[Sketch of L. Roy Papp appears here]
PAPP SMALL & MID-CAP GROWTH 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>
CHART
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PAPP SMALL & MID-CAP GROWTH FUND, INC. AND RUSSELL 2000
STOCK INDEX
AVERAGE ANNUAL TOTAL RETURN
Since
1 Year Inception
Papp Small & Mid-Cap Growth Fund 13.0% 21.1%
Russell 2000 Stock Index 21.3% 29.9%
Year Papp Small & Mid-Cap Growth Fund Russell 2000 Stock Index
12/15/98 $10,000 $10,000
1998 10,800 10,837
1999 12,208 13,140
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
Russell 2000 Stock Index (an unmanaged, unweighted index that includes stocks of
2000 small U.S. companies, with dividends reinvested).
2
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
Dear Fellow Shareholder:
Our Fund was up 13.0% in 1999. Since its inception on December 15, 1998 it was
up 22.1%. This performance is below that of the Russell 2000 Index which was up
21.3% for the year and up 29.9% since the Fund was first publicly offered, due
to meteoric rise in some of the smaller Internet and bio-technology companies'
stocks.
On the following pages of this report you will find the names and brief
descriptions of all the stocks in the Fund's portfolio. You will note that the
number of companies owned is considerably larger than is typical in a Papp
managed account, which is quite compact. This is because most small and
mid-sized companies have only one or few product lines and therefore are
vulnerable to the entrance of a substantial competitor. Also, we have noted that
these smaller companies are quite volatile on a daily basis since their shares
are thinly traded and a large buyer or seller can move the price of the issue in
a major way. Furthermore, our experience has been that the executives of these
smaller companies do not seem to have the degree of control over their sales and
earnings as do the executives of the major companies. This lack of control leads
to surprises, both positive and negative, from time to time. For these reasons
we have diversified the portfolio quite widely and avoided making major
investments in any one stock.
On the other hand, we believe that carefully selected small and medium sized
companies offer attractive capital growth possibilities significantly above that
of the general U.S. economy. The companies we own have developed a great deal of
expertise in the niche markets they serve. If our judgment is correct, these
companies will be able to increase their sales and earnings at a much faster
pace than the typical large company. Also, these stocks typically are subject to
less Wall Street research than large companies, and we are often able to
purchase them when they are priced inefficiently.
While few of the companies owned by our Fund are household names, the range of
their activities is broad indeed. Our largest industry group is in financial
services encompassing mutual fund management companies, all the way to private
banking and asset administration services. In the medical and health care areas
we own companies manufacturing specialty medical equipment along with contract
research organizations. In the more mundane areas we own two discount
self-service stores, a for-profit educational company, a lightweight telephone
headset company, and an advertising agency.
In our opinion, all are good quality companies possessing the possibility of
excellent growth in the future.
Warmest regards,
/s/ L. Roy Papp
L. Roy Papp, Chairman
February 16, 2000
3
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number Market
Common Stocks of Shares Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
FINANCIAL SERVICES (20.4%)
Bisys Group*
(Provider of administration and information services
to the financial services industry) 3,000 $195,750
Concord EFS, Inc.*
(Electronic transaction authorization, processing and settlement services) 2,000 51,500
Federated Investors
(Major U.S. investment management company) 9,900 198,619
Investors Financial Services Corp.
(Provides asset administration services to the financial
services industry) 3,000 138,000
T. Rowe Price Associates, Inc.
(No-load mutual fund company) 5,000 184,688
U.S. Trust Corporation
(Provider of investment management, private banking,
and fiduciary services) 1,400 112,262
------------
880,819
------------
INDUSTRIAL SERVICES (16.4%)
Cambridge Technology Partners, Inc.*
(International professional services business) 2,200 57,750
Cintas Corp.
(Leading uniform and textile rental company) 1,000 53,125
Expeditors International of Washington, Inc.
(International air freight forwarding) 3,400 148,963
Forrester Research*
(Leading provider of strategic technology research) 2,600 179,075
G & K Services, Inc. Class A
(Uniform rental service) 1,800 58,275
Young & Rubicam Inc.
(Worldwide advertising agency) 3,000 212,250
------------
709,438
------------
ELECTRONIC EQUIPMENT (15.3%)
American Power Conversion Corporation*
(Leading producer of uninterruptible power supply products) 8,000 211,000
Molex, Inc.
(Supplier of interconnection products) 4,000 181,000
National Instruments Corp.*
(Supplier of computer based instrumentation products) 3,750 143,437
Symbol Technologies, Inc.
(Leading manufacturer of bar code driven mobile computing systems) 2,000 127,125
------------
662,562
------------
*Non-income producing security.
The accompanying notes are an integral part of this financial statement.
4
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
Number Market
Common Stocks (continued) of Shares Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
HEALTH CARE SERVICES (7.5%)
Covance, Inc.*
(Leading contract research organization to the drug industry) 4,000 $ 43,250
Express Scripts, Inc.*
(Leading independent pharmacy benefit manager) 1,500 96,000
IMS Health, Inc.
