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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-05807
NAIC GROWTH FUND, INC.
(Exact name of registrant as specified in charter)
711 West 13 Mile Road, Madison Heights, MI 48071
(Address of principal executive offices) (zip code)
Kenneth S. Janke, President
NAIC Growth Fund, Inc.
711 W. 13 Mile Road
Madison Heights, MI 48071
(248) 583-6242
(Name and address of agent for service)
Registrant's telephone number, including area code: (877) 275-6242
Date of fiscal year end: December 31
Date of reporting period: December 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
NAIC Growth Fund, Inc.
Annual Report
December 31, 2003
www.naicgrowthfund.com
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, 2003
Stock prices generally advanced in 2003 although some
familiar names lagged the market through the year. The Dow Jones
Industrial Average increased 25.3% while the Standard & Poor's 500
gained 24.6%. Adjusting for the dividend of $0.3482 attributable
to 2003, the NAV for the NAIC Growth Fund was up 18.1%. A portion
of the shortfall can be attributed to the advancement in prices
coming primarily from many cyclical stocks in the popular averages.
The Fund managers have been concentrating on the expense ratio
that has been high due to the small size of assets under management.
The public offering that went into effect last year is an effort to
increase the total value of the Fund. This led to some increased
expenses because of registration and legal fees. However, by
increasing total assets, future expenses should remain fairly stable
with the expense ratio narrowing. Management continues to monitor
that aspect carefully.
During the year, there was a partial sale of 4,000 Stryker
leaving 10,000 shares in the portfolio. In addition, positions were
eliminated with the sale of Del Monte Foods, Medco Health Systems
(both were spin-offs of stocks held), PolyOne, Wyeth,
Vishay Intertechnology, Eli Lilly, Intel and Federal Signal.
One new stock was added with the purchase of 5,000 Avery
Dennison. We also increased our positions with purchases of 4,000
Albertson's (15,000), 1,250 Biomet (17,000), 1,000 Carlisle Companies
(9,000), 1,000 Comerica (10,000), 4,000 Conagra (18,000), 800
Huntington Bancshares (25,000), 3,000 Johnson & Johnson (15,000),
7,000 Newell Rubbermaid (16,000), 7,000 Pentair (14,000), 3,000
PepsiCo (15,000), 3,000 RPM International (25,000), 2,000 Synovus
Financial (24,000) and 2,000 Teleflex (12,000).
Reported earnings for most major companies continue to rise with
comparisons to corresponding quarters being favorable. Since stock
prices reflect earnings and potential earnings over the long-term,
the Fund managers are optimistic with the turn around in the economy.
Thomas E. O'Hara Kenneth S. Janke
Chairman President
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of December 31, 2003
ASSETS
Investment securities
-at market value (cost $9,695,659) $20,042,690
Short-term investments
-at amortized cost 4,195,982
Cash and cash equivalents 1,027,387
Dividends & interest receivable 49,678
Prepaid insurance 14,082
Prepaid fees 45,697
$25,375,516
LIABILITIES
Dividends payable 823,939
Accounts payable 50,380 874,319
TOTAL NET ASSETS $24,501,197
SHAREOWNERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 2,368,452 shares $ 2,369
Additional Paid-in Capital 14,155,602
Undistributed net investment income (3,805)
Unrealized appreciation of investments 10,347,031
SHAREOWNERS' EQUITY $24,501,197
NET ASSET VALUE PER SHARE $ 10.34
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the Year Ended December 31, 2003
INVESTMENT INCOME
Interest $ 52,707
Dividends 360,962
$ 413,669
EXPENSES
Advisory fees 168,765
Legal fees 99,648
Transfer agent 24,634
Expense reimbursement 19,535
Insurance 19,494
Audit fees 13,150
Other professional services 12,000
Printing 11,392
Custodian fees 10,094
Directors' fees & expenses 9,189
Mailing & postage 5,320
Other fees & expenses 4,534
Annual shareowners' meeting 3,318
Total Expenses $ 401,073
Net investment income 12,596
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on investments:
Proceeds from sale of
investment securities 2,097,775
Cost of investment
securities sold 1,290,826
Net realized gain on investments 806,949
Unrealized appreciation of investments:
Unrealized appreciation at
beginning of year 7,459,777
Unrealized appreciation at
end of year 10,347,031
Net change in unrealized
appreciation on investments 2,887,254
Net realized and unrealized
gain on investments 3,694,203
NET INCREASE FROM OPERATIONS 3,706,799
See notes to financial statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the years ended:
December 31, 2003 December 31, 2002
FROM OPERATIONS:
Net investment income $ 12,596 $ 43,718
Net realized gain on investments 806,949 1,181,894
Net change in unrealized
appreciation on investments 2,887,254 (4,492,496)
Net increase/(decrease) from
operations 3,706,799 (3,266,884)
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income 16,990 43,435
Net realized gain from investment
transactions 806,949 1,181,894
Total distributions 823,939 1,225,329
FROM CAPITAL STOCK TRANSACTIONS:
Dividend reinvestment 748,337 869,087
Cash purchases 314,679 269,238
Net increase from capital
stock transactions 1,063,016 1,138,325
Net increase/(decrease) in
net assets 3,945,876 (3,353,888)
TOTAL NET ASSETS:
Beginning of year $20,555,321 $23,909,209
End of year (including
undistributed net investment
income of ($3,805) and $590,
respectively) $24,501,197 $20,555,321
Shares:
Shares issued to common stockholders
under the dividend reinvestment
plan, cash purchase plan, and
follow-on offering 104,355 105,255
Shares at beginning of year 2,264,097 2,158,842
Shares at end of year 2,368,452 2,264,097
See notes to financial statements
NAIC Growth Fund, Inc.
