<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1998
Securities Act Registration No. 33-31465
Investment Company Act file No. 811-05922
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
----------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-effective Amendment No. 9 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11 [X]
----------------------------
THE L. ROY PAPP STOCK FUND, INC.
(Registrant)
4400 North 32nd Street
Suite #280
Phoenix, Arizona 85018
Telephone number: 602/956-1115
----------------------------
Robert L. Mueller Janet D. Olsen
L. Roy Papp & Associates Bell, Boyd & Lloyd
4400 North 32nd Street, #280 70 West Madison Street
Phoenix, Arizona 85018 Suite #3300
Chicago, Illinois 60602
(Agents for service)
Amending the Prospectus, Statement of Additional Information and Part C, and
filing exhibits.
It is proposed that this filing will become effective:
immediately upon filing pursuant to rule 485(b)
- -------
X on April 30, 1998 pursuant to rule 485(b)
- -------
60 days after filing pursuant to rule 485(a)(1)
- -------
on pursuant to rule 485(a)(1)
- ------- ----------------
75 days after filing pursuant to rule 485(a)(2)
- -------
on pursuant to rule 485(a)(2)
- ------- ----------------
----------------------------------------------------------------------
<PAGE>
The L. Roy Papp Stock Fund Inc.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Part A (Prospectus)
<TABLE>
<CAPTION>
Item Location or Caption*
- ---- -------------------
<S> <C>
1(a) & (b) Front Cover
2(a) Fund Expenses
(b) & (c) Not Applicable
3(a) Financial Highlights
(b) Not Applicable
(c) Other Information
4(a)(i) Other Information
(ii) Investment Objective; Investment Methods
and Risks
(b) Investment Restrictions
(c) Investment Methods and Risks
5(a) Management of the Fund
(b) Management of the Fund
Investment Advisory Agreement
(c) Investment Advisory Agreement
(d) Not Applicable
(e) Final Page
(f) Fund Expenses; Investment Advisory Agreement
(g) Not Applicable
5A The information required is included in
registrant's most recent Annual Report to
Shareholders
6(a) Other Information
(b) - (d) Not Applicable
(e) Other Information
(f) Distributions
(g) Federal Income Tax
7 Purchasing Shares
(a) Not Applicable
(b) Determination of Net Asset Value
Purchasing Shares
(c) Not Applicable
(d) Front Cover
(e) & (f) Not Applicable
8(a) Redeeming Shares
(b) Purchasing Shares
(c) & (d) Redeeming Shares
9 Not Applicable
</TABLE>
<PAGE>
Part B (Additional Information Statement)
<TABLE>
<CAPTION>
Item Location or Caption*
- ---- -------------------
<S> <C>
10(a) & (b) Front Cover
11 Front Cover
12 Not Applicable
13(a) - (c) Investment Policies and Restrictions
Investment Methods and Risks (in the prospectus)
(d) Portfolio Transactions
14(a) & (b) Directors and Officers
Management of the Fund (in the prospectus)
(c) Not Applicable
15(a) Not Applicable
(b) & (c) Certain Shareholders
16(a)(i)(ii) Management of the Fund (in the prospectus)
Investment Advisory Agreement (in the
prospectus)
(a) (iii), (b) Investment Adviser; Investment Advisory
Agreement (in the prospectus)
(c) - (g) Not Applicable
(h) Final page of prospectus
(i) Transfer Agent
17(a) Portfolio Transactions
(b) Not Applicable
(c) & (d) Portfolio Transactions
(e) Not Applicable
18(a) & (b) Not Applicable
19(a) Purchasing and Redeeming Shares
(b) Purchasing and Redeeming Shares; Additional
Information (financial statements)
(c) Purchasing and Redeeming Shares
20 Additional Tax Information
21 Not Applicable
22(a) Not Applicable
(b) (i) Performance Information
(ii) & (iii) Not Applicable
(iv) Performance Information
23 Additional Information
</TABLE>
- -----------
* References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
<PAGE>
[GRAPHIC--L. ROY PAPP]
Prospectus
April 30, 1998
THE L. ROY PAPP STOCK FUND, INC.
