THOMPSON PLUMB FUNDS, INC.
SEMIANNUAL REPORT
May 31, 1996
Thompson Plumb Balanced Fund
Thompson Plumb Bond Fund
Thompson Plumb Growth Fund
8201 Excelsior Drive, Suite 200
Madison, Wisconsin 53717
Telephone (608) 831-1300
July 15, 1996
SEMIANNUAL REPORT TO SHAREHOLDERS
Dear Fellow Shareholder:
We are proud to present you the following report depicting the investment
returns of our family of mutual funds for the period ending May 31, 1996.
The goals for each fund are as follows:
Thompson Plumb Balanced Fund
This Fund seeks to realize a combination of income and capital
appreciation, which will result in the highest total return while
assuming reasonable risk. The Balanced Fund invests in a diversified
portfolio of common stocks and fixed income securities.
Thompson Plumb Bond Fund
This Fund seeks a high level of current income while at the same time
preserving investment capital. The Bond Fund invests primarily in a
diversified portfolio of investment-grade debt securities.
Thompson Plumb Growth Fund
This Fund seeks a high level of long-term growth primarily through
capital appreciation, while at the same time assuming reasonable risk.
The Growth Fund invests primarily in a diversified portfolio of common
stocks and securities convertible into common stocks. Although current
income is not a primary objective of the Growth Fund, the Fund anticipates
that capital growth will be accompanied by growth through dividend income.
We hope that you find the report clear and concise and that
it provides you with a sufficient amount of detailed information in
order to be able to review your investment. We welcome your
comments and questions.
Sincerely,
John W. Thompson, CFA Thomas G. Plumb
Chairman & Secretary President & Treasurer
THOMPSON PLUMB FUNDS, INC.
SEMIANNUAL REPORT TO SHAREHOLDERS
May 31, 1996
CONTENTS
Page(s)
REPORT TO SHAREHOLDERS 1
OVERALL INVESTMENT REVIEW 3
FINANCIAL STATEMENTS
Statement of assets and liabilities 4
Schedule of investments 5-9
Statement of operations 10
Statement of changes in net assets 11
Notes to financial statements 12-15
Financial highlights 16-18
This semiannual report is authorized for distribution to prospective
investors only when preceded or accompanied by a Fund prospectus which
contains facts concerning the Funds' objectives and policies, management,
expenses, and other information.
THOMPSON PLUMB FUNDS,INC.
SEMIANNUAL REPORT TO SHAREHOLDERS
July 15, 1996
OVERALL INVESTMENT REVIEW
The U.S. economy had surprising and increasing strength during the
first six months of the fiscal year. As this strength became evident,
interest rates quickly reversed and moved higher as investors began to
fear rising inflation. This caused bond prices to fall and hurt the
results of the Bond Fund. In contrast, stocks continued to rise throughout
the six months. This is reflected in the excellent gains shown by the
Balanced and Growth Funds. For the first six months of their fiscal year,
your Funds' total returns were: 8.39% for the Balanced Fund, (2.37%)
for the Bond Fund, and 14.07% for the Growth Fund. The negative
return of the Bond Fund, as mentioned, reflected the sharp rise in interest
rates. The gains for the Balanced and Growth Funds exceeded the average
returns for competitive funds of their type, as measured by Lipper
Analytical Services. Looking ahead, we believe inflation fears are overdone.
Even if inflation should rise somewhat on a near-term cyclical basis, we
believe the well-established disinflation trend is intact. Underlying factors
that should dampen future inflation include demographics that foster more
savings, technology innovations that promote productivity, the already high
debt levels in the consumer sector, and the absence of pent-up demand for
durable goods. We also believe central bankers and governments will focus
on price stability in the years ahead. For all of these reasons, our
outlook is for a relatively stable economy and well-contained inflation for
the next few years. These conditions should provide a generally favorable
environment for bond and stock investments over the long-term, despite the
likelihood of setbacks in both bonds and stocks at times. Thus, we expect
to use any corrections in security markets as opportunities to gradually
accumulate bonds and stocks of strong companies for long-term investment
in your Funds.
