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.
<PAGE>
As filed with the Securities and Exchange Commission on June 20, 1997
Securities Act Registration No. 333-
Investment Company Act Registration No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [X]
Amendment No.___ [ ]
KOPP FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7701 France Avenue South
Suite 500 55435
Edina, Minnesota (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code:
(612) 920-3322
Kathleen S. Tillotson
Kopp Funds, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of proposed public offering: As soon
as practicable after the Registration Statement becomes
effective.
In accordance with Rule 24f-2 under the Investment
Company Act of 1940, Registrant declares that an
indefinite number of shares of its common stock, $.01
par value, is being registered by this Registration
Statement.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in
the Prospectus and the Statement of Additional
Information of the responses to the Items of Parts A
and B of Form N-1A).
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Investor Expenses;
Highlights
3. Condensed Financial *
Information
4. General Description of Investment Strategy;
Registrant Implementation of
Policies and Risks; Investment
Objective and Restrictions;
Fund Organization and
Management
5. Management of the Fund Fund Organization and
Management
5A. Management's Discussion
of Fund Performance *
6. Capital Stock and Other Highlights; Fund
Securities Organization and
Management; Dividends, Capital
Gains Distributions and
Tax Treatment
7. Purchase of Securities Fund Organization and
Being Offered Management; Your Account;
Determination of Net Asset
Value; Distribution and
Shareholder Servicing Plan
8. Redemption or Repurchase Your Account;
Determination of Net Asset
Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
<PAGE>
13. Investment Investment Objective and
Objectives and Policies Restrictions; Investment
Policies and Techniques; Fund
Transactions and Brokerage
14. Management of the Directors and Officers
Fund
15. Control Persons and Principal Shareholders;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory Investment Advisor; Fund
and Other Services Organization and Management
(in Prospectus);
Distributor and Plan of
Distribution; Custodian,
Transfer Agent and Dividend-
Disbursing Agent; Independent
Accountants
17. Brokerage Allocation Fund Transactions and
and Other Practices Brokerage
18. Capital Stock and Included in Prospectus
Other Securities under the heading Fund
Organization and Management
19. Purchase, Redemption and Included in Prospectus
Pricing of Securities Being under the headings Your
Offered Account; Determination of Net
Asset Value; and in the
Statement of Additional
Information under the heading
Distributor and Plan of
Distribution
20. Tax Status Included in Prospectus
under the heading
Dividends, Capital Gains
Distributions and Tax
Treatment; and in the
Statement of Additional
Information under the heading
Taxes
21. Underwriters Distributor and Plan of
Distribution
22. Calculations of Performance Information
Performance Data
23. Financial Financial Statements
Statements
________________________
* Answer negative or inapplicable.
<PAGE>
Subject to Completion, dated June 20, 1997
PROSPECTUS
____________, 1997
[Logo]
Kopp Funds, Inc.
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, Inc. ("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 0.31% and 1.66%,
respectively, and other expenses and total
operating expenses for the Class I shares are
estimated to be 0.31% and 1.31%, 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(2)++ Class I(3)+ Class I++
After 1 year $60 $50 $22 $12
After 3 years $81 $81 $37 $37
__________
+ Assumes redemption at end of period.
++Assumes no redemption at end of period.
(1)Both the 3.50% maximum sales charge
imposed on purchases of Class A shares and the
1% CDSC imposed on certain redemptions of Class
A shares are reflected in the Example.
(2)Only the 3.50% maximum sales charge
imposed on purchases of Class A shares is
reflected in the Example.
(3)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 3
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 26
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
accelerated 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%.
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, respectively. 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>
Kopp Investment Advisors
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)
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 currently
serves as First Vice President.
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 industries. 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 $500 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. The Fund does
not permit telephone exchanges.
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. The Fund does not permit telephone exchanges.
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 and 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
[insert]
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED JUNE 20, 1997
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION BUT HAS NOT YET BECOME EFFECTIVE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION
OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALES 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.
STATEMENT OF ADDITIONAL INFORMATION
[Logo]
Kopp Funds, Inc.
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-__________
Facsimile: 1-612-___________
Website: www.koppfunds.com
This Statement of Additional Information is not a
prospectus and should be read in conjunction with the
Prospectus of the Kopp Emerging Growth Fund ("Fund"),
dated ____________, 1997. The Prospectus, which may be
revised from time to time, is available without charge
upon request to the above-noted address, telephone
number, or website.
This Statement of Additional Information is dated ___________, 1997.
<PAGE>
CONTENTS
INVESTMENT OBJECTIVE AND RESTRICTIONS 4
INVESTMENT POLICIES AND TECHNIQUES 5
DIRECTORS AND OFFICERS 7
PRINCIPAL SHAREHOLDERS 8
INVESTMENT ADVISOR 9
FUND TRANSACTIONS AND BROKERAGE 9
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 11
DISTRIBUTOR AND PLAN OF DISTRIBUTION 11
TAXES 12
DETERMINATION OF NET ASSET VALUE 12
SHAREHOLDER MEETINGS 13
PERFORMANCE INFORMATION 13
INDEPENDENT ACCOUNTANTS 14
FINANCIAL STATEMENTS 15
No person has been authorized to give any
information or to make any representations other than
those contained in this Statement of Additional
Information ("SAI") and the Prospectus dated _________,
1997, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund. This SAI does not constitute
an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be
made.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is to seek long-
term capital appreciation. The Fund's investment
objective and policies are described in detail in the
Prospectus under the captions "Investment Objective and
Restrictions" and "Implementation of Policies and
Risks." The following are the Fund's fundamental
investment restrictions which cannot be changed without
shareholder approval.
The Fund:
1. May not issue senior securities, except as
permitted under the 1940 Act;
2. May not act as an underwriter of another company's
securities, except to the extent that the Fund may
be deemed to be an underwriter within the meaning
of the Securities Act of 1933, as amended ("1933
Act"), in connection with the purchase and sale of
portfolio securities;
3. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this shall
not prevent the Fund from purchasing or selling
options, futures contracts, or other derivative
instruments, or from investing in securities or
other instruments backed by physical commodities);
4. May not make loans if, as a result, more than 33
1/3% of the Fund's assets would be lent to other
persons, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements;
5. 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;
6. May not purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prohibit the
Fund from purchasing or selling securities or
other instruments backed by real estate or of
issuers engaged in real estate activities);
7. May (i) borrow money from banks, and (ii) make
other investments or engage in other transactions
permissible under the Investment Company Act of
1940, as amended ("1940 Act"), which may involve a
borrowing, provided that the combination of (i)
and (ii) shall not exceed 33 1/3% of the value of
the Fund's assets (including the amount borrowed),
less the Fund's liabilities (other than
borrowings), except that the Fund may borrow up to
an additional 5% of its assets (not including the
amount borrowed) from a bank for temporary or
emergency purposes (but not for leverage or the
purchase of investments). The Fund may also
borrow money from other persons to the extent
permitted by applicable law;
8. Notwithstanding any other fundamental investment
policy or restriction, may invest all of its
assets in the securities of a single open-end
management investment company with substantially
the same fundamental investment objective,
policies, and restrictions as the Fund.
In addition to the non-fundamental operating
policies set forth in the Prospectus, the following non-
fundamental operating policies may be changed by the
Board of Directors without shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has
the right to obtain securities equivalent in kind
and amount to the securities sold short, or unless
it covers such short sale as required by the
current rules and positions of the Securities and
Exchange Commission ("SEC") or its staff, and
provided that transactions in options, futures
contracts, options on futures contracts, or other
derivative instruments are not deemed to
constitute selling securities short.
<PAGE>
2. Purchase securities on margin, except that the
Fund may obtain such short-term credits as are
necessary for the clearance of transactions; and
provided that margin deposits in connection with
futures contracts, options on futures contracts,
or other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result of
such investment, more than 15% of its net assets
would be invested in illiquid securities, or such
other amounts as may be permitted under the 1940
Act.
4. Purchase securities of other investment companies
except in compliance with the 1940 Act.
5. Engage in futures or options on futures
transactions which are impermissible pursuant to
Rule 4.5 under the Commodity Exchange Act ("CEA")
and, in accordance with Rule 4.5, will use futures
or options on futures transactions solely for bona
fide hedging transactions (within the meaning of
the CEA); provided, however, that the Fund may,
in addition to bona fide hedging transactions, use
futures and options on futures transactions if the
aggregate initial margin and premiums required to
establish such positions, less the amount by which
any such options positions are in the money
(within the meaning of the CEA), do not exceed 5%
of the Fund's net assets.
6. Make any loans other than loans of portfolio
securities, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements with respect to portfolio
securities.
7. Borrow money except from banks or through reverse
repurchase agreements or mortgage dollar rolls,
and will not purchase securities when bank
borrowings exceed 5% of its assets.
Except for the fundamental investment restrictions
listed above and the Fund's investment objective, the
other investment policies described in the Prospectus
and this SAI are not fundamental and may be changed
with approval of the Fund's Board of Directors. Unless
noted otherwise, if a percentage restriction is adhered
to at the time of investment, a later increase or
decrease in percentage resulting from a change in the
Fund's assets (i.e., due to cash inflows or
redemptions) or in market value of the investment or
the Fund's assets will not constitute a violation of
that restriction.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the
discussion of the Fund's investment objective,
strategy, and policies that are described in the
Prospectus under the captions "Investment Strategy,"
"Implementation of Policies and Risks," and "Investment
Objective and Restrictions."
Depositary Receipts
The Fund may invest in foreign securities by
purchasing depositary receipts, including American
Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") or other securities convertible into
securities of companies based in foreign countries.
