CROFT-LEOMINSTER
INCOME FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
Dear Fellow Shareholder:
During the twelve month period ended April 30, 1997, the Croft-Leominster Income
Fund gained 10.5% on a total return basis. Since its inception date of May 4,
1995 through April 30, 1997, the Income Fund has gained 21.8% on a total return
basis.* We continue to perform well relative to our peers. The Wall Street
Journal's Mutual Fund Scorecard ranked the Income Fund 5th out of 108 BBB rated
bond funds** for the one-year period ending April 30, 1997, as determined by
Lipper Analytical Services, Inc. Over the longer term, the same portfolio in a
limited partnership format has achieved a 11.2% annualized return since
inception (January 1, 1992) compared to a 6.3% annualized return for the Lehman
Brothers Intermediate Government/Corporate Bond Index over the same time
period.***
Our credit analysis attempts to identify fixed-income securities which have
potential for ratings upgrades through enhanced cash flow and improved operating
environments. Of the fifty-seven corporate bond issues held in the fund,
thirteen have been upgraded by Standard and Poor's and/or Moody's in the
preceding year while only four issues have been downgraded. Two of these issues,
IMC Global and Maxus Energy, were upgraded from non-investment grade to
investment grade status. Subsequently, these issues experienced price
appreciation as a result of the improved credit outlook.
As of April 30, 1997 the Income Fund's bond portfolio had the following
characteristics: weighted average yield to maturity of 8.6%, average duration of
8.5 years, and weighted average maturity of 19.4 years.
The Income Fund maintains strong industry diversification, with its corporate
bonds dispersed among nineteen different industries and fifty-seven 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.
Over the past six months, our most significant portfolio additions have been in
the energy sector. We have added positions in several companies which have
attractive yields relative to their assets and cash flow potential.
Thank you for investing in the Croft-Leominster Income Fund. We will continue to
work hard to justify your confidence in the Income Fund.
Sincerely yours,
Gordon Croft
Vice President
June 13, 1997
* Past performance is not indicative of future performance. Investment return
and principal value will fluctuate. An investor's shares, when redeemed,
may be worth more or less than the original value.
** Category consists of mutual funds which generally invest at least 65% of
their assets in corporate bonds with BBB or better credit rating and may
hold government bonds. The total return does not include fees which were
waived during the period on which the ranking was based. If such fees were
not waived the total return would have been adversely affected.
*** The limited partnership was not registered under the Investment Company Act
of 1940 ("1940 Act") and, therefore, was not subject to certain investment
restrictions imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, its performance may have been adversely
affected.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
- --------------------------------------------------------------------------------
<CAPTION>
Shares Market Value
- ------ ------------
<C> <S> <C>
COMMON STOCKS 6.69%
BOND FUNDS 6.69%
6,200 Alliance World Dollar Govt.II ......... $ 82,925
3,700 Latin America Dollar Income Fund ...... 54,575
6,731 Morgan Stanley Emerging Mkt Debt Fd ... 90,868
9,500 Salomon Brothers Worldwide Income Fd .. 138,938
10,300 Templeton Emerging Markets Income Fund. 128,750
-------
