THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT
November 30, 1995
Thompson Plumb Balanced Fund
Thompson Plumb Bond Fund
Thompson Plumb Growth Fund
8201 Excelsior Drive, Suite 200
Madison, Wisconsin 53717
Telephone (608) 831-1300
January 15, 1996
ANNUAL 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 November 30, 1995. The last year was an excellent year in
the investment markets and your Funds participated in this
favorable environment. The Balanced Fund was up 21.02 percent, the
Bond Fund was up 14.06 percent, and the Growth Fund was up 32.87
percent. 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 seeks to attain this
objective by investing 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. It seeks to attain this
objective by investing 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 seeks to attain this objective by investing
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, CFA
Chairman & Secretary President & Treasurer
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1995
CONTENTS
Page(s)
REPORT TO SHAREHOLDERS 1
INVESTMENT REVIEWS
Balanced Fund 5
Bond Fund 6
Growth Fund 7
FINANCIAL STATEMENTS
Statement of assets and liabilities 8
Schedule of investments 9-13
Statement of operations 15
Statement of changes in net assets 16
Notes to financial statements 17-20
Financial highlights 21
REPORT OF INDEPENDENT ACCOUNTANTS 23
This annual 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.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1995
BALANCED FUND INVESTMENT REVIEW
This is the second full year that I have managed this fund on your
behalf. Its cumulative return of 23.62 percent ranked 41 out of
146 balanced mutual funds for those two years*. This past year the
return of 21.02 percent lagged the average balanced fund return of
22.67 percent (as measured by Lipper Analytical Services) due to
two main reasons. The fact that our bond investments were in short
and intermediate maturities, coupled with significantly falling
long-term interest rates, detracted from our overall return
potential. Our decision to be at the high end of our equity
exposure range helped our return but was offset by our exposure to
depressed retail stocks. The negative retail environment caused
these stocks to decrease and we bought into this sector at low
prices that have not proved to be bargain prices.
Looking ahead, we plan to continue our strategy of concentrating
our research on stocks that will benefit from the globalization of
the consumer products industry and from the technological trends
toward business productivity enhancement. Interest rate trends
should reflect a slowing domestic economy and low inflation rate.
Therefore, we plan to remain in the intermediate-term maturities in
order to benefit from modestly declining interest rates.
We at Thompson, Plumb & Associates, Inc. are dedicated to providing
you with competitive investment returns in a challenging investment
environment.
Sincerely,
Thomas G. Plumb
Portfolio Manager
*Ranking refers to the load-adjusted total return for balanced
funds as supplied by Lipper Analytical Services, Inc.
<TABLE>
Thompson Plumb Balanced Fund
Comparison of Change in Value of a $10,000 Investment
<CAPTION>
LEHMAN BROTHERS
THOMPSON PLUMB STANDARD & INTERMEDIATE
BALANCED FUND POOR'S 500 INDEX CORP/GOV'T INDEX
<S> <C> <C> <C>
Mar 87 10,000 10,000 10,000
Nov 87 8,450 8,065 10,125
Nov 88 10,164 9,921 10,905
Nov 89 12,243 12,978 12,274
Nov 90 12,388 12,529 13,254
Nov 91 14,661 15,078 15,032
Nov 92 16,260 17,863 16,286
Nov 93 16,752 19,667 17,872
Nov 94 17,112 19,873 17,545
Nov 95 20,708 27,222 20,096
</TABLE>
<TABLE>
Thompson Plumb Balanced Fund
Average Annual Total Return
<S> <C>
1 Year 21.02%
5 Year 10.82%
Since Inception 8.71%
</TABLE>
Past performance is not predictive of future performance.
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1995
BOND FUND INVESTMENT REVIEW
The Bond Fund allows individual investors to participate in a
managed bond portfolio that seeks a high level of current income
while preserving investment capital. Our strategy has been to
invest in high-quality, investment-grade securities and to adjust
our average maturities in anticipation of interest rate changes.
In general, bond prices move in the opposite direction of interest
rates and changes in interest rates typically have a greater effect
on the prices of longer-term bonds than those with shorter
maturities.
Overall, our investment strategy for the Bond Fund during fiscal
1995 was to modestly extend the maturities of our bonds in
anticipation of a declining interest rate environment. We shifted
more assets into intermediate-term maturities and sold our
shorter-term bonds. In addition to the higher yields that were
locked in during the first part of the year, the total return of
the Bond Fund was enhanced by the capital appreciation generated
from our bonds as interest rates declined throughout the year. The
Bond Fund earned a total return of 14.06 percent in fiscal 1995.
