<PAGE> 1
UNIVERSAL CAPITAL GROWTH FUND
100 S. WACKER DRIVE
SUITE 2100
CHICAGO, IL 60606
312-782-1515
November 25, 1997
Dear Shareholder,
The Universal Capital Growth Fund ("Fund") recorded a total return of 36.2%
for its fiscal year ended September 30, 1997. For the third calendar
quarter and the calendar 9 months, results showed a gain of 9.4% and 29.6%,
respectively. The Fund's investment performance results and those of the S&P
500 are summarized in the following table:
Total Return *
September 30, 1997
<TABLE>
<CAPTION>
Quarter 9months Past Past Past Since Inception
1Year 3Years 5Years 1/22/91_____
<S> <C> <C> <C> <C> <C> <C>
Universal Capital Growth 9.4% 29.6% 36.2% 26.4% 19.4% 16.9%
S&P 500 7.5% 29.7% 40.5% 29.9% 20.8% 20.3%
</TABLE>
* Returns except for the quarter and 9 months represent average annual
returns. All returns include the reinvestment of dividends but
exclude sales charges. Please refer to the performance chart below.
GBGS assumed management of the Fund on August 15, 1997.
As the new investment advisor to the Fund, we at Graver, Bokhof, Goodwin &
Sullivan, LP. ("GBGS") would like to thank you for approving the assignment of
the Fund's advisory agreement to us. We have agreed to manage the Fund without
any change in advisory fees and to extend by one year, through December 31,
1998, the limiting of the Fund's annual ordinary operating expenses to 2% of
the Fund's average daily net assets. Dreher & Associates, Inc. continues to
serve as the distributor. We are very enthusiastic about the prospects for
the Fund and welcome the opportunity to work for you.
By way of background, GBGS is an independent employee owned investment
advisor, headquartered in Chicago, Illinois. Our firm and affiliates currently
manage over $1 billion in client assets. Our "Growth at a Reasonable Price"
investment style emphasizes capital appreciation of undervalued growing
companies. Stocks are selected according to such variables as anticipated
earnings improvements, favorable returns on capital, reasonable price
valuations, adequate liquidity and sufficient diversification by sector and
market capitalization. The Fund is managed by a team of portfolio managers
averaging over 25 years experience in the investment industry. Rest assured
that our vast knowledge and disciplined investment process are hard at work on
behalf of the Fund's shareholders.
In the fiscal year just ended both the Fund and S&P 500 rose to all-time record
levels, accompanying an unprecedented period of economic prosperity with low
and stable inflation and interest rates. On the heels of compound annual
earnings growth exceeding 17% during the past 6 years, the S&P 500 has
experienced a remarkable seven consecutive years of positive returns. Often
referred to as the "New Paradigm", the 90s appear to have seen it all.
Levels are being achieved that have not been seen for three decades in areas
such as unemployment, consumer
<PAGE> 2
confidence, productivity and inflation. During fiscal 1998 our Federal
Government will likely report its first budget surplus since the 1960s. Surely
these seem to be the best of times.
During the past fiscal year, your Fund has benefited from the strong
performance of large capitalization stocks like those represented in the S & P
500. Specifically, the portfolio has profited from a substantial over-weighting
in the Technology, Financial and Health Care sectors. S&P sector returns in
these groups were; 62%, 57% and 37%, respectively. In both Technology and
Health Care, the Fund held positions which were almost double that of the S&P
500, with about forty-percent more exposure to financials. The five best
performing securities in the Fund were: Merrill Lynch, up 127%, Microsoft, up
101%, Intel, up 94%, Schering-Plough, up 70% and Tellabs, up 46%. Most
recently, we sold part of the Intel shares reducing the portfolio's exposure to
this security to below 5%. We have also cut back slightly our exposure in each
of these sectors.
Since August small to mid capitalization stocks have begun to outperform the
larger cap Blue Chips, a trend expected by many to continue. We have purchased
several securities in this category, namely; Brunswick, Complete Business
Solutions, Falcon Drilling, and Kuhlman Corporation. As you will note from the
listing of portfolio holdings in this report, we continue to favor the
Financial, Health Care and Technology industries and have added to the Oil
Service sector.
