit Money Market Portfolio
The Kiewit Money Market Portfolio pursues its investment objective by
investing all of its assets in the Money Market Series of the Trust (the "Money
Market Series") which has the same investment objective and policies as the
Portfolio. The investment objective of the Money Market Series is to provide
high current income while maintaining a stable share price by investing in
short-term money market securities. The Money Market Series invests in U.S.
dollar-denominated money market instruments that mature in 13 months or less,
maintains an average weighted maturity of 90 days or less and limits its
investments to those investments which the Board of Trustees determines present
minimal credit risks.
The Money Market Series will invest in the following money market
obligations issued by financial institutions, nonfinancial corporations, and
the U.S. Government, state and municipal governments and their agencies or
instrumentalities:
(1) United States Treasury obligations including bills, notes, bonds
and other debt obligations issued by the United States Treasury. These
securities are backed by the full faith and credit of the U.S. Government.
(2) Obligations of agencies and instrumentalities of the U.S.
Government which are supported by the full faith and credit of the U.S.
Government, such as securities of the Government National Mortgage Association,
or which are supported by the right of the issuer to borrow from the U.S.
Treasury, such as securities issued by the Federal Financing Bank; or which are
supported by the credit of the agency or instrumentality itself, such as
securities of Federal Farm Credit Banks.
(3) Repurchase agreements that are fully collateralized by the
securities listed in (1) and (2) above.
(4) Commercial paper rated in the two highest categories of short-term
debt ratings of any two Nationally Recognized Statistical Ratings Organization
("NRSROs") (such as Moody's Investor Services, Inc. and Standard & Poor's
Rating Services) or, if unrated, issued by a corporation having outstanding
comparable obligations that are rated in the two highest categories of short-
term debt ratings. See "Appendix - Description Of Ratings."
(5) Corporate obligations having a remaining maturity of 397 calendar
days or less, issued by corporations having outstanding comparable obligations
that are (a) rated in the two highest categories of any two NRSROs or (b) rated
no lower than the two highest long-term debt ratings categories by any NRSRO.
See "Appendix - Description Of Ratings."
(6) Obligations of U.S. banks, such as certificates of deposit, time
deposits and bankers acceptances. The banks must have total assets exceeding
$1 billion.
(7) Short-term Eurodollar and Yankee obligations of banks having total
assets exceeding one billion dollars. Eurodollar bank obligations are dollar-
denominated certificates of deposit or time deposits issued outside the U.S.
capital markets by foreign branches of U.S. banks or by foreign banks; Yankee
bank obligations are dollar-denominated obligations issued in the U.S. capital
markets by foreign banks.
The Money Market Series will not invest more than 5% of its total assets
in the securities of a single issuer. With respect to any security rated in
the second highest rating category by an NRSRO, the Money Market Series will
not invest more than (i) 1% of its total assets in such securities issued by a
single issuer and (ii) 5% of its total assets in such securities of all
issuers. Up to 10% of the Money Market Series' net assets may be invested in
"restricted" and other illiquid money market securities, which are not freely
marketable under the Securities Act of 1933 (the "1933 Act").
The Money Market Series may invest in repurchase agreements. A
repurchase agreement is a means of investing monies for a short period. In a
repurchase agreement, a seller--a U.S. commercial bank or recognized U.S.
securities dealer--sells securities to the Money Market Series and agrees to
repurchase the securities at the Money Market Series' cost plus interest within
a specified period (normally one day). In these transactions, the securities
purchased by the Money Market Series will have a total value equal to or in
excess of the value of the repurchase agreement, and will be held by the Money
Market Series' custodian bank until repurchased. Under the Investment Company
Act of 1940 (the "1940 Act"), a repurchase agreement is deemed to be the loan
of money by the Money Market Series to the seller, collateralized by the
underlying securities.
Eurodollar and Yankee obligations are subject to the same risks that
pertain to domestic issues, notably credit risk, market risk and liquidity
risk. Additionally, Eurodollar (and to a limited extent, Yankee) obligations
are subject to certain sovereign risks. One such risk is the possibility that
a foreign government might prevent dollar-denominated funds from flowing across
its borders. Other risks include: adverse political and economic developments
in a foreign country; the extent and quality of government regulation of
financial markets and institutions; the imposition of foreign withholding
taxes; and expropriation or nationalization of foreign issuers. However,
Eurodollar and Yankee obligations will undergo the same credit analysis as
domestic issues in which the Money Market Series invests, and foreign issuers
will be required to meet the same tests of financial strength as the domestic
issuers approved for the Money Market Series.
Kiewit Rated Money Market Portfolio
The Kiewit Rated Money Market Portfolio pursues its investment objective by
investing all of its assets in the Rated Money Market Series of the Trust (the
"Rated Money Market Series"). The investment objective of the Rated Money
Market Series is to provide high current income while maintaining a stable
share price and a rating in the highest category of short-term debt ratings by
an NRSRO by investing in securities issued by the U.S. Government, its agencies
or instrumentalities. The Series invests in U.S. dollar-denominated money
market instruments that mature in 13 months or less and will maintain an
average weighted maturity of 60 days or less.
The Series will invest in the following money market obligations issued by the
U.S. government, its agencies or instrumentalities:
(1) United States Treasury obligations including bills, notes, bonds and other
debt
obligations issued by the United States Treasury. These securities are backed
by the full faith and credit of the United States government
(2) Obligations of agencies and instrumentalities of the U.S. Government
which are
supported by the full faith and credit of the U.S. Government, such as
securities of the Government National Mortgage Association, or which are
supported by the right of the issuer to borrow from the U.S. Treasury, such as
securities issued by the Federal Financing Bank; or which are supported by the
credit of the agency or instrumentality itself, such as securities of Federal
Farm Credit Banks.
(3) Repurchase agreements that are fully collateralized by the securities
listed in
(1) and (2) above.
The Series has and will maintain an AAAm credit rating from Standard & Poor's
Ratings Group. The AAAm credit rating indicates that the Series is composed
exclusively of investments that are rated AAA and/or eligible short-term
investments.
The Series may invest in repurchase agreements. A repurchase agreement is a
means of investing monies for a short period. In a repurchase agreement, a
seller--a U.S. commercial bank or recognized U.S. securities dealer--sells
securities to the Series and agrees to repurchase the securities at the
Series's cost plus interest within a specified period (normally one day). In
these transactions, the securities purchased by the Series will have a total
value equal to or in excess of the value of the repurchase agreement, and will
be held by the Series' custodian bank until repurchased. Under the Investment
Company Act of 1940 (the "1940 Act"), a repurchase agreement is deemed to be
the loan of money by the Series to the seller, collateralized by the underlying
securities.
Kiewit Short-Term Government Portfolio
The Kiewit Short-Term Government Portfolio pursues its investment
objective by investing all of its assets in the Kiewit Short-Term Government
Series of the Trust (the "Short-Term Government Series") which has the same
investment objective and policies as the Portfolio. The investment objective
of the Short-Term Government Series is to provide investors with as high a
level of current income as is consistent with the maintenance of principal and
liquidity. The Short-Term Government Series invests at least 65% of its assets
in U.S. Treasury securities and U.S. Government agency securities. The Short-
Term Government Series may also invest in repurchase agreements collateralized
by U.S. Treasury or U.S. Government agency securities. In an effort to minimize
fluctuations in market value, the Short-Term Government Series will maintain a
dollar-weighted average maturity between one and three years.
U.S. Government agency securities are debt obligations of agencies and
instrumentalities of the U.S. Government which are supported by the full faith
and credit of the U.S. Government, such as securities of the Government
National Mortgage Association; or which are supported by the right of the
issuer to borrow from the U.S. Treasury, such as securities issued by the
Federal Financing Bank; or which are supported by the credit of the agency or
instrumentality itself, such as securities of Federal Farm Credit Banks.
Kiewit Intermediate-Term Bond Portfolio
The Kiewit Intermediate-Term Bond Portfolio pursues its investment
objective by investing all of its assets in the Kiewit Intermediate-Term Bond
Series of the Trust (the "Intermediate-Term Bond Series") which has the same
investment objective and policies as the Portfolio. The investment objective
of the Intermediate-Term Bond Series is to provide as high a level of current
income as is consistent with reasonable risk. It seeks to achieve its
objective by investing substantially all of its total assets in a diversified
portfolio of the following investment grade debt securities: U.S. Treasury and
U.S. Government agency securities, mortgage-backed securities, asset-backed
securities and corporate bonds. The Intermediate-Term Bond Series may also
invest in repurchase agreements collateralized by U.S. Treasury and U.S.
Government agency securities and other short-term debt securities. The
Intermediate-Term Bond Series will have an average effective maturity (i.e.,
the market value weighted average time to repayment of principal) of between
three and ten years.
Debt securities rated by an NRSRO, in the lowest investment grade debt
category, have speculative characteristics; a change in economic conditions
could lead to a weakened capacity of the issuer to make principal and interest
payments. To the extent that the rating of a debt obligation held by the
Intermediate-Term Bond Series falls below investment grade, the Intermediate-
Term Bond Series, as soon as practicable, will dispose of the security, unless
such disposal would be detrimental to the Intermediate-Term Bond Series in
light of market conditions. See "Appendix - Description Of Ratings."
The Intermediate-Term Bond Series may invest in both fixed and variable
or floating rate instruments. Variable and floating rate securities bear
interest at rates which vary with changes in specified market rates or indices,
such as a Federal Reserve composite index. The interest rate on these
securities may be reset daily, weekly, quarterly or some other reset period,
and may have a floor or ceiling on interest rate changes. There is a risk that
the current interest rate on such securities may not accurately reflect
existing market interest rates. Some of these securities carry a demand
feature which permits the Intermediate-Term Bond Series to sell them during a
predetermined time period at par value plus accrued interest. The demand
feature is often backed by a credit instrument, such as a letter of credit, or
by a creditworthy insurer. The Intermediate-Term Bond Series may rely on such
instrument or the creditworthiness of the insurer in purchasing a variable or
floating rate security.
Kiewit Tax-Exempt Portfolio
The Kiewit Tax-Exempt Portfolio pursues its investment objective by
investing all of its assets in the Kiewit Tax-Exempt Series of the Trust (the
"Tax-Exempt Series") which has the same investment objective and policies as
the Portfolio. The investment objective of the Tax-Exempt Series is to provide
as high a level of current income exempt from federal income tax as is
consistent with reasonable risk. Because of this emphasis, capital
appreciation is not an investment objective. The Tax-Exempt Series pursues its
objective by investing primarily in municipal obligations whose interest is, in
the opinion of counsel to the issuer, exempt from federal income tax. As a
fundamental policy, the Tax-Exempt Series will normally invest at least 80% of
its net assets in securities the interest on which is exempt from federal
income tax, including the alternative minimum tax. However, the Tax-Exempt
Series may invest up to 20% of its net assets in municipal securities, the
interest on which is a preference item for purposes of the federal alternative
minimum tax ("AMT bonds"). When the Manager is unable to locate investment
opportunities with desirable risk/reward characteristics, the Tax-Exempt Series
may invest up to 20% of its net assets in the following: cash, cash equivalent
short-term obligations, certificates of deposit, commercial paper, obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, and repurchase agreements.
Municipal obligations are issued by states, territories and possessions
of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities to raise money for various public
purposes. Municipal obligations consist of general obligation bonds, revenue
bonds and notes. General obligation bonds are backed by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest and are considered the safest type of municipal investment. Revenue
bonds are backed by revenues derived from a specific project, facility or
revenue source. At times, the Tax-Exempt Series may invest more than 25% of
the value of its assets in industrial development bonds, a type of revenue
bond. Although issued by a public authority, some industrial revenue bonds may
be backed only by the credit and security of a private issuer and may involve
greater credit risk. Municipal notes are issued to finance short-term capital
needs of a municipality and include tax and revenue anticipation notes, bond
anticipation notes and commercial paper. Municipal obligations bear fixed,
floating and variable rates of interest.
AMT bonds are tax-exempt "private activity" bonds issued after August 7,
1986, whose proceeds are directed at least in part to a private, for-profit
organization. While the income from AMT bonds is exempt from regular federal
income tax, it is a tax preference item for purposes of the alternative minimum
tax. The alternative minimum tax is a special separate tax that applies to a
limited number of taxpayers who have certain adjustments to income or tax
preference items.
The Tax-Exempt Series also may invest up to 5% of its total assets in the
following municipal-based obligations: municipal lease obligations, inverse
floaters, tender option bonds, when-issued securities and zero coupon bonds.
See the Fund's Statement of Additional Information for a discussion of these
types of investments.
The Tax-Exempt Series may invest in the various types of municipal
securities in any proportion. Although the Tax-Exempt Series does not currently
intend to do so on a regular basis, it may invest more than 25% of its assets
in tax-exempt securities that are repayable out of revenue streams generated
from economically related projects or facilities, if such investment is deemed
necessary or appropriate by the Manager. To the extent that the Tax-Exempt
Series' assets are concentrated in tax-exempt securities payable from revenues
on economically related projects and facilities, the Tax-Exempt Series will be
subject to the risks presented by such projects to a greater extent than it
would be if the Tax-Exempt Series' assets were not so concentrated.
The Tax-Exempt Series will invest only in investment grade obligations,
or if unrated, in obligations that the Manager determines to be of comparable
quality. The Tax-Exempt Series will have an average effective maturity (i.e.,
the market value weighted average time to repayment of principal) of between
three and ten years. See "Appendix - Description Of Ratings."
Kiewit Equity Portfolio
The Kiewit Equity Portfolio pursues its investment objective by investing
all of its assets in the Kiewit Equity Series of the Trust (the "Equity
Series") which has the same investment objective and policies as the Portfolio.
The Equity Series invests primarily in a diversified portfolio of equity
securities, including common stocks, preferred stocks and securities
convertible into common stock, which, in the Manager's opinion, are undervalued
in the marketplace at the time of purchase. Dividend income is an incidental
consideration compared to growth in capital. In selecting securities for the
Equity Series, the Manager or sub-adviser may evaluate factors it believes are
likely to affect long-term capital appreciation such as the issuer's
background, industry position, historical returns on equity and experience and
qualifications of the management team. The Manager may rotate the Equity
Series' holdings among various market sectors based on economic analysis of the
overall business cycle. Under normal conditions, at least 65 percent of the
Equity Series' net assets will be invested in equity securities.
The Equity Series invests in equity securities only if they are listed on
registered exchanges or actively traded in the over-the-counter market. Under
normal circumstances the Equity Series, to the extent not invested in the
securities described above, may invest in investment grade securities issued by
corporations and U.S. Government securities. In order to meet liquidity needs,
the Equity Series may hold cash reserves and invest in money market instruments
(including securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, repurchase agreements, certificates of deposit and
bankers acceptances issued by banks or savings and loan associations, and
commercial paper) rated at time of purchase in the top two categories by an
NRSRO or determined to be of comparable quality by the Manager at the time of
purchase.
The Equity Series may also purchase and sell American Depository Receipts
("ADRs"). ADRs are receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. Generally, ADRs in registered form are designed for use in the
U.S. securities markets. The Equity Series may invest in ADRs through
"sponsored" or "unsponsored" facilities. A sponsored facility is established
jointly by the issuer of the underlying security and a depository, whereas a
depository may establish an unsponsored facility without participation of the
issuer of the deposited security. The Series does not consider any ADR
purchase to be foreign. Holders of unsponsored ADRs generally bear all the
costs of such facilities and the depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
Therefore, there may not be a correlation between information concerning the
issuer of the security and the market value of an unsponsored ADR.
The Equity Series may invest in convertible securities issued by U.S.
companies. Convertible debentures include corporate bonds and notes that may
be converted into or exchanged for common stock. These securities are
generally convertible either at a stated price or a stated rate (that is, for a
specific number of shares of common stock or other security). As with other
fixed income securities, the price of a convertible debenture to some extent
varies inversely with interest rates. While providing a fixed-income stream, a
convertible debenture also affords the investor an opportunity, through its
conversion feature, to participate in the capital appreciation of the common
stock into which it is convertible. Common stock acquired by the Equity Series
upon conversion of a convertible debenture will generally be held for so long
as the Manager anticipates such stock will provide the Series with
opportunities which are consistent with the Series' investment objective and
policies.
For temporary defensive purposes when the Manager determines that market
conditions warrant, the Equity Series may invest up to 100% of its assets in
the money market instruments described above and other short-term debt
instruments that are rated, at the time of purchase, investment grade, and may
hold a portion of its assets in cash.
Other Investment Policies
Other Registered Investment Companies. Each Portfolio's corresponding
Series reserves the right to invest in the shares of other registered
investment companies. By investing in shares of investment companies, a Series
would indirectly pay a portion of the operating expenses, management expenses
and brokerage costs of such companies as well as the expense of operating the
Series. Thus, the Series' investors may pay higher total operating expenses
and other costs than they might pay by owning the underlying investment
companies directly. The Manager will attempt to identify investment companies
that have demonstrated superior management in the past, thus possibly
offsetting these factors by producing better results and/or lower expenses than
other investment companies with similar investment objectives and policies.
There can be no assurance that this result will be achieved. However, the
Manager will waive its advisory fee with respect to the assets of a Series
invested in other investment companies, to the extent of the advisory fee
charged by any investment adviser to such investment company. In addition, the
1940 Act limits investment by a Series in shares of other investment companies
to no more than 10% of the value of the Series' total assets.
Securities Loans. Each Series may lend securities to qualified brokers,
dealers, banks and other financial institutions for the purpose of earning
additional income. While a Series may earn additional income from lending
securities, such activity is incidental to the investment objective of a
Series. The value of securities loaned may not exceed 33 1/3% of the value of
a Series' total assets. In connection with such loans, a Series will receive
collateral consisting of cash or U.S. Government securities, which will be
maintained at all times in an amount equal to at least 100% of the current
market value of the loaned securities. In addition, the Series will be able to
terminate the loan at any time, will retain the authority to vote the loaned
securities and will receive reasonable interest on the loan, as well as amounts
equal to any dividends, interest or other distributions on the loaned
securities. In the event of the bankruptcy of the borrower, the Fund could
experience delay in recovering the loaned securities. Management believes that
this risk can be controlled through careful monitoring procedures.
Reverse Repurchase Agreements. A Series may enter into reverse
repurchase agreements with banks and broker-dealers. Reverse repurchase
agreements involve sales by a Series of its assets concurrently with an
agreement by the Series to repurchase the same assets at a later date at a
fixed price. A Series will establish a segregated account with its custodian
bank in which it will maintain cash, U.S. government securities or other liquid
obligations equal in value to its obligations with respect to reverse
repurchase agreements.
