--------------------------------------------------------------------------------
UNIVERSAL CAPITAL GROWTH FUND
-----------------------------
ANNUAL REPORT
SEPTEMBER 30, 2000
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<PAGE>
This page intentionally left blank.
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
100 S. WACKER DRIVE
SUITE 2100
CHICAGO, IL 60606
(800) 969-9676
--------------------------------------------------------------------------------
November 16, 2000
Dear Shareholder,
Your fund management team at Optimum Investment Advisors would like to thank you
for your support. The Universal Capital Growth Fund (the "Fund") recorded a
total return, gross of sales charges, of 11.24% for the fiscal year ended
September 30, 2000. The Fund's investment results and those of the S&P 500/R
Stock Index (the "S&P 500") are summarized in the following table:
TOTAL RETURNS<F1>
September 30, 2000
--------------------------------------------------------------------------------
Quarter 6 Months 1 Year 3 Years 5 Years Inception
1/22/91
--------------------------------------------------------------------------------
Universal Capital
Growth Fund
with 5.5% sales -4.74% -5.79% 11.24% 15.57% 17.70% 16.44%
load effect -9.97% -10.98% 5.13% 13.42% 16.37% 15.76%
--------------------------------------------------------------------------------
S&P 500 Stock Index -0.97% -3.60% 13.28% 16.44% 21.69% 19.01%
--------------------------------------------------------------------------------
<F1> Returns, except for the quarter and 6 months, represent average annual
returns as of September 30, 2000. All returns shown include the reinvestment of
dividends and distributions. Past performance is not indicative of future
performance. Investment and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than the original cost. The
S&P 500 Stock Index is an unmanaged but commonly used measure of common stock
total return performance. Please refer to the performance chart on page three.
Optimum Investment Advisors (formally known as Graver, Bokhof, Goodwin &
Sullivan) assumed management of the Fund on August 15, 1997.
During the past fiscal six-month period, the Fund and the stock market have
experienced a continuation of record volatility. At one point or another during
this period, most industries and sectors have undergone significant corrections.
The Nasdaq Composite Index (the "Nasdaq") has suffered the most damage,
following on the heels of an extraordinary period when it soared some 95%
between last October and March of this year. The current decline, which has
extended beyond the Fund's fiscal year end, represents the second drop for the
index of more than 30% since its March high. As an indication of the general
damage done to the broad market, the average company's stock in the S&P 500 has
fallen 30% from its fifty-two week high and more than two-thirds of all stocks
are down greater than 20%. In hindsight, future earnings estimates were not
sufficiently lowered during those earlier declines to avoid the blood-letting
associated with third quarter reported results and announcements regarding
future expectations. In addition, the mutual fund tax-selling season, which
ended on October 31, was far more severe than during previous declines.
Future economic activity and Fed policy will weigh most heavily on whether we
are in the process of a successful testing of the lows. Fed Chairman
Greenspan's concern over inflation and "irrational exuberance" in the equity
markets resulted in six interest rate increases by the Federal Reserve Board
since June 1999. Tight monetary policy, especially when accompanied by sharply
rising oil and gas prices and a very strong U.S. dollar, is resulting in slower
economic growth. Numerous industries and companies are experiencing severe
margin pressure as well. It appears likely that we are headed for a soft
landing but additional time and further economic developments are necessary
before we can reach this conclusion. As we analyze economic activity and
corporate earnings results, we also cannot ignore the crisis developing in the
Middle East. While no one can predict the outcome, it appears the degree of
risk surrounding an all-out armed conflict is higher than it has been in
sometime. Fortunately, the underlying inflation rate has thus far failed to
respond to soaring energy costs. Slower economic growth and corporate margin
pressure could hold inflation in check, but requires, close monitoring.
<PAGE>
Looking ahead however, we believe the market has entered into a period of less
exuberant returns, but one that should exhibit more rational behavior. Let us
not forget that during the past decade equity returns were double those of
historical standards and this is not likely to continue unabated. Unlike
declines during the prior two years, we believe this year's correction has
restored some "rationality" to the marketplace. The speculative technology
bubble burst early this year when the Nasdaq fell 40% between March and May.
This latest drop of 30% from the recovery high reached in July has taken an
increasing number of big name technology favorites substantially lower.
Fundamental valuation does seem to matter after all!
