<PAGE>
[ARTWORK]
PAPP AMERICA-ABROAD FUND, INC.
A NO-LOAD FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
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>
PAPP AMERICA-ABROAD FUND MORGAN STANLEY WORLD INDEX
----------------------------------------------------------------
<S> <C> <C>
12/6/91 $10,000 $10,000
6/30/96 $20,081 $16,997
----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
<S> <C> <C>
1 year
ended Since
6/30/96 Inception
------------------------------------
Papp America-
Abroad Fund 30.24% 16.48%
------------------------------------
Morgan Stanley
World Index 18.71% 12.31%
====================================
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
================================================================================
*This Fund's performance is measured against that of the Morgan Stanley World
Index. Approximately 54% of the earnings of the companies in the Fund's
portfolio are derived from foreign sources and 46% are derived from United
States sources. The Morgan Stanley World Index includes 59% foreign companies
and 41% United States companies.
2
<PAGE>
Papp America-Abroad Fund, Inc.
Dear Fellow Shareholder:
Our Fund produced good results for the first half of 1996. During the six months
ended June 30, we were up 15.1%. As the chart on the opposite page indicates,
these results were substantially better than those of the Morgan Stanley World
Index.
In my "Views From Camelback Mountain" letter dated June 25, 1996 I wrote that,
while we are comfortable with our economy, we believe that some of the smaller,
more speculative companies, particularly the IPO's (Initial Public Offerings),
were vulnerable to a decline which could cause some nervousness in the broad
markets.
Such a correction has been underway for the past two weeks. While the more
speculative sectors of the Stock Market have experienced the most severe losses,
many good quality growth stocks have also suffered.
Interestingly, the current correction began when the government reported that
employment has reached record highs and that the real wages of American workers
were again rising after years of stagnation. These data do not indicate that a
recession is around the corner. To the contrary, they indicate the economy is
healthy, a condition we believe will continue for the next few years.
Under these conditions, our country will prosper and overall corporate earnings
will continue to grow as will stock prices. This is especially true of the
companies owned by our Fund which benefit from a healthy U.S. economy, and also
benefit from an ever accelerating rate of acceptance of their products and
services around the world.
Best regards,
/s/ L. Roy Papp
---------------------
L. Roy Papp, Chairman
July 15, 1996
3
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Number Market
Common Stocks of Shares Value
- ----------------------------------------------------------------------- --------- ----------
<S> <C> <C>
INDUSTRIAL SERVICES (13.5%)
Air Express International
(Air freight forwarding) 30,000 $ 847,500
Interpublic Group of Companies, Inc.
(Worldwide advertising agencies) 22,000 1,031,250
Manpower, Inc.
(Provider of nongovernment employment services) 23,500 922,375
----------
2,801,125
----------
COMPUTERS AND SOFTWARE (11.5%)
Hewlett-Packard Company
(Manufacturer of printers, computers, and medical
electronic equipment) 7,200 717,300
Intel Corporation
(Manufacturer of microprocessors, microcontrollers, and
memory chips) 13,000 954,688
Microsoft Corporation*
(Personal computer software) 6,000 720,750
----------
2,392,738
----------
HEALTHCARE (10.3%)
Abbott Laboratories
(Healthcare products) 10,900 474,150
Johnson & Johnson
(Healthcare products) 15,000 742,500
Merck & Company
(Ethical drugs and specialty chemicals) 14,500 937,063
----------
2,153,713
----------
ELECTRICAL EQUIPMENT (9.9%)
General Electric Co.
(Diversified industrial company) 12,500 1,081,250
Emerson Electric Company
(Manufacturer of electrical and electronic products and systems) 10,900 985,087
----------
2,066,337
----------
CONSUMER PRODUCTS (9.3%)
Gillette Company
(Shaving and personal care) 16,000 998,000
Procter & Gamble Company
(Household, personal care, and food products) 10,400 942,500
----------
1,940,500
----------
DISTRIBUTORS (7.7%)
Arrow Electronics, Inc.*
(Distributor of electronic components and computer products) 15,000 646,875
Sigma-Aldrich Corp.