(Leading provider of information solutions and market research to
pharmaceutical industry) 3,000 81,563
Patterson Dental Company*
(Leading distributor of dental supplies in the U.S. and Canada) 2,500 106,563
------------
327,376
------------
TELECOMMUNICATIONS (7.5%)
ADC Telecommunications, Inc.*
(Manufacturer and developer of data and voice networking products) 2,500 181,406
Plantronics, Inc.*
(Manufactures lightweight telephone headsets) 2,000 143,125
------------
324,531
------------
SPECIALTY RETAILING (6.7%)
Dollar General Corporation
(Operates self-service discount stores) 5,000 113,750
Family Dollar Stores, Inc.
(Self-service discount store chain) 4,400 71,775
Office Depot*
(Leading retailer and direct marketer of office supplies) 9,500 103,906
------------
289,431
------------
MEDICAL PRODUCTS (6.6%)
Del Global Technologies
(Designs, manufactures, and markets medical imaging systems) 17,000 131,750
ResMed Inc.*
(Developer and manufacturer of respiratory products) 2,000 83,500
Stryker Corp.
(Developer and manufacturer of surgical and medical devices) 1,000 69,625
------------
284,875
------------
SOFTWARE (5.3%)
BMC Software, Inc.*
(Develops data and application management software) 2,000 159,875
SunGard Data Systems, Inc.*
(Develops software for investment support systems) 2,900 68,875
------------
228,750
------------
*Non-income producing security.
The accompanying notes are an integral part of this financial statement.
5
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
Number Market
Common Stocks (continued) of Shares Value
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
BIOTECHNOLOGY (3.8%)
Techne Corp.*
(Leading producer of raw materials for biotechnology industry) 3,000 $ 165,187
BROADCASTING AND PUBLISHING (3.0%)
Central Newspapers, Inc.
(Newspaper publisher) 2,000 78,750
Saga Communications, Inc.*
(Owns/operates radio and television stations) 2,500 50,625
------------
129,375
------------
CONSUMER SERVICES (2.2%)
Steiner Leisure Ltd.*
(Provider of spa services, beauty salons, and health
clubs on cruise ships) 5,800 96,788
------------
EVENT SERVICES (2.0%)
VIAD Corp.
(Provider convention/tradeshow management services and provides
money orders and other cash access services) 3,000 83,625
------------
EDUCATIONAL PROVIDER (1.4%)
Apollo Group, Inc.*
(Leading provider of higher education programs for working adults) 3,000 60,187
------------
TOTAL COMMON STOCKS - 98.1% 4,242,944
CASH AND OTHER ASSETS, LESS LIABILITIES - 1.9% 82,555
------------
NET ASSETS - 100% $4,325,499
============
NET ASSET VALUE PER SHARE
(Based on 236,188 shares outstanding at December 31, 1999) $18.31
============
</TABLE>
6
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
STATEMENT 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 $3,593,090 and $1,399,845 at December 31,
1999 and 1998, respectively) (Note 1) $4,242,944 $ 1,505,194
Cash 80,923 134,603
Dividends and interest receivable 1,632 1,101
Receivable for investments sold - 18,000
--------------- ---------------
Total assets $4,325,499 $ 1,658,898
=============== ===============
LIABILITIES
Payable for securities purchased - 92,673
--------------- ---------------
Total liabilities $ - $ 92,673
=============== ===============
NET ASSETS
Paid-in capital $3,702,254 $1,460,455
Accumulated undistributed net realized gain
on sale of investments 4,523 -
Accumulated undistributed net investment (loss)/income (31,132) 421
Net unrealized gain on investments 649,854 105,349
--------------- ---------------
Net assets applicable to Fund shares outstanding $4,325,499 $1,566,225
=============== ===============
Fund shares outstanding 236,188 96,681
=============== ===============
Net Asset Value Per Share (net assets/share outstanding) $18.31 $16.20
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE
PERIOD FROM DECEMBER 15, 1998 THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 7,717 $ 377
Interest 3,200 723
--------------- ---------------
Total investment income 10,917 1,100
--------------- ---------------
EXPENSES:
Management fee (Note 3) $ 33,639 $ 543
Filing fees 7,410 -
Accounting fees 5,750 -
Custody fees 4,990 -
Legal Fees 3,150 -
Directors' attendance fees 1,200 300
Printing fees 495 -
--------------- ---------------
Total expenses 56,634 843
--------------- ---------------
Less fees waived by adviser (Note 3) (14,585) (164)
--------------- ---------------
Net expenses 42,049 679
--------------- ---------------
Net investment (loss)/income (31,132) 421
--------------- ---------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Proceeds from sale of securities 1,750,454 -
Cost of securities sold (1,745,931) -
--------------- ---------------
Net realized gain on investments sold 4,523 -
Net change in unrealized gain on investments 544,505 105,349
--------------- ---------------
Net realized and unrealized gain on investments 549,028 105,349
--------------- ---------------
Net increase in net assets resulting from operations $ 517,896 $105,770
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE PERIOD FROM DECEMBER 15, 1998 TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment (loss)/income $ (31,132) $ 421
Net realized gain on investments sold 4,523 -
Net change in unrealized gain on investments 544,505 105,349
------------- -------------
Increase in net assets resulting from
operations 517,896 105,770
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income - prior year (421) -
Net realized gain on investments sold - -
------------- -------------
Decrease in net assets resulting from
distributions to shareholders (421) -
------------- -------------
FROM SHAREHOLDER TRANSACTIONS:
Proceeds from sale of shares 2,770,330 1,460,455
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
net realized gain on investments sold 266 -
Payments for redemption of shares (528,797) -
------------- -------------
Increase in net assets resulting
from shareholder transactions 2,241,799 1,460,455
------------- -------------
Total increase in net assets 2,759,274 1,566,225
------------- -------------
Net assets at beginning of the period 1,566,225 -
------------- -------------
Net assets at end of period $ 4,325,499 $1,566,225
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PAPP SMALL & MID-CAP GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) SIGNIFICANT ACCOUNTING POLICIES:
Papp Small & Mid-Cap Growth Fund, Inc. (the Fund) was incorporated on September
15, 1998 and is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. Operations of the Fund
commenced on December 15, 1998. The Fund invests with the objective of long-term
capital growth in the common stocks of small and mid-capitalization companies.
