| OMB Approval OMB Number: 3235-0570 Expires: January 31, 2017 Estimated average burden hours per response: 20.6 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-05127
Advance Capital I, Inc.
(Exact name of registrant as specified in charter)
| One Towne Square, Suite 444 Southfield, Michigan |
| 48076 |
| (Address of principal executive offices) |
| (Zip code) |
Christopher M. Kostiz, President
Advance Capital I, Inc.
One Towne Square, Suite 444
Southfield, Michigan 48076
(Name and Address of agent for service)
Registrant’s telephone number, including area code: (248) 350-8543
Date of fiscal year end: December 31
Date of reporting period: June 30, 2016
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940(17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays current valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507.
Item 1. Report to Shareholders.
![[ncsr063016001.jpg]](ncsr063016001.jpg)
![[ncsr063016002.jpg]](ncsr063016002.jpg)
| Dear Shareholders, 2016 Six Month Review The first quarter of the year brought renewed uncertainty about the strength of global growth and corporate earnings and, by extension, the sustain-ability of the seven-year bull market in equities. The extreme and sudden decline in the U.S. equity market in January proved to be the worst in history and was considered a potentially ominous sign for the remainder of the year. Yet, by the end of the quarter, the market recovered most of its early losses and was about even for the year. The second quarter was more subdued with a general rebound in prices and investor appetite for risk assets. We are now seven years into a bull market, and it is important to put into perspective the rarity of this event. Since the bottom in March 2009, the market, as measured by the Dow Jones Industrial Average, has posted a gain of slightly more than 180 percent. It is currently the third longest bull market in history, as we have gone seven years without a 20 percent market decline. Since 1900, there have been 23 recorded periods that are considered bull markets. Only twice has a bull market made it to its seventh year, and only once to its eighth year. Needless to say, this current bull market looks long in the tooth and susceptible to the inevitable decline. Although the underlying economic fundamentals of growth, earnings and employment appear stable and somewhat supportive of current market conditions, geopolitical risks, a misstep by the Federal Reserve or a decline of growth expectations could significantly impact investor psyche and financial assets. At the end of the second quarter, the British referendum to leave the European Union rattled world financial markets and highlighted these potential risks. The U.S. economy remains stuck in a low growth, modest inflationary environment. Recent data indicate these conditions will persist for a while. Most of the data suggest an economy that is teetering between modest growth and slight contractions, depending on the sector and time period. On the positive side, activity at factories unexpectedly expanded at a faster pace, after struggling for several quarters. Twelve of the 18 manufacturing sectors reported growth in May and deliveries jumped to the highest level since December 2014. However, many producers are still |
| battling the fallout from the plunge in energy prices, which has sapped the appetite for investment. Meanwhile, a strong dollar and lackluster global growth have weighed on exports. Further, capacity utilization, which measures the percent of a plant that is currently in use, fell to 75.4 percent, a noticeable drop from 79 percent at the end of 2014. Unsurprisingly, the slowdown in manufacturing has started to impact the robust employment gains of the past few years. The May jobs report showed a disappointing 11,000 new jobs created and a downward revision in April. However, the June report showed a big rebound of 287,000 jobs created. The job-openings rate reached an all-time high in the spring, which signals that the pace of hiring is likely to continue. In Europe, while their recovery has been gaining momentum over the past three years, its pace has disappointed in light of the decline in growth from 2008-2013. Eight years after the financial crisis, real output is still flat relative to its pre-crisis peak. In contrast, output in the U.S. is about 10 percentage points higher. Unfortunately, prospects over the next five-year secular horizon do not look much brighter. For starters, working age population growth is slowing meaningfully, with demographics alone set to shave nearly 0.5 percentage points off growth. Further, the damage to labor markets and investments caused by the recent double-dip reces-sion suggests that labor utilization and productivity are also likely to contribute less to growth than a decade ago. Adding it all together, the eurozone’s growth potential is probably close to 1.0 percent, down from 1.75 percent a decade ago. Faced with low growth, weak inflation, high real debt, and social and political pressures, the European Central Bank (ECB) will likely maintain a very accommodative monetary policy. The central bank’s quantitative easing (QE) program, which is scheduled to end in March 2017, is likely to be extended and it could broaden the range of assets it buys. 1 |
| In response to the diminished growth outlooks in developed markets such as Europe, China and Russia, the International Monetary Fund (IMF) recently downgraded its global growth forecast for the next two years to around 3.2 percent. The outlook reflects slowing growth in oil exporting countries and a modest slowdown in China, where activity is shifting from manufacturing and investing to consumption. On the positive side, areas like India, Mexico and several Asian countries are showing strong growth. However, lower global growth heightens the risks of unintended consequences such as geopolitical conflicts, exchange-rate disruptions and financial turmoil. Accommodative monetary policies remain essential to mitigate these risks as well as support economic growth and lift inflation expectations in many parts of the world. Capital Market Review Within this environment of growth uncertainty, below-average corporate earnings and low interest rates, fixed-income markets performed exceptionally well during the first half of the year while equity markets posted mixed results. Through June 30, the S&P 500 Index returned 3.84 percent while the Nasdaq Composite declined 2.61 percent. In the S&P 500 Index, gold, diversified metals and construction materials turned in the best performance; consumer services, airlines and real estate services produced the worst. In fixed income, the yield on the 10-year U.S. Treasury bond fell about 0.80 percent and credit spreads declined significantly, which helped produce strong results in most fixed-income investments. For the same period, the Advance Capital I Equity Growth Fund modestly outperformed its benchmark, returning 5.79 percent compared to the Morningstar Mid Value category, which returned 4.89 percent. The Advance Capital I Balanced Fund, with a 60 percent stock and 40 percent bond mix, noticeably outperformed with a return of 4.28 percent against the Morningstar Moderate Allocation, which returned 3.17 percent. The Advance Capital I Core Equity Fund increased 3.07 percent, outpacing the Morningstar Large Blend category, which increased 2.16 percent. The Advance Capital I Retirement 2 |
| Income Fund increased 4.82 percent, slightly lagging the Morningstar Intermediate-Term Bond category, which increased 4.92 percent. Looking Forward In this environment, investors are struggling with the uncertainties around the timing of global monetary policy changes. Each decision by a central banker has potential positive or negative ramifications for world economies and markets. While there are some positive economic signs, we remain concerned that investor sentiment is being driven more by the direction of monetary policy than the traditional valuation metrics for both stocks and bonds. Valuations still appear elevated and prone to the type of market volatility that existed in late 2015 and early 2016. At some point in this market cycle, valuations and earnings will matter again and the result could be a harsh reality for investors. For these reasons, we remain cautious in our investment stance, even as markets rebounded near all-time highs toward the end of the quarter. We are acutely aware that heightened volatility and downside risks are elevated. As always, we remind investors to stay disciplined and focused on the long term. We thank you for your continued confidence and look forward to providing you with services and results designed to meet or exceed your long-term investment objectives. If you have any questions, or if we can be of service, please call. Our toll-free number is (800) 345-4783.
Joseph R. Theisen President & CEO Advance Capital Group, Inc.