(Develops, manufactures, and distributes specialty chemicals) 18,000 963,000
----------
1,609,875
----------
</TABLE>
*Non-income producing security.
4
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Number Market
Common Stocks (continued) of Shares Value
- ------------------------- --------- -----------
<S> <C> <C>
FOOD AND BEVERAGE (7.7%)
CPC International
(International food processor) 9,000 $ 648,000
Coca Cola Company
(Dominant international soft drink company) 19,600 957,950
-----------
1,605,950
-----------
FINANCIAL SERVICES (6.2%)
State Street Boston Corporation
(Provider of U.S. and global securities
custodial services) 25,300 1,290,300
-----------
TELECOMMUNICATIONS (4.6%)
Motorola, Inc.
(Manufacturer of electronic equipment) 15,200 955,700
-----------
RESTAURANTS (3.9%)
McDonald's Corporation
(Fast food restaurants and franchising) 17,400 813,450
-----------
MISCELLANEOUS (14.8%)
Exxon Corp.
(Worldwide integrated oil company) 8,500 738,437
Intermagnetics General*
(Manufacturer of superconductive magnetic systems
and environmentally acceptable refrigerants) 8,200 147,600
Mattel, Inc.
(Toy manufacturer) 36,000 1,030,500
Reuters Holdings P.L.C.
(International news agency) 5,000 362,500
Verifone, Inc.*
(Supplier of transaction automation systems) 19,000 802,750
-----------
3,081,787
-----------
TOTAL COMMON STOCKS - 99.4% 20,711,475
CASH AND OTHER ASSETS, LESS LIABILITIES - .6% 127,203
-----------
NET ASSETS - 100.0% $20,838,678
===========
NET ASSET VALUE PER SHARE
(Based on 1,128,627 shares outstanding at June 30, 1996) $18.46
===========
</TABLE>
*Non-income producing security.
5
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment in securities at market value (identified
cost $13,874,114 at June 30, 1996) (Note 1) $ 20,711,475
Cash 189,797
Dividends and interest receivable 21,891
------------
Total assets $ 20,923,163
LIABILITES
Payable for investment securities purchased $ 67,340
Accrued Expenses 17,145
------------
Total liabilities $ 84,485
------------
NET ASSETS
Paid-in capital applicable to 1,128,627 outstanding
shares at June 30, 1996 $ 14,001,317
Net unrealized gain on investments 6,837,361
------------
Net assets $ 20,838,678
============
Net Asset Value Per Share (net assets/shares
outstanding) $ 18.46
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends $ 110,861
Interest 4,081
Foreign taxes withheld (637)
----------
Total investment income 114,305
----------
EXPENSES:
Management fee (Note 3) 89,671
Accounting 10,600
Filing fees 6,765
Legal 3,170
Directors' attendance fees 2,200
Custodial 1,969
Transfer agent fees 1,247
Other fees 2,467
----------
Total expenses 118,089
----------
Less fees waived by adviser (Note 3) (6,000)
----------
Net expenses 112,089
----------
Net investment income 2,216
----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Proceeds from sales of securities 2,102,681
Cost of securities sold 1,118,231
----------
Net realized gain on investments sold 984,450
Net change in unrealized gain on investments 1,511,668
----------
Net realized and unrealized gain on investments 2,496,118
----------
Net increase in net assets resulting from operations $2,498,334
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
----------------- ------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 2,216 $ 39,655
Net realized gain on investments sold 984,450 274,759
Net change in unrealized gain on investments 1,511,668 3,960,701
------------- -----------
Increase in net assets resulting from
operations 2,498,334 4,275,115
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - (39,655)
Net realized gain on investments sold (543,055) (245,291)
------------- -------------
Total distributions to shareholders (543,055) (284,946)
------------- -------------
FROM SHAREHOLDER TRANSACTIONS:
Proceeds from sale of shares 2,659,143 1,509,716
Net asset value of shares issued to shareholders
in reinvestment of net investment income and
net realized gain on investments sold 510,436 277,836
Payments for redemption of shares (274,447) (1,362,651)
------------- -------------
Increase in net assets resulting
from share transactions 2,895,132 424,901
------------- -------------
Total increase in net assets 4,850,411 4,415,070
Net assets at beginning of the period 15,988,267 11,573,197
------------- -------------
Net assets at end of period $ 20,838,678 $ 15,988,267
============= =============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
8
<PAGE>
PAPP AMERICA-ABROAD FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
(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.
