[Sketch of L. Roy Papp appears here]
PAPP AMERICA-PACIFIC RIM FUND, INC.
A No-Load Fund
ANNUAL REPORT
DECEMBER 31, 1999
Managed by:
L. Roy Papp & Associates
6225 North 24th Street
Suite 150
Phoenix, AZ 85016
(602)956-1115 Local
(800)421-4004
E-mail: [email protected]
Web: http://www.roypapp.com
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN PAPP
AMERICA-PACIFIC RIM FUND, INC. AND THE MORGAN STANLEY WORLD INDEX
AVERAGE ANNUAL TOTAL RETURN
1 Year Since Inception
Papp America-Pacific Rim Fund 24.9% 26.9%
Morgan Stanley World Index 24.9% 22.5%
Year Papp America-Pacific Morgan Stanley
Rim Fund World Index
3/14/97 $10,000 $10,000
1997 12,110 11,370
1998 15,580 14,130
1999 19,459 17,654
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
The investment return and principal value of an investment in the Fund will
fluctuate so that Fund shares, when redeemed, may be worth more or less than
their original cost. This Fund's performance is measured against that of the
Morgan Stanley World Index. Approximately 34% of the earnings of the companies
in the Fund's portfolio are derived from Pacific Rim sources, 17% are derived
from other foreign sources, and 49% are derived from United States sources. The
Morgan Stanley World Index is an unmanaged [market-weighted] index that includes
50% foreign companies and 50% United States companies. The values shown include
reinvested dividends.
2
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
Dear Fellow Shareholders:
Our Fund had another good year in 1999. We were up 24.9% while the Morgan
Stanley World Index, against which we measure ourselves, also was up 24.9%. The
World Index did somewhat better than the Standard & Poor's 500 Stock Index,
which increased by 21.0%.
As the chart on the opposite page indicates, in the little less than three years
of operations our Fund has bested the World Index by a significant amount and,
despite the so-called economic crisis in Asia, has performed slightly better
than the S & P 500. More importantly though, our progress has been quite steady
compared with the sharp ups and downs experienced by many funds investing in
Asian companies. In 1997 we were up 21.1%, in 1998 we were up 28.7%, and in 1999
we were up 24.9%. For the almost three years beginning March 14, 1997 the
numbers are: Papp America-Pacific Rim Fund +94.6%; Morgan Stanley World Index
+76.5%; Standard & Poor's 500 Stock Index +93.3%.
The organization of Papp America-Pacific Rim Fund reflects our conviction that
the next century will see Asia regain its place as a very powerful economic
region. The Fund is not intended to provide a comprehensive investment program
for the common stock portion of an investment portfolio, but is intended to
provide a diversified group of stocks selected for their participation in the
fastest growing areas of Asia's economies. We aim to do this with mainly United
States companies that do a substantial amount of business in Asia, particularly
those companies that have demonstrated their clear leadership in the fast
growing areas of medical and electronic technology.
More than half of the companies in our Fund today were there when we started.
These include the large drug companies, Eli Lilly and Warner-Lambert, specialty
medical device companies, Medtronic and Stryker, and the huge computer and
software companies, Hewlett-Packard and Intel. To a large extent, we have not
invested in purely Asian companies because of our concerns about their price
volatility and lack of liquidity, different reporting standards and other
auditing problems, and lack of SEC oversight. Finally, the companies we own are
generally worldwide in nature, which gives them a significant edge should one
region or another experience economic problems.
Our fundamental beliefs have not changed since this Fund was initially
organized. We think that well established and managed United States companies
will do very well with their Asian operations and that the long term investor
will be rewarded accordingly.
Warmest Regards,
/s/ L. Roy Papp
L. Roy Papp, Chairman
February 8, 2000
P.S. As of today, our Fund is up 5.7% this year while the World Index is down
4.0% and the S&P 500 is down 1.8%.
