THE GRANDVIEW FUNDS
SUPPLEMENT DATED DECEMBER 1, 1995
TO THE PROSPECTUS DATED JULY 1, 1995
The information on the GrandView REIT Index Fund, GrandView Realty Growth
Fund, GrandView Residential Realty Income Fund, GrandView Retail Realty Income
Fund, and GrandView Healthcare Realty Income Fund (the "Funds"), each a series
of the GrandView Investment Trust (the "Trust"), contained in the Funds'
Prospectus dated July 1, 1995 (the "Prospectus"), is amended to reflect the
following updated information:
1. The date of the Statement of Additional Information referenced on the
cover page of the Prospectus is changed to December 1, 1995, and as
amended or supplemented from time to time.
2. The following "FINANCIAL HIGHLIGHTS" section is added to the
Prospectus:
FINANCIAL HIGHLIGHTS
The financial data included in the table below has been derived from unaudited
financial statements of the Funds. The information in the table below should
be read in conjunction with each Fund's latest unaudited financial statements
and notes thereto for the fiscal period ended September 30, 1995, which are
included in the Statement of Additional Information, a copy of which may be
obtained at no charge by calling the Funds. Further information about the
performance of each Fund will be contained in the Annual Report of each Fund,
a copy of which may be obtained, when available, at no charge by calling the
Funds.
(For a Share Outstanding Throughout the Period)
For the period from July 3, 1995 (commencement of operations) to September
30, 1995
<TABLE>
<S> <C> <C> <C> <C> <C>
Residential Retail Healthcare
REIT Realty Realty Realty Realty
Index Growth Income Income Income
Fund Fund Fund Fund Fund
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00 $10.00
Income (loss) from investment operations
Net investment income 0.10 0.00 0.11 0.15 0.10
Net realized and unrealized gain
(loss) on investments 0.20 (0.21) (0.19) (0.32) (0.01)
Total income (loss)
from investment operations 0.30 (0.21) (0.08) (0.17) 0.09
Distributions to shareholders from
Net investment income (loss) (0.11) 0.00 (0.05) (0.06) (0.05)
Net realized gain from
investment transactions 0.00 0.00 0.00 0.00 0.00
Total distributions (0.11) 0.00 (0.05) (0.06) (0.05)
Net asset value, end of period $10.19 $9.79 $9.87 $9.77 $10.04
Total return (a) 3.00% (1.75)% (0.90)% (0.75)% 0.93%
Ratios/supplemental data
Net assets, end of period $109,206 $90,374 $57,870 $59,036 $71,935
Ratio of expenses to average net assets
Before expense reimbursements (b) 5.03% 2.20% 27.29% 29.48% 24.78%
After expense reimbursements (b) 1.05% 0.65% 1.74% 1.74% 1.74%
Ratio of net investment income (loss)
to average net assets
Before expense reimbursements (b) 6.89% (0.77)% (17.72)% (16.55)% (14.72)%
After expense reimbursements (b) 10.87% 0.77% 7.83% 11.19% 8.31%
Portfolio turnover rate 0.00% 4.77% 0.00% 0.00% 0.00%
</TABLE>
(a) Does not reflect payment of the maximum sales charge.
(b) Annualized.
3. The information under "Information About Fund Shares - Net Asset Value
and Pricing of Orders" is deleted in its entirely and updated with the
following information:
Net Asset Value and Pricing of Orders
Shares of each Fund are sold at their public offering price, which is the net
asset value per share plus the applicable sales charge, if any. Net asset
value per share of a Fund is determined by dividing the value of its assets,
less liabilities, by the number of shares outstanding. The net asset value
is computed once daily, on each day the New York Stock Exchange (the
"Exchange") is open, at 4:00 p.m. New York time.
Securities are valued at the last quoted sale price, at the time the valuation
is made, on the principal exchange or market where they are traded.
Securities which have not traded on the date of valuation, or securities for
which sales prices are not generally reported, are valued at the mean between
the current bid and asked prices. All assets of the Fund for which there is
no other readily available valuation method are valued at their fair value as
determined in good faith at the direction of the Trustees.
An order for shares received by a broker-dealer or bank prior to such 4:00
p.m. New York time is effected at the offering price determined at such time
on the day the order is received. It is the responsibility of broker-dealers
and banks to transmit orders promptly to the Distributor. An order received
by a broker-dealer or bank after such 4:00 p.m. time will be confirmed at the
offering price as of such 4:00 p.m. time on the next trading day.
An order to purchase shares is not binding on, and may be rejected by, the
Trust or the Distributor until it has been confirmed in writing by the
Distributor and payment has been received.
4. The information on the shares of the Funds as described under
"Information About Fund Shares - Description of Shares and Voting
Rights" in the Prospectus is supplemented with the following additional
information:
As of November 9, 1995, the following persons or entities owned of record or
beneficially more that 25% of the shares of the Funds: GrandView Advisers,
Inc., 127 GrandView Drive, East Glastonbury, Connecticut 06033, record holder
with respect to 34.036% of the GrandView Residential Retail Income Fund;
Maryanne S. Aylesworth, 127 GrandView Drive, East Glastonbury, Connecticut
06033, record holder with respect to 27.693% of the GrandView Residential
Retail Income Fund; Winsor H. Aylesworth, 127 GrandView Drive, East
Glastonbury, Connecticut 06033, record holder with respect to 35.014% of the
GrandView Residential Retail Income Fund; GrandView Advisers, Inc., 127
GrandView Drive, East Glastonbury, Connecticut 06033, record holder with
respect to 30.726% of the GrandView Retail Realty Income Fund; Winsor H.
Aylesworth, 127 GrandView Drive, East Glastonbury, Connecticut 06033, record
holder with respect to 31.614% of the GrandView Retail Realty Income Fund;
GrandView Advisers, Inc., 127 GrandView Drive, East Glastonbury, Connecticut
06033, record holder with respect to 25.456% of the GrandView Healthcare
Realty Income Fund; and Winsor H. Aylesworth, 127 GrandView Drive, East
Glastonbury, Connecticut 06033, record holder with respect to 25.490% of the
GrandView Healthcare Realty Income Fund. Accordingly, these persons or
entities may be deemed to be "controlling persons" of the Funds within the
meaning of the 1940 Act.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GrandView REIT Index Fund
GrandView Realty Growth Fund
GrandView Residential Realty Income Fund
GrandView Retail Realty Income Fund
GrandView Healthcare Realty Income Fund
December 1, 1995
Series of
GrandViewSM Investment Trust
105 North Washington Street,
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone 1-800-525-FUND
Table of Contents
1. THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. . . . . . . . . . . . 2
3. PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 14
4. DETERMINATION OF NET ASSET VALUE; VALUATION OF
SECURITIES; ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . 14
5. MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. PORTFOLIO TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 23
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES. . . . . . . . . . 23
8. CERTAIN ADDITIONAL TAX MATTERS. . . . . . . . . . . . . . . . . . . . . 24
9. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
GrandView Investment Trust (the "Trust") is an open-end, registered management
investment company offering five mutual funds which are described in this
Statement of Additional Information: GrandView REIT Index Fund, GrandView
Realty Growth Fund, GrandView Residential Realty Income Fund, GrandView Retail
Realty Income Fund and GrandView Healthcare Realty Income Fund (the "Funds").
Each of the Funds (other than the GrandView REIT Index Fund) is a non-
diversified fund. The address and telephone number of the Trust are 105 North
Washington St., Rocky Mount, North Carolina 27802, 1-800-525-3863.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK OR INSURED DEPOSITARY INSTITUTION, NOR ARE THEY
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER AGENCY. INVESTMENTS IN MUTUAL FUNDS INVOLVE INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This Statement of Additional Information sets forth information which may be
of interest to investors but which is not necessarily included in the Trust's
Prospectus dated July 1, 1995, as supplemented by a Supplement dated December
1, 1995, by which shares of the Funds are offered. This Statement of
Additional Information should be read in conjunction with the Prospectus, a
copy of which may be obtained by an investor without charge by contacting the
Funds' Distributor (see inside back cover for address and phone number).
This Statement of Additional Information is NOT a prospectus and is authorized
for distribution to prospective investors only if preceded or accompanied by
an effective prospectus.
1. THE FUNDS
GrandView Investment Trust (the "Trust") is an open-end management investment
company that was organized as a business trust under the laws of the
Commonwealth of Massachusetts on February 6, 1995. This Statement of
Additional Information describes shares of the GrandView REIT Index Fund
("REIT Index Fund"), GrandView Realty Growth Fund ("Realty Growth Fund"),
GrandView Residential Realty Income Fund ("Residential Realty Income Fund"),
GrandView Retail Realty Income Fund ("Retail Realty Income Fund") and
GrandView Healthcare Realty Income Fund ("Healthcare Realty Income Fund"),
which are series of the Trust. References in this Statement of Additional
Information to the "Prospectus" are to the Prospectus, dated July 1, 1995, as
supplemented by a Supplement dated December 1, 1995, of the Trust by which
shares of the Funds are offered.
GrandView Advisers, Inc. (the "Adviser") is investment adviser to each of the
Funds. The Adviser manages the investments of the Funds from day to day in
accordance with each Fund's investment objective and policies. The selection
of investments for the Funds and the way they are managed depend on the
conditions and trends in the economy and the financial marketplaces.
The Board of Trustees of the Trust provides broad supervision over the affairs
of the Funds. The Nottingham Company, L.L.C., the administrator and fund
accounting, dividend disbursing and transfer agent of each Fund ("Nottingham"
or the "Administrator"), supervises the overall administration of the Funds.
Shares of the Funds are continuously sold by Capital Investment Group, Inc.,
the Funds' distributor ("Capital Investment Group" or the "Distributor").
Shares of each Fund are sold at net asset value, plus any applicable sales
charge. The sales charge may be reduced on purchases involving substantial
amounts and may be eliminated in certain circumstances. The Trust has adopted
a Distribution Plan (the "Distribution Plan") in accordance with Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act") which
provides for payment of a distribution fee to Capital Investment Group from
each Fund. The Board of Trustees does not currently intend to authorize the
payment of any such fee from the REIT Index Fund, although they have the
authority under the Distribution Plan to do so in the future.
2. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
Investment Objectives
The REIT Index Fund, the Realty Growth Fund, the Residential Realty Income
Fund, the Retail Realty Income Fund and the Healthcare Realty Income Fund seek
both current income and long-term growth of capital. Each Fund invests
primarily in securities of real estate investment trusts ("REITs") and other
real estate industry companies. The Funds differ in the degree to which they
emphasize income or capital growth, and employ different policies to achieve
their objectives.
The investment objective of the REIT Index Fund is to provide its investors
with investment results which correspond to the performance of the GrandView
REIT Index. The Fund seeks to achieve its objective by investing in the
equity securities of the REITs comprising the Index.
The primary investment objective of the Realty Growth Fund is long-term growth
of capital. Current income is a secondary objective.
The primary investment objective of each of the Residential Realty Income
Fund, the Retail Realty Income Fund and the Healthcare Realty Income Fund is
current income. Long-term growth of capital is a secondary objective of each
of these Funds.
The investment objective of each Fund may be changed without approval by that
Fund's shareholders, but shareholders will be given written notice at least
30 days before any change is implemented. Of course, there can be no
assurance that any Fund will achieve its investment objective.
Investment Policies
The Prospectus contains a discussion of the various types of securities in
which each Fund may invest and the risks involved in such investments. The
following supplements the information contained in the Prospectus concerning
the investment objective, policies and techniques of each Fund.
The investment objective of the REIT Index Fund is to provide its investors
with investment results which correspond to the performance of the GrandView
REIT Index (the "Index"). The Fund seeks to achieve its objective by
investing in the equity securities of the REITs comprising the Index. The
REIT Index Fund intends to be as fully invested at all times as is reasonably
practicable and will attempt to approximate the weightings of the securities
held in its portfolio to the weightings of the securities in the Index.
The Index was developed and is maintained by the Adviser. It currently
consists of the equity securities of 60 REITs which, as of March 31, 1995,
represented approximately 65% of the total market capitalization of all REITs
which are publicly traded in the United States and includes REITs within each
of thirteen industry sectors identified by the Adviser. Any changes made to
the composition of the Index by the Adviser will be based solely on market
capitalization criteria. The Index is weighted by market capitalization, and
in formulating the list of REITs which comprise the Index, the Adviser chooses
REITs which represent all sectors of the REIT industry as identified by the
Adviser. The Index is reset as needed in order to reflect changes in the
market, and in any event, at least semiannually. The Index is presently
comprised of the following REITs:
GrandView REIT Index Composition
9/95 Market
Sector/Name Exchange Capitalization
APARTMENT
Security Capital Pacific Trust NYSE $1,375,140,561
Equity Residential Prop. NYSE $1,035,340,639
United Dominion Realty NYSE $798,644,556
Merry Land & Inv. Co. NYSE $712,229,375
Avalon Properties NYSE $578,088,506
Post Properties Inc. NYSE $550,068,371
BRE Properties, Inc. NYSE $369,528,750
Oasis Residential, Inc. NYSE $365,347,035
Wellsford Residential Tr. NYSE $361,436,523
Evans Withycombe Res. NYSE $325,228,750
Camden Property Trust NYSE $321,066,141
HOTEL
Starwood Lodging Trust NYSE $388,396,631
RFS Hotel Investors, Inc. NASDAQ $375,500,750
Felcor Suite Hotels, Inc. NASDAQ $244,957,500
IND/WARE
Security Capital Ind. Trust NYSE $1,059,337,500
Liberty Property Trust NYSE $449,289,770
First Industrial Rlty. Trust NYSE $377,627,980
MANUF. HOUSING
Manufacturer Home Com. NYSE $420,417,000
ROC Communities, Inc. NYSE $287,293,438
Sun Communities NYSE $257,556,000
MEDICAL
Meditrust NYSE $1,717,019,125
Health Care Property Investors NYSE $966,923,732
Health & Retirement Properties NYSE $924,846,344
Nationwide Health Prop. NYSE $793,760,000
National Health Investors NYSE $566,745,185
Omega HealthCare Investors NYSE $531,424,461
American Health Properties NYSE $452,395,000
MIXED
Duke Realty Investments, Inc. NYSE $742,331,250
Spieker Properties NYSE $641,179,776
Washington REIT SBI ASE $470,730,046
MORTGAGE
CWM Mortgage Holdings, Inc. NYSE $548,562,200
Capstead Mortgage Corporation NYSE $493,554,000
Resource Mortgage Capital, Inc. NYSE $407,612,473
OFFICE
Crescent R. E. Equities, Inc. NYSE $652,588,554
Cousins Properties NASDAQ $511,492,750
Highwood Properties, Inc. NYSE $495,850,000
Beacon Properties Corp. NYSE $411,468,750
RETAIL-MALL
Simon Property Group NYSE $1,359,935,113
Debartolo Realty Corp. NYSE $766,670,226
General Growth Properties, Inc NYSE $562,496,550
Taubman Centers, Inc. NYSE $443,303,130
CBL & Associates Prop. NYSE $431,883,798
Crown American Realty Trust NYSE $226,129,745
RETAIL-OUTLET
Chelsea GCA Realty NYSE $332,359,375
Mills Corp. NYSE $306,420,398
Factory Stores of America Inc. NYSE $234,795,280
RETAIL-STRIP
New Plan Realty Trust NYSE $1,172,492,250
Weingarten Realty Investors NYSE $934,713,625
Vornado Realty Trust NYSE $908,960,138
Kimco Realty Corp. NYSE $894,711,080
Federal Realty Investment Trust NYSE $740,777,125
Developers Diversified Realty NYSE $562,075,624
Glimcher Realty Trust NYSE $445,519,750
Realty Income Corp. NYSE $412,000,875
SELF STORAGE
Storage Equities Inc. NYSE $783,043,723
Shurgard Storage Centers, Inc. NYSE $562,075,177
Storage USA Inc. REIT NYSE $532,707,373
SPECIALTY
Franchise Finance Corp. NYSE $865,390,459
National Golf Properties, Inc. NYSE $232,356,250
CA. Jockey Club & Bay Meadows ASE $92,771,269
REITs pool investors' funds for investment primarily in income producing real
estate or real estate related loans or interests. A REIT is not taxed on
income distributed to its shareholders or unitholders if it complies with
regulatory requirements relating to its organization, ownership, assets and
income and a regulatory requirement that it distribute to its shareholders or
unitholders at least 95% of its taxable income for each taxable year.
