N-CSRS 1 a2142438zn-csrs.txt N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-00802 --------------------------------------------- MAIRS AND POWER GROWTH FUND, INC. ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 332 MINNESOTA STREET, SUITE W1520, ST. PAUL, MN 55101 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) WILLIAM B. FRELS, PRESIDENT, 332 MINNESOTA STREET, SUITE W1520, ST. PAUL, MN 55101 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 651-222-8478 ---------------------------- Date of fiscal year end: 12/31/2004 -------------------------- Date of reporting period: 06/30/2004 ------------------------- Item 1. Report to Stockholders MAIRS AND POWER GROWTH FUND, INC. 2ND QUARTER REPORT June 30, 2004 (Unaudited) W1520 First National Bank Building 332 Minnesota Street St. Paul, Minnesota 55101 651-222-8478 August 19, 2004 TO OUR SHAREHOLDERS: Mairs and Power Growth Fund shares had a return of 10.3% for the six month period ending June 30. This compares favorably with returns of 3.5% for the Standard & Poor's 500 Stock Index and 0.8% for the Dow Jones Industrial Average. The average domestic stock fund had a return of 3.8%. Our ten year average return of 18.0% once again placed us on the WALL STREET JOURNAL list of the fifty best performing mutual funds for the past ten years and within that list we ranked tenth among the diversified stock funds. Our fifteen year average annual return of 17.0% ranked 2nd among all diversified stock funds according to a similar study in the July 12th issue of BARRONS. One of the Fund's characteristics has been our extremely low portfolio turnover ratio which has averaged 6% over the past five years. According to fund tracker Morningstar, the average actively managed equity fund has a turnover rate of 107%. Another characteristic is the low number of holdings, currently 37, which compares with about 140 for the average equity fund. Various studies have demonstrated that funds which concentrate in a small number of holdings have a tendency to outperform. Morningstar screened the universe of actively managed equity funds over a ten year period and determined that concentrated, low turnover funds overwhelmingly beat their peers in all style categories. FORTUNE magazine, in the August 23rd issue, discusses these findings and selected seven top performing funds with both characteristics combined with lower-than average expense ratios, a lengthy track record, and a well defined strategy. The Fund appeared in that select group. Economic growth moderated in the second quarter with Gross Domestic Product rising at an annual rate of 3.0% compared with the robust rate of 4.5% in the previous quarter. However, corporate sector spending rose at a 10% rate offsetting weaker consumer spending. GDP growth in the second half is expected to strengthen based on improving consumer sentiment and the need for businesses to rebuild record low inventories. The world economy is better balanced than at any time in the past ten years. Japan, the world's second largest economy, has experienced a remarkable turnaround. It has grown faster than the U.S. over the past six months, and its 3.2% rate of expansion for the fiscal year ended in March was the best showing the country has managed since 1996. Japan's economy is generating jobs again and consumer spending is stronger than at any time in the past twenty years. Of equal importance is the rise of China and India, since for two decades their economies have been growing twice as fast as the rest of the world. Together, they now account for 18% of the global economy and are driving growth in many other countries. All of this augurs well for foreign trade which in turn benefits the U.S. economy. 