N-30B-2 1 a2050075zn-30b_2.txt N-30B-2 ---------------------- MAIRS AND POWER GROWTH FUND, INC. ---------------------- 1ST QUARTER REPORT March 31, 2001 To Our Shareholders: May 21, 2001 Mairs and Power Growth Fund experienced a negative return of 6.2% for the three month period ending March 31, 2001. However, this compares favorably with a decline of 11.9% for the Standard & Poor's 500 Stock Index and 8.0% for the Dow Jones Industrial Average. The average domestic diversified stock fund had a loss of 13.1% for the quarter according to Lipper, Inc. Each quarter, the WALL STREET JOURNAL compiles a list of the fifty best performing mutual funds for the past 10 year period. The fund was one of 24 diversified funds to appear on this list. The April issue of CONSUMER REPORTS contained its annual Mutual Funds Ratings. Only twelve mid-cap funds were recommended and our fund was one of these. Mid-cap funds are funds containing stocks with an average capitalization size under $15 billion which places our fund in that category. SMART MONEY magazine in the April issue featured three mutual funds that appeared to be well positioned to excel in the next market rebound based on past experience. The Fund was one of the three featured funds. The U.S. economy continued on a modest growth path in the first quarter with Gross Domestic Product rising at a 2.0% annual rate, somewhat faster than most forecasters had predicted. Consumer spending, which accounts for two-thirds of GDP, grew at an annual rate of 3%, down from 6% a year ago, but still healthy. If consumer spending continues at that rate it would be enough to prevent a recession. Housing remains remarkably healthy, representing the principal asset of two-thirds of households. The economy has never entered a recession without a decline in housing leading the way. However, labor markets continue to weaken. The unemployment rate has risen to 4.5% and in April widespread layoffs led to the sharpest one month job decline since early 1991 when the last recession was well underway. Nevertheless, the labor market is still one of the strongest in 30 years. Weakness in the economy is centered in the manufacturing sector where companies have been reducing inventories and cutting back on capital expenditures. The Federal Reserve has responded since early January by lowering short-term interest rates from 6.5% to 4.0%, its most aggressive use of monetary policy in over twenty years. The Fed has further indicated its intent to take further action, if necessary, in order to ward off a recession. It often takes six to nine months for interest rate changes to work their way through the economy but a revival should be evident by the fourth quarter of the year. Corporate earnings experienced a decline in the first quarter but much of the weakness was centered in technology and telecommunication. Most other sectors performed well. After a sharp decline in the first quarter, the stock market has strengthened as investors began anticipating a better economy later in the year. We maintain a positive view of the market, noting that investors have a record level of cash reserves totaling over $2.0 trillion, which in time should support a further market recovery. George A. Mairs President SCHEDULE OF INVESTMENTS MARCH 31, 2001 --------------------------------------------------------------------------------
NUMBER OF MARKET SHARES COMMON STOCKS VALUE ---------- ---------------------------------------------- --------------- BASIC INDUSTRIES 13.3% 728,100 BMC Industries, Inc. $ 4,062,798 374,000 Bemis Company, Inc. 12,375,660 520,000 Ecolab, Inc. 22,058,400 287,000 H. B. Fuller 12,089,875 512,500 The Valspar Corporation 14,703,625 170,000 Weyerhaeuser Company 8,634,300 --------------- 73,924,658 --------------- CAPITAL GOODS 9.5% 603,600 Donaldson Company, Inc. 16,110,084 914,775 Graco Inc. 25,613,700 1,248,100 MTS Systems Corporation 11,349,909 --------------- 53,073,693 --------------- CONSUMER CYCLICAL 11.0% 500,000 Deluxe Corp. 11,835,000 866,000 Target Corporation 31,245,280 395,800 The Toro Company 18,206,800 --------------- 61,287,080 --------------- CONSUMER STAPLE 9.8% 524,000 General Mills, Inc. 22,537,240 990,000 Hormel Foods Corporation 19,285,200 978,000 SUPERVALU Inc. 13,036,740 --------------- 54,859,180 --------------- FINANCIAL 17.1% 436,000 St. Paul Companies, Inc. 19,205,800 660,000 TCF Financial Corporation 24,941,400 920,350 US Bancorp 21,352,120 600,000 Wells Fargo & Company 29,682,000 --------------- 95,181,320 --------------- HEALTH CARE 19.2% 282,000 Baxter International, Inc. 26,547,480 56,400 Edwards Lifesciences Corp. * 1,105,440 215,000 Johnson & Johnson 18,806,050 482,000 Medtronic, Incorporated 22,046,680 498,000 Pfizer Inc. 20,393,100 335,000 St. Jude Medical, Inc. * 18,039,750 --------------- 106,938,500 --------------- TECHNOLOGY 12.7% 1,336,000 ADC Telecommunications Inc. * 11,356,000 570,000 Ceridian * 10,545,000 90,000 Corning, Inc. 1,862,100 443,130 eFunds Corp. 8,530,253 348,050 Emerson Electric Co. 21,579,100 418,750 Honeywell International Inc. 17,085,000 --------------- 70,957,453 --------------- DIVERSIFIED 4.0% 213,000 Minnesota Mining & Manufacturing Company 22,130,700 --------------- TOTAL COMMON STOCKS 96.6% 538,352,584 SHORT TERM INVESTMENTS 3.4% 13,462,092 Firstar Institutional Money Market Fund 13,462,092 5,196,942 Merrill Lynch Institutional Money Market Fund 5,196,942 --------------- 18,659,034 --------------- TOTAL INVESTMENTS 99.9% 557,011,618 OTHER ASSETS IN EXCESS OF LIABILITIES 0.0% 52,935 --------------- NET ASSETS 100% $557,064,553 ===============
