<PAGE>
Securities Act Registration No. 333-65609
Investment Company Act file No. 811-09055
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
_________________________________
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. 1 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
_________________________________
PAPP SMALL & MID-CAP GROWTH FUND, INC.
(Registrant)
6225 North 24th Street
Suite #150
Phoenix, Arizona 85016
Telephone number: 602/956-1115
__________________________________________
Robert L. Mueller Janet D. Olsen
Papp Small & Mid-Cap Growth Fund, Inc. Bell, Boyd & Lloyd
6225 North 24th Street, #150 70 West Madison Street
Phoenix, Arizona 85016 Suite #3300
Chicago, Illinois 60602
(Agents for service)
Approximate date of proposed public offering: As soon as practicable after
effectiveness of the registration statement.
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
________________________________________________________________________________
<PAGE>
[LINE DRAWING OF L. ROY PAPP]
Prospectus
December , 1998
PAPP SMALL & MID-CAP GROWTH FUND, INC.
6225 North 24th Street, Suite 150
Phoenix, Arizona 85016
(602)956-1115
(800)421-4004
Email: [email protected]
Internet: http://www.roypapp.com
Investment Objective: Long-Term Capital Growth
The Fund invests in small and mid-capitalization companies, all selected
for the possibility of long-term capital growth (see Investment Methods and Risk
Factors).
- Minimum Investment -
Initial Purchase $ 5,000
Subsequent Purchases and
Individual Retirement Accounts (IRAs) $ 1,000
No sales or redemption charges
(A pure no-load fund)
This prospectus sets forth concisely information a prospective investor should
know before investing in Papp Small & Mid-Cap Growth Fund, Inc. (the "Fund").
Please retain it for future reference. A Statement of Additional Information
regarding the Fund dated the date of this prospectus has been filed with the
Securities and Exchange Commission and (together with any supplement to it) is
incorporated by reference. The Statement of Additional Information may be
obtained at no charge by writing or telephoning the Fund at its address or
telephone number shown above. You may also obtain the Statement of Additional
Information and other information that has been electronically filed from the
Securities and Exchange Commission Internet web site: http://www.sec.gov.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
Fund Expenses 3
Investment Objective 4
Investment Methods 4
Risk Factors 5
Investment Restrictions 5
Purchasing Shares 6
Redeeming Shares 6
Determination of Net Asset Value 8
Management of the Fund 8
Investment Adviser 9
Distributions 10
Federal Income Tax 10
The Fund 10
</TABLE>
<PAGE>
Fund Expenses
- -------------
The following table illustrates all expenses and fees that a shareholder of the
Fund will bear, directly or indirectly.
Shareholder Transaction Expenses
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases.................... None
Maximum Sales Load Imposed on Reinvested Dividends......... None
Deferred Sales Load........................................ None
Redemption Fees............................................ None
Exchange Fees.............................................. None
</TABLE>
Annual Fund Operating Expenses
(as percentages of average daily net assets)
<TABLE>
<S> <C>
Management Fee............................................. 1.0%
12b-1 Fees................................................. None
Other Expenses (after any expense reimbursement)........... 0.25%
-----
Total Fund Operating Expenses (after any expense
reimbursement)............................................. 1.25%
</TABLE>
Note: In the absence of an operating history, the amount shown for "other
expenses" is the maximum amount that may be incurred by the Fund, since
the investment adviser has obligated itself to reimburse the Fund to the
extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.25% of its average daily net asset value in such year. The
investment adviser has agreed to pay all organizational expenses, and such
expenses will not be reimbursed by the Fund. Absent that expense
limitation, other expenses and total Fund operating expenses for the
Fund's initial fiscal year are estimated to be approximately 1.50% and
2.50%, respectively.
Example:
The investor would pay the following expenses on a $1,000 investment in the Fund
assuming (1) a 5% annual rate of return, (2) continuance of the operating
expense percentage shown in the table above, (3) reinvestment of all
distributions to shareholders, and (4) redemption at the end of each period.
<TABLE>
<CAPTION> One Year Three Years
-------- -----------
<S> <C>
$13.00 $41.00
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR LESS THAN
THOSE SHOWN.
3
<PAGE>
Investment Objective
- --------------------
The Fund's investment objective is long-term capital growth. The Fund's
investment objective is a fundamental policy that may not be changed without
shareholder approval.
Investment Methods
- ------------------
The Fund invests primarily in the common stocks and securities convertible
into common stocks of small and medium sized companies. Small companies are
those whose market capitalizations fall within the range of companies in the S &
P Small-Cap 600 Index (the Small-Cap Index) while medium-sized companies are
those whose market capitalizations fall within the range of companies in the S &
P Mid-Cap 400 Index (the Mid-Cap Index). As of August 31, 1998, the Small-Cap
Index included companies with capitalizations between approximately $30 million
and $3 billion while the Mid-Cap Index included companies with capitalizations
between approximately $160 million and $18 billion. The market capitalization
range in which the Fund invests will change as the range of the companies
included in the Small and Mid-Cap Indexes changes. The Fund may invest a maximum
of 20% of its common stock assets (valued at the time of each investment) in the
common stocks of foreign domiciled companies only if they are traded, either
directly or in the form of American Depository Receipts (ADRs), on a United
States stock exchange or in the Nasdaq Stock Market. At least 65% of the Fund's
assets will be invested in small and mid-capitalization securities.
The Fund's investment adviser believes that carefully selected small and
medium sized companies offer attractive capital growth possibilities
significantly above that of the general U.S. economy. Such companies have
developed significant expertise in the more limited markets they serve, and are
able to increase their sales and earnings at a more rapid pace than the average
company. Further, these companies typically are subject to less Wall Street
research than larger companies and are more likely to be priced inefficiently.
In seeking to achieve its investment objective the Fund attempts to
purchase the shares of companies that it regards as having excellent prospects
for capital appreciation (measured on an overall basis by such considerations as
earnings growth over extended periods of time, above-average profitability
created through operating efficiency rather than financial leverage, and cash
flows that appear to confirm the sustainability of growth) at a price, relative
to the market as a whole, that does not fully reflect the superiority of a
particular company. The production of current income is not a determinative
factor in the selection of portfolio securities, and the Fund is not designed
for investors seeking income rather than capital appreciation. Investments are
not limited by ratings or other external criteria of quality, and investments
may vary in quality measured by such criteria, and may include speculative
securities. Once purchased, the shares of such companies are ordinarily
retained so long as the investment adviser believes that the prospects for
appreciation continue to be favorable and that the securities are not overvalued
in the marketplace. Accordingly, although the Fund's annual portfolio turnover
rate will vary from year to year, it is not expected to exceed 45% under normal
market conditions.
