SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
X Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to ss.240-14a-11(c) or ss.240-14a-12
Life Cycle Mutual Funds, Inc.
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(Name of Registrant as Specified in its Charter)
Life Cycle Mutual Funds, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
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Life Cycle Mutual Funds, Inc.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
JULY __, 1998
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Wayne, Pennsylvania
June __, 1998
TO THE SHAREHOLDERS OF
LIFE CYCLE MUTUAL FUNDS, INC.
A Special Meeting of Shareholders of Life Cycle Mutual Funds, Inc. (the
"Company") will be held on July __, 1998 at 10:00 a.m., at
____________________________, _____________, Pennsylvania, _____, for the
following purposes:
(1) to approve or disapprove the Plan of Liquidation and Dissolution
of the Company, which Plan was approved at a meeting of the Board
of Directors of the Company held on May 29, 1998; and
(2) to transact such other business as may properly come before the
meeting and any adjournments thereof.
The subjects referred to above are discussed in detail in the Proxy
Statement attached to this notice. Each shareholder is invited to attend the
Special Meeting in person. Shareholders of record at the close of business on
June 5, 1998 have the right to vote at the meeting. If you cannot be present at
the meeting, we urge you to fill in, sign, and promptly return the enclosed
proxy in order that the meeting can be held without additional expense and a
maximum number of shares may be voted.
THE BOARD OF DIRECTORS,
LIFE CYCLE FUNDS, INC.
YOUR VOTE IS IMPORTANT NO MATTER HOW
MANY SHARES YOU OWNED ON THE RECORD DATE.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY BALLOT,
DATE, SIGN AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY. THE PROXY IS REVOCABLE AT ANY TIME
PRIOR TO ITS USE.
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Life Cycle Mutual Funds, Inc.
Life Cycle Equity Fund
Life Cycle Bond Fund
Life Cycle Retirement Income Fund
Life Cycle Harvest Fund
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JULY __, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Life Cycle Mutual Funds, Inc. (the "Company") for
use at the Special Meeting of Shareholders of each series of the Company (the
"Special Meeting") to be held at ___________________________, __________,
Pennsylvania _____, on July __, 1998 at 10:00 a.m. The Company is an open-end
investment company consisting of four separate series of shares, Life Cycle
Equity Fund, Life Cycle Bond Fund, Life Cycle Retirement Income Fund and Life
Cycle Harvest Fund (each a "Fund" and collectively, the "Funds"). Proxies may be
solicited by mail, telephone, and personal interview. The Company has also
requested brokers, dealers, banks or voting trustees, or their nominees to
forward proxy material to the beneficial owners of stock of record. The enclosed
proxy is revocable by you at any time prior to the exercise thereof by
submitting a written notice of revocation or subsequently executed proxy to the
Secretary of the meeting. Signing and mailing the proxy will not affect your
right to give a later proxy or to attend the meeting and vote your shares in
person. The cost of soliciting proxies will be paid by the Company. This
statement is expected to be distributed to shareholders on or about June __,
1998.
THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE THE NUMBER OF SHARES
REPRESENTED THEREBY AS DIRECTED OR, IN THE ABSENCE OF SUCH DIRECTION, FOR
APPROVAL OF THE COMPANY'S PLAN OF LIQUIDATION AND DISSOLUTION AND TO TRANSACT
SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY
ADJOURNMENT THEREOF.
On June 5, 1998, the date for determination of shareholders entitled to
receive notice of and to vote at the Special Meeting, or any adjournment
thereof, there were issued and outstanding ______________ shares of common stock
of the Company, consisting of _____________ shares of the Life Cycle Equity Fund
series, _______________ shares of the Life Cycle Bond Fund series,
_______________ shares of the Life Cycle Retirement Income Fund series and
_______________ shares of the Life Cycle Harvest Fund series. Each outstanding
share of the Funds is entitled to one vote.