Options. The Kiewit Short-Term Government Series, Kiewit Intermediate-
Term Bond Series and Kiewit Equity Series each may sell and/or purchase
exchange-traded call options and purchase exchange-traded put options on
securities in the Portfolio. Options will be used to generate income and to
protect against price changes and will not be engaged in for speculative
purposes. The aggregate value of option positions may not exceed 10% of each
Series' net assets as of the time the Series enters into such options.
A put option gives the purchaser of the option the right to sell, and the
writer the obligation to buy, the underlying security at any time during the
option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
There are risks associated with option transactions including the following:
(i) the success of an options strategy may depend on the ability of the Manager
to predict movements in the prices of the individual securities, fluctuations
in markets and movements in interest rates; (ii) there may be an imperfect
correlation between the changes in market value of the securities held by a
Series and the prices of options; (iii) there may not be a liquid secondary
market for options; and (iv) while a Series will receive a premium when it
writes covered call options, it may not participate fully in a rise in the
market value of the underlying security.
RISK FACTORS
Each Series has reserved the right to borrow amounts not exceeding 33% of
its net assets for the purposes of making redemption payments. When
advantageous opportunities to do so exist, a Series may also borrow amounts not
exceeding 5% of the value of the Series' net assets for the purpose of
purchasing securities. Such purchases can be considered to result in
"leveraging," and in such circumstances, the net asset value of the Series may
increase or decrease at a greater rate than would be the case if the Series had
not leveraged. A Series would incur interest on the amount borrowed and if the
appreciation and income produced by the investments purchased when the Series
has borrowed are less than the cost of borrowing, the investment performance of
the Series may be further reduced as a result of leveraging.
In addition, each Series may invest in repurchase agreements and reverse
repurchase agreements. The use of repurchase agreements involves certain
risks. For example, if the seller of the agreement defaults on its obligation
to repurchase the underlying securities at a time when the value of these
securities has declined, a Series may incur a loss upon disposition of them. If
the seller of the agreement becomes insolvent and subject to liquidation or
reorganization under the bankruptcy code or other laws, a bankruptcy court may
determine that the underlying securities are collateral not within the control
of the Series and therefore subject to sale by the trustee in bankruptcy.
Finally, it is possible that a Series may not be able to substantiate its
interest in the underlying securities. While the Fund's management
acknowledges these risks, it is expected that they can be controlled through
stringent security selection and careful monitoring. Reverse repurchase
agreements involve the risk that the market value of the securities retained by
the Series may decline below the price of the securities the Series has sold
but is obligated to repurchase under the agreement. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or become
insolvent, the Series' use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Series' obligation to repurchase the securities. Reverse
repurchase agreements are considered borrowings by the Series and as such are
subject to the investment limitations discussed above.
The mortgage-backed and asset-backed securities in which the Kiewit
Intermediate-Term Bond Series may invest differ from conventional bonds in that
principal is paid back over the life of the security rather than at maturity.
As a result, the holder of those types of securities (the Series) receives
monthly scheduled payments of principal and interest, and may receive
unscheduled principal payments representing prepayments on the underlying
mortgages or assets. Such prepayments occur more frequently during periods of
declining interest rates. When the holder reinvests the payments and any
unscheduled prepayments of principal it receives, it may receive a rate of
interest which is lower than the rate on the existing mortgage-backed and
asset-backed securities. For this reason, these securities may be less
effective than other types of securities as a means of "locking in" long-term
interest rates.
The market value of mortgage securities, like other debt securities,
generally varies inversely with changes in market interest rates, declining
when interest rates rise and rising when interest rates decline. However,
mortgage securities, due to changes in the rates of prepayments on the
underlying mortgages, may experience less capital appreciation in declining
interest rate environments and greater capital losses in periods of increasing
interest rates than other investments of comparable maturities.
In addition, to the extent mortgage securities are purchased at a
premium, mortgage foreclosures and unscheduled principal prepayments may result
in some loss of the holders' principal investment to the extent of the premium
paid. On the other hand, if mortgage securities are purchased at a discount,
both a scheduled payment of principal and an unscheduled prepayment of
principal increases current and total returns and accelerates the recognition
of income which, when distributed to shareholders, is taxable as ordinary
income.
MANAGEMENT OF THE FUND
The Fund was organized as a Delaware business trust. Under Delaware law
the Fund's Board of Trustees is responsible for establishing Fund policies and
for overseeing the management of the Fund.
Each of the Trustees and officers of the Fund is also a Trustee and
officer of the Trust. The Trustees of the Fund, including all of the
disinterested Trustees, have adopted written procedures to monitor potential
conflicts of interest that might develop between the Feeder Portfolios and the
Trust. Information as to the Trustees and Officers of the Fund and the Trust
is set forth in the Statement of Additional Information under "Trustees and
Officers."
Investment Management Agreement. Kiewit Investment Management Corp. (the
"Manager"), 1000 Kiewit Plaza, Omaha, NE 68131-3344, serves as the investment
manager to each Series of the Trust. The Manager, organized in 1994, is an
indirect wholly-owned subsidiary of Peter Kiewit Sons', Inc., a construction,
mining and telecommunications company. The Manager provides the Trust with
records concerning the Manager's activities which the Trust is required to
maintain and renders regular reports to the Trust's officers and the Board of
Trustees. The Manager also selects brokers and dealers to effect securities
transactions. Under the investment management agreement between the Manager
and the Trust on behalf of each Series, the monthly fees of the Series are at
the following annual rates of their average monthly net assets: Kiewit Money
Market Series .20%; Kiewit Short-Term Government Series .30%; Kiewit
Intermediate-Term Series .40%; Kiewit Tax-Exempt Series .40%; Kiewit Equity
Series .70%; and Kiewit Rated Money Market Series .20%.
Mr. P. Greggory Williams manages the investments of the Kiewit Short-Term
Government Series and co-manages the Kiewit Equity Series. Mr. Williams is the
Chief Investment Officer and a Vice President of the Manager, Chief Financial
Officer and a Vice President of the Fund and a Chartered Financial Analyst.
From June 1983 to December 1986, he served as Assistant Vice President-
Investments at Mutual of Omaha Fund Management Company. His duties included
managing three investment companies. From December 1986 to November 1990, Mr.
Williams served as Senior Vice President and Chief Investment Officer of
Jefferson National Life Insurance Company in Indianapolis, Indiana. From June
1991 to August 1994, Mr. Williams was Vice President-Investments and Treasurer
of Shenandoah Life Insurance Company of Roanoke, Virginia.
Brian J. Mosher manages the Kiewit Intermediate-Term Bond Series and the
Kiewit Tax-Exempt Series, and co-manages the Kiewit Equity Series. Mr. Mosher
is a Vice President of the Manager, a Vice President of the Fund and a
Chartered Financial Analyst. From April 1984 to March 1989, he was Vice
President and Trust Officer of The Provident Bancorporation of Cincinnati,
Ohio. From March 1989 to December 1994, Mr. Mosher served as Investment
Manager of Meridian Mutual Insurance Company in Indianapolis, Indiana.
The Fund has entered into an Administrative Services Agreement with the
Manager, on behalf of each Feeder Portfolio. Pursuant to this agreement, the
Manager performs various services, including: supervision of the services
provided by the Portfolio's custodian and transfer and dividend disbursing
agent and others who provide services to the Fund for the benefit of the
Portfolio; providing shareholders with information about the Portfolio and
their investments as they or the Fund may request; assisting the Portfolio in
conducting meetings of shareholders; furnishing information as the Board of
Trustees may require regarding the corresponding Series; and any other
administrative services for the benefit of the Portfolio as the Board of
Trustees may reasonably request. For its services, each Feeder Portfolio pays
the Manager a monthly fee equal to one-twelfth of .02% of the Portfolio's
average net assets.
Administration and Accounting Services Agreements. Under separate
Administration Agreements and Accounting Services Agreements with the Trust and
the Fund, Rodney Square Management Corporation ("Rodney Square"), 1100 North
Market Street, Wilmington, Delaware 19890, serves, respectively, as
Administrator and Accounting Services Agent for the Trust and the Fund. In
these joint capacities, Rodney Square manages and administers all regular day-
to-day operations (other than management of the Trust's investments) of each of
the Trust's various Series and each of the Fund's various Portfolios, subject
to the supervision of the Trust's and the Fund's respective Boards of Trustees.
Pursuant to its respective agreements with Rodney Square, the Trust has agreed
to pay Rodney Square, on behalf of each Trust Series, the Series' proportionate
share of a complex-wide annual: (a) administration services charge of 0.015% of
the Trust's aggregate total assets in excess of $125 million; and (b)
accounting services charge of 0.015% of the Trust's aggregate total assets in
excess of $100 million. Pursuant to its respective agreements with the Fund,
Rodney Square receives from the Fund, on behalf of each Fund Portfolio,
separate annual administration and accounting services fees of 0.02% of that
portion of the Portfolio's total assets attributable to S Class Fund Shares.
The foregoing Rodney Square annual asset-based fees are determined on an
average daily total asset basis, and are subject to prescribed fixed minimums.
Transfer Agency Agreement. Rodney Square serves as Transfer Agent and
Dividend Paying Agent for each Portfolio of the Fund pursuant to a Transfer
Agency Agreement with the Fund.
Investment Management Expenses. The Fund and the Trust each bears all of
its own costs and expenses, including: services of its independent accountants,
legal counsel, brokerage fees, commissions and transfer taxes in connection
with the acquisition and disposition of portfolio securities, taxes, insurance
premiums, costs incidental to meetings of its shareholders and directors or
trustees, the cost of filing its registration statements under the federal
securities laws and the cost of any notice filings required under state
securities laws, reports to shareholders, and transfer and dividend disbursing
agency, administrative services and custodian fees. Expenses allocable to a
particular Portfolio or Series are so allocated, and expenses which are not
allocable to a particular Portfolio or Series are borne by each Portfolio or
Series on the basis of the fees paid by the Fund or Trust.
DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "12b-1 Plan"), whereby it may reimburse Rodney Square
Distributors, Inc. (the "Distributor") or others for expenses actually
incurred by the Distributor or others in the promotion and distribution of the
Fund's S Class Shares. These expenses include, but are not limited to, the
printing of prospectuses and reports used for sales purposes, the preparation
of sales literature and related expenses, advertisements, and other
distribution-related expenses, including payments to securities dealer and
others participating in the sale and servicing of S Class Shares. The maximum
amount which the Fund may pay to the Distributor and others (and which the
Distributor may re-allow to securities dealers and others participating in the
sale of shares) for such distribution expenses is 0.25% per annum of average
daily net assets of a Portfolio's S Class payable on a monthly basis. All
expenses of distribution and marketing in excess of 0.25% per annum will be
borne by the Advisor. The 12b-1 Plan also covers any payments made by the
Fund, the Manager, the Distributor, or other parties on behalf of the Fund, the
Advisor, the Manager, or the Distributor, to the extent such payments are
deemed to be for the financing of any activity primarily intended to result in
the sale of S Class Shares issued by the Fund within the context of Rule 12b-1.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES
The Portfolios seek to achieve their investment objectives by investing
all of their investable assets in a corresponding Series of shares of Trust.
Each Series is classified as a partnership for U.S. federal income tax
purposes. A Portfolio is allocated its proportionate share of the income and
realized and unrealized gains and losses of its corresponding Series.
Each Portfolio of the Fund is treated as a separate entity for federal
income tax purposes. Each Portfolio intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As such, each Portfolio will not be subject to federal
income tax, or to any excise tax, to the extent its earnings are distributed as
provided in the Code and by satisfying certain other requirements relating to
the sources of its income and diversification of its assets.
Dividends paid by a Portfolio with respect to its K Class Shares and S
Class Shares are calculated in the same manner and at the same time. Both K
Class and S Class Shares of a Portfolio will share proportionally in the
investment income and expenses of the Portfolio, except that the per share
dividends of S Class Shares will ordinarily be lower than the per share
dividends of K Class Shares as a result of the distribution expenses charged to
S Class Shares.
Dividends consisting of substantially all of the ordinary income of each
Portfolio, except the Kiewit Equity Portfolio, are declared daily and are
payable to shareholders of record at the time of declaration. Such dividends
are paid on the first business day of each month. Net capital gains
distributions, if any, will be made annually. The Fund's policy is to
distribute substantially all net investment income from the Kiewit Equity
Portfolio, together with any net realized capital gains annually.
Shareholders of the Fund will automatically receive all income dividends
and capital gains distributions in additional shares of the Portfolio whose
shares they hold at net asset value (as of the business date following the
dividend record date), unless as to each Portfolio, upon written notice to the
Fund's Transfer Agent, Rodney Square, the shareholder selects one of the
following options: (i) Income Option -- to receive income dividends in cash
and capital gains distributions in additional shares at net asset value; (ii)
Capital Gains Option -- to receive capital gains distributions in cash and
income dividends in additional shares at net asset value; or (iii) Cash Option
- -- to receive both income dividends and capital gains distributions in cash.
Distributions paid by a Portfolio from long-term capital gains (which are
allocated from a Series), whether received in cash or in additional shares, are
taxable to investors as long-term capital gains, regardless of the length of
time an investor has owned shares in the Portfolio. The Portfolios (through
the operation of the Series) do not seek to realize any particular amount of
capital gains during a year; rather, realized gains are a byproduct of
management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, if purchases of shares
in a Portfolio are made shortly before the record date for a capital gains
distribution or a dividend, a portion of the investment will be returned as a
taxable distribution.
Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons, may
not be paid to the shareholder until the following January, will be treated for
tax purposes as if paid by a Portfolio and received by the shareholder on
December 31 of the calendar year in which they are declared.
A sale or redemption of shares of a Portfolio is a taxable event and may
result in a capital gain or loss to shareholders subject to tax. Any loss
incurred on sale or exchange of a Portfolio's shares held for six months or
less will be treated as a long-term capital loss to the extent of any capital
gain dividends received with respect to such shares.
The Portfolios may be required to report to the Internal Revenue Service
("IRS") any taxable dividend or other reportable payment (including share
redemption proceeds) and withhold 31% of any such payments made to shareholders
who have not provided a correct taxpayer identification number and made certain
required certifications. A shareholder may also be subject to backup
withholding if the IRS or a broker notifies the Fund that the number furnished
by the shareholder is incorrect or that the shareholder is subject to backup
withholding for previous under-reporting of interest or dividend income.
Shareholders of the Portfolios who are not U.S. persons for purposes of
federal income taxation, should consult with their financial or tax advisors
regarding the applicability of U.S. withholding and other taxes to
distributions received by them from the Portfolios and the application of
foreign tax laws to these distributions. Shareholders should also consult
their tax advisors with respect to the applicability of any state and local
intangible property or income taxes to their shares of the Portfolios and
distributions and redemption proceeds received from the Portfolios.
Shareholders who hold shares of a Portfolio in an employer-sponsored 401(k) or
profit sharing plan, or other tax-advantaged plan, such as an IRA, should read
their plan documents with respect to options available for receipt of dividends
and federal tax treatment of transactions involving such shares.
The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers concerning
the federal, state, local or foreign tax consequences of an investment in a
Portfolio.
PURCHASE OF SHARES
After you open an account with the Fund, you may purchase S Class Shares
by (a) writing to the Fund and enclosing your check as payment or (b) by
calling (800) 2KIEWIT to arrange for payment by wire transfer.
To Open an Account. Send a completed application form by regular mail to
Kiewit Mutual Fund, c/o Rodney Square, P.O. Box 8987, Wilmington, DE 19899, or
by express mail to Kiewit Mutual Fund, c/o Rodney Square, 1105 N. Market
Street, Wilmington, DE 19801. You may request an application form by calling
(800) 2KIEWIT.
To Purchase by Mail. Your initial purchase may be indicated on your
application. For additional purchases, you may send the Fund a simple letter
or use order forms supplied by the Fund. Please enclose your check drawn on a
U.S. bank payable to "Kiewit Mutual Fund." Please indicate the amount to be
invested in each Portfolio and your Portfolio account number.
To Purchase by Wire Transfer: Please call the Fund at (800) 2KIEWIT to
make specific arrangements before each wire transfer. Then, instruct your bank
to wire federal funds to Rodney Square Management Corporation, c/o Wilmington
Trust Company, Wilmington, DE -- ABA #0311-0009-2, attention: Kiewit Mutual
Fund, DDA# 2648-0337, further credit -- your account number, the desired
Portfolio and class of shares and your name.
Minimum Initial Investment. The minimum initial investment is $10,000,
but subsequent investments may be made in any amount.
Purchase Price and Timing. S Class Shares of each Portfolio are offered
at their net asset value next determined after a purchase order is received and
accepted. Purchase orders received by and accepted before the close of regular
trading on the New York Stock Exchange ("NYSE"), usually 4:00 p.m. Eastern
time, on any Business Day of the Fund will be priced at the net asset value per
share that is determined as of the close of regular trading on the NYSE.
However, purchase orders for shares of the Kiewit Money Market Portfolio and
the Kiewit Rated Money Market Portfolio received and accepted before 2:00 p.m.,
Eastern time, on any Business Day of the Fund will be priced at the net asset
value per share that is determined at 2:00 p.m., Eastern time. (See "Valuation
Of Shares.") Purchase orders received and accepted after those daily deadlines
will be priced as of the deadline on the following Business Day of the Fund. A
"Business Day of the Fund" is any day on which the NYSE and Federal Reserve
Bank are open for business. The Fund and RSD each reserves the right to reject
any purchase order and may suspend the offering of shares of any Portfolio for
a period of time.
In Kind Purchases. If accepted by the Fund, S Class Shares of
each Portfolio may be purchased in exchange for securities which are eligible
for acquisition by the Portfolio and its corresponding Series of the Trust as
described in the Statement of Additional Information. Please contact Rodney
Square about this purchase method.
SHAREHOLDER ACCOUNTS
Shareholder Inquiries. Shareholder inquiries may be made by writing the
Fund at 1100 North Market Street, Wilmington, DE 19890 or calling (800)
2KIEWIT.
Shareholder Statements. The Fund will mail a statement at least
quarterly showing all purchases, redemptions and balances in each Portfolio.
Shareholdings are expressed in terms of full and fractional shares of each
Portfolio rounded to the nearest 1/1000th of a share. In the interest of
economy and convenience, the Portfolios do not issue share certificates.
