UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement Pursuant to Section 14 (a)
of the Securities Exchange Act of 1934
(Amendment NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-12
ADVANCE CAPITAL I, INC.
----------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant
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)
and 0-11.
(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 ot transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on 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.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on July 29, 2004
The Annual Meeting of Shareholders of ADVANCE CAPITAL I, INC.
(the "Company"), will be held at the Sheraton Detroit Novi, 21111
Haggerty Road, Novi, Michigan 48375, on July 29, 2004, at 10:00 A.M.
(Eastern Daylight Time). The following matters will be acted upon
at that time:
1. To elect six directors to hold office until the next Annual
Meeting of Shareholders or until their successors have been
elected and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent auditors of the Company for the fiscal year ending
December 31, 2004;
3. To transact such other business as may properly come before
the meeting and any adjournments thereof.
Shareholders of record at the close of business on May 31,
2004, are entitled to notice of 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
June 25, 2004
- ------------------------------------------------------------------
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.
<page>
ADVANCE CAPITAL I, INC.
One Towne Square, Suite 444
Southfield, Michigan 48076
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 29, 2004
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 Annual
Meeting of Shareholders (the "Meeting") of the Company to be held at
the Sheraton Detroit Novi, 21111 Haggerty Road, Novi, Michigan 48375,
on July 29, 2004 at 10:00 A.M. (Eastern Daylight Time), and at any
adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. The approximate date on
which this Proxy Statement and form of proxy are first being mailed
to shareholders is June 25, 2004.
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. Upon request,
any shareholder may obtain a copy of the latest Annual and Semi-Annual
Reports, without charge, by mailing such request to: Advance Capital
I, Inc., Attention: Ms. Kathy Harkleroad, Secretary, One Towne
Square, Suite 444, Southfield, Michigan 48076 or by calling
(800) 345-4783.
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 for the nominees for directors hereinafter
listed and for Proposal 2. Abstentions are counted for purposes of
determining whether a quorum is present, and will have the effect of
a negative vote with respect to the approval of Proposal 2.
Shareholders of record at the close of business on May 31, 2004
(the "Record Date"), are entitled to notice of and to vote at the
Meeting.
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.
2
<page>
Each Company share and each fractional share outstanding at
the Record Date is entitled to one vote for each full share held
and a fractional vote for each fractional share held on each matter.
As of the Record Date 6,163,576 Equity Growth Fund Class shares,
17,101,424 Balanced Fund Class shares, 39,296,767 Retirement Income
Fund Class shares and 6,569,030 Cornerstone Stock Fund Class shares
were outstanding and entitled to vote at the Meeting. All classes
will vote together for the election of directors and on Proposal 2,
which means there is a total of 69,130,797 shares entitled to vote
at the Meeting. As of the Record Date no persons were known to own
of record or beneficially 5% or more of the outstanding shares of
the Company or of any particular class of shares.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board has the overall responsibility for establishing
broad corporate policies and for overseeing the overall performance
of the Company. However, it is not involved in the day-to-day
operating details. Members of the Board are kept informed of the
business of the Company by participating in quarterly Board meetings
where previously furnished detailed analyses and reports are reviewed
and discussed by the Company's President and other officers. Each
Board member oversees all four portfolios of Advance Capital I, Inc.
The Board meetings are regularly scheduled for the fourth
Friday of the months of January, April, July and October. All
directors were present at all meetings during 2003. The Company
has no policy with regard to Board attendance at annual meetings.
All directors attended the 2003 Annual Shareholder Meeting.
At the Meeting, six directors will be elected to hold office
until the next annual meeting of shareholders or until their
successors are elected and qualified. In accordance with the
Maryland General Corporation Law, directors are elected by a
plurality of the votes of the shares present in person or
represented by proxy at the Meeting. This means that the director
nominees receiving the highest number of "FOR" votes will be
elected as directors. All of the nominees for election as
directors other than Robert J. Cappelli have been previously
elected by the shareholders and are currently serving as
directors. Richard W. Holtcamp, who has served as a director
since 1989, is not eligible to stand for re-election at the
Meeting in accordance with the mandatory retirement policy for
directors that is described below.
