<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
================================================================================
One Oakbrook Terrace
Suite 708
Oakbrook Terrace, Illinois 60181
708-932-3000
May 13, 1996
Semi-Annual Report
Period Ended March 31, 1996
Dear Shareholder:
We are pleased to report that Universal Capital Growth Fund had a total return
of 7.3% for the 6-month period ended March 31, 1996. The total return is the
percentage change in the value of an investment in the fund, including the value
of shares acquired through the reinvestment of the dividend of $2.33 per share
which was paid on December 14, 1995.
The fund's investment performance results are summarized in the following
tables:
<TABLE>
<CAPTION>
------------------------------------------------
Table I
Total Returns Through
March 31, 1996
Period Total Return
------ ------------
<S> <C>
Past Quarter 5.0%
Past Six Months 7.3%
Past Year 35.1%
------------------------------------------------
-------------------------------------------------------------------------
Table II
Average Annual Total Returns
Through March 31, 1996
Past Past Past Life of
1 year 3 years 5 years Fund/1)/
------ ------- ------- --------
Without Sales Charge
35.1% 19.6% 14.9% 15.1%
With 1.5% Sales Charge 33.1% 19.0% 14.5% 14.8%
/1)/ since inception on 1/22/91
-------------------------------------------------------------------------
</TABLE>
As most of our shareholders know, our investment strategy is to seek to invest
in the best of both the large and small capitalization stocks. In both
categories we primarily try to invest in companies that we believe have the
potential for good earnings growth and are either undervalued or fairly valued.
We call this our "BEST OF BOTH WORLDS" strategy.
Our LARGE CAPITALIZATION STOCKS typically have demonstrated increasing sales and
earnings and may have
<PAGE>
leadership positions in markets in which they compete. These are companies like
General Electric, Hewlett Packard, Abbott Laboratories, Johnson and Johnson and
Walgreens.
Our SMALL CAPITALIZATION STOCKS may have had recent favorable trends in revenue
and earnings growth due to a product or service that offers the opportunity for
substantial future growth in a specialized market, companies like Cognex, Bio-
Rad Laboratories, Applebees and 3D Systems Corp. For example, 3D Systems, which
makes machines that fabricate solid objects (using a patented process involving
lasers and liquid plastic) using input from designs that engineers have made on
computers (i.e., CAD or computer-aided design systems), has seen revenues grow
the last three years from $31 million to $43 million to $63 million while the
company's net earnings have grown from $531,000 (in 1993) to $4.5 million (in
1994) to $8.9 million in 1995.
A description of a few of our investment selections is shown on an attached
sheet.
Semi-Annual Period Ended March 31, 1996
- ---------------------------------------
For our fiscal semi-annual period ended March 31, 1996, Universal Capital Growth
Fund had a total return of 7.3%. During the same period the S&P 500 Index had a
total return of 11.7%.
This was a period in which many technology stocks suffered a steep downturn
while many industrial stocks did well. Fortunately, we cut or sold positions in
several of our technology stocks such as Micron Technology, Texas Instruments
and Motorola on anticipation of poorer results and before most of the downturn.
However, our underweighting of industrial stocks caused us to have an investment
return slightly less than the S&P 500 Index for this period. Additionally, of
course, this 6-month period followed a two-year period (from Sept. 30, 1993 to
Sept. 30, 1995) when our fund rose 48.2% while the S&P 500 Index rose 34.5%
In a way, this was an unusual and volatile period for the market. During the
last quarter of last year and the first month of this year, market analysts
generally believed that the economy was slowing down, that interest rates would
keep falling, and even that the economy might be looking at a recession sometime
later this year. Then, suddenly, with a couple of economic reports indicating a
stronger than expected economy, interest rates began rising and a fear of
inflation developed. Recently, (in the past two to three months), small
capitalization stocks and technology stocks have been strong based on the
hypothesis that the economy is strengthening and computer sales aren't as
lackluster this year as some believed.
While we carefully watch economic indicators, we tend not to make general broad-
based investment decisions too often based on this type of analysis because the
resulting economic actuality often does not correspond with the often faulty
initial analysis.