Christopher M. Kostiz President Advance Capital I, Inc. |
![[ncsr063016004.gif]](ncsr063016004.gif){kind=small}
![[ncsr063016005.jpg]](ncsr063016005.jpg){kind=small}
ADVANCE CAPITAL I - EQUITY GROWTH FUND (Retail Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
See Notes to Financial Statements
3
ADVANCE CAPITAL I - BALANCED FUND (Retail Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
See Notes to Financial Statements
4
ADVANCE CAPITAL I - RETIREMENT INCOME FUND (Retail Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
See Notes to Financial Statements
5
ADVANCE CAPITAL I - CORE EQUITY FUND (Retail Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
dBefore waivers
eNet of waivers
See Notes to Financial Statements
6
ADVANCE CAPITAL I - EQUITY GROWTH FUND (Institutional Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
See Notes to Financial Statements
7
ADVANCE CAPITAL I - BALANCED FUND (Institutional Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
See Notes to Financial Statements
8
ADVANCE CAPITAL I - RETIREMENT INCOME FUND (Institutional Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
dBefore waivers
eNet of waivers
See Notes to Financial Statements
9
ADVANCE CAPITAL I - CORE EQUITY FUND (Institutional Shares)
FINANCIAL HIGHLIGHTS
aPer share amounts presented are based on average shares outstanding.
bAnnualized
cNot Annualized
dBefore waivers
eNet of waivers
See Notes to Financial Statements
10
ADVANCE CAPITAL I - EQUITY GROWTH
FUND SUMMARY OF PORTFOLIO HOLDINGS (Unaudited)
JUNE 30, 2016
![[ncsr063016006.jpg]](ncsr063016006.jpg)
Top Ten Holdings*
| SPDR S&P MidCap 400 ETF | 4.34% |
|
|
|
| Hershey Co. | 2.14% |
|
|
|
| CR Bard, Inc. | 1.98% |
|
|
|
| UGI Corp. | 1.96% |
|
|
|
| Becton Dickinson and Co. | 1.89% |
|
|
|
| Sysco Corp. | 1.88% |
|
|
|
| Flowers Foods, Inc. | 1.86% |
|
|
|
| DENTSPLY SIRONA, Inc. | 1.76% |
|
|
|
| Global Payments, Inc. | 1.72% |
|
|
|
| Fair Isaac Corp. | 1.67% |
* Percentages based on Total Net Assets
11
ADVANCE CAPITAL I - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
See Notes to Financial Statements
12
ADVANCE CAPITAL I - EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
*Securities are non-income producing
+Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2016.
ADR - American Depositary Receipt
See Notes to Financial Statements
13
ADVANCE CAPITAL I - BALANCED FUND
SUMMARY OF PORTFOLIO HOLDINGS (Unaudited)
JUNE 30, 2016
![[ncsr063016007.jpg]](ncsr063016007.jpg)
Top Equity Holdings*
| Vanguard FTSE All-World ex-US ETF | 1.58% |
|
|
|
| Vanguard FTSE Dev. Markets ETF | 1.57% |
|
|
|
| Hershey Co. | 1.16% |
|
|
|
| Medtronic PLC | 1.06% |
|
|
|
| CR Bard, Inc. | 1.06% |
Top Fixed Income Holdings*
| Bank of America Corp. 5.875% 2021 | 1.37% |
|
|
|
| Goldman Sachs Group, Inc. 5.250% 2021 | 1.34% |
|
|
|
| Gilead Sciences, Inc. 4.500% 2021 | 1.34% |
|
|
|
| Express Scripts Holding Co. 4.500% 2026 | 1.31% |
|
|
|
| Duke Energy Indiana LLC 3.750% 2020 | 1.29% |
|
|
|
| * Percentages based on Total Net Assets |
|
| ADR - American Depository Receipt |
|
14
ADVANCE CAPITAL I - BALANCED FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
| Common Stock |
| Shares |
| Value |
| Common Stock |
| Shares |
| Value | ||
| BASIC MATERIALS - 2.4% |
|
|
|
|
|
| CONSUMER, NON-CYCLICAL - 19.1% (continued) |
|
|
|
|
|
| Ecolab, Inc. |
| 3,800 |
| $ | 450,680 |
| DENTSPLY SIRONA, Inc. |
| 12,900 |
| $ | 800,316 |
| International Flavors |
| 3,600 |
|
| 453,852 |
| Express Scripts Holding Co.* |
| 8,200 |
|
| 621,560 |
| LyondellBasell Industries |
| 3,500 |
|
| 260,470 |
| Flowers Foods, Inc. |
| 44,200 |
|
| 828,750 |
| Monsanto Co. |
| 4,800 |
|
| 496,368 |
| General Mills, Inc. |
| 12,100 |
|
| 862,972 |
| Mosaic Co. |
| 11,900 |
|
| 311,542 |
| Global Payments, Inc. |
| 11,200 |
|
| 799,456 |
|
|
|
|
|
|
|
| Hershey Co. |
| 8,600 |
|
| 976,014 |
| COMMUNICATIONS - 3.6% |
|
|
|
|
|
| Johnson & Johnson |
| 7,200 |
|
| 873,360 |
| Comcast Corp. |
| 7,600 |
|
| 495,444 |
| Kroger Co. |
| 14,400 |
|
| 529,776 |
| eBay, Inc.* |
| 22,600 |
|
| 529,066 |
| Medtronic PLC |
| 10,300 |
|
| 893,731 |
| Interpublic Group of Cos |
| 20,400 |
|
| 471,240 |
| PepsiCo, Inc. |
| 7,600 |
|
| 805,144 |
| Juniper Networks, Inc. |
| 22,000 |
|
| 494,780 |
| Procter & Gamble Co. |
| 9,400 |
|
| 795,898 |
| T-Mobile US, Inc.* |
| 14,100 |
|
| 610,107 |
| UnitedHealth Group, Inc. |
| 4,400 |
|
| 621,280 |
| Twenty-First Century Fox, Inc. |
| 16,300 |
|
| 440,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ENERGY - 0.5% |
|
|
|
|
|
| CONSUMER, CYCLICAL - 12.3% |
|
|
|
|
|
| Valero Energy Corp. |
| 8,800 |
|
| 448,800 |
| Advance Auto Parts, Inc. |
| 4,100 |
|
| 662,683 |
|
|
|
|
|
|
|
| Alaska Air Group, Inc. |
| 7,000 |
|
| 408,030 |
| FINANCIAL - 3.1% |
|
|
|
|
|
| BorgWarner, Inc. |
| 13,400 |
|
| 395,568 |
| Affiliated Managers Group, Inc.* |
| 3,500 |
|
| 492,695 |
| Delta Air Lines, Inc. |
| 11,800 |
|
| 429,874 |
| Alliance Data Systems Corp.* |
| 2,600 |
|
| 509,392 |
| Dollar Tree, Inc.* |
| 5,800 |
|
| 546,592 |
| Berkshire Hathaway, Inc.* |
| 3,900 |
|
| 564,681 |
| Hasbro, Inc. |
| 8,400 |
|
| 705,516 |
| Synchrony Financial |
| 19,600 |
|
| 495,488 |
| Home Depot, Inc. |
| 4,900 |
|
| 625,681 |
| Unum Group |
| 18,100 |
|
| 575,399 |
| Lear Corp. |
| 4,500 |
|
| 457,920 |
|
|
|
|
|
|
|
| Liberty Interactive Corp.* |
| 18,600 |
|
| 471,882 |
| INDUSTRIAL - 8.3% |
|
|
|
|
|
| Macy’s, Inc. |
| 11,300 |
|
| 379,793 |
| 3M Co. |
| 4,700 |
|
| 823,064 |
| Mattel, Inc. |
| 20,100 |
|
| 628,929 |
| Acuity Brands, Inc. |
| 3,200 |
|
| 793,472 |
| McDonald’s Corp. |
| 5,100 |
|
| 613,734 |
| Boeing Co. |
| 4,400 |
|
| 571,428 |
| NIKE, Inc. |
| 11,000 |
|
| 607,200 |
| CH Robinson Worldwide, Inc. |