Individual Retirement Accounts. Shares of the Portfolios may be
purchased for a tax-deferred retirement plan such as an individual retirement
account ("IRA"). For an IRA Application, call Rodney Square at (800) 2KIEWIT.
Wilmington Trust Company ("WTC") provides IRA custodial services for each
shareholder account that is established as an IRA. For these services, WTC
receives an annual fee of $10.00 per account, which fee is paid directly to WTC
by the IRA shareholder. If the fee is not paid by the date due, Portfolio
shares owned by the IRA shareholder will be redeemed automatically for purposes
of making the payment.
Non-Individual Accounts. Corporations, partnerships, fiduciaries and
other non-individual investors may be required to furnish certain additional
documentation to make purchases, exchanges and redemptions.
Minimum Account Size. Due to the relatively high cost of maintaining
small shareholder accounts, the Fund reserves the right to automatically close
any account with a current value of less than $5,000 by involuntarily redeeming
all shares in the account and mailing the proceeds to the shareholder.
Shareholders will be notified if their account value is less than $5,000 and
will be allowed 60 days in which to increase their account balance to $5,000 or
more to prevent the account from being closed. Reductions in value that result
solely from market activity will not trigger an involuntary redemption.
VALUATION OF SHARES
The net asset values per share of each Portfolio's S Class Shares and shares
of each corresponding Series are calculated by dividing the total market
value of the corresponding Series' investments and other assets, less any
liabilities, by the total outstanding shares of the stock of the Portfolio or
Series. The value of the shares of each Series
will fluctuate in relation to its own investment experience. The value of the
shares of the Feeder Portfolios will fluctuate in relation to the investment
experience of the Trust Series in which such Portfolios invest. On each
Business Day of the Fund, net asset value is determined as of the close of
business of the NYSE, usually 4:00 p.m. Eastern time; except for the Kiewit
Money Market Portfolio and Kiewit Rated Money Market Portfolio, which is
determined at 2:00 p.m., Eastern time. Securities held by the Series which are
listed on a securities exchange and for which market quotations are available
are valued at the last quoted sale price of the day or, if there is no such
reported sale, at the mean between the most recent quoted bid and asked prices.
Price information on listed securities is taken from the exchange where the
security is primarily traded. Unlisted securities for which market quotations
are readily available are valued at the mean between the most recent bid and
asked prices. The value of other assets and securities for which no quotations
are readily available (including restricted securities) are determined in good
faith at fair value in accordance with procedures adopted by the Board of
Trustees.
Money market instruments with a maturity of more than 60 days are valued
at current market value, as discussed above. Money market instruments with a
maturity of 60 days or less are valued at their amortized cost, which the Board
of Trustees has determined in good faith constitutes fair value for purposes of
complying with the 1940 Act. This valuation method will continue to be used
until such time as the Trustees determine that it does not constitute fair
value for such purposes.
The net asset value of the shares of each Portfolio, except the Kiewit
Money Market Portfolio and the Kiewit Rated Money Market Portfolio, will
fluctuate in relation to its own investment experience. The Kiewit Money
Market Portfolio and Kiewit Rated Money Market Portfolio will attempt to
maintain a stable net asset value of $1.00 per share.
The offering price of shares of each Portfolio is the net asset value
next determined after the purchase order is received and accepted; no sales
charge or reimbursement fee is imposed.
EXCHANGE OF SHARES
You may exchange all or a portion of your S Class Shares in a Portfolio
for S Class Shares of any other Portfolio of the Fund that currently offers its
shares to investors. A redemption of shares through an exchange will be
effected at the net asset value per share next determined after receipt by the
Fund of the request, and a purchase of shares through an exchange will be
effected at the net asset value per share next determined.
Exchange transactions will be subject to the minimum initial investment
and other requirements of the Portfolio into which the exchange is made. An
exchange may not be made if the exchange would leave a balance in a
shareholder's Portfolio account of less than $5,000.
To obtain more information about exchanges, or to place exchange orders,
contact the Fund. The Fund, on behalf of the Portfolios, reserves the right to
terminate or modify the exchange offer described here. This exchange offer is
valid only in those jurisdictions where the sale of the Portfolio's shares to
be acquired through such exchange may be legally made.
REDEMPTION OF SHARES
You may redeem S Class Shares by mailing instructions to the Fund or
calling the Fund at (800) 2KIEWIT. The Fund will promptly mail you a check or
wire transfer funds to your bank, as described below.
To Redeem By Mail: You may send written instructions, with signature
guarantees, by regular mail to: Kiewit Mutual Fund, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752, or by express
mail to Kiewit Mutual Fund, c/o Rodney Square Management Corporation, 1105 N.
Market Street, Wilmington, DE 19801. The instructions should indicate the
Portfolio from which shares are to be redeemed, the number of shares or dollar
amount to be redeemed, the Portfolio account number and the name of the person
in whose name the account is registered. A signature and a signature guarantee
are required for each person in whose name the account is registered. A
signature may be guaranteed by an eligible institution acceptable to the Fund,
such as a bank, broker, dealer, municipal securities dealer, government
securities dealer, credit union, national securities exchange, registered
securities association, clearing agency, or savings association.
To Redeem By Telephone: If you want to redeem your shares by telephone
you must elect to do so by checking the appropriate box of your initial
Application or by calling the Fund at (800) 2KIEWIT to obtain a separate
application for telephone redemptions. In order to redeem by telephone, you
must call the Fund Monday through Friday during normal business hours of 9 a.m.
to 4 p.m., Eastern time, and indicate your name, Kiewit Mutual Fund, the
Portfolio's name, your Portfolio account number and the number of shares you
wish to redeem. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and will not be liable for
any losses to a shareholder due to unauthorized or fraudulent telephone
transactions. If the Fund, the Manager, the Transfer Agent or any of their
employees fails to abide by their procedures, the Fund may be liable to a
shareholder for losses he/she suffers from any resulting unauthorized
transactions. During times of drastic economic or market changes, the
telephone redemption privilege may be difficult to implement. In the event
that you are unable to reach the Fund by telephone, you may make a redemption
request by mail.
Additional Redemption Information. You may redeem all or any part of the
value of your account on any Business Day. Redemptions are made at the net
asset value next calculated after the Fund has received and accepted your
redemption request. (See "Valuation Of Shares.") The Fund imposes no fee when
shares are redeemed.
Redemption checks are mailed on the next Business Day of the Fund
following acceptance of redemption instructions but in no event later than 7
days following such receipt and acceptance. Amounts redeemed by wire from each
Portfolio, except the Kiewit Money Market Portfolio, are normally wired on the
next business day after acceptance of redemption instructions (if received by
Rodney Square before the close of regular trading on the NYSE or 2:00 p.m.
Eastern time, for the Kiewit Money Market Portfolio). In no event are
redemption proceeds wired later than 7 days following such receipt and
acceptance. If the shares to be redeemed were purchased by check, the Fund
reserves the right not to make the redemption proceeds available until it has
reasonable grounds to believe that the check has been collected (which could
take up to 10 days).
Redemption proceeds exceeding $10,000 may be wired to your predesignated
bank account in any commercial bank in the United States. The receiving bank
may charge a fee for this service. Alternatively, proceeds may be mailed to
your bank or, for amounts of less than $10,000, mailed to your Portfolio
account address of record if the address has been established for a minimum of
60 days. In order to authorize the Fund to mail redemption proceeds to your
Portfolio account address of record, complete the appropriate section of the
application for telephone redemptions or include your Portfolio account address
of record when you submit written instructions. You may change the account
which you have designated to receive amounts redeemed at any time. Any request
to change the account designated to receive redemption proceeds should be
accompanied by a guarantee of the shareholder's signature by an eligible
institution. A signature and a signature guarantee are required for each
person in whose name the account is registered. Further documentation will be
required to change the designated account when shares are held by a
corporation, partnership, fiduciary or other non-individual investor.
For more information on redemption services, call the Fund at (800)
2KIEWIT.
Redemption Policies. Redemption payments in cash will ordinarily be made
within seven days after receipt of the redemption request in good form.
However, the right of redemption may be suspended or the date of payment
postponed in accordance with the 1940 Act. The amount received upon redemption
may be more or less than the amount paid for the shares depending upon the
fluctuations in the market value of the assets owned by the Portfolio. If the
Board of Trustees determines that it would be detrimental to the best interests
of the remaining shareholders of any Portfolio to make a particular payment in
cash, the Fund may pay all or part of the redemption price by distributing
portfolio securities from the Portfolio of the shares being redeemed in
accordance with Rule 18f-1 under the 1940 Act. Investors may incur brokerage
charges and other transaction costs selling securities that were received in
payment of redemptions.
PERFORMANCE INFORMATION
From time to time, performance information, such as yield or total return
for a Portfolio, may be quoted in advertisements or in communications to
shareholders. Performance quotations represent past performance and should not
be considered as representative of future results. The current yield will be
calculated by dividing the net investment income earned per share during the
period stated in the advertisement (based on the average daily number of shares
entitled to receive dividends outstanding during the period) by the closing net
asset value per share on the last day of the period and annualizing the result
on a semi-annual compounded basis. A Portfolio's total return may be
calculated on an annualized and aggregate basis for various periods (which
periods will be stated in the advertisement). Average annual return reflects
the average percentage change per year in value of an investment in a
Portfolio. Aggregate total return reflects the total percentage change in
value of an investment in the Portfolio over the stated period.
The principal value of an investment in a Portfolio will fluctuate so
that an investor's shares when redeemed, may be worth more or less than the
investor's original cost. Performance will be calculated separately for K
Class and S Class Shares. The K Class Shares have different expenses from the
S Class Shares which may affect performance.
Further information about the performance of each Portfolio and Class is
included in the Fund's Annual Report to Shareholders which may be obtained
without charge by contacting the Fund at (800) 2KIEWIT.
GENERAL INFORMATION
The Fund, formerly named "Kiewit Institutional Fund", issues two separate
classes of shares of beneficial interest for each Portfolio with a par value of
$.01 per share. The shares of each Portfolio, when issued and paid for in
accordance with the Fund's prospectus, will be fully paid and non-assessable
shares, with equal, non-cumulative voting rights and no preferences as to
conversion, exchange, dividends, redemption or any other feature.
The separate classes of shares each represent interests in the same
portfolio of investments, have the same rights and are identical in all
respects, except that the S Class Shares bear distribution plan expenses, and
have exclusive voting rights with respect to the Rule 12b-1 Distribution Plan
pursuant to which the distribution fee may be paid. The two classes have
different exchange privileges. See "Exchange Of Shares." The net income
attributable to S Class Shares and the dividends payable on S Class Shares will
be reduced by the amount of the distribution fees; accordingly, the net asset
value of the S Class Shares will be reduced by such amount to the extent the
Portfolio has undistributed net income.
Shareholders shall have the right to vote only (i) for removal of
Trustees, (ii) with respect to such additional matters relating to the Fund as
may be required by the applicable provisions of the 1940 Act, including Section
16(a) thereof, and (iii) on such other matters as the Trustees may consider
necessary or desirable. In addition, the shareholders of each Portfolio will
be asked to vote on any proposal to change a fundamental investment policy
(i.e. a policy that may be changed only with the approval of shareholders) of
that Portfolio. All shares of the Fund entitled to vote on a matter shall vote
without differentiation between the separate Portfolios on a one-vote-per-share
basis; provided however, if a matter to be voted on does not affect the
interests of all Portfolios, then only the shareholders of each affected
Portfolio shall be entitled to vote on the matter. If liquidation of the Fund
should occur, shareholders would be entitled to receive on a per Portfolio
basis the assets of the particular Portfolio whose shares they own, as well as
a proportionate share of Fund assets not attributable to any particular
Portfolio then in existence. Ordinarily, the Fund does not intend to hold
annual meetings of shareholders, except as required by the 1940 Act or other
applicable law. The Fund's by-laws provide that meetings of shareholders shall
be called for the purpose of voting upon the question of removal of one or more
Trustees upon the written request of the holders of not less than 10% of the
outstanding shares.
Kiewit Investment Trust was organized as a Delaware business trust on
_______________, 1997. The Trust offers shares of its Series only to
institutional investors in private offerings. The Fund may withdraw the
investment of a Feeder Portfolio in a Series of the Trust at any time, if the
Board of Trustees of the Fund determines that it is in the best interests of
the Portfolio to do so. Upon any such withdrawal, the Board of Trustees of the
Fund would consider what action might be taken, including the investment of all
of the assets of the Portfolio in another pooled investment entity having the
same investment objective as the Portfolio or the hiring of an investment
advisor to manage the Portfolio's assets in accordance with the investment
policies described above.
Whenever a Feeder Portfolio, as an investor in its corresponding Trust
Series, is asked to vote on a shareholder proposal, the Fund will hold a
special meeting of the Feeder Portfolio's shareholders to solicit their votes
with respect to the proposal. The Trustees of the Fund will then vote the
Feeder Portfolio's shares in the Series in accordance with the voting
instructions received from the Feeder Portfolio's shareholders. The Trustees
of the Fund will vote shares of the Feeder Portfolio for which they receive no
voting instructions in accordance with their best judgment.
Peter Kiewit Sons', Inc., a Delaware corporation with principal offices
at 1000 Kiewit Plaza, Omaha, NE 68131, is the direct or indirect parent of
shareholders of more than 25% of the voting securities of each Portfolio and
therefore may be deemed to control each Portfolio.
APPENDIX - DESCRIPTION OF RATINGS
Description of Bond Ratings - Moody's Investors Services, Inc. ("Moody's")
description of its bond ratings are:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there maybe other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other market
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's also supplies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; the modifier 2 indicates a mid-range ranking; and 3 indicates a
ranking toward the lower end of the category.
Standard & Poor's Ratings Group's ("S&P") description of its bond ratings are:
AAA--The highest degree of safety with overwhelming repayment capacity.
AA--Very high degree of safety with very strong capacity for repayment. These
issues differ from higher rated issues only in a small degree.
A--A strong degree of safety and capacity for repayment, but these issues are
somewhat more susceptible in the long term to adverse economic conditions than
those rated in higher categories.
BBB--A satisfactory degree of safety and capacity for repayment, but these
issues are more vulnerable to adverse economic conditions or changing
circumstances than higher-rated issues.
BB--This designation reflects less near-term vulnerability to default than
other speculative issues. However, the issues face major ongoing uncertainties
or exposures to adverse economic or financial conditions threatening capacity
to meet interest and principal payments on a timely basis.
B--This designation indicates that the issues have a greater vulnerability to
default but currently have the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions will likely
impair capacity to pay interest and repay principal.
CCC--Issues rated CCC have currently identifiable vulnerability to default, and
are dependent upon favorable business, financial, and economic conditions to
meet timely interest and principal repayments. Adverse business, financial, or
economic developments would render repayment capacity unlikely.
S&P applies indicators "+," no character, and "-" to its rating categories.
The indicators show relative standing within the major rating categories.
Description of Commercial Paper Ratings
The rating A-1 is the highest commercial paper rating assigned by S&P.
Commercial paper rated A-1 has the following characteristics: (1) liquidity
ratios are adequate to meet cash requirements; (2) long-term senior debt is
rated "A" or better; (3) the issuer has access to at least two additional
channels of borrowing; (4) basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances; (5) typically, the issuer's
industry is well established and the issuer has a strong position within the
industry; and (6) the reliability and quality of management are unquestioned.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and the appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
KIEWIT MUTUAL FUND
1000 Kiewit Plaza
Omaha, NE 68131-3344
Telephone: (800) 2KIEWIT
Investment Advisor
KIEWIT INVESTMENT MANAGEMENT CORP.
1000 Kiewit Plaza
Omaha, NE 68131-3344
Custodian
WILMINGTON TRUST COMPANY
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-0001
Administrator and Transfer Agent
RODNEY SQUARE MANAGEMENT CORPORATION
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-0001
Distributor
RODNEY SQUARE DISTRIBUTORS, INC.
Rodney Square North, 1100 N. Market Street
Wilmington, DE 19890-00014
Kiewit Mutual Fund
K CLASS SHARES
1000 Kiewit Plaza, Omaha, NE 68131-3344
Telephone: (800) 2KIEWIT
STATEMENT OF ADDITIONAL INFORMATION
_________, 1997
This statement of additional information is not a prospectus but should
be read in conjunction with the prospectus of Kiewit Mutual Fund (the "Fund"),
relating to the Fund's K Class Shares, dated ______________, 1997, which
can be obtained from the Fund by writing to the Fund at the above address or by
calling the above telephone number.
TABLE OF CONTENTS
Page
HISTORY 2
INVESTMENT LIMITATIONS AND POLICIES 2
MANAGEMENT OF THE FUND 6
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 12
BROKERAGE TRANSACTIONS 16
PURCHASE AND REDEMPTION OF SHARES 16
TAX MATTERS 19
CALCULATION OF PERFORMANCE DATA 20
OTHER INFORMATION 27
FINANCIAL STATEMENTS 28
HISTORY
Kiewit Institutional Fund was organized as a Delaware business trust on
June 1, 1994. The name of the trust was changed to Kiewit Mutual Fund on
October 7, 1994.
INVESTMENT LIMITATIONS AND POLICIES
The following information supplements the information set forth in the
prospectus under the caption "Investment Objectives And Policies." The
following information applies to the Feeder Portfolios and to the corresponding
Trust Series.
Fundamental Limitations - All Portfolios
Each of the Portfolios has adopted certain limitations which may not be
changed with respect to any Portfolio without the approval of a majority of the
outstanding voting securities of the Portfolio. A "majority" is defined as the
lesser of: (1) at least 67% of the voting securities of the Portfolio (to be
affected by the proposed change) present at a meeting if the holders of more
than 50% of the outstanding voting securities of the Portfolio are present or
represented by proxy, or (2) more than 50% of the outstanding voting securities
of such Portfolio.
