<PAGE>
ANNUAL REPORT
December 31, 1997
ADVANCE Capital I, Inc.
An investment company with four funds
<PAGE>
TABLE OF CONTENTS
- -------------------------------------------------
Page
A Letter to Our Shareholders ..................2
Investment Performance.........................4
Financial Highlights..........................11
PORTFOLIO OF INVESTMENTS
Equity Growth Fund.......................15
Bond Fund................................21
Balanced Fund............................24
Retirement Income Fund...................36
Statement of Assets and Liabilities...........44
Statement of Operations.......................45
Statement of Changes in Net Assets............46
Notes to Financial Statements.................48
Report of Independent Accountants.............52
Additional Information........................53
<PAGE>
Dear Shareholders,
There were many investment highlights in 1997, including
the third consecutive year of double-digit stock returns and
above average bond returns. Incredibly, for the three year
period ended December 31, the S&P 500 Index has returned 132
percent, the Nasdaq Composite has returned 126 percent and long
government bonds have returned about 49 percent. In the past
70 years these three asset classes have never realized such
tremendous returns at the same time, illustrating just how unusual
the period has been.
As we began 1997, inflation was low, consumer confidence was
high and corporate profits were strong. Investors viewed the
prosperity as justification for continuing to propel stock values
to new highs in January. Corporations, becoming increasingly
nervous about the unrealistic earnings expectations of investors,
began advising Wall Street of earnings short falls from consensus
estimates. Investors heeded the warnings and began to push stocks
lower toward the end of the first quarter and into the second
quarter. By summer, however, actual earnings reports showed better
than expected growth across most industries. This good news,
combined with falling interest rates, signaled a buying frenzy and
stocks quickly rebounded to prior levels.
As domestic investment sentiment flip-flopped, the now
infamous Asian crisis was beginning. The economic problems of
the once prosperous region symbolize the effects of rapid growth
without proper regulation. Most of the 1990's witnessed Asian
economies and stock markets among the fastest growing in the world.
The potential for huge rewards from this region attracted investors,
headlines and most importantly, foreign capital. The inflow of
capital into the region not only spurred business growth, a real
estate boom and the development of much needed infrastructure, but
eventually stifled the very prosperity it helped create. As money
poured into foreign banks, regulation and control systems were not
in place to prevent bankers from eventually lending frivolously to
enormously leveraged and questionable ventures. Foreign investors,
sensing increased investment risk and lower potential returns, began
to exit. This increased the pressure on banks to produce hard
currency. A credit crunch quickly followed and one by one the
weakest Asian currencies began to tumble. Faced with a liquidity
crisis and falling currency values, Asia's remaining defense to
retain foreign capital was to raise interest rates. The higher
rates burst the real estate bubble and sparked a tumble in world
stock markets, including the largest one day point decline in the
U.S. market on October 27th. The whole scenario clearly illustrates
the interdependencies among world economies and, more than ever,
shows the risks and the realities of our global economy.
Within this investment environment, the Advance Capital I,
Funds produced returns that were in-line with the averages for
funds with similar objectives. The Equity Growth Fund increased
17.7 percent for the year while the Lipper Mid Cap Fund Index
increased 17.6 percent. The Balanced Fund with its 60-40 mix of
stocks and bonds, increased 20.5 percent compared to a 20.1 percent
increase in the Lipper Balanced Fund Index. The Bond and Retirement
Income Funds returned 9.4 and 12.2 percent respectively, compared to
the Lipper Intermediate Bond Index return of 8.5 percent and the
Lipper BBB Bond Index return of 9.9 percent.
2
<PAGE>
Looking ahead to 1998, it appears that the problems in Asia are
far from over. Although the International Monetary Fund (IMF) has
put together a "bailout" package for the region, it will take months,
if not years, to strengthen the economic foundation necessary to
return to prosperity and regain the confidence of foreign investors.
We know that Asia's problems will eventually affect our own economic
growth. What we don't know is when and by how much. The most
immediate impact has started with those U.S. companies that rely on
Asia for a major component of sales growth. As the region contracts
and currency values remain weak, total U.S. sales to the area will
decline markedly. This will lead to lower overall corporate earnings
and slower growth in domestic GDP. It also means that Asian goods
sold in the U.S. will become cheaper and force domestic companies to
hold the line or even lower prices to remain competitive. Falling
consumer prices and declining corporate profits can produce an
unpleasant investment and economic environment. In our view,
investment returns for 1998 will not match the prior year results.
We expect positive to average results for 1998 and negative returns
are certainly possible. The issues ahead of us will test the resolve
of the investment community and the power of the Federal Reserve Board
to maintain adequate growth and low inflation in what has become an
extremely uncertain global environment.
At December 31, 1997, the four Advance Capital I, Inc. Funds held
about $356 million in total assets, a 23 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/ John C. Shoemaker /s/ Robert J. Cappelli
John C. Shoemaker Robert J. Cappelli
February 12, 1998
3
<PAGE>
INVESTMENT PERFORMANCE
Advance Capital I, Inc. is an open-end, diversified
management investment company offering investment opportunities
in four mutual fund portfolios.
The accompanying comments are intended to help investors
evaluate the dynamics of mutual fund performance. The charts
and tables that follow show the average annual return of each
Fund as well as selected measures of general stock and bond
market returns. The Consumer Price Index (CPI) is also shown to
illustrate the impact inflation has on investment returns.
<TABLE>
<CAPTION>
1997 FUND RESULTS
<S> <C>
Equity Growth 17.68%
Bond 9.41%
Balanced 20.50%
Retirement Income 12.20%
</TABLE>
Figures for the life of the Bond and Balanced Funds begin
August 31, 1987. The Retirement Income Fund figures begin on
January 1, 1993, the start date for the fund. The historical
figures for the Equity Growth Fund begin January 1, 1994,
immediately following a 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 1997
The Advance Capital I Equity Growth Fund seeks long-term
growth of capital by investing primarily in common stocks of
small, rapidly growing companies.
<TABLE>
<CAPTION>
TOP FIVE INDUSTRIES
<S> <C>
Computer Software 10.6%
Retail Store 7.6%
Medical Services 5.6%
Financial Services 4.2%
Industrial Services 4.1%
</TABLE>
The Equity Growth Fund returned 17.68 percent in 1997 while
the NASDAQ Composite Index returned 21.64 percent and the S&P 500
Index (with dividends reinvested) returned 33.36 percent. The
accompanying graph shows the cumulative performance of the Equity
Growth Fund, the S&P 500 Index (with dividends reinvested), the
NASDAQ Composite Index and the Consumer Price Index (CPI) since the
beginning of 1994.
The solid investment foundation that has driven the seven year
bull market was tested several times during the past year. Late in
the first quarter, fear of declining corporate earnings lead investors
to reduce their long term outlook for stocks and returns turned negative.
In the second and third quarters surprisingly solid earnings announcements
and continued low inflation lifted stocks back to record levels. By the
fourth quarter economic and financial troubles in Asia jolted investor
confidence and world stock markets were sent into a tailspin.
As the events in Asia unfolded, the ripple effect throughout world
stock markets was immediate. In one day the U.S. stock market declined
about five percent, Europe was down between 4 and 6 percent and Latin
America was off about 14 percent. This rapid decline in world stocks
was quickly followed by corporate warnings of the adverse effects Asia's
troubles would have on earnings. Shortly therafter economists began
raising the specter of possible world deflation and stagnant economic
growth.
4
<PAGE>
These events bring to the forefront the realities of our global economy
and the added risk of investing heavily in one specific region of the
world.
During most of the 1990's, many domestic companies such as computer
makers and suppliers, found success selling in the booming Asian market.
High growth translated into above average earnings and skyrocketing
stock prices. Some equity fund managers rode this trend and invested a
large portion of their fund's assets in these high growth, high risk
stocks. When Asian currency values and growth declined late in 1997,
many once high-flying stocks paid the price. The same managers held
portfolios that were under diversified and heavily invested in declining
stocks. In contrast, the Equity Growth Fund's objective of diversifying
between industries and issuers, remained intact throughout the period.
By maintaining a well diversified portfolio, the Fund's return did not
rise or fall disproportionately as the events in Asia unfolded. Making
big bets in one specific industry may payoff periodically, but historical
lessons prove that the key to successful long term investing is maintaining
a well diversified portfolio throughout the entire investment cycle.
In the near term, we expect world stock markets to remain volatile
as the events in Asia continue to unfold. Investors remain cautious of
companies with a large Asian exposure, especially computer, semiconductor
and networking companies. Investors whose holdings have limited Asian
exposure and a consistent record of strong earnings, have been cushioned.
The stock market will eventually digest the Asian problem and stocks will
stabilize, assuming inflation remains low. The combination of weak
corporate earnings and rising inflation would not bode well for stocks.
This is a scenario we deem highly unlikely. It is apparent, however,
that stock returns in 1998 will most likely not set records on the plus
side. Volatility, especially in small cap stocks, should bring returns
back toward the historical average for the year ahead.
THE EQUITY GROWTH FUND
[EDGAR REFERENCE - S & P 500, NASDAQ, EQUITY GROWTH AND CPI
INDEX LINE CHART FOR 1994-1997]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1997
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Equity Growth Fund 17.68% N/A 16.36%
NASDAQ Composite Index 21.64% N/A 19.21%
S&P 500 Index 33.36% N/A 22.93%
Consumer Price Index (CPI) 1.81% N/A 2.63%
</TABLE>
Past performance should not be used to attempt to predict future
performance.
5
<PAGE>
THE BOND FUND IN 1997
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 12/31/97
<S> <C>
Average Maturity 9.5 Years
Average Quality A+
Average Duration 6.0 Years
Size $4.2 Million
</TABLE>
The Bond Fund returned 9.41 percent for 1997 compared to the
Lipper Intermediate Bond Index return of 8.47 percent. The Bond
Fund's return represents 6.65 percent from income distributed to
shareholders and a 2.76 percent increase in share price. The
accompanying graph shows the cumulative performance of the Bond
Fund, the Balanced Fund, the Lipper Intermediate Bond Index, the
Consumer Price Index (CPI) and the Lipper Balanced Index since
August 1987, the Fund's inception.
The bond market remained volatile throughout 1997 as inflation
and world economic turmoil remained in question. The beginning of
the year brought signs of robust economic growth and a continuation
of moderate inflation. As the economic and inflation pictures
brightened, the confidence among bond investors about corporate
profits grew. By mid summer this sentiment helped push the yield on
both government and corporate bonds to historically low levels. The
fourth quarter brought foreign market turmoil and general discontent
which left many bond investors feeling skittish about the stability
of corporate profits and economic growth. As investors moved out of
corporate bonds and back into government bonds, corporate yields
increased while government bond yields continued to decline. By year
end, the yield on the thirty year government bond was about 6 percent
and the ten year was under 6 percent.
At December 31, the Bond Fund was fully invested with an overall
portfolio maturity of about 9.5 years. This maturity is within the
allowed range of 5 to 10 years and significantly longer than the year
earlier figure of 7.8 years. Strategically, as bonds were called or
matured, they were replaced with bonds having maturities longer than
the Fund's average. As interest rates continued to decline, this
strategy proved beneficial to the Fund's return. Although average
maturity changed, overall quality remained an A+ and diversification
was maintained.
Today, it appears 1998 will produce a moderately expanding economy
with continued low inflation. Combined with stagnant to declining
foreign growth and weak currency values, fixed income securities should
return about their historical average for the year ahead. The Bond
Fund's structure of maintaining a well diversified portfolio of high
quality bonds is well positioned for this view in 1998.
6
<PAGE>
THE BALANCED FUND IN 1997
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 12/31/97
<S> <C>
Bonds 39%
Small Stocks 19%
Large Stocks 42%
Size $ 98 Million
</TABLE>
The Balanced Fund increased 20.50 percent in 1997 while the
Lipper Balanced Index increased 20.05 percent. The accompanying
graph illustrates the cumulative performance of the Balanced Fund,
the Bond Fund, the Lipper Intermediate Bond Index, the Lipper
Balanced Index and the Consumer Price Index (CPI) since August 1987,
the Fund's inception. Although the Fund began in August of 1987, the
investment objectives and policies were changed at the end of 1993
and T. Rowe Price Associates was added as sub-investment advisor to
the Fund at the same time.
The Balanced Fund consists of fixed income securities, small
company growth stocks and large company value stocks. The mix
between these three asset classes served the Fund well as each
returned above their historical average for the year. The bonds in
the Fund account for about 40 percent of the Fund's total and are
structurally similar to those in the Bond Fund. The bonds average
about ten years in maturity and A in quality. Throughout the year,
economic uncertainty and erratic inflationary concerns produced
significant volatility in fixed income prices. As foreign economic
turmoil unfolded in the fourth quarter, many investors sought comfort
in fixed income instruments, particularly government bonds. The
increased buying pressure resulted in historically above average
returns for the bonds in the Fund.
Stocks in the Fund consist of both small-to-midsized company
growth stocks as well as large company value stocks. Although each
sector performed well, large company value stocks outperformed smaller
company growth stocks for the third consecutive year. The stability of
earnings and solid dividend policies of large company stocks was
comforting to investors, particularly as interest rates declined and
foreign market turmoil began. If world economies remain in question
and inflation begins to rise, large company stocks should continue to
outperform smaller company stocks in the year ahead.
In contrast, smaller company stocks usually do not pay dividends
or have consistent earnings. Investors' only reward comes from stock
appreciation. This usually occurs when a company obtains a significant
market niche or a technological advancement propels an entire industry.
In the 1990's, improvements in all forms of technology have been the
cornerstone to much of the success in small cap stocks. The stock of
companies that make or design software programs, computer components or
microprocessors have risen dramatically through the decade. These
technological breakthroughs have also led the way for rapid transformations
within other industries. For example, most banks and manufacturing
facilities have been able to reduce operating costs and improve worker
productivity by utilizing new technology. As costs decreased and earnings
grew, the investment community has responded by doubling or tripling the
price of most of these companies in a short amount of time.
7
<PAGE>
Today, although the general health of the economy is strong,
inflation concerns and foreign uncertainty may dampen investment
returns in 1998. With this in mind, the Balanced Fund's investment
policy of diversifying between asset classes and industries remains
intact. Adhering to this strategy coupled with continued sound
investment decision making will provide Fund returns consistent with
its objectives.
