<PAGE> 1
LONGLEAF PARTNERS SMALL-CAP FUND
July 8, 1996
TO OUR SHAREHOLDERS:
We are pleased to report that Longleaf Partners Small-Cap Fund continued its
excellent absolute and relative performance progress in the second quarter. For
the three months ended June 30, 1996, your Fund's net asset value increased
5.1%. Year-to-date we are up 13.8%. As shown in the table that follows, these
results outperformed both our main benchmarks, the Value-Line Index and the
Wilshire 5000 Index:
CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
LONGLEAF PARTNERS
SMALL-CAP FUND VALUE-LINE INDEX WILSHIRE 5000 INDEX
----------------- ---------------- -------------------
<S> <C> <C> <C>
LAST QUARTER 5.11% 2.70% 4.41%
LAST SIX MONTHS 13.83% 7.02% 10.27%
LAST YEAR 26.41% 13.88% 26.22%
LAST TWO YEARS 43.22% 28.88% 57.42%
LAST THREE YEARS 51.57% 27.31% 59.30%
LAST FOUR YEARS 84.67% 43.81% 85.03%
LAST FIVE YEARS 89.71% 51.17% 110.80%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS*
<TABLE>
<CAPTION>
LONGLEAF PARTNERS
SMALL-CAP FUND VALUE-LINE INDEX WILSHIRE 5000 INDEX
----------------- ---------------- -------------------
<S> <C> <C> <C>
LAST YEAR 26.41% 13.88% 26.22%
LAST TWO YEARS 19.67% 13.53% 25.47%
LAST THREE YEARS 14.87% 8.38% 16.79%
LAST FOUR YEARS 16.57% 9.51% 16.63%
LAST FIVE YEARS 13.66% 8.62% 16.08%
</TABLE>
Longleaf Partners Small-Cap Fund's performance in recent weeks has been
especially gratifying in view of the difficulty many "momentum investors" have
had in the IPO and high tech arenas. A number of "air pockets" have opened up,
and the downdrafts have been quite turbulent. While we have not benefited from
the speculative excesses that have been built, we also do not expect to be
harmed by the unwinding of many of these same elevated valuations.
Our perspective continues to be what you would logically expect from a large,
committed and disciplined owner-operator. Before investing your capital and
ours, we want the odds greatly stacked in our favor. The businesses we seek to
own must be thoroughly understood; we must believe our appraisals are soundly
based; and, the purchase prices must be significantly discounted from our
appraisals to give us the concomitant margins of safety we require. In addition
to the proper relationship between price and value, we want to own above
average, competitively entrenched businesses managed by vested, capable and
trustworthy individuals. As you will read further in the report, we have added
six new holdings since the beginning of the year. We believe strongly that each
qualifies on the aforementioned requirements.
<PAGE> 2
Our largest portfolio position, White River Corporation, contributed importantly
to second quarter returns rising from $37 1/4 per share on March 31, 1996 to
$46 7/8 at the end of the second quarter. Subsequently, the price has
appreciated to the mid $50's reflecting Wall Street's approval of the company's
plan to take public InfoVest, a majority owned subsidiary. While this price
appreciation is noteworthy, our appraisals of both White River and most other
holdings are materially and demonstrably higher than their current prices.
We extend our best regards to each of our partners. We also hope you have a
wonderful summer with your families.
Sincerely,
/s/ O. Mason Hawkins /s/ G. Staley Cates
- --------------------- --------------------
O. Mason Hawkins, CFA G. Staley Cates, CFA
Co-Portfolio Manager Co-Portfolio Manager
- -------------------------------------------------------------------------------
* For the periods ended June 30, 1996. The average annual total returns of
Longleaf Partners Small-Cap Fund for the one year and five years ended June
30, 1996 and from its initial public offering on February 21, 1989 through
June 30, 1996 are 26.41%, 13.66% AND 9.30%, respectively. Fund returns and
those of the Wilshire 5000 Index are shown with all dividends and
distributions reinvested; the Value-Line Index is not available with
reinvested dividends. The stock market indices shown are unmanaged. Past
investment performance is no guarantee of future investment performance, and
the value of an investment when redeemed may be more or less than the purchase
price.