Under normal market conditions, substantially all of the Fund's assets are
invested in common stocks and convertible securities, other than cash and cash
equivalents anticipated to be needed for payment of the Fund's obligations.
However, if a temporary defensive position should be considered by the
investment adviser to be advisable in view of market conditions, the Fund may
hold cash and may invest up to 100% of its assets in United States government,
agency and instrumentality obligations, and in other domestic debt rated in one
of the two highest grades by one or more of the nationally recognized
statistical ratings organizations or, if unrated, believed by the investment
adviser to be comparable in quality, are readily salable, and mature or are
redeemable by the Fund not more than one year from the time of investment.
4
<PAGE>
Risk Factors
- ------------
Historically, stocks have shown greater growth than other types of
securities. In the short-term, however, stock prices may fluctuate widely in
response to company, market, or economic news and general investor sentiment.
In addition, the stocks of small and medium-sized companies often involve more
volatility than the stocks of larger companies. Further, a company with only
one or several product lines is vulnerable to the entrance of a substantial
competitor.
During some periods, the securities of small and mid-cap companies, as a
class, have performed better than the securities of large companies and in other
periods they have performed worse. Small and mid-cap companies, as compared to
larger companies, may have a shorter history of operations, may not have as
great an ability to raise additional capital, and may have a smaller public
market for their shares.
Investment in foreign business interests (either in United States
enterprises with substantial international activities, or in shares, or ADRs for
shares, of foreign companies), may be riskier in some ways than domestic
investment because of possibilities of: foreign controls over currency exchange;
restrictions on monetary repatriation; oppressive regulation; differing tax
systems among countries, with differing consequences to portfolio companies;
heavy or confiscatory taxation; less liquidity and more price volatility of some
foreign securities and ADRs; less governmental supervision of issuers of
securities; limited publicly available corporate information; varying
accounting, auditing and financial reporting standards and financial statements
among countries; difficulties in obtaining legal recourse and enforcing
judgments abroad; nationalization or expropriation of assets; and political,
economic or social instability. Also, risk may be increased to the extent of
commitments by portfolio companies in developing countries, contrasted with
developed countries.
All investments, including those in mutual funds, have risks and the Fund
is not intended to present a balanced investment program. It is not intended to
be a vehicle for short-term trading, but is intended for investment for the
long-term. The securities in which the Fund invests are subject to the risks
inherent in the respective portfolio companies and to market fluctuations, and
there can be no assurance that the Fund will achieve its investment objective.
Investment Restrictions
- -----------------------
The Fund will not:
1. To the extent of 75% of its assets (valued at time of investment),
invest more than 5% of its assets (valued at such time) in securities of
any one issuer, except in obligations of the United States Government and
its agencies and instrumentalities;
2. Acquire securities of any one issuer that at time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
3. Invest more than 5% of its assets (valued at time of investment) in
securities of issuers with less than three years' operation (including
predecessors);
4. Invest more than 5% of its assets (valued at time of investment) in
securities that are not readily marketable.
The first three of these restrictions cannot be changed without the approval of
the holders of a "majority of the outstanding voting securities" as defined in
the Investment Company Act. All of the Fund's investment restrictions are set
forth in the Statement of Additional Information.
5
<PAGE>
Purchasing Shares (see New Account Purchase Application accompanying this
- ------------------
prospectus)
Shares of the Fund are purchased at the net asset value per share next
determined after receipt of the purchase order, as described under
"Determination of Net Asset Value." There are no sales commissions or
underwriting discounts. The minimum initial investment is $5,000, except for
Individual Retirement Accounts (IRAs) where the minimum is $1,000. Minimum
subsequent investments in all cases are $1,000, excluding reinvestments of
dividends and capital gains distributions.
To make an initial purchase of shares, complete and sign the New Account
Purchase Application and mail it, together with a check for the total purchase
price, to Papp Small & Mid-Cap Growth Fund, Inc., Post Office Box 15508,
Phoenix, AZ 85060. The purchase price is the net asset value per share as
described under "Determination of Net Asset Value."
Each investment in shares of the Fund, including dividends and capital
gains distributions reinvested in Fund shares, is acknowledged by a statement
showing the number of shares purchased, the net asset value at which the shares
are purchased, and the new balance of Fund shares owned. The Fund does not issue
stock certificates for the shares purchased. All full and fractional shares will
be carried on the books of the Fund without the issuance of certificates.
Shares may be purchased or redeemed directly through the Fund or through an
investment dealer or other institution. The Fund may enter into an arrangement
with such an institution allowing the institution to process purchase orders or
redemption requests for its customers with the Fund on an expedited basis,
including requesting share redemptions by telephone. Although these arrangements
might permit one to effect a purchase or redemption of Fund shares through the
institution more quickly than would otherwise be possible, the institution may
impose charges for its services. Those charges could constitute a significant
portion of a smaller account, and might not be in a shareholder's best interest.
Shares of the Fund may be purchased or redeemed directly from the Fund without
imposition of any charges.
Some financial institutions that maintain nominee accounts with the Fund
for their clients for whom they hold Fund shares charge an annual fee of up to
0.35% of the average net assets held in such accounts for accounting, servicing,
and distribution services they provide with respect to the underlying Fund
shares. Such fees are paid by the Adviser.
The Fund reserves the right not to accept purchase orders under
circumstances or in amounts considered disadvantageous to existing shareholders.
Redeeming Shares
- ----------------
The Fund will redeem all or any part of shares owned upon written request
delivered to the Fund at Post Office Box 15508, Phoenix, AZ 85060. The
redemption request must:
(1) specify the number of shares or dollar amount to be redeemed, if less
than all shares are to be redeemed; and
(2) be signed by all owners exactly as their names appear on the account.