Shareholders of the Funds will vote together to approve or disapprove the
Company's Plan of Liquidation and Dissolution (the "Plan"). The affirmative vote
of more than 50% of the outstanding shares of the Company voted at the Special
Meeting, assuming a quorum is present,
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is required for approval of the Plan. Abstentions will not be counted for or
against the proposal, but will be counted for purposes of determining whether a
quorum is present.
PROPOSED PLAN OF LIQUIDATION AND DISSOLUTION
The Liquidation in General
The Company proposes to liquidate the assets of the Funds and dissolve
pursuant to the provisions of the Plan of Liquidation and Dissolution as
approved by the Board of Directors on May 29, 1998, when the Board determined
that an orderly liquidation of the Funds' assets was in the best interests of
the Company and its shareholders. The Plan provides for the complete liquidation
of the Funds and distribution of their net assets to shareholders. If the Plan
is approved by the requisite shareholder vote, the Company will undertake to
liquidate each Fund's assets at market prices and on such terms and conditions
as the Fund's investment adviser shall determine to be reasonable and in the
best interests of the Funds and their shareholders.
In the event the Plan is not approved by the requisite shareholder vote,
the Board will seek court appointment of a receiver for the Funds.
Reasons for the Liquidation
The Funds are series of shares of the Company, which is an open-end,
diversified management investment company organized as a Maryland corporation on
June 27, 1995 and registered under the Investment Company Act of 1940 (the
"Investment Company Act").
At a meeting of the Company's Board of Directors held on May 29, 1998,
after discussions with the Funds' investment adviser, independent accountant,
counsel and administrator, the Board determined that the continued operation of
the Funds was not economically feasible or in the best interests of the Funds or
their shareholders. This determination was based on certain factors, including,
without limitation: the relatively small size of the Funds' assets, the
resulting high expense ratios of the Funds, the inability of the Funds'
investment adviser to reimburse Fund expenses due to the adviser's insolvency
and the improbability that sales of the Funds' shares could be increased to
raise assets to a more economically viable level. At the May 29th meeting, the
Board considered the liquidation of the Funds pursuant to the Plan attached to
this Proxy Statement as Exhibit A. At the same meeting, the Board accepted the
resignation of Benson White & Company ("Benson White") as the Funds' investment
adviser and appointed Wilmington Trust Company as the interim adviser. See
"ADDITIONAL INFORMATION."
Benson White, the Funds' former investment adviser, had waived all of its
advisory fees since inception of the Funds and had undertaken to reimburse Fund
expenses to cap each Fund's expense ratio at 1.95%. However, since July 1996,
Benson White has not made reimbursement payments to the Funds. In connection
with its annual audit, the Funds' independent accountants
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notified the Directors and the Audit Committee of the Board that Benson White
owed the Funds non-reimbursed expenses and accruals for the fiscal year ended
July 31, 1997. The auditors were unable to determine the exact amount of the
receivables due from Benson White. However, the auditors insisted that any
amounts outstanding needed to be paid in full in order for them to certify the
financial statements. As a result of this situation, the auditors were unable to
certify the Fund's financial statements for the 1997 fiscal year, and
subsequently the Directors instructed the Funds' Distributor to suspend sales of
the Funds' shares. The Board's Audit Committee inquired as to what actions
Benson White was taking to satisfy its outstanding obligations to the Fund.
Benson White informed the Directors that it was continuing to pursue options to
recapitalize itself and that certain shareholders of Benson White were
negotiating the sale of its operations to a subsidiary of a large life insurance
company. Based on these representations, the Board decided that the best course
of action was to await the outcome of these negotiations. The Directors
monitored these activities on a regular basis, and Benson White continued to
report that a sale was imminent and that the proposed buyer would reimburse the
Funds for all obligations due from Benson White. Benson White also informed the
Directors that it was working with the Funds' administrator to determine if all
accruals charged to the Funds were accurate. As a result of these circumstances
and the uncertainty of the reimbursement due to the Fund from Benson White, the
Directors instructed Benson White and BISYS on October 10, 1997 and May 6, 1998
to charge a reserve against the Funds' assets for the amount of the receivable
due from Benson White.
