<PAGE> 1
[THOMPSON PLUMB FUNDS, INC. LOGO]
July 15, 1997
SEMIANNUAL 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 six month period ending May 31,
1997. Our equity-oriented funds again achieved strong performance results
during the six month period. The goals for each fund are as follows:
THOMPSON PLUMB BALANCED FUND
This Fund seeks to realize a combination of income and capital appreciation,
which will result in the highest total return while assuming reasonable risk.
The Balanced Fund invests in a diversified portfolio of common stocks and fixed
income securities.
THOMPSON PLUMB BOND FUND
This Fund seeks a high level of current income while at the same time
preserving investment capital. The Bond Fund invests primarily in a
diversified portfolio of investment-grade debt securities.
THOMPSON PLUMB GROWTH FUND
This Fund seeks a high level of long-term growth primarily through capital
appreciation, while at the same time assuming reasonable risk. The Growth Fund
invests primarily in a diversified portfolio of common stocks and securities
convertible into common stocks. Although current income is not a primary
objective of the Growth Fund, the Fund anticipates that capital growth will be
accompanied by growth through dividend income.
We hope that you find the report clear and concise and that it provides you
with a sufficient amount of detailed information in order to be able to review
your investment. We welcome your comments and questions.
Sincerely,
John W. Thompson Thomas G. Plumb
John W. Thompson, CFA Thomas G. Plumb, CFA
Chairman & Secretary President & Treasurer
<PAGE> 2
THOMPSON PLUMB FUNDS, INC.
SEMIANNUAL REPORT TO SHAREHOLDERS
May 31, 1997
CONTENTS
Page(s)
REPORT TO SHAREHOLDERS....................................... 1
OVERALL INVESTMENT REVIEW.................................... 3
FINANCIAL STATEMENTS
Statement of assets and liabilities....................... 4
Schedule of investments................................... 5-9
Statement of operations................................... 10
Statement of changes in net assets........................ 11
Notes to financial statements............................. 12-16
Financial highlights...................................... 17-19
This semiannual report is authorized for distribution to prospective investors
only when preceded or accompanied by a Fund prospectus which contains facts
concerning the Funds' objectives and policies, management, expenses, and other
information.
2
<PAGE> 3
THOMPSON PLUMB FUNDS, INC.
SEMIANNUAL REPORT TO SHAREHOLDERS
JULY 15, 1997
OVERALL INVESTMENT REVIEW
The U.S. economy has continued to do well, showing above-average growth, low
inflation, and excellent corporate profits. Never before has inflation been so
subdued while unemployment has been as low as it is now. Our economy has
reached full employment by historic measures, yet wage pressures and inflation
have not increased. The confluence of the two events-excellent corporate
profit growth and low inflation- has tilted the flow of savings and investments
toward equities. A smaller Federal deficit, now less than 1% of GDP, will
require less of our savings dollars and will free up capital for more
productive uses.
For the first six months of their fiscal year, the Funds' total returns were
8.22% for the Balanced Fund, (0.75%) for the Bond Fund, and 10.89% for the
Growth Fund. The slightly negative return for the Bond Fund reflects the fact
that interest rates were similar at the beginning and the end of the six
months, after having been somewhat higher in the March - April period. The
gains for the Balanced and Growth Funds again exceeded the average returns for
the Lipper Analytical Services' balanced and growth fund averages,
respectively.
As we look ahead, our view is that consumer price inflation may still rise
slightly in the next year if the U.S. economy remains strong. Virtually all
the fundamentals that influence consumer spending are positive - incomes,
employment, consumer confidence, and a "wealth effect" from the spending of
stock market gains. If the economy should again reaccelerate, there may be
renewed fears about rising inflation. We believe, however, that the
well-established, secular disinflation trend will remain in place. Interest
rates should, therefore, work lower over the next several years.
While stock valuations are high by historic standards, stocks can command
generous valuations in a relatively low inflation environment. This does mean
that any threat of rising inflation could cause a setback in the stock market
where expectations are now very high. Given our outlook for well-contained
inflation in the years ahead, however, both stocks and bonds remain attractive
as long-term investments in your Funds.
