<PAGE> 1
As filed with the Securities and Exchange Commission on March 27, 2000.
Registration No. 33-6418
1940 Act File No. 811-4946
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
===============
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. |_|
----
Post-Effective Amendment No. 15 |X|
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 17
---- |X|
(Check Appropriate box or boxes)
===============
THOMPSON PLUMB FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
1200 JOHN Q. HAMMONS DRIVE
FIFTH FLOOR
MADISON, WISCONSIN 53717
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (608) 831-1300
THOMAS G. PLUMB
1200 JOHN Q. HAMMONS DRIVE
FIFTH FLOOR
MADISON, WISCONSIN 53717
(Name and Address of Agent for Service)
Copy to:
CONRAD G. GOODKIND, ESQ.
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
It is proposed that this filing will become effective
(check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on March 31, 2000 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on March 31, 1999 pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph(a)(2)
|_| on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
|_| this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
<PAGE> 2
THOMPSON PLUMB FUNDS, INC.
1200 JOHN Q. HAMMONS DRIVE
MADISON, WISCONSIN 53717
PHONE: (608) 831-1300
(800) 999-0887
WWW.THOMPSONPLUMB.COM
PROSPECTUS
APRIL 1, 2000
THOMPSON PLUMB FUNDS, INC. offers the following no-load mutual funds:
- Thompson Plumb Growth Fund
- Thompson Plumb Balanced Fund
- Thompson Plumb Bond Fund
All of the funds are managed by Thompson, Plumb & Associates, Inc.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved
these securities or determined if this prospectus is accurate or complete.
Anyone who tells you otherwise is committing a crime.
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<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RISK/RETURN SUMMARY...............................................................................................3
Thompson Plumb Growth Fund...............................................................................3
Thompson Plumb Balanced Fund.............................................................................5
Thompson Plumb Bond Fund.................................................................................8
FEES AND EXPENSES................................................................................................10
INVESTMENT OBJECTIVES, POLICIES AND RISKS........................................................................11
Growth Fund.............................................................................................11
Balanced Fund...........................................................................................12
Bond Fund...............................................................................................13
Risks ...............................................................................................14
Other Strategies........................................................................................15
MANAGEMENT.......................................................................................................16
Investment Advisor......................................................................................16
Portfolio Managers......................................................................................16
HOW TO BUY SHARES................................................................................................17
General ...............................................................................................17
Purchase Procedures.....................................................................................17
Exchange of Fund Shares.................................................................................20
Availability of Money Market Fund.......................................................................21
HOW TO SELL SHARES...............................................................................................21
General ...............................................................................................21
Redemption Procedures...................................................................................22
Receiving Redemption Proceeds...........................................................................23
Other Redemption Information............................................................................24
OTHER INFORMATION................................................................................................25
Determination of Net Asset Value........................................................................25
Dividends and Distributions.............................................................................25
Taxes ...............................................................................................25
Retirement Plans........................................................................................26
Website ...............................................................................................26
FINANCIAL HIGHLIGHTS.............................................................................................27
</TABLE>
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RISK/RETURN SUMMARY
THOMPSON PLUMB GROWTH FUND
Investment Objective/Goals. The Growth 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 invest in common stocks that possess most of the following
characteristics:
- Leading market positions
- High barriers to entry and other competitive or technological
advantages
- High returns on equity and assets
- Good growth prospects
- Strong management
- Relatively low debt burdens
To achieve a better risk-adjusted return on its equity investments, the
Growth Fund invests in many types of stocks, including a blend of large company
stocks, small company stocks, growth stocks and value stocks. We believe that
holding a diverse group of stocks will provide competitive returns under
different market environments, as opposed to more narrow investment styles. Our
flexible approach to equity investing enables us to adapt to changing market
trends and conditions and to invest wherever we believe opportunity exists.
The Growth Fund is suitable if you are looking for capital appreciation by
investing in a diverse group of stocks, and have a long-term perspective.
Risks. An investment in the Growth Fund is subject to risks, including the
possibility that its share price and total return may decline as a result of a
decline in the value of its portfolio of common stocks. As a result, loss of
money is a risk of investing in the Growth Fund. The common stocks in which the
Growth Fund invests fluctuate in value due to changes in the securities markets,
general economic conditions and factors that particularly affect the issuers of
these stocks and their industries. In addition, we may buy common stocks of
companies with small market capitalizations which involve more risk than
investments in larger companies because their shares may be subject to greater
price fluctuation, and may have less market liquidity.
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<PAGE> 5
Past Performance. The tables below provide some indication of the risks of
investing in the Growth Fund by showing how the Fund's total returns have varied
from year to year and how the Fund's average annual total returns compare to a
broader measure of market performance. As with all mutual funds, past
performance is not an indication of the future.
<TABLE>
<CAPTION>
GROWTH FUND
YEAR-BY-YEAR TOTAL RETURNS
<S> <C> <C> <C> <C> <C> <C>
1.60% 0.43% 30.49% 33.05% 32.37% 18.41% 6.45%
1993 1994 1995 1996 1997 1998 1999
</TABLE>
[BAR GRAPH]
CALENDAR YEAR
The Fund's highest/lowest quarterly results during this period were:
Highest: 25.00% (quarter ended 12/31/98)
Lowest: -14.72% (quarter ended 9/30/98)
4
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<TABLE>
<CAPTION>
GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH DECEMBER 31, 1999)
1 YEAR 5 YEAR SINCE INCEPTION (2/10/92)
------ ------ -------------------------
<S> <C> <C> <C>
Growth Fund 6.45% 23.70% 15.20%
S&P 500 Index(1) 21.04% 28.56% 20.08%
</TABLE>
- ------------------------
(1) The S&P 500 Index is an unmanaged index of 500 U.S. stocks chosen for
market size, liquidity and industry group representation and is a
widely used benchmark of U.S. equity performance.
THOMPSON PLUMB BALANCED FUND
Investment Objective/Goal. The Balanced 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. We select securities that, in our
judgment, will result in the highest total return consistent with preservation
of principal, and we vary the mix of common stocks and bonds from time to time.
A major portion of the Balanced Fund's assets is normally invested in common
stocks.
We invest in common stocks that possess most of the following
characteristics:
- Leading market positions
- High barriers to entry and other competitive or technological
advantages
- High returns on equity and assets
- Good growth prospects
- Strong management
- Relatively low debt burdens
To achieve a better risk-adjusted return on its equity investments, the
Balanced Fund invests in many types of stocks, including a blend of large
company stocks, small company stocks, growth stocks and value stocks. We believe
that holding a diverse group of stocks will provide competitive returns under
different market environments, as opposed to more narrow investment styles. Our
flexible approach to equity investing enables us to adapt to changing market
trends and conditions and to invest wherever we believe opportunity exists.
We also invest a significant portion of the Balanced Fund's assets in fixed
income securities, all of which are investment grade. The fixed income
securities in which the Fund may invest include corporate notes, bonds and
debentures, short-term debt instruments, mortgage-related securities, debt
securities issued or guaranteed by the U.S. Government (including its agencies
and instrumentalities), convertible debt securities and preferred stock
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<PAGE> 7
that is convertible into common stock. In establishing what we think is the
appropriate mix of equity and fixed income investments for the Balanced Fund, we
assess general economic conditions, anticipated future changes in interest rates
and the outlook for common stocks generally. The dollar-weighted average
portfolio maturity of the fixed income securities held by the Fund will normally
not exceed 10 years.
The Balanced Fund is suitable if you are looking for a mix of stocks and
bonds and have a long-term perspective.
Risks. An investment in the Balanced Fund is subject to risks, including
the possibility that its share price and total return may decline because of a
decline in the value of its portfolio of common stocks and fixed income
securities. As a result, loss of money is a risk of investing in the Balanced
Fund. The common stocks in which the Balanced Fund invests fluctuate in value
due to changes in the securities markets, general economic conditions and
factors that particularly affect the issuers of these stocks and their
industries. In addition, we may buy common stocks of companies with small market
capitalizations which involve more risk than investments in larger companies
because their shares may be subject to greater price fluctuation, and may have
less market liquidity.
The value of the fixed income securities held by the Balanced Fund is
affected primarily by changes in interest rates, average maturities and the
investment and credit quality of the securities. Bond prices generally move in
the opposite direction of interest rate levels, and movements in interest rates
typically have a greater effect on the prices of long-term bonds than those of
shorter maturities.
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<PAGE> 8
Past Performance. The tables below provide some indication of the risks of
investing in the Balanced Fund by showing how the Fund's total returns have
varied from year to year and how the Fund's average annual total returns compare
to broader measures of market performance. As with all mutual funds, past
performance is not an indication of the future.
<TABLE>
<CAPTION>
BALANCED FUND
YEAR-BY-YEAR TOTAL RETURNS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.10% 27.01% 2.26% 4.45% 1.47% 20.03% 23.09% 22.54% 16.84% 8.87%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>
[BAR GRAPH]
CALENDAR YEAR
The Fund's highest/lowest quarterly results during this 10-year period
were:
Highest: 19.41% (quarter ended 12/31/98)
Lowest: -11.15% (quarter ended 9/30/98)
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<PAGE> 9
BALANCED FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH DECEMBER 31, 1999)
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
------ ------ -------
<S> <C> <C> <C>
Balanced Fund 8.87% 18.16% 12.57%
S&P 500 Index (1) 21.04% 28.56% 18.21%
Lehman Brothers Govt./Corp.
Intermediate Bond Index(2) 0.39% 7.10% 7.26%
Lipper Balanced Fund Average(3) 7.53% 15.99% 11.68%
</TABLE>
- ------------------------
(1) The S&P 500 Index is an unmanaged index of 500 U.S. stocks chosen for
market size, liquidity and industry group representation, and is a
widely used benchmark of U.S. equity performance.
(2) The Lehman Brothers Government/Corporate Intermediate Bond Index is an
index of all investment grade bonds with maturities of more than one
year and less than 10 years.
(3) Load-adjusted, equal weighted average performance of all balanced funds
measured by Lipper, Inc.
THOMPSON PLUMB BOND FUND
Investment Objective/Goal. The Bond 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.
We invest at least 65%, and normally almost all, of the Bond Fund's total
assets in corporate debt securities and securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities. The dollar-weighted
average portfolio maturity of the Bond Fund will normally not exceed 10 years.
We do not purchase securities with a view to rapid turnover. The fixed income
securities in which the Bond Fund may invest include corporate notes, bonds and
debentures, short-term debt instruments, mortgage-related securities, U.S.
Treasury securities and other debt securities issued or guaranteed by the U.S.
Government (including its agencies and instrumentalities).
The Bond Fund is suitable if you are looking for current income through
investment-grade debt securities.
Risks. The share price, total return and yield of the Bond Fund will
fluctuate depending on changes in the market value and yields of the fixed
income securities in the Fund's portfolio. As a result, loss of money is a risk
of investing in the Bond Fund. The value of fixed income securities is affected
primarily by changes in interest rates, average maturities and the investment
and credit quality of the securities. A bond's market value increases or
decreases
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<PAGE> 10
in order to adjust its yield to current interest rate levels. A bond's yield
reflects the bond's fixed annual interest as a percentage of its current price.
Therefore, bond prices generally move in the opposite direction of interest
rates and movements in interest rates typically have a greater effect on prices
of longer term bonds than on those with shorter maturities. Changes in
prevailing interest rates will also affect the yield on Bond Fund shares.
Interest rate fluctuations, however, will not affect the income received by the
Bond Fund from its existing portfolio of fixed income securities (other than
from variable rate securities).
Past Performance. The tables below provide some indication of the risks of
investing in the Bond Fund by showing how the Fund's total returns have varied
from year to year and how the Fund's average annual total returns compare to a
broader measure of market performance. As with all mutual funds, past
performance is not an indication of the future.
<TABLE>
<CAPTION>
BOND FUND
YEAR-BY-YEAR TOTAL RETURNS
<S> <C> <C> <C> <C> <C> <C>
8.18% -2.67% 14.47% 1.83% 7.42% 8.71% -2.82%
1993 1994 1995 1996 1997 1998 1999
</TABLE>
[BAR GRAPH]
CALENDAR YEAR
The Fund's highest/lowest quarterly results during this period were:
Highest: 5.13% (quarter ended 9/30/98)
Lowest: -2.47% (quarter ended 3/31/94)
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BOND FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH DECEMBER 31, 1999)
<TABLE>
<CAPTION>
1 YEAR 5 YEAR SINCE INCEPTION (2/10/92)
------ ------ -------------------------
<S> <C> <C> <C>
Bond Fund -2.82% 5.75% 5.03%
Lehman Brothers Govt./Corp. 0.39% 7.10% 6.28%
Intermediate Bond Index(1)
</TABLE>
- ----------------------------
(1) The Lehman Brothers Government/Corporate Intermediate Bond Index is an
index of all investment grade bonds with maturities of more than one
year and less than 10 years.
The Bond Fund's annualized yield for the 30 days ended December 31, 1999 was
6.72%. For current yield information, please call 1-800-999-0887.
FEES AND EXPENSES
This summary describes the fees and expenses that you may pay if you buy
and hold shares of the Funds.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT). Because the
funds are no-load funds, you pay no fee or sales charges when you buy, sell or
exchange shares. However, you will be charged a fee (currently $12.00) when you
have redemption proceeds paid to you by wire transfer.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
GROWTH BALANCED BOND
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
Management Fees 0.97% 0.85% 0.65%
Distribution (12b-1) Fees None None None
Other Expenses 0.39% 0.40% 0.46%
----- ----- ----
Total Annual Fund Operating Expenses 1.36% 1.25% 1.11%
Fee Waiver and/or Expense (0.06)% (0.00)% (0.16)%
----- ----- -----
Reimbursement (1)
Net Expenses 1.30% 1.25% 0.95%
</TABLE>
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(1) The Advisor has contractually agreed to waive management fees and/or
reimburse expenses incurred by the Funds through March 31, 2001 so that
the operating expenses of the funds do not exceed the following
percentages of their respective average daily net assets: Growth Fund -
1.30%; Balanced Fund - 1.25% and Bond Fund - 0.95%.
Example:
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in each Fund for the time periods indicated and then redeem
(or sell) all of your shares at the end of those time periods. The example also
assumes that your investment has a 5% return each year and that each Fund's
operating expenses remain the same. The assumed return does not represent actual
or future performance and your actual costs may be higher or lower.
However, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- -------- --------
<S> <C> <C> <C> <C>
Growth Fund $132 $416 $722 $1,588
Balanced Fund $127 $397 $686 $1,511
Bond Fund $97 $307 $534 $1,188
</TABLE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
GROWTH FUND
Objective and Principal Strategies. The Growth Fund seeks a high level of
long-term growth primarily through capital appreciation, while at the same time
assuming reasonable risk. The term "reasonable risk" refers to our judgment that
investments in certain common stocks would not present a greater than normal
risk of loss in light of current and reasonably anticipated future general
market and economic conditions, trends in dividend yields and interest rates,
and fiscal and monetary policies. We generally seek to identify investment
opportunities in equity securities of companies which we believe have
above-average potential for earnings and dividend growth.
Any assets not invested in common stocks and securities convertible into
common stocks will be invested in income producing short-term debt instruments
as a reserve for future purchases of securities. The Growth Fund may also invest
in convertible preferred and convertible fixed income securities. We intend
generally to limit the Growth Fund's purchase of these securities to those which
are investment grade, that is, rated in one of the four highest rating
categories by Standard & Poor's (S&P) or Moody's Investors Service, Inc.
(Moody's).
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<PAGE> 13
Risks. The share price and total return of the Growth Fund will increase or
decrease depending on changes in the value of the common stocks on its
portfolio. See "Risks" below.
BALANCED FUND
Objective and Principal Strategies. The Balanced Fund seeks a combination
of income and capital appreciation which will result in highest total return,
while assuming reasonable risk. The Fund invests in both common stocks and fixed
income securities. We vary the mix of stocks and bonds from time to time,
depending on our assessment of economic conditions and investment opportunities.
The term "reasonable risk" refers to our judgment that investments in certain
securities would not present a greater than normal risk of loss in light of
current and reasonably anticipated future general market and economic
conditions, trends in dividend yields and interest rates, and fiscal and
monetary policies. A major portion of the Balanced Fund's assets will normally
be invested at all times in common stocks. As of March 1, 2000, approximately
68% of the total assets of the Balanced Fund were invested in common stocks.
To provide balance, the Fund also invests a significant portion of its
assets in fixed income securities such as corporate notes, bonds and debentures,
short-term debt instruments, debt securities issued or guaranteed by the U.S.
Government (including its agencies and instrumentalities), convertible debt
securities and preferred stock that is convertible into common stock. All of the
debt securities purchased by the Balanced Fund are investment grade. Investment
grade securities are those rated in the four highest rating categories by S&P or
Moody's, which means that the issuers of those securities have adequate to
extremely strong capacity to pay interest and repay principal. The corporate
debt securities in which the Balanced Fund invests are generally to those issued
by established companies. In addition, we ordinarily invest only in non-callable
bonds (debt that may not be prepaid by the issuer). This eliminates prepayment
risk which would otherwise increase the price sensitivity and volatility of the
debt securities in the Fund's portfolio.