Telephone
(602)956-1115
(800)421-4004
Email: [email protected]
------------------
Internet: http://www.roypapp.com
Investment Objective: Long-Term Capital Growth
- Minimum Investment -
<TABLE>
<CAPTION>
<S> <C>
Initial Purchase $ 5,000
Subsequent Purchases and
Individual Retirement Accounts (IRAs) $ 1,000
</TABLE>
No sales or redemption charges
(A pure no-load fund)
This prospectus sets forth concisely information a prospective investor should
know before investing in The L. Roy Papp Stock 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 telephoning the Fund at its telephone number shown above. The
Statement of Additional Information and other information filed electronically
may also be obtained from the Commission's 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>
<S> <C>
Fund Expenses 3
Selected Financial Highlights 4
Investment Objective 5
Investment Methods and Risks 5
Investment Restrictions 5
Purchasing Shares 6
Redeeming Shares 7
Determination of Net Asset Value 8
Management of the Fund 8
Investment Advisory Agreement 9
Distributions 10
Federal Income Tax 10
Other Information 11
</TABLE>
<PAGE>
Fund Expenses
The following table illustrates all expenses and fees that a shareholder of the
Fund will bear, directly or indirectly.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Sales Load Imposed on Purchases.................................. None
Sales Load Imposed on Reinvested Dividends....................... None
Deferred Sales Load.............................................. None
Redemption Fees.................................................. None
Exchange Fees.................................................... None
1997 Annual Fund Operating Expenses
(as percentages of average daily net assets)
Management Fee...................................................1.00%
12b-1 Fees....................................................... None
Other Expenses...................................................0.16%
Total Fund Operating Expenses....................................1.16%
</TABLE>
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 above operating
expense percentage, (3) reinvestment of all distributions to shareholders, and
(4) redemption at the end of each period.
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
<S> <C> <C> <C>
$12 $37 $63 $140
</TABLE>
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
3
<PAGE>
SELECTED FINANCIAL HIGHLIGHTS:
Per share income and capital changes (for a share outstanding throughout the
period).
The following information has been audited by Arthur Andersen LLP., independent
auditors, for the years ended December 31, 1997, 1996, 1995, 1994, and 1993, and
by other auditors for prior periods, whose reports thereon are unqualified. The
audited financial statements of the Fund and the auditor's report thereon are
contained in the Fund's 1997 Annual Report, which may be obtained from the Fund
upon request at no cost. The Annual Report also includes information about the
Fund's investment performance.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 22.70 $ 19.29 $ 14.63 $ 14.98 $ 14.96
Income from operations:
Net investment income --- .01 .07 .13 .13
Net realized and
unrealized gain (loss)
on investments 7.51 4.16 4.73 (.35) .11
----------- ----------- ----------- ----------- -----------
Total from operations 7.51 4.17 4.80 (.22) .24
Less distributions:
Dividend from net
investment income --- (.01) (.07) (.13) (.13)
Distribution of net
realized gain (.43) (.75) (.07) --- (.09)
----------- ----------- ----------- ----------- -----------
Total distributions (.43) (.76) (.14) (.13) (.22)
Net asset value,
end of period $ 29.78 $ 22.70 $ 19.29 $ 14.63 $ 14.98
=========== =========== =========== =========== ===========
Total return 33.12% 21.77% 32.93% (1.46)% 1.65%
=========== =========== =========== =========== ===========
Ratios/Supplemental Data:
Net assets, end of period $79,820,068 $53,277,087 $44,508,543 $36,577,759 $39,522,420
Expenses to average
net assets (B) 1.12% 1.16% 1.17% 1.19% 1.25%
Net investment income
to average net assets (C) 1.00% 1.19% 1.60% 2.08% 2.22%
Portfolio turnover rate 6.19% 14.47% 22.39% 20.00% 15.00%
Average commission per
share(D) $ 0.0247 $ 0.0442
Year Ended December 31, Period Ended
------------------------------------------ December 31,
1992 1991 1990 1989 (A)
------------ ----------- ---------- -------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 13.45 $ 10.42 $ 10.38 $ 10.00
Income from operations:
Net investment income .13 .15 .16 .02
Net realized and
unrealized gain (loss)
on investments 1.68 3.46 .09 .38
------------ ----------- ---------- -------------
Total from operations 1.81 3.61 .25 .40
Less distributions:
Dividend from net
investment income (.13) (.15) (.16) (.02)
Distribution of net
realized gain (.17) (.43) (.05) ---
------------ ----------- ---------- -------------
Total distributions (.30) (.58) (.21) (.02)
Net asset value,
end of period $ 14.96 $ 13.45 $ 10.42 $ 10.38
============ =========== ========== =============
Total return 13.54% 33.79% 2.60% 3.99%
============ =========== ========== =============
Ratios/Supplemental Data:
Net assets, end of period $22,,874,733 $13,367,176 $6,104,345 $ 1,322,532
Expenses to average
net assets (B) 1.25% 1.25% 1.25% 1.25%*
Net investment income
to average net assets (C) 2.28% 2.46% 2.82% 2.23%*
Portfolio turnover rate 11.00% 4.00% 28.00% 0.00%
Average commission per share(D)
</TABLE>
* Annualized
(A) From the date of commencement of operations (November 29, 1989).
