* For the period March 31, 2008 (inception) through November 30, 2008.
| NOTES TO FINANCIAL STATEMENTS (Unaudited) |
| May 31, 2009 |
NOTE 1 - ORGANIZATION
Thompson Plumb Funds, Inc. (the “Company”) is a Wisconsin corporation registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end, diversified management investment company.
The Company consists of separate mutual funds series (each, a “Fund,” and collectively, the “Funds”): Thompson Plumb Growth Fund (the “Growth Fund”), Thompson Plumb MidCap Fund (the “MidCap Fund”) and Thompson Plumb Bond Fund (the “Bond Fund”). The assets and liabilities of each Fund are segregated and a shareholder’s interest is limited to the Fund in which the shareholder owns shares.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements.
SECURITY VALUATION - Each Fund’s investments are valued at their market prices (generally the last reported sales price on the exchange where the securities are primarily traded or, for Nasdaq-listed securities, at their Nasdaq Official Closing Prices) or, where market quotations are not readily available or are unreliable, at fair value as determined in good faith pursuant to procedures established by the Funds’ Board of Directors (the “Funds’ Board”). Market quotations for the common stocks in which the Funds invest are nearly always readily available; however, market quotations for debt securities are often not readily available. Fair values of debt securities are typically based on valuations published by an independent pricing service, which uses various valuation methodologies such as matrix pricing and other analytical pricing models as well as market transactions and dealer quotations. Debt securities with remaining maturities of 60 days or less are valued at amortized cost basis.
When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the Pricing Policies and Procedures adopted by the Funds’ Board, which includes factors such as fundamental analytical data relating to the investment, which may include consideration of yields or prices of securities of comparable quality, coupon rate, maturity and type of issue, nature and duration of any restrictions on disposition of the security and an evaluation of forces that influence the market in which the securities are purchased or sold. Fair value pricing is an inherently subjective process, and no single standard exists for determining fair value. Different funds could reasonably arrive at different values for the same security.
As of May 31, 2009, a corporate bond held by the Bond Fund was fair valued and the value of the security represented approximately 0.094% of the net assets of the Fund.
The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an investment or pay to transfer a liability in an orderly transaction with an independent buyer in the principal market, or in the absence of a principal market the most advantageous market for the investment or liability. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Level 1 – Quoted prices in active markets for identical securities.
Level 2 – Other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 – Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments).
Inputs may include price information, specific and broad credit data, liquidity statistics, and other factors. The Fund considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. The determination of what constitutes “observable” requires significant judgment by the Fund. The categorization of a financial instrument within
30
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) | |
| May 31, 2009 | |
the hierarchy is based upon the pricing transparency of the instrument and does not necessarily correspond to the Fund’s perceived risk of that instrument. Investments whose values are based on quoted market prices in active markets, and are therefore classified within level 1, include active listed equities and certain U.S. government obligations.
Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. These include certain U.S. government obligations, most government agency securities, investment-grade corporate bonds, and less liquid listed equities. As level-2 investments include positions that are not traded in active markets, valuations may be adjusted to reflect illiquidity.
Investments classified within level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level-3 instruments include private-placement and less liquid corporate debt securities. When observable prices are not available for these securities, the Fund uses one or more valuation techniques (e.g., the market approach, the income approach or, the cost approach) for which sufficient and reliable data is available. Within level 3, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. The inputs used by the Fund in estimating the value of level-3 investments include the original transaction price and recent transactions in the same or similar instruments.
The following is a summary of the inputs used to value the Funds’ net assets as of May 31, 2009:
| | Investments in Securities |
| Valuation Inputs | Growth Fund | | MidCap Fund | | Bond Fund |
| Level 1 – Quoted prices | $131,593,860 | | | $6,126,704 | | | $ | – |
| Level 2 – Other significant observable inputs | 116,128 | | | 824 | | | | 46,659,481 |
| Level 3 – Significant unobservable inputs | – | | | – | | | | – |
| Total | | $131,709,988 | | | $6,127,528 | | | $ | 46,659,481 |
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Investment securities transactions are accounted for on the trade date. Gains or losses realized on sales of securities are determined by comparing the identified cost of the security lot sold with the net sales proceeds. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities on the same basis for book and tax purposes. Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned.
SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED-DELIVERY BASIS - Each Fund may purchase securities on a when-issued or delayed-delivery basis. When-issued securities are securities purchased with delivery to occur at a later date at a stated price and/or yield, thereby involving the risk that the price and/or yield obtained may be more or less than those available in the market when delivery takes place. At the time a Fund makes a commitment to purchase a security on a when-issued basis, the Fund records the transaction and reflects the value of the security in determining net asset value. Each Fund designates and maintains cash and marketable securities at least equal in value to commitments for when-issued securities.
MORTGAGE DOLLAR ROLLS - The Bond Fund may enter into mortgage dollar roll transactions in which the fund sells a mortgage-backed security to a counterparty and simultaneously enters into an agreement with the same counterparty to buy back a similar security on a specific future date at a predetermined price. Each mortgage dollar roll is treated as a financing transaction; therefore, any gain or loss is considered unrealized until the roll reaches completion. Risks may arise due to the delayed payment date and the potential inability of counterparties to complete the transaction. Income is generated as consideration for entering into these transactions and is included in interest income on the accompanying financial statements.
VARIABLE-RATE DEMAND NOTES - The Funds invest in short-term variable-rate demand notes, which are unsecured instruments. The Funds may be susceptible to credit risk with respect to these instruments to the extent the issuer defaults on its payment obligation.
31
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) | |
| May 31, 2009 | |
PERMANENT BOOK AND TAX DIFFERENCES - Generally accepted accounting principles require that permanent financial reporting and tax differences relating to shareholder distributions be reclassified in the capital accounts.
EXPENSES - Each Fund is charged for those expenses that are directly attributed to it. Expenses that are not readily identifiable to a specific Fund are generally allocated among the Funds in proportion to the relative sizes of the Funds.
USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders from net investment income and realized gains on securities for the Growth Fund and MidCap Fund normally are declared at least annually. Bond Fund distributions to shareholders from net investment income normally are declared on a quarterly basis, and distributions to shareholders from realized gains on securities normally are declared at least annually. Distributions are recorded on the ex-dividend date.
FEDERAL INCOME TAXES - No provision has been made for federal income taxes since the Funds have elected to be taxed as regulated investment companies and intend to distribute substantially all income to shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies.
DIRECTED BROKERAGE ARRANGEMENTS - The Funds have directed brokerage arrangements with Fidelity Capital Markets, BNY Brokerage and Trade Manage Capital, Inc. Upon purchase and/or sale of the investment securities at best execution, the Funds pay brokerage commissions to Fidelity Capital Markets, BNY Brokerage and Trade Manage Capital, Inc. These commission payments generate non-refundable cumulative credits, which are available to pay certain expenses of the Funds. There were no directed brokerage credits during the six-month period ended May 31, 2009.
LINE OF CREDIT - The Funds have established a line of credit (“LOC”) with U.S. Bank N.A. which expires November 15, 2009 used for temporary liquidity needs. The LOC is used primarily to finance redemption payments. Each of the individual Fund’s borrowing under the LOC is limited to either 5% of the market value of that Fund’s total assets or any explicit borrowing limits imposed by the Funds’ Board, whatever is less. As of May 31, 2009, the limits established by the Funds’ Board are: Growth Fund - $10,000,000, MidCap Fund - $200,000 and Bond Fund - $1,000,000. The following table shows the average balance, average interest rate and interest expense incurred by the Funds on borrowings under the LOC for the six-month period ended May 31, 2009.
| | | Average | | Average | | Interest |
| | Fund | | | Balance | | Interest Rate | | Expense |
| Growth Fund | | $ | 277,560 | | 3.250% | | | $4,655 | |
| MidCap Fund | | $ | 2,104 | | 3.250% | | | $ 35 | |
| Bond Fund | | $ | 24,720 | | 3.250% | | | $ 406 | |
GUARANTEES AND INDEMNIFICATIONS - Under the Fund’s organizational documents, each Director, officer, employee or other agent of the Fund (including the Fund’s investment manager) is indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts and believe the risk of loss to be remote.
OFFERING COSTS - The MidCap Fund incurred $31,080 of offering costs which are being amortized over a period of 12 months. For the six-month period ended May 31, 2009, the MidCap Fund expensed $10,303.
32
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) | |
| May 31, 2009 | |
ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES - Effective May 31, 2008, the Fund adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes”. FIN 48 requires the evaluation of tax positions taken on previously filed tax returns or expected to be taken on future returns. These positions must meet a “more-likely-than-not” standard that, based on the technical merits, have more than fifty percent likelihood of being sustained by the applicable tax authority. In evaluating whether a tax position has met the recognition threshold, the Fund must presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax expense in the current year.