Ordinarily, at least 25% of the total assets of the Balanced Fund are
invested in fixed income securities. However, we may invest more of the Fund's
assets in fixed income securities if and when we determine, based on our
assessment of prevailing market conditions, that fixed income securities provide
a more effective means than common stocks of achieving the Fund's investment
objective. In determining whether the Balanced Fund should shift its emphasis
from common stocks to fixed income securities, we assess anticipated future
changes in interest rates and the outlook for common stocks generally.
The dollar-weighted average portfolio maturity of the fixed income
securities held by the Fund will normally not exceed 10 years. We actively
manage the portfolio maturity of the debt securities in the Fund's portfolio,
consistent with its investment objective, according to our assessment of the
interest rate outlook. During periods of rising interest rates, we will likely
attempt to shorten the average maturity of the portfolio to cushion the effect
of falling bond prices on the Fund's share price. When interest rates are
falling and bond prices are increasing, on the other hand, we will likely seek
to lengthen the average maturity.
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Risks. The Balanced Fund's share price and total return will increase or
decrease depending on changes in the value of its portfolio of common stocks and
fixed income securities. See "Risks" below.
BOND FUND
Objective and Principal Strategies. The Bond Fund seeks a higher 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. Such securities include the following types:
- Debt securities of domestic issuers, and of foreign issuers payable in
U.S. dollars (corporate debt securities) rated at the time of purchase
within the four highest grades by either S&P or Moody's;
- Securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities, including mortgage-related securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities;
such as GNMA certificates;
- Mortgage-related securities issued or guaranteed by private issuers
and guarantors rated at the time of purchase within the four highest
grades by S&P or Moody's;
- Commercial paper rated within the two highest categories for
commercial paper or short-term debt securities by either S&P or
Moody's at the time of purchase;
- Obligations of banks and thrifts whose deposits are insured by the
FDIC;
- Short-term corporate obligations, including variable rate demand notes
if the issuer has commercial paper or short-term debt securities rated
within the two highest categories by either S&P or Moody's at the time
of purchase.
Although there are no restrictions on the maturity of securities in which
the Bond Fund may investment, it is anticipated that during normal market
conditions, the dollar-weighted average portfolio maturity of the Fund will not
exceed 10 years. In calculating average maturity, the stated final maturity date
of a security is used, unless it is probable that the issuer will shorten the
maturity, in which case the date on which it is probable that the issuer will
call, refund or redeem the security is used. We actively manage the portfolio
maturity of the debt securities in the Fund's portfolio, consistent with its
investment objective, according to our assessment of the interest rate outlook.
During periods of rising interest rates, we will likely attempt to shorten the
average maturity of the portfolio to cushion the effect of falling bond prices
on the Fund's share price. When interest rates are falling and bond prices are
increasing, on the other hand, we will likely seek to lengthen the average
maturity.
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<PAGE> 15
Risks. The share price, yield and total return of the Bond Fund will
increase or decrease depending on changes in the value of, and interest rates
and yield on, the fixed income securities in the Bond Fund's portfolio. See
"Risks" below.
RISKS
Common Stocks. The Growth Fund and Balanced Fund invest in common stocks.
Common stocks fluctuate in value for various reasons, including changes in the
equities markets, general economic or political changes, interest rate changes
and factors particularly affecting the issues of stocks and their industries. In
addition, we may invest some of the Growth and Balanced Funds' assets in stocks
of companies with small market capitalizations (under $1 billion) and which may
be traded only in the over-the-counter market. We believe smaller companies are
often undervalued in the marketplace and therefore carry a greater potential for
capital appreciation. However, stocks of smaller companies are subject to
greater price volatility than stocks of large companies and may have less market
liquidity.
We do not purchase smaller company stocks (companies whose market
capitalizations are less than $1 billion) for the Growth Fund or Balanced Fund
if, at the time of purchase, the aggregate investment in such securities would
exceed one-third of the total assets of either Fund. We believe that our
policies of issuer and industry diversification, together with strategic
investment in short-term debt investments and fixed income securities, can limit
the volatility of investments in these smaller companies.
Fixed Income Securities. The total return realized on the Bond Fund and on
the fixed income portion of the Balanced Fund's portfolio consists of the change
in the value of the fixed income securities held by the Funds and the income
generated by those securities. The value of fixed income securities is affected
primarily by changes in interest rates, average maturities, the securities'
investment quality and the creditworthiness of the issuer.
A bond's yield reflects the fixed annual interest as a percentage of its
current price. The price (the bond's market value) will increase or decrease in
order to adjust the bond's yield to current interest rate levels. Therefore,
bond prices generally move in the opposite direction of interest rates. As a
result, interest rate fluctuations will affect the net asset values of the
Balanced and the Bond Funds, but will not affect the interest income received by
those Funds from their existing portfolio of fixed income securities. However,
changes in prevailing interest rates will affect the yield on shares
subsequently issued by those Funds. Movements in interest rates also typically
have a greater effect on the prices of longer term bonds than on those with
shorter maturities.
Although the Balanced and Bond Funds only buy investment-grade debt
securities, securities rated in the fourth highest investment grade category
(for example, BBB by S&P) may have speculative characteristics and changes in
economic conditions and other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than is the case with
securities rates in a higher category. In the event a debt security held in a
Fund's portfolio is downgraded to a rating below the lowest category
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<PAGE> 16
permitted by the Fund's policy, we will consider this fact together with other
relevant factors in determining whether to continue to hold the security.
However, downgrading alone will not require the sale of the security.
Securities issued by the U.S. Government, its agencies or instrumentalities
may vary in terms of the degree of support afforded by the Government. Some of
such securities may be supported by the full faith and credit of the U.S.
Treasury, such as U.S. Treasury bills, notes and bonds and GNMA certificates.
Some agency securities are supported by the agency's right to borrow from the
U.S. Treasury under certain circumstances, such as those issued by the Federal
Home Loan Banks, Tennessee Valley Authority or Federal Farm Credit Bank. Still
others are supported only by the discretionary authority to purchase the
agency's obligations, such as those issued by the Federal National Mortgage
Association, or by the credit of the agency that issued them, such as those
issued by the Student Loan Marketing Association. Because there is no guarantee
that the U.S. Government will provide support to such agencies, such securities
may involve risk of loss of principal and interest. Current market prices for
U.S. Government securities are not guaranteed and the value of such securities
will fluctuate.
OTHER STRATEGIES
Portfolio Turnover. We generally do not purchase securities for short-term
trading. However, when appropriate, we will sell securities without regard to
length of time held. A high portfolio turnover rate may increase transaction
costs, which would adversely affect Fund performance, and result in increased
taxable gains and income to you.
Change in Investment Objective. Each Fund's investment objective may be
changed by the Board of Directors without shareholder approval. However, the
Board does not plan to change any Fund's objective.
Temporary Defensive Positions. The Growth and Balanced Funds may
temporarily invest in short-term instruments for defensive purposes in response
to adverse market, economic and other conditions that could expose the Fund to a
decline in value. The Growth Fund may not invest more than 25% of its assets,
and the Balanced Fund may invest without limitation, in short-term instruments
for these purposes. Short-term instruments include commercial paper,
certificates of deposit, U.S. Treasury bills, variable rate demand notes,
repurchase agreements and money market funds. These temporary defensive
positions are inconsistent with the Funds' principal investment strategies and
make it harder for the Funds to achieve their objectives.
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<PAGE> 17
MANAGEMENT
INVESTMENT ADVISOR
Thompson Plumb & Associates, Inc. (the Advisor), 1200 John Q. Hammons
Drive, Madison, Wisconsin 53717, acts as investment advisor and administrator
for the Funds. Since 1984, the Advisor has provided investment advice to
individuals and institutional clients with substantial investment portfolios.
The Advisor has managed each Fund since its inception. As of December 31, 1999,
the Advisor had approximately $970 million in assets under management.
The Advisor manages the investment of the Funds' assets, provides the Funds
with personnel, facilities and administrative services and supervises the Funds'
daily business affairs, all subject to the oversight of the Funds' Board of
Directors.
During the fiscal year ended November 30, 1999, the Growth Fund, Balanced
Fund and Bond Fund paid management fees to the Advisor of 0.97%, 0.85% and
0.65%, respectively, of such Fund's average daily net assets during that year.
PORTFOLIO MANAGERS
Growth and Bond Funds. John W. Thompson serves as portfolio manager for the
Growth and Bond Funds. He has been sole portfolio manager of these Funds since
August 1993. Prior to that time, he was co-portfolio manager of these Funds. Mr.
Thompson is the Chairman, Secretary and a Director of Thompson Plumb Funds, Inc.
and has been President of the Advisor since co-founding it in June 1984 and its
Treasurer since October 1993. Mr. Thompson is a Chartered Financial Analyst.
John C. Thompson has served as the associate portfolio manager for the
Growth Fund since June 1998. Mr. Thompson is Assistant Vice President of
Thompson Plumb Funds, Inc. He has worked in various capacities for the Advisor
since 1993, including as a portfolio manager and investment analyst. John C.
Thompson is a Chartered Financial Analyst.
Balanced Fund. Thomas G. Plumb serves as portfolio manager for the Balanced
Fund. He has been sole portfolio manager of the Balanced Fund since August 1993.
Prior to that time, he was co-portfolio manager of the Fund. Mr. Plumb is
President, Treasurer and a Director of Thompson Plumb Funds, Inc. He has been
Vice President of the Advisor since co-founding it in June 1984. Mr. Plumb is a
Chartered Financial Analyst.
16
<PAGE> 18
HOW TO BUY SHARES
GENERAL
You may buy shares of any Fund without a sales charge. The price you pay
for the shares will be based on the net asset value per share determined at the
end of the business day on which your purchase order is received by Firstar
Mutual Fund Services, LLC (Firstar), the Funds' transfer agent. You need to
complete the Account Application and submit it to Firstar in order to purchase
Fund shares. The Funds reserve the right to reject any purchase order for any
reason.
Please call Thompson Plumb Funds, Inc. at 1-800-999-0887 or (608) 831-1300
if you have any questions about purchasing shares of the Funds.
The investment minimums for purchases of shares of a Fund are as follows:
To open an account: $1,000 ($250 for IRAs)
To add to an account: $100 ($50 for Automatic Investment
Plan and Automatic Exchange Plan)
PURCHASE PROCEDURES
You may buy shares of any Fund in the following ways:
<TABLE>
<CAPTION>
METHOD STEPS TO FOLLOW
- ------ ---------------
BY MAIL: TO OPEN A NEW ACCOUNT:
<S> <C>
Thompson Plumb Funds, Inc. 1. Complete the Account Application.
c/o Firstar Mutual Fund Services, LLC 2. Make your check payable to
P.O. Box 701 "Thompson Plumb Funds" (note: your purchase
Milwaukee, WI 53201-0701 must meet the applicable minimum). Third party
checks will not be accepted.
3. Send the completed Account Application
and check to the applicable address
listed to the left (note: $25 charge for
checks returned for insufficient funds).
</TABLE>
17
<PAGE> 19
<TABLE>
<S><C>
BY PERSONAL DELIVERY/EXPRESS MAIL: TO ADD TO AN EXISTING ACCOUNT:
Thompson Plumb Funds, Inc. 1. Complete the Additional Investment
c/o Firstar Mutual Fund Services, LLC form included with your account
615 East Michigan Street statement (or write a note with your
Milwaukee, WI 53202 account number).
2. Make your check payable to
"Thompson Plumb Funds".
3. Send the Additional Investment
form (or note) and check to the
applicable address listed to the left
(note: $25 charge for checks returned
for insufficient funds).
BY WIRE OR ELECTRONIC FUNDS TRANSFER: TO OPEN A NEW ACCOUNT:
Wire To: Firstar Bank, N.A. 1. Complete and return the Account
ABA 075000022 Application form to Firstar at the
applicable address set forth above.
Credit: c/o Firstar Mutual Fund 2. Call Firstar at 1-800-499-0079 or
Services, LLC (414) 765-4124 before making the
Account 112-952-137 wire transfer and provide your
name, account number, address,
Further Credit: (Name of Thompson social security or tax identification
Plumb Fund) number, the amount being wired,
(Account Number) the name of your bank and the
(Your Name) name and phone number of your
bank's contact person.
Note: Amounts sent by wire or electronic 3. Instruct your bank (which must be a
funds transfers must be received by Firstar member of, or have a correspondent
before 3:00 p.m. Central Time in order to buy relationship with a member of, the
shares that day. Also, you are responsible for Federal Reserve System for wire
any charges that your bank may impose for transfers, or must be an Automated
effecting the wire or electronic funds transfer. Clearing House member for electronic
funds transfers) to wire the funds as
shown to the left (note: $25 charge for
insufficient or unavailable funds or your
negligence).
TO ADD TO AN EXISTING ACCOUNT:
1. Follow steps 2 and 3 above, and
make sure you give Firstar your
correct account number.
</TABLE>
18
<PAGE> 20
<TABLE>
<S><C>
AUTOMATIC INVESTMENT PLAN: TO OPEN AN ACCOUNT:
(Note: This plan may be suspended, modified Not Applicable.
or terminated at any time.)
TO ADD TO AN EXISTING ACCOUNT:
1. Call Firstar at 1-800-499-0079
or (414) 765-4124 or call the Funds
at 1-800-999-0887 or (608) 831-1300
to obtain an Automatic Investment
Plan Application.
2. Complete the Automatic Investment
Plan Application to authorize the
transfer of funds from your bank
account, include a voided check
with the application and indicate
how often (monthly, bimonthly,
quarter or yearly) you wish to make
automatic investments.
3. Indicate the amount of the automatic
investments (must be at least $50 per
investment).
4. Your bank will deduct the automatic investment
amount you have selected from your checking account
on the business day of your choosing, and apply that
amount to the purchase of fund shares. (Note:
you will be charged $25 for any automatic investments
that do not clear due to insufficient funds or the
closing of your account without notifying the Funds
or Firstar.)
</TABLE>
19
<PAGE> 21
TO CHANGE OR STOP AN AUTOMATIC
INVESTMENT PLAN:
1. Call Firstar at 1-800-499-0079
or (414) 765-4125. Firstar
will take your request and give
you a confirmation number; or
2. Write a letter requesting
your change to:
Thompson Plumb Funds, Inc.
c/o Firstar Mutual Fund
Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
THROUGH BROKER-DEALERS AND OTHER SERVICE You may purchase shares of any Fund
PROVIDERS: through a broker-dealer, institution
or other service provider, who may
charge a commission or other
transaction fee. Certain features of
a Fund may not be available or may
be modified in connection with the
program offered by your service
provider. The service provider,
rather than you, may be the
shareholder of record of Fund
shares, and may be responsible for
delivering Fund reports and other
communications about the Funds to
you.
EXCHANGE OF FUND SHARES
You may exchange shares of a Fund for shares of another Fund without a fee
or sales charge. The exchange of shares can be made by mail by completing an
Exchange Application (available from Firstar or the Funds) or by telephone if
you have so elected on your Account Application. If you have a joint account and
select the telephone exchange option, only one joint tenant's authorization is
required. In making telephone exchanges, you assume the risk for unauthorized
transactions. However, we have procedures designed to reasonably assure that the
telephone instructions are genuine and will be liable to you if you suffer a
loss from our failure to abide by these procedures. The exchange privilege may
be modified or terminated at any time.
The basic rules for exchanges are as follows:
20
<PAGE> 22
- You must own shares of a Fund for at least 15 days before you can
exchange them for shares of another Fund.
- Shares being exchanged must have a net asset value of at least $1,000
(except for the Automatic Exchange Plan) but less than $100,000.
- We reserve the right to limit the number of times you may exchange
Fund shares.
Automatic Exchange Plan. You may also make regular monthly exchanges from
one Fund to another through our Automatic Exchange Plan. You may participate by
completing the Automatic Exchange Plan Application, which may be obtained from
the Funds or Firstar. You must establish an account for each Fund with at least
$1,000 before you can make automatic exchanges. You determine the amount that
will automatically exchanged (must be at least $50) and the day of each month
the exchange will be made.
Tax Treatment for Exchanges. An exchange of shares from one Fund to another
Fund is treated as a sale of the shares being exchanged and any gain on the
transaction may be subject to income tax.
AVAILABILITY OF MONEY MARKET FUND
If you elect on the Account Application, you may withdraw some or all of
your investment in a Fund and reinvest the proceeds the same day in the Firstar
Money Market Fund. You may also move that investment back into any of the Funds.
Your use of his privilege is subject to the purchase and redemption amounts set
forth in the Firstar Money Market Fund prospectus. There is no charge for this
privilege. However, the Funds receive a fee from Firstar Money Market Fund for
certain distribution and support services at the annual rate of 0.20% of the
average daily net asset value of the Firstar Money Market Fund shares that are
issued as a result of exchanges of Fund shares. This privilege may be modified
or terminated at any time.
HOW TO SELL SHARES
GENERAL
You may redeem (sell back to the Fund) all or some shares of any Fund at
any time by sending a written request to Firstar. A Redemption Request Form is
available from the Funds or Firstar. The price you receive for the shares will
be based on the net asset value per share next determined after the redemption
request is received in proper form. Please call Thompson Plumb Funds, Inc. at
1-800-999-0887 or (608) 831-1300 if you have any questions about redeeming
shares of the Funds.
21
<PAGE> 23
REDEMPTION PROCEDURES
You may redeem Fund shares in the following ways:
<TABLE>
<S><C>
METHOD STEPS TO FOLLOW
- ------ ---------------
BY MAIL: 1. A written request for redemption
(or the Redemption Request form)
Thompson Plumb Funds, Inc. must be signed exactly as the
c/o Firstar Mutual Fund Services, LLC account is registered and include
P.O. Box 701 the account number and the
Milwaukee, WI 53201-0701 amount to be redeemed.
