NAIC Growth Fund, Inc.
December 31, 2001
Annual Report
Contents
Report to Shareowners 2
Statement of Assets and Liabilities 3
Statement of Operations 4
Statements of Changes in Net Assets 5
Financial Highlights 6
Portfolio of Investments 7
Notes to Financial Statements 10
Report of Independent Public Accountants 14
Dividends and Distributions 15
NAIC Growth Fund, Inc., Board of Directors 19
Shareowner Information 21
Report to Shareowners:
December 31, 2001
The events of 2001 caused turmoil in the stock market with
the attacks on America and the realization that the economy has been in
a recession since at least march. Stock prices actually began a
downward trend in 2000. Based on historical averages, however, prices
did not appear to decline to a point where they seemed to be bargains.
Even with lower prices, many stocks sold at fairly high multiples, even
those operating in the "old" economy.
For the year, the Dow Jones Industrial Average declined
7.1%, while the S&P 500 was down 13.0%. Hardest hit was the
Nasdaq that dropped 21.1%. The net asset value for the Fund, adjusted
for dividends, declined 1.6%. While negative numbers are never
welcome, the Fund did outperform the popular averages in 2001.
There were some sales primarily made earlier in the year,
resulting in capital gains for the Fund. Those stocks sold included two
small holdings that were acquired because of spin-offs - McData and
Zimmer. In addition, the Fund trimmed holdings in American
International Group and Household International. Sold outright were
Reuters, Coca Cola, Dallas Semiconductor and Cooper Industries.
The Fund added shares in Comerica, ConAgra, General
Electric, Merck, Pfizer and Vishay Intertechnology. Four of those
purchases were made in late September following the attack on the
United States and when the stock market had declined quite
dramatically.
The Board of Directors declared two dividends during the
year. The first was paid August 1, while the second that included a
capital gains distribution was paid on january 30, 2002. In total, the
cash dividends amounted to $0.6725.
Thomas E. O'Hara
Chairman
Kenneth S.Janke
President
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of December 31, 2001
ASSETS
Investment securities
-at market value (cost $8,906,660)
$20,858,933
Short-term investments
-at amortized cost 3,495,372
Cash and cash equivalents 931,199
Dividends & interest receivable 41,050
Prepaid insurance 10,852
Prepaid fees 15,000
25,352,406
LIABILITIES
Dividends payable 1,391,374
Accounts payable 51,823 1,443,197
TOTAL NET ASSETS $23,909,209
SHAREOWNERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 2,158,842 shares $ 2,159
Additional Paid-in Capital 11,954,470
Undistributed net investment income 307
Unrealized appreciation of investments
11,952,273
SHAREOWNERS' EQUITY $23,909,209
NET ASSET VALUE PER SHARE $ 11.08
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the Year Ended December 31, 2001
INVESTMENT INCOME
Interest $ 151,248
Dividends 311,703
462,951
EXPENSES
Advisory fees 182,924
Legal fees 57,821
Transfer agent 34,326
Audit fees 22,000
Insurance 17,668
Directors' fees & expenses 13,297
Custodian fees 13,046
Other professional services 12,000
Mailing & postage 9,805
Other fees & expenses 8,643
Printing 8,554
Annual sharehowners' meeting 3,455
Net Expenses 383,539
Net investment income 79,412
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on investments:
Proceeds from sale of investment securities 1,962,392
Cost of investment securities sold 591,849
Net realized gain on investments 1,370,543
Unrealized appreciation of investments:
Unrealized appreciation at beginning of year 13,807,151
Unrealized appreciation at end of year 11,952,273
Net change in unrealized appreciation on investments
(1,854,878)
Net realized and unrealized loss on investments
(484,335)
NET DECREASE FROM OPERATIONS $ (404,923)
See notes to financial statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the years ended:
December 31, 2001 December 31, 2000
FROM OPERATIONS:
Net investment income $ 79,412 $ 183,239
Net realized gain
on investments 1,370,543 2,875,672
Net change in unrealized
appreciation on investments (1,854,878) 1,481,679
Net decrease/increase
from operations (404,923) 4,540,590
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income 80,695 186,201
Net realized gain from
investment transactions 1,370,543 2,875,672
Total distributions 1,451,238 3,061,873
FROM CAPITAL STOCK TRANSACTIONS:
Dividend reinvestment 1,607,357 47,746
Cash purchases 230,222 49,622
Net increase from capital
stock transactions 1,837,579 97,368
Net increase/(decrease)
in net assets (18,582) 1,576,085
TOTAL NET ASSETS:
Beginning of year $23,927,791 $22,351,706
End of year
(including undistributed net
investment income of $307 and
$1,590, respectively) $23,909,209 $23,927,791
Shares:
Shares issued to common
stockholders under the dividend
reinvestment and cash purchase plan 158,525 6,512
Shares issued to common stockholders
for the December 2000,
15% stock dividend 0 260,823
Shares at beginning of year 2,000,317 1,732,982
Shares at end of year 2,158,842 2,000,317
See notes to financial statements
NAIC Growth Fund, Inc.
