Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
Subject to Completion, dated June 27, 1997
PROSPECTUS
____________, 1997
[Logo]
Kopp Funds
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-________
Facsimile: 1-612-________
Website: www.koppfunds.com
Kopp Funds ("Corporation") is an open-end,
non-diversified management investment company, commonly
referred to as a mutual fund. The Corporation
currently comprises one portfolio: the Kopp Emerging
Growth Fund ("Fund"). The Fund's investment objective
is long-term capital appreciation. The Fund seeks to
achieve its investment objective by investing primarily
in common stocks of companies that Kopp Investment
Advisors ("Advisor") believes have the potential for
superior growth. When the Fund's assets total $1
billion, no new accounts, other than certain qualified
retirement plan accounts, will be accepted. If you are
a shareholder of record at that time, however, you will
be able to continue to add to your account through new
purchases, including purchases through reinvestment of
dividends or capital gains distributions.
You may invest in the Fund by purchasing either
Class A or Class I shares. Fund shares may be
purchased at a price equal to their net asset value (i)
plus an initial charge imposed at the time of purchase
("Class A shares") or (ii) without any initial sales
charge if the minimum investment is $5 million ("Class
I shares"). Certain purchasers of Class A shares may
have the initial sales charge waived but become subject
to a contingent deferred sales charge ("CDSC") on early
redemptions of the shares. The Class A shares are also
subject to a Rule 12b-1 plan pursuant to which an
aggregate annual fee of 0.35% is charged on the average
net assets of the Fund attributable to that class.
The Fund is a long-term investment, intended to
complement your other investments. Under federal
securities laws, the Fund is "not diversified." As a
result, it may be more vulnerable than a "diversified"
fund to fluctuations in the value of the companies in
the Fund's portfolio.
This Prospectus contains information you should
consider before you invest in the Fund. Please read it
carefully and keep it for future reference. A
Statement of Additional Information ("SAI") for the
Fund, dated __________, 1997, contains further
information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and
Exchange Commission ("SEC"). The SAI, which may be
revised from time to time, is available without charge
upon request to the above-noted address, telephone
number, or website.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INVESTOR EXPENSES
The following information is provided to help you
understand the various costs and expenses that you, as
an investor in the Fund, will bear directly or
indirectly.
Class A Class I
($5,000 ($5 million
minimum) minimum)
Shareholder Transaction Expenses(1)
Maximum sales charge imposed on purchases
(as a percentage of offering price) 3.50%(2) None
Maximum sales charge imposed on
reinvested amounts None None
Deferred sales charge imposed
on redemptions (as a percentage of
amount redeemed) 1.00%(3) None
Redemption fee None 1.00%(4)
Exchange fee None None
Annual Fund Operating Expenses
(after waivers or reimbursements)
(as a percentage of average net assets)
Management fee 1.00% 1.00%
Rule 12b-1 fees(5)
Distribution fees 0.10% None
Shareholder servicing fees 0.25% None
Other expenses(6) 0.15% 0.15%
Total operating expenses(6) 1.50% 1.15%
____________
(1)In addition to these expenses, shareholders who
choose to redeem shares by wire will be charged a
$12 service fee. See "Your Account."
(2)This sales charge is the maximum applicable to
purchases of Class A shares. Certain investors may
not have to pay this sales charge, and reduced
sales charges are available under certain
circumstances. See "Your Account."
(3)A CDSC of 1% may be imposed on redemptions of
certain Class A shares which were purchased without
a sales charge and redeemed within 24 months of
purchase. See "Your Account."
(4)A redemption fee of 1% may be imposed on
redemptions of Class I shares made within 24 months
of purchase. This fee becomes the property of the
Fund.
(5)See "Distribution and Shareholder Servicing Plan"
for detailed information relating to the Rule 12b-1
distribution and shareholder servicing plan
("Plan"). The Rule 12b-1 fee applicable to Class A
shares is currently set at 0.35% of the average
daily net asset value; however, the Plan allows the
Fund to pay up to 0.50% in such fees. Furthermore,
while the Fund currently has no intention of paying
any Rule 12b-1 fees in connection with the Class I
shares, the Plan allows the Fund to pay up to 0.50%
in such fees. Consistent with the National
Association of Securities Dealers, Inc.'s ("NASD")
rules, Rule 12b-1 fees could cause long-term
investors of the Fund to pay more than the economic
equivalent of the maximum front-end sales charges
permitted under those rules.
(6)For the fiscal year ending September 30, 1998,
Advisor has agreed to waive its management fee
and/or reimburse the Fund's operating expenses to
the extent necessary to ensure that (i) the total
operating expenses for the Class A shares do not
exceed 1.50% and (ii) the total operating expenses
for the Class I shares do not exceed 1.15%. "Other
expenses" have been estimated for the current
fiscal year since the Fund did not begin operations
until October ___, 1997, and are presented net of
reimbursements. Absent these reimbursements, other
expenses and total operating expenses for the Class
A shares are estimated to be 0.40% and 1.75%,
respectively, and other expenses and total
operating expenses for the Class I shares are
estimated to be 0.40% and 1.40%, respectively. For
additional information, see "Fund Organization and
Management."
<PAGE>
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return.
Class A(1)+ Class A(1)++ Class I(2)+ Class I+++
After 1 year $50 $26 $22 $12
After 3 years $81 $47 $37 $37
__________
+ Assumes redemption at end of period.
++ Assumes redemption at end of period
and payment of no initial sales charge.
+++Assumes no redemption at end of period.
(1)Only the 3.50% maximum sales charge
imposed on purchases of Class A shares is
reflected in the Example.
(2)The 1% redemption fee imposed on certain
redemptions of Class I shares is reflected in
the Example.
The Example is based on the above-described "Total
operating expenses." The amounts in the Example may
increase absent waivers or reimbursements. REMEMBER
THAT THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND THAT
ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN. The assumption in the Example of a 5% annual
return is required by SEC regulations. The assumed 5%
annual return is not a prediction of, and does not
represent, the projected or actual performance of the
Fund's shares.
<PAGE>
CONTENTS
INVESTOR EXPENSES INSIDE FRONT COVER
HIGHLIGHTS 5
INVESTMENT STRATEGY 7
IMPLEMENTATION OF POLICIES AND RISKS 7
INVESTMENT OBJECTIVE AND RESTRICTIONS 8
PRIOR PERFORMANCE OF INVESTMENT ADVISOR 11
FUND ORGANIZATION AND MANAGEMENT 14
YOUR ACCOUNT 22
DETERMINATION OF NET ASSET VALUE 22
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN 23
TAX-SHELTERED RETIREMENT PLANS 24
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT 24
FUND PERFORMANCE 25
ADDITIONAL INFORMATION OUTSIDE BACK COVER
No person has been authorized to give any
information or to make any representations other than
those contained in this Prospectus and the SAI, and if
given or made, such information or representations may
not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which
such offering may not lawfully be made.
<PAGE>
HIGHLIGHTS
What is the objective of the Fund?
The Fund's goal is long-term capital appreciation.
The Fund seeks to achieve its goal by investing
primarily in common stocks of companies that Advisor
believes have the potential for superior growth.
Advisor will not consider dividend income in the
selection of investments. See "Investment Strategy"
and "Investment Objective and Restrictions."
In what types of companies/securities will the Fund
invest?
Advisor intends to invest primarily in emerging
and re-emerging companies with small-to-medium market
capitalizations and significant potential for
accelerating earnings growth. Advisor believes that, as
part of a complete investment program, these types of
companies may present an opportunity for significant
long-term appreciation in an investor's wealth.
Under normal circumstances, the Fund will be fully
invested in common stocks, except that a small portion
of the Fund's assets may be held in short-term money
market securities and cash to pay redemption requests
and Fund expenses. Under unusual circumstances, as a
defensive technique, the Fund may retain a larger
portion of cash and/or invest more assets in money
market instruments deemed by Advisor to be consistent
with a temporary defensive posture. The Fund may but
does not intend to leverage its assets or invest in
options, futures, derivative contracts, or other exotic
securities or arrangements. See "Implementation of
Policies and Risks."
What are the potential risks of investing in the Fund?
