<PAGE> 1
{THOMPSON PLUMB FUNDS, INC. LOGO}
July 15, 1999
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,
1999. During the six month period, our equity-oriented funds once again added to
their long-term record of strong performance results. The goals for each fund
are as follows:
THOMPSON PLUMB BALANCED FUND
This Fund seeks 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 preserving 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 its primary
objective, the Growth Fund anticipates that capital growth is 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,
/s/ John W. Thompson, CFA /s/ Thomas G. Plumb, CFA
John W. Thompson, CFA Thomas G. Plumb, CFA
Chairman & Secretary President & Treasurer
<PAGE> 2
THOMPSON PLUMB FUNDS, INC.
SEMIANNUAL REPORT TO SHAREHOLDERS
MAY 31, 1999
CONTENTS
PAGE(S)
REPORT TO SHAREHOLDERS........................................... 1
OVERALL INVESTMENT REVIEW........................................ 3
FINANCIAL STATEMENTS
Statements of assets and liabilities.................... 4
Schedules of investments................................ 5-9
Statements of operations................................ 10
Statements 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, 1999
OVERALL INVESTMENT REVIEW
The U.S. economic growth over the past half-year could only be described as
astounding. We are living in what will likely be described by historians as the
Information Technology Boom. The U.S. economy has not performed this well since
the 1950's or 1960's, with plentiful jobs, rapid income growth, a government
budget surplus, lower crime levels, low inflation, and high productivity growth.
These elements have all added to the wonderful performance of the stock market,
which has continued to expand at a remarkable pace. Earnings, in aggregate, have
begun to reaccelerate after last fall's slowdown, which has also provided fuel
for the stock market.
Because of the very strong economic performance, the Federal Reserve recently
decided to increase short-term interest rates by 0.25%. This has caused
longer-term interest rates to increase by a full percentage point. While
interest rate increases are never good for financial assets, interest rates are
recovering from an artificially low level that was reached during the financial
panic last fall. Because of this rebound from the panic, plus the remarkable
productivity growth that has been experienced because of technology and the
Internet, we believe that interest rates at current levels do not pose a serious
threat to the stock market. However, should interest rates and inflation
continue to climb, our inclination towards remaining fully invested would be
reexamined.
The main sectors that have added to the performance of our Growth and Balanced
Funds are our holdings in technology, media and financial stocks. These sectors
have produced large gains over the last six months and should continue to mirror
the performance of the domestic economy. We have added to positions in all three
areas and believe that they will continue to perform well in a rapidly growing
economy. However, if the economy were to slow, we do hold many stable consumer
growth stocks and health care stocks that should outperform because of their
stable, consistent businesses. Therefore, while the Growth and Balanced Funds
are participating in the remarkable growth segments of the economy, there is
also diversification from holdings that are less economically sensitive.
Our bond strategy continues to be one that primarily buys and holds high quality
corporate bonds and, to a lessor extent, buys government bonds and agency bonds.
The advantage in owning corporate bonds now is that the increase in yield from
owning high quality corporates versus U.S. Treasuries is at the higher end of
the historical range. Therefore, we believe that the reward of owning these
corporate bonds currently outweighs the modest amount of added risk.