FIN 48 requires the Fund to analyze all open tax years, as defined by the Statute of Limitations, for all major jurisdictions. Open tax years are those that are open for exam by taxing authorities. As of November 30, 2008, open Federal tax years include the tax years ended November 2005 through 2007. The Fund has no examinations in progress.
The Fund has reviewed all open tax years and major jurisdictions and concluded that the adoption of FIN 48 resulted in no effect to the Fund’s financial position or results of operations. There is no tax liability resulting from unrecorded tax benefits relating to uncertain income tax positions for the six-month period ended May 31, 2009. The Fund is also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
NOTE 3 - INVESTMENT ADVISORY AND ADMINISTRATIVE AND ACCOUNTING SERVICES AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Investment Advisory Agreement pursuant to which Thompson Investment Management, Inc. (“TIM”) is retained by the Funds provides for compensation to TIM (computed daily and paid monthly) at the following annual rates: for the Growth Fund and MidCap Fund - 1.00% of the first $50 million of average daily net assets and 0.90% of average daily net assets in excess of $50 million; and for the Bond Fund - 0.65% of the first $50 million of average daily net assets and 0.60% of average daily net assets in excess of $50 million.
The Advisor is contractually bound to waive management fees and/or reimburse expenses incurred by the Funds through March 31, 2010 so that the annual operating expenses of the Funds do not exceed the following percentages of their respective average daily net assets: MidCap Fund-1.30% and Bond Fund-0.80%.
For the six-month period ended May 31, 2009, the Advisor reimbursed expenses incurred by the MidCap Fund in the amount of $88,725 so that that annual operating expenses did not exceed 1.30% of its average daily net assets. For the six-month period ended May 31, 2009, the Advisor reimbursed expenses incurred by the Bond Fund in the amount of $151,290 so that that annual operating expenses did not exceed 0.80% of its average daily net assets.
Pursuant to an Administrative and Accounting Services Agreement, TIM maintains the Funds’ financial records in accordance with the 1940 Act, prepares all necessary financial statements of the Funds and calculates the net asset value per share of the Funds on a daily basis. As compensation for its services, each Fund pays TIM a fee computed daily and payable monthly at the annual rate of 0.15% of average daily net assets up to $30 million, 0.10% of the next $70 million of average daily net assets and 0.025% of average daily net assets in excess of $100 million, with an annual minimum fee of $30,000 per Fund. The calculations of daily net asset value are subcontracted to U.S. Bancorp Fund Services, resulting in fees paid by TIM in the amounts of $17,963, $16,656 and $16,656 for the Growth Fund, MidCap Fund and Bond Fund, respectively, for the six-month period ended May 31, 2009.
As of May 31, 2009, retirement plan investments by certain employees of the Advisor represent 1.20%, 7.81% and 0.13% of the net assets of the Growth Fund, MidCap Fund and Bond Fund, respectively.
33
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) | |
| May 31, 2009 | |
NOTE 4 - FUND SHARE TRANSACTIONS
Transactions in shares of the Funds were as follows:
| (In thousands) | | | | | | | | | | | | | |
| Six-Month Period | | | | | | | |
| Ended May 31, 2009 | | Year Ended |
| (Unaudited) | | November 30, 2008 |
| Shares | | Dollars | | Shares | | Dollars |
| Growth Fund | | | | | | | | | | | | | |
| Shares sold | 392 | | | $ | 8,003 | | | 561 | | | $ | 18,264 | |
| Shares issued in reinvestment of dividends | 92 | | | | 1,864 | | | 102 | | | | 3,909 | |
| Shares issued in reinvestment of realized gains | – | | | | – | | | 1,659 | | | | 63,695 | |
| Shares redeemed | (1,438 | ) | | | (27,964 | ) | | (7,186 | ) | | | (253,927 | ) |