1 The U.S. stock market has been directionless since February and is little changed since the first of the year. A confluence of factors has been holding the market back including continuing chaos in Iraq and the Middle East, fear of terrorism at home, and uncertainty about the November elections. While these concerns will not soon abate, they may well be offset by continuing signs of a robust economy that is producing employment gains and rising personal income. Corporate earnings, the ultimate determinant of stock prices, are doing remarkably well. Earnings rose 28%, year-over-year, in the first quarter and 26% in the second quarter. The economy surged in the second half of last year so that comparisons will be less favorable going forward. However, earnings should still rise as much as 15% in both the current quarter and the next quarter. The Standard & Poor's 500 Index is currently trading at 17 times estimated earnings for the year which is a modest valuation given the current low inflation, low-interest-rate environment. Therefore, we anticipate a strengthening market in the months ahead. In accordance with long established policy, George Mairs retired as President and senior Portfolio Manager of the Fund in June. However, he continues to serve as Chair of Mairs & Power, Inc. the Fund Advisor, as well as remain an active member of its Investment Committee. William Frels was elected President by the Board of Directors and assumed the role of Portfolio Manager. William B. Frels President George A. Mairs 2 PERFORMANCE INFORMATION [CHART] COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE FUND, S & P 500 INDEX, AND THE CONSUMER PRICE INDEX FROM 12-31-94 TO 06-30-04 GROWTH FUND
12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001 12/31/2002 Fund $ 10,000 $ 14,932 $ 18,874 $ 24,282 $ 26,557 $ 28,459 $ 35,995 $ 38,325 $ 35,212 S & P $ 10,000 $ 13,754 $ 16,915 $ 22,564 $ 29,040 $ 35,150 $ 31,944 $ 28,143 $ 21,923 CPI $ 10,000 $ 10,250 $ 10,588 $ 10,768 $ 10,941 $ 11,236 $ 11,618 $ 11,804 $ 12,087 12/31/2003 6/30/2004 Fund $ 44,482 $ 49,064 S & P $ 28,215 $ 29,203 CPI $ 12,317 $ 12,920
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDING JUNE 30, 2004)
1 YEAR 5 YEARS 10 YEARS ------------------------------------------------------------------------ Mairs and Power Growth Fund 26.1% 10.9% 18.0%
PAST INVESTMENT RESULTS SHOULD NOT BE TAKEN AS NECESSARILY REPRESENTATIVE OF FUTURE PERFORMANCE. PLEASE NOTE THAT THE ABOVE GRAPH AND TABLE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. 3 FINANCIAL HIGHLIGHTS (SELECTED PER SHARE DATA AND RATIOS -- FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS ENDED YEAR ENDED 12/31 06/30/04 2003 2002 2001 2000 1999 ------------------------------------------------------------------------------------------- (UNAUDITED) PER SHARE (1) Net asset value, beginning of year $ 60.90 $ 49.26 $ 54.36 $ 53.41 $ 46.46 $ 46.34 Investment operations: Net investment income 0.38 0.54 0.45 0.51 0.54 0.43 Net realized and unrealized gains (losses) on investments 5.89 12.40 (4.86) 2.95 11.78 2.90 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL FROM INVESTMENT OPERATIONS 6.27 12.94 (4.41) 3.46 12.32 3.33 Less distributions: Dividends (from net investment income) - (0.53) (0.45) (0.51) (0.55) (0.47) Distributions (from capital gains) - (0.77) (0.24) (2.00) (4.82) (2.74) ----------- ----------- ----------- ----------- ----------- ----------- TOTAL DISTRIBUTIONS - (1.30) (0.69) (2.51) (5.37) (3.21) ----------- ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD $ 67.17 $ 60.90 $ 49.26 $ 54.36 $ 53.41 $ 46.46 =========== =========== =========== =========== =========== =========== TOTAL INVESTMENT RETURN 10.3% 26.3% (8.1)% 6.5% 26.5% 7.2% =========== =========== =========== =========== =========== =========== NET ASSETS, END OF PERIOD (000'S OMITTED) $ 1,676,736 $ 1,307,763 $ 850,302 $ 679,027 $ 581,668 $ 546,836 RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets 0.36% 0.75% 0.78% 0.76% 0.78% 0.79% Ratio of net investment income to average net assets 0.62% 1.05% 0.93% 0.97% 1.06% 0.83% Portfolio turnover rate 1.65% 2.41% 1.25% 7.91% 15.34% 5.55%
