1995 ANNUAL REPORT
GRANDVIEW HEALTHCARE REALTY INCOME FUND
This report marks our first annual report to the shareholders of The GrandView
Realty Growth Fund. This first report covers the period from June 28, 1996
(inception date) to March 31, 1996 which is the end of our fiscal year.
We will routinely use the following measures as a way of reporting our results
to you: The S&P 500 index as a comparison to the overall market, The Dow Jones
Utility Index as a comparison to another income oriented equity group, and The
GrandView REIT Index, the funds investment benchmark as per the prospectus.
<TABLE>
<CAPTION>
- --------------------- ------------------- -------------------- ------------------- ------------------------- -----------------------
QUARTER ENDING DOW JONES S&P 500 GRANDVIEW GRANDVIEW HEALTHCARE GRANDVIEW HEALTHCARE
UTILITY INDEX INDEX REIT INDEX REALTY INCOME FUND (NAV) REALTY INCOME FUND(MOP)
(TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN)
<S> <C>
- --------------------- ------------------- -------------------- ------------------- ------------------------- -----------------------
SEP. 30, 1995 6.1% 7.9% 4.8% 0.92% -3.42
- --------------------- ------------------- -------------------- ------------------- ------------------------- -----------------------
DEC. 31, 1995 6.6% 6.0% 4.5% 7.17% 7.17%
- --------------------- ------------------- -------------------- ------------------- ------------------------- -----------------------
MAR. 31, 1996 -4.1% 5.3% 1.9% 6.24% 6.24%
- --------------------- ------------------- -------------------- ------------------- ------------------------- -----------------------
</TABLE>
Most investment professionals indicate that investments in mutual funds should
not be considered as short term investments. Therefore it is somewhat unusual to
look at the above performance measures on a quarterly basis. However, since The
GrandView Healthcare Realty Income Fund is a new fund, these shorter periods are
all that are available. With time, we will lengthen the periods for performance
comparisons to the more customarily used annual basis.
We are very pleased with our first nine months of performance. After a slow
first quarter, the Fund has outperformed the S&P 500, the Dow Jones Utility
Index and The REIT sector as a whole for the last two quarters. The Fund's
concentration on the healthcare sector of the REIT industry allows us to
participate in the aging demographics of the nation's population and the real
estate properties that cater to that market. These companies have historically
had good yields and a history of routine dividend increases. We would expect
this to continue. To provide proper diversification, we have added some
additional investments that complement the philosophy of investing in those
securities that will benefit with the aging population. Roughly ten percent of
our assets are in non or low yielding health related securities which we feel
have above average growth prospects. Companies included in this group include
Walgreens, Healthsouth Corporation and Ornda Corporation. In addition, another
ten percent of the assets have been invested in apartment REITs that cater to
the more affluent, adult renter. These investments include Merry Land, Columbus
Realty, Irving Company and Summit Properties. Finally we have invested in the
only golf course REIT as a way of participating in one of the fastest growing
recreational markets. With little chance of golf course over building, we think
National Golf Properties offers our portfolio diversification and above average
growth in price and distributions.
As we look forward, we will continue to concentrate the bulk of our investments
in the healthcare industry. We will complement those holdings with other income
oriented securities that serve the ever growing adult market. The inherit
benefits of investment liquidity, professional management, high current income
and quality real estate assets makes the GrandView Healthcare Realty Income Fund
a very rational way for investors to participate in the healthcare industry
while receiving a monthly dividend check. Although we have experienced better
than expected short term results, we expect that a long term investment in the
fund will be just as rewarding. We welcome you as our first shareholders and
thank you for your trust.
Winsor H. Aylesworth
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
Performance Update - $10,000 Investment
For the period from July 3, 1995 (commencement
of operations) to March 31, 1996
[GRAPH]
<TABLE>
<CAPTION>
GrandView Healthcare Realty Income Fund S&P 500 Index Dow Jones Utility Index GrandView REIT Index
<S> <C>
07/03/95 9,550 9,550 9,550 9,550
07/31/95 9,560 9,867 9,640 9,645
09/30/95 9,638 10,309 10,127 10,001
12/31/95 10,339 10,930 10,652 10,452
03/31/96 10,991 11,516 10,055 10,655
</TABLE>
This graph depicts the performance of the GrandView Healthcare Realty Income
Fund versus the S&P 500 Index, Dow Jones Utility Index, and GrandView REIT
Index. It is important to note that the GrandView Healthcare Realty Income Fund
is a professionally managed mutual fund while the indexes are not available for
investment and are unmanaged. The comparison is shown for illustrative purposes
only.
