<PAGE>
-----------------
MAIRS AND POWER
GROWTH FUND, INC.
-----------------
-------------------------------------------------------------------------------
2ND QUARTER REPORT
June 30, 2000
To Our Shareholders: August 21, 2000
For the six month period ended June 30, Mairs and Power Growth Fund
produced a return of 7.6% which compares very favorably with negative returns of
-0.4% for the Standard & Poor's 500 and -8.5% for the Dow Jones Industrial
Average. The rotation in the stock market, which began in April, has continued
through the summer and has greatly benefitted our portfolio. As of August 18,
our Fund measured a year-to-date return of 12.4% compared with 2.4% for the S&P
500. FORBES MAGAZINE, in the August 21 issue, presented its annual survey of
mutual funds covering 1,059 funds. Each year the survey includes an honor roll
of fifteen funds measured by performance, preservation of capital in declining
markets, tax efficiency and continuity of management. Mairs and Power Growth
Fund placed second on this list where it has now appeared in three of the past
four years. In addition, the Fund was the subject of a feature article in the
same issue. MONEY MAGAZINE devoted much of the June issue to "The Best 100
Mutual Funds" and the Fund was included in that group for the third consecutive
year.
The U.S. economy continued its strong growth in the second quarter with
Gross Domestic Product advancing at an annual rate of 5.2% despite signs of
moderation as consumers slowed their spending pace. The most remarkable aspect
of this performance was the relative absence of inflationary pressures. The
price index based on personal consumption expenditures, which Federal Reserve
Chairman Alan Greenspan cites as the best indicator of inflation, rose at an
annual rate of 2.3% compared with a 3.5% rate of increase in the first quarter.
Businesses continued to invest heavily with spending on equipment and software
rising at a 21% annual rate. This in turn has resulted in a sharp rise in work
force productivity, defined as the amount of output for each hour worked, which
rose at a higher-than-expected 5.3% rate in the second quarter. Unit labor costs
declined at an annual rate of 0.1% in the quarter as productivity rose faster
than compensation. The unemployment rate has remained steady at about 4% in
recent months and wage rates have risen just 3.7% over the past twelve months
despite tight labor markets. The Federal Reserve, which has long been worried
that the economy has been growing too fast, has raised interest rates six times
since June 1999. Most observers now believe that no further action will be taken
by the Fed at least until November.
During the past three months, two of our portfolio companies (ReliaStar
and National Computer Systems) have agreed to be acquired by European companies
at prices representing a substantial premium to the level where the shares were
trading prior to the announcements. There are two significant elements to these
transactions. First, foreign companies wish to participate in the U.S.
marketplace, which is the strongest major economy in the world. Second, many
small and medium sized U.S. company stocks are significantly undervalued.
Corporate profits are the major long-term underpinning of stock prices and
according to a BUSINESS WEEK survey of 900 companies, profits rose a robust 17%
in the second quarter, marking the fifth consecutive quarter of double-digit
gains. This very strong performance on the part of American corporations is the
direct result of rapid economic growth coupled with rising productivity. We
believe that these trends will continue for at least the next twelve months and
provide the basis for rising valuations for most stocks.