The dollar-weighted average maturity of the Bond Fund was 4.5
years, up slightly from fiscal 1994, and the average bond was rated
AA by the recognized rating agencies.
During the first half of fiscal 1995 the Federal Reserve Board
maintained their "restrictive" interest rate policy, aimed at
slowing the economy and reducing inflationary expectations. Bond
market investors applauded the success of this strategy and began
to predict a reversal of prior interest rate hikes. In response,
the yield on the 30-year Treasury declined from just above 8.0
percent in December 1994 to approximately 6.75 percent in May
1995.
Due to the mounting evidence of a slowing economy and the continued
lack of inflationary pressures, the Federal Reserve Board eased
monetary policy last summer by lowering the Federal Funds Rate 25
basis points to 5.75 percent. This "change in direction" along
with the anticipation of further easing allowed interest rates to
extend their decline. The 30-year Treasury closed the fiscal year
with a yield of approximately 6.25 percent.
Also contributing to the decline was the expectation of a balanced
budget agreement by our political leaders in Washington, D.C.
"True" fiscal responsibility at our nation's capitol would lead to
less government borrowing and, therefore, lower interest rates.
Looking into fiscal 1996, the U.S. economy appears sluggish,
inflation expectations are in check, and Washington is moving
closer to a balanced budget. This environment should allow
interest rates to remain low or perhaps move lower during the first
half of the year.
Sincerely,
John W. Thompson
Portfolio Manager
<TABLE>
Thompson Plumb Bond Fund
Comparison of Change in Value of a $10,000 Investment
<CAPTION>
LEHMAN BROTHERS
THOMPSON PLUMB INTERMEDIATE
BOND FUND CORP/GOV'T INDEX
<S> <C> <C>
Feb 92 10,000 10,000
Nov 92 10,480 10,615
Nov 93 11,395 11,649
Nov 94 11,058 11,436
Nov 95 12,612 13,098
</TABLE>
<TABLE>
Thompson Plumb Bond Fund
Average Annual Total Return
<S> <C>
1 Year 14.06%
Since Inception 6.29%
</TABLE>
Past performance is not predictive of future performance.
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1995
GROWTH FUND INVESTMENT REVIEW
A year ago we stated in the Annual Report that "more favorable
trends for stocks should soon start to develop." In fact, the
stock market started an upturn early in the fiscal year and
continued to show amazing strength throughout the year. As it
turned out, the year ended November 30, 1995 was one of the best
for the stock market averages in the entire period since World War
II.
Your Fund fully participated in the general stock market gains of
the past year. In part, this was because your Fund was fully
invested throughout the year with minimal cash reserves. In
addition, the major holdings of large, high-quality growth stocks
benefited from the performance leadership this type of stock had in
the market. Specifically, the Fund has important positions in
Abbott Labs, AT&T, Coca-Cola, Emerson Electric, Exxon, Federal
National Mortgage, General Electric, Johnson & Johnson,
Kimberly-Clark, MCI, Merck, and PepsiCo. All of these stocks
performed very well, with an average total return of 48 percent for
the fiscal year.
For much of the fiscal year, technology stocks led the strong stock
market. Your Fund participated in the trend, with over 17 percent
of its assets invested in this sector during part of the year. The
holdings of Cisco Systems and Intel were especially large
contributors to this sector's good performance. Late in the fiscal
year, holdings in the technology group were reduced to about 12
percent of assets.
On the negative side, our decision last summer to accumulate
several growth-oriented retailers was premature. These stocks far
underperformed the general market for the entire year. When
economic conditions turn more favorable for retail sales, these
stocks should be early cycle leaders. This example illustrates our
style of accumulating good industries and companies during times
of temporary disappointment.
Your Fund continues to seek out intermediate-size growth situations
that augment the holdings of large growth companies. These
somewhat smaller companies are expected to have faster earnings
growth and hence provide the opportunity for greater appreciation
over the long term.
Lower interest rates were a powerful stimulus to stock prices
during the past year. Looking ahead, we expect rates to move
somewhat lower in 1996, especially for shorter-term maturities.
However, corporate earnings are slowing and lower 1996 profits are
likely for some cyclical industries in a sluggish economy. These
conditions tend to produce a "tug of war," and a more volatile
stock market is likely in 1996.
