As filed with the Securities and Exchange Commission on December 29, 1998
Securities Act Registration No. 333-29687
Investment Company Act Registration No. 811-8267
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. 2 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4 [X]
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) 841-0400
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
It is proposed that this filing will become
effective (check appropriate box):
[ ] immediately upon filing pursuant to Rule 485(b).
[X] on December 31, 1998 pursuant to Rule 485(b).
[ ] 60 days after filing pursuant to Rule 485(a)(1).
[ ] on (date) pursuant to Rule 485(a)(1).
[ ] 75 days after filing pursuant to Rule 485(a)(2).
[ ] on (date) pursuant to Rule 485(a)(2).
<PAGE>
PROSPECTUS
31 December 1998
[Logo]
Kopp Funds
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-533-KOPP
Facsimile: 1-612-841-0411
Website: www.koppfunds.com
The investment objective of the Kopp Emerging
Growth Fund ("Fund") 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.
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.
____________________
Neither the Securities and Exchange Commission
("SEC") nor any state securities commission has approved
or disapproved of the securities offered by this Prospectus,
nor has the SEC or any state securities commission passed upon
the adequacy of this Prospectus. Any representation to the
contrary is a criminal offense.
___________________
Not FDIC-Insured
No Bank Guarantee
May Lose Value
<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS 3
FEES AND EXPENSES OF THE FUND 4
INVESTMENT OBJECTIVE 5
INVESTMENT STRATEGY 5
IMPLEMENTATION OF INVESTMENT OBJECTIVE 6
PRIOR PERFORMANCE OF INVESTMENT ADVISOR 7
FINANCIAL HIGHLIGHTS OF THE FUND 10
FUND MANAGEMENT AND DISTRIBUTION 10
YOUR ACCOUNT 11
VALUATION OF FUND SHARES 18
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAX
TREATMENT 18
YEAR 2000 ISSUE 18
ADDITIONAL INFORMATION 20
No one has been authorized to give any information
or to make any representations other than those
contained in this Prospectus and the Fund's Statement
of Additional Information ("SAI"), and if given or
made, the information or representations may not be
relied upon as having been made by the Fund. This
Prospectus is not an offer to sell securities in any
state or jurisdiction in which an offering may not
lawfully be made.
<PAGE>
HIGHLIGHTS
What is the objective of the Fund?
The Fund's objective is long-term capital
appreciation. For more information, see "Investment
Objective."
What is the Fund's investment strategy?
The Fund's investment strategy is to invest
primarily in common stocks of companies that Advisor
believes have the potential for revenue and earnings
growth superior to that of companies with similar
market or business characteristics. These companies,
which may be characterized as emerging and re-emerging
growth companies, will typically have small-to-medium
market capitalizations. An emerging growth company is
a newer business organized to address an industry
niche, which may have unstable cash reserves, but the
potential to experience accelerating returns. A re-
emerging growth company is a more established company
experiencing a potential resurgence in sales and
earnings due to new industry leadership, restructuring,
or both.
Advisor uses a "buy discipline" when making
purchase decisions for the Fund. This "buy discipline"
involves three key components. First, Advisor gathers
research on potential investment candidates. Then
Advisor reviews certain fundamental attributes that it
believes a "buy" candidate should possess. Finally,
Advisor values companies by considering price to sales
ratios and price to earnings ratios within a peer
group. From this process, securities are selected and
then purchased when their prices are within a pre-
determined range.
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. Because companies
considered by Advisor to be "emerging growth" are often
in the same or related market sectors, the Fund may be
heavily invested in a single sector. In addition,
because the Fund is not subject to the diversification
rules of the Investment Company Act of 1940, as amended
("1940 Act"), the Fund may take large positions in
individual companies. For more information, see
"Investment Strategy" and "Implementation of Investment
Objective."
What are the principal 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 large 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
large 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 _ accordingly, you may lose money on
your investment. In addition, because the Fund is not
subject to the diversification rules of the 1940 Act, a
larger percentage of the Fund's assets may be invested
in fewer companies than is typical of other mutual
funds, which may increase volatility. Because the Fund
intends to qualify as a regulated investment company
under federal income tax laws, it will, however, 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 price
Risk: that the Fund seeks.
Market The market value of a security will move
Risk: up and down, sometimes rapidly and
unpredictably due to sector rotation or
other economic or market trends.
An investment opportunity may be missed
Opportunity because the assets necessary to take
Risk: advantage of it are tied up in less
desirable investments.
Management A strategy used by Advisor may fail to
Risk: produce the intended result.
<PAGE>
For more information, see "Implementation of Investment
Objective."
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;
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 potential to realize greater financial gains in
the future.
The Fund has no calendar year returns history to report.
<PAGE>
FEES AND EXPENSES OF THE FUND
The following table describes the fees and
expenses that you may pay if you buy and hold shares of
the Fund.
Class A Class C(1) Class I
Shareholder Fees (fees paid
directly from your investment)
Maximum sales charge (load) imposed
on purchases (as a percentage of
offering price) 3.50%(2) None None
Maximum deferred sales charge
(load) imposed on redemptions (as
a percentage of amount redeemed) 1.00%(3) 1.00%(4) None
Redemption fee (as a percentage of
amount redeemed)(5) None None 1.00%(6)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets) (7)
Management fee 1.00% 1.00% 1.00%
Distribution and service (12b-1) fees(8) 0.35% 1.00% None
Other expenses 0.46% 0.46%(9) 0.46%
Total 1.81%(10) 2.46%(9) 1.46%(10)
____________
(1)The Class C shares are first being offered to
investors as of the date of this Prospectus.
(2)This sales charge is the maximum applicable to
purchases of Class A shares. You may not have to
pay this sales charge because waivers and reduced
sales charges are available. See "Your
Account_Class A Shares."
(3)A contingent deferred sales charge ("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. The
CDSC is based on the lesser of the current value or
the actual purchase price of the shares being
redeemed and is not imposed on shares acquired by
reinvesting dividends or capital gains. See "Your
Account_Class A Shares."
(4)A CDSC of 1% may be imposed on redemptions of
certain Class C shares which are redeemed within 12
months of purchase. The CDSC is based on the
lesser of the current value or the actual purchase
price of the shares being redeemed and is not
imposed on shares acquired by reinvesting dividends
or capital gains. See "Your Account_Class C
Shares."
(5)If you redeem shares by wire, you will be charged a
$12 service fee. See "Your Account_Redeeming
Shares."
(6)A redemption fee of 1% of the current market value
of the shares redeemed may be imposed on
redemptions of Class I shares made within 24 months
of purchase. Redemption fees are paid directly
into Fund assets to help cover the costs that short-
term trading generates. See "Your Account_Class I
Shares."
(7)Fund operating expenses are deducted from Fund
assets before computing the daily share price or
making distributions. As a result, they do not
appear on your account statement, but instead
reduce the amount of total return you receive.
(8)The distribution and service fees applicable to
Class A shares is currently set at 0.35%; however,
the Rule 12b-1 distribution and shareholder
servicing plan ("Plan") allows the Fund to pay up
to 0.50% in these fees. The distribution and
service fees applicable to Class C shares under the
Plan is 1.00%, which is the amount currently being
paid by the Fund. Further, while the Fund
currently has no intention of paying any
distribution or service fees for the Class I
shares, the Plan allows the Fund to pay up to 0.50%
in these fees. Because these fees are paid out of
the Fund's assets on an on-going basis, over time
these fees will increase the cost of your
investment and may cost you more than paying other
types of sales charges. For information relating to
the Plan, see "Your Account_Distribution and
Shareholder Servicing Plan."
(9)"Other expenses" for the Class C shares have been
estimated. For the fiscal year ending September
30, 1999, Advisor has agreed to waive its
management fee and/or reimburse the Fund's
operating expenses to the extent necessary to
ensure that the total annual operating expenses for
the Class C shares do not exceed 2.15%. "Total"
expenses are presented before waivers and/or
reimbursements. If waivers and/or reimbursements
are included in the calculation of "Total"
expenses, "Other expenses" and "Total" for the
Class C shares would be 0.15% and 2.15%,
respectively. For additional information, see
"Fund Management and Distribution_Management."
(10) For the fiscal year ended September 30, 1998,
Advisor agreed to waive its management fee and/or
reimburse the Fund's operating expenses to the
extent necessary to ensure that (i) the total
annual operating expenses for the Class A shares
would not exceed 1.50% and (ii) the total annual
operating expenses for the Class I shares would not
exceed 1.15%. Advisor has agreed to continue this
waiver/reimbursement policy for the fiscal year
ending September 30, 1999. "Total" expenses are
presented before waivers. If these waivers are
included in the calculation of "Total" expenses
(i.e., if actual "Total" expenses are shown),
"Management fee" and "Total" for the Class A shares
would be 0.69% and 1.50%, respectively, and
"Management fee" and "Total" for the Class I shares
would be 0.69% and 1.15%, respectively. For
additional information, see "Fund Management and
Distribution_Management."
<PAGE>
Example
The following Example is intended to help you
compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your
shares at the end of those periods. The Example also
assumes that you have a 5% return each year and that
the Fund's total annual operating expenses remain the
same each year. Although your actual costs may be
higher or lower, based on these assumptions, your costs
would be as follows:
1 Year 3 Years 5 Years 10 Years
Class A(1) $527 $899 $1,295 $2,401
Class A(2) $284 $570 $ 981 $2,127
Class I(3) $253 $462 $ 798 $1,747
Class C(4) $339 $736 $1,260 $2,696
You would pay the following expenses if you did
not redeem your shares:
1 Year 3 Years 5 Years 10 Years
Class A(1) $527 $899 $1,295 $2,401
Class I $149 $462 $ 798 $1,747
Class C $239 $736 $1,260 $2,696
__________
(1)Only the 3.50% maximum sales charge
imposed on purchases of Class A shares is
reflected in the Example.
(2)Only the 1% CDSC imposed on certain
redemptions 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.
(4)The 1% CDSC imposed on certain redemptions
of Class C shares is reflected in the Example.
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-
term capital appreciation. Under normal market
conditions, the Fund will attempt to achieve this
objective by investing at least 65% of its assets in
common stocks of emerging and re-emerging growth
companies. The Fund may also hold cash and money
market instruments to provide the Fund with liquidity
and flexibility.
INVESTMENT STRATEGY
In managing the Fund's portfolio, Advisor seeks
investments in emerging growth companies that have a
small-to-medium market capitalization. A small-cap
company would typically have a market capitalization of
up to $1 billion, while a medium-cap company would have
a market capitalization of up to $3 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. Companies considered
by Advisor to be "emerging growth" are often in the
same or related market sectors. Thus, the Fund may be
heavily invested in a single sector. However, one
sector, like technology, may include numerous
subsectors or industries, like networking, data
storage, software applications, semiconductors, voice-
processing, or wireless. The Fund may be concentrated
in one sector, while being diversified among several
industries. In addition, the Fund may take large
positions in individual companies. To the extent the
Fund concentrates its investments in this way, it will
be more susceptible to adverse economic, political,
regulatory, or market developments affecting the
sector, industry, or individual company in which the
Fund has invested.
<PAGE>
When making purchase decisions for the Fund,
Advisor uses a "buy discipline" that involves three key
components:
Research
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.
Fundamentals
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.
Valuation
Finally, Advisor values companies by
considering price to sales ratios and price to
earnings ratios within a peer group. For
companies with earnings, 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. Advisor continually
monitors companies 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 suggesting an overweighted
position or overvalued security, change in theme or
sector orientation, or better relative value in other
securities.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
In implementing its investment objective, the Fund
may invest in the following securities and use the
following 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 or shares 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
The Fund will invest a substantial portion of its
assets in the common stocks of small companies. While
companies with a smaller market capitalization 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 invests in a
more limited number of companies than "diversified"
mutual funds. 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 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 and the two companies are engaged in
different businesses. The Fund may also invest 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. Non-diversification involves an
increased risk of loss to the Fund when the market
value of a security declines.
The Fund intends to invest more than 25% of its
assets in securities of companies in one or more market
sectors, such as technology or health-care services. 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.
Temporary Strategies
Prior to investing the proceeds from 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, 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 these strategies for the
Fund. To the extent the Fund engages in any of these
temporary strategies, the Fund may not achieve its
investment objective.
PRIOR PERFORMANCE OF INVESTMENT ADVISOR
The following tables and charts show Advisor's
historical composite performance data for all actual,
fee paying, discretionary private accounts managed by
Advisor that have investment objectives, policies,
strategies, and risks substantially similar to those of
the Fund. Since inception of Advisor on June 30, 1990
through September 1998, these accounts have shown an
annual return of approximately 22%. The private
accounts that are included in Advisor's composite are
not subject to the same types of expenses to which the
Fund is subject nor to the specific tax restrictions
and investment limitations imposed on the Fund by the
Code and the 1940 Act. Consequently, the performance
results for Advisor's composite could have been
adversely affected if the private accounts included in
the composite had been regulated as investment
companies under the federal tax and securities laws.
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. If custodial fees had been included,
Advisor's performance would have been lower. Also
excluded from the returns are expenses and fees,
including the advisory fee and any sales or redemption
charges, that an investor in the Fund will bear, since
the performance data presented does not represent the
performance of the Fund. If such expenses and fees
were included, Advisor's performance would have been
lower. 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>
Also included in the first table below is an
annual measure of Advisor's composite dispersion. The
measure of composite dispersion illustrates the
internal risk associated with accounts included in the
composite.
The following data is provided to illustrate the
past performance of Advisor in managing accounts which
are substantially similar to the Fund as measured
against specified market indices and does not represent
the performance of the Fund. You should not consider
this performance data as an indication of the future
performance of the Fund or Advisor.
Private Account Performance History
Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Annual Annual
Return Dispersion
1990 * * -26.89% 28.72% * *
1991 32.80% 4.35% 10.68% 31.51% 101.42% 47.3%
1992 -10.76% -4.18% 17.49% 33.80% 34.43% 27.5%
1993 -2.37% 30.38% 21.19% 2.74% 58.49% 22.9%
1994 -10.53% -6.70% 22.14% 23.52% 25.95% 12.6%
1995 5.32% 17.00% 13.96% -7.16% 30.37% 10.4%
1996 -0.37% 9.54% 1.12% 0.20% 10.58% 9.2%
1997 -16.48% 26.12% 21.04% -21.58% -0.02% 7.8%
1998 5.29% -8.32% -26.40% * * *
1 Year Rate of Return (9/30/97-9/30/98) -44.29%
3 Year Rate of Return - Annualized
(9/30/95-9/30/98) -9.99%
5 Year Rate of Return - Annualized 5.79%
(9/30/93-9/30/98)
Since Inception - Annualized (6/30/90-9/30/98) 22.16%
* Not applicable
Growth of a Unit Value
June 30, 1990 through September 30, 1998
The graphic on page 8 of the Prospectus contains a
chart which plots the growth of $10,000 invested on
June 30, 1990. The graphic compares 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
06-30-90 $10.00 $10.00
06-30-90 to 09-30-90 7.31 7.49
09-30-90 to 12-31-90 9.41 7.82
12-31-90 to 03-31-91 12.50 10.11
03-31-91 to 06-30-91 13.04 9.90
06-30-91 to 09-30-91 14.43 10.65
09-30-91 to 12-31-91 18.98 11.23
12-31-91 to 03-31-92 16.94 12.05
03-31-92 to 06-30-92 16.23 11.15
06-30-92 to 09-30-92 19.07 11.41
09-30-92 to 12-31-92 25.52 13.07
12-31-92 to 03-31-93 24.91 13.55
03-31-93 to 06-30-93 32.48 13.80
<PAGE>
Time Period Advisor Russell 2000
06-30-93 to 09-30-93 $39.36 $14.96
09-30-93 to 12-31-93 40.44 15.29
12-31-93 to 03-31-94 36.18 14.85
03-31-94 to 06-30-94 33.76 14.21
06-30-94 to 09-30-94 41.23 15.14
09-30-94 to 12-31-94 50.93 14.80
12-31-94 to 03-31-95 53.64 15.42
03-31-95 to 06-30-95 62.76 16.77
06-30-95 to 09-30-95 71.52 18.35
09-30-95 to 12-31-95 66.40 18.68
12-31-95 to 03-31-96 66.15 19.56
03-31-96 to 06-30-96 72.46 20.50
06-30-96 to 09-30-96 73.28 20.48
09-30-96 to 12-31-96 73.42 21.44
12-31-96 to 03-31-97 61.32 20.26
03-31-97 to 06-30-97 77.34 23.44
06-30-97 to 09-30-97 93.61 26.83
09-30-97 to 12-31-97 73.41 25.84
12-31-97 to 03-31-98 77.30 28.42
03-31-98 to 06-30-98 70.87 27.05
06-30-98 to 09-30-98 52.16 21.50
Average Annualized Return in Percent
Period Ending
September 30, 1998 Advisor Composite Russell 2000
Performance
1 Year -44.29% -19.88%
2 Years -15.64% 2.45%
3 Years -9.99% 5.42%
4 Years 6.05% 9.15%
5 Years 5.79% 7.53%
6 Years 18.25% 11.14%
7 years 20.14% 10.55%
Since Inception* 22.16% 9.72%
*June 30, 1990.
