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, 2002
For the third consecutive year, the stock market declined
as measured by any of the popular averages. It was not a good environment
for those investing in equities, including mutual funds. Stocks that
appeared to become bargains continued to decline in price through the year
with few equity prices ending 2002 with positive results. In hindsight, it
was a good year for selling, but not a good one for buying.
Paying attention to fundamentals was still a priority for
the fund managers and with that in mind, several additions were made to
existing positions in the portfolio. The fund managers bought at what were
thought to be favorable valuations, but with the continued drop in stock
prices, few were up by the end of the year. Following are the purchases and
prices paid, with the closing price of the stock on December 31 shown in
parenthesis:
We purchased 4,000 Albertson's at 23.43 (22.26); 2,000 American
International Group at 64.48 (57.85); 3,000 Bank One at 39.63 (36.55);
2,000 Colgate-Palmolive at 50.98 (52.43); 2,000 Comerica at 47.87 (43.24);
2,000 Conagra at 24.45 (25.01); 2,000 Emerson at 53.84 (50.85); 4,000
First Industrial Realty at 34.38 (28.00); 2,000 General Electric at 26.68
(24.35); 2,000 H.J. Heinz at 37.55 (32.87); 3,000 Merck at 57.31 (56.61);
5,000 Pfizer at 31.68 (30.57); 4,000 RPM at 15.22 (15.28) and 2,000
Synovus Financial at 27.54 (19.40).
Sales resulted in a capital gain of approximately $1.2
million. The Fund reduced its position in Citigroup and sold its holdings in
ADC Telecommunications, American Power Conversion, Bristol-Myers
Squibb, CenturyTel, Clayton Homes, Dana, EMC Corporation, Hon
Industries, Household International, McDonald's, Molex, OM Group and
Travelers.
We are pleased to welcome Luke Sims, an attorney from
Milwaukee who was elected to the Board of Directors at the annual
meeting. Retiring from the Board was Cynthia Charles, who has served
with distinction since the founding of the NAIC Growth fund. Cynthia was
the past President and Chairman of the National Association of Investors
and we will miss her counsel and guidance.
The Board of Directors declared one dividend during the
year that was paid on january 30, 2003 in the amount of $0.5412 per share.
Thomas E. O'Hara Kenneth S. Janke
Chairman President
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of December 31, 2002
ASSETS
Investment securities
-at market value (cost $9,014,884) $16,474,661
Short-term investments
-at amortized cost 4,195,637
Cash and cash equivalents 1,101,180
Dividends & interest receivable 50,705
Prepaid insurance 9,436
Prepaid fees 33,273
21,864,892
LIABILITIES
Dividends payable 1,225,329
Accounts payable 84,242 1,309,571
TOTAL NET ASSETS $20,555,321
SHAREOWNERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 2,264,097 shares $ 2,264
Additional Paid-in Capital 13,092,690
Undistributed net investment income 590
Unrealized appreciation of investments 7,459,777
SHAREOWNERS' EQUITY $20,555,321
NET ASSET VALUE PER SHARE $ 9.08
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the Year Ended December 31, 2002
INVESTMENT INCOME
Interest $ 81,760
Dividends 337,713
419,473
EXPENSES
Advisory fees 175,533
Legal fees 78,590
Transfer agent 28,407
Audit fees 18,000
Insurance 17,600
Other professional services 12,000
Directors' fees & expenses 11,075
Custodian fees 11,000
Printing 8,638
Mailing & postage 5,791
Other fees & expenses 5,707
Annual sharehowners' meeting 3,414
Net Expenses 375,755
Net investment income 43,718
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on investments:
Proceeds from sale
of investment securities 3,164,734
Cost of investment
securities sold 1,982,840
Net realized gain on investments 1,181,894
Unrealized appreciation of investments:
Unrealized appreciation at
beginning of year 11,952,273
Unrealized appreciation at
end of year 7,459,777
Net change in unrealized
appreciation on investments (4,492,496)
Net realized and unrealized
loss on investments (3,310,602)
NET DECREASE FROM OPERATIONS $ (3,266,884)
See notes to financial statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the years ended:
December 31, 2002 December 31, 2001
FROM OPERATIONS:
Net investment income $ 43,718 $ 79,412
Net realized gain on investments 1,181,894 1,370,543
Net change in unrealized appreciation
on investments (4,492,496) (1,854,878)
Net decrease/increase from
operations (3,266,884) (404,923)
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income 43,435 80,695
Net realized gain from
investment transactions 1,181,894 1,370,543
Total distributions 1,225,329 1,451,238
FROM CAPITAL STOCK TRANSACTIONS:
Dividend reinvestment 869,087 1,607,357
Cash purchases 269,238 230,222
Net increase from capital
stock transactions 1,138,325 1,837,579
Net increase/(decrease)
in net assets (3,353,888) (18,582)
TOTAL NET ASSETS:
Beginning of year $23,909,209 $23,927,791
End of year (including undistributed
net investment income of $590
and $307, respectively) $20,555,321 23,909,209
Shares:
Shares issued to common stockholders under
the dividend reinvestment and cash
purchase plan 105,255 158,525
Shares at beginning of year 2,158,842 2,000,317
Shares at end of year 2,264,097 2,158,842
See notes to financial statements
NAIC Growth Fund, Inc.
