GrandView Investment Trust
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
November 15, 1995
Telephone 919 972 9922
U.S. WATS 800-525-FUND
Facsimile 919-442-4226
To the Shareholders of the GrandView REIT Index Fund:
We are pleased to enclose the semi-annual report for the GrandView REIT Index
Fund. As is our custom, we are pleased to show our results in the table below
along with appropriate market benchmarks.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------=======================-------------------------
Period Ending Dow Jones S&P 500 GrandView GrandView GrandView REIT
Utility Index Index REIT Index REIT Index Index Fund
(Total Return) (Total Return) (Total Return) Fund (NAV) (MOP)
(Total Return) (Total Return)
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months 4.92% 7.66% 11.30% 9.82% 6.53%
Ending 9/30/96
- ---------------------------------------------------------------------------------------------------------------------------------
One Year 7.20% 20.14% 18.29% 13.45% 10.05%
Ending 9/30/96
- ---------------------------------------------------------------------------------------------------------------------------------
Since Inception 15.27% 29.53% 23.53% 16.85% 13.35%
From 07/03/95
Ending 9/30/96
- ---------------------------------------------------------------------------------=======================-------------------------
</TABLE>
NAV= Net Asset Value (Without Sales Load)
MOP = Maximum Offering Price (With Sales Load)
We have accomplished much since our last report to you six months ago. The
GrandView REIT Index Fund has roughly doubled in size and is now reaching a size
where it can effectively duplicate the GrandView REIT Index. Our performance,
although not an exact duplicate for the benchmark, still compares favorably with
the other market indices over the last six months. The fund's correlation with
the benchmark was in excess of 99.9% for the period which was far in excess of
our stated objective of 90%. Although the GrandView REIT Index Fund will never
exactly duplicate the benchmark's performance because of fund expenses and
timings of cash flows, the Fund does expect to become a closer match to the
index as it grows in size. In addition, while the stock market in general
experienced a mild correction in the mid-summer of 7-10%, your fund experienced
positive returns throughout. We think this shows the stabilizing influence a
well diversified real estate fund can add to an investment portfolio. We also
paid two dividends in the last six months for a total of $0.255. We expect to
continue this distribution policy at this or higher levels going forward. We
don't expect to pay any capital gain distribution this December but if we do, it
will be a small one. This highlights another benefit of indexing as trading is
kept to a minimum which tends to minimize the tax impact on investors until they
sell their shares.
Another note of interest that has occurred over the last six months is the
advent of a competing REIT Index fund by the one of the largest fund companies,
Vanguard. We welcome the competition and feel flattered that as one of the
smallest real estate funds and the first REIT index fund, we have been copied by
one of the most successful fund complexes. Vanguard will certainly be tough
competition but you should be aware there is a difference between the GrandView
REIT Index Fund and Vanguards.
<PAGE>
Vanguard's benchmark index, The Morgan Stanley REIT Index, does not include
healthcare or mortgage REITs in its investment portfolio. We on the other hand
include both these sectors which in fact compose over 18% of our index. We
believe this fundamental difference significantly differentiates the products
and makes your investment in the GrandView REIT Index Fund a better choice for a
representative real estate investment.
We are also please to inform you that your fund in addition to all the GrandView
Funds are now available for 24 hour pricing and shareholder information by
calling 1-800-773-3863. Fund information is also available on America On Line
via keyword Morningstar as well in reports published by Lipper Analytical, and
Value Line. Finally, we are also listed in USA Today in the first issue of every
month where they rank all mutual funds against their peers.
Again we thank you for your support and look forward to a prosperous future.
Should you have any questions or desire additional information, please feel free
to contact the Fund Administrator at 1-800- 525-3863, or the offices of
GrandView Advisers at 1-800-578-4301.
