<PAGE>
As filed with the Securities and Exchange Commission on
April 30, 1996
Registration No. 33-13754
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
PRE-EFFECTIVE AMENDMENT NO.
------
POST-EFFECTIVE AMENDMENT NO. 19 X
------
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1X
AMENDMENT NO. 19 X
------
ADVANCE CAPITAL I, INC.
- - ------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
One Towne Square, Suite 444, Southfield, Michigan 48076
- - ------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area (810) 350-8543
----------------
John C. Shoemaker, President
Advance Capital I, Inc., One Towne Square Suite 444, Southfield, Michigan 48076
- - -------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering April 30, 1996
--------------
It is proposed that this filing will become effective (check appropriate box)
X immediately upon filing pursuant to paragraph (b) of Rule 485
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph a(ii)
on (date) pursuant to paragraph a(ii) of rule 485
The Registrant has previously registered an indefinite number of
securities under the Securities Act of 1933, pursuant to (a)(1) of Rule 24f-2.
The Rule 24f-2 Notice for the Registrant's fiscal year ending December 31, 1995
was filed on February 21, 1996.
<PAGE>
CROSS REFERENCE SHEET
Form N-1A Part A Item Prospectus Caption
- - ---------------------- --------------------
1. Cover Page Cover Page
2. Synopsis Inapplicable
3. Condensed Financial Expense Table and Selected Financial
Information
4. General Description of Investment Information - Registrant
Investment Objectives - Growth
Funds; Investment Objectives -
Income Funds; Investment Policies of
the Funds; Other Investment Policies;
Investment Risks of Lower Rated
Securities; Investment Limitations;
Description of Capital Stock
5. Management of the Fund Distribution Plan; Management of the
Company; Expenses of the Company
6. Capital Stock and Other Investing in the Funds; Redeeming
Shares; Tax Information; Description
of Capital Stock; Miscellaneous
7. Purchase of Securities Investing in the Funds;
Being Offered Redeeming Shares; Distribution Plan
8. Redemption or Repurchase Redeeming Shares
9. Pending Legal Proceedings Inapplicable
<PAGE>
ADVANCE CAPITAL I, INC. P.O. Box 3144
AN INVESTMENT COMPANY WITH FIVE FUNDS Southfield, MI 48037
Michigan (810) 350-8543
Toll Free (800) 345-4783
- - -----------------------------------------------------------------
PROSPECTUS
ADVANCE CAPITAL I, INC. (the COMPANY) is an open-end,
diversified management investment company (a mutual fund) offering
shares in five investment portfolios.
INVESTMENT OBJECTIVES:
THE GROWTH PORTFOLIOS:
The EQUITY GROWTH FUND seeks to provide long-term growth of
capital through investment primarily in common stocks of small,
rapidly growing companies. Total return will consist primarily
of capital appreciation (or depreciation). Current income is
not an objective of the EQUITY GROWTH FUND. The BALANCED FUND
seeks to provide capital appreciation, current income, and
preservation of capital by investing in a diversified portfolio
of common stocks and bonds. Common stocks are generally
expected to represent approximately 60% of total assets, and
fixed income securities, including cash reserves, will represent
the remaining assets. There is no assurance that either Fund
will achieve its investment objective.
THE INCOME PORTFOLIOS:
The BOND FUND, the LONG TERM INCOME FUND and the RETIREMENT
INCOME FUND all seek to provide investors with high current
income. Each Fund invests in fixed income securities within
prescribed maturity and credit quality standards. There is no
assurance that any of these Funds will achieve its investment
objective. Up to 33 percent of the RETIREMENT INCOME FUND may
be invested in fixed income securities which carry quality
ratings below investment grade from the major rating agencies.
Securities with such ratings are commonly referred to as "high
yield bonds" or "junk bonds" and are considered speculative by
these agencies. See "Investment Risks of Lower Rated
Securities".
- - -----------------------------------------------------------------
THIS PROSPECTUS PROVIDES KEY INFORMATION YOU NEED TO KNOW ABOUT
THE COMPANY BEFORE INVESTING. WHILE THE PROSPECTUS IS DESIGNED
TO BE CONCISE AND STRAIGHTFORWARD, YOU MAY HAVE QUESTIONS OR
REQUIRE ADDITIONAL INFORMATION. PLEASE DO NOT HESITATE TO
CONTACT US DIRECTLY.
SET THIS INFORMATION ASIDE FOR FUTURE REFERENCE.
- - -----------------------------------------------------------------
Additional information about the COMPANY, contained in the
Statement of Additional Information, has been filed with the
Securities and Exchange Commission and is available upon request
without charge by writing to the COMPANY at the above address or
by calling (810) 350-8543 or (800) 345-4783. The Statement of
Additional Information bears the same date as this Prospectus
and is incorporated by reference in its entirety into this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
April 30, 1996
TABLE OF CONTENTS
Page
----
THE EXPENSE TABLE....................................... 2
FINANCIAL HIGHLIGHTS.................................... 2
GENERAL INFORMATION..................................... 5
INVESTMENT INFORMATION.................................. 5
Investment Objectives - Growth Funds............... 5
Investment Objectives - Income Funds............... 5
Investment Policies of the Funds................... 6
Other Investment Policies.......................... 9
Investment Risks of Lower Rated Securities......... 11
Investment Limitations............................. 12
DISTRIBUTION OF SHARES.................................. 13
NET ASSET VALUE......................................... 13
INVESTING IN THE FUNDS.................................. 13
Purchases By Mail.................................. 13
Purchases By Wire.................................. 13
Minimum Investment Required........................ 14
What Shares Cost................................... 14
Certificates and Confirmations..................... 14
Dividends.......................................... 14
Capital Gains...................................... 14
TRANSFERRING SHARES..................................... 14
REDEEMING SHARES........................................ 15
Written Requests................................... 15
Signatures......................................... 15
Telephone Requests................................. 15
Receiving Payment.................................. 16
Redemption Before Purchase Instruments Clear....... 16
Accounts With Low Balances......................... 16
Redemption In Kind................................. 16
DISTRIBUTION PLAN....................................... 16
MANAGEMENT OF THE COMPANY............................... 17
EXPENSES OF THE COMPANY................................. 18
TAX INFORMATION......................................... 18
DESCRIPTION OF CAPITAL STOCK............................ 19
MISCELLANEOUS........................................... 19
<PAGE>
THE EXPENSE TABLE
The purpose of the Expense Table is to assist in
understanding the various fees and expenses, both direct and
indirect, that will accompany an investment in the Advance
Capital I, Inc. Equity Growth, Bond, Balanced, Long Term Income
and Retirement Income Funds (the FUNDS). This information may
be useful when comparing these FUNDS to other investment
alternatives. See MANAGEMENT OF THE COMPANY and EXPENSES OF THE
COMPANY for more information.
<TABLE>
<CAPTION>
EQUITY LONG TERM RETIREMENT
GROWTH BOND BALANCED INCOME INCOME
------ ---- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
and Reinvested Dividends
(as a percentage of offering price).. 0% 0% 0% 0% 0%
Deferred Sales Load (as a percentage
of original purchase price).......... 0% 0% 0% 0% 0%
Redemption Fee........................ None None None None None
Exchange Fee.......................... None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees....................... .70% .40% .70% .40% .50%
12b-1 Fees (A)........................ .25% .00% .25% .00% .25%
Other Expenses........................ .17% .15% .12% .23% .09%
---- ---- ---- ---- ----
Total Fund Operating Expenses......... 1.12% .55% 1.07% .63% .84%
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<C> <C> <C> <C> <C> <S>
Example:
You would pay the following expenses $ 11 $ 6 $ 11 $ 6 $ 9 1 Year
on a $1,000 investment, assuming $ 36 $18 $ 34 $20 $ 27 3 Years
(1) a 5% annual return and (2) $ 62 $31 $ 59 $35 $ 46 5 Years
redemption at the end of each period. $136 $69 $131 $79 $103 10 Years
</TABLE>
(A) Annual 12b-1 fees of .25% have been authorized for all FUNDS
and suspended indefinitely in the Bond and Long Term Income
Funds. (See DISTRIBUTION PLAN for additional information)
THE AMOUNTS SHOWN IN THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The financial highlights for the year ended December 31, 1995 have been
audited by Price Waterhouse LLP, independent accountants, whose report
covering that year is incorporated by reference in the Statement of Additional
Information. The financial highlights for the periods ended December 31, 1987
through December 31, 1994 were audited by other independent accounts whose
reports for those periods expressed unqualified opinions.
2
<PAGE>
The tables below give you information about each fund's financial history.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
EQUITY GROWTH FUND *** 1995 1994 1993 1992 1991 1990 1989 1988 1987**
SELECTED PER-SHARE DATA ------- ------- ------- ------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.08 $9.46 $9.94 $9.83 $8.89 $9.79 $8.79 $7.46 $10.00
------- ------- ------- ------- ------- ------ ------- ------ -------
Income from investment operations
Net investment income (loss) (0.03) (0.03) 0.12 0.10 0.14 0.19 0.26 0.24 0.11
Net realized and unrealized
gain (loss) on investments 3.48 (0.35) 0.07 0.11 1.78 (0.90) 1.85 1.47 (2.54)
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from investment operations 3.45 (0.38) 0.19 0.21 1.92 (0.71) 2.11 1.71 (2.43)
------- ------- ------- ------- ------- ------- ------- ------ -------
Less distributions
Net investment income 0.00 0.00 (0.12) (0.10) (0.14) (0.19) (0.26) (0.24) (0.11)
Net realized gain on investments 0.00 0.00 (0.55) 0.00 (0.84) 0.00 (0.85) (0.14) 0.00
------- ------- ------- ------- ------- ------- ------- ------ -------
Total distributions 0.00 0.00 (0.67) (0.10) (0.98) (0.19) (1.11) (0.38) (0.11)
------- ------- ------- ------- ------- ------- ------- ------ -------
Net asset value, end of period $12.53 $9.08 $9.46 $9.94 $9.83 $8.89 $9.79 $8.79 $7.46
======= ======= ======= ======= ======= ======= ======= ====== =======
TOTAL RETURN 38.00% -4.02% 2.13% 2.22% 20.94% -7.47% 23.81% 22.48% -50.23%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $25,625 $12,634 $7,577 $7,094 $6,275 $4,310 $2,405 $692 $122
Ratio of expenses to
average net assets 1.12% 1.21% 1.16% 1.22% 1.38% 1.46% 1.31% 0.74% 0.58%*
Ratio of net investment income (loss)
to average net assets -0.29% -0.30% 1.27% 1.05% 1.37% 2.04% 2.59% 2.75% 3.30%*
Portfolio turnover rate 13.86% 18.05% 135.55% 96.05% 86.48% 81.13% 112.31% 156.56% 165.87%*
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
BOND FUND 1995 1994 1993 1992 1991 1990 1989 1988 1987**
SELECTED PER-SHARE DATA ------- ------- ------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.61 $10.82 $10.51 $10.52 $9.91 $9.90 $9.54 $9.83 $10.00
------- ------- ------- ------- ------- ------- ------- ------ -------
Income from investment operations
Net investment income 0.70 0.71 0.72 0.70 0.74 0.77 0.78 0.80 0.29
Net realized and unrealized
gain (loss) on investments 1.18 (1.21) 0.45 0.01 0.62 0.02 0.36 (0.28) (0.10)
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from investment operations 1.88 (0.50) 1.17 0.71 1.36 0.79 1.14 0.52 0.19
------- ------- ------- ------- ------- ------- ------- ------ -------
Less distributions
Net investment income (0.70) (0.71) (0.72) (0.70) (0.74) (0.78) (0.78) (0.81) (0.36)
Net realized gain on investments 0.00 0.00 (0.14) (0.02) (0.01) 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------ -------
Total distributions (0.70) (0.71) (0.86) (0.72) (0.75) (0.78) (0.78) (0.81) (0.36)
------- ------- ------- ------- ------- ------- ------- ------ -------
Net asset value, end of period $10.79 $9.61 $10.82 $10.51 $10.52 $9.91 $9.90 $9.54 $9.83
======= ======= ======= ======= ======= ======= ======= ====== =======
TOTAL RETURN 20.15% -4.64% 11.48% 7.04% 14.26% 8.52% 12.64% 4.87% 5.59%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $4,527 $3,999 $4,741 $5,793 $2,439 $1,488 $778 $565 $143
Ratio of expenses to
average net assets 0.55% 0.60% 0.61% 0.75% 0.85% 0.87% 0.86% 0.45% 0.29%*
Ratio of net investment income
to average net assets 6.80% 7.06% 6.57% 6.69% 7.36% 8.00% 7.93% 8.14% 7.25%*
Portfolio turnover rate 6.69% 21.92% 35.99% 38.22% 25.47% 7.41% 2.25% 63.69% 0.00%*
</TABLE>
* Annualized
** The period August 5, 1987 (commencement of operations) to December 31, 1987
*** Effective December 29, 1993, the investment objectives of the Equity Growth
Fund were changed by shareholder vote and T. Rowe Price Associates, Inc.
became the sub-investment adviser with the primary responsibility for the
daily security investment decisions.
3
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------
BALANCED FUND *** 1995 1994 1993 1992 1991 1990 1989 1988 1987**
SELECTED PER-SHARE DATA ------- ------- ------- ------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $9.97 $10.58 $10.36 $10.38 $9.55 $10.10 $9.35 $8.33 $10.00
------- ------- ------- ------- ------- ------- ------- ------ -------
Income from investment operations
Net investment income 0.35 0.32 0.29 0.33 0.39 0.44 0.48 0.43 0.18
Net realized and unrealized
gain (loss) on investments 2.75 (0.61) 0.22 (0.02) 1.39 (0.55) 1.24 1.01 (1.60)
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from investment operations 3.10 (0.29) 0.51 0.31 1.78 (0.11) 1.72 1.44 (1.42)
------- ------- ------- ------- ------- ------- ------- ------ -------
Less distributions
Net investment income (0.35) (0.32) (0.29) (0.33) (0.39) (0.44) (0.47) (0.42) (0.25)
Net realized gain on investments (0.15) 0.00 0.00 0.00 (0.56) 0.00 (0.50) 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------ -------
Total distributions (0.50) (0.32) (0.29) (0.33) (0.95) (0.44) (0.97) (0.42) (0.25)
------- ------- ------- ------- ------- ------- ------- ------ -------
Net asset value, end of period $12.57 $9.97 $10.58 $10.36 $10.38 $9.55 $10.10 $9.35 $8.33
======= ======= ======= ======= ======= ======= ======= ====== =======
TOTAL RETURN 31.53% -2.72% 4.97% 3.07% 18.32% -1.08% 18.59% 17.52% -14.98%*
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(in thousands) $59,299 $44,221 $46,690 $42,440 $22,677 $14,128 $3,948 $745 $243
Ratio of expenses to
average net assets 1.07% 1.10% 1.08% 1.13% 1.38% 1.35% 1.29% 0.53% 0.51%*
Ratio of net investment income
to average net assets 3.11% 3.18% 2.77% 3.24% 3.75% 4.56% 4.68% 4.62% 5.08%*
Portfolio turnover rate 22.72% 34.97% 101.29% 42.39% 50.94% 46.72% 83.79% 106.94% 90.43%*
</TABLE>
<TABLE>
<CAPTION>
LONG TERM INCOME FUND 1995 1994 1993 RETIREMENT INCOME FUND 1995 1994 1993
SELECTED PER-SHARE DATA ------- ------- ------- Selected Per-Share Data ------ ------ ------
<S> <C> <C> <C> <S> <C> <C> <C>
Net asset value, Net asset value,
beginning of period $9.20 $10.60 $10.00 beginning of period $9.22 $10.54 $10.00
------- ------- ------- ------ ------ ------
Income from investment operations Income from investment operations
Net investment income 0.70 0.72 0.74 Net investment income 0.76 0.76 0.82
Net realized and unrealized Net realized and unrealized
gain (loss) on investments 1.58 (1.40) 0.77 gain (loss) on investments 1.29 (1.32) 0.61
------- ------- ------- ------ ------ ------
Total from investment operations 2.28 (0.68) 1.51 Total from investment operations 2.05 (0.56) 1.43
------- ------- ------- ------ ------ ------
Less distributions Less distributions
Net investment income (0.70) (0.72) (0.74) Net investment income (0.76) (0.76) (0.82)
Net realized gain on investments 0.00 0.00 (0.17) Net realized gain on investments 0.00 0.00 (0.07)
------- ------- ------- ------ ------ ------
Total distributions (0.70) (0.72) (0.91) Total distributions (0.76) (0.76) (0.89)
------- ------- ------- ------ ------ ------
Net asset value, end of period $10.78 $9.20 $10.60 Net asset value, end of period $10.51 $9.22 $10.54
======= ======= ======= ====== ====== ======
TOTAL RETURN 25.57% -6.53% 14.43% Total Return 22.96% -5.34% 13.92%
RATIOS AND SUPPLEMENTAL DATA Ratios and Supplemental Data
Net assets, end of period $1,450 $1,163 $1,079 Net assets, end of period
(in thousands) (in thousands) $139,299 $84,162 $47,343
Ratio of expenses to Ratio of expenses to
average net assets 0.63% 0.63% 0.64% average net assets 0.84% 0.88% 0.88%
Ratio of net investment income Ratio of net investment income
to average net assets 6.93% 7.37% 6.60% to average net assets 7.64% 7.89% 7.41%
Portfolio turnover rate 1.74% 15.39% 75.72% Portfolio turnover rate 15.63% 12.27% 37.59%
</TABLE>
* Annualized
** The period August 5, 1987 (commencement of operations) to December 31, 1987
*** Effective December 29, 1993, T. Rowe Price Associates, Inc. became the
sub-investment adviser with the primary responsibility for the daily equity
investment decisions for the Balanced Fund.
4
<PAGE>
GENERAL INFORMATION
Advance Capital I, Inc. (the COMPANY) is a mutual fund
consisting of five separate portfolios. Each FUND has a
specific investment objective and may be used independently or
in combination with the other FUNDS, to serve different
investment needs. The minimum initial aggregate investment in
the COMPANY is $10,000 ($2,000 for IRA Accounts). The initial
investment may be distributed among any of the FUNDS as long as
a minimum $1,000 investment is maintained in each FUND selected.
COMPANY shares are sold, exchanged and redeemed at net asset
value. There are no sales commissions or deferred sales charges
imposed by the COMPANY.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVES - GROWTH FUNDS:
The EQUITY GROWTH FUND seeks to provide long-term growth of
capital through investment primarily in common stocks of small,
rapidly growing companies. Total return will consist primarily
of capital appreciation (or depreciation). Current income is
not an objective of the EQUITY GROWTH FUND.
The EQUITY GROWTH FUND'S share price will fluctuate with
changing market conditions, and any investment in it may be
worth more or less when redeemed than when purchased. The Fund
should not be relied upon as a complete investment program, nor
used to play short-term swings in the stock market. In
addition, stocks of small companies generally are subject to
more abrupt or erratic price movements than securities of larger
companies or of the market averages in general. There is no
assurance that the Fund will achieve its investment objective.
The BALANCED FUND seeks to provide capital appreciation,
current income, and preservation of capital by investing in a
diversified portfolio of common stocks and bonds. Common stocks
are generally expected to represent approximately 60% of total
assets. Fixed income securities, including cash reserves, will
represent the remaining assets.
The Fund's share price will fluctuate with changing market
conditions, and any investment in it may be worth more or less
when redeemed than when purchased. The Fund should not be
relied upon for short-term financial needs, nor used to play
short-term swings in the stock market. There is no assurance
that the Fund will achieve its investment objective.
INVESTMENT OBJECTIVES - INCOME FUNDS:
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 objective.
The LONG TERM INCOME FUND seeks to provide investors with a
higher level of current income than that of the BOND FUND, yet
still provide consistency relative to stability of principal and
liquidity. In pursuit of this objective, the LONG TERM INCOME
FUND will invest in debt securities rated no lower than Baa3 by
Moody's or BBB- by 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
5
<PAGE>
securities will be between 15 and 30 years. There is no
assurance that the Fund will achieve its investment objective.
The RETIREMENT INCOME FUND seeks to provide investors with
the highest level of current income without undue risk of
principal. In pursuit of this objective, the RETIREMENT INCOME
FUND will invest at least half of the portfolio in government
and corporate fixed income securities rated no lower than Baa3
by Moody's or BBB- by S&P. The average weighted maturity of the
portfolio securities in the RETIREMENT INCOME FUND will be
between 5 and 22 years. The RETIREMENT INCOME FUND seeks to
maximize income with respect to a portion of its assets which
may be as much as 33 percent of the Fund. 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
objective.
While the COMPANY will use its best efforts to achieve the
investment objective of each FUND, their achievement cannot be
assured. No investment objective of any FUND may be changed
without a vote of a majority of the particular FUND's
outstanding shares (as defined under MISCELLANEOUS). Except as
noted below in INVESTMENT LIMITATIONS, none of the investment
policies of any FUND may be changed without a vote of the
holders of a majority of the outstanding shares of the FUND.
INVESTMENT POLICIES OF THE FUNDS:
INVESTMENT POLICIES OF THE EQUITY GROWTH FUND: To achieve
its objective, the Equity Growth Fund invests primarily in a
diversified group of small growth companies (generally under
$1.5 billion in market capitalization). These are companies in
the development stage of their corporate life cycle, yet have
demonstrated or are expected to achieve long-term earnings
growth which reaches new highs per share during each major
business cycle. Also, companies are sought which are early
enough in their corporate life cycle not to have been widely
recognized by the investment community. The Equity Growth Fund
may also invest in companies which offer the possibility of
accelerating earnings growth due to rejuvenated management, new
products, or structural changes in the economy. Current income
is not a factor in the selection of stocks. The Equity Growth
Fund may invest in securities not listed on a national
securities exchange, but such securities generally will have an
established over-the-counter market.
While companies in the Equity Growth Fund may offer greater
opportunity for capital appreciation than larger, more
established companies, investments in small and emerging growth
companies involve greater risks. Such companies, for example,
may have limited markets, product lines, management or financial
resources. Further, stocks traded over-the-counter may trade
less frequently and in smaller volume than exchange-listed
stocks. These securities may also be more sensitive to market
changes than larger, more established companies or the market
averages in general. The Equity Growth Fund is suitable only
for those investors who are willing and able to assume the risks
inherent in its investment program.
The Equity Growth Fund will have at least 65% of its total
assets invested in equity securities, not including stock index
futures and options. The Equity Growth Fund invests primarily
in common stocks but also may invest in preferred stocks,
convertible debt securities, stock index futures and may
purchase or write options. The Equity Growth Fund may invest in
preferred stocks or convertible debt securities when, in the
opinion of the investment adviser, these securities provide a
better relationship of risk and expected return than the common
6
<PAGE>
stock alone. The Equity Growth Fund may also hold as a
temporary defensive measure other types of securities including
obligations issued or guaranteed by the U.S. Government, money
market instruments, repurchase agreements collateralized by such
obligations and cash at such times and in such proportions as,
in the opinion of the Investment Adviser or Sub-Adviser,
prevailing market conditions may warrant. See OTHER INVESTMENT
POLICIES.
INVESTMENT POLICIES OF THE BALANCED FUND: To achieve its
objective, the Balanced Fund invests in common stocks which will
consist primarily of larger, established companies, but will
also include small and medium-sized companies which are believed
by the investment adviser to exhibit good prospects for growth.
Bond and fixed income investments will include U.S. Government
and agency securities, investment grade corporate securities
(rated Baa3 or better by Moody's or BBB- or better by S&P at the
time of purchase) and other debt securities of the types listed
under OTHER INVESTMENT POLICIES. In the event that a security
held by the Balanced Fund is downgraded, the Fund may continue
to hold such security until such time as the investment adviser
deems it advantageous to dispose of the security. The average
maturity of the Fund's fixed income investments will vary with
economic conditions.
The Balanced Fund will generally be invested approximately
60% in equity securities and 40% in debt securities. Equity
securities will not represent less than 25% and fixed-income
debt securities may represent as much as 75%, but not less than
25%, of the portfolio, with the percentage varying as market
conditions change. As the anticipated return from dividends and
internal growth of equity securities approaches the expected
return available from high-quality fixed-income securities, the
incremental return from the more speculative and less senior
equity securities declines. As this occurs, the Balanced Fund
would increase the portion of its assets invested in
fixed-income securities and decrease the portion of the assets
invested in equities. Conversely, as the incremental
anticipated return from equities exceeds that for fixed-income
securities, the Balanced Fund can be expected to increase the
portion of its assets invested in equities and decrease that
portion invested in fixed-income securities. In the event such
movements in anticipated returns from equity and debt securities
occur, they are expected to take place gradually over 3 to 5
year periods and may not reach extreme variations. Adjustments
in the proportion of the Balanced Fund invested in fixed-income
securities may cause an increase in portfolio turnover and an
increase in expenses to the Balanced Fund.
The Balanced Fund may invest in preferred stocks or
convertible debt securities when, in the opinion of the
investment adviser, these securities provide a better
relationship of risk and expected return than the common stock
alone, and may also invest in stock index futures and may
purchase or write options. The Balanced Fund may also hold as a
temporary defensive measure other types of securities including
obligations issued or guaranteed by the U.S. Government, money
market instruments, repurchase agreements collateralized by such
obligations and cash at such time and in such proportions as, in
the opinion of the Investment Adviser or Sub-Adviser, prevailing
market conditions may warrant. See OTHER INVESTMENT POLICIES.
INVESTMENT POLICIES OF THE BOND FUND: 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% 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
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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.
INVESTMENT POLICIES OF THE LONG TERM INCOME FUND: The Long
Term Income Fund will invest at least 65% of its assets in
corporate or U.S. Government bonds. The remainder of the Long
Term Income 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% of the assets be
invested in obligations issued or guaranteed by the U.S.
Government.
The Long Term Income Fund will invest in corporate debt
obligations and preferred stock rated no lower than Baa3 by
Moody's or BBB- 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 Long Term Income Fund. At no
time will securities rated below BB by S&P and Ba2 by Moody's be
held in the Long Term Income Fund. The Investment Adviser
supplements the rating and the maturity information for the Long
Term Income Fund in a manner similar to that for the Bond 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% of the
portfolio may consist of unrated obligations.
When, in the opinion of the Investment Adviser, a defensive
investment posture is warranted, the Long Term Income Fund may
invest temporarily and without limitation in high-grade,
short-term money market instruments.
The Long Term Income Fund's average weighted maturity will
be adjusted according to the interest rate outlook in a manner
similar to the Bond Fund as described above. An adjustment in
the average maturity of the Long Term Income 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 Fund.
INVESTMENT POLICIES OF THE RETIREMENT INCOME FUND: The
Retirement Income Fund will invest at least 65% of its assets in
corporate or U.S. Government bonds. The remainder of the
Retirement Income 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
8
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OTHER INVESTMENT POLICIES for definitions of these types of
securities). At no time will more than 50% of the assets be
invested in obligations issued or guaranteed by the U.S.
Government.
The Retirement Income Fund will invest at least 50 percent
of the portfolio in obligations of, or guaranteed by, the U.S.
Government or its agencies or corporate debt securities or
preferred stock rated no lower than Baa3 by Moody's or BBB- by
S&P. The Fund may invest as much as 33 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 "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
Retirement Income Fund. At no time will bonds rated below B- by
S&P and B3 by Moody's be held in the Retirement Income Fund.