Generally, REITs can be classified as Equity REITs, Mortgage REITs and Hybrid
REITs. Equity REITs invest the majority of their assets directly in real
property and derive their income primarily from rents and capital gains from
appreciation realized through property sales. Equity REITs may be affected
by changes in the value of the underlying property owned by the REITs.
Mortgage REITs invest the majority of their assets in real estate mortgages
and derive their income primarily from interest payments. Mortgage REITs are
sensitive to the credit quality of the underlying borrowers. Hybrid REITs
combine the characteristics of both Equity and Mortgage REITs. The value of
REITs may be affected by management skill, cash flow and tax and regulatory
requirements.
The investment objective of the Realty Growth Fund is long-term growth of
capital. Current income is a secondary objective. In selecting investments
for the Fund, the Adviser will emphasize equity securities of real estate
industry companies which it believes are undervalued or which it believes to
have significant "turnaround" potential. For purposes of the Fund's
investments, a "real estate industry company" is a company that derives at
least 50% of its gross revenues or net profits from the ownership,
development, construction, financing, management or sale of commercial,
industrial or residential real estate. The equity securities in which the
Fund will invest may include common stocks, shares of beneficial interest and
securities with common stock characteristics, such as preferred stock,
warrants and debt securities convertible into common stock. The debt
securities in which the Fund will invest may include bonds, notes and other
short-term debt obligations. In determining whether a security is
undervalued, the Adviser may take into account price-earnings ratios, cash
flows, relationships of asset value to market prices of the securities,
interest or dividend payment histories and other factors which it believes to
be relevant. The Adviser may determine that a company has "turnaround"
potential based on, for example, changes in management or financial
restructurings. The Fund's performance depends on conditions in the real
estate industry.
The investment objective of the Residential Realty Income Fund is current
income. Long-term growth of capital is a secondary objective of the Fund.
Under normal circumstances, at least 65% of the Fund's total assets are
invested in debt and equity securities of REITs and other companies in the
residential sector of the real estate industry. A company will be deemed to
be in the residential sector of the real estate industry if it derives at
least 50% of its gross revenues or net profits from the ownership,
development, construction, financing, management or sale of real estate used
primarily for residential purposes.
The investment objective of the Retail Realty Income Fund is current income.
Long-term growth of capital is a secondary objective of the Fund. Under
normal circumstances, at least 65% of the Fund's total assets are invested in
debt and equity securities of REITs and other companies in the retail sector
of the real estate industry. A company will be deemed to be in the retail
sector of the real estate industry if it derives at least 50% of its gross
revenues or net profits from the ownership, development, construction,
financing, management or sale of real estate used primarily for retail
purposes.
The investment objective of the Healthcare Realty Income Fund is current
income. Long-term growth of capital is a secondary objective of the Fund.
Under normal circumstances, at least 65% of the Fund's total assets are
invested in debt and equity securities of REITs and other companies in the
healthcare sector of the real estate industry. A company will be deemed to
be in the healthcare sector of the real estate industry if it derives at least
50% of its gross revenues or net profits from the ownership, development,
construction, financing, management or sale of real estate used primarily for
healthcare purposes.
Because the Funds invest primarily in the real estate industry, their
investments may be subject to certain risks associated with the direct
ownership of real estate. These risks include: declines in the value of real
estate; risks related to general and local economic conditions, overbuilding
and increased competition; increases in property taxes and operating expenses;
and variations in rental income. For more information on these and other
risks of investing in the real estate industry, see "INVESTMENT OBJECTIVE AND
POLICIES - Risks of Investing" in the Prospectus.
The policies described above and those described below are not fundamental and
may be changed without shareholder approval.
Mortgage-Backed Securities
The Funds (other than the REIT Index Fund) may invest in securities that
directly or indirectly represent participations in, or are collateralized by
and payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities").
Mortgage-Backed Securities represent pools of mortgage loans assembled for
sale to investors by various governmental agencies such as the Government
National Mortgage Association ("Ginnie Mae") and government-related
organizations such as the Federal National Mortgage Association ("Fannie Mae")
and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), as well as by
nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain Mortgage-Backed Securities are guaranteed by a third party
or otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If the Adviser purchases a Mortgage-Backed
Security at a premium, that portion may be lost if there is a decline in the
market value of the security whether resulting from changes in interest rates
or prepayments in the underlying mortgage collateral. As with other interest-
bearing securities, the prices of such securities are inversely affected by
changes in interest rates. However, though the value of a Mortgage-Backed
Security may decline when interest rates rise, the converse is not
necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. For this and other
reasons, a Mortgage-Backed Security's stated maturity may be shortened by
unscheduled prepayments on the underlying mortgages and, therefore, it is not
possible to predict accurately the securities' return to a Fund. In addition,
regular payments received in respect of Mortgage-Backed Securities include
both interest and principal. No assurance can be given as to the return a
Fund will receive when these amounts are reinvested.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue Mortgage-Backed Securities
and among the securities that they issue. Mortgage-Backed Securities issued
by Ginnie Mae include Ginnie Mae Mortgage Pass-Through Certificates which are
guaranteed as to the timely payment of principal and interest by Ginnie Mae.
This guarantee is backed by the full faith and credit of the United States.
Ginnie Mae is a wholly-owned U.S. Government corporation within the Department
of Housing and Urban Development. Ginnie Mae certificates also are supported
by the authority of Ginnie Mae to borrow funds from the U.S. Treasury to make
payments under its guarantee. Mortgage-Backed Securities issued by Fannie Mae
include Fannie Mae Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are guaranteed as to timely payment of the principal
and interest by Fannie Mae. Fannie Maes are solely the obligations of Fannie
Mae and are not backed by or entitled to the full faith and credit of the
United States. Fannie Mae is a government-sponsored organization owned
entirely by private stockholders. Mortgage-Backed Securities issued by
Freddie Mac include Freddie Mac Mortgage Participation Certificates (also
known as "Freddie Macs" or "PC's"). Freddie Mac is a corporate
instrumentality of the United States, created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home
Loan Bank. Freddie Macs entitle the holder to timely payment of interest,
which is guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When Freddie Mac does not guarantee timely payment of
principal, Freddie Mac may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.
The Funds (other than the REIT Index Fund) may also invest in Mortgage-Backed
Securities which are collateralized mortgage obligations structured on pools
of mortgage pass-through certificates or mortgage loans ("CMOs" and "REMICs")
and derivative multiple-class mortgage-backed securities ("Stripped Mortgage-
Backed Securities" or "SMBSs").
Short-Term Investments
For temporary defensive purposes, each Fund (other than the REIT Index Fund)
may invest up to 100% of its total assets in short-term investments. Each
Fund (including the REIT Index Fund) may also make short-term investments for
liquidity purposes (e.g., in anticipation of redemptions or purchases of
securities). The Funds may invest in short-term investments consisting of
corporate commercial paper and other short-term commercial obligations, in
each case rated or issued by companies with similar securities outstanding
that are rated Prime-l, Aa or better by Moody's Investors Service, Inc.
("Moody's") or A-1, AA or better by Standard & Poor's Ratings Group ("Standard
& Poor's"); obligations (including certificates of deposit, time deposits,
demand deposits and bankers' acceptances) of banks with securities outstanding
that are rated Prime-l, Aa or better by Moody's, or A-1, AA or better by
Standard & Poor's; obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities with remaining maturities not exceeding 18
months; securities of registered investment companies, subject to the
provisions of the 1940 Act; and repurchase agreements. These investments may
have a lower yield than would be available from investments with a lower
quality or longer term.
Lower Rated Debt Securities
The Funds (other than the REIT Index Fund) may invest in debt securities which
are rated Caa or higher by Moody's or CCC or higher by Standard & Poor's or
Fitch Investors Service, Inc. ("Fitch") or equivalent unrated securities.
However, no Fund may invest more than 10% of its assets (25% for the Realty
Growth Fund) in debt securities rated lower than Baa by Moody's or BBB by
Standard & Poor's or Fitch or securities not rated by Moody's, Standard &
Poor's or Fitch which the Adviser deems to be of equivalent quality. Bonds
rated BB or Ba or below (or comparable unrated securities) are commonly
referred to as "junk bonds" and are considered speculative and may be
questionable as to principal and interest payments. In some cases, such bonds
may be highly speculative, have poor prospects for reaching investment
standing and be in default. As a result, investment in such bonds will entail
greater risks than those associated with investment in investment-grade bonds
(i.e., bonds rated BBB or better by Standard & Poor's or Fitch or Baa or
better by Moody's).
An economic downturn could severely affect the ability of highly leveraged
issuers to service their debt obligations or to repay their obligations upon
maturity. Factors having an adverse impact on the market value of lower rated
securities will have an adverse effect on a Fund's net asset value to the
extent it invests in such securities. In addition, the Fund may incur
additional expenses to the extent it is required to seek recovery upon a
default in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on a
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a
result, the Adviser could find it more difficult to sell these securities or
may be able to sell the securities only at prices lower than if such
securities were widely traded. Prices realized upon the sale of such lower
rated or unrated securities, under these circumstances, may be less than the
prices used in calculating the Fund's net asset value.
Since investors generally perceive that there are greater risks associated
with the medium to lower rated securities of the type in which certain of the
Funds may invest, the yields and prices of such securities may tend to
fluctuate more than those for higher rated securities. In the lower quality
segments of the fixed-income securities market, changes in perceptions of
issuers' creditworthiness tend to occur more frequently and in a more
pronounced manner than do changes in higher quality segments of the fixed-
income securities market resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In
addition, the prices of fixed-income securities fluctuate in response to the
general level of interest rates. Fluctuations in the prices of portfolio
securities subsequent to their acquisition will not affect cash income from
such securities but will be reflected in a Fund's net asset value.
Medium to lower rated and comparable non-rated securities tend to offer higher
yields than higher rated securities with the same maturities because the
historical financial condition of the issuers of such securities may not have
been as strong as that of other issuers. In addition to the risk of default,
there are the related costs of recovery on defaulted issues. The Adviser will
attempt to reduce these risks through diversification of each Fund's portfolio
and by analysis of each issuer and its ability to make timely payments of
income and principal, as well as broad economic trends in corporate
developments.
Foreign Real Estate Companies and Associated Risks
Each Fund (other than the REIT Index Fund) may invest in securities of non-
U.S. real estate companies. The risks of investing in real estate and real
estate companies are described in the Prospectus and above under "Investment
Policies." Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant
risks not present in U.S. investments. For example, the value of these
securities fluctuates based on the relative strength of the U.S. dollar. In
addition, there is generally less publicly available information about non-
U.S. issuers, particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Non-U.S. issuers are generally not
bound by uniform accounting, auditing and financial reporting requirements
comparable to those applicable to U.S. issuers. Investments in securities of
non-U.S. issuers also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of a Fund,
political or financial instability or diplomatic and other developments which
would affect such investments. Further, economies of other countries or areas
of the world may differ favorably or unfavorably from the economy of the U.S.
It is anticipated that in most cases the best available market for securities
of non-U.S. real estate companies would be on exchanges or in over-the-counter
markets located outside the U.S. Non-U.S. securities markets, while growing
in volume and sophistication, are generally not as developed as those in the
U.S., and securities of some non-U.S. real estate companies (particularly
those located in developing countries) may be less liquid and more volatile
than securities of comparable U.S. companies. Non-U.S. security trading
practices, including those involving securities settlement where Fund assets
may be released prior to receipt of payments, may expose the Funds to
increased risk in the event of a failed trade or the insolvency of a non-U.S.
broker-dealer. In addition, non-U.S. brokerage commissions are generally
higher than commissions on securities traded in the U.S. and may be non-
negotiable. In general, there is less overall governmental supervision and
regulation of non-U.S. securities exchanges, brokers and listed companies than
in the U.S.
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") and other forms of depositary receipts for
securities of non-U.S. issuers provide an alternative method for the Funds to
make non-U.S. investments. These securities are not usually denominated in
the same currency as the securities into which they may be converted.
Generally, ADRs, in registered form, are designed for use in U.S. securities
markets and EDRs and GDRs, in bearer form, are designed for use in European
and global securities markets. ADRs are receipts typically issued by a U.S.
bank or trust company evidencing ownership of the underlying securities. EDRs
and GDRs are European and global receipts, respectively, evidencing a similar
arrangement.
The Funds may invest in securities of non-U.S. real estate companies that
impose restrictions on transfer within the United States or to United States
persons. Although securities subject to such transfer restrictions may be
marketable abroad, they may be less liquid than securities of non-U.S. real
estate companies of the same class that are not subject to such restrictions.
Repurchase Agreements
Each Fund may invest in repurchase agreements collateralized by securities in
which that Fund may otherwise invest. Repurchase agreements are agreements
by which the Fund purchases a security and simultaneously commits to resell
that security to the seller (which is usually a member bank of the U.S.
Federal Reserve System or a member firm of the New York Stock Exchange (or a
subsidiary thereof)) at an agreed-upon date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated
to the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value of the underlying security,
usually U.S. Government or Government agency issues. Under the 1940 Act,
repurchase agreements may be considered to be loans by the buyer. The Fund's
risk is limited to the ability of the seller to pay the agreed-upon amount on
the delivery date. If the seller defaults, the underlying security
constitutes collateral for the seller's obligation to pay although that Fund
may incur certain costs in liquidating this collateral and in certain cases
may not be permitted to liquidate this collateral. All repurchase agreements
entered into by the Funds are fully collateralized, with such collateral being
marked to market daily.
Reverse Repurchase Agreements
Each Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements involve the sale of securities held by the Fund and the agreement
by the Fund to repurchase the securities at an agreed upon price, date and
interest payment. When the Fund enters into reverse repurchase transactions,
securities of a dollar amount equal in value to the securities subject to the
agreement will be maintained in a segregated account with the Fund's
custodian. The segregation of assets could impair the Fund's ability to meet
its current obligations or impede investment management if a large portion of
the Fund's assets are involved. Reverse repurchase agreements are considered
to be a form of borrowing.
Lending of Portfolio Securities
Consistent with applicable regulatory requirements and in order to generate
income, each Fund may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks
of the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested
in high quality short-term instruments. The Fund would have the right to call
a loan and obtain the securities loaned at any time on customary industry
settlement notice (which will not usually exceed five days). During the
existence of a loan, the Fund would continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities loaned and would
also receive compensation based on investment of the collateral. The Fund
would not, however, have the right to vote any securities having voting rights
during the existence of the loan, but would call the loan in anticipation of
an important vote to be taken among holders of the securities or of the giving
or withholding of their consent on a material matter affecting the investment.
As with other extensions of credit, there are risks of delay in recovery or
even loss of rights in the collateral should the borrower fail financially.