These securities may not necessarily be denominated in
the same currency as the securities into which they may
be converted. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer
form, may be denominated in other currencies and are
designed for use in European securities markets. ADRs
are receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a
similar arrangement. For purposes of the Fund's
investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities
they represent. Thus, an ADR or EDR representing
ownership of common stock will be treated as common
stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and
<PAGE>
obligations of ADR holders and the
practices of market participants. For example, a non-
sponsored depositary may not provide the same
shareholder information that a sponsored depositary is
required to provide under its contractual arrangements
with the issuer, including reliable financial
statements. Under the terms of most sponsored
arrangements, depositaries agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
Convertible Securities
The Fund may invest in convertible securities,
which are bonds, debentures, notes, preferred stocks,
or other securities that may be converted into or
exchanged for a specified amount of common stock or
warrants of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt or
the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted,
or exchanged. Convertible securities have unique
investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields
than comparable non-convertible securities, (ii) are
less subject to fluctuation in value than the
underlying stock (or warrant) since they have fixed
income characteristics, and (iii) provide the potential
for capital appreciation if the market price of the
underlying common stock (or warrant) increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by the Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying common stock (or warrant), or sell it to a
third party.
Concentration
While the Fund is "non-diversified," which means
that it is permitted to invest its assets in a more
limited number of issuers than other investment
companies, the Fund intends to diversify its assets to
qualify for tax treatment as a regulated investment
company under the Internal Revenue Code of 1986, as
amended (the "Code"). To so qualify (i) not more than
25% of the total value of the Fund's assets may be
invested in securities of any one issuer (other than
U.S. Government securities and the securities of other
regulated investment companies under the Code) or of
any two or more issuers controlled by the Fund, which,
pursuant to the 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
the total value of the Fund's assets (a) not more than
5% of its total assets may be invested in the
securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) and (b)
the Fund may not own more than 10% of the outstanding
voting securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code).
In addition, the Fund has adopted a fundamental
investment restriction which prohibits the Fund from
investing more than 25% of its assets in securities of
companies in any one industry. An industry is defined
as a subsector of ____________________________________.
To the extent that a relatively high percentage of
the Fund's assets may be invested in the securities of
a limited number of companies, the Fund's portfolio
securities may be more susceptible to any single
economic, political, or regulatory occurrence than the
portfolio securities of a diversified investment
company.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Policies and Risks," 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, the Fund may hold cash and/or
invest all or a portion of its assets in money market
instruments. The money market instruments which the
Fund may purchase include U.S. Government securities,
bank obligations, obligations of savings institutions,
fully insured certificates of
<PAGE>
deposit, commercial
paper, and securities issued by registered investment
companies holding themselves out as money market funds.
Such securities are limited to:
U.S. Government Securities. Obligations issued or
guaranteed as to principal and interest by the United
States or its agencies (such as the Export-Import Bank
of the United States, Federal Housing Administration
and Government National Mortgage Association) or its
instrumentalities (such as the Federal Home Loan Bank),
including Treasury bills, notes, and bonds;
Bank Obligations. Obligations (including
certificates of deposit, bankers' acceptances,
commercial paper (see below) and other debt
obligations) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or
more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic
banks;
Obligations of Savings Institutions. Certificates
of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit.
Certificates of deposit of banks and savings
institutions, having total assets of less than $1
billion, if the principal amount of the obligation is
insured by the Bank Insurance Fund or the Savings
Association Insurance Fund (each of which is
administered by the Federal Deposit Insurance
Corporation), limited to $100,000 principal amount per
certificate and to 15% or less of the Fund's total
assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. 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 at least Aaa by Moody's or
AAA by S&P; and
Money Market Funds. Securities issued by
registered investment companies holding themselves out
as money market funds which attempt to maintain a
stable net asset value of $1.00 per share.
DIRECTORS AND OFFICERS
The directors and officers of the Kopp Funds, Inc.
(the "Corporation"), of which the Fund is a series,
together with information as to their principal
business occupations during the last five years, and
other information, are shown below. Each director who
is deemed an "interested person" as defined in the 1940
Act, is indicated by an asterisk. The directors and
officers listed below have served as such since
inception of the Corporation on June 12, 1997.
*LeRoy C. Kopp, Chief Executive Officer,
President, and a Director of the Corporation.
Mr. Kopp, ___ years old, received a Bachelor's
Degree with Distinction in Business Administration from
the University of Minnesota in _______. 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.
*Donald B. Cornelius, Chief Financial Officer and
Treasurer of the Corporation.
Mr. Cornelius, 65 years old, has served as Chief
Financial Officer, Chief Compliance Officer, and
Secretary of Advisor since its inception in 1990.
Before joining Advisor, Mr. Cornelius worked for more
than 30 years at Dain Bosworth Inc.
<PAGE>
*Kathleen S. Tillotson, Secretary of the
Corporation.
Ms. Tillotson, 41 years old, joined Advisor in
March 1996 as Vice President and General Counsel. In
1981, Ms. Tillotson graduated from Tulane University
School of Law magna cum laude. Before joining Advisor
in 1996, Ms. Tillotson practiced law as an associate
and principal with law firms in Boston and Minneapolis.
____________________, a Director of the
Corporation.
____________________, a Director of the
Corporation.
The address of Messrs. Kopp and Cornelius, and Ms.
Tillotson, is 7701 France Avenue South, Suite 500,
Edina, Minnesota 55435.
As of ________, 1997, officers and directors of
the Corporation did not beneficially own any of the
shares of common stock of the Fund's then outstanding
shares. Directors and officers of the Corporation who
are also officers, directors, employees, or
shareholders of Advisor do not receive any remuneration
from the Fund for serving as directors or officers.
The following table provides information relating
to annual compensation to be paid to directors of the
Corporation for their services as such(1):
Name Cash Other Total
Compensation(2) Compensation
LeRoy C. Kopp $0 $0 $0
______________ $_____ $0 $_____
______________ $_____ $0 $_____
All directors $_____ $0 $_____
as a group
(3 persons)
__________
(1)The amounts indicated are estimates of amounts to
be paid by the Corporation during its first fiscal
year.
(2)Each director who is not deemed an "interested
person" of the Corporation, as defined in the 1940
Act, will receive $____ for each Board of Directors
meeting attended by such person, plus a $_____ per
fiscal year stipend. The Board anticipates holding
four meetings during fiscal 1998. Thus, each
disinterested director is entitled to $_____ during
such time period from the Corporation.
PRINCIPAL SHAREHOLDERS
As of ________, 1997, the following persons owned
of record or are known by the Fund to own of record or
beneficially 5% or more of the outstanding shares of
the Fund:
Name and Address No. Shares Percentage
<PAGE>
Based on the foregoing, as of _________, 1997,
____________________ owned a controlling interest in
the Fund. Shareholders with a controlling interest
could effect the outcome of proxy voting or the
direction of management of the Fund.
INVESTMENT ADVISOR
Kopp Investment Advisors ("Advisor") is the
investment advisor to the Fund. Advisor is a wholly-
owned subsidiary of Kopp Holding Company ("KHC") and is
controlled by LeRoy C. Kopp, the President and Chief
Investment Officer of Advisor and sole shareholder of
KHC.
The investment advisory agreement between the
Corporation and Advisor dated _________, 1997
("Advisory Agreement") has an initial term of two years
and thereafter is required to be approved annually by
the Board of Directors of the Corporation or by vote of
a majority of the Fund's outstanding voting securities
(as defined in the 1940 Act). Each annual renewal must
also be approved by the vote of a majority of the
Corporation's directors who are not parties to the
Advisory Agreement or interested persons of any such
party, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory
Agreement was approved by the full Board of Directors
of the Corporation on __________, 1997 and by the
initial shareholders of the Fund on __________, 1997.
The Advisory Agreement is terminable without penalty on
60 days' written notice by the Board of Directors, by
vote of a majority of the Fund's outstanding voting
securities, or by Advisor, and will terminate
automatically in the event of its assignment.
Under the terms of the Advisory Agreement, Advisor
manages the Fund's investments and business affairs,
subject to the supervision of the Board of Directors.
At its expense, Advisor provides office space and all
necessary office facilities, equipment, and personnel
for managing the investments of the Fund. As
compensation for its services, 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. The organizational expenses of the Fund were
advanced by Advisor and will be reimbursed by the Fund
over a period of not more than 60 months. The
organizational expenses were approximately
$____________.
Under the terms of the Advisory Agreement, Advisor
has agreed that for the fiscal year ending
September 30 , 1998, Advisor will waive its management
fees 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 of the Fund
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 net assets.
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 waiver of
fees or reimbursement of expenses will be made on a
monthly basis and, with respect to the latter, will be
paid to the Fund by reduction of Advisor's fee. Any
such waiver/reimbursement is subject to later
adjustment during the term of the Advisory Agreement to
allow Advisor to recoup amounts waived/reimbursed.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, Advisor, in its
capacity as portfolio manager, is responsible for
decisions to buy and sell securities for the Fund and
for the placement of the Fund's securities business,
the negotiation of the commissions to be paid on such
transactions, and the allocation of portfolio brokerage
business. The Fund has no obligation to deal with any
particular broker or dealer; in executing transactions,
Advisor seeks to obtain the best execution at the best
security price available with respect to each
transaction. The best price to the Fund means the best
net price without regard to the mix between purchase or
sale price and commission, if any. While Advisor seeks
reasonably competitive commission rates, the Fund does
not necessarily pay the lowest available commission.
<PAGE>
Brokerage may be allocated based on the sale of the
Fund's shares where best execution and price may be
obtained from more than one broker or dealer.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("Section 28(e)"), permits an
investment advisor, under certain circumstances, to
cause an account to pay a broker or dealer who supplies
brokerage and research services a commission for
effecting a transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting the transaction. Brokerage and research
services include (a) furnishing advice as to the value
of securities, the advisability of investing,
purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
(b) furnishing analyses and reports concerning issuers,
industries, sectors, securities, economic factors and
trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and
performing functions incidental thereto (such as
clearance, settlement, and custody).