2. Send the written redemption
BY PERSONAL DELIVERY/EXPRESS MAIL: request and any certificates for the
shares being redeemed to the
Thompson Plumb Funds, Inc. applicable address listed to the left.
c/o Firstar Mutual Fund Services, LLC 3. Signatures may need to be guar
615 East Michigan Street anteed. See "Signature
Milwaukee, WI 53202 Guarantees."
SYSTEMATIC WITHDRAWAL PLANS: You can elect to participate in our Syste
matic Withdrawal Plan by completing the
Systematic Withdrawal Plan Application
which is available from the Funds or
Firstar. This plan allows you to arrange for
automatic withdrawals from your Fund
account into a pre-authorized bank
account. You select the schedule for
systematic withdrawals, which may be on
a monthly basis or in certain designated
months. You also select the amount of
each systematic withdrawal, subject to a
$50 minimum. To begin systematic
withdrawals, you must have a Fund
account valued at $10,000 or more. The
Systematic Withdrawal Plan may be
terminated or modified at any time.
THROUGH BROKER-DEALERS, INSTITUTIONS AND You may redeem Fund shares through
OTHER SERVICE PROVIDERS: broker-dealers, institutions and other
service providers, who may charge a
commission or other transaction fee for
processing the redemption for you.
</TABLE>
22
<PAGE> 24
RECEIVING REDEMPTION PROCEEDS
You may request to receive your redemption proceeds by mail or by wire
or electronic funds transfer. No redemption will be effective until all
necessary documents have been received in proper form by Firstar. Firstar will
delay sending redemption proceeds for 15 days from their purchase date or until
all payments for the shares being redeemed have cleared, whichever occurs first.
<TABLE>
<S><C>
METHOD STEPS TO FOLLOW
BY MAIL: Firstar mails checks for redemption proceeds
within seven days after it receives the re
quest and all necessary documents. The
check will be mailed to the address on your
account (unless you request that it be sent to
a different address which would require a
signature guarantee). There is no charge for
mailing out redemption checks. Your re
demption checks will be mailed unless you
expressly request that it be sent by wire or
electronic fund transfer.
BY WIRE/ELECTRONIC FUNDS TRANSFER: At your written request and with a guar
anteed signature on your redemption re
quest, Firstar will send you your redemption
proceeds by wire or electronic funds transfer
to your designated bank account. Re
demption proceeds sent by wire transfer
ordinarily will be made the business day
immediately after Firstar receives the re
quest. Redemption proceeds by electronic
fund transfer will be made within two or
three days after Firstar receives the request.
You will be charged a fee (currently $12) for
each wire transfer. There is no charge for
electronic fund transfers. You will be
responsible for any charges that your bank
may impose for receiving wire or electronic
fund transfers.
</TABLE>
23
<PAGE> 25
OTHER REDEMPTION INFORMATION
Signature Guarantees. For your protection, your signature on a redemption
request must be guaranteed by an institution eligible to provide them under
federal or state law (such as a bank, savings and loan, or securities
broker-dealer) under any of the following circumstances:
- The redemption is for $25,000 or more.
- The proceeds are to be sent to someone other than the registered
account holder of the shares being redeemed.
- The proceeds are to be sent to an address other than the registered
address on the account.
- If you want to change ownership registration on your account.
- If you have requested a change of address within 30 days prior to the
redemption request.
- If you request that the redemption proceeds be sent by wire or
electronic fund transfer.
Closing of Small Accounts. Your account in any Fund may be terminated if,
as a result of any transfer, exchange or redemption of shares in the account,
the aggregate net asset value per share of the remaining shares in the account
falls below $750. We will notify you at least 30 days in advance of our
intention to terminate the account to allow you an opportunity to restore the
account balance to at least $750. Upon any such termination, we will send you a
check for the proceeds of redemption.
Suspension of Redemptions. Your right to redeem shares in any Fund and the
date of payment by the Fund may be suspended when: (1) the New York Stock
Exchange is closed or the Securities and Exchange Commission determines that
trading on the Exchange is restricted; (2) an emergency makes it impracticable
for the Fund to sell its portfolio securities or to determine the fair value of
its net assets; or (3) the Securities and Exchange Commission orders or permits
the suspension for your protection.
24
<PAGE> 26
OTHER INFORMATION
DETERMINATION OF NET ASSET VALUE
Each Fund calculates its share price, also called net asset value, for both
purchases and sales of shares, as of the close of trading on the New York Stock
Exchange (generally 4:00 p.m., Eastern Time), every day the Exchange is open. We
determine a Fund's net asset value per share by adding up the total value of the
Fund's investments and other assets and subtracting its liabilities, and then
dividing that amount by the number of outstanding shares of the Fund. We value
each Fund's investments 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. We may value debt securities held by a Fund with remaining maturities
of 60 days or less on an amortized cost basis.
DIVIDENDS AND DISTRIBUTIONS
The Growth and Balanced Funds annually (generally within 60 days following
their November 30 fiscal year-end) distribute substantially all of their net
investment income and any net realized capital gains. The Bond Fund distributes
its net investment income quarterly (generally within 60 days following the end
of each fiscal quarter) and net realized capital gains annually (generally
within 60 days following its November 30 fiscal year-end). All income, dividends
and capital gains distributions are automatically reinvested in shares of the
relevant Fund at net asset value, without a sales charge, on the payment date,
unless you request payment in cash.
TAXES
Dividends and distributions of income and capital gains are generally
taxable when they are paid, whether they are reinvested in additional Fund
shares or received in cash, unless you are exempt from taxation or entitled to
tax deferral. Income dividends are taxable as ordinary income. Capital gains are
taxed at different rates depending on the length of time a Fund holds its
assets. You will receive information annually on the federal tax status of the
Fund's dividends and capital gains distributions.
We expect that most of the Growth Fund's distributions will be capital
gains, the Balanced Fund's distributions will be a combination of capital gains
and ordinary income, and most of the Bond Fund's distributions will be ordinary
income, in light of their investment objectives and policies.
In the Account Application you are asked to certify that your taxpayer
identification or social security number is correct and that you are not subject
to backup withholding. If you fail to do so, the Funds are required to withhold
31% of your taxable distributions and redemption proceeds.
25
<PAGE> 27
The foregoing tax discussion is general. You should consult your own tax
advisor for more information and specific advice.
RETIREMENT PLANS
The Funds sponsor Individual Retirement Accounts (IRAs) through which you
may invest annual IRA contributions and roll-over IRA contributions in shares of
any of the Funds. The IRAs available through the Funds include traditional IRAs,
Roth IRAs and Education IRAs. Firstar will serve as custodian for all these
types of IRA accounts sponsored by the Funds. Firstar will charge a $12.50
annual maintenance fee for each Traditional IRA or Roth IRA account and $5.00
for each Education IRA. Shareholders with two or more IRAs using the same tax ID
number will be charged a total of $25.00 annually. Please refer to the IRA
Disclosure Statement for a detailed listing of other fees. The Individual
Retirement Account Custodial Agreement, the IRA Disclosure Statement and the
Custodial Account Application are available from the Funds.
Purchases and redemptions of shares of any Fund by IRAs and retirement
plans are treated in the same manner as any other account. IRAs must meet a
minimum initial investment requirement of $250 and a minimum subsequent
investment requirement of $100. Redemption requests on behalf of IRA owners or
retirement plans must indicate whether or not to withhold federal income tax.
Purchases may also be made by SEP plans (Simplified Employee Benefit Plan),
SIMPLE plans (Savings Incentive Match Plan for Employees of Small Employers) and
other retirement plans. Forms of SEP and SIMPLE plans are available from the
Funds.
Because a retirement program involves commitments covering future years, it
is important that the investment objectives of the Funds be consistent with the
participant's retirement objectives. Premature withdrawals from a retirement
plan may result in adverse tax consequences. Please consult with your own tax or
financial advisor.
WEBSITE
Visit Thompson Plumb Funds' site on the World Wide Web at
www.thompsonplumb.com.
26
<PAGE> 28
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
Funds' financial performance for the past 5 fiscal years (which end on November
30). Certain information reflects financial results for a single Fund share. The
total returns in the tables represent the rate that an investor would have
earned or lost on an investment in the Funds (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Funds' financial
statements, are included in the Annual Report to Shareholders, which is
available upon request.
<TABLE>
<CAPTION>
Year Ended November 30,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
GROWTH FUND
NET ASSET VALUE, BEGINNING OF PERIOD $40.85 $39.36 $32.79 $24.74 $20.43
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (0.13) (0.07) (0.12) (0.06) (0.05)
Net realized and unrealized gains on investments 3.78 4.92 9.16 8.66 6.22
---------- ------ ------ --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 3.65 4.85 9.04 8.60 6.17
LESS DISTRIBUTIONS
Dividends 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 $41.00 $40.85 $39.36 $32.79 $24.74
====== ====== ====== ====== ======
TOTAL RETURN 10.06% 13.74% 29.90% 35.52% 32.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $77.9 $ 68.5 $ 45.4 $24.1 $12.6
Ratios to average net assets:
Ratio of expenses 1.32% 1.41% 1.52% 1.58% 2.00%
Ratio of expenses without reimbursement 1.36% 1.41% 1.52% 1.58% 2.00%
Ratio of net investment loss (0.34%) (0.19%) (0.41%) (0.27%) (0.31%)
Ratio of net investment loss without reimbursement (0.37%) (0.19%) (0.41%) (0.27%) (0.31%)
Portfolio turnover rate 79.17% 67.13% 77.66% 101.91% 86.68%
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
Year Ended November 30,
----------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BALANCED FUND
NET ASSET VALUE, BEGINNING OF PERIOD $18.16 $18.16 $16.54 $14.23 $13.55
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.21 0.19 0.18 0.19 0.24
Net realized and unrealized gains on investments 1.44 1.65 3.01 3.21 2.26
------ ------ ------ --------- ------
TOTAL FROM INVESTMENT OPERATIONS 1.65 1.84 3.19 3.40 2.50
LESS DISTRIBUTIONS
Dividends from net investment income (0.19) (0.13) (0.23) (0.23) (0.28)
Distributions from capital gains (1.08) (1.71) (1.34) (0.86) (1.54)
------ ------ ------ --------- ------
TOTAL DISTRIBUTIONS (1.27) (1.84) (1.57) (1.09) (1.82)
NET ASSET VALUE, END OF PERIOD $18.54 $18.16 $18.16 $16.54 $14.23
====== ====== ====== ====== ======
TOTAL RETURN 9.79% 11.63% 21.39% 25.80% 21.02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 56.3 $ 47.3 $ 36.3 $20.8 $ 18.1
Ratios to average net assets:
Ratio of expenses 1.25% 1.30% 1.40% 1.45% 1.49%
Ratio of net investment income 1.24% 1.16% 1.04% 1.32% 1.71%
Portfolio turnover rate 66.64% 83.07% 76.66% 134.82% 111.16%
</TABLE>
<TABLE>
<CAPTION>
Year Ended November 30,
------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BOND FUND
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.93 $ 10.54 $ 10.59 $ 10.67 $ 9.88
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.59 0.56 0.54 0.52 0.57
Net realized & unrealized gains (losses) on investments (0.76) 0.39 (0.06) (0.07) 0.78
--------- -------- --------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.17) 0.95 0.48 0.45 1.35
LESS DISTRIBUTIONS
Dividends from net investment income (0.58) (0.56) (0.53) (0.53) (0.56)
Distributions from capital gains -- -- -- -- --
--------- -------- --------- ---------- ----------
TOTAL DISTRIBUTIONS (0.58) (0.56) (0.53) (0.53) (0.56)
NET ASSET VALUE, END OF PERIOD $ 10.18 $ 10.93 $ 10.54 $ 10.59 $ 10.67
========= ======== ========= ========== ==========
TOTAL RETURN (1.63%) 9.34% 4.74% 4.51% 14.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) $ 26.0 $ 32.7 $ 32.1 $ 22.2 $ 14.9
Ratios to average net assets:
Ratio of expenses 0.97% 1.04% 1.14% 1.13% 1.13%
Ratio of expenses without reimbursement 1.11% 1.08% 1.14% 1.13% 1.34%
Ratio of net investment income 5.41% 5.30% 5.42% 5.48% 5.70%
Ratio of net investment income without reimbursement 5.27% 5.26% 5.42% 5.48% 5.49%
Portfolio turnover rate 40.67% 35.09% 52.61% 104.43% 111.95%
</TABLE>
28
<PAGE> 30
ADDITIONAL FUND INFORMATION
The Statement of Additional Information (SAI) contains additional information
about the Thompson Plumb Funds. The SAI is on file with the Securities and
Exchange Commission (SEC) and is legally part of this Prospectus. The Annual and
Semi-Annual Reports to Shareholders also contain information about the Funds,
including financial statements, investment results and portfolio holdings. In
the Annual Report, you will find a discussion of the market conditions and
investment strategies that significantly affected each Fund's performance during
its last fiscal year.
To obtain a free copy of the SAI or the Annual or SemiAnnual Reports, or to ask
questions about the Funds, you can contact Thompson Plumb & Associates at the
telephone number or address shown to the right. Information and reports about
the Funds (including the SAI) are also available at the SEC's Public Reference
Room in Washington, D.C. or on the SEC's website at http://www.sec.gov.
Information on the operation of the SEC's Public Reference Room may be obtained
by calling 1-202-947-8090. Copies of such information and reports may be
obtained, after paying a duplicating fee, by sending an e-mail request to
[email protected] or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-0102.
Thompson Plumb
Funds, Inc.
PROSPECTUS
THOMPSON PLUMB GROWTH FUND
THOMPSON PLUMB BALANCED FUND
THOMPSON PLUMB BOND FUND
1200 John Q. Hammons Drive
Madison, WI 53717
Telephone: (608) 831-1300
(800) 999-0887
www.thompsonplumb.com
April 1, 2000
SEC File No. 811-4946
<PAGE> 31
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
CUSTODIAN
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
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
<PAGE> 32
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 2000
THOMPSON PLUMB FUNDS, INC.
1200 JOHN Q. HAMMONS DRIVE
MADISON, WISCONSIN 53717
TELEPHONE: (608) 831-1300
(800) 999-0887
This Statement of Additional Information ("SAI") contains detailed
information about the Thompson Plumb Growth Fund (the "Growth Fund"), Thompson
Plumb Balanced Fund (the "Balanced Fund") and Thompson Plumb Bond Fund (the
"Bond Fund"). This SAI is not a prospectus and should be read in conjunction
with the Thompson Plumb Funds, Inc. Prospectus (the "Prospectus") dated April 1,
2000. The Prospectus may be obtained by contacting Thompson Plumb Funds, Inc. at
the address or one of the telephone numbers listed above.
TABLE OF CONTENTS
PAGE
FUND HISTORY.................................................................2
DESCRIPTION OF CERTAIN INVESTMENTS AND RISKS.................................2
INVESTMENT RESTRICTIONS......................................................6
DETERMINATION OF NET ASSET VALUE AND PRICING CONSIDERATIONS..................9
MANAGEMENT..................................................................10
ADVISORY, ADMINISTRATIVE AND OTHER SERVICES.................................13
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................16
PERFORMANCE DATA............................................................18
TAXES ...................................................................21
CAPITAL STOCK AND OTHER SECURITIES..........................................23
FINANCIAL STATEMENTS........................................................26
<PAGE> 33
FUND HISTORY
Thompson Plumb Funds, Inc. (the "Investment Company") is a Wisconsin
corporation incorporated in 1986 and registered an open-end, diversified
management investment company under the Investment Company Act of 1940 (the
"1940 Act"). The Growth Fund, Bond Fund and Balanced Fund are separate series of
the Investment Company. The Growth Fund and Bond Fund each commenced operations
on February 10, 1992. The Balanced Fund commenced operations on March 16, 1987.
Prior to April 3, 1995, the Investment Company was known as Thompson, Unger &
Plumb Funds, Inc.
DESCRIPTION OF CERTAIN INVESTMENTS AND RISKS
LENDING PORTFOLIO SECURITIES
Each Fund may lend its portfolio securities to broker-dealers and
financial institutions, such as banks and trust companies, however, absent
unforeseen market and economic conditions, the Funds have no present intention
to do so. In the event any Fund engages in this activity, Thompson, Plumb &
Associates, Inc. (the "Advisor") will monitor the credit worthiness of firms to
which the Fund lends its securities. Any such loan must be continuously secured
by collateral in cash or cash equivalents maintained on a current basis in an
amount at least equal to the market value of the securities loaned by the Fund.
The Fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned, and would also receive an
additional return which may be in the form of a fixed fee or a percentage of the
collateral. The Fund would have the right to call the loan and obtain the
securities loaned at any time on notice of not more than five business days. The
Fund would not have the right to vote the securities during the existence of the
loan, but would call the loan to permit voting of securities during the
existence of the loan if, in the Advisor's judgment, a material event requiring
a shareholder vote would otherwise occur before the loan was repaid. In the
event of bankruptcy or other default of the borrower, the Fund could experience
both delays in liquidating the loan collateral or recovering the loaned
securities and losses including (a) possible decline in the value of the
collateral or in the value of the securities loaned during the period while the
Fund seeks to enforce its rights thereto, (b) possible subnormal levels of
income and lack of access to income during this period and (c) expenses of
enforcing its rights.
