ANNUAL REPORT
December 31, 1998
ADVANCE Capital I, Inc.
An investment company with five funds
<PAGE>
TABLE OF CONTENTS
- ---------------------------------------------
Page
A Letter to Our Shareholders..............2
Investment Performance....................4
Financial Highlights.....................12
PORTFOLIO OF INVESTMENTS
Equity Growth Fund..................17
Bond Fund...........................22
Balanced Fund.......................24
Retirement Income Fund..............37
Cornerstone Stock Fund..............45
Statement of Assets and Liabilities......47
Statement of Operations..................48
Statement of Changes in Net Assets.......49
Notes to Financial Statements............52
Report of Independent Accountants........56
Additional Information...................57
<PAGE>
Dear Shareholders,
Many unsettling world events, both intriguing and
emotionally draining, characterized the investment landscape
in 1998. El Nino's floods and hurricanes decimated lives and
crushed local economies. Financial troubles led both to civil
unrest and to many International Monetary Fund (IMF) bailout
packages around the world. At home, the ongoing impeachment
inquiry of the President dominated the news throughout the year.
Even in the face of this turmoil, 1998 provided the fourth
straight year of record stock returns, the first budget surplus
in three decades and the lowest unemployment and inflation rates
in thirty years.
When the year began, many predicted an "average" year for
stocks. Double-digit returns were the rule for the prior three
years and, considering the unsettled economies of Asia, stocks
were expected to return to their historical averages at best.
In retrospect, the year was anything but average. Early in the
year, despite the anticipated decline in domestic GDP growth and
mounting foreign problems, stocks soared. By April, the S&P 500
and the NASDAQ Composite Indices were headed for another record
year as investors' appetite for stocks appeared insatiable,
especially among Internet-related IPOs.
As stocks continued to climb, the financial flu which had
plagued Asia spread to the economies of Russia and Brazil.
Rising political uncertainty and anemic economic growth left
foreign investors in Russia fearful of a dramatic repetition
of their experience in Asia. Their exodus ultimately led to a
devaluation of the ruble, skyrocketing interest rates and
plummeting stock values. Russia subsequently defaulted on a
debt payment and sought an IMF bailout. In Brazil, huge budget
deficits, rising interest rates and crumbling currency values
forced that government to seek the assistance of the IMF.
Together with loans from the World Bank, a $42 billion rescue
package was created in an attempt to restore investor confidence
and bring economic stability to the region.
By the start of the third quarter, the combination of slower
growth, falling commodity prices and crumbling foreign economies
prompted many economists to conclude that global deflation or
recession would follow. Either scenario represented trouble for
stocks and investors began to unload stocks for the safety of U.S.
government bonds. From mid July through mid September all the
major stock indices dropped 15 to 20 percent. World financial
markets appeared in disarray, liquidity was low and investor
confidence was shaken.
To stabilize world markets and add needed liquidity to the
global financial system, central banks in 22 nations began
lowering borrowing costs and did so an unprecedented 55 times
from September to year end. That historic effort appears to have
worked. The S&P 500 rebounded from its low to return almost 29
percent for the full year and perhaps, more importantly, investor
confidence and liquidity appear to have returned to the capital
markets.
Within this volatile environment, the Advance Capital I, Funds
produced returns that were in-line with and generally better than
the indices of funds with similar objectives. The Equity Growth
Fund increased 16.2 percent for the year while the Lipper Mid Cap
Fund Index increased 13.9 percent. The Balanced Fund with its
60-40 mix of stocks and bonds, increased 13.2 percent compared to
a 15.1
2
percent increase in the Lipper Balanced Fund Index. The Bond and
Retirement Income Funds returned 8.1 and 6.2 percent, respectively,
compared to the Lipper Intermediate Bond Index return of 7.9 percent
and the Lipper BBB Bond Index return of 6.0 percent. The new Advance
Capital I, Inc. Cornerstone Stock Fund began trading on December 17th.
For the final two week period of the year that Fund returned 4.6 percent
compared to 4.2 percent for the S&P 500.
Looking ahead we see that global prosperity remains fragile as
unresolved economic and financial issues litter the road to continued
prosperity. Japan, for instance, has wrestled with a decade long
recession and a depression there is not out of the question. Without
major shifts in financial policies, business models and consumer
spending habits, the Japanese economy can only provide a shadow of its
former prosperity. In Brazil, the economy appears headed for serious
trouble. Recent steps by policy makers to devalue the currency in an
attempt to realign the economy has undercut Brazilian loan values held
by financial institutions worldwide. The economic health of Brazil
and Japan are particularly important because they represent two of the
four largest economies in the world.
Domestically, business investment appears poised for a decline
as the financing environment may restrict the availability of capital
for expansion. Also, consolidations and mega-mergers could well lead
to higher unemployment and lower personal income growth. These reduce
consumer demand and squeeze corporate profits. Finally, the "wealth
effect" of the last few years, produced by robust stock gains, low
energy costs and refinanced mortgages, will most likely subside in
1999.
So what does this mean for stocks and bonds? Even though the
new year has started with a bang, we expect "average" results for
both stocks and bonds in 1999. Although the economic foundation
remains solid, many uncertainties linger. From the problems in
foreign markets and slowing business investments to a debt
burdened consumer, we expect that the year will be remembered as
the year in which the financial markets took a welcome breather.
At December 31, 1998, the five Advance Capital I, Inc. Funds
held about $426 million in total assets, about 20 percent more
than the prior year. Our focus has been and will remain on the
long term. Intelligent investment decisions, broad diversification
and control of costs comprise the cornerstones of our investment
philosophy. We fully expect this approach will continue to serve
our investors well over time. We thank you for your continued
confidence and look forward to providing you 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 18, 1999
3
<PAGE>
INVESTMENT PERFORMANCE
ADVANCE CAPITAL I, INC. IS AN OPEN-END, DIVERSIFIED MANAGEMENT
INVESTMENT COMPANY OFFERING INVESTMENT OPPORTUNITIES IN FIVE
MUTUAL FUND PORTFOLIOS.
<TABLE>
<CAPTION>
1998 FUND RESULTS
<S> <C>
Equity Growth 16.23%
Balanced 13.15%
Bond 8.12%
Retirement Income 6.20%
Cornerstone Stock* 4.60%
</TABLE>
* Fund began 12/17/1998
The accompanying comments are intended to help investors
evaluate the dynamics of mutual fund performance. The charts
and tables that follow show the average annual return of each
Fund as well as selected measures of general stock and bond
market returns. The Consumer Price Index (CPI) is also shown
to illustrate the impact inflation has on investment returns.
Figures for the life of the Bond and Balanced Funds begin
August 31, 1987. 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. Figures for the Cornerstone Stock Fund
begin on December 17, 1998, the start date for the Fund.
THE EQUITY GROWTH FUND IN 1998
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 12.2%
Retail Store 9.5%
Computer Peripheral 6.4%
Medical Supplies 5.0%
Broadcasting/Cable TV 4.4%
</TABLE>
The Equity Growth Fund returned 16.2 percent in 1998 while
the S&P 400 Mid Cap Index returned 19.1 percent and the Lipper
Mid Cap Index returned 13.9 percent. The accompanying graph
shows the cumulative performance of the Equity Growth Fund, the
Lipper Mid Cap Index, the S&P 400 Mid Cap Index and the Consumer
Price Index (CPI) since the beginning of 1994.
As investors reacted to the collapse of markets in high risk
areas of the world, the equity markets were riddled with volatility.
The first half of the year saw continued investor enthusiasm about
the longevity of the U.S. economic expansion and surprisingly strong
corporate profits. By mid year, however, it started to became
apparent that problems in Asia and Russia could affect the growth
prospects for the U.S. economy. As investor sentiment changed from
euphoria to caution, the stock market went on a roller coaster ride.
For example, the NASDAQ Composite Index had returned about 21
percent by June 30th. By mid October the Index was only slightly
positive for the year (2.5 percent). In the final few months,
market stability and investor confidence came roaring back to
catapult the NASDAQ Composite Index to its third straight year
of double-digit returns.
As a mid cap growth fund, the Equity Growth Fund's investment
performance was in-line with its peers, but once again lagged funds
holding larger capitalized stocks. Typically, mid cap stocks have
market capitalization's between $1 billion and
4
<PAGE>
$5 billion, while large capitalized stocks have market
capitalization's well over $10 billion. In volatile markets,
investors tend to favor larger companies for their predictable
earnings growth, leading industry positions and diverse product
bases. In contrast, smaller companies have a narrower product
scope and rely heavily on solid economic growth, low interest
rates and an expanding market for their products to achieve
above average growth rates. Although the economy performed
well and interest rates remained low, many industries were
affected by the problems overseas. Some companies that use
or sell commodities were hit especially hard from "dumping"
by Asian companies in desperate need of cash. As this new
supply flooded the market, world commodity prices fell and
domestic commodity producer profit margins were squeezed.
Also, as Asia fought its worst economic crisis in thirty years,
the demand for telecommunications equipment, computers and
ancillary products declined considerably. The financial
strength and product diversity of larger companies gave them
a distinct competitive advantage over many smaller companies
that were unable to shift resources or respond as quickly to
these pressures. The top names in the NASDAQ Composite Index
contributed to the majority of the Index's return which helps
to explain some of the performance differential between larger
and smaller capitalized stocks over the last few years.
Today, investors remain upbeat but cautious as Asia
continues to struggle to rebuild its economic system and Brazil
appears to have become the latest casualty of the global economic
flu. Domestically, economic growth remains solid, interest rates
are controlled and consumer confidence is strong. Stock investing
will remain a roller coaster ride as contradicting foreign problems
battle the strong U.S. economy. This volatile investing environment
for 1999 will keep investors on their toes and returns around their
average.
THE EQUITY GROWTH FUND
[EDGAR REFERENCE - S & P 400 MID CAP, LIPPER MID CAP, EQUITY GROWTH
AND CPI INDEX LINE CHART FOR 1994-1998]
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Past 1 Past 5 Life of
Year Years Fund
------- ------- -------
<S> <C> <C> <C>
Equity Growth Fund 16.23% 16.30% 16.30%
S&P 400 Mid Cap Index 19.09% 18.83% 18.83%
Lipper Mid Cap Index 13.92% 16.35% 16.35%
Consumer Price Index (CPI) 1.61% 2.43% 2.43%
</TABLE>
Past performance should not be used to attempt to predict future
performance.
5
<PAGE>
THE BOND FUND IN 1998
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 12/31/98
<S> <C>
Average Maturity 8.2 Years
Average Quality A+
Average Duration 5.5 Years
Size 3.7 Million
</TABLE>
The Bond Fund returned 8.1 percent for 1998 compared to the
Lipper Intermediate Bond Index return of 7.9 percent. The Bond
Fund's return represents 6.6 percent from income distributed to
shareholders and a 1.5 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 foreign contagion which began in 1997 continued its
devastation throughout most of 1998. As problems spread through
global economies, many investors sought comfort in the safety of
U.S. government and high grade corporate bonds. The buying
pressure, along with three rate cuts by the Federal Reserve, pushed
the yield on the thirty year government bond from around six percent
at the beginning of the year, to less than five percent by year end.
The fundamental characteristics for most fixed income investments
remain favorable as both the CPI and PPI indexes remain subdued,
productivity appears to have offset rising wage pressures and
commodity prices are stable. In addition, the Federal Reserve
remains poised to lower interest further if economic or market
conditions begin to deteriorate. This investment environment
will continue to favor high quality investment grade issues and
U.S. treasury bonds.
At December 31, the Bond Fund was fully invested with an
overall portfolio maturity of about 8.2 years. This maturity is
near the middle of the target range of 5 to 10 years and slightly
shorter than the year earlier figure of 9.5 years. The combination
of strategically selling some longer than average maturing bonds
along with bonds being called, led to the slight decline in overall
Fund maturity. Although average maturity changed, overall quality
remained an A+ and diversification was maintained.
Today, foreign markets remain weak, commodity pressures are
low and the economy appears poised for slower growth. The Bond
Fund's structure of maintaining a well diversified portfolio of
high quality bonds is well positioned for this fixed income
scenario in 1999.
6
<PAGE>
THE BALANCED FUND IN 1998
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 12/31/98
<S> <C>
Bonds 41%
Small Stocks 20%
Large Stocks 39%
Size $ 125 Million
</TABLE>
The Balanced Fund increased 13.2 percent in 1998 while the
Lipper Balanced Index increased 15.1 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 that time.
The Balanced Fund's mix of large company value, small company
growth and investment grade fixed income securities produced positive
results in a very volatile investment environment. For the fourth
straight year, large company "growth" stocks such as Microsoft,
Intel and General Electric outpaced large company "value" stocks
such as Halliburton and International Paper Company. The significant
volatility in global markets, combined with falling commodity prices
has steered many investors toward large company growth stocks for
their predictable earnings and solid market positions. The
increased demand has led to historically high valuations and
prices for many of these large company growth stocks. The distinct
performance gap between growth and value stocks contributed to the
Balanced Fund's under performance relative to the Lipper Balanced
Index last year.
Fixed income securities comprise about 40 percent of the
total Fund. This portion of the Fund benefited from surprisingly
low inflation and stock volatility which increased the demand for
the stability of fixed income investments. The underlying economic
fundamentals remain positive for bonds as both the CPI and PPI
remain at historically low levels, energy costs are the lowest in
twelve years and wage pressures are in-check. Also, nagging foreign
problems will keep investors nervous and more willing to hold fixed
income securities.
Small-to-mid sized company growth stocks comprise the remaining
20 percent of the Balanced Fund. Although these stocks produced
positive results for the year, they were once again over shadowed
by investors' desire to hold large company growth stocks. Over
long periods, however, statistical evidence proves that returns
are higher for smaller company growth than for large company
growth stocks.
Today, investor confidence has returned to the equity markets
amidst a strong U.S. economy and serious foreign problems. The
Balanced Fund's allocation between large company, small company
and fixed income securities along with proper industry
diversification, should continue to provide a consistency and
"balance" to returns should inflation increase or foreign problems
escalate.
7
<PAGE>
THE BOND AND BALANCED FUNDS
[EDGAR REFERENCE - LIPPER BALANCED, BALANCED, LIPPER BOND, BOND AND
CPI INDEX LINE CHART FOR 1987-1998]
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Past 1 Past 5 Life of
Year Years * Fund
---------- ---------- ----------
<S> <C> <C> <C>
Bond Fund 8.12% 6.86% 8.49%
Balanced Fund 13.15% 14.82% 10.13%
Lipper Intermediate
Bond Index 7.87% 6.27% 8.82%
Lipper Balanced Index 15.09% 13.11% 13.45%
Consumer Price Index (CPI) 1.61% 2.43% 3.24%
</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. The five year
figures reflect results since that change.
8
<PAGE>
THE RETIREMENT INCOME FUND IN 1998
THE ADVANCE CAPITAL I RETIREMENT INCOME FUND SEEKS TO PROVIDE
INVESTORS WITH CURRENT INCOME BY INVESTING AT LEAST 65 PERCENT
IN INVESTMENT GRADE CORPORATE AND U.S. GOVERNMENT BONDS AND AS
MUCH AS 33 PERCENT IN LOWER-RATED HIGH-YIELDING INSTRUMENTS.
<TABLE>
<CAPTION>
AS OF 12/31/98
<S> <C>
Average Maturity 15.3 Years
Average Quality BBB
Average Duration 8.1 Years
Size $221 Million
</TABLE>
The Retirement Income Fund returned 6.2 percent for the
year. The return was comprised of 7.1 percent from income
distributed to shareholders and a .9 percent decrease 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.