In selecting brokers or dealers, Advisor considers
investment and market information and other research,
such as economic, securities, and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance,
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm might charge if
Advisor determines in good faith that the amount of
such commissions is reasonable in relation to the value
of the research information and brokerage services
provided by such broker or dealer to the Fund. Advisor
believes that the research information received in this
manner provides the Fund with benefits by supplementing
the research otherwise available to the Fund. Such
higher commissions will not be paid by the Fund unless
(a) Advisor determines in good faith that the amount is
reasonable in relation to the services in terms of the
particular transaction or in terms of Advisor's overall
responsibilities with respect to the accounts,
including the Fund, as to which it exercises investment
discretion; (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable
state and federal laws; and (c) in the opinion of
Advisor, the total commissions paid by the Fund will be
reasonable in relation to the benefits to the Fund over
the long term.
Advisor places portfolio transactions for other
advisory accounts in addition to the Fund. Research
services furnished by firms through which the Fund
effects its securities transactions may be used by
Advisor in servicing all of its accounts; not all of
such services may be used by Advisor in connection with
the Fund. Advisor believes it is not possible to
measure separately the benefits from research services
to each of the accounts (including the Fund) managed by
it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount
of commissions in excess of those charged by another
broker or dealer paid by each account for brokerage and
research services will vary. However, Advisor believes
such costs to the Fund will not be disproportionate to
the benefits received by the Fund on a continuing
basis. Advisor seeks to allocate portfolio
transactions equitably whenever concurrent decisions
are made to purchase or sell securities by the Fund and
another advisory account. In some cases, this
procedure could have an adverse effect on the price or
the amount of securities available to the Fund. There
can be no assurance that a particular purchase or sale
opportunity will be allocated to the Fund. In making
such allocations between the Fund and other advisory
accounts, certain factors considered by Advisor are the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable
securities, the availability of cash for investment,
and the size of investment commitments generally held.
The Fund anticipates that its annual portfolio
turnover rate will be under 50%. The annual portfolio
turnover rate indicates changes in the Fund's
securities holdings; for instance, a rate of 100% would
result if all the securities in a portfolio (excluding
securities whose maturities at acquisition were one
year or less) at the beginning of an annual period had
been replaced by the end of the period. The turnover
rate may vary from year to year, as well as within a
year, and may be affected by portfolio sales necessary
to meet cash requirements for redemptions of the Fund's
shares.
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
As custodian of the Fund's assets, Firstar Trust
Company ("Firstar"), 615 East Michigan Street,
Milwaukee, Wisconsin 53202, has custody of all
securities and cash of the Fund, delivers and receives
payment for portfolio securities sold, receives and
pays for portfolio securities purchased, collects
income from investments, if any, and performs other
duties, all as directed by the officers of the
Corporation. Firstar also acts as transfer agent and
dividend-disbursing agent for the Fund.
DISTRIBUTOR AND PLAN OF DISTRIBUTION
Distributor
Under a distribution agreement dated _________,
1997 ("Distribution Agreement"), Centennial Lakes
Capital, Inc. ("Distributor") acts as principal
distributor of the Fund's shares. The Distribution
Agreement provides that the Distributor will use its
best efforts to distribute the Fund's shares, which
shares are offered for sale by the Fund continuously at
(i) net asset value per share plus a maximum initial
sales charge of 3.50% of the offering price, in the
case of Class A shares, and (ii) net asset value per
share without the imposition of a sales charge, in the
case of Class I shares. As compensation for its
services under the Distribution Agreement, the
Distributor may retain a portion of the initial sales
charge from purchases of Class A shares. Investments
in Class A shares above $1 million are not assessed an
initial sales load. However, the Distributor may
impose a 1% contingent deferred sales charge ("CDSC")
on such shares redeemed within 24 months of purchase.
Pursuant to the terms of the Distribution Agreement,
the Distributor bears the costs of printing
prospectuses and shareholder reports which are used for
selling purposes, as well as advertising and any other
costs attributable to the distribution of Fund shares.
Certain of theses expenses may be reimbursed pursuant
to the terms of the distribution and shareholder
servicing plan discussed below.
Distribution and Shareholder Servicing Plan
As described more fully in the Prospectus under
the heading "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 such 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 such 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 pay all or a portion of these fees to any securities
dealer, financial institution or any 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 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.
<PAGE>
Anticipated Benefits to the Fund
The Board of Directors of the Corporation
considered various factors in connection with its
decision to approve the Plan, including: (a) the
nature and causes of the circumstances which make
implementation of the Plan necessary and appropriate;
(b) the way in which the Plan would address those
circumstances, including the nature and potential
amount of expenditures; (c) the nature of the
anticipated benefits; (d) the merits of possible
alternative plans or pricing structures; (e) the
relationship of the Plan to other distribution efforts
of the Fund, including the sales load on Class A
shares; and (f) the possible benefits of the Plan to
any other person relative to those of the Fund.
Based upon its review of the foregoing factors and
the material presented to it, and in light of its
fiduciary duties under relevant state law and the 1940
Act, the Board of Directors determined, in the exercise
of its business judgment, that the Plan was reasonably
likely to benefit the Fund and its shareholders in at
least one or several potential ways. Specifically, the
Board concluded that the Distributor and any Recipients
operating under Rule 12b-1 Related Agreements would
have little or no incentive to incur promotional
expenses on behalf of the Fund if a Rule 12b-1 plan
were not in place to reimburse them, thus making the
adoption of the Plan important to the initial success
and thereafter, continued viability of the Fund. In
addition, the Board determined that the payment of Rule
12b-1 fees to these persons should motivate them to
provide an enhanced level of service to Fund
shareholders, which would, of course, benefit such
shareholders. Finally, the adoption of the Plan would
help to increase net assets under management in a
relatively short amount of time, given the marketing
efforts on the part of the Distributor and Recipients
to sell Fund shares.
While there is no assurance that the expenditure
of Fund assets to finance distribution of Fund shares
will have the anticipated results, the Board of
Directors believes there is a reasonable likelihood
that one or more of such benefits will result, and
since the Board will be in a position to monitor the
distribution and shareholder servicing expenses of the
Fund, it will be able to evaluate the benefit of such
expenditures in deciding whether to continue the Plan.
TAXES
As indicated under "Dividends, Capital Gains
Distributions, and Tax Treatment" in the Prospectus,
the Fund intends to qualify annually as a "regulated
investment company" under the Code. This qualification
does not require government supervision of the Fund's
management practices or policies.
A dividend or capital gains distribution received
shortly after the purchase of shares reduces the net
asset value of shares by the amount of the dividend or
distribution and, although in effect a return of
capital, will be subject to income taxes. Net gains on
sales of securities when realized and distributed are
taxable as capital gains. If the net asset value of
shares were reduced below a shareholder's cost by
distribution of gains realized on sales of securities,
such distribution would be a return of investment
although taxable as indicated above.
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the same
heading, the net asset value of each class of shares of
the Fund will be determined as of the close of trading
on each day the New York Stock Exchange ("NYSE") is
open for trading. The Fund does not determine net
asset value on days the NYSE is closed and at other
times described in the Prospectus. The NYSE is closed
on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or the yearly accounting period.
<PAGE>
SHAREHOLDER MEETINGS
Minnesota law permits registered investment
companies, such as the Corporation, to operate without
an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by
the 1940 Act. The Corporation has adopted the
appropriate provisions in its Bylaws and may, at its
discretion, not hold an annual meeting in any year in
which the election of directors is not required to be
acted on by shareholders under the 1940 Act.
The Corporation's Bylaws also contain procedures
for the removal of directors by shareholders of the
Corporation. At any meeting of shareholders, duly
called and at which a quorum is present, the
shareholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office
and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed
directors.
PERFORMANCE INFORMATION
As described in the "Fund Performance" section of
the Fund's Prospectus, the Fund's historical
performance or return may be shown in the form of
various performance figures. The Fund's performance
figures are based upon historical results and are not
necessarily representative of future performance.
Factors affecting the Fund's performance include
general market conditions, operating expenses, and
investment management.
Total Return
The average annual total return of each class of
shares of the Fund is computed by finding the average
annual compounded rates of return over the periods that
would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of
a hypothetical $1,000 payment made at
the beginning of the stated periods at
the end of the stated periods.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000)
("initial investment") in a class of shares on the
first day of the period and computing the "ending
value" of that investment at the end of the period.
The total return percentage is then determined by
subtracting the initial investment from the ending
value and dividing the remainder by the initial
investment and expressing the result as a percentage.
With respect to the Class A shares, this calculation
reflects the deduction of the maximum 3.50% initial
sales charge and the 1% CDSC, and with respect to the
Class I shares, this calculation reflects the deduction
of the 1% redemption fee. In addition, the calculation
assumes that all income and capital gains dividends
paid by the Fund have been reinvested at the net asset
value of the applicable class of shares on the
reinvestment dates during the period. Total return may
also be shown as the increased dollar value of the
hypothetical investment over the period.
Cumulative total return represents the simple
change in value of an investment over a stated period
and may be quoted as a percentage or as a dollar
amount. Total returns may be broken down into their
components of income and capital (including capital
gains and changes in share price) in order to
illustrate the relationship between
<PAGE>
these factors and their contributions to total return.
Comparisons
From time to time, in marketing and other Fund
literature, the performance of one or both classes of
shares may be compared to the performance of other
mutual funds in general or to the performance of
particular types of mutual funds with similar
investment goals, as tracked by independent
organizations. Among these organizations, Lipper
Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by
overall performance, investment objectives, and assets,
may be cited. Lipper performance figures are based on
changes in net asset value, with all income and capital
gains dividends reinvested. Such calculations do not
include the effect of any sales charges imposed by
other funds. Each class of shares of the Fund will be
compared to Lipper's appropriate fund category, that
is, by fund objective and portfolio holdings.
The Fund's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which ranks funds on the basis of
historical risk and total return. Morningstar's
rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a
weighted average for 3, 5, and 10 year periods.
