<PAGE>
[LETTERHEAD OF UNIVERSAL CAPITAL GROWTH FUND]
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One Oakbrook Terrace
Suite 708
Oakbrook Terrace, Illinois 60181
708-932-3000
July 29, 1996
Quarterly Report
Period Ended June 30, 1996
Dear Shareholder:
In the quarter ended June 30, 1996, Universal Capital Growth Fund had a total
return of 1.8% while the S&P 500 Index had a total return of 4.5%. The quarter
was one of exceptional volatility for our fund, especially in technology and
computer-related stocks.
Our fund's attractive record of investment performance is summarized in the
tables below:
<TABLE>
<CAPTION>
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Table I
Total Returns Through
June 30, 1996
Period Total Return
------ ------------
<S> <C>
Past Quarter 1.8%
Past Six Months 6.9%
Past Year 19.0%
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</TABLE>
<TABLE>
<CAPTION>
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Table II
Average Annual Total Returns
Through June 30, 1996
Past Past Past Life of
1 year 3 years 5 years Fund/1)/
------ ------- ------- --------
<S> <C> <C> <C> <C>
Without Sales Charge 19.0% 20.3% 15.8% 14.7%
With 1.5% Sales Charge 17.2% 19.7% 15.4% 14.4%
/1)/ since inception on 1/22/91
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</TABLE>
As recent months have shown heightened volatility in the market, many investors
have increased concerns about the market. However, exaggerated market
fluctuations, while unnerving and frustrating at times, are a normal part of
the investment process and can provide long-term investment opportunities. Both
blue-chip and rapidly growing companies that become 10 to 20 percent cheaper in
a few weeks in a volatile market can be the opportunities that help give
superior long-term portfolio performance if they are purchased during the
short-term fluctuations.
<PAGE>
We continue to be optimistic in our approach of trying to invest in the best of
the large and small company stocks, picking them one at a time, based on
earnings growth and value. If we continue to be in the current market
correction as you read this report, we would encourage you to make additional
investments into the fund in order to take advantage of the lower stock prices
and the potential for future appreciation.
As always, thank you for your confidence as shareholders of the Universal
Capital Growth Fund.
Sincerely,
/s/ Nicholas J. Biscan
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Nicholas J. Biscan
President
/s/ James A. Dreher
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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>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- -----
<S> <C> <C>
COMMON STOCKS - 84.5%
AUTOMOTIVE/MOTORCYCLES
AND PARTS - 3.8%
Chrysler Corp. 4,000 $ 248,000
Custom Chrome, Inc. (a) 6,000 161,250
Harley Davidson, Inc. 500 20,562
---------
429,812
BANKS - 3.1%
Amsouth Bancorp 2,000 72,250
Banc One Corp. 1,980 67,320
Citicorp 1,000 82,625
Mellon Bank Corp. 1,000 57,000
Nations Bank 800 66,100
---------
345,295
BIOTECHNOLOGY - 2.8%
Agouron Pharmaceuticals, Inc. (a) 1,000 39,000
Amgen, Inc. (a) 2,000 108,000
Genzyme Corp. (a) 1,500 75,375
Interneuron Pharmaceutical, Inc. 3,000 90,000
---------
312,375
COMPUTERS - 0.7%
Hewlett Packard Co. 800 79,700
COMPUTER PERIPHERAL
EQUIPMENT - 4.5%
Cable Design Technologies Corp. (a) 14,000 458,500
HMT Technology Corp. 3,000 47,250
---------
505,750
COMPUTER SOFTWARE - 6.4%
C Cube Microsystems, Inc. 2,600 85,800
Cognex Corp. (a) 24,000 387,000
Electronics For Imaging, Inc. (a) 800 55,500
PC Docs Group International, Inc. (a) 4,500 89,437
Perceptron, Inc. 3,000 109,500
---------
727,237
CONSUMER PRODUCTS - 0.9%
Kimberly Clark Corp. 800 61,800
Parlux Fragrances, Inc. (a) 4,000 40,500
---------
102,300
DIVERSIFIED MANUFACTURING - 0.5%
Thermo Electron Corp. 1,350 56,194
ELECTRICAL EQUIPMENT - 0.2%