The Staff of the Securities and Exchange Commission conducted an
inspection of the Fund and Benson White subsequent to the suspension of Fund
sales in October 1997 and the establishment of a reserve against the Fund's net
asset value. In January 1998, the Staff raised a number of significant issues
relating to the Funds' operations that have been impacted by Benson White's
inability to reimburse the Funds for expenses in excess of the cap Benson White
had undertaken to provide. Benson White's responded to the Staff by representing
that negotiations for the sale of Benson White were continuing and that a deal
was likely to occur. The Board continued to monitor Benson White and, in April
1998, concluded that it could no longer be confident that Benson White would
actually consummate a sale or recapitalization.
Absent the cap on Fund expenses that Benson White had undertaken to
provide, the Funds' average annual total returns for the one year period ended
May 31, 1998 were -15.11% for the Bond Fund, 16.38% for the Equity Fund, -65.53%
for the Harvest Fund and -9.85% for the Retirement Income Fund. The Board
recognized that the Funds' performance suffered because of high expense ratios
and small asset size. The Board determined that this performance record and the
high expense ratios would make the Funds unattractive to new investors or to
other fund groups for purposes of a fund merger. Additionally, BISYS, the
Company's administrator, transfer agent and shareholder servicing agent is no
longer contractually obligated to continue servicing the Funds as of March 31,
1998, but has continued to serve in those capacities on an interim, indefinite
basis at the request of the SEC Staff. Based upon these and other relevant
factors, the Board concluded that a liquidation of the Funds would be in the
best interests of their shareholders. See "Federal Income Tax Consequences"
below.
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At the May 29, 1998 Board meeting, the Board considered various
alternatives for the Funds including: (i) increasing the size of the Funds
through special marketing efforts; (ii) merging the Funds with investment
companies with a similar investment focus; and (iii) liquidating the Funds. A
committee of independent directors reported to the full Board that it had
considered each alternative and had concluded that a prompt liquidation of the
Funds was the alternative that was in the best interests of the shareholders of
the Funds. This committee's view was that further marketing efforts would not be
successful in increasing the Funds' size sufficiently to permit the Funds to
assume the payment of all of their expenses. The merger of the Funds with a
similar investment company was not a realistic option because of the relatively
small amount of assets in the Funds, the expense involved in a merger and the
fact that many Fund shareholders could be reasonably expected to redeem any
interest in the merged entity.
The Board, including all of the Directors who are not "interested persons"
of the Company (as that term is defined in the Investment Company Act of 1940,
as amended), then unanimously adopted resolutions approving the Plan and
directing that it be submitted to the Funds' shareholders for consideration. In
connection with the proposal, the Company will bear the costs associated with
the liquidation of the Funds, which are expected to total approximately
$-----------.
The Company's independent Directors are presently reviewing the Funds'
expenses and the amount of the accrued receivables due from Benson White. At the
completion of their review, there may be further reductions to the Funds' net
asset values. The costs of liquidation also may further reduce the Funds' final
net asset values in the event there are not existing expense accruals to cover
such additional costs.
The liquidation of the assets and termination of the Funds will have the
effect of permitting the Funds' shareholders to invest the distributions to be
received by them upon liquidation in investment vehicles of their own choice.
Description of the Plan of Dissolution and Liquidation
The Plan provides for the complete liquidation of all of the assets of the
Funds. Under the Plan, on the date on which the Plan is approved by the Funds'
shareholders (the "Effective Date"), the Funds will cease to conduct business
except as is required to carry out the terms of the Plan and to accept
redemption requests. Thereafter, all securities and other assets held by the
Funds not already held in cash or cash equivalents will be converted to cash or
cash equivalents. The Funds' interim investment adviser, Wilmington Trust
Company, will undertake to liquidate the Funds' assets at market prices on such
terms and conditions as the Funds' portfolio managers shall determine to be
reasonable and in the best interests of the Funds and the shareholders. In no
event will any of the portfolio securities owned by the Funds be sold at a price
which is less than the best price available in the public market at the time of
sale.