- --------------------------------------------------------------------------------
<PAGE> 3
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
AT JUNE 30, 1996 (UNAUDITED)
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COMMON STOCK (97.5%) MARKET VALUE
------- ------------
<S> <C> <C> <C> <C>
ADVERTISING (2.9%)
21,020 Grey Advertising Inc. - Class A............................ $ 4,645,420
------------
BANKING (5.9%)
225,000 Bay View Capital Corp...................................... 7,650,000
105,100 * FirstFed Financial Corp.................................... 1,826,113
------------
9,476,113
------------
BEVERAGES (2.5%)
195,000 * Celestial Seasonings, Inc.................................. 3,997,500
------------
BUSINESS SERVICES (9.0%)
370,000 * Pinkerton's, Inc........................................... 8,556,250
300,000 * The Union Corporation ..................................... 5,925,000
------------
14,481,250
------------
COMMERCIAL LIGHTING (1.7%)
139,300 Thomas Industries, Inc..................................... 2,664,112
------------
FINANCIAL SERVICES (14.8%)
280,000 Duff & Phelps Credit Rating Co............................. 5,950,000
267,000 * Lexington Global Asset Managers, Inc. ..................... 1,335,000
351,200 * White River Corporation.................................... 16,462,500
------------
23,747,500
------------
FOOD (3.6%)
146,700 GoodMark Foods, Inc........................................ 2,090,475
176,500 * Ralcorp Holdings, Inc. .................................... 3,640,313
------------
5,730,788
------------
FURNITURE (4.9%)
715,000 * Rhodes, Inc. .............................................. 7,954,375
------------
INDUSTRIAL EQUIPMENT (0.5%)
231,400 * Baldwin Technology Company, Inc. - Class A................. 809,900
------------
INVESTMENT MANAGEMENT COMPANIES (5.8%)
260,700 Phoenix Duff & Phelps Corporation.......................... 1,955,250
19,800 The Pioneer Group, Inc..................................... 529,650
281,400 United Asset Management Corporation........................ 6,894,300
------------
9,379,200
------------
</TABLE>
See Notes to Financial Statements.
<PAGE> 4
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
AT JUNE 30, 1996 (UNAUDITED)
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
------- ------------
<S> <C> <C> <C> <C> <C>
MANUFACTURING (20.6%)
210,000 AMETEK, Inc................................................ $ 4,567,500
850,000 * American Safety Razor Company.............................. 8,606,250
405,148 Armor All Products Corporation............................. 6,026,576
172,300 Franklin Electric Co., Inc................................. 6,030,500
385,000 Zurn Industries, Inc....................................... 7,988,750
------------
33,219,576
------------
MISCELLANEOUS (2.4%)
104,152 Seafield Capital Corporation............................... 3,905,700
------------
PROPERTY & CASUALTY INSURANCE (5.8%)
34,680 * Alleghany Corporation...................................... 6,658,560
28,200 * Markel Corporation......................................... 2,622,600
------------
9,281,160
------------
PUBLISHING (2.4%)
110,000 Plenum Publishing Corporation.............................. 3,850,000
------------
REAL ESTATE (9.1%)
385,000 Cousins Properties Incorporated............................ 7,555,625
927,800 * Trizec Corporation Ltd..................................... 7,074,475
------------
14,630,100
------------
RESTAURANTS (2.2%)
290,000 * VICORP Restaurants, Inc.................................... 3,552,500
------------
RETAIL (3.4%)
200,000 * Craig Corporation.......................................... 2,550,000
120,000 Delchamps, Inc............................................. 2,910,000
------------
5,460,000
------------
TOTAL COMMON STOCKS (COST $131,884,970)................................. 156,785,194
------------
SHORT TERM OBLIGATIONS (2.7%)
Repurchase Agreement with State Street Bank and Trust Company, dated
6-28-96, due 7-1-96 at 4.75%, collateralized by $4,436,306 U.S.
Treasury Bond due 11-15-15 (Repurchase proceeds-$4,345,720) (Cost
$4,344,000)............................................................ 4,344,000
------------
TOTAL INVESTMENTS (COST $136,228,970)* *................................... 100.2% 161,129,194
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................. (0.2) (258,105)
----- ------------
NET ASSETS................................................................. 100.0% $160,871,089
===== ============
NET ASSET VALUE PER SHARE (OFFERING AND REDEMPTION PRICE PER SHARE) BASED ON
9,773,311 SHARES OUTSTANDING AT JUNE 30, 1996................................... $16.46
======
</TABLE>
* Non-income producing security
* * Also represents aggregate cost for Federal income tax purposes
See Notes to Financial Statements.