On that score, the mean price/earnings ratio for the S&P 500 has declined to
24.6X with the median multiple at a low of 16.5X. Over 70% of the stocks have
P/E multiples below the mean and the average P/E multiple for those stocks is
only 13.2X. From a valuation standpoint, a very large portion of the market
resides at levels experienced at other major bottoms. While earnings going
forward will face difficult year over year comparisons, they are far from
negative. Third quarter results saw earnings for the S&P 500 rise 16%, and
estimates for 2001 currently range in the 7%-9% area. Given current attractive
valuation levels for much of the market, with flat to slightly rising earnings,
there is little reason to drive stock prices lower. Moreover, in a slower
economic environment with hopes for Fed easing, the case for another market
rally improves.
In your Fund, the most notable of the best performers during the fiscal year
were stocks in the financial sector, i.e., Merrill Lynch and Morgan Stanley Dean
Witter among the brokers, American International Group in insurance and MBNA
Corporation, a premier credit card company. The technology sector had its share
of successes with ADC Telecommunications and Cisco providing both significant
realized and unrealized gains. New purchases in this group, BEA Systems and
Solectron, have appreciated nicely and look attractive going forward. However
this area produced a number of our losses, namely BMC Software, Microsoft, Texas
Instruments and WorldCom. In healthcare, we saw good gains by Medtronic and
Amgen. The sector that experienced the largest number of earnings
disappointments and consequently price deterioration was the consumer sector
that included Carnival Cruise Lines, Circuit City Stores, Gap Stores, Staples
Inc., New York Times Company and Proctor & Gamble.
We chose to realize losses as an offset to sizeable capital gains. Also, we
made significant changes to our technology holdings, added to energy and cut
back the number of consumer related stocks. Our challenge in the months ahead
will be to identify and take advantage of undervalued situations in companies
that can continue to produce earnings growth well in excess of the average.
Fundamentally, the portfolio looks very attractive when compared to the S&P 500.
The 3-5 year revenues and earnings growth projections for the companies owned in
the Fund are almost double that of the S&P 500. We believe the Fund's portfolio
is well positioned to participate in further appreciation of the general market.
We are encouraged by the progress we have made since assuming management of the
Fund's assets in the fall of 1997 and look forward to working for you in the
years ahead. We would be delighted to hear from you with any questions or
comments.
Sincerely,
/s/Andrew J. Goodwin, III
Andrew J. Goodwin, III
President
<F1> The views expressed in this report reflect those of the investment adviser
as of November 6, 2000 and those views are subject to change at any time based
upon market and other conditions. Specific reference to individual securities
and the Fund's investment positions as of September 30, 2000 are as follows.
ADC Telecommunications, Inc., 3.1%; American International Group, 4.1%; Amgen,
Inc., 4.0%; BEA Systems, Inc., 3.1%; BMC Software, 0.0%; Carnival Corporation,
0.0%; Circuit City Stores, 1.3%; Cisco Systems, Inc., 3.8%; Gap, Inc. (The),
0.0%; MBNA Corp., 3.3%; Medtronic Inc., 3.6%; Merrill Lynch & Co. Inc., 3.0%;
Microsoft Corp., 2.8%; Morgan Stanley Dean Witter & Co., 3.1%; New York Times
Company (The), 0.0%; Proctor & Gamble Company (The), 0.0%; Solectron
Corporation, 3.7%; Staples, Inc., 0.0%; Texas Instruments Inc., 2.0%; and
WorldCom Inc., 0.0%. The Fund holdings may change due to ongoing management and
references to specific investments should not be construed as a recommendation
of the Fund or its Adviser.
<PAGE>
GROWTH OF $10,000 INVESTMENT
Universal S&P 500
Date Capital Growth Fund Stock Index
---- ------------------- -----------
01/22/1999 9,452 10,000
09/30/1991 10,548 11,984
09/30/1992 11,001 13,308
09/30/1993 12,337 15,038
09/30/1994 13,257 15,592
09/30/1995 18,278 20,230
09/30/1996 19,631 24,344
09/30/1997 26,745 34,190
09/30/1998 28,649 37,283
09/30/1999 37,123 47,650
09/30/2000 41,283 53,979
This chart assumes an initial gross investment of $10,000 made on 1/22/91
(commencement). Returns shown include the reinvestment of all dividends and
distributions. 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 the 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.
---------------------------
TOTAL RETURN<F1>
with 5.5% sales load effect
---------------------------
1 year 5.13%
---------------------------
5 year 16.37%
---------------------------
Since inception 15.76%
---------------------------
<F1>Represent average annual returns.
This report is not authorized for distribution unless accompanied or preceded by
an effective prospectus for the Fund.
