<PAGE>
[LOGO]
PAPP AMERICA-ABROAD FUND, INC.
A NO-LOAD FUND
ANNUAL REPORT
DECEMBER 31, 1995
Managed by:
L. Roy Papp & Associates
4400 North 32nd Street
Suite 280
Phoenix, AZ 85018
(602)956-1115 Local
(800)421-4004
<PAGE>
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
PAPP AMERICA-ABROAD FUND, INC. AND
THE MORGAN STANLEY WORLD INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Years Papp America-Abroad Fund Morgan Stanley World Index
- -------------------------------------------------------------------------
<S> <C> <C>
12/6/91 $10,000 $10,000
1991 10,994 10,720
1992 11,811 10,162
1993 11,801 12,449
1994 12,718 13,084
1995 17,432 15,792
- -------------------------------------------------------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
=========================================================================
</TABLE>
*Last year, the Fund's performance was compared to that of the Standard & Poor's
500 Stock Index. However, given the Fund's investment objective and the fact
that approximately 50% of the earnings of the companies in its portfolio are
derived from foreign sources, and 50% from United States sources, it is believed
that a comparison with The Morgan Stanley World Index (which includes
approximately 59% foreign companies and 41% U.S. companies) is more appropriate.
For the year ended December 31, 1995, on a total return basis, the Fund was
+37.1%, the S&P 500 Stock Index was +37.3%, and The World Index was +20.7%.
===================================
AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------
Since
1 Year Inception
- -----------------------------------
Papp-America- 37.05% 14.63%
Abroad Fund
- -----------------------------------
Morgan Stanley
World Index 20.70% 11.88%
===================================
2
<PAGE>
Papp America-Abroad Fund, Inc.
Dear Fellow Shareholder:
Our Fund had fine results in 1995. On a total return basis, we were up 37.1%
for the year. Since inception, a little more than four years ago, we were up
74.2%. As the chart on the opposite page indicates, our long-term performance
comfortably exceeds that of the Morgan Stanley World Index against which we
compare ourselves.
As you know, our Fund is almost entirely invested in United States companies, a
major portion of whose earnings are derived from foreign activities. We believe
that well-managed, growth oriented U.S. companies are uniquely suited to
successfully compete in the worldwide marketplace. Some, e.g., Coca Cola,
Gillette, McDonald's, and Proctor & Gamble, are household names no matter where
you happen to live. Others, such as Intel, Hewlett-Packard, Microsoft, and
Motorola, are technology powerhouses whose leadership in their various areas of
expertise is unquestioned. Most of these companies performed very well last
year.
The most important factor in our 1995 performance was that we remained fully
invested throughout the year and thus were able to fully participate in the
remarkable increase in stock prices. As you may have read in the newspapers,
many of the market pundits believed that stock prices would fall sharply and
positioned themselves accordingly. We disagreed with that assessment.
In my Views from Camelback Mountain letter dated December 31, 1994, I made the
following statement:
"I believe the economy will show a good steady growth for the next two or
three years. Interest rates will be more stable and climb less. I do
expect more inflation, but at a moderate rate. I continue to think stocks
are attractive for the long run and still offer the best long-term
returns."
Even with the Federal Reserve cut in interest rates, I continue to believe that
our economy will grow only modestly this year. I think it will be slow with
many complaints. We expect next year to be up too, and perhaps a little bit
stronger. I am not upset with a small reduction in the budget deficit. I am
concerned that a couple years from now inflation will be a little bit higher as
will interest rates. The stock market has started the year very strongly, and I
feel hopeful that stocks will go up the rest of the year at a modest pace.
However, I would be very cautious about cyclical stocks and very long bonds.