However, the loans would be made only to entities deemed by the Adviser to be
of good standing, and when, in the judgment of the Adviser, the consideration
which can be earned currently from loans of this type justifies the attendant
risk. If the Adviser determines to make loans, it is not intended that the
value of the securities loaned by the Fund would exceed 30% of the value of
its net assets.
Restricted Securities and Illiquid Investments
The Trust may purchase securities for the Funds that are not registered
("restricted securities") under the Securities Act of 1933 (the "Securities
Act"), but can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are not
treated as illiquid securities for purposes of the Fund's investment
limitations.
The Trust does not invest more than 15% of any Fund's net assets in illiquid
investments, which include securities for which there is no readily available
market, securities subject to contractual restrictions on resale and
restricted securities, unless the Trustees determine, based on the trading
markets for the specific restricted security, that it is liquid. The Trust's
Trustees may adopt guidelines and delegate to the Adviser the daily function
of determining and monitoring liquidity of restricted securities. The Trust's
Trustees, however, retain sufficient oversight and are ultimately responsible
for the determinations.
"When-Issued" Securities
Each Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis. It is expected that, under normal circumstances, the
applicable Fund would take delivery of such securities. When the Fund commits
to purchase a security on a "when-issued" or on a "forward delivery" basis,
it sets up procedures consistent with SEC policies. Since those policies
currently require that an amount of the Fund's assets equal to the amount of
the purchase be held aside or segregated to be used to pay for the commitment,
the Fund will always have cash, cash equivalents or high quality debt
securities sufficient to cover any commitments or to limit any potential risk.
However, even though the Funds do not intend to make such purchases for
speculative purposes and intend to adhere to the provisions of SEC policies,
purchases of securities on such bases may involve more risk than other types
of purchases. For example, the Fund may have to sell assets which have been
set aside in order to meet redemptions. Also, if the Adviser determines it
is advisable as a matter of investment strategy to sell the "when-issued" or
"forward delivery" securities, the Fund would be required to meet its
obligations from the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of the "when-
issued" or "forward delivery" securities themselves (which may have a value
greater or less than the Fund's payment obligation).
Options and Futures Contracts
To hedge against changes in securities prices, each Fund may purchase and sell
various kinds of futures contracts, and purchase and write (sell) call and put
options on any of such futures contracts. Each Fund may also purchase put and
call options on securities indices that are based on securities in which it
may invest. The futures contracts may be based on various securities (such
as U.S. Government securities), securities indices and other financial
instruments and indices. A Fund may engage in futures and related options
transactions for bona fide hedging and non-hedging purposes as described
below. All futures contracts entered into by a Fund are traded on U.S.
exchanges or boards of trade that are licensed and regulated by the Commodity
Futures Trading Commission (the "CFTC") or on foreign exchanges.
A futures contract may generally be described as an agreement between two
parties to buy and sell particular financial instruments for an agreed price
during a designated month (or to deliver the final cash settlement price, in
the case of a contract relating to an index or otherwise not calling for
physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, a Fund can
seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, a Fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases.
Positions taken in the futures markets are not normally held to maturity but
are instead liquidated through offsetting transactions which may result in a
profit or a loss. A clearing corporation associated with the exchange on
which futures on securities are traded guarantees that, if still open, the
sale or purchase will be performed on the settlement date.
Hedging, by use of futures contracts, seeks to establish with more certainty
the effective price and rate of return on portfolio securities and securities
that a Fund owns or proposes to acquire. A Fund may, for example, take a
"short" position in the futures market by selling futures contracts in order
to hedge against an anticipated rise in interest rates that would adversely
affect the value of the Fund's portfolio securities. Such futures contracts
may include contracts for the future delivery of securities held by a Fund or
securities with characteristics similar to those of a Fund's portfolio
securities. If, in the opinion of the Adviser, there is a sufficient degree
of correlation between price trends for a Fund's portfolio securities and
futures contracts based on securities indices, a Fund may also enter into such
futures contracts as part of its hedging strategy. Although under some
circumstances prices of securities in a Fund's portfolio may be more or less
volatile than prices of such futures contracts, the Adviser will attempt to
estimate the extent of this volatility difference based on historical patterns
and compensate for any such differential by having a Fund enter into a greater
or lesser number of futures contracts or by attempting to achieve only a
partial hedge against price changes affecting a Fund's securities portfolio.
When hedging of this character is successful, any depreciation in the value
of portfolio securities will be substantially offset by appreciation in the
value of the futures position. On the other hand, any unanticipated
appreciation in the value of a Fund's portfolio securities would be
substantially offset by a decline in the value of the futures position.
On other occasions, a Fund may take a "long" position by purchasing futures
contracts. This would be done, for example, when a Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
The acquisition of put and call options on futures contracts will give a Fund
the right (but not the obligation) for a specified price to sell or to
purchase, respectively, the underlying futures contract at any time during the
option period. As the purchaser of an option on a futures contract, a Fund
obtains the benefit of the futures position if prices move in a favorable
direction but limits its risk of loss in the event of an unfavorable price
movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium which
may partially offset a decline in the value of a Fund's assets. By writing
a call option, a Fund becomes obligated, in exchange for the premium, to sell
a futures contract, which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
a Fund intends to purchase. However, a Fund becomes obligated to purchase a
futures contract which may have a value lower than the exercise price. Thus,
the loss incurred by a Fund in writing options on futures is potentially
unlimited and may exceed the amount of the premium received. A Fund will
incur transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series.
There is no guarantee that such closing transactions can be effected. A
Fund's ability to establish and close out positions on such options will be
subject to the development and maintenance of a liquid market.
A Fund may use options on futures contracts for bona fide hedging or non-
hedging purposes as discussed below.
A Fund will engage in futures and related options transactions only for bona
fide hedging or non-hedging purposes in accordance with CFTC regulations which
permit investment companies registered under the 1940 Act to engage in such
transactions without requiring their sponsors to be registered as commodity
pool operators. No Fund is permitted to engage in speculative futures
trading. A Fund will determine that the price fluctuations in the futures
contracts and options on futures used for hedging purposes are substantially
related to price fluctuations in securities held by the Fund or in securities
which it expects to purchase. Except as stated below, a Fund's futures
transactions will be entered into for traditional hedging purposes -- i.e.,
futures contracts will be sold to protect against a decline in the price of
securities that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities it intends to
purchase. In particular cases, when it is economically advantageous for a
Fund to do so, a long futures position may be terminated or an option may
expire without the corresponding purchase of securities or other assets.
No Fund may purchase or sell non-hedging futures contracts or purchase or sell
related non-hedging options, except for closing purchase or sale transactions,
if immediately thereafter the sum of the amount of initial margin deposits on
the Fund's existing non-hedging futures and related non-hedging options
positions and the amount of premiums paid for existing non-hedging options on
futures (net of the amount the positions are "in the money") would exceed 5%
of the market value of the Fund's total assets. These transactions involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating a Fund to purchase securities and currencies, require the
Fund to segregate assets to cover such contracts and options.
Transaction costs associated with futures contracts and related options
involve brokerage costs, require margin deposits and, in the case of contracts
and options obligating a Fund to purchase securities or currencies, require
a Fund to segregate assets to cover such contracts and options.
While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while a Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for a Fund than if it had not entered into any
futures contracts or options transactions. In the event of an imperfect
correlation between a futures position and a portfolio position which is
intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss.
Investment Restrictions
Fundamental Restrictions
The Trust, on behalf of the Funds, has adopted the following policies which
may not be changed with respect to any Fund without approval by holders of a
majority of the outstanding voting securities of that Fund, which as used in
this Statement of Additional Information means the vote of the lesser of (i)
67% or more of the outstanding voting securities of the respective Fund
present at a meeting at which the holders of more than 50% of the outstanding
voting securities of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding voting securities of the respective Fund.
The term "voting securities" as used in this paragraph has the same meaning
as in the 1940 Act.
A Fund may not:
(1) Borrow money, except that as a temporary measure for extraordinary
or emergency purposes it may borrow from banks and enter into
reverse repurchase agreements in an amount not to exceed 33 1/3% of
the current value of its respective net assets, including the amount
borrowed (and no Fund may purchase any securities at any time at
which borrowings exceed 5% of the total assets of the Fund, taken at
market value). It is intended that a Fund would borrow money only
from banks and only to accommodate requests for the repurchase of
shares of the Fund while effecting an orderly liquidation of
portfolio securities.
(2) Make short sales of securities or purchase securities on margin,
except that the Trust may purchase and sell various types of futures
contracts and may obtain short term credits as necessary for the
clearance of security transactions.
(3) Underwrite securities issued by other persons, except to the extent
that the Fund may be considered an underwriter within the meaning of
the Securities Act of 1933 in the disposition of restricted
securities.
(4) Make loans to other persons except (a) through the lending of its
portfolio securities, but not in excess of 33 1/3%, of the Fund's
net assets,(b) through the use of fixed time deposits or repurchase
agreements or the purchase of short-term obligations or (c) by
purchasing all or a portion of an issue of debt securities; for
purposes of this paragraph 4 the purchase of short-term commercial
paper or a portion of an issue of debt securities which are part of
an issue to the public shall not be considered the making of a
loan.
(5) Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or
interests therein), interests in oil, gas or mineral leases,
commodities or commodity contracts in the ordinary course of
business, except that the Fund may purchase and sell
mortgage-related securities and may hold and sell real estate
acquired as a result of the ownership of securities by the Fund.
(6) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the
rules and regulations promulgated thereunder, except as appropriate
to evidence a debt incurred without violating Investment Restriction
(1) above.
(7) In the case of the REIT Index Fund, with respect to 75% of its total
assets, purchase securities of any issuer if such purchase at the
time thereof would cause more than 5% of the Fund's assets (taken at
market value) to be invested in the securities of such issuer (other
than securities or obligations issued or guaranteed by the United
States government or any agency or instrumentality thereof);
provided that, for purposes of this restriction the issuer of an
option or futures contract shall not be deemed to be the issuer of
the security or securities underlying such contract.
(8) In the case of the REIT Index Fund, with respect to 75% of its total
assets, purchase securities of any issuer if such purchase at the
time thereof would cause more than 10% of the voting securities of
such issuer to be held by the Fund.
(9) Invest 25% or more of its assets in securities of issuers in any one
industry (other than securities or obligations issued or guaranteed
by the United States government or any agency or instrumentality
thereof), except that it will invest at least 25% of its assets in
securities of issuers in the real estate industry.
State and Federal Restrictions
In order to comply with certain state and federal statutes and policies each
Fund does not as a matter of operating policy: (i) borrow money for any purpose
in excess of 10% of the net assets of the Fund (taken at cost) (the Fund will
not purchase any securities for the Fund at any time at which borrowings exceed
5% of the total assets of the Fund (taken at market value)), (ii) sell any
security which the Fund does not own unless by virtue of the ownership of other
securities there is at the time of sale a right to obtain securities, without
payment of further consideration, equivalent in kind and amount to the
securities sold and provided that if such right is conditional the sale is made
upon the same conditions, (iii) invest for the purpose of exercising control or
management, (iv) purchase securities issued by any registered investment
company, except by purchase in the open market where no commission or profit to
a sponsor or dealer results from such purchase other than the customary broker's
commission, or except when such purchase, though not made in the open market, is
part of a plan of merger or consolidation; provided, however, that the Fund will
not purchase the securities of any registered investment company if such
purchase at the time thereof would cause more than 10% of the total assets of
the Fund (taken in each case at the greater of cost or market value) to be
invested in the securities of such issuers or would cause more than 3% of the
outstanding voting securities of any such issuer to be held for the Fund, (v)
invest more than 15% of the net assets of the Fund in securities that are not
readily marketable or which are subject to legal or contractual restrictions on
resale including debt securities for which there is no established market and
fixed time deposits and repurchase agreements maturing in more than seven days,
(vi) purchase or retain any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Trust, or is an officer or director of the Adviser, if after the purchase of
the securities of such issuer by the Fund, one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities, or both, all taken
at market value, of such issuer, and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities, or both, all taken at market value, (vii) make short sales of
securities, except that the Trust may purchase and sell various types of futures
contracts and may obtain short term credits as necessary for the clearance of
security transactions, (viii) invest more than 5% of the Fund's net assets in
warrants (valued at the lower of cost or market), but not more than 2% of the
Fund's net assets may be invested in warrants not listed on the New York Stock
Exchange or the American Stock Exchange, (ix) with respect to 50% of the Fund's
total assets, invest more than 5% of its total assets in the securities of any
one issuer and, as to the remaining 50% of the Fund's total assets, invest more
than 25% in the securities of any one issuer, (x) purchase securities of any
issuer if, as to 75% of the assets of the Fund at the time of purchase, more
than 10% of the voting securities of any issuer would be held by the Fund, or
(xi) invest more than 15% of the Fund's total assets in the securities of
issuers which together with any predecessors (including public and private
predecessor operating companies) have a record of less than three years of
continuous operating or securities of issuers which are restricted as to
disposition, despite any determinations made by the Board of Trustees that such
securities are liquid.
Except as provided below, in order to comply with Rule 260.140.85(b) of Title 10
of the California Code of Regulations, a Fund will not engage in short sales
(other than sales against the box) or margin purchases, in writing, buying or
selling puts and calls on securities, stock index futures, options on stock
index futures, securities, stock index futures, options on stock index futures,
financial futures contracts or options thereon, or in other investment practices
which, in the opinion of the California Commissioner of Corporations, are highly
speculative, unless the securities of the Fund are offered only to a limited
class of purchasers and are subject to other sales limitations as the California
Commissioner of Corporations may require, and adequate disclosure is made of the
speculative nature of the security. However, a Fund may engage in writing puts
or calls if each of the following conditions are met: (i) the security
underlying the put or call is within the investment policies of the Fund and the
option is issued by the Options Clearing Corporation, (ii) the aggregate value
of the securities underlying the calls or obligations underlying the puts
determined as of the date the options are sold shall not exceed 25% of the net
assets of the Fund, (iii) the securities subject to the exercise of a call
written by the Fund must be owned by the Fund at the time the call is sold and
must continue to be owned by the Fund until the call has been exercised, has
lapsed, or the Fund has purchased a closing call, and such purchase has been
confirmed, thereby extinguishing the Fund's obligation to deliver securities
pursuant to the call it has sold, and (iv) at the time a put is written the Fund
must establish a segregated account with its custodian consisting of cash or
short term United States Government securities equal in value to the amount the
Fund will be obligated to pay upon exercise of the put; this account must be
maintained until the put is exercised, has expired, or the Fund has purchased a
closing put, which is a put of the same series as the one previously written. A
Fund may buy and sell puts and calls on securities, stock index futures or
options on stock index futures, or financial futures or options on financial
futures, if such options are written by other persons and if (i) the options or
futures are offered through the facilities of a national securities association
approved by the California Commissioner of Corporations or are listed on a
national securities or commodities exchange, (ii) the aggregate premiums paid on
all such options which are held at any time do not exceed 20% of the Fund's
total net assets, and (iii) the aggregate margin deposits required on all such
futures or options thereon held at any time do not exceed 5% of the Fund's total
assets.
These policies are not fundamental and may be changed by each Fund without the
approval of its shareholders in response to changes in state and federal
requirements.
Percentage Restrictions
If a percentage restriction on investment or utilization of assets set forth
above or referred to in the Prospectus is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held for a Fund will not be considered a
violation of policy.