THE BOND AND BALANCED FUNDS
[EDGAR REFERENCE - LIPPER BALANCED, BALANCED, LIPPER BOND, BOND
AND CPI INDEX LINE CHART FOR 1987-1997]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1997
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Bond Fund 9.41% 7.52% 8.53%
Balanced Fund 20.50% 13.13% 9.85%
Lipper Intermediate
Bond Index 8.47% 6.56% 8.85%
Lipper Balanced Index 20.05% 13.19% 12.96%
Consumer Price Index (CPI) 1.81% 2.63% 3.40%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
The investment objectives and policies of the Balanced Fund
were changed at the end of 1993 and T. Rowe Price Associates was
added as sub-investment advisor to the Fund at that time.
8
<PAGE>
THE RETIREMENT INCOME FUND IN 1997
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 12/31/97
<S> <C>
Average Maturity 16.3 Years
Average Quality BBB
Average Duration 8.3 Years
Size $201 Million
</TABLE>
The Retirement Income Fund returned 12.20 percent for the
year. The return was comprised of 7.25 percent for the year.
The return was comprised of 7.25 percent from income distributed
to shareholders and a 4.95 percent increase in share price. The
accompanying graph shows the cumulative performance of the Retirement
Income Fund, the Lipper BBB Index and the Consumer Price Index (CPI)
since January 1993, the Fund's inception.
Although the year proved turbulent for bond returns, the final
outcome was sharply positive. The first quarter began with bold
remarks by Fed Chairman Alan Greenspan followed by an increase in the
Federal Funds rate. Fearing more increases by the Fed, investors began
to sell bonds. This selling pressure pushed the yield on the thirty
year government bond above seven percent by the end of the first quarter.
The quick judgment about the direction of inflation and sentiment of the
Federal Reserve Board didn't last long. By the third quarter solid
economic statistics comforted investors and reinforced the fact that
inflation remained under control. As Asia's troubles mounted and
inflation remained in-check, fixed income securities continued to attract
investors. By the end of December the thirty year government bond yield
was slightly under 6 percent, sharply lower than the 7.2 percent peak in
April. Because the Retirement Income Fund holds about 67 percent investment
grade bonds with long maturities, this portion of the Fund realized above
average returns as interest rates declined through the year.
The remaining 33 percent of the Fund is invested in high yield
securities. Like investment grade bonds, this portion of the Fund also
performed well during the year. As interest rates declined and corporate
profitability remained strong, many companies with "junk bond" status
refinanced existing debt or issued new bonds to capitalize on the favorable
interest rate environment. The investment community's appetite for the
newly issued high yield debt seemed insatiable. By summer, stronger than
expected earnings and continued low inflation increased demand further and
the buying continued. Investors were eager to accept the higher credit
risk associated with high yield bonds in exchange for higher nominal
returns. The growing acceptance of high yield bonds as a valid investment
instrument, combined with solid corporate earnings, should keep demand and
returns positive for the year ahead.
Today, the Fund holds a well diversified portfolio of about 127
investment grade and 83 high yield securities. The structure continues
to emphasis high current income at a reasonable level of risk. Looking
ahead to 1998, turmoil in Asia and low global inflation should keep
interest rates stable and prove beneficial to most fixed income securities.
9
<PAGE>
THE RETIREMENT INCOME FUND
[EDGAR REFERENCE - RETIREMENT INCOME, LIPPER BBB INDEX AND CPI
INDEX LINE CHART FOR 1993-1997]
<TABLE>
<CAPTION>
Average Annual Returns for Periods Ended December 31, 1997
Past 1 Past 5 Life of
Year Years Fund
------ ------ -------
<S> <C> <C> <C>
Retirement Income Fund 12.20% 9.08% 9.08%
Lipper BBB Index 9.90% 8.02% 8.02%
Consumer Price Index (CPI) 1.81% 2.63% 2.63%
</TABLE>
Past performance should not be used to attempt to predict
future performance.
10
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . . . $14.72 $12.53 $9.08 $9.46 $9.94
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss) . . . . . . . . (0.09) (0.07) (0.03) (0.03) 0.12
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . 2.69 2.26 3.48 (0.35) 0.07
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . 2.60 2.19 3.45 (0.38) 0.19
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . 0.00 0.00 0.00 0.00 (0.12)
Net realized gain on investments . . . . . . (0.07) 0.00 0.00 0.00 (0.55)
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . (0.07) 0.00 0.00 0.00 (0.67)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . $17.25 $14.72 $12.53 $9.08 $9.46
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . . . 17.68% 17.48% 38.00% -4.02% 2.13%
Ratios and Supplemental Data
Net assets, end of year (in thousands) . . .$54,332 $38,767 $25,625 $12,634 $7,577
Ratio of expenses to average net assets. . . 1.07% 1.09% 1.12% 1.21% 1.16%
Ratio of net investment income (loss)
to average net assets. . . . . . . . . . . -0.58% -0.50% -0.29% -0.30% 1.27%
Portfolio turnover rate. . . . . . . . . . . 20.53% 24.75% 13.86% 18.05% 135.55%
Average commission rate per share* . . . . .$0.0259 $0.0261
</TABLE>
*For fiscal years beginning after September 1, 1995, 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
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . . . $10.37 $10.79 $9.61 $10.82 $10.51
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income. . . . . . . . . . . . 0.69 0.70 0.70 0.71 0.72
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 0.24 (0.42) 1.18 (1.21) 0.45
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . 0.93 0.28 1.88 (0.50) 1.17
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . (0.69) (0.70) (0.70) (0.71) (0.72)
Net realized gain on investments . . . . . . (0.09) 0.00 0.00 0.00 (0.14)
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . (0.78) (0.70) (0.70) (0.71) (0.86)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . $10.52 $10.37 $10.79 $9.61 $10.82
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . . . 9.41% 2.81% 20.15% -4.64% 11.48%
Ratios and Supplemental Data
Net assets, end of year (in thousands) . . . $4,203 $4,430 $4,527 $3,999 $4,741
Ratio of expenses to average net assets. . . 0.54% 0.55% 0.55% 0.60% 0.61%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . 6.65% 6.71% 6.80% 7.06% 6.57%
Portfolio turnover rate. . . . . . . . . . . 21.95% 19.77% 6.69% 21.92% 35.99%
</TABLE>
See Notes To Financial Statements
12
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . . . $13.68 $12.57 $9.97 $10.58 $10.36
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income. . . . . . . . . . . . 0.45 0.41 0.35 0.32 0.29
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 2.32 1.37 2.75 (0.61) 0.22
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . 2.77 1.78 3.10 (0.29) 0.51
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . (0.45) (0.41) (0.35) (0.32) (0.29)
Net realized gain on investments . . . . . . (0.31) (0.26) (0.15) 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . (0.76) (0.67) (0.50) (0.32) (0.29)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . $15.69 $13.68 $12.57 $9.97 $10.58
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . . . 20.50% 14.48% 31.53% -2.72% 4.97%
Ratios and Supplemental Data
Net assets, end of year (in thousands) . . .$99,421 $75,202 $59,299 $44,221 $46,690
Ratio of expenses to average net assets. . . 1.04% 1.06% 1.07% 1.10% 1.08%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . 3.02% 3.17% 3.11% 3.18% 2.77%
Portfolio turnover rate. . . . . . . . . . . 10.13% 12.79% 22.72% 34.97% 101.29%
Average commission rate per share* . . . . .$0.0266 $0.0278
</TABLE>
*For fiscal years beginning after September 1, 1995, 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>
RETIREMENT INCOME
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Selected Per-Share Data
Net asset value, beginning of year . . . . . $10.20 $10.51 $9.22 $10.54 $10.00
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income. . . . . . . . . . . . 0.74 0.75 0.76 0.76 0.82
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 0.45 (0.31) 1.29 (1.32) 0.61
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . 1.19 0.44 2.05 (0.56) 1.43
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . (0.74) (0.75) (0.76) (0.76) (0.82)
Net realized gain on investments . . . . . . 0.00 0.00 0.00 0.00 (0.07)
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . (0.74) (0.75) (0.76) (0.76) (0.89)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . $10.65 $10.20 $10.51 $9.22 $10.54
========= ========= ========= ========= =========
Total Return . . . . . . . . . . . . . . . . . 12.20% 4.54% 22.96% -5.34% 13.92%
Ratios and Supplemental Data
Net assets, end of year (in thousands) . . .$200,511 $170,799 $139,299 $84,162 $47,343
Ratio of expenses to average net assets. . . 0.82% 0.82% 0.84% 0.88% 0.88%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . 7.21% 7.45% 7.64% 7.89% 7.41%
Portfolio turnover rate. . . . . . . . . . . 16.60% 8.34% 15.63% 12.27% 37.59%
</TABLE>
See Notes To Financial Statements
14
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
ADVERTISING - 1.5%
Catalina Marketing Corporation* 2,600 $ 120,738
Interpublic Group of Companies, Inc. 3,200 159,400
Omnicom Group, Inc. 5,000 211,875
Outdoor Systems, Inc.* 8,100 313,875
AEROSPACE / DEFENSE - 0.5%
BE Aerospace, Inc.* 6,000 160,500
Gulfstream Aerospace Corporation* 4,500 131,625
AIR TRANSPORT - 1.2%
Air Express International Corp. 7,650 233,325
ASA Holdings, Inc. 5,500 156,406
Comair Holdings, Inc. 9,750 235,219
APPAREL - 1.2%
Gucci Group 2,600 108,875
Jones Apparel Group, Inc.* 3,000 129,000
Nautica Enterprises, Inc.* 6,000 139,500
Quiksilver, Inc.* 4,000 114,500
Warnaco Group, Inc. 4,500 142,313
AUTO PARTS - 0.3%
SPX Corporation 2,700 186,300
BANK - 3.8%
Bank of New York Company, Inc. 4,600 266,225
City National Corporation 7,000 258,125
First American Corporation 7,400 368,150
Mercantile Bancorporation, Inc. 3,124 191,931
Northern Trust Corporation 4,600 320,850
State Street Corporation 4,600 267,663
TCF Financial Corporation 5,500 187,000
U.S. Bancorp 2,000 223,875
BEVERAGE - 0.3%
Robert Mondavi Corporation* 3,000 146,250
BIOTECHNOLOGY - 1.3%
Human Genome Sciences, Inc.* 3,200 127,200
Incyte Pharmaceuticals, Inc.* 4,000 180,000
Pioneer Hi-Bred International, Inc. 2,000 214,500
Protein Design Labs, Inc.* 4,000 160,000
BROADCASTING / CABLE TV - 3.4%
A.H. Belo Corporation 4,000 224,000
Chancellor Media Corporation* 3,000 223,875
Clear Channel Communications* 6,000 476,625
Cox Communications, Inc.* 6,000 240,750
Emmis Broadcasting Corporation* 4,000 182,500
Jacor Communications, Inc.* 5,000 265,625
Westwood One, Inc.* 6,000 222,750
BUILDING MATERIALS - 0.2%
American Standard Companies, Inc.* 3,000 114,938
CHEMICAL - 2.5%
Airgas, Inc.* 9,100 127,400
Ecolab, Inc. 4,000 221,500
Lilly Industries, Inc. 7,000 144,375
Raychem Corporation 5,000 215,313
Sherwin-Williams Company 5,500 152,625
Sigma-Aldrich Corporation 7,000 276,500
Valspar Corporation 7,000 224,000
COMPUTER & PERIPHERALS - 3.5%
3COM Corporation, Inc.* 2,700 94,163
Adaptec, Inc.* 4,000 148,500
Cisco Systems, Inc.* 4,500 250,875
Comverse Technology, Inc.* 3,000 117,000
EMC Corporation* 8,600 235,963
Gateway 2000, Inc.* 3,500 114,188
Microchip Technology, Inc.* 4,425 132,750
SCI Systems, Inc.* 6,000 261,375
Stratus Computer, Inc.* 2,000 75,500
</TABLE>