All of the nominees have consented to serve, if elected, and
no circumstances now known will prevent any of the nominees from
serving. If any nominee should be unable or unwilling to serve,
the persons named in the proxy will exercise their voting power in
favor of such other person or persons as the Board of Directors of
the Company may recommend. Certain information concerning nominees
is set forth below. The business address of each director and the
nominee is One Towne Square, Suite 444, Southfield, MI 48076. There
is no set term of office for directors; however, the Bylaws of the
Company provide that no individual may stand for election or
re-election as a director, or be appointed to fill a vacancy on the
Board, if he or she has attained 70 years of age.
3
<page>
NOMINEES WHO ARE CURRENTLY "NOT-INTERESTED" DIRECTORS:
- -----------------------------------------------------------------
<table>
<caption>
OTHER
YEAR FIRST PRINCIPAL OCCUPATION(S) DIRECTORSHIPS
NAME AND AGE ELECTED DURING PAST 5 YEARS HELD*
- ----------------- ---------- ----------------------- -------------
<s> <c> <c> <c>
Joseph A. Ahern,46 1995 Attorney; President and None
Shareholder; Stark,
Reagan, P.C.
Dennis D. Johnson,65 2000 Retired; former Chief None
Operating Officer,
Belgacom
(Ameritech International);
Management Consultant;
Vice President - Human
Resources, Ameritech
Network Services
Janice E. Loichle,56 2001 Retired; former Vice None
President, Chief
Integration
Officer and Chief
of Local
Exchange Operations,XO
Communications, Inc.;
President, NEXTLINK
Solutions
(Telecommunications)
Thomas L. Saeli,47 2000 Vice President - Corporate Noble
Development, Lear International
Corporation (Automotive Ltd.
Supplier); Vice President,
Oxford Investment Group,
Inc.
</table>
NOMINEE WHO IS CURRENTLY AN "INTERESTED" DIRECTOR:
- ---------------------------------------------------------------------
<table>
<caption>
OTHER
YEAR FIRST PRINCIPAL OCCUPATION(S) DIRECTORSHIPS
NAME AND AGE ELECTED DURING PAST 5 YEARS HELD*
- ----------------- ---------- ---------------------- -------------
<s> <c> <c> <c>
John C. Shoemaker,58 1987 President and Director, None
Advance Capital I, Inc.;
President, Advance
Capital Management, Inc,
4
</table>
<page>
NEW NOMINEE WHO WILL BE AN "INTERESTED" DIRECTOR:
- ------------------------------------------------------------------------------
<table>
<caption>
OTHER
PRINCIPAL OCCUPATION(S) DIRECTORSHIPS
NAME AND AGE DURING PAST 5 YEARS HELD*
- ----------------------- ---------------------- -------------
<s> <c> <c>
Robert J. Cappelli,52 Vice President and None
Treasurer, Advance
Capital I, Inc.; President,
Advance Capital Services, Inc.
</table>
*This column includes only directorships of companies required
to register or file reports with the Commission under the Securities
Exchange Act of 1934 (that is, "public companies") or other
investment companies registered under the 1940 Act.
The Company knows of no arrangements or understandings between
a director or officer and any other person pursuant to which said
person has been selected as a director or officer. There is no family
relationship between any of the directors and any of the officers of
the Company.
The Board recommends that you vote FOR all nominees.
OWNERSHIP OF ADVANCE CAPITAL I, INC. SHARES
The following table provides information regarding shares of
equity securities of the Funds beneficially owned, directly or
indirectly, by the current directors of the Company and the new
nominee as of the Record Date, by dollar range. "Beneficial
ownership" is defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended.
