(LEUTHOLD LOGO)
ASSET ALLOCATION FUND
Semi-Annual Report
March 31, 1997
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
ASSETS:
Investments, at value (cost $29,697,851) $30,329,861
Interest receivable 284,658
Dividends receivable 34,475
Organizational expenses, net of
accumulated amortization 31,281
Other assets 28,047
-----------
Total Assets 30,708,322
-----------
LIABILITIES:
Dividend payable 12,657
Payable to Adviser 16,281
Accrued expenses and other liabilities 47,265
-----------
Total Liabilities 76,203
-----------
NET ASSETS $30,632,119
===========
NET ASSETS CONSIST OF:
Capital stock $29,734,038
Accumulated undistributed net investment income 155,481
Accumulated undistributed
net realized gain on investments 110,590
Net unrealized appreciation on investments 632,010
-----------
Total Net Assets $30,632,119
===========
Shares outstanding
(250,000,000 shares of $.0001 par value authorized) 3,045,065
Net Asset Value, Redemption
Price and Offering Price Per Share $10.06
======
STATEMENT OF OPERATIONS
OCTOBER 1, 1996 THROUGH MARCH 31, 1997
(UNAUDITED)
INVESTMENT INCOME:
Dividend income $181,056
Interest income 943,921
-----------
Total investment income 1,124,977
-----------
EXPENSES:
Investment advisory fee 142,981
Administration fee 14,645
Shareholder servicing and accounting costs 25,623
Custody fees 10,161
Federal and state registration 12,013
Professional fees 15,276
Amortization of organizational expenses 4,290
Reports to shareholders 7,245
Directors' fees and expenses 2,912
Other 4,550
-----------
Total expenses before
reimbursement 239,696
Less: Reimbursement from Adviser 41,111
-----------
Net expenses 198,585
-----------
NET INVESTMENT INCOME 926,392
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (13,284)
Change in unrealized appreciation on investments 404,927
-----------
Net realized and unrealized
gain on investments 391,643
-----------
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS $1,318,035
==========
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
OCTOBER 1, NOVEMBER 20,
1996 1995(1)<F1>
THROUGH THROUGH
MARCH 31, 1997 SEPTEMBER 30, 1996
-------------- ------------------
(UNAUDITED)
OPERATIONS:
Net investment income $926,392 $1,161,465
Net realized gain (loss) on investments (13,284) 172,238
Change in unrealized appreciation on investments 404,927 227,083
---------- ----------
Net increase in net assets from operations 1,318,035 1,560,786
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (855,716) (1,084,877)
Net realized gains (794,514) --
---------- ----------
Total dividends and distributions (1,650,230) (1,084,877)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,370,921 11,738,348
Proceeds from collective and
common trust funds conversions -- 29,115,588
Shares issued to holders in
reinvestment of dividends 1,607,000 1,037,552
Cost of shares redeemed (3,754,108) (10,626,896)
---------- ----------
Net increase (decrease) in net assets
from capital share transactions (776,187) 31,264,592
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,108,382) 31,740,501
---------- ----------
NET ASSETS:
Beginning of period 31,740,501 0
---------- ----------
End of period (including
undistributed net investment income
of $155,481 and $81,802, respectively) $30,632,119 $31,740,501
========== ==========
(1)<F1>Commencement of operations.
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
OCTOBER 1, NOVEMBER 20,
1996 1995(1)<F2>
THROUGH THROUGH
MARCH 31, 1997 SEPTEMBER 30, 1996
-------------- ------------------
(UNAUDITED)
PER SHARE DATA:
Net asset value, beginning of period $10.18 $10.00
------ ------
Income from investment operations:
Net investment income 0.31 0.38
Net realized and unrealized gain on investments 0.11 0.16
------ ------
Total from investment operations 0.42 0.54
------ ------
Less distributions from:
Net investment income (0.28) (0.36)
Net realized gains (0.26) --
------ ------
Total distributions (0.54) (0.36)
------ ------
Net asset value, end of period $10.06 $10.18
====== ======
Total return(2)<F3> 4.05% 5.43%
Supplemental data and ratios:
Net assets, end of period $30,632,119 $31,740,501
Ratio of expenses to average net assets(3)<F4> 1.25% 1.25%
Ratio of net investment income to
average net assets(3)<F4> 5.85% 4.44%
Portfolio turnover rate 15.55% 103.30%
Average commission rate paid $0.0600 $0.0600
(1)<F2>Commencement of operations.