Annualized Rate of Return
June 30, 1990 through September 30, 1998
The graphic on page 9 of the Prospectus contains a
bar chart which shows the annualized rate of return
from June 30, 1990 through September 30, 1998 for the
Advisor composite (22.16%) versus the NASDAQ OTC Index
(17.05%), the Russell 2000 (9.72%), and the S&P 500
Index (16.46%).
<PAGE>
FINANCIAL HIGHLIGHTS OF THE FUND
The financial highlights table is intended to help
you understand the Fund's financial performance for the
fiscal year beginning October 1, 1997 (commencement of
operations) and ending September 30, 1998. The total
returns presented in the table represent the rate that
an investor would have earned on an investment in the
Fund for the stated period (assuming reinvestment of
all dividends and distributions and excluding sales
charges). This information has been audited by KPMG
Peat Marwick L.L.P., whose report, along with the
Fund's financial statements, are included in the Fund's
annual report, which is available upon request. The
information below is for the Fund's Class A and Class I
shares only. The Fund's Class C shares were not
offered until the date of this Prospectus.
Fiscal Year Ended
September 30,
1998
Class A Class I
(For a share outstanding through the fiscal year)
Net asset value, beginning of year $10.00 $10.00
Income from investment operations:
Net investment loss (0.09)(1) (0.06)(1)
Net realized and unrealized
losses on investments (4.10) (4.10)
Total from investment operations (4.19) (4.16)
Net asset value, end of year $ 5.81 $ 5.84
Total return (41.90)%(2) (41.60)%
(Supplemental data and ratios)
Net assets, end of year (000's) $216,533 $27,577
Ratio of expenses to average
net assets 1.50%(3) 1.15%(3)
Ratio of net investment (loss) to
average net assets (1.30)%(4) (0.95)%(4)
Portfolio turnover rate 19.7%(5) 19.7%(5)
________________________
(1) Net investment loss per share is calculated using
the ending balance of undistributed net investment
loss prior to considerations of adjustments for permanent
book and tax differences.
(2) Total return excludes sales charges.
(3) Absent voluntary fee waivers, the ratio of expenses
to average net assets would have been 1.81% and 1.46%
for the year ended September 30, 1998, for Class A and
Class I, respectively.
(4) Absent voluntary fee waivers, the ratio of net investment
(loss) to average net assets would have been (1.61%) and
(1.26%) for the year ended September 30, 1998, for Class A
and Class I, respectively.
(5) Calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
FUND MANAGEMENT AND DISTRIBUTION
Management
The Fund 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 Fund's Board of Directors.
<PAGE>
Advisor. Advisor was organized in March 1990 and
serves as investment advisor to individual and
institutional clients. Under the Investment Advisory
Agreement, the Fund 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
ended September 30, 1998, Advisor agreed to waive its
management fee and/or reimburse Fund operating expenses
to the extent necessary to ensure that (i) the total
annual operating expenses for the Class A shares would
not exceed 1.50% of average daily net assets and (ii)
the total annual operating expenses for the Class I
shares would not exceed 1.15% of average daily net
assets. Advisor has agreed to continue this
waiver/reimbursement policy for the fiscal year ending
September 30, 1999. Advisor has also agreed for the
fiscal year ending September 30, 1999 to waive its
management fee and/or reimburse Fund operating expenses
to the extent necessary to ensure that the total annual
operating expenses for the Class C shares do not exceed
2.15% of average daily net assets. After fiscal 1999,
Advisor may from time to time voluntarily (but is not
required 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.
Under the Investment Advisory Agreement, not only
is Advisor responsible for management of the Fund's
assets, but also for portfolio transactions and
brokerage.
Investment Committee. Advisor's Portfolio
Management Committee is primarily responsible for the
day-to-day management of the Fund's assets. The
Portfolio Management Committee is headed by LeRoy C.
Kopp, the President and Chief Investment Officer of
Advisor. The Portfolio Management Committee is
assisted in its efforts by a team of research analysts
and associates. The Portfolio Management Committee
makes all investment decisions for the Fund by majority
vote.
Custodian, Transfer Agent, and Administrator
Firstar Bank Milwaukee, N.A. acts as custodian of
the Fund's assets. Firstar Mutual Fund Services,
L.L.C. serves as transfer agent for the Fund ("Transfer
Agent") and as the Fund's administrator. Firstar Bank
Milwaukee, N.A. and Firstar Mutual Fund Services,
L.L.C. are affiliated entities and are collectively
referred to in this Prospectus as "Firstar." Firstar
serves as custodian, transfer agent, administrator, or
some combination thereof, to over 469 mutual funds,
representing approximately $81 billion in total assets.
<PAGE>
Distributor
Centennial Lakes Capital, Inc., a registered
broker-dealer and member of the National Association of
Securities Dealers, Inc. ("NASD"), acts as distributor
of the Fund's shares ("Distributor"). As compensation
for its services, the Distributor may retain all or a
portion of (i) the initial sales charge from purchases
of Class A shares, (ii) the CDSC from redemptions of
Class A and Class C shares, if applicable, and (iii)
the distribution and service fees payable with respect
to Class A and Class C shares.
From time to time, the Distributor may implement
programs that offer additional compensation in
connection with sales of Class A and Class C shares.
In some instances, this compensation may be made
available only to certain qualifying brokers whose
representatives have sold or are expected to sell
significant amounts of shares. All of such payments
will be 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.
YOUR ACCOUNT
Choosing a Class
The Fund offers three classes of shares: Class A,
Class C and Class I. Class A and Class C 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 C Class I
Front-end sales No front-end No front-
charge with break sales charge. end sales
points and certain charge.
exceptions.
Contingent
Contingent deferred sales charge Redemption fee
deferred sales imposed on certain payable on
charge imposed on redemptions. certain
certain redemptions. redemptions.
Current No
Current distribution and current
distribution and service expenses distribution
service expenses equal to 1.00% of and service
equal to 0.35% of average net assets. expenses.
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
(computed after the purchase order and funds are
received by the Transfer Agent) and the sales charge
indicated below:
Total
Sales Charge
As a As a
Your Investment Percentage Percentage
of Offering of Your
Price Investment
Up to $99,999- 3.50% 3.63%
$100,000-$249,999 3.00% 3.09%
$250,000-$499,999 2.00% 2.04%
$500,000-$999,999 1.00% 1.01%
$1,000,000-$4,999,999 None None
<PAGE>
No sales charge is imposed on the reinvestment of
dividends or capital gains. For information on how to
reduce the sales charge or to determine whether you
qualify to purchase shares at net asset value, see
"_Class A Front-End Sales Charge Waivers and
Reductions," below. Class A shares are also currently
subject to distribution and service 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 charge. However, you may
be charged a 1% CDSC on shares redeemed within 24
months of purchase. The imposition of the CDSC may be
waived by the Distributor. See "_Class A and Class C
CDSC Waivers," below. For purposes of the CDSC, all
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 value or the
actual Offering Price of the shares being redeemed, and
is not imposed on shares acquired through the
reinvestment of dividends or capital gains. To avoid
the imposition of the CDSC, the Fund will first redeem
any shares held in your account that are not subject to
the CDSC and then redeem shares in the order in which
they were purchased.
Class C Shares
Class C shares are offered and sold on a continual
basis at their net asset value (computed after the
purchase order and funds are received by the Transfer
Agent) without any initial sales charge. However, you
may may be charged a 1% CDSC on shares redeemed within
12 months of purchase. The imposition of the CDSC may
be waived by the Distributor. See "_Class A and Class
C CDSC Waivers," below. For purposes of the CDSC, all
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 value or the
initial purchase price of the shares being redeemed,
and is not imposed on shares acquired through the
reinvestment of dividends or capital gains. To avoid
the imposition of the CDSC, the Fund will first redeem
any shares held in your account that are not subject to
the CDSC and then redeem shares in the order in which
they were purchased. The Fund has also adopted a Rule
12b-1 plan with respect to the Class C shares pursuant
to which the Fund pays distribution and service fees in
an aggregate amount of 1.00% of the average daily net
assets attributable to such shares. See "_Distribution
and Shareholder Servicing Plan" for more information.
Class I Shares
Class I shares are offered and sold on a continual
basis at their net asset value (computed after the
purchase order and funds are received by the Transfer
Agent) 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. The imposition of the redemption
fee may be waived by the Fund. 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
distribution and service fees. For the foreseeable
future, however, the Fund has no intention of paying
any distribution or service fees in connection with the
Class I shares.
Class A Front-End Sales Charge Waivers and Reductions
Waivers for Certain Investors. The following
individuals and institutions may purchase Class A
shares without any initial sales charge:
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, Class C 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;
<PAGE>
government entities that are prohibited from
paying mutual fund sales charges;
registered broker-dealers who have entered into a
selling or service agreement with the Distributor and
who have achieved certain sales objectives of the Fund,
for their investment accounts only, and certain
employees of such broker-dealers, and their spouses,
children, grandchildren, and parents, in accordance
with the internal policies and procedures of the
employing broker-dealer;
owners of private accounts managed by Advisor who
are no longer eligible for separate account management
by Advisor and who completely 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;
any person who purchases shares of the Fund with
redemption proceeds from a money market fund; provided
that this sales charge waiver is only available (i) to
persons who immediately prior to their investment in
the money market fund were shareholders of the Fund,
(ii) to the extent of the investment in the money
market fund being redeemed, and (iii) for one suc
purchase within 12 months of redemption;
"wrap accounts" for the benefit of clients of
registered broker-dealers having a selling or service
agreement with the Distributor; and
any person who purchases shares of the Fund with
redemption proceeds from a registered investment
company other than the Fund and on which the investor
paid either a front-end sales charge or a contingent
deferred sales charge; provided that the proceeds are
invested in the Fund within ten days of the redemption.
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:
namely, you may participate in the Fund's Right of
Accumulation program or execute a Letter of Intent.
Both options are described in detail in the SAI.
Class A and Class C CDSC Waivers
The primary purpose of the CDSC is to encourage
long-term investing in the Fund. Accordingly, the CDSC
on Class A and Class C shares may be waived if:
the redemption results from the death or a total
and permanent disability of the shareholder which
occurs after the purchase of the shares being redeemed;
or
the selling broker-dealer elects to waive receipt
of the commission normally paid at the time of sale.
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, the Class A
and Class I 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
<PAGE>
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 Plan also
provides that the Class C shares may be required to pay
the Distributor (i) a distribution fee of up to 0.75%
of the average daily net assets of the Fund
attributable to such class (computed on an annual
basis) and (ii) a shareholder servicing fee of up to
0.25% of the average daily net assets of the Fund
attributable to such class (computed on an annual
basis). The Fund currently intends to make payments
under the Plan with respect to the Class C shares to
the maximum extent allowable under the Plan.
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 and Class C shares:
Non-retirement account: $5,000
Retirement account: $2,000
Subsequent investments: $100 or more
Automatic Investment Plan ("AIP"): $3,000
(to maintain the plan, you must
invest at least $50 per month)
(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 1-888-533-KOPP. Account applications
will be accepted by the Distributor, the
Transfer Agent, or investment professionals
who have entered into a selling or service
agreement with the Distributor.
(4) Make your initial investment, and any
subsequent investments, following the
instructions set forth below.
Buying Shares
Opening an Account. You may open an account by
completing an account application and paying for your
shares by check or wire. You may also open an account
using the Fund's exchange privilege, which is discussed
in detail in the SAI. 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 inside back cover page of
this Prospectus. 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.
<PAGE>
You may be charged a transaction fee in addition
to the sales charge with respect to Class A shares sold
by certain broker-dealers. Certain broker-dealers may
also charge a transaction fee for purchases of Class C
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 to accept a purchase application in whole or in
part.
By wire
Instruct your bank to use the following
instructions when wiring funds:
Wire to: Firstar Bank Milwaukee, N.A.
ABA Number 075000022
Credit: Firstar Mutual Fund Services, L.L.C.
Account 112-952-137
Further credit: Kopp Emerging Growth Fund
(class of shares being purchased)
(shareholder account number)
(shareholder name/account registration)
Please call 1-888-533-KOPP prior to wiring any
funds to notify the Transfer Agent that the wire is
coming and to confirm the 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 or wire. You may also add to your account
using the Fund's exchange privilege. Please see the
SAI for more information. 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 or send 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 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. The AIP
allows you to make regular, systematic investments in
Class A or Class C shares of the Fund from your bank
checking account. The minimum initial investment for
investors using the AIP is $3,000. Please refer to the
SAI for instructions as to how you may establish the
AIP for your account, or call 1-888-533-KOPP.
<PAGE>
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. See
"Valuation of Fund Shares." Because the Fund does not
consider the U.S. Postal Service or other independent
delivery services to be its agents, 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. 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 15 days from the
initial investment date). Redemptions may be made by
written request, telephone, or wire. You may also
redeem shares using the Fund's exchange privilege, as
discussed in the SAI.
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 "Redeeming
Shares_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 request, please call
1-888-533-KOPP.
Redemption requests by telephone are available for
redemptions of $1,000 to $75,000. Redemption requests
for less than $1,000 or more than $75,000 must be in
writing.
Proceeds redeemed by telephone will be mailed or
wired only to your address or bank of record as shown
on the records of the Transfer Agent.
In order to arrange for telephone redemptions
after an account has been opened or to change the bank,
account, or address designated to receive redemption
proceeds, a written request must be sent to the
Transfer Agent. The request must be signed by each
shareholder of the account, with the signatures
guaranteed. Further documentation may be requested
from corporations, executors, administrators, trustees,
and guardians. See "Redeeming Shares_Special
Situations," below.
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.
<PAGE>
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, please call 1-888-533-
KOPP.
Redemption requests by telephone which are to be
transmitted via wire transfer are available for
redemptions of $75,000 or less. Redemption requests
for more than $75,000 must be in writing.
Funds will be wired on the next business day. A
$12 fee will be deducted from your account.
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 1-888-533-KOPP. 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 $75,000, (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. These institutions include
banks, saving associations, credit unions, brokerage
firms, and others. A notary public stamp or seal is
not acceptable.