<table>
<caption>
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES
DOLLAR RANGE OF EQUITY OVERSEEN BY DIRECTORS
SECURITIES HELD IN EACH IN ALL OF THE ADVANCE
NAME ADVANCE CAPITAL I, INC. FUND CAPITAL I, INC. FUNDS
- ---- ---------------------------- ---------------------
<s> <c> <c>
"Not Interested" Directors:
- ---------------------------
Joseph A. Ahern Retirement Income $0 Over $100,000
Balanced $0
Cornerstone Stock $50,001 - $100,000
Equity Growth $50,001 - $100,000
Richard W. Holtcamp Retirement Income $0 Over $100,000
Balanced $50,001 - $100,000
Cornerstone Stock $1 - $10,000
Equity Growth $50,001 - $100,000
</table>
5
<page>
<table>
<caption>
AGGREGATE DOLLAR
RANGE OF EQUITY
SECURITIES IN ALL
REGISTERED INVESTMENT
COMPANIES
DOLLAR RANGE OF EQUITY OVERSEEN BY DIRECTORS
SECURITIES HELD IN EACH IN ALL OF THE ADVANCE
NAME ADVANCE CAPITAL I, INC. FUND CAPITAL I, INC. FUNDS
- ------------------------- ---------------------------- ----------------------
<s> <c> <c>
Dennis D. Johnson Retirement Income $0 Over $100,000
Balanced $50,001 - $100,000
Cornerstone Stock $10,001 - $50,000
Equity Growth $50,001 - $100,000
Janice E. Loichle Retirement Income $0 Over $100,000
Balanced $50,001 - $100,000
Cornerstone Stock Over $100,000
Equity Growth Over $100,000
Thomas L. Saeli Retirement Income $0 Over $100,000
Balanced $10,001 - $50,000
Cornerstone Stock $50,001 - $100,000
Equity Growth Over $100,000
"Interested" Director and Nominee:
- ----------------------------------
John C. Shoemaker Retirement Income $10,001 - $50,000 Over $100,000
Balanced Over $100,000
Cornerstone Stock Over $100,000
Equity Growth Over $100,000
Robert J. Cappelli Retirement Income $0 Over $100,000
Balanced $0
Cornerstone Stock Over $100,000
Equity Growth Over $100,000
</table>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The officers of the Company receive no direct compensation from
the Company. Certain officers and directors of the Company are also
officers and directors of Advance Capital Management, Inc.
("Management"), the Company's investment adviser, Advance Capital
Services, Inc. ("Services"), the Company's distributor of fund shares
and/or Advance Capital Group, Inc. ("Group"), the Company's administrator,
transfer agent and dividend disbursing agent. Group and its subsidiaries
pay the salaries of the Company's officers.
6
<page>
John C. Shoemaker is President of the Company and a director.
He receives no compensation from the Company for his service as a
director.
During the year ended December 31, 2003, the Board of
Directors met nine times. Only the independent directors
(those directors who are "not-interested" persons as that term is
defined by the Investment Company Act of 1940), received compensation
from the Company for their service as directors. Directors were
also reimbursed for expenses incurred in attending the meetings.
The Company did not offer its directors any pension or retirement
benefits, or any other similar long-term incentive compensation or
benefits, during or prior to the year ended December 31, 2003. The
following table provides information regarding the compensation of
the independent directors for the year ended December 31, 2003.
<table>
<caption>
Annual Meeting Total Compensation
Name Fee Fees from the Company
- ------------------ ------ ---------- ------------------
<s> <c> <c> <c>
Joseph A. Ahern $ 5,500 $ 4,000 $ 9,500
Richard W. Holtcamp $ 5,500 $ 4,000 $ 9,500
Dennis D. Johnson $ 5,500 $ 4,000 $ 9,500
Janice E. Loichle $ 5,500 $ 4,000 $ 9,500
Thomas L. Saeli $ 5,500 $ 4,000 $ 9,500
</table>
COMMITTEES OF THE BOARD
The Board has designated an Audit Committee comprised of the
directors who are "not-interested" persons of the Company (as that
term is defined in the Investment Company Act of 1940). Thomas
Saeli serves as the Committee's Chairman. The Audit Committee
provides oversight regarding the accounting and financial reporting
policies and practices, systems of internal controls and
independent audit of the Funds. The Committee has adopted a formal
written charter. A copy of the Audit Committee Charter is provided
as Exhibit A to this Proxy Statement. One Audit Committee meeting
was held during the last fiscal year.
