LEUTHOLD
ASSET ALLOCATION FUND
SEMI-ANNUAL REPORT
MARCH 31, 1996
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
ASSETS:
Investments, at value
(cost $34,126,201) $34,285,582
Deferred organization charges 39,884
Dividends receivable 26,557
Interest receivable 403,280
Other assets 32,915
----------
Total Assets 34,788,218
----------
LIABILITIES:
Dividends payable 345,170
Payable to adviser 22,370
Accrued expenses and
other liabilities 19,456
-----------
Total Liabilities 386,996
-----------
NET ASSETS $34,401,222
===========
NET ASSETS CONSIST OF:
Capital stock $34,487,110
Accumulated undistributed
net investment income 9,658
Accumulated undistributed net
realized losses on investments (254,927)
Net unrealized appreciation
on investments 159,381
-----------
Total Net Assets $34,401,222
===========
Shares outstanding
(500,000,000 shares of
$.0001 par value authorized) 3,442,570
Net Asset Value $9.99
===========
See notes to the financial statements.
STATEMENT OF OPERATIONS
NOVEMBER 20, 1995<F1> THROUGH MARCH 31, 1996
(UNAUDITED)
INVESTMENT INCOME:
Dividend income $ 76,872
Interest income 493,725
---------
Total investment income 570,597
---------
EXPENSES:
Investment advisory fee 89,686
Administration fee 10,616
Shareholder servicing and
accounting costs 17,631
Custody fees 1,426
Federal and state registration 9,428
Professional fees 6,898
Amortization of deferred
organization charges 3,135
Reports to shareholders 2,501
Directors' fees and expenses 2,477
Other 4,007
--------
Total expenses before reimbursement 147,805
Less:Reimbursement from Adviser (23,286)
--------
Net expenses 124,519
--------
NET INVESTMENT INCOME 446,078
--------
REALIZED AND UNREALIZED
LOSS ON INVESTMENTS:
Net realized loss on investments (254,927)
Change in unrealized
appreciation on investments 159,381
--------
Net realized and unrealized
loss on investments (95,546)
--------
NET INCREASE IN
NET ASSETS RESULTING
FROM OPERATIONS $350,532
========
<F1> Commencement of operations.
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 20, 1995<F2> THROUGH MARCH 31, 1996
(UNAUDITED)
OPERATIONS:
Net investment income $ 446,078
Net realized loss on investments (254,927)
Change in unrealized appreciation
on investments 159,381
---------
Net increase in net assets
from operations 350,532
---------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME (439,555)
---------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 38,896,801
Shares issued to holders in
reinvestment of dividends 91,879
Cost of shares redeemed (4,498,435)
----------
Net increase in net assets from
capital share transactions 34,490,245
----------
TOTAL INCREASE IN NET ASSETS 34,401,222
----------
NET ASSETS:
Beginning of period 0
----------
End of period (including
undistributed net investment
income of $9,658) $34,401,222
===========
<F2> Commencement of operations.
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
NOV. 20, 1995<F3>
THROUGH
PER SHARE DATA: MARCH 31, 1996
--------------
Net asset value, beginning of period $10.00
------
Income from investment operations:
Net investment income 0.15
Net realized and unrealized
losses on investments (0.01)
------
Total from investment operations 0.14
------
Less distributions from
net investment income (0.15)
------
Net asset value, end of period $ 9.99
======
Total return<F4> 1.42%
Supplemental data and ratios:
Net assets, end of period $34,401,222
Ratio of expenses to average
net assets<F5> 1.25%
Ratio of net investment income
to average net assets<F5> 4.49%
Portfolio turnover rate 32.31%
<F3> Commencement of operations.
<F4> Not annualized for the period November 20, 1995 through March 31, 1996.