| Net decrease | (954 | ) | | $ | (18,097 | ) | | (4,864 | ) | | $ | (168,059 | ) |
| |
| Six-Month Period | | | | | | | |
| Ended May 31, 2009 | | Period Ended |
| (Unaudited) | | November 30, 2008* |
| Shares | | Dollars | | Shares | | Dollars |
| MidCap Fund | | | | | | | | | | | | | |
| Shares sold | 447 | | | $ | 3,070 | | | 441 | | | $ | 4,442 | |
| Shares issued in reinvestment of dividends | 2 | | | | 17 | | | – | | | | – | |
| Shares issued in reinvestment of realized gains | – | | | | – | | | – | | | | – | |
| Shares redeemed | (24 | ) | | | (155 | ) | | (68 | ) | | | (562 | ) |
| Net increase | 425 | | | $ | 2,932 | | | 373 | | | $ | 3,880 | |
| |
| Six-Month Period | | | | | | | |
| Ended May 31, 2009 | | Year Ended |
| (Unaudited) | | November 30, 2008 |
| Shares | | Dollars | | Shares | | Dollars |
| Bond Fund | | | | | | | | | | | | | |
| Shares sold | 938 | | | $ | 8,904 | | | 3,174 | | | $ | 31,883 | |
| Shares issued in reinvestment of dividends | 186 | | | | 1,700 | | | 254 | | | | 2,550 | |
| Shares issued in reinvestment of realized gains | – | | | | – | | | – | | | | – | |
| Shares redeemed | (1,178 | ) | | | (11,082 | ) | | (2,976 | ) | | | (28,479 | ) |
| Net increase (decrease) | (54 | ) | | $ | (478 | ) | | 452 | | | $ | 5,954 | |
* For the period March 31, 2008 (inception) through November 30, 2008.
NOTE 5 - PURCHASE AND SALE OF SECURITIES
Investment transactions for the six-month period ended May 31, 2009 were as follows:
| Securities other than U. S. | | | | | | |
| Government and Short-term | | | | | | |
| Investments | | U. S. Government Securities |
| Purchases | | Sales | | Purchases | | Sales |
| Growth Fund | $ | 63,381,765 | | $ | 80,367,425 | | $ | – | | $ | – |
| MidCap Fund | $ | 3,980,481 | | $ | 1,069,179 | | $ | – | | $ | – |
| Bond Fund | $ | 16,919,452 | | $ | 6,694,859 | | $ | 13,975,799 | | $ | 31,921,707 |
34
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) | |
| May 31, 2009 | |
NOTE 6 - INCOME TAX INFORMATION
At May 31, 2009, the investment cost and aggregate unrealized appreciation and depreciation on investments for federal income tax purposes were as follows:
| | | | | | | | | | | | | Net unrealized |
| | | | | | Unrealized | | Unrealized | | appreciation |
| | Federal tax cost | | appreciation | | depreciation | | (depreciation) |
| Growth Fund | | $ | 140,125,017 | | | $ | 13,203,100 | | $ | (21,618,129 | ) | | $ | (8,415,029 | ) |
| MidCap Fund | | $ | 6,561,430 | | | $ | 205,331 | | $ | (639,233 | ) | | $ | (433,902 | ) |
| Bond Fund | | $ | 49,825,127 | | | $ | 2,219,961 | | $ | (5,385,607 | ) | | $ | (3,165,646 | ) |
The tax basis of investments for tax and financial reporting purposes differ principally due to wash sales and paydown gains and losses from mortgage securities.
The tax components of distributions paid during the six-month period ended May 31, 2009 (Unaudited) are:
| | Ordinary | | Long-term |
| | income | | capital gains |
| | distributions | | distributions |
| Growth Fund | | $ | 1,952,982 | | $ | – |
| Bond Fund | | $ | 18,875 | | $ | – |
| Bond Fund | | $ | 1,903,510 | | $ | – |
The tax components of distributions paid during the fiscal year ended November 30, 2008, capital loss carryforward as of November 30, 2008 and tax basis post-October losses as of November 30, 2008, which are not being recognized for tax purposes until the first day of the following fiscal year are:
| Ordinary | | Long-term | | | | | | |
| income | | capital gains | | Net capital loss | | Post-October |
| distributions | | distributions | | carryforward* | | losses |
| Growth Fund | $ | 4,172,247 | | | $ | 65,286,994 | | $ | 78,936,169 | | | $ | – | |
| MidCap Fund | $ | – | | | $ | – | | $ | 51,952 | | | $ | 19,711 | |
| Bond Fund | $ | 2,812,789 | | | $ | – | | $ | 536,947 | | | $ | – | |
* The Growth Fund and MidCap Fund capital losses expire November 30, 2016. The Bond Fund has capital losses in the amount of $90,180, $137,352 and $309,415 which expire on November 30, 2014, November 30, 2015 and November 30, 2016, respectively.
