LEBENTHAL FUNDS, INC.
ANNUAL REPORT
NOVEMBER 30, 1996
LEBENTHAL
THE WORKHORSE OF INVESTMENTS.
LEBENTHAL FUNDS, INC.
120 BROADWAY, NEW YORK, NY 10271
212-425-6116
OUTSIDE NYC TOLL FREE 1-800-221-5822
_______________________________________________________________________________
Dear Shareholder:
The Lebenthal bond funds continue to do very well versus their peer funds. For
rolling twelve-month periods, for the twenty months ended November 30, 1996, of
the ninety-five New York funds followed by Lipper Analytical Services, Inc.
(Lipper), the $122.6 million Lebenthal New York Fund was the best performing
fund for fourteen months, the second best performing fund for five months, and
the fourth best performing fund for one month.
The total return statistics of the Lebenthal funds for the year ended November
30, 1996, were: 6.63% for the New York Fund, 6.18% for the New Jersey Fund, and
6.35% for the Taxable Municipal bond fund. These figures do not reflect the
maximum 4.5% sales charge. Taking that into account, an investor who put $1,000
into each of the funds on December 1, 1995, reinvested the monthly dividends,
and sold on November 30, 1996, would have offset the full sales charge and
still have received $1,017.86 from the New York Fund, $1,013.40 from the New
Jersey Fund, and $1,015.60 from the Taxable Municipal Fund.
The performance records of the $5.2 million New Jersey and $14.6 million
Taxable Municipal Funds relative to their peers have also been excellent. For
rolling twelve months periods, for the six months ended November 30 that the
Lebenthal New Jersey Fund has been followed by Lipper, it was ranked #1 for
five months and #2 for one month out of 53 peer funds. Again, for rolling
twelve-month periods, for the six months that the Taxable Municipal Bond Fund
has been followed by Lipper, out of the more than 100 funds listed as being
peer funds, it was ranked #2 once; #4 twice, #14 once, #16 once, and #33 once.
We are also pleased with the 19.09% and 49.76% total returns (without load and
not annualized) of the Lebenthal New York Fund for the three year and five year
periods ended November 30, 1996. These returns places it #2 and #2 out of 61
and 43 NY funds followed by Lipper and which had been in existence for the
entire three and five-year time periods.
The total return of each fund, assuming payment of a full 4.5% load, from
inception through November 30, 1996, was (a) 46.33% for The Lebenthal New York
Municipal Bond Fund (June 24, 1991); (b) 5.40% for The Lebenthal New Jersey
Bond Fund (December 1, 1993); and (c) 18.76% for The Lebenthal Taxable
Municipal Bond Fund (December 1, 1993).
The SEC yield of the three fund's at their November 30, 1996, offering prices
were: New York, 4.54%; New Jersey, 4.88%; and Taxable Municipal, 6.80%. The
definition of SEC yield is the annualized current return for the 30-day period
prior to a named date divided by the average public offering price for the same
period.
The performance of the economy and the financial markets over the last year
surprised most economists and investors, who almost universally believed in
late 1995 that the US economy was either in or about to enter a recession. That
erroneous view resulted from (1) the bitter cold winter which slowed economic
activity in the northeast where the majority of the most widely quoted and
visible economists reside and (2) the several Federal government shutdowns
which caused the misreporting of employment and other economic data.
Forecasters were misled by the near cessation of growth in the Northeast which
they were personally experiencing not realizing that economic growth was
accelerating in the rest of the country particularly in California.
When investors, particularly those who were leveraged, realized that
inflation-adjusted GNP growth was running above 3.0% and that the unemployment
rate had dropped to below the 5.5% range which has in the past caused excessive
wage inflation, they sold bonds with a vengeance particularly since the prices
of commodities and gold were up strongly due to problems in the oil, copper,
and grain markets. Between the year end 1995 bond market high and the May 31,
1996, bond market nadir, the price of the long treasury bond declined 15.0% as
its yield-to-maturity rose from 5.95% to 7.18%.
Under normal circumstances, an increase in short-term interest rates by the
Federal Reserve could have been expected prior to mid-year since there had been
three consecutive months of large gains in employment, hours worked, wage
rates, and general economic growth. However, no tightening actions occurred
because (1) only small increases occurred in the wholesale and consumer price
indices inasmuch as manufacturers and retailers were unable to pass along their
increased costs due to competitive pressures both domestic and foreign and (2)
a cautious attitude was prudent in advance of (a) national elections and (b)
Congressional approval hearings on the appointment of Mr. Greenspan and two
other nominees to the Federal Reserve Board. You may recall that numerous
congresspersons were condemning the Federal Reserve for being unacceptably and
unnecessarily anti-growth.
The lack of Fed action proved fortuitous because various economic reports
showed a weakening of U.S. growth in the third quarter probably due to the
ripple effects of two extended General Motors strikes. These signs of weakness
ignited a powerful bond market rally which caused the yield on the long
treasury to drop from the 7.18% level of May 31 to 6.40% by the November 30,
1996, date of this report, which is equivalent to a price increase of 10.7%.
Many economists have opined that most of this rally is attributable to
accelerated buying of treasury obligations by foreigners taking advantage of
the rising value of the dollar and our higher inflation-adjusted interest
rates. Japan and various European governments were desirous of having the value
of the dollar rise versus their currencies as a way of creating demand for
their export industries at a time when recessionor worseloomed.
We think that the U.S. economy is currently accelerating due to catch-up
production at General Motors and its suppliers, inventory rebuilding throughout
the economy, and strength in housing and airline construction. Fueling the
improvement in the economy is the greatly increased wealth of the American
consumer over the last year resulting from (1) a $2.0-$2.25 trillion rise in
the equity and real estate markets and (2) tens of billions of dollars of
additional wages resulting from: (a) the addition of approximately 2.5 million
people to the work force; (b) higher wages and (c) employees working longer
hours. It is our opinion that consumers will spend some of this vast increase
in wealth and income particularly since numerous recent opinion polls show that
the American public is very positive about both their present financial
condition and the outlook for the future.
Even though we think that economic growth in the months ahead could be strong
enough to cause the yield on the long treasury to rise to 7.0-7.25% up from
today's 6.40% level, we would not be surprised if they didn't fully recover
their losses by this time next year (November 30, 1997). Although there could
be an anticipatory bond market sell-off at any time, we think that the decline
could start in earnest in March 1997 when it becomes obvious that most major
world economies, with possible exception of Japan, are expanding in unison.
The month of March is being suggested as the likely start of a bond market
decline because, by then, the typical winter related slowdown of employment
growth and housing construction will have ended. A March 1997 bond market
correction would be a replay of bond market sell-offs in both March 1994 and
March 1996. March 1995 escaped carnage because the Federal Reserve Board was
being cautious in the aftermath of the Mexico devaluation, the Orange County
bankruptcy, the virtual collapse of the mortgage and currency derivative
markets, and other financial disasters associated with the major rise in
short-term interest rates it instituted during early 1994.
