<PAGE>
[LOGO] EMERGING GROWTH FUND
- ---------------------------------------
SEMI-ANNUAL REPORT 1999
<PAGE>
MAY 1, 1999
DEAR FELLOW SHAREHOLDERS:
In our annual report last October, I wrote that I believed that we had hit a
solid bottom for small-cap growth stocks. Since that time, not only have
small-cap stocks generally gone up, but the Kopp Emerging Growth Fund has beaten
the returns posted by the recovering equity market in general.
The strength and momentum of the increase in stock prices in many of our
companies has continued since I first wrote those words and can be described as
very encouraging. The table below shows the returns of the Kopp Emerging Growth
Fund* and the major indexes from September 30, 1998 through March 31, 1999:**
<TABLE>
<S> <C>
Kopp Emerging Growth Fund.......... +47%
Dow Jones Industrial Average....... +25%
S&P 500............................ +26%
NASDAQ Composite................... +45%
Russell 2000....................... +9%
</TABLE>
DOW 10,000
After several attempts, the Dow Jones Industrial Average finally closed over
10,000 on March 29th. What does that event really mean for the market and for
the shareholders? The Dow is a measure of 30 large-cap, recognizable industrial
stocks and actually says very little about the broader U.S. market, which is
made up of more than 7,000 publicly-traded stocks of varying size. On the day
that the Dow closed above 10,000, there were twice as many stocks on the New
York Stock Exchange that made new 52-week LOWS than reached new 52-week HIGHS.
In fact, more than 70% of all stocks were trading at lower prices at the end of
March than they were a year earlier. Clearly, the pack isn't doing as well as
the Dow.
I have written about the disparity between the performance of large-cap stocks
and small-cap stocks. The reason that I continue to comment on this is that the
numbers are so amazing. I believe that some of the statistics warrant repeating,
even if you have read them elsewhere. Although the S&P 500 produced a total
return of 28% for 1998, that return was primarily driven by the large-cap
components of the index. Almost half of the S&P 500 stocks had negative returns
for the year. Indeed, two-thirds of ALL U.S. stocks actually ended 1998 at a
loss. Never before has the Russell 2000 underperformed the S&P 500 for five
consecutive years -- and never before have small-caps underperformed large-caps
by 30% in one year. 1998 was really a year for the history books. Let's hope
that chapter is closed.
ROOM FOR SMALL-CAP RECOVERY
Like the Kopp Emerging Growth Fund, its benchmark performance index, the Russell
2000, has not yet recovered from the beating it took between April and October
1998. As shown in Chart 1 on the next page, the Russell 2000 Index has dropped
substantially below its 200-day moving average only three times in the past 15
years. Following the first two occasions, the small-cap stock index made a
significant move from the low. While there has been some increase from the
October 1998 low point, the historical chart leads me to believe that there may
be more strength ahead of this small-cap barometer.
* Kopp Emerging Growth Fund Average Annual Total Return: Since Inception
(10/01/97--3/31/99): -9.93
1 year as of quarter end (3/31/98--3/31/99): +1.79
** Figures in the tables above and on page 3 include reinvested dividends and
are not annualized. Indexes are unmanaged and not available directly for
investment. Net performance of the fund does not reflect a maximum sales
charge of 3.5%. If it did, returns would be lower. Absent expense
reimbursements and fee waivers, returns of the fund would also be reduced.
Past performance is not predictive of future performance; potential for
profit involves possibility of loss. Small-cap investing carries more risk
than investing in larger, more well- established companies because small
companies have a higher risk of failure, experience greater price volatility,
have more limited financial resources, and trade in lower volumes.
1
<PAGE>
Historically, small-cap stocks have outperformed larger stocks, even though both
go through periods of being in or out of favor. Since the start of the Kopp
Emerging Growth Fund, the market has favored large-caps, causing higher than
historical returns from that category and lower than historical returns from the
small-cap category. People often think "it's different this time," but is it? At
some point, I believe there will be a shift back to small caps, causing both
categories of stocks to revert more to their historical averages.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CHART 1: RUSSELL 2000 VS. 200-DAY MOVING AVERAGE (SOLID
LINE)
<S> <C> <C> <C> <C>
Sep-83 116.04 119.54 117.43 0
Oct-83 109.17 118.08 109.17 0
Nov-83 107.76 114.66 114.66 0
Dec-83 110.75 114.71 112.27 0
Jan-84 110.21 116.69 110.21 0
Feb-84 101.26 109.61 103.72 0
Mar-84 102.93 105.17 104.1 0
Apr-84 100.63 103.72 103.34 0
May-84 97.41 105.75 97.75 0
Jun-84 98.63 100.6 100.3 107.295
Jul-84 93.95 100.06 95.25 105.077
Aug-84 96.69 106.21 106.21 104.781
Sep-84 105.12 106.82 105.17 103.832
Oct-84 102.54 104.88 103.7 102.975
Nov-84 100.11 104.47 100.11 101.965
Dec-84 98.55 101.49 101.49 101.742
Jan-85 101.21 114.77 114.77 102.809
Feb-85 114.62 119.37 117.54 104.229
Mar-85 113.63 118.68 114.92 105.946
Apr-85 113.35 115.35 113.35 107.251
May-85 112.73 117.71 117.26 109.452
Jun-85 115.5 118.38 118.38 110.669
Jul-85 118.64 123.6 121.56 112.308
Aug-85 118.57 122.49 120.1 113.948
Sep-85 112.61 119.42 112.65 115.202
Oct-85 111.81 116.73 116.73 116.726
Nov-85 117.32 124.62 124.62 117.711
Dec-85 124.32 129.87 129.87 118.944
Jan-86 128.23 131.99 131.78 120.63
Feb-86 132.11 141 141 123.395
Mar-86 141.26 147.63 147.63 126.432
Apr-86 144.08 152.95 149.66 129.56
May-86 149.03 154.61 154.61 132.865
Jun-86 152.35 154.67 154.23 136.278
Jul-86 139.59 155.3 139.65 138.978
Aug-86 137.77 143.83 143.83 141.688
Sep-86 132.07 144.14 134.73 142.699
Oct-86 135.19 139.95 139.95 143.707
Nov-86 136.05 140.94 139.26 144.455
Dec-86 134.23 140.42 135 143.855
Jan-87 137.25 151.72 150.48 144.14
Feb-87 152.29 162.84 162.84 145.458
Mar-87 162.74 169 166.79 146.676
Apr-87 158.57 169.77 161.82 147.435
May-87 157.06 164.04 161.02 149.572
Jun-87 160.4 165.76 164.75 151.664
Jul-87 164.39 169.49 169.42 155.133