The Portfolios either directly or indirectly through their investment in
the Series of the Trust will not: (1) as to 75% of the total assets of a
Portfolio, invest in the securities of any issuer (except obligations of the
U.S. Government and its instrumentalities) if, as a result more than 5% of the
Portfolio's total assets, at market, would be invested in the securities of
such issuer, provided that this restriction applies to 100% of the total assets
of the Kiewit Money Market Portfolio; (2) borrow, except that a Portfolio may
borrow from banks for temporary or emergency purposes or to pay redemptions and
then, in no event, in excess of 33% of its net assets and a Portfolio may
pledge not more than 33% of such assets to secure such loans; (3) pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10% of its
total assets at fair market value, except as described in (2) above; (4) invest
more than 15% of the value of the Portfolio's net assets in illiquid securities
which include certain restricted securities, repurchase agreements with
maturities of greater than seven days, and other illiquid investments; (5)
invest its assets in securities of any investment company in excess of the
limits set forth in the Investment Company Act of 1940 (the "1940 Act") and
rules thereunder, except in connection with a merger, acquisition of assets,
consolidation or reorganization; (6) acquire any securities of companies within
one industry if, as a result of such acquisition, more than 25% of the value of
the Portfolio's total assets would be invested in securities of companies
within such industry; (7) engage in the business of underwriting securities
issued by others, except that, in connection with the disposition of a
security, a Portfolio may be deemed to be an "underwriter" as that term is
defined in the Securities Act of 1933 (the "1933 Act"); (8) purchase or sell
commodities except that each Portfolio may purchase or sell financial futures
contracts and options thereon; (9) invest in real estate, including limited
partnership interests therein, although they may purchase and sell securities
which deal in real estate and securities which are secured by interests in real
estate; (10) purchase securities on margin or sell securities short, except
that a Portfolio may satisfy margin requirements with respect to futures
transactions; and (11) make loans, except that this restriction shall not
prohibit (a) the purchase of obligations customarily purchased by institutional
investors, (b) the lending of Portfolio securities or (c) entry into repurchase
agreements.
The investment limitations described above do not prohibit each Feeder
Portfolio from investing all or substantially all of its assets in the shares
of another registered, open-end investment company such as the Series of the
Trust. The investment policies and limitations of each Series are the same as
those of the corresponding Feeder Portfolio.
For the purposes of (4) above, each Portfolio (indirectly through their
investment in the corresponding Trust Series) may invest in commercial paper
that is exempt from the registration requirements of the 1933 Act subject to
the requirements regarding credit ratings stated in the prospectus under
"Investment Objectives And Policies." Further, pursuant to Rule 144A under the
1933 Act, the Portfolios (indirectly through their investment in the
corresponding Trust Series) may purchase certain unregistered (i.e. restricted)
securities upon a determination that a liquid institutional market exists for
the securities. If it is decided that a liquid market does exist, the
securities will not be subject to the 15% limitation on holdings of illiquid
securities stated in (4) above. While maintaining oversight, the Board of
Trustees has delegated the day-to-day function of making liquidity
determinations to Kiewit Investment Management Corp. (the "Manager"). For Rule
144A securities to be considered liquid, there must be at least one dealer
making a market in such securities. After purchase, the Board of Trustees and
the Manager will continue to monitor the liquidity of Rule 144A securities.
There is no limit on the Portfolios' (indirectly though their investment in the
corresponding Series) investment in Rule 144A securities that are determined to
be liquid.
For the purposes of (6) above, (i) utility companies will be divided
according to their services; e.g., gas, gas transmission, electric and gas,
electric, water and telephone will each be considered a separate industry; and
(ii) the Kiewit Money Market Portfolio (indirectly through its investment in
the corresponding Series) may invest more than 25% of the value of its total
assets in obligations of U.S. banks, such as certificates of deposits, time
deposits and bankers' acceptances. The banks must have total assets exceeding
one billion dollars.
Non-Fundamental Limitations - All Portfolios
The following policies are non-fundamental and may be changed by the
Board of Trustees, without shareholder approval:
The Portfolios (indirectly through their investment in the corresponding
Series) will not: (1) invest for the purpose of exercising control over
management of any company; (2) acquire more than 10% of the voting securities
of any issuer; or (3) invest more than 5% of its total assets in securities
of companies which have (with predecessors) a record of less than three
years' continuous operations.
Non-Fundamental Policies - Kiewit Bond Portfolios
The following policies are non-fundamental and may be changed by the
Board of Trustees, without shareholder approval:
The Kiewit Short-Term Government, Kiewit Tax-Exempt and Kiewit
Intermediate-Term Bond Portfolios (each referred to herein as a "Kiewit Bond
Portfolio"), through their investment in the corresponding Series, may invest
in obligations that permit repayment of the principal amount of the obligation
prior to maturity. Variable and floating rate obligations are relatively long-
term instruments that often carry demand features permitting the holder to
demand payment of principal at any time or at specified intervals prior to
maturity. Standby commitments, which are similar to a put, give a Kiewit Bond
Portfolio the option to obligate a broker, dealer or bank to repurchase a
security held by a Kiewit Bond Portfolio at a specified price. Tender option
bonds are relatively long-term bonds that are coupled with the agreement of a
third party (such as a broker, dealer or bank) to grant the holders of such
securities the option to tender the securities to the institution at periodic
intervals. A Kiewit Bond Portfolio will purchase these types of instruments
primarily for the purpose of increasing the liquidity of its portfolio.
New issues of bonds are often issued on a "when-issued" basis, which
means that actual payment for the delivery of the securities generally takes
place 15 to 45 days after the purchase date. During this period, a Kiewit Bond
Portfolio bears the risk that interest rates on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
securities. To alleviate this risk, each Kiewit Bond Portfolio does not intend
to invest more than 5% of its assets in when-issued securities.
A Kiewit Bond Portfolio also may invest up to 5% of its assets in zero
coupon bonds or "strips." Zero coupon bonds do not make regular interest
payments, rather they are sold at a discount from face value. Principal and
accretive discount (representing interest accrued but not paid) are paid at
maturity. Strips are debt securities that are stripped of their interest after
the securities are issued, but are otherwise comparable to zero coupon bonds.
The market values of zero coupon bonds and strips generally fluctuate in
response to changes in interest rates to a greater degree than interest paying
securities of comparable term and quality. The strips in which a Kiewit Bond
Portfolio may invest may or may not be a part of the U.S. Treasury Separately
Traded Registered Interest and Principal Securities program. Each Kiewit Bond
Portfolio may also purchase inverse floaters, which are instruments whose
interest bears an inverse relationship to the interest rate on another
security.
Generally, a Kiewit Bond Portfolio's average maturity will tend to be
shorter when the Manager expects interest rates to rise and longer when it
expects interest rates to decline.
Portfolio Turnover
The portfolio turnover rates for the fiscal year ended June 30, 1996, and
the annualized portfolio turnover rates for the period ended June 30, 1995, for
the Kiewit Short-Term Government Portfolio, Kiewit Intermediate-Term Bond
Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity Portfolio were as
follows:
Name June 30, 1996 June 30, 1995
Short-Term Government 57.52% 69.57%*
Intermediate-Term Bond 86.06% 121.36%*
Tax-Exempt 100.61% 92.53%*
Equity 16.95% 0.00**
* For the period from December 6, 1994 through June 30, 1995.
** For the period from January 5, 1995 through June 30, 1995.
In the current fiscal year, the portfolio turnover rate of each of the
Kiewit Short-Term Government, Kiewit Intermediate-Term Bond and Kiewit Tax-
Exempt Series is not expected to exceed 100%. The annual portfolio turnover
rate of the Kiewit Equity Series is not expected to exceed 75%. Generally,
securities held by the Kiewit Equity Series will not be sold to realize short-
term profits, but when circumstances warrant, they may be sold without regard
to the length of time held. Generally, securities held by the Kiewit Equity
Series will be purchased with the expectation that they will be held for longer
than one year.
MANAGEMENT OF THE FUND
Trustees and Officers
The names, addresses and ages of the trustees and officers of the Fund
and a brief statement or their present positions and principal occupations
during the past five years is set forth below. Trustees who are deemed to be
"interested persons" as defined in the 1940 Act are indicated by an asterisk
(*).
Richard R. Jaros*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Jaros, age 44, is a Trustee of the Fund, a Director of the Manager,
President of Peter Kiewit Sons', Inc. ("PKS"), and a Director of PKS,
California Energy Company, Inc., C-TEC Corporation and MFS Communications
Company, Inc. Mr. Jaros also was Chairman (1993-1994) and President and CEO
(1992-1993) of California Energy Company, Inc. and Vice President of Kiewit
Diversified Group Inc. (1989-1990).
Ann C. McCulloch*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Ms. McCulloch, age 38, is Chairman, President and a Trustee of the Fund,
President of the Manager and Vice President and Treasurer of PKS. From 1989 to
1993, Ms. McCulloch was Treasurer and Vice President of Central Maine Power in
Augusta, ME.
George Lee Butler*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Butler, age 57, is a Trustee of the Fund and President of Kiewit Energy
Company. From 1991 to March 1994, Mr. Butler was Commander-in-Chief of the
U.S. Strategic Command and from 1989 to 1994 was Director, Strategic Plans and
Policy, for the U.S. Joint Chiefs of Staff.
Lawrence B. Thomas
One ConAgra Drive
Omaha, NE 68102
Mr. Thomas, age 60, is a Trustee of the Fund and Senior Vice-President. He
retired in November 1996, after having served as Corporate Risk Officer and
Secretary of ConAgra, Inc. (a food company). Mr. Thomas previously served as
principal financial officer and Treasurer of ConAgra, Inc.
John J. Quindlen
2205 N. Southwinds Boulevard
Vero Beach, FL 32963
Mr. Quindlen, age 64, is a Trustee of the Fund, each investment company in the
Rodney Square Funds and Kalmar Pooled Trust, a registered investment company.
He retired in November 1993, after having served as the Senior Vice President -
Financial and Chief Financial Officer of E.I. du Pont de Nemours & Co., Inc.
from 1984 to 1993.
P. Greggory Williams
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Williams, age 42, is Chief Financial Officer, Vice President and Treasurer
of the Fund and Chief Investment Officer and a Vice President of the Manager.
From June 1991 to August 1994, Mr. Williams was Vice President-Investments and
Treasurer of Shenandoah Life Insurance Company in Roanoke, Virginia and from
December 1986 to November 1990 was Senior Vice President and Chief Investment
Officer of Jefferson National Life Insurance Company in Indianapolis, Indiana.
Brian J. Mosher
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Mosher, age 39, is a Vice President of the Fund a Vice President of the
Manager. From March 1989 to December 1994, Mr. Mosher served as Investment
Manager of Meridian Mutual Insurance Company in Indianapolis, Indiana.
Kenneth D. Gaskins, Esquire
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Gaskins, age 50, is Secretary of the Fund, Vice President and Secretary of
the Manager and Corporate Counsel of PKS.
The fees and expenses of the Trustees who are not "interested persons" of
the Fund ("Independent Trustees"), as defined in the 1940 Act, are paid by each
Portfolio. For the fiscal year ended June 30, 1996, such fees amounted to
$25,000 for the Fund. The following table shows the fees paid during the
fiscal year to the Independent Trustees for their service to the Fund.
Compensation Table
Aggregate Total Compensation
Compensation from the from the Fund
Fund Complex
Independent Trustee
John J. Quindlen $12,500 $12,500
Lawrence B. Thomas $12,500 $12,500
On _______, 1997, the Trustees and officers of the Fund, as a group,
owned beneficially, or may be deemed to have owned beneficially, less than 1%
of the outstanding shares of the Portfolios.
Investment Manager
For the services it provides as investment manager to each Portfolio's
corresponding Series of the Trust, the Manager is paid a monthly fee calculated
as a percentage of average net assets of the corresponding Series. Pursuant to
the investment management agreements, the manager's fees for the fiscal years
ended June 30, 1996 and 1995, would have been the following:
1996 1995
(000) (000)
Kiewit Money Market Portfolio $843,989 $436,236
Kiewit Short-Term Government
Portfolio $492,172 $332,931
Kiewit Tax-Exempt Portfolio $499,823 $331,508
Kiewit Intermediate-Term
Portfolio $563,114 $624,955
Kiewit Equity Portfolio $354,646 $ 35,890
The Manager has agreed to waive all or a portion of its advisory fee for
each Portfolio's corresponding Series and to assume certain expenses of the
Portfolios and Series. This undertaking, which is not contained in the
investment management agreements, may be amended or rescinded in the future.
During the fiscal year ended June 30, 1996 and the period ended June 30, 1995,
the Manager waived the following amounts to the Portfolios:
Name 1996 1995
Money Market Portfolio $298,011 $ 70,100
Short-Term Government
Portfolio 219,505 92,745
Intermediate-Term Bond Portfolio
86,597 117,862
Tax-Exempt Portfolio 57,267 121,067
Equity Portfolio 126,289 90,032
Each investment management agreement is in effect for a period of two
years. Thereafter, each agreement may continue in effect for successive
annual periods, provided such continuance is specifically approved at least
annually by a vote of the Trust's Board of Trustees or, by a vote of the
holders of a majority of a Series' outstanding voting securities, and in either
event by a majority of the Trustees who are not parties to the agreement or
interested persons of any such party (other than as Trustees of the Trust),
cast in person at a meeting called for that purpose. An investment management
agreement may be terminated without penalty at any time by the Series or by the
Manager on 60 days' written notice and will automatically terminate in the
event of its assignment as defined in the 1940 Act.
Distributor
Rodney Square Distributors, Inc. ("RSD") serves as the Distributor of
each Portfolio's K Class Shares pursuant to a Distribution Agreement with the
Fund. Under the terms of the Distribution Agreement, RSD agrees to assist in
securing purchasers for shares of the Portfolios. RSD will receive no
compensation for distribution of K Class Shares of the Portfolios, except for
reimbursement of out-of-pocket expenses.
The Distribution Agreement provides that RSD, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of reckless disregard of its obligations and duties under the
agreement, will not be liable to the Fund or its shareholders for losses
arising in connection with the sale of Portfolio K Class Shares.
The Distribution Agreement, dated November 15, 1994, continues in effect
from year to year as long as its continuance is approved at least annually by a
majority of the Trustees, including a majority of the Independent Trustees.
The Distribution Agreement terminates automatically in the event of its
assignment. The Agreement is also terminable without payment of any penalty
with respect to each Portfolio either (i) by the Fund (by vote of a majority of
the Independent Trustees or by vote of a majority of the outstanding voting
securities of the Fund) on sixty (60) days' written notice to RSD; or (ii) by
RSD on sixty (60) days' written notice to the Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of ___________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Money Market
Portfolio:
Name and Address Percentage Ownership
Peter Kiewit Sons', Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Continental Holdings Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Northern Trust Company as Trustee %
For Continental Kiewit Inc.
Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
Onbit Co. %
FBO FirsTier Bank
17th and Farnam Sts.
Omaha, NE 68102
As of ___________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Short-Term
Government Portfolio:
Name and Address Percentage Ownership
Peter Kiewit Sons', Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Global Surety & Insurance Co. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Northern Trust Company as Trustee %
For Continental Kiewit Inc. Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
California Corridor Constructors, %
A Joint Venture
One Thousand Kiewit Plaza
Omaha, NE 68131
Bank of America NT&SA %
as Collateral Agent FBO Secured Parties
One Thousand Kiewit Plaza
Omaha, NE 68131
As of ____________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Intermediate-Term
Bond Portfolio:
Name and Address Percentage Ownership
Gilbert Texas Construction Corp. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Continental Holdings Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Decker Coal Reclamation %
One Thousand Kiewit Plaza
Omaha, NE 68102
As of _______, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Tax-Exempt
Portfolio:
Name and Address Percentage Ownership
Global Surety & Insurance Co. %
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
As of _______________, 1997, the following shareholders were known to own
of record more than 5% of the total outstanding shares of the Equity Portfolio:
Name and Address Percentage Ownership
Decker Coal Reclamation %
One Thousand Kiewit Plaza
Omaha, NE 68102
Northern Trust Company as Trustee %
For Continental Kiewit Inc.
Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Wilmington Trust Co. as Trustee %
For Kiewit Construction Group
Retirement Savings Plan
1100 N. Market Street
Wilmington, DE 19890
Peter Kiewit Sons', Inc., a Delaware corporation with principal offices
at 1000 Kiewit Plaza, Omaha, NE 68131, is the direct or indirect parent of
shareholders of more than 25% of the voting securities of each Portfolio and
therefore may be deemed to control each Portfolio.
BROKERAGE TRANSACTIONS
Brokerage transactions will be placed with a view to receiving the best
price and execution. Each Portfolio's corresponding Series will seek to
acquire and dispose of securities in a manner which would cause as little
fluctuation in the market prices of stocks being purchased or sold as possible
in light of the size of the transactions being effected, and brokers will be
selected with this goal in view. The Manager monitors the performance of
brokers which effect transactions for each Series to determine the effect that
the Series' trading has on the market prices of the securities in which they
invest. Transactions also may be placed with brokers who provide the Manager
with investment research, such as reports concerning individual issuers,
industries and general economic and financial trends and other research
services. Each Series' Investment Management Agreement permits the Manager
knowingly to pay commissions on such transactions which are greater than
another broker might charge if the Manager, in good faith, determines that the
commissions paid are reasonable in relation to the research or brokerage
services provided by the broker or dealer when viewed in terms of either a
particular transaction or the Manager's overall responsibilities to the Trust.
Prior to __________, 1997, the individual Portfolios sought to achieve
their investment objectives by purchasing and managing their own investment
portfolios. As a consequence, the Portfolios incurred brokerage commissions
directly rather than indirectly through their investment in the corresponding
Series. During the fiscal year ended June 30, 1996, the Kiewit Short-Term
Government Portfolio, the Kiewit Intermediate-Term Bond Portfolio and the
Kiewit Tax-Exempt Portfolio paid no brokerage commissions. The Kiewit Equity
Portfolio paid $82,485 in brokerage commissions for the fiscal year ended June
30, 1996 and $34,515 for the period ended June 30, 1995.
PURCHASE AND REDEMPTION OF SHARES
The Fund reserves the right, in its sole discretion, to suspend the
offering of shares of any or all Portfolios or reject purchase orders when, in
the judgment of management, such suspension or rejection is in the best
interest of the Fund or a Portfolio. Securities accepted in exchange for
shares of a Portfolio will be acquired for investment purposes and will be
considered for sale under the same circumstances as other securities in the
Portfolio.
The Fund may suspend redemption privileges or postpone the date of
payment: (1) during any period when the New York Stock Exchange (the "NYSE")
is closed, or trading on the NYSE is restricted as determined by the Securities
and Exchange Commission (the "SEC"), (2) during any period when an emergency
exists as defined by the rules of the SEC as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
fairly to determine the value of its assets and (3) for such other periods as
the SEC may permit.
