<PAGE>
Universal Capital Growth Fund
==============================================================================
One Oakbrook Terrace
Suite 708
Oakbrook Terrace, Illinois 60181
708-932-3000
January 31, 1996
Quarterly Report
Period Ended December 31, 1995
Dear Shareholder:
We are again pleased to report very positive results to our investors for recent
periods.
For calendar year 1995 Universal Capital Growth Fund had a total return of
39.0%, beating the 37.6% total return of the S&P 500 Index and significantly
outperforming the average mutual fund.
According to CDA Wiesenberger, an independent company that provides mutual fund
statistics, Universal Capital Growth Fund ranked 66th out of 732 funds in 1995
that were categorized by an objective of long term growth, or in the top 9% of
those funds. For the TWO YEAR PERIOD from December 31, 1993 to December 31, 1995
your fund ranked 14th out of 556 funds, or IN THE TOP 2 1/2 PERCENT OF FUNDS
with a long-term growth objective. Over the two year period, Universal Capital
provided a total return of 49.9%. Some of the statistical results are shown in
the following tables.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Table I
PERFORMANCE SUMMARY
Years Ended Dec. 31, 1995 and Dec. 31, 1994
Fund, Index or Category Total Return
- ----------------------------------------------- ----------------
1995 1994
----- -----
<S> <C> <C>
Universal Capital Growth Fund 39.0% 7.9%
S&P 500 Index 37.6% 1.3%
NASDAQ Composite Index 39.9% -3.2%
CDA/Wiesenberger Growth Category 30.1% -1.6%
Lipper Capital Appreciation Category 30.5% -3.4%
For further explanation, please see footnote 1)
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
Table II
Average Annual Total Returns
Through December 31, 1995
Past Past Life of
1-year 3-years Fund/1)/
------ ------- --------
<S> <C> <C> <C>
Without Sales Charge 39.0% 17.6% 14.8%
With 1.5% Sales Charge 36.9% 17.0% 14.4%
/1)/ since inception on 1/22/91
- -----------------------------------------------------------------
</TABLE>
<PAGE>
In the quarter ended December 31, 1995 Universal Capital Growth Fund had a total
return of 2.2%. The total return is the percentage change in the value of an
investment in the fund, including the value of shares that shareholders acquire
through reinvestment of the dividend totaling $2.33 per share which was paid on
December 14, 1995.
While this past quarter's return was modest, we are nevertheless very pleased
with it, considering the weakness in many technology stocks in the past three to
six months. This downtrend is once again providing opportunities for the fund in
selected technology issues.
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" investment strategy. It is also important
to have a disciplined SELL STRATEGY. In that regard, we have a fairly strict
policy of selling stocks that HAVE OR MIGHT HAVE disappointing earnings or
approach OVER-VALUATION.
One of the reasons for our success in 1995 was due to our selling methodology.
For example, American Power Conversion, a long-time favorite, was sold at prices
of 19 to 23 at the first hint of a slowdown. (Current price is 8-1/2.) Micron
Technology was purchased at 36 and gradually liquidated at prices of 44, 69 and
84 -- before it hit it's peak of 94-3/4 -- but well above its current price of
34. We even sold all of our Motorola (at prices of 58 to 65 verses 54 now)
because of semiconductor and cellular phone pricing pressures and over-
valuation.
At the present time, we continue to look for opportunities in both large and
small stocks. Despite the high level of the market averages, there are many
undervalued stocks. Additionally, we are comfortable with our blue chip growth
stocks that we have been attracted to for so long: Merck, Johnson & Johnson,
Emerson Electric, General Electric, Coca Cola, Amgen and American Home Products.
Growth appears steady and the stocks should be in demand if earnings continue to
falter for cyclical issues. We are also positive on the newer large-cap
additions to our portfolio such as American Express, Eastman Chemical,
McDonalds, Mellon Bank and Citicorp. Anticipated continued earnings growth
should carry these undervalued stocks to higher levels.
Of course, past performance does not guarantee future results, but we will work
hard to try to maximize the capital appreciation of your investment in 1996.
Sincerely,
/s/ Nicholas J. Biscan
Nicholas J. Biscan
President
/s/ James A. Dreher
James A. Dreher
Chairman
<PAGE>
/1)/ CDA/Wiesenberger ("CDA") is an independent company that provides market
statistics. According to CDA, Universal Capital Growth Fund's total return
of 39.0% ranked 66th in performance for the past year out of 732 funds that
they categorize by the investment objective of long-term growth, or in the
top 9% of such funds. The ranking is based on the total return for the
period from December 31, 1994 to December 31, 1995 and does not take into
account the front-end sales load of the fund. According to CDA, Universal
Capital Growth Fund's total return of 49.9% ranked 14th in performance out
of 556 long-term growth funds for the period December 31, 1993 to December
31, 1995, or in the top 2.5% of such funds.