The Company's Board of Directors has determined that independent
directors Janice Loichle and Thomas Saeli qualify as Audit Committee
financial experts. The designation of a person as an "Audit
Committee financial expert" does not mean that the person has any
greater duties, obligations, or liability than those imposed on the
person without the "Audit Committee financial expert" designation.
Similarly, the designation of a person as an "Audit Committee
financial expert" does not affect the duties, obligations, or
liability of any other members of the Audit Committee or Board of
Directors.
The Board has not designated a specific Nominating Committee,
but the directors who are "not-interested" persons of the Company
(as that term is defined in the Investment Company Act of 1940),
as a group, function in all respects as one. The "not-interested"
directors identify, evaluate and nominate candidates for election.
The Board
7
<page>
has not adopted a charter governing the nominating process.
However, in evaluating and determining whether to recommend a person
as a candidate for election as a director, the Board considers the
following qualifications: relevant management and/or industry
experience; high personal and professional ethics; integrity and
values; a commitment to representing the long-term interests of our
shareholders; independence and an ability and willingness to devote
sufficient time to carrying out their duties and responsibilities
as directors.
The Board will consider nominee candidates properly submitted
by shareholders, under the criteria summarized above. The deadlines
and procedures for shareholder submissions of director nominees are
described under "Shareholder Proposals". The Board will evaluate
nominee candidates recommended by shareholders on the same basis
as it considers and evaluates candidates recommended by other sources.
The Board has not designated a specific Compensation Committee.
The Board has determined that such a committee is not necessary since
only independent directors receive compensation directly from the
Company. See "Compensation of Directors and Executive Officers"
for additional information.
PROPOSAL 2: SELECTION OF AUDITORS
The members of the Audit Committee of the Board, all of whom
are "not-interested" persons of the Company (as that term is defined
in the Investment Company Act of 1940), by a vote cast in person,
have selected PricewaterhouseCoopers LLP ("PwC") to serve as
independent auditors for the fiscal year ending December 31, 2004,
subject to the ratification by the Company's shareholders at the
Meeting. PwC has no direct financial interest or material
indirect financial interest in the Company. Representatives of
PwC are not expected to attend the Meeting, but a representative
would have an opportunity to make a statement if he or she chose
to attend. A representative of PwC is expected to be available by
phone to respond to any appropriate questions.
The following summarizes PwC's services for the fiscal year
ending December 31, 2004: audit of annual statements; assistance
with filing the Company's registration statement and semi-annual
reports with the Securities and Exchange Commission (Forms N-1A
and N-SAR); preparation of tax returns; and routine consultation
on financial accounting and reporting matters.
The Board authorized all services performed by PwC for the
Company during 2003. In addition, the Board annually reviews
the scope of services to be provided by PwC and considers the
effect, if any, that performance of any non-audit services might
have on audit independence. During 2003, PwC did not furnish any
audit or non-audit services to the Company's investment adviser or
to any entity controlling, controlled by or under common control
with the adviser that provided ongoing services to the Company.
PwC has audited the Company's books since 1995.
8
<page>
AUDIT FEES
The aggregate fees paid for professional services rendered
by PwC for the audit of the Company's annual statements for the
years ended December 31, 2002, and December 31, 2003 were $43,000
and $45,000, respectively. No other fees were paid to PwC for
non-audit related services, management advisory services or tax
services.
PRE-APPROVAL POLICY AND PROCEDURES
The Audit Committee Charter requires that the Audit Committee
pre-approve all audit and non-audit services performed by the
Company's independent auditor, as well as fees associated with such
services, in order to assure that the provision of such services
does not impair the auditor's independence. Unless a service to
be provided has received general pre-approval, such service and
related fees require specific pre-approval by the Audit Committee.
Any proposed service exceeding pre-approved costs also requires
specific pre-approval. The term of any pre-approval is twelve
months from the date of pre-approval, unless the Audit Committee
specifically provides for a different period or revokes a prior
pre-approval.