<TABLE>
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
(Unaudited)
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
ASSETS
Investments, at market value
(Cost $16,326,185, $17,421,467
and $14,964,859, respectively)
Common stocks ............... $ 14,138,775 - $ 18,014,675
Bonds ....................... 5,033,440 $ 16,422,528 -
Short-term investments ...... 194,216 626,944 183,201
19,366,431 17,049,472 18,197,876
Prepaid expenses ............ 8,378 7,326 5,856
Due from sale
of securities ............. 92,197 - -
Dividends and interest
receivable ................ 94,068 230,383 20,103
$ 19,561,074 $ 17,287,181 $ 18,223,835
LIABILITIES
Due on purchase of
securities ................ - - $ 175,500
Accrued expenses payable .... $ 35,956 $ 23,787 32,196
Due to investment
advisor ................... - 1,100 -
35,956 24,887 207,696
NET ASSETS
Capital stock, $.001 par value;
100,000,000 shares authorized;
1,370,627, 1,700,238 and
652,675 shares outstanding,
respectively ................ 15,467,790 17,650,970 14,104,772
Undistributed net investment
income (loss) ............... 84,675 225,065 (15,318)
Net realized gain (loss) on
investments ................. 932,407 (241,746) 693,668
Net unrealized appreciation
(depreciation) on
investments ................. 3,040,246 (371,995) 3,233,017
19,525,118 17,262,294 18,016,139
$ 19,561,074 $ 17,287,181 $ 18,223,835
Offering and redemption price/
Net asset value per share .. $14.25 $10.15 $27.60
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
May 31, 1996
(Unaudited)
<CAPTION>
Shares or
Principal Market
Amount Value
BALANCED FUND
<S> <C> <C>
COMMON STOCKS - 73.0%
Consumer Non-durables - 5.6%
Coca-Cola ......................... 6,000 $ 276,000
Eastman Kodak ..................... 3,000 223,125
PepsiCo ........................... 10,000 332,500
Procter & Gamble .................. 3,000 263,625
1,095,250
Health Care - 13.2%
Abbott Laboratories ................ 8,000 345,000
Circon <F1> ........................ 20,000 262,500
DENTSPLY International ............. 5,000 215,000
Johnson & Johnson .................. 4,000 389,500
Medtronic .......................... 2,500 140,625
Merck & Co. ........................ 6,500 420,062
St. Jude Medical <F1> .............. 6,000 228,000
Sofamor/Danek Group <F1> ........... 8,000 286,000
U. S. Surgical ..................... 8,000 274,000
2,560,687
Services - 5.2%
Marcus ............................. 8,000 208,000
Merrill ............................ 13,000 328,250
New York Times - Class A ........... 8,000 263,000
Sysco .............................. 6,000 204,750
1,004,000
Retail - 3.8%
Heilig-Meyers ...................... 10,000 206,250
Sports & Recreation <F1> ........... 15,000 142,500
Wal-Mart Stores .................... 15,000 388,125
736,875
Capital Goods - 8.4%
Advanced Lighting <F1> ............. 20,000 350,000
AMP ................................ 8,000 337,000
Emerson Electric ................... 4,000 342,500
General Electric ................... 5,500 455,125
Grainger, W. W. ................... 2,000 133,750
1,618,375
Basic Materials - 4.4%
Schulman, A. ....................... 4,000 103,500
Sigma-Aldrich ...................... 5,000 280,000
Specialty Paperboard <F1> .......... 20,000 295,000
Wausau Paper Mills ................. 8,000 170,000
848,500
Technology - 11.8%
Bay Networks <F1> .................. 4,000 116,000
Cisco Systems <F1> ................. 2,000 109,500
DSC Communications <F1> ............ 8,000 241,000
EMC <F1> ........................... 16,000 352,000
Intel .............................. 5,000 377,500
Lattice Semiconductor <F1> ......... 7,000 242,375
Linear Technology .................. 9,000 310,500
Lucent Technologies <F1> ........... 7,000 266,000
Motorola ........................... 4,000 267,000
2,281,875
Energy - 7.1%
Chevron ............................ 4,000 239,000
Chieftain International <F1> ....... 17,500 325,938
Enron Oil & Gas .................... 15,000 378,750
Exxon .............................. 5,000 423,750
1,367,438
Telecommunications/Cable - 4.9%
AT & T ............................. 6,000 374,250
MCI Communications ................. 10,000 291,250
WorldCom <F1> ...................... 6,000 293,250
958,750
Financial Services - 8.6%
Associates First Capital <F1> ...... 11,000 407,000
Cincinnati Financial ............... 4,200 249,900
Federal National Mortgage .......... 8,000 247,000
First Financial - Wisconsin ........ 15,000 345,000
Marshall & Ilsley .................. 12,000 330,000
MGIC Investment .................... 1,500 88,125
1,667,025
TOTAL COMMON STOCK
(COST $10,954,438) .............. 14,138,775
BONDS - 26.0%
United States Government
and Agency Issues - 12.6%
Federal Home Loan Mortgage
7.350% Due 03/22/05 ............. 1,000,000 1,012,660
United States Treasury Notes
7.750% Due 12/31/99 ............. 400,000 415,188
United States Treasury Notes
7.250% Due 08/15/04 ............. 500,000 512,345
United States Treasury Notes
7.250% Due 05/15/16 ............. 500,000 503,595
Total United States Government
and Agency Issues .............. 2,443,788
Corporate Bonds - 13.4%
American Home Products
7.900% Due 02/15/05 ............. 500,000 518,280
Ford Holdings
9.250% Due 03/01/00 ............. 250,000 267,890
General Electric Capital
8.750% Due 05/21/07 ............. 510,000 564,029
Philip Morris
8.250% Due 10/15/03 ............. 750,000 782,348
Union Pacific Corp.
