<PAGE> 1
Thompson Plumb
Funds, Inc.
ANNUAL REPORT
November 30, 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
(800) 999-0887
www.thompsonplumb.com
<PAGE> 2
Thompson Plumb Funds, Inc.
January 15, 1998
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, 1997. Last year was another 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. Please visit our web site (http://www.thompsonplumb.
com) for updated daily information or call with any comments or questions.
Sincerely,
John W. Thompson Thomas G. Plumb
John W. Thompson, CFA Thomas G. Plumb, CFA
Chairman & Secretary President & Treasurer
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2
<PAGE> 4
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1997
CONTENTS
Page(s)
REPORT TO SHAREHOLDERS.............................................. 1
INVESTMENT REVIEWS
Balanced Fund................................................... 4
Bond Fund....................................................... 5
Growth Fund..................................................... 6
FINANCIAL STATEMENTS
Statements of assets and liabilities............................ 7
Schedules of investments........................................ 8-12
Statements of operations........................................ 13
Statements 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, 1997
BALANCED FUND INVESTMENT REVIEW
The Balanced Fund's 21.39 percent return for the November 30, 1997 year was
the third consecutive year of total returns in excess of 20 percent.
According to Lipper Analytical Services, it outperformed 94 percent of all
balanced mutual funds for the last year, 74 percent for the last five years
and 69 percent for the last ten years*.
For 1997, the primary reasons we outperformed the average balanced funds by
over 5 percentage points (according to Lipper Analytical) were our asset
allocation and stock selection. We continued to have stock exposure near the
high end of our 75 percent maximum limit and our small and mid-sized stocks
complemented our core blue chip holdings. For the second year in a row,
health care and technology companies were our leaders.
As this letter is being written, significant financial disruptions are being
reported in Southeast Asia and the ensuing uncertainty is feeding a
correction in the U.S. equity market. Once this effect on U.S. markets
stabilizes, we should see a resumption to the U.S. growth that has been the
predominant story of the 1990's. Low interest rates create opportunities,
but as we have seen in Southeast Asia, when too much money chases too few
legitimate investments, market corrections follow.
Our underpinnings are much stronger than what we find in less developed
countries, so our corrections should be less severe. We will continue to
look for selected opportunities.
Sincerely,
Thomas G. Plumb
Thomas G. Plumb
Portfolio Manager
*As measured by Lipper Analytical Services, Inc., out of 349, 103, and 43
funds for the one-year, five-year, and ten-year periods, respectively.
[GRAPH]
Comparison of Change in Value of a $10,000 Investment
THOMPSON PLUMB BALANCED FUND
HISTORICAL PERFORMANCE
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
DATE TPA S&P 500 LEHMAN
------ ------ ------- ------
<S> <C> <C> <C>
Nov 87 10,000 10,000 10,000
Nov 88 12,028 12,301 10,770
Nov 89 14,489 16,092 12,123
Nov 90 14,660 15,535 13,090
Nov 91 17,350 18,695 14,847
Nov 92 19,243 22,148 16,085
Nov 93 19,824 24,385 17,652
Nov 94 20,250 24,641 17,329
Nov 95 24,507 33,754 19,848
Nov 96 30,830 43,157 21,003
Nov 97 37,424 55,462 22,333
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
<S> <C> <C>
21.39% 14.23% 14.10%
</TABLE>
Past performance is not predicative of future performance.
4
<PAGE> 6
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1997
BOND FUND INVESTMENT REVIEW
The Bond Fund produced a 2.81 percent return in the fourth quarter,
increasing the year-to-date return to 4.74 percent. The Fund participated in
the bond market rally which pushed bond yields to the lowest levels that had
been reached in many years. This bond rally was significant and helped the
Fund produce a good year for shareholders.
Interest rates have dropped significantly over the past few years. At the
time of this writing, the yield of the 30-year Treasury Bond dropped to 5.75
percent, the lowest level that it has been in over 20 years. We think there
were three main reasons for the decline in bond yields.
First, the U.S. Government had, for all practical purposes, balanced its
budget. This created a major change in bond market cash flows. For example,
when the deficit was $200 billion per year, the Treasury was forced to sell
approximately $1 billion in bonds per trading day. This huge supply caused
yields to rise in order to attract new buyers. Now with a balanced budget,
this constant supply of new bonds has been eliminated and yields have fallen.