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The Plan further provides that the ratable distribution of the Funds'
assets to shareholders will be made in one or more cash payments. The first
distribution of the Funds' assets (the "First Distribution") is expected to
consist of cash representing substantially all of the assets of the Funds, less
the amount reserved to pay liabilities and expenses of the Funds. Subsequent
distributions, if necessary, are anticipated to be made as soon as practicable
after the First Distribution and will consist of cash from any assets remaining
after payment of liabilities and expenses, the proceeds of any sale or assets
under the Plan not sold prior to the First Distribution and any other
miscellaneous income to the Funds. Upon distribution of the Funds' assets, the
Company will attempt to collect and distribute to shareholders of record any
outstanding amounts that are or may be owed to the Company by third parties.
At present, the date or dates on which the Company will pay the
liquidation distributions to shareholders and on which the Funds will be
liquidated are not known to the Company, but it is anticipated that if
shareholders adopt the Plan, the liquidation would occur on or prior to August
___, 1998. Each shareholder will be required to surrender his or her share
certificate(s), if any, to the Company's transfer agent, by mail prior to
receiving his or her pro rata liquidating distribution(s). In the event that a
shareholder cannot surrender a share certificate because it has been lost,
apparently destroyed or wrongfully taken, the shareholder will be asked to
contact ____________________.
Following liquidation of the Funds, the Company intends to file an
application with the Commission to de-register as an investment company under
the Investment Company Act. The Company will file Articles of Dissolution in
accordance with applicable provisions of Maryland law. As stated above, all
outstanding claims will continue to be pursued while the Company is in
dissolution. In accordance with the provisions of Maryland law, the remaining
Directors charged with winding up the affairs of the Company shall make a final
determination with regard to prosecuting, settling or otherwise compromising any
claims retained by the Company. Once a final determination has been made that
all claims are either properly discharged or abandoned, the Company shall take
steps to cease its corporate existence.
THE RIGHT OF A SHAREHOLDER TO REDEEM HIS OR HER FUND SHARES AT ANY TIME HAS NOT
BEEN IMPAIRED AND WILL NOT BE IMPAIRED BY THE ADOPTION OF THE PLAN. THEREFORE, A
SHAREHOLDER MAY REDEEM SHARES CONSISTENT WITH THE PROVISIONS OF THE INVESTMENT
COMPANY ACT WITHOUT THE NECESSITY OF WAITING FOR THE COMPANY TO TAKE ANY ACTION.
Federal Income Tax Consequences
The following summary provides general information with regard to the federal
income tax consequences to the shareholders on receipt of the First Distribution
from the Company pursuant to the provisions of the Plan and subsequent
distributions from the Company, if any (the "Liquidating Distributions"). This
summary also discusses the federal income tax consequences from the liquidation
of the Funds and the dissolution of the Company. The Funds have not
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sought a ruling from the Internal Revenue Service (the "Service") with respect
to the liquidation of the Funds and the tax consequences thereof to the Funds,
the Company or the shareholders. The tax consequences discussed herein may
affect shareholders differently depending on their particular tax situations
unrelated to the Liquidating Distribution, and accordingly, this summary is not
a substitute for careful tax planning on an individual basis. The receipt of the
Liquidating Distributions may result in tax consequences that are unanticipated
by shareholders. THUS, EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES TO THE SHAREHOLDER OF THE RECEIPT OF THE
LIQUIDATING DISTRIBUTIONS, LIQUIDATION OF THE FUNDS AND THE DISSOLUTION OF THE
COMPANY.
This summary is based on the tax laws and regulations in effect on the date of
this proxy statement, all of which are subject to change by legislative or
administrative action, possibly with retroactive effect. The discussion herein
does not address the particular federal income tax consequences that may apply
to certain shareholders such as trusts, estates, tax exempt organizations,
qualified plans, individual retirement accounts, nonresident aliens, or other
foreign investors. This summary does not the address state or local tax
consequences of a shareholder's receipt of the Liquidating Distributions or the
liquidation of the Funds and the Company.
