NOTICE AND PROXY STATEMENT
NAIC GROWTH FUND, INC.
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
April 21, 2005
To the shareholders of the NAIC Growth Fund, Inc.:
Notice is hereby given that the 2005 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, April 21, 2005 at 2:00 p.m. for the following purposes:
1. To elect a Board of eight (8) Directors;
2. To ratify the selection of Plante & Moran, PLLC as
independent auditors of the Fund for the calendar year
ending December 31, 2005; 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
February 23, 2005 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
February 25, 2005
PROXY STATEMENT
NAIC GROWTH FUND, INC.
711 West Thirteen Mile Road
Madison Heights, Michigan 48071
2005 Annual Meeting of Shareholders
April 21, 2005
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 2005 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 April 21, 2005. The approximate
mailing date of this Proxy Statement is February 25, 2005.
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 February 23,
2005 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, 2004, the Fund had outstanding 2,427,506 shares of
common stock, par value $0.001 per share.
To the knowledge of the Fund as of December 31, 2004, the
number of shares set forth below of the Fund's common stock $0.001
par value were beneficially owned by each officer, director and nominee
and by all directors and officers of the Fund as a group. The address of
each is the address of the Fund. Luke E. Sims is the only person known
by the Fund to be the beneficial owner of more than 5% of the Fund's
issued and outstanding common stock.
Number of shares and Nature
of Beneficial Ownership as
Owner of December 31, 2004 (a) Percent of Class
All Officers
as a group
(8 persons) 242,717 10.0%
Thomas O'Hara
Chairman & Director 11,156 *
Kenneth S. Janke,
President, Treasurer
and Director 22,152 *
Lewis A. Rockwell
Secretary and Director 25,397 1.0%
Peggy L. Schmeltz
Director 24,604 1.0%
Carl A. Holth
Director 1,837 *
James M.Lane
Director 2,300 *
Benedict J. Smith
Director 1,786 *
Luke E. Sims
Director 153,485 6.3%
(a) The nature of beneficial ownership of shares shown in this
column is sole voting and investment 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 Mr. Rockwell and
revocable living trusts of which Messrs. O'Hara and Janke are trustees,
are general partners. Mr O'Hara's trust is also the managing general
partner of the O'Hara Family Limited Partnership, which is a general
partner of the Mutual Investment Club of Detroit Limited Partnership.
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 271 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 Bonnie Reyes
(Vice President of Finance of the National Association of Investors
Corporation) are the sole partners. The shares shown for Mr. Janke
include 12,201 shares owned by a trust of which he is trustee and 2,224
shares owned by his wife. Mr. Sims has informed the Fund that he
beneficially owns an aggregate of 153,485 shares, of which 94,511 are
owned individually, and 58,974 are owned through custodianships for
his children.
* Less than 1%.
The Fund's Board of Directors does not have a standing
nominating committee or committee performing similar functions as the
Board has determined, given its relatively small size, to perform this
function as a whole. The Board does not currently have a charter or
other written policy with regard to the nomination process, or a formal
policy with respect to the consideration of director candidates. The
nominations of the directors standing for re-election at the 2005 annual
meeting were approved by the Board of Directors, including Messrs.
Holth, Smith, Lane and Sims, who are independent directors within the
meaning of Rule 19(a) of the Chicago Stock Exchange Rules.
Qualifications for consideration as a board nominee may vary
according to the particular areas of expertise being sought as a
complement to the existing board composition. In making its
nominations, the Board of Directors considers relevant factors, including
an individual's business experience, breadth of knowledge about issues
and matters affecting the Fund, time available for meetings and
consultation regarding the Fund matters, and other particular skills and
experience possessed by the individual. The Board desires a diverse
group of candidates who possess the background, skills and expertise to
make a significant contribution to the Board, the Fund and its
shareholders. In the event of a need for a new or additional director, the
Board of Directors would evaluate potential nominees by reviewing their
qualifications, results of personal interviews and such other information
as they may deem relevant.
The Fund does not currently employ an executive search firm, or
pay a fee to any other third party, to assist in identifying or evaluating
potential qualified candidates for director positions. Since 1989, the
Board of Directors has nominated the current directors for re-election at
each annual meeting of shareholders. All of the Fund's current members
of the Board of Directors have served as directors since 1989, except
Mr. Lane, who became a director in 1996, and Mr. Sims, who became a
director in 2002.