REPURCHASE AGREEMENTS
Each Fund may from time to time enter into repurchase agreements,
although, absent unforeseen market and economic conditions, no Fund has any
present intention to do so. Repurchase agreements involve the sale of securities
to a Fund with the concurrent agreement of the seller (a bank or securities
dealer) to repurchase the securities at the same price plus an amount equal to
an agreed-upon interest rate within a specified time, usually less than one
2
<PAGE> 34
week, but on occasion for a longer period. The Funds may enter into repurchase
agreements with broker-dealers who are recognized by the Federal Reserve Bank of
New York as primary dealers in U.S. Government securities and with banks. When a
Fund enters into a repurchase agreement, the value of the underlying security,
including accrued interest, will be equal to or exceed the value of the
repurchase agreement and, in the case of repurchase agreements exceeding one
day, the seller will agree that the value of the underlying security, including
accrued interest, will at all times be equal to or exceed the value of the
repurchase agreement. If the seller of the repurchase agreement enters a
bankruptcy or insolvency proceeding, or if the seller fails to repurchase the
underlying security as agreed, a Fund could experience losses that include (a)
possible decline in the value of the underlying security during the period that
the Fund seeks to enforce its rights with respect thereto, and possible delay in
the enforcement of such rights, (b) possible loss of all or a part of the income
or proceeds of the repurchase, (c) additional expenses to the Fund in connection
with enforcing those rights, and (d) possible delay in the disposition of the
underlying security pending court action or possible loss of rights in such
securities. The Advisor intends to cause the Funds to invest in repurchase
agreements only when the Advisor determines that the Funds should invest in
short-term money market instruments and the rates available on repurchase
agreements are favorable as compared to the rates available on other short-term
money market instruments or money market mutual funds, circumstances that the
Advisor does not anticipate will occur in the near future. The Advisor does not
currently intend to invest the assets of any Fund in repurchase agreements if,
after doing so, more than 5% of the Fund's net assets would be invested in
repurchase agreements.
WHEN-ISSUED TRANSACTIONS
A Fund may purchase or sell portfolio securities in when-issued
transactions, although, absent unforeseen market and economic conditions, the
Funds have no present intention to do so. In such transactions, instruments are
bought or sold with payment and delivery taking place in the future in order to
secure what is considered to be an advantageous yield or price to the Fund at
the time of entering into the transactions. In such transactions, the payment
obligations and the interest rate are fixed at the time the buyer enters into
the commitment, although no interest accrues to the purchaser prior to
settlement of the transaction. Consistent with the requirements of the 1940 Act,
securities purchased on a when-issued basis are recorded as an asset (with the
purchase price being recorded as a liability) and are subject to changes in
value based upon changes in the general level of interest rates. At the time of
delivery of the security, the value may be more or less than the transaction
price. To the extent that a Fund remains substantially fully invested at the
same time that it has entered into such transactions, which all of the Funds
would normally expect to do, there will be greater fluctuations in the market
value of the Fund's assets than if the Fund set aside cash to satisfy the
purchase commitment. However, each Fund will maintain designated liquid assets
with a market value, determined daily, at least equal to the amount of
commitments for when-issued securities, such assets to be ear-marked
specifically for the settlement of such commitments. Each Fund will only make
commitments to purchase portfolio securities on a
3
<PAGE> 35
when-issued basis with the intention of actually acquiring the securities, and
not for the purpose of investment leverage, but the Funds reserve the right to
sell the securities before the settlement date if it is deemed advisable. None
of the Funds currently intends to purchase securities in when-issued
transactions if, after such purchase, more than 5% of the Fund's net assets
would consist of when-issued securities.
ILLIQUID SECURITIES
No Fund will invest more than 10% of the value of its net assets in
securities which are illiquid, including restricted securities, securities for
which there are no readily available market quotations and repurchase agreements
providing for settlement in more than seven days after notice. For the purposes
of this restriction, the Funds do not consider variable rate demand notes to be
restricted securities. See "Variable Rate Demand Notes" below.
VARIABLE RATE DEMAND NOTES
The Funds may purchase variable rate master demand notes, which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, the Funds
may demand payment of principal and accrued interest at any time. The investment
policy of each Fund is to purchase variable rate demand notes only if, at the
time of purchase, the issuer has unsecured debt securities outstanding that are
rated within the two highest rating categories by either Standard & Poor's or
Moody's Investors Service, Inc.
MORTGAGE-BACKED SECURITIES
The Balanced and Bond Funds may invest in mortgage-related securities,
which include securities that represent interests in pools of mortgage loans
made by lenders such as savings and loan institutions, mortgage bankers,
commercial banks and others. These pools are combined for sale to investors
(such as the Balanced and Bond Funds) by various governmental and
government-related entities, as well as commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers and other
private issuers. Mortgage-related securities generally provide for a
"pass-through" of monthly payments made by individual borrowers on their
residential mortgage loans, net of any fees paid to the issuer or guarantor of
the securities.
The Government National Mortgage Association ("GNMA") is the principal
government guarantor of mortgage-related securities. GNMA is authorized to
guaranty, with the full faith and credit of the U.S. Government, timely payment
of principal and interest on securities it approves that are backed by pools of
FHA-insured or VA-guaranteed mortgages. GNMA securities are described as
"modified pass-through" in that they provide a monthly payment of interest and
principal payments owed on the mortgage pool, net of certain fees, regardless
4
<PAGE> 36
of whether the mortgagor actually makes the payment. Other government related
guarantors of these securities include the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). FNMA and
FHLMC securities are guaranteed as to payment of principal and interest by those
agencies, but are not backed by the full faith and credit of the U.S.
Government. With respect to private mortgage-backed securities, timely payment
of principal and interest of these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. There can be no assurance that private insurers or guarantors can
meet their obligations under such policies.
Certain mortgage-backed securities purchased by the Balanced and Bond
Funds provide for a prepayment privilege and for amortized payments of both
interest and principal over the term of the security. The yield on the original
investment in such securities applies only to the unpaid principal balance, as
the Fund must reinvest the periodic payments of principal at prevailing market
interest rates which may be higher or lower then the rate on the original
security. In addition, the prepayment privilege may require the Fund to reinvest
at lower yields than were received from the original investment. If these
instruments are purchased at a premium in the market, and if prepayment occurs,
such prepayments will be at par or stated value, which will result in reduced
return on such transactions.
During periods of declining interest rates, prepayment of mortgages
from underlying mortgage-backed securities can be expected to accelerate.
Accordingly, the Balanced and Bond Fund's ability to maintain positions in
high-yielding mortgage-backed securities will be affected by reductions in the
principal amount of such securities resulting from such prepayments, and its
ability to reinvest the returns of principal at comparable yields will depend on
prevailing interest rates at that time. Neither the Balanced Fund nor the Bond
Fund currently intends to purchase mortgage-backed securities if, after such
purchase, more than 5% of the respective Fund's net assets would consist of
mortgage-backed securities.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
An investment by a Fund in another investment company may cause the
Fund to increase payments of administration and distribution expenses. Such
investments are limited by investment restriction (7). See "Investment
Restrictions" in this Statement of Additional Information.
5
<PAGE> 37
PORTFOLIO TURNOVER
The portfolio turnover rates for the fiscal years ended November 30,
1998 and 1999 were as follows:
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Thompson Plumb Growth Fund 67.13% 79.17%
Thompson Plumb Balance Fund 83.07% 66.64%
Thompson Plumb Bond Fund 35.09% 40.67%
</TABLE>
INVESTMENT RESTRICTIONS
Each Fund has adopted the following investment restrictions, none of
which - except for the matters described in the second sentence of item (5) and
in the second sentence of item (7) - may be changed without the approval of the
holders of a majority of the outstanding shares (as defined in the 1940 Act) of
the Fund. A Fund may not:
(1) Purchase the securities of issuers conducting their
principal business activity in the same industry if immediately after such
purchase the value of the Fund's investments in such industry would exceed 25%
of the value of its total assets, provided that there is no limitation with
respect to or arising out of investments in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
(2) Purchase a security if, as a result, with respect to 75%
of the value of the Fund's total assets, more than 5% of its total assets would
be invested in the securities of any one issuer, other than obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
(3) Make loans, except through the purchase of debt
obligations in accordance with the Fund's investment objective and policies and
through repurchase agreements with banks, brokers, dealers and other financial
institutions.
(4) Issue senior securities in violation of the 1940 Act or
borrow money, except (a) as a temporary measure, and then only in amounts not
exceeding 5% of the value of the Fund's total assets or (b) from banks, provided
that immediately after any such borrowing all borrowings of the Fund do not
exceed one-third of the Fund's net assets. The exceptions to this restriction
are not for investment leverage purposes but are solely for extraordinary or
emergency purposes and to facilitate management of each Fund's portfolio by
enabling the Fund to meet redemption requests when the liquidation of portfolio
6
<PAGE> 38
instruments is deemed to be disadvantageous or not possible. While a Fund has
borrowings in excess of 5% of the value of the Fund's total assets outstanding,
it will not make any purchases of portfolio instruments. If due to market
fluctuations or other reasons the net assets of a Fund fall below 300% of its
borrowings, the Fund will promptly reduce its borrowings in accordance with the
1940 Act. To do this, the Fund may have to sell a portion of its investments at
a time when it may be disadvantageous to do so.
(5) Mortgage or pledge any assets except to secure permitted
borrowings, and then only in an amount up to 15% of the value of the Fund's net
assets, taken at cost at the time of such borrowings. Notwithstanding the prior
sentence, each Fund's current intention is not to mortgage, pledge or
hypothecate more than 5% of the value of the Fund's net assets.
(6) Purchase or sell real estate or commodities, except that a
Fund may purchase and sell (a) securities issued by real estate investment
trusts or other companies which invest in or own real estate, and (b) securities
secured by interests in real estate, provided in each case that such securities
are marketable.
(7) Purchase securities of other investment companies, except
to the extent permitted by the 1940 Act. Subject to certain exceptions, the 1940
Act prohibits a Fund from investing more than 5% of its total assets in
securities of another investment company, investing more than 10% of its total
assets in securities of such investment company and all other investment
companies, or purchasing more than 3% of the total outstanding voting stock of
another investment company.
(8) Purchase more than 10% of the outstanding voting
securities of any one issuer or invest in companies for the purpose of
exercising control or management.
(9) Act as an underwriter of securities issued by others,
except in instances where the Fund has acquired portfolio securities which it
may not be free to sell publicly without registration under the Securities Act
of 1933 (if the Fund sells such securities, it may technically be deemed an
"underwriter" for purposes of such Act).
In addition to the foregoing restrictions, the Investment Company's
Board of Directors has adopted the following restrictions, which may be changed
without shareholder approval.
A Fund may not:
(a) Purchase the equity securities of companies which have a
record of less than three years continuous operation if any such purchase at the
time thereof would cause more than 5% of the value of the total assets of the
Fund to be invested in securities of such companies. Such period of three years
includes the operation of any predecessor company or companies, partnership or
individual enterprise if the company whose securities are proposed as an
investment has come into existence as the result of a merger, consolidation,
7
<PAGE> 39
reorganization or the purchase of substantially all of the assets of such
predecessor company or companies, partnership or individual enterprise.
(b) Purchase or retain the securities of an issuer if, to the
Fund's knowledge, those officers or directors of the Fund or its investment
adviser who individually own beneficially more than 0.5 of 1% of the outstanding
securities of such issuer together own beneficially more than 5% of such
outstanding securities.
(c) Purchase securities on margin, but a Fund may obtain such
short-term credits as may be necessary for the clearance of purchase and sales
of securities.
(d) Make short sales of securities.
(e) Participate on a joint or joint-and-several basis in
any securities trading account.
(f) Invest in puts, calls, straddles or spreads, or
combinations thereof.
(g) Invest more than 10% of its net assets in illiquid
securities.
(h) Invest in oil, gas or other mineral exploration or
development programs, but this shall not prohibit a Fund from investing in
securities of companies engaged in oil, gas or mineral activities.
(i) Invest in warrants, valued at the lower of cost or market,
in an amount in excess of 5% of the value of the Fund's net assets. Included
within such amount, but not to exceed 2% of the value of the Fund's net assets,
may be warrants which are not listed on the New York or American Stock Exchange.
Warrants acquired by a Fund in units or attached to securities may be deemed to
be without value for purposes of this restriction.
(j) Buy or sell real estate or invest in the securities of
real estate investment trusts or real estate limited partnerships, provided the
Funds may invest in the securities of other companies whose business involves
the purchase and sale of real estate.
For purposes of the foregoing limitations - except for the limitation
referred to in the fourth sentence of item (4) above - any limitation which
involves a maximum percentage shall not be considered violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, a Fund.
8
<PAGE> 40
DETERMINATION OF NET ASSET VALUE AND PRICING CONSIDERATIONS
Shares of the Funds are offered to the public directly by the
Investment Company Fund shares are offered and sold without a sales charge at
the net asset value per share next determined after the purchase order has been
received by the Fund's transfer agent. The net asset value per share of each
Fund is calculated as of the close of trading on the New York Stock Exchange
(generally 4:00 P.M. Eastern Time). Net asset value per share is calculated by
adding the total fair market value of all securities and other assets of the
particular Fund, subtracting the liabilities of the Fund, and dividing the
remainder by the number of outstanding shares of the Fund.
The Funds' net asset value is determined only on the days on which the
New York Stock Exchange is open for trading. That Exchange is regularly closed
on Saturdays and Sundays and on New Years' Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. If one of those holidays falls on a Saturday
or Sunday, the Exchange will be closed on the preceding Friday or the following
Monday, respectively.
Portfolio securities which are traded on an exchange or in the
over-the-counter market are valued at the last sale price reported by the
exchange on which the securities are primarily traded 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. Debt securities for which
market quotations are not readily available may be valued based on information
supplied by independent pricing services, including services using matrix
pricing formulas and/or independent broker bid quotations. Debt securities with
remaining maturities of 60 days or less may be valued on an amortized cost
basis, which involves valuing an instrument at its cost and thereafter assuming
a constant amortization to maturity of any discount or premium, regardless of
the impact of fluctuating rates on the market value of the instrument. Any
securities or other assets for which market quotations are not readily available
are valued at fair value as determined in good faith by the Advisor pursuant to
procedures established under the general supervision and responsibility of the
Board of Directors of the Investment Company. Expenses and fees, including
advisory fees, are accrued daily and taken into account for the purpose of
determining net asset value per share.
Reliable market quotations are not considered to be readily available
for many long-term corporate bonds and notes and certain preferred stocks in
which the Funds may invest. As authorized by the Board of Directors, these
investments are stated at fair market value on the basis of valuations furnished
by independent broker bid quotations and/or independent pricing services.
Independent pricing services approved by the Board of Directors determine
valuations for normal, institutional-sized trading units of such securities
using methods based on market transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders.
9
<PAGE> 41
The Funds intend to pay all redemptions in cash. Redemption proceeds
ordinarily will be sent within seven days after receipt of the redemption
request and all necessary documents. Each Fund reserves the right to suspend or
postpone redemptions during any period when: (a) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission
or that Exchange is closed for other than customary weekend and holiday closing;
(b) the Securities and Exchange Commission has by order permitted such
suspension; or (c) an emergency, as determined by the Securities and Exchange
Commission, exists, making disposal of portfolio securities or valuation of net
assets of the Funds not reasonably practicable.
MANAGEMENT
The business and affairs of the Funds are managed by the Board of
Directors of the Investment Company.
Information pertaining to the directors and officers of the Investment
Company is set forth below. Unless indicated, the address of each director and
officer is 1200 John Q. Hammons Drive, Madison, Wisconsin 53717. An asterisk (*)
indicates those directors who are "interested persons" of the Investment Company
for purposes of the 1940 Act.
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS THOMPSON PLUMB FUNDS, INC. DURING PAST FIVE YEARS
- --------------------- -------------------------- ----------------------
<S> <C> <C>
George H. Austin, 69* Director Director of Research and Portfolio
Manager of the Advisor since March 1994; prior thereto,
Director of In vestments of the Wisconsin Alumni
Research Foundation from 1976 to 1994.
Mary Ann Deibele, 64 Director Retired since September 1994; prior thereto, Director
20029 Reichardt Road and member of the executive committee of Household
Kiel, Wisconsin 53042 Utilities, Inc. (a high tech sheet metal fabricating
facility).
David B. Duchow, 32 Assistant Vice President Portfolio Manager of the Advisor since December 1996;
formerly, Associate Portfolio Manager of the Advisor
from January 1994 to December 1996; Investment Analyst
of the Advisor since September 1992; Marketing
Representative for the Prudential Co. from December
1991 to September 1992.
</TABLE>
10
<PAGE> 42
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS THOMPSON PLUMB FUNDS, INC. DURING PAST FIVE YEARS
- --------------------- -------------------------- ----------------------
<S> <C> <C>
John W. Feldt, 57 Director Senior Vice President of Finance of the University of
150 East Gilman Street Wisconsin Foundation since 1984; prior thereto, Vice
Madison, Wisconsin 53703 President of Finance for the University of Wisconsin
Foundation.
