-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6FhPaL4wX8EvW7mKBMMd9QVkgZLQlr0/4wloN18If5OISpX1c4eQbNapzuewdFP 8S+8lBV+lB0mJ0po5sA/FQ== 0000850027-96-000007.txt : 19960308 0000850027-96-000007.hdr.sgml : 19960308 ACCESSION NUMBER: 0000850027-96-000007 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960307 SROS: CSX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NAIC GROWTH FUND INC CENTRAL INDEX KEY: 0000850027 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 311274796 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05807 FILM NUMBER: 96532327 BUSINESS ADDRESS: STREET 1: 711 WEST THIRTEEN MILE RD CITY: MADISON HEIGHTS STATE: MI ZIP: 48071 BUSINESS PHONE: 8105836242 MAIL ADDRESS: STREET 1: 711 WEST THIRTEEN MILE RD CITY: MADISON HEIGHTS STATE: MI ZIP: 48071 FORMER COMPANY: FORMER CONFORMED NAME: BETTER INVESTING FUND INC DATE OF NAME CHANGE: 19890716 N-30D 1 1995 NAIC GROWTH FUND ANNUAL REPORT NAIC GROWTH FUND, INC. Annual Report December 31, 1995 Contents Report to Shareholder 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 Auditors' Report 13 Dividends and Distributions 14 NAIC Growth Fund, Inc., Board of Directors 18 Shareholder Information 18 Report to Shareowners: December 31, 1995 As measured by the Dow Jones Industrial Average, the stock market had a great advance during 1995, rising 35.5%. New highs were attained several times throughout the year. Much of the advance has been attributed to lower interest rates, along with higher earnings in both growth and cyclical stocks. While some purchases and sales were made, price improvement on stocks already held by the Fund led to the higher Net Asset Value at year end. Sales by the Fund included Perry Drug Stores convertible subordinated debentures, when the company merged resulting in a $53,575 capital gain; Hershey Foods which generated a gain of $43,679, a small holding of Structural Dynamics that made a $4,250 profit, a $45,994 profit from the sale of Archer-Daniels-Midland and 2,000 shares of ADC Telecommunications giving the Fund a $50,812 gain. Laidlaw "B" was sold at a loss of $29,114 and the sale of Community Psychiatric Centers also resulted in a loss of $17,211. In the case of ADC Telecommunications, the Fund continues to hold 6,000 shares from the original purchase. Additions to the portfolio included 3,000 American Business Products, 1,000 Capital Cities/ABC, 5,000 Century Telephone, 5,000 McCormick, 2,000 Newell, 3,000 PepsiCo and 1,250 RPM. Several stocks in the portfolio also paid stock dividends during 1995 including ADC Telecommunications (2-1), American International Group (3-2), Clayton Homes (5-4),Dynatech (2-1), H. J. Heinz (3-2), Huntington Bancshares (5%), Ionics (2-1), Eli Lilly (2-1), Pfizer (2- 1), RPM (5-4), St. Jude Medical (3-2), Thermo Electron (3-2) and Vishay Intertechnology (2-1). There were also two major mergers involving holdings. Upjohn merged with Pharmacia to create Pharmacia and Upjohn and NBD Bancorp merged with First Chicago to form First Chicago - NBD. The Fund managers felt that both mergers made sense and the shares were retained in the portfolio. An agreement was reached with NAIC during the year to have Pulsifer and Hutner of New York to serve as a consultant for approximately 10% of the equity portfolio. Many of the stocks followed by that firm are the same as those held by the Fund. That firm will closely monitor Capital Cities/ABC, American International Group, Comerica, Coca-Cola, Johnson & Johnson and Philip Morris in addition to making further recommendations to the Fund managers. We also added William Endicott to the board of directors, who has been associated with Pulsifer & Hutner as a client for a number of years, and who brings valuable experience to the board. The Net Asset Value of your Fund was $15.19 at the end of the year compared with $11.50 a year earlier. Adding back the total 1995 dividend of $0.28, the NAV increased 34.5%. The closing price on the Chicago Stock Exchange was $13.75. Thomas