Reminiscent of 1987, this recent October, once again proved to be the market's
nemesis. Amid concern over US market valuations as well as rapidly
deteriorating currency woes and economic turmoil throughout much of Asia, stock
prices fell an average of 12-14%. Though temporarily shaken, the foundation of
this long running bull market appears so far not to have suffered any
significant permanent damage. A spillover of the impending Asian economic
setback may ripple through the global economy and may produce slower economic
growth in the U.S. Further, any deflationary impact of lower import prices and
declining exports could result in profit pressures for many U.S. corporations,
especially those with large international exposure. These forces should help
domestic inflation and interest rates remain muted. Having anticipated some
of these developments, we recently pared back the Fund's holdings in areas
where we expect earnings comparisons to be difficult.
Effective November 11, 1997 the Universal Capital Growth Fund received a symbol
(UCGFX) from the Nasdaq, making its daily net asset value and offering price
available to most broker dealers. While not yet carried in the quotation
section of your daily newspaper, price information will appear in BARRONS
mutual fund tables on a weekly basis.
We look forward to working with you during 1998. Please feel free to call us
if you have any questions.
Sincerely,
/s/ Andrew J. Goodwin, III
Andrew J. Goodwin, III
President
<PAGE> 3
Growth of a $10,000 Investment
<TABLE>
<CAPTION>
Date Universal Capital Growth Fund S & P 500 Stock Index
<S> <C> <C>
1/22/97 10000 10000
9/30/91 10548.21 11983.75
9/30/92 11000.61 13307.97
9/30/93 12337.45 15038.25
9/30/94 13257.32 15592.47
9/30/95 18277.98 20230.4
9/30/96 19630.6 24343.67
9/30/97 26745.47 34190.28
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 1/22/91
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that your shares, when redeemed, may be
worth more or less than original cost. The Fund's performance graph includes
deduction of the 5.5% front end load. The S&P 500 Stock Index is an
unmanaged but commonly used measure of common stock total return performance.
<PAGE> 4
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C> <C>
COMMON STOCKS - 95.95%
AEROSPACE - 3.35%
Boeing Company (The) 8,000 $435,500
AUTOMOTIVE PARTS AND EQUIPMENT - 1.14%
Borg Warner Automotive, Inc. 2,600 147,875
BANKS - 4.14%
First Chicago NBD Corporation 3,500 263,375
Wells Fargo & Company 1,000 275,000
-------
538,375
BIOTECHNOLOGY - 1.66%
Amgen, Inc. * 4,500 215,718
COMPUTERS - 6.09%
Compaq Computer Corporation * 2,500 186,875
Hewlett-Packard Company 2,600 180,863
International Business Machines Corporation 4,000 423,750
-------
791,488
COMPUTER PERIPHERAL EQUIPMENT - 2.25%
Cisco Systems, Inc. * 4,000 292,250
COMPUTER SOFTWARE - 6.27%
Complete Business Solutions, Inc. * 10,000 285,000
Microsoft Corporation * 4,000 529,250
-------
814,250
CONSUMER PRODUCTS - 6.49%
Brunswick Corporation 7,500 264,375
Gillette Company (The) 3,500 302,094
Procter & Gamble Company (The) 4,000 276,250
-------
842,719
DIVERSIFIED MANUFACTURING - 3.76%
Kuhlman Corporation 8,000 288,000
Thermo Electron Corporation * 5,000 200,000
-------
488,000
</TABLE>
<PAGE> 5
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
SHARES VALUE
------ -----
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT - 1.05%
General Electric Company 2,000 136,125
ELECTRONIC PRODUCTS AND COMPONENTS - 10.51%
American Power Conversion Corporation * 5,000 140,625
Analog Devices, Inc. * 6,666 223,311
