<PAGE> 1
THOMPSON PLUMB
FUNDS, INC.
ANNUAL REPORT
November 30, 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
-------------------------------
<PAGE> 2
[THOMPSON PLUMB FUNDS, INC.]
January 15, 1997
ANNUAL REPORT TO SHAREHOLDERS
Dear Fellow Shareholder:
We are proud to present you the following report depicting the investments and
returns of our family of mutual funds for the period ending November 30, 1996.
Last year was a very strong year for the performance of our equity oriented
funds. 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,
[Signature] [Signature]
<TABLE>
<S> <C>
John W. Thompson, CFA Thomas G. Plumb, CFA
Chairman & Secretary President & Treasurer
</TABLE>
<PAGE> 3
THIS PAGE INTENTIONALLY LEFT BLANK
2
<PAGE> 4
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1996
CONTENTS
Page(s)
REPORT TO SHAREHOLDERS .................................. 1
INVESTMENT REVIEWS
Balanced Fund ....................................... 4
Bond Fund ........................................... 5
Growth Fund ......................................... 6
FINANCIAL STATEMENTS
Statement of assets and liabilities ................ 7
Schedule of investments ............................ 8-12
Statement of operations ............................ 13
Statement of changes in net assets ................. 14
Notes to financial statements ...................... 15-19
Financial highlights ............................... 20-22
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.
3
<PAGE> 5
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1996
BALANCED FUND INVESTMENT REVIEW
This is the third full year that I have managed this Fund on your behalf. Its
cumulative return of 55.52 percent outperformed the average balanced fund
return of 40.29 percent by over 15 percent for those three years*. This past
year's return of 25.80 percent outperformed the average balanced fund return of
14.74 percent by over 11 percent.* This marked the second year in a row of +20
percent returns. The primary factors contributing to this absolute and
relative performance were our asset allocation and stock selection. Our stock
exposure remained near the high end of our maximum range of 75 percent. Our
stock and industry selection also proved beneficial with our technology and
healthcare holdings providing significant absolute and relative returns.
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 or stable interest
rates.
It will be difficult to match the investment returns of the last two years but
we believe that the markets still provide selective opportunities for 1997.
Sincerely,
/s/ Thomas G. Plumb
Thomas G. Plumb
Portfolio Manager
*As measured by Lipper Analytical Services, Inc.
Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Intermediate
DATE Thompson Plumb Balanced Fund Standard & 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
Nov 96 26,052 34,806 21,266
- --------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
1 Year 5 Year Since Inception
- --------------------------------------
25.80% 12.18% 10.35%
- --------------------------------------
</TABLE>
Past performance is not predictive of future performance.
4
<PAGE> 6
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1996
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.
The investment strategy we employed for the Bond Fund during fiscal 1996 had
two elements. First, we recognized that the general level of interest rates at
the beginning of the year was relatively low as indicated by the 6.25 percent
yield that was available from 30-year U.S. Treasury Bonds. We made an attempt
to avoid depreciation of the Fund by holding shorter maturity bonds early in
the fiscal year.
As interest rates moved to higher levels during the year, we used the
opportunity to purchase bonds having progressively higher yields. The second
aspect of our investment strategy was to increase the allocation of the Fund to
higher quality corporate bonds. These bonds produced income at a level 50
basis points above U.S. Treasury Notes of comparable maturities.
As the year progressed, a sizeable amount of investment cash flow entered the
Fund. This cash flow was invested in "A" and "AA" rated corporate bonds. It
was a good opportunity to make purchases of new bond holdings, offsetting the
decline in the existing investments that were in the portfolio at the beginning
of the fiscal year. A slight depreciation in the unit value of the Fund of
0.75 percent reflected some timing issues of our dividend payout.
We think the Federal Reserve Board's focus upon inflation and its willingness
to only permit a moderate level of growth in the economy will result in
gradually declining long-term interest rates. Our portfolio of
intermediate-term (5-10 year) corporate and U.S. Government Bonds should
provide a good total return in this environment during the next fiscal year.
