CROFT-LEOMINSTER
VALUE FUND
ANNUAL REPORT
APRIL 30, 1997
<PAGE>
Dear Fellow Shareholder:
During the twelve month period ended April 30, 1997, the Croft-Leominster Value
Fund gained 18.7% on a total return basis. From its inception date of May 10,
1995 through April 30, 1997, the Value Fund has gained 40.7% on a total return
basis.* Since our fiscal year end of April 30, 1997, the market has continued
its lofty ascent. The Value Fund has also participated in this rally. From April
30, 1997 through June 19, 1997, the Value Fund has gained 16.9%. In comparison,
the Standard and Poor's 500 Index has increased 12.3% over this period. We
continue to adhere to our philosophy of value investing as indicated by the
portfolio's characteristics listed below:
<TABLE>
<S> <C> <C>
Value Fund S&P 500
---------- -------
Estimated 1998 Price/Earnings 12.3x 17.2x
Estimated Growth Rate 11.8% 8.0%
Estimated Price/Book Value 2.9x 3.9x
</TABLE>
We feel that emphasizing stocks which sell at significant discounts to the
market's multiples and our careful process of security selection will help limit
the Value Fund's downside risk.
Since our last report, we have built positions in SPX Corporation (3.7%), an
automobile parts manufacturer, and International Multifoods (5.4%), a food
distributor. These two companies have talented and focused management teams,
with proven records for adding value to their businesses. Both are dedicated to
the implementation of Economic Value Added (EVA(TM)) management strategies. We
continue to hold a significant position in Westinghouse (4.6%), as the company
makes the transition from an industrial conglomerate to a broadcasting behemoth.
We feel Westinghouse sells at a discount to its underlying intrinsic value.
Thank you again for investing in the Croft-Leominster Value Fund. As always, we
will work hard to achieve good returns for our shareholders.
With kindest regards,
Sincerely yours,
Gordon Croft
Vice President
June 20, 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.
** Comments refer to the Fund as of April 30, 1997. Composition of the portfolio
may have changed somewhat as of this mailing.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1997
Shares Market Value
- ------ ------------
<C> <S> <C>
COMMON STOCKS 92.68%
BANKS, S & L'S, AND BROKERS 12.58%
1,000 BankUnited Financial Corp. Cl A* $ 9,000
1,200 Big Foot Financial Corp.* ........ 17,850
140 Chase Manhattan Bank ............. 12,967
3,600 Dime Bancorp Inc. Cl B* .......... 58,050
400 Greenpoint Financial Corp. ....... 22,150
2,300 Hibernia Corp. ................... 29,612
800 ISB Financial Corp ............... 18,000
700 Ocean Financial Corp. ............ 20,694
756 Provident Bankshares Corp. ....... 26,649
1,500 Rochester Community Savings Bank . 44,625
-------
259,597
-------
BUILDING & CONSTRUCTION 5.20%
2,650 Owens Corning .................... 107,325
-------
BUSINESS SERVICES AND TRANSPORTATION 2.47%
300 Kansas City Southern Industries .. 15,450
557 Union Pacific Corp. .............. 35,509
50,959
-------
CAPITAL EQUIPMENT 4.61%
5,600 Westinghouse Electric ............ 95,200
-------
CHEMICALS 2.33%
2,300 Ethyl Corp. ...................... 20,988
800 Rhone-Poulenc ADR ................ 27,100
-------
48,088
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1997
Shares Market Value
- ------ ------------
CLOSED END FUNDS- ASIA 1.34%
2,500 Asia Tigers Fund Inc. $ .......... 25,938
147 Schroder Asian Growth Fund ....... 1,672
-------
27,610
-------
CLOSED END FUNDS- GERMANY 0.64%
1,500 Emerging Germany Fund Inc. ....... 13,313
-------
CLOSED END FUNDS- GLOBAL 1.13%
1,100 GT Global Developing Markets Fund 13,063
700 GT Global Eastern Europe Fund .... 10,325
-------
23,388
-------
CLOSED END FUNDS- INDIA 1.54%
534 India Growth Fund Inc. ........... 6,608
1,400 Jardine Fleming India Fund* ...... 12,425
600 Morgan Stanley India Invt. Fund* . 6,600
700 The India Fund Inc. .............. 6,125