6
<PAGE>
In the case of shares registered in the name of a corporation, the
redemption request must be signed in the name of the corporation by an officer
whose title must be stated, and a certified bylaw provision or resolution of the
board of directors authorizing the officer to so act must be furnished. In the
case of a trust or a partnership, the signature must include the name of the
registered shareholder and the title of the person signing on its behalf. Under
certain circumstances, before the shares can be redeemed, additional documents,
including signature guarantees, may be required in order to verify the authority
of the person seeking to redeem.
Signature Guarantee Requirements
Under ordinary circumstances, a signature guarantee will not be required.
However, a signature guarantee is necessary under the following circumstances:
(1) the redemption request exceeds $25,000;
(2) the proceeds of the redemption are requested to be sent to a person
other then the registered holder(s) of the shares to be redeemed;
(3) the proceeds of the redemption are to be mailed to an address other
than the address of record; or
(4) a change of address request has been received by the Fund or the
Transfer Agent within the last 20 business days.
In such cases, each signature on any redemption request must be guaranteed
by a commercial bank or trust company in the United States, a member firm of the
New York Stock Exchange or other eligible guarantor institution. A notary public
is not an eligible guarantor.
Redemption Price
The redemption price per share is the net asset value determined as
described under "Determination of Net Asset Value." There is no redemption
charge. The redemption value of the shares may be more or less than the cost,
depending upon the value of the Fund's portfolio securities at the time of
redemption. If the net asset value of the shares in an account is less than
$1,000 as a result of previous redemptions and not market price declines, the
Fund may notify the registered holder that unless the account value is increased
to at least the minimum within 60 days the Fund will redeem all shares in the
account and pay the redemption price to the registered holder.
Payment for shares redeemed is made within seven days after receipt by the
Fund of a request for redemption in good order. However, if shares are redeemed
immediately after they are purchased, the Fund may delay paying the redemption
proceeds only until the shareholder's check for the purchase price has been
cleared, which may take up to 15 days. The Fund reserves the right to suspend or
postpone redemptions during any period when (a) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission,
or that Exchange is closed for other than customary weekend and holiday
closings, (b) the Commission has by order permitted such suspension, or (c) an
emergency, as determined by the Commission, exists making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably practicable.
7
<PAGE>
Determination of Net Asset Value
- --------------------------------
For purposes of computing the net asset value of a share of the Fund,
securities traded on securities exchanges, or in the over-the-counter market in
which transaction prices are reported, are valued at the last sales prices at
the time of valuation or, lacking any reported sales on that day, at the most
recent bid quotations. Other securities traded over-the-counter are also valued
at the most recent bid quotations. Securities for which quotations are not
available and any other assets are valued at a fair value as determined in good
faith by the board of directors. The price per share for a purchase order or
redemption request is the net asset value next determined after receipt of the
order.
The net asset value of a share of the Fund is determined as of the close of
trading on the New York Stock Exchange, currently 4:00 p.m. New York City time,
on any day on which that Exchange is open for trading, by dividing the value of
the Fund's assets, less its liabilities, by the number of shares outstanding,
and rounding the result to the nearest full cent.
Management of the Fund
- ----------------------
The board of directors has overall responsibility for the conduct of the
Fund's affairs. The directors of the Fund, including those directors who are
also officers, and their principal business activities during the past five
years, are:
L. Roy Papp, Chairman and director. Age 71.
Partner, L. Roy Papp & Associates (investment manager).
Harry A. Papp, CFA, President and director. Age 44.
Partner, L. Roy Papp & Associates.
Robert L. Mueller, Vice President, Secretary and director. Age 70.
Partner, L. Roy Papp & Associates.
Rosellen C. Papp, CFA, Vice President, Treasurer and director. Age 43.
Partner, L. Roy Papp & Associates.
Bruce C. Williams, CFA, Vice President and director. Age 44.
Partner, L. Roy Papp & Associates.
James K. Ballinger, director. Age 48. The Director of the Phoenix
Art Museum.
Amy S. Clague, director. Age 65. Partner, Boyd and Clague (bookkeeping
services for small companies).
Carolyn P. O'Malley, director. Age 50. The Director of the Desert
Botanical Garden since 1994. Prior thereto, Assistant Director of the
Garden and Director of Public Relations of The Volunteer Center of Maricopa
County, Phoenix, Arizona.
Each of the following is an "interested person" of the Fund (as defined in
the Investment Company Act): L. Roy Papp as an officer of the Fund and a partner
of its investment adviser, L. Roy Papp & Associates; Harry A. Papp and Rosellen
C. Papp, as officers of the Fund, partners of the investment adviser and as the
son and daughter-in-law, respectively, of L. Roy Papp; Robert L. Mueller and
Bruce C. Williams as partners of the investment adviser and as officers of the
Fund. All but Mrs. Clague, Mr. Ballinger, and Mrs. O'Malley are also personnel
of the investment adviser.
8
<PAGE>
L. Roy Papp, Harry A. Papp, and Robert L. Mueller are the members of the
executive committee, which has authority during intervals between meetings of
the board of directors to exercise the powers of the Board, with certain
exceptions. Directors not affiliated with the investment adviser and not
officers of the Fund receive from the Fund an attendance fee of $100 for each
meeting of the board of directors attended.
The following are Vice Presidents of the Fund: George D. Clark, Jr.,
Jeffrey N. Edwards, Robert L. Hawley and Victoria S. Cavallero. Julie A. Hein is
Vice President and Assistant Treasurer of the Fund. Mr. Clark has been a partner
or associate of L. Roy Papp & Associates since 1987. Mr. Edwards has been a
partner or associate of L. Roy Papp & Associates since 1987. Ms. Cavallero has
been a partner or associate of L. Roy Papp & Associates since 1987. Mr. Hawley
has been a partner or associate of L. Roy Papp & Associates since 1993. Ms. Hein
has been a partner or associate of L. Roy Papp & Associates since 1989.
Investment Adviser
- ------------------
L. Roy Papp & Associates serves as investment adviser to the Fund. L. Roy
Papp and Rosellen C. Papp, partners of that firm, manage the portfolio of the
Fund. Except for two years when he was United States director of, and ambassador
to, the Asian Development Bank, Manila, Philippines, Mr. Papp has been in the
money management field since 1955. He has been either sole proprietor of or a
partner of L. Roy Papp & Associates since 1978. Rosellen C. Papp has been the
Director of Research of L. Roy Papp & Associates since 1981.