Sincerely,
/s/ John W. Thompson
John W. Thompson
Portfolio Manager
Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
Lehman Brothers Intermediate
DATE Thompson Plumb 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
Nov 96 13,181 13,861
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
1 Year Since Inception
4.51% 5.91%
Past performance is not predictive of future performance.
5
<PAGE> 7
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
November 30, 1996
GROWTH FUND INVESTMENT REVIEW
The Growth Fund had another outstanding year, both in terms of absolute
performance and relative to competing growth funds. On a total return basis,
the Fund appreciated 35.52 percent during the year. It outperformed the
average growth fund return of 19.22 percent by over 16 percent*.
There were several reasons for this excellent performance. First, the Fund
stayed fully invested throughout the fiscal year and thus benefited from the
strong general market for stocks. Second, the Fund continues to have the most
representation in large, high-quality growth stocks. This type of stock again
found greatest favor among stock investors, as compared to small or more
cyclical types of stocks. The Fund has major positions in the stocks of
Chevron, Eastman Kodak, Exxon, Federal National Mortgage, Johnson & Johnson,
Kimberly-Clark, and MCI. Many of these companies are multinational and obtain
good earnings growth in overseas markets.
In addition, the Fund had success in selecting a number of intermediate-size
growth companies that augmented the performance for the fiscal year. In
general, good stock selections were made across the portfolio and poor
performers were small in number. Technology and healthcare holdings were the
leading sectors in performance.
Quality is emphasized in the entire portfolio. Given our aversion to higher
risk situations, the above-average annual performance is especially gratifying.
Even more important, consistent performance over the long term is our primary
goal and we are pleased to be making good progress toward this goal for your
Fund.
Sincerely,
/s/ John W. Thompson
John W. Thompson
Portfolio Manager
*As measured by Lipper Analytical Service, Inc.
Comparison of Change in Value of a $10,000 Investment
<TABLE>
<CAPTION>
DATE Thompson Plumb Growth Fund Standard & 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
Nov 96 18,394 20,840
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
1 Year Since Inception
35.52% 13.51%
Past performance is not predictive of future performance.
6
<PAGE> 8
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
ASSETS
Investments, at market value (Cost $15,770,202,
$21,477,705 and $18,307,574, respectively)
Common stocks ................................. $15,177,962 - $23,425,235
Bonds ......................................... 5,307,543 $21,716,926 -
Short-term investments ........................ 300,466 165,770 660,547
----------- ----------- -----------
20,785,971 21,882,696 24,085,782
Prepaid expenses ............................... 5,501 3,399 2,234
Dividends and interest receivable .............. 115,916 297,177 28,174
----------- ----------- -----------
20,907,388 22,183,272 24,116,190
----------- ----------- -----------
LIABILITIES
Due on purchase of securities ................. 103,183 - -
Accrued expenses payable ...................... 18,019 15,270 16,643
Due to investment advisor ..................... 17,326 15,089 22,579
----------- ----------- -----------
138,528 30,359 39,222
----------- ----------- -----------
$20,768,860 $22,152,913 $24,076,968
=========== =========== ===========
NET ASSETS
Capital stock ($.001 par value) .............. $13,790,071 $21,651,740 $16,400,302
Undistributed net investment income .......... 205,991 277,450 -
Net realized gain (loss) on investments ...... 1,757,029 (181,268) 1,898,458
Net unrealized appreciation on investments.... 5,015,769 404,991 5,778,208
----------- ----------- -----------
$20,768,860 $22,152,913 $24,076,968
=========== =========== ===========
Shares of capital stock outstanding
(100,000,000 shares authorized) ............ 1,255,483 2,090,900 734,242
Offering and redemption price/Net asset
value per share $ 16.54 $ 10.59 $ 32.79
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
7
<PAGE> 9
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
November 30, 1996