Aug-87 168.8 174.44 173.31 158.469
Sep-87 166.78 174.25 170.81 161.624
Oct-87 106.07 172.54 118.26 159.95
Nov-87 111.7 120.22 111.7 156.072
Dec-87 106.43 121.59 120.42 151.83
Jan-88 121.23 128.03 125.24 147.675
Feb-88 125.26 136.1 136.1 145.103
Mar-88 136.26 143.67 142.15 143.216
Apr-88 140.41 145.32 145.01 141.242
May-88 139.2 145.31 141.37 138.437
Jun-88 142.8 151.3 151.3 136.236
Jul-88 148.77 151.42 149.88 134.143
Aug-88 144 150.67 145.74 136.891
Sep-88 144.57 149.09 149.09 140.63
Oct-88 146.67 149.15 147.25 143.313
Nov-88 139.87 147.21 142.01 144.99
Dec-88 142.56 147.36 147.36 146.116
Jan-89 146.79 153.85 153.85 147.286
Feb-89 153.96 157.07 154.56 148.241
Mar-89 154.67 158.33 157.9 149.894
Apr-89 157.97 164.68 164.68 151.232
May-89 164.29 171.53 171.53 153.397
Jun-89 167.43 173.4 167.43 155.566
Jul-89 167.6 174.5 174.5 158.107
Aug-89 174.21 178.2 178.2 161.202
Sep-89 175.99 179.16 178.21 164.822
Oct-89 166.33 180.78 167.47 166.833
Nov-89 165.76 168.48 168.18 168.266
Dec-89 162.82 168.87 168.31 169.641
Jan-90 152.62 170.8 153.26 169.177
Feb-90 154.36 159.3 157.72 168.481
Mar-90 158.04 164.38 163.64 167.692
Apr-90 157.82 163.4 158.09 166.758
May-90 158.49 168.91 168.91 166.199
Jun-90 166.9 170.9 169.12 165.291
Jul-90 161.51 170.04 161.51 163.621
Aug-90 132.92 160.77 139.51 160.825
Sep-90 126.18 140.34 126.74 156.681
Oct-90 118.82 129.06 118.82 151.732
Nov-90 118.91 127.51 127.51 149.157
Dec-90 128.15 132.19 132.19 146.604
Jan-91 125.25 144.17 144.17 144.657
Feb-91 145.5 160.01 160.01 144.849
Mar-91 161.25 171.01 171.01 145.059
Apr-91 170.31 178.7 170.64 145.211
May-91 169.48 178.34 178.34 146.894
Jun-91 167.41 178.54 167.41 149.684
Jul-91 167 172.87 172.78 154.288
Aug-91 166.49 179.11 179.11 160.317
Sep-91 175.29 180.16 180.15 165.581
Oct-91 175.61 185 184.97 170.859
Nov-91 174.89 188.4 176.37 174.079
Dec-91 174.43 189.93 189.91 177.069
Jan-92 183.88 206.1 205.11 180.479
Feb-92 205.16 213 211.15 184.53
Mar-92 202.32 218.15 203.7 187.066
Apr-92 191.2 203.7 196.26 189.951
May-92 190.85 200.84 198.52 192.525
Jun-92 185.73 200.6 188.58 193.472
Jul-92 185.32 194.75 194.74 194.931
Aug-92 186.01 195.86 188.79 195.313
Sep-92 188.53 194.73 192.91 196.967
Oct-92 183.4 198.91 198.91 197.867
Nov-92 198.6 213.81 213.81 198.737
Dec-92 212.56 221.01 221.01 199.723
Jan-93 219.2 230.69 228.1 202.163
Feb-93 216.43 232.45 222.41 204.778
Mar-93 222.25 230.8 229.21 207.847
Apr-93 218.4 229.29 222.68 211.257
May-93 222.37 232.93 232.19 215.002
Jun-93 226.52 234.33 233.35 219.458
Jul-93 233.02 237.91 236.46 223.813
Aug-93 236.34 246.19 246.19 228.541
Sep-93 242.15 252.95 252.95 232.455
Oct-93 252.3 260.41 259.18 236.272
Nov-93 246.66 260.17 250.41 238.503
Dec-93 249.33 258.59 258.59 242.121
Jan-94 256.08 266.71 266.52 245.852
Feb-94 258.81 267.75 265.53 250.137
Mar-94 248.37 271.08 251.06 252.024
Apr-94 241.95 256.01 252.55 253.944
May-94 242.39 255 249.28 255.226
Jun-94 238.23 253.39 240.29 254.636
Jul-94 239.91 245.98 244.06 253.747
Aug-94 243.67 257.32 257.32 253.561
Sep-94 252.32 260.29 256.12 254.132
Oct-94 247.97 256.44 255.02 253.775
Nov-94 238.9 255.04 244.25 251.548
Dec-94 233.9 250.36 250.36 250.031
Jan-95 246.39 253.13 246.85 249.61
Feb-95 246.85 257.47 256.57 250.012
Mar-95 253.69 261.55 260.77 251.161
Apr-95 259.69 266.18 266.17 253.7491
May-95 264.59 273.84 270.25 256.368
Jun-95 270.25 284.37 283.63 258.9991
Jul-95 283.24 299.72 299.72 263.3591
Aug-95 297.22 305.5 305.31 268.3881
Sep-95 303.88 316.97 310.38 275.0011
Oct-95 291.25 310.38 296.25 279.5901
Nov-95 295.69 308.58 308.58 285.7631
Dec-95 303.38 315.97 315.97 291.7031
Jan-96 299.44 316.89 315.38 297.1641
Feb-96 315.19 326.44 324.93 303.0401
Mar-96 318.34 331.52 330.77 309.0921
Apr-96 328.34 348.58 348.28 315.5571
May-96 341.34 364.97 361.85 321.7701
Jun-96 339.28 364.34 346.61 325.9001
Jul-96 303.03 347.84 316 326.4621
Aug-96 316 335.62 333.88 330.225
Sep-96 330.42 346.54 346.39 334.006
Oct-96 337.71 350.43 340.57 336.4661
Nov-96 338.9 354.29 354.11 340.3391
Dec-96 348.45 362.61 362.61 344.1071
Jan-97 357.61 373.17 369.45 347.975
Feb-97 358.41 370.65 360.05 349.152
Mar-97 342.49 367.87 342.56 347.2231
Apr-97 335.18 347.59 343 346.8621
May-97 342.99 380.76 380.76 353.3381
Jun-97 380.59 396.99 396.37 359.5871
Jul-97 392.99 414.641 414.48 366.3961
Aug-97 406.172 423.82 423.43 374.6821
Sep-97 423.43 453.82 453.82 384.6531
Oct-97 405.371 466.211 433.262 391.7183
Nov-97 418.828 444.93 429.922 397.7655
Dec-97 412.68 442.031 437.02 405.4625
Jan-98 404.859 438.172 430.051 414.2116
Feb-98 430.051 462.422 461.828 426.0944
Mar-98 456.078 480.68 480.68 436.0864
Apr-98 466.031 492.281 482.891 444.7385
May-98 445.602 487.539 456.621 448.9526
Jun-98 433.66 457.66 457.391 452.3487
Jul-98 419.75 464.328 419.75 448.9417
Aug-98 337.84 420.18 337.949 439.4104
Sep-98 335.871 376.969 363.59 432.7772
Oct-98 303.871 379.231 378.16 426.8912
Nov-98 378.16 403.141 397.75 423.6611
Dec-98 387.609 421.981 421.961 419.6744
Jan-99 407.0236 435.301 427.219 414.3283
Feb-99 388.578 429.129 392.262 405.2654
Mar-99 381.961 403.371 397.629 399.3662
Apr-99 396.289 399.891 399.891 393.6162
39% Decline Oct-Feb
31% Decline July-Dec
38% Decline Apr-Oct 8
</TABLE>
A STEALTH BEAR OR A REAL BEAR?
The good performance of the large-cap indexes masking the poor performance of
the broader market has sometimes been referred to as a "STEALTH bear market."
According to Lipper Inc., a leading provider of data on market and mutual fund
statistics, we experienced a REAL bear market in the two and a half months
between July 1998 and October 1998. That was obvious in the returns posted for
the major indexes, but I would argue that the real bear market for small-cap
stocks -- indeed for the broader market representing all publicly-traded stocks
- -- was closer to two and a half years rather than two and a half months.
In any case, if October 8, 1998 marked the end of a bear market (regardless of
how long it lasted), then our current phase may be categorized as the first leg
of a new bull market. Many of our shareholders recognize that there has been a
bounce off the October 8th lows, but they see the Dow at new highs and wonder if
their fund holdings have done as well as the market since the October 8th low.
We believe that the two charts on the facing page show that our shareholders are
getting their fair share of recent gains.