See Notes To Financial Statements
15
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------------- -------- ----------
<S> <C> <C>
COMPUTER & PERIPHERALS - 3.5% (Continued)
Sun Microsystems, Inc.* 8,500 $ 338,938
Xilinx, Inc.* 4,300 150,769
COMPUTER SOFTWARE & SERVICES - 10.6%
Adobe Systems, Inc. 4,000 165,000
Affiliated Computer Services, Inc.* 7,000 183,750
America Online, Inc.* 2,500 222,969
Baan Company, N.V.* 4,600 151,800
BMC Software, Inc.* 5,600 367,500
Cadence Design Systems, Inc.* 11,000 270,875
Cambridge Technology Partners, Inc.* 6,000 249,750
CBT Group PLC* 2,500 205,313
Citrix Systems, Inc.* 3,500 266,000
Cognizant Corporation 4,500 201,094
Compuware Corporation* 10,000 320,000
DST Systems, Inc.* 3,500 149,406
Electronics for Imaging, Inc.* 4,000 66,500
First Data Corporation 3,612 105,651
HBO & Company 8,000 383,500
Intuit, Inc.* 4,200 173,250
Network Associates, Inc.* 5,983 316,351
Oracle Corporation* 7,500 166,875
Parametric Technology Company* 3,500 165,813
Peoplesoft, Inc.* 8,000 312,000
Remedy Corporation* 3,000 63,000
Security Dynamics Tech., Inc.* 5,000 178,750
Shared Medical Systems Corporation 3,500 230,563
Sterling Commerce, Inc.* 6,500 250,250
SunGard Data Systems, Inc.* 4,500 139,500
Symantec Corporation* 7,800 171,113
Synopsys, Inc.* 3,400 121,550
Visio Corporation* 5,600 214,900
DIVERSIFIED - 1.8%
Danaher Corporation 4,000 253,500
Equity Corporation International* 5,000 114,688
Service Corp. International 5,200 192,075
Thermo Electron Corporation* 4,000 178,000
Tyco International, Ltd. 5,294 238,561
DRUG - 2.4%
Agouron Pharmaceuticals, Inc.* 2,400 70,500
Amgen, Inc.* 3,300 178,613
BioChem Pharma, Inc.* 5,000 104,375
Biogen, Inc.* 3,400 123,675
Dura Pharmaceuticals, Inc.* 3,500 160,563
Elan Corporation PLC* 3,200 164,000
Gilead Sciences, Inc.* 4,000 153,000
Guilford Pharmaceuticals, Inc.* 4,500 92,250
Isis Pharmaceuticals, Inc.* 5,500 67,719
Watson Pharmaceuticals, Inc.* 5,600 183,750
ELECTRIC & GAS UTILITIES - 0.6%
AES Corporation* 6,800 317,900
ELECTRICAL EQUIPMENT - 0.2%
Littlefuse, Inc.* 5,000 124,375
ELECTRONICS - 2.2%
Altera Corporation* 5,400 178,875
Harman International Industries 3,100 131,556
Lam Research Corporation* 2,300 66,988
Molex, Inc. 7,421 213,354
Symbol Technologies, Inc. 6,650 253,947
Teradyne, Inc.* 3,100 99,200
Thermedics, Inc.* 7,000 115,500
Waters Corporation* 4,000 151,000
ENVIRONMENTAL - 1.1%
Superior Services, Inc.* 7,000 202,125
USA Waste Services, Inc.* 7,312 286,996
U.S. Filter Corporation* 3,500 105,000
FINANCIAL SERVICES - 4.2%
Aames Financial Corporation 4,500 58,219
Cendant Corporation* 15,612 536,676
Finova Group, Inc. 5,000 248,438
Franklin Resources, Inc. 4,650 405,131
Green Tree Financial Corporation 5,000 130,938
ING Groep N.V. 1 28
</TABLE>
See Notes To Financial Statements
16
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------------- -------- ---------
<S> <C> <C>
FINANCIAL SERVICES - 4.2% (Continued)
Mutual Risk Management, Ltd. 10,132 $ 303,327
Paychex, Inc. 4,500 227,813
SunAmerica, Inc. 4,900 209,475
United Asset Management Corp. 6,200 151,900
FOOD PROCESSING - 0.9%
Goodmark Foods, Inc. 5,000 92,500
International Multifoods Corporation 6,000 169,500
Tootsie Roll Industries, Inc. 3,666 232,333
FOREIGN TELECOMMUNICATIONS - 1.2%
Ericsson Telephone 4,000 149,250
Reuters Holdings PLC 2,500 165,625
Vodafone Group PLC 4,500 326,813
GROCERY - 1.2%
Quality Food Centers, Inc.* 2,800 187,600
Richfood Holdings, Inc. 6,500 183,625
Safeway, Inc.* 4,400 277,750
HOMEBUILDING - 0.5%
Lennar Corporation 4,600 99,188
Rouse Company 4,900 160,781
HOTEL / GAMING - 0.7%
Extended Stay America, Inc.* 6,500 81,250
Host Marriott Corporation* 7,500 147,656
Mirage Resorts, Inc.* 6,000 135,750
HOUSEHOLD PRODUCTS - 1.1%
First Brands Corporation 5,000 135,313
Lancaster Colony Corporation 4,000 225,500
Sunbeam Corporation, Inc. 5,000 211,563
INDUSTRIAL SERVICES - 4.1%
AccuStaff, Inc.* 6,000 138,750
Apollo Group, Inc.* 4,500 212,625
Equifax, Inc. 6,200 219,713
Interim Services* 6,000 153,375
Manpower, Inc. 3,900 136,988
Primark Corporation* 5,500 224,125
Quintiles Transnational Corporation* 5,000 191,250
Registry, Inc.* 3,520 162,800
Robert Half International, Inc.* 6,750 267,891
Romac International, Inc.* 10,000 245,000
Sylvan Learning Systems, Inc.* 3,000 117,000
Vincam Group, Inc.* 6,750 179,719
INSURANCE - 3.8%
Ace, Ltd. 2,800 270,200
Ambac Financial Group, Inc. 5,200 239,525
Compdent Corporation* 4,500 91,266
Mercury General Corporation 4,400 244,200
MGIC Investment Corporation 4,000 267,250
Progressive Corporation of Ohio 2,800 335,475
Protective Life Corporation 3,400 203,150
UICI* 4,500 156,938
Vesta Insurance Group, Inc. 4,250 252,875
MACHINERY - 1.8%
AGCO Corporation 5,000 146,250
Alamo Group, Inc. 5,000 108,438
Cognex Corporation* 5,000 136,250
Donaldson Company, Inc. 3,800 171,238
IDEX Corporation 5,500 191,813
Parker-Hannifin Corporation 4,500 207,563
MANUFACTURED HOUSING - 0.4%
Oakwood Homes Corporation 7,000 232,313
MEDICAL SERVICES - 5.6%
ABR Information Services, Inc.* 5,800 138,475
Genesis Health Ventures, Inc.* 4,500 120,938
Health Care & Retirement Corp.* 5,550 223,734
Health Management Associates* 11,137 281,209
HEALTHSOUTH Corporation* 6,500 180,375
IDX Systems Corporation* 4,600 170,200
Lincare Holdings, Inc.* 3,300 188,100
</TABLE>
See Notes To Financial Statements
17
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
MEDICAL SERVICES - 5.6% (Continued)
MedPartners/Mullikin, Inc.* 6,651 $ 147,153
Omnicare, Inc. 4,500 137,813
Orthodontic Centers of America, Inc.* 6,000 99,750
PacifiCare Health Systems, Inc.* 1,500 78,563
PhyCor, Inc.* 6,000 162,000
Quorum Health Group, Inc.* 7,500 195,938
Renal Treatment Centers, Inc.* 5,500 198,688
Tenet Healthcare Corporation* 6,075 200,855
Total Renal Care Holdings, Inc.* 2,000 55,000
United HealthCare Corporation 3,900 194,269
Universal Health Services, Inc.* 5,300 266,988
MEDICAL SUPPLIES - 4.0%
Arterial Vascular Engineering, Inc.* 3,500 227,500
Boston Scientific Corporation* 3,000 137,625
Cardinal Health, Inc. 4,125 310,406
Guidant Corporation 6,000 373,500
Henry Schein, Inc.* 4,500 157,500
Life Technologies, Inc. 5,250 177,188
Medtronic, Inc. 4,000 209,500
Physio-Control International Corp.* 5,500 85,594
Sola International, Inc.* 4,000 131,000
Sybron International Corp.* 5,000 234,688
VISX, Inc.* 5,000 110,625
METAL FABRICATING - 0.3%
Kennametal, Inc. 3,500 181,781
NATURAL GAS - 0.3%
Sonat, Inc. 3,000 137,250
NEWSPAPER - 0.3%
Central Newspapers, Inc. 2,500 185,000
OFFICE EQUIPMENT & SUPPLIES - 1.0%
Diebold, Inc. 4,500 227,813
Ikon Office Solutions, Inc. 5,500 154,000
Wallace Computer Services, Inc. 4,500 174,375
OILFIELD SERVICES - 2.8%
BJ Services Company* 2,500 179,844
Camco International, Inc. 3,500 222,906
Cooper Cameron Corporation* 2,400 146,400
Noble Drilling Corporation* 6,700 204,769
Pride International, Inc.* 8,000 199,500
Smith International, Inc.* 4,300 263,913
Tidewater, Inc. 2,500 137,813
Weatherford Enterra, Inc.* 3,300 144,375
PACKAGING & CONTAINER - 0.4%
Sealed Air Corporation* 3,400 210,800
PETROLEUM - 2.1%
Apache Corporation 4,500 157,781
Barrett Resources Corporation* 4,000 120,000
Devon Energy Corporation 4,500 174,094
Noble Affiliates, Inc. 4,400 155,375
Nuevo Energy Company* 3,000 122,250
Tosco Corporation 7,500 284,063
United Meridian Corporation* 4,200 118,125
PRECISION INSTRUMENT - 1.3%
Coherent, Inc.* 3,000 105,375
Dionex Corporation* 3,000 150,750
KLA-Tencor Corporation* 2,600 100,750
Roper Industries, Inc. 6,000 173,250
Teleflex, Inc. 5,000 188,750
PRINTING - 0.4%
Valassis Communications, Inc.* 5,500 203,500
PUBLISHING - 0.6%
Harcourt General, Inc. 3,000 164,438
Meredith Corporation 5,000 178,438
RAILROAD - 0.3%
Kansas City Southern Ind., Inc. 6,000 189,750
</TABLE>
See Notes To Financial Statements
18
<PAGE>
ADVANCE CAPTIAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
REAL ESTATE INVESTMENT MANAGEMENT - 0.8%
LaSalle Partners, Inc.* 4,000 $ 142,500
LNR Property Corporation 4,600 109,250
Security Capital Group Incorporated* 5,000 162,500
REAL ESTATE INVESTMENT TRUST - 0.6%
National Health Investors, Inc. 3,700 155,169
Security Capital Pacific Trust 6,500 158,031
RECREATION - 1.3%
Callaway Golf Company 3,400 97,113
Carmike Cinemas, Inc.* 6,000 172,500
Carnival Corporation 4,500 249,188
Harley-Davidson, Inc. 6,000 164,625
RESTAURANT - 0.5%
Outback Steakhouse, Inc.* 4,750 136,563
Sbarro, Inc. 5,500 145,406
RETAIL STORE - 7.6%
AutoZone, Inc.* 5,300 153,369
Bed Bath & Beyond, Inc.* 7,000 268,625
Borders Group, Inc.* 8,000 250,500
CDW Computer Centers, Inc.* 2,500 130,313
Circuit City Stores, Inc. 4,300 153,456
CompUSA, Inc.* 6,600 206,663
Consolidated Stores Corporation* 4,300 189,200
CVS Corporation 3,000 192,375
Dollar General Corporation 11,900 431,375
Gymboree Corporation* 4,000 109,500
Lands' End, Inc.* 6,200 217,775
Men's Wearhouse, Inc.* 5,250 182,438
MSC Industrial Direct Co., Inc.* 4,000 169,500
OfficeMax, Inc.* 9,000 127,688
Petco Animal Supplies, Inc.* 5,500 132,000
Starbucks Corporation* 4,000 153,500
The Sports Authority, Inc.* 7,000 103,250
Tiffany & Company 4,000 144,000
TJX Companies, Inc. 6,000 206,250
U.S. Office Products Company* 6,000 116,250
Viking Office Products, Inc.* 6,400 139,600
Williams-Sonoma, Inc.* 5,000 209,375
Zale Corporation* 7,000 161,000
SECURITIES BROKERAGE - 1.6%
Charles Schwab Corporation 9,000 377,438
Investment Technology Group* 7,800 218,400
Raymond James Financial, Inc. 6,750 269,578
SEMICONDUCTOR - 2.3%
Analog Devices, Inc.* 5,500 151,594
ASM Lithography Holding N.V.* 1,500 101,250
Atmel Corporation* 4,400 81,950
Lattice Semiconductor Corporation* 2,500 118,438
Linear Technology Corporation 5,400 310,500
Maxim Integrated Products, Inc.* 12,000 414,000
SDL, Inc.* 5,000 72,500
SHOE - 0.3%
Wolverine World Wide, Inc. 6,750 153,141
TELECOMMUNICATIONS EQUIPMENT - 1.9%
ADC Telecommunications, Inc.* 4,000 167,000
Andrew Corporation* 5,906 141,744
Ascend Communications, Inc.* 4,850 119,431
Aspect Telecommunications Corp.* 6,000 125,250
Coherent Commun. Systems Corp.* 5,000 141,250
Tellabs, Inc.* 6,400 337,200
TELECOMMUNICATIONS SERVICE - 2.7%
360 Communications Company* 6,500 131,219
Centennial Cellular Corporation* 4,500 92,250
CommNet Cellular, Inc.* 5,500 195,594
DSP Communications, Inc.* 6,000 72,000
Intermedia Communications, Inc.* 3,500 212,188
Powertel, Inc.* 8,100 135,675
Saville Systems PLC* 8,000 332,000
</TABLE>
See Notes To Financial Statements
19
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
TELECOMMUNICATIONS SERVICE - 2.7% (Continued)
United States Cellular Corporation* 3,500 $ 107,625
WorldCom, Inc.* 6,500 196,625
TEXTILE - 0.3%
Unifi, Inc. 4,500 183,094
THRIFT - 0.4%
JSB Financial, Inc. 4,500 227,531
TOILETRIES / COSMETICS - 0.3%
Alberto-Culver Company 4,500 144,281
TOYS - 0.4%
Mattel, Inc. 5,625 210,938
TRUCKING & TRANSPORT LEASING - 0.2%
Werner Enterprise, Inc. 6,000 123,000
-----------
TOTAL COMMON STOCK - 99.1%
(Cost $34,686,446) $53,838,950
===========
</TABLE>
* Securities are non-income producing
See Notes To Financial Statements
20
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------- --------- ------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
BANK - 12.7%
Banc One Corporation A+ 8.740 09/15/03 $ 100,000 $ 111,002
Citicorp A 7.250 10/15/11 100,000 106,485
Harris Bankcorp, Inc. A+ 9.375 06/01/01 75,000 82,073
Morgan, J.P. & Company AA 8.500 08/15/03 100,000 110,542
Security Pacific Corporation A 9.750 05/15/99 40,000 41,853
Swiss Bank Corp.-NY AA 7.375 07/15/15 75,000 80,141
CHEMICAL - 2.7%
duPont, E.I. de Nemours & Co. AA- 6.000 12/01/01 115,000 114,081
COMPUTER & PERIPHERALS - 1.9%
International Business Machines Corp. A 7.250 11/01/02 75,000 78,349