Because the Fund will invest primarily in small-to-
medium capitalization stocks, which are more volatile
than investments in larger companies, you should expect
that the value of the Fund's shares will be more
volatile than the shares of a fund that invests in
larger capitalization stocks. Thus, especially in the
short term, the share price will fluctuate and may, at
redemption, be worth more, or less, than the initial
purchase price. In addition, because the Fund has
elected not to be subject to the diversification rules
of the Investment Company Act of 1940, as amended
("1940 Act"), a relatively larger percentage of the
Fund's assets may be invested in relatively fewer
companies than is typical of other mutual funds. This
concentration may increase volatility. Because the
Fund intends to qualify as a regulated investment
company under federal income tax laws, it will be
subject to the diversification requirements of the
Internal Revenue Code of 1986, as amended ("Code").
Other risks associated with investing in the Fund
include:
Certain securities may be difficult or
Liquidity impossible to sell at the time and the
Risk: price that the Fund seeks.
Market The market value of a security may move
Risk: up and down, sometimes rapidly and
unpredictably due to sector rotation or
other market trends.
An investment opportunity may be missed
Opportunity because the assets necessary to take
Risk: advantage of it are tied up in less
advantageous investments.
A strategy used by Advisor may fail to
Management produce the intended result.
Risk:
See "Implementation of Policies and Risks."
Is an investment in the Fund appropriate for me?
The Fund is suitable for long-term investors only.
It is not a short-term investment vehicle.An investment
in the Fund may be appropriate if you:
seek long-term capital appreciation;
seek a mutual fund for the aggressive equity
portion of your portfolio;
<PAGE>
have no immediate financial requirements for this
investment; and
are willing to accept a high degree of volatility.
The Fund is designed for investors who have the
financial ability to undertake greater risk in exchange
for the opportunity to realize greater financial gains
in the future. See "Investment Objective and
Restrictions."
Who will manage my investment?
Kopp Investment Advisors serves as investment
advisor to the Fund. As of June 13, 1997, Advisor
managed over $3 billion for individual and
institutional clients. See "Fund Organization and
Management."
How can I buy or redeem Fund shares?
Class A shares are offered at net asset value plus
a maximum initial sales charge of 3.50% of the offering
price. The sales charge may be waived and/or reduced
under certain circumstances. If purchased with a sales
load, Class A shares may be redeemed at net asset value
without the payment of a redemption charge. A CDSC of
1% may be imposed upon redemptions of Class A shares
made within 24 months of purchase if the purchase was
exempt from the initial sales charge because the amount
of the purchase was between $1 and $5 million. For
minimum investments of $5 million, Class I shares of
the Fund are offered without a sales charge. However,
a 1% redemption fee may be imposed upon Class I shares
sold within 24 months of purchase. In addition, the
Fund has adopted a distribution and shareholder
servicing plan under Rule 12b-1 of the 1940 Act, which
authorizes the Fund to pay a yearly distribution fee of
up to 0.25% and a yearly shareholder servicing fee of
up to 0.25% of the average daily net assets of the Fund
attributable to each class. For the foreseeable future
the Fund (i) intends to pay distribution fees of 0.10%
and servicing fees of 0.25% of the average daily net
assets attributable to the Class A shares and (ii)
intends to pay no Rule 12b-1 fees with respect to the
Class I shares. See "Your Account" and "Distribution
and Shareholder Servicing Plan."
The minimum initial investment in Class A shares
is $5,000 ($2,000 for retirement accounts), with a
minimum subsequent investment of $100. The minimum
initial investment in Class I shares is $5 million,
with no minimum subsequent investment requirement. The
minimum initial investment using the Automatic
Investment Plan, which is only available for purchases
of Class A shares, is $3,000 with a minimum automatic
monthly investment of $50. These minimums may be
changed or waived at any time by the Fund. See "Your
Account."
What is the policy regarding dividends and other
distributions?
You should not expect income from this Fund.
However, as required by law, to avoid double taxation,
the Fund will distribute substantially all of its net
realized capital gains and net investment income, if
any, to shareholders annually in the form of a
distribution and/or dividend, taxable to you as capital
gain or ordinary income. In the absence of specific
instructions to the contrary, distributions and
dividends will be reinvested in additional Fund shares
and will not be available for the payment of taxes. To
the extent possible, Advisor intends to minimize tax
consequences to investors by minimizing portfolio
turnover. See "Dividends, Capital Gains Distributions
and Tax Treatment" and "Implementation of Policies and
Risks."
Who should I contact if I have questions?
Any questions or communications regarding a
shareholder account should be directed to your
registered representative at your broker-dealer.
General inquiries regarding the Fund can be directed
either to your investment professional or to the Fund
at the address, telephone number, or website listed on
the cover page of this Prospectus.
<PAGE>
INVESTMENT STRATEGY
Advisor seeks investments in high-growth companies
that have market capitalizations of less than $2
billion. Advisor's general strategy is to be fully
invested, holding securities for their long-term growth
potential over a three- to five-year time frame.
Although Advisor's investment strategy is based on
company fundamentals, companies considered by Advisor
to be "high growth" are often in the same or related
market sectors. Thus, the Fund may be heavily invested
in a single sector. One sector, however, like
technology, may include numerous subsectors or
industries, like networking, telecommunications,
software, semiconductors, or voice-processing. The
Fund may be concentrated in one sector, while being
diversified among several industries. In addition, the
Fund may take relatively large positions in a single
issuer. To the extent the Fund is concentrated, it
will be susceptible to adverse economic, political,
regulatory, or market developments affecting a single
sector, industry or issuer.
When making purchase decisions for the Fund,
Advisor uses a "buy discipline" that involves three key
components: research, fundamentals, and valuation.
Advisor gathers research on potential investment
candidates from a wide variety of sources. To further
qualify prospective investments, it analyzes
information from corporate contacts, industry
conferences, and visits with company management. Once
the research phase is complete, Advisor reviews certain
fundamental attributes that it believes a "buy"
candidate should possess, including (i) management
excellence, (ii) leading industry position or product,
(iii) projected annual revenue or sales growth of 15%
or more and projected earnings growth of 20% or more,
(iv) significant investment in research and
development, and (v) strong financial position
including a low debt to total capital ratio. Finally,
Advisor values companies by considering price to sales
ratios and price to earnings ratios within a peer
group. The price to earnings ratio relative to a
company's forecasted growth rate is the most important
measure in Advisor's quantitative analytical process.
Advisor then constructs a list of securities for the
Fund and purchases them when their prices are within a
pre-determined range. Companies are monitored
continually for variations from expectations.
Advisor makes sell decisions for the Fund based on
a number of factors, including significant
deterioration in a company's underlying fundamentals,
strong price appreciation which suggests an
overweighted position or overvalued security, change in
theme or sector orientation, or better relative value
in other securities.
IMPLEMENTATION OF POLICIES AND RISKS
In implementing its investment strategy, the Fund
may use the following securities and investment
techniques. Some of these securities and investment
techniques involve special risks, which are described
below, elsewhere in this Prospectus, and in the Fund's
SAI.
Common Stocks and Other Equity Securities
The Fund will invest in common stocks and other
equity securities. Other equity securities may include
depositary receipts and warrants and other securities
convertible or exchangeable into common stock. Common
stocks and other equity securities generally increase
or decrease in value based on the earnings of a company
and on general industry and market conditions. A fund
that invests a significant amount of its assets in
common stocks and other equity securities is likely to
have greater fluctuations in share price than a fund
that invests a significant portion of its assets in
fixed-income securities.
Small Capitalization Companies
Not only will the Fund invest in common stocks,
but it will invest a substantial portion of its assets
in the common stocks of small companies. While
companies with a smaller market capitalizations have
the potential for significant capital appreciation, the
equity securities of these companies also involve
greater risks than larger, more established companies.
Small-cap companies may lack the management experience
or depth, financial resources, product diversification,
and competitive strength of large-cap companies. The
market for small-cap securities is generally less
liquid and subject to greater price volatility than the
market for large-cap securities.
