1995 ANNUAL REPORT
GRANDVIEW REALTY GROWTH 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 REALTY GRANDVIEW REALTY GROWTH
UTILITY INDEX INDEX REIT INDEX GROWTH FUND (NAV) FUND (MOP)
(TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN) (TOTAL RETURN)
- ----------------- ----------------- ------------------ ----------------- ---------------------- ------------------------
<S> <C>
SEP. 30, 1995 6.1% 7.9% 4.8% -1.75% -5.98%
- ----------------- ----------------- ------------------ ----------------- ---------------------- ------------------------
DEC. 31, 1995 6.6% 6.0% 4.5% 1.37% 1.37%
- ----------------- ----------------- ------------------ ----------------- ---------------------- ------------------------
MAR. 31, 1996 -4.1% 5.3% 1.9% 6.02% 6.02%
- ----------------- ----------------- ------------------ ----------------- ---------------------- ------------------------
</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 Realty Growth 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.
The REIT Industry is comprised of over 200 individual securities specializing in
many different property types and in many different geographical locations. Your
fund's objective is to find REITs which will provide above average capital
gains. In creating the portfolio, we are concentrating on three different
investment philosophies to achieve our objectives. The first is to concentrate
on those high quality REITs that have exceptionally strong balance sheets,
generally low distribution yields, sell at above average pricing multiples and
have above average growth prospects. This would include our holdings in Starwood
lodging, (HOT, NYSE); Public Storage, (PSA, NYSE); Crescent Realty, (CEI, NYSE);
and Merry Land, (MRY, NYSE). We perceive that companies like these have good
long term prospects and carry a minimal amount of risk.
A second category of investments are those REITs that represent property sectors
that may be currently out of favor. Characteristics may include recent or
prospective distribution reductions, stock prices that are at below average
pricing multiples and may be undergoing or have recently had management changes.
Investments in this group that your fund has made include First Union Mortgage,
(FUR, NYSE); Factory Stores of America, (FAC, NYSE); Crown American Realty,
(CWN, NYSE) and Burnham Pacific Realty, (BPP, NYSE). The risk level of this
group could be considered moderate. We perceive that REITs such as these carry
more risk than the first group but also offer more potential reward if
managements are able to show improved performance.
<PAGE>
Finally there is a group of REITs whose risk level we considered to be the
highest due to the uncertainty of the REITs future. This group of distressed
companies feature small market capitalization, have few if any assets other than
cash and pay no dividends. Their value lies in their REIT structure and their
tax position. These companies may have hired third party consultants to find new
capital and to help them develop new strategic plans. This part of the REIT
market is probably the least efficient and offers investors significant rewards
for patient and diversified investing. Investments we have made in this group
include Rymac Mortgage, (RM, ASE); Homplex Mortgage, (HPX, NYSE); Angeles
Participating Mortgage, (APT, ASE); TIS Mortgage (TIS, NYSE) and Banyon Hotel,
(VHT, ASE).
By acquiring assets following these three investment philosophies in a
diversified portfolio, provides the shareholders of our fund prospects of
significant gains while modifying the risk level. We believe investors started
to reap this philosophy in the quarter ending March 31, 1996 as the fund
outperformed the S&P 500, The Dow Jones Utility Index and The REIT Industry as a
whole. We look forward to the future and want to thank our initial shareholders
for their trust and support.
Winsor H. Aylesworth
<PAGE>
GRANDVIEW REALTY GROWTH FUND
Performance Update - $10,000 Investment
For the period from July 3, 1995 (commencement of operations) to
March 31, 1996
[GRAPH]
<TABLE>
GrandView REIT Dow Jones
Index Fund S&P 500 Index Utility Index GrandView REIT Index
<S> <C>
07/03/95 9,550 9,550 9,550 9,550
07/31/95 9,283 9,867 9,640 9,645
09/30/95 9,383 10,309 10,127 10,001
12/31/95 9,513 10,930 10,652 10,452
03/31/96 10,095 11,516 10,055 10,655
</TABLE>
This graph depicts the performance of the GrandView Realty Growth Fund versus
the S&P 500 Index, Dow Jones Utility Index, and GrandView REIT Index. It is
important to note that the GrandView Realty Growth 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 7.73%
Maximum 4.5%
Sales Load 1.27%
* 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.
* At March 31, 1996, the GrandView Realty Growth Fund would have grown to
$10,095 - total investment return of 0.95% since July 3, 1995. Without the
deduction of the 4.5% maximum sales load, the Grandview Realty Fund would have
grown to $10,570 - total investment return of 5.70% since July 3, 1995.
* 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.
* 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
reinvestment of dividends.