The firm of L. Roy Papp & Associates is also investment adviser to
individuals, trusts, retirement plans, endowments, and foundations. Assets under
management exceed $1.2 billion. The firm also acts as investment adviser to The
L. Roy Papp Stock Fund, Inc. which commenced operations in 1989 and whose assets
approximate $82 million, Papp America-Abroad Fund, Inc. which commenced
operations in 1991 and whose assets approximate $279 million, Papp America-
Pacific Rim Fund, Inc. which commenced operations in 1997 and whose assets
approximate $13 million, and Papp Focus Fund, Inc. which commenced operations in
1998 and whose assets approximate $3 million.
Subject to the overall authority of the Fund's board of directors, the
adviser furnishes continuous investment supervision and management to the Fund
under an investment advisory agreement.
The investment adviser receives from the Fund, as compensation for its
services, a fee, accrued daily and payable monthly, at an annual rate of 1% of
the Fund's net assets. On days for which the values of the Fund's net assets
are not determined, the fee is accrued on the most recently determined net
assets adjusted for subsequent daily income and expense accruals. The adviser
has obligated itself to reimburse the Fund to the extent the Fund's total annual
expenses, excluding taxes, interest and extraordinary litigation expenses,
during any of its fiscal years, exceed 1.25% of its average daily net asset
value in such year.
Under the agreement, the investment adviser furnishes at its own expense
office space to the Fund and all necessary office facilities, equipment, and
personnel for managing the assets of the Fund. The investment adviser also pays
all expenses of marketing shares of the Fund, all expenses in determination of
daily price computations, placement of securities orders and related
bookkeeping.
The Fund pays all expenses incident to its operations and business not
specifically assumed by the investment adviser, including expenses relating to
custodial, legal, and auditing charges; printing and mailing reports and
prospectuses to existing shareholders; taxes and corporate fees; maintaining
9
<PAGE>
registration of the Fund under the Investment Company Act and registration of
its shares under the Securities Act of 1933; and complying with the securities
laws of certain states.
Distributions
- -------------
The Fund intends to distribute to shareholders substantially all net
investment income and any net capital gains realized from sales of the Fund's
portfolio securities.
Dividends from net investment income and distributions from any net
realized capital gains are reinvested in additional shares of the Fund unless
the shareholder has requested in writing to have them paid by check.
Federal Income Tax
- ------------------
The Fund intends to qualify to be taxed as a regulated investment company
under the Internal Revenue Code so as to be relieved of federal income tax on
its capital gains and net investment income currently distributed to its
shareholders. Dividends from investment income and net short-term capital gains
are taxable as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in
the Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of the Fund.
Each shareholder is advised annually of the source or sources of
distributions for federal income tax purposes. A shareholder who is not subject
to federal income taxation will not be required to pay tax on distributions
received.
If shares are purchased shortly before a record date for a distribution,
the shareholder will, in effect, receive a return of a portion of his
investment, but the distribution will be taxable to him even if the net asset
value of the shares is reduced below the shareholder's cost. However, for
federal income tax purposes the original cost would continue as the tax basis.
If shares are redeemed within six months, any loss on the sale of those shares
would be long-term capital loss to the extent of any distributions of long-term
capital gains that the shareholder has received on those shares.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% ("backup
withholding") from dividend, capital gain and redemption payments to him.
Dividend and capital gain payments may also be subject to backup withholding if
the shareholder fails to certify properly that he is not subject to backup
withholding due to the under-reporting of certain income. These certifications
are contained in the New Account Purchase Application which should be completed
and returned to the Fund when the initial investment is made.
Other Information
- -----------------
The Fund was incorporated in Maryland on September 15, 1998 and commenced
operations as an open-end diversified management investment company on
December , 1998. Each share of capital stock, $.01 par value, is entitled to
share pro rata in any dividends and other distributions on shares declared by
the board of directors, to one vote per share in elections of directors and
other matters presented to shareholders, and to equal rights per share in the
event of liquidation.
The Fund issues annual reports to shareholders containing financial
statements audited by its independent auditors, Arthur Andersen LLP. The Fund
also issues interim quarterly reports containing lists of securities owned by
the Fund.
10
<PAGE>
The Fund may provide information about its total return and average annual
total return in letters to shareholders or in sales materials. Total return is
the percentage change in value during the period of an investment in the Fund,
including the value of shares acquired through reinvestment of all dividend and
capital gains distributions. Average annual total return is the average annual
compounded rate of change in value represented by the total return for the
period. Performance quotations for any period when an expense limitation is in
effect will be greater than if the limitation had not been in effect. The Fund's
performance may also be compared to various indices. See the Statement of
Additional Information for a more complete explanation.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, and the Fund's operating expenses. Investment performance also
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.
According to the law of Maryland, under which the Fund is incorporated, and
the Fund's bylaws, the Fund is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act.
Inquiries regarding the Fund should be directed to the Fund at its telephone
number shown on the front cover.
The Fund will call a meeting of shareholders for the purpose of voting
upon the question of removal of a director or directors when requested in
writing to do so by record holders of at least 10% of the Fund's outstanding
common shares, and in connection with such meeting will comply with the
provisions of section 16(c) of the Investment Company Act concerning assistance
with a record shareholder communication asking other record shareholders to join
in that request.
11
<PAGE>
Papp Small & Mid-Cap Growth Fund, Inc.
(a pure no-load fund)
Investment Adviser
L. Roy Papp & Associates
6225 North 24th Street
Suite 150
Phoenix, AZ 85016
Telephone: (602) 956-0980
Custodian
Founders Bank of Arizona
7335 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
Transfer and Dividend Disbursing Agent
L. Roy Papp & Associates
6225 North 24th Street
Suite 150
Phoenix, AZ 85016
Independent Auditors
Arthur Andersen LLP
501 North 44th Street
Suite 300
Phoenix, AZ 85008
Legal Counsel
Bell, Boyd & Lloyd
70 West Madison Street
Chicago, IL 60602
<PAGE>
[LINE DRAWING OF L. ROY PAPP]
PAPP SMALL & MID-CAP GROWTH FUND, INC.