As underlying fundamentals remained strong, the environment
for investment grade fixed income securities was positive
throughout 1998. Early in the year, expectations of benign
inflation and slowing global growth spurred the demand for U.S.
treasury bonds and high quality corporate bonds. By the third
quarter, economic and social unrest in Asia and Russia left
investors skittish about equity securities and desperate for the
stability of fixed income securities, particularly those issued
by the U.S. Government The dramatic shift in sentiment sent
prices soaring and yields plummeting for both government and high
quality corporate bonds. The yield on the thirty year government
bond declined from around six percent at the beginning of the year
to below five percent by mid September. By year end, the Federal
Reserve had lowered rates three times to help stabilize world
markets and improve the liquidity of the global financial system.
Along with lower consumer and producer prices, the action by the
Federal Reserve helped investment grade bonds and U.S. government
securities generate above average returns for the year.
In addition to investment grade bonds, the Retirement Income
Fund also invests in high yield securities. The high yield market
experienced severe volatility, along with liquidity problems
during the third quarter. These pressures stemmed from a
faltering Russian economy, continued problems in Asia and nervous
investors. As uncertainty built, investors pulled money from high
yield bond funds, forcing some portfolio managers to sell in order
to meet redemptions. Once the Federal Reserve stepped up its effort
to cut key interest rates, high yield investors returned to the
market and values inched back to respectable levels. The recent
volatility in high yield bonds, although rare, is precisely the
reason investors demand a higher yield to hold these securities.
The Fund's strategy of holding about two thirds investment grade
and on third percent high yield bonds proved beneficial as rising
investment grade values offset a relatively poor performance of
high yield bonds.
Today, the Retirement Income Fund's high yield portion
remains weighted toward speculative quality names with relatively
strong investment characteristics. The investment grade portion
remains at its average maturity and quality levels. It appears
that the high yield market has stabilized and market participants
have returned. Interest rates are subdued and underlying
fundamentals point to an average year for most fixed income
securities in 1999.
9
<PAGE>
THE RETIREMENT INCOME FUND
[EDGAR REFERENCE - RETIREMENT INCOME, LIPPER BBB INDEX AND CPI
INDEX LINE CHART FOR 1993-1998]
AVERAGE ANNUAL RETURNS FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Past 1 Past 5 Life of
Year Years Fund
--------- --------- ---------
<S> <C> <C> <C>
Retirement Income Fund 6.20% 7.71% 8.60%
Lipper BBB Index 5.98% 6.92% 7.77%
Consumer Price Index (CPI) 1.61% 2.43% 2.44%
</TABLE>
Past performance should not be used to attempt to predict future
performance.
10
<PAGE>
THE CORNERSTONE STOCK FUND IN 1998
THE ADVANCE CAPITAL I CORNERSTONE STOCK FUND SEEKS TO PROVIDE
LONG-TERM GROWTH OF CAPITAL BY INVESTING PRIMARILY IN COMMON
STOCKS OF LARGE, WELL ESTABLISHED COMPANIES.
TOP FIVE HOLDINGS
--------------------
Microsoft
Intel
General Electric
Cisco Systems
Dell Computers
The Cornerstone Stock Fund commenced on December 17, 1998.
For the two week period the Fund returned 4.6 percent while the
S&P 500 Index returned 4.2 percent.
The Cornerstone Stock Fund invests primarily in a diversified
group of large, well established companies with market
capitalization's well over $10 billion. Companies of this size
tend to have established product lines, solid market positions
and substantial financial resources. These are the most liquid
stocks in the marketplace.
Today, the Cornerstone Stock Fund is fully invested with over
fifty securities in ten different industries. An emphasis on
technology, pharmaceuticals and telecommunications recognizes the
major growth opportunities of the next decade. The Fund's strategy
of investing in highly capitalized companies with industry leading
positions along with diligent investment research should prove
beneficial over the long term.
11
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH
--------------------------------------------------
Years ended December 31
--------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year . . . . . . . . . . . . $17.25 $14.72 $12.53 $9.08 $9.46
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income (loss) . . . . . . . . . . . . . . . (0.10) (0.09) (0.07) (0.03) (0.03)
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . 2.90 2.69 2.26 3.48 (0.35)
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . . . . . . . . 2.80 2.60 2.19 3.45 (0.38)
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . . . . . . . . 0.00 0.00 0.00 0.00 0.00
Net realized gain on investments . . . . . . . . . . . . . 0.00 (0.07) 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . . . . . . . . 0.00 (0.07) 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . . . . . . . . $20.05 $17.25 $14.72 $12.53 $9.08
========= ========= ========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . 16.23% 17.68% 17.48% 38.00% -4.02%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands) . . . . . . . . . . $ 68,061 $ 54,332 $ 38,767 $ 25,625 $ 12,634
Ratio of expenses to average net assets. . . . . . . . . . 1.02% 1.07% 1.09% 1.12% 1.21%
Ratio of net investment income (loss)
to average net assets. . . . . . . . . . . . . . . . . . -0.58% -0.58% -0.50% -0.29% -0.30%
Portfolio turnover rate. . . . . . . . . . . . . . . . . . 22.34% 20.53% 24.75% 13.86% 18.05%
</TABLE>
See Notes To Financial Statements
12
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- ----------------------------------------------------------
<TABLE>
<CAPTION>
BOND
--------------------------------------------------
Years ended December 31
--------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . . . . . . . . $10.52 $10.37 $10.79 $9.61 $10.82
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . . . . . . . . . . 0.67 0.69 0.70 0.70 0.71
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . . 0.15 0.24 (0.42) 1.18 (1.21)
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . . . . . . . . 0.82 0.93 0.28 1.88 (0.50)
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . . . . . . . . (0.67) (0.69) (0.70) (0.70) (0.71)
Net realized gain on investments. . . . . . . . . . . . . (0.05) (0.09) 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . . . . . . . . . (0.72) (0.78) (0.70) (0.70) (0.71)
--------- --------- --------- --------- ---------
Net asset value, end of year. . . . . . . . . . . . . . . . $10.62 $10.52 $10.37 $10.79 $9.61
========= ========= ========= ========= =========
TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . 8.12% 9.41% 2.81% 20.15% -4.64%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . . . . . . . . . $ 3,746 $ 4,203 $ 4,430 $ 4,527 $ 3,999
Ratio of expenses to average net assets . . . . . . . . . 0.52% 0.54% 0.55% 0.55% 0.60%
Ratio of net investment income to average
net assets. . . . . . . . . . . . . . . . . . . . . . 6.35% 6.65% 6.71% 6.80% 7.06%
Portfolio turnover rate . . . . . . . . . . . . . . . . . 11.56% 21.95% 19.77% 6.69% 21.92%
</TABLE>
See Notes To Financial Statements
13
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED
--------------------------------------------------
Years ended December 31
--------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year. . . . . . . . . . . . $15.69 $13.68 $12.57 $9.97 $10.58
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income . . . . . . . . . . . . . . . . . . 0.48 0.45 0.41 0.35 0.32
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . . 1.56 2.32 1.37 2.75 (0.61)
--------- --------- --------- --------- ---------
Total from investment operations. . . . . . . . . . . . . 2.04 2.77 1.78 3.10 (0.29)
--------- --------- --------- --------- ---------
Less distributions
Net investment income . . . . . . . . . . . . . . . . . . (0.48) (0.45) (0.41) (0.35) (0.32)
Net realized gain on investments. . . . . . . . . . . . . (0.12) (0.31) (0.26) (0.15) 0.00
--------- --------- --------- --------- ---------
Total distributions . . . . . . . . . . . . . . . . . . . (0.60) (0.76) (0.67) (0.50) (0.32)
--------- --------- --------- --------- ---------
Net asset value, end of year. . . . . . . . . . . . . . . . $17.13 $15.69 $13.68 $12.57 $9.97
========= ========= ========= ========= =========
TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . 13.15% 20.50% 14.48% 31.53% -2.72%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands). . . . . . . . . . $125,883 $ 99,421 $ 75,202 $ 59,299 $ 44,221
Ratio of expenses to average net assets . . . . . . . . . 1.01% 1.04% 1.06% 1.07% 1.10%
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . . . . . . 2.92% 3.02% 3.17% 3.11% 3.18%
Portfolio turnover rate . . . . . . . . . . . . . . . . . 11.04% 10.13% 12.79% 22.72% 34.97%
</TABLE>
See Notes To Financial Statements
14
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT INCOME
-------------------------------------------------
Years ended December 31
-------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of year . . . . . . . . . . . . $10.65 $10.20 $10.51 $9.22 $10.54
--------- --------- --------- --------- ---------
Income from investment operations
Net investment income. . . . . . . . . . . . . . . . . . . 0.73 0.74 0.75 0.76 0.76
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . (0.08) 0.45 (0.31) 1.29 (1.32)
--------- --------- --------- --------- ---------
Total from investment operations . . . . . . . . . . . . . 0.65 1.19 0.44 2.05 (0.56)
--------- --------- --------- --------- ---------
Less distributions
Net investment income. . . . . . . . . . . . . . . . . . . (0.73) (0.74) (0.75) (0.76) (0.76)
Net realized gain on investments . . . . . . . . . . . . . (0.01) 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ---------
Total distributions. . . . . . . . . . . . . . . . . . . . (0.74) (0.74) (0.75) (0.76) (0.76)
--------- --------- --------- --------- ---------
Net asset value, end of year . . . . . . . . . . . . . . . . $10.56 $10.65 $10.20 $10.51 $9.22
========= ========= ========= ========= =========
TOTAL RETURN . . . . . . . . . . . . . . . . . . . . . . . . 6.20% 12.20% 4.54% 22.96% -5.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of year (in thousands) . . . . . . . . . . $221,221 $200,511 $170,799 $139,299 $ 84,162
Ratio of expenses to average net assets. . . . . . . . . . 0.79% 0.82% 0.82% 0.84% 0.88%
Ratio of net investment income to average
net assets. . . . . . . . . . . . . . . . . . . . . . . 6.87% 7.21% 7.45% 7.64% 7.89%
Portfolio turnover rate. . . . . . . . . . . . . . . . . . 19.52% 16.60% 8.34% 15.63% 12.27%
</TABLE>
See Notes To Financial Statements
15
<PAGE>
ADVANCE CAPITAL I, INC.
FINANCIAL HIGHLIGHTS - Continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
CORNERSTONE
STOCK
----------------
Partial Year*
Ended
Dec. 31, 1998
----------------
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . $10.00
----------
Income from investment operations
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46
----------
Total from investment operations. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.46
----------
Less distributions
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
Net realized gain on investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
----------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00
----------
Net asset value, end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10.46
==========
TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.60%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (in thousands). . . . . . . . . . . . . . . . . . . . . . . $ 7,316
Ratio of expenses to average net assets . . . . . . . . . . . . . . . . . . . . . . . 0.66%**
Ratio of net investment income to average
net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20%**
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%
</TABLE>
* From December 17, 1998 (commencement of operations) to December 31, 1998.
** Annualized
See Notes To Financial Statements
16
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- ------- ------------
<S> <C> <C>
ADVERTISING - 2.5%
Catalina Marketing Corporation* 2,600 $ 177,775
Harte-Hanks, Inc. 4,000 114,000
Interpublic Group of Companies, Inc. 4,200 333,900
Lamar Advertising Company* 6,000 223,500
Omnicom Group, Inc. 5,000 290,000
Outdoor Systems, Inc.* 18,225 546,750
AEROSPACE / DEFENSE - 0.5%
BE Aerospace, Inc.* 6,000 126,000
Gulfstream Aerospace Corporation* 4,500 238,500
AIR TRANSPORT - 1.0%
Air Express International Corp. 7,650 166,387
ASA Holdings, Inc. 5,500 167,750
