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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, 2005
ITEM 1. REPORT TO STOCKHOLDERS.
(logo)
NAIC Growth Fund, Inc.
Annual Report
December 31, 2005
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 22
Report to Shareowners:
December 31, 2005
By the time the last trading day of the year
occurred, the Dow Jones Industrial Average had dropped
0.6% when compared with the close of 2004. Uncertainties
again hit the stock market led by natural disasters and the
price of crude oil. The Federal Reserve continued the
increases in interest rates as concerns about inflation
surfaced. The end result was that stock prices rose one day
only to decline the next.
The S&P 500 finished the year in positive territory, up
3% for the year with the NASDAQ increased 1.4%.
Adjusted for the year-end distribution paid in 2005, the Fund's
NAV increased 1.3%.
There were some sales during the year. The Fund's entire
position in Newell Rubbermaid was sold resulting in a small
capital gain of about $5,000. There were two partial sales of
Pentair with a net capital gain of $261,438. We continue to
hold 18,000 Pentair in the portfolio. New positions were
taken with the purchase of 10,000 CIT Group, 22,000 Jack
Henry & Associates, 14,000 Washington Mutual and 15,000
Wendy's International. We also added to our holdings in a
number of other stocks. They included 4,000 Abbott
Laboratories (18,000 total shares); 5,000 Avery Dennison
(12,000); 2,000 Carlisle Companies (11,000); 3,000
Medtronic (14,000); 2,000 Polymedica (12,000); 2,000
Sigma Aldrich (7,000); 2,000 State Street (16,000); 2,000
Stryker (22,000) and 2,000 Teleflex (16,000).
The Fund's directors and managers tried to concentrate on
improving the expense ratio and were able to reduce it to
1.46%. With dividend increases by stocks held in the
portfolio and watching expenses, we are hopeful that we will
be able to improve on that figure in years to come.
The stock of the Fund is listed on the Chicago Stock
Exchange with the trading symbol GRF. In addition, it is
traded over-the-counter with the symbol GRTH. For those wishing
to buy, or sell shares, we feel it is important to specify prices
rather than placing a "market order." The spread between the bid
and ask price, especially in the "pink sheets" can be wide.
Brokers tend to want to handle the transaction through other
broker-dealers, so shareowners may wish to specify where they want
buy and sell transactions to take place. It will call for a
little more work by the broker, but that's why they receive
commissions.
Thomas E. O'Hara Kenneth S. Janke
Chairman President
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of December 31, 2005
ASSETS
Investment securities
-at market value (cost $14,577,882) $26,547,670
Short-term investments
-at amortized cost 598,390
Cash and cash equivalents 58,273
Dividends & interest receivable 64,682
Prepaid insurance 14,082
27,283,097
LIABILITIES
Dividends payable 460,176
Accounts payable 44,315
Advisor fees payable 19,061
523,552
TOTAL NET ASSETS $26,759,545
SHAREOWNERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 2,792,336 shares $2,794
Additional Paid-in Capital 14,783,011
Undistributed net investment income 3,952
Unrealized appreciation of investments 11,969,788
SHAREOWNERS' EQUITY $26,759,545
NET ASSET VALUE PER SHARE $9.58
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the Year Ended December 31, 2005
INVESTMENT INCOME
Interest $ 31,311
Dividends 548,406
579,717
EXPENSES
Advisory fees 199,195
Legal fees 57,117
Insurance 24,140
Transfer agent 23,600
Audit fees 19,275
Directors' fees & expenses 13,052
Custodian fees 13,000
Mailing and postage 11,857
Printing 11,362
Other fees & expenses 7,926
Expense reimbursement 4,875
Annual shareowners' meeting 2,746
Total Expenses 388,145
Net investment income 191,572
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Realized gain on investments:
Proceeds from sale of investment securities 895,338
Cost of investment securities sold 628,547
Net realized gain on investments 266,791
Unrealized appreciation of investments:
Unrealized appreciation at
beginning of year 12,087,985
Unrealized appreciation at end of year 11,969,788
Net change in unrealized appreciation
on investments (118,197)
Net realized and unrealized
gain on investments 148,594
NET INCREASE FROM OPERATIONS $ 340,166
See notes to financial statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the years ended:
December 31, 2005 December 31, 2004
FROM OPERATIONS:
Net investment income $ 191,572 $ 29,364
Net realized gain on investments 266,791 455,020
Net change in unrealized
appreciation on investments (118,197) 1,740,954
Net increase/(decrease)
from operations 340,166 2,225,338
DISTRIBUTIONS TO STOCKHOLDERS FROM:
Net investment income 193,385 19,792
Net realized gain from
investment transactions 266,791 455,020
Total distributions 460,176 474,812
FROM CAPITAL STOCK TRANSACTIONS:
Dividend reinvestment - 419,422
Cash purchases 6,693 201,717
Net increase from capital
stock transactions 6,693 621,139
Net increase/(decrease)
in net assets (113,317) 2,371,665
TOTAL NET ASSETS:
Beginning of year $26,872,862 $24,501,197
End of year
(including undistributed net
investment income of $3,952
and 5,766, respectively) $26,759,545 $26,872,862
Shares:
Shares issued to common stockholders
under the dividend reinvestment
plan, cash purchase plan, and
follow-on offering 364,830 59,054
Shares at beginning of year 2,427,506 2,368,452
Shares at end of year 2,792,336 2,427,506
See notes to financial statements
NAIC Growth Fund, Inc.