-------
31,758
-------
CLOSED END FUNDS-LATIN AMERICA 2.38%
700 Argentina Fund Inc. .............. 9,188
1,200 Latin American Investment Fund ... 21,150
1,200 Latin American Equity Fund ....... 18,750
-------
49,088
-------
CONSUMER CYCLICALS 5.68%
700 Federal-Mogul Corp. .............. 19,338
400 Philips Electronics N.V .......... 21,400
1,400 SPX Corp. ........................ 76,475
-------
117,213
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1997
Shares Market Value
- ------ ------------
CONSUMER NON-DURABLES 8.12%
200 Colgate Palmolive Co. $ .......... 22,200
950 Hanson PLC ADR ................... 23,037
4,500 International Multifoods Corp. ... 111,937
300 PepsiCo, Inc. .................... 10,462
-------
167,636
-------
FERTILIZERS 1.62%
435 Potash Corp. Of Saskatchewan ..... 33,441
-------
FINANCIAL SERVICES 4.73%
1,075 Franklin Resources Inc. .......... 63,559
5,000 Long Beach Financial Corp.* ...... 34,062
-------
97,621
-------
INSURANCE 8.75%
600 Aetna Life & Casualty Co ......... 54,675
800 Everest Reinsurance Holdings Inc. 23,000
700 GCR Holdings Ltd. ................ 15,138
1,400 Highlands Insurance Group* ....... 24,675
400 ITT Hartford Group, Inc. ......... 29,800
600 Travelers Group, Inc. ............ 33,225
-------
180,513
-------
NATURAL GAS 11.36%
4,700 Bellwether Exploration* .......... 41,125
3,800 Cairn Energy USA Inc. ............ 42,275
3,600 Comstock Resources Inc.* ......... 30,600
12,200 Frontier Natural Gas Corp.* ...... 26,688
6,600 Gothic Energy Corp.* ............. 15,675
14,510 National Energy Group Inc.* ...... 43,530
8,500 Panaco Inc.* ..................... 34,531
-------
234,424
-------
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
SCHEDULE OF INVESTMENTS
CROFT-LEOMINSTER VALUE FUND
April 30, 1997
Shares Market Value
- ------ ------------
OIL 9.92%
600 Benton Oil & Gas Co.* $ .......... 8,775
7,300 Equity Oil Co* ................... 21,444
6,000 Magnum Hunter Resources Inc.* .... 34,500
1,300 Mallon Resources Corp.* .......... 9,262
3,100 McFarland Energy Inc.* ........... 36,037
700 Oryx Energy Co. * ................ 14,000
5,200 Santa Fe Energy Resources* ....... 73,450
200 Triton Energy Ltd.* .............. 7,350
-------
204,818
-------
PAPER & FOREST PRODUCTS 6.05%
1,900 Boise Cascade Corp. ............... 63,175
6,100 Stone Container Corp. ............. 61,762
-------
124,937
-------
PHARMACEUTICALS 1.66%
350 Warner Lambert Co. ................ 34,300
-------
POLLUTION CONTROL 0.56%
6,000 Infinity Corp.* ................... 11,625
-------
TOTAL COMMON STOCKS (Cost $1,717,127) ......... 1,912,854
---------
SHORT TERM INVESTMENTS 7.31%
150,980 Star Treasury Fund (Cost $150,980).. 150,980
---------
TOTAL INVESTMENTS (Cost $1,868,107) ...... 99.99% $ 2,063,834
OTHER ASSETS LESS LIABILITIES ............ 0.01% 206
---------
TOTAL NET ASSETS .........................100.00% $ 2,064,041
=========
<FN>
* Non-Income Producing
</FN>
</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 VALUE FUND
April 30, 1997
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments at value (cost $1,868,107) ................... $2,063,834
Receivable for Securities Sold ........................... 46,660
Dividends and interest receivable ........................ 1,659
Due from Investment Adviser (Note 3) ..................... 3,942
Receivable for funds shares sold ......................... 474
---------
TOTAL ASSETS ...................................... 2,116,569
---------
LIABILITIES
Payable for securities purchased ......................... 32,500
Other expenses ........................................... 20,028
---------
TOTAL LIABILITIES ................................. 52,528
---------
NET ASSETS
Net assets, equivalent to $13.32 per share,
on 154,996 shares outstanding (Note 4) ................ $2,064,041
==========
COMPUTATION OF NET ASSET VALUE PER SHARE AND
PUBLIC OFFERING PRICE .................................... $ 13.32