ANNUALIZED TOTAL RETURN
COMMENCEMENT OF
OPERATIONS THROUGH 3/31/96
No Sales Load 20.75%
Maximum 4.5%
Sales Load 13.51%
(bullet) The graph assumes an initial $10,000 investment at July 3, 1995
($9,550 after maximum sales load of 4.5%). All dividends and
distributions are reinvested.
(bullet) At March 31, 1996, the GrandView Healthcare Realty Income Fund
would have grown to $10,991 - total investment return of 9.91%
since July 3, 1995. Without the deduction of the 4.5% maximum sales
load, the GrandView Healthcare Realty Income Fund would have grown
to $11,508 - total investment return of 15.08% since July 3, 1995.
(bullet) At March 31, 1996, a similar investment in the S&P 500 Index (after
maximum sales load of 4.5%) would have grown to $11,516 - total
investment return of 15.16%; the Dow Jones Utility Index would have
grown to $10,055 - total investment return of 0.55%; the GrandView
REIT Index would have grown to $10,655 - total investment return
of 6.55%, since July 3, 1995.
(bullet) Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and
the principal value of shares, when redeemed, may be worth more or less
than the original cost. Average annual returns are historical in nature
and measure net investment income and capital gain or loss from
portfolio investments assuming reinvestments of dividends.
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
PORTFOLIO OF INVESTMENTS
March 31, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
--------- --------
<S> <C> <C>
COMMON STOCKS - 78.37%
Medical - Hospital Management & Service - 6.24%
(a) HEALTHSOUTH Corporation 100 $3,400
(a) OrNda HealthCorp 200 5,750
-------
9,150
-------
Real Estate Investment Trust - 69.91%
American Health Properties, Inc. 250 5,625
Capstone Capital Trust, Inc. 200 4,300
Columbus Realty Trust 250 4,875
G&L Realty Corporation 400 5,000
Health and Retirement Property Trust 500 8,563
Health Care Property Investors, Inc. 300 9,450
Health Care REIT, Inc. 250 5,531
Healthcare Realty Trust, Inc. 300 6,562
Irvine Apartment Communities, Inc. 250 4,781
LTC Properties, Inc. 200 3,250
Meditrust Corporation 100 3,388
Merry Land & Investment Company, Inc. 200 4,350
National Golf Properties, Inc. 200 5,075
National Health Investors, Inc. 300 9,750
Nationwide Health Properties, Inc. 200 4,200
OMEGA Healthcare Investors, Inc. 350 10,019
Universal Health Realty Income Trust 400 7,850
-------
102,569
-------
Retail - Drug Stores - 2.22%
Walgreen Company 100 3,262
-------
Total Common Stocks (Cost $108,962) 114,981
-------
Principal
Amount
---------
REPURCHASE AGREEMENT (b) - 22.11%
Wachovia Bank
5.38%, due April 1, 1996 $32,437 32,437
-------
(Cost $32,437)
Total Value of Investments (Cost $141,399 (c)) 100.48% 147,418
Liabilities In Excess of Other Assets (0.48)% (698)
--------- --------
Net Assets 100.00% $146,720
========= ========
</TABLE>
(Continued)
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
PORTFOLIO OF INVESTMENTS
March 31, 1996
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into March 31, 1996, with a maturity
value of $54,221,391 collateralized by $46,275,000 U.S. Treasury Notes,
due February 15, 2020. The aggregate market value of the collateral at
March 31, 1996 was $54,871,024. The Fund's pro rata interest in the
market value of the collateral at March 31, 1996 was $32,813. The
Fund's pro rata interest in the joint repurchase agreement collateral
is taken into possession by the Fund's custodian upon entering into the
repurchase agreement.
