Contents
Report to Shareowners 2
Statement of Assets and Liabilities 3
Statement of Operation 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
Shareowner Information 14
Report to Shareowners:
June 30, 2000
There were a great many gyrations in the stock market during the
first six months of the year. Investors experienced a large drop in
the NASDAQ and the Dow Jones Industrial Average seemed to trade in a
fairly narrow range considering the high level it has attained in the
past few years. Still, the Net Asset Value of the NAIC Growth Fund
increased from $12.90 at the beginning of 2000 to $14.81 on June 30.
That is a rise of 14.8%.
Earnings for the majority of stocks held in the portfolio
continued to show progress as well as dividend increases in a number of
holdings. The managers continue to monitor the portfolio for the
fundamentals as stock prices eventually reflect that earnings progress.
Some full and partial sales have been made including Broadwing,
Convergys, St. Jude Medical, Pharmacia & Upjohn, Monsanto,
International Business Machines, Molex, Vishay Intertechnology and
Lydall. In addition, both TSI Incorporated and American Business
Products were purchased by other corporations. The result is a current
gain on the books of approximately $1.7 million that will be reflected
in the year-end distribution.
Adding to positions included the purchase of 2,500 AFLAC, 2,000
Bank One, 2,000 Carlisle Companies, 1,750 CenturyTel, 2,000 Comerica,
4,000 ConAgra, 6,000 Dana, 2,000 Diebold, 2,000 Donaldson, 1,000
Emerson Electric, 2,000 Federal Signal, 2,000 H.J. Heinz, 4,000 Hon
Industries, 5,000 Huntington Bancshares, 2,000 McCormick, 8,000
O'Reilly Automotive, 2,000 Pentair, 3,000 RPM, 2,000 Synovus Financial
and 2,000 Teleflex. New positions were taken with the purchase of
7,000 Albertsons and 6,000 Cooper Industries.
The Board of Directors declared a cash dividend of $0.045 per
share paid on August 1, 2000 to shareowners of record on June 30, 2000.
Thomas E. O'Hara Kenneth S. Janke
CHAIRMAN PRESIDENT
NAIC Growth Fund, Inc.
Statement of Assets and Liabilities
As of June 30, 2000
(Unaudited)
ASSETS
Investment securities
-at market value (cost $9,066,500) $22,996,341
Short-term investments
-at amortized cost 1,793,385
Cash and cash equivalents 980,069
Dividends and interest receivable 22,016
Prepaid insurance 1,417
25,793,228
LIABILITIES
Dividends payable 77,984
Accounts payable 41,252 119,236
TOTAL NET ASSETS $25,673,992
SHAREHOLDERS' EQUITY
Common Stock-par value $0.001 per share;
authorized 50,000,000 shares,
outstanding 1,732,982 shares $ 1,733
Additional Paid-in Capital 10,019,948
Undistributed net investment income (1,023)
Undistributed net realized gain
on investments 1,723,493
Unrealized appreciation of investments 13,929,841
SHAREHOLDERS' EQUITY $25,673,992
NET ASSET VALUE PER SHARE $ 14.81
See notes to financial statements
NAIC Growth Fund, Inc.
Statement of Operations
For the six months ended June 30, 2000
(Unaudited)
INVESTMENT INCOME
Interest $ 69,240
Dividends 148,773
218,013
EXPENSES
Advisory fees 88,988
Transfer agent & custodian fees 21,038
Legal fees 10,113
Audit fees 8,750
Insurance 8,500
Other Professional Services 7,500
Directors' fees & expenses 6,259
Mailing & postage 6,110
Printing 4,264
Annual shareholders' meeting 3,047
Other fees & expenses 3,283
Less: Advisory fees waived (22,247)
Net Expenses 145,605
Net investment income 72,408
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on investments:
Proceeds from sale of investment securities 2,689,470
Cost of investment securities sold 965,977
Net realized gain on investments 1,723,493
Unrealized appreciation of investments:
Unrealized appreciation at beginning of period 12,325,472
Unrealized appreciation at end of period 13,929,841
Increase in unrealized appreciation on investments 1,604,369
Net realized and unrealized gain on investments 3,327,862
NET INCREASE FROM OPERATIONS $3,400,270
See notes to financial statements
NAIC Growth Fund, Inc.