3
<PAGE>
< PAPP AMERICA-PACIFIC RIM FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number Market
Common Stocks of Shares Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
COMPUTER EQUIPMENT (19.6%)
Hewlett-Packard Company
(Manufacturer of printers, computers, and medical
electronic equipment) 8,500 $ 968,469
Intel Corporation
(Manufacturer of microprocessors, microcontrollers,
and memory chips) 16,000 1,317,000
International Business Machines Corporation
(Global provider of information technology, hardware,
software, and services) 3,500 378,000
National Instruments Corporation*
(Supplier of computer based instrumentation products) 15,000 573,750
--------------
3,237,219
--------------
ELECTRONIC EQUIPMENT (16.6%)
Agilent Technologies, Inc.
(Designs and manufactures test and measurment systems for the
electronics and healthcare industries) 6,800 525,725
American Power Conversion*
(Leading producer of uninterruptible power supply products) 48,000 1,266,000
Molex, Inc.
(Supplier of interconnection products) 21,000 950,250
--------------
2,741,975
--------------
FINANCIAL SERVICES (16.4%)
American International Group
(Major international insurance holding company) 10,000 1,081,250
General Electric Co.
(Diversified financial and industrial company) 5,500 851,125
State Street Corporation
(Provider of U.S. and global securities custodial services) 10,500 767,156
--------------
2,699,531
--------------
INDUSTRIAL SERVICES (16.3%)
Expeditors International of Washington, Inc.
(International air freight forwarding) 23,000 1,007,688
G & K Services, Inc. Class A
(Uniform rental service) 14,500 469,437
Interpublic Group of Companies, Inc.
(Worldwide advertising agencies) 21,000 1,211,438
--------------
2,688,563
--------------
*Non-income producing security.
The accompanying notes are an integral part of this financial statements.
4
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
Number Market
Common Stocks (continued) of Shares Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
MEDICAL PRODUCTS (10.1%)
Medtronic, Inc.
(Manufacturer of implantable biomedical devices) 22,000 $ 801,625
ResMed, Inc.*
(Developer and manufacturer of respiratory products) 4,000 167,000
Stryker Corp.
(Developer and manufacturer of surgical and medical devices) 10,000 696,250
--------------
1,664,875
--------------
PHARMACEUTICAL (7.3%)
Eli Lilly & Co.
(Prescription pharmaceuticals) 7,500 498,750
Pfizer, Inc.
(Prescription pharmaceuticals) 6,000 194,625
Warner-Lambert Company
(Prescription pharmaceuticals) 6,000 491,625
--------------
1,185,000
--------------
TELECOMMUNICATIONS (5.5%)
L. M. Ericsson Telephone AB
(Manufacturer of telecom systems and cellular handsets) 12,000 788,250
Cable & Wireless HKT Ltd.
(International telecommunications services) 4,000 116,500
--------------
904,750
--------------
RESTAURANTS (4.5%)
McDonald's Corporation
(Fast food restaurants and franchising) 18,500 745,781
--------------
CONSUMER PRODUCTS (2.3%)
Clorox Company
(Manufacturer of bleach and other consumer products) 7,500 377,812
SOFTWARE (1.0%)
Microsoft Corporation*
(Personal computer software) 1,500 175,125
TOTAL COMMON STOCKS - 99.6% 16,420,631
Cash and Other Assets, Less Liabilities - 0.4% 58,069
--------------
Net Assets - 100.0% $16,478,700
==============
Net Asset Value Per Share
(Based on 847,668 shares outstanding at December 31, 1999) $ 19.44
==============
*Non-income producing security.
The accompanying notes are an integral part of this financial statement.