E. O'Hara, Chairman Kenneth S. Janke, President NAIC Growth Fund, Inc. Statement of Assets and Liabilities As of December 31, 1995 ASSETS Investment securities -at market value (cost $6,074,825) $10,439,337 Short-term investments -at amortized cost 164,936 Cash and cash equivalents 535,047 Dividends and interest receivable 19,263 Prepaid insurance 11,148 11,169,731 LIABILITIES Dividends payable 170,009 Accounts payable 10,607 180,616 TOTAL NET ASSETS $10,989,115 SHAREHOLDERS' EQUITY Common Stock-par value $0.001 per share; authorized 50,000,000 shares, outstanding 723,444 shares $ 723 Additional Paid-in Capital 6,614,799 Undistributed net investment income 9,081 Undistributed net realized gain on investment 0 Unrealized appreciation of investments 4,364,512 SHAREHOLDERS' EQUITY $10,989,115 NET ASSET VALUE PER SHARE $ 15.19 See notes to financial statements NAIC Growth Fund, Inc. Statement of Operations For the year ended December 31, 1995 INVESTMENT INCOME Interest $ 36,803 Dividends 192,370 229,173 EXPENSES Advisory fees 73,024 Insurance 19,721 Transfer agent & custodian fee 19,545 Legal fees 14,954 Amortization of organization costs 14,219 Audit fees 13,900 Directors' fees & expenses 12,205 Printing 7,581 Annual shareholders' meeting 3,756 Mailing & postage 3,546 Other fees & expenses 6,773 Less: Advisory fees waived (73,024) Net Expenses 116,200 Net investment income 112,973 REALIZED AND UNREALIZED GAIN ON INVESTMENTS Realized gain on investments: Proceeds from sale of investment securities 740,245 Cost of investment securities sold 588,250 Net realized gain on investments 151,995 Unrealized appreciation of investments: Unrealized appreciation at beginning of year 1,754,353 Unrealized appreciation at end of year 4,364,512 Increase in unrealized appreciation on investments 2,610,159 Net realized and unrealized gain on investments 2,762,154 NET INCREASE FROM OPERATIONS $ 2,875,127 See notes to financial statements NAIC Growth Fund, Inc. Statements of Changes in Net Assets For the years ended: December 31, 1995 December 31, 1994 FROM OPERATIONS: Net investment income $112,973 $62,497 Net realized gain (loss) on investments 151,995 (55,496) Net change in unrealized appreciation on investments 2,610,159 240,598 Net increase from operations 2,875,127 247,599 DISTRIBUTION TO STOCKHOLDERS FROM: Net investment income 106,065 61,493 Net realized gain from investment transactions 96,499 0 Total distribution 202,564 61,493 FROM CAPITAL STOCK TRANSACTIONS: Shares issued to common stockholders: Dividend reinvestment 0 29,110 Cash purchases 0 19,532 Net increase from capital stock transactions 0 48,642 Net increase in net asset 2,672,563 234,748 TOTAL NET ASSETS: Beginning of year $8,316,552 8,081,804 End of year (including undistributed net investment income of $9,081 and $2,173, respectively) $10,989,115 $8,316,552 Shares: Shares issued to common stockholders under the dividend reinvestment and cash purchase plan 0 4,371 Shares at beginning of year 723,444 719,073 Shares at end of year 723,444 723,444 See notes to financial statements NAIC Growth Fund, Inc. Financial Highlights For the years ended: 1995 1994 1993 1992 1991 Net asset value at $11.50 $11.24 $10.83 $10.06 $8.72 beginning of year Net investment income .15 .09 .07 .09 .19 Net realized and unrealized gain on investments 3.82 .26 .43 .86 1.49 Total from investment 3.97 .35 .50 .95 1.68 operations Distributions from: Net investment income (.15) (.09) (.07) (.09) (.19) Realized gains (.13) .00 (.02) (.09) (.07) Total distributions (.28) (.09) (.09) (.18) (.26) Registration and initial public offering costs .00 .00 .00 .00 (.08) Net asset value at $15.19 $11.50 $11.24 $10.83 $10.06 end of year Per share market value, Ask 14 1/4 9 1/2 11 1/4 12 12 end of year Bid 13 3/4 9 3/8 9 1/2 9 1/2 9 1/2 Total Investment Return: based on market value 1 year 49.70% (0.54%) 0.83% 1.72% (12.52%) from inception 7.85% 0.27% 0.50% 0.37% (0.52%) based on net asset value 1 year 34.60% 3.12% 4.65% 9.51% 