2
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CHART 2: SIX MONTH PERFORMANCE
(9/30/98-3/31/99) **
<S> <C> <C> <C> <C> <C>
KOPPX DOW JONES S&P 500 NASDAQ RUSSELL 2000
9/30/98 0 0 0 0 0
10/1/98 -4.3029 -2.6788 -3.0108 -4.8121 -3.727
10/2/98 -6.3683 -0.7387 -1.4169 -4.6557 -3.8172
10/5/98 -13.0809 -1.4839 -2.7974 -9.2777 -7.3679
10/6/98 -14.2857 -1.2705 -3.1878 -10.8009 -8.5368
10/7/98 -18.5886 -1.2869 -4.5555 -13.6512 -11.3752
10/8/98 -21.6867 -1.4116 -5.6607 -16.2188 -14.6618
10/9/98 -15.1463 0.7255 -3.2074 -11.8872 -12.4294
10/12/98 -11.1876 2.0255 -1.8977 -8.7234 -10.4428
10/13/98 -13.0809 1.218 -2.1839 -10.8859 -11.8986
10/14/98 -11.8761 1.6086 -1.1288 -9.0251 -10.6188
10/15/98 -6.3683 5.8238 2.997 -4.8901 -7.9158
10/16/98 -6.8847 7.3208 3.8751 -4.3032 -5.696
10/19/98 -4.3029 7.9544 4.4621 -2.6632 -3.0642
10/20/98 -3.7866 8.4567 4.6135 -3.2264 -1.4525
10/21/98 -1.2048 8.6274 5.2025 -1.127 -1.0036
10/22/98 1.3769 8.8047 6.0442 0.5195 0.7723
10/23/98 3.0981 7.7738 5.2763 0.0012 0.9519
10/26/98 5.1635 7.5178 5.4385 1.8384 2.3323
10/27/98 6.5404 6.674 4.7522 1.4045 2.1755
10/28/98 7.401 6.7497 5.0226 2.5687 2.167
10/29/98 8.9501 8.3188 6.7767 3.74 2.9954
10/30/98 10.1549 9.5565 8.0294 4.5784 4.0073
11/2/98 13.9415 11.0107 9.3008 6.3211 6.3891
11/3/98 12.5645 11.0107 9.2261 5.5844 6.5923
11/4/98 15.3184 11.9924 9.996 7.6589 8.0781
11/5/98 16.8675 13.6797 11.4886 8.4577 9.1309
11/6/98 18.5886 14.4447 12.1926 9.6066 10.102
11/9/98 17.3838 13.4565 11.1297 9.8717 9.4373
11/10/98 16.3511 13.0232 10.9389 10.1415 9.1501
11/11/98 18.4165 12.5111 10.2221 9.9342 8.2178
11/12/98 18.7608 12.5866 9.8996 9.2819 7.8685
11/13/98 17.7281 13.7323 10.6892 9.1006 7.0874
11/16/98 18.7608 14.901 11.6872 9.9089 7.3797
11/17/98 18.2444 14.5826 12.0264 10.903 7.1069
11/18/98 20.3098 15.2818 12.5338 12.02 7.847
11/19/98 22.7195 15.4722 13.3332 13.333 8.4659
11/20/98 22.031 16.792 14.4089 13.8366 8.4433
11/23/98 24.4406 19.5298 16.8337 16.7418 9.5047
11/24/98 23.0637 18.5975 16.3204 16.0606 9.0795
11/25/98 23.58 18.7649 16.7019 17.2017 9.827
11/27/98 25.3012 19.0046 17.2388 19.0455 10.5889
11/30/98 24.2685 16.2437 14.4168 15.0959 9.3952
12/1/98 24.957 16.4603 15.5623 18.2963 9.6669
12/2/98 26.3339 15.5805 15.166 17.7921 9.3231
12/3/98 26.1618 13.2234 13.0903 15.3787 8.6389
12/4/98 27.5387 14.9634 15.7058 18.2615 9.566
12/7/98 29.432 15.6561 16.7835 20.4742 10.3364
12/8/98 28.5714 15.1143 16.1621 20.1265 10.4214
12/9/98 29.6041 14.8748 16.3696 21.0516 10.5534
12/10/98 25.9897 12.7376 14.5534 19.0171 9.0514
12/11/98 25.9897 12.4849 14.695 19.8053 8.7409
12/14/98 22.7195 10.8762 12.2113 16.122 6.6974
12/15/98 24.2685 12.5045 14.3381 18.8188 7.1454
12/16/98 26.8503 12.0875 14.2506 18.6275 7.223
12/17/98 28.7435 13.1742 16.0244 20.6655 8.3036
12/18/98 30.2926 13.5288 16.816 23.1604 9.305
12/21/98 32.8744 14.6154 18.2722 26.2239 10.5168
12/22/98 33.7349 15.3245 18.344 25.2173 10.0795
12/23/98 34.7676 17.3336 20.7992 28.2612 11.3312
12/24/98 34.2513 17.5371 20.576 27.6998 11.5475
12/28/98 35.1119 17.6488 20.4993 28.7194 12.2916
12/29/98 34.9398 18.8503 22.104 28.8061 12.8771
12/30/98 35.284 18.2595 21.1325 27.9312 13.2897
12/31/98 38.5542 17.0709 20.867 29.4508 16.0541
1/4/99 38.7263 17.1072 20.7559 30.3577 15.8618
1/5/99 41.9966 18.7255 22.396 32.9093 16.0896
1/6/99 46.4716 21.7064 25.1059 37.0177 17.657
1/7/99 48.0207 21.6145 24.8493 37.3264 17.6677
1/8/99 50.0861 22.9604 25.3763 38.408 18.6036
1/11/99 50.6024 22.6617 24.2741 40.7801 19.1257
1/12/99 48.537 20.8101 21.8779 37.0112 17.5387
1/13/99 47.5043 19.2147 21.3754 36.7786 17.283
1/14/99 45.9552 16.2995 19.1915 34.4177 15.5428
1/15/99 50.4303 19.0999 22.2466 38.6317 17.454
1/19/99 52.4957 19.2869 23.106 42.1722 18.5101
1/20/99 54.9053 19.0407 23.5602 42.6044 18.4359
1/21/99 52.6678 18.1248 21.4501 38.4263 16.6289
1/22/99 51.1188 16.2962 20.4698 38.0815 16.1861
1/25/99 51.9793 17.3501 21.3341 39.878 16.0948
1/26/99 54.389 18.8962 23.1365 43.6623 16.9801
1/27/99 50.9467 17.3107 22.2377 42.1114 15.823
1/28/99 54.389 18.3448 24.4206 46.2559 16.6063
1/29/99 54.7332 19.333 25.8237 47.9414 17.5002
2/1/99 55.7659 19.1655 25.1708 48.1893 17.1864
2/2/99 51.9793 18.2528 24.0883 45.434 15.9908
2/3/99 54.2169 19.4347 25.0794 47.2046 16.5406
2/4/99 53.7005 18.6402 22.7608 42.2844 14.9066
2/5/99 49.3976 18.6369 21.867 40.1325 13.5122
2/8/99 51.6351 18.4695 22.2967 41.9804 13.1296
2/9/99 46.8158 16.4538 19.5799 36.4232 10.8746
2/10/99 43.2014 17.0184 20.3086 36.347 9.4532
2/11/99 48.1928 19.392 23.3066 42.0176 11.722
2/12/99 46.1274 18.2626 20.9555 37.0785 9.5853
2/16/99 44.9226 18.545 22.1099 36.605 9.0234
2/17/99 39.5869 17.25 20.3558 32.7699 7.1369
2/18/99 39.759 18.5653 21.6586 33.4571 7.5635
2/19/99 39.2427 19.0922 21.8493 34.8179 7.8965
2/22/99 40.2754 21.8047 25.0863 38.2663 9.4145
2/23/99 42.5129 21.6994 24.9919 40.2937 9.7423
2/24/99 41.9966 19.8537 23.2446 38.111 8.7109
2/25/99 39.759 19.4287 22.4196 37.3695 8.0118
2/26/99 37.0052 18.6667 21.7618 35.0795 7.8858
3/1/99 36.1446 18.8988 21.5485 35.5016 8.4714
3/2/99 35.9725 18.5523 20.5003 33.3674 8.4821
3/3/99 32.8744 18.2753 20.7166 33.7316 7.7997
3/4/99 34.2513 20.7173 22.5789 35.3664 8.3693
3/5/99 40.2754 24.1432 25.4137 37.977 9.4673
3/8/99 42.3408 24.0352 26.1276 41.5494 10.0303
3/9/99 42.3408 23.6036 25.8434 41.2731 9.7937
3/10/99 42.1687 24.6119 26.5317 42.0441 10.3223
3/11/99 40.9638 26.2007 27.5976 42.4131 10.3105
3/12/99 40.1033 25.9318 27.2937 40.5995 9.5682
3/15/99 41.6523 26.9827 28.5395 43.546 10.2451
3/16/99 44.2341 26.6218 28.453 44.0083 9.7863
3/17/99 42.685 25.9708 27.6113 43.4002 9.5822
3/18/99 41.3081 27.4781 29.453 45.4069 9.8905
3/19/99 38.8984 26.2786 27.7559 42.9456 9.0716
3/22/99 38.21 26.1123 27.5317 41.4502 8.1435
3/23/99 34.5955 23.324 24.103 37.1346 5.4405
3/24/99 35.8003 23.2603 24.7372 39.6401 5.7229
3/25/99 41.3081 25.4222 26.8414 43.7444 8.0855
3/26/99 40.7917 25.2418 26.1345 42.8216 8.3424
3/29/99 46.6437 27.5949 28.8257 47.1709 9.9486
3/30/99 44.2341 26.4024 27.8994 46.43 9.6788
3/31/99 47.1601 24.7818 26.4855 45.3148 9.3619
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CHART 3: PERFORMANCE FROM OCTOBER 8, 1998-MARCH 31,
1999 **
<S> <C> <C> <C> <C> <C>
KOPPX NASDAQ S&P 500 RUSSELL 2000 DOW JONES
10/8/98 0 0 0 0 0
10/9/98 8.3516 5.1701 2.6005 2.616 2.1678