Financial Highlights (a)
For the years ended:
2003 2002 2001 2000 1999
Net asset value at beginning
of year $9.08 $11.08 $11.96 $11.22 $10.86
Net investment income .01 .02 .04 .09 .08
Net realized and unrealized
gain (loss) on investments 1.60 (1.48) (.25) 2.18 .76
Total from investment operations 1.61 (1.46) (.21) 2.27 .84
Distribution from:
Net investment income (.01) (.02) (.04) (.09) (.09)
Realized gains (.34) (.52) (.63) (1.44) (.39)
Total distributions (.35) (.54) (.67) (1.53) (.48)
Net asset value at end of
period $10.34 $9.08 $11.08 $11.96 $11.22
Per share market value,
end of period
last traded price (b) $9.50 $9.95 $10.75 $10.50 $10.00
Total Investment Return
Annualized:
Based on market value
1 year (1.02%) 2.10% 3.70% 30.90% 2.85%
from inception 9.94% 10.86% 11.66% 12.57% 10.28%
Based on net asset value
1 year 18.05% (13.81%) (1.59%) 27.27% 7.75%
from inception 10.63% 10.06% 12.42% 13.81% 13.15%
Net Assets, end of year
(000's) $24,501.2 $20,555.3 $23,909.2 $23,927.8 $22,351.7
Ratios to average net assets
annualized:
Ratio of expenses to
average net assets (c) 1.79% 1.61% 1.57% 1.25% 1.00%
Ratio of net investment income
to average net assets (c) .06% .17% 0.32% 0.74% 0.70%
Portfolio turnover rate 11.31% 11.19% 1.77% 10.61% 4.20%
Average commission rate paid
per share $0.125 $0.125 $0.125 $0.125 $0.125
(a) All per share data for all periods 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) If there was no sale on the valuation date, the bid price for each
such date is shown.
(c) For the years ended 2000, & 1999, the adviser voluntarily waived all
or a portion of its fees. Had the adviser not done so in 2000, and 1999,
the ratio of expenses to average net assets would have been 1.44%, &
1.37%, and the ratio of net investment income to average net assets would
have been 0.55%, & 0.32%, for each of these years.
NAIC Growth Fund, Inc.
Portfolio of Investments - December 31, 2003
% Common Stock Shares Cost Market
3.1 Auto Replacement
O'Reilly Auto* 20,000 $242,606 $770,400
12.2 Banking
Bank One Corp. 10,000 331,370 455,400
Citigroup 15,000 53,760 726,450
Comerica, Inc. 10,000 404,669 563,100
Huntington Banc. 25,000 238,023 559,750
Synovus Financial 24,000 239,517 694,080
2.8 Building Products
Johnson Controls 6,000 96,895 691,500
2.8 Chemicals
RPM 25,000 287,099 409,000
Sigma Aldrich 5,000 94,937 286,550
3.5 Consumer Products
Colgate-Palmolive 10,000 200,450 499,100
Newell Rubbermaid 16,000 413,527 362,880
2.8 Electrical Equipment
General Electric 22,000 378,341 675,840
2.2 Electronics
Diebold 10,000 269,187 538,100
8.4 Ethical Drugs
Johnson & Johnson 15,000 614,274 770,550
Merck & Co., Inc. 10,000 359,350 455,000
Pfizer, Inc. 23,000 442,195 806,610
1.7 Financial Services
State Street Boston 8,000 75,500 417,680
7.2 Food
Albertson's 15,000 407,968 336,900
ConAgra 18,000 351,815 471,960
Heinz, H.J. 10,000 309,522 364,200
McCormick & Co. 20,000 223,975 592,600
7.7 Hospital Supplies
Biomet Corp. 17,000 166,709 611,490
Invacare 10,000 245,375 413,600
Stryker Corp. 10,000 95,500 848,000
2.9 Industrial Services
Donaldson Co. 12,000 162,563 709,560
5.6 Insurance
AFLAC, Inc. 20,000 143,906 719,000
American Int'l Group 10,000 196,449 660,200
2.6 Machinery
Emerson Electric Co. 10,000 335,278 648,100
7.3 Multi Industry
Carlisle 9,000 364,086 550,890
Pentair 14,000 456,569 644,840
Teleflex 12,000 356,378 582,240
1.1 Office Supplies
Avery Dennison 5,000 264,504 277,800
2.0 Realty Trust
First Industrial
Realty Trust 14,000 394,963 483,420
2.9 Soft Drinks
PepsiCo 15,000 335,649 699,300
3.0 Transportation
Sysco Corp. 20,000 142,750 746,600
81.8% Investment
Securities $9,695,659 $20,042,690
Short-term Investments
17.1 United States Treasury Bills,
Maturing 1/29/2004 $4,195,982
4.2 Misc. Cash Equivalents 1,027,387
21.3% $5,223,369
Total Investments $25,266,059
(3.1) All other assets less liabilities (764,862)
100% TOTAL NET ASSETS $24,501,197
*Non-Income Producing Security
See notes to financial statements
Top Ten Holdings - NAIC Growth Fund, 12/31/03
Market % of
Company Value Portfolio Investments
Stryker $848,000 3.5
Pfizer 806,610 3.3
Johnson & Johnson 770,550 3.1
O'Reilly Auto 770,400 3.1