(c) Aggregate cost for financial reporting and federal income tax purposes
is the same. Unrealized appreciation (depreciation) of investments for
financial reporting and federal income tax purposes is as follows:
Unrealized appreciation $7,191
Unrealized depreciation (1,172)
--------
Net unrealized appreciation $6,019
========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
ASSETS
Investments in common stocks, at value (cost $108,962) $114,981
Repurchase agreement (cost $32,437) 32,437
Dividends receivable 401
Interest receivable 84
Receivable for fund shares sold 8,000
Deferred organization expenses, net (note 4) 23,137
Other asset 50
--------
Total assets 179,090
--------
LIABILITIES
Accrued expenses 5,511
Payable for investment purchases 14,854
Due to advisor 11,161
Disbursements in excess of cash on demand deposit 844
--------
Total liabilities 32,370
--------
NET ASSETS
(applicable to 13,481 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $146,720
========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($146,720 / 13,481 shares) $ 10.88
========
OFFERING PRICE PER SHARE
(100 / 95.5 of $10.88) $ 11.39
========
NET ASSETS CONSIST OF
Paid-in capital $140,701
Net unrealized appreciation on investments 6,019
--------
$146,720
========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
STATEMENT OF OPERATIONS
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends $3,795
Interest 521
--------
Total income 4,316
--------
Expenses
Professional fees 5,806
Custody fees 2,742
Securities pricing fees 962
Registration and filing administration fees 784
Investment advisory fees (note 2) 396
Fund administration fees (note 2) 170
Distribution and service fees (note 3) 141
Shareholder recordkeeping fees 56
Amortization of deferred organization expenses (note 4) 4,070
Shareholder servicing expenses 1,818
Printing expenses 596
Registration and filing expenses 183
Trustee fees and meeting expenses 113
Other operating expenses 1,619
--------
Total expenses 19,456
--------
Less:
Expense reimbursements (note 2) (17,872)
Investment advisory fees waived (note 2) (396)
Fund administration fees waived (note 2) (4)
Distribution and service fees waived (note 3) (141)
--------
Net expenses 1,043
--------
Net investment income 3,273
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 2,608
Increase in unrealized appreciation on investments 6,019
--------
Net realized and unrealized gain on investments 8,627
--------
Net increase in net assets resulting from operations $11,900
========
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
<TABLE>
<CAPTION>
<S> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $3,273
Net realized gain from investment transactions 2,608
Increase in unrealized appreciation on investments 6,019
----------
Net increase in net assets resulting from operations 11,900
----------
Distributions to shareholders from
Net investment income (3,273)
Net realized gain from investment transactions (2,608)
Tax return of capital (279)
----------
Decrease in net assets resulting from distributions (6,160)
----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 140,980
----------
Total increase in net assets 146,720
NET ASSETS
Beginning of period 0
----------
End of period $146,720
==========
</TABLE>
(a) A summary of capital share activity follows:
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
Shares Value
-------- ---------
Shares sold 14,145 $148,513
Shares issued for reinvestment
of distributions 330 3,551
-------- ---------
14,475 152,064
Shares redeemed (994) (11,084)
-------- ---------
Net increase 13,481 $140,980
======== =========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
<TABLE>
<S> <C>
Net asset value, beginning of period (initial offering price) $10.00
Income from investment operations
Net investment income 0.38
Net realized and unrealized gain on investments 1.10
--------------
Total from investment operations 1.48
--------------
Distributions to shareholders from
Net investment income (0.38)
Net realized gain from investment transactions (0.20)
Tax return of capital (0.02)
--------------
Total distributions (0.60)
--------------
Net asset value, end of period $10.88
==============
Total return (a) 15.08%
==============
Ratios/supplemental data
Net assets, end of period $146,720
==============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 34.51% (b)
After expense reimbursements and waived fees 1.75% (b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (26.86)% (b)
After expense reimbursements and waived fees 5.81% (b)
Portfolio turnover rate 52.74%
</TABLE>
(a) Total return does not reflect payment of a sales charge. Annualized total
return for the period is 20.75%
(b) Annualized.
See accompanying notes to financial statements
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The GrandView Healthcare Realty Income Fund (the "FUND") is a
non-diversified series of shares of beneficial interest of the GrandView
Investment Trust (the "TRUST"). The Trust, an open-end investment
company, was organized on February 6, 1995 as a Massachusetts Business
Trust and is registered under the Investment Company Act of 1940. The
Fund began operations on July 3, 1995. The following is a summary of
significant accounting policies followed by the Fund.
A. SECURITY VALUATION - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last sales price as of
4:00 p.m., New York time on the day of valuation. Other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued
at the most recent bid price. Securities for which market
quotations are not readily available, if any, are valued by using
an independent pricing service or by following procedures
approved by the Board of Trustees. Short-term investments are
valued at cost which approximates value.
B FEDERAL INCOME TAXES - The Fund is considered a personal holding
company as defined under Section 542 of the Internal Revenue Code
since 50% of the value of the Fund's shares were owned directly
or indirectly by five or fewer individuals at certain times
during the last half of the year. As a personal holding company
the Fund is subject to federal income taxes on undistributed
personal holding company income at the maximum individual income
tax rate. No provision has been made for federal income taxes
since all taxable income has been distributed to shareholders.
It is the policy of the Fund to comply with the provisions of the
Internal Revenue Code applicable to regulated investment
companies and to make sufficient distributions of taxable income
to relieve it from all federal income taxes.
The character of distributions made during the year from net
investment income or net realized gains from investment
transactions may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains are
recorded by the Fund.
C. INVESTMENT TRANSACTIONS - Investment transactions are recorded on
the trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend
date.
The Fund records distributions received from its investments in
real estate investment trusts that represent a tax return of
capital as a reduction of the cost basis of investments.