Financial Highlights (a)
For the years ended:
2005 2004 2003 2002 2001
Net asset value at
beginning of year $9.63 $8.99 $7.90 $9.63 $10.40
Net investment income .07 .01 .01 .02 .03
Net realized and unrealized
gain (loss) on investments .05 .81 1.39 (1.28) (.22)
Total from investment
operations .12 .82 1.40 (1.26) (.19)
Distribution from:
Net investment income (.07) (.01) (.01) (.02) (.03)
Realized gains (.10) (.17) (.30) (.45) (.55)
Total distributions (.17) (.18) (.31) (.47) (.58)
Net asset value at end of period $9.58 $9.63 $8.99 $7.90 $9.63
Per share market value, end of period
last traded price (b) $8.70 $7.83 $8.26 $8.65 $9.35
Total Investment Return Annualized:
Based on market value
1 year 11.17% (3.31%) (1.02%) 2.10% 3.70%
from inception 9.11% 8.97% 9.94% 10.86% 11.66%
Based on net asset value
1 year (0.48%) 9.26% 18.05% (13.81%) (1.59%)
from inception 9.79% 10.53% 10.63% 10.06% 12.42%
Net Assets, end of year (000's)
$26,759.5 $26,872.9 $24,501.2 $20,555.3 $23,909.2
Ratios to average net assets
annualized:
Ratio of expenses to
average net assets 1.46% 1.80% 1.79% 1.61% 1.57%
Ratio of net investment income
to average net assets 0.72% 0.11% 0.06% 0.17% 0.32%
Portfolio turnover rate 3.51% 6.53% 11.31% 11.19% 1.77%
Average commission rate
paid per share $0.075 $0.095 $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 April 21, 2005 and paid on May 23, 2005 to shareholders
of record on May 13, 2005.
(b) If there was no sale on the valuation date, the bid price for
each such date is shown. Price obtained from Chicago Stock Exchange.
NAIC Growth Fund, Inc.
Portfolio of Investments - December 31, 2005
% Common Stock Shares Cost Market
4.8 Auto Replacement
O'Reilly Auto* 40,000 $242,606 $1,280,400
Total $1,280,400
13.3 Banking
Citigroup 22,000 368,635 1,067,660
Comerica, Inc. 10,000 404,669 567,600
Huntington Banc. 25,000 238,023 593,750
JP Morgan Chase 15,000 396,347 595,350
Synovus Financial 27,000 317,651 729,270
Total 3,553,630
3.3 Building Products
Johnson Controls 12,000 96,895 874,920
Total 874,920
3.3 Chemicals
RPM 25,000 287,099 434,250
Sigma Aldrich 7,000 213,317 443,030
Total 877,280
3.3 Consumer Products
Colgate-Palmolive 16,000 469,850 877,600
Total 877,600
3.1 Electrical Equipment
General Electric 24,000 441,341 841,200
Total 841,200
1.4 Electronics
Diebold 10,000 269,188 380,000
Total 380,000
9.7 Ethical Drugs
Abbott Laboratories 18,000 775,880 709,740
Johnson & Johnson 15,000 614,274 901,500
Merck & Co., Inc. 10,000 359,350 318,100
Pfizer, Inc. 28,000 606,755 652,960
Total 2,582,300
7.5 Financial Services
CIT Group 10,000 392,785 517,800
State Street Boston 16,000 436,700 887,040
Washington Mutual 14,000 565,440 609,000
Total 2,013,840
5.7 Food
ConAgra 18,000 351,815 365,040
Heinz, H.J. 16,000 532,050 539,520
McCormick & Co. 20,000 223,975 618,400
Total 1,522,960
2.3 Food Wholesale
Sysco 20,000 142,750 621,000
Total 621,000
10.5 Hospital Supplies
Biomet Corp. 17,000 166,709 621,690
Medtronic 14,000 704,829 805,980
Polymedica 12,000 346,237 401,640
Stryker Corp. 22,000 180,012 977,460
Total 2,806,770
2.9 Industrial Services
Donaldson Co. 24,000 162,563 763,200
Total 763,200
3.5 Insurance
AFLAC, Inc. 20,000 143,906 928,400
Total 928,400
1.6 Information Technology
Jack Henry & Assoc. 22,000 395,376 419,980
Total 419,980
2.8 Machinery
Emerson Electric Co. 10,000 335,278 747,000
Total 747,000
9.0 Multi Industry
Carlisle 11,000 495,674 760,650
Pentair 18,000 280,288 621,360
Teleflex 16,000 545,608 1,039,680
Total 2,421,690
2.5 Office Supplies
Avery Dennison 12,000 666,064 663,240
Total 663,240
2.0 Realty Trust
First Industrial
Realty Trust 14,000 394,963 539,000
Total 539,000
3.1 Restaurant
Wendy's 15,000 579,762 828,900
Total 828,900
3.8 Beverages - Soft Drinks
PepsiCo 17,000 433,218 1,004,360
Total 1,004,360
99.4% Investment
Securities $14,577,882 $26,547,670
Short-term Investments
2.2 United States Treasury Bills,
Maturing 1/26/2006 $598,390
0.4 Misc. Cash Equivalents 137,037
2.6% $735,427
Total Investments $27,283,097
(2.0) All other assets less liabilities (523,552)
100% TOTAL NET ASSETS $26,759,545
See notes to financial statements
Top Ten Holdings - NAIC Growth Fund, 12/31/2005
Market % of
Company Value Portfolio Investments
O'Reilly Auto $1,280,400 4.8
Citigroup 1,067,660 4.0
Teleflex 1,039,680 3.9
PepsiCo 1,004,360 3.8
Stryker 977,460 3.7
AFLAC 928,400 3.5
Johnson & Johnson 901,500 3.4
State Street Boston 887,040 3.3
Colgate-Palmolive 877,600 3.3
Johnson Controls 874,920 3.3
Summary of Investment Position
as % of Total Investments
12/31/2005
Picture (Pie Graph)
97.3% - Equities - Common Stock
2.2% - Fixed Income-U.S. Treasury Bills
0.5% - Cash
See notes to financial statements
* non-income producing security
