CROFT-LEOMINSTER
INCOME FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1995
(Unaudited)
<PAGE>
Dear Croft-Leominster Income Fund Shareholder:
Since its inception date of May 3, 1995, the Croft-Leominster Income Fund has
gained 8.6% through October 31, 1995, on a total return basis. The Income Fund
has outperformed its benchmark indexes. The Income Fund was created as a
successor vehicle to the Leominster Income Limited Partnership, and upon
commencement of operations, the LP's assets were transferred to the mutual
fund. As such, the Income Fund was substantially invested upon inception.
The Income Fund seeks a high level of current income by investing at least 65%
of its assets in investment-grade fixed-income securities. The Fund may invest
up to 34.9% of its assets in non-investment grade securities, including common
stocks and high-yield bonds. We attempt to add value to the Income Fund in this
manner, through the opportunistic use of convertible securities, preferred
securities, closed-end bond funds, and high-yield bonds with attractive
valuations.
As of October 31, 1995, the Income Fund's bond portfolio had the following
characteristics: weighted average yield to maturity of 8.4%, average duration
of 8.6 years, and weighted average maturity of 17.57 years. The Fund's 30-day
"SEC yield" was 7.03% as of October 31, 1995.
The Income Fund maintains strong industry diversification, with its corporate
bonds dispersed among 17 different industries and 41 different securities. This
diversification helps to minimize both credit and event risks. In addition, the
Fund attempts to minimize the risk of early redemption by holding a number of
bonds which are either selling at a discount or are non-callable for life.
Thank you for investing in the Croft-Leominster Income Fund. We will continue
to work hard to justify your confidence in the Fund.
Sincerely yours,
Gordon Croft
Vice President
December 15, 1995
**Comments refer to the Fund as of October 31, 1995. Composition of the
portfolio will have changed somewhat at this mailing.
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
(Unaudited)
<S> <C>
Shares Market Value
COMMON STOCKS 7.41%
BOND FUNDS 7.41%
6,200 Alliance World Dollar Govt. II.......................... $68,975
3,900 Alliance World Dollar Govt. Fund........................ 45,825
3,700 Latin America Dollar Income Fund........................ 44,862
4,231 Morgan Stanley Emerging Mkt. Debt. Fd................... 50,243
9,500 Salomon Brothers Worldwide Income Fd.................... 108,063
9,800 Templeton Emerging Markets Income Fund.................. 107,800
425,768
TOTAL COMMON STOCKS
(cost $447,403)................................................. 425,768
PREFERRED STOCKS 4.77%
CONVERTIBLE PREFERRED 2.17%
1,600 Bethlehem Steel $5.00 Conv. Pfd. ....................... 85,200
1,600 California Fed. Bank 7.75% Conv. Pfd. A................. 39,400
124,600
PREFERRED STOCKS 2.60%
650 California Fed Bank 10.625% Pfd B....................... 70,200
1,120 Consumers Power $4.16 Pfd A............................. 56,560
400 Consumers Power $4.50 Pfd B............................. 22,500
149,260
TOTAL PREFERRED STOCKS (cost $248,481)............................. 273,860
BONDS 80.59%
Principal Value
AUTO & AUTOMOTIVE PRODUCTS 4.27%
$ 95,000 Ford Holdings Inc. Debentures 9.375%, due 03/01/20...... 116,354
120,000 SPX Corp. Sr. Sub. Nts. 11.75%, due 06/01/02............ 128,700
245,054
CABLE TV/CELLULAR 5.68%
100,000 CF Cable TV Inc. 9.125%, due 07/15/07................... 102,125
225,000 Tele-Communications Inc. Notes 7.875%, due 08/01/13..... 223,778
325,903
CAPITAL GOODS 0.60%
30,000 Caterpillar Inc. Senior Debentures 9.75%, due 06/01/19.. 34,545
See notes to financial statements.