Best regards,
/s/ L. Roy Papp
L. Roy Papp, Chairman
February 7, 1996
3
<PAGE>
Arthur Andersen LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of the
Papp America-Abroad Fund, Inc.:
We have audited the accompanying statements of assets and liabilities of the
Papp America-Abroad Fund, Inc. (the Fund) as of December 31, 1995 and 1994,
including the schedule of portfolio investments as of December 31, 1995, and the
related statements of operations and statements of changes in net assets for the
two years then ended, and the financial highlights for the three years then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Papp America-Abroad Fund, Inc. for the
year ended December 31, 1992, and the period from December 6, 1991 (date of
commencement of operations) through December 31, 1991, were audited by other
auditors whose report dated January 29, 1993, expressed an unqualified opinion
on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Papp America-Abroad Fund, Inc. as of December 31, 1995 and 1994, and the results
of its operations and changes in its net assets for the two years then ended and
its financial highlights for the three years then ended, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
January 19, 1996.
4
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market
Number Value
Common Stocks of Shares (Note 1)
- --------------------------------------------------------------- --------- -----------
<S> <C> <C>
INDUSTRIAL SERVICES (13.4%)
Air Express International
(Air freight forwarding) 30,000 $ 690,000
Interpublic Group of Companies, Inc.
(Worldwide advertising agencies) 19,000 824,125
Manpower, Inc.
(Provider of nongovernment employment services) 22,500 632,813
----------
2,146,938
----------
HEALTHCARE (12.6%)
Abbott Laboratories
(Healthcare products) 10,900 455,075
Johnson & Johnson
(Healthcare products) 7,000 599,375
Merck & Company
(Ethical drugs and specialty chemicals) 14,500 953,375
----------
2,007,825
----------
FOOD AND BEVERAGE (12.4%)
CPC International
(International food processor) 9,000 617,625
Coca Cola Company
(Dominant international soft drink company) 11,800 876,150
International Flavors & Fragrances, Inc.
(Creator and manufacturer of flavors and fragrances) 10,300 494,400
----------
1,988,175
----------
CONSUMER PRODUCTS (12.0%)
Gillette Company
(Shaving and personal care) 17,000 886,125
Procter & Gamble Company
(Household, personal care, and food products) 10,400 863,200
Sara Lee Corporation
(International consumer products) 5,000 159,375
----------
1,908,700
----------
FINANCIAL SERVICES (10.8%)
Advance Ross Corporation*
(Provider of value-added tax refunds) 31,000 871,875
State Street Boston Corporation
(Provider of U.S. and global securities custodial services) 19,000 855,000
----------
1,726,875
----------
</TABLE>
*Non-income producing security.
The accompanying notes are an integral part of this schedule.
5
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market
Number Value
Common Stocks (continued) of Shares (Note 1)
- -------------------------------------------------------------------- --------- ------------
<S> <C> <C>
COMPUTERS AND SOFTWARE (9.6%)
Hewlett-Packard Company
(Manufacturer of printers, computers, and medical
electronic equipment) 4,000 $ 335,000
Intel Corporation
(Manufacturer of microprocessors, microcontrollers, and
memory chips) 12,000 681,000
Microsoft Corporation*
(Personal computer software) 6,000 526,500
-----------
1,542,500
-----------
RESTAURANTS (5.5%)
McDonald's Corporation
(Fast food restaurants and franchising) 19,400 875,425
-----------
TELECOMMUNICATIONS (5.4%)
Motorola, Inc.
(Manufacturer of electronic equipment) 15,200 866,400
-----------
ELECTRICAL EQUIPMENT (5.3%)
Emerson Electric Company
(Manufacturer of electrical and electronic products and systems) 10,400 850,200
-----------
PUBLISHING (1.7%)
Reuters Holdings P.L.C.
(International news agency) 5,000 275,625
-----------
ENVIRONMENTAL/RECYCLING (1.1%)
Intermagnetics General*
(Manufacturer of superconductive magnetic systems
and environmentally acceptable refrigerants) 8,200 172,200
-----------
MISCELLANEOUS (9.5%)
Mattel, Inc.