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. If no such prices are available on the valuation
date, the Board of Directors has determined the most recent market
prices be used. 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, 2005:
Gross unrealized appreciation $ 12,013,862
Gross unrealized depreciation (44,074)
Net unrealized appreciation $ 11,969,788
------------
Federal income tax cost $ 14,577,882
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.
The expenses of the follow-on offering are not considered an
expense of the Fund for purposes of the expense limitations of
the advisory agreement.
(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 - LaSalle Bank, NA (LB)
serves as the Fund's custodian pursuant to the Custodian
Agreement. As the Fund's custodian, LB 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, cash dividends and voluntary cash payments will be
invested in shares purchased in the open market. In the event
the Plan agent is unable to complete its acquisition of shares
to be purchased on the open market by the end of the thirtieth
(30th) day following receipt of the cash dividends from the
Fund, any remaining funds will be returned to the
participants on pro rata basis. In the event the Plan agent is
unable to complete its acquisition of shares to be purchased
from additional contributions on the open market by the end
of the twentieth (20th) day following the Investment Date,
any remaining funds will be returned to the participants on a
pro rata basis. 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 8, 2005, a distribution of $0.1648 per share
aggregating $460,176 was declared from net investment income
and realized gains. The dividend was paid on January 26, 2006,
to shareowners of record on December 21, 2005.
The tax character of distributions paid during 2005 and 2004
was as follows:
2005 2004
Distributions paid from:
Ordinary income $ 193,385 $ 19,792
Long-term capital gain 266,791 455,020
$ 460,176 $ 474,812
As of December 31, 2005, the components of distributable
earnings on a tax basis were
as follows:
Undistributed ordinary income $ 3,952
Unrealized appreciation $11,969,788
(6) INVESTMENT TRANSACTIONS
Purchases and sales of securities, other than short-term
securities for the year ended December 31, 2005, were
$3,209,912 and $895,338, 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 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, 2005 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 two
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 the standards of
the Public Company Accounting Oversight Board (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, 2005 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, 2005, 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 5, 2006
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.
COSTS OF THE PLAN
There are no special fees or charges relating to
participation in the Plan, other than reasonable transaction
fees. A termination or a partial sale fee (currently $15 plus
$0.10 per share) may be imposed when you terminate or
partially sell your shares in the Plan and take delivery of
accumulated shares. The benefit of any reduced brokerage
commission changes will be passed on, pro rata to
participants. In addition, if you wish to deposit your
certificated shares in your plan account, there is currently a
transaction fee of $7.50 for this service.
DIVIDEND REINVESTMENT
The Plan agent, will receive the total amount of your
dividend (a) on shares which are held directly by you and (b)
on any full and fractional shares held for you under the Plan,
in cash. These cash dividends will be used by the Plan agent
to buy shares of the Fund's common stock on the open
market (determined to three decimal places, in terms of any
fractional share). In the event the Plan agent is unable to
complete its acquisition of shares to be purchased on the
open market by the end of the thirtieth (30th) day following
receipt of the cash dividends from the Fund, any remaining
funds will be returned to the participants on a pro rata basis.
VOLUNTARY CASH PAYMENTS
You may make voluntary cash payments of not less
than $50.00 nor more than $1,000.00 per month for the
purpose of acquiring additional shares. You may make these
voluntary cash payments regularly or from time to time, and
you may also vary the amount of each payment so long as the
amount of any monthly voluntary cash payment meets the
foregoing limitations. Voluntary cash payments must be
received by the Plan agent on or prior to the last day of any
month and will be invested beginning on or about the first
business day of the following month (an "Investment Date").
