As filed with the Securities and Exchange Commission on [date]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8267
Kopp Funds, Inc.
(Exact name of registrant as specified in charter)
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
(Address of principal executive offices) (Zip code)
Kathleen S. Tillotson
Kopp Funds, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
(Name and address of agent for service)
(952) 841-0400
Registrant's telephone number, including area code
Date of fiscal year end: September 30, 2004
Date of reporting period: March 31, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
1
May 15, 2004
DEAR FELLOW SHAREHOLDERS:
One of the best-kept secrets in the world today is the recovery in the U.S.
economy and the earnings power of Corporate America. We believe there are two
primary reasons for this "minimization" of the economic recovery. First, the
current geopolitical environment and presidential campaign rhetoric are focusing
media attention to other areas. To the extent that the media has turned its
attention to the economy, the focus has been on employment, which has indeed
been the weak spot in the recovery. We believe there are signs of improvement
here, however. Because numerous new companies were formed near the last peak, we
believe hiring went overboard in 1999-2000. Millions of jobs were trimmed
subsequent to that artificial bubble, and we are just now starting to see signs
of pent-up demand. A recent Manpower survey indicated that 28% of employers plan
to add workers in the second quarter. This figure is double what it was a year
ago and the highest it has been since the first quarter of 2001. Importantly,
employment activity has broadened beyond the staffing companies, into
corporations and small businesses.
The second reason that we believe the recovery has remained a relative secret is
that corporate executives are tempering their public exuberance regarding near-
term results, having learned their lessons in the past about over-exuberance.
Larry Kudlow points out that, while after-tax corporate profits surged to almost
$962 billion in the fourth quarter -- an 87% rise from the third-quarter 2001
trough -- the S&P 500 has risen only 46% from its October 2002 lows. This
suggests to us that valuations are not at troublesome levels and that the market
has a way to go in catching up with rising earnings.
The market pundits are not talking much about the strong market drivers. We view
as significant, the fact that interest rates are at historically low levels,
even with a modest move up this year. There are still huge amounts of cash
hiding in money market funds and short-term investments. As corporate profits
continue to build momentum, we believe some of that cash will be reallocated to
equity investments. In addition, taxes on capital gains and dividends are now at
historically low levels of 15%. We believe this reduction in taxes should be a
powerful driver of the demand for equity investments.
Corrections in the market are a normal part of the process, but the markets of
the past few years have been exceptionally painful. Three of the six worst
quarters (as measured by the S&P 500) in the last 30 years were in the 2001-2002
period. Indeed, three of the worst four years in the last 30 years were 2000-
2001-2002. The NASDAQ's recovery went uninterrupted for nearly sixteen months
without a significant correction. It recovered 94% from October 9, 2002 to
January 26, 2004. We believe the long-term health of the market is enhanced by
the correction experienced from January 26, 2004 to March 23, 2004. Recent
financial highlights of the Kopp Emerging Growth Fund through March 31, 2004 are
presented on pages 8 and 9 of this report.
We are optimistic going forward. January tends to be a good predictor of the
full year. Since 1950, the performance of the S&P 500 in January has predicted
(with 92% accuracy) the direction of the market for the full calendar year. For
example, if January is up, the market has tended to be up for the year. This
barometer is based on the S&P 500. In January 2004, the S&P 500 Index was up
1.7%. Indeed, earnings for the first quarter have generally exceeded
expectations.
Bull markets last longer than bear markets. According to Bloomberg, Post-World
War II bull markets have generally started strong and averaged 4.5 years in
2
duration. The current bull market started in October 2002, and we believe has
much further to run.
Extended periods of gains generally follow extended periods of losses. According
to Ibbotson Associates, there have been only nine times since 1926 when the
five-calendar-year average annual return for the S&P 500 Index has fallen into
negative territory. The eighth and ninth times are represented by two very
recent five-year periods, 1998-2002 and 1999-2003. The five-calendar-year
periods following these negative periods have historically been profitable for
the market, producing average annual gains of 15%. Of course, past performance
does not guarantee future results, and small-cap investing carries more risk
than investing in larger, more well-established companies.
We believe a long-term, disciplined approach to investing still works. We have
been through a lot since the fall of 2000. Sticking to our management strategies
of long-term investing and staying fully invested was challenging, but we did
not drift from our style. Over the long term, we also will not drift from our
three key operating philosophies -- superior investment performance, quality
client service, and integrity.
Sincerely,
/s/ L.C. KOPP
LEE KOPP
President
3
TOP ten HOLDINGS
- ------------------------------------------------------
<Table>
1. EPICOR SOFTWARE CORPORATION (EPIC)
2. ENDOCARDIAL SOLUTIONS, INC. (ESCI)
3. VITESSE SEMICONDUCTOR CORPORATION (VTSS)
4. VENTANA MEDICAL SYSTEMS, INC. (VMSI)
5. HYPERION SOLUTIONS CORPORATION (HYSL)
6. ADC TELECOMMUNICATIONS, INC. (ADCT)
7. SYMYX TECHNOLOGIES, INC. (SMMX)
8. STRATEX NETWORKS, INC. (STXN)
9. LECROY CORPORATION (LCRY)
10. CONEXANT SYSTEMS, INC. (CNXT)
</Table>
TOP ten INDUSTRIES
- ------------------------------------------------------
(PIE CHART)
<Table>
<Caption>
SOFTWARE TELECOMMUNICATION THERAPEUTICS/SPECIALTY
SEMICONDUCTOR APPLICATIONS WIRELESS DIAGNOSTICS EQUIPMENT COMPOUNDS
------------- ------------ -------- ----------- ----------------- ----------------------
Top ten Industries 14.8% 11.0% 8.2% 7.6% 5.6% 5.2%
<Caption>
LASER-
BASED
COMPONENTS OTHER
& INFORMATION COMMON CASH &
CARDIOVASCULAR SUBSYSTEMS GENOMICS SECURITY STOCK EQUIVALENTS
-------------- ---------- -------- ----------- ------ -----------
Top ten Industries 4.4% 4.3% 4.2% 3.4% 30.0% 1.3%
</Table>
Percentages represent market value as a percentage of total investments on
3/31/04.