Statements of Changes in Net Assets
For the periods ended:
June 30,2000 December 31, 1999
(Unaudited)
FROM OPERATIONS:
Net investment income $72,408 $149,638
Net realized gain on investments 1,723,493 787,318
Net change in unrealized appreciation
on investments 1,604,369 738,906
Net increase from operations 3,400,270 1,675,862
DISTRIBUTION TO STOCKHOLDERS FROM:
Net investment income 77,984 156,231
Net realized gain from
investment transactions 0 787,318
Total distributions 77,984 943,549
FROM CAPITAL STOCK TRANSACTIONS:
Dividend reinvestment 0 607,813
Cash purchases 0 310,405
Net increase from
capital stock transactions 0 918,218
Net increase in net assets 3,322,286 1,650,531
TOTAL NET ASSETS:
Beginning of period $22,351,706 $20,701,175
End of period (including undistributed
net investment income (loss) of
($1,023) and $4,552, respectively) $25,673,992 $22,351,706
Shares:
Shares issued to common stockholders under
the dividend reinvestment and cash
purchase plan 0 73,588
Shares at beginning of period 1,732,982 1,659,394
Shares at end of period 1,732,982 1,732,982
See notes to financial statements
NAIC Growth Fund, Inc.
Financial Highlights
For the periods ended:
June 30, 2000
(Unaudited) 1999 1998 1997 1996 1995
Net asset value at
beginning of period $12.90 $12.48 $10.99 $9.07 $7.60 $5.75
Net investment income .04 .09 .14 .10 .10 .08
Net realized and unrealized
Gain on investments 1.92 .88 1.93 2.29 1.75 1.91
Total from investment
Operations 1.96 .97 2.07 2.39 1.85 1.99
Distributions from:
Net investment income (.05) (.10) (.13) (.10) (.10) (.08)
Realized gains .00 (.45) (.45) (.37) (.28) (.06)
Total distributions (.05) (.55) (.58) (.47) (.38) (.14)
Net asset value at end of period $14.81 $12.90 $12.48 $10.99 $9.07 $7.60
Per share market value,
end of period Ask 12 3/4 10 1/4 10 3/4 15 1/4 9 3/4 7 1/8
Bid 12 3/16 10 10 1/4 14 1/2 9 7/16 6 7/8
Total Investment Return (annualized):
based on market value
1 year 44.65% 2.85% (25.42%) 58.50% 42.94% 49.70%
from inception 13.25% 10.28% 11.30% 17.84% 12.59% 7.85%
based on net asset value
1 year 30.31% 7.75% 18.84% 26.43% 24.46% 34.60%
from inception 15.73% 13.15% 13.79% 13.69% 11.92% 9.78%
Net Assets,end of period
(mil) $25,674 $22,351.7 $20,701.2 $17,335.3 $13,487.8 $10,989.1
Ratios to average net assets (annualized):
Ratio of expenses to
average net assets 1.23% 1.00% 0.83% 0.96% 0.96% 1.19%
Ratio of net investment
income to average net assets0.61% 0.70% 1.13% 0.96% 1.10% 1.16%
Portfolio turnover rate 18.30% 4.20% 5.87% 6.31% 5.93% 6.90%
See notes to financial statements
1.9 Auto Replacement
Dana Corp. 10,000 223,000 211,875
O'Reilly Auto.* 20,000 242,605 277,500
7.8 Banking
Citigroup 15,000 79,167 903,750
Comerica Inc. 5,000 148,750 224,375
Bank One Corp. 7,000 212,495 185,937
Huntington Banc. 22,000 221,907 347,875
Synovus Financial 20,000 140,938 352,500
1.8 Building Products
Clayton Homes 20,000 221,325 160,000
Johnson Controls 6,000 96,895 307,875
2.7 Chemicals
OM Group 8,000 258,725 352,000
RPM 18,000 190,250 182,250
Sigma Aldrich 5,000 94,938 146,250
4.8 Computers
EMC Corp. * 16,000 116,000 1,231,000
2.8 Consumer Products
Colgate-Palmolive 8,000 98,500 479,000
Newell Rubbermaid 9,000 237,375 231,750
8.6 Electrical Equipment
Amer. Power Conv.* 10,000 190,531 408,125
Cooper Industries 6,000 207,813 195,375
Federal Signal 12,000 280,563 198,000
General Electric 12,000 56,000 636,000
Vishay Intertech. * 19,500 134,973 739,780
1.9 Electronics
Diebold 10,000 269,188 278,750
Molex Inc. 6,250 101,819 218,750
9.7 Ethical Drugs
Amer. Home Prod. 6,000 90,510 352,500
Bristol-Myers Squibb 6,000 106,538 349,500
Eli Lilly 6,000 91,687 599,250
Johnson & Johnson 2,000 45,500 203,750
Merck & Co., Inc. 5,000 83,319 383,125
Pfizer Inc. 12,000 58,750 576,000
5.7 Financial Services
Household Intl. 25,000 223,538 1,039,063