Voluntary cash payment will be invested in shares purchased
in the open market, (determined to three decimal places, in
terms of any fractional share). In the event the Plan agent is
unable to complete its acquisition of shares to be purchased
on the open market by the end of the twentieth (20th) day
following the Investment Date, any remaining funds will be
returned to the participants on a pro rata basis. 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 for 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 for the calendar month
indicated, the Plan Agent shall attempt to invest such
payment on the next Investment Date. Optional cash
payments can also be made online at www.amstock.com.
You need to know your American Stock Transfer and Trust
Company 10 digit account number and your social security
number to access your account. You may obtain the return of
any voluntary cash payment, if your written request is
received by the Plan agent at least forty-eight (48) hours prior
to the time such voluntary cash payment is invested.
HOLDING OF SHARES
For your convenience, the Plan agent will hold all
shares that you acquire as a result of your participation in the
Plan, for safekeeping. However, upon your online request at
www.amstock.com, telephonically at (877) 739-9994 or
request by mail, the Plan agent will send you a certificate
representing a specified number of full shares which you
have acquired through the Plan and which are held for your
account. The Plan agent will also allow you to deposit with
it, in safekeeping and in your "book-entry" account for the
Plan, any additional stock certificates for the Fund's shares
you might have in your possession. This will enable you to
guard against loss, theft or damage.
STATEMENT OF ACCOUNT
A cumulative, detailed statement of your account
under the Plan for each current calendar year will be sent to
you by the Plan agent; and you will also receive the
customary Form 1099 (Internal Revenue Service) reporting
dividend income.
WITHDRAWAL OF SHARES
You are not committed to remain in the Plan. You
may terminate your participation at any time by notice to the
Plan agent. Beginning with the dividend which relates to the
first dividend record date which occurs at least ten days after
the Plan agent's receipt of your termination notice, dividends
will be remitted to you, directly, at your address of record or
as you otherwise shall have directed. Upon terminating
participation in the Plan, certificates for all full shares
standing to your credit in your Plan account will be issued
and sent to you and any voluntary cash payments held for
investment until the next Investment Date will also be sent to
you. Any remaining fractional share will be converted to
cash, on the basis of the then current market price of the
Fund's common stock, and a check, representing the same, will be
issued and sent to you. If you desire, you may direct that your
full shares be sold in the open market and that the proceeds
(less any brokerage commission incurred as a result of such sale)
be sent to you.
INCOME TAX CONSIDERATIONS
Dividends (including those declared in shares of
stock) invested under the Plan are taxable in the same way as
dividends paid to you in cash.
SHAREHOLDERS' RIGHTS
Shares held under the Plan have the same rights as all
other shares, in terms of stock dividends, stock splits, and
preemptive and voting rights. Stock dividends will be fully
credited to your account. Transaction processing may either
be curtailed or suspended until the completion of any stock
dividend, stock split or corporate action.
MORE DETAILED INFORMATION
If you have any questions regarding your specific
participation in the Plan, please visit us online at
www.amstock.com, call us at (877) 739-9994 or write the
Plan Agent's at:
Transaction Processing Inquiries
American Stock Transfer & American Stock
Transfer & Trust Company Trust Company
DRP Plan 59 Maiden Lane
P.O. Box 922 Wall Street Station New York, NY 10038
New York, NY 10269-0560
Directors Who Are Interested Persons of the Fund and
Officers
Thomas E. O'Hara
Age 90
Chairman of the Board and Director
Term of office
one year.
Served as Chairman as a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman Emeritus of the Board (since 2002) and Trustee (since 1951) of
the National Association of Investors Corporation, a nonprofit
corporation engaged in investment education ("NAIC") and Chairman
Emeritus (since 2002) and Director of the Growth Fund Advisor, Inc.
(since 1999), the Fund's investment adviser ("the Investment Adviser").
Chairman of NAIC (from 1951 to 2002) and Chariman of the Investment
Advisor (from 1999-2002).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Kenneth S. Janke
Age 71
Director, President and Treasurer
Term of office
one year.
Served as a President and a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman and Trustee of NAIC (since 2002) and Chairman, Chief Executive
Officer and Director (since 2002) and President and Treasurer
(since 1990) of the Investment Adviser. Chief Executive Officer of
NAIC (from 1981 to 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 87
Director and Secretary
Term of office
one year.
Served as a Secretary and as a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman and Director of Sunshine Fifty, Inc., Trustee (since 1956)
and Secretary (since 1987) of NAIC; Director; and Secretary of the
Investment Adviser (since 1999).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Peggy Schmeltz
Age 78
Director
Term of office
one year.
Served as director since 1989.
Principal Occupation(s) During Past 5 Years
Adult Education Teacher; Trustee of NAIC (since 1995); Director of
Bowling Green State University Foundation Board. Former member of
NYSE Advisory Committee (1992 to 1994).
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.