3
<PAGE> 4
THOMPSON PLUMB FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 1999 (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
BALANCED BOND GROWTH
FUND FUND FUND
--------- --------- --------
<S> <C> <C> <C>
ASSETS
Investments, at market value (Cost $41,197,
$25,265, and $59,040, respectively)
Common stocks .......................... $ 34,649 -- $ 73,334
Bonds .................................. 13,783 $ 22,570 --
Short-term investments ................. 469 2,685 131
-------- -------- --------
48,901 25,255 73,465
Receivable from investment advisor ........ 1 9 4
Prepaid expenses .......................... 20 11 31
Due from sale of securities ............... 641 -- --
Dividends and interest receivable ......... 344 383 63
-------- -------- --------
Total Assets ........................... 49,907 25,658 73,563
-------- -------- --------
LIABILITIES
Accrued expenses payable .................. 20 13 25
Due to investment advisor ................. 44 19 71
-------- -------- --------
Total Liabilities ...................... 64 32 96
-------- -------- --------
NET ASSETS ......................................... $ 49,843 $ 25,626 $ 73,467
======== ======== ========
Net Assets consist of:
Capital stock ($.001 par value) ........... $ 38,630 $ 25,115 $ 57,203
Undistributed net investment income (loss) 325 313 (104)
Accumulated net realized gain
on investments ......................... 3,184 207 1,944
Net unrealized appreciation (depreciation)
on investments ......................... 7,704 (9) 14,424
-------- -------- --------
Net Assets ............................. $ 49,843 $ 25,626 $ 73,467
======== ======== ========
Shares of capital stock outstanding
(100,000 shares authorized) ............ 2,782 2,464 1,855
Offering and redemption price/Net asset
value per share ........................ $ 17.92 $ 10.40 $ 39.60
======== ======== ========
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ---------
<S> <C> <C>
- ---------------------------------------------------------------------
BALANCED FUND
- ---------------------------------------------------------------------
COMMON STOCKS - 70.8%
BASIC MATERIALS - 1.5%
FiberMark (a) ............. 50,000 $ 715,625
----------
CAPITAL GOODS - 8.5%
Advanced Lighting (a) ..... 67,500 489,375
Emerson Electric .......... 15,000 958,125
General Electric .......... 7,000 711,812
Howmet International (a)... 55,000 976,250
Xerox ..................... 18,000 1,011,375
---------
4,146,937
---------
CONSUMER PRODUCTS - 5.6%
Discount Auto Parts (a) ... 20,000 495,000
Gillette .................. 18,000 918,000
Newell Rubbermaid ......... 12,000 486,000
PepsiCo ................... 23,000 823,687
---------
2,722,687
---------
ENERGY - 3.0%
Chevron ................... 6,500 602,469
Exxon ..................... 11,000 878,625
---------
1,481,094
---------
FINANCIAL SERVICES - 9.9%
Anchor Bancorp Wisconsin... 25,000 412,500
Associated Banc-Corp ...... 16,000 554,000
Bank of America ........... 12,000 776,250
Bank One .................. 10,000 565,625
CIT Group - Class A ....... 30,000 870,000
Fannie Mae ................ 16,000 1,088,000
Wells Fargo ............... 15,000 600,000
---------
4,866,375
---------
HEALTH CARE - 12.0%
Abbott Laboratories ....... 20,000 903,750
Bergen Brunswig - Class A.. 42,500 935,000
BioChem Pharma (a) ........ 25,000 478,125
Johnson & Johnson ......... 10,000 926,250
Medtronic ................. 14,038 996,698
Merck & Co. ............... 16,000 1,080,000
PSS World Medical (a) ..... 45,000 554,062
---------
5,873,885
---------
RETAIL - 3.3%
Fastenal .................. 15,000 768,750
Walgreen .................. 36,000 837,000
---------
1,605,750
---------
SERVICES - 6.2%
CBS (a) ................... 20,000 835,000
