<PAGE>
May 2, 1997
Semi-Annual Report
Period Ended March 31, 1997
Dear Shareholder:
Universal Capital Growth Fund had a total return of 4.5% for the six month
period ended March 31, 1997. 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 $1.79 per share which was paid on
December 12, 1996.
The fund's investment performance results are summarized in the following
tables:
Table I
Total Returns Through
March 31, 1997
Period Total Return
------ ------------
Past Quarter (.1%)
Past Six Months 4.5%
Past Year 4.7%
Table II
Average Annual Total Returns
Through March 31, 1997
Past Past Past Life of
1 year 3 years 5 years Fund/(1)/
------ ------- ------- ---------
Without Sales Charge 4.7% 18.3% 12.1% 13.3%
With 1.5% Sales Charge 3.1% 17.7% 11.8% 13.1%
(1) since inception on 1/22/91
The U.S. is well into its sixth year of economic expansion. Using traditional
measures, both labor and capital resources in the U.S. are fully employed.
Although we would seem to be in an advanced stage of the business cycle, there
are relatively few signs that inflation has begun to accelerate. In spite of
this, the Federal Reserve has recently moved in a preemptive fashion by raising
the Federal Funds rate 25 basis points at the end of March, and indications are
that investors might expect a further increase later this year. However, we
continue to be blessed with a vigorous economy and do not see any imbalances
which might derail the current economic
<PAGE>
expansion. As this is being written, excellent first quarter earnings are being
reported by both large and small cap companies, with the market continuing to
primarily reward those large cap multi-national companies in which your fund is
invested.
Uncertainties about the future direction of the economy and worries about
interest rates continue to produce an erratic stock market. However, stock
prices ultimately follow earnings trends and, as we have noted, earnings
continue to be strong.
Another consideration causes us to be very optimistic regarding the U.S.
economy. Along with low inflation and low interest rates we are in a dynamic
economic period unlike any we have ever seen. We see elements in our economy
which are actually deflationary. Although traditional industries (such as autos
and steel) are growing at only 1 to 2% per year, we have sectors of our economy,
primarily high tech, which are providing explosive growth. Telecommunications,
computers and other information-related industries accounted for a stunning 40%
of the growth in the U.S. over the last two years. High tech has been growing
at 15% a year. And the prices for many of those products and services, which
are making people and companies more productive, are going down. The word
processor we bought 12 years ago for $5,000 is now an antiquated relic replaced
by a software program which produces far superior results and costs $150.
We feel that the combination of rapid but non-inflationary growth in high tech
and moderate expansion everywhere else is a recipe for sustainable economic
growth of 3 to 4% per year.
Thank you for your continued confidence.
Sincerely,
James A. Dreher
Chairman
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
Portfolio of Investments
March 31, 1997
(Unaudited)
Number
of Shares Value
--------- -----
COMMON STOCKS-84.4%
AIRLINE MANUFACTURING-1.9%
Boeing 2,000 197,250
AUTOMOTIVE/MOTORCYCLES
AND PARTS-2.9%
Borg Warner Auto Parts 2,600 $ 110,825
Genuine Parts Co. 4,000 186,500
----------
297,325
BANKS-2.8%
Wells Fargo & Company 1,000 284,125
BIOTECHNOLOGY-2.5%
Amgen, Inc. (a) 4,500 251,438
COMPUTERS-3.6%
Hewlett Packard Co. 1,600 85,200
IBM, Corp. 2,000 274,750
----------
359,950
COMPUTER PERIPHERAL
EQUIPMENT-2.4%
Cisco Systems Inc. (a) 4,000 192,500
US Robotics Corp. 1,000 55,375
----------
247,875
COMPUTER SOFTWARE-5.0%
Cognex Corp. (a) 8,000 152,000
Microsoft Corp. (a) 4,000 366,750
----------
518,750
CONSUMER PRODUCTS-10.1%
Kimberly Clark Corp. 2,000 198,750
Procter & Gamble Co. 2,000 230,000
Philip Morris Companies 4,000 456,500
Gillette 2,000 145,250
----------
1,030,500
DIVERSIFIED MANUFACTURING-0.9%
Thermo Electron Corp. 3,000 92,625
ELECTRICAL EQUIPMENT-0.9%
General Electric Co. 1,000 99,250
ELECTRONIC PRODUCTS
AND COMPONENTS-10.9%
Analog Devices (a) 6,666 149,985
Annel Corp. (a) 5,400 129,262
Intel Corp. 6,000 834,750
----------
1,113,997
ENERGY-1.3%
Mobil Corp. 1,000 130,625
FINANCE AND
FINANCIAL SERVICES-10.3%
Franklin Resource 2,000 102,000
MBIA Inc. 1,500 143,812
Merrill Lynch 5,000 429,375
Paine Webber Group, Inc. 5,000 141,250
Charles Schwab Corp. 7,200 229,500
----------
1,045,937
FOOD-2.0%
Heinz H.J. Company 5,000 197,500
HEALTH/PHARMACEUTICALS-14.9%
Abbott Laboratories 3,000 168,375
American Home Products Corp. 3,000 180,000
Johnson & Johnson 5,000 264,375
Lilly Eli & Co. 3,000 246,750
Merek & Co., Inc. 3,600 303,300
Schering Plough Corp. 4,800 349,200
----------
1,512,000
HEALTH/SUPPLIES-3.7%
McKesson 2,000 128,000
Medtronic, Inc. 4,000 249,000
----------
377,000
INSURANCE-1.3%
Horace Mann Educ 3,000 132,375
MISCELLANEOUS-0.5%
Oregon Metallurgic (a) 3,000 54,000
RAILROADS-1.5%
Burlington Northern Inc. 2,000 148,000
RETAIL-2.1%
Walgreen Co. 5,000 209,375
TELECOMMUNICATIONS-2.8%
Tellabs, Inc. (a) 8,000 289,000
----------
TOTAL COMMON STOCKS
(Cost: $7,196,848) $8,588,897
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
Portfolio of Investments (continued)