Donald A. Nichols, 59 Director Professor of Economics at the University of Wisconsin
1180 Observatory Drive since 1966; Chairman, Department of Economics from 1983
Madison, Wisconsin 53706 to 1986 and from 1988 to 1990; Director of the Center
for Re search on the Wisconsin economy; Member of the
Board of Advisors of the American Players Theatre since
1993; Economic Adviser to the Governor of the State of
Wisconsin from 1982 through 1986; Consultant to
National Economic Research Associates during 1985.
Timothy R. O'Brien, 40 Assistant Vice President Portfolio Manager of the Advisor since October 1998;
Investment Analyst of the Advisor since October 1997;
Lieutenant Colonel in the Wisconsin Air National Guard;
Adjunct Professor at Upper Iowa University since 1995.
Thomas G. Plumb, 47* President, Treasurer and
Director Vice President of the Advisor since co-founding it
in June 1984; formerly, Vice President of Firstar Bank
Madison, N.A., Investment Management Division, from
December 1983 to June 1984 and various officer and
other management responsibilities at Firstar Bank
Madison, N.A. from November 1979 to December 1983; a
Chartered Financial Analyst.
John C. Thompson, 31 Assistant Vice President Portfolio Manager of the Advisor since December 1996;
Associate Portfolio Manager of the Advisor from January
1994 to December 1996; Investment Analyst for the
Advisor since March 1993; a Chartered Financial
Analyst.
</TABLE>
11
<PAGE> 43
<TABLE>
<CAPTION>
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS THOMPSON PLUMB FUNDS, INC. DURING PAST FIVE YEARS
- --------------------- -------------------------- ----------------------
<S> <C> <C>
John W. Thompson, 56* Chairman, Secretary and Director President of the Advisor since co- founding it in June
1984; Treasurer of the Advisor since October 1993;
formerly, First Vice President and Division Manager of
the Investment Management Division of Firstar Bank
Madison, N.A. from September 1979 until June 1984; a
Chartered Financial Analyst.
</TABLE>
Directors and officers of the Investment Company who are officers,
directors, employees or shareholders of the Advisor do not receive any
remuneration from the Funds for serving as directors or officers. Those
directors who are not so affiliated with the Advisor received $11,000 in fiscal
year 1999, as set forth in the table below.
<TABLE>
<CAPTION>
TOTAL
AGGREGATE ESTIMATED COMPENSATION
COMPENSATION PENSION OR ANNUAL FROM INVESTMENT
FROM INVESTMENT RETIREMENT BENEFITS UPON COMPANY AND
DIRECTOR COMPANY BENEFITS RETIREMENT FUND COMPLEX
- -------- ------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Mary Ann Deibele $11,000 None None $11,000
John W. Feldt $11,000 None None $11,000
Donald A. Nichols $11,000 None None $11,000
</TABLE>
For fiscal year 2000, those directors who are not so affiliated with
the Advisor will each receive $11,750.
As of December 31, 1999, the Investment Company's Directors and
officers as a group owned 74,599 shares (3.85% of the outstanding shares) of the
Growth Fund, 90,885 shares (2.82% of the outstanding shares) of the Balanced
Fund and 24,970 shares (1.15% of the outstanding shares) of the Bond Fund.
12
<PAGE> 44
CODE OF ETHICS
The Investment Company and the Advisor have each adopted a code of
ethics under Rule 17j-1 of the 1940 Act designed to ensure, among other things,
that the interests of Fund shareholders take precedence over personal interest
of their respective directors, officers and employees. Under the code of ethics,
personal investment activities are subject to limitations designed to avoid both
actual and perceived conflicts of interest with the investment activities of the
Funds. The code permits personnel of the Investment Company and the Advisor to
invest in securities including securities that may be purchased or held by the
Funds, subject to certain exceptions and pre-clearance procedures.
ADVISORY, ADMINISTRATIVE AND OTHER SERVICES
Thompson, Plumb & Associates, Inc. acts as the investment advisor and
administrator for each of the Funds. John W. Thompson and Thomas G. Plumb each
own 50% of the outstanding shares of the Advisor. The Advisor manages the
investment and reinvestment of the Fund's provides the Funds with personnel,
facilities and administrative services, and supervises the Fund's daily affairs,
all subject to the supervision of the Board of Directors of the Investment
Company. The Advisor formulates and implements a continuous investment program
for each Fund consistent with its investment objective, policy and restrictions.
The administrative obligations of the Advisor include: (a) providing
supervision of all aspects of each Fund's non-investment operations, such as
custody of the Fund's assets, shareholder servicing and legal and audit services
(the parties giving due recognition to the fact that certain of such operations
are performed by others pursuant to the Funds' agreements with their custodian
and shareholder servicing agent), (b) providing each Fund, to the extent not
provided pursuant to such agreements or the agreement with the Funds' accounting
services agent, with personnel to perform such executive, administrative and
clerical services as are reasonably necessary to provide effective
administration of the Fund, such as preparing budgets, supplying information for
the Prospectus, this Statement of Additional Information and various reports,
and handling meetings of shareholders, (c) arranging, to the extent not provided
pursuant to such agreements, for the preparation of each Fund's tax returns,
reports to shareholders, periodic updating of the Prospectus and this Statement
of Additional Information, and reports filed with the SEC and other regulatory
authorities, all at the expense of the Fund, (d) providing each Fund, to the
extent not provided pursuant to such agreements, with adequate office space and
certain related office equipment and services in Madison, Wisconsin, and (e)
maintaining all of the records of each Fund other than those maintained pursuant
to such agreements.
13
<PAGE> 45
For the fiscal years ended November 30, 1999, 1998 and 1997, in return
for serving as the Funds' investment advisor and administrator, the Advisor
earned fees of $709,735, $581,250 and $333,296, respectively, for the Growth
Fund; $431,433, $357,956 and $247,662, respectively, for the Balanced Fund; and
$173,621, $206,183 and $183,746, respectively, for the Bond Fund.
The Advisory Agreement provides that the Advisor may render similar
services to others so long as its services under the Agreement are not impaired
thereby. The Advisory Agreement also provides that the Funds will indemnify the
Advisor against certain liabilities, including liabilities under the federal
securities laws, or, in lieu thereof, contribute to resulting losses. The
Advisory Agreement further provides that, subject to Section 36 of the 1940 Act,
the Advisor will not be liable for any error of judgment or mistake of law or
for any loss suffered by the Funds in connection with the matters to which the
Agreement relates, except liability to a Fund or its shareholders to which the
Advisor would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence, in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under the Agreement.
The Advisory Agreement between the Advisor and the Funds was approved
pursuant to the vote of a majority of the outstanding shares (as defined in the
1940 Act) of the Balanced Fund on March 9, 1988 and of the Bond and Growth Funds
on December 22, 1992. The Advisory Agreement will continue from year to year
with respect to each Fund provided such continuance is specifically approved at
least annually, (a) by the vote of the outstanding shares of the Fund or by the
Directors of the Funds, and (b) by the vote of a majority of the Directors of
the Funds who are not parties to the Advisory Agreement or "interested persons"
(as such term is defined in the 1940 Act) of any party thereto, cast in person
at a meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically if assigned (as defined in the 1940 Act)
and is terminable at any time without penalty by the Directors of the Funds or,
with respect to any Fund, by vote of a majority of the outstanding shares of the
Fund (as defined in the 1940 Act) on 60 days' written notice to the Advisor and
by the Advisor on 60 days' written notice to the Funds.
ACCOUNTING SERVICES AGENT
Under its Accounting Services Agreement with the Funds, the Advisor
maintains and keeps current certain accounts and financial records of each Fund,
prepares the financial statements of each Fund as required by the 1940 Act and
calculates the net asset value per share of each Fund on a daily basis.
For the fiscal years ended November 30, 1999, 1998 and 1997, the
Advisor earned fees for the services it provided to, and the expenses it assumed
for, the Funds under the Accounting Services Agreement in the amounts of
$114,130, $96,358 and $63,099, respectively, for the Growth Fund; $86,029,
$75,141 and $56,797, respectively, for the Balanced Fund; and $53,335, $62,104
and $56,007, respectively, for the Bond Fund.
14
<PAGE> 46
EXPENSES
The Funds are responsible for the payment of their own expenses. Such
expenses include, without limitation: the fees payable to the Advisor; the fees
and expenses of the Funds' custodian and transfer and dividend disbursing agent;
the cost of stock certificates; association membership dues; any portfolio
losses; filing fees for the registration or qualification of Fund shares under
federal or state securities laws; expenses of the organization of the Funds;
taxes; interest; costs of liability insurance, fidelity bonds, indemnification
or contribution; any costs, expenses or losses arising out of any liability of,
or claim for damages or other relief asserted against, the Funds for violation
of any law; legal and auditing fees and expenses; expenses of preparing and
setting in type prospectuses, statements of additional information, proxy
material, reports and notices and the printing and distributing of the same to
the Funds' existing shareholders and regulatory authorities; compensation and
expenses of the Funds' Directors; and extraordinary expenses incurred by the
Funds. The Advisor will bear the expense of printing and distributing
prospectuses to prospective shareholders.
The Advisor has agreed to reimburse each of the Growth, Balanced and
Bond Funds for all expenses such Fund incurs from April 1, 2000 through March
31, 2001 in excess of 1.30%, 1.25% and 0.95%, respectively, of its average daily
net assets.
TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Third
Floor, P.O. Box 701, Milwaukee, Wisconsin 53201, is the transfer and dividend
disbursing agent for the Funds.
CUSTODIAN
Firstar Bank, N.A., 777 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, is the custodian of the Funds' portfolio securities and cash.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Quarles & Brady LLP, 411 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, serves as general counsel to the Funds.
PricewaterhouseCoopers LLP, independent accountants, 650 Third Avenue
South, Suite 1300, Minneapolis, Minnesota 55402, serves as independent
accountants for the Funds.
15
<PAGE> 47
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisor is responsible for decisions to buy and sell securities for
each Fund, the selection of brokers and dealers to effect the transactions and
the negotiation of brokerage commissions, where applicable. Purchases and sales
of securities on a national securities exchange are effected through brokers who
charge a negotiated commission for their services. In the over-the-counter
market, securities are generally traded on a "net" basis with dealers acting as
principal for their own accounts without a stated commission, although the price
of the security usually includes a profit to the dealer. In underwritten
offerings, securities are purchased at a fixed price which includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. On occasion, certain money market instruments may be
purchased directly from an issuer, in which case no commissions or discounts are
paid.
In placing purchase and sale orders for portfolio securities for the
Fund, it is the policy of the Advisor to seek the best net price and the most
favorable execution in light of the overall quality of brokerage and research
services provided. In addition, the Advisor may place orders for portfolio
transactions with brokers who recommend the purchase of shares of the Funds to
clients if the Advisor believes that such brokers' commissions or dealer
spreads, quality of execution and the overall quality of brokerage and research
services are comparable to those of other brokers. In selecting brokers to
effect portfolio transactions, the determination of what is expected to result
in best net price and the most favorable execution involves a number of largely
judgmental considerations. Among these are the Advisor's evaluation of the
broker's efficiency in executing and clearing transactions and the broker's
financial strength and stability. The best net price takes into account the
brokerage commission or dealer spread involved in purchasing the securities.
Transactions in the securities of small companies may involve specialized
services on the part of the broker and thereby entail higher commissions or
spreads than would be paid in transactions involving more widely traded
securities.
In selecting brokers to effect portfolio transactions for the Funds,
the Advisor also takes into consideration the research, analytical, statistical
and other information and services provided by the broker, such as general
economic reports and information, reports or analyses of particular companies or
industry groups, market timing and technical information, access to computerized
data bases and the software for analyzing such data bases, and the availability
of the brokerage firm's analysts for consultation. Where computer software
serves other functions than assisting the Advisor in the investment
decision-making process (e.g., recordkeeping), the Advisor makes a reasonable
allocation of the cost of the software to such other functions and bears such
part of the cost itself. While the Advisor believes such information and
services have substantial value, the Advisor considers them supplemental to its
own efforts in the performance of its duties under the Advisory Agreement. Other
clients of the Advisor may benefit from the availability of these services to
the Advisor, and the Funds may benefit from services available to the Advisor as
a result of transactions for other clients.
16
<PAGE> 48
The Advisory Agreement provides that the Advisor, in placing orders for
portfolio securities, is entitled to rely upon Section 28(e) of the Securities
Exchange Act of 1934. Such section generally permits the Advisor to cause the
Funds to pay a broker or dealer, who provides brokerage and research services to
the Advisor, an amount of commission for effecting a securities transaction in
excess of the amount another broker or dealer would have charged for effecting
the transaction; provided the Advisor determines in good faith that such amount
of commission is reasonable in relation to the value of brokerage and research
services provided by the executing broker or dealer viewed in terms of either
the particular transaction or the Advisor's overall responsibilities with
respect to the Funds and the other accounts as to which the Advisor exercises
investment discretion.
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of a Fund as well as the Advisor's other customers
(including any other fund or other investment company or advisory account for
which the Advisor acts as investment advisor), the Advisory Agreement provides
that the Advisor, to the extent permitted by applicable laws and regulations,
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for such other customers in order to obtain the best net
price and most favorable execution. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Advisor in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Fund and such other customers.
In some instances, this procedure may adversely affect the size of the position
obtainable for a Fund.
During the fiscal year ended November 30, 1999, the Growth Fund,
Balanced Fund and Bond Fund paid brokerage commissions aggregating $151,556,
$72,724 and $5,781, respectively, in connection with their portfolio
transactions. The entire amount of such commissions was paid to brokers or
dealers who provided research services to the Advisor in transactions amounting
to $84,137,829, $48,379,942 and $13,523,018, respectively, other than brokerage
commissions of $1,695 paid to brokers or dealers by the Growth Fund for
executing transactions totaling $971,217.
During the fiscal years ended November 30, 1998 and 1997, the Funds
paid brokerage commissions in connection with their portfolio transactions
aggregating $92,684 and $75,213, respectively, for the Growth Fund; $69,684 and
$56,729, respectively, for the Balanced Fund; and $2,813 and $7,906,
respectively, for the Bond Fund.
17
<PAGE> 49
PERFORMANCE DATA
GENERAL
From time to time the Funds may advertise yield and total return for
various periods of investment. Such information will always include uniform
performance calculations based on standardized methods established by the
Securities and Exchange Commission, and may also include other total return
information. Yield is based on historical earnings and total return is based on
historical calculated earnings; neither is intended to indicate future
performance. Performance information should be considered in light of the
particular Fund's investment objectives and policies, characteristics and
quality of its portfolio securities in the market conditions during the
applicable period, and should not be considered as a representation of what may
be achieved in the future. Investors should consider these factors, in addition
to differences in the methods used in calculating performance information, when
comparing a particular Fund's performance to the performance data established
for alternative investments.
AVERAGE ANNUAL TOTAL RETURN
For each of the Funds, standardized annual total return is computed by
finding the average annual compounded rates of return over the one, five and
ten-year periods (or the portion thereof during which the Fund has been in
existence) that would equate the initial amount invested to the ending
redeemable value according to the following formula:
n
P(1 + T) = ERV
WHERE:
T = average annual total return;
n = number of years and portion of a year;
ERV = ending redeemable value (of the hypothetical $1,000
payment) at the end of the 1, 5 and 10-year periods,
or fractional portion thereof, after deduction of all
non-recurring charges to be deducted, assuming
redemption at the end of the period; and
P = $1,000 (the hypothetical initial payment).
18
<PAGE> 50
The average annual total returns for the Balanced Fund for the
one-year, five-year and ten-year periods ended November 30, 1999, and the
average annual total returns for the Bond and Growth Funds for the one-year and
five-year periods ended November 30, 1999 and for the period from February 10,
1992 (commencement of operations) through November 30, 1999, are as follows:
<TABLE>
<CAPTION>
FROM
COMMENCEMENT
OF
1 YEAR 5 YEARS 10 YEARS OPERATIONS
------ ------- -------- ----------
<S> <C> <C> <C> <C>
Growth Fund 10.06% 23.97% -- 15.06%
Balanced Fund 9.79% 17.76% 12.21% --
Bond Fund -1.63% 6.07% -- 5.19%
</TABLE>
- ------------------
(1) Without expense reimbursements by the Advisor in 1999, 1994 and 1992,
the Growth Fund's average annual return for the one-year and five-year
periods ended November 30, 1999 and for the period from commencement of
operations through November 30, 1999 would have been 10.01%, 23.96% and
15.01%, respectively.
(2) Without expense reimbursements by the Advisor in 1999, 1998, 1995,
1994, 1993 and 1992, the Bond Fund's average annual return for the
one-year and five-year periods ended November 30, 1999 and for the
period from commencement of operations through November 30, 1999 would
have been -1.79%, 5.99% and 4.83%, respectively.
19
<PAGE> 51
CURRENT YIELD
Current yield quotations for the Funds are based on a 30-day (or
one-month) period, and are computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
a -b 6
Yield = 2[(----- + 1) - 1]
cd
WHERE:
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends;
and
d = the maximum offering price per share on the last day
of the period.
For purposes of this calculation, income earned on debt obligations is
determined by applying a calculated yield-to-maturity percentage to the
obligations held during the period. Interest earned on mortgage backed
securities will be calculated using the coupon rate and principal amount after
adjustment for a monthly paydown. Income earned on equity securities is
determined by using the stated annual dividend rate applied over the performance
period. Because the investment objectives of the Growth and Balanced Funds do
not relate solely to current income, these Funds will not typically advertise
yield. The yield for the Bond Fund for the 30-day period ended November 30, 1999
was 6.15%. When advertising yield, the Bond Fund will not advertise a one-month
or a 30-day period which ends more than 45 days before the date on which the
advertisement is published.
