NOTICE AND PROXY STATEMENT
NAIC GROWTH FUND, INC.
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1997
To the shareholders of the NAIC Growth Fund, Inc.:
Notice is hereby given that the 1997 Annual Meeting of
Shareholders (the "Meeting") of the NAIC Growth Fund, Inc.
(the "Fund") will be held at the Fund's principal executive
offices located at 711 West Thirteen Mile Road, Madison
Heights, Michigan, on Thursday, May 15, 1997 at 2:00 p.m.
for the following purposes:
1. To elect a Board of nine (9) Directors;
2. To ratify or reject the selection of Arthur Andersen LLP
as independent auditors of the Fund for the calendar year
ending December 31, 1997; and
3. To act upon such other business as may properly come
before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
March 21, 1997 as the record date for the determination of
shareholders entitled to vote at the Meeting or any
adjournment thereof.
You are cordially invited to attend the Meeting.
Shareholders who do not expect to attend the Meeting in
person are requested to complete, date and sign the enclosed
proxy form and return it promptly in the envelope provided
for that purpose. The enclosed proxy is being solicited on
behalf of the Board of Directors of the Fund.
By Order of the Board of Directors
Lewis A. Rockwell
Secretary
April 9, 1997
PROXY STATEMENT
NAIC GROWTH FUND, INC.
711 West Thirteen Mile Road
Madison Heights, Michigan 48071
1997 Annual Meeting of Shareholders
May 15, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors
of NAIC Growth Fund, Inc., a Maryland corporation (the
"Fund"), to be voted at the 1997 Annual Meeting of
Shareholders of the Fund (the "Meeting"), to be held at the
executive offices of the National Association of Investors
Corporation, 711 West Thirteen Mile Road, Madison Heights,
Michigan 48071, at 2:00 p.m. on May 15, 1997. The
approximate mailing date of this Proxy Statement is April 9,
1997.
All properly executed proxies received prior to the Meeting
will be voted at the Meeting in accordance with the
instructions marked thereon or otherwise as provided
therein.
Unless instructions to the contrary are marked, proxies will
be voted for the election of nine Directors and for the
ratification of the independent auditors. Any proxy may be
revoked at any time prior to the exercise thereof by giving
written notice to the Secretary of the Fund.
The Directors have fixed the close of business on March 21,
1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the
Meeting and at any adjournment thereof. Shareholders on the
record date will be entitled to one vote for each share
held, with no shares having cumulative voting rights. As of
December 31, 1996, the Fund had outstanding 743,821 shares
of common stock, par value $0.001 per share. To the
knowledge of management of the Fund no person owned
beneficially more than 5% of its outstanding shares at such
date.
To the knowledge of the Fund as of December 31, 1996, the
following number of shares of the Fund's common stock $0.001
par value were beneficially owned by each director and by
all directors and officers of the Fund as a group:
Number of Shares
and Nature of Beneficial
Ownership as of Percent
Owner December 31, 1996 (a) of Class
All Officers and Directors
as a group (9 persons) 19,275 2.59
Thomas E. O'Hara 3,653 *
Kenneth S. Janke 5,770 *
Lewis A. Rockwell 5,509 *
Peggy L. Schmeltz 2,969 *
Cynthia P. Charles 649 *
Carl A. Holth 523 *
William T. Endicott 0 *
James M. Lane 0 *
Benedict J. Smith 202 *
(a) The nature of beneficial ownership of shares shown in
this column is sole voting investment power unless otherwise
indicated. The shares shown for Messrs. O'Hara, Janke and
Rockwell include 3,123 shares owned by the Mutual Investment
Club of Detroit Limited Partnership, a Michigan limited
partnership, of which Messrs. O'Hara, Rockwell and Janke are
general partners. The individual retirement accounts of
Messrs. O'Hara and Janke are limited partners of the Mutual
Investment Club of Detroit Limited Partnership. The shares
shown for Messrs. O'Hara and Janke also include 110 shares
owned by the National Association of Investors Corporation
and held by NAIC Associates, a Michigan co-partnership, a
nominee partnership in which Messrs. O'Hara, Janke and
James A. Sobol (Comptroller of the Investment Adviser) are
the sole partners. The shares shown for Mr. Rockwell
include 2,385 shares owned jointly with his wife. The
shares shown for Mr. Janke include 2,537 shares owned by a
trust of which he is trustee. The shares shown for Mrs.
