ADVANCE CAPITAL I INC, 497, 1999-05-04

ADVANCE CAPITAL I INC
497, 1999-05-04

Previous: PRINCIPAL MUTUAL LIFE INSURANCE CO VARIABLE LIFE SEP ACCOUNT, 497, 1999-05-04

Next: SUMMIT TECHNOLOGY INC, 8-K, 1999-05-04

ADVANCE CAPITAL I, INC. FUNDS
An investment company with five funds

P.O. Box 3144
Southfield, MI 48037

PROSPECTUS

ADVANCE CAPITAL I FUNDS:

Bond Fund

Retirement Income
Fund

Balanced Fund

Cornerstone Stock
Fund

Equity Growth Fund

April 30, 1999

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES. FURTHER, IT HAS NOT DETERMINED THAT THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>
1

TABLE OF CONTENTS

INVESTMENT, RISKS AND PERFORMANCE PAGE
----
Bond Fund 1
Retirement Income Fund 4
Balanced Fund 7
Cornerstone Stock Fund 10
Equity Growth Fund 11

FEES & EXPENSES 14

NEW DEVELOPMENTS 15

MANAGEMENT, ORGANIZATION & CAPITAL STRUCTURE 15

SHAREHOLDER INFORMATION
Pricing of Fund Shares 17
How to Purchase Shares 17
How to Exchange Shares 17
How to Redeem Shares 18
Restrictions on Redemptions 18
Dividends and Distributions 19
Tax Consequences 20

FINANCIAL INFORMATION 20

GENERAL INFORMATION 23

<PAGE>

[SIDEBAR]
A WORD ABOUT RISK...

Risk is the possibility that your investment might lose
value. When assessing risk, it is important to remember
that the higher the risk of losing money, the higher the
potential reward. As you consider an investment in the
funds, you should also consider your own tolerance for
the daily fluctuations in the stock and bond markets.

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED ON THE
FOLLOWING PAGES, YOUR INVESTMENT IN THE FUNDS, AS WITH
ANY INVESTMENT, COULD LOSE MONEY!

A WORD ABOUT BONDS AND INTEREST RATES...

When interest rates rise, bond prices fall. The opposite
is also true. Bond prices go up when interest rates fall.
Why do bond prices and interest rates move in opposite
directions? Let's assume that you hold a bond offering
a 5 percent yield. A year later, interest rates are on
the rise and bonds are offered with a 6 percent yield.
With higher yielding bonds available, you would have
trouble selling your 5 percent bond for the price you paid,
causing you to lower your asking price. On the other hand,
if interest rates were falling and 4 percent bonds were
being offered, you would be able to sell your 5 percent
bond for more than you paid.
[END SIDEBAR]

RISK/RETURN SUMMARY:
INVESTMENTS, RISKS, AND PERFORMANCE
The purpose of this section is to provide you with a brief overview of
each of the funds. There is no guarantee that any of the funds will
meet its stated investment objective. Each fund's share price will
change based on changes in the market. Shares may be worth more or
less when you sell them than when you purchased them. The likelihood
of loss is greater if you invest for a shorter period of time. Mutual
fund shares are not deposits of, obligations of, or guaranteed by any
depository institution. Shares are not insured by the FDIC, Federal
Reserve, or any other agency, and are subject to investment risk,
including possible loss of the original amount invested.

THE BOND FUND
SEEKS TO PROVIDE INVESTORS WITH THE HIGHEST LEVEL OF CURRENT INCOME
WITHOUT UNDUE RISK OF PRINCIPAL.

PRINCIPAL INVESTMENT STRATEGIES
The fund strives to meet its investment objective by investing in
a broad range of fixed income investments. The portfolio manager
looks for investment grade corporate bonds, securities issued or
guaranteed by the U. S. Government and high yield, high-risk
corporate bonds commonly referred to as "junk bonds".

The fund may, from time to time, invest in high quality, short
maturity securities as a temporary defensive measure. Taking
such actions may cause the fund not to achieve its investment
objective.

SECURITY SELECTION
The average weighted maturity of the portfolio securities in the
Bond Fund will be between five and twenty-five years. The fund
may invest as much as 45 percent of the portfolio in lower rated,
high-yielding securities, rated between Ba1 and B2 by Moody's
Investors Service, or between BB+ and B by Standard and Poors.
If the quality rating criteria are met at the time of investment,
a later decline in the rating by either or both of the rating
agencies shall not be a violation of the investment policies of
the fund. In the event that a security held by the Bond Fund is
downgraded below B3 by Moody's and B- by S&P, the fund may
continue to hold such security until such time as the investment
adviser deems it advantageous to dispose of the security.

The remaining assets may be invested in preferred stocks, U.S.
Government agency securities, non-U.S. Government agency securities,
U.S. Government obligations and money market instruments. These
non-principal investments are discussed in the Statement of
Additional Information (SAI).

When choosing investments, the portfolio manager adheres to the
following policies:

1) The Bond Fund invests at least 65 percent of its total
assets in corporate or U. S. Government bonds.
2) The fund can invest as much as 45 percent of the portfolio in
"junk bonds".
3) The Fund can invest as much as 25 percent of the total
portfolio in mortgage backed securities, backed by U.S.
Government.
4) No more than 50 percent of the fund's assets will be invested
in obligations issued or guaranteed by the U.S. Government.

<PAGE>
2

5) The fund may hold unrated securities if the portfolio
manager believes that the securities are comparable in
investment quality to the rated securities. However, the
fund will hold no more than 5 percent of the portfolio in
unrated securities.
6) In addition to credit ratings, the portfolio manager also
uses credit analysis and security research when choosing bonds.

The portfolio manager looks at the following:
. present and potential liquidity
. capability to generate funds
. profitability
. adequacy of capital

When selling investments, the portfolio manager considers the
following:

1) Whether the current market price accurately reflects the
credit worthiness of the company.
2) Whether changes in the industry could have a negative
impact on the company's business or marketing opportunities.
3) Credit ratings which fall below the fund's minimum
standards.
4) The possible impact of rising or falling interest rates on
bonds in the fund.

The Bond Fund may adjust the average maturity based on the interest
rate outlook. When interest rates are expected to rise and bond prices
fall, the fund may hold bonds with a shorter average maturity. When
rates are expected to fall and bond prices rise, the fund may hold bonds
with a longer average maturity.

PRINCIPAL RISKS
LIMITED OPERATING HISTORY - The Bond Fund changed investment objectives
in February 1999. In years prior, the Bond Fund consisted mainly of
investment-grade fixed-income securities. The fund now includes high-
yield, high-risk bonds which make the fund a more risky investment.
Due to the change in objective, there is little operating or performance
history for the fund as it is now structured.

INTEREST RATE RISK - The Bond Fund is subject to potential fluctuations
in bond prices due to changing interest rates. Since bonds with
longer maturities have greater interest rate risk than do bonds with
shorter maturities, this risk is possible when investing in the Bond
Fund.

LOW CREDIT RATING - Issuers of junk bonds are not as strong
financially as those companies issuing investment grade bonds.
Investments in junk bonds are considered to be predominantly
speculative when compared to investment grade bonds. The value
of debt securities may be affected by changing credit ratings.

CREDIT RISK - Whenever the fund purchases a bond, there is the
chance that the issuer will default on its promise to pay
interest and/or principal at maturity. Credit ratings are an
attempt to assess this risk. All things being equal, the lower
a bond's credit rating, the higher the interest the bond must
pay in order to attract investors and compensate them for taking
this additional risk.

<PAGE>

CALL RISK - Junk bonds may be very sensitive to economic changes.
During times of economic uncertainty there may be an increase in
volatility of market prices and junk bonds, and, in turn, the
fund's net asset value. Junk bonds may contain redemption or
call provisions which, if called during a period of declining
interest rates, may cause the fund to replace the security with a
lower yielding security, resulting in a decreased return for
investors.

PREPAYMENT RISK - There is the risk that an investor will receive
a portion of his principal prior to the stated investment's
maturity date and have to invest such proceeds at a lower interest
rate. Mortgage backed securities are subject to prepayment risk.

LIMITED MARKET TRADING - There may be little market trading for
particular bonds, which may adversely affect the fund's ability
to value or sell the bonds.

WHO SHOULD INVEST?
The Bond Fund may be suitable for you if:
* You want to add a high-risk fixed income fund to your
current portfolio
* You have a long-term time horizon (at least 5 years)
* You are seeking current income rather than growth
* You have a high tolerance for risk and can accept
large price swings

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED IN THIS PROSPECTUS,
YOU COULD LOSE MONEY!

INVESTMENT RESULTS
The following information illustrates how the fund's results may vary
and provides some indication of the risks of investing in the Fund by
showing changes in the Fund's performance from year to year and by
showing how the Fund's average annual returns for one, five, and ten
years compare with those of a broad measure of market performance.
PAST PERFORMANCE SHOULD NOT BE USED TO ATTEMPT TO PREDICT FUTURE
PERFORMANCE.

[EDGAR REFERENCE - ADVANCE CAPITAL I, INC. BOND FUND ANNUAL RETURNS
BAR CHART FOR 1988-1998]

The fund's highest/lowest quarterly results during this time period were:
HIGHEST: + 7.3% 2ND QUARTER 1995
LOWEST: - 3.4% 1ST QUARTER 1995

<PAGE>
4
[SIDEBAR]

A WORD ABOUT PAST PERFORMANCE...

When you see information on a fund's performance, do not consider
the figures to be an indication of the performance you could expect
by making a purchase in the fund today. The past is an imperfect
guide to the future and you should not expect future performance
to be predicted by past performance.

[END SIDEBAR]

PERFORMANCE SUMMARY
-------------------
AVERAGE ANNUAL RETURNS
FOR YEARS ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- -----------------------------------------------------------------
<S> <C> <C> <C>
Bond Fund 8.1% 6.8% 8.7%
Lehman Brothers Long Treasury Index 13.5% 9.5% 11.6%
Lipper Intermediate Bond Index 7.9% 6.3% 7.8%
- -----------------------------------------------------------------
</TABLE>
LEHMAN BROTHERS LONG TREASURY BOND INDEX - measures the total return
on all U.S. Treasury Bonds with maturities of ten years or longer.

LIPPER INTERMEDIATE BOND INDEX - is made up of the 30 largest mutual
funds that hold at least 65 percent of the total fund assets in
investment grade bonds with a dollar weighted average maturity
between 5 and 10 years.