6.000% Due 09/01/03 ............. 500,000 457,105
Total Corporate Bonds 2,589,652
TOTAL BONDS
(COST $5,177,531) ............... 5,033,440
SHORT-TERM INVESTMENTS - 1.0%
Pitney Bowes Credit
Variable Rate Demand Notes ....... 66,751 66,751
Sara Lee
Variable Rate Demand Notes ....... 41,819 41,819
Southwestern Bell Telephone
Variable Rate Demand Notes ....... 17,286 17,286
Wisconsin Electric Power
Variable Rate Demand Notes ....... 68,360 68,360
TOTAL SHORT-TERM INVESTMENTS
(COST $194,216) .................. 194,216
TOTAL INVESTMENTS - 100.0%
(COST $16,326,185) ............... $19,366,431
<FN>
<F1>
Non-income producing
</FN>
<CAPTION>
Shares or
Principal Market
Amount Value
BOND FUND <C> <C>
<S>
BONDS - 96.3%
United States Government
and Agency Issues - 44.6%
United States Treasury Notes
7.750% Due 12/31/99 ............. 1,000,000 $ 1,037,970
United States Treasury Notes
8.000% Due 05/15/01 ............. 1,000,000 1,056,250
United States Treasury Notes
7.250% Due 05/15/04 ............. 1,000,000 1,024,840
United States Treasury Notes
7.875% Due 11/15/04 ............. 1,350,000 1,436,481
United States Treasury Notes
7.500% Due 02/15/05 ............. 1,000,000 1,040,160
United States Treasury Notes
7.250% Due 05/15/16 ............. 1,000,000 1,007,190
United States Treasury Notes
7.250% Due 08/15/22 ............. 1,000,000 1,007,030
Total United States Government
and Agency Issues ............... 7,609,921
Corporate Bonds - 51.7%
American Home Products
7.900% Due 02/15/05 ............. 750,000 777,420
AT & T Corp.
6.750% Due 04/01/04 ............. 500,000 482,190
AT & T Corp.
7.000% Due 05/15/05 ............. 250,000 246,173
Baltimore Gas & Electric
8.375% Due 08/15/01 ............. 200,000 211,054
Disney, Walt Co.
6.750% Due 03/30/06 ............. 500,000 479,845
First Bank Systems
6.875% Due 09/15/07 ............. 500,000 473,795
Firstar Corp.
7.150% Due 09/01/00 ............. 350,000 347,980
Ford Motor Credit
5.750% Due 01/25/01 ............. 250,000 236,720
General Electric Capital
8.750% Due 05/21/07 ............. 500,000 552,970
Maytag Corp.
8.875% Due 07/15/99 ............. 250,000 263,395
McDonnell Douglas
8.400% Due 04/11/00 ............. 250,000 253,353
Norwest Financial
6.250% Due 11/01/02 ............. 250,000 238,845
Penney, J. C. & Co.
7.375% Due 06/15/04 ............. 500,000 496,405
PepsiCo, Inc.
7.050% Due 05/15/06 ............. 500,000 489,845
Philip Morris
9.000% Due 01/01/01 ............. 500,000 533,750
Sears, Roebuck Co.
8.450% Due 11/01/98 ............. 500,000 519,055
Smithkline Beecham
7.375% Due 04/15/05 ............. 500,000 502,970
Time Warner, Inc.
7.450% Due 02/01/98 ............. 500,000 504,220
Time Warner, Inc.