As discussed above, pursuant to the Plan, the Funds will sell their assets,
distribute the proceeds to their shareholders and dissolve the Company. The
Company anticipates that it will retain its qualification as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), during the liquidation period, and therefore, will not be taxed on any
of its net income from the sale of its assets.
For federal income tax purposes, each shareholder's receipt of the First
Distribution will be a taxable event in which the shareholder will be viewed as
having sold shares of the Funds in exchange for an amount equal to the First
Distribution received. Each shareholder will recognize gain or loss measured by
the difference between the adjusted tax basis in the shares and the aggregate of
the First Distribution received from the Funds. If the shareholders hold the
shares as a capital asset, the gain or loss will be characterized as a long-term
capital gain or loss provided the shares were held for more than one year.
Generally, an individual shareholder's maximum tax rate is 28% for shares held
for more than one year but for 18 months or less, and 20% for shares held more
than 18 months.
The Company will attempt to collect any outstanding amounts due to the
shareholders. Any recoveries by the Company in excess of expenses will be income
to the shareholders. Generally, this income will be ordinary income.
If a shareholder has failed to furnish a correct taxpayer identification number,
has failed to report fully dividend or interest income, or has failed to certify
that he or she has provided a correct taxpayer identification number and that he
or she is not subject to "backup withholding," the shareholder may be subject to
a 31% backup withholding tax with respect to taxable proceeds
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received as part of the Liquidating Distributions. An individual's taxpayer
identification number is his or her social security number. Certain shareholders
specified in the Code may be exempt from backup withholding. The backup
withholding tax is not an additional tax and may be credited against a
taxpayer's federal income tax liability.
The receipt of Liquidating Distributions by an individual retirement account or
qualified plan is outside the scope of this discussion and such shareholders
should consult with their own tax advisors concerning the consequences of the
Liquidation Distributions in advance of the receipt of the Liquidation
Distributions.
The distribution of liquidation proceeds to a custodian for a minor holding
shares pursuant to the Uniform Gifts to Minors Act (the "UGMA") would not affect
the status of the assets for purposes of UGMA, although the minor shareholder
may realize gain upon the liquidation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
PLAN OF LIQUIDATION AND DISSOLUTION.
ADDITIONAL INFORMATION
Wilmington Trust Company, located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, serves as the Funds' interim
investment adviser pursuant to investment advisory contracts approved by the
Company's Board of Directors, and separately by the Directors who are not
interested persons, on May 29, 1998. Benson White & Company, 656 Swedesford
Road, Wayne, Pennsylvania, formerly served as the investment adviser of each
Fund pursuant to investment advisory contracts dated July 31, 1995. The
Company's Board of Directors accepted Benson White's resignation as investment
adviser effective May 29, 1998.
The Company will not seek shareholder ratification of the Funds' interim
investment advisory contracts with Wilmington Trust Company because the Board
does not anticipate that Wilmington Trust will serve as the Funds' investment
adviser for more than 120 days. Rule 15a- 4 under the Investment Company Act
provides that after the termination of a fund's adviser, a temporary adviser may
be appointed without shareholder approval, for up to 120 days after termination.
BISYS Fund Services, 3435 Stelzer Road, Suite 1000, Columbus, Ohio 43219,
currently serves as the Funds' administrator, transfer agent and shareholder
servicing agent. Since the termination of the Funds' administrative services
agreement with BISYS on March 31, 1998, BISYS has agreed to provide
administrative services only on an interim basis, and BISYS has no contractual
obligation to continue providing such services.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June __, 1998, there were no persons known by the Company to own
beneficially more than 5% of the outstanding voting shares of a Fund, and all
directors and officers of the Funds as a group beneficially owned less than 1%
of the outstanding voting shares of the Funds.
REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS
The Company is not currently in compliance with the shareholder reporting
requirements under the Investment Company Act. The Company's independent
accountants, Coopers & Lybrand L.L.P., would not certify the Company's financial
statements for the fiscal year ended July 31, 1997 because of uncertainty about
the Funds' accrued unreimbursed expenses and concerns about overstatement of the
Funds' net asset values. Therefore, the Company does not have audited annual
financial statements for the fiscal year ended July 31, 1997, and did not
distribute an Annual Report to shareholders for its last fiscal year.
Additionally, because of unresolved questions concerning the exact amount of the
Funds' expenses and the receivables due from the Adviser, the Company was unable
to prepare and distribute to shareholders the Funds' semi-annual financial
statements for the six months ended January 31, 1998. Consequently, the Company
does not have recent audited annual financial statements or semi-annual
financial statements to provide to Fund shareholders at this time.
SHAREHOLDER PROPOSALS
In the event that the Funds are not liquidated and dissolved pursuant to
this proxy solicitation, any shareholder who desires to submit a proposal for
consideration at future shareholder meetings may do so by submitting such
proposal in writing to _______________. Ordinarily, the Fund does not hold
annual shareholder meetings.
OTHER MATTERS
Representatives of the Funds' independent accountants, Coopers & Lybrand
L.L.P. will attend the Special Meeting.
Management does not know of any matters to be presented at the Special
Meeting other than those mentioned in this Proxy Statement. If any other
business should come before the meeting, the proxies will vote thereon in
accordance with their best judgment.
By Order of the Board of Directors of
Dated: June __, 1998 Life Cycle Mutual Funds, Inc.
IF YOU CANNOT ATTEND THE SPECIAL MEETING, IT IS REQUESTED THAT YOU
COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED SO
THAT THE MEETING MAY BE HELD AND ACTION TAKEN ON THE MATTER DESCRIBED HEREIN
WITH THE GREATEST POSSIBLE NUMBER OF SHARES PARTICIPATING.
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EXHIBIT A
THIS PLAN OF LIQUIDATION AND DISSOLUTION (the "Plan") is
adopted by Life Cycle Mutual Funds, Inc., a Maryland corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Company is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") consisting of four separate series of shares ("Series"), Life Cycle
Equity Fund, Life Cycle Bond Fund, Life Cycle Retirement Income Fund and Life
Cycle Harvest Fund; and
WHEREAS, this Plan is intended to be and is adopted as a plan
of liquidation of each Series of the Company, on the terms and conditions set
forth below; and
WHEREAS, the Board of Directors of the Company, including a
majority of the directors who are not interested persons (as defined by the 1940
Act), has determined that this Plan is in the best interests of the shareholders
of each Series of the Company.
NOW THEREFORE, the Board of Directors of the Company hereby
adopts the following:
i. CONDITIONS PRECEDENT. This Plan is approved subject to the
following conditions:
(1) This Plan shall be approved by the affirmative vote of
more than 50% of the outstanding shares of the
Company's common stock voted at a special meeting of
the shareholders called for the purpose of approving
the Plan, assuming a quorum is present.
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(2) A Proxy Statement describing the Plan and the proposed
liquidation and dissolution shall be prepared and
submitted to the Securities and Exchange Commission
("SEC") and when authorized by such regulator, shall be
delivered to each shareholder of record of the Company
for the purposes of soliciting proxies for the approval
of the Plan.
(3) All necessary approvals and authorizations from the SEC
or any other regulatory authority having jurisdiction
over the transactions contemplated by the Plan shall be
obtained.