<PAGE>
Non-Diversification and Sector Concentration
As a "non-diversified" fund, the Fund is permitted
to invest its assets in a more limited number of
issuers than other investment companies. Under the
Code, however, for income tax purposes the Fund (i) may
not invest more than 25% of its assets in the
securities of any one company or in the securities of
any two or more companies controlled by the Fund which,
pursuant to regulations under the Code, may be deemed
to be engaged in the same, similar, or related trades
or businesses and (ii) with respect to 50% of its
assets, may not invest more than 5% of its assets in
the securities of any one company and may not own more
than 10% of the outstanding voting securities of a
single company. Thus, as a "non-diversified" fund, the
Fund may invest up to 50% of its assets in the
securities of as few as two companies, up to 25% each,
so long as the Fund does not control the two companies
or so long as the two companies are engaged in
different businesses, and up to 50% of its assets in
the securities of as few as ten companies, up to 5%
each, so long as the Fund does not own in excess of 10%
of any company's outstanding voting stock. This
practice involves an increased risk of loss to the Fund
if the market value of a security should decline or its
issuer were otherwise unable to meet its obligations.
The Fund intends to invest more than 25% of its
assets in securities of companies in one or more market
sectors, such as the technology or health-care sector.
A market sector may be made up of companies in a number
of different industries. The Fund will only
concentrate its investments in a particular market
sector if Advisor believes that the potential
investment return justifies the additional risk
associated with concentration in that sector.
Portfolio Turnover
A change in the investments held by the Fund is
known as "portfolio turnover." Portfolio turnover
generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and
reinvestment in other securities. Such sales may
result in realization of taxable capital gains. Under
normal market conditions, the anticipated portfolio
turnover rate for the Fund is expected to be under 50%
annually.
Temporary Strategies
Pending investment of proceeds from new sales of
Fund shares, to meet ordinary daily cash needs and to
retain the flexibility to respond promptly to changes
in market and economic conditions, Advisor may hold
cash and/or invest all or a portion of the Fund's
assets in money market instruments, which are short-
term fixed income securities issued by private and
governmental institutions. It is impossible to predict
when or for how long Advisor may employ such
strategies. Money market instruments in which the Fund
may invest include securities issued or guaranteed by
the U.S. government or its agencies (Treasury bills,
notes, and bonds); obligations of banks subject to
regulation by the U.S. government; obligations of
savings banks and savings and loan associations; fully
insured certificates of deposit; commercial paper rated
within the two highest grades by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") or, if not rated, issued by a
company having an outstanding debt issue rated Aaa by
Moody's or AAA by S&P; and securities issued by
registered investment companies holding themselves out
as money market funds. See the SAI for a more detailed
description of the money market instruments in which
the Fund may invest.
Investment Objective AND Restrictions
The Fund's investment objective is to seek long-
term capital appreciation. This investment objective
is fundamental and cannot be changed without
shareholder approval. Under normal market conditions,
the Fund will attempt to achieve this objective by
investing at least 65% of its assets in equity
securities consisting primarily of common stocks of
emerging and re-emerging companies. In general,
investments in these types of companies involve greater
risks than investments in established companies.
Because of the risks inherent in this investment
strategy, there can be no assurance that the Fund will
meet its investment objective or that shares in the
Fund will be worth more at redemption than at
acquisition. The Fund may also hold cash and money
market instruments to provide the Fund with liquidity
and flexibility.
<PAGE>
In addition, the Fund has adopted certain
fundamental investment restrictions on its investments
and other activities that, like the Fund's investment
objective, may not be changed without shareholder
approval.
Limitation on Industry Concentration: The Fund
may not invest more than 25% of its assets in
securities of companies in any one industry. This
restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies, or
instrumentalities.
Limitation on "Senior Securities": The Fund may
not issue senior securities, except as permitted under
the 1940 Act.
These fundamental investment restrictions,
together with all of the Fund's fundamental investment
restrictions and non-fundamental investment policies,
are described in greater detail in the Fund's SAI.
PRIOR PERFORMANCE OF INVESTMENT ADVISOR
The following table shows Advisor's historical
composite performance data for all actual, fee paying,
discretionary private accounts managed by Advisor, for
the periods indicated, that have investment objectives,
policies, strategies, and risks substantially similar
to those of the Fund. Since inception of Advisor
through 1996, these accounts have shown an annual
return of approximately 36%. The private accounts that
are included in Advisor's composite are not subject to
the same types of expenses to which the Fund is subject
nor to the specific tax restrictions and investment
limitations imposed on the Fund by the Code and the
1940 Act. Consequently, the performance results for
Advisor's composite could have been adversely
affected if the private accounts included in the
composite had been regulated as investment companies
under the federal tax and securities laws. The data is
provided to illustrate the past performance of Advisor
in managing substantially similar accounts as measured
against specified market indices and does not represent
the performance of the Fund. Investors should not consider
this performance data as an indication of the future
performance of the Fund or Advisor.
Advisor's performance information has been
calculated in accordance with recommended standards of
the Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses. All returns reflect the deduction of
investment advisory fees, brokerage commissions, and
execution costs paid by Advisor's private accounts,
without provision for federal or state income taxes.
Custodial fees, if any, were not included in the
calculation. Cash and equivalents are included in
performance returns. Total return is calculated
monthly in accordance with the "time-weighted" rate of
return method provided for by the AIMR standards,
accounted for on a trade-date and accrual basis. No
leveraged positions were utilized. Principal additions
and withdrawals are weighted in computing the monthly
returns based on the timing of these transactions. The
monthly returns are geometrically linked to derive
annual total returns.
<PAGE>
Private Account Performance History
Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Annual
Return
1990 * * -26.89% 28.72% *
1991 32.80% 4.35% 10.68% 31.51% 101.42%
1992 -10.76% -4.18% 17.49% 33.80% 34.43%
1993 -2.37% 30.38% 21.19% 2.74% 58.49%
1994 -10.53% -6.70% 22.14% 23.52% 25.95%
1995 5.32% 17.00% 13.96% -7.16% 30.37%
1996 -0.37% 9.54% 1.12% 0.20% 10.58%
1 Year Rate of Return (12/31/95 - 10.58%
12/31/96)
3 Year Rate of Return - Annualized 22.00%
(12/31/93 - 12/31/96)
5 Year Rate of Return - Annualized 31.07%
(12/31/91 - 12/31/96)
* Not applicable
Growth of a Unit Value
December 31, 1991 - December 31, 1996
The graphic on page 10 of the Prospectus contains
a chart which plots the 5 year growth of $10,000 invested
on December 31, 1991. The graphic compares the Advisor's
composite performance of this investment to the Russell 2000.
The plot points for the graphic are as follows (numbers are in
thousands):
Time Period Advisor Russell 2000
12-31-91 10.00 10.00
12-31-91 to 03-31-92 8.92 10.73
03-31-92 to 06-30-92 8.55 9.93
06-30-92 to 09-30-92 10.05 10.16
09-30-92 to 12-31-92 13.44 11.64
12-31-92 to 03-31-93 13.12 12.07
03-31-93 to 06-30-93 17.11 12.29
06-30-93 to 09-30-93 20.74 13.32
09-30-93 to 12-31-93 21.31 13.61
12-31-93 to 03-31-94 19.06 13.22
03-31-94 to 06-30-94 17.79 12.65
06-30-94 to 09-30-94 21.72 13.49
09-30-94 to 12-31-94 26.83 13.18
12-31-94 to 03-31-95 28.26 13.73
03-31-95 to 06-30-95 33.06 14.93
06-30-95 to 09-30-95 37.68 16.34
09-30-95 to 12-31-95 34.98 16.64
12-31-95 to 03-31-96 34.85 17.42
03-31-96 to 06-30-96 38.18 18.25
06-30-96 to 09-30-96 38.60 18.24
09-30-96 to 12-31-96 38.68 19.09
Advisor Composite Performance (US$)
RUSSELL 2000 (US$)
<PAGE>
Average Annualized Return in Percent
Period Ending
December 31, 1996 Advisor Composite Russell 2000
Performance
1 Year 10.58% 14.76%
2 Years 20.07% 20.35%
3 Years 22.00% 11.93%
4 Years 30.24% 13.18%
5 Years 31.07% 13.81%
6 Years 40.80% 18.32%
Annualized Rate of Return
December 31, 1991, through December 31, 1996
The graphic on page 11 of the Prospectus contains a bar
chart which shows the annualized rate of return from December
31, 1991 through December 31, 1996 for the Advisor Composite
versus the NASDAQ OTC Index, the Russell 2000 and the S&P 500
Index. The annualized rate of return for the Advisor Composite
was 31.07% versus 17.10%, 13.81% and 15.20% for the NASDAQ OTC
Index, the Russell 2000 Index and the S&P 500 Index, respectively.
