Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Confidential, for Use
/X/ Preliminary Proxy Statement Commission Only (as
/ / Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Advance Capital I, Inc.
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(Name of Registrant as Specified in Its Charter)
Kathy J. Harkleroad
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(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount which the filing fee is calculated and state
how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11 (a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, of the Form
or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ADVANCE CAPITAL I, INC.
PRELIMINARY COPIES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE BOND FUND
To Be Held on March 8, 1999
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The Special Meeting of the Class B (Bond Fund) shareholders of
ADVANCE CAPITAL I, INC. (the Company), will be held at the Company's
headquarters, One Towne Square Suite 444, Southfield, Michigan on
March 8, 1999 at 10:00 A.M. (Eastern Standard Time). The following
matters will be acted upon at that time:
1. To approve or disapprove a modification of the Investment
Objectives and Policies of the Bond Fund.
Shareholders of record at the close of business on January
15, 1999, are entitled to notice thereof and to vote at
the meeting.
By Order of the Board of Directors
Kathy J. Harkleroad, Secretary
One Towne Square, Suite 444
Southfield, Michigan 48076
January 25, 1999
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YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
SHAREHOLDERS ARE URGED TO DESIGNATE THEIR CHOICES ON EACH OF THE
MATTERS TO BE ACTED UPON AND TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE POSTAGE PAID ENVELOPE PROVIDED. IF YOU GIVE NO VOTING
INSTRUCTIONS, YOUR SHARES WILL BE VOTED IN FAVOR OF THE PROPOSALS
DESCRIBED IN THIS PROXY STATEMENT.
ADVANCE CAPITAL I, INC.
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 8, 1999
INTRODUCTION
This proxy statement is furnished in connection with the
solicitation by the Board of Directors (the Board) of Advance
Capital I, Inc. (the Company) of proxies to be voted at the
Special Meeting of Shareholders (the Meeting) of Class B of
the Company's stock to be held at the Company's headquarters,
One Town Square Suite 444, Southfield, Michigan, on March 8, 1999
at 10:00 A.M. (Eastern Standard Time), and at any adjournments
thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The cost of soliciting proxies will be borne by the Company.
In addition, certain Officers and Directors of the Company and of
Advance Capital Management, Inc. the Company's investment adviser
(none of whom will receive additional compensation thereof) may
solicit proxies in person or by telephone or mail.
The Board of Directors has authorized the reinstatement of
the 12b-1 fee with respect to the Bond Fund. This fee, which
permits the Fund to spend up to .25% of its average daily net
assets for activities primarily intended to result in sales of
shares, had previously been suspended. If the Proposal is
approved, shareholders of the Bond Fund are hereby notified that
the 12b-1 fee will be reinstated.
All shares represented by the enclosed proxy will be voted
in the manner specified therein, and if no specification is made,
such shares will be voted to approve Proposal (1). The vote of
a majority of the outstanding voting securities is necessary to
approve the Proposal. A "majority" is defined by the Investment
Company Act of 1940 as the vote, "(A) of 67 per centum or more
of the voting securities present at such meeting, if the holders
of more than 50 per centum of the outstanding voting securities
of such company are present or represented by proxy; or (B) of
more than 50 per centum of the outstanding voting securities of
such company whichever is the less." Abstentions are counted
for purposes of determining whether a quorum is present, but do
not represent votes cast with respect to any Proposal.
Execution of the enclosed proxy will not affect a
shareholder's right to attend the meeting and vote in person,
and a shareholder giving a proxy has the power to revoke it (by
written notice to the Company at P.O. Box 3144, Southfield,
Michigan 48037, execution of a subsequent proxy, or oral
revocation at the meeting) at any time before it is exercised.
Each Company share and each fractional share outstanding
at the close of business on January 15, 1999, is entitled to
one vote for each full share held and a fractional vote for
each fractional share held on each matter. As of January 15,
1999, 350,781 Class B shares with a $.001 par value, were
outstanding.