Charles include 323 shares owned jointly with her children.
The shares shown for Mr. Holth are owned by a pension trust
of which he is trustee.
* Less than 1%.
The Directors have elected three (3) officers for the Fund.
The following sets forth information concerning each of
these officers:
Served
Office Name and Age Since
Chairman of the Board and Thomas E. O'Hara-81 1989
Chief Executive Officer
President, Chief Operating Kenneth S. Janke-62 1989
Officer and Treasurer
Secretary Lewis A. Rockwell-78 1989
The Fund has no standing audit, nominating or compensation
committees of the Board of Directors, or committees
performing similar functions. The Fund has a Management
Proxy Committee comprised of Messrs. O'Hara and Janke to
cast votes represented by properly executed proxies.
A copy of the Fund's Annual Report for the year ended
December 31, 1996, including audited financial statements,
has been included with this proxy statement.
The Directors of the Fund know of no business other than
that mentioned in Items 1 and 2 of the Notice of Meeting
which will be presented for consideration at the Meeting.
If any other matter is properly presented, it is the
intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment.
PROPOSAL NO. 1
(Election of Directors)
A Board of nine (9) Directors to serve for a term of one (1)
year, or until their successors are elected and qualified,
is to be elected at the Meeting. Unless authorization to do
so is withheld, it is intended that the proxies will be
voted for the election of the nominees named below. If any
nominee becomes unavailable for election, an event not now
anticipated by the Board of Directors, the proxy will be
voted for such other nominee as may be designated by the
Board of Directors. All nominees are presently Directors of
the Fund and have consented to continuing as Directors.
Listed below are all nominees and their backgrounds.
Nominee Directors
Thomas E. O'Hara * 81 Chairman of the Board, 1989
Chief Executive Officer
and Director
Chairman of the Board and Trustee of the National
Association of Investors Corporation, the Fund's Investment
Adviser (the "Investment Adviser").
Kenneth S. Janke * 62 Director, President, 1989
Chief Operating Officer
and Treasurer
President and Trustee of the Investment Adviser;
Director,AFLAC; Partner, NAIC Associates.
Lewis A. Rockwell * 78 Director and Secretary 1989
Attorney and Counsel to the law firm of Bodman, Longley
& Dahling LLP, counsel to the Fund and the Investment
Adviser (January, 1990 to present); attorney and member of
the law firm of Rockwell and Kotz, P.C. (December, 1982 to
January 1990); Trustee and Secretary of the Investment
Adviser.
Peggy L. Schmeltz * 69 Director 1989
Adult Education Teacher.
Cynthia P. Charles 75 Director 1989
Retired.
Carl A. Holth 63 Director 1989
President and Director, Greater Detroit Capital Corporation;
Financial Consultant and President of Carl A. Holth &
Associates, Inc. (a private financial consulting and
business appraising firm located in Grosse Pointe Woods,
Michigan).
William T. Endicott 50 Director 1995
Consultant, Hutner Capital Management (1996-Present);
Consultant, Pulsifer & Hutner, Inc. (1991-1996).
Benedict J. Smith 77 Director 1996
Retired; Senior Vice President, Manufacturers Bank (1970-
1987); Director and Treasurer, Detroit Executive Service
Corps.; Director, Vista Maria; Trustee, Henry Ford Health
System, Behavioral Services.
James M. Lane 67 Director 1997
Retired; Senior Vice President, NBD Bank (1982- 1994);
Trustee for Wheaton College, William Tyndale College,
Baseball Chapel, Inc., Christian Camps, Inc.,and Financial
Analysts Society.