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------
BALANCED FUND
<S> <C> <C>
COMMON STOCKS - 73.0%
CONSUMER NON-DURABLES - 5.1%
Eastman Kodak............... 3,500 $ 283,937
Kimberly-Clark ............. 3,000 293,625
PepsiCo ................... 16,000 484,000
---------
1,061,562
---------
HEALTH CARE - 14.1%
Abbott Laboratories ........ 9,000 500,625
Johnson & Johnson .......... 7,000 372,750
Medtronic .................. 3,500 231,875
Merck & Co. ............... 6,500 539,500
St. Jude Medical (a) ....... 12,000 501,000
Sofamor/Danek Group (a) .... 15,000 421,875
TheraTech (a) .............. 10,000 112,500
United Healthcare .......... 6,000 258,750
---------
2,938,875
---------
SERVICES - 1.5%
Merrill .................... 13,000 305,292
---------
RETAIL - 2.0%
Walgreen ................... 10,000 417,500
---------
CAPITAL GOODS - 9.9%
Advanced Lighting (a) ...... 20,000 440,000
Emerson Electric ........... 4,000 392,500
General Electric ........... 5,500 572,000
Grainger, W. W. ........... 3,000 238,500
Pall........................ 10,000 261,250
Rental Service (a) ......... 6,000 154,500
---------
2,058,750
---------
Shares or
Principal Market
Amount Value
--------- -------
<S> <C> <C>
BASIC MATERIALS - 5.8%
Alco Standard ............. 8,500 $ 439,875
Sigma-Aldrich ............. 6,000 375,000
Specialty Paperboard (a) .. 22,000 385,000
---------
1,199,875
---------
TECHNOLOGY - 17.4% ........
EMC (a) .................. 16,000 516,000
Hewlett-Packard .......... 7,500 404,063
Intel .................... 5,000 634,375
Lattice Semiconductor (a). 16,000 716,000
Linear Technology ........ 12,000 565,500
Lucent Technologies ...... 8,296 425,170
Zebra Technologies -
Class A (a)............... 14,000 360,500
---------
3,621,608
---------
ENERGY - 8.0%
Chevron .................. 5,500 368,500
Chieftain International (a) 17,500 428,750
Enron Oil & Gas .......... 15,000 399,375
Exxon .................... 5,000 471,875
---------
1,668,500
---------
TELECOMMUNICATIONS/CABLE - 3.0%
AT & T ................... 4,000 157,000
MCI Communications ....... 15,000 457,500
---------
614,500
---------
FINANCIAL SERVICES - 6.2%
Associates First Capital -
Class A 9,000 435,375
First Financial - Wisconsin 15,000 448,125
Marshall & Ilsley ........ 12,000 408,000
---------
1,291,500
---------
TOTAL COMMON STOCKS
(COST $10,320,315) ...... 15,177,962
----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
8
<PAGE> 10
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
November 30, 1996
(Continued)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------
<S> <C> <C>
BONDS - 25.6%
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 5.2%
United States Treasury Notes
7.250% Due 08/15/04 ........... 1,000,000 $ 1,076,250
Total United States Government ----------
and Agency Issues ............. 1,076,250
----------
CORPORATE BONDS - 20.4%
American Home Products
7.900% Due 02/15/05 .............. 750,000 818,205
duPont, E. I. de Nemours
8.500% Due 02/15/03 ............. 288,000 309,329
Ford Holdings
9.250% Due 03/01/00 ............. 565,000 613,907
General Electric Capital
8.750% Due 05/21/07 ............. 510,000 595,277
Mobil
8.375% Due 02/12/01 ............. 475,000 513,955
Philip Morris
8.625% Due 03/01/99 ............. 400,000 419,840
Philip Morris
6.375% Due 02/01/06 ............. 500,000 482,030
Union Pacific
6.000% Due 09/01/03 ............. 500,000 478,750
----------
Total Corporate Bonds ............. 4,231,293
----------
TOTAL BONDS
(COST $5,149,421) ............. 5,307,543
---------
Shares or
Principal Market
Amount Value
--------- ------
SHORT-TERM INVESTMENTS - 1.4%
Pitney Bowes Credit
Variable Rate Demand Notes ....... 172,210 $ 172,210
Southwestern Bell Telephone
Variable Rate Demand Notes ....... 128,256 128,256
TOTAL SHORT-TERM INVESTMENTS
(COST $300,466) ....... 300,466
----------
TOTAL INVESTMENTS - 100.0%
(COST $15,770,202) ....... $20,785,971
===========
(a) Non-income producing
</TABLE>
The accompanying notes to financial statements are an
integral part of this schedule
9
<PAGE> 11
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1996
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------
BOND FUND
<S> <C> <C>
BONDS - 99.2%
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 33.0%
Federal Home Loan Banks
7.160% Due 07/03/06 ........ 1,000,000 $1,058,780
Federal National Mortgage Assn.