Statement of Additional Information
-----------------------------------
December ____, 1998
6225 North 24th Street - Suite #150
Phoenix, Arizona 85016
(602) 956-1115
(800) 421-4004
Email: [email protected]
Internet: http://www.roypapp.com
_________________________________
Table of Contents
<TABLE>
<S> <C>
Additional Information....................................................... 1
Investment Policies and Restrictions......................................... 2
Investment Adviser........................................................... 3
Directors and Officers....................................................... 4
Performance Information...................................................... 4
Purchasing and Redeeming Shares.............................................. 5
Additional Tax Information................................................... 5
Portfolio Transactions....................................................... 5
Custodian.................................................................... 6
Transfer Agent............................................................... 7
Independent Auditors......................................................... 7
Financial Statements......................................................... 7
Independent Auditors Report.................................................. 8
Statement of Assets and Liabilities.......................................... 9
</TABLE>
_________________________________
Additional Information
- ----------------------
This Statement of Additional Information is not a prospectus, but
provides information that should be read in conjunction with the Fund's
prospectus dated December ___, 1998 and any supplement thereto.
The prospectus may be obtained from the Fund at no charge by writing or
telephoning the Fund at its address or telephone number shown above. If you
have access to the Internet, you may also obtain the prospectus by visiting our
web site (http://www.roypapp.com).
B-1
<PAGE>
Investment Policies and Restrictions
- ------------------------------------
The Fund's investment objective is stated in the prospectus on the front
cover and under "Investment Objective." The manner in which the Fund pursues its
investment objective is discussed in the prospectus under the captions
"Investment Methods" and "Risk Factors." The investment restrictions are set
forth in full immediately below.
The Fund will not:
1. To the extent of 75% of its assets (valued at time of
investment), invest more than 5% of its assets (valued at such time)
in securities of any one issuer, except in obligations of the United
States Government and its agencies and instrumentalities.
2. Acquire securities of any one issuer that at time of investment
(a) represent more than 10% of the voting securities of the issuer or
(b) have a value greater than 10% of the value of the outstanding
securities of the issuer;
3. Invest more than 25% of its assets (valued at time of investment)
in securities of companies in any one industry;
4. Borrow money except from banks for temporary or emergency
purposes in amounts not exceeding 10% of the value of the Fund's
assets at the time of borrowing (the Fund will not purchase additional
securities when its borrowings exceed 5% of the value of its assets);
5. Underwrite the distribution of securities of other issuers, or
acquire "restricted" securities that, in the event of a resale, might
be required to be registered under the Securities Act of 1933 on the
ground that the Fund could be regarded as an underwriter as defined by
that Act with respect to such resale;
6. Purchase or sell commodities, commodity contracts or options;
7. Make margin purchases or short sales of securities;
8. Invest in companies for the purpose of management or the
exercise of control;
9. Make loans (but this restriction shall not prevent the Fund from
investing in debt securities);
10. Issue any senior security except to the extent permitted under
the Investment Company Act of 1940*.
Restrictions 1 through 10 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" as defined in the Investment Company Act.
* The Fund has no present intention of issuing any senior security.
B-2
<PAGE>
The Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
The Fund will not:
a. Invest more than 5% of its assets (valued at time of investment)
in securities that are not readily marketable;
b. Acquire securities of other investment companies except (a) by
purchase in the open market, where no commission or profit to a
sponsor or dealer results from such purchase other than the customary
broker's commission and (b) where the acquisition results from a
dividend or a merger, consolidation or other reorganization [in
addition to this investment restriction, the Investment Company Act of
1940 provides that the Fund may neither purchase more than 3% of the
voting securities of any one investment company nor invest more than
10% of the Fund's assets (valued at time of investment) in all
investment company securities purchased by the Fund];
Investment Adviser
- ------------------
Information on the Fund's investment adviser, L. Roy Papp & Associates, is
set forth in the prospectus under "Management of the Fund" and "Investment
Adviser," and is incorporated herein by reference.
The adviser is an Arizona general partnership owned and controlled by its
partners, of whom there were 10 at the date of this Statement of Additional
Information: L. Roy Papp, Harry A. Papp, Robert L. Mueller, Rosellen C. Papp,
Bruce C. Williams, George D. Clark, Jr., Jeffrey N. Edwards, Robert L. Hawley,
Victoria S. Cavallero, and Julie A. Hein.
The Advisory Agreement provides that the adviser shall not be liable for
any loss suffered by the Fund or its shareholders as a consequence of any act or
omission in connection with services under the Agreement, except by reason of
the adviser's willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreement expires on September 24, 2000, but may be continued
from year to year only so long as the continuance is approved annually (a) by
the vote of a majority of the Directors of the Fund who are not "interested
persons" of the Fund or the adviser cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Directors or by the
vote of a majority (as defined in the 1940 Act) of the outstanding shares of the
Fund. The Agreement will terminate automatically in the event of its assignment
(as defined in the 1940 Act).
B-3
<PAGE>
Directors and Officers
- ----------------------
Information about the directors and officers of the Fund and their
principal business activities during the past five years is set forth in the
prospectus under "Management of the Fund", and is incorporated herein by
reference.
All of the directors, except James K. Ballinger, Amy S. Clague, and
Carolyn P. O'Malley are partners of L. Roy Papp & Associates, the Fund's
investment adviser, and serve without any compensation from the Fund. The
following table sets forth compensation expected to be paid by the Fund and by
all of the Papp Funds (the Fund, The L. Roy Papp Stock Fund, Papp America-Abroad
Fund, Papp America-Pacific Rim Fund, and Papp Focus Fund) to Mr. Ballinger, Mrs.
Clague, and Mrs. O'Malley during the fiscal year ending December 31, 1998.
Neither the Fund nor any of the Papp funds has any pension or retirement plan.
<TABLE>
<CAPTION>
Estimated Total Compensation from the
Fund, The L. Roy Papp Stock Fund, Papp
Estimated Aggregate America-Abroad Fund, Papp America-
Compensation Pacific Rim Fund, and Papp Focus Fund
Name of Director From the Fund Paid to Directors
- ---------------- ------------- -----------------
<S> <C> <C>
James K. Ballinger $100.00 $8,700.00
Amy S. Clague $100.00 $8,700.00
Carolyn P. O'Malley $100.00 $1,500.00
</TABLE>
At the date of this Statement of Additional Information, L. Roy Papp, who
provided the Fund's organizational capital, owned 100% of the Fund's outstanding
common stock and therefore controlled the Fund.