Rankings are not absolute or necessarily predictive of
future performance.
Evaluations of the Fund's performance made by
independent sources may also be used in advertisements
concerning the Fund, including reprints of or
selections from, editorials or articles about the Fund.
Sources for Fund performance and articles about the
Fund may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, the Wall Street Journal, Barron's,
and a variety of investment newsletters.
The Fund may compare the performance of one or
both classes of shares to a wide variety of indices and
measures of inflation. There are differences and
similarities between the investments that the Fund may
purchase and the investments measured by these indices.
Investors may want to compare the performance of
one or both classes of shares to that of certificates
of deposit offered by banks and other depository
institutions. Certificates of deposit may offer fixed
or variable interest rates and principal is guaranteed
and may be insured. Withdrawal of the deposits prior
to maturity normally will be subject to a penalty.
Rates offered by banks and other depository
institutions are subject to change at any time
specified by the issuing institution.
Investors may also want to compare performance of
one or both classes of shares to that of money market
funds. Money market fund yields will fluctuate and
shares are not insured, but share values usually remain
stable.
INDEPENDENT ACCOUNTANTS
[name], [address], have been selected as the independent
accountants for the Fund.
<PAGE>
FINANCIAL STATEMENTS
The following financial statements of the Fund are
contained herein:
(a) Report of Independent Accountants.
(b) Statement of Assets and Liabilities.
(c) Notes to Statement of Assets and Liabilities.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (Included in Parts A and B)
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
(b) Exhibits
(1) Registrant's Articles of Incorporation
(2) Registrant's By-Laws
(3) None
(4) None
(5) Investment Advisory Agreement*
(6.1) Distribution Agreement*
(6.2) Form of Selected Dealer Agreement*
(7) None
(8) Custodian Agreement*
(9.1) Transfer Agency Agreement*
(9.2) Administration Agreement*
(9.3) Fund Accounting Agreement*
(9.4) Fulfillment Servicing Agreement*
(10) Opinion and Consent of Godfrey & Kahn, S.C.*
(11) Consent of [ auditors ]*
(12) None
(13) Subscription Agreement*
(14) Individual Retirement Account Disclosure Statement
and Custodial Account*
<PAGE>
(15.1) Rule 12b-1 Distribution and Shareholder Servicing
Plan*
(15.2) Form of 12b-1 Related Agreement*
(16) None
(17) None
(18) Rule 18f-3 Multi-Class Plan*
(19) Powers of Attorney for Directors and
Officers (see signature page)
______________
* To be filed by amendment.
Item 25. Persons Controlled by or under Common Control
with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Securities as of __, 1997
Common Stock, $.01 par value [ ]
Item 27. Indemnification
Article VIII of Registrant's Articles of
Incorporation provides as follows:
(a) The Corporation shall indemnify such persons
for such expenses and liabilities, in such manner,
under such circumstances, and to the full extent
permitted by Section 302A.521 of the MBCA, as now
enacted or hereafter amended.
(b) A director of the Corporation shall not be
personally liable to the Corporation or its
shareholders for monetary damages for breach of
fiduciary duty as a director, except for (i)
liability based on a breach of duty of loyalty to
the Corporation or the shareholders; (ii)
liability for acts or omissions not in good faith
or that involve intentional misconduct or a
knowing violation of law; (iii) liability based on
the payment of an improper dividend or an improper
repurchase of the Corporation's stock under MBCA
Section 302A.559 or on the sale of unregistered
securities or securities fraud under MBCA 80A.23;
or (iv) liability for any transaction from which
the director derived an improper personal benefit.
If the MBCA is hereafter amended to authorize the
further elimination or limitation of the liability
of directors, then the liability of a director of
the Corporation, in addition to the limitation on
personal liability provided herein, shall be
limited to the fullest extent permitted by the
MBCA, as amended. Any repeal or modification of
this Article VIII by the shareholders of the
Corporation shall be prospective only and shall
not adversely affect any limitation on the
personal liability of a director of the
Corporation existing at the time of such repeal or
modification.
(c) Paragraphs (a) and (b) of this Article VIII
are qualified by Section 17(h) of the 1940 Act
which provides that neither the articles of
incorporation nor the bylaws of any registered
investment company may contain any provision which
protects or purports to protect any director or
officer of such company against any liability to
the company or its security holders to which such
officer or director would otherwise be
<PAGE>
subject by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his or her office.
Item 28. Business and Other Connections of Investment
Advisor
Besides serving as investment advisor to the
Registrant and other private accounts, Advisor is not
currently and has not during the past two fiscal years
engaged in any other business, profession, vocation, or
employment of a substantial nature. Information
regarding the business, profession, vocation, or
employment of a substantial nature of Advisor's
directors and officers is hereby incorporated by
reference from the information contained under "Fund
Organization and Management-Management" in the
Prospectus.
Item 29. Principal Underwriters
(a) None.
(b) The principal business address of
Centennial Lakes Capital, Inc.
("Centennial"), the Registrant's principal
underwriter, is 7701 France Avenue South,
Suite 500, Edina, Minnesota 55435. The
following information relates to each
director and officer of Centennial:
Positions
And Offices Positions and Offices
Name With Underwriter With Registrant
Donald James President None
Donald Cornelius Secretary Chief Financial Officer
and Treasurer and Treasurer
(c) None.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of Kopp
Investment Advisors, Registrant's investment advisor,
at Registrant's corporate offices, except records held
and maintained by Firstar Trust Company, 615 East
Michigan Street, Milwaukee, Wisconsin 53202, relating
to its function as custodian, transfer agent,
administrator, and fund accountant.
Item 31. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 32. Undertakings.
(a) Not Applicable.
(b) Registrant undertakes to file a post-
effective amendment to this Registration
Statement which will contain financial
statements (which need not be certified) no
later than 60 days after the end of the four
to six month period after effectiveness of
this Registration Statement.
(c) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement
on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of
Edina and State of Minnesota on the 20th day of June,
1997.
KOPP FUNDS,INC.(Registrant)
By: /s/ LeRoy C. Kopp
----------------------
LeRoy C. Kopp
Chief Executive
Officer and President
Each person whose signature appears below
constitutes and appoints LeRoy C. Kopp his true and
lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to
sign any and all amendments to this Registration
Statement and to file the same, with all exhibits
thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission
and any other regulatory body, granting unto said
attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement on Form N-1A has
been signed below by the following persons in the
capacities and on the date(s) indicated.
Name Title Date
/s/ LeRoy C. Kopp Chief Executive Officer,
- ------------------ President and Director June 20, 1997
LeRoy C. Kopp
____________________ Director ___________, 1997
____________________ Director ___________, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1) Registrant's Articles of Incorporation
(2) Registrant's By-Laws
(3) None
(4) None
(5) Investment Advisory Agreement*
(6.1) Distribution Agreement*
(6.2) Form of Selected Dealer Agreement*
(7) None
(8) Custodian Agreement*
(9.1) Transfer Agency Agreement*
(9.2) Administration Agreement*
(9.3) Fund Accounting Agreement*
(9.4) Fulfillment Servicing Agreement*
(10) Opinion and Consent of Godfrey & Kahn, S.C.*
(11) Consent of [ auditors ] *
(12) None
(13) Subscription Agreement*
(14) Individual Retirement Account Disclosure
Statement and Custodial Account*
(15.1) Rule 12b-1 Distribution and Shareholder
Servicing Plan*
(15.2) Form of 12b-1 Related Agreement*
(16) None
(17) None
(18) Rule 18f-3 Multi-Class Plan*
(19) Powers of Attorney for Directors and
Officers (see signature page)
___________________
* To be filed by Amendment.
ARTICLES OF INCORPORATION
OF
KOPP FUNDS, INC.
For the purpose of forming a corporation pursuant
to the provisions of Minnesota Statutes, Chapter 302A
(the "MBCA"), the following Articles of Incorporation
are adopted:
ARTICLE I
The name of the corporation (the "Corporation") is
Kopp Funds, Inc.
ARTICLE II
The location of the Corporation's registered
office is 7701 France Avenue South, Suite 500, Edina,
Minnesota 55435. The name of the Corporation's
registered agent at that address is Kathleen S.
Tillotson.
ARTICLE III
The total authorized number of shares of the
Corporation is ten billion (10,000,000,000), all of
which shall be common shares, par value $0.01 per
share, initially consisting of a single class
designated as Common Stock.
The Corporation may issue fractional shares. Any
fractional shares shall carry proportionately all the
rights of whole shares, including, without limitation,
the right to vote and the right to receive dividends
and distributions.
The shares may be classified by the Board of
Directors into one or more classes with such relative
rights and preferences as shall be stated or expressed
in a resolution or resolutions providing for the issue
of any such class or classes as may be adopted from
time to time by the Board of Directors of the
Corporation pursuant to the authority vested in the
Board of Directors and the MBCA, Section 302A.401,
Subd. 3, or any successor provision.
The shares of each class may be divided by the
Board of Directors into one or more series with such
relative rights and preferences as shall be stated or
expressed in a resolution or resolutions providing for
the issue of any such series as may be adopted from
time to time by the Board of Directors of the
Corporation pursuant to the authority vested in the
Board of Directors and the MBCA, Section 302A.401,
Subd. 3, or any successor provision.
For purposes of the Corporation's Registration
Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended
and the Investment Company Act of 1940, as amended (the
"1940 Act"), including all prospectuses and Statements
of Additional Information, and other reports filed
under the 1940 Act, references therein to "classes" of
the Corporation's Common Stock shall mean "series" as
used in these Articles of Incorporation and the MBCA,
and references therein to "series" shall mean
"classes," as used in these Articles of Incorporation
and the MBCA.
ARTICLE IV
The shareholders of each class of shares of the
Corporation shall not have the right to cumulate votes
for the election of directors.