Advisor Composite Performance (US$)
RUSSELL 2000 (US$)
FUND ORGANIZATION AND MANAGEMENT
Organization
The Fund is a series of common stock of a
corporation, Kopp Funds, Inc. ("Corporation"), a
Minnesota company incorporated on June 12, 1997. The
Corporation is authorized to issue shares of common
stock in series and classes. Each share of common
stock of each class of shares of the Fund is entitled
to one vote, and each share is entitled to participate
equally in dividends and capital gains distributions by
the respective class of shares and in the residual
assets of the respective class of shares in the event
of liquidation. However, each class of shares bears
its own expenses, is subject to its own sales charges,
if any, and has exclusive voting rights on matters
pertaining to the Rule 12b-1 plan as it relates to that
class. No certificates will be issued for shares held
in your account. You will, however, have full
shareholder rights. Generally, the Fund will not hold
annual shareholders' meetings unless required by the
1940 Act. As of __________, 1997, _________________,
owned a controlling interest in the Fund.
Management
Under the laws of the State of Minnesota, the
Board of Directors of the Corporation is responsible
for managing its business and affairs. The Corporation
has entered into an Investment Advisory Agreement with
Advisor under which Advisor manages the Fund's
investments and business affairs, subject to the
supervision of the Corporation's Board of Directors.
Kopp Holding Company ("KHC"), which is wholly-owned by
LeRoy C. Kopp, provides office space for the
Corporation and pays the salaries, fees and expenses of
all the Corporation's officers and interested
directors.
<PAGE>
Advisor. Advisor is a Minnesota corporation which
was organized in March 1990. Advisor is a wholly-owned
subsidiary of KHC and controlled by LeRoy C. Kopp, the
President and Chief Investment Officer of Advisor and
the sole shareholder of KHC. Under the Investment
Advisory Agreement, the Corporation pays Advisor an
annual management fee of 1.00% of the Fund's average
daily net assets attributable to each class of shares.
The advisory fee is accrued daily and paid monthly.
For the fiscal year ending September 30, 1998, Advisor
has agreed to waive its management fee and/or reimburse
Fund operating expenses to the extent necessary to
ensure that (i) the total operating expenses for the
Class A shares do not exceed 1.50% of average daily net
assets and (ii) the total operating expenses for the
Class I shares do not exceed 1.15% of average daily net
assets. Total operating expenses exclude taxes,
interest, and extraordinary expenses. After fiscal
1998, Advisor may from time to time voluntarily (but is
not required or obligated to) waive all or a portion of
its fee and/or reimburse all or a portion of class
operating expenses. Any waivers or reimbursements will
have the effect of lowering the overall expense ratio
for the applicable class and increasing its overall
return to investors at the time any such amounts were
waived and/or reimbursed.
Portfolio Managers. The following individuals are
co-managers of the Fund:
President and Chief Investment Officer of Advisor,
LeRoy C. Kopp is a graduate of the University of
Minnesota, where he received a Bachelor's Degree with
Distinction in Business Administration. Prior to
founding Advisor in 1990, Mr. Kopp spent 30 years with
Dain Bosworth Inc., where he was the manager of the
Edina, Minnesota branch and a Senior Vice President.
Mr. Kopp has received a number of business and
community honors and awards, including Upper Midwest
Entrepreneur of the Year for Emerging Companies.
Senior Vice President of Advisor, Sally A.
Anderson graduated from Northwestern University, from
which she holds a B.S. in Business
Administration/Finance. Prior to joining Advisor in
1991, Ms. Anderson served as Assistant Director of
Research for Dain Bosworth Inc., with whom she was
associated for 26 years. Ms. Anderson is a Chartered
Financial Analyst and a member of the Twin Cities
Society of Security Analysts, where she served as
President in 1997.
Vice President of Advisor, Steven F. Crowley is a
graduate of the University of Chicago, where he earned
a B.A. in Economics. Before joining Advisor in 1994,
Mr. Crowley was Executive Vice President and Director
of Research at Summit Investment Corporation in
Minneapolis, Minnesota, a position he held for one
year, where he served as the Senior Analyst covering
emerging growth companies in the health care,
environmental, and technology sectors. For four years
before that, Mr. Crowley was a Vice President of
Research at Craig Hallum, Inc., in Minneapolis. He has
also been associated with J.P. Morgan Investment
Management and Market Guide, Inc. in an investment
research capacity. Mr. Crowley is a Chartered
Financial Analyst and a member of the Twin Cities
Society of Security Analysts.
Custodian and Transfer Agent
Firstar Trust Company ("Firstar") acts as
custodian of the Fund's assets ("Custodian") and as
dividend-disbursing and transfer agent for the Fund
("Transfer Agent"). Firstar serves as custodian,
transfer agent, or both to over 295 registered
investment companies, representing approximately $68
billion in total assets.
Administrator
Pursuant to an Administration Agreement and an
Accounting Servicing Agreement, Firstar also performs
accounting and certain compliance and tax reporting
functions for the Fund. For its administration
services, Firstar receives from the Fund a fee,
computed daily and payable monthly based on the Fund's
average net assets at the annual rate of .06 of 1% on
the first $100 million, .05 of 1% on the next $100
million, and .03 of 1% on average net assets in excess
of $400 million, subject to an annual minimum of
$50,000, plus out-of-pocket expenses.
<PAGE>
Distributor
Centennial Lakes Capital, Inc., a registered
broker-dealer and affiliate of Advisor, acts as
distributor of the Fund's shares ("Distributor"). As
compensation for its services, the Distributor may
retain a portion of (i) the initial sales charge from
purchases of Class A shares, (ii) the CDSC from
redemptions of Class A shares, if applicable, and (iii)
the Rule 12b-1 fees payable with respect to Class A
shares.
From time to time, the Distributor may implement
programs to promote the sale of Class A shares under
which a broker or dealer's sales force may be eligible
to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any broker
or dealer that sponsors or participates in sales
contests or recognition programs all or a portion of
the total applicable sales charges on the sales
generated by the broker or dealer at the public
offering price during such programs. Also, in its
discretion, the Distributor may from time to time,
pursuant to objective criteria it establishes, pay fees
to, and sponsor business seminars for, qualifying
brokers or dealers for certain services or activities
which are primarily intended to result in sales of
Class A shares. Fees may include payment for travel
expenses, including lodging, incurred in connection
with trips taken by invited registered representatives
and members of their families to locations within or
outside the United States for meetings or seminars of a
business nature. All of the foregoing payments are
made by the Distributor out of its own assets. These
programs will not change the price you will pay for
shares or the amount that the Fund will receive from
such a sale. No such programs or additional
compensation will be offered to the extent that they
are prohibited by the laws of any state or any self-
regulatory agency with jurisdiction over the
Distributor, such as the NASD.
Fund Expenses
The Fund is responsible for its own expenses,
including interest charges; taxes; brokerage
commissions; organizational expenses; expenses of
registering or qualifying shares for sale with the
states and the SEC; expenses of issue, sale,
repurchase, or redemption of shares; expenses of
printing and distributing reports and prospectuses to
existing shareholders; charges of custodians; expenses
for accounting, administrative, audit, and legal
services; fees for outside directors; expenses of
fidelity bond coverage and other insurance; expenses of
indemnification; extraordinary expenses; and costs of
shareholder and director meetings.
<PAGE>
YOUR ACCOUNT
Choosing a Class
The Fund offers two classes of shares: Class A
and Class I. Class A shares are designed for "retail"
investors, with a minimum initial investment of $5,000
($2,000 for retirement accounts). Class I shares are
designed for "institutional" investors, with a minimum
initial investment of $5 million. Each class has its
own cost structure.
Class A Class I
Front-end sales No front-end sales
charges with break charges.
points and certain
exceptions. Redemption fee
payable on certain
Contingent redemptions.
deferred sales charge
imposed on certain No current Rule
redemptions. 12b-1 expenses.
Current Rule 12b-1
expenses, 0.35% of
average net assets.