Sincerely,
John W. Thompson
Portfolio Manager
<TABLE>
Thompson Plumb Growth Fund
Comparison of Change in Value of a $10,000 Investment
<CAPTION>
THOMPSON PLUMB STANDARD &
GROWTH FUND POOR'S 500 INDEX
<S> <C> <C>
Feb 92 10,000 10,000
Nov 92 10,185 10,695
Nov 93 10,235 11,775
Nov 94 10,215 11,899
Nov 95 13,573 16,299
</TABLE>
<TABLE>
Thompson Plumb Growth Fund
Average Annual Total Return
<S> <C>
1 Year 32.87%
Since Inception 8.36%
</TABLE>
Past Performance is not predictive of future performance.
<TABLE>
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
ASSETS
Investments, at market value
(Cost $15,435,926, $14,321,340
and $10,851,375, respectively)
Common stocks .............. $ 13,093,937 - $ 11,920,437
Preferred stocks ........... 380,000 $ 356,250 -
Bonds ...................... 4,255,539 13,865,366 -
Short-term investments ..... 282,684 487,951 848,690
18,012,160 14,709,567 12,769,127
Receivable from investment
advisor .................... - 1,600 -
Prepaid expenses ............. 4,608 2,549 1,309
Dividends and interest
receivable ................. 101,418 180,159 20,094
$ 18,118,186 $ 14,893,875 $ 12,790,530
LIABILITIES
Due on purchase of
securities ................. - - $ 197,480
Accrued expenses payable ..... $ 31,711 $ 23,640 23,883
31,711 23,640 221,363
NET ASSETS
Capital stock, $.001 par value;
100,000,000 shares authorized;
1,271,120, 1,393,152 and
508,142 shares outstanding,
respectively ............... 14,160,542 14,480,160 10,391,912
Undistributed net investment
income ..................... 250,827 189,685 -
Net realized gain (loss) on
investments ................ 1,098,872 (187,837) 259,503
Net unrealized appreciation on
investments ................ 2,576,234 388,227 1,917,752
18,086,475 14,870,235 12,569,167
$ 18,118,186 $ 14,893,875 $ 12,790,530
Offering and redemption price/
Net asset value per share .. $ 14.23 $ 10.67 $ 24.74
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
November 30, 1995
<CAPTION>
Shares or
Principal Market
Amount Value
BALANCED FUND
<S> <C> <C>
COMMON STOCKS - 72.7%
Consumer Non-durables - 9.0%
Coca-Cola .......................... 4,000 $ 303,000
Colgate-Palmolive .................. 3,000 219,750
Kimberly-Clark ..................... 5,500 422,125
PepsiCo ............................ 7,500 415,312
Premark International .............. 5,000 255,000
1,615,187
Health Care - 9.3%
Abbott Laboratories ................ 8,000 325,000
Johnson & Johnson .................. 5,000 433,125
Merck & Co. ........................ 8,000 495,000
ONCOR <F1> ......................... 24,000 141,000
Sofamor/Danek Group <F1> ........... 12,500 287,500
1,681,625
Services - 3.3%
Marcus ............................. 9,000 208,125
Merrill ............................ 10,000 170,000
Promus Hotel <F1> .................. 10,000 221,250
599,375
Retail - 6.3%
Best Buy <F1> ...................... 13,000 266,500
Heilig-Meyers ...................... 12,000 243,000
Penney, J. C. ...................... 5,000 235,625
Sports & Recreation <F1> ........... 30,000 210,000
Toys R Us <F1> ..................... 8,000 186,000
1,141,125
Capital Goods - 9.7%
Emerson Electric ................... 4,000 312,500
Fisher Scientific International .... 4,000 130,500
General Electric ................... 6,000 402,750
Grainger, W. W. .................... 5,000 334,375
Osmonics <F1> ...................... 15,000 270,000
Regal Beloit ....................... 13,000 286,000
1,736,125
Basic Materials - 8.7%
Bandag - Class A ................... 4,000 197,000
Consolidated Papers ................ 6,000 372,000
Sigma-Aldrich ...................... 4,000 197,000
Specialty Paperboard <F1> .......... 30,000 378,750
Wausau Paper Mills ................. 15,000 412,500
1,557,250
Technology - 7.3%
EMC <F1> ........................... 20,000 357,500
Intel .............................. 7,000 426,125
Lattice Semiconductor <F1> ......... 9,000 290,250
Motorola ........................... 4,000 246,000
1,319,875
Energy - 6.3%
Chieftain International <F1> ....... 25,000 418,750
Exxon .............................. 5,000 386,875
Seagull Energy <F1> ................ 18,000 333,000
1,138,625
Telecommunications/Cable - 4.6%
A T & T ............................ 6,000 395,250
Paging Network <F1> ................ 5,000 111,250
WorldCom <F1> ...................... 10,000 325,000
831,500
Financial Services - 8.2%
Cincinnati Financial ............... 2,500 155,000
Federal National Mortgage .......... 4,000 438,000
First Financial - Wisconsin ........ 15,000 337,500
Marsh & McLennan ................... 2,000 173,500
Marshall & Ilsley .................. 14,000 369,250
1,473,250
TOTAL COMMON STOCK
(COST $10,679,551) ............... 13,093,937
PREFERRED STOCKS - 2.1%
Services - 2.1%
Loewen Group Capital Preferred
9.450% Series A <F2> ............. 16,000 380,000
TOTAL PREFERRED STOCK
(COST $402,898) .................. 380,000
BONDS - 23.6%
United States Government
and Agency Issues - 12.1%
Federal National Mortgage Assoc.