(1) All per share amounts have been adjusted to give effect to a two-for-one stock split which was paid on October 10, 2001. 4 STATEMENT OF NET ASSETS JUNE 30, 2004 (UNAUDITED)
NUMBER OF MARKET VALUE SHARES SECURITY DESCRIPTION (NOTE 2a.) ------------ --------------------------------------------------------- --------------- COMMON STOCKS 97.8% BASIC INDUSTRIES 12.6% 1,750,000 Bemis Company, Inc. $ 49,437,500 1,870,000 Ecolab, Inc. 59,279,000 1,590,000 H. B. Fuller 45,156,000 1,140,000 The Valspar Corporation 57,444,600 --------------- 211,317,100 CAPITAL GOODS 12.2% 1,930,000 Donaldson Company, Inc. 56,549,000 1,783,993 Graco Inc. 55,392,983 1,183,000 MTS Systems Corporation 27,741,350 1,920,000 Pentair, Inc. 64,588,800 --------------- 204,272,133 CONSUMER CYCLICAL 8.0% 1,820,000 Target Corporation 77,295,400 807,600 The Toro Company 56,588,532 --------------- 133,883,932 CONSUMER STAPLE 10.2% 1,220,000 General Mills, Inc. 57,986,600 1,730,000 Hormel Foods 53,803,000 189,886 Smucker (J. M.) Co. 8,717,666 1,620,000 SUPERVALU, Inc. 49,588,200 --------------- 170,095,466 DIVERSIFIED 6.6% 1,600,000 General Electric Company 51,840,000 656,000 3M Company 59,046,560 --------------- 110,886,560
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NUMBER OF MARKET VALUE SHARES SECURITY DESCRIPTION (NOTE 2a.) ------------ --------------------------------------------------------- --------------- COMMON STOCKS (CONTINUED) FINANCIAL 16.2% 130,000 Associated Banc-Corp. $ 3,851,900 1,250,000 St. Paul Travelers Companies, Inc. 50,675,000 1,250,000 TCF Financial Corporation 72,562,500 2,300,000 U.S. Bancorp 63,388,000 1,420,000 Wells Fargo & Company 81,266,600 --------------- 271,744,000 HEALTH CARE 19.5% 1,190,000 Baxter International Inc. 41,066,900 1,010,000 Johnson & Johnson 56,257,000 1,570,000 Medtronic, Inc. 76,490,400 560,000 Merck & Co. 26,600,000 1,780,000 Pfizer Inc. 61,018,400 640,000 St. Jude Medical, Inc. * 48,416,000 410,000 Techne Corp. * 17,814,500 --------------- 327,663,200 TECHNOLOGY 11.4% 2,200,000 ADC Telecommunications Inc. * 6,248,000 2,100,000 Ceridian * 47,250,000 1,200,000 Corning Inc. * 15,672,000 1,287,030 eFunds Corp. * 22,523,025 840,000 Emerson Electric Co. 53,382,000 1,280,000 Honeywell International Inc. 46,886,400 --------------- 191,961,425 UTILITIES 1.1% 490,000 Verizon Communications 17,733,100 --------------- TOTAL COMMON STOCKS 97.8% (cost $1,140,647,105) $ 1,639,556,916
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NUMBER OF MARKET VALUE SHARES SECURITY DESCRIPTION (NOTE 2a.) ------------ --------------------------------------------------------- --------------- SHORT TERM INVESTMENTS 2.3% 10,676,129 First American Prime Obligations Fund, Class I $ 10,676,129 27,700,517 Merrill Lynch Institutional Money Market Fund 27,700,517 --------------- TOTAL SHORT TERM INVESTMENTS 2.3% (cost $38,376,646) 38,376,646 --------------- TOTAL INVESTMENTS 100.1% 1,677,933,562 (cost $1,179,023,751) OTHER ASSETS AND LIABILITIES (NET) (0.1)% (1,197,692) --------------- NET ASSETS: Capital stock 249,639 Additional paid-in capital 1,159,511,295 Accumulated undistributed net investment income 9,767,720 Accumulated undistributed net realized gain on investment 8,297,405 Net unrealized appreciation of investments 498,909,811 TOTAL NET ASSETS 100% (Net assets equal to $67.17 per share on 24,963,908 shares outstanding) $ 1,676,735,870 =============== CAPITAL STOCK (par value $.01 a share) Shares authorized 25,000,000 ===============
