CROFT-LEOMINSTER
VALUE FUND
ANNUAL REPORT
April 30, 1996
<PAGE>
Croft-Leominster Value Fund Shareholder:
As of April 30, 1996, the Value Fund has gained 18.6% since inception (May 10,
1995) on a total return basis. Though the absolute return to shareholders has
been good, we have been lagging behind the results of the Standard & Poor's 500
Index. Somewhat typical of the stock market lately, a company like Coca-Cola is
selling at an estimated 30x this year's earnings. As value investors, we are
unwilling to pay these lofty prices for stocks. Looking forward, the Value Fund
portfolio trades at an estimated 11.4x 1997 earnings. Given our long-term
experience as an investment advisor, we feel that this strategy should result in
lower downside risk while providing for growth.
<TABLE>
<S> <C> <C>
Value Fund S&P 500
1997E Price/Earnings 11.4x 15.4x
Estimated Growth Rate 10.8% 8.0%
Price/Book Value 2.6x 3.9x
</TABLE>
The portfolio mainly consists of stocks that should appreciate independently of
the market, based on their own fundamentals and specific industry conditions.
Fertilizer companies (6.8%) remain a significant holding given the 20-year lows
in worldwide grain stocks, increased acreage for planting and the cost-
effectiveness in increasing crop yields.
In the energy sector (13.2%), we have identified several companies which sell at
meaningful discounts to their net asset values. Santa Fe Energy Resources sells
as a 30% discount to its estimated asset value of $16 per share without taking
into consideration its favorable overseas projects in Africa and Indonesia.
Other companies that look undervalued to us on a sum of the parts basis and also
where we see catalysts to realize intrinsic value include Hanson plc,
Westinghouse, Comstock Resources and Warner-Lambert.
We have increased our international weighting (11.4%) chiefly in emerging
markets. Though not without risk, these economies are growing twice as fast as
the United States and give the portfolio what we feel is some prudent
diversification outside of the U.S.
Thank you for investing in the Croft-Leominster Value Fund. We will continue to
work hard to justify your confidence in the Fund.
Sincerely yours,
Gordon Croft
Vice President
June 13, 1996
** Comments refer to the Fund as of April 30, 1996. Composition of the portfolio
will have changed somewhat at this mailing.
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<TABLE>
<CAPTION>
Croft Funds Corporation
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
<C> <S> <C>
Shares Market Value
COMMON STOCKS 94.57%
APPAREL & TEXTILES 1.36%
800 Fieldcrest Cannon Inc.* $ 17,100
BANKS, S & L'S, AND BROKERS 10.10%
100 Astoria Financial Corp. 5,325
330 CENFED Financial Corp. 7,590
300 Coast Savings Financial* 9,337
150 Citicorp 11,812
300 First Chicago NBD Corp. 12,375
1,900 Great Western Financial Corp. 43,700
800 Greenpoint Financial Corp. 23,100
420 Provident Bank Corp. 13,598
126,837
BUILDING & CONSTRUCTION 3.69%
1,150 Owens Corning* 46,288
BUSINESS SERVICES AND TRANSPORTATION 7.51%
200 AMR Corp.* 17,850
700 Kansas City Southern Inds 33,950
1,700 Southern Pacific Rail Corp.* 42,500
94,300
CAPITAL EQUIPMENT 3.16%
2,100 Westinghouse Electric 39,638
CHEMICALS 2.75%
200 Dow Chemical Co. 17,775
400 Rhone-Poulenc ADR 9,650
600 Uniroyal Chemical Corp.* 7,050
34,475
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
Shares Market Value
CLOSED END FUNDS - ASIA 2.60%
2,500 Asia Tigers Fund Inc. $ 30,000
200 Schroder Asian Growth Fund* 2,625
32,625
CLOSED END FUNDS - GERMANY 1.87%
700 Central European Equity Fund Inc. 12,425