We think the Federal Reserve Board could choose to raise short-term rates by
25-75 basis points perhaps starting in March or April 1997 in an effort to
restrain the wage inflation that could easily result from the rate of
unemployment dropping from today's 5.3% to below 5% at various times during
1997. If the rate should drop below 5%, it would be the first time that has
happened in 23 years.
Ameliorating the need for aggressive Fed tightening is the inability of U.S.
manufacturers to increase prices because, when they have tried that of late,
wholesalers and retailers have chosen to purchase similar goods for sale to
consumers from overseas at lesser prices. The ability of overseas manufacturers
to undercut the prices of domestic U.S. suppliers results from their lower
labor costs and the continued strength of the dollar. Amplifying the lack of
domestic pricing power in the months ahead is the likelihood that the relative
value of the dollar will increase due to the interest-rate rises we are
forecasting until foreign economies grow enough for their governments to start
increasing their rates which, in our opinion, is not likely to happen for at
least a couple of years.
A year end bond market rally could commence around November 1997 when
government economic statistics again overstate the extent of the Winter
slowdown. But, when Spring 1998 comes around, treasury bond yields could again
return to the 6.5%-7% range because there appears no reason for the U.S.
economy to slow particularly when economic growth overseas should be expanding
strongly if the weather and political problems holding back growth in Japan,
Europe, India, Thailand, Korea, and China are resolved. The world economic
engine should be chugging along nicely by mid 1998 or so we think.
In the economic environment just described, caution is advisable. Thus, we are
continuing to follow the same strategy that has thus far allowed us to
outperform most of our peer funds over the last year as described in the
opening paragraphs of this report. That strategy is to stay fully-invested in
high-quality, liquid instruments with current or premium coupons. Yes, it would
be more cautious to keep a substantive cash reserve but we believe that you
bought a bond fund with the idea that it would be mostly invested in bonds. In
any case, we have learned that successfully forecasting interest-rate
inflection points is almost impossible so we believe in being fully invested at
almost all times.
Even though the $183 billion new issue calendar was the largest it had been in
several years, tax-exempts considerably outperformed taxable instruments during
the last year primarily because (1) individual investors returned to buying
municipals after deciding that passage of a flat tax was unlikely and (2)
insurance companies were unusually aggressive buyers due to increased
profitability. We think that municipals will continue to outperform taxables in
the coming year because it appears that the new issue calendar could decline
18% to $150 billion or less without any corresponding decline in demand. In
fact, we think that investor demand for tax-free bonds will increase
considerably in 1997 because of the relative unattractiveness of equities going
forward after their enormous rise of the last couple of years.
Please be mindful that the information and statistics included in this
commentary are not guaranteed. However, they have been obtained from reliable
sources and are believed to be accurate.
We thank you for the opportunity to be of service.
Very truly yours,
James L. Gammon
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
PERFORMANCE COMPARISON CHART
_______________________________________________________________________________
The following chart compares the performance of Lebenthal New York Municipal
Bond Fund (with and without the 4.5% sales load), for the one year and since
inception periods, against the Lehman Brothers Municipal Bond Index (Lehman
Index) for the same time periods. It is important to keep in mind that the
Lehman Index excludes the effects of any fees or sales charges, and does not
reflect state-specific bond market performance.
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
Performance Comparison Chart
AVERAGE ANNUAL TOTAL RETURN
SINCE COMMENCEMENT
ONE OF OPERATIONS
YEAR JUNE 24, 1991
------- ---------------
Lebenthal New York Municipal Bond Fund:
with sales load 1.79% 7.26%
without sales load 6.63% 8.19%
Lehman Index 5.88% 8.09%
Past performance is not predictive of future performance.
LEBENTHAL NEW JERSEY MUNICIPAL BOND FUND
PERFORMANCE COMPARISON CHART
_______________________________________________________________________________
The following chart compares the performance of Lebenthal New Jersey Municipal
Bond Fund (with and without the 4.5% sales load), for the one year and since
inception periods, against the Lehman Brothers Municipal Bond Index (Lehman
Index) for the same time periods. It is important to keep in mind that the
Lehman Index excludes the effects of any fees or sales charges, and does not
reflect state-specific bond market performance.
LEBENTHAL NEW JERSEY MUNICIPAL BOND FUND
Performance Comparison Chart
AVERAGE ANNUAL TOTAL RETURN
SINCE COMMENCEMENT
ONE OF OPERATIONS
YEAR DECEMBER 1, 1993
------ ------------------
Lebenthal New Jersey Municipal Bond Fund:
with sales load 1.34% 1.77%
without sales load 6.18% 3.36%
Lehman Index 5.88% 6.05%
Past performance is not predictive of future performance.
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
PERFORMANCE COMPARISON CHART
_______________________________________________________________________________
The following chart compares the performance of Lebenthal Taxable Municipal
Bond Fund (with and without the 4.5% sales load), for the one year and since
inception periods, against the Lehman Brothers Long Corporate Bond Index
(Lehman Index) for the same time periods. It is important to keep in mind that
the Lehman Index excludes the effects of any fees or sales charges.
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
Performance Comparison Chart
AVERAGE ANNUAL TOTAL RETURN
SINCE COMMENCEMENT
ONE OF OPERATIONS
YEAR DECEMBER 1, 1993
------ ------------------
Lebenthal Taxable Municipal Bond Fund:
with sales load 1.56% 5.91%
without sales load 6.35% 7.56%
Lehman Index 6.78% 8.16%
Past performance is not predictive of future performance.