6.410% Due 03/08/06 ........ 1,000,000 1,005,290
United States Treasury Notes
6.375% Due 01/15/99 ........ 900,000 913,923
United States Treasury Notes
8.000% Due 05/15/01 ........ 900,000 977,202
United States Treasury Notes
7.500% Due 11/15/01 ........ 1,000,000 1,070,780
United States Treasury Notes
7.875% Due 11/15/04 ........ 1,000,000 1,116,560
United States Treasury Notes
7.500% Due 02/15/05 ........ 1,000,000 1,094,220
Total United States Government ---------
and Agency Issues .......... 7,236,755
---------
CORPORATE BONDS - 66.2%
American Home Products
7.900% Due 02/15/05 ........ 1,000,000 1,090,940
AT & T
6.750% Due 04/01/04 ........ 500,000 509,845
AT & T
7.000% Due 05/15/05 ........ 500,000 516,565
Baltimore Gas & Electric
8.375% Due 08/15/01 ........ 200,000 217,270
Disney, Walt
6.750% Due 03/30/06 ........ 500,000 507,815
Shares or
Principal Market
Amount Value
--------- ------
First Bank Systems
6.875% Due 09/15/07 ........ 500,000 504,975
General Electric Capital
8.750% Due 05/21/07 ........ 500,000 583,605
Household Bank
6.870% Due 05/15/01 ........ 1,000,000 1,024,560
Lucent Technologies
7.250% Due 07/15/06 ........ 1,000,000 1,051,560
Maytag
8.875% Due 07/15/99 ........ 250,000 266,417
Northern Trust
7.300% Due 09/15/06 ........ 1,000,000 1,044,490
Norwest Financial
6.250% Due 11/01/02 ........ 250,000 249,278
Penney, J. C.
7.375% Due 06/15/04 ........ 500,000 525,155
PepsiCo
7.050% Due 05/15/06 ........ 500,000 505,405
Philip Morris
9.000% Due 01/01/01 ........ 500,000 546,095
Sears, Roebuck
6.700% Due 11/15/06 ........ 1,000,000 1,004,690
Smithkline Beecham
7.375% Due 04/15/05 ........ 500,000 527,815
Time Warner
7.450% Due 02/01/98 ........ 500,000 507,500
Time Warner
7.950% Due 02/01/00 ........ 200,000 207,126
Travelers/Aetna
6.750% Due 04/15/01 ........ 500,000 509,220
Tribune
6.875% Due 11/01/06 ........ 1,000,000 1,020,310
Wal-Mart Stores
7.500% Due 05/15/04 ........ 500,000 531,405
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
10
<PAGE> 12
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1996
(CONTINUED)
<TABLE>
<CAPTION>
Share or
Principal Market
Amount Value
------------- -------------
<S> <C> <C>
BONDS - 99.2% (Continued)
Wells Fargo
7.125% Due 08/15/06 ................ 1,000,000 $ 1,028,130
-----------
Total Corporate Bonds ................ 14,480,171
-----------
TOTAL BONDS
(COST $21,311,935) ................. 21,716,926
-----------
SHORT TERM INVESTMENTS - 0.8%
Pitney Bowes Credit
Variable Rate Demand Notes ........ 165,770 165,770
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $165,770) ................... 165,770
-----------
TOTAL INVESTMENTS - 100.0%
(COST $21,477,705).................. $21,882,696
===========
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------------- -------------
GROWTH FUND
<S> <C> <C>
COMMON STOCKS - 97.3%
CONSUMER DURABLES - 1.5%
Chrysler .......................... 10,000 $ 355,000
-----------
CONSUMER NON-DURABLES - 11.5%
Eastman Kodak ..................... 12,000 973,500
Kimberly-Clark..................... 2,000 195,750
PepsiCo............................ 25,000 756,250
Philip Morris ..................... 5,000 516,250
Procter & Gamble .................. 3,000 326,250
-----------
2,768,000
-----------
HEALTH CARE - 16.8%
Abbott Laboratories................ 10,000 556,250
DENTSPLY International............. 10,000 465,000
Johnson & Johnson.................. 6,000 319,500
Merck & Co ........................ 12,000 996,000
St. Jude Medical (a) .............. 12,000 501,000
Schering-Plough ................... 4,000 285,000
Sofamor/Danek Group (a) ........... 33,000 928,125
-----------
4,050,875
SERVICES - 5.8% -----------
Merrill ........................... 15,000 352,260
Metromail (a) ..................... 8,000 185,000
New York Times - Class A .......... 10,000 373,750
Sysco ............................. 6,000 204,750
Universal Outdoor Holdings (a) .... 10,000 272,500