Instead, we try to pick our stocks one at a time, based on the fundamental
revenue and earnings growth prospects of each stock. We also carefully look at
the valuation of each stock since both short-term and long-term investment
return on a particular stock can be adversely affected if it is approaching
overvaluation. For example, we recently sold our position in a long-time
favorite for consistent and predictable earnings growth, Coca-Cola, because we
believe it will have limited upside appreciation for a while as it is highly
priced relative to its past earnings and its earnings potential. On the other
hand, we increased our position in Schering Plough, which may have future
earnings growth similar to Coca-Cola's but sells at a price-to-earnings ratio
considerably less than Coke's.
In short, we remain committed to our methodology of focusing on earnings growth
and value in both blue-chip large capitalization stocks and rapidly growing
small capitalization stocks. While our fund will, of
<PAGE>
course, have fluctuations in value and performance, we believe that our
methodology will help us achieve our investment objective of maximum capital
appreciation.
Thank you for your confidence as shareholders of the Universal Capital Growth
Fund.
Sincerely,
/s/ Nicholas J. Biscan
Nicholas J. Biscan
President
/s/ James A. Dreher
James A. Dreher
Chairman
<PAGE>
PERFORMANCE DATA EXPLANATION
Performance data represents past performance. The fund's past results should
not be considered a representation of the results which may be realized from an
investment made in the fund today. The principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than the original cost.
The S&P 500 Index is the average of a group of unmanaged large capitalization
stocks widely regarded to be representative of the stock market in general.
The TOTAL RETURN values represented in this report do not take into account any
applicable sales charge; if reflected, such sales charge would reduce the fund
performance quoted. A sales charge of 4.75% was in effect until September 22,
1995 and is not reflected in the performance returns. The maximum applicable
sales charge is currently 1.5% with reduced sales charge on larger investments.
There is no sales charge on purchases of $250,000 or more or on reinvestment of
dividends.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by the fund's prospectus, which contains more complete
information regarding the fund's objectives, policies, and other information.
UNIVERSAL CAPITAL GROWTH FUND IS DISTRIBUTED BY DREHER & ASSOCIATES, INC.,
ONE OAKBROOK TERRACE, SUITE 708, OAKBROOK TERRACE, ILLINOIS 60181
MEMBER NASD . SIPC. (708) 932-3000
<PAGE>
DESCRIPTION OF FIVE INVESTMENT SELECTIONS
Universal Capital Growth Fund invests in both large and small capitalization
companies that have the potential to increase earnings and are either
undervalued or fairly valued. Our large capitalization companies typically have
demonstrated increasing sales and earnings and may have leadership positions in
the markets in which they compete. These are companies like Microsoft, Johnson
& Johnson, and Walgreens. Our small capitalization companies may have had
recent favorable trends in revenue and earnings growth due to a product or
service that offers the opportunity for substantial future growth in a
specialized market, companies like Cognex, Bio-Rad Laboratories and 3D Systems
Corporation. Five of our investment selections are described in this section.
Johnson & Johnson 1992 1993 1994 1995
- ----------------- ---- ---- ---- ----
Revenue, billions $ 13.7 14.1 15.7 18.8
Earnings per share, $ 2.46 2.74 3.12 3.72
Johnson & Johnson is a leading manufacturer of healthcare products with well
known brand names such as Tylenol and Band-Aid which have dominant market
positions. New pharmaceutical and other healthcare related products offer good
potential for continued earnings growth. Johnson & Johnson holds worldwide
rights (except for Japan) to market a biotechnology-derived red blood cell
stimulant developed by Amgen called erythropoietin. While Amgen retains the
rights to market the drug for use in treating anemia in kidney dialysis
patients, Johnson & Johnson is developing the drug for use in treating earlier
forms of chronic kidney failure, as well as anemia associated with AIDS, cancer
and surgery. In April, 1996, Johnson & Johnson reported that its first-quarter
earnings rose 21% to $790 million. Sales rose 19% to $5.3 billion from $4.5
billion a year ago. The company said its pharmaceutical sales grew 19% world-
wide, and 31% in the U.S. The company indicated "incredible growth" of its
stent, a device implanted in coronary arteries to keep them from reclosing after
surgery. Sales in the company's profession segment, which sells hospital
supplies and medical devices, grew 24%. Consumer products saw growth of 13%.