7.950% Due 02/01/00 ............. 200,000 203,562
Travelers/Aetna
6.750% Due 04/15/01 ............. 500,000 492,655
Wal-Mart Stores
7.500% Due 05/15/04 ............. 500,000 506,405
Total Corporate Bonds ............. 8,812,607
TOTAL BONDS
(COST $16,794,523) .............. $16,422,528
SHORT-TERM INVESTMENTS - 3.7%
General Mills
Variable Rate Demand Notes ...... 92,847 $ 92,847
Pitney Bowes Credit
Variable Rate Demand Notes ...... 324,902 324,902
Wisconsin Electric Power
Variable Rate Demand Notes ...... 209,195 209,195
TOTAL SHORT-TERM INVESTMENTS
(COST $626,944) ................. 626,944
TOTAL INVESTMENTS - 100.0%
(COST 17,421,467) $17,049,472
<CAPTION>
Shares or
Principal Market
Amount Value
GROWTH FUND
<S> <C> <C>
COMMON STOCKS - 99.0%
Consumer Non-durables - 11.2%
Celestial Seasonings <F1> .......... 10,000 $ 210,000
Coca-Cola .......................... 4,000 184,000
CPC International .................. 4,000 276,500
Eastman Kodak ...................... 7,000 520,625
PepsiCo ............................ 12,000 399,000
Procter & Gamble ................... 5,000 439,375
2,029,500
Health Care - 14.3%
Abbott Laboratories ................ 8,000 345,000
DENTSPLY International ............. 8,000 344,000
EmCare Holdings <F1> ............... 2,500 78,125
Johnson & Johnson .................. 3,000 292,125
Merck & Co. ........................ 12,000 775,500
St. Jude Medical <F1> .............. 8,000 304,000
Sofamor/Danek Group <F1> ........... 13,000 464,750
2,603,500
Services - 7.2%
Marcus ............................. 10,000 260,000
Merrill ............................ 15,000 378,750
New York Times - Class A ........... 10,000 328,750
Romac International <F1> ........... 5,000 142,500
Sysco .............................. 6,000 204,750
1,314,750
Retail - 7.1%
Best Buy <F1> ...................... 8,000 182,000
Heilig-Meyers ...................... 10,000 206,250
Sports & Recreation <F1> ........... 20,000 190,000
Wal-Mart Stores .................... 18,000 465,750
Walgreen ........................... 8,000 255,000
1,299,000
Capital Goods - 10.0%
AMP ................................ 10,000 421,250
Emerson Electric ................... 3,000 256,875
General Electric ................... 4,000 331,000
Grainger, W. W. .................... 5,000 334,375
Millipore .......................... 6,000 263,250
Molex - Class A .................... 7,000 205,625
1,812,375
Basic Materials - 4.2%
Consolidated Papers ................ 5,000 261,250
Sigma-Aldrich ...................... 9,000 504,000
765,250
Technology - 18.8%
Bay Networks <F1> .................. 5,000 145,000
Cisco Systems <F1> ................. 4,000 219,000
Dallas Semiconductor ............... 12,000 252,000
DSC Communications <F1> ............ 9,000 271,125
EMC <F1> ........................... 25,000 550,000
Intel .............................. 5,000 377,500
Lattice Semiconductor <F1> ......... 8,000 277,000
Linear Technology .................. 20,000 690,000
Lucent Technologies <F1> ........... 7,100 269,800
Tylan General <F1> ................. 12,000 118,500
Zebra Technologies - Class A <F1> .. 10,000 252,500
3,422,425
Energy - 9.6%
Chevron ............................. 5,000 298,750
Chieftain International <F1> ........ 24,000 447,000
Devon Energy ........................ 12,000 306,000
Enron Oil & Gas ..................... 14,000 353,500
Exxon ............................... 4,000 339,000
1,744,250
Telecommunications/Cable - 8.3%
AT & T .............................. 5,000 311,875
MCI Communications .................. 20,000 582,500
Paging Network <F1> ................. 12,000 270,000
WorldCom <F1> ....................... 7,000 342,125
1,506,500
Financial Services - 8.3%
AMRESCO <F1> ........................ 10,000 183,750
Associates First Capital <F1> ....... 12,000 444,000
Federal National Mortgage ........... 13,000 401,375
First Financial - Wisconsin ......... 11,000 253,000
MGIC Investment ..................... 4,000 235,000
1,517,125
TOTAL COMMON STOCK
(COST $14,781,658) ................ 18,014,675
SHORT-TERM INVESTMENTS - 1.0%
General Mills
Variable Rate Demand Notes ........ 11,874 11,874
Pitney Bowes Credit
Variable Rate Demand Notes ........ 95,000 95,000
Wisconsin Electric Power
Variable Rate Demand Notes ........ 76,327 76,327
TOTAL SHORT-TERM INVESTMENTS
(COST $183,201) ................... 183,201
TOTAL INVESTMENTS - 100.0%
(COST $14,964,859) ................ $18,197,876
<FN>
<F1>
Non-income producing
</FN>
The accompanying notes to financial statementsare an integral part of this
schedule.
