<PAGE>
ANNUAL REPORT
December 31, 1996
ADVANCE CAPITAL I, Inc.
An investment company with five funds
<PAGE>
TABLE OF CONTENTS
- ----------------------------------------
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
Report of Independent Accountants....53
Additional Information...............54
<PAGE>
Dear Shareholders,
The year 1996 marked the second consecutive year of double
digit stock returns. It was also one of the best performing
back-to-back-year periods in history. After a rather
uninteresting 1994, these two years could not have better
reinforced the concepts of staying the course and investing for
the long term. Those late-1994 investors who, tempted by the
headlines, reallocated their portfolios from stocks have paid a
high price for their lesson. In the two years since, the S&P
500 Index has returned 61.3 percent and the Dow Jones Industrial
Average has returned 68.2 percent. Long term history continues
to be the best guide for long term investing. Headlines can be
a great distraction and, if heeded, a great detriment to
performance.
Today factories are operating near capacity, corporate
profits are strong, unemployment is low and consumer confidence
and spending remain high. The Federal Reserve's three year
commitment to control inflation and produce the proverbial "soft
landing" appears to have worked. This record-setting prosperity
continues to encourage investors to move stocks to higher and
higher levels. This very success itself is now worrying an
increasing number of investors. One can argue, and many do,
that stocks are ten to fifteen percent overpriced, that a
correction is in the future and, perhaps, is imminent. For the
long term investor this caution, even if accurate, is not
relevant. One can never tell exactly when to exit and, having
done so, when to reenter. Avoiding stock corrections is highly
desirable but the potential cost (of an error) is too high to
warrant the attempt.
For the year 1996 the Advance Capital I Funds produced
returns that were in-line with most averages. The Equity Growth
Fund, in its third year as a small to mid-cap growth stock fund,
increased 17.5 percent in value while the Lipper Analytical
Services Index of Mid-Cap Stock funds increased 16.3 percent.
The Balanced Fund with its 60-40 mix of stocks and bonds,
increased 14.5 percent compared to a 13.0 percent increase in
the Lipper Balanced Fund Index. The Bond and Long Term Income
Funds returned 2.8 and 2.1 percent respectively, while the
Lipper Index of A-Rated bond Funds increased 2.6 percent.
Finally, the Retirement Income Fund returned 4.5 percent
compared with the Lipper Index of BBB-Rated Bond Funds which
returned 4.1 percent.
Our view of 1997 is that the economic status quo will
continue, at least for the first half of the year. Economic
signals continue to be mixed and the pace of the economy is high
but relatively stable. Signs of pending inflation continue to
be elusive, which is good for both stocks and bonds. We do
anticipate a moderate slowing in eco-
2
<PAGE>
nomic activity in the second half of the year. Such a slowdown
could discourage stock investors and trigger a long-anticipated
correction. This, in our view, is part of the normal progress
of the stock market. We see no signs of doom on the horizon for
either stocks or bonds. After the blistering pace set by stocks
in 1995 and 1996 it would be foolhardy not to anticipate a
cooler, calmer 1997. In fact a "normal year" of 12 percent or
so for stocks would be very calm, indeed, by comparison to the
recent past. For bonds we expect a coupon-clipping year in the
six to eight percent range. Dramatic pressures on inflation and
interest rates, in either direction, are just not visible and we
do not anticipate any.
At December 31, 1996, the five Advance Capital I, Inc.
Funds held about $290 million in total assets, a 26 percent
increase from the prior year. Our focus has been and will
remain on the long term. Proper investment decisions and broad
diversification in respective categories is the cornerstone to
our investment philosophy. We fully expect this approach,
combined with our careful attention to costs, will continue to
serve 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 7, 1997
3
<PAGE>
INVESTMENT PERFORMANCE
Advance Capital I, Inc. is an open-end, diversified
management investment company offering investment opportunities
in five mutual fund portfolios.
<TABLE>
<CAPTION>
1996 FUND RESULTS
<S> <C>
Equity Growth 17.48%
Bond 2.81%
Balanced 14.48%
Long Term Income 2.09%
Retirement Income 4.54%
</TABLE>
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 historical
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 T. Rowe Price as a sub-investment advisor to
the Fund.
THE EQUITY GROWTH FUND IN 1996
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 11.7%
Retail Store 6.6%
Medical Services 6.4%
Medical Supplies 5.1%
Computer Peripherals 4.8%
</TABLE>
The Equity Growth Fund returned 17.48 percent in 1996 while
the NASDAQ Composite Index returned 22.71 percent and the S&P
500 Index (with dividends reinvested) returned 22.95 percent.
The accompanying graph 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 dramatic performance of the largest companies, which
dominate these indices, accounts for the difference in
performance with the Equity Growth Fund, which is broadly
diversified across the mid-cap stock universe.
For a second straight year, low inflation, sound economic
growth and record inflows into stock mutual funds has produced
dramatic stock returns. Market indices dominated by stocks with
the largest market capitalization returned 20 percent or better
for the year, hitting record highs along the way. As the five
year expansion and two plus years of record stock returns enters
another year, the forces that determine stock values point
toward stable, but unnerving fundamentals.
In a normal business cycle, wage and commodity inflation
become issues as the expansion matures. The Federal Reserve
Board, however, has been able to hold both consumer and producer
price inflation at the average for the last five years. Wage
growth, adjusted for inflation, has been flat for the last
decade. Stock investing has
4
<PAGE>
now entered unchartered territory. The continuation of a five
year expansion with no significant signs of inflation has
produced fertile ground for the massive growth in stocks values.
The challenge ahead for the Federal Reserve is to moderate
late-expansion period excesses such as higher wages or higher
commodity prices.
For the last five years corporations have down sized their
work forces and upgraded their technology in efforts to increase
productivity and reduce expenses. These decisions have produced
strong corporate earnings and correspondingly higher stock
prices. In select industries further cost reduction is
possible, but future earnings will be driven by improvements in
technology and the general prosperity of the economy. In the
absence of a domestic or global recession, corporate earnings in
1997 should hold no real surprises that would prove detrimental
to the stock market.
In the near term the market's success, not higher inflation
or lower earnings, may prove to be its biggest risk. As
investors scramble to participate in record stock returns, they
have poured millions into mutual funds. Portfolio managers,
flush with cash, have been forced to choose between holding
money market instruments or investing in a stock market that has
appeared overpriced. Because the penalty for holding cash in a
rising market is great, most portfolio managers have been forced
to invest. This increased demand for stocks has created a
market that is somewhat overpriced by historical measures.
Although economic fundamentals remain strong, rational investors
realize that record setting stock returns will not last
indefinitely. The year ahead may prove erratic for stocks. If
economic fundamentals remain sound, and cash flows into mutual
funds continue at a strong pace, stocks should provide average
returns for the full year 1997.
THE EQUITY GROWTH FUND
[EDGAR REFERENCE - S & P 500, NASDAQ, EQUITY GROWTH AND CPI
INDEX LINE CHART FOR 1994-1996]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1996
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Equity Growth Fund 17.48% N/A 15.87%
NASDAQ Composite Index 22.71% N/A 18.42%
S&P 500 Index 22.95% N/A 19.63%
Consumer Price Index (CPI) 3.45% N/A 2.90%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
5
<PAGE>
THE BOND FUND IN 1996
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 12/31/96
<S> <C>
Average Maturity 7.8 Years
Average Quality A+
Average Duration 5.5 Years
Size $4.4 Million
</TABLE>
The Bond Fund returned 2.81 percent for 1996. This return
represents 6.70 percent income distributed to shareholders and a
3.89 percent decrease in share price. 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 fixed income market in 1996 was a roller coaster ride.
At the end of 1995, the ten-year government bond was yielding
around 5.60 percent. By mid year 1996, it had risen to 7.07
percent and by year end it was back down to 6.05 percent. This
swing was the result of conflicting economic signals throughout
the year. Some economic data pointed to low unemployment,
strong consumer confidence and average inflation. Other data
pointed to possible wage inflation, rising energy and food
prices and rising consumer debt. Combined with election year
politics, the fixed income market in 1996 was anything but dull.
At the end of the year, the average maturity of the Bond
Fund was about 7.8 years, slightly lower than the prior year,
but within its target range of 5 to 10 years. Duration, which
measures the sensitivity of the portfolio to changes in interest
rates, declined from 5.8 in 1995 to 5.5 in 1996. The reduction
in these categories was less the result of a strategic decision
than the passage of time. Quality remains strong with a solid
A+ average rating for the bonds in the Fund.
Today the economy is growing about 2.5 to 3.0 percent
annually. Both consumer and producer price inflation are at
their historical average and federal deficit spending continues
to decline. The year ahead looks stable for fixed income
investments. Although not exciting, fixed income securities
should return about their historical average for the coming
year. The Bond Fund, with an overall maturity of about 8 years,
is well positioned for this stable view in 1997.
6
<PAGE>
THE BALANCED FUND IN 1996
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 12/31/96
<S> <C>
Bonds 37%
Small Stocks 20%
Large Stocks 43%
Size $75 Million
</TABLE>
The Balanced Fund increased 14.48 percent in 1996. The
Lehman Brothers Government-Corporate Bond Index increased .40
percent and the S&P 500 Index (with dividends reinvested)
increased 22.95 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 about 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 issues and United States Treasury bonds
and/or notes. Bond returns fluctuated from slightly negative to
slightly positive during the year, in reaction to inconsistent
economic data. These inconsistencies are a direct result of
today's global nature of business. Global competition has
forced companies to hold the line on prices to maintain market
share. As profit margins get squeezed, companies look to
streamline operations and reduce expenses to maintain profit
margins. Most expense reductions in recent years have come from
layoffs. The resulting feelings of job insecurity among
employees has caused the growth in real wages to remain stagnant
for the last decade. This may be starting to change. With the
current unemployment rate at 5.3 percent, the pool of qualified
candidates is shrinking. This may force corporations to offer
more lucrative employment packages to entice potential
candidates, a scenario which could spark renewed inflation or
concerns about inflation.
Stocks in the Balanced Fund performed well for a second
consecutive year. Strong fundamentals and enthusiastic
investors lifted stocks generally to record highs. In contrast
to 1995 large-company stocks outperformed smaller-company stocks
in 1996. The momentum that stocks have been riding for the last
two years may be slowing. As the market hits new highs,
investors become increasingly nervous and negative news puts
downward pressure on stocks.
Today, the Balanced Fund holds about 20 percent
small-company stocks, 43 percent large-company stocks and 37
percent corporate and government bonds. The Fund is well
diversified with 429 stocks and 64 bond holdings.
7
<PAGE>
[EDGAR REFERENCE - S & P 500, LBGC, BALANCED, BOND AND CPI INDEX
LINE CHART FOR 1987-1996]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1996
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Bond Fund 2.81% 7.05% 8.23%
Balanced Fund 14.48% 9.64% 8.72%
Lehman Brothers Government
Corporate Bond Index (LBGC) .40% 7.69% 9.27%
S&P 500 Index 22.95% 15.19% 12.72%
Consumer Price Index (CPI) 3.45% 2.88% 3.61%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
THE LONG TERM INCOME FUND IN 1996
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 12/31/96
<S> <C>
Average Maturity 19 Years
Average Quality A
Average Duration 9.0 Years
Size $1.4 Million
</TABLE>
The Long Term Income Fund returned 2.09 percent for the
year. This return reflects 6.82 percent from income distributed
to shareholders and a 4.73 percent decrease in share price. By
comparison the Lehman Brothers Government-Corporate Bond Index
returned .40 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
8
<PAGE>
January 1993.
Throughout the year, economic data was erratic even though
inflation was under control and economic growth was moderate.
Each time the market began to rally in response to a piece of
good news, a new piece of data would appear which would spark
renewed inflation concerns. One week inflation seemed under
control and the next it appeared on the verge of increase. This
constant seesaw of news lead to a volatile bond market in 1996.
As Treasury Bond yields fluctuated throughout the year, so did
the performance of the Long Term Income Fund. The 30-year
Treasury Bond's yield began the year at about 5.95 percent. By
mid year it had risen to 7.26 percent and by year end it was
down to 6.45 percent. This volatility moved the Long Term
Income Fund to minus five percent by May, then to plus four
percent by November before closing the year at plus 2.09
percent. The fluctuation in return is a direct result of the
long average maturity of the Fund.
Today, the market appears to have settled into a trading
range, but remains uneasy about the long term prospects for
inflation. Although most data continues to reflect subdued
inflation and a moderately expanding economy, employment and
consumer confidence remain very strong and are possible
inflationary signals. The SEC yield of the Long Term Income
Fund was 6.77 percent at year end.
THE RETIREMENT INCOME FUND IN 1996
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 12/31/96
<S> <C>
Average Maturity 17 Years
Average Quality BBB
Average Duration 8.3 Years
Size $170 Million
</TABLE>
The Retirement Income Fund returned 4.54 percent for the
year. This return was comprised of 7.49 percent from income
distributed to shareholders and a 2.95 percent decrease in share
price. The Fund's performance was helped by the presence of its
high yield bonds. Throughout the year the high yield portion of
the fund was maintained above 30 percent of the total portfolio.
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.
The investment grade portion of the Fund was negatively
affected by a volatile bond market. The prospect of lending
long term money in an uncertain inflation environment was the
impetus for this volatility. Investors believed the prospects
for short term inflation were bright, but questioned the long
term outlook. Early in the first quarter economic growth
unexpectedly accelerated and long maturing bonds fell about four
percent in value from January to May. By summer, the fear had
waned and signs were pointing to stable growth and average
inflation. By the third quarter, however, low unemployment
brought fears of possible wage inflation. As the market rocked
back and forth from positive to negative, so did the returns of
the investment grade portion of the Fund.
The high yield bonds comprise about one third of the Fund.
The balance
9
<PAGE>
between investment grade and high yield bonds served investors
well during the year. The same strong economic growth that
threatened inflation and hurt the performance of investment
grade bonds helped the performance of those companies issuing
high yield debt. High yield bonds are obligations of riskier
and/or start up businesses. When the economy grows, the
performance and the prospect of long term success for these
companies grows right along with it. Because of the strong
economy, fixed income portfolio managers were willing to hold
more of these bonds and, as the demand increased for high yield
bonds, so did the price.