Walgreen Co. 1992 1993 1994 1995
- ------------ ---- ---- ---- ----
Revenue, billions $ 7.5 8.3 9.2 10.4
Earnings per share, $ .89 .99 1.14 1.30
Walgreen Co. is the largest retail drugstore chain (by sales) in the United
States. The company currently operates over 2,100 drugstores in 31 states and
Puerto Rico. It expects to open 200 new stores in 1996 and expects to operate
3,000 stores in the U.S. by the year 2000. Walgreen continued to experience
good same-store sales growth in 1995 and early 1996 and completed its 21st
consecutive year of sales and earnings growth. Walgreen introduced a new
pharmacy management system that should cut its costs of filling prescriptions.
The system integrates all of the functions of the purchase, sales and
distribution of prescription drugs and allows better inventory management and
quicker identification of sales trends.
Cognex Corporation 1992 1993 1994 1995
- ------------------ ---- ---- ---- ----
Revenue, millions $ 28.6 43.4 62.5 104.5
Earnings per share, $ .18 .31 .44 .79
Founded in 1981 by experts in artificial intelligence from the Massachusetts
Institute of Technology, Cognex Corporation makes machine vision systems - or
computers that can "see." Machine vision systems are used to replace human
vision in a variety of manufacturing processes, automatically gauging, guiding,
identifying, and inspecting products. Machine vision systems perform these
processes with the accuracy and speed needed to keep pace with even the fastest
production lines, resulting in improved productivity, higher quality, and
reduced costs for manufacturers. In the electronics and semiconductor
industries, vision systems align wafers prior to critical processing steps and
guide the placement of tiny electronic devices onto printed circuit boards.
Automotive manufacturing plants depend on machine vision systems to measure and
gauge airbags, fuses, and dashboard displays to ensure they are assembled
properly. In the pharmaceutical and healthcare industries, Cognex machine
vision systems inspect products to verify that they are correctly labeled,
capped, and safety sealed. Cognex markets its products in three major
geographical regions, the U.S., Japan, and Europe, and has recently shown very
strong revenue and earnings growth.
<PAGE>
Bio-Rad Laboratories 1992 1993 1994 1995
- -------------------- ---- ---- ---- ----
Revenues, millions $ 330 329 355 397
Earnings per share, $ 1.96 0.35 1.93 3.09
Bio-Rad Labs makes products that identify, separate, analyze and purify chemical
and biological substances either to provide information to researchers or to
help physicians diagnose disease. The company serves more than 25,000 customers
in 70 countries (43% of sales from North America, 35% from Europe, and 22% from
the Far East). Although the company sometimes exhibits erratic earnings growth,
over the long-term the company has grown at a double-digit pace in both revenues
and earnings growth as shown in the following table. Continued growth is
expected and the stock appears to be undervalued.
Bio-Rad Laboratories Long-Term Revenue and Earnings Growth (Historical)
-----------------------------------------------------------------------
Year 1975 1980 1985 1990 1995
Revenues, millions $ 11 46 102 287 397
Net Income, millions $ 0.5 1.9 3.8 10.7 25.2
3D Systems Corporation 1992 1993 1994 1995
- ---------------------- ---- ---- ---- ----
Revenues, millions $ 26.0 31.1 43.3 62.6
Earnings per share, $ (.12) .06 .48 .83
3D Systems manufactures Stereolithography Apparatus (SLA) systems that build
models, manufacturing prototypes, masters, patterns and other solid, three-
dimensional objects. An SLA builds a highly accurate, computer-generated part
in a matter of hours directly from CAD/CAM system input, where traditional hand
crafting or machining methods take weeks or even months. The process has
enabled companies in the automotive, aerospace, computer, electronic, medical
and consumer products industries to leap beyond their competition by providing
them with cost effective methods to reduce time-to-market dramatically, achieve
substantial savings in product development costs, and allow engineers to improve
product quality. In addition, creativity and product innovations are enhanced.