- --------------------------------------------------------------------------------
It should not be assumed that the Fund's stock selection or
investment philosophy will be profitable or will equal past
performance. Because of daily market fluctuations, current
Fund performance may also be different from the performance
described in this report. Small-cap stocks involve greater
risks and volatility than those of larger, more established
companies. Potential for profit entails possibility of loss.
The shareholder letter is for general information only and is
not intended to provide specific advice or stock
recommendations to any individual. It is also not a
solicitation for the purchase or sale of any security or
investment advisory service. The opinions in the letter are
those of Kopp Investment Advisors, are subject to change
without notice, and may not come to pass. Future investment
decisions and commentary may be made under different economic, market,
and industry conditions from those existing at the time the letter was written.
A stock market index is unmanaged and does not charge advisory
fees, transactions costs, or other expenses incurred by a
mutual fund. Any index will include a different degree of
investment in individual securities, industries, or sectors
from the Kopp Emerging Growth Fund. The mention of an index does not mean that
the index is an appropriate benchmark for the Fund. Although the data in the
letter has been obtained from sources believed reliable, Kopp Investment
Advisors cannot guarantee the accuracy of such information.
>This report is not authorized for distribution to prospective
investors in the Fund unless preceded or accompanied by a
prospectus. For more information on the Kopp Emerging Growth
Fund, including current performance and expenses, call
1-888-533-KOPP for a free prospectus. Read it carefully before you invest or
send money. The Fund should be used in a program of diversified investing and
not as a complete investment program.
4
(This page is intentionally left blank.)
5
KOPP EMERGING GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 2004 (Unaudited)
<Table>
- -------------------------------------------------------
ASSETS
Investments in securities, at value:
Investments in securities of
unaffiliated issuers
(cost $598,254,282) $ 497,273,516
Investments in securities of
affiliated issuers (cost
$101,003,709) 72,814,841
- -------------------------------------------------------
Total investments in securities (cost
$699,257,991) 570,088,357
Receivable for securities sold 670,034
Receivable from capital shares sold 1,238,051
Income receivable 3,713
Prepaid expenses 50,030
- -------------------------------------------------------
Total Assets 572,050,185
- -------------------------------------------------------
LIABILITIES
Payable for securities purchased 1,688,537
Payable for capital shares redeemed 935,228
Payable to investment advisor 496,679
Payable for service fees 302,180
Payable for distribution fees 148,287
Payable to affiliated distributor 35,698
Accrued other expenses 220,532
- -------------------------------------------------------
Total Liabilities 3,827,141
- -------------------------------------------------------
NET ASSETS $ 568,223,044
- -------------------------------------------------------
- -------------------------------------------------------
NET ASSETS CONSIST OF
Capital stock $ 562,130
Paid-in-capital in excess of par 742,826,496
Accumulated undistributed net
investment loss (4,800,335)
Accumulated net realized losses on
investments (41,195,613)
Unrealized net depreciation on
investments (129,169,634)
- -------------------------------------------------------
Total Net Assets $ 568,223,044
- -------------------------------------------------------
CLASS A
Net Assets $ 447,587,561
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 44,365,930
Net asset value per share (note 1) $ 10.09
- -------------------------------------------------------
Maximum offering price per share
(note 1) $ 10.46
- -------------------------------------------------------
CLASS I
Net Assets $ 86,294,275
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 8,328,299
Net asset value, offering price and
redemption price per share $ 10.36
- -------------------------------------------------------
CLASS C
Net Assets $ 34,341,208
Shares authorized ($0.01 par value) 3,000,000,000
Shares issued and outstanding 3,518,804
Net asset value and offering price
per share (note 1) $ 9.76
- -------------------------------------------------------
</Table>
See Notes to the Financial Statements.
6
KOPP EMERGING GROWTH FUND
STATEMENT OF OPERATIONS
For the six months ended March 31, 2004 (Unaudited)
<Table>
- -------------------------------------------------------
INVESTMENT INCOME
Dividends $ 14,569
- -------------------------------------------------------
Total investment income 14,569
- -------------------------------------------------------
EXPENSES
Investment advisory fee 3,010,981
Service fees -- Class A 596,947
Service fees -- Class C 44,586
12b-1 fees -- Class A 238,779
12b-1 fees -- Class C 133,759
Transfer agent fees and expenses 345,321
Fund administration fees 167,097
Custody fees 65,331
Fund accounting fees 59,475
Reports to shareholders 45,750
Professional fees 24,423
Federal and state registration fees 15,429
Directors' fees and expenses 15,006
Other expenses 52,020
- -------------------------------------------------------
Total expenses 4,814,904
- -------------------------------------------------------
NET INVESTMENT LOSS (4,800,335)
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN
Net realized loss on investment
transactions:
Net realized loss on investment
transactions of unaffiliated issuers (7,102,207)
Net realized gain on investment
transactions of affiliated issuers 27,387
Change in unrealized appreciation on
investments 67,676,532
- -------------------------------------------------------
Net gain on investments 60,601,712
- -------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $55,801,377
- -------------------------------------------------------
</Table>
See Notes to the Financial Statements.