See "Investment Risks of Lower Rated Securities". The
Investment Adviser supplements the rating and the maturity
information for the Retirement Income Fund in a manner similar
to that for the Bond and Long Term Income Funds. 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
Retirement Income Fund may invest temporarily and without
limitation in high-grade, short-term money market instruments.
The Retirement Income 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 Bond 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 Retirement Income 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 Retirement Income Fund holdings may cause an increase in
portfolio turnover and may result in an increase in expenses to
the Fund.
OTHER INVESTMENT POLICIES:
GOVERNMENT OBLIGATIONS: Each FUND may invest in
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. U.S. Government agencies that
are supported by the full faith and credit of the U.S.
Government include securities of the Federal Housing
Administration, the Department of Housing and Urban Development,
the Export-Import Bank, the Farmers Home Administration, the
General Services Administration, the Maritime Administration,
and the Small Business Administration. Generally less than 50%
of the Bond Fund, the Long Term Income Fund, the Retirement
Income Fund or the bonds in the Balanced Fund will be invested
in obligations of the U.S. Government or agencies supported by
the full faith and credit of the U.S. Government. The Equity
Growth Fund will have less than 5% of its assets invested in
obligations of the U.S. Government or agencies supported by the
full faith and credit of the U.S. Government except when in the
opinion of the Investment Adviser a temporary defensive
investment posture is warranted.
Each FUND may invest on a limited basis in obligations of
certain agencies or instrumentalities which do not carry the
full faith and credit of the U.S. Government, such as the
Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation securities. Each FUND will invest in the
obligations of such agencies or instrumentalities only when the
Investment Adviser believes the credit risk with respect to the
agency or instrumentality is minimal. No more than 20% of the
assets of the Bond Fund, the Long Term Income Fund or the bonds
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in the Balanced Fund will be invested in these types of
securities. No more than 5% of the Equity Growth Fund will be
invested in these types of securities.
MONEY MARKET INSTRUMENTS: Each FUND, consistent with its
primary investment objective, anticipates under normal
conditions that no more than 20% of its assets will be invested
in high-quality money market instruments. Under unusual market
or economic conditions (e.g., if short-term interest rates
exceed long term rates) and for temporary defensive purposes
each FUND may invest up to 100% of its assets in money market
instruments. Money market instruments are defined as commercial
paper and bank obligations. Bank obligations include bankers'
acceptances, negotiable certificates of deposit and
non-negotiable time deposits earning a specified return and
issued by a U.S. bank which is a member of the Federal Reserve
System or insured by the Federal Deposit Insurance Corporation,
or by a savings and loan association or savings bank that is
insured by the Federal Savings and Loan Insurance Corporation.
Investment in bank obligations is limited to the obligations of
financial institutions having more than $2 billion in total
assets at the time of purchase. Investment in time deposits is
limited to no more than 5% of the value of a FUND's total assets
at the time of purchase.
Investments in commercial paper will be limited to issues
within the highest rating, at the time of purchase, of S&P or
Moody's or, if not rated, are determined by the Investment
Adviser to be of comparable quality.
REPURCHASE AGREEMENTS: The U.S. Government obligations in
which the FUNDS invest may be purchased pursuant to repurchase
agreements. Repurchase agreements are arrangements in which
banks, brokers, dealers, and other recognized financial
institutions sell U.S. Government securities (limited to those
with remaining maturities of five years or less) to the FUNDS
and agree at the time of sale to repurchase them at a mutually
agreed upon time and price. The FUNDS or their Custodian will
take possession of the securities subject to repurchase
agreements. Repurchase agreements may also be viewed as loans
made by the FUNDS which are collateralized by the securities
subject to repurchase. Advance Capital Management, Inc., the
Investment Adviser, will monitor such transactions to ensure
that the value of the underlying securities will be at least
equal at all times to the total amount of the repurchase
obligation, including the interest factor. In the event of a
bankruptcy or default of certain sellers of repurchase
agreements, the FUNDS could experience costs and delays in
liquidating the underlying security which is held as collateral,
and the FUNDS might incur a loss if the value of the collateral
held declines during this period.
VARIABLE AND FLOATING RATE INSTRUMENTS: Unrated variable
or floating rate instruments will make up not more than 5% of
any FUND's assets. These instruments require the Investment
Adviser to monitor closely the earning power, cash flows and
other liquidity ratios of the issuers to insure they can meet
payment on demand. These instruments often provide a higher
yield than money market rates because they are viewed by the
issuer and purchaser as longer-term obligations whose pricing
may be based on shorter-term rates.
NON-INTEREST-BEARING SECURITIES: The Bond Fund has not
invested in non-income-producing securities in the past.
Further, there are no present plans to invest in
non-income-producing securities in the Bond Fund, the Long Term
Income Fund or the Retirement Income Fund. Non-income-producing
securities include zero coupon bonds, which pay interest only at
maturity and payment in kind ("PIK") bonds, which pay interest
in the form of additional bonds. Although there are no plans to
do so, the Retirement Income Fund may invest up to 5 percent of
its assets in such securities. Should non-interest-bearing
securities be held in the Retirement Income Fund, there are
special tax considerations associated with them. The Retirement
Income Fund will report interest on these securities as income
even though it receives no cash interest until the security's
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maturity or payment date. Therefore, the Retirement Income Fund
may have to dispose of some portfolio securities under
disadvantageous circumstances to generate cash to satisfy
distribution requirements.
STOCK INDEX FUTURES CONTRACTS AND OPTIONS: The Equity
Growth Fund and the Balanced Fund (the Growth Portfolios) may
enter into stock index futures contracts (or options thereon) to
hedge all or a portion of its equity portfolio, or as an
efficient means of regulating its exposure to the equity
markets. The Growth Portfolios will not use futures contracts
for speculation. The Funds will limit the use of futures
contracts so that: (1) no more than 5% of the Growth Portfolios'
assets would be committed to initial margin deposits or premiums
on such contracts and (2) immediately after entering into such
contracts, no more than 30% of the Equity Growth Fund's total
assets or no more than 20% of the Balanced Fund's assets would
be represented by such contracts. The Growth Portfolios may
also write covered call options and purchase put options on
securities and financial indices. The aggregate market value of
each Fund's portfolio securities covering call options will not
exceed 25% of the Equity Growth Fund's net assets or 15% of the
Balanced Fund's net assets. Futures contracts and options can
be highly volatile and could reduce each Fund's total return,
and a Fund's attempt to use such investment for hedging purposes
may not be successful. Successful futures strategies require
the ability of the investment adviser to predict future
movements in securities prices, interest rates and other
economic factors. Each Fund's potential losses from the use of
futures extends beyond its initial investment in such contracts.
Also, losses from options and futures could be significant if a
Fund is unable to close out its position due to disruptions in
the market or lack of liquidity.
PORTFOLIO TRANSACTIONS: Although the FUNDS do not intend
to invest for the purpose of seeking short-term profits,
securities in the portfolios will be sold whenever the
Investment Adviser or Sub-Adviser believes it is appropriate to
do so in light of the respective FUND's investment objectives,
without regard to the length of time a particular security may
have been held. Although it is not possible to predict the
annual portfolio turnover rate, it is not expected to exceed
125% for the Equity Growth Fund, the Retirement Income Fund or
the equity portion of the Balanced Fund and not expected to
exceed 75% for the Bond Fund, the Long Term Income Fund or the
bond portion of the Balanced Fund when measured over any
extended number of years. Portfolio trading and turnover
involve transaction costs which reduce investor returns. Higher
portfolio turnover rates will further increase costs. In
addition, higher portfolio turnover may increase distributions
of taxable capital gains and ordinary income to shareholders.
The Investment Adviser and Sub-Adviser use various
brokerage firms to carry out portfolio transactions. The
COMPANY has authorized the Investment Adviser and Sub-Adviser to
place brokerage orders with some brokers who help to distribute
shares of the FUNDS. The Investment Adviser or Sub-Adviser will
do so only when it reasonably believes that the commissions and
the transaction quality are comparable to that available from
other qualified brokers.
The COMPANY has authorized the Investment Adviser or
Sub-Adviser to pay higher commissions to those firms that
provide research services. The Investment Adviser and
Sub-Adviser may use this research information in managing the
FUNDS' assets, as well as assets of other clients.
INVESTMENT RISKS OF LOWER RATED SECURITIES:
The Retirement Income Fund may invest as much as 33 percent
of the Fund in lower rated, high-yielding securities (rated Ba
or lower by Moody's or BB or lower by S&P) which may provide
poor protection for payment of principal and interest. These
bonds are commonly referred to as "junk bonds". These
securities are considered to be speculative and involve greater
risk of default or volatility in price changes due to the credit
worthiness of the issuer than do securities assigned higher
quality ratings.
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The fixed income market has experienced a dramatic increase
in the large scale use of such securities to fund highly
leveraged corporate acquisitions and restructurings. The high
yield, high risk bond market is relatively new and many of the
outstanding high yield bonds have not endured a major business
recession. A long term track record on bond default rates, such
as that for investment grade corporate bonds, does not exist for
the high yield market. It may be that future default rates on
high yield, high risk bonds will be more widespread and higher
than in the past, especially during periods of deteriorating
economic conditions.
High yield, high risk bonds may also carry call risk, or
the risk that bonds will be redeemed by the issuer during
periods of declining interest rates. Replacing the called bonds
with a lower yielding security will reduce the return for
investors. Conversely, in periods of rising interest rates, the
value of high yield bonds will decline, thereby reducing the
value of the Funds assets.
Credit quality in the high yield, high risk bond market can
change suddenly and unexpectedly, and even recently-issued
credit ratings may not fully reflect the actual risks posed by a
particular high-yield security. For these reasons it is the
Retirement Income Fund's policy not to rely primarily on ratings
issued by established credit rating agencies, but to utilize
such ratings in conjunction with the investment adviser's own
independent and ongoing review of credit quality.
The market for lower rated securities may be less active
and thinner than that for higher quality securities. This may
adversely affect the price at which these securities can be
sold. The market prices of lower rated securities may fluctuate
more than higher rated securities and may decline significantly
in periods of general economic decline and also following
periods of rising interest rates. During a period of economic
downturn or a prolonged period of rising interest rates, the
ability of issuers of lower quality debt to continue to service
their payment obligations, meet projected goals or obtain
additional financing may be seriously impaired. Under such
conditions, it may become difficult to value these securities
accurately. The Fund may also be forced to sell securities at a
significant loss in order to meet shareholder redemptions.
Overall, investors should expect that the lower quality
bonds in the Retirement Income Fund may fluctuate in price
independently of the broad bond market and prevailing interest
rate trends, and that price volatility at times may be very
high, especially as a result of credit concerns, market
liquidity and anticipated or actual adverse changes in economic
activity.
The Retirement Income Fund's policies regarding lower rated
debt securities are not fundamental and may be changed at any
time without shareholder approval.
INVESTMENT LIMITATIONS:
The following investment limitations are matters of
fundamental policy and may not be changed with respect to a FUND
without the vote of the holders of a majority of the FUND's
outstanding shares (as defined under MISCELLANEOUS).
The FUNDS will not:
- borrow money or pledge securities;
- commit more than 10% of their respective net assets to
non-liquid securities, including repurchase agreements with
maturities longer than seven days, or to securities subject to
restrictions on resale;
- purchase the securities of any one issuer, other than the
U.S. Government or any of its instrumentalities, if immediately
after such purchase more than 5% of the value of its total
12
<PAGE>
assets would be invested in such issuer, except that up to 15%
of the value of each FUND's total assets may be invested without
regard to the 5% limitation;
- invest more than 5% of each respective FUND's total assets in
securities of issuers that have records of less than three years
of continuous operations;
- invest more than 25% of each respective FUND's total assets
in any one industry;
- acquire more than 10% of the voting securities of any one
issuer.
If a percentage limitation is satisfied at the time of the
investment, a later increase or decrease in such percentage
resulting from a change in the value of a FUND's portfolio
securities will not constitute a violation of such limitation.
DISTRIBUTION OF SHARES
Advance Capital Services, Inc., a wholly-owned subsidiary
of Advance Capital Group, Inc., is the principal distributor for
shares of the COMPANY. It is a Michigan corporation organized
on August 5, 1986 and a registered broker-dealer with the
National Association of Securities Dealers, Inc. The
distributor is responsible for soliciting orders for the sale of
shares of the FUNDS and will undertake such advertising and
promotion as it believes reasonable in connection with such
solicitation.
NET ASSET VALUE
Each FUND's net asset value per share is determined by
dividing the sum of the market or appraised value of all
securities and all other assets less liabilities by the number
of shares of the FUND outstanding. Each FUND's net asset value
per share is calculated on days that the New York Stock Exchange
is open.
INVESTING IN THE FUNDS
Shares of the COMPANY are sold on days on which the New
York Stock Exchange is open. Shares may be purchased either by
mail or wire. The COMPANY reserves the right to reject any
purchase request.
PURCHASES BY MAIL: Shares may be purchased initially by
completing the Application for Purchase of Shares accompanying
this prospectus. Mail the Application and a check payable to
Advance Capital I, Inc. to:
Advance Capital Group, Inc.
P.O. Box 3144
Southfield, Michigan 48037
Orders by mail are considered received the day the check is
received by Advance Capital Group.
Subsequent purchases by mail need only to include a check,
the investor's account number, and the amount of money to be
invested in each FUND.
PURCHASES BY WIRE: A completed and signed Application must
be on file with Advance Capital Group in order to purchase
shares by Federal Reserve wire. For instructions to initiate a
wire purchase, call Advance Capital Group on (810) 350-8543 or
(800) 345-4783. The order is considered received immediately.
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<PAGE>
The shares will be priced at the Net Asset Value as next
determined after the order is received. Payment by Federal
Funds must be received before the close of business on the next
business day following the order.
MINIMUM INVESTMENT REQUIRED: The minimum initial aggregate
investment in the COMPANY is $10,000 ($2,000 for IRA Accounts).
This investment may be distributed in any of the FUNDS as long
as a $1,000 minimum investment is maintained in each FUND
selected. An institutional investor's minimum investment will
be calculated by combining all accounts it maintains with the
COMPANY.
WHAT SHARES COST: Shares of each FUND are purchased or
sold at their net asset value, as next determined after an order
is received by Advance Capital Group. There are no sales
commissions or charges imposed by the COMPANY. Investors who
purchase or sell shares through a non-affiliated broker or bank
may be charged an additional service fee by that broker or bank.
The net asset value of each FUND is determined at the close
of business of the New York Stock Exchange (currently 4:00 PM
Eastern Time), Monday through Friday, on each day the New York
Stock Exchange is open for trading.
CERTIFICATES AND CONFIRMATIONS: As transfer agent for the
COMPANY, Advance Capital Group maintains a share account for
each shareholder of each FUND. Share certificates are not
issued.
Detailed confirmations of each purchase, exchange or
redemption are sent to each shareholder. Monthly confirmations
are sent to report dividends declared during that month to Bond
Fund, Balanced Fund, Long Term Income Fund, and Retirement
Income Fund shareholders. Confirmations are sent to report
dividends declared at year end to Equity Growth Fund
shareholders.
DIVIDENDS: Bond Fund, Balanced Fund, Long Term Income
Fund, and Retirement Income Fund dividends are declared daily,
except on Saturdays, Sundays, and holidays and are paid monthly
on the last business day of the month. Dividends are declared
just prior to determining net asset value. Dividends declared
on Fridays and on days preceding holidays are proportionally
larger to adjust for the FUND's income for the following
Saturday and Sunday, or holiday.
Equity Growth Fund dividends are declared annually and paid
on the last business day of the year.
Dividends for each FUND may be received in cash by
selecting the appropriate option on the Application for Purchase
of Shares when an account is opened. Otherwise, dividends of
all five FUNDS are automatically reinvested in additional shares
of the respective FUND unless cash distributions are requested
subsequently, in writing, to the transfer agent, Advance Capital
Group.
CAPITAL GAINS: Capital gains, if any, of each FUND will be
distributed annually and normally be paid within 45 days of the
close of the COMPANY's fiscal year. Capital gains may be
received in cash by selecting the appropriate option on the
Application for Purchase of Shares when an account is opened.
Otherwise, capital gains are paid in the form of additional
shares unless cash distributions are requested subsequently, in
writing, to the transfer agent, Advance Capital Group.
TRANSFERRING SHARES
EXCHANGING SHARES AMONG FUNDS: An exchange of a FUND's
shares can be made for shares in any of the other four FUNDS of
the COMPANY. For tax purposes an exchange is treated as a
redemption and a purchase.
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Exchanges by telephone or in writing, are subject to the
same authorizations and restrictions as redemptions (See
REDEEMING SHARES and TELEPHONE REQUESTS). All requests must
include; the shareholder's name and account number, the name of
the FUND being redeemed and the FUND being purchased and the
number of shares or dollar amount being exchanged. If share
certificates have been issued, they must be properly endorsed
and sent by registered or certified mail along with the written
request. The Company reserves the right to modify or terminate
these exchange procedures or required authorizations in the
future. Shareholders will be given at least 60 days notice
before any such changes or termination becomes
effective.
REDEEMING SHARES
The COMPANY redeems shares at their net asset value next
determined after Advance Capital Group receives the redemption
request. There are no deferred sales charges or redemption
fees. Redemptions may be made on days on which the New York
Stock Exchange is open for business. The redemption request
must be received before 4:00 PM Eastern Time for same day
processing. Redemption requests must be received in proper form
and can be made by written request or by telephone request.
Redemption requests for IRA accounts require a signed IRA
Distribution Form.
WRITTEN REQUESTS: Shares may be redeemed by sending a
written request to:
Advance Capital Group, Inc.
P.O. Box 3144
Southfield, Michigan 48037
The request must provide the shareholder's name and account
number, the name of the FUND and the share or dollar amount of
the redemption. If share certificates have been issued, they
must be properly endorsed and should be sent by registered or
certified mail with the written request.
SIGNATURES: Signatures on redemption requests and share
certificates must be guaranteed by:
- a trust company or commercial bank that is a member of the
FDIC; or
- a member firm of the New York, American, Boston, Midwest, or
Pacific Stock Exchange.
The COMPANY does not accept signatures guaranteed by a
savings bank, savings and loan association or notary public.
TELEPHONE REQUESTS: Share amounts less than $25,000 may be
redeemed or exchanged by telephone if the Telephone Redemption
or Exchange Option was completed on the initial Application for
Purchase of Shares. For amounts over $25,000, or if the
Telephone Redemption or Exchange Option was not completed on the
initial application, a written redemption or exchange request
must be made with Advance Capital Group and must be signature
guaranteed (See REDEEMING SHARES and SIGNATURES). Redemption
requests for IRA accounts may not be made by telephone. Shares
may be redeemed by calling (810) 350-8543 or (800) 345-4783 any
business day between the hours 8:00 AM and 4:00 PM, Eastern Time.
By establishing the telephone redemption service you
authorize Advance Capital Group to: (1) act upon instruction of
any person by telephone to redeem or exchange shares from any
account for which such service has been authorized; and (2)
honor any written instructions pertaining to a redemption for an
amount $25,000 or less or for a change of address regardless of
whether such request was accompanied by a signature guarantee.
You also agree that neither the FUNDS nor Advance Capital Group,
Inc. will be liable for following instructions communicated by
telephone reasonably believed to be genuine and a loss to the
shareholder may result due to an unauthorized transaction. The
FUNDS and Advance Capital Group, Inc. will employ reasonable
15
<PAGE>
procedures which may include one or more of the following:
verifying authorization and requiring some form of personal
identification prior to acting upon instructions, and sending a
statement each time a telephone exchange is made to confirm that
instructions communicated by telephone are genuine. The Transfer
Agent and the COMPANY reserve the right to change, modify, or
terminate these services at any time.
RECEIVING PAYMENT: Normally, a check for the proceeds of a
redemption is mailed within one business day, but in no event
more than seven days, after receipt of a proper redemption
request.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR: When shares
are purchased by check, those shares are not available for
redemption, except by letter, until the Custodian collects
payment for those shares. It is the COMPANY's policy to allow
up to 15 calendar days from the date those shares were purchased
for such collection.
ACCOUNTS WITH LOW BALANCES: Due to the high cost of
maintaining accounts with low balances, the COMPANY may redeem
shares in all FUNDS and pay the proceeds to the shareholder if
the total of the account balances in the five FUNDS falls below
a required minimum net asset value of $10,000 ($2,000 for IRA
accounts) or redeem shares of the specific FUND if that one FUND
falls below the $1,000 minimum. This requirement does not
apply, however, if the aggregate account balance falls below
$10,000 ($2,000 for IRA accounts) because of changes in the net
asset values of the FUNDS.
Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum aggregate
requirement.
REDEMPTION IN KIND: Each FUND of the COMPANY is obligated
to redeem shares solely in cash up to $250,000 or 1% of the
FUND's net asset value, whichever is less, for any one
shareholder within a 90 day period.
Any redemption beyond this amount will also be cash unless
the Board of Directors of the COMPANY determine that further
cash payments will have a material adverse effect on remaining
shareholders. In such a case, the FUND will pay all or a
portion of the remainder of the redemption in portfolio
instruments, valued in the same way as the FUND's net asset
value is determined. The portfolio instruments will be selected
in a manner that the Board of Directors deems fair and
reasonable.
Redemption in kind is not as liquid as a cash redemption.
If redemption is made in kind, shareholders receiving their
securities and selling them could receive less than the
redemption value of their securities and could incur certain
transaction costs.
DISTRIBUTION PLAN
The COMPANY has adopted a Plan of Distribution under which
each FUND is permitted to spend up to .25% of its average daily
net assets for activities primarily intended to result in sales
of shares of any of the FUNDS that comprise the COMPANY, which
activities include but are not limited to, compensation of sales
personnel; compensation to and expenses, including the cost of
equipment, telephones, travel, seminars, stationary, and
supplies, of employees of the Distributor who engage in or
support distribution of the FUNDS' shares or who service
shareholder accounts; development and implementation of direct
mail promotions and advertising; and preparation, printing and
distribution of company prospectuses and reports for recipients
other than existing shareholders. The Plan does not permit non
reimbursed expenses incurred in a particular year to be carried
over to or reimbursed in subsequent years. The terms of the
Plan are incorporated into the COMPANY's distribution agreement
with the Distributor. The Board of Directors has suspended
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indefinitely the 12b-1 fees for the Bond and Long Term Income
Funds. Shareholders of the Bond and Long Term Income Funds will
be notified 30 days prior to any increase in the 12b-1 fees
charged to these Funds.
During the fiscal year ended December 31, 1995, the COMPANY
paid or accrued distribution expenses of $50,077, $0, $128,517,
$0 and $301,004 for the Equity Growth, Bond, Balanced, Long Term
Income and Retirement Income Funds respectively, to the
COMPANY's distributor, Advance Capital Services.
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS: The COMPANY is managed by a Board of
Directors. The Directors are responsible for managing the
COMPANY's business affairs and for exercising all the COMPANY's
powers except those reserved for the shareholders.
INVESTMENT ADVISER: Advance Capital Management, Inc., a
wholly-owned subsidiary of Advance Capital Group, Inc., a
financial services and holding company, serves as the Investment
Adviser to the COMPANY. The principal business address of
Advance Capital Management, Inc. is in Southfield, Michigan.
Subject to the general supervision of the COMPANY's Directors
and in accordance with each FUND's investment objectives and
policies, the Investment Adviser continually conducts investment
research and furnishes an investment program for each of the
FUNDS of the COMPANY, is responsible for the purchase and sale
of each FUND's portfolio securities and maintains the COMPANY's
records relating to such purchases and sales.
SUB-ADVISER: T. Rowe Price Associates, Inc. (TRPA) serves
as the investment adviser for that portion of the portfolio
assets of the Equity Growth Fund and Balanced Fund which are
determined by the Investment Adviser to be invested in common
stocks. TRPA is a Maryland Corporation with its principal
business address in Baltimore, Maryland. Their primary business
is the investment management of assets for no-load mutual funds
and other large investment accounts. TRPA is one of the largest
100 percent no-load mutual fund managers in the nation.
ADVISORY FEES: For services provided and expenses assumed
pursuant to the Investment Advisory Agreement, the Investment
Adviser receives a fee, computed daily and paid monthly, at the
annual rate of .7% of the average daily net assets of the Equity
Growth Fund and the Balanced Fund, .4% of the average daily net
assets of the Bond Fund and the Long Term Income Fund and .5% of
the average daily net assets of the Retirement Income Fund. The
Sub-Advisory Agreements do not provide for any increase in the
level of fees payable by the Company. For its services, the
Sub-Adviser is paid a fee by the Investment Adviser, payable
over the same time periods and calculated in the same manner as
the investment advisory fee, of .2% percent annually of daily
net assets of the Equity Growth Fund and of that portion of the
Balanced Fund so designated by the Investment Adviser to be
invested in common stocks. From time to time, as it may deem
appropriate in its sole discretion, the Investment Adviser may
waive a portion or all of its advisory fee.
PORTFOLIO MANAGERS: John C. Shoemaker, President, Robert
J. Cappelli, Vice President, and Christopher M. Kostiz of
Advance Capital Management, Inc., have responsibility for the
day-to-day management of the Bond Fund, Long Term Income Fund,
Retirement Income Fund and the fixed-income portion of the
Balanced Fund. Mr. Shoemaker has been the portfolio manager for
all of the funds since their inception (August, 1987 for the
Equity Growth, Bond and Balanced Funds and October 6, 1992 for
the Long Term Income Fund and Retirement Income Fund). Mr.
Cappelli has been a portfolio manager for the Bond Fund and the
Balanced Fund since 1991 and for the Long Term Income Fund and
Retirement Income Fund since inception. Prior to that, Mr.
Cappelli had been actively involved in the investment research
17
<PAGE>
and strategy for all of the Advance Capital I Funds since
inception. Mr. Kostiz has been a portfolio manager of the Bond
Fund, the fixed-income portion of the Balanced Fund, the Long
Term Income Fund and the Retirement Income Fund since 1995, and
has been involved in the administration, research and investment
of these portfolios since 1993. Richard T. Whitney, Managing
Director, T. Rowe Price Associates, Inc. has had responsibility
for the day-to-day management of the common stock portions of
the Equity Growth and Balanced Funds since December 29, 1993.
Mr. Whitney has been at T. Rowe Price Associates, Inc. since
1985 where he has been actively involved in the development and
management of their systematic equity process. He is President
of the T. Rowe Price Equity Index Fund and the T. Rowe Price
Balanced Fund.
ADMINISTRATIVE SERVICES: Advance Capital Group, the
COMPANY's Transfer Agent, also provides the administrative
personnel and services necessary to handle the clerical,
accounting, and bookkeeping functions required to operate the
COMPANY. In its capacity as Transfer Agent, Advance Capital
Group arranges for the processing of share purchase and
redemption orders, maintains shareholder account records, and
serves as dividend disbursing agent. These combined
administrative and transfer agent services are provided to the
COMPANY at cost.
TRANSFER AGENT: Advance Capital Group is the transfer
agent and dividend disbursing agent for shares of the COMPANY.
EXPENSES OF THE COMPANY
Except as noted below, the Investment Adviser bears all
expenses in connection with the performance of its services.
The COMPANY bears the expenses incurred in its operations.
