NAIC
GROWTH
FUND,
INC.
Semi-Annual Report
June 30, 1996
Contents
Report to Shareholders 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
NAIC Growth Fund, Inc., Board of Directors 13
Shareholder Information 14
June 30, 1996
The first half of 1996 has seen a great deal of volatility in the stock
market with predictions of future interest rates still playing an
important role. Since December 31, 1995 the net asset value of the NAIC
Growth Fund has increased from $15.19 to $17.01 which was the NAV on June
30, 1996. The peak was on May 23rd, when the NAV was at $17.14
The Board of Directors declared a dividend of $0.09 per share, payable on
August 1st. That compares with a semi-annual dividend of $0.45 paid the
previous year. Many of the stocks held in the Fund's portfolio increased
dividends during the past year, enabling the Board to declare a higher
payout.
Sales by the Fund included Kimball International resulting in a capital
gain of $29,625; Maytag that produced a gain of $27,977; Liqui-Box for a
small gain of $4,285; Lukens with a gain of $6,617; Anheuser-Busch giving
another small gain of $7,498 and Detection Systems with a profit of
53,928. In addition, Guardsman Products merged into another company,
resulting in a capital gain of $111,040.
Additions to the portfolio included 3,438 Clayton Homes bringing the
total holdings to 5,000 shares; 1,000 Hannaford Bros. for a new total of
6,000 shares; 1,000 Newell which increased the holding to 7, 000; 3,750
additional RPM, up to 10,000 shares; 1,000 Sysco for a new total of 4,000
and 1,508 Vishay Intertechnology bringing the total to 11,550 shares
before the stock dividend paid by the company.
Stock distributions during the period included AFLAC (3-2); American Home
Products (2-1); Coca-Cola (2-1); Johnson & Johnson (2-1); Monsanto (5-1);
Pentair (2-1); PepsiCo (2-1); RPM (5-4); Stryker (2-1); Synovus Financial
(3-2); Thermo Electron (3-2); and Vishay Intertechnology (5%).
The price of the stock, listed on the Chicago Stock Exchange (GRF) closed
on June 30th at $17.875. That resulted in the price being at a 5.1%
premium over the Net Asset Value and compared favorably with a price of
$13.75 at the end of the year.
Report to Shareowners:
Thomas E. O'Hara, Chairman Kenneth S. Janke, President
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of June 30, 1996
(Unaudited)
ASSETS
Investment securities
-at market value (cost $5,896,010) $11,327,272
Short-term investments
-at amortized cost 576,210
Cash and cash equivalents 573,036
Dividends and interest receivable 15,268
Prepaid insurance 1,593
12,493,379
LIABILITIES
Dividends payable 65,709
Accounts payable 12,321 78,030
TOTAL NET ASSETS $12,415,349
SHAREHOLDERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 730,097 shares $ 730
Additional Paid-in Capital 6,716,325
Undistributed net investment income 13,221
Undistributed net realized gain
on investments 253,811
Unrealized appreciation of investments 5,431,262
SHAREHOLDERS' EQUITY $12,415,349
NET ASSET VALUE PER SHARE $ 17.01
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the six months ended June 30, 1996
(Unaudited)
INVESTMENT INCOME
Interest $ 22,108
Dividends 102,762
124,870
EXPENSES
Advisory fees 44,252
Legal fees 10,103
Insurance 9,556
Printing 6,182
Annual shareholders meeting 6,139
Directors fees & expenses 5,633
Transfer agent & custodian fees 4,921
Audit fees 2,927
Mailing & postage 1,318
Other fees & expenses 6,139
Less: Advisory fees waived (42,149)
Net Expenses 55,021
Net investment income 69,849
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on investments:
Proceeds from sale of investment securities 755,947
Cost of investment securities sold 502,136
Net realized gain on investments 253,811
Unrealized appreciation of investments:
Unrealized appreciation at beginning of period 4,364,512
Unrealized appreciation at end of period 5,431,262
Increase in unrealized appreciation on investments 1,066,750
Net realized and unrealized gain on investments 1,320,561
NET INCREASE FROM OPERATIONS $ 1,390,410
See Notes to Financial Statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the periods ended:
June 30, 1996 December 31, 1995
(Unaudited)
FROM OPERATIONS:
Net investment income $69,849 $112,973
Net realized gain on investments 253,811 51,995
Net change in unrealized appreciation on
investments 1,066,750 2,610,159
Net increase from operations 1,390,410 2,875,127
DISTRIBUTION TO STOCKHOLDERS FROM:
Net investment income 65,709 106,065
Net realized gain from investment transactions 0 96,499
Total distributions 65,709 202,564
FROM CAPITAL STOCK TRANSACTIONS:
Shares issued to common stockholders:
Dividend reinvestment 101,533 0
Cash purchases 0 0
Net increase from capital stock
transactions 101,533 0
Net increase in net assets 1,426,234 2,672,563
TOTAL NET ASSETS:
Beginning of period 10,989,115 8,316,552
End of period (including undistributed
net investment income of $13,221
and $9,081, respectively) $12,415,349 $10,989,115
Shares:
Shares issued to common stockholders under
the dividend reinvestment and cash
purchase plan 6,653 0
Shares at beginning of period 723,444 723,444
Shares at end of period 730,097 723,444
See Notes to Financial Statements
NAIC Growth Fund, Inc.