Today, the Retirement Income Fund holds 86 investment grade
issues and 115 high yield issues. The structure and goal of the
Fund continues to emphasis broad diversification among issuers,
quality, maturity and industries to ensure high current income
at a reasonable risk level. Looking ahead, both the investment
grade and high yield markets appear stable and headed for an
average year in 1997. The SEC yield of the Retirement Income
Fund was 7.44 percent at year-end.
[EDGAR REFERENCE - RETIREMENT INCOME, LONG TERM, LBGC AND CPI
INDEX LINE CHART FOR 1993-1996]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1996
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Long Term Income Fund 2.09% N/A 8.20%
Retirement Income Fund 4.54% N/A 8.51%
Lehman Brothers Government
Corporate Bond Index (LBGC) .40% N/A 7.71%
Consumer Price Index (CPI) 3.45% N/A 2.86%
</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
-------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . $12.53 $9.08 $9.46 $9.94 $9.83
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss) . . . . . . (0.07) (0.03) (0.03) 0.12 0.10
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . 2.26 3.48 (0.35) 0.07 0.11
--------- --------- --------- --------- ---------
Total from investment operations . . . . 2.19 3.45 (0.38) 0.19 0.21
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . 0.00 0.00 0.00 (0.12) (0.10)
Net realized gain on investments . . . . 0.00 0.00 0.00 (0.55) 0.00
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . 0.00 0.00 0.00 (0.67) (0.10)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . $14.72 $12.53 $9.08 $9.46 $9.94
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . 17.48% 38.00% -4.02% 2.13% 2.22%
Ratios and Supplemental Data
Net assets, end of year (in thousands). . $38,767 $25,625 $12,634 $7,577 $7,094
Ratio of expenses to average net assets . 1.09% 1.12% 1.21% 1.16% 1.22%
Ratio of net investment income (loss)
to average net assets . . . . . . . . . -0.50% -0.29% -0.30% 1.27% 1.05%
Portfolio turnover rate . . . . . . . . . 24.75% 13.86% 18.05% 135.55% 96.05%
Average commission rate per share* . . . $0.0261
</TABLE>
*For fiscal years beginning after September 1, 1996, a fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
See Notes To Financial Statements
11
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . $10.79 $9.61 $10.82 $10.51 $10.52
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . 0.70 0.70 0.71 0.72 0.70
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.42) 1.18 (1.21) 0.45 0.01
--------- --------- --------- --------- ---------
Total from investment operations . . . . 0.28 1.88 (0.50) 1.17 0.71
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . (0.70) (0.70) (0.71) (0.72) (0.70)
Net realized gain on investments . . . . 0.00 0.00 0.00 (0.14) (0.02)
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . (0.70) (0.70) (0.71) (0.86) (0.72)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . $10.37 $10.79 $9.61 $10.82 $10.51
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . 2.81% 20.15% -4.64% 11.48% 7.04%
Ratios and Supplemental Data
Net assets, end of year (in thousands). . $4,430 $4,527 $3,999 $4,741 $5,793
Ratio of expenses to average net assets . 0.55% 0.55% 0.60% 0.61% 0.75%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . 6.71% 6.80% 7.06% 6.57% 6.69%
Portfolio turnover rate . . . . . . . . . 19.77% 6.69% 21.92% 35.99% 38.22%
</TABLE>
See Notes To Financial Statements
12
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . $12.57 $9.97 $10.58 $10.36 $10.38
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . . 0.41 0.35 0.32 0.29 0.33
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . 1.37 2.75 (0.61) 0.22 (0.02)
--------- --------- --------- --------- ---------
Total from investment operations . . . . 1.78 3.10 (0.29) 0.51 0.31
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . (0.41) (0.35) (0.32) (0.29) (0.33)
Net realized gain on investments . . . . (0.26) (0.15) 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . (0.67) (0.50) (0.32) (0.29) (0.33)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . $13.68 $12.57 $9.97 $10.58 $10.36
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . 14.48% 31.53% -2.72% 4.97% 3.07%
Ratios and Supplemental Data
Net assets, end of year (in thousands). . $75,202 $59,299 $44,221 $46,690 $42,440
Ratio of expenses to average net assets . 1.06% 1.07% 1.10% 1.08% 1.13%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . 3.17% 3.11% 3.18% 2.77% 3.24%
Portfolio turnover rate . . . . . . . . . 12.79% 22.72% 34.97% 101.29% 42.39%
Average commission rate per share* . . . $0.0278
</TABLE>
*For fiscal years beginning after September 1, 1996, a fund is required to
disclose its average commission rate per share for security trades on which
commissions are charged.
See Notes To Financial Statements
13
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG TERM INCOME
---------------------------------------
Years ended December 31
---------------------------------------
1996 1995 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . $10.78 $9.20 $10.60 $10.00
--------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . . 0.70 0.70 0.72 0.74
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.51) 1.58 (1.40) 0.77
--------- --------- --------- ---------
Total from investment operations . . . . 0.19 2.28 (0.68) 1.51
--------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . (0.70) (0.70) (0.72) (0.74)
Net realized gain on investments . . . . 0.00 0.00 0.00 (0.17)
--------- --------- --------- ---------
Total distributions . . . . . . . . . . . (0.70) (0.70) (0.72) (0.91)
--------- --------- --------- ---------
Net asset value, end of year . . . . . . . $10.27 $10.78 $9.20 $10.60
========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . 2.09% 25.57% -6.53% 14.43%
Ratios and Supplemental Data
Net assets, end of year (in thousands). . $1,395 $1,450 $1,163 $1,079
Ratio of expenses to average net assets . 0.64% 0.63% 0.63% 0.64%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . 6.86% 6.93% 7.37% 6.60%
Portfolio turnover rate . . . . . . . . . 6.38% 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
---------------------------------------
1996 1995 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . $10.51 $9.22 $10.54 $10.00
--------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . 0.75 0.76 0.76 0.82
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.31) 1.29 (1.32) 0.61
--------- --------- --------- ---------
Total from investment operations . . . . 0.44 2.05 (0.56) 1.43
--------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . (0.75) (0.76) (0.76) (0.82)
Net realized gain on investments . . . . 0.00 0.00 0.00 (0.07)
--------- --------- --------- ---------
Total distributions . . . . . . . . . . . (0.75) (0.76) (0.76) (0.89)
--------- --------- --------- ---------
Net asset value, end of year . . . . . . . $10.20 $10.51 $9.22 $10.54
========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . 4.54% 22.96% -5.34% 13.92%
Ratios and Supplemental Data
Net assets, end of year (in thousands). .$170,799 $139,299 $84,162 $47,343
Ratio of expenses to average net assets . 0.82% 0.84% 0.88% 0.88%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . 7.45% 7.64% 7.89% 7.41%
Portfolio turnover rate . . . . . . . . . 8.34% 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, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ------- ------------
<S> <C> <C>
ADVERTISING - 0.9%
Catalina Marketing Corporation* 3,600 $ 198,450
CKS Group, Inc.* 4,000 111,500
Heritage Media Corporation* 5,000 56,250
AIR TRANSPORT - 0.9%
Air Express International Corp. 4,100 132,225
Atlantic Southeast Airlines, Inc. 4,500 98,437
Comair Holdings, Inc. 4,500 108,000
APPAREL - 0.7%
Jones Apparel Group, Inc.* 3,500 130,813
Nautica Enterprises, Inc.* 6,000 151,500
BANK - 3.0%
Bank of New York Company, Inc. 4,600 155,250
City National Corporation 7,000 151,375
First American Corporation 3,700 213,213
First Bank Systems, Inc. 2,000 136,500
Northern Trust Corporation 4,600 166,750
Norwest Corporation 2,576 112,056
Roosevelt Financial Group, Inc. 3,800 79,800
State Street Boston Corporation 2,300 148,637
BEVERAGE - 0.5%
Robert Mondavi Corporation* 5,000 182,500
BIOTECHNOLOGY - 0.3%
Human Genome Sciences, Inc.* 3,200 130,400
BROADCASTING / CABLE TV - 2.6%
A.H. Belo Corporation 3,000 104,625
Clear Channel Communications* 9,000 325,125
Cox Communications, Inc.* 6,000 138,750
Emmis Broadcasting Corporation* 3,000 98,250
Evergreen Media Corporation* 3,000 75,000
Heartland Wireless Commun., Inc.* 4,500 59,063
Jacor Communications, Inc.* 4,000 109,500
Westwood One, Inc.* 5,000 83,125
CHEMICAL - 1.5%
Airgas, Inc.* 7,600 167,200
Lilly Industries, Inc. 5,500 100,375
Raychem Corporation 2,000 160,250
Sherwin-Williams Company 2,500 140,000
COMPUTER & PERIPHERALS - 4.8%
3COM Corporation, Inc.* 3,000 220,125
Cabletron Systems, Inc.* 4,000 133,000
Cisco Systems, Inc.* 5,000 318,125
Compaq Computer Corporation* 2,500 185,937
EMC Corporation* 4,300 142,438
Microchip Technology, Inc.* 2,950 150,081
PairGain Technologies, Inc.* 6,000 182,625
SCI Systems, Inc.* 3,000 133,875
Sun Microsystems, Inc.* 10,400 267,150
Xilinx, Inc.* 3,300 121,481
COMPUTER SOFTWARE & SERVICES - 11.7%
Adobe Systems, Inc. 3,000 112,125
Applix, Inc.* 4,000 87,500
BMC Software, Inc.* 5,600 231,700
Broderbund Software, Inc.* 1,900 56,525
Cadence Design Systems, Inc.* 4,500 177,750
CBT Group PLC* 2,500 135,625
Ceridian Corporation* 3,500 141,750
Cognos, Inc.* 4,800 135,000
Compuware Corporation* 2,500 125,312
Electronics for Imaging, Inc.* 1,500 123,375
First Data Corporation 3,612 131,838
HBO & Company 4,000 237,500
Hummingbird Communications Ltd.* 2,500 70,938
Informix Corporation* 4,500 91,688
Intuit, Inc.* 2,200 69,300
McAfee Associates, Inc.* 3,900 171,600
Medic Computer Systems, Inc.* 3,400 137,063
Microsoft Corporation* 3,800 313,975
National Data Corporation 3,000 130,500
Network General Corporation* 5,000 151,250
Oracle Corporation* 5,000 208,750
</TABLE>
See Notes To Financial Statements
16
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ------- ------------
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES - 11.7% (Continued)
Peoplesoft, Inc.* 4,000 $ 191,750
PMT Services, Inc.* 5,000 87,500
Rational Software Corporation* 4,000 158,250
Remedy Corporation* 3,000 161,250
Security Dynamics Tech., Inc.* 5,000 157,500
Shared Medical Systems Corp. 2,500 123,125
Shiva Corporation* 4,000 139,500
Sterling Commerce, Inc.* 3,500 123,375
Symantec Corporation* 6,300 91,350
Synopsys, Inc.* 2,400 111,000
Visio Corporation* 2,800 138,600
DIVERSIFIED - 1.6%
Alco Standard Corporation 3,000 154,875
Danaher Corporation 4,000 186,500
Service Corp. International 5,200 145,600
Thermo Electron Corporation* 3,000 123,750
DRUG - 3.5%
Amgen, Inc.* 5,600 304,500
BioChem Pharma, Inc.* 2,500 125,625
Biogen, Inc.* 3,400 131,750
Dura Pharmaceuticals, Inc.* 3,500 167,125
Genetics Institute, Inc.* 1,500 127,125
Gilead Sciences, Inc.* 4,000 100,000
Guilford Pharmaceuticals, Inc.* 4,500 104,625
Isis Pharmaceuticals, Inc.* 5,500 99,000
SEQUUS Pharmaceuticals, Inc.* 4,500 72,000
TheraTech, Inc.* 10,200 135,150
DRUGSTORE - 0.2%
Eckerd Corporation* 2,160 69,120
ELECTRICAL EQUIPMENT - 0.7%
FORE Systems, Inc.* 5,000 164,375
Littlefuse, Inc.* 2,500 121,250
ELECTRONICS - 3.3%
ADT Ltd.* 5,500 125,812
Altera Corporation* 2,700 196,256
Checkpoint Systems, Inc.* 4,500 111,375
Harman International Industries 2,100 116,813
Lam Research Corporation* 2,300 64,688
Macromedia* 4,500 81,000
Molex, Inc. 3,750 133,594
S3, Inc.* 4,900 79,625
Symbol Technologies, Inc.* 2,600 115,050