Second, inflation has been virtually non-existent. This is due, in part, to
the strong U.S. dollar. The strong dollar has allowed for imports of foreign
goods at lower prices to consumers. For example, consumers can now purchase
Japanese cars at much lower prices than they could two years ago. This
effect is very significant and has allowed the U.S. economy to grow without
signs of significant inflation.
Third, the financial crisis in the Far East has also helped the bond market
because the U.S. has been viewed as a "safe haven" for investors fleeing from
financial storms overseas. As the markets in Hong Kong, Korea and Malaysia
fell, investors sold securities in those markets, transferred the funds into
U.S. dollars, and bought U.S. Treasuries to obtain a guaranteed return.
The bond market appears to be an attractive place to invest because the real
interest rate, or the difference between inflation and yields, is still high
relative to the historical average. This spread should narrow if the U.S.
economy slows in the coming months, as we expect. As a result, we expect
that yields could fall even further by the end of 1998.
Sincerely,
John W. Thompson
John W. Thompson
Portfolio Manager
[GRAPH]
Comparison of Change in Value of a $10,000 Investment
THOMPSON PLUMB BOND FUND
HISTORICAL PERFORMANCE
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
DATE TPA LEHMAN
------ ------ ---------------------
<S> <C> <C>
Feb 92 10,000 10,000
Nov 92 10,480 10,615 (SHORT PERIOD)
Nov 93 11,395 11,649
Nov 94 11,058 11,436
Nov 95 12,612 13,098
Nov 96 13,181 13,861
Nov 97 13,806 14,738
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------
1 YEAR 5 YEAR SINCE INCEPTION
------- ------ ---------------
<S> <C> <C>
4.74% 5.67% 5.71%
</TABLE>
Past performance is not predicative of future performance.
5
<PAGE> 7
THOMPSON PLUMB FUNDS, INC.
ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1997
GROWTH FUND INVESTMENT REVIEW
The Growth Fund had yet another outstanding year, both in terms of absolute
performance and relative to competing growth funds. On a total return basis,
the Fund appreciated 29.90 percent. It outperformed the average growth fund
return of 22.00 percent* by almost 8 percentage points.
The strong stock market in fiscal 1997 was the main reason for the absolute
performance as most stocks continued their upward trend. Interest rates were
also favorable during 1997, which was one of the main drivers of the stock
market. The Growth Fund benefited from ownership of stocks in the medical,
financial, media, consumer product and oil sectors as these areas
outperformed the market as a whole. The Fund continues to hold major
positions in Merck, PepsiCo, Johnson & Johnson, Fannie Mae, Chevron,
Kimberly-Clark, EMC, Intel, the New York Times, and Linear Technology as
these companies have outstanding long-term prospects.
Quality continues to be emphasized in the entire portfolio. Absent from the
Fund were Asian stocks or stocks from emerging markets. We believe that with
over 12,000 stocks in our home market, there is plenty of room for
diversification within the U.S. International investing requires understanding
of companies, accounting rules, currency effects, and political situations,
which can be too many variables for most people to grasp, including ourselves.
Consistent performance over the long term is our primary goal and we are
pleased to be making good progress toward this objective.
Sincerely,
John W. Thompson
John W. Thompson
Portfolio Manager
*As measured by Lipper Analytical Service, Inc.
[GRAPH]
Comparison of Change in Value of a $10,000 Investment
THOMPSON PLUMB GROWTH FUND
HISTORICAL PERFORMANCE
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
DATE TPA S&P500
------- -------- ---------------------
<S> <C> <C>
Feb 92 10,000 10,000
Nov 92 10,185 10,695 (SHORT PERIOD)
Nov 93 10,235 11,775
Nov 94 10,215 11,899
Nov 95 13,573 16,299
Nov 96 18,394 20,840
Nov 97 23,894 26,781
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------
1 YEAR 5 YEAR SINCE INCEPTION
------- ------ ---------------
<S> <C> <C>
29.90% 18.59% 16.18%
</TABLE>
Past performance is not predicative of future performance.