By the end of 1994, the company had 52 patents in place, 40 of them in the U.S.,
and the remaining 12 in various countries around the world. Recognized as the
market leader in rapid prototyping and manufacturing, 3D has the largest
installed base of rapid prototyping systems in the world, with more than 470
stereolithography installations worldwide, and a customer base that includes a
significant and growing number of Fortune 500 corporations.
How Stereolithography Works: First, the SLA receives design data from the
computer CAD file and "slices" the design into thin horizontal cross sections.
Next, a finely focused ultra violet laser draws the first cross section of the
CAD design on the surface of a vat of ultraviolet sensitive photopolymer (liquid
plastic). Where the laser beam touches the liquid plastic, it solidifies to the
dimensions of the cross section. When the first layer is completed, an elevator
within the system lowers the now solid plastic layer the depth of the next
layer, recoating the solid layer with liquid polymer in preparation for the
drawing of the next cross section. The laser then draws the next cross section,
solidifying and joining it to the layer below, and the process continues until
the entire CAD design has been transformed into a solid model, prototype, or
casting pattern.
The information and statistics in this "Description of Five Investment
Selections" have been obtained from sources we believe reliable including but
not limited to the company's reports, Standard and Poor's and ValueLine. The
information is not warranted by us to be accurate or complete. Also, any and
all earnings projections and estimates assume certain economic conditions and
industry developments that are subject to change. The description of common
stocks presented herein is for informational purposes only and does not
constitute an offer to sell or a solicitation of an offer to buy any security.
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- ------
<S> <C> <C>
COMMON STOCKS - 96.5%
AIRLINES - 0.6%
Comair Holdings, Inc. 2,000 $ 69,500
AUTOMOTIVE/MOTORCYCLES
AND PARTS - 2.7%
Chrysler Corporation 2,200 136,950
Custom Chrome Inc. (a) 4,000 97,500
Harley Davidson Inc. 1,500 58,312
----------
292,762
BANKS - 2.2%
Banc One Corporation 1,980 70,537
Citicorp 2,000 160,000
----------
230,537
BEVERAGES - 0.8%
Coca-Cola 1,000 82,625
BIOTECHNOLOGY - 2.8%
Agouron Pharmaceuticals, Inc. (a) 1,000 38,750
Alteon Inc. (a) 3,000 30,750
Amgen Inc. (a) 3,000 174,375
Genzyme Corporation (a) 1,000 55,000
----------
298,875
CHEMICALS - 2.1%
Eastman Chemical Co. 3,200 221,200
COMPUTERS - 1.1%
Hewlett Packard Co. 500 47,000
Sun Microsystems 1,500 65,625
----------
112,625
COMPUTER PERIPHERAL
EQUIPMENT - 3.4%
Cable Design Technologies Corporation (a) 4,500 165,375
Cisco Systems, Inc. (a) 1,000 46,375
EMC Corp. Mass. (a) 7,000 153,125
----------
364,875
COMPUTER SOFTWARE - 9.5%
Cognex Corporation (a) 27,800 712,375
DSP Group Inc. (a) 3,000 37,500
Electronics For Imaging Inc. (a) 1,300 56,550
Microsoft Corporation (a) 400 41,250
PC Docs Group International Inc. (a) 4,200 74,550
Perceptron Inc. 3,600 93,150
----------
1,015,375
CONSUMER PRODUCTS - 0.6%
Parlux Fragrances (a) 5,000 61,875
DIVERSIFIED MANUFACTURING - 0.8%
Thermo Electron Corporation 1,500 89,250
ELECTRICAL EQUIPMENT - 1.4%
Emerson Electric Co. 500 40,375
General Electric Company 1,000 77,875
Pacific Scientific Company 1,500 31,687
----------
149,937
ELECTRONIC PRODUCTS
AND COMPONENTS - 4.1%
Altron Incorporated (a) 2,000 58,250
Atmel Corp. (a) 2,400 61,200
CP Claire Corp. (a) 2,500 48,750
ITI Technologies, Inc. (a) 2,000 54,250
Linear Technology Corp. 2,400 100,200
Proxim Inc. (a) 3,000 75,375
Silicon Storage Technology, Inc. (a) 2,000 23,000
Vicor Corporation (a) 1,000 15,250
----------
436,275
ENERGY - 4.3%
Input/Output, Inc. (a) 10,000 310,000
Mobil Corporation 1,300 150,637
----------
460,637
ENVIRONMENTAL - 0.5%