<PAGE> 5
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
AT JUNE 30, 1996 (UNAUDITED)
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments:
Securities, at market value (cost $131,884,970) (Note 1 and Note 7)......... $156,785,194
Repurchase agreement (Note 6)............................................... 4,344,000
------------
TOTAL INVESTMENTS 161,129,194
Cash.......................................................................... 545
Receivables:
Securities sold............................................................. 688,043
Dividends and interest...................................................... 157,334
Prepaid assets................................................................ 9,047
Insurance reserve premium..................................................... 7,274
------------
TOTAL ASSETS 161,991,437
------------
LIABILITIES:
Payable for:
Securities purchased........................................................ 966,153
Investment Counsel fee (Note 2)............................................. 131,493
Administration fee (Note 3)................................................. 13,149
Other accrued expenses........................................................ 9,553
------------
TOTAL LIABILITIES 1,120,348
------------
NET ASSETS $160,871,089
============
Composition of net assets:
Paid-in capital (unlimited number of shares authorized,
9,773,311 shares outstanding)............................................ $124,751,895
Undistributed net investment income......................................... 91,434
Accumulated net realized gain............................................... 11,127,536
Unrealized appreciation of investments (Note 7)............................. 24,900,224
------------
NET ASSETS $160,871,089
============
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE) PER SHARE
($160,871,089 DIVIDED BY 9,773,311 SHARES).................................. $16.46
=======
</TABLE>
See Notes to Financial Statements.
<PAGE> 6
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends.................................................................... $ 832,261
Interest..................................................................... 150,279
-----------
982,540
-----------
EXPENSES:
Investment counsel fee (Note 2).............................................. 729,479
Administration fee (Note 3).................................................. 72,948
Registration and filing fees................................................. 19,646
Trustees' fees............................................................... 14,919
Transfer agent fee........................................................... 13,391
Custodian fee................................................................ 10,443
Printing..................................................................... 8,951
Reimbursable administration expenses (Note 3)................................ 6,787
Professional fees............................................................ 6,228
Supplies and postage......................................................... 5,968
Insurance expense............................................................ 3,233
Miscellaneous................................................................ 11,101
-----------
903,094
-----------
Net investment income................................................ 79,446
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities transactions, net:
Proceeds from sales....................................................... 26,123,247
Cost of securities sold................................................... 15,011,850
-----------
Net realized gain.................................................... 11,111,397
Increase in unrealized appreciation for the period, net...................... 7,294,938
-----------
Net realized and unrealized gain on investments...................... 18,406,335
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $18,485,781
===========
</TABLE>
See Notes to Financial Statements.
<PAGE> 7
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
---------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................... $ 79,446 $ 1,025,608
Net realized gain on investments........................... 11,111,397 10,013,505
Net unrealized appreciation for the period................. 7,294,938 10,269,885
---------------- ------------
Net increase in net assets resulting from operations.... 18,485,781 21,308,998
---------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gain on investments ($1.166 per share)... (10,015,944)
From net investment income ($0.118 per share).............. (1,013,621)
------------
Net decrease in net assets resulting from
distributions......................................... (11,029,565)
------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares........................... 25,432,631 54,528,065
Net asset value of shares issued to shareholders for
reinvestment of shareholder distributions............... 10,605,812
Cost of shares redeemed.................................... (19,024,119) (39,045,822)
---------------- ------------
Net increase in net assets from fund share
transactions.......................................... 6,408,512 26,088,055
---------------- ------------
Total increase in net assets............................ 24,894,293 36,367,488
NET ASSETS:
Beginning of period........................................ 135,976,796 99,609,308
---------------- ------------
End of period (including undistributed net investment
income of $91,434 and $11,988, respectively)............ $160,871,089 $135,976,796
============== ============
</TABLE>
See Notes to Financial Statements.