8.000% Due 03/15/00 .............. 500,000 503,125
United States Treasury Notes
7.250% Due 08/15/04 .............. 1,000,000 1,100,160
United States Treasury Notes
7.875% Due 11/15/04 .............. 500,000 572,345
Total United States Government
and Agency Issues ............... 2,175,630
Corporate Bonds - 11.5%
American Home Products
7.700% Due 02/15/00 .............. 350,000 372,750
Ford Holdings
9.250% Due 03/01/00 .............. 250,000 278,985
PDV America, Inc.
7.750% Due 08/01/00 .............. 600,000 579,588
Philip Morris
9.000% Due 01/01/01 .............. 760,000 848,586
Total Corporate Bonds 2,079,909
TOTAL BONDS
(COST $4,070,793) ................ 4,255,539
SHORT-TERM INVESTMENTS - 1.6%
General Mills
Variable Rate Demand Notes ....... 260,850 260,850
Pitney Bowes Credit
Variable Rate Demand Notes ....... 10,500 10,500
Southwestern Bell Telephone
Variable Rate Demand Notes ....... 10,834 10,834
Wisconsin Electric Power
Variable Rate Demand Notes ....... 500 500
TOTAL SHORT-TERM INVESTMENTS
(COST $282,684) .................. 282,684
TOTAL INVESTMENTS - 100.0%
(COST $15,435,926) ............... $18,012,160
<FN>
<F1>
Non-income producing
<F2>
Limited partnership preferred shares
</FN>
<CAPTION>
Shares or
Principal Market
Amount Value
BOND FUND
<S> <C> <C>
PREFERRED STOCKS - 2.4%
Services - 2.4%
Loewen Group Capital Preferred
9.450% Series A <F2> ............. 15,000 $ 356,250
TOTAL PREFERRED STOCK
(COST $383,125) ................... 356,250
BONDS - 94.3%
United States Government
and Agency Issues - 57.6%
Federal Home Loan Banks
8.750% Due 02/03/05 .............. 500,000 530,080
United States Treasury Notes
8.500% Due 05/15/97 .............. 300,000 312,843
United States Treasury Notes
7.500% Due 10/31/99 .............. 1,000,000 1,068,590
United States Treasury Notes
7.750% Due 11/30/99 .............. 1,000,000 1,078,910
United States Treasury Notes
7.750% Due 12/31/99 .............. 1,000,000 1,080,160
United States Treasury Notes
6.750% Due 04/30/00 .............. 1,000,000 1,047,030
United States Treasury Notes
8.000% Due 05/15/01 .............. 1,000,000 1,113,440
United States Treasury Notes
7.250% Due 05/15/04 .............. 1,000,000 1,098,910
United States Treasury Notes
7.875% Due 11/15/04 .............. 1,000,000 1,144,690
Total United States Government
and Agency Issues ................ 8,474,653
Corporate Bonds - 36.7%
Baltimore Gas & Electric
8.375% Due 08/15/01 .............. 200,000 221,312
First Bank Systems
6.875% Due 09/15/07 .............. 250,000 256,798
Firstar Corp.
7.150% Due 09/01/00 .............. 250,000 255,615
Ford Motor Credit
8.000% Due 12/01/97 .............. 500,000 520,470
General Motors Acceptance Corp.
8.375% Due 05/01/97 .............. 540,000 557,550
GTE Corp.
9.375% Due 12/01/00 .............. 100,000 113,451
Long Island Lighting
7.625% Due 04/15/98 .............. 500,000 500,060
Maytag Corp.
8.875% Due 07/15/99 .............. 250,000 272,312
McDonnell Douglas
8.400% Due 04/11/00 .............. 250,000 254,428
Norwest Financial, Inc.
6.250% Due 11/01/02 .............. 250,000 251,000
PDV America, Inc.