18.18% from inception 9.78% 4.92% 5.45% 5.77% 3.35% Net Assets, end of year 10,989,115 8,316,552 8,081,804 7,432,322 6,187,758 Ratios to average net assets: Ratio of expenses to average net assets (a) 1.19% 1.81% 2.00% 2.00% 2.00% Ratio of net investment income to average net assets (a) 1.16% 0.77% 0.63% 0.92% 1.94% Portfolio turnover rate 6.9% 6.56% 0.62% 3.50% 1.46% Average commission rate $0.12 (a) In 1995 and 1994, the adviser voluntarily waived its fee. Had the adviser not done so in 1995 and 1994, the ratio of expenses to average net assets would have been 1.94% and 2.00% and the ratio of net investment income to average net assets would have been 0.41% and 0.58%, respectively. See notes to financial statements NAIC Growth Fund, Inc. Portfolio of Investments - December 31, 1995 % Common Stock Shares Cost Market 0.7 Appliances Maytag Corp. 4,000 $53,020 81,000 1.1 Auto Replacement Dana Corp. 4,000 53,250 117,000 7.6 Banking Citicorp 4,000 79,167 269,000 Comerica Inc. 2,000 58,750 80,000 Huntington Banc. 10,916 91,105 261,984 First Chicago NBD 2,000 64,750 79,000 Synovus Financial 5,000 81,125 142,500 1.1 Broadcasting Capital Cities ABC 1,000 116,810 23,375 2.2 Building Products Johnson Controls 3,000 96,895 206,250 Clayton Homes 1,562 16,625 33,398 4.7 Chemicals Guardsman Prod. 7,900 70,660 105,663 Monsanto 1,500 71,448 183,750 RPM 6,250 61,000 103,125 Sigma Aldrich 2,500 94,938 123,750 0.8 Computers IBM 1,000 99,387 91,375 2.9 Consumer Products Colgate-Palmolive 2,000 98,500 140,500 Alltrista Corp. * 1,125 16,361 20,250 Newell Co. 6,000 124,875 155,250 0.3 Distillery Anheuser-Busch 500 25,875 33,437 4.3 Electrical Equipment General Electric 2,000 56,000 144,000 Vishay Intertech. * 9,492 91,122 298,998 Westinghouse Elec. 2,000 23,875 32,750 0.9 Electronics Detection Systems * 5,000 31,071 29,375 Dynatech Corp. * 4,000 35,513 68,000 11.7 Ethical Drugs Amer. Home Prod. 1,500 90,510 145,500 Bristol-Myers Squibb 2,000 146,475 171,750 Eli Lilly 5,000 168,963 281,250 Johnson & Johnson 1,000 45,500 85,500 Merck & Co., Inc. 2,500 83,319 164,063 Pfizer Inc. 2,000 58,750 126,000 Pharmicia & Upjohn 7,975 200,070 309,031 7.7 Financial Services Allied Group 5,000 131,625 180,000 Beneficial Corp. 4,000 119,537 186,500 Dun & Bradstreet 1,500 66,615 97,125 Household Intl. 5,000 123,313 297,500 State Street Boston 2,000 75,500 90,000 3.5 Food ConAgra 3,000 78,125 123,750 Heinz 3,000 67,250 99,375 McCormick & Co. 7,000 145,100 168,875 1.1 Furniture Kimball Intl. 5,000 117,250 126,250 1.1 Grocery Hannaford Bros. 5,000 109,812 123,125 1.3 Hospital Supplies Biomet Corp. * 2,000 26,750 35,750 Stryker Corp. 2,000 69,250 105,000 1.8 Hospital St. Jude Medical 4,500 100,125 193,500 0.7 Industrial Services Donaldson Co. 3,000 37,588 75,375 1.0 Instruments TSI Inc. 7,500 48,375 105,000 2.9 Insurance AFLAC Inc. 2,500 51,875 108,750 Amer. Int'l. Group 2,250 79,053 208,125 1.1 Leasing Ryder System Inc. 4,800 75,973 118,800 4.1 Machinery Commercial Inter. 4,500 51,475 81,563 Cooper Industries 3,500 129,018 128,625 Emerson Electric 3,000 113,518 245,250 1.1 Maritime Sea Containers 7,000 136,563 121,625 2.8 Multi Industry Pentair 1,500 23,875 74,625 Thermo Electron * 4,500 106,687 234,000 0.8 Office Equipment American Bus. Prod. 3,000 62,625 85,500 0.2 Packaging Liqui Box 600 14,690 17,775 2.4 Paper Mead Corp. 5,000 134,002 261,250 1.2 Petroleum Kerr McGee 2,000 95,250 127,000 0.8 Pollution Control WMX Tech. 3,000 92,647 89,250 3.0 Publishing Reuters Holdings 6,000 125,375 330,750 3.3 Restaurants McDonald's 8,000 115,260 361,000 0.5 Rubber Cooper Tire & Rubber 2,000 31,823 49,250 4.4 Soft Drinks Coca Cola 2,000 82,250 148,500 PepsiCo 6,000 222,250 335,250 0.8 Steel Lukens 3,000 72,755 86,250 2.9 Telecommunications ADC Telecom. * 6,000 28,312 219,000 Cincinnati Bell 3,000 55,250 104,250 1.6 Tobacco Philip Morris 2,000 91,588 180,500 1.2 Transportation Arnold Industries 2,000 27,850 34,750 Sysco Corp. 3,000 75,125 97,500 1.4 Utilities Century Telephone 5,000 140,625 