Cognex Corporation * 8,000 263,000
Intel Corporation 8,000 738,500
---------
1,365,436
ENERGY - 3.36%
Falcon Drilling Company, Inc. * 5,000 176,563
Halliburton Company 5,000 260,000
-------
436,563
FINANCE AND FINANCIAL SERVICES - 12.46%
Charles Schwab Corporation (The) 10,800 386,100
Fannie Mae 5,500 258,500
Merrill Lynch & Company, Inc. 10,000 741,875
Paine Webber Group Inc. 5,000 232,813
---------
1,619,288
FOOD AND BEVERAGE - 3.96%
H. J. Heinz Company 5,000 230,937
PepsiCo, Inc. 7,000 283,938
-------
514,875
HEALTH/PHARMACEUTICALS - 13.78%
Abbott Laboratories 4,500 287,719
Eli Lilly and Company 3,000 361,312
Johnson & Johnson 5,000 288,125
Merck & Co., Inc. 3,600 359,775
Schering-Plough Corporation 9,600 494,400
---------
1,791,331
HEALTH/SUPPLIES - 2.89%
Medtronic, Inc. 8,000 376,000
</TABLE>
<PAGE> 6
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
September 30, 1997
<TABLE>
<CAPTION>
Shares Value
------ -----
<S> <C> <C> <C>
INSURANCE - 5.37%
Horace Mann Educators Corporation 5,000 280,625
MBIA Inc. 1,500 188,156
USF&G Corporation 10,000 229,375
-------
698,156
RAILROADS - 1.49%
Burlington Northern Santa Fe Corporation 2,000 193,250
RETAIL - 1.97%
Walgreen Co. 10,000 256,250
TELECOMMUNICATIONS - 3.96%
Tellabs, Inc. * 10,000 515,000
-------
TOTAL COMMON STOCKS (COST $8,498,282) 12,468,449
----------
PRINCIPAL
AMOUNT VALUE
------ -----
REPURCHASE AGREEMENT - 3.08%
UMB Bank, n.a., 5.05%, dated 9/30/97,
repurchase price $400,166, maturing
10/03/97, collateralized $400,000 400,000
-------
by U.S. Treasury Notes, 8.875%,
maturing 2/15/99
TOTAL REPURCHASE AGREEMENTS 400,000
-------
(COST $400,000)
TOTAL INVESTMENTS - 99.03%
(COST $8,898,282) 12,868,449
CASH AND OTHER ASSETS
LESS LIABILITIES - 0.97% 126,026
-------
NET ASSETS - 100.00% $12,994,475
</TABLE> ===========
<PAGE> 7
UNIVERSAL CAPITAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at value (cost $8,898,282) $12,868,449
Cash 153,047
Receivables for shares issued 1,022
Dividends receivable 10,489
Prepaid expenses 13,092
-----------
Total Assets 13,046,099
-----------
LIABILITIES:
Payable to Adviser 16,081
Payable for shares redeemed 5,231
Other accrued expenses 30,312
-----------
Total Liabilities 51,624
-----------
NET ASSETS $12,994,475
===========
NET ASSETS CONSIST OF:
Paid in capital $8,671,949
Accumulated net realized gain
on investments 352,359
Unrealized net appreciation
on investments 3,970,167
-----------
TOTAL NET ASSETS $12,994,475
===========
NET ASSET VALUE PER SHARE
($12,994,475 DIVIDED BY 718,215
SHARES OUTSTANDING) $ 18.09
===========
MAXIMUM OFFERING PRICE PER SHARE
(net asset value, plus 5.8% of net
asset value or 5.5% of offering price) $ 19.14
===========
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividend income $ 107,466
Interest income 63,948
----------
171,414
----------
EXPENSES:
Investment advisory fees 112,887
12b-1 fees 56,444
Legal fees 34,000
Audit fees 19,996
Federal and state registration fees 13,500
Reports to shareholders 13,000
Fund accounting fees 12,100
Transfer agent fees and expenses 11,800
Custody fees 4,900
Trustees' fees 2,750
Other 1,455
----------
Total expenses before waiver 282,832
Waiver of fees (57,057)
----------
Net expenses 225,775
----------
Net investment loss (54,361)
----------
REALIZED AND UNREALIZED GAINS:
Net realized gain on investments 405,187
Change in unrealized appreciation
on investments 3,159,044
----------
Net gain on investments 3,564,231
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,509,870
==========
</TABLE>
See notes to financial statements.