(B) If the Fund had paid all of its expenses and there had been no
reimbursement by the investment adviser, this ratio would have been 1.25%,
1.26%, 1.35%, 1.92% and 1.80% for the years ended December 31, 1993, 1992,
1991, 1990 and the period ended December 31, 1989, respectively.
(C) Computed giving effect to investment adviser's expense limitation
undertaking.
(D) This disclosure was not required for years prior to 1996.
<PAGE>
Investment Objective
The Fund invests with the objective of long-term capital growth. The Fund's
investment objective is a fundamental policy that may not be changed without
shareholder approval. The investment objective is pursued as described
immediately below.
Investment Methods and Risks
The Fund invests in common stocks. It may also invest in securities
convertible into common stocks to the extent of not more than 5% of net assets
(valued at time of investment). It seeks 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, long-term dividend growth, 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, which does not fully reflect the superiority of a particular
company. The Fund is not designed for investors seeking income rather than
capital appreciation. Investments will not be limited by ratings or other
external criteria of quality, and investments may vary in quality measured by
such criteria, and may include speculative securities. Portfolio securities
include only issues traded in the United States on stock exchanges or in the
Nasdaq National Market. 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, it is expected that the Fund's
annual portfolio turnover rate will be less than that of most mutual funds that
invest primarily in common stocks.
Under normal circumstances, substantially all of the Fund's assets will be
invested in common stocks and, to the extent of not more than 5% of net assets
(valued at time of investment), in securities convertible into common stocks.
However, the Fund may invest up to 100% of its assets in United States
government securities, or hold cash or cash equivalents, if a temporary
defensive position is considered by the investment adviser to be advisable. To
that extent, the Fund would not be invested for the purpose of achieving its
investment objective.
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);
5
<PAGE>
4. Invest more than 5% of its assets (valued at time of investment) in
securities that are not readily marketable.
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 of 1940. All of the Fund's investment restrictions are set forth in
the Additional Information Statement.
Purchasing Shares (see application accompanying 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) and minimum subsequent investments are
$1,000, excluding reinvestments of dividends and capital gains distributions.
To purchase shares, complete and sign the Share Purchase Application and
mail it, together with a check for the total purchase price, to The L. Roy Papp
Stock Fund, Inc., P.O. 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. Share balances for full and fractional shares
are carried in book entry form.
Shares may be purchased or redeemed directly through the Fund or through an
investment dealer, bank 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 other than those
described in the prospectus.
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.
6
<PAGE>
Redeeming Shares
The Fund will redeem all or any part of shares owned upon written request
delivered to the Fund at P.O. 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;
(2) be signed by all owners exactly as their names appear on the account;
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.
7
<PAGE>
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.
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
regular session 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 market 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
Partner, L. Roy Papp & Associates (investment manager).
Harry A. Papp, CFA, President and director. Age 43
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. Director of the Phoenix Art Museum.
Amy S. Clague, director. Age 65. Partner, Boyd and Clague (bookkeeping
services for small companies).
8
<PAGE>
Each of the following is an "interested person" of the Fund (as defined in
the Investment Company Act of 1940): 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; Bruce C.
Williams as a partner of the investment adviser and an officer of the Fund;
Robert L. Mueller as a partner of the investment adviser and as an officer of
the Fund. All but Mrs. Clague and Mr. Ballinger are also personnel of the
investment adviser.
L. Roy Papp, Harry A. Papp and Robert L. Mueller are 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 $800 for each
meeting of the Board of Directors attended.
The following are Vice Presidents of the Fund: George D. Clark, Jr.,
Jeffrey N. Edwards, Victoria S. Cavallero, and Robert L. Hawley. 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 April, 1987. Mr. Edwards
has been a partner or associate of L. Roy Papp & Associates since August, 1987.