* An `interested person' of the Fund within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940.
There were four (4) meetings of the Board of Directors held
during the past year. Each Director attended at least 75%
of the meetings of the Board of Directors during 1996,
except Mr. Robert Eldred who has resigned as Director
effective December 5, 1996.
Compensation of Directors and Officers
and Ownership Reports
The Directors of the Fund who are not affiliated with the
Investment Adviser or the Investment Adviser's affiliates
are paid $1,000 per year plus $100 per meeting attended.
All other officers and directors, including the Chairman,
President and Secretary, are not compensated by the Fund,
except for out-of-pocket expenses relating to attendance at
meetings and other operations of the Fund.
Directors and officers of the Fund and certain of its
affiliates and beneficial owners of more than 10% of the
Fund's common stock are required to file initial reports of
ownership and reports of changes in ownership of the Fund's
common stock pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended. The Fund has reviewed
such reports received by it and written representations of
such persons who are known by the Fund, and based solely
upon such review, the Fund believes that during the year
ended December 31, 1996 all filing requirements were met.
Investment Advisor
The Fund has entered into an Investment Advisory Agreement
dated October 2, 1989, as amended, between the National
Association of Investors Corporation (the "Investment
Adviser") and the Fund (the "Advisory Agreement"). The
shareholders approved the continuance of the Advisory
Agreement through June 30, 1993 and modification to the
Advisory Agreement at the Annual Meeting of Shareholders
which was held on May 21, 1992. The Advisory Agreement,
which became effective on July 2, 1990, continues in effect
for a period of two years from its effective date and
thereafter only so long as such continuance is specifically
approved at least annually by the Board of Directors of the
Fund or by a vote of the majority of the outstanding voting
securities of the Fund. The continuance of the Advisory
Agreement through June 30, 1998 was approved by the Board of
Directors of the Fund at its meeting on December 5, 1996.
The Investment Adviser is a Michigan nonprofit corporation
which provides investment education and advisory services.
The address of the Investment Adviser is the same as the
Fund. Messrs. O'Hara, Janke and Rockwell, who are directors
and officers of the Fund, are also trustees and officers of
the Investment Adviser. See `Proposal No. 1 - Nominee
Directors.' The Fund is the Investment Adviser's sole
advisory client. A copy of the consolidated balance sheet
as of September 30, 1996 of National Association of
Investment Clubs Trust, which wholly owns the Investment
Adviser, is attached hereto as Exhibit A.
The following table set forth the name, title and principal
occupation of the officers and trustees of the Investment
Adviser. The address of each is the address of the Fund.
Position With National Other
Association of Investors Principal
Name Corp.(Investment Advisor) Occupation
Warren B. Alexander Trustee Retired
Donald E. Danko Trustee Managing Editor of
Better Investing.
Lorrie Gustin Trustee Consultant, Stand In
Office Services;
(1995-Present) Vice
President of W.R.
Gustin & Associates,
Inc. (1956-1995).
Robert W. Hague Trustee Investment adviser
for SIGMA Investment
Counselors (1989-
Present); Senior
Vice President of
Federal-Mogul
Corporation 1964-
1989).
Richard H. Holthaus Trustee Vice President,
Fleishman-Hillard
(1992-Present);
Senior Vice
President,
Christensen &
Associates (1989-
1992);
Vice President of
Investor Relations
for CitiCorp-
CitiBank
(1971-1989).
Kenneth S. Janke Trustee None.
and President
Kenneth R. Lightcap Trustee Weller, O'Sullivan,
Zucherman &
Lightcap,
President, Director
Public Relations,
Pedone & Partners
(1994-1996);
Managing
Director,Manning
Selvage & Lee
(1992-1993); Vice
President of
Shareholder
Relations,
Reebok Int'l, Ltd.,
(1989-1991); Vice
President of Public
Affairs and
Investor Relations
Chesebrough-Ponds,
Inc.(1976-1989).