10/12/98 13.4066 8.9464 3.9888 4.9439 3.4863
10/13/98 10.989 6.3652 3.6855 3.238 2.6673
10/14/98 12.5275 8.5863 4.8038 4.7376 3.0635
10/15/98 19.5604 13.5218 9.1772 7.9051 7.3391
10/16/98 18.9011 14.2222 10.108 10.5063 8.8574
10/19/98 22.1978 16.1797 10.7302 13.5903 9.5001
10/20/98 22.8571 15.5075 10.8907 15.4789 10.0097
10/21/98 26.1538 18.0133 11.5151 16.0048 10.1827
10/22/98 29.4505 19.9786 12.4072 18.0859 10.3626
10/23/98 31.6483 19.3599 11.5932 18.2963 9.317
10/26/98 34.2857 21.5528 11.7652 19.9139 9.0573
10/27/98 36.044 21.0349 11.0377 19.7302 8.2015
10/28/98 37.1428 22.4245 11.3243 19.7202 8.2782
10/29/98 39.1209 23.8225 13.1837 20.6909 9.8697
10/30/98 40.6593 24.8231 14.5116 21.8766 11.1252
11/2/98 45.4945 26.9033 15.8592 24.6676 12.6003
11/3/98 43.7363 26.0239 15.78 24.9058 12.6003
11/4/98 47.2527 28.5001 16.5961 26.6468 13.596
11/5/98 49.2308 29.4535 18.1783 27.8805 15.3075
11/6/98 51.4286 30.8247 18.9246 29.0185 16.0833
11/9/98 49.8901 31.1411 17.7979 28.2396 15.081
11/10/98 48.5714 31.4632 17.5957 27.9031 14.6415
11/11/98 51.2088 31.2158 16.8359 26.8105 14.1221
11/12/98 51.6483 30.4372 16.494 26.4012 14.1987
11/13/98 50.3297 30.2208 17.3309 25.4859 15.3608
11/16/98 51.6483 31.1855 18.3889 25.8285 16.5462
11/17/98 50.989 32.3722 18.7484 25.5088 16.2233
11/18/98 53.6264 33.7054 19.2862 26.3761 16.9324
11/19/98 56.7033 35.2726 20.1336 27.1012 17.1256
11/20/98 55.8242 35.8736 21.2739 27.0748 18.4643
11/23/98 58.9011 39.3413 23.8441 28.3185 21.2413
11/24/98 57.1429 38.5281 23.3 27.8203 20.2956
11/25/98 57.8022 39.8902 23.7045 28.6962 20.4654
11/27/98 60 42.0909 24.2735 29.589 20.7086
11/30/98 58.6813 37.3767 21.2822 28.1903 17.9081
12/1/98 59.5604 41.1967 22.4965 28.5087 18.1279
12/2/98 61.3187 40.5949 22.0764 28.1058 17.2355
12/3/98 61.0989 37.7142 19.8762 27.304 14.8446
12/4/98 62.8571 41.1551 22.6486 28.3904 16.6095
12/7/98 65.2747 43.7962 23.791 29.2931 17.3121
12/8/98 64.1758 43.3811 23.1322 29.3927 16.7626
12/9/98 65.4945 44.4853 23.3522 29.5474 16.5196
12/10/98 60.8791 42.057 21.4271 27.7874 14.3518
12/11/98 60.8791 42.9978 21.5772 27.4235 14.0955
12/14/98 56.7033 38.6014 18.9444 25.0289 12.4638
12/15/98 58.6813 41.8203 21.1988 25.5539 14.1154
12/16/98 61.978 41.592 21.1061 25.6448 13.6925
12/17/98 64.3956 44.0245 22.9863 26.9111 14.7947
12/18/98 66.3736 47.0024 23.8254 28.0845 15.1543
12/21/98 69.6703 50.6589 25.369 29.5045 16.2565
12/22/98 70.7692 49.4574 25.445 28.9921 16.9758
12/23/98 72.0879 53.0906 28.0476 30.4588 19.0137
12/24/98 71.4286 52.4205 27.811 30.7123 19.2201
12/28/98 72.5275 53.6375 27.7297 31.5843 19.3334
12/29/98 72.3077 53.741 29.4307 32.2704 20.5521
12/30/98 72.7472 52.6967 28.4009 32.7539 19.9528
12/31/98 76.9231 54.5105 28.1195 35.9932 18.7472
1/4/99 77.1429 55.5929 28.0017 35.7679 18.784
1/5/99 81.3187 58.6385 29.7403 36.0348 20.4255
1/6/99 87.033 63.5422 32.6128 37.8715 23.4491
1/7/99 89.011 63.9107 32.3407 37.884 23.3558
1/8/99 91.6484 65.2017 32.8994 38.9808 24.7211
1/11/99 92.3077 68.033 31.731 39.5925 24.418
1/12/99 89.6703 63.5344 29.191 37.7329 22.54
1/13/99 88.3516 63.2568 28.6584 37.4333 20.9217
1/14/99 86.3736 60.4389 26.3435 35.394 17.9648
1/15/99 92.0879 65.4687 29.5818 37.6336 20.8052
1/19/99 94.7253 69.6946 30.4928 38.8712 20.9949
1/20/99 97.8022 70.2104 30.9743 38.7842 20.7452
1/21/99 94.945 65.2235 28.7376 36.6668 19.8162
1/22/99 92.967 64.812 27.6984 36.1479 17.9614
1/25/99 94.0659 66.9563 28.6146 36.0409 19.0304
1/26/99 97.1429 71.4732 30.5251 37.0783 20.5987
1/27/99 92.7473 69.622 29.5725 35.7225 18.9904
1/28/99 97.1429 74.5688 31.8863 36.6403 20.0393
1/29/99 97.5824 76.5805 33.3736 37.6878 21.0416
2/1/99 98.9011 76.8765 32.6816 37.32 20.8718
2/2/99 94.0659 73.5879 31.534 35.919 19.946
2/3/99 96.9231 75.7011 32.5846 36.5633 21.1448
2/4/99 96.2637 69.8285 30.1269 34.6486 20.339
2/5/99 90.7692 67.26 29.1795 33.0146 20.3356
2/8/99 93.6264 69.4656 29.635 32.5663 20.1658
2/9/99 87.4725 62.8326 26.7552 29.9238 18.1213
2/10/99 82.8571 62.7417 27.5275 28.2583 18.6939
2/11/99 89.2308 69.51 30.7054 30.9168 21.1015
2/12/99 86.5934 63.6148 28.2133 28.413 19.956
2/16/99 85.0549 63.0496 29.437 27.7545 20.2423
2/17/99 78.2417 58.4721 27.5775 25.5439 18.9288
2/18/99 78.4615 59.2924 28.9586 26.0438 20.263
2/19/99 77.8022 60.9166 29.1608 26.4341 20.7974
2/22/99 79.1209 65.0326 32.5919 28.2128 23.5488
2/23/99 81.978 67.4524 32.4919 28.597 23.4419
2/24/99 81.3187 64.8472 30.6398 27.3884 21.5698
2/25/99 78.4615 63.9622 29.7653 26.5691 21.1388
2/26/99 74.9451 61.2288 29.068 26.4215 20.3659
3/1/99 73.8461 61.7326 28.8418 27.1077 20.6013
3/2/99 73.6264 59.1853 27.7308 27.1203 20.2498
3/3/99 69.6703 59.62 27.9601 26.3207 19.9688
3/4/99 71.4286 61.5712 29.9341 26.9881 22.4458
3/5/99 79.1209 64.6873 32.939 28.2747 25.9208
3/8/99 81.7582 68.9512 33.6957 28.9344 25.8112
3/9/99 81.7582 68.6214 33.3945 28.6572 25.3734
3/10/99 81.5385 69.5417 34.1241 29.2767 26.3962
3/11/99 80 69.9821 35.2539 29.2628 28.0077
3/12/99 78.9011 67.8174 34.9318 28.393 27.7349
3/15/99 80.8791 71.3343 36.2524 29.1861 28.8009
3/16/99 84.1758 71.8861 36.1607 28.6485 28.4349
3/17/99 82.1978 71.1603 35.2685 28.4094 27.7745
3/18/99 80.4396 73.5554 37.2207 28.7707 29.3034
3/19/99 77.3626 70.6177 35.4217 27.8111 28.0867
3/22/99 76.4835 68.8328 35.1841 26.7235 27.9181
3/23/99 71.8681 63.6817 31.5497 23.5561 25.0898
3/24/99 73.4066 66.6723 32.2219 23.8871 25.0252
3/25/99 80.4396 71.5711 34.4524 26.6555 27.2181
3/26/99 79.7802 70.4697 33.703 26.9565 27.0351
3/29/99 87.2527 75.661 36.5557 28.8387 29.4218
3/30/99 84.1758 74.7766 35.5739 28.5225 28.2123
3/31/99 87.9121 73.4455 34.0751 28.1513 26.5685
</TABLE>
3
<PAGE>
The charts depict the performance of the Kopp Emerging Growth Fund (KOPPX) and
the four major indexes for the six-month period ended March 31, as well as the
performance from October 8, 1998 through March 31, 1999. As shown in Chart 3,
through March 31st, the Dow bounced 27% off the October 8th low. Interestingly,
for that time period, the Russell 2000, which we consider our small-cap
benchmark, was up a similar percentage. The NASDAQ composite was up an
impressive 73%, driven by very strong moves in many of the large-cap technology
stocks. Over the same period, however, the Kopp Emerging Growth Fund was up 88%
- -- a full 15 percentage points better than the NASDAQ Composite.
BROADER GAINS IN TECHNOLOGY