Comair Holdings, Inc. 9,750 329,062
APPAREL - 1.2%
Cintas Corporation 4,600 324,012
Jones Apparel Group, Inc.* 6,000 132,375
Quiksilver, Inc.* 8,000 240,000
Warnaco Group, Inc. 4,500 113,344
BANK - 4.3%
Bank of New York Company, Inc. 10,200 410,550
City National Corporation 8,000 333,000
First American Corporation 6,000 266,250
Northern Trust Corporation 5,600 488,950
Providian Financial Corporation 7,500 562,500
Silicon Valley Bancshares* 9,000 153,281
State Street Corporation 6,100 424,331
Zions Bancorporation 5,000 311,875
BIOTECHNOLOGY - 1.3%
Human Genome Sciences, Inc.* 4,700 167,144
Incyte Pharmaceuticals, Inc.* 5,000 186,875
Millennium Pharmaceuticals, Inc.* 10,000 258,750
Pioneer Hi-Bred International, Inc. 6,000 160,875
Protein Design Labs, Inc.* 4,000 93,000
BROADCASTING / CABLE TV - 4.4%
Chancellor Media Corporation* 7,000 335,125
Clear Channel Communications* 12,000 654,000
Cox Communications, Inc.* 6,000 414,750
Emmis Broadcasting Corporation* 5,000 216,875
Heftel Broadcasting Corporation* 4,600 226,550
Jacor Communications, Inc.* 5,000 321,875
TCA Cable TV, Inc. 9,000 321,187
Univision Communications, Inc.* 9,600 347,400
Westwood One, Inc.* 6,000 144,000
BUILDING MATERIALS - 0.2%
American Standard Companies, Inc.* 4,000 143,750
CHEMICAL - 1.9%
Ecolab, Inc. 8,000 288,500
Lilly Industries, Inc. 8,000 157,000
Raychem Corporation 5,000 161,562
Sherwin-Williams Company 6,500 190,938
Sigma-Aldrich Corporation 8,000 235,000
Valspar Corporation 7,800 289,575
COMPUTER & PERIPHERALS - 6.4%
Cable Design Technologies* 7,750 143,375
Cisco Systems, Inc.* 6,750 626,484
Comverse Technology, Inc.* 4,500 319,500
EMC Corporation* 8,600 731,000
Gateway 2000, Inc.* 5,000 255,937
Microchip Technology, Inc.* 4,425 163,725
Network Appliance Inc.* 10,800 486,000
SCI Systems, Inc.* 6,000 346,500
</TABLE>
See Notes To Financial Statements
17
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- ------- ------------
<S> <C> <C>
COMPUTER & PERIPHERALS - 6.4% (CONTINUED)
Sun Microsystems, Inc.* 8,500 $ 727,812
VERITAS Software Corporation* 3,500 209,781
Xilinx, Inc.* 5,300 345,162
COMPUTER SOFTWARE & SERVICES - 12.2%
Acclaim Entertainment, Inc.* 61 747
Adobe Systems, Inc. 4,000 187,000
Affiliated Computer Services, Inc.* 7,000 312,375
America Online, Inc.* 10,000 1,443,750
BARRA, Inc.* 7,000 165,375
BMC Software, Inc.* 11,200 499,100
Cadence Design Systems, Inc.* 11,000 327,250
Citrix Systems, Inc.* 5,250 509,578
Compuware Corporation* 10,000 781,250
DST Systems, Inc.* 4,300 245,369
Electronic Arts, Inc.* 6,500 364,812
HBO & Company 16,000 459,000
Intuit, Inc.* 4,200 304,500
Keane, Inc. 4,000 159,750
Network Associates, Inc.* 8,974 594,528
Oracle Corporation* 7,500 323,438
Shared Medical Systems Corporation 3,500 174,562
Sterling Commerce, Inc.* 7,500 335,156
SunGard Data Systems, Inc.* 8,000 317,500
Symantec Corporation* 8,800 191,400
Synopsys, Inc.* 3,400 184,450
Visio Corporation* 5,600 204,750
Whittman-Hart Inc.* 7,900 218,238
DIVERSIFIED - 1.2%
Danaher Corporation 8,000 432,000
Equity Corporation International* 5,800 154,063
Service Corp. International 5,200 197,925
DRUG - 3.2%
Agouron Pharmaceuticals, Inc.* 3,400 199,750
Amgen, Inc.* 3,300 345,056
BioChem Pharma, Inc.* 5,000 143,125
Biogen, Inc.* 4,900 406,700
Centocor Inc.* 5,500 248,188
Elan Corporation PLC-ADR* 3,700 257,381
Gilead Sciences, Inc.* 4,000 164,250
Guilford Pharmaceuticals, Inc.* 4,500 64,125
Watson Pharmaceuticals, Inc.* 5,600 352,100
DRUGSTORE - 0.3%
Duane Reade, Inc.* 6,000 231,000
ELECTRIC & GAS UTILITIES - 0.5%
AES Corporation* 7,500 355,313
ELECTRICAL EQUIPMENT - 0.1%
Littlefuse, Inc.* 5,000 96,250
ELECTRONICS - 3.2%
Altera Corporation* 6,800 413,950
Molex, Inc. 7,421 236,544
Sanmina Corporation* 5,400 337,500
Symbol Technologies, Inc. 9,975 637,777
Teradyne, Inc.* 3,100 128,262
Waters Corporation* 4,800 418,800
ENVIRONMENTAL - 1.0%
Allied Waste Industries, Inc.* 8,500 179,031
Superior Services, Inc.* 7,000 140,437
Waste Management, Inc. 7,812 364,235
</TABLE>
See Notes To Financial Statements
18
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
-----------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- ------- ------------
<S> <C> <C>
FINANCIAL SERVICES - 2.4%
Amvescap PLC-ADR 5,500 $ 211,750
Finova Group, Inc. 6,000 323,250
Franklin Resources, Inc. 9,300 326,081
Mutual Risk Management, Ltd. 11,632 455,102
Paychex, Inc. 6,750 347,203
FOOD PROCESSING - 0.4%
Tootsie Roll Industries, Inc. 7,550 295,394
FOREIGN TELECOMMUNICATIONS - 0.9%
Ericsson (LM) Telephone-ADR-Class B 6,000 143,625
Vodafone Group PLC-ADR 3,000 483,375
GROCERY - 1.2%
Safeway, Inc.* 8,800 536,250
Whole Foods Market, Inc.* 6,000 290,250
HOMEBUILDING - 0.2%
Lennar Corporation 4,600 115,575
HOUSEHOLD PRODUCTS - 0.9%
Lancaster Colony Corporation 6,000 192,750
Leggett & Platt, Inc. 9,000 195,750
Rayovac Corporation 7,900 210,337
INDUSTRIAL SERVICES - 3.4%
ACNielsen Corporation* 7,500 211,875
Apollo Group, Inc.* 8,250 279,469
DeVry, Inc.* 12,000 367,500
Equifax, Inc. 6,200 211,575
Interim Services* 6,000 139,875
Primark Corporation* 5,500 151,250
Quintiles Transnational Corporation* 6,000 320,250
Robert Half International, Inc.* 6,750 301,641
Romac International, Inc.* 10,000 222,500
Sylvan Learning Systems, Inc.* 4,500 137,250
INSURANCE - 3.1%
Ace, Ltd. 8,900 306,494
Ambac Financial Group, Inc. 5,200 312,975
EXEL Limited 3,500 262,500
Mercury General Corporation 4,900 213,762
MGIC Investment Corporation 4,000 159,250
Progressive Corporation of Ohio 2,800 474,250
Protective Life Corporation 9,100 362,294
MACHINERY - 0.8%
Cognex Corporation* 5,000 100,000
Donaldson Company, Inc. 7,600 155,800
IDEX Corporation 5,500 134,750
Parker-Hannifin Corporation 4,500 147,375
MANUFACTURED HOUSING - 0.2%
Oakwood Homes Corporation 7,000 106,312
MEDICAL SERVICES - 4.2%
HCR Manor Care, Inc.* 5,550 162,337
Health Management Associates* 16,705 361,246
HEALTHSOUTH Corporation* 9,500 146,656
IDX Systems Corporation* 4,600 202,400
IMS Health Incorporated 4,500 339,469
Lincare Holdings, Inc.* 6,600 267,713
Omnicare, Inc. 7,500 260,625
Orthodontic Centers of America, Inc.* 7,500 145,781
PacifiCare Health Systems, Inc.-Class B* 1,500 119,250
Total Renal Care Holdings, Inc.* 12,342 364,860
United HealthCare Corporation 3,000 129,188
Universal Health Services, Inc.-Class B* 5,300 279,575
MEDICAL SUPPLIES - 5.0%
Arterial Vascular Engineering, Inc.* 3,500 183,750
Boston Scientific Corporation* 6,000 160,875
Cardinal Health, Inc. 6,187 469,052
Guidant Corporation 6,000 661,500
</TABLE>
See Notes To Financial Statements
19
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- ------- ------------
<S> <C> <C>
MEDICAL SUPPLIES - 5.0% (CONTINUED)
Henry Schein, Inc.* 4,500 $ 201,375
Medtronic, Inc. 7,122 528,809
Sofamor Danek Group, Inc.* 1,600 194,800
Steris Corporation* 7,000 199,063
Sybron International Corp.* 13,000 353,438
VISX, Inc.* 5,000 437,188
METAL FABRICATING - 0.3%
Lincoln Electric Holdings, Inc. 9,700 215,825
NEWSPAPER - 0.3%
Central Newspapers, Inc. 2,500 178,594
OFFICE EQUIPMENT & SUPPLIES - 0.6%
Avery Dennison Corporation 5,700 256,856
Diebold, Inc. 4,500 160,594
OILFIELD SERVICES - 1.2%
BJ Services Company* 11,500 179,688
Cooper Cameron Corporation* 6,900 168,188
Noble Drilling Corporation* 8,700 112,556
Smith International, Inc.* 8,800 221,650
Weatherford International, Inc.* 5,335 103,366
PACKAGING & CONTAINER - 0.4%
Sealed Air Corporation* 4,900 250,206
PETROLEUM - 1.1%
Apache Corporation 4,500 113,906
Barrett Resources Corporation* 4,000 96,000
Devon Energy Corporation 4,500 138,094
Noble Affiliates, Inc. 4,400 108,350
Tosco Corporation 7,500 194,063
Veritas DGC, Inc.* 7,800 101,400
PRECISION INSTRUMENT - 0.8%
Dionex Corporation* 6,000 219,750
Roper Industries, Inc. 6,000 122,250
Teleflex, Inc. 5,000 226,250
PRINTING - 0.6%
Valassis Communications, Inc.* 8,000 413,000
PUBLISHING - 1.2%
Harcourt General, Inc. 4,500 239,625
Meredith Corporation 10,000 378,750
The Petersen Companies, Inc.* 6,500 219,781
RAILROAD - 0.4%
Kansas City Southern Ind., Inc. 6,000 295,125
REAL ESTATE INVESTMENT MANAGEMENT - 0.8%
LaSalle Partners, Inc.* 10,800 317,925
Security Capital Group, Inc.-Class B* 16,800 227,850
RECREATION - 1.2%
Carnival Corporation 9,000 430,875
Harley-Davidson, Inc. 8,000 379,000
RESTAURANT - 0.2%
Outback Steakhouse, Inc.* 3,750 149,531
RETAIL STORE - 9.5%
AutoZone, Inc.* 8,100 266,794
Bed Bath & Beyond, Inc.* 14,000 477,750
BJ's Wholesale Club, Inc.* 5,500 254,719
Borders Group, Inc.* 8,000 199,500
CDW Computer Centers, Inc.* 2,500 239,844
Circuit City Stores, Inc. 5,300 264,669
Consolidated Stores Corporation* 5,300 106,994
</TABLE>
See Notes To Financial Statements
20
<PAGE>
ADVANCE CAPITAL I, INC. - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- ---------------------------------------------------- ------- ------------
<S> <C> <C>
RETAIL STORE - 9.5% (CONTINUED)
CVS Corporation 6,000 $ 330,000
Dollar General Corporation 18,593 439,260
Kohl's Corporation* 5,800 355,975
Lands' End, Inc.* 7,200 193,950
Linens 'n Things Inc.* 7,000 277,375
Men's Wearhouse, Inc.* 9,225 292,894
MSC Industrial Direct Co., Inc.* 8,000 181,000
Office Depot, Inc.* 13,400 492,450
Staples Inc.* 7,000 305,813
Starbucks Corporation* 8,100 454,612
Tiffany & Company 7,000 363,125
TJX Companies, Inc. 12,000 348,000
Williams-Sonoma, Inc.* 10,000 403,125
Zale Corporation* 7,000 224,437
SECURITIES BROKERAGE - 2.6%
Charles Schwab Corporation 13,500 758,531
Investment Technology Group* 7,800 484,088
Legg Mason, Inc. 9,000 284,062
Raymond James Financial, Inc. 10,125 213,891
SEMICONDUCTOR - 3.6%
Analog Devices, Inc.* 7,500 235,313
Applied Materials, Inc.* 7,000 298,812
Dallas Semiconductor Corporation 6,500 261,219
Lattice Semiconductor Corporation* 2,500 114,766
Linear Technology Corporation 7,400 662,763
Maxim Integrated Products, Inc.* 13,000 567,938
Vitesse Semiconductor Corporation* 7,500 342,187
TELECOMMUNICATIONS EQUIPMENT - 1.8%
Ascend Communications, Inc.* 4,850 318,887
Tellabs, Inc.* 10,000 685,625
Uniphase Corporation* 3,000 208,125
TELECOMMUNICATIONS SERVICE - 2.5%
Aliant Communications Inc. 7,500 306,562
Cellular Communications International, Inc.* 2,000 136,000
ICG Communications, Inc.* 7,000 150,500
Intermedia Communications, Inc.* 7,000 120,750
MCI WorldCom, Inc.* 6,500 466,375
McleodUSA Inc.* 6,500 203,125
Nextel Communications, Inc.* 9,000 212,625
United States Cellular Corporation* 3,500 133,000
TEXTILE - 0.1%
Unifi, Inc. 4,500 87,750
THRIFT - 0.7%
Charter One Financial, Inc. 6,300 174,825
JSB Financial, Inc. 5,000 270,000
TOYS - 0.2%
Mattel, Inc. 6,125 139,726
TRANSPORT SERVICES - 0.7%
C.H. Robinson Worldwide, Inc. 8,000 207,500
Expeditors International of Washington, Inc. 6,000 252,000
------------
TOTAL COMMON STOCK - 98.9%
(Cost $38,097,742) $67,314,607
============
</TABLE>
* Securities are non-income producing
ADR - American Depositary Receipt
See Notes To Financial Statements
21
<PAGE>
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- -------- -------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
AUTO & TRUCK - 3.0%
Ford Motor Company A 7.250 10/01/08 $ 100,000 $ 110,931
BANK - 14.3%
Banc One Corporation A 8.740 09/15/03 100,000 112,423
Citicorp A+ 7.250 10/15/11 100,000 110,265
Harris Bankcorp, Inc. A+ 9.375 06/01/01 75,000 81,536
J.P. Morgan & Company AA- 8.500 08/15/03 100,000 111,018
Security Pacific Corporation A 9.750 05/15/99 40,000 40,620
Swiss Bank Corp.-NY AA 7.375 07/15/15 75,000 80,280
COMPUTER & PERIPHERALS - 2.1%
International Business Machines Corp. A+ 7.250 11/01/02 75,000 79,734
ELECTRIC & GAS UTILITIES - 10.1%
Duke Energy Corporation AA- 6.375 03/01/08 75,000 75,863
Florida Power Corporation AA- 6.875 02/01/08 70,000 76,893
Ontario Hydro AA- 7.450 03/31/13 150,000 173,890
Public Service Electric & Gas A- 7.000 09/01/24 50,000 51,150
ENVIRONMENTAL - 1.3%
Waste Management, Inc. BBB+ 7.650 03/15/11 45,000 49,196
FINANCIAL SERVICES - 6.4%
General Electric Capital Corporation AAA 7.750 03/15/02 100,000 107,531
GMAC A 6.625 10/15/05 125,000 131,454
FOOD PROCESSING - 3.0%
Archer Daniels Midland Company AA- 7.125 03/01/13 100,000 112,570
FOREIGN GOVERNMENT - 7.4%
Province of Ontario AA- 7.625 06/22/04 100,000 110,134
Province of Quebec A+ 8.800 04/15/03 150,000 167,487
GOVERNMENTAL AGENCY - 1.4%
Tennessee Valley Authority AAA 6.125 07/15/03 50,000 50,797
INSURANCE - 8.7%
Aetna Services, Inc. A 7.125 08/15/06 100,000 105,067
Allstate Corporation A+ 7.500 06/15/13 100,000 109,330
CIGNA Corporation A 8.250 01/01/07 100,000 112,588
</TABLE>
See Notes To Financial Statements
22
<PAGE>
ADVANCE CAPITAL I, INC. - BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- -------- -------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
MACHINERY - 6.2%
Caterpillar, Inc. A+ 9.000 04/15/06 $ 100,000 $ 118,705
Deere & Company A+ 8.950 06/15/19 100,000 115,000
METALS & MINING - 3.4%
Alcan Aluminum Ltd. A- 5.875 04/01/00 125,000 125,859