Financial Highlights (a)
For the years ended:
2002 2001 2000 1999 1998
Net asset value at beginning of year $11.08 $11.96 $11.22 $10.86 $9.56
Net investment income .02 .04 .09 .08 .12
Net realized and unrealized gain
(loss) on investments (1.48) (.25) 2.18 .76 1.68
Total from investment operations (1.46) (.21) 2.27 .84 1.80
Distribution from:
Net investment income (.02) (.04) (.09) (.09) (.11)
Realized gains (.52) (.63) (1.44) (.39) (.39)
Total distributions (.54) (.67) (1.53) (.48) (.50)
Net asset value at end of period $9.08 $11.08 $11.96 $11.22 $10.86
Per share market value, Ask 10.60 10.75 11.00 10.25 10.75
end of period Bid 9.95 10.25 10.50 10.00 10.25
Total Investment Return Annualized:
Based on market value
1 year 2.10% 3.70% 30.90% 2.85%(25.42%)
from inception 10.86% 11.66% 12.57% 10.28% 11.30%
Based on net asset value
1 year (13.81%) (1.59%) 27.27% 7.75% 18.84%
from inception 10.06% 12.42% 13.81% 13.15% 13.79%
Net Assets, end of year (000's)$20,555.3 $23,909.2 $23,927.8 $22,351.7 $20,701.2
Ratios to average net assets
annualized:
Ratio of expenses to
average net assets (b) 1.61% 1.57% 1.25% 1.00% 0.83%
Ratio of net investment income
to average net assets (b) .17% 0.32% 0.74% 0.70% 1.13%
Portfolio turnover rate 11.19% 1.77% 10.61% 4.20% 5.87%
(a) All per share data for 2000, 1999, and 1998 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, and 1998, the adviser voluntarily
waived all or a portion of its fees. Had the adviser not done so in 2000,
1999, and 1998 the ratio of expenses to average net assets would have been
1.44%, 1.37%, and 1.39% and the ratio of net investment income to average
net assets would have been 0.55%, 0.32%, and 0.57%, for each of these
years.
NAIC Growth Fund, Inc.
Portfolio of Investments - December 31, 2002
% Common Stock Shares Cost Market
2.5 Auto Replacement
O'Reilly Auto* 20,000 242,606 $505,800
10.5 Banking
Bank One Corp. 10,000 331,370 365,500
Citigroup 15,000 53,760 527,846
Comerica, Inc. 9,000 353,210 389,160
Huntington Banc 24,200 221,907 452,782
Synovus Financial 22,000 196,008 426,800
2.3 Building Products
Johnson Controls 6,000 96,895 481,020
3.0 Chemicals
Polyone Corp. 10,000 88,000 39,200
RPM 22,000 251,148 336,160
Sigma Aldrich 5,000 94,937 243,500
3.9 Consumer Products
Colgate-Palmolive 10,000 200,450 524,300
Newell Rubbermaid 9,000 237,375 272,970
5.6 Electrical Equipment
Federal Signal 17,000 372,110 330,140
General Electric 22,000 378,341 535,700
Vishay Intertech* 25,000 245,379 279,500
2.0 Electronics
Diebold 10,000 269,187 412,200
10.2 Ethical Drugs
Eli Lilly 6,000 91,687 381,000
Johnson & Johnson 4,000 45,500 214,840
Merck & Co., Inc. 10,000 379,817 566,100
Pfizer, Inc. 23,000 442,195 703,110
Wyeth 6,000 90,510 224,400
1.5 Financial Services
State Street Boston 8,000 75,500 312,000
6.8 Food
Albertson's 11,000 329,031 244,860
Conagra 14,000 254,915 350,140
Del Monte 4,466 33,553 34,388
Heinz, H.J. 10,000 309,522 328,700
McCormick & Co. 20,000 223,975 464,000
8.4 Hospital Supplies
Biomet Corp. 15,750 122,250 451,395
Invacare 10,000 245,375 333,000
Stryker Corp. 14,000 160,063 939,680
2.1 Industrial Services
Donaldson Co. 12,000 162,562 432,000
5.7 Insurance
AFLAC, Inc. 20,000 143,906 602,400
American Int'l Group 10,000 196,449 578,500
2.5 Machinery
Emerson Electric 10,000 335,278 508,500
Co.
