<PAGE> 1
LONGLEAF PARTNERS FUND
July 8, 1996
TO OUR SHAREHOLDERS:
We are pleased to report that Longleaf Partners Fund's return for the first half
of the year continued to exceed that of the market, despite the fact that your
manager made little progress finding qualifying equity investments for the
Fund's substantial cash reserves. The portfolio's liquidity position declined
only slightly from 26.0% at the end of March to 24.6% at this quarter's close.
Through the first six months the Partners Fund appreciated 10.5%. We were up
4.0% in the second quarter. Comparative gains for the S&P 500, including
dividends, were 10.0% and 4.4%, respectively.
The data below summarizes Longleaf Partners Fund's recent cumulative and average
annual returns for the periods ending June 30, 1996:
CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
LONGLEAF PARTNERS FUND S&P 500 INDEX VALUE-LINE INDEX
---------------------- ------------- ----------------
<S> <C> <C> <C>
LAST FIVE YEARS 148.14% 107.38% 51.17%
LAST FOUR YEARS 113.83% 82.85% 43.81%
LAST THREE YEARS 71.82% 60.94% 27.31%
LAST TWO YEARS 41.19% 58.73% 28.88%
LAST YEAR 20.16% 25.92% 13.88%
LAST SIX MONTHS 10.54% 10.04% 7.02%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS*
<TABLE>
<CAPTION>
LONGLEAF PARTNERS FUND S&P 500 INDEX VALUE-LINE INDEX
---------------------- ------------- ----------------
<S> <C> <C> <C>
LAST FIVE YEARS 19.93% 15.70% 8.62%
LAST FOUR YEARS 20.93% 16.29% 9.51%
LAST THREE YEARS 19.77% 17.19% 8.38%
LAST TWO YEARS 18.82% 25.99% 13.53%
LAST YEAR 20.16% 25.92% 13.88%
</TABLE>
Either the market must become more accommodative, or we must achieve the more
difficult feat of finding substantially undervalued, above average businesses in
an overvalued climate. We remain very focused on the latter given the fact that
we can't control the former. In the meantime, it is best for us to remember the
admonition of Blaise Pascal: "I have discovered that all human evil comes from
this, man's being unable to sit still in a room." Or, as we might contemporize,
many portfolio problems emanate from decisions which are impatiently forced as
opposed to those that have been patiently and logically concluded.
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 in order 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. Hopefully, by the time we next report to you, we
will have identified and purchased a few of these core building blocks.
<PAGE> 2
We are very appreciative of our loyal and supportive shareholders/partners who,
in elevated markets like these, have urged us not to violate our price
disciplines. Were we to "pay up," our required and substantial margin-of-safety
cushion of intrinsic value over price would be eroded; and, the odds of success
would be greatly diminished. We will not knowingly reduce our probabilities.
Many of you have inquired about the progress of the Longleaf Fund family's new
addition, Longleaf Partners Realty Fund. We are pleased to report that the
Realty Fund is off to a great start and was the #1 PERFORMING REAL ESTATE MUTUAL
FUND for the FIRST QUARTER, SECOND QUARTER, and FIRST HALF OF 1996 according to
Lipper Analytical Services, Inc., which tracks 50 mutual funds with similar
objectives. Longleaf Partners Realty Fund's net asset value increased by 7.8% in
the second quarter and is up 16.9% since the Fund began operations on January 2.
For those of you who would like information on the new Fund, please contact our
marketing center at (800) 445-9469. You will receive a second quarter report,
application and prospectus which describes the new Fund's investment objectives
and policies, fees and expenses. Please read the prospectus carefully before
making an investment decision.