The returns for the fund have been quite good over the past two quarters,
particularly since the October 8, 1998 low, but they were not driven solely by
our small-cap investment style. Rather, our technology focus, complemented by a
small-cap asset allocation, has produced these results.
While most market indexes cover a broad array of sectors and industries and show
a domination by large-cap stocks, it is interesting to note that since the
October 8th low, the SoundView Information Technology (IT) 100 and the SoundView
Small-Cap Index have tracked each other closely. The IT 100 index reflects the
performance of the 100 largest information technology stocks; the Small-Cap
Index reflects the performance of the next 200 IT companies in size. Both
indexes are equally-weighted. No matter how you adjust or slice the data in
these two indexes -- weighted or unweighted, mean or median -- the results are
the same: the small-cap technology stocks appear to be keeping up with the
large-caps in terms of performance. Perhaps the small-capitalization technology
stocks have finally shed their laggardly behavior.
I want to reiterate, finally, that this is an EMERGING GROWTH mutual fund. While
some may view it as a technology fund, I want to emphasize that we look at a
number of sectors and industries in our search for attractive growth prospects.
In recent years, our focus has been on technology, and to a lesser extent,
health care. I continue to believe that the technology sector, more than most
others, offers excellent long-term growth potential based primarily on
productivity-enhancing trends, but opportunities for growth can appear in any
sector. We at Kopp Investment Advisors will continue to search for those
opportunities, and thank you for your patience and discipline.
[SIGNATURE]
LEE KOPP
PRESIDENT
4
<PAGE>
TOP TEN HOLDINGS
--------------------------------------------
1. SDL, INC. (SDLI)
2. RATIONAL SOFTWARE CORPORATION (RATL)
3. ADC TELECOMMUNICATIONS, INC. (ADCT)
4. LEVEL ONE COMMUNICATIONS, INC. (LEVL)
5. DIGITAL MICROWAVE CORP. (DMIC)
6. TECHNE CORP. (TECH)
7. MOLECULAR DEVICES CORP. (MDCC)
8. AVT CORPORATION (AVTC)
9. COGNOS, INC. (COGN)
10. MACROVISION (MVSN)
TOP TEN INDUSTRIES
--------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Semiconductor 9.1%
Wireless 9.9%
Research Reagents/Instru-
mentation 8.0%
Telecom Equipment 6.9%
Semicap Equipment 5.4%
Networking 4.3%
Voice Processing 4.2%
Software Applications 4.1%
Other Common Stocks 22.0%
Cash & Equivalents 0.7%
Laser-Based Components &
Subsystems 16.1%
Application Development
Tools 9.7%
</TABLE>
- --------------------------------------------------------------------------------
IT SHOULD NOT BE ASSUMED THAT OUR STOCK SELECTIONS OR INVESTMENT
PHILOSOPHY WILL BE PROFITABLE OR WILL EQUAL ANY PAST PERFORMANCE.
SMALL-CAP STOCKS INVOLVE GREATER RISKS AND VOLATILITY THAN THOSE OF
LARGER, MORE ESTABLISHED COMPANIES. THIS REPORT IS FOR GENERAL
INFORMATION ONLY AND IS NOT INTENDED TO PROVIDE SPECIFIC ADVICE OR
RECOMMENDATIONS TO ANY INDIVIDUAL. FUTURE INVESTMENT DECISIONS AND
COMMENTARY MAY BE MADE UNDER DIFFERENT ECONOMIC, MARKET, AND
INDUSTRY CONDITIONS FROM THOSE EXISTING AT THE TIME THESE COMMENTS
WERE PREPARED.
CHART DATA COURTESY OF BASELINE FINANCIAL SERVICES, INC. AND
SOUNDVIEW TECHNOLOGY GROUP. DATA IS BELIEVED TO BE RELIABLE, BUT IS
NOT GUARANTEED AS TO ACCURACY.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE
FUND. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS IN THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS. FOR MORE INFORMATION ON THE KOPP EMERGING GROWTH FUND,
INCLUDING CHARGES AND EXPENSES, CALL 1-888-533-KOPP FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
5
<PAGE>
KOPP EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
- ------------------------------------------------------------------
ASSETS
Investments in securities, at value:
Investments in securities of unaffiliated
issuers (cost $298,824,676) $ 329,516,302
Investments in securities of affiliated issuers
(cost $38,116,507) 17,658,594
- ------------------------------------------------------------------
Total investments in securities (cost
$336,941,183) 347,174,896
Receivable from capital shares sold 119,259
Receivable from securities sold 408,581
Interest receivable 8,919
Deferred organization expenses, net of accumulated
amortization 67,895
Prepaid expenses 27,839
- ------------------------------------------------------------------
Total Assets 347,807,389
- ------------------------------------------------------------------
LIABILITIES
Payable for capital shares redeemed 1,124,263
Payable to Investment Advisor 270,080
Payable for services fees 173,103
Payable for distribution fees 71,635
Payable to Affiliated Distributor 9,195
Accrued other expenses 374,089
- ------------------------------------------------------------------
Total Liabilities 2,022,365
- ------------------------------------------------------------------
NET ASSETS $ 345,785,024
- ------------------------------------------------------------------
- ------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital stock $ 404,222
Paid-in-capital in excess of par 361,465,289
Accumulated undistributed net investment loss (2,205,474)
Accumulated net realized loss on securities (24,112,726)
Unrealized net appreciation on securities 10,233,713
- ------------------------------------------------------------------
Total Net Assets $ 345,785,024
- ------------------------------------------------------------------
CLASS A
Net Assets $ 302,357,401
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 35,377,675
Net asset value and redemption price per share $ 8.55
- ------------------------------------------------------------------
Maximum offering price per share $ 8.86
- ------------------------------------------------------------------
CLASS C
Net Assets $ 134,941
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 15,783
Net asset value and redemption price per share $ 8.55
- ------------------------------------------------------------------
CLASS I
Net Assets $ 43,292,682
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 5,028,712
Net asset value, redemption price and offering
price per share $ 8.61
- ------------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements.