Disney, Walt .............. 20,000 582,500
Merrill ................... 24,000 363,000
New York Times - Class A... 18,000 614,250
NOVA (a) .................. 30,000 667,500
---------
3,062,250
---------
TECHNOLOGY - 16.6%
Dell Computer (a) ......... 10,000 344,375
EMC (a) ................... 8,000 797,000
IBM ....................... 10,000 1,163,125
JDA Software Group (a) .... 40,000 357,500
Linear Technology ......... 20,000 1,060,000
Lucent Technologies ....... 14,000 796,250
Microchip Technology (a)... 22,500 987,188
Oracle (a) ................ 36,000 893,250
Parametric Technology (a).. 30,000 416,250
Sterling Commerce (a) ..... 28,000 1,088,500
Storage Technology (a) .... 10,000 198,750
---------
8,102,188
---------
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------ -----
<S> <C> <C>
COMMON STOCKS - 70.8% (Continued)
TELECOMMUNICATIONS - 4.2%
ADC Telecommunications (a) ......... 15,000 $ 733,125
Ameritech .......................... 3,000 197,438
Nortel Networks .................... 5,000 375,000
SBC Communications ................. 15,000 766,875
-----------
2,072,438
-----------
TOTAL COMMON STOCKS
(COST $26,765,306) ............... 34,649,229
-----------
BONDS - 28.2%
CORPORATE BONDS - 23.0%
Aetna Services
6.375% Due 08/15/03 .............. 1,000,000 992,609
Aetna Services
7.125% Due 08/15/06 .............. 2,000,000 2,017,742
American Home Products
7.900% Due 02/15/05 .............. 1,000,000 1,067,004
General Electric Capital
8.750% Due 05/21/07 .............. 640,000 730,438
Johnson Controls
6.300% Due 02/01/08 .............. 2,000,000 1,931,762
Philip Morris
6.375% Due 02/01/06 .............. 1,000,000 966,180
Thermo Electron Cvt
4.250% Due 01/01/03 .............. 1,500,000 1,340,625
Union Pacific
6.000% Due 09/01/03 .............. 1,185,000 1,151,227
Wisconsin Power & Light
7.000% Due 06/15/07 .............. 1,000,000 1,024,886
-----------
Total Corporate Bonds .............. 11,222,473
-----------
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 5.2%
United States Treasury Notes
6.500% Due 05/31/02 .............. 2,500,000 2,560,158
-----------
Total United States Government
and Agency Issues ................ 2,560,158
-----------
TOTAL BONDS
(COST $13,962,053) ............... 13,782,631
-----------
SHORT-TERM INVESTMENTS - 1.0%
VARIABLE RATE DEMAND NOTES - 1.0%
Firstar Bank ....................... 469,367 469,367
-----------
Total Variable Rate Demand Notes.... 469,367
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $469,367) .................. 469,367
-----------
TOTAL INVESTMENTS - 100.0%
(COST $41,196,726) ............... $48,901,227
===========
</TABLE>
(a) Non-income producing
See Notes to Financial Statements.
6
<PAGE> 7
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
- ----------------------------------------------------------------------------
BOND FUND
- ----------------------------------------------------------------------------
<S> <C> <C>
BONDS - 89.4%
CORPORATE BONDS - 83.0%
American Home Products
7.900% Due 02/15/05 ........ 1,000,000 $1,067,004
Anheuser-Busch
7.100% Due 06/15/07 ........ 1,000,000 1,010,211
Associates Corp.
7.240% Due 08/15/06 ........ 1,000,000 1,028,357
AT & T
7.000% Due 05/15/05 ........ 1,000,000 1,018,157
Beneficial Corp.
6.850% Due 10/03/07 ........ 1,000,000 1,004,229
General Electric Capital
8.750% Due 05/21/07 ........ 1,000,000 1,141,309
Hartford Life
6.900% Due 06/15/04 ........ 1,000,000 1,007,945
Hartford Life
7.100% Due 06/15/07 ........ 500,000 507,727
Hershey Foods
6.700% Due 10/01/05 ........ 1,000,000 1,007,764
Lucent Technologies
7.250% Due 07/15/06 ........ 1,000,000 1,041,312
NationsBank
6.690% Due 04/03/02 ........ 1,000,000 1,004,566
Northern Trust
7.300% Due 09/15/06 ........ 1,000,000 1,018,456
Penney, J. C.