| 10,700 |
|
| 794,475 |
| PVH Corp. |
| 4,900 |
|
| 461,727 |
| CSX Corp. |
| 22,500 |
|
| 586,800 |
| Southwest Airlines Co. |
| 12,900 |
|
| 505,809 |
| Dover Corp. |
| 12,700 |
|
| 880,364 |
| VF Corp. |
| 10,300 |
|
| 633,347 |
| Expeditors International |
| 16,500 |
|
| 809,160 |
| Walgreens Boots Alliance, Inc. |
| 6,600 |
|
| 549,582 |
| FedEx Corp. |
| 3,400 |
|
| 516,052 |
| Wal-Mart Stores, Inc. |
| 11,300 |
|
| 825,126 |
| Textron, Inc. |
| 15,300 |
|
| 559,368 |
| Wyndham Worldwide Corp. |
| 6,200 |
|
| 441,626 |
| Union Pacific Corp. |
| 7,100 |
|
| 619,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CONSUMER, NON-CYCLICAL - 19.1% |
|
|
|
|
|
| TECHNOLOGY - 4.1% |
|
|
|
|
|
| Abbott Laboratories |
| 18,500 |
|
| 727,235 |
| Analog Devices, Inc. |
| 13,500 |
|
| 764,640 |
| Aetna, Inc. |
| 5,000 |
|
| 610,650 |
| Apple, Inc. |
| 5,100 |
|
| 487,560 |
| AmerisourceBergen Corp. |
| 6,500 |
|
| 515,580 |
| Intel Corp. |
| 24,500 |
|
| 803,600 |
| Aramark |
| 14,000 |
|
| 467,880 |
| QUALCOMM, Inc. |
| 11,200 |
|
| 599,984 |
| Becton Dickinson and Co. |
| 5,100 |
|
| 864,909 |
| Xilinx, Inc. |
| 16,800 |
|
| 774,984 |
| Cardinal Health, Inc. |
| 6,800 |
|
| 530,468 |
|
|
|
|
|
|
|
| Centene Corp.* |
| 9,200 |
|
| 656,604 |
| TOTAL COMMON STOCK - 53.4% |
|
|
|
|
|
| Cigna Corp. |
| 4,100 |
|
| 524,759 |
| (Cost $43,530,084) |
|
|
| $ | 44,797,458 |
| Coca-Cola Co. |
| 16,800 |
|
| 761,544 |
|
|
|
|
|
|
|
| CR Bard, Inc. |
| 3,800 |
|
| 893,608 |
|
|
|
|
|
|
|
* Securities are non-income producing
ADR - American Depositary Receipt
See Notes to Financial Statements
15
ADVANCE CAPITAL I - BALANCED FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
|
|
|
|
|
|
| Principal |
|
|
| |
Fixed Income Securities |
| Coupon |
| Maturity |
| Amount |
| Value | ||
| COMMUNICATIONS - 3.6% |
|
|
|
|
|
|
|
|
|
|
| Alibaba Group Holding Ltd |
| 3.600 |
| 11/28/2024 |
| $ | 1,000,000 |
| $ | 1,021,170 |
| AT&T, Inc. |
| 4.750 |
| 05/15/2046 |
|
| 1,000,000 |
|
| 1,024,873 |
| Verizon Communications, Inc. |
| 3.850 |
| 11/01/2042 |
|
| 1,000,000 |
|
| 940,459 |
| CONSUMER, CYCLICAL - 0.6% |
|
|
|
|
|
|
|
|
|
|
| Walgreens Boots Alliance, Inc. |
| 3.450 |
| 06/01/2026 |
|
| 500,000 |
|
| 513,270 |
| CONSUMER, NON-CYCLICAL - 4.5% |
|
|
|
|
|
|
|
|
|
|
| Anthem, Inc. |
| 3.125 |
| 05/15/2022 |
|
| 1,000,000 |
|
| 1,034,568 |
| Celgene Corp. |
| 3.250 |
| 08/15/2022 |
|
| 500,000 |
|
| 516,424 |
| Express Scripts Holding Co. |
| 4.500 |
| 02/25/2026 |
|
| 1,000,000 |
|
| 1,098,644 |
| Gilead Sciences, Inc. |
| 4.500 |
| 04/01/2021 |
|
| 1,000,000 |
|
| 1,120,918 |
| ENERGY - 1.3% |
|
|
|
|
|
|
|
|
|
|
| Chevron Corp. |
| 2.419 |
| 11/17/2020 |
|
| 500,000 |
|
| 515,757 |
| Phillips 66 |
| 4.300 |
| 04/01/2022 |
|
| 500,000 |
|
| 546,097 |
| FINANCIAL - 7.8% |
|
|
|
|
|
|
|
|
|
|
| Bank of America Corp. |
| 5.875 |
| 01/05/2021 |
|
| 1,000,000 |
|
| 1,147,170 |
| Goldman Sachs Group, Inc. |
| 5.250 |
| 07/27/2021 |
|
| 1,000,000 |
|
| 1,128,482 |
| JPMorgan Chase & Co. |
| 3.250 |
| 09/23/2022 |
|
| 1,000,000 |
|
| 1,045,425 |
| MetLife, Inc. |
| 3.600 |
| 04/10/2024 |
|
| 1,000,000 |
|
| 1,054,657 |
| PNC Funding Corp. |
| 3.300 |
| 03/08/2022 |
|
| 1,000,000 |
|
| 1,063,505 |
| Wells Fargo & Co. |
| 4.300 |
| 07/22/2027 |
|
| 1,000,000 |
|
| 1,079,731 |
| GOVERNMENT - 4.2% |
|
|
|
|
|
|
|
|
|
|
| Federal Farm Credit Banks |
| 2.900 |
| 11/26/2027 |
|
| 500,000 |
|
| 500,024 |
| Federal National Mortgage Assoc. |
| 3.200 |
| 08/16/2032 |
|
| 1,000,000 |
|
| 1,000,387 |
| United States Treasury Note |
| 1.375 |
| 05/31/2021 |
|
| 1,000,000 |
|
| 1,018,008 |
| United States Treasury Note |
| 1.625 |
| 04/30/2023 |
|
| 1,000,000 |
|
| 1,022,461 |
| INDUSTRIAL - 1.3% |
|
|
|
|
|
|
|
|
|
|
| General Electric Co. |
| 3.100 |
| 01/09/2023 |
|
| 1,000,000 |
|
| 1,068,210 |
| MORTGAGE SECURITIES - 9.4% |
|
|
|
|
|
|
|
|
|
|
| Fannie Mae Pool |
| 7.000 |
| 04/01/2033 |
|
| 141,966 |
|
| 163,730 |
| Fannie Mae Pool |
| 6.000 |
| 10/01/2036 |
|
| 120,259 |
|
| 137,448 |
| Fannie Mae Pool |
| 4.500 |
| 01/01/2042 |
|
| 695,879 |
|
| 761,076 |
| Fannie Mae Pool |
| 4.000 |
| 07/01/2042 |
|
| 870,061 |
|
| 935,506 |
| Fannie Mae Pool |
| 3.500 |
| 10/01/2042 |
|
| 676,507 |
|
| 716,297 |
| Freddie Mac Gold Pool |
| 6.500 |
| 06/01/2024 |
|
| 78,325 |
|
| 89,978 |
| Freddie Mac Gold Pool |
| 7.000 |
| 10/01/2031 |
|
| 200,753 |
|
| 241,582 |
| Freddie Mac Gold Pool |
| 6.500 |
| 02/01/2032 |
|
| 237,073 |
|
| 273,990 |
| Freddie Mac Gold Pool |
| 6.500 |
| 08/01/2032 |
|
| 96,478 |
|
| 116,070 |
| Freddie Mac Gold Pool |
| 6.500 |
| 12/01/2032 |
|
| 186,674 |
|
| 222,180 |
| Freddie Mac Gold Pool |
| 6.500 |
| 04/01/2033 |
|
| 82,940 |
|
| 100,214 |
| Freddie Mac Gold Pool |
| 5.500 |
| 03/01/2034 |
|
| 197,894 |
|
| 224,106 |
| Freddie Mac Gold Pool |
| 5.500 |
| 06/01/2035 |
|
| 204,387 |
|
| 230,540 |
| Freddie Mac Gold Pool |
| 5.000 |
| 07/01/2035 |
|
| 259,307 |
|
| 287,244 |
| Freddie Mac Gold Pool |
| 5.000 |
| 09/01/2035 |
|
| 122,783 |
|
| 135,915 |
| Freddie Mac Gold Pool |
| 5.500 |
| 11/01/2035 |
|
| 243,770 |
|
| 274,781 |
| Freddie Mac Gold Pool |
| 6.000 |
| 02/01/2036 |
|
| 178,834 |
|
| 203,844 |
| Freddie Mac Gold Pool |
| 5.000 |
| 01/01/2037 |
|
| 170,451 |
|
| 188,839 |
| Freddie Mac Gold Pool |
| 5.500 |
| 05/01/2038 |
|
| 186,315 |
|
| 209,800 |
See Notes to Financial Statements
16
ADVANCE CAPITAL I - BALANCED FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
^Security exempt from registration under Rule 144A of the Securities Act of 1933. This security is considered liquid and may be resold in transactions exempt from registration. At June 30, 2016, the aggregate market value of this security amounted to $522,411 or 0.62% of net assets.
+ Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2016.
See Notes to Financial Statements
17
ADVANCE CAPITAL I - RETIREMENT INCOME FUND
SUMMARY OF PORTFOLIO HOLDINGS (Unaudited)
JUNE 30, 2016
![[ncsr063016008.jpg]](ncsr063016008.jpg)
Top Ten Holdings*
| Province of Quebec Canada 2.625% 2023 | 2.68% |
|
|
|
| United States Treasury Note 2.000% 2025 | 2.67% |
|
|
|
| Apple, Inc. 4.650% 2046 | 1.92% |
|
|
|
| Gilead Sciences, Inc. 4.500% 2021 | 1.91% |
|
|
|
| Cisco Systems, Inc. 4.450% 2020 | 1.88% |
|
|
|
| Freddie Mac Gold Pool 3.500% 2042 | 1.86% |
|
|
|
| Commonwealth Edison Co. 3.400% 2021 | 1.83% |
|
|
|
| Federal National Mortgage Assoc. 2.500% 2033 | 1.83% |
|
|
|
| General Electric Co. 3.100% 2023 | 1.82% |
|
|
|
| Old Republic International Corp. 4.875% 2024 | 1.82% |
|
|
|
|
|
|
|
|
|
| *Percentages based on Total Net Assets |
|
|
|
|
|
|
|
|
|
|
18
ADVANCE CAPITAL I - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
|
|
|
|
|
|
| Principal |
|
|
| |
Fixed Income Securities |
| Coupon |
| Maturity |
| Amount |
| Value | ||
| COMMUNICATIONS - 7.0% |
|
|
|
|
|
|
|
|
|
|
| Alibaba Group Holding Ltd |
| 3.600 |
| 11/28/2024 |
| $ | 2,000,000 |
| $ | 2,042,340 |
| AT&T, Inc. |
| 4.750 |
| 05/15/2046 |
|
| 2,000,000 |
|
| 2,049,745 |
| Cisco Systems, Inc. |
| 4.450 |
| 01/15/2020 |
|
| 2,000,000 |
|
| 2,209,118 |
| Verizon Communications, Inc. |
| 3.850 |
| 11/01/2042 |
|
| 2,000,000 |
|
| 1,880,918 |
| CONSUMER, CYCLICAL - 4.2% |
|
|
|
|
|
|
|
|
|
|
| Advance Auto Parts, Inc. |
| 4.500 |
| 12/01/2023 |
|
| 1,000,000 |
|
| 1,074,091 |
| Lennar Corp. |
| 4.750 |
| 11/15/2022 |
|
| 1,250,000 |
|
| 1,270,313 |
| Newell Brands, Inc. |
| 3.850 |
| 04/01/2023 |
|
| 1,500,000 |
|
| 1,591,004 |
| Walgreens Boots Alliance, Inc. |
| 3.450 |
| 06/01/2026 |
|
| 1,000,000 |
|
| 1,026,540 |
| CONSUMER, NON-CYCLICAL - 9.6% |
|
|
|
|
|
|
|
|
|
|
| Anthem, Inc. |
| 3.125 |
| 05/15/2022 |
|
| 2,000,000 |
|
| 2,069,136 |
| Celgene Corp. |
| 3.250 |
| 08/15/2022 |
|
| 2,000,000 |
|
| 2,065,696 |
| Express Scripts Holding Co. |
| 4.500 |
| 02/25/2026 |
|
| 1,000,000 |
|
| 1,098,644 |
| Gilead Sciences, Inc. |
| 4.500 |
| 04/01/2021 |
|
| 2,000,000 |
|
| 2,241,835 |
| HCA, Inc. |
| 4.750 |
| 05/01/2023 |
|
| 1,000,000 |
|
| 1,025,000 |
| Johnson & Johnson |
| 3.700 |
| 03/01/2046 |
|
| 1,500,000 |
|
| 1,688,988 |
| Sysco Corp. |
| 3.300 |
| 07/15/2026 |
|
| 1,000,000 |
|
| 1,037,473 |
| ENERGY - 1.8% |
|
|
|
|
|
|
|
|
|
|
| Chevron Corp. |
| 2.419 |
| 11/17/2020 |
|
| 1,000,000 |
|
| 1,031,513 |
| Phillips 66 |
| 4.300 |
| 04/01/2022 |
|
| 1,000,000 |
|
| 1,092,194 |
| FINANCIAL - 19.5% |
|
|
|
|
|
|
|
|
|
|
| Bank of America Corp. |
| 4.000 |
| 04/01/2024 |
|
| 2,000,000 |
|
| 2,134,585 |
| BlackRock, Inc. |
| 3.375 |
| 06/01/2022 |
|
| 1,000,000 |
|
| 1,086,475 |
| Capital One Financial Corp. |
| 4.200 |
| 10/29/2025 |
|
| 1,500,000 |
|
| 1,542,063 |
| Citigroup, Inc. |
| 5.500 |
| 09/13/2025 |
|
| 1,500,000 |
|
| 1,681,412 |
| Fairfax Financial Holdings Ltd^ |
| 5.800 |
| 05/15/2021 |
|
| 1,500,000 |
|
| 1,619,886 |
| Goldman Sachs Group, Inc. |
| 3.850 |
| 07/08/2024 |
|
| 2,000,000 |
|
| 2,120,622 |
| JPMorgan Chase & Co. |
| 3.250 |
| 09/23/2022 |
|
| 2,000,000 |
|
| 2,090,850 |
| MetLife, Inc. |
| 3.600 |
| 04/10/2024 |
|
| 2,000,000 |
|
| 2,109,314 |
| Morgan Stanley |
| 3.875 |
| 04/29/2024 |
|
| 1,500,000 |
|
| 1,605,626 |
| Old Republic International Corp. |
| 4.875 |
| 10/01/2024 |
|
| 2,000,000 |
|
| 2,136,254 |
| PNC Funding Corp. |
| 3.300 |
| 03/08/2022 |
|
| 2,000,000 |
|
| 2,127,010 |
| Visa, Inc. |
| 2.800 |
| 12/14/2022 |
|
| 1,500,000 |
|
| 1,582,482 |
| Wells Fargo & Co. |
| 4.300 |
| 07/22/2027 |
|
| 1,000,000 |
|
| 1,079,731 |
| GOVERNMENT - 14.9% |
|
|
|
|
|
|
|
|
|
|
| Federal Farm Credit Banks |
| 2.900 |
| 11/26/2027 |
|
| 2,000,000 |
|
| 2,000,094 |
| Federal National Mortgage Assoc. |
| 3.200 |
| 08/16/2032 |
|
| 2,000,000 |
|
| 2,000,774 |
| Federal National Mortgage Assoc. |
| 3.000 |
| 12/27/2032 |
|
| 1,000,000 |
|
| 1,000,670 |
| Federal National Mortgage Assoc. |
| 2.500 |
| 01/24/2033 |
|
| 2,145,000 |
|
| 2,145,459 |
| Province of Quebec Canada |
| 2.625 |
| 02/13/2023 |
|
| 3,000,000 |
|
| 3,147,957 |