Expenses of the COMPANY include: taxes; fees, including fees
paid to its Directors, investment advisory fees, transfer agent
and dividend disbursing fees, Securities and Exchange Commission
fees, and state qualification fees; costs of preparing and
printing prospectuses for regulatory purposes and for
distribution to shareholders; charges of the Custodian; certain
insurance premiums; outside auditing and legal expenses; costs
of independent pricing services; costs of shareholder reports
and meetings; and extraordinary expenses. The COMPANY also pays
for brokerage fees and commissions in connection with portfolio
securities transactions.
Expenses of the COMPANY may also include
distribution-related expenses which the COMPANY is permitted to
bear under a Plan of Distribution complying with the provisions
of Rule 12b-1 under the Investment Company Act of 1940. Such
Plan was approved by the Board of Directors, including a
majority of the Directors who are not interested persons of the
COMPANY and who have no direct or indirect financial interest in
the operation of the Plan. Under the Plan, up to .25% of each
FUND's average daily net assets, for any fiscal year, may be
expended for preparation, reproduction and distribution of sales
literature and prospectuses used for sales purposes; public
relations and communications with investors and prospective
investors; and compensation of sales personnel.
TAX INFORMATION
FEDERAL INCOME TAX: The COMPANY will distribute to
shareholders all capital gains and income earned. As such, the
COMPANY will pay no federal income tax because it expects to
meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax
treatment afforded to such companies.
Unless otherwise exempt, shareholders are required to pay
federal income tax on any dividends and other distributions
received. This applies whether dividends are received in cash
or as additional shares. Information on the tax status of
dividends is provided annually.
18
<PAGE>
The Internal Revenue Code of 1986 treats each FUND in a
series mutual fund as a separate corporation.
STATE AND LOCAL TAXES: Shareholders are urged to consult
their own tax advisers regarding the status of their accounts
under state and local tax laws.
DESCRIPTION OF CAPITAL STOCK
The COMPANY was organized as a Maryland Corporation on
March 6, 1987. The COMPANY is a series fund offering five
classes of shares, each representing shares in one of five
separate Funds. Class A common shares represent interests in the
Equity Growth Fund, Class B common shares represent interests in
the Bond Fund, Class C common shares represent interests in the
Balanced Fund, Class D common shares represent interests in the
Long Term Income Fund and Class E common shares represent
interests in the Retirement Income Fund. Each share has a par
value of $.001, which represents an equal proportionate interest
in the FUND with other shares of the same class, and is entitled
to such dividends and distributions out of the income earned on
the assets belonging to such FUND as are declared in the
discretion of the COMPANY's Board of Directors. The COMPANY's
Articles of Incorporation authorizes the Board of Directors to
classify or reclassify any class of shares into one or more
portfolios.
Shareholders are entitled to one vote for each full share
held, and fractional votes for fractional shares held, and will
vote in the aggregate and not by class, except as otherwise
expressly required by law, or when otherwise permitted by the
Board of Directors acting in its sole discretion. At such time
shares of capital stock of the COMPANY shall be voted by
individual class and only shares of capital stock of the
respective class or classes affected by a matter shall be
entitled to vote on such a matter. The COMPANY holds an Annual
Meeting of Shareholders.
Certificates for shares will not be issued unless expressly
requested in writing to the COMPANY's Transfer Agent, Advance
Capital Group, Inc. and will not be issued for fractional shares
or for IRA(s) held by a Custodian.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports
describing the COMPANY's investment operations and annual
financial statements audited by independent accountants.
As used in this Prospectus, a "vote of the holders of a
majority of the outstanding shares" of the COMPANY or a
particular FUND means the affirmative vote of the lesser of (a)
50% of the outstanding shares of the COMPANY or such FUND, or
(b) 67% or more of the shares of the COMPANY or such FUND
present at a meeting if the holders of more than 50% of the
outstanding shares of the COMPANY or such FUND are represented
at the meeting in person or by proxy.
Inquiries regarding the COMPANY or any of its FUNDS may be
directed to the address or telephone number listed on the cover
of this Prospectus.
19
<PAGE>
ADVANCE CAPITAL I, INC. ADVANCE CAPITAL I, INC.
An investment company with five funds.
INVESTMENT ADVISER:
Advance Capital Management, Inc. Equity Growth Fund
One Towne Square, Suite 444 Bond Fund
Southfield, Michigan 48076 Balanced Fund
Long Term Income Fund
SUB-ADVISER: (Equity Growth and Balanced Funds) Retirement Income Fund
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
DISTRIBUTOR:
Advance Capital Services, Inc.
P.O. Box 3144
Southfield, Michigan 48037
ADMINISTRATOR AND TRANSFER AGENT:
Advance Capital Group, Inc.
P.O. Box 3144
Southfield, Michigan 48037
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
BOARD OF DIRECTORS:
Joseph A. Ahern
Richard W. Holtcamp
John C. Shoemaker Prospectus
Frank R. Zimmerman April 30, 1996
<PAGE>
ADVANCE CAPITAL I, INC.
Statement of Additional Information
April 30, 1996
This statement of Additional Information is not a prospectus
and should be read in conjunction with the current Prospectus as
updated to reflect filing of updated condensed financial
information for Advance Capital I, Inc. (the COMPANY), dated
April 30, 1996 (the Prospectus). Much of the information
contained in this Statement of Additional Information expands
upon the subjects discussed in the Prospectus. No investment in
shares of the COMPANY (the Shares) should be made without first
reading the Prospectus. A copy of the Prospectus for the
COMPANY may be obtained by writing Advance Capital I, Inc. at
P.O. Box 3144, Southfield, Michigan 48037 or by calling (810)
350-8543 or (800) 345-4783.
TABLE OF CONTENTS
Page
GENERAL INFORMATION ABOUT THE COMPANY................... 2
INVESTMENT OBJECTIVES, POLICIES AND RISK
CONSIDERATIONS................................. 2
General......................................... 2
Additional Information on Portfolio Instruments... 2
Additional Investment Limitations.................. 3
DISTRIBUTION PLAN......................................... 4
DESCRIPTION OF SHARES......................................... 5
OFFICERS AND DIRECTORS.......................................... 6
INVESTMENT ADVISORY AND ADMINISTRATION AND TRANSFER
AGENT AGREEMENTS.............................................. 7
PORTFOLIO TRANSACTIONS......................................... 8
CUSTODIAN.................................................. 10
INDEPENDENT ACCOUNTANTS....................................... 10
COUNSEL................................................ 10
PERFORMANCE INFORMATION................................... 11
SECURITY VALUATION......................................... 12
ADDITIONAL TAX INFORMATION..................................... 12
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES......... 12
MISCELLANEOUS............................................. 14
DESCRIPTION OF BOND RATINGS................................... 14
FINANCIAL STATEMENTS.................................. 15
<PAGE>
General Information About the COMPANY:
ADVANCE CAPITAL I, Inc. (the COMPANY) is a Maryland Corporation
organized on March 6, 1987. The COMPANY offers shares in five
separate portfolios (the FUNDS). The five portfolios are:
Equity Growth Fund
Bond Fund
Balanced Fund
Long Term Income Fund
Retirement Income Fund
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS:
General
As stated in the Prospectus, the COMPANY offers Shares
representing interests in five different investment portfolios.
The investment objective of the Equity Growth Fund is to provide
long-term growth of capital through investment primarily in
common stocks of small, rapidly growing companies. The Balanced
Fund's investment objective is to provide capital appreciation,
current income and preservation of capital by investing in a
diversified portfolio of common stocks and bonds. Common stocks
are generally expected to represent approximately 60% of total
assets, and fixed income securities, including cash reserves,
will represent the remaining assets. The investment objective
of the Bond Fund is to seek a high level of current interest
income consistent with the relative stability of principal and
liquidity. To achieve this objective, the Bond Fund invests
primarily in high-quality, intermediate-term bonds. The Long
Term Income Fund seeks a higher level of current interest income
than does the Bond Fund, yet still consistent with the relative
stability of principal and liquidity. To achieve this
objective, the Long Term Income Fund invests in investment
grade, long term fixed income securities. The Retirement Income
Fund seeks the highest level of current income without undue
risk of principal. To achieve this objective, the Retirement
Income Fund invests at least half of the portfolio in U.S.
Government and investment grade fixed income securities and up
to 33 percent of the portfolio in fixed income securities with
ratings below investment grade. These high yield, high risk or
"junk bonds" generally involve greater price volatility and
greater risks to principal and income than do bonds in the
higher rating categories. Such high yield bonds are considered
predominately speculative.
Additional Information on Portfolio Instruments
Variable and Floating Rate Instruments
With respect to unrated variable and floating rate instruments,
the Investment Adviser will consider the earning power, cash
flows and other liquidity ratios of the issuers of such
instruments and will continuously monitor their financial status
to meet payment on demand. In determining average weighted
portfolio maturity and whether a variable or floating rate
instrument has a remaining maturity of one year or less, a
variable and floating rate instrument will usually be deemed to
have a maturity equal to the longer of the period remaining to
2
<PAGE>
the next interest rate adjustment or the time the COMPANY can
recover payment of principal as specified in the instrument.
Repurchase Agreements
Repurchase agreements are considered to be loans by the COMPANY
under the Investment Company Act of 1940 (1940 Act). The
repurchase agreements described in the COMPANY's Prospectus are
fully collateralized which means that the value of the
collateral security is, and during the entire term of the
agreement remains, at least equal to the amount of the "loan"
including accrued interest. Securities subject to repurchase
agreements are held by the COMPANY's custodian or in the Federal
Reserve/Treasury book entry system. The Board of Directors
shall establish guidelines and standards of review for the
Investment Adviser to follow for purposes of determining the
credit worthiness of the broker or dealer issuing the repurchase
agreement. The Board of Directors will monitor the Investment
Adviser's actions in engaging in repurchase agreements for the
COMPANY.
Additional Investment Limitations
In addition to the investment limitations disclosed in the
Prospectus, the FUNDS are subject to the following investment
limitations which may be changed with respect to a particular
FUND only by a vote of a majority of the holders of such FUND
(as defined under MISCELLANEOUS in the Prospectus).
The FUNDS will not:
1. Invest in bank obligations having remaining maturities in
excess of one year, except that (1) securities subject to
repurchase agreements may have longer maturities and (2) the
Bond Fund, the Long Term Income Fund, the Retirement Income Fund
or the Balanced Fund may invest in bank obligations without
regard to maturity.
2. Make loans, except that each FUND may purchase or hold debt
securities in accordance with its investment objectives and
policies and may enter into repurchase agreements with respect
to obligations issued or guaranteed by the U. S. Government, its
agencies or instrumentalities.
3. Purchase securities on margin, make short sales of
securities or maintain a short position.
4. Act as an underwriter of securities within the meaning of
the Securities Act of 1933 except insofar as it might be deemed
to be an underwriter upon disposition of certain portfolio
securities acquired within the limitation on purchases of
restricted securities.
5. Purchase or sell real estate, except that each FUND may
purchase securities of issuers which deal in real estate and may
purchase securities which are secured by interests in real
estate.
6. Purchase or sell commodities futures contracts or invest in
oil, gas, or other mineral exploration or development programs;
provided, however, this shall not prohibit the Equity Growth
3
<PAGE>
Fund or the Balanced Fund from purchasing publicly traded
securities of companies engaging in whole or in part in such
activities.
7. Issue any senior securities.
8. Invest in companies for the purpose of exercising
management or control.
9. Invest more than five percent of its total assets in
securities issued by companies which, together with any
predecessor, have been in continuous operation for fewer than
three years.
10. Acquire any other investment company or investment company
security except in connection with a merger, consolidation,
reorganization or acquisition of assets.
11. Permit the purchase or retention of the securities of any
issuer if the officers, directors or trustees of the COMPANY,
its advisers or managers owning beneficially more than one-half
of one percent of the securities of such issuer together own
beneficially more than five percent of such securities.
DISTRIBUTION PLAN:
As stated in the Prospectus, the COMPANY has adopted a Plan of
Distribution (the Plan) under Section 12(b) of the 1940 Act and
Rule 12b-1 thereunder (the Rule). Under the Plan, each FUND is
authorized to spend up to 0.25% of its average daily net assets
on activities primarily intended to result in the sale of the
Shares of any of the FUNDS comprising the COMPANY, which
activities are summarized in the Prospectus.
Under the Distribution Agreement with Distributor discussed
above, each FUND is authorized to reimburse Distributor for its
distribution activities (which are the same as those authorized
by the Plan) on behalf of each FUND on a monthly basis, provided
that any payment by a fund to Distributor, together with any
other payments made by such FUND pursuant to the Plan, shall not
exceed .02083% of its average daily net assets for the prior
month (.25% on an annualized basis).
The plan was initially approved on July 17, 1987, by the
Directors of the COMPANY, including a majority of the Directors
who were not "interested persons" (as defined in the 1940 Act)
of the COMPANY and who had no direct or indirect financial
interest in the operation of the Plan or in any agreement
related to the Plan (the Qualified Directors). In approving the
Plan, the Directors determined that the Plan was in the best
interest of the shareholders of each FUND. At the first Annual
Meeting of Shareholders held on July 22, 1988 for the
shareholders of the Equity Growth, Bond and Balanced Funds and
July 23, 1993 for the shareholders of the Long Term Income and
Retirement Income Funds, the Plan of Distribution was approved.
A modification of the plan to reduce the aggregate fees charged
under the plan to .25% annually, was approved by the Board of
Directors on April, 24, 1992. During the fiscal year ended
December 31, 1995, the COMPANY paid or accrued distribution
expenses of $50,077, $0, $128,517, $0 and $301,004 for the
Equity Growth, Bond, Balanced, Long Term Income and Retirement
Income Funds, respectively, to the COMPANY's distributor,
Advance Capital Services, Inc.
4
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The Plan requires that, at least quarterly, the Directors must
review a written report prepared by the Treasurer of the COMPANY
enumerating the amounts expended and purposes therefor under the
Plan. The Rule also requires that the selection and nomination
of Directors who are not "interested persons" of the COMPANY be
made by such disinterested Directors.
DESCRIPTION OF SHARES:
The COMPANY's Articles of Incorporation authorize the Board of
Directors to issue up to one billion shares of capital stock,
and to classify or reclassify any unissued shares of the COMPANY
into one or more additional classes by setting or changing in
any one or more respects their respective preferences,
conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and
conditions of redemption. All of the COMPANY's authorized
capital is currently classified into five classes of Shares,
each representing interests in one of five separate investment
portfolios - the Equity Growth Fund, the Bond Fund, the Balanced
Fund, the Long Term Income Fund and the Retirement Income Fund.
Shares have no preemptive rights and only such conversion or
exchange rights as the Board of Directors may grant in its
discretion. When issued for payment as described in the
Prospectus, the COMPANY's Shares will be fully paid and
non-assessable. In the event of a liquidation or dissolution of
the COMPANY or an individual FUND, shareholders of a FUND are
entitled to receive the assets available for distribution
belonging to the particular FUND, and a proportionate
distribution, based upon the relative asset values of the
respective FUNDS, of any general assets of the COMPANY not
belonging to any particular FUND which are available for
distribution.
Shareholders are entitled to one vote for each full Share held,
and fractional votes for fractional Shares held, and will vote
in the aggregate and not by class except as otherwise required
by the 1940 Act or other applicable law or when the matter to be
voted upon affects only the interest of the shareholders of a
particular class. Voting rights are not cumulative and,
accordingly, the holders of more than 50% of the aggregate of
the COMPANY's Shares may elect all of the directors,
irrespective of the votes of other shareholders.
Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting
securities of an investment company such as the COMPANY shall
not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding Shares
of each FUND affected by the matter. A FUND is affected by a
matter unless it is clear that the interests of each FUND in the
matter are substantially identical or that the matter does not
effect any interest of the FUND. Under the Rule, the approval
of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon
with respect to a FUND only if approved by a majority of the
outstanding Shares of such FUND. However, the Rule also
provides that the ratification of the appointment of independent
public accountants, the approval of principal underwriting
contracts, and the election of directors may be effectively
acted upon by shareholders of the COMPANY voting without regard
to class.
The COMPANY's Articles of Incorporation authorize the Board of
Directors, with shareholder approval, to (a) sell and convey the
assets of a FUND to another management investment company for
consideration which may include securities issued by the
purchaser and, in connection therewith, to cause all outstanding
Shares of the FUND involved to be redeemed at a price which is
5
<PAGE>
equal to their net asset value and which may be paid in cash or
by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert a
FUND's assets into money and, in connection therewith, to cause
all outstanding Shares of the FUND involved to be redeemed at
their net asset value; or (c) combine the assets belonging to a
FUND with the assets belonging to another FUND, if the Board of
Directors reasonably determines that such combination will not
have material adverse effect on shareholders of any FUND
participating in such combination, and, in connection therewith,
to cause all outstanding Shares of any FUND to be redeemed at
their net asset value or converted Shares of another class of
capital stock at net asset value. In the event that Shares are
redeemed in cash at their net asset value, a shareholder may
receive in payment for such shares an amount that is more or
less than his original investment due to changes in the market
price of the FUND's portfolio securities. The exercise of such
authority by the Board of Directors will be subject to the
provisions of the 1940 Act, and the Board of Directors will not
take any action described in this paragraph unless the proposed
action has been disclosed in writing to the FUND's shareholders
at least 30 days prior thereto.
Notwithstanding any provision of Maryland law requiring a
greater vote of the COMPANY's common stock (or of the Shares of
a FUND voting separately as a class) in connection with any
corporate action, unless otherwise provided by law (for example,
by Rule 18f-2 discussed above) or by the COMPANY's Articles of
Incorporation, the COMPANY may take or authorize such action
upon the favorable vote of the holders of more than 50% of the
outstanding common stock of the COMPANY voting without regard to
class.
OFFICERS AND DIRECTORS:
Officers and Directors of the COMPANY, their addresses,
principal occupations during the last five years, and other
affiliations are as follows:
Positions Principal Occupations
Name and Address & Offices During Past 5 Years
- - ------------------------------------------------------------------
*John C. Shoemaker Director and President & Director, Advance
One Towne Square President Capital I, Inc.; President,
Suite 444 Advance Capital Management, Inc.
Southfield, MI 48076
- - -------------------------------------------------------------------
Raymond A. Rathka Vice- President, Advance Capital
One Towne Square President Group, Inc.; Vice-President,
Suite 444 Advance Capital I, Inc.
Southfield, MI 48076
- - -------------------------------------------------------------------
Robert J. Cappelli Secretary and President, Advance Capital
One Towne Square Treasurer Services, Inc.; Secretary &
Suite 444 Treasurer, Advance Capital I, Inc.
Southfield, MI 48076
- - --------------------------------------------------------------------
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Positions Principal Occupations
Name and Address & Offices During Past 5 Years
- - ---------------------------------------------------------------------
Joseph A. Ahern Director Attorney and Partner, Stark, Reagan &
3208 E. Breckenridge Finnerty, P.C.
Bloomfield Hills, MI 48301
- - ----------------------------------------------------------------------
Richard W. Holtcamp Director General Manager - Marketing, Michigan
27 Oyster Rake Lane Bell Telephone; Director of Marketing
Hilton Head Is., SC 29926 and Consultant, Fishburne & Co, Inc.
- - ------------------------------------------------------------------------
Frank R. Zimmerman Director Retired President, Illinois Bell
175 N. Harbor Drive Telephone Company; Director, Executive
Apt. 2506 Service Corp of Chicago; Director,
Chicago, IL 60601 First Methodist Episcopal Aid Society
- - ---------------------------------------------------------------------------
*"Interested person" of the COMPANY as defined in the
Investment Company Act of 1940.
Advance Capital Management, Inc., Investment Adviser, and
Advance Capital Services, Inc., Distributor, are wholly owned
subsidiaries of Advance Capital Group, Inc., Administrator and
Transfer Agent. Directors who are not affiliated with any of
the Advance Capital companies are paid an annual fee of $1,000
plus $100.00 for each meeting attended plus reimbursement of
expenses incurred in attending such meetings. No officer or
director received any other compensation directly from the
COMPANY. Messrs. Shoemaker, Rathka and Cappelli, who are
shareholders of Advance Capital Group, Inc., may be deemed to
receive indirect remuneration by virtue of their participation,
if any, in the fees paid to its subsidiaries. The Company was
charged investment management fees totaling $1,124,605 for 1995.
For the same period all administrative fees were waived.
INVESTMENT ADVISORY AND ADMINISTRATION AND TRANSFER AGENT
AGREEMENTS:
Advance Capital Management, Inc. serves as Investment Adviser
to the FUNDS. Under Asset Manager's Agreements, signed December
21, 1993 and December 17, 1993, T. Rowe Price Associates, Inc.,
has been hired as a Sub-Adviser to the Equity Growth and
Balanced Funds. These agreements were approved at a Special
Meeting of Shareholders on October 28, 1993. The Investment
Adviser and Sub-Adviser have agreed to provide to the COMPANY
the advisory services described in the Prospectus and in the
Investment Advisory Agreement. The Investment Adviser has also
agreed to pay certain expenses, including the fees associated
with hiring of a Sub-Adviser, incurred in connection with its
activities under the Investment Advisory Agreement other than
the cost of securities, including brokerage commissions,
purchased for the COMPANY.
7
<PAGE>
Specifically, the Investment Adviser will pay in full for (a)
the salaries and employment benefits of all of its employees who
are engaged in providing these services, (b) adequate office
space and suitable office equipment for such employees, (c) all
telephone and postage costs relating to such functions.
The Investment Advisory Agreement provides that the Investment
Adviser shall not be held liable for any error of judgment or
mistake of law or for any loss suffered by the COMPANY in
connection with the performance of the Investment Advisory
Agreement, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or
a loss resulting from willful misfeasance, bad-faith, or gross
negligence on the part of the Investment Adviser in the
performance of their duties or from reckless disregard by them
of their duties and obligations thereunder.
Advance Capital Group, Inc. serves as the COMPANY's
Administrator and Transfer Agent. Under the Administration and
Transfer Agent Agreement, Advance Capital Group, Inc. as
Administrator agrees to maintain office facilities for the
COMPANY, furnish the COMPANY with statistical and research data,
clerical, accounting, and bookkeeping services, and certain
other services required by the COMPANY, and to compute the net
asset value, net income and realized capital gains or losses, if
any, of the respective FUNDS. The Administrator prepares
semi-annual reports to the Securities and Exchange Commission,
prepares Federal and state tax returns, prepares filings with
the state commissions, maintains financial accounts and records
and generally assists in all aspects of the COMPANY's
operations. Advance Capital Group, Inc., acting in its capacity
as Transfer Agent, arranges for and bears the cost of processing
share purchase and redemption orders, maintains shareholder
record accounts and serves as dividend disbursing agent, with
duties involving calculation of dividends and capital gains
distributions, issuing dividend and capital gains checks,
authorizing payment by the Custodian, and maintaining dividend
and capital gains payment records. The Transfer Agent is also
responsible for preparing and mailing to shareholders periodic
account statements, federal tax information, daily confirmations
of transactions in FUND Shares and issuing Share certificates
upon request by shareholders. In addition, the Transfer Agent
will respond to telephone and mail inquiries concerning the
status of shareholder accounts.
If the expenses borne by any FUND in any fiscal year exceed
expense limitations imposed by applicable state regulations,
Advance Capital Management, Inc. will reimburse the COMPANY for
a portion of any such excess to the extent required by such
regulations up to the amount of fees payable to it or it may
effect such reimbursement regardless of the fees payable to it.
Such amount, if any, will be estimated, reconciled and paid on a
monthly basis.
PORTFOLIO TRANSACTIONS:
Subject to the general control of the COMPANY's Board of
Directors, the Investment Adviser and Sub-Adviser, are
responsible for, make decisions with respect to, and place
orders for all purchases and sales of portfolio securities.
8
<PAGE>
Although the FUNDS do not intend to invest for the purpose of
seeking short-term profits, securities in the portfolios will be
sold whenever the Investment Advisor believes it is appropriate
to do so in light of the respective FUND's investment
objectives, without regard to the length of time a particular
security may have been held. Portfolio turnover may vary from
year to year as well as within a particular year, and may also
be affected by cash requirements for redemptions of Shares and
by regulatory provisions which enable the COMPANY to receive
certain favorable tax treatment. Although it is not possible to
predict the annual portfolio turnover rates, it is not expected
to exceed 125% for the Equity Growth Fund, the Retirement Income
Fund and the equity portion of the Balanced Fund and not
expected to exceed 75% for the Bond Fund, the Long Term Income
Fund and the bond portion of the Balanced Fund when measured
over any extended number of years. Portfolio turnover will not
be a limiting factor in making portfolio decisions.
Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary
among different brokers.
Transactions in the over-the-counter market are generally
principal transactions with dealers and the costs of such
transactions involve dealer spreads rather than brokerage
commissions. With respect to over-the-counter transactions, the
COMPANY, where possible, will deal directly with the dealers who
make a market in the securities involved except in those
circumstances where better prices and execution are available
elsewhere.
The Investment Advisory Agreement between the COMPANY and the
Investment Adviser and the Asset Manager's Agreement between the
Investment Adviser and the Sub-Adviser, both provide that, in
executing portfolio transactions and selecting brokers or
dealers, the Investment Adviser and Sub-Adviser will seek to
obtain the best net price and the most favorable execution. The
Investment Adviser and Sub-Adviser shall consider factors deemed
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of
the commission, if any, for the specific transaction and on a
continuing basis. In addition, the Investment Advisory
Agreement authorizes the Investment Adviser, to the extent
permitted by law and subject to the review of the COMPANY's
Board of Directors from time to time with respect to the extent
and continuation of this policy, to cause any of the FUNDS to
pay a broker-dealer which furnishes brokerage and research
services a higher commission than that which might be charged by
another broker-dealer for effecting the same transaction,
provided that the Investment Adviser determines in good faith
that such commission is reasonable in relation to the value of
the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular
transaction or the overall responsibilities of the Investment
Adviser to the accounts as to which it exercises investment
direction. Such brokerage and research services might consist
of reports and statistics on specific companies or industries,
general summaries of groups of stocks and their comparative
earnings, yields or broad overviews of the stock market and the
economy.
9
<PAGE>
Supplementary research information so received is in addition
to and not in lieu of services required to be performed by the
Investment Adviser or Sub-Adviser and does not reduce the
investment advisory fee payable to the Investment Adviser by the
COMPANY. Such information may be useful to the Investment
Adviser or Sub-Adviser in servicing both the COMPANY and other
clients, and, conversely, supplemental information obtained by
the placement of business of other clients may be useful to the
Investment Adviser or Sub-Adviser in carrying out its
obligations to the COMPANY.
The COMPANY has authorized the Investment Adviser to place
brokerage orders with some brokers who distribute the COMPANY's
Shares. The Investment Adviser will do so only when it
reasonably believes that the commissions and the transaction
quality are comparable to that available from other qualified
brokers.
Portfolio securities will not be purchased from or sold to the
Investment Adviser, the Sub-Adviser, the Distributor or any
affiliated person of any of them (as such term is defined in the
1940 Act) acting as principal, except to the extent permitted by
the Securities and Exchange Commission.