Ms. Cavallero has been a partner or associate of L. Roy Papp & Associates since
September, 1987. Mr. Hawley has been a partner or associate of L. Roy Papp &
Associates since June, 1993. Ms. Hein has been a partner or associate of L. Roy
Papp & Associates since 1989.
Investment Advisory Agreement
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 $1.1 billion. The firm also acts as investment adviser to Papp
America-Abroad Fund, Inc. which commenced operations in 1991 and whose assets
approximate $370 million, Papp America-Pacific Rim Fund, Inc. which commenced
operations in 1997 and whose assets approximate $15 million, and Papp Focus
Fund, Inc. which commenced operations in 1998 and whose assets approximate $1.5
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
9
<PAGE>
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
registration of the Fund under the Investment Company Act of 1940 and
registration of its shares under the Securities Act of 1933; and qualifying and
maintaining qualification of its shares under 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 and capital gain distributions, if any, 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 continue to qualify 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 will be taxable, whether received in cash
or reinvested in shares of the Fund.
Each shareholder will be advised annually as to the source of distributions
for tax purposes. A shareholder who is not subject to 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 Share Purchase Application which should be completed and
returned to the Fund when the initial investment is made.
10
<PAGE>
Other Information
The Fund was incorporated in Maryland on September 15, 1989, and commenced
operations as an open-end diversified management investment company on November
29, 1989. 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.
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 the investment adviser has
reimbursed expenses pursuant to its expense limitation obligation 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 laws 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. 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 shareholder communication.
Inquiries regarding the Fund should be directed to the Fund at its
telephone number shown on the front cover.
11
<PAGE>
The L. Roy Papp Stock Fund, Inc.
Investment Adviser
L. Roy Papp & Associates
4400 N. 32nd Street
Suite 280
Phoenix, Arizona 85018
Telephone: (602) 956-0980
Custodian
Founders Bank of Arizona
7335 E. Doubletree Ranch Road
Scottsdale, AZ 85258
Transfer and Dividend Disbursing Agent
L. Roy Papp & Associates
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
12
<PAGE>
[ART MAN SITTING]
THE L. ROY PAPP STOCK FUND, INC.
Statement of Additional Information
April 30, 1998
4400 North 32nd Street - Suite #280
Phoenix, Arizona 85018
Phone (602) 956-1115
(800) 421-4004
Email: [email protected]
Internet: http://www.roypapp.com
________________________________
Table of Contents
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............................................................. 6
Certain Shareholders....................................................... 7
-----------------------------------------
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
April 30, 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.
The 1997 annual report of the Fund, a copy of which accompanies this
Additional Information Statement, contains financial statements, notes thereto,
and reports of independent auditors, all of which (but no other part of the
annual report) are incorporated herein by reference.
1
<PAGE>
Investment Policies and Restrictions
The Fund invests with the objective of long-term capital growth. Although
income is considered in the selection of securities, the Fund is not designed
for investors seeking income rather than capital appreciation. Additional
information concerning the investment policies of the Fund is contained in the
prospectus under the captions "Investment Objective" and "Investment Methods and
Risks", which is incorporated herein by reference.
In pursuing its investment objective, 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;
5. Invest more than 25% of its assets (valued at time of investment)
in securities of companies in any one industry;
6. Invest in repurchase agreements or reverse repurchase agreements;
7. 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];
8. Purchase or retain securities of a company if all of the directors
and officers of the Fund and of its investment adviser who
individually own beneficially more than 1/2% of the securities of the
company collectively own beneficially more than 5% of such securities;
9. 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);
2
<PAGE>
10. Pledge, mortgage or hypothecate its assets, except for temporary
or emergency purposes and then to an extent not greater than 15% of
its assets at cost;
11. 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;
12. Purchase or sell real estate or interests in real estate,
although it may invest in marketable securities of enterprises that
invest in real estate or interests in real estate;
13. Purchase or sell commodities, commodity contracts or options;
14. Make margin purchases or short sales of securities;
15. Invest in companies for the purpose of management or the exercise
of control;
16. Make loans (but this restriction shall not prevent the Fund from
investing in debt securities, subject to the 5% limitation stated in
restriction 4 above);
17. Invest in or write puts, calls, straddles or spreads;
18. Invest in oil, gas or other mineral exploration or development
programs, although it may invest in marketable securities of
enterprises engaged in oil, gas or mineral exploration;
19. Invest more than 5% of its net assets (valued at time of
investment) in warrants, nor more than 2% of its net assets in
warrants that are not listed on the New York or American Stock
Exchanges.