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (92.60%)
- -------------------------------------------------------------------------------
$ 1,285,000 Monroe County, New York IDA Civic
Facility (DePaul Community Facility),
6.50%, due 02/01/24,
(SONYMA Insured) $1,367,484 Aa
2,290,000 New York, New York - Series C,
General Obligation, 7.25%,
due 08/15/24 2,482,681 Baa1 BBB+
2,400,000 New York State Dormitory Authority,
7.40%, due 08/01/30, (FHA Insured) 2,698,776 Aa AAA
7,210,000 New York State Dormitory Authority
(Highlands Center),
6.60%, due 02/01/34, (FHA Insured) 7,747,649 AA
2,330,000 New York State Dormitory Authority
(Presbyterian Residential Community),
6.50%, due 08/01/34, (FHA Insured) 2,479,376 AA
750,000 New York State Dormitory Authority
(State University Educational
Facilities), 7.00%, due 05/15/16 807,023 Baa1 BBB+
3,900,000 New York State Dormitory Authority
(Nottingham Retirement Community),
6.125%, due 07/01/25,
(SONYMA Insured) 4,036,461 Aa
3,500,000 New York State Dormitory Authority
(Jewish Geriatric - Long Island),
7.35%, due 08/01/29, (FHA Insured) 3,974,985 AAA
5,190,000 New York State Dormitory Authority
(Niagara Frontier Home),
6.40%, due 02/01/35, (FHA Insured) 5,499,895 AA
4,755,000 New York State Dormitory Authority
(Geneva Nursing Home II),
6.20%, due 08/01/35, (FHA Insured) 4,962,033 AA
3,500,000 New York State Dormitory Authority
(Lakeside Memorial Hospital),
6.00%, due 02/01/21, (FHA Insured) 3,598,910 AAA
3,500,000 New York State Dormitory Authority
(St. Johns Health),
6.25%, due 02/01/36, (FHA Insured) 3,660,090 AA
2,730,000 New York State Dormitory Authority
(Jewish Home of Central New York),
6.25%, due 07/01/25, (MBIA Insured) 2,942,476 Aaa
1,000,000 New York State Dormitory Authority
(Amsterdam Memorial Hospital),
6.00%, due 08/01/35, (FHA Insured) 1,020,270 AAA
2,400,000 New York State Dormitory Authority
(W K Nursing Home Corporation),
6.125%, due 02/01/36, (FHA Insured) 2,487,936 AAA
970,000 New York State Dormitory Authority
(Special Surgery),
6.05%, due 08/01/36, (FHA Insured) 994,405 Aa
3,000,000 New York State Dormitory Authority
(New York Methodist Hospital),
6.05%, due 02/01/34, (AMBAC Insured) 3,137,850 Aaa AAA
1,000,000 New York State Dormitory Authority
(Grace Manor Health Care Facility),
6.15%, due 07/01/18, (SONYMA Insured) 1,031,730 Aa
1,000,000 New York State Dormitory Authority
(St. Lukes Home Residential Health),
6.375%, due 08/01/35, (FHA Insured) 1,051,680 AA
See Notes to Financial Statements.
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (Continued)
- -------------------------------------------------------------------------------
$ 1,000,000 New York State Energy Research &
Development Authority - Industrial
Development & Pollution Control
(Brooklyn Union and Gas),
6.75%, due 02/01/24, (MBIA Insured) $1,094,640 Aaa AAA
6,000,000 New York State Energy Research &
Development Authority - Electric
Facilities - (Consolidated Edison
Company of New York),
6.75%, due 01/15/27 6,362,040 A1 A+
1,000,000 New York State Energy Research &
Development Authority - Electric
Facilities - (Long Island Lighting),
7.15%, due 02/01/22 1,031,930 Ba1 BB+
500,000 New York State Energy Research &
Development Authority - Pollution
Control - (Niagara Mohawk Power
Corporation),
6.625%, due 10/01/13, (FGIC Insured) 552,610 Aaa AAA
1,750,000 New York State Medical Hospital
Nursing Facilities Finance Agency,
6.60%, due 02/15/31, (FHA Insured) 1,877,803 AAA
1,500,000 New York State Housing Finance
Agency MHRB - Series C,
6.50%, due 08/15/24, (FHA Insured) 1,554,000 Aa AAA
2,000,000 New York State Housing Finance Agency
(Housing Project Meeting - Series A),
6.125%, due 11/01/20, (FSA Insured) 2,053,620 Aaa AAA
2,515,000 New York State Housing Finance
Agency (Multi-family Housing Meeting
- Series C), 6.10%, due 08/15/28,
(SONYMA Insured) 2,543,998 Aa
3,400,000 New York State Housing Finance
Agency (Phillips Village Project -
Series A), 7.75%, due 08/15/17,
(FHA/SONYMA Insured) 3,785,152 A
6,750,000 New York State Medical Care
Facilities Finance Agency - Series B,
6.60%, due 08/15/34, (FHA Insured) 7,249,635 Aa AA
175,000 New York State Medical Care
Facilities Finance Agency, Mental
Health, 7.30%, due 02/15/21 193,452 Baa1 BBB+
5,300,000 New York State Medical Care
Facilities Finance Agency,
6.90%, due 08/15/34,
(AMBAC/FHA Insured) 6,003,045 Aaa AAA
6,950,000 New York State Medical Care
Facilities Finance Agency - Series C,
6.375%, due 08/15/29, (FHA Insured) 7,308,620 Aa AA
500,000 New York State Medical Care
Facilities Finance Agency (New York
Downtown Hospital - Series A),
6.70%, due 02/15/12 519,335 Baa BBB
2,600,000 New York State Medical Care
Facilities Finance Agency
(New York Downtown Hospital -
Series A), 6.80%, due 02/15/20 2,706,027 Baa BBB
2,505,000 New York State Medical Care
Facilities Finance Agency
(Mortgage Project - Series A),
6.50%, due 02/15/35, (FHA Insured) 2,672,234 Aa AA
See Notes to Financial Statements.
LEBENTHAL NEW YORK MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ------------ ------- --------
MUNICIPAL BONDS (Continued)
- -------------------------------------------------------------------------------
$ 2,000,000 New York State Medical Care
Facilities Finance Agency
(Brookdale Hospital Medical Center
- Series A), 6.80%, due 08/15/12 $ 2,105,000 Baa BBB
2,550,000 New York State Medical Care
Facilities Finance Agency
(Brookdale Hospital Medical Center
- Series A), 6.85%, due 02/15/17 2,683,544 Baa BBB
5,000,000 New York State Medical Care
Facilities Finance Agency
(Mortgage Project - Series D),
6.375%, due 02/15/35, (FHA Insured) 5,259,050 Aa AA
TOTAL MUNICIPAL BONDS
(COST $106,400,421) 113,537,445
COMMERCIAL PAPER (0.11%)
- -------------------------------------------------------------------------------
145,000 Ford Motor Credit Company, 5.40%,
due 12/03/96 145,000
(COST $145,000)
Shares
- ----------
CLOSED-END FUNDS (5.39%)
- -------------------------------------------------------------------------------
133,663 Munivest New York Insured Fund 1,595,602
25,853 Muniyield New York Insured Fund 387,795
332,855 Muniyield New York Insured Fund II 4,368,722
10,000 Muniyield New York Insured Fund III 130,000
11,000 Taurus Muni New York Holdings 122,375
TOTAL CLOSED-END FUNDS
(COST $6,510,648) 6,604,494
TOTAL INVESTMENTS (98.10%)
(COST $113,056,069#) 120,286,939
CASH AND OTHER ASSETS, NET OF
LIABILITIES (1.90%) 2,324,374
NET ASSETS (100.00%) $122,611,313
# Aggregate cost for federal income tax purposes is $113,060,233. Aggregate
unrealized appreciation and depreciation, based on cost for federal income tax
purposes, are $7,234,656 and $7,950 respectively, resulting in net unrealized
appreciation of $7,226,706.
KEY:
AMBAC = Ambac Indemnity Corporation
FGIC = Federal Guaranty Insurance Corporation
FHA = Federal Housing Administration
MBIA = Municipal Bond Insurance Association
MHRB = Multi-family Housing Revenue Bond
SONYMA = State of New York Mortgage Agency
See Notes to Financial Statements.