6
<PAGE> 8
THOMPSON PLUMB FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
BALANCED BOND GROWTH
FUND FUND FUND
--------- --------- ----------
<S> <C> <C> <C>
ASSETS
Investments, at market value (Cost $29,086,
$31,165 and $33,117, respectively)
Common stocks ......................................... $25,405 - $43,576
Bonds ................................................. 9,976 $31,114 -
Short-term investments ................................ 719 576 417
------- ------- -------
36,100 31,690 43,993
Prepaid expenses ........................................ 4 4 4
Due from sale of securities.............................. 1,100 - 1,573
Dividends and interest receivable ....................... 209 482 34
------- ------- -------
37,413 32,176 45,604
------- ------- -------
LIABILITIES
Due on purchase of securities ........................... 1,025 - 161
Accrued expenses payable ................................ 21 17 24
Due to investment advisor ............................... 30 22 43
------- ------- -------
1,076 39 228
------- ------- -------
$36,337 $32,137 $45,376
======= ======= =======
NET ASSETS CONSIST OF:
Capital stock ($.001 par value).......................... $25,584 $31,577 $30,541
Undistributed net investment income...................... 261 416 -
Net realized gain (loss) on investments.................. 3,478 (381) 3,959
Net unrealized appreciation on investments............... 7,014 525 10,876
------- ------- -------
$36,337 $32,137 $45,376
======= ======= =======
Shares of capital stock outstanding
(100,000 shares authorized)............................. 2,001 3,050 1,153
Offering and redemption price/Net asset
value per share ........................................ $ 18.16 $ 10.54 $ 39.36
------- ------- -------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
7
<PAGE> 9
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
---------- ----------
BALANCED FUND
<S> <C> <C>
COMMON STOCKS - 70.4%
BASIC MATERIALS - 3.6%
FiberMark (a)......................... 35,000 $ 741,563
Sigma-Aldrich......................... 15,000 541,875
-----------
1,283,438
-----------
CAPITAL GOODS - 5.6%
Advanced Lighting (a)................. 30,000 630,000
Boeing................................ 10,000 531,250
General Electric...................... 9,000 663,750
Watsco ............................... 8,000 208,000
-----------
2,033,000
-----------
CONSUMER DURABLES - 0.6%
Discount Auto Parts (a)............... 12,000 224,250
-----------
CONSUMER NON-DURABLES - 4.4%
Colgate-Palmolive .................... 5,000 334,063
CPC International..................... 2,500 258,437
Kimberly-Clark ....................... 10,000 520,625
PepsiCo .............................. 13,000 479,375
-----------
1,592,500
-----------
ENERGY - 4.8%
Chevron .............................. 6,500 521,219
Chieftain International (a) .......... 22,700 502,237
Exxon ................................ 11,400 695,400
-----------
1,718,856
-----------
FINANCIAL SERVICES - 11.1%
Anchor Bancorp Wisconsin ............. 20,000 630,000
Associated Banc-Corp ................. 8,000 398,000
Banc One ............................. 9,000 462,375
CIT Group - Class A (a) .............. 10,000 303,750
Fannie Mae ........................... 10,500 554,531
Hartford Life - Class A .............. 15,000 575,625
Household International .............. 4,000 504,000
Schwab, Charles ...................... 15,000 578,438
-----------
4,006,719
-----------
HEALTH CARE - 14.9%
Abbott Laboratories .................. 6,000 390,000
Bergen Brunswig - Class A ............ 10,000 429,375
Graham-Field Health Products (a)...... 15,000 224,063
Gulf South Medical Supply (a)......... 10,000 326,250
Johnson & Johnson .................... 13,000 818,187
Kapson Senior Quarters (a)............ 20,000 297,500
Medtronic............................. 10,000 477,500
Merck & Co. .......................... 7,000 661,937
Priority Healthcare - Class B (a)..... 20,000 312,500
Schering-Plough ...................... 10,000 626,875
Sybron International (a) ............. 10,000 440,000
Young Innovations (a) ................ 24,000 357,000
-----------
5,361,187
RETAIL - 3.2% -----------
AutoZone (a) ......................... 10,000 300,000
Casey's General Stores ............... 14,500 341,656