Directors Who Are Not Interested Persons of the Fund
Carl A. Holth
Age 73
Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
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 85
Director
Term of office
one year.
Served as a director since 1996.
Principal Occupation(s) During Past 5 Years
Retired; Director, Detroit Executive Service Corps; Director,
Vista Maria (a nonprofit charitable organization).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
James M. Lane
Age 76
Director
Term of office
one year.
Served as a director since 1996.
Principal Occupation(s) During Past 5 Years
Retired; Director, Wheaton 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)
None.
Luke E. Sims
Age 56
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 LLP and Director,
Wilson-Hurd Mfg. Co.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
LaCrosse Footwear, Inc. (developer and marketer of premium work and
outdoor 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.
Compensation
The following table sets forth the aggregate compensation
paid to all directors in 2005. Directors who are affiliated with
the Investment Adviser or the Investment Adviser's affiliates
do not receive any compensation for service as a director.
The Chairman and President are not compensated by the
Fund, except for reimbursement for out-of-pocket expenses
relating to attendance at meetings and other operations of the
Fund. No other officer of the Fund received compensation
from the Fund in 2005 in excess of $60,000.
Directors Who Are Interested Persons of the Fund
Thomas E. O'Hara
Chairman and Director
Aggregate Compensation from Fund*
None
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from fund and Complex Paid to Directors**
None
Kenneth S. Janke
President, Treasurer and Director
Aggregate Compensation from Fund*
None
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from fund and Complex Paid to Directors**
None
Lewis A. Rockwell
Secretary and Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from fund and Complex Paid to Directors**
$1,425
Peggy Schmeltz
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from fund and Complex Paid to Directors**
$1,425
Directors Who Are Not Interested Persons of the Fund
Carl A. Holth
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Complex Paid to Directors**
$1,425
James M. Lane
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Complex Paid to Directors**
$1,425
Benedict M. Smith
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Complex Paid to Directors**
$1,425
Luke E. Sims
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Complex Paid to Directors**
$1,425
*All amounts shown are for service as a director
**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 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.
The Fund files its complete schedule of portfolio holdings
with Securities and Exchange Commission for the first and
third quarters of each fiscal year on Form N-Q. The Fund's
Form N-Q are available on the Commission's website at
http://sec.gov, on the Fund's website at
http://www.naicgrowthfund.com under the heading "SEC Edgar
Filings" and upon request by calling 1-877-275-6242. The
Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, D.C., and information
on the operation of the Public Reference Room may obtained
by calling 1-800-SEC-0330.
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.
Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent twelve month
period ended June 30, 2005 is available (1) without charge,
upon request by calling 1-877-275-6242 or on the Fund's website
at http://www.naicgrowthfund.com and (2) on the Commission's
website at http://www.sec.gov.
The board of directors of the Fund approved the continuation
of the investment advisory agreement with its investment
advisor, Growth Fund Advisor, Inc., in December 2005.
In renewing the investment advisory agreement, the board
discussed the following material factors: a comparison of the
fees paid to, and services rendered by, certain other
investment advisors of other funds historically selected by
the board for peer comparisons (including the reasonableness
and low price of the fees charged by Growth Fund Advisor,
the long-term investment performance of the Fund, the
utilization of, generally, the NAIC investment principles and
the NAIC stock study program for investment decisions, the
reasonableness of the costs of services provided by the
Growth Fund Advisor, Inc.), and the profits realized by Growth
Fund Advisor, Inc. during its tenure as investment advisor
to the Fund. The board also favorably considered that Growth
Fund Advisor, Inc. uses a broker based on consideration of
price, responsiveness, availability, reliability, capability,
and research services. The board deferred any discussion of
the effect on fee payable to Growth Fund Advisor, Inc. of
any growth in assets resulting in economies of scale until
such time as the potential for significant asset fund growth
becomes realizable. Overall, the board determined that it remains
satisfied with the nature, extent and quality of services, and the
investment performance provided by Growth Fund Advisor, Inc.
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 Benjamin J. Smith
qualifies as a financial expert; and that both Carl A. Holth and
James M. Lane also qualify as financial experts. Benjamin J. Smith,
Carl A. Holth and James M. Lane are independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Audit Fees. Plante & Moran, LLP was paid $15,075 for the fiscal
year ending December 31, 2005 and $16,250 for the fiscal year ending
December 31, 2004 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 $4,200 for the fiscal
year ending December 31, 2005 and $4,200 for fiscal year ending
December 31, 2004 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 $0 for the
fiscal year ending December 31, 2005 by the Fund for all other fees and
$6,500 for the fiscal year ended December 31, 2004 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.
None of the services covered under the captions "Audit Related
Fees," "Tax Fees," and All Other Fees with Respect to Plante & Moran
were provided under the de minimis exception to audit committee
approval of 17 CFR 210.2-01(c) 7(i)(C) and (ii). Plante & Moran, PLLC
was not engaged during the last two fiscal years to provide non-audit
services to Investment Adviser and its affiliates that provide ongoing
services to the Fund that relate directly to the operations and financial
reporting of the Fund ("Other Non-Audit Services"). Under the audit
committee charter, the audit committee is to pre-approve all non-audit
services of the Fund and all Other Non-Audit Services. The audit
committee has not adopted "pre-approval policies and procedures" as
such term is used in 17 CFR 210.2-01(c)(7)(i)(B) and (ii).