Pacific Scientific Co. 1,500 23,625
ELECTRONIC PRODUCTS
AND COMPONENTS - 7.6%
Altron, Inc. (a) 4,500 91,125
Atmel Corp. (a) 5,400 162,675
CP Claire Corp. (a) 5,500 141,625
International Rectifier Corp. 5,000 80,625
ITI Technologies, Inc. (a) 4,000 132,000
Silicon Storage Technology, Inc. (a) 2,000 27,500
Zycon Corp. 18,500 173,437
Zytec Corp. 3,000 54,375
---------
863,362
ENERGY - 2.9%
Input/Output, Inc. (a) 3,000 97,125
Texaco, Inc. 1,000 83,875
Triton Energy Corp. 3,000 145,875
---------
326,875
ENVIRONMENTAL - 0.6%
United Waste Systems, Inc. (a) 2,000 64,500
FIBER OPTICS - 3.6%
Amphenol Corp. (a) 5,500 126,500
Coherent, Inc. (a) 3,200 166,400
Uniphase Corp. (a) 3,200 113,600
---------
406,500
FILTRATION - 0.2%
Calgon Carbon Corp. 2,000 27,000
FINANCE AND
FINANCIAL SERVICES - 2.2%
The Charles Schwab Corp. 6,200 151,900
Countrywide Credit Ind. 1,800 44,550
Paine Webber Group, Inc. 2,000 47,500
---------
243,950
FOOD - 1.3%
CPC International, Inc. 2,000 144,000
HEALTH/PHARMACEUTICALS - 11.5%
Abbott Laboratories 3,000 130,500
American Home Products Corp. 2,000 120,250
ICN Pharmaceuticals, Inc. 1,822 42,361
Johnson & Johnson 2,000 99,000
Lilly Eli & Co. 3,000 195,000
Merck & Co., Inc. 3,600 232,650
Schering Plough Corp. 4,800 301,200
Teva Pharmaceutical Industries, Ltd. 2,200 83,325
Watson Pharmaceutical, Inc. 2,400 90,900
---------
1,295,186
HEALTH/SERVICES - 2.3%
Apria Healthcare Group, Inc. 1,500 47,062
Foundation Health Corp. 3,000 107,625
Horizon Medical Health 3,700 105,450
---------
260,137
HEALTH/SUPPLIES - 11.9%
Biomet, Inc. 8,000 115,000
Boston Scientific Corp. 2,000 90,000
Chad Theraputics, Inc. 5,000 92,500
Cohr, Inc. 8,000 190,000
Conmed Corp. 3,500 93,188
Cryolife, Inc. 3,000 111,000
Elan Corp-ADR 1,300 74,263
Express Scripts, Inc. 2,000 92,000
Guidant Corp. 2,600 128,050
ICU Medical, Inc. 8,000 110,000
Medtronic, Inc. 2,200 123,200
Research Medical, Inc. 3,500 77,438
Thermolase Corp. 1,600 43,600
Ventritex, Inc. 3,200 54,800
---------
1,340,239
INSTRUMENTS/SCIENTIFIC - 3.8%
Bio-Rad Laboratories CL A (a) 5,000 179,375
Millipore Corp. 2,000 83,750
Teradyne, Inc. 5,500 94,875
Thermo Voltek Corp. (a) 3,500 67,375
---------
425,375
INSURANCE - 1.6%
Conseco, Inc. 4,500 180,000
LASER SYSTEMS - 1.7%
Excel Technology, Inc. 21,000 194,250
</TABLE>
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
Number
of shares Value
--------- -----
<S> <C> <C>
MINING - 1.6%
Inco, Ltd. 180,600 $ 5,600
PIPELINES/NATURAL GAS - 1.2%
PanEnergy Corp. 1,800 59,175
Williams Companies, Inc. 1,500 74,250
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133,425
RESTAURANTS - 0.7%
Applebees International, Inc. 2,500 80,313
REAL ESTATE INVESTMENT TRUSTS - 1.4%
Realty Income Corp. 7,500 155,625
RETAIL - 2.0%
General Nutrition Companies, Inc. (a) 5,000 87,500
Walgreen Co. 4,000 134,000
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221,500
STEREOLITHOGRAPHY - 0.6%
3D Systems Corp. (a) 3,000 66,000
TELECOMMUNICATIONS - 1.6%
AT&T Corp. 1,000 62,000
Qualcomm, Inc. 1,000 53,125
Sprint Corp. 1,000 42,000
Tellabs, Inc. (a) 400 26,750
-------
183,875
TEXTILES - 0.5%
Supreme International Corp. (a) 3,000 51,750
TRANSPORTATION SERVICES - 0.8%
Expeditors International of Washington, Inc. 3,000 93,000
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TOTAL COMMON STOCKS
(Cost: $9,330,375) 9,574,550
REPURCHASE AGREEMENT - 15.0%
UMB Bank, n.a., dated 6/28/96,
due 7/3/96, 4.80%, collateralized
by U.S. Treasury Bills
(Cost: $1,700,000) 1,700,000
----------
TOTAL INVESTMENTS - 99.6%
(Cost: $11,030,375) 11,274,550
CASH AND OTHER ASSETS,
LESS LIABILITIES - 0.4% 50,305
------
NET ASSETS - 100% $11,324,855
==========
</TABLE>
NOTE TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security
<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 Walgreen. 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 Tellabs. Five of our investment
selections are described in this section.