Sysco 746,600 3.0
Citigroup 726,450 3.0
AFLAC 719,000 2.9
Donaldson 709,560 2.9
PepsiCo. 699,300 2.9
Synovus Financial 694,080 2.8
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, 2003:
Gross unrealized appreciation $ 10,468,746
Gross unrealized depreciation (121,715)
Net unrealized appreciation $ 10,347,031
Federal income tax cost $ 9,695,659
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, 2003.
(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 4, 2003, a distribution of $0.3482 per share aggregating
$823,939 was declared from net investment income and realized gains.
The dividend will be paid on January 29, 2004, to shareowners of
record December 15, 2003.
The tax character of distributions paid during 2003 and 2002 was as
follows:
Distributions paid from: 2003 2002
Ordinary income $ 16,990 $ 43,435
Long-term capital gain 806,949 1,181,894
$823,939 $1,225,329
As of December 31, 2003, the components of distributable earnings on a
tax basis were as follows:
Undistributed ordinary income ($3805)
Unrealized appreciation $10,347,031
(6) Investment transactions
Purchases and sales of securities, other than short-term securities for
the year ended December 31, 2003, were $1,971,597 and $2,097,792,
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, 2003 and the related statement of operations for the year
then ended, and the statement of changes in net assets and financial
highlights for each of the two 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 audit.
The financial highlights of NAIC Growth Fund, Inc. for each of the three
years in the period ended December 31, 2001 were audited by other
auditors who have ceased operations and whose most recent report dated
January 4, 2002 expressed an unqualified opinion on the financial
statements containing those financial highlights.
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, 2003 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, 2003, the results
of its operations for the year then ended, and the statement of changes
in net assets and financial highlights for each of the two years in the
period then ended, in conformity with accounting principles generally
accepted in the United States of America.
Plante & Moran, PLLC
January 7, 2004
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 $9.50 on December 31, 2003. 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 88
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**
One
Other Directorships Held by Director (Public Companies)
None.
Kenneth S. Janke
Age 69
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 from July, 2002. Chairman,
Chief Executive Officer and Trustee of NAIC and Chairman, Chief
Executive Officer and Director of the Investment Adviser from
February, 2002 to July 2002. President and Trustee of NAIC and
President and Director of the Investment Adviser to February, 2002.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
Director, AFLAC.
Incorporated (insurance).
Lewis A. Rockwell
Age 85
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**
One
Other Directorships Held by Director (Public Companies)
None.
Peggy L. Schmeltz
Age 76
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**
One
Other Directorships Held by Director (Public Companies)
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 71
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**
One
Other Directorships Held by Director (Public Companies)
None.
Benedict J. Smith
Age 83
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**
One
Other Directorships Held by Director (Public Companies)
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**
One
Other Directorships Held by Director (Public Companies)
Chateau Communities, Inc. (Owner and operator of manufactured
home communities)
Luke E. Sims
Age 54
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**
One
Other Directorships Held by Director (Public Companies)
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.
Additional information concerning the directors of the Fund is
contained in the Fund's Statement of Additional information which is
available, without charge, upon request by calling (877) 275-6242.