CUSTODIAN:
Huntington Banks of Michigan is "Custodian" of the Company's
assets. Under the custodian agreement, Custodian has agreed to
(i) maintain separate accounts in the name of the Company; (ii)
make receipts and disbursements of money on behalf of the
Company; (iii) collect and receive all income and other payments
and distributions on account of the Company's portfolio
securities; (iv) respond to correspondence from securities
brokers and other relating to its duties; (v) maintain certain
financial accounts and records; (vi) make periodic reports to
the Company's Board of Directors concerning the Company's
operations. Under the custodian agreement, Custodian is
entitled to monthly fees for furnishing custodial services and
is entitled to reimbursement for its out of pocket expenses in
connection with the above services.
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP, with offices at 100 East Wisconsin
Avenue, Suite 1500, Milwaukee, Wisconsin 53202 serve as
independent accountants for the COMPANY. The financial
statements of the COMPANY included in the Prospectus and the
Statement of Additional Information, respectively, have been
audited by Price Waterhouse LLP for the period included in their
report thereon.
COUNSEL:
Berry, Moorman, King & Hudson, 600 Woodbridge Place, Detroit,
Michigan 48226, are counsel to the COMPANY and will pass upon
the legality of the Shares offered in the Prospectus.
10
<PAGE>
PERFORMANCE INFORMATION:
From time to time, each FUND may state its total return in
advertisements and other types of literature. Any statements of
total return performance data will be accompanied by information
on the Fund's average annual compounded rate of return over the
most recent 1 year period or life of the FUND.
Each FUND's average annual compounded rate of return is based
on a hypothetical $1,000 investment that includes capital
appreciation and depreciation during the stated periods. The
following formula will be used for the actual computations:
n
P(1+T) = ERV
Where: P = a hypothetical initial purchase order of $1,000
from which the maximum sales load ( 0 ) is deducted
T = average annual total return
n = number of years
ERV= redeemable value of the hypothetical $1,000 purchase at
the end of the period
Aggregate total return is calculated in a similar manner,
except that the results are not annualized.
The performance for each of the FUNDS, as shown below, is the
average annual return for the FUNDS for the periods listed;
Security prices fluctuate during the period covered and the past
results should not be considered as representative of future
performance.
<TABLE>
<CAPTION>
Average Annual Return
---------------------
Past 1 Past 5 Past 10
Year Years Years
----- ------ ------
<S> <C> <C> <C>
Equity Growth * 38.00% N/A N/A
Bond 20.15% 9.33% N/A
Balanced ** 31.53% 10.37% N/A
Long Term Income 25.57% N/A N/A
Retirement Income 22.96% N/A N/A
</TABLE>
* Effective December 29, 1993, the investment objectives of the
Equity Growth Fund were changed by shareholder vote and T. Rowe
Price Associates, Inc. became the sub-investment adviser with
the primary responsibility for the daily security investment
decisions.
** Effective December 29, 1993, T. Rowe Price Associates, Inc.
became the sub-investment adviser with the primary
responsibility for the daily equity security investment
decisions for the Balanced Fund.
11
<PAGE>
SECURITY VALUATION:
The FUNDS' assets are valued as follows: (a) stocks which are
traded on the New York Stock Exchange are valued at the last
sale price on that Exchange on the valuation day or, if no sale
occurs, at the mean between the closing bid and asked price; (b)
other stocks are valued in the manner described in (a) if traded
on any other exchange or on the National Association of
Securities Dealers NASDAQ; (c) over-the-counter stocks quoted on
the National Association of Securities Dealers NASDAQ system are
valued at the bid price supplied through such system; (d)
over-the-counter common and preferred stocks not quoted on the
NASDAQ system are valued at the mean between the last bid and
asked price, and (e) all other securities are valued at fair
value as determined in good faith by the Board of Directors,
although the actual calculation may be done by others. Money
market instruments held by the FUNDS with a remaining maturity
of sixty days or less will be valued at amortized cost.
ADDITIONAL TAX INFORMATION:
The Internal Revenue Code of 1986 treats each FUND in a series
mutual fund as a separate corporation. As such, each FUND
intends to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1954. The
COMPANY intends to distribute to shareholders of each FUND all
capital gains and income earned.
Unless otherwise exempt, shareholders are required to pay
Federal income tax on any dividends and other distributions
received. This applies whether dividends are received in cash
or as additional shares. Information on the tax status of
dividends is provided annually.
At the time of your purchase, The FUND's net asset value may
reflect undistributed income or capital gains or net unrealized
appreciation of securities held by the FUND. A subsequent
distribution to you of such amounts, although constituting a
return of your investment, would be taxable as described above.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES:
Controlling Persons
As of April 19, 1996, no individual owned of record or
beneficially 25% or more of any Class of stock or, in any other
manner, represents a controlling interest in the COMPANY.
12
<PAGE>
Principal Holders of Securities
As of April 19, 1996 the following individuals were known to
own of record or beneficially 5% or more of the outstanding
shares of a particular class of Shares of the COMPANY:
CLASSES A,C, and E
NOTHING TO REPORT
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS SHARES OF CLASS
---------------- ------ --------
<S> <C> <C>
CLASS B
Dezena Mary Houghton 22,655 5.47%
13558 Ward Street
Southgate, MI 48195
CLASS D
Russell A. Bobcean 8,823 6.70%
Donna Marie Bobcean
7071 Reams Road
Alanson, MI 49706
Cecile E. Carter 7,508 5.70%
365 Sand Point
Mead, OK 73449
Albert A. Less, Jr. 9,849 7.48%
2324 Grove Park
Fenton, MI 48430
Ann F. Mienaltowski 8,416 6.39%
13573 Kingsville
Sterling Heights, MI 48312
John P. Nagro 6,917 5.25%
816 Spooner Court
DePere, WI 54115
Gerald R. Rice 8,136 6.18%
1912 Norwood Drive
Midland, MI 48640
</TABLE>
13
<PAGE>
Principal Holders of Securities (Directors and Officers)
As of April 19, 1996, all directors and officers as a group (6
persons) owned 49,969 Class A shares (2.2%), 7,388 Class B
shares (1.8%), 15,676 Class C shares (.3%), 0 Class D shares,
and 671 Class E shares (.0%).
MISCELLANEOUS:
As used in the Prospectus, "assets belonging to a FUND" means
the consideration received by the COMPANY upon the issuance of
Shares in that particular FUND, together with all income,
earnings, profits, and proceeds derived from the investment
thereof, including any proceeds from the sale of such
investments, any funds or payments derived from any reinvestment
of such proceeds, and a portion of any general assets of the
COMPANY not belonging to a particular FUND. In determining a
FUND's net asset value, assets and liabilities of the COMPANY
are normally allocated in proportion to the relative asset
values of the respective FUNDS. Subject to the provisions of
the COMPANY's Articles of Incorporation, determinations by the
Board of Directors as to the direct and allocable liabilities,
and the allocable portion of any general assets with respect to
a particular FUND, are conclusive.
DESCRIPTION OF BOND RATINGS:
Excerpts from Moody's Investors Service, Inc. ("Moody's")
description of its bond ratings: AAA - judged to be the best
quality. They carry the smallest degree of investment risk; AA
- - - judged to be of high quality by all standards. Together with
the Aaa group they comprise what are generally known as high
grade bonds; A - possess many favorable investment attributes
and are to be considered as "upper medium grade obligations";
BAA - considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. BA
- - - judged to have speculative elements; their future cannot be
considered as well assured; B - generally lack characteristics
of the desirable investment; CAA - are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest; CA - speculative
in a high degree; often in default; C - lowest rated class of
bonds; regarded as having extremely poor prospects.
Moody's also supplies numerical indicators 1, 2 and 3 to rating
categories. The modifier 1 indicates that the security is in
the higher end of its rating category; the modifier 2 indicates
a mid-range ranking; and 3 indicates a ranking toward the lower
end of the category.
Excerpts from Standard & Poors Corporation ("S&P") description
of its bond ratings: AAA - highest grade obligations. Capacity
to pay interest and repay principal is extremely strong; AA -
also qualify as high grade obligation. A very strong capacity
to pay interest and repay principal and differs from AAA issues
only in small degree; A - regarded as upper medium grade. They
have a strong capacity to pay interest and repay principal
although it is somewhat susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in
higher rated categories; BBB - regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
14
<PAGE>
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories. This
group is the lowest which qualifies for commercial bank
investment. BB, B, CCC and CC are predominately speculative
with respect to capacity to pay interest and repay principal in
accordance with terms of the obligation; BB indicates the lowest
degree of speculation and CC the highest.
S&P applies indicators "+", no character, and "-" to its rating
categories. The indicators show relative standing within the
major rating categories.
FINANCIAL STATEMENTS:
The following is attached:
(1) Annual Report for year ended December 31, 1995. The Annual
Report includes; Investment Performance, Financial Highlights,
Portfolio of Investments, Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets,
Notes to Financial Statements, the Independent Accountants'
Report, and Additional Information.
<PAGE>
ANNUAL REPORT
December 31, 1995
ADVANCE Capital I Inc.
An investment company with five funds
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- - -----------------------------------------
<S> <C>
Page
A Letter to Our Shareholders..........2
Investment Performance................4
Financial Highlights.................11
PORTFOLIO OF INVESTMENTS
Equity Growth Fund..............16
Bond Fund.......................21
Balanced Fund...................24
Long Term Income Fund...........34
Retirement Income Fund..........37
Statement of Assets and Liabilities..44
Statement of Operations..............45
Statement of Changes in Net Assets...46
Notes to Financial Statements........49
Independent Accountants' Report......52
Additional Information...............53
</TABLE>
<PAGE>
Dear Shareholders,
The performance of both the stock and bond markets in 1995
will probably be remembered as one of the great investment
"comebacks" this century. One year ago we reported that
inflation was low, corporate earnings were strong and
international relations were improving. In spite of this, the
stock market had been lackluster at best and the bond market had
just returned one of its worst years. This year, the investment
community finally awakened to the fact that this economic
scenario is nearly perfect. In herd-like fashion, they
stampeded to produce both stock and bond returns that set
records on the plus side.
The year 1995 reflects the start of a slightly new world
for investors. In February of 1995 the Federal Reserve ended
its rate-lifting efforts, started in February 1994 to head off
typical excesses of historical economic expansions. Their
reasoning was textbook. Typically, as an economic expansion
enters its later years, unemployment remains low, corporate
earnings are strong and manufacturing output is high. This
leads to increased wage and commodity price pressures and,
ultimately, rising inflation. Perhaps as a result of the Fed's
preemptory moves, pricing pressures so typical of subsequent
expansions have not materialized. Labor costs remain low,
particularly when viewed in the light of the productivity gains
realized over the past several years, and commodity prices have
been stable. There are signs of a transformation occurring
throughout the economy as corporations produce more with fewer
resources and the government is discussing, and may be on the
verge of signing, an historic budget agreement. International
conglomerates are being formed in efforts to further efficiency
in a highly computerized, increasingly global economy. As this
phenomenon spreads, the typical or traditional economic signals
of inflation, recession and recovery will be blurred. This
changing world picture sets the stage for 1996 and, more
importantly, the next century.
For the year 1995 the Advance Capital I Funds produced
outstanding results. The Balanced Fund, the Long Term Income
Fund and the Retirement Income Fund each produced results in the
top five percent of their respective fund categories as reported
by Lipper Analytical Services, Inc. The Equity Growth Fund, in
its second year as a small to mid-size growth stock fund,
increased 38.0 percent in value. The Balanced Fund with its
approximate 60-40 stock-bond mix increased 31.5 percent. The
three income funds, Bond, Long Term Income and Retirement
Income, increased 20.2 percent, 25.6 percent and 23.0 percent,
respectively. According to Lipper Analytical Services, the
average of almost 2,000 general equity funds increased 31.1
percent and the average of more than 1,500 fixed income funds
increased 15.2 percent for the year. The Standard & Poor's 500
Common Stock Index returned 37.6 percent (with dividends
reinvested) in 1995.
2
<PAGE>
Looking to 1996, there are clear signs that the pace of
economic expansion is slowing but remains bright and
encouraging. This will be the year that tests the Fed's
two-year attempts at engineering a "soft landing" for this
latest economic cycle. If successful, the economy will grow at
the same "real" 2.5 percent pace of 1995. Continued corporate
cost control and productivity gains will support earnings and
low unemployment will keep consumer demand strong. Interest
rates will remain low and stable, reflecting underlying
inflation at about the same 3 percent level as 1995. Beneath
this scenario is the assumption that the Federal Reserve Board
will reduce short term interest rates to keep economic activity
growing. The Fed clearly telegraphed an end to its restrictive
bias when it lowered the Fed Funds rate by 0.25 percent last
July, the first decrease since 1992. A continued restrictive
policy by the Fed now would risk an economic "landing" much
harder than anyone desires. The accompanying reduction in
economic activity, employment and corporate profits would weigh
heavily on stock performance for the year. Bonds, typically,
perform better during a slowing in economic activity because low
activity usually means low pressure to increase prices. We
think that a "hard landing" will be avoided. Our view of 1996
is a return to "normal." Stock returns will be more like 10 to
15 percent, rather than the 25 to 40 percent plus rate of 1995.
Bonds will be stable, producing annual results in the six to
eight percent range, depending on the aggressiveness of the
particular bond or fund in question.
At December 31, 1995, the five Advance Capital I, Inc.
Funds held more than $230 million in total assets, a 57 percent
increase from the prior year. The performance of the funds
suggests that our security selections are on target with their
objectives. Our focus remains on the long term for each of the
funds. As we make investment decisions, we will add to existing
positions and extend diversification to new holdings to maintain
broadly diversified portfolios in each of the five funds. We
fully expect this approach, coupled with careful attention to
costs will continue to serve each of our investors well, over
time. We thank you for your continued confidence and look
forward to providing you and others with service and results
designed to meet or exceed your long term investment objectives.
If you have questions or if we may be of service, please call
us. We appreciate the opportunity to answer your questions or
to discuss financial or investment matters that may be of
interest to you. Our toll-free number is (800) 345-4783.
Sincerely,
/s/ Robert J. Cappelli /s/ John C. Shoemaker
Robert J. Cappelli John C. Shoemaker
February 8, 1996
3
<PAGE>
INVESTMENT PERFORMANCE
Advance Capital I Inc. is an open-end, diversified
management investment company offering investment opportunities
in five mutual fund portfolios.
The accompanying comments are intended to help investors
evaluate the dynamics of mutual fund performance. The charts
and tables that follow show the average annual return of each
Fund as well as selected measures of general stock and bond
market returns. The Consumer Price Index (CPI) is also shown to
illustrate the impact inflation has on investment returns.
Figures for the life of the Bond and Balanced Funds begin
August 31, 1987, a few days after the funds started. The Long
Term Income Fund and Retirement Income Fund figures begin
January 1, 1993, the start date for those funds. The historic
figures for the Equity Growth Fund begin January 1, 1994, a few
days after the substantial change in the investment objectives
and the addition of a sub-investment advisor to the Fund.
THE EQUITY GROWTH FUND IN 1995
The Advance Capital I Equity Growth Fund seeks long - term
growth of capital by investing primarily in common stocks of
small, rapidly growing companies.
<TABLE>
<CAPTION>
TOP FIVE INDUSTRIES
<S> <C>
Computer Software 10.1%
Computer Peripherals 6.3%
Financial Services 5.7%
Retail Store 5.4%
Medical Services 4.8%
</TABLE>
This year marked the second full year under the new
investment objectives of the Fund and the sub-investment advisor
relationship with T. Rowe Price & Associates. For 1995, the
Equity Growth Fund returned 38.0 percent, while the NASDAQ
Composite Index returned 39.9 percent and the S&P 500 Index
(with dividends reinvested) returned 37.6 percent. The graph on
page 5 shows the cumulative performance of the Equity Growth
Fund, the S&P 500 Index, the NASDAQ Composite Index and the
Consumer Price Index (CPI) since the beginning of 1994.
The inflationary fears that fueled a decline in stocks in
1994, were replaced with a more "rational" view of expected
inflation in 1995. The year began with the Federal Reserve
raising interest rates in February, the last in a series that
began in 1994. These policy actions by the Fed began to slow
the growth in manufacturing output, consumer spending and
employment. As growth slowed and inflation fears subsided, the
Federal Reserve cut interest rates in July and again in
December. Since small emerging companies rely on capital for
growth, falling interest rates
4
<PAGE>
reduce the cost of financing and increased investor expectations
of growth in these companies. Combined with solid corporate
earnings, investors aggressively bid up the prices on all stocks,
in particular small and mid-cap growth stocks. The Equity Growth
Fund returned almost 10 percent in the first quarter and over 19
percent by mid-year. The technology industry was the outstanding
performer for the year as corporations, individuals and institutions
continued to buy computers and related software in further attempts
to increase efficiency and competitiveness in a globalized, highly
computerized environment.
Today, the Equity Growth Fund remains well diversified with
holdings in more than 261 companies and 59 industries. As the
economy continues to slow, smaller companies may begin to
experience earning pressures, but a well-diversified portfolio
is intended to ease the individual company effect on total
return. Unlike the outstanding year just finished, the year
ahead appears poised to produce more "normal" returns of around
10 to 15 percent for small to mid-sized company funds. This
view is based on a moderately growing economy, low inflation,
high employment and the always "wild card" of an election year.
THE EQUITY GROWTH FUND
[EDGAR REFERENCE - S & P 500, NASDAQ, EQUITY GROWTH AND CPI
INDEX LINE CHART FOR 1993-1995]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1995
Past 1 Past 5 Life of
Year Years Fund
------ ------ ------
<S> <C> <C> <C>
Equity Growth Fund 38.00% N/A 15.10%
NASDAQ Composite Index 39.92% N/A 16.33%
S&P 500 Index 37.55% N/A 18.00%
Consumer Price Index (CPI) 2.52% N/A 2.58%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
5
<PAGE>
THE BOND FUND IN 1995
The Advance Capital I Bond Fund seeks to provide investors
with stable income from high quality investment grade bonds and
U.S. government bonds.
<TABLE>
<CAPTION>
AS OF 12/31/95
<S> <C>
Average Maturity 8 Years
Average Quality A+
Average Duration 5.8 Years
Size $4.5 Million
</TABLE>
The Bond Fund returned 20.2 percent for 1995. This return
represents 6.8 percent income distributed to shareholders and a
13.4 percent increase in share price. The performance was above
the 15.2 percent return of the average performance of 1,520
fixed income funds reported by Lipper Analytical Services, but
below the 29.9 percent return of the Lehman Brothers Government
- - - Corporate Bond Index. The accompanying graph shows the
cumulative performance of the Bond Fund, the Balanced Fund, the
Lehman Brothers Government - Corporate Bond Index, the Consumer
Price Index and the S&P 500 Index (with dividends reinvested).
The investment environment of this past year was favorable
for practically all fixed income securities. The rapid decline
of interest rates and lower "perceived" inflation throughout
1995, can be attributed to slower economic growth and an
aggressive monetary policy by the Federal Reserve Board. In
1994, fixed income securities performed poorly due to
expectations of higher inflation and an economy that seemed on
the verge of growing "out of control". In 1995, the inflation
mis-perceptions began to dissipate as consumer spending slowed,
business productivity increased and consumer confidence
declined. By year end, pessimism had been replaced with
optimism and sound judgment about the long term outlook for
inflation.
At the end of 1995, the average maturity of the Bond Fund
was about 8 years, a slight decrease from the prior year, but in
middle of its target range of 5 to 10 years. The reduction in
average maturity resulted more from the passage of time rather
than a strategic decision to change. The declining interest
rate environment of 1995, and the addition of new bonds with
maturities slightly longer than average, stabilized duration at
about 5.8 years. Duration measures the sensitivity of a bond
portfolio to changes in interest rates and is an active part of
portfolio management.
Today, the economy is growing at a sustainable level,
inflation remains in-check and the federal deficit appears
headed for control. If Washington can agree on true fiscal
reform and the economy continues to grow at a manageable level,
the long term outlook for interest rates is bright. The Bond
Fund's average maturity and high quality is structured well for
this continued-success view of the economy in 1996.
6
<PAGE>
THE BALANCED FUND IN 1995
The Advance Capital I Balanced Fund seeks to provide
capital appreciation, current income and preservation of capital
by investing in a diversified portfolio of common stocks and
bonds.
<TABLE>
<CAPTION>
AS OF 12/31/95
<S> <C>
Bonds 36%
Small Stocks 21%
Large Stocks 43%
Size $59 Million
</TABLE>
The Balanced Fund increased 31.5 percent in 1995. In
comparison the Lehman Brothers Government - Corporate Bond Index
increased 29.9 percent and the S&P 500 Index (with dividends
reinvested) increased 37.6 percent. The accompanying graph
illustrates the cumulative performance of the Balanced Fund, the
Bond Fund, the Lehman Brothers Government - Corporate Bond
Index, the S&P 500 Index (with dividends reinvested) and the
Consumer Price Index (CPI) since August 1987, the Fund's
inception. The Fund averages approximately 60 percent stocks
and 40 percent bonds. The stocks are comprised of both
small-to-midsized company growth stocks as well as large-company
value stocks. The bonds consist of investment grade quality
issues and United States Treasury bonds and/or notes.
As outlined in the discussion about the Bond Fund, the
inflation mis-perceptions of the prior year were replaced with
sound judgment on inflation and growth in the economy this year.
As interest rates declined, the purchasing power and value of
existing bonds increased. The bonds in the Balanced Fund
produced double digit returns for the year. Though somewhat
longer in maturity and slightly lower in average quality, the
Balanced Fund bond portfolio is similar to the Bond Fund
portfolio.
The stocks in the Balanced Fund consist of approximately 67
percent large-company stocks and 33 percent small-to-midsized
company growth stocks. Since the end of 1993, T. Rowe Price &
Associates has been responsible for the day-to-day investment
decisions of the stocks in the Fund. Throughout 1995, both
large and small company stocks performed well as a result of an
overall increase in corporate earnings and a bullish sentiment
on inflation. As a result of the rapid increase in stock prices
early in the year, the stock allocation of the Fund had risen to
almost 70 percent of the total. This stock allocation was
reduced toward the 60 percent target in two moves, one in March
and one in May of 1995.
Today, stocks represent approximately 65 percent of the
Fund and bonds about 35 percent. The Fund is well diversified
with 398 stocks and 54 bond holdings. Our view is for continued
moderate economic growth, solid corporate earnings and low
inflation. In this environment, the bonds in the Balanced Fund
should return 6 to 7 percent and the stocks, 10 to 15 percent.
7
<PAGE>
[EDGAR REFERENCE - S & P 500, LBGC, BOND, BALANCED AND CPI INDEX
LINE CHART FOR 1987-1995]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1995
Past 1 Past 5 Life of
Year Years Fund
------ ------ ------
<S> <C> <C> <C>
Bond Fund 20.15% 9.33% 8.89%
Balanced Fund 31.53% 10.37% 8.06%
Lehman Brothers Government
Corporate Bond Index (LBGC) 29.93% 10.86% 10.37%
S&P 500 Index 37.55% 16.55% 11.56%
Consumer Price Index (CPI) 2.52% 2.79% 3.62%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
THE LONG TERM INCOME FUND IN 1995
The Advance Capital I Long Term Income Fund seeks to
provide investors with current income by investing in investment
grade bonds with long maturities.
<TABLE>
<CAPTION>
AS OF 12/31/95
<S> <C>
Average Maturity 19 Years
Average Quality A
Average Duration 9.3 Years
Size $1.5 Million
</TABLE>
The Long Term Income Fund returned 25.6 percent for the
year. This return reflects 6.9 percent from income distributed
to shareholders and an 18.7 percent increase in share price. By
comparison the Lehman Brothers Government - Corporate Index
returned 29.9 percent for the year. The accompanying graph
shows the cumulative return of the Long Term Income Fund, the
Retirement Income Fund, the Lehman Brothers Government -
Corporate Bond Index and the Consumer Price Index (CPI) since
January 1993.
8
<PAGE>
The positive return for the Long Term Income Fund can be
attributed to its long average maturity objective. In 1994,
investor fears of rising inflation and interest rates negatively
impacted bonds with long average maturities. This year, as
economic activity "softened", the inflation expectations
declined and the value of bonds with long average maturities
began to rise. Throughout the year, the average maturity of the
Fund declined to about nineteen years and the average quality
remained an A. The high average quality helped the return
relative to comparable securities of lesser quality as investors
bid up these issues in anticipation of slower economic growth.
Today, the bond market appears to be reacting to inflation
as if it is under control, the economy is stable and the
budgetary problems in Washington are on the road to progress.
Considering this, the structure of the Long Term Income Fund is
well positioned for a more "normal" investment environment for
1996.
THE RETIREMENT INCOME FUND IN 1995
The Advance Capital I Retirement Income Fund seeks to
provide investors with current income by investing at least 65%
in investment grade corporate and U.S. Government bonds and as
much as 33% in lower-rated higher-yielding instruments.
<TABLE>
<CAPTION>
AS OF 12/31/95
<S> <C>
Average Maturity 17 Years
Average Quality BBB
Average Duration 8.5 Years
Size $139 Million
</TABLE>
The Retirement Income Fund returned 23.0 percent for the
year. This return was comprised of 7.6 percent from income
distributed to shareholders and a 15.4 percent increase in share
price. For the year, the Fund's performance was below the 29.9
percent increase reported by Lehman Brothers Government -
Corporate Bond Index. The accompanying graph shows the
cumulative performance of the Retirement Income Fund, the Long
Term Income Fund, the Lehman Brothers Government - Corporate
Bond Index and the Consumer Price Index (CPI) since January
1993, the Fund's inception.
Throughout the year, the Retirement Income Fund held more
than 66 percent in investment grade bonds. Generally, more than
30 percent of the Fund was invested in high yield or "junk"
bonds. The investment grade portion of the Fund has an average
maturity of about 21 years. In anticipation of falling interest
rates, a strategic decision was made to begin lengthening the
average maturity of this portion of the Fund, by adding longer
term bonds. By the end of the 1995, the long term government
bond yield had fallen from a high of about 8 percent to around 6
percent. A combination of the Federal Reserve's aggressive
stance on inflation, large productivity gains in the private
sector and an apparent realization in Washington that deficit
spending must be stopped, led to an outstanding year for longer
term investment grade quality bonds.
9
<PAGE>
The high yield or "junk" portion of the fund consists of
securities with lower credit ratings and higher risk than
investment grade bonds. As interest rates declined throughout
1995, this portion of the fund also performed well. In
anticipation of a "softening" economy and increased earnings
pressure on lower-rated companies, a strategic decision was made
to raise the average quality of the high yield portion of the
portfolio. This action served the portfolio well as lower
quality high-yield bonds generally fared worse during 1995 than
did the higher quality portion of the same high-yield market.
The principal focus, however, continues to be broad
diversification among industries, maturities and quality to
manage risk in this portfolio.
Today, the Fund holds approximately 67 percent investment
grade bonds and 33 percent high yield bonds. Strategically we
are continuing to favor higher quality "junk" bonds in
anticipation of increased pricing pressures on lower quality
issues. Also, facing a very strong bond market, we have
maintained a higher than average cash balance and have slightly
shortened the average maturity of the Fund.