3. PERFORMANCE INFORMATION
A total rate of return quotation for each Fund is calculated for any period by
(a) dividing (i) the sum of the net asset value per share on the last day of the
period and the net asset value per share on the last day of the period of shares
purchasable with dividends and capital gains distributions declared during such
period with respect to a share held at the beginning of such period and with
respect to shares purchased with such dividends and capital gains
distributions, by (ii) the public offering price per share on the first day of
such period, and (b) subtracting 1 from the result. Any annualized total rate
of return quotation is calculated by (x) adding 1 to the period total rate of
return quotation calculated above, (y) raising such sum to a power which is
equal to 365 divided by the number of days in such period, and (z) subtracting 1
from the result. Total rates of return may also be calculated on investments at
various sales charge levels or at net asset value. Any performance data which
is based on a reduced sales charge or net asset value per share would be reduced
if the maximum sales charge were taken into account.
Any current yield quotation for a Fund consists of an annualized historical
yield, carried at least to the nearest hundredth of one percent, based on a 30
calendar day or one month period and is calculated by (a) raising to the sixth
power the sum of 1 plus the quotient obtained by dividing the Fund's net
investment income earned during the period by the product of the average daily
number of shares outstanding during the period that were entitled to receive
dividends and the maximum public offering price per share on the last day of the
period, (b) subtracting 1 from the result, and (c) multiplying the result by 2.
The aggregate total rate of return for the Funds for the period from July 3,
1995 (commencement of operations) to September 30, 1995 was as follows: REIT
Index Fund, -0.09% (with maximum sales load) and 3.00% (with no sales load);
Realty Growth Fund, -6.17% (with maximum sales load) and -1.75% (with no sales
load); Residential Realty Income Fund, -5.36% (with maximum sales load) and -
0.90% (with no sales load); Retail Realty Income Fund, -6.17% (with maximum
sales load) and -1.75% (with no sales load); and Healthcare Realty Income Fund,
- -3.62% (with maximum sales load) and 0.93% (with no sales load). For the thirty
day period ended September 30, 1995, the yield of the Funds was as follows: REIT
Index Fund, 6.44% (with maximum sales load) and 6.64% (with no sales load);
Realty Growth Fund, 2.74% (with maximum sales load) and 2.87% (with no sales
load); Residential Realty Income Fund, 5.20% (with maximum sales load) and 5.45%
(with no sales load); Retail Realty Income Fund, 7.89% (with maximum sales load)
and 8.27% (with no sales load); and Healthcare Realty Income Fund, 6.19% (with
maximum sales load) and 6.48% (with no sales load). These performance
quotations should not be considered as representative of the Funds' performance
for any specified period in the future. Aggregate total return is calculated
similarly to annual total rate of return, except that the return is aggregated
rather than annualized.
4. DETERMINATION OF NET ASSET VALUE; VALUATION OF
SECURITIES; ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The net asset value of each share of each Fund is determined each day during
which the New York Stock Exchange is open for trading (a "Business Day"). As of
the date of this Statement of Additional Information, the New York Stock
Exchange is open for trading every weekday except for the following holidays (or
the days on which they are observed): New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. This determination of net asset value of shares of a Fund is
made once each day at 4 p.m. New York time by dividing the value of each Fund's
net assets (i.e., the value of its assets less its liabilities, including
expenses payable or accrued) by the number of shares of the Fund outstanding at
the time the determination is made. A share's net asset value is effective for
orders received by the Distributor prior to its calculation and prior to the
close of the Business Day on which such net asset value is determined.
For purposes of calculating net asset value per share, all assets and
liabilities initially expressed in non-U.S. currencies will be converted into
U.S. dollars at the prevailing market rates at the time of valuation. Equity
securities are valued at the last quoted sale price, at the time of valuation,
on the principal exchange or market where they are traded. Securities which
have not traded on the date of valuation, or securities for which sales prices
are not generally reported, are valued at the mean between the current bid and
asked prices. Securities listed on a non-U.S. exchange are valued at the last
quoted sale price available before the time when net assets are valued. Bonds
and other fixed income securities (other than short-term obligations) are valued
on the basis of valuations furnished by a pricing service, use of which has been
approved by the Board of Trustees. In making such valuations, the pricing
service utilizes both dealer-supplied valuations and electronic data processing
techniques that take into account appropriate factors such as institutional-size
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics and other market data, without exclusive
reliance upon quoted prices or exchange or over-the- counter prices, since such
valuations are believed to reflect more accurately the fair value of such
securities. Short-term obligations (maturing in 60 days or less) are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees. Futures contracts are normally valued at the settlement price on the
exchange on which they are traded. Securities for which there are no such
valuations are valued at fair value as determined in good faith by or at the
direction of the Board of Trustees.
Trading in securities on most non-U.S. exchanges and over-the-counter markets is
normally completed before 4:00 p.m. New York time and may also take place on
days on which the New York Stock Exchange is closed. If events materially
affecting the value of non-U.S. securities occur between the time when the
exchange on which they are traded closes and the time when a Fund's net asset
value is calculated, such securities will be valued at fair value in accordance
with procedures established by and under the general supervision of the Board of
Trustees.
Interest income on long-term obligations held for a Fund is determined on the
basis of interest accrued plus amortization of "original issue discount"
(generally, the difference between issue price and stated redemption price at
maturity) and premiums (generally, the excess of purchase price over stated
redemption price at maturity). Interest income on short-term obligations is
determined on the basis of interest accrued less amortization of any premium.
Subject to compliance with applicable regulations, the Trust has reserved the
right to pay the redemption price of shares of each Fund, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so distributed would be valued at the same amount as
that assigned to them in calculating the net asset value for the shares being
sold. If a holder of shares received a distribution in kind, that holder could
incur brokerage or other charges in converting the securities to cash.
Redemptions of shares of the REIT Index Fund made within six months of purchase
are subject to a redemption fee in the amount of 1% of the net asset value of
the shares redeemed. Redemptions of shares of the REIT Index Fund made between
six and twelve months after purchase will be subject to a redemption fee of
0.50% of the net asset value of the shares redeemed. No redemption fee is
imposed if the proceeds are immediately invested in shares of one or more of the
other Funds, but a further redemption of shares of the other Fund may result in
a redemption fee at the rate which would have been applicable if the shareholder
had continued to hold shares of the REIT Index Fund. All redemption fees are
payable to the applicable Fund. The Board of Trustees of the Trust has adopted
a policy of waiving the redemption fee otherwise applicable to a redemption by
an omnibus account.
Redemption proceeds are normally paid by check within seven days after receipt
of a redemption request. However, the right of any shareholder to receive
payment with respect to any redemption may be suspended or the payment of the
redemption proceeds postponed during any period in which (a) trading in the
markets a Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC, exists making disposal of a Fund's
investments or determination of its net asset value not reasonably practicable;
(b) the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or (c) the SEC has by order permitted such suspension.
Letter of Intent
If an investor anticipates purchasing sufficient shares to entitle the investor
to a quantity discount alone or in combination with any shares of other series
of the Trust within a 13-month period, the investor may obtain such shares at
the same reduced sales charge as though the total quantity were invested in one
lump sum by completing a Letter of Intent on the terms described below. Subject
to acceptance by the Distributor and the conditions mentioned below, each
purchase will be made at a public offering price applicable to a single
transaction of the dollar amount specified in the Letter of Intent. The
shareholder must inform the Distributor that the Letter of Intent is in effect
each time shares are purchased. The shareholder makes no commitment to purchase
additional shares, but if his or her purchases within 13 months plus the value
of shares credited toward completion of the Letter of Intent do not total the
sum specified, an increased sales charge will apply as described below. A
purchase not originally made pursuant to a Letter of Intent may be included
under a subsequent Letter of Intent executed within 90 days of the original
purchase if the Distributor is informed in writing of this intent within the
90-day period. The value of shares of a Fund held prior to the commencement of
a Letter of Intent may be included, at their cost or maximum offering price
(whichever is higher), as a credit toward the completion of a Letter of Intent,
but the reduced sales charge applicable to the amount covered by such Letter is
applied only to new purchases. Neither income dividends nor capital gain
distributions taken in additional shares will apply toward the completion of the
Letter of Intent. The value of any shares redeemed or otherwise disposed of by
the purchaser prior to termination or completion of the Letter of Intent is
deducted from the total purchases made under such Letter.
If the investment specified in the Letter of Intent is not completed (either
prior to or by the end of the 13-month period), the Administrator will redeem,
within 20 days of the expiration of the Letter of Intent, an appropriate number
of the shares in order to realize the difference between the reduced sales
charge that would apply if the investment under the Letter of Intent had been
completed and the sales charge that would normally apply to the number of shares
actually purchased. By completing and signing the Letter of Intent, the
shareholder irrevocably appoints the Administrator his or her attorney to
surrender for redemption any or all shares purchased under the Letter of Intent
with full power of substitution in the premises.
Right of Accumulation
A shareholder qualifies for cumulative quantity discounts on the purchase of
shares when his or her new investment, together with the current offering price
value of all holdings of that shareholder in the Funds, reaches a discount
level. See "INFORMATION ABOUT FUND SHARES - How to Purchase Shares" in the
Prospectus for the sales charges on quantity discounts. A shareholder must
provide the Distributor with information to verify that the quantity sales
charge discount is applicable at the time the investment is made.
Exchange Privilege
Shares of each Fund for which payment has been received (i.e., an established
account) may be exchanged at their net asset value for shares of each other
Fund. No initial sales charge is imposed on shares being acquired through an
exchange unless the sales charge of the Fund being exchanged into is greater
than the current sales charge of the Fund (in which case an initial sales charge
will be imposed at a rate equal to the difference). No redemption fee is
imposed on shares being disposed of through an exchange; however, a redemption
fee may apply to redemptions of shares acquired through an exchange of shares of
the REIT Index Fund at the rate which would have been applicable if the
shareholder had continued to hold shares of the REIT Index Fund. Exchanges will
be made only after proper instructions in writing or by telephone (an "Exchange
Request") are received for an established account by the Distributor.
Each Exchange Request must be in proper form (see "How to Redeem Shares" in the
Prospectus), and each exchange must involve either shares having an aggregate
value of at least $1,000 ($5,000 for the REIT Index Fund) or all the shares in
the shareholder's account. Each exchange involves the redemption of the shares
of a Fund to be exchanged and the purchase at net asset value of the shares of
the other Fund. Any gain or loss on the redemption of the shares exchanged is
reportable on the shareholder's Federal income tax return, unless such shares
were held in a tax-deferred retirement plan or other tax- exempt account. If
the Exchange Request is received by the Distributor in writing or by telephone
on any business day prior to 4:00 p.m. New York time, the exchange usually will
occur on that day if all the restrictions set forth above have been complied
with at that time. However, payment of the redemption proceeds by a Fund, and
thus the purchase of shares of the other Fund, may be delayed for up to seven
days if the Fund determines that such delay would be in the best interest of all
of its shareholders.
5. MANAGEMENT
The Trustees and officers of the Trust, their ages, and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. Asterisks indicate that those Trustees and
officers are "interested persons" (as defined in the 1940 Act) of the Trust.
Trustees of the Trust
Winsor H. Aylesworth*, age 48 - President and Treasurer of the Trust;
President and Director, GrandView Advisers, Inc. (since March, 1995);
President and Director, WHA Enterprises, Inc. (since September, 1991);
Executive Vice President, Loan Review Department, Bank of Boston Connecticut
(1990 - 1993). His address is 127 Grandview Drive, Glastonbury CT 06033.
Arthur Collins, age 66 - Trustee of the Trust; President, Collins Enterprises
LLC/Collins Development Corporation (since 1972); Director, Connecticut National
Bank (1986 - 1992). His address is 53 Forest Avenue, Old Greenwich, CT 06870.
Richard W. Jagolta, age 61 - Trustee of the Trust; Business Development Manager,
Polaroid Corporation (1957 - April, 1995). His address is 40 Blueridge Avenue,
Saugus, MA 01906.
Raymond H. Weaving, age 54 - Trustee of the Trust; Director of Lending,
Massachusetts Housing Investment Corporation (since November, 1993); Vice
President and Team Leader, Baybank Boston, Inc. (1992 - 1993); Consultant,
Malden Trust Co. (1991 - 1992); Division Executive, Bank of Boston (1965 -
1991). His address is 11 Perry Henderson Drive, Framingham, MA 01701.
Officers of the Trust
Winsor H. Aylesworth*, age 48 - President and Treasurer of the Trust; President
and Director, GrandView Advisers, Inc. (since March, 1995); President and
Director, WHA Enterprises, Inc. (since September, 1991); Executive Vice
President, Loan Review Department, Bank of Boston Connecticut (1990 - 1993). His
address is 127 Grandview Drive, Glastonbury CT 06033.
Lucille C. Carlson*, age 37 - Vice President of the Trust; Director, GrandView
Advisers, Inc. (since March, 1995); Director of Research, WHA Enterprises, Inc.
(since July, 1993) Assistant Vice President, Loan Review Department, Bank of
Boston Connecticut (1991 - April, 1995); Real Estate Management Officer, John
Hancock Properties, Inc. (1987 - 1990). Her address is 127 Grandview Drive,
Glastonbury CT 06033.
David F. Wolf*, age 48 - Vice President of the Trust; Director, GrandView
Advisers, Inc. (since March, 1995); Director of Marketing, WHA Enterprises, Inc.
(since July, 1993); Financial Planning Consultant, John Hancock Financial
Services, Inc. (1992 - May, 1995); real estate developer (1991 - 1992); Account
Executive, NCNB Securities, Inc. (1990 - 1991); Stock Broker, Shearson Lehman
Brothers, Inc. (1983 - 1990). Mr. Wolf is a registered representative of the
Funds' Distributor, Capital Investment Group, Inc. His address is 127 Grandview
Drive, Glastonbury CT 06033.
Frank P. Meadows, III*, age 34 - Secretary of the Trust; Commission Based
Broker, Capital Investment Group, Inc. (since October, 1993); Managing Director,
The Nottingham Company, Inc. (since January, 1988); Commission Based Broker,
Mid-Atlantic Securities (1989 - 1993). His address is 105 North Washington
Street, Rocky Mount, NC 27802.
To provide the initial capital of the Trust, on May 18, 1995, GrandView
Advisers, Inc. purchased an aggregate of 2000 shares of each of the Funds at the
net asset value of $10 per share for an aggregate purchase price of $100,000.
The Declaration of Trust of the Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the
Trust. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees of the
Trust, or in a written opinion of independent counsel, that such officers or
Trustees have not engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of their duties.