(Toy manufacturer) 27,200 836,400
Verifone, Inc.*
(Supplier of transaction automation systems) 24,000 687,000
-----------
1,523,400
-----------
TOTAL COMMON STOCKS - 99.3% 15,884,263
CASH AND OTHER ASSETS, LESS LIABILITIES - .7% 104,004
-----------
NET ASSETS - 100.0% $15,988,267
===========
NET ASSET VALUE PER SHARE
(Based on 970,561 shares outstanding at December 31, 1995) $16.47
===========
</TABLE>
*Non-income producing security.
The accompanying notes are an integral part of this schedule.
6
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Investment in securities at market value (identified
cost $10,558,570 and $10,036,727 at December 31,
1995 and 1994, respectively) (Note 1) $15,884,263 $11,401,719
Cash 83,326 125,153
Dividends and interest receivable 20,678 31,325
Subscription receivable - 15,000
----------- -----------
Total assets $15,988,267 $11,573,197
=========== ===========
NET ASSETS
Paid-in capital applicable to 970,561 outstanding
shares at December 31, 1995 and 945,228
outstanding shares at December 31, 1994 $10,662,574 $10,237,673
Undistributed net realized loss on investments - (29,468)
Net unrealized gain on investments 5,325,693 1,364,992
----------- -----------
Net assets $15,988,267 $11,573,197
=========== ===========
Net Asset Value Per Share (net assets/share
outstanding) $ 16.47 $ 12.24
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 201,325 $ 214,189
Interest 7,941 5,289
Foreign taxes withheld (1,754) (1,071)
---------- ----------
Total investment income 207,512 218,407
---------- ----------
EXPENSES:
Management fee (Note 3) 137,892 108,170
Accounting 9,700 10,725
Filing fees 4,584 4,127
Directors' attendance fees 3,500 4,000
Custodial 4,963 3,400
Transfer agent fees 2,425 2,287
Legal 1,118 1,169
Other fees 3,675 3,340
---------- ----------
Total expenses 167,857 137,218
---------- ----------
Less fees waived by adviser (Note 3) - (5,750)
---------- ----------
Net expenses 167,857 131,468
---------- ----------
Net investment income 39,655 86,939
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Proceeds from sales of securities 3,627,982 1,857,818
Cost of securities sold 3,353,223 1,887,286
---------- ----------
Net realized gain (loss) on investments sold 274,759 (29,468)
Net change in unrealized gain on investments 3,960,701 763,886
---------- ----------
Net realized and unrealized gain on investments 4,235,460 734,418
---------- ----------
Net increase in net assets resulting from operations $4,275,115 $ 821,357
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 39,655 $ 86,939
Net realized gain (loss) on investments sold 274,759 (29,468)
Net change in unrealized gain on investments 3,960,701 763,886
----------- -----------
Increase in net assets resulting from
operations 4,275,115 821,357
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (39,655) (86,939)
Net realized gain on investments sold (245,291) -
----------- -----------
Total distributions to shareholders (284,946) (86,939)
----------- -----------
FROM SHAREHOLDER TRANSACTIONS:
Proceeds from sale of shares 1,509,716 877,737
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
net realized gain on investments sold 277,836 83,389
Payments for redemption of shares (1,362,651) (1,056,640)
----------- -----------
Increase (decrease) in net assets resulting
from share transactions 424,901 (95,514)
----------- -----------
Total increase in net assets 4,415,070 638,904
Net assets at beginning of the year 11,573,197 10,934,293
----------- -----------
Net assets at end of year $15,988,267 $11,573,197
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) SIGNIFICANT ACCOUNTING POLICIES:
Papp America-Abroad Fund, Inc. (the Fund) was incorporated on August 15, 1991,
and is registered under the Investment Company Act of 1940 as an open-end
diversified management investment company. Operations of the Fund commenced on
December 6, 1991. The Fund invests with the objective of long-term capital
growth in the common stocks of United States companies that have substantial
international activities and, to a much lesser extent, in the common stocks of
foreign enterprises that are traded publicly in United States securities
markets.