<TABLE>
<CAPTION>
Tellabs, Inc. 1992 1993 1994 1995
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<S> <C> <C> <C> <C>
Revenue, millions $ 259 320 494 635
Earnings per share, $ .20 .34 .80 1.26
</TABLE>
Tellabs, Inc. manufactures voice and data transport and network access systems.
It's products are used worldwide by public telephone companies, long-distance
carriers, alternate service providers, cellular and other wireless service
providers, cable operators and others. Significantly, in 1995 Tellabs added
Ameritech Corp. as the sixth Bell operating company among its large number of
customers. Also, four of the top six long-distance providers now employ the
company's cross-connects to manage their broadband digital networks. Tellabs
venture into phone on cable is now in field trials in the United Kingdom with
TeleWest and in the U.S. with Time Warner Communications and others. Over the
past two years, Tellabs revenues nearly doubled and its earnings more than
tripled. We believe that the company will continue rapid growth over the next
five years and is among the best companies positioned to benefit from
telecommunications deregulation.
<TABLE>
<CAPTION>
Johnson & Johnson 1992 1993 1994 1995
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<S> <C> <C> <C> <C>
Revenue, billions $ 13.7 14.1 15.7 18.8
Earnings per share, $ 2.46 2.74 3.12 3.72
</TABLE>
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%.
<TABLE>
<CAPTION>
Walgreen Co. 1992 1993 1994 1995
- ------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, billions $ 7.5 8.3 9.2 10.4
Earnings per share, $ .89 .99 1.14 1.30
</TABLE>
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. Walgreens continued to experience
good same-store sales growth in 1995 and early 1996 and completed its 21st
consecutive year of sales and earnings growth. Walgreens 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.
<PAGE>
<TABLE>
<CAPTION>
CryoLife Inc. 1992 1993 1994 1995
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, millions $ 19.6 21.3 23.2 28
Earnings per share, $ .10 .06 .14 .23
</TABLE>
CryoLife is an Atlanta-based company that in 1984 pioneered a technique that
uses ultralow temperature to preserve human tissue for surgery. The freezing or
"cryogenic" process allows tissue to be stored for long periods and to be thawed
with little damage to cells. CryoLife has three primary businesses: 1) human
heart valves, 2) preserving veins for coronary bypass and orthopedic surgery,
and 3) preserving connective tissue for knee surgery.
Heart Valves
A growing number of surgeons are using human valves instead of synthetic or
pig-tissue alternatives. CryoLife's human tissue valves provide a more natural
blood flow and do not require special medication as compared to mechanical heart
valves. Traditional tissue valves, derived from pig hearts, still make up about
75% of the tissue valve segment. CryoLife's human heart-valve business grew 18%
last year, three times the porcine (pig) market's 6% rate.
Preserved Veins
CryoLife is the sole for-profit supplier of preserved veins for use in coronary
bypass and orthopedic surgery. Typically, the patient's own veins are used in
these procedures, but preserved substitutes are often needed when a patient does
not have enough usable veins because of a previous operation, disease or injury.
There is no synthetic graft that works well below the knee, so in many cases,
the only alternative besides donor veins would be amputation! The U.S. market
is over $150 million per year. The company's vein preservation business,
accounts for about 23% of revenues and grew 23% last year.
Connective Tissue for Knees
CryoLife's fastest growing product line is its preserved connective tissue --
tendons, ligaments and meniscus cartilage, all of which are crucial to the
proper function of the knee. Tapping the burgeoning field of sports medicine,
CryoLife's orthopedic tissue business jumped 146% last year to $1.5 million.
Analysts expect it to top $2.7 - $3.0 million in 1996. Each year there are
about 250,000 ligament operations and 250,000 meniscus operations done on people
who have damaged their knees. That presents a huge opportunity for preserved
tissue.
<TABLE>
<CAPTION>
Cognex Corporation 1992 1993 1994 1995
- ------------------ ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, millions $ 28.6 43.4 62.5 104.5
Earnings per share, $ .18 .31 .44 .79
</TABLE>
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.
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.