3
<PAGE> 4
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
---------------- ------------ ----------------
ASSETS
<S> <C> <C> <C>
Investments, at market value (Cost $25,966,
$28,398 and $25,777, respectively)
Common stocks ................................ $21,820 - $32,808
Bonds ........................................ 7,445 $26,567 -
Short-term investments ....................... 2,298 1,577 667
------- ------- -------
31,563 28,144 33,475
Prepaid expenses ............................... 14 15 15
Dividends and interest receivable .............. 111 337 45
------- ------- -------
31,688 28,496 33,535
------- ------- -------
LIABILITIES
Due on purchase of securities .................. 995 - 246
Accrued expenses payable ....................... 14 11 15
Due to investment advisor ...................... 24 20 32
------- ------- -------
1,033 31 293
------- ------- -------
$30,655 $28,465 $33,242
======= ======= =======
NET ASSETS CONSIST OF:
Capital stock ($.001 par value) ................ $23,668 $28,725 $24,228
Undistributed net investment income (loss) .... 45 395 (33)
Net realized gain (loss) on investments ........ 1,345 (401) 1,349
Net unrealized appreciation (depreciation)
on investments ................................ 5,597 (254) 7,698
------- ------- -------
$30,655 $28,465 $33,242
======= ======= =======
Shares of capital stock outstanding
(100,000 shares authorized) .................. 1,894 2,774 989
Offering and redemption price/Net asset
value per share .............................. $ 16.19 $ 10.26 $ 33.60
======= ======= =======
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
4
<PAGE> 5
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
- -------------------------------------------------------------------------------
BALANCED FUND
- -------------------------------------------------------------------------------
COMMON STOCKS - 69.1%
BASIC MATERIALS - 4.1%
<S> <C> <C>
FiberMark (a) ....................... 37,000 $ 753,875
Sigma-Aldrich ....................... 18,000 551,250
----------
1,305,125
==========
CAPITAL GOODS - 5.6%
Advanced Lighting (a) ............... 20,000 522,500
Emerson Electric .................... 5,000 270,000
General Electric .................... 12,000 724,500
Halter Marine Group (a) ............. 10,000 235,000
----------
1,752,000
==========
CONSUMER DURABLES - 1.2%
Discount Auto Parts (a) ............ 21,000 391,125
----------
CONSUMER NON-DURABLES - 6.6%
CPC International .................. 2,500 215,000
Eastman Kodak ...................... 5,300 439,237
Kimberly-Clark ..................... 8,200 412,050
PepsiCo ............................ 14,000 514,500
Philip Morris ...................... 11,800 519,200
----------
2,099,987
==========
ENERGY - 6.5%
Chevron ............................. 6,500 455,000
Chieftain International (a).......... 22,700 510,750
Exxon ............................... 11,400 675,450
Weatherford Enterra (a) ............. 12,000 406,500
----------
2,047,700
==========
FINANCIAL SERVICES - 7.5%
Anchor Bancorp Wisconsin ............ 7,000 297,941
Fannie Mae .......................... 9,500 415,625
First Financial - Wisconsin ......... 21,625 602,797
Household International ............. 4,000 393,000
Mercury Finance (a) ................. 50,000 131,250
Schwab, Charles ..................... 13,000 528,125
----------
2,368,738
==========
HEALTH CARE - 11.4%
American Home Products .............. 5,000 $ 380,000
Johnson & Johnson ................... 10,000 600,000
Medtronic ........................... 6,000 444,000
Merck & Co. ......................... 7,000 629,125
Sofamor/Danek Group (a) ............. 12,000 552,000
Sybron International (a) ............ 10,000 361,250
Thermo Electron (a) ................. 18,200 627,900
-----------
3,594,275
===========
RETAIL - 2.3%
Casey's General Stores .............. 14,500 290,000
Walgreen ............................ 9,200 430,100
-----------
720,100
===========
SERVICES - 5.5%
Ikon Office Solutions ............... 21,000 609,000
Media General - Class A ............. 10,000 305,630
Merrill ............................. 15,000 489,375
Universal Outdoor Holdings (a)....... 10,000 325,000