Financial Highlights (a)
For the years ended:
2001 2000 1999 1998 1997
Net asset value at
beginning of year $11.96 $11.22 $10.86 $9.56 $7.89
Net investment income .04 .09 .08 .12 .09
Net realized and
unrealized gain
(loss) on investments (.25) 2.18 .76 1.68 1.99
Total from investment
operations (.21) 2.27 .84 1.80 2.08
Distribution from:
Net investment income (.04) (.09) (.09) (.11) (.09)
Realized gains (.63) (1.44) (.39) (.39) (.32)
Total distributions (.67) (1.53) (.48) (.50) (.41)
Net asset value at end
of period $11.08 $11.96 $11.22 $10.86 $9.56
Per share market
value,
end of Ask 10 3/4 11 10 1/4 10 3/4 15 1/4
period Bid 10 1/4 10 1/2 10 10 1/4 14 1/2
Total Investment Return Annualized:
Based on market value
1 year 3.70% 30.90% 2.85% (25.42%) 58.50%
from inception 11.66% 12.57% 10.28% 11.30% 17.84%
Based on net asset value
1 year (1.59%) 27.27% 7.75% 18.84% 26.43%
from inception 12.42% 13.81% 13.15% 13.79% 13.69%
Net Assets,
end of year (mil) $23,909.2 $23,927.8 $22,351.7 $20,701.2 $17,335.3
Ratios to average net assets
annualized:
Ratio of expenses to
average net
assets(b) 1.57% 1.25% 1.00% 0.83% 0.96%
Ratio of net investment income
to average
net assets(b) 0.32% 0.74% 0.70% 1.13% 0.96%
Portfolio turnover
rate 1.77% 10.61% 4.20% 5.87% 6.31%
(a) All per share data for 2000, 1999, 1998, and 1997 has been restated
to reflect the effect of a 15% stock dividend which was declared on
august 18, 2000 and paid on September 29, 2000 to shareholders of
record on Sept. 18, 2000.
(b) For the years ended 2000, 1999, 1998, and 1997, the adviser
voluntarily waived all or a portion of its fees. Had the adviser not done
so in 2000, 1999, 1998, and 1997 the ratio of expenses to average net
assets would have been 1.44%, 1.37%, 1.39%, and 1.69% and the ratio
of net investment income to average net assets would have been 0.55%,
0.32%, 0.57%, and 0.23% for each of these years.
NAIC Growth Fund, Inc.