1,500 Emerging Germany Fund Inc.* 11,062
23,487
CLOSED END FUNDS - GLOBAL 1.01%
1,000 Foreign & Colonial Emerging Middle East* 11,625
100 GT Global Developing Markets Fund 1,050
12,675
CLOSED END FUNDS - INDIA 0.28%
100 Jardine Fleming India Fund* 1,100
200 Morgan Stanley India Investment Fund* 2,425
3,525
CLOSED END FUNDS - LATIN AMERICA 2.41%
600 Brazil Fund 12,975
600 Brazilian Equity Fund* 7,950
300 Latin American Investment Fund 4,950
300 Latin American Equity Fund 4,313
30,188
CONGLOMERATES 3.73%
3,100 Hanson PLC ADR 46,887
CONSUMER CYCLICALS 2.62%
600 Federal-Mogul Corp. 11,400
600 Philips Electronics N.V. 21,525
32,925
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
Shares Market Value
CONSUMER NON-DURABLES 3.32%
200 Colgate Palmolive Co. $ 15,325
600 Panamerican Beverages, Inc. 26,325
41,650
ENERGY 13.17%
3,500 Comstock Resources Inc.* 21,219
1,200 Equity Oil Co.* 5,550
4,500 McFarland Energy Inc.* 40,500
1,900 Oryx Energy Co.* 30,400
2,300 Sante Fe Energy Resources* 27,600
650 Triton Energy Ltd.* 35,750
200 YPF SA (ADR) 4,375
165,394
FERTILIZERS 6.75%
1,650 Agrium, Inc. 21,244
450 Agrium, Inc. (CANADA) 5,894
1,700 Arcadian Corp. 34,000
335 Potash Corp. Of Saskatchewan 23,617
84,755
FINANCIAL SERVICES 2.48%
350 Franklin Resources Inc. 20,037
200 T Rowe Price Associates 11,150
31,187
INSURANCE 10.51%
700 GCR Holdings Ltd. 17,850
2,200 Highlands Insurance Group* 41,800
400 ITT Hartford Group, Inc. 19,550
1,100 Prudential Reinsurance Hldgs. 25,025
450 Travelers Group, Inc. 27,675
131,900
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
Shares Market Value
MEDIA & ENTERTAINMENT 1.61%
300 ITT Corp. (New)* $ 18,263
100 U.S. West Inc. Media Group* 1,950
20,213
PACKAGING & CONTAINERS 0.19%
50 Crown Cork & Seal 2,356
PAPER & FOREST PRODUCTS 9.38%
1,600 Boise Cascade Corp. 74,400
1,700 Scott Paper Ltd. 29,814
800 Stone Container Corp. 13,600
117,814
PHARMACEUTICALS 4.01%
450 Warner Lambert Co. 50,288
TELEPHONE & CELLULAR 0.06%
33 360 Communications Co.* 776
TOTAL COMMON STOCKS (Cost $1,081,521) 1,187,283
SHORT TERM INVESTMENTS 6.21%
77,957 Star Treasury Fund (Cost $77,957) 77,957
TOTAL INVESTMENTS (Cost $1,159,478) 100.78% $ 1,265,240
Other assets less liabilities (0.78%) (9,811)
TOTAL NET ASSETS 100.00% $ 1,255,429
<FN>
* Non-Income Producing
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
Croft Funds Corporation
STATEMENT OF ASSETS AND LIABILITIES
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
<S> <C>
ASSETS
Investments at value (cost $1,159,478) $ 1,265,240
Dividends and interest receivable 574
Total assets 1,265,814
LIABILITIES
Payable for fund shares redeemed 0
Payable for dividends declared 0
Accrued advisory fee (Note 3) 6,508
Other expenses 3,877
Total liabilities 10,385
NET ASSETS
Net assets, equivalent to $11.74 per share,
on 106,946 shares outstanding (Note 4) $ 1,225,429
Computation of net asset value per share and
public offering price $ 11.74
Net Assets consist of:
Paid in capital 1,137,747
Undistributed net investment income 10
Accumulated undistributed net realized
gains (losses) from security transactions 11,910
Net unrealized appreciation (depreciation)
of investments 105,762
Net Assets April 30, 1996 $ 1,255,429
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
Croft Funds Corporation
STATEMENT OF OPERATIONS
CROFT-LEOMINSTER VALUE FUND
For the period from May 4, 1995 (Commencement of Operations)
through April 30, 1996
<S> <C>
Investment Income:
Dividends $ 8,274
Interest 8,270
Total income 16,553
Expenses:
Investment advisory fee (Note 3) 6,508