-----------
1,729,005
===========
TECHNOLOGY - 17.2%
Computer Sciences (a) ............... 6,600 510,675
Electronic Data Systems ............. 11,000 411,125
EMC (a) ............................. 17,000 677,875
Intel................................ 5,000 757,500
Lattice Semiconductor (a) ........... 12,500 725,000
Linear Technology ................... 12,000 601,500
Oracle (a) .......................... 9,000 419,625
Parametric Technology (a) ........... 9,600 430,800
U.S. Robotics (a) ................... 3,500 294,000
Zebra Technologies - Class A (a)..... 20,000 615,000
-----------
5,443,100
===========
TELECOMMUNICATIONS/CABLE - 1.2%
Cincinnati Bell ..................... 6,000 369,000
===========
TOTAL COMMON STOCKS
(COST $16,192,596) ................. 21,820,155
===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
5
<PAGE> 6
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
MAY 31, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------------ -------
<S> <C> <C>
BONDS - 23.6%
CORPORATE BONDS - 14.2%
American Home Products
7.900% Due 02/15/05 ........... 1,000,000 $1,049,060
Ford Holdings
9.250% Due 03/01/00 ........... 565,000 598,798
General Electric Capital
8.750% Due 05/21/07 ........... 510,000 569,446
Mobil
8.375% Due 02/12/01 ........... 475,000 500,531
Philip Morris
8.625% Due 03/01/99 ........... 400,000 412,000
Philip Morris
6.375% Due 02/01/06 ........... 750,000 698,670
Union Pacific
6.000% Due 09/01/03 ........... 685,000 645,873
----------
Total Corporate Bonds .......... 4,474,378
==========
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 9.4%
United States Treasury Bills (a)
Due 09/11/97 .................. 2,000,000 1,971,360
United States Treasury Notes
6.500% Due 05/31/02 ........... 1,000,000 999,690
----------
Total United States Government
and Agency Issues ............. 2,971,050
==========
TOTAL BONDS
(COST $7,476,553) ............. 7,445,428
==========
<CAPTION>
Shares or
Principal Market
Amount Value
----------- -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 7.3%
American Family Financial
Variable Rate Demand Notes ......... 851,836 $ 851,836
General Mills
Variable Rate Demand Notes ......... 113,032 113,032
Johnson Controls
Variable Rate Demand Notes ......... 893,820 893,820
Pitney Bowes Credit
Variable Rate Demand Notes ......... 379,000 379,000
Wisconsin Electric Power
Variable Rate Demand Notes ......... 60,094 60,094
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,297,782) .................. 2,297,782
-----------
TOTAL INVESTMENTS - 100.0%
(COST $25,966,931) ................. $31,563,365
===========
(a) Non-income producing
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
6
<PAGE> 7
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
MAY 31, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
- -------------------------------------------------------------------------------
BOND FUND
- -------------------------------------------------------------------------------
BONDS - 94.4%
CORPORATE BONDS - 63.2%
<S> <C> <C>
American Home Products
7.900% Due 02/15/05 .................. 1,000,000 $1,049,060
AT & T
7.000% Due 05/15/05 .................. 500,000 499,065
AT & T
7.500% Due 06/01/06 .................. 500,000 512,345
Baltimore Gas & Electric
8.375% Due 08/15/01 .................. 200,000 211,238
Disney, Walt
6.750% Due 03/30/06 .................. 500,000 486,250
First Bank Systems
6.875% Due 09/15/07 .................. 1,000,000 963,250
General Electric Capital
8.750% Due 05/21/07 .................. 750,000 837,420
Household Bank
6.870% Due 05/15/01 .................. 1,000,000 998,760
Lucent Technologies
7.250% Due 07/15/06 .................. 1,000,000 1,006,880
Maytag
8.875% Due 07/15/99 .................. 300,000 314,193
Michigan Consolidated Gas
7.210% Due 05/01/07 .................. 200,000 200,698
Morgan, J. P.
8.500% Due 08/15/03 .................. 1,000,000 1,076,080
Northern Trust
7.300% Due 09/15/06 .................. 1,000,000 1,007,270
Norwest Financial
6.250% Due 11/01/02 .................. 500,000 482,345
Penney, J. C.
7.375% Due 06/15/04 .................. 500,000 506,665
Penney, J. C.