Portfolio of Investments -
December 31, 2001
% Common Stock Shares Cost Market
3.6 Auto Replacement
Dana Corporation 10,000 $223,000 $138,800
O'Reilly Auto* 20,000 242,606 729,400
10.6 Banking
Bank One Corp. 7,000 212,495 273,350
Citigroup 20,000 79,167 1,009,600
Comerica, Inc. 6,000 199,635 343,800
Huntington Banc. 24,200 221,907 415,998
Synovus Financial 20,000 140,937 501,000
3.4 Building Products
Clayton Homes 20,000 221,325 342,000
Johnson Controls 6,000 96,895 484,500
5.1 Chemicals
OM Group, Inc. 10,000 344,650 661,900
Polyone Corp. 10,000 88,000 98,000
RPM 18,000 190,250 260,280
Sigma Aldrich 5,000 94,937 197,050
0.5 Computers
EMC Corp.* 10,000 70,912 134,400
3.0 Consumer Products
Colgate-Palmolive 8,000 98,500 462,000
Newell Rubbermaid 9,000 237,375 248,130
6.3 Electrical Equipment
American Power Conv.* 10,000 190,531 144,600
Federal Signal 12,000 280,562 267,240
General Electric 15,000 149,886 601,200
Vishay Intertech* 25,000 245,379 487,500
2.2 Electronics
Diebold 10,000 269,187 404,400
Molex, Inc. 5,000 81,979 135,250
9.6 Ethical Drugs
American Home Prod. 6,000 90,510 368,160
Bristol-Myers Squibb 6,000 101,400 306,000
Eli Lilly 6,000 91,687 471,240
Johnson & Johnson 4,000 45,500 236,400
Merck & Co., Inc. 6,000 149,805 352,800
Pfizer, Inc. 14,000 129,140 557,900
6.3 Financial Services
Household Int'l 19,000 175,353 1,100,860
State Street Boston 8,000 75,500 418,000
4.9 Food
Albertson's 7,000 235,331 220,430
ConAgra 12,000 206,025 285,240
Heinz, H.J. 6,000 179,375 246,720
McCormick & Co. 10,000 223,975 419,700
6.9 Hospital Supplies
Biomet Corp. 15,750 122,250 486,675
Invacare 10,000 245,375 337,100
Stryker Corp. 14,000 160,063 817,180
1.9 Industrial Services
Donaldson Co. 12,000 162,563 466,080
4.7 Insurance
AFLAC, Inc. 20,000 143,906 491,200
American Int'l Group 8,000 67,499 635,200
1.7 Machinery
Emerson Electric Co. 7,000 170,393 399,700
4.3 Multi Industry
Carlisle 8,000 318,631 295,840
Pentair 7,000 171,894 255,570
Teleflex 10,000 277,938 473,100
1.4 Office Equipment
Hon Industries 12,000 283,938 331,800
1.0 Restaurants
McDonald's 8,000 53,625 211,760
1.3 Realty Trust
First Industrial
Realty Trust 10,000 257,463 311,000
1.6 Semiconductor
Intel 12,000 228,563 377,400
2.4 Soft Drinks
PepsiCo 12,000 205,374 584,280
0.5 Telecommunications
ADC Telecom.* 24,000 14,156 110,400
2.2 Transportation
Sysco Corp. 20,000 142,750 524,400
1.8 Utilities
CenturyTel, Inc. 13,000 196,563 426,400
87.2% Investment
Securities $8,906,660 $20,858,933
Short-term Investments
14.6 United States Treasury Bill,
Maturing 1/24/2002 $3,495,372
3.9 Misc. Cash Equivalents 931,199
18.5% $4,426,571
Total Investments $25,285,504
(5.7%) All other assets less liabilities (1,376,295)
100% TOTAL NET ASSETS $23,909,209
Top Ten Holdings - NAIC Growth Fund, 12/31/01
Market % of
Company Value Portfolio Investments
Household Int'l $1,100,860 4.6
Citigroup 1,009,600 4.2
Stryker Corp. 817,180 3.4
O'Reilly Auto 729,400 3.1
OM Group 661,900 2.8
American Int'l Group 635,200 2.7
General Electric 601,200 2.5
PepsiCo 584,280 2.4
Pfizer 557,900 2.3
Sysco 524,400 2.2
NAIC Growth Fund, Inc.
Notes to Financial Statements
(1) ORGANIZATION
The NAIC Growth Fund, Inc. (the "Fund") was organized under
Maryland law on April 11, 1989 as a diversified closed-end investment
company under the Investment Company Act of 1940. The Fund
commenced operations on July 2, 1990.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
followed by the Fund not otherwise set forth in the notes to financial
statements:
Dividends and Distributions - Dividends from the Fund's net
investment income and realized net long- and short-term capital gains
will be declared and distributed at least annually. Shareowners may
elect to participate in the Dividend Reinvestment and Cash Purchase
Plan (see Note 4).
