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[PHOTO APPEARS HERE]
THE L. ROY PAPP STOCK FUND, INC.
A No-Load Fund
FIRST QUARTER REPORT
MARCH 31, 1996
Managed by:
L. Roy Papp & Associates
4400 North 32/nd/ Street
Suite 280
Phoenix, AZ 85018
(602)956-1115 Local
(800)421-4004
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FACTS ABOUT THE FUND
INVESTMENT OBJECTIVE
The Fund invests for the long-term in good quality common stocks. For the most
part, the companies in which the Fund invests occupy a dominant position in
their industry and are purchased at prices which, in the opinion of the Fund's
management, do not reflect their superior long-term growth of earnings and
dividends. Once purchased, the shares of these companies are ordinarily retained
so long as management believes that the prospects for appreciation continue to
be favorable and that the securities are not greatly overvalued in the
marketplace.
THE INVESTMENT ADVISER
The Fund's assets are managed by L. Roy Papp & Associates, the largest
investment counseling firm in Arizona, with over $589 million in total assets
managed for individuals, trusts, corporations, and charitable and educational
institutions. Founded in 1978, the Firm is solely in the investment management
business. The Firm is an independent general partnership. Of its ten general
partners, seven are Chartered Financial Analysts (CFAs).
EXPERIENCED MANAGEMENT
The securities portfolio of the Fund is managed by L. Roy Papp and Rosellen C.
Papp. Mr. Papp, the founder of L. Roy Papp & Associates, has over 40 years
experience in the field of investment management. Prior to founding L. Roy Papp
& Associates, he was a senior partner of a large investment counseling firm in
Chicago, Illinois and the United States Director and Ambassador to the Asian
Development Bank, Manila, Philippines. He received his M.B.A. degree from the
Wharton School, University of Pennsylvania and his A.B. degree from Brown
University.
Rosellen C. Papp, the director of research at L. Roy Papp & Associates, has over
17 years experience in security and financial analysis. She holds a Master of
Management degree in Finance from the Kellogg Graduate School of Management,
Northwestern University and a B.B.A. degree from the University of Michigan. She
is a Chartered Financial Analyst and member of the International Society of
Financial Analysts.
"PURE" NO-LOAD
The Fund is a "pure" no-load fund in that there are no "loading" charges or
sales commissions paid in connection with the purchase of its shares. In
addition, there are no deferred sales loads, no redemption fees, and no 12b-1
fees. The Fund's investment adviser receives an annual management fee of 1%,
which is based on the Fund's average daily net asset value. Other expenses such
as auditing charges, legal fees, and custodial expenses are limited to 1/4% of
the Fund's average daily net asset value; therefore, the Fund's annual expenses
may not exceed 1-1/4%.
SUITABILITY
The Fund is suitable only for long-term investors seeking capital appreciation
and increased dividend income over time. Included are individuals of most ages,
institutional accounts such as pension and profit sharing plans, retirement
accounts such as IRA's, educational accounts for young children, and many
personal trusts. The Fund is not suitable for those with high current income
needs, aggressive investors who desire maximum short-term results and are
willing to assume the attendant risks, and those with relatively short time
horizons who may require their capital in the near-term.
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The L. Roy Papp Stock Fund, Inc.
Dear Fellow Shareholder:
Our Fund had a good first quarter of 1996. Per share net asset value rose from
$19.29 on December 31, 1995 to $20.26 on March 31, 1996, an increase of 5.0%.
Since inception, a little more than six and one quarter years ago, the Fund was
up 125.6%, expressed on a total return basis.
Again the "experts," who predicted a sharp market correction after the
remarkable upsurge in stock prices in 1995, have been disappointed. Of course,
some day they will call it correctly but, in our judgment, there are a number of
good reasons why stocks have been strong. First, corporate earnings have been
rising sharply, largely due to the often painful restructuring and downsizing
which has occurred over the last several years. Second, the Technology Age is
upon us and the United States is the unquestioned leader in creativity and
innovation. In turn, this has led to an enormous participation in the world's
economy through our strongest and best managed companies. Finally, the Cold War
is no longer with us and we need not commit such substantial resources to the
military effort.
Our securities portfolio is structured with these factors in mind. We own a
diverse group of the highest quality technology companies, two large ethical
drug companies, and a wide range of individual stocks selected because of their
dominance in their marketplace. For the most part, these companies also have
very substantial international activities. Sigma-Aldrich, the only major
addition to the portfolio during the quarter, is a good example of our
investment philosophy as it produces over 76,000 highest quality specialty
chemical items used for research and development by universities and clinical
laboratories and is rapidly expanding its overseas business which already
accounts for 42% of total sales.
Best regards,
/s/ L. Roy Papp
L. Roy Papp, Chairman
April 12, 1996
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THE L. ROY PAPP STOCK FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Number Market
Common Stocks of Shares Value
- ----------------------------------------------------------------- --------- -----------
<S> <C> <C>
ETHICAL DRUGS (12.5 %)
American Home Products Corporation
(Ethical and proprietary drugs) 11,000 $1,192,125
Merck & Company
(Ethical drugs and specialty chemicals) 47,500 2,956,875
Mylan Laboratories, Inc.
(Manufacturer of prescription generic drugs) 78,150 1,641,150
----------
5,790,150
----------
DISTRIBUTORS (11.8%)
Marshall Industries, Inc.*
(Distributor of industrial electronic components) 109,000 3,324,500
Sigma-Aldrich Corp.