7.600% Due 04/01/07 .................. 1,000,000 1,021,560
PepsiCo
7.050% Due 05/15/06 .................. 500,000 491,570
Philip Morris
9.000% Due 01/01/01 .................. 910,000 966,930
Philip Morris
7.500% Due 04/01/04 .................. 500,000 503,125
Sears, Roebuck
6.700% Due 11/15/06 .................. 1,000,000 963,880
Smithkline Beecham
7.375% Due 04/15/05 .................. 500,000 507,855
Time Warner
7.950% Due 02/01/00 .................. 200,000 205,000
Travelers Property & Casualty
6.750% Due 04/15/01 .................. 500,000 497,815
Tribune
6.875% Due 11/01/06 .................. 1,000,000 979,360
Wal-Mart Stores
7.500% Due 05/15/04 .................. 500,000 514,375
Wells Fargo
7.125% Due 08/15/06 .................. 1,000,000 988,750
----------
Total Corporate Bonds 17,791,739
==========
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 31.2%
Fannie Mae
7.100% Due 02/28/11 .................... 430,000 410,409
Federal Home Loan Banks
7.250% Due 10/30/02 .................... 1,000,000 1,012,820
United States Treasury Bills (a)
Due 06/12/97 ........................... 2,000,000 1,997,120
United States Treasury Bills (a)
Due 06/26/97 ........................... 1,000,000 996,920
United States Treasury Bills (a)
Due 02/05/98 ........................... 300,000 288,960
United States Treasury Notes
5.875% Due 01/31/99 .................... 2,000,000 1,992,500
United States Treasury Notes
7.500% Due 11/15/01 .................... 2,000,000 2,076,560
-----------
Total United States Government
and Agency Issues 8,775,289
-----------
TOTAL BONDS
(COST $26,821,339) ..................... 26,567,028
===========
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
7
<PAGE> 8
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
MAY 31, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
---------- --------
SHORT-TERM INVESTMENTS - 5.6%
<S> <C> <C>
American Family Financial
Variable Rate Demand Notes ............ 449,173 $ 449,173
Johnson Controls
Variable Rate Demand Notes ............ 1,085,309 1,085,309
Pitney Bowes Credit
Variable Rate Demand Notes ............ 26,000 26,000
Wisconsin Electric Power
Variable Rate Demand Notes ............ 16,252 16,252
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,576,734) .................... 1,576,734
-----------
TOTAL INVESTMENTS - 100.0%
(COST $28,398,073) ................... $28,143,762
===========
(a) Non-income producing
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
- --------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------
COMMON STOCKS - 98.0%
BASIC MATERIALS - 3.2%
<S> <C> <C>
Sigma-Aldrich ............... 35,000 $1,071,875
----------
CAPITAL GOODS - 6.4%
Advanced Lighting (a) ....... 15,000 391,875
AMP.......................... 10,000 410,000
Belden ...................... 5,000 181,875
Cuno (a) .................... 5,000 82,500
Emerson Electric ............ 4,000 216,000
General Electric ............ 8,000 483,000
Halter Marine Group (a) ..... 10,000 235,000
Watsco ...................... 5,000 145,000
----------
2,145,250
==========
CONSUMER DURABLES - 1.0%
Chrysler ................... 10,000 318,750
==========
CONSUMER NON-DURABLES - 11.5%
Eastman Kodak .............. 15,000 1,243,125
Kimberly-Clark ............. 15,000 753,750
PepsiCo .................... 25,000 918,750
Philip Morris .............. 21,000 924,000
-----------
3,839,625
==========
ENERGY - 7.8%
Chevron ...................... 10,000 700,000
Chieftain International (a) .. 30,000 675,000
Enron Oil & Gas .............. 30,000 641,250
Exxon ........................ 10,000 592,500
----------
2,608,750
==========
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
8
<PAGE> 9
THOMPSON PLUMB FUNDS, INC.