Lipper Analytical Services is another independent company that provides
market statistics. According to Lipper, Universal Capital Growth Fund's
total return of 39.0% ranked 32nd in performance for the past year out of
181 funds that they categorize by the investment objective of capital
appreciation. The ranking is based on the total return for the period from
December 31, 1994 to December 31, 1995 and does not take into account the
front-end sales load of the fund. According to Lipper, Universal Capital
Growth Fund's total return of 7.9% ranked 3rd in performance out of 155
capital appreciation funds for the period December 31, 1993 to December 31,
1994.
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.
<PAGE>
PERFORMANCE DATA EXPLANATION
Performance data represents past performance. 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 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.
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.
We have included two unmanaged stock market indexes for comparison purposes. 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 NASDAQ
Composite Index is the average of a group of more than 2,500 unmanaged over-the-
counter securities widely regarded to be representative of small and medium
sized stocks.
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 SIX 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 Emerson Electric,
Johnson & Johnson, Coca Cola, Pfizer, 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 Atmel, Custom Chrome, and 3D
Systems Corporation. Six of our investment selections are described in this
section.
<TABLE>
<CAPTION>
Schering-Plough 1992 1993 1994 1995
- --------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues, billions $ 4.1 4.3 4.7 5.1
Earnings per share, $ 1.80 2.12 2.41 2.85
</TABLE>
Schering-Plough is a worldwide manufacturer of prescription and over-the-counter
drugs, animal health products, vision care products, and sun care and foot care
lines. Much of Schering-Plough's growth over the past two years has stemmed from
Claritin, the company's non-sedating anti-histamine for allergies. Its sister
compound, Claritin-D, combines Claritin with a decongestant. Together these
drugs have captured 30% of the new prescriptions dispensed for anti-allergy
drugs in the U.S. due to several advantages over competing products, including:
non-sedating, fast acting, and no drug interactions. Worldwide revenues of the
two drugs were $505 million in 1994. We believe revenues could exceed $1.3
billion by the end of the decade. Another drug, Intron A, is a form of alpha
interferon that Schering-Plough has licensed from Biogen. Its largest use is
currently as a hepatitis treatment but it was recommended for FDA approval by an
FDA advisory committee for malignant melanoma, likely to be the first of its
many major cancer indications in the U.S. As Schering-Plough has various new
drugs in development, some with sizable sales potential, we expect continued
good earnings growth for this blue-chip company over the next several years.
<TABLE>
<CAPTION>
Emerson Electric 1992 1993 1994 1995
- ---------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues, billions $ 7.7 8.2 8.6 10.0
Earnings per share, $ 2.98 3.15 3.52 4.06
</TABLE>
Emerson Electric is a worldwide leader in the design, manufacture, and sale of a
broad range of electrical, eletromechanical, and electronic products and
systems. Revenues are broken down into two groups: 1) commercial and industrial
components and systems (which contribute 57% of revenues and include process
control instrumentation, valves and systems, industrial motors and drives,
industrial machinery, and electronics) and 2) appliance and construction-related
components (which contribute 43% of sales and include fractional horsepower
motors; appliance components; heating, ventilating, and air conditioning
components; and tools). International sales account for 44% of total corporate
revenues. Emerson Electric is expected to continue its growth because of
management's focus on strengthening its leadership positions in its businesses,
its emphasis on new products and on technology, its drive to increase
international exposure in the faster growing economies such as India and China,
and its focus on creating value through acquisitions and joint ventures. Emerson
Electric is a solid blue-chip holding and has delivered an exemplary 38 years of
consecutive earning growth.
<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. Walgreen continued to experience good
same-store sales growth in 1995 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.
<PAGE>
<TABLE>
<CAPTION>
Custom Chrome 1992 1993 1994 1995
- ------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, millions, $ 44 52 67 75
Earnings per share, $ .33 .78 1.10 1.27
</TABLE>
As the American classic Harley-Davidson motorcycles grow more popular, Custom
Chrome Inc. rides along with the boom by supplying parts and accessories for
them. Established in 1970, Custom Chrome is the largest independent wholesale
supplier of aftermarket parts and accessories for Harley-Davidson motorcycles,
offering over 9,500 products to more than 3,900 dealers. The company also
distributes products under its own brand names, such as RevTech, Premium, Dyno
Power, and C.C. Rider. The company also distributes products under the
manufacturers' brand names. An in-house product development department designs
the Company's proprietary products which are then subcontracted to outside
manufacturers. The Company offers products in 16 different categories, ranging
from apparel and leather to engine products. The proprietary products are not
widely available from any other source, allowing the company to obtain higher
margins than may be available on products for which it acts only as a
distributor.