7.875% Due 08/01/03 .............. 400,000 373,432
Philip Morris
9.000% Due 01/01/01 .............. 500,000 558,280
Sears, Roebuck Co.
8.450% Due 11/01/98 .............. 500,000 533,755
Time Warner, Inc.
7.450% Due 02/01/98 .............. 500,000 512,500
Time Warner, Inc.
7.950% Due 02/01/00 .............. 200,000 209,750
Total Corporate Bonds .............. 5,390,713
TOTAL BONDS
(COST $13,450,264) ............... 13,865,366
SHORT-TERM INVESTMENTS - 3.3%
General Mills
Variable Rate Demand Notes ....... 73,770 $ 73,770
Pitney Bowes Credit
Variable Rate Demand Notes ....... 44,803 44,803
Sara Lee
Variable Rate Demand Notes ....... 73,717 73,717
Southwestern Bell Telephone
Variable Rate Demand Notes ....... 115,823 115,823
Warner-Lambert
Variable Rate Demand Notes ....... 146,435 146,435
Wisconsin Electric Power
Variable Rate Demand Notes ....... 33,403 33,403
TOTAL SHORT-TERM INVESTMENTS
(COST $487,951) .................. 487,951
TOTAL INVESTMENTS - 100.0%
(COST $14,321,340) ............... $14,709,567
<FN>
<F2>
Limited partnership preferred shares
</FN>
<CAPTION>
Shares or
Principal Market
Amount Value
GROWTH FUND
<S> <C> <C>
COMMON STOCKS - 93.4%
Consumer Non-durables - 13.4%
Celestial Seasonings <F1> .......... 10,000 $ 192,500
Coca-Cola .......................... 2,000 151,500
Eastman Kodak ...................... 4,000 273,000
Kimberly-Clark ..................... 3,000 230,250
McCormick & Co. .................... 3,000 70,875
PepsiCo ............................ 5,000 276,875
Tambrands .......................... 5,000 260,625
UST Inc. ........................... 8,000 260,000
1,715,625
Health Care - 10.5%
Abbott Laboratories ................ 6,000 243,750
DENTSPLY International ............. 5,000 179,375
EmCare Holdings <F1> ............... 2,500 58,125
Johnson & Johnson .................. 3,000 259,875
Merck & Co. ........................ 6,000 371,250
Sofamor/Danek Group <F1> ........... 10,000 230,000
1,342,375
Services - 5.8%
Marcus ............................. 7,500 173,437
Merrill ............................ 10,000 170,000
New York Times - Class A ........... 8,000 236,000
Promus Hotel <F1> .................. 7,000 154,875
734,312
Retail - 8.5%
Best Buy <F1> ...................... 8,000 164,000
Heilig-Meyers ...................... 12,000 243,000
Penney, J. C. ...................... 3,000 141,375
Sports & Recreation <F1> ........... 15,000 105,000
Toys R Us <F1> ..................... 7,000 162,750
Walgreen ........................... 9,000 263,250
1,079,375
Capital Goods - 8.5%
Emerson Electric ................... 3,000 234,375
Fisher Scientific International .... 3,000 97,875
General Electric ................... 3,000 201,375
Grainger, W. W. .................... 5,000 334,375
Osmonics <F1> ...................... 12,000 216,000
1,084,000
Basic Materials - 13.2%
Air Products & Chemicals ........... 4,000 222,000
Bandag ............................. 5,000 254,375
Betz Laboratories .................. 4,000 161,000
Consolidated Papers ................ 5,000 310,000
Crompton & Knowles ................. 10,000 130,000
Sigma-Aldrich ...................... 6,000 295,500
Temple-Inland ...................... 2,000 90,750
Wausau Paper Mills ................. 8,000 220,000
1,683,625
Technology - 10.5%
American Power Conversion <F1> ..... 10,000 106,250
Cisco Systems <F1> ................. 3,000 252,375
EMC <F1> ........................... 16,000 286,000
Intel .............................. 5,000 304,375
Lattice Semiconductor <F1> ......... 6,000 193,500
Zebra Technologies - Class A <F1> .. 3,000 200,250
1,342,750
Energy - 9.8%
Chevron ............................ 5,000 246,875
Chieftain International <F1> ....... 23,000 385,250
Devon Energy ....................... 7,000 168,875
Exxon .............................. 3,000 232,125
Seagull Energy <F1> ................ 12,000 222,000
1,255,125
Telecommunications/Cable - 7.5%
A T & T ............................ 5,000 329,375
MCI Communications ................. 12,000 321,000
Paging Network <F1> ................ 5,000 111,250
WorldCom <F1> ...................... 6,000 195,000
956,625
Financial Services - 5.7%
Cincinnati Financial ............... 3,000 186,000
Federal National Mortgage .......... 2,500 273,750
First Financial - Wisconsin ........ 6,000 135,000
Marshall & Ilsley .................. 5,000 131,875
726,625
TOTAL COMMON STOCK
(COST $10,002,685) ............... 11,920,437
SHORT-TERM INVESTMENTS - 6.6%
General Mills
Variable Rate Demand Notes ....... 203,799 203,799
Pitney Bowes Credit
Variable Rate Demand Notes ....... 163,571 163,571
Sara Lee
Variable Rate Demand Notes ....... 37,134 37,134
Southwestern Bell Telephone
Variable Rate Demand Notes ....... 231,962 231,962
Warner-Lambert
Variable Rate Demand Notes ....... 96,032 96,032
Wisconsin Electric Power
Variable Rate Demand Notes ....... 116,192 116,192
TOTAL SHORT-TERM INVESTMENTS
(COST $848,690) .................. 848,690
TOTAL INVESTMENTS - 100.0%
(COST $10,851,375) ............... $12,769,127
<FN>
<F1>
Non-income producing
</FN>
The accompanying notes to financial statements are an integral part of this
schedule.