7.600% Due 04/01/07 ........ 1,000,000 1,021,383
Philip Morris
9.000% Due 01/01/01 ........ 1,000,000 1,040,796
Schwab, Charles
6.520% Due 05/27/08 ........ 1,000,000 981,942
Sears, Roebuck
6.700% Due 11/15/06 ........ 1,000,000 989,629
SmithKline Beecham
7.375% Due 04/15/05 ........ 965,000 1,008,026
Travelers Property & Casualty
6.750% Due 04/15/01 ........ 1,000,000 1,011,533
Tribune
6.875% Due 11/01/06 ........ 1,000,000 1,008,384
Wells Fargo
7.125% Due 08/15/06 ........ 1,000,000 1,025,449
Wisconsin Power & Light
7.000% Due 06/15/07 ........ 1,000,000 1,024,886
-----------
Total Corporate Bonds ........ 20,969,065
-----------
UNITED STATES GOVERNMENT
AND AGENCY ISSUES - 6.4%
United States Treasury Notes
6.000% Due 08/15/00 ........ 500,000 504,219
United States Treasury Notes
7.875% Due 11/15/04 ........ 1,000,000 1,097,188
-----------
Total United States Government
and Agency Issues .......... 1,601,407
-----------
TOTAL BONDS
(COST $22,579,798) ......... 22,570,472
-----------
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
------ -----
<S> <C> <C>
SHORT-TERM INVESTMENTS - 10.6%
VARIABLE RATE DEMAND NOTES - 10.6%
American Family Financial .......... 510,771 $ 510,771
Firstar Bank ....................... 1,147,642 1,147,642
Warner-Lambert ..................... 611,594 611,594
Wisc. Central Credit Union ......... 99,859 99,859
Wisconsin Electric Power ........... 315,072 315,072
-----------
Total Variable Rate Demand Notes.... 2,684,938
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,684,938) ................ 2,684,938
-----------
TOTAL INVESTMENTS - 100.0%
(COST $25,264,736) ............... $25,255,410
===========
- ----------------------------------------------------------------------------------
GROWTH FUND
- ----------------------------------------------------------------------------------
COMMON STOCKS - 99.8%
CAPITAL GOODS - 8.7%
Advanced Lighting (a) .............. 100,000 $ 725,000
Boeing ............................. 38,000 1,605,500
Howmet International (a) ........... 140,000 2,485,000
Xerox .............................. 28,000 1,573,250
-----------
6,388,750
-----------
CONSUMER PRODUCTS - 7.8%
Gillette ........................... 40,000 2,040,000
PepsiCo ............................ 54,000 1,933,875
Wrigley, Wm. Jr .................... 20,000 1,741,250
-----------
5,715,125
-----------
ENERGY - 1.1%
Exxon .............................. 10,000 798,750
-----------
FINANCIAL SERVICES - 23.8%
Associated Banc-Corp ............... 20,000 692,500
Associates First Capital - Class A.. 35,000 1,435,000
Bank of America .................... 35,000 2,264,062
CIT Group - Class A ................ 110,000 3,190,000
Fannie Mae ......................... 27,000 1,836,000
Freddie Mac ........................ 25,000 1,457,812
Hartford Life - Class A ............ 48,000 2,280,000
Marshall & Ilsley .................. 10,000 700,000
Merrill Lynch ...................... 12,000 1,008,000
Wells Fargo ........................ 65,000 2,600,000
-----------
17,463,374
-----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 9
THOMPSON PLUMB FUNDS, INC.
SCHEDULES OF INVESTMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
Shares or
Principal Market
Amount Value
--------- ------------
<S> <C> <C>
COMMON STOCKS - 99.8% (Continued)
HEALTH CARE - 22.3%
Abbott Laboratories ................ 24,000 $ 1,084,500
Bergen Brunswig - Class A .......... 30,000 660,000
BioChem Pharma (a) ................. 100,000 1,912,500
Bristol-Myers Squibb ............... 20,000 1,372,500
Johnson & Johnson .................. 21,000 1,945,125
Medtronic .......................... 28,000 1,988,000
Merck & Co. ........................ 36,000 2,430,000
Schein, Henry (a) .................. 108,000 3,260,250
Sybron International (a) ........... 70,000 1,758,750
-----------
16,411,625
-----------
RETAIL - 3.0%
Fastenal ........................... 43,000 2,203,750
-----------
SERVICES - 11.5%
CBS (a) ............................ 75,000 3,131,250
New York Times - Class A ........... 45,000 1,535,625
NOVA (a) ........................... 85,000 1,891,250
Outdoor Systems (a) ................ 64,000 1,916,000
-----------
8,474,125
-----------
TECHNOLOGY - 18.5%
Altera (a) ......................... 30,000 1,044,375
EMC (a) ............................ 12,100 1,205,463
Keane (a) .......................... 40,000 1,160,000
Linear Technology .................. 40,000 2,120,000
Maxim Integrated Products (a) ...... 20,000 1,068,750
Microsoft (a) ...................... 24,000 1,936,500
Parametric Technology (a) .......... 70,000 971,250
Sterling Commerce (a) .............. 50,000 1,943,750
Unisys (a) ......................... 40,000 1,517,500
Zebra Technologies - Class A (a).... 19,000 610,375
-----------
13,577,963
-----------
TELECOMMUNICATIONS - 3.1%
SBC Communications ................. 45,000 2,300,625
-----------
TOTAL COMMON STOCKS
(COST $58,909,624) ............... 73,334,087
-----------
SHORT-TERM INVESTMENTS - 0.2%
VARIABLE RATE DEMAND NOTES - 0.2%
Firstar Bank ....................... 130,483 130,483
-----------
Total Variable Rate Demand Notes 130,483
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $130,483) .................. 130,483
-----------
TOTAL INVESTMENTS - 100.0%
(COST $59,040,107) ............... $73,464,570
===========
</TABLE>
(a) Non-income producing
See Notes to Financial Statements.