==========
NET ASSETS CONSIST OF:
Paid in capital .......................................... 1,741,403
Undistributed net investment income ...................... 0
Accumulated undistributed net realized
gains (losses) from security transactions ............ 126,911
Net unrealized appreciation (depreciation)
of investments ....................................... 195,727
----------
NET ASSETS APRIL 30, 1997 ................................ $2,064,041
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CROFT FUNDS CORPORATION
STATEMENT OF OPERATIONS
CROFT-LEOMINSTER VALUE FUND
For the year ended April 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C>
Dividends $ .............................................. 22,867
Interest ................................................. 7,472
--------
Total income ............................................. 30,339
--------
EXPENSES:
Investment advisory fee (Note 3) ......................... 15,468
Distribution fee (Note 3) ................................ 2,294
Administration fee ....................................... 18,868
Legal fee ................................................ 14,399
Transfer agent fee ....................................... 11,830
Audit fee ................................................ 6,581
Insurance ................................................ 6,249
Custody fee .............................................. 5,840
Printing ................................................. 3,800
Registration ............................................. 2,500
Other .................................................... 1,126
--------
TOTAL EXPENSES .................................... 88,955
Less: Expense reimbursement ....................... (64,272)
--------
Net expenses ...................................... 24,683
--------
NET INVESTMENT INCOME (LOSS) ...................... 5,656
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................. 182,830
Unrealized appreciation (depreciation) of investments
for the period ...................................... 89,965
--------
NET GAIN (LOSS) ON INVESTMENTS .................... 272,795
--------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $278,451
========
</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 VALUE FUND
For the year ended April 30, 1997
- --------------------------------------------------------------------------------
For the year May 4, 1995*
ended through
April 30, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income .................................... $ 5,656 $ 6,168
Net realized gain (loss) on investments .................. 182,830 15,698
Unrealized appreciation (depreciation) for the period .... 89,965 105,762
------ -------
Net increase (decrease) in net assets
from operations ..................................... 278,451 127,628
------- -------
DIVIDENDS PAID TO SHAREHOLDERS:
Net investment income ($.05 and .07 per share,
respectively) ...................................... (8,262) (6,158)
Capital gains ($.52 and .04 per share,
respectively) ...................................... (67,829) (3,788)
CAPITAL SHARE TRANSACTIONS (Note 4) ...................... 606,252 1,137,747
--------- ---------
TOTAL INCREASE .................................... 808,612 1,255,429
NET ASSETS:
Beginning of period ...................................... 1,255,429 0
--------- ---------
End of period (including undistributed
net investment income of $0 and $10 respectively) $ 2,064,041 $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 STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
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. The Fund's investment objective is to seek growth
of capital. It invests primarily (under normal market conditions, at least 65%
of its total assets) in common stocks which are believed by the Manager to be
undervalued and have good prospects for capital appreciation.