7
KOPP EMERGING GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
Six Months Ended Year Ended
March 31, 2004 September 30,
(Unaudited) 2003
- ------------------------------------------------------------------------------------------------
OPERATIONS
Net investment loss $ (4,800,335) $ (6,420,785)
Net realized loss on investments (7,074,820) (20,850,604)
Change in unrealized appreciation (depreciation) on
investments 67,676,532 275,472,871
- ------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 55,801,377 248,201,482
- ------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Class A:
Proceeds from shares sold 48,174,601 95,433,954
Cost of shares redeemed (68,645,289) (91,089,573)
Class I:
Proceeds from shares sold 3,356,224 11,970,804
Cost of shares redeemed (1,760,428) (1,741,847)
Class C:
Proceeds from shares sold 7,524,541 7,626,720
Cost of shares redeemed (5,270,019) (2,820,110)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
share transactions (16,620,370) 19,379,948
- ------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 39,181,007 267,581,430
- ------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 529,042,037 261,460,607
- ------------------------------------------------------------------------------------------------
End of period $568,223,044 $529,042,037
- ------------------------------------------------------------------------------------------------
</Table>
See Notes to the Financial Statements.
8
KOPP EMERGING GROWTH FUND
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
Mar. 31, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
Class A Class A Class A Class A Class A
(Unaudited) Class A
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Net asset value, beginning of period $ 9.10 $ 4.69 $ 8.64 $ 30.78 $11.89 $ 5.81
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment loss (0.09)(3) (0.11)(3) (0.15)(3) (0.22)(3) (0.38)(2) (0.14)(3)
Net realized and unrealized gain
(loss) on investments 1.08 4.52 (3.80) (19.83) 19.27 6.22
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.99 4.41 (3.95) (20.05) 18.89 6.08
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net realized gain -- -- -- (2.09) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.09 $ 9.10 $ 4.69 $ 8.64 $30.78 $11.89
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA AND RATIOS
Net assets, end of period (000's) $447,588 $423,165 $217,177 $412,503 $1,201,524 $404,630
Ratio of expenses to average net
assets 1.61%(8) 1.72% 1.69% 1.60% 1.68%(9) 1.50%(4)
Ratio of net investment loss to
average net assets (1.61)%(8) (1.71)% (1.67)% (1.43)% (1.55)%(9) (1.44)%(6)
Portfolio turnover rate(10) 8.7%(12) 26.9% 17.4% 6.6% 21.9% 41.3%
Total return(11) 10.88%(12) 94.03% (45.72)% (69.58)% 158.87% 104.65%
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Commencement of operations for Class C.
(2) Net investment loss per share represents net investment loss divided by the
average shares outstanding throughout the year.
(3) Net investment loss per share is calculated using the ending balance of
undistributed net investment loss prior to consideration of adjustments for
permanent book and tax differences.
(4) Absent voluntary fee waivers for the year ended September 30, 1999, the
ratio of expenses to average net assets would have been 1.70% for Class A
and 1.35% for Class I.
(5) Absent voluntary fee waivers for the period February 19, 1999 through
September 30, 1999, the annualized ratio of expenses to average net assets
would have been 2.31% for Class C.
(6) Absent voluntary fee waivers for the year ended September 30, 1999, the
ratio of net investment loss to average net assets would have been (1.64)%
for Class A and (1.29)% for Class I.
9
<Table>
<Caption>
Six Months Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended Ended Year Ended
Mar. 31, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30, Mar. 31, Sept. 30,
2004 2003 2002 2001 2000 1999 2004 2003
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Class I Class I Class I Class I Class I Class I Class C Class C
(Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
$ 9.33 $ 4.79 $ 8.79 $ 31.17 $12.00 $ 5.84 $ 8.83 $ 4.58
- ---------------------------------------------------------------------------------------------------------------------
(0.07)(3) (0.08)(3) (0.12)(3) (0.18)(3) (0.30)(2) (0.09)(3) (0.11)(3) (0.14)(3)
1.10 4.62 (3.88) (20.11) 19.47 6.25 1.04 4.39
- ---------------------------------------------------------------------------------------------------------------------
1.03 4.54 (4.00) (20.29) 19.17 6.16 0.93 4.25
- ---------------------------------------------------------------------------------------------------------------------
-- -- -- (2.09) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
$10.36 $ 9.33 $ 4.79 $ 8.79 $31.17 $12.00 $ 9.76 $ 8.83
- ---------------------------------------------------------------------------------------------------------------------
$86,294 $76,501 $31,920 $58,767 $200,347 $64,653 $34,341 $29,376
1.26%(8) 1.37% 1.34% 1.25% 1.33%(9) 1.15%(4) 2.26%(8) 2.37%
(1.26)%(8) (1.36)% (1.32)% (1.08)% (1.20)%(9) (1.09)%(6) (2.26)%(8) (2.36)%
8.7%(12) 26.9% 17.4% 6.6% 21.9% 41.3% 8.7%(12) 26.9%
11.04%(12) 94.78% (45.51)% (69.47)% 159.75% 105.48% 10.53%(12) 92.80%
- ---------------------------------------------------------------------------------------------------------------------
<Caption>
Feb. 19,
1999(1)
Year Ended Year Ended Year Ended through
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2000 1999
- ---------- ---------- ---------- ---------
Class C Class C Class C Class C
- ------------------------------------------------------------
$ 8.49 $ 30.49 $11.85 $ 8.09
- ------------------------------------------------------------
(0.21)(3) (0.29)(3) (0.60)(2) (0.07)(3)
(3.70) (19.62) 19.24 3.83
- ------------------------------------------------------------
(3.91) (19.91) 18.64 3.76
- ------------------------------------------------------------
-- (2.09) -- --
- ------------------------------------------------------------
$ 4.58 $ 8.49 $30.49 $11.85
- ------------------------------------------------------------
$12,364 $21,705 $44,111 $1,891
2.34% 2.25% 2.33%(9) 2.15%(5)(8)
(2.32)% (2.08)% (2.20)%(9) (2.09)%(7)(8)
17.4% 6.6% 21.9% 41.3%
(46.05)% (69.79)% 157.30% 46.48%(12)
- ------------------------------------------------------------
</Table>
(7) Absent voluntary fee waivers for the period February 19, 1999 through
September 30, 1999, the annualized ratio of net investment loss to average
net assets would have been (2.25)% for Class C.