Walgreen ............................. 16,000 515,000
-----------
1,156,656
-----------
SERVICES - 4.2%
Danka Business Systems ADR ........... 15,000 551,250
Merrill .............................. 24,000 483,000
New York Times - Class A............. 8,000 475,000
-----------
1,509,250
TECHNOLOGY - 16.4% -----------
EMC (a) .............................. 27,500 833,594
Hewlett-Packard ...................... 8,000 488,500
Intel ................................ 10,000 776,250
Lattice Semiconductor (a) ............ 15,000 846,562
Linear Technology .................... 11,000 708,125
Microchip Technology (a) ............. 12,000 420,000
Oracle (a) ........................... 13,500 449,719
Parametric Technology (a) ............ 9,600 485,400
Structural Dynamics Research (a)...... 102 1,702
Xilinx (a)............................ 10,000 345,625
Zebra Technologies - Class A (a)...... 18,000 573,750
-----------
5,929,227
-----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
8
<PAGE> 10
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
---------- --------
<S> <C> <C>
COMMON STOCKS - 70.4% (Continued)
Telecommunications/Cable - 1.6%
Cincinnati Bell ......................... 20,000 $ 590,000
------------
TOTAL COMMON STOCKS
(COST $18,516,028) ..................... 25,405,083
------------
BONDS - 27.6%
CORPORATE BONDS - 21.9%
Aetna Services
6.375% Due 08/15/03 .................... 1,000,000 994,183
Aetna Services
7.125% Due 08/15/06 .................... 1,500,000 1,532,550
American Home Products
7.900% Due 02/15/05 .................... 2,000,000 2,151,584
General Electric Capital
8.750% Due 05/21/07 .................... 510,000 592,618
Mobil
8.375% Due 02/12/01 .................... 475,000 505,605
Philip Morris
6.375% Due 02/01/06 .................... 1,000,000 973,834
Union Pacific
6.000% Due 09/01/03 .................... 685,000 660,232
Wisconsin Power & Light
7.000% Due 06/15/07 .................... 500,000 518,318
------------
Total Corporate Bonds ................... 7,928,924
------------
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 5.7%
United States Treasury Notes
6.500% Due 05/31/02 .................... 2,000,000 2,046,876
------------
Total United States Government
and Agency Issues ...................... 2,046,876
------------
TOTAL BONDS
(COST $9,850,852) ...................... 9,975,800
------------
SHORT-TERM INVESTMENTS - 2.0%
General Mills
Variable Rate Demand Notes.............. 60,000 60,000
Johnson Controls
Variable Rate Demand Notes.............. 539,699 539,699
Pitney Bowes Credit
Variable Rate Demand Notes.............. 60,000 60,000
Sara Lee
Variable Rate Demand Notes.............. 13,169 13,169
Warner-Lambert
Variable Rate Demand Notes ............. 46,138 46,138
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $719,006) ......................... 719,006
------------
TOTAL INVESTMENTS - 100.0%
(COST $29,085,886) ...................... $ 36,099,889
============
</TABLE>
(a) Non-income producing
The accompanying notes to financial statements
are an integral part of this schedule.
9
<PAGE> 11
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------------- -----------
<S> <C> <C>
BOND FUND
BONDS - 98.2%
CORPORATE BONDS - 82.2%
American Home Products
7.900% Due 02/15/05 ...................... 1,000,000 $ 1,075,792
Anheuser-Busch
7.100% Due 06/15/07 ...................... 1,000,000 1,029,768
AT&T
7.000% Due 05/15/05 ...................... 1,000,000 1,030,127
AT&T
7.500% Due 06/01/06 ...................... 500,000 532,437
Dayton Hudson
6.400% Due 02/15/03 ...................... 1,000,000 997,754
Disney, Walt
6.750% Due 03/30/06 ...................... 1,000,000 1,019,081
duPont, E. I. de Nemours
6.750% Due 09/01/07 ...................... 1,000,000 1,020,892
General Electric Capital
8.750% Due 05/21/07 ...................... 750,000 871,497
Household Bank
6.870% Due 05/15/01 ...................... 1,000,000 1,008,466
Lucent Technologies
7.250% Due 07/15/06 ...................... 1,000,000 1,049,953
Maytag
8.875% Due 07/15/99 ...................... 500,000 520,380
Michigan Consolidated Gas
7.210% Due 05/01/07 ...................... 285,000 298,249
Morgan, J. P.
8.500% Due 08/15/03 ...................... 1,000,000 1,095,382
Morgan, J. P.