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1995
(Unaudited)
Principal Value Market Value
CHEMICALS 3.64%
$105,000 Arco Chemical Co. Debentures 9.80%, due 02/01/20........ $135,535
20,000 General Chemical Corp. Senior Subordinated Notes 9.25%,
due 08/15/03............................................ 19,750
50,000 Rexene Corp. Senior Notes 11.75%, due 12/01/04.......... 53,625
208,910
CONTAINERS & PAPER 13.18%
340,000 Georgia-Pacific Corp. Debentures 9.625%, due 03/15/22... 383,317
180,000 Georgia-Pacific Corp. Debentures 9.125%, due 07/01/22... 198,556
20,000 Owens-Illinois Inc. Senior Subordinated Notes 10.00%,
due 08/01/02.......................................... 20,700
145,000 Riverwood Intl. Corp. Senior Subordinated Notes 11.25%,
due 06/15/02.......................................... 154,425
756,998
CONVERTIBLE BONDS 2.92%
195,000 Oryx Energy Co. Convertible Subordinated Debentures
7.50%, due 05/15/14................................... 167,456
ENERGY & ENERGY SERVICES 1.08%
65,000 Maxus Energy Corp. Notes 9.375%, due 11/01/03........... 62,238
FINANCIAL SERVICES 9.32%
175,000 Aetna Life & Casualty Co. Debentures 8.00%,
due 01/15/17............................................ 180,598
55,000 Aetna Life & Casualty Co. Debentures 7.25%,
due 08/15/23............................................ 53,006
100,000 Chase Manhattan Corp. Subordinated Notes 7.875%,
due 08/01/04............................................ 103,826
75,000 Chemical Banking Corp. Subordinated Capital
Notes 10.125%, due 11/01/00............................. 85,854
110,000 Reliance Group Holdings Senior Subordinated
Debentures 9.75%, due 11/15/03.......................... 111,650
534,934
FOOD & DRUG PRODUCERS 1.65%
55,000 Borden Inc. Senior Debentures 9.25%, due 06/15/19....... 59,078
35,000 RJR Nabisco Inc. Notes 8.625%, due 12/01/02............. 35,782
94,860
INDUSTRIAL GOODS 8.13%
85,000 Ametek Inc. Senior Notes 9.75%, due 03/15/04............ 92,225
20,000 Deere & Co. Senior Debentures 8.50%, due 01/09/22....... 22,999
65,000 Penn Central Corp. Subordinated Notes 10.625%,
due 04/15/00............................................ 68,098
65,000 Westinghouse Electric Corp. Debentures 8.625%,
due 08/01/12............................................ 64,737
240,000 Westinghouse Electric Corp. Debentures 7.875%,
due 09/01/23............................................ 219,130
467,189
See notes to financial statements.
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1995
(Unaudited)
Principal Value Market Value
MEDIA & ENTERTAINMENT 10.01%
$ 35,000 Paramount Communications Senior Debentures 8.25%,
due 08/01/22.......................................... $ 34,843
35,000 Time Warner Entertainment Senior Debentures 8.375%,
due 03/15/23.......................................... 36,155
460,000 Time Warner Inc. Debentures 9.15%, due 02/01/23......... 503,964
574,962
METALS & MINING 7.70%
80,000 Alcan Aluminum Ltd. Debentures 8.875%, due 01/15/22..... 87,089
50,000 Armco Inc. Senior Notes 11.375%, due 10/15/99........... 51,750
285,000 USX Corp. Debentures 8.50%, due 03/01/23................ 303,642
442,481
MISCELLANEOUS CONSUMER GOODS & SERVICES 0.37%
20,000 Integrated Health Services Senior Sub. Notes 10.75%,
due 07/15/04.......................................... 21,300
RETAIL STORES 2.83%
30,000 Dayton Hudson Co. Debentures 8.60%, due 01/15/12........ 33,923
105,000 Sears, Roebuck & Co. Notes 9.375%, due 11/01/11......... 128,505
162,428
TECHNOLOGY 2.06%
65,000 Plantronics Inc. Senior Notes 10.00%, due 01/15/01...... 66,706
50,000 Tektronix Inc. Senior Notes 7.625%, due 08/15/02........ 51,786
118,492
TELEPHONES 3.01%
125,000 GTE Corp. Debentures 8.75%, due 11/01/21................ 143,968
24,580 NYNEX Corp. SF Debentures 9.55%, due 05/01/10........... 28,768
172,736
TEXTILES 2.26%
130,000 Westpoint Stevens Inc. Senior Subordinated
Debentures 9.375%, due 12/15/05....................... 130,000
TRANSPORTATION 1.88%
100,000 Southern Pacific Railroad Senior Notes 9.375%,
due 08/15/05.......................................... 108,000
TOTAL BONDS (cost $4,305,001)...................................... 4,628,486
SHORT TERM INVESTMENTS 5.65%