Leroy F. Mumford Trustee President of PlanCon
Associates, Inc.
(1982-Present).
Thomas E. O'Hara Trustee None.
and Chairman
of the Board
Lewis A. Rockwell Trustee and Counsel to the law
Secretary firm of Bodman,
Longley & Dahling
LLP (1990-Present);
Member of the law
firm of Rockwell
and Kotz, P.C.
(1982-1990);
President,Director,
Secretary,Sunshine-
Fifty, Inc.
Ralph L. Seger, Jr. Trustee President, Seger-
Elvekrog, Inc.
(1981-Present)
Sharon Vuinovich Trustee Regional Vice
President,
McDonald's Corp.
Peggy L. Schmeltz Trustee Adult Education
Teacher.
Elizabeth N. Hamm Trustee Adult Education
Teacher.
The Investment Adviser is wholly owned by the National
Association of Investment Clubs Trust (the "Trust"), a trust
formed under Michigan law. The address of the Trust is the
address of the Fund. The trustees of the Investment Adviser
are also the trustees of the Trust. No officer, director or
trustee of the Fund or the Investment Adviser has any direct
or indirect interest in the Investment Adviser or the Trust.
Advisory Agreement
The Advisory Agreement provides that, subject to the
direction of the Board of Directors of the Fund, the
Investment Adviser is responsible for the actual management
of the Fund's portfolio. The responsibility for making
decisions to buy, sell or hold a particular security rests
with the Investment Adviser, subject to review by the Board
of Directors of the Fund.
Fees and Expense
For the services provided by the Investment Adviser under
the Advisory Agreement, the Fund is to pay to the Investment
Adviser a monthly fee at an annual rate of three-quarters of
one percent (0.75%) of the weekly net assets of the Fund,
which fee is higher than those paid by most other investment
companies; however, if the weekly net asset value of the
Fund is below Three Million Eight Hundred Thousand and
00/100 ($3,800,000.00) Dollars, no Investment Adviser's fee
will be paid or accrued by the Fund to the Investment
Adviser for that week. The Investment Adviser waived its
fees from 1991 through 1995 and has waived all of its fees
for 1996, except with respect to certain costs and expenses
incurred by the Investment Adviser in connection with the
Fund which are anticipated to be approximately six percent
(6%) of the three-quarters of one percent (0.75%) fees for
1997, or forty-five hundredth of one percent (0.045%). The
Fund made no material payments to the Investment Adviser in
1996.
In addition to the fee of the Investment Adviser, the Fund
pays all of the other costs and expenses of its operation
including, among other things, expenses for legal and
auditing services, costs of printing proxies, stock
certificates and shareholder reports, charges of the
custodian, transfer agent, Securities and Exchange
Commission fees, fees and expenses of unaffiliated
directors, accounting and pricing costs, membership fees and
trade associations, insurance, interest, brokerage costs,
taxes, stock exchange listing fees and expenses, expenses of
qualifying the Fund's shares for sale in various states and
other miscellaneous expenses properly payable by the Fund.
The Advisory Agreement provides that in the event the
average weekly net asset value of the Fund falls below Three
Million Eight Hundred Thousand and 00/100 ($3,800,000.00)
Dollars, the Investment Adviser will not be paid its fee,
nor will such fee be accrued. The Advisory Agreement
provides that the Fund may not incur annual aggregate
expenses in excess of two percent (2%) of the first Ten
Million and 00/100 ($10,000,000.00) Dollars of the Fund's
average net assets, one and one-half percent (1 1/2%) of the
next Twenty Million and 00/100 ($20,000,000.00) 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. The pro rata portion of the estimate
annual excess expenses will be offset against the Investment
Adviser's monthly fee. In the event such amount exceeds the
fee payable in any month, no fees shall be collected by the
Investment Adviser at such time.