SCHEDULE OF INVESTMENTS
MAY 31, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------------- ----------
COMMON STOCKS - 98.0% (Continued)
FINANCIAL SERVICES - 13.3%
<S> <C> <C>
Associates First Capital - Class A .. 18,000 $850,500
BISYS Group (a) ..................... 12,000 457,500
Fannie Mae .......................... 21,000 918,750
First Data .......................... 10,000 400,000
First Financial - Wisconsin ......... 20,000 557,500
Hartford Life - Class A (a) ......... 10,000 335,000
Household International ............. 5,000 491,250
MGIC Investment ..................... 5,000 445,000
-----------
4,455,500
===========
HEALTH CARE - 20.2%
Abbott Laboratories ................. 6,000 378,000
American Home Products .............. 10,000 760,000
DENTSPLY International .............. 10,000 502,500
Johnson & Johnson ................... 10,000 600,000
Medtronic ........................... 5,000 370,000
Merck & Co. ......................... 10,000 898,750
Schering-Plough ..................... 5,000 453,750
Sofamor/Danek Group (a) ............. 30,000 1,380,000
Sybron International (a) ............ 20,000 722,500
Thermo Electron (a) ................. 20,000 690,000
-----------
6,755,500
===========
RETAIL - 2.4%
Casey's General Stores .............. 20,000 400,000
Walgreen ............................ 9,000 420,750
-----------
820,750
===========
SERVICES - 8.5%
Danka Business Systems ADR .......... 3,000 120,375
Ikon Office Solutions ............... 10,000 290,000
Merrill ............................. 26,000 848,250
Metromail (a) ....................... 10,000 220,000
New York Times - Class A ............ 15,000 690,945
Outdoor Systems (a) ................. 10,000 331,250
Universal Outdoor Holdings (a) ...... 11,000 357,500
-----------
2,858,320
===========
TECHNOLOGY - 22.8%
Atmel (a) ............................ 10,000 287,500
EMC (a) .............................. 30,000 1,196,250
Hewlett-Packard ...................... 10,000 515,000
Intel................................. 4,000 606,000
Lattice Semiconductor (a) ............ 22,000 1,276,000
Linear Technology .................... 24,000 1,203,000
Oracle (a) ........................... 12,000 559,500
Parametric Technology (a) ............ 15,000 673,125
Synopsys (a) ......................... 10,000 373,750
U.S. Robotics (a) .................... 2,000 168,000
Zebra Technologies - Class A (a) ..... 25,000 768,750
-----------
7,626,875
===========
TELECOMMUNICATIONS/CABLE - 0.9%
Cincinnati Bell ...................... 5,000 307,500
-----------
TOTAL COMMON STOCKS
(COST $25,110,353) .................. 32,808,695
===========
SHORT-TERM INVESTMENTS - 2.0%
Johnson Controls
Variable Rate Demand Notes ......... 628,731 628,731
Wisconsin Electric Power
Variable Rate Demand Notes .......... 38,018 38,018
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $666,749) ..................... 666,749
-----------
TOTAL INVESTMENTS - 100.0%
(COST $25,777,102) .................. $33,475,444
===========
</TABLE>
(a) Non-income producing
The accompanying notes to financial statements
are an integral part of this schedule.
9
<PAGE> 10
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MAY 31, 1997
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
------------- --------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ........................................ $ 80 - $ 143
Interest ......................................... 228 $ 838 38
------ ----- ------
308 838 181
------ ----- ------
EXPENSES
Accounting services fees ......................... 24 25 27
Directors fees ................................... 4 4 5
Federal & state registration ..................... 10 11 11
Investment advisory fees ......................... 103 82 137
Professional fees ................................ 13 13 14
Shareholder servicing costs ...................... 13 2 13
Other expenses ................................... 8 7 7
------ ----- ------
175 144 214
------ ----- ------
NET INVESTMENT INCOME (LOSS) ....................... 133 694 (33)
------ ----- ------
Net realized gain (loss) on investments ............ 1,312 (220) 1,288
Net unrealized appreciation (depreciation)
on investments .................................... 581 (659) 1,920
------ ----- ------
NET GAIN (LOSS) ON INVESTMENTS ..................... 1,893 (879) 3,208
------ ----- ------
Net increase (decrease) in net assets resulting from
operations ....................................... $2,026 $(185) $3,175
====== ===== ======
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
10
<PAGE> 11
THOMPSON PLUMB FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MAY 31,
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
------------------ ------------- --------------------
1997 1996 1997 1996 1997 1996