ELECTRIC & GAS UTILITIES - 10.8%
Duke Energy Corporation AA- 6.375 03/01/08 75,000 74,531
Florida Power Corporation AA- 6.875 02/01/08 70,000 72,859
Northern States Power Co. Minn. AA 7.375 03/01/02 40,000 40,431
Ontario Hydro AA- 7.450 03/31/13 150,000 165,364
Public Service Co. of Oklahoma AA- 7.250 01/01/99 50,000 50,169
Public Service Electric & Gas A- 7.000 09/01/24 50,000 49,216
ENVIRONMENTAL - 1.1%
Waste Management, Inc. A- 7.650 03/15/11 45,000 46,506
FINANCIAL SERVICES - 5.0%
BHP Finance USA Ltd. A 7.875 12/01/02 100,000 105,973
General Electric Capital Corporation AAA 7.750 03/15/02 100,000 106,233
FOOD PROCESSING - 2.5%
Archer Daniels Midland Company AA- 7.125 03/01/13 100,000 105,366
FOREIGN GOVERNMENT - 6.5%
Province of Ontario AA- 7.625 06/22/04 100,000 107,612
Province of Quebec A+ 8.800 04/15/03 150,000 166,053
GOVERNMENTAL AGENCY - 1.2%
Tennessee Valley Authority AAA 6.125 07/15/03 50,000 50,062
</TABLE>
See Notes To Financial Statements
21
<PAGE>
ADVANCE CAPTIAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
CREDIT PRINCIPAL MARKET
FIXED INCOME SECURITIES RATING COUPON MATURITY AMOUNT VALUE
- ------------------------------------- --------- ------ -------- --------- -------
<S> <C> <C> <C> <C> <C>
INSURANCE - 7.7%
Aetna Services, Inc. A 7.125 08/15/06 $ 100,000 $ 103,325
Allstate Corporation A+ 7.500 06/15/13 100,000 108,245
CIGNA Corporation A 8.250 01/01/07 100,000 111,275
MACHINERY - 5.6%
Caterpillar, Inc. A+ 9.000 04/15/06 100,000 116,661
Deere & Company A+ 8.950 06/15/19 100,000 118,062
MEDICAL SERVICES - 2.4%
Columbia/HCA Healthcare Corporation BBB 7.250 05/20/08 100,000 99,620
MEDICAL SUPPLIES - 5.5%
Johnson & Johnson AAA 8.720 11/01/24 200,000 229,917
METALS & MINING - 2.9%
Alcan Aluminum Ltd. A- 5.875 04/01/00 125,000 123,974
NEWSPAPER - 1.5%
Knight-Ridder, Inc. A 9.875 04/15/09 50,000 64,255
OFFICE EQUIPMENT & SUPPLIES - 0.8%
Xerox Corporation A 9.750 03/15/00 30,000 32,193
PETROLEUM - 3.5%
Kerr-McGee Corporation A- 7.000 11/01/11 150,000 147,780
RAILROAD - 2.6%
Missouri Pacific Railroad Co. A 9.400 12/15/00 100,000 108,861
RETAIL STORE - 1.9%
Wal-Mart Stores, Inc. AA 8.625 04/01/01 75,000 80,241
SECURITIES BROKERAGE - 7.3%
Lehman Brothers Holdings, Inc. A 8.875 03/01/02 150,000 163,489
Merrill Lynch & Company, Inc. AA- 7.375 05/15/06 135,000 143,043
</TABLE>
See Notes To Financial Statements
22
<PAGE>
ADVANCE CAPTIAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
CREDIT PRINCIPAL MARKET
FIXED INCOME SECURITIES RATING COUPON MATURITY AMOUNT VALUE
- ------------------------------------- ------ ------ -------- --------- ------
<S> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS SERVICE - 7.2%
AT&T Corporation AA- 7.750 03/01/07 $ 90,000 $ 98,535
GTE Southwest, Inc. AA- 5.820 12/01/99 100,000 99,527
Pacific Bell Telephone Co. AA- 7.000 07/15/04 100,000 103,958
TOBACCO - 2.3%
Philip Morris Companies, Inc. A 6.375 02/01/06 100,000 97,956
U.S. GOVERNMENT - 2.5%
U.S. Treasury 6.625 05/15/07 100,000 105,844
-----------
TOTAL FIXED-INCOME SECURITIES - 98.1%
(Cost $3,906,202) $4,121,662
===========
</TABLE>
See Notes To Financial Statements
23
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
ADVERTISING - 0.2%
Catalina Marketing Corporation* 1,100 $ 51,081
Outdoor Systems, Inc.* 3,000 116,250
AEROSPACE / DEFENSE - 0.8%
BE Aerospace, Inc.* 2,000 53,500
Boeing Company 5,740 280,901
General Motors Corp. - Class H 1,500 55,406
Gulfstream Aerospace Corporation* 1,700 49,725
Lockheed Martin Corporation 2,000 197,000
Raytheon Company - Class A 997 49,334
Raytheon Company - Class B 1,700 85,850
AIR TRANSPORT - 0.3%
Air Express International Corp. 2,400 73,200
ASA Holdings, Inc. 1,800 51,188
Comair Holdings, Inc. 2,362 56,983
Pittston Brink's Group 3,000 120,750
APPAREL - 0.3%
Gucci Group 1,100 46,063
Nautica Enterprises, Inc.* 1,800 41,850
Quiksilver, Inc.* 1,500 42,938
VF Corporation 3,600 165,600
Warnaco Group, Inc. 1,500 47,438
AUTO PARTS - 0.3%
Borg-Warner Automotive, Inc. 2,000 104,000
Dana Corporation 2,600 123,175
Genuine Parts Company 3,000 101,625
AUTO & TRUCK - 0.3%
Ford Motor Company 3,500 170,406
General Motors Corporation 2,400 145,350
BANK - 5.6%
Banc One Corporation 3,264 177,276
Bank of Boston Corporation 2,540 238,601
Bank of New York Company, Inc. 2,800 162,050
BankAmerica Corporation 2,000 146,000
Barnett Banks, Inc. 10,400 748,800
Chase Manhattan Corporation 4,840 529,980
City National Corporation 1,600 59,000
First American Corporation 4,400 218,900
First Chicago NBD Corporation 3,500 292,250
First Tennessee National Corp. 5,800 387,150
First Union Corporation 11,600 594,500
J.P. Morgan & Company 2,000 225,875
KeyCorp 2,500 177,031
Mellon Bank Corporation 5,400 327,375
Mercantile Bancorporation, Inc. 3,075 188,920
National City Corporation 2,000 131,500
Northern Trust Corporation 1,200 83,700
Norwest Corporation 1,800 69,413
PNC Bank Corporation 4,000 228,250
State Street Corporation 2,400 139,650
U.S. Bancorp 1,300 145,519
Wells Fargo & Company 933 316,695
BEVERAGE - 0.6%
Anheuser-Busch Companies, Inc. 7,400 325,600
Coca-Cola Company 1,000 66,625
PepsiCo, Inc. 3,000 109,313
Robert Mondavi Corporation* 1,000 48,750
BIOTECHNOLOGY - 0.2%
Human Genome Sciences, Inc.* 1,200 47,700
Incyte Pharmaceuticals, Inc.* 1,400 63,000
Protein Design Labs, Inc.* 1,100 44,000
BROADCASTING / CABLE TV - 0.7%
A.H. Belo Corporation 1,400 78,400
Chancellor Media Corporation* 1,200 89,550
Clear Channel Communications* 2,200 174,763
Cox Communications, Inc.* 1,500 60,188
</TABLE>
See Notes To Financial Statements
24
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
BROADCASTING / CABLE TV - 0.7% (Continued)
Emmis Broadcasting Corporation* 1,500 $ 68,438
Jacor Communications, Inc.* 1,500 79,688
U.S. West Media Group* 4,000 115,500
Westwood One, Inc.* 1,700 63,113
BUILDING MATERIALS - 0.2%
American Standard Companies, Inc.* 1,100 42,144
Armstrong World Industries, Inc. 1,500 112,125
CHEMICAL - 1.9%
A. Schulman, Inc. 2,000 50,250
Airgas, Inc.* 4,000 56,000
B.F. Goodrich Company 2,000 83,125
duPont, E.I. de Nemours & Co. 7,000 421,313
Lilly Industries, Inc. 2,500 51,563
Minnesota Mining & Manufacturing 2,000 164,250
Monsanto Company 8,000 336,000
Raychem Corporation 2,000 86,125
Rohm & Haas Company 1,000 95,000
Sherwin-Williams Company 4,000 111,000
Sigma-Aldrich Corporation 2,600 102,700
Union Carbide Corporation 2,100 90,169
Valspar Corporation 2,600 83,200
WD-40 Company 5,600 162,400
Witco Corporation 2,700 110,363
COMPUTER & PERIPHERALS - 1.0%
3COM Corporation, Inc.* 1,550 54,056
Adaptec, Inc.* 1,400 51,975
Cisco Systems, Inc.* 1,950 108,713
Comverse Technology, Inc.* 800 31,200
EMC Corporation* 4,000 109,750
Gateway 2000, Inc.* 1,200 39,150
Hewlett-Packard Company 4,100 256,250
Microchip Technology, Inc.* 1,500 45,000
SCI Systems, Inc.* 2,000 87,125
Stratus Computer, Inc.* 1,100 41,525
Sun Microsystems, Inc.* 2,200 87,725
Xilinx, Inc.* 2,100 73,631
COMPUTER SOFTWARE & SERVICES - 2.3%
Adobe Systems, Inc. 1,200 49,500
Affiliated Computer Services, Inc.* 2,000 52,500
America Online, Inc.* 1,000 89,188
Automatic Data Processing, Inc. 4,000 245,500
Baan Company, N.V.* 1,000 33,000
BMC Software, Inc.* 2,000 131,250
Cadence Design Systems, Inc.* 2,700 66,488
Cambridge Technology Partners, Inc.* 2,000 83,250
CBT Group PLC* 1,000 82,125
Citrix Systems, Inc.* 1,200 91,200
Cognizant Corporation 1,600 71,500
Compuware Corporation* 4,000 128,000
DST Systems, Inc.* 1,500 64,031
Electronics for Imaging, Inc.* 1,400 23,275
First Data Corporation 1,488 43,524
HBO & Company 4,000 191,750
Intuit, Inc.* 1,700 70,125
Network Associates, Inc.* 1,200 63,450
Oracle Corporation* 3,787 84,261
Parametric Technology Company* 1,000 47,375
Peoplesoft, Inc.* 3,200 124,800
Remedy Corporation* 1,200 25,200
Security Dynamics Tech., Inc.* 1,400 50,050
Shared Medical Systems Corporation 900 59,288
Sterling Commerce, Inc.* 2,300 88,550
Symantec Corporation* 2,400 52,650
Synopsys, Inc.* 2,000 71,500
Visio Corporation* 2,600 99,775
DIVERSIFIED - 1.2%
AlliedSignal, Inc. 10,200 396,525
Danaher Corporation 1,000 63,375
Service Corp. International 2,700 99,731
</TABLE>
See Notes To Financial Statements
25
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
DIVERSIFIED - 1.2% (Continued)
Textron, Inc. 3,000 $ 188,063
Thermo Electron Corporation* 1,350 60,075
Tomkins PLC 4,900 93,713
TRW, Inc. 2,000 106,875
United Technologies Corporation 2,200 160,188
DRUG - 3.7%
American Home Products Corp. 3,400 260,313
Amgen, Inc.* 1,100 59,538
BioChem Pharma, Inc.* 2,200 45,925
Biogen, Inc.* 2,000 72,750
Bristol-Myers Squibb Company 12,400 1,168,700
Dura Pharmaceuticals, Inc.* 1,300 59,638
Elan Corporation PLC* 1,000 51,250
Gilead Sciences, Inc.* 1,000 38,250
Guilford Pharmaceuticals, Inc.* 1,500 30,750
Merck & Company, Inc. 6,000 633,750
Pfizer, Inc. 6,000 447,375
Schering-Plough Corporation 4,000 248,750
Warner-Lambert Company 3,800 471,200
Watson Pharmaceuticals, Inc.* 1,600 52,500
DRUGSTORE - 0.1%
Rite Aid Corporation 2,000 117,375
ELECTRIC & GAS UTILITIES - 2.8%
AES Corporation* 1,700 79,475
Baltimore Gas & Electric Company 5,700 193,800
CMS Energy Corporation 2,300 101,200
Consolidated Edison Co. of N.Y. 1,900 77,900
Duke Energy Corporation 8,935 494,217
Edison International 6,500 177,125
Entergy Corporation 4,000 119,750
FirstEnergy Corp. 4,500 130,219
Florida Progress Corporation 5,500 215,875
GPU, Inc. 3,600 151,650
Hawaiian Electric Industries, Inc. 2,300 94,013
New Century Energies, Inc. 4,700 225,306
Northern States Power Company 2,500 144,531
PacifiCorp 8,400 228,900
TECO Energy, Inc. 7,700 216,563
Texas Utilities Company 3,500 145,250
ELECTRICAL EQUIPMENT - 1.6%
Corning, Inc. 2,500 92,813
Emerson Electric Company 5,000 282,188
General Electric Company 14,000 1,027,250
Hubbell, Inc. 3,200 158,600
Littlefuse, Inc.* 2,000 49,750
ELECTRONICS - 0.4%
Altera Corporation* 2,000 66,250
Harman International Industries 1,050 44,559
Lam Research Corporation* 1,300 37,863
Molex, Inc. 2,928 84,180
Symbol Technologies, Inc. 3,000 114,563
Thermedics, Inc.* 2,000 33,000
ENVIRONMENTAL - 0.5%
Browning-Ferris Industries, Inc. 4,500 166,500
Superior Services, Inc.* 3,100 89,513
U.S. Filter Corporation* 1,200 36,000
USA Waste Services, Inc.* 1,700 66,725
Waste Management, Inc. 5,500 151,250
FINANCIAL SERVICES - 2.0%
American Express Company 5,000 446,250
Cendant Corporation* 5,605 192,660
Countrywide Credit Industries, Inc. 4,000 171,250
Finova Group, Inc. 2,000 99,375
Franklin Resources, Inc. 1,500 130,688
Green Tree Financial Corporation 2,000 52,375
Household International, Inc. 1,000 127,563
ING Groep N.V. 1 32
</TABLE>
See Notes To Financial Statements
26
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
FINANCIAL SERVICES - 2.0% (Continued)
Mutual Risk Management, Ltd. 6,666 $ 199,563
Paychex, Inc. 2,250 113,906
SLM Holding Corporation 800 111,600
Travelers Group, Inc. 5,400 290,588
United Asset Management Corp. 2,000 49,000
FOOD PROCESSING - 1.1%
Goodmark Foods, Inc. 5,200 96,200
Heinz (H.J) Company 3,500 178,063
Hershey Foods Corp. 2,800 173,425
International Multifoods Corporation 1,500 42,375
Kellogg Company 3,000 149,063
Quaker Oats Company 2,000 105,500
Sara Lee Corporation 4,500 253,406
Tootsie Roll Industries, Inc. 1,236 78,332
FOREIGN TELECOMMUNICATIONS - 0.5%
BCE, Inc. 4,400 146,575
Ericsson Telephone 1,800 67,163
Reuters Holdings PLC 2,000 132,500
Vodafone Group PLC 2,100 152,513
GROCERY - 0.3%
Albertson's, Inc. 2,900 137,569
Richfood Holdings, Inc. 2,000 56,500
Safeway, Inc.* 2,000 126,250
HOMEBUILDING - 0.3%
Lennar Corporation 1,700 36,656
Rouse Company 7,000 229,688
HOTEL / GAMING - 0.0%
Mirage Resorts, Inc.* 2,000 45,250
HOUSEHOLD PRODUCTS - 1.4%
Amway Asia Pacific Ltd. 1,000 19,438