Termination
The Advisory Agreement is not assignable. The Advisory
Agreement may be terminated at any time without the payment
of any penalty by the Board of Directors of the Fund or by a
vote of the majority of the outstanding voting securities of
the Fund. The Investment Adviser may terminate the Advisory
Agreement upon sixty days notice to the Fund.
Use of Name
The Investment Adviser has become well known through its
educational activities and publications. The Fund had no
prior operating history and therefore at the time of the
initial offering was not well known. As a result, the
Investment Adviser consented to allow the Fund to use NAIC
as part of the Fund's name. The Fund acknowledges that the
Investment Adviser may withdraw from the Fund the use of its
name, however in doing so, the Investment Adviser agrees to
submit the question of continuing the Advisory Agreement to
a vote of the Fund's shareholders at that time. The
Advisory Agreement also reserves the right of the Investment
Adviser to grant the use of its name in whole or in part to
another investment company or business enterprise. However,
the Investment Adviser agrees to submit the question of
continuing the Advisory Agreement to the vote of the Fund's
shareholders at that time.
Portfolio Transactions and Brokerage
Subject to the policies established by the Board of
Directors of the Fund, the Investment Adviser is primarily
responsible for the execution of the Fund's portfolio
transactions and the allocation of brokerage. In executing
such transactions, the Investment Adviser seeks to obtain
the most favorable execution and price taking into account
such factors as price, size of order, difficulty of
execution and operation of facilities of the firm involved
and the firm's risk in positioning a block of securities.
The Investment Adviser and the Fund have no obligations to
deal with any broker or group of brokers in executing
transactions in portfolio securities. The Investment
Adviser is also authorized to consider, in selecting brokers
or dealers with which such orders may be placed, certain
statistical, research and other information or services
furnished to the Investment Adviser by brokers or dealers
(the terms "statistical, research and other information or
services" include advice as to the value of securities, the
responsibility of investing in, purchasing or selling
securities; the availability of securities or purchasers or
sellers of securities; and the furnishing of analysis and
reports concerning issuers, industries, securities, economic
factors and trends, and portfolio strategy in the
performance of accounts). The Investment Adviser may pay a
broker a commission in excess of that which another broker
might charge in recognition of the value of the statistical,
research and other information provided by such broker.
The Investment Adviser will also make recommendations as to
the manner in which voting rights, rights to consent to
corporate action or other rights pertaining to the Fund's
portfolio securities will be exercised.
A substantial portion of the securities in which the Fund
will invest may be traded in the over-the-counter market,
and the Fund intends to deal directly with the dealers who
make markets in the securities involved, except in those
circumstances where better prices and execution are
available elsewhere. Under the 1940 Act, persons affiliated
with the Fund are prohibited from dealing with the Fund as
principal in the purchase and sale of securities. Since
transactions in the over-the-counter market usually involve
transactions with dealers acting as principal for their own
account, the Fund will not deal with affiliated persons in
connection with such transactions. However, affiliated
persons of the Fund may serve as its broker in the over-the-
counter market and other transactions conducted on an agency
basis.
The Board of Directors of the Fund has adopted certain
policies incorporating the standards of Rule 17e-1 issued by
the Securities and Exchange Commission under the 1940 Act,
which require that the commissions paid to affiliates of the
Fund, or to affiliates of such persons, must be reasonable
and fair compared to the commissions, fees or other
remuneration received or to be received by other brokers in
connection with comparable transactions involving similar
securities during a comparable period of time. The rule and
procedures also contain review requirements and require the
Investment Adviser to furnish reports to the Board of
Directors of the Fund and to maintain records in connection
with such reviews. After consideration of all factors
deemed relevant, the Board of Directors of the Fund will
consider from time to time whether the advisory fee will be
reduced by all or a portion of the brokerage commission
given to brokers that are affiliated with the Fund.
The aggregate dollar amount of brokerage commissions paid by
the Fund during its fiscal year ended December 31, 1996 was
$6,901.