(8) Annualized.
(9) For the year ended September 30, 2000, the ratio includes Advisor
fee-waiver recovery (net) of 0.15% for Class A, Class I and Class C.
(10) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(11) Total return excludes sales charges.
(12) Not annualized.
See Notes to the Financial Statements.
10
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS
March 31, 2004 (Unaudited)
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
COMMON STOCK -- 99.0%
- ---------------------------------------------------------------
APPLICATION DEVELOPMENT TOOLS -- 0.9%
250,000 SERENA Software, Inc. $ 5,087,500
- ---------------------------------------------------------------
ARTHROSCOPY -- 1.4%
350,000 ArthroCare Corporation 8,088,500
- ---------------------------------------------------------------
CARDIOVASCULAR -- 4.4%
1,000,000 CardioDynamics International
Corporation 6,320,000
2,135,703 Endocardial Solutions, Inc.(#) 18,537,902
- ---------------------------------------------------------------
24,857,902
- ---------------------------------------------------------------
DATA STORAGE -- 1.3%
550,000 EMC Corporation 7,485,500
- ---------------------------------------------------------------
DATABASE & DATA WAREHOUSING -- 3.0%
406,491 Hyperion Solutions Corporation 16,849,052
- ---------------------------------------------------------------
DIAGNOSTICS -- 7.7%
200,000 Biosite Diagnostics, Inc. 6,394,000
600,000 Cepheid, Inc. 5,586,000
300,000 Gen-Probe Incorporated 10,023,000
595,000 Quidel Corporation 3,921,050
430,000 Ventana Medical Systems, Inc. 17,612,800
- ---------------------------------------------------------------
43,536,850
- ---------------------------------------------------------------
ELECTRONIC COMPONENTS/MANUFACTURING -- 1.6%
300,000 Artesyn Technologies, Inc. 2,856,000
200,000 Plexus Corp. 3,558,000
250,000 Sanmina-SCI Corporation 2,752,500
- ---------------------------------------------------------------
9,166,500
</Table>
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
ELECTRONIC DESIGN AUTOMATION -- 1.0%
250,000 Artisan Components, Inc. $ 5,572,500
- ---------------------------------------------------------------
GENOMICS -- 4.2%
750,000 CuraGen Corporation 4,680,000
1,000,000 Medarex, Inc. 8,970,000
800,000 Sangamo BioSciences, Inc. 4,944,000
2,800,000 Transgenomic, Inc.(#) 5,488,000
- ---------------------------------------------------------------
24,082,000
- ---------------------------------------------------------------
IMAGING -- 2.2%
400,000 SonoSite, Inc. 8,532,000
400,000 Vital Images, Inc. 4,016,000
- ---------------------------------------------------------------
12,548,000
- ---------------------------------------------------------------
INDUSTRIAL AUTOMATION -- 0.1%
570,000 Adept Technology, Inc. 535,800
- ---------------------------------------------------------------
INFORMATION SECURITY -- 3.4%
950,000 Digimarc Corporation 11,751,500
200,000 Macrovision Corporation 3,736,000
100,000 SafeNet, Inc. 3,754,000
- ---------------------------------------------------------------
19,241,500
- ---------------------------------------------------------------
INFORMATION TECHNOLOGY SERVICES -- 0.3%
300,000 Lightbridge, Inc. 1,770,000
- ---------------------------------------------------------------
LASER-BASED COMPONENTS & SUBSYSTEMS -- 4.4%
3,000,000 Finisar Corporation 6,540,000
2,100,000 JDS Uniphase Corporation 8,547,000
3,850,000 Oplink Communications, Inc. 9,663,500
- ---------------------------------------------------------------
24,750,500
</Table>
See Notes to the Financial Statements.
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2004 (Unaudited)
11
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
MACHINE VISION/INSPECTION -- 2.5%
240,000 CyberOptics Corporation $ 4,310,400
620,000 Zygo Corporation 9,690,600
- ---------------------------------------------------------------
14,001,000
- ---------------------------------------------------------------
NETWORKING -- 2.1%
4,000,000 Enterasys Networks, Inc. 10,120,000
75,000 Larscom Incorporated -- Class A 367,500
500,000 Visual Networks, Inc. 1,665,000
- ---------------------------------------------------------------
12,152,500
- ---------------------------------------------------------------
ORTHOPEDICS -- 0.4%
150,000 Interpore International, Inc. 2,157,000
- ---------------------------------------------------------------
RESEARCH REAGENTS/INSTRUMENTATION -- 3.3%
1,080,000 Array BioPharma Inc. 9,720,000
630,000 Caliper Life Sciences, Inc. 4,315,500
500,000 Harvard Bioscience, Inc. 4,643,000
- ---------------------------------------------------------------
18,678,500
- ---------------------------------------------------------------
SEMICAP EQUIPMENT -- 2.6%
200,000 Brooks Automation, Inc. 4,196,000
200,000 MKS Instruments, Inc. 4,802,000
450,500 Trikon Technologies, Inc. 1,441,600
150,000 Veeco Instruments Inc. 4,207,500
- ---------------------------------------------------------------
14,647,100
</Table>
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
SEMICONDUCTOR -- 14.8%
950,000 ANADIGICS, Inc. $ 5,909,000
500,000 Applied Micro Circuits Corporation 2,875,000
600,000 Centillium Communications, Inc. 2,712,000
2,000,000 Conexant Systems, Inc. 12,320,000
1,000,000 Mindspeed Technologies Inc. 6,530,000
400,000 PMC-Sierra, Inc. 6,788,000
1,700,000 QuickLogic Corporation(#) 6,475,300
750,000 Skyworks Solution, Inc. 8,745,000
335,000 Synaptics Incorporated 5,875,900
2,600,000 Vitesse Semiconductor Corporation 18,434,000
2,000,000 WJ Communications, Inc. 7,400,000
- ---------------------------------------------------------------
84,064,200
- ---------------------------------------------------------------
SOFTWARE APPLICATIONS -- 11.0%
2,100,000 Epicor Software Corporation 27,867,000
750,000 MapInfo Corporation 9,570,000
650,000 MRO Software, Inc. 7,553,000
570,000 PLATO Learning, Inc. 5,751,300
750,000 Retek Inc. 5,670,000
925,000 Vastera, Inc. 3,589,000
205,400 Verity, Inc. 2,807,818
- ---------------------------------------------------------------
62,808,118
- ---------------------------------------------------------------
SPECIALTY PHARMACEUTICALS -- 2.6%
925,000 DepoMed, Inc. 7,242,750
1,482,500 InKine Pharmaceutical Company, Inc. 7,694,175
- ---------------------------------------------------------------
14,936,925
- ---------------------------------------------------------------
SURGICAL PRODUCTS -- 0.8%
170,000 Closure Medical Corporation 4,675,000
- ---------------------------------------------------------------
SYSTEM SOFTWARE -- 1.0%
350,000 VeriSign, Inc. 5,806,500
</Table>
See Notes to the Financial Statements.