| United States Treasury Note |
| 1.375 |
| 05/31/2021 |
|
| 2,000,000 |
|
| 2,036,016 |
| United States Treasury Note |
| 1.625 |
| 04/30/2023 |
|
| 2,000,000 |
|
| 2,044,922 |
| United States Treasury Note |
| 2.000 |
| 08/15/2025 |
|
| 3,000,000 |
|
| 3,136,290 |
See Notes to Financial Statements
19
ADVANCE CAPITAL I - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
|
|
|
|
|
|
| Principal |
|
|
| |
Fixed Income Securities |
| Coupon |
| Maturity |
| Amount |
| Value | ||
| INDUSTRIAL - 3.1% |
|
|
|
|
|
|
|
|
|
|
| General Electric Co. |
| 3.100 |
| 01/09/2023 |
| $ | 2,000,000 |
| $ | 2,136,420 |
| United Parcel Service, Inc. |
| 2.450 |
| 10/01/2022 |
|
| 1,500,000 |
|
| 1,559,455 |
| MORTGAGE SECURITIES - 25.4% |
|
|
|
|
|
|
|
|
|
|
| Fannie Mae Pool |
| 7.000 |
| 02/01/2032 |
|
| 270,703 |
|
| 322,485 |
| Fannie Mae Pool |
| 7.000 |
| 03/01/2032 |
|
| 298,219 |
|
| 366,403 |
| Fannie Mae Pool |
| 7.000 |
| 04/01/2033 |
|
| 222,049 |
|
| 256,090 |
| Fannie Mae Pool |
| 6.000 |
| 10/01/2036 |
|
| 326,124 |
|
| 372,739 |
| Fannie Mae Pool |
| 6.000 |
| 07/01/2037 |
|
| 494,258 |
|
| 564,791 |
| Fannie Mae Pool |
| 4.000 |
| 08/01/2041 |
|
| 1,686,246 |
|
| 1,812,465 |
| Fannie Mae Pool |
| 4.000 |
| 11/01/2041 |
|
| 1,945,299 |
|
| 2,090,663 |
| Fannie Mae Pool |
| 4.500 |
| 01/01/2042 |
|
| 1,043,819 |
|
| 1,141,614 |
| Fannie Mae Pool |
| 4.000 |
| 07/01/2042 |
|
| 1,104,839 |
|
| 1,187,944 |
| Fannie Mae Pool |
| 4.000 |
| 07/01/2042 |
|
| 1,462,956 |
|
| 1,573,017 |
| Fannie Mae Pool |
| 3.500 |
| 10/01/2042 |
|
| 1,353,013 |
|
| 1,432,594 |
| Freddie Mac Gold Pool |
| 6.500 |
| 06/01/2024 |
|
| 182,758 |
|
| 209,949 |
| Freddie Mac Gold Pool |
| 7.000 |
| 10/01/2031 |
|
| 342,601 |
|
| 412,280 |
| Freddie Mac Gold Pool |
| 6.500 |
| 02/01/2032 |
|
| 379,688 |
|
| 438,813 |
| Freddie Mac Gold Pool |
| 7.000 |
| 05/01/2032 |
|
| 507,953 |
|
| 625,503 |
| Freddie Mac Gold Pool |
| 6.500 |
| 08/01/2032 |
|
| 128,638 |
|
| 154,760 |
| Freddie Mac Gold Pool |
| 6.500 |
| 04/01/2033 |
|
| 248,819 |
|
| 300,642 |
| Freddie Mac Gold Pool |
| 7.000 |
| 09/01/2033 |
|
| 95,881 |
|
| 117,627 |
| Freddie Mac Gold Pool |
| 5.500 |
| 03/01/2034 |
|
| 593,681 |
|
| 672,318 |
| Freddie Mac Gold Pool |
| 5.500 |
| 04/01/2034 |
|
| 801,172 |
|
| 904,005 |
| Freddie Mac Gold Pool |
| 5.000 |
| 06/01/2034 |
|
| 269,270 |
|
| 298,276 |
| Freddie Mac Gold Pool |
| 5.500 |
| 12/01/2034 |
|
| 660,605 |
|
| 746,460 |
| Freddie Mac Gold Pool |
| 5.500 |
| 01/01/2035 |
|
| 499,359 |
|
| 564,262 |
| Freddie Mac Gold Pool |
| 5.500 |
| 06/01/2035 |
|
| 812,439 |
|
| 916,395 |
| Freddie Mac Gold Pool |
| 5.000 |
| 07/01/2035 |
|
| 771,439 |
|
| 854,552 |
| Freddie Mac Gold Pool |
| 5.000 |
| 08/01/2035 |
|
| 885,050 |
|
| 990,462 |
| Freddie Mac Gold Pool |
| 5.000 |
| 09/01/2035 |
|
| 491,133 |
|
| 543,662 |
| Freddie Mac Gold Pool |
| 5.000 |
| 11/01/2035 |
|
| 275,151 |
|
| 304,941 |
| Freddie Mac Gold Pool |
| 5.500 |
| 11/01/2035 |
|
| 731,311 |
|
| 824,343 |
| Freddie Mac Gold Pool |
| 6.000 |
| 02/01/2036 |
|
| 491,795 |
|
| 560,570 |
| Freddie Mac Gold Pool |
| 5.000 |
| 01/01/2037 |
|
| 511,353 |
|
| 566,518 |
| Freddie Mac Gold Pool |
| 5.500 |
| 12/01/2037 |
|
| 177,445 |
|
| 198,470 |
| Freddie Mac Gold Pool |
| 5.500 |
| 05/01/2038 |
|
| 673,112 |
|
| 757,951 |
| Freddie Mac Gold Pool |
| 5.500 |
| 05/01/2038 |
|
| 568,649 |
|
| 640,328 |
| Freddie Mac Gold Pool |
| 6.500 |
| 10/01/2038 |
|
| 427,710 |
|
| 503,682 |
| Freddie Mac Gold Pool |
| 5.500 |
| 01/01/2039 |
|
| 787,135 |
|
| 889,262 |
| Freddie Mac Gold Pool |
| 6.000 |
| 09/01/2039 |
|
| 760,865 |
|
| 867,944 |
| Freddie Mac Gold Pool |
| 4.000 |
| 12/01/2040 |
|
| 1,559,854 |
|
| 1,698,844 |
| Freddie Mac Gold Pool |
| 3.500 |
| 09/01/2042 |
|
| 2,065,480 |
|
| 2,181,002 |
See Notes to Financial Statements
20
ADVANCE CAPITAL I - RETIREMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
^Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities are considered liquid and may be resold in transactions exempt from registration. At June 30, 2016, the aggregate value of these securities amounted to $2,664,708 or 2.27% of net assets.
+ Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2016.