LEBENTHAL NEW JERSEY MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (84.62%)
- -------------------------------------------------------------------------------
$ 100,000 Brick Township New Jersey Municipal
Utilities Authority, 5.00%,
due 12/01/16, (FGIC Insured) $ 95,733 Aaa AAA
125,000 Cape May County, New Jersey
Industrial Pollution Control Financing
Authority Atlantic City Electric
Company Project A,
7.20%, due 11/01/29, (MBIA Insured) 145,746 Aaa AAA
70,000 Essex County, New Jersey Import
Authority Orange School District -
Series A, 6.95%, due 07/01/14,
(MBIA Insured) 80,508 Aaa AAA
100,000 Gloucester County New Jersey
Utilities Authority, 5.45%,
due 01/01/24, (MBIA Insured) 99,295 Aaa AAA
100,000 Irvington, New Jersey Housing &
Mortgage Finance Authority, 6.50%,
due 02/01/24, (FHA Insured) 103,470 AAA
300,000 Middlesex County New Jersey Import
Authority, 5.90%, due 9/15/21 306,780 A1 A+
100,000 New Jersey Economic Development
Authority, Economic Development
Revenue - American Airlines Inc.
Project, 7.10%, due 11/01/31 107,544 Baa2 BB+
250,000 New Jersey Economic Development
Authority, Economic Development
Revenue - Bancroft Incorporated
Obligation Group, 6.05%,
due 12/01/25, (Connie Lee Insured) 259,150 AAA
150,000 New Jersey Economic Development
Authority, Economic Development
Revenue Refunding - Burlington
Coat Factory, LOC First Fidelity
Bank, 6.125%, due 09/01/10 158,481 Aa3
150,000 New Jersey Economic Development
Authority, Economic Development
Revenue - W.Y. Urban Holding
Company, LOC NatWest Bank, Jersey
City, 6.50%, due 06/01/15 159,416 A
200,000 New Jersey Economic Development
Authority, Economic Development
Revenue Health Village Project,
LOC First Union, 6.00%,
due 05/01/16 205,462 A+
100,000 New Jersey Economic Development
Authority, Pollution Control
Revenue PSE&G Co. Project, 6.40%,
due 05/01/32, (MBIA Insured) 107,228 Aaa AAA
100,000 New Jersey Economic Development
Authority, Water Facilities Revenue
Project A, 6.875%, due 11/01/34,
(FGIC Insured) 111,122 Aaa AAA
100,000 New Jersey Economic Development
Authority Revenue Sewer Facilities-
Anheuser-Busch Project, 5.85%,
due 12/01/30 100,080 A1 AA-
85,000 New Jersey Health Care Facilities
Financing Authority - Irvington
General Hospital Issue - Series 1994,
6.40%, due 08/01/25, (FHA Insured) 88,344 AAA
See Notes to Financial Statements.
LEBENTHAL NEW JERSEY MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (Continued)
- -------------------------------------------------------------------------------
$ 125,000 New Jersey Health Care Facilities
Financing Authority - General
Hospital Center at Passaic, 6.75%,
due 07/01/19, (FSA Insured) $ 140,385 Aaa AAA
100,000 New Jersey Health Care Facilities
Financing Authority Revenue Monmouth
Medical Center Issue - Series C,
6.25%, due 7/01/24 (FSA Insured) 106,909 Aaa AAA
150,000 New Jersey Health Care Facilities
Financing Authority Revenue
St. Joseph's Hospital & Medical
Center, 6.00%, due 7/01/26
(Connie Lee Insured) 155,056 AAA
100,000 New Jersey Economic Development
Authority Revenue Economic Growth
- Series D, LOC NatWest Bank,
Jersey City, 6.55%, due 08/01/14 105,634 A
150,000 New Jersey State Education
Facilities Authority - Trenton
State College - Series E, 6.00%,
due 07/01/19, (AMBAC Insured) 155,818 Aaa AAA
100,000 New Jersey State Education
Facilities Authority - New Jersey
Institute Technology Issue -
Series A, 6.00%, due 07/01/24,
(MBIA Insured) 104,668 Aaa AAA
125,000 New Jersey State Housing & Mortgage
Finance Agency MHRB Refunding -
Presidential Plaza, 7.00%,
due 05/01/30, (FHA Insured) 134,336 AAA
300,000 New Jersey State Housing & Mortgage
Finance Agency MHRB Series A, 6.05%,
due 11/01/20, (AMBAC Insured) 307,440 Aaa AAA
100,000 New Jersey State Housing & Mortgage
Finance Agency MHRB Series A, 6.25%,
due 05/01/28 (AMBAC Insured) 102,372 Aaa AAA
125,000 New Jersey State Housing & Mortgage
Finance Agency Revenue Housing -
Series A, HUD Section 8, 6.95%,
due 11/01/13 133,251 A+
150,000 New Jersey State Housing & Mortgage
Finance Agency - Home Buyers -
Series O, 6.35%, due 10/01/27,
(MBIA Insured), Subject to AMT 154,149 Aaa AAA
250,000 New Jersey State Housing & Mortgage
Finance Agency - Home Buyers -
Series Q, 5.875%, due 04/01/17,
(MBIA Insured), Subject to AMT 251,520 Aaa AAA
140,000 Newark, New Jersey Housing Finance
Corporation Mortgage Revenue,
Refunding-HUD Section 8-Manor
Apartments-A, 7.50%, due 02/15/24,
(FHA Insured) 152,753 AAA
100,000 Puerto Rico Housing Bank & Finance
Agency Single Family Mortgage
Affordable Housing Mortgage -
Portfolio I, 6.25%, due 04/01/29,
(GNMA/FNMA/FHLMA Insured),
Subject to AMT 102,282 Aaa AAA
50,000 Salem County, New Jersey Industrial
Pollution Control Financing Authority
Refunding, 5.55%, due 11/01/33,
(MBIA Insured) 49,379 Aaa AAA
100,000 Scotch Plains Township, New Jersey
Senior Citizen Housing Corporation,
5.75%, due 09/01/23 100,742 Aa AA
TOTAL MUNICIPAL BONDS
(COST $4,172,484) 4,385,053
See Notes to Financial Statements.
LEBENTHAL NEW JERSEY MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
COMMERCIAL PAPER (2.62%)
- -------------------------------------------------------------------------------
$ 136,000 Ford Motor Credit Company,
5.29%, due 12/10/96 $ 136,000
(COST $136,000)
Shares
- ----------
CLOSED-END FUNDS (8.77%)
- -------------------------------------------------------------------------------
18,995 Munivest New Jersey Fund 232,689
15,300 Muniyield New Jersey Fund 221,850
TOTAL CLOSED-END FUNDS
(COST $442,605) 454,539
TOTAL INVESTMENTS (96.01%)
(COST $4,751,089#) 4,975,592
CASH AND OTHER ASSETS, NET OF
LIABILITIES (3.99%) 206,557
NET ASSETS (100.00%) $5,182,149
# Aggregate cost for federal income tax purposes is identical. Aggregate
unrealized appreciation and depreciation, based on cost for federal income tax
purposes, are $225,609 and $1,106, respectively, resulting in net unrealized
appreciation of $224,503.