<F5> Annualized for the period November 20, 1995 through March 31, 1996. Without
expense reimbursements of $23,286 for the period November 20, 1995 through March
31, 1996, the ratio of expenses to average net assets would have been 1.49% and
the ratio of net investment income to average net assets would have been 4.25%.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
- - --------- -----
COMMON STOCKS - 21.9%
COMMUNICATIONS TECHNOLOGY - 0.6%
6,600 ADT, Ltd. <F6> $116,325
3,700 BI, Inc. <F6> 30,988
4,200 Identix, Inc. <F6> 47,250
-------
194,563
-------
CONSUMER SERVICES - 0.6%
3,400 Corrections Corporation
of America <F6> 193,800
-------
COUNTRY FUNDS-CLOSED END - 0.5%
11,133 Greater China Fund, Inc. 173,953
-------
DIVERSIFIED TECHNOLOGY - 0.8%
6,400 Checkpoint Systems, Inc. <F6> 159,200
2,400 Cohu, Inc. 60,000
1,800 Diebold, Inc. 71,325
-------
290,525
-------
ETHICAL DRUGS - 1.5%
2,300 Amgen, Inc. <F6> 133,687
2,000 Merck & Company, Inc. 124,500
3,800 Pfizer, Inc. 254,600
-------
512,787
-------
FOOD & BEVERAGES - 1.2%
6,800 ConAgra, Inc. 276,250
2,100 PepsiCo, Inc. 132,825
-------
409,075
-------
MEDICAL/BIO-TECHNOLOGY - 0.7%
4,300 Medtronic, Inc. 256,388
-------
OFFICE/INFORMATION TECHNOLOGY - 0.6%
2,100 Hewlett-Packard Company $197,400
--------
REAL ESTATE INVESTMENT TRUSTS - 8.8%
7,600 Bradley Real Estate, Inc. 109,250
6,700 CBL & Associates
Properties, Inc. 141,538
8,300 Colonial Properties Trust 196,088
10,800 Cousins Properties, Inc. 210,600
7,100 Crescent Real Estate
Equities, Inc. 238,738
3,600 Developers Diversified Realty Corporation 105,750
9,200 Equity Residential
Properties Trust 287,500
10,100 Excel Realty Trust, Inc. 195,687
4,100 Health Care Property
Investors, Inc. 129,150
3,950 Kimco Realty Corporation 106,650
14,700 Koger Equity, Inc. <F6> 159,862
11,400 Nationwide Health
Properties, Inc. 239,400
7,700 Oasis Residential, Inc. 180,950
5,600 Post Properties, Inc. 182,000
7,500 RFS Hotel Investors, Inc. 130,312
6,800 Summit Properties, Inc. 136,000
10,600 Sun Communities, Inc. 288,850
---------
3,038,325
---------
REGIONAL BANKS - 1.8%
1,400 BayBanks, Inc.150,500
5,800 City National Corporation 79,025
900 Cullen/Frost Bankers, Inc. 44,325
3,300 First American
Corporation-Tennessee $146,850
700 Integra Financial Corporation 49,087
1,600 Mercantile Bancorporation 73,200
2,800 Mercantile Bankshares
Corporation 73,500
-------
616,487
-------
SEMICONDUCTOR & RELATED - 1.7%
6,200 Analog Devices, Inc. <F6> 173,600
4,500 International Rectifier
Corporation <F6> 81,000
3,300 LSI Logic Corporation <F6> 88,275
5,500 National Semiconductor
Corporation <F6> 76,313
3,000 Texas Instruments, Inc. 152,625
-------
571,813
-------
TELEPHONE SERVICES - 2.7%
3,900 Ameritech Corporation 212,550
4,600 BellSouth Corporation 170,200
3,100 Cincinnati Bell, Inc. 161,200
3,900 SBC Communications, Inc. 205,238
3,300 US West Communications Group 106,837
3,300 US West Media Group <F6> 68,062
-------
924,087
-------
TEXTILES & APPAREL - 0.4%
4,900 Shanghai Petrochemical
Company Ltd. 150,063
-------
MARKET
VALUE
-----
Total common stocks
(cost $7,272,932) $7,529,266
----------
CONTRACTS (100 SHARES PER CONTRACT)
- - -----------------------------------
CALL OPTIONS PURCHASED - 2.6%
S&P 500:
182 Expiration June 1996,
Exercise Price $635 530,075
141 Expiration June 1996,
Exercise Price $640 363,075
-------
Total call options purchased
(cost $714,990) 893,150
-------
PRINCIPAL
AMOUNT
------
FIXED INCOME SECURITIES - 44.0%
FOREIGN BONDS - 22.6%
AUSTRALIAN
$3,390,000 Treasury Corp Victoria,
8.25%, 10/15/2003 2,645,296
---------
CANADIAN
3,645,000 Province of Ontario,
7.75%, 12/08/2003 2,690,685
3,430,000 Province of Quebec,
7.50%, 12/01/2003 2,454,058
---------
5,144,743
---------
Total foreign bonds
(cost $7,695,991) 7,790,039
---------
PRINCIPAL MARKET
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS - 21.4%
U.S. Treasury Bonds:
$3,680,000 7.50%, 11/15/2016 $ 3,942,200
2,975,000 8.125%, 8/15/2019 3,402,656
----------
7,344,856
----------
Total fixed income securities
(cost $15,410,008) 15,134,895
----------
SHORT-TERM INVESTMENTS - 31.2%
VARIABLE RATE DEMAND
NOTES - 28.9%
1,530,533 American Family Financial
Services, Inc. 1,530,533
1,635,000 General Mills, Inc. 1,635,000
1,546,456 Pitney Bowes, Inc. 1,546,456
1,591,888 Sara Lee Corp. 1,591,888
1,545,351 Southwestern Bell Corp. 1,545,351
1,000,000 Warner Lambert, Inc. 1,000,000
1,079,043 Wisconsin Electric Power Co. 1,079,043
---------
9,928,271
---------
COMMERCIAL PAPER - 2.3%
$800,000 Prudential Funding Corp. $ 800,000
----------
Total short-term investments
(cost $10,728,271) 10,728,271
----------
Total investments - 99.7%
(cost $34,126,201) 34,285,582
----------
Other assets in excess
of liabilities - 0.3% 115,640
----------
TOTAL NET ASSETS - 100.0% $34,401,222
==========
<F6> Non-income producing security.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Leuthold Funds, Inc. (the "Company") was incorporated on August 30, 1995, as
a Maryland Corporation and is registered as an open-end management investment
company under the Investment Company Act of 1940. The Company currently
consists of one series, Leuthold Asset Allocation Fund (the "Fund"). The
investment objective of the Fund is to seek high total return consistent with
reasonable risk over the long term. The Fund issued and sold 10,000 shares of
its capital stock at $10 per share on October 20, 1995. The Fund commenced
operations on November 20, 1995.