</TABLE>
<TABLE>
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
Investment income
Dividends .................... $ 192,746 $ 26,746 $ 115,768
Interest ..................... 366,609 825,242 17,724
559,355 851,988 133,492
Expenses
Accounting services fees ..... 31,168 30,217 30,214
Directors fees ............... 5,794 3,938 2,267
Investment advisory fees ..... 147,812 81,158 78,969
Professional fees ............ 28,289 25,724 23,521
Shareholder servicing costs .. 23,400 10,957 10,882
Other expenses ............... 24,283 14,729 12,085
Total expenses ............. 260,746 166,723 157,938
Less expenses reimbursable
by advisor ............... - (25,775) -
Net expenses ................... 260,746 140,948 157,938
Net investment income (loss) ... 298,609 711,040 (24,446)
Net realized gain on
investments .................. 1,051,073 90,541 259,674
Net unrealized appreciation on
investments .................. 1,958,203 803,692 1,815,719
Net gain on investments ........ 3,009,276 894,233 2,075,393
Net increase in net assets
resulting from operations .... $ 3,307,885 $ 1,605,273 $ 2,050,947
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
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
Year Ended November 30, Year Ended November 30, Year Ended November 30,
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) ..... $ 298,609 $ 358,945 $ 711,040 $ 454,244 $ (24,446) $ (26,955)
Net realized gain (loss) on
investments .................... 1,051,073 1,972,759 90,541 (269,209) 259,674 673,844
Net unrealized appreciation
(depreciation) on investments .. 1,958,203 (1,898,832) 803,692 (509,753) 1,815,719 (656,811)
Net increase (decrease) in net
assets resulting from
operations ..................... 3,307,885 432,872 1,605,273 (324,718) 2,050,947 (9,922)
Distributions to Shareholders
Distributions from net investment
income ......................... (358,945) (410,320) (653,566) (392,056) - -
Distributions from net realized
gains on securities
transactions ................... (1,971,983) (1,015,077) - (73,639) (430,201) -
Total distributions to shareholders (2,330,928) (1,425,397) (653,566) (465,695) (430,201) -
Fund Share Transactions
Proceeds from sale of 191,606;
230,178; 492,422; 671,732; 271,434
and 77,011 shares sold,
respectively ..................... 2,540,438 3,159,218 5,103,604 6,956,944 6,162,583 1,593,983
Net asset value of 29,018; 29,414;
57,149 and 33,253 shares issued
to shareholders in reinvestment
of dividends, respectively ....... 347,632 400,335 582,902 339,078 - -
Net asset value of 159,459; 72,811;
5,729 and 21,159 shares issued to
shareholders in reinvestment of
realized gains, respectively ..... 1,910,301 990,980 - 60,554 405,826 -
Payments for 381,297; 575,795;
190,417; 250,399; 14,544 and
192,677 shares redeemed,
respectively ..................... (4,924,984) (7,800,933) (1,981,329) (2,536,926) (320,867) (3,961,826)
Net increase (decrease) in net
assets resulting from Fund share
transactions ((1,214); (243,392);
359,154; 460,315; 278,049 and
(115,666) shares, respectively) .. (126,613) (3,250,400) 3,705,177 4,819,650 6,247,542 (2,367,843)
Total increase (decrease) in net
assets ............................. 850,344 (4,242,925) 4,656,884 4,029,237 7,868,288 (2,377,765)
Net Assets
Beginning of period ................ 17,236,131 21,479,056 10,213,351 6,184,114 4,700,879 7,078,644
End of period (Including
undistributed net investment
income of $250,827; $311,163;
$189,685; $132,211; $0 and $0,
respectively) .................... $18,086,475 $17,236,131 $14,870,235 $10,213,351 $12,569,167 $ 4,700,879
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 Nasdaq 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 Nasdaq 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. On October 1, 1995, this fee changed to the above schedule
from $120 per day, per Fund, as approved by the Board of Directors.
