<PAGE>
----------------------------
MAIRS AND POWER
GROWTH FUND, INC.
----------------------------
- -------------------------------------------------------------------------------
1ST QUARTER REPORT
March 31, 2000
To Our Shareholders: May 19, 2000
For the three month period ended March 31, Mairs and Power Growth Fund
produced a return of 0.6% compared with returns of 2.3% for the Standard &
Poor's 500 and -4.7% for the Dow Jones Industrial Average. However, the stock
market has undergone significant change in April and May with investor interest
moving away from technology to many broader areas that had become undervalued in
previous months. This rotation has particularly benefitted our portfolio and as
of this date (May 19), our Fund measures a year-to-date return of 7.7% compared
with negative returns for both the S&P 500 (-4.7%) and the DJIA (-7.6%). As we
have written in our previous reports, we believe that technology is having a
profound effect on the U.S. economy and that all of our portfolio companies must
be active participants in the transformation. We also believe that there is as
much money to be made from the application of technology as there is from its
development and we give thoughtful consideration to both aspects.
The U.S. economy has entered its 10th year of expansion, the longest
period on record. Gross Domestic Product rose at a 5.4% annual rate during the
first quarter and unemployment has declined to 3.9%, the lowest level in 30
years. The economy's growth rate has exceeded 5% in each of the last three
quarters, the first time that has happened since 1983-84. The Federal Reserve
believes that growth rates in excess of 4% may generate inflationary pressures
and therefore has taken action on six separate occasions during the past twelve
months to raise short term interest rates. These moves are aimed at containing
inflation by raising the cost of consumer loans, mortgages and business
borrowing as a way of slowing spending. The most recent action (May 16) raised
the overnight bank lending rate to 6.5%, the highest level in nine years,
followed by a cautionary statement suggesting the possibility of additional
increases in coming months. We believe that the Fed actions are clearly intended
to prolong the expansion rather than curtail it and therefore have positive
long-term implications for the financial markets.
Corporate earnings are the primary determinant of stock prices and the
trend continues to be very strong. Earnings for the first quarter increased
about 20% over the lackluster year-earlier period. While increases will moderate
from that level, the prospects for the balance of the year are very favorable
and operating earnings for the S&P 500 are forecast to rise about 10% with a
further increase in the following year. The market volatility of the past two
years has been discomforting to many investors and therefore we would counsel
shareholders to concentrate on long-term prospects. We believe that U.S.
corporations have sharpened their competitive edge in recent years and are well
prepared to continue their dominance in many World markets. While the business
cycle has not been repealed, much has been learned about moderating its
severity. We find many stocks attractively valued at the present time, which is
our basis for expecting higher valuations over the balance of the year.
At the April 14, 2000 meeting of the Board of Directors, Norbert J.
Conzemius was appointed to the Board. Mr. Conzemius (58) was a career employee
of U.S. Bancorp. where he held a number of senior level management positions
including the presidency of a trust company subsidiary. This action expands our
Board to seven members, four of whom are independent of the management company.
The Mutual Fund industry is moving towards the adoption of a "Best Practice"
which is to place independent directors in a majority position on such boards.
We are pleased to be in the forefront of this movement.
George A. Mairs
President
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS MARCH 31, 2000
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NUMBER OF SHARES COMMON STOCKS MARKET VALUE
- ----------------- ----------------------------------------------- ---------------
<S> <C> <C>
BASIC INDUSTRIES 11.3%
713,300 BMC Industries, Inc. $ 4,056,894
384,000 Bemis Company, Inc. 14,160,000
510,000 Ecolab, Inc. 18,710,625
222,500 H. B. Fuller 8,886,094
232,200 The Valspar Corporation 8,896,162
-------------
54,709,775
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CAPITAL GOODS 8.2%
564,800 Donaldson Company, Inc. 12,743,300
609,850 Graco Inc. 17,685,650
1,248,100 MTS Systems Corporation 9,516,762
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39,945,712
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CONSUMER CYCLICAL 10.6%
500,000 Deluxe Corp. 13,250,000
368,000 Target Corporation 27,508,000
345,800 The Toro Company 10,352,388
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51,110,388
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CONSUMER STAPLE 9.8%
514,000 General Mills, Inc. 18,600,375
880,000 Hormel Foods 14,465,000
748,000 SUPERVALU Inc. 14,165,250
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47,230,625
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FINANCIAL 15.9%
330,000 ReliaStar Financial Corporation 11,178,750
436,000 St. Paul Companies, Inc. 14,878,500
640,000 TCF Financial Corporation 15,240,000
510,000 US Bancorp 11,156,250
600,000 Wells Fargo & Company 24,562,500
-------------
77,016,000
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HEALTH CARE 17.9%
282,000 Baxter International, Inc. 17,677,875
215,000 Johnson & Johnson 15,063,437
492,000 Medtronic, Incorporated 25,307,250
498,000 Pfizer Inc. 18,208,125
415,000 St. Jude Medical, Inc. * 10,712,187
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86,968,874