-----------
1,388,260
RETAIL- 1.6% -----------
Walgreen .......................... 9,000 375,750
-----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
11
<PAGE> 13
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1996
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------
<S> <C> <C>
COMMON STOCKS - 97.3% (Continued)
CAPITAL GOODS - 11.1%
Advanced Lighting (a)................... 23,000 $ 506,000
AMP .................................... 10,000 382,500
Emerson Electric ....................... 2,000 196,250
General Electric ....................... 4,000 416,000
Grainger,W. W. ......................... 5,000 397,500
Pall ................................... 22,000 574,750
Rental Service (a) ..................... 8,300 213,725
---------
2,686,725
---------
BASIC MATERIALS - 4.4%
Alco Standard .......................... 6,000 310,500
Sigma-Aldrich .......................... 12,000 750,000
---------
1,060,500
---------
TECHNOLOGY- 19.4%
Atmel (a) ............................... 4,000 131,500
Dallas Semiconductor .................... 12,000 261,000
EMC (a) ................................. 25,000 806,250
Intel ................................... 3,000 380,625
Lattice Semiconductor (a) ............... 24,000 1,074,000
Linear Technology ....................... 22,000 1,036,750
Lucent Technologies ..................... 7,100 363,875
Zebra Technologies - Class A (a) ........ 24,000 618,000
---------
4,672,000
ENERGY- 11.3% ---------
Chevron ................................. 6,000 402,000
Chieftain International (a) ............. 30,000 735,000
Enron Oil & Gas.......................... 30,000 798,750
Exxon.................................... 5,000 471,875
Weatherford Enterra (a).................. 10,000 305,000
---------
2,712,625
---------
TELECOMMUNICATIONS/CABLE - 3.8%
MCI Communications ........................ 30,000 915,000
---------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------
<S> <C> <C>
FINANCIAL SERVICES - 10.1%
Associates First Capital - Class A ....... 12,000 $ 580,500
Federal National Mortgage ................ 16,000 660,000
First Financial - Wisconsin .............. 16,000 478,000
Household International .................. 2,000 189,500
Mercury Finance .......................... 20,000 232,500
MGIC Investment ......................... 4,000 300,000
---------
2,440,500
---------
TOTAL COMMON STOCKS
(COST $17,647,027) ..................... 23,425,235
----------
SHORT-TERM INVESTMENTS - 2.7%
Pitney Bowes Credit
Variable Rate Demand Notes ............... 503,757 503,757
Southwestern Bell Telephone
Variable Rate Demand Notes ............... 156,790 156,790
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $660,547) .......................... 660,547
----------
TOTAL INVESTMENTS - 100.0%
(COST $18,307,574) ....................... $24,085,782
===========
(a) Non-income producing
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
12
<PAGE> 14
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1996
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................... $ 181,388 $ 6,102 $ 204,263
Interest ................................ 351,230 1,166,206 20,160
--------- ---------- ----------
532,618 1,172,308 224,423
--------- ---------- ----------
Expenses
Accounting services fees ................ 38,456 35,457 34,990
Directors fees .......................... 8,888 7,733 7,379
Investment advisory fees ................ 163,437 115,203 171,264
Professional fees ....................... 20,280 18,996 21,676
Shareholder servicing costs ............. 29,509 6,921 16,616
Other expenses 18,273 16,012 19,138
--------- ---------- ----------
278,843 200,322 271,063
--------- ---------- ----------
NET INVESTMENT INCOME (LOSS) 253,775 971,986 (46,640)
--------- ---------- ----------
Net realized gain on investments 1,771,008 6,569 1,923,779
Net unrealized appreciation on investments 2,439,535 16,764 3,860,456
--------- ---------- ----------
