NOTICE AND PROXY STATEMENT
NAIC GROWTH FUND, INC.
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
May 17, 2001
To the shareholders of the NAIC Growth Fund, Inc.:
Notice is hereby given that the 2001 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 17, 2001 at 2:00 p.m. for the following purposes:
1. To elect a Board of eight (8) 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, 2001; 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 22, 2001
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 6, 2001
PROXY STATEMENT
NAIC GROWTH FUND, INC.
711 West Thirteen Mile Road
Madison Heights, Michigan 48071
2001 Annual Meeting of Shareholders
May 17, 2001
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 2001 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 17, 2001. The approximate mailing date of this
Proxy Statement is April 6, 2001.
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 eight 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
22, 2001 as the record date for the determination of shareholders
entitled to notice of and to vote at theMeeting 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, 2000, the Fund had
outstanding 2,000,317 shares of common stock, par value $0.001 per
share.
To the knowledge of the Fund as of December 31, 2000, 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:
Owner Number of shares Percent of
and nature of Beneficial Class
ownership as of Dec. 31, 2000
All Officers and Directors as
a group (8 persons) 39,978 2.00
Thomas E. O'Hara 8,886 *
Kenneth S. Janke 15,845 *
Lewis A. Rockwell 15,312 *
Peggy L. Schmeltz 8,453 *
Cynthia P. Charles 1,752 *
Carl A. Holth 1,412 *
James M. Lane 2,300 *
Benedict J. Smith 928 *
(a)The nature of beneficial ownership of shares shown in this column
is sole voting andinvestment power unless otherwise indicated. The
shares shown for Messrs. O'Hara, Janke and Rockwell include 7,455
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'Haraand Janke are limited partners of the
Mutual Investment Club of Detroit Limited Partnership. The shares
shown for Messrs. O'Hara and Janke also include 297 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 T. Sobol
(Vice President of Finance of the National Association of
Investors Corporation ) are the sole partners. The shares
shown for Mr. Janke include 7,633 shares owned by a trust of
which he is trustee and 460 shares owned by his wife. The shares
shown for Mrs. Charles include 871 shares owned jointly with her
children. The shares shown for Mr. Holth are owned by a revocable
living 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:
Chairman of the Board Thomas E. O'Hara - 85 1989
President and Treasurer Kenneth S. Janke - 66 1989
Secretary Lewis A. Rockwell - 82 1989
The Fund has no standing 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. The Fund also has an audit committee
comprised of Messrs. O'Hara, Holth and Smith. Messrs. Holth and
Smith are independent directors within the meaning of Rule 4200
(a)(15) of the National Association of Securities Dealers' listing
standards. A copy of the report of the audit committee is attached
hereto as Exhibit A. The Board of Directors of the Fund has not
adopted a written charter for the audit committee.
Principal Shareowner
Set forth in the table below is information as of December
31, 2000 concerning persons known by the Fund to be the beneficial
owner of more than 5% of the Fund's issuedand outstanding common stock:
Name Shares Percent
of Total
Luke E. Sims (a)
777 E. Wisconsin Ave, Suite 3700
Milwaukee, Wisconsin 53202 112,316 5.6%
(a) Mr. Sims has informed the Fund that he beneficially owns an
aggregate of 112,316 shares, of which 18,300 are owned by his
self-directed Keogh plan, 35,016 are owned individually, 14,700
are owned through custodianships for his children, and 44,300 are
owned through a limited liability company established by Mr. Sims
of which he is the sole manager, has complete control over the
investment decisions and is thesole beneficial owner of the
securities held by such limited liability company.
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 eight (8) 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. Directors will be elected by
a plurality of votes cast at the Meeting. 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 age Position Director Business Experience
since
Thomas E. O'Hara * 85 Chairman 1989 Chairman of the Board and
Director Trustee of the National
Association of Investors
Corporation ("NAIC") and
Growth Fund Advisor, Inc.,
Fund's Investment Adviser
(the "Investment Adviser").
Kenneth S. Janke * 66 Director, 1989 President and Trustee,
President, NAIC Treasurer and Investment
and Treasurer Adviser; Director, AFLAC;
Partner, NAIC Associates.