<PAGE> 8
- ---------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Longleaf Partners Small-Cap Fund (the "Fund") is a series of Longleaf Partners
Funds Trust, a Massachusetts business trust which is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company. The Fund was formed on December 21, 1988, and on December
28, 1988 the initial capitalization of $1,500,000 was provided by two principals
of Southeastern Asset Management, Inc., the Investment Counsel, who received
150,000 shares of beneficial interest in return. The Fund commenced its public
offering of shares on February 21, 1989.
The following is a summary of significant accounting policies:
(a) Valuation of Securities and Repurchase Agreements:
(1) Portfolio securities listed or traded on a securities exchange and
over-the-counter securities traded on the NASDAQ national market are
valued at the last sales price. If there are no transactions in the
security that day, securities are valued at the midpoint between the
closing bid and ask prices.
(2) All other portfolio securities for which over-the-counter market
quotations are readily available are valued at the midpoint between the
closing bid and ask prices. Repurchase agreements are valued at cost
which, combined with accrued interest, approximates market.
(3) When market quotations are not readily available, portfolio securities
are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the
Fund's Trustees.
(b) Accounting for Investments:
The Fund follows industry practice and records security transactions on
the day following the trade date (date the order to buy or sell is
executed). Realized gains and losses on security transactions are
determined using the specific identification method. Dividend income is
recognized on the ex-dividend date and interest income is recognized on an
accrual basis.
(c) Federal Income Taxes:
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Accordingly, no
federal income tax provision is required. In addition, the Fund intends to
make any required distributions to avoid the application of a 4%
nondeductible excise tax.
(d) Distributions to Shareholders:
Dividends and distributions to shareholders are recorded on the
ex-dividend date.
<PAGE> 9
NOTE 2. INVESTMENT COUNSEL AGREEMENT
Southeastern Asset Management, Inc. ("Southeastern") serves as Investment
Counsel to the Fund and receives annual compensation from the Fund, computed
daily and paid monthly, in accordance with the following schedule:
<TABLE>
<S> <C>
First $400 million of average daily net assets..................... 1.00%
In excess of $400 million.......................................... .75%
</TABLE>
The Investment Counsel has agreed to reduce its fees on a pro rata basis for
services rendered to the extent that the Fund's normal annual operating expenses
(excluding taxes, interest, brokerage fees, and extraordinary expenses) exceed
1.5% of average annual net assets. No such reduction was necessary for the
current period.
NOTE 3. FUND ADMINISTRATOR
Southeastern also serves as the Fund Administrator and in this capacity is
responsible for managing, performing or supervising the administrative and
business operations of the Fund, including, among other things, the preparation
of all registration statements, prospectuses, tax returns and proxy statements,
daily valuation of the Fund's portfolio and calculation of daily net asset value
per share. The Fund pays a fee as compensation for these services, accrued daily
and paid monthly, of 0.10% per annum of average daily net assets.
Reimbursable administration expenses paid by the Fund to Southeastern consist of
a portion of both the computer support charges for computer programs used in
processing transactions for the Fund and its shareholders and of the salary of
the Fund's Treasurer calculated in accordance with Trustee review and approval.
NOTE 4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
---------- -----------
<S> <C> <C>
Shares sold..................................... 1,627,737 $25,432,631
Shares redeemed................................. (1,261,191) (19,024,119)
---------- -----------
366,546 $ 6,408,512
========== ===========
</TABLE>
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the period (excluding short term
obligations) aggregated $33,069,708 and $26,123,247, respectively. Total
brokerage commissions paid by the Fund during the period were $212,615.
NOTE 6. INVESTMENTS IN SHORT TERM OBLIGATIONS
As excess funds are available, the Fund makes certain short term investments in
cash equivalents, including repurchase agreements. The Fund's custodian bank
sells U.S. government securities to the Fund under an agreement to repurchase
these securities from the Fund at a stated repurchase price including interest
for the
<PAGE> 10
term of the agreement, which is usually overnight or over a week-end. The Fund,
through its custodian, receives delivery of the underlying U.S. government
securities, the market value of which is required to be at least equal to the
repurchase price. A repurchase agreement of $4,344,000 is included in the
statement of assets and liabilities at June 30, 1996.