Teradyne, Inc.* 3,100 75,562
Thermedics, Inc.* 6,000 108,750
Ultratech Stepper, Inc.* 3,000 71,250
ENVIRONMENTAL - 1.4%
Superior Services, Inc.* 7,000 142,625
United Waste Systems, Inc.* 3,500 120,312
U.S. Filter Corporation* 3,500 111,125
USA Waste Services, Inc.* 5,750 183,281
FINANCIAL SERVICES - 4.7%
Aames Financial Corporation 3,000 107,625
Advanta Corporation 3,000 122,625
Concord EFS, Inc.* 4,500 127,125
CUC International, Inc.* 8,022 194,534
Finova Group, Inc. 2,500 160,625
First USA, Inc. 5,000 173,125
Franklin Resources, Inc. 3,100 211,963
Green Tree Financial Corporation 4,000 154,500
Mercury Finance Company 7,000 85,750
Mutual Risk Management, Ltd. 5,066 187,442
Paychex, Inc. 3,000 154,313
United Asset Management Corp. 5,200 138,450
FOOD PROCESSING - 0.6%
Goodmark Foods, Inc. 5,000 82,500
Tootsie Roll Industries, Inc. 3,560 141,065
FOREIGN TELECOMMUNICATIONS - 1.6%
Ericsson Telephone 10,000 301,875
Reuters Holdings PLC 2,000 153,000
Vodafone Group PLC 4,000 165,500
GROCERY - 0.5%
Safeway, Inc.* 4,400 188,100
</TABLE>
See Notes To Financial Statements
17
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ------- ------------
<S> <C> <C>
HOMEBUILDING - 0.7%
Lennar Corporation 4,100 $ 111,725
Rouse Company 4,900 155,575
HOTEL / GAMING - 1.1%
HFS, Inc.* 4,000 239,000
Homestead Village, Inc.* 1 11
Homestead Village, Inc./Warrants* 1 4
La Quinta Inns, Inc. 4,500 86,063
Mirage Resorts, Inc.* 5,000 108,125
HOUSEHOLD PRODUCTS - 0.9%
Amway Asia Pacific Ltd. 3,500 148,312
Lancaster Colony Corporation 4,000 184,000
INDUSTRIAL SERVICES - 4.4%
AccuStaff, Inc.* 5,000 105,625
APAC Teleservices, Inc.* 3,000 115,125
Apollo Group, Inc.* 3,500 117,031
Equifax, Inc. 6,200 189,875
Interim Services* 3,000 106,500
ITT Educational Services, Inc.* 5,200 120,250
Kelly Services, Inc. 2,300 62,100
Manpower, Inc. 3,900 126,750
Primark Corporation* 4,500 111,375
Quintiles Transnational Corporation* 2,500 165,625
Robert Half International, Inc.* 4,500 153,562
Romac International, Inc.* 3,500 77,000
Sitel Corporation* 5,400 76,950
Sylvan Learning Systems, Inc.* 3,000 85,500
Unitog Company 4,050 110,362
INSURANCE - 3.8%
Ace, Ltd. 2,300 138,287
AMBAC, Inc. 2,600 172,575
Compdent Corporation* 3,500 123,375
Equitable of Iowa Companies 3,100 142,213
MGIC Investment Corporation 2,000 152,000
Oxford Health Plans, Inc.* 3,200 187,400
Progressive Corporation of Ohio 2,800 188,650
UICI* 4,500 146,250
Vesta Insurance Group, Inc. 3,750 117,656
Zurich Reinsurance Centre Hold.* 3,100 96,875
MACHINERY - 1.3%
AGCO Corporation 5,000 143,125
Alamo Group, Inc. 5,000 85,625
Cognex Corporation* 2,500 46,250
Greenfield Industries, Inc. 4,000 122,500
Parker-Hannifin Corporation 2,500 96,875
MANUFACTURED HOUSING - 0.4%
Oakwood Homes Corporation 7,000 160,125
MEDICAL SERVICES - 6.4%
ABR Information Services, Inc.* 2,000 78,750
Access Health, Inc.* 3,500 156,625
Apria Healthcare Group, Inc.* 4,000 75,000
Health Care & Retirement Corp.* 5,550 158,869
Health Management Associates* 7,425 167,063
IDX Systems Corporation* 4,600 131,675
Lincare Holdings, Inc.* 3,300 135,300
MedPartners/Mullikin, Inc.* 5,151 106,883
Omnicare, Inc. 4,000 128,500
OrNda HealthCorp* 4,500 131,625
Orthodontic Ctrs. of America, Inc.* 6,000 96,000
PacifiCare Health Systems, Inc.* 1,500 127,875
PhyCor, Inc.* 4,500 127,688
Quorum Health Group, Inc.* 5,000 148,750
Renal Treatment Centers, Inc.* 4,000 102,000
Sierra Health Services, Inc.* 3,500 86,187
United HealthCare Corporation 2,900 130,500
Universal Health Services, Inc.* 4,800 137,400
Vencor, Inc.* 5,400 170,775
Vivra, Inc.* 3,000 82,875
MEDICAL SUPPLIES - 5.1%
Boston Scientific Corporation* 2,500 150,000
Cardinal Health, Inc. 4,125 240,281
Guidant Corporation 3,000 171,000
</TABLE>
See Notes To Financial Statements
18
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ------- ------------
<S> <C> <C>
MEDICAL SUPPLIES - 5.1% (Continued)
Henry Schein, Inc.* 3,500 $ 120,313
IDEXX Laboratories, Inc.* 5,000 180,000
Life Technologies, Inc. 5,250 131,250
Medtronic, Inc. 2,000 136,000
Physio-Control International Corp.* 5,500 123,750
Sola International, Inc.* 4,000 152,000
Steris Corporation* 2,570 111,795
Sybron Corporation* 5,000 165,000
Target Therapeutics, Inc.* 3,500 147,000
Uromed Corporation* 5,000 48,750
VISX, Inc.* 4,000 88,500
METAL FABRICATING - 0.3%
Kennametal, Inc. 2,500 97,188
NATURAL GAS - 0.4%
Sonat, Inc. 3,000 154,500
NEWSPAPER - 0.3%
Central Newspapers, Inc. 2,500 110,000
OFFICE EQUIPMENT & SUPPLIES - 0.4%
Reynolds & Reynolds Company 5,400 140,400
OILFIELD SERVICES - 2.0%
BJ Services Company/Warrants* 1,160 31,175
Camco International, Inc. 3,500 161,437
Noble Drilling Corporation* 4,700 93,413
Pride Petroleum Services, Inc.* 8,000 186,000
Smith International, Inc.* 4,300 192,962
Triton Energy Corporation* 2,500 121,250
PACKAGING & CONTAINER - 0.4%
Sealed Air Corporation* 3,400 141,525
PAPER & FOREST PRODUCTS - 0.4%
Williamette Industries, Inc. 2,300 160,137
PETROLEUM - 2.3%
Apache Corporation 4,000 140,500
Devon Energy Corporation 4,500 156,375
Noble Affiliates, Inc. 3,900 186,713
Tosco Corporation 2,500 197,812
United Meridian Corporation* 4,200 212,100
PRECISION INSTRUMENT - 1.1%
Coherent, Inc.* 3,000 126,750
Dionex Corporation* 2,000 70,000
KLA Instruments Corporation* 2,600 92,300
Teleflex, Inc. 2,500 130,312
PUBLISHING - 0.3%
Scholastic Corporation* 2,000 134,500
RAILROAD - 0.7%
Kansas City Southern Ind., Inc. 2,300 103,500
Wisconsin Central Transportation* 4,500 178,312
REAL ESTATE INVESTMENT TRUST - 0.7%
National Health Investors, Inc. 3,700 140,138
Security Capital Pacific Trust 5,500 125,812
RECREATION - 1.8%
Callaway Golf Company 2,400 69,000
Carmike Cinemas, Inc.* 6,000 152,250
Carnival Corporation 4,500 148,500
Gaylord Entertainment Company 4,610 105,454
Harley-Davidson, Inc. 3,000 141,000
Sturm, Ruger & Company, Inc. 4,000 77,500
RESTAURANT - 0.8%
Applebee's International, Inc. 3,200 88,000
Outback Steakhouse, Inc.* 3,750 100,313
Sbarro, Inc. 4,500 114,750
RETAIL STORE - 6.6%
AutoZone, Inc.* 3,800 104,500
Bed Bath & Beyond, Inc.* 7,000 169,750
Borders Group, Inc.* 4,000 143,500
Circuit City Stores, Inc. 2,800 84,350
CompUSA, Inc.* 5,600 116,200
Corporate Express, Inc.* 4,700 138,356
</TABLE>
See Notes To Financial Statements
19
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ------- ------------
<S> <C> <C>
RETAIL STORE - 6.6% (Continued)
Dollar General Corporation 7,616 $ 243,712
Gymboree Corporation* 4,000 91,500
Lands' End, Inc.* 6,200 164,300
Men's Wearhouse, Inc.* 4,250 104,125
MSC Industrial Direct Co., Inc.* 3,000 111,000
OfficeMax, Inc.* 9,000 96,750
Pep Boys-Manny, Moe & Jack 2,500 76,875
Starbucks Corporation* 4,000 114,500
The Sports Authority, Inc.* 5,000 108,750
Tiffany & Company 4,000 146,500
U.S. Office Products Company* 3,000 102,375
Viking Office Products, Inc.* 6,400 170,800
Williams-Sonoma, Inc.* 5,000 181,875
Zale Corporation* 5,500 105,875
SECURITIES BROKERAGE - 1.2%
Charles Schwab Corporation 6,000 192,000
Investment Technology Group* 7,800 150,150
Raymond James Financial, Inc. 4,500 135,563
SEMICONDUCTOR - 2.5%
Atmel Corporation* 4,400 145,750
International Rectifier Corp.* 4,600 70,150
Linear Technology Corporation 5,400 236,925
LSI Logic Corporation* 2,000 53,500
Maxim Integrated Products, Inc.* 9,000 389,250
SDL, Inc.* 3,000 78,750
SHOE - 0.3%
Wolverine World Wide, Inc. 4,500 130,500
STEEL - 0.2%
Commercial Metals Company 3,000 90,375
TELECOMMUNICATIONS EQUIPMENT - 4.6%
Andrew Corporation* 3,938 208,934
Ascend Communications, Inc.* 4,000 248,500
Aspect Telecommunications Corp.* 2,000 127,000
Cascade Communications Corp.* 4,500 248,062
Coherent Commun. Systems Corp.* 5,000 97,500
DSP Communications, Inc.* 6,000 116,250
Glenayre Technologies, Inc.* 2,700 58,219
PictureTel Corporation* 3,000 78,000
Premisys Communications, Inc.* 2,000 67,500
Tellabs, Inc.* 6,400 240,800
U.S. Robotics, Inc.* 4,000 288,000
TELECOMMUNICATIONS SERVICE - 1.5%
360 Communications Company* 5,000 116,250
Cellular Commun. of Puerto Rico* 3,000 59,250
Centennial Cellular Corporation* 4,500 54,562
CommNet Cellular, Inc.* 4,000 111,500
InterCel, Inc.* 6,100 74,725
LCI International, Inc.* 4,000 86,500
United States Cellular Corporation* 3,000 83,625
TEXTILE - 0.2%
Unifi, Inc. 3,000 96,375
THRIFT - 0.3%
JSB Financial Corporation 3,500 133,000
TOYS - 0.3%
Mattel, Inc. 4,125 114,469
TRUCKING & TRANSPORT LEASING - 0.3%
Werner Enterprise, Inc. 6,000 108,750
-----------
TOTAL COMMON STOCK - 99.0%
(Cost $27,124,597) $38,393,985
===========
</TABLE>
* Securities are non-income producing
See Notes To Financial Statements
20
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------------- --------- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BANK - 10.2%
Banc One Corporation A+ 8.740 09/15/03 $ 100,000 $ 109,969
First Chicago NBD Corporation A 8.100 03/01/02 100,000 105,531
Harris Bankcorp, Inc. A+ 9.375 06/01/01 75,000 82,884
Morgan, J.P. & Company AA 8.500 08/15/03 100,000 108,969
Security Pacific Corporation A 9.750 05/15/99 40,000 42,858
CHEMICAL - 2.5%
duPont, E.I. de Nemours & Co. AA- 6.000 12/01/01 115,000 111,979
COMPUTER & PERIPHERALS - 1.7%
International Business Machines Corp. A 7.250 11/01/02 75,000 77,274
ELECTRIC & GAS UTILITIES - 11.5%
Baltimore Gas & Electric Company A+ 6.125 07/01/03 150,000 145,266
Florida Power Corporation AA- 6.875 02/01/08 70,000 69,803
Northern States Power Co. Minn. AA- 7.375 03/01/02 40,000 40,437
Ontario Hydro AA- 7.450 03/31/13 150,000 153,997
Public Service Co. of Oklahoma A+ 7.250 01/01/99 50,000 50,352
Public Service Electric & Gas A- 7.000 09/01/24 50,000 46,328
ENVIRONMENTAL - 1.1%
Waste Management, Inc. A+ 7.650 03/15/11 45,000 47,166
FINANCIAL SERVICES - 4.7%
BHP Finance USA Ltd. A 7.875 12/01/02 100,000 104,985
General Electric Capital Corporation AAA 7.750 03/15/02 100,000 105,263
FOOD PROCESSING - 2.3%
Archer Daniels Midland Company AA- 7.125 03/01/13 100,000 100,375
FOREIGN GOVERNMENT - 6.1%
Province of Ontario AA- 7.625 06/22/04 100,000 105,469
Province of Quebec A+ 8.800 04/15/03 150,000 164,766
GOVERNMENTAL AGENCY - 1.1%
Tennessee Valley Authority AAA 6.125 07/15/03 50,000 48,563
INSURANCE - 6.0%
Allstate Corporation A 7.500 06/15/13 100,000 101,500
CIGNA Corporation A- 8.250 01/01/07 100,000 108,271
Travelers, Inc. A+ 7.625 01/15/97 57,000 57,035
</TABLE>
See Notes To Financial Statements
21
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------------- --------- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
MACHINERY - 5.1%
Caterpillar, Inc. A 9.000 04/15/06 $ 100,000 $ 113,569
Deere & Company A 8.950 06/15/19 100,000 114,269
MEDICAL SERVICES - 2.3%
Columbia/HCA Healthcare Corporation A- 7.250 05/20/08 100,000 101,906
METALS & MINING - 2.8%
Alcan Aluminum Ltd. A- 5.875 04/01/00 125,000 122,720
NEWSPAPER - 1.4%
Knight-Ridder, Inc. AA- 9.875 04/15/09 50,000 61,951
OFFICE EQUIPMENT & SUPPLIES - 0.7%
Xerox Corporation A 9.750 03/15/00 30,000 32,728
PETROLEUM - 3.3%
Kerr-McGee Corporation A- 7.000 11/01/11 150,000 145,403
RAILROAD - 2.5%
Missouri Pacific Railroad Co. A 9.400 12/15/00 100,000 109,157
RETAIL STORE - 6.4%
Sears, Roebuck & Company A- 9.250 08/01/97 200,000 203,797
Wal-Mart Stores, Inc. AA 8.625 04/01/01 75,000 80,789
SECURITIES BROKERAGE - 7.0%
Lehman Brothers Holdings, Inc. A 8.875 03/01/02 150,000 160,594
Merrill Lynch & Company, Inc. AA- 8.230 04/30/02 150,000 151,529
SEMICONDUCTOR - 3.2%
Texas Instruments, Inc. A 8.750 04/01/07 125,000 140,521
TELECOMMUNICATIONS SERVICE - 6.7%
AT&T Corporation AA- 7.750 03/01/07 90,000 95,484
GTE Southwest, Inc. A+ 5.820 12/01/99 100,000 98,344
Pacific Bell Telephone Co. AA- 7.000 07/15/04 100,000 101,104
TOBACCO - 2.1%
Philip Morris Companies, Inc. A 6.375 02/01/06 100,000 94,344