George A. Mairs
President
<PAGE>
SCHEDULE OF INVESTMENTS JUNE 30, 2000
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES COMMONS STOCKS VALUE
--------- ---------------------------------------- -----------
<S> <C> <C>
BASIC INDUSTRIES 11.1%
893,900 BMC Industries, Inc. $ 3,631,469
384,000 Bemis Company, Inc. 12,912,000
510,000 Ecolab, Inc. 19,921,875
224,500 H. B. Fuller 10,228,781
262,700 The Valspar Corporation 8,866,125
-----------
55,560,250
-----------
CAPITAL GOODS 7.7%
564,800 Donaldson Company, Inc. 11,154,800
609,850 Graco Inc. 19,820,125
1,248,100 MTS Systems Corporation 7,800,625
-----------
38,775,550
-----------
CONSUMER CYCLICAL 8.7%
500,000 Deluxe Corp. 11,781,250
348,000 Target Corporation 20,184,000
355,800 The Toro Company 11,719,162
-----------
43,684,412
-----------
CONSUMER STAPLE 10.0%
514,000 General Mills, Inc. 19,660,500
940,000 Hormel Foods Corporation 15,803,750
778,000 SUPERVALU Inc. 14,830,625
-----------
50,294,875
-----------
FINANCIAL 13.7%
60,000 ReliaStar Financial Corporation 3,146,250
436,000 St. Paul Companies, Inc. 14,878,500
640,000 TCF Financial Corporation 16,440,000
590,000 US Bancorp 11,357,500
600,000 Wells Fargo & Company 23,250,000
-----------
69,072,250
-----------
HEALTH CARE 21.8%
282,000 Baxter International, Inc. 19,828,125
56,400 Edwards Lifesciences Corp. * 1,043,400
215,000 Johnson & Johnson 21,903,125
472,000 Medtronic, Incorporated 23,511,500
498,000 Pfizer Inc. 23,904,000
415,000 St. Jude Medical, Inc. * 19,038,125
-----------
109,228,275
-----------
TECHNOLOGY 22.0%
468,000 ADC Telecommunications Inc. * 39,253,500
570,000 Ceridian * 13,715,625
348,050 Emerson Electric Co. 21,013,519
368,750 Honeywell Inc. 12,422,266
483,400 National Computer Systems Inc. 23,807,450
-----------
110,212,360
-----------
DIVERSIFIED 3.5%
213,000 Minnesota Mining & Manufacturing Company 17,572,500
-----------
TOTAL COMMON STOCKS 98.5% 494,400,472
SHORT TERM INVESTMENTS 1.4%
6,925,136 Firstar Institutional Money Market Fund 6,925,136
-----------
TOTAL INVESTMENTS 99.9% 501,325,608
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1% 366,392
-----------
NET ASSETS 100% $501,692,300
===========
</TABLE>
* Non-income producing
<PAGE>
STATEMENT OF NET ASSETS AT JUNE 30, 2000
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments at market value (cost $339,075,691).................................................. $ 494,400,472
Cash............................................................................................. 6,925,136
Dividends and interest receivable................................................................ 373,994
Receivables for securities sold, not yet delivered............................................... 523,982
Prepaid expense.................................................................................. (15,658)
--------------
502,207,926
LIABILITIES
Accrued management fee................................................. $ 252,250
Accrued custodian and transfer agent fee............................... 78,001
Payable for securities purchased, not yet received..................... 185,375 515,626
---------- --------------
NET ASSETS
Equivalent to $99.63 per share on 5,035,758 shares outstanding................................... $ 501,692,300
==============
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED JUNE 30, 2000
------------------------------------------------------------------------------------------------------------------
NET ASSETS, December 31, 1999.................................................................... $ 546,836,085
Net investment income, per statement below............................. $ 2,321,674
Distribution to shareholders........................................... (1,756,675) 564,999
------------
Fund shares issued and repurchased:
Received for 242,722 shares issued.................................. 22,575,974
Paid for 1,092,861 shares repurchased............................... (98,123,296) (75,547,322)
------------
Increase in unrealized net appreciation (depreciation) of investments............................ (2,598,719)
Net gain (or loss) realized from sales of securities............................................. 32,437,257
--------------
NET ASSETS, June 30, 2000........................................................................ $ 501,692,300
==============
STATEMENT OF NET INVESTMENT INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2000
------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends........................................................................................ $ 4,147,508
Interest......................................................................................... 158,491
------------
4,305,999
EXPENSES
Management fee (Note A)................................................ $ 1,474,118
Fees and expenses of custodian, transfer agent and
dividend disbursing agent (Note A)................................. 257,346
Legal and auditing fees and expenses................................... 15,221
Insurance.............................................................. 6,615
Other Fees and Expenses................................................ 231,025 1,984,325
------------ ------------
NET INVESTMENT INCOME............................................................................ $ 2,321,674
============
</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) The directors of the Fund not affiliated with
Mairs and Power, Inc. received a total of $17,100.00 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, 2000 aggregated
$9,726,021 and $79,693,485 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
-------------------------------------------------------------------------------
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
Jun. 30, 2000 5,035,758 501,692,300 99.63 - 0.35
</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.
AVERAGE ANNUAL TOTAL RETURNS
THE AVERAGE ANNUAL TOTAL RETURNS FOR THE FUND (PERIOD ENDED JUNE 30, 2000) ARE
AS FOLLOWS:
1 YEAR: +4.8% 5 YEARS: +19.9% 10 YEARS: +18.3%
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.
<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS
-------------------------------------------------------------------------------------------------------
<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
Norber J. Conzemius Charlton Dietz Donald E. Garretson J. Thomas Simonet
Director Director Director Director
</TABLE>