NOTE 7. UNREALIZED APPRECIATION
Net unrealized appreciation consists of the following:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $28,715,360
Unrealized depreciation..................................... (3,815,136)
-----------
$24,900,224
===========
</TABLE>
NOTE 8. RELATED PARTY SHAREHOLDERS
At June 30, 1996, Mr. O. Mason Hawkins, Chairman of the Board and Chief
Executive Officer of Southeastern and of the Fund, owned 1,061,395 shares of the
Fund, constituting 10.9% of the outstanding shares; Mr. W. Reid Sanders, a
director and Executive Vice President of Southeastern and a member of the Board
of Trustees and President of the Fund, owned 315,135 shares of the Fund,
constituting 3.2% of the outstanding shares. Officers and employees of
Southeastern and their families, Fund trustees and the Southeastern retirement
plan and other affiliates owned an additional 626,290 shares, constituting 6.4%
of the outstanding shares.
NOTE 9. OTHER PORTFOLIO INFORMATION
At June 30, 1996, the Fund's holdings consisted of at least five percent of the
outstanding class of common stock of the following companies: American Safety
Razor Company -- 7.4%, Duff & Phelps Credit Rating Co. -- 5.1%, Rhodes,
Inc. -- 7.7%, The Union Corporation -- 5.4%, and White River Corporation --
7.2%.
<PAGE> 11
- ------------------------------------------------------------------------
LONGLEAF PARTNERS SMALL-CAP FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
The following condensed financial information, including total returns, has been
audited by Coopers & Lybrand L.L.P., independent certified public accountants.
The audit report on the 1995 financial statements issued by Coopers & Lybrand
L.L.P. appears in the Statement of Additional Information and should be read in
conjunction with this condensed financial information. The presentation is for a
share outstanding throughout each period.
<TABLE>
<CAPTION>
NET GAINS
OR
NET (LOSS) ON DISTRI- NET
ASSET NET SECURITIES TOTAL DIVIDENDS BUTIONS ASSET
VALUE INVESTMENT REALIZED FROM FROM NET FROM TOTAL VALUE
BEGINNING INCOME AND INVESTMENT INVESTMENT CAPITAL DISTRI- END OF TOTAL
OF PERIOD (LOSS) UNREALIZED OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN
--------- ---------- ----------- ---------- ---------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six months ended June
30, 1996 (Unaudited)... $ 14.46 $ .01 $ 1.99 $ 2.00 - - - $ 16.46 13.83%(1)
Year ended
December 31,
1995................. 13.28 .12 2.35 2.47 (.12) (1.17) (1.29) 14.46 18.61%
1994................. 13.49 (.03) .52 .49 - (.70) (.70) 13.28 3.64%
1993................. 11.40 (.06) 2.32 2.26 - (.17) (.17) 13.49 19.83%
1992................. 10.67 (.01) .74 .73 - - - 11.40 6.87%
1991................. 8.50 .06 2.17 2.23 (.06) - (.06) 10.67 26.31%
1990................. 12.87 .40 (4.18) (3.78) (.36) (.23) (.59) 8.50 (30.05)%
Two months ended
December 31,
1989................... 13.02 .04 .22 .26 (.05) (.36) (.41) 12.87 2.10%(1)
December 28, 1988 (Date
of Initial
Capitalization) through
October 31, 1989....... 10.00 .17 2.94 3.11 (.09) - (.09) 13.02 31.13%(1)
<CAPTION>
RATIO OF
EXPENSES RATIO OF
NET ASSETS TO NET INCOME
END OF AVERAGE (LOSS) TO PORTFOLIO
PERIOD NET AVERAGE TURNOVER
(THOUSANDS) ASSETS NET ASSETS RATE
----------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Six months ended June
30, 1996 (Unaudited)... $ 160,871 1.23%* .11%* 21.42%
Year ended
December 31,
1995................. 135,977 1.30% .84% 32.95%
1994................. 99,609 1.38% (.22)% 19.79%
1993................. 85,087 1.45% (.45)% 14.37%
1992................. 62,181 1.45% (.03)% 25.80%
1991................. 60,354 1.43% .60% 65.18%
1990................. 47,894 1.43% 3.48% 14.93%
Two months ended
December 31,
1989................... 52,176 1.47%* 1.60%* 3.96%
December 28, 1988 (Date
of Initial
Capitalization) through
October 31, 1989....... 43,860 1.50%*(2) 1.63%* 20.47%
</TABLE>
* Annualized
(1) Aggregate; not annualized.