NEWSPAPER - 1.8%
Knight-Ridder, Inc. A 9.875 04/15/09 50,000 67,035
OFFICE EQUIPMENT & SUPPLIES - 0.8%
Xerox Corporation A 9.750 03/15/00 30,000 31,499
PETROLEUM - 4.0%
Kerr-McGee Corporation A- 7.000 11/01/11 150,000 150,334
RAILROAD - 2.9%
Missouri Pacific Railroad Co. A- 9.400 12/15/00 100,000 107,280
REAL ESTATE INVESTMENT MANAGEMENT - 2.9%
Rodamco N.V. AA 7.750 05/15/15 100,000 107,835
RETAIL STORE - 2.1%
Wal-Mart Stores, Inc. AA 8.625 04/01/01 75,000 80,413
SECURITIES BROKERAGE - 4.3%
Lehman Brothers Holdings, Inc. A 8.875 03/01/02 150,000 160,573
TELECOMMUNICATIONS SERVICE - 8.3%
AT&T Corporation NR 7.750 03/01/07 90,000 104,080
GTE Southwest, Inc. AA- 5.820 12/01/99 100,000 100,400
Pacific Bell Telephone Co. AA- 7.000 07/15/04 100,000 107,668
TOBACCO - 2.8%
Philip Morris Companies, Inc. A 6.375 02/01/06 100,000 103,276
U.S. GOVERNMENT - 0.9%
U.S. Treasury - Bond 6.625 05/15/07 30,000 33,745
-------------
TOTAL FIXED-INCOME SECURITIES - 98.1%
(Cost $3,425,517) $ 3,674,459
=============
</TABLE>
See Notes To Financial Statements
23
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
ADVERTISING - 0.4%
Catalina Marketing Corporation* 1,100 $ 75,212
Interpublic Group of Companies, Inc. 1,400 111,300
Lamar Advertising Company* 1,700 63,325
Omnicom Group, Inc. 1,500 87,000
Outdoor Systems, Inc.* 6,750 202,500
AEROSPACE / DEFENSE - 0.6%
BE Aerospace, Inc.* 2,000 42,000
B.F. Goodrich Company 2,000 71,750
Boeing Company 5,740 187,267
Gulfstream Aerospace Corporation* 1,700 90,100
Lockheed Martin Corporation 3,000 254,250
Raytheon Company - Class B 1,700 90,525
AIR TRANSPORT - 0.2%
Air Express International Corp. 2,400 52,200
ASA Holdings, Inc. 1,800 54,900
Comair Holdings, Inc. 3,562 120,217
APPAREL - 0.2%
Quiksilver, Inc.* 3,000 90,000
VF Corporation 3,600 168,975
Warnaco Group, Inc. 1,500 37,781
AUTO PARTS - 0.3%
Borg-Warner Automotive, Inc. 2,000 111,625
Dana Corporation 2,600 105,950
Genuine Parts Company 3,000 100,312
AUTO & TRUCK - 0.4%
Ford Motor Company 4,900 287,569
General Motors Corporation 2,400 171,900
BANK - 4.9%
Banc One Corporation 9,260 472,839
Bank of Boston Corporation 5,080 197,802
Bank of New York Company, Inc. 5,600 225,400
BankAmerica Corporation 14,613 878,607
Chase Manhattan Corporation 9,680 658,240
City National Corporation 1,600 66,600
First American Corporation 4,400 195,250
First Tennessee National Corp. 11,600 441,525
First Union Corporation 11,600 705,425
J.P. Morgan & Company 1,500 157,594
KeyCorp 5,000 159,375
Mellon Bank Corporation 5,400 371,250
National City Corporation 2,000 144,000
Northern Trust Corporation 1,700 148,431
PNC Bank Corporation 4,000 216,500
Providian Financial Corporation 2,400 180,000
Silicon Valley Bancshares* 3,400 57,906
State Street Corporation 2,400 166,950
U.S. Bancorp 3,900 138,450
Wells Fargo & Company 11,130 444,504
Zions Bancorporation 1,500 93,563
BEVERAGE - 0.5%
Anheuser-Busch Companies, Inc. 7,400 485,625
Coca-Cola Company 1,000 67,000
PepsiCo, Inc. 3,000 122,625
BIOTECHNOLOGY - 0.2%
Human Genome Sciences, Inc.* 1,200 42,675
Incyte Pharmaceuticals, Inc.* 1,400 52,325
Millennium Pharmaceuticals, Inc.* 3,000 77,625
Protein Design Labs, Inc.* 1,100 25,575
BROADCASTING / CABLE TV - 0.9%
A.H. Belo Corporation 2,800 55,825
Chancellor Media Corporation* 2,400 114,900
Clear Channel Communications* 4,400 239,800
Cox Communications, Inc.* 1,500 103,688
</TABLE>
See Notes To Financial Statements
24
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
BROADCASTING / CABLE TV - 0.9% (CONTINUED)
Emmis Broadcasting Corporation* 1,500 $ 65,063
Heftel Broadcasting Corporation* 1,600 78,800
Jacor Communications, Inc.* 1,500 96,563
TCA Cable TV, Inc. 2,600 92,788
Univision Communications, Inc.* 3,300 119,419
U.S. West Media Group* 4,000 188,000
Westwood One, Inc.* 1,700 40,800
BUILDING MATERIALS - 0.2%
American Standard Companies, Inc.* 1,100 39,531
Armstrong World Industries, Inc. 2,500 150,781
CHEMICAL - 1.3%
duPont, E.I. de Nemours & Co. 7,000 392,000
Ecolab, Inc. 2,500 90,156
Lilly Industries, Inc. 2,500 49,063
Minnesota Mining & Manufacturing 3,300 239,456
Raychem Corporation 2,000 64,625
Rohm & Haas Company 5,000 150,938
Sherwin-Williams Company 4,000 117,500
Sigma-Aldrich Corporation 2,600 76,375
Union Carbide Corporation 2,100 89,250
Valspar Corporation 2,600 96,525
WD-40 Company 7,600 217,550
COMPUTER & PERIPHERALS - 1.5%
Cable Design Technologies* 2,000 37,000
Cisco Systems, Inc.* 2,925 271,476
Comverse Technology, Inc.* 800 56,800
EMC Corporation* 4,000 340,000
Gateway 2000, Inc.* 1,200 61,425
Hewlett-Packard Company 6,100 416,706
Microchip Technology, Inc.* 1,500 55,500
Network Appliance Inc.* 3,400 153,000
SCI Systems, Inc.* 2,000 115,500
Sun Microsystems, Inc.* 2,200 188,375
Xilinx, Inc.* 2,100 136,762
COMPUTER SOFTWARE & SERVICES - 2.5%
Adobe Systems, Inc. 1,200 56,100
Affiliated Computer Services, Inc.* 2,000 89,250
America Online, Inc.* 4,000 577,500
Automatic Data Processing, Inc. 4,000 320,750
BARRA, Inc.* 2,500 59,063
BMC Software, Inc.* 4,000 178,250
Cadence Design Systems, Inc.* 3,700 110,075
Citrix Systems, Inc.* 1,800 174,713
Compuware Corporation* 4,000 312,500
DST Systems, Inc.* 1,500 85,594
Electronic Arts, Inc.* 2,000 112,250
HBO & Company 8,000 229,500
Intuit, Inc.* 1,700 123,250
Network Associates, Inc.* 2,300 152,375
Oracle Corporation* 3,787 163,314
Parametric Technology Company* 2,000 32,750
Shared Medical Systems Corporation 900 44,888
Sterling Commerce, Inc.* 2,300 102,781
SunGard Data Systems, Inc.* 2,000 79,375
Symantec Corporation* 2,400 52,200
Synopsys, Inc.* 2,000 108,500
Visio Corporation* 2,600 95,063
Whittman-Hart Inc.* 2,000 55,250
DIVERSIFIED - 1.3%
AlliedSignal, Inc. 10,200 451,987
Danaher Corporation 2,000 108,000
PPG Industries, Inc. 4,600 267,950
Service Corp. International 2,700 102,769
</TABLE>
See Notes To Financial Statements
25
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
DIVERSIFIED - 1.3% (CONTINUED)
Textron, Inc. 3,000 $ 227,813
Tomkins PLC-ADR 4,900 98,000
TRW, Inc. 2,000 112,500
United Technologies Corporation 2,200 240,900
DRUG - 4.0%
Agouron Pharmaceuticals, Inc.* 1,200 70,500
American Home Products Corp. 6,800 382,925
Amgen, Inc.* 1,100 115,019
BioChem Pharma, Inc.* 2,200 62,975
Biogen, Inc.* 2,000 166,000
Bristol-Myers Squibb Company 12,400 1,659,275
Centocor Inc.* 1,500 67,688
Elan Corporation PLC-ADR* 1,500 104,344
Gilead Sciences, Inc.* 1,000 41,063
Guilford Pharmaceuticals, Inc.* 1,500 21,375
Merck & Company, Inc. 6,000 887,250
Pfizer, Inc. 4,000 500,250
Schering-Plough Corporation 8,000 442,000
Warner-Lambert Company 5,500 413,531
Watson Pharmaceuticals, Inc.* 1,600 100,600
DRUGSTORE - 0.2%
Duane Reade, Inc.* 2,000 77,000
Rite Aid Corporation 4,000 198,250
ELECTRIC & GAS UTILITIES - 2.5%
AES Corporation* 2,200 104,225
Baltimore Gas & Electric Company 5,700 175,275
CMS Energy Corporation 2,300 111,406
Consolidated Edison Co. of N.Y. 2,400 126,900
Duke Energy Corporation 8,935 572,398
Edison International 6,500 181,187
FirstEnergy Corp. 4,500 145,969
Florida Progress Corporation 5,500 246,125
GPU, Inc. 3,600 159,075
Hawaiian Electric Industries, Inc. 2,300 92,287
New Century Energies, Inc. 4,700 229,125
Northern States Power Company 5,000 138,750
SCANA Corporation 5,000 160,937
Southern Company 8,000 232,500
TECO Energy, Inc. 9,700 272,813
Texas Utilities Company 4,300 200,756
ELECTRICAL EQUIPMENT - 1.5%
Corning, Inc. 2,500 112,500
Emerson Electric Company 5,000 307,500
General Electric Company 12,500 1,275,000
Hubbell Inc.-Class B 3,200 121,600
Littlefuse, Inc.* 2,000 38,500
ELECTRONICS - 0.6%
Altera Corporation* 2,000 121,750
Molex, Inc. 2,928 93,330
Sanmina Corporation* 1,900 118,750
Symbol Technologies, Inc. 4,500 287,719
Waters Corporation* 1,500 130,875
ENVIRONMENTAL - 0.4%
Allied Waste Industries, Inc.* 2,700 56,869
Browning-Ferris Industries, Inc. 4,500 127,969
Superior Services, Inc.* 3,100 62,194
Waste Management, Inc. 5,687 265,156
FINANCIAL SERVICES - 1.6%
American Express Company 5,000 511,250
Amvescap PLC-ADR 1,700 65,450
Associates First Capital Corporation 1,834 77,716
Citigroup Inc. 5,400 267,300
Countrywide Credit Industries, Inc. 4,000 200,750
Dun & Bradstreet Corporation* 4,700 148,344
</TABLE>
See Notes To Financial Statements
26
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
FINANCIAL SERVICES - 1.6% (CONTINUED)
Finova Group, Inc. 2,000 $ 107,750
Franklin Resources, Inc. 3,000 105,188
Mutual Risk Management, Ltd. 6,666 260,807
Paychex, Inc. 3,375 173,602
SunAmerica, Inc. 1,800 147,712
FOOD PROCESSING - 1.3%
ConAgra, Inc. 5,622 177,081
General Mills, Inc. 4,900 380,975
Heinz (H.J.) Company 5,000 281,563
Hershey Foods Corp. 2,800 174,125
Kellogg Company 3,000 102,375
Quaker Oats Company 2,000 119,000
Sara Lee Corporation 9,000 254,250
Tootsie Roll Industries, Inc. 2,546 99,612
FOREIGN TELECOMMUNICATIONS - 0.6%
BCE Inc. 4,400 166,925
Ericsson (LM) Telephone-ADR-Class B 3,600 86,175
Reuters Group PLC-ADR 2,733 173,204
Vodafone Group PLC-ADR 2,100 338,363
GROCERY - 0.4%
Albertson's, Inc. 2,900 184,694
Safeway, Inc.* 4,000 243,750
Whole Foods Market, Inc.* 1,900 91,913
HOMEBUILDING - 0.2%
Lennar Corporation 1,700 42,713
Rouse Company 8,800 242,000
HOTEL / GAMING - 0.0%
Mirage Resorts, Inc.* 2,000 29,875
HOUSEHOLD PRODUCTS - 1.4%
Clorox Company 3,800 443,888
Colgate-Palmolive Company 6,200 575,825
Kimberly-Clark Corporation 5,800 316,100
Lancaster Colony Corporation 1,500 48,188
Leggett & Platt, Inc. 3,100 67,425
Proctor & Gamble Company 2,400 219,150
Rayovac Corporation 2,300 61,238
INDUSTRIAL SERVICES - 0.6%
Apollo Group, Inc.* 2,250 76,219
DeVry, Inc.* 3,800 116,375
Equifax, Inc. 2,600 88,725
Interim Services* 2,232 52,034
Primark Corporation* 1,800 49,500
Quintiles Transnational Corporation* 2,000 106,750
Robert Half International, Inc.* 2,250 100,547
Sylvan Learning Systems, Inc.* 3,075 93,788
Vincam Group, Inc.* 1,800 31,613
INSURANCE - 2.0%
Ace, Ltd. 3,000 103,313
AFLAC, Inc. 4,800 211,200
Allstate Corporation 7,230 279,259
Ambac Financial Group, Inc. 2,600 156,488
American International Group, Inc. 4,500 434,813
EXEL Limited 1,000 75,000
Hartford Financial Services Group, Inc. 4,000 219,500
Marsh & McLennan Companies, Inc. 6,600 385,688
MBIA, Inc. 3,000 196,688
Mercury General Corporation 1,400 61,075
MGIC Investment Corporation 2,000 79,625
Progressive Corporation of Ohio 1,000 169,375
Protective Life Corporation 2,700 107,494
</TABLE>
See Notes To Financial Statements
27
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
MACHINERY - 0.7%
Caterpillar, Inc. 3,600 $ 165,600
Cognex Corporation* 1,500 30,000
Deere & Company 4,200 139,125
Donaldson Company, Inc. 2,800 57,400
Dover Corporation 10,400 380,900
IDEX Corporation 2,000 49,000
Parker-Hannifin Corporation 1,575 51,581
MANUFACTURED HOUSING - 0.0%
Oakwood Homes Corporation 2,000 30,375
MEDICAL SERVICES - 0.8%
HCR Manor Care, Inc.* 3,700 108,225
Health Management Associates* 8,352 180,612
HEALTHSOUTH Corporation* 3,200 49,400
IMS Health Incorporated 1,600 120,700
Lincare Holdings, Inc.* 2,000 81,125
Omnicare, Inc. 2,800 97,300
Orthodontic Centers of America, Inc.* 2,200 42,763
PacifiCare Health Systems, Inc.-Class B* 700 55,650
Total Renal Care Holdings, Inc.* 3,869 114,377
United HealthCare Corporation 1,300 55,981
Universal Health Services, Inc.-Class B* 2,200 116,050
MEDICAL SUPPLIES - 1.6%
Abbott Laboratories 7,200 352,800
Arterial Vascular Engineering, Inc.* 2,000 105,000
Baxter International, Inc. 3,000 192,938
Boston Scientific Corporation* 2,800 75,075
Cardinal Health, Inc. 2,700 204,694
Guidant Corporation 2,000 220,500
Henry Schein, Inc.* 1,500 67,125
Johnson & Johnson 2,560 213,440
Medtronic, Inc. 3,600 267,300
Sofamor Danek Group, Inc.* 1,000 121,750
Steris Corporation* 2,000 56,875
Sybron International Corp.* 4,000 108,750
VISX, Inc.* 1,000 87,438
METAL FABRICATING - 0.1%
Kennametal, Inc. 1,000 21,188
Lincoln Electric Holdings, Inc. 3,500 77,875
METALS & MINING - 0.2%
Aluminum Company of America 4,000 298,250
NATURAL GAS - 0.4%
Enron Corporation 5,400 308,138
Sonat, Inc. 1,800 48,713
The Williams Companies, Inc. 4,500 140,344
NEWSPAPER - 0.3%
Central Newspapers, Inc. 1,000 71,438
Gannett Company, Inc. 3,800 251,513
OFFICE EQUIPMENT & SUPPLIES - 0.7%
Avery Dennison Corporation 1,700 76,606
Diebold, Inc. 1,400 49,963
Pitney Bowes, Inc. 7,000 462,000
Xerox Corporation 2,900 342,200
OILFIELD SERVICES - 0.6%
Baker Hughes, Inc. 6,500 114,969
BJ Services Company* 3,200 50,000
Cooper Cameron Corporation* 1,900 46,312
Halliburton Company 7,000 208,250
Noble Drilling Corporation* 2,000 25,875
Schlumberger, Ltd. 3,180 149,261
Smith International, Inc.* 2,800 70,525
Weatherford International, Inc.* 1,800 34,875
</TABLE>
See Notes To Financial Statements
28
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
PACKAGING & CONTAINER - 0.1%
Sealed Air Corporation* 2,000 $ 102,125
PAPER & FOREST PRODUCTS - 0.5%