Class A Shares
Class A shares are offered and sold on a continual
basis at the next offering price ("Offering Price"),
which is the sum of the net asset value per share and
the sales charge indicated below:
Total Sales Charge
As a Percentage As a Percentage Portion of
Your Investment of Offering of Your Offering Price
Price Investment Retained by
Dealers*
Up to $100,000 3.50% 3.63% 3.00%
$100,001 - $250,000 3.00% 3.09% 2.50%
$250,001 - $500,000 2.00% 2.04% 1.50%
$500,001 - $1,000,000 1.00% 1.01% 0.50%
$1,000,001 - $5,000,000** None None None
_____________
*At the discretion of the Distributor, all sales
charges may at times be paid to the securities dealer,
if any, involved in the trade. A securities dealer
which is paid all or substantially all of the sales
charges may be deemed an "underwriter" under the
Securities Act of 1933, as amended.
**A 1% CDSC may be imposed on redemptions of all or
part of an investment of $1 million or more in Class A
shares redeemed within 24 months of purchase. The
Distributor may, in its discretion, pay a 1% commission
to broker-dealers who initiate and are responsible for
such purchases. This commission will not be paid if
the purchase represents the reinvestment of a
redemption of Fund shares made during the previous 12
calendar months.
No sales charge is imposed on the reinvestment of
dividends or capital gains or on exchange transactions
(subject to certain restrictions with respect to
frequency). For information on how to reduce the sales
charge payable upon the purchase of Fund shares or
whether you qualify to purchase shares at net asset
value, see "Class A Front-End Sales Charge Waivers and
Reductions." Class A shares are also currently subject
to Rule 12b-1 fees in an aggregate amount of 0.35% of
the average daily net assets attributable to such
shares, although the Plan, which is described in more
detail under "Distribution and Shareholder Servicing
Plan," permits the payment of up to 0.50% in such fees.
Investments in Class A shares above $1 million are
not assessed an initial sales load. However, you will
be charged a 1% CDSC on shares redeemed within 24
months of purchase. For purposes of the CDSC, all
<PAGE>
purchases made during a calendar month are counted as
having been made on the last day of that month. The
CDSC is based on the lesser of the current market value
or the actual purchase price of the shares being sold,
and is not imposed on shares acquired by reinvesting
dividends or capital gains. To avoid the imposition of
the CDSC, the Fund will first sell any shares held in
your account that are not subject to the CDSC. The
imposition of the CDSC may be waived by the
Distributor. See "Class A CDSC Waivers."
Class I Shares
Class I shares are offered and sold on a continual
basis at their net asset value without any initial
sales charge. However, you may be charged a redemption
fee of 1% of the value of the shares redeemed on
redemptions made within 24 months of purchase. In
addition, as described in more detail under
"Distribution and Shareholder Servicing Plan," the Fund
has adopted a Rule 12b-1 plan with respect to the Class
I shares which permits the payment of up to 0.50% in
Rule 12b-1 fees. For the foreseeable future, however,
the Fund has no intention of paying any distribution or
servicing fees in connection with the Class I shares.
Class A Front-End Sales Charge Waivers and Reductions
Waivers for Certain Investors. Class A shares may
be offered and sold without front-end sales charges to
various individuals and institutions, including:
certain retirement plans, such as profit-sharing,
pension, 401(k), and simplified employee pension plans
(SEP's and SIMPLE's), subject to minimum requirements
with respect to the number of employees or amount of
purchase, which may be established by the Distributor
(currently, those criteria require that the employer
establishing the plan have 200 or more eligible
employees or that the amount invested total at least $1
million within 13 months of the initial investment);
persons who have taken a distribution from a
retirement plan invested in Class A or Class I shares
of the Fund, to the extent of the distribution,
provided that, the distribution is reinvested within 90
days of the payment date;
government entities that are prohibited from
paying mutual fund sales charges;
registered securities brokers and dealers who have
entered into sales or service agreements with the
Distributor and who have achieved certain sales
objectives of the Fund, for their investment accounts
only, and certain registered personnel and employees of
such securities brokers and dealers, and their spouses,
children, grandchildren and parents, in accordance with
the internal policies and procedures of the employing
broker or dealer;
owners of private accounts managed by Advisor who
either purchase Fund shares within one year of the
Fund's inception or who within the Advisor's sole
discretion, are no longer eligible for separate account
management by Advisor and who in either case liquidate
their private account and purchase Fund shares with the
proceeds within 90 days of the liquidation;
trust companies investing $1 million or more for
common trust or collective investment funds;
registered investment companies;
persons who contemporaneously exchange shares in
the Portico Money Market Fund for Class A shares, to
the extent of the exchange; provided, however, that the
sales charge waiver provided by this exception (i)
shall only be available for one exchange-related
purchase per year and (ii) shall only be available to
persons who immediately prior to their investment in
the Portico Money Market Fund were shareholders of the
Fund;
<PAGE>
"wrap accounts" for the benefit of clients of
registered broker-dealers having sales or service
agreements with the Distributor; and
any investor who purchases shares of the Fund with
redemption proceeds from a registered investment
company other than the Fund and on which the investor
was subject to a front-end sales charge or a contingent
deferred sales charge; provided that the proceeds are
invested in the Fund within 10 days of the redemption.
Class A shares are offered at net asset value to
these persons and institutions due to anticipated
economies of scale in sales efforts and expense.
Please contact your investment professional, the
Distributor, or the Transfer Agent for more information
on purchases at net asset value.
Reducing Sales Charges. If you are not eligible
for a waiver, there are two ways that you can combine
multiple purchases of Class A shares to take advantage
of the breakpoints in the sales charge schedule. The
following two methods can be combined in any manner:
Rights of Accumulation. The Fund offers a Right
of Accumulation ("ROA") allowing you to purchase Class
A shares at the sales charge applicable to the sum of
(a) the dollar amount then being purchased, plus (b)
the higher of either (i) the current market value
(calculated at the applicable Offering Price) or (ii)
the actual purchase price of all Fund shares already
held by you and your spouse and minor children. To
receive an ROA, at the time of purchase, you must give
your investment professional, the Distributor, or the
Transfer Agent sufficient information to determine
whether the purchase will qualify for the reduced sales
charge.
Letter of Intent. You may also immediately
qualify for a reduced sales charge on the purchase of
Class A shares by completing the Letter of Intent
section of the account application ( "LOI"). By
completing the LOI, you express an intention to invest
during the next 13-month period a specified amount
(minimum of at least $100,001) which, if made at one
time, would qualify for a reduced sales charge. Any
shares you own on the date you execute the LOI may be
used as a credit toward the completion of the LOI.
However, the reduced sales charge will only be applied
to new purchases. Any redemptions made during the
13-month period will be subtracted from the amount of
the purchases for purposes of determining whether the
terms of the LOI have been satisfied. If, at the end
of the 13-month period covered by the LOI, the total
amount of purchases (less redemptions) does not equal
the amount indicated, you will be required to pay the
difference between the sales charge paid at the reduced
rate and the sales charge applicable to the purchases
actually made. Shares equal to 5% of the amount
specified in the LOI will be held in escrow during the
13-month period and are subject to involuntary
redemption to assure any payment of a higher applicable
sales charge. Signing a LOI does not bind you to
purchase the full amount indicated, but you must
complete the intended purchase in accordance with the
terms of the LOI to obtain the reduced sales charge.
For more information on the LOI, please contact your
investment professional, the Distributor, or the
Transfer Agent.
Reinstatement Privilege. If you sell shares in
the Fund (regardless of whether such shares are Class A
or Class I), you may invest some or all of the proceeds
in the Fund's Class A shares once per year within 120
days without the imposition of a sales charge. In
order to rely on this privilege, all accounts involved
must have the same name before and after the
reinstatement. For more information, please contact
your investment professional, the Distributor, or the
Transfer Agent.
<PAGE>
Class A CDSC Waivers
The CDSC on Class A shares may be waived if:
the redemption results from the death or a total
and permanent disability (as defined in Section 72 of
the Code) occurring after the purchase of the shares
being redeemed of a shareholder or participant in an
employer-sponsored retirement plan;
the distribution is part of a series of
substantially equal payments made over the life
expectancy of the participant or the joint life
expectancy of the participant and his or her
beneficiary; or
the distribution is to a participant in an
employer-sponsored retirement plan and is (i) a return
of excess employee deferrals or contributions, (ii) a
qualifying hardship distribution as defined by the
Code, (iii) from a termination of employment, or (iv)
in the form of a loan to a participant in a plan which
permits loans.