As of January 15, 1999 the following individuals were
known to own of record or beneficially 5 percent or more of
the outstanding shares of the Class B shares of the Company:
<TABLE>
<CAPTION>
Classes Name and Address Shares Percent
- ------- ---------------- ------ -------
<S> <C> <C> <C>
Class B William E. Ross 23,009 6.5%
586 Robin Hood Lane
Grayling, MI 49728-9382
Jack M. Carter 19,999 5.7%
365 Sand Point
Mead, OK 73449
</TABLE>
PROPOSAL 1:
MODIFICATION OF THE INVESTMENT OBJECTIVES AND POLICIES WITH RESPECT TO
THE BOND FUND
The Board of Directors has voted to present to the shareholders
a modification of the investment objectives and investment policies
of the Bond Fund. The Board believes that the proposed modifications
will operate to the benefit of the Company and the shareholders in
that Fund.
The Investment Objectives of the Bond Fund currently reads:
The BOND FUND seeks to provide investors with a high level of
current interest income consistent with relative stability of
principal and liquidity. In pursuit of this objective, the BOND
FUND will invest in debt securities rated no lower than A3 by
Moody's Investors Service, Inc. (Moody's) or A- by Standard & Poor's
Corporation (S&P) and in U.S. Government obligations and other debt
securities of the types listed under OTHER INVESTMENT POLICIES.
The average weighted maturity of the portfolio securities will be
between 3 and 10 years. There is no assurance that the Fund will
achieve its investment objectives.
The proposed Investment Objectives would read:
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The BOND FUND seeks to provide investors with the highest level
of current income without undue risk of principal. The Fund seeks
to achieve these objectives by investing in a broad range of fixed
income investments, including investment grade corporate bonds,
securities issued or guaranteed by the U.S. government and high
yield bonds. The value of the debt securities may be affected by
changing credit ratings or changes in interest rates. In addition,
certain industry events or changes in market sentiment can also
affect the value of the securities in the portfolio.
The average weighted maturity of the portfolio securities in
the BOND FUND will typically be between 5 and 25 years. The BOND
FUND seeks to maximize income with respect to a portion of its
assets. Such maximum return is ordinarily associated with high
yield, high risk bonds and similar securities in the lower rating
categories of the recognized rating agencies. Such high yield,
high risk or "junk bonds" generally involve greater price volatility
as well as risk of principal and income than do bonds in the higher
rating categories. High yield bonds are considered predominately
speculative. See INVESTMENT RISKS OF LOWER RATED SECURITIES. There
is no assurance that the Fund will achieve its investment objectives.
The investment policies of the Bond Fund currently read:
The Bond Fund will invest at least 65% of its assets in
corporate or U.S. Government bonds. The remainder of the Bond
Fund may be invested in the following types of securities:
preferred stocks, U.S. Government agency securities, U.S.
Government obligations and money market instruments (See OTHER
INVESTMENT POLICIES for definitions of these types of securities).
At no time will more than 50 percent of the assets be invested
in obligations issued or guaranteed by the U.S. Government.
The Bond Fund will invest in corporate debt obligations and
preferred stock rated no lower than A3 by Moody's or A- by S&P.
If the quality rating criteria are met at the time of investment,
a later decline in the rating by either or both of the rating
agencies shall not be a violation of the investment policies of
the Bond Fund. At no time will bonds rated below BBB- by S&P and
Baa3 by Moody's be held in the Bond Fund. The Investment Adviser
supplements the rating and the maturity information with internal
credit analysis and security research. These analyses take into
consideration such factors as a corporation's present and potential
liquidity, profitability, internal capability to generate funds,
and adequacy of capital. Unrated obligations will be considered,
if based on the Investment Adviser's analysis of the financial
merits of the obligations, it concludes they are of comparable
investment quality to the rated instruments. No more than 5% of
the portfolio may consist of unrated obligations.
When, in the opinion of the Investment Adviser, a defensive
investment posture is warranted, the Bond Fund may invest
temporarily and without limitation in high-grade, short-term
money market instruments.
The Bond Fund's average weighted maturity will be adjusted
according to the interest rate outlook. During periods of
anticipated rising interest rates and falling bond prices, a
shorter average maturity may be adopted to cushion the effect
of price declines on the Bond Fund's net asset value. When
rates are expected to fall and bond prices rise, a longer
average maturity may be expected. An adjustment in the average
maturity of the Bond Fund holdings, due to anticipated changes
in interest rates, may cause an increase in portfolio turnover
and may result in an increase in expenses to the Bond Fund.
