-----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, J5Gs1BjwAvR/sAnU0ttsiekKT1TTOrTynhsBe0G3lFkVUTTG6PoCHNasdzo8W2CD 1oAW5l24isacGzQlCX5M4w== 0001047469-98-041957.txt : 19981124 0001047469-98-041957.hdr.sgml : 19981124 ACCESSION NUMBER: 0001047469-98-041957 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981123 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: 98756597 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 N30B2 ------------------ MAIRS AND POWER GROWTH FUND, INC. ------------------ 3RD QUARTER REPORT September 30, 1998 November 11, 1998 To Our Shareholders: On September 30, 1998, the net asset value per share of Mairs and Power Growth Fund was $80.39, a decline of 6.9% from the year-end valuation. This compares with returns of +6% for the Standard & Poor's 500 Stock Index, +0.4% for the Dow Jones Industrial Average and -16.8% for the Russell 2000. The WALL STREET JOURNAL, in its quarterly review of Mutual Funds, compiled a list of the 50 best performing stock funds for the past five and ten year periods. Mairs and Power Growth Fund was one of the ten diversified stock funds to appear on both lists. For the past five and ten year periods, the Fund has outperformed all major stock indexes. The U.S. economy continued to perform admirably in the third quarter with G.D.P. rising at an annual rate of 3.3%, up from the second quarter pace of 1.8%. This was well above analysts' estimates and provides further evidence of sustainable economic growth. The unemployment rate remains low and American workers have received a boost in real disposable personal income which grew 2.6% during the past six months. These factors have supported strong consumer spending, which accounts for roughly two-thirds of G.D.P. Personal consumption grew at a strong 3.9% rate during the quarter. It appears that the economy has geared down to a 2.5% growth rate in the fourth quarter due, in part, to slower exports. However, we share the view held by most economists that a recession is not in prospect for 1999. The Federal Reserve has lowered interest rates twice during the past two months and we believe that further rate cuts may lie ahead. Consumer prices are rising at an annual rate of less than 2% which is a record low during a period of full employment. Moderately rising wages are being partially offset by improving worker productivity which has been rising at a 2% annual rate this year. Economists consider productivity the key to prosperity. The stock market suffered a sharp correction during August and September, reflecting investor concern over political instability both here and abroad as well as further indications of weakness in foreign economies. The sharp decline in both U.S. and foreign security markets created fears of an impending credit crisis which prompted the Federal Reserve to take decisive action and lower interest rates in both September and October. These actions served to restore confidence in U.S. financial markets and the stock market has recovered much of its earlier losses. Corporate earnings are in line with lowered expectations but most companies will report record earnings for 1998 and we believe that this will be the case in 1999 as well. Large company stocks appear to be at valuation levels that are consistent with their growth prospects but we believe that the recent flight to quality on the part of investors has left many mid and small company stocks clearly undervalued. We also believe that confidence will rise in the months ahead and substantiate our positive view on the prospects for U.S. financial markets. George A. Mairs President SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------
NUMBER OF MARKET SHARES COMMON STOCKS VALUE - ---------------- ------------------------------------------ ------------- CHEMICAL 4.8% 540,000 Ecolab, Inc. $ 15,356,250 222,500 H. B. Fuller 8,427,188 ------------- 23,783,438 ------------- CONSUMER 9.4% 247,000 General Mills, Inc. 17,290,000 490,000 Hormel foods 13,260,625 442,610 Jostens, Inc. 9,184,157 345,800 The Toro Company 7,153,738 ------------- 46,888,520 ------------- DRUGS AND HOSPITAL SUPPLIES 10.5% 282,000 Baxter International, Inc. 16,779,000 215,000 Johnson & Johnson 16,823,750 176,000 Pfizer Inc. 18,645,000 ------------- 52,247,750 ------------- FINANCIAL 15.3% 590,000 Norwest Corporation 21,129,375 330,000 ReliaStar Financial Corporation 12,870,000 416,000 St. Paul Companies, Inc. 13,520,000 640,000 TCF Financial Corporation 12,720,000 450,000 US Bancorp 16,003,125 ------------- 76,242,500 ------------- INFORMATION SERVICES 9.4% 470,000 Deluxe Corp. 13,365,625 965,000 Merrill Corporation 15,138,437 628,400 National Computer Systems Inc. 18,537,800 ------------- 47,041,862 ------------- MEDICAL DEVICES 6.2% 376,000 Medtronic, Incorporated 21,761,000 395,000 St. Jude Medical, Inc. * 9,134,375 ------------- 30,895,375 ------------- RETAILING 5.8% 398,000 Dayton Hudson Corporation 14,228,500 628,000 SUPERVALU Inc. 14,640,250 ------------- 28,868,750 ------------- TECHNOLOGY 16.7% 230,000 Ceridian * 13,196,250 308,050 Emerson Electric Co. 19,176,113 240,000 Honeywell Inc. 15,375,000 1,052,100 MTS Systems Corporation 15,518,475 213,000 Minnesota Mining & Manufacturing Company 15,695,437 578,500 TSI Inc. 4,266,438 ------------- 83,227,713 ------------- TELECOMMUNICATIONS 2.6% 629,000 ADC Telecommunications Inc. * 13,287,625 ------------- OTHER INDUSTRIALS 14.7% 374,000 Bemis Company, Inc. 13,113,375 862,300 BMC Industries, Inc. 5,173,800 450,000 Burlington Northern Santa Fe 14,400,000 494,800 Donaldson Company, Inc. 7,916,800 549,850 Graco Inc. 12,784,012 355,800 Imation Corporation * 6,582,300 320,000 Weyerhaeuser Company 13,500,000 ------------- 73,470,287 ------------- TOTAL COMMON STOCKS 95.4% $475,953,820 ------------- OTHER ASSETS IN EXCESS OF LIABILITIES 4.6% 22,721,600 ------------- NET ASSETS 100% $498,675,420 ------------- -------------
*Non-income producing
STATEMENT OF NET ASSETS AT SEPTEMBER 30, 1998 - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Common stocks as annexed, at market value (cost $402,259,904). . . . . . . . . . . . . . . . . . . . . . . . . $ 475,953,820 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,560,336 Dividends and interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497,233 Receivables for securities sold, not yet delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292,178 Prepaid expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,298 -------------- $ 499,390,865 LIABILITIES Accrued management fee . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 238,934 Accrued custodian and transfer agent fee . . . . . . . . . . . . . . . . . . 80,623 Payable for securities purchased, not yet received . . . . . . . . . . . . . 395,888 715,445 -------------- -------------- NET ASSETS Equivalent to $80.39 per share on 6,203,431 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . $ 498,675,420 -------------- -------------- STATEMENT OF CHANGES IN NET ASSETS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 - ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS, December 31, 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 412,590,619 Net investment income, per statement below . . . . . . . . . . . . . . . . . $ 3,678,332 Net accrued income in price of shares sold and repurchased (Note A). . . . . 0 -------------- 3,678,332 Reversal of Capital Gain Distribution Paid . . . . . . . . . . . . . . . . . 3,038 Distribution to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . (2,095,337) 1,586,033 -------------- Fund shares issued and repurchased: Received for 2,129,456 shares issued. . . . . . . . . . . . . . . . . . 190,448,855 Paid for 686,540 shares repurchased . . . . . . . . . . . . . . . . . . (61,335,055) 129,113,800 -------------- Increase in unrealized net appreciation (depreciation) of investments. . . . . . . . . . . . . . . . . . . . . (49,118,798) Net gain or (loss) realized from sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,503,766 Distribution from net realized gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 -------------- NET ASSETS, September 30, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 498,675,420 -------------- -------------- STATEMENT OF NET INVESTMENT INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 - ---------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,644,057 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,086,795 -------------- 6,730,852 EXPENSES Management fee (Note B). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,282,301 Fees and expenses of custodian, transfer agent and dividend disbursing agent (Note B) . . . . . . . . . . . . . . . . . . . 401,671 Legal and auditing fees and expenses . . . . . . . . . . . . . . . . . . . . 26,070 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,817 Other Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 333,661 3,052,520 -------------- -------------- NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,678,332 -------------- --------------
NOTE A: 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. NOTE B: 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. SUPPLEMENTARY INFORMATION: 1) Each director of the Fund not affiliated with Mairs and Power, Inc. received $13,500.00 compensation for meetings attended during this nine 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 nine months ended September 30, 1998 aggregated $136,628,642 and $5,816,526 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 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 Sep. 30, 1998 6,203,431 498,675,420 80.39 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 SEPTEMBER 30, 1998) ARE AS FOLLOWS: 1 YEAR: -4.7% 5 YEARS: +20.0% 10 YEARS: +18.6% 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 Treasurer Director Director and Director Charlton Dietz Donald E. Garretson J. Thomas Simonet Director Director Director -----END PRIVACY-ENHANCED MESSAGE-----