(2) Before expense limitation fee waiver, this ratio was 1.59%.
<PAGE> 12
FIVE LARGEST HOLDINGS
(REPRESENTS 30.7% OF NET ASSETS AT 6/30/96)
WHITE RIVER CORPORATION (WHRC) 10.2%
A holding company. Its primary operating business provides vehicle valuation and
collision estimating services and software for insurance and auto repair firms.
AMERICAN SAFETY RAZOR COMPANY (RAZR) 5.3%
The largest U.S. maker of private label and value-brand shaving blades and
razors; the largest manufacturer of both premium and value-priced bladed hand
tools and blades; the second largest maker of skin care, bath, pharmaceutical
and specialty custom bar soaps. Also makes cotton swabs, balls and puffs, as
well as specialty industrial and medical blades.
PINKERTON'S, INC. (PKT) 5.3%
One of the largest U.S. based security guard and investigative firms with both
domestic and international offices.
ZURN INDUSTRIES, INC. (ZRN) 5.0%
Leading provider of water quality control systems for non-residential
construction and of products and services for alternate-energy and power plants.
RHODES, INC. (RHD) 4.9%
Leading specialty furniture retailer focusing on affordably priced furniture in
the metropolitan Southeast and Midwest U.S.
<PAGE> 13
PORTFOLIO CHANGES
(UNAUDITED)
JANUARY 1, 1996 THROUGH JUNE 30, 1996
<TABLE>
<CAPTION>
NEW HOLDINGS ELIMINATIONS
- ---------------------------------- -----------------------------
<S> <C>
AMETEK, Inc Chartwell Reinsurance Company
Bay View Capital Corporation Helene Curtis Industries,
FirstFed Financial Corp. Inc.
The Pioneer Group, Inc. Meredith Corporation
Trizec Corporation Ltd.
Zurn Industries, Inc.
</TABLE>
PUBLISHED DAILY PRICE QUOTATIONS
The daily net asset values per share of each series of Longleaf Partners Funds
Trust are reported in the Mutual Fund Quotations tables of major newspapers in
alphabetical sequence under the bold heading LONGLEAF PARTNERS as follows:
"Partners" -- Longleaf Partners Fund
"Realty" -- Longleaf Partners Realty Fund
"Sm-Cap" -- Longleaf Partners Small-Cap Fund
<PAGE> 14
- ---------------------------------------------
TRUSTEES
O. MASON HAWKINS, CFA --
Chairman, Southeastern Asset
Management, Inc.
Memphis, Tennessee
CHADWICK H. CARPENTER, JR. --
Senior Executive Officer, Progress
Software Corporation
Bedford, Massachusetts
JOHN R. McCARROLL, JR. --
Chairman, McCarroll Newman LLC
Memphis, Tennessee
STEVEN N. MELNYK --
Chairman of the Executive
Committee and President,
Riverside Golf Group, Inc.
Jacksonville, Florida
C. BARHAM RAY -- Chairman of the
Board and Secretary, SSM Corp.
Memphis, Tennessee
W. REID SANDERS -- Executive
Vice President, Southeastern
Asset Management, Inc.
Memphis, Tennessee
- ---------------------------------------------
This report is submitted for the general informa-
tion of shareholders of the Fund. For more detailed
information about the Fund, its management, fees,
expenses and other pertinent information, please
see the prospectus.
This report is not authorized for distribution to
prospective investors in the Fund unless preceded
or accompanied by an effective prospectus.
[LOGO] LONGLEAF
PARTNERS
FUNDS
MANAGED BY:
SOUTHEASTERN ASSET
MANAGEMENT, INC.
6075 POPLAR AVE.
SUITE 900
MEMPHIS, TN 38119
(901) 761-2474
(800) 488-4191
----------------------------------------------------
----------------------------------------------------
[LOGO]
SEMI-ANNUAL
REPORT
June 30, 1996
LONGLEAF PARTNERS
SMALL-CAP FUND
----------------------------------------------------
----------------------------------------------------
MANAGED BY:
SOUTHEASTERN ASSET
MANAGEMENT, INC.