Investments - Investments in equity securities are stated at market
value, which is determined based on quoted market prices or dealer
quotes. Pursuant to Rule 2a-7 of the Investment Company Act of 1940,
the Fund utilizes the amortized cost method to determine the carrying
value of short-term debt obligations. Under this method, investment
securities are valued for both financial reporting and Federal tax
purposes at amortized cost, which approximates fair value. Any
discount or premium is amortized from the date of acquisition to
maturity. Investment security purchases and sales are accounted for on
a trade date basis. Interest income is accrued on a daily basis while
dividends are included in income on the ex-dividend date.
Use of Estimates - 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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Federal Income Taxes - The Fund intends to comply with the general
qualification requirements of the Internal Revenue Code applicable to
regulated investment companies. The Fund intends to distribute at least
90% of its taxable income, including net long-term capital gains, to its
shareowners. In order to avoid imposition of the excise tax applicable
to regulated investment companies, it is also the Fund's intention to
declare as dividends in each calendar year at least 98% of its net
investment income and 98% of its net realized capital gains plus
undistributed amounts from prior years.
The following information is based upon Federal income tax cost of
portfolio investments as of December 31, 2001:
Gross unrealized appreciation $ 12,133,419
Gross unrealized depreciation (181,146)
Net unrealized appreciation $ 11,952,273
Federal income tax cost $ 8,906,660
Expenses -The Fund's service contractors bear all expenses in
connection with the performance of their services. The Fund bears all
expenses incurred in connection with its operations including, but not
limited to, management fees (as discussed in Note 3), legal and audit
fees, taxes, insurance, shareowner reporting and other related costs.
Such expenses will be charged to expense daily as a percentage of net
assets. The Advisory Agreement provides that the Fund may not incur
annual aggregate expenses in excess of two percent (2%) of the first
Ten Million Dollars of the Fund's average net assets, one and one-half
percent (1 1/2%) of the next Twenty Million Dollars of the average net
assets, and one percent (1%) of the remaining average net assets for any
fiscal year. Any excess expenses shall be the responsibility of the
Investment Adviser, and the pro rata portion of the estimated annual
excess expenses will be offset against the Investment Adviser's
monthly fee.
A director of the Fund provides professional services to the fund. The
fees for those services amounted to $12,000 for the year ended
December 31, 2001.
(3) MANAGEMENT ARRANGEMENTS
Investment Adviser - Growth Fund Advisor, Inc., serves as the Fund's
Investment Adviser subject to the Investment Advisory Agreement, and
is responsible for the management of the Fund's portfolio, subject to
review by the board of directors of the Fund.
For the services provided under the Investment Advisory Agreement,
the Investment Adviser receives a monthly fee at an annual rate of
three-quarters of one percent (0.75%) of the average weekly net asset
value of the Fund, during the times when the average weekly net asset
value is at least $3,800,000. The Investment Adviser will not be
entitled to any compensation for a week in which the average weekly
net asset value falls below $3,800,000.
Custodian and Plan Agent - Standard Federal Bank, NA (SFB)
serves as the Fund's custodian pursuant to the Custodian Agreement.
As the Fund's custodian, SFB receives fees and compensation of
expenses for services provided including, but not limited to, an annual
account charge, annual security fee, security transaction fee and
statement of inventory fee. American Stock Transfer and Trust
Company serves as the Fund's transfer agent
and dividend disbursing agent pursuant to Transfer Agency and
Dividend Disbursement Agreements. American Stock Transfer and
Trust Company receives fees for services provided including, but not
limited to, account maintenance fees, activity and transaction
processing fees and reimbursement of out-of-pocket expenses such as
forms and mailing costs.