United Waste Systems Inc. (a) 1,000 50,000
FIBER OPTICS - 2.3%
Amphenol Corporation (a) 4,000 93,500
Coherent Inc. (a) 1,800 76,500
Uniphase Corporation (a) 2,100 81,375
----------
251,375
FILTRATION - 0.4%
Calgon Carbon Corporation 4,000 48,500
FINANCE AND
FINANCIAL SERVICES - 2.9%
American Express Company 1,600 79,000
Household International, Inc. 1,000 67,250
Paine Webber Group, Inc. 4,000 88,000
The Charles Schwab Corporation 3,000 76,875
----------
311,125
FOOD - 1.3%
CPC International Inc. 2,000 138,750
HEALTH/PHARMACEUTICALS - 18.5%
Abbott Laboratories 7,000 285,250
Alza Corp. CL A (a) 3,000 92,250
American Home Products Corp. 2,700 292,613
ICN Pharmaceuticals, Inc. 1,822 40,312
Johnson & Johnson 3,000 276,750
Lilly Eli & Co. 3,000 195,000
Merck & Co., Inc. 3,600 224,100
Pfizer Inc. 800 53,600
Schering Plough Corporation 3,800 220,875
Teva Pharmaceutical Industries, Ltd. 5,200 200,200
Watson Pharmaceuticals, Inc. (a) 2,400 96,000
----------
1,976,950
HEALTH/SERVICES - 3.2%
Apria Healthcare Group Inc. (a) 1,500 47,625
Foundation Health Corporation (a) 3,000 114,375
HCIA, Inc. (a) 1,500 70,500
Horizon Mental Health Management, Inc. (a) 3,700 78,163
Thermolase Corporation (a) 1,600 38,800
----------
349,463
HEALTH/SUPPLIES - 8.5%
Biomet, Inc. (a) 11,000 154,000
Chad Therapeutics, Inc. (a) 5,000 69,375
Datascope Corp. (a) 2,000 47,000
Diagnostic Products Corporation 2,800 113,050
Elan Corporation plc ADR (a) 1,300 83,525
Guidant Corp. 1,600 86,600
ICU Medical, Inc. (a) 5,000 72,578
MediSense, Inc. (a) 2,000 89,125
Medtronic, Inc. 1,200 71,550
Thermo Cardiosystems Inc. (a) 800 54,200
Ventritex, Inc. (a) 4,200 64,575
----------
905,578
</TABLE>
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
Number
of shares Value
--------- -----
<S> <C> <C>
INSTRUMENTS/SCIENTIFIC - 3.5%
Bio-Rad Laboratories CL A (a) 6,300 $ 264,600
Millipore Corporation 2,000 76,500
Thermo Voltek Corp. (a) 1,500 29,625
-----------
370,725
INSURANCE - 2.9%
AFLAC Inc. 3,000 93,750
Conseco, Inc. 3,000 217,125
-----------
310,875
INVESTMENT COMPANIES - 0.7%
Templeton Emerging Markets Fund, Inc. 4,000 78,500
MINING - 1.1%
Inco Ltd. 3,600 113,850
PIPELINES/NATURAL GAS - 1.7%
PanEnergy 2,700 84,038
Williams Co. 2,000 100,750
-----------
184,788
RESTAURANTS - 1.3%
Applebees 2,500 62,500
McDonald's Corporation 1,500 72,000
-----------
134,500
REAL ESTATE INVESTMENT TRUSTS - 1.5%
Realty Income Corporation 8,000 166,000
RETAIL - 3.2%
General Nutrition Companies, Inc. (a) 3,000 75,000
Nike, Inc. 1,300 105,625
Walgreen Co. 5,000 163,125
-----------
343,750
STEREOLITHOGRAPHY - 0.7%
3D Systems Corporation (a) 3,500 73,500
TELECOMMUNICATIONS - 4.2%
DSC Communications Corporation (a) 500 13,500
GTE Corp. 1,500 65,813
MRV Communications 1,800 85,500
Nynex 2,500 124,688
Tellabs, Inc. (a) 3,200 154,800
-----------
444,300
TEXTILES - 1.0%
St. John Knits Inc. 1,000 67,375
Supreme International Corporation (a) 3,000 39,375
-----------
106,750
TRANSPORTATION SERVICES - 0.7%
Expeditors International of Washington, Inc. 3,000 78,750
-----------
TOTAL INVESTMENTS - 96.5%
(Cost: $9,098,203) 10,324,377
CASH AND OTHER ASSETS,
LESS LIABILITIES - 3.5% 375,049
-----------
NET ASSETS - 100% $10,699,426
===========
</TABLE>
NOTE TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
March 31, 1996
ASSETS
<S> <C> <C>
Investments, at value (cost $9,098,203).......... $ 10,324,377
Cash............................................. 352,300
Receivable for Fund shares sold.................. 28,531
Accrued dividends and interest receivable........ 10,031
Prepaid expenses................................. 9,510
Deferred organization costs, net................. 1,114
-----------
TOTAL ASSETS................................... 10,725,863
LIABILITIES AND NET ASSETS
Payable to Advisor............................... 6,214
Payable to Distributor........................... 4,453
Accounts payable and accrued liabilities......... 15,770
-----------