35
The following table presents information relating to a share of capital stock outstanding for the entire period.
| Six-Month | | | | | | | | | | | | | | | |
| Period Ended | | Year Ended November 30, |
| May 31, 2009 | | | | | | | | | | | | | | | |
| (Unaudited) | | 2008 | | 2007 | | 2006 | | 2005 | | 2004 |
| GROWTH FUND | | | | | | | | | | | | | | | | | | |
| |
| Net Asset Value, Beginning of Period | | $19.75 | | | $45.86 | | | $49.95 | | | $45.85 | | | $46.03 | | | $42.45 | |
| Income from Investment Operations | | | | | | | | | | | | | | | | | | |
| Net investment income | | 0.06 | | | 0.29 | | | 0.36 | | | 0.35 | | | 0.27 | | | 0.46 | |
| Net realized and unrealized gains (losses) | | | | | | | | | | | | | | | | | | |
| on investments | | 3.14 | | | (19.59 | ) | | (2.49 | ) | | 5.14 | | | 0.54 | | | 3.26 | |
| Total from Investment Operations | | 3.20 | | | (19.30 | ) | | (2.13 | ) | | 5.49 | | | 0.81 | | | 3.72 | |
| Less Distributions | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | (0.29 | ) | | (0.41 | ) | | (0.34 | ) | | (0.27 | ) | | (0.44 | ) | | (0.14 | ) |
| Distributions from net realized gains | | – | | | (6.40 | ) | | (1.62 | ) | | (1.12 | ) | | (0.55 | ) | | – | |
| Total Distributions | | (0.29 | ) | | (6.81 | ) | | (1.96 | ) | | (1.39 | ) | | (0.99 | ) | | (0.14 | ) |
| |
| Net Asset Value, End of Period | | $22.66 | | | $19.75 | | | $45.86 | | | $49.95 | | | $45.85 | | | $46.03 | |
| |
| Total Return | 16.39% | (a) | (49.29% | ) | (4.52% | ) | 12.32% | | | 1.76% | | | 8.77% | |
| |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (millions) | | $131.9 | | | $133.9 | | | $533.9 | | | $759.0 | | $1,030.7 | | $1,485.9 | |
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | |
| Ratio of expenses | | 1.63% | (b) | | 1.27% | | | 1.13% | | | 1.12% | | | 1.08% | | | 1.05% | |
| Ratio of expenses without reimbursement† | | 1.63% | (b) | | 1.27% | | | 1.13% | | | 1.12% | | | 1.09% | | | 1.06% | |
| Ratio of net investment income | | 0.61% | (b) | | 0.56% | | | 0.62% | | | 0.63% | | | 0.50% | | | 1.12% | |
| Ratio of net investment income | | | | | | | | | | | | | | | | | | |
| without reimbursement† | | 0.61% | (b) | | 0.56% | | | 0.62% | | | 0.63% | | | 0.49% | | | 1.11% | |
| Portfolio turnover rate | | 52% | (a) | | 43% | | | 29% | | | 17% | | | 20% | | | 29% | |
| (a) | Calculated on a non-annualized basis. |
| (b) | Calculated on an annualized basis. |
| † | Before directed brokerage credits. |
See Notes to Financial Statements.
36
| FINANCIAL HIGHLIGHTS (Continued) |
| |
The following table presents information relating to a share of capital stock outstanding for the entire period.
| Six-Month | | March 31, 2008 |
| Period Ended | | (inception) |
| May 31, 2009 | | through |
| (Unaudited) | | November 30, 2008 |
| MIDCAP FUND | | | | | | | |
| |
| Net Asset Value, Beginning of Period | | $6.18 | | | | $10.00 | |
| Income from Investment Operations | | | | | | | |
| Net investment income | | 0.01 | | | | 0.04 | |
| Net realized and unrealized gains (losses) | | | | | | | |
| on investments | | 1.55 | | | | (3.86 | ) |
| Total from Investment Operations | | 1.56 | | | | (3.82 | ) |
| Less Distributions | | | | | | | |
| Distributions from net investment income | | (0.05 | ) | | | – | |
| Distributions from net realized gains | | – | | | | – | |
| Total Distributions | | (0.05 | ) | | | – | |
| |
| Net Asset Value, End of Period | | $7.69 | | | | $6.18 | |
| |
| Total Return | | 25.33% | (a) | | | (38.20% | )(a) |
| |
| Ratios/Supplemental Data | | | | | | | |
| Net assets, end of period (millions) | | $6.1 | | | | $2.3 | |
| Ratios to average net assets: | | | | | | | |
| Ratio of expenses | | 1.30% | (b) | | | 1.30% | (b) |
| Ratio of expenses without reimbursement | | 6.54% | (b) | | | 8.40% | (b) |
| Ratio of net investment income | | 0.42% | (b) | | | 0.79% | (b) |
| Ratio of net investment loss | | | | | | | |
| without reimbursement | | (4.83% | )(b) | | | (6.30% | )(b) |
| Portfolio turnover rate | | 31% | (a) | | | 50% | (a) |
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
See Notes to Financial Statements.