Principal Holders of Voting Securities
As of January 10, 1995, the Trustees and officers of the Trust as a group
owned beneficially (i.e., had voting and/or investment power) 55.151% of the
then outstanding shares of the REIT Index Fund; 61.704% of the then
outstanding shares of the Realty Growth Fund; 96.743% of the then outstanding
shares of the Residential Realty Income Fund; 99.985% of the then outstanding
shares of the Retail Income Fund; and 77.404% of the then outstanding shares
of the Healthcare Realty Income Fund. On the same date the following
shareholders owned of record more than 5% of the outstanding shares of
beneficial interest of the Funds. Except as provided below, no person is
known by the Trust to be the beneficial owner of more than 5% of the
outstanding shares of the Funds as of January 10, 1995.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent
REIT Index Fund
Winsor H. Aylesworth 1,972.283 shares 16.049%
127 GrandView Drive
Glastonbury, Connecticut 06033
Marie T. Aylesworth 972.763 shares 7.916%
435 South Gulfstream
Sarasota, Florida 34236
Maryanne S. Aylesworth 1,572.044 shares 12.792%
127 GrandView Drive
Glastonbury, Connecticut 06033
Lucille C. Carlson & Suk-Ying Chan 1,004.016 shares 8.170%
31 Glendale Road
West Hartford, Connecticut 06107
GrandView Advisers, Inc. 2,000.000 shares 16.274%
127 GrandView Drive
Glastonbury, Connecticut 06033
Chuck K. Chan 1,416.311 shares 11.525%
2146 Woodley Way
Mountain View, California 94040
Peter A. Harvey 995.857 shares 8.103%
42 Lords Hill Road
Stonington, Connecticut 06378
Robert F. Schatz 1,542.145 shares 12.459%
120 GrandView Drive
Glastonbury, Connecticut 06033
Realty Growth Fund
Winsor H. Aylesworth 2,084.268 shares 20.513%
127 GrandView Drive
Glastonbury, Connecticut 06033
Maryanne S. Aylesworth 1,665.909 shares 16.395%
127 GrandView Drive
Glastonbury, Connecticut 06033
Lucille Carlson & Suk-Ying Chan 519.384 shares 5.112%
31 Glendale Road
West Hartford, Connecticut 06107
GrandView Advisers, Inc. 2,000.000 shares 19.684%
127 GrandView Drive
Glastonbury, Connecticut 06033
Peter A. Harvey 1,049.765 shares 10.332%
42 Lords Hill Road
Stonington, Connecticut 06378
Charles P. Collins 925.281 shares 6.154%
31 Glendale Road
West Hartford, Connecticut 06107
Chuck K. Chan 980.509 shares 9.650%
2146 Woodley Way
Mountain View, California 94040
Residential Realty Income Fund
Winsor H. Aylesworth 2,057.485 shares 35.014%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Maryanne S. Aylesworth 1,627.292 shares 27.693%**
127 GrandView Drive
Glastonbury, Connecticut 06033
GrandView Advisers, Inc. 2,000.000 shares 34.036%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Retail Realty Income Fund
Winsor H. Aylesworth 2,083.538 shares 31.614%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Maryanne S. Aylesworth 1,644.526 shares 24.953%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Lucille Carlson & Suk-Ying Chan 529.419 shares 8.033%
31 Glendale Road
West Hartford, Connecticut 06107
GrandView Advisers, Inc. 2,024.975 shares 30.726%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Healthcare Realty Income Fund
Winsor H. Aylesworth 2,002.722 shares 25.490%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Marie T. Aylesworth 987.167 shares 12.564%
435 South Gulfstream
Sarasota, Florida 34236
Maryanne S. Aylesworth 1,591.830 shares 20.260%
127 GrandView Drive
Glastonbury, Connecticut 06033
Lucille C. Carlson & Suk-Ying Chan 486.976 shares 6.198%
31 Glendale Road
West Hartford, Connecticut 06107
GrandView Advisers, Inc. 2,000.000 shares 25.456%**
127 GrandView Drive
Glastonbury, Connecticut 06033
Dorothy J. Wolf 499.351 shares 6.356%
P.O Box 116
Conegtoga, Pennsylvania 17516
* All amounts indicated are believed by the Trust to be owned both of record
and beneficially by the indicated shareholders.
** Under applicable SEC regulations, this shareholder is deemed to control
the Fund in question.
Adviser
GrandView Advisers, Inc. manages the assets of each Fund pursuant to separate
investment advisory agreements (the "Advisory Agreements"). Subject to such
policies as the Board of Trustees may determine, the Adviser manages the
securities of each Fund and makes investment decisions for each Fund. The
Adviser furnishes at its own expense all services, facilities and personnel
necessary in connection with managing each Fund's investments and effecting
securities transactions for each Fund. Each of the Advisory Agreements will
continue in effect until April 26, 1997 and thereafter as long as such
continuance is specifically approved at least annually by the Board of
Trustees or by a vote of a majority of the outstanding voting securities of
the applicable Fund, and, in either case, by a majority of the Trustees of the
Trust who are not parties to the Advisory Agreement or interested persons of
any such party, at a meeting called for the purpose of voting on the Advisory
Agreement.
Winsor H. Aylesworth, Lucille C. Carlson and David F. Wolf own, respectively,
60%, 20% and 20% of the outstanding capital stock of the Adviser, and serve
as co-portfolio managers for the Funds. They collectively have over 50 years
experience in the commercial real estate finance and management and securities
businesses. Winsor H. Aylesworth, President, Treasurer and Director of the
Adviser, has had over ten years of experience with Bank of Boston Corporation
and Bank of Boston Connecticut. At Bank of Boston, Mr. Aylesworth's
responsibilities included forming and managing workout and OREO groups and
overseeing the disposition of real estate properties and other assets by the
OREO groups. Mr. Aylesworth was also responsible for managing Bank of Boston
Corporation's Florida Loan Production Office and for overseeing the granting
of construction loans on investment grade real estate. Lucille C. Carlson,
a Director of the Adviser, has managed cases on non-performing assets,
including loan restructuring and OREO management and disposition, for Bank of
Boston Connecticut. Ms. Carlson has served as a real estate asset management
officer, managing an institutional grade real estate portfolio comprised of
commercial property and other portfolios consisting of real estate property
and mortgages for John Hancock Properties Inc. and Cigna Investments Inc., and
has served as a securities and equity analyst. David F. Wolf, a Director of
the Adviser, has over eight years of experience as a financial consultant,
serving as a consultant for John Hancock Financial Services and Shearson
Lehman Brothers. Mr. Wolf has acted as an account executive for NCNB
Securities and has professional experience in the areas of real estate
developing, lending, workouts and asset management. Mr. Aylesworth, Ms.
Carlson and Mr. Wolf also own all of the outstanding capital stock of WHA
Enterprises, Inc., which since 1991 has published a monthly newsletter on the
REIT industry known as The Winsor Report. The Adviser was organized in March,
1995 and has no previous experience as an investment adviser.
Each of the Advisory Agreements provides that the Adviser may render services
to others. Each Advisory Agreement is terminable without penalty on not more
than 60 days' nor less than 30 days' written notice by the Trust when
authorized either by a vote of a majority of the outstanding voting securities
of the applicable Fund or by a vote of a majority of the Board of Trustees,
or by the Adviser on not more than 60 days' nor less than 30 days' written
notice, and will automatically terminate in the event of its assignment. Each
Advisory Agreement provides that neither the Adviser nor its personnel shall
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of security
transactions for the applicable Fund, except for willful misfeasance, bad
faith or gross negligence or reckless disregard of its or their obligations
and duties under the Advisory Agreement.
Upon termination of any contract with GrandView Advisers, Inc., or any
corporation affiliated therewith, acting as investment adviser or manager, the
Board of Trustees will promptly change the name of the Trust and of each of
the Funds to a name which does not include "GrandView" or any approximation
or abbreviation thereof.
The Prospectus contains a description of the fees payable to the Adviser for
services under the Advisory Agreements.
Administrator
Pursuant to an administrative services agreement (the "Administrative Services
Agreement"), Nottingham serves as the administrator and fund accounting,
dividend disbursing and transfer agent for the Funds. Under the
Administrative Services Agreement Nottingham provides the Trust with general
office facilities and supervises the overall administration of the Trust,
including, among other responsibilities, the negotiation of contracts and fees
with, and the monitoring of performance and billings of, the Trust's
independent contractors and agents; the preparation and filing of all
documents required for compliance by the Trust with applicable laws and
regulations; and arranging for the maintenance of books and records of the
Trust. The Administrator provides persons satisfactory to the Board of
Trustees to serve as Trustees and officers of the Trust. Such Trustees and
officers, as well as certain other employees and Trustees of the Trust, may
be directors, officers or employees of Nottingham or its affiliates.
The Administrative Services Agreement with the Trust provides that Nottingham
may render administrative services to others. The Administrative Services
Agreement with the Trust terminates automatically if it is assigned and may
be terminated without penalty by vote of a majority of the outstanding voting
securities of the Trust or by either party on not more than 90 days' written
notice. The Administrative Services Agreement with the Trust also provides
that neither Nottingham, as the Administrator, nor its personnel shall be
liable for any error of judgment or mistake of law or for any act or omission
in the administration or management of the Trust, except for willful
misfeasance, bad faith or gross negligence in the performance of its or their
duties or by reason of reckless disregard of its or their obligations and
duties under the Trust's Administrative Services Agreement.
The Prospectus contains a description of the fees payable to the Administrator
under the Administrative Services Agreement.
Distributor
Capital Investment Group serves as the Distributor of each Fund's shares
pursuant to a Distribution Agreement (the "Distribution Agreement") with the
Trust. Unless otherwise terminated, the Distribution Agreement for the Funds
remains in effect until April 26, 1996 and, for each Fund, thereafter will
continue from year to year upon annual approval by the Trust's Board of
Trustees, or by the vote of a majority of the outstanding voting securities
of the Trust and by the vote of a majority of the Board of Trustees who are
not parties to the Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. The
Agreement will terminate in the event of its assignment, as defined in the
1940 Act.
The Trust has adopted a Distribution Plan in accordance with Rule 12b-1 under
the 1940 Act with respect to shares of the Funds after concluding that there
is a reasonable likelihood that the Distribution Plan will benefit each Fund
and its shareholders. The Distribution Plan provides that each Fund will pay
a monthly distribution fee to the Distributor at an annual rate not to exceed
0.25% of such Fund's average daily net assets. The Board of Trustees does not
currently intend to authorize the payment of any such fee from the REIT Index
Fund, although they have the authority under the Distribution Plan to do so
in the future.
The Distributor may use all or any portion of any such distribution fee to pay
for employee salaries, bonuses and other overhead expenses, service fees to
be paid to certain banks and broker-dealers which provide certain services to
their customers who hold Fund shares, and other such distribution-related
expenses.
The Distribution Plan continues in effect if such continuance is specifically
approved at least annually by a vote of both a majority of the Trust's
Trustees and a majority of the Trustees who are not "interested persons" of
the Trust and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any agreement related to the Plan
(for purposes of this paragraph "Qualified Trustees"). The Distribution Plan
requires that the Trust and the Distributor provide to the Board of Trustees,
and the Board of Trustees review, at least quarterly, a written report of the
amounts expended (and the purposes therefor) under the Distribution Plan. The
Distribution Plan further provides that the selection and nomination of the
Qualified Trustees is committed to the discretion of the disinterested
Trustees (as defined in the 1940 Act) then in office. The Distribution Plan
may be terminated with respect to any Fund at any time by a vote of a majority
of the Trust's Qualified Trustees or by a vote of a majority of the
outstanding voting securities of the Fund. The Distribution Plan may not be
amended to increase materially the amount of a Fund's permitted expenses
thereunder without the approval of a majority of the outstanding securities
of that Fund and may not be materially amended in any case without a vote of
a majority of both the Trustees and Qualified Trustees. The Distributor will
preserve copies of any plan, agreement or report made pursuant to the
Distribution Plan for a period of not less than six years from the date of the
Plan, and for the first two years the Distributor will preserve such copies
in an easily accessible place.
As contemplated by the Distribution Plan, Capital Investment Group acts as the
agent of the Trust in connection with the offering of shares of the Funds
pursuant to the Distribution Agreement. After the prospectuses and periodic
reports of the Funds have been prepared, set in type and mailed to existing
shareholders, the Distributor pays for the printing and distribution of copies
thereof which are used in connection with the offering of shares of the Funds
to prospective investors.
David F. Wolf, a registered representative of the Funds' Distributor, may
receive brokerage commissions from the Distributor in connection with sales
of shares of the Funds. Mr. Wolf is a Vice President of the Trust and a
Director of GrandView Advisers, Inc.
Custodian
The Trust has entered into a Custodian Agreement with Wachovia Bank of North
Carolina, N.A., pursuant to which custodial services are provided for the
Trust and the Funds. The address of Wachovia Bank of North Carolina, N.A. is
301 North Main Street, Winston-Salem, North Carolina 27102.
Auditors
KPMG Peat Marwick LLP are the independent auditors for the Trust. The address
of KPMG Peat Marwick LLP is Suite 1900, 1021 East Cary Street, Richmond,
Virginia 23219.
Counsel
Bingham, Dana & Gould serve as counsel for the Trust. The address of Bingham,
Dana & Gould is 150 Federal Street, Boston, Massachusetts 02110.
6. PORTFOLIO TRANSACTIONS
The Trust trades securities for a Fund if it believes that a transaction net
of costs (including custodian charges) will help achieve the Fund's investment
objective. Changes in the portfolio of the REIT Index Fund will be effected
primarily to accommodate cash flows into and out of the Fund and changes in
the GrandView REIT Index. Changes in a Fund's investments are generally made
without regard to the length of time a security has been held, or whether a
sale would result in the recognition of a profit or loss. Therefore, the rate
of turnover is not a limiting factor when changes are appropriate. It is
anticipated that the portfolio turnover rate of the REIT Index Fund and of
each of the other Funds will not exceed 75% and 100%, respectively, in the
coming year. The amount of a Fund's brokerage commissions and realization of
taxable capital gains will tend to increase as the level of portfolio activity
increases.
The primary consideration in placing portfolio securities transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting broker-
dealers to execute transactions on behalf of each Fund on the basis of their
professional capability, the value and quality of their brokerage services,
and the level of their brokerage commissions. In the case of securities
traded in the over-the-counter market (where no stated commissions are paid
but the prices include a dealer's markup or markdown), the Adviser normally
seeks to deal directly with the primary market makers, unless in its opinion,
best execution is available elsewhere. In the case of securities purchased
from underwriters, the cost of such securities generally includes a fixed
underwriting commission or concession. From time to time, soliciting dealer
fees are available to the Adviser on the tender of a Fund's securities in so-
called tender or exchange offers. Such soliciting dealer fees are in effect
recaptured for the Funds by the Adviser. At present no other recapture
arrangements are in effect.
Under the Advisory Agreements, in connection with the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed to
seek for each Fund in its best judgment, prompt execution in an effective
manner at the most favorable price. Subject to this requirement of seeking
the most favorable price, securities may be bought from or sold to broker-
dealers who have furnished statistical, research and other information or
services to the Adviser or the Funds, subject to any applicable laws, rules
and regulations.
The investment advisory fee that each Fund pays to the Adviser will not be
reduced as a consequence of the Adviser's receipt of brokerage and research
services. While such services are not expected to reduce the expenses of the
Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff.
In certain instances there may be securities that are suitable as an
investment for a Fund, as well as for one or more of the Adviser's other
clients (including other Funds). When two or more clients are simultaneously
engaged in the purchase or sale of the same security, the securities are
allocated among clients in a manner believed to be equitable to each. It is
recognized that in some cases this system could adversely affect the price of
or the size of the position obtainable in a security for a Fund. When
purchases or sales of the same security for a Fund and for other portfolios
managed by the Adviser occur contemporaneously, the purchase or sale orders
may be aggregated in order to obtain any price advantages available to large
volume purchases or sales.
7. DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional Shares of Beneficial Interest (par value $0.0001
per share) of each series and to divide or combine the shares of any series
into a greater or lesser number of shares of that series without thereby
changing the proportionate beneficial interests in that series. While there
are at present no series of the Trust other than the Funds, the Trust has
reserved the right to create and issue additional series of shares, as well
as classes of shares within each series. Each share of each Fund represents
an equal proportionate interest in the Fund with each other share. Shares of
each series participate equally in the earnings, dividends and distribution
of net assets of the particular series upon liquidation or dissolution.
Shares of each series are entitled to vote separately to approve advisory
agreements or changes in investment policy, but shares of all series may vote
together in the election or selection of Trustees and accountants for the
Trust. In matters affecting only a particular Fund, only shares of that
particular Fund are entitled to vote.