D. DISTRIBUTIONS TO SHAREHOLDERS - The Fund generally declares
dividends monthly, payable on a date selected by the Trust's
Trustees. In addition, distributions may be made annually in
December out of net realized gains through October 31 of that
year. The Fund may make a supplemental distribution subsequent to
the end of its fiscal year ending March 31.
E. USE OF ESTIMATES - Management makes a number of estimates in the
preparation of the Fund's financial statements. Actual results
could differ significantly from those estimates.
(CONTINUED)
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, GrandView Advisers, Inc.
(the "ADVISOR") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to
investments, investment policies and the purchase and sale of
securities. As compensation for its services, the Advisor receives a fee
at the annual rate of 0.70% of the Fund's average daily net assets.
Currently, the Fund does not offer its shares for sale in states which
require limitations to be placed on its expenses. The Advisor currently
intends to voluntarily waive all or a portion of its fee and reimburse
expenses of the Fund to limit total Fund operating expenses to 1.75% of
the average daily net assets of the Fund. There can be no assurance that
the foregoing voluntary fee waivers or reimbursements will continue. The
Advisor has voluntarily waived its fee amounting to $396 ($0.05 per
share) and has voluntarily reimbursed $17,872 of the Fund's operating
expenses for the period from July 3, 1995 (commencement of operations)
to March 31, 1996.
The Fund's administrator, The Nottingham Company (the "ADMINISTRATOR"),
provides administrative services to and is generally responsible for the
overall management and day-to-day operations of the Fund pursuant to an
accounting and administrative agreement with the Trust. As compensation
for its services, the Administrator receives a fee at the annual rate of
0.30% of the Fund's first $25 million of average daily net assets,
0.275% of the next $25 million of average daily net assets, and 0.225%
of average daily net assets over $50 million. Additionally, the
Administrator charges the Fund for servicing of shareholder accounts and
registration of the Fund's shares. The Administrator also charges the
Fund for certain expenses involved with the daily valuation of portfolio
securities.
Capital Investment Group, Inc. (the "DISTRIBUTOR") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the period from July 3, 1995 (commencement of operations) to March 31,
1996, the Distributor retained sales charges in the amount of $60.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the Distributor or the Administrator.
At March 31, 1996, the Advisor, its officers, and Trustees of the Fund
held 9,163 shares or 68% of the Fund shares outstanding.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Trust as defined in the Investment Company
Act of 1940 (the "ACT"), adopted a distribution plan pursuant to Rule
12b-1 of the Act (the "PLAN"). The Act regulates the manner in which a
regulated investment company may assume expenses of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
(CONTINUED)
<PAGE>
GRANDVIEW HEALTHCARE REALTY INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
The Plan provides that the Fund may incur certain expenses, which may
not exceed 0.25% per annum of the Fund's average daily net assets for
each year elapsed subsequent to adoption of the Plan, for payment to the
Distributor and others for items such as advertising expenses, selling
expenses, commissions, travel or other expenses reasonably intended to
result in sales of shares of the Fund or support servicing of
shareholder accounts. The Distributor has voluntarily waived all of such
expenses under the Plan for the period from July 3, 1995 (commencement
of operations) to March 31, 1996.
NOTE 4 - DEFERRED ORGANIZATION EXPENSES
All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund.
The organization expenses are being amortized over a period of sixty
months. Investors purchasing shares of the Fund bear such expenses only
as they are amortized against the Fund's investment income.
In the event any of the initial shares of the Fund are redeemed during
the amortization period, the redemption proceeds will be reduced by a
pro rata portion of any unamortized organization expenses in the same
proportion as the number of initial shares being redeemed bears to the
number of initial shares of the Fund outstanding at the time of the
redemption.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $142,301 and $35,947, respectively, for the period from July
3, 1995 (commencement of operations) to March 31, 1996.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
All distributions from net realized gain from investment transactions
for the period from July 3, 1995 (commencement of operations) to March
31, 1996 represent short-term capital gain distributions, and are
taxable as ordinary income to shareholders for federal income tax
purposes. Shareholders should consult a tax advisor on how to report
distributions for state and local income tax purposes.
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
GrandView Investment Trust:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the GrandView Healthcare Realty Income Fund
(the "Fund"), a series of the GrandView Investment Trust, as of March 31, 1996,
and the related statement of operations, statement of changes in net assets and
financial highlights for the period from July 3, 1995 (commencement of
operations) to March 31, 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 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 securities owned as of March 31, 1996 by
correspondence with the custodian and brokers. 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 provides 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 the
GrandView Healthcare Realty Income Fund as of March 31, 1996, and the results of
its operations, the changes in its net assets and financial highlights for the
period from July 3, 1995 (commencement of operations) to March 31, 1996 in
conformity with generally accepted accounting principles.
Richmond, Virginia
May 14, 1996