The CDSC will not be applicable if the selling broker-
dealer elects to waive receipt of the commission
normally paid at the time of the sale.
Investing in the Fund
Before opening an account and investing in Fund
shares, you should contact your investment
professional. Then, you should:
(1) Read this Prospectus carefully.
(2) Determine how much you would like to invest.
The minimum initial investment requirements
are:
(a) Class A shares:
Non-retirement account: $5,000
Retirement account: $2,000
Automatic Investment Plan ("AIP"): $3,000
(to maintain the plan, you must
invest at least $50 per month)
Subsequent investments: $100 or more
(b) Class I shares:
All accounts: $5 million
Subsequent investments: No minimum
The Fund may change or waive these minimums
at any time; you will be given at least 30
days' notice of any increase in the minimum
dollar amount of purchases.
(3) Complete the appropriate parts of the account
application, carefully following the
instructions. If you have questions, please
contact your investment professional or the
Fund at 1-888-__________. Account
applications will be accepted by investment
professionals who have entered into sales or
service agreements with the Distributor, the
Distributor, or the Transfer Agent.
(4) Make your initial investment, and any
subsequent investments, following the
instructions set forth below.
<PAGE>
Buying Shares
Opening an Account. You may open an account by
completing an account application and paying for your
shares by check, exchange, or wire. All new account
applications should be given to your investment
professional or forwarded to the Distributor or the
Transfer Agent, whose addresses appear on the back
cover page of this Prospectus. The price per share
will be the net asset value (plus applicable sales
charge in the case of Class A shares) next computed
after the time the application and funds are received
in proper order by the Transfer Agent and accepted by
the Fund. See "Determination of Net Asset Value." The
Fund does not consider the U.S. Postal Service or other
independent delivery services to be its agents;
therefore, deposit in the mail or with such services,
or receipt at the Transfer Agent's post office box, of
purchase applications does not constitute receipt by
the Transfer Agent or the Fund. A confirmation
indicating the details of each purchase transaction
will be sent to you promptly.
By check
Make out a check for the investment amount,
payable to "Kopp Emerging Growth Fund." Payment should
be made in U.S. funds by check drawn on a U.S. bank,
savings and loan, or credit union. Neither cash nor
third-party checks will be accepted.
Purchases through broker-dealers who have no sales
agreement with the Distributor may be made, but you may
be charged a transaction fee in addition to the sales
charge with respect to Class A shares.
If your check does not clear, you will be charged
a $20 service fee. You will also be responsible for
any losses suffered by the Fund as a result.
All applications to purchase Fund shares are
subject to acceptance by the Fund and are not binding
until so accepted. The Fund reserves the right to
decline or accept a purchase application in whole or in
part.
By exchange
You may exchange Class A shares for Class I shares
at any time if you have authorized this privilege in
your application and meet the Class I minimum initial
investment requirement. The value of the shares to be
exchanged will be the net asset value (less the CDSC,
if applicable) after receipt of instructions for
exchange. Likewise, the price of the shares being
purchased will be the net asset value after receipt of
instructions for exchange.
In addition, if you own shares in the Portico
Money Market Fund, you may exchange such shares for
shares of the Fund. This type of exchange will be
effected at net asset value; however, with respect to
exchanges resulting in the purchase of Class A shares,
only one such exchange per year may be effected at net
asset value without the imposition of a sales charge,
and such sales load free exchanges shall only be
available to persons who, immediately before their
investment in the Portico Money Market Fund, were
shareholders of the Fund. The Portico Money Market
Fund is a no-load money market fund managed by an
affiliate of Firstar. The Portico Money Market Fund is
unrelated to the Corporation or the Fund.
You may also exchange shares of the Fund for
shares of the Portico Money Market Fund. This exchange
privilege is a convenient way to buy shares in a money
market fund in order to respond to changes in your
goals or market conditions. Before exchanging into the
Portico Money Market Fund, please read the applicable
prospectus, which may be obtained by calling 1-888-
_______. The value of the shares to be exchanged will
be the net asset value (less the redemption fee, if
applicable, with respect to Class I shares or the CDSC,
if applicable, with respect to Class A shares) after
receipt of instructions for exchange. The price of the
shares being purchased will be at net asset value.
The Fund may refuse any exchange request from any
account in which two exchanges have occurred in the
preceding three month period, or where the exchanged
shares are the lesser of $1 million or 1% of the Fund's
net assets. The Fund may also refuse any exchange or
purchase order if it believes a previous pattern of
excessive purchases and redemptions or exchanges has
been established by an account. Excessive trading
(including market timing) can hurt the Fund's
performance. Accounts under common ownership or
control will be considered one account for this
purpose.
<PAGE>
The Fund reserves the right to modify or terminate
the exchange privilege at any time.
Call the Transfer Agent at 1-888-_______ to
request instructions for an exchange.
An exchange is not a tax-free transaction.
By wire
Obtain your account number by reviewing your
account statement or by calling your investment
professional, the Distributor, or the Transfer Agent.
Instruct your bank to follow the following
instructions when wiring funds:
Wire to: Firstar Bank Milwaukee, N.A.
ABA Number 075000022
Credit: Firstar Trust Company
Account 112-952-137
Further credit: Kopp Emerging Growth Fund
(class of shares being purchased)
(shareholder account number)
(shareholder name/account registration)
Please call 1-888-________ prior to wiring any
funds to notify the Transfer Agent that the wire is
coming and to verify the proper wire instructions.
The Fund is not responsible for the consequences
of delays resulting from the banking or Federal Reserve
wire system.
Adding to an Account. You may add to your account
by check, exchange, or wire. A confirmation indicating
the details of each subsequent purchase transaction
will be sent to you promptly.
By check
Make out a check for the investment amount,
payable to "Kopp Emerging Growth Fund." Neither cash
nor third-party checks will be accepted.
Fill out the detachable investment slip from an
account statement. If no slip is available, include a
note specifying your account number and the name(s) in
which the account is registered.
Deliver the check and your investment slip or note
to your investment professional, the Distributor, or
the Transfer Agent.
By exchange
Call the Transfer Agent at 1-888-________ to
request instructions for an exchange.
By wire
Follow the wire instructions used to open an
account.
Automatic Investment Plan. The Automatic
Investment Plan ("AIP") is a method of using dollar
cost averaging which is an investment strategy that
involves investing a fixed amount of money at a regular
time interval. By always investing the same amount,
you will be purchasing more shares when the price is
low and fewer shares when the price is high. Since
such a program involves continuous investment
regardless of fluctuating share values,
<PAGE>
you should
consider your financial ability to continue the program
through periods of low share price levels. A program
of regular investment cannot ensure a profit or protect
against a loss from declining markets.
The AIP allows you to make regular, systematic
investments in Class A shares of the Fund from your
bank checking or NOW account. The minimum initial
investment for investors using the AIP is $3,000. To
establish the AIP, complete the appropriate section in
the account application attached to this Prospectus.
Under certain circumstances (such as discontinuation of
the AIP before the minimum initial investment is
reached), the Fund reserves the right to close your
account. Prior to closing any account for failure to
reach the minimum initial investment, the Fund will
give you written notice and 60 days in which to
reinstate the AIP or otherwise reach the minimum
initial investment. Your account may be closed in
periods of declining share prices.
Under the AIP, you may choose to make investments
on certain days of each month (at least seven days
apart) in amounts of $50 or more. There is no service
fee charged by the Fund for participating in the AIP.
However, a service fee of $20 will be deducted from
your Fund account for any AIP purchase that does not
clear due to insufficient funds or, if prior to
notifying the Fund in writing or by telephone of your
intention to terminate the plan, you close your bank
account or in any manner prevent withdrawal of funds
from the designated checking or NOW account. You can
set up the AIP with most financial institutions.
Special Note on Investing in the Fund. When the
Fund's assets total $1 billion, no new accounts, other
than certain qualified retirement plans, will be
accepted. If you are a shareholder of record at that
time, however, you will be able to continue to add to
your account through new purchases, including purchases
through reinvestment of dividends or capital gains
distributions.