The performance data for the Funds is based on historical results and
is not intended to indicate future performance. Each Fund's total return will
vary based on market conditions, Fund expenses, portfolio investments and other
factors. The value of a Fund's shares will fluctuate and an investor's shares
may be worth more or less than their original cost upon redemption.
OTHER PERFORMANCE INFORMATION
Each Fund may from time to time advertise its comparative performance
as measured by various independent sources, including, without limitation,
Lipper Inc., Barron's, The Wall Street Journal, The New York Times, U.S.A.
Today, Weisenberger Investment Companies Service, Consumer Reports, Time,
Newsweek, U.S. News and World Report, Business Week, Financial World, U.S. News
and World Reports, Milwaukee Journal Sentinel, Wisconsin State Journal, Forbes,
Fortune, Money, Morningstar Publications, Standard & Poors/Lipper Mutual
20
<PAGE> 52
Fund Profiles and The Individual Investor's Guide to No-Load Mutual Funds. A
Fund may also note its mention in, or inclusion in lists or rankings prepared or
published by, such independent sources and other newspapers, magazines and media
from time to time. However, the investment company assumes no responsibility for
the accuracy of such information. In addition, each Fund may from time to time
advertise its performance relative to certain other mutual funds or groups of
funds, indices and benchmark investments, including, without limitation, the
Value Line Index, Lipper Capital Appreciation Fund Average, Lipper Growth Funds
Average, Lipper General Equity Funds Average, Lipper Equity Funds Average,
Morningstar Growth Average, Morningstar Equity Fund Average, Morningstar Hybrid
Average, Morningstar All Equity Funds Average, Lipper Balanced Funds Index,
Lipper Balanced Funds Average, Morningstar General Equity Average, Dow Jones
Industrial Average, New York Stock Exchange Composite Index, American Stock
Exchange Composite Index, Standard & Poor's 500 Stock Index, Russell 2000 Small
Stock Index, Russell Mid-Cap Stock Index, Russell 2500 Index, Standard & Poor's
400 Industrials, Standard & Poor's 100, Wilshire 5000, Wilshire 4500, Wilshire
4000, Lehman Brothers Intermediate Corporate/Government Bond Index, Nasdaq
Industrials, Nasdaq-OTC Price Index and Consumer Price Index.
Each Fund may advertise its rankings as published by Lipper in its
categories or sub-categories, as well as its rating by Morningstar, Inc. The
Lipper and Morningstar averages are unweighted averages of total return
performance of mutual funds as classified, calculated and published by Lipper
and Morningstar. Morningstar's rating system is based on risk-adjusted total
return performance and is expressed in a star-rating format. The risk-adjusted
number is computed by subtracting a Fund's risk (which is a function of the
Fund's monthly returns less the three-month Treasury bill return) from the
Fund's load-adjusted total return score. This numerical score is then translated
into rating categories, with the top 10% labeled five star, the next 22.5%
labeled four star, then next 35% labeled three star, the next 22.5% labeled two
star and bottom 10% rated one star. A high rating reflects either above-average
returns or below-average risks, or both.
TAXES
Each Fund intends to qualify as a regulated investment company under
the Internal Revenue Code of 1986 (the "Code"), and to take all other action
required so that no federal income tax will be payable by the Fund itself. In
order to qualify as a regulated investment company, each Fund must satisfy a
number of requirements. If a Fund were to fail to qualify as a regulated
investment company under the Code, it would be treated as a regular corporation
whose net taxable income (including taxable dividends and net capital gains)
would be subject to income tax at the corporate level, and distributions to
shareholders would be subject to a second tax at the shareholder level.
21
<PAGE> 53
The dividends received deduction available to a corporate shareholder
with respect to certain ordinary income distributions from a Fund may be reduced
below 70% if the shareholder has incurred any indebtedness directly attributable
to its investment in Fund shares.
Any ordinary income or capital gain distribution will reduce the net
asset value of Fund shares by the amount of the distribution. Although such a
distribution thus resembles a return of capital if received shortly after the
purchase of shares, it generally will be taxable to shareholders.
All or part of any loss that a shareholder realizes on a redemption of
shares will be disallowed if the shareholder purchases other shares of the same
Fund (including by the automatic reinvestment of Fund distributions in
additional Fund shares) within 30 days before or after the redemption.
Each Fund will be subject to a nondeductible 4% excise tax if it fails
to meet certain requirements with respect to distributions of net ordinary
income and capital gain net income. It is anticipated that this provision will
not materially affect the Funds or their shareholders. Dividends declared in
October, November or December to shareholders on a date in any such month and
paid during January of the following year will be treated as received by the
shareholders on December 31 of the year declared.
Dividends and other distributions paid to individuals and other
non-exempt persons are subject to a 31% backup federal withholding tax if the
Transfer Agent is not provided with the shareholder's correct taxpayer
identification number or certification that the shareholder is not subject to
such backup withholding or if a Fund is notified that the shareholder has under
reported income in the past. In addition, such backup withholding tax will apply
to the proceeds of redemption or repurchase of shares from a shareholder account
for which the correct taxpayer identification number has not been furnished. For
most individual taxpayers, the taxpayer identification number is the social
security number. A shareholder may furnish the Transfer Agent with such number
and the required certifications by completing and sending the Transfer Agent
either the account application form accompanying the Prospectus or an IRS Form
W-9.
The foregoing discussion of tax consequences is based on federal tax
laws and regulations in effect on the date of this Statement of Additional
Information, which are subject to change by legislative or administrative
action.
22
<PAGE> 54
CAPITAL STOCK AND OTHER SECURITIES
GENERAL
The authorized capital stock of the Investment Company consists of 100
million shares of Common Stock, $.001 par value per share. The shares of Common
Stock are presented divided into three series: the Balanced Fund, Bond Fund and
Growth Fund. Each such series consists of 10 million shares of Common Stock. The
Board of Directors may authorize the issuance of additional series of Common
Stock (funds) and may increase or decrease the number of shares in each series.
Each share of Common Stock has one vote and, when issued and paid for
in accordance with the terms of the Prospectus, will be fully paid and
nonassessable, except that shareholders are subject to personal liability under
Section 180.0622(2)(b) of the Wisconsin Business Corporation Law, as judicially
interpreted, for debts owing to employees of the Funds for services performed,
but not exceeding six months' service in any one case. The Funds currently have
no employees and do not intend to have employees in the future. Shares of Common
Stock are redeemable at net asset value, at the option of the shareholder.
Shares of Common Stock have no preemptive, subscription, conversion or
accumulative voting rights and are freely transferrable. Shares of Common Stock
can be issued as full shares or fractions of shares. If a fraction of share has
the same kind of rights and privileges as a full share.
Shareholders have the right to vote on the election of the directors at
each meeting of shareholders at which directors are to be elected and on other
matters as provided by law or the Investment Company's Articles of Incorporation
or Bylaws. Shareholders of each Fund vote together to elect a single Board of
Directors of the Investment Company and on other matters affecting the entire
Investment Company, with each share entitled to a single vote. On matters
affecting only one Fund, only the shareholders of that Fund are entitled to
vote. On matters relating to all Funds, but affecting individual Funds
differently (such as a new Advisory Agreement), separate votes by shareholders
of each Fund are required. The Investment Company's Articles of Incorporation do
not require the holding of annual meetings of shareholders. However, special
meetings of shareholders may be called (and, at the request of shareholders
holding 10% or more of the Funds' outstanding shares must be called) for
purposes such as electing or removing directors, changing fundamental policies
or approving investment advisory contracts.
23
<PAGE> 55
CONTROL PERSONS AND PRINCIPAL HOLDERS OF FUND SHARES
The following table sets forth the names, addresses and percentage
ownership of each person who owns of record or is known to management to own
beneficially 5% or more of a Fund's outstanding shares as of December 31, 1999.
Other than those named below, no person controls any Fund.
<TABLE>
<CAPTION>
RECORD OR BENEFICIAL OWNER PERCENTAGE OWNERSHIP
- -------------------------- --------------------
<S> <C>
GROWTH FUND:
Old Kent Bank (record) 12.04%
4420 44th Street, Suite A
Grand Rapids, MI 49512-4011
IFTC (record) 9.70%
801 Pennsylvania Avenue
Kansas City, MO 64105-1307
BALANCED FUND:
IFTC (record) 9.99%
801 Pennsylvania Avenue
Kansas City, MO 64105-1307
MUGGS & CO. (record) 5.56%
c/o Firstar Trust Company
P.O. Box 1787
Milwaukee, WI 53201-1787
Medical X-Ray Consultants Profit Sharing Plan (beneficial) 5.33%
c/o Firstar Trust Company
P.O. Box 1787
Milwaukee, WI 53201-1787
BOND FUND:
CAPINCO (record) 30.50%
c/o Firstar Trust Company
P.O. Box 1787
Milwaukee, WI 53201-1787
Old Kent Bank (record) 23.53%
4420 44th Street, Suite A
Grand Rapids, MI 49512-4011
</TABLE>
24
<PAGE> 56
<TABLE>
<CAPTION>
RECORD OR BENEFICIAL OWNER PERCENTAGE OWNERSHIP
- -------------------------- --------------------
<S> <C>
UW Platteville Foundation (beneficial) 11.78%
c/o Firstar Trust Company
P.O. Box 1787
Milwaukee, WI 53201-1787
Owens Ayres Profit Sharing Plan (beneficial) 11.55%
c/o Firstar Trust Company
P.O. Box 1787
Milwaukee, WI 53201-1787
UW Eau Claire Foundation (beneficial) 7.22%
c/o Old Kent Bank
4420 44th Street, Suite A
Grand Rapids, MI 49512-4011
Wisconsin Auto & Truck Dealers Association (beneficial) 5.26%
150 East Gilman Street
Madison, WI 53703-1441
</TABLE>
25
<PAGE> 57
FINANCIAL STATEMENTS
The financial statements and related report of PricewaterhouseCoopers
LLP, independent accountants, contained in the Annual Report to Shareholders for
the fiscal year ended November 30, 1999 are incorporated by reference herein. A
copy of the Annual Report to Shareholders may be obtained without charge by
writing to Thompson, Plumb & Associates, Inc., 1200 John Q. Hammons Drive,
Madison, Wisconsin 53717 or by calling Thompson, Plumb & Associates, Inc. at
(608) 831-1300 or 1-800-999-0887.
26
<PAGE> 58
PART C
OTHER INFORMATION
-----------------
ITEM 23. EXHIBITS.
See Exhibit Index following the signature page to this Registration
Statement, which Exhibit Index is incorporated herein by this reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Article V, Section 4 of the Registrant's Bylaws provides for
indemnification under certain circumstances of any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the Registrant. However, no person shall be indemnified by the Registrant
against any liability to any of the Funds or its shareholders to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such person's office.
Paragraph 7 of the Investment Advisory Agreement between the Registrant
and Thompson, Plumb & Associates, Inc. provides for indemnification of Thompson,
Plumb & Associates, Inc. by the Funds or, in lieu thereof, contribution by the
Funds under certain circumstances.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
Thompson, Plumb & Associates, Inc., the Registrant's investment
advisor, is engaged in the investment advisory business. Set forth below is a
list of the directors and officers of Thompson, Plumb & Associates, Inc.,
together with information as to any other business, profession, vocation or
employment of a substantial nature of those directors and officers during the
past two fiscal years.
<PAGE> 59
<TABLE>
<CAPTION>
NAME POSITION WITH ADVISOR OTHER AFFILIATIONS
- ---- --------------------- ------------------
<S> <C> <C>
John W. Thompson President and Director Chairman, Secretary and
Director of the Registrant
Thomas G. Plumb Vice President and Director President, Treasurer and Di-
rector of the Registrant
Connie M. Redman Corporate Secretary None
Penny M. Hubbard Assistant Vice President None
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS.
(A) Not applicable.
(B) Not applicable.
(C) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The Amended and Restated Articles of Incorporation, Bylaws and minute
book of the Registrant are in the physical possession of Quarles & Brady LLP,
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. Accounts, books, records
and other documents required to be maintained under Section 31(a) relating to
the number of shares of the Registrant's common stock held by each shareholder
of record are in the physical possession of Firstar Trust Company, P.O. Box 701,
Milwaukee, Wisconsin 53201. All other accounts, books and other documents
required to be maintained under Section 31(a) of the Investment Company Act of
1940 and the Rules promulgated thereunder are in the physical possession of
Thompson, Plumb & Associates, Inc., 1200 John Q. Hammons Drive, Fifth Floor,
Madison, Wisconsin 53717.
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-3
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Madison, State of
Wisconsin, on the 27th day of March, 2000.
THOMPSON PLUMB FUNDS, INC
By /s/ John W. Thompson
-----------------------
JOHN W. THOMPSON
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below on
this 27th day of March, 2000, by the following persons in the capacities
indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ John W. Thompson Mary Ann Deibele+
-------------------------------------------- ------------------------------------------
JOHN W. THOMPSON MARY ANN DEIBELE
Director, Chairman and Secretary Director
(Principal Executive Officer)
/s/ Thomas G. Plumb John W. Feldt*
-------------------------------------------- ------------------------------------------
THOMAS G. PLUMB JOHN W. FELDT
Director, President and Treasurer Director
(Principal Financial and Accounting Officer)
/s/ George H. Austin Donald A. Nichols*
-------------------------------------------- ------------------------------------------
GEORGE H. AUSTIN DONALD A. NICHOLS
Director Director
/s/ John W. Thompson
+*By: _________________________________________
JOHN W. THOMPSON
+ Pursuant to Power of Attorney
dated January 26, 1995
* Pursuant to Power of Attorney
dated December 6, 1991
</TABLE>
C-4
<PAGE> 61
THOMPSON PLUMB FUNDS, INC.
=============================================
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM N-1A
=============================================
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
------ ----------- --------------- --------
<S> <C> <C> <C>
(A) Registrant's Amended and Post-Effective Amendment No.
Restated Articles of Incorpora- 12 to the Registrant's Reg-
tion. istration Statement on Form N-
1A (Reg. No. 33-6418) (the
"Registration Statement").
(B) Registrant's Bylaws, as Post-Effective Amendment No.
amended and restated and 13 to the Registration Statement.
presently in effect.
(C) None.
(D) Investment Advisory Post-Effective Amendment No.
Agreement between 12 to the Registration Statement.
Registrant and Thompson,
Unger & Plumb, Inc., as
amended and restated as of
February 7, 1992.
(E) Not applicable.
(F) Not applicable.
(G) Custodian Agreement with Post-Effective Amendment No.
Bank between Registrant and 12 to the Registration Statement.
First Wisconsin Trust
Company, as amended and
restated as of February 7,
1992.
</TABLE>
C-5
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
------ ----------- --------------- --------
<S> <C> <C> <C>
(H)(1) Accounting Services Agreement Post-Effective Amendment No.
between Registrant and Thompson 12 to the Registration Statement.
Unger & Plumb, Inc., as amended
and restated as of February 7,
1992.
(H)(2) Shareholder Services Agreement Post-Effective Amendment No.
between Registrant and Thompson 12 to the Registration Statement.
Unger & Plumb, Inc., as amended
and restated as of February 7,
1992.
(H)(3) Operating Agreement between Post-Effective Amendment No.
Registrant and Charles Schwab & 12 to the Registration Statement.
Co., Inc. dated as of January 15,
1997.
(H)(4) Confidentiality Agreement Post-Effective Amendment No.
between Registrant and 12 to the Registration Statement.
Charles Schwab & Co., Inc.
dated as of January 15, 1997.
(H)(5) Services Agreement between Post-Effective Amendment No.
Registrant and Charles 12 to the Registration Statement.
Schwab & Co., Inc. dated as
of January 15, 1997.
(H)(6) Distribution and Servicing Post-Effective Amendment No.
Agreement between 12 to the Registration Statement.
Registrant and Portico Funds,
Inc.
(H)(7) Servicing Agreement between Post-Effective Amendment No.
Registrant and Firstar Funds, 13 to the Registration Statement.
Inc.
(H)(8) Revolving Credit Agreement Post-Effective Amendment No.
dated as of February 6, 1998 13 to the Registration Statement.
between Registrant and M&I
Bank of Southern Wisconsin.
(I) Opinion of Counsel. Post-Effective Amendment No.
14 to the Registration Statement.
</TABLE>
C-6
<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
------ ----------- --------------- --------
<S> <C> <C> <C>
(J) Consent of Independent X
Public Accountants.
(K) Not applicable.
(L) Subscription Agreement be- Post-Effective Amendment No.
tween Registrant and 14 to the Registration Statement.
Thompson, Unger & Plumb,
Inc. (f/k/a FMI Capital
Management, Inc.).
(M) Not applicable.
(P) Code of Ethics. X
</TABLE>
C-7
<PAGE> 1
EXHIBIT (J)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
and Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A (the
"Registration Statement") of our report dated January 20, 2000, relating to the
financial statements and financial highlights appearing in the November 30, 1999
Annual Report to Shareholders of Thompson Plumb Funds, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the headings "Counsel and Independent Accountants" and "Financial
Statements" in the Statement of Additional Information.
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
March 20 , 2000
<PAGE> 1
EXHIBIT (P)
THOMPSON PLUMB FUNDS, INC.