158,750 2.0 Water Treatment Ionics * 5,000 117,187 217,500 95.0 $6,074,825 $10,439,337 Short-term Investments 1.3 United States Treasury Securities 144,936 4.9 Misc. Cash Equivalents 535,047 0.2 Commercial Paper 20,000 6.4 699,983 Total Investments 11,139,320 (1.4) All other assets less liabilities (150,205) 100.0% Total Net Assets $10,989,115 * non-income producing securities 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. Shareholders may elect to participate in the Dividend Reinvestment and Cash Purchase Plan (see Note 4). Organization Costs - Organization costs are to be amortized over a period of 60 months from the commencement of operations of the Fund. 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. 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. 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 shareholders. 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. For federal tax purposes, as of December 31, 1994, the Fund had a capital loss carryforward of $55,496 which was used to offset current net realized gains on investments. The following information is based upon Federal income tax cost of portfolio investments as of December 31, 1995: Gross unrealized appreciation $ 4,392,949 Gross unrealized depreciation (28,437) Net unrealized appreciation $ 4,364,512 Federal income tax cost $ 6,074,825 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, shareholder reporting and other related costs. Such expenses will be charged to expense daily as a percentage of net assets. The Fund's expenses in excess of two percent (2%) of average net assets shall be the responsibility of the Investment Adviser. A director of the Fund is of counsel to the Fund's legal counsel. Legal counsel has incurred $14,954 for ongoing legal services during the year. (3) MANAGEMENT ARRANGEMENTS Investment Adviser National Association of Investors Corporation 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. The Adviser has voluntarily waived its fee of $73,024 for the year ended 1995. Plan Agent First Chicago NBD, formerly known as NBD Bank, serves as the Fund's custodian pursuant to the Custodian Agreement. As the Fund's custodian, NBD will receive 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. In August, 1994, Boston EquiServe, formerly known as State Street Bank and Trust Company, became the Fund's transfer agent and dividend disbursing agent pursuant to Transfer Agency and Dividend Disbursement Agreements. Boston EquiServe will receive 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 shareholders 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 shareholders 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 shareholder participant's account will be based upon the average purchase price for all shares purchased. (5) DISTRIBUTIONS TO SHAREHOLDERS On May 18, 1995, a distribution of $0.045 per share aggregating $32,555 was declared from net investment income. The dividend was paid August 1, 1995, to shareholders of record June 30, 1995. On December 7, 1995, a dividend of $0.235 per share aggregating $170,009 was declared from net investment income and net realized gains payable January 29, 1996, to shareholders of record December 29, 1995. (6) Investment transactions Purchases and sales of securities, other than short-term securities for the year ended December 31, 1995, were $628,685 and $740,245, 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. These Financial Highlights have been derived from the financial statements of the Fund and other information for the years presented. The Total Investment Return based on market value assumes that shareholders bought into the Fund at the bid price and sold out of the Fund at the bid price. In reality, shareholders 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 Shareholders of NAIC Growth Fund, Inc.: We have audited the accompanying statement of assets and liabilities of NAIC GROWTH FUND, INC. (a Maryland corporation), including the portfolio of investments, as of December 31, 1995, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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, 1995, by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NAIC Growth Fund, Inc. as of December 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Detroit, Michigan, January 11, 1996. 