[EDGAR REFERENCE - LONG TERM, LBGC, RETIREMENT INCOME AND CPI
INDEX LINE CHART FOR 1992-1995]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1995
Past 1 Past 5 Life of
Year Years Fund
------ ----- ------
<S> <C> <C> <C>
Long Term Income fund 25.57% N/A 10.33%
Retirement Income Fund 22.96% N/A 9.87%
Lehman Brothers Government
Corporate Bond Index (LBGC) 29.93% N/A 10.27%
Consumer Price Index (CPI) 2.52% N/A 2.63%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
10
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . $9.08 $9.46 $9.94 $9.83 $8.89
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss). . . . . . . . (0.03) (0.03) 0.12 0.10 0.14
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 3.48 (0.35) 0.07 0.11 1.78
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . 3.45 (0.38) 0.19 0.21 1.92
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . 0.00 0.00 (0.12) (0.10) (0.14)
Net realized gain on investment . . . . . . 0.00 0.00 (0.55) 0.00 (0.84)
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . . 0.00 0.00 (0.67) (0.10) (0.98)
--------- --------- --------- --------- ---------
Net asset value, end of year. . . . . . . . . $12.53 $9.08 $9.46 $9.94 $9.83
========= ========= ========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . 38.00% -4.02% 2.13% 2.22% 20.94%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . .$25,625 $12,634 $7,577 $7,094 $6,275
Ratio of expenses to average net asset. . . 1.12% 1.21% 1.16% 1.22% 1.38%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . -0.29% -0.30% 1.27% 1.05% 1.37%
Portfolio turnover rate . . . . . . . . . . 13.86% 18.05% 135.55% 96.05% 86.48%
</TABLE>
See Notes To Financial Statements
11
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . $9.61 $10.82 $10.51 $10.52 $9.91
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss). . . . . . . . 0.70 0.71 0.72 0.70 0.74
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 1.18 (1.21) 0.45 0.01 0.62
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . 1.88 (0.50) 1.17 0.71 1.36
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . (0.70) (0.71) (0.72) (0.70) (0.74)
Net realized gain on investment . . . . . . 0.00 0.00 (0.14) (0.02) (0.01)
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . . (0.70) (0.71) (0.86) (0.72) (0.75)
--------- --------- --------- --------- ---------
Net asset value, end of year. . . . . . . . . $10.79 $9.61 $10.82 $10.51 $10.52
========= ========= ========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . 20.15% -4.64% 11.48% 7.04% 14.26%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . . $4,527 $3,999 $4,741 $5,793 $2,439
Ratio of expenses to average net asset. . . 0.55% 0.60% 0.61% 0.75% 0.85%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . 6.80% 7.06% 6.57% 6.69% 7.36%
Portfolio turnover rate . . . . . . . . . . 6.69% 21.92% 35.99% 38.22% 25.47%
</TABLE>
See Notes To Financial Statements
12
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . $9.97 $10.58 $10.36 $10.38 $9.55
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss). . . . . . . . 0.35 0.32 0.29 0.33 0.39
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 2.75 (0.61) 0.22 (0.02) 1.39
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . 3.10 (0.29) 0.51 0.31 1.78
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . (0.35) (0.32) (0.29) (0.33) (0.39)
Net realized gain on investment . . . . . . (0.15) 0.00 0.00 0.00 (0.56)
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . . (0.50) (0.32) (0.29) (0.33) (0.95)
--------- --------- --------- --------- ---------
Net asset value, end of year. . . . . . . . . $12.57 $9.97 $10.58 $10.36 $10.38
========= ========= ========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . .31.53% -2.72% 4.97% 3.07% 18.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . .$59,299 $44,221 $46,690 $42,440 $22,677
Ratio of expenses to average net asset. . . 1.07% 1.10% 1.08% 1.13% 1.38%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . 3.11% 3.18% 2.77% 3.24% 3.75%
Portfolio turnover rate . . . . . . . . . . 22.72% 34.97% 101.29% 42.39% 50.94%
</TABLE>
See Notes To Financial Statements
13
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG TERM INCOME
-----------------------------
Years ended December 31
-----------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . $9.20 $10.60 $10.00
--------- --------- ---------
Income from investment operations
Net investment income (loss). . . . . . . . 0.70 0.72 0.74
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 1.58 (1.40) 0.77
--------- --------- ---------
Total from investment operations. . . . . . 2.28 (0.68) 1.51
--------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . (0.70) (0.72) (0.74)
Net realized gain on investment . . . . . . 0.00 0.00 (0.17)
--------- --------- ---------
Total distributions . . . . . . . . . . . . (0.70) (0.72) (0.91)
--------- --------- ---------
Net asset value, end of year. . . . . . . . . $10.78 $9.20 $10.60
========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . 25.57% -6.53% 14.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . . $1,450 $1,163 $1,079
Ratio of expenses to average net asset. . . 0.63% 0.63% 0.64%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . 6.93% 7.37% 6.60%
Portfolio turnover rate . . . . . . . . . . 1.74% 15.39% 75.72%
</TABLE>
See Notes To Financial Statements
14
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT INCOME
-----------------------------
Years ended December 31
-----------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . $9.22 $10.54 $10.00
--------- --------- ---------
Income from investment operations
Net investment income (loss). . . . . . . . 0.76 0.76 0.82
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 1.29 (1.32) 0.61
--------- --------- ---------
Total from investment operations. . . . . . 2.05 (0.56) 1.43
--------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . (0.76) (0.76) (0.82)
Net realized gain on investment . . . . . . 0.00 0.00 (0.07)
--------- --------- ---------
Total distributions . . . . . . . . . . . . (0.76) (0.76) (0.89)
--------- --------- ---------
Net asset value, end of year. . . . . . . . . $10.51 $9.22 $10.54
========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . 22.96% -5.34% 13.92%
Ratios and Supplemental Data
Net assets, end of year (in thousands). . $139,299 $84,162 $47,343
Ratio of expenses to average net asset. . . 0.84% 0.88% 0.88%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . . 7.64% 7.89% 7.41%
Portfolio turnover rate . . . . . . . . . . 15.63% 12.27% 37.59%
</TABLE>
See Notes To Financial Statements
15
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ----------
<S> <C> <C> <S> <C> <C>
ADVERTISING - 0.6% BROADCASTING / CABLE TV - 2.2% (Continued)
Catalina Marketing Corporati 1,800 $ 112,950 Comcast Corporation 5,700 $ 103,668
Heritage Media Corporation* 2,000 51,250 Viacom - Class B* 3,000 142,125
Westwood One, Inc.* 4,000 56,500
AIR TRANSPORT - 1.1%
Air Express International Co 3,000 69,000 BUILDING MATERIALS - 0.6%
Atlantic Southeast Airlines, 2,500 53,750 Lafarge Corporation 3,500 65,188
Comair Holdings, Inc. 3,000 80,625 USG Corporation* 2,900 87,000
Fritz Companies, Inc.* 2,000 83,000
CHEMICAL - 2.7%
APPAREL - 0.7% A. Schulman, Inc. 3,500 78,750
Kellwood Company 1,750 35,656 Airgas, Inc.* 5,300 176,225
Nautica Enterprises, Inc.* 3,000 131,250 Crompton & Knowles 3,600 47,700
Great Lakes Chemical Corpora 1,100 79,200
AUTO PARTS - 0.2% Lilly Industries, Inc. 4,000 51,000
Superior Industries Int'l, I 2,400 63,300 Oil-Dri Corporation America 2,700 42,188
Olin Corporation 1,000 74,250
AUTO & TRUCKS - 0.2% Sherwin-Williams Company 2,500 101,875
Wabash National Corporation 2,500 55,937 Wellman, Inc. 2,200 50,050
BANK - 4.1% COMPUTER & PERIPHERALS - 6.3%
Bank of New York Company, In 2,300 112,125 Bay Networks, Inc.* 4,500 185,062
Bank South Corporation 1,800 54,675 Cabletron Systems, Inc.* 2,000 162,000
BayBanks, Inc. 1,000 98,250 Cisco Systems, Inc.* 2,400 179,100
City National Corporation 5,000 70,000 Compaq Computer Corporation* 2,500 120,000
Crestar Financial Corporatio 1,000 59,125 EMC Corporation* 4,300 66,112
First American Corporation 3,700 175,288 Microchip Technology, Inc.* 2,450 89,425
First Bank Systems, Inc. 2,000 99,250 SCI Systems, Inc.* 2,000 62,000
Midlantic Corporation 2,900 190,312 Seagate Technology* 3,800 180,500
Norwest Corp. 2,576 85,008 Silicon Graphics, Inc.* 3,000 82,500
State Street Boston Corporat 2,300 103,500 Sun Microsystems, Inc.* 5,200 237,250
3COM Corporation, Inc.* 3,000 139,875
BEVERAGE - 0.5% Xilinx, Inc.* 3,300 100,650
Adolph Coors Company 1,700 37,612
Robert Mondavi Corporation* 3,000 82,875 COMPUTER SOFTWARE & SERVICES - 10.1%
Acclaim Entertainment, Inc.* 1,200 14,850
BROADCASTING / CABLE TV - 2.2% Adobe Systems, Inc. 3,000 186,000
A.H. Belo Corporation 2,000 69,500 America Online, Inc.* 3,200 120,000
Clear Channel Communications 4,500 198,562 BMC Software, Inc.* 2,800 119,700
</TABLE>
See Notes To Financial Statements
16
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ----------
<S> <C> <C> <S> <C> <C>
COMPUTER SOFTWARE & SERVICES - 10.1% (Cont'd) ELECTRONICS - 3.5%
Broderbund Software, Inc.* 1,900 $ 115,425 Altera Corporation* 1,700 $ 84,575
Cadence Design Systems, Inc. 2,000 84,000 General Instrument Corporati 3,200 74,800
Ceridian Corporation* 3,500 144,375 Harman International Industr 2,100 84,262
Cerner Corporation* 1,400 28,700 Lam Research Corporation* 2,300 105,225
Davidson & Associates, Inc.* 2,400 52,800 Macromedia* 2,000 104,500
First Data Corporation 3,806 254,526 Molex, Inc. 3,750 114,844
FTP Software, Inc.* 2,300 66,700 Stratacom, Inc.* 1,000 73,500
HBO & Company 2,000 153,250 Symbol Technologies, Inc.* 2,600 102,700
Informix Corporation* 4,500 135,000 Ultratech Stepper, Inc.* 2,000 51,500
Intuit, Inc.* 1,200 93,600 Vishay Intertechnology, Inc. 3,150 99,225
Microsoft Corporation* 1,900 166,725
Minnesota Educ. Computing Co 2,500 62,500 ENVIRONMENTAL - 0.6%
Network General Corporation* 2,500 83,438 Sanifill, Inc.* 2,000 66,750
Oracle Corporation* 5,000 211,875 Western Waste Industries* 3,000 82,125
Peoplesoft, Inc.* 2,000 86,000
Security Dynamics Tech., Inc 1,000 54,500 FINANCIAL SERVICES - 5.7%
Sierra On-Line, Inc.* 3,000 86,250 CUC International, Inc.* 4,500 153,562
Sybase, Inc.* 3,000 108,000 Finova Group, Inc. 2,500 120,625
Symantec Corporation* 2,300 53,475 First USA, Inc. 2,500 110,938
Synopsys, Inc.* 2,000 76,000 Franklin Resources, Inc. 1,600 80,600
Wonderware Corporation* 2,000 34,250 Green Tree Financial Corpora 4,000 105,500
H & R Block, Inc. 1,300 52,650
DIVERSIFIED - 1.9% Medaphis Corporation* 4,000 148,000
Alco Standard Corporation 4,000 182,500 Mercury Finance Company 6,000 79,500
Danaher Corporation 2,500 79,375 Mutual Risk Management, Ltd. 3,800 173,850
Service Corp. International 2,600 114,400 Paychex, Inc. 4,650 231,919
Thermo Electron Corp.* 2,000 104,000 Pioneer Group, Inc. 3,000 81,750
United Asset Management Corp 2,100 80,588
DRUG - 3.2% Unitog Company 1,900 45,837
Amgen, Inc.* 5,600 332,500
Biogen, Inc.* 3,700 227,550 FOOD PROCESSING - 0.6%
Forest Laboratories, Inc.* 2,100 95,025 Goodmark Foods, Inc. 4,000 71,000
Isis Pharmaceuticals, Inc.* 4,000 52,500 Hormel Foods Corporation 3,400 83,725
Mylan Laboratories, Inc. 3,750 88,125
Roberts Pharmaceutical Corp. 1,600 28,400 FOREIGN TELECOMMUNICATIONS - 2.2%
Ericsson Telephone 10,000 195,000
ELECTRICAL EQUIPMENT - 0.6% Reuters Holdings PLC 3,900 214,988
Anixter International, Inc.* 5,000 93,125 Vodafone Group PLC 4,000 141,000
Littlefuse, Inc.* 1,500 55,125
</TABLE>
See Notes To Financial Statements
17
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ----------
<S> <C> <C> <S> <C> <C>
FURNITURE / HOME FURNISHINGS - 0.2% INSURANCE - 3.3% (Continued)
Shaw Industries, Inc. 3,000 $ 44,250 Value Health, Inc.* 1,100 $ 30,250
Zurich Reinsurance Centre Ho 2,500 75,938
GROCERY - 0.4%
Safeway, Inc.* 2,200 113,300 MACHINERY - 1.6%
AGCO Corporation 2,500 127,500
HOMEBUILDING - 0.6% Cascade Corporation 3,200 44,800
Lennar Corporation 2,100 52,762 Greenfield Industries, Inc. 2,500 78,125
Rouse Company 4,900 99,838 Parker-Hannifin Corporation 2,500 85,625
Tecumseh Products Company 700 36,575
HOTEL / GAMING - 2.3% TriMas Corporation 1,500 28,125
G-Tech Holdings Corporation* 1,500 39,188
Harrah's Entertainment, Inc. 1,800 43,650 MANUFACTURED HOUSING - 0.7%
HFS, Inc.* 3,500 286,125 Clayton Homes, Inc. 1,563 33,399
La Quinta Inns, Inc. 2,500 68,438 Oakwood Homes Corporation 3,500 134,312
Marcus Corporation 1,950 53,381
Mirage Resorts, Inc.* 2,500 86,250 MEDICAL SERVICES - 4.8%
Health Care & Retirement Cor 3,700 129,500
HOUSEHOLD PRODUCTS - 0.8% Health Management Associates 4,950 129,319
Amway Asia Pacific Ltd. 3,000 106,875 Horizon/CMS Healthcare Corp. 2,700 68,175
Lancaster Colony Corporation 2,500 93,125 Omnicare, Inc. 2,000 89,500
OrNda HealthCorp* 2,500 58,125
INDUSTRIAL PRODUCTS - 0.2% Pacific Physician Services, 2,500 45,000
Watts Industries, Inc. 2,000 46,500 United HealthCare Corporatio 4,900 320,338
Universal Health Services, I 1,900 84,312
INDUSTRIAL SERVICES - 1.4% U.S. Healthcare, Inc. 3,050 141,825
Equifax, Inc. 6,200 132,525 Vencor, Inc.* 5,400 175,500
Kelly Services, Inc. 2,300 63,825
Manpower, Inc. 2,400 67,500 MEDICAL SUPPLIES - 2.9%
Robert Half International, I 2,000 83,750 Amsco International, Inc.* 4,500 66,938
Cardinal Health, Inc. 3,250 177,938
INSURANCE - 3.3% Cordis Corporation* 2,200 221,100
AMBAC, Inc. 2,600 121,875 MediSense, Inc.* 2,000 63,250
Equitable of Iowa Companies 2,600 83,525 Summit Technology, Inc.* 3,000 101,250
Humana, Inc.* 3,100 84,863 Sybron Corporation* 5,000 118,750
MGIC Investment Corporation 2,000 108,500
Mid Atlantic Medical Service 3,600 87,300 METAL FABRICATING - 0.3%
Oxford Health Plans, Inc.* 1,600 118,200 Kennametal, Inc. 2,500 79,375
Progressive Corporation of O 2,800 136,850
</TABLE>
See Notes To Financial Statements
18
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - -----------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ----------
<S> <C> <C> <S> <C> <C>
METALS & MINING - 0.3% RAILROAD - 0.8%
Magma Copper Company* 3,000 $ 83,625 Kansas City Southern Ind., I 2,300 $ 105,225
Wisconsin Central Transporta 1,500 98,625
NATURAL GAS - 0.4%
Sonat, Inc. 3,000 106,875 REAL ESTATE INVESTMENT TRUST - 0.7%
National Health Investors, I 2,700 89,437
NEWSPAPER - 0.2% Security Capital Pacific Tru 4,500 88,875
Central Newspapers, Inc. 1,500 47,063
RECREATION - 2.4%
OFFICE EQUIPMENT & SUPPLIES - 0.7% Callaway Golf Company 4,400 99,550
Danka Business Systems PLC 2,000 74,000 Carmike Cinemas, Inc.* 6,000 135,000
Reynolds & Reynolds Company 2,700 104,962 Carnival Corporation 4,500 109,688
Electronic Arts, Inc.* 2,200 57,475
OILFIELD SERVICES - 1.0% Gaylord Entertainment Compan 2,915 80,891
BJ Services Company/Warrants 1,160 8,845 Harley-Davidson, Inc. 3,000 86,250
Pride Petroleum Services, In 6,000 63,750 Sturm, Ruger & Company, Inc. 2,000 54,750
Smith International, Inc.* 4,300 101,050
Triton Energy Corporation* 1,500 86,063 RESTAURANT - 1.3%
Apple South, Inc. 1,950 41,925
PACKAGING & CONTAINER- 0.4% Applebee's International, In 2,200 50,050
Sealed Air Corporation* 3,400 95,625 Brinker International, Inc.* 3,350 50,668
Outback Steakhouse, Inc.* 3,750 134,531
PAPER & FOREST PRODUCTS - 0.5% Sbarro, Inc. 3,000 64,500
Willamette Industries, Inc. 2,300 129,375
RETAIL STORE - 5.4%
PETROLEUM - 1.5% AutoZone, Inc.* 2,300 66,412
Apache Corporation 3,000 88,500 Bed Bath & Beyond, Inc.* 3,500 135,844
Devon Energy Corporation 2,500 63,750 Circuit City Stores, Inc. 2,800 77,350
Noble Affiliates, Inc. 3,900 116,512 Dollar General Corporation 6,093 126,430
Tosco Corporation 1,500 57,188 Fingerhut Companies, Inc. 2,000 27,750
United Meridian Corporation* 3,200 55,600 Gap, Inc. 1,000 42,000
General Nutrition Companies* 4,000 92,000
PRECISION INSTRUMENT - 0.9% Heilig-Meyers Company 2,300 42,262
KLA Instruments Corporation* 1,600 41,700 Lands' End, Inc.* 4,200 57,225
Tektronix, Inc. 2,000 98,250 Lowe's Companies, Inc. 2,400 80,400
Teleflex, Inc. 2,500 102,500 Men's Wearhouse, Inc.* 2,250 57,937
Michaels Stores, Inc.* 3,300 45,375
PUBLISHING - 0.8% Office Depot, Inc.* 6,150 120,694
Edmark Corporation* 2,400 75,600 Pep Boys-Manny, Moe & Jack 2,000 51,250
Scholastic Corporation* 1,500 116,625
</TABLE>
See Notes To Financial Statements
19
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ----------
<S> <C> <C> <S> <C> <C>
RETAIL STORE - 5.4% (Continued) TELECOMMUNICATIONS SERVICE - 1.9%
Starbucks Corporation* 4,000 $ 84,000 Cellular Commun. of Puerto R 1,500 $ 41,625
Viking Office Products, Inc. 3,200 148,800 Centennial Cellular Corporat 2,500 42,812
Williams-Sonoma, Inc.* 3,000 55,500 Frontier Corporation 3,600 108,000
Zale Corporation* 5,000 80,625 LCI International, Inc.* 6,400 131,200
Paging Network, Inc.* 5,000 121,875
SECURITIES BROKERAGE - 0.7% United States Cellular Corpo 1,500 50,250
Charles Schwab Corporation 6,000 120,000
Investment Technology Group* 1,500 13,875 TEXTILE - 0.3%
Raymond James Financial, Inc 2,500 53,125 Unifi, Inc. 3,000 66,750
SEMICONDUCTOR - 4.3% THRIFT - 0.5%
Applied Materials, Inc.* 2,800 110,250 JSB Financial Corporation 2,000 63,250
Atmel Corporation* 3,400 76,075 Roosevelt Financial Group, I 2,800 54,250
Integrated Device Technology 5,600 72,100
International Rectifier Corp 4,600 115,000 TOYS - 0.4%
Linear Technology Corporatio 5,400 211,950 Mattel, Inc. 3,300 101,475
LSI Logic Corporation* 2,000 65,500
Maxim Integrated Products, I 9,000 346,500 TRUCKING & TRANSPORT LEASING - 0.6%
S3, Inc.* 2,900 51,113 American Freightways Corp.* 2,400 24,900
Teradyne, Inc.* 2,600 64,675 M.S. Carriers, Inc.* 2,900 58,000
Werner Enterprise, Inc. 4,000 81,000
SHOE - 0.4% ----------
Wolverine World Wide, Inc. 3,000 94,500 TOTAL COMMON STOCK - 98.2%
(Cost $19,042,234) $25,173,380
STEEL - 0.6% ==========
Commercial Metals Company 2,500 61,875
Worthington Industries 5,000 104,063
TELECOMMUNICATIONS EQUIPMENT - 4.1%
Andrew Corporation* 2,625 100,406
Ascend Communications, Inc.* 2,000 162,250
Aspect Telecommunications Co 2,000 67,000
Cascade Communications Corp. 1,500 127,875
Cidco, Inc.* 1,900 48,450
Coherent Commun. Systems Cor 3,000 57,750
DSC Communications Corp.* 2,200 81,125
Glenayre Technologies, Inc.* 2,700 112,050
Tellabs, Inc.* 3,200 118,400
U.S. Robotics, Inc.* 2,000 175,500
</TABLE>
*Securities are non - income producing
See Notes To Financial Statements
20
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BANK - 10.4%
Banc One Corporation A+ 8.740 09/15/03 $ 100,000 $ 115,500
First Chicago NBD Corporation A 8.100 03/01/02 100,000 109,906
Harris Bankcorp, Inc. A+ 9.375 06/01/01 75,000 86,634
Morgan, J.P. & Company AA 8.500 08/15/03 100,000 113,719
Security Pacific Corporation A 9.750 05/15/99 40,000 44,363
CHEMICAL - 2.5%
duPont, E.I. de Nemours & Co. AA- 6.000 12/01/01 115,000 114,892
COMPUTER & PERIPHERALS - 1.8%
International Business Machines Cor A 7.250 11/01/02 75,000 80,453
ELECTRIC & GAS UTILITIES - 13.3%
Baltimore Gas & Electric Company A+ 6.125 07/01/03 150,000 147,770
Florida Power Corporation AA- 6.875 02/01/08 70,000 74,676
Kentucky Utilities Company AA- 7.375 12/01/02 75,000 76,677
Northern States Power Co. Minn. AA- 7.375 03/01/02 40,000 40,642
Ontario Hydro AA- 7.450 03/31/13 150,000 164,578
Public Service Co. of Oklahoma A+ 7.250 01/01/99 50,000 50,487
Public Service Electric & Gas A- 7.000 09/01/24 50,000 49,281
ENVIRONMENTAL - 1.1%
Waste Management, Inc. A+ 7.650 03/15/11 45,000 49,417
FINANCIAL SERVICES - 4.8%
BHP Finance USA Ltd. A 7.875 12/01/02 100,000 109,499
General Electric Capital Corporatio AAA 7.750 03/15/02 100,000 109,944
FOREIGN GOVERNMENT - 6.2%
Province of Ontario AA- 7.625 06/22/04 100,000 110,188
Province of Quebec A+ 8.800 04/15/03 150,000 171,890
GOVERNMENTAL AGENCY - 1.1%
Tennessee Valley Authority Not Rated 6.125 07/15/03 50,000 49,688
</TABLE>
See Notes To Financial Statements
21
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INSURANCE - 8.7%
Aetna Life & Casualty Company A- 6.375 08/15/03 $ 110,000 $ 110,413
Allstate Corporation A 7.500 06/15/13 100,000 107,531
CIGNA Corporation BBB+ 8.250 01/01/07 100,000 115,483
Travelers, Inc. A+ 7.625 01/15/97 57,000 58,087
MACHINERY - 5.3%
Caterpillar, Inc. A 9.000 04/15/06 100,000 119,646
Deere & Company A 8.950 06/15/19 100,000 121,637
METALS & MINING - 2.8%
Alcan Aluminum Ltd. A- 5.875 04/01/00 125,000 124,961
NEWSPAPER - 1.5%
Knight-Ridder, Inc. AA- 9.875 04/15/09 50,000 66,203
OFFICE EQUIPMENT & SUPPLIES - 0.8%
Xerox Corporation A 9.750 03/15/00 30,000 34,331
PETROLEUM - 5.2%
BP America, Inc. AA- 8.750 02/01/03 75,000 86,993
Kerr-McGee Corporation A- 7.000 11/01/11 150,000 149,509
RAILROAD - 2.5%
Missouri Pacific Railroad Co. AA- 9.400 12/15/00 100,000 114,160
RETAIL STORE - 6.5%
Sears, Roebuck & Company BBB 9.250 08/01/97 200,000 210,438
Wal-Mart Stores, Inc. AA 8.625 04/01/01 75,000 84,141
SECURITIES BROKERAGE - 7.2%
Lehman Brothers Holdings, Inc. A 8.875 03/01/02 150,000 167,766
Merrill Lynch & Company, Inc. A+ 8.230 04/30/02 150,000 156,632
SEMICONDUCTOR - 3.3%
Texas Instruments, Inc. A 8.750 04/01/07 125,000 148,122
</TABLE>
See Notes To Financial Statements
22
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - -----------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS SERVICE - 6.9%
AT&T Corporation AA 7.125 01/15/02 $ 100,000 $ 106,156
GTE Southwest, Inc. A+ 5.820 12/01/99 100,000 99,813
Pacific Bell Telephone Co. AA- 7.000 07/15/04 100,000 106,125
TOBACCO - 3.5%
Philip Morris Companies, Inc. A 7.500 01/15/02 100,000 105,938
Philip Morris Companies, Inc. A 9.250 12/01/97 50,000 53,141
U.S. GOVERNMENT - 2.6%
U. S. Treasury 7.500 02/15/05 105,000 119,093
----------
TOTAL FIXED-INCOME SECURITIES - 98.0%
(Cost $4,096,111) $4,436,523
==========
</TABLE>
See Notes To Financial Statements
23
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
ADVERTISING - 0.1% BANK - 5.4% (Continued)
Catalina Marketing Corporati 1,000 $ 62,750 City National Corporation 1,100 $ 15,400
Heritage Media Corporation* 1,000 25,625 First American Corporation 2,200 104,225
First Bank Systems, Inc. 1,300 64,512
AEROSPACE / DEFENSE - 1.3% First Chicago NBD Corporatio 6,335 250,232
Boeing Company 1,700 133,238 First Interstate Bancorp 1,400 191,100
General Motors Corp. - Class 1,500 73,688 First Tennessee National Cor 2,900 175,450
Loral Corporation 5,000 176,875 First Union Corporation 5,800 322,625
McDonnell Douglas Corporatio 2,400 220,800 Integra Financial Corporatio 1,000 63,125
Raytheon Company 3,200 151,200 J.P. Morgan & Company 2,000 160,500
KeyCorp 4,000 145,000
AIR TRANSPORT - 0.3% Mellon Bank Corporation 2,700 145,125
Air Express International Co 700 16,100 Mercantile Bancorporation, I 1,050 48,300
Atlantic Southeast Airlines, 1,000 21,500 Midlantic Corporation 2,500 164,062
Comair Holdings, Inc. 1,050 28,219 NationsBank Corporation 4,000 278,500
Pittston Services Group 3,000 94,125 PNC Bank Corporation 4,000 129,000
State Street Boston Corporat 1,200 54,000
APPAREL - 0.0%
Kellwood Company 1,400 28,525 BEVERAGE - 0.7%
Adolph Coors Company 800 17,700
AUTO PARTS - 0.2% Anheuser-Busch Companies, In 3,700 247,438
Borg-Warner Automotive, Inc. 1,000 32,000 Coca-Cola Company 500 37,125
Dana Corporation 1,600 46,800 PepsiCo, Inc. 1,500 83,812
Strattec Security Corporatio 240 4,320 Robert Mondavi Corporation* 1,500 41,438
Superior Industries Int'l, I 1,400 36,925
BROADCASTING / CABLE TV - 1.0%
AUTO & TRUCK - 0.4% A.H. Belo Corporation 1,400 48,650
Ford Motor Company 3,500 101,500 Capital Cities/ABC, Inc. 2,000 246,750
General Motors Corporation 2,400 126,900 Clear Channel Communications 1,600 70,600
Wabash National Corporation 1,000 22,375 Comcast Corporation 3,000 54,562
U.S. West Media Group* 4,000 76,000
BANK - 5.4% Viacom - Class B* 1,599 75,753