(2)<F3>Not annualized.
(3)<F4>Annualized. Without expense reimbursements of $41,111 and $77,769 for the
periods October 1, 1996 through March 31, 1997 and November 20, 1995 through
September 30, 1996, respectively, the ratio of expenses to average net assets
would have been 1.51% and 1.55%, and the ratio of net investment income to
average net assets would have been 5.59% and 4.14%, respectively.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
MARCH 31, 1997
(UNAUDITED)
NUMBER MARKET
OF SHARES VALUE
--------- -------
COMMON STOCKS - 30.2%
BUILDING MATERIALS - 0.5%
3,200 Martin Marietta Materials $82,400
1,200 Medusa Corp. 45,000
1,200 Texas Industries, Inc. 33,000
--------
160,400
--------
ENERGY - EQUIPMENT & SERVICES - 1.5%
3,300 Dresser Industries, Inc. 99,825
1,300 ENSCO International, Inc.*<F5> 64,025
6,600 Global Marine, Inc. * <F5> 141,900
1,800 Halliburton Co. 121,950
2,400 Noble Drilling Corp. * <F5> 41,400
--------
469,100
--------
ENERGY - OIL & GAS - 2.3%
1,700 Burlington Resources, Inc. 72,675
2,600 Enron Corp. 98,800
2,300 KN Energy, Inc. 90,850
2,000 Louisiana Land & Exploration 94,750
1,300 Mobil Corp. 169,813
1,800 Noble Affiliates, Inc. 67,950
4,800 Oryx Energy Co. *<F5> 92,400
--------
687,238
--------
LIFE INSURANCE - 2.6%
5,900 Equitable Companies, Inc. 160,775
1,700 Jefferson-Pilot Corp. 92,438
3,000 Provident Companies, Inc. 164,250
2,100 Providian Corp. 112,350
1,800 ReliaStar Financial Corp. 106,425
3,900 SunAmerica, Inc. 146,738
--------
782,976
--------
MACHINERY - DIVERSIFIED - 1.2%
1,100 Caterpillar, Inc. 88,275
1,800 Deere & Co. 78,300
2,800 Harnischfeger Industries, Inc. 130,200
1,800 Ingersoll-Rand Co. 78,525
--------
375,300
--------
MAJOR AIRLINES - 1.4%
1,000 AMR Corp. *<F5> 82,500
1,800 Delta Air Lines, Inc. 151,425
3,200 Northwest Air Lines Corp. *<F5> 120,400
1,300 UAL Corp. 84,175
--------
438,500
--------
NATIONAL BANKS - 0.1%
400 Bank America Corp. 40,300
--------
REAL ESTATE INVESTMENT TRUSTS - 16.6%
5,000 Avalon Properties, Inc. 137,500
8,800 BRE Properties Class A 217,800
6,100 Bradley Real Estate, Inc. 116,661
5,400 CBL & Associates
Properties, Inc. 132,300
11,000 CenterPoint Properties Corp. 336,875
7,900 Chelsea GCA Realty, Inc. 283,412
6,700 Colonial Properties Trust 194,300
8,700 Cousins Properties, Inc. 237,075
11,600 Crescent Real Estate
Equities, Inc. 310,300
8,300 Developers Diversified
Realty Corporation 313,325
7,400 Equity Residential
Properties Trust 328,375
8,200 Excel Realty Trust, Inc. 207,050
5,700 First Industrial Realty Trust 180,262
3,300 Health Care Property
Investors, Inc. 109,312
4,900 Hospitality Properties Trust 150,062
9,450 Kimco Realty Corp. 307,125
11,900 Koger Equity, Inc. 205,275
9,200 Nationwide Health
Properties, Inc. 196,650
4,500 Post Properties, Inc. 171,563
6,000 RFS Hotel Investors, Inc. 104,250
5,700 Reckson Associates Realty Corp. 262,913
8,500 Sun Communities, Inc. 272,000
23,700 Western Investment
Real Estate Trust 296,250
---------
5,070,635
---------
RETAIL - SPECIALTY - 1.2%
7,600 Costco Companies, Inc. 209,950
1,400 Dayton Hudson Corp. 58,450
4,200 Ross Stores, Inc. 106,575
--------
374,975
--------
RETAIL STORES - DRUG STORES - 0.1%
1,600 Longs Drug Stores, Inc. 37,600
--------
RETAIL STORES - FOOD CHAINS - 0.2%
1,100 Safeway, Inc. *<F5> 51,013
--------
SEMICONDUCTORS - 1.4%
3,466 Analog Devices, Inc. 77,985
3,500 Atmel Corp. *<F5> 83,781
1,200 Intel Corp. 166,950
1,800 Maxim Integrated
Products, Inc. *<F5> 87,075
--------
415,791
--------
UTILITIES - 1.1%
4,400 CalEnergy, Inc. *<F5> 149,600
3,900 Coastal Corp. 187,200
--------
336,800
--------
Total common stocks
(cost $8,051,520) 9,240,628
---------
CONTRACTS (100 SHARES PER CONTRACT)
- -----------------------------------
PUT OPTIONS PURCHASED - 2.1%
S&P 500:
124 Expiration September 1997,
Exercise Price $795 646,350