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. SCHEDULE OF INVESTMENTS
Funds schedule of investments is included in the Report to Shareholders
under item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED
END MANAGEMENT INVESTMENT COMPANIES.
GROWTH FUND ADVISOR, INC.
PROXY VOTING POLICIES AND PROCEDURES
BACKGROUND
Growth Fund Advisor, Inc., a Michigan corporation (the
"Advisor"), is the investment advisor for NAIC Growth Fund, Inc., a
Maryland corporation which is an investment company registered under
the Investment Company Act of 1940 (the "Fund"). The Fund and the
Advisor, as successor to National Association of Investors Corporation,
are parties to an Investment Advisory Agreement dated October 2, 1989
(the "Advisory Agreement"). The Fund is the Advisor's sole advisory
client.
The Advisor hereby adopts the following policies and procedures
effective as of August 1, 2003, which it believes are reasonably designed
to ensure that proxies are voted in the best interest of the Fund, in
accordance with its fiduciary duties and Rule 206(4)-6 under the
Investment Advisers Act of 1940 (the "Advisers Act"). The Advisor's
authority to vote the proxies of the Fund is established through the
Advisory Agreement, and these proxy voting guidelines have been
tailored to reflect this contractual obligation and the Advisor's fiduciary
duty to the Fund and its shareholders.
POLICY
The Advisor's proxy voting procedures are designed and are to
be implemented in a way that is reasonably expected to ensure that
proxy matters are handled in the best interest of the Fund and its
shareholders. While the guidelines included in the procedures are
intended to provide a benchmark for voting standards, each vote is
ultimately cast on a case-by-case basis, taking into consideration the
Advisor's fiduciary duty to the Fund and all other relevant facts and
circumstances at the time of the vote (such that these guidelines may be
overridden to the extent the Advisor deems appropriate).
PROCEDURES
RESPONSIBILITY AND OVERSIGHT
The Chief Executive Officer of the Advisor or his designee (the
"CEO") is responsible for administering and overseeing the proxy voting
process, proxy gathering, and for determining appropriate voting
positions on each proxy utilizing any applicable guidelines contained in
these procedures.
PROXY GATHERING
All persons associated with the Advisor or the Fund that receive
proxy materials on behalf of the Fund ("Proxy Recipients") shall be
instructed to forward them to the CEO on a timely basis.
PROXY VOTING
Once proxy materials are received by the CEO, the following
shall occur:
1. The CEO shall review the proxy materials to determine if
there are any material conflicts of interest (see the
conflicts of interest section of these procedures for further
information on determining material conflicts of interest).
2. If a material conflict of interest exists, the CEO shall seek
voting instructions from an independent third party or
shall inform the Board of the Fund of the conflict and
seek voting instructions from the Board of the Fund. The
CEO shall keep a written record of each such voting
instruction which shall include the name(s) of the person
giving the instruction, the date(s) of the instruction, and
determination.
3. The CEO shall determine votes on a case-by-case basis,
taking into account the voting guidelines contained in
these procedures.
4. The CEO's staff shall vote the proxy pursuant to the
instructions received in (2) or (3) and return the voted
proxy as indicated in the proxy materials.
TIMING
The Advisor's personnel shall act in such a manner to ensure
that, absent special circumstances, the proxy gathering and proxy voting
steps noted above can be completed before the applicable deadline for
returning proxy votes.
RECORDKEEPING
The Advisor shall maintain the records of proxies voted required
pursuant to Rule 204-2 under the Advisers Act. These records shall
include (except as otherwise provided in such rule):
1. A copy of the Advisor's proxy voting policies and
procedures.
2. Copies of proxy statements received regarding the Fund's
securities.
3. A copy of any document created or received by the
Advisor that was material to making a decision how to
vote proxies or that memorializes the basis for that
decision.
4. A copy of each written request from the Fund for
information on how the Advisor voted proxies on behalf
of the Fund, and a copy of any written response by the
Advisor to any (written or oral) request from the Fund on
how the Advisor voted proxies on behalf of the Fund.
5. A proxy log including:
a. Issuer name;
b. Exchange ticker symbol of the issuer's shares to
be voted (if available through reasonably
practicable means);
c. Council on Uniform Securities Identification
Procedures ("CUSIP") number for the shares to be
voted (if available through reasonably practicable
means);
d. A brief identification of the matter voted on;
e. Whether the matter was proposed by the issuer or
by a shareholder of the issuer;
f. Whether a vote was cast by the Advisor on the
matter;
g. A record of how the vote was cast; and
h. Whether the vote was cast for or against the
recommendation of the issuer's management
team.
Records shall be maintained in an easily accessible place for five years,
the most recent two years in the Advisor's offices.