KEY:
AMBAC = Ambac Indemnity Corporation
AMT = Alternative Minimum Tax
FGIC = Federal Guaranty Insurance Corporation
FHA = Federal Housing Authority
FHLMA = Federal Home Loan Mortgage Association
FSA = Financial Security Assurance, Inc.
CONNIE LEE = College Construction Loan Insurance Association
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
HUD = Housing and Urban Development
LOC = Letter of Credit
MBIA = Municipal Bond Insurance Association
MHRB = Multi-family Housing Revenue Bond
See Notes to Financial Statements.
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (84.65%)
- -------------------------------------------------------------------------------
$ 150,000 All Saints Health System,
9.00%, due 08/15/24, (MBIA Insured) $ 166,063 Aaa AAA
385,000 Baltimore, Maryland - Series B,
General Obligation, 7.90%,
due 10/15/16, (FGIC Insured) 406,541 Aaa AAA
1,100,000 Bastrop, Texas Economic Development
Corporation,8.00%, due 08/15/16 1,133,440 BBB+
100,000 Buffalo, New York - Series F, 9.05%,
due 02/01/15, (AMBAC Insured) 107,038 Aaa AAA
240,000 California Housing Finance Agency -
Series C, 8.10%, due 02/01/37,
(AMBAC Insured) 249,804 Aaa AAA
2,000,000 Compton, California Community
Redevelopment Agency - Series C,
Tax Allocation, 0.00%, due 08/01/22,
(FSA Insured) 311,200 Aaa AAA
150,000 Connecticut State Health and
Educational Facilities, Maefair
Health Care, 9.20%, due 11/01/24 177,628 A1 AA-
125,000 Connecticut State Health and
Educational Facilities, Laurelwood,
9.36%, due 11/01/24 142,786 A1 AA-
150,000 Connecticut State Health and
Educational Facilities, Shady Knoll
Center, 8.90%, due 11/01/24 172,444 A1 AA-
255,000 Connecticut State Housing Finance
Authority - Series F, 9.25%,
due 05/15/27 288,321 Aa AA
200,000 Connecticut State Housing Finance
Authority - Series G, 7.625%,
due 05/15/21 197,050 Aa AA
100,000 Connecticut State Development
Authority - Sub series B1,
8.50%, due 08/15/14 105,540 A+
125,000 Conyers, Georgia Water & Sewer -
Series B, 8.75%, due 07/01/15,
(AMBAC Insured) 136,474 Aaa AAA
250,000 Cuyahoga County, Ohio Economic
Development - Series A,
8.625%, due 06/01/22 272,685 A
200,000 Florida Housing Finance Agency -
Taxable Housing Mariner Club,
8.25%, due 09/01/15 (AMBAC Insured) 210,714 Aaa AAA
1,230,000 Harrisburg, Pennsylvania -
Series A, General Obligation,
0.00%, due 04/01/18, (AMBAC Insured) 263,072 Aaa AAA
1,165,000 Harrisburg, Pennsylvania -
Series A, General Obligation,
0.00%, due 04/01/19, (AMBAC Insured) 231,800 Aaa AAA
350,000 Harrison County, Mississippi -
Series A, General Obligation,
7.75%, due 04/01/16, (MBIA Insured) 355,043 Aaa
150,000 Idaho Housing Agency, HUD Section 8,
8.50%, due 07/01/09 157,953 A
150,000 Illinois Housing Development
Authority, 8.64%, due 12/01/21,
(AMBAC Insured) 159,445 Aaa AAA
See Notes to Financial Statements.
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (Continued)
_______________________________________________________________________________
$ 2,180,000 Kern County, California Pension
Obligation, 0.00%, due 08/15/18,
(MBIA Insured) $ 471,316 Aaa AAA
325,000 Maryland State Community Development
Administration, 9.10%, due 05/15/10,
(MHF Insured) 352,060 Aa
150,000 Memorial Health System, 8.375%,
due 10/01/20, (MBIA Insured) 160,611 Aaa AAA
200,000 Michigan State Housing Development
Authority - Series A, 8.30%,
due 11/01/15, (AMBAC Insured) 214,568 Aaa AAA
190,000 Minnesota State Housing Finance
Agency - Series A, 8.70%,
due 08/01/22 196,798 Aa AA
60,000 Minnesota State Housing Finance
Agency - Series B, 8.00%,
due 02/01/18 61,729 AA
50,000 Minnesota State Housing Finance
Agency, 8.05%, due 01/01/12 50,926 Aa AA+
600,000 Mississippi Hospital Equipment and
Facilities, 9.10%, due 04/01/06 629,160 Baa
90,000 New Hampshire State Housing and
Finance Authority - Series C,
9.40%, due 07/01/14 100,956 Aa
240,000 New Jersey State Housing and
Mortgage Finance Agency - Series E,
8.95%, due 11/01/12 257,179 A+
180,000 New York, New York - Series D,
General Obligation, 9.625%,
due 08/01/10 198,936 Baa1 BBB+
250,000 New York State Environmental
Facilities - Series A,
9.625%, due 03/15/21 277,473 Baa1 BBB
300,000 New York State Housing Finance
Agency - Series B, 8.25%,
due 05/15/35, (FHA Insured) 308,223 AAA
350,000 New York State Housing Finance
Agency Revenue - Taxable Multi -
family Housing, 8.11%, due 11/15/38,
(FHA Insured) 354,830 AAA
110,000 New York State Housing Finance
Agency - Series B, Service Contract
Obligation, 8.60%, due 03/15/04 118,608 Baa1 BBB
100,000 Pittsburgh, Pennsylvania Urban
Redevelopment Authority, 9.07%,
due 09/01/14, (FSA Insured) 114,457 Aaa AAA
300,000 Sacramento County, California,
0.00%, due 08/15/21, (MBIA Insured) 267,969 Aaa AAA
120,000 Southeastern Pennsylvania Transit
Authority - Series B, 8.75%,
due 03/01/20, (FGIC Insured) 133,657 Aaa AAA
300,000 Tampa, Florida Sports Authority,
8.07%, due 10/01/26, (MBIA Insured) 314,520 Aaa AAA
375,000 Texas State Department of Housing &
Community Affairs - Series C1,
7.76%, due 09/01/17, (MBIA Insured) 385,388 Aaa AAA
See Notes to Financial Statements.