(4) DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
The Fund has a Dividend Reinvestment and Cash Purchase Plan (the
"Plan") which allows shareowners to reinvest dividends paid and make
additional contributions. Under the Plan, if on the valuation date the
net asset value per share is lower than the market price at the close of
trading on that day, then the Plan Agent will elect on behalf of the
shareowners who are participants of the Plan to take the dividends in
newly issued shares of the Fund's common stock. If net asset value
exceeds the market price on the valuation date, the Plan Agent will
elect to receive cash dividends, and will promptly buy shares of the
Fund's common stock on whatever market is consistent with best price
and execution. The number of shares credited to each shareowner
participant's account will be based upon the average purchase price for
all shares purchased.
(5) DISTRIBUTIONS TO SHAREOWNERS
On May 17, 2001, a distribution of $0.028 per share aggregating
$59,864 was declared from net investment income. The dividend was
paid August 1, 2001, to shareowners of record June 29, 2001. On
December 6, 2001, a distribution of $0.6445 per share aggregating
$1,391,374 was declared from net investment income and realized
gains. the dividend was paid January 30, 2002, to shareowners of
record December 27, 2001.
The tax character of distributions paid during 2001 and 2000 was as
follows:
2001 2000
Distributions paid from:
Ordinary income $ 80,695 $ 186,201
Long-term capital gain 1,370,543 2,875,672
$1,451,238 $3,061,873
As of December 31, 2001, the components of distributable earnings on
a tax basis were as follows:
Undistributed ordinary income $ 307
Unrealized appreciation $11,952,273
(6) Investment transactions
Purchases and sales of securities, other than short-term securities for
the year ended December 31, 2001, were $365,421 and $1,962,392,
respectively.
(7) FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Fund's
net asset value has changed during the years presented. Additional
quantitative measures expressed in ratio form analyze important
relationships between certain items presented in the financial
statements. The Total Investment Return based on market value
assumes that shareowners bought into the Fund at the bid price and sold
out of the Fund at the bid price. In reality, shareowners buy into the
Fund at the ask price and sell out of the Fund at the bid price.
Therefore, actual returns may differ from the amounts stated.
Report of Independent Public Accountants
To the Board of Directors and Shareowners of NAIC Growth Fund,
Inc.:
We have audited the accompanying statement of assets and
liabilities of NAIC GROWTH FUND, INC. (a Maryland corporation),
including the portfolio of investments, as of December 31, 2001, and
the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years
in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards in the united states. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 2001, by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material respects, the
financial position of NAIC Growth Fund, Inc. as of December 31,
2001, the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then
ended in conformity with accounting principles generally accepted in
the united states.
ARTHUR ANDERSEN LLP
Detroit, Michigan,
January 4, 2002.
NAIC Growth Fund, Inc.
Dividends and Distributions: Dividend Reinvestment and Cash
Purchase Plan
We invite you to join the Dividend Reinvestment and Cash
Purchase Plan (the "Plan"), which is provided to give you easy and
economical ways of increasing your investment in the Fund's shares.
THOSE SHAREOWNERS WHO HAVE ELECTED TO
PARTICIPATE IN THE PLAN NEED NOT DO ANYTHING
FURTHER TO MAINTAIN THEIR ELECTION.
American Stock Transfer and Trust Company will act as the
Plan Agent on behalf of shareowners who are participants in the Plan.
All shareowners of the Fund (other than brokers and nominees
of financial institutions) who have not previously elected to participate
in the Plan or who have terminated their election may elect to become
participants in the Plan by filling in and signing the form of
authorization obtainable from American Stock Transfer and Trust
Company, the transfer agent for the Fund's shares and the shareowners'
agent for the Plan, and mailing it to American Stock Transfer and Trust
Company P.O. Box 922 Wall Street Station, New York, NY 10038.
The authorization must be signed by the registered shareowners of an
account. Participation is voluntary and may be terminated or resumed at
any time upon written notice from the participant received by the Plan
Agent prior to the record date of the next dividend. Additional
information regarding the election may be obtained from the Fund.