BankAmerica Corporation 1,000 64,750 Westwood One, Inc.* 700 9,888
Bank of Boston Corporation 1,000 46,250
Bank of New York Company, In 1,400 68,250 BUILDING MATERIALS - 0.2%
Barnett Banks, Inc. 5,200 306,800 Armstrong World Industries, 1,500 93,000
BayBanks, Inc. 700 68,775 Lafarge Corporation 1,000 18,625
Chase Manhattan Corporation 1,000 60,625 USG Corporation* 1,100 33,000
Chemical Banking Corporation 3,800 223,250
</TABLE>
See Notes To Financial Statements
24
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
CHEMICAL - 3.3% COMPUTER SOFTWARE & SERVICES - 1.9% (Cont'd)
A. Schulman, Inc. 2,000 $ 45,000 Brandon Systems Corporation 700 $ 17,937
Airgas, Inc.* 3,000 99,750 Broderbund Software, Inc.* 1,400 85,050
B.F. Goodrich Company 1,000 68,000 Ceridian Corporation* 2,000 82,500
Crompton & Knowles 1,500 19,875 Davidson & Associates, Inc.* 800 17,600
duPont, E.I. de Nemours & Co 3,500 244,562 First Data Corporation 1,744 116,630
Eastman Chemical Company 250 15,656 HBO & Company 1,000 76,625
Great Lakes Chemical Corpora 500 36,000 Informix Corporation* 1,000 30,000
Lilly Industries, Inc. 1,500 19,125 Microsoft Corporation* 1,000 87,750
Minnesota Mining & Manufactu 4,000 265,000 Oracle Corporation* 2,550 108,056
Monsanto Company 3,500 428,750 Sierra On-Line, Inc.* 1,000 28,750
Oil-Dri Corporation America 1,400 21,875 Sybase, Inc.* 1,400 50,400
Olin Corporation 700 51,975 Symantec Corporation* 1,000 23,250
Rohm & Haas Company 1,000 64,375 Synopsys, Inc.* 2,000 76,000
Sherwin-Williams Company 2,000 81,500 Wonderware Corporation* 800 13,700
Union Carbide Corporation 2,100 78,750
WD-40 Company 2,800 114,800 DIVERSIFIED - 1.4%
W.R. Grace & Company 2,500 147,812 Alco Standard Corporation 2,800 127,750
Wellman, Inc. 1,000 22,750 AlliedSignal, Inc. 5,100 242,250
Witco Corporation 1,700 49,725 Danaher Corporation 1,000 31,750
Premark International, Inc. 1,000 50,625
COMPUTER & PERIPHERALS - 1.5% Service Corp. International 2,100 92,400
Bay Networks, Inc.* 2,700 111,037 Textron, Inc. 1,500 101,250
Cabletron Systems, Inc.* 1,500 121,500 TRW, Inc. 1,000 77,500
Cisco Systems, Inc.* 2,000 149,250 United Technologies Corporat 1,100 104,363
Compaq Computer Corporation* 1,000 48,000
EMC Corporation* 3,000 46,125 DRUG - 3.6%
Microchip Technology, Inc.* 1,000 36,500 American Home Products Corp. 1,000 97,000
Seagate Technology* 2,000 95,000 Amgen, Inc.* 3,200 190,000
Silicon Graphics, Inc.* 1,500 41,250 Biogen, Inc.* 2,400 147,600
Sun Microsystems, Inc.* 1,600 73,000 Bristol-Myers Squibb Company 6,200 532,425
3COM Corporation, Inc.* 1,600 74,600 Forest Laboratories, Inc.* 1,100 49,775
Xilinx, Inc.* 2,100 64,050 Merck & Company, Inc. 8,000 526,000
Mylan Laboratories, Inc. 1,200 28,200
COMPUTER SOFTWARE & SERVICES - 1.9% Pfizer, Inc. 3,000 189,000
Adobe Systems, Inc. 1,200 74,400 Roberts Pharmaceutical Corp. 1,000 17,750
America Online, Inc.* 2,000 75,000 Schering-Plough Corporation 2,000 109,500
Automatic Data Processing, I 2,000 148,500 Warner-Lambert Company 1,900 184,538
BMC Software, Inc.* 1,000 42,750
</TABLE>
See Notes To Financial Statements
25
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
DRUGSTORE - 0.1% ENVIRONMENTAL - 0.4%
Rite Aid Corporation 2,000 $ 68,500 Browning-Ferris Industries, 3,000 $ 88,500
Western Waste Industries* 1,200 32,850
ELECTRIC & GAS UTILITIES - 3.4% WMX Technologies, Inc. 4,500 134,438
Baltimore Gas & Electric Com 5,700 162,450
CMS Energy Corporation 2,300 68,712 FINANCIAL SERVICES - 2.3%
Consolidated Edison Co. of N 1,900 60,325 American Express Company 5,000 207,500
Duke Power Company 3,400 161,075 Countrywide Credit Industrie 4,000 86,500
Entergy Corporation 4,000 117,000 CUC International, Inc.* 2,850 97,256
Florida Progress Corporation 5,500 194,562 Dean Witter, Discover & Comp 3,500 164,500
General Public Utilities Cor 3,600 122,400 Finova Group, Inc. 1,000 48,250
Hawaiian Electric Industries 2,300 89,125 First USA, Inc. 1,400 62,125
New England Electric System 1,700 67,362 Franklin Resources, Inc. 1,000 50,375
Niagra Mohawk Power Corporat 2,500 23,750 Green Tree Financial Corpora 2,000 52,750
Northern States Power Compan 2,500 122,812 H & R Block, Inc. 1,300 52,650
PacifiCorp 8,400 178,500 Household International, Inc 1,000 59,125
Public Service Enterprise Gr 1,900 58,188 Medaphis Corporation* 1,400 51,800
Public Service of Colorado 4,700 166,263 Mercury Finance Company 3,000 39,750
SCEcorp 6,500 115,375 Mutual Risk Management, Ltd. 2,500 114,375
TECO Energy, Inc. 7,700 197,313 Paychex, Inc. 1,500 74,812
Unicom Corporation* 3,500 114,625 Pioneer Group, Inc. 2,000 54,500
Travelers, Inc. 1,800 113,175
ELECTRICAL EQUIPMENT - 1.6% United Asset Management Corp 1,000 38,375
Anixter International, Inc.* 1,600 29,800 Unitog Company 1,000 24,125
Emerson Electric Company 2,500 204,375
General Electric Company 8,200 590,400 FOOD PROCESSING - 0.8%
Hubbell, Inc. 1,000 65,750 Goodmark Foods, Inc. 5,200 92,300
Littlefuse, Inc.* 1,000 36,750 Hershey Foods Corp. 1,400 91,000
Hormel Foods Corporation 1,000 24,625
ELECTRONICS - 0.7% Kellogg Company 1,500 115,875
Altera Corporation* 1,000 49,750 Sara Lee Corporation 4,500 143,438
General Instrument Corporati 1,500 35,062
Harman International Industr 1,050 42,130 FOREIGN TELECOMMUNICATIONS - 0.6%
Lam Research Corporation* 1,300 59,475 Ericsson Telephone 6,400 124,800
Macromedia* 800 41,800 Reuters Holdings PLC 2,400 132,300
Molex, Inc. 1,875 57,422 Vodafone Group PLC 2,100 74,025
Symbol Technologies, Inc.* 2,000 79,000
Ultratech Stepper, Inc.* 1,000 25,750 FURNITURE / HOME FURNISHINGS - 0.0%
Vishay Intertechnology, Inc. 1,500 47,250 Shaw Industries, Inc. 1,500 22,125
</TABLE>
See Notes To Financial Statements
26
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
GROCERY - 0.1% INSURANCE - 2.1% (Continued)
Safeway, Inc.* 1,600 $ 82,400 Equitable of Iowa Companies 2,100 $ 67,462
Humana, Inc.* 1,500 41,062
HOMEBUILDING - 0.3% MBIA, Inc. 1,500 112,500
Lennar Corporation 1,700 42,712 MGIC Investment Corporation 1,000 54,250
Rouse Company 7,000 142,625 Oxford Health Plans, Inc.* 800 59,100
Progressive Corporation of O 1,000 48,875
HOTEL / GAMING - 0.4% Zurich Reinsurance Centre Ho 1,000 30,375
G-Tech Holdings Corporation* 1,000 26,125
Harrah's Entertainment, Inc. 1,100 26,675 MACHINERY - 1.4%
HFS, Inc.* 1,000 81,750 AGCO Corporation 1,000 51,000
La Quinta Inns, Inc. 1,000 27,375 Alamo Group, Inc. 1,500 27,000
Marcus Corporation 1,950 53,380 Briggs & Stratton Corporatio 1,200 52,050
Mirage Resorts, Inc.* 1,000 34,500 Caterpillar, Inc. 1,800 105,750
Cummins Engine Company, Inc. 2,100 77,700
HOUSEHOLD PRODUCTS - 1.3% Deere & Company 4,200 148,050
Amway Asia Pacific Ltd. 1,000 35,625 Dover Corporation 5,200 191,750
Clorox Company 1,900 136,088 GATX Corporation 700 34,038
Colgate-Palmolive Company 3,100 217,775 Greenfield Industries, Inc. 900 28,125
Kimberly-Clark Corporation 2,900 239,975 JLG Industries, Inc. 600 17,850
Lancaster Colony Corporation 1,000 37,250 Parker-Hannifin Corporation 1,050 35,962
Proctor & Gamble Company 1,200 99,600 TriMas Corporation 1,500 28,125
Trinova Corporation 2,100 60,113
INDUSTRIAL PRODUCTS - 0.0%
Watts Industries, Inc. 1,000 23,250 MANUFACTURED HOUSING - 0.1%
Oakwood Homes Corporation 1,000 38,375
INDUSTRIAL SERVICES - 0.5%
Equifax, Inc. 4,600 98,325 MARITIME - 0.1%
Kelly Services, Inc. 700 19,425 American President Co's., Lt 2,000 46,000
Manpower, Inc. 1,500 42,188
PHH Corporation 1,600 74,800 MEDICAL SERVICES - 1.2%
Sylvan Learning Systems* 1,300 38,675 Health Care & Retirement Cor 3,900 136,500
Health Management Associates 2,475 64,659
INSURANCE - 2.1% Horizon/CMS Healthcare Corp. 2,000 50,500
AFLAC, Inc. 1,600 69,400 Mid Atlantic Medical Service 1,300 31,525
Allstate Corporation 3,615 148,667 Omnicare, Inc. 1,400 62,650
AMBAC, Inc. 1,300 60,938 OrNda HealthCorp* 1,000 23,250
American International Group 4,125 381,562 United HealthCare Corporatio 2,300 150,363
Aon Corporation 3,500 174,563 Universal Health Services, I 1,100 48,813
</TABLE>
See Notes To Financial Statements
27
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
MEDICAL SERVICES - 1.2% (Continued) OILFIELD SERVICES - 0.8%
U.S. Healthcare, Inc. 1,500 $ 69,750 Baker Hughes, Inc. 3,000 $ 73,125
Vencor, Inc.* 3,100 100,750 BJ Services Company/Warrants 1,200 9,150
Halliburton Company 3,500 177,188
MEDICAL SUPPLIES - 1.4% Pride Petroleum Services, In 2,800 29,750
Abbott Laboratories 3,600 150,300 Schlumberger, Ltd. 1,000 69,250
Amsco International, Inc.* 1,500 22,312 Smith International, Inc.* 2,300 54,050
Baxter International, Inc. 2,000 83,750 Triton Energy Corporation* 700 40,163
Cardinal Health, Inc. 1,200 65,700
Cordis Corporation* 1,400 140,700 PACKAGING & CONTAINER - 0.1%
Johnson & Johnson 700 59,938 Sealed Air Corporation* 2,000 56,250
McKesson Corporation 2,000 101,250
Medtronic, Inc. 1,800 100,575 PAPER & FOREST PRODUCTS - 0.7%
Summit Technology, Inc.* 1,050 35,438 International Paper Company 8,000 303,000
Sybron Corporation* 2,000 47,500 Weyerhaeuser Company 1,000 43,250
Willamette Industries, Inc. 800 45,000
METAL FABRICATING - 0.0%
Trinity Industries, Inc. 800 25,200 PETROLEUM - 4.4%
Amerada Hess Corporation 600 31,800
METALS & MINING - 0.7% Amoco Corporation 2,400 172,500
Aluminum Company of America 4,000 211,500 Apache Corporation 1,800 53,100
Inco Limited 2,000 66,500 Ashland Oil, Inc. 1,800 63,225
Kennametal, Inc. 1,000 31,750 Atlantic Richfield Company 1,000 110,750
Magma Copper Company* 1,000 27,875 British Petroleum Co. PLC 1,000 102,125
Placer Dome, Inc. 2,500 60,312 Devon Energy Corporation 1,500 38,250
Exxon Corporation 6,300 504,788
NATURAL GAS - 0.7% Mobil Corporation 5,000 560,000
Enron Corporation 5,400 205,875 Noble Affiliates, Inc. 2,800 83,650
Panhandle Eastern Corporatio 5,300 147,738 Royal Dutch/Shell Transport 3,400 479,825
Sonat, Inc. 1,800 64,125 Sun Company, Inc. 4,910 134,410
Tosco Corporation 1,000 38,125
NEWSPAPER - 0.2% Union Texas Petroleum Holdin 6,700 129,813
Central Newspapers, Inc. 1,000 31,375 United Meridian Corporation* 1,000 17,375
Gannett Company, Inc. 1,900 115,900 USX-Marathon Group 3,500 68,250
OFFICE EQUIPMENT & SUPPLIES - 0.6% PRECISION EQUIPMENT - 0.5%
Danka Business Systems PLC 1,000 37,000 Eastman Kodak Company 2,900 194,300
Reynolds & Reynolds Company 2,800 108,850 Tektronix, Inc. 1,000 49,125
Xerox Corporation 1,500 205,500 Teleflex, Inc. 1,000 41,000
</TABLE>
See Notes To Financial Statements
28
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - -------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
PUBLISHING - 0.5% RETAIL STORE - 1.8%
Edmark Corporation* 1,000 $ 31,500 AutoZone, Inc.* 1,000 $ 28,875
McGraw-Hill, Inc. 1,500 130,688 Bed Bath & Beyond, Inc.* 2,700 104,794
Reader's Digest Association, 1,000 51,250 Circuit City Stores, Inc. 2,200 60,775
Value Line, Inc. 2,500 96,250 Dollar General Corporation 4,000 83,000
Fingerhut Companies, Inc. 1,000 13,875
RAILROAD - 0.7% Gap, Inc. 500 21,000
Conrail, Inc. 1,500 105,000 General Nutrition Companies* 1,200 27,600
Kansas City Southern Ind., I 2,000 91,500 Heilig-Meyers Company 1,000 18,375
Union Pacific Corporation 2,000 132,000 J.C. Penney Company 1,100 52,388
Wisconsin Central Transporta 1,000 65,750 Lowe's Companies, Inc. 1,400 46,900
Men's Wearhouse, Inc.* 1,500 38,625
REAL ESTATE INVESTMENT TRUST - 0.9% Michaels Stores, Inc.* 1,000 13,750
DeBartolo Realty Corporation 5,000 65,000 Office Depot, Inc.* 2,900 56,912
Federal Realty Investment Tr 2,400 54,600 Pep Boys-Manny, Moe & Jack 1,000 25,625
Meditrust Corporation 2,500 87,188 Sears, Roebuck & Company 3,900 152,100
National Health Investors, I 1,600 53,000 Starbucks Corporation* 4,000 84,000
Nationwide Health Properties 2,000 84,000 Tandy Corporation 3,100 128,650
Security Capital Pacific Tru 2,000 39,500 Viking Office Products, Inc. 2,200 102,300
Starwood Lodging Trust 2,500 74,375 Zale Corporation* 1,000 16,125
Weingarten Realty Investors 2,200 83,600
SECURITIES BROKERAGE - 0.3%
RECREATION - 0.9% Bear Stearns Companies, Inc. 2,533 50,343
Brunswick Corporation 3,000 72,000 Charles Schwab Corporation 3,000 60,000
Callaway Golf Company 2,400 54,300 Investment Technology Group* 1,000 9,250
Carmike Cinemas, Inc. * 3,000 67,500 Merrill Lynch & Company, Inc 1,200 61,200
Carnival Corporation 2,000 48,750
Electronic Arts, Inc.* 1,700 44,412 SEMICONDUCTOR - 1.3%
Gaylord Entertainment Compan 1,050 29,138 Applied Materials, Inc.* 2,600 102,375
Harley-Davidson, Inc. 2,000 57,500 Atmel Corporation* 2,000 44,750
Time Warner, Inc. 1,200 45,300 Integrated Device Technology 2,800 36,050
Walt Disney Company 2,200 129,800 Intel Corporation 2,400 136,200
International Rectifier Corp 2,000 50,000
RESTAURANT - 0.6% Linear Technology Corporatio 2,200 86,350
Apple South, Inc. 1,500 32,250 Maxim Integrated Products, I 3,400 130,900
McDonald's Corporation 6,000 270,750 National Semiconductor Corp. 2,000 44,500
Outback Steakhouse, Inc.* 2,250 80,719 Texas Instruments, Inc. 2,400 123,600
</TABLE>
See Notes To Financial Statements
29
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET MARKET
COMMON STOCK SHARES VALUE COMMON STOCK SHARES VALUE
- - ----------------------------- -------- --------- ----------------------------- -------- ---------
<S> <C> <C> <S> <C> <C>
SHOE - 0.1% TIRE & RUBBER - 0.2%
Wolverine World Wide, Inc. 1,050 $ 33,075 Goodyear Tire & Rubber Compa 2,600 $ 117,975
STEEL - 0.3% TOBACCO - 0.8%
Nucor Corporation 1,500 85,688 American Brands, Inc. 2,000 89,250
Worthington Industries 4,000 83,250 Philip Morris Companies, Inc 4,300 388,075
Schweitzer-Mauduit Int'l, In 290 6,706
TELECOMMUNICATIONS EQUIPMENT - 0.6%
Andrew Corporation* 1,050 40,163 TOILETRIES / COSMETICS - 0.2%
Ascend Communications, Inc.* 500 40,562 Gillette Company 2,600 135,525
Cidco, Inc.* 800 20,400
Coherent Commun. Systems Cor 500 9,625 TOYS - 0.1%
DSC Communications Corp.* 1,800 66,375 Mattel, Inc. 2,500 76,875
Tellabs, Inc.* 1,200 44,400
U.S. Robotics, Inc.* 1,200 105,300 TRUCKING & TRANSPORT LEASING - 0.2%
M.S. Carriers, Inc.* 1,000 20,000
TELECOMMUNICATIONS SERVICE - 4.3% Ryder System, Inc. 1,000 24,750
ALLTEL Corporation 2,000 59,000 Werner Enterprise, Inc. 3,100 62,775
Ameritech Corporation 4,200 247,800 ------
AT&T Corporation 1,500 97,125 TOTAL COMMON STOCK - 63.1%
Bell Atlantic Corporation 4,100 274,188 (Cost $27,687,645) $37,385,382
BellSouth Corporation 10,000 433,750 ==========
Cellular Commun. of Puerto R 1,000 27,750
Centennial Cellular Corporat 1,000 17,125
Frontier Corporation 1,600 48,000
GTE Corporation 13,500 592,313
LCI International, Inc.* 3,000 61,500
Pacific Telesis Group 4,000 134,000
Paging Network, Inc.* 2,000 48,750
SBC Communications, Inc. 5,900 337,775
U.S. West Communications Gro 4,000 143,000
United States Cellular Corpo 600 20,100
TEXTILES - 0.0%
Unifi, Inc. 1,300 28,925
THRIFT - 0.5%
Federal Home Loan Mortgage C 1,000 83,500
Federal National Mortgage As 1,700 211,012
JSB Financial Corporation 1,000 31,625
</TABLE>
* Securities are non - income producing
See Notes To Financial Statements
30
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
AEROSPACE / DEFENSE - 0.4%
Lockheed Corporation A- 9.375 10/15/99 $ 100,000 $ 111,827
Rockwell International Corp. AA- 8.875 09/15/99 100,000 110,280
AUTO & TRUCK - 1.0%
General Motors Corporation A- 9.125 07/15/01 500,000 570,469
BANK - 4.1%
Bankers Trust New York Corp. A 9.500 06/14/00 250,000 285,665
Chase Manhattan Corp. A- 6.750 08/15/08 400,000 408,750
First Chicago NBD Corporation A 8.100 03/01/02 500,000 549,532
First Union Corporation A- 8.000 08/15/09 500,000 549,063
First Union Corporation A- 9.450 06/15/99 100,000 110,620
Morgan, J.P. & Company AA 8.500 08/15/03 500,000 568,595
CHEMICAL - 1.0%
Monsanto Company A 8.875 12/15/09 500,000 615,938
DIVERSIFIED - 1.1%
United Technologies Corporation A+ 9.625 05/15/99 100,000 101,141
Whitman Corporation BBB+ 8.250 02/15/07 500,000 568,333
ELECTRIC & GAS UTILITIES - 5.6%
Alabama Power Company A+ 8.500 05/01/22 500,000 535,484
Florida Power & Light Company AA- 7.875 01/01/13 500,000 528,374
Georgia Power Company A+ 7.625 03/01/23 450,000 462,015
Hydro Quebec A+ 7.000 03/01/05 500,000 522,118
Potomac Edison Company A+ 7.750 05/01/25 500,000 545,321
Public Service Electric & Gas A- 7.000 09/01/24 200,000 197,125
Virginia Electric & Power Company A 8.000 03/01/04 500,000 561,319
FOOD PROCESSING - 0.9%
Nabisco, Inc. BBB 7.050 07/15/07 500,000 513,328
FINANCIAL SERVICES - 3.1%
Associated Corporation of North Ame AA- 8.700 01/01/97 200,000 205,875
Ford Holdings, Inc. A+ 9.250 03/01/00 475,000 530,961
General Electric Capital Corporatio AAA 7.750 03/15/02 500,000 549,719
Loews Corporation AA- 8.250 01/15/07 500,000 529,524
</TABLE>
See Notes To Financial Statements
31
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - -------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
FOREIGN GOVERNMENT - 2.6%
Province of Nova Scotia A- 7.250 07/27/13 $ 500,000 $ 523,907
Province of Quebec A+ 8.800 04/15/03 350,000 401,078
Province of Saskatchewan BBB+ 9.375 12/15/20 500,000 646,069
GOVERNMENTAL AGENCY - 0.8%
Federal National Mortgage Associat Not Rated 5.520 04/13/98 500,000 496,800
INSURANCE - 2.2%
Chubb Corporation AA+ 8.750 11/15/99 80,000 85,325
CIGNA Corporation BBB+ 8.250 01/01/07 500,000 577,417
Farmers Group, Inc. A 8.250 07/15/96 200,000 202,525
Metropolitan Life Insurance Co.* AA 7.450 11/01/23 450,000 452,299
METALS & MINING - 0.9%
Placer Dome, Inc. BBB 7.750 06/15/15 500,000 517,055
NATURAL GAS - 0.8%
Tennessee Gas Pipeline Company BBB- 6.000 12/15/11 500,000 452,813
NEWSPAPER - 0.8%
Knight-Ridder, Inc. AA- 9.875 04/15/09 100,000 132,406
Tribune Company A+ 8.450 02/25/98 300,000 316,849
OFFICE EQUIPMENT & SUPPLIES - 0.6%
Xerox Corporation A 9.200 07/15/99 100,000 101,692
Xerox Corporation A 9.750 03/15/00 200,000 228,875
PACKAGING & CONTAINER - 0.7%
Crown Cork & Seal Company, Inc. BBB+ 8.375 01/15/05 390,000 442,640
PETROLEUM - 2.0%
Atlantic Richfield Company A 8.500 04/01/12 250,000 299,844
BP America, Inc. AA- 8.750 02/01/03 320,000 371,169
Louisiana Land & Exploration Co. BBB 7.625 04/15/13 500,000 524,844
RAILROAD - 0.2%
Union Pacific Railroad AA- 9.500 02/15/99 100,000 102,974
</TABLE>
See Notes To Financial Statements
32
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - -------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
RETAIL STORE - 1.4%
Dayton Hudson Corporation BBB+ 9.625 02/01/08 $ 200,000 $ 244,372
Kmart Corporation BBB 8.125 12/01/06 500,000 376,094
Sears, Roebuck & Company BBB 9.000 09/15/96 100,000 102,063
Sears, Roebuck & Company BBB 8.550 08/01/96 100,000 101,500
SECURITIES BROKERAGE - 0.5%
Salomon, Inc. BBB 9.450 03/15/98 300,000 321,012
TELECOMMUNICATIONS SERVICE - 2.2%
AT&T Corporation AA 7.125 01/15/02 500,000 530,782
NYNEX Corporation A 7.375 12/15/11 250,000 255,910
Southwestern Bell Telephone Company AA 7.375 05/01/12 500,000 511,566
TOBACCO - 0.8%
Philip Morris Companies, Inc. A 9.000 01/01/01 400,000 449,875
U.S. GOVERNMENT - 1.9%
U.S. Treasury 6.500 08/15/05 500,000 533,047
U.S. Treasury 7.875 11/15/04 500,000 579,063
-----------
TOTAL FIXED-INCOME SECURITIES - 35.6%
(Cost $19,825,416) 21,113,241
TOTAL COMMON STOCK - 63.1%
(Cost $27,687,645) 37,385,382
-----------
TOTAL INVESTMENTS IN SECURITIES - 98.7%
(Cost $47,513,061) $58,498,623
===========
</TABLE>
* Security exempt from registration under Rule 144A of the
Securities Act of 1933
See Notes To Financial Statements
33
<PAGE>
ADVANCE CAPITAL I, INC. - LONG TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
AIR TRANSPORT - 2.2%
Federal Express Corporation BBB 9.650 06/15/12 $ 25,000 $ 31,371
BANK - 3.8%
Chemical Banking Corporation A- 7.625 01/15/03 25,000 27,078
Westpac Banking Corporation A 9.125 08/15/01 25,000 28,539
BEVERAGE - 2.0%
Coca-Cola Enterprises, Inc. AA- 8.000 09/15/22 25,000 29,086
CHEMICAL - 2.1%
Monsanto Company A 8.700 10/15/21 25,000 30,969
COMPUTERS & PERIPHERALS - 1.9%
Digital Equipment Corporation BB+ 8.625 11/01/12 25,000 27,268
DIVERSIFIED - 4.4%
AlliedSignal, Inc. A 9.500 06/01/16 25,000 32,716
United Technologies Corporation A+ 8.750 03/01/21 25,000 31,073
ELECTRIC & GAS UTILITIES - 17.6%
Consolidated Edison Co. of N.Y., In A+ 7.375 09/01/05 25,000 26,054
Florida Power Corporation AA- 8.625 11/01/21 50,000 55,984
FPL Group Capital, Inc. A+ 7.625 05/01/13 25,000 26,273
Houston Lighting & Power Co. A 8.750 03/01/22 30,000 35,175
Hydro Quebec A+ 8.400 01/15/22 50,000 57,953
Nevada Power Company BBB 8.500 01/01/23 25,000 27,865
Texas Utilities Company BBB+ 6.750 03/01/03 25,000 25,817
ELECTRICAL EQUIPMENT - 3.6%
Philips Electronics N.V. BBB+ 7.250 08/15/13 25,000 26,125
Westinghouse Electric Corp. B+ 8.625 08/01/12 25,000 25,414
ENVIRONMENTAL - 1.9%
Laidlaw, Inc. BBB+ 8.250 05/15/23 25,000 27,608
</TABLE>
See Notes To Financial Statements
34
<PAGE>
ADVANCE CAPITAL I, INC. - LONG TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - 10.0%
Barclays North American Capital Cor AA- 9.750 05/15/21 $ 25,000 $ 30,098
Dean Witter Discover & Company A 6.750 10/15/13 40,000 39,845
Ford Motor Credit Corporation A+ 6.375 11/05/08 25,000 25,000
General Motors Acceptance Corp. A- 8.250 04/01/16 25,000 25,988
Loews Corporation AA- 7.000 10/15/23 25,000 24,312
FOOD PROCESSING - 4.9%
Borden, Inc. BBB- 9.250 06/15/19 25,000 27,956
Dole Food Company, Inc. BBB- 7.875 07/15/13 40,000 42,688
FOREIGN GOVERNMENT - 4.1%
Province of Ontario AA- 7.375 01/27/03 25,000 26,969
Province of Saskatchewan BBB+ 9.375 12/15/20 25,000 32,304
INSURANCE - 5.3%
CIGNA Corporation BBB+ 7.400 01/15/03 25,000 26,212
Metropolitan Life Insurance Co.* AA 7.450 11/01/23 50,000 50,255
MACHINERY - 2.0%
Caterpillar, Inc. A 9.750 06/01/19 25,000 28,998
METALS & MINING - 2.0%
Alcan Aluminum Ltd. A- 8.875 01/15/22 25,000 28,606
PAPER & FOREST PRODUCTS - 1.9%
Georgia-Pacific Corporation BBB- 9.125 07/01/22 25,000 28,133
PETROLEUM - 3.6%
NOVA Gas Transmission A- 7.875 04/01/23 25,000 27,886
OXY USA, Inc. BBB 7.000 04/15/11 25,000 24,836
RECREATION - 1.8%
Brunswick Corporation BBB+ 7.375 09/01/23 25,000 26,173
RETAIL STORE - 5.1%
Dayton Hudson Corporation BBB+ 10.000 01/01/11 20,000 25,409
Kmart Corporation BBB 8.375 07/01/22 25,000 16,906
Sears, Roebuck & Company BBB 9.375 11/01/11 25,000 31,260
</TABLE>
See Notes To Financial Statements
35
<PAGE>
ADVANCE CAPITAL I, INC. - LONG TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT PRINCIPAL MARKET
ISSUE RATING COUPON MATURITY AMOUNT VALUE
- - ----------------------------------- --------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
SECURITIES BROKERAGE - 3.8%
Lehman Brothers Holdings, Inc. A 7.625 07/15/99 $ 25,000 $ 26,086
Salomon, Inc. BBB 6.750 01/15/06 30,000 28,934
TELECOMMUNICATIONS SERVICE - 7.4%
Bell Telephone Co. Pennsylvania AA 7.500 05/01/13 50,000 51,141
NYNEX Corporation A 7.000 06/15/13 30,000 31,465
Southwestern Bell Telephone Company AA 7.375 05/01/12 25,000 25,578
U. S. GOVERNMENT - 5.2%
U. S. Treasury 5.750 08/15/03 75,000 75,984
------
TOTAL FIXED-INCOME SECURITIES - 96.6%
(Cost $1,328,435) $ 1,401,390
=========
</TABLE>
* Security exempt from registration under Rule 144A of the
Securities Act of 1933
See Notes To Financial Statements
36
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ADVERTISING - 0.4%
Heritage Media Corporation BB- 06/15/02 11.000 $ 500,000 $ 535,634
AEROSPACE / DEFENSE - 2.1%
AAR Corporation BBB- 10/15/03 7.250 500,000 503,232
Coltec Industries, Inc. BB- 04/01/02 10.250 500,000 516,840
Lockheed Corporation A+ 03/15/23 7.875 500,000 550,415
McDonnell Douglas Corporation BBB 04/01/12 9.750 1,000,000 1,288,126
AIR TRANSPORT - 2.6%
AMR Corporation BB+ 03/15/00 9.750 100,000 110,594
AMR Corporation BB+ 08/01/12 9.000 1,000,000 1,129,689
Delta Air Lines, Inc. BB 02/01/11 10.375 500,000 622,032
Federal Express Corporation BBB 01/01/15 7.630 500,000 538,311
United Airlines, Inc. BB 07/15/21 10.250 500,000 624,688
United Airlines, Inc. BB 08/15/21 9.750 500,000 602,032
APPAREL- 1.7%