</TABLE>
See Notes To Financial Statements
22
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------------- --------- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT - 7.1%
U.S. Treasury 6.875 05/15/06 $ 155,000 $ 159,722
U.S. Treasury 7.000 07/15/06 150,000 155,836
-----------
TOTAL FIXED-INCOME SECURITIES - 97.8%
(Cost $4,181,736) $4,332,807
===========
</TABLE>
See Notes To Financial Statements
23
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
ADVERTISING - 0.2%
Catalina Marketing Corporation* 2,000 $ 110,250
CKS Group, Inc.* 1,000 27,875
Heritage Media Corporation* 2,000 22,500
AEROSPACE / DEFENSE - 1.1%
Boeing Company 1,700 181,050
General Motors Corp. - Class H 1,500 84,375
Lockheed Martin Corporation 2,000 183,000
McDonnell Douglas Corporation 4,800 315,000
Raytheon Company 1,700 81,812
AIR TRANSPORT - 0.2%
Air Express International Corp. 700 22,575
Atlantic Southeast Airlines, Inc. 1,000 21,875
Comair Holdings, Inc. 1,575 37,800
Pittston Brink's Group 3,000 81,000
APPAREL - 0.2%
Nautica Enterprises, Inc.* 1,800 45,450
VF Corporation 1,300 87,750
AUTO PARTS - 0.3%
Borg-Warner Automotive, Inc. 2,000 77,000
Dana Corporation 1,600 52,200
Genuine Parts Company 2,000 89,000
AUTO & TRUCK - 0.3%
Ford Motor Company 3,500 112,875
General Motors Corporation 2,400 133,800
BANK - 5.5%
Bank of Boston Corporation 2,540 163,195
Bank of New York Company, Inc. 2,800 94,500
BankAmerica Corporation 1,000 99,750
Barnett Banks, Inc. 10,400 427,700
Chase Manhattan Corporation 4,840 432,575
City National Corporation 1,600 34,600
First American Corporation 2,200 126,775
First Bank Systems, Inc. 1,300 88,725
First Chicago NBD Corporation 3,500 188,125
First Tennessee National Corp. 5,800 217,500
First Union Corporation 5,800 429,200
J.P. Morgan & Company 2,000 195,250
KeyCorp 4,000 202,000
Mellon Bank Corporation 2,700 191,700
Mercantile Bancorporation, Inc. 2,050 105,319
National City Corporation 2,000 89,750
NationsBank Corporation 4,000 391,000
Northern Trust Corporation 1,200 43,500
Norwest Corporation 900 39,150
PNC Bank Corporation 4,000 150,500
State Street Boston Corporation 1,200 77,550
Wells Fargo & Company 933 251,676
BEVERAGE - 0.7%
Anheuser-Busch Companies, Inc. 7,400 296,000
Coca-Cola Company 1,000 52,625
PepsiCo, Inc. 3,000 87,750
Robert Mondavi Corporation* 1,500 54,750
BIOTECHNOLOGY - 0.1%
Human Genome Sciences, Inc.* 1,200 48,900
BROADCASTING / CABLE TV - 0.5%
A.H. Belo Corporation 1,400 48,825
Clear Channel Communications* 3,200 115,600
Cox Communications, Inc.* 1,500 34,688
Evergreen Media Corporation* 1,200 30,000
Heartland Wireless Commun., Inc.* 1,500 19,688
Jacor Communications, Inc.* 1,500 41,063
U.S. West Media Group* 4,000 73,500
Westwood One, Inc.* 1,700 28,262
BUILDING MATERIALS - 0.1%
Armstrong World Industries, Inc. 1,500 104,250
</TABLE>
See Notes To Financial Statements
24
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
CHEMICAL - 2.7%
A. Schulman, Inc. 2,000 $ 49,000
Airgas, Inc.* 4,000 88,000
B.F. Goodrich Company 2,000 81,000
duPont, E.I. de Nemours & Co. 3,500 329,438
Lilly Industries, Inc. 1,500 27,375
Minnesota Mining & Manufacturing 2,000 166,000
Monsanto Company 15,500 602,563
Olin Corporation 1,400 52,675
Raychem Corporation 500 40,062
Rohm & Haas Company 1,000 81,625
Sherwin-Williams Company 2,000 112,000
Union Carbide Corporation 2,100 85,837
WD-40 Company 2,800 142,843
Witco Corporation 2,700 82,350
COMPUTER & PERIPHERALS - 1.3%
3COM Corporation, Inc.* 1,600 117,400
Cabletron Systems, Inc.* 2,000 66,500
Cisco Systems, Inc.* 2,000 127,250
Compaq Computer Corporation* 1,000 74,375
EMC Corporation* 2,000 66,250
Hewlett-Packard Company 2,600 130,650
Microchip Technology, Inc.* 1,000 50,875
PairGain Technologies, Inc.* 4,000 121,750
SCI Systems, Inc.* 1,000 44,625
Sun Microsystems, Inc.* 3,200 82,200
Xilinx, Inc.* 2,100 77,306
COMPUTER SOFTWARE & SERVICES - 2.4%
Adobe Systems, Inc. 1,200 44,850
Automatic Data Processing, Inc. 4,000 171,500
BMC Software, Inc.* 2,000 82,750
Broderbund Software, Inc.* 1,400 41,650
Cadence Design Systems, Inc.* 1,350 53,325
CBT Group PLC* 1,000 54,250
Ceridian Corporation* 2,000 81,000
Cognos, Inc.* 2,100 59,063
Compuware Corporation* 1,000 50,125
First Data Corporation 1,488 54,312
HBO & Company 2,000 118,750
Hummingbird Communications Ltd.* 1,000 28,375
Informix Corporation* 1,500 30,563
Intuit, Inc.* 900 28,350
McAfee Associates, Inc.* 1,200 52,800
Medic Computer Systems, Inc.* 1,000 40,313
Microsoft Corporation* 2,000 165,250
Oracle Corporation* 2,525 105,419
Peoplesoft, Inc.* 1,600 76,700
PMT Services, Inc.* 2,000 35,000
Rational Software Corporation* 1,400 55,387
Remedy Corporation* 1,200 64,500
Security Dynamics Tech., Inc.* 1,400 44,100
Shared Medical Systems Corp. 900 44,325
Shiva Corporation* 1,200 41,850
Sterling Commerce, Inc.* 1,300 45,825
Symantec Corporation* 1,000 14,500
Synopsys, Inc.* 2,000 92,500
Visio Corporation* 1,300 64,350
DIVERSIFIED - 1.4%
Alco Standard Corporation 1,800 92,925
AlliedSignal, Inc. 5,100 341,700
Danaher Corporation 1,000 46,625
Service Corp. International 4,200 117,600
Textron, Inc. 1,500 141,375
Thermo Electron Corp.* 1,350 55,687
TRW, Inc. 2,000 99,000
United Technologies Corporation 2,200 145,750
DRUG - 3.2%
American Home Products Corp. 3,400 199,325
Amgen, Inc.* 2,200 119,625
BioChem Pharma, Inc.* 1,100 55,275
Biogen, Inc.* 2,000 77,500
Bristol-Myers Squibb Company 6,200 675,800
Genetics Institute, Inc.* 500 42,375
Gilead Sciences, Inc.* 1,000 25,000
Guilford Pharmaceuticals, Inc.* 1,500 34,875
</TABLE>
See Notes To Financial Statements
25
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
DRUG - 3.2% (Continued)
Merck & Company, Inc. 6,000 $ 477,750
Pfizer, Inc. 3,000 249,000
Schering-Plough Corporation 2,000 129,500
SEQUUS Pharmaceuticals, Inc.* 1,500 24,000
TheraTech, Inc.* 3,500 46,375
Warner-Lambert Company 3,800 285,000
DRUGSTORE - 0.1%
Eckerd Corporation* 785 25,120
Rite Aid Corporation 2,000 79,500
ELECTRIC & GAS UTILITIES - 2.6%
Baltimore Gas & Electric Company 5,700 152,475
CMS Energy Corporation 2,300 77,338
Consolidated Edison Co. of N.Y. 1,900 55,338
Duke Power Company 3,400 157,250
Edison International 6,500 129,188
Entergy Corporation 4,000 110,500
Florida Progress Corporation 5,500 177,375
General Public Utilities Corp. 3,600 121,050
Hawaiian Electric Industries, Inc. 2,300 83,088
Northern States Power Company 2,500 114,688
PacifiCorp 8,400 172,200
Public Service of Colorado 4,700 182,712
TECO Energy, Inc. 7,700 185,762
Texas Utilities Company 3,500 142,625
Unicom Corporation* 3,500 94,937
ELECTRICAL EQUIPMENT - 2.1%
Duracell International, Inc. 4,000 279,500
Emerson Electric Company 2,500 242,188
FORE Systems, Inc.* 2,000 65,750
General Electric Company 8,200 810,775
Hubbell, Inc. 3,200 138,400
Littlefuse, Inc.* 1,000 48,500
ELECTRONICS - 0.6%
Altera Corporation* 1,000 72,688
Checkpoint Systems, Inc.* 1,500 37,125
Harman International Industries 1,050 58,406
Lam Research Corporation* 1,300 36,563
Macromedia* 1,500 27,000
Molex, Inc. 1,875 66,797
Symbol Technologies, Inc.* 2,000 88,500
Thermedics, Inc.* 2,000 36,250
Ultratech Stepper, Inc.* 1,000 23,750
ENVIRONMENTAL - 0.5%
Browning-Ferris Industries, Inc. 3,000 78,750
Superior Services, Inc.* 3,100 63,162
U.S. Filter Corporation* 1,200 38,100
USA Waste Services, Inc.* 1,800 57,375
WMX Technologies, Inc. 4,500 146,250
FINANCIAL SERVICES - 2.1%
Advanta Corporation 800 32,700
American Express Company 5,000 282,500
Countrywide Credit Industries, Inc. 4,000 114,500
CUC International, Inc.* 3,432 83,226
Dean Witter, Discover & Company 2,000 132,500
Echelon International Corp., Inc.* 0.7 10
Finova Group, Inc. 1,000 64,250
First USA, Inc. 2,800 96,950
Franklin Resources, Inc. 1,000 68,375
Green Tree Financial Corporation 2,000 77,250
H & R Block, Inc. 1,300 37,700
Household International, Inc. 1,000 92,250
Mercury Finance Company 3,000 36,750
Mutual Risk Management, Ltd. 3,333 123,321
Paychex, Inc. 1,500 77,156
Student Loan Marketing Association 800 74,500
Travelers, Inc. 3,600 163,350
United Asset Management Corp. 2,000 53,250
FOOD PROCESSING - 0.8%
Goodmark Foods, Inc. 5,200 85,800
Hershey Foods Corp. 2,800 122,500
Kellogg Company 1,500 98,438
Quaker Oats Company 2,000 76,250
</TABLE>
See Notes To Financial Statements
26
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
FOOD PROCESSING - 0.8% (Continued)
Sara Lee Corporation 4,500 $ 167,625
Tootsie Roll Industries, Inc. 1,200 47,550
FOREIGN TELECOMMUNICATIONS - 0.6%
BCE, Inc. 2,200 105,050
Ericsson Telephone 6,400 193,200
Reuters Holdings PLC 1,000 76,500
Vodafone Group PLC 2,100 86,887
GROCERY - 0.2%
Safeway, Inc.* 3,200 136,800
HOMEBUILDING - 0.4%
Lennar Corporation 1,700 46,325
Rouse Company 7,000 222,250
HOTEL / GAMING - 0.2%
HFS, Inc.* 1,500 89,625
Homestead Village, Inc.* 1 7
Homestead Village, Inc./Warrants* 1 5
La Quinta Inns, Inc. 1,500 28,688
Mirage Resorts, Inc.* 2,000 43,250
HOUSEHOLD PRODUCTS - 1.4%
Amway Asia Pacific Ltd. 1,000 42,375
Clorox Company 1,900 190,713
Colgate-Palmolive Company 3,100 285,975
Kimberly-Clark Corporation 2,900 276,225
Lancaster Colony Corporation 1,000 46,000
Proctor & Gamble Company 1,200 129,150
Tupperware Corporation* 2,000 107,250
INDUSTRIAL SERVICES - 0.8%
AccuStaff, Inc.* 2,000 42,250
Apollo Group, Inc.* 1,500 50,156
Equifax, Inc. 4,600 140,875
Interim Services* 1,116 39,618
Kelly Services, Inc. 700 18,900
Manpower, Inc. 1,500 48,750
Primark Corporation* 1,800 44,550
Quintiles Transnational Corporation 1,000 66,250
Robert Half International, Inc.* 1,500 51,187
Sylvan Learning Systems, Inc.* 3,450 98,325
Unitog Company 1,000 27,250
INSURANCE - 2.0%
Ace, Ltd. 1,000 60,125
AFLAC, Inc. 2,400 102,600
Allstate Corporation 3,615 209,218
AMBAC, Inc. 1,300 86,288
American International Group, Inc. 4,125 446,531
Equitable of Iowa Companies 2,100 96,338
MBIA, Inc. 1,500 151,875
MGIC Investment Corporation 1,000 76,000
Oxford Health Plans, Inc.* 1,600 93,700
Progressive Corporation of Ohio 1,000 67,375
St. Paul Companies, Inc. 1,500 87,937
Vesta Insurance Group, Inc. 1,000 31,375
Zurich Reinsurance Centre Hold.* 1,000 31,250
MACHINERY - 1.1%
AGCO Corporation 2,000 57,250
Alamo Group, Inc. 1,500 25,688
Briggs & Stratton Corporation 1,200 52,800
Caterpillar, Inc. 1,800 135,450
Deere & Company 4,200 170,100
Dover Corporation 5,200 262,600
Greenfield Industries, Inc. 1,400 42,875
Parker-Hannifin Corporation 1,050 40,688
Trinova Corporation 2,100 76,387
MANUFACTURED HOUSING - 0.1%
Oakwood Homes Corporation 2,000 45,750
MEDICAL SERVICES - 1.3%
ABR Information Services, Inc.* 800 31,500
Apria Healthcare Group, Inc.* 1,000 18,750
Health Care & Retirement Corp.* 5,850 167,456
</TABLE>
See Notes To Financial Statements
27
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
MEDICAL SERVICES - 1.3% (Continued)
Health Management Associates* 3,712 $ 83,520
Lincare Holdings, Inc.* 1,000 41,000
MedPartners/Mullikin, Inc.* 2,000 41,500
Omnicare, Inc. 2,800 89,950
OrNda HealthCorp* 1,500 43,875
Orthodontic Ctrs. of America, Inc.* 1,400 22,400
PacifiCare Health Systems, Inc.* 700 59,675
PhyCor, Inc.* 1,500 42,562
Quorum Health Group, Inc.* 1,000 29,750
Renal Treatment Centers, Inc.* 1,700 43,350
Sierra Health Services, Inc.* 1,200 29,550
United HealthCare Corporation 1,300 58,500
Universal Health Services, Inc.* 2,200 62,975
Vencor, Inc.* 3,100 98,037
Vivra, Inc.* 800 22,100
MEDICAL SUPPLIES - 1.4%
Abbott Laboratories 3,600 182,700
Baxter International, Inc. 2,000 82,000
Boston Scientific Corporation* 1,000 60,000
Cardinal Health, Inc. 1,800 104,850
Guidant Corporation 1,000 57,000
Johnson & Johnson 2,560 127,360
Life Technologies, Inc. 1,800 45,000
Medtronic, Inc. 1,800 122,400
Sola International, Inc.* 1,500 57,000