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) Estimates.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(d) 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 .94% of the Value Fund's average daily net
assets. Until December 31, 1997, the manager guarantees that the overall expense
ratio for the Value Fund, which exclude ordinary brokerage commissions incurred
in the purchase or sale of portfolio securities, will not exceed 1.50%. As a
result, for the year ended April 30, 1997, the Adviser accrued reimbursements to
the Fund of $64,272.
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. For the year ended April 30, 1997 the Fund accrued
distribution fees of $4,025.
NOTE 4. CAPITAL STOCK.
At April 30, 1997, there were 30,000,000 shares of capital stock ($.001 par
value) authorized for the Croft Funds Corporation, and capital paid-in amounted
to $1,741,403 for the Value Fund. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
For the year
ended
April 30, 1997
--------------
Shares Amount
------ ------
<S> <C> <C>
Sold ..................................... 43,426 $ 549,286
Issued on reinvestment
of dividends ............................. 5,654 70,681
Redemptions .............................. (1,030) (13,715)
------ -------
Net increase ............................. 48,050 $ 606,252
====== =========
</TABLE>
<PAGE>
CROFT FUNDS CORPORATION
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
NOTE 5. INVESTMENT TRANSACTIONS.
During the year ended April 30, 1997, purchases and sales of investment
securities, excluding short-term obligations were as follows:
<TABLE>
<S> <C>
Cost of purchases $1,998,057
Proceeds of sales 1,590,525
At April 30, 1997 the net unrealized appreciation based on cost for Federal
income tax purposes of $1,869,530 for the Value Fund was as follows:
Unrealized appreciation $ 247,902
Unrealized depreciation (53,598)
---------
$ 194,304
=========
</TABLE>
NOTE 6. DISTRIBUTIONS TO SHAREHOLDERS
During the fiscal year ended April 30, 1997, distributions of $.57 aggregating
$76,091 were declared from net realized gains and net investment income
(including $.35 applicable to short-term gain that are taxable to shareholders
as ordinary income dividends) of the Croft-Leominster Value Fund.
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 VALUE FUND
Financial Highlights for a share outstanding
throughout the period
<S> <C> <C>
For the May 4, 1995*
year ended through
April 30, 1997 April 30, 1996
-------------- --------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.74 $ 10.00
Income from investment operations:
Net investment income .................. .04 .10
Net realized and unrealized gain (loss)
on investments ......................... 2.11 1.75
---- ----
TOTAL FROM INVESTMENT OPERATIONS ...... 2.15 1.85
---- ----
Less distributions:
Dividends from net investment income.... (.05) (.07)
Dividends from net realized gains .... (.52) (.04)
---- ----
TOTAL DISTRIBUTIONS ................... (.57) (.11)
---- ----
NET ASSET VALUE, END OF PERIOD .............. $ 13.32 $ 11.74
========= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...... 2,064 1,255
Ratios to average net assets:
Expenses ............................... 1.50% 1.50%**
Net investment income .................. 0.34% 0.89%**
Portfolio turnover rate ................ 105.72% 65.38%
Average Commission Rate Paid ........... .1096 --
TOTAL RETURN ................................ 18.71% 18.57%
<FN>
** Commencement of operations
** Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
CROFT FUNDS CORPORATION
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 VALUE FUND
April 30, 1997
AVERAGE ANNUAL TOTAL PERFORMANCE PERIODS ENDED 4/30/97
<TABLE>
<CAPTION>
Since Inception
One Year (5/10/95)
-------- ---------
<S> <C> <C>
Croft-Leominster Value Fund ...................+ 18.7% + 18.9%
Standard & Poor's 500 Index ...................+ 25.1% + 26.8%
</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 (S&P 500) using
a $10,000 initial investment. The value of the Fund at April 30, 1997 was
$14,071 vs. $15,970 for the benchmark.
<PAGE>
CROFT-LEOMINSTER
VALUE FUND
1-800-746-3322