<PAGE> 8
UNIVERSAL CAPITAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (54,361) $ (68,812)
Net realized gain on investments 405,187 1,302,945
Change in unrealized appreciation on investments 3,159,044 (499,880)
----------- ------------
Net increase in net assets resulting from operations 3,509,870 734,253
----------- ------------
DISTRIBUTIONS:
Net realized gains (1,185,143) (1,269,948)
----------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from 54,442 and 202,722 shares issued, respectively 888,007 3,008,775
Net asset value of 82,871 and 90,601 shares issued to
holders in reinvestment of dividends, respectively 1,150,243 1,268,410
Cost of 161,216 and 51,688 shares redeemed, respectively (2,492,100) (766,538)
----------- ------------
Net increase (decrease) from capital transactions (453,850) 3,510,647
----------- ------------
TOTAL INCREASE IN NET ASSETS 1,870,877 2,974,952
NET ASSETS:
Beginning of year 11,123,598 8,148,646
----------- ------------
End of year $12,994,475 $ 11,123,598
=========== ============
</TABLE>
See notes to the financial statements.
<PAGE> 9
UNIVERSAL CAPITAL GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 14.99 $ 16.28 $ 12.47 $12.27 $11.38
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.08) (0.10) (0.10) (0.13) (0.04)
Net realized and unrealized gains on investments 4.97 1.14 4.54 0.96 1.39
------- ------- ------- ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.89 1.04 4.44 0.83 1.35
------- ------- ------- ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - - - - 0.11
Net realized gains (1.79) 2.33 0.63 0.63 0.35
------- ------- ------- ------ ------
Total distributions to shareholders (1.79) 2.33 0.63 0.63 0.46
NET ASSET VALUE, END OF YEAR $ 18.09 $ 14.99 $ 16.28 $12.47 $12.27
======= ======= ======= ====== ======
TOTAL RETURN (B) 36.24% 7.40% 37.87% 7.46% 12.15%
SUPPLEMENTAL DATA AND RATIOS:
Ratio of net expenses to average net assets (a) 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment loss to average net assets (a) (0.5)% (0.7)% (0.8)% (1.1)% (0.4)%
Portfolio turnover rate 49.2% 262.1% 157.6% 188.7% 186.3%
Average commission rate per share $0.0457 $0.0208 N/A N/A N/A
Net assets, end of year (in 000's) $12,994 $11,124 $ 8,149 $4,969 $4,892
</TABLE>
(a) After reimbursement and waiver of Advisor fees and earnings credits of the
custodian of 0.50%, 0.35%, 0.7%, 1.1%, and 0.9% of average net assets
for 1997, 1996, 1995, 1994, and 1993.
(b) The total return calculation does not reflect the sales load imposed on the
purchase of shares.
(c) On August 15, 1997, the advisor changed to Graver, Bokhof, Goodwin &
Sullivan from Integrated Financial Services, Inc.
See notes to the financial statements.
<PAGE> 10
UNIVERSAL CAPITAL GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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 (the "1940 Act") as a
diversified, open-end investment company. Universal Capital Growth Fund (the
"Fund"), the only series of the Trust currently offered, commenced selling
shares of beneficial interest to the public on January 22, 1991 (commencement
of operations).
INVESTMENT VALUATION. Investments are stated at value. Investments 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.
Investments 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.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
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.
The character of distributions made during the year from net investment income
of net realized gains may differ from the characterization for federal income
tax purposes due to differences in the recognition of income, expense or gain
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such differences that
are permanent in nature. Accordingly, at September 30, 1997, the Fund reduced
paid in capital by $54,175 and offset accumulated net realized gain on
investments by $186 for the current year's net investment loss.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. All
repurchase agreements are fully collateralized by U.S. Treasury securities.
All collateral is held through the Fund's custodian bank and is monitored daily
by the Fund to ensure that its market value exceeds the carrying value of the
repurchase agreement.
2. TRANSACTIONS WITH AFFILIATES
Pursuant to an investment advisory agreement, beginning August 15, 1997,
with Graver, Bokhof, Goodwin & Sullivan ("Advisor"), the Fund pays an
investment advisory fee 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 from August 15, 1997 to
September 30, 1997, the Fund incurred investment advisory fees of $16,427 under
this agreement.
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 2.00% of average daily net assets
through December 31, 1998. During the period from August 15, 1997 to September
30, 1997, the Advisor waived or reimbursed $11,870 of its investment advisory
fee.
Prior to August 15, 1997, the investment advisor was Integrated Financial
Services, Inc. ("IFS"). The Fund paid an investment advisory fee 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 from October 1, 1996 to August 14, 1997, the Fund incurred
investment advisory fees of $96,460 under this agreement.