Financial Highlights
For the periods ended: June 30,
1996 1995 1994 1993 1992 1991
(Unaudited)
Net asset value at
beginning of period $15.19 $11.50 $11.24 $10.83 $10.06 $8.72
Net investment income .10 .15 .09 .07 .09 .19
Net realized and unrealized
gain on investments 1.81 3.82 .26 .43 .86 1.49
Total from investment
operations 1.91 3.97 .35 .50 .95 1.68
Distributions from:
Net investment income (.09) (.15) (.09) (.07) (.09) (.19)
Realized gains .00 (.13) .00 (.02) (.09) (.07)
Total distributions (.09) (.28) (.09) (.09) (.18) (.26)
Registration and initial
public offering costs .00 .00 .00 .00 .00 (.08)
Net asset value at
end of period $17.01 $15.19 $11.50 $11.24 $10.83 $10.06
Per share market value,
end of period
Ask 17 7/8 14 1/4 9 1/2 11 1/4 12 12
Bid 17 1/4 13 3/4 9 3/8 9 1/2 9 1/2 9 1/2
Total Investment Return
(annualized):
based on market value
1 year 61.31% 49.70% (0.54%) 0.83% 1.72% (12.52%)
from inception 11.36% 7.85% 0.27% 0.50% 0.37% (0.52%)
based on net asset value
1 year 25.15% 34.60% 3.12% 4.65% 9.51% 18.18%
from inception 11.10% 9.78% 4.92% 5.45% 5.77% 3.35%
Net Assets, end of period
12,415,349 10,989,115 8,316,552 8,081,804 7,432,322 6,187,758
Ratios to average net assets (annualized):
Ratio of expenses to
average net assets (a)0.93% 1.19% 1.81% 2.00% 2.00% 2.00%
Ratio of net investment
income to average
net assets (a) 1.18% 1.16% 0.77% 0.63% 0.92% 1.94%
Portfolio turnover rate 5.85% 6.90% 6.56% 0.62% 3.50% 1.46%
Average commission rate $0.125 $0.12
(a) For the periods 1996, 1995 and 1994, the adviser voluntarily waived either
all or a portion of its fee. Had the adviser not done so, the ratios of
expenses to average net assets would have been 1.64%, 1.94% and 2.00%, in 1996,
1995 and 1994, respectively, and the ratios of net investment income to average
net assets would have been 0.47%, 0.41% and 0.58%, respectively.
See Notes to Financial Statements
NAIC Growth Fund, Inc.
Portfolio of Investments - June 30, 1996
% Common Stock Shares Cost Market
1.0 Auto Replacement
Dana Corp. 4,000 53,250 124,000
7.4 Banking
Citicorp 4,000 79,167 331,000
Comerica Inc. 2,000 58,750 89,250
Huntington Banc. 10,916 91,105 260,620
First Chicago NBD 2,000 64,750 78,250
Synovus Financial 7,500 81,125 162,187
0.5 Broadcasting
Walt Disney 1,049 67,681 65,956
2.5 Building Products
Johnson Controls 3,000 96,895 208,500
Clayton Homes 5,000 83,231 100,000
4.3 Chemicals
Monsanto 1,500 71,447 243,750
RPM 10,000 119,125 156,250
Sigma Aldrich 2,500 94,938 133,750
0.8 Computers
IBM 1,000 99,387 99,000
3.3 Consumer Products
Colgate-Palmolive 2,000 98,500 169,500
Alltrista Corp. * 1,125 16,361 26,719
Newell Co. 7,000 153,000 214,375
3.9 Electrical Equipment
General Electric 2,000 56,000 173,500
Vishay Intertech. * 11,550 132,026 272,869
Westinghouse 2,000 23,875 37,750
1.1 Electronics
Dynatech Corp. * 4,000 35,512 130,000
11.6 Ethical Drugs
Amer. Home Prod. 3,000 90,510 180,375
Bristol-Myers Squibb 2,000 146,475 180,000
Eli Lilly 5,000 168,963 325,000
Johnson & Johnson 2,000 45,500 99,000
Merck & Co., Inc. 2,500 83,319 161,562
Pfizer Inc. 1,000 58,750 142,750
Pharmacia & Upjohn 5,500 200,070 353,891
8.2 Financial Services
Allied Group 5,000 131,625 217,500
Beneficial Corp. 4,000 119,537 224,500
Dun & Bradstreet 1,500 66,615 93,750
Household Intl. 5,000 123,313 380,000
State Street Boston 2,000 75,500 102,000
3.1 Food
ConAgra 3,000 78,125 136,125
Heinz, H.J. 2,000 67,250 92,250
McCormick & Co. 7,000 145,100 154,875
1.6 Grocery
Hannaford Bros. 6,000 138,562 195,750
2.2 Hospital Supplies
Biomet Corp. * 2,000 26,750 28,750
Stryker Corp. 2,000 69,250 91,000
St. Jude Medical 4,500 100,125 150,750
0.6 Industrial Services
Donaldson Co. 3,000 37,588 77,250
1.1 Instruments
TSI Inc. 7,500 48,375 142,500
2.7 Insurance
AFLAC 3,750 51,875 112,031
Amer. Int'l. Group 2,250 79,053 221,906
1.1 Leasing
Ryder System Inc. 4,800 75,973 135,000