*Non-income producing
STATEMENT OF NET ASSETS AT MARCH 31, 2001 ------------------------------------------------------------------------------------------------------------------ ASSETS Investments at market value (cost $357,138,433).................................................. $ 538,352,584 Cash............................................................................................. 18,659,034 Dividends and interest receivable................................................................ 649,228 Receivables for securities sold, not yet delivered............................................... 0 Prepaid expense.................................................................................. (5,398) -------------- 557,655,448 LIABILITIES Accrued management fee................................................. $ 272,693 Accrued custodian and transfer agent fee............................... 69,451 Payable for securities purchased, not yet received..................... 248,751 590,895 -------------- -------------- NET ASSETS Equivalent to $100.25 per share on 5,557,003 shares outstanding.................................. $ 557,064,553 ==============
STATEMENT OF CHANGES IN NET ASSETS FOR THE THREE MONTHS ENDED MARCH 31, 2001 ------------------------------------------------------------------------------------------------------------------ NET ASSETS, December 31, 2000.................................................................... $ 581,668,419 Net investment income, per statement below....................................................... 1,492,410 Fund shares issued and repurchased: Received for 264,117 shares issued.................................. 27,090,546 Paid for 152,632 shares repurchased................................. (15,553,771) 11,536,775 -------------- Increase in unrealized net appreciation (depreciation) of investments............................ (37,633,112) Net gain (or loss) realized from sales of securities............................................. 61 -------------- NET ASSETS, March 31, 2001....................................................................... $ 557,064,553 ==============
STATEMENT OF NET INVESTMENT INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2001 ------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME Dividends........................................................................................ $ 2,386,432 Interest......................................................................................... 189,812 -------------- 2,576,244 EXPENSES Management fee (Note A)................................................ $ 852,565 Fees and expenses of custodian, transfer agent and dividend disbursing agent (Note A)................................. 118,115 Legal and auditing fees and expenses................................... 7,090 Insurance.............................................................. 3,141 Other Fees and Expenses................................................ 102,923 1,083,834 -------------- -------------- NET INVESTMENT INCOME $ 1,492,410 ==============
NOTE A: The investment advisory fee was paid to Mairs and Power, Inc., which is owned by individuals who are directors and officers of the Fund, for its services as investment adviser. Investment advisory fees are paid to the adviser pursuant to an advisory agreement approved by the Directors of the Fund. The advisory fee is computed each month at an annual rate of 0.60% of the net asset value of the Fund on the last valuation day of the month. The transfer agent fee was paid to Firstar Mutual Fund Services, LLC which serves as transfer agent. SUPPLEMENTARY INFORMATION: 1) The directors of the Fund not affiliated with Mairs and Power, Inc. received no compensation for meetings attended during this three month period. No compensation was paid to any other director or officer of the Fund. 2) No provision has been made for federal income taxes as it is the intention of the Fund to comply with the provisions of the Internal Revenue Code available to investment companies and to make distributions of income and security profits which will be sufficient to relieve it from all or substantially all income taxes. 3) Purchases and sales of investment securities during the three months ended March 31, 2001 aggregated $15,236,430 and $-0- respectively. ---------------------- MAIRS AND POWER GROWTH FUND, INC. ---------------------- A NO-LOAD FUND W-1420 First National Bank Building, 332 Minnesota Street, St. Paul, Minnesota 55101-1363 Investment Adviser: 651-222-8478 Shareholder Information: 800-304-7404 www.mairsandpower.com SUMMARY OF FINANCIAL INFORMATION -------------------------------------------------------------------------------- This table covers a period of generally rising common stock prices. The results shown should not be considered as a representation of the dividend income and capital gain or loss which may result from an investment made in the Fund today.