Net gain on investments 4,210,543 23,333 5,784,235
--------- ---------- ----------
Net increase in net assets resulting from
operations .............................. $4,464,318 $ 995,319 $5,737,595
========= ========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
13
<PAGE> 15
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
Year Ended November 30, Year Ended November 30, Year Ended November 30,
----------------------- ----------------------- -----------------------
1996 1995 1996 1995 1996 1995
------------- --------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income (loss) ......................... $ 253,775 $ 298,609 $ 971,986 $ 711,040 $ (46,640) $ (24,446)
Net realized gain on investments ..................... 1,771,008 1,051,073 6,569 90,541 1,923,779 259,674
Net unrealized appreciation on investments ........... 2,439,535 1,958,203 16,764 803,692 3,860,456 1,815,719
--------- --------- --------- ---------- ---------- ----------
Net increase in net assets resulting from operations .. 4,464,318 3,307,885 995,319 1,605,273 5,737,595 2,050,947
--------- --------- --------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income .............. (298,611) (358,945) (884,221) (653,566) - -
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) (884,221) (653,566) (284,824) (430,201)
--------- --------- --------- ---------- ---------- ----------
FUND SHARE TRANSACTIONS ................................. (370,471) (126,613) 7,171,580 3,705,177 6,055,030 6,247,542
--------- --------- ---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS ............................ 2,682,385 850,344 7,282,678 4,656,884 11,507,801 7,868,288
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 of $205,991; $250,827; $277,450; $189,685; $0 and
$0, respectively) .................................... $20,768,860 $18,086,475 $22,152,913 $14,870,235 $24,076,968 $12,569,167
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
14
<PAGE> 16
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 (Thompson, Plumb & Associates, Inc.)
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 (that is, A-1, A-2 or
15
<PAGE> 17
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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 $153,478 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. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
NOTE 3 - FUND SHARE TRANSACTIONS
Transactions in shares of the Funds during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
BALANCED FUND
Shares sold 183,503 $2,574,836 191,606 $2,540,438
Shares issued in reinvestment of dividends 21,882 288,668 29,018 347,632
Shares issued in reinvestment of realized gains 81,571 1,076,090 159,459 1,910,301
Shares redeemed (302,593) (4,310,065) (381,297) (4,924,984)
-------- --------- --------- ---------
Net decrease (15,637) $ (370,471) (1,214) $ (126,613)
======== ========= ========= =========
BOND FUND
Shares sold 801,845 $8,257,776 492,422 $5,103,604
Shares issued in reinvestment of dividends 80,217 820,128 57,149 582,902
Shares redeemed (184,314) (1,906,324) (190,417) (1,981,329)
-------- --------- -------- ---------
Net increase 697,748 $7,171,580 359,154 $3,705,177
======== ========= ======== =========
GROWTH FUND
Shares sold 252,647 $6,819,690 271,434 $6,162,583
Shares issued in reinvestment of realized gains 9,451 229,870 21,159 405,826
Shares redeemed (35,998) (994,530) (14,544) (320,867)
-------- --------- -------- ---------
Net increase 226,100 $6,055,030 278,049 $6,247,542
======== ========== ======== ==========
</TABLE>
16
<PAGE> 18
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 4 - 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, custodial, 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.
17
<PAGE> 19
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income and realized gains on
securities for 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.