<TABLE>
<CAPTION>
Atmel Corporation 1992 1993 1994 1995
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue, millions $ 140 222 375 634
Earnings per share, $ .19 .37 .67 1.16
</TABLE>
Atmel manufactures so-called flash-memory semiconductors and related products,
which require less power than standard chips. Flash or non-volatile memories do
not lose their programmed contents even when the system power is turned off.
Atmel's flash chips require only 3 volts of power; most other chips require at
least 5 volts. Atmel chips are used in cellular phones, consumer electronics
products and automobiles, among other things. Atmel is benefiting from the
accelerating trend toward smaller, more portable electronic and computer
equipment. Increasing portability depends largely on chips that are smaller,
have more memory and require less power, which is what Atmel's products deliver.
<TABLE>
<CAPTION>
3D Systems Corporation 1991 1992 1993 1994
- ---------------------- ----- ----- ---- ----
<S> <C> <C> <C> <C>
Revenues, millions $ 19.5 26.0 31.1 43.3
Earnings per share, $ (.56) (.12) .02 .16
</TABLE>
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 Six 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
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- ----------
<S> <C> <C>
COMMON STOCKS - 94.2%
BANKS - 1.9%
Citicorp 1,000 $ 67,250
Mellon Bank Corporation 2,100 112,875
----------
180,125
BEVERAGES - 0.8%
Coca-Cola 1,000 74,250
BIOTECHNOLOGY - 2.3%
Alteon Inc. (a) 2,000 32,250
Amgen Inc. (a) 2,000 118,750
Genzyne Corporation (a) 1,000 62,375
----------
213,375
CHEMICALS - 1.5%
Eastman Chemical Co. 2,200 137,775
COMPUTERS - 3.2%
Hewlett Packard Co. 2,500 209,375
Sun Microsystems 2,000 91,250
----------
300,625
COMPUTER PERIPHERAL
EQUIPMENT - 4.2%
Cable Design Technologies Corporation (a) 3,000 132,000
EMC Corp. Mass. (a) 3,000 46,125
Encad, Inc. (a) 1,800 31,500
Microdyne Corporation 2,000 34,000
Oak Technology Inc. (a) 1,700 71,825
3 Com Corp. (a) 1,500 69,937
----------
385,387
COMPUTER SOFTWARE - 4.4%
Cerner Corporation (a) 1,000 20,500
Cognex Corporation (a) 6,000 208,500
DSP Group Inc. (a) 3,000 34,500
Microsoft Corporation (a) 700 61,425
PC DOCS Group International Inc. (a) 2,200 39,325
Perceptron Inc. 1,800 40,050
----------
404,300
CONSUMER PRODUCTS - 0.7%
American Greetings Corp. CL A 1,000 27,625
Parlux Fragrances Inc. (a) 4,000 35,500
----------
63,125
DIVERSIFIED MANUFACTURING - 2.3%
Corning Incorporated 1,000 32,000
Idex Corporation 1,000 41,000
ITI Technologies, Inc. (a) 2,000 59,500
Thermo Electron Corporation 1,500 78,000
----------
210,500
ELECTRICAL EQUIPMENT - 2.1%
Emerson Electric Co. 1,000 81,750
General Electric Company 1,000 72,000
Pacific Scientific Company 1,500 37,125
----------
190,875
ELECTRONIC PRODUCTS
AND COMPONENTS - 11.0%
Altron Incorporated (a) 2,000 60,000
Analog Devices, Inc. (a) 1,000 35,375
Atmel Corp. (a) 4,400 98,450
C P Claire Corp. 2,500 51,250
IIT Industries Inc. (a) 1,500 36,000
Intel Corporation 1,000 56,750
Linear Technology Corp. 2,400 94,200
Silicon Storage Technology, Inc. (a) 2,000 26,500
Texas Instruments, Inc. 5,000 258,750
Unitech Industries, Inc. (a) 2,500 7,187
Vicor Corporation (a) 15,000 300,000
----------
1,024,467
ENERGY - 7.3%
Amerada Hess Corp 1,200 63,600
Amoco Corporation 1,700 122,187
Atlantic Richfield Company 1,000 110,750
Input/Output, Inc. 2,000 115,500
Mobil Corporation 1,300 145,600
Occidental Petroleum Corporation 2,000 42,750
Texaco, Inc. 1,000 78,500
----------
678,887
ENVIRONMENTAL - 0.4%
United Waste Systems Inc. (a) 1,000 37,250