The valuation of the securities held by the Kiewit Money Market Series
and the Kiewit Rated Money Market Series (including any securities held in a
separate account maintained for when-issued securities) is based upon their
amortized costs which does not take into account unrealized capital gains or
loses. This involves valuing an instrument at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than
the price such Series would receive if they sold the instrument. During
periods of declining interest rates, the daily yields on shares of the Series
computed as described above may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Series resulted in a
lower aggregate portfolio value on a particular day, a prospective investor in
the Series would be able to obtain a somewhat higher yield than would result
from investment in a fund utilizing solely market values, and existing
investors in the Series would receive less investment income. The converse
would apply in a period of rising interest rates.
The Kiewit Money Market and Kiewit Rated Money Market Series' use of
amortized cost, which facilitates the maintenance of their corresponding
Portfolios' per share net asset value of $1.00, is permitted by a rule adopted
by the SEC, pursuant to which the Series must adhere to certain conditions.
The Kiewit Money Market and Kiewit Rated Money Market Series each must
maintain a dollar-weighted average portfolio maturity of 90 days or less, only
purchase instruments having remaining maturities of 397 calendar days or less,
and invest only in those U.S. dollar-denominated instruments that the Manager
has determined, pursuant to guidelines adopted by the Board of Trustees,
present minimal credit risks and which are, as required by the federal
securities laws (i) rated in one of the two highest rating categories as
determined by nationally recognized statistical rating agencies, (ii)
instruments deemed comparable in quality to such rated instruments, or (iii)
instruments, the issuers of which, with respect to an outstanding issue of
short-term debt that is comparable in priority and protection, have received a
rating within the two highest categories of nationally recognized statistical
rating agencies. Securities subject to floating or variable interest rates
with demand features in compliance with applicable rules of the SEC may have
stated maturities in excess of 397 days. The Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the
Series' price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures will include review of the portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine whether
the Series' net asset value calculated by using available market quotations
deviates from $1.00 per share based on amortized cost. The extent of any
deviation will be examined by the Trustees. If such deviation exceeds 1/2 of
1%,
the Trustees will promptly consider what action, if any, will be initiated. In
the event the Trustees determine that a deviation exists which may result in
material dilution or other unfair results to investors or existing
shareholders, they will take such corrective action as they regard as necessary
and appropriate, which may include the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends, redemptions of shares in kind, or establishing
a net asset value per share by using available market quotations.
In-Kind Purchases. If accepted by the Fund, shares of each Portfolio may be
purchased in exchange for securities which are eligible for acquisition by the
Portfolios or their corresponding Series, as described in this Statement of
Additional Information. Please contact Rodney Square about this purchase
method. Securities to be exchanged which are accepted by the Fund and Portfolio
shares to be issued therefore will be valued, as set forth under "Valuation Of
Shares," at the time of the next determination of net asset value after such
acceptance. All dividends, interest, subscription, or other rights pertaining
to such securities shall become the property of the Portfolio whose shares are
being acquired and must be delivered to the Fund by the investor upon receipt
from the issuer.
The Fund will not accept securities in exchange for shares of a Portfolio
unless: (1) current market quotations are readily available for such
securities; (2) the investor represents and agrees that all securities offered
to be exchanged are not subject to any restrictions upon their sale by the
Portfolio (or its corresponding Series) under the 1933 Act or under the laws of
the country in which the principal market for such securities exists, or
otherwise; (3) at the discretion of the Portfolio (or its corresponding
Series), the value of any such security (except U.S. Government securities)
being exchanged together with other securities of the same issuer owned by the
corresponding Series will not exceed 5% of the net assets of the corresponding
Series immediately after the transaction; and (4) the Portfolio (or its
corresponding Series) acquires the securities for investment and not for
resale. In addition, nearly all of the securities accepted in an exchange must
be, at the time of the exchange, eligible to be included in the Portfolio (or
corresponding Series) whose shares are issued. Investors interested in such
exchanges should contact the Manager.
TAX MATTERS
The Internal Revenue Code of 1986, as amended (the "Code") imposes a
nondeductible 4% excise tax on a regulated investment company which does not
distribute to investors in each calendar year an amount equal to (i) 98% of its
calendar year ordinary income, (ii) 98% of its capital gain net income (the
excess of short and long-term capital gain over short and long-term capital
loss) for the one-year period ending each October 31, and (iii) 100% of any
undistributed ordinary income and capital gain net income from the prior year.
Each Portfolio intends to declare and pay dividends and capital gain
distributions in a manner to avoid imposition of the excise tax. Each
Portfolio also intends to comply with other Code requirements such as (1)
appropriate diversification of portfolio investments; (2) realization of 90% of
annual gross income from dividends, interest, gains from sales of securities,
or other "qualifying income," and (3) realization of less than 30% of gross
income from gains on sale or other disposition of securities held less than
three months.
For any Portfolio that has a principal investment policy of investing in
non-equity investments, it is anticipated that either none or only a small
portion of that Portfolio's dividends will qualify for the corporate dividends
received deduction. The portion of the dividends so qualified depends on the
aggregate qualifying dividend income received by a Portfolio from domestic
(U.S.) sources. To the extent that any Portfolio pays dividends which qualify
for this deduction, the availability of the deduction is subject to certain
holding period and debt financing restrictions imposed under the Code on the
corporation claiming the deduction.
The Fund in its sole discretion may accept securities in exchange for
shares of a Portfolio. A gain or loss for federal income tax purposes may be
realized by investors in a Portfolio who are subject to federal taxation upon
the exchange. The amount of such gain or loss realized with respect to a
security is measured by the difference between the fair market value of the
contributed security on the date of contribution and its adjusted tax basis.
Any loss realized on the exchange may be subject to certain provisions of the
Code which either disallow the recognition of any such loss or result in a
deferral of the time for recognizing such loss.
CALCULATION OF PERFORMANCE DATA
The performance of a Portfolio's classes of shares (or its corresponding
Series) may be quoted in terms of its yield and its total return in advertising
and other promotional materials ("performance advertisements"). Performance
data quoted represents past performance and is not intended to indicate future
performance. The investment return of an investment in the Portfolios and the
principal value of an investment in any Portfolio except the Money Market
Portfolio and the Rated Money Market Portfolio will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. Performance of the Portfolios will vary based on changes in market
conditions and the level of each Portfolio's expenses. These performance
figures are calculated in the following manner:
A. Yield is the net annualized yield for a specified 7 calendar days
calculated at simple interest rates. From time to time, the Money
Market Portfolio and the Rated Money Market Portfolio may advertise
their yields. Yield is calculated by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of
the period, subtracting a hypothetical charge reflecting deductions
from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the
base period return. The yield is annualized by multiplying the
base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent.
The yield for the 7-day period ended June 30, 1996 was 5.22% for
the Money Market Portfolio.
B. Effective Yield is the net annualized yield for a specified 7
calendar days assuming reinvestment of income or compounding. From
time to time the Money Market Portfolio and the Rated Money Market
Portfolio may advertise their effective yields. Effective yield is
calculated by the same method as yield except the yield figure is
compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the
following formula:
Effective Yield = [(Base Period Return + 1) 365/7] - 1.
The effective yield for the 7-day period ended June 30, 1996 was
5.37% for the Money Market Portfolio.
C. Tax-Equivalent Yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal a Portfolio's
tax-exempt yield. From time to time, the Tax-Exempt Portfolio may
advertise its tax-equivalent yield. Tax-equivalent yield is
computed by: (i) dividing that portion of a Portfolio's yield
which is tax-exempt by one minus a stated income tax rate; and (ii)
adding the product of that portion, if any, of the Portfolio's
yield that is not tax-exempt. For purposes of this formula, tax-
exempt yield is a yield which is exempt from federal income tax.
The following table, which is based upon federal income tax rates in
effect on the date of this Statement of Additional Information, illustrates the
yields that would have to be achieved on taxable investments to produce a range
of hypothetical tax-equivalent yields:
Tax-Equivalent Yield Table
Federal Marginal
Income Tax Bracket
Tax-Equivalent Yields Based on Tax-Exempt Yields of:
4% 5% 6% 7% 8% 9% 10% 11%
28% 5.6 6.9 8.3 9.7 11.1 12.5 13.9 15.3
31% 5.8 7.2 8.7 10.1 11.6 13.0 14.5 15.9
36% 6.3 7.8 9.4 10.9 12.5 14.1 15.6 17.2
39.6% 6.6 8.3 9.9 11.6 13.2 14.9 16.6 18.2
D. Yield of the Short-Term Government Portfolio, Intermediate-Term
Bond Portfolio, and the Tax-Exempt Portfolio is calculated by
dividing the Portfolio's investment income for a 30-day period, net
of expenses, by the average number of shares entitled to receive
dividends during that period according to the following formula:
YIELD = 2[((a-b)/cd + 1)6-1]
Where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding
during the period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day
of the period.
The result is expressed as an annualized percentage (assuming semiannual
compounding) of the maximum offering price per share at the end of the period.
Except as noted below, in determining interest earned during the period
(variable "a" in the above formula), the interest earned on each debt
instrument held by a Portfolio (or its corresponding Series) during the period
is calculated by: (i) computing the instrument's yield to maturity, based on
the value of the instrument (including actual accrued interest) as of the last
business day of the period or, if the instrument was purchased during the
period, the purchase price plus accrued interest; (ii) dividing the yield to
maturity by 360; and (iii) multiplying the resulting quotient by the value of
the instrument (including actual accrued interest). Once interest earned is
calculated in this fashion for each debt instrument held by the Portfolio (or
its corresponding Series), interest earned during the period is then determined
by totaling the interest earned on all debt instruments held by the Portfolio.
For purposes of these calculations, the maturity of a debt instrument
with one or more call provisions is assumed to be the next date on which the
instrument reasonably can be expected to be called or, if none, the maturity
date. In general, interest income is reduced with respect to debt instruments
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and increased with respect to debt
instruments trading at a discount by adding a portion of the discount to daily
income.
For the 30-day period ended June 30, 1996, the yields for the Short-Term
Government Portfolio, Intermediate-Term Bond Portfolio and the Tax-Exempt
Portfolio were 5.99%, 6.56% and 4.47%, respectively.
Since yield accounting methods differ from the accounting methods used to
calculate net investment income for other purposes, a Portfolio's yield may not
equal the dividend income actually paid to investors or the net investment
income reported with respect to the Portfolio in the Fund's financial
statements.
Yield information may be useful in reviewing a Portfolio's performance
and in providing a basis for comparison with other investment alternatives.
Nevertheless, the Portfolios' yields fluctuate, unlike investments that pay a
fixed interest rate over a stated period of time. Investors should recognize
that in periods of declining interest rates, the Portfolios' yields will tend
to be somewhat higher than prevailing market rates, and in periods of rising
interest rates, the Portfolios' yields will tend to be somewhat lower. Also,
when interest rates are falling, the inflow of net new money to the Portfolios
from the continuous sale of their shares will likely be invested in instruments
producing lower yields than the balance of the Portfolios' holdings, thereby
reducing the current yields of the Portfolios. In periods of rising interest
rates, the opposite can be expected to occur.
E. Average Annual Total Return is the average annual compound rate of
return for the periods of one year, five years, ten years and the
life of a Portfolio, where quotations reflect changes in the price
of a Portfolio's shares, if any, and assume that all dividend and
capital gains distributions, if any, during the respective periods
were reinvested in Portfolio shares. Each Portfolio may advertise
its average annual total return from time to time. Average annual
total return is calculated by finding the average annual compound
rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is
then expressed as a percentage):
T=(ERV/P)1/n - 1
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the
end of the applicable period, of a hypothetical
$1,000 investment made at the beginning of the
applicable period.
Average Annual Total Returns for the one-year period ended June 30,
1996 and for the periods from the effective date of the Fund's
registration statement under the Securities Act of 1933 or
commencement of operations1, whichever occurred later, through June
30, 1996:
1 year ended Since Effectiveness 1
June 30, 1996 through June 30, 1996
Money Market Portfolio 5.61% 5.71%
Short-Term Government Portfolio 4.66% 6.96%
Intermediate-Term Bond Portfolio 4.48% 8.40%
Tax-Exempt Portfolio 4.55% 6.59%
Equity Portfolio 19.24% 21.70%
1 The Money Market Portfolio, Short-Term Government Portfolio,
Intermediate-Term Bond Portfolio and Tax-Exempt Portfolio became
effective on December 6, 1994. The Equity Portfolio commenced
operations on January 5, 1995.
F. Cumulative Total Return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect the change in the price
of a Portfolio's shares, if any, and assume that all dividends and
capital gains distributions, if any, during the period were
reinvested in Portfolio shares. Cumulative total return is
calculated by finding the cumulative rates of return of a
hypothetical investment over such periods, according to the
following formula (cumulative total return is then expressed as a
percentage):
C = (ERV/P) - 1
Where: C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value, at
the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
Cumulative Total Returns for the one-year period ended June 30,
1996 and for the periods from the effective date of the Fund's
registration statement under the Securities Act of 1933 or
commencement of operations1 , whichever occurred later, through
June 30, 1996:
1 year ended Since Effectiveness 1
June 30, 1996 through June 30, 1996
Money Market Portfolio 5.61% 9.11%
Short-Term Government
Portfolio 4.66% 11.13%
Intermediate-Term Bond
Portfolio 4.48% 13.50%
Tax-Exempt Portfolio 4.55% 10.54%
Equity Portfolio 19.24% 33.93%
1 The Money Market Portfolio, Short-Term Government Portfolio,
Intermediate-Term Bond Portfolio and Tax-Exempt Portfolio became
effective on December 6, 1994. The Equity Portfolio commenced
operations on January 5, 1995.
The preceding performance figures were affected by fee waivers and
expenses assumed by the Portfolios' investment manager. Without such fee
waivers and expense assumptions, the performance figures quoted above would
have been lower.
The Portfolios may also from time to time present some or all of their
investments ranked by their percentage representation within the respective
Portfolio or in the form of the schedule of "Investments" included in the
Annual Report to the shareholders of the Portfolios as of and for the fiscal
year ended June 30, 1996, a copy of which follows and is part of this document.
Performance advertisements for the Money Market Portfolio and the Rated
Money Market Portfolio may include yield calculations for the 7-day period
ending on the most recent practicable date considering the media used for the
advertisement. Performance advertisements for the other four Portfolios may
include average annual total returns and 30-day yield calculations as of the
end of the most recent quarter practicable considering the media used for the
advertisement. Such advertisements may include a schedule of investments for
the corresponding date, employing presentation principles used in annual
reports to shareholders.
To help investors better evaluate how an investment in a Portfolio might
satisfy their investment objective, advertisements regarding a Portfolio may
discuss yield or total return as reported by various financial publications.
Advertisements may also compare yield or total return to other investments,
indices and averages. The following publications, benchmarks, indices, and
averages may be used: Lipper Mutual Fund Performance Analysis; Lipper Fixed
Income Analysis; Lipper Mutual Fund Indices; Salomon Brothers Indices; Lehman
Brothers Indices; Dow Jones Composite Average or its component indices;
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") or its
component indices; The New York Stock Exchange composite or component indices;
CDA Mutual Fund Report; Weisenberger - Mutual Fund Panorama and Investment
Companies; Mutual Fund Values and Mutual Fund Service Book, published by
Morningstar, Inc.; and financial publications such as Business Week,
Kiplinger's Personal Finance, Financial World, Forbes, Fortune, Money Magazine,
The Wall Street Journal, Barron's, et al., which rate mutual fund performance
over various time periods.
Currently the performance of the Kiewit Money Market Portfolio and the
Rated Money Market Portfolio may be compared to the performance of IBC's Money
Fund Average. The IBC's Money Fund Average is a composition of all reporting
money market funds with similar objectives and restrictions. The Kiewit Short-
Term Government Portfolio is currently compared to the Lehman 1-3 Year
Government Index. The Lehman 1-3 Year Government Index is a total return
performance benchmark consisting of U.S. Government agency and Treasury
securities with maturities from one to three years. The Kiewit Intermediate-
Term Bond Portfolio is currently compared to the Lehman Intermediate Corporate
Index. The Lehman Intermediate Corporate Index is a total return performance
benchmark consisting of publicly issued corporate debt issues rated at least
investment grade with maturities from one to ten years. The Kiewit Tax-Exempt
Portfolio is currently compared to the Lehman 5-Year Municipal Bond Index. The
Lehman 5-Year Municipal Bond Index is a total return performance benchmark
consisting of tax-exempt municipal bonds rated at least investment grade with
maturities from four to six years. The Kiewit Equity Portfolio is currently
compared to the S&P 500. The S&P 500 is an unmanaged capitalization weighted
index of five hundred publicly traded stocks.
OTHER INFORMATION
The Fund does not intend to hold annual meetings; it may, however, hold a
meeting for such purposes as changing fundamental investment limitations,
approving a new investment management agreement or any other matters which are
required to be acted on by shareholders under the 1940 Act. Shareholders may
receive assistance in communicating with other shareholders in connection with
the election or removal of Trustees similar to the provisions contained in
Section 16(c) of the 1940 Act.
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, a Delaware-chartered banking institution, is the
Fund's Custodian.
Price Waterhouse LLP, Thirty South 17th Street, Philadelphia,
Pennsylvania 19103, is the Fund's independent accountant.
Kiewit Mutual Fund
S CLASS SHARES
1000 Kiewit Plaza, Omaha, NE 68131-3344
Telephone: (800) 2KIEWIT
STATEMENT OF ADDITIONAL INFORMATION
_________, 1997
This statement of additional information is not a prospectus but should
be read in conjunction with the prospectus of Kiewit Mutual Fund (the "Fund"),
relating to the Fund's S Class Shares, dated _______________ __, 1997, which
can be obtained from the Fund by writing to the Fund at the above address or by
calling the above telephone number.
TABLE OF CONTENTS
Page
HISTORY 2
INVESTMENT LIMITATIONS AND POLICIES 2
MANAGEMENT OF THE FUND 6
DISTRIBUTION PLAN
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 12
BROKERAGE TRANSACTIONS 16
PURCHASE AND REDEMPTION OF SHARES 16
TAX MATTERS 19
CALCULATION OF PERFORMANCE DATA 20
OTHER INFORMATION 27
FINANCIAL STATEMENTS 28
HISTORY
Kiewit Institutional Fund was organized as a Delaware business trust on
June 1, 1994. The name of the trust was changed to Kiewit Mutual Fund on
October 7, 1994.
INVESTMENT LIMITATIONS AND POLICIES
The following information supplements the information set forth in the
prospectus under the caption "Investment Objectives And Policies." The
following information applies to the Feeder Portfolios and to the corresponding
Trust Series.