The Board has not established special procedures for the Fund's
shareholders to submit director recommendations. If the Secretary of the
Fund were to receive recommendations of candidates from the Fund's
shareholders, the Board of Directors would consider such
recommendations in the same manner as all other candidates.
Shareholders of the Fund may send communications to the Board
to the attention of the Fund's Secretary at the Fund's principal executive
offices. All shareholder communications shall be compiled by the
Secretary and forwarded directly to the Board or the director as indicated
in the letter. All letters will be forwarded to the appropriate party. The
Board of Directors reserves the right to revise this in the event that this
process is abused, becomes unworkable or otherwise does not efficiently
serve its purpose.
The Board of Directors does not currently have a policy with
regard to the attendance of board members at its annual meeting of
shareholders. All of the directors attended the Fund's 2004 Annual
Meeting of Shareholders except Mr. O'Hara.
The Fund has no standing compensation committees of the Board
of Directors, or committee performing a similar function.
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.
Holth, Smith and Lane. The audit committee is responsible for the
appointment, compensation, retention and oversight of the work of the
Fund's independent accountants. The audit committee met one time
during 2004. Messrs. Holth, Smith and Lane meet the requirements for
independence set forth in Rule 19(b) of the Chicago Stock Exchange
Rules. A copy of the report of the audit committee is attached hereto as
Exhibit A. The Board of Directors of the Fund has adopted a written
charter for the audit committee, which is attached hereto as Exhibit B.
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.
Section 16(a) Beneficial Ownership Reporting Compliance
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, 2004 all filing
requirements were met.
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. Listed
below are all nominees and their backgrounds. "Interested persons" of
the Fund are those persons who are "interested persons" of the Fund
within the meaning of Section 2(a)(19) of the Investment Company Act
of 1940.
Nominee Directors
Nominee Directors Who Are Interested Persons of the Fund and Officers
Thomas E. O'Hara
Age 89
Chairman of the Board and Director
Term of office
one year.
Served as Chairman as a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman Emeritus of the Board (since 2002) and Trustee (since 1951) of
the National Association of Investors Corporation, a nonprofit
corporation engaged in investment education ("NAIC") and Chairman
Emeritus (since 2002) and Director of the Growth Fund Advisor, Inc.
(since 1999), the Fund's investment adviser ("the Investment Adviser").
Chairman of NAIC (from 1951 to 2002) and Chariman of the Investment
Advisor (from 1999-2002).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Kenneth S. Janke
Age 70
Director, President and Treasurer
Term of office
one year.
Served as a President and a director since 1989.
Principal Occupation(s) During Past 5 Years
Chairman and Trustee of NAIC (since 2002) and Chairman, Chief Executive
Officer and Director (since 2002) and President and Treasurer
(since 1990) of the Investment Adviser. Chief Executive Officer of
NAIC (from 1981 to 2002).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
Director, AFLAC Incorporated (Insurance).
Lewis A. Rockwell
Age 86
Director and Secretary
Term of office
one year.
Served as a Secretary and as a director since 1989.
Principal Occupation(s) During Past 5 Years
Counsel to the law firm of Bodman LLP, counsel to the Fund, NAIC and
the Investment Adviser since their inception; Trustee (since 1956)
and Secretary (since 1987) of NAIC; Director; and Secretary of the
Investment Adviser (since 1999).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Peggy Schmeltz
Age 77
Director
Term of office
one year.
Served as director since 1989.
Principal Occupation(s) During Past 5 Years
Adult Education Teacher; Trustee of NAIC (since 1995); Director of
Bowling Green State University Foundation Board. Former member of
NYSE Advisory Committee (1992 to 1994).
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
*The address of each is the address of the Fund. Messrs. O'Hara, Janke
and Rockwell and Mrs. Schmeltz are interested persons of the Fund
within the meaning of Section 2(a)(19) of the Investment Company Act of
1940. Mr. O'Hara is an interested person because he is a trustee of NAIC
and a director of the Investment Adviser. Messrs. Janke and Rockwell are
interested persons because they are trustees and officers of NAIC and
directors and officers of the Investment Adviser, as noted above.
Mrs. Schmeltz is an interested person because she is a trustee of NAIC.
**The Fund is not part of any fund complex.
Nominee Directors Who Are Not Interested Persons of the Fund
Carl A. Holth
Age 72
Director
Term of office
one year.