Shareholders are entitled to one vote for each share held on matters on which
they are entitled to vote. Shareholders in the Trust do not have cumulative
voting rights, and shareholders owning more than 50% of the outstanding shares
of the Trust may elect all of the Trustees of the Trust if they choose to do
so and in such event the other shareholders in the Trust would not be able to
elect any Trustee. The Trust is not required to hold, and has no present
intention of holding, annual meetings of shareholders, but the Trust will hold
special meetings of shareholders when in the judgment of the Trustees it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have, under certain circumstances (e.g., upon the application and submission
of certain specified documents to the Trustees by a specified number of
shareholders), the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees. Shareholders also have under certain circumstances the right
to remove one or more Trustees without a meeting by a declaration in writing
by a specified number of shareholders. No material amendment may be made to
the Trust's Declaration of Trust without the affirmative vote of the holders
of a majority of the outstanding shares of each series affected by the
amendment. Shares have no preference, pre-emptive, conversion or similar
rights. Shares, when issued, are fully paid and non-assessable, except as set
forth below.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets (or all or substantially all of the assets
belonging to any series of the Trust), if approved by a vote of the holders
of two-thirds of the Trust's outstanding shares, voting as a single class, or
of the affected series of the Trust, as the case may be, except that if the
Trustees of the Trust recommend such sale of assets, merger or consolidation,
the approval by vote of the holders of a majority of the Trust's outstanding
shares, or of the affected series, would be sufficient. The Trust or any
series of the Trust, as the case may be, may be terminated (i) by a vote of
a majority of the outstanding voting securities of the Trust or the affected
series or (ii) by the Trustees by written notice to the shareholders of the
Trust or the affected series. If not so terminated, the Trust will continue
indefinitely.
It is not contemplated that share certificates will be issued for the shares.
However, upon the written request of a shareholder, the Trustees, in their
discretion, may authorize the issuance of share certificates and promulgate
appropriate rules and regulations as to their use.
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for its
obligations and liabilities. However, the Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations of the
Trust and provides for indemnification and reimbursement of expenses out of
Trust property for any shareholder held personally liable for the obligations
of the Trust. The Declaration of Trust of the Trust also provides that the
Trust may maintain appropriate insurance (e.g., fidelity bonding, and errors
and omissions insurance) for the protection of the Trust, its shareholders,
Trustees, officers, employees and agents covering possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.
The Trust's Declaration of Trust further provides that obligations of the
Trust are not binding upon the Trustees individually but only upon the
property of the Trust and that the Trustees will not be liable for any action
or failure to act, but nothing in the Declaration of Trust of the Trust
protects a Trustee against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
8. CERTAIN ADDITIONAL TAX MATTERS
Each of the Funds has elected to be treated and intends to qualify each year
as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of a
Fund's gross income, the amount of Fund distributions, and the composition and
holding period of a Fund's portfolio assets. Provided all such requirements
are met, no U.S. federal income or excise taxes will be required to be paid
by the Funds, although non-U.S. source income earned by each Fund may be
subject to non-U.S. withholding taxes. If a Fund should fail to qualify as
a "regulated investment company" for any year, the Fund would incur a regular
corporate federal income tax upon its taxable income, and distributions by
that Fund would generally be taxable as ordinary income to shareholders.
The portion of each Fund's ordinary income dividends attributable to dividends
received in respect of equity securities of U.S. issuers is normally eligible
for the dividends received deduction for corporations subject to U.S. federal
income taxes. Availability of the deduction for particular shareholders is
subject to certain limitations, and deducted amounts may be subject to the
alternative minimum tax and result in certain basis adjustments. Any dividend
that is declared by a Fund in October, November or December of any calendar
year, that is payable to shareholders of record in such a month and that is
paid the following January will be treated as if received by the shareholders
on December 31 of the year in which the dividend is declared.
Any Fund distribution will have the effect of reducing the per share net asset
value of shares in the Fund by the amount of the distribution. Shareholders
purchasing shares shortly before the record date of any distribution may thus
pay the full price for the shares and then effectively receive a portion of
the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of shares of
any of the Funds by a shareholder that holds such shares as a capital asset
will be treated as long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise as a short-term capital gain or
loss. However, any loss realized upon a disposition of shares in a Fund held
for six months or less will be treated as long-term capital loss to the extent
of any distributions of net capital gain made with respect to those shares.
Any loss realized upon a disposition of shares may also be disallowed under
rules relating to wash sales. Gain may be increased (or loss reduced) upon
a redemption of shares of a Fund within 90 days after their purchase followed
by any purchase (including purchases by exchange or by reinvestment) of shares
of that same Fund.
The Funds' transactions in forward contracts will be subject to special tax
rules that may affect the amount, timing and character of Fund income and
distributions to shareholders. For example, certain positions held by a Fund
on the last business day of each taxable year will be marked to market (i.e.,
treated as if closed out) on that day, and any gain or loss associated with
the positions will be treated as 60% long-term and 40% short-term capital gain
or loss. Certain positions held by a Fund that substantially diminish its
risk of loss with respect to other positions in its portfolio may constitute
"straddles," and may be subject to special tax rules that would cause deferral
of Fund losses, adjustments in the holding periods of Fund securities and
conversion of short-term into long-term capital losses. Certain tax elections
exist for straddles that may alter the effects of these rules. The Funds will
limit their activities in forward contracts to the extent necessary to meet
the requirements of Subchapter M of the Code.
Special tax considerations apply with respect to non-U.S. investments of the
Funds. Investment income received by a Fund from non-U.S. securities may be
subject to non-U.S. income taxes withheld at the source. The United States
has entered into tax treaties with many other countries that may entitle a
Fund to a reduced rate of tax or an exemption from tax on such income. The
Funds intend to qualify for treaty-reduced rates where available. It is not
possible, however, to determine the Funds' effective rate of non-U.S. tax in
advance since the amount of the Funds' respective assets to be invested within
various countries is not known.
9. FINANCIAL STATEMENTS
Attached.
<TABLE>
<CAPTION>
GRANDVIEW INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
May 22, 1995
<S> <C> <C> <C> <C> <C>
GrandView GrandView GrandView GrandView GrandView
REIT Index Realty Growth Residential Realty Retail Realty Healthcare Realty
Fund Fund Income Fund Income Fund Income Fund
ASSETS
Cash $20,000 $20,000 $20,000 $20,000 $20,000
Deferred organization expenses,
net (note B) 26,775 26,775 26,775 26,775 26,775
Total assets 46,775 46,775 46,775 46,775 46,775
LIABILITIES
Accrued organization expenses 26,775 26,775 26,775 26,775 26,775
Total liabilities 26,775 26,775 26,775 26,775 26,775
NET ASSETS
(applicable to 2,000 shares outstanding
each; unlimited shares of no par value
beneficial interest authorized) $20,000 $20,000 $20,000 $20,000 $20,000
NET ASSET VALUE PER SHARE (note F) $10,000 $10,000 $10,000 $10,000 $10,000
NET ASSETS CONSIST OF
Paid in capital $20,000 $20,000 $20,000 $20,000 $20,000
See accompanying notes to financial statements
</TABLE>
GRANDVIEW INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
May 22, 1995
(A) GrandView Investment Trust (the "Trust") was organized as a business trust
under the laws of the Commonwealth of Massachusetts on February 7, 1995.
The GrandView REIT Index Fund, GrandView Realty Growth Fund, GrandView
Residential Realty Income Fund, Grandview Retail Realty Income Fund, and
GrandView Healthcare Realty Income Fund (collectively the "Funds") are
open-ended management investment companies, each a series of the GrandView
Investment Trust. GrandView REIT Index Fund is a diversified fund and
GrandView Realty Growth Fund, GrandView Residential Realty Income Fund,
GrandView Retail Realty Income Fund, and GrandView Healthcare Realty Income
Fund are non-diversified funds. The Funds have an unlimited number of
authorized shares. The Funds had no operations other than organizational
matters and activities in connection with the purchase of 2,000 shares from
each of the five funds by GrandView Advisers, Inc. It is currently
intended that, upon the effectiveness of the Trust's registration statement
with the Securities and Exchange Commission, shares will be offered to the
public.
(B) The Funds will bear the cost of all organizational expenses including the
fees for registering and qualifying the Funds' shares for distribution.
Fees and expenses for the organization and registration of shares of the
Funds are estimated to be $133,875 and will be amortized over 60 months. In
the event any of the initial shares are redeemed by any holder thereof
during the 60 month amortization period, redemption proceeds will be
reduced by any unamortized organizational expenses in the same proportion
as the number of initial shares of the Fund(s) being redeemed bears to the
number of initial shares of the Fund(s) outstanding at the time of the
redemption.
(C) The Funds intend to qualify each year and elect to be taxed as regulated
investment companies under Subchapter M of the United States Internal
Revenue Code of 1986, as amended (the Code). Thus, the Funds intend to be
relieved of any federal income tax liability by distributing virtually all
of their net investment income and capital gains, if any, to their
shareholders. The Funds intend to avoid excise taxable tax liability by
making the required distributions under the Code.
(D) Subject to the general supervision of the Funds' Board of Trustees and in
accordance with the Funds' investment policies, GrandView Advisers, Inc.,
of East Glastonbury, Connecticut (the "Adviser"), will manage the Funds'
investments. For its advisory services, the Adviser will receive a monthly
management fee based on an annual percentage of the Funds' daily net assets
indicated as follows:
Management Fees
<TABLE>
<S> <C> <C> <C> <C>
Residential Retail Healthcare
REIT Realty Realty Realty Realty
Index Growth Income Income Income
Fund Fund Fund Fund Fund
0.35% 1.00% 0.70% 0.70% 0.70%
</TABLE>
(E) Capital Investment Group, Inc. will be the Funds' Distributor (the
"Distributor"). For its services, which include making payments to
qualified securities dealers for sales of Fund shares, the Distributor
will receive commissions consisting of the portion of the sales charge
on sales of fund shares remaining after amounts allowed to securities
dealers. Under a Distribution Plan applicable to all of the Funds
except for the Grandview REIT Index Fund, payments of up to 0.25%
annually of a Fund's average net assets may be made to the Distributor
and others to compensate and reimburse them for activities intended to
result in the sale of Fund shares and the servicing of accounts of
Fund shareholders.
GrandView REIT Index Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
Market
Shares Value
COMMON STOCKS - 81.16%
Real Estate Investment Trust
American Health Properties, Inc. 100 $2,162
Avalon Properties, Inc. 100 2,038
Camden Property Trust 200 4,425
Carr Realty Corporation 100 1,875
Chelsea GCA Realty, Inc. 100 2,987
Federal Realty Investment Trust 300 7,013
First Industrial Realty Trust, Inc 400 8,000
HGI Realty, Inc. 100 2,400
Meditrust Corporation 100 3,462
Merry Land & Investment Company 200 4,225
Mills Corp. 100 1,813
New Plan Realty Trust 100 2,212
Oasis Residential, Inc. 100 2,250
ROC Communities, Inc. 100 2,312
Realty Income Corporation 550 11,619
Security Capital Pacific Trust 500 9,500
Taubman Centers, Inc. 200 2,000
Washington Real Estate Investment 200 3,050
Weingarten Realty Investors 100 3,538
Wellsford Residential Property Trust 550 11,756
Total Common Stocks (Cost $88,384) 88,637
PREFERRED STOCKS - 0.15%
Real Estate Investment Trust
American Health Properties, Inc. 10 163
Total Preferred Stocks (Cost $196) 163
Total Value of Investments (Cost $88,580) 81.31% 88,800
Other Assets Less Liabilities 18.69% 20,406
Net Assets 100.00% $109,206
(a) Aggregate cost for federal income tax purposes is the same. Unrealized
appreciation (depreciation) of securities for federal income tax purposes
is as follow:
Unrealized appreciation $1,170
Unrealized depreciation (950)
Net unrealized appreciation/depreciation $220
See acccompanying notes to financial statements
GrandView REIT Index Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
ASSETS
Investments at value (Cost $88,580) $88,800
Cash 18,993
Interest receivable 103
Dividends receivable 905
Reserve premium 50
Deferred organization expenses, net (note 3) 26,775
Total assets 135,626
LIABILITIES
Payable to advisor 26,420
Total liabilities 26,420
NET ASSETS
(applicable to 10,710 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $109,206
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($109,206 / 10,710 shares) $10.20
OFFERING PRICE PER SHARE
(100 / 97 of $10.20 adjusted to nearest cent) $10.51
NET ASSETS CONSIST OF:
Paid-in capital $109,042
Undistributed net investment loss (56)
Net unrealized appreciation on investments 220
$109,206
See accompanying notes to financial statements
GrandView REIT Index Fund
STATEMENT OF OPERATIONS
September 30, 1995
(Unaudited)
INVESTMENT INCOME
Income
Interest $174
Dividends 1,047
Total Income 1,221
Expenses
Investment advisory fees (note 2) 36
Fund administration fees (note 2) 23
Professional fees 29
Custody fees 12
Shareholder recordkeeping fees 27
Registration and filing administration fees 129
Operating expenses 91
Shareholder servicing expenses 168
Total expenses 515
Less:
Expense reimbursements (note 2) (355)
Investment advisory fees waived (note 2) (36)
Fund administration fees waived (note 2) (16)
Net expenses 108
Net investment income 1,113
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Increase in unrealized appreciation on investments 220
Net realized and unrealized gain on investments 220
Net increase in net assets resulting from operations $1,333
See accompanying notes to financial statements
GrandView REIT Index Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the
period from
July 3, 1995
(commencement
of operations) to
September 30,
1995
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income $1,113
Increase in unrealized appreciation on investments 220
Net increase in net assets resulting from operations 1,333
Distributions to shareholders from
Net investment income (1,169)
Capital share transactions
(a)Increase in net assets resulting from
capital share transactions 109,042
Total increase in net assets 109,206
NET ASSETS
Beginning of period 0
End of period $109,206
(a) A summary of capital share activity follows:
For the period from July 3, 1995
(commencement of operations)
to September 30, 1995
Shares Value
Shares sold 10,627 $108,200
Shares issued for reinvestment
of distributions 83 842
10,710 109,042
Shares redeemed 0 0
Net increase 10,710 $109,042
See accompanying notes to financial statements
GrandView REIT Index Fund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the
period from
July 3, 1995
(commencement
of operations)
September 30
1995
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from investment operations
Net investment income 0.10
Net realized and unrealized gain on investments 0.21
Total from investment operations 0.30
Distributions to shareholders from
Net investment income (0.11)
Net Asset Value, End of Period $10.20
Total return (a) 3.00%
Ratios/supplemental data
Net assets, end of period $109,206
Ratio of expenses to average net assets
Before expense reimbursements 5.03%(b)
After expense reimbursements 1.05%(b)
Ratio of net investment income to average net assets
Before expense reimbursements 6.89%(b)
After expense reimbursements 10.87%(b)
Portfolio turnover rate 0.00%
(a) Does not include sales load.
(b) Annualized.
See accompanying notes to financial statements
GrandView REIT Index Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GrandView REIT Index Fund (the "Fund") is a non-diversified series of
shares of beneficial interest of 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 market value. Securities listed on an exchange or quoted
on a national market system are valued at 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 an independent pricing service or determined following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates market value.
B. Federal Income Taxes - No provision has been made for federal income
taxes since 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.
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.
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.
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 or reimburse all or a portion of its fee 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 $36 ($0.01 per share) and has
voluntarily reimbursed a portion of the Fund's operating expenses for the
period ended September 30, 1995. The total fees waived and expenses
reimbursed by the Advisor amounted to $391.
GrandView REIT Index Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The Fund's administrator, The Nottingham Company, Inc. (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. Addition-
ally, 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. The Administrator has voluntarily waived a portion
of its fees and reimbursed the Fund for expenses amounting to $16 for the
period ended September 30, 1995.
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 to September 30, 1995, the Distributor retained sales
charges in the amount of $17.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
At September 30, 1995, the Advisor held 2,000 or 19% of the Fund shares
outstanding.