THE RETIREMENT INCOME FUND
SEEKS TO PROVIDE INVESTORS WITH A HIGH LEVEL OF INCOME

PRINCIPAL INVESTMENT STRATEGIES
The portfolio manager strives to meet the fund's investment
objective by investing as much as 33 percent of the fund in fixed
income securities which carry a quality rating below investment
grade as given by the major rating agencies such as Standard &
Poor's Ratings Service and Moody's Investors Service, Inc. These
low rated securities are commonly referred to as high yield, high-risk
bonds or "junk bonds".

The Fund may, from time to time, invest in high quality, short maturity
securities as a temporary defensive measure. Taking such actions may
cause the fund not to achieve its investment objectives.

SECURITY SELECTION
The Retirement Income Fund invests at least 65 percent of its total
assets in corporate or U.S. Government bonds. The remaining assets
may be invested in preferred stocks, U.S. Government agency securities,
U.S. Government obligations, and money market instruments. These non-
principal investments are discussed in the SAI.

When choosing investments, the portfolio manager adheres to the
following policies:

1) The fund may invest up to 33 percent of assets in
lower rated, higher yielding securities, rated
between Ba1 and B2 by Moody's or between BB+ and B
by S&P at the time of purchase. If the rating falls
after purchase, the fund may still hold the security.
At no time will the fund hold bonds rated below B- by
S&P and B3 by Moody's. If a bond's credit rating falls
below these minimum ratings, there is a risk that the
portfolio manager will be forced to sell the bonds at
an unfavorable price.

<PAGE>

2) No more than 50 percent of the fund's assets will be
invested in obligations issued or guaranteed by the
U.S. Government.
3) At least 50 percent of assets will be invested in the
following securities:
* obligations of, or guaranteed by the U.S. Government
or its agencies
* corporate debt or preferred stocks rated Baa3 or
higher by Moody's, or BBB- or higher by S&P
4) The fund may hold unrated securities if the portfolio
manager believes that the securities are comparable in
investment quality to the rated securities. However, the
fund will hold no more than 5 percent of the portfolio
in unrated securities.
5) The portfolio manager uses credit analysis and security
research in addition to credit ratings when choosing bonds.

The portfolio manager takes into consideration such
factors as the following:
. present and potential liquidity
. capability to generate funds
. profitability
. adequacy of capital

When selling investments, the portfolio manager considers the
following:

1) Whether the current market price accurately reflects the
credit worthiness of the company.
2) Whether changes in the industry could have a negative
impact on the company's business or marketing opportunities.
3) Credit ratings which fall below the Fund's minimum standards.
4) The possible impact of rising or falling interest rates on
bonds in the Fund.

The Fund may adjust the average maturity based on the interest rate
outlook. When interest rates are expected to rise and bond prices
fall, the fund may hold bonds with a shorter average maturity. When
rates are expected to fall and bond prices rise, the fund may hold
bonds with a longer average maturity.

The Investment Adviser may adjust the quality of bonds held based
on current economic conditions. Any adjustment in the maturity or
quality of the holdings may cause an increase in portfolio turnover
resulting in an increase in expenses. The fund's policies regarding
lower rated debt securities can be changed at any time without
shareholder approval.

PRINCIPAL RISKS
INTEREST RATE RISK - The Retirement Income Fund is subject to
potential fluctuations in bond prices due to changing interest
rates. Bonds with longer maturities have greater interest rate
risk than do bonds with shorter maturitites.

LOW CREDIT RATING - Issuers of junk bonds are not be as
strong financially as those companies issuing investment grade
bonds. Investments in junk bonds are considered to be predominantly
speculative when compared to investment grade bonds. The value of
debt securities may be affected by changing credit ratings.

<PAGE>
6

CALL RISK - High-yield, high-risk bonds may be very sensitive to
economic changes. During times of economic uncertainty there may be
an increase in volatility of market prices and yields of high-yield,
high-risk bonds, and in turn, the fund's net asset value. High-yield,
high risk bonds may contain redemption or call provisions which, if
called during a period of declining interest rates, may cause the fund
to replace the security with a lower yielding security, resulting in
a decreased return for investors.

LIMITED MARKET TRADING - There may be little market trading for
particular bonds, which may affect the fund's ability to value or
sell the bonds.

[SIDEBAR]
A WORD ABOUT PORTFOLIO DIVERSIFICATION...

Portfolio Diversification is the process of buying securities that
are different from each other. In general, the more diversified a
fund's portfolio of securities, the less likely that a specific
security's poor performance will hurt the fund. Each of the
Advance Capital I funds is diversified.

[END SIDEBAR]

WHO SHOULD INVEST?
The RETIREMENT INCOME FUND may be suitable for you if:
* You want to add a high risk fixed income fund to your
current portfolio
* You have a long time horizon (at least five years)
* You are seeking current income rather than growth
* You have a high risk tolerance and can accept large
price swings

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED IN THIS PROSPECTUS,
YOU COULD LOSE MONEY!

INVESTMENT RESULTS
The following information illustrates how the fund's results may vary
and provides some indication of the risks of investing in the fund by
showing changes in the fund's performance from year to year and by
showing how the fund's average annual returns for one and five years
and the life of the fund compare with those of a broad measure of
market performance. PAST PERFORMANCE SHOULD NOT BE USED TO ATTEMPT
TO PREDICT FUTURE PERFORMANCE.

[EDGAR REFERENCE - ADVANCE CAPITAL I, INC. RETIREMENT INCOME FUND
ANNUAL RETURNS BAR CHART FOR 1993-1998]

<PAGE>
7

The fund's highest/lowest quarterly results during this time period were:
HIGHTEST: + 8.6% 2ND QUARTER 1995
LOWEST: - 3.2% 1ST QUARTER 1994

Retirement Income Fund 6.2% 7.7% 8.6%
Lehman Brothers Long
Treasury Index 13.5% 9.5% 10.8%
Lipper BBB Index 6.0% 6.9% 7.8%

- -----------------------------------------------------------------
</TABLE>
LEHMAN BROTHERS LONG TREASURY INDEX - measures the total return on
all U.S. Treasury Bonds with maturities of ten years or longer.

LIPPER BBB INDEX - is made up of the 30 largest mutual funds that
hold at least 65 percent of the total fund assets in corporate or
government bonds with credit ratings in the top four grades.

THE BALANCED FUND
SEEKS TO PROVIDE CAPITAL GROWTH, CURRENT INCOME AND PRESERVE CAPITAL THROUGH
A PORTFOLIO OF STOCKS AND FIXED INCOME SECURITIES.

PRINCIPAL INVESTMENT STRATEGIES
The fund strives to reach its investment objective by investing in a
mixed portfolio of stocks and bonds. Normally, the fund is comprised
of approximately 60 percent of total assets in common stocks and 40
percent in fixed income securities. The fund may hold a limited amount
of cash to be used for redemptions.

SECURITY SELECTION
The Balanced Fund seeks to provide investors with capital
appreciation, current income and preservation of capital by investing
in a mix of stocks and bonds. Equity securities will not represent
less than 25 percent of the portfolio. Fixed income securities
may represent as much as 75 percent, but not less than 25 percent.

The Investment Adviser invests in common stocks of large, established
companies as well as small to mid-size companies that are considered
to have good growth potential. Small companies are considered to
have market capitalization less than $5 billion. Medium-sized
companies are considered to have market capitalization between $5 and
$10 billion. Bond and fixed income investments include U.S. Government
and agency securities, investment grade securities (rated Baa3 or better
by Moody's or BBB- or better by S&P) and other debt securities. If a
security is downgraded, the fund may hold the security until such time
as the Investment Advisor believes it should be sold.

The Balanced Fund primarily invests in common stocks and investment
grade bonds. Although not principal to the funds objective, the fund
may also invest in

<PAGE>
8

other securities including foreign securities, preferred stocks,
obligations issued or guaranteed by the U.S. Government, stock
index futures, money market instruments, repurchse agreements,
options, and convertible debt securities.

When considering whether or not to sell investments, the portfolio
manager considers the following:

1) The potential impact of management changes, strategic
marketing opportunities and competition on both the large
cap value and small cap growth stocks in the Fund.
2) Whether a securities price is overvalued compared to future
earnings growth
3) The likely impact of rising or falling interest rates on
bonds in the Fund
4) Whether there have been any other fundamental changes in the
current or prospective financial structure or operations of
the company

PRINCIPAL RISKS
PRICE VOLATILITY - The return from the stock portion of the portfolio
will rise and fall with changes in the broad market, a particular
industry, as well as changes in the individual investments. The
market as a whole can decline for many reasons, including adverse
political or economic developments here or abroad, changes in investor
psychology, or heavy institutional selling. Bond prices will fluctuate
as interest rates and credit ratings change. Share prices of all
companies, even the best managed and most profitable, can fall for any
number of reasons. Some reasons include:

* lower than expected earnings
* increase in interest rates
* overall economic condition
* investor perception

MARKET RISK - The share price of the fund will fluctuate with changing
market conditions. Any investment in the fund may be worth more or less
when redeemed than when purchased. The Balanced fund should not be relied
upon for short-term financial needs.

OBJECTIVE RISK - There is always the chance that returns from the type
of stock selected for a particular fund will trail the returns of the
stock market in general.

STOCKS VS. BONDS - Balanced funds are considered "middle-of-the-road"
investments. Because stocks and bonds can move in different directions,
balanced funds attempt to use the rewards from one type of investment
to offset the risks of another. While the securities in the portfolio
tend to "balance" each other out, investors still face the risk of
losing money when investing. The fund's bond holdings help to lessen
some of the volatility that the stocks create. Although investors
think bonds are less risky than stocks, there have been times when
bond values have fallen due to rising interest rates. A balanced
fund may not be as greatly affected by interest rate changes as a fund
that is made up entirely of bonds. Also, the fund's balance between
stocks and bonds could limit its potential for capital growth compared
to an all-stock fund.

<PAGE>
9

WHO SHOULD INVEST?
The BALANCED FUND may be suitable for you if:
* You want to add a balanced fund to your existing portfolio
* You are looking for a moderate level of growth and a moderate
level of income
* You have a long-term time horizon (at least 5 years)
* You can tolerate the ups and down of movement in the stock
and bond markets

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED IN THIS PROSPECTUS, YOU
COULD LOSE MONEY!

INVESTMENT RESULTS
The following information illustrates how the fund's results may vary
and provides some indication of the risks of investing in the fund by
showing changes in the fund's performance from year to year and by
showing how the fund's average annual returns for one, five and ten
years compare with those of a broad measure of market performance.
PAST PERFORMANCE SHOULD NOT BE USED TO ATTEMPT TO PREDICT FUTURE
PERFORMANCE.