Served as a director since 1989.
Principal Occupation(s) During Past 5 Years
Director, Sunshine Fifty, Inc., and Harrison Piping Supply, Inc.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Benedict J. Smith
Age 84
Director
Term of office
one year.
Served as a director since 1996.
Principal Occupation(s) During Past 5 Years
Retired; Director and Treasurer, Detroit Executive Service Corps;
Director, Vista Maria (a nonprofit charitable organization); Trustee,
Henry Ford Health System, Behavorial Sciences.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
James M. Lane
Age 75
Director
Term of office
one year.
Served as a director since 1996.
Principal Occupation(s) During Past 5 Years
Retired; Director, Wheaton College, Baseball Chapel Inc. and Christian
Camps, Inc.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
None.
Luke E. Sims
Age 55
Director
Term of office
one year.
Served as a director since 2002.
Principal Occupation(s) During Past 5 Years
Partner in the law firm of Foley & Lardner LLP and Director,
Wilson-Hurd Mfg. Co.
Number of Portfolios in Fund Complex Overseen by Director**
One
Other Directorships Held by Director (Public Companies)
LaCrosse Footwear, Inc. (manufacturer and marketer of sporting and
industrial footwear).
*The address of each is the address of the Fund.
**The Fund is not part of any fund complex.
The Fund's Investment Adviser, Growth Fund Advisor, Inc., is a
wholly owned subsidiary of N.A.I.C. Holding Corporation, a
Michigan corporation which conducts no business activities. The
address of the Investment Adviser is the address of the Fund. NAIC
and N.A.I.C. Holding Corporation are each wholly owned
subsidiaries of the National Association of Investment Clubs Trust
(the "Trust"). Mr. O'Hara is the Chairman Emeritus and a Trustee
of the Trust; Mr. Janke is the Chairman and a Trustee of the Trust;
and Mr. Rockwell is the Secretary and a Trustee of the Trust. The
Fund is the Investment Adviser's sole advisory client. No other
person provided any significant administrative or business affairs
management services to the Fund during 2004.
The Fund's principal underwriter is Broker Dealer Financial
Services Corp., whose address is 8800 NW 62nd Avenue, P.O. Box 6240,
Johnston, Iowa 50131.
No director or nominee for election as director who is not an
Interested Person of the Fund, nor any of their immediate family
members, owns any securities beneficially or of record in the Fund's
Investment Adviser or principal underwriter, or any of their affiliates.
There were three meetings of the Board of Directors held during
2004. 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 2004, except Mr. O'Hara and Mr. Sims, who attended two of the
three Board meetings.
Dollar Range of Common Stock Owned by Directors and Nominee
The following tables set forth the dollar range of the Fund's
common stock, par value $0.001 per share, which is the Fund's only
equity security, beneficially owned by each director and nominee,
valued at price per share of $9.40 as of January 6, 2005.
Nominee Directors Who Are Interested Persons of the Fund
Name of Director Dollar Range of Equity Aggregate Dollar Range
or Nominee Securities in the Fund of Equity Securities in
All Funds Overseen or to
be Overseen by Director
or Nominee in Family of
Investment Companies*
Thomas E. O'Hara Over $100,000 Over $100,000
Kenneth S. Janke Over $100,000 Over $100,000
Lewis A. Rockwell Over $100,000 Over $100,000
Peggy L. Schmeltz Over $100,000 Over $100,000
*The Fund is not part of a family of investment companies.
Nominee Directors Who Are Not Interested Persons of the Fund
Name of Director Dollar Range of Equity Aggregate Dollar Range
or Nominee Securities in the Fund of Equity Securities in
All Funds Overseen or to
be Overseen by Director
or Nominee in Family of
Investment Companies*
Carl A. Holth $10,001 - $50,000 $10,001 - $50,000
Benedict J. Smith $10,001 - $50,000 $10,001 - $50,000
James M. Lane $10,001 - $50,000 $10,001 - $50,000
Luke E. Sims Over $100,000 Over $100,000
*The Fund is not part of a family of investment companies.
Compensation
The following tables set forth the aggregate compensation
paid to all directors in 2004. Directors who are affiliated with the
Investment Adviser or the Investment Adviser's affiliates do not
receive any compensation for service as a director. The Chairman
and President are not compensated by the Fund, except for
reimbursement for out-of-pocket expenses relating to attendance at
meetings and other operations of the Fund. No other officer of the
Fund received compensation from the Fund in 2004 in excess of
$60,000.