ARTICLE V
The shareholders of each class of shares shall
have no preemptive right to subscribe to any issue of
shares of any class or series of the Corporation now or
hereafter created, designated or classified.
ARTICLE VI
A description of the relative rights and
preferences of all classes or series of shares is as
follows, unless otherwise set forth in one or more
amendments to these Articles of Incorporation or in the
resolution providing for the issue of such classes or
series:
a. All holders of shares shall vote as a single
class and series, except with respect to any matter
which affects only one or more classes or series of
shares, in which case only the holders of shares of the
class or series so affected shall be entitled to vote.
b. The assets and liabilities and the income and
expenses for each class shall be attributable to that
class. The assets and liabilities and the income and
expenses of each series within a class shall be
determined separately and, accordingly, the net asset
value of shares may vary from series to series within a
class. The income or gain and the expense or
liabilities of the Corporation shall be allocated to
each class or series as determined by or under the
direction of the Board of Directors.
c. Shares of each class or series shall be
entitled to such dividends or distributions, in shares,
cash or other property, as may be declared from time to
time by the Board of Directors, and to the extent
permitted by the MBCA as now enacted or hereafter
amended, with respect to such class or series.
Dividends or distributions shall be paid on shares of a
class or series only out of the assets belonging to
that class or series.
d. In the event of the liquidation or
dissolution of the Corporation, the holders of a class
or series shall be entitled to receive, as a class or
series, out of the assets available for distribution to
shareholders, the assets belonging to that class or
series less the liabilities allocated to that class or
series. The assets so distributable to the holders of
a class or series shall be distributed among such
holders in proportion to the number of shares of that
class or series held by them and recorded on the books
of the Corporation. In the event that there are any
assets available for distribution that are not
attributable to any particular class or series, such
assets shall be allocated to all classes or series in
proportion to the net asset value of the respective
class or series.
e. With the approval of a majority of the
shareholders of each of the affected classes or series
of shares present in person or by proxy at a meeting
called for the following purpose, the Board of
Directors may transfer the assets of any class or
series of shares to any other class or series; provided
that at least 10% of the issued and outstanding shares
of the affected class or series is present at such
meeting in person or by proxy. Upon such a transfer,
the Corporation shall issue shares representing
interests in the class or series of shares to which the
assets were transferred in exchange for all shares
representing interests in the class or series from
which the assets were transferred. Such shares shall
be exchanged at their respective net asset values.
f. Subject to the suspension of the right of
redemption or postponement of the date of payment or
satisfaction upon redemption in accordance with the
1940 Act, each holder of any class or series of the
Common Stock of the Corporation, upon request and after
complying with the redemption procedures established by
or under the supervision of the Board of Directors,
shall be entitled to require the Corporation to redeem
out of legally available funds all or any part of the
Common Stock standing in the name of such holder on the
books of the Corporation at the net asset value (as
determined in accordance with the 1940 Act) of such
shares (less any applicable redemption fee). Payment
of any redemption may be made in cash or other assets
of the Corporation. Any such redeemed shares shall be
cancelled and restored to the status of authorized but
unissued shares.
ARTICLE VII
The following additional provisions, when
consistent with law, are hereby established for the
management of the business of the Corporation, for the
conduct of the affairs of the Corporation and for the
purpose of describing certain specific powers of the
Corporation and of its directors and shareholders.
a. In furtherance and not in limitation of the
powers conferred by statute and pursuant to these
Articles of Incorporation, the Board of Directors is
expressly authorized to do the following:
(i) to distribute, in its discretion, for
any fiscal year (in the year or in the next fiscal
year) as ordinary dividends and as capital gains
distributions, respectively, amounts sufficient to
enable each class or series of shares to qualify
under the Internal Revenue Code as a regulated
investment company to avoid any liability for
federal income tax in respect of such year. Any
distribution or dividend paid to shareholders from
any capital source shall be accompanied by a
written statement showing the source or sources of
such payment;
(ii) to authorize, subject to such vote,
consent, or approval of shareholders and other
conditions, if any, as may be required by any
applicable statute, rule or regulation, the
execution and performance by the Corporation of
any agreement or agreements with any person,
corporation, association, company, trust,
partnership (limited or general) or other
organization whereby, subject to the supervision
and control of the Board of Directors, any such
other person, corporation, association, company,
trust, partnership (limited or general) or other
organization shall render managerial, investment
advisory, distribution, transfer agent, accounting
and/or other services to the Corporation
(including, if deemed advisable, the management or
supervision of the investment portfolios of the
Corporation) upon such terms and conditions as may
be provided in such agreement or agreements;
(iii) to authorize any agreement of the
character described in subparagraph (ii) of this
paragraph (a) with any person, corporation,
association, company, trust, partnership (limited
or general) or other organization, although one or
more of the members of the Board of Directors or
officers of the Corporation may be the other party
to any such agreement or an officer, director,
employee, shareholder, or member of such other
party, and no such agreement shall be invalidated
or rendered voidable merely by reason of the
existence of any such relationship;
(iv) to allot and authorize the issuance and
sale of the authorized but unissued shares of any
class or series from time to time and in such
amounts and on such terms and conditions, for such
purposes and for such amounts or kind of
consideration as the Board of Directors shall
determine, subject to any limits required by then
applicable law;
(v) to accept or reject subscriptions for
shares of any class or series thereof, made after
incorporation;
(vi) to take any action which might be taken
at a meeting of the Board of Directors, or any
duly constituted committee thereof, without a
meeting pursuant to a writing signed by that
number of directors or committee members that
would be required to take the same action at a
meeting of the Board of Directors or committee
thereof at which all directors or committee
members were present; and
(vii) to determine what constitutes net
income, total assets and the net asset value of
the shares of each class or series of the
Corporation. Any such determination made in good
faith shall be final and conclusive, and shall be
binding upon the Corporation and all holders
(past, present and future) of shares of each class
or series.
b. The Board may authorize the Corporation, at
its option and to the extent permitted by and in
accordance with the 1940 Act, to redeem any shares of
Common Stock of any class or series of the Corporation
owned by any shareholder under circumstances deemed
appropriate by the Board of Directors in its sole
discretion from time to time, including without
limitation the failure to maintain ownership of a
specified minimum number or value of shares of Common
Stock of any class or series of the Corporation, at the
net asset value (as determined in accordance with the
1940 Act) of such shares (less any applicable
redemption fee).
c. The Board may, upon reasonable notice to the
holders of Common Stock of any class or series of the
Corporation, impose a fee for the redemption of shares,
such fee to be not in excess of the amount set forth in
the Corporation's then existing By-Laws and to apply in
the case of such redemptions and under such terms and
conditions as the Board of Directors shall determine.
The Board of Directors shall have the authority to
rescind imposition of any such fee in its discretion
and to reimpose the redemption fee from time to time
upon reasonable notice.
d. With respect to any class or series, the
Board may adopt provisions to seek to maintain a stable
net asset value per share. Without limiting the
foregoing, the Board of Directors may determine that
the net asset value per share of any class or series
should be maintained at a designated constant value and
may establish procedures, not inconsistent with
applicable law, to accomplish that result. Such
procedures may include a requirement, in the event of a
net loss with respect to the particular class or series
from time to time, for automatic pro rata capital
contributions from each shareholder of that class or
series in amounts sufficient to maintain the designated
constant share value.
e. Except as provided in the next sentence of
this paragraph, shares of any class or series,
hereafter issued which are redeemed, exchanged, or
otherwise acquired by the Corporation shall return to
the status of authorized and unissued shares of such
class or series. Upon the redemption, exchange or
other acquisition by the Corporation of all outstanding
shares of any class or series hereafter issued, such
shares shall return to the status of authorized and
unissued shares without designation as to class (if no
shares of the class remain outstanding) or with the
same designation as to class, but no designation as to
series within such class (if shares of such class
remain outstanding, but no shares of such series
thereof remain outstanding), and all provisions of
these Articles of Incorporation relating to such class,
or series thereof (including, without limitation, any
statement establishing or fixing the rights and
preferences of such class, or series thereof), shall
cease to be of further effect and shall cease to be a
part of these Articles of Incorporation. Upon the
occurrence of such events, the Board of Directors shall
have the power, pursuant to MBCA Section 302A.135,
Subdivision 5, or any successor provision, and without
shareholder action, to cause restated Articles of
Incorporation of the Corporation to be prepared and
filed with the Secretary of State of Minnesota which
reflect such removal from these Articles of
Incorporation of all such provisions relating to such
class or series thereof.
f. The determination as to any of the following
matters made by or pursuant to the direction of the
Board of Directors consistent with these Articles of
Incorporation and in the absence of willful
misfeasance, bad faith, gross negligence or reckless
disregard of duties, shall be final and conclusive and
shall be binding upon the Corporation and every holder
of shares: namely, the amount of the assets,
obligations, liabilities and expenses of each class or
series of shares of the Corporation; the amount of the
net income of the Corporation from dividends and
interest for any period and the amount of assets at any
time legally available for the payment of dividends in
each class or series of shares; the amount of paid-in
surplus, other surplus, annual or other net profits, or
net assets in excess of capital, undivided profits, or
excess of profits over losses on sales of securities of
each class or series of shares; the amount, purpose,
time of creation, increase or decrease, alteration or
cancellation of any reserves or charges and the
propriety thereof (whether or not any obligation or
liability for which such reserves or charges shall have
been created shall have been paid or discharged); the
market value, or any sale, bid or asked price to be
applied in determining the market value, of any
security owned or held by or in each class or series of
shares of the Corporation; the fair value of any other
asset owned by or in each class or series of shares of
the Corporation; the number of shares of each class or
series of the Corporation issued or issuable; any
matter relating to the acquisition, holding and
disposition of securities and other assets by each
class or series of shares of the Corporation; and any
question as to whether any transaction constitutes a
purchase of securities on margin, a short sale of
securities, or an underwriting of the sale of, or
participation in any underwriting or selling group in
connection with the public distribution of, any
securities.
g. The Board of Directors or the shareholders of
the Corporation may adopt, amend, affirm or reject
investment policies and restrictions upon investment or
the use of assets of each class or series of shares of
the Corporation and may designate some such policies as
fundamental and not subject to change other than by a
vote of a majority of the outstanding voting
securities, as such phrase is defined in the 1940 Act,
of the affected class or series of shares of the
Corporation.