* Non income producing SEE ACCOMPANYING 'NOTES TO FINANCIAL STATEMENTS'. 7 STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 14,591,806 Other income 225 -------------- TOTAL INCOME $ 14,592,031 Expenses: Investment management fees (NOTE 5) 4,420,999 Administrative fees (NOTE 5) 405,436 Transfer agent fees 322,588 Custodian fees 154,358 Legal and audit fees 19,452 Other fees and expenses 18,731 -------------- TOTAL EXPENSES 5,341,564 ------------- NET INVESTMENT INCOME 9,250,467 REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 4) Net realized gains on investments sold 8,534,676 Unrealized appreciation of investments 129,848,520 -------------- NET GAIN ON INVESTMENTS 138,383,196 ------------- INCREASE IN NET ASSETS FROM OPERATIONS $ 147,633,663 =============
SEE ACCOMPANYING 'NOTES TO FINANCIAL STATEMENTS'. 8 STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED 06/30/04 YEAR ENDED (UNAUDITED) 12/31/03 ---------------------------------- OPERATIONS Net investment income $ 9,250,467 $ 10,842,796 Net realized gains on investments sold 8,534,676 16,156,556 Unrealized appreciation of investments 129,848,520 224,446,201 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS 147,633,663 251,445,553 DISTRIBUTIONS TO SHAREHOLDERS From net investment income (11) (10,700,102) From net realized gains (7) (16,194,253) --------------- --------------- TOTAL DISTRIBUTIONS TO SHAREHOLDERS (18) (26,894,355) CAPITAL STOCK TRANSACTIONS Proceeds from shares sold 271,183,572 286,487,193 Reinvestment of distributions from net investment income and net realized gains 3,188 24,849,409 Cost of shares redeemed (49,847,666) (78,426,608) --------------- --------------- INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS 221,339,094 232,909,994 --------------- --------------- TOTAL INCREASE IN NET ASSETS 368,972,739 457,461,192 --------------- --------------- NET ASSETS Beginning of year 1,307,763,131 850,301,939 End of period (including accumulated undistributed net investment income of $9,767,720 and $222,023, respectively) $ 1,676,735,870 $ 1,307,763,131 =============== =============== CHANGES IN CAPITAL STOCK Shares sold 4,277,162 5,263,298 Shares issued for reinvested distributions 59 414,833 Shares redeemed (786,098) (1,468,601) --------------- --------------- NET INCREASE IN SHARES 3,491,123 4,209,530 =============== ===============
SEE ACCOMPANYING 'NOTES TO FINANCIAL STATEMENTS'. 9 NOTES TO FINANCIAL STATEMENTS JUNE 30, 2004 (UNAUDITED) Note 1 -- The Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, no-load, open-end management investment company. The objective of the Fund is to provide shareholders with a diversified holding of common stocks which appear to offer possibilities for long-term appreciation. Note 2 -- Significant accounting polices of the Fund are as follows: (a) Security valuations for fund investments are furnished by independent pricing services that have been approved by the Board of Directors. Investments in equity securities that are traded on a national securities exchange are stated at the last quoted sales price if readily available for such securities on each business day. For securities traded on the NASDAQ national market system, the Fund utilizes the NASDAQ Official Closing Price which compares the last trade to the bid/ask range of the security. If the last trade falls within the bid/ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask price will be the closing price. If the last price is below the bid, the bid will be the