PER SHARE ----------------------------------------------- DISTRIBUTIONS DIVIDENDS OF REALIZED FROM NET SHARES TOTAL NET NET ASSET SECURITIES INVESTMENT DATES OUTSTANDING ASSETS VALUE GAINS INCOME ------------- ------------- ------------- ------------- ------------- ------------- Dec. 31, 1981 861,678 $ 13,148,158 $15.26 $0.74 $ 0.60 Dec. 31, 1982 850,942 16,784,217 19.72 0.58 0.50 Dec. 31, 1983 881,592 18,972,177 21.52 0.70 0.48 Dec. 31, 1984 872,069 17,304,204 19.84 0.76 0.46 Dec. 31, 1985 856,738 21,553,457 25.16 0.86 0.46 Dec. 31, 1986 893,850 22,235,453 24.88 2.74 0.40 Dec. 31, 1987 914,139 19,816,097 21.68 2.29 0.48 Dec. 31, 1988 929,039 20,630,251 22.21 1.21 0.41 Dec. 31, 1989 866,584 22,630,081 26.11 1.83 0.43 Dec. 31, 1990 867,432 22,501,587 25.94 0.70 0.42 Dec. 31, 1991 904,023 31,440,529 34.78 1.58 0.39 Dec. 31, 1992 956,814 34,363,306 35.91 1.16 0.40 Dec. 31, 1993 1,006,285 39,081,010 38.84 1.22 0.43 Dec. 31, 1994 1,064,019 41,889,850 39.37 0.98 0.65 Dec. 31, 1995 1,245,325 70,536,880 56.64 1.51 0.56 Dec. 31, 1996 2,161,246 150,161,759 69.48 1.39 0.71 Dec. 31, 1997 4,760,515 412,590,619 86.67 1.91 0.78 Dec. 31, 1998 6,262,832 580,460,523 92.68 1.36 0.72 Dec. 31, 1999 5,885,897 546,836,085 92.91 5.48 0.93 Dec. 31, 2000 5,445,519 581,668,419 106.82 9.64 1.09 Mar. 31, 2001 5,557,003 557,064,553 100.25 - -
No adjustment has been made for any income tax payable by shareholders on capital gain distributions accepted in shares. This report is not to be used in connection with the offering of shares of the Fund unless accompanied or preceded by an effective Prospectus. Please call or write if you desire further information. -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS ---------------------------- THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND (PERIOD ENDED MARCH 31, 2001) ARE AS FOLLOWS: 1 YEAR: +17.9% 5 YEARS: +16.8% 10 YEARS: +17.4%
PAST INVESTMENT RESULTS SHOULD NOT BE TAKEN AS NECESSARILY REPRESENTATIVE OF FUTURE PERFORMANCE. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. --------------------------------------------------------------------------------
OFFICERS AND DIRECTORS ---------------------------------------------------------------------------------------------------------- George A. Mairs, III William B. Frels Peter G. Robb Lisa J. Hartzell President and Director Secretary and Director Vice-President and Director Treasurer Norbert J. Conzemius Charlton Dietz Donald E. Garretson J. Thomas Simonet Director Director Director Director