ARTICLE VIII
a. The Corporation shall indemnify such persons
for such expenses and liabilities, in such manner,
under such circumstances, and to the full extent
permitted by Section 302A.521 of the MBCA, as now
enacted or hereafter amended.
b. A director of the Corporation shall not be
personally liable to the Corporation or its
shareholders for monetary damages for breach of
fiduciary duty as a director, except for (i) liability
based on a breach of the duty of loyalty to the
Corporation or the shareholders; (ii) liability for
acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law;
(iii) liability based on the payment of an improper
dividend or an improper repurchase of the Corporation's
stock under MBCA Section 302A.559 or on the sale of
unregistered securities or securities fraud under MBCA
80A.23; or (iv) liability for any transaction from
which the director derived an improper personal
benefit. If the MBCA is hereafter amended to authorize
the further elimination or limitation of the liability
of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal
liability provided herein, shall be limited to the
fullest extent permitted by the MBCA, as amended. Any
repeal or modification of this Article VIII by the
shareholders of the Corporation shall be prospective
only and shall not adversely affect any limitation on
the personal liability of a director of the Corporation
existing at the time of such repeal or modification.
c. Paragraphs (a) and (b) of this Article VIII
are qualified by Section 17(h) of the 1940 Act which
provides that neither the articles of incorporation nor
the bylaws of any registered investment company may
contain any provision which protects or purports to
protect any director or officer of such company against
any liability to the company or to its security holders
to which such officer or director would otherwise be
subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
ARTICLE IX
The name of the Corporation's first director, who
shall serve until the first regular meeting of
shareholders or until his successor is elected and
qualified, is:
Mr. LeRoy C. Kopp
ARTICLE X
The name and address of the incorporator, who is a
natural person of full age, is:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
IN WITNESS WHEREOF, the undersigned incorporator
has executed these Articles of Incorporation on this
11th day of June, 1997.
Carol A. Gehl, Incorporator
BYLAWS
OF
KOPP FUNDS, INC.
ARTICLE I
OFFICES
SECTION 1.01. NAME. The name of the corporation
is Kopp Funds, Inc.
SECTION 1.02. REGISTERED OFFICE. The registered
office of the corporation in Minnesota shall be that
set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation
or resolution of the directors filed with the Secretary
of State of Minnesota changing the registered office.
SECTION 1.03. CORPORATE SEAL. The corporation
shall have no seal.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 2.01. PLACE AND TIME OF MEETINGS. Except
as provided otherwise by Minnesota Statutes, Chapter
302A (the "MBCA"), meetings of the shareholders may be
held at any place, within or without the State of
Minnesota, designated by the directors and, in the
absence of such designation, shall be held at the
registered office of the corporation in the State of
Minnesota. The directors shall designate the time of
day for each meeting and, in the absence of such
designation, every meeting of shareholders shall be
held at 10:00 A.M.
SECTION 2.02. REGULAR MEETINGS.
(a) Annual meetings of shareholders are not
required by these Bylaws. Regular meetings of
shareholders shall be held only with such frequency and
at such times and places as required by law.
(b) At each regular meeting, the shareholders,
voting as provided in the Articles of Incorporation and
these Bylaws, shall elect directors, and shall transact
such other business as may properly come before them.
(c) If a regular meeting of shareholders has not
been held during the immediately preceding 15 months, a
shareholder or shareholders holding three percent or
more of the voting power of all shares entitled to vote
may demand a regular meeting of shareholders by written
notice of demand given to the President or Treasurer.
Within 30 days after receipt of the demand, the Board
of Directors shall cause a regular meeting of
shareholders to be called and held on notice no later
than 90 days after receipt of the demand, at the
expense of the corporation.
SECTION 2.03. SPECIAL MEETINGS. Special meetings
of the shareholders may be held at any time and for any
purpose and may be called by the Chairman of the Board,
the President, any two or more directors, or by one or
more shareholders holding ten percent (10%) or more of
the shares entitled to vote on the matters to be
presented to the meeting. A shareholder or
shareholders holding ten percent (10%) or more of the
voting power of all shares entitled to vote, may demand
a special meeting of shareholders by written notice of
demand given to the President or Treasurer and
containing the purposes of the meeting. Within 30 days
of receipt of the demand, the Board of Directors shall
cause a special meeting of shareholders to be called
and held on notice no later than 90 days after receipt
of the demand, at the expense of the corporation.
SECTION 2.04. QUORUM, ADJOURNED MEETINGS. The
holders of ten percent (10%) of the shares outstanding
and entitled to vote shall constitute a quorum for the
transaction of business at any regular or special
meeting. In case a quorum shall not be present at a
meeting, those present in person or by proxy shall
adjourn the meeting to such day as they shall, by
majority vote, agree upon without further notice other
than by announcement at the meeting at which such
adjournment is taken. If a quorum is present, a
meeting may be adjourned from time to time without
notice other than announcement at the meeting. At
adjourned meetings at which a quorum is present, any
business may be transacted which might have been
transacted at the meetings as originally noticed. If a
quorum is present, the shareholders may continue to
transact business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a
quorum.
SECTION 2.05. VOTING. At each meeting of the
shareholders every shareholder having the right to vote
shall be entitled to vote either in person or by proxy.
Each shareholder, unless the Articles of Incorporation
provide otherwise, shall have one vote for each share
having voting power registered in his name on the books
of the corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions
of the Investment Company Act of 1940 (the "1940 Act")
or other applicable laws, all questions shall be
decided by a majority vote of the number of shares
entitled to vote and represented at the meeting at the
time of the vote.
SECTION 2.06. VOTING - PROXIES. The right to
vote by proxy shall exist only if the instrument
authorizing such proxy to act shall have been executed
in writing by the shareholder or his or her attorney
thereunto duly authorized in writing. No proxy shall
be voted after eleven months from its date unless it
specifically provides for a longer period.
SECTION 2.07. CLOSING OF BOOKS. The Board of
Directors may fix a time, not exceeding sixty (60) days
preceding the date of any meeting of shareholders, as a
record date for the determination of the shareholders
entitled to notice of, and to vote at, such meeting,
notwithstanding any transfer of shares on the books of
the corporation after any record date so fixed. The
Board of Directors may close the books of the
corporation against the transfer of shares during the
whole or any part of such period. If the Board of
Directors fails to fix a record date for determination
of the shareholders entitled to notice of, and to vote
at, any meeting of shareholders, the record date shall
be the thirtieth (30th) day preceding the date of such
meeting.
SECTION 2.08. NOTICE OF MEETINGS. There shall be
mailed to each shareholder, shown on the books of the
corporation to be a holder of record of voting shares,
at his or her address as shown on the books of the
corporation, a notice setting out the time and place of
each regular meeting and each special meeting, which
notice shall be mailed at least ten (10) and not more
than sixty (60) days prior thereto. Every notice of
any special meeting shall state the purpose or purposes
for which the meeting has been called, pursuant to
Section 2.03, and the business transacted at all
special meetings shall be confined to the purpose
stated in such notice.
SECTION 2.09. WAIVER OF NOTICE. Notice of any
regular or special meeting may be waived either before,
at or after such meeting orally or in writing signed by
each shareholder or representative thereof entitled to
vote the shares so represented. A shareholder, by his
or her attendance at any meeting of shareholders, shall
be deemed to have waived notice of such meeting, except
where the shareholder objects at the beginning of the
meeting to the transaction of business because the
meeting is not lawfully called or convened, or objects
before a vote on an item of business because the item
may not lawfully be considered at that meeting and does
not participate in the consideration of the item at
that meeting.
SECTION 2.10. WRITTEN ACTION. Any action which
might be taken at a meeting of the shareholders may be
taken without a meeting if done in writing and signed
by all of the shareholders entitled to vote on that
action.
ARTICLE III
DIRECTORS
SECTION 3.01. NUMBER, QUALIFICATION AND TERM OF
OFFICE. The number of directors shall be at least the
number named in the Articles of Incorporation.
Thereafter, the number of directors may be increased or
decreased, subject to Section 302A.223, from time to
time by resolution adopted by an affirmative vote of a
majority of the entire Board of Directors then in
office. Directors need not be shareholders. Each of
the directors shall hold office until the regular
meeting of shareholders next held after his election
and until his or her successor shall have been elected
and shall qualify, or until the earlier of the death,
resignation, removal or disqualification of such
director.
SECTION 3.02. ELECTION OF DIRECTORS. Except as
otherwise provided in Sections 3.10 and 3.11 hereof,
the directors shall be elected at each regular
shareholders' meeting. In the event that directors are
not elected at a regular shareholders' meeting, then
directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall
contain mention of such purpose. At each shareholders'
meeting for the election of directors, the directors
shall be elected by a plurality of the votes validly
cast at such election.
SECTION 3.03. GENERAL POWERS.
(a) Except as otherwise permitted by statute, the
property, affairs and business of the corporation shall
be managed by the Board of Directors, which may
exercise all the powers of the corporation except those
powers vested solely in the shareholders of the
corporation by statute, the Articles of Incorporation,
or these Bylaws, as amended.
(b) All acts done by any meeting of the Board of
Directors or by any person acting as a director, so
long as his successor shall not have been duly elected
or appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in the
election of the directors or such person acting as
aforesaid or that they or any of them were
disqualified, be as valid as if the directors or such
other person, as the case may be, had been duly elected
and were or was qualified to be directors or a director
of the corporation.