The Proposed Investment Policies of the Bond Fund would read:
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The Bond Fund will invest at least 65 percent of its assets
in corporate or U.S. Government bonds. The Fund can invest as
much as 45 percent of the portfolio in lower rated, high-yielding
securities and as much as 25 percent of the portfolio in mortgage
backed securities guaranteed by the U.S. government. The Fund may
also invest in the following types of securities: preferred stocks,
mortgage or asset backed securities not issued or guaranteed by the
U.S. government or its agencies and money market instruments (See
OTHER INVESTMENT POLICIES for definitions of these types of
securities). At no time will more than 50 percent of the assets be
invested in obligations issued or guaranteed by the U.S. Government.
The Bond Fund will not invest in investment grade corporate
or U.S. Government issued or guaranteed bonds, preferred stocks
or mortgage or asset backed securities not guaranteed by the
U.S. government or its agencies that are rated lower than Baa3
by Moody's or BBB- by S&P at the time of purchase. The Fund may
invest as much as 45 percent of the portfolio in lower rated,
high-yielding securities, rated between Ba1 and B2 by Moody's or
between BB+ and B by S&P, which may provide poor protection for
payment of principal and interest. These bonds are commonly
referred to as high yield or "junk bonds". If the quality rating
criteria are met at the time of investment, a later decline in
the rating by either or both of the rating agencies shall not
be a violation of the investment policies of the Bond Fund.
In the event that a security held by the Bond Fund is downgraded
below B3 by Moody's and B- by S&P, the Fund may continue to hold
such security until such time as the investment adviser deems
it advantageous to dispose of the security. See "Investment
Risks of Lower Rated Securities". The Investment Adviser
supplements the rating and the maturity information for the
Bond Fund in a manner similar to that for the Retirement Income
Fund. Unrated obligations will be considered, if based on the
Investment Adviser's analysis of the financial merits of the
obligations, it concludes they are of comparable investment
quality to the rated instruments. No more than 5 percent of
the portfolio may consist of unrated obligations. When, in
the opinion of the Investment Adviser, a defensive investment
posture is warranted, the Bond Fund may invest temporarily
and without limitation in high-grade, short-term money market
instruments.
The Bond Fund has a flexible investment policy which allows
the Investment Adviser to adjust the maturity and the quality of
the securities held in the portfolio. The average weighted
maturity will be adjusted according to the interest rate outlook
in a manner similar to the Retirement Income Fund as described
above. The mix of the quality of the securities held in the
portfolio will similarly be adjusted by the Investment Adviser.
The degree to which the Bond Fund holds high yield, high risk
securities will be based on the Adviser's forecast of the economy
and its judgment concerning the comparative value of high yield,
high risk securities and higher quality issues. Any adjustment
in the maturity or the quality of the Bond Fund holdings may
cause an increase in portfolio turnover and may result in an
increase in expenses to the Fund.
<PAGE>
ADVANCE CAPITAL I, INC.
One Towne Square, Suite 444, Southfield, Michigan 48076
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(For the shareholders of the Bond Fund)
The undersigned hereby appoints John C. Shoemaker and Robert J.
Cappelli as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below,
all shares of common stock of the Bond Fund held of record by the
undersigned on January 15, 1999, at the Special Meeting of Shareholders
of the Company to be held on Monday, March 8, 1999 or any adjournment
thereof, with respect to the matters set forth below and described
in the Notice of Special Meeting and Proxy Statement dated
February 5, 1999.
This Proxy, when properly executed, will be voted in the manner
directed herein by the shareholder. If no direction is made, this
proxy will be voted FOR all proposals.
Please sign exactly as name appears hereon. If a corporation,
please sign in full corporate name by president or other authorized
officer. If a partnership, please sign partnership name by
authorized person. When signing as trusee, please give full title
as such.
Dated: , 1999
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Signature
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Signature (If Joint Account)
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Title (If Applicable)
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INSTRUCTIONS:
1. Cast your vote by checking the appropriate boxes below. If you
do not check a box, your vote will be cast FOR the proposal.
2. Sign and date the PROXY.
3. Please return the signed PROXY promptly using the enclosed postage
paid envelope.
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FOR AGAINST ABSTAIN
1. To approve or dissapprove a modification
of the Investment Objectives and Policies
of the Bond Fund. / / / / / /
I authorize the Proxies, in their discretion, to vote upon such
other business as may properly come before this meeting or any
adjournment thereof.