Distribution fee (Note 3) 1,731
Other 2,146
Total expenses 10,385
Net investment income (loss) 6,168
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments 15,698
Unrealized appreciation (depreciation) of investments
for the period 105,762
Net gain (loss) on investments 121,460
Net increase (decrease) in net assets
from operations $ 127,628
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<TABLE>
<CAPTION>
Croft Funds Corporation
STATEMENT OF CHANGES IN NET ASSETS
CROFT-LEOMINSTER VALUE FUND
May 4, 1995* through April 30, 1996
<S> <C>
Increase (Decrease) in Net Assets from Operations:
Net investment income $ 6,168
Net realized gain (loss) on investments 15,698
Unrealized appreciation (depreciation) for the period 105,762
Net increase (decrease) in net assets
from operations 127,628
Dividends paid to shareholders:
Net investment income (6,158)
Capital gains (3,788)
Capital share transactions (Note 4) 1,137,747
Total increase 1,255,429
Net Assets:
Beginning of period 0
End of period (including undistributed
net investment income of $10) $ 1,255,429
<FN>
* Commencement of operations
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
NOTES TO FINANCIAL STATEMENT
April 30, 1996
Note 1. Nature of Business and Basis of Presentation
The Croft-Leominster Value Fund (the "Fund"), is a managed portfolio of the
Croft Funds Corporation, a diversified open-end management investment company
registered under the Investment Company Act of 1940. The Fund is one of a
series of Funds of the Croft Funds Corporation, which also includes the
Croft-Leominster Income Fund.
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
(a) Valuation of Securities.
Investments are stated at value based on latest sales prices reported on
national securities exchanges on the last business day of the period.
Investments for which no sale is reported, or which are traded over the counter,
are valued at the last reported bid price.
(b) Income taxes.
The Fund intends to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Therefore no provision has been made for
federal income taxes.
(c) Other.
Realized gains and losses are reported on an identified cost basis. Securities
transactions are recorded on the trade date basis. Interest is accrued as
earned and dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded as soon as information is
available to the Fund. Dividends and capital gain distributions to shareholders
are recorded on the ex-dividend date. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
<PAGE>
Croft Funds Corporation
NOTES TO FINANCIAL STATEMENT
April 30, 1996
Note 3. Investment Advisory Fee and Other Transactions With Affiliates.
The Fund retains Croft-Leominster Inc. (Adviser) as its investment adviser.
Under the terms of the agreement the Adviser receives a fee, computed daily and
payable quarterly at the annual rate of .94% of the Value Fund s daily net
assets. Until December 31, 1997, the manager guarantees that the overall
expense ratios for the Value Fund, which exclude ordinary brokerage commissions
incurred in the purchase or sale of portfolio securities, will not exceed 1.50%.
Pursuant to a plan of Distribution the Fund pays a distribution fee of up to
.25% of the average daily net assets to Broker-Dealers for distribution
assistance, and to financial institutions and intermediaries such as banks,
savings and loan associations, insurance companies and investment counselors as
compensation for services rendered or expenses incurred in connection with
distribution assistance.
Note 4. Capital Stock.