Directors Who Are Interested Persons of the Fund
Name of Person,
Position
Thomas E. O'Hara,
Chairman and Director
Aggregate Compensation from Fund*
None
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
None
Name of Person,
Position
Kenneth S. Janke,
President, Treasurer and Director
Aggregate Compensation from Fund*
None
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
None
Name of Person,
Position
Lewis A. Rockwell,
Secretary and Director
Aggregate Compensation from Fund*
None
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
None
Name of Person,
Position
Peggy L. Schmeltz,
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
$1,425
*All amounts shown are for service as a director.
**The Fund is not part of any fund complex.
Directors Who Are Not Interested Persons of the Fund
Name of Person,
Position
Carl A. Holth,
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
$1,425
Name of Person,
Position
James M. Lane,
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
$1,425
Name of Person,
Position
Benedict M. Smith,
Director
Aggregate Compensation from Fund*
$1,425
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
$1,425
Name of Person,
Position
Luke E. Sims,
Director
Aggregate Compensation from Fund*
$1,325
Pension or Retirement Benefits Accrued as Part of Fund Expenses
None
Estimated Annual Benefits Upon Retirement
None
Total Compensation from Fund and Fund Complex Paid to Directors**
$1,325
*All amounts shown are for service as a director.
**The Fund is not part of any fund complex.
Related Party Transactions
Lewis A. Rockwell, a director and Secretary of the Fund, who
was allocated $12,000 for his services as Secretary of the Fund in 2004,
is of counsel to the law firm of Bodman LPP, outside counsel to the
Fund, NAIC and the Investment Adviser. After 2004, Mr. Rockwell will
not receive any compensation for his services as Secretary of the Fund.
PROPOSAL NO. 2
(Selection of Independent Accounts)
Plante & Moran, PLLC, independent accountants, has been
selected by the audit committee to examine the financial statements of
the Fund for the year ending December 31, 2005. Unless a contrary
specification is made, the accompanying proxy will be voted in favor of
ratifying the selection of such accountants. Representatives of Plante &
Moran, PLLC 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. The Board of Directors
recommends that shareholders vote "FOR" the ratification of Plante &
Moran, PLLC as the independent accountants to examine the financial
statements of the Fund for the year ending December 31, 2005.
Audit Fees. Plante & Moran, LLP was paid $16,250 for the
fiscal year ended December 31, 2004 and $13,600 for the fiscal year
ended December 31, 2003 by the Fund for audit fees.
Audit-Related Fees. Plante & Moran, LLP was not paid any
audit-related fees by the Fund in either of the last two fiscal years.
Tax Fees. Plante & Moran, LLP was paid $4,200 for the fiscal
year ended December 31, 2004 and $3,180 for fiscal year ended
December 31, 2003 by the Fund for tax fees, for services in connection
with the preparation of the Fund's tax returns and assistance with IRS
notice and tax matters.
All Other Fees. Plante & Moran, LLP was paid $6,500 for the
fiscal year ended December 31, 2004 for all other fees and $6,500 for
the fiscal year ended December 31, 2003 by the Fund for all other fees,
for services in connection with (i) the review of registration documents
and consent procedures and a comfort letter and related procedures with
respect to the Fund's registration statement filed with the Securities and
Exchange Commission for its follow-on offering, and (ii) assistance with
year-end dividend calculation and reporting.
"Audit fees" are fees paid by the Fund to Plante & Moran, PLLC
for professional services for the audit of our financial statements, or for
services that are usually provided by an auditor in connection with
statutory and regulatory filings and engagements. "Audit-related fees"
are fees for assurance and related services that are reasonably related to
the performance of the audit or review of financial statements. "Tax
fees" are fees for tax compliance, tax advice and tax planning. All other
fees are fees billed for any services not included in the first three
categories.