closing price. Other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system. For securities where quotations are not readily available, or where the last quoted sale price is not considered representative of the value of the security if it were to be sold on that day, the security will be valued at fair value as determined in good faith by procedures established and approved by the adviser, Mairs and Power, Inc. and the Fund's Board of Directors. (b) Security transactions are recorded on the date on which securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income is recorded on the accrual basis. Realized gains and losses are reported on an identified cost basis. 10 (c) The Fund is a "regulated investment company" as defined in Subchapter M of the Internal Revenue Code, as amended. 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 applicable to investment companies and to make distributions of income and security gains sufficient to relieve it from all or substantially all excise and income taxes. (d) The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of net assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the reporting period. Actual results could differ from those estimates. Note 3 -- Purchases and sales of investment securities, excluding short-term securities, during the six months ended June 30, 2004 aggregated $258,297,981 and $23,960,555, respectively. Note 4 -- Net unrealized appreciation on investments for federal income tax purposes aggregated $498,909,811, of which $518,127,183 related to appreciated investment securities and $19,217,372 related to depreciated investment securities. Aggregate cost of investments for federal income tax purposes was $1,179,023,751. There is no difference between the book basis and tax basis (estimated) of dividends paid during the six-month period ended June 30, 2004. For federal income tax purposes, the components of distributable income as of December 31, 2003 were: Accumulated undistributed net investment income $ 222,023 Accumulated undistributed net realized gain on investment 57,977 Net unrealized appreciation of investments 369,061,291 -------------- $ 369,341,291
11 Note 5 -- The investment management fees were paid to Mairs and Power, Inc. pursuant to an advisory agreement approved by the Directors of the Fund. Mairs and Power, Inc. is owned by individuals who are officers of the Fund, including William B. Frels who is the only owner of the investment advisor, who is a director of the Fund. The management fee is computed each month at an annual rate of .60% based on the Fund's average daily net assets. At June 30, 2004, the amount payable by the Fund to Mairs and Power, Inc. was $799,440. As part of the Administration expenses of the Fund, 1) directors of the Fund not affiliated with Mairs and Power, Inc. received compensation for meetings attended totaling $34,200 as of June 30, 2004 (no compensation was paid to any other director or officer of the Fund), and 2) Mairs and Power, Inc. was paid $42,481 for Administration expenses. 12 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 or capital gain or loss which may be realized from an investment made in the Fund today.
