-----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, ScwWzUYBUtDl7N5EVbcIRcha1Hc/nEtdJ9jMe74kYho1X9nC0//+YYBO1DFcYZ/h zONnvAjeNT0B8tPbFkXCIQ== 0000850027-98-000003.txt : 19980227 0000850027-98-000003.hdr.sgml : 19980227 ACCESSION NUMBER: 0000850027-98-000003 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980226 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: SEC FILE NUMBER: 811-05807 FILM NUMBER: 98550410 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 NAIC GROWTH FUND, INC. Annual Report December 31, 1997 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 Auditors' Report 13 Dividends and Distributions 14 NAIC Growth Fund, Inc., Board of Directors 18 Shareholder Information 18 Report to Shareowners: December 31, 1997 As measured by the popular averages, the stock market experienced a dramatic increase for the third consecutive year. It was also a good year for the NAIC Growth Fund. The Net Asset Value was $9.07 at the end of 1996 and on December 31, 1997 was $11.46 when the dividends were added back in to the actual NAV of $10.99. That was an increase of 26.3% for the year. The price of the stock closed the year at $14.75, up 56.3% from the 1996 closing price. All figures have been adjusted for the 100% stock dividend paid on October 1st. The dividend payments last year increased 29.5% over 1996, including regular income and capital gains. Two new issues were added to the portfolio - 6,000 OM Group and 4,000 O'Reilly Automotive. We increased our positions with the addition of 4,000 American Business Products, 5,000 Biomet, 3,000 CBS, 2,000 Dallas Semiconductor, 2,000 Federal Signal, 1,000 McCormick, 2,000 Stryker, 1,000 Sysco and 1,000 Teleflex. We reduced our positions in four stocks with partial sales of Eli Lilly, McDonald's, Mead and Bristol-Myers Squibb. Full sales were made in Philip Morris, Cooper Tire & Rubber, Walt Disney, Arnold Industries, Cuno, Commercial Intertech, Dun & Bradstreet, Sea Containers and Alltrista. Stocks which split or paid stock dividends during the year included: Allied Group (3-2); American International Group (3-2); Bristol-Myers Squibb (2-1); Cincinnati Bell (2-1); Colgate-Palmolive (2-1); ConAgra (2-1); Eli Lilly (2-1); Emerson Electric (2-1); General Electric (2-1); Huntington Bancshares (10%); IBM (2-1); Johnson Controls (2-1); Mead (2-1); Molex (5- 4); O'Reilly Automotive (2-1); Pfizer (2-1); RPM (5-4); Sigma Aldrich (2-1); State Street (2-1); Synovus Financial (3-2); Teleflex (2-1) and Vishay Intertechnology (5%). With the turmoil in the Asian markets and projected lower earnings gains for many companies, 1998 will be a challenging year. We feel that our portfolio is well positioned and expect continued earnings progress for the stocks we hold. They are continually monitored to seek opportunities to increase positions and to add new issues to the Fund's portfolio. Thomas E. O'Hara, Chairman Kenneth S. Janke, President NAIC Growth Fund, Inc. Statement of Assets and Liabilities As of December 31, 1997 ASSETS Investment securities -at market value (cost $6,307,866) $15,650,593 Short-term investments -at amortized cost 1,598,476 Cash and cash equivalents 734,919 Dividends and interest receivable 18,795 Prepaid insurance 11,444 18,014,227 LIABILITIES Dividends payable 651,296 Accounts payable 27,626 678,922 TOTAL NET ASSETS $17,335,305 SHAREHOLDERS' EQUITY Common Stock-par value $0.001 per share; authorized 50,000,000 shares, outstanding 1,576,988 shares $ 1,577 Additional Paid-in Capital 7,990,479 Undistributed net investment income 522 Undistributed net realized gain on investments 0 Unrealized appreciation of investments 9,342,727 SHAREHOLDERS' EQUITY $17,335,305 NET ASSET VALUE PER SHARE $ 10.99 See notes to financial statements NAIC Growth Fund, Inc. Statement of Operations For the year ended December 31, 1997 INVESTMENT INCOME Interest $ 92,768 Dividends 208,849 301,617 EXPENSES Advisory fees 118,047 Transfer agent & custodian fees 32,444 Legal fees 30,057 Insurance 19,323 Audit fees 15,450 Directors' fees & expenses 12,986 Printing 11,876 Annual shareholders' meeting 9,847 Mailing & postage 3,360 Other fees & expenses 12,326 Less: Advisory fees waived (114,329) Net Expenses 151,387 Net investment income 150,230 REALIZED AND UNREALIZED GAIN ON INVESTMENTS Realized gain on investments: Proceeds from sale of investment securities 1,235,419 Cost of investment securities sold 658,391 Net realized gain on investments 577,028 Unrealized appreciation of investments: Unrealized appreciation at beginning of year 6,526,553 Unrealized appreciation at end of year 9,342,727 Increase in unrealized appreciation on investments 2,816,174 Net realized and unrealized gain on investments 3,393,202 NET INCREASE FROM OPERATIONS $ 3,543,432 See notes to financial statements NAIC Growth Fund, Inc. Statements of Changes in Net Assets For the years ended: December 31, 1997 December 31, 1996 FROM OPERATIONS: Net investment income $150,230 $136,240 Net realized gain on investments 577,028 424,659 Net change in unrealized appreciation on investments 2,816,174 2,162,041 Net increase from operations 3,543,432 2,722,940 DISTRIBUTION TO STOCKHOLDERS FROM: Net investment income 155,619 139,410 Net realized gain from investment transactions 577,028 424,659 Total distributions 732,647 564,069 FROM CAPITAL STOCK TRANSACTIONS: Dividend reinvestment 423,948 150,443 Cash purchases 612,787 189,356 Net increase from capital stock transactions 1,036,735 339,799 Net increase in net assets 3,847,520 2,498,670 TOTAL NET ASSETS: Beginning of year $13,487,785 $10,989,115 End of year (including undistributed net investment income of $522 and $5,911, respectively) $17,335,305 $13,487,785 Shares: Shares issued to common stockholders under the dividend reinvestment and cash purchase plan 89,346 40,754 Shares at beginning of year 1,487,642 1,446,888 Shares at end of year 1,576,988 1,487,642 See notes to financial statements NAIC Growth Fund, Inc. Financial Highlights For the years ended: 1997 1996 1995 1994 1993 Net asset value at beginning of year $9.07 $7.60 $5.75 $5.62 $5.42 Net investment income .10 .10 .08 .05 .04 Net realized and unrealized gain on investments 2.29 1.75 1.91 .13 .21 Total from investment operations 2.39 1.85 1.99 .18 .25 Distributions from: Net investment income (.10) (.10) (.08) (.05) (.04) Realized gains (.37) (.28) (.06) .00 (.01) Total distributions (.47) (.38) (.14) (.05) (.05) Net asset value at end of year $10.99 $9.07 $7.60 $5.75 $5.62 Per share market value, end of year Ask 15 1/4 9 3/4 7 1/8 4 3/4 5 5/8 Bid 14 1/2 9 7/16 6 7/8 4 11/16 4 3/4 Total Investment Return: based on market value 1 year 58.50% 42.94% 49.70% (0.54%) 0.83% from inception 17.84% 12.59% 7.85% 0.27% 0.50% based on net asset value 1 year 26.43% 24.46% 34.60% 3.12% 4.65% from inception 13.69% 11.92% 9.78% 4.92% 5.45% Net Assets, end of year (mil) $17,335.3 $13,487.8 $10,989.1 $8,316.6 $8,081.8 Ratios to average net assets: Ratio of expenses to average net assets (a) 0.96% 0.96% 1.19% 1.81% 2.00% Ratio of net investment income to average net assets (a) 0.96% 1.10% 1.16% 0.77% 0.63% Portfolio turnover rate 6.31% 5.93% 6.90% 6.56% 0.62% Average commission rate $0.12 $0.12 $0.12 (a) In 1997, 1996, 1995 and 1994, the adviser voluntarily waived its fee. Had the adviser not done so in 1997, 1996, 1995 and 1994, the ratio of expenses to average net assets would have been 1.69%, 1.68%, 1.94% and 2.00% and the ratio of net investment income to average net assets would have been 0.23%, 0.38%, 0.41% and 0.58%, respectively. See notes to financial statements NAIC Growth Fund, Inc. Portfolio of Investments - December 31, 1997 % Common Stock Shares Cost Market 1.8 Agriculture Monsanto 7,500 65,339 315,000 1.7 Auto Replacement Dana Corp. 4,000 53,250 190,000 O'Reilly Automotive * 4,000 84,750 105,000 9.8 Banking Citicorp 4,000 79,167 505,750 Comerica, Inc. 2,000 58,750 180,500 First Chicago NBD 2,000 64,750 167,000 Huntington Banc. 13,207 91,093 475,452 Synovus Financial 11,250 81,125 368,438 2.7 Building Products Clayton Homes 10,000 131,981 180,000 Johnson Controls 6,000 96,895 286,500 3.7 Chemicals OM Group, Inc. 6,000 195,562 219,750 RPM 12,500 119,125 190,625 Sigma Aldrich 5,000 94,937 198,750 Solutia, Inc. 1,500 6,109 40,031 1.2 Computers IBM 2,000 99,387 209,250 3.4 Consumer Products Colgate-Palmolive 4,000 98,500 294,000 Newell Co. 7,000 153,000 