----- ----- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income (loss) ....................... $ 133 $ 133 $ 694 $ 429 $ (33) $ (15)
Net realized gain (loss) on investments ............ 1,312 946 (220) (54) 1,288 719
Net unrealized appreciation (depreciation) on
investments...................................... 581 464 (659) (760) 1,920 1,315
------- ------- ----- ------- ------- -------
Net increase (decrease) in net assets resulting
from operations................................. 2,026 1,543 (185) (385) 3,175 2,019
------- ------- ----- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income ........... (294) (298) (576) (394) - -
Distributions from net realized gains on
securities transactions......................... (1,724) (1,113) - - (1,838) (285)
------- ------- ----- ------- ------- -------
Total distributions to shareholders ................ (2,018) (1,411) (576) (394) (1,838) (285)
------- ------- ----- ------- ------- -------
FUND SHARE TRANSACTIONS ............................... 9,878 1,307 7,073 3,171 7,828 3,713
------- ------- ----- ------- ------- -------
TOTAL INCREASE IN NET ASSETS .......................... 9,886 1,439 6,312 2,392 9,165 5,447
Net Assets
Beginning of period .................................. 20,769 18,086 22,153 14,870 24,077 12,569
------- ------- ----- ------- ------- -------
End of period (Including undistributed net
investment income (loss) of $45; $85; $395;
$225; ($33) and ($15), respectively ............... $30,655 $19,525 $28,465 $17,262 $33,242 $18,016
======= ======= ======= ======= ======= =======
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
11
<PAGE> 12
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 on an exchange and in the over-the-counter
market 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 market 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
12
<PAGE> 13
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 - Generally accepted accounting principles
require that permanent financial reporting and tax differences relating to
shareholder distributions be reclassified to paid-in capital.
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 the six months ended May 31, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
----------------------------- ------------------------
Shares Dollars Shares Dollars
------- --------- ------ ---------
BALANCED FUND
<S> <C> <C> <C> <C>
Shares sold 732 $11,367 139 $ 1,918
Shares issued in reinvestment of dividends 19 283 22 289
Shares issued in reinvestment of realized gains 112 1,660 82 1,076
Shares redeemed (224) (3,432) (143) (1,976)
------ ------- ----- -------
Net increase 639 $ 9,878 100 $ 1,307
====== ======= ===== =======
BOND FUND
Shares sold 1,010 $10,414 319 $ 3,303
Shares issued in reinvestment of dividends 53 541 35 366
Shares redeemed (380) (3,882) (47) (498)
------ ------- ----- -------
Net increase 683 $ 7,073 307 $ 3,171
====== ======= ===== =======
GROWTH FUND
Shares sold 295 $ 9,177 145 $ 3,732
Shares issued in reinvestment of realized gains 54 1,629 10 230
Shares redeemed (94) (2,978) (10) (249)
------ ------- ----- -------
Net increase 255 $ 7,828 145 $ 3,713
====== ======= ===== =======
</TABLE>
13
<PAGE> 14
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 average daily net assets up
to $50 million and .80 of 1% of average daily net assets in excess of $50
million; (ii) for the Bond Fund, .65 of 1% of average daily net assets up to
$50 million and .60 of 1% of average daily net assets in excess of $50 million;
(iii) for the Growth Fund, 1.00% of average daily net assets up to $50 million
and .90 of 1% of average daily 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.
14
<PAGE> 15
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.
For the period ended February 28, 1997, a dividend from net investment income
for the Bond Fund was declared March 14, 1997 payable to shareholders on March
17, 1997. 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>
<CAPTION>
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>
<CAPTION>
DIVIDENDS FROM NET INVESTMENT INCOME
1997 1996
-------------------- --------------------
Total Per Total Per
Distribution Share Distribution Share
-------------- ------ ------------ ------
<S> <C> <C> <C> <C>
BALANCED FUND - - $294,243 $0.23
BOND FUND $191,723 $0.07 $384,392 $0.18
</TABLE>
15
<PAGE> 16
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the six months ended May 31, 1997 were as follows:
Balanced Fund Bond Fund Growth Fund
------------- --------- -----------
U. S. Government Securities
Purchases $ 3,471,140 $10,540,278 -
Sales $ 1,546,641 $ 8,719,408 -
Securities other than
U. S. Government and
Short-term Investments
Purchases $13,623,117 $ 6,864,238 $18,257,000
Sales $ 8,667,887 $ 2,954,085 $12,081,807
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.
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.