Steris Corporation* 690 30,015
Sybron Corporation* 2,000 66,000
Target Therapeutics, Inc.* 1,400 58,800
VISX, Inc.* 1,000 22,125
METAL FABRICATING - 0.1%
Kennametal, Inc. 1,000 38,875
Trinity Industries, Inc. 800 30,000
METALS & MINING - 0.5%
Aluminum Company of America 4,000 255,000
Inco Limited 2,000 63,750
Placer Dome, Inc. 2,500 54,375
NATURAL GAS - 0.8%
Enron Corporation 5,400 232,875
PanEnergy Corporation 5,300 238,500
Sonat, Inc. 1,800 92,700
NEWSPAPER - 0.2%
Central Newspapers, Inc. 1,000 44,000
Gannett Company, Inc. 1,900 142,263
OFFICE EQUIPMENT & SUPPLIES - 0.3%
Pitney Bowes, Inc. 2,000 109,500
Reynolds & Reynolds Company 5,600 145,600
OILFIELD SERVICES - 1.0%
Baker Hughes, Inc. 4,000 138,000
BJ Services Company/Warrants* 1,200 32,250
Camco International, Inc. 1,000 46,125
Halliburton Company 3,500 210,875
Pride Petroleum Services, Inc.* 2,800 65,100
Schlumberger, Ltd. 1,000 99,875
Smith International, Inc.* 2,300 103,212
Triton Energy Corporation* 700 33,950
PACKAGING & CONTAINER - 0.1%
Sealed Air Corporation* 2,000 83,250
PAPER & FOREST PRODUCTS - 0.9%
Georgia Pacific Corporation 1,400 100,800
International Paper Company 8,000 324,000
James River Corporation 3,000 99,375
Weyerhaeuser Company 2,200 104,225
Williamette Industries, Inc. 800 55,700
PETROLEUM - 4.4%
Amerada Hess Corporation 1,300 75,238
Amoco Corporation 2,400 193,500
Apache Corporation 1,800 63,225
Ashland Oil, Inc. 1,800 78,975
Atlantic Richfield Company 1,000 132,500
British Petroleum Co. PLC 2,000 282,750
</TABLE>
See Notes To Financial Statements
28
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
PETROLEUM - 4.4% (Continued)
Devon Energy Corporation 1,500 $ 52,125
Exxon Corporation 6,300 617,400
Mobil Corporation 5,000 611,250
Noble Affiliates, Inc. 2,800 134,050
Repsol SA 2,500 95,312
Royal Dutch/Shell Transport Group 3,400 580,550
Tosco Corporation 1,000 79,125
Union Texas Petroleum Holdings 6,700 149,912
United Meridian Corporation* 1,000 50,500
USX-Marathon Group 4,500 107,437
PRECISION INSTRUMENT - 0.5%
Coherent, Inc.* 1,100 46,475
Dionex Corporation* 1,000 35,000
Eastman Kodak Company 2,900 232,725
Teleflex, Inc. 1,000 52,125
PUBLISHING - 0.5%
McGraw-Hill, Inc. 4,000 184,500
Reader's Digest Association, Inc. 1,000 40,250
Scholastic Corporation* 1,000 67,250
Value Line, Inc. 2,500 110,625
RAILROAD - 0.4%
Kansas City Southern Ind., Inc. 2,000 90,000
Union Pacific Corporation 2,000 120,250
Wisconsin Central Transportation* 3,000 118,875
REAL ESTATE INVESTMENT TRUST - 2.0%
CarrAmerica Realty Corporation 5,000 146,250
Federal Realty Investment Trust 4,800 130,200
Meditrust Corporation 4,500 180,000
National Health Investors, Inc. 1,600 60,600
Nationwide Health Properties, Inc. 7,500 181,875
Security Capital Industrial Trust 7,908 169,033
Security Capital Pacific Trust 2,000 45,750
Simon DeBartolo Group, Inc. 3,400 105,400
South West Property Trust 7,500 126,562
Starwood Lodging Trust 4,600 253,575
Weingarten Realty Investors 3,200 130,000
RECREATION - 1.0%
Brunswick Corporation 3,000 72,000
Callaway Golf Company 1,400 40,250
Carmike Cinemas, Inc.* 3,000 76,125
Carnival Corporation 2,000 66,000
Gaylord Entertainment Company 1,102 25,208
Harley-Davidson, Inc. 2,000 94,000
Time Warner, Inc. 2,200 82,500
Walt Disney Company 4,298 299,786
RESTAURANT - 0.2%
McDonald's Corporation 2,500 113,438
Outback Steakhouse, Inc.* 2,250 60,188
RETAIL STORE - 1.8%
AutoZone, Inc.* 1,000 27,500
Bed Bath & Beyond, Inc.* 4,000 97,000
Borders Group, Inc.* 1,500 53,813
Circuit City Stores, Inc. 2,200 66,275
Corporate Express, Inc.* 1,600 47,100
Dayton Hudson Corporation 4,000 157,000
Dollar General Corporation 4,000 128,000
Gymboree Corporation* 1,400 32,025
J.C. Penney Company 1,100 53,625
Men's Wearhouse, Inc.* 1,500 36,750
MSC Industrial Direct Co., Inc.* 900 33,300
OfficeMax, Inc.* 2,000 21,500
Pep Boys-Manny, Moe & Jack 1,000 30,750
Sears, Roebuck & Company 3,900 179,400
Starbucks Corporation* 4,000 114,500
Tandy Corporation 1,600 70,400
The Sports Authority, Inc.* 2,000 43,500
Tiffany & Company 800 29,300
Viking Office Products, Inc.* 2,200 58,712
Williams-Sonoma, Inc.* 1,500 54,562
Zale Corporation* 1,500 28,875
SECURITIES BROKERAGE - 0.4%
Bear Stearns Companies, Inc. 2,659 74,120
Charles Schwab Corporation 3,000 96,000
</TABLE>
See Notes To Financial Statements
29
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ------------------------------------ ------- ------------
<S> <C> <C>
SECURITIES BROKERAGE - 0.4% (Continued)
Investment Technology Group* 2,900 $ 55,825
Merrill Lynch & Company, Inc. 1,200 97,800
SEMICONDUCTOR - 1.1%
Atmel Corporation* 2,000 66,250
Intel Corporation 2,400 314,250
International Rectifier Corp.* 2,000 30,500
Linear Technology Corporation 2,200 96,525
Maxim Integrated Products, Inc.* 3,400 147,050
SDL, Inc.* 1,500 39,375
Texas Instruments, Inc. 2,400 153,000
SHOE - 0.1%
Wolverine World Wide, Inc. 1,575 45,675
STEEL - 0.3%
Nucor Corporation 2,300 117,300
Worthington Industries 4,000 72,500
TELECOMMUNICATIONS EQUIPMENT - 0.8%
Andrew Corporation* 1,575 83,573
Ascend Communications, Inc.* 1,500 93,188
Aspect Telecommunications Corp.* 1,000 63,500
Cascade Communications Corp.* 1,500 82,688
Coherent Commun. Systems Corp.* 1,500 29,250
DSP Communications, Inc.* 1,600 31,000
Glenayre Technologies, Inc.* 1,000 21,563
PictureTel Corporation* 1,000 26,000
Tellabs, Inc.* 2,400 90,300
U.S. Robotics, Inc.* 1,400 100,800
TELECOMMUNICATIONS SERVICE - 3.1%
360 Communications Company* 1,800 41,850
ALLTEL Corporation 4,000 125,500
Ameritech Corporation 3,000 181,875
AT&T Corporation 1,500 65,063
Bell Atlantic Corporation 4,100 265,475
BellSouth Corporation 10,000 405,000
Cellular Commun. of Puerto Rico* 1,000 19,750
Centennial Cellular Corporation* 1,000 12,125
Cincinnati Bell Inc. 2,000 123,250
CommNet Cellular, Inc.* 1,000 27,875
Frontier Corporation 1,600 36,200
GTE Corporation 11,500 521,813
InterCel, Inc.* 2,500 30,625
LCI International, Inc.* 1,500 32,438
SBC Communications, Inc. 5,900 306,062
Southern New England Tele. Corp. 2,000 77,750
United States Cellular Corporation* 1,100 30,662
TEXTILES - 0.1%
Unifi, Inc. 1,300 41,762
THRIFT - 0.5%
Federal Home Loan Mortgage Corp. 1,000 110,375
Federal National Mortgage Assoc. 6,800 255,850
JSB Financial Corporation 1,000 38,000
TIRE & RUBBER - 0.2%
Goodyear Tire & Rubber Company 2,600 133,575
TOBACCO - 0.8%
American Brands, Inc. 2,000 99,250
Philip Morris Companies, Inc. 4,300 485,900
TOILETRIES / COSMETICS - 0.5%
Gillette Company 1,600 124,400
Int'l Flavors & Fragrances, Inc. 5,000 225,000
TOYS - 0.1%
Mattel, Inc. 3,125 86,719
TRUCKING & TRANSPORT LEASING - 0.1%
Werner Enterprise, Inc. 3,150 57,093
WATER UTILITY - 0.1%
American Water Works Co., Inc. 3,500 72,188
-----------
TOTAL COMMON STOCK - 61.4%
(Cost $29,925,295) $46,168,966
-----------
</TABLE>
* Securities are non-income producing
See Notes To Financial Statements
30
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
AEROSPACE / DEFENSE - 1.0%
Lockheed Corporation BBB+ 9.375 10/15/99 $ 100,000 $ 107,426
Lockheed Martin Corporation BBB+ 7.650 05/01/16 500,000 516,876
Rockwell International Corp. AA 8.875 09/15/99 100,000 106,000
AUTO PARTS - 0.6%
Eaton Corporation A 7.000 04/01/11 500,000 480,313
AUTO & TRUCK - 0.7%
General Motors Corporation A- 9.125 07/15/01 500,000 545,626
BANK - 4.4%
Bankers Trust New York Corp. A- 9.500 06/14/00 250,000 272,982
Chase Manhattan Corp. A- 6.750 08/15/08 400,000 388,500
First Chicago NBD Corporation A 8.100 03/01/02 500,000 527,657
First Union Corporation A- 9.450 06/15/99 100,000 106,375
First Union Corporation A- 8.000 08/15/09 500,000 521,163
Morgan, J.P. & Company AA 8.500 08/15/03 500,000 544,844
NationsBank Corporation A 6.500 03/15/06 500,000 481,251
Royal Bank of Scotland A+ 6.375 02/01/11 500,000 460,640
CHEMICAL - 0.8%
Monsanto Company A 8.875 12/15/09 500,000 575,307
DIVERSIFIED - 0.7%
Whitman Corporation BBB+ 8.250 02/15/07 500,000 540,879
ELECTRIC & GAS UTILITIES - 5.6%
Alabama Power Company A+ 8.500 05/01/22 500,000 520,924
Duke Power Company AA- 6.375 03/01/08 500,000 470,794
Florida Power & Light Company AA- 7.875 01/01/13 500,000 509,219
Georgia Power Company A+ 7.625 03/01/23 450,000 443,592
Hydro Quebec AAA 7.000 03/01/05 500,000 494,986
Monongahela Power A+ 8.500 06/01/22 500,000 520,965
Potomac Edison Company A+ 7.750 05/01/25 500,000 504,240
Public Service Electric & Gas A- 7.000 09/01/24 200,000 185,313
Virginia Electric & Power Company A 8.000 03/01/04 500,000 533,598
FINANCIAL SERVICES - 4.4%
Associated Corporation of North America AA- 8.700 01/01/97 200,000 199,966
Deere, John Capital Corporation A- 8.625 08/01/19 500,000 527,636
Fairfax Financial Holdings BBB+ 8.250 10/01/15 500,000 522,030
Fletcher Challenge Capital Canada, Inc. BBB 8.250 06/20/16 500,000 528,282
</TABLE>
See Notes To Financial Statements
31
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - 4.4% (Continued)
Ford Holdings, Inc. A+ 9.250 03/01/00 $ 475,000 $ 510,477
General Electric Capital Corporation AAA 7.750 03/15/02 500,000 526,313
Loews Corporation AA- 8.250 01/15/07 500,000 519,215
FOOD PROCESSING - 1.0%
Kraft, Inc. A 8.500 02/15/17 250,000 258,617
Nabisco, Inc. BBB 7.050 07/15/07 500,000 491,251
FOREIGN GOVERNMENT - 2.0%
Province of Nova Scotia A- 7.250 07/27/13 500,000 494,923
Province of Quebec A+ 8.800 04/15/03 350,000 384,453
Province of Saskatchewan A- 9.375 12/15/20 500,000 603,274
GOVERNMENTAL AGENCY - 0.7%
Federal National Mortgage Association Not Rated 5.520 04/13/98 500,000 496,269
HOTEL / GAMING - 0.6%
ITT Corporation BBB 7.375 11/15/15 500,000 483,346
INSURANCE - 1.4%
Chubb Corporation AA+ 8.750 11/15/99 59,000 61,543
CIGNA Corporation A- 8.250 01/01/07 500,000 541,357
Metropolitan Life Insurance Co.* A+ 7.450 11/01/23 450,000 424,714
MACHINERY - 0.6%
Case Corporation BBB 7.250 01/15/16 500,000 486,407
MEDICAL SUPPLIES - 0.6%
Cardinal Health, Inc. A- 6.000 01/15/06 500,000 466,859
METALS & MINING - 0.6%
Placer Dome, Inc. BBB 7.750 06/15/15 500,000 483,498
NATURAL GAS - 0.6%
Enron Corporation BBB+ 7.000 08/15/23 500,000 462,397
NEWSPAPER - 0.6%
Knight-Ridder, Inc. AA- 9.875 04/15/09 100,000 123,901
Tribune Company A 8.450 02/25/98 300,000 307,658
OFFICE EQUIPMENT & SUPPLIES - 0.3%
Xerox Corporation A 9.750 03/15/00 200,000 218,188
</TABLE>
See Notes To Financial Statements
32
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PACKAGING & CONTAINER - 0.6%
Crown Cork & Seal Company, Inc. BBB+ 8.375 01/15/05 $ 390,000 $ 423,154
PETROLEUM - 1.7%
Atlantic Richfield Company A 8.500 04/01/12 250,000 281,016
Louisiana Land & Exploration Co. BBB 7.625 04/15/13 500,000 506,563
OXY USA, Inc. BBB 7.000 04/15/11 500,000 472,969
RESTAURANT - 0.6%
Darden Restaurants, Inc. BBB 7.125 02/01/16 500,000 467,500
RETAIL STORE - 0.9%
Dayton Hudson Corporation BBB+ 9.625 02/01/08 200,000 236,557
Kmart Corporation B+ 8.125 12/01/06 500,000 471,250
SECURITIES BROKERAGE - 1.1%
Lehman Brothers Holdings, Inc. A 8.500 08/01/15 500,000 531,407
Salomon, Inc. BBB 9.450 03/15/98 300,000 310,452
TELECOMMUNICATIONS SERVICE - 2.3%
AT&T Corporation AA- 7.125 01/15/02 500,000 510,782
Michigan Bell Telephone AAA 7.500 02/15/23 500,000 496,345
NYNEX Corporation A 7.375 12/15/11 250,000 246,889
Southwestern Bell Telephone Company AA 7.375 05/01/12 500,000 497,034
TOBACCO - 0.6%
Philip Morris Companies, Inc. A 9.000 01/01/01 400,000 430,761
U.S. GOVERNMENT - 1.4%
U.S. Treasury 6.500 08/15/05 500,000 503,200
U.S. Treasury 7.875 11/15/04 500,000 545,625
TOTAL FIXED-INCOME SECURITIES - 36.4%
(Cost $26,987,108) 27,413,548
-------------
TOTAL INVESTMENTS IN SECURITIES - 97.8%
(Cost $56,912,403) $ 73,582,514
=============