FIBER OPTICS - 2.1%
Amphenol Corporation (a) 4,000 97,000
Coherent Inc. (a) 1,200 48,600
Uniphase Corporation (a) 1,500 53,625
----------
199,225
FILTRATION - 0.6%
Calgon Carbon Corporation 5,000 60,000
FINANCE AND
FINANCIAL SERVICES - 1.8%
American Express Company 1,600 66,200
AT&T Capital Corp. 1,000 38,250
Paine Webber Group, Inc. 1,700 34,000
The Charles Schwab Corporation 1,500 30,188
----------
168,638
FOOD - 1.2%
CPC International Inc. 1,000 68,625
H. J. Heinz Company 1,400 46,375
----------
115,000
HEALTH/PHARMACEUTICALS - 14.1%
Abbott Laboratories 3,000 125,250
American Home Products Corp. 2,700 261,900
ICN Pharmaceuticals, Inc. 1,822 35,082
Johnson & Johnson 2,000 171,250
Eli Lilly and Company 2,000 112,500
Merck & Co., Inc. 2,600 170,950
Novo-Nordisk ADS 1,500 51,000
Pfizer Inc. 800 50,400
Schering Plough Corporation 1,400 76,650
Teva Pharmaceutical Industries, Ltd. 3,700 171,588
Watson Pharmaceuticals, Inc. (a) 1,700 83,300
----------
1,309,870
HEALTH/SERVICES - 3.3%
Apria Healthcare Group Inc. (a) 1,500 42,375
Foundation Health Corporation (a) 2,000 86,000
HCIA, Inc. (a) 1,500 70,125
Mid Atlantic Medical Services, Inc. (a) 1,000 24,250
Pacificare Health Systems, Inc. CL B (a) 500 43,500
ThermoLase Corporation (a) 1,600 41,400
----------
307,650
HEALTH/SUPPLIES - 8.9%
Biomet, Inc. (a) 4,500 80,437
Chad Therapeutics, Inc. (a) 3,000 46,875
Cryolife Inc. 9,000 139,500
Datascope Corp. (a) 4,000 96,000
Diagnostic Products Corporation 2,200 83,325
</TABLE>
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
Number
of shares Value
--------- ----------
<S> <C> <C>
Express Scripts, Inc. (a) 1,500 76,500
MediSense, Inc. (a) 6,000 189,750
Thermo Cardiosystems Inc. (a) 800 61,800
Ventritex, Inc. (a) 3,200 55,600
----------
829,787
HOTELS AND CASINOS - 0.9%
ITT Corporation 1,500 79,500
INSTRUMENTS/SCIENTIFIC - 4.9%
Bio-Rad Laboratories CL A (a) 7,000 297,500
Millipore Corporation 2,000 82,250
Teradyne, Inc. (a) 1,000 25,000
Thermo Voltek Corp. (a) 3,000 45,750
----------
450,500
INSURANCE - 1.5%
AFLAC Inc. 1,600 69,400
ITT Hartford Group 1,500 72,563
----------
141,963
PIPELINES/NATURAL GAS - 1.0%
PanEnergy 3,200 89,200
REAL ESTATE INVESTMENT TRUSTS - 1.4%
Realty Income Corporation 2,700 60,750
Tucker Properties Corporation 8,000 70,000
----------
130,750
RESTAURANTS - .5%
McDonald's Corporation 1,000 45,125
RETAIL - 3.5%
Custom Chrome Inc. (a) 3,000 $ 69,375
General Nutrition Companies, Inc. (a) 2,000 46,000
Nike, Inc. 800 55,700
Viking Office Products (a) 1,000 46,500
Walgreen Co. 3,600 107,550
----------
325,125
STEREOLITHOGRAPHY - 1.4%
3D Systems Corporation (a) 5,500 130,625
TELECOMMUNICATIONS - 3.3%
DSC Communications Corporation (a) 1,500 55,313
GTE Corp. 1,500 66,000
MRV Communications 2,800 71,050
Tellabs, Inc. (a) 3,200 118,400
----------
310,763
TEXTILES - 1.1%
St. Johns Knits Inc. 1,000 53,125
Supreme International Corporation (a) 3,000 48,000
----------
101,125
TRANSPORTATION SERVICES - 0.6%
Expeditors International of Washington, Inc. 2,000 52,250
TOTAL COMMON STOCKS
(Cost: $7,553,787) $8,748,032
CONVERTIBLE PREFERRED STOCK - 1.2%
Nokia Corp. Convertible Pref. ADS 2,800 108,850
(Cost: $154,401)
REPURCHASE AGREEMENT - 4.0%
UMB Bank, n.a., dated 12/29/95,
due 1/2/96, 5.25%, collateralized
by U.S. Treasury Bills
(Cost: $375,000) 375,000
----------
TOTAL INVESTMENTS - 99.4%
(Cost: $8,083,188) 9,231,882
CASH AND OTHER ASSETS 57,172
----------
LESS LIABILITIES - 0.6%
NET ASSETS - 100% $9,289,054
==========
</TABLE>
NOTE TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security