Performance Information
- -----------------------
From time to time the Fund may quote total return figures. "Total Return"
for a period is the percentage change in value during the period of an
investment in Fund shares, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compounded rate of change in value
represented by the Total Return Percentage for the period.
Average Annual Total Return is computed as follows:
ERV = P(1 + T)/n/
Where: P = the amount of an assumed initial investment in Fund shares
T = average annual total return
n = number of years from initial investment to the end of the
period
ERV = ending redeemable value of shares held at the end of the
period
The Fund imposes no sales charge and pays no distribution expenses. Income
taxes are not taken into account. The Fund's performance is a function of
conditions in the securities markets, portfolio management, and operating
expenses. Although information such as that shown above is useful in reviewing
the Fund's performance and in providing some basis for comparison with other
investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.
B-4
<PAGE>
In advertising and sales literature, the Fund's performance may be compared
with that of market indices and other mutual funds. In addition to the above
computations, the Fund might use comparative performance as computed in a
ranking determined by Lipper Analytical Services, Inc., Morningstar, Inc., or
that of another service.
Purchasing and Redeeming Shares
- -------------------------------
Purchases and redemptions are discussed in the Fund's prospectus under the
headings "Purchasing Shares" and "Redeeming Shares." All of that information is
incorporated herein by reference.
The Fund's net asset value is determined on days on which the New York
Stock Exchange is open for trading, which regularly is every day except Saturday
and Sunday. However, that Exchange is also closed on New Year's Day, the third
Monday in January, the third Monday in February, Good Friday, the last Monday in
May, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and if one
of those holidays should fall on a Saturday or a Sunday, on the preceding Friday
or the following Monday, respectively. Net asset value will not be computed on
the days of observance of those holidays, unless, in the judgment of the board
of directors, it should be determined on any such day, in which case the
determination will be made as of 1:00 p.m., Phoenix time.
The Fund has elected to be governed by rule 18f-1 under the Investment
Company Act pursuant to which it is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund during any
90-day period for any one shareholder. Redemptions in excess of the above
amounts will normally be paid in cash, but may be paid wholly or partly by a
distribution in kind of securities.
Redemptions will be made at net asset value. See "Determination of Net
Asset Value" in the prospectus, which information is incorporated herein by
reference.
Additional Tax Information
- --------------------------
See "Federal Income Tax" in the prospectus. All that information is
incorporated herein by reference.
Portfolio Transactions
- ----------------------
The Fund expects that its annual portfolio turnover rate will not exceed
45% under normal conditions, a turnover rate less than that of most mutual funds
that invest primarily in small and mid-capitalization securities. However, there
can be no assurance that the Fund will not exceed this rate, and the portfolio
turnover rate may vary from year to year.
The investment adviser places portfolio transactions of the Fund with
those securities brokers and dealers that it believes will provide the best
value in transaction and research services for the Fund, either in a particular
transaction or over a period of time. Although some transactions involve only
brokerage services, some involve research services as well.
In valuing brokerage services, the investment adviser makes a judgment as
to which brokers are capable of providing the most favorable net price (not
necessarily the lowest commission considered alone) and the best execution in a
particular transaction. Best execution connotes not only general competence and
reliability of a broker, but specific expertise and effort of a broker in
overcoming the anticipated difficulties in fulfilling the requirements of
B-5
<PAGE>
particular transactions, because the problems of execution and the required
skills and effort vary greatly among transactions.
In valuing research services, the investment adviser makes a judgment of
the usefulness of research and other information provided by a broker to the
investment adviser in managing the Fund's investment portfolio. The information,
e.g., data or recommendations concerning particular securities, relates to the
specific transaction placed with the broker. The extent, if any, to which the
obtaining of such information may reduce the expenses of the adviser in
providing management services to the Fund is not determinable. In addition, it
is understood by the Board of Directors that other clients of the investment
adviser might also benefit from the information obtained for the Fund, in the
same manner that the Fund might also benefit from information obtained by the
investment adviser in performing services to others.
The reasonableness of brokerage commissions paid by the Fund in relation to
transaction and research services received is evaluated by the staff of the
investment adviser on an ongoing basis. The general level of brokerage charges
and other aspects of the Fund's portfolio transactions are reviewed periodically
by the Board of Directors.
Transactions of the Fund in the over-the-counter market are executed with
primary market makers acting as principal except where it is believed that
better prices and execution may be obtained otherwise.
Subject to the overriding objective of seeking the best value in
transaction and research services for the Fund, the adviser may select those
brokers and dealers who have made recommendations resulting in sales of Fund
shares.
Although investment decisions for the Fund are made independently from
those for other investment advisory clients of L. Roy Papp & Associates, it may
develop that the same investment decision is made for both the Fund and one or
more other advisory clients. If both the Fund and other clients purchase or
sell the same class of securities on the same day, the transactions will be
allocated as to amount and price in a manner considered equitable to each.
Custodian
- ---------
Founders Bank of Arizona, 7335 E. Doubletree Ranch Road, Scottsdale, AZ
85258, is the custodian for the Fund. It is responsible for holding all
securities and cash of the Fund, receiving and paying for securities purchased,
delivering against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Fund, and performing
other administrative duties, all as directed by authorized persons of the Fund.
The custodian does not exercise any supervisory function in such matters as
purchase and sale of portfolio securities, payment of dividends, or payment of
expenses of the Fund. The Fund has authorized the custodian to deposit certain
portfolio securities in central depository systems as permitted under federal
law. The Fund may invest in obligations of the custodian and may purchase or
sell securities from or to the custodian.
B-6
<PAGE>
Transfer Agent
- --------------
L. Roy Papp & Associates, the investment adviser to the Fund, also acts as
transfer, dividend disbursing, and shareholder servicing agent for the Fund
pursuant to a written agreement with the Fund. Under the agreement, L. Roy Papp
& Associates is responsible for administering and performing transfer agent
functions, for acting as service agent in connection with dividend and
distribution functions, for performing shareholder account administration agent
functions in connection with the issuance, transfer and redemption of the Fund's
shares, and maintaining necessary records in accordance with applicable laws,
rules and regulations.