297,500 4.8 Electrical Equipment CBS Corp. 5,000 102,437 147,188 Federal Signal 5,000 119,875 108,125 General Electric 4,000 56,000 293,500 Vishay Intertech. * 12,127 132,026 285,742 2.4 Electronics Dynatech Corp. * 6,000 111,138 281,250 Molex, Inc. 4,687 93,240 134,751 11.1 Ethical Drugs Amer. Home Prod. 3,000 90,510 229,500 Bristol-Myers Squibb 3,000 106,538 283,875 Eli Lilly 6,000 91,688 417,750 Johnson & Johnson 2,000 45,500 131,750 Merck & Co., Inc. 2,500 83,320 265,000 Pfizer, Inc. 4,000 58,750 298,250 Pharmicia & Upjohn 7,975 200,070 292,084 9.2 Financial Services Allied Group 11,250 131,625 322,031 Beneficial Corp. 4,000 119,538 332,500 Cognizant Corp. 1,500 35,799 66,938 Household Intl. 5,000 123,312 638,125 State Street Boston 4,000 75,500 232,750 3.3 Food ConAgra 6,000 78,125 198,750 Heinz, H.J. 3,000 67,250 152,438 McCormick & Co. 8,000 168,850 224,000 1.5 Grocery Hannaford Bros. 6,000 138,562 260,625 3.1 Hospital Supplies Biomet Corp. 7,000 122,250 179,375 Stryker Corp. 6,000 121,750 223,500 St. Jude Medical* 4,500 100,125 137,250 0.8 Industrial Services Donaldson Co. 3,000 37,588 135,188 0.9 Instruments TSI, Inc. 15,000 48,375 150,000 3.2 Insurance AFLAC, Inc. 3,750 51,875 191,719 Amer. Int'l. Group 3,375 79,052 367,031 3.0 Machinery Cooper Industries 3,500 129,018 171,500 Emerson Electric Co. 6,000 113,518 338,625 3.6 Multi Industry Pentair 3,000 23,875 107,812 Teleflex 6,000 145,188 226,500 Thermo Electron * 6,750 106,688 297,000 0.9 Office Equipment American Bus. Prod. 7,000 158,000 151,375 1.0 Paper Mead Corp. 6,000 74,144 168,000 0.7 Petroleum Kerr McGee 2,000 95,250 126,625 2.3 Publishing Reuters Holdings 6,000 125,375 397,500 1.9 Restaurants McDonald's 6,000 83,125 286,500 Tricon Global Rest. * 1,200 16,876 34,875 1.2 Semiconductor Dallas Semiconductor 5,000 107,750 203,750 4.0 Soft Drinks Coca Cola 4,000 82,250 266,750 PepsiCo 12,000 205,374 435,000 3.3 Telecommunications ADC Telecom. * 9,000 21,234 375,750 Cincinnati Bell 6,000 55,250 186,000 1.3 Transportation Sysco Corp. 5,000 142,750 227,812 1.4 Utilities Century Telephone 5,000 140,625 249,063 1.1 Water Treatment Ionics * 5,000 117,188 195,625 90.3 $6,307,866 $15,650,593 Short-term Investments 9.2 United States Treasury Bill, maturing 1/8/98 1,598,476 4.2 Misc. Cash Equivalents 734,919 13.4 2,333,395 Total Investments 17,983,988 (3.7) All other assets less liabilities (648,683) 100.0% Total Net Assets $17,335,305 * 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. Shareholders may elect to participate in the Dividend Reinvestment and Cash Purchase Plan (see Note 4). Investments - Investments in equity securities are stated at market value, which is determined based on quoted market prices or dealer quotes. Pursuant to Rule 2a-7 of the Investment Company Act of 1940, the Fund utilizes the amortized cost method to determine the carrying value of short-term debt obligations. Under this method, investment securities are valued for both financial reporting and Federal tax purposes at amortized cost. 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. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles 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 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. The following information is based upon Federal income tax cost of portfolio investments as of December 31, 1997: Gross unrealized appreciation $ 9,361,102 Gross unrealized depreciation (18,375) Net unrealized appreciation $ 9,342,727 Federal income tax cost $ 6,307,866 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 Advisory Agreement provides that the Fund may not incur annual aggregate expenses in excess of two percent (2%) of the first Ten Million Dollars of the Fund's average net assets, one and one-half percent (1 1/2%) of the next Twenty Million Dollars of the average net assets, and one percent (1%) of the remaining average net assets for any fiscal year. Any excess expenses shall be the responsibility of the Investment Adviser, and the pro rata portion of the estimated annual excess expenses will be offset against the Investment Adviser's monthly fee. A director of the Fund is of counsel to the Fund's legal counsel. Legal