Clorox Company 3,800 300,438
Colgate-Palmolive Company 6,200 455,700
First Brands Corporation 2,000 54,125
Kimberly-Clark Corporation 5,800 286,375
Lancaster Colony Corporation 1,000 56,375
Proctor & Gamble Company 2,400 191,550
Sunbeam Corporation, Inc. 1,600 67,700
INDUSTRIAL SERVICES - 0.7%
AccuStaff, Inc.* 2,000 46,250
Apollo Group, Inc.* 1,500 70,875
Equifax, Inc. 2,600 92,138
Interim Services* 2,232 57,056
Manpower, Inc. 1,500 52,688
Primark Corporation* 1,800 73,350
Quintiles Transnational Corporation* 2,000 76,500
Robert Half International, Inc.* 2,250 89,297
Sylvan Learning Systems, Inc.* 2,050 79,950
Vincam Group, Inc.* 1,800 47,925
INSURANCE - 2.2%
Ace, Ltd. 1,000 96,500
AFLAC, Inc. 2,400 122,700
Allstate Corporation 3,615 328,513
Ambac Financial Group, Inc. 2,600 119,763
American International Group, Inc. 3,000 326,250
Hartford Financial Services Group, Inc. 2,000 187,125
Marsh & McLennan Companies, Inc. 2,000 148,875
MBIA, Inc. 3,000 199,500
Mercury General Corporation 1,400 77,700
MGIC Investment Corporation 2,000 133,625
Progressive Corporation of Ohio 1,000 119,813
St. Paul Companies, Inc. 2,700 221,569
Vesta Insurance Group, Inc. 1,500 89,250
MACHINERY - 1.2%
Aeroquip-Vickers, Inc. 2,100 103,031
AGCO Corporation 2,000 58,500
Alamo Group, Inc. 1,500 32,531
Caterpillar, Inc. 3,600 175,050
</TABLE>
See Notes To Financial Statements
27
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
MACHINERY - 1.2% (Continued)
Cognex Corporation* 1,500 $ 40,875
Deere & Company 4,200 244,125
Donaldson Company, Inc. 1,400 63,088
Dover Corporation 10,400 375,700
IDEX Corporation 2,000 69,750
Parker-Hannifin Corporation 1,575 72,647
MANUFACTURED HOUSING - 0.1%
Oakwood Homes Corporation 2,000 66,375
MEDICAL SERVICES - 1.1%
ABR Information Services, Inc.* 1,600 38,200
Health Care & Retirement Corp.* 3,700 149,156
Health Management Associates* 5,568 140,592
HEALTHSOUTH Corporation* 2,000 55,500
Lincare Holdings, Inc.* 1,000 57,000
MedPartners/Mullikin, Inc.* 2,000 44,250
Omnicare, Inc. 2,800 85,750
Orthodontic Centers of America, Inc.* 2,200 36,575
PacifiCare Health Systems, Inc.* 700 36,663
PhyCor, Inc.* 2,000 54,000
Quorum Health Group, Inc.* 2,250 58,781
Renal Treatment Centers, Inc.* 1,700 61,413
Tenet Healthcare Corporation* 2,025 66,952
United HealthCare Corporation 1,300 64,756
Universal Health Services, Inc.* 2,200 110,825
MEDICAL SUPPLIES - 1.3%
Abbott Laboratories 3,600 236,700
Baxter International, Inc. 3,000 151,313
Boston Scientific Corporation* 1,400 64,225
Cardinal Health, Inc. 1,800 135,450
Guidant Corporation 2,000 124,500
Johnson & Johnson 2,560 168,480
Life Technologies, Inc. 1,800 60,750
Medtronic, Inc. 3,600 188,550
Sola International, Inc.* 1,500 49,125
Sybron International Corp.* 2,000 93,875
VISX, Inc.* 1,000 22,125
METAL FABRICATING - 0.1%
Kennametal, Inc. 1,000 51,938
METALS & MINING - 0.4%
Aluminum Company of America 4,000 281,500
Inco Limited 2,000 34,000
Placer Dome, Inc. 4,000 50,750
NATURAL GAS - 0.3%
Enron Corporation 5,400 224,100
Sonat, Inc. 1,800 82,350
NEWSPAPER - 0.3%
Central Newspapers, Inc. 1,000 74,000
Gannett Company, Inc. 3,800 233,938
OFFICE EQUIPMENT & SUPPLIES - 0.6%
Diebold, Inc. 1,400 70,875
Ikon Office Solutions, Inc. 1,800 50,400
Pitney Bowes, Inc. 3,500 314,563
Wallace Computer Services, Inc. 1,500 58,125
Xerox Corporation 1,400 103,338
OILFIELD SERVICES - 1.2%
Baker Hughes, Inc. 4,000 174,500
Camco International, Inc. 1,000 63,688
Cooper Cameron Corporation* 900 54,900
Halliburton Company 7,000 363,563
Noble Drilling Corporation* 2,000 61,125
Pride International, Inc.* 2,800 69,825
Schlumberger, Ltd. 2,000 161,000
Smith International, Inc.* 2,300 141,163
Tidewater, Inc. 1,000 55,125
PACKAGING & CONTAINER - 0.1%
Sealed Air Corporation* 2,000 124,000
PAPER & FOREST PRODUCTS - 0.7%
Fort James Corporation 3,000 114,563
Georgia Pacific Corporation 1,400 85,050
</TABLE>
See Notes To Financial Statements
28
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
PAPER & FOREST PRODUCTS - 0.7% (Continued)
Georgia Pacific Corp. (Timber Group) 1,400 $ 31,850
International Paper Company 8,000 345,000
Weyerhaeuser Company 2,200 107,938
PETROLEUM - 4.4%
Amerada Hess Corporation 1,300 71,256
Amoco Corporation 3,700 315,656
Apache Corporation 1,800 63,113
Ashland Oil, Inc. 1,800 96,525
Atlantic Richfield Company 3,000 240,375
Barrett Resources Corporation* 1,400 42,000
British Petroleum Co. PLC 4,000 318,750
Devon Energy Corporation 1,500 58,031
Exxon Corporation 12,600 770,963
Mobil Corporation 10,000 721,250
Noble Affiliates, Inc. 2,800 98,875
Phillips Petroleum Company 4,100 199,619
Repsol SA 3,400 144,713
Royal Dutch/Shell Transport Group 13,600 736,100
Texaco Inc. 2,300 125,063
Tosco Corporation 3,000 113,625
Union Texas Petroleum Holdings 4,000 83,250
United Meridian Corporation* 1,500 42,188
USX-Marathon Group 7,000 236,250
PRECISION INSTRUMENT - 0.3%
Coherent, Inc.* 1,600 56,200
Dionex Corporation* 1,000 50,250
KLA-Tencor Corporation* 900 34,875
Roper Industries, Inc. 2,000 57,750
Teleflex, Inc. 2,000 75,500
PRINTING - 0.2%
R. R. Donnelley & Sons Company 2,500 93,125
Valassis Communications, Inc.* 1,600 59,200
PUBLISHING - 0.5%
Harcourt General, Inc. 1,200 65,775
McGraw-Hill, Inc. 4,000 296,000
Meredith Corporation 1,800 64,238
Value Line, Inc. 2,500 98,750
RAILROAD - 0.3%
Kansas City Southern Ind., Inc. 4,500 142,313
Union Pacific Corporation 2,000 125,000
REAL ESTATE INVESTMENT MANAGEMENT - 0.1%
LNR Property Corporation 1,700 40,375
Security Capital Group Incorporated* 2,000 65,000
REAL ESTATE INVESTMENT TRUST - 1.6%
CarrAmerica Realty Corporation 5,000 159,688
Federal Realty Investment Trust 4,800 123,900
Meditrust Corporation 5,407 198,707
National Health Investors, Inc. 1,600 67,100
Nationwide Health Properties, Inc. 7,500 192,188
Security Capital Industrial Trust 7,908 196,712
Security Capital Pacific Trust 2,000 48,625
Simon DeBartolo Group, Inc. 3,400 111,138
Starwood Lodging Trust 5,000 289,375
United Dominion Realty Trust, Inc. 8,124 113,736
Weingarten Realty Investors 3,200 143,800
RECREATION - 0.9%
Brunswick Corporation 3,000 90,938
Callaway Golf Company 1,400 39,988
Carmike Cinemas, Inc.* 3,000 86,250
Carnival Corporation 2,000 110,750
Harley-Davidson, Inc. 4,000 109,750
Time Warner, Inc. 2,200 136,263
Walt Disney Company 3,000 297,188
RESTAURANT - 0.2%
McDonald's Corporation 2,500 118,438
Outback Steakhouse, Inc.* 2,250 64,688
</TABLE>
See Notes To Financial Statements
29
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
RETAIL STORE - 2.2%
AutoZone, Inc.* 1,500 $ 43,406
Bed Bath & Beyond, Inc.* 4,000 153,500
Borders Group, Inc.* 3,000 93,938
CDW Computer Centers, Inc.* 1,000 52,125
Circuit City Stores, Inc. 2,200 78,513
CompUSA, Inc.* 2,200 68,888
Consolidated Stores Corporation* 1,400 61,600
Dayton Hudson Corporation 4,000 270,000
Dollar General Corporation 6,250 226,563
Gymboree Corporation* 1,400 38,325
J.C. Penney Company 1,618 97,485
Lands' End, Inc.* 2,200 77,275
Men's Wearhouse, Inc.* 1,500 52,125
MSC Industrial Direct Co., Inc.* 1,500 63,563
OfficeMax, Inc.* 3,400 48,238
Sears, Roebuck & Company 3,900 176,475
Starbucks Corporation* 4,000 153,500
Tandy Corporation 3,200 123,400
The Sports Authority, Inc.* 2,600 38,350
Tiffany & Company 1,300 46,800
TJX Companies, Inc. 2,200 75,625
Viking Office Products, Inc.* 2,200 47,988
Williams-Sonoma, Inc.* 1,500 62,813
Zale Corporation* 2,200 50,600
SECURITIES BROKERAGE - 0.8%
Bear Stearns Companies, Inc. 2,791 133,270
Charles Schwab Corporation 4,500 188,719
Investment Technology Group* 2,900 81,200
Merrill Lynch & Company, Inc. 2,400 175,050
Morgan Stanley, Dean Witter and Co. 4,000 235,750
SEMICONDUCTOR - 1.2%
Analog Devices, Inc.* 1,700 46,856
ASM Lithography Holding N.V.* 600 40,500
Atmel Corporation* 2,000 37,250
Intel Corporation 4,800 337,500
Lattice Semiconductor Corporation* 800 37,900
Linear Technology Corporation 2,200 126,500
Maxim Integrated Products, Inc.* 4,800 165,600
Motorola, Inc. 2,500 142,656
SDL, Inc.* 1,500 21,750
Texas Instruments, Inc. 4,800 216,000
SHOE - 0.1%
Wolverine World Wide, Inc. 2,362 53,588
STEEL - 0.2%
Nucor Corporation 2,300 110,975
Worthington Industries 4,000 66,000
TELECOMMUNICATIONS EQUIPMENT - 0.3%
Andrew Corporation* 1,862 44,688
Ascend Communications, Inc.* 2,050 50,481
Aspect Telecommunications Corp.* 2,000 41,750
Coherent Commun. Systems Corp.* 1,500 42,375
DSP Communications,Inc.* 1,600 19,200
Tellabs, Inc.* 2,400 126,450
TELECOMMUNICATIONS SERVICE - 3.1%
360 Communications Company* 2,400 48,450
ALLTEL Corporation 4,500 185,063
Ameritech Corporation 3,000 242,063
AT&T Corporation 1,500 91,875
Bell Atlantic Corporation 4,100 372,588
BellSouth Corporation 10,000 563,125
Centennial Cellular Corporation* 1,000 20,500
Cincinnati Bell Inc. 5,000 155,313
CommNet Cellular, Inc.* 1,000 35,563
GTE Corporation 11,500 599,438
Intermedia Communications, Inc.* 1,200 72,750
Powertel, Inc.* 2,500 41,875
SBC Communications, Inc. 5,900 432,175
Southern New England Tele. Corp. 2,700 135,675
United States Cellular Corporation* 1,100 33,825
WorldCom, Inc.* 2,700 81,675
</TABLE>
See Notes To Financial Statements
30
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- -------- ----------
<S> <C> <C>
TEXTILE - 0.1%
Unifi, Inc. 1,300 $ 52,894
THRIFT - 0.6%
Fannie Mae 6,800 388,450
Freddie Mac 4,000 168,000
JSB Financial, Inc. 1,500 75,844
TIRE & RUBBER - 0.2%
Goodyear Tire & Rubber Company 2,600 165,588
TOBBACO - 0.8%
Fortune Brands, Inc. 2,000 74,125
Philip Morris Companies, Inc. 12,900 584,531
UST, Inc. 3,000 110,813
TOILETRIES / COSMETICS - 0.6%
Alberto-Culver Company 1,400 44,888
Gillette Company 3,000 301,313
Int'l Flavors & Fragrances, Inc. 5,000 257,188
TOYS - 0.1%
Mattel, Inc. 3,125 117,188
TRUCKING & TRANSPORT LEASING - 0.1%
Werner Enterprise, Inc. 3,150 64,575
WATER UTILITY - 0.2%
American Water Works Co., Inc. 5,500 150,563
----------
TOTAL COMMON STOCK - 59.9%
(Cost $32,781,892) $59,536,279
===========
</TABLE>
*Securities are non-income producing
See Notes To Financial Statements
31
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------- --------- ------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
AEROSPACE / DEFENSE - 0.8%
Lockheed Martin Corporation BBB+ 9.375 10/15/99 $ 100,000 $ 105,349
Lockheed Martin Corporation BBB+ 7.650 05/01/16 500,000 545,778
Rockwell International Corp. AA+ 8.875 09/15/99 100,000 104,507
AIR TRANSPORT - 0.4%
Federal Express Corporation BBB+ 8.760 05/22/15 350,000 401,828
AUTO & TRUCK - 0.6%
General Motors Corporation A 9.125 07/15/01 500,000 545,454
BANK - 4.5%
Bankers Trust New York Corp. A- 9.500 06/14/00 250,000 268,919
Chase Manhattan Corp. A- 6.750 08/15/08 400,000 405,621
Comerica Bank A- 7.125 12/01/13 500,000 497,065
First Chicago NBD Corporation A 8.100 03/01/02 500,000 531,458
First Union Corporation A- 8.000 08/15/09 500,000 539,885
First Union Corporation A- 9.450 06/15/99 100,000 104,722
Morgan, J.P. & Company AA 8.500 08/15/03 500,000 552,713
NationsBank Corporation A 6.500 03/15/06 500,000 503,420
Royal Bank of Scotland A+ 6.375 02/01/11 500,000 486,928
Swiss Bank Corp.-NY AA 7.375 07/15/15 500,000 534,275
BEVERAGE - 0.6%
Anheuser Busch Companies, Inc. A+ 7.125 07/01/17 350,000 360,358
Anheuser Busch Companies, Inc. A+ 8.500 03/01/17 220,000 228,289
BUILDING MATERIALS - 0.5%
Masco Corporation BBB+ 7.125 08/15/13 500,000 517,070
CHEMICAL - 0.6%
Monsanto Company A 8.875 12/15/09 500,000 600,063
DIVERSIFIED - 2.2%
Service Corp. International BBB+ 7.700 04/15/09 500,000 544,580
Tenneco, Inc. BBB 7.625 06/15/17 500,000 533,463
Textron, Inc. A- 8.750 07/01/22 500,000 548,654
Whitman Corporation BBB+ 8.250 02/15/07 500,000 556,847
</TABLE>
See Notes To Financial Statements