9
<PAGE> 10
THOMPSON PLUMB FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MAY 31, 1999
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
BALANCED BOND GROWTH
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................. $ 191 - $ 369
Interest .............................. 447 $ 829 6
------ ------- ------
638 829 375
------ ------- ------
EXPENSES
Accounting services fees .................. 42 27 56
Directors fees ............................ 5 4 7
Federal & state registration .............. 13 12 14
Investment advisory fees .................. 211 87 348
Professional fees ......................... 13 11 17
Other expenses ............................ 30 11 41
------ ------- ------
Total expenses .......................... 314 152 483
Less expenses reimbursable by advisor.... 1 21 4
------ ------- ------
Net expenses ....................................... 313 131 479
------ ------- ------
NET INVESTMENT INCOME (LOSS) ....................... 325 698 (104)
------ ------- ------
Net realized gain on investments ................... 3,421 426 2,111
Net unrealized appreciation (depreciation)
on investments ............................ (827) (1,579) 2,342
------ ------- ------
NET GAIN (LOSS) ON INVESTMENTS ..................... 2,594 (1,153) 4,453
------ ------- ------
Net increase (decrease) in net assets
resulting from operations ................. $2,919 $ (455) $4,349
====== ======= ======
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 11
THOMPSON PLUMB FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MAY 31,
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
------------- --------- -----------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income (loss) ........... $ 325 $ 211 $ 698 $ 828 $ (104) $ (15)
Net realized gain on investments ....... 3,421 1,888 426 114 2,111 2,393
Net unrealized appreciation
(depreciation) on investments ....... (827) 1,227 (1,579) 279 2,342 3,281
------- ------- ------- ------ ------- -------
Net increase (decrease) in net assets
resulting from operations ........... 2,919 3,326 (455) 1,221 4,349 5,659
------- ------- ------- ------ ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income .. (488) (261) (804) (819) -- --
Distributions from net realized gains on
securities transactions ................ (2,796) (3,478) -- -- (5,885) (3,968)
------- ------- ------- ------ ------- -------
Total distributions to shareholders ....... (3,284) (3,739) (804) (819) (5,885) (3,968)
------- ------- ------- ------ ------- -------
FUND SHARE TRANSACTIONS ..................... 2,893 8,580 (5,788) (253) 6,497 17,182
------- ------- ------- ------ ------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS ..... 2,528 8,167 (7,047) 149 4,961 18,873
NET ASSETS
Beginning of period ....................... 47,315 36,337 32,673 32,137 68,506 45,376
------- ------- ------- ------- ------- -------
End of period ............................. $49,843 $44,504 $25,626 $32,286 $73,467 $64,249
======= ======= ======= ======= ======= =======
Accumulated undistributed net investment
income (loss) included in net assets at end
of period ................................. $ 325 $ 211 $ 313 $ 425 ($104) ($15)
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 12
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
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 consists of separate mutual funds series (the "Funds"): Thompson
Plumb Balanced Fund (the "Balanced Fund"), Thompson Plumb Bond Fund (the "Bond
Fund"), and Thompson Plumb Growth Fund (the "Growth Fund"). 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 - Each Fund's investments are valued at their market prices
(generally the last reported sales price on the exchange where the securities
are primarily traded) or, where market quotations are not readily available, at
fair value as determined in good faith by the Advisor pursuant to procedures
established by the Funds' Board of Directors. Debt securities held by a Fund
with remaining maturities of 60 days or less may be valued on an amortized cost
basis.