AND
THOMPSON, PLUMB & ASSOCIATES, INC.
CODE OF ETHICS WITH RESPECT TO
SECURITIES TRANSACTIONS OF ACCESS PERSONS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
I. INTRODUCTION.............................................................................................1
II. DEFINITIONS..............................................................................................2
III. STATEMENT OF GENERAL PRINCIPLES..........................................................................4
IV. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES............................................................4
V. EXEMPT TRANSACTIONS......................................................................................6
VI. REPORTING REQUIREMENTS OF ACCESS PERSONS.................................................................7
VII. COMPLIANCE MONITORING...................................................................................10
VIII. REVIEW BY BOARD OF DIRECTORS............................................................................10
IX. RECORDS RETENTION.......................................................................................11
X. CONFIDENTIAL TREATMENT..................................................................................12
XI. VIOLATIONS OF THIS CODE.................................................................................12
XII. INTERPRETATION OF PROVISIONS............................................................................12
XIII. AMENDMENTS TO THE CODE..................................................................................12
APPENDIX A - PERSONAL TRADING REQUEST AND AUTHORIZATION FORM....................................................A-1
APPENDIX B - INITIAL HOLDINGS REPORT............................................................................B-1
APPENDIX C - QUARTERLY TRANSACTION REPORT.......................................................................C-1
APPENDIX D - ANNUAL HOLDINGS REPORT.............................................................................D-1
ANNUAL CERTIFICATION............................................................................................E-1
</TABLE>
ToC-i
<PAGE> 3
I. INTRODUCTION
Rule 17j-1 (the "Rule") under the Investment Company Act of 1940 (the
"1940 Act") requires investment companies, as well as their investment advisers
and principal under writers, to adopt written codes of ethics containing
provisions reasonably necessary to prevent "access persons" from engaging in any
act, practice, or course of business prohibited under the anti-fraud provisions
of the Rule.(1) Pursuant to the requirements of the Rule, Thompson Plumb Funds,
Inc. (the "Fund") and Thompson, Plumb & Associates, Inc. ("Adviser") have
adopted, and the Fund's Board of Directors (including a majority of the
independent directors) have approved, this Code of Ethics (the "Code") with
respect to the securities transactions of the directors, officers, and certain
employees of the Fund and the directors, officers and certain employees of the
Adviser that come within the term "access person," as defined below.
This Code reflects the principal recommendations in the May 9, 1994
Report of the Investment Company Institute Advisory Group on Personal Investing,
and all amendments to the Rule through October 29, 1999. It is intended to
provide guidance to access persons of the Fund and the Adviser in the conduct of
their personal investments to eliminate the possibility of securities
transactions occurring that place, or appear to place, such persons in conflict
with the interests of the Fund or their shareholders.(2) As required by the
Rule, a copy of this Code has been filed with the Securities and Exchange
Commission.
- --------
(1) Rule 17j-1 under the 1940 Act provides that it is unlawful for any
affiliated person of or principal underwriter for a registered investment
company, or any affiliated person of such company's investment adviser or
principal underwriter, in connection with any purchase or sale, directly or
indirectly, by such person of a "security held or to be acquired" (as defined
therein) by such investment company, to engage in any of the following acts,
practices or courses of business:
A. Employ any device, scheme, or artifice to defraud such
investment company;
B. Make any untrue statement of a material fact to such
investment company or omit to state a material fact necessary
in order to make the statements made to such investment
company, in light of the circumstances under which they are
made, not misleading;
C. Engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any such
investment company; and
D. Engage in any manipulative practice with respect to such
investment company.
(2) Consistent with Section 206 of the Investment Advisers Act of 1940 and
Rules 204-2(a)(12) and (13), and to the extent appropriate, the access persons
of the Adviser shall abide by the principles established by this Code and the
specific reporting and other requirements hereof when dealing with other
advisory clients of the Adviser.
1
<PAGE> 4
Your receipt of this Code for your review and signature means that you
are a person to whom the Code applies. You are required to certify annually that
you have read, understood and complied with this Code. See Appendix E.
If you have any questions concerning this Code, please contact the
Compliance Officer for the Fund and/or Fund counsel.
II. DEFINITIONS
A. Access Person. "Access person" means any director, officer,
general partner or "advisory person" (as hereinafter defined)
of the Fund or any director, officer, general partner or
"advisory person" of the Adviser who, with respect to the
Fund, makes any recommendation regarding the purchase or sale
of a security by the Fund, participates in the determination
of which recommendation shall be made, or whose principal
function or duties relate to the determination of which
recommendation shall be made to the Fund, or who, in
connection with his(3) duties, obtains to any information
concerning securities recommendations being made by the
Adviser to the Fund.
B. Advisory Person. "Advisory person" means (a) any employee of
the Fund or the Advisor who, in connection with his regular
functions or duties, makes, participates in, or obtains
information regarding a security (as defined in II.H. below)
being considered for purchase or sale or which has been
purchased or sold by or on behalf of the Fund, or (b) any
employee of the Fund or the Adviser whose functions relate to
the making of any recommendations with respect to such
purchases or sales. In the event that any individual or
company is in a control relationship with the Fund or the
Adviser, the term "advisory person" includes such individual
company, or any employee of such a company to the same extent
as an employee of the Fund or the Adviser.
C. Beneficial Ownership. "Beneficial Ownership" has the same
meaning as used in Rule 16a-1(a)(2) under the Securities
Exchange Act of 1934, except that the term applies to both
debt and equity securities. "Beneficial ownership" under Rule
16a-1(a)(2) includes accounts of a spouse, minor children who
reside in an access person's home and any other relatives
(parents, adult children, brothers, sisters, etc.) whose
investments the access person directs or controls, whether the
person lives with the access person or not, as well as
accounts of another person (individual, partner, corporation,
trust, custodian, or other entity) if by reason of any
contract, understanding, relationship, agreement or other
arrangement the access person obtains or may obtain therefrom
a direct or indirect pecuniary interest. A person does not
derive a direct or indirect
----------
(3) The use of the masculine pronoun is for convenience of reference only
and is intended to include the feminine in all cases, unless the context
requires otherwise.
2
<PAGE> 5
pecuniary interest by virtue of serving as a trustee or
executor unless he or a member of his immediate family has a
vested interest in the income or corpus of the trust or
estate. A copy of Release No. 34-18114 issued by the
Securities and Exchange Commission on the meaning of the term
"beneficial ownership" is available upon request from the
Fund's Compliance Officer, and should be reviewed carefully by
any access person before preparing any reports required by
this Code.
D. Being Considered for Purchase or Sale. A security is "being
considered for purchase or sale" when a recommendation to
purchase or sell such security has been made and communicated
by an advisory person of the Fund or the Adviser, in the
course of his duties and, with respect to the person making
the recommendation, when such person seriously considers
making such a recommendation.
E. Control. "Control" means the power to exercise a controlling
influence over the management and policies of a company,
unless such power is solely the result of an official position
with such company.
F. Disinterested Director. The term "disinterested director"
means a director of the Fund who is not an "interested person"
of the Fund within the meaning of Section 2(a)(19) of the 1940
Act. These Directors have been designated by the Fund.
G. Portfolio Managers. Persons who make decisions as to the
purchase or sale of portfolio securities of the Fund.
H. Security. "Security" has the same meaning as in Section
2(a)(36) of the 1940 Act, except that it shall not include
shares of registered open-end investment companies, direct
obligations of the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper,
short-term debt securities that are "government securities"
within the meaning of Section 2(a)(16) of the 1940 Act, or
such other high quality short-term debt instruments and money
market instruments as designated by the Board of Directors of
the Fund. Copies of Sections 2(a)(36) and 2(a)(16) are
available from the Fund's Compliance Officer.
3
<PAGE> 6
III. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the personal
investment activities of all access persons.
Each access person shall adhere to the highest ethical standards and
shall:
A. At all times, place the interests of the Fund before his
personal interests;
B. Conduct all personal securities transactions in a manner
consistent with this Code, so as to avoid any actual or
potential conflicts of interest, or any abuse of position of
trust and responsibility; and
C. Not take any inappropriate advantage of his position with or
on behalf of the Fund.
Access persons should follow not only the letter of this Code, but also
its spirit and their transactions will be reviewed for this purpose.
IV. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. Prior Clearance Required for All Securities Transactions.
Unless the transaction is exempt under Article V below, no
access person (other than a disinterested director of the
Fund) may directly or indirectly, initiate, recommend, or in
any other way participate in the purchase or sale of a
security in which such access person has, or by reason of the
transaction may acquire, any direct or indirect beneficial
interest, without first obtaining prior written clearance for
such transaction from the Fund's Compliance Officer. When
requesting prior clearance, each access person should be aware
that:
1. All requests for prior clearance must be set forth in
writing on the standard Personal Trading Request and
Authorization Form, a copy of which is attached as
Appendix A.
2. Prior clearance of a securities transaction is
effective for three business days from and including
the date clearance is granted.
B. Purchases and Sales Involving the Fund (Blackout Periods).
Unless the transaction is exempt under Article V below, no
access person (other than a disinterested director of the
Fund) may effect a transaction in any equity security on the
same trading day that the Fund has traded that equity
security. Additionally, no portfolio manager may purchase or
sell as beneficial owner any equity security within seven
calendar days before and after the Fund trades (or has traded)
in that equity security. In order to assure compliance with
this Paragraph B of Article IV, prior to clearing any personal
transaction by a
4
<PAGE> 7
portfolio manager or access person, the Fund's Compliance
Officer shall take all steps above and make any other
investigation reasonably necessary in order to assure such
compliance. If the subject transaction involves acquisition of
beneficial ownership of an equity security by a portfolio
manager, the Compliance Officer shall consult a current list
of all trades of equity securities by the Fund within the past
seven calendar days. Furthermore, the Compliance Officer must
confirm that the portfolio manager has no intention to trade
that security in the next seven days.
C. Short-Term Trading Profits. Short term trading by advisory
persons shall be looked upon with disfavor. All sales and
purchases (or purchases and sales) of the same or equivalent
securities within 60 calendar days by an advisory person shall
be reported to the Fund's Board of Directors.
D. Initial Public Offerings. No advisory person may acquire any
beneficial ownership in any securities in an initial public
offering (i.e., an offering of securities registered under the
Securities Act of 1933, the issuer of which, immediately prior
to the registration was not subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934).
E. Gifts. No advisory person may receive any gift or anything
else of more than $100 value within any calendar year from any
person, entity or person affiliated with an entity that does
business with or on behalf of the Fund.
F. Private Placements. With regard to private placements (i.e.,
offerings of securities that are exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or
4(6) or Regulation D), each advisory person shall:
1. Obtain express prior written approval from the Fund's
Compliance Officer (who, in making such
determination, shall consider among other factors,
whether the investment opportunity should be reserved
for the Fund, and whether such opportunity is being
offered to such advisory person by virtue of his
position with the Fund) for any acquisition of
securities in a private placement; and,
2. If and after such authorization to acquire securities
in a private placement has been obtained, disclose
such personal investment in any subsequent
consideration by the Fund (or any other investment
company for which he acts in a capacity as an
advisory person) for investment in that issuer
arises.
If the Fund decides to purchase securities of an
issuer the shares of which have been previously
obtained for personal investment by an advisory
person, that decision shall be subject to an
independent review by the disinterested directors
with no personal interest in the issuer.
5
<PAGE> 8
G. Service as a Director. No advisory person shall serve on a
board of directors of a publicly traded company, absent prior
written authorization by the Board of Directors of the Fund,
based upon a determination that such service would be
consistent with the interests of the Fund.
If board service of an advisory person is authorized by the
Board of Directors of the Fund, such advisory person shall be
isolated from the investment making decisions of the Fund with
respect to the company of which he is a director.
H. Confidentiality. No access person shall reveal to any other
person (except in the normal course of his duties on behalf of
the Fund or the Adviser) any information regarding securities
transactions made, or being considered, by or on behalf of the
Fund.
V. EXEMPT TRANSACTIONS
The prohibitions described in Paragraphs A and B of Article IV above
shall not apply to:
A. Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control,
or in any account of the access person which is managed on a
discretionary basis by a person other than the access person
and, with respect to which the access person does not in fact
influence or control purchase or sale transactions;
B. Purchases or sales that are non-volitional on the part of the
access person or the Fund, including mergers,
recapitalizations or similar transaction;
C. Purchases that are part of an issuer's automatic dividend
reinvestment plan;
D. Purchases effected upon the exercise of rights issued by the
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired;
E. Purchases that are part of an Investment Club portfolio where
an access person or portfolio manager maintains a beneficial
interest of 20% or less provided that such transactions are
reported quarterly to the Board; and
F. Purchases or sales that receive the prior approval of the
Fund's Compliance Officer on the basis, determined from the
investigation described in Section IV. B, that (a) the
transaction is not potentially harmful to the Fund, (b) the
transaction would be unlikely to affect the market in which
the portfolio securities for the Fund are traded, (c) the
transaction is not related economically to the securities to
be purchased, sold, or held by the Fund and the decision to
purchase or sell the security is not the result of material
non-public information,
6
<PAGE> 9
(d) for transactions involving access persons, the Fund has
not engaged in a transaction in the same security on the same
day, or (e) for transactions involving portfolio managers, the
Fund has not engaged in a transaction in the same security
within the past seven calendar days and has no intention to do
so within the next seven calendar days. As noted above, prior
approval must be set forth in writing on the Personal Trading
Request and Authorization Form (Appendix A).
VI. REPORTING REQUIREMENTS OF ACCESS PERSONS
A. Initial Holdings Report. Every access person (except
disinterested directors of the Fund) shall complete, sign and
submit to the Fund's Compliance Officer an Initial Holding
Report no later than 10 days after becoming an access person.
[Persons who became access persons before March 1, 2000 are
not required to submit an Initial Holdings Report.] The
Initial Holdings Report (attached hereto as Appendix B) shall
include the following information:
1. The title, number of shares and principal amount of
each security in which the access person had any
direct or indirect beneficial ownership when the
person became an access person;
2. The name of any broker, dealer or bank with whom the
access person maintained an account in which any
securities were held for the direct or indirect
benefit of the access person as of the date the
person became an access person; and
3. The date on which the report is submitted by the
access person.
B. Quarterly Transaction Reports. Every access person (except
disinterested directors of the Fund) shall complete, sign and
submit to the Fund's Compliance Officer a Quarterly
Transaction Report (attached hereto as Appendix C) which
discloses the information with respect to transactions during
the quarter in any security in which such access person has,
or by reason of such transaction, acquires any direct or
indirect beneficial ownership in the security. The Quarterly
Transaction Report shall be submitted no later than 10 days
after the end of each calendar quarter, whether or not there
has been a transaction for the quarter. For any transaction in
a security during the quarter in which the access person had
any direct or indirect beneficial ownership, the Quarterly
Transaction Report shall contain the following information:
1. The date of the transaction, the title, interest rate
and maturity date (if applicable), the number of
shares and the principal amount of the security
involved;
7
<PAGE> 10
2. The nature of the transaction, i.e., purchase, sale
or any other type of acquisition or disposition;
3. The price of the security at which the transaction
was effected;
4. The name of the broker, dealer, or bank with or
through whom the transaction was effected; and
5. The date on which the report is submitted by the
access person.
For any account established by the access person in which any
securities were held during the quarter for the direct or
indirect benefit of the access person, the Quarterly
Transaction Report shall contain the following information:
1. The name of the broker, dealer or bank with whom the
access person established the account;
2. The date on which the account was established; and
3. The date on which the report is submitted by the
access person.
In lieu of the Quarterly Transaction Report, the reporting
person may provide copies of broker trade confirmations or
monthly or quarterly account statements reflecting equivalent
information, provided the reporting person dates and signs
each such statement.
C. Annual Holdings Report. Every access person (except
disinterested directors of the Fund) shall complete, sign and
submit to the Fund's Compliance Officer an Annual Holdings
Report no later than 30 days following the end of the calendar
year. The Annual Holdings Report (attached hereto as Appendix
D) shall contain the following information (which shall be
current as of a date no more than 30 days before the report is
submitted):
1. The title, number of shares and principal amount of
each security in which the access person had any
direct or indirect beneficial ownership;
2. the name of any broker, dealer or bank with whom the
access person maintained an account in which any
securities were held for the direct or indirect
benefit of the access person; and
3. The date on which the report is submitted by the
access person.
8
<PAGE> 11
D. Disinterested Directors. Notwithstanding Paragraph B of
Article VI above, a disinterested director of the Fund shall
report a transaction in a security on a Quarterly Transaction
Report if the director, at the time of the transaction, knew
or, in the ordinary course of fulfilling his official duties
as a director of the Fund, should have known that, during the
15-day period immediately before or after the date of the
transaction by the director, the security is or was purchased
or sold by the Fund or was considered for purchase or sale.
E. Absence of Control. An access person shall not be required to
submit an Initial Holdings, Quarterly Transaction or Annual
Holdings Report with respect to transactions effected for, and
securities held in, any account over which the person has no
direct or indirect influence or control.
F. Confirmations. All access persons (other than disinterested
directors of the Fund) shall direct their brokers to supply to
the Fund's Compliance Officer on a timely basis, duplicate
copies of confirmations of all personal securities
transactions.
G. Disclosure of Personal Securities Holdings. All advisory
persons shall disclose all personal securities holdings upon
commencement of employment.