The Advisor reimburses the Funds for annual expenses in excess of
the lowest expense limitation imposed by the states. In addition
to the reimbursement required under the Advisory Agreement, the
Advisor voluntarily reimbursed the Bond Fund for expenses incurred
on an annual basis over 1.00% of average net assets from December
1, 1994 to January 31, 1995 and 1.15% of average net assets,
thereafter. This voluntary reimbursement to the Bond Fund may be
modified or discontinued at any time by the Advisor.
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 of 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 thirty days and
paid within sixty days following the Fund's fiscal year-end. Bond
Fund distributions of net investment income normally will be
declared on a quarterly basis within thirty days and paid within
sixty days following the Fund's fiscal quarter, and distributions
of realized gains normally will be declared on an annual basis
within thirty days and paid within sixty days following the Fund's
fiscal year-end. Distributions are recorded on the ex-dividend
date.
Quarterly distributions from net investment income for the Bond
Fund during fiscal 1995 totaled $653,566 or $0.56 per share. 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
1995
Total Per
Distribution Share
BALANCED FUND $298,611 $0.23
BOND FUND $201,800 $0.14
NOTE 5 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the year ended November 30, 1995 were
as follows:
Balanced Fund Bond Fund Growth Fund
U. S. Government Securities
Purchases $3,197,345 $14,723,065 -
Sales $3,444,155 $13,788,942 -
Securities other than
U. S. Government and
Short-term Investments
Purchases $15,573,812 $4,560,996 $11,831,860
Sales $17,505,984 $2,068,802 $ 6,665,367
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.
During the period ended November 30, 1995, the Bond Fund utilized
a Federal income tax capital loss carryforward of $31,535 and a
post-October capital loss carryforward of $60,011 to offset certain
realized capital gains during the period.
For Federal income tax purposes at November 30, 1995:
Aggregate Aggregate
unrealized unrealized Net unrealized
Aggregate cost appreciation depreciation appreciation
of investments for investments for investments for investments
in securities held held held
Balanced Fund $15,497,823 $2,871,356 ($357,019) $2,514,337
Bond Fund $14,322,346 $464,879 ($77,658) $387,221
Growth Fund $10,901,139 $2,158,468 ($290,480) $1,867,988
<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.
Income From Investment Operations Less Distributions
Net Gains
or Losses on
Net Asset Investments Total Dividends Net Asset
Value, Net (both From (from net Distributions Value,
Beginning Investment realized and Investment investment (from capital Total End of
of Period Income unrealized) Operations income) gains) Distributions Period
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND
March 16, 1987
(Commencement
of Operations)
through
November 30,
1987 $10.00 $0.09 ($1.64) ($1.55) - - - $8.45
Year Ended
November 30,
1988 8.45 0.19 1.51 1.70 (0.09) - (0.09) 10.06
1989 10.06 0.30 1.72 2.02 (0.21) - (0.21) 11.87
1990 11.87 0.27 (0.14) 0.13 (0.31) - (0.31) 11.69
1991 11.69 0.27 1.83 2.10 (0.29) - (0.29) 13.50
1992 13.50 0.30 1.16 1.46 (0.28) (0.11) (0.39) 14.57
1993 14.57 0.28 0.15 0.43 (0.28) (0.55) (0.83) 14.17
1994 14.17 0.27 0.04 0.31 (0.27) (0.66) (0.93) 13.55
1995 13.55 0.24 2.26 2.50 (0.28) (1.54) (1.82) 14.23
BOND FUND
February 10, 1992
(Commencement of
Operations) through
November 30,
1992 $10.00 $0.20 $0.28 $0.48 ($0.15) - ($0.15) $10.33
Year Ended
November 30,
1993 10.33 0.45 0.44 0.89 (0.42) (0.02) (0.44) 10.78
1994 10.78 0.48 (0.78) (0.30) (0.47) (0.13) (0.60) 9.88