TOTAL COMMON STOCKS (Cost $458,956) ............ 496,056
-------
PREFERRED STOCKS 2.56%
CONVERTIBLE PREFERRED 1.44%
2,100 Bethlehem Steel $5.00 Conv PFD ......... 106,575
-------
PREFERRED STOCKS 1.12%
500 Allied Irish 11.875% PFD ............... 13,563
650 California Fed Bank 10.625% PFD B ...... 69,550
-------
83,113
------
TOTAL PREFERRED STOCKS (Cost $177,815) .......... 189,688
=======
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
- --------------------------------------------------------------------------------
Principal Value Market Value
- --------------- ------------
BONDS 88.18%
AUTOS & AUTOMOTIVE PRODUCTS 1.48%
95,000 Ford Holdings Inc. Debentures ......... $110,023
CABLE TV & CELLULAR 6.48%
185,000 CF Cable TV Inc. Senior Sec. Notes .... 200,725
225,000 Tele-Communications Senior Debentures.. 213,466
70,000 Tele-Communications Senior Debentures . 66,692
-------
480,883
-------
CAPITAL GOODS 1.29%
90,000 Caterpillar Inc. Sinking Fund
Debentures ......................... 95,871
-------
CHEMICALS 4.11%
105,000 ARCO Chemical Co. Debentures ......... 127,165
20,000 General Chemical Corp. Senior
Subordinated Notes ............... 20,100
30,000 IMC Fertilizer Senior Debentures ..... 34,685
110,000 Rexene Corp. Senior Notes ............ 122,787
-------
304,737
-------
CONTAINERS & PAPER 16.89%
140,000 Champion International Debentures ... 130,175
46,000 Georgia-Pacific Corp. Debentures .... 51,380
365,000 Georgia-Pacific Corp. Debentures .... 393,650
465,000 Georgia-Pacific Corp. Debentures .... 485,847
20,000 Owens-Illinois Inc. Senior
Subordinated Notes ................ 21,000
125,000 Stone Container Corp. Senior
Subordinated Debentures .......... 118,750
55,000 Stone Container Corp. Senior
Subordinated Debentures .......... 52,662
---------
1,253,464
---------
CONVERTIBLE BONDS 0.64%
50,000 Kelley Oil & Gas Corp. Convertible
Subordinated Debentures........... 47,625
ELECTRIC & GAS UTILITIES 4.09%
70,000 Monongahela Power 1st Mortgage ...... 72,413
115,000 Old Dominion Electric 1st Mortgage .. 123,155
100,000 Penn Power & Light 1st Mortgage ..... 108,106
-------
303,674
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
- --------------------------------------------------------------------------------
Principal Value Market Value
- --------------- ------------
ENERGY & ENERGY SERVICES 3.36%
30,000 Costilla Energy Inc. Senior Notes .. $ 30,375
65,000 Maxus Energy Corp. Senior
Subordinated Notes ............. 68,087
100,000 Mariner Energy Corp Senior
Subordinated Notes . ........... 100,750
50,000 National Energy Group Senior
Subordinated Notes ............. 50,000
-------
249,212
-------
FINANCIAL SERVICES 11.96%
225,000 Aetna Services Inc. Debentures .... 220,438
55,000 Aetna Services Inc. Debentures .... 51,562
100,000 Chase Manhattan Corp. New
Subordinated Notes .............. 100,349
15,000 ITT Corp. Senior Subordinated
Debentures ...................... 15,368
95,000 Lincoln National Corp. Debentures . 100,770
160,000 Reliance Group Holdings Senior
Subordinated Debentures ......... 164,600
230,000 Torchmark Corp. Sinking Fund
Debentures ...................... 234,482
-------
887,569
-------
FOOD & DRUG PRODUCERS 2.21%
80,000 Borden Inc. Sinking Fund
Debentures ......................... 78,213
85,000 RJR Nabisco Inc. Notes ............. 85,824
-------
164,037
-------
GAS & GAS TRANSMISSION 0.97%
70,000 Bellwether Exploration Senior
Subordinated Notes .............. 71,750
-------
INDUSTRIAL GOODS 6.88%
85,000 Ametek Inc. Senior Notes .......... 88,400
20,000 Deere & Co. Senior Debentures ..... 21,264
65,000 Westinghouse Electric Corp.
Debentures ..................... 67,010
370,000 Westinghouse Electric Corp.