</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, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ---------------------------------------- --------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AIR TRANSPORT - 2.1%
Federal Express Corporation BBB 9.650 06/15/12 $ 25,000 $ 29,519
BANK - 5.7%
Chase Manhattan Corp. A- 7.625 01/15/03 25,000 25,977
NationsBank Corporation A 7.750 08/15/15 25,000 25,555
Westpac Banking Corporation A+ 9.125 08/15/01 25,000 27,469
BEVERAGE - 1.9%
Coca-Cola Enterprises, Inc. AA- 8.000 09/15/22 25,000 26,641
CHEMICAL - 2.1%
Monsanto Company A 8.700 10/15/21 25,000 28,695
COMPUTERS & PERIPHERALS - 1.9%
Digital Equipment Corporation BB+ 8.625 11/01/12 25,000 25,808
DIVERSIFIED - 4.3%
AlliedSignal, Inc. A 9.500 06/01/16 25,000 30,807
United Technologies Corporation A+ 8.750 03/01/21 25,000 29,050
ELECTRIC & GAS UTILITIES - 17.3%
Consolidated Edison Co. of N.Y., Inc. A+ 7.375 09/01/05 25,000 25,206
Florida Power Corporation AA- 8.625 11/01/21 50,000 53,351
FPL Group Capital, Inc. A+ 7.625 05/01/13 25,000 25,078
Houston Lighting & Power Co. A- 8.750 03/01/22 30,000 32,032
Hydro Quebec A+ 8.400 01/15/22 50,000 54,781
Nevada Power Company BBB 8.500 01/01/23 25,000 26,308
Texas Utilities Company BBB+ 6.750 03/01/03 25,000 24,922
ELECTRICAL EQUIPMENT - 3.6%
Philips Electronics N.V. BBB+ 7.250 08/15/13 25,000 24,569
Westinghouse Electric Corp. BB 8.625 08/01/12 25,000 25,063
ENVIRONMENTAL - 1.9%
Laidlaw, Inc. BBB+ 8.250 05/15/23 25,000 26,496
FINANCIAL SERVICES - 7.9%
Barclays North American Capital Corp. AA- 9.750 05/15/21 25,000 27,926
Dean Witter Discover & Company A 6.750 10/15/13 40,000 37,500
Ford Motor Credit Corporation A+ 6.375 11/05/08 25,000 23,383
Loews Corporation AA- 7.000 10/15/23 25,000 22,905
</TABLE>
See Notes To Financial Statements
34
<PAGE>
ADVANCE CAPITAL I, INC. - LONG TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ---------------------------------------- --------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
FOOD PROCESSING - 4.7%
Borden, Inc. BB+ 9.250 06/15/19 $ 25,000 $ 25,589
Dole Food Company, Inc. BBB- 7.875 07/15/13 40,000 40,487
FOREIGN GOVERNMENT - 4.0%
Province of Ontario AA- 7.375 01/27/03 25,000 25,938
Province of Saskatchewan A- 9.375 12/15/20 25,000 30,164
INSURANCE - 5.2%
CIGNA Corporation A- 7.400 01/15/03 25,000 25,742
Metropolitan Life Insurance Co.* A+ 7.450 11/01/23 50,000 47,190
MACHINERY - 1.9%
Caterpillar, Inc. A 9.750 06/01/19 25,000 27,169
METALS & MINING - 1.9%
Alcan Aluminum Ltd. A- 8.875 01/15/22 25,000 27,080
PAPER & FOREST PRODUCTS - 1.9%
Georgia-Pacific Corporation BBB- 9.125 07/01/22 25,000 26,625
PETROLEUM - 3.6%
NOVA Gas Transmission A- 7.875 04/01/23 25,000 25,917
OXY USA, Inc. BBB 7.000 04/15/11 25,000 23,648
RECREATION - 1.8%
Brunswick Corporation BBB+ 7.375 09/01/23 25,000 24,520
RETAIL STORE - 3.9%
Dayton Hudson Corporation BBB+ 10.000 01/01/11 20,000 24,578
Sears, Roebuck & Company A- 9.375 11/01/11 25,000 29,707
SECURITIES BROKERAGE - 3.9%
Lehman Brothers Holdings, Inc. A 7.625 07/15/99 25,000 25,531
Salomon, Inc. BBB 6.750 01/15/06 30,000 28,379
TELECOMMUNICATIONS SERVICE - 11.1%
Bell Telephone Co. Pennsylvania AA 7.500 05/01/13 50,000 49,911
GTE Corporation A- 7.830 05/01/23 50,000 50,545
NYNEX Corporation A 7.000 06/15/13 30,000 29,463
Southwestern Bell Telephone Company AA 7.375 05/01/12 25,000 24,852
</TABLE>
See Notes To Financial Statements
35
<PAGE>
ADVANCE CAPITAL I, INC. - LONG TERM INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ---------------------------------------- --------- ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
U. S. GOVERNMENT - 5.0%
U.S. Treasury 5.750 08/15/03 $ 35,000 $ 33,950
U.S. Treasury 6.750 08/15/26 35,000 35,263
-----------
TOTAL FIXED-INCOME SECURITIES - 97.6%
(Cost $1,354,162) $1,361,289
===========
</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, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ADVERTISING - 0.7%
Heritage Media Corporation B 02/15/06 8.750 $ 500,000 $ 485,000
Heritage Media Corporation BB- 06/15/02 11.000 500,000 537,500
Lamar Advertising Company B 12/01/06 9.625 200,000 205,500
AEROSPACE / DEFENSE - 1.3%
AAR Corporation BBB- 10/15/03 7.250 500,000 486,382
Lockheed Corporation BBB+ 03/15/23 7.875 500,000 519,988
McDonnell Douglas Corporation A- 04/01/12 9.750 1,000,000 1,240,626
AIR TRANSPORT - 2.4%
AMR Corporation BB+ 08/01/12 9.000 1,000,000 1,121,876
AMR Corporation BB+ 03/15/00 9.750 100,000 108,500
Delta Air Lines, Inc. BB+ 02/01/11 10.375 500,000 611,407
Federal Express Corporation BBB+ 01/01/15 7.630 1,000,000 1,028,708
United Airlines, Inc. BB 08/15/21 9.750 500,000 587,813
United Airlines, Inc. BB 07/15/21 10.250 500,000 615,000
APPAREL - 1.3%
Fruit of the Loom, Inc. BBB 03/15/11 7.000 1,000,000 931,319
Phillips-Van Heusen Corp. BB+ 11/15/23 7.750 1,000,000 817,677
Platex Family Products Corp. B 12/15/03 9.000 500,000 496,250
AUTO PARTS - 0.6%
JPS Automotive Products Corp. B 06/15/01 11.125 500,000 537,500
Walbro Corporation B+ 07/15/05 9.875 500,000 515,613
AUTO & TRUCK - 1.7%
Ford Motor Company A+ 11/15/22 8.875 2,000,000 2,187,628
General Motors Corporation A- 04/15/16 8.125 700,000 714,490
BANK - 6.1%
Banc One Corporation A+ 07/15/25 7.750 1,000,000 1,025,001
Bank of Boston Corporation BBB 12/01/05 6.625 1,000,000 965,001
Bankers Trust New York Corp. A- 11/15/15 7.500 1,500,000 1,485,470
Chase Manhattan Corp. A- 10/15/08 6.125 1,000,000 913,951
Citicorp A 02/01/16 10.500 199,000 208,347
Comerica Bank A- 12/01/13 7.125 1,000,000 951,876
KeyCorp BBB+ 03/15/06 6.750 1,000,000 975,314
NCNB Corporation A 07/15/15 10.200 1,000,000 1,282,695
Republic New York Corporation AA 05/15/21 9.125 1,000,000 1,182,189
Royal Bank of Scotland A+ 02/01/11 6.375 1,000,000 921,279
Westpac Banking Corporation A+ 08/15/01 9.125 500,000 549,376
</TABLE>
See Notes To Financial Statements
37
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BEVERAGE - 0.2%
Anheuser Busch Companies, Inc. AA- 03/01/17 8.500 $ 386,000 $ 401,923
BROADCASTING / CABLE TV - 4.9%
Cablevision Systems Corp. B 05/15/06 9.875 750,000 770,625
Century Communications Corp. BB- 03/01/05 9.500 1,000,000 1,011,251
Century Communications Corp. BB- 02/15/02 9.750 250,000 256,875
Comcast Corporation BB- 05/15/05 9.375 500,000 520,000
Comcast Corporation BB- 01/15/08 9.500 500,000 513,126
Continental Cablevision, Inc. BBB+ 08/01/13 9.500 500,000 571,719
Jones Intercable, Inc. B+ 07/15/04 11.500 250,000 271,875
Jones Intercable, Inc. B+ 03/01/08 10.500 200,000 215,518
Lenfest Communications, Inc. BB+ 11/01/05 8.375 750,000 720,000
Rogers Cablesystems Ltd. BB+ 03/15/05 10.000 500,000 515,315
Sinclair Broadcast Group, Inc. B 09/30/05 10.000 500,000 510,000
Sinclair Broadcast Group, Inc. B 12/15/03 10.000 575,000 592,401
Tele-Communications, Inc. BBB- 02/15/23 8.750 500,000 470,157
Tele-Communications, Inc. BBB- 01/15/23 9.250 760,000 742,426
Turner Broadcasting System, Inc. BBB- 07/01/13 8.375 750,000 767,727
BUILDING - 2.1%
Continental Homes Holding Corporation B+ 04/15/06 10.000 500,000 516,857
Ryland Group B+ 07/15/02 10.500 1,050,000 1,081,787
Standard Pacific Corporation BB 03/01/00 10.500 300,000 303,000
Toll Corporation BB- 03/15/02 10.500 550,000 570,528
U.S. Home Corporation BB 06/15/03 9.750 1,000,000 1,040,000
BUILDING MATERIALS - 0.3%
Schuller International Group BB- 12/15/04 10.875 500,000 557,500
CHEMICAL - 1.6%
Arcadian Partners, L.P. BB- 05/01/05 10.750 500,000 555,000
Borden Chemicals and Plastics, L.P. BB+ 05/01/05 9.500 500,000 512,500
duPont, E.I. de Nemours & Co. AA- 01/15/22 8.250 1,000,000 1,060,001
Union Carbide Chemicals & Plastics Co. BBB 04/01/23 7.875 600,000 623,764
COMPUTER & PERIPHERALS - 1.4%
Digital Equipment Corporation BB+ 11/01/12 8.625 1,200,000 1,238,801
International Business Machines Corp. A 11/01/19 8.375 1,000,000 1,117,814
DIVERSIFIED - 0.7%
Tenneco, Inc. BBB 11/15/12 9.200 500,000 583,241
Textron, Inc. BBB 07/01/22 8.750 581,000 605,200
</TABLE>
See Notes To Financial Statements
38
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ELECTRIC & GAS UTILITIES - 11.5%
Alabama Power Company A+ 12/01/24 9.000 $1,000,000 $ 1,082,501
Cleveland Electric Illuminating Company BB 03/01/17 9.375 500,000 509,931
Duke Power Company AA- 03/01/22 8.625 500,000 526,956
Florida Power & Light Company AA- 01/01/13 7.875 1,000,000 1,018,439
FPL Group Capital, Inc. A+ 05/01/13 7.625 500,000 501,563
Georgia Power Company A+ 02/01/23 7.950 1,000,000 1,006,603
Hydro Quebec A+ 01/15/22 8.400 800,000 876,501
Illinois Power Co. BBB 02/15/23 8.000 1,000,000 993,056
Indianapolis Power & Light Co. AA- 02/01/24 7.050 1,000,000 952,252
Long Island Lighting Company BB+ 07/15/19 8.900 473,000 465,758
Midland Cogeneration Venture BB- 07/23/02 10.330 387,909 416,033
Monongahela Power Company A+ 06/01/22 8.500 1,500,000 1,562,895
New Orleans Public Service, Inc. BBB 03/01/23 8.000 600,000 604,359
Northern Illinois Gas Company AA 08/15/21 8.875 1,000,000 1,060,814
Philadelphia Electric Company BBB+ 09/01/22 8.250 1,000,000 1,005,939
Potomac Edison Company A+ 06/01/24 8.000 1,000,000 1,029,666
Potomac Electric Power Company A 06/01/21 9.000 1,000,000 1,089,137
Public Service Electric & Gas A- 09/01/24 7.000 1,000,000 926,564
Southern Cal Edison A+ 12/01/17 8.375 655,000 668,944
Southern California Gas Company AA- 10/01/21 8.750 1,000,000 1,067,090
Virginia Electric & Power Company A 10/01/24 8.625 1,000,000 1,065,001
West Penn Power Company A+ 08/01/24 8.125 1,000,000 1,066,242
ELECTRIC EQUIPMENT - 1.6%
Essex Group, Inc. B+ 05/01/03 10.000 1,000,000 1,040,000
Philips Electronics N.V. BBB+ 08/15/13 7.250 1,000,000 982,779
Westinghouse Electric Corp. BB 08/01/12 8.625 750,000 751,876
ELECTRONICS - 0.6%
ADT Operations, Inc. BB+ 08/01/03 9.250 500,000 535,000
Rogers Communications, Inc. BB- 04/15/04 10.875 500,000 527,500
ENVIRONMENTAL - 0.6%
Laidlaw, Inc. BBB+ 05/15/23 8.250 1,000,000 1,059,840
FINANCIAL SERVICES - 3.5%
Auburn Hills Trust A- 05/01/20 12.000 400,000 609,875
CRA Finance USA, Ltd. AA- 12/01/13 7.125 500,000 492,630
Dean Witter Discover & Company A 10/15/13 6.750 1,250,000 1,171,869
Fairfax Financial Holdings BBB+ 10/01/15 8.250 1,500,000 1,566,090
Fletcher Challenge Capital Canada, Inc. BBB 06/20/16 8.250 500,000 528,282
</TABLE>
See Notes To Financial Statements
39
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - 3.5% (Continued)
Keystone Group, Inc. A+ 09/01/03 9.750 $ 500,000 $ 542,500
SunAmerica Inc. A 04/28/23 8.125 1,000,000 1,030,155
FOOD PROCESSING - 1.5%
Chiquita Brands Int'l, Inc. B+ 01/15/04 9.625 1,000,000 1,032,500
ConAgra, Inc. BBB 03/01/21 9.750 500,000 618,844
Nabisco, Inc. BBB 06/15/15 7.550 1,000,000 985,496
FOREIGN GOVERNMENT - 3.1%
Province of Newfoundland BBB+ 10/22/22 8.650 1,000,000 1,121,620
Province of Nova Scotia A- 07/27/13 7.250 1,000,000 989,845
Province of Quebec A+ 12/01/26 8.625 1,000,000 1,120,001
Province of Saskatchewan A- 02/01/13 8.000 1,000,000 1,062,283
Republic of Finland AA 04/01/28 9.625 1,000,000 1,070,404
GROCERY - 0.3%
Safeway, Inc. BBB- 03/15/07 9.875 450,000 508,701
HOTEL / GAMING - 3.4%
Aztar Corporation B 10/01/02 11.000 500,000 487,500
California Hotel Finance Corp. BB- 12/01/02 11.000 400,000 416,000
Circus Circus Enterprises BBB 07/15/13 7.625 450,000 432,000
Empress River Casino Finance Corp. BB 04/01/02 10.750 500,000 527,879
Grand Casinos, Inc. BB 12/01/03 10.125 500,000 502,500
Host Marriott Travel Plaza BB- 05/15/05 9.500 1,000,000 1,040,000
ITT Corporation BBB 11/15/15 7.375 1,000,000 966,691
Prime Hospitality Corp. BB 01/15/06 9.250 500,000 508,665
Showboat, Inc. BB- 05/01/08 9.250 400,000 392,000
Station Casinos B+ 06/01/03 9.625 500,000 492,500
HOUSEHOLD PRODUCTS - 0.4%
American Standard, Inc. B+ 06/01/01 9.875 350,000 371,000