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MAY 31, 1996
(Unaudited)
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
Investment income
Dividends ...................... $ 104,604 $ 6,102 $ 92,238
Interest ....................... 169,082 513,999 13,556
273,686 520,101 105,794
Expenses
Accounting services fees ....... 19,167 15,756 15,595
Directors fees ................. 4,731 3,787 3,482
Investment advisory fees ....... 81,460 51,176 74,288
Professional fees .............. 10,738 9,100 10,487
Shareholder servicing costs .... 15,608 2,758 7,985
Other expenses ................. 9,523 7,966 9,275
141,227 90,543 121,112
Net investment income (loss) ..... 132,459 429,558 (15,318)
Net realized gain (loss)
on investments ................. 946,386 (53,909) 718,989
Net unrealized appreciation
(depreciation) on investments ... 464,012 (760,222) 1,315,265
Net gain (loss) on investments ... 1,410,398 (814,131) 2,034,254
Net increase (decrease) in
net assets resulting
from operations ................ $ 1,542,857 $ (384,573) $ 2,018,936
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MAY 31, 1996
(Unaudited)
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) ..... $ 132,459 $ 164,160 $ 429,558 $ 336,254 $ (15,318) $ (4,464)
Net realized gain (loss) on
investments .................... 946,386 525,447 (53,909) (23,243) 718,989 114,011
Net unrealized appreciation
(depreciation) on investments .. 464,012 1,336,990 (760,222) 687,025 1,315,265 934,129
Net increase (decrease) in net
assets resulting from
operations ..................... 1,542,857 2,026,597 (384,573) 1,000,036 2,018,936 1,043,676
Distributions to Shareholders
Distributions from net investment
income ......................... (298,611) (358,945) (394,178) (289,369) - -
Distributions from net realized
gains on securities
transactions ................... (1,112,851) (1,971,983) - - (284,824) (430,201)
Total distributions to shareholders (1,411,462) (2,330,928) (394,178) (289,369) (284,824) (430,201)
Fund Share Transactions
Proceeds from the sale of 139,450;
90,363; 319,141; 189,341; 144,636
and 106,541 shares sold,
respectively ...................... 1,918,232 1,147,002 3,303,074 1,919,771 3,731,963 2,215,544
Net asset value of 21,882; 29,018;
35,052 and 25,878 shares issued
to shareholders in reinvestment
of dividends, respectively ........ 288,668 347,632 365,476 256,466 - -
Net asset value of 81,571; 159,459;
9,451 and 21,159 shares issued to
shareholders in reinvestment of
realized gains, respectively ...... 1,076,090 1,910,301 - - 229,871 405,826
Payments for 143,396; 248,813;
47,107; 66,908; 9,554 and
9,089 shares redeemed,
respectively ...................... (1,975,742) (3,110,064) (497,740) (680,927) (248,974) (191,772)
Net increase in net assets resulting
from Fund share transactions
(99,507; 30,027; 307,086; 148,311;
144,533 and 118,611 shares,
respectively) ..................... 1,307,248 294,871 3,170,810 1,495,310 3,712,860 2,429,598
Total increase (decrease) in net
assets .............................. 1,438,643 (9,460) 2,392,059 2,205,977 5,446,972 3,043,073
Net Assets
Beginning of period ................. 18,086,475 17,236,131 14,870,235 10,213,351 12,569,167 4,700,879
End of period (Including
undistributed net investment
income (loss) of $84,675;
$116,378; $225,065; $179,096;
($15,318) and ($4,464),
respectively) ..................... $19,525,118 $17,226,671 $17,262,294 $12,419,328 $18,016,139 $ 7,743,952
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Thompson Plumb Funds, Inc. (the "Company") is a Wisconsin corporation
registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end, diversified management investment
company.
The Company is a series of separate mutual funds: Thompson
Plumb Balanced Fund (the "Balanced Fund"), Thompson Plumb Bond Fund
(the "Bond Fund"), and Thompson Plumb Growth Fund (the "Growth
Fund"), collectively the "Funds." The assets and liabilities of
each Fund are segregated and a shareholder's interest is limited to
the Fund in which the shareholder owns shares.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements.
SECURITY VALUATION - Portfolio securities which are traded on an exchange
or in the over-the-counter market are valued at the last sale price reported
on the day of valuation. Securities for which there are no transactions
on a given day or securities not traded on an exchange or in the
over-the-counter market are valued at the average of the most recent bid
and asked prices. Portfolio securities which are traded both in the
over-the-counter market and on an exchange are valued according to the
broadest and most representative market. Debt securities for which market
quotations are not readily available may be valued based on information
supplied by independent pricing services, including services using matrix
pricing formulas and/or independent broker bid quotations. Debt securities
with remaining maturities of 60 days or less may be valued on an amortized
cost basis, which involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating rates on the market value of the
instrument. Any securities or other assets for which market quotations are
not readily available are valued at fair value as determined in good faith
by the Advisor pursuant to procedures established under the general
supervision and responsibility of the Board of Directors of Thompson Plumb
Funds, Inc.