All 19 restrictions 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.
Investment Adviser
Information about the Fund's investment adviser, L. Roy Papp & Associates,
is set forth in the prospectus under "Management of the Fund" and "Investment
Advisory Agreement", and is incorporated herein by reference. During the fiscal
periods ended December 31, 1997, 1996, and 1995 the Fund paid management fees of
$690,660, $486,360 and $404,846, respectively.
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 and Amy S. Clague, 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 paid by the Fund to Mr. Ballinger and Mrs. Clague during the fiscal
year ended December 31, 1997. The Fund has no pension or retirement plan.
<TABLE>
<CAPTION>
Total Compensation from Fund,
Aggregate Papp America-Abroad Fund, and Papp
Compensation America-Pacific Rim Fund Paid
Name of Director From the Fund to Directors
- ---------------- ------------- ----------------------------------
<S> <C> <C>
James K. Ballinger $3,200.00 $6,150.00
Amy S. Clague $3,200.00 $6,150.00
</TABLE>
The address of Messrs. L. Roy Papp, Harry A. Papp, Robert L. Mueller, and
Bruce C. Williams, and Ms. Rosellen C. Papp is 4400 North 32nd Street-Suite
#280, Phoenix, Arizona 85018; the address of Mr. Ballinger is 1625 North Central
Avenue, Phoenix, Arizona 85004; and the address of Mrs. Clague is 326 East Kaler
Drive, Phoenix, Arizona 85020.
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
Applying the above method of computation to the operations of the Fund for the
one year and five years ended December 31, 1997 and from November 29, 1989 (the
commencement of the Fund's operations) through December 31, 1997, the Average
Annual Total Return would be 33.1%, 16.6% and 16.7%, respectively. Total Return
for the same periods was 33.1%, 115.9% and 250.0%, respectively.
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.
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 or rating determined by Lipper Analytical Services, Inc., Morningstar,
Inc., or 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 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
See "Management of the Fund" in the prospectus. The Fund expects that its
annual portfolio turnover rate will not exceed 25% under normal conditions, a
turnover rate less than that of most mutual funds that invest primarily in
common stocks. 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. Portfolio
turnover for the year ended December 31, 1997 was 6.2%.
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
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
5
<PAGE>
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.
During the year ended December 31, 1997, brokerage commissions paid by the
Fund totaled $5,842 on portfolio transactions aggregating $16,846,408. All
commissions were paid to discount brokers.
Custodian
Founders Bank of Arizona, 7335 E. Doubletree Road, Scottsdale, Arizona
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.
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.
6
<PAGE>
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.
Certain Shareholders
At April 1, 1998, the only person known by the Fund to own of record in
excess of 5% of the outstanding shares of capital stock of the Fund, as nominee
for its clients and without power to vote or dispose of the shares, was Charles
Schwab & Co., Inc. which owned 417,603 shares, or 15.4% of the outstanding
shares. On that date 109,765 shares, 3.9% of the outstanding shares, were owned
by directors and officers of the Fund as a group.
7
<PAGE>
Part C
Other Information
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial statements included in Part B of this amendment
(incorporated by reference to 1997 annual report of registrant).
Schedule of portfolio investments - December 31, 1997
Report of independent auditors
Statements of assets and liabilities - December 31, 1997 and 1996
Statements of operations - years ended December 31, 1997 and 1996
Statements of changes in net assets - years ended December 31, 1997
and 1996
Notes to financial statements
(2) Financial statements included in Part C of this amendment:
None
Note: The following schedules have been omitted for the following reasons:
Schedule I - The required information is presented in the statement of
investments at December 31, 1997.
Schedules II, IV, and V - The required information is not present.
(b) Exhibits
1. Articles of Incorporation*
2. Bylaws*
3. None
C-1
<PAGE>
4. Form of stock certificate*
5. Investment Advisory Agreement*
6. None
7. None
8. Custodian Agreement*
9. Transfer Agency Agreement with L. Roy Papp & Associates
dated November 7, 1989*
10.1 Opinion of Bell, Boyd & Lloyd*
10.2 Consent of Bell, Boyd & Lloyd
11. Consent of independent auditors dated April 27, 1998
12. None
13. Initial Subscription Agreement*
13.1 New Account Purchase Application
14. None
15. None
16. Schedule of Computation of Performance Quotations
17. Financial Data Schedule
18. Not Applicable
* Incorporated by reference to Amendment No. 9 to Registration Statement,
effective April 30, 1996.