[EDGAR REFERENCE - ADVANCE CAPITAL I, INC. BALANCED FUND ANNUAL RETURNS
BAR CHART FOR 1988-1998]

The fund's highest/lowest quarterly results during this time period were:
HIGHEST: + 10.9% 2ND QUARTER 1987
LOWEST: - 12.0% 3RD QUARTER 1990

PERFORMANCE SUMMARY
-------------------
AVERAGE ANNUAL RETURNS
FOR YEARS ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
- -----------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund 13.1% 14.8% 11.6%
Lehman Brothers Long Treasury Index 13.5% 9.5% 11.6%
S&P 400 Mid Cap Index 19.1% 18.8% 16.8%
Lipper Balanced Index 15.1% 13.1% 13.3%
- -----------------------------------------------------------------
</TABLE>

<PAGE>

LEHMAN BROTHERS LONG TREASURY INDEX - measures the total return on
all U.S. Treasury Bonds with maturities of ten years or longer.

S&P 400 MID CAP INDEX - measures the performance of the mid-range
section of the U.S. stock market weighted by capitalization.

LIPPER BALANCED INDEX - consists of the 30 largest mutual funds whose
primary investment objective is to conserve principal by maintaining,
at all times, a balanced portfolio of stocks and bonds.

THE CORNERSTONE STOCK FUND
SEEKS TO PROVIDE INVESTORS WITH LONG-TERM GROWTH OF CAPITAL

PRINCIPAL INVESTMENT STRATEGIES
The fund strives to meet its objective by investing in the common
stocks of large, well established companies. The portfolio manager
looks for companies that have established product lines, solid
management and substantial financial resources. While some companies
may pay a dividend, current income (dividends) is not an objective
of the fund. Any income that you earn in this fund should be considered
incidental.

SECURITY SELECTION
The Cornerstone Stock Fund seeks to provide investors with long-term
growth of capital by investing in large, established companies. In
general, the companies will be over $10 billion in market capitalization
at the time of purchase.

The Cornerstone Stock Fund invests at least 70 percent of its assets
in common stock, not including stock index futures and options.
Although not principal to the Fund's objective, the Fund may also invest
in other securities including preferred stocks, obligations issued or
guaranteed by the U.S. Government, stock index futures, money market
instruments, repurchase agreements, convertible debt securities, and
options.

When considering whether or not to sell investments, the portfolio
manager considers the following:

1) If a company's market capitalization falls significantly
and fails to meet the minimum objectives of a large growth
stock
2) Whether a securities price is overvalued compared to future
earnings growth
3) Potential industry consolidations or pressures which may
negatively impact a company's value
4) Whether there have been any other fundamental changes in the
current or prospective financial structure or operations of
the company

PRINCIPAL RISKS
LIMITED OPERATING HISTORY - The Cornerstone Stock Fund opened in
December, 1998. Therefore, there is little operating or performance
information available for this fund.

PRICE VOLATILITY - Share prices of all companies, even the best managed
and most profitable, can fall for any number of reasons. Some reasons
include:

<PAGE>

11
* lower than expected earnings
* increase in interest rates
* overall economic condition
* investor perception

RISK VS. REWARD - Larger companies tend to be more stable than smaller
companies. In addition, they have established product lines, plenty of
financial resources, and a market for their stocks that is very liquid.
This means that there are a lot of investors who are constantly buying
and selling their stocks. It is generally accepted, however, that the
lower the risk of a stock, the lower your potential reward. In addition,
as with any stock, you face the risk of losing money.

MARKET RISK - The share price of the fund will fluctuate with
changing market conditions. Any investment in the fund may be
worth more or less when redeemed than when purchased. The
Cornerstone Stock Fund should not be relied upon for short-term
financial needs.

OBJECTIVE RISK - There is always the chance that returns from the
type of stock selected for a particular fund will trail the returns
of the stock market in general.

WHO SHOULD INVEST?
The CORNERSTONE STOCK FUND may be suitable for you if:
* You want to add a growth fund to your existing portfolio
* You have a long-term time horizon (at least 5 years)
* You want to invest for the growth potential in the stocks
of large companies
* You do not need dividend income
* You can tolerate fluctuations in share price

The Cornerstone Stock Fund opened in December, 1998. There is little
operating or performance information currently available for this fund.

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED IN THIS PROSPECTUS, YOU
COULD LOSE MONEY!

THE EQUITY GROWTH FUND
SEEKS TO PROVIDE INVESTORS WITH LONG-TERM GROWTH OF CAPITAL BY
INVESTING PRIMARILY IN STOCKS OF SMALL AND MID-SIZED COMPANIES

PRINCIPAL INVESTMENT STRATEGIES
The fund strives to reach its investment objective by investing
primarily in a diversified group of small and medium-sized growth
companies. Small companies are considered to have market
capitalization less than $5 billion. Medium-sized companies are
considered to have market capitalization between $5 and $10 billion.
The portfolio manager looks for companies that are early
in their development, have new management, new products, or recent
structural changes. You may never have heard of many of these
companies. They usually do not pay dividends. Instead, they
reinvest all profits back into the business to help it grow. Any
income earned in this fund should be considered incidental.

<PAGE>
12

SECURITY SELECTION
The Equity Growth Fund seeks long-term growth of capital by investing in
small and mid-sized growth companies. When picking stocks, the
portfolio manager uses a combination of quantitative models and
fundamental research to select companies with the following
characteristics:
* companies that are just starting out but are expected to grow
revenues, earnings and cash flow over time
* companies that have gone unnoticed by the investment community
* companies with capable management, new products, or recent
structural changes

The Equity Growth Fund invests at least 65 percent of its total assets
in common stocks of small and medium-sized growth companies, NOT INCLUDING
stock index futures and options. The Equity Growth Fund invests
primarily in common stocks. Although not principal to the Fund's objectives,
the Fund may also invest in other securities if they offer better returns
with less risk than common stocks alone. These securities include:
foreign securities, preferred stocks, obligations issued and guaranteed
by the U.S. Government, stock index futures, money market instruments,
repurchase agreements, convertible debt securities, and options.

When considering whether or not to sell investments, the portfolio
manager considers the following:

1) The potential impact of management changes, strategic
marketing opportunities and competition on the long-term
growth prospects for the company
2) Whether a securities price is overvalued compared to
future earnings growth.
3) How changes in the economy will impact the value of a
company's stock
4) Whether there have been any other fundamental changes in
the current or prospective financial structure or
operations of the company

RELATED RISKS
MARKET RISK - There is always the possibility that stock prices
overall will decline over short or extended periods. Stock markets
tend to move in cycles, with periods of rising stock prices and
periods of falling stock prices. Any investment in the fund may
be worth more or less when redeemed than when purchased. The
Equity Growth fund should not be relied upon for short-term
financial needs.

OBJECTIVE RISK - There is always the chance that returns from
the type of stock selected for a particular fund will trail the
returns of the stock market in general.

SMALL VERSUS MID SIZED COMPANIES - Although companies in the Equity
Growth Fund may offer greater opportunity for growth than larger,
more established companies, investments in small companies involve
greater risks. Small and mid-sized companies may lack depth of
management, they may be unable to generate funds necessary for
growth or potential development or they may be developing or
marketing new products or services for which markets are not yet
established and may never become established. Small and mid-sized
companies tend to trade less frequently and be more sensitive to
market changes than the

<PAGE>
13

market in general. In addition, these companies may be so small
within their respective industries that they may become subject to
intense competition from larger or more established companies.
Finally, smaller growth stocks can have steep price declines if their
earnings disappoint investors. Since the fund will be significantly
invested in this market sector, investors will be exposed to its
volatility.

RISK VS. RETURN - History indicates that small and mid-size company
stocks provide higher returns than those of larger companies, but
they also have greater risk. In comparison to larger, more
established companies, smaller companies tend to:
* Suffer more significant losses
* Be more volatile and somewhat more speculative
* Trade less often
* Offer fewer product lines and have fewer financial resources

WHO SHOULD INVEST?
The EQUITY GROWTH FUND may be suitable for you if:
* You want to add a growth fund to your existing portfolio
* You have a long-term time horizon (at least 5 years)
* You want to focus on smaller-company stocks
* You do not need, or are not concerned with, dividend income
* You have a high tolerance for risk and can handle large
price swings

BECAUSE OF THE SEVERAL TYPES OF RISK DESCRIBED IN THIS PROSPECTUS,
YOU COULD LOSE MONEY!

INVESTMENT RESULTS
The following information illustrates how the fund's results may vary
and provides some indication of the risks of investing in the fund
by showing changes in the fund's performance from year to year and by
showing how the fund's average annual returns for one, five and ten
years compare with those of a broad measure of market performance.
PAST PERFORMANCE SHOULD NOT BE USED TO ATTEMPT TO PREDICT FUTURE
PERFORMANCE.

[EDGAR REFERENCE - ADVANCE CAPITAL I, INC. EQUITY GROWTH FUND ANNUAL
RETURNS BAR CHART FOR 1988-1998]

The fund's highest/lowest quarterly results during this time were:
HIGHEST: + 28.9% 4TH QUARTER 1998
LOWEST: - 19.7% 3RD QUARTER 1990

<PAGE>

14
[SIDEBAR]
A WORD ABOUT FEES AND EXPENSES?

Fees and expenses are an important consideration when choosing a
mutual fund. That's because you, as a shareholder, pay the costs
of operating the fund plus any transaction cost incurred when buying,
selling, or exchanging shares. These costs can reduce the fund's
return. Even small differences in fund expenses can have a dramatic
impact over time. The funds' OPERATING EXPENSES are:

MANAGEMENT FEES - The percent of fund assets paid to the fund's
investment manager.

DISTRIBUTION FEES - An annual charge ("12b-1") to existing shareholders
to cover the cost of selling shares to new shareholders.

OTHER EXPENSES - Expenses for servicing of shareholder accounts,
including costs for such services as:
* providing statements and reports
* disbursing dividends
* maintaining accounts
* custodial fees
* auditor fees
* providing various other services.

These expenses, which are deducted from a fund's gross income, are
expressed as a percentage of the net assets of the fund. Expenses
vary among the funds for a variety of reasons, including fund size,
differences in management fees, frequency of dividend payments, and
average account size.

[END SIDEBAR]

PERFORMANCE SUMMARY
-------------------
AVERAGE ANNUAL RETURNS
FOR YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS LIFE OF FUND
(SINCE 8-5-1987)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Equity Growth Fund 16.2% 16.3% N/A 16.3% *
S&P 400 Mid Cap Index 19.1% 18.8% N/A 18.8% *
* Denotes 5-Year Performance
- --------------------------------------------------------------------------------
</TABLE>
S&P 400 MID CAP INDEX - a capitalization weighted index intended to represent
the performance of a mid-range sector of the U.S. stock market.