REALIZED GAINS AND LOSSES ON SECURITIES - Gains or losses realized on sales
of securities are determined by comparing the identified cost of the
security lot sold with the net sales proceeds.
VARIABLE-RATE DEMAND NOTES - The Funds invest in short-term, variable-rate
demand notes, which are unsecured instruments. The Funds may be susceptible
to credit risk with respect to these instruments to the extent the issuer
defaults on its payment obligation. Each Fund's policy is to not purchase
variable-rate demand notes unless at the time of purchase the issuer has
unsecured debt securities outstanding that have received a rating within
the two highest categories from either Standard & Poor's Corporation
(that is, A-1, A-2 or AAA, AA) or Moody's Investors Service, Inc. (that is,
Prime-1, Prime-2 or Aaa, Aa). Accordingly, the Funds do not anticipate
nonperformance of these obligations by the issuers.
PERMANENT BOOK AND TAX DIFFERENCES - Cumulative permanent book and tax
differences of $106,838 in undistributed net investment loss have been
reclassified to paid-in capital for the Growth Fund.
OTHER - Investment security transactions are accounted for on the trade
date. Discounts and premiums on securities purchased are amortized
over the life of the respective securities on the same basis for
book and tax purposes. Dividend income is recorded on the ex-dividend
date. Interest income is recorded as earned.
NOTE 3 - INVESTMENT ADVISORY & ACCOUNTING SERVICES AGREEMENTS AND
OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into an Advisory Agreement with Thompson, Plumb
& Associates, Inc. (the "Advisor") for management of each Fund's portfolio
and for the administration of other Fund affairs. As compensation for its
services, the Advisor receives a fee computed daily and payable monthly as
follows: (i) for the Balanced Fund, .85 of 1% of net assets up to $50
million and .80 of 1% of net assets in excess of $50 million; (ii) for the
Bond Fund, .65 of 1% of net assets up to $50 million and .60 of 1% of net
assets in excess of $50 million; (iii) for the Growth Fund, 1.00% of net
assets up to $50 million and .90 of 1% of net assets in excess of $50
million.
Pursuant to an Accounting Services Agreement, the Advisor maintains the
Funds' financial records in accordance with the 1940 Act, prepares all
necessary financial statements of the Funds, and calculates the net
asset value per share of the Funds on a daily basis. As compensation
for its services, each Fund pays the Advisor a fee computed daily and
payable monthly at the annual rate of .20 of 1% of net assets up to $30
million and .125 of 1% of net assets in excess of $30 million, with a
minimum fee of $30,000 per year.
Each Fund is charged for those expenses that are directly attributed to
it, such as advisory, custodian, accounting services and certain
shareholder servicing fees, while other expenses that cannot be directly
attributable to a Fund are allocated among the Funds in
proportion to the net assets of the respective Fund.
NOTE 4 - DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income and realized
gains on securities from the Balanced Fund and the Growth Fund normally
will be declared on an annual basis within 30 days and paid within 60
days following the Funds' fiscal year-end. Bond Fund distributions to
shareholders from net investment income normally will be declared on a
quarterly basis within 30 days and paid within 60 days following the Fund's
fiscal quarter, and distributions to shareholders from realized gains on
securities normally will be declared on an annual basis within 30 days and
paid within 60 days following the Fund's fiscal year-end. Distributions are
recorded on the ex-dividend date.
For the period ended February 29, 1996, a dividend from net investment
income for the Bond Fund was declared March 15, 1996 payable to
shareholders on March 18, 1996. For the period ended November 30, 1995,
a capital gains distribution for the Balanced Fund and the Growth Fund
and a dividend from net investment income for the Balanced Fund and the
Bond Fund were declared December 22, 1995 payable to shareholders on
December 26, 1995.
CAPITAL GAINS DISTRIBUTIONS
1995 Long-term 1995 Short-term
Total Per Total Per
Distribution Share Distribution Share
BALANCED FUND $544,632 $0.42 $568,219 $0.44
GROWTH FUND $5,240 $0.01 $279,584 $0.54
DIVIDENDS FROM NET INVESTMENT INCOME
1996 1995
Total Per Total Per
Distribution Share Distribution Share
BALANCED FUND - - $298,611 $0.23
BOND FUND $192,378 $0.13 $201,800 $0.14
NOTE 5 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the six months ended
May 31, 1996 were as follows:
Balanced Fund Bond Fund Growth Fund
U S. Government Securities
Purchases $3,522,469 $7,031,438 -
Sales $3,016,094 $7,348,133 -
Securities other than
U S. Government and
Short-term Investments
Purchases $10,280,102 $5,800,703 $11,942,343
Sales $10,745,272 $2,428,369 $ 7,882,359
NOTE 6 - FEDERAL INCOME TAXES
No provision has been made for Federal income taxes since the Funds
have elected to be taxed as regulated investment companies and intend to
distribute substantially all income to shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies. The Bond Fund has $186,829 of net capital losses
which expire November 30, 2002 that may be used to offset capital gains
in future years to the extent provided by tax regulations.