4.3 Machinery
Commercial Inter. 4,500 51,475 116,437
Cooper Industries 3,500 129,018 145,250
Emerson Electric 3,000 113,518 271,125
1.1 Maritime
Sea Containers 7,000 136,563 133,000
3.0 Multi Industry
Pentair 3,000 23,875 90,000
Thermo Electron * 4,500 106,687 280,969
0.5 Office Equipment
American Bus. Prod. 3,000 62,625 65,625
2.1 Paper
Mead Corp. 5,000 134,002 259,375
1.0 Petroleum
Kerr McGee 2,000 95,250 121,750
0.8 Pollution Control
WMX Tech. 3,000 92,647 98,250
3.5 Publishing
Reuters Holdings 6,000 125,375 435,000
3.0 Restaurants
McDonald's 8,000 115,260 374,000
0.4 Rubber
Cooper Tire & Rub. 2,000 31,823 44,500
5.0 Soft Drinks
Coca Cola 4,000 82,250 196,000
PepsiCo 12,000 222,250 426,000
3.4 Telecommunications
ADC Telecom. * 6,000 28,313 270,000
Cincinnati Bell 3,000 55,250 156,375
1.7 Tobacco
Philip Morris 2,000 91,588 208,000
1.3 Transportation
Arnold Industries 2,000 27,850 28,500
Sysco Corp. 4,000 108,250 137,000
1.3 Utilities
Century Telephone 5,000 140,625 159,375
1.9 Water Treatment
Ionics * 5,000 117,188 235,000
91.3 $5,896,010 $11,327,272
S Short-term Investments
4.6 United States Treasury Securities 576,210
4.6 Misc. Cash Equivalents 573,036
9.2 1,149,246
Total Investments 12,476,518
(0.5) All other assets less liabilities (61,169)
100.0% Total Net Assets $12,415,349
* non-income producing securities
See Notes to Financial Statements
NAIC Growth Fund, Inc.
Notes to Financial Statements
(1) ORGANIZATION
The NAIC Growth Fund, Inc. (the "Fund") was organized under Maryland law
on April 11, 1989 as a diversified closed-end investment company under
the Investment Company Act of 1940. The Fund commenced operations on
July 2, 1990.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
followed by the Fund not otherwise set forth in the notes to financial
statements:
Dividends and Distributions - Dividends from the Fund's net investment
income and realized net long- and short-term capital gains will be
declared and distributed at least annually. 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.
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 June 30, 1996:
Gross unrealized appreciation $ 5,436,937
Gross unrealized depreciation (5,675)
Net unrealized appreciation $ 5,431,262
Federal income tax cost $ 5,896,010
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 $10,103 for ongoing legal services during the
period.
(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 $42,149 of
its total fee of $44,252 for the period ended June 30, 1996.
Plan Agent
First Chicago NBD, formerly known as NDB 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 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 16, 1996, a distribution of $0.09 per share aggregating $65,709
was declared from net investment income. The dividend was paid August
1, 1996, to shareholders of record June 28, 1996.
(6) INVESTMENT TRANSACTIONS
Purchases and sales of securities, other than short-term securities for
the period ended June 30, 1996, were $323,322 and $755,947,
respectively.
(7) FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Fund's
net asset value has changed during the periods 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 periods
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.
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 8204, 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 8204, 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.
NAIC Growth Fund, Inc.
Board of Directors
Thomas E. O'Hara
Chairman,
Bloomfield Hills, MI
Lewis A. Rockwell
Secretary,
Grosse Pointe Shores, MI
Cynthia P. Charles
Director,
Amber, PA
Carl A. Holth
Director,
Grosse Pointe, MI
William T. Endicott
Director,
Bethesda, MD
Kenneth S. Janke
President,
Bloomfield Hills, MI
Benedict J. Smith
Director,
Birmingham, Mi
Robert L. Eldred
Director,
Chippewa Lake, MI
Peggy L. Schmeltz
Director,
Bowling Green, OH