FEES & EXPENSES
All Advance Capital Funds are 100 percent no-load funds. This
means you may purchase and sell shares in any of these mutual funds
without incurring any sales charges. All the money that you invest
in the fund(s) goes to work for you. The table below shows that you
pay no such fees. In addition, the following table describes the
annual fees and expenses that you pay if you buy and hold shares of
the funds.

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES (FEES PAID DIRECTLY
FROM YOUR INVESTMENT)
- ------------------------------------------------------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES NONE
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED
DIVIDEND NONE
REDEMPTION FEE NONE
EXCHANGE FEE NONE
- -------------------------------------------------------------
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MGMT DISTRIBUTION OTHER TOTAL ANNUAL FUND
FEES (12B-1) FEES EXPENSES OPERATING EXPENSES
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond .40% .25% .12% .77%
Retirement Income .50% .25% .04% .79%
Balanced .70% * .25% .06% 1.01%
Cornerstone Stock .40% .25% .01% .66%
Equity Growth .70% * .25% .07% 1.02%
- --------------------------------------------------------------------------------
</TABLE>

* T. Rowe Price is paid .2% on average daily assets up to 100 million
dollars and .15% on average daily assets over 100 million dollars of the
common stock portion of the Balanced Fund and the Equity Growth Fund.

<PAGE>

EXAMPLE
This example is intended to help you compare the cost of investing
in the Advance Capital Funds with the cost of investing in other
mutual funds. This example assumes that you invest $10,000 in the
fund for the time periods indicated and then redeem all of your
shares at the end of those periods. The example also assumes that
your investment has a 5 percent return each year and that the fund's
operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond $ 79 $246 $428 $954
Retirement Income $ 81 $252 $436 $967
Balanced $103 $322 $558 $1,236
Cornerstone Stock $103 $322 N/A N/A
Equity Growth $104 $325 $563 $1,248
- ---------------------------------------------------------------------------
</TABLE>

THE AMOUNTS SHOWN IN THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. THE ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.

PLAN OF DISTRIBUTION
The fund has a Plan of Distribution or "12b-1 Plan" under which it
may finance activities primarily intended to sell shares. Because
these fees are paid out of the fund's assets on an ongoing basis,
over time, these fees will increase the cost of your investment and
may cost you more than other types of sales charges.

NEW DEVELOPMENTS
YEAR 2000
The date-related computer issue known as the "Year 2000" problem
(Y2K) could have an adverse impact on the quality of services
provided to the funds and its shareholders. When evaluating
current and potential portfolio positions, Year 2000 is one of
the factors the fund's manager considers.

The manager will rely upon public filings and other statements
made by companies about their Year 2000 readiness. The manager,
of course, cannot audit any company and its major suppliers to
verify their Year 2000 readiness, however, the funds understand
that its key service providers --including the investment adviser
and its affiliates --are taking steps to address the issue.

If a company in which the funds are invested is adversely affected
by Year 2000 problems, it is likely that the price of its security
will also be adversely affected. A decrease in the value of one or
more of the funds' portfolio holdings will have a similar impact on
the price of the funds' shares. The fund and its investment adviser
will continue to monitor developments relating to this issue.

MANAGEMENT, ORGANIZATION, & CAPITAL STRUCTURE
INVESTMENT ADVISER
Advance Capital Management, Inc. began serving as Investment Adviser
to Advance Capital I, Inc. in 1987 and currently serves as Investment
Adviser to all of the Advance Capital I, Inc. Funds. Advance Capital
Management, Inc., One Towne

<PAGE>

Square, Suite 444, Southfield, MI 48076, is the Investment Adviser
to each of the funds and is responsible for the day-to-day management
of the investment portfolios and other business affairs. Advance
Capital Management, Inc., conducts investment research, offers advice
and recommendations concerning each fund's investments, and supplies
certain administrative, compliance, and accounting services to the
funds.

SUB-ADVISER
T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 East Pratt
Street, Baltimore, MD 21202, serves as the Investment Adviser for
the common stock portion of the Equity Growth and Balanced Funds.
T. Rowe Price is one of the largest no-load mutual fund managers
in the nation.

MANAGEMENT PERSONNEL
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PORTFOLIO FUNDS MANAGED -
MANAGER BEGINNING DATE
- ---------------------------------------------------------
<S> <C>
John C. Shoemaker Bond-1987
Advance Capital Management, Inc. Retirement Income-1993
President Cornerstone Stock-1998
Balanced-1987
Equity Growth-1987
- ---------------------------------------------------------
Robert J. Cappelli Bond-1987
Advance Capital Mangement, Inc. Retirement Income-1993
Vice-President Cornerstone Stock-1998
Balanced Fund-1987
- ---------------------------------------------------------
Christopher M. Kostiz Bond-1998
Advance Capital Management, Inc. Retirement Income-1998
Portfolio Manager Cornerstone Stock-1998
Balanced (Bonds)-1998
Retirement Income Fund-1998
- ---------------------------------------------------------
Richard T. Whitney Equity Growth-1994
T. Rowe Price Balanced (Stocks)-1994
Managing Director
- ---------------------------------------------------------
Donald J. Peters Equity Growth-1994
T. Rowe Price Balanced (Stocks)-1994
Vice-President
- ---------------------------------------------------------
Kristen F. Culp Equity Growth-1994
T. Rowe Price Balanced (Stocks)-1994
Vice President
- ---------------------------------------------------------
</TABLE>
Each of the funds has multiple investment advisers ("Adviser Group")
who are jointly and primarily responsible for the day-to-day
management of the Funds portfolios. The Funds investments are
managed by these Adviser Goup(s).

<PAGE>
17

SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
The fund's share price, also called its net asset value, or NAV, is
calculated each business day that the New York Stock Exchange is open,
after the close of trading (generally 4 p.m. Eastern time). The NAV
is not calculated on days when the New York Stock Exchange is closed.

The net asset value is calculated by totaling the assets of the fund,
subtracting all of its liabilities, or debts, and then dividing by the
total number of fund shares outstanding. In calculating the value of
total assets, securities are valued at market price.

Total Assets - Liabilities
----------------------------
Net Asset Value = Number of Shares Outstanding

The daily net asset value is useful to you as a shareholder
because the NAV, when multiplied by the number of shares you own,
gives you the dollar amount you would have received had you sold all
of your shares back to the fund THAT DAY.

HOW TO PURCHASE SHARES
You may purchase shares in any of the funds by completing an
Application to Purchase Shares. Mail the application and a
check payable to Advance Capital I, Inc. to:

BY REGUALR MAIL: BY OVERNIGHT MAIL:
------------------------ -------------------------
Advance Capital Group, Inc. Advance Capital Group, Inc.
P.O. Box 3144 One Towne Square, Ste 444
Southfield, MI 48037 Southfield, MI 48076

All purchases must be made in U.S. dollars, and checks must be drawn on
U.S. banks. If you are making a purchase into a retirement account,
please indicate whether the purchase is a rollover or a current or
prior year contribution. Your order will be processed at the next
NAV calculated after your order is received.

When making subsequent purchases, you only need to mail a check noting
your account number and the amount of money to be invested into each
fund.

The minimum initial investment in all of the funds is $10,000 (or
$2,000 for IRA accounts). This investment may be distributed in any of
the funds as long as a $1,000 minimum investment is maintained in each
fund selected.

HOW TO EXCHANGE SHARES
An exchange is the selling of shares of one Advance Capital Fund to
purchase shares of another Advance Capital Fund. Such a transaction
may produce a taxable gain or loss in a non-tax deferred account.
You may exchange shares in writing or by telephone (see "Telephone
Requests"). Advance Capital reserves the right to change these
exchange procedures or required authorizations in the future. You
will be given at least 60 days notice before any changes become
effective.

<PAGE>

18
[SIDEBAR]

A WORD ABOUT SIGNATURE GUARANTEES...

A signature guarantee is a measure designed to protect you from
fraud by assuring that your signature is genuine. The following
financial institutions may guarantee signatures: banks, savings
and loan associations, trust companies, credit unions, and members
of the New York Stock Exchange ("NYSE"). Call your financial
institution to see if they can guarantee your signature. Please
note that a signature guarantee is NOT the same as having your
signature notarized by a Notary Public and the two are not
interchangeable.

[END SIDEBAR]

HOW TO REDEEM SHARES
On any business day, you may redeem all or a portion of your shares.
Your order will be processed at the next NAV calculated after your
order is received. Normally, a check for the proceeds from a sale
is mailed within one business day, but in no event, more than seven
days. Redemptions are either made by written instruction or by
telephone.

WRITTEN REQUESTS
In order to redeem all or part of your shares from an IRA account,
you must complete an IRA Distribution Form.

If you are selling shares from a non-IRA account for amounts over
$25,000, you must submit a letter of instruction which has been
SIGNATURE GUARANTEED. The letter must state your name, account
number, the name of the fund and the dollar or share amount you
wish to redeem.

In addition, if you would like a check mailed to an address other
than the address of record, the request must be signature guaranteed.
This applies to both IRA and non-IRA accounts.

TELEPHONE REQUESTS
If you wish to redeem less than $25,000 from a non-IRA account,
you may redeem the shares by telephone as long as you authorized
"Telephone Redemption Service" on your initial Application to
Purchase Shares. You may redeem shares by calling (248) 350-8543
or (800) 345-4783 any business day between the hours 8:00 AM and
4:00 PM, Eastern time. If you authorize Telephone Redemption
Service, you authorize Advance Capital Group to:

1) Take instruction from any person by telephone to redeem or
sell shares from your account
2) Take written instruction to redeem an amount of $25,000 or
less regardless of whether or not the request was signature
guaranteed
3) Take instruction from any person by telephone to change your
address
4) Take written instruction to change your address regardless
of whether or not the request was signature guaranteed

The Funds and Advance Capital Group will take reasonable precautions to
ensure that any requests made are legitimate. For example, the Funds
and Advance Capital Group will ask for certain personal forms of
identification. If such reasonble precautions are taken, the Fund
and Advance Capital Group will not be held responsible for any losses
resulting from unauthorized transactons. You will receive a statement
each time a telephone exchange is made to confirm that instructions
communicated by telephone are genuine.

RESTRICTIONS ON REDEMPTIONS
FEES:
- -----
Advance Capital charges a $50 fee for a 100 percent redemption of an
IRA account. The fee will automatically be taken from the proceeds
of the sale. There is no fee to terminate a non-IRA account.