6
<PAGE>
KOPP EMERGING GROWTH FUND
STATEMENT OF OPERATIONS
FOT THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<S> <C>
- ----------------------------------------------------------------
INVESTMENT INCOME
Interest $ 71,951
Dividends 30,000
- ----------------------------------------------------------------
Total investment income 101,951
- ----------------------------------------------------------------
EXPENSES
Investment advisory fee 1,584,911
Transfer agent fees 317,174
Service fees -- Class A 350,016
Service fees -- Class C 30
12b-1 fees -- Class A 140,007
12b-1 fees -- Class C 90
Federal and state registration fees 13,310
Fund administration fees 92,628
Custody fees 40,296
Fund accounting fees 30,740
Professional fees 41,104
Directors' fees and expenses 14,999
Reports to shareholders 26,068
Amortization of deferred organization expenses 9,923
Other expenses 17,460
- ----------------------------------------------------------------
Total expenses before waivers 2,678,756
Less: Waiver of expenses by Investment Advisor (365,972)
- ----------------------------------------------------------------
Net expenses 2,312,784
- ----------------------------------------------------------------
NET INVESTMENT (LOSS) (2,210,833)
- ----------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized loss on investment transactions:
Net realized loss on investment transactions of
unaffiliated issuers (12,615,414)
Net realized loss on investment transactions of
affiliated issuers (4,796,216)
Change in unrealized appreciation on investments 137,547,161
- ----------------------------------------------------------------
Net gain on investments 120,135,531
- ----------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $117,924,698
- ----------------------------------------------------------------
</TABLE>
KOPP EMERGING GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended
March 31, 1999 Year Ended
(Unaudited) September 30, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------
OPERATIONS
Net investment (loss) $ (2,210,833) $ (3,559,559)
Net realized (loss) on investments (17,411,630) (6,701,095)
Change in unrealized appreciation on
investments 137,547,161 (127,313,448)
- ------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 117,924,698 (137,574,102)
- ------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A:
Proceeds from shares sold 34,309,387 394,592,927
Cost of shares redeemed (53,112,723) (51,519,044)
Class C:
Proceeds from shares sold 128,830 --
Class I:
Proceeds from shares sold 2,491,543 38,670,416
Cost of shares redeemed (66,968) (59,940)
- ------------------------------------------------------------------------------------
Net decrease resulting from capital
share transactions (16,249,931) 381,684,359
- ------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS: 101,674,767 244,110,257
- ------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 244,110,257 0
- ------------------------------------------------------------------------------------
End of period $345,785,024 $ 244,110,257
- ------------------------------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements.
7
<PAGE>
KOPP EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended
September 30, 1998 September 30, 1998
------------------ ------------------
Six Months Ended February 19, Six Months Ended Class A Class I
March 31, 1999 1999(1) March 31, 1999
---------------- through ----------------
Class A March 31, 1999 Class I
Unaudited --------------- Unaudited
Class C
Unaudited
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value,
beginning of year $5.81 $8.09 $5.84 $10.00 $10.00
- ---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.06) (0.02) (0.04) (0.09)(2) (0.06)(2)
Net realized and
unrealized losses
on investments 2.80 0.48 2.81 (4.10) (4.10)
- ---------------------------------------------------------------------------------------------------------------------
Total from
investment
operations 2.74 0.46 2.77 (4.19) (4.16)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end
of period $8.55 $8.55 $8.61 $5.81 $5.84
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of
period (000's) $302,357 $ 135 $43,293 $216,533 $ 27,577
Ratio of expenses to
average net
assets: 1.50%(3) 2.15%(4) 1.15%(3) 1.50%(3) 1.15%(3)
Ratio of net
investment loss to
average net
assets: (1.44)%(5) (2.09)%(6) (1.09)%(5) (1.30)%(5) (0.95)%(5)
Portfolio turnover
rate(7) 15.4% 15.4% 15.4% 19.7% 19.7%
Total return 47.16%(8),(9) 5.69%(8) 47.43%(8) (41.90)%(9) (41.60)%
</TABLE>
- --------------------------------------------------------------------------------
(1) Commencement of operations for Class C.
(2) Net investment loss per share is calculated using the ending balance of
undistributed net investment loss prior to consideration of adjustments for
permanent book and tax differences.
(3) Absent voluntary fee waivers for the six months ended March 31, 1999 and
the year ended September 30, 1998, respectively, the ratio of expenses to
average net assets would have been 1.85% and 1.96% for Class A and 1.46%
and 1.65% for Class I. Included in these fee waivers, for the six months
ended March 31, 1999 and the year ended September 30, 1998, respectively
were 12b-1 fee waivers of 0.12% and 0.15% for Class A and 0.08% and 0.19%
for Class I.
(4) Absent voluntary fee waivers for the period February 19, 1999 through March
31, 1999, the ratio of expenses to average net assets would have been 2.24%
for Class C. No 12b-1 fee waivers are included in these fee waivers since
Class C had already incurred its maximum 12b-1 and shareholder servicing
fees.
(5) Absent voluntary fee waivers for the six months ended March 31, 1999 and
the year ended September 30, 1998, respectively, the ratio of net
investment (loss) to average net assets would have been (1.79%) and (1.76%)
for Class A and (1.40%) and (1.45%) for Class I.
(6) Absent voluntary fee waivers for the period February 19, 1999 through March
31, 1999, the ratio of net investment (loss) to average net assets would
have been (2.18%) for Class C.
(7) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(8) Not annualized.
(9) Total return excludes sales charges.