Quarterly distributions from net investment income for the Bond Fund during
fiscal 1996 totaled $884,221 or $0.53 per share. For the period ended November
30, 1996, a capital gains distribution for the Balanced Fund and the Growth
Fund and a distribution from net investment income for the Balanced Fund and
the Bond Fund were declared December 23, 1996 payable to shareholders on
December 24, 1996.
<TABLE>
CAPITAL GAINS DISTRIBUTIONS
1996 Long-term 1996 Short-term
----------------------- -----------------------
Total Per Total Per
Distribution Share Distribution Share
------------ ----- ------------ -----
<S> <C> <C> <C> <C>
BALANCED FUND $1,156,101 $0.90 $567,560 $0.44
GROWTH FUND $ 998,460 $1.34 $839,536 $1.13
</TABLE>
<TABLE>
DIVIDENDS FROM NET INVESTMENT INCOME
1996
-------------------------------------------------
Total Per
Distribution Share
------------ -----
<S> <C> <C>
BALANCED FUND $294,243 $0.23
BOND FUND $384,392 $0.18
</TABLE>
18
<PAGE> 20
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the year ended November 30, 1996 were as follows:
<TABLE>
<CAPTION>
Balanced Fund Bond Fund Growth Fund
U. S. Government Securities
- ---------------------------
<S> <C> <C> <C>
Purchases $5,464,297 $13,053,492 -
Sales $6,398,732 $14,096,031 -
Securities other than
U. S. Government and
Short-term Investments
- -----------------------
Purchases $19,802,054 $12,386,470 $22,920,676
Sales $20,302,708 $ 3,789,084 $17,200,113
</TABLE>
NOTE 7 - 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 $177,789 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, 1996, the Bond Fund utilized a Federal
income tax capital loss carryforward of $9,040 to offset certain realized
capital gains during the period.
The Balanced Fund incurred $14,451 of post-October capital losses, during 1996,
which may be used to offset capital gains in future years to the extent
provided by tax regulations.
For Federal income tax purposes at November 30, 1996:
<TABLE>
<CAPTION>
Aggregate Aggregate
unrealized unrealized Net unrealized
Aggregate cost appreciation depreciation appreciation
of investments for investments for investments for investments
in securities held held held
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $15,770,302 $5,030,540 ($14,871) $5,015,669
Bond Fund $21,481,182 $ 420,910 ($19,396) $ 401,514
Growth Fund $18,318,190 $5,779,687 ($12,095) $5,767,592
</TABLE>
19
<PAGE> 21
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
The following table presents information relating to a share of capital stock
outstanding for the entire period.
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 (d)
---- ---- ---- ---- ---- ---- ---- ---- ---- --------
BALANCED FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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 0.19 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 3.21 2.26 0.04 0.15 1.16 1.83 (0.14) 1.72 1.51 (1.64)
------ ----- ----- ----- ------ ----- ------- ----- ----- ------
Total from Investment Operations 3.40 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 $16.54 $14.23 $13.55 $14.17 $14.57 $13.50 $11.69 $11.87 $10.06 $8.45
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
TOTAL RETURN 25.80% 21.02% 2.15% 3.02% 10.91% 18.35% 1.18% 20.46% 20.28% (15.50%)(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $20.8 $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 1.45% 1.49% 1.42% 1.40% 1.48% 1.64% 1.84% 2.00% 2.00%(c) 2.00%(b)(c)
Ratio of net income to average
net assets 1.32% 1.71% 1.84% 1.89% 2.14% 2.46% 2.49% 2.95% 2.15%(c) 1.93%(b)(c)
Portfolio turnover rate 134.82% 111.16% 110.01% 91.77% 52.75% 48.46% 56.86% 55.69% 80.96% 114.06%
Average commission rate paid $0.0745 - - - - - - - - -
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) Computed after giving effect to Advisor's expense reimbursement as follows: 1988 1987 (d)
---- -------
Advisor's expense reimbursement $13,977 $4,994
Ratio of expenses to average net assets without reimbursement 2.2% 2.2%(b)
Ratio of net income to average net assets without reimbursement 1.9% 1.7%(b)
(d) For the period March 16, 1987 (commencement of operations) through November 30, 1987.