<PAGE>
19
[SIDEBAR]

A WORD ABOUT CASH RESERVES...

Holding "cash" does not mean that the fund literally holds a stack of
currency. Rather, cash reserves refer to short-term, interest-bearing
securities that can easily and quickly be converted to cash. Most
mutual funds keep a small percentage of assets in cash to accomodate
shareholder redemptions.

While some funds strive to keep cash levels at a minimum and to always
remain fully invested in stocks, others allow the investment advisers
to hold up to 20 percent of a fund's assets in cash reserves.

A WORD ABOUT "MARKET TIMING"...

Market timing is the switching of money into investments when you
expect prices to rise, and taking money out when you expect them to
fall. As money is shifted in and out, a fund incurs expenses for
buying and selling of the securities. These costs are borne by all
fund shareholders, including the long-term investors who did not
generate the costs. Advance Capital discourages short-term trading
by closely monitoring daily transactions of its shareholders.

[END SIDEBAR]

REDEMPTION IN KIND:
- -------------------
Each fund is obligated to redeem shares in cash up to $250,000 or
1 percent of the fund's NAV, whichever is less, for any shareholder
within the 90 day period. A redemption above this amount will also
be made in cash unless the Board of Directors determines that
additional cash withdrawals will have a material adverse effect on
the remaining shareholders. If this is the case, the fund will pay
all or a portion of the remainder of the distribution in liquid or
readily marketable portfolio instruments that the Board of Directors
deem fair and reasonable.

Redemption in kind is not as liquid or marketable as cash. If
redemption is made in kind, shareholders may need to sell the
securities for less than their value at the time of redemption
and may incur fees associated with this sale.

REDEMPTION BEFORE CHECKS CLEAR:
- -------------------------------
When you purchase shares by check, payment of the proceeds may be
delayed until the check clears the bank. Up to 15 calendar days
may be allowed from the purchase date for a check to clear.

ACCOUNTS WITH LOW BALANCES:
- ---------------------------
Due to the high cost of maintaining accounts with low balances,
your shares may be sold if the total of your combined account
balances in all funds falls below $10,000 ($2,000 for IRA accounts).
Advance Capital could sell shares of a specific fund if that one
fund falls below the $1,000 minimum. Shares will not be sold if
the total account balance for all funds falls below $10,000 ($2,000
for IRA accounts) because of changes in the net asset values of the
funds. Before your shares are sold, you will be notified in writing
and will be allowed 30 days to purchase additional shares to meet
the minimum balance.

DIVIDENDS AND DISTRIBUTIONS
As a shareholder, you are entitled to your share of the fund's
income from interest and dividends, and gains from the sale of
investments. You receive earnings as either an income dividend or
capital gains distribution. Income dividends come from the interest
the fund earns from its money market and bond investments as well
as dividends it receives from stock investments. Capital gains
are realized whenever the fund sells securities for a higher price
than it paid for them.

DISTRIBUTION OPTIONS
You can receive distributions in a number of ways:
<TABLE>
<CAPTION>
<S> <C>
Reinvestment Dividends and capital gains are
automatically reinvested in additional
shares of the fund unless you request a
different distribution method.

Dividends in Cash Dividends are paid by check and mailed to
your address of record, and capital gains are
reinvested in additional shares of the fund.

Capital Gains in Cash Capital gains distributions are paid by check
and mailed to your address of record, and
dividends are reinvested in additional
shares of the fund.

<PAGE>

Dividends and Capital Gains Both dividends and capital gains
In Cash distributions are paid by check and mailed
to your address of record.

[SIDEBAR]

A WORD ABOUT "BUYING A DIVIDEND"...

"Buying a Dividend" is the practice of purchasing shares of a fund
shortly before it makes a distribution. The payment of a cash
dividend decreases a mutual fund's net asset value, thereby returning
shares to you as a taxable distribution.

As an example: If, on December 15th, you invest $5,000 for 250 shares
of a Fund at $20 per share and the Fund pays a distribution of $1 per
share on December 16th, its share price would drop to $19 (ignoring
market changes). You would still have only $5,000 (250 shares times
$19=$4,750 in share value, plus $250 in distributions), but you would
owe tax on the $250 distribution you received (even if you had reinvested
it in more shares). To avoid "buying a dividend" check a fund's
distribution schedule before you invest.

A WORD ABOUT INVESTING FOR THE LONG TERM...

Each fund is intended to be a long-term investment vehicle;
none is designed to provide investors with a means of speculating
on short-term fluctuations in the market.

[END SIDEBAR]

</TABLE>
- -----------------------------------------------------------------------
DISTRIBUTION SCHEDULE
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND DIVIDENDS PAID CAPITAL GAINS PAID
- -----------------------------------------------------------------------
<S> <C> <C>
Bond Fund Declared daily, paid monthly Declared annually, paid in December
Retirement Income Fund Declared daily, paid monthly Declared annually, paid in December
Balanced Fund Declared daily, paid monthly Declared annually, paid in December
Cornerstone Stock Fund Declared annually, paid in December Declared annually, paid in December
Equity Growth Fund Declared annually, paid in December Declared annually, paid in December
_______________________________________________________________________
</TABLE>

Dividends are not declared on Saturdays, Sundays, or holidays.
Dividends are declared just prior to determining net asset value.
Dividends declared on Fridays and on days preceding holidays are
larger to adjust for the fund's income for the following Saturday,
Sunday, or holiday.

TAX CONSEQUENCES
As with any investment, you should consider the tax consequences of
investing in the funds. The following discussion does not apply to
tax-deferred accounts, nor is it a complete analysis of the federal
tax implications of investing in the funds. You may wish to consult
your own tax adviser. Additionally, state or local taxes may apply
to your investment, depending upon the laws where you live.

To avoid taxation, the Internal Revenue Code requires each fund to
distribute net income and any net capital gains realized on its
investments. Shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether
the dividends are paid in cash or reinvested in additional shares.

The dividends and short-term capital gains that you receive are
taxable to you as ordinary dividend income. Any distributions of net
long-term capital gains by the fund are taxable to you as long-term
capital gains, no matter how long you've owned shares in the fund.
Long-term capital gains may be taxed at different rates depending
on how long the fund held the securities.

If you sell or exchange shares of the fund, any gain or loss you
have is a taxable event, which means you may have a capital gain to
report as income, or a capital loss to report as a deduction, when
you complete your federal income tax return.

FINANCIAL HIGHLIGHTS
This table is intended to help you understand each funds' financial
performance for the past 5 years. Information relects financial
results for a single fund share. The total returns in the table
represent the rate that you would have earned (or lost) on an
investment in the fund (assuming reinvestment of all dividends
and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report,

<PAGE>

along with the fund's financial statements are included in the
annual report, which is available upon request.

The Cornerstone Stock Fund opened in December, 1998. For this reason
there are no financial highlights for this fund.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
BOND FUND 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.52 $10.37 $10.79 $9.61 $10.82
------ ------ ------ ------ ------
Income from investment Operations
Net investment income (loss) 0.67 0.69 0.70 0.70 0.71
Net realized & 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 (loss)
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>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
RETIREMENT INCOME FUND 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.65 $10.20 $10.51 $9.22 $10.54
--------- -------- --------- --------- ---------
Income from investment Operations
Net investment income (loss) 0.73 0.74 0.75 0.76 0.76
Net realized & 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 (loss)
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>
<TABLE>
<CAPTION>

<PAGE>
22
- -------------------------------------------------------------------------------------------------------
BALANCED FUND 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $15.69 $13.68 $12.57 $9.97 $10.58
-------- -------- --------- --------- ---------
Income from investment Operations
Net investment income (loss) 0.48 0.45 0.41 0.35 0.32
Net realized & 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 (loss)
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>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
EQUITY GROWTH 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 & 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>
<PAGE>

Additional information about Advance Capital, contained in the Statement
of Additional Information, has been filed with the Securities and
Exchange Commission and is available, upon request, without charge by
writing to Advance Capital at the address on page 1 or by calling
(248) 350-8543 or (800) 345-4783. The Statement of Additional
Information bears the same date as this prospectus and is incorporated
by reference in its entirety into this prospectus.

Further, information about the funds' investments is available in the
funds' annual and semi-annual reports to shareholders. In the funds'
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the funds' performance
during the last fiscal year.

Finally, information about the funds (including the SAI) can be reviewed
and copied at the Commission's Public Reference Room in Washington, D.C.
You may obtain information on the operation of the public reference room
by calling the Commission at (800) SEC-0330. Reports and other information
about the funds are available on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section
of the Commission, Washington, D.C. 20549-6009.

File # 811-05127

<PAGE>
1
ADVANCE CAPITAL I, INC.
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999

This Statement is not a Prospectus but should be read in
conjunction with the Funds' current Prospectus dated April 30,
1999. Much of the information contained in this Statement of
Additional Information expands upon the subjects discussed in
the Prospectus. No investment should be made without first
reading the Prospectus. You may receive a copy of the
Prospectus by calling 800-345-4783 or by writing to us at the
following address:

Advance Capital I, Inc.
P.O. Box 3144
Southfield, MI 48037

TABLE OF CONTENTS
-----------------
Page
----
Fund History 2
Fund Description 2
Management 6
Control Persons and Principal Holders of Securities 7
Investment Advisory and Other Services 8
Portfolio Transactions 11
Capital Stock 12
Purchases and Pricing of Shares 13
Taxation of the Funds 13
Calculation of Performance Data 14
Financial Statements 15

<PAGE>
2
FUND HISTORY
Advance Capital I, Inc. (the COMPANY) was organized on March 6,
1987 as a Maryland Corporation. The COMPANY is an open-end,
diversified, management investment company offering five distinct
portfolios (the FUNDS). The five portfolios are:

Bond Fund
Retirement Income Fund
Balanced Fund
Cornerstone Stock Fund
Equity Growth Fund

FUND DESCRIPTION

Each portfolio has its own investment objectives and policies.
The following policies supplement the investment objectives and
policies set forth in the Prospectus. Each policy applies to all
FUNDS. The percentage limitations included in these policies apply
only at the time of purchase. For example, if a FUND exceeds a
limit as a result of market fluctuations or the sale of other
securities, it will not be required to sell any securities.