See Notes to Financial Statements
21
ADVANCE CAPITAL I - CORE EQUITY FUND
SUMMARY OF PORTFOLIO HOLDINGS (Unaudited)
JUNE 30, 2016
![[ncsr063016009.jpg]](ncsr063016009.jpg)
Top Ten Holdings*
| SPDR S&P 500 ETF | 4.49% |
|
|
|
| Hershey Co. | 3.00% |
|
|
|
| Medtronic PLC | 2.84% |
|
|
|
| Becton Dickinson and Co. | 2.78% |
|
|
|
| Johnson & Johnson | 2.75% |
|
|
|
| General Mills, Inc. | 2.70% |
|
|
|
| 3M Co. | 2.65% |
|
|
|
| Wal-Mart Stores, Inc. | 2.58% |
|
|
|
| Procter & Gamble Co. | 2.56% |
|
|
|
| PepsiCo, Inc. | 2.54% |
* Percentages based on Total Net Assets
22
ADVANCE CAPITAL I - CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
| Common Stock |
| Shares |
| Value |
| Common Stock |
| Shares |
| Value | ||
| BASIC MATERIALS - 4.1% |
|
|
|
|
|
| CONSUMER, NON-CYCLICAL - 37.5% (continued) | |||||
| Ecolab, Inc. |
| 800 |
| $ | 94,880 |
| Cardinal Health, Inc. |
| 1,100 |
| $ | 85,811 |
| Monsanto Co. |
| 1,000 |
|
| 103,410 |
| Centene Corp.* |
| 1,500 |
|
| 107,055 |
| Mosaic Co. |
| 1,600 |
|
| 41,888 |
| Cigna Corp. |
| 600 |
|
| 76,794 |
| Sherwin-Williams Co. |
| 300 |
|
| 88,101 |
| Coca-Cola Co. |
| 4,200 |
|
| 190,386 |
| COMMUNICATIONS - 6.4% |
|
|
|
|
|
| Express Scripts Holding Co.* |
| 1,300 |
|
| 98,540 |
| Comcast Corp. |
| 1,300 |
|
| 84,747 |
| General Mills, Inc. |
| 3,000 |
|
| 213,960 |
| eBay, Inc.* |
| 3,700 |
|
| 86,617 |
| Hershey Co. |
| 2,100 |
|
| 238,329 |
| Interpublic Group of Cos |
| 3,500 |
|
| 80,850 |
| Johnson & Johnson |
| 1,800 |
|
| 218,340 |
| Juniper Networks, Inc. |
| 3,600 |
|
| 80,964 |
| Kroger Co. |
| 2,400 |
|
| 88,296 |
| T-Mobile US, Inc.* |
| 2,200 |
|
| 95,194 |
| Mallinckrodt PLC* |
| 1,400 |
|
| 85,092 |
| Twenty-First Century Fox, Inc. |
| 2,800 |
|
| 75,740 |
| Medtronic PLC |
| 2,600 |
|
| 225,602 |
| CONSUMER, CYCLICAL - 21.4% |
|
|
|
|
|
| PepsiCo, Inc. |
| 1,900 |
|
| 201,286 |
| Alaska Air Group, Inc. |
| 1,200 |
|
| 69,948 |
| Procter & Gamble Co. |
| 2,400 |
|
| 203,208 |
| BorgWarner, Inc. |
| 2,300 |
|
| 67,896 |
| Tyson Foods, Inc. |
| 1,300 |
|
| 86,827 |
| CVS Health Corp. |
| 900 |
|
| 86,166 |
| UnitedHealth Group, Inc. |
| 700 |
|
| 98,840 |
| Delta Air Lines, Inc. |
| 1,900 |
|
| 69,217 |
| ENERGY - 0.9% |
|
|
|
|
|
| Home Depot, Inc. |
| 1,300 |
|
| 165,997 |
| Valero Energy Corp. |
| 1,400 |
|
| 71,400 |
| Kohl’s Corp. |
| 1,800 |
|
| 68,256 |
| FINANCIAL - 4.3% |
|
|
|
|
|
| Lear Corp. |
| 800 |
|
| 81,408 |
| Affiliated Managers Group, Inc.* |
| 600 |
|
| 84,462 |
| Liberty Interactive Corp.* |
| 3,200 |
|
| 81,184 |
| Berkshire Hathaway, Inc.* |
| 600 |
|
| 86,874 |
| Macy’s, Inc. |
| 1,900 |
|
| 63,859 |
| Synchrony Financial |
| 3,100 |
|
| 78,368 |
| McDonald’s Corp. |
| 1,400 |
|
| 168,476 |
| Unum Group |
| 2,900 |
|
| 92,191 |
| NIKE, Inc. |
| 3,000 |
|
| 165,600 |
| INDUSTRIAL - 8.5% |
|
|
|
|
|
| PVH Corp. |
| 800 |
|
| 75,384 |
| 3M Co. |
| 1,200 |
|
| 210,144 |
| Southwest Airlines Co. |
| 2,000 |
|
| 78,420 |
| AMERCO* |
| 300 |
|
| 112,365 |
| VF Corp. |
| 2,800 |
|
| 172,172 |
| Boeing Co. |
| 700 |
|
| 90,909 |
| Wal-Mart Stores, Inc. |
| 2,800 |
|
| 204,456 |
| FedEx Corp. |
| 500 |
|
| 75,890 |
| Wyndham Worldwide Corp. |
| 1,100 |
|
| 78,353 |
| Textron, Inc. |
| 2,500 |
|
| 91,400 |
| CONSUMER, NON-CYCLICAL - 37.5% |
|
|
|
|
|
| Union Pacific Corp. |
| 1,100 |
|
| 95,975 |
| Abbott Laboratories |
| 4,600 |
|
| 180,826 |
| TECHNOLOGY - 9.5% |
|
|
|
|
|
| AbbVie, Inc. |
| 1,500 |
|
| 92,865 |
| Analog Devices, Inc. |
| 3,300 |
|
| 186,912 |
| Aetna, Inc. |
| 800 |
|
| 97,704 |
| Apple, Inc. |
| 800 |
|
| 76,480 |
| AmerisourceBergen Corp. |
| 1,000 |
|
| 79,320 |
| IBM |
| 1,300 |
|
| 197,314 |
| Aramark |
| 2,400 |
|
| 80,208 |
| Intel Corp. |
| 6,100 |
|
| 200,080 |
| Becton Dickinson and Co. |
| 1,300 |
|
| 220,467 |
| QUALCOMM, Inc. |
| 1,800 |
|
| 96,426 |
*Securities are non-income producing
See Notes to Financial Statements
23
ADVANCE CAPITAL I - CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS (Unaudited)
JUNE 30, 2016
| Common Stock, Exch. Traded Funds |
|
|
|
| |
| and Short-Term Investments |
| Shares |
| Value | |
| TOTAL COMMON STOCK - 92.6% |
|
|
|
|
|
| (Cost $7,180,697) |
|
|
| $ | 7,346,129 |
|
|
|
|
|
|
|
| EXCHANGE TRADED FUNDS |
|
|
|
|
|
| SPDR S&P500 ETF |
| 1,700 |
|
| 356,108 |
|
|
|
|
|
|
|
| TOTAL EXCHANGE TRADED FUNDS - 4.5% |
|
|
|
|
|
| (Cost $343,466) |
|
|
|
| 356,108 |
|
|
|
|
|
|
|
| SHORT-TERM INVESTMENTS - 3.7% |
|
|
|
|
|
| Federated Treasury Obligations Fund, 0.24% Yield+ |
|
|
|
|
|
| (Cost $295,803) |
| 295,803 |
|
| 295,803 |
|
|
|
|
|
|
|
| TOTAL INVESTMENTS IN SECURITIES - 100.8% |
|
|
|
|
|
| (Cost $7,819,966) |
|
|
|
| 7,998,040 |
| OTHER ASSETS LESS LIABILITIES - (0.8)% |
|
|
|
| (64,956) |
|
|
|
|
|
|
|
| TOTAL NET ASSETS - 100.0% |
|
|
| $ | 7,933,084 |
*Securities are non-income producing
+ Variable rate security. Interest rate disclosed is that which is in effect at June 30, 2016.
See Notes to Financial Statements
24
ADVANCE CAPITAL I, INC.
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2016
See Notes to Financial Statements
25
ADVANCE CAPITAL I, INC.
STATEMENTS OF OPERATIONS (Unaudited)
SIX MONTHS ENDED JUNE 30, 2016
See Notes to Financial Statements
26
ADVANCE CAPITAL I, INC.
STATEMENTS OF CHANGES IN NET ASSETS
See Notes to Financial Statements
27
ADVANCE CAPITAL I, INC.
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
See Notes to Financial Statements
28
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Note 1. ORGANIZATION OF THE COMPANY
Advance Capital I, Inc. (the “Company”) is a Maryland Corporation organized on March 6, 1987 that 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 portfolios: Equity Growth Fund, Balanced Fund, Retirement Income Fund and the Core Equity Fund (collectively the “Funds”). Advance Capital Management, Inc. (“Management” or “Adviser”) (a wholly owned subsidiary of Advance Capital Group, Inc.) is the Company’s investment adviser.
The Funds offer Retail Class shares and Institutional Class shares, each of which has equal rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. The two share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for distribution. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
Under the Company’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with their vendors and others that provide for general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect that risk of loss to be remote.
The Funds are an investment company and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services - Investment Companies.
Note 2. ACCOUNTING POLICIES
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from these estimates.
The following is a summary of significant accounting policies followed by the Company.
Security Valuation
Equity securities for which exchange quotations are readily available are valued at the last quoted market price at the time the valuations are made and debt securities are valued using prices furnished by an independent third party pricing service. The independent third party pricing service may use a matrix, formula or other objective method that considers the effect of market indices, yield curves and other specific adjustments to determine market price. When reliable market quotations are not readily available or are considered unreliable, securities are priced at their fair value, determined according to procedures adopted by the Board of Directors, which may include using an independent pricing service. Fair value procedures may also be used if the Company determines that a significant event has occurred between the time at which a market price is determined but prior to the time at which a Fund’s net asset value is calculated. Money market instruments or short-term debt held by the Funds with a remaining maturity of sixty days or less are valued at net asset value or amortized cost, when amortized cost approximates fair value best.