Redemptions in Kind. The Fund has reserved the
right to redeem in kind (i.e., in securities) any
redemption request during any 90-day period in excess
of the lesser of (i) $250,000 or (ii) 1% of the net
asset value of the class of shares being redeemed.
Please see the SAI for more information.
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.
VALUATION OF FUND SHARES
The price of Fund shares is based on the Fund's
net asset value, which is calculated using the market
price method of valuation and is determined as of the
close of trading (generally 4:00 p.m. Eastern Time) on
each day the New York Stock Exchange ("NYSE") is open
for business. The Fund does not determine net asset
value on days the NYSE is closed. The NYSE is closed
on New Year's Day, Martin Luther King Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day. In addition,
if any of these 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 yearly accounting period. The
price at which a purchase order or redemption request
is effected is based on the next calculation of net
asset value after the order is placed or the request is
received.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAX
TREATMENT
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. 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 (and the applicable tax rate) 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.
<PAGE>
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. The
Fund expects that, because of its investment objective,
its distributions will consist primarily of long-term
capital gains.
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 in cash or reinvest them in shares may be
changed by writing to the Fund at Kopp Funds, Inc., c/o
Firstar Mutual Fund Services, L.L.C., P.O. Box 701,
Milwaukee, Wisconsin 53201-0701. Such notice must be
received at least ten days prior to the record date of
any dividend or capital gain distribution.
YEAR 2000 ISSUE
The Fund's operations depend on the seamless
functioning of computer systems in the financial
service industry. Many computer software systems in
use today cannot properly process date-related
information after December 31, 1999 because of the
method by which dates are encoded and calculated. This
failure, commonly referred to as the "Year 2000 Issue,"
could adversely affect the handling of security trades,
pricing, and account servicing for the Fund.
The Fund has made compliance with the Year 2000
Issue a priority and is taking steps that it believes
are reasonably designed to address the Year 2000 Issue.
Because the Fund has no computer software system of its
own, and Advisor's systems are not used in connection
with the operation of the Fund, Firstar's computer
software systems are the focus of the Fund's efforts.
Firstar has represented to the Fund and Advisor that it
does not currently anticipate that the Year 2000 Issue
will have a material impact on its ability to continue
to fulfill its duties as a service provider to the
Fund.
With respect to the companies in which the Fund
invests, the Fund cannot make any assurances as to
their Year 2000 compliance efforts. In the event that
one or more of these companies is not Year 2000
compliant, the Fund's investment in such companies may
be adversely affected.
<PAGE>
ADDITIONAL INFORMATION
INVESTMENT ADVISOR
Kopp Investment Advisors, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
DISTRIBUTOR
Centennial Lakes Capital Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
CUSTODIAN
Firstar Bank Milwaukee, N.A.
For overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o Firstar Bank Milwaukee, N.A. c/o Firstar Bank Milwaukee, N.A.
Third Floor P.O. Box 701
615 E. Michigan Street Milwaukee, Wisconsin 53201-0701
Milwaukee, Wisconsin 53202
TRANSFER AGENT AND ADMINISTRATOR
Firstar Mutual Fund Services, L.L.C.
For overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o Firstar Mutual Fund Services,L.L.C. c/o Firstar Mutual Fund Services, L.L.C.
Third Floor P.O. Box 701
615 E. Michigan Street Milwaukee, Wisconsin 53201-0701
Milwaukee, Wisconsin 53202
The SAI for the Fund contains additional information
about the Fund. Additional information about the
Fund's investments is contained in the Fund's annual
and semi-annual reports to shareholders. The Fund's
annual report provides a discussion of the market
conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal
year. The Fund's SAI, which is incorporated by
reference into this Prospectus, annual reports and semi-
annual reports are available without charge upon
request to the address, toll-free telephone number, or
Website noted on the cover page of this Prospectus.
These documents may also be obtained from certain
financial intermediaries.
Information about the Fund (including the SAI) can be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-800-SEC-
0330 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Fund are also available on the SEC's Internet
Website located at http://www.sec.gov. Alternatively,
copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-
6009.
The Fund's 1940 Act File Number is 811-8267.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Kopp Funds, Inc.
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-533-KOPP
Facsimile: 1-612-841-0411
Website: www.koppfunds.com
This Statement of Additional Information ("SAI")
is not a prospectus and should be read in conjunction
with the Prospectus of the Kopp Emerging Growth Fund
("Fund") dated December 31, 1998. The Fund is a series
of Kopp Funds, Inc. ("Corporation").
The Fund's audited financial statements for the
year ended September 30, 1998 are incorporated herein
by reference to the Fund's 1998 Annual Report.
A copy of the Fund's 1998 Annual Report and/or its
Prospectus is available without charge upon request to
the above-noted address, toll-free telephone number, or
website.
<PAGE>
This Statement of Additional Information is dated December 31, 1998.
<PAGE>
TABLE OF CONTENTS
FUND ORGANIZATION 3
FUND POLICIES: FUNDAMENTAL AND NON-FUNDAMENTAL 3
IMPLEMENTATION OF INVESTMENT OBJECTIVE 5
DIRECTORS AND OFFICERS 7
PRINCIPAL SHAREHOLDERS 9
INVESTMENT ADVISOR 10
FUND TRANSACTIONS AND BROKERAGE 10
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND-DISBURSING
AGENT 12
ADMINISTRATOR AND FUND ACCOUNTANT 12
DISTRIBUTOR 12
ARRANGEMENTS WITH BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES 13
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN 14
PURCHASE, EXCHANGE, AND PRICING OF SHARES 16
REDEMPTIONS IN KIND 18
TAXATION OF THE FUND 19
PERFORMANCE INFORMATION 19
INDEPENDENT ACCOUNTANTS 20
FINANCIAL STATEMENTS 20
No one has been authorized to give any information or to make any
representations other than those contained in this SAI and related
Prospectus, and if given or made, the information or representations
may not be relied upon as having been made by the Fund. This SAI is
not an offer to sell securities in any state or jurisdiction in which
an offering may not lawfully be made.
<PAGE>
FUND ORGANIZATION
The Corporation is an open-end management
investment company, commonly referred to as a mutual
fund. The Corporation is organized as a Minnesota
company and was incorporated on June 12, 1997.
The Corporation is authorized to issue shares of
common stock in series and classes. The Corporation
currently offers one series of shares: the Kopp
Emerging Growth Fund. The shares of common stock of
the Fund are further divided into three classes: Class
A, Class C and Class I. 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 in the event of liquidation.
However, each class of shares bears its own expenses,
is subject to its own sales and redemption charges, if
any, and has exclusive voting rights on matters
pertaining to the Rule 12b-1 distribution and
shareholder servicing 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
Investment Company Act of 1940, as amended ("1940
Act"), or Minnesota law.
FUND POLICIES: FUNDAMENTAL AND NON-FUNDAMENTAL
The following are the Fund's fundamental
investment policies which cannot be changed without the
approval of a majority of the Fund's outstanding voting
securities. As used herein, a "majority of the Fund's
outstanding voting securities" means the lesser of (i)
67% of the shares of common stock of the Fund
represented at a meeting at which more than 50% of the
outstanding shares are present, or (ii) more than 50%
of the outstanding shares of common stock of the Fund.
The Fund:
1. May not issue senior securities, except as
permitted under the 1940 Act;
2. May (i) borrow money from banks, and (ii)
make other investments or engage in other
transactions permissible under the 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;
3. 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;
4. 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;
5. 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);
<PAGE>
6. 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;
7. 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); and
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.
The Fund's investment objective, which is to seek
long-term capital appreciation, is also a fundamental
investment policy which cannot be changed without the
approval of a majority of the Fund's outstanding voting
securities.
The following are the Fund's non-fundamental
investment policies which may be changed by the Board
of Directors of the Fund 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.
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.
<PAGE>
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 or in the market value of
the investment will not constitute a violation of that
restriction.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
The following information supplements the
discussion of the Fund's investment objective and
strategy described in the Prospectus under the headings
"Investment Objective" and "Investment Strategy."
Depositary Receipts
The Fund may invest in the equity securities of
foreign companies by purchasing depositary receipts,
including American Depositary Receipts ("ADRs") and
European Depositary Receipts ("EDRs"). 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.
Investments in securities of foreign companies
involve risks which are in addition to the usual risks
inherent in domestic investments. In many countries
there is less publicly available information about
companies than is available in the reports and ratings
published about companies in the U.S. Additionally,
foreign companies are not subject to uniform
accounting, auditing, and financial reporting
standards. Other risks inherent in foreign investment
include expropriation; confiscatory taxation;
withholding taxes on dividends and interest; less
extensive regulation of foreign brokers, securities
markets, and companies; costs incurred in conversions
between currencies; the illiquidity and volatility of
foreign securities markets; the possibility of delays
in settlement in foreign securities markets;
limitations on the use or transfer of assets (including
suspension of the ability to transfer currency from a
given country); the difficulty of enforcing obligations
in other countries; diplomatic developments; and
political or social instability. Foreign economies may
differ from the U.S. economy in various respects, and
many foreign securities are less liquid and their
prices are more volatile than comparable U.S.
securities. From time to time, foreign securities may
be difficult to liquidate rapidly without adverse price
effects. Certain costs attributable to foreign
investing, such as custody charges and brokerage costs,
are higher than those attributable to domestic
investing.
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.
<PAGE>
Borrowing
The Fund is authorized to borrow money from banks
and make other investments or engage in other
transactions permissible under the 1940 Act which may
be considered a borrowing (such as mortgage dollar
rolls and reverse repurchase agreements), provided that
the amount borrowed cannot exceed 33 1/3% of the value
of the Fund's net assets. The Fund's borrowings create
an opportunity for greater return to the Fund and,
ultimately, the Fund's shareholders, but at the same
time increase exposure to losses. In addition,
interest payments and fees paid by the Fund on any
borrowings may offset or exceed the return earned on
borrowed funds. The Fund currently intends to borrow
money only for temporary, extraordinary or emergency
purposes.
Lending Portfolio Securities
The Fund may lend portfolio securities with a
value not exceeding 33 1/3% of the Fund's total assets
to brokers or dealers, banks or other institutional
borrowers of securities as a means of earning income.
In return, the Fund will receive collateral in cash or
money market instruments. Such collateral will be
maintained at all times in an amount equal to at least
100% of the current market value of the loaned
securities. The purpose of such securities lending is
to permit the borrower to use such securities for
delivery to purchasers when such borrower has sold
short. The Fund will continue to receive the
equivalent of the interest or dividends paid by the
issuer of the securities lent, and the Fund may also
receive interest on the investment of collateral, or a
fee from the borrower as compensation for the loan.
The Fund may pay reasonable custodial and
administrative fees in connection with the loan. The
Fund will retain the right to call, upon notice, lent
securities. While there may be delays in recovery or
even a loss of right in collateral should the borrower
fail financially, the Fund's investment advisor will
review the credit worthiness of the entities to which
such loans are made to evaluate those risks. Although
the Fund is authorized to lend, the Fund does not
presently intend to engage in lending.
Non-Diversification
While the Fund is "non-diversified," which means
that it is permitted to invest its assets in a more
limited number of companies than "diversified" mutual
funds, 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 ("Code"). To qualify (i) not more than 25% of
the total value of the Fund's assets may be invested in
securities of any one issuer 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 and
(b) the Fund may not own more than 10% of the
outstanding voting securities of any one issuer. These
percentage limitations do not apply to investments in
U.S. government securities or the securities of other
regulated investment companies. To the extent that a
relatively high percentage of the Fund's assets are
invested in the securities of a limited number of
companies, the Fund's portfolio may be more susceptible
to a single economic, political, or regulatory
occurrence than the portfolio of a diversified mutual
fund.
Concentration
The Fund has adopted a fundamental investment
policy which prohibits the Fund from investing more
than 25% of its assets in the securities of companies
in any one industry. An industry is defined as a
business-line subsector of a stock-market sector.
While the Fund may be heavily invested in a single
market sector like technology or health care, for
example, it will not invest more than 25% of its assets
in securities of companies in any one industry or
subsector. Technology industries or subsectors include
networking, data storage, software applications,
semiconductors, voice-processing and wireless business
lines. Health care industries or subsectors include
medical devices and information systems business lines.
<PAGE>
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Investment Objective," prior to
investing proceeds from 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 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
Under the laws of the State of Minnesota, the
Board of Directors of the Fund is responsible for
managing the Fund's business and affairs.
The directors and officers of the Fund, together
with information as to their principal business
occupations during the last five years, and other
information, are shown below. Each director and
officer who is deemed an "interested person" of the
Fund, 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 Fund on June 12,
1997, except as otherwise noted.
*LeRoy C. Kopp, Chief Executive Officer, President
and a Director of the Fund.
Mr. Kopp, 64 years old, is the founder, President
and Chief Investment Officer of Kopp Investment
Advisors ("Advisor"). 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
<PAGE>
Upper Midwest Entrepreneur of the Year for
Emerging Companies. Mr. Kopp graduated with
distinction with a B.B.A. degree from the University of
Minnesota in 1956. Mr. Kopp served as Chief Financial
Officer and Treasurer of the Fund from February 1998 to
December 1998.
*Kathleen S. Tillotson, Executive Vice President
and Secretary of the Fund.
Ms. Tillotson, 42 years old, joined Advisor in
March 1996 as Vice President and General Counsel and
since June 1998, she has served as the Assistant
Secretary of Centennial Lakes Capital, Inc., the Fund's
distributor. 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.
*John P. Flakne, Chief Financial Officer and
Treasurer of the Fund.
Mr. Flakne, 33 years old, joined Advisor in
December 1998 as Controller. In 1989, Mr. Flakne
graduated from the University of Minnesota with a
B.S.B. in Accounting and a Computer Science minor.
Before joining Advisor in December 1998, Mr. Flakne
held various accounting-related positions as follows:
From August 1989 until December 1994, Mr. Flakne worked
for Coopers & Lybrand L.L.P., Minneapolis, Minnesota,
first as an Associate and eventually as a Manager; from
January 1995 until June 1997, Mr. Flakne worked for
Carlson Companies, Inc., Minnetonka, Minnesota, first
as a Manager and eventually as Interim Director of the
Corporate Audit function; from July 1997 until January
1998, Mr. Flakne worked for Bertram, Vallez, Kaplan &
Talbot, Ltd., New Hope, Minnesota, a CPA and business
consulting firm, as a Senior Manager; and from February
1998 until November 1998, Mr. Flakne worked for
Caterpillar Paving Products Inc., Brooklyn Park,
Minnesota, a division of Caterpillar Inc., as
Controller. Mr. Flakne is a CPA. Mr. Flakne has
served as Chief Financial Officer and Treasurer of the
Fund since December 1998.
Robert L. Stehlik, a Director of the Fund.
Mr. Stehlik, 60 years old, has been a Director of
the Fund since September 8, 1997. Mr. Stehlik is
currently the Senior Vice President of People's Bank of
Commerce, which is based in Minneapolis, Minnesota.
Mr. Stehlik has held this position since September
1998. For the four years prior to that, he served as
the Senior Vice President of Richfield Bank & Trust
Co., based in Richfield, Minnesota. For the 20 years
prior to that, he served in various capacities at First
Bank, a bank based in Minneapolis, Minnesota, including
Senior Vice President.
Thomas R. Stuart, a Director of the Fund.
Mr. Stuart, 53 years old, has been a Director of
the Fund since September 8, 1997. Since May 1988, Mr.
Stuart has served as Chairman and Chief Executive
Officer of the Bureau of Engraving, Inc., a
manufacturer of interconnect devices and a provider of
commercial printing and home education services based
in Minneapolis, Minnesota.