LEBENTHAL TAXABLE MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 1996
_______________________________________________________________________________
RATINGS
-----------------
FACE VALUE STANDARD
AMOUNT (NOTE 1) MOODY'S & POOR'S
- --------- ---------- ------- --------
MUNICIPAL BONDS (Continued)
- -------------------------------------------------------------------------------
$ 300,000 Texas State Veterans Housing,
General Obligation,
7.35%,due 12/01/21 $ 300,459 Aa AA
1,050,000 United Nations Development
Corporation, 8.80%, due 07/01/26 1,102,983 A
365,000 Virginia State Housing Development
Authority - Series A, Multi-family,
8.125%, due 11/01/15 385,093 Aa AA+
350,000 Wisconsin Housing & Economic
Development Authority - Series H,
7.875%, due 03/01/26 361,337 Aa AA
TOTAL MUNICIPAL BONDS
(COST $11,755,507) 12,364,277
GOVERNMENTAGENCY (4.77%)
- -------------------------------------------------------------------------------
650,000 Tennesse Valley Authority, 8.625%,
due 11/15/29 697,743 Aaa AAA
(COST $702,072)
Shares
- ----------
CLOSED-END FUNDS (8.84%)
- -------------------------------------------------------------------------------
94,016 BlackRock Income Trust 599,352
73,771 Hyperion Total Return 691,603
TOTAL CLOSED-END FUNDS
(COST $1,260,237) 1,290,955
TOTAL INVESTMENTS (98.26%)
(COST $13,717,816#) 14,352,975
CASH AND OTHER ASSETS, NET OF
LIABILITIES (1.74%) 254,210
NET ASSETS (100.00%) $14,607,185
# Aggregate cost for federal income tax purposes is $13,723,674. Aggregate
unrealized appreciation and depreciation, based on cost for federal income tax
purposes, are $653,869 and $24,568, respectively, resulting in net unrealized
appreciation of $629,301.
KEY:
AMBAC = Ambac Indemnity Corporation
FGIC = Federal Guaranty Insurance Corporation
FHA = Federal Housing Authority
FSA = Financial Security Assurance, Inc.
HUD = Housing and Urban Development
MBIA = Municipal Bond Insurance Association
MHF = Maryland Housing Fund
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
_______________________________________________________________________________
LEBENTHAL LEBENTHAL LEBENTHAL
NEW YORK NEW JERSEY TAXABLE
MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND
------------- ----------- ------------
ASSETS
Investment in securities at value
(cost $113,056,069, $4,751,089
and $13,717,816) $120,286,939 $4,975,592 $14,352,975
Cash 14,160 27,664 --
Receivables:
Securities sold -- -- 217,613
Capital shares sold 761,752 187,572 80,419
Interest 2,161,142 64,023 221,814
Due from Manager -- 49,007 46,465
Deferred organization expenses -- 15,491 12,498
Total assets 123,223,993 5,319,349 14,931,784
LIABILITIES
Payables:
Securities purchased -- 98,569 --
Capital shares redeemed 143,896 -- 155,168
Dividends declared 312,654 13,709 56,156
Due to custodian -- -- 78,871
Distribution fee payable (Note 3) 24,867 -- --
Management fee payable (Note 2) 22,967 -- --
Administration fee payable 11,867 486 1,304
Accrued Directors' fees 2,400 83 227
Accrued expenses and other liabilities 94,029 24,353 32,873
Total liabilities 612,680 137,200 324,599
NET ASSETS 122,611,313 5,182,149 14,607,185
NET ASSETS consist of:
Par value 15,157 769 2,049
Paid in capital 117,287,722 5,250,373 14,429,004
Undistributed investment income - net 9,452 -- --
Accumulated net realized loss on
investments (1,931,888) (293,496) (459,027)
Unrealized appreciation on
investments - net 7,230,870 224,503 635,159
Total net assets $122,611,313 $5,182,149 $14,607,185
Shares outstanding (Note 4) 15,156,501 768,861 2,049,233
Net asset value, and redemption
price per share $ 8.09 $ 6.74 $ 7.13
Maximum offering price per share* $ 8.47 $ 7.06 $ 7.47
* The sales charge is 4.5% of the offering price on a single sale of less than
$50,000, reduced on sales of $50,000 or more and certain other sales.
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1996
_______________________________________________________________________________
LEBENTHAL LEBENTHAL LEBENTHAL
NEW YORK NEW JERSEY TAXABLE
MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND
----------- ----------- ------------
INVESTMENT INCOME
Income:
Interest . $6,644,669 $230,296 $ 897,359
Dividends 517,860 25,442 75,365
Total income 7,162,529 255,738 972,724
Expenses:
Management fee (Note 2) 266,395 10,708 30,632
Distribution fee (Note 3) 286,119 10,708 30,632
Administration fee 144,407 5,398 15,311
Shareholder servicing and related
shareholder expenses 188,603 34,728 40,527
Custodian fee 124,143 1,759 3,552
Interest 68,025 456 1,629
Legal, compliance and filing fees 78,124 15,626 14,322
Audit and accounting fees 58,991 48,238 54,064
Directors' fees 15,014 557 1,618
Amortization of organization expenses 8,646 7,766 6,266
Other 9,257 1,076 1,582
Total expenses 1,247,724 137,020 200,135
Less: Reimbursement of expenses by
Manager (Note 2) -- (88,736) (64,239)
Fees waived by Manager and
Distributor (Notes 2 and 3) -- (21,416) (61,264)
Fees paid indirectly (Note 1) (945) (1,200) (1,272)
Net expenses 1,246,779 25,668 73,360
Net investment income 5,915,750 230,070 899,364
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on investments 967,689 (14,767) (222,798)
Change in unrealized appreciation of
investments 177,568 48,013 153,567
Net realized and unrealized gain/(loss)
on investments 1,145,257 33,246 (69,231)
Increase in net assets from operations $7,061,007 $263,316 $ 830,133
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED NOVEMBER 30, 1996 AND 1995
_______________________________________________________________________________
<TABLE>
<CAPTION>
LEBENTHAL NEW YORK MUNICIPAL LEBENTHAL NEW JERSEY MUNICIPAL
BOND FUND BOND FUND
------------------------------- ------------------------------
1996 1995 1996 1995
-------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 5,915,750 $ 5,069,127 $ 230,070 $ 134,992
Net realized gain (loss) on investments 967,689 1,283,011 (14,767) 36,790
Change in unrealized appreciation 177,568 11,953,235 48,013 221,012
Increase in net assets from operations 7,061,007 18,305,373 263,316 392,794
Dividends from net investment income (5,907,035)* (5,069,127)** (230,070)* (134,992)**
Capital share transactions (Note 4) 15,455,986 17,016,993 1,791,020 954,934
Capital contribution (Note 2) 422,268 -- -- --
Total increase 17,032,226 30,253,239 1,824,266 1,212,736
Net assets:
Beginning of year 105,579,087 75,325,848 3,357,883 2,145,147
End of year $122,611,313 $105,579,087 $5,182,149 $3,357,883
</TABLE>
* 99.62% and 98.67% designated as exempt interest dividends for federal
income tax purposes for New York Municipal Bond Fund and New Jersey Municipal
Bond Fund, respectively.