Dreher & Associates, Inc. as Distributor
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 2000
SHARES VALUE
------ -----
COMMON STOCKS 100.63%
---------------------------------------------
AEROSPACE AND DEFENSE 3.19%
United Technologies Corporation 8,000 $554,000
BANKS 8.60%
MBNA Corporation 15,000 577,500
Washington Mutual, Inc. 8,000 318,500
Wells Fargo & Company 13,000 597,187
-----------
1,493,187
COMPUTERS 3.89%
International Business
Machines Corporation 6,000 675,000
COMPUTER NETWORKS 6.96%
BEA Systems, Inc.<F1> 7,000 545,125
Cisco Systems, Inc.<F1> 12,000 663,000
-----------
1,208,125
COMPUTER SOFTWARE 2.78%
Microsoft Corporation<F1> 8,000 482,000
DIVERSIFIED MISCELLANEOUS 3.58%
Tyco International Ltd. 12,000 622,500
ELECTRICAL EQUIPMENT 3.99%
General Electric Company 12,000 692,250
ELECTRONIC PRODUCTS & COMPONENTS 12.73%
American Power
Conversion Corporation<F1> 20,000 383,750
Flextronics International Ltd.<F1> 5,000 410,625
Intel Corporation 10,000 416,250
Solectron Corporation<F1> 14,000 645,750
Texas Instruments Incorporated 7,500 353,906
-----------
2,210,281
ENERGY 8.20%
AES Corporation<F1> 6,000 411,000
Halliburton Company 15,000 734,062
R&B Falcon Corporation<F1> 10,000 278,750
-----------
1,423,812
<F1> Non-income producing
See Notes to the Financial Statements
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
SEPTEMBER 30, 2000
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED) 100.63%
---------------------------------------------
FINANCE & FINANCIAL SERVICES 10.34%
American International Group, Inc. 7,500 $717,656
Merrill Lynch & Co., Inc. 8,000 528,000
Morgan Stanley Dean Witter & Co. 6,000 548,625
-----------
1,794,281
HEALTHCARE 10.31%
Amgen Inc.<F1> 10,000 698,281
Johnson & Johnson 5,000 469,688
Medtronic, Inc. 12,000 621,750
-----------
1,789,719
INDUSTRIAL EQUIPMENT 1.61%
Illinois Tool Works Inc. 5,000 279,375
PHARMACEUTICALS 6.09%
Merck & Co., Inc. 7,200 535,950
Schering-Plough Corporation 11,200 520,800
-----------
1,056,750
RETAIL 12.51%
CDW Computer Centers, Inc.<F1> 5,000 345,000
Circuit City Stores, Inc. 10,000 230,000
Costco Wholesale Corporation<F1> 14,000 489,125
Lowe's Companies, Inc. 12,000 538,500
Walgreen Co. 15,000 569,063
-----------
2,171,688
TELECOMMUNICATIONS 5.85%
ADC Telecommunications, Inc.<F1> 20,000 537,813
Tellabs, Inc.<F1> 10,000 477,500
-----------
1,015,313
TOTAL COMMON STOCKS
(COST $9,975,943) 17,468,281
-----------
TOTAL INVESTMENTS
(COST $9,975,943) 100.63% 17,468,281
LIABILITIES LESS OTHER ASSETS (0.63)% (109,665)
-----------
NET ASSETS 100.00% $17,358,616
===========
<F1> Non-income producing
See Notes to the Financial Statements
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
ASSETS:
Investments at value (cost $9,975,943) $17,468,281
Dividends and interest receivable 7,739
Prepaid expenses 5,972
-----------
Total assets 17,481,992
-----------
LIABILITIES:
Payable to custodian 62,837
Accrued distribution fees 11,505
Payable to Adviser 4,687
Other accrued expenses 44,347
-----------
Total liabilities 123,376
-----------
NET ASSETS $17,358,616
===========
NET ASSETS CONSIST OF:
Paid-in-capital 8,439,456
Accumulated net realized gain
on investments 1,426,822
Net unrealized appreciation
on investments 7,492,338
-----------
TOTAL NET ASSETS $17,358,616
===========
NET ASSET VALUE AND
REDEMPTION PRICE PER SHARE
($17,358,616 DIVIDED BY
751,193 SHARES OUTSTANDING) $23.11
======
MAXIMUM OFFERING PRICE
PER SHARE
(NET ASSET VALUE, PLUS 5.82% OF NET
ASSET VALUE OR 5.50% OF OFFERING PRICE) $24.46
======
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
INVESTMENT INCOME:
Dividend income $95,041
Interest income 26,682
-----------
121,723
===========
EXPENSES:
Investment advisory fees 184,870
Distribution fees 61,274
Transfer agent fees and expenses 28,672
Legal fees 27,913
Reports to shareholders 25,910
Fund accounting fees 20,983
Audit fees 20,559
Federal and state registration fees 15,537
Administrative services agreement fees 12,464
Custody fees 9,379
Trustees' fees and expenses 8,992
Other 4,401
-----------
Total expenses before waiver 420,954
Waiver of investment advisory fees (51,190)
-----------
Net expenses 369,764
-----------
Net investment loss (248,041)
-----------
REALIZED AND UNREALIZED GAINS:
Net realized gain on investments 1,718,511
Net realized loss on options purchased (150,150)
Change in net unrealized appreciation
on investments 640,117
-----------
Net gain on investments 2,208,478
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,960,437