None of the services covered under the captions "Audit Related
Fees," "Tax Fees," and All Other Fees with Respect to Plante & Moran
were provided under the de minimis exception to audit committee
approval of 17 CFR 210.2-01(c) 7(i)(C) and (ii). Plante & Moran, PLLC
was not engaged during the last two fiscal years to provide non-audit
services to Investment Adviser and its affiliates that provide ongoing
services to the Fund that relate directly to the operations and financial
reporting of the Fund ("Other Non-Audit Services"). Under the audit
committee charter, the audit committee is to pre-approve all non-audit
services of the Fund and all Other Non-Audit Services. The audit
committee has not adopted "pre-approval policies and procedures" as
such term is used in 17 CFR 210.2-01(c)(7)(i)(B) and (ii).
PROPOSALS OF SHAREHOLDERS
Shareholder proposals for the 2006 Annual Meeting of
Shareholders must comply with applicable rules of the Securities and
Exchange Commission (including Rule 14a-8) and be received by the
Fund at P.O. Box 220, Royal Oak, Michigan 48068 before the close of
business on October 28, 2005 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
Lewis A. Rockwell,
Secretary
February 25, 2005
EXHIBIT A
Report of Audit Committee
February 15, 2005
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, 2004.
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 to shareholders required by
Section 30(e) of the Investment Company Act of 1940 and Rule 30d-1
thereunder for the year ended December 31, 2004 for filing with the
Securities and Exchange Commission.
Carl A. Holth, Chairman
Benedict J. Smith, Member
James M. Lane, Member
EXHIBIT B
NAIC GROWTH FUND, INC.
Audit Committee Charter
Organization and Membership
There shall be a committee of the Board of Directors (the "Board") of
NAIC Growth Fund, Inc. (the "Fund") to be known as the Audit
Committee. The Audit Committee shall be comprised of at least three
Directors. Audit Committee members shall be independent of the Fund
and free of any relationship that, in the opinion of the Directors, would
interfere with their exercise of independent judgment as an Audit
Committee member. In particular, each member must meet the
independence and experience requirements applicable to the Fund of the
Chicago Stock Exchange, Section 10A of the Securities Exchange Act of
1934 (the "Exchange Act"), and the rules and regulations of the
Securities and Exchange Commission (the "Commission"). Each such
member of the Audit Committee shall have a basic understanding of
finance and accounting, be able to read and understand fundamental
financial statements, and be financially literate, and at least one such
member shall have accounting or related financial management
expertise, in each case as determined by the Directors, exercising their
business judgment (this person may also serve as the Audit Committee's
"financial expert" as defined by the Commission). The Board shall
appoint the members and the Chairman of the Audit Committee. The
Audit Committee shall meet periodically but in any event no less
frequently than on a semi-annual basis. Except for the Fund, Audit
Committee members shall not serve simultaneously on the audit
committees of more than two other public companies.
Statement of Policy, Purpose and Processes
The Audit Committee shall assist the Board in oversight and monitoring
of (1) the accounting and reporting policies, processes and practices, and
the audits of the financial statements of the Fund; (2) the quality and
integrity of the financial statements of the Fund; (3) the Fund's
compliance with legal and regulatory requirements, and (4) the
independent auditors' qualifications, performance and independence. In
doing so, the Audit Committee shall seek to maintain free and open
means of communication among the Directors, the independent auditors,
any internal auditors and the management of the Fund. The Audit
Committee shall meet periodically but in any event no less frequently
than once per year with Fund management, any internal auditors, and/or
the Fund's independent auditors, in executive sessions. The Audit
Committee shall prepare reports of the Audit Committee as required by
the Commission to be included in the Fund's annual proxy statements or
otherwise.
The Audit Committee shall have the authority and resources in its
discretion to retain special legal, accounting or other consultants to
advise the Audit Committee and to otherwise discharge its
responsibilities, including appropriate funding as determined by the
Audit Committee for compensation to independent auditors engaged for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Fund, compensation to advisers
employed by the Audit Committee, and ordinary administrative
expenses of the Audit Committee that are necessary or appropriate in
carrying out its duties, as determined in its discretion. The Audit
Committee may request any officer or employee of the Fund or its
affiliates or the Fund's independent auditors or outside counsel to attend
a meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee. The Fund's independent auditors
and any internal auditors shall have unrestricted accessibility at any time
to Committee members.
Responsibilities
Fund management has the primary responsibility to establish and
maintain systems for accounting, reporting, disclosure and internal
control.