KOPP EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
March 31, 2004 (Unaudited)
12
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT -- 5.6%
5,000,000 ADC Telecommunications, Inc. $ 14,500,000
180,000 Advanced Fibre Communications, Inc. 3,965,400
650,000 Network Equipment Technologies, Inc. 6,487,000
1,610,000 Tut Systems, Inc.(#) 7,019,600
- ---------------------------------------------------------------
31,972,000
- ---------------------------------------------------------------
TEST AND MEASUREMENT -- 2.2%
611,274 LeCroy Corporation(#) 12,696,161
- ---------------------------------------------------------------
THERAPEUTICS/SPECIALTY COMPOUNDS -- 5.2%
400,000 Cell Genesys, Inc. 4,816,000
1,120,120 Neose Technologies, Inc.(#) 10,529,128
500,000 Symyx Technologies, Inc. 14,320,000
- ---------------------------------------------------------------
29,665,128
- ---------------------------------------------------------------
VOICE PROCESSING -- 0.8%
800,000 Captaris Inc. 4,400,000
- ---------------------------------------------------------------
WIRELESS -- 8.2%
625,000 EMS Technologies, Inc.(#) 12,068,750
5,000,000 Proxim Corporation -- Class A 8,850,000
1,000,000 REMEC, Inc. 7,600,000
300,000 RF Monolithics, Inc. 3,201,000
3,000,000 Stratex Networks, Inc. 14,250,000
300,000 Superconductor Technologies Inc. 690,000
- ---------------------------------------------------------------
46,659,750
- ---------------------------------------------------------------
Total Common Stock (cost $692,061,620) 562,891,986
</Table>
<Table>
<Caption>
Number of
Shares Value
- ---------------------------------------------------------------
SHORT-TERM INVESTMENT -- 1.3%
- ---------------------------------------------------------------
INVESTMENT COMPANY -- 1.3%
7,196,371 First American Prime Obligations
Fund, Class I(*) $ 7,196,371
- ---------------------------------------------------------------
Total Short-Term Investment (cost $7,196,371) 7,196,371
- ---------------------------------------------------------------
Total Investments -- 100.3% (cost $699,257,991) 570,088,357
- ---------------------------------------------------------------
Liabilities, less Other Assets -- (0.3)% (1,865,313)
- ---------------------------------------------------------------
NET ASSETS -- 100.0% $568,223,044
- ---------------------------------------------------------------
</Table>
# Affiliated company; the Fund owns 5% or more of the outstanding voting
securities of the issuer. See note 7.
* Income producing security. All other securities are non-income producing.
See Notes to the Financial Statements.
13
KOPP EMERGING GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2004 (Unaudited)
1. ORGANIZATION
Kopp Funds, Inc. (the "Company") was incorporated on June 12, 1997, as a
Minnesota corporation, and is registered as an open-end, investment management
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Kopp Emerging Growth Fund (the "Fund") is a non-diversified series of the
Company. The Fund's investment objective is to seek long-term capital
appreciation by investing primarily in common stocks of companies that Kopp
Investment Advisors, LLC (the "Advisor") believes to have the potential for
superior growth. The Company's registration statement was declared effective on
September 16, 1997. The Fund commenced operations on October 1, 1997.
The Fund has issued three classes of shares: Class A, Class C, and Class I. Each
class of shares has identical rights and privileges except that each class bears
its own expenses and exclusive voting rights on matters pertaining to the
distribution plan for that class. Class A shares are subject to an initial sales
charge imposed at the time of purchase, in accordance with the Fund's
prospectus. The maximum sales charge on Class A shares is 3.50% of the offering
price or 3.63% of the net asset value. Investments in Class A shares above $1
million are subject to a contingent deferred sales charge at the time of
redemption, in accordance with the Fund's prospectus. The maximum sales charge
is 1% for redemptions within the first 24 months and 0% thereafter. Class A
shares may also be subject to a 2% redemption fee on certain redemptions made
within 30 days of purchase. The Class I shares are subject to a 2% redemption
fee of the then current value of the shares on redemptions made within 24 months
of purchase. The Class C shares are subject to a contingent deferred sales
charge at the time of redemption, in accordance with the Fund's prospectus. The
maximum sales charge is 1% for redemptions in the first year and 0% thereafter.