For its services L. Roy Papp & Associates receives from the Fund a monthly
fee of $.75 for each shareholder account of the Fund, $.50 for each dividend
paid on a shareholder account, and $1.00 for each purchase (other than by
reinvestment, transfer or redemption) of shares of the Fund. The Board of
Directors of the Fund has determined the charges by L. Roy Papp & Associates to
the Fund are comparable to the charges of others performing similar services. L.
Roy Papp & Associates has agreed to make no charges for the provision of these
services until January 1, 2001.
Independent Auditors
- --------------------
Arthur Andersen LLP, 501 North 44th Street, Suite 300, Phoenix, Arizona
85008, audits and reports on the Fund's annual financial statements, reviews
certain regulatory reports and the Fund's tax returns, and performs other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Fund.
Financial Statements
- --------------------
Immediately following is the audited Statement of Assets and Liabilities of
the Fund and notes thereon as of December 8, 1998. This statement shows the
Fund's initial capitalization and is accompanied by the report of Arthur
Andersen LLP, the Fund's independent accountants.
B-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Papp Small & Mid-Cap Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of PAPP
SMALL & MID-CAP GROWTH FUND, INC. (a Maryland corporation), as of December 8,
1998. The statement of assets and liabilities is the responsibility of Papp
Small & Mid-Cap Growth Fund, Inc. management. Our responsibility is to express
an opinion on the statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. Our procedures included confirmation of cash held by the custodian
as of December 8, 1998. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the assets and liabilities of Papp
Small & Mid-Cap Growth Fund, Inc. as of December 8, 1998, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen, LLP
Phoenix, Arizona,
December 8, 1998.
B-8
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
________________________
STATEMENT OF ASSETS AND LIABILITIES
December 8, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
CASH $100,000
--------
Total assets $100,000
========
LIABILITIES
Total liabilities $ -
========
NET ASSETS
NET ASSETS $100,000
--------
Shares outstanding 10,000
Net asset value, offering and redemption price per share $ 10.00
========
</TABLE>
B-9
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 8, 1998
(1) THE FUND:
Papp Small & Mid-Cap Growth Fund, Inc. was organized as a Maryland corporation
on September 15, 1998, and has been inactive since that date except for matters
relating to its organization, its registration as an open-end investment company
and the registration of its shares under the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended, and the sale of the
outstanding shares to a partner of L. Roy Papp & Associates, the Fund's
investment adviser. The Fund is authorized to issue 25,000,000 shares of capital
stock ($.01 par value). All costs to organize the Fund have been paid by L. Roy
Papp & Associates, the Fund's adviser, and will not be reimbursed by the Fund.
(2) RELATED PARTIES:
L. Roy Papp & Associates will act as investment adviser to and manage the
investment and reinvestment of the assets of the Fund. For these services, the
Fund has agreed to pay an annual management fee of 1.00% of its average daily
net assets as described in the Prospectus.
(3) TAXES:
The Fund intends to comply with the requirements of the Internal Revenue Code
necessary to qualify as a regulated investment company and make the requisite
distributions of income to its shareholders which will be sufficient to relieve
it from all or substantially all federal income taxes.
B-10
<PAGE>
Part C
------
Other Information
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
(1) Financial statements included in Part B (there are none in part A):
Independent auditor's report
Statement of assets and liabilities, December 8, 1998
(2) Financial Statements included in Part C.
None
(b) Exhibits
1. Articles of Incorporation*
2. Bylaws*
3. None
4. None
5. Investment Advisory Agreement*
6. None
7. None
8. Custodian Agreement*
9. Transfer Agency Agreement*
10. Opinion and consent of Bell, Boyd & Lloyd
10.1. Opinion and consent of Piper & Marbury L.L.P.
11. Consent of independent auditors
12. None
13. Initial Subscription Agreement*
14. None
15. None
16. None
17. Financial Data Schedule
18. None
19. New Account Purchase Application*
================================================================================
*Incorporated by reference to the exhibit of the same number filed with the
initial registration statement on Form N-1A No. 333-65609, filed October 13,
1998.
<PAGE>
Item 25. Persons Controlled By or Under Common Control with Registrant
-------------------------------------------------------------
The registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
registrant within the meaning of this item. The information in the prospectus
under the captions "Management of the Fund" and "Investment Advisory Agreement"
and in the Additional Information Statement under the captions "Directors and
Officers" and "Investment Adviser" is incorporated by reference.
Item 26. Number of Holders of Securities
-------------------------------
<TABLE>
<CAPTION>
Number of Record Holders
Title of Series as of December 10, 1998
--------------- ------------------------
<S> <C>
Papp Small & Mid-Cap Growth Fund, Inc.
Common Stock 1
</TABLE>
Item 27. Indemnification
---------------
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified
circumstances. Section 9.01 of Article IX of the bylaws of the registrant
(exhibit 2 to the registration statement, which is incorporated herein by
reference) provides in effect that the registrant shall provide certain
indemnification of its directors and officers. In accordance with section 17(h)
of the Investment Company Act, this provision of the bylaws shall not protect
any person against any liability to the registrant or its shareholders to which
he or she 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issuer.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The information in the prospectus under the captions "Management of the
Fund" and "Investment Advisory Agreement" is incorporated by reference. Neither
L. Roy Papp & Associates nor any of its partners has at any time during the past
two years been engaged in any other business, profession, vocation or employment
of a substantial nature either for its, his or her own account or in the
capacity of director, officer, employee, partner or trustee.
Item 29. Principal Underwriters
----------------------
None
Item 30. Location of Accounts and Records
--------------------------------
Rosellen C. Papp, Treasurer
Papp Small & Mid-Cap Growth Fund, Inc.