The Audit Committee has delegated pre-approval authority to
the Chairman of the Audit Committee for time-sensitive services.
REQUIRED VOTE
The affirmative vote of a majority of shares present and voting
at the Meeting is required to ratify the selection of PwC. The
Board recommends that the shareholders vote FOR the ratification
of the selection of independent auditors.
OTHER BUSINESS
The management of the Company knows of no other business
which may come before the Meeting. However, if any additional
matters are properly presented at the Meeting, it is the intention
of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment.
OTHER INFORMATION
OFFICERS OF THE COMPANY
The following table provides information with respect to
the current officers of the Company. Each officer is elected by
the Board of Directors and serves until his or her successor is
chosen or until his or her resignation or removal by the Board.
The business address of all officers is One Towne Square, Suite
444, Southfield, MI 48076.
9
<page>
<table>
<caption>
Name, Position(s) Principal Occupation(s)
and Age Officer Since During past 5 Years
- ----------------- ------------- -----------------------
<s> <c> <c>
Christopher Kostiz, 36 2003 Senior Portfolio Manager,
Vice President Advance Capital Management, Inc.
Kathy J. Harkleroad, 51 1996 Marketing Director, Advance
Secretary Capital Services, Inc.; Director
of Client Services, Advance
Capital Services, Inc.
Julie Katynski, 38 2003 Controller, Advance Capital
Vice President and Group, Inc.
Assistant Secretary
</table>
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
The Company's investment adviser, Management, is a Michigan
corporation established in 1986 for the purpose of providing
investment management services. Management is a registered
investment adviser with the Securities and Exchange Commission.
Management charged investment advisory fees to the Company of
$4,369,943 for 2003. Management is a wholly-owned subsidiary of
Advance Capital Group, Inc.
T. Rowe Price Associates, Inc. is a Maryland corporation that
serves as the investment sub-adviser to the Company. Its
headquarters are located at 100 East Pratt Street, Baltimore, MD 21202.
The Company's distributor, Advance Capital Services, Inc.
("Services"), is a financial services company established in 1986
that is a licensed National Association of Securities Dealers, Inc.
broker-dealer. Services charged distribution fees to the Company of
$1,958,104 for 2003. Services is a wholly-owned subsidiary of
Advance Capital Group, Inc. The Company's administrator, transfer
agent and dividend disbursing agent is Advance Capital Group, Inc.
("Group").
10
<page>
The owners of Group and the directors and officers of
Management and Services are the same three individuals,
Raymond A. Rathka, John C. Shoemaker, and Robert J. Cappelli.
The address for all three companies and their officers is One
Towne Square, Suite 444, Southfield, Michigan, 48076. The following
chart shows the ownership and control of these three firms and of
the Company as well.
POSITION GROUP SERVICES MANAGEMENT COMPANY
- ----------- ------ -------- ----------- -------------
Owners Cappelli GROUP GROUP Shareholders
Rathka
Shoemaker
Directors Cappelli Cappelli Cappelli Ahern
Rathka Rathka Rathka Johnson
Shoemaker Shoemaker Shoemaker Loichle
Saeli
Shoemaker
President Rathka Cappelli Shoemaker Shoemaker
Vice President Shoemaker Shoemaker Cappelli Cappelli
Katynski
Kostiz
Treasurer Cappelli Rathka Rathka Cappelli
Secretary Shoemaker Shoemaker Shoemaker Harkleroad
Asst. Secretary Katynski
SHAREHOLDER PROPOSALS
Proposals to be considered for inclusion in the proxy materials
for the 2005 annual meeting must be received by February 28, 2005.
If any shareholder intends to propose at the annual meeting a nominee
for director or the adoption or approval of any other matter by the
shareholders, other than matters included in the proxy statement in
accordance with the foregoing sentence, the proponent must give
written notice no later than May 13, 2005.
To communicate with the Board of Directors or an individual
director, a shareholder should send a written communication to the
Company's principal office at One Towne Square, Suite 444,
Southfield, Michigan 48076, addressed to the Board of Directors
or an individual director and the Secretary of the Company.