Fort James Corporation 3,000 120,000
Georgia Pacific Corporation 1,400 81,987
International Paper Company 8,000 358,500
Weyerhaeuser Company 2,200 111,787
PETROLEUM - 3.9%
Amerada Hess Corporation 1,300 64,675
Amoco Corporation 7,400 447,700
Apache Corporation 1,800 45,562
Atlantic Richfield Company 3,000 196,125
Barrett Resources Corporation* 1,400 33,600
British Petroleum Co. PLC-ADR 4,000 358,000
Chevron Corporation 5,300 439,569
Devon Energy Corporation 1,500 46,031
Exxon Corporation 12,600 921,375
Mobil Corporation 10,000 871,250
Noble Affiliates, Inc. 2,800 68,950
Phillips Petroleum Company 4,100 174,762
Repsol SA-ADR 3,400 185,725
Royal Dutch Petroleum Company 13,600 651,100
Texaco, Inc. 2,300 121,612
Tosco Corporation 3,000 77,625
USX-Marathon Group 7,000 210,000
Veritas DGC, Inc.* 2,500 32,500
PRECISION INSTRUMENT - 0.2%
Dionex Corporation* 2,000 73,250
Roper Industries, Inc. 2,000 40,750
Teleflex, Inc. 2,000 90,500
PRINTING - 0.2%
R. R. Donnelley & Sons Company 2,500 109,531
Valassis Communications, Inc.* 2,600 134,225
PUBLISHING - 0.6%
Harcourt General, Inc. 1,700 90,525
McGraw-Hill, Inc. 4,000 407,500
Meredith Corporation 3,100 117,412
The Petersen Companies, Inc.* 2,100 71,006
Value Line, Inc. 2,500 98,437
RAILROAD - 0.4%
Kansas City Southern Ind., Inc. 4,500 221,344
Norfolk Southern Corporation 8,100 256,669
REAL ESTATE INVESTMENT MANAGEMENT - 0.1%
LaSalle Partners, Inc.* 4,200 123,637
Security Capital Group, Inc. - Class B* 4,400 59,675
REAL ESTATE INVESTMENT TRUST - 1.0%
Archstone Communities Trust 4,000 79,500
CarrAmerica Realty Corporation 5,000 120,000
Equity Office Properties Trust 7,000 168,000
Federal Realty Investment Trust 4,800 113,400
Nationwide Health Properties, Inc. 7,500 161,719
ProLogis Trust 11,908 245,602
Simon DeBartolo Group, Inc. 6,400 182,400
United Dominion Realty Trust, Inc. 8,124 83,779
Weingarten Realty Investors 3,200 142,400
RECREATION - 0.8%
Brunswick Corporation 3,000 74,250
Carnival Corporation 4,000 191,500
Harley-Davidson, Inc. 4,000 189,500
Time Warner, Inc. 4,400 273,075
Walt Disney Company 9,000 270,000
RESTAURANT - 0.2%
McDonald's Corporation 2,500 191,562
Outback Steakhouse, Inc.* 2,250 89,719
</TABLE>
See Notes To Financial Statements
29
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
RETAIL STORE - 2.5%
AutoZone, Inc.* 2,400 $ 79,050
Bed Bath & Beyond, Inc.* 8,000 273,000
BJ's Wholesale Club, Inc.* 1,700 78,731
Borders Group, Inc.* 3,000 74,812
CDW Computer Centers, Inc.* 1,000 95,937
Circuit City Stores, Inc. 2,200 109,862
Consolidated Stores Corporation* 1,900 38,356
CVS Corporation 1,600 88,000
Dayton Hudson Corporation 8,000 434,000
Dollar General Corporation 9,765 230,698
Kohl's Corporation* 1,800 110,475
Lands' End, Inc.* 2,200 59,262
Linens 'n Things Inc.* 1,800 71,325
Men's Wearhouse, Inc.* 2,250 71,437
MSC Industrial Direct Co., Inc.* 3,000 67,875
Office Depot, Inc.* 4,200 154,350
Sears, Roebuck & Company 3,900 165,750
Staples Inc.* 2,200 96,112
Starbucks Corporation* 4,000 224,500
Tandy Corporation 3,200 131,800
Tiffany & Company 2,300 119,312
TJX Companies, Inc. 4,400 127,600
Williams-Sonoma, Inc.* 3,500 141,094
Zale Corporation* 2,200 70,537
SECURITIES BROKERAGE - 1.0%
Bear Stearns Companies, Inc. 2,791 104,662
Charles Schwab Corporation 6,750 379,266
Investment Technology Group* 2,900 179,981
Legg Mason, Inc. 3,000 94,687
Merrill Lynch & Company, Inc. 2,400 160,200
Morgan Stanley, Dean Witter and Co. 4,000 284,000
SEMICONDUCTOR - 1.6%
Analog Devices, Inc.* 2,400 75,300
Applied Materials, Inc.* 1,500 64,031
Dallas Semiconductor Corporation 2,000 80,375
Intel Corporation 4,800 569,100
Lattice Semiconductor Corporation* 800 36,725
Linear Technology Corporation 2,200 197,037
Maxim Integrated Products, Inc.* 4,800 209,700
Motorola, Inc. 2,500 152,656
SDL, Inc.* 1,500 59,437
Texas Instruments, Inc. 4,800 411,000
Vitesse Semiconductor Corporation* 2,500 114,062
SHOE - 0.0%
Wolverine World Wide, Inc. 2,362 31,001
STEEL - 0.2%
Nucor Corporation 4,800 207,600
TELECOMMUNICATIONS EQUIPMENT - 0.4%
Ascend Communications, Inc.* 2,050 134,787
Tellabs, Inc.* 3,480 238,598
Uniphase Corporation* 1,100 76,312
TELECOMMUNICATIONS SERVICE - 4.1%
Aliant Communications Inc. 3,000 122,625
ALLTEL Corporation 6,276 375,383
Ameritech Corporation 6,000 380,250
AT&T Corporation 1,500 112,875
Bell Atlantic Corporation 8,200 464,837
BellSouth Corporation 20,000 997,500
Cellular Communications International Inc.* 1,300 88,400
Centennial Cellular Corporation* 1,000 41,000
Cincinnati Bell, Inc. 5,000 189,062
GTE Corporation 11,500 767,625
Intermedia Communications, Inc.* 2,400 41,400
MCI WorldCom, Inc.* 2,700 193,725
McleodUSA Inc.* 2,500 78,125
Nextel Communications, Inc.* 2,700 63,786
</TABLE>
See Notes To Financial Statements
30
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- ---------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------------- --------- ---------------
<S> <C> <C>
TELECOMMUNICATIONS SERVICE - 4.1% (CONTINUED)
Powertel, Inc.* 2,500 $ 33,906
SBC Communications, Inc. 16,543 887,118
Sprint Corporation 3,200 269,200
United States Cellular Corporation* 1,100 41,800
TEXTILE - 0.0%
Unifi, Inc. 1,300 25,350
THRIFT - 0.7%
Charter One Financial, Inc. 1,890 52,448
Fannie Mae 6,800 503,200
Freddie Mac 4,000 257,750
JSB Financial, Inc. 1,500 81,000
TIRE & RUBBER - 0.1%
Goodyear Tire & Rubber Company 2,600 131,138
TOBBACO - 0.7%
Philip Morris Companies, Inc. 13,400 716,900
UST, Inc. 4,000 139,500
TOILETRIES / COSMETICS - 0.5%
Avon Products, Inc. 4,000 177,000
Gillette Company 6,000 289,875
Int'l Flavors & Fragrances, Inc. 5,000 223,750
TOYS - 0.1%
Mattel, Inc. 3,125 71,289
TRANSPORT SERVICES - 0.1%
C.H. Robinson Worldwide, Inc. 3,000 77,813
Expeditors International of Washington, Inc. 2,100 88,200
WATER UTILITY - 0.1%
American Water Works Co., Inc. 5,500 185,625
---------------
TOTAL COMMON STOCK - 58.2%
(Cost $36,951,538) $ 73,241,717
===============
</TABLE>
*Securities are non-income producing
ADR - American Depositary Receipt
See Notes To Financial Statements
31
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
AEROSPACE / DEFENSE - 1.4%
B.F. Goodrich Company A- 6.800 02/01/18 $ 500,000 $ 506,440
Lockheed Martin Corporation BBB+ 9.375 10/15/99 100,000 102,899
Lockheed Martin Corporation BBB+ 7.650 05/01/16 500,000 563,210
Raytheon Company BBB 6.750 08/15/07 500,000 525,780
Rockwell International Corp. AA- 8.875 09/15/99 100,000 102,354
AIR TRANSPORT - 0.3%
Federal Express Corporation BBB+ 8.760 05/22/15 350,000 416,500
AUTO & TRUCK - 0.4%
General Motors Corporation A 9.125 07/15/01 500,000 542,425
BANK - 6.0%
Banc One Corporation A 8.100 03/01/02 500,000 535,374
BankBoston Corporation A- 7.375 09/15/06 500,000 534,638
Bankers Trust Corporation BBB+ 7.250 10/15/11 500,000 532,855
Chase Manhattan Corp. A 6.750 08/15/08 400,000 424,522
Comerica Bank A- 7.125 12/01/13 500,000 509,585
Dresdner Bank - NY AA- 7.250 09/15/15 500,000 513,335
First Union Corporation A- 8.000 08/15/09 500,000 550,885
First Union Corporation A- 9.450 06/15/99 100,000 101,693
J.P. Morgan & Company AA- 8.500 08/15/03 500,000 555,093
MBNA America Bank, N.A. BBB 6.750 03/15/08 500,000 481,850
NationsBank Corporation A 6.500 03/15/06 500,000 526,688
Republic New York Corporation A 7.000 03/22/11 500,000 541,532
Royal Bank of Scotland A 6.375 02/01/11 500,000 480,920
Swiss Bank Corp.-NY AA 7.375 07/15/15 500,000 535,200
Wachovia Corporation A+ 6.375 02/01/09 500,000 524,981
BEVERAGE - 0.4%
Anheuser-Busch Companies, Inc. A+ 7.125 07/01/17 350,000 379,950
Anheuser-Busch Companies, Inc. A+ 8.500 03/01/17 115,000 119,069
BUILDING MATERIALS - 0.4%
Masco Corporation A- 7.125 08/15/13 500,000 538,711
CHEMICAL - 0.5%
Monsanto Company A 8.875 12/15/09 500,000 623,648
</TABLE>
See Notes To Financial Statements
32
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
COMPUTER & PERIPHERALS - 0.4%
Dell Computer Corporation BBB+ 6.550 04/15/08 $ 500,000 $ 495,180
COMPUTER SOFTWARE & SERVICES - 0.4%
Computer Associates International, Inc. A- 6.500 04/15/08 500,000 496,215
DIVERSIFIED - 1.7%
Service Corp. International BBB+ 7.700 04/15/09 500,000 549,057
Tenneco, Inc. BBB 7.625 06/15/17 500,000 547,330
Textron, Inc. A- 8.750 07/01/22 500,000 555,409
Tyco International Ltd. A- 6.375 06/15/05 500,000 506,132
ELECTRIC & GAS UTILITIES - 4.9%
Dayton Power & Light Company AA- 8.150 01/15/26 500,000 546,233
Delmarva Power & Light Co. A 8.500 02/01/22 500,000 556,020
Duke Energy Corporation AA- 6.375 03/01/08 500,000 505,755
Florida Power Corporation AA- 8.000 12/01/22 500,000 550,352
Florida Power & Light Company AA- 7.875 01/01/13 500,000 522,413
Georgia Power Company A+ 7.625 03/01/23 450,000 471,160
Hydro Quebec A+ 7.000 03/01/05 500,000 533,824
Potomac Edison Company A+ 7.750 05/01/25 500,000 550,152
Public Service Electric & Gas A- 7.000 09/01/24 200,000 204,599
Union Electric Company AA- 8.750 12/01/21 500,000 561,112
Virginia Electric & Power Company A 8.000 03/01/04 500,000 556,011
Western Resources, Inc. BBB 6.875 08/01/04 500,000 519,553
FINANCIAL SERVICES - 5.4%
American General Finance Corp. A+ 8.125 08/15/09 500,000 587,209
Dean Witter Discover & Company A+ 6.750 10/15/13 500,000 515,680
Deere, John Capital Corporation A 8.625 08/01/19 500,000 527,500
Dow Capital BV A 8.700 05/15/22 250,000 276,866
Fairfax Financial Holdings BBB+ 8.250 10/01/15 500,000 555,530
Fletcher Challenge Capital Canada, Inc. BBB 8.250 06/20/16 500,000 510,000
Ford Holdings, Inc. A 9.250 03/01/00 475,000 495,690
General Electric Capital Corporation AAA 7.750 03/15/02 500,000 537,653
Household Finance Corporation A 6.375 08/01/10 500,000 506,620
IBM Credit Corporation A+ 6.750 12/24/07 500,000 505,985
Santander Finance Issuances A 6.375 02/15/11 500,000 485,427
Sears Roebuck Acceptance Corp. A- 6.875 10/15/17 500,000 522,050
SunAmerica, Inc. A 8.125 04/28/23 500,000 586,605
</TABLE>
See Notes To Financial Statements
33
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
FOOD PROCESSING - 0.4%
Nabisco, Inc. BBB 7.050 07/15/07 $ 500,000 $ 513,744
FOOD WHOLESALERS - 0.2%
SYSCO Corporation AA- 7.250 04/15/07 250,000 280,159
FOREIGN GOVERNMENT - 1.3%
Province of Nova Scotia A- 7.250 07/27/13 500,000 554,120
Province of Quebec A+ 8.800 04/15/03 350,000 390,804
Province of Saskatchewan A 9.375 12/15/20 525,000 728,919
FOREIGN TELECOMMUNICATIONS - 0.4%
Cable & Wireless Communications PLC A- 6.750 03/06/08 500,000 510,065
GROCERY - 0.4%
SUPERVALU INC. BBB+ 6.640 06/09/06 500,000 522,954
INDUSTRIAL SERVICES - 0.4%
ServiceMaster Company BBB 7.100 03/01/18 500,000 495,155
INSURANCE - 2.2%
CIGNA Corporation A 8.250 01/01/07 500,000 562,942
CNA Financial Corporation A- 6.950 01/15/18 500,000 492,841
Leucadia National Corporation BBB+ 7.750 08/15/13 500,000 491,260
MBIA, Inc. AA 9.375 02/15/11 500,000 648,460
Metropolitan Life Insurance Co.* A+ 7.450 11/01/23 450,000 472,469
MACHINERY - 0.9%
Case Corporation A- 7.250 01/15/16 500,000 532,280
Clark Equipment Company A- 8.000 05/01/23 500,000 566,684
MEDICAL SUPPLIES - 0.9%
Cardinal Health, Inc. A 6.000 01/15/06 500,000 510,866
Johnson & Johnson AAA 8.720 11/01/24 550,000 654,783
METALS & MINING - 0.4%
Placer Dome, Inc. BBB 7.750 06/15/15 500,000 537,225
</TABLE>
See Notes To Financial Statements
34
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
NATURAL GAS - 1.2%
Columbia Energy Group BBB+ 7.320 11/28/10 $ 500,000 $ 528,138
Enron Corporation BBB+ 7.000 08/15/23 500,000 480,404
Southwestern Energy Company BBB+ 6.700 12/01/05 500,000 519,771
NEWSPAPER - 0.1%
Knight-Ridder, Inc. A 9.875 04/15/09 100,000 134,070
OFFICE EQUIPMENT & SUPPLIES - 0.2%
Xerox Corporation A 9.750 03/15/00 200,000 209,996
OILFIELD SERVICES - 0.4%
Smith International Inc. BBB+ 7.000 09/15/07 500,000 513,315
PACKAGING & CONTAINER - 0.3%
Crown Cork & Seal Company, Inc. BBB 8.375 01/15/05 390,000 420,636
PAPER & FOREST PRODUCTS - 0.4%
Weyerhaeuser Company A 6.950 08/01/17 500,000 514,395
PETROLEUM - 1.5%
Atlantic Richfield Company A 8.500 04/01/12 250,000 307,243
Louisiana Land & Exploration Co. A- 7.625 04/15/13 500,000 553,928
OXY USA, Inc. BBB 7.000 04/15/11 525,000 520,871
Phillips Petroleum Company A- 8.860 05/15/22 500,000 558,026
PUBLISHING - 0.4%
News America Holdings BBB- 8.000 10/17/16 500,000 549,697
REAL ESTATE INVESTMENT MANAGEMENT - 0.4%
Rodamco N.V. AA 7.750 05/15/15 500,000 539,175
RENTAL AUTO/EQUIPMENT - 0.4%
Hertz Corporation BBB+ 6.625 05/15/08 500,000 519,715
RESTAURANT - 0.4%
Darden Restaurants, Inc. BBB 7.125 02/01/16 500,000 499,750
</TABLE>
See Notes To Financial Statements
35
<PAGE>
ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Principal Market
Fixed Income Securities Rating Coupon Maturity Amount Value
- ------------------------------------------- --------- --------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C>
RETAIL STORE - 1.0%
Dayton Hudson Corporation A- 9.625 02/01/08 $ 200,000 $ 251,434