6225 North 24th Street, Suite 150
Phoenix, Arizona 85016
Item 31. Management Services
-------------------
None
<PAGE>
INDEX FOR EXHIBITS
FILED WITH THIS AMENDMENT
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------- -----------
<S> <C>
1. Articles of Incorporation*
2. Bylaws*
3. None
4. None
5. Investment Advisory Agreement*
6. None
7. None
8. Custodian Agreement*
9. Transfer Agency Agreement*
10. Opinion and consent of Bell, Boyd & Lloyd
10.1. Opinion and consent of Piper & Marbury L.L.P.
11. Consent of independent auditors
12. None
13. Initial Subscription Agreement*
14. None
15. None
16. None
17. Financial Data Schedule
18. None
19. New Account Purchase Application*
</TABLE>
================================================================================
*Incorporated by reference to the exhibit of the same number filed with the
initial registration statement on Form N-1A, No. 333-65609, on October 13,
1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Phoenix, Arizona on December 10, 1998.
Papp Small & Mid-Cap Growth Fund, Inc.
By: /s/ L. Roy Papp
---------------------------
L. Roy Papp, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ L. Roy Papp Director and Chairman )
- ----------------------------- (principal executive and )
L. Roy Papp financial officer) )
)
/s/ Harry A. Papp Director and President )
- ----------------------------- )
Harry A. Papp )
)
)
/s/ Robert L. Mueller Director, Vice President )
- ----------------------------- and Secretary )
Robert L. Mueller )
)
)
/s/ Bruce C. Williams Director and Vice President )
- ----------------------------- )
Bruce C. Williams ) December 10, 1998
)
/s/ Rosellen C. Papp Director, Vice President and )
- ----------------------------- Treasurer (principal accounting )
Rosellen C. Papp officer) )
)
/s/ James K. Ballinger Director )
- ----------------------------- )
James K. Ballinger )
)
/s/ Amy S. Clague Director )
- ----------------------------- )
Amy S. Clague )
)
/s/ Carolyn P. O'Malley Director )
- ----------------------------- )
Carolyn P. O'Malley )
</TABLE>
<PAGE>
EXHIBIT 10
BELL, BOYD & LLOYD
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
312 372 1121
Fax: 312 372 2098
December 10, 1998
Papp Small & Mid-Cap Growth Fund, Inc.
6225 North 24th Street, Suite 150
Phoenix, Arizona 85016
Ladies and Gentlemen:
We have acted as counsel for Papp Small & Mid-Cap Growth Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the registration under the
Securities Act of 1933 (the "Act") of an indefinite number of shares of its
capital stock, $0.01 par value per share (the "shares"), pursuant to the Fund's
registration statement, no. 333-65609 on Form N-1A (the "registration
statement"). In this connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate and other records, certificates and other papers as we deemed it
necessary to examine for the purpose of this opinion, including the articles of
incorporation and bylaws of the Fund, resolutions of the board of directors
authorizing the issuance of the shares, and the registration statement.
Based upon the foregoing examination, we are of the opinion that:
1. The Fund is a corporation duly organized and legally existing in good
standing under the laws of Maryland.
2. Upon the issuance and delivery of the shares in accordance with the
articles of incorporation of the Fund and the resolutions of the board
of directors authorizing the issuance of its shares and the receipt by
the Fund of a purchase price of not less than the net asset value or
the par value per share, the shares will be legally issued and
outstanding, fully paid and nonassessable.
In giving this opinion, we have relied upon the opinion of Piper & Marbury,
L.L.P. to us dated December 8, 1998, and have made no independent inquiry with
respect to any matter covered by such opinion. Further, we have assumed that
the number of shares issued by the Fund at any time will not exceed the total
number of shares authorized to be issued by the Fund's articles of
incorporation.
We consent to the filing of this opinion as an exhibit to the registration
statement. In giving this consent we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.
Very truly yours,
/s/ Bell, Boyd & Lloyd
<PAGE>
EXHIBIT 10.1
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET WASHINGTON
Baltimore, Maryland 21201-3018 NEW YORK
410-539-2530 PHILADELPHIA
FAX: 410-539-0489 EASTON
December 10, 1998
Papp Small & Mid-Cap Growth Fund, Inc.
4400 North 32nd Street, Suite #280
Phoenix, Arizona 85018
Registration Statement on Form N-1A
-----------------------------------
Gentlemen:
We have acted as special Maryland counsel to Papp Small & Mid-Cap Growth
Fund, Inc., a Maryland corporation (the "Fund"), in connection with the
registration by the Fund of an indefinite number of shares of its Common Stock,
par value $0.01 per share, up to 25,000,000 shares of Common Stock as authorized
by the Fund's Charter (the "Shares"), pursuant to a registration statement on
Form N-1A (the "Registration Statement"), under the Securities Act of 1933, as
amended (File No. 333-65609), and the Investment Company Act of 1940, as amended
(File No. 811-09055).
In this capacity, we have examined the Fund's Charter and By-Laws, the
Registration Statement, the proceedings of the Board of Directors of the Fund
authorizing the issuance of the Shares from time to time in accordance with the
Registration Statement, a Certificate of the Secretary of the Company dated the
date hereof, and such other statutes, certificates, instruments, and documents
relating to the Fund and matters of law as we have deemed necessary to the
issuance of this opinion. In such examination, we have assumed, without
independent investigation, the genuineness of all signatures, the legal capacity
of all individuals who have executed any of the aforesaid documents, the
authenticity of all documents submitted to us as originals, the conformity with
originals of all documents submitted to us as copies (and the authenticity of
the originals of such copies), no substantial change in the final documents of
documents submitted to us as drafts, and the completeness and accuracy of all
public records reviewed by us. As to factual matters, we have relied on the
Certificate of the Secretary and have not independently verified the matters
stated therein.
Based upon the foregoing, having regard for such legal considerations as we
deem relevant, and limited in all respects to applicable Maryland law, we are of
the opinion and advise you that:
1. The Fund has been duly incorporated and is validly existing as a
corporation under the laws of the State of Maryland.
2. The Shares to be issued by the Fund pursuant to the Registration
Statement have been duly authorized and, when issued as contemplated in the
Registration Statement, will be validly issued, fully paid and non-
assessable.
Messrs. Bell, Boyd & Lloyd are authorized to rely upon this opinion in
rendering any opinion to the Fund which is to be filed as an exhibit to the
Registration Statement. This opinion is limited to the matters set forth
herein, and no other opinion should be inferred beyond the matters expressly
stated.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Registration
Statement and the related Prospectus. In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
December 8, 1998.
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<PAGE>
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<NAME> PAPP SMALL & MID-CAP GROWTH FUND, INC.
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