(4) At or immediately prior to the Liquidation Date (as
defined in paragraph 6), each Series shall, if
necessary, have declared and paid a dividend or
dividends which, together with all previous such
dividends, shall have the effect of distributing to the
shareholders of a Series all of the Series' investment
company taxable income for taxable years ending at or
prior to the Liquidation Date (computed without regard
to any deduction for dividends paid) and all of its net
capital gain, if any, realized in taxable years ending
at or prior to the Liquidation Date (after reduction
for any capital loss carry-forward).
ii. TERMINATION OF BUSINESS OPERATIONS. On the date on which the
shareholders approve the Plan (the "Effective Date"), each
Series of
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the Company shall cease to conduct business except as
is required to carry out the terms of the Plan and to
accept redemption requests.
iii. NOTICE OF LIQUIDATION. As soon as practicable after the
Effective Date, the Company shall mail notice to all its
creditors that the Plan has been approved by the Board of
Directors and the shareholders and that it will be
liquidating its assets. Such notice will comply with the
requirements of any state laws mandating notice of
liquidation such as that contemplated by the Plan.
iv. LIQUIDATION OF ASSETS. As soon as it is reasonable and
practicable after the Effective Date, but in no event later
than _____________, 1998 (the "Liquidation Period"), all
portfolio securities of each Series of the Company not
already converted to cash or cash equivalents shall be
converted to cash or cash equivalents.
v. LIABILITIES. During the Liquidation Period, the Company
shall pay, discharge, or otherwise provide for the payment
or discharge of, any and all liabilities and obligations of
the Company. If it is unable to pay, discharge or otherwise
provide for any of its liabilities during the Liquidation
Period, the Company may, however, retain cash or cash
equivalents in an amount which it estimates is necessary to
discharge any unpaid liabilities of the Company on the
Company's books as of the Liquidation Date (as defined in
paragraph 6). Unpaid liabilities may
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include but not be limited to, income dividends and
capital gains distributions, if any, payable for the
period prior to the Liquidation Date.
vi. DISTRIBUTION TO SHAREHOLDERS. Upon termination of the
Liquidation Period (the "Liquidation Date"), the assets of
each Series will be distributed ratably among the Series'
shareholders of record in one or more cash payments. The
first distribution of the Series' assets (the "First
Distribution") is expected to consist of cash representing
substantially all the assets of a Series, less the amount
reserved to pay creditors. Subsequent distributions, if
necessary, are anticipated to be made within ___ days after
the First Distribution and will consist of any cash from any
assets remaining after payment of creditors, the proceeds of
any sale of assets of the Series under the Plan not sold
prior to the First Distribution and any other miscellaneous
income to the Series. Each shareholder will be required to
surrender his or her share certificates, if any, by mail to:
_______________________ prior to receiving his or her pro
rata liquidating distributions. In the event that a
shareholder cannot surrender a share certificate because it
has been lost, apparently destroyed or wrongfully taken, the
shareholder must contact ___________________ to make
alternative arrangements. Upon evidence satisfactory to the
Board of Directors of the Company that a certificate of
stock has been lost, apparently destroyed or wrongfully
taken, and upon receiving indemnity satisfactory to the
Board of Directors against loss to the Company, the
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Board of Directors may authorize the issuance of a
new certificate in place thereof.
vii. AMENDMENT OR TERMINATION. This Plan and the transactions
contemplated hereby may be terminated and abandoned by
resolution of the Board of Directors of the Company, at any
time prior to the Liquidation Date, if circumstances should
develop that, in the opinion of the Board, in its sole
discretion, make proceeding with this Plan inadvisable for
the Company. The Board of Directors may modify or amend this
Plan at any time without shareholder approval if it
determines that such action would be advisable and in the
best interests of the Company and the shareholders. However,
if the Board determines that any such amendment or
modification will materially and adversely affect the
interests of the shareholders, such an amendment or
modification will not be adopted unless approved by the
shareholders.
viii. FILINGS. As soon as practicable after the final
distribution of the Company's assets to shareholders, the
Company shall file Articles of Dissolution, Form N-8F under
the 1940 Act and any other documents, as are necessary to
effect the dissolution and/or de-registration of the Company
in accordance with the requirements of the Articles of
Incorporation of the Company, the Maryland Business
Corporation Law, the Internal Revenue Code of 1986, as
amended, any applicable securities laws, and any rules and
regulations of the Securities and Exchange
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Commission or any state securities commission,
including, without limitation, withdrawing any
qualification to conduct business in any state in
which the Company is so qualified, as well as the
preparation and filing of any tax returns.