PER SHARE --------------------------------------------------- DISTRIBU- PERFORMANCE TIONS OF DIVIDENDS OF AN REALIZED FROM NET ASSUMED SHARES NET ASSET SECURITIES INVESTMENT INVESTMENT OF DATES OUTSTANDING TOTAL NET ASSETS VALUE GAINS INCOME $10,000* ------------- ----------- ---------------- --------- ---------- ---------- ------------- Dec. 31, 1980 1,681,764 $ 14,540,014 $ 8.65 - $ 0.28 $ 11,611 Dec. 31, 1981 1,723,356 $ 13,148,158 $ 7.63 $ 0.37 $ 0.30 $ 11,171 Dec. 31, 1982 1,701,884 $ 16,784,217 $ 9.86 $ 0.29 $ 0.25 $ 15,546 Dec. 31, 1983 1,763,184 $ 18,972,177 $ 10.76 $ 0.35 $ 0.24 $ 17,996 Dec. 31, 1984 1,744,138 $ 17,304,204 $ 9.92 $ 0.38 $ 0.23 $ 17,632 Dec. 31, 1985 1,713,476 $ 21,553,457 $ 12.58 $ 0.43 $ 0.23 $ 23,763 Dec. 31, 1986 1,787,700 $ 22,235,453 $ 12.44 $ 1.37 $ 0.20 $ 26,505 Dec. 31, 1987 1,828,278 $ 19,816,097 $ 10.84 $ 1.15 $ 0.24 $ 25,887 Dec. 31, 1988 1,858,078 $ 20,630,251 $ 11.11 $ 0.61 $ 0.21 $ 28,471 Dec. 31, 1989 1,733,168 $ 22,630,081 $ 13.06 $ 0.92 $ 0.22 $ 36,462 Dec. 31, 1990 1,734,864 $ 22,501,587 $ 12.97 $ 0.35 $ 0.21 $ 37,780 Dec. 31, 1991 1,808,046 $ 31,440,529 $ 17.39 $ 0.79 $ 0.20 $ 53,695 Dec. 31, 1992 1,913,628 $ 34,363,306 $ 17.96 $ 0.58 $ 0.20 $ 57,905 Dec. 31, 1993 2,012,570 $ 39,081,010 $ 19.42 $ 0.61 $ 0.22 $ 65,350 Dec. 31, 1994 2,128,038 $ 41,889,850 $ 19.69 $ 0.49 $ 0.33 $ 69,031 Dec. 31, 1995 2,490,650 $ 70,536,880 $ 28.32 $ 0.76 $ 0.28 $ 103,075 Dec. 31, 1996 4,322,492 $ 150,161,759 $ 34.74 $ 0.70 $ 0.36 $ 130,281 Dec. 31, 1997 9,521,030 $ 412,590,619 $ 43.34 $ 0.96 $ 0.39 $ 167,619 Dec. 31, 1998 12,525,664 $ 580,460,523 $ 46.34 $ 0.68 $ 0.36 $ 183,323 Dec. 31, 1999 11,771,794 $ 546,836,085 $ 46.46 $ 2.74 $ 0.47 $ 196,452 Dec. 31, 2000 10,891,038 $ 581,668,419 $ 53.41 $ 4.82 $ 0.55 $ 248,474 Dec. 31, 2001 12,490,964 $ 679,026,689 $ 54.36 $ 2.00 $ 0.51 $ 264,563 Dec. 31, 2002 17,263,254 $ 850,301,939 $ 49.26 $ 0.24 $ 0.45 $ 243,074 Dec. 31, 2003 21,472,784 $ 1,307,763,131 $ 60.90 $ 0.77 $ 0.53 $ 307,066 Jun. 30, 2004 24,963,908 $ 1,676,735,870 $ 67.17 - - $ 338,680
*ASSUMES THE REINVESTMENT OF ALL INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS FOR A $10,000 INVESTMENT MADE AT THE BEGINNING OF 1980. 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 JUNE 30, 2004) ARE AS FOLLOWS: 1 YEAR: +26.1% 5 YEARS: +10.9% 10 YEARS: +18.0%
THE TOTAL RETURN DATA REPRESENTS PAST PERFORMANCE, AND 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. THE TOTAL RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. 13 DIRECTORS AND OFFICERS Information pertaining to the Directors and Officers of Mairs and Power Growth Fund, Inc. is set forth below. The statement of additional information (SAI) includes additional information about the Fund's Directors and is available without charge, upon request, by calling 1-800-304-7404 or can be downloaded from our website at www.mairsandpower.com.
POSITION(S) NUMBER OF HELD WITH PORTFOLIOS IN OTHER FUND AND FUND COMPLEX DIRECTORSHIPS LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FIVE OVERSEEN BY HELD BY NAME, (AGE) AND ADDRESS(1) TIME SERVED(2) YEARS DIRECTOR TRUSTEE ---------------------------------------------------------------------------------------------------------------------- INTERESTED PRINCIPAL OFFICER WHO IS A DIRECTOR William B. Frels (64) President - President of the Investment 2 N/A since June Adviser (2002 to present). 2004, - Treasurer of the Investment Director Adviser (1996 to present). since 1992 - Vice President of the Investment Adviser (1994 to 2002). INTERESTED PRINCIPAL OFFICERS WHO ARE NOT DIRECTORS George A. Mairs, III (76) President - Chairman of the Investment N/A N/A 1980 - June Adviser (2002 to present). 2004 - President of the Investment Adviser ( 1993 to 2002). Peter G. Robb (55) Vice - Vice President and Secretary of N/A N/A President the Investment Adviser. since 1994 Jon A. Theobald (58) Secretary - Executive Vice President and N/A N/A since 2003 Chief Administrative Officer of the Investment Adviser (2002 to present). - Senior Vice President, U.S. Trust Company (2001 - 2002). - Executive Vice President, Resource Trust Company (1996 - 2001). Lisa J. Hartzell (59) Treasurer - Manager of Mutual Fund N/A N/A since 1996 Services of the Investment Adviser.