Class C shares may also be subject to a 2% redemption fee on certain redemptions
made within 30 days of purchase.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATION
Common stocks and other equity-type securities traded primarily on a national
securities exchange are valued at the last sales price. For securities traded on
NASDAQ, the Fund utilizes the NASDAQ Official Closing Price which compares the
last trade to the bid/ask price of a security. If the last trade is below the
bid, the bid will be the closing price. Securities traded on a national
securities exchange or NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities exchange or NASDAQ, are
valued at the average of the most recent bid and asked prices. Any securities or
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith under supervision of the Board of
Directors of the Company. Some of the factors which may be considered by the
Board of Directors in determining fair value are fundamental analytical data
relating to the investment; the nature and duration of any restrictions on
dispositions; trading in similar securities of the same issuer or comparable
companies; information received from brokers; and an evaluation of the forces
that influence the market in which the securities are purchased and sold. The
Board of Directors has approved the use of pricing services to assist the Fund
in the determination of net asset value. Instruments with a remaining maturity
of 60 days or less are valued on an amortized cost basis.
14
FEDERAL INCOME TAXES
The Fund intends to qualify for treatment as a "Regulated Investment Company"
under Subchapter M of the Internal Revenue Code, and the Fund intends to
distribute investment company net taxable income and net capital gains to
shareholders. Therefore, no federal tax provision is recorded.
INCOME AND EXPENSES
Net investment income (loss), other than class specific expenses, and realized
and unrealized gains and losses are allocated daily to each class of shares
based upon the relative net asset value of outstanding shares of each class of
shares at the beginning of the day (after adjusting for the current day's
capital share activity of the respective class).
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income and distributions of net realized gains, if
any, will be declared and paid at least annually.
Distributions are determined in accordance with income tax regulations which may
differ from accounting principles generally accepted in the United States. These
differences are primarily due to differing treatments for amounts related to the
deferral of post-October and wash sale losses.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in U.S.
companies and the U.S. government. These risks include revaluation of currencies
and future adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may be less
liquid and their prices more volatile than those of securities of comparable
U.S. companies and the U.S. government.
ILLIQUID OR RESTRICTED SECURITIES
Restricted securities are often purchased in private placement transactions, are
not registered under the Securities Act of 1933, may have contractual
restrictions on resale, and are valued under methods approved by the Board of
Directors as reflecting fair value. A security may also be considered illiquid
if it lacks a readily available market or if its valuation has not changed for a
certain period of time. The Fund intends to invest no more than 15% of its net
assets (determined at the time of purchase and reviewed periodically) in
illiquid securities. Certain restricted securities, eligible for resale to
qualified institutional investors, are not subject to that limitation. As of
March 31, 2004, the Fund held no illiquid or restricted securities.
OTHER
Investment and shareholder transactions are recorded on the trade date. The Fund
determines the gain or loss realized from investment transactions by comparing
the original cost of the security lot sold with the net sales proceeds (specific
identification). Dividend income is recognized on the ex-dividend date or as
soon as this information is available to the Fund, and interest income is
recognized on an accrual basis.
3. INCOME TAX INFORMATION
At September 30, 2003, the Fund's most recently completed fiscal year end, the
Fund had net realized capital loss carryovers of $187,528, $208,436, and
$12,647,345 expiring in 2009, 2010, and 2011, respectively. To the extent that
the Fund realizes future net capital gains, taxable distributions to its
15
respective shareholders will be offset by any unused capital loss carryover.
During the fiscal year ended September 30, 2003, the Fund utilized post-October
capital losses of $11,974,762. The Fund incurred losses in the amount of
$20,143,957 from November 1, 2002 to September 30, 2003. As permitted by tax
regulations, the Fund intends to elect to defer and treat these losses as
arising in the fiscal year ending September 30, 2004.
At September 30, 2003, the components of accumulated earnings (losses) on a tax
basis were as follows:
<Table>
Cost of investments(a) $ 727,485,783
-------------
Gross unrealized appreciation $ 129,109,369
Gross unrealized depreciation (326,889,062)
-------------
Net unrealized depreciation on
investments $(197,779,693)
- -------------------------------------------------------
Undistributed ordinary income $ --
Undistributed long-term capital gain --
-------------
Total distributable earnings $ --
- -------------------------------------------------------
Other accumulated losses $ (33,187,266)
-------------
Total accumulated losses $(230,966,959)
- -------------------------------------------------------
</Table>
(a) Represents cost for federal income tax purposes and differs from the cost
for financial reporting purposes due to the deferral of losses on wash
sales.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
<Table>
<Caption>
Class A
Six Months Ended Class A
March 31, 2004 Year Ended
(Unaudited) September 30, 2003
---------------- ------------------
Shares sold 4,469,393 13,976,915
Shares redeemed (6,589,334) (13,776,096)
- ----------------------------------------------------------------
Net increase (decrease) (2,119,941) 200,819
</Table>
<Table>
<Caption>
Class I
Six Months Ended Class I
March 31, 2004 Year Ended
(Unaudited) September 30, 2003
---------------- ------------------
Shares sold 296,203 1,792,092
Shares redeemed (164,575) (256,302)
- ----------------------------------------------------------------
Net increase 131,628 1,535,790
</Table>
<Table>
<Caption>
Class C
Six Months Ended Class C
March 31, 2004 Year Ended
(Unaudited) September 30, 2003
---------------- ------------------
Shares sold 716,840 1,067,894
Shares redeemed (523,099) (440,817)
- ----------------------------------------------------------------
Net increase 193,741 627,077
</Table>
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended March 31, 2004, were
$51,098,043 and $72,830,501, respectively. There were no purchases or sales of
long-term U.S. government securities.
At March 31, 2004, gross unrealized appreciation and depreciation of investments
for federal income tax purposes were as follows:
<Table>
Appreciation $ 162,261,543
Depreciation (292,330,640)
-------------
Net unrealized depreciation on
investments ($130,069,097)
- -------------------------------------------------------
</Table>
At March 31, 2004, the cost of investments for federal income tax purposes was
$700,157,454.
6. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Pursuant to its investment advisory agreement with the Fund, the Advisor is
entitled to receive a fee, calculated daily and payable monthly, at an annual
rate of 1.00% applied to the daily net assets of the Fund.
U.S. Bancorp Fund Services, LLC, serves as accounting services agent,
administrator, and transfer agent for the Fund. U.S. Bank, N.A. serves as
custodian for the Fund.
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan") with respect to each class of shares pursuant to which certain
distribution and shareholder servicing fees may be paid to
16
Centennial Lakes Capital, LLC (the "Distributor"). The Distributor is an
affiliate of the Advisor. Under the terms of the Plan, each class of shares may
be required to pay the Distributor (i) a distribution fee for the promotion and
distribution of shares of up to 0.25% of the average daily net assets of the
Fund attributable to Class A and Class I and up to 0.75% of the average daily
net assets of the Fund attributable to Class C (computed on an annual basis) and
(ii) a shareholder servicing fee for personal service provided to shareholders
of up to 0.25% of the average daily net assets of the Fund attributable to all
three classes (computed on an annual basis). Payments under the Plan with
respect to Class A shares are currently limited to 0.35%, which represents a
0.10% distribution fee and a 0.25% shareholder servicing fee. Class C shares are
currently incurring 1.00%, which represents a 0.75% distribution fee and a 0.25%
shareholder servicing fee. The Distributor currently has no intention of
charging any Rule 12b-1 fees in connection with the Class I shares. The
Distributor is authorized to, in turn, pay all or a portion of these fees to any
registered securities dealer, financial institution, or other person who renders
assistance in distributing or promoting the sale of Fund shares, or who provides
certain shareholder services to Fund shareholders, pursuant to a written
agreement. To the extent such fee is not paid to such persons, the Distributor
may use the fee for its own distribution expenses incurred in connection with
the sale of Fund shares, or for any of its shareholder servicing expenses.
The Plan is a "reimbursement" plan, which means that the fees paid by the Fund
under the Plan are intended to reimburse the Distributor for services rendered
and commission fees borne up to the maximum allowable distribution and
shareholder servicing fees. If the Distributor is due more money for its
services rendered and commission fees borne than are immediately payable because
of the expense limitation under the Plan, the unpaid amount is carried forward
from period to period while the Plan is in effect until such time as it may be
paid. As of March 31, 2004, there were $758,902 of unreimbursed distribution and
shareholder servicing related expenses to be carried forward to future plan
years. Upon termination of the 12b-1 Plan, the Fund is not contractually
obligated to continuing paying these excess costs. As such, this amount has not
been recorded as a liability in the Fund's records.
Distribution and shareholder servicing fees incurred by Class A shares for the
six months ended March 31, 2004 were $238,779 and $596,947, respectively. The
distribution and shareholder servicing fees retained by the Distributor, related
to Class A, for the six months ended March 31, 2004 were $17,939 and $44,847,
respectively. The Fund was advised that the Distributor advanced $75,060 of
distribution and shareholder servicing fees related to Class C shares for the
six months ended March 31, 2004. Distribution and shareholder servicing fees
incurred by Class C shares for the six months ended March 31, 2004 were $133,759
and $44,586, respectively. The distribution and shareholder servicing fees
retained by the Distributor, related to Class C, for the six months ended March
31, 2004 were $42,382 and $14,128, respectively.
The Fund was advised that the Distributor retained front-end sales charges on
Class A shares of $102,441 and contingent deferred sales charges on Class C
shares of $23,446 for the six months ended March 31, 2004.
17
7. OTHER AFFILIATES *
Investments representing 5% or more of the outstanding voting securities of a
portfolio company result in that company being considered an affiliated company,
as defined in the 1940 Act. The aggregate market value of all securities of
affiliated companies as of March 31, 2004 amounted to $72,814,841 representing
12.8% of net assets. Transactions during the six months ended March 31, 2004 in
which the issuer was an "affiliated person" are as follows:
<Table>
<Caption>
EMS Endocardial Epicor Hyperion
Digimarc Technologies, Solutions, Software Solutions LeCroy
Corporation** Inc. Inc. Corporation** Corporation**(1) Corporation
------------- ------------- ----------- ------------- ---------------- -----------
September 30, 2003
Balance
Shares 950,000 500,000 2,135,703 2,220,000 406,492 675,000
Cost $21,167,839 $ 9,278,176 $8,611,113 $3,999,439 $7,881,527 $15,511,419
Gross Additions
Shares -- 125,000 -- -- -- --
Cost $ -- $ 2,708,418 $ -- $ -- $ -- $ --
Gross Deductions
Shares -- -- -- 120,000 1 63,726
Cost $ -- $ -- $ -- $ 476,457 $ 25 $ 2,316,708
March 31, 2004
Balance
Shares 950,000 625,000 2,135,703 2,100,000 406,491 611,274
Cost $21,167,839 $11,986,594 $8,611,113 $3,522,982 $7,881,502 $13,194,711
- ----------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) $ 0 $ 0 $ 0 $1,080,012 $ 14 $(1,052,639)
- ----------------------------------------------------------------------------------------------------------------------------
Investment income $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------------
<Caption>
Neose Tut
Technologies, QuickLogic Transgenomic, Systems,
Inc. Corporation Inc. Inc. Total
------------- ----------- ------------- -------- -----
September 30, 2003
Balance
Shares 1,083,333 1,440,000 2,530,000 1,610,000
Cost $25,951,011 $18,476,942 $9,128,334 $11,513,745 $131,519,545
Gross Additions
Shares 36,787 260,000 270,000 --
Cost $ 332,555 $ 1,538,704 $ 270,000 $ -- $ 4,849,677
Gross Deductions
Shares -- -- -- --
Cost $ -- $ -- $ -- $ -- $ 2,793,190
March 31, 2004
Balance
Shares 1,120,120 1,700,000 2,800,000 1,610,000
Cost $26,283,566 $20,015,646 $9,398,334 $11,513,745 $133,576,032
- --------------------------------------------------------------------------------------------------------
Realized gain (loss) $ 0 $ 0 $ 0 $ 0 $ 27,387
- --------------------------------------------------------------------------------------------------------
Investment income $ 0 $ 0 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------
</Table>
* As a result of the Fund's beneficial ownership of the common stock of these
companies, regulators require that the Fund state that it may be deemed an
affiliate of the respective issuer. The Fund disclaims that the "affiliated
persons" are affiliates of the Distributor, Advisor, Fund, Company, or any
other client of the Advisor.