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
Number of Record Holders
Title of Class At April 1, 1998
-------------- ------------------------
Capital Stock $.01 par value 1,302
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 17(h) of the Investment Company Act provides that neither the
articles of incorporation of the registrant, nor any other instrument pursuant
to which the registrant is organized or administered, shall contain any
provision that protects or purports to protect any director or officer of the
registrant against any liability to the registrant or its security holders to
which he 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 office.
C-2
<PAGE>
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.
In the absence of a final decision on the merits by a court or other body
before which a proceeding was brought that a person to be indemnified
(indemnitee) was not liable by reason of his willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office, the registrant will not indemnify any person unless a determination
that the indemnitee was not so liable shall have been made on behalf of the
registrant by (a) vote of a majority of directors who are neither "interested
persons" of the registrant as defined in section 2(a)(19) of the Act nor parties
to the proceeding (disinterested, non-party directors), or (b) an independent
legal counsel in a written opinion. The registrant will not advance attorneys'
fees or other expenses incurred by an indemnitee in connection with a proceeding
unless the registrant receives an undertaking by or on behalf of the indemnitee
to repay the advance (unless it is ultimately determined that he is entitled to
indemnification) and (a) the indemnitee shall provide a security for his
undertaking, or (b) a majority of the disinterested, non-party directors of the
registrant, or an independent legal counsel in a written option, shall
determine, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
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 issue.
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
C-3
<PAGE>
Item 30. Location of Accounts and Records
Rosellen C. Papp, Treasurer
The L. Roy Papp Stock Fund, Inc.
4400 North 32nd Street, Suite 280
Phoenix, AZ 85018
Item 31. Management Services
None
Item 32. Undertakings
a) Not applicable
b) Not applicable
c) Registrant undertakes to deliver to each person to whom a
prospectus is delivered, upon request and without charge, a copy
of Registrant's Annual Report to Shareholders.
The registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director or directors when requested
to do so by the record holders of at least 10% of the registrant's outstanding
common shares, and in connection with such meeting to comply with provisions of
section 16(c) of the Investment Company Act of 1940.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amendment
to the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Phoenix, and the State of Arizona on
April 27, 1998.
The L. Roy Papp Stock 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 ) April 27, 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 )
</TABLE>
<PAGE>
INDEX FOR EXHIBITS
FILED WITH THIS AMENDMENT
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.2 Consent of Bell, Boyd & Lloyd
11. Consent of independent auditors dated April 27, 1998
13.1 New Account Purchase Application
16. Schedule of Computation of Performance Quotations
17. Financial Data Schedule
<PAGE>
Exhibit 10.2
BELL, BOYD & LLOYD
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207
312 372 1121
Fax: 312 372 2098
As counsel for The L. Roy Papp Stock Fund, Inc. (the "Fund"), we consent to
the incorporation by reference of our opinion dated November 10, 1989 as an
exhibit to post-effective amendment no. 7 to the registration statement of the
Fund, no. 33-31465 on Form N-1A. 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.
April 28, 1998
/s/ Bell, Boyd & Lloyd
<PAGE>
Exhibit 11
Arthur Andersen LLP
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,
April 27, 1998.
<PAGE>
Exhibit 13.1
[LOGO]
THE L. ROY PAPP STOCK FUND, INC.
Post Office Box 15508
NEW ACCOUNT PURCHASE APPLICATION Phoenix, Arizona 85060
(602) 956-1115
(800) 421-4004
Dated: ____________________
Make checks payable to, and mail to: The L. Roy Papp Stock Fund, Inc., P.O. Box
15508, Phoenix, AZ 85060
................................................................................
1 AMOUNT OF PURCHASE: $____________ ($5,000 minimum for new account, except for
Individual Retirement Accounts (IRAs) where the minimum is $1,000)
................................................................................