Fruit of the Loom, Inc. BBB+ 03/15/11 7.000 1,000,000 945,911
Phillips-Van Heusen Corp. BBB 11/15/23 7.750 1,000,000 1,044,108
Platex Family Products Corp. B+ 12/15/03 9.000 500,000 441,719
AUTO PARTS - 0.4%
JPS Automotive Products Corp. B 06/15/01 11.125 500,000 504,611
AUTO & TRUCK - 1.4%
Ford Motor Company A+ 11/15/22 8.875 1,000,000 1,170,314
General Motors Corporation A- 04/15/16 8.125 700,000 727,344
BANK - 5.5%
Banc One Corporation A+ 07/15/25 7.750 1,000,000 1,113,126
Bank of Boston Corporation BBB 12/01/05 6.625 1,000,000 1,018,126
Chase Manhattan Corp. A- 10/15/08 6.125 1,000,000 972,501
Citicorp A 02/01/16 10.500 329,000 346,148
Comerica Bank A- 12/01/13 7.125 1,000,000 1,016,143
NCNB Corporation A- 07/15/15 10.200 1,000,000 1,353,750
Republic New York Corporation AA- 05/15/21 9.125 1,000,000 1,285,450
Westpac Banking Corporation A 08/15/01 9.125 500,000 570,782
</TABLE>
See Notes To Financial Statements
37
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BEVERAGE - 0.8%
Anheuser Busch Companies, Inc. AA- 03/01/17 8.500 $1,000,000 $ 1,045,187
BROADCASTING / CABLE TV - 3.9%
Cablevision Industries Corp. BB- 01/30/02 10.750 400,000 436,825
Century Communications Corp. BB- 03/01/05 9.500 1,000,000 1,036,039
Century Communications Corp. BB- 02/15/02 9.750 250,000 258,438
Comcast Cablevision B+ 01/15/08 9.500 500,000 524,063
Continental Cablevision, Inc. BB+ 08/01/13 9.500 500,000 534,063
Jones Intercable, Inc. B+ 03/01/08 10.500 200,000 212,840
Jones Intercable, Inc. B+ 07/15/04 11.500 250,000 276,299
Tele-Communications, Inc. BBB- 02/15/23 8.750 500,000 524,376
Tele-Communications, Inc. BBB- 01/15/23 9.250 760,000 832,438
Turner Broadcasting System, Inc. BB+ 07/01/13 8.375 750,000 780,000
BUILDING MATERIALS- 0.7%
American Standard, Inc. B+ 06/01/01 9.875 350,000 375,594
Schuller International Group BB- 12/15/04 10.875 500,000 562,736
BUILDING - 2.5%
Ryland Group BB- 07/15/02 10.500 1,050,000 1,053,339
Sherritt Gordon Ltd. BB- 04/01/03 9.750 1,000,000 1,015,000
Standard Pacific Corporation BB 03/01/00 10.500 300,000 308,660
Toll Corporation BB- 03/15/02 10.500 550,000 582,360
U.S. Home Corporation BB- 06/15/03 9.750 500,000 524,917
CHEMICAL - 1.2%
Arcadian Partners, L.P. BB- 05/01/05 10.750 500,000 530,275
Borden Chemicals and Plastics, L.P. BB+ 05/01/05 9.500 500,000 519,557
Union Carbide Chemicals & Plastics BBB 04/01/23 7.875 600,000 664,275
COMPUTER & PERIPHERALS - 2.1%
Digital Equipment Corporation BB+ 11/01/12 8.625 1,200,000 1,308,871
International Business Machines Cor A 11/01/19 8.375 1,000,000 1,198,439
Unisys Corporation BB- 09/15/16 9.750 200,000 166,000
Unisys Corporation BB- 10/01/99 10.625 250,000 222,578
</TABLE>
See Notes To Financial Statements
38
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
DIVERSIFIED - 0.9%
Tenneco, Inc. BBB- 11/15/12 9.000 $ 500,000 $ 606,407
Textron, Inc. BBB 07/01/22 8.750 581,000 637,207
ELECTRIC & GAS UTILITIES - 11.8%
Alabama Power Company A+ 12/01/24 9.000 1,000,000 1,148,402
Cleveland Electric Illuminating Com BB 03/01/17 9.375 500,000 502,270
Duke Power Company AA- 03/01/22 8.625 500,000 537,681
Florida Power & Light Company AA- 01/01/13 7.875 500,000 528,374
FPL Group Capital, Inc. A+ 05/01/13 7.625 500,000 525,450
Georgia Power Company A+ 02/01/23 7.950 1,000,000 1,055,939
Hydro Quebec A+ 01/15/22 8.400 800,000 927,250
Indianapolis Power & Light Co. AA- 02/01/24 7.050 1,000,000 1,024,950
Long Island Lighting Company BB+ 07/15/19 8.900 473,000 472,705
Midland Cogeneration Venture BB- 07/23/02 10.330 432,577 448,530
Monongahela Power A+ 06/01/22 8.500 1,500,000 1,604,850
New Orleans Public Service, Inc. BBB 03/01/23 8.000 600,000 630,625
Northern Illinois Gas Company AA 08/15/21 8.875 1,000,000 1,071,576
Philadelphia Electric Company BBB+ 09/01/22 8.250 1,000,000 1,071,564
Potomac Electric Power Company A 06/01/21 9.000 1,000,000 1,150,005
Public Service Electric & Gas A- 09/01/24 7.000 1,000,000 985,626
Southern California Edison Co. A+ 12/01/17 8.375 655,000 667,779
Virginia Electric & Power Company A 10/01/24 8.625 1,000,000 1,141,564
West Penn Power Company A+ 08/01/24 8.125 1,000,000 1,135,277
ELECTRIC EQUIPMENT - 1.9%
Essex Group, Inc. B+ 05/01/03 10.000 1,000,000 985,255
Philips Electronics N.V. BBB+ 08/15/13 7.250 1,000,000 1,045,002
Westinghouse Electric Corp. B+ 06/01/01 8.875 250,000 263,857
Westinghouse Electric Corp. B+ 08/01/12 8.625 375,000 381,211
ELECTRONICS - 0.8%
ADT Operations, Inc. BB+ 08/01/03 9.250 500,000 529,688
Rogers Communications, Inc. BB- 04/15/04 10.875 500,000 525,000
ENVIRONMENTAL - 0.8%
Laidlaw, Inc. BBB+ 05/15/23 8.250 1,000,000 1,104,340
</TABLE>
See Notes To Financial Statements
39
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - 2.1%
Auburn Hills Trust A- 05/01/20 12.000 $ 400,000 $ 611,079
CRA Finance USA, Ltd. AA- 12/01/13 7.125 500,000 516,136
Dean Witter Discover & Company A 10/15/13 6.750 1,250,000 1,245,159
Keystone Group, Inc. BB- 09/01/03 9.750 500,000 505,012
FOOD PROCESSING - 2.0%
Chiquita Brands Int'l, Inc. B+ 01/15/04 9.625 1,000,000 1,020,057
ConAgra, Inc. BBB- 03/01/21 9.750 500,000 652,657
Nabisco, Inc. BBB 06/15/15 7.550 1,000,000 1,052,933
FOREIGN GOVERNMENT - 4.0%
Province of Newfoundland BBB+ 10/22/22 8.650 1,000,000 1,165,852
Province of Nova Scotia A- 07/27/13 7.250 1,000,000 1,047,814
Province of Quebec A+ 12/01/26 8.625 1,000,000 1,190,199
Province of Saskatchewan BBB+ 02/01/13 8.000 1,000,000 1,122,712
Republic of Finland AA- 04/01/28 9.625 1,000,000 1,109,320
GROCERY - 1.4%
Penn Traffic Company BB- 02/15/02 10.250 1,000,000 951,870
Ralph's Grocery Company B 06/15/04 10.450 250,000 254,297
Ralph's Grocery Company B- 06/15/05 13.750 194,000 206,987
Safeway, Inc. BB+ 03/15/07 9.875 450,000 509,530
HOTEL / GAMING - 1.7%
Caesars World, Inc. BBB- 08/15/02 8.875 500,000 535,092
California Hotel Finance Corp. BB- 12/01/02 11.000 400,000 426,014
Empress River Casino Finance Corp. BB 04/01/02 10.750 500,000 518,689
Showboat, Inc. BB- 05/01/08 9.250 400,000 401,125
Station Casinos B+ 06/01/03 9.625 500,000 495,485
INSURANCE - 7.0%
Aetna Life & Casualty Company A- 09/15/13 6.750 1,000,000 976,251
CIGNA Corporation BBB+ 03/01/23 7.650 500,000 515,626
CNA Financial Corporation A- 11/15/23 7.250 1,000,000 1,005,094
Continental Corporation BBB- 08/15/12 8.375 600,000 682,646
Kaufman & Broad Home Corp. BB- 05/01/03 9.375 1,000,000 998,537
Leucadia National Corporation BBB+ 08/15/13 7.750 910,000 863,059
</TABLE>
See Notes To Financial Statements
40
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
INSURANCE - 7.0% (Continued)
MBIA, Inc. AA 10/01/22 8.200 $2,000,000 $ 2,264,016
Metropolitan Life Insurance Co.* AA 11/01/23 7.450 500,000 502,555
Penncorp Financial Group, Inc. BB+ 12/15/03 9.250 500,000 477,500
Reliance Group Holdings, Inc. BB+ 11/15/00 9.000 1,000,000 1,030,000
Vesta Insurance Group BBB+ 07/15/25 8.750 500,000 554,476
MEDICAL SERVICES - 1.6%
Abbey Healthcare Group, Inc. BB+ 11/01/02 9.500 500,000 534,258
Columbia/HCA Healthcare Corporation BBB+ 12/15/14 9.000 1,000,000 1,216,321
HEALTHSOUTH Rehabilitation B 04/01/01 9.500 500,000 535,704
MEDICAL SUPPLIES - 0.5%
Cardinal Health, Inc. A- 02/15/04 6.500 700,000 711,021
METALS & MINING - 2.4%
Alcan Aluminum Ltd. A- 01/15/22 8.875 1,000,000 1,144,236
Inco Ltd. BBB- 06/15/22 9.600 500,000 586,380
Kaiser Aluminum & Chemical Corp. B- 02/01/03 12.750 500,000 526,298
Placer Dome, Inc. BBB 06/15/15 7.750 1,000,000 1,034,109
NATURAL GAS - 1.5%
Consolidated Natural Gas Company AA- 12/01/11 8.625 1,000,000 1,059,098
Seagull Energy BB- 08/01/05 8.625 1,000,000 969,169
OILFIELD SERVICES - 0.2%
Rowan Companies, Inc. B+ 12/01/01 11.875 250,000 271,485
PACKAGING & CONTAINERS - 0.5%
Container Corp. of America B+ 04/01/03 9.750 400,000 389,875
Owens Illinois, Inc. B+ 08/15/04 9.750 250,000 261,407
PAPER & FOREST PRODUCTS - 3.1%
Bowater, Inc. BBB 10/15/12 9.500 700,000 868,337
Domtar, Inc. BB 03/15/99 11.750 750,000 839,535
Fort Howard Corporation B 03/15/03 10.000 400,000 414,428
Georgia-Pacific Corporation BBB- 07/01/22 9.125 1,000,000 1,125,314
Sweetheart Corporation, Inc. B+ 09/01/00 9.625 1,000,000 1,031,374
</TABLE>
See Notes To Financial Statements
41
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PETROLEUM - 6.4%
ANR Pipeline Company BBB- 11/01/21 9.625 $1,000,000 $ 1,277,624
Clark Oil & Refining Corporation BB 09/15/04 9.500 650,000 672,536
Diamond Shamrock R & M, Inc. BBB 04/01/23 8.000 600,000 646,318
Louisiana Land & Exploration Co. BBB 04/15/13 7.625 1,000,000 1,049,689
Maxus Energy Corporation BB- 11/01/03 9.375 750,000 743,154
Maxus Energy Corporation BB- 02/15/03 9.500 1,000,000 1,012,668
NOVA Gas Transmission A- 04/01/23 7.875 600,000 669,269
OXY USA, Inc. BBB 04/15/11 7.000 1,000,000 993,439
Phillips Petroleum Company BBB 01/01/23 8.490 1,000,000 1,093,967
USX Corporation BB+ 02/15/12 9.375 750,000 879,376
RAILROAD - 0.4%
Kansas City Southern Industries, In BBB+ 07/01/22 8.800 500,000 564,535
REAL ESTATE INVESTMENT TRUST - 0.6%
Taubman Realty Group Ltd. BBB 10/01/03 7.000 750,000 769,387
RECREATION - 1.8%
Bally's Health & Tennis Corp. B- 01/15/03 13.000 500,000 420,663
Brunswick Corporation BBB+ 09/01/23 7.375 975,000 1,020,727
Time Warner, Inc. BBB- 01/15/13 9.125 1,000,000 1,130,000
RETAIL STORE - 4.7%
Best Buy, Inc. B+ 10/01/00 8.625 1,000,000 991,862
Dayton Hudson Corporation BBB+ 08/01/23 7.650 750,000 778,542
Genesco, Inc. B 02/01/03 10.375 425,000 385,240
Hechinger Company BB- 11/15/12 9.450 600,000 437,880
Kmart Corporation BBB 10/01/12 7.750 1,000,000 627,810
May Department Stores A 12/01/16 9.125 1,000,000 1,056,347
Rite-Aid Corporation A- 08/15/13 6.875 1,000,000 986,250
Sears, Roebuck & Company BBB 11/01/11 9.375 1,000,000 1,250,408
SECURITIES BROKERAGE - 3.9%
Bear Stearns Companies, Inc. A 01/15/04 6.625 1,000,000 1,012,501
Goldman Sachs Group* A+ 03/01/13 8.000 1,000,000 983,850
Lehman Brothers, Inc. A 05/15/05 11.625 1,023,000 1,374,358
Morgan Stanley Group, Inc. A+ 10/01/13 7.000 1,000,000 1,007,189
Paine Webber Group, Inc. BBB+ 02/15/14 7.625 1,000,000 1,040,154
</TABLE>
See Notes To Financial Statements
42
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- - ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
FIXED INCOME SECURITIES CREDIT MATURITY PRINCIPAL MARKET
ISSUE RATING DATE COUPON AMOUNT VALUE
- - ----------------------------------- -------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
STEEL - 1.1%
AK Steel Corporation BB- 04/01/04 10.750 $ 500,000 $ 557,582
Jorgensen, Earle M. Company B 03/01/00 10.750 500,000 461,565
Wheeling-Pittsburgh Corporation BB- 11/15/03 9.375 500,000 476,407
TELECOMMUNICATIONS SERVICE - 5.2%
GTE Corporation BBB+ 11/01/21 8.750 1,000,000 1,208,232
NYNEX Corporation A 12/15/11 7.375 500,000 511,820
Paging Network, Inc. B 02/01/06 8.875 1,000,000 1,018,439
Panamsat L.P. BB- 08/01/00 9.750 500,000 528,282
Southern Bell Telephone & Telegraph AAA 03/15/13 7.625 3,000,000 3,081,566
Southwestern Bell Telephone Company AA 05/01/12 7.375 1,000,000 1,023,132
TEXTILES - 1.2%
Fieldcrest Cannon, Inc. B+ 06/15/04 11.250 1,000,000 961,980
WestPoint Stevens, Inc. BB- 12/15/01 8.750 750,000 752,110
TOBACCO - 0.6%
RJR Nabisco, Inc. BBB- 04/15/04 8.750 775,000 800,188
U.S. GOVERNMENT - 2.4%
U.S. Treasury 08/15/05 6.500 1,000,000 1,066,094
U.S. Treasury 08/15/23 6.250 750,000 771,680
U.S. Treasury 05/31/96 5.875 1,468,000 1,471,670
------------
TOTAL FIXED INCOME SECURITIES - 97.8%
(Cost $127,728,831) $136,225,797
============
</TABLE>
* Security exempt from registration under Rule 144A of the
Securities Act of 1933
See Notes To Financial Statements
43
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY LONG TERM RETIREMENT
GROWTH BOND BALANCED INCOME INCOME
------------ ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities . . . . . . . . . $ 25,173,380 $ 4,436,523 $ 58,498,623 $ 1,401,390 $ 136,225,797
Cash . . . . . . . . . . . . . . . . . . . . 526,474 9,400 385,430 19,880 220,544
Dividends and interest receivable . . . . . 7,400 85,681 495,822 28,862 2,977,030
Prepaid expenses . . . . . . . . . . . . . . 2,932 1,570 5,775 1,051 10,747
------------ ----------- ------------ ----------- -------------
Total assets . . . . . . . . . . . . . . . . 25,710,186 4,533,174 59,385,650 1,451,183 139,434,118
LIABILITIES
Payable to affiliated entities
Investment advisory fees. . . . . 14,647 1,496 34,294 478 57,398
Distribution fees . . . . . . . . 5,231 0 12,248 0 28,699
Accounts payable and accrued expenses . . . 8,929 1,348 15,277 213 43,041
Securities purchased . . . . . . . . . . 56,233 0 21,877 0 0
Distributions payable . . . . . . . . . . 0 3,217 3,184 125 5,752
------------ ----------- ------------ ----------- -------------
Total liabilities . . . . . . . . . . . . 85,040 6,061 86,880 816 134,890
------------ ----------- ------------ ----------- -------------
Net assets . . . . . . . . . . . . . $ 25,625,146 $ 4,527,113 $ 59,298,770 $ 1,450,367 $ 139,299,228
============ =========== ============ =========== =============
NET ASSETS
Paid-in capital . . . . . . . . . . . . $ 19,750,650 $ 4,202,661 $ 48,313,208 $ 1,383,171 $ 131,316,542
Accumulated undistributed net realized
loss on investments . . . . . . . (256,650) (15,960) 0 (5,759) (514,280)
Net unrealized appreciation in value
of investments . . . . . . . . . 6,131,146 340,412 10,985,562 72,955 8,496,966
------------ ----------- ------------ ----------- -------------
Net assets . . . . . . . . . . . . . $ 25,625,146 $ 4,527,113 $ 59,298,770 $ 1,450,367 $ 139,299,228
============ =========== ============ =========== =============
SHARES OUTSTANDING . . . . . . . . . . . . 2,044,498 419,747 4,718,511 134,536 13,251,408
============ =========== ============ =========== =============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE . . . . . . . . $ 12.53 $ 10.79 $ 12.57 $ 10.78 $ 10.51
============ =========== ============ =========== =============
</TABLE>
See Notes To Financial Statements
44
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
- - ---------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY LONG TERM RETIREMENT
GROWTH BOND BALANCED INCOME INCOME
------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . $ 31,562 $ 317,443 $ 1,376,644 $ 100,147 $ 10,160,207
Dividends . . . . . . . . . . . . . . . . 135,211 0 771,839 0 0
------------ ----------- ------------- ----------- -------------
Total investment income . . . . . . . . . 166,773 317,443 2,148,483 100,147 10,160,207
EXPENSES
Paid to affiliates:
Investment advisory fees . . . . 140,215 17,244 359,848 5,290 602,008
Administration fees . . . . . . . 0 0 0 0 0
Distribution fees . . . . . . . . 50,077 0 128,517 0 301,004
Transfer and dividend disbursing
agent fees . . . . . . . . . 0 0 0 0 0
Paid to others:
Custodial fees . . . . . . . . . 17,458 2,106 24,188 1,332 5,242
Directors fees and expenses . . . 452 108 1,249 0 2,842
Professional fees . . . . . . . . 4,529 1,037 11,940 0 27,710
Shareholder reporting costs . . . 4,695 1,093 12,779 82 29,886
Registration and filing fees . . 4,114 1,473 3,636 1,369 18,409
Other operating expenses . . . . 2,178 583 5,935 304 14,332
------------ ----------- ------------- ----------- -------------
Total expenses . . . . . . . . . . . . . . 223,718 23,644 548,092 8,377 1,001,433
------------ ----------- ------------- ----------- -------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . (56,945) 293,799 1,600,391 91,770 9,158,774
REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from securities sold . . . . . . 2,697,991 281,803 11,500,300 22,195 20,170,735
Cost of securities sold . . . . . . . . . (2,381,476) (269,958) (10,045,028) (21,508) (20,480,515)
------------ ----------- ------------- ----------- -------------
Net realized gain (loss) on investment . . 316,515 11,845 1,455,272 687 (309,780)
UNREALIZED GAIN ON INVESTMENTS
Appreciation (depreciation),
Beginning of year. . . . . . . . . . . . 140,944 (143,464) 135,558 (131,206) (7,293,366)
Appreciation, End of year . . . . . . . . 6,131,146 340,412 10,985,562 72,955 8,496,966
------------ ----------- ------------- ----------- -------------
Net unrealized gain on investments . . . . 5,990,202 483,876 10,850,004 204,161 15,790,332
------------ ----------- ------------- ----------- -------------
NET GAIN ON INVESTMENTS 6,306,717 495,721 12,305,276 204,848 15,480,552
------------ ----------- ------------- ----------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,249,772 $ 789,520 $ 13,905,667 $ 296,618 $ 24,639,326
============ =========== ============= =========== =============
</TABLE>
See Notes To Financial Statements
45
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
- - --------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH BOND
----------------------------- ---------------------------
1995 1994 1995 1994
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . $ (56,945) $ (31,711) $ 293,799 $ 303,948
Net realized gain (loss) on investments . . . . 316,515 (573,165) 11,845 (27,805)
Net unrealized gain (loss) on investments . . . 5,990,202 212,430 483,876 (488,493)
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets resulting
from operations. . . . . . . . . . . . . . . . 6,249,772 (392,446) 789,520 (212,350)
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . 0 0 (293,799) (303,948)
Net realized gain on investments . . . . . . . . 0 0 0 0
-------------- ------------- ------------ -------------
Total distributions to shareholders . . . . . . 0 0 (293,799) (303,948)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . 8,534,816 7,528,321 654,515 695,361
Reinvestment of distributions . . . . . . . . . 0 0 250,365 269,884
Cost of shares reacquired . . . . . . . . . . . (1,793,152) (2,078,769) (872,964) (1,190,895)
-------------- ------------- ------------ -------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . 6,741,664 5,449,552 31,916 (225,650)
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets . . . . . 12,991,436 5,057,106 527,637 (741,948)
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . 12,633,710 7,576,604 3,999,476 4,741,424
-------------- ------------- ------------ -------------
End of year . . . . . . . . . . . . . . . . . . $ 25,625,146 $ 12,633,710 $ 4,527,113 $ 3,999,476
============== ============= ============ =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . 822,812 814,695 63,642 69,169
Shares issued from reinvestment of distributions 0 0 24,367 26,963
Reacquired . . . . . . . . . . . . . . . . . . . (169,448) (224,684) (84,347) (118,389)
-------------- ------------- ------------ -------------
Net increase (decrease) in shares outstanding. . 653,364 590,011 3,662 (22,257)
Outstanding:
Beginning of year . . . . . . . . . . 1,391,134 801,123 416,085 438,342
-------------- ------------- ------------ -------------
End of year . . . . . . . . . . . . . 2,044,498 1,391,134 419,747 416,085
============== ============= ============ =============
</TABLE>
See Notes To Financial Statements
46
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
- - --------------------------------------------------------------------
<TABLE>
<CAPTION> LONG TERM
BALANCED INCOME
----------------------------- ---------------------------
1995 1994 1995 1994
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . $ 1,600,391 $ 1,448,188 $ 91,770 $ 83,318
Net realized gain (loss) on investments . . . . 1,455,272 (597,213) 687 (6,446)
Net unrealized gain (loss) on investments . . . 10,850,004 (2,140,483) 204,161 (154,400)
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets resulting
from operations. . . . . . . . . . . . . . . . 13,905,667 (1,289,508) 296,618 (77,528)
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . (1,600,391) (1,448,188) (91,770) (83,318)
Net realized gain on investments . . . . . . . . (675,694) 0 0 0
-------------- ------------- ------------ -------------
Total distributions to shareholders . . . . . . (2,276,085) (1,448,188) (91,770) (83,318)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . 6,216,671 6,839,769 88,084 367,113
Reinvestment of distributions . . . . . . . . . 2,254,669 1,432,265 90,571 83,061
Cost of shares reacquired . . . . . . . . . . . (5,022,865) (8,003,667) (95,945) (205,843)
-------------- ------------- ------------ -------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . 3,448,475 268,367 82,710 244,331
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets . . . . . 15,078,057 (2,469,329) 287,558 83,485
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . 44,220,713 46,690,042 1,162,809 1,079,324
-------------- ------------- ------------ -------------
End of year . . . . . . . . . . . . . . . . . . $ 59,298,770 $ 44,220,713 $ 1,450,367 $ 1,162,809
============== ============= ============ =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . 537,704 663,867 8,833 36,367
Shares issued from reinvestment of distributions 190,968 140,863 8,984 8,643
Reacquired . . . . . . . . . . . . . . . . . . . (445,049) (782,820) (9,616) (20,487)
-------------- ------------- ------------ -------------
Net increase (decrease) in shares outstanding. . 283,623 21,910 8,201 24,523
Outstanding:
Beginning of year . . . . . . . . . . 4,434,888 4,412,978 126,335 101,812
-------------- ------------- ------------ -------------
End of year . . . . . . . . . . . . . 4,718,511 4,434,888 134,536 126,335
============== ============= ============ =============
</TABLE>
See Notes To Financial Statements
47
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - Continued
YEARS ENDED DECEMBER 31
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT
INCOME
-----------------------------
1995 1994
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . $ 9,158,774 $ 5,222,488
Net realized gain (loss) on investments . . . . (309,780) (204,500)
Net unrealized gain (loss) on investments . . . 15,790,332 (8,426,355)
-------------- -------------
Net increase (decrease) in net assets resulting
from operations . . . . . . . . . . . . . . . 24,639,326 (3,408,367)
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . (9,158,774) (5,222,488)
Net realized gain on investments . . . . . . . . 0 0
-------------- -------------
Total distributions to shareholders . . . . . . (9,158,774) (5,222,488)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . 41,855,679 48,774,219
Reinvestment of distributions . . . . . . . . . 9,090,489 5,170,296
Cost of shares reacquired . . . . . . . . . . . (11,289,892) (8,494,349)
-------------- -------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . 39,656,276 45,450,166
-------------- -------------
Net increase (decrease) in net assets . . . . . 55,136,828 36,819,311
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . 84,162,400 47,343,089
-------------- -------------
End of year . . . . . . . . . . . . . . . . . . $ 139,299,228 $ 84,162,400
============== =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . 4,342,406 4,966,047
Shares issued from reinvestment of distributions 907,982 538,445
Reacquired . . . . . . . . . . . . . . . . . . . (1,130,935) (864,791)
-------------- -------------
Net increase (decrease) in shares outstanding. . 4,119,453 4,639,701
Outstanding:
Beginning of year . . . . . . . . . . 9,131,955 4,492,254
-------------- -------------
End of year . . . . . . . . . . . . . 13,251,408 9,131,955
============== =============
</TABLE>
See Notes To Financial Statements
48
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION OF THE COMPANY
Advance Capital I, Inc. (The COMPANY) is a Maryland
Corporation organized on March 6, 1987 and commenced operations
on August 5, 1987. The COMPANY is registered under the
Investment Company Act of 1940, as amended, as an open-end,
diversified management investment company (a mutual fund)
offering shares in the Equity Growth Fund, Bond Fund, Balanced
Fund, Long Term Income Fund and Retirement Income Fund.