9
<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 June 20, 1996, a distribution of approximately $.50 a share, aggregating
$543,055, was declared from net realized capital gains earned during 1996. The
distribution was paid on June 28, 1996, to shareholders of record on June 19,
1996.
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.
Dividends and distributions payable to its shareholders are recorded by the Fund
on the ex-dividend date.
(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 $6,000 was required in 1996. The Fund
incurred fees of $1,247 and $2,425 in 1996 and 1995, respectively, from the
manager for its services as shareholder services and transfer agent.
10
<PAGE>
The Fund's independent directors receive $600 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 six months ended June 30, 1996 and the year ended December 31, 1995,
investment transactions excluding short-term investments were as follows:
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Purchases at cost $4,366,436 $3,875,066
Sales 2,102,681 3,627,982
</TABLE>
(5) CAPITAL SHARE TRANSACTIONS:
At June 30, 1996, 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>
Six months ended June 30, 1996
Shares issued $ 2,659,143 145,865
Dividends and distributions reinvested 510,436 27,877
Shares redeemed (274,447) (15,676)
----------- -------
Net increase $ 2,895,132 158,067
=========== =======
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
=========== =======
</TABLE>
(6) UNREALIZED APPRECIATION:
Unrealized appreciation of portfolio securities for both financial statement and
federal income tax purposes is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Market value $20,711,475 $15,884,263
Original cost 13,874,114 10,558,570
----------- -----------
Net unrealized appreciation $ 6,837,361 $ 5,325,693
=========== ===========
</TABLE>
As of June 30, 1996, gross unrealized gains on investments in which market value
exceeded cost totaled $6,954,733 and gross unrealized losses on investments in
which cost exceeded market value totaled $117,372.
11
<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>
Six Months Period Ended
Ended June 30, Year Ended December 31, December 31,
---------------------------------------------------------
1996 1995 1994 1993 1992 1991 (A)
--------------- ------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 16.47 $ 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 2.49 4.52 .79 (.11) .71 .98
----------- ----------- ----------- ----------- ---------- ----------
Total from investment
operations 2.49 4.56 .89 (.01) .82 1.00
Less Distributions:
Dividend from investment
income - (.04) (.10) (.09) (.11) (.02)
Distribution of net realized
gain (.50) (.29) - (.12) (.02) -
----------- ----------- ----------- ----------- ---------- ----------
Total Distributions (.50) (.33) (.10) (.21) (.13) (.02)
Net asset value, end of period $ 18.46 $ 16.47 $ 12.24 $ 11.45 $ 11.67 $ 10.98
=========== =========== =========== =========== ========== ==========
Total return 15.14% 37.05% 7.77% (.08)% 7.44% 9.94%
=========== =========== =========== =========== ========== ==========
Ratios/Supplemental Data:
Net assets, end of period $20,838,678 $15,988,267 $11,573,197 $10,934,293 $5,013,407 $1,369,899
Expenses to average
net assets (B) 1.25%* 1.22% 1.25% 1.25% 1.25% 1.25%*
Net investment income to
average net assets (C) 1.27%* 1.50% 2.07% 2.28% 2.28% 4.51%*
Portfolio turnover rate 11.73% 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
1.31%, 1.30%, 1.33%, 3.16%, and 2.07% for the six months ended June 30,
1996, 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.
12
<PAGE>
FACTS ABOUT THE FUND
INVESTMENT OBJECTIVE
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 INVESTMENT ADVISER
The Fund's assets are managed by L. Roy Papp & Associates, the largest
investment counseling firm in Arizona, with over $568 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.
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
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.
14