8 See Notes to the Financial Statements.
<PAGE>
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Number of Market
Shares Value
<C> <S> <C>
- ------------------------------------------------------------------
COMMON STOCK -- 99.7%
- ------------------------------------------------------------------
APPLICATION DEVELOPMENT TOOLS -- 9.7%
1,250,000 Rational Software Corporation $ 33,515,625
- ------------------------------------------------------------------
DATA STORAGE -- 1.2%
500,000 Western Digital Corporation 3,968,750
- ------------------------------------------------------------------
DATA WAREHOUSING -- 2.7%
400,000 Cognos, Inc.(f) 9,400,000
- ------------------------------------------------------------------
DIAGNOSTICS -- 0.3%
445,000 Cholestech Corporation 945,625
- ------------------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.1%
300,000 Artesyn Technologies, Inc. 3,712,500
- ------------------------------------------------------------------
ELECTRONIC DATA INTERCHANGE -- 2.4%
200,000 National Data Corporation(*) 8,400,000
- ------------------------------------------------------------------
ELECTRONIC DESIGN AUTOMATION -- 3.0%
400,000 ANSYS, Inc. 2,750,000
450,000 Applied Microsystems Corporation(#) 1,293,750
120,000 Synopsys, Inc. 6,450,000
- ------------------------------------------------------------------
10,493,750
- ------------------------------------------------------------------
INDUSTRIAL AUTOMATION -- 1.1%
585,000 Adept Technology, Inc.(#) 3,857,344
- ------------------------------------------------------------------
<CAPTION>
Number of Market
Shares Value
<C> <S> <C>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
INFECTION CONTROL EQUIPMENT -- 0.8%
100,000 STERIS Corporation $ 2,662,500
- ------------------------------------------------------------------
INFORMATION SECURITY -- 2.9%
300,000 Cylink Corporation 1,200,000
240,000 Macrovision Corporation 8,880,000
- ------------------------------------------------------------------
10,080,000
- ------------------------------------------------------------------
INFORMATION TECHNOLOGY SERVICES -- 1.7%
392,500 Lightbridge, Inc. 1,987,031
100,000 Norstan, Inc. 925,000
130,000 ONTRACK Data International, Inc. 503,750
340,000 Technology Solutions Company 2,422,500
- ------------------------------------------------------------------
5,838,281
- ------------------------------------------------------------------
LASER-BASED COMPONENTS & SUBSYSTEMS -- 16.1%
615,000 SDL, Inc. 55,811,250
- ------------------------------------------------------------------
MACHINE VISION/INSPECTION -- 1.5%
35,000 CyberOptics Corporation 455,000
400,000 Zygo Corporation 4,750,000
- ------------------------------------------------------------------
5,205,000
- ------------------------------------------------------------------
NETWORKING -- 4.3%
150,000 3 Com Corporation 3,496,875
50,000 Cisco Systems, Inc. 5,478,125
230,000 Digital Link Corporation 1,380,000
240,000 Larscom Incorporated 502,500
80,000 Network Equipment Technologies, Inc. 715,000
</TABLE>
See Notes to the Financial Statements. 9
<PAGE>
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Number of Market
Shares Value
<C> <S> <C>
- ------------------------------------------------------------------
NETWORKING (CONTINUED)
400,000 VideoServer, Inc. $ 3,100,000
- ------------------------------------------------------------------
14,672,500
- ------------------------------------------------------------------
ONCOLOGY -- 1.1%
230,000 ImClone Systems Incorporated 3,881,250
- ------------------------------------------------------------------
ORTHOPEDICS -- 0.3%
25,000 Xomed Surgical Products, Inc. 981,250
- ------------------------------------------------------------------
RESEARCH REAGENTS/INSTRUMENTATION -- 8.0%
400,000 Molecular Devices Corporation 10,800,000
395,000 Serologicals Corporation 5,357,187
400,000 Techne Corporation 11,550,000
- ------------------------------------------------------------------
27,707,187
- ------------------------------------------------------------------
SEMICAP EQUIPMENT -- 5.4%
350,000 Aetrium Incorporated 2,275,000
370,000 Applied Science and Technology, Inc. 4,648,125
180,000 Asyst Technologies, Inc. 2,475,000
100,000 Brooks Automation, Inc. 2,237,500
290,000 Credence Systems Corporation 6,216,875
30,000 Lam Research Corporation 870,000
- ------------------------------------------------------------------
18,722,500
- ------------------------------------------------------------------
SEMICONDUCTOR -- 9.1%
300,000 ANADIGIC, Inc. 5,287,500
130,000 Burr-Brown Corporation 3,055,000
20,000 Conexant Systems, Inc. 553,750
350,000 Level One Communications, Incorporated 17,018,750
<CAPTION>
Number of Market
Shares Value
<C> <S> <C>
- ------------------------------------------------------------------
SEMICONDUCTOR (CONTINUED)
65,000 PMC-Sierra, Inc. $ 4,627,188
170,000 RF Monolithics, Inc. 1,051,875
- ------------------------------------------------------------------
31,594,063
- ------------------------------------------------------------------
SOFTWARE APPLICATIONS -- 4.1%
150,000 Gensym Corporation 412,500
200,000 Hyperion Software Corporation 2,900,000
300,000 Infinium Software, Inc. 1,350,000
270,000 Information Management Associates, Inc. 573,750
270,000 Platinum Software Corporation 1,991,250
235,000 Project Software & Development, Inc. 5,757,500
100,000 The Vantive Corporation 1,206,250
- ------------------------------------------------------------------
14,191,250
- ------------------------------------------------------------------
SPECIALTY PHARMACEUTICALS -- 0.1%
69,200 Warner Chilcott Laboratories -- SP ADR 484,400
- ------------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT -- 6.9%
400,000 ADC Telecommunications, Inc. 19,075,000
50,000 Tellabs, Inc. 4,887,500
- ------------------------------------------------------------------
23,962,500
- ------------------------------------------------------------------
TEST AND MEASUREMENT -- 1.8%
390,000 LeCroy Corporation(#) 6,045,000
- ------------------------------------------------------------------
VOICE PROCESSING -- 4.2%
140,000 Aspect Telecommunications Corporation 927,500
400,000 AVT Corporation 9,550,000
</TABLE>
10 See Notes to the Financial Statements.
<PAGE>
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Number of Market
Shares Value
<C> <S> <C>
- ------------------------------------------------------------------
VOICE PROCESSING (CONTINUED)
250,000 Centigram Communications Corporation $ 2,468,750
100,000 Davox Corporation 618,750
30,000 Dialogic Corporation 915,000
- ------------------------------------------------------------------
14,480,000
- ------------------------------------------------------------------
WIRELESS -- 9.9%
38,000 Celeritek, Inc. 152,000
2,000,000 Digital Microwave Corporation 16,750,000
200,000 EMS Technologies, Inc. 2,825,000
540,000 Itron, Inc. 5,062,500
100,000 Proxim, Inc. 2,875,000
550,000 Spectrian Corporation(#) 6,462,500
- ------------------------------------------------------------------
34,127,000
- ------------------------------------------------------------------
Total Common Stock (cost $334,505,812) $344,739,525
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
<C> <S> <C>
- ------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 0.7%
- ------------------------------------------------------------------
INVESTMENT COMPANIES -- 0.7%
$2,435,371 Firstar Institutional Money Market
Fund(*) $ 2,435,371
- ------------------------------------------------------------------
Total Short-Term Investments (cost $2,435,371) 2,435,371
- ------------------------------------------------------------------
Total Investments -- 100.4% (cost $336,941,183) 347,174,896
Liabilities, less Other Assets -- (0.4)% (1,389,872)
- ------------------------------------------------------------------
NET ASSETS -- 100.0% $345,785,024
</TABLE>
- ----------------------------------------------------
* Income producing security.
f Foreign security.
# Affiliated company; the Fund owns 5% or more of the outstanding voting
securities of the issuer.
See Notes to the Financial Statements.
11
<PAGE>
KOPP EMERGING GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
1. ORGANIZATION
Kopp Funds, Inc. (the "Company") was incorporated on June 12, 1997 as a
Minnesota company, and is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act"). The Kopp
Emerging Growth Fund (the "Fund") is a non-diversified series of the Company.
The Fund's investment objective is to seek long-term capital appreciation by
investing primarily in common stocks of companies Kopp Investment Advisors, Inc.
(the "Advisor") believes to have the potential for superior growth. The
Company's registration statement was declared effective on September 16, 1997.
The Fund commenced operations on October 1, 1997.
The costs incurred in connection with the organization, initial registration and
public offering of shares aggregated $96,935. These costs are being amortized
over the period of benefit, but not to exceed sixty months from the Fund's
commencement of operations. The proceeds of any redemption of the initial shares
by the original shareholders or any transferee will be reduced by a pro rata
portion of any then unamortized organizational expenses in the same proportion
as the number of initial shares being redeemed bears to the number of initial
shares outstanding at the time of such redemption.
The Fund has issued three classes of shares: Class A, Class C, and Class I. Each
class of shares has identical rights and privileges except that each class bears
its own expenses and exclusive voting rights on matters pertaining to the
distribution plan for that class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATION
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 Company 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. Instruments with a
remaining maturity of 60 days or less are valued on an amortized cost basis.
FEDERAL INCOME TAXES
The Fund intends to qualify for treatment as a "Regulated Investment Company"
under Subchapter M of the Internal Revenue Code, and the Fund intends to
distribute investment company net taxable income and net capital gains to
shareholders. Therefore, no federal tax provision is required.
INCOME AND EXPENSES
Net investment income (loss), other than class specific expenses, and realized
and unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares of each class of
shares at the beginning of the day (after adjusting for the current day's
capital share activity of the respective class).
12
<PAGE>
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income and distributions of net realized gains, if
any, will be declared and paid at least annually.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in U.S.
companies and the U.S. government. These risks include revaluation of currencies
and future adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
OTHER
Investment and shareholder transactions are recorded on the trade date. The Fund
determines the gain or loss realized from investment transactions by comparing
the original cost of the security lot sold with the net sales proceeds (specific
identification). Dividend income is recognized on the ex-dividend date or as
soon as this information is available to the Fund, and interest income is
recognized on an accrual basis. Generally accepted accounting principles require
that permanent financial reporting and tax differences be reclassified to more
closely present capital balances on a tax basis.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
Class A
Six Months Ended
March 31, 1999
-----------------
<S> <C>
Shares sold 5,163,351
Shares redeemed (7,080,594)
- ---------------------------------------------------------------------
Net decrease (1,917,243)
</TABLE>
<TABLE>
<CAPTION>
Class C
February 19, 1999*
through
March 31, 1999
----------------------
<S> <C>
Shares sold 15,783
Shares redeemed --
- --------------------------------------------------------------------------
Net increase 15,783
</TABLE>
<TABLE>
<CAPTION>
Class I
Six Months Ended
March 31, 1999
-----------------
<S> <C>
Shares sold 317,022
Shares redeemed (12,124)
- ---------------------------------------------------------------------
Net increase 304,898
</TABLE>
*Commencement of operations for Class C.