<TABLE>
<CAPTION>
For Federal income tax purposes at May 31, 1997:
Aggregate Aggregate Net unrealized
unrealized unrealized appreciation
Aggregate cost appreciation depreciation (depreciation)
of investments for investments for investments for investments
in securities held held held
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balanced Fund $25,967,031 $5,931,285 $(334,951) $5,596,334
Bond Fund $28,398,073 $ 47,715 $(302,026) $ (254,311)
Growth Fund $25,787,718 $7,899,211 $(211,485) $7,687,726
</TABLE>
16
<PAGE> 17
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,
-----------------------------------------------------
1997 (C) 1996 1995 1994 1993 1992
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCED FUND
NET ASSET VALUE, BEGINNING OF PERIOD $16.54 $14.23 $13.55 $14.17 $14.57 $13.50
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.09 0.19 0.24 0.27 0.28 0.30
Net realized and unrealized gains
(losses) on investments 1.13 3.21 2.26 0.04 0.15 1.16
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.22 3.40 2.50 0.31 0.43 1.46
LESS DISTRIBUTIONS
Dividends from net investment income (0.23) (0.23) (0.28) (0.27) (0.28) (0.28)
Distributions from capital gains (1.34) (0.86) (1.54) (0.66) (0.55) (0.11)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.57) (1.09) (1.82) (0.93) (0.83) (0.39)
NET ASSET VALUE, END OF PERIOD $16.19 $16.54 $14.23 13.55 $14.17 $14.57
====== ====== ====== ====== ====== ======
TOTAL RETURN 8.22% (a) 25.80% 21.02% 2.15% 3.02% 10.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 30.7 $ 20.8 $ 18.1 $ 17.2 $ 21.5 $ 20.9
Ratio of expenses to average net assets 1.42% (b ) 1.45% 1.49% 1.42% 1.40% 1.48%
Ratio of expenses to average net assets
without reimbursement - - - - - -
Ratio of net income to average net assets 1.08% (b) 1.32% 1.71% 1.84% 1.89% 2.14%
Ratio of net income to average net assets
without reimbursement - - - - - -
Portfolio turnover rate 44.86% 134.82% 111.16% 110.01% 91.77% 52.75%
Average commission rate paid $0.0689 $0.0745 - - - -
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987 (d)
------ ------ ------ ----- --------
<S> <C> <C> <C> <C> <C>
BALANCED FUND
NET ASSET VALUE, BEGINNING OF PERIOD $11.69 $11.87 $10.06 $8.45 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.27 0.27 0.30 0.19 0.09
Net realized and unrealized gains
(losses) on investments 1.83 (0.14) 1.72 1.51 (1.64)
------ ------ ------ ----- ------
TOTAL FROM INVESTMENT OPERATIONS 2.10 0.13 2.02 1.70 (1.55)
LESS DISTRIBUTIONS
Dividends from net investment income (0.29) (0.31) (0.21) (0.09) -
Distributions from capital gains - - - - -
------ ------ ------ ----- ------
TOTAL DISTRIBUTIONS (0.29) (0.31) (0.21) (0.09) -
NET ASSET VALUE, END OF PERIOD $13.50 $11.69 $11.87 $10.06 $ 8.45
====== ====== ====== ====== =======
TOTAL RETURN 18.35% 1.18% 20.46% 20.28% (15.50%)(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 18.1 $ 11.4 $ 9.0 $ 6.4 $ 4.4
Ratio of expenses to average net assets 1.64% 1.84% 2.00% 2.00% 2.00% (b)
Ratio of expenses to average net assets
without reimbursement - - - 2.20% 2.20% (b)
Ratio of net income to average net assets 2.46% 2.49% 2.95% 2.15% 1.93% (b)
Ratio of net income to average net assets
without reimbursement - - - 1.90% 1.70% (b)
Portfolio turnover rate 48.46% 56.86% 55.69% 80.96% 114.06%
Average commission rate paid - - - - -
</TABLE>
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) For the six month period ended May 31, 1997 (Unaudited).
(d) For the period March 16, 1987 (commencement of operations) through
November 30, 1987.
The accompanying notes to financial statements
are an integral part of this statement.