32
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------- --------- ------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
ELECTRIC & GAS UTILITIES - 6.1%
Alabama Power Company A+ 8.500 05/01/22 $ 500,000 $ 529,385
Dayton Power & Light Company AA- 8.150 01/15/26 500,000 538,651
Delmarva Power & Light Co. A 8.500 02/01/22 500,000 546,118
Duke Energy Corporation AA- 6.375 03/01/08 500,000 496,875
Florida Power & Light Company AA- 7.875 01/01/13 500,000 518,795
Georgia Power Company A+ 7.625 03/01/23 450,000 461,192
Hydro Quebec A+ 7.000 03/01/05 500,000 522,420
Monongahela Power A+ 8.500 06/01/22 500,000 529,316
Potomac Edison Company A+ 7.750 05/01/25 500,000 526,987
Public Service Electric & Gas A- 7.000 09/01/24 200,000 196,864
Union Electric Company AA- 8.750 12/01/21 500,000 552,655
Virginia Electric & Power Company A 8.000 03/01/04 500,000 543,302
FINANCIAL SERVICES - 4.1%
Deere, John Capital Corporation A 8.625 08/01/19 500,000 545,625
Dow Capital BV A 8.700 05/15/22 250,000 308,377
Fairfax Financial Holdings BBB+ 8.250 10/01/15 500,000 548,910
Fletcher Challenge Capital Canada,Inc. BBB 8.250 06/20/16 500,000 564,391
Ford Holdings, Inc. A 9.250 03/01/00 475,000 503,424
General Electric Capital Corporation AAA 7.750 03/15/02 500,000 531,164
IBM Credit Corporation A 6.750 12/24/07 500,000 493,742
SunAmerica, Inc. A 8.125 04/28/23 500,000 557,469
FOOD PROCESSING - 0.8%
Kraft, Inc. A 8.500 02/15/17 250,000 258,042
Nabisco, Inc. BBB 7.050 07/15/07 500,000 515,482
FOREIGN GOVERNMENT - 1.6%
Province of Nova Scotia A- 7.250 07/27/13 500,000 525,717
Province of Quebec A+ 8.800 04/15/03 350,000 387,458
Province of Saskatchewan A 9.375 12/15/20 525,000 681,792
GOVERNMENTAL AGENCY - 0.5%
Fannie Mae Not Rated 5.520 04/13/98 500,000 500,315
HOTEL / GAMING - 0.5%
ITT Corporation BBB 7.375 11/15/15 500,000 485,628
</TABLE>
See Notes To Financial Statements
33
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------- --------- ------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
INSURANCE - 2.2%
Chubb Corporation AA+ 8.750 11/15/99 $ 39,000 $ 40,349
CIGNA Corporation A 8.250 01/01/07 500,000 556,374
Leucadia National Corporation BBB+ 7.750 08/15/13 500,000 515,000
MBIA, Inc. AA 9.375 02/15/11 500,000 627,257
Metropolitan Life Insurance Co.* A+ 7.450 11/01/23 450,000 487,233
MACHINERY - 0.5%
Case Corporation A- 7.250 01/15/16 500,000 523,825
MEDICAL SUPPLIES - 1.1%
Cardinal Health, Inc. A- 6.000 01/15/06 500,000 485,345
Johnson & Johnson AAA 8.720 11/01/24 550,000 632,271
METALS & MINING - 0.6%
Placer Dome, Inc. BBB 7.750 06/15/15 500,000 537,975
NATURAL GAS - 0.5%
Enron Corporation BBB+ 7.000 08/15/23 500,000 486,657
NEWSPAPER - 0.4%
Knight-Ridder, Inc. A 9.875 04/15/09 100,000 128,509
Tribune Company A 8.450 02/25/98 300,000 301,006
OFFICE EQUIPMENT & SUPPLIES - 0.2%
Xerox Corporation A 9.750 03/15/00 200,000 214,619
PACKAGING & CONTAINER - 0.4%
Crown Cork & Seal Company, Inc. BBB+ 8.375 01/15/05 390,000 429,727
PAPER & FOREST PRODUCTS - 0.5%
Weyerhaeuser Co. A 6.950 08/01/17 500,000 509,613
PETROLEUM - 1.9%
Atlantic Richfield Company A 8.500 04/01/12 250,000 299,598
Louisiana Land & Exploration Co. A- 7.625 04/15/13 500,000 541,012
OXY USA, Inc. BBB 7.000 04/15/11 525,000 515,409
Phillips Petroleum Company A- 8.860 05/15/22 500,000 547,500
</TABLE>
See Notes To Financial Statements
34
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ----------------------------------- --------- ------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
PUBLISHING - 0.5%
News America Holdings BBB- 8.000 10/17/16 $ 500,000 $ 541,075
RESTAURANT - 0.5%
Darden Restaurants, Inc. BBB 7.125 02/01/16 500,000 475,000
RETAIL STORE - 0.2%
Dayton Hudson Corporation BBB+ 9.625 02/01/08 200,000 243,776
SECURITIES BROKERAGE - 1.7%
Bear Stearns Companies, Inc. A 7.250 10/05/06 500,000 522,631
Lehman Brothers Holdings, Inc. A 8.500 08/01/15 500,000 578,598
Merrill Lynch & Company, Inc. AA- 7.190 08/07/12 300,000 302,105
Salomon, Inc. A 9.450 03/15/00 300,000 301,946
TELECOMMUNICATIONS SERVICE - 1.8%
AT&T Corporation AA- 7.125 01/15/02 500,000 518,003
Michigan Bell Telephone AAA 7.500 02/15/23 500,000 520,991
NYNEX Corporation A+ 7.375 12/15/11 250,000 251,875
Southwestern Bell Telephone Company AA 7.375 05/01/12 525,000 528,937
TOBACCO - 0.4%
Philip Morris Companies, Inc. A 9.000 01/01/01 400,000 427,380
U.S. GOVERNMENT - 1.0%
U.S. Treasury 6.500 08/15/05 1,000,000 1,043,281
--------------
TOTAL FIXED-INCOME SECURITIES - 38.2%
(Cost $36,200,523) 38,022,219
TOTAL COMMON STOCK - 59.9%
(Cost $32,781,892) 59,536,279
--------------
TOTAL INVESTMENTS IN SECURITIES - 98.1%
(Cost $68,982,415) $ 97,558,498
==============
</TABLE>
* Security exempt from registration under Rule 144A of
the Securities Act of 1933
See Notes To Financial Statements
35
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
ADVERTISING - 0.9%
Heritage Media Corporation BB+ 02/15/06 8.750 $ 500,000 $ 506,180
Lamar Advertising Company B 12/01/06 9.625 700,000 752,500
Universal Outdoor, Inc. B 10/15/06 9.750 500,000 562,500
AEROSPACE / DEFENSE - 1.2%
AAR Corporation BBB 10/15/03 7.250 500,000 517,477
Lockheed Martin Corporation BBB+ 03/15/23 7.875 500,000 523,084
McDonnell Douglas Corporation AA+ 04/01/12 9.750 1,000,000 1,314,488
AIR TRANSPORT - 2.7%
AMR Corporation BBB- 08/01/12 9.000 1,000,000 1,191,021
AMR Corporation BBB- 03/15/00 9.750 100,000 106,250
Delta Air Lines, Inc. BBB- 02/01/11 10.375 500,000 634,415
Federal Express Corporation BBB+ 01/01/15 7.630 1,000,000 1,083,556
Northwest Airlines Corporation BB- 03/15/07 8.700 1,000,000 1,057,500
United Airlines, Inc. BB+ 07/15/21 10.250 500,000 663,750
United Airlines, Inc. BB+ 08/15/21 9.750 500,000 645,328
APPAREL - 1.5%
Fruit of the Loom, Inc. BBB- 03/15/11 7.000 1,000,000 950,000
Phillips-Van Heusen Corp. BB+ 11/15/23 7.750 1,000,000 1,064,722
Platex Family Products Corp. B 12/15/03 9.000 1,000,000 1,017,500
AUTO PARTS - 0.8%
JPS Automotive Products Corp. B 06/15/01 11.125 500,000 555,000
Titan International, Inc. BB- 04/01/07 8.750 500,000 515,000
Walbro Corporation B+ 07/15/05 9.875 500,000 524,319
AUTO & TRUCK - 1.7%
Ford Motor Company A 11/15/22 8.875 2,000,000 2,235,675
General Motors Corporation A 06/15/24 8.100 1,000,000 1,102,255
BANK - 5.7%
Banc One Corporation A+ 07/15/25 7.750 1,000,000 1,106,146
Bank of Boston Corporation BBB+ 12/01/05 6.625 1,000,000 1,005,651
Bankers Trust New York Corp. A- 11/15/15 7.500 1,500,000 1,580,767
</TABLE>
See Notes To Financial Statements
36
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
BANK - 5.7% (Continued)
Chase Manhattan Corp. A- 10/15/08 6.125 $1,000,000 $ 966,215
Comerica Bank A- 12/01/13 7.125 1,000,000 994,130
First Union Corporation A- 08/15/09 8.000 500,000 539,885
KeyCorp BBB+ 03/15/06 6.750 1,000,000 1,011,078
NCNB Corporation A 07/15/15 10.200 1,000,000 1,360,077
Republic New York Corporation AA- 05/15/21 9.125 1,000,000 1,273,374
Royal Bank of Scotland A+ 02/01/11 6.375 1,000,000 973,856
Westpac Banking Corporation A+ 08/15/01 9.125 500,000 546,193
BEVERAGE - 0.2%
Anheuser Busch Companies, Inc. A+ 03/01/17 8.500 386,000 400,543
BROADCASTING / CABLE TV - 5.5%
Cablevision Systems Corporation BB- 05/15/06 9.875 750,000 821,250
Century Communications Corp. BB- 02/15/02 9.750 250,000 264,375
Century Communications Corp. BB- 03/01/05 9.500 1,000,000 1,060,000
Comcast Cablevision BB+ 01/15/08 9.500 500,000 531,050
Comcast Cablevision BB+ 05/15/05 9.375 500,000 535,000
Continental Cablevision, Inc. BBB+ 08/01/13 9.500 500,000 591,166
Jacor Communications Company B 12/15/06 9.750 750,000 806,250
Jones Intercable, Inc. BB 04/01/07 8.875 500,000 523,750
Jones Intercable, Inc. B+ 03/01/08 10.500 700,000 772,415
Lenfest Communications, Inc. BB+ 11/01/05 8.375 1,000,000 1,030,000
Rogers Cablesystems Ltd. BB+ 03/15/05 10.000 500,000 547,380
Sinclair Broadcast Group, Inc. B 09/30/05 10.000 500,000 535,000
Tele-Communications, Inc. BBB- 01/15/23 9.250 760,000 838,552
Tele-Communications, Inc. BBB- 02/15/23 8.750 500,000 538,519
Turner Broadcasting System, Inc. BBB- 07/01/13 8.375 750,000 836,267
Young Broadcasting, Inc. B 06/15/07 8.750 750,000 742,500
BUILDING - 2.1%
Continental Homes Holding Corporation B+ 04/15/06 10.000 500,000 538,077
Hovnanian Enterprises, Inc. B 06/01/05 9.750 500,000 497,500
Ryland Group B+ 07/15/02 10.500 1,050,000 1,098,436
Standard Pacific Corporation BB 06/15/07 8.500 1,000,000 1,010,109
U.S. Home Corporation BB- 08/15/07 8.880 1,000,000 1,020,000
</TABLE>
See Notes To Financial Statements
37
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
BUILDING MATERIALS - 0.3%
Johns Manville Corporation BB- 12/15/04 10.875 $ 500,000 $ 556,250
CHEMICAL - 1.6%
Borden Chemicals and Plastics, L.P. BB+ 05/01/05 9.500 500,000 530,000
duPont, E.I. de Nemours & Co. AA- 01/15/22 8.250 1,000,000 1,079,330
Eastman Chemical Company BBB+ 01/15/24 7.250 1,000,000 1,036,467
Union Carbide Chemicals & Plastics Co. BBB 04/01/23 7.875 600,000 671,644
COMPUTER & PERIPHERALS - 1.3%
Digital Equipment Corporation BB+ 11/01/12 8.625 1,200,000 1,388,398
International Business Machines Corp. A 11/01/19 8.375 1,000,000 1,191,032
DIVERSIFIED - 1.2%
Tenneco, Inc. BBB 11/15/12 9.200 500,000 609,260
Textron, Inc. A- 07/01/22 8.750 581,000 637,536
Whitman Corporation BBB+ 06/15/15 7.625 1,000,000 1,081,320
ELECTRIC & GAS UTILITIES - 10.5%
Alabama Power Company A+ 12/01/24 9.000 1,000,000 1,097,762
Cleveland Electric Illuminating Company BB+ 08/01/12 8.375 500,000 509,600
Dayton Power & Light Company AA- 01/15/26 8.150 1,000,000 1,077,302
Florida Power & Light Company AA- 01/01/13 7.875 1,000,000 1,037,591
FPL Group Capital, Inc. A+ 05/01/13 7.625 1,025,000 1,057,308
Georgia Power Company A+ 02/01/23 7.950 1,000,000 1,038,425
Hydro Quebec A+ 01/15/22 8.400 850,000 1,013,222
Illinois Power Co. BBB 02/15/23 8.000 1,000,000 1,035,000
Indianapolis Power & Light Co. AA- 02/01/24 7.050 1,000,000 1,003,667
Long Island Lighting Company BB+ 07/15/19 8.900 473,000 503,051
Midland Cogeneration Venture BB- 07/23/02 10.330 338,054 359,337
Monongahela Power A+ 06/01/22 8.500 1,500,000 1,587,947
New Orleans Public Service, Inc. BBB 03/01/23 8.000 600,000 615,366
Northern Illinois Gas Company AA 08/15/21 8.875 1,000,000 1,063,987
Philadelphia Electric Company BBB+ 09/01/22 8.250 1,000,000 1,048,967
Potomac Edison Company A+ 06/01/24 8.000 1,000,000 1,076,225
Potomac Electric Power Company A 06/01/21 9.000 1,000,000 1,106,238
Public Service Electric & Gas A- 09/01/24 7.000 1,000,000 984,320
Southern Cal Edison A+ 12/01/17 8.375 655,000 672,020
</TABLE>
See Notes To Financial Statements
38
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<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 - 10.5% (Continued)
Southern California Gas Company AA- 10/01/21 8.750 $1,000,000 $ 1,099,484
Virginia Electric & Power Company A 10/01/24 8.625 1,000,000 1,126,254
West Penn Power Company A+ 08/01/24 8.125 1,000,000 1,076,491
ELECTRIC EQUIPMENT - 1.4%
Essex Group, Inc. BB- 05/01/03 10.000 1,000,000 1,050,000
Philips Electronics N.V. BBB+ 08/15/13 7.250 1,000,000 1,008,960
Westinghouse Electric Corp. BB 08/01/12 8.625 750,000 787,500
ENVIRONMENTAL - 0.6%
Laidlaw, Inc. BBB+ 05/15/23 8.250 1,000,000 1,135,300
FINANCIAL SERVICES - 4.7%
AMRESCO, Inc. B 03/15/04 10.000 1,000,000 1,040,000
Auburn Hills Trust A 05/01/20 12.000 400,000 640,710
CRA Finance USA, Ltd. AA- 12/01/13 7.125 500,000 525,070
Dean Witter Discover & Company A+ 10/15/13 6.750 1,250,000 1,240,098
Dow Capital BV A 05/15/22 8.700 1,000,000 1,233,508
Fairfax Financial Holdings BBB+ 10/01/15 8.250 1,500,000 1,646,730
Fletcher Challenge Capital Canada, Inc. BBB 06/20/16 8.250 1,000,000 1,128,782