Debentures ..................... 333,979
-------
510,653
-------
MEDIA & ENTERTAINMENT 5.89%
35,000 Time Warner Entertainment Senior
Debentures ..................... 35,160
375,000 Time Warner Inc. Debentures ....... 401,788
-------
436,948
-------
METALS & MINING 6.55%
180,000 Alcan Aluminum Ltd. Debentures .... 189,835
285,000 USX Corp. Debentures .............. 296,163
-------
485,998
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
- --------------------------------------------------------------------------------
Principal Value Market Value
- --------------- ------------
MISC. CONSUMER GOODS & SERVICES 0.29%
20,000 Integrated Health Services Senior
Subordinated Notes ............... $ 21,400
RETAIL STORES 3.43%
30,000 Dayton Hudson Co. Debentures ....... 32,274
105,000 Sears Roebuck & Co. Notes .......... 122,204
100,000 Woolworth Corp Debentures .. ....... 99,732
------
254,210
-------
TECHNOLOGY 2.43%
125,000 Plantronics Inc. Senior Notes ...... 129,375
50,000 Tektronix Inc. Senior Notes ........ 50,703
------
180,078
-------
TELEPHONES & CELLULAR 4.69%
125,000 GTE Corp. Debentures ............... 139,557
70,000 New York Telephone Debentures ...... 76,852
23,240 NYNEX Corp. Sinking Fund Debentures. 26,030
100,000 US West Communications Debentures .. 105,465
-------
347,904
-------
TEXTILES & APPAREL MANUFACTURING 3.06%
30,000 Fieldcrest Cannon Inc. Senior
Subordinated Debentures ........ 31,425
70,000 Fruit of the Loom Inc. Senior Notes. 65,672
130,000 Westpoint Stevens Inc. Senior
Subordinated Debentures ........ 132,925
-------
227,022
-------
TRANSPORTATION 1.22%
90,000 Union Pacific Corp. Sinking
Fund Debentures ................ 90,296
------
US TREASURY 0.26%
20,000 U.S. Treasury Note ................. 19,144
------
TOTAL BONDS (Cost $6,355,616) ............... 6,542,498
---------
SHORT TERM INVESTMENTS 1.09%
80,581 Star Treasury Fund (Cost $80,581)... 80,581
TOTAL INVESTMENTS (Cost $7,072,967).....98.52% $7,308,823
Other assets less liabilities ........... 1.48% 109,710
---- ----------
TOTAL NET ASSETS .......................100.00% $7,418,533
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
STATEMENT OF ASSETS AND LIABILITIES
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments at value (cost $7,117,312) ..................... $7,308,823
Dividends and interest receivable .......................... 158,066
Due from investment adviser (Note 3) ....................... 74
---------
TOTAL ASSETS ........................................ 7,466,963
---------
LIABILITIES
Payable for fund shares redeemed ............................. 900
Payable for dividends declared ............................... 31,348
Other expenses ............................................... 17,082
---------
TOTAL LIABILITIES ..................................... 48,430
---------
NET ASSETS
Net assets, equivalent to $10.40 on 713,385 shares
outstanding. (Note 4) ........................................ $7,418,533
==========
COMPUTATION OF NET ASSET VALUE PER SHARE AND
PUBLIC OFFERING PRICE ...................................... $ 10.40
==========
NET ASSETS CONSIST OF:
Paid in capital .............................................. 7,237,614
Undistributed net investment income .......................... 2,824
Accumulated undistributed net realized
gains (losses) from security transactions ................. (13,416)
Net unrealized appreciation (depreciation)
of investments ............................................ 191,511
----------
NET ASSETS APRIL 30, 1997 .................................... $7,418,533
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
STATEMENT OF OPERATIONS
CROFT-LEOMINSTER INCOME FUND
For the year ended April 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C>
Dividends $ .............................................. 70,727
Interest ................................................. 532,824
Other .................................................... 2,257
-------
Total income ...................................... 605,808
-------
EXPENSES:
Investment advisory fee (Note 3) ......................... 55,199
Administrative fee ....................................... 24,586
Legal Fee ................................................ 14,399
Transfer agent fee ....................................... 11,687
Audit fee ................................................ 6,581
Insurance ................................................ 6,249
Custody fee .............................................. 6,001
Printing ................................................. 3,800
Registration ............................................. 3,325
Distribution fee (Note 3) ................................ 0
Other .................................................... 1,131