** Security that was affiliated during the six months ended March 31, 2004, but
not at March 31, 2004.
(1) Formerly known as Brio Software, Inc. (acquired by Hyperion Solutions
Corporation on October 23, 2003 in a 0.109/1.00 share ratio).
8. LINE OF CREDIT
The Fund has a $50,000,000 line of credit with U.S. Bank, N.A expiring July 31,
2004. The interest rate on any borrowings is the Bank's announced prime rate and
borrowings would be for liquidity purposes. The Fund pays a commitment fee equal
to the amount of the line at a rate of 0.12% per annum. During the six months
ended March 31, 2004, the Fund did not draw upon the line of credit.
18
9. RELATED PARTY TRANSACTIONS
As of March 31, 2004, officers and directors of the Fund beneficially owned
6,449,930 shares or 11.47% of the Fund's outstanding shares (1.50% of which was
owned through the Advisor's profit sharing plan).
HOW TO OBTAIN A COPY OF THE FUND'S PROXY VOTING POLICIES -- A description of the
policies and procedures that the Fund uses to determine how to vote proxies
relating to portfolio securities is available (1) without charge upon request by
calling 1-888-533-KOPP; (2) at koppfunds.com; and (3) on the U.S. Securities and
Exchange Commission's website at sec.gov.
Except for historical information, the matters discussed in this report may
constitute forward-looking statements made pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995. These include any
advisor and/or portfolio manager predictions, assessments, analyses or outlooks
for individual securities, industries, market sectors and/or markets. These
statements involve risks and uncertainties. In addition to the general risks
described in the Fund's current Prospectus, other factors bearing on this report
include the accuracy of the advisor's forecasts and predictions and the
appropriateness of the investment program designed by the advisor to implement
its strategies efficiently and effectively. Any one or more of these factors, as
well as other risks affecting the securities markets and investment instruments
generally, could cause the actual results of the Fund to differ materially as
compared to benchmarks associated with the Fund.
19
(This page is intentionally left blank.)
[KOPP FUND LOGO]
(C)2004 Kopp Investment Advisors, LLC
DIRECTORS
LeRoy C. Kopp
Robert L. Stehlik
Thomas R. Stuart
OFFICERS
LeRoy C. Kopp, Chief Executive Officer and President
John P. Flakne, Chief Financial Officer and Treasurer
Kathleen S. Tillotson, Executive Vice President and Secretary
Gregory S. Kulka, First Vice President
INVESTMENT ADVISER
KOPP INVESTMENT ADVISORS, LLC
7701 France Avenue South, Suite 500
Edina, MN 55435
EMERGING GROWTH FUND
ADMINISTRATOR AND TRANSFER AGENT SEMI-ANNUAL REPORT 2004
U.S. BANCORP FUND SERVICES, LLC
<Table>
For overnight deliveries, For regular mail deliveries,
use: use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o U.S. Bancorp Fund c/o U.S. Bancorp Fund
Services, LLC Services, LLC
Third Floor P.O. Box 701
615 E. Michigan Street Milwaukee, WI 53201-0701
Milwaukee, WI 53202
</Table>
CUSTODIAN
U.S. BANK, N.A.
425 Walnut Street
Cincinnati, OH 45202
DISTRIBUTOR
CENTENNIAL LAKES CAPITAL, LLC
7701 France Avenue South, Suite 500
Edina, MN 55435
INDEPENDENT AUDITORS
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue, Suite 1500
Milwaukee, WI 53202
LEGAL COUNSEL
GODFREY & KAHN, S.C.
780 N. Water Street
Milwaukee, WI 53202
Kopp Funds are distributed by Centennial Lakes Capital, LLC, a member of
the NASD and an affiliate of Kopp Investment Advisors, LLC and the Fund.
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable for periods ending before July 9, 2004.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES.
Not applicable to open-end investment companies.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The Registrant's President/Chief Executive Officer and Treasurer/Chief
Financial Officer have concluded that the Registrant's disclosure controls
and procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940 (the "1940 Act")) are effective as of a date within 90 days of
the filing date of the report that includes the disclosure required by this
paragraph, based on the evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act and Rules 15d-15(b) under the
Securities Exchange Act of 1934, as amended.
(b) There were no significant changes in the Registrant's internal controls
over financial reporting that occurred during the Registrant's last fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a) (1) Any code of ethics or amendment thereto, that is subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit.
Incorporate by reference to previous Form N-CSR filing dated September 30,
2003.
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Kopp Funds, Inc.
------------------------------------------------
By (Signature and Title) /s/ LeRoy C. Kopp
-------------------------------------------------
LeRoy C. Kopp, Chief Executive Officer, President
Date 6/3/04
-------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ LeRoy C. Kopp
-------------------------------------------------
LeRoy C. Kopp, Chief Executive Officer, President
Date 6/3/04
--------------------------------------------------------
By (Signature and Title) /s/ John P. Flakne
---------------------------------------------
John P. Flakne, Chief Financial Officer,
Treasurer
Date 6/3/04
--------------------------------------------------------