</TABLE>
5
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31,1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Investment in securities at market value (original cost
$9,070,690 and $10,351,153 at December 31, 1999 and 1998,
respectively) (Note 1) $16,420,631 $14,584,338
Cash 16,847 194,464
Dividends and interest receivable 9,473 13,729
Receivable for investment securities sold 31,749 -
--------------- ---------------
Total assets $16,478,700 $14,792,531
=============== ===============
LIABILITIES
Payable for investment securities purchased $ - $ 73,500
Redemptions payable - 13,201
--------------- ---------------
Total liabilities $ - $ 86,701
=============== ===============
NET ASSETS
Paid-in capital $ 9,317,394 $10,846,991
Accumulated undistributed net realized loss
on sale of investments (30,836) (310,322)
Accumulated undistributed net investment loss (157,799) (64,024)
Net unrealized gain on investments 7,349,941 4,233,185
--------------- ---------------
Net assets applicable to Fund shares outstanding $16,478,700 $14,705,830
=============== ===============
Fund shares outstanding 847,668 944,775
=============== ===============
Net Asset Value Per Share (net assets/shares
outstanding) $ 19.44 $ 15.57
=============== ===============
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 76,658 $ 105,405
Interest 6,584 7,005
Foreign taxes withheld (1,542) (2,089)
--------------- ---------------
Total investment income 81,700 110,321
--------------- ---------------
EXPENSES:
Management fee (Note 3) 140,437 140,635
Filing fees 20,734 31,885
Accounting fees 11,000 7,500
Custodial fees 7,034 5,609
Legal fees 5,471 4,811
Directors' attendance fees 3,900 2,300
Printing and postage fees 3,519 1,571
Other fees 3,809 2,795
--------------- ---------------
Total expenses 195,904 197,106
--------------- ---------------
Less fees waived by adviser (Note 3) (20,357) (21,864)
--------------- ---------------
Net expenses 175,547 175,242
--------------- ---------------
Net investment loss (93,847) (64,921)
--------------- ---------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Proceeds from sales of securities 4,024,592 4,544,223
Cost of securities sold (3,745,114) (4,854,545)
--------------- ---------------
Net realized gain/(loss) on investments sold 279,478 (310,322)
Net change in unrealized gain on investments 3,116,756 3,833,105
--------------- ---------------
Net realized and unrealized gain on investments 3,396,234 3,522,783
--------------- ---------------
Net increase in net assets resulting from operations $3,302,387 $3,457,862
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (93,847) $ (64,921)
Net realized gain/(loss) on investments sold 279,478 (310,322)
Net change in unrealized gain on investments 3,116,756 3,833,105
------------- -------------
Increase in net assets resulting from
operations 3,302,387 3,457,862
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - -
Net realized gain on investments sold - -
------------- -------------
Decrease in net assets resulting from
distributions to shareholders - -
------------- -------------
FROM SHAREHOLDER TRANSACTIONS:
Proceeds from sale of shares 2,214,299 4,267,258
Net asset value of shares issued to shareholders
in reinvestment of net investment income and - -
net realized gain on investments sold
Payments for redemption of shares (3,743,816) (6,760,679)
------------- -------------
Decrease in net assets resulting
from shareholder transactions (1,529,517) (2,493,421)
------------- -------------
Total increase in net assets 1,772,870 964,441
Net assets at beginning of the period 14,705,830 13,741,389
------------- -------------
Net assets at end of period $16,478,700 $14,705,830
============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
8
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) SIGNIFICANT ACCOUNTING POLICIES:
Papp America-Pacific Rim Fund, Inc. (the Fund) was incorporated on December 18,
1996, and is registered under the Investment Company Act of 1940 as an open-end
diversified management investment company. Operations of the Fund commenced on
March 14, 1997. The Fund invests with the objective of long-term capital growth
in the common stocks of companies that have substantial international
activities, particularly in the Pacific Rim nations.
The policies described below are followed by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
INVESTMENT IN SECURITIES
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 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 Fund's net asset value per share (NAV) is the value of a single share. It is
computed by dividing the market value of a Fund's assets, less its liabilities,
by the number of shares outstanding, and rounding the result to the nearest full
cent. The NAV is determined as of the close of trading on the New York Stock
Exchange, currently 4:00 p.m. New York City time, on any day on which that
Exchange is open for trading.
Investment transactions are accounted for on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the ex-dividend date
and interest is recorded on the accrual basis. Realized gains and losses from
investment transactions and unrealized appreciation or depreciation are
calculated on the identified cost basis.
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 increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
9
<PAGE>
FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code which are applicable to regulated investment companies. The Code requires
that substantially all of the Fund's taxable income, as well as any net realized
gain on sales of investments, are to be distributed to the shareholders. The
Fund has complied with this policy and, accordingly, no provision for federal
income taxes is required.