17
<PAGE> 18
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,
--------------------------------
1997 (c) 1996 1995 1994 1993 1992 (d)
--------- ------- ------- ------ ------- ---------
BOND FUND
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.59 $ 10.67 $ 9.88 $ 10.78 $ 10.33 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.26 0.52 0.57 0.48 0.45 0.20
Net realized and unrealized gains (losses)
on investments (0.34) (0.07) 0.78 (0.78) 0.44 0.28
------- ------ ------- ------ ------- -------
TOTAL FROM INVESTMENT OPERATIONS (0.08) 0.45 1.35 (0.30) 0.89 0.48
LESS DISTRIBUTIONS
Dividends from net investment income (0.25) (0.53) (0.56) (0.47) (0.42) (0.15)
Distributions from capital gains - - - (0.13) (0.02) -
------- ------- ------- ------ ------- -------
TOTAL DISTRIBUTIONS (0.25) (0.53) (0.56) (0.60) (0.44) (0.15)
NET ASSET VALUE, END OF PERIOD $10.26 $ 10.59 $ 10.67 $ 9.88 $ 10.78 $ 10.33
======= ======= ======= ======== ======= =======
TOTAL RETURN (0.75%)(a) 4.51% 14.06% (2.96%) 8.74% 4.80%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 28.5 $ 22.2 $ 14.9 $ 10.2 $ 6.2 $ 3.9
Ratio of expenses to average net assets 1.14% 1.13% 1.13% 1.00% 1.00% 1.15%(b)
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 5.46% (b) 5.48% 5.70% 4.83% 4.44% 4.36%(b)
Ratio of net income to average net assets
without reimbursement - - 5.49% 4.34% 3.68% 3.13%(b)
Portfolio turnover rate 45.11% 104.43% 111.95% 165.74% 111.18% 227.03%
</TABLE>
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) For the six month period ended May 31, 1997 (Unaudited).
(d) For the period February 10, 1992 (commencement of operations) through
November 30, 1992.
The accompanying notes to financial statements
are an integral part of this statement.
18
<PAGE> 19
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,
----------------------------
1997 (c) 1996 1995 1994 1993 1992 (d)
--------- ------- --------- ---------- ----- ---------
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 32.79 $ 24.74 $20.43 $ 20.47 $20.37 $20.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.03) (0.06) (0.05) (0.20) (0.12) (0.05)
Net realized and unrealized gains on
investments 3.31 8.66 6.22 0.16 0.22 0.42
-------- ------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 3.28 8.60 6.17 (0.04) 0.10 0.37
LESS DISTRIBUTIONS
Dividends from net investment income - - - - - -
Distributions from capital gains (2.47) (0.55) (1.86) - - -
-------- ------- ------- ------- ------ ------
TOTAL DISTRIBUTIONS (2.47) (0.55) (1.86) - - -
NET ASSET VALUE, END OF PERIOD $ 33.60 $ 32.79 $24.74 $ 20.43 $20.47 $20.37
======== ======= ======= ======= ====== ======
TOTAL RETURN 10.89%(a) 35.52% 32.87% (0.19%) 0.49% 1.85% (a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 33.2 $ 24.1 $ 12.6 $ 4.7 $ 7.1 $ 7.4
Ratio of expenses to average net assets 1.54% (b) 1.58% 2.00% 2.00% 1.93% 2.00% (b)
Ratio of expenses to average net assets
without reimbursement - - - 2.31% - 2.05% (b)
Ratio of net income to average net assets (0.24%) (b) (0.27%) (0.31%) (0.49%) (0.54%) (0.40%) (b)
Ratio of net income to average net assets
without reimbursement - - - (0.80%) - (0.46%)(b)
Portfolio turnover rate 45.67% 101.91% 86.68% 116.69% 98.93% 43.23%
Average commission rate paid $0.0714 $0.0858 - - - -
</TABLE>
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) For the six month period ended May 31, 1997 (Unaudited).
(d) For the period February 10, 1992 (commencement of operations) through
November 30, 1992.
The accompanying notes to financial statements
are an integral part of this statement.
19
<PAGE> 20
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
David B. Duchow
Assistant Vice President
John C. Thompson
Assistant Vice President
CUSTODIAN, TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Firstar Trust Company
P. 0. Box 701
Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
33 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
[THOMPSON PLUMB FUNDS, INC. LOGO]
SEMIANNUAL REPORT
May 31, 1997
Thompson Plumb Balanced Fund
Thompson Plumb Bond Fund
Thompson Plumb Growth Fund
8201 Excelsior Drive, Suite 200
Madison, Wisconsin 53717
Telephone: (608) 831-1300