29
Note 2. ACCOUNTING POLICIES (Continued)
Fair Value Measurement
As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. GAAP establishes a hierarchy that prioritizes inputs to valuation methods.
The three levels of the fair value hierarchy are described below:
Level 1 – quoted prices in active markets for identical securities
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments.)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value each Fund’s investments as of June 30, 2016:
* Please refer to the Portfolios of Investments to view common stock and fixed income securities segregated by industry type.
There were no transfers between levels of the fair value hierarchy during the six month period ended June 30, 2016. The Funds did not hold any Level 3 investments during the six month period ended June 30, 2016. It is the Funds’ policy to consider transfers into or out of each Level as of the end of the reporting period.
30
Note 2. ACCOUNTING POLICIES (Continued)
Allocation of Income, Expenses, Gains and Losses
Income, fees and expenses of the Company (other than class-specific fees and expenses) and realized and unrealized gains and losses are allocated on a daily basis to each class of shares or Fund based upon their relative net assets. Class-specific fees and expenses are charged directly to the respective share class. Fund-specific fees and expenses are charged directly to the respective Fund.
Federal Income Taxes
It is each Fund’s policy to meet the requirements to qualify each year as a registered investment company under Subchapter M of the Internal Revenue Code. Each Fund intends to distribute all of its taxable income to its shareholders. Therefore, no federal income tax provision is provided. Capital losses are available to offset future capital gains, if any.
Management has analyzed the Funds’ tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed, or expected to be taken on the Funds’ 2016 tax return. The Funds are also not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable), including the recognition of any related interest and penalties as an operating expense. During the six months ended June 30, 2016, the Funds did not incur any interest or penalties.
Dividends
Income dividends in the Balanced Fund and Retirement Income Fund are declared daily, except on Saturdays, Sundays and holidays and are paid monthly on the last business day of the month. Income dividends in the Equity Growth Fund and Core Equity Fund, if any, are declared annually and paid on the last business day of the year. Capital gain distributions, if any, are declared annually and paid in December. Dividends to shareholders are recorded on the ex-dividend date.
The amount of distributions from net investment income and net realized gains are determined in accordance with federal income tax regulations which may differ from GAAP. These “book/tax” differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require a reclassification.
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 specific identification method for book and tax purposes. Paydown gains and losses on mortgage-backed and asset-backed securities are recorded as adjustments to interest income in the Statements of Operations. Net investment losses, for which no carryover is permitted, are offset against paid in capital.
31
Note 3. TRANSACTIONS WITH AFFILIATES
Advance Capital Management, Inc. (a wholly owned subsidiary of Advance Capital Group, Inc.) serves as the Company’s investment advisor. 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 on an annual basis equal to .70% of the average daily net assets for the first $500 million and .65% of the average daily net assets exceeding $500 million of the Equity Growth and Balanced Funds; .50% of the average daily net assets for the first $500 million and .45% of the average daily net assets exceeding $500 million of the Retirement Income Fund; and .80% of the average daily net assets of the Core Equity Fund. Group provides administrative, transfer agent and dividend disbursing agent services to the Company and is reimbursed by the Company for all expenses in connection with the performance of its services. The Company will compensate Services for expenses incurred in connection with the distribution of Retail Class shares of the Equity Growth, Balanced, Retirement Income and Core Equity, at .25% of each Fund’s average daily net assets.
Effective April 22, 2016, the Board of Directors of the Advance Capital I, Inc. Funds approved an Expense Limitation Agreement between the Company and Management whereby Management agreed at least until April 30, 2017, to waive its fees and/or reimburse expenses of the Institutional Class of shares of the Retirement Income
Fund to the extent necessary to maintain the total annual operating expenses (excluding any front-end or contingent deferred loads, brokerage fees and commissions, acquired fund fees and expenses, expenses associated with instruments in other collective investment vehicles or derivative instruments, borrowing costs, and extraordinary expenses) at a level not to exceed 0.51% of the daily net assets. There is no waiver in place for the Retail Class of shares of the Retirement Income Fund. Waived fees in the Institutional Class of shares of the Retirement Income Fund are subject to repayment in the three fiscal years following the fiscal year in which the expenses occurred, if the Institutional Class of shares of the Retirement Income Fund is able to make the repayment without exceeding its current expense limitation. For the six months ended June 30, 2016, Management waived fees of $580 which are subject to repayment until December 31, 2019.
For the six months ended June 30, 2016, the Company incurred investment advisory fees of $156,304, $308,784, $318,771 and $33,383 by Management for the Equity Growth Fund, Balanced Fund, Retirement Income Fund and Core Equity Fund, respectively. For the six months ended June 30, 2016, the Company was charged distribution fees of $54,108, $109,048, $158,760, and $10,247 by Services for Retail Class shares for the Equity Growth Fund, Balanced Fund, Retirement Income Fund and Core Equity Fund, respectively.
Certain officers and directors of Group, Management, and Services are also officers and directors of the Company. Director’s fees are only paid to independent directors and consist of quarterly payments of $5,150 to each director. The Chairman of the Board receives an additional 50% in compensation.
Note 4. INVESTMENT PORTFOLIO TRANSACTIONS
The cost of purchases and proceeds from sales of investments, other than short-term obligations and U.S. Government securities, for the six months ended June 30, 2016 were as follows:
|
| Equity |
| Retirement | Core |
|
| Growth Fund | Balanced Fund | Income Fund | Equity Fund |
| Purchases | $30,188,188 | $45,586,891 | $22,422,725 | $5,464,338 |
| Sales | 35,291,500 | 65,267,321 | 50,009,328 | 6,549,481 |
32
Note 4. INVESTMENT PORTFOLIO TRANSACTIONS (Continued)
The cost of purchases and proceeds from sales of U.S. Government securities excluded above were as follows:
|
| Equity |
| Retirement | Core |
|
| Growth Fund | Balanced Fund | Income Fund | Equity Fund |
| Purchases | $0 | $2,016,094 | $4,032,188 | $0 |
| Sales | 0 | 0 | 0 | 0 |
At June 30, 2016, the gross unrealized net appreciation and depreciation of securities for financial federal income tax reporting purposes consisted of the following:
|
| Equity |
| Retirement | Core |
|
| Growth Fund | Balanced Fund | Income Fund | Equity Fund |
| Unrealized Gain | $3,226,270 | $3,883,348 | $4,693,912 | $480,407 |
| Unrealized Loss | (1,955,923) | (1,612,813) | (44,189) | (302,333) |
| Net Unrealized Gain/(Loss) | $1,270,347 | $2,270,535 | $4,649,723 | $178,074 |
Note 5. AUTHORIZED SHARES
The Company has one billion authorized shares of common stock, par value of $.001 per share. Each of the Company’s portfolios has 150 million shares authorized for Retail Class shares and 100 million shares authorized for Institutional Class shares.