Owens Illinois, Inc. B+ 08/15/04 9.750 250,000 256,294
INSURANCE - 6.5%
Aetna Life & Casualty Company A- 01/15/17 8.000 1,500,000 1,486,212
CIGNA Corporation A- 03/01/23 7.650 500,000 493,438
CNA Financial Corporation A- 11/15/23 7.250 1,000,000 942,397
Continental Corporation BBB- 08/15/12 8.375 600,000 635,932
Kaufman & Broad Home Corp. B+ 05/01/03 9.375 1,000,000 1,010,000
Leucadia National Corporation BBB+ 08/15/13 7.750 910,000 914,550
MBIA, Inc. AA 10/01/22 8.200 2,000,000 2,157,743
</TABLE>
See Notes To Financial Statements
40
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
INSURANCE - 6.5% (Continued)
Metropolitan Life Insurance Co.* A+ 11/01/23 7.450 $ 500,000 $ 471,904
New York Life Insurance Company AA 12/15/23 7.500 1,000,000 981,580
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 8.750 500,000 539,824
MEDICAL SERVICES - 1.6%
Abbey Healthcare Group, Inc. BB+ 11/01/02 9.500 500,000 524,832
Beverly Enterprises Inc. B+ 02/15/06 9.000 500,000 500,000
Columbia/HCA Healthcare Corporation A- 12/15/14 9.000 1,000,000 1,165,754
HEALTHSOUTH Rehabilitation BB- 04/01/01 9.500 500,000 535,000
MEDICAL SUPPLIES - 0.4%
Cardinal Health, Inc. A- 02/15/04 6.500 700,000 684,601
METALS & MINING - 1.5%
Alcan Aluminum Ltd. A- 01/15/22 8.875 1,000,000 1,083,190
Inco Ltd. BBB- 06/15/22 9.600 500,000 563,048
Placer Dome, Inc. BBB 06/15/15 7.750 1,000,000 966,996
NATURAL GAS - 1.1%
Consolidated Natural Gas Company AA- 12/01/11 8.625 845,000 884,390
Seagull Energy BB- 08/01/05 8.625 1,000,000 1,020,000
NEWSPAPER - 0.3%
Hollinger International, Inc. BB- 02/01/06 9.250 500,000 492,500
OILFIELD SERVICES - 0.2%
Rowan Companies, Inc. B+ 12/01/01 11.875 250,000 267,500
PACKAGING & CONTAINERS - 1.6%
Container Corp. of America B+ 04/01/03 9.750 400,000 423,000
Crown Cork & Seal Company, Inc. BBB+ 04/15/23 8.000 1,500,000 1,505,627
Stone Container Corporation B+ 02/01/01 9.875 750,000 757,500
PAPER & FOREST PRODUCTS - 2.8%
Bowater, Inc. BBB 10/15/12 9.500 700,000 821,728
Champion International Corporation BBB 09/01/23 7.625 1,500,000 1,447,289
Fort Howard Corporation B 03/15/03 10.000 400,000 417,465
Georgia-Pacific Corporation BBB- 07/01/22 9.125 1,000,000 1,065,000
Sweetheart Corporation, Inc. B+ 09/01/00 9.625 1,000,000 1,037,500
</TABLE>
See Notes To Financial Statements
41
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PETROLEUM - 7.3%
Amoco Company AAA 12/15/16 8.625 $2,000,000 $ 2,092,202
ANR Pipeline Company BBB- 11/01/21 9.625 1,000,000 1,214,459
Clark Oil & Refining Corporation BB 09/15/04 9.500 650,000 666,250
Clark USA, Inc. B+ 12/01/05 10.875 500,000 522,257
Diamond Shamrock R & M, Inc. BBB 04/01/23 8.000 600,000 606,306
Louisiana Land & Exploration Co. BBB 04/15/13 7.625 1,000,000 1,013,126
Maxus Energy Corporation BB- 02/15/03 9.500 1,000,000 1,023,050
Maxus Energy Corporation BB- 11/01/03 9.375 750,000 768,750
NOVA Gas Transmission A- 04/01/23 7.875 600,000 621,996
OXY USA, Inc. BBB 04/15/11 7.000 1,000,000 945,939
Phillips Petroleum Company A- 01/01/23 8.490 1,000,000 1,066,381
USX Corporation BBB- 02/15/12 9.375 750,000 859,335
Vintage Petroleum, Inc. B+ 12/15/05 9.000 1,000,000 981,327
PUBLISHING - 1.1%
K-III Communications Corporation BB- 06/01/04 10.250 750,000 791,250
News America Holdings BBB 08/10/18 8.250 1,000,000 1,012,814
RAILROAD - 1.2%
Kansas City Southern Industries, Inc. BBB+ 07/01/22 8.800 500,000 531,089
Union Pacific Corporation BBB 05/01/25 8.350 1,500,000 1,557,225
REAL ESTATE INVESTMENT TRUST - 0.4%
Taubman Realty Group Ltd. BBB 10/01/03 7.000 750,000 726,329
RECREATION - 1.2%
Brunswick Corporation BBB+ 09/01/23 7.375 975,000 956,281
Time Warner, Inc. BBB- 01/15/13 9.125 1,000,000 1,095,000
RESTAURANT - 0.8%
Darden Restaurants, Inc. BBB 02/01/16 7.125 1,500,000 1,402,500
RETAIL STORE - 2.9%
Best Buy, Inc. B- 10/01/00 8.625 1,000,000 910,000
Dayton Hudson Corporation BBB+ 08/01/23 7.650 750,000 716,954
Genesco, Inc. B 02/01/03 10.375 425,000 419,241
Kmart Corporation B+ 10/01/12 7.750 1,000,000 844,190
Rite-Aid Corporation BBB+ 08/15/13 6.875 1,000,000 940,314
Sears, Roebuck & Company A- 11/01/11 9.375 1,000,000 1,188,272
</TABLE>
See Notes To Financial Statements
42
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- -------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
SECURITIES BROKERAGE - 3.1%
Bear Stearns Companies, Inc. A 01/15/04 6.625 $1,000,000 $ 976,876
Goldman Sachs Group A+ 03/01/13 8.000 1,000,000 1,029,503
Lehman Brothers, Inc. A 05/15/05 11.625 1,023,000 1,290,944
Morgan Stanley Group, Inc. A+ 10/01/13 7.000 1,000,000 961,312
Paine Webber Group, Inc. BBB+ 02/15/14 7.625 1,000,000 976,370
STEEL - 0.9%
AK Steel Corporation BB- 04/01/04 10.750 500,000 545,000
Jorgensen, Earle M. Company B 03/01/00 10.750 500,000 510,000
Wheeling-Pittsburgh Corporation BB- 11/15/03 9.375 500,000 490,000
TELECOMMUNICATIONS SERVICE - 4.2%
GTE Corporation A- 11/01/21 8.750 1,000,000 1,151,251
NYNEX Corporation A 12/15/11 7.375 500,000 493,779
Paging Network, Inc. B 02/01/06 8.875 1,000,000 953,554
Panamsat L.P. BB- 08/01/00 9.750 500,000 528,750
Southern Bell Telephone & Telegraph Co. AAA 03/15/13 7.625 3,000,000 3,030,817
Southwestern Bell Telephone Company AA 05/01/12 7.375 1,000,000 994,068
TEXTILES - 1.4%
Dominion Textile, Inc. BB 04/01/06 9.250 500,000 506,250
Fieldcrest Cannon, Inc. B+ 06/15/04 11.250 1,000,000 1,040,000
WestPoint Stevens, Inc. BB- 12/15/01 8.750 750,000 776,250
TOBACCO - 0.8%
Philip Morris Companies, Inc. A 01/15/17 8.375 500,000 503,021
RJR Nabisco, Inc. BBB- 04/15/04 8.750 775,000 780,329
U.S. GOVERNMENT - 2.3%
U.S. Treasury 08/15/23 6.250 1,000,000 937,500
U.S. Treasury 08/15/05 6.500 1,000,000 1,006,402
U.S. Treasury 08/15/26 6.750 2,000,000 2,015,000
-------------
TOTAL FIXED INCOME SECURITIES - 95.4%
(Cost $158,107,243) $162,937,383
=============
</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, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY LONG TERM RETIREMENT
GROWTH BOND BALANCED INCOME INCOME
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities . . . . . . . . $ 38,393,985 $ 4,332,807 $ 73,582,514 $ 1,361,289 $162,937,383
Cash . . . . . . . . . . . . . . . . . . . 408,054 18,889 1,005,304 5,000 4,386,032
Receivables
Dividends and interest . . . . . . . . . 15,768 84,231 717,190 28,658 3,590,692
Securities Sold . . . . . . . . . . . . 0 0 0 0 0
Prepaid expenses . . . . . . . . . . . . . 4,078 1,559 6,989 1,075 13,987
------------- ------------- ------------- ------------- -------------
Total assets . . . . . . . . . . . . . . . 38,821,885 4,437,486 75,311,997 1,396,022 170,928,094
LIABILITIES
Payable to affiliated entities
Investment advisory fees . . . . . . . . 22,398 1,481 43,537 467 71,085
Distribution fees . . . . . . . . . . . 261 0 510 0 1,150
Accounts payable and accrued expenses . . 14,229 1,408 23,474 72 45,072
Securities purchased . . . . . . . . . . . 18,104 0 32,587 0 0
Distributions payable . . . . . . . . . . 0 4,111 10,216 687 11,596
------------- ------------- ------------- ------------- -------------
Total liabilities . . . . . . . . . . . . 54,992 7,000 110,324 1,226 128,903
------------- ------------- ------------- ------------- -------------
Net assets . . . . . . . . . . . . . . . . $ 38,766,893 $ 4,430,486 $ 75,201,673 $ 1,394,796 $170,799,191
============= ============= ============= ============= =============
NET ASSETS
Paid-in capital . . . . . . . . . . . . . $ 27,625,290 $ 4,280,485 $ 58,531,562 $ 1,394,325 $166,940,004
Accumulated undistributed net realized
loss on investments . . . . . . . . . . (127,785) (1,070) 0 (6,656) (970,953)
Net unrealized appreciation in value of
investments . . . . . . . . . . . . . . 11,269,388 151,071 16,670,111 7,127 4,830,140
------------- ------------- ------------- ------------- -------------
Net assets . . . . . . . . . . . . . . . . $ 38,766,893 $ 4,430,486 $ 75,201,673 $ 1,394,796 $170,799,191
============= ============= ============= ============= =============
SHARES OUTSTANDING . . . . . . . . . . . . . 2,633,924 427,193 5,497,973 135,750 16,747,398
============= ============= ============= ============= =============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE . . . . . . . . $ 14.72 $ 10.37 $ 13.68 $ 10.27 $ 10.20
============= ============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
44
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY LONG TERM RETIREMENT
GROWTH BOND BALANCED INCOME INCOME
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . $ 25,491 $ 317,386 $ 1,888,004 $ 102,556 $ 13,007,779
Dividends . . . . . . . . . . . . . . . . . . 169,376 0 925,704 0 0
------------- ------------- ------------- ------------- -------------
Total investment income . . . . . . . . . . . 194,867 317,386 2,813,708 102,556 13,007,779
EXPENSES
Paid to affiliates:
Investment advisory fees . . . . . . . . . . 229,385 17,394 465,621 5,436 785,763
Administration fees . . . . . . . . . . . . . 0 0 0 0 0
Distribution fees . . . . . . . . . . . . . . 81,923 0 166,293 0 392,882
Transfer and dividend disbursing
agent fees . . . . . . . . . . . . . . . . 0 0 0 0 0
Paid to others:
Custodial fees . . . . . . . . . . . . . . . 21,841 2,659 27,206 1,777 9,417
Directors fees and expenses . . . . . . . . . 977 131 1,987 0 4,702
Professional fees . . . . . . . . . . . . . . 5,860 784 11,923 0 28,213
Shareholder reporting costs . . . . . . . . . 8,532 1,194 17,689 74 40,752
Registration and filing fees . . . . . . . . 4,630 1,464 4,728 1,400 12,942
Other operating expenses . . . . . . . . . . 4,408 610 9,436 42 20,806
------------- ------------- ------------- ------------- -------------
Total expenses . . . . . . . . . . . . . . . 357,556 24,236 704,883 8,729 1,295,477
------------ ------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . (162,689) 293,150 2,108,825 93,827 11,712,302
REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from securities sold . . . . . . . . 7,991,824 845,746 8,370,070 84,582 12,719,017
Cost of securities sold . . . . . . . . . . . (7,862,959) (830,856) (6,948,023) (85,479) (13,175,690)
------------- ------------- ------------- ------------- -------------
Net realized gain (loss) on investments . . . 128,865 14,890 1,422,047 (897) (456,673)
UNREALIZED GAIN (LOSS) ON INVESTMENTS
Appreciation, Beginning of year . . . . . . . 6,131,147 340,412 10,985,562 72,955 8,496,965
Appreciation, End of year . . . . . . . . . . 11,269,388 151,071 16,670,111 7,127 4,830,140
------------- ------------- ------------- ------------- -------------
Net unrealized gain (loss) on investments . . 5,138,241 (189,341) 5,684,549 (65,828) (3,666,825)
------------- ------------- ------------- ------------- -------------
NET GAIN (LOSS) ON INVESTMENTS . . . . . . . . . 5,267,106 (174,451) 7,106,596 (66,725) (4,123,498)
------------- ------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . $ 5,104,417 $ 118,699 $ 9,215,421 $ 27,102 $ 7,588,804
============= ============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
45
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH BOND
--------------------------- ---------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . . $ (162,689) $ (56,945) $ 293,150 $ 293,799
Net realized gain (loss) on investments . . . . . . 128,865 316,515 14,890 11,845
Net unrealized gain (loss) on investments . . . . . 5,138,241 5,990,202 (189,341) 483,876
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations 5,104,417 6,249,772 118,699 789,520
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . . . 0 0 (293,150) (293,799)
Net realized gain on investments . . . . . . . . . 0 0 0 0
------------- ------------- ------------- -------------