NOTE 3 - 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 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases of investments, other than short-term investments, aggregated
$88,580 for the period ended September 30, 1995. There were no sales of
investments during this period.
NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS
For the period ended September 30, 1995, the Fund made distributions
classified as ordinary income in the amount of $1,169. Shareholders
should consult a tax advisor on how to report distributions for state and
local income tax purposes.
GrandView Realty Growth Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
Market
Shares Value
COMMON STOCKS - 87.47%
Real Estate Investment Trust - 87.47%
(a)Angeles Participating Mortgage Trus 3,000 $1,687
(a)Banyan Hotel Investment Fund 1,500 1,875
Bedford Property Investors, Inc. 200 1,325
Burnham Pacific Properties, Inc. 200 2,350
Crescent Real Estate Equities, Inc. 200 6,150
Crown American Realty Trust 300 2,475
First Union Real Estate Investments 200 1,475
G&L Realty Corporation 200 2,025
Highwoods Properties, Inc. 200 5,275
(a)Homeplex Mortgage Investments Corpo 1,000 1,750
Innkeepers USA Trust 600 5,700
IRT Property Company 400 3,850
Jameson Inns, Inc. 400 3,550
(a)Koger Equity, Inc. 400 3,950
(a)Meridian Point Realty Trust VII Com 2,000 1,750
MGI Properties, Inc. 300 4,650
(a)Mortgage and Realty Trust 3,000 937
RFS Hotel Investors, Inc. 200 3,050
RPS Realty Trust 500 2,250
RYMAC Mortgage Investment Corporati 5,700 6,412
Sizeler Property Investors, Inc. 300 2,813
(a)TIS Mortgage Investment Company 1,000 2,000
United Mobile Homes, Inc. 300 2,925
(a)Vinland Property Trust 2,900 3,263
Winston Hotels, Inc. 500 5,625
Total Common Stocks (Cost $79,041) 79,112
Principal Market
Amount Value
REPURCAHSE AGREEMENT (b) - 11.55%
Wachovia Bank $10,448 10,448
5.34%, due October 2, 1995
(Cost $10,448)
Total Value of Investments (Cost $89,489) 99.03% 89,560
Other Assets Less Liabilities 0.97% 880
Net Assets 100.00% $90,440
(Continued)
GrandView Realty Growth Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
(a) Non-income producing investment.
(b) Joint repurchase agreement entered into September 30, 1995, with a
maturity value of $15,080,609 collateralized by $11,129,000 U.S.
Treasury Notes, 9.8750%, due November 15, 2015. The aggregate market
value of the collateral at September 30, 1995 was $15,374,653. The
Fund's pro rata interest in the collateral at September 30, 1995 was
$10,655. The Fund's pro rata interest in the joint repurchase
agreement is taken into possession by the Fund upon entering into the
repurchase agreement. The collateral is marked to market daily to
ensure its market value is at least 102 percent of the sales price of
the repurchase agreement.
(c) Aggregate cost for federal income tax purposes is the same. Unrealized
appreciation (depreciation) of securities for federal income tax
purposes is as follow:
Unrealized appreciation $1,793
Unrealized depreciation (1,721)
Net unrealized appreciation $72
See acccompanying notes to financial statements
GrandView Realty Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
ASSETS
Investments at value (Cost $89,488) $89,561
Interest receivable 151
Dividends receivable 223
Deferred organization expenses, net (note 4) 26,775
Due from advisor (note 2) 508
Total assets 117,218
LIABILITIES
Accrued expenses (66)
Payable to Adviser 26,775
Disbursements in excess of cash on demand deposit 69
Total liabilities 26,778
NET ASSETS
(applicable to 9,233 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $90,440
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($90,440 / 9,233 shares) $9.80
OFFERING PRICE PER SHARE
(100 / 95.5 of $9.80 adjusted to nearest cent) $10.26
NET ASSETS CONSIST OF:
Paid-in capital $89,520
Undistributed net investment loss 64
Undistributed net realized gain on investments 784
Net unrealized appreciation on investments 72
$90,440
See accompanying notes to financial statements
GrandView Realty Growth Fund
STATEMENT OF OPERATIONS
September 30, 1995
(Unaudited)
INVESTMENT INCOME
Income
Interest $295
Dividends 295
Total Income 590
Expenses
Investment advisory fees (note 2) 102
Fund administration fees (note 2) 31
Professional fees 29
Custody fees 12
Securities pricing fees 60
Shareholder recordkeeping fees 11
Registration and filing administration fees 146
Operating expenses 342
Shareholder servicing expenses 178
Total expenses 911
Less:
Expense reimbursements (note 2) (574)
Investment advisory fees waived (note 2) (102)
Fund administration fees waived (note 2) (31)
Net expenses 204
Net investment income 386
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions 784
Increase in unrealized appreciation on investments 72
Net realized and unrealized gain on investments 856
Net increase in net assets resulting from operations $1,242
See accompanying notes to financial statements
GrandView Realty Growth Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the
period from
July 3,
(commencement
of operations) to
September 30,
1995
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income $386
Net realized gain from investment transactions 784
Increase in unrealized appreciation on
investments 72
Net increase in net assets resulting from
operations 1,242
Distributions to shareholders from
Net investment income (322)
Net realized gain from investment transactions 0
Decrease in net assets resulting from distributions (322)
Capital share transactions
(a)Increase in net assets resulting from
capital share transactions 89,520
Total increase in net assets 90,440
NET ASSETS
Beginning of period 0
End of period $90,440
(a) A summary of capital share activity follows:
For the period from July 3, to
(commencement of operations) to
September 30, 1995
Shares Value
Shares sold 9,207 $89,268
Shares issued for reinvestment
of distributions 26 252
9,233 89,520
Shares redeemed 0 0
Net increase 9,233 $89,520
See accompanying notes to financial statements
GrandView Realty Growth Fund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the
period from
July 3,
(commencement
of operations
September 30,
1995
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from investment operations
Net realized and unrealized gain on investments (0.20)
Total from investment operations (0.19)
Net Asset Value, End of Period $9.80
Total return (a) (1.75)%
Ratios/supplemental data
Net assets, end of period $90,440
Ratio of expenses to average net assets
Before expense reimbursements 8.92%(b)
After expense reimbursements 1.99%(b)
Ratio of net investment income to average net assets
Before expense reimbursements (0.77)%(b)
After expense reimbursements 0.93% (b)
Portfolio turnover rate 4.77%
(a) Does not include sales load.
(b) Annualized.
See accompanying notes to financial statements
GrandView Realty Growth Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GrandView Realty Growth Fund (the "Fund") is a non-diversified
series of shares of beneficial interest of 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 market value. Securities listed on an exchange or
quoted on a national market system are valued at 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 an independent pricing service or determined
following procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates market value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since 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.
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.
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.
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 or reimburse all or a portion of
its fee 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 $102 ($0.01 per
share) and has voluntarily reimbursed a portion of the Fund's operating
expenses for the period ended September 30, 1995. The total fees
waived and expenses reimbursed by the Advisor amounted to $676.
GrandView Realty Growth Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The Fund's administrator, The Nottingham Company, Inc. (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. The
Administrator has voluntarily waived a portion of its fees amounting to
$31 for the period ended September 30, 1995.
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 to September 30, 1995, the Distributor
retained sales charges of $8.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
At September 30, 1995, the Advisor held 2,000 shares or 22% of the Fund
shares outstanding.
NOTE 3 - DISTRIBUTION COSTS
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 costs of distributing and
promoting the sales of its shares and servicing of its shareholder
accounts.
The Plan provides that the Fund may incur certain costs, 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 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.
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.
GrandView Realty Growth Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
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 investments, other than short-term investments,
aggregated $80,068 and $ 1,811 respectively, for the period ended
September 30, 1995.
GrandView Residential Realty Income Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
Market
Shares Value
COMMON STOCKS - 78.28%
Real Estate Investment Trust -78.28%
Asset Investors Corporation 500 $1,375
ASR Investments Corporation 400 7,200
Boddie-Noell Properties, Inc. 200 2,575
Bay Apartment Communities, Inc. 100 2,150
Columbus Realty Trust 200 3,800
Essex Property Trust, Inc. 300 5,287
Irvine Apartment Communitites, Inc. 100 1,762
Merry Land & Investment Company, Inc. 100 2,113
Pacific Gulf Properties, Inc. 200 3,250
Real Estate Investment Trust of Californi 200 3,325
American Real Estate Investment Corporati 400 3,300
Sizeler Property Investors, Inc. 200 1,875
South West Property Trust 200 2,550
United Dominion Realty 200 2,850
Walden Residential Properties, Inc. 100 1,888
Total Common Stocks (Cost $45,642) 45,300
Principal Interes Maturity Market
Amount Rate Date Value
REPURCHASE AGREEMENT (a) - 19.85%
Wachovia Bank 11,487 6.45% 10-01-95 11,487
(Cost $11,487)
Total Value of Investments (Cost $57,129)(b) 98.13% 56,787
Other Assets Less Liabilities 1.87% 1,083
Net Assets 100.00% $57,870
(a) Joint repurchase agreement entered into September 30, 1995, with a
maturity value of $15,080,609 collateralized by $11,129,000 U.S.
Treasury Notes, 9.8750%, due November 15, 2015. The aggregate market
value of the collateral at September 30, 1995 was $15,374,653. The
Fund's pro rata interest in the collateral at September 30, 1995 was
$11,715. The Fund's pro rata interest in the joint repurchase
agreement is taken into possession by the Fund upon entering into the
repurchase agreement. The collateral is marked to market daily to
ensure its market value is at least 102 percent of the sales price of
the repurchase agreement.
(b) Aggregate cost for federal income tax purposes is the same. Unrealized
appreciation (depreciation) of securities for federal income tax
purposes is as follow:
Unrealized appreciation $427
Unrealized depreciation (769)
Net unrealized depreciation ($342)
See acccompanying notes to financial statements
GrandView Residential Realty Income Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
ASSETS
Investments at value (Cost $57,129) $56,787
Interest receivable 114
Dividends receivable 463
Reserve premium 50
Deferred organization expenses, net (note 4) 26,775
Total assets 84,189
LIABILITIES
Accrued expenses 1,352
Payable to advisor 24,817
Disbursements in excess of cash on demand deposit 150
Total liabilities 26,319
NET ASSETS
(applicable to 5,860 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $57,870
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($57,870 / 5,860 shares) $9.87
OFFERING PRICE PER SHARE
(100 / 95.5 of $9.87 adjusted to nearest cent) $10.34
NET ASSETS
Paid-in capital $57,885
Undistributed net investment income 327
Net unrealized depreciation on investments (342)
$57,870
See accompanying notes to financial statements
GrandView Residential Realty Income Fund
STATEMENT OF OPERATIONS
For the period ended September 30, 1995
(Unaudited)
INVESTMENT INCOME
Income
Interest $187
Dividends 570
Total Income 757
Expenses
Custody fees 293
Registration and filing administration fees 278
Professional fees 154
Investment advisory fees (note 2) 55
Fund administration fees (note 2) 24
Securities pricing fees 33
Shareholder recordkeeping fees 9
Operating expenses 991
Shareholder servicing expenses 316
Total expenses 2,153
Less:
Expense reimbursements (note 2) (1,958)
Investment advisory fees waived (note 2) (55)
Fund administration fees waived (note 2) (2)
Net expenses 138
Net investment income 619
UNREALIZED LOSS ON INVESTMENTS
Increase in unrealized depreciation on investments (342)
Unrealized loss on investments (342)
Net increase in net assets resulting from operations $277
See accompanying notes to financial statements
GrandView Residential Realty Income Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the
period from
July 3, 1995
(commencement
of operations) to
September 30,
1995
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income $619
Increase in unrealized depreciation on investments (342)
Net increase in net assets resulting from operations 277
Distributions to shareholders from
Net investment income (292)
Decrease in net assets resulting from distributions (292)
Capital share transactions
Increase in net assets resulting from
capital share transactions (a) 57,885
Total increase in net assets 57,870
NET ASSETS
Beginning of period 0
End of period $57,870
(a) A summary of capital share activity follows:
For the period from July 3, 1995
(commencement of operations)
to September 30, 1995
Shares Value
Shares sold 5,841 $57,693
Shares issued for reinvestment
of distributions 19 192
Net increase 5,860 $57,885
See accompanying notes to financial statements
GrandView Residential Realty Income Fund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the
period from
July 3, 1995
(commencement
of operations)
September 30,
1995
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income(loss) from investment operations
Net investment income 0.11
Net unrealized loss on investments (0.19)
Total from investment operations (0.08)
Distributions to shareholders from
Net investment income (0.05)
Total distributions (0.05)
Net Asset Value, End of Period $9.87
Total return (a) (0.90%)
Ratios/supplemental data
Net assets, end of period $57,870
Ratio of expenses to average net assets
Before expense reimbursements 27.29%(b)
After expense reimbursements 1.74%(b)
Ratio of net investment income to average net assets
Before expense reimbursements (17.72%)(b)
After expense reimbursements 7.83%(b)
Portfolio turnover rate 0.00%
(a) Does not include sales load.
(b) Annualized
See accompanying notes to financial statements
GrandView Residential Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GrandView Residential Realty Income Fund (the "Fund") is a non-
diversified series of shares of beneficial interest of 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 market value. Securities listed on an exchange or
quoted on a national market system are valued at 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 an independent pricing service or determined
following procedures approved by the Board of Trustees.
Short-term investments are valued at cost which approximates
market value.
B. Federal Income Taxes - No provision has been made for
federal income taxes since 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.
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.
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.
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 or reimburse all or a portion of its fee 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 $55 ($0.02 per share) and has
voluntarily reimbursed a portion of the Fund's operating expenses for the
period ended September 30, 1995. The total fees waived and expenses
reimbursed by the Advisor amounted to $2,013.<PAGE>
GrandView Residential Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The Fund's administrator, The Nottingham Company, Inc. (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. The Administrator has
voluntarily waived a portion of its fees and reimbursed the Fund for
expenses amounting to $2 for the period ended September 30, 1995.
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 to September 30, 1995, the Distributor retained sales
charges in the amount of $8.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
At September 30, 1995, the Advisor held 2,000 shares or 34% of the Fund
shares outstanding.
NOTE 3 - DISTRIBUTION COSTS
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 costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, 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 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 ended September 30, 1995.
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.
GrandView Residential Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
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 of investments, other than short-term investments, aggregated
$45,642 for the period ended September 30, 1995. There were no sales of
investments during this period.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
For the period ended September 30, 1995, the Fund made distributions
classified as ordinary income in the amount of $292. Shareholders should
consult a tax advisor on how to report distributions for state and local
income tax purposes.
GrandView Retail Realty Income Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
Market
Shares Value
COMMON STOCKS - 93.55%
Real Estate Investment Trust
Alexander Haagen Properties, Inc. 100 $1,163
Burnham Pacific Properties, Inc. 400 4,700
Crown American Realty Trust 300 2,475
DeBartolo Realty Corporation 200 2,800
Excel Realty Trust, Inc. 200 3,950
Factory Stores of America, Inc. 200 3,975
First Washington Realty Trust, Inc. 200 3,500
HRE Properties 200 2,800
IRT Property Company 200 1,925
Kranzco Realty Trust 300 5,063
Malan Realty Investors, Inc. 200 3,125
Mark Centers Trust 200 2,450
Mid-America Realty 600 4,725
Mid-Atlantic Realty Trust 300 2,681
Regency Realty Corporation 200 3,525
Sizeler Property Investors, Inc. 200 1,875
Tucker Properties Corporation 200 2,225
Western Investment Real Estate Trust 200 2,275
Total Common Stocks (Cost $55,990) 55,232
Principal Market
Amount Value
REPURCHASE AGREEMENT (a) - 4.58%
Wachovia Bank $2,703 2,703
6.45%, due October 1, 1995
(Cost $2,703)
Total Value of Investments (Cost $58,693) 98.13% 57,935
Other Assets Less Liabilities 1.86% 1,101
Net Assets 100.00% $59,036
(a) Joint repurchase agreement entered into September 30, 1995, with a
maturity value of $15,080,609 collateralized by $11,129,000 U.S.