Dividend payments and other distributions to be made by the
Fund to participants in the Plan either will be paid to the Plan Agent in
cash (which then must be used to purchase shares in the open market)
or, will be represented by the delivery of shares depending upon which
of the two options would be the most favorable to participants, as
hereafter determined. On each date on which the Fund determines the
net asset value of the shares (a Valuation Date), and which occurs not
more than five business days prior to a date fixed for payment of a
dividend or other distribution from the Fund, the Plan Agent will
compare the determined net asset value per share with the market price
per share. For all purposes of the Plan, market price shall be deemed to
be the highest price bid at the close of the market by any market maker
on the date which coincides with the relevant Valuation Date, or, if no
bids were made on such date, the next preceding day on which a bid
was made. The market price was $10.75 on December 31, 2001. If the
net asset value in any such comparison is found to be lower than said
market price, the Plan Agent will demand that the Fund satisfy its
obligation with respect to any such dividend or other distribution by
issuing additional shares to the Participants in the Plan at a price per
share equal to the greater of the determined net asset value per share or
ninety-five percent (95%) of the market price per share determined as
of the close of business on the relevant Valuation Date. However, if the
net asset value per share (as determined above) is higher than the
market price per share, then the Plan Agent will demand that the Fund
satisfy its obligation with respect to any such dividend or other
distribution by a cash payment to the Plan Agent for the account of
Plan participants and the Plan Agent then shall use such cash payment
to buy additional shares in the open market for the account of the Plan
participants, provided, however, that the Plan Agent shall not purchase
shares in the "open market" at a price in excess of the net asset value as
of the relevant Valuation Date. In the event the Plan Agent is unable to
complete its acquisition of shares to be purchased in the "open market"
by the end of the first trading day following receipt of the cash payment
from the Fund, any remaining funds shall be used by the Plan Agent to
purchase newly issued shares of the Fund's common stock from the
Fund at the greater of the determined net asset value per share or
ninety-five percent (95%) of the market price per share as of the date
coinciding with or next preceding the date of the relevant Valuation
Date.
Participants in the Plan will also have the option of
making additional cash payments to the Plan Agent, on a monthly
basis, for investment in the Fund's shares. Such payments may be made
in any amount from a minimum of $50.00 to a maximum of $1,000.00
per month. The Fund may, in its discretion, waive the maximum
monthly limit with respect to any participant. At the end of each
calendar month, the Plan Agent will determine the amount of funds
accumulated. Purchases made from the accumulation of payments
during any one calendar month will be made on or about the first
business day of the following month (Investment Date). The funds will
be used to purchase shares of the Fund's common stock from the Fund
if the net asset value of the shares is lower than the market price as of
the Valuation Date which occurs not more than five business days prior
to the relevant Investment Date. In such case, such shares will be newly
issued shares and will be issued at a price per share equal to the greater
of the determined net asset value per share or ninety-five percent (95%)
of the market price per share. If the net asset value per share is higher
than the market price per share, then the Plan Agent shall use such cash
payments to buy additional shares in the open market for the account of
the Plan participants, provided, however, that the Plan Agent shall not
purchase shares in the "open market" at a price in excess of the net
asset value as of the relevant Valuation Date. In the event the Plan
Agent is unable to complete its acquisition of shares to be purchased in
the "open market" by the end of the Investment Date, any remaining
cash payments shall be used by the Plan Agent to purchase newly
issued shares of the Fund's common stock from the Fund at the greater
of the determined net asset value per share or ninety-five (95%) percent
of the market price per share as of the relevant Valuation Date. All
cash payments received by the Plan Agent in connection with the Plan
will be held without earning interest. To avoid unnecessary cash
accumulations, and also to allow ample time of receipt and processing
by the Plan Agent, participants participants that wish to make voluntary
cash payments should send such payments to the Plan Agent in such a
manner that assures that the Plan Agent will receive and collect Federal
Funds by the end of the month. This procedure will avoid unnecessary
accumulations of cash and will enable participants to realize lower
brokerage commissions and to avoid additional transaction charges. If a
voluntary cash payment is not received in time to purchase shares in
any calendar month, such payment shall be invested on the next
Investment Date. A participant may withdraw a voluntary cash
payment by written notice to the Plan Agent if the notice is received by
the Plan Agent at least forty-eight hours before such payment is to be
invested by the Plan Agent.