Redeeming Shares
To Redeem Some or All of Your Shares. You may
request redemption of part or all of your Fund shares
at any time. The price per share will be the net asset
value next computed (less the redemption fee or CDSC,
if applicable) after the time the redemption request is
received in proper form by the Transfer Agent and
accepted by the Fund. See "Determination of Net Asset
Value." The Fund does not consider the U.S. Postal
Service or other independent delivery services to be
its agents; therefore, deposit in the mail or with such
services, or receipt at the Transfer Agent's post
office box, of redemption requests does not constitute
receipt by the Transfer Agent or the Fund. The Fund
normally will mail your redemption proceeds within one
or two business days and, in any event, no later than
seven business days after receipt by the Transfer Agent
of a redemption request in good order. However, the
Fund may hold payment until investments which were made
by check, telephone, or pursuant to the AIP have been
collected (which may take up to 12 days from the
initial investment date). What follows is a listing of
the various options for redemptions. Redemptions may
be made by written request, telephone, wire, or
exchange.
By written request
Write a letter of instruction indicating the Fund
name, your share class, your account number, the
name(s) in which the account is registered, and the
dollar value or number of shares you wish to sell.
Include all signatures and any additional
documents that may be required. See "Special
Situations," below.
Forward the materials to the Transfer Agent.
A check will be mailed to the name(s) and address
in which the account is registered, or otherwise
according to your letter of instruction.
By telephone
Fill out the "Telephone Redemption" section of
your new account application.
To place your redemption order, you may call
1-888-________.
<PAGE>
Redemption requests by telephone are available for
redemptions of $1,000 to $25,000. Redemption requests
for less than $1,000 or more than $25,000 must be in
writing.
Proceeds redeemed by telephone will be mailed or
wired only to your address or bank of record as shown
on the records of the Transfer Agent.
In order to arrange for telephone redemptions
after an account has been opened or to change the bank,
account, or address designated to receive redemption
proceeds, a written request must be sent to the
Transfer Agent. The request must be signed by each
shareholder of the account, with the signatures
guaranteed. Further documentation may be requested
from corporations, executors, administrators, trustees,
and guardians. See "Special Situations."
The Fund reserves the right to refuse any request
made by telephone and may limit the amount involved or
the number of telephone redemptions.
Once you place a telephone redemption request, it
cannot be canceled or modified.
Neither the Fund nor the Transfer Agent will be
responsible for the authenticity of redemption
instructions received by telephone. Accordingly, you
bear the risk of loss. However, the Fund will use
reasonable procedures to ensure that instructions
received by telephone are genuine, including recording
telephonic transactions and sending written
confirmation of such transactions to investors.
You may experience difficulty in implementing a
telephone redemption during periods of drastic economic
or market changes. If you are unable to contact the
Transfer Agent by telephone, you may also redeem shares
by written request, as noted above.
By wire
Fill out the "Telephone Redemption" section of
your new account application.
To verify that the telephone redemption privilege
is in place on an account, or to request the forms to
add it to an existing account, call the Transfer Agent.
Redemption requests by telephone which are to be
transmitted via wire transfer are available for
redemptions of $25,000 or less. Redemption requests
for more than $25,000 must be in writing.
Funds will be wired on the next business day. A
$12 fee will be deducted from your account.
By exchange
See "Buying Shares - By exchange."
Special Situations. If you are acting as an
attorney-in-fact for another person, or as a trustee or
on behalf of a corporation, additional documentation
may be required in order to effect a redemption.
Questions regarding such circumstances may be directed
to your investment professional, or the Transfer Agent
by calling 1-888-________. In addition, the Fund
requires a signature guarantee for all authorized
owners of an account: (i) when you submit a written
redemption request for more than $25,000, (ii) when you
add the telephone redemption option to your existing
account, (iii) if you transfer ownership of your
account to another individual or entity, or (iv) if you
request redemption proceeds to be sent to an address
other than the address that appears on your account. A
signature guarantee may be obtained from any eligible
guarantor institution, as defined by the SEC. These
institutions include banks, saving associations, credit
unions, brokerage firms, and others. A notary public
stamp or seal is not acceptable.
Redemption in Kind. The Fund has filed a
Notification under Rule 18f-1 under the 1940 Act,
pursuant to which it has undertaken to pay in cash all
requests for redemption by any shareholder of record,
limited in amount with respect to each shareholder
during any 90-day period to the lesser amount of (i)
$250,000, or (ii) 1% of the net asset value of the
class of shares of the Fund being redeemed, valued at
the beginning of such election period. The Fund
intends to also pay redemption proceeds in excess of
such lesser amount in cash, but reserves the right to
pay such excess amount in kind, if it is deemed to be
in the best interest of the Fund to do so. In making a
redemption in kind, the Fund reserves the right to
select from each securities holding a number of shares
which will reflect the
<PAGE>
Fund's portfolio make-up and the
value of which will approximate as closely as possible
the value of the Fund shares being redeemed, or to
select from one or more securities holdings, shares
equal in value to the total value of the Fund shares
being redeemed; any shortfall will be made up in cash.
Investors receiving an in kind distribution are advised
that they will likely incur a brokerage charge on the
disposition of such securities through a securities
dealer. The values of securities distributed in kind
will be the values used for the purpose of calculating
the per share net asset value used in valuing the Fund
shares tendered for redemption.
IRAs. Shareholders who have an Individual
Retirement Account ("IRA") or other retirement plan
must indicate on their redemption requests whether or
not to withhold federal income taxes. Redemption
requests failing to indicate an election will be
subject to withholding.
Termination of Accounts. Your account may be
terminated by the Fund if, at the time of any
redemption of shares in your account, the value of the
remaining shares in the account falls below $1,000. A
check for the proceeds of redemption will be sent to
you within seven days of the redemption.
DETERMINATION OF NET ASSET VALUE
The net asset value per share for each class is
determined as of the close of trading (generally
4:00 p.m. Eastern Standard Time) on each day the New
York Stock Exchange ("NYSE") is open for business.
Purchase orders received or shares tendered for
redemption on a day the NYSE is open for trading, prior
to the close of trading on that day, will be valued as
of the close of trading on that day. Applications for
purchase of shares and requests for redemption of
shares received after the close of trading on the NYSE
will be valued as of the close of trading on the next
day the NYSE is open. The Fund is not required to
calculate its net asset value on days during which the
Fund receives no orders to purchase shares and no
shares are tendered for redemption. Net asset value
per share for each class of shares is calculated by
taking the fair value of the total assets per class,
including interest or dividends accrued, but not yet
collected, less all liabilities, and dividing by the
total number of shares outstanding in that class. The
result, rounded to the nearest cent, is the net asset
value per share.
In determining net asset value, expenses are
accrued and applied daily and securities and other
assets for which market quotations are available are
valued at fair value. Common stocks and other equity-
type securities are valued at the last sales price on
the national securities exchange or NASDAQ on which
such securities are primarily traded; however,
securities traded on a national securities exchange or
NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities
exchange or NASDAQ, are valued at the average of the
most recent bid and asked prices. Any securities or
other assets for which market quotations are not
readily available are valued at fair value as
determined in good faith by the Board of Directors of
the Corporation or its delegate. The Board of
Directors may approve the use of pricing services to
assist the Fund in the determination of net asset
value. All money market instruments held by the Fund
will be valued on an amortized cost basis.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act ( "Plan") with respect to each class
of shares pursuant to which certain distribution and
shareholder servicing fees may be paid to the
Distributor. Under the terms of the Plan, each class
of shares may be required to pay the Distributor (i) a
distribution fee for the promotion and distribution of
shares of up to 0.25% of the average daily net assets
of the Fund attributable to each class (computed on an
annual basis) and (ii) a shareholder servicing fee for
personal service provided to shareholders of up to
0.25% of the average daily net assets of the Fund
attributable to each class (computed on an annual
basis). Payments under the Plan with respect to Class
A shares are currently limited to 0.35%, which
represents a 0.10% distribution fee and a 0.25%
shareholder servicing fee; the Fund currently has no
intention of paying any Rule 12b-1 fees in connection
with the Class I shares. The Distributor is authorized
to, in turn, pay all or a portion of these fees to any
registered securities dealer, financial institution, or
other person ("Recipient") who renders assistance in
distributing or promoting the sale of Fund shares, or
who provides certain shareholder services to Fund
shareholders, pursuant to a written agreement ("Rule
12b-1 Related Agreement"). To the extent such fee is
not paid to such
<PAGE>
persons, the Distributor may use the
fee for its own distribution expenses incurred in
connection with the sale of Fund shares, or for any of
its shareholder servicing expenses. The Plan is a
"reimbursement" plan, which means that the fees paid by
the Fund under the Plan are intended to reimburse the
Distributor for services rendered and commission fees
borne up to the maximum allowable distribution and
shareholder servicing fees. If the Distributor is due
more monies for its services rendered and commission
fees borne than are immediately payable because of the
expense limitation under the Plan, the unpaid amount is
carried forward from period to period while the Plan is
in effect until such time as it may be paid. No
interest, carrying or other finance charges will be
borne by the Fund with respect to unpaid amounts
carried forward.