The address of Mr. Kopp, Ms. Tillotson, and Mr.
Flakne is 7701 France Avenue South, Suite 500, Edina,
Minnesota 55435. Mr. Stehlik's address is 9330
Sheffield Circle, Bloomington, Minnesota 55437. Mr.
Stuart's address is 3400 Technology Drive, Minneapolis,
Minnesota 55418.
As of November 30, 1998, officers and directors of
the Fund beneficially owned none of the shares of the
Fund's then outstanding Class A shares and 33.82% of
the Fund's then outstanding Class I shares. Class C
shares were not available for investment until the date
of this SAI.
Directors and officers of the Fund who are also
officers, directors, or employees of Advisor do not
receive any remuneration from the Fund for serving as
directors or officers. Accordingly, neither Mr. Kopp,
Ms. Tillotson, nor Mr. Flakne receive any remuneration
from the Fund for their services as directors and/or
officers. However, Messrs. Stehlik and Stuart receive
the following fees for their services as directors of
the Fund:
<PAGE>
Name Cash Other Total
Compensation(1) Compensation
Robert L. Stehlik $15,000 $0 $15,000
Thomas R. Stuart $15,000 $0 $15,000
__________
(1)Each director who is not deemed an "interested
person" of the Fund, as defined in the 1940 Act,
receives $3,500 for each Board of Directors meeting
attended by such person, a $1,000 per fiscal year
stipend if all such meetings are attended, and
reimbursement of reasonable expenses incurred in
connection therewith. The Board held four meetings
during fiscal 1998 and both of the disinterested
directors attended all four meetings. Thus, each
disinterested director received $15,000 during such
time period from the Fund, plus reasonable
expenses. Disinterested directors may elect to
receive their compensation in the form of cash,
shares of the Fund, or both.
PRINCIPAL SHAREHOLDERS
As of November 30, 1998, the following persons
owned of record or are known by the Fund to own
beneficially 5% or more of a class of the Fund's
outstanding shares (Class C shares were not available
for investment until the date of this SAI):
Number of Shares Percentage Percentage
Name and Address Class A Class I Class A Class I of Fund
Kopp Investment N/A 1,496,195.780 N/A 31.70% 3.46%
Advisors, Inc.
7701 France Avenue
South, Suite 500
Edina, MN 55435
LeRoy C. Kopp N/A 980,255.606 N/A 20.77% 2.27%
7701 France Avenue
South, Suite 500
Edina, MN 55435
Kopp Family N/A 722,281.831 N/A 15.30% 1.67%
Foundation
c/o LeRoy C. Kopp
7701 France Avenue
South, Suite 500
Edina, MN 55435
Firstar Trust N/A 607,708.865 N/A 12.88% 1.41%
Company Custodian
LeRoy C. Kopp IRA
c/o Kopp Investments
Advisors, Inc.
7701 France Avenue
South, Suite 500
Edina, MN 55435
Kristin L. Kopp N/A 238,624.869 N/A 5.06% 0.55%
6504 Indian Hills Road
Edina, MN 55439
<PAGE>
Based on the foregoing, as of November 30, 1998,
LeRoy C. Kopp owned a controlling interest in the
Fund's Class I shares, however no person owned a
controlling interest in the Fund. Shareholders with a
controlling interest could affect 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. Kathleen S. Tillotson is the Vice President and
General Counsel of Advisor, and John P. Flakne is the
Controller of the Advisor.
The investment advisory agreement between the Fund
and Advisor dated as of October 1, 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 Fund or by vote of a majority
of the Fund's outstanding voting securities. Each
annual renewal must also be approved by the vote of a
majority of the Fund'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 on September 8, 1997 by the full
Board of Directors and the initial shareholder of the
Fund. 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 Fund 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 are being
amortized over a period of 60 months.
Advisor voluntarily agreed that for the fiscal
year ended September 30, 1998, Advisor would waive its
management fees and/or reimburse the Fund's operating
expenses to the extent necessary to ensure that (i) the
total annual operating expenses for the Class A shares
of the Fund would not exceed 1.50% of average daily net
assets, and (ii) the total annual operating expenses
for the Class I shares would not exceed 1.15% of
average daily net assets. Advisor has voluntarily
agreed to continue this waiver/reimbursement policy for
the fiscal year ending September 30, 1999. Advisor has
also agreed for the fiscal year ending September 30,
1999 to waive its management fee and/or reimburse Fund
operating expenses to the extent necessary to ensure
that the total annual operating expenses for the Class
C shares do not exceed 2.15% of average daily net
assets. After fiscal 1999, 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 to
the extent actual fees and expenses for a specific
month are less than the expense limitation caps. In
the event that after fiscal 1999, Advisor decides to no
longer voluntarily waive and/or reimburse fees and/or
expenses, any unrecovered amounts previously waived
and/or reimbursed will be permanently forgiven by
Advisor.
For the fiscal year ended September 30, 1998, the
Advisor waived 0.31% of its annual management fee so
that Fund operating expenses would not exceed the
limits described above. If such fee had not been
waived, Advisor would have received $2,795,449 from the
Fund for its investment advisory services ($2,564,636
of which is attributable to Class A shares and $230,813
of which is attributable to Class I shares). No
management fee was paid to Advisor with respect to the
Class C shares for the fiscal year ended September 30,
1998 because such shares were not available for
investment until the date of this SAI.
<PAGE>
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, Advisor 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 and principal business. Trades may
be done with brokers, dealers and, on occasion,
issuers. Remuneration for trades may include
commissions, dealer spreads, mark-ups, and mark-downs.
In executing transactions on behalf of the Fund,
Advisor has no obligation to deal with any particular
broker or dealer. Rather, Advisor seeks to obtain the
best qualitative execution. The best net price is an
important factor, but Advisor also considers the full
range and quality of a broker's services, as described
below. Recognizing the value of the range of services,
the Fund may not pay the lowest commission or spread
available on any particular transaction. 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 (i) 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;
(ii) furnishing analyses and reports concerning
issuers, industries, sectors, securities, economic
factors and trends, portfolio strategy, and the
performance of accounts; and (iii) 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, however, be paid by the
Fund unless (i) 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; (ii) such payment is made in
compliance with the provisions of Section 28(e) and
other applicable state and federal laws; and (iii) in
the opinion of Advisor, the total commissions paid by
the Fund are 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; that is, 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 received by 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.
<PAGE>
The aggregate amount of brokerage commissions paid
by the Fund for the fiscal year ended September 30,
1998 was $150,375. For this same period, the Fund paid
brokerage commissions with respect to transactions for
which research services were provided; however, neither
the Fund nor Advisor had any agreement or understanding
with any broker or dealer to direct brokerage to such
broker or dealer because of research services provided.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND-DISBURSING
AGENT
As custodian of the Fund's assets, Firstar Bank
Milwaukee, N.A., 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 Fund. Firstar Mutual
Fund Services, L.L.C., an affiliate of Firstar Bank
Milwaukee, N.A., acts as transfer agent and dividend-
disbursing agent for the Fund ("Transfer Agent").
ADMINISTRATOR AND FUND ACCOUNTANT
The Transfer Agent also provides administrative
and fund accounting services to the Fund pursuant to
separate administration and fund accounting agreements
dated as of October 1, 1997, as amended
("Administrative Agreement" and "Fund Accounting
Agreement," respectively). Under these Agreements, the
Transfer Agent calculates the daily net asset value of
each class of shares; prepares and files all federal
and state tax returns; oversees the Fund's insurance
relationships; participates in the preparation of
registration statements, proxy statements and reports;
prepares compliance filings relating to the
registration of the Fund's shares pursuant to state
securities laws; compiles data for and prepares notices
to the SEC; prepares financial statements for annual
and semi-annual reports; monitors the Fund's expense
accruals and performs securities valuations; monitors
compliance with the Fund's investment policies; and
generally assists in the Fund's administrative
operations. For the foregoing services, the Transfer
Agent will receive from the Fund, effective January 1,
1999, the following fees, computed daily and payable
monthly based on the average net assets per class of
shares: (i) pursuant to the Administration Agreement,
the Transfer Agent will receive a fee at the annual
rate of 0.07 of 1% on the first $200 million, 0.05 of
1% on the next $400 million, and 0.03 of 1% on average
net assets in excess of $500 million, subject to an
annual minimum of $70,000 (for all classes of shares),
plus out-of-pocket expenses; and (ii) pursuant to the
Fund Accounting Agreement, the Transfer Agent will
receive a fee of $33,000 on the first $40 million,
0.0150 of 1% on the next $200 million, and 0.00750 of
1% on average net assets in excess of $240 million,
plus out-of-pocket expenses. For the fiscal year ended
September 30, 1998, the Transfer Agent received $150,195
for its services under the Administration Agreement and
$57,693 for its services under the Fund Accounting
Agreement.
DISTRIBUTOR
Under a distribution agreement dated as of October
1, 1997, as amended and restated ("Distribution
Agreement"), Centennial Lakes Capital, Inc.
("Distributor") acts as principal distributor of the
Fund's shares. The Distributor's principal business
address is 7701 France Avenue South, Suite 500, Edina,
Minnesota 55435. The Distributor is controlled by
KHC, which in turn is controlled by LeRoy C. Kopp. Mr.
Kopp also controls Advisor. Accordingly, the
Distributor and Advisor are affiliated entities.
The Distribution Agreement provides that the
Distributor will use its best efforts to distribute the
Fund's shares, which shares are offered for sale
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 C and Class I shares.
Investments in Class A shares above $1 million are not
assessed an initial sales charge. However, the
Distributor may impose a 1% contingent deferred sales
<PAGE>
charge ("CDSC") on such shares redeemed within 24
months of purchase. The Distributor may also impose a
1% CDSC on Class C shares redeemed within 12 months of
purchase. In addition, redemptions of Class I shares
within 24 months of purchase may be charged a 1%
redemption fee. The Fund does not currently have any
arrangements that result in breakpoints in, or the
elimination of, sales charges or redemption fees for
directors and/or other affiliated persons of the Fund,
although the Fund has historically waived the initial
minimum investment requirements for such persons with
respect to their purchases of Class I shares. Certain
waivers and/or reductions of sales charges and
redemption fees are, however, available to other
persons and institutions, as described in the
Prospectus under the heading "Your Account." Any sales
charges which are assessed become the property of the
Distributor; the redemption fee, however, is the
property of the Fund.
With respect to Class A shares, the Distributor
may pay a portion of the applicable initial sales
charge due upon the purchase of such shares to the
broker-dealer, if any, involved in the trade, as
follows:
Dollar Amount Initial Portion of Initial
of Sales Sales Charge
Shares Charge(1) Paid to Broker-
Purchased Dealer(1)(2)
Up to $99,999 3.50% 3.00%
$100,000-$249,999 3.00% 2.55%
$250,000-$499,999 2.00% 1.70%
$500,000-$999,999 1.00% 0.85%
$1,000,000-$4,999,999 None None(3)
_____________________
(1) Reflected as a percentage of the offering price
of Class A shares. The offering price is the sum of
the net asset value per share plus the initial sales
charge indicated in the table ("Offering Price").
(2) At the discretion of the Distributor, all sales
charges may at times be paid to the broker-dealer,
if any, involved in the trade. A broker-dealer paid
all or substantially all of the sales charge may be
deemed an "underwriter" under the 1933 Act.
(3) The Distributor may, in its discretion and out
of its own assets, pay a 1% commission to broker-
dealers who initiate and are responsible for
purchases of Class A shares between $1,000,000 -
$4,999,999. The Distributor may also pay a 1%
commission to broker-dealers who initiate and are
responsible for purchases of Class C shares.
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 these expenses may be reimbursed pursuant to
the terms of the Rule 12b-1 distribution and
shareholder servicing plan discussed below.
As compensation for its services under the
Distribution Agreement, the Distributor may retain all
or a portion of (i) the initial sales charge from
purchases of Class A shares, (ii) the CDSC from
redemptions of Class A and Class C shares, if
applicable, and (iii) the Rule 12b-1 fees payable with
respect to the Class A and Class C shares (as described
under "Distribution and Shareholder Servicing Plan,"
below). For the fiscal year ended September 30, 1998,
the aggregate dollar amount of initial sales charges
imposed on purchases of Class A shares was $10,604,987;
the aggregate dollar amount of CDSCs imposed on
redemptions of Class A shares was $0; and the aggregate
dollar amount of Rule 12b-1 fees payable with respect
to Class A shares was $897,166 (Class C shares were not
available for investment until the date of this SAI).
Of these amounts, the Distributor retained $1,992,628,
$0, and $55,083, respectively.
ARRANGEMENTS WITH BROKER-DEALERS AND OTHER FINANCIAL
INTERMEDIARIES
The Distributor has entered into agreements with
registered broker-dealers pursuant to which such broker-
dealers have agreed to sell the Fund's shares to the
public. Certain of these broker-dealers have also
agreed to perform, with respect to shareholders who
purchase Fund shares through the broker-dealer, certain
<PAGE>
shareholder servicing functions which would ordinarily
be performed by the Transfer Agent. The Fund has
agreed to compensate certain of these broker-dealers
for the shareholder services they provide and the
Transfer Agent, in turn, has agreed to reduce its
transfer agency and servicing fee by a like amount for
those shareholder accounts which are serviced by such
broker-dealers. Under these arrangements, the Fund,
however, will not pay more than $16 per year per
account in transfer agency and shareholder servicing
fees.
The Fund may also pay, directly or indirectly
through arrangements with Advisor and/or the
Distributor, amounts to financial intermediaries that
purchase shares of the Fund through an omnibus-type
account and provide administrative services relating to
the Fund to their customers; provided that the Fund
will not pay more for these services through
intermediary relationships than it would if the
intermediaries' customers were direct shareholders in
the Fund.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
Description of 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, the Class A
and Class I 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 Plan also
provides that the Class C shares may be required to pay
the Distributor (i) a distribution fee of up to 0.75%
of the average daily net assets of the Fund
attributable to such class (computed on an annualized
basis) and (ii) a shareholder servicing fee of up to
0.25% of the average daily net assets of the Fund
attributable to such class (computed on an annual
basis). The Fund currently intends to make payments
under the Plan with respect to the Class C shares to
the maximum extent allowable under such Plan. The
Distributor is authorized, in turn, to 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 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 money
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
Fund a written report of all amounts expensed pursuant
to the Plan; provided, however, that the aggregate
payments by the Fund under the Plan to the Distributor
and all Recipients currently may not exceed 0.35% (on
an annualized basis) with respect to the Class A and
Class I shares, and 1.00% (on an annualized basis) with
respect to the Class C shares, of the average daily net
assets of the Fund attributable to each 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 more classes of shares, the cost 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.
<PAGE>
The Plan, including a form of the Rule 12b-1
Related Agreement, has been unanimously approved by the
Board of Directors, including all of the members of the
Board who are not "interested persons" of the Fund as
defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of the
Plan or any Rule 12b-1 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 Fund'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
any class 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 60 days'
written notice in the case of the Rule 12b-1 Related
Agreement only).
Amounts Expensed Under the Plan
For the fiscal year ended September 30, 1998, the
Fund paid out $897,166 under the Plan with respect to
the Class A shares. Of this amount, $15,968 was spent
on advertising, $28,598 was spent on printing and
mailing prospectuses to other than current
shareholders, and $852,600 was spent on compensation to
broker-dealers. The Distributor retained $55,083 of
the amounts expensed under the Plan.
For the fiscal year ended September 30, 1998,
unreimbursed expenses which were incurred by the
Distributor under the Plan and which have been carried
forward to fiscal 1999 amount to $540,941 (or 0.002% of
the net assets attributable to the Class A shares as of
September 30, 1998).