We extend our best regards to each of you. We 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
- - --------------------------------------------------------------------------------
* The average annual total returns of Longleaf Partners Fund for the one year
and five years ended June 30, 1996 and from its initial public offering on
April 8, 1987 through June 30, 1996 are 20.16%, 19.93% AND 15.61%,
respectively. Fund returns and those of the S&P 500 Stock 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 FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
AT JUNE 30, 1996 (UNAUDITED)
- - ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COMMON STOCK (75.6%) MARKET VALUE
--------- ------------
<S> <C> <C> <C> <C>
BEVERAGES (6.0%)
1,271,000 Coca-Cola Enterprises, Inc............................... $44,008,375
2,550,000 The Seagram Company Ltd. ................................ 85,743,750
------------
129,752,125
------------
BUSINESS SERVICES (1.2%)
600,000 Ecolab, Inc. ............................................ 19,800,000
47,300 Rollins, Inc............................................. 1,111,550
279,200 * The Union Corporation.................................... 5,514,200
------------
26,425,750
------------
ENTERTAINMENT (0.3%)
171,277 * Chris-Craft Industries, Inc.............................. 7,536,188
------------
ENVIRONMENTAL SERVICES (3.0%)
512,900 Safety-Kleen Corp........................................ 8,975,750
1,709,800 WMX Technologies, Inc.................................... 55,995,950
------------
64,971,700
------------
FINANCIAL SERVICES (5.7%)
1,170,000 Mellon Bank Corporation.................................. 66,690,000
2,363,300 PaineWebber Group, Inc................................... 56,128,375
------------
122,818,375
------------
FOOD (12.8%)
2,298,900 Nabisco Holdings Corp.................................... 81,323,588
3,818,000 The Quaker Oats Company.................................. 130,289,250
478,333 * Ralcorp Holdings, Inc.................................... 9,865,618
846,500 Ralston Purina Group Common Stock........................ 54,281,812
------------
275,760,268
------------
HEALTH CARE (0.6%)
430,419 WellPoint Health Networks Inc............................ 13,450,594
------------
INSURANCE BROKERAGE (3.6%)
3,770,142 Alexander & Alexander Services Inc....................... 74,460,304
42,500 Marsh & McLennan Companies, Inc.......................... 4,101,250
------------
78,561,554
------------
INVESTMENT MANAGEMENT COMPANIES (4.4%)
1,200,000 Franklin Resources, Inc. ................................ 73,200,000
778,000 The Pioneer Group, Inc. ................................. 20,811,500
------------
94,011,500
------------
MANUFACTURING (2.2%)
1,407,000 Louisiana-Pacific Corporation............................ 31,129,875
574,000 * USG Corporation.......................................... 16,000,250
------------
47,130,125
------------
MULTI-INDUSTRY (3.4%)
1,565,000 Alexander & Baldwin, Inc................................. 37,755,625
1,488,300 Whitman Corporation...................................... 35,905,238
------------
73,660,863
------------
</TABLE>
See Notes to Financial Statements.
<PAGE> 4
- - ---------------------------------------------------------------------
LONGLEAF PARTNERS FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
AT JUNE 30, 1996 (UNAUDITED)
- - ---------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET VALUE
--------- --------------
<S> <C> <C> <C> <C>
NATURAL RESOURCES (5.5%)
6,228,300 The Horsham Corporation.................................. $ 86,417,662
866,800 Rayonier Inc............................................. 32,938,400
--------------
119,356,062
--------------
PROPERTY & CASUALTY INSURANCE (1.0%)
110,616 * Alleghany Corp........................................... 21,238,272
--------------
PUBLISHING (13.0%)
3,170,600 Knight-Ridder, Inc....................................... 229,868,500
158,300 The Washington Post Company - Class B.................... 51,289,200
--------------
281,157,700
--------------
REAL ESTATE (0.7%)
788,000 Cousins Properties Incorporated.......................... 15,464,500
--------------
RETAIL (1.1%)
520,000 American Stores Company.................................. 21,450,000
225,000 * Craig Corporation........................................ 2,868,750
--------------
24,318,750
--------------
TELECOMMUNICATIONS (3.2%)
2,839,237 * 360() Communications Company............................. 68,141,688
--------------
TRANSPORTATION (7.9%)
1,070,000 * Federal Express Corporation.............................. 87,740,000
1,934,100 Kansas City Southern Industries, Inc..................... 82,924,538
--------------
170,664,538
--------------
TOTAL COMMON STOCKS (COST $1,267,978,677)............................... 1,634,420,552
--------------
SHORT TERM OBLIGATIONS (24.6%)
Certificate of Deposit - due 8-19-96 at 4.25%........................... 45,000
Repurchase Agreement with State Street Bank and Trust Company, dated
6-28-96, due 7-1-96 at 4.75%, collateralized by $35,835,275 U.S.