Lewis A. Rockwell * 82 Director 1989
and Secretary Counsel to the law firm
of Bodman, Longley &
Dahling LLP, counsel to the
Fund, NAIC and the
Investment Adviser; Trustee
and Secretary of the
Investment Adviser.
Peggy L. Schmeltz * 73 Director 1989 Adult Education
Teacher.
Cynthia P. Charles 79 Director 1989 Retired.
Carl A. Holth 68 Director 1989 President and Director,
Greater Detroit Capital
Corporation; Director,
Sunshine Fifty, Inc. and
Harrison Piping Supply, Inc.
Benedict J. Smith 80 Director 1996 Retired; Director
and Treasurer, Detroit
Executive Service Corps.;
Director, Vista Maria;
Trustee, Henry Ford Health
System, Behavioral Services.
James M. Lane 71 Director 1997 Retired; Director,
Chateau Communities, Inc.,
Wheaton College, William Tyndale
College, Baseball Chapel, Inc. and
Christian Camps, Inc.
* 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 and committees of the board on which he or
she served during 2000.
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
$1,500 per year plus $100 per meeting attended. The Chairman and
President 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, 2000 all filing requirements
were met.
Investment Advisor
Growth Fund Advisor, Inc., a Michigan corporation which
is registered with the Securities and Exchange Commission under
the Investment Advisers Act of 1940 (the "Investment Adviser"),
provides the Fund with investment advisory services and, subject
to the authority of the Board of Directors of the Fund, is responsible
for the overall management of the Fund's business affairs.
The Investment Adviser is a wholly owned subsidiary of N.A.I.C.
Holding Corporation, a Michigan corporation which conducts no
business activities. National Association of Investors Corporation
("NAIC") and N.A.I.C. Holding Corporation are each wholly owned
subsidiaries of the National Association of Investment Clubs
Trust (the "Trust").
The Fund has entered into an Investment Advisory Agreement
dated October 2, 1989, as amended (the "Advisory Agreement"),
between the Fund and the Fund's former investment adviser, NAIC.
The Investment Adviser took over the investment advisory services
to the Fund under the Advisory Agreement on September 1, 1999.
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
was last approved by the Board of Directors of the Fund at its meeting
on December 7, 2000. The address of the Trust is the address of the
Fund. The directors 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; 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 was paid seventy-five
percent (75%) of the three-quarters of one percent (0.75%) for 2000,
and intends on collecting all of the fee in 2001 and thereafter.
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, 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 within the meaning
of the Investment Advisers Act of 1940. 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
NAIC 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, NAIC consented to allow the Fund to use NAIC as part of
the Fund's name. The Fund acknowledges that NAIC 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
Investment Company Act of 1940 (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, 2000 was $19,294.
No such fees were paid to any brokers that are affiliated with the
Fund.
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, 2001. 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.
Audit Fees,
Financial Information, Systems Design and Implementation Fees, and
All Other Fees
Fees paid to Arthur Andersen LLP for the last annual audit were
$20,000. There were no financial information systems design and
implementation fees or other fees paid to Arthur Andersen LLP
for the year ending December 31, 2000.
PROPOSALS OF SHAREHOLDERS
Shareholder proposals for the 2002 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, 2001 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 6, 2001
Lewis A. Rockwell, Secretary
Report of Audit Committee
April 6, 2001
To the Board of Directors of the NAIC Growth Fund, Inc.:
We have reviewed and discussed with management the Fund's
audited financial statements as of and for the year ended
December 31, 2000.
We have discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as amended,
by the Auditing Standards Board of the American Institute
of Certified Public Accountants.
We have received and reviewed the written disclosures and
the letter from the independent auditors required by
Independence Standard No. 1, Independence Discussions
with Audit Committees, as amended, by the Independence
Standards Board, and have discussed with the
auditors the auditors' independence.
Based on the reviews and discussions referred to above,
we recommend to the Board of Directors that the financial
statements referred to above be included in the Fund's Annual
Report on Form N-SAR for the year ended December 31, 2000.
Thomas E. O'Hara, Chairman
Carl A. Holth, Member
Benedict J. Smith, Member