(2) DIVIDENDS AND DISTRIBUTIONS:
Dividends and capital gain distributions are reinvested in additional shares of
the Fund unless the shareholder has requested in writing to be paid by check.
Dividends and distributions payable to its shareholders are recorded by the Fund
on the ex-dividend date.
(3) TRANSACTIONS WITH AFFILIATES:
The Fund has an investment advisory and management services agreement with L.
Roy Papp & Associates (Manager). The Manager 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. The Manager will reimburse the Fund
to the extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.25% of its average daily net asset value in such year. A
management fee expense reimbursement of $20,357 and $21,864 was required in 1999
and 1998 respectively. The Fund incurred fees of $2,408 as of December 31, 1999
from the manager for providing shareholder and transfer agent services.
The Fund's independent directors receive $350 for each meeting of the Board of
Directors attended on behalf of the Fund. Certain officers and/or directors of
the Fund are also partners of the Manager and shareholders in the Fund. The Fund
made no payments to its officers or directors, except to independent directors
as stated above.
(4) PURCHASES AND SALES OF SECURITIES:
For the years ended December 31, 1999 and December 31, 1998 investment
transactions excluding short-term investments were as follows:
1999 1998
-------------- ----------------
Purchases at cost $2,464,651 $1,908,840
Sales 4,024,592 4,544,223
10
<PAGE>
(5) CAPITAL SHARE TRANSACTIONS:
At December 31, 1999, there were 5,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital shares of the Fund were as follows:
Proceeds Shares
------------- -------------
Period ended December 31, 1999
Shares issued $ 2,214,299 141,621
Dividends and distributions reinvested - -
Shares redeemed (3,743,816) (238,728)
------------- -------------
Net decrease $(1,529,517) (97,107)
============= =============
Period ended December 31, 1998
Shares issued $ 4,267,258 320,978
Dividends and distributions reinvested - -
Shares redeemed (6,760,679) (511,920)
------------- -------------
Net decrease $(2,493,421) (190,942)
============= =============
(6) UNREALIZED APPRECIATION:
Unrealized appreciation of portfolio securities for both financial statement and
federal income tax purposes is as follows:
1999 1998
-------------- ---------------
Market value $16,420,631 $ 14,584,338
Original cost (9,070,690) (10,351,153)
-------------- ---------------
Net unrealized appreciation $ 7,349,941 $ 4,233,185
============== ===============
As of December 31, 1999, gross unrealized gains on investments in which market
value exceeded cost totaled $7,397,438 and gross unrealized losses on
investments in which cost exceeded market value totaled $47,497.
As of December 31, 1998, gross unrealized gains on investments in which market
value exceeded cost totaled $4,523,937 and gross unrealized losses on
investments in which cost exceeded market value totaled $290,752.
11
<PAGE>
(7) SELECTED FINANCIAL HIGHLIGHTS:
The following selected per share data has been calculated using revenues and
expenses for the periods indicated, divided by the weighted average number of
shares outstanding during the periods. The ratios are calculated using the
revenues and expenses for the period, divided by the weighted average of the
daily net assets of the Fund.
<TABLE>
<CAPTION>
Years ended Period Ended
December 31, December 31,
1999 1998 1997(A)
-------------- ---------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning
of period $ 15.57 $ 12.10 $ 10.00
Income from operations:
Net investment income (0.12) (0.06) -
Net realized and unrealized
gain (loss) on investments 3.99 3.53 2.11
-------------- ---------------- -----------------
Total from operations 3.87 3.47 2.11
Less Distributions:
Dividend from investment income - - -
Distribution of net realized gain - - (0.01)
-------------- ---------------- -----------------
Total distributions - - (0.01)
Net asset value, end of period $ 19.44 $ 15.57 $ 12.10
============== ================ =================
Total return 24.86% 28.68% 21.11%
============== ================ =================
Ratios/Supplemental Data:
Net assets, end of period $16,478,700 $14,705,830 $13,741,389
Expenses to average net assets(B) 1.25% 1.25% 1.25%*
Investment income to
average net assets(C) 0.58% 0.79% 1.30%*
Portfolio turnover rate 17.52% 13.73% 14.30%
</TABLE>
* Annualized
(A) From the date of commencement of operations (March 14, 1997).