The Secretary of the Company will direct the correspondence to
the appropriate parties.
11
<page>
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
Only one proxy statement is being delivered to multiple
shareholders sharing an address unless the Company has received
contrary instructions from one or more of the shareholders.
The Company will deliver promptly upon written or oral request a
separate copy of the proxy statement to a shareholder at a
shared address. In order to request a separate copy or change
your preference to receive multiple copies in the future, please
write to Advance Capital I, Inc. at One Towne Square, Suite 444,
Southfield, Michigan 48076 or call Advance Capital I, Inc. at
(800) 345-4783.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities and the Schedule of
Portfolio of Investments as of December 31, 2003, and the
Statement of Operations of the Company for the year ended
December 31, 2003, reported on by PwC, are contained in the
Annual Report of the Company which has been previously
distributed to all shareholders. Upon request, any shareholder
may obtain a copy of the latest Annual and Semi-Annual Reports by
mailing such request directly to: Advance Capital I, Inc.,
Attention: Ms. Kathy J. Harkleroad, Secretary, One Towne Square,
Suite 444, Southfield, Michigan 48076 or by calling (800) 345-4783.
Any copies requested will be mailed no later than the following
business day via first-class U.S. mail.
If you have any questions with respect to the material in
this Proxy Statement, please contact Advance Capital Group, Inc.
at (800) 345-4783.
By Order of the Board of Directors
Kathy J. Harkleroad, Secretary
June 25, 2004
12
<page>
Exhibit A
ADVANCE CAPITAL I, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee
of Advance Capital I, Inc. The committee shall review and reassess
the charter at least annually and obtain the approval of the board
of directors. The committee shall be members of, and appointed by,
the board of directors and shall comprise at least three directors,
each of whom are independent of management and the Company. Members
of the committee shall be considered independent as long as they
do not accept any consulting, advisor, or other compensatory fee
from the Company or related parties and are not affiliated persons
of the Company or its subsidiaries, and meet the independence
requirements of the stock exchange listing standards. All
committee members shall be financially literate and at least one
member shall be a "financial expert" as defined by SEC regulations.
PURPOSE
The audit committee shall provide assistance to the board of
directors in fulfilling their oversight responsibility to the
shareholders, potential shareholders, the investment community,
and others relating to: the integrity of the Company's financial
statements; the financial reporting process; the systems of
internal accounting and financial controls; the performance of
the Company's internal audit function and independent auditors;
the independent auditor's qualifications and independence; and
the Company's compliance with ethics policies and legal and
regulatory requirements. In so doing, it is the responsibility
of the committee to maintain free and open communication between
the committee, independent auditors, the internal auditors, and
management of the Company.
In discharging its oversight role, the committee is empowered
to investigate any matter brought to its attention with full
access to all books, records, facilities, and personnel of the
Company and the authority to engage independent counsel and other
advisers as it determines necessary to carry out its duties.
DUTIES AND RESPONSIBILITIES
The primary responsibility of the audit committee is to
oversee the Company's financial reporting process on behalf of the
board and report the results of their activities to the board.
While the audit committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the audit committee to
plan or conduct audits or to determine that the Company's financial
statements are complete and accurate and are in accordance with
generally accepted accounting principles. Management is responsible
for the preparation, presentation, and integrity of the Company's
financial statements and for the appropriateness of the accounting
principles and reporting
A-1
<page>
policies that are used by the Company. The independent auditors
are responsible for auditing the Company's financial statements
and for reviewing the Company's unaudited interim financial
statements.
The committee, in carrying out its responsibilities, believes
its policies and procedures should remain flexible, in order to best
react to changing conditions and circumstances. The committee
should take appropriate actions to set the overall corporate "tone"
for quality financial reporting, sound business risk practices, and
ethical behavior. The following shall be the principal duties and
responsibilities of the audit committee. These are set forth as a
guide with the understanding that the committee may delete, modify
or supplement them as appropriate.