The policies described below are followed by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
(A) INVESTMENT IN SECURITIES
For purposes of computing the net asset value of a share of the Fund, securities
traded on securities exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales prices at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Other securities traded over-the-counter are valued at the most
recent bid quotations. Securities for which quotations are not available and
any other assets are valued at a fair value as determined in good faith by the
Board of Directors. The price per share for a purchase order or redemption
request is the net asset value next determined after receipt of the order.
The net asset value of a share of the Fund is determined as of the close of
trading on the New York Stock Exchange, currently 4:00 p.m. New York City time,
on any day on which that Exchange is open for trading, by dividing the market
value by the number of shares outstanding, and rounding the result to the
nearest full cent.
Investment transactions are accounted for on the trade date (the date the order
to buy or sell is executed). Dividend income is recorded on the ex-dividend
date and interest is recorded on the accrual basis. Realized gains and losses
from investment transactions and unrealized appreciation or depreciation are
calculated on the identified cost basis.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
10
<PAGE>
(B) FEDERAL INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code which are applicable to regulated investment companies. The Code requires
that substantially all of the Fund's taxable income, as well as any net realized
gain on sales of investments, is to be distributed to the shareholders. The
Fund has complied with this policy and, accordingly, no provision for federal
income taxes is required.
(2) DIVIDENDS AND DISTRIBUTIONS:
Dividends and capital gain distributions are reinvested in additional shares of
the Fund unless the shareholder has requested in writing to be paid by check.
On December 21, 1995, a dividend of approximately $.010567 a share, aggregating
$10,435, was declared from net investment income earned during 1995. A
distribution was also declared from net realized long-term capital gains of
approximately $.256864 a share, aggregating $245,291. The dividend and
distribution were paid on December 29, 1995, to shareholders of record on
December 20, 1995.
On June 21, 1995, a dividend of approximately $.031 a share, aggregating
$29,220, was declared from net investment income earned during 1995. The
dividend was paid on June 30, 1995, to shareholders of record on June 20, 1995.
On December 21, 1994, a dividend of approximately $.042853 a share, aggregating
$40,799, was declared from net investment income earned during 1994. The
dividend was paid on December 30, 1994, to shareholders of record on December
20, 1994.
On June 22, 1994, a dividend of approximately $.0516 a share, aggregating
$46,140, was declared from net investment income earned during 1994. The
dividend was paid on June 30, 1994, to shareholders of record on June 22, 1994.
Dividends and distributions payable to its shareholders are recorded by the Fund
on the ex-dividend date. At December 31, 1994, there was an undistributed net
realized loss on investment transactions of $29,468. This loss was offset
against the net realized gains which were distributed in 1995.
(3) TRANSACTIONS WITH AFFILIATES:
The Fund has an investment advisory and management services agreement with L.
Roy Papp & Associates (Manager). The Manager receives from the Fund, as
compensation for its services, a fee accrued daily and payable monthly at an
annual rate of 1% of the Fund's net assets. The Manager will reimburse the Fund
to the extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.25% of its average daily net asset value in such year. A
management fee expense reimbursement of $5,750 was required in 1994. The Fund
incurred fees of $2,425 and $2,287 in 1995 and 1994, respectively, from the
manager for its services as shareholder services and transfer agent.
11
<PAGE>
The Fund's independent directors receive $500 for each meeting of the Board of
Directors attended on behalf of the Fund. Certain officers and/or directors of
the Fund are also partners of the Manager and shareholders in the Fund. The
Fund made no payments to its officers or directors, except to independent
directors as stated above.