-------
TOTAL EXPENSES ...................................... 132,958
Less: Expense reimbursement ......................... (56,099)
-------
Net expenses ........................................ 76,859
-------
NET INVESTMENT INCOME (LOSS) ........................ 528,949
-------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments .................. 18,264
Distributions of realized gains by other investment companies 24,775
Unrealized appreciation (depreciation) of investments
for the period ...................................... 123,697
-------
NET GAIN (LOSS) ON INVESTMENTS ...................... 166,736
-------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS. $695,685
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
STATEMENT OF CHANGES IN NET ASSETS
CROFT-LEOMINSTER INCOME FUND
For the year ended April 30, 1997
- --------------------------------------------------------------------------------
<CAPTION>
For the May 4, 1995*
year ended through
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income .......................... $528,949 $406,481
Net realized gain (loss) on investments ........ 18,264 30,969
Distributions of realized gains by other
investment companies ........................ 24,795 0
Unrealized appreciation (depreciation) for
the period ....... ........................... 123,697 67,814
------- ------
Net increase (decrease) in net assets
from operations .......................... 695,685 505,264
------- -------
DIVIDENDS PAID TO SHAREHOLDERS:
Net investment income ($.84 and .73 per share,
respectively) .............................. (557,517) (399,864)
Capital gains ($.06 and .03 per share,
respectively) .............................. (45,617) (17,033)
CAPITAL SHARE TRANSACTIONS (NOTE 4)........... 875,797 6,361,818
------- ---------
TOTAL INCREASE ........................ 968,348 6,450,185
NET ASSETS:
Beginning of period .......................... 6,450,185 0
--------- ---------
End of period (including undistributed
net investment income of $2,824)
and $6,617, respectively) .............. $ 7,418,533 $ 6,450,185
=========== ===========
<FN>
* Commencement of operations
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Croft-Leominster Income Fund (the "Fund"), is a managed portfolio of the
Croft Funds Corpor-ation, 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 4, 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 April 30, 1997 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 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 STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
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 monthly at the annual rate of .79% of the Income Fund's average daily
net assets. Until December 31, 1997, the manager guarantees that the overall
expense ratio for the Income Fund, which exclude ordinary brokerage commissions
incurred in the purchase or sale of portfolio securities, will not exceed 1.35%.
As a result, for the year ended April 30, 1997, the Adviser accrued
reimbursements to the Fund of $56,099.
Pursuant to a plan of Distribution the Fund pays a distribution fee of up to
.25% of the average daily net assets to Broker-Dealers for distribution
assistance, and to financial institutions and intermediaries such as banks,
savings and loan associations, insurance companies and investment counselors as
compensation for services rendered or expenses incurred in connection with
distribution assistance.
The Croft Funds Corporation elected to waive the 12b-1 fee for the
Croft-Leominster Income Fund on August 23, 1995. The waiver was enacted
primarily because the Corporation currently does not have any 12b-1 agreements
with a broker-dealer or any other financial institution, and felt it imprudent
to accrue fees for compensation of the same. The 12b-1 fee will be waived into
the foreseeable future; however, the Croft Funds Corporation reserves the right
to terminate the waiver and reinstate the 12b-1 fee at any time in its sole
discretion.
NOTE 4. CAPITAL STOCK.
At April 30, 1997, there were 30,000,000 shares of capital stock ($.001 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $7,237,614 for the Income Fund. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
For the
year ended
April 30, 1997
---------------
Shares Amount
------ ------
<S> <C> <C>
Sold ..................................... 55,851 $ 581,758
Issued on reinvestment
of dividends ............................. 44,932 467,568
Redemptions .............................. (16,411) (173,529)
------- --------
Net increase ............................. 84,372 $ 875,797
====== =========
</TABLE>
<PAGE>
CROFT FUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
NOTE 5. INVESTMENT TRANSACTIONS.