6.700% Due 11/01/07 ...................... 500,000 501,268
NationsBank
6.690% Due 04/03/02 ...................... 1,000,000 1,008,359
Northern Trust
7.300% Due 09/15/06 ...................... 1,000,000 1,057,561
Norwest Financial
6.250% Due 11/01/02 ...................... 685,000 682,220
Penney, J. C.
7.375% Due 06/15/04 ...................... 500,000 523,825
Penney, J. C.
7.600% Due 04/01/07 ...................... 1,000,000 1,066,014
Philip Morris
9.000% Due 01/01/01 ...................... 1,000,000 1,071,358
Philip Morris
7.500% Due 04/01/04 ...................... 500,000 519,105
Sears, Roebuck
6.700% Due 11/15/06 ...................... 1,000,000 1,016,968
SmithKline Beecham
7.375% Due 04/15/05 ...................... 800,000 849,176
Time Warner
7.950% Due 02/01/00 ...................... 1,000,000 1,031,575
Travelers Property & Casualty
6.750% Due 04/15/01 ...................... 1,000,000 1,012,920
Tribune
6.875% Due 11/01/06 ...................... 1,000,000 1,027,792
Wal-Mart Stores
7.500% Due 05/15/04 ...................... 1,000,000 1,062,144
Wells Fargo
7.125% Due 08/15/06 ...................... 1,000,000 1,031,031
Wisconsin Power & Light
7.000% Due 06/15/07 ...................... 1,000,000 1,036,637
----------
Total Corporate Bonds ..................... 26,047,731
----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
10
<PAGE> 12
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
-------------- ------------
<S> <C> <C>
BONDS - 98.2% (Continued)
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 16.0%
Fannie Mae
5.710% Due 03/18/98 .................................... 1,000,000 $ 999,890
Federal Home Loan Banks
7.250% Due 10/30/02 .................................... 1,000,000 1,009,208
United States Treasury Notes
5.875% Due 01/31/99..................................... 2,000,000 2,001,876
United States Treasury Notes
7.500% Due 11/15/01 .................................... 1,000,000 1,055,625
-----------
Total United States Government
and Agency Issues ...................................... 5,066,599
-----------
TOTAL BONDS
(COST $30,589,747) ..................................... 31,114,330
-----------
SHORT-TERM INVESTMENTS - 1.8%
Johnson Controls
Variable Rate Demand Notes.............................. 575,689 575,689
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $575,689) ........................................ 575,689
-----------
TOTAL INVESTMENTS - 100.0%
(COST $31,165,436) ..................................... $31,690,019
===========
GROWTH FUND
COMMON STOCKS - 99.1%
BASIC MATERIALS - 2.5%
Sigma-Aldrich .......................................... 30,000 1,083,750
-----------
CAPITAL GOODS - 4.8%
Advanced Lighting (a) .................................. 35,000 735,000
Boeing ................................................. 15,000 796,875
Emerson Electric ....................................... 6,000 330,000
Watsco ................................................. 10,000 260,000
-----------
2,121,875
-----------
CONSUMER NON-DURABLES - 8.4%
Kimberly-Clark ......................................... 25,000 1,301,563
PepsiCo ................................................ 30,000 1,106,250
Philip Morris .......................................... 30,000 1,305,000
-----------
3,712,813
-----------
ENERGY - 6.4%
Chevron ................................................ 12,000 962,250
Chieftain International (a)............................. 41,600 920,400
Exxon .................................................. 15,000 915,000
-----------
2,797,650
-----------
FINANCIAL SERVICES - 22.0%
Associated Banc-Corp ................................... 15,300 761,175
Associates First Capital - Class A...................... 10,000 642,500
BISYS Group (a) ........................................ 20,000 640,000
CIT Group - Class A (a) ................................ 30,000 911,250
Fannie Mae ............................................. 21,000 1,109,063
First Data ............................................. 30,000 849,375
Hartford Life - Class A ................................ 25,000 959,375
Household International ................................ 7,000 882,000
MGIC Investment ........................................ 10,000 584,375
Morgan, J. P. .......................................... 5,000 570,938
PMI Group .............................................. 5,000 325,000
Reuters Holdings ADR ................................... 10,000 676,250
Schwab, Charles ........................................ 15,000 578,437
Travelers Ppty. & Casualty - Cl. A...................... 5,000 198,750
-----------
9,688,488
-----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this schedule.