--------
Total put options purchased
(cost $425,444) 646,350
--------
PRINCIPAL MARKET
AMOUNT VALUE
-------- -------
FIXED INCOME SECURITIES - 52.0%
U.S. TREASURY OBLIGATIONS - 52.0%
$20,085,000 U.S. Treasury Strips,
due 2/15/2018 # <F6> $4,424,121
U.S. Treasury Bonds:
8,660,000 7.50%, due 11/15/2016 8,903,563
2,370,000 8.125%, due 8/15/2019 2,598,854
----------
11,502,417
----------
Total fixed income securities
(cost $16,704,542) 15,926,538
----------
SHORT-TERM INVESTMENTS - 14.7%
VARIABLE RATE DEMAND NOTES - 6.6%
94,799 American Family 94,799
53,064 General Mills 53,064
412,221 Sara Lee 412,221
16,000 Pitney Bowes 16,000
1,036,614 Johnson Controls 1,036,614
64,948 Warner Lambert 64,948
338,699 Wisconsin Electric Power Co. 338,699
----------
2,016,345
---------
COMMERCIAL PAPER - 8.1%
1,500,000 Norwest Financial Inc. 1,500,000
1,000,000 Prudential Funding 1,000,000
----------
2,500,000
----------
Total short-term investments
(cost $4,516,345) 4,516,345
----------
Total investments - 99.0%
(cost $29,697,851) 30,329,861
Other assets in excess
of liabilities - 1.0% 302,258
----------
TOTAL NET
ASSETS - 100.0% $30,632,119
===========
*<F5>Non-income producing security.
#<F6>Principal only.
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 total return consistent with prudent investment
risk. 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. Options and 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 has complied to date with the provisions of the Internal Revenue
Code available to regulated investment companies and intends to continue to so
comply in 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 - Option contracts purchased are included in
the Statement of Assets and Liabilities as an asset and are valued at the last
bid price reported on the date of valuation. 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. Option contracts are held by the
Fund for trading and hedging purposes.
f) 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 costs
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 were as follows:
OCT. 1, 1996 - NOV. 20, 1995 -
MAR. 31, 1997 SEPT. 30, 1996
------------- ---------------
Shares sold 131,451 1,167,497
Shares issued as a result of
collective and common trust
fund conversions -- 2,905,504
Shares issued to holders in
reinvestment of dividends 155,920 102,850
Shares redeemed (360,502) (1,057,655)
--------- ----------
Net increase (decrease) (73,131) 3,118,196
========= ==========
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period October 1, 1996 through March 31,
1997, were $4,525,748 and $3,903,788, respectively.
At March 31, 1997, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $1,511,150
(Depreciation) (1,029,443)
----------
Net appreciation on
investments $481,707
==========
At March 31, 1997, the cost of investments for federal income tax purposes
was $29,765,912.
At the close of business on January 19, 1996, the unit holders of the Piper
Trust Common Leuthold Flexible Fund transferred their assets to the Fund. As a
result of the tax-free transfer, the Fund acquired $860,971 of unrealized
appreciation for tax purposes.
As of March 31, 1997, the Fund realized $746,150 of the appreciation. At
March 31, 1997, the realized appreciation is included in accumulated
undistributed net realized gain on investments on the Statement of Assets and
Liabilities.
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 has voluntarily agreed to reimburse the Fund to the
extent necessary to ensure 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) do not 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.
For the period ended March 31, 1997, the Fund paid Weeden & Co., L.P., an
affiliate of the Adviser $6,051 of brokerage commissions.
(LEUTHOLD LOGO)
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.