Fundamental Limitations - All Portfolios
Each of the Portfolios has adopted certain limitations which may not be
changed with respect to any Portfolio without the approval of a majority of the
outstanding voting securities of the Portfolio. A "majority" is defined as the
lesser of: (1) at least 67% of the voting securities of the Portfolio (to be
affected by the proposed change) present at a meeting if the holders of more
than 50% of the outstanding voting securities of the Portfolio are present or
represented by proxy, or (2) more than 50% of the outstanding voting securities
of such Portfolio.
The Portfolios either directly or indirectly through their investment in
the Series of the Trust will not: (1) as to 75% of the total assets of a
Portfolio, invest in the securities of any issuer (except obligations of the
U.S. Government and its instrumentalities) if, as a result more than 5% of the
Portfolio's total assets, at market, would be invested in the securities of
such issuer, provided that this restriction applies to 100% of the total assets
of the Kiewit Money Market Portfolio; (2) borrow, except that a Portfolio may
borrow from banks for temporary or emergency purposes or to pay redemptions and
then, in no event, in excess of 33% of its net assets and a Portfolio may
pledge not more than 33% of such assets to secure such loans; (3) pledge,
mortgage, or hypothecate any of its assets to an extent greater than 10% of its
total assets at fair market value, except as described in (2) above; (4) invest
more than 15% of the value of the Portfolio's net assets in illiquid securities
which include certain restricted securities, repurchase agreements with
maturities of greater than seven days, and other illiquid investments; (5)
invest its assets in securities of any investment company in excess of the
limits set forth in the Investment Company Act of 1940 (the "1940 Act") and
rules thereunder, except in connection with a merger, acquisition of assets,
consolidation or reorganization; (6) acquire any securities of companies within
one industry if, as a result of such acquisition, more than 25% of the value of
the Portfolio's total assets would be invested in securities of companies
within such industry; (7) engage in the business of underwriting securities
issued by others, except that, in connection with the disposition of a
security, a Portfolio may be deemed to be an "underwriter" as that term is
defined in the Securities Act of 1933 (the "1933 Act"); (8) purchase or sell
commodities except that each Portfolio may purchase or sell financial futures
contracts and options thereon; (9) invest in real estate, including limited
partnership interests therein, although they may purchase and sell securities
which deal in real estate and securities which are secured by interests in real
estate; (10) purchase securities on margin or sell securities short, except
that a Portfolio may satisfy margin requirements with respect to futures
transactions; and (11) make loans, except that this restriction shall not
prohibit (a) the purchase of obligations customarily purchased by institutional
investors, (b) the lending of Portfolio securities or (c) entry into repurchase
agreements.
The investment limitations described above do not prohibit each Feeder
Portfolio from investing all or substantially all of its assets in the shares
of another registered, open-end investment company such as the Series of the
Trust. The investment policies and limitations of each Series are the same as
those of the corresponding Feeder Portfolio.
For the purposes of (4) above, each Portfolio (indirectly through their
investment in the corresponding Trust Series) may invest in commercial paper
that is exempt from the registration requirements of the 1933 Act subject to
the requirements regarding credit ratings stated in the prospectus under
"Investment Objectives And Policies." Further, pursuant to Rule 144A under the
1933 Act, the Portfolios (indirectly through their investment in the
corresponding Trust Series) may purchase certain unregistered (i.e. restricted)
securities upon a determination that a liquid institutional market exists for
the securities. If it is decided that a liquid market does exist, the
securities will not be subject to the 15% limitation on holdings of illiquid
securities stated in (4) above. While maintaining oversight, the Board of
Trustees has delegated the day-to-day function of making liquidity
determinations to Kiewit Investment Management Corp. (the "Manager"). For Rule
144A securities to be considered liquid, there must be at least one dealer
making a market in such securities. After purchase, the Board of Trustees and
the Manager will continue to monitor the liquidity of Rule 144A securities.
There is no limit on the Portfolios' (indirectly though their investment in the
corresponding Series) investment in Rule 144A securities that are determined to
be liquid.
For the purposes of (6) above, (i) utility companies will be divided
according to their services; e.g., gas, gas transmission, electric and gas,
electric, water and telephone will each be considered a separate industry; and
(ii) the Kiewit Money Market Portfolio (indirectly through its investment in
the corresponding Series) may invest more than 25% of the value of its total
assets in obligations of U.S. banks, such as certificates of deposits, time
deposits and bankers' acceptances. The banks must have total assets exceeding
one billion dollars.
Non-Fundamental Limitations - All Portfolios
The following policies are non-fundamental and may be changed by the
Board of Trustees, without shareholder approval:
The Portfolios (indirectly through their investment in the corresponding
Series) will not: (1) invest for the purpose of exercising control over
management of any company; (2) acquire more than 10% of the voting securities
of any issuer; or (3) invest more than 5% of its total assets in securities
of companies which have (with predecessors) a record of less than three
years' continuous operations.
Non-Fundamental Policies - Kiewit Bond Portfolios
The following policies are non-fundamental and may be changed by the
Board of Trustees, without shareholder approval:
The Kiewit Short-Term Government, Kiewit Tax-Exempt and Kiewit
Intermediate-Term Bond Portfolios (each referred to herein as a "Kiewit Bond
Portfolio"), through their investment in the corresponding Series, may invest
in obligations that permit repayment of the principal amount of the obligation
prior to maturity. Variable and floating rate obligations are relatively long-
term instruments that often carry demand features permitting the holder to
demand payment of principal at any time or at specified intervals prior to
maturity. Standby commitments, which are similar to a put, give a Kiewit Bond
Portfolio the option to obligate a broker, dealer or bank to repurchase a
security held by a Kiewit Bond Portfolio at a specified price. Tender option
bonds are relatively long-term bonds that are coupled with the agreement of a
third party (such as a broker, dealer or bank) to grant the holders of such
securities the option to tender the securities to the institution at periodic
intervals. A Kiewit Bond Portfolio will purchase these types of instruments
primarily for the purpose of increasing the liquidity of its portfolio.
New issues of bonds are often issued on a "when-issued" basis, which
means that actual payment for the delivery of the securities generally takes
place 15 to 45 days after the purchase date. During this period, a Kiewit Bond
Portfolio bears the risk that interest rates on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
securities. To alleviate this risk, each Kiewit Bond Portfolio does not intend
to invest more than 5% of its assets in when-issued securities.
A Kiewit Bond Portfolio also may invest up to 5% of its assets in zero
coupon bonds or "strips." Zero coupon bonds do not make regular interest
payments, rather they are sold at a discount from face value. Principal and
accretive discount (representing interest accrued but not paid) are paid at
maturity. Strips are debt securities that are stripped of their interest after
the securities are issued, but are otherwise comparable to zero coupon bonds.
The market values of zero coupon bonds and strips generally fluctuate in
response to changes in interest rates to a greater degree than interest paying
securities of comparable term and quality. The strips in which a Kiewit Bond
Portfolio may invest may or may not be a part of the U.S. Treasury Separately
Traded Registered Interest and Principal Securities program. Each Kiewit Bond
Portfolio may also purchase inverse floaters, which are instruments whose
interest bears an inverse relationship to the interest rate on another
security.
Generally, a Kiewit Bond Portfolio's average maturity will tend to be
shorter when the Manager expects interest rates to rise and longer when it
expects interest rates to decline.
Portfolio Turnover
The portfolio turnover rates for the fiscal year ended June 30, 1996, and
the annualized portfolio turnover rates for the period ended June 30, 1995, for
the Kiewit Short-Term Government Portfolio, Kiewit Intermediate-Term Bond
Portfolio, Kiewit Tax-Exempt Portfolio and Kiewit Equity Portfolio were as
follows:
Name June 30, 1996 June 30, 1995
Short-Term Government 57.52% 69.57%*
Intermediate-Term Bond 86.06% 121.36%*
Tax-Exempt 100.61% 92.53%*
Equity 16.95% 0.00**
* For the period from December 6, 1994 through June 30, 1995.
** For the period from January 5, 1995 through June 30, 1995.
In the current fiscal year, the portfolio turnover rate of each of the
Kiewit Short-Term Government, Kiewit Intermediate-Term Bond and Kiewit Tax-
Exempt Series is not expected to exceed 100%. The annual portfolio turnover
rate of the Kiewit Equity Series is not expected to exceed 75%. Generally,
securities held by the Kiewit Equity Series will not be sold to realize short-
term profits, but when circumstances warrant, they may be sold without regard
to the length of time held. Generally, securities held by the Kiewit Equity
Series will be purchased with the expectation that they will be held for longer
than one year.
MANAGEMENT OF THE FUND
Trustees and Officers
The names, addresses and ages of the trustees and officers of the Fund
and a brief statement or their present positions and principal occupations
during the past five years is set forth below. Trustees who are deemed to be
"interested persons" as defined in the 1940 Act are indicated by an asterisk
(*).
Richard R. Jaros*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Jaros, age 44, is a Trustee of the Fund, a Director of the Manager,
President of Peter Kiewit Sons', Inc. ("PKS"), and a Director of PKS,
California Energy Company, Inc., C-TEC Corporation and MFS Communications
Company, Inc. Mr. Jaros also was Chairman (1993-1994) and President and CEO
(1992-1993) of California Energy Company, Inc. and Vice President of Kiewit
Diversified Group Inc. (1989-1990).
Ann C. McCulloch*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Ms. McCulloch, age 38, is Chairman, President and a Trustee of the Fund,
President of the Manager and Vice President and Treasurer of PKS. From 1989 to
1993, Ms. McCulloch was Treasurer and Vice President of Central Maine Power in
Augusta, ME.
George Lee Butler*
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Butler, age 57, is a Trustee of the Fund and President of Kiewit Energy
Company. From 1991 to March 1994, Mr. Butler was Commander-in-Chief of the
U.S. Strategic Command and from 1989 to 1994 was Director, Strategic Plans and
Policy, for the U.S. Joint Chiefs of Staff.
Lawrence B. Thomas
One ConAgra Drive
Omaha, NE 68102
Mr. Thomas, age 60, is a Trustee of the Fund and Senior Vice-President. He
retired in November 1996, after having served as Corporate Risk Officer and
Secretary of ConAgra, Inc. (a food company). Mr. Thomas previously served as
principal financial officer and Treasurer of ConAgra, Inc.
John J. Quindlen
2205 N. Southwinds Boulevard
Vero Beach, FL 32963
Mr. Quindlen, age 64, is a Trustee of the Fund, each investment company in the
Rodney Square Funds and Kalmar Pooled Trust, a registered investment company.
He retired in November 1993, after having served as the Senior Vice President -
Financial and Chief Financial Officer of E.I. du Pont de Nemours & Co., Inc.
from 1984 to 1993.
P. Greggory Williams
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Williams, age 42, is Chief Financial Officer, Vice President and Treasurer
of the Fund and Chief Investment Officer and a Vice President of the Manager.
From June 1991 to August 1994, Mr. Williams was Vice President-Investments and
Treasurer of Shenandoah Life Insurance Company in Roanoke, Virginia and from
December 1986 to November 1990 was Senior Vice President and Chief Investment
Officer of Jefferson National Life Insurance Company in Indianapolis, Indiana.
Brian J. Mosher
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Mosher, age 39, is a Vice President of the Fund a Vice President of the
Manager. From March 1989 to December 1994, Mr. Mosher served as Investment
Manager of Meridian Mutual Insurance Company in Indianapolis, Indiana.
Kenneth D. Gaskins, Esquire
1000 Kiewit Plaza
Omaha, NE 68131-3344
Mr. Gaskins, age 50, is Secretary of the Fund, Vice President and Secretary of
the Manager and Corporate Counsel of PKS.
The fees and expenses of the Trustees who are not "interested persons" of
the Fund ("Independent Trustees"), as defined in the 1940 Act, are paid by each
Portfolio. For the fiscal year ended June 30, 1996, such fees amounted to
$25,000 for the Fund. The following table shows the fees paid during the
fiscal year to the Independent Trustees for their service to the Fund.
Compensation Table
Aggregate Compensation Total Compensation
from the Fund from the Fund Complex
Independent Trustee
John J. Quindlen $12,500 $12,500
Lawrence B. Thomas $12,500 $12,500
On _______, 1997, the Trustees and officers of the Fund, as a group,
owned beneficially, or may be deemed to have owned beneficially, less than 1%
of the outstanding shares of the Portfolios.
Investment Manager
For the services it provides as investment manager to each Portfolio's
corresponding Series of the Trust, the Manager is paid a monthly fee calculated
as a percentage of average net assets of the corresponding Series. Pursuant to
the investment management agreements, the manager's fees for the fiscal years
ended June 30, 1996 and 1995, would have been the following:
1996 1995
(000) (000)
Kiewit Money Market Portfolio $843,989 $436,236
Kiewit Short-Term Government Portfolio$492,172 $332,931
Kiewit Tax-Exempt Portfolio $499,823 $331,508
Kiewit Intermediate-Term Portfolio $563,114 $624,955
Kiewit Equity Portfolio $354,646 $ 35,890
The Manager has agreed to waive all or a portion of its advisory fee for
each Portfolio's corresponding Series and to assume certain expenses of the
Portfolios and Series. This undertaking, which is not contained in the
investment management agreements, may be amended or rescinded in the future.
During the fiscal year ended June 30, 1996 and the period ended June 30, 1995,
the Manager waived the following amounts to the Portfolios:
Name 1996 1995
Money Market Portfolio $298,011 $ 70,100
Short-Term Government Portfolio 219,505 92,745
Intermediate-Term Bond Portfolio 86,597 117,862
Tax-Exempt Portfolio 57,267 121,067
Equity Portfolio 126,289 90,032
Each investment management agreement is in effect for a period of two
years. Thereafter, each agreement may continue in effect for successive
annual periods, provided such continuance is specifically approved at least
annually by a vote of the Trust's Board of Trustees or, by a vote of the
holders of a majority of a Series' outstanding voting securities, and in either
event by a majority of the Trustees who are not parties to the agreement or
interested persons of any such party (other than as Trustees of the Trust),
cast in person at a meeting called for that purpose. An investment management
agreement may be terminated without penalty at any time by the Series or by the
Manager on 60 days' written notice and will automatically terminate in the
event of its assignment as defined in the 1940 Act.
DISTRIBUTION PLAN
Rodney Square Distributors, Inc. ("RSD") serves as the Distributor of
each Portfolio's shares pursuant to a Distribution Agreement with the Fund.
Under the terms of the Distribution Agreement, RSD agrees to assist in securing
purchasers for shares of the Portfolios.
As noted in the Fund's Prospectus, the S Class Shares of each Portfolio
have adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan")
whereby the Fund may pay up to a maximum of 0.25% per annum of the average
daily net assets of the S Class Shares for expenses incurred by the Distributor
in the distribution of the S Class Shares. The fees are paid on a monthly
basis, based on the average daily net assets of each Portfolio's S Class
Shares.
Pursuant to the Plan, the Distributor is entitled to a reimbursement each
month up to the maximum of 0.25% for S Class Shares per annum of average net
assets of the S Class Shares, for the actual expenses incurred in the
distribution and promotion of the Fund's shares, including but not limited to,
printing of prospectuses and reports used for sales purposes, preparation and
printing of sales literature and related expenses, advertisements, and other
distribution-related expenses as well as any distribution or service fees paid
to securities dealers or others who have executed a dealer agreement with the
Underwriter. Any expense of distribution in excess of 0.25% per annum will be
borne by the Manager without any reimbursement or payment by the Fund.
The Plan also provides that to the extent that the Fund, the Manager, the
Distributor, or other parties on behalf of the Fund, the Manager, or the
Underwriter make payments that are deemed to be payments for the financing of
any activity primarily intended to result in the sale of shares issued by the
Fund within the context of Rule 12b-1, such payments shall be deemed to be made
pursuant to the Plan. In no event shall the payments made under the Plan, plus
any other payments deemed to be made pursuant to the Plan, exceed the amount
permitted to be paid pursuant to applicable rules of the National Association
of Securities Dealers, Inc..
The Board of Trustees has determined that a consistent cash flow
resulting from the sale of new shares is necessary and appropriate to meet
redemptions and to take advantage of buying opportunities without having to
make unwarranted liquidations of portfolio securities. The Board therefore
believes that it will likely benefit the Fund to have monies available for the
direct distribution activities of the Distributor in promoting the sale of the
Fund's shares, and to avoid any uncertainties as to whether other payments
constitute distribution expenses on behalf of the Fund. The Board of Trustees,
including the non-interested trustees, has concluded that in the exercise of
their reasonable business judgment and in light of their fiduciary duties,
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
The Plan has been approved by the Fund's Board of Trustees, including all
of the trustees who are non-interested persons as defined in the 1940 Act. The
Plan must be renewed annually by the Fund's Board of Trustees, including a
majority of the trustees who are non-interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the Plan.
The votes must be cast in person at a meeting called for that purpose. It is
also required that the selection and nomination of such trustees be done by the
non-interested trustees. The Plan and any related agreements may be terminated
at any time, without any penalty: 1) by vote of a majority of the non-
interested trustees on not more than 60 days' written notice, 2) by the
Distributor on not more than 60 days' written notice, 3) by vote of a majority
of the Fund's outstanding shares, on 60 days' written notice, and 4)
automatically by any act that terminates the Distribution Agreement with the
Distributor. The Distributor or any dealer or other firm may also terminate
their respective agreements at any time upon written notice.
The Plan and any related agreement may not be amended to increase
materially the amounts to be spent for distribution expenses without approval
by a majority of the Fund's outstanding shares, and all material amendments to
the Plan or any related agreements shall be approved by a vote of the non-
interested trustees, cast in person at a meeting called for the purpose of
voting on any such amendment.
The Underwriter is required to report in writing to the Board of Trustees
of the Fund, at least quarterly, on the amounts and purpose of any payments
made under the Plan, as well as to furnish the Board with such other
information as may reasonably be requested in order to enable the Board to make
an informed determination of whether the Plan should be continued.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of ___________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Money Market
Portfolio:
Name and Address Percentage Ownership
Peter Kiewit Sons', Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Continental Holdings Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Northern Trust Company as Trustee %
For Continental Kiewit Inc.
Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
Onbit Co. %
FBO FirsTier Bank
17th and Farnam Sts.