** 100.00% designated as exempt interest dividends for federal income tax
purposes.
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
YEARS ENDED NOVEMBER 30, 1996 AND 1995
_______________________________________________________________________________
LEBENTHAL TAXABLE MUNICIPAL
BOND FUND
----------------------------
1996 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 899,364 $ 352,886
Net realized gain (loss) on investments (222,798) 10,392
Change in unrealized appreciation 153,567 585,669
Increase in net assets from operations 830,133 948,947
Dividends from net investment income (899,364) (352,886)
Capital share transactions (Note 4) 5,990,459 5,099,617
Total increase 5,921,228 5,695,678
Net assets:
Beginning of year 8,685,957 2,990,279
End of year $14,607,185 $8,685,957
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
_______________________________________________________________________________
<TABLE>
<CAPTION>
LEBENTHAL NEW YORK
MUNICIPAL BOND FUND
---------------------------------------------------------
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------
1996 1995 1994# 1993 1992
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 7.99 $ 6.84 $ 8.03 $ 7.54 $ 7.19
Income from investment operations:
Net investment income 0.41 0.43 0.41 0.44 0.47
Net realized and unrealized gain (loss)
on investments 0.10 1.15 (1.15) 0.50 0.35
Total from investment operations 0.51 1.58 ( 0.74) 0.94 0.82
Less distributions:
Dividends from net investment income (0.41) (0.43) (0.41) (0.44) (0.47)
Distributions from net realized gain on
investments -- -- (0.04) (0.01) --
Total distributions (0.41) (0.43) (0.45) (0.45) (0.47)
Net asset value, end of period $ 8.09 $ 7.99 $ 6.84 $ 8.03 $ 7.54
TOTAL RETURN
(without deduction of sales load) 6.63%* 23.56% (9.62%) 12.63% 11.68%
Ratios/Supplemental Data
Net assets, end of period (000) $122,611 $105,579 $75,326 $80,727 $39,350
RATIOS TO AVERAGE NET ASSETS:
Expenses 1.09% 0.99% 0.64%** 0.20%** 0.17%**
Net investment income 5.17% 5.63% 5.44% 5.42% 6.08%
Portfolio turnover 45.92% 148.88% 192.91% 7.88% 8.14%
</TABLE>
# Effective August 15, 1994, the investment advisor changed to Lebenthal
Asset Management, Inc.
* Includes the effect of a capital contribution from the Fund's Manager.
Without the capital contribution the total return would have been 6.24%.
** If the Investment Manager had not waived fees and reimbursed expenses and
the Administrator and Distributor had not waived fees, the ratio of operating
expenses to average net assets would have been 1.10%, 1.12%, and 1.44% for the
periods ended November 30, 1994,1993, and 1992, respectively.
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
_______________________________________________________________________________
<TABLE>
<CAPTION>
LEBENTHAL NEW JERSEY LEBENTHAL TAXABLE
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------------------- --------------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
------------------------------- --------------------------------
1996 1995 1994#* 1996 1995 1994#*
---------- -------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 6.70 $ 5.95 $ 7.16 $ 7.22 $ 6.34 $ 7.16
Income from investment operations:
Net investment income 0.36 0.36 0.32 0.52 0.53 0.44
Net realized and unrealized gain (loss)
on investments 0.04 0.75 (1.21) (0.09) 0.88 (0.82)
Total from investment operations 0.40 1.11 (0.89) 0.43 1.41 (0.38)
Less distributions:
Dividends from net investment income (0.36) (0.36) (0.32) (0.52) (0.53) (0.44)
Net asset value, end of period $ 6.74 $ 6.70 $ 5.95 $ 7.13 $ 7.22 $ 6.34
TOTAL RETURN
(without deduction of sales load) 6.18% 19.10% (12.70%) 6.35% 23.11% (5.45%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $5,182 $3,358 $2,145 $14,607 $8,686 $2,990
Ratios to average net assets:
Expenses ## 0.63%** 0.60% 0.60% 0.61%** 0.60% 0.60%
Net investment income 5.37% 5.64% 4.97% 7.34% 7.57% 6.74%
Portfolio turnover 28.56% 61.69% 291.60% 44.46% 84.74% 93.73%
</TABLE>
# Effective August 15, 1994, the investment advisor changed to Lebenthal
Asset Management, Inc.
* Fund commenced operations on December 1, 1993.
## If the Investment Manager had not waived fees and reimbursed expenses and
the Administrator and Distributor had not waived fees, the ratio of operating
expenses to average net assets would have been 3.20%, 4.13%, and 4.83% for the
periods ended November 30, 1996, 1995 and 1994, respectively, for the New
Jersey Bond Fund; and 1.63%, 2.59%, and 3.60% for the periods ended November
30, 1996, 1995 and 1994, respectively, for the Taxable Bond Fund.
** Includes fees paid indirectly of 0.03% and 0.01% for the New Jersey Bond
Fund and Taxable Bond Fund, respectively.
See Notes to Financial Statements.
LEBENTHAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
_______________________________________________________________________________
1. SUMMARY OF ACCOUNTING POLICIES
Lebenthal Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940 as an open-end management investment company consisting of
Lebenthal New York Municipal Bond Fund (the "New York Bond Fund"), Lebenthal
New Jersey Municipal Bond Fund (the "New Jersey Bond Fund") and Lebenthal
Taxable Municipal Bond Fund (the "Taxable Bond Fund"). Its financial statements
are prepared in accordance with generally accepted accounting principles as
follows:
A) VALUATION OF SECURITIES -
Municipal obligations are stated on the basis of valuations provided by a
pricing service approved by the Board of Directors, which uses information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. The valuations provided by such pricing
services are based upon fair market value determined most likely on the basis
of the factors listed above. If a pricing service is not used, municipal
obligations are valued at quoted prices provided by municipal bond dealers.
Other securities for which transaction prices are readily available are stated
at market value (determined on the basis of the last reported sales price, or a
similar means). Short-term investments that will mature in sixty (60) days or
less are stated at amortized cost, which approximates market value. All other
securities are valued at their fair value as determined in good faith by the
Board of Directors.
B) FEDERAL INCOME TAXES -
It is the policy of each Fund to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its tax-exempt and taxable income to its shareholders.
Therefore, no provision for Federal income tax is required.
C) DIVIDENDS AND DISTRIBUTIONS -
Dividends from net investment income are declared daily and paid monthly.
Distributions of net capital gains, if any, realized on sales of investments,
are made after the close of the Fund's fiscal year, as declared by the Fund's
Board of Directors.
D) ORGANIZATIONAL EXPENSES -
Costs incurred in connection with the organization of each Fund and their
initial registration are amortized on a straight-line basis over a five-year
period from each Fund's commencement of operations.