GOVERNMENT OBLIGATIONS:
Each FUND may invest in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. U.S.
Government agencies that are supported by the full faith and
credit of the U.S. Government include securities of the Federal
Housing Administration, the Department of Housing and Urban
Developments, the Export-Import Bank, the Farmers Home
Administration, the General Services Administration, the
Maritime Administration, and the Small Business Administration.
Generally less than 50 percent of the Bond Fund, the Retirement
Income Fund or the bonds in the Balanced Fund will be invested
in obligations of the U.S. Government or agencies supported by
the full faith and credit of the U.S. Government. The Equity
Growth Fund and the Cornerstone Stock Fund will have less than
5 percent of their assets invested in obligations of the U.S.
Government or agencies supported by the full faith and credit
of the U.S. Government except when, in the opinion of the
Investment Adviser, economic or business conditions warrant
a temporary defensive investment position.

Each FUND may invest, on a limited basis, in obligations of certain
agencies or instrumentalities which do not carry the full faith and
credit of the U.S. Government, such as the Federal National Mortgage
Association or the Federal Home Loan Mortgage Corporation. Each FUND
will invest in the obligations of such agencies or instrumentalities
only when the Investment Adviser believes the credit risk with
respect to the agency or instrumentality is minimal. No more than
20 percent of the assets of the Bond Fund or the bonds in the Balanced
Fund will be invested in these types of securities. No more than 5
percent of the Equity Growth Fund or the Cornerstone Stock Fund will
be invested in these types of securities.

<PAGE>
3
MONEY MARKET INSTRUMENTS:
Each FUND anticipates under normal conditions that no more than 20
percent of its assets will be invested in high-quality money market
instruments. Under unusual market or economic conditions, during
the initial start-up phase of a FUND or for temporary defensive
purposes, each FUND may invest up to 100 percent of its assets in
money market instruments. Money market instruments are defined as
commercial paper and bank obligations. Bank obligations include
bankers acceptances, negotiable certificates of deposit and
nonnegotiable time deposits earning a specified return and issued
by a U.S. bank which is a member of the Federal Reserve System or
insured by the Federal Deposit Insurance Corporation, or by a
savings and loan association or savings bank that is insured by the
Federal Savings and Loan Insurance Corporation. Investments in bank
obligations are limited to the obligations of financial institutions
having more than $2 billion in total assets at the time of purchase.
Investments in commercial paper will be limited to issues within the
highest rating, at the time of purchase, of S&P or Moody's or, if
not rated, are determined by the Investment Adviser to be of
comparable quality.

REPURCHASE AGREEMENTS:
Each FUND may invest in repurchase agreements. Repurchase agreements
are arrangements in which banks, brokers, dealers, and other recognized
financial institutions sell U.S. Government securities (limited to those
with remaining maturities of five years or less) to the FUNDS and agree
at the time of sale to repurchase them at a mutually agreed upon time
and price. The FUNDS or their Custodian will take possession of the
securities subject to repurchase agreements. Repurchase agreements
may also be viewed as loans made by the FUNDS which are collateralized
by the securities subject to repurchase. Advance Capital Management,
Inc., the Investment Adviser, will monitor such transactions to ensure
that the value of the underlying securities will be at least equal at
all times to the total amount of the repurchase obligation, including
the interest factor. In the event of a bankruptcy or default of
certain sellers of repurchase agreements, the FUNDS could experience
costs and delays in liquidating the underlying security which is held
as collateral, and the FUNDS might incur a loss if the value of the
collateral held declines during this period.

VARIABLE AND FLOATING INSTRUMENTS:
Unrated variable or floating rate instruments will make up not more
than 5 percent of any FUND's assets. These instruments require the
Investment Adviser to monitor closely the earning power, cash flows
and other liquidity ratios of the issuers to insure they can meet
payment on demand. These instruments often provide a higher yield
than money market rates because they are viewed by the issuer and
purchaser as longer-term obligations whose pricing may be based on
shorter term rates.

NON-INTEREST-BEARING SECURITIES:
The Bond Fund has not invested in non-income-producing securities
in the past. Further, there are no present plans to invest in
non-income-producing securities in the Bond Fund or the Retirement
Income Fund. Non-income-producing securities include zero coupon
bonds, which pay interest only at maturity and payment in kind
("PIK") bonds, which pay interest in the form of additional bonds.
Although there are not plans to do so, the Retirement Income Fund
may invest up to 5 percent of its assets in such securities.
Should non-interest-bearing securities be

<PAGE>
4
held in the Retirement Income Fund, there are special tax
considerations associated with them. The Retirement Income Fund
will report interest on these securities as income even though it
receives no cash interest until the security's maturity or payment
date. Therefore, the Retirement Income Fund may have to dispose of
some portfolio securities under disadvantageous circumstances to
generate cash to satisfy distribution requirements.

STOCK INDEX FUTURES CONTRACT AND OPTIONS:
The Equity Growth Fund, the Balanced Fund and the Cornerstone Stock
Fund (the Growth Portfolios) may enter into stock index futures
contracts (or options thereon) to hedge all or a portion of its
equity portfolio, or as an efficient means of regulating its exposure
to the equity markets. The Growth Portfolios will not use futures
contracts for speculation. The FUNDS will limit the use of futures
contracts so that (1) no more than 5 percent of each of the Growth
Portfolios' assets would be committed to initial margin deposits or
premiums on such contracts and (2) immediately after entering into
such contracts, no more than 30 percent of the Equity Growth Fund's
total assets or 20 percent of the Balanced Fund's or Cornerstone
Stock Fund's assets would be represented by such contracts. The
Growth Portfolios may also write covered call options and purchase
put options on securities and financial indices. The aggregate
market value of each FUND's portfolio securities covering call
options will not exceed 25 percent of the Equity Growth Fund's net
assets or 15 percent of the Balanced Fund's or Cornerstone Stock
Fund's net assets. Futures contracts and options can be highly
volatile and could reduce each FUND's total return, and a FUND's
attempt to use such investment for hedging purposes may not be
successful. Successful futures strategies require the ability of
the Investment Adviser to predict future movements in securities
prices, interest rates and other economic factors. Each FUND's
potential losses from the use of futures extends beyond its initial
investment in such contracts. Also, losses from options and futures
could be significant if a FUND is unable to close out its position
due to disruptions in the market or lack of liquidity.

FOREIGN SECURITIES
The Equity Growth Fund may invest up to 10 percent of total assets
(excluding reserves) in foreign securities. These include nondollar-
denominated securities traded outside of the U.S. and dollar-
denominated securities of foreign issuers traded in the U.S. (such
as ADRs). Such investments increase a portfolios diversification and
may enhance return, but they also involve some special risks, such
as exposure to potentially adverse local political and economic
developments; nationalization and exchange controls; potentially
lower liquidity and higher volatility; possible problems arising
from accounting, disclosure, settlement, and regulatory practices
that differ from U.S. standards; and the chance that fluctuations
in foreign exchange rates will decrease the investment's value
(favorable changes can increase its value). These risks are
heightened for investments in developing countries, and there
is no limit on the amount of the fund's foreign investments that
may be made in such countries. Also, the introduction of the
European common currency on January 1, 1999 could have uncertain
adverse effects on currency values.

FUND POLICIES
The FUNDS are subject to investment limitations. If a percentage
limitation is satisfied at the time of the investment, a later
increase or decrease in the percentage resulting from a change in

<PAGE>
5
the value of a FUND's portfolio securities will not constitute a
violation. The portfolio manager will determine, based on current
market conditions, when to realign the portfolio within its
original investment limitations. The following investment
limitations may only be changed with respect to a particular FUND
by a vote of a majority of the the shareholders. This means the
affirmative vote of the lesser of (a) 50 percent of the outstanding
shares of the FUND, or (b) 67 percent or more of the shares of the
FUND present at a meeting if the holders of more than 50 percent of
the outstanding shares of the FUND are represented at the meeting
in person or by proxy.

THE FUNDS WILL NOT:

1.) Issue senior securities

2.) Borrow money

3.) Engage in the business of underwriting securities issued
by other people except to the extent that the FUND may
technically be deemed to be an underwriter under the
Securities Act of 1933 as amended in disposing of
investment securities

4.) Invest more than 25 percent of each respective FUND's
total assets in any one industry

5.) Purchase or sell commodities futures contracts or invest
in oil, gas, or other mineral exploration or development
programs; provided, however, this shall not prohibit the
Equity Growth Fund, the Balanced Fund, or the Cornerstone
Stock Fund from purchasing publicly traded securities of
companies engaging in whole or in part in such activities

6) Purchase or sell real estate, except that each FUND may
purchase securities of issuers which deal in real estate
and may purchase securities which are secured by interests
in real estate

7.) Make loans, except that each FUND may purchase or hold debt
securities in accordance with its investment objectives and
policies and may enter into repurchase agreements with
respect to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities

8.) Invest in companies for the purpose of exercising management
or control

9.) Invest in bank obligations having remaining maturities in
excess of one year, except that (1) securities subject to
repurchase agreements may have longer maturities and (2) the
Bond Fund, the Retirement Income Fund or the Balanced Fund
may invest in bank obligations without regard to maturity

10.) Purchase securities on margin, make short sales of securities
or maintain a short position

<PAGE>
6
11.) Invest more than 5 percent of its total assets in securities
issued by companies which, together with any predecessor,
have been in continuous operation for fewer than three years

12.) Acquire any other investment company or investment company
security except in connection with a merger, consolidation,
reorganization or acquisition of assets as outlined in the
Investment Company Act of 1940

13.) Permit the purchase or retention of the securities of any
issuer if the officers, directors or trustees of the COMPANY,
its advisers or managers owning beneficially more than
one-half of 1 percent of the securities of such issuer
together own beneficially more than 5 percent of such
securities

14.) Commit more than 10 percent of their respective net assets to
non-liquid securities, including repurchase agreements with
maturities longer than seven days, or to securities subject to
restrictions on resale

15.) Purchase the securities of any one issuer, other than the U.S.
Government or any of its instrumentalities, if immediately
after such purchase more than 5 percent of the value of its
total assets would be invested in such issuer, except that up
to 15 percent of the value of each FUND's total assets may be
invested without regard to the 5 percent limitation

16.) Invest more than 5 percent of each respective FUND's total
assets in securities of issuers that have records of less
than three years of continuous operations

17.) Acquire more than 10 percent of the voting securities of
any one issuer

MANAGEMENT OF THE FUND
Advance Capital I, Inc. is managed by a Board of Directors. The
Directors are responsible for managing the company's business affairs
and for exercising all the company's powers except those reserved for
the shareholders. Officers and Directors of the Company, their
addresses, and principal occupations during the last five years, are
as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Positions Principal Occupations
Name and Address & Offices During past 5 Years
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
*John C. Shoemaker Director and President & Director, Advance Capital I,
One Towne Square President Inc.; President, Advance Capital
Suite 444 Management, Inc.
Southfield, MI 48076
Age 54
- --------------------------------------------------------------------------------------------------
Robert J. Cappelli Vice President President, Advance Capital Services, Inc.;
One Towne Square and Treasurer Vice President & Treasurer, Advance
Suite 444 Capital I, Inc.
Southfield, MI 48076
Age 48