At April 30, 1996, there were 30,000,000 shares of capital stock ($.001 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $1,137,747 for the Value Fund. Transactions in capital stock were as
follows:
<TABLE>
<S> <C> <C>
May 4, 1995
(Commencement of
Operations) through
April 30, 1996
Shares Amount
Sold.............................. 108,804 $ 1,159,177
Issued on reinvestment
of dividends...................... 862 9,537
Redemptions....................... (2,720) (30,967)
Net increase...................... 106,946 $ 1,137,747
</TABLE>
<PAGE>
Croft Funds Corporation
NOTES TO FINANCIAL STATEMENT
April 30, 1996
Note 5. Investment Transactions.
During the period ended April 30, 1996, purchases and sales of investment
securities, excluding short-term obligations were as follows:
Cost of purchases........... $1,455,552
Proceeds of sales........... 389,676
At April 30, 1996 the net unrealized appreciation based on cost for Federal
income tax purposes of $1,159,496 for the Value Fund was as follows:
Unrealized appreciation....... $118,632
Unrealized depreciation....... (12,888)
$105,744
Note 6. Distribution to Shareholders
On December 28, 1995, a distribution of $.11 aggregating $9,946 was declared
from net realized gains and net investment income (including $.04 applicable to
short-term gain that are taxable to shareholders as ordinary income dividends)
of the Croft-Leominster Value Fund during 1995. The dividend was paid on
January 2, 1996 to shareholders of record on December 28, 1995.
Note 7. Financial Instrument Disclosure
There are no reportable financial instruments that have any off balance sheet
risk as of April 30, 1996.
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
April 30, 1996
<TABLE>
<S> <C>
Financial Highlights for a share outstanding
throughout the period from
May 4, 1995 (Commencement of Operations)
through April 30, 1996
Per Share Operating Performance (for a
share outstanding throughout the period)
Net asset value, beginning of period $ 10.00
Income from investment operations:
Net investment income .10
Net realized and unrealized gain (loss)
on investments 1.75
Total from investment operations 1.85
Less distributions:
Dividends from net investment income (.07)
Dividends from net realized gains (.04)
Total distributions (.11)
Net asset value, end of period $ 11.74
Ratios/Supplemental Data:
Net assets, end of period (000's) 1,255
Ratios to average net assets:
Expenses 1.50%**
Net investment income .89%**
Portfolio turnover rate 65.38%*
Total Return 18.57%*
<FN>
** Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Croft Funds Corporation
April 30, 1996
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors
Croft Funds Corporation
We have audited the accompanying statement of assets and liabilities of Croft
Funds Corporation (comprising, respectively, the Croft-Leominster Income Fund
and Croft-Leominster Value Fund), including the schedule of portfolio
investments, as of April 30, 1996, and the related statement of operations, the
statement of changes in net assets, and financial highlights for the period from
May 4, 1995 (commencement of operations) to April 30, 1996 in the period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' 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 amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held
by the custodian as of April 30, 1996, by correspondence with the custodian. 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 each
of the respective portfolios constituting the Croft Funds Corporation as of
April 30, 1996, the results of its operations, the changes in its net assets,
and the financial highlights for the period from May 4, 1995 (commencement of
operations) to April 30, 1996 in the period then ended, in conformity with
generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
May 23, 1996
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<TABLE>
<CAPTION>
Average Anual Total Return Performance: Period Ended 4/30/96
<S> <C>
Since inception
5/10/95-4/30/96
Croft-Leominster Value Fund +18.6%
Standard & Poor's 500 Index +27.7%
</TABLE>
Total return takes into account all distributions made by the Fund, as well as
changes in share price over the period. Past performance is not indicative of
future results.
[Graph Here: Indicating Cumulative Performance Comparison using $10,000
Investment Since Inception.
Croft-Leominster Value Fund value at 4/96............. $ 11,857
Standard & Poor's 500 Index........................... $ 12,765
[End of Graph]
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CROFT-LEOMINSTER
VALUE FUND
1-800-746-3322