===========
See Notes to the Financial Statements
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
------------------ ------------------
OPERATIONS:
Net investment loss $(248,041) $(216,298)
Net realized gain on investments 1,718,511 1,063,779
Net realized loss on options purchased (150,150) -
Change in net unrealized
appreciation on investments 640,117 3,214,680
----------- -----------
Net increase in net assets
resulting from operations 1,960,437 4,062,161
----------- -----------
DISTRIBUTIONS:
Net realized gains (1,205,318) (1,399,939)
----------- -----------
CAPITAL SHARE TRANSACTIONS :
Proceeds from 34,162 and 38,445
shares issued, respectively 795,523 871,272
Net asset value of 51,492 and 71,994
shares issued to holders in reinvestment
of dividends, respectively 1,178,649 1,375,088
Cost of 130,190 and 52,497
shares redeemed, respectively (3,045,418) (1,144,818)
----------- -----------
Net increase (decrease) from
capital transactions (1,071,246) 1,101,542
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (316,127) 3,763,764
NET ASSETS:
Beginning of year 17,674,743 13,910,979
----------- -----------
End of year $17,358,616 $17,674,743
=========== ===========
See Notes to the Financial Statements
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
FINANCIAL HIGHLIGHTS
YEAR ENDED SEPTEMBER 30,
2000 1999 1998 1997<F1> 1996
---- ---- ---- -------- ----
NET ASSET VALUE,
BEGINNING OF YEAR $22.21 $18.86 $18.09 $14.99 $16.28
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.33) (0.27) (0.21) (0.08) (0.10)
Net realized and unrealized gain
on investments 2.80 5.54 1.46 4.97 1.14
------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 2.47 5.27 1.25 4.89 1.04
------- ------- ------- ------- -------
LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net realized gains (1.57) (1.92) (0.48) (1.79) (2.33)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR $23.11 $22.21 $18.86 $18.09 $14.99
======= ======= ======= ======= =======
TOTAL RETURN<F2> 11.24% 29.54% 7.12% 36.24% 7.40%
SUPPLEMENTAL DATA AND RATIOS:
Ratio of net expenses to
average net assets:
Before waiver of investment
adviser fees 2.28% 2.18% 2.37% 2.50% 2.35%
After waiver of investment
adviser fees 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment loss
to average net assets:
Before waiver of investment
adviser fees (1.62)% (1.44)% (1.40)% (0.98)% (1.02)%
After waiver of investment
adviser fees (1.34)% (1.26)% (1.03)% (0.48)% (0.67)%
Portfolio turnover rate 37.7% 71.1% 58.1% 49.2% 262.1%
Net assets,
end of year (in 000's) $17,359 $17,675 $13,911 $12,994 $11,124
<F1> On August 15, 1997, the adviser changed to Optimum Investment Advisors,
L.P. (formerly known as Graver, Bokhof, Goodwin & Sullivan) from Integrated
Financial Services, Inc.
<F2> The total return calculation does not reflect any sales load imposed on the
purchase of shares.
See Notes to the Financial Statements
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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"), is the only series of the Trust currently offered.
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.
OPTION CONTRACTS. The Fund purchases put option contracts to hedge portfolio
investments. Option contracts 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. When option contracts
expire or are closed, realized gains or losses are recognized without regard to
any unrealized gains or losses on the underlying securities.
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
or 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, 2000, the Fund reduced
paid-in-capital by $248,041 for the current period's net investment loss. The
Fund hereby designates approximately $1,205,318 as a capital gain dividend for
the purpose of the dividends paid deduction.
2. TRANSACTIONS WITH AFFILIATES
Pursuant to an investment advisory agreement with Optimum Investment Advisors,
L.P., formally known as Graver, Bokhof, Goodwin & Sullivan (the "Adviser"), the
Fund pays an investment advisory fee at the annual rate of 1.00% 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 year ended
September 30, 2000, the Fund incurred investment advisory fees of $184,870 under
this agreement.
The agreement provides for the waiver of expenses from the Adviser through
December 31, 2001 should the Fund's normal operating expenses exceed 2.00% of
average daily net assets. During the year ended September 30, 2000, the Adviser
waived $51,190 of its investment advisory fee.