</TABLE>
20
<PAGE> 22
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
(Continued)
The following table presents information relating to a share of capital stock
outstanding for the entire period.
<TABLE>
<CAPTION>
Year Ended November 30,
---------------------------
1996 1995 1994 1993 1992 (d)
BOND FUND
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.67 $9.88 $10.78 $10.33 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.52 0.57 0.48 0.45 0.20
Net realized and unrealized
gains (losses) on investments (0.07) 0.78 (0.78) 0.44 0.28
------ ----- ----- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.45 1.35 (0.30) 0.89 0.48
LESS DISTRIBUTIONS
Dividends from net investment income (0.53) (0.56) (0.47) (0.42) (0.15)
Distributions from capital gains - - (0.13) (0.02) -
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.53) (0.56) (0.60) (0.44) (0.15)
NET ASSET VALUE, END OF PERIOD $10.59 $10.67 $9.88 $10.78 $10.33
====== ====== ===== ====== ======
TOTAL RETURN 4.51% 14.06% % (2.96%) 8.74% 4.80%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $22.2 $ 14.9 $ 10.2 $ 6.2 $ 3.9
Ratio of expenses to average
net assets 1.13% 1.13%(c) 1.00%(c) 1.00%(c) 1.15%(b)(c)
Ratio of net income to average
net assets 5.48% 5.70%(c) 4.83%(c) 4.44%(c) 4.36%(b)(c)
Portfolio turnover rate 104.43% 111.95% 165.74% 111.18% 227.03%
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) Computed after giving effect to Advisor's
expense reimbursement as
follows:
<CAPTION>
1995 1994 1993 1992 (d)
<S> <C> <C> <C> <C>
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%(b)
Ratio of net income to average
net assets without reimbursement 5.49% 4.34% 3.68% 3.13%(b)
(d) For the period February 10, 1992 (commencement of operations) through
November 30, 1992.
</TABLE>
21
<PAGE> 23
THOMPSON PLUMB FUNDS, INC.
FINANCIAL HIGHLIGHTS
(CONTINUED)
The following table presents information relating to a share of capital stock
outstanding for the entire period.
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------
1996 1995 1994 1993 1992 (d)
GROWTH FUND
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $24.74 $20.43 $20.47 $20.37 $20.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.06) (0.05) (0.20) (0.12) (0.05)
Net realized and unrealized gains on investments 8.66 6.22 0.16 0.22 0.42
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 8.60 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 $32.79 $24.74 $20.43 $20.47 $20.37
====== ====== ====== ====== ======
TOTAL RETURN 35.52% 32.87% (0.19%) 0.49% 1.85%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $24.1 $12.6 $4.7 $7.1 $7.4
Ratio of expenses to average net assets 1.58% 2.00% 2.00%(c) 1.93% 2.00%(b)(c)
Ratio of net income to average net assets (0.27%) (0.31%) (0.49%)(c)(0.54%) (0.40%)(b)(c)
Portfolio turnover rate 101.91% 86.68% 116.69% 98.93% 43.23%
Average commission rate paid $0.0858 - - - -
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) Computed after giving effect to Advisor's expense reimbursement as
follows: 1994 1992(d)
----- ------
Advisor's expense reimbursement $16,467 $2,638
Ratio of expenses to average net assets without reimbursement 2.31% 2.05%(b)
Ratio of net income to average net assets without reimbursement (0.80%) (0.46%)(b)
(d) For the period February 10, 1992 (commencement of operations) through
November 30, 1992.
</TABLE>
22
<PAGE> 24
[PRICE WATERHOUSE LLP LETTERHEAD]
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, 1996, 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
nine years in the period ended November 30, 1996 and for the period March 16,
1987 (commencement of operations) through November 30, 1987 for the Thompson
Plumb Balanced Fund and for the four years in the period ended November 30,
1996 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, 1996 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
January 13, 1997
23
<PAGE> 25
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.O. Box 701
Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
30 South Sixth Street
Minneapolis, Minnesota 55402
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
