-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HjEtuzoM8scsPrKFxLmjeVzd3LPVtldYiq8ARTKxwy45iLrnOjqnvdYbGxr8SmFE d5qLNaLwGTIfITfzuL3FQg== 0001047469-98-032735.txt : 19980827 0001047469-98-032735.hdr.sgml : 19980827 ACCESSION NUMBER: 0001047469-98-032735 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980826 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAIRS & POWER GROWTH FUND INC CENTRAL INDEX KEY: 0000061628 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 416019924 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: SEC FILE NUMBER: 811-00802 FILM NUMBER: 98697866 BUSINESS ADDRESS: STREET 1: 332 MINNESOTA ST STE W-2062 STREET 2: FIRST NATIONAL BANK BUILDING CITY: ST PAUL STATE: MN ZIP: 55101 BUSINESS PHONE: 6122228478 MAIL ADDRESS: STREET 1: FIRST NATIONAL BANK BUILDING W-2062 STREET 2: 332 MINNESOTA STREET CITY: ST PAUL STATE: MN ZIP: 55101 FORMER COMPANY: FORMER CONFORMED NAME: MAIRS & POWER FUND INC DATE OF NAME CHANGE: 19680607 N-30B-2 1 N-30B-2 - -------------------------------- ------------------ MAIRS AND POWER GROWTH FUND, INC. ------------------ 2ND QUARTER REPORT June 30, 1998 August 21, 1998 To Our Shareholders: On June 30, 1998, the net asset value per share of Mairs and Power Growth Fund was $92.56, a 7.2% increase from the year-end valuation. This compares with returns of 17.6% for the Standard and Poor's 500 Stock Index and 14.1% for the Dow Jones Industrial Average. These two indexes were driven by a relatively small number of large capitalization stocks that had strong gains during the period. Mairs and Power Growth Fund holds a blend of large, medium, and small capitalization stocks. Therefore, we will also use a third bench-mark, which is the Russell 2000. This is an index of 2,000 medium and small companies which registered a 4.9% return for the period. We believe that our shareholders are well served by our exposure to mid-cap and small-cap stocks that historically experience higher growth rates than that of very large companies. For the ten year period ending June 30, the Fund registered an average annual return of 20.0%, outpacing the 18.5% return of the Standard and Poor's 500 Stock Index as well as the 13.6% return of the Russell 2000. According to a WALL STREET JOURNAL study, the Fund ranked among the twenty-five best performing diversified stock funds for that ten year period. FORBES magazine, in the August 24 issue, presented its annual survey of mutual funds covering 1,200 funds. Each year the survey includes an Honor Roll of twelve funds as measured by performance, preservation of capital in declining markets, tax efficiency and continuity of management. For the second year in a row, Mairs and Power Growth Fund appeared in 1st place on that list. In addition, FORBES also designated twenty stock funds based on superior performance coupled with low operating costs. The Fund appeared on that list as well for the second consecutive year. MONEY magazine devoted much of the June issue to the Best 100 Mutual Funds and the Fund was included in that group. The U.S. economy continues to perform remarkably well. Growth moderated in the second quarter with GDP rising at an annual rate of 1.4%. However, the first quarter rate of 5.5% was clearly unsustainable. For the first half of the year, GDP rose at an average rate of 3.5%. Despite this strong growth, inflation remained well contained with consumer prices rising at a 1.5% rate. While there is continuing concern about economic developments in Japan and the rest of Asia, the average effect on the U.S. economy and corporate profits has been relatively modest. However, the impact on specific companies and industries has been highly variable. We continue to believe that this country is enjoying a longlasting period of economic and profit expansion coupled with moderate inflation which is a very favorable environment for common stocks. The major stock market indexes have experienced a 10% correction since mid-July. However, the broader market has suffered a sharper decline. The average stock on the New York stock exchange has declined almost 30% from its 52-week high. We believe that most stocks are fairly valued at current levels and believe that stock prices should strengthen in the months ahead. While growth in corporate earnings has moderated this year as we anticipated, we still expect earnings to rise a solid 5-6% this year with similar increases in 1999. We regard this to be the major underpinning for stronger stock prices. Because the market has provided very high returns during the past sixteen years, some investors are projecting similar returns in the future. We note that Mairs and Power Growth Fund has registered an average annual return of 12.4% since its inception almost 40 years ago. We believe that the future average rate of return may approximate that benchmark. George A. Mairs President SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 - --------------------------------------------------------------------------------