(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 1.39%,
1.41% and 1.55%, for the years ended December 31, 1999, 1998 and the
period ended December 31, 1997, respectively.
(C) Computed giving effect to investment adviser's expense limitation
undertaking.
12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Papp America-Pacific Rim Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of the
Papp America-Pacific Rim Fund, Inc. as of December 31, 1999 and 1998, including
the schedule of portfolio investments as of December 31, 1999, and the related
statements of operations and changes in net assets for the two years then ended,
and the financial highlights for the two years then ended and for the period
from March 14, 1997 (date of commencement of operations) through December 31,
1997. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1999 and 1998, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Papp America-Pacific Rim Fund, Inc. as of December 31, 1999 and 1998, and the
results of its operations and changes in its net assets for the two years then
ended, and its financial highlights for the two years then ended and for the
period from March 14, 1997 (date of commencement of operations) through December
31, 1997, in conformity with generally accepted accounting principles.
/S/ Authur Andersen LLP
Phoenix, Arizona,
January 27, 2000.
13
<PAGE>
FACTS ABOUT THE FUND
INVESTMENT OBJECTIVE - The Fund, which commenced operations on March 14, 1997,
is designed for those long-term investors who wish to invest a portion of their
common stock assets in mainly American multinational companies which do a
significant amount of business with, and receive substantial income from,
nations bordering the Pacific Ocean. The Fund purchases the shares of companies
that, over time, have shown the ability to substantially increase their
earnings.
THE INVESTMENT ADVISER - The Fund's assets are managed by L. Roy Papp &
Associates, the largest investment counseling firm in Arizona, with over $1.2
billion in total assets managed for individuals, trusts, corporations, and
charitable and educational institutions. Founded in 1978, the firm is solely in
the investment management business. The firm is an independent general
partnership. Of its ten general partners, seven hold the Chartered Financial
Analyst (CFA) designation.
EXPERIENCED MANAGEMENT - The securities portfolio of the Fund is managed by L.
Roy Papp and Rosellen C. Papp. Mr. Papp, the founder of L. Roy Papp &
Associates, has over 45 years experience in the field of investment management.
Prior to founding L. Roy Papp & Associates, he was a senior partner of a large
investment counseling firm in Chicago, Illinois and the United States Director
and Ambassador to the Asian Development Bank, Manila, Philippines. He received
his M.B.A. degree from the Wharton School, University of Pennsylvania and his
A.B. degree from Brown University.
Rosellen C. Papp, the director of research at L. Roy Papp & Associates, has over
22 years experience in security and financial analysis. She holds a Master of
Management degree in finance from the Kellogg Graduate School of Management,
Northwestern University and a B.B.A. degree from the University of Michigan. She
is a Chartered Financial Analyst and member of the International Society of
Financial Analysts.
"PURE" NO-LOAD - The Fund is a "pure" no-load fund in that there are no
"loading" charges or sales commissions paid in connection with the purchase of
its shares. In addition, there are no deferred sales loads, no redemption fees,
and no 12b-1 fees. The Fund's investment adviser receives an annual management
fee of 1% which is based on the Fund's average daily net asset value. Other
expenses such as auditing charges, legal fees, and custodial expenses are
limited to 1/4% of the Fund's average daily net asset value; therefore, the
Fund's annual expenses may not exceed 1 1/4%.
SUITABILITY - The Fund is suitable only for long-term investors seeking capital
appreciation over time. Included are individuals of most ages, institutional
accounts such as pension and profit sharing plans, retirement accounts such as
IRA's, educational accounts for young children, and many personal trusts. The
Fund is not suitable for those with high current income needs, aggressive
investors who desire maximum short-term results and are willing to assume the
attendant risks, and those with relatively short time horizons who may require
their capital in the near-term.