For Federal income tax purposes at May 31, 1996:
Aggregate Aggregate Net unrealized
unrealized unrealized appreciation
Aggregate cost appreciation depreciation (depreciation)
of investments for investments for investments for investments
in securities held held held
Balanced Fund $16,372,608 $3,251,531 ($257,708) $2,993,823
Bond Fund $17,421,467 $50,129 ($422,124) ($371,995)
Growth Fund $15,014,548 $3,295,074 ($111,746) $3,183,328
<TABLE>
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
<CAPTION>
The following table presents information relating to a share of capital
stock outstanding for the entire period.
BALANCED FUND
Year Ended November 30,
1996<F5> 1995 1994 1993 1992 1991 1990 1989 1988 1987<F4>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<S>
Net Asset Value, Beginning of Period $14.23 $13.55 $14.17 $14.57 $13.50 $11.69 $11.87 $10.06 $8.45 $10.00
Income from Investment Operations
Net investment income 0.09 0.24 0.27 0.28 0.30 0.27 0.27 0.30 0.19 0.09
Net realized and unrealized gains
(losses) on investments 1.02 2.26 0.04 0.15 1.16 1.83 (0.14) 1.72 1.51 (1.64)
Total from Investment Operations 1.11 2.50 0.31 0.43 1.46 2.10 0.13 2.02 1.70 (1.55)
Less Distributions
Dividends from net investment
income (0.23) (0.28) (0.27) (0.28) (0.28) (0.29) (0.31) (0.21) (0.09) -
Distributions from capital gains (0.86) (1.54) (0.66) (0.55) (0.11) - - - - -
Total Distributions (1.09) (1.82) (0.93) (0.83) (0.39) (0.29) (0.31) (0.21) (0.09) -
Net Asset Value, End of Period $14.25 $14.23 $13.55 $14.17 $14.57 $13.50 $11.69 $11.87 $10.06 $8.45
Total Return 8.39%<F1> 21.02% 2.15% 3.02% 10.91% 18.35% 1.18% 20.46% 20.28% (15.50%)<F1>
Ratios/Supplemental Data
Net assets, end of period (millions) $19.5 $18.1 $17.2 $21.5 $20.9 $18.1 $11.4 $9.0 $6.4 $4.4
Ratio of expenses to average
net assets 1.48%<F2> 1.49% 1.42% 1.40% 1.48% 1.64% 1.84% 2.00% 2.00%<F3> 2.00%<F2><F3>
Ratio of net income to average
net assets 1.38%<F2> 1.71% 1.84% 1.89% 2.14% 2.46% 2.49% 2.95% 2.15%<F3> 1.93%<F2><F3>
Portfolio turnover rate 74.33% 111.16% 110.01% 91.77% 52.75% 48.46% 56.86% 55.69% 80.96% 114.06%
Average commission rate paid $0.0729 - - - - - - - - -
<FN>
<F1>
Calculated on a non-annualized basis.
<F2>
Calculated on an annualized basis.
<F3>
Computed after giving effect to Advisor's
expense reimbursement as follows: 1988 1987 <F4>
Advisor's expense reimbursement $13,977 $4,994
Ratio of expenses to average net
assets without reimbursement 2.2% 2.2%<F2>
Ratio of net income to average net
assets without reimbursement 1.9% 1.7%<F2>
<F4>
For the period March 16, 1987 (Commencement of Operations) through
November 30, 1987.
<F5>
For the six month period ended May 31, 1996 (Unaudited).
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
<CAPTION>
The following table presents information relating to a share of
capital stock outstanding for the entire period.