DISCLOSURE
The Fund will be provided a copy of these policies and
procedures, as well as periodic reports on how its proxies have been
voted. These reports shall be provided no less frequently than annually
and upon the request of the Fund to the CEO, and shall include on a
timely basis all information required to be disclosed with respect to the
Fund's proxies on the Fund's Form N-PX to be filed each year with the
Securities and Exchange Commission. The Advisor agrees that the Fund
may disclose these policies and procedures as required by applicable
laws and regulations and as otherwise agreed by the CEO.
CONFLICTS OF INTEREST
All proxies are reviewed by the CEO for material conflicts of
interest between the shareholders of the Fund, on one hand, and those of
the Advisor, its affiliates or the Fund's underwriter, on the other. Issues
to be reviewed include, but are not limited to:
1. Whether the Advisor (or, to the extent required to be
considered by applicable law, its affiliates or the Fund's
underwriter) has an interest in the company;
2. Whether the Advisor or an officer or director of the
Advisor (together, "Voting Persons") is, is a close
relative of, or has a personal or business relationship with
the company, an executive, director or person who is a
candidate for director of the company or is a participant
in a proxy contest; and
3. Whether there is any other business or personal
relationship where a Voting Person has a personal interest
in the outcome of the matter before shareholders.
VOTING GUIDELINES
The Advisor's substantive voting decisions turn on the particular
facts and circumstances of each proxy vote and are evaluated by the
CEO on a case-by-case basis. The examples outlined below are meant
only as guidelines to aid in the decision making process.
Guidelines are grouped according to the types of proposals
generally presented to shareholders. Part I deals with proposals which
have been approved and are recommended by a company's board of
directors; Part II deals with proposals submitted by shareholders for
inclusion in proxy statements; Part III addresses issues relating to voting
shares of investment companies; and Part IV addresses unique
considerations pertaining to foreign issuers.
I. Board Approved Proposals
The vast majority of matters presented to shareholders for a vote
involve proposals made by a company itself that have been approved
and recommended by its board of directors. In view of the enhanced
corporate governance practices currently being implemented in public
companies, the Advisor generally votes in support of decisions reached
by independent boards of directors. More specific guidelines related to
certain board-approved proposals are as follows:
1. Matters relating to the Board of Directors
The Advisor votes proxies for the election of the company's
nominees for directors and for board-approved proposals on other
matters relating to the board of directors with the following exceptions:
a. Votes are withheld for the entire board of
directors if the board does not have a majority of
independent directors or the board does not have
nominating, audit and compensation committees
composed solely of independent directors.
b. Votes are withheld for any nominee for director
who is considered an independent director by the
company and who has received compensation
(directly or indirectly) from the company other
than for service as a director.
c. Votes are withheld for any nominee for director
who attends less than 75% of board and
committee meetings without valid reasons for
absences.
d. Votes are cast on a case-by-case basis in contested
elections of directors.
2. Matters relating to Stock Option Plans and Other
Executive Compensation Issues
The Advisor generally favors compensation programs that relate
executive compensation to a company's long-term performance. Votes
are cast on a case-by-case basis on board-approved proposals relating to
stock option plans and executive compensation, except as follows:
a. Except where the Advisor is otherwise
withholding votes for the entire board of directors,
the Advisor votes for stock option plans that will
result in an annual dilution of 10% or less.
b. The Advisor votes against stock option plans or
proposals that permit replacing or re-pricing of
underwater options.
c. The Advisor votes against stock option plans that
permit issuance of options with an exercise price
below the stock's current market price.
d. Except where the Advisor is otherwise
withholding votes for the entire board of directors,
the Advisor votes for employee stock purchase
plans that limit the discount for shares purchased
under the plan to no more than 15% of their
market value, have an offering period of 27
months or less and result in dilution of 10% or
less.
3. Matters relating to Capitalization
The management of a company's capital structure involves a
number of important issues, including cash flows, financing needs and
market conditions that are unique to the circumstances of each company.
As a result, the Advisor votes on a case-by-case basis on board-approved
proposals involving changes to a company's capitalization, including
increases and decreases of capital and preferred stock issuances, except
where the Advisor is otherwise withholding votes for the entire board of
directors. Generally:
a. The Advisor votes for proposals relating to the
authorization of additional common stock.
b. The Advisor votes for proposals to effect stock
splits (excluding reverse stock splits).
c. The Advisor votes for proposals authorizing share
repurchase programs.
4. Matters relating to Changes in State of Incorporation,
Mergers and Other Corporate Restructurings, and Social
and Corporate Responsibility Issues
The Advisor votes these issues on a case-by-case basis on board-
approved transactions.
5. Matters relating to Anti-Takeover Measures
The Advisor votes against board-approved proposals to adopt
anti-takeover measures such as staggered boards, poison pills and
supermajority provisions except as follows:
a. The Advisor votes on a case-by-case basis on
proposals to ratify or approve shareholder rights
plans.
b. The Advisor votes on a case-by-case basis on
proposals to adopt fair price provisions.