1995 9.88 0.57 0.78 1.35 (0.56) - (0.56) 10.67
GROWTH FUND
February 10, 1992
(Commencement of
Operations) through
November 30,
1992 $20.00 ($0.05) $0.42 $0.37 - - - $20.37
Year Ended
November 30,
1993 20.37 (0.12) 0.22 0.10 - - - 20.47
1994 20.47 (0.20) 0.16 (0.04) - - - 20.43
1995 20.43 (0.05) 6.22 6.17 - (1.86) (1.86) 24.74
Ratios/Supplemental Data
Net Assets, Ratio of Ratio of
End of Expenses Net Income Portfolio
Total Period to Average to Average Turnover
Return (millions) Net Assets Net Assets Rate
BALANCED FUND
March 16, 1987
(Commencement
of Operations)
through
November 30,
1987 (15.50%)<F1> $4.4 2.00%<F2><F3> 1.93%<F2><F4> 114.06%
Year Ended
November 30,
1988 20.28% 6.4 2.00%<F3> 2.15%<F4> 80.96%
1989 20.46% 9.0 2.00% 2.95% 55.69%
1990 1.18% 11.4 1.84% 2.49% 56.86%
1991 18.35% 18.1 1.64% 2.46% 48.46%
1992 10.91% 20.9 1.48% 2.14% 52.75%
1993 3.02% 21.5 1.40% 1.89% 91.77%
1994 2.15% 17.2 1.42% 1.84% 110.01%
1995 21.02% 18.1 1.49% 1.71% 111.16%
BOND FUND
February 10, 1992
(Commencement of
Operations) through
November 30,
1992 4.80%<F1> $3.9 1.15%<F2><F3> 4.36%<F2><F4> 227.03%
Year Ended
November 30,
1993 8.74% 6.2 1.00%<F3> 4.44%<F4> 111.18%
1994 (2.96%) 10.2 1.00%<F3> 4.83%<F4> 165.74%
1995 14.06% 14.9 1.13%<F3> 5.70%<F4> 111.95%
GROWTH FUND
February 10, 1992
(Commencement of
Operations) through
November 30,
1992 1.85%<F1> $7.4 2.00%<F2><F3> (0.40%)<F2><F4> 43.23%
Year Ended
November 30,
1993 0.49% 7.1 1.93% (0.54%) 98.93%
1994 (0.19%) 4.7 2.00%<F3> (0.49%)<F4> 116.69%
1995 32.87% 12.6 2.00% (0.31%) 86.68%
<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: for the Balanced Fund $13,977 and
$4,994 in 1988 and 1987, respectively; for the Bond Fund $25,775,
$46,412, $39,759 and $20,582 in 1995, 1994, 1993 and 1992,
respectively; for the Growth Fund $16,467 and $2,638 in 1994 and
1992, respectively. Without such reimbursements, the ratios would
have been as follows: for the Balanced Fund 2.2% in 1988 and
2.2%<F2> in 1987; for the Bond Fund 1.34%, 1.48%, 1.76% and 2.36%<F2>
in 1995, 1994, 1993 and 1992, respectively; for the Growth Fund
2.31% in 1994 and 2.05%<F2> in 1992.
<F4>
Without expense reimbursements, the ratios would have been as
follows: for the Balanced Fund 1.9% and 1.7%<F2> in 1988 and 1987,
respectively; for the Bond Fund 5.49%, 4.34%, 3.68% and 3.13%<F2> in
1995, 1994, 1993 and 1992, respectively; for the Growth Fund
(0.80%) and (0.46%)<F2> in 1994 and 1992, respectively.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Thompson Plumb Funds,
Inc.
In our opinion, the accompanying statements of assets and
liabilities, including the schedules of investments, and the
related statements of operations and of changes in net assets and
the financial highlights present fairly, in all material respects,
the financial position of Thompson Plumb Balanced Fund, Thompson
Plumb Bond Fund and Thompson Plumb Growth Fund (constituting the
Thompson Plumb Funds, Inc., hereafter referred to as the "Funds")
at November 30, 1995, the results of each of their operations for
the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial
highlights for each of the eight years in the period ended November
30, 1995 and for the period March 16, 1987 (commencement of
operations) through November 30, 1987 for the Thompson Plumb
Balanced Fund and for the three years in the period ended November
30, 1995 and the period February 10, 1992 through November 30, 1992
for Thompson Plumb Bond Fund and Thompson Plumb Growth Fund, all in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities
at November 30, 1995 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
December 29, 1995
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