The independent auditors have the primary responsibility to plan and
implement an audit, with proper consideration given to accounting,
reporting and internal controls. Each independent auditor engaged for
the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Fund shall report directly to the
Audit Committee. The independent auditors are ultimately accountable
to the Board and the Audit Committee. It is the ultimate responsibility of
the Audit Committee to select, appoint, retain, evaluate, oversee and
replace any independent auditors and to determine their compensation,
subject to ratification of the Board or shareholders, if required.
The Audit Committee is responsible for the following:
With respect to Fund financial statements:
1. Reviewing and discussing the annual audited financial statements
and semi-annual financial statements with Fund management and
the independent auditors including major issues regarding
accounting and auditing principles and practices.
2. Requiring the independent auditors to deliver to the Chairman of
the Audit Committee a timely report on any issues relating to the
significant accounting policies, management judgments and
accounting estimates or other matters that would need to be
communicated under Statement on Auditing Standards (SAS)
No. 90, Audit Committee Communications (which amended SAS
No. 61, Communication with Audit Committees), that arise
during the auditors' review of the Fund's financial statements,
which information the Chairman shall further communicate to
the other members of the Audit Committee, as deemed necessary
or appropriate in the Chairman's judgment.
3. As applicable, discussing with management the Fund's press
releases regarding financial results and dividends. This
discussion may be done generally, consisting of discussing the
types of information to be disclosed and the types of
presentations to be made. The Chairman of the Audit Committee
shall be authorized to have these discussions with management
on behalf of the Audit Committee.
4. Discussing with management and the independent auditors (a)
significant financial reporting issues and judgments made in
connection with the preparation and presentation of the Fund's
financial statements, including any significant changes in the
Fund's selection or application of accounting principles and any
major issues as to the adequacy of the Fund's internal controls
and any special audit steps adopted in light of material control
deficiencies; and (b) analyses prepared by Fund management
and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the
preparation of the financial statements, including analyses of the
effects of alternative GAAP methods on the financial statements.
5. Discussing with management and the independent auditors the
effect of regulatory and accounting initiatives on the Fund's
financial statements.
6. Reviewing and discussing reports, both written and oral, from the
independent auditors and/or Fund management regarding (a) all
critical accounting policies and practices to be used; (b) all
alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative
treatments and disclosures, and the treatment preferred by the
independent auditors; and (c) other material written
communications between the independent auditors and
management, such as any management letter or schedule of
unadjusted differences.
7. Discussing with Fund management the Fund's major financial
risk exposures and the steps management has taken to monitor
and control these exposures.
8. Reviewing disclosures made to the Audit Committee by the
Fund's principal executive officer and principal financial officer
during their certification process for the Fund's periodic reports
about any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud
involving management or other employees who have a
significant role in the Fund's internal controls.
With respect to the independent auditors:
1. Selecting, appointing, retaining or replacing the independent
auditors, subject, if applicable, only to Board and shareholder
ratification; and compensating, evaluating and overseeing the
work of the independent auditor (including the resolution of
disagreements between Fund management and the independent
auditor regarding financial reporting).
2. Meeting with the independent auditors and Fund management to
review the scope, fees, audit plans and staffing for the audit, for
the current year. At the conclusion of the audit, reviewing such
audit results, including the independent auditors' evaluation of
the Fund's financial and internal controls, any comments or
recommendations of the independent auditors, any audit
problems or difficulties and management's response, including
any restrictions on the scope of the independent auditor's
activities or on access to requested information, any significant
disagreements with management, any accounting adjustments
noted or proposed by the auditor but not made by the Fund, any
communications between the audit team and the audit firm's
national office regarding auditing or accounting issues presented
by the engagement, any significant changes required from the
originally planned audit programs and any adjustments to the
financial statements recommended by the auditors.
3. Pre-approving all audit services and permitted non-audit
services, and the terms thereof, to be performed for the Fund by
its independent auditors, and pre-approving all permitted non-
audit services of the Fund's investment adviser and its affiliates
which provide ongoing services to the Fund if such services
relate directly to the operations and financial reporting of the
Fund, subject to the de minimis exceptions to audit committee
approval for non-audit services described in 17 CFR 210.2-
01(c)(7)(i) and (ii). The Audit Committee may adopt pre-
approval "policies and procedures" as such term is used in 17
CFR 210.2-01(c)(7)(i)(B) and (ii). The Chairman of the Audit
Committee shall be authorized to give pre-approvals of such non-
audit services on behalf of the Audit Committee.