6. Other Business Matters
The Advisor votes for board-approved proposals approving such
routine business matters such as changing the company's name, ratifying
the appointment of auditors and procedural matters relating to the
shareholder meeting. Generally:
a. The Advisor votes on a case-by-case basis on
proposals to amend a company's charter or
bylaws.
b. The Advisor votes against authorization to
transact other unidentified, substantive business at
the meeting.
II. Shareholder Proposals
The regulations of the Securities and Exchange Commission
permit shareholders to submit proposals for inclusion in a company's
proxy statement. These proposals generally address social and corporate
responsibility issues and seek to change some aspect of a company's
corporate governance structure or to change some aspect of its business
operations. The Advisor votes in accordance with the recommendation
of the company's board of directors on all shareholder proposals, except
as follows:
1. The Advisor votes for shareholder proposals to require
shareholder approval of shareholder rights plans.
2. The Advisor votes for shareholder proposals that are
consistent with the Advisor's proxy voting guidelines for
board-approved proposals.
3. The Advisor votes on a case-by-case basis on other
shareholder proposals where the Advisor is otherwise
withholding votes for the entire board of directors.
III. Voting Shares of Investment Companies
The Advisor may utilize shares of open or closed-end investment
companies in accordance with the Fund's investment guidelines.
Shareholder votes for investment companies that fall within the
categories listed in Parts I and II above are voted in accordance with
those guidelines.
1. The Advisor votes on a case-by-case basis on proposals
relating to changes in the investment objectives of an
investment company taking into account the original
intent of the fund and the role the fund plays in the
Fund's portfolio.
2. The Advisor votes on a case-by-case basis on all
proposals that would result in increases in expenses (e.g.,
proposals to adopt 12b-1 plans, alter investment advisory
arrangements or approve fund mergers) taking into
account comparable expenses for similar funds and the
services to be provided.
IV. Voting Shares of Foreign Issuers
In the event the Advisor is required to vote on securities held in
foreign issuers, i.e. issuers that are incorporated under the laws of a
foreign jurisdiction and that are not listed on a U.S. securities exchange
or the NASDAQ stock market, the following guidelines are used, which
are premised on the existence of a sound corporate governance and
disclosure framework. These guidelines, however, may not be
appropriate under some circumstances for foreign issuers and therefore
apply only where applicable.
1. The Advisor votes for shareholder proposals calling for a
majority of the directors to be independent of
management.
2. The Advisor votes for shareholder proposals seeking to
increase the independence of board nominating, audit and
compensation committees.
3. The Advisor votes for shareholder proposals that
implement corporate governance standards similar to
those established under U.S. federal law and the listing
requirements of U.S. stock exchanges, and that do not
otherwise violate the laws of the jurisdiction under which
the company is incorporated.
4. The Advisor votes on a case-by-case basis on proposals
relating to the issuance of common stock.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Kenneth S. Janke
Director, President and Treasurer of the Fund.
Chairman, CEO, Director, President and Treasurer of the Investment
Adviser.
Serves as a President and a Director of the Fund (since 1989) and serves
as Chairman, CEO, Director, President, and Treasurer of the Investment
Adviser since the years set forth below.
Principal Occupation(s) During Past 5 Years
Chairman and Trustee of NAIC (since 2002) and Chairman, Chief Executive
Officer and Director (since 2002) and President and Treasurer
(since 1990) of the Investment Adviser. Chief Executive Officer of
NAIC (from 1981 to 2002).
As of 12-31-2005, the Investment Adviser paid Mr. Janke a salary on
a fixed basis (not tied to Fund performance).
Dollar range of equity securities of the NAIC Growth Fund, Inc. beneficially
owned by Kenneth S. Janke is between $100,001-$500,000.
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
During the period covered by this report, no purchases were made by or
on behalf of the registrant or any "affiliated purchaser" (as defined
in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934 (the
"Exhange Act") of shares of registrant's equity securities that are
registered by the registrant pursuant to Section 12 of the Exchange Act.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No changes to the procedures by which shareholders may recommend
nominees to the registrant's board of directors have been implemented
after registrant last provided disclosure in response to Item
7(d)(2)(ii)(g) of schedule 14A in registrant's 2005 proxy statement
ITEM 11. CONTROLS AND PROCEDURES.
(i) As of February 23, 2006, 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 effectively designed to insure
that information required to be disclosed by the registrant
on Form N-CSR and Form N-Q 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 on FOrm N-CSR and Form N-Q
is accumulated and communicated to the registrant's management,
including its Principal ExecutiveOfficer and Principal Financial
Officer,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, 2005 that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
ITEM 12. EXHIBITS:
(A)(1) Not applicable.
(A)(2) Separate certification of principal executive officer and
principal financial officer as required by Rule 30a-2(a) under
the Investment Company Act of 1940.
(B) Certification Pursuant to Rule 30a-2(b) under the Investment
Company Act of 1940 and 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: March 3, 2006
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: March 3, 2006
By: /s/ Calvin George
---------------------
Calvin George
Accountant (Principal Financial Officer)
Date: March 3, 2006