No amounts were expensed under the Plan with
respect to the Class C shares for the fiscal year ended
September 30, 1998 because such shares were not
available for investment until the date of this SAI.
Interests of Certain Persons
With the exception of Advisor, in its capacity as
the Fund's investment advisor, and the Distributor, in
its capacity as principal distributor of Fund shares,
no "interested person" of the Fund, as defined in the
1940 Act, and no director of the Fund who is not an
"interested person" has or had a direct or indirect
financial interest in the Plan or any Rule 12b-1
Related Agreement.
Anticipated Benefits to the Fund
The Board of Directors considered various factors
in connection with its decision to approve and continue
the Plan, including: (i) the nature and causes of the
circumstances which make implementation and
continuation of the Plan necessary and appropriate;
(ii) the way in which the Plan addresses those
circumstances, including the nature and amount of
expenditures; (iii) the nature of the anticipated
benefits; (iv) the merits of possible alternative plans
or pricing structures; (v) the relationship of the Plan
to other distribution efforts of the Fund, including
the sales charge on Class A shares; and (vi) 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 Plan would help to increase
net
<PAGE>
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,
which should result in certain economies of scale.
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 monitor the distribution and
shareholder servicing expenses of the Fund, it will be
able to evaluate the benefit of such expenditures in
deciding annually whether to continue the Plan.
PURCHASE, EXCHANGE, AND PRICING OF SHARES
Purchase of Shares
The Fund offers three classes of shares: Class A,
Class C and Class I. As discussed above under the
heading "Distributor," the Class A shares are offered
and sold subject to an initial sales charge (with
certain exceptions), while the Class C and Class I
shares are offered and sold without being subject to an
initial sales charge. In addition, a CDSC may be
charged on certain redemptions of Class A and Class C
shares and a redemption fee may be charged on certain
redemptions of Class I shares. Please see "Your
Account" in the Prospectus for more information.
As noted above, Class A shares may be purchased
without the imposition of an initial sales charge under
certain circumstances. In addition, the initial sales
charge may be reduced if multiple purchases of Class A
shares are combined. You may combine purchases of
Class A shares to take advantage of the breakpoints in
the sales charge schedule by participating in either
the Fund's Right of Accumulation ("ROA") program or by
executing a Letter of Intent ("LOI").
Right of Accumulation. The ROA allows you to
purchase Class A shares at the sales charge applicable
to the sum of (i) the dollar amount then being
purchased, plus (ii) the higher of either (a) the
current market value (calculated at the applicable
Offering Price) or (b) the actual purchase price of all
Fund shares already held by you, your spouse, and your
minor children or you and members of a "qualified
group." A "qualified group" is one that was formed at
least one year prior to the ROA purchase, has a purpose
other than buying Fund shares at a discount, has more
than ten members, can arrange meetings between the
Distributor and group members, agrees to include Fund
literature in mailings to its members, agrees to
arrange for payroll deductions or other bulk
transmissions of investments to the Fund, and meets
other uniform criteria that allow the Distributor to
achieve cost savings in distributing shares of the
Fund. To receive the 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 a reduced sales charge.
Letter of Intent. You may also qualify for a
reduced sales charge on the purchase of Class A shares
by completing the LOI section of the account
application. By completing the LOI, you express an
intention to invest during the next 13-month period a
specified amount (minimum of at least $100,000) 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
apply 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
<PAGE>
assure any payment of a
higher applicable sales charge. By signing the
purchase application and checking the box labeled
"Letter of Intent," you grant to the Distributor a
security interest in the reserved shares and appoint
the Distributor as attorney-in-fact to sell any or all
of the reserved shares to cover any additional sales
charges if you do not fulfill your undertaking.
Signing an 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.
You may reach the Distributor or the Transfer Agent by
calling 1-888-533-KOPP.
The Fund also offers an Automatic Investment Plan
("AIP"), which is a method of using dollar cost
averaging. Dollar cost averaging 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, 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 or Class C shares of the Fund
from your bank checking account. The minimum initial
investment for investors using the AIP is $3,000. If
you elect this option, all dividends and capital gains
distributions will be automatically reinvested in Fund
shares. With respect to Class A shares, the sales
charge on future purchases may be reduced by using the
Fund's ROA or LOI. To establish the AIP, complete the
appropriate section in the account application. 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 account. You can set up
the AIP with most financial institutions.
If you purchase (or redeem) shares of the Fund
through a financial intermediary, certain features of
the Fund relating to such transactions may not be
available or may be modified. In addition, certain
operational policies of the Fund, including those
related to settlement and dividend accrual, may vary
from those applicable to direct shareholders of the
Fund and may vary among intermediaries. We urge you to
consult your financial intermediary for more
information regarding these matters. In addition, the
Fund may pay, directly or indirectly through
arrangements with Advisor and/or the Distributor,
amounts to financial intermediaries that provide
transfer agent type and/or other administrative
services to their customers provided, however, that the
Fund will not pay more for these services through
intermediary relationships than it would if the
intermediaries' customers were direct shareholders in
the Fund. See "Arrangements with Broker-Dealers and
Other Financial Intermediaries." Certain financial
intermediaries may charge an advisory, transaction, or
other fee for their services. You will not be charged
for such fees if you purchase (or redeem) your Fund
shares directly from the Fund without the intervention
of a financial intermediary.
Exchange of Shares
You may exchange Class A or Class C shares for
Class I shares at any time so long as the Class I
minimum initial investment requirement is met. The
value of the shares to be exchanged will be the net
asset value (less the CDSC, if applicable) next
determined after receipt of instructions for exchange;
the price of the shares being purchased will be the net
asset value next determined after receipt of
instructions for exchange.
<PAGE>
You may also exchange shares of the Fund for
shares of the Firstar Money Market Fund, a no-load
money market fund managed by an affiliate of the
Transfer Agent. The Firstar Money Market Fund is
unrelated to the 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. The value of the shares to be exchanged
will be the net asset value (less the CDSC, if
applicable, with respect to Class A or Class C shares
or the redemption fee, if applicable, with respect to
Class I shares) next determined after receipt of
instructions for exchange; the price of the shares
being purchased will be at net asset value. Before
exchanging into the Firstar Money Market Fund, please
read the applicable prospectus, which may be obtained
by calling 1-888-533-KOPP, and open an account in the
Firstar Money Market Fund.
The Fund reserves the right to modify or terminate
the exchange privilege at any time. Call the Transfer
Agent at 1-888-533-KOPP to request instructions for an
exchange. An exchange is not a tax-free transaction.
Pricing of Shares
The Class A shares of the Fund are offered to the
public at the Offering Price, which is the sum of the
net asset value per share (next computed after the time
the purchase application and funds are received in
proper order by the Transfer Agent) and the applicable
initial sales charge. The Class C and Class I shares
of the Fund are offered to the public at their net
asset value (next computed after the time the purchase
application and funds are received in proper order by
the Transfer Agent) without any initial sales charge.
As previously noted, the initial sales charge may
be waived for certain individuals and institutions due
to anticipated economies of scale in sales efforts and
expense. For more information, please see "Your
Account_Class A Front-End Sales Charge Waivers and
Reductions" in the Prospectus.
The net asset value per share for each class is
determined as of the close of trading (generally 4:00
p.m. Eastern Time) on each day the New York Stock
Exchange ("NYSE") is open for business. Purchase
orders and redemption requests received 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 the purchase of shares
and requests for the 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 or redeem shares. 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 market 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 Fund 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.
REDEMPTIONS IN KIND
The Fund has filed a Notification under Rule 18f-1
of the 1940 Act, pursuant to which it has agreed 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 the 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
<PAGE>
amount in kind,
if it is deemed to be in the best interest of the Fund
to do so. If you receive an in kind distribution, you
will likely incur a brokerage charge on the disposition
of such securities through a securities dealer.
TAXATION OF THE FUND
The Fund intends to qualify annually for treatment
as a "regulated investment company" under the
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. In the event the Fund fails to qualify as a
"regulated investment company," it will be treated as a
regular corporation for federal income tax purposes.
Accordingly, the Fund would be subject to federal
income taxes and any distributions that it makes would
be taxable and non-deductible by the Fund. What this
means for shareholders of the Fund is that the cost of
investing in the Fund would increase. Under these
circumstances, it would be more economical for
shareholders to invest directly in securities held by
the Fund, rather than invest indirectly in such
securities through the Fund.
PERFORMANCE INFORMATION
The Fund's historical performance or return may be
shown in the form of various performance figures,
including average annual total return, total return,
and cumulative total return. 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,
investment management, and the imposition of sales
charges. Any additional fees charged by a dealer or
other financial services firm would reduce the returns
described in this section.
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
therefore represent the aggregate percentage or dollar
value change over the period.
The average annual total return of each class of
shares 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. 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
<PAGE>
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 these factors and
their contributions to total return.
The non-load-adjusted total return for the Class A
and Class I shares of the Fund for the year ended
September 30, 1998 was (41.90)% and (41.60)%,
respectively. The load-adjusted total return for the
Class A shares for this period was (43.92%). Class C
shares were not available for investment until the date
of this SAI.
Comparisons
From time to time, in marketing and other Fund
literature, the performance of one or more 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. 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
more classes of shares to a wide variety of indices and
measures of inflation, including the Russell 2000
Index. There are differences and similarities between
the investments that the Fund may purchase and the
investments measured by these indices.
The Fund's performance may also be discussed
during television interviews of Advisor personnel
conducted by news organizations to be broadcast in the
United States and elsewhere.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick L.L.P., 4200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402,
have been selected as the independent accountants for
the Fund.
FINANCIAL STATEMENTS
The following audited financial statements of the
Fund are incorporated herein by reference to the Fund's
1998 Annual Report as filed with the SEC on December 2,
1998:
(a) Report of Independent Accountants.
(b) Schedule of Investments as of September
30, 1998.
<PAGE>
(c) Statement of Assets and Liabilities as
of September 30, 1998.
(d) Statement of Operations for the year
ended September 30, 1998.
(e) Statement of Changes in Net Assets for
the year ended September 30, 1998.
(f) Financial Highlights for the year ended
September 30, 1998.
(g) Notes to Financial Statements.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
See "Exhibit Index."
Item 24. Persons Controlled by or under Common Control
with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 25. 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 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 26. Business and Other Connections of the
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 to the information contained under "Directors
and Officers" in the Statement of Additional
Information.
Item 27. Principal Underwriters
<PAGE>
(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 and Treasurer None
Kathleen Tillotson Assistant Secretary Executive Vice
President and
Secretary
(c) None.
Item 28. 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 Bank Milwaukee, N.A. and
Firstar Mutual Fund Services, L.L.C., 615 East Michigan
Street, Milwaukee, Wisconsin 53202, relating to the
former's function as custodian and the latter's
function as transfer agent, administrator, and fund
accountant.
Item 29. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 30. Undertakings.
(a) Registrant undertakes to furnish a copy
of its Annual Report to each person to whom a
Statement of Additional Information is
delivered if the person is not a shareholder
of the Fund at the time the Statement of
Additional Information is so delivered.
(b) Registrant undertakes to furnish a copy
of its Annual Report to each person to whom a
Prospectus is delivered, upon request and
without charge.
<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 Post-Effective
Amendment No. 2 to the 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 16th day of December, 1998.
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, granding 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 Post-Effective Amendment No. 2 to the
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 Director December 16, 1998
- -----------------------
LeRoy C. Kopp
/s/ Robert L. Stehlik Director December 16, 1998
- ------------------------
Robert L. Stehlik
/s/ Thomas R. Stuart Director December 16, 1998
- ------------------------
Thomas R. Stuart
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(a.1) Registrant's Articles of Incorporation(1)
(a.2) Certificate of Amendment to
Registrant's Articles of Incorporation (to
create Class A and Class I shares)(2)
(a.3) Certificate of Designation
to Registrant's Articles of Incorporation (to
create Class C shares)
(b) Registrant's By-Laws(1)
(c) None
(d) Investment Advisory Agreement(2)
(e.1) Amended and Restated Distribution Agreement
(e.2) Form of Selected Dealer Agreement(2)
(f) None
(g) (i) Custodian Agreement(2)
(ii) Amendment to Custodian
Agreement (to add Class C shares)
(iii) Addendum to Custodian
Agreement (to change name)
(h.1) (i) Transfer Agency Agreement(2)
(ii) Amendment to Transfer Agency
Agreement (relating to fee)
(iii) Amendment to Transfer Agency
Agreement (to add Class C shares)
(h.2) (i) Administration Agreement(2)
(ii) Amendment to Administration Agreement
(to add Class C shares)
(h.3) (i) Fund Accounting Agreement(2)
(ii) Amendment to Fund Accounting Agreement
(to add Class C shares)
(h.4) (i) Fulfillment Servicing Agreement(2)
(ii) Amendment to Fulfillment Servicing
Agreement (to add Class C shares)
(h.5) Addendum to Firstar Servicing
Agreements (to change name)
(i) Opinion and Consent of Godfrey & Kahn, S.C.(2)
(j) Consent of KPMG Peat Marwick L.L.P.
(k) None
(l) Initial Subscription Agreement(2)
<PAGE>
(m.1) Rule 12b-1
Distribution and Shareholder
Servicing Plan, as amended
(m.2) Form of 12b-1 Related
Agreement (for Class A and Class I shares)(2)
(m.3) Form of 12b-1 Related
Agreement (for Class C shares)
(n) Financial Data Schedule(3)
(o) Rule 18f-3 Multi-Class Plan, as amended
___________________
(1) Incorporated by reference to the Registrant's
Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission on June 20, 1997.
(2) Incorporated by reference to the
Registrant's Registration Statement on Form N-1A as
filed with the Securities and Exchange Commission on
September 16, 1997.
(3) Incorporated by reference to the
Registrant's Annual N-SAR as filed with the Securities
and Exchange Commission on November 30, 1998.
CERTIFICATE OF DESIGNATION
OF
KOPP FUNDS, INC.
The undersigned, the duly elected Secretary of
Kopp Funds, Inc., a Minnesota corporation (the
"Corporation"), hereby certifies that the following is
a true, complete and correct copy of resolutions duly
adopted by the Board of Directors of the Corporation
pursuant to Chapter 302A of the Minnesota Statutes on
November 16th, 1998:
Designation of Class A, Series C Common Shares
WHEREAS, pursuant to Article III of the
Corporation's Articles of Incorporation (the
"Articles"), the common shares of the Corporation 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
as may be adopted from time to time by the Board of
Directors of the Corporation; and
WHEREAS, pursuant to Article III of the Articles,
the common shares of the Corporation may be further
classified 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; and
WHEREAS, pursuant to a resolution adopted by the
Board of Directors on September 5, 1997, ten billion
(10,000,000,000) common shares of the Corporation were
designated as Class A Common Shares, of which three
billion (3,000,000,000) shares were designated as Class
A, Series A Common Shares, three billion
(3,000,000,000) shares were designated as Class A,
Series I Common Shares and the remaining four billion
(4,000,000,000) shares were left undesignated as to
series.
NOW, THEREFORE, BE IT RESOLVED, that of the four
billion (4,000,000,000) undesignated Class A Common
Shares, three billion (3,000,000,000) shares are hereby
designated as Class A, Series C Common Shares and the
remaining one billion (1,000,000,000) Class A Common
Shares shall remain undesignated as to series.
BE IT FURTHER RESOLVED, that the Class A, Series C
Common Shares designated by these resolutions shall
have the relative rights and preferences set forth in
Article VI of the Articles.