TOTAL LIABILITIES.............................. 26,437
-----------
NET ASSETS APPLICABLE TO 714,574 SHARES
OUTSTANDING, NO PAR VALUE....................... $ 10,699,426
===========
ANALYSIS OF NET ASSETS
Excess of amounts received from issuance
of shares over amounts paid on redemption
of shares on account of capital............... $ 8,775,412
Accumulated net investment loss.................. (32,590)
Accumulated net realized gain on investments..... 730,430
Unrealized appreciation of investments........... 1,226,174
-----------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING................................... $ 10,669,426
===========
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE AT MARCH, 31, 1996
($10,699,426 divided by 714,574
shares outstanding)........................... $ 14.97
===========
MAXIMUM OFFERING PRICE PER SHARE
(net asset value, plus 1.52% of net asset
value or 1.50% of offering price)............. $ 15.20
===========
- ----------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six months Year
ended ended
March 31, 1996 Sept. 30, 1995
-------------- --------------
OPERATIONS:
Net investment income $ ( 32,590) $ ( 45,564)
Net realized gain on investments 832,062 1,218,344
Change in unrealized appreciation ( 84,829) 829,469
---------- -----------
Increase in net assets from operations 714,643 2,002,249
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income 0 0
Net realized gain on
investment transactions (1,269,948) (250,706)
---------- -----------
Total distributions to shareholders (1,269,948) (250,706)
NET INCREASE (DECREASE) FROM
CAPITAL SHARE TRANSACTIONS 3,106,085 1,428,388
---------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 2,550,780 3,179,931
NET ASSETS:
Beginning of period 8,148,646 4,968,715
---------- -----------
End of period (Including
accumulated net investment
loss of $32,590 in 1996
and $0 in 1995) $10,699,426 $ 8,148,646
========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended March 31, 1996
INVESTMENT INCOME
<S> <C>
Dividends..................................... $ 46,979
Interest...................................... 12,979
--------
TOTAL INVESTMENT INCOME.......................... 59,958
EXPENSES
Investment advisory fee........................ 46,274
Distribution fees.............................. 23,137
Transfer agent fees............................ 5,340
Legal fees..................................... 6,360
Audit fees..................................... 8,024
Accounting fees................................ 6,808
Amortization of deferred organization costs.... 1,802
Printing and postage........................... 1,834
Custodian fees................................. 4,052
Trustees fees.................................. 1,502
Registration fees.............................. 2,080
Insurance...................................... 590
--------
TOTAL EXPENSES.............................. 107,803
Less expense waiver and reimbursement....... 15,255
--------
NET EXPENSES ABSORBED BY FUND............... 92,548
--------
NET INVESTMENT LOSS.............................. (32,590)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investment transactions.. 832,062
Change in unrealized appreciation
of investments.............................. ( 84,829)
--------
NET GAIN ON INVESTMENTS.......................... 747,233
--------
NET INCREASE IN NET ASSETS
FROM OPERATIONS............................... $ 714,643
========
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Universal Capital Investment Trust (the "Trust") is a
Massachusetts business trust organized on October 18, 1990. The Trust is
registered under the Investment Company Act of 1940 as a diversified, open-end
investment company. Universal Capital Growth Fund (the "Fund") is the only
series of the Trust currently offered, and commenced selling shares of
beneficial interest to the public on January 22, 1991 (commencement of
operations).