<PAGE>
7
- --------------------------------------------------------------------------------------------------
Charles J. Cobb Vice President Vice President, Advance Capital I, Inc.;
One Towne Square Regional Representative, Advance Capital
Suite 444 Services, Inc.; Controller, Advance Capital
Southfield, MI 48076 I, Inc., Advance Capital Group, Inc.
Age 35
- --------------------------------------------------------------------------------------------------
Kathy J. Harkleroad Secretary Secretary, Advance Capital I., Inc.
One Towne Square Director of Client Services, Advance Capital
Suite 444 Services, Inc.
Southfield, MI 48076
Age 47
- --------------------------------------------------------------------------------------------------
Joseph A. Ahern Director Attorney and Partner, Stark, Reagan &
3208 E. Breckenridge Finnerty, P.C.
Bloomfield Hills, MI 48301
Age 41
- -------------------------------------------------------------------------------------------------
Richard W. Holtcamp Director Retired General Manager - Marketing,
27 Oyster Rake Lane Michigan Bell Telephone; Director of
Hilton Head Is., SC 29926 Marketing and Consultant, Fishburne & Co.,
Age 65 Inc.
- --------------------------------------------------------------------------------------------------
Harry Kalajian Director Retired Executive Vice President - Finance
2401 Eimen Road & External Affairs, Michigan Bell
Traverse City, MI 49686 Telephone; Treasurer, WTVS Public
Age 67 Television, Channel 56 Detroit; Vice
Chairman, Board of Trustees, Grace
Hospital, Detroit
- --------------------------------------------------------------------------------------------------
Frank R. Zimmerman Director Retired President, Illinois Bell Telephone
4291 Maitland Road Company; Director, Executive Service Corp
P.O. Box 87 of Chicago; Director, First Methodist
Acme, MI 49610 Episcopal Aid Society
Age 66
- --------------------------------------------------------------------------------------------------
</TABLE>
*Officers of the Funds are "interested persons" as defined in
the Investment Company Act of 1940.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

CONTROLLING PERSONS
As of January 31, 1999, no individual owned of record or beneficially
25 percent or more of any Class of stock or, in any other manner,
represents a controlling interest in the company.

PRINCIPAL HOLDERS OF SECURITIES
As of January 31, 1999, the following individuals were known to own
of record or beneficially 5 percent or more of the outstanding shares
of a particular class of Shares of the COMPANY:

<PAGE>
8
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS SHARES OF CLASS
- ---------------- ------ --------
<S> <C> <C>
William E. Ross 23,128.518 6.53%
586 Robin Hood Lane
Grayling, MI 49728-9382

Jack M. Carter 20,103.563 5.68%
365 Sand Point
Mead, OK 73449
</TABLE>

PRINCIPAL HOLDERS OF SECURITIES (DIRECTORS AND OFFICERS)
As of January 31, 1999, all directors and officers as a group
owned 52,134 Class A Shares (1.5%), 6,932 Class B Shares (2.0%),
16,841 Class C Shares (.2%), 671 Class E Shares (0%), and 45,734
Class F Shares (5.0%).

INVESTMENT ADVISORY AND OTHER SERVICES

INVESTMENT ADVISER AND SUB-ADVISER
Advance Capital Management, Inc. serves as Investment Adviser to
the FUNDS. Under Asset Manager's Agreements, signed December 21,
1993 and December 17, 1993, T. Rowe Price Associates, Inc. ("T. Rowe
Price"), has been hired as a Sub-Adviser to the Equity Growth and
Balanced Funds. These agreements were approved at a Special Meeting
of Shareholders on October 28, 1993. The principal business address
of Advance Capital Management, Inc. is in Southfield, Michigan. T.
Rowe Price is a Maryland Corporation with its principal business
address in Baltimore, Maryland. Subject to the general supervision
of the COMPANY's Directors and in accordance with each FUND's
investment objectives and policies, the Investment Adviser continually
conducts investment research and furnishes an investment program for
each of the FUNDS and the COMPANY, is responsible for the purchase and
sale of each FUND's portfolio securities and maintains the COMPANY's
records relating to such purchases and sales.

The Investment Advisory Agreement provides that the Investment Adviser
shall not be held liable for any error of judgment or mistake of law
or for any loss suffered by the COMPANY in connection with the
performance of the Investment Advisory Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services or a loss resulting from willful
misfeasance, bad-faith, or gross negligence on the part of the
Investment Adviser in the performance of their duties or from reckless
disregard by them of their duties and obligations thereunder.

The Investment Adviser has agreed to pay certain expenses, including
the fees associated with hiring of a Sub-Adviser, incurred in
connection with its activities under the Investment Advisory Agreement
other than the cost of securities, including brokerage commissions,
purchased for the
<PAGE>
9
COMPANY. Specifically, the Investment Adviser will pay for (a) the
salaries and employment benefits of all its employees who are engaged
in providing these services, (b) adequate office space and suitable
office equipment for such employees, (c) all telephone and postage
costs relating to such functions.

For services provided and expenses assumed pursuant to the Investment
Advisory Agreement, the Investment Adviser receives a fee, computed
daily and paid monthly, at the annual rate of .7 percent of the
average daily net assets of the Equity Growth Fund and the Balanced
Fund, .4 percent of the average daily net assets of the Bond Fund
and Cornerstone Stock Fund and .5 percent of the average daily net
assets of the Retirement Income Fund. The Sub-Advisory Agreements
do not provide for any increase in the level of fees payable by the
COMPANY. For its services, the Sub-Adviser is paid a fee by the
Investment Adviser, payable over the same time periods and calculated
in the same manner as the investment advisory fee, of .2 percent on
the average daily net assets up to 100 million dollars and .15% on
average daily assets over 100 million dollars of the Equity Growth
Fund and of that portion of the Balanced Fund so designated by the
Investment Adviser to be invested in common stocks. From time to
time, as it may deem appropriate in its sole discretion, the
Investment Adviser may waive a portion or all of its advisory fee.

If the expenses borne by any FUND in any fiscal year exceed expense
limitations imposed by applicable state regulations, Advance Capital
Management, Inc. will reimburse the COMPANY for a portion of any such
excess to the extent required by such regulations up to the amount of
fees payable to it or it may effect such reimbursement regardless of
the fees payable to it. Such amount, if any, will be estimated,
reconciled and paid on a monthly basis.

12B-1 AND DISTRIBUTION PLAN
Expenses of the COMPANY may include distribution-related expenses
which the COMPANY is permitted to bear under a Plan of Distribution
complying with the provisions of Rule 12b-1 under the Investment
Company Act of 1940. Such Plan was approved by the Board of Directors,
including a majority of the Directors who are not interested persons of
the COMPANY and who have no direct or indirect financial interest in
the operation of the Plan. Under the Plan, up to .25% of each FUND's
average daily net assets, for any fiscal year, may be expended for
preparation, reproduction, and distribution of sales literature and
prospectuses used for sales purposes; public relations and
communications with investors and prospective investors; and
compensation of sales personnel.

Under the Distribution Agreement, each FUND is authorized to reimburse
the Distributor for its activities (which are the same as those
authorized by the Plan) on behalf of each FUND on a monthly basis,
provided that any payment by a FUND to Distributor, together with any
other payments made by such FUND pursuant to the Plan, shall not exceed
.02083 percent of its average daily net assets for the prior month (.25
percent on an annualized basis).

The plan was initially approved on July 17, 1987, by the Directors of
the COMPANY, including a majority of the Directors who were not
"interest persons" (as defined in the 1940 Act) of the COMPANY and who
had no direct or indirect financial interest in the operation of the
Plan or in
<PAGE>
10
any agreement related to the Plan (the Qualified Directors). In
approving the Plan, the Directors determined that the Plan was in
the best interest of the shareholders of each FUND. At the first
Annual Meeting of Shareholders held on July 22, 1988 for the
shareholders of the Equity Growth, Bond and Balanced Funds and July
23, 1993 for the shareholders of the Retirement Income Fund, the Plan
of Distribution was approved. A modification of the plan to reduce
the aggregated fees charged under the plan to .25 percent annually,
was approved by the Board of Directors on April, 24, 1992. During
the fiscal year ended December 31, 1998, the COMPANY paid or accrued
distribution expenses of $148,846, $ 0, $282,936, $593, and $527,069
for the Equity Growth, Bond, Balanced, Cornerstone Stock and
Retirement Income Funds, respectively, the COMPANY's distributor,
Advance Capital Services, Inc.

ADMINISTRATOR AND TRANSFER AGENT
Advance Capital Group, Inc., located at One Towne Square, Suite
444, Southfield, Michigan, 48076, serves as the COMPANY's Administrator
and Transfer Agent. Under the Administration and Transfer Agent
Agreement, Advance Capital Group, Inc. as Administrator agrees to
maintain office facilities for the COMPANY, furnish the COMPANY with
statistical and research data, clerical, accounting, and bookkeeping
services, and certain other services required by the COMPANY, and to
compute the net asset value, net income and realized capital gains or
losses, if any, of the respective FUNDS. The administrator prepares
semi-annual reports to the Securities and Exchange Commission,
prepares federal and state tax returns, prepares filings with the
state commissions, maintains financial accounts and records and
generally assists in all aspects of the COMPANY's operations. Advance
Capital Group, Inc., acting in its capacity as Transfer Agent, arranges
for and bears the cost of processing share purchase and redemption
orders, maintains shareholder record accounts and serves as dividend
disbursing agent, with duties involving calculation of dividends and
capital gains distributions, issuing dividend and capital gains payment
records. The Transfer Agent is also responsible for preparing and
mailing to shareholders periodic account statements, federal tax
information, daily confirmations of transactions in FUND shares. In
addition, the Transfer Agent will respond to telephone and mail inquiries
concerning the status of shareholder accounts.

CUSTODIAN
Huntington National Bank, located at 220 Park St., Suite 100,
Birmingham, Michigan 48009, is "Custodian" of the COMPANY's assets.
Under the custodian agreement, Huntington has agreed to a) maintain
separate accounts in the name of the COMPANY; b) make receipts and
disbursements of money on behalf of the COMPANY; c) collect and
receive all income and other payments and distributions on account of
the COMPANY's portfolio securities; d) respond to correspondence from
securities brokers and others relating to its duties; e) maintain
certain financial accounts and records; f) make periodic reports to
the COMPANY's Board of Directors concerning the COMPANY's operations.
Under the custodian agreement, Custodian is entitled to monthly fees
for furnishing custodial services and is entitled to reimbursement for
its out of pocket expenses in connection with the above services.