BOND FUND
Year Ended November 30,
1996<F5> 1995 1994 1993 1992<F4>
<C> <C> <C> <C> <C>
<S>
Net Asset Value, Beginning of Period $10.67 $9.88 $10.78 $10.33 $10.00
Income from Investment Operations
Net investment income 0.26 0.57 0.48 0.45 0.20
Net realized and unrealized gains
(losses) on investments (0.51) 0.78 (0.78) 0.44 0.28
Total from Investment Operations (0.25) 1.35 (0.30) 0.89 0.48
Less Distributions
Dividends from net investment income (0.27) (0.56) (0.47) (0.42) (0.15)
Distributions from capital gains - - (0.13) (0.02) -
Total Distributions (0.27) (0.56) (0.60) (0.44) (0.15)
Net Asset Value, End of Period $10.15 $10.67 $9.88 $10.78 $10.33
Total Return (2.37%)<F1> 14.06% (2.96%) 8.74% 4.80%<F1>
Ratios/Supplemental Data
Net assets, end of period (millions) $17.3 $14.9 $10.2 $6.2 $3.9
Ratio of expenses to average net assets 1.15%<F2> 1.13%<F3> 1.00%<F3> 1.00%<F3> 1.15%<F2><F3>
Ratio of net income to average net assets 5.44%<F2> 5.70%<F3> 4.83%<F3> 4.44%<F3> 4.36%<F2><F3>
Portfolio turnover rate 64.07% 111.95% 165.74% 111.18% 227.03%
<FN>
<F1>
Calculated on a non-annualized basis.
<F2>
Calculated on an annualized basis.
<F3>
Computed after giving effect to Advisor's
expense reimbursement as follows: 1995 1994 1993 1992 <F4>
Advisor's expense reimbursement $25,775 $46,412 $39,759 $20,582
Ratio of expenses to average net
assets without reimbursement 1.34% 1.48% 1.76% 2.36%<F2>
Ratio of net income to average
net assets without reimbursement 5.49% 4.34% 3.68% 3.13%<F2>
<F4>
For the period February 10, 1992 (Commencement of
Operations) through November 30, 1992.
<F5>
For the six month period ended May 31, 1996 (Unaudited).
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
<CAPTION>
The following table presents information relating to a share of
capital stock outstanding for the entire period.
GROWTH FUND
Year Ended November 30,
1996<F5> 1995 1994 1993 1992<F4>
<C> <C> <C> <C> <C>
<S>
Net Asset Value, Beginning of Period $24.74 $20.43 $20.47 $20.37 $20.00
Income from Investment Operations
Net investment income (loss) (0.02) (0.05) (0.20) (0.12) (0.05)
Net realized and unrealized
gains on investments 3.43 6.22 0.16 0.22 0.42
Total from Investment Operations 3.41 6.17 (0.04) 0.10 0.37
Less Distributions
Dividends from net investment income - - - - -
Distributions from capital gains (0.55) (1.86) - - -
Total Distributions (0.55) (1.86) - - -
Net Asset Value, End of Period $27.60 $24.74 $20.43 $20.47 $20.37
Total Return 14.07%<F1> 32.87% (0.19%) 0.49% 1.85%<F1>
Ratios/Supplemental Data
Net assets, end of period (millions) $18.0 $12.6 $4.7 $7.1 $7.4
Ratio of expenses to average net assets 1.62%<F2> 2.00% 2.00%<F3> 1.93% 2.00%<F2><F3>
Ratio of net income to average net assets (0.20%)<F2> (0.31%) (0.49%)<F3> (0.54%) (0.40%)<F2><F3>
Portfolio turnover rate 54.37% 86.68% 116.69% 98.93% 43.23%
Average commission rate paid $0.0892 - - - -
<FN>
<F1>
Calculated on a non-annualized basis.
<F2>
Calculated on an annualized basis.
<F3>
Computed after giving effect to Advisor's
expense reimbursement as follows: 1994 1992<F4>
Advisor's expense reimbursement $16,467 $2,638
Ratio of expenses to average net
assets without reimbursement 2.31% 2.05%<F2>
Ratio of net income to average net
assets without reimbursement (0.80)% (0.46%)<F2>
<F4>
For the period February 10, 1992 (Commencement of
Operations) through November 30, 1992.
<F5>
For the six month period ended May 31, 1996 (Unaudited).
</TABLE>
DIRECTORS OF THE FUNDS
George H. Austin
Mary Ann Deibele
John W. Feldt
Donald A. Nichols
Thomas G. Plumb, CFA: Vice President
Thompson, Plumb & Associates, Inc.
John W. Thompson, CFA: President
Thompson, Plumb & Associates, Inc.
OFFICERS OF THE FUNDS
John W. Thompson, CFA
Chairman & Secretary
Thomas G. Plumb, CFA
President & Treasurer
CUSTODIAN, TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Firstar Trust Company
P.0. Box 701
Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INVESTMENT ADVISOR
Thompson, Plumb & Associates, Inc.
8201 Excelsior Drive, Suite 200
Madison, Wisconsin 53717
Telephone: (608) 831-1300