Omaha, NE 68102
As of ___________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Short-Term
Government Portfolio:
Name and Address Percentage Ownership
Peter Kiewit Sons', Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Global Surety & Insurance Co. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Northern Trust Company as Trustee %
For Continental Kiewit Inc. Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
California Corridor Constructors, %
A Joint Venture
One Thousand Kiewit Plaza
Omaha, NE 68131
Bank of America NT&SA %
as Collateral Agent FBO Secured Parties
One Thousand Kiewit Plaza
Omaha, NE 68131
As of ____________, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Intermediate-Term
Bond Portfolio:
Name and Address Percentage Ownership
Gilbert Texas Construction Corp. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Continental Holdings Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Decker Coal Reclamation %
One Thousand Kiewit Plaza
Omaha, NE 68102
As of _______, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of the Tax-Exempt
Portfolio:
Name and Address Percentage Ownership
Global Surety & Insurance Co. %
One Thousand Kiewit Plaza
Omaha, NE 68131
CCC Canada Holding, Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
As of _______________, 1997, the following shareholders were known to own
of record more than 5% of the total outstanding shares of the Equity Portfolio:
Name and Address Percentage Ownership
Decker Coal Reclamation %
One Thousand Kiewit Plaza
Omaha, NE 68102
Northern Trust Company as Trustee %
For Continental Kiewit Inc.
Pension Plan
One Thousand Kiewit Plaza
Omaha, NE 68131
Kiewit Diversified Group Inc. %
One Thousand Kiewit Plaza
Omaha, NE 68131
Wilmington Trust Co. as Trustee %
For Kiewit Construction Group
Retirement Savings Plan
1100 N. Market Street
Wilmington, DE 19890
Peter Kiewit Sons', Inc., a Delaware corporation with principal offices
at 1000 Kiewit Plaza, Omaha, NE 68131, is the direct or indirect parent of
shareholders of more than 25% of the voting securities of each Portfolio and
therefore may be deemed to control each Portfolio.
BROKERAGE TRANSACTIONS
Brokerage transactions will be placed with a view to receiving the best
price and execution. Each Portfolio's corresponding Series will seek to
acquire and dispose of securities in a manner which would cause as little
fluctuation in the market prices of stocks being purchased or sold as possible
in light of the size of the transactions being effected, and brokers will be
selected with this goal in view. The Manager monitors the performance of
brokers which effect transactions for each Series to determine the effect that
the Series' trading has on the market prices of the securities in which they
invest. Transactions also may be placed with brokers who provide the Manager
with investment research, such as reports concerning individual issuers,
industries and general economic and financial trends and other research
services. Each Series' Investment Management Agreement permits the Manager
knowingly to pay commissions on such transactions which are greater than
another broker might charge if the Manager, in good faith, determines that the
commissions paid are reasonable in relation to the research or brokerage
services provided by the broker or dealer when viewed in terms of either a
particular transaction or the Manager's overall responsibilities to the Trust.
Prior to __________, 1997, the individual Portfolios sought to achieve
their investment objectives by purchasing and managing their own investment
portfolios. As a consequence, the Portfolios incurred brokerage commissions
directly rather than indirectly through their investment in the corresponding
Series. During the fiscal year ended June 30, 1996, the Kiewit Short-Term
Government Portfolio, the Kiewit Intermediate-Term Bond Portfolio and the
Kiewit Tax-Exempt Portfolio paid no brokerage commissions. The Kiewit Equity
Portfolio paid $82,485 in brokerage commissions for the fiscal year ended June
30, 1996 and $34,515 for the period ended June 30, 1995.
PURCHASE AND REDEMPTION OF SHARES
The Fund reserves the right, in its sole discretion, to suspend the
offering of shares of any or all Portfolios or reject purchase orders when, in
the judgment of management, such suspension or rejection is in the best
interest of the Fund or a Portfolio. Securities accepted in exchange for
shares of a Portfolio will be acquired for investment purposes and will be
considered for sale under the same circumstances as other securities in the
Portfolio.
The Fund may suspend redemption privileges or postpone the date of
payment: (1) during any period when the New York Stock Exchange (the "NYSE")
is closed, or trading on the NYSE is restricted as determined by the Securities
and Exchange Commission (the "SEC"), (2) during any period when an emergency
exists as defined by the rules of the SEC as a result of which it is not
reasonably practicable for the Fund to dispose of securities owned by it, or
fairly to determine the value of its assets and (3) for such other periods as
the SEC may permit.
The valuation of the securities held by the Kiewit Money Market Series
and the Kiewit Rated Money Market Series (including any securities held in a
separate account maintained for when-issued securities) is based upon their
amortized costs which does not take into account unrealized capital gains or
loses. This involves valuing an instrument at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than
the price such Series would receive if they sold the instrument. During
periods of declining interest rates, the daily yields on shares of the Series
computed as described above may tend to be higher than a like computation made
by a fund with identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Series resulted in a
lower aggregate portfolio value on a particular day, a prospective investor in
the Series would be able to obtain a somewhat higher yield than would result
from investment in a fund utilizing solely market values, and existing
investors in the Series would receive less investment income. The converse
would apply in a period of rising interest rates.
The Kiewit Money Market and Kiewit Rated Money Market Series' use of
amortized cost, which facilitates the maintenance of their corresponding
Portfolios' per share net asset value of $1.00, is permitted by a rule adopted
by the SEC, pursuant to which the Series must adhere to certain conditions.
The Kiewit Money Market and Kiewit Rated Money Market Series each must
maintain a dollar-weighted average portfolio maturity of 90 days or less, only
purchase instruments having remaining maturities of 397 calendar days or less,
and invest only in those U.S. dollar-denominated instruments that the Manager
has determined, pursuant to guidelines adopted by the Board of Trustees,
present minimal credit risks and which are, as required by the federal
securities laws (i) rated in one of the two highest rating categories as
determined by nationally recognized statistical rating agencies, (ii)
instruments deemed comparable in quality to such rated instruments, or (iii)
instruments, the issuers of which, with respect to an outstanding issue of
short-term debt that is comparable in priority and protection, have received a
rating within the two highest categories of nationally recognized statistical
rating agencies. Securities subject to floating or variable interest rates
with demand features in compliance with applicable rules of the SEC may have
stated maturities in excess of 397 days. The Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the
Series' price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures will include review of the portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine whether
the Series' net asset value calculated by using available market quotations
deviates from $1.00 per share based on amortized cost. The extent of any
deviation will be examined by the Trustees. If such deviation exceeds 1/2 of
1%,
the Trustees will promptly consider what action, if any, will be initiated. In
the event the Trustees determine that a deviation exists which may result in
material dilution or other unfair results to investors or existing
shareholders, they will take such corrective action as they regard as necessary
and appropriate, which may include the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends, redemptions of shares in kind, or establishing
a net asset value per share by using available market quotations.
In-Kind Purchases. If accepted by the Fund, shares of each Portfolio may be
purchased in exchange for securities which are eligible for acquisition by the
Portfolios or their corresponding Series, as described in this Statement of
Additional Information. Please contact Rodney Square about this purchase
method. Securities to be exchanged which are accepted by the Fund and Portfolio
shares to be issued therefore will be valued, as set forth under "Valuation Of
Shares," at the time of the next determination of net asset value after such
acceptance. All dividends, interest, subscription, or other rights pertaining
to such securities shall become the property of the Portfolio whose shares are
being acquired and must be delivered to the Fund by the investor upon receipt
from the issuer.
The Fund will not accept securities in exchange for shares of a Portfolio
unless: (1) current market quotations are readily available for such
securities; (2) the investor represents and agrees that all securities offered
to be exchanged are not subject to any restrictions upon their sale by the
Portfolio (or its corresponding Series) under the 1933 Act or under the laws of
the country in which the principal market for such securities exists, or
otherwise; (3) at the discretion of the Portfolio (or its corresponding
Series), the value of any such security (except U.S. Government securities)
being exchanged together with other securities of the same issuer owned by the
corresponding Series will not exceed 5% of the net assets of the corresponding
Series immediately after the transaction; and (4) the Portfolio (or its
corresponding Series) acquires the securities for investment and not for
resale. In addition, nearly all of the securities accepted in an exchange must
be, at the time of the exchange, eligible to be included in the Portfolio (or
corresponding Series) whose shares are issued. Investors interested in such
exchanges should contact the Manager.
TAX MATTERS
The Internal Revenue Code of 1986, as amended (the "Code") imposes a
nondeductible 4% excise tax on a regulated investment company which does not
distribute to investors in each calendar year an amount equal to (i) 98% of its
calendar year ordinary income, (ii) 98% of its capital gain net income (the
excess of short and long-term capital gain over short and long-term capital
loss) for the one-year period ending each October 31, and (iii) 100% of any
undistributed ordinary income and capital gain net income from the prior year.
Each Portfolio intends to declare and pay dividends and capital gain
distributions in a manner to avoid imposition of the excise tax. Each
Portfolio also intends to comply with other Code requirements such as (1)
appropriate diversification of portfolio investments; (2) realization of 90% of
annual gross income from dividends, interest, gains from sales of securities,
or other "qualifying income," and (3) realization of less than 30% of gross
income from gains on sale or other disposition of securities held less than
three months.
For any Portfolio that has a principal investment policy of investing in
non-equity investments, it is anticipated that either none or only a small
portion of that Portfolio's dividends will qualify for the corporate dividends
received deduction. The portion of the dividends so qualified depends on the
aggregate qualifying dividend income received by a Portfolio from domestic
(U.S.) sources. To the extent that any Portfolio pays dividends which qualify
for this deduction, the availability of the deduction is subject to certain
holding period and debt financing restrictions imposed under the Code on the
corporation claiming the deduction.
The Fund in its sole discretion may accept securities in exchange for
shares of a Portfolio. A gain or loss for federal income tax purposes may be
realized by investors in a Portfolio who are subject to federal taxation upon
the exchange. The amount of such gain or loss realized with respect to a
security is measured by the difference between the fair market value of the
contributed security on the date of contribution and its adjusted tax basis.
Any loss realized on the exchange may be subject to certain provisions of the
Code which either disallow the recognition of any such loss or result in a
deferral of the time for recognizing such loss.
CALCULATION OF PERFORMANCE DATA
The performance of a Portfolio's classes of shares (or its corresponding
Series) may be quoted in terms of its yield and its total return in advertising
and other promotional materials ("performance advertisements"). Performance
data quoted represents past performance and is not intended to indicate future
performance. The investment return of an investment in the Portfolios and the
principal value of an investment in any Portfolio except the Money Market
Portfolio and the Rated Money Market Portfolio will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than the original
cost. Performance of the Portfolios will vary based on changes in market
conditions and the level of each Portfolio's expenses. Since S Class Shares of
the Portfolios bear additional distribution expenses, the performance of the S
Class Shares of the Portfolios will generally be lower than that of the K Class
Shares. These performance figures are calculated in the following manner:
A. Yield is the net annualized yield for a specified 7 calendar days
calculated at simple interest rates. From time to time, the Money
Market Portfolio and the Rated Money Market Portfolio may advertise
their yields. Yield is calculated by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of
the period, subtracting a hypothetical charge reflecting deductions
from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the
base period return. The yield is annualized by multiplying the
base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent.
The yield for the 7-day period ended June 30, 1996 was 5.22% for
the Money Market Portfolio.
B. Effective Yield is the net annualized yield for a specified 7
calendar days assuming reinvestment of income or compounding. From
time to time the Money Market Portfolio and the Rated Money Market
Portfolio may advertise their effective yields. Effective yield is
calculated by the same method as yield except the yield figure is
compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the
following formula:
Effective Yield = [(Base Period Return + 1) 365/7] - 1.
The effective yield for the 7-day period ended June 30, 1996 was
5.37% for the Money Market Portfolio.
C. Tax-Equivalent Yield is the rate an investor would have to earn
from a fully taxable investment after taxes to equal a Portfolio's
tax-exempt yield. From time to time, the Tax-Exempt Portfolio may
advertise its tax-equivalent yield. Tax-equivalent yield is
computed by: (i) dividing that portion of a Portfolio's yield
which is tax-exempt by one minus a stated income tax rate; and (ii)
adding the product of that portion, if any, of the Portfolio's
yield that is not tax-exempt. For purposes of this formula, tax-
exempt yield is a yield which is exempt from federal income tax.
The following table, which is based upon federal income tax rates in
effect on the date of this Statement of Additional Information, illustrates the
yields that would have to be achieved on taxable investments to produce a range
of hypothetical tax-equivalent yields:
Tax-Equivalent Yield Table
Federal Marginal
Income Tax Bracket
Tax-Equivalent Yields Based on Tax-Exempt Yields of:
4% 5% 6% 7% 8% 9% 10% 11%
28% 5.6 6.9 8.3 9.7 11.1 12.5 13.9 15.3
31% 5.8 7.2 8.7 10.1 11.6 13.0 14.5 15.9
36% 6.3 7.8 9.4 10.9 12.5 14.1 15.6 17.2
39.6% 6.6 8.3 9.9 11.6 13.2 14.9 16.6 18.2
D. Yield of the Short-Term Government Portfolio, Intermediate-Term
Bond Portfolio, and the Tax-Exempt Portfolio is calculated by
dividing the Portfolio's investment income for a 30-day period, net
of expenses, by the average number of shares entitled to receive
dividends during that period according to the following formula:
YIELD = 2[((a-b)/cd + 1)6-1]
Where:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day
of the period.
The result is expressed as an annualized percentage (assuming semiannual
compounding) of the maximum offering price per share at the end of the period.
Except as noted below, in determining interest earned during the period
(variable "a" in the above formula), the interest earned on each debt
instrument held by a Portfolio (or its corresponding Series) during the period
is calculated by: (i) computing the instrument's yield to maturity, based on
the value of the instrument (including actual accrued interest) as of the last
business day of the period or, if the instrument was purchased during the
period, the purchase price plus accrued interest; (ii) dividing the yield to
maturity by 360; and (iii) multiplying the resulting quotient by the value of
the instrument (including actual accrued interest). Once interest earned is
calculated in this fashion for each debt instrument held by the Portfolio (or
its corresponding Series), interest earned during the period is then determined
by totaling the interest earned on all debt instruments held by the Portfolio.
For purposes of these calculations, the maturity of a debt instrument
with one or more call provisions is assumed to be the next date on which the
instrument reasonably can be expected to be called or, if none, the maturity
date. In general, interest income is reduced with respect to debt instruments
trading at a premium over their par value by subtracting a portion of the
premium from income on a daily basis, and increased with respect to debt
instruments trading at a discount by adding a portion of the discount to daily
income.
For the 30-day period ended June 30, 1996, the yields for the Short-Term
Government Portfolio, Intermediate-Term Bond Portfolio and the Tax-Exempt
Portfolio were 5.99%, 6.56% and 4.47%, respectively.
Since yield accounting methods differ from the accounting methods used to
calculate net investment income for other purposes, a Portfolio's yield may not
equal the dividend income actually paid to investors or the net investment
income reported with respect to the Portfolio in the Fund's financial
statements.
Yield information may be useful in reviewing a Portfolio's performance
and in providing a basis for comparison with other investment alternatives.
Nevertheless, the Portfolios' yields fluctuate, unlike investments that pay a
fixed interest rate over a stated period of time. Investors should recognize
that in periods of declining interest rates, the Portfolios' yields will tend
to be somewhat higher than prevailing market rates, and in periods of rising
interest rates, the Portfolios' yields will tend to be somewhat lower. Also,
when interest rates are falling, the inflow of net new money to the Portfolios
from the continuous sale of their shares will likely be invested in instruments
producing lower yields than the balance of the Portfolios' holdings, thereby
reducing the current yields of the Portfolios. In periods of rising interest
rates, the opposite can be expected to occur.
E. Average Annual Total Return is the average annual compound rate of
return for the periods of one year, five years, ten years and the
life of a Portfolio, where quotations reflect changes in the price
of a Portfolio's shares, if any, and assume that all dividend and
capital gains distributions, if any, during the respective periods
were reinvested in Portfolio shares. Each Portfolio may advertise
its average annual total return from time to time. Average annual
total return is calculated by finding the average annual compound
rates of return of a hypothetical investment over such periods,
according to the following formula (average annual total return is
then expressed as a percentage):
T=(ERV/P)1/n - 1
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000
investment made at the beginning of the applicable period.
Average Annual Total Returns for the one-year period ended June 30,
1996 and for the periods from the effective date of the Fund's
registration statement under the Securities Act of 1933 or
commencement of operations1, whichever occurred later, through June
30, 1996:
1 year ended Since Effectiveness 1
June 30, 1996 through June 30, 1996
Money Market Portfolio 5.61% 5.71%
Short-Term Government Portfolio 4.66% 6.96%
Intermediate-Term Bond Portfolio 4.48% 8.40%
Tax-Exempt Portfolio 4.55% 6.59%
Equity Portfolio 19.24% 21.70%
1 The Money Market Portfolio, Short-Term Government Portfolio,
Intermediate-Term Bond Portfolio and Tax-Exempt Portfolio became
effective on December 6, 1994. The Equity Portfolio commenced
operations on January 5, 1995.
F. Cumulative Total Return is the cumulative rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect the change in the price
of a Portfolio's shares, if any, and assume that all dividends and
capital gains distributions, if any, during the period were
reinvested in Portfolio shares. Cumulative total return is
calculated by finding the cumulative rates of return of a
hypothetical investment over such periods, according to the
following formula (cumulative total return is then expressed as a
percentage):
C = (ERV/P) - 1
Where: C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value: ERV is the value, at the end
of the applicable period, of a hypothetical $1,000
investment made at the beginning of the applicable
period.
Cumulative Total Returns for the one-year period ended June 30,
1996 and for the periods from the effective date of the Fund's
registration statement under the Securities Act of 1933 or
commencement of operations1 , whichever occurred later, through
June 30, 1996:
1 year ended Since Effectiveness 1
June 30, 1996 through June 30, 1996
Money Market Portfolio 5.61% 9.11%
Short-Term Government Portfolio 4.66% 11.13%
Intermediate-Term Bond Portfolio 4.48% 13.50%
Tax-Exempt Portfolio 4.55% 10.54%
Equity Portfolio 19.24% 33.93%
1 The Money Market Portfolio, Short-Term Government Portfolio,
Intermediate-Term Bond Portfolio and Tax-Exempt Portfolio became
effective on December 6, 1994. The Equity Portfolio commenced
operations on January 5, 1995.
The preceding performance figures were affected by fee waivers and
expenses assumed by the Portfolios' investment manager. Without such fee
waivers and expense assumptions, the performance figures quoted above would
have been lower.
The Portfolios may also from time to time present some or all of their
investments ranked by their percentage representation within the respective
Portfolio or in the form of the schedule of "Investments" included in the
Annual Report to the shareholders of the Portfolios as of and for the fiscal
year ended June 30, 1996, a copy of which follows and is part of this document.