11
<PAGE> 13
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
NOVEMBER 30, 1997
(CONTINUED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
---------- -----------
<S> <C> <C>
COMMON STOCKS - 99.1% (Continued)
HEALTH CARE - 15.6%
Abbott Laboratories ..................... 12,000 $ 780,000
Johnson & Johnson ....................... 23,000 1,447,562
Medtronic ............................... 10,000 477,500
Merck & Co. ............................. 16,000 1,513,000
Schering-Plough ......................... 8,000 501,500
Sybron International (a) ................ 20,000 880,000
Thermo Electron (a) ..................... 20,000 736,250
Young Innovations (a) ................... 34,000 505,750
-----------
6,841,562
-----------
RETAIL - 6.3%
Albertson's ............................. 20,000 887,500
AutoZone (a) ............................ 30,000 900,000
Casey's General Stores .................. 20,000 471,250
Walgreen ................................ 16,000 515,000
-----------
2,773,750
-----------
SERVICES - 5.4%
Merrill ................................. 35,000 704,375
New York Times - Class A ................ 15,000 890,625
Outdoor Systems (a) ..................... 7,500 231,562
Universal Outdoor Holdings (a) .......... 12,000 535,500
-----------
2,362,062
-----------
TECHNOLOGY - 25.7%
EMC (a) ................................. 68,000 2,061,250
Hewlett-Packard ......................... 10,000 610,625
Intel ................................... 14,000 1,086,750
Lattice Semiconductor (a)................ 26,000 1,467,375
Linear Technology ....................... 25,000 1,609,375
Maxim Integrated Products (a)............ 10,000 691,250
Oracle (a) .............................. 18,000 599,625
Parametric Technology (a)................ 20,000 1,011,250
Sterling Commerce (a) ................... 25,000 868,750
Structural Dynamics Research (a)......... 30 501
Xilinx (a) .............................. 10,000 345,625
Zebra Technologies - Class A (a)......... 30,000 956,250
-----------
11,308,626
-----------
TELECOMMUNICATIONS/CABLE - 2.0%
Cincinnati Bell ......................... 30,000 885,000
-----------
TOTAL COMMON STOCKS
(COST $32,699,792) ...................... 43,575,576
-----------
SHORT-TERM INVESTMENTS - 0.9%
General Mills
Variable Rate Demand Notes................. 44,834 44,834
Johnson Controls
Variable Rate Demand Notes................. 311,846 311,846
Pitney Bowes Credit
Variable Rate Demand Notes................. 60,000 60,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $416,680) .......................... 416,680
-----------
TOTAL INVESTMENTS - 100.0%
(COST $33,116,472) ....................... $43,992,256
===========
</TABLE>
(a) Non-income producing
The accompanying notes to financial statements
are an integral part of this schedule.
12
<PAGE> 14
THOMPSON PLUMB FUNDS, INC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCED BOND GROWTH
FUND FUND FUND
------- ------- -------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................. $ 187 - $ 309
Interest .............................................. 523 $1,851 62
------- ------- -------
710 1,851 371
------- ------- -------
EXPENSES
Accounting services fees ......................... 57 56 63
Directors fees ................................... 9 9 10
Federal & state registration ..................... 23 25 25
Investment advisory fees ......................... 248 184 333
Professional fees ................................ 30 29 33
Shareholder servicing costs ...................... 25 5 25
Other expenses ................................... 16 13 17
------- ------- -------
408 321 506
------- ------- -------
NET INVESTMENT INCOME (LOSS) ......................... 302 1,530 (135)
------- ------- -------
Net realized gain (loss) on investments .............. 3,492 (200) 4,104
Net unrealized appreciation on investments ........... 1,998 120 5,098
------- ------- -------
NET GAIN (LOSS) ON INVESTMENTS ....................... 5,490 (80) 9,202
------- ------- -------
Net increase in net assets resulting from
operations........................................ $ 5,792 $ 1,450 $ 9,067
======= ======= =======
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
13
<PAGE> 15
THOMPSON PLUMB FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30,
(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) ........................ $ 302 $ 254 $ 1,530 $ 972 $ (135) $ (46)
Net realized gain (loss) on investments ............. 3,492 1,771 (200) 6 4,104 1,924
Net unrealized appreciation on investments .......... 1,998 2,439 120 17 5,098 3,860
------- ------- ------- -------- -------- --------
Net increase in net assets resulting
from operations ..................................... 5,792 4,464 1,450 995 9,067 5,738
------- ------- ------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income............. (294) (298) (1,393) (884) - -
Distributions from net realized gains on
securities transactions ............................ (1,724) (1,113) - - (1,838) (285)
------- ------- ------- -------- -------- --------
Total distributions to shareholders ................... (2,018) (1,411) (1,393) (884) (1,838) (285)
------- ------- ------- -------- -------- --------
FUND SHARE TRANSACTIONS................................. 11,794 (370) 9,927 7,172 14,070 6,055
------- ------- ------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS ........................... 15,568 2,683 9,984 7,283 21,299 11,508
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 of $214; $206;
$414; $277; $0 and $0, respectively) ............... $36,337 $20,769 $32,137 $22,153 $45,376 $24,077
======= ======= ======= ======= ======= =======
</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 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
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.