BE IT FURTHER RESOLVED, that the officers of the
Corporation are hereby authorized and directed to file
with the office of the Secretary of State of Minnesota
a Certificate of Designation, or such other similar
document, setting forth the relative rights and
preferences of the Class A, Series C Common Shares
designated hereby, as required by Section 302A.401,
Subd. 3(b) of the Minnesota Business Corporation Act.
IN WITNESS WHEREOF, the undersigned has executed
this Certificate of Designation on behalf of the
Corporation this 16th day of November, 1998.
/s/ Kathleen S. Tillotson
--------------------------------
Kathleen S. Tillotson, Secretary
This instrument was drafted by:
Pamela M. Krill
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
KOPP FUNDS, INC.
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into as of the 31st day
of December, 1998 between Kopp Funds, Inc., a Minnesota
corporation (the "Corporation") and Centennial Lakes
Capital, Inc., a Minnesota corporation (the
"Distributor").
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation is
authorized to create separate series and classes
thereof, each with its own separate investment
portfolio (the "Funds"), and the beneficial interest in
each such series and class thereof will be represented
by a separate series, and class, of shares (the
"Shares").
WHEREAS, the Distributor is a registered broker-
dealer under state and federal laws and regulations and
is a member of the National Association of Securities
Dealers, Inc. (the "NASD").
WHEREAS, the Corporation desires to retain the
Distributor as the principal distributor of Shares of
certain Funds of the Corporation.
NOW, THEREFORE, the Corporation and the
Distributor mutually agree and promise as follows:
1. Appointment of the Distributor; Acceptance of
Appointment. The Corporation hereby appoints the
Distributor as its agent for the distribution of Shares
for each of the Funds on whose behalf the Corporation
executes an Exhibit to this Agreement in jurisdictions
wherein the Shares may lawfully be offered for sale,
and the Distributor, by execution of each such Exhibit,
hereby accepts such appointment.
2. Exclusive Nature of Distribution Services. The
Distributor shall be the exclusive representative of the
Corporation to act as the principal distributor of each
Fund's Shares, except that the exclusive rights granted
to the Distributor to sell Shares shall not apply to (i)
Shares issued by the Corporation directly to Fund
investors upon such terms and conditions and for such
consideration, if any, as the Corporation may determine,
whether in connection with the reinvestment of dividends
or capital gains distributions or through the exercise
of any exchange privilege, or otherwise, and (ii)
purchases made by investors through Firstar Mutual Fund
Services, L.L.C., the Corporation's transfer and
dividend disbursing agent (the "Transfer Agent"), or any
successor Transfer Agent, in the manner set forth in the
Prospectus of the Corporation. The term "Prospectus"
shall mean the Prospectus and Statement of Additional
Information included as part of the Corporation's
Registration Statement, as such Prospectus and
Registration Statement may be amended from time to time,
and the term "Registration Statement" shall mean the
Registration Statement on Form N-1A filed by the
Corporation with the Securities and Exchange Commission
(the "SEC") and effective under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act, as
may be amended from time to time.
3. Services of the Distributor.
(a) Distribution of Shares. The Distributor
shall use its best efforts to solicit orders for the
sale of such part of the authorized Shares of each Fund
remaining unissued as from time to time shall be
effectively registered under the 1933 Act, at prices
determined as hereinafter provided and on terms
hereinafter set forth, all subject to applicable
federal and state laws and regulations and to the
Articles of Incorporation, Bylaws and Registration
Statement of the Corporation; provided, however, the
Distributor is not obligated to sell any specific
number of Shares. In addition, the Distributor shall
undertake such advertising and promotion as it believes
is reasonable in connection with such solicitation.
(b) Selected Dealer Agreements. The Distributor
may enter into selected dealer agreements with
registered and qualified dealers and other financial
institutions of its choice for the sale of Shares (the
"Selected Dealers"), provided that the Corporation
shall approve the form of such agreements and provided
further that, in entering into any such agreement, the
Distributor shall act only on its own behalf as
principal and not as agent for the Corporation. Shares
sold to Selected Dealers by the Distributor shall be
for resale by such dealers only at the prices as set
forth herein.
(c) Transmission of Sales Orders. The
Distributor shall transmit any order received by it for
the purchase of Shares to the Transfer Agent. Any
order may be rejected by the Transfer Agent, upon
instructions from the Corporation; provided, however
that the Corporation will not arbitrarily or without
reasonable cause refuse to accept orders for the
purchase of Shares. The Corporation will cause the
Transfer Agent to confirm orders for Shares upon their
receipt and make appropriate book entries therefor
pursuant to the instructions of the Distributor. The
Distributor shall cause payment for Shares and
instructions as to book entries to be delivered
promptly to the Transfer Agent. With respect to Shares
sold by any Selected Dealer, the Distributor is
authorized to direct the Transfer Agent to receive
instructions directly from the Selected Dealer on
behalf of the Distributor as to the registration of
Shares in the names of investors and to confirm the
issuance of such Shares to such investors. The
Distributor is also authorized to instruct the Transfer
Agent to receive payment directly from a Selected
Dealer on behalf of the Distributor for the purchase
price of the Shares. In such event, the Transfer Agent
will obtain from the Selected Dealer and maintain a
record of such registration and payments.
(d) Suspension of Sales. The Distributor
acknowledges that, whenever in the judgment of the
Corporation's officers such action is warranted for any
reason, including, without limitation, market, economic
or political conditions, the Corporation's officers may
decline to accept orders for, or make any sales of,
Shares of a Fund or Funds until such time as those
officers deem it advisable to accept such orders and to
make such sales.
(e) Redemption of Shares. The Distributor is
authorized, as agent for the Corporation, to repurchase
Shares held in an investor's account with a Fund or
Funds in accordance with applicable provisions in the
Prospectus. The Distributor shall promptly transmit to
the Transfer Agent of the Corporation, for redemption,
all such orders for the repurchase of Shares. Payment
for such Shares repurchased may be made by the Transfer
Agent directly for the account of the investor and the
Distributor shall, under no circumstances, be
responsible for transmitting funds or crediting a
client's account. The Distributor shall, however, be
responsible for the accuracy of the instructions
transmitted to the Transfer Agent in connection with
all such repurchases. With respect to Shares tendered
for redemption by any Selected Dealer on behalf of an
investor, the Distributor is authorized to instruct the
Transfer Agent to accept orders for redemption directly
from the Selected Dealer on behalf of the Distributor
and to instruct the Corporation to transmit payments
for such redemptions directly to the Selected Dealer
for the account of the investor and, in such
circumstances, the Distributor shall be solely
responsible for the transmission of funds or crediting
of a client's account by the Selected Dealer. The
Transfer Agent will obtain from the Selected Dealer and
maintain a record of all such orders.
(f) Rule 12b-1 Plan Reports. In connection with
the distribution services provided hereunder and with
respect to a Rule 12b-1 Plan (the "Rule 12b-1 Plan")
adopted by the Corporation on behalf of the Funds, the
Distributor shall provide the Corporation such
information as may be reasonably requested concerning
the Distributor's activities and the costs incurred in
performing such activities with respect to the Funds.
(g) Exclusive Services. The services of the
Distributor hereunder are exclusive, it being
understood that the Distributor may not act as
principal distributor for other registered investment
companies. It is also understood, however, that the
Selected Dealers may sell shares for other registered
investment companies in addition to the Corporation.
(h) Use of Unauthorized Information. Neither the
Distributor nor any Selected Dealer shall give any
information or make any representations, other than
those contained in the Registration Statement or
Prospectus and any sales literature specifically
approved by officers of the Corporation.
(i) Compliance with Applicable Law. The
Distributor will in all material respects conform its
activities hereunder to the requirements of applicable
state and federal laws and all applicable rules of the
NASD. In addition, the Distributor will observe and be
bound by all the provisions of the Corporation's
Articles of Incorporation, Bylaws and Registration
Statement which at any time in any way require, limit,
restrict, or prohibit or otherwise regulate any action
on the part of the Distributor.
4. Price of Shares.
(a) Sales. Shares offered for sale or sold by
the Distributor or any Selected Dealer for the account
of a Fund shall be so offered or sold at a price per
Share determined in accordance with the Prospectus
relating to the sale of such Shares. The price the
Corporation shall receive for any Shares purchased by
an investor from the Corporation through the
Distributor or a Selected Dealer shall be the net asset
value (the "NAV") used in determining the public
offering price applicable to the sale of such Shares,
as calculated in the manner set forth in the
Prospectus. Any excess amounts paid by an investor for
the purchase of Shares shall be allocated as set forth
in Paragraph 6(a) below.
(b) Redemptions. Shares tendered for redemption
by the Distributor or a Selected Dealer on behalf of an
investor shall be redeemed in accordance with the
applicable provisions as set forth in the Prospectus at
a price equal to the NAV of the Fund as determined in
accordance with the procedures set forth in the
Prospectus, less any applicable contingent deferred
sales charge or redemption fee.
5. Duties of the Corporation.
(a) Registration of Shares with SEC. The
Corporation agrees that it will use its best efforts to
keep effectively registered under the 1933 Act for sale
as herein contemplated such Shares as the Distributor
shall reasonably request and as the SEC shall permit to
be so registered.
(b) Qualification of Shares with States;
Registration of Corporation. The Corporation agrees to
execute any and all documents, furnish any and all
information and take any other actions which may be
reasonably necessary in connection with the
qualification of Shares for sale, including the
qualification of the Corporation as a broker or dealer
where necessary or advisable, in such states as the
Distributor may reasonably request (it being understood
that the Corporation shall not be required without its
consent to comply with any requirement which in its
opinion is unduly burdensome).
(c) Available Information. At the expense of the
Distributor, the Corporation shall furnish to the
Distributor copies of all information, financial
statements, annual and interim reports, and other
papers which the Distributor may reasonably request for
use in connection with the distribution of Shares.
6. Payments to the Distributor.
(a) Front-End Sales Charge. With respect to
Funds which impose a front-end sales charge, the
Distributor shall receive and may retain any portion of
any front-end sales charge which is imposed on such
sales and not reallocated by the Distributor to
Selected Dealers as set forth in the Prospectus,
subject to applicable NASD rules.
(b) Contingent Deferred Sales Charge. With
respect to Funds which impose a contingent deferred
sales charge ("CDSC"), the Distributor shall receive
and may retain any portion of any CDSC which is imposed
on such redemptions, subject to applicable NASD rules.
(c) Rule 12b-1 Fee. Pursuant to the terms of
the Rule 12b-1 Plan, the Corporation may pay the
Distributor the amounts specified under the Rule 12b-1
Plan to the extent the Distributor provides services
under the Plan or otherwise incurs expenses in
connection therewith. The Distributor may pay all or a
portion of this fee to Selected Dealers or any other
qualified persons who render assistance in distributing
or promoting the sale of Shares pursuant to a written
agreement, provided the form of such agreement shall be
approved by the Corporation and provided further that
in entering into any such agreement, the Distributor
shall act only on its own behalf as principal and not
as agent for the Corporation. To the extent such fee
is not paid to such persons, the Distributor may use
the fee for its own distribution and shareholder
servicing expenses incurred in connection with its
services to the Corporation hereunder to the extent
specified under the Rule 12b-1 Plan.
7. Expenses.
(a) Payable by the Corporation. The Corporation
shall bear the expenses of (i) registering the Shares
under the 1933 Act, (ii) qualifying or continuing the
qualification of Shares for sale under the laws of such
states as may be designated by the Distributor under
the conditions herein specified, (iii) qualifying or
continuing the qualification of the Corporation as a
broker or dealer under the laws of such states as may
be designated by the Distributor under the conditions
herein specified, and (iv) issuing Shares, such as
issue taxes and fees of the transfer agent.
(b) Payable by the Distributor. Other than the
expenses payable by the Corporation as set forth in
paragraph 7(a) above or as otherwise provided herein,
the Distributor shall bear all expenses incident to the
sale and distribution of the Shares issued or sold
hereunder, including, without limitation, (i) any sales
commissions or other expenses payable to Selected
Dealers and others for their services in connection
with the sale of Shares, (ii) the expenses of printing
and distributing Prospectuses and any other literature,
advertising and selling aids used in connection with
the offering of Shares for sale (except that such
expenses shall not include expenses incurred by the
Corporation in connection with the preparation,
printing and distribution of any prospectus, report or
other communication to holders of Shares in their
capacity as such), and (iii) the expenses of
advertising in connection with the offering of Shares.
In addition, so long as the Rule 12b-1 Plan continues
in effect, any expenses incurred by the Distributor
hereunder may be paid from amounts the Distributor and
any Selected Dealer or other person are entitled to
receive from the Corporation under such plan.
8. Indemnification.
(a) By the Corporation. The Corporation agrees
to indemnify the Distributor and its officers,
directors and controlling persons (within the meaning
of the federal securities laws), and the officers and
directors of its controlling persons, for any liability
and expenses, including reasonable attorneys' fees,
which may be sustained by any of the indemnitees as a
result of (i) any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares, (ii)
any omission or alleged omission to state a material
fact required to be stated in the Registration
Statement, Prospectus or Statement of Additional
Information or necessary to make the statements in any
of them not misleading, or (iii) the Corporation's
willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties and obligations
hereunder; provided, however, that the Corporation
shall not be required to indemnify the Distributor or
any of its officers, directors or controlling persons,
or the officers and directors of its controlling
persons, for any liability or expenses arising out of
or based upon any statements or representations made by
the Distributor or its agents other than such
statements or representations as are contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares
(other than statements or omissions relating to the
Distributor) and in such other financial and other
statements as are furnished to the Distributor pursuant
to paragraph 5(c) hereof.
(b) By the Distributor The Distributor agrees to
indemnify the Corporation and its officers, directors
and controlling persons (within the meaning of the
federal securities laws) for any liability and
expenses, including reasonable attorneys' fees, which
may be sustained by any of the indemnitees as a result
of (i) any alleged or actual material misrepresentation
or omission by the Distributor or its agents, or (ii)
the Distributor's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties and
obligations hereunder.
9. Duration and Termination.
(a) Duration. This Agreement shall become
effective for each Fund as of the date of execution of
the applicable Exhibit and shall continue in effect
with respect to each Fund for one year from the date of
this Agreement and thereafter for successive periods of
one year, subject to the provisions for termination and
all other terms and conditions hereof, if such
continuation shall be specifically approved at least
annually (i) by the vote of a majority of the Board of
Directors of the Corporation, including a majority of
the Directors who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for
that purpose or (ii) by a vote of a majority of the
outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act) of each
Fund. If a Fund is added after the first approval as
described above, this Agreement will be effective as to
that Fund upon execution of the applicable Exhibit and
will continue in effect until the next annual approval
of this Agreement by the Board of Directors of the
Corporation or Fund shareholders and thereafter for
successive periods of one year, subject to approval as
described above.
(b) Termination. Notwithstanding whatever may be
provided herein to the contrary, this Agreement may be
terminated at any time, without penalty, by the Board
of Directors of the Corporation or by the shareholders
of a Fund acting by the vote of at least "a majority of
its outstanding voting securities" (as that phrase is
defined in Section 2(a)(42) of the 1940 Act), or by the
Distributor, in each case, on not more than 60 days'
written notice to the other party. In addition, this
Agreement shall automatically terminate in the event of
its "assignment" (as defined in Section 2(a)(4) of the
1940 Act).
10. Notice. Any notice under this Agreement
shall be in writing, delivered or mailed, postage
prepaid, or transmitted by facsimile with
acknowledgment of receipt, to the other party at such
party's principal place of business, which may from
time to time be changed by one party by notice to the
other party.