counsel has incurred $30,057 for ongoing legal services during the year. (3) MANAGEMENT ARRANGEMENTS Investment Adviser - National Association of Investors Corporation (NAIC) 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 $114,329 of its total fee of $118,047 for the year ended 1997. NAIC entered into a Consulting Agreement dated January 1, 1997 with Hutner Capital Management Inc. ("Hutner"), an investment adviser, pursuant to which Hutner acted as consultant and adviser to NAIC with respect to the investment of certain assets of the Fund (constituting approximately 10% of the Fund's total assets). The Consulting Agreement required NAIC to evaluate the recommendations of Hutner and, in its sole and absolute discretion, to accept or reject such recommendations in accordance with applicable law, its fiduciary obligations to the Fund and the terms of the Advisory Agreement. NAIC paid Hutner $3,718 in 1997 for its services. The Consulting Agreement terminated on December 31, 1997. Plan Agent - In 1997, the Fund changed custodians from First Chicago NBD (NBD) to Michigan National Bank (MNB). NBD and MNB served as the Fund's custodians pursuant to the Custodian Agreement. As the Fund's custodians, NBD and MNB received 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. Boston EquiServe serves as the Fund's transfer agent and dividend disbursing agent pursuant to Transfer Agency and Dividend Disbursement Agreements. Boston EquiServe 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 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 15, 1997, a distribution of $0.0525 per share aggregating $81,351 was declared from net investment income. The dividend was paid August 1, 1997, to shareholders of record June 30, 1997. On December 4, 1997, a dividend of $0.413 per share aggregating $651,296 was declared from net investment income and net realized gains payable January 29, 1998, to shareholders of record December 29, 1997. The Board of Directors also declared a 100% stock dividend on August 22, 1997. The stock dividend was paid October 1, 1997 to shareholders of record September 12, 1997. All per share disclosures have been retroactively adjusted for the stock dividend. (6) Investment transactions Purchases and sales of securities, other than short-term securities for the year ended December 31, 1997, were $892,228 and $1,235,419, 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, 1997, 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, 1997, 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, 1997, 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 7, 1998. 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 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 $14 3/4 on December 31, 1997. 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 withoutearning 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 and a termination fee of up to one ($1.00) dollar. With respect to purchases from voluntary cash payments, the Plan Agent will charge a pro rata share of the brokerage commissions, if any. Brokerage charges for purchasing small blocks of stock for individual accounts through the Plan are expected to be less than the usual brokerage charges for such transactions, as the Plan Agent will be purchasing shares for all participants in larger blocks and prorating the lower commission rate thus applied. The automatic reinvestment of dividends and distributions will not relieve participants of any income tax liability associated therewith. Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund reserves the right to amend or terminate the Plan as applied to any voluntary cash payment received and any dividend or distribution to be paid subsequent to a date specified in a notice of the change sent to all 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, Clinton Twp., MI Kenneth S. Janke President, Bloomfield Hills, MI Benedict J. Smith Director, Birmingham, MI James M. Lane Director, Grosse Pointe Farms, MI Peggy L. Schmeltz Director, Bowling Green, OH Cynthia P. Charles Director, Ambler, PA 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 248-583-6242 Ext. 322. -----END PRIVACY-ENHANCED MESSAGE-----