15
<PAGE> 17
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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. 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. 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 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
-------------------------- ------------------------
Shares Dollars Shares Dollars
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
BALANCED FUND
Shares sold 940 $14,996 184 $ 2,575
Shares issued in reinvestment of dividends 19 283 22 289
Shares issued in reinvestment of realized gains 112 1,659 82 1,076
Shares redeemed (325) (5,144) (303) (4,310)
----- ------- ----- -------
Net increase (decrease) 746 $11,794 (15) $ (370)
===== ======= ===== =======
BOND FUND
Shares sold 1,357 $14,014 802 $ 8,258
Shares issued in reinvestment of dividends 129 1,322 80 820
Shares redeemed (527) (5,409) (184) (1,906)
----- ------- ----- -------
Net increase 959 $ 9,927 698 $ 7,172
===== ======= ===== =======
GROWTH FUND
Shares sold 506 $17,157 253 $ 6,820
Shares issued in reinvestment of realized gains 54 1,629 9 230
Shares redeemed (141) (4,716) (36) (995)
----- ------- ----- -------
Net increase 419 $14,070 226 $ 6,055
===== ======= ===== =======
</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 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.
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 1997 totaled $1,392,793 or $0.53 per share. For the period ended
November 30, 1997, 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 24, 1997 payable to
shareholders on December 26, 1997.
<TABLE>
<Caption
CAPITAL GAINS DISTRIBUTIONS
1997 Long-term 1997 Short-term
----------------------- -------------------------
Total Per Total Per
Distribution Share Distribution Share
------------- ------- --------------- -------
<S> <C> <C> <C> <C>
BALANCED FUND $2,451,413 $1.21 $1,026,307 $0.50
GROWTH FUND $1,663,017 $1.41 $2,305,446 $1.95
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS FROM NET INVESTMENT INCOME
1997
-------------------------
Total Per
Distribution Share
------------ -----
<S> <C> <C>
BALANCED FUND $261,244 $0.13
BOND FUND $559,725 $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, 1997 were as follows:
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
------------- ----------- --------------
<S> <C> <C> <C>
U. S. Government Securities
- ---------------------------
Purchases $ 4,496,140 $13,485,405 -
Sales $ 3,535,135 $15,433,122 -
Securities other than
U. S. Government and
Short-Term Investments
- ---------------------------
Purchases $ 27,830,270 $16,141,881 $35,947,958
Sales $ 19,401,265 $ 4,677,963 $25,000,148
</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 and $200,225 of net capital losses which expire
November 30, 2005 that may be used to offset capital gains in future years to
the extent provided by tax regulations.