SECTION 3.04. BOARD MEETINGS. Meetings of the
Board of Directors shall be held from time to time at
such time and place within or without the State of
Minnesota as may be designated in the notice of such
meeting.
SECTION 3.05. CALLING MEETINGS, NOTICE. A
director may call a meeting by giving five (5) days
notice to all directors of the date, time, and place of
the meeting; provided that if the day or date, time and
place of a board meeting have been announced at a
previous meeting of the board, no notice is required.
SECTION 3.06. WAIVER OF NOTICE. Notice of any
meeting of the Board of Directors may be waived by any
director either before, at, or after such meeting
orally or in writing signed by such director. A
director, by his attendance and participation in the
action taken at any meeting of the Board of Directors,
shall be deemed to have waived notice of such meeting,
except where the director objects at the beginning of
the meeting to the transaction of business because the
meeting is not lawfully called or convened and does not
participate thereafter in the meeting.
SECTION 3.07. QUORUM. A majority of the
directors holding office immediately prior to a meeting
of the Board of Directors shall constitute a quorum for
the transaction of business at such meeting; provided,
however, notwithstanding the above, if the Board of
Directors is taking action pursuant to certain
provisions of the 1940 Act, as now enacted or hereafter
amended, a majority of directors who are not
"interested persons" (as defined by the 1940 Act) of
the corporation shall constitute a quorum for taking
such action.
SECTION 3.08. ADVANCE CONSENT OR OPPOSITION. A
director may give advance written consent or opposition
to a proposal to be acted on at a meeting of the Board
of Directors. If such director is not present at the
meeting, consent or opposition to a proposal does not
constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall
be counted as a vote in favor of or against the
proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted
on at the meeting is substantially the same or has
substantially the same effect as the proposal to which
the director has consented or objected.
SECTION 3.09. CONFERENCE COMMUNICATIONS. Unless
otherwise required by the 1940 Act, directors may
participate in any meeting of the Board of Directors,
or of any duly constituted committee thereof, by means
of a conference telephone conversation or other
comparable communication technique whereby all persons
participating in the meeting can hear and communicate
to each other. For the purposes of establishing a
quorum and taking any action at the meeting, such
directors participating pursuant to this Section 3.09
shall be deemed present in person at the meeting; and
the place of the meeting shall be the place or
origination of the conference telephone conversation or
other comparable communication technique.
SECTION 3.10. VACANCIES; NEWLY CREATED
DIRECTORSHIPS. Vacancies in the Board of Directors of
this corporation occurring by reason of death,
resignation, removal or disqualification shall be
filled for the unexpired term by a majority of the
remaining directors of the Board although less than a
quorum; newly created directorships resulting from an
increase in the authorized number of directors by
action of the Board of Directors as permitted by
Section 3.01 may be filled by the affirmative vote of a
majority of the directors serving at the time of such
increase; and each person so elected shall be a
director until his or her successor is elected by the
shareholders, who may make such election at their next
regular meeting or at any meeting duly called for that
purpose; provided, however, that no vacancy can be
filled as provided above if prohibited by the
provisions of the 1940 Act.
SECTION 3.11. REMOVAL. The entire Board of
Directors or any individual director may be removed
from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled
to vote at an election of directors. In the event that
the entire Board or any one or more directors be so
removed, new directors shall be elected at the same
meeting, or the remaining directors may, to the extent
vacancies are not filled at such meeting, fill any
vacancy or vacancies created by such removal. A
director named by the Board of Directors to fill a
vacancy may be removed from office at any time, with or
without cause, by the affirmative vote of the remaining
directors if the shareholders have not elected
directors in the interim between the time of the
appointment to fill such vacancy and the time of the
removal.
SECTION 3.12. COMMITTEES. A resolution approved
by the affirmative vote of a majority of the Board of
Directors may establish committees having the authority
of the board in the management of the business of the
corporation to the extent provided in the resolution.
A committee shall consist of one or more persons, who
need not be directors, appointed by the affirmative
vote of a majority of the directors present.
Committees are subject to the direction and control of,
and vacancies in the membership thereof shall be filled
by, the Board of Directors.
A majority of the members of the committee present
at a meeting is a quorum for the transaction of
business, unless a larger or smaller proportion or
number is provided in a resolution approved by the
affirmative vote of a majority of the directors
present.
SECTION 3.13. WRITTEN ACTION. Unless otherwise
prohibited by the 1940 Act, any action which might be
taken at a meeting of the Board of Directors, or any
duly constituted committee thereof, may be taken
without a meeting if done in writing and signed by a
majority of the directors or committee members.
SECTION 3.14. COMPENSATION. Directors who are
not salaried officers of this corporation or affiliated
with its investment adviser shall receive such fixed
sum per meeting attended and/or such fixed annual sum
as shall be determined, from time to time, by
resolution of the Board of Directors. All such
directors shall receive their expenses, if any, of
attendance at meetings of the Board of Directors or any
committee thereof. Nothing herein contained shall be
construed to preclude any director from serving this
corporation in any other capacity and receiving proper
compensation therefor.
SECTION 3.15. RESIGNATION. A director may resign
by giving written notice to the corporation, and the
resignation is effective without acceptance when given,
unless a later effective time is specified in the
notice.
ARTICLE IV
OFFICERS
SECTION 4.01. NUMBER. The officers of the
corporation shall consist of a Chairman of the Board
(if one is elected by the Board), the President, one or
more Vice Presidents (if desired by the Board), a
Secretary, a Treasurer and such other officers and
agents as may, from time to time, be elected by the
Board of Directors. Any number of offices may be held
by the same person.
SECTION 4.02. ELECTION, TERM OF OFFICE AND
QUALIFICATIONS. The Board of Directors shall elect,
from within or without their number, the officers
referred to in Section 4.01 of these Bylaws, each of
whom shall have the powers, rights, duties,
responsibilities, and terms in office provided for in
these Bylaws or a resolution of the Board not
inconsistent therewith. The President and all other
officers shall continue to hold office until the
election and qualification of their successors.
SECTION 4.03. RESIGNATION. Any officer may
resign his or her office at any time by delivering a
written resignation to the Board of Directors, the
President, the Secretary, or any Assistant Secretary.
Unless otherwise specified therein, such resignation
shall take effect upon delivery.
SECTION 4.04. REMOVAL AND VACANCIES. Any officer
may be removed from office by a majority of the Board
of Directors with or without cause. Such removal,
however, shall be without prejudice to the contract
rights of the person so removed. If there be a vacancy
among the officers of the corporation by reason of
death, resignation, or otherwise, such vacancy shall be
filled for the unexpired term by the Board of
Directors.
SECTION 4.05. CHAIRMAN OF THE BOARD. The
Chairman of the Board, if one is elected, shall preside
at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from
time to time, by the Board of Directors.
SECTION 4.06. PRESIDENT. The President shall
have general active management of the business of the
corporation. In the absence of the Chairman of the
Board, the President shall preside at all meetings of
the shareholders and directors. The President shall be
the chief executive officer of the corporation and
shall see that all orders and resolutions of the Board
of Directors are carried into effect. The President
may execute and deliver, in the name of the
corporation, any deeds, mortgages, bonds, contracts, or
other instruments pertaining to the business of the
corporation and, in general, shall perform all duties
usually incident to the office of the President. In
addition, the President shall have such other duties as
may, from time to time, be prescribed by the Board of
Directors.
SECTION 4.07. VICE PRESIDENT. Each Vice
President shall have such powers and shall perform such
duties as may be specified in the Bylaws or prescribed
by the Board of Directors or by the President. In the
event of absence or disability of the President, Vice
Presidents shall succeed to his or her power and duties
in the order designated by the Board of Directors.
SECTION 4.08. SECRETARY. The Secretary shall be
secretary of, and shall attend, all meetings of the
shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of
the corporation. The Secretary shall give proper
notice of meetings of shareholders and directors and
shall perform such other duties as may, from time to
time, be prescribed by the Board of Directors or by the
President.
SECTION 4.09. TREASURER. The Treasurer shall be
the chief financial officer and shall keep accurate
accounts of all moneys of the corporation received or
disbursed. The Treasurer shall deposit all moneys,
drafts and checks in the name of, and to the credit of,
the corporation in such banks and depositories as a
majority of the Board of Directors shall, from time to
time, designate. The Treasurer shall have power to
endorse, for deposit, all notes, checks and drafts
received by the corporation and shall disburse the
funds of the corporation, as ordered by the Board of
Directors, making proper vouchers therefor. The
Treasurer shall render to the President and the
directors, whenever required, an account of all his or
her transactions as Treasurer and of the financial
condition of the corporation, and shall perform such
other duties as may, from time to time, be prescribed
by the Board of Directors or by the President.
SECTION 4.10. ASSISTANT SECRETARIES. At the
request of the Secretary, or in his or her absence or
disability, any Assistant Secretary shall have the
power to perform all the duties of the Secretary, and,
when so acting, shall have all the powers of, and be
subject to all restrictions upon, the Secretary. The
Assistant Secretaries shall perform such other duties
as from time to time may be assigned to them by the
Board of Directors or the President.
SECTION 4.11. ASSISTANT TREASURERS. At the
request of the Treasurer or in his or her absence or
disability any Assistant Treasurer shall have the power
to perform all the duties of the Treasurer, and when so
acting, shall have all the powers of, and be subject to
all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as
from time to time may be assigned to them by the Board
of Directors or the President.
SECTION 4.12. COMPENSATION. The officers of this
corporation shall receive such compensation for their
services as may be determined, from time to time, by
resolution of the Board of Directors.
ARTICLE V
SHARES AND THEIR TRANSFER
SECTION 5.01. CERTIFICATES FOR SHARES.
(a) The corporation may have certificated or
uncertificated shares, or both, as designated by
resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be
entitled to a certificate, to be in such form as shall
be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him.