The investment adviser paid all start up costs, and the Fund will not reimburse
them.
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.
10
<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. During the year the Fund distributed $421 of net
investment income from the prior year.
(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 $14,585 and $164 was required in 1999
and 1998, respectively.
The Fund's independent directors receive $100 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 year ended December 31, 1999 and for the period from December 15, 1998
(date of commencement of operations) to December 31, 1998, investment
transactions excluding short-term investments were as follows:
1999 1998
----------------- -------------------
Purchases at cost $3,939,176 $1,399,845
Sales 1,750,454 -
11
<PAGE>
(5) CAPITAL SHARE TRANSACTIONS:
At December 31, 1999, there were 25,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital shares of the Fund were as follows:
Proceeds Shares
--------------- ----------------
Year ended December 31, 1999
Shares issued $2,770,330 171,664
Dividends and distributions reinvested 266 21
Shares redeemed (528,797) (32,178)
--------------- ----------------
Net increase $2,241,799 139,507
=============== ================
Period ended December 31, 1998
Shares issued $1,460,455 96,681
Dividends and distributions reinvested - -
Shares redeemed - -
--------------- ----------------
Net increase $1,460,455 96,681
=============== ================
(6) UNREALIZED APPRECIATION:
Unrealized appreciation of portfolio securities for both financial statement and
federal income tax purposes is as follows:
1999 1998
--------------- ----------------
Market value $4,242,944 $ 1,505,194
Original cost (3,593,090) (1,399,845)
--------------- ----------------
Net unrealized appreciation $ 649,854 $ 105,349
=============== ================
As of December 31, 1999, gross unrealized gains on investments in which market
value exceeded cost totaled $989,503 and gross unrealized losses on investments
in which cost exceeded market value totaled $339,649.
As of December 31, 1998, gross unrealized gains on investments in which market
value exceeded cost totaled $125,365 and gross unrealized losses on investments
in which cost exceeded market value totaled $20,016.
12
<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>
Year ended December 31, Period ended December 31,
1999 1998(A)
------------------------ -----------------------
<S> <C> <C>
Net asset value, beginning
of period $ 16.20 $ 15.00
Income from operations:
Net investment loss (0.14) -
Net realized and unrealized
gain on investments 2.25 1.20
---------------- ---------------
Total from operations 2.11 1.20
Less Distributions:
Dividend from investment
income - -
Distribution of net realized
gain - -
---------------- ---------------
Total distributions - -
Net asset value, end of period $ 18.31 $ 16.20
================ ===============
Total return 13.04% 8.00%
================ ===============
Ratios/Supplemental Data:
Net assets, end of period $4,325,499 $1,566,225
Expenses to average
net assets(B) 1.25% 1.25%*
Investment income to
average net assets(C) 0.32% 1.01%*
Portfolio turnover rate 53.07% 0.00%
* Annualized
(A) From the date of commencement of operations (December 15, 1998).
(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 1.68 and
1.56%, for the periods ended December 31, 1999 and 1998, respectively.
(C) Computed giving effect to investment adviser's expense limitation
undertaking.
</TABLE>
13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Papp Small & Mid-Cap Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of the Papp
Small & Mid-Cap Growth 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, changes in net assets, and the financial highlights
for the year ended December 31, 1999, and for the period from December 15, 1998
(date of commencement of operations) through December 31, 1998. 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. 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 Small & Mid-Cap Growth Fund, Inc. as of December 31, 1999 and 1998, and the
results of its operations, changes in its net assets, and its financial
highlights for the year ended December 31, 1999 and the period from December 15,
1998 (date of commencement of operations) through December 31, 1998, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
January 27, 2000.
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.
<PAGE>
PAPP SMALL & MID-CAP GROWTH 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.