During the period ended April 30, 1997, purchases and sales of investment
securities, excluding short-term obligations were as follows:
<TABLE>
<S> <C>
Cost of purchases $2,056,301
Proceeds of sales 891,963
At April 30, 1997 the net unrealized appreciation based on cost for Federal
income tax purposes of $7,072,967 for the Income Fund was as follows:
Unrealized appreciation $277,878)
Unrealized depreciation (42,022)
-------
$ 235,856
=========
</TABLE>
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
The Croft-Leominster Income Fund makes dividend distributions quarterly. During
the fiscal year ended April 30, 1997, distributions of $.90 aggregating $603,134
were declared with $31,348 remaining payable to shareholders at year end.
NOTE 7. FINANCIAL INSTRUMENT DISCLOSURE
There are no reportable financial instruments that have any off balance sheet
risk as of April 30, 1997.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
Financial Highlights for a share outstanding
throughout the period
Per Share Operating Performance (for a
share outstanding throughout the period)
For the May 4, 1995*
year ended through
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.25 $ 10.00
------- -------
Income from investment operations:
Net investment income ................. .79 .73
Capital gains ......................... .04 .03
Net realized and unrealized gain (loss)
on investments .................... .22 .25
------ ------
TOTAL FROM INVESTMENT OPERATIONS ..... 1.05 1.01
------- ------
Less distributions:
Dividends from net investment income .. (.84) (.73)
Dividends from net realized gains .... (.06) (.03)
------- ------
TOTAL DISTRIBUTIONS .................. (.90) (.76)
------- ------
NET ASSET VALUE, END OF PERIOD ............. $ 10.40 $ 10.25
======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .. 7,419 6,450
Ratios to average net assets:
Expenses .............................. 1.10% 1.10%**
Net investment income ................. 7.92% 7.35%**
Portfolio turnover rate ............... 13.73% 13.76%
Average Commission Rate Paid .......... .0711 -
Total Return ............................... 10.56% 10.17%
<FN>
* Commencement of operations
** Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
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, 1997, and the related statement of operations for
the year then ended, and the statement of changes in net assets, and financial
highlights for the year then ended, and 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, 1997, 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 each
of the respective portfolios constituting the Croft Funds Corporation as of
April 30, 1997, the results of its operations for the year then ended, the
changes in net assets, and the financial highlights for the year then ended, and
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 13, 1997
<PAGE>
CROFT FUNDS CORPORATION
CROFT-LEOMINSTER INCOME FUND
April 30, 1997
<TABLE>
AVERAGE ANNUAL TOTAL RETURN PERFORMANCE PERIOD ENDED 4/30/97
<S> <C> <C> <C>
Since Inception
One Year Five Years* (01/01/92)*
-------- ----------- -----------
Croft-Leominster Income Fund* + 10.5% + 10.2% + 11.2%
Lehman Brothers Intermediate + 6.4% + 6.8% + 6.3%
Government/Corporate Bond Index
<FN>
* The performance data quoted includes past performance of the Leominster
Income Limited Partnership, the predecessor to the Croft-Leominster Income
Fund. This past performance has been adjusted for fees and expenses for the
periods prior to inception of the Croft-Leominster Income Fund on May 4, 1995.
The Leominster Income Limited Partnership was not registered under the 1940
Act and therefore was not subject to certain investment restrictions which may
have adversely affected performance.
</FN>
</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 SHOWN HERE]
This graph depicts the performance of the Fund vs. its benchmark (Lehman
Brothers International Government Bond Index) using a $10,000 initial
investment. The value of the Fund at April 30, 1997 was $17,655 vs. $13,866 for
the benchmark.
<PAGE>
CROFT-LEOMINSTER
INCOME FUND
1-800-746-3322