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TECHNOLOGY 21.0%
578,000 ADC Telecommunications Inc. * 31,139,750
570,000 Ceridian * 10,936,875
348,050 Emerson Electric Co. 18,403,144
318,750 Honeywell Inc. 16,794,141
483,400 National Computer Systems Inc. 24,532,550
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101,806,460
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DIVERSIFIED 3.9%
213,000 Minnesota Mining & Manufacturing Company 18,863,813
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TOTAL COMMON STOCKS 98.6% 477,651,647
SHORT TERM INVESTMENTS 1.2%
5,943,395 Firstar Institutional Money Market Fund 5,943,395
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TOTAL INVESTMENTS 99.8% 483,595,042
OTHER ASSETS IN EXCESS OF LIABILITIES 0.2% 1,072,093
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NET ASSETS 100% $ 484,667,135
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-------------
</TABLE>
*Non-income producing
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AT MARCH 31, 2000
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<S> <C> <C>
ASSETS
Investments at market value (cost $341,455,011).................................................. $ 477,651,647
Cash............................................................................................. 5,943,395
Dividends and interest receivable................................................................ 383,391
Receivables for securities sold, not yet delivered............................................... 1,013,092
Prepaid expense.................................................................................. (16,977)
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484,974,548
LIABILITIES
Accrued management fee................................................. $ 230,443
Accrued custodian and transfer agent fee............................... 76,970
Payable for securities purchased, not yet received..................... 0 307,413
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NET ASSETS
Equivalent to $93.51 per share on 5,183,095 shares outstanding................................... $ 484,667,135
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--------------
STATEMENT OF CHANGES IN NET ASSETS FOR THE THREE MONTHS ENDED MARCH 31, 2000
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS, December 31, 1999.................................................................... $ 546,836,085
Net investment income, per statement below............................. $ 1,182,405
Distribution to shareholders reversed.................................. 6 1,182,411
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Fund shares issued and repurchased:
Received for 121,717 shares issued.................................. 10,714,731
Paid for 824,519 shares repurchased................................. (72,061,320) (61,346,589)
------------
Increase in unrealized net appreciation (depreciation) of investments............................ (21,726,865)
Net gain (or loss) realized from sales of securities............................................. 19,721,900
Distribution from net realized gain reversed..................................................... 193
--------------
NET ASSETS, March 31, 2000....................................................................... $ 484,667,135
--------------
--------------
STATEMENT OF NET INVESTMENT INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends........................................................................................ $ 2,068,864
Interest......................................................................................... 74,485
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2,143,349
EXPENSES
Management fee (Note A)................................................ $ 707,055
Fees and expenses of custodian, transfer agent and
dividend disbursing agent (Note A)................................. 127,459
Legal and auditing fees and expenses................................... 7,610
Insurance.............................................................. 3,307
Other Fees and Expenses................................................ 115,513 960,944
------------ --------------
NET INVESTMENT INCOME............................................................................ $ 1,182,405
--------------
--------------
</TABLE>
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 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 also paid to Firstar Mutual Fund Services, LLC which serves as
transfer agent.
SUPPLEMENTARY INFORMATION: 1) Each director 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, 2000 aggregated $1,226,013 and
$56,137,092 respectively.
<PAGE>
----------------------------
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
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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.
<TABLE>
<CAPTION>
PER SHARE
---------------------------------------------
DISTRIBUTIONS DIVIDENDS
OF REALIZED FROM NET
SHARES TOTAL NET NET ASSET SECURITIES INVESTMENT
DATES OUTSTANDING ASSETS VALUE GAINS INCOME
------------- ----------- ------------ --------- ------------- ----------
<S> <C> <C> <C> <C> <C>
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
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
Mar. 31, 2000 5,183,095 484,667,135 93.51 - -
</TABLE>
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.
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AVERAGE ANNUAL TOTAL RETURNS
----------------------------
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND (PERIOD ENDED MARCH 31, 2000)
ARE AS FOLLOWS:
- -------------------------------------------------------------------------------
1 YEAR: +12.0% 5 YEARS: +20.8% 10 YEARS: +18.5%
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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
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