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POSITION(S) NUMBER OF HELD WITH PORTFOLIOS IN OTHER FUND AND FUND COMPLEX DIRECTORSHIPS LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FIVE OVERSEEN BY HELD BY NAME, (AGE) AND ADDRESS(1) TIME SERVED(2) YEARS DIRECTOR TRUSTEE ---------------------------------------------------------------------------------------------------------------------- DISINTERESTED DIRECTORS Charlton Dietz (73) Director - Retired Senior Vice 2 N/A 30 Seventh Street East since 1997 President, Legal Affairs and Suite 3050 General Counsel, 3M Company. St. Paul, MN 55101 Norbert J. Conzemius (62) Director - Retired Chief Executive 2 N/A since 2000 Officer, Road Rescue Incorporated Charles M. Osborne (50) Director - Chief Financial Officer (May 2 N/A since 2001 2004 to present), Fair Isaac Corporation. - Chief Financial Officer (2000 to 2004), Vice President (2003 to 2004), University of Minnesota Foundation. - Vice President and General Manager, MN (1999), Vice President Corporate Human Resources, IA (2000), McLeod USA/Ovation Communications. INTERESTED DIRECTOR WHO IS NOT A PRINCIPAL OFFICER Edward C. Stringer (69) Director - Attorney (2002 - present), 2 N/A 2200 IDS Center since 2002 Briggs and Morgan, P.A. 80 South 8th Street - Associate Justice, State of Minneapolis, MN 55402 Minnesota Supreme Court (1994-2002).
(1) Unless otherwise indicated, the mailing address of each officer and director is: 332 Minnesota Street, Suite W1520, Saint Paul, MN 55101. (2) Each Director serves until elected at each annual meeting, or until his successor is appointed. Each officer is elected annually. 15 MAIRS AND POWER GROWTH FUND, INC. INVESTMENT ADVISER Mairs and Power, Inc. W1520 First National Bank Building 332 Minnesota Street Saint Paul, Minnesota 55101 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 INDEPENDENT AUDITOR Ernst & Young, LLP Suite 1400 220 South Sixth Street Minneapolis, Minnesota 55402 FOR ANY SHAREHOLDER ACCOUNT INFORMATION AND INQUIRIES CALL 1-800-304-7404 or write to: (REGULAR MAIL ADDRESS) (OVERNIGHT OR EXPRESS MAIL ADDRESS) Mairs and Power Growth Fund Mairs and Power Growth Fund c/o U.S. Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC 615 East Michigan Street 3rd Floor P. O. Box 701 615 East Michigan Street Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202 For Fund literature and information, you can also visit the Fund's web site at: www.mairsandpower.com MAIRS AND POWER GROWTH FUND Item 2. Code of Ethics. Not applicable to semi-annual report. Item 3. Audit Committee Financial Expert Not applicable to semi-annual report. Item 4. Principal Accountant Fees and Services Not applicable to semi-annual report. Item 5. Audit Committee of Listed Registrant Not applicable to registrant. Item 6. Schedule of Investments Not applicable to this filing. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies Not applicable to registrant. Item 8. Purchases of Equity Securities by Closed-End Management Not applicable to registrant. Item 9. Submission of Matters to a Vote of Security Holders. There has been no material change to the procedures by which shareholders may recommend nominees to the registrant's board of directors. Item 10. Controls and Procedures a) The registrant's principal executive officer and principal financial officer have evaluated the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report and have concluded that the registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized and reported within the time period specified by the SEC's rules and forms. b) There was no change in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 11. Exhibits (a) (1) Code of Ethics Not applicable to semi-annual report. (2) Certifications required by Rule 30a-2(a). under the Investment Company Act of 1940. Attached as exhibits 11(a)(2).1 and 11(a)(2).2 to this form. (b) Certifications required by 18 U.S.C. 1350. Attached as exhibit 11(b). 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. (Registrant) MAIRS AND POWER GROWTH FUND, INC. -------------------------------------------------------------------- By (Signature and Title) */s/ William B. Frels -------------------------------------------------------------------------------- WILLIAM B. FRELS, PRESIDENT Date September 1, 2004 --------------------------------------------------------------------------- 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 and on the dates indicated. By (Signature and Title) */s/ William B. Frels -------------------------------------------------------------------------------- WILLIAM B. FRELS, PRESIDENT (PRINCIPAL EXECUTIVE OFFICER) Date September 1, 2004 --------------------------------------------------------------------------- By (Signature and Title) */s/ Lisa J. Hartzell -------------------------------------------------------------------------------- LISA J. HARTZELL, TREASURER (PRINCIPAL FINANCIAL OFFICER) Date September 1, 2004 --------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.