IFS agreed to limit the Fund's annual operating expenses to 2.00% of
average daily net assets. During the period from October 1, 1996 to August 14,
1997, IFS waived or reimbursed $39,469 of its investment advisory fee.
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 1940 Act whereby the Fund pays the
Distributor a monthly service fee of .25% and a monthly sales compensation fee
of .25%, 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 year ended September 30, 1997, the Fund incurred
distribution fees of $56,444. The Distributor received commissions of $4,215
from sale of the Fund's shares during the year ended September 30, 1997, all of
which was paid to brokers affiliated with the Fund.
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 year ended September 30, 1997, the Fund paid brokerage commissions
to the Distributor on purchases and sales of securities in the amount of
$10,412. It is the management's opinion that commission rates charged to the
Fund by the
<PAGE> 11
UNIVERSAL CAPITAL GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Distributor are consistent with those charged to comparable unaffiliated
customers in similar transactions.
Pursuant to a custody agreement with UMB Bank, n.a. ("UMB"), the Fund pays
custody fees to UMB. In connection with that agreement, UMB issued $5,718 of
earning credits to the Fund.
3. INVESTMENTS
Purchases and sales of investments, other than short-term obligations, were
$5,568,555 and $4,853,575 respectively, for the year ended September 30, 1997.
The cost basis of investments for federal income tax purposes at September 30,
1997 was $8,901,175. At September 30, 1997, on a tax basis, gross unrealized
appreciation was $4,010,552, gross unrealized depreciation was $43,278 and net
unrealized appreciation was $3,967,274.
FEDERAL TAX STATUS
OF 1997 DIVIDENDS
INCOME AND CAPITAL GAIN DIVIDENDS PAID TO YOU, WHETHER RECEIVED IN CASH
OR REINVESTED IN SHARES, MUST BE INCLUDED IN YOUR FEDERAL INCOME TAX RETURN AND
MUST BE REPORTED BY THE FUND TO THE INTERNAL REVENUE SERVICE IN ACCORDANCE WITH
U.S. TREASURY DEPARTMENT REGULATIONS.
NONE OF THE DIVIDENDS PAID BY THE FUND QUALIFY FOR THE 70% DIVIDENDS RECEIVED
DEDUCTION AVAILABLE TO CERTAIN CORPORATE SHAREHOLDERS.
INVESTMENT ADVISOR
Graver, Bokhof, Goodwin & Sullivan
100 South Wacker Drive, Suite 2100
Chicago, Illinois 60606
DISTRIBUTOR
Dreher & Associates, Inc.
One Oakbrook Terrace, Suite 708
Chicago, Illinois 60181
CUSTODIAN
UMB Bank, n.a.
P.O. Box 419226
Kansas City, Missouri 64141
TRANSFER AGENT
Jones & Babson
BMA Tower
700 Karnes Blvd., 12th Floor
Kansas City, Missouri 64108
COUNSEL
Vedder, Price, Kaufman & Kammholz
Chicago, Illinois
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, Illinois
RESULTS OF THE SPECIAL SHAREHOLDER MEETING
A special meeting of the shareholders of the Universal Capital Growth Fund (the
"Fund") was held on August 13, 1997.
The matters voted on by the shareholders of record as of June 30, 1997 and the
results of the shareholders' vote at the August 13, 1997 meeting were as
follows:
A. Approval of the nominees to the Fund's Board of Trustees: Andrew J.
Goodwin, III, William J. Breen, Robert F. Seebeck, Alan L. Zable.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
402,110 7,726 0
</TABLE>
B. Approval of new investment advisory agreement pursuant to which Graver,
Bokhof, Goodwin & Sullivan would direct the investment of the Fund's
assets and be responsible for the formulation and implementation of a
continuing program for the management of the Fund's assets.
<TABLE>
<CAPTION>
For Against Abstain
------- ------- -------
<S> <C> <C>
399,790 2,359 7,686
</TABLE>
<PAGE> 12
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Universal Capital Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Universal Capital Growth Fund as of September
30, 1997, the related statement of operations for the year then ended and
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the fiscal years since 1993. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of September 30, 1997, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Universal Capital Growth Fund at September 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the fiscal years since 1993, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 1, 1997