The costs incurred in connection with the organization, initial registration
and public offering of shares, aggregating $43,019, have been paid by the
Fund. These costs are being amortized over the period of benefit, but not to
exceed sixty months from the Fund's commencement of operations.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation - Common stocks that are listed on a securities
exchange are valued at the last quoted sales price on the day the valuation
is made. Price information on listed stocks is taken from the exchange
where the security is primarily traded. Securities which are listed on an
exchange but which are not traded on the valuation date are valued at the
most recent bid prices. Unlisted securities for which market quotations are
readily available are valued at the latest quoted bid price. Debt
securities are valued at the latest bid prices furnished by independent
pricing services. Other assets and securities for which no quotations are
readily available are valued at fair value as determined in good faith by
the Directors. Short-term instruments (those with remaining maturities of
60 days or less) are valued at amortized cost, which approximates market.
b) Federal Income Taxes - No provision for federal income taxes has been made
since the Fund intends to comply with the provisions of the Internal
Revenue Code available to regulated investment companies in the current and
future years.
c) Distributions to Shareholders - Dividends from net investment income are
declared and paid quarterly. Distributions of net realized capital gains,
if any, will be declared at least annually.
d) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
e) Purchased Option Accounting - Premiums paid for option contracts purchased
are included in the Statement of Assets and Liabilities as an asset. Option
contracts are valued at the last sales price reported on the date of
valuation. If no sale is reported, the option contract purchased is valued
at the last bid price. When option contracts expire or are closed, realized
gains or losses are recognized without regard to any unrealized gains or
losses on the underlying securities.
f) Foreign Currency Translations - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot market
rate of exchange at the time of valuation. Purchases and sales of
investments and dividend and interest income are translated into U.S.
dollars using the spot market rate of exchange prevailing on the respective
dates of such transactions. The gain or loss resulting from changes in
foreign exchange rates is included with net realized and unrealized gain or
loss from investments, as appropriate.
g) Other - Investment and shareholder transactions are recorded no later than
the first business day after the trade date. The Fund determines the gain
or loss realized from the investment transactions by comparing the original
cost of the security lot sold with the net sales proceeds. Dividend income
is recognized on the ex-dividend date or as soon as information is
available to the Fund, and interest income is recognized on an accrual
basis. Discounts and premiums on bonds are amortized over the life of the
respective bond. Generally accepted accounting principles require that
permanent financial reporting and tax differences be reclassified to
capital stock.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the period November 20, 1995 through
March 31, 1996 were as follows:
Shares sold 3,878,191
Shares issued to holders
in reinvestment of dividends 9,026
Shares redeemed (444,647)
---------
Net increase 3,442,570
=========
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period November 20, 1995 through March 31,
1996, were $27,524,688 and $4,582,062, respectively.
At March 31, 1996, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $830,956
(Depreciation) (701,278)
--------
Net appreciation on investments $129,678
========
At March 31, 1996, the cost of investments for federal income tax purposes was
$34,155,904.
4. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Fund has entered into an Investment Advisory Agreement with Leuthold &
Anderson, Inc. Pursuant to its advisory agreement with the Fund, the
Investment Adviser is entitled to receive a fee, calculated daily and payable
monthly, at the annual rate of 0.90% as applied to the Fund's daily net
assets.
The Investment Adviser voluntarily agrees to reimburse its management fee and
other expenses to the extent that total operating expenses (exclusive of
interest, taxes, brokerage commissions and other costs incurred in connection
with the purchase or sale of portfolio securities, and extraordinary items)
exceed the annual rate of 1.25% of the net assets of the Fund, computed on a
daily basis.
Firstar Trust Company, a subsidiary of Firstar Corporation, a publicly held
bank holding company, serves as custodian, transfer agent, administrator and
accounting services agent for the Fund.
LEUTHOLD
ASSET ALLOCATION FUND
INVESTMENT ADVISER:
Leuthold & Anderson, Inc., Minnesota
ADMINISTRATOR, TRANSFER AGENT,
DIVIDEND PAYING AGENT, SHAREHOLDER
SERVICING AGENT &CUSTODIAN:
Firstar Trust Company, Wisconsin
COUNSEL:
Foley & Lardner, Wisconsin
AUDITORS:
Arthur Andersen LLP, Wisconsin
This report is authorized for distribution only when preceded or accompanied by
a current prospectus.