(4) PURCHASES AND SALES OF SECURITIES:
For the year ended December 31, investment transactions excluding short-term
investments were as follows:
<TABLE>
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Purchases at cost $3,875,066 $1,674,040
Sales 3,627,982 1,857,818
</TABLE>
(5) CAPITAL SHARE TRANSACTIONS:
At December 31, 1995, there were 5,000,000 shares of $.01 par value capital
stock authorized. Transactions in capital shares of the Fund were as follows:
<TABLE>
<CAPTION>
Proceeds Shares
------------ --------
<S> <C> <C>
Year ended December 31, 1995
Shares issued $ 1,509,716 105,481
Dividends and distributions reinvested 277,836 17,193
Shares redeemed (1,362,651) (97,341)
----------- -------
Net increase $ 424,901 25,333
=========== =======
Year ended December 31, 1994
Shares issued $ 877,737 74,866
Dividends and distributions reinvested 83,389 7,075
Shares redeemed (1,056,640) (92,075)
----------- -------
Net decrease $ (95,514) (10,134)
=========== =======
</TABLE>
(6) UNREALIZED APPRECIATION:
Unrealized appreciation of portfolio securities for both financial statement and
federal income tax purposes is as follows:
<TABLE>
<CAPTION>
1995 1994
----------- ------------
<S> <C> <C>
Market value $15,884,263 $11,401,719
Original cost 10,558,570 10,036,727
----------- -----------
Net unrealized appreciation $ 5,325,693 $ 1,364,992
=========== ===========
</TABLE>
As of December 31, 1995, gross unrealized gains on investments in which market
value exceeded cost totaled $5,328,808 and gross unrealized losses on
investments in which cost exceeded market value totaled $3,115.
12
<PAGE>
(7) SELECTED FINANCIAL HIGHLIGHTS:
The following selected per share data has been calculated using revenues and
expenses for the periods indicated, divided by the weighted average number of
shares outstanding during the periods. The ratios are calculated using the
revenues and expenses for the periods, divided by the weighted average of the
daily net assets of the Fund.
<TABLE>
<CAPTION>
Year Ended December 31, Period Ended
------------------------------------------------------ December 31,
1995 1994 1993 1992 1991 (A)
------------ ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 12.24 $ 11.45 $ 11.67 $ 10.98 $ 10.00
Income from investment
operations:
Net investment income .04 .10 .10 .11 .02
Net realized and unrealized
gain (loss) on investments 4.52 .79 (.11) .71 .98
----------- ----------- ----------- ---------- ----------
Total from investment
operations 4.56 .89 (.01) .82 1.00
Less Distributions:
Dividend from investment
income (.04) (.10) (.09) (.11) (.02)
Distribution of net realized
gain (.29) - (.12) (.02) -
----------- ----------- ----------- ---------- ----------
Total Distributions (.33) (.10) (.21) (.13) (.02)
Net asset value, end of period $ 16.47 $ 12.24 $ 11.45 $ 11.67 $ 10.98
=========== =========== =========== ========== ==========
Total return 37.05% 7.77% (.08)% 7.44% 9.94%
=========== =========== =========== ========== ==========
Ratios/Supplemental Data:
Net assets, end of period $15,988,267 $11,573,197 $10,934,293 $5,013,407 $1,369,899
Expenses to average
net assets (B) 1.22% 1.25% 1.25% 1.25% 1.25%*
Net investment income to
average net assets (C) 1.50% 2.07% 2.28% 2.28% 4.51%*
Portfolio turnover rate 26.65% 16.00% 8.00% 16.00% 0.00%
</TABLE>
* Annualized
(A) From the date of commencement of operations (December 6, 1991).
(B) If the Fund had paid all of its expenses and there had been no
reimbursement by the investment adviser, this ratio would have been
1.30%, 1.33%, 3.16% and 2.07% for the years ended December 31, 1994,
1993, 1992 and the period ended December 31, 1991.
(C) Computed giving effect to investment adviser's expense limitation
undertaking.
13
<PAGE>
PAPP AMERICA-ABROAD 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
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.