Dillard's Inc. BBB 7.850 10/01/12 500,000 546,324
Pep Boys-Manny, Moe & Jack BBB+ 7.000 06/01/05 500,000 517,095
SECURITIES BROKERAGE - 1.0%
Bear Stearns Companies, Inc. A 7.250 10/15/06 500,000 530,431
Lehman Brothers Holdings, Inc. A 8.500 08/01/15 500,000 475,725
Merrill Lynch & Company, Inc. AA- 7.190 08/07/12 300,000 311,133
SEMICONDUCTOR - 0.4%
Applied Materials, Inc. BBB+ 7.125 10/15/17 500,000 500,715
TELECOMMUNICATIONS SERVICE - 2.4%
AirTouch Communications, Inc. BBB+ 7.500 07/15/06 500,000 545,575
AT&T Corporation AA- 7.125 01/15/02 500,000 525,516
Bell Atlantic Corporation A+ 7.375 12/15/11 250,000 255,982
GTE Corporation A 6.460 04/15/08 500,000 527,070
MCI Communications Corporation BBB+ 7.750 03/15/24 500,000 534,528
Michigan Bell Telephone AAA 7.500 02/15/23 500,000 541,507
TOBACCO - 0.3%
Philip Morris Companies, Inc. A 9.000 01/01/01 400,000 425,549
U.S. GOVERNMENT - 0.4%
U.S. Treasury - Bond 6.500 08/15/05 500,000 549,687
--------------
TOTAL FIXED-INCOME SECURITIES - 40.9%
(Cost $49,245,544) 51,482,590
TOTAL COMMON STOCK - 58.2%
(Cost $36,951,538) 73,241,717
--------------
TOTAL INVESTMENTS IN SECURITIES - 99.1%
(Cost $86,197,082) $ 124,724,307
==============
</TABLE>
* Security exempt from registration under Rule 144A of the Securities
Act of 1933
See Notes To Financial Statements
36
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
ADVERTISING - 1.1%
Heritage Media Corporation BB+ 02/15/06 8.750 $ 675,000 $ 692,146
Lamar Advertising Company B 12/01/06 9.625 700,000 731,500
Outdoor Systems, Inc. B 06/15/07 8.875 1,000,000 1,075,720
AEROSPACE / DEFENSE - 1.1%
AAR Corporation BBB 10/15/03 7.250 500,000 504,541
Lockheed Martin Corporation BBB+ 03/15/23 7.875 500,000 543,170
McDonnell Douglas Corporation AA- 04/01/12 9.750 1,000,000 1,343,598
AIR TRANSPORT - 2.4%
AMR Corporation BBB- 08/01/12 9.000 1,000,000 1,194,958
AMR Corporation BBB- 03/15/00 9.750 100,000 104,341
Delta Air Lines, Inc. BBB- 02/01/11 10.375 500,000 652,083
Federal Express Corporation BBB+ 01/01/15 7.630 1,000,000 1,100,870
Northwest Airlines Corporation BB 03/15/07 8.700 1,000,000 986,540
United Airlines, Inc. BB+ 07/15/21 10.250 500,000 634,046
United Airlines, Inc. BB+ 08/15/21 9.750 500,000 612,038
APPAREL - 0.4%
Phillips-Van Heusen Corporation BB 11/15/23 7.750 1,000,000 954,993
AUTO PARTS - 1.4%
Federal-Mogul Corporation BB+ 07/01/06 7.750 1,000,000 980,000
JPS Automotive Products Corp. B 06/15/01 11.125 500,000 573,125
Titan International, Inc. BB- 04/01/07 8.750 1,000,000 1,030,000
Walbro Corporation B+ 07/15/05 9.875 500,000 465,349
AUTO & TRUCK - 1.5%
Ford Motor Company A 11/15/22 8.875 2,000,000 2,261,524
General Motors Corporation A 06/15/24 8.100 1,000,000 1,106,710
BANK - 7.2%
Banc One Corporation A 07/15/25 7.750 1,000,000 1,160,430
Bank of Boston Corporation BBB+ 12/01/05 6.625 1,000,000 1,034,767
BankAmerica Corporation A 03/01/09 7.125 1,000,000 1,096,747
Bankers Trust Corporation BBB+ 11/15/15 7.500 1,500,000 1,571,269
Chase Manhattan Corp. A 10/15/08 6.125 1,000,000 1,014,634
Citicorp A+ 10/15/11 7.250 1,000,000 1,102,651
Comerica Bank A- 12/01/13 7.125 1,000,000 1,019,170
Dresdner Bank - NY AA- 09/15/15 7.250 1,000,000 1,026,670
First Union Corporation A- 08/15/09 8.000 500,000 550,885
</TABLE>
See Notes To Financial Statements
37
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
BANK - 7.2% (Continued)
KeyCorp BBB+ 03/15/06 6.750 $ 1,000,000 $ 1,060,237
NCNB Corporation A 07/15/15 10.200 1,000,000 1,400,179
Republic New York Corporation A 05/15/21 9.125 1,000,000 1,309,717
Royal Bank of Scotland A 02/01/11 6.375 1,000,000 961,840
Swiss Bank Corporation-NY AA 06/15/17 7.375 1,000,000 1,101,540
Westpac Banking Corporation A+ 08/15/01 9.125 500,000 539,698
BEVERAGE - 0.5%
Anheuser-Busch Companies, Inc. A+ 07/01/17 7.125 1,000,000 1,085,571
BROADCASTING / CABLE TV - 6.3%
CSC Holdings, Inc. BB+ 02/15/18 7.875 500,000 507,895
CSC Holdings, Inc. BB- 05/15/06 9.875 750,000 831,481
Century Communications Corp. BB- 02/15/02 9.750 250,000 271,369
Century Communications Corp. BB- 03/01/05 9.500 1,000,000 1,129,829
Chancellor Media Corporation B 06/15/07 8.750 1,250,000 1,294,524
Comcast Cablevision BB+ 01/15/08 9.500 500,000 527,689
Comcast Cablevision BB+ 05/15/05 9.375 500,000 537,072
Continental Cablevision, Inc. BBB 08/01/13 9.500 500,000 595,676
Fox Family Worldwide, Inc. B 11/01/07 9.250 1,000,000 970,000
Jacor Communications Company B 12/15/06 9.750 750,000 833,117
Jones Intercable, Inc. BB+ 04/01/07 8.875 500,000 544,551
Jones Intercable, Inc. BB- 03/01/08 10.500 700,000 764,628
Lenfest Communications, Inc. BB+ 11/01/05 8.375 1,000,000 1,040,000
Rogers Cablesystems Ltd. BB+ 03/15/05 10.000 500,000 547,380
Sinclair Broadcast Group, Inc. B 09/30/05 10.000 500,000 533,487
Tele-Communications, Inc. BBB- 01/15/23 9.250 760,000 881,008
Tele-Communications, Inc. BBB- 02/15/23 8.750 500,000 565,972
Turner Broadcasting System, Inc. BBB 07/01/13 8.375 750,000 887,809
Young Broadcasting, Inc. B 06/15/07 8.750 750,000 761,108
CHEMICAL - 0.7%
Eastman Chemical Company BBB+ 01/15/24 7.250 1,000,000 949,488
Union Carbide Chemicals & Plastics Co. BBB 04/01/23 7.875 600,000 646,451
COMPUTER & PERIPHERALS - 0.6%
International Business Machines Corp. A+ 11/01/19 8.375 1,000,000 1,264,863
COMPUTER SOFTWARE & SERVICES - 0.5%
Computer Associates International, Inc. A- 04/15/05 6.375 1,250,000 1,235,722
</TABLE>
See Notes To Financial Statements
38
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
DIVERSIFIED - 1.0%
Mark IV Industries, Inc. BB- 09/01/07 7.500 $ 1,000,000 $ 964,080
Tenneco, Inc. BBB 11/15/12 9.200 500,000 580,093
Textron, Inc. A- 07/01/22 8.750 581,000 645,385
ELECTRIC & GAS UTILITIES - 9.1%
Alabama Power Company A+ 12/01/24 9.000 1,000,000 1,090,013
Dayton Power & Light Company AA- 01/15/26 8.150 1,000,000 1,092,466
Duke Energy Corporation AA- 08/01/25 6.750 1,000,000 993,748
Florida Power & Light Company AA- 01/01/13 7.875 1,000,000 1,044,826
FPL Group Capital, Inc. A+ 05/01/13 7.625 1,025,000 1,025,205
Georgia Power Company A+ 02/01/23 7.950 852,000 852,060
Hydro Quebec A+ 01/15/22 8.400 850,000 1,059,252
Illinois Power Co. BBB 02/15/23 8.000 1,000,000 1,000,392
Indianapolis Power & Light Co. AA- 02/01/24 7.050 1,000,000 1,040,763
New Orleans Public Service, Inc. BBB 03/01/23 8.000 600,000 633,490
Northern Illinois Gas Company AA 08/15/21 8.875 1,000,000 1,059,046
Oklahoma Gas & Electric Company AA- 10/15/25 7.300 1,500,000 1,607,186
Potomac Edison Company A+ 06/01/24 8.000 1,000,000 1,111,959
Potomac Electric Power Company A 06/01/21 9.000 1,000,000 1,111,069
Public Service Electric & Gas A- 09/01/24 7.000 1,000,000 1,022,996
Rocheseter Gas & Electric Corporation A- 04/01/21 9.375 1,000,000 1,116,361
Southern California Gas Company AA- 10/01/21 8.750 1,000,000 1,111,320
Virginia Electric & Power Company A 10/01/24 8.625 1,000,000 1,160,757
West Penn Power Company A+ 08/01/24 8.125 1,000,000 1,103,321
ELECTRIC EQUIPMENT - 0.9%
Philips Electronics N.V. BBB+ 08/15/13 7.250 1,000,000 1,051,342
Westinghouse Electric Corp. BBB- 08/01/12 8.625 750,000 882,396
ENVIRONMENTAL - 0.8%
American Eco Corporation BB- 05/15/08 9.625 1,000,000 700,000
Laidlaw, Inc. BBB+ 05/15/23 8.250 1,000,000 1,113,483
FINANCIAL SERVICES - 4.7%
Auburn Hills Trust A+ 05/01/20 12.000 400,000 664,698
ContiFinancial Corporation B+ 04/01/08 8.125 1,000,000 800,000
CRA Finance USA, Ltd. AA- 12/01/13 7.125 500,000 540,443
Dean Witter Discover & Company A+ 10/15/13 6.750 1,250,000 1,289,201
Dow Capital BV A 05/15/22 8.700 1,000,000 1,107,463
Fairfax Financial Holdings BBB+ 10/01/15 8.250 1,500,000 1,666,590
Fletcher Challenge Capital Canada, Inc. BBB 06/20/16 8.250 1,000,000 1,020,000
</TABLE>
See Notes To Financial Statements
39
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES - 4.7% (Continued)
Household Finance Corporation A 08/01/10 6.375 $ 1,000,000 $ 1,013,240
Imperial Credit Industries, Inc. B- 01/15/07 9.875 500,000 382,500
Sears Roebuck Acceptance Corp. A- 10/15/17 6.875 500,000 522,050
SunAmerica, Inc. A 04/28/23 8.125 1,250,000 1,466,513
FOOD PROCESSING - 1.2%
Chiquita Brands Int'l, Inc. B+ 01/15/04 9.625 1,000,000 1,046,709
ConAgra, Inc. BBB 03/01/21 9.750 500,000 655,804
Nabisco, Inc. BBB 06/15/15 7.550 1,000,000 1,015,143
FOREIGN GOVERNMENT - 2.2%
Province of Newfoundland BBB+ 10/22/22 8.650 1,000,000 1,180,477
Province of Nova Scotia A- 07/27/13 7.250 1,000,000 1,108,240
Province of Quebec A+ 12/01/26 8.625 1,115,000 1,400,189
Province of Saskatchewan A 02/01/13 8.000 1,000,000 1,202,114
FOREIGN TELECOMMUNICATIONS - 0.5%
Cable & Wireless Communications PLC A- 03/06/08 6.750 1,000,000 1,020,130
HOMEBUILDING - 3.2%
Beazer Homes USA, Inc. B+ 04/01/08 8.875 1,000,000 965,000
D.R. Horton, Inc. BB 04/15/06 10.000 1,000,000 1,020,000
Hovnanian Enterprises, Inc. B 06/01/05 9.750 1,000,000 959,640
M.D.C. Holdings, Inc. BB- 02/01/08 8.375 1,000,000 990,000
Ryland Group, Inc. B+ 06/01/04 9.625 1,000,000 1,028,221
Standard Pacific Corp. BB 06/15/07 8.500 1,000,000 1,022,500
U.S. Home Corporation BB- 08/15/07 8.880 1,000,000 1,015,846
HOTEL / GAMING - 3.6%
Boyd Gaming Corporation BB 10/01/03 9.250 1,000,000 1,033,750
Circus Circus Enterprises BB+ 07/15/13 7.625 450,000 417,591
Hilton Hotels Corporation BBB 12/15/09 7.200 1,000,000 955,749
Host Marriott Travel Plaza BB- 05/15/05 9.500 1,000,000 1,039,382
ITT Corporation BB 11/15/15 7.375 1,000,000 840,670
Park Place Entertainment Corp. BB 12/01/03 10.125 1,000,000 1,095,000
Prime Hospitality Corp. BB 01/15/06 9.250 1,000,000 1,041,250
Rank Group PLC BBB+ 01/15/18 7.125 1,000,000 997,900
Station Casinos B+ 06/01/03 9.625 500,000 500,095
HOUSEHOLD PRODUCTS - 0.4%
American Standard, Inc. BB- 02/01/08 7.375 1,000,000 995,000
</TABLE>
See Notes To Financial Statements
40
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
INDUSTRIAL SERVICES - 0.5%
Coinmach Laundry Corporation B+ 11/15/05 11.750 $ 1,000,000 $ 1,097,062
INSURANCE - 6.0%
Aetna Services, Inc. A 01/15/17 8.000 1,050,000 1,055,785
American Financial Group, Inc. BBB+ 12/15/07 7.125 1,000,000 1,018,440
CIGNA Corporation A 03/01/23 7.650 500,000 527,985
CNA Financial Corporation A- 11/15/23 7.250 1,000,000 965,916
CNA Financial Corporation A- 01/15/18 6.950 500,000 492,841
Continental Corporation BBB- 08/15/12 8.375 600,000 675,335
Kaufman & Broad Home Corp. BB- 05/01/03 9.375 1,000,000 1,016,250
Leucadia National Corporation BBB+ 08/15/13 7.750 910,000 894,093
Loews Corporation AA- 10/15/23 7.000 1,000,000 978,976
MBIA, Inc. AA 10/01/22 8.200 2,000,000 2,261,080
Metropolitan Life Insurance Co.* A+ 11/01/23 7.450 550,000 577,462
New York Life Insurance Company AA- 12/15/23 7.500 1,000,000 1,189,590
Reliance Group Holdings, Inc. BBB- 11/15/00 9.000 1,000,000 1,037,500
Vesta Insurance Group BBB- 07/15/25 8.750 500,000 515,000
MACHINERY - 0.3%
Clark Equipment Company A- 05/01/23 8.000 500,000 566,684
MEDICAL SERVICES - 0.7%
HEALTHSOUTH Corporation BBB- 04/01/01 9.500 500,000 516,586
Tenet Healthcare Corporation BB- 01/15/07 8.625 1,000,000 1,030,000
MEDICAL SUPPLIES - 0.8%
Boston Scientific Corporation BBB 03/15/05 6.625 1,000,000 964,122
Cardinal Health, Inc. A 02/15/04 6.500 700,000 725,276
METALS & MINING - 1.2%
Alcan Aluminum Ltd. A- 01/15/22 8.875 1,000,000 1,118,820
Inco Ltd. BBB- 06/15/22 9.600 500,000 549,598
Placer Dome, Inc. BBB 06/15/15 7.750 1,000,000 1,074,449
MORTGAGED BACK SECURITIES - 0.5%
Ginnie Mae AAA 11/20/28 6.500 998,192 1,002,559
NATURAL GAS - 1.3%
AmeriGas Partners, L.P. BB+ 04/15/07 10.125 1,200,000 1,262,677
Ferrellgas Partners, L.P. B+ 06/15/06 9.375 500,000 506,672
Seagull Energy BB+ 08/01/05 8.625 1,000,000 1,031,083
</TABLE>
See Notes To Financial Statements
41
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
NEWSPAPER - 0.5%
Hollinger International, Inc. BB- 02/01/06 9.250 $ 500,000 $ 525,625
Hollinger International, Inc. BB- 03/15/07 9.250 500,000 524,375
OILFIELD SERVICES - 1.9%
Husky Oil, Ltd. BBB 11/15/16 7.550 1,000,000 1,030,000
J. Ray McDermott, S.A. BB+ 07/15/06 9.375 1,000,000 1,018,750
Lomak Petroleum, Inc. B 01/15/07 8.750 1,000,000 979,338
Offshore Logistics, Inc. BB 01/15/08 7.875 500,000 470,000
Veritas DGC, Inc. BB+ 10/15/03 9.750 750,000 786,167
PACKAGING & CONTAINERS - 1.5%
Container Corp. of America B- 04/01/03 9.750 400,000 407,210
Crown Cork & Seal Company, Inc. BBB 04/15/23 8.000 1,500,000 1,460,623
Owens-Illinois Inc. BB+ 05/15/07 8.100 750,000 801,352
Smurfit-Stone Container Corporation B 02/01/01 9.875 750,000 759,375
PAPER & FOREST PRODUCTS - 1.6%
Bowater, Inc. BBB 10/15/12 9.500 700,000 865,629
Champion International Corporation BBB 09/01/23 7.625 1,500,000 1,508,929
Georgia-Pacific Corporation BBB- 07/01/22 9.125 1,000,000 1,100,800
PETROLEUM - 4.9%
ANR Pipeline Company BBB 11/01/21 9.625 1,000,000 1,316,348
Clark Oil & Refining Corporation BB 09/15/04 9.500 650,000 655,804
Clark USA, Inc. B+ 12/01/05 10.875 500,000 510,000