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 SHAREHOLDERS WHO HAVE ELECTED TO PARTICIPATE IN THE PLAN NEED NOT DO ANYTHING FURTHER TO MAINTAIN THEIR ELECTION. Boston EquiServe, formerly known as State Street Bank and Trust Company, will act as the Plan Agent on behalf of shareholders who are participants in the Plan. All shareholders 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 Boston EquiServe, P.O. Box 8200, Boston, Massachusetts 02266, the transfer agent for the Fund's shares and the shareholders' agent for the Plan, and mailing it to Boston EquiServe. The authorization must be signed by the registered shareholders 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 $13.75 on December 31, 1995. 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 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. Boston EquiServe as the Plan Agent will perform bookkeeping and other administrative functions, such as maintaining all shareholder accounts in the Plan and furnishing written confirmation of all transactions in the account, including information needed by shareholders 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 shareholder's proxy will include those shares purchased pursuant to the Plan and of record as of the record date for determining those shareholders who are entitled to vote on any matter involving the Fund. In case of shareholders 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 shareholders as representing and limited to the total number of shares registered in the shareholder'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, which shall not exceed the lesser of five percent (5%) of the amount reinvested or three ($3.00) dollars and a termination fee of up to one ($1.00) dollar. With respect to purchases from voluntary cash payments, the Plan Agent will charge three ($3.00) dollars, plus 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 shareholders at least ninety days before such specified date. The Plan may also be terminated on at least ninety days' written notice to all shareholders in the Plan. All correspondence concerning the Plan should be directed to Boston EquiServe, P.O. Box 8200, Boston, Massachusetts 02266 or call 1-800- 257-1770. NAIC Growth Fund, Inc. Board of Directors Thomas E. O'Hara Chairman, Bloomfield Hills, MI Lewis A. Rockwell Secretary, Grosse Pointe Shores, MI Carl A. Holth Director, Grosse Pointe, MI Kenneth S. Janke President, Bloomfield Hills, MI Robert M. Bilkie, Jr. Director, Grosse Pointe, Mi Robert L. Eldred Director, Chippewa Lake, MI William T. Endicott Director, Bethesda, MD Cynthia P. Charles Director, Amber, PA Peggy L. Schmeltz Director, Bowling Green, OH Shareholder Information The ticker symbol for the NAIC Growth Fund, Inc., on the Chicago Stock Exchange is GRF. The dividend reinvestment plan allows shareholders to automatically reinvest dividends in Fund common stock without paying commission. Once enrolled, you can make additional stock purchases through monthly cash deposits ranging from $50 to $1,000. For more information, request a copy of the Dividend Reinvestment Service for Stockholders of NAIC Growth Fund, Inc., from Boston EquiServe, P.O. Box 8200, Boston, Massachusetts 02266. Telephone 1-800-257-1770. Questions about dividend checks, statements, account consolidation, address changes, stock certificates or transfer procedures write Boston EquiServe, P.O. Box 8200, Boston, Massachusetts 02266. Telephone 1-800-257-1770. Shareholders or individuals wanting general information or having questions, write NAIC, P.O. Box 220, Royal Oak, Michigan 48068. Telephone 810-583-6242 Ext. 322. -----END PRIVACY-ENHANCED MESSAGE-----