<PAGE>
GRANDVIEW REALTY GROWTH FUND
PORTFOLIO OF INVESTMENTS
March 31, 1996
<TABLE>
<CAPTION>
Number of Value
Shares (note 1)
----------------- --------------
<S> <C>
COMMON STOCKS - 64.28%
Real Estate Investment Trust
(a) Angeles Participating Mortgage Trust 6,000 $3,375
(a) Banyan Hotel Investment Fund 4,500 3,094
Bedford Property Investors, Inc. 400 3,050
Burnham Pacific Properties, Inc. 400 4,400
Capstead Mortgage Corporation 300 7,500
Crescent Real Estate Equities, Inc. 200 6,725
Crocker Realty Trust, Inc. 400 3,900
Crown American Realty Trust 600 4,575
Factory Stores of America, Inc. 800 7,900
First Union Real Estate Investments 800 5,800
Homeplex Mortgage Investments Corporation 2,000 3,250
Innkeepers USA Trust 600 5,625
(a) Koger Equity, Inc. 400 4,350
MGI Properties, Inc. 300 5,025
RYMAC Mortgage Investment Corporation 6,700 8,794
Sizeler Property Investors, Inc. 1,100 8,663
Starwood Lodging Trust 150 5,062
Sunstone Hotel Investors, Inc. 200 2,050
(a) TIS Mortgage Investment Company 4,600 7,475
United Mobile Homes, Inc. 300 3,900
(a) Value Property Trust 200 2,475
(a) Vinland Property Trust 780 3,900
Winston Hotels, Inc. 500 6,125
--------------
Total Common Stocks (Cost $112,813) 117,013
--------------
Principal
Amount
-----------------
REPURCHASE AGREEMENT (b) - 24.45%
Wachovia Bank
5.38%, due April 1, 1996 $44,504 44,504
------------
(Cost $44,504)
Total Value of Investments (Cost $157,317(c)) 88.73% $161,517
Other Assets Less Liabilities 11.27% 20,505
-------- --------------
Net Assets 100.00% $182,022
======== ==============
(Continued)
<PAGE>
GRANDVIEW REALTY GROWTH 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 $45,708. 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 $7,278
Unrealized depreciation (3,078)
-----------
Net unrealized appreciation $4,200
===========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REALTY GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1996
ASSETS
Investments in common stocks, at value (cost $112,813) $117,013
Repurchase agreement (cost $44,504) 44,504
Dividends receivable 331
Interest receivable 27
Receivable for fund shares sold 18,550
Deferred organization expenses, net (note 4) 23,137
Other assets 70
--------
Total assets 203,632
--------
LIABILITIES
Accrued expenses 5,540
Due to advisor 10,641
Disbursements in excess of cash on demand deposit 5,429
--------
Total liabilities 21,610
--------
NET ASSETS
(applicable to 18,040 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $182,022
========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($182,022 / 18,040 shares) $ 10.09
========
OFFERING PRICE PER SHARE
(100 / 95.5 of $10.09) $ 10.57
========
NET ASSETS CONSIST OF
Paid-in capital $177,822
Net unrealized appreciation on investments 4,200
--------
$182,022
========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REALTY GROWTH FUND
STATEMENT OF OPERATIONS
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME
Income
Dividends $3,422
Interest 428
--------------
Total income 3,850
--------------
Expenses
Professional fees 5,806
Custody fees 3,252
Securities pricing fees 1,365
Registration and filing administration fees 794
Investment advisory fees (note 2) 675
Fund administration fees (note 2) 229
Distribution and service fees (note 3) 225
Shareholder recordkeeping fees 80
Amortization of deferred organization expenses (note 4) 4,070
Shareholder servicing expenses 1,904
Printing expenses 602
Registration and filing expenses 134
Trustee fees and meeting expenses 113
Other operating expenses 1,619
--------------
Total expenses 20,868
--------------
Less:
Expense reimbursements (note 2) (18,489)
Investment advisory fees waived (note 2) (675)
Fund administration fees waived (note 2) (43)
Distribution and service fees waived (note 3) (225)
--------------
Net expenses 1,436
--------------
Net investment income 2,414
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions 3,462
Increase in unrealized appreciation on investments 4,200
--------------
Net realized and unrealized gain on investments 7,662
--------------
Net increase in net assets resulting from operations $10,076
==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REALTY GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
<TABLE>
<S> <C>
INCREASE IN NET ASSETS
Operations
Net investment income $2,414
Net realized gain from investment transactions 3,462
Increase in unrealized appreciation on investments 4,200
------------------------
Net increase in net assets resulting from operations 10,076
------------------------
Distributions to shareholders from
Net investment income (2,414)
Net realized gain from investment transactions (3,462)
Tax return of capital (851)
------------------------
Decrease in net assets resulting from distributions (6,727)
------------------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a 178,673
------------------------
Total increase in net assets 182,022
NET ASSETS
Beginning of period 0
------------------------
End of period $182,022
========================
(a) A summary of capital share activity follows:
</TABLE>
<TABLE>
Caption>
For the period from July 3, 1995
(commencement of operations)
to March 31, 1996
Shares Value
--------- --------------
<S> <C>
Shares sold 18,289 $181,279
Shares issued for reinvestment of distributions 526 5,247
--------- --------------
18,815 186,526
Shares redeemed (775) (7,853)
--------- --------------
Net increase 18,040 $178,673
========= ==============
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REALTY GROWTH 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 0.20
Net realized and unrealized gain on investments 0.36
------------
Total from investment operations 0.56
------------
Distributions to shareholders from
Net investment income (0.20)
Net realized gain from investment transactions (0.22)
Tax return of capital (0.05)
------------
Total distributions (0.47)
------------
Net asset value, end of period $10.09
============
Total return (a) 5.70%
============
Ratios/supplemental data
Net assets, end of period $182,022
============
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 31.34 %(b)
After expense reimbursements and waived fees 2.00 %(b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (25.55)%(b)
After expense reimbursements and waived fees 3.62 %(b)
Portfolio turnover rate 44.44 %
(a) Total return does not reflect payment of a sales charge. Annualized total return for the period is 7.73%
(b) Annualized.
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REALTY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The GrandView Realty Growth 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 registered
management 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 semi-annually, 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 REALTY GROWTH 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 1.00% 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 2.00% 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 $675 ($0.04 per share) and
has voluntarily reimbursed $18,489 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 of $10.
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 11,811 shares or 65% 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 REALTY GROWTH 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 $146,113 and $36,762, 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>
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 Realty Growth 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. 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 Realty Growth 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