11. Miscellaneous.
(a) Governing Law. This Agreement shall be
construed in accordance with the laws of the State of
Minnesota, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act,
the 1933 Act, the Securities Exchange Act of 1934, as
amended, or any rule or order of the SEC under such
Acts or any rule of the NASD.
(b) Captions. The captions of this Agreement are
included for convenience only and in no way define or
limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) Severability. If any provision of this
Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be
deemed to be severable.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
EXHIBIT A
to the
Distribution Agreement
KOPP EMERGING GROWTH FUND
The Corporation hereby appoints the Distributor,
and the Distributor hereby accepts such appointment, as
the Corporation's exclusive agent for the distribution
of Shares of the above-named Fund, subject to the terms
of the Distribution Agreement of which this Exhibit is
a part.
Executed as of this 31st day of December,
1998.
The Corporation:
KOPP FUNDS, INC.
By: /s/ LeRoy C. Kopp
--------------------------
LeRoy C. Kopp, President
The Distributor:
CENTENNIAL LAKES CAPITAL, INC.
By: /s/ Donald P. James
---------------------------
Donald P. James, President
ADDITION OF THE
KOPP EMERGING GROWTH FUND CLASS C SHARES
TO THE
CUSTODIAN SERVICING AGREEMENT
Between
KOPP FUNDS, INC.
and
FIRSTAR BANK MILWAUKEE, N.A.
Dated October 1, 1997
WHEREAS, the above parties have entered into a
Custodian Servicing Agreement (the "Agreement") whereby
Firstar Bank Milwaukee, N.A. ("Firstar") has agreed to
provide custody services to Kopp Funds, Inc. (the
"Corporation"); and
WHEREAS, the parties would like to add Kopp Emerging
Growth Fund Class C Shares ("Class C") to the
Agreement;
NOW THEREFORE, the Corporation and Firstar agree to add
Class C to the Agreement and compensation for the
addition of Class C is detailed on the following
schedule.
Dated this 31st day of December, 1998.
KOPP FUNDS, INC. FIRSTAR BANK MILWAUKEE, N.A.
BY: /s/ Kathleen Tillotson BY: /s/ Joe Neuberger
Custody Services
Annual Fee Schedule - Domestic Funds
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund
Class A October 1, 1997
Class I October 1, 1997
Class C December 31, 1998
Annual fee based upon market value
2 basis points per year
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange,
tender, redemption, maturity, receipt, delivery):
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$15.00 per variation margin
$15.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term
investment, variable amount notes offer safety and
prevailing high interest rates. Our charge, which is
1/4 of 1%, is deducted from the variable amount note
income at the time it is credited to your account.
Plus out-of-pocket expenses, and extraordinary expenses
based on complexity.
Fees are billed monthly, based upon market value at the
beginning of the month.
Addendum to Custodian Servicing Agreement
This Addendum to the Custodian Servicing Agreement
dated October 1, 1997, is entered into by and between
Firstar Bank Milwaukee, N.A. and Kopp Funds, Inc. as of
the 30th day of September, 1998; and
WHEREAS, the entity known as Firstar Trust Company
ceased operations on September 30, 1998; and
WHEREAS, Firstar Bank Milwaukee, N.A. represents that
it has the necessary trust and custodial powers to
enter into this Agreement; NOW,
THEREFORE, Firstar Bank Milwaukee, N.A. will be the
successor responsible party to each of the Agreements
referenced above and will assume all responsibility for
any acts or omissions during the time Firstar Trust
Company was the named service provider under these same
Agreements.
Firstar Bank Milwaukee, N.A. Kopp Funds, Inc.
BY: /s/ Joe Neuberger BY: /s/ Kathleen Tillotson
---------------------- ------------------------
ATTEST: /s/ Victoria Kampa ATTEST: /s/ Greg Kulka
------------------- ---------------------
AMENDMENT TO TRANSFER AGENT SERVICING AGREEMENT
THIS AMENDMENT is made and entered into as of the
first day of October 1997, by and between Kopp Funds,
Inc., a Minnesota corporation ("Company"), and Firstar
Trust Company, a Wisconsin corporation ("Agent").
WHEREAS, the Transfer Agent Servicing Agreement
dated as of October 1, 1997 ("Agreement"), between the
Company and Agent provides that the Company shall pay
Agent an annual fee for each Class A shareholder
account of $16;
WHEREAS, Centennial Lakes Capital, Inc., the
distributor of the Class A shares of the Company
("Distributor"), has entered into selling agreements
with certain broker-dealers pursuant to which these
broker-dealers will perform certain shareholder
servicing functions that Agent performs for other Class
A shareholders of the Company;
WHEREAS, Company desires that Agent reduce its
shareholder servicing fee for those accounts that are
serviced in part by such broker-dealers;
NOW, THEREFORE, in consideration of the premises,
the Company and the Agent do mutually promise and agree
as follows:
Pursuant to Section 9.A. of the Agreement, the
parties hereby amend Exhibit A to the Agreement to
provide that the annual fee per shareholder account for
the Class A shares shall be $13 for the accounts
serviced by broker-dealers who have a National
Securities Clearing Corporation Matrix Levels I, II, or
III networking reimbursement agreement with
Distributor. Agent's invoices to Company shall be
reduced by the aggregate of the amount paid or to be
paid under the networking reimbursement agreements,
which amount shall in turn be reimbursed or paid to
Distributor from the Company's gross assets by the
Company's administrator.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by a duly authorized
officer on one or more counterparts as of the day and
year first above written.
KOPP FUNDS, INC. FIRSTAR TRUST COMPANY
BY: /s/ Kathleen S. Tillotson BY: /s/ Robert J. Kern
- --------------------------------- -------------------------
TITLE: Executive Vice President TITLE: Vice President
ADDITION OF THE
KOPP EMERGING GROWTH FUND CLASS C SHARES
TO THE
TRANSFER AGENT SERVICING AGREEMENT
Between
KOPP FUNDS, INC.
and
FIRSTAR MUTUAL FUND SERVICES, LLC
Dated October 1, 1997
WHEREAS, the above parties have entered into a Transfer
Agent Servicing Agreement (the "Agreement") whereby
Firstar Mutual Fund Services ("FMFS") has agreed to
provide transfer agent services to Kopp Funds, Inc.
(the "Corporation"); and
WHEREAS, the parties would like to add Kopp Emerging
Growth Fund Class C Shares ("Class C") to the
Agreement;
NOW THEREFORE, the Corporation and FMFS agree to add
Class C to the Agreement and compensation for the
addition of Class C is detailed on the following
schedule.
Dated this 31st day of December, 1998.
KOPP FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES
BY: /s/ Kathleen Tillotson BY: /s/ Joe Neuberger
---------------------- ------------------
Transfer Agent and Shareholder Servicing
Annual Fee Schedule
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund
Class A October 1, 1997
Class I October 1, 1997
Class C December 31, 1998
Annual Fee
$16.00 per shareholder account -- load fund (Class A & C)
$14.00 per shareholder account -- no-load fund (Class I)
Minimum annual fee of $25,500 for initial class
Minimum annual fee of $10,000 for each additional class or fund
Plus Out-of-Pocket Expenses, including but not limited
to:
Telephone - toll free lines Proxies
Postage Retention of records (with prior approval)
Programming (with prior approval) Microfilm/fiche of records
Stationery/envelopes Special reports
Mailing ACH fees
Insurance NSCC charges
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per item for AIP purchases
$ .35 per item for EFT payments and purchases
$ 3.50 per correction, reversal, return item
Qualified Plan Fees (Billed to Investors)
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Return check fee $20.00 / item
Stop payment (Liquidation,
dividend, draft check) $20.00 / stop
Research fee $ 5.00 / item
(For requested items of the second calendar year
[or previous] to the request)
(Cap at $25.00)
NSCC and DAZL
Out-of-Pocket Charges
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50 / month
Networking $ 250 / month
CPU Access $ 40 / month
Fund/SERV Transactions $ 0.35 / trade
Networking - per item $ 0.025/ monthly dividend fund
Networking - per item $ 0.015/ non-mo. dividend fund
First Dat $ 0.10 / next-day Fund/SERV trade
First Data $ 0.15 / same-day Fund/SERV trade
NSCC Implementation
8 to 10 weeks lead time (target availability 10/1/97)
DAZL (Direct Access Zip Link - Electronic mail interface
to financial advisor network)
Setup $5,000 / fund group - Waived for FIRSTAR
Monthly Usage $1,000 / month
Transmission $0.015 / price record
$0.025 / other record
Enhancement $ 125 / hour
Fees and out-of-pocket expenses are billed to the fund
monthly.
ADDITION OF THE
KOPP EMERGING GROWTH FUND CLASS C SHARES
TO THE
FUND ADMINISTRATION SERVICING AGREEMENT
Between
KOPP FUNDS, INC.
and
FIRSTAR MUTUAL FUND SERVICES, LLC
Dated October 1, 1997
WHEREAS, the above parties have entered into a Fund
Administration Servicing Agreement (the "Agreement")
whereby Firstar Mutual Fund Services ("FMFS") has
agreed to provide administration services to Kopp
Funds, Inc. (the "Corporation"); and
WHEREAS, the parties would like to add Kopp Emerging
Growth Fund Class C Shares ("Class C") to the
Agreement;
NOW THEREFORE, the Corporation and FMFS agree to add
Class C to the Agreement and compensation for the
addition of Class C is detailed on the following
schedule.
Dated this 31st day of December, 1998.
KOPP FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES
BY: /s/ Kathleen Tillotson BY: /s/ Joe Neuberger
---------------------- -----------------
Fund Administration and Compliance
Annual Fee Schedule - Domestic Funds
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund
Class A October 1, 1997
Class I October 1, 1997
Class C December 31, 1998
Annual fee based upon average net fund assets per class
7 basis points on the first $200 million
5 basis points on the next $400 million
3 basis points on the balance
Minimum annual fee: $30,000 first fund
$20,000 /fund next three funds
$15,000 /fund additional funds
Plus out-of-pocket expense reimbursements, including
but not limited to:
Postage
Programming*
Stationery
Proxies*
Retention of records*
Special reports*
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses*
* If in excess of $1,000 in any month, such
expenses must be pre-approved by the Company.
Fees and out-of-pocket expense reimbursements are
billed monthly.
ADDITION OF THE
KOPP EMERGING GROWTH FUND CLASS C SHARES
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
Between
KOPP FUNDS, INC.
and
FIRSTAR MUTUAL FUND SERVICES, LLC
Dated October 1, 1997
WHEREAS, the above parties have entered into a Fund
Accounting Servicing Agreement (the "Agreement")
whereby Firstar Mutual Fund Services ("FMFS") has
agreed to provide fund accounting services to Kopp
Funds, Inc. (the "Corporation"); and
WHEREAS, the parties would like to add Kopp Emerging
Growth Fund Class C Shares ("Class C") to the
Agreement;
NOW THEREFORE, the Corporation and FMFS agree to add
Class C to the Agreement and compensation for the
addition of Class C is detailed on the following
schedule.
Dated this 31st day of December, 1998.
KOPP FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES
BY: /s/ Kathleen Tillotson BY: /s/ Joe Neuberger
Fund Accounting Services
Annual Fee Schedule
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund
Class A October 1, 1997
Class I October 1, 1997
Class C December 31, 1998
Domestic Equity Funds (reflects fees for 3 classes)
$33,000 for the first $40 million
1.50 of 1% (1.50 basis points) on the next $200 million
0.75 of 1% (0.75 basis points) on average net assets exceeding
$240 million
Plus out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $0.15
Options $0.15
Corp/Gov/Agency Bonds $0.50
CMO's $0.80
International Equities and Bonds $0.50
Municipal Bonds $0.80
Money Market Instruments $0.80
All fees are billed monthly.
ADDITION OF THE
KOPP EMERGING GROWTH FUND CLASS C SHARES
TO THE
FULFILLMENT SERVICING AGREEMENT
Between
KOPP FUNDS, INC.
and
FIRSTAR MUTUAL FUND SERVICES, LLC
Dated October 1, 1997
WHEREAS, the above parties have entered into a
Fulfillment Servicing Agreement (the "Agreement")
whereby Firstar Mutual Fund Services ("FMFS") has
agreed to provide fulfillment services to Kopp Funds,
Inc. (the "Corporation"); and
WHEREAS, the parties would like to add Kopp Emerging
Growth Fund Class C Shares ("Class C") to the
Agreement;
NOW THEREFORE, the Corporation and FMFS agree to add
Class C to the Agreement and compensation for the
addition of Class C is detailed on the following
schedule.
Dated this 31st day of December, 1998.
KOPP FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES
BY: /s/ Kathleen Tillotson BY: /s/ Joe Neuberger
Literature Fulfillment Services
Annual Fee Schedule
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund
Class A October 1, 1997
Class I October 1, 1997
Class C December 31, 1998
Customer Service
State registration compliance edits
Literature database
Record prospect request and profile
Prospect servicing 8:00 am to 7:00 pm CT
Recording and transcription of requests received off-hours
Periodic reporting of leads to client
Service Fee: $0.99 / minute
$100 / month minimum
$780 one-time setup
Assembly and Distribution of Literature Requests
Generate customized prospect letters
Assembly and insertion of literature items
Inventory tracking
Inventory storage, reporting
Periodic reporting of leads by state, items requested, market source
Service Fee: $0.45 / lead-insertion of up to 4 items/lead
$0.15 / additional inserts
Fees and out-of-pocket expenses are billed to fund
monthly.
Addendum to Firstar Servicing Agreement
This Addendum to the Fund Administration, Fund
Accounting, Transfer Agent and Fulfillment Servicing
Agreements dated October 1, 1997, is entered into by
and between Firstar Mutual Fund Services, LLC and Kopp
Funds, Inc. as of the 30th day of September, 1998.
WHEREAS, the mutual funds servicing division of Firstar
Trust Company became a limited liability company and
separate subsidiary of Firstar Bank, Milwaukee, on
September 30, 1998; and
WHEREAS, the entity known as Firstar Trust Company
ceased operations on September 30, 1998; NOW,
THEREFORE, Firstar Mutual Fund Services, LLC will be
the successor responsible party to each of the
Agreements referenced above and will assume all
responsibility for any acts or omissions during the
time Firstar Trust Company was the named service
provider under these same Agreements.
Firstar Mutual Fund Services, LLC Kopp Funds, Inc.
BY: /s/ Joe Neuberger BY: /s/ Kathleen Tillotson
-------------------- -----------------------
ATTEST: /s/ Victoria Kampa ATTEST: /s/ Greg Kulka
CONSENT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors of
Kopp Funds, Inc.:
We consent to the reference to our Firm in the
Prospectus under the heading "Financial Highlights of
the Fund" and in the Statement of Additional
Information under the heading "Independent
Accountants." In addition, we consent to the
incorporation by reference into the Statement of
Additional Information under the heading "Financial
Statements" of our report on the Fund's financial
statements for the year ended September 30, 1998, which
report is included in the Fund's 1998 Annual Report.
/s/ KPMG Peat Marwick L.L.P.
KPMG Peat Marwick L.L.P.
Minneapolis, Minnesota
December 28, 1998
KOPP FUNDS, INC.
KOPP EMERGING GROWTH FUND
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN, AS AMENDED
The following Distribution and Shareholder
Servicing Plan, as amended (the "Plan"), has been
adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act"), by Kopp
Funds, Inc. (the "Corporation"), a Minnesota
corporation, on behalf of the Kopp Emerging Growth Fund
(the "Fund"). The Plan has been approved by a majority
of the Corporation's Board of Directors, including a
majority of the directors who are not interested
persons of the Corporation and who have no direct or
indirect financial interest in the operation of the
Plan or in any Rule 12b-1 related agreement (as defined
below) (the "Disinterested Directors"), cast in person
at a meeting called for the purpose of voting on such
plan.