Winsor H. Aylesworth
President
GrandView Advisers
<PAGE>
GRANDVIEW REIT INDEX FUND
PORTFOLIO OF INVESTMENTS
September 30, 1996
(Unaudited)
Value
Shares (note 1)
COMMON STOCKS - 94.12%
Real Estate Investment Trust - 94.12%
Avalon Properties, Inc. 300 $6,938
BRE Properties, Inc. 550 11,000
CWM Mortgage Holdings, Inc. 500 9,938
Capstead Mortgage Corporation 412 8,498
Chelsea GCA Realty, Inc. 200 6,100
Crescent Real Estate Equities, Inc. 300 12,337
Developers Diversified Realty 275 8,800
Duke Realty Investments, Inc. 300 9,750
Equity Residential Properties Trust 550 19,662
Franchise Finance Corporation of Ame 500 11,687
Federal Realty Investment Trust 400 9,400
FelCor Suite Hotels, Inc. 250 8,063
First Industrial Realty Trust, Inc. 300 7,650
General Growth Properties 350 8,750
Health Care Property Investors, Inc. 400 13,100
Health and Retirement Property Trust 800 14,200
Highwoods Properties Inc. 200 6,050
Horizon Group, Inc. 325 6,703
Kimco Realty Corporation 400 11,900
Manufactured Home Communities, Inc. 450 8,606
Meditrust Corporation 700 24,325
Merry Land & Investment Company, Inc 400 8,500
National Health Investors, Inc. 225 7,509
Nationwide Health Properties, Inc. 500 11,062
New Plan Realty Trust 650 13,975
Oasis Residential, Inc. 300 6,563
Post Properties, Inc. 275 10,072
Public Storage, Inc. 700 15,837
ROC Communities, Inc. 225 5,484
Realty Income Corporation 400 9,100
Security Capital Pacific Trust 900 19,237
Security Capital Industrial Trust 1029 18,779
Shurgard Storage Centers, Inc. 425 10,997
Simon DeBartolo Group, Inc. 1101 28,075
Spieker Properties, Inc. 425 12,484
Starwood Lodging Trust 250 10,438
Storage USA, Inc. 300 10,033
United Dominion Realty Trust 700 9,800
Vornado Realty Trust 300 12,188
Weingarten Realty Investors 325 12,594
--- -------
Total Common Stocks (Cost $428,356) 456,184
========
<PAGE>
(Continued)
GRANDVIEW REIT INDEX FUND
PORTFOLIO OF INVESTMENTS
September 30, 1996
(Unaudited)
Principal Value
Amount (note 1)
REPURCHASE AGREEMENT (a) - 5.83%
Wachovia Bank $28,255 $28,255
5.75%, due October 1, 1996
(Cost $28,255)
Total Value of Investments (Cost $456,611 (b)) 99.95% 484,439
Other Assets Less Liabilities 0.05% 244
------- --------
Net Assets 100.00% $484,683
====== ========
(a)The repurchase agreement is fully collateralized by U. S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investment in the repurchase agreement is through participation in a joint
account with other funds administered by The Nottingham Company.
(b)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 $28,649
Unrealized depreciation (821)
-------
Net unrealized appreciation $27,828
=======
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REIT INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996
(Unaudited)
ASSETS
Investments, at value (cost $456,611) $484,439
Interest receivable 42
Dividends receivable 2,092
Prepaid expenses 6,367
Deferred organization expenses, net (note 4) 20,408
- ------
Total assets 513,348
=======
LIABILITIES
Payable for investment purchases 10,033
Accrued expenses 1,500
Due to investment advisor 15,358
Disbursements in excess of cash on demand deposit 1,774
------
Total liabilities 28,665
======
NET ASSETS
(applicable to 44,301 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $484,683
========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($484,683 44,301 shares) $10.94
OFFERING PRICE PER SHARE
(100 97 of $10.94) $11.28
NET ASSETS CONSIST OF
Paid-in capital $457,799
Undistributed net investment income 423
Undistributed net realized loss on investments (1,367)
Net unrealized appreciation on investments 27,828
--------
$484,683
========
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REIT INDEX FUND
STATEMENT OF OPERATIONS
Period ended September 30, 1996
(Unaudited)
INVESTMENT INCOME
Income
Dividends $12,197
Interest 310
-------
Total income 12,507
======
Expenses
Fund accounting fees (note 2) 4,663
Professional fees 2,902
Custody fees 1,360
Registration and filing administration fees 729
Investment advisory fees (note 2) 654
Fund administration fees (note 2) 421
Shareholder recordkeeping fees 108
Securities pricing fees 174
Amortization of deferred organization expenses (note 4) 2,729
Registration and filing expenses 243
Other operating expenses 789
Shareholder servicing expenses 880
Printing expenses 168
Trustee fees and meeting expenses 57
------
Total expenses 15,877
======
Less:
Expense reimbursements (note 2) (13,265)
Investment advisory fees waived (note 2) (654)
- ------
Net expenses 1,958
------
Net investment income 10,549
======
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss from investment transactions (1,464)
Increase in unrealized appreciation on investments 28,709
------
Net realized and unrealized gain on investments 27,245
------
Net increase in net assets resulting from operations $37,794
=======
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REIT INDEX FUND
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
For the
period from
July 3, 1995
(commencement of
Period ended operations) to
September 30, March 31,
1996 1996
INCREASE IN NET ASSETS
Operations
Net investment income $10,549 $5,240
Net realized gain (loss) from investment transactions (1,464) 1,665
====== =====
Increase (decrease) in unrealized appreciation on inves 28,709 (881)
------ ----
Net increase in net assets resulting from operations 37,794 6,024
====== =====
Distributions to shareholders from
Net investment income (10,126) (5,240)
Net realized gain from investment transactions 0 (1,568)
------ ------
Decrease in net assets resulting from distributions (10,126) (6,808)
======= ======
Capital share transactions
Increase in net assets resulting from capital share tra 204,222 253,577
------- -------
Total increase in net assets 231,890 252,793
======= =======
NET ASSETS
Beginning of period 252,793 0
------- -------
End of pe(including undistributed net investment income $484,683 $252,793
======== ========
of $423 as of September 30, 1996 and $0 as of