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.
PERMANENT BOOK AND TAX DIFFERENCES - Generally accepted accounting principles
require that permanent financial reporting and tax differences relating to
shareholder distributions be reclassified to the capital accounts.
OTHER - Investment securities 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
12
<PAGE> 13
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
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 - 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.
The Advisor has contractually agreed to waive management fees and/or
reimbursement expenses incurred by the Funds through March 31, 2000 so that the
operating expenses of the funds do not exceed the following percentages of their
respective average daily net assets: Balanced Fund - 1.25%; Bond Fund - 0.95%;
and Growth Fund - 1.30%.
13
<PAGE> 14
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
NOTE 4 - FUND SHARE TRANSACTIONS
Transactions in shares of the Funds during the six months ended May 31, 1999 and
1998 were as follows:
(In thousands)
<TABLE>
<CAPTION>
1999 1998
---------------------- ------------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
BALANCED FUND
Shares sold .............................................. 251 $ 4,453 378 $ 6,678
Shares issued in reinvestment of dividends ............... 28 469 16 252
Shares issued in reinvestment of realized gains........... 161 2,715 215 3,401
Shares redeemed .......................................... (263) (4,744) (100) (1,751)
---- -------- ---- --------
Net increase .......................................... 177 $ 2,893 509 $ 8,580
==== ======== ==== ========
BOND FUND
Shares sold .............................................. 365 $ 3,889 328 $ 3,478
Shares issued in reinvestment of dividends ............... 71 759 75 787
Shares redeemed .......................................... (962) (10,436) (426) (4,518)
---- -------- ---- --------
Net decrease .......................................... (526) $ (5,788) (23) $ (253)
==== ======== ==== ========
GROWTH FUND
Shares sold .............................................. 186 $ 7,307 383 $ 15,069
Shares issued in reinvestment of realized gains........... 160 5,811 111 3,900
Shares redeemed .......................................... (168) (6,621) (45) (1,787)
---- -------- ---- --------
Net increase .......................................... 178 $ 6,497 449 $ 17,182
==== ======== ==== ========
</TABLE>
14
<PAGE> 15
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
(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, 1999, a distribution from net investment
income for the Bond Fund was declared March 15, 1999 payable to shareholders on
March 16, 1999. For the period ended November 30, 1998, 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 15, 1998 payable to shareholders on December 16, 1998.
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
---------------------- ------------------------ -----------------------
Total Per Total Per Total Per
Distribution Share Distribution Share Distribution Share
------------ ----- ------------ ----- ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Distributions to Shareholders
1999 Net investment income..... -- -- $ 243,760 $ 0.10 -- --
1998 Net investment income..... $ 488,411 $ 0.19 $ 559,917 $ 0.22 -- --
1998 Long-term capital gains... $2,796,329 $ 1.08 -- -- $5,457,389 $ 3.25
1998 Short-term capital gains.. -- -- -- -- $ 427,581 $ 0.25
</TABLE>
15
<PAGE> 16
THOMPSON PLUMB FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999 (UNAUDITED)
(Continued)
NOTE 6 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the six months ended May 31, 1999 were as follows:
<TABLE>
<CAPTION>
BALANCED FUND BOND FUND GROWTH FUND
------------- --------- -----------
<S> <C> <C> <C>
U. S. GOVERNMENT SECURITIES
Purchases .......... $ 1,559,941 $ 1,726,359 --
Sales .............. $ 516,641 $ 101,914 --
SECURITIES OTHER THAN
U. S. GOVERNMENT AND
SHORT-TERM INVESTMENTS
Purchases .......... $14,045,169 -- $29,812,363
Sales .............. $15,520,677 $ 9,006,605 $29,312,089
</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 $18,639 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.