Treasury Bond due 11-15-15 (Repurchase proceeds - $35,140,904) (Cost
$35,127,000)........................................................... 35,127,000
U.S. Treasury Bill, due 8-22-96, yield at date of purchase 5.08%... 148,923,167
U.S. Treasury Bill, due 8-29-96, yield at date of purchase 5.13%... 99,178,917
U.S. Treasury Bill, due 9-12-96, yield at date of purchase 5.24%... 148,448,750
U.S. Treasury Bill, due 9-26-96, yield at date of purchase 5.22%... 98,772,333
--------------
530,495,167
--------------
TOTAL INVESTMENTS (COST $1,798,473,844)* *................................. 100.2% 2,164,915,719
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................. (0.2) (4,248,032)
----- --------------
NET ASSETS................................................................. 100.0% $2,160,667,687
===== =============
NET ASSET VALUE PER SHARE (OFFERING AND REDEMPTION PRICE PER SHARE) BASED ON
92,402,890 SHARES OUTSTANDING AT JUNE 30, 1996.................................. $23.38
</TABLE>
* Non-income producing security
* * Also represents aggregate cost for Federal income tax purposes
See Notes to Financial Statements.
<PAGE> 5
- - ---------------------------------------------------------------------
LONGLEAF PARTNERS FUND
STATEMENT OF ASSETS AND LIABILITIES
AT JUNE 30, 1996 (UNAUDITED)
- - ---------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments:
Securities, at market value (cost $1,267,978,677) (Note 1 and Note 7)...... $1,634,420,552
U.S. Treasury Bills........................................................ 495,323,167
Repurchase agreement (Note 6).............................................. 35,127,000
Certificate of deposit..................................................... 45,000
--------------
TOTAL INVESTMENTS 2,164,915,719
Cash......................................................................... 733
Dividends and interest receivable............................................ 2,826,268
Prepaid assets............................................................... 77,133
Insurance reserve premium.................................................... 52,272
--------------
TOTAL ASSETS 2,167,872,125
--------------
LIABILITIES:
Payable for:
Securities purchased....................................................... 5,444,739
Investment Counsel fee (Note 2)............................................ 1,417,923
Administration fee (Note 3)................................................ 178,127
Other accrued expenses....................................................... 163,649
--------------
TOTAL LIABILITIES 7,204,438
--------------
NET ASSETS $2,160,667,687
=============
Composition of net assets:
Paid-in capital (unlimited number of shares authorized, 92,402,890 shares
outstanding)............................................................ $1,662,303,459
Undistributed net investment income........................................ 20,622,252
Accumulated net realized gain.............................................. 111,300,101
Unrealized appreciation of investments (Note 7)............................ 366,441,875
--------------
NET ASSETS $2,160,667,687
=============
NET ASSET VALUE (OFFERING AND REDEMPTION PRICE) PER SHARE
($2,160,667,687 DIVIDED BY 92,402,890 SHARES).............................. $23.38
======
</TABLE>
See Notes to Financial Statements.
<PAGE> 6
- - ---------------------------------------------------------------------
LONGLEAF PARTNERS FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- - ---------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends................................................................... $ 18,314,382
Interest.................................................................... 12,091,796
------------
30,406,178
------------
EXPENSES:
Investment Counsel fee (Note 2)............................................. 8,228,416
Administration fee (Note 3)................................................. 1,030,820
Transfer Agent fee.......................................................... 189,258
Supplies and postage........................................................ 109,398
Reimbursable administration expenses (Note 3)............................... 82,047
Registration and filing fees................................................ 51,689
Printing.................................................................... 40,775
Trustees' fees.............................................................. 29,835
Insurance expense........................................................... 24,999
Custodian fee............................................................... 17,902
Professional fees........................................................... 8,691
Miscellaneous............................................................... 74,852
------------
9,888,682
------------
Net investment income............................................... 20,517,496
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from securities transactions, net:
Proceeds from sales...................................................... 326,197,670
Cost of securities sold.................................................. 215,032,186
------------
Net realized gain................................................... 111,165,484
Increase in unrealized appreciation for the period, net..................... 72,919,217
------------
Net realized and unrealized gain on investments..................... 184,084,701
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $204,602,197
============
</TABLE>
See Notes to Financial Statements.