In approving the Plan, the Board of Directors
determined that the Plan would be prudent and in the
best interests of the Fund and its shareholders. Such
approval by the Board of Directors included a
determination, in the exercise of its reasonable
business judgment and in light of its fiduciary duties,
that there is a reasonable likelihood that the Plan
will benefit each Class of the Fund and its
shareholders.
The provisions of the Plan are as follows:
1. PAYMENTS BY THE CORPORATION TO PROMOTE THE SALE OF
THE FUND'S SHARES
(a) The Corporation, on behalf of the Fund,
will reimburse Centennial Lakes Capital, Inc. (the
"Distributor"), as principal distributor of the
Fund's Class A, Class C and Class I shares (each a
"Class"), for expenses incurred in connection with
(i) the promotion and distribution of each Class
(the "distribution fee") and (ii) the provision of
personal services to the shareholders of each
Class (the "shareholder servicing fee"). With
respect to the Class A and Class I shares, neither
the distribution fee nor the shareholder servicing
fee payable to the Distributor shall exceed 0.25%
of the average daily net assets of the Fund
attributable to each Class; with respect to the
Class C shares, the distribution fee shall not
exceed 0.75%, and the shareholder servicing fee
shall not exceed 0.25%, of the average daily net
assets of the Fund attributable to the Class. The
Distributor may pay all or a portion of these fees
to any registered securities dealer, financial
institution or any other person (the "Recipient")
who renders assistance in distributing or
promoting the sale of a Class, or who provides
certain shareholder services to shareholders of a
Class, pursuant to a written agreement (the "Rule
12b-1 Related Agreement"), a form of which is
attached hereto as Appendix A with respect to the
Class A shares, Appendix B with respect to the
Class I shares and Appendix C with respect to the
Class C shares. To the extent such fees are not
paid to such persons, the Distributor may use the
fees for its distribution expenses incurred in
connection with the sale of a Class of shares or
any of its shareholder servicing expenses.
Payment of these fees to the Distributor shall be
made quarterly, within 30 days after the close of
the quarter for which the fee is payable, upon the
Distributor forwarding to the Corporation's Board
of Directors the written report required by
Section 2 of this Plan; provided that the
aggregate payments under the Plan to the
Distributor and all Recipients shall not exceed
0.50% (on an annualized basis) with respect to the
Class A and Class I shares, or 1.00% (on an
annualized basis) with respect to the Class C
shares, of the average daily net assets of the
Fund attributable to each such Class of shares for
that quarter; and provided further that no fees
shall be paid in excess of the distribution and
shareholder servicing expenses verified in a
written report and submitted by the Distributor to
the Corporation's Board of Directors as required
under Section 2 of this Plan.
(b) From time to time, the Distributor may
engage in activities which jointly promote the
sale of one or more Classes, the costs of which
are not readily identifiable as related to any one
Class. The expenses attributable to such joint
distribution activities shall be allocated by the
Board of Directors among each Class on the basis
of its respective net assets, although the Board
of Directors may allocate expenses in any other
manner it deems fair and equitable.
(c) 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 Section 1 of this Plan,
the unpaid amount shall be carried forward from
period to period while the Plan is in effect until
such time as it is paid. The Distributor shall
not, however, be entitled to charge the Fund any
interest, carrying or finance fees in connection
with any such unpaid amounts carried forward.
(d) No Rule 12b-1 Related Agreement shall be
entered into with respect to any Class, and no
payments shall be made pursuant to any Rule 12b-1
Related Agreement, unless such Rule 12b-1 Related
Agreement is in writing and has first been
delivered to and approved 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 such
Rule 12b-1 Related Agreement. The form of Rule
12b-1 Related Agreement relating to the Class A
shares attached hereto as Appendix A, the form of
Rule 12b-1 Related Agreement relating to the Class
I shares attached hereto as Appendix B and the
form of Rule 12b-1 Related Agreement relating to
the Class C shares attached hereto as Appendix C
have been approved by the Corporation's Board of
Directors as specified above.
(e) Any Rule 12b-1 Related Agreement shall
describe the services to be performed by the
Recipient and shall specify the amount of, or the
method for determining, the compensation to the
Recipient.
(f) No Rule 12b-1 Related Agreement may be
entered into unless it provides (i) that it may be
terminated with respect to a Class of the Fund at
any time, without the payment of any penalty, by
vote of a majority of the Class, or by vote of a
majority of the Disinterested Directors, on not
more than 60 days' written notice to the other
party to the Rule 12b-1 Related Agreement, and
(ii) that it shall automatically terminate in the
event of its assignment.
(g) Any Rule 12b-1 Related Agreement shall
continue in effect for a period of more than one
year from the date of its execution only if such
continuance is specifically approved at least
annually by a vote of a majority of the Board of
Directors, and of the Disinterested Directors,
cast in person at a meeting called for the purpose
of voting on such Rule 12b-1 Related Agreement.
2. QUARTERLY REPORTS
The Distributor shall provide to the Board of
Directors, and the Directors shall review, at
least quarterly, a written report of all amounts
expended pursuant to the Plan. This report shall
include the identity of the Recipient of each
payment and the purpose for which the amounts were
expended and such other information as the Board
of Directors may reasonably request.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective with respect to
each Class immediately upon approval by the vote
of a majority of the Board of Directors, and of
the Disinterested Directors, cast in person at a
meeting called for the purpose of voting on the
approval of the Plan. The Plan shall continue in
effect for a period of one year from its effective
date unless terminated pursuant to its terms.
Thereafter, the Plan shall continue with respect
to each Class from year to year, provided that
such continuance is approved at least annually by
a vote of a majority of the Board of Directors,
and of the Disinterested Directors, cast in person
at a meeting called for the purpose of voting on
such continuance. The Plan may be terminated with
respect to a Class at any time by a majority vote
of such Class, or by vote of a majority of the
Disinterested Directors.
4. SELECTION OF DISINTERESTED DIRECTORS
During the period in which the Plan is effective,
the selection and nomination of those Directors
who are Disinterested Directors of the Corporation
shall be committed to the discretion of the
Disinterested Directors.
5. AMENDMENTS
All material amendments of the Plan shall be in
writing and shall be approved by a vote of a
majority of the Board of Directors, and of the
Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such
amendment. In addition, the Plan may not be
amended to increase materially the amount to be
expended by the Fund hereunder without the
approval by a majority vote of each Class affected
thereby.
______________, 1998
Page 1
Rule 12b-1 Related Agreement - Class C
Centennial Lakes Capital, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
_____________, 1998
[Recipient's Name and Address]
Ladies and Gentlemen:
This letter will confirm our understanding and
agreement with respect to payments to be made to you
pursuant to a Distribution and Shareholder Servicing
Plan (the "Plan") adopted by Kopp Funds, Inc. (the
"Corporation"), on behalf of the Kopp Emerging Growth
Fund (the "Fund"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
The Plan and this related agreement (the "Rule 12b-1
Related Agreement") have been approved by a majority of
the Board of Directors of the Corporation, including a
majority of the Board of Directors who are not
"interested persons" of the Corporation, as defined in
the Act, and who have no direct or indirect financial
interest in the operation of the Plan or in this or any
other Rule 12b-1 Related Agreement (the "Disinterested
Directors"), cast in person at a meeting called for the
purpose of voting thereon. Such approval included a
determination by the Board of Directors that, in the
exercise of its reasonable business judgment and in
light of its fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund's Class
C shareholders.
1. To the extent you provide distribution and
marketing services in the promotion of the Fund's Class
C shares, including furnishing services and assistance
to your customers who invest in and own Class C shares,
including, but not limited to, answering routine
inquiries regarding the Fund and assisting in changing
account designations and addresses, we shall pay you a
fee of up to 1.00% of the average daily net assets of
the Fund attributable to the Fund's Class C shares
(computed on an annual basis) which are owned of record
by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as
maintained by the Corporation or its agent, designate
your firm as the customer's dealer or service provider
of record. We reserve the right to increase, decrease
or discontinue the fee at any time in our sole
discretion upon written notice to you.
We shall make the determination of the net asset
value, which determination shall be made in the manner
specified in the Fund's current Prospectus, and pay to
you quarterly, on the basis of such determination, the
fee specified above, to the extent permitted under the
Plan. No such quarterly fee will be paid to you with
respect to shares purchased by you and redeemed or
repurchased by the Corporation, its agent or us within
seven (7) business days after the date of our
confirmation of such purchase. In addition, no such
quarterly fee will be paid to you with respect to any
of your customers if the amount of such fee based upon
the value of such customer's Class C shares will be
less than $1.00. Payment of such quarterly fee shall
be made within 45 days after the close of each quarter
for which such fee is payable.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of
Directors, on behalf of the Fund, with respect to the
fees paid to you pursuant to this Rule 12b-1 Related
Agreement.
3. We shall furnish to the Board of Directors,
for its review, on a quarterly basis, a written report
of the amounts expended under the Plan by us and the
purposes for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be
terminated by the vote of (a) a majority vote of Class
C shareholders, or (b) a majority of the Disinterested
Directors, on sixty (60) days' written notice, without
payment of any penalty. In addition, this Rule 12b-1
Related Agreement will be terminated by any act which
terminates the Distribution Agreement between the
Corporation and us and shall terminate immediately in
the event of its assignment. This Rule 12b-1 Related
Agreement may be amended by us upon written notice to
you, and you shall be deemed to have consented to such
amendment upon effecting any purchases of shares for
your own account or on behalf of any of your customer's
accounts following your receipt of such notice.
5. The provisions of the Distribution Agreement
between the Corporation and us are incorporated herein
by reference. This Rule 12b-1 Related Agreement shall
become effective on the date accepted by you and shall
continue in full force and effect so long as the
continuance of the Distribution Agreement, the Plan and
this Rule 12b-1 Related Agreement are approved at least
annually by a vote of the Board of Directors of the
Corporation and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to
the above address. Any notice to you shall be duly
given if mailed or telegraphed to you at the address
specified by you below. This Rule 12b-1 Related
Agreement shall be construed under the laws of the
State of Minnesota.
CENTENNIAL LAKES CAPITAL, INC.
By: _____________________________
Donald B. Cornelius
Accepted:
____________________________
(Dealer or Service Provider Name)
____________________________
(Street Address)
____________________________
(City) (State) (ZIP)
____________________________
(Telephone No.)
____________________________
(Facsimile No.)
By: _____________________________
(Name and Title)
KOPP FUNDS, INC.
RULE 18f-3
MULTIPLE CLASS PLAN, AS AMENDED
Kopp Funds, Inc. (the "Company"), a registered
investment company currently consisting of the Kopp
Emerging Growth Fund (the "Fund"), has elected to rely
on Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), in offering multiple
classes of shares of the Fund. The Board of Directors
of the Company has determined in accordance with Rule
18f-3(d) that the following plan (the "Plan") is in the
best interests of each class individually and the
Company as a whole:
1. Class Designation. Fund shares will be
designated either Class A, Class C or Class I.
2. Class Characteristics. Each class of shares
will represent interests in the same portfolio of
investments and will be identical in all respects to
the other class, except as set forth below:
Class A: Class A shares will
be sold subject to a maximum front-
end sales charge of 3.50%, subject
to certain exceptions as set forth
in the Fund's current prospectus.
Class A shares will also be subject
to a distribution plan adopted
pursuant to Rule 12b-1 under the
1940 Act which provides for an
annual distribution fee of up to
0.50% of the average daily net
assets of the Fund attributable to
Class A shares, computed on an
annual basis. The distribution
plan fees for the Class A shares
will be used to pay the Fund's
distributor (i) a distribution fee
of up to 0.25% for the promotion
and distribution of Class A shares
and (ii) a shareholder servicing
fee of up to 0.25% for personal
service provided to Class A
shareholders. A deferred sales
charge of 1.00% will be imposed on
redemptions of Class A shares which
were purchased without a sales
charge and redeemed within 24
months of purchase, subject to
certain exceptions as set forth in
the Fund's current prospectus.
Class C: Class C shares will
be offered for sale at net asset
value per share without the
imposition of a sales charge.
However, Class C shares will be
subject to a distribution plan
adopted pursuant to Rule
12b-1 under the 1940
Act which provides for an annual
distribution fee of up to 1.00% of
the average daily net assets of
Class C shares, computed on an
annual basis. The distribution
plan fees for the Class C shares
will be used to pay the Fund's
distributor (i) a distribution fee
of up to 0.75% for the promotion
and distribution of Class C shares
and (ii) a shareholder servicing
fee of up to 0.25% for personal
service provided to Class C
shareholders. A deferred sales
charge of 1.00% will be imposed on
redemptions of Class C shares
redeemed within 12 months of
purchase, subject to certain
exceptions as set forth in the
Fund's current Prospectus.
Class I: Class I shares will
be offered for sale at net asset
value per share without the
imposition of a sales charge.
However, Class I shares will be
subject to a distribution plan
adopted pursuant to Rule 12b-1
under the 1940 Act which provides
for an annual distribution fee of
up to 0.50% of the average daily
net assets of Class I shares,
computed on an annual basis. The
distribution plan fees for the
Class I shares will be used to pay
the Fund's distributor (i) a
distribution fee of up to 0.25% for
the promotion and distribution of
Class I shares and (ii) a
shareholder servicing fee of up to
0.25% for personal service provided
to Class I shareholders. A
redemption fee of 1.00% will be
imposed on redemptions of Class I
shares made within 24 months of
purchase, subject to certain
exceptions as set forth in the
Fund's current prospectus.
3. Expense Allocations. The following expenses
will be allocated on a class-by-class basis, to the
extent practicable: (i) fees under the distribution
plan; (ii) printing and postage expenses related to
preparing and distributing materials to existing
shareholders of a particular class; (iii) Securities
and Exchange Commission and blue sky fees incurred on
behalf of the shareholders of a particular class; (iv)
the expense of administrative personnel and services
required to support the shareholders of a particular
class; (v) accounting, auditor, litigation or other
legal expenses relating solely to a particular class;
(vi) transfer agent fees identified by the transfer
agent as being attributable to a particular class; and
(vii) expenses incurred in connection with shareholder
meetings as a result of issues relating to a particular
class. Income, realized and unrealized capital gains
and losses, and expenses of the Fund not allocated to a
particular class will be allocated on the basis of the
net asset value of each class in relation to the net
asset value of the Fund. Notwithstanding the
foregoing, a service provider for the Fund may waive or
reimburse the expenses of a specific class or classes
to the extent permitted under Rule 18f-3 of the 1940
Act.
4. Exchanges and Conversions. There are no
conversion features associated with the Class A, Class
C or Class I shares; however, Class A and Class C
shares may be exchanged for Class I shares at any time
so long as the Class I minimum initial investment
requirement is met.
5. General. Each class will have exclusive
voting rights with respect to any matter related solely
to that class. Each class will have separate voting
rights with respect to any matter in which the
interests of one class differ from the interests of the
other class. Each class will have in all other
respects the same rights and obligations as each other
class. On an ongoing basis, the Board of Directors
will monitor the Plan for any material conflicts
between the interests of the classes of shares. The
Board of Directors will take such action as is
reasonably necessary to eliminate any conflict that
develops. The Fund's investment adviser and
distributor will be responsible for alerting the Board
of Directors to any material conflicts that may arise.
Any material amendment to this Plan must be approved by
a majority of the Board of Directors, including a
majority of the directors who are not interested
persons of the Company, as defined in the 1940 Act.
This Plan is qualified by and subject to the then
current prospectus for the applicable class, which
contains additional information about that class.