American Stock Transfer and Trust Company as the Plan
Agent will perform bookkeeping and other administrative functions,
such as maintaining all shareowner accounts in the Plan and furnishing
written confirmation of all transactions in the account, including
information needed by shareowners for personal and tax records.
Shares in the account of each Plan participant will be held by the Plan
Agent in noncertificated form in the name of the participant, and each
shareowner's proxy will include those shares purchased pursuant to the
Plan and of record as of the record date for determining those
shareowners who are entitled to vote on any matter involving the Fund.
In case of shareowners such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will
administer the Plan on the basis of the number of shares certified from
time to time by such shareowners as representing and limited to the
total number of shares registered in the shareowner's name and held for
the account of beneficial owners who have elected to participate in the
Plan.
There are no special fees or charges to participants other than
reasonable transaction fees and a termination fee of $15.00 plus 10
cents per share.
With respect to purchases from voluntary cash payments, the
Plan Agent will charge a pro rata share of the brokerage commissions,
if any. Brokerage charges for purchasing small blocks of stock for
individual accounts through the Plan are expected to be less than the
usual brokerage
charges for such transactions, as the Plan Agent will be purchasing
shares for all participants in larger blocks and prorating the lower
commission rate thus applied.
The automatic reinvestment of dividends and distributions will
not relieve participants of any income tax liability associated therewith.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan
as applied to any voluntary cash payment received and any dividend or
distribution to be paid subsequent to a date specified in a notice of the
change sent to all shareowners at least ninety days before such
specified date. The Plan may also be terminated on at least ninety days
written notice to all shareowners in the Plan. All correspondence
concerning the Plan should be directed to American Stock Transfer and
Trust Company, P.O. Box 922 Wall Street Station, New York, NY
10038.
Directors
Directors Who Are Interested Persons of the Fund
Name, Address
and Age*
Position(s)
Held with
Fund
Term of
Office and
Length of
Time Served
Principal Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director or
Nominee for
Director**
Other
Directorships
Held by
Director or
Nominee for
Director
Thomas E.
O'Hara
Age 86
Chairman of the Board and
DirectorTerm of office one year.
Served as a director since 1989.
Chairman Emeritus of the Board
and Trustee of the National
Association of Investors
Corporation, a nonprofit
corporation engaged in investment
education ("NAIC") and Chairman
Emeritus and Director of Growth
Fund Advisor, Inc., the Fund's
investment adviser (the
"Investment Adviser") February,
2002 to present. Chairman and
Trustee of NAIC and Chairman
and Director of the Investment
Adviser to February, 2002.
One
None.
Kenneth S.
Janke
Age 67
Director, President and Treasurer
Term of office one year. Served as a
director since 1989.Chairman, Chief Executive
Officer and Trustee of NAIC and Chairman,
Chief Executive Officer
and Director of the Investment
Adviser February, 2002 to present.
President and Trustee of NAIC and
President and Director of the
Investment Adviser to February,
2002.
One
Director,
AFLAC.
Lewis A.
Rockwell
Age 83
Director and Secretary
Term of office one year. Served as a
director since 1989. Counsel to the law firm of
Bodman, Longley & Dahling LLP,
counsel to the Fund, NAIC and the
Investment Adviser; Trustee and
Secretary of NAIC; Director and
Secretary of the Investment Adviser.
One
None.
Peggy L.
Schmeltz
Age 74
DirectorTerm of office one year.
Served as a director since 1989.
Adult Education Teacher; Trustee
of NAIC; Director of Bowling
Green State University Foundation
Board.
One
None.
*The address of each is the address of the Fund. Messrs. O'Hara, Janke
and Rockwell and Mrs. Schmeltz are interested persons of the Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940. Mr. O'Hara
is an interested person because he is a trustee of NAIC and a director of the
Investment Adviser. Messrs. Janke and Rockwell are interested persons because
they are trustees and officers of NAIC and directors and officers of the
Investment Adviser, as noted above. Mrs. Schmeltz is an interested person
because she is a trustee of NAIC.