H. Disclaimer of Beneficial Ownership. No Initial Holdings,
Quarterly Transaction or Annual Holdings Report shall be
construed as an admission by the person making such report
that he has any direct or indirect beneficial ownership in the
security to which the report relates.
I. Potential Conflicts of Interest. Every access person shall
immediately report to the Fund's Compliance Officer any
factors of which the access person is aware that would be
relevant to a conflict of interest analysis, including the
existence of any substantial economic relationship between the
access person's transactions and securities held or to be
acquired by the Fund. These factors may include, for example,
officerships or directorships with issuers or beneficial
ownership of more than 1/2 of 1% of the total outstanding
shares of any issuer whose shares are publicly traded or that
may be initially offered to the public in the foreseeable
future.
J. Notification of Reporting Obligation. All access persons
having a duty to file Initial Holdings, Quarterly Transaction
and Annual Holdings Reports hereunder shall be informed of
such duty by the Fund's Compliance Officer and shall be
provided with a copy of this Code. Once informed of the duty
to file an Initial Holdings, Quarterly Transaction and Annual
Holdings Report, an access person has a continuing obligation
to file each such report in a timely manner, whether or not
the access person had any securities transactions or changes
in securities ownership have occurred.
9
<PAGE> 12
VII. COMPLIANCE MONITORING
The Fund's Compliance Officer shall review all Initial Holdings,
Quarterly Transaction and Annual Holdings Reports, confirmations, and
other materials provided to him regarding personal securities
transactions by access persons to ascertain compliance with the
provisions of this Code. The Compliance Officer shall date each Initial
Holdings, Quarterly Transaction and Annual Holdings Report the day it
is received and shall sign the Report to verify the date of receipt.
The Fund's Compliance Officer shall also maintain a list of the names
of person(s) responsible for reviewing those reports. The Compliance
Officer shall institute any additional procedures necessary to monitor
the adequacy of such reports and to otherwise prevent or detect
violations of this Code. Upon discovery of a violation of this Code, it
shall be the responsibility of the Fund's Compliance Officer to report
such violation to the management of the Adviser, as well as to the
Board of Directors of the Fund.
VIII. REVIEW BY BOARD OF DIRECTORS
The Fund's Compliance Officer shall regularly (but not less frequently
than annually) furnish to the Board of Directors of the Fund a written
report regarding the administration of this Code. This report shall
describe issues that arose during the previous year under this Code
including, but not limited to, information about material violations of
this Code and related procedures, and sanctions imposed as a result of
these violations. The report shall also certify to the Board of
Directors that the Fund has adopted procedures reasonable necessary to
prevent its access persons from violating this Code. The Board of
Directors shall consider this report and determine whether amendments
to the Fund's Code or procedures are necessary. If any such report
indicates that any change to this Code is advisable, the Compliance
Officer shall make an appropriate recommendation to the Board of
Directors.
The Compliance Officer shall inquire into any apparent violation of
this Code and shall report any apparent violation requiring remedial
action to the Fund's Board of Directors. Upon finding such a violation
of this Code, including the filing of any false, incomplete, or
untimely Initial Holdings Report, Quarterly Transaction Report or
Annual Holdings Report, or the failure to obtain prior clearance of any
personal securities transaction, the Board of Directors may impose any
sanction or take such remedial actions as it deems appropriate. No
director shall participate in a determination of whether he has
committed a violation of this Code or of the imposition of any sanction
against himself.
10
<PAGE> 13
IX. RECORDS RETENTION.
The Fund and the Adviser shall maintain, at their respective principal
places of business, records in the manner and to the extent set forth
below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f)(1) under the 1940 Act, and shall
make these records available to the Securities and Exchange Commission
or any representative of the Commission at any time and from time to
time for reasonable periodic, special or other examination:
A. Retention of Copy of Code of Ethics. A copy of this Code, and
any other code of ethics in effect at any time during the past
five years, shall be maintained in an easily accessible place;
B. Record of Violations. A record of any violation of this Code
and of any action taken as a result of such violation shall be
maintained in any easily accessible place for a period of not
less than five years following the end of the fiscal year in
which the violation occurs;
C. Copy of Forms and Reports. A copy of each Personal Trading
Request and Authorization Form and each Initial Holdings
Report, Quarterly Transaction Report and Annual Holdings
Report prepared and filed by an access person pursuant to this
Code shall be maintained for a period of not less than five
years from the end of the fiscal year in which such report is
made, the first two years in an easily accessible place;
D. List of Access Persons. A list of all persons who are, or
within the past five years of business have been, required to
file Personal Trading Request and Authorization Forms, Initial
Holdings Reports, Quarterly Transaction Report and Annual
Holdings Reports pursuant to this Code shall be maintained in
an easily accessible place; and
E. Board Reports. A copy of each written report furnished to the
Fund's Board of Directors as set forth in Article VII above
must be maintained for at least five years after the end of
the fiscal year in which it is made, the first two years in an
easily accessible place.
The Fund or the Advisor shall also maintain a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
advisory persons of private placement securities for not less than five
years following the end of the fiscal year in which the approval is
granted.
11
<PAGE> 14
X. CONFIDENTIAL TREATMENT
All reports and other records required to be filed or maintained under
this Code shall be treated as confidential, except to the extent required by
law.
XI. VIOLATIONS OF THIS CODE
Violations of this Code may result in the imposition of sanctions or
the taking of such remedial steps as the Fund and/or the Adviser may deem
appropriate, including, but not limited to, unwinding the transaction or, if
impractical, disgorgement of any profit from the transaction, a letter of
censure, reduction in salary, and suspension or termination of employment. No
director or officer of the Adviser or director or officer of the Fund shall
participate in a determination of whether he has committed a violation of this
Code or of the imposition of any sanction against himself.
In addition, the Fund or the Adviser may report any violations to the
appropriate regulatory authority, including the Securities and Exchange
Commission.
XII. INTERPRETATION OF PROVISIONS
The Board of Directors of the Fund and management of the Adviser may,
from time to time, adopt such interpretations of this Code as such Board or
management deems appropriate.
XIII. AMENDMENTS TO THE CODE
Any material change to the Code subsequent to its approval must be
approved within six months of the change by the Board of Directors of the Fund.
Any amendment to the Code shall be effective 30 calendar days after written
notice of such amendment shall have been received by the Fund's Compliance
Officer, unless the Board of Directors of the Fund or the management of the
Adviser, as appropriate, expressly determines that such amendment shall become
effective on an earlier date or shall not be adopted.
12
<PAGE> 15
APPENDIX A
PERSONAL TRADING REQUEST AND AUTHORIZATION FORM
Personal Trading Request (to be completed by access person prior to any personal
trade):
Name:
---------------------------------------------------------------------------
Date of proposed transaction:
------------------
Name of the issuer and dollar amount or number of securities of the issuer
proposed to be purchased or sold:
-----------------------------------------------
- --------------------------------------------------------------------------------
Nature of transaction (i.e., purchase, sale):(1)
----------------------------------
- --------------------------------------------------------------------------------
Are you or is a member of your immediate family an officer or director of the
issuer of the securities or any affiliate(2) of the issuer? Yes No
---- ----
If yes, please describe:
-----------------------------------------------
- --------------------------------------------------------------------------------
Describe the nature of any direct or indirect professional or business
relationship that you may have with the issuer of the securities.(3)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------
(1)If other than a market order, please describe any proposed limits.
(2)For purposes of this question, "affiliate" includes (i) any entity that
directly or indirectly owns, controls, or holds with power to vote 5% or more of
the outstanding voting securities of the issuer and (ii) any entity under common
control with the issuer.
(3)A "professional relationship" includes, for example, the provision of
legal counsel or accounting services. A "business relationship" includes, for
example, the provision of consulting services or insurance coverage.
A-1
<PAGE> 16
Do you have any material nonpublic information concerning the issuer?
Yes No
---- ----
Do you beneficially own more than 1/2 of 1% of the outstanding equity securities
of the issuer?
Yes No
---- ----
If yes, please report the name of the issuer and the total number of
shares "beneficially owned":
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Are you aware of any facts regarding the proposed transaction, including the
existence of any substantial economic relationship, between the proposed
transaction and any securities held or to be acquired by the Fund that may be
relevant to a determination as to the existence of a potential conflict of
interest?(4) Yes No
---- ----
If yes, please describe:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
To the best of your knowledge and belief, the answers that you have
provided above are true and correct.
------------------------
Signature
- --------
(4)Facts that would be responsive to this question include, for example,
the receipt of "special favors" from a stock promoter, such as participation in
a private placement or initial public offering, as an inducement to purchase
other securities for the Fund. Another example would be investment in securities
of a limited partnership that in turn owned warrants of a company formed for the
purpose of effecting a leveraged buy-out in circumstances where the Fund might
invest in securities related to the leveraged buyout. The foregoing are only
examples of pertinent facts and in no way limits the types of facts that may be
responsive to this question.
A-2
<PAGE> 17
Approval or Disapproval of Personal Trading Request (to be completed by
Compliance Officer):
I confirm that the above-described proposed transaction appears to be
- ---- consistent with the policies described in the Code and that the
conditions necessary(5) for approval of the proposed transaction have
been satisfied.
I do not believe the above-described proposed transaction is consistent
- ---- with the policies described in the Code or that the conditions
necessary for approval of the proposed transaction have been satisfied.
Dated: Signed:
------------------------------ -----------------------------
Title:
------------------------------
- --------
(5)In the case of a personal securities transaction by an access
person of the Fund (other than disinterested trustees of the Fund), the
Code of Ethics of the Fund requires that the Fund's Compliance Officer
determine that the proposed personal securities transaction (i) is not
potentially harmful to the Fund, (ii) would be unlikely to affect the
market in which the Fund's portfolio securities are traded, (iii) is
not related economically to securities to be purchased, sold, or held
by the Fund, (iv) the security which is the subject of the transaction
is not being considered for purchase or sale by the Fund, (v) with
regard to proposed transactions involving the purchase of an equity
security, the Fund holds no position in that same equity security, or
(vi) for transactions involving portfolio managers, the Fund has not
engaged in a transaction in the same security within the past seven
calendar days and has no intention to do so within the next seven
calendar days. In addition, the Code requires that the Fund's
Compliance Officer determine that the decision to purchase or sell the
security at issue is not the result of information obtained in the
course of the access person's relationship with the Fund.
A-3
<PAGE> 18
APPENDIX B
INITIAL HOLDINGS REPORT
- -----------------------------------
NAME
The Initial Holdings Report requires all access persons(1) of Thompson Plumb
Funds, Inc. (the "Fund") to provide information on their ownership of securities
when such persons become access persons. A report must be filed no later than 10
DAYS after the filer becomes an access person. Each report must include all
securities(2) in which the person had any direct or indirect beneficial
ownership when such person became an access person and cover all accounts in
which any securities were held for your direct or indirect benefit (unless you
have no direct or indirect influence or control over such accounts). Please
include all non-client accounts that you manage or with respect to which you
give investment or voting advice.
I (have have no ) interests in securities as described
------- ---------
above.
Please describe all reportable securities holdings on page 2. Use
additional copies of this form if necessary.
To the best of my knowledge and belief, the answers set out in this
Report are true and correct.
- ----------------------------------- ------------------------------------
Date Submitted Signature
The undersigned, , in my capacity
-----------------------------------------------
as the Fund's Compliance Officer, hereby certify receipt of this Initial
Holdings Report on the day of , 200 .
---- ------- -
------------------------------------
Compliance Officer
- --------
(1)The term "access person" is defined in the Code of Ethics.
(2)Certain securities are exempted under Section II.H of the Code.
B-1
<PAGE> 19
REPORTABLE INITIAL SECURITIES HOLDINGS
Title, number of shares and principal amount of each security in which the
access person has any direct or indirect beneficial ownership when he/she became
an access person:
<TABLE>
<S> <C> <C>
NAME OF ISSUER/TITLE OF SECURITIES NO. OF SHARES PRINCIPAL AMOUNT
</TABLE>
Name of broker, dealer, or bank with whom the access person maintains an account
in which any securities are held for his/her direct or indirect benefit as of
the date he/she came an access person:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER RELEVANT INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-2
<PAGE> 20
APPENDIX C
QUARTERLY TRANSACTION REPORT
FOR THE QUARTER ENDED , 200
------------------ -
- ------------------------------
NAME
1. Reportable Securities Transactions are all securities transactions of
access persons(1) of Thompson Plumb Funds, Inc. (the "Fund"),
regardless of the size of the securities transaction. A report must be
filed quarterly, by the tenth day after the end of each calender
quarter, whether or not you have had any securities transactions for
the prior quarter. Each report must cover all accounts in which you
have a direct or indirect beneficial ownership interest (unless you
have no influence or control over such accounts) and all non-client
accounts that you manage or with respect to which you give investment
or voting advice.
I (had had no ) reportable securities transactions
----- -----
during the above quarter. Please describe all reportable
securities transactions on page 3. Copies of confirmation
statements may be attached to a signed report in lieu of
setting forth the information otherwise required. Use
additional copies of this form if necessary.
2. Reportable Accounts are all accounts established by access persons of
the Fund in which any securities were held for the direct or indirect
benefit of the access person. A report of such accounts must be filed
quarterly, by the tenth day after the end of each calendar quarter.
I (have established have not established ) any
----- -----
accounts in which any securities were held during the quarter
for my direct or indirect benefit.
Please describe all such accounts on page 5.
- --------
(1)The term "access person" is defined in the Code of Ethics. Certain
securities are exempted under Article II.H. of the Code.
C-1
<PAGE> 21
To the best of my knowledge and belief, the answers set out in this
Report are true and correct.
- ----------------------------- ------------------------------
Date Submitted Signature
The undersigned, , in my capacity as the Fund's
----------------------------
Compliance Officer, hereby certify receipt of this Quarterly Report on the
---
day of , 200 .
--------- -
------------------------------
Compliance Officer
C-2
<PAGE> 22
REPORTABLE SECURITIES TRANSACTION(2)
Date of transaction:
------------------------------
Name of the issuer, title of security, the interest rate and maturity date (if
applicable), the number of shares or principal amount of the security purchased
or sold:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nature of transaction (i.e., purchase, sale, or other type of acquisition or
disposition):
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Price of the security at which the transaction was effected:
--------------------
- --------------------------------------------------------------------------------
Name of broker, dealer, or bank with or through whom the transaction was
effected:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Does the transaction involve:
(a) sale of securities purchased
within the last 60 days (or
the purchase of securities sold
within the last 60 days)? Yes No
----- -----
(b) purchase or sale of private
placement securities? Yes No
----- -----
(c) purchase of a security in an
initial public offering? Yes No
----- -----
- --------
(2)This Report shall not be construed as an admission by the person making
such Report that he or she has any direct or indirect beneficial interest in the
security or securities to which the Report relates.
C-3
<PAGE> 23
OTHER RELEVANT INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C-4
<PAGE> 24
SECURITIES ACCOUNTS
(COMPLETE FOR EACH ACCOUNT ESTABLISHED)
Set forth below are all accounts I have established in which any
securities were held during the quarter for my direct or indirect benefit:
Name of the broker, dealer or bank with whom I established the account:
--------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Date on which the account was established:
--------------------------------------
C-5
<PAGE> 25
APPENDIX D
ANNUAL HOLDINGS REPORT
FOR THE CALENDAR YEAR ENDED , 200
-------------- -
- -----------------------------------
NAME
This Annual Holdings Report requires all access persons(1) of Thompson Plumb
Funds, Inc. (the "Fund") to provide information annually on their ownership of
securities. A report must be filed annually and the information must be current
as of a date NO MORE THAN 30 DAYS before the report is submitted. Each report
must include all securities(2) in which you have any direct or indirect
beneficial ownership and cover all accounts in which any securities are held for
your direct or indirect benefit (unless you have no direct or indirect influence
or control over such accounts) and please include all non-client accounts that
you manage or with respect to which you give investment or voting advice.
Please describe all reportable securities holdings on page 2. Use
additional copies of this form if necessary.
To the best of my knowledge and belief, the answers set out in this
Report are true and correct.
- ----------------------------------- ------------------------------------
Date Submitted Signature
The undersigned, , in my capacity as the Fund's
------------------------------
Compliance Officer, hereby certify receipt of this Annual Holdings Report on the
day of , 200 .
- ---- ------- -
Compliance Officer
- --------
(1)The term "access person" is defined in the Code of Ethics.
(2)Certain securities are exempted under Section II.H of the Code.
D-1
<PAGE> 26
REPORTABLE ANNUAL SECURITIES HOLDINGS
Title, number of shares and principal amount of each security in which the
access person has any direct or indirect beneficial ownership:
<TABLE>
<S> <C> <C>
NAME OF ISSUER/TITLE OF SECURITIES NO. OF SHARES PRINCIPAL AMOUNT
</TABLE>
Name of broker, dealer, or bank with whom the access person maintains an account
in which any securities are held for his/her direct or indirect benefit:
--------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER RELEVANT INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D-2
<PAGE> 27
APPENDIX E
ANNUAL CERTIFICATION
I hereby certify that I (i) have read and understand the Code of Ethics
of Thompson Plumb Funds, Inc., (ii) recognize that I am subject to the Code of
Ethics, (iii) have complied with the requirements of the Code of Ethics over the
past year, and (iv) have disclosed all personal securities transactions, over
the past year, required to disclosed by the Code of Ethics.
Signed:
-------------------------------------
Date:
---------------------------------------
E-1