Performance advertisements for the Money Market Portfolio and the Rated
Money Market Portfolio may include yield calculations for the 7-day period
ending on the most recent practicable date considering the media used for the
advertisement. Performance advertisements for the other four Portfolios may
include average annual total returns and 30-day yield calculations as of the
end of the most recent quarter practicable considering the media used for the
advertisement. Such advertisements may include a schedule of investments for
the corresponding date, employing presentation principles used in annual
reports to shareholders.
To help investors better evaluate how an investment in a Portfolio might
satisfy their investment objective, advertisements regarding a Portfolio may
discuss yield or total return as reported by various financial publications.
Advertisements may also compare yield or total return to other investments,
indices and averages. The following publications, benchmarks, indices, and
averages may be used: Lipper Mutual Fund Performance Analysis; Lipper Fixed
Income Analysis; Lipper Mutual Fund Indices; Salomon Brothers Indices; Lehman
Brothers Indices; Dow Jones Composite Average or its component indices;
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") or its
component indices; The New York Stock Exchange composite or component indices;
CDA Mutual Fund Report; Weisenberger - Mutual Fund Panorama and Investment
Companies; Mutual Fund Values and Mutual Fund Service Book, published by
Morningstar, Inc.; and financial publications such as Business Week,
Kiplinger's Personal Finance, Financial World, Forbes, Fortune, Money Magazine,
The Wall Street Journal, Barron's, et al., which rate mutual fund performance
over various time periods.
Currently the performance of the Kiewit Money Market Portfolio and the
Rated Money Market Portfolio may be compared to the performance of IBC's Money
Fund Average. The IBC's Money Fund Average is a composition of all reporting
money market funds with similar objectives and restrictions. The Kiewit Short-
Term Government Portfolio is currently compared to the Lehman 1-3 Year
Government Index. The Lehman 1-3 Year Government Index is a total return
performance benchmark consisting of U.S. Government agency and Treasury
securities with maturities from one to three years. The Kiewit Intermediate-
Term Bond Portfolio is currently compared to the Lehman Intermediate Corporate
Index. The Lehman Intermediate Corporate Index is a total return performance
benchmark consisting of publicly issued corporate debt issues rated at least
investment grade with maturities from one to ten years. The Kiewit Tax-Exempt
Portfolio is currently compared to the Lehman 5-Year Municipal Bond Index. The
Lehman 5-Year Municipal Bond Index is a total return performance benchmark
consisting of tax-exempt municipal bonds rated at least investment grade with
maturities from four to six years. The Kiewit Equity Portfolio is currently
compared to the S&P 500. The S&P 500 is an unmanaged capitalization weighted
index of five hundred publicly traded stocks.
OTHER INFORMATION
The Fund does not intend to hold annual meetings; it may, however, hold a
meeting for such purposes as changing fundamental investment limitations,
approving a new investment management agreement or any other matters which are
required to be acted on by shareholders under the 1940 Act. Shareholders may
receive assistance in communicating with other shareholders in connection with
the election or removal of Trustees similar to the provisions contained in
Section 16(c) of the 1940 Act.
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, a Delaware-chartered banking institution, is the
Fund's Custodian.
Price Waterhouse LLP, Thirty South 17th Street, Philadelphia,
Pennsylvania 19103, is the Fund's independent accountant.
KIEWIT MUTUAL FUND
Items Required By Form N-1A
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Included in the Prospectus (Part A):
Financial Highlights for Kiewit Mutual Fund for the Period Ended
June 30, 1996.
Included in the Statement of Additional Information (Part B):
(i) Report of Independent Public Accountants
dated July 26, 1996
(ii) Audited Financial Statements of Kiewit
Money Market Portfolio for the Period
Ended June 30, 1996
(iii) Audited Financial Statements of Kiewit
Short-Term Government Portfolio for the
Period Ended June 30, 1996
(iv) Audited Financial Statements of Kiewit
Intermediate-Term Bond Portfolio for the
Period Ended June 30, 1996
(v) Audited Financial Statements of Kiewit
Tax-Exempt Portfolio for the Period Ended
June 30, 1996
(vi) Audited Financial Statements of Kiewit
Equity Portfolio for the Period Ended June
30, 1996
(b) Exhibits:
Exhibit No. Description of Exhibit
(1) (i) Agreement and Declaration of Trust*
(ii) Certificate of Trust*
(iii) Certificate of Amendment to Certificate of
Trust**
(2) By-Laws*
(3) None
(4) (i) Specimen Certificate of Kiewit Money Market
Fund*
(ii) Specimen Certificate of Kiewit Short-Term
Government Fund*
(iii) Specimen Certificate of Kiewit Intermediate-
Term Bond Fund*
(iv) Specimen Certificate of Kiewit Tax-Exempt
Fund*
(v) Specimen Certificate of Kiewit Equity Fund*
(5) (i) Investment Management Agreement re
Kiewit Money Market Portfolio**
(ii) Investment Management Agreement re
Kiewit Short-Term Government Portfolio**
(iii) Investment Management Agreement re
Kiewit Intermediate-Term Bond Portfolio**
(iv) Investment Management Agreement re
Kiewit Tax-Exempt Portfolio**
(v) Investment Management Agreement re
Kiewit Equity Portfolio**
(6) Distribution Agreement with Rodney Square Distributors, Inc.**
(7) None
(8) Custody Agreement with Wilmington Trust Company*
(9) (i) Amended and Restated Transfer Agency
Agreement with Rodney Square
Management Corporation**
(ii) Amended and Restated Accounting Services
Agreement with Rodney Square
Management Corporation**
(iii) Amended and Restated Administration
Agreement with Rodney Square
Management Corporation**
(iv) Sub-Administration Agreement between
Kiewit Investment Management Corp. and
Treasury Strategies, Inc.*
(10) Not applicable
(11) Consent of Independent Accountants
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15) Form of Plan of Distribution Pursuant to Rule 12b-1
under the Investment Company Act of 1940
(16) Schedule of Performance Calculations***
(17) Financial Data Schedule***
(18) Form of Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940
* Previously filed with the Securities and Exchange Commission on Form N-1A on
July
25, 1994 and incorporated herein by reference.
** Previously filed with the Securities and Exchange Commission with Pre-
Effective
Amendment No. 2 on Form N1-A on November 29, 1994 and incorporated herein by
reference.
*** Previously filed with the Securities and Exchange Commission with Post-
Effective
Amendment No.2 on Form N1-A on September 30, 1996 and incorporated herein by
reference.
Item 25. Persons controlled by or under common control with Registrant.
None.
Item 26. Number of Holders of Securities.
Number of Record Holders
K Class Shares as of November 30, 1996
Shares of Beneficial Interest, Par Value $.01
Kiewit Money Market Portfolio 114
Kiewit Short-Term Government Portfolio 22
Kiewit Intermediate-Term Bond Portfolio 26
Kiewit Tax-Exempt Portfolio 5
Kiewit Equity Portfolio 42
Item 27. Indemnification.
Reference is made to Article VII of the Registrant's Agreement and Declaration
of Trust (Exhibit 24(b)(1)(i)) and to Article X of the Registrant's By-Laws
(Exhibit 24(b)(2)), which are incorporated herein by reference. Pursuant to
Rule 484 under the Securities Act of 1933, as amended, the Registrant
furnishes the following undertaking:
"Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue."
Item 28. Business and Other Connections of Investment Adviser.
Kiewit Investment Management Corp. (the "Manager") is a Delaware corporation
organized in 1994. Under Investment Management Agreements with respect to
each Portfolio, dated November 15, 1994, the Manager, subject to the
supervision of the Board of Trustees, provides investment management services
to each Portfolio. Kiewit Diversified Holdings Inc., a wholly-owned
subsidiary of Kiewit Diversified Group Inc. ("KDG") owns 60% of the Manager
and Kiewit Construction Company, a wholly-owned subsidiary of Kiewit
Construction Group Inc. ("KCG") owns the remaining 40% of the Manager. Both
KDG and KCG are wholly-owned by Peter Kiewit Sons', Inc.
The business, profession, vocation or employment of a substantial nature in
which each director and officer of the Manager and Rodney Square is or has
been , during the past two fiscal years, engaged for his own account in the
capacity of director, officer, employee, partner or trustee is set forth
below.
Kiewit Investment Management Corp.
Richard R. Jaros is a director of the Manager. Mr. Jaros is also Executive
Vice President and a Director of Peter Kiewit Sons', Inc. ("PKS") and
President of Kiewit Diversified Group Inc.
Walter Scott, Jr. is a Director of the Manager. Mr. Scott is also Chairman
and President of PKS.
Kenneth E. Stinson is a Director of the Manager. Mr. Stinson is also
Executive Vice President of PKS and Chairman and President of Kiewit
Construction Group ("KCG").
Ann C. McCulloch is President of the Manager. Ms. McCulloch is also President
and the Chairman of the Fund, and Vice President and Treasurer of PKS.
Kenneth D. Gaskins, Esquire is a Vice President and Secretary of the Manager.
Mr. Gaskins is also the Secretary of the Fund and Corporate Counsel of PKS.
P. Greggory Williams is a Vice President and Chief Investment Officer of the
Manager. Mr. Williams is also the Chief Financial Officer, Vice President and
Treasurer of the Fund.
Brian J. Mosher is a Vice President of the Manager. Mr. Mosher is also a Vice
President of the Fund.
Item 29. Principal Underwriters
(a) The Rodney Square Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Fixed-Income Fund
The Rodney Square Multi-Manager Fund
Heitman Securities Trust/Institutional Class
1838 Investment Advisors Funds
The Olstein Funds
The HomeState Group
(b) The principal business address for the Officers and Directors of
Rodney Square Distributors, Inc. is: 1100 North Market Street,
Wilmington, DE 19890-0001.
(1) (2) (3)
Position
Name and Principal Position and Offices with and Offices
Business Address Rodney Square Distributors, Inc. with Registrant
Jeffrey O. Stroble President, Secretary, None
Treasurer & Director
Martin L. Klopping Director None
Cornelius G. Curran Vice President None
(c) None.
Item 30. Locations of Accounts and Records
All accounts and records are maintained by the Registrant, or on its behalf by
the Fund's administrator, transfer agent, dividend paying agent and accounting
services agent, Rodney Square Management Corporation, at Rodney Square North,
1100 North Market Street, Wilmington, DE 19890.
Item 31. Management Services.
There are no management-related service contracts not discussed in Part A or
Part B.
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
11 Consent of Independent Accountants
15 Form of Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act of 1940
18 Form of Plan Pursuant to Rule 18f-3 under the
Investment Company Act of 1940
Exhibit 24 (b) 11
Consent of Independent Accountants
We hereby consent to the use in the Statements of Additional Information
constituting part of this Post-Effective Amendment No. 3 to the
registration statement on Form N-1A (the "Registration Statement") of
our report dated July 26, 1996, relating to the financial statements and
financial highlights of Kiewit Mutual Fund, which appears in such
Statements of Additional Information, and to the incorporation by
reference of our report into the Prospectuses which constitute part of
this Registration Statement. We also consent to the references to us
under the headings "Financial Statements" and "Other Information" in
such Statements of Additional Information and to the reference to us
under the hearing "Financial Highlights" in such Prospectuses.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Philadelphia, PA
December 20, 1996
EXHIBIT 24(b)(15)
DISTRIBUTION PLAN OF KIEWIT MUTUAL FUND
The following Distribution Plan (the "Plan") has been adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by
Kiewit Mutual Fund (the "Fund") for the use of the Fund's S Class shares. The
Plan has been approved by a majority of the Fund's Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Fund and who have no direct or indirect financial interest in the operation of
the Plan (the "non-interested trustees"), cast in person at a meeting called
for the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees considered the
proposed schedule and nature of payments and terms of the advisory agreement
between the Fund and Kiewit Investment Management Corp. (the "Adviser"), and
the underwriting agreement between the Fund and Rodney Square Distributors,
Inc. (the "Distributor"). The Board of Trustees concluded that the proposed
compensation of the Adviser under the advisory agreement, and of the
Distributor under the underwriting agreement is fair and not excessive.
Accordingly, the Board determined that the Plan should provide for such
payments and that adoption of the Plan would be prudent and in the best
interests of the Fund and its shareholders. Such approval included a
determination that in the exercise of their reasonable business judgment and
in light of their fiduciary duties, there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
The Provisions of the Plan are:
1. The Fund shall reimburse the Distributor, or the Adviser or
others through the Distributor, for all expenses incurred by such parties in
the promotion and distribution of the Fund's S Class shares, including but not
limited to, the printing of prospectuses and reports used for sales purposes,
expenses of preparation of sales literature and related expenses,
advertisements, and other distribution-related expenses, as well as any
distribution or service fees paid to securities dealers or others who have
executed a servicing agreement with the Fund or the Distributor, which form of
agreement has been approved by the Trustees, including the non-interested
trustees.
2. The maximum aggregate amount which may be reimbursed by the
S Class shares of the Fund to such parties pursuant to Paragraph 1 herein
shall be 0.25% per annum of the average daily net assets of the S Class
shares. Said reimbursement shall be made monthly by the Fund to such parties.
3. The Adviser and the Distributor shall collect and monitor
the documentation of payments made under paragraphs 1 and 2 above, and shall
furnish to the Board of Trustees of the Fund, for their review, on a quarterly
basis, a written report of the monies reimbursed to them and others under the
Plan as to the Fund, and shall furnish the Board of Trustees of the Fund with
such other information as the Board may reasonably request in connection with
the payments made under the Plan as to the Fund in order to enable the Board
to make an informed determination of whether the Plan should be continued.
4. The Plan shall continue in effect for a period of more than
one year only so long as such continuance is specifically approved at least
annually by the Fund's Board of Trustees, including the non-interested
trustees, cast in person at a meeting called for the purpose of voting on the
Plan.
5. The Plan, or any agreements entered into pursuant to this
Plan, may be terminated at any time, without penalty, by vote of a majority of
the outstanding voting securities of the Fund, or by vote of a majority of the
non-interested Trustees, on not more than sixty (60) days' written notice, and
shall terminate automatically in the event of any act that constitutes an
assignment of the management agreement between the Fund and the Manager.
6. The Plan and any agreements entered into pursuant to this
Plan may not be amended to increase materially the amount to be spent by the
Fund for distribution pursuant to Paragraph 2 hereof without approval by a
majority of the Fund's outstanding voting securities.
7. All material amendments to the Plan, or any agreements
entered into pursuant to this Plan, shall be approved by the non-interested
trustees cast in person at a meeting called for the purpose of voting on any
such amendment.
8. So long as the Plan is in effect, the selection and
nomination of the Fund's non-interested trustees shall be committed to the
discretion of such non-interested trustees.
9. This Plan shall take effect on the ____ day of March, 1997.
This Plan and the terms and provisions thereof are hereby accepted
and agreed to by the Fund, the Adviser and the Distributor as evidenced by
their execution hereof.
KIEWIT MUTUAL FUND
By:
KIEWIT INVESTMENT MANAGEMENT CORP.
By:
By:
RODNEY SQUARE DISTRIBUTORS, INC.
By:
EXHIBIT 24(b)18
KIEWIT MUTUAL FUND
Multiple Class Plan Pursuant to Rule 18f-3
I. Introduction
This Multiple Class Plan (the "Plan") has been adopted by a
majority of the Board of Trustees of Kiewit Mutual Fund (the "Fund"),
including a majority of the Trustees who are not interested persons of the
Fund, pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "Act").
Rule 18f-3 requires that the Board of an investment company
desiring to offer multiple classes of shares pursuant to said Rule adopt a
plan setting forth the differences among the classes with respect to
shareholder services, distribution arrangements, expense allocations and any
related conversion features or exchange privileges. The Plan provides a
detailed statement of the differences between the Fund's two classes of
shares.
The Fund's Board of Trustees, including a majority of the non-
interested Trustees, has determined that the Plan, including the allocation of
expenses, is in the best interests of the Fund as a whole, each series of
shares offered by the Fund (a "Portfolio") and each class of shares offered by
a Portfolio.
II. Elements of the Plan
1. Class Designation: Each Portfolio's shares shall be divided
into K Class shares and S Class shares. The existing shares of each Portfolio
of the Fund are to be redesignated as K Class shares.
2. Differences in Availability: S Class shares shall be
available to all investors and will be sold by Rodney Square Distributors,
Inc. (the "Distributor") and by banks, securities brokers or dealers and other
financial institutions that have entered into a Selling Agreement with the
Fund's Distributor. K Class shares will be available only to existing K Class
shareholders and to certain other investors.
3. Differences in Distribution Arrangements: S Class shares
shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1 under
the 1940 Act. The Distribution Plan for S Class shares allows each Portfolio
of the Fund to spend annually up to 0.25% of its average daily net assets
attributable to S Class shares to reimburse the Distributor for distribution
activities and expenses primarily intended to result in the sale of S Class
shares.
K Class shares shall not be subject to a Distribution Plan.
4. Differences in Shareholder Services: Other than any
shareholder services that may be provided under the S Class shares'
Distribution Plan, the services offered to shareholders of each Class shall be
the same.
5. Expense Allocation. The following expenses shall be
allocated on a Class-by-Class basis:
(a) fees under the Distribution Plan;
(b) transfer agency and other recordkeeping costs;
(c) Securities and Exchange Commission and blue sky registration
or qualification fees;
(d) printing and postage expenses related to printing and
distributing class specific materials, such as shareholder
reports, prospectuses and proxies to current shareholders of
a particular class or to regulatory authorities with respect
to such class of shares;
(e) audit or accounting fees or expenses relating solely to such
class;
(f) the expenses of administrative personnel and services as
required to support the shareholders of such class;
(g) litigation or other legal expenses relating solely to such
class of shares;
(h) Trustees' fees and expenses incurred as a result of issues
relating solely to such class of shares; and
(i) other expenses subsequently identified and determined to be
properly allocated to such class of shares.
6. Conversion Features. There shall be no automatic conversion
feature for either the K Class or S Class shares.
7. Exchange Privileges. K Class shares shall be exchangeable
only for K Class shares of other Portfolios of the Fund. S Class shares shall
be exchangeable only for S Class shares of other Portfolios of the Fund.
8. Voting and Other Rights. Each class shall have: (a)
exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangements; (b) separate voting rights on any matter submitted
to shareholders in which the interests of one class differ from the interests
of the other class; and (c) in all other respects, the same rights and
obligation as each other class.
Dated: February __, 1997