Imperial Credit Industries, Inc. B+ 01/15/07 9.875 500,000 496,689
SunAmerica, Inc. A 04/28/23 8.125 1,250,000 1,393,672
FOOD PROCESSING - 0.8%
Chiquita Brands Int'l, Inc. B+ 01/15/04 9.625 1,000,000 1,062,500
ConAgra, Inc. BBB 03/01/21 9.750 500,000 657,988
FOREIGN GOVERNMENT - 2.8%
Province of Newfoundland BBB+ 10/22/22 8.650 1,000,000 1,184,350
Province of Nova Scotia A- 07/27/13 7.250 1,000,000 1,051,434
Province of Quebec A+ 12/01/26 8.625 1,000,000 1,228,105
Province of Saskatchewan A 02/01/13 8.000 1,000,000 1,121,923
Republic of Finland AA 04/01/28 9.625 1,000,000 1,051,243
HOTEL / GAMING - 3.6%
Boyd Gaming Corporation BB 10/01/03 9.250 1,000,000 1,050,000
Circus Circus Enterprises BBB- 07/15/13 7.625 450,000 460,125
</TABLE>
See Notes To Financial Statements
39
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
HOTEL / GAMING - 3.6% (Continued)
Empress River Casino Finance Corp. BB 04/01/02 10.750 $ 500,000 $ 518,500
Grand Casinos, Inc. BB 12/01/03 10.125 1,000,000 1,082,500
Host Marriott Travel Plaza BB- 05/15/05 9.500 1,000,000 1,062,500
ITT Corporation BBB 11/15/15 7.375 1,000,000 971,256
Prime Hospitality Corp. BB 01/15/06 9.250 1,000,000 1,065,096
Showboat, Inc. BB- 05/01/08 9.250 400,000 430,000
Station Casinos B+ 06/01/03 9.625 500,000 516,250
INSURANCE - 6.6%
Aetna Services, Inc. A 01/15/17 8.000 1,275,000 1,318,736
American Financial Group, Inc. BBB 12/15/07 7.125 1,000,000 1,005,232
CIGNA Corporation A 03/01/23 7.650 500,000 526,766
CNA Financial Corporation A- 11/15/23 7.250 1,000,000 1,005,373
Continental Corporation BBB- 08/15/12 8.375 600,000 676,655
Kaufman & Broad Home Corp. B+ 05/01/03 9.375 1,000,000 1,030,000
Leucadia National Corporation BBB+ 08/15/13 7.750 910,000 937,300
MBIA, Inc. AA 10/01/22 8.200 2,000,000 2,126,945
Metropolitan Life Insurance Co.* A+ 11/01/23 7.450 550,000 595,507
New York Life Insurance Company AA- 12/15/23 7.500 1,000,000 1,040,000
Penncorp Financial Group, Inc. BB+ 12/15/03 9.250 500,000 515,830
Reliance Group Holdings, Inc. BB+ 11/15/00 9.000 1,000,000 1,047,500
Torchmark Corporation A 03/01/17 8.625 900,000 938,916
Vesta Insurance Group BBB+ 07/15/25 8.750 500,000 587,836
MEDICAL SERVICES - 1.4%
Abbey Healthcare Group, Inc. B+ 11/01/02 9.500 500,000 528,871
Beverly Enterprises Inc. B+ 02/15/06 9.000 500,000 520,000
Columbia/HCA Healthcare Corporation BBB 12/15/14 9.000 1,000,000 1,163,060
HEALTHSOUTH Corporation BB- 04/01/01 9.500 500,000 525,000
MEDICAL SUPPLIES - 0.4%
Cardinal Health, Inc. A- 02/15/04 6.500 700,000 705,941
METALS & MINING - 1.4%
Alcan Aluminum Ltd. A- 01/15/22 8.875 1,000,000 1,094,433
Inco Ltd. BBB- 06/15/22 9.600 500,000 563,413
Placer Dome, Inc. BBB 06/15/15 7.750 1,000,000 1,075,951
</TABLE>
See Notes To Financial Statements
40
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
NATURAL GAS - 1.0%
AmeriGas Partners, L.P. BB+ 04/15/07 10.125 $ 300,000 $ 326,070
Consolidated Natural Gas Company AA- 12/01/11 8.625 154,000 157,850
Ferrellgas Partners, L.P. B+ 06/15/06 9.375 500,000 530,000
Seagull Energy BB+ 08/01/05 8.625 1,000,000 1,050,000
NEWSPAPER - 0.5%
Hollinger International, Inc. BB- 02/01/06 9.250 500,000 530,000
Hollinger International, Inc. BB- 03/15/07 9.250 500,000 528,605
OILFIELD SERVICES - 2.7%
Dawson Production Services, Inc. B+ 02/01/07 9.375 1,000,000 1,050,000
Husky Oil, Ltd. BBB 11/15/16 7.550 1,000,000 983,000
J. Ray McDermott, S.A. BB- 07/15/06 9.375 500,000 535,000
Lomak Petroleum, Inc. B 01/15/07 8.750 1,000,000 1,020,893
Trico Marine Services Inc. BB- 08/01/05 8.500 1,000,000 1,032,467
Veritas DGC, Inc. BB 10/15/03 9.750 750,000 816,517
PACKAGING & CONTAINERS - 1.4%
Container Corp. of America B+ 04/01/03 9.750 400,000 428,000
Crown Cork & Seal Company, Inc. BBB+ 04/15/23 8.000 1,500,000 1,571,948
Stone Container Corporation B 02/01/01 9.875 750,000 750,000
PAPER & FOREST PRODUCTS - 2.2%
Bowater, Inc. BBB 10/15/12 9.500 700,000 878,451
Champion International Corporation BBB 09/01/23 7.625 1,500,000 1,535,797
Georgia-Pacific Corporation BBB- 07/01/22 9.125 1,000,000 1,114,734
Sweetheart Corporation, Inc. B+ 09/01/00 9.625 1,000,000 992,500
PETROLEUM - 4.5%
ANR Pipeline Company BBB 11/01/21 9.625 1,000,000 1,306,349
Clark Oil & Refining Corporation BB 09/15/04 9.500 650,000 672,750
Clark USA, Inc. B+ 12/01/05 10.875 500,000 546,942
Diamond Shamrock R & M, Inc. BBB 04/01/23 8.000 600,000 631,650
Louisiana Land & Exploration Co. A- 04/15/13 7.625 1,000,000 1,082,024
NOVA Gas Transmission A- 04/01/23 7.875 600,000 674,724
OXY USA, Inc. BBB 04/15/11 7.000 1,000,000 981,732
Phillips Petroleum Company A- 01/01/23 8.490 1,000,000 1,084,453
</TABLE>
See Notes To Financial Statements
41
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
PETROLEUM - 4.5% (Continued)
USX Corporation BBB- 02/15/12 9.375 $ 750,000 $ 917,334
Vintage Petroleum, Inc. B+ 12/15/05 9.000 1,000,000 1,051,879
PUBLISHING - 0.9%
K-III Communications Corporation BB- 06/01/04 10.250 750,000 813,750
News America Holdings BBB- 08/10/18 8.250 1,000,000 1,099,147
RAILROAD - 1.1%
Kansas City Southern Industries, In BBB- 07/01/22 8.800 500,000 545,506
Union Pacific Corporation BBB 05/01/25 8.350 1,500,000 1,637,257
REAL ESTATE INVESTMENT MANAGEMENT - 0.5%
Rodamco N.V. AA 05/15/15 7.750 1,000,000 1,114,576
REAL ESTATE INVESTMENT TRUST - 0.4%
Taubman Realty Group Ltd. BBB 10/01/03 7.000 750,000 759,210
RECREATION - 1.3%
Brunswick Corporation BBB+ 09/01/23 7.375 975,000 1,033,089
Speedway Motorsports, Inc. B+ 08/15/07 8.500 500,000 508,750
Time Warner, Inc. BBB- 01/15/13 9.125 1,000,000 1,190,000
RESTAURANT - 0.7%
Darden Restaurants, Inc. BBB 02/01/16 7.125 1,500,000 1,425,000
RETAIL STORE - 4.3%
Dayton Hudson Corporation BBB+ 12/01/22 8.500 1,500,000 1,623,378
Genesco, Inc. B+ 02/01/03 10.375 425,000 439,835
J.C. Penney Company A 04/01/17 7.950 1,000,000 1,118,004
The Limited, Inc. BBB+ 03/15/23 7.500 1,000,000 997,703
May Department Stores A 07/15/26 8.300 1,000,000 1,105,918
Michaels Stores, Inc. BB- 06/15/06 10.875 1,000,000 1,088,330
Rite-Aid Corporation BBB+ 08/15/13 6.875 1,000,000 1,005,322
Sears, Roebuck & Company A- 11/01/11 9.375 1,000,000 1,240,993
SECURITIES BROKERAGE - 2.8%
Bear Stearns Companies, Inc. A 01/15/04 6.625 1,000,000 999,392
Goldman Sachs Group A+ 03/01/13 8.000 1,000,000 1,129,474
</TABLE>
See Notes To Financial Statements
42
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ----------------------------------- -------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
SECURITIES BROKERAGE - 2.8% (Continued)
Lehman Brothers, Inc. A 05/15/05 11.625 $1,023,000 $ 1,328,881
Morgan Stanley Group, Inc. A+ 10/01/13 7.000 1,000,000 1,038,773
Paine Webber Group, Inc. BBB+ 02/15/14 7.625 1,000,000 1,063,128
SEMICONDUCTOR - 0.5%
Advanced Micro Devices, Inc. BB- 08/01/03 11.000 1,000,000 1,075,000
STEEL - 0.5%
AK Steel Corporation BB- 12/15/06 9.125 1,000,000 1,029,321
TELECOMMUNICATIONS SERVICE - 3.3%
AT&T Corporation AA- 01/15/22 8.125 750,000 799,399
Bell Atlantic Corporation A+ 06/15/17 7.875 500,000 511,250
Comcast Cellular Communications, In BB+ 05/01/07 9.500 500,000 525,000
GCI, Inc. B+ 08/01/07 9.750 1,000,000 1,035,214
GTE Corporation A 11/01/21 8.750 1,000,000 1,215,339
NYNEX Corporation A+ 12/15/11 7.375 500,000 503,750
Paging Network, Inc. B 02/01/06 8.875 1,000,000 980,401
Southwestern Bell Telephone Company AA 05/01/12 7.375 1,000,000 1,007,500
TEXTILES - 1.5%
Dominion Textile, Inc. BB 04/01/06 9.250 1,000,000 1,122,500
Fieldcrest Cannon, Inc. B+ 06/15/04 11.250 1,000,000 1,055,000
WestPoint Stevens, Inc. BB- 12/15/01 8.750 750,000 780,000
TOBACCO - 0.9%
Philip Morris Companies, Inc. A 01/15/17 8.375 1,000,000 1,027,388
RJR Nabisco, Inc. BBB- 04/15/04 8.750 775,000 821,568
U.S. GOVERNMENT - 3.7%
U.S. Treasury 08/15/26 6.750 2,000,000 2,202,813
U.S. Treasury 10/15/06 6.500 500,000 523,594
U.S. Treasury 11/15/12 10.375 3,500,000 4,651,172
----------------
TOTAL FIXED INCOME SECURITIES - 95.6%
(Cost $179,340,720) $ 191,712,180
================
</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, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY RETIREMENT
GROWTH BOND BALANCED INCOME
----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities. . . . . . . . . $ 53,838,950 $ 4,121,662 $ 97,558,498 $ 191,712,180
Cash . . . . . . . . . . . . . . . . . . . 514,568 17,610 1,064,560 4,952,367
Receivables
Dividends and interest. . . . . . . . . . 24,057 69,572 884,587 3,981,295
Securities sold . . . . . . . . . . . . . 0 0 0 0
Prepaid expenses . . . . . . . . . . . . . 4,046 1,516 6,690 13,838
------------ ----------- ------------ -------------
Total assets . . . . . . . . . . . . . . . . 54,381,621 4,210,360 99,514,335 200,659,680
LIABILITIES
Payable to affiliated entities
Investment advisory fees. . . . . . . . . 30,653 1,398 57,032 82,702
Distribution fees . . . . . . . . . . . . 368 0 670 1,332
Accounts payable and accrued expenses. . . 18,304 1,350 29,414 52,918
Securities purchased . . . . . . . . . . . 0 0 0 0
Distributions payable. . . . . . . . . . . 68 4,617 5,760 11,622
------------ ----------- ------------ -------------
Total liabilities. . . . . . . . . . . . . 49,393 7,365 92,876 148,574
------------ ----------- ------------ -------------
Net assets . . . . . . . . . . . . . . . . $ 54,332,228 $ 4,202,995 $ 99,421,459 $ 200,511,106
============ =========== ============ =============
NET ASSETS
Paid-in capital. . . . . . . . . . . . . . $ 35,179,724 $ 3,987,535 $ 70,845,376 $ 188,180,866
Accumulated undistributed net realized
loss on investments . . . . . . . . . . . 0 0 0 (41,220)
Net unrealized appreciation in value of
investments . . . . . . . . . . . . . . . 19,152,504 215,460 28,576,083 12,371,460
------------ ----------- ------------ -------------
Net assets . . . . . . . . . . . . . . . . $ 54,332,228 $ 4,202,995 $ 99,421,459 $ 200,511,106
============ =========== ============ =============
SHARES OUTSTANDING . . . . . . . . . . . . . 3,150,443 399,375 6,336,730 18,824,383
============ =========== ============ =============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE . . . . . . . . $ 17.25 $ 10.52 $ 15.69 $ 10.65
============ =========== ============ =============
</TABLE>
See Notes To Financial Statements
44
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY RETIREMENT
GROWTH BOND BALANCED INCOME
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . $ 24,600 $ 305,052 $ 2,603,199 $ 14,807,711
Dividends. . . . . . . . . . . . . . . . . 210,189 0 978,862 0
------------ ----------- ------------ -------------
Total investment income. . . . . . . . . . 234,789 305,052 3,582,061 14,807,711
EXPENSES
Paid to affiliates:
Investment advisory fees . . . . . . . . 331,108 16,856 617,972 921,051
Administration fees. . . . . . . . . . . 0 0 0 0
Distribution fees. . . . . . . . . . . . 118,253 0 220,704 460,525
Transfer and dividend disbursing
agent fees . . . . . . . . . . . . . . 0 0 0 0
Paid to others:
Custodial fees . . . . . . . . . . . . . 22,623 2,245 21,292 9,475
Directors fees and expenses. . . . . . . 1,926 178 3,624 7,623
Professional fees. . . . . . . . . . . . 8,631 764 16,176 33,709
Shareholder reporting costs. . . . . . . 12,219 1,133 23,029 47,501
Registration and filing fees . . . . . . 4,478 1,416 6,319 10,018
Other operating expenses . . . . . . . . 5,981 455 10,415 20,344
------------ ----------- ------------ -------------
Total expenses . . . . . . . . . . . . . . 505,219 23,047 919,531 1,510,246
------------ ----------- ------------ -------------
NET INVESTMENT INCOME (LOSS) . . . . . . . . (270,430) 282,005 2,662,530 13,297,465
REALIZED GAIN ON INVESTMENTS
Proceeds from securities sold. . . . . . . 9,559,297 1,218,525 8,780,765 29,757,980