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, with offices at 2050 North Woodward, Suite
200, Bloomfield Hills, Michigan 48304 serves as independent accountants
for the COMPANY. The financial

<PAGE>
11
highlights and financial statements of the COMPANY included in the
Prospectus and Statement of Additional Information, respectively,
have been audited by PricewaterhouseCoopers LLP for the years ended
December 31, 1995 through December 31, 1998, whose report is also
included herein.

COUNSEL
Berry Moorman P.C., 600 Woodbridge Place, Detroit, Michigan 48226,
are counsel to the COMPANY and will pass upon the legality of the
Shares offered in the Prospectus.

PORTFOLIO TRANSACTIONS
The Investment Adviser and Sub-Adviser are responsible for, make
decisions with respect to, and place orders for all purchases and
sales of portfolio securities.

Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions
are negotiated, the cost of transactions may vary among different
brokers.

Transactions in the over-the-counter market are generally principal
transactions with dealers and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, the COMPANY, where possible, will deal
directly with the dealers who make a market in the securities involved,
except in those circumstances where better prices and execution are
available elsewhere.

The Investment Advisory Agreement between the COMPANY and the
Investment Adviser and the Asset Manager's Agreement between the
Investment Adviser and the Sub-Adviser, both provide that, in
executing portfolio transactions and selecting brokers or dealers,
the Investment Adviser and Sub-Adviser will seek to obtain the best
net price and the most favorable execution. The Investment Adviser
and Sub-Adviser will consider factors deemed relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer,
and the reasonableness of the commission, if any for the specific
transaction and on a continuing basis. In addition, the Investment
Advisory Agreement authorizes the Investment Adviser, to the extent
permitted by law and subject to the review of the COMPANY's Board of
Directors, from time to time, with respect to the extent and
continuation of this policy, to cause any of the FUNDS to pay a
broker-dealer which furnishes brokerage and research services at a
higher commission than that which might be charged by another
broker-dealer for effecting the same transaction. This is allowed
when the Investment Adviser determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage
and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities
of the Investment Adviser, to the accounts to which it exercises
investment direction. Such brokerage and research services may
consist of reports and statistics on specific companies or industries,
general summaries of groups of stocks and their comparative earnings,
yields or broad overviews of the stock market and the economy.

<PAGE>
12
Supplementary research information so received is in addition to and
not in lieu of services required to be performed by the Investment
Adviser or Sub-Adviser and does not reduce the investment advisory
fee payable to the Investment Adviser by the COMPANY. Such
information may be useful to the Investment Adviser or Sub-Adviser
in servicing both the COMPANY and other clients, and, conversely,
supplemental information obtained by the placement of business of
other clients may be useful to the Investment Adviser or Sub-Adviser
in carrying out its obligations to the COMPANY.

The COMPANY has authorized the Investment Adviser to place brokerage
orders with some brokers who distribute the COMPANY's Shares. The
Investment Adviser will do so only when it reasonably believes that
the commissions and the transaction quality are comparable to that
available from other qualified brokers.

Portfolio securities will not be purchased from, or sold to, the
Investment Adviser, the Sub-Adviser, the Distributor or any affiliated
person of any of them (as such term is defined in the 1940 Act) acting
as principal, except to the extent permitted by the Securities and
Exchange Commission.

PORTFOLIO TURNOVER
Portfolio Turnover is the practice by mutual funds of buying and selling
securities within funds. Before investing in a mutual fund, you should
review its portfolio turnover rate for an indication of the potential
effect of these transactions costs on the fund's future returns.
Typically, the greater the volume of buying and selling by the fund, the
greater the impact that brokerage commissions and other transaction
costs will have on its return. Also, funds with high portfolio turnover
rates (100% or more) may be more likely than low-turnover funds to
generate capital gains that must be distributed to shareholders as
taxable income. The average turnover rate for all domestic stock
funds is about 80 percent.

CAPITAL STOCK AND OTHER SECURITIES
Advance Capital I, Inc. shares are currently classified into five
classes of shares, each representing interest in one of five separate
investment portfolios. Class A common shares represent interests in
the Equity Growth Fund, Class B common shares represent interests in
the Bond Fund, Class C common shares represent interest in the
Balanced Fund, Class E common shares represent interests in the
Retirement Income Fund, and Class F common shares represent interests
in the Cornerstone Stock Fund.

Each share is entitled to such dividends and distributions out of the
income earned on the assets belonging to such FUND as are declared at
the discretion of the Board of Directors.

Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the
aggregate and not by class, except as otherwise expressly required by
law, or when the matter to be voted upon affects only the interest of
the shareholders of a particular class. At such time, shares of
capital stock of the COMPANY shall be voted by individual class and
only shares of capital stock of the respective class or classes affected
by a matter shall be entitled to vote on such a matter. The approval of
an investment company

<PAGE>
13
agreement or any change in a fundamental investment policy would be
effectively acted upon with respect to a FUND only if approved by a
majority of the outstanding shares of such FUND. Also, the
ratification of the appointment of independent public accountants,
the approval of principal underwriting contracts, and the election
of directors may be effectively acted upon by shareholders without
regard to class.

Shares have no preemptive rights and only conversion or exchange
rights as the Board of Directors allows. When issued for payment,
the COMPANY's shares will be fully paid and non-assessable. In the
event of a liquidation or dissolution of the COMPANY or an individual
FUND, shareholders of a FUND are entitled to receive the assets
available for distribution belonging to the particular FUND, and a
proportionate distribution of any general assets of the COMPANY not
belonging to any particular FUND which are available for distribution.

The Board of Directors is authorized, with shareholder approval, to
(a) sell all assets of a FUND at net asset value for consideration
involving cash or securities and transfer to another management
investment company (b) sell and convert the FUND's assets into
cash and cause all shares of the FUND to be redeemed at net asset
value (c) combine the assets belonging to a FUND with the assets
belonging to another FUND as long as the Board of Directors determines
that such combination will not have a material adverse effect on
shareholders of any FUND participating in such combination.

PURCHASE AND PRICING OF SHARES
Shares may be purchased in any of the FUNDS by completing an
Application to Purchase Shares. The Application and a check made
payable to Advance Capital I, Inc. can be mailed to the Southfield,
MI address located on the cover of this Statement.

Securities are valued at market value, or if a market quotation is
not readily available, at their fair market value. The net asset
value is calculated by adding up the total assets of the FUND,
subtracting all of its liabilities, or debts, and then dividing by
the total number of FUND shares outstanding.

Total Assets - Liabilities
----------------------------
Net Asset Value = Number of Shares Outstanding

TAXATION OF THE FUND
The Internal Revenue Code of 1986 treats each FUND in a series
mutual fund as a separate corporation. Each FUND intends to
qualify each year as a "regulated investment company" under
Subchapter M on the Internal Revenue Code of 1954. The company
intends to distribute to shareholders of each FUND all capital
gains and income earned.

Unless otherwise exempt, shareholders are required to pay
federal income tax on any dividends and other distributions
received. This applies whether dividends are received in cash
or as additional shares. Information on the tax status of
dividends is provided annually.

<PAGE>
14
At the time of your purchase, the FUND's net asset value may
reflect undistributed income or capital gains or unrealized
appreciation of securities held by the FUND. A subsequent
distribution to you of such amounts, although constituting a
return of your investment, would be taxable as described above.

PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN
From time to time, each FUND may state its total return in
advertisements and other types of literature. Any statements of
total return performance data will be accompanied by information
on the FUND's average annual compounded rate of return over the
most recent 1 year period or life of the FUND.

Each FUND's average annual compounded rate of return is based
on a hypothetical $1,000 investment that includes capital
appreciation and depreciation during the stated periods. The
following formula will be used for the actual computations:

P(1+T) = ERV

Where: P = a hypothetical initial purchase order of $1,000
from which the maximum sales load (0) is deducted.

T = average annual total return
n = number of years
ERV= redeemable value of the hypothetical $1,000 purchase
at the end of the period

Aggregate total return is calculated in a similar manner, except
that the results are not annualized.

The performance of each of the FUNDS, as shown below, is the
average annual return for the FUNDS for the periods listed.
Security prices fluctuate during the period covered and past
results should not be considered representative of future
performance.

AVERAGE ANNUAL RETURN
<TABLE>
<CAPTION>

1 YEAR 5 YEARS 10 YEARS LIFE OF FUND
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund 8.1% 6.8% 8.7% 8.5%
Retirement Income Fund 6.2% 7.7% N/A 8.6%
Balanced Fund 13.1% 14.8% 11.6% 10.1%**
Cornerstone Stock Fund N/A N/A N/A 4.6%
Equity Growth Fund 16.2% 16.3% N/A 16.3% *
- -----------------------------------------------------------------------------------------
</TABLE>
*Effective December 29, 1993, the investment objectives of the Equity
Growth Fund were changed by shareholder vote and T. Rowe Price Associates,
Inc. became the sub-investment adviser with the primary responsibility for
the daily security investment decisions.

**Effective December 29, 1993, T. Rowe Price Associates, Inc. became the
sub-investment adviser with the primary responsibility for the daily
equity security investment decisions for the Balanced Fund.

YIELD QUOTATION
Directions: Based on a 30 day (or one month ) period ended on the date
of the most recent balance sheet included in the registration statement,
calculate the Fund's yield by dividing the net investment income per share
earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:

YIELD = 2(a-b/cd +1)6 - 1

Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends
d = the maximum offering price per share on the last day
of the period

FINANCIAL STATEMENTS
The following is attached:

(1) Annual Report for year ended December 31, 1998. The annual
report includes: Investment Performance, Financial Highlights,
Portfolio of Investments, Statements of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Notes
to Financial Statements, the Independent Accountants' Report, and
Additional Information.

<PAGE>

ANNUAL REPORT

December 31, 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

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

<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

<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.

<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.

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.

<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.

<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.

<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.

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.

<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.

<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.

<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

<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

<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

<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

<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

<PAGE>

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

<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

<PAGE>

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

<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

<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

<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

<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

<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

<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

<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

<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

<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

<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

<PAGE>

ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<PAGE>

ADVANCE CAPITAL I, INC. - BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<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

<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

<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

<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

<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

<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

<PAGE>

ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<PAGE>

ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<PAGE>

ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<PAGE>

ADVANCE CAPITAL I, INC. - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998

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

<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

<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

<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

<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

<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

<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

<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

<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.

<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

<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:

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:

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>

<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:

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:

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.

<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

<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.

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
<PAGE>