Note 6. FEDERAL INCOME TAX INFORMATION
The tax characteristics of distributions paid to shareholders during the six months ended June 30, 2016 and the year ended December 31, 2015 were as follows:
| Six months ended | Distributions Paid from | Long Term | Return of | Total Distributions |
| June 30, 2016 | Ordinary Income | Capital Gain | Capital | Paid |
| Equity Growth Fund | $0 | $0 | $0 | $0 |
| Balanced Fund | 690,944 | 0 | 0 | 690,944 |
| Retirement Income Fund | 1,599,458 | 0 | 0 | 1,599,458 |
| Core Equity Fund | 0 | 0 | 0 | 0 |
|
|
|
|
|
|
| Year ended | Distributions Paid from | Long Term | Return of | Total Distributions |
| December 31, 2015 | Ordinary Income | Capital Gain | Capital | Paid |
| Equity Growth Fund | $527,755 | $102,454 | $0 | $630,209 |
| Balanced Fund | 2,091,502 | 116,460 | 0 | 2,207,962 |
| Retirement Income Fund | 4,881,082 | 0 | 0 | 4,881,082 |
| Core Equity Fund | 119,430 | 0 | 0 | 119,430 |
33
Note 6. FEDERAL INCOME TAX INFORMATION (Continued)
As of December 31, 2015 the components of accumulated earnings/(deficit) on a tax basis were as follows:
|
| Undistributed |
|
| Total |
|
| Accumulated | Accumulated |
| Accumulated |
|
| Net Investment | Capital Gains and | Unrealized | Earnings/ |
|
| Income | Losses | Gain/(Loss) | (Deficit) |
| Equity Growth Fund | $10,492 | ($1,053,434) | ($1,830,897) | ($2,873,839) |
| Balanced Fund | 0 | (3,337,164) | (1,073,142) | (4,410,306) |
| Retirement Income Fund | 0 | (55,115,123) | 635,052 | (54,480,071) |
| Core Equity Fund | 0 | (50,860) | 134,611 | 83,751 |
At December 31, 2015, capital loss carryovers and their expiration dates were as follows:
|
| Equity |
| Retirement | Core |
|
| Growth Fund | Balanced Fund | Income Fund | Equity Fund |
| December 31, 2016 | $0 | $0 | $39,244,091 | $0 |
| December 31, 2017 | 0 | 0 | 10,127,592 | 0 |
| December 31, 2018 | 0 | 0 | 3,971,993 | 0 |
| Nonexpiring Losses-ST | 853,014 | 3,337,164 | 639,388 | 50,860 |
| Nonexpiring Losses-LT | 200,420 | 0 | 1,132,059 | 0 |
| Total | $1,053,434 | $3,337,164 | $55,115,123 | $50,860 |
Under the Regulated Investment Company Modernization Act of 2010, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
34
Note 7. SUBSEQUENT EVENTS
Effective August 1, 2016, the Board of Directors of the Advance Capital I, Inc. Funds approved an Expense Limitation Agreement between the Company and Management whereby Management agreed at least until April 30, 2017, to waive its fees and/or reimburse expenses incurred by each share class of each Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses) at a level not to exceed the following:
| Fund | Operating Expense Limit |
| Balanced Fund |
|
| Institutional Class | 0.95% |
| Retail Class | 1.20% |
| Core Equity Fund |
|
| Institutional Class | 1.19% |
| Retail Class | 1.44% |
| Equity Growth Fund |
|
| Institutional Class | 0.99% |
| Retail Class | 1.24% |
| Retirement Income Fund |
|
| Institutional Class | 0.50% |
| Retail Class | 0.99% |
On July 29, 2016, the Board of Directors of the Advance Capital I, Inc. Funds approved a Plan of Liquidation to close each Fund and redeem all outstanding shares on or before March 31, 2017. Effective August 8, 2016, each Fund will no longer accept new subscriptions to the Funds or subsequent purchases. Any shareholders who have not redeemed their shares prior to March 31, 2017 will have their shares automatically redeemed as of that date the respective Fund’s net asset value and proceeds will be sent to the address of record.
35
ADDITIONAL INFORMATION (UNAUDITED)
Expense Examples:
As a shareholder of the Advance Capital I, Inc. Funds, you incur ongoing costs, including management fees; distribution (and/or service) 12b-1 fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Advance Capital I, Inc. Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2016 through June 30, 2016.
actual expenses
The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
|
| Beginning | Ending | Expense Paid | Expense Ratio |
|
| Account Value | Account Value | During Period* | During Period |
|
| 1/1/16 | 6/30/16 | 1/1/16 - 6/30/16 | 1/1/16 - 6/30/16 |
| Equity Growth Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,057.90 | $6.29 | 1.23% |
| Institutional shares | 1,000.00 | 1,059.60 | 5.02 | 0.98% |
| Balanced Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,042.80 | $6.04 | 1.19% |
| Institutional shares | 1,000.00 | 1,044.80 | 4.78 | 0.94% |
| Retirement Income Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,048.20 | $4.99 | 0.98% |
| Institutional shares | 1,000.00 | 1,050.50 | 2.55 | 0.50% |
| Core Equity Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,030.70 | $7.22 | 1.43% |
| Institutional shares | 1,000.00 | 1,031.60 | 5.96 | 1.18% |
*Expenses are equal to the average account value times each Fund’s annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year.
36
Hypothetical Example For Comparison Purposes
The table below provides information about the hypothetical values and hypothetical expenses based on each Advance Capital I, Inc. Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
|
| Beginning | Ending | Expense Paid | Expense Ratio |
|
| Account Value | Account Value | During Period* | During Period |
|
| 1/1/16 | 6/30/16 | 1/1/16 - 6/30/16 | 1/1/16 - 6/30/16 |
| Equity Growth Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,018.75 | $6.17 | 1.23% |
| Institutional shares | 1,000.00 | 1,019.99 | 4.92 | 0.98% |
| Balanced Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,018.95 | $5.97 | 1.19% |
| Institutional shares | 1,000.00 | 1,020.19 | 4.72 | 0.94% |
| Retirement Income Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,019.99 | $4.92 | 0.98% |
| Institutional shares | 1,000.00 | 1,022.38 | 2.51 | 0.50% |
| Core Equity Fund |
|
|
|
|
| Retail shares | $1,000.00 | $1,017.75 | $7.17 | 1.43% |
| Institutional shares | 1,000.00 | 1,019.00 | 5.92 | 1.18% |
*Expenses are equal to the average account value times each Fund’s annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year.
Proxy Voting
The policies and procedures that Advance Capital I, Inc. uses to determine how to vote proxies relating to portfolio securities are available on the SEC’s website at www.sec.gov. Information on how the Funds voted proxies relating to portfolio securities during the 12 month period ended June 30, 2016 is available at (1) without charge, upon request, by calling (800) 345-4783, and (2) on the SEC’s website at www.sec.gov.
Quarterly Portfolio Schedule
The Funds file with the SEC a complete schedule of its portfolio holdings as of the close of the first and third quarters of its fiscal year, on “Form N-Q”. These filings are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (Call 1-800-SEC-0330 for information on the operation of the Public Reference Room.) This information is also available without charge, upon request, by calling (800) 345-4783.
37
PRIVACY POLICY
The Company considers the privacy of its investors to be of fundamental importance and has established a policy to maintain the privacy of the information you share with us. We do not sell any information to any third parties, however, we do collect and maintain certain nonpublic personal information about you, including the following:
•
Name and address
•
Social Security number
•
Assets
•
Account balance
•
Investment activity
•
Other accounts
Any personal or financial information provided to the Company is kept strictly confidential.
•
The Company restricts access to personal and financial information to certain employees in order to provide products and services.
•
Employees share information outside of the Company only as authorized by you or as required by law.
Physical, electronic and procedural safeguards are in place to guard your nonpublic information. These safeguards comply with federal and state standards.
38
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![[ncsr063016010.jpg]](ncsr063016010.jpg)
Item 2. Code of Ethics.
Not applicable for the semi-annual report.
Item 3. Audit Committee Financial Expert.
Not applicable for the semi-annual report.
Item 4. Principal Accountant Fees and Services.
Not applicable for the semi-annual report.
Item 5. Audit Committee of Listed Registrant.
Not applicable because registrant’s shares are not listed for trading on a national securities exchange.
Item 6. Schedule of Investments.
Schedule I - Investments in securities of unaffiliated issuers is included as part of the report to shareholders filed under Item I of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-end Management Investment Companies.
Not applicable for open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable for open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable for open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a)
The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Investment Company Act of 1940, as amended (the “1940 Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures. The Company’s principal executive officer and principal financial officer, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act) are effective, based on their evaluation of the disclosure controls and procedures as of June 30, 2015, a date that is within 90 days of the filing date of this report.
(b)
There were no significant changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1)
Not applicable.
(a)(2)
Certification pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
(a)(3)
Not applicable.
(b)
Certification pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ADVANCE CAPITAL I, INC.
By:
/s/ Christopher M. Kostiz
Christopher M. Kostiz, President
(principal executive officer)
Date: August 31, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
By:
/s/ Christopher M. Kostiz
Christopher M. Kostiz, President
(principal executive officer)
Date: August 31, 2016
By:
/s/ Julie A. Katynski
Julie A. Katynski, Vice President, Treasurer & Assistant Secretary
(principal financial officer)
Date: August 31, 2016