For Federal income tax purposes at May 31, 1999:
<TABLE>
<CAPTION>
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 $41,196,826 $ 8,809,928 $(1,105,527) $ 7,704,401
Bond Fund $25,264,736 $ 153,757 $ (163,083) $ (9,326)
Growth Fund $59,040,107 $15,566,310 $(1,141,847) $14,424,463
</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,
------------------------------------------------------------------
1999(a) 1998 1997 1996 1995 1994
------- ---- ---- ---- ---- ----
BALANCED FUND
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ...... $ 18.16 $ 18.16 $ 16.54 $ 14.23 $ 13.55 $ 14.17
--------- --------- --------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ................... 0.12 0.19 0.18 0.19 0.24 0.27
Net realized and unrealized gains
on investments ........................ 0.91 1.65 3.01 3.21 2.26 0.04
--------- --------- --------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS ........ 1.03 1.84 3.19 3.40 2.50 0.31
LESS DISTRIBUTIONS
Distributions from net investment income (0.19) (0.13) (0.23) (0.23) (0.28) (0.27)
Distributions from capital gains ........ (1.08) (1.71) (1.34) (0.86) (1.54) (0.66)
--------- --------- --------- ---------- ---------- ----------
Total Distributions ..................... (1.27) (1.84) (1.57) (1.09) (1.82) (0.93)
NET ASSET VALUE, END OF PERIOD ............ $ 17.92 $ 18.16 $ 18.16 $ 16.54 $ 14.23 $ 13.55
========= ========= ========= ========== ========== ==========
TOTAL RETURN .............................. 6.12% (b) 11.63% 21.39% 25.80% 21.02% 2.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) .... $ 49.8 $ 47.3 $ 36.3 $ 20.8 $ 18.1 $ 17.2
Ratios to average net assets:
Ratio of expenses .................... 1.26% (c) 1.30% 1.40% 1.45% 1.49% 1.42%
Ratio of expenses without reimbursement 1.26% (c) 1.30% 1.40% 1.45% 1.49% 1.42%
Ratio of net investment income ........ 1.32% (c) 1.16% 1.04% 1.32% 1.71% 1.84%
Ratio of net investment income without
reimbursement ...................... 1.30% (c) 1.16% 1.04% 1.32% 1.71% 1.84%
Portfolio turnover rate ................. 32.20% (b) 83.07% 76.66% 134.82% 111.16% 110.01%
</TABLE>
(a) For the six month period ended May 31, 1999 (Unaudited).
(b) Calculated on a non-annualized basis.
(c) Calculated on an annualized basis.
See Notes to Financial Statements.
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,
-----------------------
1999(a) 1998 1997 1996 1995 1994
------- ---- ---- ---- ---- ----
BOND FUND
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.93 $10.54 $10.59 $ 10.67 $ 9.88 $ 10.78
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.31 0.56 0.54 0.52 0.57 0.48
Net realized and unrealized gains (losses)
on investments (0.52) 0.39 (0.06) (0.07) 0.78 (0.78)
------ ------ ------ ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS (0.21) 0.95 0.48 0.45 1.35 (0.30)
LESS DISTRIBUTIONS
Distributions from net investment income (0.32) (0.56) (0.53) (0.53) (0.56) (0.47)
Distributions from capital gains -- -- -- -- -- (0.13)
------ ------ ------ ------- ------- -------
TOTAL DISTRIBUTIONS (0.32) (0.56) (0.53) (0.53) (0.56) (0.60)
NET ASSET VALUE, END OF PERIOD $10.40 $10.93 $10.54 $ 10.59 $ 10.67 $ 9.88
====== ====== ====== ======= ======= =======
TOTAL RETURN (2.03%)(b) 9.34% 4.74% 4.51% 14.06% (2.96%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 25.6 $ 32.7 $ 32.1 $ 22.2 $ 14.9 $ 10.2
Ratios to average net assets:
Ratio of expenses 0.98% (c) 1.04% 1.14% 1.13% 1.13% 1.00%
Ratio of expenses without reimbursement 1.14% (c) 1.08% 1.14% 1.13% 1.34% 1.48%
Ratio of net investment income 5.20% (c) 5.30% 5.42% 5.48% 5.70% 4.83%
Ratio of net investment income without
reimbursement 5.04% (c) 5.26% 5.42% 5.48% 5.49% 4.34%
Portfolio turnover rate 6.99% (b) 35.09% 52.61% 104.43% 111.95% 165.74%
</TABLE>
(a) For the six month period ended May 31, 1999 (Unaudited).