14
<PAGE>
AN INTRODUCTION TO THE PAPP MUTUAL FUNDS
The Papp Mutual Funds invest in high quality common stocks carefully selected
for the possibility of long-term capital growth. All the funds are "pure"
no-load in that there are no sales commissions, redemption fees, or 12b-1
charges. Because the Funds invest for the long-term, portfolio turnover is low
and the Funds do not ordinarily produce large taxable capital gains. They are
designed for the long-term (3 to 5 years) investor and are not appropriate for
those with short-term time horizons. The partners and employees of L. Roy Papp &
Associates have invested a significant part of their own assets in the Funds,
either personally or through the Firm's 401K Plan.
The Papp Stock Fund is structured to provide a comprehensive investment for the
common stock portion of an investment program through the purchase and retention
of a diversified, high quality group of securities. It owns the common stocks of
very large United States companies, many of which derive a large percentage of
their earnings from overseas activities where we believe the strong growth of
recent years will continue. It also owns large and medium sized American
companies which have all of their operations within our country.
Papp America-Abroad Fund invests primarily in United States companies, a large
portion of whose earnings come from foreign countries. It is our belief that it
is far safer to participate in the increased globalization of the world's
economies through ownership of multinational U.S. companies, thereby avoiding
many risks and expenses associated with the direct purchase of foreign stocks
such as different accounting and financial reporting standards, lack of
liquidity, greater price volatility, and lack of SEC protection. While the Fund
owns some medium sized companies, for the most part it invests in large
companies that have the experience and expertise to successfully compete on the
international level.
Papp America-Pacific Rim Fund reflects our belief that the best prospect for
growth over the next several decades lies in our large and rapidly growing trade
with the nations bordering the Pacific Ocean. Like our other Funds, the Pacific
Rim Fund invests mainly in American companies, but its primary thrust is to seek
out and purchase those companies that have established a strong and growing
presence in the Pacific Rim area. We believe this Fund is appropriate for that
part of an investor's assets dedicated to long-term growth.
Papp Focus Fund is a non-diversified investment company that will own a maximum
of 16 stocks under normal market conditions. While we believe that a strategy of
investing in a limited number of securities has the potential for higher total
returns, this may increase volatility, so prospective shareholders should
carefully consider whether their investment strategy parallels that of the Fund.
Papp Small & Mid-Cap Growth Fund invests primarily in the common stocks and
securities convertible into common stocks of small and medium sized companies.
We believe that carefully selected small and medium sized companies offer
attractive capital growth possibilities significantly above that of the general
U.S. economy. While these companies, during some periods, will perform better
than the stocks of large companies, they also may involve greater volatility and
be subject to competitive pressures.
15
<PAGE>
PAPP AMERICA-PACIFIC RIM FUND, INC.
DIRECTORS
James K. Ballinger Harry A. Papp
Amy S. Clague L. Roy Papp
Robert L. Mueller Rosellen C. Papp
Carolyn P. O'Malley Bruce C. Williams
OFFICERS
Chairman - L. Roy Papp President - Harry A. Papp
VICE PRESIDENTS
Victoria S. Cavallero Julie A. Hein
George D. Clark, Jr. Robert L. Mueller
Jeffrey N. Edwards Rosellen C. Papp
Robert L. Hawley Bruce C. Williams
Secretary - Robert L. Mueller
Treasurer - Rosellen C. Papp
Assistant Treasurer - Julie A. Hein
INVESTMENT ADVISER
L. Roy Papp & Associates
6225 North 24th Street, Suite 150
Phoenix, Arizona 85016
Telephone: (602) 956-1115
E-mail: [email protected]
Web: http://www.roypapp.com
CUSTODIAN
Founders Bank of Arizona
7335 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
SHAREHOLDER SERVICES AND TRANSFER AGENT
L. Roy Papp & Associates
6225 North 24th Street, Suite 150
Phoenix, Arizona 85016
Telephone: (602) 956-1115
(800) 421-4004
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
501 North 44th Street, Suite 300
Phoenix, Arizona 85008
LEGAL COUNSEL
Bell, Boyd & Lloyd
70 West Madison Street
Chicago, Illinois 60602
This report is submitted for the general information of the shareholders of the
Fund. The report is not authorized for distribution to prospective investors in
the Fund unless it is accompanied or preceded by a currently effective
prospectus of the Fund. No sales charge to the shareholder or to the new
investor is made in offering the shares of the Fund.