Dreher & Associates, Inc. (the "Distributor") serves as distributor for the
Trust. The Trust has adopted a Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act. Pursuant to that plan, prior to January 28, 2000, the Fund paid
the Distributor a monthly service fee of .25% and a monthly distribution fee of
.25%, based on the Fund's average daily net assets. As of January 28, 2000, the
Fund pays the Distributor a monthly distribution 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, 2000, the Fund incurred fees
<PAGE>
UNIVERSAL CAPITAL GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
under the plan of $61,274. The Distributor received commissions of $9,170 from
the sale of the Fund's shares during the year ended September 30, 2000.
Effective January 28, 2000, the Trust has adopted an Administrative Services
Agreement whereby the Fund pays the Distributor a monthly fee of .10%, based on
the Fund's average daily net assets. In return, the Distributor provides
information and administrative services for the benefit of the Fund and its
shareholders. During the period January 28 to September 30, 2000, the Fund
incurred $12,464 in administrative services fees.
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, 2000, the Fund paid brokerage commissions to the
Distributor on purchases and sales of securities in the amount of $9,310. It is
the Adviser's opinion that the use of the Distributor to execute portfolio
transactions results in prices for and execution of securities transactions at
least as favorable to the Fund as those likely to be derived from other
qualified brokers. In addition, the Distributor charges the Fund commission
rates consistent with those charged by the Distributor in similar transactions
to clients that are comparable to the Fund.
3. INVESTMENTS
Purchases and sales of investments, other than short-term obligations, were
$6,727,815 and $8,046,132 respectively, for the year ended September 30, 2000.
The cost basis of investments for federal income tax purposes at September 30,
2000 was $9,975,943. At September 30, 2000, on a tax basis, gross unrealized
appreciation was $7,667,490, gross unrealized depreciation was $175,152 and net
unrealized appreciation was $7,492,338.
--------------------------------------------------------------------------------
FEDERAL TAX STATUS
OF 2000 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.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RESULTS OF THE SPECIAL SHAREHOLDER MEETING (UNAUDITED)
A special meeting of the shareholders of the Trust was held on August 17, 2000.
The matters voted on by the shareholders of record as of July 14, 2000 and the
results of the shareholders' vote at the August 17, 2000 meetings were as
follows:
1. To elect Andrew J. Goodwin, III, Robert A. Korajczyk, Robert F. Seebeck,
Alan L. Zable as Trustees,
For Against Abstain
------- ------- -------
Andrew J. Goodwin, III 384,869 1,131 4,467
Robert A. Korajczyk 384,788 1,212 4,467
Robert F. Seebeck 382,678 3,322 4,467
Alan L. Zable 385,814 186 4,467
2A. To approve a new Investment Advisory Agreement with Optimum Investment
Advisors,
For Against Abstain
------- ------- -------
362,316 1,095 27,056
2B. To continue the New Investment Agreement with Optimum Investment Advisors,
L.P.
For Against Abstain
------- ------- -------
362,868 544 27,056
3. To ratify the appointment of Ernst & Young as auditors of the Trust for the
current fiscal year.
For Against Abstain
------- ------- -------
380,253 2,116 8,100
--------------------------------------------------------------------------------
<PAGE>
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, 2000, the related statements 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 periods since 1996. 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 audit.
We conducted our audit in accordance with accounting principles generally
accepted in the United States. 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, 2000, 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 audit 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, 2000, 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 periods since 1996, in conformity with accounting principles
generally accepted in the United States.
/s/Ernst & Young LLP
Chicago, Illinois
October 27, 2000
<PAGE>
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<PAGE>
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<PAGE>
INVESTMENT ADVISER
Optimum Investment Advisors, L.P.
100 South Wacker Drive, Suite 2100
Chicago, Illinois 60606
(800) 969-9676
DISTRIBUTOR
Dreher & Associates, Inc.
One Oakbrook Terrace, Suite 708
Chicago, Illinois 60181
(630) 932-3000
CUSTODIAN
UMB Bank, n.a.
P.O. Box 419226
Kansas City, Missouri 64141
TRANSFER AGENT
Sunstone Financial Group, Inc.
803 West Michigan Street, Suite A
Milwaukee, WI 53233
(800) 537-3446
COUNSEL
Vedder, Price, Kaufman & Kammholz
Chicago, Illinois
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, Illinois
This report is submitted for the general information of shareholders of the
Universal Capital Growth Fund. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective
prospectus for the Fund. The prospectus gives details about charges,
investment objectives, risks and operation policies of the Fund. Read the
prospectus carefully.