PROPOSAL NO. 2
(Selection of Independent Accounts)
The Board of Directors has selected Arthur Andersen LLP,
independent accountants, to examine the financial statements
of the Fund for the year ending December 31, 1997. Unless a
contrary specification is made, the accompanying proxy will
be voted in favor of ratifying the selection of such
accountants. Representatives of Arthur Andersen LLP are
expected to be present at the Meeting where they will have
the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
There has been no change in the Fund's accountants since the
creation of the Fund. The Board of Directors recommends
that shareholders vote "FOR" the ratification of Arthur
Andersen LLP as the independent accountants for the Fund.
PROPOSALS OF SHAREHOLDERS
Shareholder proposals for the 1998 Annual Meeting of
Shareholders must be received by the Fund at P.O. Box 220,
Royal Oak, Michigan 48068 before the close of business on
December 10, 1997 for consideration for inclusion in the
Fund's proxy statement. Shareholder proposals should be
addressed to the attention of the Fund's Secretary.
MISCELLANEOUS
The Board of Directors is not aware of any other business
that will be presented for action at the Meeting. If any
other business comes before the Meeting, the Management
Proxy Committee has been directed by the Board of Directors
to cast such votes at its discretion. The cost of preparing
and mailing the notice of meeting, proxy statement and proxy
to the shareholders will be borne by the Fund.
By Order of the Board of Directors
April 9, 1997
Lewis A. Rockwell, Secretary
Exhibit A
Independent Auditor's Report
To the Directors and Stockholders
National Association of Investment
Clubs Trust and Subsidiaries
We have audited the accompanying consolidated statement of
financial position of National Association of Investments
Clubs Trust and subsidiaries (a not-for-profit corporation)
as of September 30, 1996 and 1995 and the related
consolidated statements of activities and changes in trust
net assets and cash flows for the year ended September 30,
1996. These consolidated financial statements are the
responsibility of the Trust's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the financial statements. 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 consolidated financial statements
referred to above present fairly, in all material respects
the financial position of National Association of Investment
Clubs Trust and subsidiaries as of September 30, 1996 and
1995 and the changes in their net assets and their cash
flows for the year ended September 30, 1996, in conformity
with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial
statements, the Trust changed its methods of accounting for
investments and financial presentation in 1996.
Plante & Moran, LLP
November 15, 1996
National Association of Invesement Clubs Trust and
Subsidiaries
(a not-for-profit corporation)
Consolditaed Balance Sheet
September 30, 1996 and 1995
1996 1995
Assets
Current Assets
Cash and cash equivalents $4,358,202 $
1,218,700
Investments (Note 2) 4,805,230
4,158,954
Accounts Receivable
(less allowance for uncollectible
accounts $27,910) 306,154
277,591
Inventories 295,172
198,804
Defered tax asset (Note 4) 12,889
5,398
Federal income taxes refundable -
41,400
Prepaid expenses and other 185,934
119,962
Total current assets 9,963,581
6,020,809
Property, Buildings and Equipment
(Note 3) 2,367,797
2,019,085
Other Assets
Investments-Deferred
compensation 541,547
285,737
Total assets $12,872,925 $
8,325,631
Liabilities and Trust Equities
Current Liabilities
Accounts payable $ 507,818 $
390,826
Deferred revenue 4,400,206
3,037,206
Accured compensation 254,357
84,647
Other accrued liabilities 407,669
90,045
Federal income taxes payable 210,822
- -
Total current libabilities 5,780,872
3,602,724
Deferred Compensation 541,072
285,261
Deferred Tax Liability (Note 4) 293,865
265,374
Total liabilities 6,615,809
4,153,359
Trust Net Assets - Unrestriced 6,257,116
4,172,272
Total liabilities and
trust net assets $12,872,925 $
8,325,631
National Association of Investment Clubs Trust and
Subsidiaries
(a not-or-profit corporation)
Notes to Consolidated Financial Statements
September 30,1996
Note 1-Nature of Operations and Significant Accounting
Policies
The consolidated financial statements include the accounts
of National Association of Investment Clubs Trust and its
wholly-owned subsidiaries, National Association of Investors
Corporation, NAIC Investor Advisory Service Corporation and
National Investors Association (collectively, the Trust).