March 31, 1996)
(a) A summary of capital share activity follows:
For the period from July 3, 1995
Period ended (commencement of operations)
September 30, 1996 to March 31, 1996
Shares Value Shares Value
Shares sold 19,050 $198,902 25,257 $258,779
Shares issued for reinvestment
of distributions 683 7,344 482 4,916
------ ------ ----- -----
19,733 206,246 25,739 263,695
------ ------- ------ -------
Shares redeemed (195) (2,024) (976) (10,118)
------ ------ ---- -------
Net increase 19,538 $204,222 24,763 $253,577
====== ======== ====== ========
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REIT INDEX FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
For the
period from
July 3, 1995
(commencement of
Period ended operations) to
September 30, March 31,
1996 1996
Net asset value, beginning of period $10.21 $10.00
Income from investment operations
Net investment income 0.27 0.33
Net realized and unrealized gain on investmen 0.72 0.32
---- ----
Total from investment operations 0.99 0.65
---- ----
Distributions to shareholders from
Net investment income (0.26) (0.33)
Net realized gain from investment transaction 0.00 (0.11)
---- -----
Total distributions (0.26) (0.44)
----- -----
Net asset value, end of period $10.94 $10.21
====== ======
Total return 9.82 % 6.40 %
Ratios/supplemental data
Net assets, end of period $484,683 $252,793
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 8.40 %(a 20.63 %(a)
After expense reimbursements and waived fees 1.04 %(a 1.05 %(a)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (1.72)%(a (13.66)%(a)
After expense reimbursements and waived fees 5.64 %(a 5.86 %(a)
Portfolio turnover rate 23.15 % 47.46 %
(a) Annualized.
</TABLE>
See accompanying notes to financial statements
<PAGE>
GRANDVIEW REIT INDEX FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The GrandView REIT Index Fund (the "Fund") is a 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, as amended. The Fund began
operations on July 3, 1995. Shares of the Fund purchased are subject to
a maximum sales charge of 3.00%. Shares of the Fund redeemed are
subject to a 1.00% redemption fee, which applies to redemptions during
the first six months after share purchases. The redemption fee is
subsequently reduced after the first six months and is eliminated after
one year. 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 - At March 31, 1996, the Fund was 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 to 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 an
accrual basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund generally declares dividends
quarterly, 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.
<PAGE>
GRANDVIEW REIT INDEX FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
E. 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 amount of assets,
liabilities, expenses and revenues reported in the financial statements.
Actual results could differ from those estimated.
F. Repurchase Agreements - The Fund may acquire U. S. Government Securities
or corporate debt securities subject to repurchase agreements. A
repurchase agreement transaction occurs when the Fund acquires a
security and simultaneously resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities
dealer) for delivery on an agreed upon future date. The repurchase price
exceeds the purchase price by an amount which reflects an agreed upon
market interest rate earned by the Fund effective for the period of time
during which the repurchase agreement is in effect. Delivery pursuant to
the resale typically will occur within one to five days of the purchase.
The Fund will not enter into repurchase agreement which will cause more
than 10% of its net assets to be invested in repurchase agreements which
extend beyond seven days. In the event of the bankruptcy of the other
party to a repurchase agreement, the Fund could experience delays in
recovering its cash or the securities lent. To the extent that in the
interim the value of the securities purchased may have declined, the
Fund could experience a loss. In all cases, the creditworthiness of the
other party to a transaction is reviewed and found satisfactory by the
Advisor. Repurchase agreements are, in effect, loans of Fund assets. The
Fund will not engage in reverse repurchase transactions, which are
considered to be borrowings under the Investment Company Act of 1940, as
amended.
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 0.35% 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
1.05% 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
$654 ($0.02 per share) and has voluntarily reimbursed $13,265 of the
Fund's operating expenses for the period ended September 30, 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 0.225% of the Fund's first $25 million of
average daily net assets, 0.20% of the next $25 million of average daily
net assets, and 0.175% 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.
<PAGE>
GRANDVIEW REIT INDEX FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
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 ended September 30, 1996, the Distributor retained
sales charges in the amount of $383.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the Distributor or the Administrator.
At September 30, 1996, the Advisor, its officers, and Trustees of
the Fund held 10,590 shares or 24% 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.
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 Trustees of the Trust do not currently intend to authorize the
payment of any such distribution and service fees from the Fund,
although they have authority under the Plan to do so in the future.
Shareholders of the Fund will be given at least sixty days written
notice before any distribution and service fees are imposed.
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.
NOTE 5 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $267,299 and $79,423, respectively, for the
period ended September 30, 1996.