Payment of the distribution and servicing fees is
to be made quarterly, within 30 days after the close of
the quarter for which the fee is payable, after the
Distributor forwards to the Board of Directors of the
Corporation a written report of all amounts expensed
pursuant to the Plan; provided, however, that the
aggregate payments by the Fund with respect to the
Class A shares under the Plan to the Distributor and
all Recipients may not exceed 0.35% (on an annualized
basis) of the Fund's average net assets attributable to
such class of shares for that quarter.
From time to time, the Distributor may engage in
activities which jointly promote the sale of shares of
one or both classes, the costs of which may not be
readily identifiable as related to any one class.
Generally, the distribution expenses attributable to
such joint distribution activities will be allocated
among each class of shares on the basis of its
respective net assets, although the Board of Directors
may allocate such expenses in any other manner it deems
fair and equitable.
The Plan, including a form of the 12b-1 Related
Agreement, has been unanimously approved by the Board
of Directors of the Corporation, including all of the
members of the Board who are not "interested persons"
of the Corporation as defined in the 1940 Act and who
have no direct or indirect financial interest in the
operation of the Plan or any related agreements
("Disinterested Directors") voting separately.
The Plan, and any Rule 12b-1 Related Agreement
which is entered into, will continue in effect for a
period of more than one year only so long as its
continuance is specifically approved at least annually
by a vote of a majority of the Corporation's Board of
Directors, and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting on
the Plan, or the Rule 12b-1 Related Agreement, as
applicable. In addition, the Plan, and any Rule 12b-1
Related Agreement, may be terminated with respect to
either or both classes at any time, without penalty, by
vote of a majority of the outstanding voting securities
of the applicable class, or by vote of a majority of
Disinterested Directors (on not more than sixty (60)
days' written notice in the case of the Rule 12b-1
Related Agreement only).
TAX-SHELTERED RETIREMENT PLANS
The Fund offers through Firstar, in its capacity
as Custodian, certain qualified retirement plans for
adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-
deferred basis. Contributions to these plans are tax-
deductible as provided by law and earnings are tax-
deferred until distributed.
Individual Retirement Accounts
Individuals under age 70 1/2 who receive
compensation or earned income, even if they are active
participants in a qualified retirement plan (or certain
similar retirement plans), may contribute money to an
IRA. For taxable years beginning after 1996, in the
case of a married couple filing a joint return, up to
$2,000 can be contributed to each spouse's IRA, even if
one spouse has little or no compensation or earned
income. The Fund offers a prototype IRA plan which may
be adopted by individuals to establish a new IRA or to
rollover funds from an existing IRA.
Earnings on amounts held in an IRA are not taxed
until withdrawn. However, the amount of the deduction,
if any, allowed for IRA contributions is limited for an
individual who is, or whose spouse is, an active
participant in an employer-sponsored retirement plan
and whose income exceeds specific limits.
<PAGE>
Simplified Employee Pension Plan
The Fund also offers a simplified employee pension
("SEP") plan for employers, including self-employed
individuals who wish to purchase Fund shares with tax-
deductible contributions. Under the SEP plan, employer
contributions are made directly to the IRA accounts of
eligible participants.
Savings Incentive Match Plan for Employees of Small
Employers
The Savings Incentive Match Plan for Employees of
Small Employers ("SIMPLE Plan") is a written
arrangement established under Section 408(p) of the
Code which provides a simplified tax-favored retirement
plan for small employers. In a SIMPLE Plan, each
employee may choose whether to have the employer make
payments as contributions under the plan or to receive
these payments directly as cash. A small employer that
chooses to establish a SIMPLE Plan must make either
matching contributions or non-elective contributions.
All contributions made under a SIMPLE Plan are made to
SIMPLE IRAs. A SIMPLE IRA is an IRA to which the only
contributions that can be made are contributions under
a SIMPLE Plan.
A complete description of the above plans, as well
as a description of the applicable service fees, may be
obtained by calling 1-888-________ or writing to the
Fund at Kopp Funds, Inc., c/o Firstar Trust Company,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Please
note that early withdrawals from a retirement plan may
result in adverse tax consequences.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT
The Fund intends to qualify for treatment as a
"Regulated Investment Company" under Subchapter M of
the Code and, if so qualified, will not be liable for
federal income taxes to the extent earnings are
distributed to shareholders on a timely basis.
However, for federal income tax purposes, all dividends
and distributions of net realized short-term capital
gains you receive from the Fund are taxable as ordinary
income, whether reinvested in additional shares or
received in cash, unless you are exempt from taxation
or entitled to a tax deferral. Distributions of net
realized long-term capital gains you receive from the
Fund, whether reinvested in additional shares or
received in cash, are taxable as a capital gain. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund. You
will be informed annually as to the amount and nature
of all dividends and capital gains paid during the
prior year. Such capital gains and dividends may also
be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally
not required to pay federal income taxes on the amounts
distributed to you.
Dividends and capital gains, if any, will be
distributed at least annually in December. Please
note, however, that the objective of the Fund is
capital appreciation, not the production of
distributions. You should measure the success of your
investment by the value of your investment at any given
time and not by the distributions you receive.
When a dividend or capital gain is distributed,
the Fund's net asset value decreases by the amount of
the payment. If you purchase shares shortly before a
distribution, you will be subject to income taxes on
the distribution, even though the value of your
investment (plus cash received, if any) remains the
same. All dividends and capital gains distributions
will automatically be reinvested in additional Fund
shares at the then prevailing net asset value unless
you specifically request that dividends or capital
gains or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing to
the Fund at Kopp Funds, Inc., c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
Such notice must be received at least 10 days prior to
the record date of any dividend or capital gain
distribution.
If you do not furnish the Fund with your correct
social security number or taxpayer identification
number, the Fund is required by current federal law to
withhold federal income tax from your distributions
(including applicable Fund share reinvestments) and
redemption proceeds at a rate of 31%.
<PAGE>
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
advisor.
FUND PERFORMANCE
Each class of shares may from time to time compare
its investment results to various passive indices or
other mutual funds and cite such comparisons in reports
to shareholders, sales literature and advertisements.
The results may be calculated on several bases,
including average annual total return, total return and
cumulative total return.
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments in a class of shares over a
specified period of time, assuming the reinvestment of
all dividends and distributions. Average annual total
return figures are annualized and therefore represent
the average annual percentage change over the specified
period. Total return figures are not annualized and
represent the aggregate percentage or dollar value
change over the period. Cumulative total return simply
reflects the applicable class' performance over a
stated period of time. All performance figures for
Class A shares reflect the deduction of the 3.50%
maximum initial sales charge or the 1% CDSC. All
performance figures for Class I shares reflect the
deduction of the 1% redemption fee.
<PAGE>
ADDITIONAL INFORMATION
DIRECTORS
LeRoy C. Kopp
_____________
_____________
OFFICERS
LeRoy C. Kopp, Chief Executive Officer and President
Donald B. Cornelius, Chief Financial Officer and Treasurer
Kathleen S. Tillotson, Secretary
INVESTMENT ADVISOR
Kopp Investment Advisors, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
CUSTODIAN, ADMINISTRATOR,
TRANSFER AGENT AND DIVIDEND-
DISBURSING AGENT
Firstar Trust Company
For overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o Firstar Trust Company c/o Firstar Trust Company
Mutual Fund Services P.O. Box 701
Third Floor Milwaukee, Wisconsin
53201-0701
615 E. Michigan Street
Milwaukee, WI 53202
DISTRIBUTOR
Centennial Lakes Capital, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