NUMBER OF SHARES COMMON STOCKS MARKET VALUE - --------- ------------------------------------------ ------------- CHEMICAL 5.2% 530,000 Ecolab, Inc. $ 16,430,000 222,500 H. B. Fuller 12,334,844 ------------- 28,764,844 ------------- CONSUMER 10.0% 83,000 Darden Restaurants 1,317,625 247,000 General Mills, Inc. 16,888,625 470,000 Hormel Foods 16,244,375 422,610 Jostens, Inc. 10,089,814 325,800 The Toro Company 11,158,650 ------------- 55,699,089 ------------- DRUGS AND HOSPITAL SUPPLIES 9.2% 282,000 Baxter International, Inc. 15,175,125 215,000 Johnson & Johnson 15,856,250 186,000 Pfizer Inc. 20,215,875 ------------- 51,247,250 ------------- FINANCIAL 15.5% 520,000 Norwest Corporation 19,435,000 320,000 ReliaStar Financial Corporation 15,360,000 366,000 St. Paul Companies, Inc. 15,394,875 570,000 TCF Financial Corporation 16,815,000 450,000 U.S. Bancorp 19,350,000 ------------- 86,354,875 ------------- INFORMATION SERVICES 9.3% 460,000 Deluxe Corp. 16,473,750 875,000 Merrill Corporation 19,304,687 668,400 National Computer Systems Inc. 16,041,600 ------------- 51,820,037 ------------- MEDICAL DEVICES 6.8% 386,000 Medtronic, Incorporated 24,607,500 355,000 St. Jude Medical, Inc.* 13,068,437 ------------- 37,675,937 ------------- RETAILING 5.7% 368,000 Dayton Hudson Corporation 17,848,000 314,000 SUPERVALU Inc. 13,933,750 ------------- 31,781,750 ------------- TECHNOLOGY 15.5% 230,000 Ceridian* 13,512,500 298,050 Emerson Electric Co. 17,994,769 220,000 Honeywell Inc. 18,383,750 987,100 MTS Systems Corporation 15,855,294 193,000 Minnesota Mining & Manufacturing Company 15,862,187 578,500 T S I Inc. 4,700,313 ------------- 86,308,813 ------------- TELECOMMUNICATIONS 3.8% 589,000 ADC Telecommunications Inc.* 21,516,906 ------------- OTHER INDUSTRIALS 13.8% 374,000 Bemis Company, Inc. 15,287,250 852,300 BMC Industries, Inc. 7,457,625 150,000 Burlington Northern Santa Fe 14,728,125 211,800 Donaldson Company, Inc. 5,003,775 418,350 Graco Inc. 14,589,956 355,800 Imation Corporation* 5,892,938 300,000 Weyerhaeuser Company 13,856,250 ------------- 76,815,919 ------------- TOTAL COMMON STOCKS 94.8% $527,985,420 ------------- OTHER ASSETS IN EXCESS OF LIABILITIES 5.2% 28,834,880 ------------- NET ASSETS 100% $556,820,300 ------------- ------------- *Non-income producing
STATEMENT OF NET ASSETS AT JUNE 30, 1998 - -------------------------------------------------------------------------------- ASSETS Common stocks as annexed, at market value (cost $376,046,145).................................... $527,985,420 Cash............................................................................................. 29,802,674 Dividends and interest receivable................................................................ 596,620 Receivables for securities sold, not yet delivered............................................... 0 Prepaid expense.................................................................................. 97,905 ------------ $558,482,619 LIABILITIES Accrued management fee.................................................. $ 274,810 Accrued custodian and transfer agent fee................................ 77,680 Payable for securities purchased, not yet received...................... 1,309,829 1,662,319 ------------- ------------ NET ASSETS Equivalent to $92.56 per share on 6,015,593 shares outstanding................................... $556,820,300 ------------ ------------
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 1998 - -------------------------------------------------------------------------------- NET ASSETS, December 31, 1997.................................................................... $412,590,619 Net investment income, per statement below.............................. $ 2,384,184 Net accrued income in price of shares sold and repurchased (Note B)..... 0 ------------- 2,384,184 Reversal of Capital Gain Distribution Paid.............................. 3,038 Distribution to Shareholders............................................ (2,095,437) 291,785 ------------- Fund shares issued and repurchased: Received for 1,627,733 shares issued.................................. 147,877,800 Paid for 372,655 shares repurchased................................... (34,209,832) 113,667,968 ------------- Increase in unrealized net appreciation (depreciation) of investments............................ 29,126,561 Net gain or (loss) realized from sales of securities............................................. 1,143,367 Distribution from net realized gain.............................................................. 0 ------------ NET ASSETS, June 30, 1998........................................................................ $556,820,300 ------------ ------------