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 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
2002. 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
2002.
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 commissions.
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
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling 877-275-6242;
(2) on the Fund's website at www.naicgrowthfund.com; and (3) on the
Securities and Exchange Commission website at www.sec.gov.
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.
ITEM 2. CODE OF ETHICS.
The Fund has adopted a Code of Ethics for Financial Professionals,
which applies to the principal executive officer of the Fund, all
professionals serving as principal financial officer, the principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
by Fund or a third party, and the members of the Fund's Board of
Directors. The Code of Ethics for Financial Professionals has been
posted on the Fund's website at www.naicgrowthfund.com
There have been no amendments to or waivers from any provisions of the
Code of Ethics for Financial Professionals since its adoption.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Fund's Board of Directors has determined that the Fund has at least
one audit committee financial expert serving on its audit committee,
Benjamin J. Smith, who is independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees. Plante & Moran, LLP was paid $13,600 for the fiscal
year ending December 31, 2003 and $15,000 for the fiscal year ending
December 31, 2002 by the Fund for audit fees.
Audit-Related Fees. Plante & Moran, LLP was not paid any
audit-related fees by the Fund in either of the last two fiscal years.
Tax Fees. Plante & Moran, LLP was paid $3,180 for the fiscal
year ending December 31, 2003 and $3,000 for fiscal year ending
December 31, 2002 by the Fund for tax fees, for services in connection
with the preparation of the Fund's tax returns and assistance with IRS
notice and tax matters.
All Other Fees. Plante & Moran, LLP was paid $8,725 for the
fiscal year ending December 31, 2003 by the Fund for all other fees,
for services in connection with (i) the review of registration
documents and consent procedures and a comfort letter and related
procedures with respect to the Fund's registration statement filed
with the Securities and Exchange Commission for its follow-on
offering, and (ii) assistance with year-end dividend calculation and
reporting.
"Audit fees" are fees paid by the Fund to Plante & Moran, PLLC
for professional services for the audit of our financial statements, or
for services that are usually provided by an auditor in connection with
statutory and regulatory filings and engagements. "Audit-related fees"
are fees for assurance and related services that are reasonably related
to the performance of the audit or review of financial statements.
"Tax fees" are fees for tax compliance, tax advice and tax planning.
All other fees are fees billed for any services not included in the
first three categories.
The Fund's audit committee has not adopted "pre-approval
policies and procedures," as such term is used in Rule 2-01(c)(7)(i)
of Regulation S-X promulgated by the Securities and Exchange
Commission ("Regulation S-X"), for the provision of non-audit
services to the Fund by Plante & Moran, PLLC. None of the services
represented by the fees set forth above were provided in accordance
with the "de minimis" exception to audit committee approval that
appears in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The Fund's Board of Directors has separately-designated standing
audit committee established in accordance with Section 3(a)(58)(A)
of the Securities Exchange Act of 1934. The members of the
committee are Carl A. Holth, Benjamin J. Smith and James M. Lane.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED
END MANAGEMENT INVESTMENT COMPANIES.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling 877-275-6242
and (2) on the Fund's website at www.naicgrowthfund.com.
ITEM 8. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES.
(i) As of February 22, 2004, an evaluation of the
effectiveness of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940) was performed under
the supervision and with the participation of the registrant's
President (Principal Executive Officer) and Accountant
(person performing the functions of the Principal Financial
Officer). Based on that evaluation, the registrant's
President and Accountant concluded that the registrant's
controls and procedures are adequately and effectively
designed to insure that information required to be disclosed
by the registrant is recorded, processed, summarized and
reported within the time periods required by the
Commission's rules and forms, and that information
required to be disclosed in the reports that the registrant
files is accumulated and communicated to the registrant's
management, as appropriate, to allow timely decisions
regarding required disclosure.
(ii) There has been no change in the registrants's internal
control over financial reporting (as defined in Rule 30a-3(d) under
the Investment Company Act) that occurred during the 6 months
ending December 31, 2003 that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 11. EXHIBITS:
(A)(1) Not applicable.
(A)(2) Separate certification of principal executive officer and
principal financial officer as required by Rule 30a-2 under
the Act.
(A)(3) Not applicable.
(B) Certification Pursuant to 18 U.S.C. Section 1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NAIC GROWTH FUND, INC.
By: /s/ Kenneth S. Janke
----------------------
Kenneth S. Janke
President
Date: February 25, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: /s/ Kenneth S. Janke
----------------------
Kenneth S. Janke
President
Date: February 25, 2004
By: /s/ Calvin George
---------------------
Calvin George
Accountant (Principal Financial Officer)
Date: February 25, 2004