INVESTMENT VALUATION. Securities traded on a securities exchange or in the
over-the-counter market are valued at the last current sale price as of the time
of valuation or, lacking any current reported sale on that day, at the mean
between the most recent bid and asked quotations. Securities for which
quotations are not readily available and securities for which the valuation
methods described above do not produce a value reflective of the fair value of
the securities are valued at a fair value as determined in good faith by the
board of trustees or a committee thereof.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME. Investment transactions are
recorded on the trade date (the day the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Realized gains and losses from investment
transactions are reported on an identified cost basis.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS. It is the Fund's policy to
comply with the special provisions of the Internal Revenue Code available to
regulated investment companies and, in the manner provided therein, to
distribute all of its taxable income, as well as any net realized gain on sales
of investments. Such provisions were complied with and therefore no provision
for federal income taxes is required.
2. TRANSACTIONS WITH AFFILIATES
Pursuant to an investment advisory agreement with Integrated Financial Services,
Inc. ("Advisor"), the Fund pays an investment advisory fee accrued daily and
paid monthly at the annual rate of 1.0% of the first $250 million of the Fund's
average daily net assets and .75% of the Fund's average daily net assets in
excess of $250 million. During the period ended March 31, 1996, the Fund
incurred an investment advisory fee of $46,274.
The agreement provides for the waiver or reimbursement of expenses from the
Advisor should the Fund's normal operating expenses exceed the most restrictive
applicable state expense limitation. The Advisor also has agreed to limit the
Fund's annual operating expenses to 2.0% of average daily net assets through
December 31, 1996. During the period ended March 31, 1996, the Advisor waived or
reimbursed the Fund for expenses of $15,255.
While serving as Distributor, Dreher & Associates, Inc. ("Distributor") assumed
all expenses of personnel, office space, office facilities and equipment
incidental to such service. The Trust has adopted a Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act of 1940 whereby the Fund pays the
Distributor an annual service fee of .25% and an annual sales compensation fee
of .25%, both accrued daily and paid monthly and based on the Fund's average
daily net assets. In return, the Distributor bears all expenses incurred in the
distribution and promotion of the Fund's shares. During the period ended March
31, 1996, the Fund incurred distribution fees of $23,137. The Distributor
received commissions of $21,483 from sale of the Fund's shares during the period
ended March 31, 1996, of which $1,590 was paid to brokers affiliated with the
Distributor and the remainder was paid to retail brokers.
Portfolio transactions for the Fund have been executed through the Distributor,
consistent with the Fund's policy of obtaining best price and execution. During
the period ended March 31, 1996, the Fund paid brokerage commissions to the
Distributor on purchases and sales of securities in the amount of $15,417. It is
management's opinion that commission rates charged to the Fund by the
Distributor are consistent with those charged to comparable unaffiliated
customers in similar transactions.