Cost of securities sold. . . . . . . . . . (9,202,743) (1,180,335) (6,878,349) (28,828,247)
------------ ----------- ------------ -------------
Net realized gain on investments . . . . . 356,554 38,190 1,902,416 929,733
UNREALIZED GAIN ON INVESTMENTS
Appreciation, Beginning of year. . . . . . 11,269,388 151,070 16,670,110 4,830,140
Appreciation, End of year. . . . . . . . . 19,152,504 215,460 28,576,083 12,371,460
------------ ----------- ------------ ------------
Net unrealized gain on investments . . . . 7,883,116 64,390 11,905,973 7,541,320
------------ ----------- ------------ ------------
NET GAIN ON INVESTMENTS. . . . . . . . . . . 8,239,670 102,580 13,808,389 8,471,053
------------ ----------- ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . $ 7,969,240 $ 384,585 $ 16,470,919 $ 21,768,518
============ =========== ============ =============
</TABLE>
See Notes To Financial Statements
45
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH BOND
----------------------------- ----------------------------
1997 1996 1997 1996
-------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . . $ (270,430) $ (162,689) $ 282,005 $ 293,150
Net realized gain (loss) on investments. . . . . . 356,554 128,865 38,190 14,890
Net unrealized gain (loss) on investments. . . . . 7,883,116 5,138,241 64,390 (189,341)
-------------- ------------- ------------ --------------
Net increase in net assets resulting
from operations. . . . . . . . . . . . . . . . . 7,969,240 5,104,417 384,585 118,699
Distributions to Shareholders:
Net investment income. . . . . . . . . . . . . . 0 0 (282,005) (293,150)
Net realized gain on investments . . . . . . . . (228,769) 0 (37,120) 0
-------------- ------------- ------------ --------------
Total distributions to shareholders. . . . . . . (228,769) 0 (319,125) (293,150)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . 11,871,517 10,814,068 665,380 747,478
Reinvestment of distributions. . . . . . . . . . 228,701 0 267,980 246,917
Cost of shares reacquired. . . . . . . . . . . . (4,275,354) (2,776,738) (1,226,311) (916,571)
-------------- ------------- ------------ --------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . 7,824,864 8,037,330 (292,951) 77,824
-------------- ------------- ------------ --------------
Net increase (decrease) in net assets. . . . . . 15,565,335 13,141,747 (227,491) (96,627)
NET ASSETS
Beginning of year. . . . . . . . . . . . . . . . 38,766,893 25,625,146 4,430,486 4,527,113
-------------- ------------- ------------ --------------
End of year. . . . . . . . . . . . . . . . . . . $ 54,332,228 $ 38,766,893 $ 4,202,995 $ 4,430,486
============== ============= ============ ==============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . 774,840 792,133 64,974 71,788
Shares issued from reinvestment of distributions 13,258 0 25,755 23,856
Reacquired . . . . . . . . . . . . . . . . . . . (271,579) (202,707) (118,547) (88,198)
-------------- ------------- ------------ -------------
Net increase (decrease) in shares outstanding. . 516,519 589,426 (27,818) 7,446
Outstanding:
Beginning of year. . . . . . . . . . . . . . . 2,633,924 2,044,498 427,193 419,747
-------------- ------------- ------------ --------------
End of year. . . . . . . . . . . . . . . . . . 3,150,443 2,633,924 399,375 427,193
============== ============= ============ ==============
</TABLE>
See Notes To Financial Statements
46
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - Continued
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT
BALANCED INCOME
---------------------------- ----------------------------
1997 1996 1997 1996
-------------- ------------- ------------ --------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) . . . . . . . . . . . $ 2,662,530 $ 2,108,825 $13,297,465 $ 11,712,302
Net realized gain (loss) on investments. . . . . . 1,902,416 1,422,047 929,733 (456,673)
Net unrealized gain (loss) on investments. . . . . 11,905,973 5,684,549 7,541,320 (3,666,825)
Net increase in net assets resulting
from operations. . . . . . . . . . . . . . . . . . 16,470,919 9,215,421 21,768,518 7,588,804
Distributions to Shareholders:
Net investment income. . . . . . . . . . . . . . . (2,662,530) (2,108,825) (13,297,465) (11,712,302)
Net realized gain on investments . . . . . . . . . (1,902,416) (1,422,047) 0 0
-------------- ------------- ------------ -------------
Total distributions to shareholders. . . . . . . . (4,564,946) (3,530,872) (13,297,465) (11,712,302)
Share Transactions:
Net Proceeds from sale of shares . . . . . . . . . 17,779,709 14,712,818 28,904,791 39,730,156
Reinvestment of distributions. . . . . . . . . . . 4,535,246 3,500,989 13,134,267 11,592,633
Cost of shares reacquired. . . . . . . . . . . . . (10,001,142) (7,995,453) (20,798,196) (15,699,328)
-------------- ------------- ------------ -------------
Net increase (decrease) derived from share
transactions . . . . . . . . . . . . . . . . . . 12,313,813 10,218,354 21,240,862 35,623,461
-------------- ------------- ------------ -------------
Net increase (decrease) in net assets. . . . . . . 24,219,786 15,902,903 29,711,915 31,499,963
NET ASSETS
Beginning of year. . . . . . . . . . . . . . . . . 75,201,673 59,298,770 170,799,191 139,299,228
-------------- ------------- ------------ -------------
End of year. . . . . . . . . . . . . . . . . . . . $ 99,421,459 $ 75,201,673 $200,511,106 $170,799,191
============== ============= ============ =============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . 1,211,965 1,132,445 2,825,132 3,902,770
Shares issued from reinvestment of distributions . 298,348 262,475 1,275,428 1,150,356
Reacquired . . . . . . . . . . . . . . . . . . . . (671,556) (615,458) (2,023,575) (1,557,136)
-------------- ------------- ------------ -------------
Net increase (decrease) in shares outstanding. . . 838,757 779,462 2,076,985 3,495,990
Outstanding:
Beginning of year. . . . . . . . . . . . . . . . 5,497,973 4,718,511 16,747,398 13,251,408
-------------- ------------- ------------ -------------
End of year. . . . . . . . . . . . . . . . . . . 6,336,730 5,497,973 18,824,383 16,747,398
============== ============= ============ =============
</TABLE>
See Notes To Financial Statements
47
<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 and Retirement Income Fund.
On August 15, 1997, the shareholders of the Advance Capital
I, Inc. Long Term Income Fund approved the liquidation and
dissolution of the Fund. The Fund was dissolved and all assets
were distributed in 1997.
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.
48
<PAGE>
Note 2. ACCOUNTING POLICIES (Continued)
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 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 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
Fund. 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
49
<PAGE>
Note 3. TRANSACTIONS WITH AFFILIATES (Continued)
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
$1,886,987 by MANAGEMENT for 1997. The COMPANY was charged
distribution fees of $799,482 by SERVICES for 1997. At
December 31, 1997 an employee retirement plan sponsored by SERVICES
owned 52,746 shares (1.7%) of the Equity Growth Fund and
7,132 shares (0.1%) of the Balanced Fund.
Certain officers and directors of GROUP, MANAGEMENT, and
SERVICES, are also officers and directors of the COMPANY.
Directors fees are only paid to outside directors and consist of
a $2,500 annual retainer and an additional $250 per meeting.
Note 4. INVESTMENT PORTFOLIO TRANSACTIONS
The cost of purchases and proceeds from sales of
investments, other than short-term obligations, for 1997
were as follows:
<TABLE>
<CAPTION>
Equity Retirement
Growth Bond Balanced Income
------ ---- -------- ------
<S> <C> <C> <C> <C>
Purchases $16,764,592 $908,419 $18,961,364 $50,091,523
Sales 9,559,297 1,218,525 8,780,765 29,757,980
</TABLE>
The cost of purchases and proceeds from sales of U.S.
Government securities included above were as follows:
<TABLE>
<CAPTION>
Equity Retirement
Growth Bond Balanced Income
------ ---- -------- ------
<S> <C> <C> <C> <C>
Purchases None $207,817 $992,188 $8,479,219
Sales None 418,169 1,044,531 5,507,344
</TABLE>
50
<PAGE>
Note 4. INVESTMENT PORTFOLIO TRANSACTIONS (Continued)
Gross unrealized appreciation and depreciation of
investments for book and tax purposes as of December 31, 1997
were as follows:
<TABLE>
<CAPTION>
Equity Retirement
Growth Bond Balance Income
------ ---- -------- ------
<S> <C> <C> <C> <C>
Appreciation $20,379,035 $223,214 $29,320,504 $12,537,716
Depreciation 1,226,531 7,754 744,421 166,256
</TABLE>
Note 5. CASH
As of December 31, 1997, substantially all cash was
invested in the Monitor Money Market Fund, bearing interest at a
variable rate (approximately 5.2%).
Note 6. CAPITAL LOSS CARRYOVERS
For 1997, the Company utilized $127,785, $1,070 and $929,733
of capital loss carryovers in the Equity Growth, Bond
and Retirement Income Funds respectively. At December 31, 1997,
capital loss carryovers and their expiration dates were as follows:
<TABLE>
<CAPTION>
Retirement
Income
------
<S> <C>
December 31, 2004 $41,220
</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 four
portfolios has 200 million shares authorized.
51
<PAGE>
Report of Independent Accountants
To the Trustees and Shareholders of
Advance Captial I, Inc.
In our opinion, the accompaning 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, and Retirement Income Fund (constituting
Advance Captial I, Inc., hereafter referred to as the "Company")
at December 31, 1997, the results of each of their operations for
the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial
highlights for each of their net assets for each of the two years
in the period then ended and the financial highlights for each of
the three years in the period 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 audits. We conducted our audits
in accordance with gennerally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31,
1997 by correspondence with the custodian and brokers, provides a
reasonable basis for the opinion expressed above. The financial
statements of Advance Captial I, Inc. for the years ended December
31, 1994 and 1993 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 4, 1998
52
<PAGE>
ADDITIONAL INFORMATION (Unaudited)
RESULTS OF ANNUAL SHAREHOLDER VOTE
An Annual Meeting of Shareholders of the COMPANY was held
at the Novi Hilton, 21111 Haggerty Road, Novi, Michigan,
on July 25, 1997 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 16,341,683
Richard W. Holtcamp 16,205,318
Harry Kalajian 16,314,374
John C. Shoemaker 16,336,172
Frank R. Zimmerman 16,281,470
</TABLE>
2. To ratify the selection of Price Waterhouse LLP as
independent accountants of the COMPANY for the fiscal year
ending December 31,1997.
<TABLE>
<S> <C>
Votes For: 16,318,398
Votes Against: 25,691
Votes to Abstain: 99,115
</TABLE>
53
<PAGE>
ADVANCE CAPTIAL I, INC. ADVANCE CAPTIAL I INC
An investment company with four funds
INVESTMENT ADVISER:
Advance Capital Management, Inc.
One Towne Square, Suite 444
Southfield, Michigan 48076
SUB-ADVISER:
(Equity Growth and Balanced Funds) EQUITY GROWTH FUND
T. Rowe Price Associates, Inc. BOND FUND
100 East Pratt Street BALANCED FUND
Baltimore, Maryland 21202 RETIREMENT INCOME FUND
DISTRIBUTOR:
Advance Capital Services, Inc.
P.O. Box 3144
Southfield, Michigan 48037
ADMINISTRATOR AND TRANSFER AGENT:
Advance Capital Group, Inc.
P.O. Box 3144
Southfield, Michigan 48037
CUSTODIAN:
Huntington National Bank
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, 1997
Joseph A. Ahern
Richard W. Holtcamp
Harry Kalajian
John C. Shoemaker
Frank R. Zimmerman