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended March 31, 1999, were
$48,885,166 and $65,136,052 respectively. There were no purchases or sales of
long-term U.S. Government securities.
At March 31, 1999, gross unrealized appreciation and depreciation of investments
for federal income tax purposes were as follows:
<TABLE>
<S> <C>
Appreciation $ 115,754,834
(Depreciation) (105,524,470)
- -----------------------------------------------------------------
Net unrealized appreciation on investments $ 10,230,364
</TABLE>
At March 31, 1999, the cost of investments for federal income tax purposes was
$336,944,532.
13
<PAGE>
At September 30, 1998, the Fund had, on a tax basis, post-October losses of
$6,697,746 expiring in 2006. These losses are available to offset future capital
gains prior to a distribution.
5. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Pursuant to its investment advisory agreement with the Fund, the Advisor is
entitled to receive a fee, calculated daily and payable monthly, at an annual
rate of 1.00% applied to the daily net assets of the Fund.
For the fiscal year ending September 30, 1999, the Advisor has voluntarily
agreed to waive its management fee to the extent necessary to ensure that (i)
the total annual operating expenses for Class A shares will not exceed 1.50%,
(ii) the total annual operating expenses for Class C shares will not exceed
2.15%, and (iii) the total annual operating expenses for Class I shares will not
exceed 1.15%.
Firstar Mutual Fund Services LLC, serves as accounting services agent,
administrator and transfer agent for the Fund. Firstar Bank Milwaukee, N.A.
serves as custodian for the Fund.
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan") with respect to each class of shares pursuant to which certain
distribution and shareholder servicing fees may be paid to Centennial Lakes
Capital, Inc. (the "Distributor"). The Distributor is an affiliate of the
Advisor. Under the terms of the Plan, each class of shares may be required to
pay the Distributor (i) a distribution fee for the promotion and distribution of
shares of up to 0.25% of the average daily net assets of the Fund attributable
to Class A and Class I and up to 0.75% of the average daily net assets of the
Fund attributable to Class C (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 all three
classes (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. Class C shares are
currently incurring 1.00%, which represents a 0.75% distribution fee and a 0.25%
shareholder servicing fee. The Fund currently has no intention of paying any
Rule 12b-1 fees in connection with the Class I shares. The Distributor is
authorized to, in turn, pay all or a portion of these fees to any registered
securities dealer, financial institution, or other person (the "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 shareholders 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 renders 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. As of March 31, 1999, there were
$662,810 of unreimbursed distribution and shareholder servicing related expenses
to be carried forward to future plan years. Distribution fees and shareholder
servicing fees incurred by Class A shares for the six months ended March 31,
1999 were $140,007 and $350,016, respectively (net of voluntary waiver).
Distribution fees and shareholder servicing fees incurred by Class C shares for
the
14
<PAGE>
period ended March 31, 1999 were $90 and $30, respectively. The distribution and
shareholder servicing fees retained by the Distributor, related to Class A, for
the six months ended March 31, 1999 were $13,732 and $34,330, respectively. The
distribution and shareholder servicing fees retained by the Distributor, related
to Class C, for the period ended March 31, 1999 were $90 and $30, respectively.
The Fund was advised that the Distributor retained front-end sales charges on
Class A shares of $100,630 for the six months ended March 31, 1999.
6. OTHER AFFILIATES*
Investments representing 5% or more of the outstanding voting securities of a
portfolio company results in that company being considered an "affiliated
person," as defined in Section 2(a)(3) of the Investment Company Act of 1940.
The aggregate market value of all securities of "affiliated persons" as of March
31, 1999 amounted to $17,658,594, representing 5.1% of net assets. Transactions
during the six months ended March 31, 1999 in which the issuer was an
"affiliated person" are as follows:
<TABLE>
<CAPTION>
Adept Applied Digital
Technology, Microsystems Link Lecroy Spectrian
Inc. Corporation Corporation** Corporation Corporation Total
------------ ------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
September 30, 1998
Balance
Shares 615,000 200,000 471,000 364,900 460,000 2,110,900
Cost $ 8,533,551 $ 2,128,180 $ 9,226,332 $ 12,018,276 $ 13,174,625 $ 45,080,964
Gross Additions
Shares 0 250,000 0 25,100 90,000 365,100
Cost $ -- $ 967,110 $ -- $ 478,094 $ 1,291,046 $ 2,736,250
Gross Deductions
Shares 30,000 0 241,000 0 0 271,000
Cost $ 474,375 $ -- $ 5,765,426 $ -- $ -- $ 6,239,801
- ---------------------------------------------------------------------------------------------------------------------
March 31, 1999 Balance
Shares 585,000 450,000 230,000 390,000 550,000 2,205,000
Cost $ 8,059,176 $ 3,095,290 $ 3,460,906 $ 12,496,370 $ 14,465,671 $ 41,577,413
- ---------------------------------------------------------------------------------------------------------------------
Realized loss ($ 253,757) $ 0 ($ 4,542,459) $ 0 $ 0 ($ 4,796,216)
- ---------------------------------------------------------------------------------------------------------------------
Investment income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*The listing of these companies is not an admission that the "affiliated
persons" are affiliates of the Distributor, Advisor, Fund, Company, or any
other client of the Advisor.
**Security that was affiliated during the six months ended March 31, 1999, but
not at March 31, 1999.
7. BANK BORROWING
The Fund has secured a $10,000,000 line of credit with Firstar Bank Milwaukee,
N.A. The interest rate on any borrowings is the Bank's announced prime rate and
borrowings would be for liquidity purposes. The Fund pays a commitment fee equal
to the amount of the line at a rate of 0.10% per annum. During the six months
ended March 31, 1999, the Fund did not draw upon the line of credit.
15
<PAGE>
DIRECTORS
LeRoy C. Kopp
Robert L. Stehlik
Thomas R. Stuart
OFFICERS
LeRoy C. Kopp, CHIEF EXECUTIVE OFFICER AND PRESIDENT
John P. Flakne, CHIEF FINANCIAL OFFICER AND TREASURER
Kathleen S. Tillotson, EXECUTIVE VICE PRESIDENT AND SECRETARY
Gregory S. Kulka, FIRST VICE PRESIDENT
INVESTMENT ADVISER
KOPP INVESTMENT ADVISORS, INC.
7701 France Avenue South, Suite 500
Edina, MN 55435
- ------------------------------------------------------------------------
ADMINISTRATOR AND TRANSFER AGENT
FIRSTAR MUTUAL FUND SERVICES, LLC
For Overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o Firstar Mutual Fund c/o Firstar Mutual Fund
Services, LLC Services, LLC
Third Floor P.O. Box 701
615 E. Michigan Street Milwaukee, WI 53201-0701
Milwaukee, WI 53202
CUSTODIAN
FIRSTSTAR BANK MILWAUKEE, N.A.
777 E. Wisconsin Avenue
Milwaukee, WI 53202
DISTRIBUTOR
CENTENNIAL LAKES CAPITAL, INC.
7701 France Avenue South, Suite 500
Edina, MN 55435
INDEPENDENT AUDITORS
KPMG LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
LEGAL COUNSEL
GODFREY & KAHN, S.C.
780 N. Water Street
Milwaukee, WI 53202
KOPP FUNDS IS DISTRIBUTED BY CENTENNIAL LAKES CAPITAL, INC., A MEMBER OF
THE NASD AND AN AFFILIATE OF KOPP INVESTMENT ADVISORS, INC. AND THE FUND.
- -C- 1999 Kopp Investment Advisors, Inc.