STATEMENT OF NET INVESTMENT INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 - -------------------------------------------------------------------------------- INVESTMENT INCOME Dividends........................................................................................ $ 3,672,035 Interest......................................................................................... 733,705 ------------ 4,405,740 EXPENSES Management fee (Note A)................................................. $ 1,538,413 Fees and expenses of custodian, transfer agent and dividend disbursing agent (Note A)..................................... 263,764 Legal and auditing fees and expenses.................................... 16,470 Insurance............................................................... 5,878 Other Fees and Expenses................................................. 197,031 2,021,556 ------------- ------------ NET INVESTMENT INCOME............................................................................ $ 2,384,184 ------------ ------------
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 advisor fee is computed each month and is 1/20th of one percent of the net asset value of the Fund on the last valuation day of the month. The transfer agent fee was paid to Firstar Trust Company which serves as transfer agent. NOTE B: As of January 1, 1998, the Fund has retroactively elected to discontinue the use of the equalization method of accounting. The now current method being applied is more consistent with industry standard. The change has no impact on the net asset value per share. SUPPLEMENTARY INFORMATION: 1) Each director of the Fund not affiliated with Mairs and Power, Inc. received $9,000.00 compensation for meetings attended during this six 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 six months ended June 30, 1998 aggregated $109,110,225 and $1,155,011 respectively. 4) An annual meeting of shareholders was held on May 18, 1998 for the purposes of: (a) Election of six directors; (b) to amend the Articles of Incorporation of the Fund to increase the total number of authorized shares to 25,000,000; and (c) to ratify the selection of Ernst & Young LLP as independent auditors for the Fund. Of the 5,572,521 shares outstanding on record date of March 31, 1998, the following votes were cast:
SHARES PROPOSAL SHARES FOR AGAINST ABSTAINING - -------------------------------------------------------------------------------- ----------- ----------- ----------- Elect George A. Mairs, III 2,920,179 20,995 0 Elect William B. Frels 2,919,592 21,582 0 Elect Peter G. Robb 2,918,403 22,772 0 Elect Charlton Dietz 2,907,325 33,849 0 Elect Donald E. Garretson 2,912,915 28,259 0 Elect J. Thomas Simonet 2,920,113 21,061 0 Increase the total number of authorized shares to 25,000,000 2,607,208 200,335 133,631 Ratify Ernst & Young LLP as Independent Auditors 2,841,508 24,561 75,105
--------------------------------------------------------------------- MAIRS AND POWER GROWTH FUND, INC. --------------------------- A NO-LOAD FUND W-1420 FIRST NATIONAL BANK BUILDING, 332 MINNESOTA STREET, ST. PAUL, MINNESOTA 55101-1363 651-222-8478 SHAREHOLDER INFORMATION: 800-304-7404 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 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, 1978 998,265 13,282,487 13.31 0.35 Dec. 31, 1979 914,635 14,104,765 15.42 0.45 Dec. 31, 1980 840,882 14,540,014 17.29 0.55 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 1.69 1.00 Jun. 30, 1998 6,015,593 556,820,300 92.56 0.35
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 (PERIODS ENDED JUNE 30, 1998) ARE AS FOLLOWS: 1 YEAR: +16.2% 5 YEARS: +24.3% 10 YEARS: +20.0% 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 Secretary and Vice-President and Treasurer Director Director Director Charlton Dietz Donald E. Garretson J. Thomas Simonet Director Director Director
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