324,368 Star Treasury Fund (cost $324,368)...................... 324,368
TOTAL INVESTMENTS (cost $5,355,253)...................... 98.42% 5,652,482
Other assets less liabilities............................ 1.58% 90,771
TOTAL NET ASSETS.........................................100.00% $5,743,253
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES October 31, 1995
(Unaudited)
<S> <C>
ASSETS
Investments at value (cost $5,355,253)......................... $5,652,482
Dividends and interest receivable.............................. 117,933
Subscriptions receivable....................................... 0
Total assets................................................ 5,770,415
LIABILITIES
Accrued expenses............................................... 27,162
Total liabilities........................................... 27,162
NET ASSETS
Net assets, equivalent to $10.69 per share,
on 537,331 shares outstanding (Note 4)...................... $5,743,253
Computation of net asset value per share and
public offering price....................................... $ 10.69
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF OPERATIONS
For the period from May 3, 1995 (Commencement of Operations)
through October 31, 1995
(Unaudited)
<S> <C>
Investment Income:
Income:
Dividends.................................................... $33,444
Interest..................................................... 170,751
Total income............................................... 204,195
Expenses:
Investment advisory fee (Note 3)............................. 19,499
Distribution fee (Note 3).................................... 0
Other ................................................... 7,652
Total expenses............................................. 27,151
Net investment income...................................... 177,044
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments...................... 579
Unrealized appreciation of investments for the period........ 248,778
Net gain (loss) on investments............................. 249,357
Net increase in net assets from operations................. $426,401
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
October 31, 1995
(Unaudited)
<S> <C>
May 3, 1995*
through October 31, 1995
Increase (Decrease) in Net Assets from Operations:
Net investment income......................................... $177,044
Net realized gain (loss) on investments....................... 579
Unrealized appreciation (depreciation) for the period......... 248,778
Net increase (decrease) in net assets
from operations.............................................. 426,401
Dividends paid to shareholders from
net investment income........................................ (71,995)
Capital share transactions (Note 4)............................ 5,388,847
Total increase............................................. 5,743,253
Net Assets:
Beginning of period.......................................... 0
End of period (including undistributed net
investment income of $105,049)............................... $5,743,253
<FN>
* Commencement of operations
</FN>
</TABLE>
See notes to financial statements.
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
(Unaudited)
Note 1. Nature of Business and Basis of Presentation
The Croft-Leominster Income Fund (the "Fund") is a separately 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 Value Fund. It was organized in 1994 to succeed to the
business of Croft-Leominster Inc.'s Leominster Income Limited Partnership, an
investment company organized as a limited partnership which commenced operations
January 1, 1992 for the purpose of investing the partners' capital in securities
under professional investment management. This succession occurred on May 3,
1995 when the partnership's net assets aggregating $3,175,041 were transferred
to the Croft-Leominster Income Fund in exchange for 317,504 shares of the Fund's
capital stock. As a result of transferring such assets at their market value,
the change in unrealized appreciation of investments for the period, as shown
in the Statement of Operations will not equal the current unrealized
appreciation at October 31, 1995 as shown in the Statement of Assets and
Liabilities and the Schedule of Investments.