State Street Boston 4,000 75,500 424,250
3.9 Food
Albertson's 7,000 235,330 232,750
ConAgra 10,000 166,875 190,625
Heinz, H.J. 6,000 179,375 262,500
McCormick & Co. 10,000 223,975 325,000
4.5 Hospital Supplies
Biomet Corp. 7,000 122,250 269,063
Invacare 10,000 245,375 262,500
Stryker Corp. 14,000 160,063 612,500
0.9 Industrial Services
Donaldson Co. 12,000 162,563 237,000
4.7 Insurance
AFLAC 10,000 143,905 459,375
Amer. Int'l. Group 6,327 79,037 743,423
1.6 Machinery
Emerson Electric 7,000 170,393 422,625
1.2 Manufacturing
Carlisle Co. 7,000 279,944 315,000
2.1 Multi Industry
Pentair 7,000 171,894 248,500
Teleflex Inc. 8,000 213,563 286,000
1.1 Office Equipment
Hon Industries 12,000 283,938 282,000
2.0 Publishing
Reuters Group PLC 5,199 125,351 519,575
1.1 Realty Trust
First Industrial 10,000 257,463 295,000
1.0 Restaurants
McDonald's 8,000 53,625 263,500
5.0 Semiconductor
Dallas Semiconductor 12,000 138,437 489,000
Intel 6,000 228,562 802,125
3.0 Soft Drinks
Coca Cola 4,000 82,250 229,750
PepsiCo 12,000 205,374 533,250
5.9 Telecommunications
ADC Telecom. * 18,000 21,234 1,509,750
1.6 Transportation
Sysco Corp. 10,000 142,750 421,250
1.5 Utilities
Century Telephone 13,000 196,562 373,750
0.8 Water Treatment
Ionics * 7,000 177,313 214,375
89.6 $9,066,500 $22,996,341
Short-term Investments
7.0 United States Treasury Bill,
maturing 7/6/00 1,793,385
3.8 Misc. Cash Equivalents 980,069
10.8 2,773,454
Total Investments 25,769,795
(0.4) All other assets less liabilities (95,803)
100.0% Total Net Assets $25,673,992
*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).
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.
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, 2000:
Gross unrealized appreciation $ 14,140,055
Gross unrealized depreciation (210,214)
Net unrealized appreciation $ 13,929,841
Federal income tax cost $ 9,066,500
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 provides professional services to
the fund. The fees for those services amounted to $7,500 for 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 $22,247 of
its total fee of $88,988 for the period ended june 30, 2000.
Plan Agent
Michigan National Bank (MNB) serves as the Fund's custodian pursuant to
the Custodian Agreement. As the Fund's custodian, MNB receives fees
and compensation of expenses for services provided including, but not
limited to, an annual account charge, annual security fee, security
transaction fee and statement of inventory fee. Boston EquiServe
serves as the Fund's transfer agent and dividend disbursing agent
pursuant to the 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 18, 2000, a distribution of $0.045 per share aggregating $77,984
was declared from net investment income. The dividend was paid August
1, 2000 to shareholders of record June 30, 2000.
(6) INVESTMENT TRANSACTIONS
Purchases and sales of securities, other than short-term securities for
the period ended June 30, 2000, were $1,955,763 and $2,689,470,
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.
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,
Ambler, PA
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
Shareowner Information
The ticker symbol for the NAIC Growth Fund, Inc., on the Chicago Stock
Exchange is GRF.
The dividend reinvestment plan allows shareowners to automatically
reinvest dividends in Fund common stock with little or no commissions.
Once enrolled, you can make additional stock purchases through monthly
cash deposits ranging from $50 to $1,000. For more information,
request a copy of the Dividend Reinvestment Service for Stockholders of
NAIC Growth Fund, Inc., from 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.
Shareowners or individuals wanting general information or having
questions, write NAIC, P.O. Box 220, Royal Oak, Michigan 48068.
Telephone 877-275-6242.