During the period ended November 30, 1997, the Balanced Fund utilized a
post-October capital loss carry-forward of $14,451 to offset certain
realized capital gains during the period. The Bond Fund incurred $3,031 of
post-October capital losses, during 1997, 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, 1997:
<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 $29,085,986 $ 7,219,898 $(205,995) $ 7,013,903
Bond Fund $31,165,436 $ 524,583 - $ 524,583
Growth Fund $33,125,519 $ 11,134,795 $(268,058) $10,866,737
</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,
------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <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 $11.69 $11.87 $10.06 $8.45
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.18 0.19 0.24 0.27 0.28 0.30 0.27 0.27 0.30 0.19
Net realized and unrealized
gains (losses) on investments 3.01 3.21 2.26 0.04 0.15 1.16 1.83 (0.14) 1.72 1.51
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
TOTAL FROM INVESTMENT OPERATIONS 3.19 3.40 2.50 0.31 0.43 1.46 2.10 0.13 2.02 1.70
LESS DISTRIBUTIONS
Distributions from net investment income (0.23) (0.23) (0.28) (0.27) (0.28) (0.28) (0.29) (0.31) (0.21) (0.09)
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) (0.29) (0.31) (0.21) (0.09)
NET ASSET VALUE, END OF PERIOD $18.16 $16.54 $14.23 $13.55 $14.17 $14.57 $13.50 $11.69 $11.87 $10.06
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN 21.39% 25.80% 21.02% 2.15% 3.02% 10.91% 18.35% 1.18% 20.46% 20.28%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $36.3 $20.8 $18.1 $17.2 $21.5 $20.9 $18.1 $11.4 $9.0 $6.4
Ratio of expenses to average net assets 1.40% 1.45% 1.49% 1.42% 1.40% 1.48% 1.64% 1.84% 2.00% 2.00%
Ratio of expenses to average net assets
without reimbursement - - - - - - - - - 2.20%
Ratio of net income to average net assets 1.04% 1.32% 1.71% 1.84% 1.89% 2.14% 2.46% 2.49% 2.95% 2.15%
Ratio of net income to average net assets
without reimbursement - - - - - - - - - 1.90%
Portfolio turnover rate 76.66% 134.82% 111.16% 110.01% 91.77% 52.75% 48.46% 56.86% 55.69% 80.96%
Average commission rate paid $0.0693 $0.0745 - - - - - - - -
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
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,
--------------------------------------------
1997 1996 1995 1994 1993 1992 (c)
---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
BOND FUND
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 0.54 0.52 0.57 0.48 0.45 0.20
Net realized and unrealized gains (losses)
on investments (0.06) (0.07) 0.78 (0.78) 0.44 0.28
------ ------ ----- ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.48 0.45 1.35 (0.30) 0.89 0.48
LESS DISTRIBUTIONS
Distributions from net investment income (0.53) (0.53) (0.56) (0.47) (0.42) (0.15)
Distributions from capital gains - - - (0.13) (0.02) -
------ ------ ----- ------ ------ ------
TOTAL DISTRIBUTIONS (0.53) (0.53) (0.56) (0.60) (0.44) (0.15)
NET ASSET VALUE, END OF PERIOD $10.54 $10.59 $10.67 $9.88 $10.78 $10.33
====== ====== ====== ===== ====== ======
TOTAL RETURN 4.74% 4.51% 14.06% (2.96%) 8.74% 4.80%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $32.1 $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 5.42% 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 52.61% 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 period February 10, 1992 (commencement of operations) through
November 30, 1992.
The accompanying notes to financial statements
are an integral part of this statement.
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,
-----------------------------------------------------------
1997 1996 1995 1994 1993 1992 (c)
---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND
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 (0.12) (0.06) (0.05) (0.20) (0.12) (0.05)
Net realized and unrealized gains on investments 9.16 8.66 6.22 0.16 0.22 0.42
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 9.04 8.60 6.17 (0.04) 0.10 0.37
LESS DISTRIBUTIONS
- ------------------
Distributions 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 $39.36 $32.79 $24.74 $20.43 $20.47 $20.37
====== ====== ====== ====== ====== ======
TOTAL RETURN 29.90% 35.52% 32.87% (0.19%) 0.49% 1.85%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $45.4 $24.1 $12.6 $4.7 $7.1 $7.4
Ratio of expenses to average net assets 1.52% 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 (0.41%) (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 77.66% 101.91% 86.68% 116.69% 98.93% 43.23%
Average commission rate paid $0.0734 $0.0858 - - - -
</TABLE>
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
(c) 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.
22
<PAGE> 24
[PRICE WATERHOUSE LLP LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
January 22, 1998
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, 1997, the results of each of their operations, the
changes in each of their net assets and the financial highlights for the
periods indicated, 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, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
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
David B. Duchow
Assistant Vice President
John C. Thompson, CFA
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