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 re-corded 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.
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 .79% of the Fund's average daily net
assets. Until December 31, 1997, the manager guarantees that the overall
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER INCOME FUND
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995
(Unaudited)
expense ratio for the Fund, which excludes ordinary brokerage commissions
incurred in the purchase and sale of portfolio securities, will not
exceed 1.35%.
Pursuant to a plan of Distribution the Fund pays a distribution fee of up to
.25% of each Fund's 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.
The Croft Funds Corporation elected to waive the 12b-1 fee for the Fund on
August 23, 1995. The waiver was enacted primarily because the Corporation
currently does not have any 12b-1 agreements with a broker-dealer or any other
financial institution, and felt it imprudent to accrue fees for compensation of
the same. The 12b-1 fee will be waived into the foreseeable future, however,
the Croft Funds Corporation reserves the right to terminate the waiver and
reinstate the 12b-1 fee at any time in its sole discretion.
Note 4. Capital Stock.
At October 31, 1995, there were 30,000,000 shares of capital stock ($1 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $5,388,847 for the Fund. Trans-actions in capital stock were as follows:
<TABLE>
<S> <C> <C>
May 3, 1995
(Commencement of
Operations) through
October 31, 1995
Shares Amount
Sold..................................................... 570,449 $5,730,748
Issued on reinvestment of dividends...................... 4,824 48,867
Redemptions.............................................. (37,942) (390,768)
Net increase............................................. 537,331 $5,388,847
</TABLE>
Note 5. Investment Transactions.
During the period ended October 31, 1995, purchases and sales of investment
securities, excluding short-term obligations were as follows:
<TABLE>
<S> <C>
Cost of purchases................................................... $5,090,422
Proceeds of sales................................................... 60,116
</TABLE>
At October 31, 1995 the aggregate unrealized appreciation and (depreciation) of
portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $359,575
Unrealized depreciation............................................. (62,346)
$297,229
</TABLE>
Note 6. Selected Financial Information.
<TABLE>
<CAPTION>
Per Share Operating Performance (for a share outstanding throughout the period)
<S> <C>
May 3, 1995
(Commencement of
Operations) through
October 31, 1995
Net asset value, beginning of period........................... $010.00
Income from investment operations:
Net investment income........................................ .37
Net realized and unrealized gain (loss) on investments....... .48
Total from investment operations........................... .85
Less distributions:
Dividends from net investment income......................... (.16)
Dividends from net realized gains............................ .00
Total distributions........................................ (.16)
Net asset value, end of period................................. $010.69
Ratios/Supplemental Data:
Net assets, end of period (000's)............................ 5,743
Ratios to average net assets:
Expenses..................................................... 1.08%**
Net investment income........................................ 7.08%**
Portfolio turnover rate........................................ 1.44%
Net asset value adjusted for reinvestment of
dividends and distributions:
Beginning of period.......................................... $010.00
End of period................................................ $010.85
Total Return...................................... ............ 8.59%
<FN>
**Annualized
</FN>
</TABLE>
<PAGE>
Croft-Leominster
Value Fund
SEMI-ANNUAL REPORT
OCTOBER 31, 1995
(Unaudited)
<PAGE>
Dear Croft-Leominster Value Fund Shareholder:
As of October 31, 1995, the Value Fund has gained 4.9% since inception on a
total return basis. The Value Fund has underperformed relative to the Standard
and Poor's 500 Index at this time; however, we feel that it is well-positioned
to benefit from upcoming opportunities available in the equity markets. As of
October 31, 1995, the Value Fund held a cash position of more than 31%. We have
been cautiously participating in the strong domestic equity market. We have
avoided the technology sector, whose lofty price-to-earnings ratios and high
volatility contradict our philosophy. Our research tends to shy away from the
"big picture;" instead, we focus on accumulating knowledge regarding specific,
attractively valued companies. When our research uncovers an attractive security
we feel strongly about, we act on our conviction. We have established core
positions in several industries which we feel have strong fundamentals and
prospects for capital appreciation:
As of October 31, 1995, we held a 13.6% stake in the fertilizer industry. We
look favorably on this industry for several reasons: world and U.S. grain stocks
are at 20-year lows; emerging market fertilizer demand is rising as population
growth continues and dietary patterns change with higher income levels;
fertilizer is very cost-effective in that proper usage can boost crop yields
250%, and this fact is leading to higher application rates overseas. Potash
Corporation of Saskatchewan (PCS) constitutes the largest holding in this
industry. PCS is the world's largest potash producer.