37
| FINANCIAL HIGHLIGHTS (Continued) |
| |
The following table presents information relating to a share of capital stock outstanding for the entire period.
| Six-Month | | | | | | | | | | | | | | | |
| Period Ended | | Year Ended November 30, |
| May 31, 2009 | | | | | | | | | | | | | | | |
| (Unaudited) | | 2008 | | 2007 | | 2006 | | 2005 | | 2004 |
| BOND FUND | | | | | | | | | | | | | | | | | | |
| |
| Net Asset Value, Beginning of Period | | $9.24 | | | $10.34 | | | $10.26 | | | $10.21 | | | $10.68 | | | $10.86 | |
| Income from Investment Operations | | | | | | | | | | | | | | | | | | |
| Net investment income | | 0.41 | | | 0.62 | | | 0.48 | | | 0.44 | | | 0.39 | | | 0.57 | |
| Net realized and unrealized gains (losses) | | | | | | | | | | | | | | | | | | |
| on investments | | 0.85 | | | (1.17 | ) | | 0.08 | | | 0.11 | | | (0.36 | ) | | (0.16 | ) |
| Total from Investment Operations | | 1.26 | | | (0.55 | ) | | 0.56 | | | 0.55 | | | 0.03 | | | 0.41 | |
| Less Distributions | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | (0.40 | ) | | (0.55 | ) | | (0.48 | ) | | (0.41 | ) | | (0.42 | ) | | (0.59 | ) |
| Distributions from net realized gains | | – | | | – | | | – | | | (0.09 | ) | | (0.08 | ) | | – | |
| Total Distributions | | (0.40 | ) | | (0.55 | ) | | (0.48 | ) | | (0.50 | ) | | (0.50 | ) | | (0.59 | ) |
| |
| Net Asset Value, End of Period | | $10.10 | | | $9.24 | | | $10.34 | | | $10.26 | | | $10.21 | | | $10.68 | |
| |
| Total Return | 14.14% | (a) | (5.63% | ) | | 5.64% | | | 5.64% | | | 0.29% | | | 3.90% | |
| |
| Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (millions) | | $47.5 | | | $44.0 | | | $44.5 | | | $32.5 | | | $30.6 | | | $29.7 | |
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | |
| Ratio of expenses | | 0.66% | (b) | | 0.59% | | | 0.59% | | | 0.72% | | | 0.80% | | | 0.80% | |
| Ratio of expenses without reimbursement | | 1.34% | (b) | | 1.18% | | | 1.24% | | | 1.30% | | | 1.28% | | | 1.20% | |
| Ratio of net investment income | | 8.76% | (b) | | 6.38% | | | 4.92% | | | 4.42% | | | 3.80% | | | 5.00% | |
| Ratio of net investment income | | | | | | | | | | | | | | | | | | |
| without reimbursement | | 8.08% | (b) | | 5.78% | | | 4.26% | | | 3.84% | | | 3.31% | | | 4.60% | |
| Portfolio turnover rate | | 55% | (a) | | 110% | | | 86% | | | 51% | | | 26% | | | 24% | |
(a) Calculated on a non-annualized basis.
(b) Calculated on an annualized basis.
See Notes to Financial Statements.