4.8 Multi Industry
Carlisle 8,000 318,631 331,040
Pentair 7,000 171,894 241,850
Teleflex 10,000 277,938 428,900
1.9 Realty Trust
First Industrial 14,000 394,963 392,000
Realty Trust
1.0 Semiconductor
Intel 12,000 228,563 186,840
2.5 Soft Drinks
PepsiCo 12,000 205,374 506,640
2.9 Transportation
Sysco Corp. 20,000 142,750 595,800
80.1% Investment $9,014,884 $16,474,661
Securities
Short-term Investments
20.4 United States Treasury Bill,
Maturing 1/30/2003 $4,195,637
5.8 Misc. Cash Equivalents 1,194,594
26.2% $5,390,231
Total Investments $21,864,892
(6.3%) All other assets less liabilities (1,309,571)
100% Total Net Assets $20,555,321
*Non-Income Producing Security
Top Ten Holdings - NAIC Growth Fund, 12/31/02
Market % of
Company Value Portfolio Investments
Stryker $939,680 4.6
Pfizer 703,110 3.4
AFLAC 602,400 2.9
Sysco 595,800 2.9
American Int'l Group 578,500 2.8
Merck 566,100 2.8
General Electric 535,700 2.6
Citigroup 527,850 2.6
Colgate-Palmolive 524,300 2.6
Emerson Electric 508,500 2.5
See notes to financial statements
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, 2002:
Gross unrealized appreciation $ 7,679,404
Gross unrealized depreciation (219,627)
Net unrealized appreciation $ 7,459,777
Federal income tax cost $ 9,014,884
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,
2002.
(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 December 5, 2002, a distribution of $0.5412 per share aggregating
$1,225,329 was declared from net investment income and realized gains.
The dividend will be paid on January 30, 2003, to shareowners of
record December 27, 2002.
The tax character of distributions paid during 2002 and 2001 was as
follows:
2002 2001
Distributions paid from:
Ordinary income $ 43,435 $ 80,695
Long-term capital gain 1,181,894 1,370,543
$1,225,329 $1,451,238
As of December 31, 2002, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income $ 590
Unrealized appreciation $7,459,777
(6) Investment transactions
Purchases and sales of securities, other than short-term securities for the
year ended December 31, 2002, were $2,091,067 and $3,164,734,
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., including the portfolio of investments, as of December 31,
2002, and the related statements of operations, changes in net assets, and
financial highlights for the year 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 audit. The financial statements of Naic
Growth Fund, Inc. as of December 31, 2001 and for the year then ended, and
the financial highlights for each of the fours in the period then ended, were
audited by other auditors who have ceased operations and whose report
dated January 4, 2002 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. 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,
2002, 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 audit provides 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, 2002, the results of its operations,
changes in its net assets and financial highlights for the year then ended, in
conformity with accounting principles generally accepted in the United
States of America.
Plante & Moran, PLLC
January 7, 2003
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 $10.45 on
December 31, 2002. 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 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 Who Are Interested Persons of the Fund
Thomas E. O'Hara
Age 87
Chairman of the Board and Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
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.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
None.
Kenneth S. Janke
Age 68
Director, President and Treasurer
Term of Office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman and Trustee of NAIC and Chairman, Chief Executive Officer
and Director of the Investment Adviser July, 2002. Chairman,
Chief Executive Officer and Trustee of NAIC and Chairman and Chief
Executive Officer and Director of the Investment Adviser from
February, 2002 to July 2002. President and Director of the Investment
Adviser to February, 2002.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
Director, AFLAC.
Lewis A. Rockwell
Age 84
Director and Secretary
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
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.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
None.
Peggy L. Schmeltz
Age 75
Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years.
Adult Education Teacher; Trustee of NAIC; Director of Bowling Green
State University Foundation Board. Former member of NYSE Advisory
Committee.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
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.
Carl A. Holth
Age 70
Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
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.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
None.
Benedict J. Smith
Age 82
Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
Retired; Director and Treasurer, Detroit Executive Service Corps;
Director, Vista Maria (nonprofit charitable organization); Trustee,
Henry Ford Health System, Behavioral Services.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
None
James M. Lane
Age 73
Director
Term of office
one year.
Served as a director since 1996.
Principal Occupation(s) During Past 5 Years
Retired; Director, Wheaton College, William Tyndale College,
Baseball Chapel, Inc. and Christian Camps, Inc.
Number of Portfolios in Fund Complex Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
Chateau Communities, Inc. (Owner and operator of manufactured
home communities)
Luke E. Sims
Age 53
Director
Term of office
one year.
Served as a director since 2002.
Principal Occupation(s) During Past 5 Years
Partner in the law firm of Foley & Lardner; Director, Wilson-Hurd Mfg.
Co. and Notre Dame Middle School, Inc.
Number of Portfolios in Fund Overseen by Director or
Nominee for Director**
One
Other Directorships Held by Director or Nominee for Director
LaCrosse Footwear, Inc. (manufacturer and marketer of sporting and
industrial footwear)
*The address of each is the address of the Fund.
*The Fund is not part of any fund complex.
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
Luke E. Sims
Director,
Milwaukee, WI
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 Growth Fund, Inc., P.O. Box 220, Royal Oak,
Michigan 48068. Telephone 877-275-6242 or visit us at our website at
www.naicgrowthfund.com.