NOTE 2. ACCOUNTING POLICIES
The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts and
disclosures in the financial statements. Actual results could
differ from these estimates.
The following is a summary of significant accounting
policies followed by the COMPANY.
Security Valuation
Securities for which exchanged quotations are readily
available are valued at the last sale price, or if no sale
price, at the closing bid price. Securities (including
restricted securities) for which exchange quotations are not
readily available (and in certain cases debt securities which
trade on an exchange), are valued primarily using dealer
supplied valuations or at their fair value as determined in good
faith under consistently applied procedures under the general
supervision of the Board of Directors. Money market instruments
held by the Funds with a remaining maturity of sixty days or
less will be valued at cost which approximates market.
Expenses
Most expenses of the Company can be directly attributed to
a fund. Expenses which cannot be directly attributed are
apportioned between the Funds on the basis of average net assets.
Federal Income Taxes
It is the Company's policy to meet the requirements of the
Internal Revenue Code that are applicable to regulated
investment companies and to distribute all of its taxable income
to its shareholders. Therefore, no federal income tax provision
is provided.
Other
Fixed income security transactions are accounted for on the
trade date, the date the order to buy or sell is executed.
Common stock transactions are accounted for on the day after the
transactions occur (trade date plus one). Interest income is
recorded on the accrual basis. Dividend income is recorded on
the ex-dividend date. Premium and discount amortization on
fixed income
49
<PAGE>
NOTE 2. ACCOUNTING POLICIES (CONTINUED)
securities are amortized using the effective interest method.
Realized gains and losses on security transactions are
determined on the first-in, first-out method. Net investment
losses, for which no carryover is permitted, are offset against
paid in capital.
NOTE 3. TRANSACTIONS WITH AFFILIATES
Advance Capital Management, Inc. (MANAGEMENT) (a wholly
owned subsidiary of Advance Capital Group, Inc.) is the
COMPANY'S investment adviser. Advance Capital Services, Inc.
(SERVICES) (also a wholly owned subsidiary of Advance Capital
Group, Inc.) is the distributor of the Company's shares.
Advance Capital Group, Inc. (GROUP) is the Company's Transfer
Agent and Dividend Disbursing Agent. For services provided by
MANAGEMENT, the COMPANY pays a fee equal on an annual basis to
.70% of the average daily net assets of the Equity Growth and
Balanced Funds, .50% of the average daily net assets of the
Retirement Income Fund, and .40% of the average daily net assets
of the Bond and Long Term Income Funds. GROUP provides
administrative, transfer agent and dividend disbursing agent
services to the COMPANY. The COMPANY will reimburse SERVICES
for actual expenses incurred in connection with the distribution
of fund shares of the Equity Growth, Balanced and Retirement
Income Funds, at a rate not to exceed .25% of each fund's
average daily net assets.
The COMPANY was charged investment advisory fees of
$1,124,605 by MANAGEMENT for 1995. The COMPANY was charged
distribution fees of $479,598 by SERVICES for 1995. SERVICES
paid or accrued to brokerage firms a total of $17,623 for
distributing COMPANY shares for 1995. At December 31, 1995 an
employee retirement plan sponsored by SERVICES owned 67,379
shares (3.3%) of the Equity Growth Fund and 838 shares (0.0%) of
the Balanced Fund.
Certain officers and directors of GROUP, MANAGEMENT, and
SERVICES, are also officers and directors of the COMPANY.
Directors fees are only paid to outside directors and consist of
a $1,000 annual retainer and an additional $100 per meeting.
NOTE 4. INVESTMENT PORTFOLIO TRANSACTIONS
The cost of purchases and proceeds from sales of
investments, other than short-term obligations, for 1995 were as
follows:
<TABLE>
<CAPTION>
Equity Long Term Retirement
Growth Bond Balanced Income Income
------- ----- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Purchases $9,631,090 $331,847 $14,208,108 $95,419 $56,804,501
Sales 2,697,991 281,803 11,500,300 22,195 17,919,328
</TABLE>
50
<PAGE>
NOTE 4. INVESTMENT PORTFOLIO TRANSACTIONS (CONTINUED)
The cost of purchases and proceeds from sales of U.S.
Government Securities included above were as follows:
<TABLE>
<CAPTION>
Equity Long Term Retirement
Growth Bond Balanced Income Income
------- ------ --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Purchases None $193,203 $1,555,234 $45,328 $15,695,559
Sales None 123,648 547,898 22,195 14,993,466
</TABLE>
Gross unrealized appreciation and depreciation of
investments as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Equity Long Term Retirement
Growth Bond Balanced Income Income
-------- ------ --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Appreciation $7,060,533 $342,453 $11,631,974 $85,280 $9,570,616
Depreciation 929,387 2,041 646,412 12,325 1,073,650
</TABLE>
NOTE 5. CASH
As of December 31, 1995, substantially all cash was
invested in the Monitor Money Market Fund, bearing interest at a
variable rate (approximately 5.5%).
NOTE 6. CAPITAL LOSS CARRYOVERS
For 1995, the Company utilized $316,515, $11,845, $779,579
and $687 of capital loss carryovers in the Equity Growth, Bond,
Balanced and Long Term Income Funds respectively. At December
31, 1995, capital loss carryovers and their expiration dates
were as follows:
<TABLE>
<CAPTION>
Equity Long Term Retirement
Growth Bond Income Income
------- ----- --------- ---------
<S> <C> <C> <C> <C>
December 31, 2002 $256,650 $15,960 $5,759 $204,500
December 31, 2003 0 0 0 309,780
------- ------ ----- -------
Total $256,650 $15,960 $5,759 $514,280
======= ====== ===== =======
</TABLE>
NOTE 7. AUTHORIZED SHARES
The Fund has one billion authorized shares of common stock,
par value of $.001 per share. Each of the Fund's five
portfolios has 200 million shares authorized.
51
<PAGE>
[Price Waterhouse Letterhead]
Report of Independent Accountants
January 26, 1996
To the Trustees and Shareholders of
Advance Capital I, Inc.
In our opinion, the accompanying statements of assets and
liabilities, including the portfolios of investments, and the
related statements of operations and of changes in net assets
and the financial highlights present fairly, in all material
respects, the financial position of the Equity Growth, Bond,
Balanced, Long Term Income and Retirement Income Funds
(constituting Advance Capital I, Inc., hereafter referred to as
the "Fund") at December 31, 1995 and the results of each of
their operations, the changes in each of their net assets and
the financial highlights for the year then ended, in conformity
with generally accepted accounting principles. These financial
statements and the financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit
in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audit, which included confirmation of securities at December 31,
1995 by correspondence with the custodian and brokers, provides
a reasonable basis for the opinion expressed above. The
financial statements of Advance Capital I, Inc. for the years
ended December 31, 1991 through December 31, 1994 were audited
by other independent accountants whose report dated February 15,
1995 expressed an unqualified opinion on those statements.
/s/ Price Waterhouse LLP
52
<PAGE>
ADDITIONAL INFORMATION (UNAUDITED)
CHANGE OF ACCOUNTANTS
Effective May 22, 1995, Correll Porvin & Associates
declined to stand for reelection as the Fund's independent
accountants. For the period of August 5, 1987 (commencement of
operations) to December 31, 1987 and for the years ended
December 31, 1988 through December 31, 1994 for the Equity
Growth Fund, Bond Fund and Balanced Fund and the years ended
December 31, 1993 through December 31, 1994 for the Long Term
Income Fund and Retirement Income Fund, Correll Porvin &
Associates expressed an unqualified opinion on the Fund's
financial statements. There were no disagreements between Fund
management and Correll Porvin & Associates prior to their
decision not to stand for reelection. On July 27, 1995, the
Board of Directors approved Price Waterhouse, LLP as the Fund's
independent accountants.
RESULTS OF ANNUAL SHAREHOLDER VOTE
An Annual Meeting of Shareholders of the COMPANY was held
at the Radisson Hotel, 1500 Town Center, Southfield, Michigan,
on July 27, 1995 for the following purposes:
1. To elect four Directors to hold office until the next
Annual Meeting of Shareholders or until their successors have been
elected and qualified.
<TABLE>
<CAPTION>
Directors Elected at Meeting Votes For
---------------------------- ---------
<S> <C>
Joseph A. Ahern 10,788,386
Richard W. Holtcamp 10,824,181
John C. Shoemaker 10,885,748
Frank R. Zimmerman 10,871,015
</TABLE>
2. To ratify the selection of Price Waterhouse, LLP as
independent public accountants of the COMPANY for the fiscal year
ending December 31,1995.
<TABLE>
<S> <C>
Votes For: 10,795,331
Votes Against: 0
Votes to Abstain: 138,229
</TABLE>
53
<PAGE>
ADVANCE CAPITAL I, INC. ADVANCE CAPITAL I INC.
An investment company with five funds
INVESTMENT ADVISER:
Advance Capital Management, Inc.
One Towne Square, Suite 444
Southfield, Michigan 48076
SUB-ADVISER:
(Equity Growth and Balanced Funds) EQUITY GROWTH FUND
BOND FUND
T. Rowe Price Associates, Inc. BALANCED FUND
100 East Pratt Street LONG TERM INCOME FUND
Baltimore, Maryland 21202 RETIREMENT INCOME FUND
DISTRIBUTOR:
Advance Capital Services, Inc.
P.O. Box 3144
Southfield, Michigan 48037
ADMINISTRATOR AND TRANSFER AGENT:
Advance Capital Group, Inc.
P.O. Box 3144
Southfield, Michigan 48037
CUSTODIAN:
Huntington Banks of Michigan
220 Park Street, Suite 100
Birmingham, Michigan 48009
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
BOARD OF DIRECTORS:
Joseph A. Ahern
Richard W. Holtcamp
John C. Shoemaker ANNUAL REPORT
Frank R. Zimmerman DECEMBER 31, 1995
<PAGE>
FORM N-1A
Part C - Other Information
Item 24. Financial Statements and Exhibits.
-----------------------------------
(a) Financial Statements. Included with the Statement of Additional
---------------------
Information is the following:
# (1) Annual Report for the year ended December 31, 1995.
All required financial statements are included in Part B.
(b) Exhibits.
---------
(1) Articles of Incorporation filed March 6, 1987.
(i) Amendment to Articles of Incorporation approved by shareholder
vote July 24, 1992.
(2) By-laws as approved and adopted by Registrant's Board of Directors.
(3) None.
(4) Specimen copy of each security issued by Registrant.
(i) Class A Common Shares.
(ii) Class B Common Shares.
(iii) Class C Common Shares.
(iv) Class D Common Shares.
(v) Class E Common Shares.
(5) Investment Advisory Agreement between Registrant and Advance Capital
Management, Inc. dated August 3, 1987 and amended July 24, 1992.
(i) Board Resolution dated July 24, 1992.
(ii) Sub-Investment Advisory Agreements between Advance Capital
Management, Inc. and T. Rowe Price Associates, Inc. dated December
21, 1993 for Class A and December 17, 1993 for Class C.
(6) Distribution Agreement between Registrant and Advance Capital
Services, Inc. dated August 3, 1987.
(i) Board Resolution dated July 24, 1992.
(7) None.
(8) Custodian Agreements between Registrant and Huntington Banks of
Michigan dated June 17, 1992 for Class A, Class B and Class C and
August 5, 1992 for Class D and Class E.
(9) Administration and Transfer Agent Agreement between Registrant and
Advance Capital Services, Inc. dated April 28, 1987 and amended July
9, 1992.
(i) Board Resolution dated July 24, 1992.
(ii) Administration and Transfer Agent Agreement between Registrant and
Advance Capital Group, Inc. dated December 23, 1993.
* (10) Opinion and consent of counsel.
(11) Other consents.
# (i) Consent of Price Waterhouse LLP.
# (ii) Consent of Messrs. Berry, Moorman, King & Hudson
(12) None.
(13) Purchase Agreement between Registrant and Investors dated August 3,
1987.
(14) Not applicable.
(15) Plan of Distribution dated August 3, 1987, approved by shareholders
July 22, 1988 and amended January 2, 1992.
(i) Board Resolution Dated April 24, 1992.
(ii) Board Resolution Dated July 24, 1992.
(16) Not applicable.
* Filed under Rule 24f-2 as part of Registrant's Rule 24f-2
notice.
# Filed with this amendment.
Item 25. Persons Controlled By or Under Common Control with Registrant.
-------------------------------------------------------------
Included in Part B - Statement of Additional Information under the
heading of Control Persons and Principal Holders of Securities is a
detailed description of the principal holders of securities, including
those that own more than 5% and the detailed holdings of directors and
officers of the Company.
The holdings as of April 19, 1996 for Messrs. Raymond Rathka, John C.
Shoemaker and Robert J. Cappelli, who are directors and officers of the
Registrant's Investment Adviser, Advance Capital Management, Inc. and
of the Registrant's transfer agent and administrator, Advance Capital
Services, Inc., are included in that section of Part B mentioned in the
preceding paragraph.
Item 26. Number of Holders of Securities
--------------------------------
As of April 19, 1996
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
<S> <C>
Class A 1,064
Class B 123
Class C 959
Class D 28
Class E 1,102
</TABLE>
Item 27. Indemnification
----------------
Article VII, Section 3 of Registrant's Articles of
Incorporation, incorporated by reference as Exhibit (1) hereto,
and Article VI, Section 2 of Registrant's Bylaws, incorporated
by reference as Exhibit (2) hereto, provides for the
indemnification of Registrant's directors and officers.
Indemnification of the Registrant's principal underwriter is
provided for in Section 4 of the Distribution Agreement,
incorporated by reference as Exhibit (6) hereto. In no event
will Registrant indemnify any of its directors, officers,
employees, or agents against any liability to which said person
would otherwise be subject by reason of his willful misfeasance,
bad faith, or gross negligence in the performance of his duties,
or by reason of his reckless disregard of the duties involved in
the conduct of his office or under his agreement with
Registrant. Registrant will comply with Rule 484 under the
Securities Act of 1933 and Release No. 11330 under the
Investment Company Act of 1940 in connection with any
indemnification.
Insofar as indemnification for liability arising under
the Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission
such indemnifications against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a
director, officer, or controlling person of Registrant in the
successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in
connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser.
-----------------------------------------------------
Advance Capital Management, Inc. ("Management") is a
Michigan corporation established in 1986 for the purpose of
providing investment management services. Management, a
registered investment adviser with the Securities and Exchange
Commission and the State of Michigan, is a wholly owned
subsidiary of Advance Capital Group, Inc.("Group"). Group also
owns Advance Capital Services, Inc. ("Services") a financial
services company that is a licensed National Association of
Securities Dealers, Inc. broker-dealer. The owners of Group and
the directors and officers of Services and Management are the
same three individuals, Raymond A. Rathka, John C. Shoemaker,
and Robert J. Cappelli. The address for all three companies is
One Towne Square, Suite 444, Southfield, Michigan, 48076. The
chart below shows the ownership and control of these three firms
and of the Registrant as well.
Position Group Services Management Registrant
- - -------- ----- --------- ---------- ----------
Owner(s) Cappelli Group Group Shareholders
Rathka
Shoemaker
Directors Cappelli Cappelli Cappelli Ahern,J. A.
Rathka Rathka Rathka Holtcamp, R.W.
Shoemaker Shoemaker Shoemaker
Zimmerman, F.R.
President Rathka Cappelli Shoemaker Shoemaker
Vice President Shoemaker Shoemaker Cappelli Rathka
Treasurer Cappelli Rathka Rathka Cappelli
Secretary Shoemaker Shoemaker Shoemaker Cappelli
Item 29. Principal Underwriters.
----------------------
Advance Capital Services, Inc.("Services") is a Michigan
corporation which was established in 1986 to provide financial
services and broker-dealer services. Currently, it is not
distributing securities for any other investment companies. The
directors and officers of Services are identified in Item 28
above.
Item 30. Location of Accounts and Records
----------------------------------
(1) Advance Capital Management, Inc., One Towne Square, Suite 444,
Southfield, Michigan, 48076 (records relating to its functions as
investment adviser).
(2) Advance Capital Services, Inc., One Towne Square, Suite 444,
Southfield, Michigan 48076 (records relating to its functions as
distributor).
(3) Advance Capital Group, Inc., One Towne Square, Suite 444, Southfield,
Michigan 48076 (records relating to its functions as administrator and
transfer agent).
(4) Huntington Banks of Michigan, 220 Park Street, Suite 100, Birmingham,
Michigan 48009 (records relating to its functions as custodian).
(5) Berry, Moorman, King & Hudson, 600 Woodbridge Place, Detroit,
Michigan 48226 (Registrant's Articles of Incorporation and Bylaws).
Item 31. Management Services.
--------------------
Inapplicable.
Item 32. Undertakings.
-------------
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective
Amendment No. 19 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
ADVANCE CAPITAL I, INC.
Registrant
By /s/ Robert J. Cappelli 4/29/96
---------------------------- --------
Robert J. Cappelli - Secretary Date
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
Principal Executive Officer:
/s/ John C. Shoemaker 4/29/96
- - ---------------------------- --------
John C. Shoemaker - President and Director Date
Principal Financial Officer:
/s/ Robert J. Cappelli 4/29/96
- - ---------------------------- --------
Robert J. Cappelli - Treasurer Date
Directors:
/s/ Joseph A. Ahern 4/22/96
- - ---------------------------- --------
Joseph A. Ahern Date
/s/ Richard W. Holtcamp 4/20/96
- - ---------------------------- --------
Richard W. Holtcamp Date
/s/ Frank R. Zimmerman 4/24/96
- - ---------------------------- --------
Frank R. Zimmerman Date
<PAGE>
[Berry, Moorman, King & Hudson Letterhead]
Detroit Office
April 23, 1996
Ms. Melanie Bascom-Keller
Advance Capital I, Inc.
1 Towne Square
Suite 444
Southfield, MI 48076
Dear Ms. Bascom-Keller:
We hereby consent to the reference to our firm's name as
legal counsel to Advance Capital I, Inc. included in the April
30, 1996 amendment to the Company's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission.
Very truly yours,
BERRY, MOORMAN, KING & HUDSON, P.C.
By: /s/ George R. Sokoly
- - ----------------------------
George R. Sokoly
GRS:lal
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus and Statement of Additional Information constituting
parts of this Post-Effective Amendment No. 19 to the
registration statement on Form N-1A (the "Registration
Statement") of our report dated January 26, 1996 relating to the
financial statements and financial highlights appearing in the
December 31, 1995 Annual Report to Shareholders of Advance
Capital I, Inc., which is also incorporated by reference into
the Registration Statement. We also consent to the references
to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Independent Accountants" in the Statement
of Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Milwaukee, Wisconsin
April 25, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> EQUITY GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 19,568,708
<INVESTMENTS-AT-VALUE> 25,699,854
<RECEIVABLES> 7,400
<ASSETS-OTHER> 2,932
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25,710,186
<PAYABLE-FOR-SECURITIES> 56,233
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28,807
<TOTAL-LIABILITIES> 85,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,750,650
<SHARES-COMMON-STOCK> 2,044,498
<SHARES-COMMON-PRIOR> 1,391,134
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (256,650)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,131,146
<NET-ASSETS> 25,625,146
<DIVIDEND-INCOME> 135,211
<INTEREST-INCOME> 31,562
<OTHER-INCOME> 0
<EXPENSES-NET> 223,718
<NET-INVESTMENT-INCOME> (56,945)
<REALIZED-GAINS-CURRENT> 316,515
<APPREC-INCREASE-CURRENT> 5,990,202
<NET-CHANGE-FROM-OPS> 6,249,772
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 822,812
<NUMBER-OF-SHARES-REDEEMED> 169,448
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 12,991,436
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (573,165)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 140,215
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,718
<AVERAGE-NET-ASSETS> 19,974,651
<PER-SHARE-NAV-BEGIN> 9.08
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 3.48
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.53
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,105,511
<INVESTMENTS-AT-VALUE> 4,445,923
<RECEIVABLES> 85,681
<ASSETS-OTHER> 1,570
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,533,174
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,061
<TOTAL-LIABILITIES> 6,061
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,202,661
<SHARES-COMMON-STOCK> 419,747
<SHARES-COMMON-PRIOR> 416,085
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (15,960)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 340,412
<NET-ASSETS> 4,527,113
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 317,443
<OTHER-INCOME> 0
<EXPENSES-NET> 23,644
<NET-INVESTMENT-INCOME> 293,799
<REALIZED-GAINS-CURRENT> 11,845
<APPREC-INCREASE-CURRENT> 483,876
<NET-CHANGE-FROM-OPS> 789,520
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 293,799
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 63,642
<NUMBER-OF-SHARES-REDEEMED> 83,347
<SHARES-REINVESTED> 24,367
<NET-CHANGE-IN-ASSETS> 527,637
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (27,805)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17,244
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,644
<AVERAGE-NET-ASSETS> 4,318,364
<PER-SHARE-NAV-BEGIN> 9.61
<PER-SHARE-NII> .70
<PER-SHARE-GAIN-APPREC> 1.18
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NUMBER> 003
<NAME> BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 004
<NAME> LONG TERM INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,348,315
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 005
<NAME> RETIREMENT INCOME FUND
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 127,949,375
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</TABLE>