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| ADDITIONAL INFORMATION (Unaudited) |
| |
| THOMPSON PLUMB FUNDS |
| | |
| DIRECTORS | INVESTMENT ADVISOR |
| Donald A. Nichols - Chairman | Thompson Investment Management, Inc. |
| John W. Feldt | 1200 John Q. Hammons Drive |
| Patricia Lipton | Madison, Wisconsin 53717 |
| John W. Thompson | |
| | DISTRIBUTOR |
| OFFICERS | Quasar Distributors, LLC |
| John W. Thompson, CFA | 615 East Michigan Street |
| President and Chief Executive Officer | Milwaukee, Wisconsin 53202 |
| |
| Jason L. Stephens, CFA | TRANSFER AGENT |
| Vice President and Secretary | U.S. Bancorp Fund Services, LLC |
| | 615 East Michigan Street |
| James T. Evans, CFA | Milwaukee, Wisconsin 53202 |
| Vice President | |
| | INDEPENDENT REGISTERED |
| Penny M. Hubbard | PUBLIC ACCOUNTING FIRM |
| Chief Financial Officer and Treasurer | PricewaterhouseCoopers LLP |
| | One North Wacker Drive |
| Nedra S. Pierce | Chicago, IL 60606 |
| Chief Compliance Officer | |
| | LEGAL COUNSEL |
| | Quarles & Brady LLP |
| | 411 East Wisconsin Avenue |
| | Milwaukee, Wisconsin 53202 |
The Statement of Additional Information contains additional information about the directors and officers of Thompson Plumb Funds, Inc. and is available without charge, upon request, by calling 1-800-999-0887.
Proxy Voting Policy
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds actually voted proxies during the most recent 12-month period ended June 30 are available without charge, upon request, by calling 1-800-999-0887, through the Funds’ website at www.thompsonplumb.com and on the SEC’s website at www.sec.gov.
Information About Portfolio Securities
The Funds file complete schedules of their portfolio holdings with the Securities and Exchange Commission for the Funds’ first and third quarters of their fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Securities and Exchange Commission’s website at www.sec.gov. You may also review and copy those documents by visiting the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Funds’ Forms N-Q are also available without charge, upon request, by calling 1-800-999-0887.
39
| 07/09 |  |
Item 2. Code of Ethics.
Not required in Semi-Annual Reports on Form N-CSR.
Item 3. Audit Committee Financial Expert.
Not required in Semi-Annual Reports on Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Not required in Semi-Annual Reports on Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable to this Registrant because it is not a “listed issuer” within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934.
Item 6. Schedule of Investments.
The required Schedules of Investments in securities of unaffiliated issuers is included as part of the Registrant’s Semi-Annual Report to shareholders dated as of May 31, 2009 provided under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant because it is not a closed-end management investment company.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to this Registrant because it is not a closed-end management investment company.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers.
Not applicable to this Registrant because it is not a closed-end management investment company.
Item 10. Submission of Matters to a Vote of Securities Holders.
The Registrant has not made any material changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Directors [after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K or this Item.]
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Item 11. Controls and Procedures.
| | (a) | | Disclosure Controls and Procedures. Based on an evaluation of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) carried out under the supervision and with the participation of the Registrant’s management, including its principal executive and financial officers, within 90 days prior to the filing date of this report on Form N-CSR, the Registrant’s principal executive and financial officers have concluded that the design and operation of the Registrant’s disclosure controls and procedures are effective in providing reasonable assurance that the information required to be disclosed on Form N-CSR is recorded, processed, summarized and reported within the applicable time periods. |
| |
| (b) | | Change in Internal Controls Over Financial Reporting. There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this Form N-CSR that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Exhibits
The following exhibits are attached to this Form N-CSR:
| Exhibit No. | | Description of Exhibit | |
| | 12(a)(1) | | The Code of Ethics for the Registrant’s Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer referred to in Item 2 was filed as Exhibit 12(a)(1) to the Registrant’s Certified Shareholder Report on Form N-CSR filed on January 28, 2005, and is incorporated herein by reference |
| | | |
| 12(a)(2)-1 | | Certification of Principal Executive Officer Required by Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 12(a)(2)-2 | | Certification of Principal Financial Officer Required by Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 12(b) | | Certification of Chief Executive Officer and Chief Financial Officer Required by Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 27th day of July, 2009.
| THOMPSON PLUMB FUNDS, INC. |
| |
| By: | /s/ John W. Thompson |
| John W. Thompson, Chief Executive |
| Officer and President |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on this 27th day of July, 2009.
| By: | | /s/ John W. Thompson |
| | | John W. Thompson, Chief Executive |
| | | Officer and President (Principal |
| | | Executive Officer) |
| |
| By: | | /s/ Penny Hubbard |
| | | Penny Hubbard, Chief Financial |
| | | Officer (Principal Financial Officer) |
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