(Develops, manufactures, and distributes specialty chemicals) 13,000 744,250
W.W. Grainger
(Distributor and manufacturer of electric equipment) 21,200 1,423,050
----------
5,491,800
----------
CONSUMER SERVICES (11.0%)
G&K Services Class A
(Uniform rental service) 67,000 1,792,250
Service Corporation International
(Funeral service; cemetery owner/operator) 67,500 3,290,625
----------
5,082,875
----------
FINANCIAL SERVICES (8.8 %)
Northern Trust Corporation
(Bank specializing in trust services) 25,000 1,350,000
State Street Boston Corporation
(Provider of securities custodial services) 54,600 2,730,000
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4,080,000
----------
RETAIL STORES (8.7%)
Albertson's Inc.
(Regional retail grocery chain) 51,800 1,923,075
May Department Stores Company
(Department store operator) 12,500 603,125
Walgreen Company
(Retail drug store chain) 47,000 1,533,375
----------
4,059,575
----------
COMPUTERS AND SOFTWARE (8.4 %)
Hewlett-Packard Company
(Manufacturer of printers, computers and medical
electronic equipment) 12,000 1,128,000
Intel Corporation
(Manufacturer of microprocessors, microcontrollers,
and memory chips) 20,000 1,137,500
Microsoft Corporation*
(Personal computer software) 16,000 1,650,000
----------
3,915,500
----------
INDUSTRIAL SERVICES (7.8 %)
Interpublic Group of Companies, Inc.
(Worldwide advertising agencies) 60,000 2,835,000
Manpower, Inc.
(Provider of nongovernment employment services) 26,000 806,000
----------
3,641,000
----------
</TABLE>
*Non-income producing security.
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THE L. ROY PAPP STOCK FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
MARCH 31, 1996
<TABLE>
<CAPTION>
Number Market
Common Stocks (continued) of Shares Value
- ----------------------------------------------------------------------- --------- ------------
<S> <C> <C>
CONSUMER PRODUCTS (6.6%)
Clorox Company
(Manufacturer of bleach and other consumer products) 14,600 $ 1,257,425
Procter & Gamble Company
(Household, personal care, and food products) 14,700 1,245,825
Sara Lee Corporation
(International consumer products) 17,000 554,625
-----------
3,057,875
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TELECOMMUNICATIONS (5.3%)
Motorola, Inc.
(Manufacturer of electronic equipment) 46,000 2,438,000
-----------
ELECTRICAL EQUIPMENT (4.4 %)
Pitney Bowes, Inc.
(Manufacturer of postage meters) 12,600 617,400
Emerson Electric Company
(Manufacturer of electrical and electronic products and systems) 17,500 1,413,125
-----------
2,030,525
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RESTAURANTS (4.0%)
McDonald's Corporation
(Fast food restaurants and franchising) 39,000 1,872,000
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MISCELLANEOUS (9.4%)
Exxon Corp.
(Worldwide integrated oil company) 4,000 326,500
Intermagnetics General*
(Manufacturer of superconductive magnetic systems
and environmentally acceptable refrigerant) 22,500 382,500
Mattel, Inc.
(Toy manufacturer) 83,750 2,271,719
Verifone, Inc.*
(Supplier of transaction automation systems) 33,000 1,386,000
-----------
4,366,719
-----------
TOTAL COMMON STOCKS - 98.7% 45,826,019
CASH AND OTHER ASSETS, LESS LIABILITIES - 1.3% 583,079
-----------
NET ASSETS - 100% $46,409,098
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NET ASSET VALUE PER SHARE
(Based on 2,290,729 shares outstanding at March 31, 1996) $20.26
======
</TABLE>
*Non-income producing security.
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THE L. ROY PAPP STOCK FUND, INC.
DIRECTORS
James K. Ballinger L. Roy Papp
Amy S. Clague Rosellen C. Papp
Robert L. Mueller Bruce C. Williams
Harry A. Papp
OFFICERS
Chairman - L. Roy Papp President - Harry A. Papp
VICE PRESIDENTS
Victoria S. Cavallero Robert L. Mueller
George D. Clark, Jr. Rosellen C. Papp
Jeffrey N. Edwards Bruce C. Williams
Robert L. Hawley
SECRETARY - Robert L. Mueller
ASSISTANT SECRETARY - Barbara D. Perleberg
TREASURER - Rosellen C. Papp
ASSISTANT TREASURER - Julie A. Hein
INVESTMENT ADVISER
L. Roy Papp & Associates
4400 North 32nd Street, Suite 280
Phoenix, Arizona 85018
Telephone: (602) 956-1115
CUSTODIAN
First Interstate Bank of Arizona
100 West Washington Street
Phoenix, Arizona 85003
SHAREHOLDER SERVICES AND TRANSFER AGENT
L. Roy Papp & Associates
4400 North 32nd Street, Suite 280
Phoenix, Arizona 85018
Telephone: (602) 956-1115, (800) 421-4004
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
2 North Central Avenue, Suite 1000
Phoenix, Arizona 85004
LEGAL COUNSEL
Bell, Boyd & Lloyd
70 West Madison Street
Chicago, Illinois 60602
This report is submitted for the general information of the shareholders of the
Fund. The report is not authorized for distribution to prospective investors in
the Fund unless it is accompanied or preceded by a currently effective
prospectus of the Fund. No sales charge to the shareholder or to the new
investor is made in offering the shares of the Fund.