Within a reasonable time after the issuance or transfer
of uncertificated shares, the corporation shall send to
the new shareholder the information required to be
stated on certificates. Certificated shares shall be
numbered in the order in which they shall be issued and
shall be signed, in the name of the corporation, by the
President or a Vice President and by the Treasurer or
Secretary or by such officers as the Board of Directors
may designate. Such signatures may be by facsimile if
authorized by the Board of Directors. Every
certificate surrendered to the corporation for exchange
or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any
existing certificate until such existing certificate
shall have been so cancelled, except in cases provided
for in Section 5.08.
(b) In case any officer, transfer agent or
registrar who shall have signed any such certificate,
or whose facsimile signature has been placed thereon,
shall cease to be such an officer, transfer agent or
registrar (because of death, resignation or otherwise)
before such certificate is issued, such certificate may
be issued and delivered by the corporation with the
same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
SECTION 5.02. ISSUANCE OF SHARES. The Board of
Directors is authorized to cause to be issued shares of
the corporation up to the full amount authorized by the
Articles of Incorporation in such amounts as may be
determined by the Board of Directors and as may be
permitted by law. No shares shall be allotted except
in consideration of cash or other property, tangible or
intangible, received or to be received by the
corporation under a written agreement, of services
rendered or to be rendered to the corporation under a
written agreement, or of an amount transferred from
surplus to stated capital upon a share dividend. At
the time of such allotment of shares, the Board of
Directors making such allotments shall state, by
resolution, their determination of the fair value to
the corporation in monetary terms of any consideration
other than cash for which shares are allotted. No
shares of stock issued by the corporation shall be
issued, sold, or exchanged by or on behalf of the
corporation for any amount less than the net asset
value per share of the shares outstanding as determined
pursuant to Article X hereunder.
SECTION 5.03. REDEMPTION OF SHARES. Upon the
demand of any shareholder, this corporation shall
redeem any share of stock issued by it held and owned
by such shareholder at the net asset value thereof as
determined pursuant to Article X hereunder. The Board
of Directors may suspend the right of redemption or
postpone the date of payment during any period as may
be permitted by law.
SECTION 5.04. TRANSFER OF SHARES. Transfer of
shares on the books of the corporation may be
authorized only by the shareholder named in the
certificate, or the shareholder's legal representative,
or the shareholder's duly authorized attorney-in-fact,
and upon surrender of the certificate or the
certificates, if any, for such shares or a duly
executed assignment covering shares held in unissued
form. The corporation may treat, as the absolute owner
of shares of the corporation, the person or persons in
whose name shares are registered on the books of the
corporation.
SECTION 5.05. REGISTERED SHAREHOLDERS. The
corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to
recognize any equitable or other claim to or interest
in such share on the part of any other person, whether
or not it shall have express or other notice thereof,
except as otherwise expressly provided by the laws of
Minnesota.
SECTION 5.06. TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may from time to time appoint or
remove transfer agents and/or registrars of transfers
of shares of stock of the corporation, and it may
appoint the same person as both transfer agent and
registrar. Upon any such appointment being made all
certificates representing shares of capital stock
thereafter issued shall be countersigned by one of such
transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both
transfer agent and registrar, only one countersignature
by such person shall be required.
SECTION 5.07. TRANSFER REGULATIONS. The shares
of stock of the corporation may be freely transferred,
and the Board of Directors may from time to time adopt
rules and regulations with reference to the method of
transfer of the shares of stock of the corporation.
SECTION 5.08. LOST, STOLEN, DESTROYED AND
MUTILATED CERTIFICATES. The holder of any stock of the
corporation shall immediately notify the corporation of
any loss, theft, destruction or mutilation of any
certificate therefor, and the Board of Directors may,
in its discretion, cause to be issued to him or her a
new certificate or certificates of stock, upon the
surrender of the mutilated certificate or in case of
loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft, or destruction.
A new certificate or certificates of stock will be
issued to the owner of the lost, stolen or destroyed
certificate only after such owner, or his or her legal
representatives, gives to the corporation and to such
registrar or transfer agent as may be authorized or
required to countersign such new certificate or
certificates a bond, in such sum as they may direct,
and with such surety or sureties, as they may direct,
as indemnity against any claim that may be made against
them or any of them on account of or in connection with
the alleged loss, theft, or destruction of any such
certificate.
ARTICLE VI
DIVIDENDS, SURPLUS, ETC.
SECTION 6.01. The corporation's net investment
income will be determined, and its dividends shall be
declared and made payable at such time(s) as the Board
of Directors shall determine.
It shall be the policy of the corporation to
qualify for and elect the tax treatment applicable to
regulated investment companies under the Internal
Revenue Code, so that the corporation will not be
subjected to Federal income tax on such part of its
income or capital gains as it distributes to
shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
SECTION 7.01. SHARE REGISTER. The Board of
Directors of the corporation shall cause to be kept at
its principal executive office, or at another place or
places within the United States determined by the
Board:
(1) a share register not more than one year
old, containing the names and addresses of the
shareholders and the number and classes or series
of shares held by each shareholder; and
(2) a record of the dates on which
certificates or transaction statements
representing shares were issued.
SECTION 7.02. OTHER BOOKS AND RECORDS. The Board
of Directors shall cause to be kept at its principal
executive office, or, if its principal executive office
is not in Minnesota, shall make available at its
registered office within ten days after receipt by an
officer of the corporation of a written demand for them
made by a shareholder or other person authorized by
MBCA Section 302A. 461, originals or copies of:
(1) records of all proceedings of
shareholders for the last three years;
(2) records of all proceedings of the Board
for the last three years;
(3) its articles and all amendments
currently in effect;
(4) its bylaws and all amendments currently
in effect;
(5) financial statements required by MBCA
Section 302A. 463 and the financial statement for
the most recent interim period prepared in the
course of the operation of the corporation for
distribution to the shareholders or to a
governmental agency as a matter of public record;
(6) reports made to shareholders generally
within the last three years;
(7) a statement of the names and usual
business addresses of its directors and principal
officers; and
(8) any shareholder voting or control
agreements of which the corporation is aware.
SECTION 7.03. AUDIT; ACCOUNTANT.
(a) The Board of Directors shall cause the
records and books of account of the corporation to be
audited at least once in each fiscal year and at such
other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent
public accountant or firm of independent public
accountants as its Accountant to examine the accounts
of the corporation and to sign and certify financial
statements filed by the corporation.
(c) Any vacancy occurring between regular
meetings, due to resignation or otherwise of the
Accountant, may be filled by the Board of Directors,
unless otherwise prohibited by the 1940 Act.
SECTION 7.04. FISCAL YEAR. The fiscal year of
the corporation shall be determined by the Board of
Directors.
ARTICLE VIII
INDEMNIFICATION OF CERTAIN PERSONS
SECTION 8.01. The corporation shall indemnify
such persons, for such expenses and liabilities, in
such manner, under such circumstances, and to such
extent as permitted by Section 302A. 521 of the MBCA,
as now enacted or hereafter amended, provided, however,
that no such indemnification may be made if it would be
in violation of Section 17(h) of the 1940 Act, as now
enacted or hereafter amended.
ARTICLE IX
VOTING OF STOCK HELD
SECTION 9.01. Unless otherwise provided by
resolution of the Board of Directors, the President,
any Vice President, the Secretary or the Treasurer, may
from time to time appoint an attorney or attorneys or
agent or agents of the corporation, in the name and on
behalf of the corporation, to cast the votes which the
corporation may be entitled to cast as a stockholder or
otherwise in any other corporation or association, any
of whose stock or securities may be held by the
corporation, at meetings of the holders of the stock or
other securities of any such other corporation or
association, or to consent in writing to any action by
any such other corporation or association, and may
instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent,
and may execute or cause to be executed on behalf of
the corporation, such written proxies, consents,
waivers, or other instruments as it may deem necessary
or proper; or any of such officers may themselves
attend any meeting of the holders of stock or other
securities of any such corporation or association and
vote or exercise any or all other powers of the
corporation as the holder of such stock or other
securities of such other corporation or association, or
consent in writing to any action by any such other
corporation or association.
ARTICLE X
DETERMINATION OF NET ASSET VALUE
SECTION 10.01. The net asset value per share of
the corporation shall be determined in good faith by or
under the supervision of the officers of the
corporation as authorized by the Board of Directors as
often and on such days and at such time(s) as the Board
of Directors shall determine, or as otherwise may be
required by law, rule, regulation or order of the
Securities and Exchange Commission.
ARTICLE XI
CUSTODY OF ASSETS
SECTION 11.01. All securities and cash owned by
the corporation shall, as hereinafter provided, be held
by or deposited with a bank or trust company having
(according to its last published report) not less than
Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits (the "Custodian"), unless
a more rigorous standard is required by the 1940 Act.
This corporation shall enter into a written
contract with the Custodian regarding the powers,
duties and compensation of the Custodian with respect
to the cash and securities of the corporation held by
the Custodian. Said contract and all amendments
thereto shall be approved by the Board of Directors of
the corporation. In the event of the Custodian's
resignation or termination, the corporation shall use
its best efforts promptly to obtain a successor
Custodian and shall require that the cash and
securities owned by the corporation held by the
Custodian be delivered directly to such successor
Custodian.
ARTICLE XII
AMENDMENTS
SECTION 12.01. These Bylaws may be amended or
altered by a vote of the majority of the Board of
Directors at any meeting provided that notice of such
proposed amendment shall have been given to the
directors of such meeting. Such authority in the Board
of Directors is subject to the power of the
shareholders to change or repeal such Bylaws by a
majority vote of the shareholders present or
represented at any regular or special meeting of
shareholders called for such purpose, and the Board of
Directors shall not make or alter any Bylaws fixing a
quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies
in the Board of Directors, or fixing the number of
directors or their classifications, qualifications or
terms of office, except that the Board of Directors may
make or alter any Bylaw to increase their number.