4. Obtaining and reviewing a report or reports from the independent
auditors at least annually (including a formal written statement
delineating all relationships between the auditors and the Fund
consistent with Independent Standards Board Standard 1, as may
be amended, restated, modified or replaced) regarding (a) the
independent auditors' internal quality-control procedures; (b) any
material issues raised by the most recent internal quality-control
review, or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities within
the preceding five years, respecting one or more independent
audits carried out by the firm; (c) any steps taken to deal with
any such issues; and (d) all relationships between the
independent auditor and the Fund and their affiliates, in order to
assist the Audit Committee in assessing the auditors'
independence. After reviewing the foregoing report[s] and the
independent auditors' work throughout the year, the Audit
Committee shall be responsible for evaluating the qualifications,
performance and independence of the independent auditors and
their compliance with all applicable requirements for
independence and peer review, and a review and evaluation of
the lead partner, taking into account the opinions of Fund
management and any internal auditors, and discussing such
reports with the independent auditors. The Audit Committee
shall present its conclusions with respect to the independent
auditors to the Board.
5. Reviewing any reports from the independent auditors mandated
by Section 10A(b) of the Exchange Act regarding any illegal act
detected by the independent auditor (whether or not perceived to
have a material effect on the Fund's financial statements) and
obtaining from the independent auditors any information about
illegal acts in accordance with Section 10A(b).
6. Ensuring the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law, and
further considering the rotation of the independent auditor firm
itself.
7. Establishing and recommending to the Board for ratification,
policies for the Fund's, Fund management's or the Fund
adviser's hiring of employees or former employees of the
independent auditor who participated in the audits of the Fund.
8. Taking, or recommending that the Board take, appropriate action
to oversee the independence of the outside auditor.
With respect to any internal auditor:
9. Reviewing the proposed programs of any internal auditor for the
coming year. It is not the obligation or responsibility of the Audit
Committee to confirm the independence of any internal auditors
performing services relating to the Fund or to approve any
termination or replacement of the manager of internal audit.
10. Receiving a summary of findings from any completed internal
audits pertaining to the Fund and a progress report on any
proposed internal audit plan for the Fund, with explanations for
significant deviations from the original plan.
Other responsibilities:
11. Reviewing with counsel to the Fund, legal matters that may have
a material impact on the Fund's financial statements or
compliance policies.
12. Receiving and reviewing periodic or special reports issued on,
irregularities and control failures related to the Fund.
13. Reviewing with the independent auditors, with any internal
auditor and with Fund management, the adequacy and
effectiveness of the accounting and financial controls of the
Fund, and eliciting any recommendations for the improvement of
internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis
should be given to the adequacy of such internal controls to
expose payments, transactions or procedures that might be
deemed illegal or otherwise improper.
14. Reviewing the reports of examinations by regulatory authorities
as they relate to financial statement matters.
15. Discussing with management and the independent auditor any
correspondence with regulators or governmental agencies that
raises material issues regarding the Fund's financial statements
or accounting policies.
16. Obtaining reports from management with respect to the Fund's
policies and procedures regarding compliance with applicable
laws and regulations.
17. Reporting regularly to the Board on the results of the activities of
the Audit Committee, including any issues that arise with respect
to the quality or integrity of the Fund's financial statements, the
Fund's compliance with legal or regulatory requirements, the
performance and independence of the Fund's independent
auditors, or the performance of any internal audit function.
18. Performing any special reviews, investigations or oversight
responsibilities requested by the Board.
19. Reviewing and reassessing annually the adequacy of this charter
and recommending to the Board approval of any proposed
changes deemed necessary or advisable by the Audit Committee.
20. Undertaking an annual review of the performance of the Audit
Committee.
21. Establishing procedures for the receipt, retention and treatment
of complaints received by the Fund regarding accounting,
internal accounting controls or auditing matters, and the
confidential, anonymous submission of concerns regarding
questionable accounting or auditing matters by employees of
Fund management, the investment adviser, administrator,
principal underwriter, or any other provider of accounting related
services for the Fund, as well as employees of the Fund.
Although the Audit Committee shall have the authority and
responsibilities set forth in this Charter, it is not the responsibility of the
Audit Committee to plan or conduct audits or to determine that the
Fund's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. That is the
responsibility of management and the independent auditors. Nor is it the
duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent
auditors or to ensure compliance with laws and regulations.