**The Fund is not part of any fund complex.
Directors Who Are Not Interested Persons of the Fund
Name, Address
and Age*
Position(s)
Held with
Fund
Term of
Office and
Length of
Time Served
Principal Occupation(s) During
Past 5 Years
Number of
Portfolios in Fund
Complex Overseen
by Director or
Nominee for
Director**
Other
Directorships
Held by
Director or
Nominee for
Director
Cynthia P.
Charles
Age 80
DirectorTerm of office
one year. Served as a
director since 1989.Retired.
One
None.
Carl A. Holth
Age 69
DirectorTerm of office one year.
Served as a director since 1989.
President and Director, Greater
Detroit Capital Corporation;
Financial Consultant and President
of Carl A. Holth & Associates, Inc.
(a private financial consulting and
business appraisal firm); Director,
Sunshine Fifty, Inc., and Harrison
Piping Supply, Inc.
One
None.
Benedict J. Smith
Age 81
DirectorTerm of office one year.
Served as a director since 1989.
Retired; Director and Treasurer,
Detroit Executive Service Corps;
Director, Vista Maria; Trustee,
Henry Ford Health System,
Behavioral Services.
One
None.
James M. Lane
Age 72
DirectorTerm of office one year.
Served as a director since 1989.
Retired; Director, Chateau
Communities, Inc., Wheaton
College, William Tyndale College,
Baseball Chapel, Inc. and Christian
Camps, Inc.
One
None.
*The address of each is the address of the Fund.
**The Fund is not part of any fund complex.
The Fund's Investment Adviser is a wholly owned
subsidiary of N.A.I.C. Holding Corporation, a Michigan corporation
which conducts no business activities. NAIC and N.A.I.C. Holding
Corporation are each wholly owned subsidiaries of the National
Association of Investment Clubs Trust (the "Trust"). Mr. O'Hara is
the Chairman Emeritus and a Trustee of the Trust; Mr. Janke is the
Chairman, Chief Executive Officer and a Trustee of the Trust; and
Mr. Rockwell is the Secretary and a Trustee of the Trust. The Fund
is the Investment Adviser's sole advisory client.
No director or nominee for election as director, nor any of
their immediate family members, owns any securities beneficially or
of record in the Fund's Investment Adviser or any of its affiliates.
There were four meetings of the Board of Directors held
during 2001. Each Director attended at least 75% of the meetings of
the Board of Directors and committees of the Board on which he or
she served during 2001.
NAIC Growth Fund, Inc.
Board of Directors
Thomas E. O'Hara
Chairman,
Highland Beach, FL
Lewis A. Rockwell
Secretary,
Grosse Pointe Shores, MI
Carl A. Holth
Director,
Clinton Twp., MI
Kenneth S. Janke
President,
Bloomfield Hills, MI
Benedict J. Smith
Director,
Birmingham, MI
James M. Lane
Director,
Highland Beach, FL
Peggy L. Schmeltz
Director,
Bowling Green, OH
Cynthia P. Charles
Director,
Ambler, PA
Shareowner Information
The ticker symbol for the NAIC Growth Fund, Inc., on the Chicago
Stock Exchange is GRF. You may wish to visit the Chicago Stock
Exchange web site at www.chicagostockex.com.
The dividend reinvestment plan allows shareowners to automatically
reinvest dividends in Fund common stock without paying commission.
Once enrolled, you can make additional stock purchases through
monthly cash deposits ranging from $50 to $1,000. For more
information, request a copy of the Dividend Reinvestment Service for
Stockholders of NAIC Growth Fund, Inc., from American Stock
Transfer and Trust Company, P.O. Box 922 Wall Street Station, New
york, NY 10038 Telephone 1-800-937-5449
Questions about dividend checks, statements, account consolidation,
address changes, stock certificates or transfer procedures write
American Stock Transfer and Trust Company, P.O. Box 922 Wall
Street Station, New york, NY 10038 Telephone 1-800-937-5449
Shareowners or individuals wanting general information or having
questions, write NAIC, P.O. Box 220, Royal Oak, Michigan 48068.
Telephone 877-275-6242 or visit us at our website at
www.naicgrowthfund.com.