E) GENERAL -
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded on the identified cost
basis. Interest income is recorded on the accrual basis and dividend income is
recorded on the ex-dividend date. Premiums and original issue discounts on
securities purchased are amortized over the life of the respective securities.
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
F) FEES PAID INDIRECTLY -
Funds leaving excess cash in demand deposit accounts may receive credits
which are available to offset custody expenses. The Statements of Operations
report gross custody expense, and reflect the amount of such credits as a
reduction in total expenses.
G) BANK LOANS -
During the year ended November 30, 1996, the New York Bond Fund
periodically borrowed amounts from a bank. Interest paid on borrowings reduces
net income. During the year ended November 30, 1996, the New York Bond Fund had
average daily borrowings of $796,734 at an average interest rate of 8.31%.
H) ESTIMATES -
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Funds to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
2. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the Management Contract the Funds pay a management fee to Lebenthal Asset
Management, Inc. (its Manager), equal to 0.25% of each Fund's average daily net
assets up to $50 million; 0.225% of such assets between $50 million and $100
million; and 0.20% of such assets in excess of $100 million. The Manager
manages the portfolio of securities of each Fund and makes decisions with
respect to the purchase and sale of investments. The Manager has agreed to
reimburse the Fund for its expenses (exclusive of interest, taxes, brokerage,
and extraordinary expenses) which in any year exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale. For the year ended November 30, 1996, the Manager
voluntarily waived management fees of $10,708 and $30,632 for the New Jersey
Bond Fund and the Taxable Bond Fund, respectively. In addition, although not
required to do so, the Manager has agreed to reimburse expenses for the New
Jersey Bond Fund and the Taxable Bond Fund amounting to $88,736 and $64,239,
respectively.
Lebenthal & Co., Inc. retained commissions of $566,362 from the sales of shares
of the Company.
The Directors of the Company who are unaffiliated with the Manager or the
Distributor are paid $2,000 per annum plus $500 per meeting attended.
Included in the Statement of Changes in Net Assets of the New York Municipal
Bond Fund is a reimbursement of $422,268 from the Fund's Manager representing a
loss on a security purchased in excess of a regulatory limitation.
LEBENTHAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________________________________________________________________________
3. DISTRIBUTION PLAN
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the Investment
Company Act of 1940, the Company and Lebenthal & Co., Inc. (the Distributor)
have entered into a Distribution Agreement. For its services under the
Distribution Agreement, the Distributor receives from each Fund a fee equal to
0.25% of the Fund's average daily net assets. For the year ended November 30,
1996, the Distributor voluntarily waived fees of $10,708 and $30,632 from the
New Jersey Bond Fund and the Taxable Bond Fund, respectively. There were no
additional expenses borne by the Company pursuant to the Distribution Plan.
4. CAPITAL STOCK
At November 30, 1996, there were 20,000,000,000 shares of $0.001 par value
stock authorized. Transactions in capital stock were as follows:
LEBENTHAL NEW YORK LEBENTHAL NEW YORK
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
Sold 3,470,847 $ 27,552,574 3,626,833 $ 27,728,133
Issued as reinvestment
of dividends 665,870 5,256,989 584,439 4,424,986
Redeemed (2,196,989) (17,353,577) (2,011,809) (15,136,126)
Net increase 1,939,728 $ 15,455,986 2,199,463 $ 17,016,993
LEBENTHAL NEW JERSEY LEBENTHAL NEW JERSEY
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
Sold 392,200 $ 2,608,455 320,760 $ 2,060,689
Issued as reinvestment
of dividends 31,934 211,384 18,321 118,158
Redeemed (156,189) (1,028,819) (198,975) (1,223,913)
Net increase 267,945 $ 1,791,020 140,106 $ 954,934
LEBENTHAL TAXABLE LEBENTHAL TAXABLE
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
YEAR ENDED YEAR ENDED
NOVEMBER 30, 1996 NOVEMBER 30, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 1,164,585 $ 8,169,453 928,692 $ 6,373,549
Issued as reinvestment
of dividends 102,059 708,161 39,468 270,713
Redeemed (420,759) (2,887,155) (236,166) (1,544,645)
Net increase 845,885 $ 5,990,459 731,994 $ 5,099,617
5. INVESTMENT TRANSACTIONS
Purchases of investment securities for the New York Bond Fund, the New Jersey
Bond Fund, and the Taxable Bond Fund, other than short term debt obligations
and government securities having maturities of one year or less, were
$61,243,971, $2,782,508, and $10,991,825, respectively. Sales of investment
securities for the New York Bond Fund, the New Jersey Bond Fund, and the
Taxable Bond Fund, other than short term obligations, were $52,970,185,
$1,174,893, and $5,415,249, respectively.
6. FEDERAL INCOME TAXES
Tax basis capital losses which may be carried forward to offset future capital
gains through November 30, 2004 amounted to $1,927,724, $293,496 and $453,168
for the New York Bond Fund, the New Jersey Bond Fund, and the Taxable Bond
Fund, respectively.
7. CONCENTRATION OF CREDIT RISK
The New York Bond Fund invests primarily in obligations of political
subdivisions of the state of New York and the New Jersey Bond Fund invests
primarily in obligations of political subdivisions of the state of New Jersey
and accordingly these funds are subject to the risk associated with the
non-performance of such issuers. Each Fund maintains a policy of monitoring its
exposure by reviewing the creditworthiness of the issuers, as well as that of
financial institutions issuing letters of credit, and by limiting the amount of
holdings with letters of credit from one financial institution.
LEBENTHAL FUNDS, INC.
INDEPENDENT AUDITOR'S REPORT
_______________________________________________________________________________
THE BOARD OF DIRECTORS AND SHAREHOLDERS
LEBENTHAL FUNDS, INC.
We have audited the accompanying statements of assets and liabilities and the
statements of investments of Lebenthal New York Municipal Bond Fund, Lebenthal
New Jersey Municipal Bond Fund, and Lebenthal Taxable Municipal Bond Fund,
series of Lebenthal Funds, Inc., as of November 30, 1996, and the related
statements of operations, the statements of changes in net assets and the
financial highlights for each of the periods indicated in the accompanying
financial statements. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amount and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Lebenthal New York Municipal Bond Fund, Lebenthal New Jersey Municipal Bond
Fund, and Lebenthal Taxable Municipal Bond Fund, series of Lebenthal Funds,
Inc. as of November 30, 1996, the results of their operations, the changes in
their net assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles.
McGLADREY & PULLEN, LLP
New York, New York
January 10, 1997
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
LEBENTHAL FUNDS, INC.
120 Broadway
New York, New York 10271
(212) 425-6116
DISTRIBUTOR AND SHAREHOLDER SERVICING AGENT
Lebenthal & Co., Inc.
120 Broadway
New York, New York 10271
LEBENTHAL
120 BROADWAY, NEW YORK, NY 10271
(212) 425-6116
OUTSIDE OF NYC 1-800-221-5822