Treasury Notes, 9.8750%, due November 15, 2015. The aggregate market
value of the collateral at September 30, 1995 was $15,374,653. The
Fund's pro rata interest in the collateral at September 30, 1995 was
$2,752. The Fund's pro rata interest in the joint repurchase agreement
is taken into possession by the Fund upon entering into the repurchase
agreement. The collateral is marked to market daily to ensure its
market value is at least 102 percent of the sales price of the
repurchase agreement.
(b) Aggregate cost for federal income tax purposes is the same. Unrealized
appreciation (depreciation) of securities for federal income tax
purposes is as follow:
Unrealized appreciation $638
Unrealized depreciation (1,397)
Net unrealized appreciation/depreciation ($759)
See acccompanying notes to financial statements
GrandView Retail Realty Income Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
ASSETS
Investments at value (Cost $58,694) $57,935
Cash 122
Interest receivable 83
Dividends receivable 525
Deferred organization expenses, net (note 4) 26,775
Total assets 85,440
LIABILITIES
Accrued expenses 1,715
Payable to advisor 24,689
Total liabilities 26,404
NET ASSETS
(applicable to 6,041 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $59,036
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($59,036 / 6,041 shares) $9.77
OFFERING PRICE PER SHARE
(100 / 95.5 of $9.77 adjusted to nearest cent) $10.23
NET ASSETS CONSIST OF:
Paid-in capital $59,263
Undistributed net investment income 532
Net unrealized depreciation on investments (759)
$59,036
See acccompanying notes to financial statements
GrandView Retail Realty Income Fund
STATEMENT OF OPERATIONS
September 30, 1995
(Unaudited)
INVESTMENT INCOME
Income
Interest $155
Dividends 843
Total Income 998
Expenses
Investment advisory fees (note 2) 54
Fund administration fees (note 2) 21
Professional fees 154
Custody fees 296
Securities pricing fees 142
Shareholder recordkeeping fees 10
Registration and filing administration fees 269
Operating expenses 991
Shareholder servicing expenses 338
Total expenses 2,275
Less:
Expense reimbursements (note 2) (2,086)
Investment advisory fees waived (note 2) (54)
Net expenses 135
Net investment income 863
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Increase in unrealized depreciation on investments (759)
Net realized and unrealized loss on investments (759)
Net increase in net assets resulting from operations $104
See accompanying notes to financial statements
GrandView Retail Realty Income Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the
period from
July 3, 1995
(commencement
of operations) to
September 30,
1995
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income $863
Increase in unrealized depreciation on investments (759)
Net increase in net assets resulting from
operations 104
Distributions to shareholders from
Net investment income (331)
Decrease in net assets resulting from distributions (331)
Capital share transactions
(a)Increase in net assets resulting from
capital share transactions 59,263
Total increase in net assets 59,036
NET ASSETS
Beginning of period 0
End of period $59,036
(a) A summary of capital share activity follows:
For the period from July 3, 1995
(commencement of operations)
to September 30, 1995
Shares Value
Shares sold 6,020 $59,061
Shares issued for reinvestment
of distributions 21 203
6,041 59,263
Shares redeemed 0 0
Net increase(decrease) 6,041 $59,263
See accompanying notes to financial statements
GrandView Retail Realty Income Fund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the
period from
July 3, 1995
(commencement
of operations)
September 30,
1995
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from investment operations
Net investment income 0.15
Net realized and unrealized loss on investments (0.32)
Total from investment operations (0.17)
Distributions to shareholders from
Net investment income (0.06)
Total distributions (0.06)
Net Asset Value, End of Period $9.77
Total return (a) (1.75%)
Ratios/supplemental data
Net assets, end of period $59,036
Ratio of expenses to average net assets
Before expense reimbursements 29.48%(b)
After expense reimbursements 1.74%(b)
Ratio of net investment income(loss) to average net assets
Before expense reimbursements (16.55%) (b)
After expense reimbursements 11.19%(b)
Portfolio turnover rate 0.00%
(a) Does not include sales load
(b) Annualized.
See accompanying notes to financial statements
GrandView Retail Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GrandView Retail Realty Income Fund (the "Fund") is a non-diversified
series of shares of beneficial interest of 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 market value. Securities listed on an exchange or quoted
on a national market system are valued at 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 an independent pricing service or determined following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates market value.
B. Federal Income Taxes - No provision has been made for federal income
taxes since 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.
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.
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.
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 or reimburse all or a portion of its fee 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 $54 ($0.02 per share) and has
voluntarily reimbursed a portion of the Fund's operating expenses for the
period ended September 30, 1995. The total fees waived and expenses
reimbursed by the Advisor amounted to $2,140.
GrandView Retail Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The Fund's administrator, The Nottingham Company, Inc. (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. Addition-
ally, 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 a s 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 to September 30, 1995, there were no sales charges
distributed.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
At September 30, 1995, the Advisor held 2,025 shares or 34% of the Fund
shares outstanding.
NOTE 3 - DISTRIBUTION COSTS
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 costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, 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 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 ended September 30, 1995.
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.
GrandView Retail Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
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 of investments, other than short-term investments, aggregated
$55,990 for the period ended September 30, 1995. There were no sales of
investments during this period.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
For the period ended September 30, 1995, the Fund made distributions
classified as ordinary income in the amount of $331. Shareholders should
consult a tax advisor on how to report distributions for state and local
income tax purposes.
GrandView Healthcare Realty Income Fund
PORTFOLIO OF INVESTMENTS
September 30, 1995
(Unaudited)
Market
Shares Value
COMMON STOCKS - 90.64%
Real Estate Investment Trust
American Health Properties, Inc. 100 $2,162
Capstone Capital Trust, Inc. 400 7,550
G&L Realty Corporation 500 5,062
Health Care Property Investors, Inc. 100 3,387
Health Care REIT, Inc. 600 9,375
Health and Retirement Property Trust 500 7,813
Healthcare Realty Trust, Inc. 100 2,075
LTC Properties, Inc. 200 2,875
Meditrust Corporation 100 3,463
National Health Investors, Inc. 100 3,025
Nationwide Health Properties, Inc. 100 4,100
OMEGA Healthcare Investors, Inc. 100 2,675
Universal Health Realty Income Trust 700 11,638
Total Common Stocks (Cost $65,630) 65,200
Principal Market
Amount Value
REPURCAHSE AGREEMENT (b) - 6.80%
Wachovia Bank 4,894 4,894
6.45%, due October 1, 1995
(Cost $4,894)
Total Value of Investments (Cost $70,524) 97.44% 70,094
Other Assets Less Liabilities 2.56% 1,841
Net Assets 100.00% $71,935
(a) Joint repurchase agreement entered into September 30, 1995, with a
maturity value of $15,080,609 collateralized by $11,129,000 U.S. Treasury
Notes, 9.8750%, due November 15, 2015. The aggregate market value of the
collateral at September 30, 1995 was $15,374,653. The Fund's pro rata
interest in the collateral at September 30, 1995 was $4,997. The Fund's
pro rata interest in the joint repurchase agreement is taken into
possession by the Fund upon entering into the repurchase agreement. The
collateral is marked to market daily to ensure its market value is at
least 102 percent of the sales price of the repurchase agreement.
(b) Aggregate cost for federal income tax purposes is the same. Unrealized
appreciation (depreciation) of securities for tax purposes is as follow
Unrealized appreciation $2,067
Unrealized depreciation (2,496)
Net unrealized appreciation/depreciation ($430)
See acccompanying notes to financial statements
GrandView Healthcare Realty Income Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(Unaudited)
ASSETS
Investments at value (Cost $70,524) $70,094
Cash 1,063
Interest receivable 150
Dividends receivable 285
Deferred organization expenses, net (note 4) 26,775
Total assets 98,367
LIABILITIES
Accrued expenses 1,676
Payable to advisor 24,756
Total liabilities 26,432
NET ASSETS
(applicable to 7,164 shares outstanding; unlimited
shares of no par value beneficial interest authorized) $71,935
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE
($71,935 / 7,164 shares) $10.04
OFFERING PRICE PER SHARE
(100 / 95.5 of $10.04 adjusted to nearest cent) $10.51
NET ASSETS CONSIST OF:
Paid-in capital $71,988
Undistributed net investment income 377
Net unrealized depreciation on investments (430)
$71,935
See accompanying notes to financial statements
GrandView Healthcare Realty Income Fund
STATEMENT OF OPERATIONS
September 30, 1995
(Unaudited)
INVESTMENT INCOME
Income
Interest $262
Dividends 649
Total Income 911
Expenses
Investment advisory fees (note 2) 63
Fund administration fees (note 2) 25
Professional fees 154
Custody fees 278
Securities pricing fees 111
Shareholder recordkeeping fees 11
Registration and filing administration fees 269
Operating expenses 991
Shareholder servicing expenses 339
Total expenses 2,241
Less:
Expense reimbursements (note 2) (2,019)
Investment advisory fees waived (note 2) (63)
Net expenses 159
Net investment income 752
REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS
Increase in unrealized depreciation on investments (430)
Net realized and unrealized loss on investments (430)
Net increase in net assets resulting from operations $322
See accompanying notes to financial statements
GrandView Healthcare Realty Income Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the
period from
July 3, 1995
(commencement
of operations) to
September 30,
1995
(Unaudited)
INCREASE IN NET ASSETS
Operations
Net investment income $752
Increase in unrealized depreciation on investments (430)
Net increase in net assets resulting from
operations 322
Distributions to shareholders from
Net investment income (375)
Decrease in net assets resulting from distributions (375)
Capital share transactions
(a)Increase in net assets resulting from
capital share transactions 71,988
Total increase in net assets 71,935
NET ASSETS
Beginning of period 0
End of period $71,935
(a) A summary of capital share activity follows:
For the period from July 3, 1995 to
(commencement of operations)
to September 30, 1995
Shares Value
Shares sold 7,145 $71,801
Shares issued for reinvestment
of distributions 19 187
7,164 71,988
Shares redeemed 0 0
Net increase(decrease) 7,164 $71,988
See accompanying notes to financial statements
GrandView Healthcare Realty Income Fund
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
For the
period from
July 3, 1995
(commencement
of operations)
September 30,
1995
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from investment operations
Net investment income 0.10
Net realized and unrealized loss on investments (0.01)
Total from investment operations 0.09
Distributions to shareholders from
Net investment income (0.05)
Total distributions (0.05)
Net Asset Value, End of Period $10.04
Total return (a)
0.93%
Ratios/supplemental data
Net assets, end of period $71,935
Ratio of expenses to average net assets
Before expense reimbursements 24.78%(b)
After expense reimbursements 1.74%(b)
Ratio of net investment income(loss) to average net assets
Before expense reimbursements (14.72%)(b)
After expense reimbursements 8.31%(b)
Portfolio turnover rate 0.00%
(a) Does not include sales load
(b) Annualized
See accompanying notes to financial statements
GrandView Healthcare Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The GrandView Healthcare Realty Income Fund (the "Fund") is a non-
diversified series of shares of beneficial interest of 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 market value. Securities listed on an exchange or quoted
on a national market system are valued at 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 an independent pricing service or determined following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates market value.
B. Federal Income Taxes - No provision has been made for federal income
taxes since 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.
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.
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.
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 or reimburse all or a portion of its fee 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 $63 ($0.02 per share) and has
voluntarily reimbursed a portion of the Fund's operating expenses for the
period ended September 30, 1995. The total fees waived and expenses
reimbursed by the Advisor amounted to $2,082.
GrandView Healthcare Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The Fund's administrator, The Nottingham Company, Inc. (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. Addition-
ally, 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 to September 30, 1995, there were no sales charges
distributed.
Certain Trustees and officers of the Trust are also officers of the
Advisor, the distributor or the Administrator.
At September 30, 1995, the Advisor held 2,000 shares or 28% of the Fund
shares outstanding.
NOTE 3 - DISTRIBUTION COSTS
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 costs of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.
The Plan provides that the Fund may incur certain costs, 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 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 ended September 30, 1995.
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.
GrandView Healthcare Realty Income Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
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 of investments, other than short-term investments, aggregated
$65,630 for the period ended September 30, 1995. There were no sales of
investments during this period.
NOTE 6 - DISTRIBUTIONS TO SHAREHOLDERS
For the period ended September 30, 1995, the Fund made distributions
classified as ordinary income in the amount of $375. Shareholders should
consult a tax advisor on how to report distributions for state and local
income tax purposes.
<TABLE> <S> <C>
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<NUMBER> 01
<NAME> GRANDVIEW REIT INDEX FUND
<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 88580
<INVESTMENTS-AT-VALUE> 88800
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<NET-INVESTMENT-INCOME> 1113
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<APPREC-INCREASE-CURRENT> 220
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<PER-SHARE-NAV-END> 10.20
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> GRANDVIEW REALTY GROWTH FUND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 89488
<INVESTMENTS-AT-VALUE> 89561
<RECEIVABLES> 882
<ASSETS-OTHER> 26775
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 117218
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26778
<TOTAL-LIABILITIES> 26778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89520
<SHARES-COMMON-STOCK> 9233
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 64
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 784
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 72
<NET-ASSETS> 90440
<DIVIDEND-INCOME> 295
<INTEREST-INCOME> 295
<OTHER-INCOME> 0
<EXPENSES-NET> (204)
<NET-INVESTMENT-INCOME> 386
<REALIZED-GAINS-CURRENT> 784
<APPREC-INCREASE-CURRENT> 72
<NET-CHANGE-FROM-OPS> 1242
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<DISTRIBUTIONS-OF-INCOME> 322
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<NUMBER-OF-SHARES-SOLD> 9207
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<SHARES-REINVESTED> 26
<NET-CHANGE-IN-ASSETS> 91084
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 102
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 910
<AVERAGE-NET-ASSETS> 41364
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.80
<EXPENSE-RATIO> 1.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> GRANDVIEW RESIDENTIAL REALTY INCOME FUND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 57128
<INVESTMENTS-AT-VALUE> 56787
<RECEIVABLES> 2535
<ASSETS-OTHER> 26825
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 86147
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 28277
<TOTAL-LIABILITIES> 28277
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57885
<SHARES-COMMON-STOCK> 5859
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 327
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (342)
<NET-ASSETS> 57870
<DIVIDEND-INCOME> 570
<INTEREST-INCOME> 187
<OTHER-INCOME> 0
<EXPENSES-NET> (138)
<NET-INVESTMENT-INCOME> 619
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (342)
<NET-CHANGE-FROM-OPS> 277
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 292
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5840
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<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> 58454
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 55
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2154
<AVERAGE-NET-ASSETS> 31988
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-NAV-END> 9.87
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> GRANDVIEW RETAIL REALTY INCOME FUND
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 58693
<INVESTMENTS-AT-VALUE> 57935
<RECEIVABLES> 608
<ASSETS-OTHER> 26897
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85440
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26404
<TOTAL-LIABILITIES> 26404
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 59263
<SHARES-COMMON-STOCK> 6041
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 532
<OVERDISTRIBUTION-NII> 0
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<NAME> GRANDVIEW HEALTHCARE REALTY INCOME FUND
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