<PAGE> 7
- - ---------------------------------------------------------------------
LONGLEAF PARTNERS 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...................................... $ 20,517,496 $ 20,371,114
Net realized gain on investments........................... 111,165,484 37,694,798
Net unrealized appreciation for the period................. 72,919,217 239,294,987
---------------- --------------
Net increase in net assets resulting from operations.... 204,602,197 297,360,899
---------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($0.24 per share)............... (20,363,752)
From net realized gain on investments ($0.444 per share)... (37,672,942)
--------------
Net decrease in net assets resulting from
distributions......................................... (58,036,694)
--------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares........................... 235,929,881 1,109,962,005
Net asset value of shares issued to shareholders for
reinvestment of shareholder distributions............... 54,537,285
Cost of shares redeemed.................................... (156,331,637) (280,883,298)
---------------- --------------
Net increase in net assets from fund share
transactions.......................................... 79,598,244 883,615,992
---------------- --------------
Total increase in net assets............................ 284,200,441 1,122,940,197
NET ASSETS:
Beginning of period........................................ 1,876,467,246 753,527,049
---------------- --------------
End of period (including undistributed net investment
income of $20,622,252 and $104,756, respectively)....... $2,160,667,687 $1,876,467,246
============== =============
</TABLE>
See Notes to Financial Statements.
<PAGE> 8
- - ---------------------------------------------------------------------
LONGLEAF PARTNERS FUND
NOTES TO FINANCIAL STATEMENTS
- - ---------------------------------------------------------------------
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Longleaf Partners 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 organized on November 26, 1986 and on March 24, 1987 the
initial capitalization of $100,000 was provided by two principals of
Southeastern Asset Management, Inc., the Investment Counsel, who received 10,000
shares of beneficial interest in return. The Fund commenced its public offering
of shares on April 8, 1987.
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. Short-term
U.S. Government obligations are valued at amortized cost which
approximates current market value.
(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................................. 10,593,140 $ 235,929,881
Shares redeemed............................. (6,917,294) (156,331,637)
----------- --------------
3,675,846 $ 79,598,244
=========== =============
</TABLE>
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the period (excluding short term
obligations) aggregated $213,134,757 and $326,197,670 respectively. Total
brokerage commissions paid by the Fund during the period were $999,080.
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 term of the agreement, which is usually overnight or over a week-end.
The Fund, through its custodian,
<PAGE> 10
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 $35,127,000 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.................................... $378,353,103
Unrealized depreciation.................................... (11,911,228)
------------
$366,441,875
============
</TABLE>
NOTE 8. RELATED PARTY SHAREHOLDERS
At June 30, 1996, officers and employees of Southeastern and their families,
Fund trustees and the Southeastern retirement plan and other affiliates owned
1,403,617 shares of the Fund, constituting 1.5% 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: Alexander &
Alexander Services, Inc. -- 9.0%, Craig Corporation -- 5.3%, Horsham
Corporation -- 6.5%, Knight-Ridder, Inc. -- 6.5%, and The Union Corporation --
5.0%.