ix. POWERS OF BOARD AND OFFICERS. The Board of Directors and,
subject to the direction of the Board of Directors, the
officers of the Company, shall have authority to do or
authorize any or all acts and things as provided for in the
Plan and any and all such further acts and things as they
may consider necessary or desirable to carry out the
purposes of the Plan, including, without limitation, the
execution and filing of all certificates, documents,
information returns, tax returns, forms and other papers
which may be necessary to or appropriate to implement the
Plan or which may be required be the provisions of the 1940
Act or any other applicable laws. The death, resignation or
other disability of any director or any officer of the
Company shall not impair the authority of the surviving or
remaining directors or officers to exercise any of the
powers provided for in the Plan.
x. AMENDMENT OF PLAN. The Board shall have the authority to
authorize such variations from or amendments of the
provisions of the Plan (other than the terms of the
Liquidation Distribution) as may be necessary or appropriate
to effect the dissolution, complete liquidation,
deregistration and termination of the existence of the
Company, and the
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distribution of assets to Shareholders in accordance with
the purposes to be accomplished by the Plan.
xi. EXPENSES. The expenses of carrying out the terms of this
Plan shall be borne by the Company, whether or not the
liquidation contemplated by the Plan is effected.
xii. FURTHER ASSURANCES. The Company shall take such. further
action, prior to, at, and after the Liquidation Date, as
may be necessary or desirable and proper to consummate the
transactions contemplated by this Plan.
xiii. GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the Board of Directors of the Company has
caused this Plan to be executed by their duly authorized representatives as of
this ________ day of _____________, 1998.
LIFE CYCLE MUTUAL FUNDS, INC.
By:______________________________
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BY SIGNING AND DATING THIS BALLOT, YOU AUTHORIZE THE PROXIES TO VOTE THE
PROPOSAL AS MARKED. IF NOT MARKED, THE PROXIES WILL VOTE "FOR" THE PROPOSAL, AND
AS THEY SEE FIT ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING. IF
YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING, PLEASE COMPLETE AND MAIL
THIS BALLOT AT ONCE IN THE ENCLOSED ENVELOPE.
LIFE CYCLE MUTUAL FUNDS, INC.
PROXY BALLOT FOR SPECIAL MEETING OF SHAREHOLDERS - July __, 1998
The undersigned hereby constitutes and appoints _____________ and
________________, or any of them, with power of substitution, as proxies to
appear and vote all of the shares of beneficial interest standing in the name of
the undersigned on the record date at the special meeting of shareholders of
Life Cycle Mutual Funds, Inc. to be held at ______________________,
__________________, Pennsylvania _______ at ________ local time, or at any
postponement or adjournment thereof; and the undersigned hereby instructs said
proxies to vote as indicated on this proxy ballot.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED IN THE
FOLLOWING ITEM. IF NO CHOICE IS SPECIFIED, THEY WILL BE VOTED TO APPROVE
THE PROPOSAL. PLEASE REFER TO THE PROXY STATEMENT DISCUSSION OF THESE
MATTERS. THIS PROXY IS SOLICITED ON BEHALF OF THE FUNDS' BOARD OF DIRECTORS.
1. Approval of the Company's Plan of Liquidation and Dissolution:
FOR |_| AGAINST |_| ABSTAIN |_|
To transact such other business as may properly come before the Meeting.
- ------------------------------------------------------------------------------
SIGNATURE SIGNATURE (JOINT OWNER) DATE
PLEASE DATE AND SIGN NAME OR NAMES TO AUTHORIZE THE VOTING OF YOUR
SHARES AS INDICATED ABOVE. WHERE SHARES ARE REGISTERED WITH JOINT
OWNERS, ALL JOINT OWNERS SHOULD SIGN. PERSONS SIGNING AS AN
EXECUTOR, TRUSTEE, ADMINISTRATOR, OR OTHER REPRESENTATIVE SHOULD
GIVE FULL TITLE AS SUCH.
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