Certain officers or trustees of the Fund are also officers of the Distributor
and/or the Advisor. During the period ended March 31, 1996, the Fund made no
direct payments to its officers and incurred trustees' fees of $1,502 to its
unaffiliated trustees.
3. INVESTMENTS
Purchases and sales of investments, other than short-term obligations, were
$12,259,332 and $9,527,163, respectively, for the period ended March 31, 1996.
The cost basis of investments for federal income tax purposes at March 31, 1996
was $9,098,203. At March 31, 1996, on a tax basis, gross unrealized appreciation
was $1,497,980, gross unrealized depreciation was $271,806 and net unrealized
appreciation was $1,226,174.
7
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
4. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund.
<TABLE>
<CAPTION>
Six months Year
ended ended
March 31, 1996 Sept. 30, 1995
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold 135,564 $2,020,242 103,666 $1,490,399
Shares issued
on reinvestment
of distributions 90,601 1,268,410 22,243 250,009
Less shares redeemed (12,074) (182,567) (23,751) (430,971)
------- ---------- ------- ----------
Net increase 214,091 $3,106,085 102,158 $1,428,388
======= ========== ======= ==========
</TABLE>
5. ORGANIZATION COSTS
Costs amounting to $45,961 were paid by the Advisor in connection with the
organization and initial registration of the Fund. These costs are being
amortized and reimbursed to the Advisor over the period between June 1991 (when
the Fund reached $2.5 million in total assets) and January 1996.
----------------------------------
INVESTMENT ADVISOR
Integrated Financial Services, Inc.
One Oakbrook Terrace, Suite 708
Oakbrook Terrace, Illinois 60181
DISTRIBUTOR
Dreher & Associates, Inc.
One Oakbrook Terrace, Suite 708
Oakbrook Terrace, Illinois 60181
CUSTODIAN
UMB Bank, N.A.
P.O. Box 419226
Kansas City, Missouri 64141
TRANSFER AGENT
Jones & Babson
2440 Pershing Road
Kansas City, Missouri 64108
COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
INDEPENDENT AUDITORS
Ernst & Young, LLP
Chicago, Illinois
FINANCIAL HIGHLIGHTS
Per share income and capital change (for a share outstanding
throughout the period).
<TABLE>
<CAPTION>
Six months Year Year Year Year
ended ended ended ended ended
March 31, 1996 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1993 Sept. 30, 1992
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.28 $ 12.47 $ 12.27 $ 11.38 $ 11.16
Income from investment operations:
Net investment income (loss)(a) (.05) (.10) (.13) (.04) .11
Net realized & unrealized gain on investments 1.07 4.54 .96 1.39 .37
-------- ------- ------- ------- -------
Total from investment operations 1.02 4.44 .83 1.35 .48
Less distribution to shareholders from:
Net investment income -- -- -- .11 .07
Realized gains on investments 2.33 .63 .63 .35 .19
-------- ------- ------- ------- -------
Total distributions to shareholders 2.33 .63 .63 .46 .26
Net asset value, end of period $ 14.97 $ 16.28 $ 12.47 $ 12.27 $ 11.38
======== ======= ======= ======= =======
Total return (b) 7.3% 37.9% 7.5% 12.2% 4.3%
Ratio of net expenses to average net assets (a) 2.0%* 2.0% 2.0% 2.0% 2.0%
Ratio of net investment income (loss) to
average net assets (a) (0.7)%* (0.8)% (1.1)% (0.4)% 1.2%
Portfolio turnover rate 111.27% 157.6% 188.7% 186.3% 111.3%*
Net assets, end of period (in 000's) $ 10,669 $ 8,149 $ 4,969 $ 4,892 $ 4,715
</TABLE>
(a) After reimbursement and waiver of expenses by the Advisor of .3%*, .7%,
1.1%, .9%, and 1.3% of average net assets for 1996, 1995, 1994, 1993 and 1992,
respectively.
(b) Total return is not annualized for periods less than a full year and does
not reflect the effect of any sales charges.
* Annualized
Note: Per share data for 1996, 1995, 1994 and 1993 was determined based on
average shares outstanding.
8