All significant intercompany transactions have been
eliminated in consolidation.
The Trust is engaged principally in providing its members
with the tools to make informed investment decisions in the
common stock market. Revenue consists primarily of
membership dues, subscriptions, and sales of publications
and market analysis tools to members throughout the country.
Revenue Recognition - Membership dues and publication
subscriptions are deferred and recognized ratably over the
applicable term. Advertising revenue is recognized at the
time of the publications. Sales revenue is recognized at
the time of shipment to members.
Cash Equivalents - The Trust considers all highly liquid
investments purchased with an original maturity of three
months or less to be cash equivalents.
Investments - Investments in equity securities with readily
determinable fair market value and in all debt securities
are recorded at fair market value.
Inventories - Inventories consist primarily of investment
software, books and publications for sale to members,
recorded at the lower of cost or market value determined
using the first-in, first-out method.
Property, Buildings and Equipment - Property, buildings and
equipment are recorded at cost. Depreciation is computed
principally on the straight-line method over the estimated
useful lives of the assets. Costs of maintenance and
repairs are charged to expense when incurred.
Income Taxes - The Trust and its subsidiaries are not exempt
from income taxes. A current tax liability or asset is
recognized for estimated taxes payable or refundable on tax
returns for the year. Deferred tax liabilities or assets
are recognized for the estimate future tax effects of
temporary differences between financial reporting and tax
accounting and operating loss carryforwards.
Profit-Sharing Plan - The Trust has a defined contribution
profit-sharing plan covering substantially all employees
with more than one year of service. The benefits are based
on years of service and discretionary employer contributions
based on net profit of the Trust as a percentage of
participants' wages. Profit-sharing expense for fiscal 1996
totaled $124,810.
Fair Value of Financial Instruments - The fair value of the
Trust's short-term financial instruments, including cash and
cash equivalents, trade accounts receivable and payable, and
accrued liabilities, approximate the carrying amounts due to
the short maturity of such instruments. The Trust's
investments in debt and equity securities are carried at
fair value based on quoted market prices.
Use of Estimate - 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,
disclosure of contingent assets and liabilities and the
reported amounts of revenue and expenses. Actual results
could differ from those estimates.
Functional Allocation of Expenses - The costs of providing
the Trust's member services totaled $11,864,829 and its
management and general costs toted $555,700 or 1996.
Change in Accounting and Presentation - The Trust changed
its method of accounting for investments in 1996, in
accordance with provisions of Statement of Financial
Accounting Standards No. 124 which requires that certain
investments be carried at fair value. This change was
implemented by retroactively restating beginning trust net
assets at October 1, 1995, and the accompanying 1995
statement of financial position, resulting in an increase in
trust net assets at October 1, 1995 of $572,349, comprised
of an increase in the recorded amount of investments of
$863,559 and recognition of a corresponding deferred tax
liability of $291,210, and a net increase in 1995 of net
change in trust net assets of $218,982.
In addition, the 1995 statement of financial position
presentation has been retroactively restated to conform with
the current year presentation format and Statement of
Financial Accounting Standards No. 117.
Note 2 - Investments
Investment, stated at fair value, consist of the following:
1996 1995
U.S. government securities $1,294,693 $1,403,131
Corporate bonds 234,070 81,900
Equity securities 2,052,120 1,697,744
Certificate of deposit 982,376 815,421
Mutual funds 241,971 160,758
Total $4,805,230 $4,158,954
Investment income for the year ended September 30, 1996
consists of the following:
Dividend and interest $ 337,252
Realized gains 32,935
Net unrealized gains and losses 218,982
Total $ 589,169
Note 3 - Property, Buildings and Equipment
Property, buildings and equipment are summarized as follows:
1996 1995
Land $ 163,197 $ 229,197
Buildings and improvements 1,497,704 1,432,499
Machinery and equipment 868,605 654,384
Furniture and fixtures 466,961 430,648
Vehicles 51,217 48,783
Total cost 3,047,684 2,795,511
Less accumulated depreciation 679,887 776,426
Total $2,367,797 $2,019,085
Depreciation expense for the year ended September 30, 1996
totaled $191,256.