Diamond Shamrock R & M, Inc. BBB 04/01/23 8.000 600,000 635,294
Kerr-McGee Corporation A- 11/01/11 7.000 1,500,000 1,498,356
Louisiana Land & Exploration Co. A- 04/15/13 7.625 1,000,000 1,107,855
NOVA Gas Transmission A- 04/01/23 7.875 600,000 669,906
Ocean Energy Inc. BB+ 07/01/05 7.625 500,000 486,830
OXY USA, Inc. BBB 04/15/11 7.000 1,000,000 992,135
Phillips Petroleum Company A- 01/01/23 8.490 1,000,000 1,105,541
USX Corporation BBB- 02/15/12 9.375 750,000 919,863
Vintage Petroleum, Inc. B+ 12/15/05 9.000 1,000,000 1,048,482
PUBLISHING - 0.9%
K-III Communications Corporation BB- 06/01/04 10.250 750,000 805,657
News America Holdings BBB- 08/10/18 8.250 1,000,000 1,127,523
RAILROAD - 1.0%
Kansas City Southern Industries, Inc. BBB- 07/01/22 8.800 500,000 542,830
Union Pacific Corporation BBB- 05/01/25 8.350 1,500,000 1,610,901
</TABLE>
See Notes To Financial Statements
42
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
REAL ESTATE INVESTMENT MANAGEMENT - 0.5%
Rodamco N.V. AA 05/15/15 7.750 $ 1,000,000 $ 1,078,351
RECREATION - 1.5%
Brunswick Corporation BBB+ 09/01/23 7.375 975,000 1,034,456
Speedway Motorsports, Inc. B+ 08/15/07 8.500 1,000,000 996,000
Time Warner, Inc. BBB 01/15/13 9.125 1,000,000 1,274,346
RENTAL AUTO/EQUIPMENT - 0.5%
Hertz Corporation BBB+ 05/15/08 6.625 1,000,000 1,039,431
RESTAURANT - 0.7%
Darden Restaurants, Inc. BBB 02/01/16 7.125 1,500,000 1,499,250
RETAIL STORE - 5.9%
Dayton Hudson Corporation A- 12/01/22 8.500 1,500,000 1,661,667
Dillard's Inc. BBB 10/01/12 7.850 1,500,000 1,638,972
Finlay Fine Jewelry Corporation B+ 05/01/08 8.375 1,000,000 940,000
Fred Meyer, Inc. BB+ 03/01/08 7.450 1,000,000 1,079,560
J.C. Penney Company A 04/01/17 7.950 1,000,000 1,115,545
The Limited, Inc. BBB+ 03/15/23 7.500 1,000,000 981,241
May Department Stores A 07/15/26 8.300 1,000,000 1,139,933
Michaels Stores, Inc. BB- 06/15/06 10.875 1,000,000 1,098,910
Pep Boys-Manny, Moe & Jack BBB+ 06/01/05 7.000 1,000,000 1,034,190
Rite-Aid Corporation BBB+ 08/15/13 6.875 1,000,000 998,709
Sears, Roebuck & Company A- 11/01/11 9.375 1,000,000 1,266,456
Bear Stearns Companies, Inc. A 01/15/04 6.625 1,000,000 1,019,559
Goldman Sachs Group A+ 03/01/13 8.000 1,000,000 1,125,980
Lehman Brothers, Inc. A 05/15/05 11.625 1,023,000 1,309,394
Morgan Stanley Group, Inc. A+ 10/01/13 7.000 1,000,000 1,055,635
Paine Webber Group, Inc. BBB+ 02/15/14 7.625 1,000,000 1,032,975
SEMICONDUCTOR - 0.9%
Advanced Micro Devices, Inc. B 08/01/03 11.000 1,000,000 1,060,000
Applied Materials, Inc. BBB+ 10/15/17 7.125 1,000,000 1,001,430
SHOE - 0.5%
Brown Group, Inc. BB 10/15/06 9.500 1,000,000 1,056,250
</TABLE>
See Notes To Financial Statements
43
<PAGE>
ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
S & P
Credit Maturity Principal Market
Fixed Income Securities Rating Date Coupon Amount Value
- ------------------------------------------- --------- --------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
STEEL - 0.5%
AK Steel Corporation BB- 12/15/06 9.125 $ 1,000,000 $ 1,043,856
TELECOMMUNICATIONS SERVICE - 6.1%
AirTouch Communications, Inc. BBB+ 05/01/08 6.650 1,500,000 1,586,014
AT&T Corporation AA- 01/15/22 8.125 750,000 820,504
AT&T Corporation AA- 07/15/24 8.125 800,000 884,965
Bell Atlantic Corporation A+ 12/15/11 7.375 500,000 511,964
Comcast Cellular Communications, Inc. BB+ 05/01/07 9.500 1,000,000 1,055,000
GCI, Inc. B+ 08/01/07 9.750 1,000,000 1,026,388
GTE Corporation A 11/01/21 8.750 1,000,000 1,284,748
Illinois Bell Telephone Company AAA 03/15/24 7.250 1,425,000 1,516,455
MasTec, Inc. BB- 02/01/08 7.750 1,000,000 951,359
MCI WorldCom, Inc. BBB+ 03/15/24 7.750 1,000,000 1,069,056
New Jersey Bell Telephone AA 06/01/12 7.375 1,000,000 1,020,343
Paging Network, Inc. B 02/01/06 8.875 1,000,000 931,378
SBC Communications Corp. AA 07/15/25 7.250 1,000,000 1,063,328
TEXTILES - 0.7%
Dyersburg Corporation B+ 09/01/07 9.750 500,000 467,500
WestPoint Stevens Inc. BB 06/15/05 7.875 1,000,000 1,013,100
TOBACCO - 0.7%
Philip Morris Companies, Inc. A 01/15/17 8.375 697,000 722,711
RJR Nabisco, Inc. BBB- 04/15/04 8.750 775,000 787,761
TOILETRIES/COSMETICS - 0.5%
Platex Family Products Corp. B 12/15/03 9.000 1,000,000 1,027,500
U.S. GOVERNMENT - 0.5%
U.S. Treasury - Bond 08/15/26 6.750 1,000,000 1,197,969
-------------
TOTAL FIXED INCOME SECURITIES - 96.9%
(Cost $203,907,342) $214,339,961
=============
</TABLE>
* Security exempt from registration under Rule 144A of the Securities
Act of 1933
See Notes To Financial Statements
44
<PAGE>
ADVANCE CAPITAL I, INC. - CORNERSTONE STOCK FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ---------- --------------
<S> <C> <C>
AUTO & TRUCK - 1.1%
Ford Motor Company 1,400 $ 82,163
BANK - 4.8%
Banc One Corporation 1,400 71,488
BankAmerica Corporation 2,100 126,262
First Union Corporation 1,200 72,975
Wells Fargo & Company 2,000 79,875
BEVERAGE - 2.7%
Coca-Cola Company 3,000 201,000
BROADCASTING/CABLE TV - 1.3%
Comcast Corporation 700 41,081
Tele-Communications, Inc.* 1,000 55,312
CHEMICAL - 1.1%
duPont, E.I. de Nemours & Co. 1,400 78,400
COMPUTER & PERIPHERALS - 12.2%
Cisco Systems, Inc.* 3,000 278,438
Compaq Computer Corporation 2,100 88,331
Dell Computer Corporation* 2,400 175,650
Hewlett-Packard Company 1,300 88,806
International Business Machines Corp. 1,100 203,225
Sun Microsystems, Inc.* 700 59,938
COMPUTER SOFTWARE & SERVICES - 10.7%
America Online, Inc.* 900 129,937
Microsoft Corporation* 4,700 651,831
DRUG - 13.7%
American Home Products Corp. 1,600 90,100
Amgen, Inc.* 500 52,281
Bristol-Myers Squibb Company 1,200 160,575
Eli Lilly & Company 1,300 115,538
Merck & Company, Inc. 1,400 207,025
Pfizer, Inc. 1,600 200,100
Schering-Plough Corporation 1,800 99,450
Warner-Lambert Company 1,000 75,187
ELECTRICAL EQUIPMENT - 5.6%
General Electric Company 4,000 408,000
FINANCIAL SERVICES - 1.9%
Citigroup Inc. 2,800 138,600
FOREIGN TELECOMMUNICATIONS - 1.1%
Ericsson (LM) Telephone-ADR-Class B 3,400 81,388
HOUSEHOLD PRODUCTS - 2.0%
Proctor & Gamble Company 1,600 146,100
INSURANCE - 1.7%
American International Group, Inc. 1,300 125,613
MEDICAL SUPPLIES - 3.0%
Abbott Laboratories 1,800 88,200
Johnson & Johnson 1,600 133,400
PETROLEUM - 6.7%
Amoco Corporation 1,200 72,600
Exxon Corporation 2,900 212,062
Mobil Corporation 900 78,413
Royal Dutch Petroleum Company 2,600 124,475
RECREATION - 2.1%
Time Warner, Inc. 1,300 80,681
Walt Disney Company 2,500 75,000
RESTAURANT - 0.8%
McDonald's Corporation 800 61,300
</TABLE>
See Notes To Financial Statements
45
<PAGE>
ADVANCE CAPITAL I, INC. - CORNERSTONE STOCK FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Common Stock Shares Value
- --------------------------------------- ---------- --------------
<S> <C> <C>
RETAIL STORE - 4.6%
The Home Depot, Inc. 1,900 $ 116,256
Wal-Mart Stores, Inc. 2,700 219,881
SEMICONDUCTOR - 5.0%
Intel Corporation 3,100 367,544
TELECOMMUNICATIONS EQUIPMENT - 2.8%
Lucent Technologies Inc. 1,600 176,000
Tellabs, Inc.* 400 27,425
TELECOMMUNICATIONS SERVICE - 12.6%
Ameritech Corporation 1,300 82,388
AT&T Corporation 2,100 158,025
Bell Atlantic Corporation 1,900 107,706
BellSouth Corporation 2,400 119,700
GTE Corporation 1,200 80,100
MCI WorldCom, Inc.* 3,400 243,950
SBC Communications, Inc. 2,400 128,700
THRIFT - 1.2%
Fannie Mae 1,200 88,800
TOILETRIES/COSMETICS - 0.9%
Gillette Company 1,300 62,806
--------------
TOTAL COMMON STOCK - 99.6%
(Cost $7,056,807) $ 7,290,081
==============
</TABLE>
* Securities are non-income producing
ADR - American Depositary Receipt
See Notes To Financial Statements
46
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
- ------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY RETIREMENT CORNERSTONE
GROWTH BOND BALANCED INCOME STOCK
ASSETS ------------ ------------ ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Investments in securities . . . . . . . . $67,314,607 $ 3,674,459 $ 124,724,307 $ 214,339,961 $ 7,290,081
Cash. . . . . . . . . . . . . . . . . . . 766,753 14,785 120,019 2,615,727 681,055
Receivables
Dividends and interest. . . . . . . . . 25,638 64,449 1,117,090 4,397,081 4,504
Securities sold . . . . . . . . . . . . 0 0 40,084 0 0
Prepaid expenses. . . . . . . . . . . . . 4,393 1,395 9,115 16,840 0
------------ ------------ ---------------- -------------- -------------
Total assets. . . . . . . . . . . . . . . 68,111,391 3,755,088 126,010,615 221,369,609 7,975,640
LIABILITIES
Payable to affiliated entities
Investment advisory fees. . . . . . . . 37,516 1,261 72,396 91,966 948
Distribution fees . . . . . . . . . . . 898 0 1,687 2,959 94
Accounts payable and accrued expenses . . 12,221 555 20,051 32,586 62
Securities purchased. . . . . . . . . . . 0 0 25,723 0 658,247
Distributions payable . . . . . . . . . . 0 7,090 8,086 21,202 0
------------ ------------ ---------------- -------------- -------------
Total liabilities . . . . . . . . . . . . 50,635 8,906 127,943 148,713 659,351
------------ ------------ ---------------- -------------- -------------
Net assets. . . . . . . . . . . . . . . . $68,060,756 $ 3,746,182 $ 125,882,672 $ 221,220,896 $ 7,316,289
============ ============ ================ ============== =============
NET ASSETS
Paid-in capital . . . . . . . . . . . . . $39,143,465 $ 3,497,240 $ 87,355,447 $ 210,788,277 $ 7,083,015
Accumulated undistributed net realized
loss on investments. . . . . . . . . (299,574) 0 0 0 0
Net unrealized appreciation in value of
investments. . . . . . . . . . . . . 29,216,865 248,942 38,527,225 10,432,619 233,274
------------ ------------ ---------------- -------------- -------------
Net assets. . . . . . . . . . . . . . . . $68,060,756 $ 3,746,182 $ 125,882,672 $ 221,220,896 $ 7,316,289
============ ============ ================ ============== =============
SHARES OUTSTANDING. . . . . . . . . . . . . 3,394,756 352,744 7,346,917 20,948,191 699,280
============ ============ ================ ============== =============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE. . . . . . . . $ 20.05 $ 10.62 $ 17.13 $ 10.56 $ 10.46
============ ============ ================ ============== =============
</TABLE>
See Notes To Financial Statements
47
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF OPERATIONS
- ----------------------------------------------------
<TABLE>
<CAPTION> PARTIAL *
YEAR ENDED
YEAR ENDED DECEMBER 31, 1998 DEC. 31, 1998
----------------------------------------------------------------------
EQUITY RETIREMENT CORNERSTONE
GROWTH BOND BALANCED INCOME STOCK
------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest. . . . . . . . . . . . . . . . . . . $ 23,633 $ 273,126 $ 3,370,704 $ 16,181,418 $ 4,296
Dividends . . . . . . . . . . . . . . . . . . 239,267 0 1,068,989 0 208
------------- ---------- ------------- ------------- ------------
Total investment income . . . . . . . . . . . 262,900 273,126 4,439,693 16,181,418 4,504
EXPENSES
Paid to affiliates:
Investment advisory fees . . . . . 416,768 15,826 792,221 1,054,139 948
Distribution fees. . . . . . . . . 148,846 0 282,936 527,069 593
Paid to others:
Custodial fees . . . . . . . . . . 20,439 1,738 22,723 10,202 35
Directors fees and expenses. . . . 3,082 222 5,950 11,225 3
Professional fees. . . . . . . . . 3,933 259 7,316 13,641 8
Shareholder reporting costs. . . . 6,493 419 12,433 23,256 15
Registration and filing fees . . . 3,409 1,572 9,375 13,460 0
Other operating expenses . . . . . 4,868 472 10,028 21,752 1
------------- ---------- ------------- ------------- ------------
Total expenses. . . . . . . . . . . . . . . . 607,838 20,508 1,142,982 1,674,744 1,603
------------- ---------- ------------- ------------- ------------
NET INVESTMENT INCOME (LOSS) (344,938) 252,618 3,296,711 14,506,674 2,901
REALIZED GAIN (LOSS) ON INVESTMENTS
Proceeds from securities sold . . . . . . . . 13,183,365 943,507 12,250,817 40,058,234 0
Cost of securities sold . . . . . . . . . . . (13,482,939) (925,015) (11,410,202) (39,732,773) 0
------------- ---------- ------------- ------------- ------------
Net realized gain (loss) on investments . . . (299,574) 18,492 840,615 325,461 0
UNREALIZED GAIN (LOSS) ON INVESTMENTS
Appreciation, Beginning of period . . . . . . 19,152,504 215,460 28,576,083 12,371,460 0
Appreciation, End of period . . . . . . . . . 29,216,865 248,942 38,527,225 10,432,619 233,274
------------- ---------- ------------- ------------- ------------
Net unrealized gain (loss) on investments . . 10,064,361 33,482 9,951,142 (1,938,841) 233,274
------------- ---------- ------------- ------------- ------------
NET GAIN (LOSS) ON INVESTMENTS. . . . . . . . . 9,764,787 51,974 10,791,757 (1,613,380) 233,274
------------- ---------- ------------- ------------- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . $ 9,419,849 $ 304,592 $ 14,088,468 $ 12,893,294 $ 236,175
============= ========== ============= ============= ============
</TABLE>
*From December 17, 1998 (commencement of operations) to December 31, 1998.