2 REGISTRATION: (check one)
[ ] Individual or
Joint Account: ______________________ _________________________________
(Individual) (Joint Tenant, if any)
[ ] Transfer (or Gift) to Minor: _______________, Custodian for ________________
(Custodian) (Minor)
Under the Uniform Transfers (or Gifts) to Minors Act of ____________________
(State of residence)
[ ] IRA: ____________________________ Custodian for ____________________________
(Custodian) (Individual)
IRA IRA Rollover (circle one)
[ ] Other: (Corporations, Trusts, or others): __________________________________
(Trustee(s) - please include agreement date,
--------------------------------------------------
corporation, partnership or other entity)
-----------------------------------------
................................................................................
3 ADDRESS OF RECORD: __________________________________________________________
City ________________ State ________ Zip ________ Telephone ( )______________
4 CITIZENSHIP: [ ] United States [ ] Other (specify)
................................................................................
5 SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER: _______________________________
Page 1 of 2
(Please complete both sides of this application)
<PAGE>
NEW ACCOUNT PURCHASE APPLICATION
6 DISTRIBUTIONS - Dividends and capital gain distributions will be reinvested
automatically in additional shares (whole and fractional) unless the Fund is
otherwise instructed in writing. If you wish all or a portion of
distributions to be paid in cash, please so indicate.
[ ] Pay income dividends [ ] Pay any capital gains
in cash distributions in cash
...............................................................................
7 AGREEMENT - By signing this Application, I certify that I have received and
read the prospectus and agree to its terms and that all information provided
in the Application is correct.
...............................................................................
8 TAX CERTIFICATIONS - Under penalties of perjury, I certify that:
1. the number shown on this Application is my correct Social Security or other
tax identification number (or I am waiting for a number to be issued to me),
and
2. I am not subject to backup withholding, either because the IRS has not
notified me that I am subject to backup withholding for failure to report
dividend or interest income, or because the IRS has notified me that I am no
longer subject to backup withholding.
The IRS does not require your consent to any provision of this document other
than the certifications required to avoid backup withholding (under the heading
"Tax Certifications").
...............................................................................
SIGNATURE:
__________________________________ _____________________________________
(signature of shareholder) (signature of joint investor, if any)
...............................................................................
Each transaction in your account will be confirmed in writing. The Fund does not
issue stock certificates. All full and fractional shares are held in book entry
form.
Page 2 of 2
(Please complete both sides of this application)
<PAGE>
Exhibit 16
Schedule of Computation
of Perfomance Quotations
The L. Roy Papp Stock Fund, Inc.
Total Return Calculation
As of December 31, 1997
<TABLE>
<CAPTION>
Net Asset Net Asset Annualized
Value Per Value Per Redemption Average
Beginning Share at Shares Share at Value Total Total
of Principal Beginning Shares at End End of End of Total Return Return
Period Invested of Period Acquired of Period Period Period Return % Years %
- --------- --------- --------- -------- --------- --------- ---------- ------- ------ ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/1/97 $1,000.00 $22.70 44.053 44.700 $29.78 $1,331.17 331.17 33.1% 1 33.1%
- ----------------------------------------------------------------------------------------------------------------------------------
1/1/93 $1,000.00 $14.96 66.845 72.517 $29.78 $2,159.56 1159.56 115.9% 5 16.6%
- ----------------------------------------------------------------------------------------------------------------------------------
11/29/89 $1,000.00 $10.00 100.00 117.552 $29.78 $3,500.70 2500.70 250.0% 8.093 16.7%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 39,547,255
<INVESTMENTS-AT-VALUE> 79,109,038
<RECEIVABLES> 100,562
<ASSETS-OTHER> 610,468
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 79,820,068
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,258,285
<SHARES-COMMON-STOCK> 2,680,437
<SHARES-COMMON-PRIOR> 2,346,779
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,561,783
<NET-ASSETS> 79,820,068
<DIVIDEND-INCOME> 644,793
<INTEREST-INCOME> 38,555
<OTHER-INCOME> 0
<EXPENSES-NET> 772,989
<NET-INVESTMENT-INCOME> (89,641)
<REALIZED-GAINS-CURRENT> 1,139,336
<APPREC-INCREASE-CURRENT> 17,054,879
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,139,336
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 816,722
<NUMBER-OF-SHARES-REDEEMED> 517,899
<SHARES-REINVESTED> 34,835
<NET-CHANGE-IN-ASSETS> 18,104,574
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 690,660
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 772,989
<AVERAGE-NET-ASSETS> 67,760
<PER-SHARE-NAV-BEGIN> 22.70
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 7.51
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .43
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.78
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