Value
-----
REPURCHASE AGREEMENT-14.2%
UMB Bank, n.a., dated 3/31/97
due 4/3/97, 4.85%, collateralized
by U.S. Treasury Bills
(Cost: $1,450,000) 1,450,000
-----------
TOTAL INVESTMENTS-98.6%
(Cost: $8,646,848) 10,038,897
CASH AND OTHER ASSETS,
LESS LIABILITIES-1.4% 137,610
-----------
NET ASSETS-100% $10,176,507
===========
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, 1997
<S> <C>
ASSETS
Common stocks, at value (cost $7,196,848)......................... $ 8,588,897
Repurchase agreements, at value (cost $1,450,000)................. 1,450,000
Cash.............................................................. 125,048
Receivable for fund shares sold................................... 7,057
Accrued dividends receivable...................................... 13,454
Accrued interest receivable....................................... 4,019
Prepaid expenses.................................................. 7,334
-----------
Total Assets..................................................... 10,195,809
LIABILITIES AND NET ASSETS
Payable to Advisor................................................ 5,390
Payable to Distributor............................................ 4,729
Accounts payable and accrued liabilities.......................... 9,183
-----------
Total Liabilities................................................ 19,302
-----------
NET ASSETS APPLICABLE TO 733,249 SHARES
OUTSTANDING, NO PAR VALUE........................................ $10,176,507
===========
ANALYSIS OF NET ASSETS
Paid in capital................................................... $ 8,936,553
Accumulated net investment loss................................... (9,514)
Accumulated net realized loss on investments...................... (142,581)
Net unrealized appreciation of investments........................ 1,392,049
-----------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING...................................................... $10,176,507
===========
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE
($10,176,507 divided by 733,249
shares outstanding).............................................. $ 13.88
===========
MAXIMUM OFFERING PRICE PER SHARE
(net asset value, plus 1.52% of net asset
value or 1.50% of offering price)................................ $ 14.09
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year
Ended ended
March 31, 1997 Sept. 30, 1996
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss........................... $ (9,514) $ (68,812)
Net realized gain/(loss) on investments....... (89,902) 1,302,945
Change in net unrealized appreciation......... 580,926 (499,880)
------------ -----------
Net increase in net assets from operations.... 481,510 734,253
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized gain on investment transactions... (1,185,180) (1,269,948)
NET INCREASE/(DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS.................................. (243,421) 3,510,647
------------ -----------
TOTAL INCREASE/(DECREASE) IN NET ASSETS........ (947,091) 2,974,952
NET ASSETS:
Beginning of period............................ 11,123,598 8,148,646
------------ -----------
End of period.................................. $ 10,176,507 $11,123,598
============ ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended March 31, 1997
<S> <C>
INVESTMENT INCOME
Dividends........................................................ $ 52,511
Interest......................................................... 48,255
----------
Total Investment Income........................................... 100,766
EXPENSES
Investment advisory fee.......................................... 53,420
Distribution fees................................................ 26,710
Transfer agent fees.............................................. 6,025
Legal fees....................................................... 8,656
Audit fees....................................................... 9,418
Accounting fees.................................................. 6,556
Printing and postage............................................. 2,737
Custodian fees................................................... 2,444
Trustees fees.................................................... 1,369
Registration fees................................................ 6,982
Insurance........................................................ 474
Other............................................................ 249
----------
Total Expenses.................................................. 125,040
Less expense waiver and reimbursement........................... 14,760
----------
Net Expenses Absorbed by Fund................................... 110,280
----------
NET INVESTMENT LOSS............................................... (9,514)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized loss on investment transactions..................... (89,902)
Change in net unrealized appreciation
of investments.................................................. 580,926
----------
NET GAIN ON INVESTMENTS........................................... 491,024
----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS.................................................. $ 481,510
==========
</TABLE>
See accompanying notes to financial statements
<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. 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.