(b) Calculated on a non-annualized basis.
(c) Calculated on an annualized basis.
See Notes to Financial Statements.
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,
-----------------------------------------------------------
1999(a) 1998 1997 1996 1995 1994
------- ---- ---- ---- ---- ----
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ...... $ 40.85 $ 39.36 $ 32.79 $ 24.74 $ 20.43 $ 20.47
INCOME FROM INVESTMENT OPERATIONS
Net investment loss ...................... (0.06) (0.07) (0.12) (0.06) (0.05) (0.20)
Net realized and unrealized gains
on investments ......................... 2.31 4.92 9.16 8.66 6.22 0.16
--------- --------- --------- ---------- --------- ----------
TOTAL FROM INVESTMENT OPERATIONS ......... 2.25 4.85 9.04 8.60 6.17 (0.04)
LESS DISTRIBUTIONS
Distributions from net investment income -- -- -- -- -- --
Distributions from capital gains ......... (3.50) (3.36) (2.47) (0.55) (1.86) --
--------- --------- --------- ---------- --------- ----------
TOTAL DISTRIBUTIONS ...................... (3.50) (3.36) (2.47) (0.55) (1.86) --
NET ASSET VALUE, END OF PERIOD ............ $ 39.60 $ 40.85 $ 39.36 $ 32.79 $ 24.74 $ 20.43
========= ========= ========= ========== ========= ==========
TOTAL RETURN .............................. 6.30% (b) 13.74% 29.90% 35.52% 32.87% (0.19%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) ..... $ 73.5 $ 68.5 $ 45.4 $ 24.1 $ 12.6 $ 4.7
Ratios to average net assets:
Ratio of expenses ....................... 1.32% (c) 1.41% 1.52% 1.58% 2.00% 2.00%
Ratio of expenses without reimbursement.. 1.34% (c) 1.41% 1.52% 1.58% 2.00% 2.31%
Ratio of net investment loss............. (0.28%)(c) (0.19%) (0.41%) (0.27%) (0.31%) (0.49%)
Ratio of net investment loss without
reimbursement ........................ (0.30%)(c) (0.19%) (0.41%) (0.27%) (0.31%) (0.80%)
Portfolio turnover rate .................. 40.97% (b) 67.13% 77.66% 101.91% 86.68% 116.69%
</TABLE>
(a) For the six month period ended May 31, 1999 (Unaudited).
(b) Calculated on a non-annualized basis.
(c) Calculated on an annualized basis.
See Notes to Financial Statements.
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, CFA
Assistant Vice President
Timothy R. O'Brien
Assistant Vice President
John C. Thompson, CFA
Assistant Vice President
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC
P. 0. Box 701
Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
650 Third Avenue South, Suite 1300
Minneapolis, Minnesota 55402
LEGAL COUNSEL
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
INVESTMENT ADVISOR
Thompson, Plumb & Associates, Inc.
1200 John Q. Hammons Drive
Madison, Wisconsin 53717
Telephone: (608) 831-1300
THOMPSON PLUMB
FUNDS, INC.
SEMIANNUAL REPORT
MAY 31, 1999
THOMPSON PLUMB BALANCED FUND
THOMPSON PLUMB BOND FUND
THOMPSON PLUMB GROWTH FUND
1200 John Q. Hammons Drive
Madison, Wisconsin 53717
Telephone: (608) 831-1300
(800) 999-0887
www.thompsonplumb.com