Note 4 - Income taxes
The provision for income taxes for the year ended September
30, 1996 is as follows:
Current $950,916
Deferred 21,000
Total tax provision $971,916
A reconciliation of the provision for income taxes from
continuing operations to income taxes computed by applying
the statutory United States federal tax rate to income
before taxes is as follows:
Tax, computed at 34 percent of pretax income $1,039,298
Effect of nontaxable income (67,382)
Total tax expense $ 971,916
The details of the net deferred tax liability are as
follows:
1996 1995
Total deferred tax liabilities $(362,525) $(477,829)
Total deferred tax assets 102,549 196,853
Net deferred tax liability (259,976) (280,976)
Deferred tax liabilities result primarily from use of
accelerated depreciation for tax reporting purposes and
unrealized gains on investments. Deferred tax assets result
from expenses recorded for financial reporting purposes but
not currently deductible for tax purposes.
Cash paid for income taxes totaled $673,978 for the year
ended September 30, 1996.
Note 5 - Low Cost Investment Plan
The Trust acts as agent for members for the purchase of
shares of corporations that have a dividend reinvestment
plan and are willing to accept the Trust's purchases on
behalf of members. Funds received from members for such
purchases are placed in escrow prior to the periodic
purchase dates specified by each corporation's dividend
reinvestment agent. At September 30, 1996 and 1995, member
funds held in escrow by the Trust totaled approximately
$196,000 and $348,000 respectively. Although these funds
are held by the Trust, they are excluded from the
accompanying consolidated statement of financial position
since they are not assets of the Trust.
NAIC GROWTH FUND, INC.
The undersigned hereby appoints Thomas E. O'Hara and
Kenneth S. Janke, jointly and severally, proxies, with full
power of substitution, to represent the undersigned at the
Annual Meeting of Shareholders of the NAIC Growth Fund,
Inc., to be held at the offices of the National Association
of Investors Corporation, 711 West Thirteen Mile Road,
Madison Heights, Michigan, on Thursday, May 15, 1997 at 2:00
o'clock in the afternoon, or at any adjournments thereof,
and to vote all shares of common stock which the undersigned
is entitled to vote, and act with all the powers the
undersigned would possess if personally present at the
meeting:
1. The election of the following persons
as Directors of the Fund to hold office
until the next annual meeting and until
their successors shall have been elected
and qualified:
For Against
Withheld
Thomas E. O'Hara Kenneth S. Janke
Lewis A. Rockwell Carl A. Holth
Peggy L. Schmeltz Cynthia P. Charles
William T. Endicott James M. Lane
Benedict J. Smith
A VOTE FOR ANY OF THE ABOVE MAY BE
WITHHELD BY LINING OUT THEIR NAME(S).
2. The selection of Arthur Andersen LLP
as independent accountants for the Fund's
year ending December 31, 1997.
3. In their discretion, for or against
such other matters as may properly come
before the Meeting or any adjournment or
adjournments thereof.
The Board of Directors recommends a vote "For" items 1 and
2.
Unless otherwise directed herein, the proxy or proxies
appointed hereby are authorized to vote "FOR" items 1 and 2,
and to vote in their discretion with respect to all other
matters which may come before the meeting.
If only one of the above-named proxies shall be present
in person or by substitute at the Meeting, or any
adjournment thereof, then that one, either in person or by
substitute, may exercise all of the powers hereby given.
Any proxy or proxies heretofore given to vote such
shares are hereby revoked.
Date: , 1997
(Please sign exactly as name(s) appear hereon)
(This Proxy is Solicited by the Board of Directors)