We continue to find some compelling values in the energy sector (8.9%). We
attempt to identify companies in this industry which sell at discounts to their
net asset values. Our largest holding in this industry, Triton Energy (3.1%),
sells at a 30% discount to its estimated net asset value of $79 per share.
The banking industry (11.8%) represents another core holding in the Value Fund.
We expect this industry to benefit from the stable interest rate environment,
and have found several companies with reasonable valuations. The trend of
consolidation should further enhance value in this industry. We like Great
Western Financial (3.7%), which is California's fifth largest depository and
maintains a significant presence in the emerging Florida banking market.
We continue to monitor the international arena for investment opportunities. As
of October 31, the Fund held a fairly small position (2.3%) in foreign
investments. Geographic diversification can serve as a measure of safety against
a correction in the U.S. markets, while providing exposure to some of the
fastest growing markets in the world. Some intriguing values exist overseas, and
we have been moderately expanding our presence in the international marketplace.
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
December 15, 1995
**Comments refer to the Fund as of October 31, 1995. Composition of the
portfolio will have changed somewhat at this mailing.
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS
October 31, 1995
(Unaudited)
<S> <C>
Shares Market Value
COMMON STOCKS 68.99%
APPAREL & TEXTILES 1.72%
600 Fieldcrest Cannon Inc.*................................. $ 11,550
BANKS, SAVINGS & LOANS, AND BROKERS 11.82%
100 Astoria Financial Corp. ................................ 4,287
300 Cenfed Financial Corp. ................................. 6,975
500 Coast Savings Financial*................................ 13,187
150 Citicorp................................................ 9,731
1,100 Great Western Financial................................. 24,887
300 Greenpoint Financial Corp. ............................. 8,100
100 Mellon Bank Corp. ...................................... 5,012
50 Morgan Stanley Group Inc. .............................. 4,350
100 PNC Financial Corp. .................................... 2,625
79,154
BUILDING & CONSTRUCTION 3.52%
200 Ampco-Pittsburgh........................................ 2,000
300 Congoleum Corp Cl. A*................................... 2,512
450 Owens-Corning Fiberglas Corp.*.......................... 19,069
23,581
BUSINESS SERVICES AND TRANSPORTATION 5.14%
500 Kansas City Southern Inds. ............................. 23,312
500 Southern Pacific Rail Corp.*............................ 11,125
34,437
CAPITAL EQUIPMENT 5.69%
100 General Electric Co. ................................... 6,325
500 SPX Corp. .............................................. 7,750
1,700 Westinghouse Electric................................... 24,012
38,087
CHEMICALS 0.93%
100 DuPont Co. ............................................. 6,237
CLOSED END COUNTRY FUND (INCOME) 0.69%
500 Kleinwort Benson Australian Income Fund................. 4,625
CLOSED END FUNDS-ASIA 1.11%
500 Asia Tigers Fund Inc. .................................. 5,187
200 Schroder Asian Growth Fund*............................. 2,225
7,412
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1995
(Unaudited)
Shares Market Value
CLOSED END FUNDS-GLOBAL 0.14%
100 GT Global Developing Markets Fund....................... $ 938
CLOSED END FUNDS-INDIA 0.40%
100 Jardine Fleming India Fund*............................. 888
200 Morgan Stanley India Investment Fund*................... 1,750
2,638
CONGLOMERATES 1.83%
100 ITT Corp. .............................................. 12,250
CONSUMER CYCLICALS 2.08%
300 Kerr Group*............................................. 2,363
300 Philips Electronics N.V ................................ 11,588
13,951
CONSUMER NON-DURABLES 1.16%
200 Hanson PLC. ADR......................................... 3,100
100 Heinz (H.J.) Co......................................... 4,650
7,750
ENERGY 8.92%
500 Benton Oil & Gas Co.*................................... 6,063
2,500 Comstock Resources Inc.*................................ 10,938
600 Equity Oil Co.*......................................... 2,775