The committee shall be directly responsible for the appointment
and termination (subject to shareholder ratification), compensation,
and oversight of the work of the independent auditors, including
any necessary resolution of disagreements between management and the
auditor regarding financial reporting. The committee shall
pre-approve all audit and non-audit services provided by the
independent auditors but shall not engage the independent auditors
to perform the specific non-audit services proscribed by law or
regulation. The committee may delegate pre-approval authority to a
member of the audit committee whose decisions of any audit committee
member to whom pre-approval authority is delegated must be presented
to the full audit committee at its next scheduled meeting.
At least annually, the committee shall obtain and review a
report by the independent auditors covering:
- - The firm's internal quality control procedures.
- - 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, and any steps taken to deal with
any such issues.
- - All relationships between the independent auditor and the Company
(to assess the auditor's independence).
The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their
respective audits, including the adequacy of staffing and
compensation. Also, the committee shall discuss with management,
the internal auditors, and the independent auditors the adequacy
and effectiveness of the accounting and financial controls, including
the Company's policies and procedures to assess, monitor, and manage
business risk, and legal and ethical compliance programs
(e.g., Company's Code of Conduct).
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The committee shall meet separately as deemed necessary with
management, the internal auditors, and/or the independent auditors
to discuss issues and concerns warranting committee attention.
The committee shall provide opportunity for the internal auditors
and the independent auditors to meet privately with the members of
the committee. The committee shall review with the independent
auditor any audit problems or difficulties and management's
response to same.
The committee shall receive any reports from the independent
auditor on the critical policies and practices of the Company, and
any alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management.
The committee shall review the financial statements and
disclosures included in the Annual and Semi Annual financial reports
of the Company. The committee shall also discuss the results of any
other matters required to be communicated to the committee by the
independent auditors under generally accepted auditing standards.
The chair of the committee may represent the entire committee for
the purposes of this review.
The committee shall review with management and the independent
auditors the financial statements and discussions included in the
Company's Annual and Semi Annual Reports including their judgment
about the quality of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements.
The committee shall receive and review copies of any
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters, and the confidential,
anonymous submission by employees of affiliated companies regarding
their concerns about possible questionable accounting or auditing
matters.
The committee shall receive any reports of counsel regarding
evidence of any material violation with securities laws or breaches
of fiduciary duty. The committee shall perform an evaluation of its
performance at least triennially to assess the efficacy of its
functioning.
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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 Equity Growth, Balanced, Retirement
Income and Cornerstone Stock Funds)
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 respective Fund
of Advance Capital I, Inc. held of record by the undersigned on May 31,
2004, at the Annual Meeting of Shareholders of the Company
to be held on Thursday, July 29, 2004 or any adjournment thereof, with
respect to the matters set forth below and described in the Notice
Annual Meeting and Proxy Statement dated June 25, 2004.
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 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 trustee, please give full title as such.
Dated: , 2004
--------------------------
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Signature
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Signature (If Joint Account)
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Title (If Applicable)
INSTRUCTIONS:
1. Cast your vote by checking the appropriate boxes below. If you
do not check a box, your vote will be cast FOR that proposal.
2. Sign and date the PROXY.
3. Please return the signed PROXY promptly using the enclosed postage
paid envelope, even if you will be attending the meeting.
1. Election of FOR all nominees listed WITHHOLD AUTHORITY
directors. below (except as marked to vote for all nominees
to the contrary) listed below
------ -------
(Instructions: To withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list below)
Joseph A. Ahern, Robert J. Cappelli, Dennis D. Johnson,
Janice E. Loichle, Thomas L. Saeli, John C. Shoemaker
FOR AGAINST ABSTAIN
2. Ratify the selection of
PricewaterhouseCoopers LLP
as independent auditors of the Company. ---- ------- -------
3. I authorize the Proxies, in their discretion, to vote upon such other
business as may properly come before this meeting or any
adjournment thereof.
NUMBER OF ATTENDEES
If you plan to attend the Annual Meeting of
Shareholders please indicate the number
attending the meeting and/or luncheon. Meeting Luncheon
---- ----