See Notes To Financial Statements
48
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- ---------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH BOND
---------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss). . . . . . . . . . . . . . . . . $ (344,938) $ (270,430) $ 252,618 $ 282,005
Net realized gain (loss) on investments . . . . . . . . . . . (299,574) 356,554 18,492 38,190
Net unrealized gain (loss) on investments . . . . . . . . . . 10,064,361 7,883,116 33,482 64,390
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations. . . . . 9,419,849 7,969,240 304,592 384,585
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . . . . . . . . 0 0 (252,618) (282,005)
Net realized gain on investments. . . . . . . . . . . . . . . 0 (228,769) (18,492) (37,120)
------------- ------------- ------------- -------------
Total distributions to shareholders . . . . . . . . . . . . . 0 (228,769) (271,110) (319,125)
Share Transactions:
Net proceeds from sale of shares. . . . . . . . . . . . . . . 10,851,525 11,871,517 184,096 665,380
Reinvestment of distributions . . . . . . . . . . . . . . . . 0 228,701 225,055 267,980
Cost of shares reacquired . . . . . . . . . . . . . . . . . . (6,542,846) (4,275,354) (899,446) (1,226,311)
------------- ------------- ------------- -------------
Net increase (decrease) derived from share transactions . . . 4,308,679 7,824,864 (490,295) (292,951)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets . . . . . . . . . . . . 13,728,528 15,565,335 (456,813) (227,491)
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . . . . . . 54,332,228 38,766,893 4,202,995 4,430,486
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,060,756 $ 54,332,228 $ 3,746,182 $ 4,202,995
============= ============= ============= =============
NUMBER OF SHARES
Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605,020 774,840 17,285 64,974
Shares issued from reinvestment of distributions. . . . . . . 0 13,258 21,229 25,755
Reacquired. . . . . . . . . . . . . . . . . . . . . . . . . . (360,707) (271,579) (85,145) (118,547)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding . . . . . . . . 244,313 516,519 (46,631) (27,818)
Outstanding:
Beginning of year . . . . . . . . . . . . . . . . . . . . . 3,150,443 2,633,924 399,375 427,193
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . 3,394,756 3,150,443 352,744 399,375
============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
49
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
YEARS ENDED DECEMBER 31, 1998 AND 1997
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
RETIREMENT
BALANCED INCOME
---------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss). . . . . . . . . . . . . . . . . $ 3,296,711 $ 2,662,530 $ 14,506,674 $ 13,297,465
Net realized gain (loss) on investments . . . . . . . . . . . 840,615 1,902,416 325,461 929,733
Net unrealized gain (loss) on investments . . . . . . . . . . 9,951,142 11,905,973 (1,938,841) 7,541,320
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations. . . . . 14,088,468 16,470,919 12,893,294 21,768,518
Distributions to Shareholders:
Net investment income . . . . . . . . . . . . . . . . . . . . (3,296,711) (2,662,530) (14,506,674) (13,297,465)
Net realized gain on investments. . . . . . . . . . . . . . . (840,615) (1,902,416) (284,242) 0
------------- ------------- ------------- -------------
Total distributions to shareholders . . . . . . . . . . . . . (4,137,326) (4,564,946) (14,790,916) (13,297,465)
Share Transactions:
Net proceeds from sale of shares. . . . . . . . . . . . . . . 25,495,015 17,779,709 29,094,377 28,904,791
Reinvestment of distributions . . . . . . . . . . . . . . . . 4,102,654 4,535,246 14,595,861 13,134,267
Cost of shares reacquired . . . . . . . . . . . . . . . . . . (13,087,598) (10,001,142) (21,082,826) (20,798,196)
------------- ------------- ------------- -------------
Net increase (decrease) derived from share transactions . . . 16,510,071 12,313,813 22,607,412 21,240,862
------------- ------------- ------------- -------------
Net increase (decrease) in net assets . . . . . . . . . . . . 26,461,213 24,219,786 20,709,790 29,711,915
NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . . . . . . 99,421,459 75,201,673 200,511,106 170,799,191
------------- ------------- ------------- -------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . $125,882,672 $ 99,421,459 $221,220,896 $200,511,106
============= ============= ============= =============
NUMBER OF SHARES
Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,559,384 1,211,965 2,736,189 2,825,132
Shares issued from reinvestment of distributions. . . . . . . 248,724 298,348 1,372,921 1,275,428
Reacquired. . . . . . . . . . . . . . . . . . . . . . . . . . (797,921) (671,556) (1,985,302) (2,023,575)
------------- ------------- ------------- -------------
Net increase (decrease) in shares outstanding . . . . . . . . 1,010,187 838,757 2,123,808 2,076,985
Outstanding:
Beginning of year . . . . . . . . . . . . . . . . . . . . . 6,336,730 5,497,973 18,824,383 16,747,398
End of year . . . . . . . . . . . . . . . . . . . . . . . . 7,346,917 6,336,730 20,948,191 18,824,383
============= ============= ============= =============
</TABLE>
See Notes To Financial Statements
50
<PAGE>
ADVANCE CAPITAL I, INC.
STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
- -----------------------------------------------------------
<TABLE>
<CAPTION>
CORNERSTONE
STOCK
------------------
Partial Year Ended*
December 31, 1998
------------------
<S> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,901
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Net unrealized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233,274
-------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . . . 236,175
Distributions to Shareholders:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,901)
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
-------------
Total distributions to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,901)
Share Transactions:
Net proceeds from sale of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,080,114
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,901
Cost of shares reacquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
-------------
Net increase derived from share transactions . . . . . . . . . . . . . . . . . . . . . . . 7,083,015
-------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,316,289
NET ASSETS
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
-------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,316,289
=============
NUMBER OF SHARES
Sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,003
Shares issued from reinvestment of distributions . . . . . . . . . . . . . . . . . . . . . 277
Reacquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
-------------
Net increase in shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,280
Outstanding:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
-------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699,280
=============
</TABLE>
* From December 17, 1998 (commencement of operations) to December 31, 1998.
See Notes To Financial Statements
51
<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 following classes: Equity Growth Fund,
Bond Fund, Balanced Fund, Retirement Income Fund and Cornerstone
Stock Fund. On December 17, 1998, the Cornerstone Stock Fund
commenced operations as a new class of shares of the COMPANY.
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 exchange quotations are readily
available are valued at the last sale price (generally 4:00
PM Eastern time). If there is no sale price, they are valued
at the last 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 are 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.
52
<PAGE>
NOTE 2. ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
It is each fund's policy to meet the requirements of
the Internal Revenue Code that are applicable to regulated
investment companies and each fund 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 and
Cornerstone Stock Funds, if any, are declared annually and
paid on the last business day of the year. Capital gain
dividends, if any, are declared annually and paid in December.
For 1998, distributions of net realized capital gains of
$10,395, $840,615 and $284,242 were paid by the Bond, Balanced
and Retirement Income Funds, respectively.
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
53
<PAGE>
NOTE 3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
the Bond and Cornerstone Stock Funds. For its services, TRPA
is paid a fee by MANAGEMENT equal on an annual basis to .20% of
the average daily net assets of the Equity Growth Fund and that
portion of the Balanced Fund invested in common stocks for the
first $100 million of assets managed and .15% of the average
daily net assets exceeding $100 million. 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, Retirement Income
and Cornerstone Stock Funds, at a rate not to exceed .25% of
each fund's average daily net assets.
The COMPANY was charged investment advisory fees of
$2,279,902 by MANAGEMENT for 1998. The COMPANY was charged
distribution fees of $959,444 by SERVICES for 1998. At
December 31, 1998 an employee retirement plan sponsored by
SERVICES owned 59,301 shares (1.8%) of the Equity Growth
Fund and 8,565 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 plus $250 per meeting attended.
NOTE 4. INVESTMENT PORTFOLIO TRANSACTIONS
The cost of purchases and proceeds from sales of
investments, other than short-term obligations, for 1998 were
as follows:
<TABLE>
<CAPTION>
Equity Retirement Cornerstone
Growth Bond Balanced Income Stock
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchases $16,894,235 $448,890 $28,665,902 $64,425,149 $7,056,807
Sales 13,183,365 943,507 12,250,817 40,058,234 0
</TABLE>
The cost of purchases and proceeds from sales of U.S.
Government securities included above were as follows:
<TABLE>
<CAPTION>
Equity Retirement Cornerstone
Growth Bond Balanced Income Stock
----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Purchases None $ 95,928 $1,654,688 $2,650,781 None
Sales None 174,586 2,212,422 8,963,281 None
</TABLE>
54
<PAGE>
NOTE 4. INVESTMENT PORTFOLIO TRANSACTIONS (CONTINUED)
Gross unrealized appreciation and depreciation of investments
for book and tax purposes as of December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Equity Retirement Cornerstone
Growth Bond Balanced Income Stock
----------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Appreciation $31,413,365 $251,990 $39,842,798 $12,343,073 $272,177
Depreciation 2,196,500 3,048 1,315,573 1,910,454 38,903
</TABLE>
NOTE 5. CASH
As of December 31, 1998, substantially all cash was invested in
the Monitor Money Market Fund, bearing interest at a variable rate
(approximately 4.6%).
NOTE 6. CAPITAL LOSS CARRYOVERS
For 1998, the Company utilized $41,220 of capital loss carryovers
in the Retirement Income Fund. At December 31, 1998, capital loss
carryovers and their expiration dates were as follows:
<TABLE>
<CAPTION>
Equity
Growth
--------
<S> <C>
December 31, 2006 $299,574
</TABLE>
NOTE 7. AUTHORIZED SHARES
The Fund has one billion authorized shares of common
stock, par value of $.001 per share. Each of the Fund's five
portfolios has 200 million shares authorized.
55
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
Advance Capital I, Inc.
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements
of operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of the
Equity Growth Fund, Bond Fund, Balanced Fund, Retirement Income Fund and
Cornerstone Stock Fund (constituting Advance Capital I, Inc., hereafter
referred to as the "Company") at December 31, 1998, the results of each
of their operations for the year or period then ended, the changes in
each of their net assets for the periods indicated and the financial
highlights for the four years in the period ended December 31, 1998 for
the Equity Growth Fund, Bond Fund, Balanced Fund and Retirement Income
Fund and for the period from December 17, 1998 (commencement of operations)
to December 31, 1998 for the Cornerstone Stock Fund, 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
generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
our audits, which included confirmation of securities at December
31, 1998 by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above. The financial
statements of Advance Capital I, Inc. for the year ended December
31, 1994 were audited by other independent accountants whose report
dated February 15, 1995 expressed and unqualified opinion on
those statements.
/s/ PricewaterhouseCoopers LLP
Detroit, Michigan
February 5, 1999
56
<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 24, 1998
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 17,757,394
Richard W. Holtcamp 17,651,791
Harry Kalajian 17,745,511
John C. Shoemaker 17,787,614
Frank R. Zimmerman 17,732,111
</TABLE>
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the COMPANY for the fiscal year
ending December 31,1998.
<TABLE>
<S> <C>
Votes For: 17,706,724
Votes Against: 30,183
Votes to Abstain: 130,664
</TABLE>
<PAGE>
ADVANCE CAPITAL I, INC. ADVANCE CAPITAL I INC
An investment company with five funds
INVESTMENT ADVISER:
Advance Capital Management, Inc.
One Towne Square, Suite 444
Southfield, Michigan 48076
SUB-ADVISER:
(Equity Growth and Balanced Funds) EQUITY GROWTH FUND
T. Rowe Price Associates, Inc. BOND FUND
100 East Pratt Street BALANCED FUND
Baltimore, Maryland 21202 RETIREMENT INCOME FUND
CORNERSTONE STOCK 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, Mighigan 48037
CUSTODIAN:
Huntington National Bank
220 Park Street, Suite 100
Birmingham, Michigan 48009
INDEPENDENT ACCOUNTANTS:
PricewaterhouseCoopers LLP
2050 North Woodward Avenue
Suite 200
Bloomfield Hills, MI 48304-2260
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, 1998
Joseph A. Ahern
Richard W. Holtcamp
Harry Kalajian
John C. Shoemaker
Frank R. Zimmerman