500 McFarland Energy Inc.*.................................. 3,188
600 Oryx Energy Co.*........................................ 6,900
1,000 Sante Fe Energy Resources*.............................. 8,875
450 Triton Energy Corp.*.................................... 20,981
59,720
FERTILIZERS 13.6%
150 Agrium Inc. ............................................ 6,150
150 Agrium Inc. (Canada).................................... 6,050
1,000 Arcadian Corp. ......................................... 20,625
317 Freeport McMoran, Inc. ................................. 11,835
485 Potash Corp. of Saskatchewan............................ 33,768
1,000 Terra Industries Inc. .................................. 12,625
91,053
FINANCIAL SERVICES 2.45%
300 Capital One Financial Corp. ............................ 7,350
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
SCHEDULE OF INVESTMENTS (continued)
October 31, 1995
(Unaudited)
Shares Market Value
FINANCIAL SERVICES (continued)
100 Eagle Finance Corp.*.................................... $ 1,463
150 Franklin Resources Inc. ................................ 7,613
16,426
INSURANCE 2.90%
60 Aetna Life & Casualty Co. .............................. 4,223
300 Travelers Group, Inc. .................................. 15,150
1 Transport Holdings Inc. ................................ 39
19,412
INVESTMENT COMPANIES 0.28%
200 Charles Allmon Trust Inc. .............................. 1,850
PACKAGING & CONTAINERS 0.26%
50 Crown Cork & Seal*...................................... 1,744
PHARMACEUTICALS 1.91%
150 Warner Lambert Co. ..................................... 12,769
RETAIL 0.24%
200 Kmart Corp. ............................................ 1,625
TECHNOLOGY 0.53%
150 Advanced Micro Devices*................................. 3,581
TELEPHONE & CELLULAR 1.67%
100 AT&T Corp. ............................................. 6,400
100 U.S. West, Inc. ........................................ 4,763
11,163
TOTAL COMMON STOCKS (cost $453,135).................................. 461,953
SHORT TERM INVESTMENTS 24.44%
163,675 Star Treasury Fund (cost $163,675)...................... 163,675
TOTAL INVESTMENTS (cost $616,810)............................ 93.43% $ 625,628
Other assets less liabilities................................ 6.57% 43,962
TOTAL NET ASSETS.............................................100.00% $ 669,590
<FN>
* Non-income producing
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
(Unaudited)
<S> <C>
ASSETS
Investments at value (cost $616,810)............................. $ 625,628
Dividends and interest receivable................................ 1,279
Subscriptions receivable......................................... 45,495
Total assets.................................................. 672,402
LIABILITIES
Accrued expenses................................................. 2,812
Total liabilities............................................. 2,812
NET ASSETS
Net assets, equivalent to $10.49 per share,
on 63,813 shares outstanding (Note 4)......................... $ 669,590
Computation of net asset value per share and
public offering price......................................... $ 10.49
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF OPERATIONS
For the period from May 9, 1995 (Commencement of Operations)
through October 31, 1995
(Unaudited)
<S> <C>
Investment Income:
Income:
Dividends..................................................... $ 1,339
Interest...................................................... 4,214
Total income................................................ 5,553
Expenses:
Investment advisory fee (Note 3).............................. 1,762
Distribution fee (Note 3)..................................... 469
Other......................................................... 581
Total expenses.............................................. 2,812
Net investment income....................................... 2,741
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments....................... 823
Unrealized appreciation of investments for the period......... 8,818
Net gain (loss) on investments.............................. 9,641
Net increase in net assets from operations.................. $ 12,382
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