<PAGE> 11
- - ------------------------------------------------------------------------
LONGLEAF PARTNERS 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 (LOSSES) ON DISTRI- NET
ASSET SECURITIES TOTAL DIVIDENDS BUTIONS ASSET
VALUE NET REALIZED FROM FROM NET FROM TOTAL VALUE
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT CAPITAL DISTRI- END OF TOTAL
OF PERIOD INCOME UNREALIZED OPERATIONS INCOME GAINS BUTIONS PERIOD RETURN
--------- ---------- ----------- ---------- ---------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six months ended June
30, 1996 (Unaudited)... $ 21.15 $ .22 $ 2.01 $ 2.23 - - - $ 23.38 10.54%(1)
Year ended December 31,
1995................. 17.13 .30 4.40 4.70 (.24) (.44) (.68) 21.15 27.50%
1994................. 16.92 .21 1.30 1.51 (.16) (1.14) (1.30) 17.13 8.96%
1993................. 14.70 .10 3.16 3.26 (.09) (.95) (1.04) 16.92 22.20%
1992................. 13.34 .07 2.65 2.72 (.07) (1.29) (1.36) 14.70 20.47%
1991................. 10.21 .05 3.93 3.98 (.06) (.79) (.85) 13.34 39.19%
1990................. 12.62 .13 (2.16) (2.03) (.15) (.23) (.38) 10.21 (16.35)%
Two months ended
December 31,
1989................... 14.30 .03 (.10) (.07) (.08) (1.53) (1.61) 12.62 (0.47)%(1)
Year ended
October 31,
1989................. 11.25 .18 3.00 3.18 (.13) - (.13) 14.30 28.38%
1988................. 8.69 .14 2.50 2.64 (.08) - (.08) 11.25 30.69%
March 24, 1987
(Date of Initial
Capitalization)
through October 31,
1987................... 10.00 .11 (1.42) (1.31) - - - 8.69 (13.14)%(1)
<CAPTION>
RATIO OF
EXPENSES RATIO OF
NET ASSETS TO NET
END OF AVERAGE INCOME TO PORTFOLIO
PERIOD NET AVERAGE TURNOVER
(THOUSANDS) ASSETS NET ASSETS RATE
------------ -------- ----------- ---------
<S> <C> <C> <C> <C>
Six months ended June
30, 1996 (Unaudited)... $ 2,160,668 .95%* 1.98%* 15.67%
Year ended December 31,
1995................. 1,876,467 1.01% 1.45% 12.60%
1994................. 753,527 1.17% 1.18% 27.39%
1993................. 397,282 1.26% .63% 19.12%
1992................. 243,678 1.29% .50% 29.12%
1991................. 177,878 1.30% .42% 45.11%
1990................. 129,643 1.32% 1.13% 52.45%
Two months ended
December 31,
1989................... 148,680 1.31%* 1.73%* 6.67%
Year ended
October 31,
1989................. 139,608 1.35% 1.37% 57.72%
1988................. 50,676 1.50%(2) 1.40% 92.68%
March 24, 1987
(Date of Initial
Capitalization)
through October 31,
1987................... 25,787 1.50%*(2) 1.61%* 70.00%
</TABLE>
* Annualized
(1) Aggregate; not annualized.
(2) Before expense limitation fee waiver, this ratio was 1.64% and 1.83% for the
1988 and 1987 periods, respectively.
<PAGE> 12
FIVE LARGEST HOLDINGS
(REPRESENTS 28.7% OF NET ASSETS AT 6/30/96)
KNIGHT-RIDDER, INC. (KRI) 10.6%
One of the largest newspaper publishers in the U.S. and a worldwide provider of
electronic information services.
THE QUAKER OATS COMPANY (OAT) 6.0%
A producer of brand name packaged foods and beverages including numerous hot and
cold cereals, Gatorade, Snapple, and Aunt Jemima.
FEDERAL EXPRESS CORPORATION (FDX) 4.1%
Integrated air-ground transportation company providing overnight and second-day
delivery of packages and documents worldwide.
THE HORSHAM CORPORATION (HSM) 4.0%
A Canadian based company consisting of three primary businesses - refining and
marketing petroleum products in the U.S. through Clark Refining & Marketing,
owning and operating gold mines via American Barrick Resources Corp., and
developing real estate through ownership of Horsham Properties GmbH in Germany
and Trizec Corp. in Canada.
THE SEAGRAM COMPANY LTD. (VO) 4.0%
Global producer and marketer of brand name distilled spirits (Absolut, Chivas),
juices (Tropicana), coolers and mixers (Seagram's). Owns entertainment giant MCA
which includes Universal Studios, a large film library, and television and movie
production and syndication. Also holds 14.9% of Time Warner stock.
<PAGE> 13
PORTFOLIO CHANGES
(UNAUDITED)
JANUARY 1, 1996 THROUGH JUNE 30, 1996
<TABLE>
<CAPTION>
NEW HOLDINGS ELIMINATIONS
- - ---------------------------------------- -----------------------------
<S> <C>
Nabisco Holdings Corp. American Express Company
Rayonier Inc. Hasbro Inc.
USG Corporation Health Systems International,
360() Communications Company Inc.
Hilton Hotels Corp.
McKesson Corporation
Polaroid Corp.
</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 FUND
----------------------------------------------------
----------------------------------------------------
MANAGED BY:
SOUTHEASTERN ASSET
MANAGEMENT, INC.