Total distributions to shareholders . . . . . . . . 0 0 (293,150) (293,799)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . . 10,814,068 8,534,816 747,478 654,515
Reinvestment of distributions . . . . . . . . . . . 0 0 246,917 250,365
Cost of shares reacquired . . . . . . . . . . . . . (2,776,738) (1,793,152) (916,571) (872,964)
------------- ------------- ------------- -------------
Net increase derived from share transactions . . . 8,037,330 6,741,664 77,824 31,916
------------- ------------- ------------- -------------
Net increase (decrease) in net assets . . . . . . . 13,141,747 12,991,436 (96,627) 527,637
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . 25,625,146 12,633,710 4,527,113 3,999,476
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . . $ 38,766,893 $ 25,625,146 $ 4,430,486 $ 4,527,113
============= ============= ============= =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . 792,133 822,812 71,788 63,642
Shares issued from reinvestment of distributions . 0 0 23,856 24,367
Reacquired . . . . . . . . . . . . . . . . . . . . (202,707) (169,448) (88,198) (84,347)
------------- ------------- ------------- -------------
Net increase in shares outstanding . . . . . . . . 589,426 653,364 7,446 3,662
Outstanding:
Beginning of year . . . . . . . . . . . . . . . . 2,044,498 1,391,134 419,747 416,085
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . 2,633,924 2,044,498 427,193 419,747
============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
46
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED LONG TERM INCOME
--------------------------- ---------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . . $ 2,108,825 $ 1,600,391 $ 93,827 $ 91,770
Net realized gain (loss) on investments . . . . . . 1,422,047 1,455,272 (897) 687
Net unrealized gain (loss) on investments . . . . . 5,684,549 10,850,004 (65,828) 204,161
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations 9,215,421 13,905,667 27,102 296,618
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . . . (2,108,825) (1,600,391) (93,827) (91,770)
Net realized gain on investments . . . . . . . . . (1,422,047) (675,694) 0 0
------------- ------------- ------------- -------------
Total distributions to shareholders . . . . . . . . (3,530,872) (2,276,085) (93,827) (91,770)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . . 14,712,818 6,216,671 43,803 88,084
Reinvestment of distributions . . . . . . . . . . . 3,500,989 2,254,669 86,013 90,571
Cost of shares reacquired . . . . . . . . . . . . . (7,995,453) (5,022,865) (118,662) (95,945)
------------- ------------- ------------- -------------
Net increase derived from share transactions . . . 10,218,354 3,448,475 11,154 82,710
------------- ------------- ------------- -------------
Net increase (decrease) in net assets . . . . . . . 15,902,903 15,078,057 (55,571) 287,558
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . 59,298,770 44,220,713 1,450,367 1,162,809
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . . $ 75,201,673 $ 59,298,770 $ 1,394,796 $ 1,450,367
============= ============= ============= =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . 1,132,445 537,704 4,368 8,833
Shares issued from reinvestment of distributions . 262,475 190,968 8,433 8,984
Reacquired . . . . . . . . . . . . . . . . . . . . (615,458) (445,049) (11,587) (9,616)
------------- ------------- ------------- -------------
Net increase in shares outstanding . . . . . . . . 779,462 283,623 1,214 8,201
Outstanding:
Beginning of year . . . . . . . . . . . . . . . . 4,718,511 4,434,888 134,536 126,335
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . 5,497,973 4,718,511 135,750 134,536
============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
47
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - Continued
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT INCOME
---------------------------
1996 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . . $ 11,712,302 $ 9,158,774
Net realized gain (loss) on investments . . . . . . (456,673) (309,780)
Net unrealized gain (loss) on investments . . . . . (3,666,825) 15,790,332
------------- -------------
Net increase (decrease) in net assets
resulting from operations . . . . . . . . . . . . 7,588,804 24,639,326
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . . . (11,712,302) (9,158,774)
Net realized gain on investments . . . . . . . . . 0 0
------------- -------------
Total distributions to shareholders . . . . . . . . (11,712,302) (9,158,774)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . . 39,730,156 41,855,679
Reinvestment of distributions . . . . . . . . . . . 11,592,633 9,090,489
Cost of shares reacquired . . . . . . . . . . . . . (15,699,328) (11,289,892)
------------- -------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . . 35,623,461 39,656,276
------------- -------------
Net increase (decrease) in net assets . . . . . . . 31,499,963 55,136,828
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . 139,299,228 84,162,400
------------- -------------
End of period . . . . . . . . . . . . . . . . . . . $170,799,191 $139,299,228
============= =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . 3,902,770 4,342,406
Shares issued from reinvestment of distributions . 1,150,356 907,982
Reacquired . . . . . . . . . . . . . . . . . . . . (1,557,136) (1,130,935)
------------- -------------
Net increase (decrease) in shares outstanding . . . 3,495,990 4,119,453
Outstanding:
Beginning of year . . . . . . . . . . . . . . . . 13,251,408 9,131,955
------------- -------------
End of period . . . . . . . . . . . . . . . . . . 16,747,398 13,251,408
============= =============
</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
generally 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 intends to distribute all of its
taxable income to its shareholders. Therefore, no federal
income tax provision is provided.
Dividends
Income dividends in the Bond, Balanced, Long Term Income
and Retirement Income Funds are declared daily, except on
Saturdays, Sundays and holidays and are paid monthly on the last
business day of the month. Income dividends in the Equity
Growth Fund, if any, are declared
49
<PAGE>
NOTE 2. ACCOUNTING POLICIES (CONTINUED)
annually and paid on the last business day of the year. Capital
gain dividends, if any, are declared annually on the last
business day of the year and are normally paid within 45 days.
Other
Security transactions are accounted for on the trade date,
the date the order to buy or sell is executed. Interest income
is recorded on the accrual basis. Dividend income is recorded
on the ex-dividend date. Premium and discount on fixed income
securities are amortized using the effective interest method.
Realized gains and losses on security transactions are
determined on the first-in, first-out method for book and tax
purposes. 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. T. Rowe Price Associates, Inc.
(TRPA) serves as sub-adviser for that portion of the portfolio
of assets of the Equity Growth Fund and Balanced Fund which are
determined by MANAGEMENT to be invested in common stocks.
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 Administrator, 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. For its services, TRPA is paid
a fee by MANAGEMENT equal on an annual basis to .20% of the
average daily net assets of the Equity Growth Fund and that
portion of the Balanced Fund invested in common stocks. 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
$1,503,599 by MANAGEMENT for 1996. The COMPANY was charged
distribution fees of $641,098 by SERVICES for 1996. SERVICES
paid or accrued to brokerage firms a total of $15,127 for
distributing COMPANY shares for 1996. At December 31, 1996 an
employee retirement plan sponsored by SERVICES owned 52,675
shares (2.0%) of the Equity Growth Fund and 14,650 shares (0.3%)
of the Balanced Fund.
50
<PAGE>
NOTE 3. TRANSACTIONS WITH AFFILIATES (Continued)
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 1996 were as
follows:
<TABLE>
<CAPTION>
Equity Long Term Retirement
Growth Bond Balanced Income Income
------ ---- -------- ---------- ---------
<S> <C> <C> <C> <C>
Purchases $15,945,323 $919,113 $16,353,198 $112,125 $43,539,878
Sales 7,991,824 845,746 8,370,070 84,582 12,719,017
</TABLE>
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 $516,538 None $36,313 $3,086,328
Sales None 317,854 None 38,432 2,380,813
</TABLE>
Gross unrealized appreciation and depreciation of
investments for book and tax purposes as of December 31, 1996
were as follows:
<TABLE>
<CAPTION>
Equity LongTerm Retirement
Growth Bond Balanced Income Income
------ ---- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Appreciation $12,371,787 $175,234 $17,505,183 $32,826 $6,589,985
Depreciation 1,102,399 24,163 835,072 25,699 1,759,845
</TABLE>
NOTE 5. CASH
As of December 31, 1996, substantially all cash was
invested in the Monitor Money Market Fund, bearing interest at a
variable rate (approximately 4.9%).
51
<PAGE>
NOTE 6. CAPITAL LOSS CARRYOVERS
For 1996, the Company utilized $128,865 and $14,890 of
capital loss carryovers in the Equity Growth and Bond Funds
respectively. At December 31, 1996, 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 $127,785 $1,070 $5,759 $204,500
December 31, 2003 0 0 0 309,780
December 31, 2004 0 0 0 456,673
-------- ------ --------- ----------
$127,785 $1,070 $5,759 $970,953
======== ====== ========= ==========
</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.
52
<PAGE>
Report of Independent Accountants
To the Board of Directors 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 Fund, Bond
Fund, Balanced Fund, Long Term Income Fund and Retirement Income
Fund (constituting Advance Capital I, Inc., hereafter referred
to as the "Company") at December 31, 1996, and the results of
each of their operations for the year ended and the changes in
each of their net assets and the financial highlights for each
of the two years in the periods 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
Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We
conducted our audits of these financial statements 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 our
audits, which included confirmation of securities at December
31, 1996 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above. The
financial statements of Advance Capital I, Inc. for the years
ended December 31, 1992 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
Detroit, Michigan
February 10, 1997
53
<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 26, 1996 for the following purposes:
1. To elect five 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 14,407,210
Richard W. Holtcamp 14,367,406
Harry Kalajian 14,410,527
John C. Shoemaker 14,491,427
Frank R. Zimmerman 14,471,339
</TABLE>
2. To ratify the selection of Price Waterhouse LLP as
independent accountants of the COMPANY for the fiscal year
ending December 31,1996.
<TABLE>
<S> <C>
Votes For: 14,461,039
Votes Against: 30,110
Votes to Abstain: 94,407
</TABLE>
54
<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 FUND
(Equity Growth and Balanced Funds) BOND FUND
T. Rowe Price Associates, Inc. BALANCED FUND
100 East Pratt Street LONG TERM INCOME FUND
Baltimore, Maryland 2102 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
200 Renaissance Center
Suite 3900
Detroit, MI 48243
OFFICERS:
John C. Shoemaker, President
Robert J. Cappelli, Vice President & Treasurer
Charles J. Cobb, Vice President
Kathy J. Harkleroad, Secretary
ANNUAL REPORT
BOARD OF DIRECTORS: DECEMBER 31, 1996
Joseph A. Ahern
Richard W. Holtcamp
Harry Kalajian
John C. Shoemaker
Frank R. Zimmerman