Distributions are determined in accordance with income tax principles which may
treat certain transactions differently than generally accepted accounting
principles.
Repurchase agreements. The Fund has a significant portion of its investments 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 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 six months ended March 31, 1997, the Fund
incurred an investment advisory fee of $53,420.
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 six months ended March 31, 1997, the Advisor
waived or reimbursed the Fund for expenses of $14,760.
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 six months ended
March 31, 1997, the Fund incurred distribution fees of $26,710. The Distributor
received commissions of $2,467 from sale of the Fund's shares during the six
months ended March 31, 1997, of which $711 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 six months ended March 31, 1997, the Fund paid brokerage commissions to the
Distributor on purchases and sales of securities in the amount of $2,052. 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 six months ended March 31, 1997, the Fund made no
direct payments to its officers and incurred trustees' fees of $1,369 to its
unaffiliated trustees.
3. Investments
Purchases and sales of investments, other than short-term obligations, were
$1,689,675 and $1,781,039, respectively, for the six months ended March 31,
1997.
The cost basis of investments for federal income tax purposes at March 31, 1997
was $7,196,848. At March 31, 1997, on a tax basis, gross unrealized
appreciation was $1,600,014, gross unrealized depreciation was $207,965 and net
unrealized appreciation was $1,392,049.
<PAGE>
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, 1997 Sept. 30, 1996
-------------- --------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold 19,709 $295,668 202,722 $3,008,775
Shares issued
on reinvestment
of distributions 82,863 1,150,143 90,601 1,268,410
Less shares redeemed (111,441) (1,689,232) (51,688) (766,538)
-------- ---------- ------- ----------
Net increase/(decrease) (8,869) ($243,421) 241,635 $3,510,647
======== ========== ======= ==========
</TABLE>
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 60108
Custodian
UMB Bank, n.a.
P.O. Box 419226
Kansas City, Missouri 64141
Transfer Agent
Jones & Babson
2440 Pershing Road
Kansas City, Missouri 64181
Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
FINANCIAL HIGHLIGHTS
Per share income and capital changes (for a share outstanding throughout each
period).
<TABLE>
<CAPTION>
Six months Year Year Year Year
ended ended ended ended ended
March 31, 1997 Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1993
-------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.99 $ 16.28 $ 12.47 $ 12.27 $ 11.38
Income form investment operations:
Net investment income (loss)(a) (.01) (.10) (.10) (.13) (.04)
Net realized & unrealized gain on
investments .69 1.14 4.54 .96 1.39
---- ---- ---- ---- ----
Total from investment operations .68 1.04 4.44 .83 1.35
Less distribution to shareholders from:
Net investment income -- -- -- -- .11
Realized gains on investments 1.79 2.33 .63 .63 .35
---- ---- ---- ---- ----
Total distributions to shareholders 1.79 2.33 .63 .63 .46
Net asset value, end of period $ 13.88 $ 14.99 $ 16.28 $ 12.47 $ 12.27
======= ======= ======= ======= =======
Total return(b) 4.7% 7.4% 37.9% 7.5% 12.2%
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) (0.2)%* (0.7)% (0.8)% (1.1)% (0.4)%
Portfolio turnover rate 20.7% 262.1% 157.6% 188.7% 186.3%
Average commission rate per share .0219 .0208 N/A N/A N/A
Net assets, end of period (in 000's) $ 10,176 $11,124 $ 8,149 $ 4,969 $ 4,892
</TABLE>
(a) After reimbursement and waiver of expenses by the Advisor of .28%, .35%,
.7%, 1.1%, and .9%, of average net assets for 1997, 1996, 1995, 1994, and 1993,
respectively.
(b) Total return is not annualized and does not reflect the effect of any sales
charges.
*Annualized
Note: Per share data for 1997, 1996, 1995, 1994 and 1993 was determined based on
average shares outstanding.