October 31, 1995
(Unaudited)
<S> <C>
May 9, 1995*
through October 31, 1995
Increase (Decrease) in Net Assets from Operations:
Net investment income.......................................... $0,2,741
Net realized gain (loss) on investments........................ 823
Unrealized appreciation (depreciation) for the period.......... 8,818
Net increase (decrease) in net assets
from operations............................................... 12,382
Dividends paid to shareholders from
net investment income......................................... 0
Capital share transactions (Note 4)............................. 657,208
Total increase.............................................. 669,590
Net Assets:
Beginning of period........................................... 0
End of period (including undistributed net
investment income of $2,741).................................. $0669,590
<FN>
* Commencement of operations
</FN>
</TABLE>
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
(Unaudited)
Note 1. Nature of Business and Basis of Presentation
The Croft-Leominster Value Fund (the "Fund") is a separately 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 re-corded 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.
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 0.94% of the Fund's average daily net
assets. Until December 31, 1997, the manager guarantees that the overall expense
ratio of the Fund, which excludes ordinary brokerage commissions incurred in the
purchase and 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 each Fund's 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.
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995
(Unaudited)
Note 4. Capital Stock.
At October 31, 1995, there were 30,000,000 shares of capital stock ($1 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $657,208 for the Fund. Trans-actions in capital stock were as follows:
<TABLE>
<S> <C> <C>
May 9, 1995
(Commencement of
Operations) through
October 31, 1995
Shares Amount
Sold................................................. 63,813 $ 657,208
Issued on reinvestment of dividends.................. 0 0
Redemptions.......................................... 0 0
Net increase......................................... 63,813 $ 657,208
</TABLE>
Note 5. Investment Transactions.
During the period ended October 31, 1995, purchases and sales of investment
securities, excluding short-term obligations were as follows:
<TABLE>
<S> <C>
Cost of purchases............................................ $ 494,268
Proceeds of sales............................................ 41,904
</TABLE>
At October 31, 1995 the aggregate unrealized appreciation and (depreciation) of
portfolio securities, based on cost for federal income tax purposes, was as
follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................... $ 25,106
Unrealized depreciation....................................... (16,288)
$ 8,818
</TABLE>
<PAGE>
Croft Funds Corporation
CROFT-LEOMINSTER VALUE FUND
NOTES TO FINANCIAL STATEMENTS (continued)
October 31, 1995
(Unaudited)
Note 6. Selected Financial Information.
<TABLE>
<CAPTION>
Per Share Operating Performance (for a share outstanding throughout the period)
<S> <C>
May 9, 1995
(Commencement of
Operations) through
October 31, 1995
Net asset value, beginning of period.......................... $ 10.00
Income from investment operations:
Net investment income....................................... .07
Net realized and unrealized gain (loss) on investments...... .42
Total from investment operations.......................... .49
Less distributions:
Dividends from net investment income........................ (.00)
Dividends from net realized gains........................... .00
Total distributions:...................................... (.00)
Net asset value, end of period................................ $ 10.49
Ratios/Supplemental Data:
Net assets, end of period (000's)........................... 670
Ratios to average net assets:
Expenses.................................................... 1.46%**
Net investment income....................................... 1.42%**
Portfolio turnover rate....................................... 16.08%
Total Return.................................................. 4.90%
<FN>
**Annualized
</FN>
</TABLE>
